Document:

mhr_8k-ex1002.htm

    Exhibit 10.2

     

     

    

    3,903,720
Units

     

    MAGNUM
HUNTER RESOURCES CORPORATION

     

    Common
Stock and Warrants

     

    

    PLACEMENT AGENCY
AGREEMENT

    

    

    November
10, 2009

    

    Canaccord
Adams Inc.

    99 High
Street, 11th
Floor

    Boston,
Massachusetts 02110

    

    Ladies
and Gentlemen:

    

    Magnum
Hunter Resources Corporation, a Delaware corporation (the "Company"), proposes, subject
to the terms and conditions stated in this Placement Agency Agreement (this
"Agreement") and the
Subscription Agreements in the form of Exhibit A attached
hereto (the "Subscription
Agreements") to be entered into with the investors identified therein
(each, an "Investor"
and collectively, the "Investors"), to issue and
sell up to an aggregate of 3,903,720 Units (the "Units"), each Unit consisting
of one share  of the Company's common stock, $0.01 par value (the
"Common Stock") and
one-fifth of a warrant to purchase one share of Common Stock (each whole
warrant, a "Warrant").  The
Company hereby confirms its several agreements with Canaccord Adams Inc. ("Canaccord") as set forth
below.  Canaccord is referred to herein as the "Placement
Agent".  The Units are more fully described in the Prospectus
(as defined below).

     

    1.         
   Agreement to Act
as Placement Agent; Delivery and Payment. On the basis of the
representations, warranties and agreements of the Company herein contained, and
subject to the terms and conditions set forth in this Agreement:

     

    (a)            The
Company hereby engages the Placement Agent, as the exclusive agent of the
Company, to, on a commercially reasonable best efforts basis, solicit offers to
purchase Units from the Company on the terms and subject to the conditions set
forth in the Subscription Agreements and Prospectus (as defined
below).  The Placement Agent shall use commercially reasonable best
efforts to assist the Company in obtaining performance by each Investor whose
offer to purchase the Units was solicited by the Placement Agent and accepted by
the Company, but the Placement Agent shall not, except as otherwise provided in
this Agreement, have any liability to the Company in the event any such purchase
is not consummated for any reason. Under no circumstances will the Placement
Agent or any of its affiliates be obligated to underwrite or purchase any of the
Units for its own account or otherwise provide any financing. The Placement
Agent shall act solely as the Company's agent and not as
principal.  The Placement Agent shall not have any authority to bind
the Company with respect to any prospective offer to purchase Units and the
Company shall have the sole right to accept offers to purchase Units and may
reject any such offer, in whole or in part.  The Placement Agent has
the right, after discussion with the Company, to reject any offer to purchase
Units received by it, in whole or in part, and any such rejection shall not be
deemed a breach of this Agreement.

     

    

    
      
        
           

        

        
           

          
            

          

        

        
           

        

      

    

    

    (b)            As
compensation for services rendered by the Placement Agent hereunder, on the
Closing Date (as defined below), the Placement Agent shall receive from the
Company, in the manner provided in Section 6(f), an aggregate amount equal to
five percent (5.0%) of the gross proceeds received by the Company from the sale
of the Units on such Closing Date (the "Agency Fee").  The
Placement Agent agrees that the foregoing compensation, together with any
expense reimbursement payable hereunder, constitutes all of the compensation
that the Placement Agent shall be entitled to receive in connection with the
Offering contemplated hereby.

     

    (c)            The
Units are being sold to the Investors at a price of $1.73 per unit (the "Purchase Price") as set forth
on the cover page of the Prospectus (as defined below). The purchases of Units
by the Investors shall be evidenced by the execution of the Subscription
Agreements by each of the parties thereto in the form attached hereto as Exhibit
A.

     

    (d)            Prior
to the earlier of (i) the date on which this Agreement is terminated and (ii)
the Closing Date, the Company shall not, without the prior written consent of
the Placement Agent, solicit or accept offers to purchase shares of the Common
Stock or any securities convertible into Common Stock (other than pursuant to
the exercise of options or warrants to purchase shares of Common Stock that are
outstanding at the date hereof) otherwise than through the Placement Agent in
accordance herewith.

     

    (e)            No
Units which the Company has agreed to sell pursuant to this Agreement and the
Subscription Agreements shall be deemed to have been purchased and paid for, or
sold by the Company, until such Units shall have been delivered to the Investor
purchasing such Units against payment therefor by such Investor. If the Company
shall default in its obligations to deliver Units to an Investor whose offer it
has accepted, the Company shall indemnify and hold the Placement Agent harmless
against any loss, claim, damage or liability directly or indirectly arising from
or as a result of the default by the Company in accordance with the procedures
set forth in Section
6(c) hereof.

     

    (f)        
   Payment of the purchase price for, and delivery of the Units
shall be made at a closing (the "Closing") at the offices of
Bracewell & Giuliani LLP, counsel for the Placement Agent, located at 711
Louisiana Street, Houston, Texas, at 11:00 a.m., New York City time, on November
16, 2009 or at such other time and date as the Placement Agent and the Company
determine pursuant to Rule 15c6-1(a) under the Securities Exchange Act of 1934,
as amended (the "Exchange
Act") (such date of payment and delivery being herein referred to as the
"Closing
Date").  Unless otherwise specified in the applicable
Subscription Agreement, the Units will be settled (i) through the facilities of
The Depository Trust Company's DWAC system or (ii) The Depository Trust
Company's delivery versus payment (DVP) settlement service. Payment of the
purchase price for the Units shall be made in the manner set forth in the
applicable Subscription Agreement by Federal Funds wire transfer, against
delivery of the Units to such persons and shall be registered in the name or
names and shall be in such denominations as the Placement Agent may request at
least one business day before the Closing Date. Payment of the purchase price
for the Units to be purchased by Investors shall be made pursuant to
instructions contained in the Subscription Agreement.  Prior to the
Closing, each such Investor shall deposit with (i) the Company or (ii) the
applicable Placement Agent, pursuant to the Subscription Agreement, an amount
(the "Purchase Amount")
equal to the product of (x) the number of Units such Investor has agreed to
purchase and (y) the Purchase Price. The aggregate of all such Purchase Amounts
is herein referred to as the "Purchase Funds." Subject to the terms and
conditions hereof and of the Subscription Agreements, the Placement Agent shall,
on the Closing Date, deliver to the Company, by Federal Funds wire transfer, the
Purchase Funds so held by the Placement Agent, reduced by an amount equal to the
sum of the aggregate Agency Fee payable to the Placement Agent and the Placement
Agent's bona fide estimate of the amount, if any, of expenses for which the
Placement Agent is entitled to reimbursement pursuant hereto. At least one day
prior to the Closing Date, the Placement Agent shall submit to the Company its
bona fide estimate of the amount, if any, of expenses for which the Placement
Agent is entitled to reimbursement pursuant hereto. As soon as reasonably
practicable after the Closing Date, the Placement Agent shall submit to the
Company its expense reimbursement invoice and the Company or the Placement
Agent, as applicable, shall make any necessary reconciling payment(s) within
thirty days after receipt of such invoice. The Company shall remit to the
Placement Agent any remaining Agency Fees or any Placement Agent's expenses for
which the Placement Agent is entitled to reimbursement.

     

    

    
      
        
           

        

        
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    2.            
Representations
and Warranties of the Company. The Company represents and warrants to the
Placement Agent as of the date hereof, and as of the Closing Date and agrees
with the Placement Agent, as follows:

     

    (a)           Filing of Registration
Statement. The Company has prepared and filed, in conformity with the
requirements of the Securities Act of 1933, as amended (the "Securities Act"), and the
published rules and regulations thereunder (the "Rules and Regulations")
adopted by the Securities and Exchange Commission (the "Commission"), a registration
statement, including a prospectus, on Form S-3 (File No. 333-161937), which
became effective as of October 15, 2009, relating to the Units and the offering
thereof (the "Offering") from time to time
in accordance with Rule 415(a)(1)(x) of the Rules and Regulations, and such
amendments thereof as may have been required to the date of this Agreement. The
term "Registration
Statement" as used in this Agreement means the aforementioned
registration statement, as amended at the time of such registration statement's
effectiveness for purposes of Section 11 of the Securities Act, (the "Effective Time"), including
(i) all documents filed as a part thereof or incorporated or deemed to be
incorporated by reference therein and (ii) any information in the corresponding
Base Prospectus (as defined below) or a prospectus supplement filed with the
Commission pursuant to Rule 424(b) under the Securities Act, to the extent such
information is deemed pursuant to Rule 430A ("Rule 430A"), 430B ("Rule 430B") or 430C
("Rule 430C")
under the Securities Act to be a part thereof at the Effective Time. If the
Company has filed an abbreviated registration statement to register additional
shares of Common Stock pursuant to Rule 462(b) under the Rules and Regulations
(the "Rule 462(b) Registration
Statement"), then any reference herein to the term "Registration Statement" shall
also be deemed to include such Rule 462(b) Registration Statement. For purposes
of this Agreement, all references to the Registration Statement, the Base
Prospectus, any Preliminary Prospectus (as defined below), the Prospectus (as
defined in below) or any amendment or supplement to any of the foregoing shall
be deemed to include the copy filed with the Commission pursuant to its
Electronic Data Gathering, Analysis and Retrieval System ("EDGAR"). All references in
this Agreement to amendments or supplements to the Registration Statement, the
Base Prospectus, any Preliminary Prospectus or the Prospectus shall be deemed to
mean and include the subsequent filing of any document under the Exchange Act
and which is deemed to be incorporated therein by reference therein or otherwise
deemed to be a part thereof.

     

    

    
      
        
           

        

        
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    (b)      
    Effectiveness of Registration
Statement; Certain Defined Terms. The Company and the transactions
contemplated by this Agreement meet the requirements and comply with the
conditions for the use of Form S-3 under the Securities Act.  The
Registration Statement meets, and the offering and sale of the Units as
contemplated hereby complies with, the requirements of Rule 415 under the
Securities Act (including, without limitation, Rule 415(a)(4) and (a)(5) of the
Rules and Regulations). The Company has complied, to the Commission's
satisfaction, with all requests of the Commission for additional or supplemental
information. No stop order preventing or suspending use of the Registration
Statement, any Preliminary Prospectus or the Prospectus or the effectiveness of
the Registration Statement has been issued by the Commission, and no proceedings
for such purpose pursuant to Section 8A of the Securities Act against the
Company or related to the Offering have been instituted or are pending or, to
the Company's knowledge, are contemplated or threatened by the Commission, and
any request received by the Company on the part of the Commission for additional
information has been complied with. As used in this
Agreement: 

     

    
      (1)        
   "Base Prospectus" means the
prospectus included in the Registration Statement at the Effective
Time.

    

                   

    
      (2)        
   "Disclosure Package" means (i)
the Statutory Prospectus, (ii) each Issuer Free Writing Prospectus, if any,
filed or used by the Company on or before the Effective Time and listed on Schedule II hereto
(other than a roadshow that is an Issuer Free Writing Prospectus but is not
required to be filed under Rule 433 of the Rules and Regulations) and (iii) the
pricing and other information as set forth on Exhibit B hereto, all
considered together.

    

                   

    
      (3)      
"Issuer Free Writing
Prospectus" means any "issuer free writing prospectus," as defined in Rule 433 of
the Rules and Regulations relating to the Units in the form filed or required to
be filed with the Commission or, if not required to be filed, in the form
retained in the Company's records pursuant to Rule 433(g) of the Rules and
Regulations.

    

                   

    
      (4)         
  "Preliminary Prospectus" means
any preliminary prospectus supplement, subject to completion, relating to the
Units, filed by the Company with the Commission pursuant to Rule 424(b) under
the Securities Act for use in connection with the offering and sale of the
Units, together with the Base Prospectus attached to or used with such
preliminary prospectus supplement.

    

                   

    
      (5)          
 "Prospectus" means the final
prospectus supplement, relating to the Units, filed by the Company with the
Commission pursuant to Rule 424(b) under the Securities Act on or before the
second business day after the date hereof (or such earlier time as may be
required under the Securities Act), in the form furnished by the Company to the
Placement Agent, for use in connection with the offering and sale of the Units
that discloses the public offering price and other final terms of the Units,
together with the Base Prospectus attached to or used with such final prospectus
supplement.

    

    

    
      
        
           

        

        
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      (6)       
    "Statutory Prospectus" means
the Preliminary Prospectus, if any, and the Base Prospectus, each as amended and
supplemented immediately prior to the Time of Sale, including any document
incorporated by reference therein, and any prospectus
supplement.

    

    

    
      (7)           
"Time of Sale" means 3:55
p.m., New York City time, on the date of this Agreement.

    

    

    (c)            Contents of Registration
Statement. The Registration Statement complied when it became effective,
complies as of the date hereof and, as amended or supplemented, at the Time of
Sale and at all times during which a prospectus is required by the Securities
Act to be delivered (whether physically or through compliance with Rule 172
under the Securities Act or any similar rule) in connection with any sale of
Units (the "Prospectus
Delivery Period"), will comply, in all material respects, with the
requirements of the Securities Act and the Rules and Regulations; the
Registration Statement did not, as of the Effective Time, contain an untrue
statement of a material fact or omit to state a material fact required to be
stated therein or necessary in order to make the statements therein not
misleading, provided,
that the Company makes no representation or warranty in this subsection (c) with
respect to statements in or omissions from the Registration Statement in
reliance upon, and in conformity with, written information furnished to the
Company by the Placement Agent specifically for inclusion therein, which
information the parties hereto agree is limited to the Placement Agent's
Information (as defined in Section 7
hereof).

     

    (d)           Contents of Prospectus. The
Prospectus will comply, as of the date that it is filed with the Commission, the
date of its delivery to Investors and at all times during the Prospectus
Delivery Period, in all material respects, with the requirements of the
Securities Act; at no time during the period that begins on the date the
Prospectus is filed with the Commission and ends at the end of the Prospectus
Delivery Period will the Prospectus, as then amended or supplemented, include an
untrue statement of a material fact or omit to state a material fact necessary
in order to make the statements therein, in the light of the circumstances under
which they were made, not misleading, provided, that the Company
makes no representation or warranty with respect to statements in or omissions
from the Prospectus in reliance upon, and in conformity with, written
information furnished to the Company by the Placement Agent specifically for
inclusion therein, which information the parties hereto agree is limited to the
Placement Agent's Information (as defined below).  The Prospectus
contains all required information under the Securities Act with respect to the
Units and the distribution of the Units.

     

    (e)           Incorporated Documents. Each
of the documents incorporated or deemed to be incorporated by reference in the
Registration Statement, at the time such document was filed with the Commission
or at the time such document became effective, as applicable, complied, in all
material respects, with the requirements of the Exchange Act, was filed on a
timely basis with the Commission and did not include an untrue statement of a
material fact or omit to state a material fact necessary in order to make the
statements therein, in the light of the circumstances under which they were
made, not misleading.

     

    

    
      
        
           

        

        
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    (f)            Disclosure Package. The
Disclosure Package, as of the Time of Sale, did not, and at the Closing Date
will not, contain any untrue statement of a material fact or omit to state any
material fact required to be stated therein or necessary in order to make the
statements therein, in the light of the circumstances under which they were
made, not misleading; provided, that the Company
makes no representations or warranties in this subsection (f) with
respect to statements in or omissions from the Disclosure Package in reliance
upon, and in conformity with, written information furnished to the Company by
the Placement Agent specifically for inclusion therein, which information the
parties hereto agree is limited to the Placement Agent's
Information.

     

    (g)           Distributed Materials; Conflict with
Registration Statement. Other than the Base Prospectus, any Preliminary
Prospectus and the Prospectus, the Company has not made, used, prepared,
authorized, approved or referred to and will not make, use, prepare, authorize,
approve or refer to any "written communication" (as defined in Rule 405 under
the Securities Act) that constitutes an offer to sell or a solicitation of an
offer to buy the Units other than (i) any document not constituting a prospectus
pursuant to Section 2(a)(10)(a) of the Securities Act or Rule 134 under the
Securities Act or (ii) the documents listed on Schedule II hereto
and other written communications approved in advance by the Placement
Agent.

     

    (h)           Issuer Free Writing
Prospectuses. Each Issuer Free Writing Prospectus, if any, conformed or
will conform in all material respects to the requirements of the Securities Act
and the Rules and Regulations on the date of first use, and the Company has
complied or will comply with any filing requirements applicable to such Issuer
Free Writing Prospectus pursuant to the Rules and Regulations. Each Issuer Free
Writing Prospectus, if any, when considered together with the Disclosure
Package, as of its issue date and at all subsequent times through the completion
of the Prospectus Delivery Period did not, does not and will not include any
information that conflicted, conflicts or will conflict with the information
contained in the Registration Statement, the Statutory Prospectus or the
Prospectus, including any document incorporated by reference therein and any
prospectus supplement deemed to be a part thereof that has not been superseded
or modified, or includes an untrue statement of a material fact or omitted or
would omit to state a material fact required to be stated therein or necessary
in order to make the statements therein, in the light of the circumstances
prevailing at the subsequent time, not misleading; provided, that the Company
makes no representation or warranty with respect to statements in or omissions
from any Issuer Free Writing Prospectus in reliance upon, and in conformity
with, written information furnished to the Company by the Placement Agent
specifically for inclusion therein, which information the parties hereto agree
is limited to the Placement Agent's Information.

     

    (i)            Not an Ineligible Issuer. (i)
At the earliest time after the filing of the Registration Statement that the
Company or another offering participant made a bona fide offer (within the
meaning of Rule 164(h)(2) under the Securities Act) of the Units and (ii) at the
date hereof, the Company was not and is not an "ineligible issuer," as defined
in Rule 405 under the Securities Act ("Rule 405").

     

    (j)            Due
Incorporation.

     

    
      (1)      
The
Company has been duly organized and is validly existing as a corporation in good
standing under the laws of the State of Delaware, with the corporate power and
authority to own its properties and to conduct its business as it is currently
being conducted and as described in the Registration Statement, the Prospectus
and the Disclosure Package. The Company is duly qualified to transact business
and is in good standing as a foreign corporation or other legal entity in each
other jurisdiction in which its ownership or leasing of property or the conduct
of its business requires such qualification, except where the failure to be so
qualified or in good standing or have such power or authority would not (i)
have, individually or in the aggregate, a material adverse effect upon the
general affairs, business, operations, properties, financial condition, or
results of operations of the Company and its subsidiaries, taken as a whole, or
(ii) impair in any material respect the power or ability of the Company to
perform its obligations under this Agreement or to consummate any transactions
contemplated by the Agreement and the Subscription Agreements, including the
issuance and sale of the Units (any such effect as described in clauses (i) or
(ii), a "Material Adverse
Effect");

    

    

    
      (2)      
Each of
the subsidiaries of the Company has been duly incorporated or formed, as the
case may be, and is validly existing and in good standing under the laws of its
respective jurisdiction of organization, each with full power and authority
(corporate and otherwise) to own its properties and conduct its business as
described in the Registration Statement, the Prospectus and the Disclosure
Package, and each has been duly qualified as a foreign corporation, limited
liability company or limited partnership for the transaction of business and is
in good standing under the laws of each other jurisdiction in which it owns or
leases properties or conducts any business so as to require such qualification,
except where the failure to be so qualified or in good standing would not result
in any Material Adverse Effect.

    

    

    (k)            Subsidiaries. Except for PRC Williston, LLC, Sharon Resources, Inc., Triad
Hunter LLC and Sharon Hunter Resources, Inc. and as otherwise described in the Registration
Statement, the Prospectus and the Disclosure Package, the Company has no
subsidiaries and does not own any beneficial interest, directly or indirectly,
in any corporation, partnership, joint venture or other business
entity.

     

    (l)      
     Due Authorization and
Enforceability. The Company has the full right, power and authority to
enter into this Agreement and the Subscription Agreements, and to perform and
discharge its obligations hereunder and thereunder; and each of this Agreement
and the Subscription Agreements has been (or, in the case of the Subscription
Agreements, will be) duly authorized, executed and delivered by the Company, and
constitutes (or will constitute) a valid, legal and binding obligation of the
Company, enforceable against the Company in accordance with its terms, except as
rights to indemnity hereunder may be limited by federal or state securities laws
and except as such enforceability may be limited by applicable bankruptcy,
insolvency, reorganization or similar laws affecting the rights of creditors
generally and subject to general principles of equity.

     

    

    
      
        
           

        

        
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    (m)           The Units. The issuance of
the Units has been duly and validly authorized by the Company and, when issued,
delivered and paid for in accordance with the terms of this Agreement and the
Subscription Agreements, will have been duly and validly issued and will be
fully paid and nonassessable, will not be subject to any statutory or
contractual preemptive rights or other rights to subscribe for or purchase or
acquire any shares of Common Stock of the Company which have not been waived or
complied with, and will conform in all material respects to the description
thereof contained in the Disclosure Package and the Prospectus and such
description conforms in all material respects to the rights set forth in the
instruments defining the same.

     

    (n)           Capitalization. The
information set forth under the caption "Capitalization" in the Statutory
Prospectus (and any similar sections or information, if any, contained in the
Disclosure Package) is fairly presented on a basis consistent with the Company's
financial statements. The certificates evidencing the Units are in due and
proper legal form and have been duly authorized for issuance by the
Company.  The authorized capital stock of the Company conforms as to
legal matters to the description thereof contained in the Prospectus under the
caption "Description of Capital Stock" (and any similar sections or information,
if any, contained in the Disclosure Package). The issued and outstanding shares
of capital stock of the Company have been duly authorized and validly issued,
are fully paid and nonassessable, and have been issued in compliance with all
federal and state securities laws. None of the outstanding shares of Common
Stock was issued in violation of any preemptive rights, rights of first refusal
or other similar rights to subscribe for or purchase or acquire any securities
of the Company or any of its subsidiaries. There are no authorized or
outstanding shares of capital stock, options, warrants, preemptive rights,
rights of first refusal or other rights to purchase, or equity or debt
securities convertible into or exchangeable for, any capital stock of the
Company or any of its subsidiaries other than those described in the Prospectus
and the Disclosure Package. The description of the Company's stock option, stock
bonus and other stock plans or arrangements, and the options or other rights
granted thereunder, as described in the Prospectus and the Disclosure Package,
accurately and fairly presents the information required to be shown with respect
to such plans, arrangements, options and rights.  The issued and
outstanding shares of capital stock of each of the Company's subsidiaries have
been duly authorized and validly issued, are fully paid and nonassessable, have
been issued in compliance with all federal and state securities laws, and are
owned directly by the Company or by another wholly-owned subsidiary of the
Company free and clear of any lien, encumbrance, security interest, claim or
charge, other than those described in, or incorporated by reference into the
Registration Statement and the Prospectus.  All the outstanding shares
of capital stock of each "significant subsidiary" within the meaning of Rule
1-02(w) of Regulation S-X (such a significant subsidiary of the Company, a
"Significant
Subsidiary") of the Company have been duly authorized and validly issued,
are fully paid and nonassessable and except to the extent set forth in the
Disclosure Package and the Prospectus, are owned by the Company directly or
indirectly through one or more wholly-owned subsidiaries, free and clear of any
lien, encumbrance, security interest, claim or charge, restriction upon voting
or transfer or any other claim of any third party.

     

    

    
      
        
           

        

        
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    (o)           No Conflict. The execution,
delivery and performance by the Company of this Agreement and the Subscription
Agreements, and the consummation of the transactions contemplated hereby and
thereby, including the issuance and sale of the Units by the Company, will not
conflict with or result in a breach or violation of, or constitute a default
under (nor constitute any event which with or without notice, lapse of time or
both would result in any breach or violation of or constitute a default under),
give rise to any right of termination or other right or the cancellation or
acceleration of any right or obligation or loss of a benefit under, or give rise
to the creation or imposition of any lien, encumbrance, security interest, claim
or charge upon any property or assets of the Company or its subsidiaries
pursuant to (i) any indenture, mortgage, deed of trust, loan agreement or other
agreement or instrument to which the Company or any of its subsidiaries is a
party or by which either the Company or its subsidiaries or any of their
properties may be bound or to which any of their property or assets is subject,
(ii) result in any violation of the provisions of the charter or by-laws of the
Company or any of its subsidiaries, or (iii) result in any violation of any
law, statute, rule, regulation, judgment, order or decree of any court or
governmental agency or body, domestic or foreign, having jurisdiction over the
Company or any of its properties or assets.

     

    (p)           No Consents Required. No
approval, authorization, consent or order of or filing, qualification or
registration with, any court or governmental agency or body, foreign or
domestic, which has not been made, obtained or taken and is not in full force
and effect, is required in connection with the Company's execution, delivery and
performance of this Agreement or the Subscription Agreements, the consummation
by the Company of the transactions contemplated hereby or thereby or the
issuance and sale of the Units other than (i) as may be required under the
Securities Act, (ii) any necessary qualification of the Units under the
securities or blue sky laws of the various jurisdictions in which the Units are
being offered by the Placement Agent, (iii) under the rules and regulations of
the Financial Industry Regulatory Authority, Inc. ("FINRA") (other than any
approval required with respect to the Base Prospectus), (iv) the New York Stock
Exchange Amex Equities, ("NYSE
Amex") or (v) any required filing on
Form
8-K under the Exchange Act.

     

    (q)           Preemptive Rights. There are
no preemptive rights or other rights (other than rights which have been waived
in writing in connection with the transactions contemplated by this Agreement or
otherwise satisfied or as described in the Prospectus) to subscribe for or to
purchase any shares of Common Stock or shares of any other capital stock or
other equity interests of the Company or any of its subsidiaries, or any
agreement or arrangement between the Company and any of the Company's
stockholders or between any of the Company's subsidiaries and any of such
subsidiary's stockholders, or to the Company's knowledge, between or among any
of the Company's stockholders or any of its subsidiaries' stockholders, which
grant special rights with respect to any shares of the Company's or any of its
subsidiaries' capital stock or which in any way affect any stockholder's ability
or right to alienate freely or vote such shares.

     

    (r)           Registration Rights. Except for the Company’s registration
obligation for the Common Stock underlying certain warrants pursuant to the
Securities Purchase and Registration Rights Agreement dated November 5, 2009
(the “Underlying
Warrant Stock Registration
Statement”), there are
no contracts, agreements or understandings between the Company or any of its
subsidiaries and any person granting such person the right (other than rights
which have been waived in writing in connection with the transactions
contemplated by this Agreement or otherwise satisfied) to require the Company or
any of its subsidiaries to register any securities with the
Commission.

     

    

    
      
        
           

        

        
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    (s)           Independent Accountants.
Malone & Bailey, PC, whose reports on the consolidated financial statements
of the Company are incorporated by reference in the Registration Statement, the
Prospectus and the Disclosure Package, is (i) an independent public accounting
firm within the meaning of the Securities Act, (ii) a registered public
accounting firm (as defined in Section 2(a)(12) of the Sarbanes-Oxley Act of
2002 (the "Sarbanes-Oxley
Act")), and (iii) to the Company's knowledge, not in violation of the
auditor independence requirements of the Sarbanes-Oxley Act.  Except
as disclosed in the Registration Statement and as pre-approved in accordance
with the requirements set forth in Section 10A of the Exchange Act, Malone &
Bailey, PC has not been engaged by the Company to perform any "prohibited
activities" (as defined in Section 10A of the Exchange Act).

     

    (t)           Financial Statements. The
consolidated financial statements of the Company, together with the related
schedules and notes thereto, set forth or incorporated by reference in the
Registration Statement, the Prospectus and the Disclosure Package comply in all
material respects with the applicable requirements of the Securities Act and the
Exchange Act, as applicable, and present fairly in all material respects (i) the
financial condition of the Company and its consolidated subsidiaries as of the
dates indicated and (ii) the consolidated results of operations, stockholders'
equity and changes in cash flows of the Company and its consolidated
subsidiaries for the periods therein specified; and such financial statements
and related schedules and notes thereto have been prepared in conformity with
United States generally accepted accounting principles, consistently applied
throughout the periods involved (except as otherwise stated therein and subject,
in the case of unaudited financial statements, to the absence of footnotes and
normal year-end adjustments). The historical consolidated financial statements
of the Triad Energy Corporation and certain of its affiliates ("Triad"), together with the
related schedules and notes thereto set forth or incorporated by reference in
the Registration Statement, the Prospectus and the Disclosure Package comply in
all material respects with the applicable requirements of the Securities Act and
the Exchange Act, as applicable, and present fairly in all material respects (i)
the financial condition of Triad as of the dates indicated and (ii) the
consolidated results of operations, stockholders' equity and changes in cash
flows of Triad for the periods therein specified; and such financial statements
and related schedules and notes thereto have been prepared in conformity with
United States generally accepted accounting principles, consistently applied
throughout the periods involved (except as otherwise stated therein and subject,
in the case of unaudited financial statements, to the absence of footnotes and
normal year-end adjustments).  There are no other financial statements
(historical or pro forma) that are required to be included or incorporated by
reference in the Registration Statement, the Prospectus or the Disclosure
Package; and the Company does not have any material liabilities or obligations,
direct or contingent (including any off-balance sheet obligations), not
disclosed in the Registration Statement, the Disclosure Package and the
Prospectus; and all disclosures contained in the Registration Statement, the
Disclosure Package and the Prospectus regarding "non-GAAP financial measures"
(as such term is defined by the rules and regulations of the Commission) comply
with Regulation G of the Exchange Act and Item 10(e) of Regulation S-K under the
Securities Act, to the extent applicable, and present fairly the information
shown therein and the Company's basis for using such measures.

