Document:

10.1ex

Exhibit 10.1-Form of Warrant

 

NEITHER THIS SECURITY NOR THE SECURITIES INTO WHICH THIS SECURITY IS EXERCISABLE HAVE BEEN REGISTERED WITH THE SECURITIES AND EXCHANGE COMMISSION OR THE SECURITIES COMMISSION OF ANY STATE IN RELIANCE UPON AN EXEMPTION FROM REGISTRATION UNDER THE SECURITIES ACT OF 1933, AS AMENDED (THE “1933 ACT”), AND, ACCORDINGLY, MAY NOT BE OFFERED OR SOLD EXCEPT PURSUANT TO AN EFFECTIVE REGISTRATION STATEMENT UNDER THE SECURITIES ACT OR PURSUANT TO AN AVAILABLE EXEMPTION FROM, OR IN A TRANSACTION NOT SUBJECT TO, THE REGISTRATION REQUIREMENTS OF THE 1933 ACT AND IN ACCORDANCE WITH APPLICABLE STATE SECURITIES LAWS AS EVIDENCED BY A LEGAL OPINION OF COUNSEL TO THE TRANSFEROR REASONABLY ACCEPTABLE TO THE COMPANY TO SUCH EFFECT, THE SUBSTANCE OF WHICH SHALL BE REASONABLY ACCEPTABLE TO THE COMPANY.

WARRANT

To Purchase ________ Shares of Common Stock of

LION CAPITAL HOLDINGS, INC.

THIS WARRANT (the “Warrant”) certifies that, for value received, _____________ (the “Holder”), is entitled, upon the terms and subject to the limitations on exercise and the conditions hereinafter set forth, at any time on or after ________________ , 2009 (the “Initial Exercise Date”) and on or prior to the two-year anniversary of the Initial Exercise Date (the “Termination Date”), but not thereafter, to subscribe for and purchase from Lion Capital Holdings, Inc., a Delaware corporation (the “Company”), up to ________ shares (the “Warrant Shares”) of common stock, no par value per share, of the Company (the “Common Stock”).  The purchase price of each share of Common Stock (the “Exercise Price”) under this Warrant shall be $___, subject to adjustment hereunder.  

1.

Title to Warrant.  Prior to the Termination Date and subject to compliance with applicable laws and Section 7 of this Warrant, this Warrant and all rights hereunder are transferable, in whole or in part, at the office or agency of the Company by the Holder in person or by duly authorized attorney, upon surrender of this Warrant together with the Assignment Form attached hereto as Exhibit A (the “Assignment Form”), properly endorsed.

2.

Authorization of Shares.  The Company covenants that all Warrant Shares which may be issued upon the exercise of the purchase rights represented by this Warrant will, upon exercise of the purchase rights represented by this Warrant, be duly authorized, validly issued, fully paid and nonassessable and free from all taxes, liens and charges in respect of the issue thereof (other than taxes in respect of any transfer occurring contemporaneously with such issue).

3.

Exercise of Warrant.

A.

Exercise of the purchase rights represented by this Warrant may be made at any time or times on or after the Initial Exercise Date and on or before the Termination Date by delivery to the Company (or such other office or agency of the Company as it may designate by notice in writing to the registered Holder at the address of such Holder appearing on the books of the Company) of a duly executed facsimile copy of the Notice of Exercise in the form attached hereto as Exhibit B (the “Notice of Exercise”); provided, however, within three (3) Business Days of the date said Notice of Exercise is delivered to the Company, the Holder shall have surrendered this Warrant to the Company, and, if the Holder has not elected to make a cashless exercise as provided below, the Company shall have received payment of the aggregate Exercise Price of the shares thereby purchased by wire transfer or cashier’s check drawn on a United States bank.  Certificates for Warrant Shares purchased hereunder shall be delivered to the Holder no later than three (3) Business Days after the delivery to the Company of the Notice of Exercise, surrender of this Warrant and, if the Holder has not elected to make a cashless exercise as provided below, payment of the aggregate Exercise Price as set forth above (“Warrant Share Delivery Date”).  Prior to the issuance of such Warrant Shares, if the Company fails to deliver to the Holder a certificate or certificates representing the Warrant Shares pursuant to this Section 3(a) by the Warrant Share Delivery Date, then the Holder will have the right to rescind such exercise.  Nothing herein shall limit a Holder’s right to pursue any other remedies available to it hereunder, at law or in equity, including, without limitation, a decree of specific performance and/or injunctive relief with respect to the Company’s failure to timely deliver certificates representing Warrant Shares as required pursuant to the terms hereof. “Business Day” shall mean any day other than: (i) Saturday or Sunday or (ii) a legal holiday on which banks in the State of Delaware are authorized to be closed for business.

