Document:

Exhibit 10.5

 

COMMON STOCK PURCHASE AGREEMENT

 

This COMMON
STOCK PURCHASE AGREEMENT (this “Agreement”), dated as of August 9, 2013, is made by and between American Eagle
Energy Corporation, a Nevada corporation (the “Company”), and Power Energy Holdings, LLC, an Illinois limited
liability company (the “Purchaser”). The Company and the Purchaser are sometimes individually referred to in
this Agreement as a “Party” and collectively as the “Parties.”

 

WHEREAS, the
Company desires to issue and sell to the Purchaser, and the Purchaser desires to purchase from the Company, an aggregate of 5,000,000
shares of the Company’s common stock, par value $0.001 per share (such 5,000,000 shares of common stock, collectively, the
“Common Shares”), for an aggregate purchase price of $10,000,000.00, in accordance with the terms hereof pursuant
to a currently effective shelf registration statement on Form S-3, Registration Number 333-189191 (the “Registration Statement”),
which Registration Statement has been declared effective in accordance with the Securities Act of 1933, as amended (the “Securities
Act”), by the United States Securities and Exchange Commission (the “Commission”).

 

NOW, THEREFORE,
in consideration of the premises and the mutual covenants contained in this Agreement and for other good and valuable consideration,
the receipt and sufficiency of which are hereby acknowledged, the Parties agree as follows:

 

ARTICLE
I

SALE AND PURCHASE OF the common SHARES; Closing

 

SECTION 1.01                   
Sale and Purchase of the Common Shares. Upon the terms and subject to the conditions of this Agreement, at the
Closing, the Company shall issue and sell to the Purchaser, and the Purchaser shall purchase from the Company, the Common Shares
for the purchase price of $2.00 per Common Share, with an aggregate purchase price of $10,000,000.00 (the “Purchase Price”).

 

SECTION 1.02                   
Closing. The closing of the issuance, sale, and purchase of the Common Shares (the “Closing”)
shall take place at the offices of the Company, at 2549 West Main Street, Suite 202, Littleton, Colorado
80120, at 9:00 a.m. Mountain Daylight Time on August 9, 2013, or at such other location or time or on such other date as
the Parties may agree. The date on which the Closing will occur is referred to herein as the “Closing Date.”
At the Closing, the Company shall issue and deliver to the Purchaser a stock certificate, registered in the name of the Purchaser,
representing the Common Shares in exchange for the payment of the Purchase Price by the Purchaser to the Company pursuant to the
wire transfer instructions furnished by the Company.

 

ARTICLE
II

REPRESENTATIONS AND WARRANTIES OF THE COMPANY

 

The Company hereby
represents and warrants to the Purchaser as of the Closing Date as follows:

 

    	 

    	 

    

 

SECTION 2.01                   
Organization and Good Standing. The Company and its subsidiaries have been duly incorporated or organized and
are validly existing and in good standing under the laws of their respective jurisdictions of incorporation or organization, are
duly qualified to do business, and are in good standing in each jurisdiction in which their respective ownership or lease of property
or the conduct of their respective businesses requires such qualification, and have all power and authority necessary to own or
hold their respective properties and to conduct the businesses in which they are engaged, except where the failure to be so qualified
or in good standing or have such power or authority would not, individually or in the aggregate, have a material adverse effect
on the Company and its subsidiaries taken as a whole or on the performance by the Company of its obligations under this Agreement
(a “Company Material Adverse Effect”).

 

SECTION 2.02                   
Authority and Binding Obligation. The Company has the necessary corporate power and authority to execute and
deliver this Agreement and to perform its obligations hereunder. The Company has duly executed and delivered this Agreement and,
assuming due authorization, execution, and delivery hereof by the Purchaser, this Agreement constitutes the valid and legally binding
obligation of the Company, enforceable against the Company in accordance with its terms, subject to applicable bankruptcy, insolvency,
fraudulent transfer, reorganization, moratorium, or other similar laws relating to creditors’ rights and general principles
of equity.

 

SECTION 2.03                   
Capitalization. All issued and outstanding shares of capital stock of the Company have been duly authorized and
validly issued and are fully paid and non-assessable and are not subject to any preemptive rights. Except as disclosed in the Company
Reports (as defined in Section 2.08), (i) there are no options, warrants, calls, subscriptions, convertible securities, or other
rights, agreements, or commitments that obligate the Company or any of its subsidiaries to issue, transfer, sell, or register any
shares of capital stock or other securities of the Company or any of its subsidiaries, (ii) there are no outstanding obligations
of the Company or any of its subsidiaries to repurchase, redeem, or otherwise acquire any shares of capital stock of the Company
or any of its subsidiaries, and (iii) there are no outstanding stock appreciation rights, security-based performance units, “phantom”
stock, or other security rights or other agreements or arrangements pursuant to which any person is or may be entitled to receive
any payment or other value based on the revenues, earnings, or financial performance or other attribute of the Company or any of
its subsidiaries or assets or calculated in accordance therewith (other than payments or commissions to employees or agents of
the Company or any of its subsidiaries in the ordinary course of business consistent with past practices). The Company has no outstanding
bonds, debentures, notes, or other obligations, the holders of which have the right to vote (or which are convertible into or exercisable
for securities having the right to vote) with the stockholders of the Company on any matter. There are no voting trusts or other
agreements or understandings to which the Company is a party with respect to the voting of capital stock of the Company.

 

SECTION 2.04                   
The Common Shares. The Common Shares to be issued and sold by the Company hereunder, when issued and delivered
and paid for as provided herein, will be duly authorized, validly issued, fully paid, and nonassessable. The issuance of the Common
Shares is not subject to any preemptive or similar rights. The issuance by the Company to the Purchaser of the Common Shares has
been registered under the Securities Act and all Common Shares issuable pursuant to this Agreement, when delivered, will be freely
transferable and tradable in the public markets by the Purchaser without restriction other than any restrictions arising solely
from an act or omission of the Purchaser. The Registration Statement is effective and available for the issuance of the Common
Shares thereunder and the Company has not received any notice that the Commission has issued or intends to issue a stop-order with
respect to the Registration Statement or that the Commission otherwise has suspended or withdrawn the effectiveness of the Registration
Statement, either temporarily or permanently, or intends or has threatened in writing to do so. The “Plan of Distribution”
section under the Registration Statement as supplemented by the Prospectus Supplement (as defined in Section 2.07 below) permits
the issuance and sale of the Common Shares.

 

    	-2-

    	 

    

 

SECTION 2.05                   
No Violation or Default. Neither the Company nor any of its subsidiaries is: (i) in violation of its articles
of incorporation or bylaws or similar organizational documents, (ii) in default, and no event has occurred that, with notice or
lapse of time or both, would constitute such a default, in the due performance or observance of any term, covenant, or condition
contained in 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 the Company or any of its subsidiaries is bound or to which any of the property or assets
of the Company or any of its subsidiaries is subject, or (iii) in violation of any law or statute or any judgment, order, rule,
or regulation of any court or arbitrator or governmental or regulatory authority, except, in the case of clauses (ii) and (iii)
above, for any such default or violation that would not, individually or in the aggregate, have a Company Material Adverse Effect.

 

SECTION 2.06                   
No Conflicts. The execution, delivery, and performance by the Company of this Agreement, including the
issuance and sale of the Common Shares, will not: (i) result in any violation of the provisions of the articles of incorporation
or bylaws or similar organizational documents of the Company or any of its subsidiaries, (ii) conflict with or result in a breach
or violation of any of the terms or provisions of, or constitute a default under, or result in the creation or imposition of any
lien, charge, or encumbrance upon any property or assets of the Company or any of its subsidiaries pursuant to, 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 the Company or any of its subsidiaries is bound or to which any of the property or assets of the Company or any
of its subsidiaries is subject, or (iii) subject to the Required Approvals (as defined in Section 2.07 below), result in the violation
of any law or statute or any judgment, order, rule, or regulation of any court or arbitrator or governmental or regulatory authority,
except, in the case of clauses (ii) and (iii) above, for any such conflict, breach, violation, or default that would not, individually
or in the aggregate, have a Company Material Adverse Effect.

 

SECTION 2.07                   
No Governmental Consents Required. No consent, approval, authorization, order, license, registration, filing,
or qualification of or with any court or arbitrator or governmental or regulatory authority is required to be obtained or made
by the Company for the execution, delivery, and performance by the Company of this Agreement, including the issuance and sale of
the Common Shares, other than (i) the filing of the supplement to the base prospectus contained in the Registration Statement to
be filed in connection with the sale to the Purchaser of the Common Shares (the “Prospectus Supplement”) and
(ii) any notice filings, reports, or other documents required to be made following the Closing Date under applicable federal and
state securities laws (collectively, the “Required Approvals”).

 

SECTION 2.08                   
Financial Statements. The financial statements (including the related notes thereto) of the Company and its consolidated
subsidiaries included or incorporated by reference in the periodic reports filed by the Company with the U.S. Securities and Exchange
Commission (the “Commission”) since December 31, 2012 (including exhibits and any amendments thereto or incorporated
by reference therein, collectively, the “Company Reports”) comply in all material respects with the applicable
requirements of the Securities Act of 1933, as amended (the “Securities Act”), and the Securities Exchange Act
of 1934, as amended (the “Exchange Act”), as applicable, and fairly present in all material respects the financial
position of the Company and its consolidated subsidiaries as of the dates indicated and the results of their operations and the
changes in their cash flows for the periods specified (subject, in the case of unaudited statements, to (i) such exceptions as
may be permitted for Quarterly Reports on Form 10-Q filed with the Commission and (ii) normal, recurring year-end audit adjustments
that are not material in the aggregate). Such financial statements have been prepared in conformity with generally accepted accounting
principles in the United States applied on a consistent basis throughout the periods covered thereby, except as may be noted therein.

 

    	-3-

    	 

    

 

SECTION 2.09                   
No Company Material Adverse Effect. Since the date of the most recent financial statements of the Company included
or incorporated by reference in the Company Reports, (i) there has not been any Company Material Adverse Effect and (ii) except
for the transactions contemplated by this Agreement and the transaction identified on Schedule 2.09, the Company and its
subsidiaries have conducted their respective businesses in the ordinary course.

 

SECTION 2.10                   
No Other Representations or Warranties. Except for the representations and warranties made by the Company in
this Article II, neither the Company nor any other person makes any representation or warranty with respect to the Company or its
subsidiaries or their respective businesses, operations, assets, liabilities, condition (financial or otherwise), or prospects,
notwithstanding the delivery or disclosure to the Purchaser or any of its affiliates or representatives of any documentation, forecasts,
or other information with respect to any one or more of the foregoing.

 

ARTICLE
III

REPRESENTATIONS AND WARRANTIES OF THE PURCHASER

 

The Purchaser represents
and warrants to the Company as of the Closing Date as follows:

 

SECTION 3.01                   
Organization and Good Standing. The Purchaser has been duly organized and is validly existing and in good standing
under the laws of its jurisdiction of organization, is duly qualified to do business, and is in good standing in each jurisdiction
in which its ownership or lease of property or the conduct of its business requires such qualification, and has all power and authority
necessary to own or hold its properties and to conduct the businesses in which it is engaged, except where the failure to be so
qualified, in good standing or have such power or authority would not, individually or in the aggregate, have a material adverse
effect on the Purchaser or on the performance by the Purchaser of its obligations under this Agreement (a “Purchaser Material
Adverse Effect”).

 

SECTION 3.02                   
Authority and Binding Obligations. The Purchaser has the necessary limited liability company power and authority
to execute and deliver this Agreement and to perform its obligations hereunder. The Purchaser has duly executed and delivered this
Agreement and, assuming due authorization, execution, and delivery hereof by the Company, this Agreement constitutes the valid
and legally binding obligation of the Purchaser, enforceable against the Purchaser in accordance with its terms, subject to applicable
bankruptcy, insolvency, fraudulent transfer, reorganization, moratorium, or other similar laws relating to creditors’ rights
and general principles of equity.