     

    (u)            Pro Forma Financial
Information.  The pro forma financial statements included in
the Registration Statement, the Prospectus and the General Disclosure Package
reflect, subject to the limitations set forth therein as to such pro forma
financial information, the results of operations of the Company and its
consolidated subsidiaries purported to be shown thereby for the periods
indicated and conform to the requirements of Regulation S-X of the Rules and
Regulations under the Securities Act, and management of the Company believes (i)
the assumptions underlying the pro forma adjustments are reasonable, (ii) that
such adjustments have been properly applied to the historical amounts in the
compilation of such pro forma statements and notes thereto, and (iii) that such
statements and notes thereto present fairly, with respect to the Company and its
consolidated subsidiaries, the pro forma financial position and results of
operations and the other information purported to be shown therein at the
respective dates or for the respective periods therein specified.

     

    

    
      
        
           

        

        
          9

          
            

          

        

        
           

        

      

    

    

    (v)           Absence of Material Changes.
Subsequent to the respective dates as of which information is given in the
Registration Statement, the Prospectus and the Disclosure Package, and except as
may be otherwise stated or incorporated by reference in the Registration
Statement, the Prospectus and the Disclosure Package, and the delivery to JP Morgan Chase, as escrow agent
(the “Escrow
Agent”), of an aggregate of 601,652 shares
of Common Stock to satisfy the Company’s deposit obligation in the Triad
acquisition, there has not been (i) any Material Adverse Effect, (ii) any
transaction which is material to the Company or any of its subsidiaries, (iii)
any obligation, direct or contingent (including any off-balance sheet
obligations), incurred by the Company or any of its subsidiaries, which is
material to the Company or any of its subsidiaries, (iv) any dividend or
distribution of any kind declared, paid or made on the capital stock of the
Company, (v) any change in the capital stock (other than a change in the number
of outstanding shares of Common Stock due to the issuance of shares upon the
exercise of outstanding options or warrants or the conversion of convertible
indebtedness), or material change in the short-term debt or long-term debt of
the Company or any of its subsidiaries (other than upon conversion of
convertible indebtedness) or any issuance of options, warrants, convertible
securities or other rights to purchase the capital stock (other than grants of
stock options under the Company's stock option plans existing on the date
hereof) of the Company or any of its subsidiaries.

     

    (w)           Legal Proceedings. Except as
disclosed in the Company's filings with the Commission, there are no legal or
governmental actions, suits, claims or proceedings pending or, to the Company's
knowledge, threatened or contemplated to which the Company or any of its
subsidiaries is or would be a party or of which any of their respective
properties is or would be subject at law or in equity, before or by any federal,
state, local or foreign governmental or regulatory commission, board, body,
authority or agency, or before or by any self-regulatory organization or other
non-governmental regulatory authority which are required to be described in the
Registration Statement, the Disclosure Package or the Prospectus or a document
incorporated by reference therein and are not so described therein, or which,
singularly or in the aggregate, if resolved adversely to the Company or such
subsidiary, would reasonably be likely to result in a Material Adverse Effect or
prevent or materially and adversely affect the ability of the Company to
consummate the transactions contemplated hereby. To the Company's knowledge, no
such proceedings are threatened or contemplated by governmental authorities or
threatened by other third parties.

     

    

    
      
        
           

        

        
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    (x)            No Violation. Neither the
Company nor any of its subsidiaries is in breach or violation of or in default
(nor has any event occurred which with notice, lapse of time or both would
result in any breach or violation of, or constitute a default) (i) under the
provisions of its charter or bylaws (or analogous governing instrument, as
applicable) or (ii) in the performance or observance of any term, covenant,
obligation, agreement or condition contained in any indenture, mortgage, deed of
trust, bank loan or credit agreement or other evidence of indebtedness, or any
license, lease, contract or other agreement or instrument to which the Company
or such subsidiary is a party or by which any of its properties may be bound or
affected, or (iii) in the performance or observance of any statute, law, rule,
regulation, ordinance, judgment, order or decree of any court, regulatory body,
administrative agency, governmental body, arbitrator or other authority having
jurisdiction over the Company or such subsidiary or any of its properties, as
applicable, except, with respect to clauses (ii) and (iii) above, to the extent
any such contravention has been waived or would not result in a Material Adverse
Effect.

     

    (y)           Permits. The Company and each
of its subsidiaries have made all filings, applications and submissions required
by, and owns or possesses all approvals, licenses, certificates, certifications,
clearances, consents, exemptions, marks, notifications, orders, permits and
other authorizations issued by, the appropriate federal, state or foreign
regulatory authorities necessary to conduct its business as described in the
Disclosure Package (collectively, "Permits"), and is in
compliance in all material respects with the terms and conditions of all such
Permits. All such Permits are valid and in full force and effect. Neither the
Company nor any of its subsidiaries has received any notice of any proceedings
relating to revocation or modification of, any such Permit, which, individually
or in the aggregate, if the subject of an unfavorable decision, ruling or
finding, would have a Material Adverse Effect.  Except as may be
required under the Securities Act and state and foreign Blue Sky laws and the
rules and regulations of FINRA, no other Permits are required for the Company or
any of its subsidiaries to enter into, deliver and perform this Agreement and to
issue and sell the Units to be issued and sold by the Company
hereunder.

     

    (z)            Not an Investment Company.
The Company is not or, after giving effect to the offering and sale of the Units
and the application of the proceeds thereof as described in the Disclosure
Package and the Prospectus, will not be (i) required to register as an
"investment company" as defined in the Investment Company Act of 1940, as
amended (the "Investment
Company Act"), and the rules and regulations of the Commission thereunder
or (ii) a "business development company" (as defined in
Section 2(a)(48) of the Investment Company Act).

     

    (aa)          No Price Stabilization.
Neither the Company nor any of its subsidiaries, or any of their respective
officers, directors, affiliates or controlling persons has taken or will take,
directly or indirectly, any action designed to or that would be reasonably
expected to cause or result in, or which has constituted or which would
reasonably be expected to constitute the stabilization or manipulation of the
price of any security of the Company to facilitate the sale or resale of the
Units.

     

    (bb)         Good Title to Property. The
Company and each of its subsidiaries has good and defensible title to all
property (whether real or personal) described in the Registration Statement, the
Disclosure Package and the Prospectus as being owned by it, in each case free
and clear of all liens, claims, security interests, other encumbrances or
defects (collectively, "Liens"), except such as are
described in the Registration Statement, the Disclosure Package and the
Prospectus and those that would not, individually or in the aggregate materially
affect the value of such property and do not materially interfere with the use
made and proposed to be made of such property by the Company or any of its
subsidiaries. All of the property described in the Registration Statement,
Disclosure Package and the Prospectus as being held under lease by the Company
or any of its subsidiaries is held thereby under valid, subsisting and
enforceable leases, without any liens, restrictions, encumbrances or claims,
except those that, individually or in the aggregate, are not material and
do not materially interfere with the use made and proposed to be made of such
property by the Company or such subsidiary.

     

    (cc)          Intellectual Property Rights.
The Company and each of its subsidiaries owns or possesses the right to use all
patents, trademarks, trademark registrations, service marks, service mark
registrations, trade names, copyrights, licenses, inventions, software,
databases, know-how, Internet domain names, trade secrets and other unpatented
and/or unpatentable proprietary or confidential information, systems or
procedures, and other intellectual property (collectively, "Intellectual Property")
necessary to carry on its businesses as currently conducted, and as proposed to
be conducted as described in the Disclosure Package and the Prospectus, and the
Company is not aware of any claim to the contrary or any challenge by any other
person to the rights of the Company or any of its subsidiaries with respect to
the foregoing except for those that could not have a Material Adverse Effect.
The Intellectual Property licenses described in the Disclosure Package and the
Prospectus are, to the knowledge of the Company, valid, binding upon, and
enforceable by or against the parties thereto in accordance with their terms.
The Company and each of its subsidiaries has complied in all material respects
with, and is not in breach nor has received any asserted or threatened claim of
breach of, any Intellectual Property license, and the Company has no knowledge
of any breach or anticipated breach by any other person of any Intellectual
Property license.  The Company's and each of its subsidiaries'
business as now conducted and as proposed to be conducted, to the knowledge of
the Company, does not and will not infringe or conflict with any patents,
trademarks, service marks, trade names, copyrights, trade secrets, licenses or
other Intellectual Property or franchise right of any person. Neither the
Company nor any of its subsidiaries has received notice of any claim against the
Company or any of its subsidiaries alleging the infringement by the Company or
any of its subsidiaries of any patent, trademark, service mark, trade name,
copyright, trade secret, license in or other intellectual property right or
franchise right of any person. The Company and each of its subsidiaries has
taken all reasonable steps to protect, maintain and safeguard its rights in all
Intellectual Property, including the execution of appropriate nondisclosure and
confidentiality agreements. The consummation of the transactions contemplated by
this Agreement will not result in the loss or impairment of or payment of any
additional amounts with respect to, nor require the consent of any other person
in respect of, the Company's or any of its subsidiaries' right to own, use, or
hold for use any of the Intellectual Property as owned, used or held for use in
the conduct of the businesses as currently conducted.  Neither the
Company nor any of its subsidiaries owns any patents or has made application for
the issuance of a patent.  To the Company's knowledge, no employee of
the Company or any of its subsidiaries is the subject of any claim or proceeding
involving a violation of any term of any employment contract, patent disclosure
agreement, invention assignment agreement, non-competition agreement,
non-solicitation agreement, nondisclosure agreement or any restrictive covenant
to or with a former employer where the basis of such violation relates to such
employee's employment with the Company or any of the Company's subsidiaries or
actions undertaken by the employee while employed with the Company or any of the
Company's subsidiaries.

     

    

    
      
        
           

        

        
          11

          
            

          

        

        
           

        

      

    

    

    (dd)          No Labor Disputes. No labor
problem or dispute with the employees of the Company or any of the Company's
subsidiaries exists, or, to the Company's knowledge, is threatened or imminent,
which would reasonably be expected to result in a Material Adverse Effect. The
Company is not aware that any key employee or significant group of employees of
the Company or any of the Company's subsidiaries plans to terminate employment
with the Company or any of the Company's subsidiaries. Neither the Company nor
any of its subsidiaries has engaged in any unfair labor practice; except for
matters which would not, individually or in the aggregate, result in a Material
Adverse Effect, (i) there is (A) no unfair labor practice complaint pending or,
to the Company's knowledge, threatened against the Company or any of its
subsidiaries before the National Labor Relations Board, and no grievance or
arbitration proceeding arising out of or under collective bargaining agreements
is pending or to the Company's knowledge, threatened, (B) no strike, labor
dispute, slowdown or stoppage pending or, to the Company's knowledge, threatened
against the Company or any of its subsidiaries and (C) no union representation
dispute currently existing concerning the employees of the Company or any of its
subsidiaries and (ii) to the Company's knowledge, (A) no union organizing
activities are currently taking place concerning the employees of the Company or
any of its subsidiaries and (B) there has been no violation of any federal,
state, local or foreign law relating to discrimination in the hiring, promotion
or pay of employees, any applicable wage or hour laws or any provision of the
Employee Retirement Income Security Act of 1974 ("ERISA") or the rules and
regulations promulgated thereunder concerning the employees of the Company or
any of its subsidiaries.

     

    (ee)          Taxes. Except as disclosed in
its filings with the Commission, the Company and each of its subsidiaries (i)
has timely filed all necessary federal, state, local and foreign income and
franchise tax returns (or timely filed applicable extensions therefor) that have
been required to be filed and (ii) is not in default in the payment of any taxes
which were payable pursuant to such returns or any assessments with respect
thereto, other than any which the Company or any of its subsidiaries is
contesting in good faith and for which adequate reserves have been provided and
reflected in the Company's financial statements included in the Registration
Statement, the Disclosure Package and the Prospectus. Neither the Company nor
any of its subsidiaries has any tax deficiency that has been or, to the
knowledge of the Company, is reasonably likely to be asserted or threatened
against it that would result in a Material Adverse Effect.  Neither
the Company nor any of its subsidiaries has engaged in any transaction which is
a corporate tax shelter or which could be characterized as such by the Internal
Revenue Service or any other taxing authority.

     

    (ff)           ERISA. The Company and each
of its subsidiaries is in compliance in all material respects with all presently
applicable provisions of ERISA; no "reportable event" (as defined in ERISA) has
occurred with respect to any "pension plan" (as defined in ERISA) for which the
Company or any of its subsidiaries would have any liability; neither the Company
nor any of its subsidiaries has incurred and does not expect to incur liability
under (i) Title IV of ERISA with respect to termination of, or withdrawal from,
any "pension plan" or (ii) Sections 412 or 4971 of the Internal Revenue Code of
1986, as amended, including the regulations and published interpretations
thereunder (the "Code"); and each "pension
plan" for which the Company or any of its subsidiaries would have any liability
that is intended to be qualified under Section 401(a) of the Code is so
qualified in all material respects and nothing has occurred, whether by action
or by failure to act, which would cause the loss of such
qualification.

     

    

    
      
        
           

        

        
          12

          
            

          

        

        
           

        

      

    

    

    (gg)         Compliance with Environmental
Laws. The Company and each of its subsidiaries (i) is in compliance with
any and all applicable foreign, federal, state and local laws, orders, rules,
regulations, directives, decrees and judgments relating to the use, treatment,
storage and disposal of hazardous or toxic substances or waste and protection of
human health and safety or the environment which are applicable to their
businesses ("Environmental
Laws"); (ii) has received and is in compliance with all permits, licenses
or other approvals required of it under applicable Environmental Laws to conduct
its business; and (iii) is in compliance with all terms and conditions of any
such permit, license or approval, except where such noncompliance with
Environmental Laws, failure to receive required permits, licenses or other
approvals or failure to comply with the terms and conditions of such permits,
licenses or approvals would not, individually or in the aggregate, result in a
Material Adverse Effect. There are no costs or liabilities associated with
Environmental Laws (including, without limitation, any capital or operating
expenditures required for clean-up, closure of properties or compliance with
Environmental Laws or any permit, license or approval, any related constraints
on operating activities and any potential liabilities to third parties) which
would, individually or in the aggregate, result in a Material Adverse
Effect.

     

    (hh)         Insurance. The Company and
each of its subsidiaries maintains or is covered by insurance provided by
recognized, financially sound and reputable institutions with insurance policies
in such amounts and covering such risks as is adequate for the conduct of its
business and the value of its properties and as is customary for companies
engaged in similar businesses in similar industries. All such insurance is fully
in force on the date hereof and will be fully in force as of the Closing Date.
The Company has no reason to believe that it and its subsidiaries will not be
able to renew their existing insurance coverage as and when such coverage
expires or to obtain similar coverage from similar insurers as may be necessary
to continue its business at a cost that would not have a Material Adverse
Effect.  Neither the Company nor any of its subsidiaries has been
denied any material insurance policy or coverage for which it has
applied.  Neither the Company nor any of its subsidiaries insures risk
of loss through any captive insurance, risk retention group, reciprocal group or
by means of any fund or pool of assets specifically set aside for contingent
liabilities other than as described in the Disclosure Package.

     

    (ii)        Accounting Controls. The
Company maintains a system of internal accounting controls sufficient to provide
reasonable assurances that (i) transactions are executed in accordance with
management's general or specific authorization; (ii) transactions are
recorded as necessary to permit preparation of financial statements in
conformity with generally accepted accounting principles and to maintain
accountability for assets; (iii) access to assets is permitted only in
accordance with management's general or specific authorization; and
(iv) the recorded accountability for assets is compared with existing
assets at reasonable intervals and appropriate action is taken with respect to
any differences.

     

    (jj)           Disclosure Controls. The
Company has established, maintains and evaluates "disclosure controls and
procedures" (as such term is defined in Rule 13a-15(e) and 15d-15(e) under
the Exchange Act), which (i) are designed to ensure that material
information relating to the Company and its subsidiaries is made known to the
Company's principal executive officer and its principal financial officer by
others within those entities, particularly during the periods in which the
periodic reports required under the Exchange Act are being prepared, (ii) have
been evaluated for effectiveness as of the end of the last fiscal period covered
by the Registration Statement; and (iii) such disclosure controls and procedures
are effective to perform the functions for which they were established. There
are no significant deficiencies or material weaknesses in the design or
operation of internal controls which could adversely affect the Company's
ability to record, process, summarize, or report financial data to management
and the Board of Directors of the Company. The Company is not aware of any
fraud, whether or not material, that involves management or other employees who
have a role in the Company's internal controls; and since the date of the most
recent evaluation of such disclosure controls and procedures, there have been no
significant changes in internal controls or in other factors that could
significantly affect internal controls, including any corrective actions with
regard to significant deficiencies and material weaknesses.  A member
of the Audit Committee of the Board of Directors of the Company (the "Audit Committee") has
confirmed to the Chief Executive Officer, Chief Financial Officer or General
Counsel of the Company that, except as set forth in the Disclosure Package, the
Audit Committee is not reviewing or investigating, and neither the Company's
independent auditors nor its internal auditors have recommended that the Audit
Committee review or investigate, (iv) adding to, deleting, changing the
application of or changing the Company's disclosure with respect to, any of the
Company's material accounting policies, (v) any manner which could result in a
restatement of the Company's financial statements for any annual or interim
period during the current or prior three fiscal years, or (iii) a significant
deficiency, material weakness, change in internal control over financial
reporting or fraud involving management or other employees who have a
significant role in the internal control over financial reporting.

     

    

    
      
        
           

        

        
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    (kk)          Minute Books.  The
minute books of the Company and each of its subsidiaries that would be a
Significant Subsidiary have been made available upon request to the Placement
Agent and counsel for the Placement Agent, and such books (i) contain a
materially complete summary of all meetings and actions of the board of
directors (including each board committee) and shareholders of the Company (or
analogous governing bodies and interest holders, as applicable), and each of its
Significant Subsidiaries since the time of its incorporation or organization
through the date of the latest meeting and action, and (ii) accurately in all
material respects reflect all transactions referred to in such
minutes.

     

    (ll)           Contracts; Off-Balance Sheet
Interests. There is no document, contract, permit or instrument, or
off-balance sheet transaction (including without limitation, any "variable
interests" in "variable interest entities," as such terms are defined in
Financial Accounting Standards Board Interpretation No. 46) of a character
required by the Securities Act or the Rules and Regulations to be described in
the Registration Statement or the Disclosure Package or to be filed as an
exhibit to the Registration Statement or document incorporated by reference
therein, which is not described or filed as required.  Each
description of a document, contract, permit or instrument in the Registration
Statement or the Disclosure Package accurately reflects in all material respects
the terms of the underlying document, contract, permit or
instrument.  The documents, contracts, permits and instruments
described in the immediately preceding sentence to which the Company is a party
have been duly authorized, executed and delivered by the Company, constitute
valid and binding agreements of the Company, are enforceable against and by the
Company in accordance with the terms thereof and are in full force and effect on
the date hereof.  Neither the Company nor any of its subsidiaries, if
a subsidiary is a party, nor to the Company's knowledge, any other party is in
default in the observance or performance of any term or obligation to be
performed by it under any such agreement, and no event has occurred which with
notice or lapse of time or both would constitute such a default, in any case
which default or event, individually or in the aggregate, would have a Material
Adverse Effect.  No default exists, and no event has occurred which
with notice or lapse of time or both would constitute a default, in the due
performance and observance of any term, covenant or condition, by the Company or
a subsidiary, if a subsidiary is a party thereto, of any agreement or instrument
to which the Company or any of its subsidiaries is a party or by which the
Company or its properties or business or a subsidiary or the subsidiary's
properties or business may be bound or affected which default or event,
individually or in the aggregate, would have a Material Adverse
Effect.

     

    (mm)        No Undisclosed Relationships.
No relationship, direct or indirect, exists between or among the Company on the
one hand and the directors, officers, stockholders, customers or suppliers of
the Company or any of their affiliates on the other hand, which is required to
be described in the Registration Statement, the Disclosure Package or the
Prospectus or a document incorporated by reference therein and which has not
been so described.

     

    (nn)        
Brokers Fees. Except as
disclosed in the Disclosure Package, there are no contracts, agreements or
understandings between the Company and any person (other than this Agreement)
that would give rise to a claim against the Company or the Placement Agent for a
brokerage commission, finder's fee or other like payment in connection with the
offering and sale of the Units.

     

    (oo)          Forward-Looking Statements.
No forward-looking statements (within the meaning of Section 27A of the
Securities Act and Section 21E of the Exchange Act) contained in either the
Disclosure Package or the Prospectus have been made or reaffirmed without a
reasonable basis therefor or have been disclosed other than in good
faith.

     

    (pp)        
NYSE Amex; Exchange Act
Registration. The Common Stock is registered pursuant to Section 12(b) or
12(g) of the Exchange Act and is listed on the NYSE Amex, and the Company has
taken no action designed to, or reasonably likely to have the effect of,
terminating the registration of the Common Stock under the Exchange Act or
delisting the Common Stock from the NYSE Amex, nor has the Company received any
notification that the Commission or the NYSE Amex is contemplating terminating
such registration or listing. The Company has complied in all material respects
with the applicable requirements of the NYSE Amex for maintenance of inclusion
of the Common Stock thereon. The Company has filed a notification of the listing
of the additional shares of Common Stock, including the shares of Common Stock
underlying the Warrants, to be issued by the Company pursuant to this Agreement
and the Subscription Agreement, on the NYSE Amex.

     

    (qq)       
Sarbanes-Oxley Act. The
Company, and to its knowledge, each of the Company's directors or officers, in
their capacities as such, is in compliance in all material respects with all
applicable effective provisions of the Sarbanes-Oxley Act and any related rules
and regulations promulgated by the Commission. Each of the principal executive
officer and the principal financial officer of the Company (and each former
principal executive officer of the Company and each former principal financial
officer of the Company as applicable) has made all certifications required by
Sections 302 and 906 of the Sarbanes-Oxley Act with respect to all reports,
schedules, forms, statements and other documents required to be filed by him or
her with the Commission. For purposes of the preceding sentence, "principal
executive officer" and "principal financial officer" shall have the meanings
given to such terms in the Sarbanes-Oxley Act.

     

    

    
      
        
           

        

        
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    (rr)          
Foreign Corrupt Practices.
Neither the Company nor, to the Company's knowledge, any other person associated
with or acting on behalf of the Company, including without limitation any
director, officer, agent or employee of the Company or any of its subsidiaries
has, directly or indirectly, while acting on behalf of the Company or any of its
subsidiaries (i) used any corporate funds for unlawful contributions, gifts,
entertainment or other unlawful expenses relating to political activity or
failed to disclose fully any contribution in violation of law, (ii) made any
payment to any federal or state governmental officer or official, or other
person charged with similar public or quasi-public duties, other than payments
required or permitted by the laws of the United States or any jurisdiction
thereof, (iii) violated or is in violation of any provision of the U.S. Foreign
Corrupt Practices Act of 1977, as amended or (iv) made any bribe, rebate,
payoff, influence payment, kickback or other unlawful payment.

     

    (ss)         
Affiliate
Transactions.  There are no transactions, arrangements or other
relationships between and/or among the Company, any of its affiliates (as such
term is defined in Rule 405) and any unconsolidated entity, including, but not
limited to, any structured finance, special purpose or limited purpose entity
that could reasonably be expected to materially affect the Company's liquidity
or the availability of or requirements for its capital resources required to be
described in the Disclosure Package and the Prospectus or a document
incorporated by reference therein which have not been described as
required.  The Company does not, directly or indirectly, including
through any subsidiary, have any outstanding personal loans or other credit
extended to or for any of its directors or executive officers.

     

    (tt)          
Statistical or Market-Related
Data. Any statistical, industry-related or market-related data included
or incorporated by reference in the Registration Statement, the Prospectus or
the Disclosure Package, are based on or derived from sources that the Company
reasonably and in good faith believes to be reliable and accurate, and such data
agree with the sources from which they are derived.

     

    (uu)        
Money Laundering Laws. The
operations of the Company and its subsidiaries are and have been conducted at
all times in compliance in all material respects with applicable financial
recordkeeping and reporting requirements of the Currency and Foreign
Transactions Reporting Act of 1970, as amended, the USA PATRIOT Act, the money
laundering statutes of all jurisdictions, the rules and regulations thereunder
and any related or similar rules, regulations or guidelines, issued,
administered or enforced by any governmental agency (collectively, the "Money Laundering Laws") and
no action, suit or proceeding by or before any court or governmental agency,
authority or body or any arbitrator involving the Company with respect to the
Money Laundering Laws is pending, or to the knowledge of the Company, threatened
against the Company or any of its subsidiaries.

     

    (vv)        
OFAC. Neither the Company
nor, to the knowledge of the Company, any director, officer, agent, employee or
affiliate of the Company or any of its subsidiaries is currently subject to any
U.S. sanctions administered by the Office of Foreign Assets Control of the U.S.
Treasury Department ("OFAC"); and the Company will
not directly or indirectly use the proceeds of the offering, or lend, contribute
or otherwise make available such proceeds to any affiliate, joint venture
partner or other person or entity, which, to the Company's knowledge, will use
such proceeds for the purpose of financing the activities of any person
currently subject to any U.S. sanctions administered by OFAC.

     

    

    
      
        
           

        

        
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    (ww)       
Margin Securities. The
Company does not own any "margin securities" as that term is defined in
Regulation U of the Board of Governors of the Federal Reserve System (the "Federal Reserve Board"), and
none of the proceeds of the sale of the Units will be used, directly or
indirectly, for the purpose of purchasing or carrying any margin security, for
the purpose of reducing or retiring any indebtedness which was originally
incurred to purchase or carry any margin security or for any other purpose which
might cause any of the Units to be considered a "purpose credit" within the
meanings of Regulation T, U or X of the Federal Reserve Board.

     

    (xx)         
Rated Securities. At the Time
of Sale there were, and as of the Closing Date there will be, no securities of
or guaranteed by the Company that are rated by a "nationally recognized
statistical rating organization," as that term is defined in Rule 436(g)(2)
promulgated under the Securities Act.

     

    (yy)         
FINRA Affiliations. There are
no affiliations or associations between (i) any member of the FINRA and (ii) the
Company or any of the Company's officers, directors or 5% or greater
securityholders or any beneficial owner of the Company's unregistered equity
securities that were acquired at any time on or after the one hundred eightieth
(180th) day immediately preceding the date the Registration Statement was
initially filed with the Commission, except as set forth in the Registration
Statement, the Disclosure Package and the Prospectus.

     

    (zz)         
Exchange Act Requirements.
The Company has filed in a timely manner all reports required to be filed
pursuant to Sections 13(a), 13(e), 14 and 15(d) of the Exchange Act during the
preceding 12 months (except to the extent that Section 15(d) requires reports to
be filed pursuant to Sections 13(d) and 13(g) of the Exchange Act, which shall
be governed by the next clause of this sentence); and the Company has filed in a
timely manner all reports required to be filed pursuant to Sections 13(d) and
13(g) of the Exchange Act, except where the failure to timely file could not
reasonably be expected individually or in the aggregate to have a Material
Adverse Effect.

     

    (aaa)       
Trading Market. Assuming the
accuracy of the representations of the Investors in the Subscription Agreements,
no approval of the shareholders of the Company under the rules and regulations
of any trading market is required for the Company to issue and deliver to the
Investors the Units.