1

B.

If this Warrant shall have been exercised in part, then the Company shall, at the time of delivery of the certificate or certificates representing the Warrant Shares, deliver to Holder a new Warrant evidencing the rights of Holder to purchase the unpurchased Warrant Shares called for by this Warrant, which new Warrant shall in all other respects be identical with this Warrant.

C.

In the event that the Holder elects to make a cashless exercise as provided above, the Company shall issue to the Holder the number of shares of Common Stock equal to the result obtained by (i) subtracting B from A, (ii) multiplying the difference by C, and (iii) dividing the product by A, as set forth in the following equation:

X

=

(A - B) x C    where: 

                                   A

X

=

the number of shares of Common Stock issuable upon a cashless exercise of the Warrant pursuant to the provisions of this Section 3.

A

=

the Fair Market Value (as defined below) of one share of Common Stock on the date of net issuance exercise.

B

=

the Exercise Price for one share of Common Stock under this Warrant.

C

=

the number of shares of Common Stock as to which this Warrant is exercisable.

If the foregoing calculation results in a negative number, then no shares of Common Stock shall be issued upon a cashless exercise.

For the purpose of such calculations, the fair market value per share of the shares of Common Stock shall be, (i) if the cashless exercise of the Warrant is in connection with a secondary public offering of the Company’s Common Stock, the public offering price (before deducting commission, discounts or expenses) at which the Common Stock is sold in such offering, (ii) if a public market for the Company’s Common Stock exists at the time of such exercise, the average of the closing bid and asked prices of the Common Stock quoted in the Over-The-Counter Market Summary or the last reported sale price of the Common Stock or closing price quoted on the NASDAQ National Market or on any exchange on which the Common Stock is listed, whichever is applicable, as published in The Wall Street Journal for the five (5) trading days prior to the date of determination of fair market value; or (iii) if there is no public market for the Company’s Common Stock, determined by the Company’s Board of Directors in good faith.

2

4.

No Fractional Shares or Scrip.  No fractional shares or scrip representing fractional shares shall be issued upon the exercise of this Warrant.  As to any fraction of a share which Holder would otherwise be entitled to purchase upon such exercise, the Company shall round such fraction of a share up to the nearest whole share.

5.

Charges, Taxes and Expenses.  Issuance of certificates for Warrant Shares shall be made without charge to the Holder for any issue or transfer tax or other incidental expense in respect of the issuance of such certificate, all of which taxes and expenses shall be paid by the Company, and such certificates shall be issued in the name of the Holder or in such name or names as may be directed by the Holder; provided, however, that in the event certificates for Warrant Shares are to be issued in a name other than the name of the Holder, this Warrant when surrendered for exercise shall be accompanied by the Assignment Form duly executed by the Holder, and the Company may require, as a condition thereto, the payment of a sum sufficient to reimburse it for any transfer tax incidental thereto.

6.

Closing of Books.  The Company will not close its shareholder books or records in any manner which prevents the timely exercise of this Warrant, pursuant to the terms hereof.

7.

Transfer, Division and Combination.

A.

Subject to compliance with any applicable securities laws and with the provisions of Sections 1, 5 and 7(e) hereof, this Warrant and all rights hereunder are transferable, in whole or in part, upon surrender of this Warrant at the principal office of the Company, together with an Assignment Form completed and duly executed by the Holder or its agent or attorney and funds sufficient to pay any transfer taxes payable upon the making of such transfer.  Upon such surrender and, if required, such payment, the Company shall execute and deliver a new Warrant or Warrants in the name of the assignee or assignees and in the denomination or denominations specified in the Assignment Form, and shall issue to the assignor a new Warrant evidencing the portion of this Warrant not so assigned, and this Warrant shall promptly be cancelled.  A Warrant, if properly assigned, may be exercised by a new holder for the purchase of Warrant Shares without having a new Warrant issued.

B.

This Warrant may be divided or combined with other Warrants upon presentation hereof at the aforesaid office of the Company, together with a written notice specifying the names and denominations in which new Warrants are to be issued, signed by the Holder or its agent or attorney.  Subject to compliance with Section 7(a), as to any transfer which may be involved in such division or combination, the Company shall execute and deliver a new Warrant or Warrants in exchange for the Warrant or Warrants to be divided or combined in accordance with such notice.