 

    	-4-

    	 

    

 

SECTION 3.03                   
No Conflicts. The execution, delivery, and performance by the Purchaser of this Agreement, including the
purchase of the Common Shares, will not (i) result in any violation of the provisions of the organizational documents of the Purchaser,
(ii) conflict with or result in a breach or violation of any of the terms or provisions of, or constitute a default under, or result
in the creation or imposition of any lien, charge, or encumbrance upon any property or assets of the Purchaser pursuant to, any
indenture, mortgage, deed of trust, loan agreement, or other agreement or instrument to which the Purchaser is a party or by which
it is bound or to which any of its properties or assets is subject, or (iii) result in the violation of any law or statute or any
judgment, order, rule, or regulation of any court or arbitrator or governmental or regulatory authority, except, in the case of
clauses (ii) and (iii) above, for any such conflict, breach, violation, or default that would not, individually or in the aggregate,
have a Purchaser Material Adverse Effect.

 

SECTION 3.04                   
No Governmental Consents Required. No consent, approval, authorization, order, license, registration, or qualification
of or with any court or arbitrator or governmental or regulatory authority is required to be obtained or made by the Purchaser
for the execution, delivery, and performance by the Purchaser of this Agreement.

 

SECTION 3.05                   
Investment Experience. The Purchaser has such knowledge and experience in financial and business matters so as
to be able to evaluate the risks and merits of its investment in the Company and it is able financially to bear the risks thereof.

 

SECTION 3.06                   
No Governmental Review. The Purchaser understands that no federal or state agency or any other government or
governmental agency has passed on or made any recommendation or endorsement of the Common Shares or the fairness or suitability
of the investment in the Common Shares nor have such authorities passed upon or endorsed the merits of the offering of the Common
Shares.

 

SECTION 3.07                   
Access to Information. The Purchaser acknowledges that the Purchaser has had access to the Registration Statement,
the Prospectus Supplement, and such financial and other information relating to the Company, including the Company Reports and
the Company’s other annual, quarterly, and current reports, registration statements, prospectuses, proxy statements, information
statements, and other documents (including exhibits and amendments) filed by the Company with the Commission and other publicly
available information regarding the Company, required for the Purchaser to make an informed decision with respect to the Purchaser’s
purchase of the Common Shares hereby and that the Purchaser has had an opportunity to discuss the Company’s business, management,
and financial affairs with the Company’s management, and has had all of the Purchaser’s questions regarding the Company
or the Common Shares answered to the Purchaser’s satisfaction. Without limitation of the generality of the foregoing, the
Purchaser further acknowledges that it has had access to certain financial and other information relating to the Company in connection
with the transaction identified on Schedule 2.09. The Purchaser acknowledges that it should carefully review the risk factors
set forth in the Company Reports and in the Prospectus Supplement. The Purchaser is not relying upon any representation or warranty
of the Company or any employee, officer, or director of the Company other than the representations and warranties of the Company
expressly provided herein. The Purchaser has obtained the advice of independent counsel and tax advisors of the Purchaser’s
choice in connection with this Agreement and the transactions contemplated hereby or has knowingly elected not to receive such
counsel.

 

    	-5-

    	 

    

 

ARTICLE
IV

CONDITIONS TO THE OBLIGATIONS OF THE PURCHASER

 

The obligations of
the Purchaser to purchase and pay for the Common Shares at the Closing are subject to the satisfaction, at or prior to the Closing,
of the following conditions (any or all of which may be waived by the Purchaser, in whole or in part):

 

SECTION 4.01                   
Stock Certificates. The Purchaser shall have received a certificate representing the Common Shares.

 

SECTION 4.02                   
Representations and Warranties. The representations and warranties contained in Article II shall be true and
correct in all material respects as of the Closing, and an executive officer of the Company shall have certified to such effect
to the Purchaser in writing.

 

SECTION 4.03                   
Performance. The Company shall have performed and complied in all material respects with all agreements contained
herein required to be performed or complied with by it at or prior to the Closing and an executive officer of the Company shall
have certified to the Purchaser in writing to such effect.

 

SECTION 4.04                   
Closing Certificates. The Purchaser shall have received copies of the following certificates and other documents:

 

(a)               
a certificate of the Secretary of State of the State of Nevada, dated as of a recent date, as to the good standing of the
Company; and

 

(b)              
a certificate of the Secretary of the Company dated the Closing Date and certifying:

 

(i)                
that attached thereto are true and complete copies of the articles of incorporation and bylaws of the Company as in effect
on the Closing Date; and

 

(ii)              
that attached thereto is a true and complete copy of all resolutions of the Board of Directors of the Company authorizing
the execution, delivery, and performance of this Agreement, including the issuance and sale of the Common Shares, and that all
such resolutions are in full force and effect.

 

SECTION 4.05                   
No Actions or Proceedings. No action or proceeding by or before any court, administrative body, or governmental
agency shall have been instituted or threatened that seeks to enjoin, restrain, or prohibit this Agreement or the consummation
of the transactions contemplated by this Agreement. No law or regulation shall be in effect and no court order shall have been
entered in any action or proceeding instituted by any party that enjoins, restrains, or prohibits this Agreement or the consummation
of the transactions contemplated by this Agreement.

 

    	-6-

    	 

    

 

SECTION 4.06                   
Registration Statement. The Commission shall not have issued a stop-order with respect to the Registration Statement
or otherwise suspended or withdrawn the effectiveness of the Registration Statement.

 

ARTICLE
V

CONDITIONS TO the OBLIGATIONS of the company

 

The obligations of
the Company to issue and sell the Common Shares at the Closing are subject to the satisfaction, at or prior to the Closing, of
the following conditions (any or all of which may be waived by the Company, in whole or in part):

 

SECTION 5.01                   
Representations and Warranties. The representations and warranties contained in Article III shall be true and
correct in all material respects as of the Closing, and an executive officer of the Purchaser shall have certified to such effect
to the Company in writing.

 

SECTION 5.02                   
Performance. The Purchaser shall have performed and complied in all material respects with all agreements contained
herein required to be performed or complied with by it at or prior to the Closing and an executive officer of the Purchaser shall
have certified to the Company in writing to such effect.

 

SECTION 5.03                   
No Actions or Proceedings. No action or proceeding by or before any court, administrative body, or governmental
agency shall have been instituted or threatened that seeks to enjoin, restrain, or prohibit this Agreement or the consummation
of the transactions contemplated by this Agreement. No law or regulation shall be in effect and no court order shall have been
entered in any action or proceeding instituted by any party that enjoins, restrains, or prohibits this Agreement or the consummation
of the transactions contemplated by this Agreement.

 

SECTION 5.04                   
Registration Statement. The Commission shall not have issued a stop-order with respect to the Registration Statement
or otherwise suspended or withdrawn the effectiveness of the Registration Statement.

 

ARTICLE
VI

INDEMNIFICATION

 

SECTION 6.01                   
Survival. All covenants, agreements, representations, and warranties made by either Party in this Agreement,
and the indemnification obligations of the Parties with respect thereto, shall survive the execution and delivery of this Agreement
and the Closing and continue in full force and effect until the one-year anniversary of the Closing Date (the “Expiration
Date”). If, at any time prior to the Expiration Date, any Purchaser Indemnified Party or Company Indemnified Party (as
such terms are defined in Sections 6.02 and 6.03, respectively), as the case may be, delivers to the other Party a written notice
asserting a claim for indemnification hereunder, then the claim asserted in such written notice shall survive until such time as
such claim is finally resolved.

 

SECTION 6.02                   
Indemnification of the Purchaser. The Company shall indemnify and hold harmless the Purchaser and each affiliate,
member, director, officer, employee, agent, representative, and successor-in-interest of the Purchaser (the “Purchaser
Indemnified Parties”) from and against any and all Losses (as defined below) asserted against, resulting to, imposed
upon, or incurred or suffered by the Purchaser Indemnified Parties, directly or indirectly, as a result of or arising from (i)
any inaccuracy in or breach of any of the representations and warranties made by the Company in this Agreement or (ii) any breach
of or nonperformance by the Company of its covenants, agreements, or other obligations under this Agreement. For purposes of this
Agreement, “Losses” means any loss, damage, liability, settlement, judgment, award, fine, penalty, or reasonable
fee (including reasonable attorneys’ fees), cost, or expense.

 

    	-7-

    	 

    

 

SECTION 6.03                   
Indemnification of the Company. The Purchaser shall indemnify and hold harmless the Company and each affiliate,
stockholder, director, officer, employee, agent, representative, and successor-in-interest of the Company ( the “Company
Indemnified Parties”) from and against any and all Losses, asserted against, resulting to, imposed upon, or incurred
or suffered by the Company Indemnified Parties, directly or indirectly, as a result of or arising from (i) any inaccuracy in or
breach of any of the representations and warranties made by the Purchaser in this Agreement or (ii) any breach of or nonperformance
by the Purchaser of its covenants, agreements, or other obligations under this Agreement.

 

SECTION 6.04                   
Exclusive Remedies. The remedies provided in this Article VI shall be deemed the sole and exclusive remedies
of the Parties with respect to this Agreement and the transactions contemplated hereby after the Closing, and no Party shall pursue
or seek to pursue any other remedy except for any equitable relief to which any Party may be entitled or in the case of fraud.

 

ARTICLE
VII

Other agreements of the parties; MISCELLANEOUS

 

SECTION 7.01                   
Prospectus Supplement. The Company will use its reasonable best efforts to file the Prospectus Supplement in
accordance with the requirements of Rule 424 promulgated under the Securities Act on or before the Closing Date.

 

SECTION 7.02                   
Brokerage. Each Party hereto will indemnify and hold harmless the other Party against and in respect of any claim
for brokerage or other commissions relative to this Agreement or to the transactions contemplated hereby, based in any way on agreements,
arrangements, or understandings made or claimed to have been made by such Party with any third party.

 

SECTION 7.03                   
Expenses. Each Party shall pay all of its own fees and expenses incurred in connection with the negotiation,
preparation, and execution of this Agreement.

 

SECTION 7.04                   
Notices. All notices, requests, consents, and other communications hereunder shall be in writing and will be
deemed to have been duly given when (i) delivered by hand (with written confirmation of receipt), (ii) received by the addressee,
if sent by a nationally recognized overnight delivery service, (iii) received by the addressee, if mailed by certified or registered
mail, return receipt requested, postage prepaid, or (iv) sent by facsimile or email (with confirmation of receipt), addressed as
follows:

 

    	-8-

    	 

    

 

If to the Company:

 

2549 W. Main Street, Suite 202

Littleton, Colorado 80120

Attention: Bradley M. Colby

Facsimile: (303) 798-5767

 

With a copy to:

(which shall not constitute notice)

 

Baker & Hostetler LLP

600 Anton Blvd., Suite 900

Costa Mesa, California 92626

Attention: Randolf W. Katz

Facsimile: (714) 966-8802

 

If to the Purchaser:

 

Power Energy Holdings, LLC

778 Frontage Rd., Suite 122

Northfield, Illinois 60093

Attention: George P. Archos

Facsimile: (___0 ___ - ____

 

With a copy to:

(which shall not constitute notice)

 

_____________________

_____________________

_____________________

Attention: _____________

Facsimile: (___) ___ - ____

 

or, in any such case, at such other address or addresses as
shall have been furnished in writing by such Party to the other.

 

SECTION 7.05                   
Governing Law. The execution, delivery, and performance of this Agreement shall be governed by, construed, and
enforced in accordance with the laws of the State of Nevada without giving effect to any choice or conflict of law provision or
rule that would cause the application of the laws of any jurisdiction other than the State of Nevada. Any proceeding seeking to
enforce any provision of, or based on any right arising out of, this Agreement shall be brought or otherwise commenced in any state
or federal court of the United States situated in Denver County, Colorado.

 

SECTION 7.06                   
Entire Agreement. This Agreement, including the Schedule hereto, supersedes all prior agreements between the
Parties with respect to its subject matter and constitutes the sole and entire agreement of the Parties with respect to the subject
matter hereof. All Schedules and Exhibits hereto are hereby incorporated herein by reference.

 

    	-9-

    	 

    

 

SECTION 7.07                   
Assignments and Successors. This Agreement shall not be assigned by either of the Parties (whether by operation
of law or otherwise) without the prior written consent of the other Party, which consent may be withheld, delayed, denied, or conditioned
by such Party in its sole and absolute discretion. Subject to the preceding sentence, this Agreement will be binding upon, inure
to the benefit of, and be enforceable by the Parties and their respective successors and assigns.

 

SECTION 7.08                   
Counterparts; Effectiveness. This Agreement may be executed in two or more counterparts, each of which shall
be deemed an original, but all of which together shall constitute one and the same instrument. Delivery of an executed counterpart
of a signature page to this Agreement by facsimile or in electronic (i.e., “pdf” or “tif”)
format shall be as effective as delivery of a manually executed counterpart of this Agreement.