     

    

    
      
        
           

        

        
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    (bbb)       Reserve
Reports.  The information underlying the estimates of the
reserves of the Company and its subsidiaries, which was supplied by the Company
to Cawley Gillespie & Associates, Inc., ("Cawley"), independent
petroleum engineers, for purposes of preparing the reserve reports incorporated
by reference into the Registration Statement (the "Reserve Reports"), including,
without limitation, production, volumes, sales prices for production,
contractual pricing provisions under oil or gas sales or marketing contracts
under hedging arrangements, costs of operations and development, and working
interest and net revenue interest information relating to the Company's
ownership interests in properties, was true and correct in all material respects
on the dates of such Reserve Reports; the estimates of future capital
expenditures and other future exploration and development costs supplied to
Cawley were prepared in good faith and with a reasonable basis; the information
provided to Cawley by the Company for purposes of preparing the Reserve Reports
was prepared in accordance with customary industry practices; Cawley was, as of
the dates of the Reserve Reports, and is, as of the date hereof, independent
petroleum engineers with respect to the Company; other than any decrease in
reserves resulting from normal production of the reserves and intervening spot
market product price fluctuations or as disclosed in the Preliminary Prospectus
Supplement and incorporated by reference into the Registration Statement, to the
knowledge of the Company, there are not any facts or circumstances that would
adversely affect the reserves in the aggregate, or the aggregate present value
of future net cash flows therefrom, as disclosed in the Preliminary Prospectus
Supplement and incorporated by reference into the Registration Statement and
reflected in the Reserve Reports such as to cause a material adverse change;
estimates of such reserves and the present value of the future net cash flows
therefrom as disclosed in the Preliminary Prospectus Supplement and incorporated
by reference into the Registration Statement and reflected in the Reserve
Reports comply in all material respects to the applicable requirements of
Regulation S-X and Industry Guide 2 under the Securities Act.

     

    (ccc)       To
the best of the Company's knowledge, information and belief, none of the current
directors or officers of the Company or any of its subsidiaries (or such
shareholders' respective principals) is or has ever been subject to prior
regulatory, criminal or bankruptcy proceedings in the U.S. or
elsewhere.

     

    (ddd)        The
Company has not provided and has not authorized any other person to act on its
behalf to provide any Investor or its respective agents or counsel with any
information about the Company that constitutes or might constitute material,
non-public information which is not otherwise disclosed in the
Prospectus.

     

    Any
certificate signed by any officer of the Company and delivered to the Placement
Agent or to counsel for the Placement Agent in connection with the offering of
the Units shall be deemed a representation and warranty by the Company to the
Placement Agent and the Investors as to the matters covered
thereby.

     

    3.        
    Covenants.
The Company covenants and agrees with the Placement Agent as
follows:

     

    (a)           Reporting Obligations; Exchange Act
Compliance. The Company will file: (i) any Preliminary Prospectus and the
Prospectus with the Commission within the time periods specified by Rule 424(b)
and Rules 430A, 430B or 430C under the Securities Act, as applicable, (ii) any
Issuer Free Writing Prospectus to the extent required by Rule 433 under the
Securities Act, if applicable, (iii) all reports and any definitive proxy or
information statements required to be filed by the Company with the Commission
pursuant to Section 13(a), 13(c), 14 or 15(d) of the Exchange Act subsequent to
the date of the Prospectus during the Prospectus Delivery Period, and (iv)
furnish copies of each Issuer Free Writing Prospectus, if any, (to the extent
not previously delivered) to the Placement Agent prior to 11:00 a.m. New York
City time, on the second business day next succeeding the date of this Agreement
in such quantities as the Placement Agent shall reasonably request.

     

    

    
      
        
           

        

        
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     (b)           Continued Compliance with Securities
Law. If, at any time prior to the filing of the Prospectus pursuant to
Rule 424(b), any event occurs as a result of which the Disclosure Package as
then amended or supplemented would include an untrue statement of a material
fact or omit to state any material fact necessary to make the statements
therein, in the light of the circumstances under which they were made, not
misleading, the Company will (i) promptly notify the Placement Agent so that any
use of the Disclosure Package may cease until it is amended or supplemented and
(ii) amend or supplement the Disclosure Package to correct such statements or
omission. If, during the Prospectus Delivery Period, any event occurs as a
result of which the Prospectus as then amended or supplemented would include an
untrue statement of a material fact or omit to state any material fact necessary
to make the statements therein, in the light of the circumstances under which
they were made, not misleading, or if it is necessary at any time to amend the
Registration Statement or supplement the Prospectus to comply with the
Securities Act, the Company will (A) promptly notify the Placement Agent of such
event and (B) promptly prepare and file with the Commission and furnish, at its
own expense, to the Placement Agent and, to the extent applicable, the dealers
and any other dealers upon request of any Placement Agent, an amendment or
supplement which will correct such statement or omission or an amendment which
will effect such compliance.  The Company will deliver promptly to the
Placement Agent such number of the following documents as the Placement Agent
shall reasonably request:  (i) conformed copies of the Registration
Statement as originally filed with the Commission (in each case excluding
exhibits), (ii) any Preliminary Prospectus, (iii) any Issuer Free
Writing Prospectus, (iii) the Prospectus (the delivery of the documents
referred to in clauses (i), (ii) and (iii) of this subsection
(b) to be made not later than 10:00 a.m., New York City time,
on the business day following the execution and delivery of this Agreement),
(iv) conformed copies of any amendment to the Registration Statement
(excluding exhibits), (v) any amendment or supplement to the Disclosure
Package or the Prospectus (the delivery of the documents referred to in clauses
(iv) and (v) of this subsection
(b) to be made not later than 10:00 a.m., New York City time,
on the business day following the date of such amendment or supplement) and
(vi) any document incorporated by reference in the Disclosure Package or
the Prospectus (excluding exhibits thereto) (the delivery of the documents
referred to in clause (v) of this subsection
(b) to be made not later than 10:00 a.m., New York City time,
on the business day following the date of such document).

     

    (c)           Issuer Free Writing
Prospectuses. The Company will (i) not make any offer relating to the
Units that would constitute an Issuer Free Writing Prospectus or that would
otherwise constitute a "free writing prospectus" (as defined in Rule 405 under
the Securities Act) required to be filed by the Company with the Commission
under Rule 433 under the Securities Act unless the Placement Agent approves its
use in writing prior to first use (each, a "Permitted Free Writing
Prospectus"); provided, that the prior
written consent of the Placement Agent shall be deemed to have been given in
respect of any electronic road show; (ii) treat each Permitted Free Writing
Prospectus prepared or approved by the Company as an Issuer Free Writing
Prospectus; (iii) comply with the requirements of Rules 164 and 433 under the
Securities Act applicable to any Issuer Free Writing Prospectus, including the
requirements relating to filing timely with the Commission, legending and record
keeping; and (iv) not take any action that would result in the Placement Agent
or the Company being required to file with the Commission pursuant to Rule
433(d) under the Securities Act a free writing prospectus prepared by or on
behalf of the Placement Agent that the Placement Agent otherwise would not have
been required to file thereunder. The Company and the Placement Agent, as
applicable, will satisfy the conditions in Rule 433 under the Securities Act to
avoid a requirement to file with the Commission any electronic road
show.

     

    

    
      
        
           

        

        
          18

          
            

          

        

        
           

        

      

    

    

    (d)           Conflicting Issuer Free Writing
Prospectus. If at any time following the issuance of an Issuer Free
Writing Prospectus there occurred or occurs an event or development as a result
of which such Issuer Free Writing Prospectus conflicted or would conflict with
the information contained in the Registration Statement relating to the Units or
included or would include an untrue statement of a material fact or omitted or
would omit to state a material fact necessary in order to make the statements
therein, in the light of the circumstances prevailing at that subsequent time,
not misleading, the Company promptly will notify the Placement Agent and will
promptly amend or supplement, at its own expense, such Issuer Free Writing
Prospectus to eliminate or correct such conflict, untrue statement or omission.
The foregoing sentence does not apply to statements in or omissions from any
Issuer Free Writing Prospectus in reliance upon, and in conformity with, written
information furnished to the Company by the Placement Agent specifically for
inclusion therein, which information the parties hereto agree is limited to
the Placement
Agent's Information.

     

     (e)           Blue Sky Laws. The Company
will promptly take or cause to be taken, from time to time, such actions as the
Placement Agent may reasonably request to qualify the Units for offering and
sale under the state securities, or blue sky, laws of such states or other
jurisdictions as the Placement Agent may reasonably request and to maintain such
qualifications in effect so long as the Placement Agent may request for the
distribution of the Units, provided, that in no event
shall the Company be obligated to qualify as a foreign corporation in any
jurisdiction in which it is not so qualified or to file a general consent to
service of process in any jurisdiction or subject itself to taxation as doing
business in any jurisdiction. The Company will advise the Placement Agent
promptly of the suspension of the qualification or registration of (or any
exemption relating to) the Units for offering, sale or trading in any
jurisdiction or any initiation or threat of any proceeding for any such purpose,
and in the event of the issuance of any order suspending such qualification,
registration or exemption, the Company shall use its best efforts to obtain the
withdrawal thereof at the earliest possible moment.

     

     (f)           Earnings Statement. As soon
as practicable, the Company will make generally available to holders of its
securities and deliver to the Placement Agent, an earnings statement of the
Company (which need not be audited) covering a period of at least 12 months
beginning after the date of this Agreement that will satisfy the provisions of
Section 11(a) of the Securities Act and the Rules and Regulations (including, at
the option of the Company, Rule 158).

     

     (g)          Use of Proceeds. The Company
will apply the net proceeds from the sale of the Units in the manner set forth
in the Registration Statement, the Disclosure Package and the Prospectus under
the heading "Use of Proceeds."

     

    

    
      
        
           

        

        
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     (h)           Public Communications. Prior
to 9:00 a.m. New York City time on the business day immediately subsequent to
the date hereof, the Company shall issue a press release (the "Press Release") reasonably
acceptable to the Placement Agent disclosing the execution of this Agreement,
the Subscription Agreements and the transactions contemplated hereby and
thereby.  Except for (i) an earnings
release for the quarter ended September 30, 2009 and the related Current Report
on Form 8-K, (ii) a Current Report on Form 8-K describing the Company’s issuance
of Common Stock and warrants in a shelf take-down under the Registration
Statement, (iii) a press release announcing the Company's credit facility with
Bank of Montreal and the related Current Report on Form 8-K and (iv) the
Company's Form 10-Q for the quarter ended September 30, 2009
prior to the Closing Date, the Company covenants not to issue any
press release (other than the Press Release) or other communication directly or
indirectly or hold any press conference with respect to the Company, its
condition, financial or otherwise, or earnings, business affairs or business
prospects (except for routine oral marketing communications in the ordinary
course of business and consistent with the past practices of the Company and of
which the Placement Agent is notified), without the prior written consent of the
Placement Agent, unless in the judgment of the Company and its counsel, and
after notification to the Placement Agent, such press release or communication
is required by law.

     

    (i)            
Stabilization. The Company
will not take directly or indirectly any action designed, or that might
reasonably be expected to cause or result in, or that will constitute,
stabilization or manipulation of the price of any security of the Company to
facilitate the sale or resale of any of the Units.

     

    (j)            
Transfer Agent. The Company
shall engage and maintain, at its expense, a transfer agent and, if necessary
under the jurisdiction of incorporation of the Company, a registrar for the
Units.

     

    (k)           
Listing. The Company shall
use its reasonable best efforts to ensure the additional shares of Common Stock,
including the shares of Common Stock underlying the Warrants, are listed for
quotation on the NYSE Amex at the Closing Date and to maintain such
listing.

     

    (l)            
Investment Company Act. The
Company shall not invest, or otherwise use the proceeds received by the Company
from its sale of the Units in such a manner as would require the Company to
register as an investment company under the Investment Company Act.

     

    (m)          
Sarbanes-Oxley Act. The
Company will comply in all material respects with all effective applicable
provisions of the Sarbanes Oxley Act.

     

    (n)          
Periodic Reports. The Company
will file with the Commission such periodic and special reports as are required
by the Exchange Act.

     

    

    
      
        
           

        

        
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    (o)           
Lock-Up
Period.  That
the Company will not, for a period of forty-five (45) days from the date of this
Agreement, (the "Lock-Up
Period") without the prior written consent of the Placement Agent,
directly or indirectly offer, sell, assign, transfer, pledge, contract to sell,
grant any option to purchase, make any short sale or otherwise dispose of, any
shares of Common Stock or any securities convertible into or exercisable or
exchangeable for Common Stock, other than (i) the Company's sale of the
Units hereunder, (ii) the issuance of Common Stock or options to acquire
Common Stock pursuant to the Company's employee benefit plans, qualified stock
option plans or other director or employee compensation plans as such plans are
in existence on the date hereof and described in the Prospectus (provided,
however, that the Company's directors, officers and employees may put in place a
10(b)5-1 trading plan during the Lock-Up Period that becomes effective after the
termination of the Lock-Up Period), (iii) the issuance of Common Stock
pursuant to the valid exercises of options, warrants or rights outstanding on
the date hereof, (iv) the issuance of up to 10 million shares of Common
Stock or securities convertible into or exercisable or exchangeable for up to 10
million shares of Common Stock, for the purpose of mergers and acquisitions,
(v) the issuance of any additional shares of Common Stock pursuant to the
Company's existing at-the-market program, and (vi)
the deposit of such additional number of shares of Common Stock with the Escrow
Agent as may be required pursuant to the Triad
acquisition.  The Company will cause each executive officer and
director, and each shareholder listed in Schedule III to
furnish to the Placement Agent, prior to the date of this Agreement, a letter,
substantially in the form of Exhibit C
hereto, pursuant to which each such person shall agree, among other things, not
to directly or indirectly offer, sell, assign, transfer, pledge, contract to
sell, or otherwise dispose of, or announce the intention to otherwise dispose
of, any shares of Common Stock or any securities convertible into or exercisable
or exchangeable for Common Stock, not to engage in any swap, hedge or similar
agreement or arrangement that transfers, in whole or in part, directly or
indirectly, the economic risk of ownership of Common Stock or any such
securities and not to engage in any short selling of any Common Stock or any
such securities, during the Lock-Up Period, without the prior written consent of
the Placement Agent.  The Company also agrees that during the Lock-Up
Period, other than for the sale of the Units hereunder and under the
circumstances set forth in clauses (ii) through (v) hereof, without prior
written consent of the Placement Agent, the Company will not file any
registration statement, preliminary prospectus or prospectus, or any amendment
or supplement thereto, under the Securities Act for any such transaction or
which registers, or offers for sale, Common Stock or any securities convertible
into or exercisable or exchangeable for Common Stock, except for (i) a
registration statement on Form S-8 relating to employee benefit plans and
(ii) the Underlying Warrant Stock Registration Statement. 

     

    (p)           
The
Company shall maintain the effectiveness of the Registration Statement (or a
suitable replacement) while any of the Warrants are outstanding; provided,
however, that the Company may suspend the use of the Registration Statement for
a period of not more than 30 days (a "Blackout Period") upon the
advice of counsel that such Blackout Period is necessary due to material
non-public information in the Company's possession.

     

    4.        
    Costs and
Expenses. The Company, whether or not the transactions contemplated
hereunder are consummated or this Agreement is terminated, will pay or reimburse
the Placement Agent all actual and accountable direct and reasonable expenses
incident to the performance of this Agreement and in connection with the
transactions contemplated hereby, including the reasonable legal fees and
expenses of counsel to the Placement Agent.

     

    5.      
      Conditions of
Placement Agent's Obligations. The obligations of the Placement Agent
hereunder and the Investors under the Subscription Agreements are subject to the
following conditions:

     

    

    
      
        
           

        

        
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    (a)          
Filings with the Commission.
Each Issuer Free Writing Prospectus, if any, and the Prospectus shall have been
filed with the Commission within the applicable time period prescribed for such
filing by, and in compliance with, the Rules and Regulations and in accordance
with Section
3(a) hereof.

     

    (b)           No Stop Orders. Prior to the
Closing: (i) no stop order suspending the effectiveness of the Registration
Statement or any part thereof, preventing or suspending the use of the
Prospectus or any Issuer Free Writing Prospectus or any part thereof shall have
been issued under the Securities Act and no proceedings for that purpose or
pursuant to Section 8A under the Securities Act shall have been initiated or
threatened by the Commission, (ii) no order suspending the qualification or
registration of the Units under the securities or blue sky laws of any
jurisdiction shall be in effect and (iii) all requests for additional
information on the part of the Commission (to be included or incorporated by
reference in the Registration Statement, the Disclosure Package, the Prospectus
or any Issuer Free Writing Prospectus or otherwise) shall have been complied
with to the reasonable satisfaction of the Placement Agent. On or prior to the
Closing Date, the Registration Statement or any amendment thereof or supplement
thereto shall not contain an untrue statement of material fact or omit to state
a material fact required to be stated therein or necessary to make the
statements therein not misleading, and neither the Disclosure Package, nor any
Issuer Free Writing Prospectus nor the Prospectus nor any amendment thereof or
supplement thereto shall contain any untrue statement of a material fact or omit
to state a material fact required to be stated therein or necessary to make the
statements therein, in light of the circumstances in which they were made, not
misleading.

     

    (c)      
     Action Preventing Issuance.
No action shall have been taken and no law, statute, rule, regulation or order
shall have been enacted, adopted or issued by any governmental agency or body
which would prevent the issuance or sale of the Units or materially and
adversely affect or potentially materially and adversely affect the business or
operations of the Company; and no injunction, restraining order or order of any
other nature by any federal or state court of competent jurisdiction shall have
been issued which would prevent the issuance or sale of the Units or materially
and adversely affect or potentially materially and adversely affect the business
or operations of the Company.

     

    (d)     
     Material Adverse Change.
Subsequent to the date of the latest audited financial statements included or
incorporated by reference in the Disclosure Package, (i) neither the Company nor
any of its subsidiaries has sustained any material loss or interference with its
business from fire, explosion, flood or other calamity, whether or not covered
by insurance, or from any labor dispute or court or governmental action, order
or decree, otherwise than as set forth in the Disclosure Package, (ii) there has
not been any change in the capital stock (other than a change in the number of
outstanding shares of Common Stock due to the issuance of shares upon the
exercise of outstanding options or warrants or the conversion of convertible
indebtedness), or material change in the short–term debt or long–term debt of
the Company (other than upon conversion of convertible indebtedness) or any
material adverse change, in or affecting the business, assets, general affairs,
management, financial position, stockholders' equity or results of operations of
the Company, otherwise than as set forth in the Disclosure Package, the effect
of which, in any such case described in clause (i) or (ii) of this subsection (d), is, in the
reasonable judgment of the Placement Agent, so material and adverse as to make
it impracticable or inadvisable to proceed with the sale or delivery of the
Units on the terms and in the manner contemplated in the Disclosure
Package.

     

    

    
      
        
           

        

        
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    (e)            Representations and
Warranties. Each of the representations and warranties of the Company
contained herein shall be true and correct when made and on and as of the
Closing Date, as if made on such date (except that those representations and
warranties that address matters only as of a particular date shall remain true
and correct as of such date), and all covenants and agreements herein contained
to be performed on the part of the Company and all conditions herein contained
to be fulfilled or complied with by the Company at or prior to the Closing Date
shall have been duly performed, fulfilled or complied with.

     

    (f)            Opinions of Counsel to the
Company. The Placement Agent shall have received from Fulbright &
Jaworski L.L.P., counsel to the Company, such counsel's written opinion,
addressed to the Placement Agent and the Investors and dated the Closing Date,
in form and substance reasonably satisfactory to the Placement Agent and their
counsel. Such counsel to the Company shall also have furnished to the Placement
Agent a written statement ("Negative Assurances"),
addressed to the Placement Agent and dated the Closing Date, in form and
substance satisfactory to the Placement Agent and its counsel.

     

    (g)            Opinion of Counsel to the Placement
Agent.  The Placement Agent shall have received from Bracewell
& Giuliani LLP, counsel for the Placement Agent, such opinion or opinions,
dated the Closing Date, with respect to such matters as the Placement Agent may
reasonably require, and the Company shall have furnished to such counsel such
documents as it requests to enable it to pass upon such matters.

     

    (h)            Accountant's Comfort
Letter.  On the date hereof, the Placement Agent shall have
received a letter dated the date hereof (the "Comfort Letter"), addressed
to the Placement Agent and in form and substance reasonably satisfactory to the
Placement Agent and its counsel, from each of Malone & Bailey, PC and
Appalachian Basin CPAs, Inc., (i) confirming that they are independent public
accountants with respect to the Company within the meaning of the Securities Act
and the Rules and Regulations and (ii) stating, as of the date hereof (or, with
respect to matters involving changes or developments since the respective dates
as of which specified financial information is given in the Disclosure Package,
as of a date not more than three days prior to the date hereof), the conclusions
and findings of such firm with respect to the financial information and other
matters ordinarily covered by accountants' "comfort letters" to underwriters,
delivered according to Statement of Auditing Standards No. 72 and Statement of
Auditing Standard No. 100 (or successor bulletins), in connection with
registered public offerings.

     

    (i)           Bring-Down Letter. On the
Closing Date, the Placement Agent shall have received from Malone & Bailey,
PC a letter (the "Bring-Down
Letter"), dated the Closing Date, addressed to Placement Agent and in
form and substance reasonably satisfactory to the Placement Agent and its
counsel, (i) confirming that they are independent public accountants with
respect to the Company within the meaning of the Securities Act and the Rules
and Regulations, (ii) stating, as of the date of the Bring-Down Letter (or, with
respect to matters involving changes or developments since the respective dates
as of which specified financial information is given in the Disclosure Package
and the Prospectus, as of a date not more than three days prior to the date of
the Bring-Down Letter), the conclusions and findings of such firm with respect
to the financial information and other matters covered by the Comfort Letter and
(iii) confirming in all material respects the conclusions and findings set forth
in the Comfort Letter.

     

    

    
      
        
           

        

        
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    (j)            Officer's Certificate. The
Placement Agent shall have received on the Closing Date a certificate, addressed
to the Placement Agent and dated the Closing Date, of the chief executive or
chief operating officer and the chief financial officer or chief accounting
officer of the Company to the effect that:

     

    (i)           each
of the representations, warranties and agreements of the Company contained in
this Agreement were true and correct when originally made and are true and
correct as of the Time of Sale and the Closing Date as if made on each such date
(except that those representations and warranties that address matters only as
of a particular date remain true and correct as of each such date); and the
Company has complied with all agreements and satisfied all the conditions on its
part required under this Agreement to be performed or satisfied at or prior to
the Closing Date;

    

    (ii)          there
has not been, subsequent to the date of the most recent audited financial
statements included or incorporated by reference in the Disclosure Package, any
material adverse change in the financial position or results of operations of
the Company, or any change or development that, singularly or in the aggregate,
would involve a material adverse change or a prospective material adverse
change, in or affecting the condition (financial or otherwise), results of
operations, business or assets of the Company except as set forth in the
Prospectus;

    

    (iii)         no
stop order suspending the effectiveness of the Registration Statement or any
part thereof or any amendment thereof or the qualification of the Units for
offering or sale, nor suspending or preventing the use of the Disclosure
Package, the Prospectus or any Issuer Free Writing Prospectus shall have been
issued, and no proceedings for that purpose or pursuant to Section 8A under the
Securities Act shall be pending or to their knowledge, threatened by the
Commission or any state or regulatory body;

    

    (iv)        the
Registration Statement and each amendment thereto, at the Time of Sale and as of
the date of this Agreement and as of the Closing Date did not include any untrue
statement of a material fact and did not omit to state a material fact required
to be stated therein or necessary to make the statements therein not misleading,
and the Disclosure Package, as of the Time of Sale and as of the Closing Date,
any Issuer Free Writing Prospectus as of its date and as of the Closing Date,
the Prospectus and each amendment or supplement thereto, as of the respective
date thereof and as of the Closing Date, did not include any untrue statement of
a material fact and did not omit to state a material fact necessary in order to
make the statements therein, in the light of the circumstances in which they
were made, not misleading; and

    

    (v)          no
event has occurred as a result of which it is necessary to amend or supplement
the Registration Statement, the Prospectus or the Disclosure Package in order to
make the statements therein not untrue or misleading in any material
respect.

    

    
      
        
           

        

        
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    (k)           
The NYSE Amex. The shares of
Common Stock, including the shares of Common Stock underlying the Warrants,
issued pursuant to this Agreement and the Subscription Agreement shall have been
listed and authorized for trading on the NYSE Amex, and satisfactory evidence of
such actions shall have been provided to the Placement Agent, which shall
include oral confirmations from a member of the NYSE Amex staff.

     

    (l)           
Subscription Agreements. The
Company shall have entered into the Subscription Agreements with each of the
Investors, and such agreement shall be in full force and effect on the Closing
Date.

     

    (m)        
 Lock-Up
Letters.  The Placement Agent shall have received the written
agreements, substantially in the form of Exhibit C
hereto, of the executive officers, directors and shareholders of the Company
listed in Schedule
III to this Agreement.

     

    (n)         
Additional Documents. Prior
to the Closing Date, the Company shall have furnished to the Placement Agent
such further information, certificates or documents as the Placement Agent shall
have reasonably requested.

     

    All
opinions, letters, evidence and certificates mentioned above or elsewhere in
this Agreement shall be deemed to be in compliance with the provisions hereof
only if they are in form and substance reasonably satisfactory to counsel for
the Placement Agent.

     

    If any
condition specified in this Section 5 is not
satisfied when and as required to be satisfied, this Agreement may be terminated
by the Placement Agent by notice to the Company at any time prior to the Closing
Date, which termination shall be without liability on the part of any party to
any other party, except that Section 4, Section 6 and Section 8 hereof
shall at all times be effective and shall survive such termination.

    

    5.1           Sales to Canadian
Residents.  Canaccord and the Company agree that Units may be
offered to certain residents of Canada in accordance with the terms set out in
Schedule IV
hereto (which terms, and the representations, warranties and covenants set out
in such Schedule, shall be deemed to be incorporated by reference into this
Agreement and form a part hereof), and Canaccord has otherwise caused such offer
and sale to comply with all Applicable Canadian Securities Laws (as defined in
Schedule IV hereto).

    

     6.           Indemnification
and Contribution.

     

    (a)            Indemnification of the Placement
Agent. The Company agrees to indemnify, defend and hold harmless the
Placement Agent, its affiliates and each of its respective directors, officers,
members, employees, representatives and agents and any person who controls the
Placement Agent within the meaning of Section 15 of the Securities Act or
Section 20 of the Exchange Act, and the successors and assigns of all of the
foregoing persons, from and against any losses, claims, damages, expenses or
liabilities, joint or several, to which such person may become subject, under
the Securities Act, the Exchange Act, or other federal or state statutory law or
regulation, the common law or otherwise (including in settlement of any
litigation if such settlement is effected with the written consent of the
Company), insofar as such losses, claims, damages or liabilities (or actions in
respect thereof) arise out of or are based upon (i) any untrue statement or
alleged untrue statement of a material fact contained in the Registration
Statement, any Preliminary Prospectus, the Disclosure Package, the Prospectus,
or any amendment or supplement thereto, any Issuer Free Writing Prospectus or in
any materials or information provided to Investors by, or with the approval of,
the Company in connection with the marketing of the offering of the Common Stock
("Marketing
Materials"), including any roadshow or investor presentations made to
Investors by the Company (whether in person or electronically) or arise out of
or are based upon the omission or alleged omission to state therein a material
fact required to be stated therein or necessary to make the statements therein
not misleading, and will reimburse the Placement Agent for any reasonable legal
or other expenses incurred by it in connection with investigating or defending
against such loss, claim, damage, liability, expense or action; or (ii) in whole
or in part upon any inaccuracy in the representations and warranties of the
Company contained herein; or (iii) in whole or in part upon any failure of the
Company to perform its obligations hereunder or under law; provided, however, that the
Company shall not be liable in any such case to the extent that any such loss,
claim, damage, expense, liability or action arises out of or is based upon (x)
an untrue statement or alleged untrue statement or omission or alleged omission
made in the Registration Statement, any Preliminary Prospectus, the Disclosure
Package, the Prospectus, or any such amendment or supplement, any Issuer Free
Writing Prospectus or in any Marketing Materials, in reliance upon and in
conformity with written information furnished to the Company by the Placement
Agent, specifically for use in the preparation thereof, which information the
parties hereto agree is limited to the Placement Agent's Information or (y) an untrue statement or alleged untrue statement
of a material fact, or omission or alleged omission to state a material fact in
the Registration Statement, any Preliminary Prospectus, the Disclosure Package,
the Prospectus, any such amendment or supplement, any Issuer Free Writing
Prospectus or any Marketing Materials that is corrected by an amendment or other
corrective materials provided by the Company to the Placement Agent and the
Placement Agent fails, due solely to gross negligence or willful misconduct, to
deliver such corrective materials to the Investors.