3

C.

The Company shall prepare, issue and deliver at its own expense (other than transfer taxes) the new Warrant or Warrants under this Section 7.

D.

The Company agrees to maintain, at its aforesaid office, books for the registration and the registration of transfer of the Warrants.

E.

If, at the time of the surrender of this Warrant in connection with any transfer of this Warrant, the transfer of this Warrant shall not be registered pursuant to an effective registration statement under the 1933 Act and under applicable state securities or blue sky laws, the Company may require, as a condition of allowing such transfer:  (i) that the Holder or assignee of this Warrant, as the case may be, furnish to the Company a written opinion of counsel (which opinion shall be in form, substance and scope customary for opinions of counsel in comparable transactions) to the effect that such transfer may be made without registration under the 1933 Act and under applicable state securities or blue sky laws; (ii) that the Holder or assignee execute and deliver to the Company an investment representation letter in form and substance reasonably satisfactory to the Company; and (iii) that the assignee be an “accredited investor” as defined in Rule 501(a) promulgated under the 1933 Act or a qualified institutional buyer as defined in Rule 144A(a) under the 1933 Act.

8.

No Rights as Shareholder until Exercise.  This Warrant does not entitle the Holder to any voting rights or other rights as a shareholder of the Company prior to the exercise hereof.  Upon the surrender of this Warrant, the delivery of the Notice of Exercise by facsimile copy, and the payment of the aggregate Exercise Price and the payment of all taxes required to be paid by the Holder prior to the issuance of the Warrant Shares pursuant to Section 5, if any, the Warrant Shares so purchased shall be and be deemed to be issued to such Holder as the record owner of such shares as of the close of business on the later of the date of such surrender, delivery or payment.

9.

Loss, Theft, Destruction or Mutilation of Warrant.  The Company covenants that upon receipt by the Company of evidence reasonably satisfactory to it of the loss, theft, destruction or mutilation of this Warrant or any stock certificate relating to the Warrant Shares, and in case of loss, theft or destruction, of indemnity or security reasonably satisfactory to it (which, in the case of the Warrant, shall not include the posting of any bond), and upon surrender and cancellation of such Warrant or stock certificate, if mutilated, the Company will make and deliver a new Warrant or stock certificate of like tenor and dated as of such cancellation, in lieu of such Warrant or stock certificate.

10.

Saturdays, Sundays, Holidays, etc.  If the last or appointed day for the taking of any action or the expiration of any right required or granted herein shall not be a Business Day, then such action may be taken or such right may be exercised on the next succeeding Business Day.

4

11.

Adjustments to Exercise Price and Number of Warrant Shares.  The number and kind of securities purchasable upon the exercise of this Warrant and the Exercise Price shall be subject to adjustment from time to time if the Company shall:  (i) pay a dividend in shares of Common Stock or make a distribution in shares of Common Stock to holders of its outstanding Common Stock; (ii) subdivide its outstanding shares of Common Stock into a greater number of shares; (iii) combine its outstanding shares of Common Stock into a smaller number of shares of Common Stock; or (iv) issue any shares of its capital stock in a reclassification of the Common Stock.  Upon the happening of any of the events set forth in subsections (i)-(iv) of this Section 11(a), the number of Warrant Shares purchasable upon exercise of this Warrant immediately prior thereto shall be adjusted so that the Holder shall be entitled to receive the kind and number of Warrant Shares or other securities of the Company which it would have owned or have been entitled to receive had such Warrant been exercised in advance thereof.  Upon each such adjustment of the kind and number of Warrant Shares or other securities of the Company which are purchasable hereunder, the Holder shall thereafter be entitled to purchase the number of Warrant Shares or other securities resulting from such adjustment at an Exercise Price per Warrant Share or other security obtained by multiplying the Exercise Price in effect immediately prior to such adjustment by the number of Warrant Shares purchasable pursuant hereto immediately prior to such adjustment and dividing by the number of Warrant Shares or other securities of the Company that are purchasable pursuant hereto immediately after such adjustment.  An adjustment made pursuant to this paragraph shall become effective immediately after the effective date of such event retroactive to the record date, if any, for such event.

12.