 

SECTION 7.09                   
Amendments. This Agreement may be amended or modified with the written consent of the Company and the Purchaser.

 

SECTION 7.10                   
Severability. If any provision of this Agreement shall be declared void or unenforceable by any judicial or administrative
authority, the validity of any other provision and of the entire Agreement shall not be affected thereby.

 

SECTION 7.11                   
Section Headings; Construction. The headings of Articles and Sections in this Agreement are for convenience only
and are not to be considered in construing or interpreting any term or provision of this Agreement. All references to “Article”,
“Articles”, “Section”, or “Sections” refer to the corresponding Article, Articles, Section,
or Sections (or sub-Section or sub-Sections) of this Agreement. All words used in this Agreement will be construed to be of such
gender or number as the circumstances require. Unless otherwise expressly provided, the word “including” does not limit
the preceding words or terms.

 

SECTION 7.12                   
No Third-Party Beneficiaries. This Agreement shall not confer any rights or remedies upon any person other than
the Parties and their respective successors and permitted assigns, except for the rights of the Purchaser Indemnified Parties and
Company Indemnified Parties under Article VI of this Agreement.

 

[Signatures of the Parties appear on
the next page.]

 

    	-10-

    	 

    

 

IN WITNESS WHEREOF,
the undersigned have executed this Common Stock Purchase Agreement as of the date first set forth above.

 

	THE COMPANY:
	 	 	 	 	 	 	 
	AMERICAN EAGLE ENERGY CORPORATION
	 	 	 	 	 	 	 
	 	 	 	 	 	 	 
	 	 	 	 	 	 	 
	By:	 /s/ Bradley M. Colby
	 	Bradley M. Colby, President and 
	 	Chief Executive Officer
	 	 	 	 	 	 	 
	 	 	 	 	 	 	 
	THE PURCHASER:
	 	 	 	 	 	 	 
	POWER ENERGY HOLDINGS, LLC
	 	 	 	 	 	 	 
	 	 	 	 	 	 	 
	 	 	 	 	 	 	 
	By:	 /s/ George P. Archos
	 	George P. Archos, authorized signatory

  

    	-11-

    	 

    

 

Schedule 2.09

 

	The Company and Morgan Stanley Capital Group Inc. (“MSCC”) may
enter into one or a series of agreements that relate to a term loan financing in favor of the Company by MSCC and any other lenders
named in such agreement(s) (the “Debt Financing Transaction”). Although no assurances can be given as to whether
the Debt Financing Transaction will close on the terms that have been disclosed to the Purchaser, or whether the Debt Financing
Transaction will close at all, the Company currently expects that the Debt Financing Transaction will close within four weeks of
the date hereof.PURCHASE, SALE AND OPTION AGREEMENT

 

This Purchase, Sale
and Option Agreement (this “Agreement”) is entered into as of August 12, 2013, by and between USG Properties
Bakken I, LLC, a Delaware limited liability company (“Seller”), and American Eagle Energy Corporation, a Nevada
corporation (“Buyer”). Seller and Buyer are sometimes referred to herein individually as a “Party”
and collectively as the “Parties.” NextEra Energy Gas Producing LLC, a Delaware limited liability company (“NextEra”)
joins in this Agreement for the purposes set forth in Section 12(c).

 

WHEREAS, Seller and
Buyer each own undivided interests in and to the Assets (as defined below) and Seller has agreed to (i) sell a portion of its interests
in the Assets to Buyer and (ii) grant to Buyer an option (the “Option”) to purchase another equal portion of
Seller’s remaining interest in the Assets upon the terms and conditions set forth herein.

 

WHEREAS, contemporaneously
with the execution of this Agreement Seller and Buyer are also entering into a Carry Agreement (the “Carry Agreement”)
and a Farmout Agreement (the “Farmout Agreement”) pursuant to which Seller will be paying Buyer’s share
of the costs of the wells drilled pursuant to such agreements (which share will increase as and if the closings under this Agreement
occur) and thereby earn, in some cases for a limited term, portions of Buyer’s interests in such wells and the revenues therefrom.

 

NOW THEREFORE, in consideration
of the mutual covenants, representations, warranties, conditions and agreements contained in this Agreement and other valuable
consideration, the receipt and sufficiency of which are hereby acknowledged, Buyer and Seller agree as follows:

 

		1.	The Property. Buyer agrees to purchase, and Seller agree to sell, convey and assign, the
undivided interests specified in the Stipulation (as defined below) in and to the Assets (such interests, the “Property”),
subject to the terms and conditions of this Agreement:

 

		A.	The oil, gas and mineral leases described in Exhibit A, Parts I, II and III and any and
all other leases owned by Seller covering any of the below-referenced units or fields (the “Leases”), insofar
as they cover the lands described in Exhibit A, which lands are located in Divide County, North Dakota (the “Lands”),
together with all rights, privileges and obligations appurtenant thereto;

 

		B.	All oil, gas and condensate wells (whether producing, not producing or abandoned), and all water
source, water injection and other injection and disposal wells and systems located on the Leases or the Lands, or used in connection
therewith, including without limitation those described in Exhibit A (collectively the “Wells”), together
with all equipment, facilities, and fixtures located on or used in developing or operating the Leases, the Lands, or the Wells,
or producing, storing, treating or transporting oil, gas, water, or other products or byproducts, including pipelines, flow lines,
gathering systems, tank batteries, improvements, fixtures, inventory, movables and immovables now existing in connection with the
Leases, the Lands or the Wells. (collectively the “Lease Property and Equipment”);

 

		C.	To the extent assignable or transferable, all permits, licenses, easements, rights-of-way, servitudes,
surface leases, surface use agreements, and similar rights and interests applicable to or used in operating the Leases, the Lands,
the Wells, or the Lease Property and Equipment (collectively the “Permits and Easements”);

 

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		D.	To the extent assignable or transferable, all contracts and contractual rights, obligations and
interests, insofar as they relate to the Leases, the Lands, the Wells, the Lease Property and Equipment, or the Permits and Easements
(the “Related Contracts”); and

 

		E.	To the extent assignable or transferable, all other tangibles, miscellaneous interests and other
assets on or used in connection with the Leases, the Lands, the Wells, the Lease Property and Equipment, or the Permits and Easements
(collectively the “Miscellaneous Personal Property”), including records, files, and other data that relate to
the Leases, the Lands, the Wells, the Lease Property and Equipment, the Permits and Easements, or the Related Contracts, and lease,
land and well files, production records, title opinions, contract, regulatory and environmental files, and geological and geophysical
information (collectively the “Property Records” and together with the Leases, Wells, Lease Property and Equipment,
Permits and Easements, Related Contracts and Miscellaneous Property the “Assets”).

 

The Property shall not include
(i) any Leases, Wells, Lease Property and Equipment, Permits and Easements, Related Contracts and Miscellaneous Property that are
not transferred to Buyer at Closing including, but not limited to, those reflected on Exhibit A-1 (“Excluded Assets”),
 (ii) any taxes, tax refunds or tax carry-forward amounts attributable to the Property prior to the Effective Date or to
Seller’s businesses generally, (iii) all personal property of Seller not included within the definition of Assets, or (iv)
all of Seller’s proprietary computer software, patents, trade secrets, copyrights, names, trademarks, logos and other intellectual
property.

 

		2.	Purchase Price.

 

		A.	The purchase price for the Property (the “Purchase Price”), to be paid by Buyer
to Seller is $47,000,000, subject to adjustment as provided in Sections 3 and 9 below (as so adjusted, the “Adjusted Purchase
Price”) and payable as provided in Section 2B. The Purchase Price shall be allocated among the respective Properties
(and as so allocated per Property, the “Allocated Value”) and as to type of asset as set forth in Schedule
2A attached hereto. Buyer and Seller agree to use such allocations in all tax and related filings with respect to the transactions
contemplated hereby.

 

		B.	The Adjusted Purchase Price shall be paid to Seller by Buyer at Closing by wire transfer or other
immediately available funds.

 

		3.	Purchase Price Adjustments.

 

The Purchase
Price will be adjusted as follows to reflect the allocation of expenses and revenues attributable to the Property as of the Effective
Time such that Seller shall bear all expenses and receive all the proceeds related to the Property before the Effective Time and
Buyer shall bear all expenses and receive all the proceeds related to the Property after the Effective Time, provided, however,
that for the purposes of this Section 3 only the Property shall not include the Carry Wells and Farmout Wells as such terms are
defined in the Carry Agreement and Farmout Agreement, and the costs and expenses associated with such wells. No less than five
business days before Closing, Buyer will submit for Seller’s review and approval a preliminary settlement statement identifying
estimates of all such adjustments.

 

		A.	The Purchase Price will be adjusted upward by: (i) all proceeds attributable to the operation of
the Property not yet received by Seller to the extent they are attributable to times before the Effective Time including proceeds
for volumes of hydrocarbons stored at the Effective Time in stock tanks, pipelines or other storage; (ii) all operating and capital
expenses including any prepaid expenses, rentals, cash calls, and advances for expenses not yet incurred and actually paid by Seller
with respect to the operation of the Property after the Effective Time (and including any capital expenses relating to times prior
to the Effective Time if such expenses have not as of the date of this Agreement already been billed to Seller) and, (iii) any
property taxes and excise, severance and other taxes attributable to the Property or on or measured by the production therefrom
(collectively “Production Taxes”) paid by Seller, to the extent relating to times on and after the Effective
Time, based upon the assessment rates for the most recent calendar year or other time period then available.

 

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		B.	The Purchase Price will be adjusted downward by: (i) all proceeds attributable to the operation
of the Property received by Seller to the extent they are attributable to times after the Effective Time including proceeds for
volumes of hydrocarbons stored in stock tanks, pipelines or other storage ; and (ii) any Production Taxes paid by Buyer, to the
extent relating to times prior to the Effective Time, based upon the assessment rates for the most recent calendar year or other
time period then available; and, any other decreases in the Purchase Price pursuant to Section 9 below.

 

Within 90 days after Closing,
Buyer will provide a final settlement statement for Seller’s review and approval containing a final calculation of the adjustments
to the Purchase Price. If Seller does not submit a notice of disagreement with respect to such adjustments within 30 days after
receipt thereof, such adjustments shall become final and binding. If Buyer submits a notice of disagreement with respect to such
adjustments within such 30 day period, the parties shall negotiate in good faith to resolve such disagreement as soon as possible.
If the Adjusted Purchase Price is greater than the Purchase Price, then Buyer shall pay the amount by which the Adjusted Purchase
Price exceeds the Purchase Price to Seller. If the Purchase Price is greater than the Adjusted Purchase Price, then Seller shall
pay the amount by which the Purchase Price exceeds the Adjusted Purchase Price to Buyer. Such payment shall be made within 10 days
after the parties agree upon the Adjusted Purchase Price by wire transfer of immediately available funds. Notwithstanding the foregoing,
if either party receives revenues that belong to the other party based on an Effective Time allocation, the receiving party will
promptly remit those revenues to the other party, and if either party pays an expense that is the responsibility of the other party
based on the Effective Time allocation described above, the party on whose behalf the expenses were paid agrees to promptly reimburse
the other party. Without limiting the foregoing, Seller shall file all returns and pay all Production Taxes relating to times prior
to the Effective Time.

 

		4.	Effective Time. The “Effective Time”
shall mean 12:01 a.m. local time in Divide County, North Dakota, on June 1, 2013. If the Closing does not occur on the first day
of a calendar month, costs and expenses for that month shall be allocated as if the revenues and expenses for that calendar month
were produced or incurred on an equal daily basis for that calendar month.

 

		5.	Reciprocal Representations, Warranties and Covenants. Buyer and Seller each represents and
warrants to the other that, as to itself, the following statements are true and accurate as of the date hereof through the Closing
Date:

 

		A.	It is duly organized and in good standing under the laws of its state of incorporation or organization,
is (or, as of the date of Closing hereunder, will be) duly qualified to carry on its business in the State of North Dakota, and
has all the requisite power and authority to enter into and perform this Agreement.

 

		B.	This Agreement has, and all other documents it is to execute and deliver on or before the Closing
Date have been (or will be) duly executed by its authorized representatives, constitute its valid and legally binding obligations,
and subject to applicable law, are enforceable against it in accordance with their respective terms. Except as would not result
in a material adverse effect on the Property taken as a whole, execution, delivery, and performance of this Agreement and such
documents does not conflict with or violate any agreement or instrument to which it is a party or by which it is bound, or any
law, rule, regulation, ordinance, judgment, decree or order to which it or the Property is subject.