     

    

    
      
        
           

        

        
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    (b)            Indemnification of the
Company. The Placement Agent agrees to indemnify, defend and hold
harmless the Company against any losses, claims, damages, expenses or
liabilities to which the Company may become subject, under the Securities Act,
the Exchange Act, or other federal or state statutory law or regulation, the
common law or otherwise (including in settlement of any litigation, if such
settlement is effected with the written consent of the Placement Agent), insofar
as such losses, claims, damages, expenses or liabilities (or actions in respect
thereof) arise out of or are based upon any untrue statement or alleged untrue
statement of a material fact contained in the Registration Statement, any
Preliminary Prospectus, the Disclosure Package, the Prospectus, or any amendment
or supplement thereto or any Issuer Free Writing Prospectus, or arise out of or
are based upon the omission or alleged omission to state therein a material fact
required to be stated therein or necessary to make the statements therein not
misleading, in each case to the extent, but only to the extent, that such untrue
statement or alleged untrue statement or omission or alleged omission was made
in the Registration Statement, any Preliminary Prospectus, the Disclosure
Package, the Prospectus, or any such amendment or supplement thereto, or any
Issuer Free Writing Prospectus in reliance upon and in conformity with written
information furnished to the Company by the Placement Agent, specifically for
use in the preparation thereof, which information the parties hereto agree is
limited to the Placement Agent's Information relating to the Placement Agent,
and will reimburse the Company for any legal or other expenses reasonably
incurred by the Company in connection with investigating or defending against
any such loss, claim, damage, liability or action. Notwithstanding the
provisions of this Section 6(b), in no
event shall any indemnity by the Placement Agent under this Section 6(b) exceed
the total compensation received by the Placement Agent in accordance with Section 1(b)
hereof.

     

    

    
      
        
           

        

        
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    (c)            Notice and Procedures. If any
action, suit or proceeding (each, a "Proceeding") is brought
against a person (an "Indemnified Party") in
respect of which indemnity may be sought against the Company or the Placement
Agent (as applicable, the "Indemnifying Party") pursuant
to subsections
(a) or (b) above,
respectively, of this Section 6, such
Indemnified Party shall promptly notify such Indemnifying Party in writing of
the institution of such Proceeding and such Indemnifying Party shall assume the
defense of such Proceeding, including the employment of counsel selected by the Indemnifying Party and reasonably satisfactory to such Indemnified
Party (who shall not, except with the consent of the Indemnified Party, be
counsel to the Indemnifying Party) and payment of all reasonable fees and
expenses; provided,
however, that the omission to so notify such Indemnifying Party shall not
relieve such Indemnifying Party from any liability which such Indemnifying Party
may have to any Indemnified Party or otherwise, except to the extent the
Indemnifying Party has been actually prejudiced by such failure; and provided, further, that the
failure to notify the Indemnifying Party shall not relieve it from any liability
that it may have to an Indemnified Party otherwise than under subsection (a) or
(b) above. The
Indemnified Party or Parties shall have the right to employ its or their own
counsel in any such case, but the fees and expenses of such counsel shall be at
the expense of such Indemnified Party or Parties unless (i) the employment of
such counsel shall have been authorized in writing by the Indemnifying Party in
connection with the defense of such Proceeding, (ii) the Indemnifying Party
shall not have, within a reasonable period of time in light of the
circumstances, employed counsel to defend such Proceeding or (iii) such
Indemnified Party or Parties shall have reasonably concluded upon written advice
of counsel that there may be one or more legal defenses available to it or them
which are different from, additional to or in conflict with those available to
such Indemnifying Party (in which case such Indemnifying Party shall not have
the right to direct that portion of the defense of such Proceeding on behalf of
the Indemnified Party or Parties, but such Indemnifying Party or Parties may
employ counsel and participate in the defense thereof but the fees and expenses
of such counsel shall be at the expense of the Indemnifying Party), in any of
which events such reasonable fees and expenses shall be borne by such
Indemnifying Party and paid as incurred (it being understood, however, that such
Indemnifying Party shall not be liable for the expenses of more than one
separate counsel (in addition to any local counsel) in any one Proceeding or
series of related Proceedings in the same jurisdiction representing the
Indemnified Parties who are parties to such Proceeding). An Indemnifying Party
shall not be liable for any settlement of any Proceeding effected without its
written consent but, if settled with its written consent, such Indemnifying
Party agrees to indemnify and hold harmless the Indemnified Party or parties
from and against any loss or liability by reason of such settlement.
Notwithstanding the foregoing sentence, if at any time an Indemnified Party
shall have requested an Indemnifying Party to reimburse the Indemnified Party
for fees and expenses of counsel as contemplated by the second sentence of this
Section 6(c),
then the Indemnifying Party agrees that it shall be liable for any settlement of
any Proceeding effected without its written consent if (i) such settlement
is entered into more than 60 days after receipt by such Indemnifying Party of
the aforesaid request, (ii) such Indemnifying Party shall not have fully
reimbursed the Indemnified Party in accordance with such request prior to the
date of such settlement and (iii) such Indemnified Party shall have given
the Indemnifying Party at least 30 days' prior notice of its intention to
settle. No Indemnifying Party shall, without the prior written consent of the
Indemnified Party, effect any settlement, compromise or consent to the entry of
judgment in any pending or threatened Proceeding in respect of which any
Indemnified Party is or could have been a party and indemnity could have been
sought hereunder by such Indemnified Party, unless such settlement includes an
unconditional release of such Indemnified Party from all liability on claims
that are the subject matter of such Proceeding and does not include an admission
of fault or culpability or a failure to act by or on behalf of such Indemnified
Party.

     

    

    
      
        
           

        

        
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    (d)            Contribution. If the
indemnification provided for in this Section 6 is
unavailable to an Indemnified Party under subsections
(a) or (b) of this
Section 6
or insufficient to hold an Indemnified Party harmless in respect of any losses,
claims, damages, liabilities or expenses referred to therein, then each
applicable Indemnifying Party, in lieu of indemnifying such Indemnified Party,
shall contribute to the amount paid or payable by such Indemnified Party as a
result of the losses, claims, damages, liabilities or expenses referred to in
subsections (a)
or (b) above,
(i) in such proportion as is appropriate to reflect the relative benefits
received by the Indemnifying Party or Parties on the one hand and the
Indemnified Party or Parties on the other hand from the offering of the Units or
(ii) if the allocation provided by clause (i) above is not permitted
by applicable law, in such proportion as is appropriate to reflect not only the
relative benefits referred to in clause (i) above but also the relative
fault of the Indemnifying Party or Parties on the one hand and the Indemnified
Party or Parties on the other hand in connection with the statements or
omissions that resulted in such losses, claims, damages, liabilities or
expenses, as well as any other relevant equitable considerations. The relative
benefits received by the Company on the one hand and the Placement Agent on the
other hand shall be deemed to be in the same respective proportions as the total
net proceeds from the offering of the Units (before deducting expenses) received
by the Company bear to the discounts and commissions received by the Placement
Agent.  The relative fault of the Company on the one hand and the
Placement Agent on the other hand shall be determined by reference to, among
other things, whether the untrue or alleged untrue statement of a material fact
or the omission or alleged omission to state a material fact relates to
information supplied by the Company, on the one hand, or by the Placement Agent,
on the other hand, and the parties' relevant intent, knowledge, access to
information and opportunity to correct or prevent such untrue statement,
omission, act or failure to act; provided that the parties
hereto agree that the written information furnished to the Company by the
Placement Agent for use in the Registration Statement or the Prospectus, or in
any amendment or supplement thereto, consists solely of the Placement Agent's
Information relating to the Placement Agent.

     

    (e)            Allocation. The Company and
the Placement Agent agree that it would not be just and equitable if
contribution pursuant to subsection (d) above
were to be determined by pro rata allocation or by any other method of
allocation which does not take account of the equitable considerations referred
to in the first sentence of subsection (d) above.
Notwithstanding the provisions of this Section 6(e), the
Placement Agent shall not be required to contribute any amount in excess of the
total commissions received by the Placement Agent in accordance with Section 1(b) less the
amount of any damages which the Placement Agent has otherwise paid or become
liable to pay by reason of any untrue or alleged untrue statement, omission or
alleged omission, act or alleged act or failure to act or alleged failure to
act. No person guilty of fraudulent misrepresentation (within the meaning of
Section 11(f) of the Securities Act) shall be entitled to contribution from any
person who was not guilty of such fraudulent misrepresentation. The remedies
provided for in this Section 6 are not
exclusive and shall not limit any rights or remedies which may otherwise be
available to any Indemnified Party at law or in equity.

     

    

    
      
        
           

        

        
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    (f)            Representations and Agreements to
Survive Delivery. The obligations of the Company and the Placement Agent
under this Section 6 shall
be in addition to any liability which the Company or the Placement Agent may
otherwise have. The indemnity and contribution agreements contained in this
Section 6
and the covenants, agreements, warranties and representations of the Company
contained in this Agreement shall remain operative and in full force and effect
regardless of (i) any termination of this Agreement, (ii) any investigation made
by or on behalf of the Placement Agent, any person who controls the Placement
Agent within the meaning of either Section 15 of the Securities Act or
Section 20 of the Exchange Act or any affiliate of the Placement Agent, or
by or on behalf of the Company, its directors or officers or any person who
controls the Company within the meaning of either Section 15 of the
Securities Act or Section 20 of the Exchange Act, and (iii) the issuance
and delivery of the Units. The Company and the Placement Agent agree promptly to
notify each other of the commencement of any Proceeding against it and, in the
case of the Company, against any of the Company's officers or directors in
connection with the issuance and sale of the Units, or in connection with the
Registration Statement, the Disclosure Package or the Prospectus.

     

    7.        
     Information
Furnished by Placement Agent.

     

    (a)            The
Company acknowledges that the statements set forth in the paragraph under the
heading "Plan of Distribution" in the Prospectus (the "Placement Agent's
Information") constitute the only information relating to the Placement
Agent furnished in writing to the Company by the Placement Agent as such
information is referred to in Sections 2 and 6
hereof.

     

    (b)
          The
Placement Agent agrees and confirms that it has not provided any Investor or its
respective agents or counsel with any information about the Company that
constitutes or might constitute material, non-public information which is not
otherwise disclosed in the Prospectus.

     

     8.      
     Termination. The Placement Agent shall
have the right to terminate this Agreement by giving notice as hereinafter
specified at any time at or prior to the Closing Date, without liability on the
part of the Placement Agent to the Company, if (i) prior to delivery and payment
for the Units (A) trading in securities generally shall have been suspended on
or by the New York Stock Exchange, the NYSE Amex, the NASDAQ Global Market or in
the over the counter market (each, a "Trading Market"),
(B) trading in the Common Stock of the Company shall have been suspended on
any exchange, in the over-the-counter market or by the Commission, (C) a
general moratorium on commercial banking activities shall have been declared by
federal or New York state authorities or a material disruption shall have
occurred in commercial banking or securities settlement or clearance services in
the United States, (D) there shall have occurred any outbreak or material
escalation of material hostilities or material acts of terrorism involving the
United States or there shall have been a declaration by the United States of a
national emergency or war, (E) there shall have occurred any other calamity or
crisis or any material change in general economic, political or financial
conditions in the United States or elsewhere, if the effect of any such event
specified in clause (D) or (E), in the reasonable judgment of the Placement
Agent, is material and adverse and makes it impractical or inadvisable to
proceed with the completion of the sale of and payment for the Units on the
Closing Date on the terms and in the manner contemplated by this Agreement, the
Disclosure Package and the Prospectus, (ii) since the time of execution of this
Agreement or the earlier respective dates as of which information is given in
the Disclosure Package or incorporated by reference therein, there has been any
Material Adverse Effect, (iii) the Company shall have failed, refused or been
unable to comply with the terms or perform any agreement or obligation of this
Agreement or any Subscription Agreements, other than by reason of a default by
the Placement Agent, or (iv) any condition of the Placement Agent's obligations
hereunder is not fulfilled. Any such termination shall be without liability of
any party to any other party except that the provisions of Section 4, Section 6, and
Section 12
hereof shall at all times be effective notwithstanding such
termination.

     

    

    
      
        
           

        

        
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     9.      
     Notices.
All statements, requests, notices and agreements hereunder shall be in writing
or by facsimile, and:

     

    (a)            if
to the Placement Agent, shall be delivered or sent by mail, telex or facsimile
transmission as follows:

     

    Canaccord
Adams Inc.

    99 High
Street

    Boston,
MA 02110

    Facsimile
No.: (617) 788-1553

     

    with a
copy (which shall not constitute notice) to:

     

    Bracewell
& Giuliani LLP

    1445 Ross
Avenue, Suite 3800

    Dallas,
Texas  75202

    Attention:
Brice Tarzwell

    Facsimile
No.: (214) 468-3888

    

    (b)           if
to the Company shall originate from the Placement Agent and shall be delivered
or sent by mail, telex or facsimile transmission to:

     

    Magnum
Hunter Resources Corporation

    777 Post
Oak Blvd., Suite 910

    Houston,
Texas  77056

    Attention:
Gary C. Evans, Chairman

    Facsimile
No.: (832) 369-6992

    

    
      
        
           

        

        
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    with a
copy (which shall not constitute notice) to:

     

    Fulbright
& Jaworski L.L.P.

    2200 Ross
Avenue, Suite 2800

    Dallas,
Texas 75201

    Attention:
Dave Morrison and Alexis Thomason

    Facsimile
No.: (214) 855-8200

    

    Any such
statements, requests, notices or agreements shall be effective only upon
receipt. Any party to this Agreement may change such address for notices by
sending to the parties to this Agreement written notice of a new address for
such purpose.

     

    

    10.           Persons Entitled
to Benefit of Agreement. This Agreement shall inure to the benefit of and
shall be binding upon the Placement Agent, the Company, and their respective
successors and assigns. Nothing expressed or mentioned in this Agreement is
intended or shall be construed to give any person other than the persons
mentioned in the preceding sentence any legal or equitable right, remedy or
claim under or in respect of this Agreement, or any provisions herein contained,
this Agreement and all conditions and provisions hereof being intended to be and
being for the sole and exclusive benefit of such persons and for the benefit of
no other person, except that (i) the representations, warranties, covenants,
agreements and indemnities of the Company contained in this Agreement shall also
be for the benefit of the controlling persons, officers and directors referred
to in Section
6(a) hereof and the indemnities of the Placement Agent shall also be for
the benefit of the controlling persons, officers and directors referred to in
Section 6(b)
hereof; and (ii) the Investors are relying on the representations made by the
Company under, and are intended third party beneficiaries of, this
Agreement.  The term "successors and assigns" as herein used shall not
include any purchaser of the Units by reason merely of such
purchase.

     

    11.           Governing Law;
Submission to Jurisdiction. This Agreement shall be
governed by, and construed in accordance with, the laws of the State of New
York, without giving effect to the conflicts of laws provisions thereof. Except
as set forth below, no Proceeding may be commenced, prosecuted or continued in
any court other than the courts of State of New York located in the City and
County of New York or the United States District Court for the Southern District
of New York, which courts shall have jurisdiction over the adjudication of such
matters, and the Company and the Placement Agent hereby consent to the
jurisdiction of such courts and personal service with respect thereto. The
Company hereby consents to personal jurisdiction, service and venue in any court
in which any Proceeding arising out of or in any way relating to this Agreement
is brought by any third party against the Placement Agent. The Company hereby
waives all right to trial by jury in any Proceeding (whether based upon
contract, tort or otherwise) in any way arising out of or relating to this
Agreement. The parties each agree  that a final judgment in any such
Proceeding brought in any such court shall be conclusive and binding upon such
party and may be enforced in any other courts in the jurisdiction of which such
party is or may be subject, by suit upon such judgment.

     

    

    
      
        
           

        

        
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    12.           No Fiduciary
Relationship. The Company hereby acknowledges and agrees
that:

     

    (a)            No Other Relationship. The
Placement Agent has been retained solely to act as the exclusive Placement Agent
in connection with the offering of the Company's securities. The Company further
acknowledges that the Placement Agent is acting pursuant to a contractual
relationship created solely by this Agreement entered into on an arm's length
basis and in no event do the parties intend that the Placement Agent act or be
responsible as a fiduciary to the Company, its management, stockholders,
creditors or any other person in connection with any activity that the Placement
Agent may undertake or has undertaken in furtherance of the offering of the
Company's securities, either before or after the date hereof, irrespective of
whether the Placement Agent has advised or is advising the Company on other
matters. The Placement Agent hereby expressly disclaims any fiduciary or similar
obligations to the Company, either in connection with the transactions
contemplated by this Agreement or any matters leading up to such transactions,
and the Company hereby confirms its understanding and agreement to that
effect.

     

    (b)            Arm's-Length Negotiations.
The price of the Units set forth in this Agreement was established by the
Company following discussions and arms-length negotiations with the Investors
and the Placement Agent, and the Company is capable of evaluating and
understanding, and understands and accepts, the terms, risks and conditions of
the transactions contemplated by this Agreement.

     

    (c)           Absence of Obligation to
Disclose. The Company has been advised that the Placement Agent and its
affiliates are engaged in a broad range of transactions which may involve
interests that differ from those of the Company and that the Placement Agent has
no obligation to disclose such interests or transactions to the Company by
virtue of any fiduciary, advisory or agency relationship.

     

    (d)           Waiver. The Company hereby
waives and releases, to the fullest extent permitted by law, any claims that the
Company may have against the Placement Agent with respect to any breach or
alleged breach of any fiduciary or similar duty to the Company in connection
with the transactions contemplated by this Agreement or any matters leading up
to such transactions and agrees that the Placement Agent shall have no liability
(whether direct or indirect) to the Company in respect of such a fiduciary duty
claim to any person asserting a fiduciary duty claim on behalf of the Company,
including stockholders, employees or creditors of the Company.

     

    13.           Headings.
The Section headings in this Agreement have been inserted as a matter of
convenience of reference and are not a part of this Agreement.

     

    14.           Amendments and
Waivers. No supplement, modification or waiver of this Agreement shall be
binding unless executed in writing by the party to be bound thereby. The failure
of a party to exercise any right or remedy shall not be deemed or constitute a
waiver of such right or remedy in the future. No waiver of any of the provisions
of this Agreement shall be deemed or shall constitute a waiver of any other
provision hereof (regardless of whether similar), nor shall any such waiver
constitute a continuing waiver unless otherwise expressly provided.

     

    

    
      
        
           

        

        
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    15.           Counterparts.
This Agreement may be executed in one or more counterparts and, if executed in
more than one counterpart, the executed counterparts shall each be deemed to be
an original and all such counterparts shall together constitute one and the same
instrument. Delivery of an executed counterpart by facsimile or portable
document format (.pdf) shall be effective as delivery of a manually executed
counterpart thereof.

     

    16.           Research Analyst
Independence. The Company acknowledges that the Placement Agent's
research analysts and research departments are required to be independent from
its investment banking division and are subject to certain regulations and
internal policies, and that the Placement Agent's research analysts may hold
views and make statements or investment recommendations and/or publish research
reports with respect to the Company and/or the offering that differ from the
views of their investment banking division. The Company hereby waives and
releases, to the fullest extent permitted by law, any claims that the Company
may have against the Placement Agent with respect to any conflict of interest
that may arise from the fact that the views expressed by its independent
research analysts and research departments may be different from or inconsistent
with the views or advice communicated to the Company by the Placement Agent's
investment banking division. The Company acknowledges that the Placement Agent
is a full service securities firm and as such from time to time, subject to
applicable securities laws, rules and regulations, may effect transactions for
its own account or the account of its customers and hold long or short positions
in debt or equity securities of the Company; provided, however, that nothing in this
Section 16
shall relieve the Placement Agent of any responsibility or liability it may
otherwise bear in connection with activities in violation of applicable
securities laws, rules or regulations.

     

    17.           Entire
Agreement. This Agreement constitutes the entire agreement of the parties
to this Agreement and supersedes all prior written or oral and all
contemporaneous oral agreements, understandings and negotiations with respect to
the subject matter hereof.

     

    18.           Partial
Unenforceability. The invalidity or unenforceability of any section,
paragraph, clause or provision of this Agreement shall not affect the validity
or enforceability of any other section, paragraph, clause or provision hereof.
If any section, paragraph, clause or provision of this Agreement is for any
reason determined to be invalid or unenforceable, there shall be deemed to be
made such minor changes (and only such minor changes) as are necessary to make
it valid and enforceable.

     

    19.           Effectiveness.
This Agreement shall become effective upon the execution and delivery hereof by
the parties hereto.

     

    [Signature
Page Follows]

    

    

    
      
        
           

        

        
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    If the
foregoing is in accordance with your understanding of the agreement between the
Company and the Placement Agent, kindly indicate your acceptance in the space
provided for that purpose below.

     

    
    

    
      
         

        
          	 	
                  Very
      truly yours,

                  

                  MAGNUM
      HUNTER RESOURCES CORPORATION

                  

                  

                  By:  /s/ Ronald D.
      Ormand                          
      

                  
                    Name:Ronald
      D. Ormand

                  

                  
                    Title:  
      Executive Vice President and

                        
             Chief Executive
  Officer

                  

                

        

         

      

       

    

     

     

     

    

    

    
      
        
           

        

        
          34

          
            

          

        

        
           

        

      

    

    

    

    Accepted
as of the date first

    above
written:

    

    CANACCORD
ADAMS INC.

    

    

    By: /s/ Christian
Gibson                            

    
      Name:
Christian
Gibson

    

    
      Title:   
Managing
Director

    

    

     

     

     

     

     

     

     

     

     

     

     

     

     

     

     

     

     

     

     

     

     

    

    
      
        
           

        

        
          35

          
            

          

        

        
           

        

      

    

    

    

    Schedules
and Exhibits

    
      	 
      	 
      	 
      
	
              Schedule
      I:

            	 
      	
              Allocation
      between Placement Agent

            
	 
      	 
      	 
      
	
              Schedule
      II:

            	 
      	
              Issuer
      Free Writing Prospectus

            
	 
      	 
      	 
      
	
              Schedule
      III:

            	 
      	
              List
      of Directors and Officers for Lock-Up Letter

            
	 
      	 
      	 
      
	
              Schedule
      IV:

            	 
      	
              Terms
      and Conditions for Canadian Offer and Sales

            
	 
      	 
      	 
      
	
              Exhibit
      A:

            	 
      	
              Subscription
      Agreements

            
	 
      	 
      	 
      
	
              Exhibit
      B:

            	 
      	
              Pricing
      Information

            
	 
      	 
      	 
      
	
              Exhibit
      C:

            	 
      	
              Form
      of Lock-Up Letter

            

    

    

    

    

    
      
        
           

        

        
          
          

          
            

          

        

        
           

        

      

    

    

    

    SCHEDULE
I

    

    Allocation
between Placement Agents

    

    
      	
              Name

            	
              Pro Rata Units

            
	
              Canaccord
      Adams Inc.

            	
              100%

            
	
              Total

            	
              100%

            
	 
      
	 
      

    

    

    

     

     

     

     

     

     

     

     

     

     

    
 

    

    
      
        
           

        

        
          
          

          
            

          

        

        
           

        

      

    

    

    

    SCHEDULE
II

    

    Issuer
Free Writing Prospectus

    

    

    [None]

    

     

     

     

     

     

     

     

     

     

     

    
 

    
      
        
           

        

        
          
          

          
            

          

        

        
           

        

      

    

    

    

    SCHEDULE
III

    

    List
of Directors and Officers for Lock-Up Letter

    

    

    Gary C.
Evans

    Ron
Ormand

    Jim
Denny

    Hershal
("Kip") Ferguson III

    M.
Bradley Davis

    Don
Kirkendall

    David
Krueger

    

    

     

     

     

     

     

     

     

     

     

     

    
 

    
      
        
           

        

        
          
          

          
            

          

        

        
           

        

      

    

    

    

    SCHEDULE
IV

    

    TERMS
AND CONDITIONS FOR

    CANADIAN
OFFERS AND SALES

    

    
      
        	
                1. 

              	
                For
      the purposes of this Schedule, capitalized terms not otherwise defined
      have the meanings given to them in the Placement Agency Agreement to which
      this Schedule is attached and the following terms will have the meanings
      indicated:

              

      

    

     

    
      
        	
              	
                (a) 

              	
                "Institutional
      Accredited Investor" has the meaning set out in the definition of
      "Accredited Investor" in Section 1.1 of National Instrument 45-106 of the
      Canadian Securities Administrators, but expressly excluding the
      individuals described in items (j), (k) or (l) of such
      definition.

              

      

    

     

    
      
        	
              	
                (b) 

              	
                "Applicable Canadian
      Securities Laws" means all applicable securities laws, rules,
      regulations, notices, instruments, blanket orders and policies in each of
      the provinces and territories of
Canada.

              

      

    

     

    
      
        	
              	
                (c) 

              	
                ("Canadian Wrap"
      means the Disclosure Package supplemented with wrap pages describing
      matters relating to Canadian securities laws in the form agreed to by
      Canaccord Adams Inc. and the
Company.

              

      

    

     

    
      
        	
                2. 

              	
                 The
      Placement Agent may offer and sell the Units within Canada on the terms
      and subject to the conditions of this Schedule.  In connection
      therewith, the Company represents and warrants
  that:

              

      

    

     

    
      
        	
              	
                (a) 

              	
                it
      is not a reporting issuer in any jurisdiction in
  Canada;

              

      

    

     

    
      
        	
              	
                (b) 

              	
                at
      the Closing Date, after giving effect to the issue of the Units, to the
      Company's knowledge, residents of
Canada:

              

      

    

     

    
      
        	
              	
                (i) 

              	
                (will
      not own directly or indirectly more than 10 percent of the outstanding
      shares of common stock of the Company;
and

              

      

    

     

    
      
        	
              	
                (ii) 

              	
                (will
      not represent in number more than 10 percent of the total number of owners
      directly or indirectly of shares of common stock of the
      Company.

              

      

    

     

    
      
        	
                3. 

              	
                The
      Placement Agent acknowledges that the Company is not a reporting issuer in
      any jurisdiction of Canada and the Prospectus will not be filed with any
      securities regulatory authority in Canada and the Units may be offered and
      sold only to Institutional Accredited Investors in transactions exempt
      from the registration and prospectus requirements of Applicable Canadian
      Securities Laws.  Accordingly, the Placement Agent represents,
      warrants and covenants, and will cause its Canadian affiliates to comply
      with such representations, warranties and covenants,
  that:

              

      

    

     

    

    
      
        
           

        

        
          
          

          
            

          

        

        
           

        

      

    

    

    
      
        	
              	
                (a) 

              	
                it
      will not offer or sell any Units in Canada, except in accordance with
      Section 2.3 of National Instrument 45-106 to persons who are Institutional
      Accredited Investors;

              

      

    

     

    
      
        	
              	
                (b) 

              	
                it
      will not cause any advertisement of the Units in any printed media of
      general and regular paid circulation, radio, television or
      telecommunications, including electronic display, or any other form of
      advertising in Canada;

              

      

    

     

    
      
        	
              	
                (c) 

              	
                all
      offers and sales of the Units in Canada will be effected through an
      investment dealer duly registered under Applicable Canadian Securities
      Laws;

              

      

    

     

    
      
        	
              	
                (d) 

              	
                it
      will not use any written material in connection with offer and sales of
      Units in Canada other than the Canadian Wrap and it agrees to deliver a
      copy of the Canadian Wrap to each purchaser of Units in
      Canada;

              

      

    

     

    
      
        	
              	
                (e) 

              	
                any
      offer, sale or solicitation of an offer to buy Units made to a person in
      Canada will be made only to a person it reasonably believes to be an
      Institutional Accredited Investor who is acquiring the Units as
      principal;

              

      

    

     

    
      
        	
              	
                (f) 

              	
                all
      purchasers of the Units in Canada will be informed that the Units are
      being offered and sold in Canada in reliance on exemptions from the
      prospectus and registration requirements of Applicable Canadian Securities
      Laws and that the Units can be resold only in accordance with further
      exemptions from such
requirements;

              

      

    

     

    
      
        	
              	
                (g) 

              	
                on
      or prior to the Closing Date, it will provide to the Company's transfer
      agent a list of all purchasers of the Units in Canada;
  and

              

      

    

     

    
      
        	
              	
                (h) 

              	
                (it
      will collect the following information for each purchaser of Units in
      Canada, and will provide such information to the Company to enable the
      Company to file, with the applicable securities regulatory authorities in
      Canada, reports of the trades of Units on Form 45-106F1 and such other
      filings as may be required under Applicable Canadian Securities Laws: full
      name, address and telephone number and number of Units
      purchased.

              

      

    

     

    

    

    

    

    
      
        
           

        

        
          
          

          
            

          

        

        
           

        

      

    

    

    

    EXHIBIT
A

    

    Subscription
Agreements

     

     

     

     

     

     

     

     

     

     

    
 

     

     

     

     

     

     

     

     

     

     

    

    
      
        
           

        

        
          
          

          
            

          

        

        
           

        

      

    

    

    

    EXHIBIT
B

    

    Pricing
Information

    

     

     

     

     

     

     

     

     

     

     

     

     

     

     

     

     

     

     

     

     

    
 

    
      
        
           

        

        
          
          

          
            

          

        

        
           

        

      

    

    

    

    EXHIBIT
C

    

    Form
of Lock-Up Lettermhr_8k-ex1003.htm

    Exhibit 10.3

    ,500,000
Units

     

    MAGNUM
HUNTER RESOURCES CORPORATION

     

    Common
Stock and Warrants

     

    

    PLACEMENT AGENCY
AGREEMENT

    

    

    November
11, 2009

    

    Canaccord
Adams Inc.