Reorganization, Reclassification, Merger, Consolidation or Disposition of Assets.  In case the Company shall reorganize its capital, reclassify its capital stock, consolidate or merge with or into another corporation (where the Company is not the surviving corporation or where there is a change in or distribution with respect to the Common Stock of the Company), or sell, transfer or otherwise dispose of its property, assets or business to another corporation and, pursuant to the terms of such reorganization, reclassification, merger, consolidation or disposition of assets, shares of common stock of the successor or acquiring corporation, or any cash, shares of stock or other securities or property of any nature whatsoever (excluding cash but including warrants or other subscription or purchase rights) in addition to or in lieu of common stock of the successor or acquiring corporation (“Other Property”), are to be received by or distributed to the holders of Common Stock of the Company, then the Holder shall have the right thereafter to receive the number of shares of Common Stock of the successor or acquiring corporation or of the Company, if it is the surviving corporation, and Other Property receivable upon or as a result of such reorganization, reclassification, merger, consolidation or disposition of assets by a Holder of the number of shares of Common Stock for which this Warrant is exercisable immediately prior to such event.  In case of any such reorganization, reclassification, merger, consolidation or disposition of assets, the successor or acquiring corporation (if other than the Company) shall expressly assume the due and punctual observance and performance of each and every covenant and condition of this Warrant to be performed and observed by the Company and all the obligations and liabilities hereunder, subject to such modifications as may be deemed appropriate (as determined in good faith by resolution of the Board of Directors of the Company) in order to provide for adjustments of Warrant Shares for which this Warrant is exercisable which shall be as nearly equivalent as practicable to the adjustments provided for in this Section 12.  For purposes of this Section 12, “common stock of the successor or acquiring corporation” shall include stock of such corporation of any class which is not preferred as to dividends or assets over any other class of stock of such corporation and which is not subject to redemption and shall also include any evidences of indebtedness, shares of stock or other securities which are convertible into or exchangeable for any such stock, either immediately or upon the arrival of a specified date or the happening of a specified event and any warrants or other rights to subscribe for or purchase any such stock.  The foregoing provisions of this Section 13 shall similarly apply to successive reorganizations, reclassifications, mergers, consolidations or disposition of assets.

5

 

13.

Voluntary Adjustment by the Company.  The Company may at any time during the term of this Warrant reduce the then current Exercise Price to any amount and for any period of time deemed appropriate by the Board of Directors of the Company.

14.

Notice of Adjustment.  Whenever the number of Warrant Shares or number or kind of securities or other property purchasable upon the exercise of this Warrant or the Exercise Price is adjusted, as herein provided, the Company shall give notice thereof to the Holder, which notice shall state the number of Warrant Shares (and other securities or property) purchasable upon the exercise of this Warrant and the Exercise Price of such Warrant Shares (and other securities or property) after such adjustment, setting forth a brief statement of the facts requiring such adjustment and setting forth the computation by which such adjustment was made.

15.

Notice of Corporate Action.  If at any time:

A.

the Company shall take a record of the holders of its Common Stock for the purpose of entitling them to receive a dividend or other distribution, or any right to subscribe for or purchase any evidences of its indebtedness, any shares of stock of any class or any other securities or property, or to receive any other right, or

B.

there shall be any capital reorganization of the Company, any reclassification or recapitalization of the capital stock of the Company or any consolidation or merger of the Company with, or any sale, transfer or other disposition of all or substantially all the property, assets or business of the Company to, another corporation or,

C.

there shall be a voluntary or involuntary dissolution, liquidation or winding up of the Company;

then, in any one or more of such cases, the Company shall give to Holder: (i) at least 20 days’ prior written notice of the date on which a record date shall be selected for such dividend, distribution or right or for determining rights to vote in respect of any such reorganization, reclassification, merger, consolidation, sale, transfer, disposition, liquidation or winding up, and (ii) in the case of any such reorganization, reclassification, merger, consolidation, sale, transfer, disposition, dissolution, liquidation or winding up, at least 20 days’ prior written notice of the date when the same shall take place.  Such notice in accordance with the foregoing clause also shall specify: (A) the date on which any such record is to be taken for the purpose of such dividend, distribution or right, the date on which the holders of Common Stock shall be entitled to any such dividend, distribution or right, and the amount and character thereof, and (B) the date on which any such reorganization, reclassification, merger, consolidation, sale, transfer, disposition, dissolution, liquidation or winding up is to take place and the time, if any such time is to be fixed, as of which the holders of Common Stock shall be entitled to exchange their Common Stock for securities or other property deliverable upon such disposition, dissolution, liquidation or winding up.  Each such written notice shall be sufficiently given if addressed to Holder at the last address of Holder appearing on the books of the Company and delivered in accordance with Section 17(d).

6

16.