 

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		C.	There is no action, suit, proceeding, claim or investigation pending or, to the best of its knowledge,
threatened, against it that seeks to restrain or prohibit, or to obtain damages from it, with respect to this Agreement or the
consummation of all or part of the transaction contemplated by this Agreement.

 

		D.	It has not incurred any obligation for brokers’, finders’ or similar fees for which
the other party would be liable.

 

		E.	Prior to Closing, it will give the other party prompt written notice of any matter materially affecting
the accuracy of any of its representations or warranties under this Agreement.

 

		6.	Seller’s Representations, Warranties and Covenants. Seller represents and warrants
to Buyer that the following statements are true and accurate, as of the date hereof through the Closing Date:

 

		A.	Except for burdens that have been taken into account in determining the Working Interests (as defined
below) and Net Revenue Interests (as defined below) included in the Property and for liens, encumbrances and other burdens that
will be released contemporaneously with the Closing, the Property is free and clear of all mortgages, deeds of trust, liens, and
other encumbrances created by, through or under Seller and Seller has made no dispositions or elections or taken any other action
that would increase its share of costs to greater than the Working Interest or decrease its net share of production to less than
the Net Revenue Interest set forth on Exhibit A. To Seller’s knowledge, there are no preferential rights, consents
to assignment or other restrictions on alienation of the Property, except as heretofore disclosed in writing by Seller to Buyer.
For the avoidance of doubt, any representation or warranty qualified to the “knowledge of Seller” or “to Seller’s
knowledge” or with any similar knowledge qualification is limited to matters within the actual knowledge of Seller.

 

		B.	Except as previously disclosed by Seller to Buyer, to Seller’s knowledge there is no demand
or lawsuit, nor any compliance order, notice of probable violation or other private or governmental action, pending or, to the
best of Seller’s knowledge, threatened against Seller of which Seller has knowledge, that would result in an impairment or
loss of title to any part of the Property, or impairment of the value thereof, or would hinder or impede the operation or transfer
of the Property.

 

		C.	Except as required by applicable law or the Related Contracts, Seller will not commence or consent
to commencement of, or elect to participate in, any operation to drill any new well on the Leases or the Lands or to frac, re-complete,
deepen, rework, plug back, plug and abandon, or conduct other significant operations with respect to any Well without the prior
written consent of Buyer, not to be unreasonably withheld.

 

		D.	From the date hereof through Closing, Seller will
pay when due all undisputed expenses coming due and payable in connection with the Property. Without the prior written consent
of Buyer, which shall not be unreasonably withheld, and except as required by applicable law or Related Contracts, Seller will
not do any of the following with respect to the Property, except to the extent resulting from the actions of the operator of the
Property: (i) enter into any new agreements or commitments that can reasonably be expected to result in aggregate payments by
Seller of more than $50,000 during the current or any subsequent fiscal year that cannot be terminated by Seller on not greater
than 60 days’ notice; (ii) incur any liabilities other than in the ordinary course of business for normal operating
expenses; (iii) release, surrender, modify or terminate all or any portion of the Leases or the Related Contracts; or (iv)
encumber, sell or otherwise dispose of any of the Property other than hydrocarbons sold in the ordinary course of business.

 

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		E.	All taxes, assessments and other governmental charges payable with respect to the Property that
are based on or measured by actual ownership of the Property that have become due and payable before the Effective Time have been
properly paid in a timely manner.

 

		F.	From the date hereof through Closing, Seller will
immediately notify Buyer of any material change in the condition of the Property of which Seller is aware, including, without
limitation, any casualty loss.

 

		G.	Promptly after the execution and delivery of this
Agreement, Seller will give written notice to Buyer of any condition or occurrence of which Seller has actual knowledge relating
to any or all of the Property that could constitute an Environmental Issue (as defined below). Seller shall have the right, up
to the day prior to the Closing, to supplement its original notice by giving one or more additional written notices to Buyer,
if Seller later becomes aware of any additional conditions or occurrences of the type referred to above. Any and all notices given
by Seller to Buyer under this Section 6.G shall be herein referred to, collectively, as the “Environmental Disclosure.”

 

		H.	EXCEPT AS AND TO THE EXTENT EXPRESSLY SET FORTH IN HEREIN, IN THE CERTIFICATE OF SELLER TO BE DELIVERED
AT CLOSING OR IN THE CONVEYANCES TO BE DELIVERED BY SELLER TO BUYER HEREUNDER, THERE ARE NO REPRESENTATIONS AND WARRANTIES, EXPRESS,
STATUTORY OR IMPLIED, BY SELLER AS TO THE PROPERTY OR PROSPECTS THEREOF AND BUYER HAS NOT RELIED UPON ANY ORAL OR WRITTEN INFORMATION
PROVIDED BY SELLER.

 

		I.	Seller will use its best efforts to obtain the management
approval described in Section 11 A (iii) no later than August 16, 2013

 

		7.	Buyer’s Representations, Warranties and Covenants. Buyer represents and warrants to
Seller that the following statements are true and accurate, as of the date hereof and the Closing Date:

 

		A.	Buyer is acquiring the Property for investment purposes only and not with a view toward resale
or distribution thereof in violation of applicable securities laws. Buyer acknowledges that it can bear the economic risk of its
investment in the Property, Buyer has such knowledge and experience in financial and business matters that it is capable of evaluating
the merits and risks of an investment in the Property, and Buyer is sophisticated in the evaluation, purchase, ownership and operation
of oil and gas properties. Buyer is an “accredited investor” as such term is defined in Regulation D under the Securities
Act of 1933, as amended (the “Securities Act”). Buyer understands that none of the Property will have been registered
pursuant to the Securities Act or any applicable state securities laws, that the Property will be characterized as “restricted
securities” under federal securities laws, and that the Property may not be sold or otherwise disposed of without registration
under the Securities Act or an exemption therefrom.

 

		B.	Buyer hereby acknowledges and affirms that (i) it has completed its own independent investigation,
analysis, and evaluation of the Property, (ii) it has made all such reviews and inspections of the Leases, Lands and Wells, their
results of operation, their condition (financial or otherwise), and as to their prospects as it has deemed necessary or appropriate
and (iii) in making its decision to enter into this Agreement and to consummate the transactions contemplated hereby, Buyer has
relied solely on the representations and warranties set forth in this Agreement and its own independent investigation, analysis
and evaluation.

 

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		C.	There are no actions, suits or proceedings pending, or to Buyer’s knowledge, threatened in
writing, before any local, state or federal governmental body or arbitrator against Buyer which are reasonably likely to impair
materially Buyer’s ability to perform its obligations under this Agreement or any document required to be executed and delivered
by Buyer at Closing.

 

		D.	Buyer is, or as of the Closing will be, qualified under applicable laws to own the Property and
has, or as of the Closing will have, complied with all necessary bonding requirements of local, state or federal governmental Bodies
required for Buyer’s ownership or operation of the Property.

 

		8.	Due Diligence.  From the date hereof through Closing,
Seller will allow Buyer full access to the Related Contracts and the Property Records. Buyer may photocopy records at its sole
expense and shall keep confidential all information made available to it until the Closing. In the event that the purchase/sale
of the Property as contemplated by this Agreement does not close, Buyer shall at its expense promptly return to Seller all original
information and certify that it has destroyed and retained no copies of all other information it obtained from Seller.

 

		9.	Notice of Defect.

 

9.1
For the purposes of this Agreement: (a) references to a “Title Defect” shall be deemed to refer to
any lien, encumbrance or other defect that causes Seller to be entitled to receive a Net Revenue Interest with respect to a Lease
or Well less than the “Net Revenue Interest” set forth in Exhibit A for such Lease or Well, or that causes
Seller to be obligated to bear a Working Interest with respect to a Lease or Well greater than the “Working Interest”
set forth in Exhibit A for such Lease or Well, except for any such excess Working Interest accompanied by a proportionate
increase in the Net Revenue Interest for such Lease or Well, and (b) references to an “Environmental Issue”
shall be deemed to refer to any condition of the Leases, Lands, Wells or Lease Property and Equipment that could reasonably be
expected, under any applicable environmental or other law, either to require remediation efforts or to expose the owner of the
Property to liability for any fine, penalty or other monetary obligation that exceeds $100,000. If Buyer becomes aware prior to
Closing of any Title Defect or Environmental Issue that a reasonably prudent operator would deem to materially impact value of
the Properties or operations and not incurred in the normal course of business, as such, require curative action prior to Closing,
Buyer shall promptly notify Seller in writing of such Title Defect or Environmental Issue but in no event later than the Claim
Date referenced below, and Buyer and Seller shall attempt to reach a good faith agreement on curative action, Purchase Price adjustment,
indemnification or other appropriate steps. To be asserted as a valid claim, any defect asserted pursuant to this section (other
than a lien or encumbrance arising by through or under Seller) must exceed an individual defect threshold of $1,000,000 per spacing
unit (“Individual Defect Threshold”).

 

To
assert a claim of Title Defect or Environmental Issue, Buyer must deliver a claim notice of such Title defect or Environmental
Issue (“Claim Notice”) on or before ten business days prior to Closing (such cut-off date being the “Claim
Date”)). To be effective, the Claim Notice shall be in writing and shall include (i) a description of the alleged issue
that is reasonably sufficient for Seller to determine the basis of the alleged issue, (ii) the Lease or Well adversely affected
by the issue (each a “Defect Property”), (iii) the Allocated Value of each Defect Property, (iv) all documents
upon which Buyer relies for its assertion of a defect, including, at a minimum, supporting documents reasonably necessary for
Seller (as well as any title attorney, examiner, consultant or other representative hired or retained by Seller) to verify the
existence of the alleged defect and (v) the amount by which Buyer reasonably believes the allocated value of each Defect Property
is reduced by the alleged defect and the computations and information upon which Buyer’s belief is based, including any
analysis by any title attorney, examiner, consultant or representative hired or retained by Buyer. Any claim not made by the Claim
Date shall be deemed waived by Buyer.

 

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9.2 Seller have the right,
but not the obligation, to attempt, at its sole cost, to cure or remove on or before Closing any asserted defects each exceeding
the Individual Defect Threshold for which Seller has timely received a Claim Notice as set forth below. In the event Seller is
unable to cure any such defect prior to Closing and such defect is not waived by Buyer then Seller may elect to either (i) reduce
the Purchase Price by the Title Defect Amount (as defined below) and proceed with Closing or (ii) retain the defective Property
and reduce the Purchase Price by the Allocated Value of such Property and proceed to Closing, provided, however, that if the Purchase
Price is reduced pursuant to this sentence by more than 10% either Party may terminate this Agreement.

 

The “Title
Defect Amount” resulting from a Title Defect shall be the amount by which the Allocated Value of the affected Defect
Property is reduced as a result of the existence of such Title Defect and shall be determined in accordance with the following
methodology, terms and conditions:

 

		A.	If Buyer and Seller agree on the Title Defect Amount,
then that amount shall be the Title Defect Amount;

 

		B.	If the Title Defect is an encumbrance that is undisputed
and liquidated in amount, then the Title Defect Amount shall be the amount necessary to be paid to remove such Title Defect from
the Defect Property;

 

		C.	If the Title Defect represents a discrepancy between
(i) the actual Net Revenue Interest for any Defect Property and (ii) the Net Revenue Interest stated herein, and the actual Working
Interest for such Defect Property is less than the Working Interest stated herein in the same proportion as the reduction in the
net Revenue Interest, then the Title Defect Amount shall be the product of (y) the Allocated Value of such Defect Property multiplied
by (z) 1 minus a fraction, the numerator of which is the actual Net Revenue Interest and the denominator of which is the Net Revenue
Interest stated herein;

 

		D.	If the Title Defect represents an obligation or encumbrance
upon or other defect in title to the Defect Property of a type not described above, the Title Defect Amount shall be determined
by taking into account the Allocated Value of the Defect Property, the portion of the Defect Property affected by the Title Defect,
the legal effect of the Title Defect, the potential economic effect of the Title Defect over the life of the Defect Property,
the values placed upon the Title Defect by Buyer and Seller, proportionate reduction to the working interest share corresponding
to the Working Interest in the Defect Property as set forth on Exhibit A and such other reasonable factors as are necessary to
make a proper evaluation; provided, if such Title Defect is reasonably capable of being cured, the Title Defect Amount shall not
be greater than the reasonable cost and expense of curing such Title Defect;

 

		E.	The Title Defect Amount with respect to a Defect Property
shall be determined without duplication of any costs or losses included in another Title Defect Amount hereunder; and

 

		F.	Notwithstanding anything to the contrary in this Section
9.2, the aggregate Title Defect Amounts attributable to the effects of all Title Defects upon any Defect Property shall not exceed
the Allocated Value of such Title Defect Property.