    99 High
Street, 11th
Floor

    Boston,
Massachusetts 02110

    

    Ladies
and Gentlemen:

    

    Magnum
Hunter Resources Corporation, a Delaware corporation (the "Company"), proposes, subject
to the terms and conditions stated in this Placement Agency Agreement (this
"Agreement") and the
Subscription Agreements in the form of Exhibit A attached
hereto (the "Subscription
Agreements") to be entered into with the investors identified therein
(each, an "Investor"
and collectively, the "Investors"), to issue and
sell up to an aggregate of 2,500,000 Units (the "Units"), each Unit consisting
of one share  of the Company's common stock, $0.01 par value (the
"Common Stock") and
one-fifth of a warrant to purchase one share of Common Stock (each whole
warrant, a "Warrant").  The
Company hereby confirms its several agreements with Canaccord Adams Inc. ("Canaccord") as set forth
below.  Canaccord is referred to herein as the "Placement
Agent".  The Units are more fully described in the Prospectus
(as defined below).

     

    1.       
    Agreement to Act
as Placement Agent; Delivery and Payment. On the basis of the
representations, warranties and agreements of the Company herein contained, and
subject to the terms and conditions set forth in this Agreement:

     

    (a)           The
Company hereby engages the Placement Agent, as the exclusive agent of the
Company, to, on a commercially reasonable best efforts basis, solicit offers to
purchase Units from the Company on the terms and subject to the conditions set
forth in the Subscription Agreements and Prospectus (as defined
below).  The Placement Agent shall use commercially reasonable best
efforts to assist the Company in obtaining performance by each Investor whose
offer to purchase the Units was solicited by the Placement Agent and accepted by
the Company, but the Placement Agent shall not, except as otherwise provided in
this Agreement, have any liability to the Company in the event any such purchase
is not consummated for any reason. Under no circumstances will the Placement
Agent or any of its affiliates be obligated to underwrite or purchase any of the
Units for its own account or otherwise provide any financing. The Placement
Agent shall act solely as the Company's agent and not as
principal.  The Placement Agent shall not have any authority to bind
the Company with respect to any prospective offer to purchase Units and the
Company shall have the sole right to accept offers to purchase Units and may
reject any such offer, in whole or in part.  The Placement Agent has
the right, after discussion with the Company, to reject any offer to purchase
Units received by it, in whole or in part, and any such rejection shall not be
deemed a breach of this Agreement.

     

    

    
      
        
           

        

        
           

          
            

          

        

        
           

        

      

    

    

    (b)           As
compensation for services rendered by the Placement Agent hereunder, on the
Closing Date (as defined below), the Placement Agent shall receive from the
Company, in the manner provided in Section 6(f), an aggregate amount equal to
five percent (5.0%) of the gross proceeds received by the Company from the sale
of the Units on such Closing Date (the "Agency Fee").  The
Placement Agent agrees that the foregoing compensation, together with any
expense reimbursement payable hereunder, constitutes all of the compensation
that the Placement Agent shall be entitled to receive in connection with the
Offering contemplated hereby.

     

    (c)           The
Units are being sold to the Investors at a price of $1.73 per unit (the "Purchase Price") as set forth
on the cover page of the Prospectus (as defined below). The purchases of Units
by the Investors shall be evidenced by the execution of the Subscription
Agreements by each of the parties thereto in the form attached hereto as Exhibit
A.

     

    (d)           Prior
to the earlier of (i) the date on which this Agreement is terminated and (ii)
the Closing Date, the Company shall not, without the prior written consent of
the Placement Agent, solicit or accept offers to purchase shares of the Common
Stock or any securities convertible into Common Stock (other than pursuant to
the exercise of options or warrants to purchase shares of Common Stock that are
outstanding at the date hereof) otherwise than through the Placement Agent in
accordance herewith.

     

    (e)           No
Units which the Company has agreed to sell pursuant to this Agreement and the
Subscription Agreements shall be deemed to have been purchased and paid for, or
sold by the Company, until such Units shall have been delivered to the Investor
purchasing such Units against payment therefor by such Investor. If the Company
shall default in its obligations to deliver Units to an Investor whose offer it
has accepted, the Company shall indemnify and hold the Placement Agent harmless
against any loss, claim, damage or liability directly or indirectly arising from
or as a result of the default by the Company in accordance with the procedures
set forth in Section
6(c) hereof.

     

    (f)           Payment
of the purchase price for, and delivery of the Units shall be made at a closing
(the "Closing") at the
offices of Bracewell & Giuliani LLP, counsel for the Placement Agent,
located at 711 Louisiana Street, Houston, Texas, at 11:00 a.m., New York City
time, on November 16, 2009 or at such other time and date as the Placement Agent
and the Company determine pursuant to Rule 15c6-1(a) under the Securities
Exchange Act of 1934, as amended (the "Exchange Act") (such date of
payment and delivery being herein referred to as the "Closing
Date").  Unless otherwise specified in the applicable
Subscription Agreement, the Units will be settled (i) through the facilities of
The Depository Trust Company's DWAC system or (ii) The Depository Trust
Company's delivery versus payment (DVP) settlement service. Payment of the
purchase price for the Units shall be made in the manner set forth in the
applicable Subscription Agreement by Federal Funds wire transfer, against
delivery of the Units to such persons and shall be registered in the name or
names and shall be in such denominations as the Placement Agent may request at
least one business day before the Closing Date. Payment of the purchase price
for the Units to be purchased by Investors shall be made pursuant to
instructions contained in the Subscription Agreement.  Prior to the
Closing, each such Investor shall deposit with (i) the Company or (ii) the
applicable Placement Agent, pursuant to the Subscription Agreement, an amount
(the "Purchase Amount")
equal to the product of (x) the number of Units such Investor has agreed to
purchase and (y) the Purchase Price. The aggregate of all such Purchase Amounts
is herein referred to as the "Purchase Funds." Subject to the terms and
conditions hereof and of the Subscription Agreements, the Placement Agent shall,
on the Closing Date, deliver to the Company, by Federal Funds wire transfer, the
Purchase Funds so held by the Placement Agent, reduced by an amount equal to the
sum of the aggregate Agency Fee payable to the Placement Agent and the Placement
Agent's bona fide estimate of the amount, if any, of expenses for which the
Placement Agent is entitled to reimbursement pursuant hereto. At least one day
prior to the Closing Date, the Placement Agent shall submit to the Company its
bona fide estimate of the amount, if any, of expenses for which the Placement
Agent is entitled to reimbursement pursuant hereto. As soon as reasonably
practicable after the Closing Date, the Placement Agent shall submit to the
Company its expense reimbursement invoice and the Company or the Placement
Agent, as applicable, shall make any necessary reconciling payment(s) within
thirty days after receipt of such invoice. The Company shall remit to the
Placement Agent any remaining Agency Fees or any Placement Agent's expenses for
which the Placement Agent is entitled to reimbursement.

     

    

    
      
        
           

        

        
          2

          
            

          

        

        
           

        

      

    

    

    2.          
  Representations
and Warranties of the Company. The Company represents and warrants to the
Placement Agent as of the date hereof, and as of the Closing Date and agrees
with the Placement Agent, as follows:

     

    (a)           Filing of Registration
Statement. The Company has prepared and filed, in conformity with the
requirements of the Securities Act of 1933, as amended (the "Securities Act"), and the
published rules and regulations thereunder (the "Rules and Regulations")
adopted by the Securities and Exchange Commission (the "Commission"), a registration
statement, including a prospectus, on Form S-3 (File No. 333-161937), which
became effective as of October 15, 2009, relating to the Units and the offering
thereof (the "Offering") from time to time
in accordance with Rule 415(a)(1)(x) of the Rules and Regulations, and such
amendments thereof as may have been required to the date of this Agreement. The
term "Registration
Statement" as used in this Agreement means the aforementioned
registration statement, as amended at the time of such registration statement's
effectiveness for purposes of Section 11 of the Securities Act, (the "Effective Time"), including
(i) all documents filed as a part thereof or incorporated or deemed to be
incorporated by reference therein and (ii) any information in the corresponding
Base Prospectus (as defined below) or a prospectus supplement filed with the
Commission pursuant to Rule 424(b) under the Securities Act, to the extent such
information is deemed pursuant to Rule 430A ("Rule 430A"), 430B ("Rule 430B") or 430C
("Rule 430C")
under the Securities Act to be a part thereof at the Effective Time. If the
Company has filed an abbreviated registration statement to register additional
shares of Common Stock pursuant to Rule 462(b) under the Rules and Regulations
(the "Rule 462(b) Registration
Statement"), then any reference herein to the term "Registration Statement" shall
also be deemed to include such Rule 462(b) Registration Statement. For purposes
of this Agreement, all references to the Registration Statement, the Base
Prospectus, any Preliminary Prospectus (as defined below), the Prospectus (as
defined in below) or any amendment or supplement to any of the foregoing shall
be deemed to include the copy filed with the Commission pursuant to its
Electronic Data Gathering, Analysis and Retrieval System ("EDGAR"). All references in
this Agreement to amendments or supplements to the Registration Statement, the
Base Prospectus, any Preliminary Prospectus or the Prospectus shall be deemed to
mean and include the subsequent filing of any document under the Exchange Act
and which is deemed to be incorporated therein by reference therein or otherwise
deemed to be a part thereof.

     

    

    
      
        
           

        

        
          3

          
            

          

        

        
           

        

      

    

    

    (b)           Effectiveness of Registration
Statement; Certain Defined Terms. The Company and the transactions
contemplated by this Agreement meet the requirements and comply with the
conditions for the use of Form S-3 under the Securities Act.  The
Registration Statement meets, and the offering and sale of the Units as
contemplated hereby complies with, the requirements of Rule 415 under the
Securities Act (including, without limitation, Rule 415(a)(4) and (a)(5) of the
Rules and Regulations). The Company has complied, to the Commission's
satisfaction, with all requests of the Commission for additional or supplemental
information. No stop order preventing or suspending use of the Registration
Statement, any Preliminary Prospectus or the Prospectus or the effectiveness of
the Registration Statement has been issued by the Commission, and no proceedings
for such purpose pursuant to Section 8A of the Securities Act against the
Company or related to the Offering have been instituted or are pending or, to
the Company's knowledge, are contemplated or threatened by the Commission, and
any request received by the Company on the part of the Commission for additional
information has been complied with. As used in this
Agreement: 

     

    
      (1)         
  "Base Prospectus" means the
prospectus included in the Registration Statement at the Effective
Time.

    

                   

    
      (2)         
  "Disclosure Package" means (i)
the Statutory Prospectus, (ii) each Issuer Free Writing Prospectus, if any,
filed or used by the Company on or before the Effective Time and listed on Schedule II hereto
(other than a roadshow that is an Issuer Free Writing Prospectus but is not
required to be filed under Rule 433 of the Rules and Regulations) and (iii) the
pricing and other information as set forth on Exhibit B hereto, all
considered together.

    

                   

    
      (3)       
    "Issuer Free Writing
Prospectus" means any "issuer free writing prospectus," as defined in Rule 433 of
the Rules and Regulations relating to the Units in the form filed or required to
be filed with the Commission or, if not required to be filed, in the form
retained in the Company's records pursuant to Rule 433(g) of the Rules and
Regulations.

    

                   

    
      (4)         
  "Preliminary Prospectus" means
any preliminary prospectus supplement, subject to completion, relating to the
Units, filed by the Company with the Commission pursuant to Rule 424(b) under
the Securities Act for use in connection with the offering and sale of the
Units, together with the Base Prospectus attached to or used with such
preliminary prospectus supplement.

    

                   

    
      (5)       
    "Prospectus" means the final
prospectus supplement, relating to the Units, filed by the Company with the
Commission pursuant to Rule 424(b) under the Securities Act on or before the
second business day after the date hereof (or such earlier time as may be
required under the Securities Act), in the form furnished by the Company to the
Placement Agent, for use in connection with the offering and sale of the Units
that discloses the public offering price and other final terms of the Units,
together with the Base Prospectus attached to or used with such final prospectus
supplement.

    

    

    
      
        
           

        

        
          4

          
            

          

        

        
           

        

      

    

    

    

    
      (6)        
   "Statutory Prospectus" means
the Preliminary Prospectus, if any, and the Base Prospectus, each as amended and
supplemented immediately prior to the Time of Sale, including any document
incorporated by reference therein, and any prospectus
supplement.

    

    

    
      (7)          
 "Time of Sale" means 3:55
p.m., New York City time, on the date of this Agreement.

    

    

    (c)           Contents of Registration
Statement. The Registration Statement complied when it became effective,
complies as of the date hereof and, as amended or supplemented, at the Time of
Sale and at all times during which a prospectus is required by the Securities
Act to be delivered (whether physically or through compliance with Rule 172
under the Securities Act or any similar rule) in connection with any sale of
Units (the "Prospectus
Delivery Period"), will comply, in all material respects, with the
requirements of the Securities Act and the Rules and Regulations; the
Registration Statement did not, as of the Effective Time, contain an untrue
statement of a material fact or omit to state a material fact required to be
stated therein or necessary in order to make the statements therein not
misleading, provided,
that the Company makes no representation or warranty in this subsection (c) with
respect to statements in or omissions from the Registration Statement in
reliance upon, and in conformity with, written information furnished to the
Company by the Placement Agent specifically for inclusion therein, which
information the parties hereto agree is limited to the Placement Agent's
Information (as defined in Section 7
hereof).

     

    (d)           Contents of Prospectus. The
Prospectus will comply, as of the date that it is filed with the Commission, the
date of its delivery to Investors and at all times during the Prospectus
Delivery Period, in all material respects, with the requirements of the
Securities Act; at no time during the period that begins on the date the
Prospectus is filed with the Commission and ends at the end of the Prospectus
Delivery Period will the Prospectus, as then amended or supplemented, include an
untrue statement of a material fact or omit to state a material fact necessary
in order to make the statements therein, in the light of the circumstances under
which they were made, not misleading, provided, that the Company
makes no representation or warranty with respect to statements in or omissions
from the Prospectus in reliance upon, and in conformity with, written
information furnished to the Company by the Placement Agent specifically for
inclusion therein, which information the parties hereto agree is limited to the
Placement Agent's Information (as defined below).  The Prospectus
contains all required information under the Securities Act with respect to the
Units and the distribution of the Units.

     

    (e)           Incorporated Documents. Each
of the documents incorporated or deemed to be incorporated by reference in the
Registration Statement, at the time such document was filed with the Commission
or at the time such document became effective, as applicable, complied, in all
material respects, with the requirements of the Exchange Act, was filed on a
timely basis with the Commission and did not include an untrue statement of a
material fact or omit to state a material fact necessary in order to make the
statements therein, in the light of the circumstances under which they were
made, not misleading.

     

    

    
      
        
           

        

        
          5

          
            

          

        

        
           

        

      

    

    

    (f)           Disclosure Package. The
Disclosure Package, as of the Time of Sale, did not, and at the Closing Date
will not, contain any untrue statement of a material fact or omit to state any
material fact required to be stated therein or necessary in order to make the
statements therein, in the light of the circumstances under which they were
made, not misleading; provided, that the Company
makes no representations or warranties in this subsection (f) with
respect to statements in or omissions from the Disclosure Package in reliance
upon, and in conformity with, written information furnished to the Company by
the Placement Agent specifically for inclusion therein, which information the
parties hereto agree is limited to the Placement Agent's
Information.

     

    (g)           Distributed Materials; Conflict with
Registration Statement. Other than the Base Prospectus, any Preliminary
Prospectus and the Prospectus, the Company has not made, used, prepared,
authorized, approved or referred to and will not make, use, prepare, authorize,
approve or refer to any "written communication" (as defined in Rule 405 under
the Securities Act) that constitutes an offer to sell or a solicitation of an
offer to buy the Units other than (i) any document not constituting a prospectus
pursuant to Section 2(a)(10)(a) of the Securities Act or Rule 134 under the
Securities Act or (ii) the documents listed on Schedule II hereto
and other written communications approved in advance by the Placement
Agent.

     

    (h)           Issuer Free Writing
Prospectuses. Each Issuer Free Writing Prospectus, if any, conformed or
will conform in all material respects to the requirements of the Securities Act
and the Rules and Regulations on the date of first use, and the Company has
complied or will comply with any filing requirements applicable to such Issuer
Free Writing Prospectus pursuant to the Rules and Regulations. Each Issuer Free
Writing Prospectus, if any, when considered together with the Disclosure
Package, as of its issue date and at all subsequent times through the completion
of the Prospectus Delivery Period did not, does not and will not include any
information that conflicted, conflicts or will conflict with the information
contained in the Registration Statement, the Statutory Prospectus or the
Prospectus, including any document incorporated by reference therein and any
prospectus supplement deemed to be a part thereof that has not been superseded
or modified, or includes an untrue statement of a material fact or omitted or
would omit to state a material fact required to be stated therein or necessary
in order to make the statements therein, in the light of the circumstances
prevailing at the subsequent time, not misleading; provided, that the Company
makes no representation or warranty with respect to statements in or omissions
from any Issuer Free Writing Prospectus in reliance upon, and in conformity
with, written information furnished to the Company by the Placement Agent
specifically for inclusion therein, which information the parties hereto agree
is limited to the Placement Agent's Information.

     

    (i)           Not an Ineligible Issuer. (i)
At the earliest time after the filing of the Registration Statement that the
Company or another offering participant made a bona fide offer (within the
meaning of Rule 164(h)(2) under the Securities Act) of the Units and (ii) at the
date hereof, the Company was not and is not an "ineligible issuer," as defined
in Rule 405 under the Securities Act ("Rule 405").

     

    

    
      
        
           

        

        
          6

          
            

          

        

        
           

        

      

    

    

    (j)           Due
Incorporation.

     

    
      (1)      
The
Company has been duly organized and is validly existing as a corporation in good
standing under the laws of the State of Delaware, with the corporate power and
authority to own its properties and to conduct its business as it is currently
being conducted and as described in the Registration Statement, the Prospectus
and the Disclosure Package. The Company is duly qualified to transact business
and is in good standing as a foreign corporation or other legal entity in each
other jurisdiction in which its ownership or leasing of property or the conduct
of its business requires such qualification, except where the failure to be so
qualified or in good standing or have such power or authority would not (i)
have, individually or in the aggregate, a material adverse effect upon the
general affairs, business, operations, properties, financial condition, or
results of operations of the Company and its subsidiaries, taken as a whole, or
(ii) impair in any material respect the power or ability of the Company to
perform its obligations under this Agreement or to consummate any transactions
contemplated by the Agreement and the Subscription Agreements, including the
issuance and sale of the Units (any such effect as described in clauses (i) or
(ii), a "Material Adverse
Effect");

    

    

    
      (2)      
Each of
the subsidiaries of the Company has been duly incorporated or formed, as the
case may be, and is validly existing and in good standing under the laws of its
respective jurisdiction of organization, each with full power and authority
(corporate and otherwise) to own its properties and conduct its business as
described in the Registration Statement, the Prospectus and the Disclosure
Package, and each has been duly qualified as a foreign corporation, limited
liability company or limited partnership for the transaction of business and is
in good standing under the laws of each other jurisdiction in which it owns or
leases properties or conducts any business so as to require such qualification,
except where the failure to be so qualified or in good standing would not result
in any Material Adverse Effect.

    

    

    (k)           Subsidiaries. Except for PRC
Williston, LLC, Sharon Resources, Inc., Triad Hunter LLC and Sharon Hunter
Resources, Inc. and as otherwise described in the Registration Statement, the
Prospectus and the Disclosure Package, the Company has no subsidiaries and does
not own any beneficial interest, directly or indirectly, in any corporation,
partnership, joint venture or other business entity.

     

    (l)           Due Authorization and
Enforceability. The Company has the full right, power and authority to
enter into this Agreement and the Subscription Agreements, and to perform and
discharge its obligations hereunder and thereunder; and each of this Agreement
and the Subscription Agreements has been (or, in the case of the Subscription
Agreements, will be) duly authorized, executed and delivered by the Company, and
constitutes (or will constitute) a valid, legal and binding obligation of the
Company, enforceable against the Company in accordance with its terms, except as
rights to indemnity hereunder may be limited by federal or state securities laws
and except as such enforceability may be limited by applicable bankruptcy,
insolvency, reorganization or similar laws affecting the rights of creditors
generally and subject to general principles of equity.

     

    

    
      
        
           

        

        
          7

          
            

          

        

        
           

        

      

    

    

    (m)           The Units. The issuance of
the Units has been duly and validly authorized by the Company and, when issued,
delivered and paid for in accordance with the terms of this Agreement and the
Subscription Agreements, will have been duly and validly issued and will be
fully paid and nonassessable, will not be subject to any statutory or
contractual preemptive rights or other rights to subscribe for or purchase or
acquire any shares of Common Stock of the Company which have not been waived or
complied with, and will conform in all material respects to the description
thereof contained in the Disclosure Package and the Prospectus and such
description conforms in all material respects to the rights set forth in the
instruments defining the same.

     

    (n)           Capitalization. The
information set forth under the caption "Capitalization" in the Statutory
Prospectus (and any similar sections or information, if any, contained in the
Disclosure Package) is fairly presented on a basis consistent with the Company's
financial statements. The certificates evidencing the Units are in due and
proper legal form and have been duly authorized for issuance by the
Company.  The authorized capital stock of the Company conforms as to
legal matters to the description thereof contained in the Prospectus under the
caption "Description of Capital Stock" (and any similar sections or information,
if any, contained in the Disclosure Package). The issued and outstanding shares
of capital stock of the Company have been duly authorized and validly issued,
are fully paid and nonassessable, and have been issued in compliance with all
federal and state securities laws. None of the outstanding shares of Common
Stock was issued in violation of any preemptive rights, rights of first refusal
or other similar rights to subscribe for or purchase or acquire any securities
of the Company or any of its subsidiaries. There are no authorized or
outstanding shares of capital stock, options, warrants, preemptive rights,
rights of first refusal or other rights to purchase, or equity or debt
securities convertible into or exchangeable for, any capital stock of the
Company or any of its subsidiaries other than those described in the Prospectus
and the Disclosure Package. The description of the Company's stock option, stock
bonus and other stock plans or arrangements, and the options or other rights
granted thereunder, as described in the Prospectus and the Disclosure Package,
accurately and fairly presents the information required to be shown with respect
to such plans, arrangements, options and rights.  The issued and
outstanding shares of capital stock of each of the Company's subsidiaries have
been duly authorized and validly issued, are fully paid and nonassessable, have
been issued in compliance with all federal and state securities laws, and are
owned directly by the Company or by another wholly-owned subsidiary of the
Company free and clear of any lien, encumbrance, security interest, claim or
charge, other than those described in, or incorporated by reference into the
Registration Statement and the Prospectus.  All the outstanding shares
of capital stock of each "significant subsidiary" within the meaning of Rule
1-02(w) of Regulation S-X (such a significant subsidiary of the Company, a
"Significant
Subsidiary") of the Company have been duly authorized and validly issued,
are fully paid and nonassessable and except to the extent set forth in the
Disclosure Package and the Prospectus, are owned by the Company directly or
indirectly through one or more wholly-owned subsidiaries, free and clear of any
lien, encumbrance, security interest, claim or charge, restriction upon voting
or transfer or any other claim of any third party.

     

    

    
      
        
           

        

        
          8

          
            

          

        

        
           

        

      

    

    

    (o)           No Conflict. The execution,
delivery and performance by the Company of this Agreement and the Subscription
Agreements, and the consummation of the transactions contemplated hereby and
thereby, including the issuance and sale of the Units by the Company, will not
conflict with or result in a breach or violation of, or constitute a default
under (nor constitute any event which with or without notice, lapse of time or
both would result in any breach or violation of or constitute a default under),
give rise to any right of termination or other right or the cancellation or
acceleration of any right or obligation or loss of a benefit under, or give rise
to the creation or imposition of any lien, encumbrance, security interest, claim
or charge upon any property or assets of the Company or its subsidiaries
pursuant to (i) any indenture, mortgage, deed of trust, loan agreement or other
agreement or instrument to which the Company or any of its subsidiaries is a
party or by which either the Company or its subsidiaries or any of their
properties may be bound or to which any of their property or assets is subject,
(ii) result in any violation of the provisions of the charter or by-laws of the
Company or any of its subsidiaries, or (iii) result in any violation of any
law, statute, rule, regulation, judgment, order or decree of any court or
governmental agency or body, domestic or foreign, having jurisdiction over the
Company or any of its properties or assets.

     

    (p)           No Consents Required. No
approval, authorization, consent or order of or filing, qualification or
registration with, any court or governmental agency or body, foreign or
domestic, which has not been made, obtained or taken and is not in full force
and effect, is required in connection with the Company's execution, delivery and
performance of this Agreement or the Subscription Agreements, the consummation
by the Company of the transactions contemplated hereby or thereby or the
issuance and sale of the Units other than (i) as may be required under the
Securities Act, (ii) any necessary qualification of the Units under the
securities or blue sky laws of the various jurisdictions in which the Units are
being offered by the Placement Agent, (iii) under the rules and regulations of
the Financial Industry Regulatory Authority, Inc. ("FINRA") (other than any
approval required with respect to the Base Prospectus), (iv) the New York Stock
Exchange Amex Equities, ("NYSE Amex") or (v) any required filing on Form 8-K
under the Exchange Act.

     

    (q)           Preemptive Rights. There are
no preemptive rights or other rights (other than rights which have been waived
in writing in connection with the transactions contemplated by this Agreement or
otherwise satisfied or as described in the Prospectus) to subscribe for or to
purchase any shares of Common Stock or shares of any other capital stock or
other equity interests of the Company or any of its subsidiaries, or any
agreement or arrangement between the Company and any of the Company's
stockholders or between any of the Company's subsidiaries and any of such
subsidiary's stockholders, or to the Company's knowledge, between or among any
of the Company's stockholders or any of its subsidiaries' stockholders, which
grant special rights with respect to any shares of the Company's or any of its
subsidiaries' capital stock or which in any way affect any stockholder's ability
or right to alienate freely or vote such shares.

     

    (r)           Registration Rights. Except
for the Company’s registration obligation for the Common Stock underlying
certain warrants pursuant to the Securities Purchase and Registration Rights
Agreement dated November 5, 2009 (the “Underlying Warrant Stock Registration
Statement”), there are no contracts, agreements or understandings between the
Company or any of its subsidiaries and any person granting such person the right
(other than rights which have been waived in writing in connection with the
transactions contemplated by this Agreement or otherwise satisfied) to require
the Company or any of its subsidiaries to register any securities with the
Commission.

     

    

    
      
        
           

        

        
          9

          
            

          

        

        
           

        

      

    

    

    (s)           Independent Accountants.
Malone & Bailey, PC, whose reports on the consolidated financial statements
of the Company are incorporated by reference in the Registration Statement, the
Prospectus and the Disclosure Package, is (i) an independent public accounting
firm within the meaning of the Securities Act, (ii) a registered public
accounting firm (as defined in Section 2(a)(12) of the Sarbanes-Oxley Act of
2002 (the "Sarbanes-Oxley
Act")), and (iii) to the Company's knowledge, not in violation of the
auditor independence requirements of the Sarbanes-Oxley Act.  Except
as disclosed in the Registration Statement and as pre-approved in accordance
with the requirements set forth in Section 10A of the Exchange Act, Malone &
Bailey, PC has not been engaged by the Company to perform any "prohibited
activities" (as defined in Section 10A of the Exchange Act).

     

    (t)           Financial Statements. The
consolidated financial statements of the Company, together with the related
schedules and notes thereto, set forth or incorporated by reference in the
Registration Statement, the Prospectus and the Disclosure Package comply in all
material respects with the applicable requirements of the Securities Act and the
Exchange Act, as applicable, and present fairly in all material respects (i) the
financial condition of the Company and its consolidated subsidiaries as of the
dates indicated and (ii) the consolidated results of operations, stockholders'
equity and changes in cash flows of the Company and its consolidated
subsidiaries for the periods therein specified; and such financial statements
and related schedules and notes thereto have been prepared in conformity with
United States generally accepted accounting principles, consistently applied
throughout the periods involved (except as otherwise stated therein and subject,
in the case of unaudited financial statements, to the absence of footnotes and
normal year-end adjustments). The historical consolidated financial statements
of the Triad Energy Corporation and certain of its affiliates ("Triad"), together with the
related schedules and notes thereto set forth or incorporated by reference in
the Registration Statement, the Prospectus and the Disclosure Package comply in
all material respects with the applicable requirements of the Securities Act and
the Exchange Act, as applicable, and present fairly in all material respects (i)
the financial condition of Triad as of the dates indicated and (ii) the
consolidated results of operations, stockholders' equity and changes in cash
flows of Triad for the periods therein specified; and such financial statements
and related schedules and notes thereto have been prepared in conformity with
United States generally accepted accounting principles, consistently applied
throughout the periods involved (except as otherwise stated therein and subject,
in the case of unaudited financial statements, to the absence of footnotes and
normal year-end adjustments).  There are no other financial statements
(historical or pro forma) that are required to be included or incorporated by
reference in the Registration Statement, the Prospectus or the Disclosure
Package; and the Company does not have any material liabilities or obligations,
direct or contingent (including any off-balance sheet obligations), not
disclosed in the Registration Statement, the Disclosure Package and the
Prospectus; and all disclosures contained in the Registration Statement, the
Disclosure Package and the Prospectus regarding "non-GAAP financial measures"
(as such term is defined by the rules and regulations of the Commission) comply
with Regulation G of the Exchange Act and Item 10(e) of Regulation S-K under the
Securities Act, to the extent applicable, and present fairly the information
shown therein and the Company's basis for using such measures.