Authorized Shares.  The Company covenants that during the period the Warrant is outstanding, it will reserve from its authorized and unissued Common Stock a sufficient number of shares to provide for the issuance of the Warrant Shares upon the exercise of any purchase rights under this Warrant.  The Company further covenants that its issuance of this Warrant shall constitute full authority to its officers who are charged with the duty of executing stock certificates to execute and issue the necessary certificates for the Warrant Shares upon the exercise of the purchase rights under this Warrant.  The Company will take all such reasonable action as may be necessary to assure that such Warrant Shares may be issued as provided herein without violation of any applicable law or regulation.

Except and to the extent as waived or consented to by the Holder, the Company shall not by any action, including, without limitation, amending the Company’s Articles of Incorporation or through any reorganization, transfer of assets, consolidation, merger, dissolution, issue or sale of securities or any other voluntary action, avoid or seek to avoid the observance or performance of any of the terms of this Warrant, but will at all times in good faith assist in the carrying out of all such terms and in the taking of all such actions as may be necessary or appropriate to protect the rights of Holder as set forth in this Warrant against impairment.  Without limiting the generality of the foregoing, the Company will: (i) not increase the par value of any Warrant Shares above the amount payable therefor upon such exercise immediately prior to such increase in par value, (ii) take all such action as may be necessary or appropriate in order that the Company may validly and legally issue fully paid and nonassessable Warrant Shares upon the exercise of this Warrant, and (iii) use commercially reasonable efforts to obtain all such authorizations, exemptions or consents from any public regulatory body having jurisdiction thereof as may be necessary to enable the Company to perform its obligations under this Warrant.

Before taking any action which would result in an adjustment in the number of Warrant Shares for which this Warrant is exercisable or in the Exercise Price, the Company shall obtain all such authorizations or exemptions thereof, or consents thereto, as may be necessary from any public regulatory body or bodies having jurisdiction thereof.

17.

Miscellaneous.

A.

This Warrant shall be governed by and construed in accordance with the laws of the State of Delaware without regard to principles of conflict of laws.

B.

The Holder acknowledges that the Warrant Shares acquired upon the exercise of this Warrant, if not registered, will have restrictions upon resale imposed by state and federal securities laws.

7

C.

No course of dealing or any delay or failure to exercise any right hereunder on the part of Holder shall operate as a waiver of such right or otherwise prejudice Holder’s rights, powers or remedies, notwithstanding all rights hereunder terminate on the Termination Date.  If the Company willfully and knowingly fails to comply with any provision of this Warrant, which results in any material damages to the Holder, the Company shall pay to Holder such amounts as shall be sufficient to cover any costs and expenses including, but not limited to, reasonable attorneys’ fees, including those of appellate proceedings, incurred by Holder in collecting any amounts due pursuant hereto or in otherwise enforcing any of its rights, powers or remedies hereunder.

D.

All notices, requests, consents and other communications hereunder shall be in writing and shall be deemed to have been made when delivered or mailed by first class mail, postage prepaid, as follows:  (a) if to the Holder, at the address of the Holder as shown on the registry books maintained by the Company or the Transfer Agent; and (b) if to the Company, at 9211 Waterford Centre Blvd, Suite 200, Austin TX 78758, Attention: Chief Executive Officer.

E.

No provision hereof, in the absence of any affirmative action by Holder to exercise this Warrant or purchase Warrant Shares, and no enumeration herein of the rights or privileges of Holder, shall give rise to any liability of Holder for the purchase price of any Common Stock or as a shareholder of the Company, whether such liability is asserted by the Company or by creditors of the Company.

F.

Holder, in addition to being entitled to exercise all rights granted by law, including recovery of damages, will be entitled to specific performance of its rights under this Warrant.  The Company agrees that monetary damages would not be adequate compensation for any loss incurred by reason of a breach by it of the provisions of this Warrant and hereby agrees to waive the defense in any action for specific performance that a remedy at law would be adequate.

G.

Subject to applicable securities laws, this Warrant and the rights and obligations evidenced hereby shall inure to the benefit of and be binding upon the successors of the Company and the successors and permitted assigns of Holder.  The provisions of this Warrant are intended to be for the benefit of all Holders from time to time of this Warrant and shall be enforceable by any such Holder or holder of Warrant Shares.

H.

This Warrant may be modified or amended or the provisions hereof waived with the written consent of the Company and the Holder.

I.

Wherever possible, each provision of this Warrant shall be interpreted in such manner as to be effective and valid under applicable law, but if any provision of this Warrant shall be prohibited by or invalid under applicable law, such provision shall be ineffective to the extent of such prohibition or invalidity, without invalidating the remainder of such provisions or the remaining provisions of this Warrant.