 

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9.3
Seller and Buyer shall attempt in good faith to agree on all Title Defects and Title Defect Amounts. If Seller and Buyer are
unable to agree by Closing then subject to the right to terminate, if applicable under Section 9.2, the parties shall proceed
with Closing using the alternative chosen by Seller under Section 9.2 and the Title Defect Amounts in dispute shall be exclusively
and finally resolved pursuant to this Section 9.3. There shall be a single arbitrator, who shall be a title attorney (the “Title
Arbitrator”) with at least ten years’ experience in oil and gas titles involving properties in the regional area
in which the Defect Properties are located, as selected by mutual agreement of Buyer and Seller within 15 days after the Closing,
and absent such agreement, by the International Institute for Conflict Prevention and Resolution (“CPR”). The
arbitration proceeding shall be held in Denver, Colorado, in accordance with the rules of the CPR to the extent such rules do
not conflict with the terms of this Section 9. The Title Arbitrator’s determination shall be made within 20 days after submission
of the matters in dispute and shall be binding on and non-appealable by the Parties. In making his/her determination, the Title
Arbitrator shall be bound by the rules set forth in Section 9 and, subject to the foregoing, may consider such other matters as
in the opinion of the Title Arbitrator are necessary to make a proper determination. The Title Arbitrator, however, may not award
the Buyer a greater Title Defect Amount with respect to a Defect Property than the Title Defect Amount claimed by Buyer in its
applicable Claim Notice. The Title Arbitrator shall act as an expert for the limited purpose of determining the specific disputed
Title Defect, Defect Properties and Title Defect Amounts submitted by either Party and may not award damages, interest or penalties
to either Party with respect to any other matter. Seller and Buyer shall each bear its own legal fees and other costs and expenses
of presenting its case. The fees and expenses associated with the Title Arbitrator shall be borne equally by the Parties. After
giving effect to any Purchase Price adjustments already made with respect to a Defect Property then within ten days after the
Title Arbitrator delivers written notice to Buyer and Seller of the award with respect to a Title Defect Amount, (a) Buyer shall
pay to Seller the amount, if any, so awarded by the Title Arbitrator to Seller and (b) Seller shall pay to Buyer the amount, if
any, so awarded by the Title Arbitrator to Buyer.

 

Except
for any special warranty that may be provided for under this Agreement, Seller makes no warranty or representation, express, implied,
statutory or otherwise, with respect to Seller’s title to any of the Property.

 

9.4
For purposes of this Agreement, “Working Interest” shall mean, with respect to a Lease or Well, the percentage
interest in such Lease or Well that is burdened with the obligation to bear and pay costs and expenses of maintenance, development
and operations in connection with such Lease or Well, without regard to royalties, overriding royalties, net profits interests
or other similar burdens.

 

For purposes of this Agreement,
“Net Revenue Interest” shall mean, with respect to a Lease or Well, the interest in and to all hydrocarbons
produced, saved, and sold from or allocated to such Lease or Well, after giving effect to all royalties, overriding royalties,
production payments, carried interests, net profits interests, reversionary interests, and other burdens upon, measured by, or
payable out of production therefrom.

 

10.
Closing.  The actions and events described in Section 12 below are the “Closing” of this transaction, which shall
be held on at 1:00 p.m. local time on September 30, 2013 or at such earlier date and time as to which Buyer and Seller may hereafter
mutually agree in writing. Closing will be held at Buyer’s office located at 2549 W. Main Street, Suite202, Littleton, Colorado
80120, or at such other place as the parties may mutually agree. All events of Closing shall be deemed to have occurred simultaneously,
and each shall be a condition precedent to the others. The date of the Closing determined pursuant to this Section 10 shall herein
be referred to as the “Closing Date.”

 

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		11.	Conditions to Closing. 

 

		A.	Seller’s obligation to close the transactions described in this Agreement is subject to the
fulfillment or satisfaction as of Closing of the following conditions (it being understood that any one or more of the following
conditions may be waived by Seller in a writing signed on behalf of Seller):

 

		(i)	The representations and warranties of Buyer in this Agreement shall be true and correct in all
material respects, and Buyer shall have performed and complied with all covenants made by Buyer in this Agreement that are required
to be performed on or before Closing.

 

		(ii)	No suit or other proceeding instituted by a person or entity other than Buyer or Seller shall be
pending or threatened before any court or governmental agency seeking to restrain, prohibit, or declare illegal, or seeking substantial
damages in connection with, the transaction that is the subject of this Agreement.

 

		(iii)	Seller shall have received management approval of the transactions contemplated by this Agreement.

 

			

		B.	Buyer’s obligation to close the transactions described in this Agreement is subject to the
fulfillment or satisfaction as of Closing of the following conditions (it being understood that any one or more of the following
conditions may be waived by Buyer in a writing signed on behalf or Buyer):

 

		(i)	The representations and warranties of Seller in this Agreement shall be true and correct in all
material respects, and Seller shall have performed and complied with all covenants made by Seller in this Agreement that are required
to be performed on or before Closing.

 

		(ii)	No suit or other proceeding instituted by a person or entity other than Buyer or Seller shall be
pending or threatened before any court or governmental agency seeking to restrain, prohibit, or declare illegal, or seeking substantial
damages in connection with, the transaction that is the subject of this Agreement.

 

		(iii)	Buyer shall have obtained financing of at least the amount of the Adjusted Purchase Price on terms
acceptable to Buyer.

.

		12.	Events of Closing. At Closing, the following events shall occur, the term “delivery”
to include all appropriate executions and acknowledgments:

 

		A.	Buyer and Seller will deliver the preliminary settlement statement, showing adjustments to the
Purchase Price. At least five business days prior to Closing, Buyer shall have prepared and delivered to Seller a schedule setting
forth the details for any adjustments to the Purchase Price and the Parties shall have until Closing to reach an agreement with
respect to such adjustments. If an agreement cannot be reach prior to Closing, Buyer’s preliminary settlement statement shall
be used pending adjustment under Sections 9 and 23.

 

		B.	Buyer will deliver the Adjusted Purchase Price by wire transfer in immediately available funds
to the account of Seller, as provided in account and wire transfer instructions designated in writing by Seller at least 3 business
days prior to Closing.

 

		C.	Seller, NextEra and Buyer will deliver to each other one or more counterparts of the Stipulation
and Cross-Conveyance (the “Stipulation”) in the form attached as Exhibit B and, if the Property includes
State or Federal leases, the appropriate state or federal forms required for filing in the applicable State or Federal records.

 

		D.	Seller will deliver to Buyer all other instruments necessary or advisable to transfer the rights,
obligations and interests in applicable Related Contracts and other Property, including all third-party waivers, consents, approvals
and permits, provided that Buyer has utilized its commercially reasonable efforts in actively assisting Seller in obtaining such
transfer rights including third-party waivers, consents, approvals and permits.

 

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		E.	Buyer and Seller will each deliver to the other any additional assignments, bills of sale, deeds
or instruments necessary to transfer the Property to Buyer or to otherwise effect and support the transaction contemplated in this
Agreement.

 

		F.	Buyer and Seller will each deliver to the other, a statement that, to the best of its knowledge,
all of its representations are true in all material respects as of the Closing.

 

			

		13.	Post-Closing Obligations and Other Agreements.

 

		A.	After the Closing, Buyer will have access, during normal business hours and upon reasonable prior
notice, to the Property Records at Seller’s offices. Buyer shall have the right, at Buyer’s sole cost, risk and expense,
to copy any or all of such Property Records.

 

		B.	Within 15 days after Closing, Buyer will, at Buyer’s
cost, record all assignments and all other instruments that must be recorded to effect the transfer of the Property and file for
approval with any state, local or federal government agencies required to effect the transfer of the Property.

 

		C.	The representations, warranties, and related covenants and agreements made in this Agreement or
any certificate, agreement or document delivered at the Closing shall survive the Closing for a period of 18 months after the Closing
Date.

 

		D.	Each party will be responsible for its own state and federal income taxes, if any, relating to
this transaction. Buyer will be responsible for any transfer, sales or similar taxes levied on the transfer of the Property to
Buyer. After the Effective Time, each Party shall: (a) reasonably assist the other in preparing any tax returns with respect to
any tax incurred or imposed, or required to be filed, in connection with the transactions contemplated by this Agreement, and in
qualifying for any exemption or reduction in tax that may be available, (b) reasonably cooperate in preparing for any audits or
examinations by, or disputes with, taxing authorities regarding any tax incurred or imposed in connection with the transactions
contemplated by this Agreement, (c) make available to the other, and to any taxing authority as reasonably requested, any information,
records, and documents relating to a tax incurred or imposed in connection with the transactions contemplated by this Agreement;
provided however, no Party shall be required to provide to the other Party any information, records or documents subject to attorney-client
privilege or any information, records or documents related to income taxes; and (d) provide timely notice to the other in writing
of any pending or threatened tax audit, examination, or assessment that could reasonably be expected to affect the other’s
tax liability under applicable law or this Agreement, and to promptly furnish the other with copies of all correspondence with
respect to any such tax audit, examination, or assessment.

 

		E.	Effective as of the Closing, Buyer assumes and agrees to fully perform a share of Seller’s
express or implied covenants under the Leases and other Property, with such share being proportionate to the undivided interests
of Seller being sold to Buyer pursuant to this Agreement; provided, however, Buyer shall not assume any obligations or liabilities
to the extent they are (i) costs allocated to Seller under this Agreement, or (ii) attributable to the gross negligence or willful
misconduct of Seller in connection with the Properties (collectively, the “Seller Retained Liabilities”).

 

    	10

    	 

    

 

		F.	Effective as of the Closing, Seller shall defend, indemnify and hold harmless Buyer and its shareholders,
directors, officers, managers, employees, agents and representatives (collectively, “Buyer Indemnified Parties”)
from and against any and all claims, causes of actions, payments, charges, judgments, assessments, liabilities, losses, damages,
penalties, fines, costs and expenses, including any attorneys’ fees and legal or other expenses incurred in connection therewith
and including liabilities, costs, losses and damages for personal injury or death or property damage (all of the foregoing collectively
known as “Liabilities”), arising from, based upon, related to or associated with:

 

		(a)	any breach by Seller of its representations, warranties or covenants contained in this Agreement;
or

 

		(b)	the ownership or operation of the Property before the Effective Time.

 

		G.	Effective as of the Closing, Buyer shall defend, indemnify
and hold harmless Seller and its members, directors, officers, employees, agents and representatives (collectively, “Seller
Indemnified Parties”) from and against any and all any and all Liabilities arising from, based upon, related to or associated
with:

 

		(a)	any breach by Buyer of its representations, warranties or covenants contained in this Agreement;
or

 

		(b)	the ownership or operation of the Property after the Effective Time except to the extent that a
Liability arising after the Effective Time is attributable to the ownership of the property before the Effective Time.

 

		H.	All disputes arising from or relating to this Agreement shall be adjudicated in the federal and
state courts sitting in Denver, Colorado, and each party hereby consents to such courts’ jurisdiction and to such venue.

 

		I.	Buyer and Seller agree to execute and deliver from time to time such further instruments and do
such other acts as may be reasonably requested to effectuate the purposes of this Agreement.

 

		J.	NO PARTY NOR ANY OF ITS AFFILIATES SHALL BE LIABLE UNDER THIS AGREEMENT OR ANY OTHER DOCUMENT ENTERED
INTO OR OTHERWISE RELATED TO THIS TRANSACTION FOR EXEMPLARY, SPECIAL, PUNITIVE, INDIRECT, REMOTE, SPECULATIVE, OR CONSEQUENTIAL
DAMAGES (INCLUDING LOST PROFITS, OPPORTUNITY COSTS, OR DAMAGES BASED UPON MULTIPLES OF EARNINGS), WHETHER IN TORT (INCLUDING NEGLIGENCE
OR GROSS NEGLIGENCE), STRICT LIABILITY, BY CONTRACT OR STATUTE, AND WHETHER FORESEEABLE OR UNFORESEEABLE.