     

    

    
      
        
           

        

        
          10

          
            

          

        

        
           

        

      

    

    

    (u)           Pro Forma Financial
Information.  The pro forma financial statements included in
the Registration Statement, the Prospectus and the General Disclosure Package
reflect, subject to the limitations set forth therein as to such pro forma
financial information, the results of operations of the Company and its
consolidated subsidiaries purported to be shown thereby for the periods
indicated and conform to the requirements of Regulation S-X of the Rules and
Regulations under the Securities Act, and management of the Company believes (i)
the assumptions underlying the pro forma adjustments are reasonable, (ii) that
such adjustments have been properly applied to the historical amounts in the
compilation of such pro forma statements and notes thereto, and (iii) that such
statements and notes thereto present fairly, with respect to the Company and its
consolidated subsidiaries, the pro forma financial position and results of
operations and the other information purported to be shown therein at the
respective dates or for the respective periods therein specified.

     

    (v)           Absence of Material Changes.
Subsequent to the respective dates as of which information is given in the
Registration Statement, the Prospectus and the Disclosure Package, and except as
may be otherwise stated or incorporated by reference in the Registration
Statement, the Prospectus and the Disclosure Package, and the delivery to JP
Morgan Chase, as escrow agent (the “Escrow Agent”), of an aggregate of 601,652
shares of Common Stock to satisfy the Company’s deposit obligation in the Triad
acquisition, there has not been (i) any Material Adverse Effect, (ii) any
transaction which is material to the Company or any of its subsidiaries, (iii)
any obligation, direct or contingent (including any off-balance sheet
obligations), incurred by the Company or any of its subsidiaries, which is
material to the Company or any of its subsidiaries, (iv) any dividend or
distribution of any kind declared, paid or made on the capital stock of the
Company, (v) any change in the capital stock (other than a change in the number
of outstanding shares of Common Stock due to the issuance of shares upon the
exercise of outstanding options or warrants or the conversion of convertible
indebtedness), or material change in the short-term debt or long-term debt of
the Company or any of its subsidiaries (other than upon conversion of
convertible indebtedness) or any issuance of options, warrants, convertible
securities or other rights to purchase the capital stock (other than grants of
stock options under the Company's stock option plans existing on the date
hereof) of the Company or any of its subsidiaries.

     

    (w)           Legal Proceedings. Except as
disclosed in the Company's filings with the Commission, there are no legal or
governmental actions, suits, claims or proceedings pending or, to the Company's
knowledge, threatened or contemplated to which the Company or any of its
subsidiaries is or would be a party or of which any of their respective
properties is or would be subject at law or in equity, before or by any federal,
state, local or foreign governmental or regulatory commission, board, body,
authority or agency, or before or by any self-regulatory organization or other
non-governmental regulatory authority which are required to be described in the
Registration Statement, the Disclosure Package or the Prospectus or a document
incorporated by reference therein and are not so described therein, or which,
singularly or in the aggregate, if resolved adversely to the Company or such
subsidiary, would reasonably be likely to result in a Material Adverse Effect or
prevent or materially and adversely affect the ability of the Company to
consummate the transactions contemplated hereby. To the Company's knowledge, no
such proceedings are threatened or contemplated by governmental authorities or
threatened by other third parties.

     

    

    
      
        
           

        

        
          11

          
            

          

        

        
           

        

      

    

    

    (x)           No Violation. Neither the
Company nor any of its subsidiaries is in breach or violation of or in default
(nor has any event occurred which with notice, lapse of time or both would
result in any breach or violation of, or constitute a default) (i) under the
provisions of its charter or bylaws (or analogous governing instrument, as
applicable) or (ii) in the performance or observance of any term, covenant,
obligation, agreement or condition contained in any indenture, mortgage, deed of
trust, bank loan or credit agreement or other evidence of indebtedness, or any
license, lease, contract or other agreement or instrument to which the Company
or such subsidiary is a party or by which any of its properties may be bound or
affected, or (iii) in the performance or observance of any statute, law, rule,
regulation, ordinance, judgment, order or decree of any court, regulatory body,
administrative agency, governmental body, arbitrator or other authority having
jurisdiction over the Company or such subsidiary or any of its properties, as
applicable, except, with respect to clauses (ii) and (iii) above, to the extent
any such contravention has been waived or would not result in a Material Adverse
Effect.

     

    (y)           Permits. The Company and each
of its subsidiaries have made all filings, applications and submissions required
by, and owns or possesses all approvals, licenses, certificates, certifications,
clearances, consents, exemptions, marks, notifications, orders, permits and
other authorizations issued by, the appropriate federal, state or foreign
regulatory authorities necessary to conduct its business as described in the
Disclosure Package (collectively, "Permits"), and is in
compliance in all material respects with the terms and conditions of all such
Permits. All such Permits are valid and in full force and effect. Neither the
Company nor any of its subsidiaries has received any notice of any proceedings
relating to revocation or modification of, any such Permit, which, individually
or in the aggregate, if the subject of an unfavorable decision, ruling or
finding, would have a Material Adverse Effect.  Except as may be
required under the Securities Act and state and foreign Blue Sky laws and the
rules and regulations of FINRA, no other Permits are required for the Company or
any of its subsidiaries to enter into, deliver and perform this Agreement and to
issue and sell the Units to be issued and sold by the Company
hereunder.

     

    (z)        
   Not an
Investment Company. The Company is not or, after giving effect to the
offering and sale of the Units and the application of the proceeds thereof as
described in the Disclosure Package and the Prospectus, will not be (i) required
to register as an "investment company" as defined in the Investment Company Act
of 1940, as amended (the "Investment Company Act"), and
the rules and regulations of the Commission thereunder or (ii) a "business
development company" (as defined in Section 2(a)(48) of the Investment
Company Act).

     

    (aa)          No Price Stabilization.
Neither the Company nor any of its subsidiaries, or any of their respective
officers, directors, affiliates or controlling persons has taken or will take,
directly or indirectly, any action designed to or that would be reasonably
expected to cause or result in, or which has constituted or which would
reasonably be expected to constitute the stabilization or manipulation of the
price of any security of the Company to facilitate the sale or resale of the
Units.

     

    (bb)         Good Title to Property. The
Company and each of its subsidiaries has good and defensible title to all
property (whether real or personal) described in the Registration Statement, the
Disclosure Package and the Prospectus as being owned by it, in each case free
and clear of all liens, claims, security interests, other encumbrances or
defects (collectively, "Liens"), except such as are
described in the Registration Statement, the Disclosure Package and the
Prospectus and those that would not, individually or in the aggregate materially
affect the value of such property and do not materially interfere with the use
made and proposed to be made of such property by the Company or any of its
subsidiaries. All of the property described in the Registration Statement,
Disclosure Package and the Prospectus as being held under lease by the Company
or any of its subsidiaries is held thereby under valid, subsisting and
enforceable leases, without any liens, restrictions, encumbrances or claims,
except those that, individually or in the aggregate, are not material and
do not materially interfere with the use made and proposed to be made of such
property by the Company or such subsidiary.

     

    

    
      
        
           

        

        
          12

          
            

          

        

        
           

        

      

    

    

    (cc)       
  Intellectual
Property Rights. The Company and each of its subsidiaries owns or
possesses the right to use all patents, trademarks, trademark registrations,
service marks, service mark registrations, trade names, copyrights, licenses,
inventions, software, databases, know-how, Internet domain names, trade secrets
and other unpatented and/or unpatentable proprietary or confidential
information, systems or procedures, and other intellectual property
(collectively, "Intellectual
Property") necessary to carry on its businesses as currently conducted,
and as proposed to be conducted as described in the Disclosure Package and the
Prospectus, and the Company is not aware of any claim to the contrary or any
challenge by any other person to the rights of the Company or any of its
subsidiaries with respect to the foregoing except for those that could not have
a Material Adverse Effect. The Intellectual Property licenses described in the
Disclosure Package and the Prospectus are, to the knowledge of the Company,
valid, binding upon, and enforceable by or against the parties thereto in
accordance with their terms. The Company and each of its subsidiaries has
complied in all material respects with, and is not in breach nor has received
any asserted or threatened claim of breach of, any Intellectual Property
license, and the Company has no knowledge of any breach or anticipated breach by
any other person of any Intellectual Property license.  The Company's
and each of its subsidiaries' business as now conducted and as proposed to be
conducted, to the knowledge of the Company, does not and will not infringe or
conflict with any patents, trademarks, service marks, trade names, copyrights,
trade secrets, licenses or other Intellectual Property or franchise right of any
person. Neither the Company nor any of its subsidiaries has received notice of
any claim against the Company or any of its subsidiaries alleging the
infringement by the Company or any of its subsidiaries of any patent, trademark,
service mark, trade name, copyright, trade secret, license in or other
intellectual property right or franchise right of any person. The Company and
each of its subsidiaries has taken all reasonable steps to protect, maintain and
safeguard its rights in all Intellectual Property, including the execution of
appropriate nondisclosure and confidentiality agreements. The consummation of
the transactions contemplated by this Agreement will not result in the loss or
impairment of or payment of any additional amounts with respect to, nor require
the consent of any other person in respect of, the Company's or any of its
subsidiaries' right to own, use, or hold for use any of the Intellectual
Property as owned, used or held for use in the conduct of the businesses as
currently conducted.  Neither the Company nor any of its subsidiaries
owns any patents or has made application for the issuance of a
patent.  To the Company's knowledge, no employee of the Company or any
of its subsidiaries is the subject of any claim or proceeding involving a
violation of any term of any employment contract, patent disclosure agreement,
invention assignment agreement, non-competition agreement, non-solicitation
agreement, nondisclosure agreement or any restrictive covenant to or with a
former employer where the basis of such violation relates to such employee's
employment with the Company or any of the Company's subsidiaries or actions
undertaken by the employee while employed with the Company or any of the
Company's subsidiaries.

     

    

    
      
        
           

        

        
          13

          
            

          

        

        
           

        

      

    

    

    (dd)           No Labor Disputes. No labor
problem or dispute with the employees of the Company or any of the Company's
subsidiaries exists, or, to the Company's knowledge, is threatened or imminent,
which would reasonably be expected to result in a Material Adverse Effect. The
Company is not aware that any key employee or significant group of employees of
the Company or any of the Company's subsidiaries plans to terminate employment
with the Company or any of the Company's subsidiaries. Neither the Company nor
any of its subsidiaries has engaged in any unfair labor practice; except for
matters which would not, individually or in the aggregate, result in a Material
Adverse Effect, (i) there is (A) no unfair labor practice complaint pending or,
to the Company's knowledge, threatened against the Company or any of its
subsidiaries before the National Labor Relations Board, and no grievance or
arbitration proceeding arising out of or under collective bargaining agreements
is pending or to the Company's knowledge, threatened, (B) no strike, labor
dispute, slowdown or stoppage pending or, to the Company's knowledge, threatened
against the Company or any of its subsidiaries and (C) no union representation
dispute currently existing concerning the employees of the Company or any of its
subsidiaries and (ii) to the Company's knowledge, (A) no union organizing
activities are currently taking place concerning the employees of the Company or
any of its subsidiaries and (B) there has been no violation of any federal,
state, local or foreign law relating to discrimination in the hiring, promotion
or pay of employees, any applicable wage or hour laws or any provision of the
Employee Retirement Income Security Act of 1974 ("ERISA") or the rules and
regulations promulgated thereunder concerning the employees of the Company or
any of its subsidiaries.

     

    (ee)          Taxes. Except as disclosed in
its filings with the Commission, the Company and each of its subsidiaries (i)
has timely filed all necessary federal, state, local and foreign income and
franchise tax returns (or timely filed applicable extensions therefor) that have
been required to be filed and (ii) is not in default in the payment of any taxes
which were payable pursuant to such returns or any assessments with respect
thereto, other than any which the Company or any of its subsidiaries is
contesting in good faith and for which adequate reserves have been provided and
reflected in the Company's financial statements included in the Registration
Statement, the Disclosure Package and the Prospectus. Neither the Company nor
any of its subsidiaries has any tax deficiency that has been or, to the
knowledge of the Company, is reasonably likely to be asserted or threatened
against it that would result in a Material Adverse Effect.  Neither
the Company nor any of its subsidiaries has engaged in any transaction which is
a corporate tax shelter or which could be characterized as such by the Internal
Revenue Service or any other taxing authority.

     

    (ff)           ERISA. The Company and each
of its subsidiaries is in compliance in all material respects with all presently
applicable provisions of ERISA; no "reportable event" (as defined in ERISA) has
occurred with respect to any "pension plan" (as defined in ERISA) for which the
Company or any of its subsidiaries would have any liability; neither the Company
nor any of its subsidiaries has incurred and does not expect to incur liability
under (i) Title IV of ERISA with respect to termination of, or withdrawal from,
any "pension plan" or (ii) Sections 412 or 4971 of the Internal Revenue Code of
1986, as amended, including the regulations and published interpretations
thereunder (the "Code"); and each "pension
plan" for which the Company or any of its subsidiaries would have any liability
that is intended to be qualified under Section 401(a) of the Code is so
qualified in all material respects and nothing has occurred, whether by action
or by failure to act, which would cause the loss of such
qualification.

     

    

    
      
        
           

        

        
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    (gg)         Compliance with Environmental
Laws. The Company and each of its subsidiaries (i) is in compliance with
any and all applicable foreign, federal, state and local laws, orders, rules,
regulations, directives, decrees and judgments relating to the use, treatment,
storage and disposal of hazardous or toxic substances or waste and protection of
human health and safety or the environment which are applicable to their
businesses ("Environmental
Laws"); (ii) has received and is in compliance with all permits, licenses
or other approvals required of it under applicable Environmental Laws to conduct
its business; and (iii) is in compliance with all terms and conditions of any
such permit, license or approval, except where such noncompliance with
Environmental Laws, failure to receive required permits, licenses or other
approvals or failure to comply with the terms and conditions of such permits,
licenses or approvals would not, individually or in the aggregate, result in a
Material Adverse Effect. There are no costs or liabilities associated with
Environmental Laws (including, without limitation, any capital or operating
expenditures required for clean-up, closure of properties or compliance with
Environmental Laws or any permit, license or approval, any related constraints
on operating activities and any potential liabilities to third parties) which
would, individually or in the aggregate, result in a Material Adverse
Effect.

     

    (hh)         Insurance. The Company and
each of its subsidiaries maintains or is covered by insurance provided by
recognized, financially sound and reputable institutions with insurance policies
in such amounts and covering such risks as is adequate for the conduct of its
business and the value of its properties and as is customary for companies
engaged in similar businesses in similar industries. All such insurance is fully
in force on the date hereof and will be fully in force as of the Closing Date.
The Company has no reason to believe that it and its subsidiaries will not be
able to renew their existing insurance coverage as and when such coverage
expires or to obtain similar coverage from similar insurers as may be necessary
to continue its business at a cost that would not have a Material Adverse
Effect.  Neither the Company nor any of its subsidiaries has been
denied any material insurance policy or coverage for which it has
applied.  Neither the Company nor any of its subsidiaries insures risk
of loss through any captive insurance, risk retention group, reciprocal group or
by means of any fund or pool of assets specifically set aside for contingent
liabilities other than as described in the Disclosure Package.

     

    (ii)     
      Accounting Controls. The
Company maintains a system of internal accounting controls sufficient to provide
reasonable assurances that (i) transactions are executed in accordance with
management's general or specific authorization; (ii) transactions are
recorded as necessary to permit preparation of financial statements in
conformity with generally accepted accounting principles and to maintain
accountability for assets; (iii) access to assets is permitted only in
accordance with management's general or specific authorization; and
(iv) the recorded accountability for assets is compared with existing
assets at reasonable intervals and appropriate action is taken with respect to
any differences.

     

    

    
      
        
           

        

        
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    (jj)           Disclosure Controls. The
Company has established, maintains and evaluates "disclosure controls and
procedures" (as such term is defined in Rule 13a-15(e) and 15d-15(e) under
the Exchange Act), which (i) are designed to ensure that material
information relating to the Company and its subsidiaries is made known to the
Company's principal executive officer and its principal financial officer by
others within those entities, particularly during the periods in which the
periodic reports required under the Exchange Act are being prepared, (ii) have
been evaluated for effectiveness as of the end of the last fiscal period covered
by the Registration Statement; and (iii) such disclosure controls and procedures
are effective to perform the functions for which they were established. There
are no significant deficiencies or material weaknesses in the design or
operation of internal controls which could adversely affect the Company's
ability to record, process, summarize, or report financial data to management
and the Board of Directors of the Company. The Company is not aware of any
fraud, whether or not material, that involves management or other employees who
have a role in the Company's internal controls; and since the date of the most
recent evaluation of such disclosure controls and procedures, there have been no
significant changes in internal controls or in other factors that could
significantly affect internal controls, including any corrective actions with
regard to significant deficiencies and material weaknesses.  A member
of the Audit Committee of the Board of Directors of the Company (the "Audit Committee") has
confirmed to the Chief Executive Officer, Chief Financial Officer or General
Counsel of the Company that, except as set forth in the Disclosure Package, the
Audit Committee is not reviewing or investigating, and neither the Company's
independent auditors nor its internal auditors have recommended that the Audit
Committee review or investigate, (iv) adding to, deleting, changing the
application of or changing the Company's disclosure with respect to, any of the
Company's material accounting policies, (v) any manner which could result in a
restatement of the Company's financial statements for any annual or interim
period during the current or prior three fiscal years, or (iii) a significant
deficiency, material weakness, change in internal control over financial
reporting or fraud involving management or other employees who have a
significant role in the internal control over financial reporting.

     

    (kk)          Minute Books.  The
minute books of the Company and each of its subsidiaries that would be a
Significant Subsidiary have been made available upon request to the Placement
Agent and counsel for the Placement Agent, and such books (i) contain a
materially complete summary of all meetings and actions of the board of
directors (including each board committee) and shareholders of the Company (or
analogous governing bodies and interest holders, as applicable), and each of its
Significant Subsidiaries since the time of its incorporation or organization
through the date of the latest meeting and action, and (ii) accurately in all
material respects reflect all transactions referred to in such
minutes.

     

    (ll)       
    Contracts; Off-Balance Sheet
Interests. There is no document, contract, permit or instrument, or
off-balance sheet transaction (including without limitation, any "variable
interests" in "variable interest entities," as such terms are defined in
Financial Accounting Standards Board Interpretation No. 46) of a character
required by the Securities Act or the Rules and Regulations to be described in
the Registration Statement or the Disclosure Package or to be filed as an
exhibit to the Registration Statement or document incorporated by reference
therein, which is not described or filed as required.  Each
description of a document, contract, permit or instrument in the Registration
Statement or the Disclosure Package accurately reflects in all material respects
the terms of the underlying document, contract, permit or
instrument.  The documents, contracts, permits and instruments
described in the immediately preceding sentence to which the Company is a party
have been duly authorized, executed and delivered by the Company, constitute
valid and binding agreements of the Company, are enforceable against and by the
Company in accordance with the terms thereof and are in full force and effect on
the date hereof.  Neither the Company nor any of its subsidiaries, if
a subsidiary is a party, nor to the Company's knowledge, any other party is in
default in the observance or performance of any term or obligation to be
performed by it under any such agreement, and no event has occurred which with
notice or lapse of time or both would constitute such a default, in any case
which default or event, individually or in the aggregate, would have a Material
Adverse Effect.  No default exists, and no event has occurred which
with notice or lapse of time or both would constitute a default, in the due
performance and observance of any term, covenant or condition, by the Company or
a subsidiary, if a subsidiary is a party thereto, of any agreement or instrument
to which the Company or any of its subsidiaries is a party or by which the
Company or its properties or business or a subsidiary or the subsidiary's
properties or business may be bound or affected which default or event,
individually or in the aggregate, would have a Material Adverse
Effect.

     

    

    
      
        
           

        

        
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    (mm)        No Undisclosed Relationships.
No relationship, direct or indirect, exists between or among the Company on the
one hand and the directors, officers, stockholders, customers or suppliers of
the Company or any of their affiliates on the other hand, which is required to
be described in the Registration Statement, the Disclosure Package or the
Prospectus or a document incorporated by reference therein and which has not
been so described.

     

    (nn)         Brokers Fees. Except as
disclosed in the Disclosure Package, there are no contracts, agreements or
understandings between the Company and any person (other than this Agreement)
that would give rise to a claim against the Company or the Placement Agent for a
brokerage commission, finder's fee or other like payment in connection with the
offering and sale of the Units.

     

    (oo)          Forward-Looking Statements.
No forward-looking statements (within the meaning of Section 27A of the
Securities Act and Section 21E of the Exchange Act) contained in either the
Disclosure Package or the Prospectus have been made or reaffirmed without a
reasonable basis therefor or have been disclosed other than in good
faith.

     

    (pp)         NYSE Amex; Exchange Act
Registration. The Common Stock is registered pursuant to Section 12(b) or
12(g) of the Exchange Act and is listed on the NYSE Amex, and the Company has
taken no action designed to, or reasonably likely to have the effect of,
terminating the registration of the Common Stock under the Exchange Act or
delisting the Common Stock from the NYSE Amex, nor has the Company received any
notification that the Commission or the NYSE Amex is contemplating terminating
such registration or listing. The Company has complied in all material respects
with the applicable requirements of the NYSE Amex for maintenance of inclusion
of the Common Stock thereon. The Company has filed a notification of the listing
of the additional shares of Common Stock, including the shares of Common Stock
underlying the Warrants, to be issued by the Company pursuant to this Agreement
and the Subscription Agreement, on the NYSE Amex.

     

    (qq)          Sarbanes-Oxley Act. The
Company, and to its knowledge, each of the Company's directors or officers, in
their capacities as such, is in compliance in all material respects with all
applicable effective provisions of the Sarbanes-Oxley Act and any related rules
and regulations promulgated by the Commission. Each of the principal executive
officer and the principal financial officer of the Company (and each former
principal executive officer of the Company and each former principal financial
officer of the Company as applicable) has made all certifications required by
Sections 302 and 906 of the Sarbanes-Oxley Act with respect to all reports,
schedules, forms, statements and other documents required to be filed by him or
her with the Commission. For purposes of the preceding sentence, "principal
executive officer" and "principal financial officer" shall have the meanings
given to such terms in the Sarbanes-Oxley Act.

     

    

    
      
        
           

        

        
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    (rr)           Foreign Corrupt Practices.
Neither the Company nor, to the Company's knowledge, any other person associated
with or acting on behalf of the Company, including without limitation any
director, officer, agent or employee of the Company or any of its subsidiaries
has, directly or indirectly, while acting on behalf of the Company or any of its
subsidiaries (i) used any corporate funds for unlawful contributions, gifts,
entertainment or other unlawful expenses relating to political activity or
failed to disclose fully any contribution in violation of law, (ii) made any
payment to any federal or state governmental officer or official, or other
person charged with similar public or quasi-public duties, other than payments
required or permitted by the laws of the United States or any jurisdiction
thereof, (iii) violated or is in violation of any provision of the U.S. Foreign
Corrupt Practices Act of 1977, as amended or (iv) made any bribe, rebate,
payoff, influence payment, kickback or other unlawful payment.

     

    (ss)           Affiliate
Transactions.  There are no transactions, arrangements or other
relationships between and/or among the Company, any of its affiliates (as such
term is defined in Rule 405) and any unconsolidated entity, including, but not
limited to, any structured finance, special purpose or limited purpose entity
that could reasonably be expected to materially affect the Company's liquidity
or the availability of or requirements for its capital resources required to be
described in the Disclosure Package and the Prospectus or a document
incorporated by reference therein which have not been described as
required.  The Company does not, directly or indirectly, including
through any subsidiary, have any outstanding personal loans or other credit
extended to or for any of its directors or executive officers.

     

    (tt)           Statistical or Market-Related
Data. Any statistical, industry-related or market-related data included
or incorporated by reference in the Registration Statement, the Prospectus or
the Disclosure Package, are based on or derived from sources that the Company
reasonably and in good faith believes to be reliable and accurate, and such data
agree with the sources from which they are derived.

     

    (uu)           Money Laundering Laws. The
operations of the Company and its subsidiaries are and have been conducted at
all times in compliance in all material respects with applicable financial
recordkeeping and reporting requirements of the Currency and Foreign
Transactions Reporting Act of 1970, as amended, the USA PATRIOT Act, the money
laundering statutes of all jurisdictions, the rules and regulations thereunder
and any related or similar rules, regulations or guidelines, issued,
administered or enforced by any governmental agency (collectively, the "Money Laundering Laws") and
no action, suit or proceeding by or before any court or governmental agency,
authority or body or any arbitrator involving the Company with respect to the
Money Laundering Laws is pending, or to the knowledge of the Company, threatened
against the Company or any of its subsidiaries.

     

    (vv)           OFAC. Neither the Company
nor, to the knowledge of the Company, any director, officer, agent, employee or
affiliate of the Company or any of its subsidiaries is currently subject to any
U.S. sanctions administered by the Office of Foreign Assets Control of the U.S.
Treasury Department ("OFAC"); and the Company will
not directly or indirectly use the proceeds of the offering, or lend, contribute
or otherwise make available such proceeds to any affiliate, joint venture
partner or other person or entity, which, to the Company's knowledge, will use
such proceeds for the purpose of financing the activities of any person
currently subject to any U.S. sanctions administered by OFAC.

     

    

    
      
        
           

        

        
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    (ww)        Margin Securities. The
Company does not own any "margin securities" as that term is defined in
Regulation U of the Board of Governors of the Federal Reserve System (the "Federal Reserve Board"), and
none of the proceeds of the sale of the Units will be used, directly or
indirectly, for the purpose of purchasing or carrying any margin security, for
the purpose of reducing or retiring any indebtedness which was originally
incurred to purchase or carry any margin security or for any other purpose which
might cause any of the Units to be considered a "purpose credit" within the
meanings of Regulation T, U or X of the Federal Reserve Board.

     

    (xx)           Rated Securities. At the Time
of Sale there were, and as of the Closing Date there will be, no securities of
or guaranteed by the Company that are rated by a "nationally recognized
statistical rating organization," as that term is defined in Rule 436(g)(2)
promulgated under the Securities Act.

     

    (yy)          FINRA Affiliations. There are
no affiliations or associations between (i) any member of the FINRA and (ii) the
Company or any of the Company's officers, directors or 5% or greater
securityholders or any beneficial owner of the Company's unregistered equity
securities that were acquired at any time on or after the one hundred eightieth
(180th) day immediately preceding the date the Registration Statement was
initially filed with the Commission, except as set forth in the Registration
Statement, the Disclosure Package and the Prospectus.

     

    (zz)           Exchange Act Requirements.
The Company has filed in a timely manner all reports required to be filed
pursuant to Sections 13(a), 13(e), 14 and 15(d) of the Exchange Act during the
preceding 12 months (except to the extent that Section 15(d) requires reports to
be filed pursuant to Sections 13(d) and 13(g) of the Exchange Act, which shall
be governed by the next clause of this sentence); and the Company has filed in a
timely manner all reports required to be filed pursuant to Sections 13(d) and
13(g) of the Exchange Act, except where the failure to timely file could not
reasonably be expected individually or in the aggregate to have a Material
Adverse Effect.

     

    (aaa)        Trading Market. Assuming the
accuracy of the representations of the Investors in the Subscription Agreements,
no approval of the shareholders of the Company under the rules and regulations
of any trading market is required for the Company to issue and deliver to the
Investors the Units.