 

		K.	Notwithstanding anything to the contrary contained in this Agreement, indemnification pursuant
to this Section 13 is the Parties’ exclusive remedy against each other with respect to breaches of the representations and
warranties of the Parties contained in this Agreement.

 

    	11

    	 

    

 

		L.	EACH PARTY WAIVES, TO THE FULLEST EXTENT PERMITTED BY LAW, ANY RIGHT IT MAY HAVE TO A TRIAL BY
JURY WITH RESPECT TO ANY ACTION, SUIT, OR PROCEEDING ARISING OUT OF OR RELATING TO THIS AGREEMENT.

 

		14.	Disclaimers.

 

		A.	EXCEPT AS AND TO THE EXTENT EXPRESSLY SET FORTH IN SECTION 5 (AS TO SELLER), SECTION 6 OR THE SPECIAL
WARRANTIES OF TITLE CONTAINED IN THE ASSIGNMENTS PER SECTION 12, (I) SELLER MAKES NO REPRESENTATIONS OR WARRANTIES, EXPRESS, STATUTORY
OR IMPLIED AND (II) SELLER EXPRESSLY DISCLAIMS ALL LIABILITY AND RESPONSIBILITY FOR ANY REPRESENTATION, WARRANTY, STATEMENT OR
INFORMATION MADE OR COMMUNICATED (ORALLY OR IN WRITING) TO BUYER OR ANY OF ITS AFFILIATES, EMPLOYEES, AGENTS, CONSULTANTS OR REPRESENTATIVES
(INCLUDING ANY OPINION, INFORMATION, PROJECTION OR ADVICE THAT MAY HAVE BEEN PROVIDED TO BUYER BY ANY OF SELLER’S REPRESENTATIVES,
INCLUDING WITH RESPECT TO ANY SEISMIC DATA AND INFORMATION).

 

		B.	EXCEPT AS EXPRESSLY SET FORTH IN SECTION 5 (AS TO SELLER), SECTION 6 OR THE SPECIAL WARRANTIES
OF TITLE CONTAINED IN THE ASSIGNMENTS PER SECTION 12, AND WITHOUT LIMITING THE GENERALITY OF THE FOREGOING, SELLER EXPRESSLY DISCLAIMS
ANY REPRESENTATION OR WARRANTY, EXPRESS, STATUTORY OR IMPLIED, AS TO (I) TITLE TO ANY OF THE PROPERTIES, (II) THE CONTENTS, CHARACTER
OR NATURE OF ANY REPORT OF ANY PETROLEUM ENGINEERING CONSULTANT, OR ANY ENGINEERING, GEOLOGICAL OR SEISMIC DATA OR INTERPRETATION,
INCLUDING THE SEISMIC DATA AND INFORMATION, RELATING TO THE PROPERTY, (III) THE QUANTITY, QUALITY OR RECOVERABILITY OF HYDROCARBONS
IN OR FROM THE PROPERTY, (IV) ANY ESTIMATES OF THE VALUE OF THE PROPERTY OR FUTURE REVENUES GENERATED BY THE PROPERTY, (V) THE
PRODUCTION OF HYDROCARBONS FROM THE PROPERTY, (VI) THE MAINTENANCE, REPAIR, CONDITION, QUALITY, SUITABILITY, DESIGN OR MARKETABILITY
OF THE PROPERTY, (VII) THE CONTENT, CHARACTER OR NATURE OF ANY INFORMATION, MEMORANDUM, REPORTS, BROCHURES, CHARTS OR STATEMENTS
PREPARED BY SELLER OR THIRD PARTIES WITH RESPECT TO THE PROPERTY, (VIII) ANY OTHER MATERIALS OR INFORMATION THAT MAY HAVE BEEN
MADE AVAILABLE TO BUYER OR ITS AFFILIATES, OR ITS OR THEIR EMPLOYEES, AGENTS, CONSULTANTS, REPRESENTATIVES OR ADVISORS IN CONNECTION
WITH THE TRANSACTIONS CONTEMPLATED BY THIS AGREEMENT OR ANY DISCUSSION OR PRESENTATION RELATING THERETO AND (IX) ANY IMPLIED OR
EXPRESS WARRANTY OF FREEDOM FROM PATENT OR TRADEMARK INFRINGEMENT. EXCEPT AS EXPRESSLY REPRESENTED OTHERWISE IN SECTION 5 (AS TO
SELLER) AND SECTION 6, SELLER FURTHER DISCLAIMS ANY REPRESENTATION OR WARRANTY, EXPRESS, STATUTORY OR IMPLIED, OF MERCHANTABILITY,
FREEDOM FROM LATENT VICES OR DEFECTS, FITNESS FOR A PARTICULAR PURPOSE OR CONFORMITY TO MODELS OR SAMPLES OF MATERIALS OF ANY PROPERTIES,
RIGHTS OF A PURCHASER UNDER APPROPRIATE STATUTES TO CLAIM DIMINUTION OF CONSIDERATION OR RETURN OF THE PURCHASE PRICE, IT BEING
EXPRESSLY UNDERSTOOD AND AGREED BY THE PARTIES THAT BUYER SHALL BE DEEMED TO BE OBTAINING THE PROPERTY IN ITS PRESENT STATUS, CONDITION,
AND STATE OF REPAIR, “AS IS” AND “WHERE IS” WITH ALL FAULTS OR DEFECTS (KNOWN OR UNKNOWN, LATENT, DISCOVERABLE
OR UNDISCOVERABLE), AND THAT BUYER HAS MADE OR CAUSED TO BE MADE SUCH INSPECTIONS OF THE PROPERTY AS BUYER DEEMS APPROPRIATE.

 

    	12

    	 

    

 

		C.	OTHER THAN THOSE REPRESENTATIONS SET FORTH IN SECTION 6.G, SELLER HAS NOT AND WILL NOT MAKE ANY
REPRESENTATION OR WARRANTY REGARDING ANY MATTER OR CIRCUMSTANCE RELATING TO ENVIRONMENTAL LAWS, THE RELEASE OF MATERIALS INTO THE
ENVIRONMENT OR THE PROTECTION OF HUMAN HEALTH, SAFETY, NATURAL RESOURCES OR THE ENVIRONMENT OR ANY OTHER ENVIRONMENTAL CONDITION
OF THE PROPERTIES, AND NOTHING IN THIS AGREEMENT OR OTHERWISE SHALL BE CONSTRUED AS SUCH A REPRESENTATION OR WARRANTY, AND BUYER
SHALL BE DEEMED TO BE TAKING THE PROPERTY “AS IS” AND “WHERE IS” WITH ALL FAULTS FOR PURPOSES OF ITS ENVIRONMENTAL
CONDITION AND THAT BUYER HAS MADE OR CAUSED TO BE MADE SUCH ENVIRONMENTAL INSPECTIONS AS BUYER DEEMS APPROPRIATE.

 

		D.	SELLER AND BUYER AGREE THAT, TO THE EXTENT REQUIRED BY APPLICABLE LAW TO BE EFFECTIVE, THE DISCLAIMERS
OF CERTAIN REPRESENTATIONS AND WARRANTIES CONTAINED IN THIS SECTION 14 ARE “CONSPICUOUS” DISCLAIMERS FOR THE PURPOSE
OF ANY APPLICABLE LAW.

 

		15.	Notices. All notices under this Agreement must be in writing and may be given by personal
delivery, facsimile or electronic transmission, U.S. Mail (postage prepaid), or commercial delivery service, and will be deemed
duly given when received by the party charged with such notice and addressed as follows:

 

	If to Seller:	USG Properties Bakken I, LLC
	 	601 Travis Street, Suite 1900
	 	Houston, Texas 77002
	 	Attention: Michael Jessop
	 	Facsimile: (713) 751-0375
	 	Email: michael.jessop@nee.com
	 	 
	If to Buyer:	American Eagle Energy Corporation
	 	2549 W. Main Street, Suite 202
	 	Littleton, Colorado 80120
	 	Attention:  Steve Dille
	 	Facsimile: 303 798 5767
	 	Email: stevedille@amzgcorp.com

 

		16.	Entire Agreement and Amendment. This Agreement constitutes the entire understanding between
the Parties, replacing and superseding all prior negotiations, discussions, arrangements, agreements and understandings between
the Parties regarding the subject transaction and subject matter hereof. This Agreement can be supplemented, amended or revoked
only in writing, signed by the parties.

 

		17.	Assignment; Binding Effect; Public Announcement; Confidentiality.
Prior to the Closing Date, neither party may assign its rights or obligations under this Agreement without the prior written consent
of the other, which consent may not be unreasonably withheld or delayed; provided that no consent shall be required for Buyer
to assign its rights to any subsidiary, affiliate or other entity so long as Buyer remains liable to Seller for the payment and
performance of any and all of Buyer’s obligations hereunder. If Buyer sells, transfers or assigns all or a portion of its
rights hereunder, in addition to Buyer remaining liable to Seller for the payment and performance of any and all related obligations
as set forth above, Buyer shall require its successors and assigns to expressly assume its obligations under this Agreement, to
the extent related or applicable to the Property or portion thereof acquired by them, and Seller shall be considered a third party
beneficiary under any such assumption. This Agreement shall be binding upon the parties hereto and their permitted successors
and assigns.

 

    	13

    	 

    

 

			Neither Seller nor Buyer shall make any press release or other public announcement regarding the
existence of this Agreement, the contents hereof or the transactions contemplated hereby without the prior written consent of the
other Party; provided, however, that the foregoing shall not restrict disclosures to the extent (i) necessary for a Party to perform
this Agreement (including disclosure to governmental bodies or third parties holding preferential rights to purchase, rights of
consent or other rights that may be applicable to the transaction contemplated by this Agreement, as reasonably necessary to provide
notices, seek waivers, amendments or termination of such rights, or seek such consents), (ii) required (upon advice of counsel)
by applicable securities or other laws or regulations or the applicable rules of any stock exchange having jurisdiction over the
Parties or their respective affiliates or (iii) such Party has given the other Party a reasonable opportunity to review such disclosure
prior to its release and no objection is raised; and provided, further, that, in the case of clauses (i) and (ii), each Party shall
use its reasonable efforts to consult with the other Party regarding the contents of any such release or announcement prior to
making such release or announcement.

 

Notwithstanding anything in
this section to the contrary, the Parties shall keep all information and data relating to this Agreement, and the transactions
contemplated hereby, strictly confidential except for disclosures to authorized agents, lenders and/or representatives of the Parties
and any disclosures required to perform this Agreement; provided, however, that the foregoing shall not restrict disclosures that
are required (upon advice of counsel) by applicable securities or other laws or regulations or the applicable rules of any stock
exchange having jurisdiction over the Parties or their respective affiliates; and provided, further, that prior to making any such
disclosures to such representatives, agents or holders of preferential rights to purchase, the Party disclosing such information
shall obtain an undertaking of confidentiality from each such party.

 

		18.	Interpretation. This Agreement shall be considered for all purposes to have been jointly
prepared by the Parties, and shall not be construed against any one party (nor shall any inference or presumption be made) on the
basis of who drafted this Agreement or any other event of the negotiation, drafting or execution of this Agreement. The omission
of provisions of this Agreement from the assignment documents described in Section 12 is not a conflict or inconsistency with this
Agreement and will not effect a merger of the omitted provisions. To the fullest extent permitted by law, all provisions of this
Agreement are hereby incorporated into such assignment documents by reference. Headings and titles in this Agreement are for convenience
only and shall have no significance in interpreting this Agreement. The plural shall be deemed to include the singular, and vice
versa. The word “including” shall be construed not as a limitation, but as the phrase “including, but not limited
to.”

 

		19.	Severability. If any provision of this Agreement is found by a court of competent jurisdiction
to be invalid or unenforceable, that provision will be deemed modified to the extent necessary to make it valid and enforceable,
and if it cannot be so modified, it shall be deemed deleted and the remainder of the Agreement shall continue and remain in full
force and effect.

 

		20.	Governing Law. This Agreement shall be governed, construed and enforced in accordance with
the laws of Colorado without regard to conflicts of law, except that the stipulation and conveyance in the forms of Exhibit B and
D shall be construed under the laws of North Dakota.

 

    	14

    	 

    

 

 

		21.	Exhibits and Schedules. The Exhibits and Schedules attached to this Agreement are incorporated
into and made a part of this Agreement.