     

    

    
      
        
           

        

        
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    (bbb)       Reserve
Reports.  The information underlying the estimates of the
reserves of the Company and its subsidiaries, which was supplied by the Company
to Cawley Gillespie & Associates, Inc., ("Cawley"), independent
petroleum engineers, for purposes of preparing the reserve reports incorporated
by reference into the Registration Statement (the "Reserve Reports"), including,
without limitation, production, volumes, sales prices for production,
contractual pricing provisions under oil or gas sales or marketing contracts
under hedging arrangements, costs of operations and development, and working
interest and net revenue interest information relating to the Company's
ownership interests in properties, was true and correct in all material respects
on the dates of such Reserve Reports; the estimates of future capital
expenditures and other future exploration and development costs supplied to
Cawley were prepared in good faith and with a reasonable basis; the information
provided to Cawley by the Company for purposes of preparing the Reserve Reports
was prepared in accordance with customary industry practices; Cawley was, as of
the dates of the Reserve Reports, and is, as of the date hereof, independent
petroleum engineers with respect to the Company; other than any decrease in
reserves resulting from normal production of the reserves and intervening spot
market product price fluctuations or as disclosed in the Preliminary Prospectus
Supplement and incorporated by reference into the Registration Statement, to the
knowledge of the Company, there are not any facts or circumstances that would
adversely affect the reserves in the aggregate, or the aggregate present value
of future net cash flows therefrom, as disclosed in the Preliminary Prospectus
Supplement and incorporated by reference into the Registration Statement and
reflected in the Reserve Reports such as to cause a material adverse change;
estimates of such reserves and the present value of the future net cash flows
therefrom as disclosed in the Preliminary Prospectus Supplement and incorporated
by reference into the Registration Statement and reflected in the Reserve
Reports comply in all material respects to the applicable requirements of
Regulation S-X and Industry Guide 2 under the Securities Act.

     

    (ccc)        To
the best of the Company's knowledge, information and belief, none of the current
directors or officers of the Company or any of its subsidiaries (or such
shareholders' respective principals) is or has ever been subject to prior
regulatory, criminal or bankruptcy proceedings in the U.S. or
elsewhere.

     

    (ddd)       The
Company has not provided and has not authorized any other person to act on its
behalf to provide any Investor or its respective agents or counsel with any
information about the Company that constitutes or might constitute material,
non-public information which is not otherwise disclosed in the
Prospectus.

     

    Any
certificate signed by any officer of the Company and delivered to the Placement
Agent or to counsel for the Placement Agent in connection with the offering of
the Units shall be deemed a representation and warranty by the Company to the
Placement Agent and the Investors as to the matters covered
thereby.

     

    3.           Covenants.
The Company covenants and agrees with the Placement Agent as
follows:

     

    (a)           Reporting Obligations; Exchange Act
Compliance. The Company will file: (i) any Preliminary Prospectus and the
Prospectus with the Commission within the time periods specified by Rule 424(b)
and Rules 430A, 430B or 430C under the Securities Act, as applicable, (ii) any
Issuer Free Writing Prospectus to the extent required by Rule 433 under the
Securities Act, if applicable, (iii) all reports and any definitive proxy or
information statements required to be filed by the Company with the Commission
pursuant to Section 13(a), 13(c), 14 or 15(d) of the Exchange Act subsequent to
the date of the Prospectus during the Prospectus Delivery Period, and (iv)
furnish copies of each Issuer Free Writing Prospectus, if any, (to the extent
not previously delivered) to the Placement Agent prior to 11:00 a.m. New York
City time, on the second business day next succeeding the date of this Agreement
in such quantities as the Placement Agent shall reasonably request.

     

    

    
      
        
           

        

        
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    (b)           Continued Compliance with Securities
Law. If, at any time prior to the filing of the Prospectus pursuant to
Rule 424(b), any event occurs as a result of which the Disclosure Package as
then amended or supplemented would include an untrue statement of a material
fact or omit to state any material fact necessary to make the statements
therein, in the light of the circumstances under which they were made, not
misleading, the Company will (i) promptly notify the Placement Agent so that any
use of the Disclosure Package may cease until it is amended or supplemented and
(ii) amend or supplement the Disclosure Package to correct such statements or
omission. If, during the Prospectus Delivery Period, any event occurs as a
result of which the Prospectus as then amended or supplemented would include an
untrue statement of a material fact or omit to state any material fact necessary
to make the statements therein, in the light of the circumstances under which
they were made, not misleading, or if it is necessary at any time to amend the
Registration Statement or supplement the Prospectus to comply with the
Securities Act, the Company will (A) promptly notify the Placement Agent of such
event and (B) promptly prepare and file with the Commission and furnish, at its
own expense, to the Placement Agent and, to the extent applicable, the dealers
and any other dealers upon request of any Placement Agent, an amendment or
supplement which will correct such statement or omission or an amendment which
will effect such compliance.  The Company will deliver promptly to the
Placement Agent such number of the following documents as the Placement Agent
shall reasonably request:  (i) conformed copies of the Registration
Statement as originally filed with the Commission (in each case excluding
exhibits), (ii) any Preliminary Prospectus, (iii) any Issuer Free
Writing Prospectus, (iii) the Prospectus (the delivery of the documents
referred to in clauses (i), (ii) and (iii) of this subsection
(b) to be made not later than 10:00 a.m., New York City time,
on the business day following the execution and delivery of this Agreement),
(iv) conformed copies of any amendment to the Registration Statement
(excluding exhibits), (v) any amendment or supplement to the Disclosure
Package or the Prospectus (the delivery of the documents referred to in clauses
(iv) and (v) of this subsection
(b) to be made not later than 10:00 a.m., New York City time,
on the business day following the date of such amendment or supplement) and
(vi) any document incorporated by reference in the Disclosure Package or
the Prospectus (excluding exhibits thereto) (the delivery of the documents
referred to in clause (v) of this subsection
(b) to be made not later than 10:00 a.m., New York City time,
on the business day following the date of such document).

     

    (c)           Issuer Free Writing
Prospectuses. The Company will (i) not make any offer relating to the
Units that would constitute an Issuer Free Writing Prospectus or that would
otherwise constitute a "free writing prospectus" (as defined in Rule 405 under
the Securities Act) required to be filed by the Company with the Commission
under Rule 433 under the Securities Act unless the Placement Agent approves its
use in writing prior to first use (each, a "Permitted Free Writing
Prospectus"); provided, that the prior
written consent of the Placement Agent shall be deemed to have been given in
respect of any electronic road show; (ii) treat each Permitted Free Writing
Prospectus prepared or approved by the Company as an Issuer Free Writing
Prospectus; (iii) comply with the requirements of Rules 164 and 433 under the
Securities Act applicable to any Issuer Free Writing Prospectus, including the
requirements relating to filing timely with the Commission, legending and record
keeping; and (iv) not take any action that would result in the Placement Agent
or the Company being required to file with the Commission pursuant to Rule
433(d) under the Securities Act a free writing prospectus prepared by or on
behalf of the Placement Agent that the Placement Agent otherwise would not have
been required to file thereunder. The Company and the Placement Agent, as
applicable, will satisfy the conditions in Rule 433 under the Securities Act to
avoid a requirement to file with the Commission any electronic road
show.

     

    

    
      
        
           

        

        
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    (d)           Conflicting Issuer Free Writing
Prospectus. If at any time following the issuance of an Issuer Free
Writing Prospectus there occurred or occurs an event or development as a result
of which such Issuer Free Writing Prospectus conflicted or would conflict with
the information contained in the Registration Statement relating to the Units or
included or would include an untrue statement of a material fact or omitted or
would omit to state a material fact necessary in order to make the statements
therein, in the light of the circumstances prevailing at that subsequent time,
not misleading, the Company promptly will notify the Placement Agent and will
promptly amend or supplement, at its own expense, such Issuer Free Writing
Prospectus to eliminate or correct such conflict, untrue statement or omission.
The foregoing sentence does not apply to statements in or omissions from any
Issuer Free Writing Prospectus in reliance upon, and in conformity with, written
information furnished to the Company by the Placement Agent specifically for
inclusion therein, which information the parties hereto agree is limited to
the Placement
Agent's Information.

     

    (e)           Blue Sky Laws. The Company
will promptly take or cause to be taken, from time to time, such actions as the
Placement Agent may reasonably request to qualify the Units for offering and
sale under the state securities, or blue sky, laws of such states or other
jurisdictions as the Placement Agent may reasonably request and to maintain such
qualifications in effect so long as the Placement Agent may request for the
distribution of the Units, provided, that in no event
shall the Company be obligated to qualify as a foreign corporation in any
jurisdiction in which it is not so qualified or to file a general consent to
service of process in any jurisdiction or subject itself to taxation as doing
business in any jurisdiction. The Company will advise the Placement Agent
promptly of the suspension of the qualification or registration of (or any
exemption relating to) the Units for offering, sale or trading in any
jurisdiction or any initiation or threat of any proceeding for any such purpose,
and in the event of the issuance of any order suspending such qualification,
registration or exemption, the Company shall use its best efforts to obtain the
withdrawal thereof at the earliest possible moment.

     

    (f)     
      Earnings Statement. As soon
as practicable, the Company will make generally available to holders of its
securities and deliver to the Placement Agent, an earnings statement of the
Company (which need not be audited) covering a period of at least 12 months
beginning after the date of this Agreement that will satisfy the provisions of
Section 11(a) of the Securities Act and the Rules and Regulations (including, at
the option of the Company, Rule 158).

     

    (g)           Use of Proceeds. The Company
will apply the net proceeds from the sale of the Units in the manner set forth
in the Registration Statement, the Disclosure Package and the Prospectus under
the heading "Use of Proceeds."

     

    

    
      
        
           

        

        
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    (h)           Public Communications. Prior
to 9:00 a.m. New York City time on the business day immediately subsequent to
the date hereof, the Company shall issue a press release (the "Press Release") reasonably
acceptable to the Placement Agent disclosing the execution of this Agreement,
the Subscription Agreements and the transactions contemplated hereby and
thereby.  Except for (i) an earnings release for the quarter ended
September 30, 2009 and the related Current Report on Form 8-K, (ii) a Current
Report on Form 8-K describing the Company’s issuance of Common Stock and
warrants in a shelf take-down under the Registration Statement, (iii) a press
release announcing the Company's credit facility with Bank of Montreal and the
related Current Report on Form 8-K and (iv) the Company's Form 10-Q for the
quarter ended September 30, 2009 prior to the Closing Date, the Company
covenants not to issue any press release (other than the Press Release) or other
communication directly or indirectly or hold any press conference with respect
to the Company, its condition, financial or otherwise, or earnings, business
affairs or business prospects (except for routine oral marketing communications
in the ordinary course of business and consistent with the past practices of the
Company and of which the Placement Agent is notified), without the prior written
consent of the Placement Agent, unless in the judgment of the Company and its
counsel, and after notification to the Placement Agent, such press release or
communication is required by law.

     

    (i)           Stabilization. The Company
will not take directly or indirectly any action designed, or that might
reasonably be expected to cause or result in, or that will constitute,
stabilization or manipulation of the price of any security of the Company to
facilitate the sale or resale of any of the Units.

     

    (j)           Transfer Agent. The Company
shall engage and maintain, at its expense, a transfer agent and, if necessary
under the jurisdiction of incorporation of the Company, a registrar for the
Units.

     

    (k)           Listing. The Company shall
use its reasonable best efforts to ensure the additional shares of Common Stock,
including the shares of Common Stock underlying the Warrants, are listed for
quotation on the NYSE Amex at the Closing Date and to maintain such
listing.

     

    (l)           Investment Company Act. The
Company shall not invest, or otherwise use the proceeds received by the Company
from its sale of the Units in such a manner as would require the Company to
register as an investment company under the Investment Company Act.

     

    (m)           Sarbanes-Oxley Act. The
Company will comply in all material respects with all effective applicable
provisions of the Sarbanes Oxley Act.

     

    (n)           Periodic Reports. The Company
will file with the Commission such periodic and special reports as are required
by the Exchange Act.

     

    

    
      
        
           

        

        
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    (o)           Lock-Up
Period.  That the Company will not, for a period of forty-five
(45) days from the date of this Agreement, (the "Lock-Up Period") without the
prior written consent of the Placement Agent, directly or indirectly offer,
sell, assign, transfer, pledge, contract to sell, grant any option to purchase,
make any short sale or otherwise dispose of, any shares of Common Stock or any
securities convertible into or exercisable or exchangeable for Common Stock,
other than (i) the Company's sale of the Units hereunder, (ii) the
issuance of Common Stock or options to acquire Common Stock pursuant to the
Company's employee benefit plans, qualified stock option plans or other director
or employee compensation plans as such plans are in existence on the date hereof
and described in the Prospectus (provided, however, that the Company's
directors, officers and employees may put in place a 10(b)5-1 trading plan
during the Lock-Up Period that becomes effective after the termination of the
Lock-Up Period), (iii) the issuance of Common Stock pursuant to the valid
exercises of options, warrants or rights outstanding on the date hereof,
(iv) the issuance of up to 10 million shares of Common Stock or securities
convertible into or exercisable or exchangeable for up to 10 million shares of
Common Stock, for the purpose of mergers and acquisitions, (v) the issuance
of any additional shares of Common Stock pursuant to the Company's existing
at-the-market program, and (vi) the deposit of such additional number of shares
of Common Stock with the Escrow Agent as may be required pursuant to the Triad
acquisition.  The Company will cause each executive officer and
director, and each shareholder listed in Schedule III to
furnish to the Placement Agent, prior to the date of this Agreement, a letter,
substantially in the form of Exhibit C
hereto, pursuant to which each such person shall agree, among other things, not
to directly or indirectly offer, sell, assign, transfer, pledge, contract to
sell, or otherwise dispose of, or announce the intention to otherwise dispose
of, any shares of Common Stock or any securities convertible into or exercisable
or exchangeable for Common Stock, not to engage in any swap, hedge or similar
agreement or arrangement that transfers, in whole or in part, directly or
indirectly, the economic risk of ownership of Common Stock or any such
securities and not to engage in any short selling of any Common Stock or any
such securities, during the Lock-Up Period, without the prior written consent of
the Placement Agent.  The Company also agrees that during the Lock-Up
Period, other than for the sale of the Units hereunder and under the
circumstances set forth in clauses (ii) through (v) hereof, without prior
written consent of the Placement Agent, the Company will not file any
registration statement, preliminary prospectus or prospectus, or any amendment
or supplement thereto, under the Securities Act for any such transaction or
which registers, or offers for sale, Common Stock or any securities convertible
into or exercisable or exchangeable for Common Stock, except for (i) a
registration statement on Form S-8 relating to employee benefit plans and
(ii) the Underlying Warrant Stock Registration Statement. 

     

    (p)           The
Company shall maintain the effectiveness of the Registration Statement (or a
suitable replacement) while any of the Warrants are outstanding; provided,
however, that the Company may suspend the use of the Registration Statement for
a period of not more than 30 days (a "Blackout Period") upon the
advice of counsel that such Blackout Period is necessary due to material
non-public information in the Company's possession.

     

    4.           Costs and
Expenses. The Company, whether or not the transactions contemplated
hereunder are consummated or this Agreement is terminated, will pay or reimburse
the Placement Agent all actual and accountable direct and reasonable expenses
incident to the performance of this Agreement and in connection with the
transactions contemplated hereby, including the reasonable legal fees and
expenses of counsel to the Placement Agent; provided that the aggregate of the
expenses paid by the Company pursuant to this Section 4 and Section 4 of that
certain Placement Agency Agreement by and between the Company and the Placement
Agent, dated of even date herewith and pertaining to the offering of 3,903,720
Units, shall not exceed $100,000.00.

     

    

    
      
        
           

        

        
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    5.           Conditions of
Placement Agent's Obligations. The obligations of the Placement Agent
hereunder and the Investors under the Subscription Agreements are subject to the
following conditions:

     

    (a)           Filings with the Commission.
Each Issuer Free Writing Prospectus, if any, and the Prospectus shall have been
filed with the Commission within the applicable time period prescribed for such
filing by, and in compliance with, the Rules and Regulations and in accordance
with Section
3(a) hereof.

     

    (b)           No Stop Orders. Prior to the
Closing: (i) no stop order suspending the effectiveness of the Registration
Statement or any part thereof, preventing or suspending the use of the
Prospectus or any Issuer Free Writing Prospectus or any part thereof shall have
been issued under the Securities Act and no proceedings for that purpose or
pursuant to Section 8A under the Securities Act shall have been initiated or
threatened by the Commission, (ii) no order suspending the qualification or
registration of the Units under the securities or blue sky laws of any
jurisdiction shall be in effect and (iii) all requests for additional
information on the part of the Commission (to be included or incorporated by
reference in the Registration Statement, the Disclosure Package, the Prospectus
or any Issuer Free Writing Prospectus or otherwise) shall have been complied
with to the reasonable satisfaction of the Placement Agent. On or prior to the
Closing Date, the Registration Statement or any amendment thereof or supplement
thereto shall not contain an untrue statement of material fact or omit to state
a material fact required to be stated therein or necessary to make the
statements therein not misleading, and neither the Disclosure Package, nor any
Issuer Free Writing Prospectus nor the Prospectus nor any amendment thereof or
supplement thereto shall contain any untrue statement of a material fact or omit
to state a material fact required to be stated therein or necessary to make the
statements therein, in light of the circumstances in which they were made, not
misleading.

     

    (c)           Action Preventing Issuance.
No action shall have been taken and no law, statute, rule, regulation or order
shall have been enacted, adopted or issued by any governmental agency or body
which would prevent the issuance or sale of the Units or materially and
adversely affect or potentially materially and adversely affect the business or
operations of the Company; and no injunction, restraining order or order of any
other nature by any federal or state court of competent jurisdiction shall have
been issued which would prevent the issuance or sale of the Units or materially
and adversely affect or potentially materially and adversely affect the business
or operations of the Company.

     

    (d)           Material Adverse Change.
Subsequent to the date of the latest audited financial statements included or
incorporated by reference in the Disclosure Package, (i) neither the Company nor
any of its subsidiaries has sustained any material loss or interference with its
business from fire, explosion, flood or other calamity, whether or not covered
by insurance, or from any labor dispute or court or governmental action, order
or decree, otherwise than as set forth in the Disclosure Package, (ii) there has
not been any change in the capital stock (other than a change in the number of
outstanding shares of Common Stock due to the issuance of shares upon the
exercise of outstanding options or warrants or the conversion of convertible
indebtedness), or material change in the short–term debt or long–term debt of
the Company (other than upon conversion of convertible indebtedness) or any
material adverse change, in or affecting the business, assets, general affairs,
management, financial position, stockholders' equity or results of operations of
the Company, otherwise than as set forth in the Disclosure Package, the effect
of which, in any such case described in clause (i) or (ii) of this subsection (d), is, in the
reasonable judgment of the Placement Agent, so material and adverse as to make
it impracticable or inadvisable to proceed with the sale or delivery of the
Units on the terms and in the manner contemplated in the Disclosure
Package.

     

    

    
      
        
           

        

        
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    (e)           Representations and
Warranties. Each of the representations and warranties of the Company
contained herein shall be true and correct when made and on and as of the
Closing Date, as if made on such date (except that those representations and
warranties that address matters only as of a particular date shall remain true
and correct as of such date), and all covenants and agreements herein contained
to be performed on the part of the Company and all conditions herein contained
to be fulfilled or complied with by the Company at or prior to the Closing Date
shall have been duly performed, fulfilled or complied with.

     

    (f)           Opinions of Counsel to the
Company. The Placement Agent shall have received from Fulbright &
Jaworski L.L.P., counsel to the Company, such counsel's written opinion,
addressed to the Placement Agent and the Investors and dated the Closing Date,
in form and substance reasonably satisfactory to the Placement Agent and their
counsel. Such counsel to the Company shall also have furnished to the Placement
Agent a written statement ("Negative Assurances"),
addressed to the Placement Agent and dated the Closing Date, in form and
substance satisfactory to the Placement Agent and its counsel.

     

    (g)           Opinion of Counsel to the Placement
Agent.  The Placement Agent shall have received from Bracewell
& Giuliani LLP, counsel for the Placement Agent, such opinion or opinions,
dated the Closing Date, with respect to such matters as the Placement Agent may
reasonably require, and the Company shall have furnished to such counsel such
documents as it requests to enable it to pass upon such matters.

     

    (h)           Accountant's Comfort
Letter.  On the date hereof, the Placement Agent shall have
received a letter dated the date hereof (the "Comfort Letter"), addressed
to the Placement Agent and in form and substance reasonably satisfactory to the
Placement Agent and its counsel, from each of Malone & Bailey, PC and
Appalachian Basin CPAs, Inc., (i) confirming that they are independent public
accountants with respect to the Company within the meaning of the Securities Act
and the Rules and Regulations and (ii) stating, as of the date hereof (or, with
respect to matters involving changes or developments since the respective dates
as of which specified financial information is given in the Disclosure Package,
as of a date not more than three days prior to the date hereof), the conclusions
and findings of such firm with respect to the financial information and other
matters ordinarily covered by accountants' "comfort letters" to underwriters,
delivered according to Statement of Auditing Standards No. 72 and Statement of
Auditing Standard No. 100 (or successor bulletins), in connection with
registered public offerings.

     

    (i)           Bring-Down Letter. On the
Closing Date, the Placement Agent shall have received from Malone & Bailey,
PC a letter (the "Bring-Down
Letter"), dated the Closing Date, addressed to Placement Agent and in
form and substance reasonably satisfactory to the Placement Agent and its
counsel, (i) confirming that they are independent public accountants with
respect to the Company within the meaning of the Securities Act and the Rules
and Regulations, (ii) stating, as of the date of the Bring-Down Letter (or, with
respect to matters involving changes or developments since the respective dates
as of which specified financial information is given in the Disclosure Package
and the Prospectus, as of a date not more than three days prior to the date of
the Bring-Down Letter), the conclusions and findings of such firm with respect
to the financial information and other matters covered by the Comfort Letter and
(iii) confirming in all material respects the conclusions and findings set forth
in the Comfort Letter.

     

    

    
      
        
           

        

        
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    (j)           Officer's Certificate. The
Placement Agent shall have received on the Closing Date a certificate, addressed
to the Placement Agent and dated the Closing Date, of the chief executive or
chief operating officer and the chief financial officer or chief accounting
officer of the Company to the effect that:

     

    (i)           each
of the representations, warranties and agreements of the Company contained in
this Agreement were true and correct when originally made and are true and
correct as of the Time of Sale and the Closing Date as if made on each such date
(except that those representations and warranties that address matters only as
of a particular date remain true and correct as of each such date); and the
Company has complied with all agreements and satisfied all the conditions on its
part required under this Agreement to be performed or satisfied at or prior to
the Closing Date;

    

    (ii)           there
has not been, subsequent to the date of the most recent audited financial
statements included or incorporated by reference in the Disclosure Package, any
material adverse change in the financial position or results of operations of
the Company, or any change or development that, singularly or in the aggregate,
would involve a material adverse change or a prospective material adverse
change, in or affecting the condition (financial or otherwise), results of
operations, business or assets of the Company except as set forth in the
Prospectus;

    

    (iii)           no
stop order suspending the effectiveness of the Registration Statement or any
part thereof or any amendment thereof or the qualification of the Units for
offering or sale, nor suspending or preventing the use of the Disclosure
Package, the Prospectus or any Issuer Free Writing Prospectus shall have been
issued, and no proceedings for that purpose or pursuant to Section 8A under the
Securities Act shall be pending or to their knowledge, threatened by the
Commission or any state or regulatory body;

    

    (iv)           the
Registration Statement and each amendment thereto, at the Time of Sale and as of
the date of this Agreement and as of the Closing Date did not include any untrue
statement of a material fact and did not omit to state a material fact required
to be stated therein or necessary to make the statements therein not misleading,
and the Disclosure Package, as of the Time of Sale and as of the Closing Date,
any Issuer Free Writing Prospectus as of its date and as of the Closing Date,
the Prospectus and each amendment or supplement thereto, as of the respective
date thereof and as of the Closing Date, did not include any untrue statement of
a material fact and did not omit to state a material fact necessary in order to
make the statements therein, in the light of the circumstances in which they
were made, not misleading; and

    

    

    
      
        
           

        

        
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    (v)           no
event has occurred as a result of which it is necessary to amend or supplement
the Registration Statement, the Prospectus or the Disclosure Package in order to
make the statements therein not untrue or misleading in any material
respect.

    

    (k)           The NYSE Amex. The shares of
Common Stock, including the shares of Common Stock underlying the Warrants,
issued pursuant to this Agreement and the Subscription Agreement shall have been
listed and authorized for trading on the NYSE Amex, and satisfactory evidence of
such actions shall have been provided to the Placement Agent, which shall
include oral confirmations from a member of the NYSE Amex staff.

     

    (l)           Subscription Agreements. The
Company shall have entered into the Subscription Agreements with each of the
Investors, and such agreement shall be in full force and effect on the Closing
Date.

     

    (m)           Lock-Up
Letters.  The Placement Agent shall have received the written
agreements, substantially in the form of Exhibit C
hereto, of the executive officers, directors and shareholders of the Company
listed in Schedule
III to this Agreement.

     

    (n)           Additional Documents. Prior
to the Closing Date, the Company shall have furnished to the Placement Agent
such further information, certificates or documents as the Placement Agent shall
have reasonably requested.

     

    All
opinions, letters, evidence and certificates mentioned above or elsewhere in
this Agreement shall be deemed to be in compliance with the provisions hereof
only if they are in form and substance reasonably satisfactory to counsel for
the Placement Agent.

     

    If any
condition specified in this Section 5 is not
satisfied when and as required to be satisfied, this Agreement may be terminated
by the Placement Agent by notice to the Company at any time prior to the Closing
Date, which termination shall be without liability on the part of any party to
any other party, except that Section 4, Section 6 and Section 8 hereof
shall at all times be effective and shall survive such termination.

    

    5.1           Sales to Canadian
Residents.  Canaccord and the Company agree that Units may be
offered to certain residents of Canada in accordance with the terms set out in
Schedule IV
hereto (which terms, and the representations, warranties and covenants set out
in such Schedule, shall be deemed to be incorporated by reference into this
Agreement and form a part hereof), and Canaccord has otherwise caused such offer
and sale to comply with all Applicable Canadian Securities Laws (as defined in
Schedule IV hereto).

    

    6.           Indemnification
and Contribution.

     

    

    
      
        
           

        

        
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    (a)           Indemnification of the Placement
Agent. The Company agrees to indemnify, defend and hold harmless the
Placement Agent, its affiliates and each of its respective directors, officers,
members, employees, representatives and agents and any person who controls the
Placement Agent within the meaning of Section 15 of the Securities Act or
Section 20 of the Exchange Act, and the successors and assigns of all of the
foregoing persons, from and against any losses, claims, damages, expenses or
liabilities, joint or several, to which such person may become subject, under
the Securities Act, the Exchange Act, or other federal or state statutory law or
regulation, the common law or otherwise (including in settlement of any
litigation if such settlement is effected with the written consent of the
Company), insofar as such losses, claims, damages or liabilities (or actions in
respect thereof) arise out of or are based upon (i) any untrue statement or
alleged untrue statement of a material fact contained in the Registration
Statement, any Preliminary Prospectus, the Disclosure Package, the Prospectus,
or any amendment or supplement thereto, any Issuer Free Writing Prospectus or in
any materials or information provided to Investors by, or with the approval of,
the Company in connection with the marketing of the offering of the Common Stock
("Marketing
Materials"), including any roadshow or investor presentations made to
Investors by the Company (whether in person or electronically) or arise out of
or are based upon the omission or alleged omission to state therein a material
fact required to be stated therein or necessary to make the statements therein
not misleading, and will reimburse the Placement Agent for any reasonable legal
or other expenses incurred by it in connection with investigating or defending
against such loss, claim, damage, liability, expense or action; or (ii) in whole
or in part upon any inaccuracy in the representations and warranties of the
Company contained herein; or (iii) in whole or in part upon any failure of the
Company to perform its obligations hereunder or under law; provided, however, that the
Company shall not be liable in any such case to the extent that any such loss,
claim, damage, expense, liability or action arises out of or is based upon (x)
an untrue statement or alleged untrue statement or omission or alleged omission
made in the Registration Statement, any Preliminary Prospectus, the Disclosure
Package, the Prospectus, or any such amendment or supplement, any Issuer Free
Writing Prospectus or in any Marketing Materials, in reliance upon and in
conformity with written information furnished to the Company by the Placement
Agent, specifically for use in the preparation thereof, which information the
parties hereto agree is limited to the Placement Agent's Information or (y) an
untrue statement or alleged untrue statement of a material fact, or omission or
alleged omission to state a material fact in the Registration Statement, any
Preliminary Prospectus, the Disclosure Package, the Prospectus, any such
amendment or supplement, any Issuer Free Writing Prospectus or any Marketing
Materials that is corrected by an amendment or other corrective materials
provided by the Company to the Placement Agent and the Placement Agent fails,
due solely to gross negligence or willful misconduct, to deliver such corrective
materials to the Investors.