 

		22.	Waiver and Amendment. No provision of this Agreement may be waived except by written instrument
executed by the party charged with such waiver. Except as otherwise expressly provided, the failure of any party to require performance
of any provision hereof shall not affect such party’s right to enforce the same. Waiver by a party of a provision in this
Agreement in one or more instances shall not be deemed to be or construed as a further or continuing waiver of such provision.
This Agreement may be amended or modified only by an agreement in writing executed by the Parties and expressly identified as an
amendment or modification.

 

		23.	Dispute Resolution.

 

(a) Unless otherwise specified
in this Agreement, all disputes of any nature arising under this Agreement between the Parties, (other than disputes related to
asserted title defects or environmental issues), (a "Dispute"), must be resolved in accordance with this Section
23, through the use of binding arbitration administered by a panel of three arbitrators in accordance with the Commercial Arbitration
Rules of the American Arbitration Association (the "AAA"), as supplemented to the extent necessary to determine
any procedural appeal questions by the Federal Arbitration Act (Title 9 of the United States Code).

 

(b) In the event of a Dispute,
the Parties shall use their reasonable efforts to resolve such Dispute through negotiations between (i) senior executives of the
applicable Parties, or (ii) delegated project managers of the applicable Parties with authority to resolve the applicable Dispute.

 

(c) If, after 30 days following
commencement of negotiations by initial notice of a Party of intent to negotiate a Dispute in accordance with Section 23(b), the
Parties have been unable to resolve the applicable Dispute through such negotiation in good faith on behalf of each Party, arbitration
of a Dispute may be initiated by a Party (a "Claimant") serving written notice on the AAA and the other Party
("Respondent") that the Claimant has referred the Dispute to binding arbitration. Claimant's notice initiating
binding arbitration must describe in reasonable detail the nature of the Dispute and the facts and circumstances relating thereto
and identify the arbitrator Claimant has appointed. Respondent shall respond to Claimant within 30 days after receipt of Claimant's
notice, identifying the arbitrator Respondent has appointed. All arbitrators must be neutral parties who have never been officers,
directors or employees of the Parties or any of their affiliates, and who have not performed any work for either of the Parties
or its affiliates. Arbitrators must have not less than seven years of experience as a lawyer in the energy industry with experience
in exploration and production issues. The two arbitrators so chosen shall select a third arbitrator within 30 days after the second
arbitrator has been appointed. If either the Respondent fails to name its Party appointed arbitrator within the time permitted,
or if the two arbitrators are unable to agree on a third arbitrator within 30 days from the date the second arbitrator has been
appointed, then the missing arbitrator(s) shall be selected by the AAA from its Large, Complex Commercial Case Panel or the Center
for Public Resources Panel of Distinguished Neutrals, giving due regard to the selection criteria set forth above. The AAA shall
select the missing arbitrator(s) not later than 90 days from initiation of arbitration.

 

(d)The hearing
shall be conducted in Denver, Colorado.

 

(e) The arbitrators may not grant
or award indirect, consequential, punitive or exemplary damages.

 

(f) In any action under this
Agreement, the arbitration and court costs and attorneys' fees of the Parties shall be borne in the manner determined by the arbitrators.

 

    	15

    	 

    

 

24. Option. In consideration of
Buyer’s purchase of the Property and of other good and valuable consideration, the receipt and sufficiency of which are hereby
acknowledged by Seller, Seller hereby grants to Buyer the Option, which shall entitle Buyer to purchase undivided interests in
and to the Assets (such interests being the “Second Property”) in an amount equal to the undivided interests
constituting the Property being sold and transferred pursuant to the other terms of this Agreement. The Option may be exercised
at any time on or before 180 days after the first Closing under this Agreement by Borrower providing to Seller with 20 days advance
written notice (the “Exercise Notice”). Other than the time and place of the closing under the Option, which
time and place shall be specified in the Option Notice, and the action specified below with respect to the Replacement Operating
Agreement (as defined below), the other terms and conditions of the purchase and sale of the Second Property shall be identical
to the terms and conditions of the purchase and sale of the Property (specifically including a Purchase Price of $47,000,000 and
an Effective Time of June 1, 2013) provided that (i) the respective representations of the Parties shall be updated to be made
as of the date of the closing of the Second Property and (ii) in lieu of delivering the Stipulation Seller shall deliver to Buyer
one or more counterparts of the Assignment, Bill of Sale and Conveyance in the form attached hereto as Exhibit D. At the time of
the closing under the Option Buyer and Seller will each deliver counterparts of a joint operating agreement in the form of the
agreement attached hereto as Exhibit C (the “Replacement Operating Agreement”) that will amend and replace
in their entirety A.A.P.L. Form 610 -1989 Model Form Operating Agreement dated May 1, 2011 and A.A.P.L. Form 610 -1989 Model Form
Operating Agreement November 1, 2011 (together, the “Current Joint Operating Agreements, which have previously been
in effect and covering the Property. Seller and Buyer agree that, upon payment by Buyer at the Closing under this Agreement with
respect to the Property, Buyer will have satisfied an undivided 50% of its obligations under the Original Carry Agreement dated
April 19, 2012 and as amended by First Amendment to Carry Agreement dated as of July 15, 2012, and if Buyer exercises the Option
and purchases the Second Property, Buyer’s obligations under the Original Carry Agreement will have been completely satisfied.
For the avoidance of doubt, the obligations shall be adjusted as set forth in Exhibit E.

 

25. Execution. This Agreement may
be executed in counterparts, each of which will constitute an original and all of which will constitute one document. This Agreement
may be executed and delivered by either or both of the parties by facsimile transmission or email of a PDF version (with confirmation
of transmission) of a signed counterpart of the signature page hereof to the other at the applicable facsimile number or email
address shown in Section 15 above. After execution and delivery by facsimile or electronic transmission or email, the parties agree
to follow up with two originally executed counterparts and signature pages so that each party will have a counterpart with original
signature pages from both parties.

  

IN CONFIRMATION OF THE ABOVE, Buyer
and Seller execute this Agreement as of the date first stated above, and the representatives executing on behalf of Buyer and Seller
each attests to his or her authorization by such execution.

 

 

	
        SELLER:

         

        USG Properties Bakken I, LLC

         

        By: _/s/ Lawrence A. Wall, Jr. ________

        Lawrence
A. Wall, Jr., President
	
        BUYER:

         

        AMERICAN EAGLE ENERGY CORPORATION

         

        By: _/s/ Brad Colby______________

        Brad Colby, President

 

    	16

    	 

    

 

EXHIBIT “A”

 

LEASES AND WELLS

 

    	 

    	 

    

 

EXHIBIT “A-1”

 

EXCLUDED ASSETS

 

    	 

    	 

    

 

EXHIBIT “B”

 

STIPULATION OF INTEREST AND CROSS-CONVEYANCE

 

THIS STIPULATION OF
INTEREST AND CROSS-CONVEYANCE (this “Stipulation”), effective as of June 1, 2013 at 12:01 a.m., local time in Divide
County, North Dakota (the “Effective Time”), is among USG Properties Bakken I, LLC a Delaware limited liability company
(“USG”), NextEra Energy Gas Producing, LLC (“NextEra”) with each of USG and NextEra having an address at
601 Travis Street, Suite 1900, Houston, Texas 77002 and American Eagle Energy Corporation, a Nevada corporation (“AEE”),
with an address at 2549 W. Main Street, Suite 202, Littleton, Colorado 80120.

 

RECITALS

 

A.AEE and
NextEra are parties to A.A.P.L. Form 610 -1989 Model Form Operating Agreement dated May 1, 2011 and A.A.P.L. Form610 -1989 Model
Form Operating Agreements November 1, 2011 (together, the “Joint Operating Agreements”) respectively covering the Spyglass
and West Spyglass areas in Divide County, North Dakota.

 

B.Pursuant
to the Area of Mutual Interest provisions of the Joint Operating Agreements AEE and NextEra jointly acquired leasehold and mineral
interests in certain lands located in Divide County, North Dakota, as more fully set forth in Exhibit A (the "Land").
USG, an affiliate of NextEra, has acquired certain of NextEra’s interests in the Land (as defined below) and has thereby
become a party to the Joint Operating Agreements.

 

C.
Pursuant to Purchase and Sale Agreement dated August __, 2013 between AEE and USG (the “Purchase Agreement”), the parties
intend that AEE will acquire from USG and NextEra sufficient interests in the Property (as defined below) such that the interests
held by AEE and USG will be owned in the respective, relative ratios of (i) 62.5/37.5 for that portion of the Property described
in Part I of Exhibit A, (ii) 50/50 for that portion of the Property described in Part II of Exhibit A and (iii) 77.5/22.5
for that portion of the Property described in Part III of Exhibit A and that NextEra will retain no interest in any part
of the Property.

 

 

D.Certain
irregularities or gaps in the chain of title among the parties may exist and the parties desire to cure any such irregularities
or gaps by executing this Stipulation.

 

STIPULATIONAND CROSS-CONVEYANCE

 

For and in consideration
of the sum of ten dollars ($10.00) and other good and valuable consideration, the receipt and sufficiency of which are hereby acknowledged,
USG, NextEra and AEE do hereby sell, assign, transfer and convey to each other interests in the assets described below (the “Property”)
sufficient such that after giving effect to this assignment and cross-conveyance the respective, relative ownership interests in
the Property will be (i) 62.5/37.5 for that portion of the Property described in Part I of Exhibit A, (ii) 50/50 for that
portion of the Property described in Part II of Exhibit A and (iii) 77.5/22.5 for that portion of the Property described
in Part III of Exhibit A and 0% for NextEra in all of the Property:

 

    	 

    	 

    

 

(a)The oil, gas and mineral leases
described in Exhibit A, insofar as they cover any or all of the lands described in Exhibit A (the “Lands”), together
with all rights, privileges and obligations appurtenant thereto, including rights in any unit in which said leases or Lands are
included (collectively the “Leases”);

 

(b) All oil, gas and condensate wells
(whether producing, not producing or abandoned), and all water source, water injection and other injection and disposal wells and
systems located on the Leases or the Lands, or used in connection therewith, including without limitation those described in Exhibit
A (collectively the “Wells”), together with all equipment, facilities, and fixtures located on or used in developing
or operating the Leases, the Lands, or the Wells, or producing, storing, treating or transporting oil, gas, water, or other products
or byproducts, including pipelines, flow lines, gathering systems, tank batteries, improvements, fixtures, inventory, movables
and immovables (collectively the “Lease Property and Equipment”);

 

(c)To the extent assignable or transferable,
all permits, licenses, easements, rights-of-way, servitudes, surface leases, surface use agreements, and similar rights and interests
applicable to or used in operating the Leases, the Lands, the Wells, or the Lease Property and Equipment (collectively the “Permits
and Easements”);

 

(d)To the extent assignable or transferable,
all contracts and contractual rights, obligations and interests, insofar as they relate to the Leases, the Lands, the Wells, the
Lease Property and Equipment or the Permits and Easements (the “Related Contracts”); and

 

(e)To the extent assignable or transferable,
all other tangibles, miscellaneous interests and other assets on or used in connection with the Leases, the Lands, the Wells, the
Lease Property and Equipment, or the Permits and Easements (collectively the “Miscellaneous Personal Property”), including
records, files, and other data that relate to the Leases, the Lands, the Wells, the Lease Property and Equipment, the Permits and
Easements, or the Related Contracts, and lease, land and well files, production records, title opinions, contract, regulatory and
environmental files, and geological and geophysical information (collectively the “Property Records”).

 

Each of USG, NextEra
and AEE warrants that it has not granted, created or reserved any burden, claim or title defect that would cause the Net Revenue
Interest in a Lease or Well to be less than the Net Revenue Interest for such Lease or Well set forth in Exhibit A or the Working
Interest in a Lease or Well to be greater than the Working Interest for such Lease or Well set forth in Exhibit A, except for any
such excess Working Interest accompanied by a proportionate increase in the Net Revenue Interest for such Lease or Well.

 

For purposes of this
Assignment, “Working Interest” shall mean, with respect to a Lease or Well the percentage interest in a Lease or Well
that is burdened with the obligation to bear and pay costs and expenses of maintenance, development and operations in connection
with such Lease or Well, without regard to royalties, overriding royalties, net profits interests or other similar burdens.

 

For purposes of this
Assignment, “Net Revenue Interest” shall mean, with respect to a Lease or Well, the interest in and to all hydrocarbons
produced, saved, and sold from or allocated to such Lease or Well, after giving effect to all royalties, overriding royalties,
production payments, carried interests, net profits interests, reversionary interests, and other burdens upon, measured by, or
payable out of production therefrom.