     

    (b)           Indemnification of the
Company. The Placement Agent agrees to indemnify, defend and hold
harmless the Company against any losses, claims, damages, expenses or
liabilities to which the Company may become subject, under the Securities Act,
the Exchange Act, or other federal or state statutory law or regulation, the
common law or otherwise (including in settlement of any litigation, if such
settlement is effected with the written consent of the Placement Agent), insofar
as such losses, claims, damages, expenses or liabilities (or actions in respect
thereof) arise out of or are based upon any untrue statement or alleged untrue
statement of a material fact contained in the Registration Statement, any
Preliminary Prospectus, the Disclosure Package, the Prospectus, or any amendment
or supplement thereto or any Issuer Free Writing Prospectus, or arise out of or
are based upon the omission or alleged omission to state therein a material fact
required to be stated therein or necessary to make the statements therein not
misleading, in each case to the extent, but only to the extent, that such untrue
statement or alleged untrue statement or omission or alleged omission was made
in the Registration Statement, any Preliminary Prospectus, the Disclosure
Package, the Prospectus, or any such amendment or supplement thereto, or any
Issuer Free Writing Prospectus in reliance upon and in conformity with written
information furnished to the Company by the Placement Agent, specifically for
use in the preparation thereof, which information the parties hereto agree is
limited to the Placement Agent's Information relating to the Placement Agent,
and will reimburse the Company for any legal or other expenses reasonably
incurred by the Company in connection with investigating or defending against
any such loss, claim, damage, liability or action. Notwithstanding the
provisions of this Section 6(b), in no
event shall any indemnity by the Placement Agent under this Section 6(b) exceed
the total compensation received by the Placement Agent in accordance with Section 1(b)
hereof.

     

    

    
      
        
           

        

        
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    (c)           Notice and Procedures. If any
action, suit or proceeding (each, a "Proceeding") is brought
against a person (an "Indemnified Party") in
respect of which indemnity may be sought against the Company or the Placement
Agent (as applicable, the "Indemnifying Party") pursuant
to subsections
(a) or (b) above,
respectively, of this Section 6, such
Indemnified Party shall promptly notify such Indemnifying Party in writing of
the institution of such Proceeding and such Indemnifying Party shall assume the
defense of such Proceeding, including the employment of counsel selected by the
Indemnifying Party and reasonably
satisfactory to such Indemnified Party (who shall not, except with the consent
of the Indemnified Party, be counsel to the Indemnifying Party) and payment of
all reasonable fees and expenses; provided, however, that the
omission to so notify such Indemnifying Party shall not relieve such
Indemnifying Party from any liability which such Indemnifying Party may have to
any Indemnified Party or otherwise, except to the extent the Indemnifying Party
has been actually prejudiced by such failure; and provided, further, that the
failure to notify the Indemnifying Party shall not relieve it from any liability
that it may have to an Indemnified Party otherwise than under subsection (a) or
(b) above. The
Indemnified Party or Parties shall have the right to employ its or their own
counsel in any such case, but the fees and expenses of such counsel shall be at
the expense of such Indemnified Party or Parties unless (i) the employment of
such counsel shall have been authorized in writing by the Indemnifying Party in
connection with the defense of such Proceeding, (ii) the Indemnifying Party
shall not have, within a reasonable period of time in light of the
circumstances, employed counsel to defend such Proceeding or (iii) such
Indemnified Party or Parties shall have reasonably concluded upon written advice
of counsel that there may be one or more legal defenses available to it or them
which are different from, additional to or in conflict with those available to
such Indemnifying Party (in which case such Indemnifying Party shall not have
the right to direct that portion of the defense of such Proceeding on behalf of
the Indemnified Party or Parties, but such Indemnifying Party or Parties may
employ counsel and participate in the defense thereof but the fees and expenses
of such counsel shall be at the expense of the Indemnifying Party), in any of
which events such reasonable fees and expenses shall be borne by such
Indemnifying Party and paid as incurred (it being understood, however, that such
Indemnifying Party shall not be liable for the expenses of more than one
separate counsel (in addition to any local counsel) in any one Proceeding or
series of related Proceedings in the same jurisdiction representing the
Indemnified Parties who are parties to such Proceeding). An Indemnifying Party
shall not be liable for any settlement of any Proceeding effected without its
written consent but, if settled with its written consent, such Indemnifying
Party agrees to indemnify and hold harmless the Indemnified Party or parties
from and against any loss or liability by reason of such settlement.
Notwithstanding the foregoing sentence, if at any time an Indemnified Party
shall have requested an Indemnifying Party to reimburse the Indemnified Party
for fees and expenses of counsel as contemplated by the second sentence of this
Section 6(c),
then the Indemnifying Party agrees that it shall be liable for any settlement of
any Proceeding effected without its written consent if (i) such settlement
is entered into more than 60 days after receipt by such Indemnifying Party of
the aforesaid request, (ii) such Indemnifying Party shall not have fully
reimbursed the Indemnified Party in accordance with such request prior to the
date of such settlement and (iii) such Indemnified Party shall have given
the Indemnifying Party at least 30 days' prior notice of its intention to
settle. No Indemnifying Party shall, without the prior written consent of the
Indemnified Party, effect any settlement, compromise or consent to the entry of
judgment in any pending or threatened Proceeding in respect of which any
Indemnified Party is or could have been a party and indemnity could have been
sought hereunder by such Indemnified Party, unless such settlement includes an
unconditional release of such Indemnified Party from all liability on claims
that are the subject matter of such Proceeding and does not include an admission
of fault or culpability or a failure to act by or on behalf of such Indemnified
Party.

     

    

    
      
        
           

        

        
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    (d)           Contribution. If the
indemnification provided for in this Section 6 is
unavailable to an Indemnified Party under subsections
(a) or (b) of this
Section 6
or insufficient to hold an Indemnified Party harmless in respect of any losses,
claims, damages, liabilities or expenses referred to therein, then each
applicable Indemnifying Party, in lieu of indemnifying such Indemnified Party,
shall contribute to the amount paid or payable by such Indemnified Party as a
result of the losses, claims, damages, liabilities or expenses referred to in
subsections (a)
or (b) above,
(i) in such proportion as is appropriate to reflect the relative benefits
received by the Indemnifying Party or Parties on the one hand and the
Indemnified Party or Parties on the other hand from the offering of the Units or
(ii) if the allocation provided by clause (i) above is not permitted
by applicable law, in such proportion as is appropriate to reflect not only the
relative benefits referred to in clause (i) above but also the relative
fault of the Indemnifying Party or Parties on the one hand and the Indemnified
Party or Parties on the other hand in connection with the statements or
omissions that resulted in such losses, claims, damages, liabilities or
expenses, as well as any other relevant equitable considerations. The relative
benefits received by the Company on the one hand and the Placement Agent on the
other hand shall be deemed to be in the same respective proportions as the total
net proceeds from the offering of the Units (before deducting expenses) received
by the Company bear to the discounts and commissions received by the Placement
Agent.  The relative fault of the Company on the one hand and the
Placement Agent on the other hand shall be determined by reference to, among
other things, whether the untrue or alleged untrue statement of a material fact
or the omission or alleged omission to state a material fact relates to
information supplied by the Company, on the one hand, or by the Placement Agent,
on the other hand, and the parties' relevant intent, knowledge, access to
information and opportunity to correct or prevent such untrue statement,
omission, act or failure to act; provided that the parties
hereto agree that the written information furnished to the Company by the
Placement Agent for use in the Registration Statement or the Prospectus, or in
any amendment or supplement thereto, consists solely of the Placement Agent's
Information relating to the Placement Agent.

     

    (e)           Allocation. The Company and
the Placement Agent agree that it would not be just and equitable if
contribution pursuant to subsection (d) above
were to be determined by pro rata allocation or by any other method of
allocation which does not take account of the equitable considerations referred
to in the first sentence of subsection (d) above.
Notwithstanding the provisions of this Section 6(e), the
Placement Agent shall not be required to contribute any amount in excess of the
total commissions received by the Placement Agent in accordance with Section 1(b) less the
amount of any damages which the Placement Agent has otherwise paid or become
liable to pay by reason of any untrue or alleged untrue statement, omission or
alleged omission, act or alleged act or failure to act or alleged failure to
act. No person guilty of fraudulent misrepresentation (within the meaning of
Section 11(f) of the Securities Act) shall be entitled to contribution from any
person who was not guilty of such fraudulent misrepresentation. The remedies
provided for in this Section 6 are not
exclusive and shall not limit any rights or remedies which may otherwise be
available to any Indemnified Party at law or in equity.

     

    

    
      
        
           

        

        
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    (f)           Representations and Agreements to
Survive Delivery. The obligations of the Company and the Placement Agent
under this Section 6 shall
be in addition to any liability which the Company or the Placement Agent may
otherwise have. The indemnity and contribution agreements contained in this
Section 6
and the covenants, agreements, warranties and representations of the Company
contained in this Agreement shall remain operative and in full force and effect
regardless of (i) any termination of this Agreement, (ii) any investigation made
by or on behalf of the Placement Agent, any person who controls the Placement
Agent within the meaning of either Section 15 of the Securities Act or
Section 20 of the Exchange Act or any affiliate of the Placement Agent, or
by or on behalf of the Company, its directors or officers or any person who
controls the Company within the meaning of either Section 15 of the
Securities Act or Section 20 of the Exchange Act, and (iii) the issuance
and delivery of the Units. The Company and the Placement Agent agree promptly to
notify each other of the commencement of any Proceeding against it and, in the
case of the Company, against any of the Company's officers or directors in
connection with the issuance and sale of the Units, or in connection with the
Registration Statement, the Disclosure Package or the Prospectus.

     

    7.           Information
Furnished by Placement Agent.

     

    (a)           The
Company acknowledges that the statements set forth in the paragraph under the
heading "Plan of Distribution" in the Prospectus (the "Placement Agent's
Information") constitute the only information relating to the Placement
Agent furnished in writing to the Company by the Placement Agent as such
information is referred to in Sections 2 and 6
hereof.

     

    (b)           The
Placement Agent agrees and confirms that it has not provided any Investor or its
respective agents or counsel with any information about the Company that
constitutes or might constitute material, non-public information which is not
otherwise disclosed in the Prospectus.

     

    8.           Termination. The Placement Agent shall
have the right to terminate this Agreement by giving notice as hereinafter
specified at any time at or prior to the Closing Date, without liability on the
part of the Placement Agent to the Company, if (i) prior to delivery and payment
for the Units (A) trading in securities generally shall have been suspended on
or by the New York Stock Exchange, the NYSE Amex, the NASDAQ Global Market or in
the over the counter market (each, a "Trading Market"),
(B) trading in the Common Stock of the Company shall have been suspended on
any exchange, in the over-the-counter market or by the Commission, (C) a
general moratorium on commercial banking activities shall have been declared by
federal or New York state authorities or a material disruption shall have
occurred in commercial banking or securities settlement or clearance services in
the United States, (D) there shall have occurred any outbreak or material
escalation of material hostilities or material acts of terrorism involving the
United States or there shall have been a declaration by the United States of a
national emergency or war, (E) there shall have occurred any other calamity or
crisis or any material change in general economic, political or financial
conditions in the United States or elsewhere, if the effect of any such event
specified in clause (D) or (E), in the reasonable judgment of the Placement
Agent, is material and adverse and makes it impractical or inadvisable to
proceed with the completion of the sale of and payment for the Units on the
Closing Date on the terms and in the manner contemplated by this Agreement, the
Disclosure Package and the Prospectus, (ii) since the time of execution of this
Agreement or the earlier respective dates as of which information is given in
the Disclosure Package or incorporated by reference therein, there has been any
Material Adverse Effect, (iii) the Company shall have failed, refused or been
unable to comply with the terms or perform any agreement or obligation of this
Agreement or any Subscription Agreements, other than by reason of a default by
the Placement Agent, or (iv) any condition of the Placement Agent's obligations
hereunder is not fulfilled. Any such termination shall be without liability of
any party to any other party except that the provisions of Section 4, Section 6, and
Section 12
hereof shall at all times be effective notwithstanding such
termination.

     

    

    
      
        
           

        

        
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    9.           Notices.
All statements, requests, notices and agreements hereunder shall be in writing
or by facsimile, and:

     

    (a)           if
to the Placement Agent, shall be delivered or sent by mail, telex or facsimile
transmission as follows:

     

    Canaccord
Adams Inc.

    99 High
Street

    Boston,
MA 02110

    Facsimile
No.: (617) 788-1553

     

    with a
copy (which shall not constitute notice) to:

     

    Bracewell
& Giuliani LLP

    1445 Ross
Avenue, Suite 3800

    Dallas,
Texas  75202

    Attention:
Brice Tarzwell

    Facsimile
No.: (214) 468-3888

    

    (b)           if
to the Company shall originate from the Placement Agent and shall be delivered
or sent by mail, telex or facsimile transmission to:

     

    Magnum
Hunter Resources Corporation

    777 Post
Oak Blvd., Suite 910

    Houston,
Texas  77056

    Attention:
Gary C. Evans, Chairman

    Facsimile
No.: (832) 369-6992

    

    
      
        
           

        

        
          33

          
            

          

        

        
           

        

      

    

    

    

    with a
copy (which shall not constitute notice) to:

     

    Fulbright
& Jaworski L.L.P.

    2200 Ross
Avenue, Suite 2800

    Dallas,
Texas 75201

    Attention:
Dave Morrison and Alexis Thomason

    Facsimile
No.: (214) 855-8200

    

    Any such
statements, requests, notices or agreements shall be effective only upon
receipt. Any party to this Agreement may change such address for notices by
sending to the parties to this Agreement written notice of a new address for
such purpose.

     

    

    10.           Persons Entitled
to Benefit of Agreement. This Agreement shall inure to the benefit of and
shall be binding upon the Placement Agent, the Company, and their respective
successors and assigns. Nothing expressed or mentioned in this Agreement is
intended or shall be construed to give any person other than the persons
mentioned in the preceding sentence any legal or equitable right, remedy or
claim under or in respect of this Agreement, or any provisions herein contained,
this Agreement and all conditions and provisions hereof being intended to be and
being for the sole and exclusive benefit of such persons and for the benefit of
no other person, except that (i) the representations, warranties, covenants,
agreements and indemnities of the Company contained in this Agreement shall also
be for the benefit of the controlling persons, officers and directors referred
to in Section
6(a) hereof and the indemnities of the Placement Agent shall also be for
the benefit of the controlling persons, officers and directors referred to in
Section 6(b)
hereof; and (ii) the Investors are relying on the representations made by the
Company under, and are intended third party beneficiaries of, this
Agreement.  The term "successors and assigns" as herein used shall not
include any purchaser of the Units by reason merely of such
purchase.

     

    11.           Governing Law;
Submission to Jurisdiction. This Agreement shall be
governed by, and construed in accordance with, the laws of the State of New
York, without giving effect to the conflicts of laws provisions thereof. Except
as set forth below, no Proceeding may be commenced, prosecuted or continued in
any court other than the courts of State of New York located in the City and
County of New York or the United States District Court for the Southern District
of New York, which courts shall have jurisdiction over the adjudication of such
matters, and the Company and the Placement Agent hereby consent to the
jurisdiction of such courts and personal service with respect thereto. The
Company hereby consents to personal jurisdiction, service and venue in any court
in which any Proceeding arising out of or in any way relating to this Agreement
is brought by any third party against the Placement Agent. The Company hereby
waives all right to trial by jury in any Proceeding (whether based upon
contract, tort or otherwise) in any way arising out of or relating to this
Agreement. The parties each agree  that a final judgment in any such
Proceeding brought in any such court shall be conclusive and binding upon such
party and may be enforced in any other courts in the jurisdiction of which such
party is or may be subject, by suit upon such judgment.

     

    

    
      
        
           

        

        
          34

          
            

          

        

        
           

        

      

    

    

    12.           No Fiduciary
Relationship. The Company hereby acknowledges and agrees
that:

     

    (a)           No Other Relationship. The
Placement Agent has been retained solely to act as the exclusive Placement Agent
in connection with the offering of the Company's securities. The Company further
acknowledges that the Placement Agent is acting pursuant to a contractual
relationship created solely by this Agreement entered into on an arm's length
basis and in no event do the parties intend that the Placement Agent act or be
responsible as a fiduciary to the Company, its management, stockholders,
creditors or any other person in connection with any activity that the Placement
Agent may undertake or has undertaken in furtherance of the offering of the
Company's securities, either before or after the date hereof, irrespective of
whether the Placement Agent has advised or is advising the Company on other
matters. The Placement Agent hereby expressly disclaims any fiduciary or similar
obligations to the Company, either in connection with the transactions
contemplated by this Agreement or any matters leading up to such transactions,
and the Company hereby confirms its understanding and agreement to that
effect.

     

    (b)           Arm's-Length Negotiations.
The price of the Units set forth in this Agreement was established by the
Company following discussions and arms-length negotiations with the Investors
and the Placement Agent, and the Company is capable of evaluating and
understanding, and understands and accepts, the terms, risks and conditions of
the transactions contemplated by this Agreement.

     

    (c)           Absence of Obligation to
Disclose. The Company has been advised that the Placement Agent and its
affiliates are engaged in a broad range of transactions which may involve
interests that differ from those of the Company and that the Placement Agent has
no obligation to disclose such interests or transactions to the Company by
virtue of any fiduciary, advisory or agency relationship.

     

    (d)           Waiver. The Company hereby
waives and releases, to the fullest extent permitted by law, any claims that the
Company may have against the Placement Agent with respect to any breach or
alleged breach of any fiduciary or similar duty to the Company in connection
with the transactions contemplated by this Agreement or any matters leading up
to such transactions and agrees that the Placement Agent shall have no liability
(whether direct or indirect) to the Company in respect of such a fiduciary duty
claim to any person asserting a fiduciary duty claim on behalf of the Company,
including stockholders, employees or creditors of the Company.

     

    13.           Headings.
The Section headings in this Agreement have been inserted as a matter of
convenience of reference and are not a part of this Agreement.

     

    14.           Amendments and
Waivers. No supplement, modification or waiver of this Agreement shall be
binding unless executed in writing by the party to be bound thereby. The failure
of a party to exercise any right or remedy shall not be deemed or constitute a
waiver of such right or remedy in the future. No waiver of any of the provisions
of this Agreement shall be deemed or shall constitute a waiver of any other
provision hereof (regardless of whether similar), nor shall any such waiver
constitute a continuing waiver unless otherwise expressly provided.

     

    

    
      
        
           

        

        
          35

          
            

          

        

        
           

        

      

    

    

    15.           Counterparts.
This Agreement may be executed in one or more counterparts and, if executed in
more than one counterpart, the executed counterparts shall each be deemed to be
an original and all such counterparts shall together constitute one and the same
instrument. Delivery of an executed counterpart by facsimile or portable
document format (.pdf) shall be effective as delivery of a manually executed
counterpart thereof.

     

    16.           Research Analyst
Independence. The Company acknowledges that the Placement Agent's
research analysts and research departments are required to be independent from
its investment banking division and are subject to certain regulations and
internal policies, and that the Placement Agent's research analysts may hold
views and make statements or investment recommendations and/or publish research
reports with respect to the Company and/or the offering that differ from the
views of their investment banking division. The Company hereby waives and
releases, to the fullest extent permitted by law, any claims that the Company
may have against the Placement Agent with respect to any conflict of interest
that may arise from the fact that the views expressed by its independent
research analysts and research departments may be different from or inconsistent
with the views or advice communicated to the Company by the Placement Agent's
investment banking division. The Company acknowledges that the Placement Agent
is a full service securities firm and as such from time to time, subject to
applicable securities laws, rules and regulations, may effect transactions for
its own account or the account of its customers and hold long or short positions
in debt or equity securities of the Company; provided, however, that nothing in this
Section 16
shall relieve the Placement Agent of any responsibility or liability it may
otherwise bear in connection with activities in violation of applicable
securities laws, rules or regulations.

     

    17.           Entire
Agreement. This Agreement constitutes the entire agreement of the parties
to this Agreement and supersedes all prior written or oral and all
contemporaneous oral agreements, understandings and negotiations with respect to
the subject matter hereof.

     

    18.           Partial
Unenforceability. The invalidity or unenforceability of any section,
paragraph, clause or provision of this Agreement shall not affect the validity
or enforceability of any other section, paragraph, clause or provision hereof.
If any section, paragraph, clause or provision of this Agreement is for any
reason determined to be invalid or unenforceable, there shall be deemed to be
made such minor changes (and only such minor changes) as are necessary to make
it valid and enforceable.

     

    19.           Effectiveness.
This Agreement shall become effective upon the execution and delivery hereof by
the parties hereto.

     

    [Signature
Page Follows]

    

    

    
      
        
           

        

        
          36

          
            

          

        

        
           

        

      

    

    

    

    If the
foregoing is in accordance with your understanding of the agreement between the
Company and the Placement Agent, kindly indicate your acceptance in the space
provided for that purpose below.

     

    
       

      
        	 	
                Very
      truly yours,

                

                MAGNUM
      HUNTER RESOURCES CORPORATION

                

                

                By:  /s/ Ronald D.
      Ormand                          
      

                
                  Name:Ronald
      D. Ormand

                

                
                  Title:  
      Executive Vice President and

                            
      Chief Executive Officer

                

              

      

       

    

     

    

     

     

     

     

     

     

     

     

     

     

     

    

    
      
        
           

        

        
          37

          
            

          

        

        
           

        

      

    

    

    

    Accepted
as of the date first

    above
written:

    

    CANACCORD
ADAMS INC.

    

    

    By:   /s/ Christian
Gibson                                   

    
      	
              Name:

            	
              Christian
      Gibson

            

    

    
      	
              Title:

            	
              Managing
      Director

            

    

     

     

     

     

     

     

     

     

     

     

     

     

     

     

     

     

     

     

     

     

    
 

    

    
      
        
           

        

        
          38

          
            

          

        

        
           

        

      

    

    

    

    Schedules
and Exhibits

    
      	 
      	 
      
	
              Schedule
      I:

            	
              Allocation
      between Placement Agent

            
	 
      	 
      
	
              Schedule
      II:

            	
              Issuer
      Free Writing Prospectus

            
	 
      	 
      
	
              Schedule
      III:

            	
              List
      of Directors and Officers for Lock-Up Letter

            
	 
      	 
      
	
              Schedule
      IV:

            	
              Terms
      and Conditions for Canadian Offer and Sales

            
	 
      	 
      
	
              Exhibit
      A:

            	
              Subscription
      Agreements

            
	 
      	 
      
	
              Exhibit
      B:

            	
              Pricing
      Information

            
	 
      	 
      
	
              Exhibit
      C:

            	
              Form
      of Lock-Up Letter

            

    

    

    

    

    
      
        
           

        

        
          
          

          
            

          

        

        
           

        

      

    

    

    

    SCHEDULE
I

    

    Allocation
between Placement Agents

    

    
      	
              Name

            	
              Pro Rata Units

            
	
              Canaccord
      Adams Inc.

            	
              100%

            
	
              Total

            	
              100%

            
	 
      
	 
      

    

    

    

     

     

     

     

     

     

     

     

     

     

    
 

    

    
      
        
           

        

        
          
          

          
            

          

        

        
           

        

      

    

    

    

    SCHEDULE
II

    

    Issuer
Free Writing Prospectus

    

    

    [None]

     

     

     

     

     

     

     

     

     

     

    
 

    

    
      
        
           

        

        
          
          

          
            

          

        

        
           

        

      

    

    

    SCHEDULE
III

    

    List
of Directors and Officers for Lock-Up Letter

    

    

    Gary C.
Evans

    Ron
Ormand

    Jim
Denny

    Hershal
("Kip") Ferguson III

    M.
Bradley Davis

    Don
Kirkendall

    David
Krueger

    

    

     

     

     

     

     

     

     

     

     

     

    
 

    
      
        
           

        

        
          
          

          
            

          

        

        
           

        

      

    

    

    SCHEDULE
IV

    

    TERMS
AND CONDITIONS FOR

    CANADIAN
OFFERS AND SALES

    

    
      	
              1.

            	
              For
      the purposes of this Schedule, capitalized terms not otherwise defined
      have the meanings given to them in the Placement Agency Agreement to which
      this Schedule is attached and the following terms will have the meanings
      indicated:

            

    

     

    
      	
               
      

            	
              (a)

            	
              "Institutional
      Accredited Investor" has the meaning set out in the definition of
      "Accredited Investor" in Section 1.1 of National Instrument 45-106 of the
      Canadian Securities Administrators, but expressly excluding the
      individuals described in items (j), (k) or (l) of such
      definition.

            

    

     

    
      	
               
      

            	
              (b)

            	
              "Applicable Canadian
      Securities Laws" means all applicable securities laws, rules,
      regulations, notices, instruments, blanket orders and policies in each of
      the provinces and territories of
Canada.

            

    

     

    
      	
               
      

            	
              (c)

            	
              "Canadian Wrap"
      means the Disclosure Package supplemented with wrap pages describing
      matters relating to Canadian securities laws in the form agreed to by
      Canaccord Adams Inc. and the
Company.

            

    

     

    
      	
              2.

            	
              The
      Placement Agent may offer and sell the Units within Canada on the terms
      and subject to the conditions of this Schedule.  In connection
      therewith, the Company represents and warrants
  that:

            

    

     

    
      	
               
      

            	
              (a)

            	
              it
      is not a reporting issuer in any jurisdiction in
  Canada;

            

    

     

    
      	
               
      

            	
              (b)

            	
              at
      the Closing Date, after giving effect to the issue of the Units, to the
      Company's knowledge, residents of
Canada:

            

    

     

    
      	
               
      

            	
              (i)

            	
              will
      not own directly or indirectly more than 10 percent of the outstanding
      shares of common stock of the Company;
and

            

    

     

    
      	
               
      

            	
              (ii)

            	
              will
      not represent in number more than 10 percent of the total number of owners
      directly or indirectly of shares of common stock of the
      Company.

            

    

     

    
      	
              3.

            	
              The
      Placement Agent acknowledges that the Company is not a reporting issuer in
      any jurisdiction of Canada and the Prospectus will not be filed with any
      securities regulatory authority in Canada and the Units may be offered and
      sold only to Institutional Accredited Investors in transactions exempt
      from the registration and prospectus requirements of Applicable Canadian
      Securities Laws.  Accordingly, the Placement Agent represents,
      warrants and covenants, and will cause its Canadian affiliates to comply
      with such representations, warranties and covenants,
  that:

            

    

     

    

    
      
        
           

        

        
          
          

          
            

          

        

        
           

        

      

    

    

    

     

    
      	
               
      

            	
              (a)

            	
              it
      will not offer or sell any Units in Canada, except in accordance with
      Section 2.3 of National Instrument 45-106 to persons who are Institutional
      Accredited Investors;

            

    

     

    
      	
               
      

            	
              (b)

            	
              it
      will not cause any advertisement of the Units in any printed media of
      general and regular paid circulation, radio, television or
      telecommunications, including electronic display, or any other form of
      advertising in Canada;

            

    

     

    
      	
               
      

            	
              (c)

            	
              all
      offers and sales of the Units in Canada will be effected through an
      investment dealer duly registered under Applicable Canadian Securities
      Laws;

            

    

     

    
      	
               
      

            	
              (d)

            	
              it
      will not use any written material in connection with offer and sales of
      Units in Canada other than the Canadian Wrap and it agrees to deliver a
      copy of the Canadian Wrap to each purchaser of Units in
      Canada;

            

    

     

    
      	
               
      

            	
              (e)

            	
              any
      offer, sale or solicitation of an offer to buy Units made to a person in
      Canada will be made only to a person it reasonably believes to be an
      Institutional Accredited Investor who is acquiring the Units as
      principal;

            

    

     

    
      	
               
      

            	
              (f)

            	
              all
      purchasers of the Units in Canada will be informed that the Units are
      being offered and sold in Canada in reliance on exemptions from the
      prospectus and registration requirements of Applicable Canadian Securities
      Laws and that the Units can be resold only in accordance with further
      exemptions from such requirements;

            

    

     

    
      	
               
      

            	
              (g)

            	
              on
      or prior to the Closing Date, it will provide to the Company's transfer
      agent a list of all purchasers of the Units in Canada;
  and

            

    

     

    
      	
               
      

            	
              (h)

            	
              it
      will collect the following information for each purchaser of Units in
      Canada, and will provide such information to the Company to enable the
      Company to file, with the applicable securities regulatory authorities in
      Canada, reports of the trades of Units on Form 45-106F1 and such other
      filings as may be required under Applicable Canadian Securities Laws: full
      name, address and telephone number and number of Units
      purchased.

            

    

     

    

    

    

    

    
      
        
           

        

        
          
          

          
            

          

        

        
           

        

      

    

    

    EXHIBIT
A

    

    Subscription
Agreements

     

     

     

     

     

     

     

     

     

     

    
 

    

    
      
        
           

        

        
          
          

          
            

          

        

        
           

        

      

    

    

    EXHIBIT
B

    

    Pricing
Information

    

    

    
      
        
           

        

        
          
          

          
            

          

        

        
           

        

      

    

    

    EXHIBIT
C

    

    Form
of Lock-Up Letter

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