 

    	 

    	 

    

 

Except for the special
warranty of title set forth above, THE PARTIES CONVEY THE PROPERTY TO EACH OTHER WITHOUT AND EXPRESSLY DISCLAIM ANY EXPRESS, STATUTORY
OR IMPLIED WARRANTY OR REPRESENTATION OF ANY KIND, INCLUDING WARRANTIES RELATING TO (i) THE CONDITION OR MERCHANTABILITY OF THE
PROPERTY, (ii) THE FITNESS OF THE PROPERTY FOR ANY PARTICULAR PURPOSE, OR (iii) CONFORMITY TO MODELS OR SAMPLES OF MATERIALS. THE
PARTIES HAVE INSPECTED (OR HAVE BEEN GIVEN THE OPPORTUNITY TO INSPECT), THE PROPERTY AND ARE SATISFIED AS TO THE PHYSICAL, OPERATING,
REGULATORY COMPLIANCE, SAFETY AND ENVIRONMENTAL CONDITION (BOTH SURFACE AND SUBSURFACE) OF THE PROPERTY AND EXPRESSLY AND KNOWINGLY
ACCEPTS THE PROPERTY AS IS, WHERE IS, AND WITH ALL FAULTS AND DEFECTS AND IN ITS PRESENT CONDITION AND STATE OF REPAIR. Without
limiting the generality of the foregoing, no party makes any representation or warranty as to (i) the amount, value, quality,
quantity, volume or deliverability of any oil, gas or other minerals or reserves (if any) in, under or attributable to the Property,
(ii) the physical, operating, regulatory compliance, safety or environmental condition of the Property, (iii) the geological
or engineering condition of the Property or any value thereof; (iv) the ability of the Property to generate income or profits;
or (v) the cost of owning or operating the Property.

 

THE PARTIES AGREE THAT,
TO THE EXTENT REQUIRED BY APPLICABLE LAW TO BE EFFECTIVE, THE DISCLAIMERS OF CERTAIN REPRESENTATIONS AND WARRANTIES CONTAINED IN
THIS STIPULATION OF INTEREST AND CROSS CONVEYANCEARE “CONSPICUOUS” DISCLAIMERS FOR THE PURPOSE OF ANY APPLICABLE LAW.

 

To the extent that
the Leases cover state or federal leases, separate assignments on the appropriate state or federal forms required for filing in
the applicable state or federal records are being delivered contemporaneously herewith. Such separate assignments are intended
to cover the same interests that are being conveyed hereby.

 

This Agreement shall
be governed, construed and enforced in accordance with the laws of North Dakota without regard to conflicts of law.

 

This Assignment shall
extend to and shall be binding upon the successors and assigns of the Parties.

 

    	 

    	 

    

 

THIS STIPULATION is executed by the parties
as of the Effective Time.

 

 

USG Properties Bakken I, LLC

By: _____________________________

__________________,

__________________

 

 

American Eagle Energy Corporation

 

By: _____________________________

__________________,

__________________

 

 

NextEra Energy Gas Producing, LLC

 

By: _____________________________

__________________,

__________________

 

 

	STATE OF ________________	§
	 	§ ss.
	COUNTY OF ______________	§

 

 

This instrument was acknowledged before
me on _____________, 2013, by _____________, as ____________ of ____________________, a ____________________, on behalf of said
_____________ __________________. Witness my hand and official seal.

 

 

_____________________________

NOTARY PUBLIC

 

 

	(SEAL)	My commission expires: _________________, 20___

 

    	 

    	 

    

 

	STATE OF ________________	§
	 	§ ss.
	COUNTY OF ______________	§

 

 

This instrument was acknowledged before
me on _____________, 2013, by _____________, as ____________ of ____________________, a ____________________, on behalf of said
_____________ __________________. Witness my hand and official seal.

 

 

_____________________________

NOTARY PUBLIC

 

 

	(SEAL)	My commission expires: _________________, 20___

 

 

 

	STATE OF ________________	§
	 	§ ss.
	COUNTY OF ______________	§

 

 

This instrument was acknowledged before
me on _____________, 2013, by _____________, as ____________ of ____________________, a ____________________, on behalf of said
_____________ __________________. Witness my hand and official seal.

 

 

_____________________________

NOTARY PUBLIC

 

	(SEAL)	My commission expires: _________________, 20___

 

    	 

    	 

    

 

EXHIBIT A 

TO THE STIPULATION OF INTEREST AND CROSS-CONVEYANCE

 

    	 

    	 

    

 

EXHIBIT “C”

 

 

REPLACEMENT OPERATING AGREEMENT

 

    	 

    	 

    

 

EXHIBIT D

 

ASSIGNMENT, BILL OF SALE AND CONVEYANCE

 

THIS ASSIGNMENT, BILL OF SALE AND CONVEYANCE
(this “Assignment”), dated effective as of June 1, 2013 at 12:01 a.m., local time in Divide County, North Dakota (the
“Effective Time”), is from USG Properties Bakken I, LLC a Delaware limited liability company (“ASSIGNOR”),
with an address at 601 Travis Street, Suite 1900, Houston, Texas 77002 to American Eagle Energy Corporation, a Nevada corporation
(“ASSIGNEE”), with an address at 2549 W. Main Street, Suite 202, Littleton, Colorado 80120.

 

Pursuant to the terms of the Purchase, Sale
and Option Agreement dated as of August __, 2013 (the “PSA”), between ASSIGNOR and ASSIGNEE, for and in consideration
of the sum of ten dollars ($10.00) and other good and valuable consideration, the receipt and sufficiency of which are hereby acknowledged,
ASSIGNOR does hereby sell, convey, assign and transfer to ASSIGNEE, the undivided interests specified on Exhibit A Parts I and
II (the “Transferred Interests”) in and to the following (the “Property”):

 

(a)The oil, gas and mineral leases described in Exhibit
A, insofar as they cover any or all of the lands described in Exhibit A, (the “Lands”), together with all rights, privileges
and obligations appurtenant thereto, including rights in any unit in which said leases or Lands are included (collectively the
“Leases”);

 

(b) All oil, gas and condensate wells (whether producing,
not producing or abandoned), and all water source, water injection and other injection and disposal wells and systems located on
the Leases or the Lands, or used in connection therewith, including without limitation those described in Exhibit A (collectively
the “Wells”), together with all equipment, facilities, and fixtures located on or used in developing or operating the
Leases, the Lands, or the Wells, or producing, storing, treating or transporting oil, gas, water, or other products or byproducts,
including pipelines, flow lines, gathering systems, tank batteries, improvements, fixtures, inventory, movables and immovables
(collectively the “Lease Property and Equipment”);

 

(c)To the extent assignable or transferable, all permits,
licenses, easements, rights-of-way, servitudes, surface leases, surface use agreements, and similar rights and interests applicable
to or used in operating the Leases, the Lands, the Wells, or the Lease Property and Equipment (collectively the “Permits
and Easements”);

 

(d)To the extent assignable or transferable, all contracts
and contractual rights, obligations and interests (collectively the “Related Contracts”), INSOFAR ONLY as the Related
Contracts cover or are attributable to the Leases, the Lands, the Wells, the Lease Property and Equipment or the Permits and Easements;
and

 

(e)To the extent assignable or transferable, all other tangibles,
miscellaneous interests and other assets on or used in connection with the Leases, the Lands, the Wells, the Lease Property and
Equipment, or the Permits and Easements (collectively the “Miscellaneous Personal Property”), including records, files,
and other data that relate to the Leases, the Lands, the Wells, the Lease Property and Equipment, the Permits and Easements, or
the Related Contracts, and lease, land and well files, production records, title opinions, contract, regulatory and environmental
files, and geological and geophysical information (collectively the “Property Records”).

 

ASSIGNOR warrants title to the Transferred
Interests in the Property and the Working Interests and Net Revenue Interests described in Exhibit A against burdens, claims, title
defects and other matters arising by, through or under ASSIGNOR. ASSIGNOR quitclaims to ASSIGNEE the benefit of all previous warranties
in ASSIGNOR’s chain of title, insofar as they may cover the Transferred Interests in the Property.

 

    	 

    	 

    

 

Except for the special warranty of title
set forth above and for those representations and warranties made by ASSIGNOR in the PSA, ASSIGNOR CONVEYS THE TRANSFERRED INTERESTS
IN THE PROPERTY TO ASSIGNEE WITHOUT ANY EXPRESS, STATUTORY OR IMPLIED WARRANTY OR REPRESENTATION OF ANY KIND, INCLUDING WARRANTIES
RELATING TO (i) THE CONDITION OR MERCHANTABILITY OF THE TRANSFERRED INTERESTS IN THE PROPERTY, (ii) THE FITNESS OF THE TRANSFERRED
INTERESTS IN THE PROPERTY FOR ANY PARTICULAR PURPOSE, OR (iii) CONFORMITY TO MODELS OR SAMPLES OF MATERIALS. ASSIGNEE HAS INSPECTED
(OR HAS BEEN GIVEN THE OPPORTUNITY TO INSPECT), THE TRANSFERRED INTERESTS IN THE PROPERTY AND IS SATISFIED AS TO THE PHYSICAL,
OPERATING, REGULATORY COMPLIANCE, SAFETY AND ENVIRONMENTAL CONDITION (BOTH SURFACE AND SUBSURFACE) OF THE TRANSFERRED INTERESTS
IN THE PROPERTY AND EXPRESSLY AND KNOWINGLY ACCEPTS THE TRANSFERRED INTERESTS IN THE PROPERTY AS IS, WHERE IS, AND WITH ALL FAULTS
AND DEFECTS AND IN ITS PRESENT CONDITION AND STATE OF REPAIR. Without limiting the generality of the foregoing, ASSIGNOR makes
no representation or warranty as to (i) the amount, value, quality, quantity, volume or deliverability of any oil, gas or
other minerals or reserves (if any) in, under or attributable to the Transferred Interests in the Property, (ii) the physical,
operating, regulatory compliance, safety or environmental condition of the Transferred Interests in the Property, (iii) the
geological or engineering condition of the Transferred Interests in the Property or any value thereof; (iv) the ability of
the Transferred Interests in the Property to generate income or profits; or (v) the cost of owning or operating the Transferred
Interests in the Property.

 

To the extent that the Transferred Interests
in the Property cover state or federal leases, separate assignments on the appropriate state or federal forms required for filing
in the applicable state or federal records are being delivered contemporaneously herewith. Such separate assignments are intended
to cover the same interests that are being conveyed hereby.

 

The terms, conditions and indemnities contained
in the PSA shall be deemed to be included in this Assignment, including, without limitation the agreements that Assignor agrees
to defend and hold harmless Assignee from all Liabilities relating to the ownership and operation of the Transferred Interests
in the Property before the Effective Time and Assignee agrees to defend and hold harmless Assignor from all Liabilities relating
to the ownership and operation of the Transferred Interests in the Property after the Effective Time.

 

**********************************************************

 

    	 

    	 

    

 

This Assignment shall extend to and shall
be binding upon the successors and assigns of ASSIGNOR and ASSIGNEE.

 

THIS ASSIGNMENT is executed by the parties
as of the Effective Time.

 

ASSIGNOR:

USG Properties Bakken I, LLC

 

By: _____________________________

__________________,

__________________

 

 

ASSIGNEE:

 

American Eagle Energy Corporation

 

By: _____________________________

__________________,

__________________

 

 

	STATE OF ________________	§
	 	§ ss.
	COUNTY OF ______________	§

 

 

This instrument was acknowledged before
me on _____________, 2013, by _____________, as ____________ of ____________________, a ____________________, on behalf of said
_____________ __________________. Witness my hand and official seal.

 

 

_____________________________

NOTARY PUBLIC

 

 

	(SEAL)	My commission expires: _________________, 20___

 

    	 

    	 

    

 

	STATE OF ________________	§
	 	§ ss.
	COUNTY OF ______________	§

 

 

This instrument was acknowledged before
me on _____________, 2013, by _____________, as ____________ of ____________________, a ____________________, on behalf of said
_____________ __________________. Witness my hand and official seal.

 

 

_____________________________

NOTARY PUBLIC

 

 

	(SEAL)	My commission expires: _________________, 20___

  

    	 

    	 

    

 

SCHEDULE 2A

 

PURCHASE PRICE ALLOCATIONS

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