J.

The headings used in this Warrant are for the convenience of reference only and shall not, for any purpose, be deemed a part of this Warrant.

 

IN WITNESS WHEREOF, the Company has caused this Warrant to be executed by its officer thereunto duly authorized.

Dated:  _____________, 2009

	
	LION CAPITAL HOLDINGS, INC.

	By: _____________________________________________

     Name:   

     Title:     

8PURCHASE AND SALE AGREEMENT

PURCHASE AND SALE AGREEMENT

(of Oil and Gas Properties and Related Assets)

Seller:

Robinhood L.L.C.

P.O. Box 1089

Hobbs, New Mexico 88241

Buyer:

Blugrass Energy Inc.

7609 Ralston Road

Arvada, Colorado 80002

Seller and Buyer, named above, are entering into this Purchase and Sale Agreement (the "Agreement"), as evidence of Seller's agreement to sell, and Buyer's agreement to buy the properties described in and subject to this Agreement.

In consideration of the mutual covenants, conditions and considerations provided below, Buyer and Seller agree as follows:

1.

The Properties.  Seller shall assign and convey to Buyer all of Seller's interest in and to the following, all of which are collectively referred to in this Agreement as (the "Properties"):

a.

All of Seller's rights, title and interests (of whatever kind or character, whether legal or equitable, and whether vested or contingent) in and to the oil, gas and other minerals in and under and that may be produced from the lands described in Exhibit "A" including, without limitation, interests in oil, gas and/or mineral leases covering any part of the lands, overriding royalty interests, production payments, and net profits interests in any part of the lands or leases, fee royalty interests, fee mineral interests, and other interests in oil, gas and other minerals in any part of the lands, whether the lands are described in any of the descriptions set out in Exhibit "A" or by reference to another instrument for description, even though the Seller's interests may be incorrectly described in, or omitted from, Exhibit "A";

b.

All right, title, and interests of Seller in all presently existing and valid oil, gas and/or mineral unitization, pooling, and/or communitization agreements, declarations, and/or orders and the properties covered or included in the units (including, without limitation, units formed under orders, rules, regulations, or other official acts of any federal, state or other authority having jurisdiction, voluntary unitization agreements, designations, and/or declarations, and any "working interest units" (created under operating agreements or otherwise) which relate to any of the Properties described in subparagraph a. above;

c. 

All rights, title and interests of Seller in all presently existing and valid production sales (and sales related) contracts, operating agreements, and other agreements and contracts which relate to any of the Properties described in subparagraphs a. and b. above, or which relate to the exploration, development, operation, or maintenance of the Properties or the treatment, storage, transportation, or marketing of production from or allocated to the Properties; and,

d.

All rights, title and interests of Seller in and to all materials, supplies, machinery, equipment, improvements, and other personal property and fixtures (including, but not limited to the Properties, all wells, wellhead equipment, pumping units, flow lines, tanks, buildings, injection facilities, salt water disposal facilities, compression facilities, gathering systems, and other equipment), all easements, rights-of-way, surface leases, and other surface rights, all permits and licenses, and all other appurtenances, used or held for use in connection with or related to the exploration, development, operation, or maintenance of any of the Properties described in subparagraphs a. and b. above, or the treatment, storage, transportation, or marketing of production from or allocated to the Properties.

2.

Purchase Price.  Buyer shall pay to Seller the cash amount of $550,000.00 to be structured in the following manner, subject to the adjustment provided for below:

- Cash Payment of $100,000.00 to be paid on or before October 12, 2009

- Cash Payment of $100,000.00 to be paid on or before November 30, 2009

- Cash Payment of $100,000.00 to be paid on or before December 31, 2009

- Cash Payment of $100,000.00 to be paid on or before January 31, 2010

- Cash Payment of $150,000.00 to be paid on or before February 28, 2010

3.

Closing.  The sale and purchase of the Properties (the "Closing") shall be on October 12, 2009 at Seller's offices in Hobbs, New Mexico, or such other place as Buyer and Seller shall mutually agree.  At the date of Closing (the "Closing Date"), Seller shall deliver to Buyer executed instruments of conveyance of the Properties in form acceptable to Buyer and Buyer shall deliver to Seller the Purchase Price provided in Section 2.

4.

Conveyance Effective Date.  The conveyance by Seller shall be effective as of 7 a.m. local time, where the Properties are located, on October 12, 2009 (the "Effective Date").   

4.1

Ownership of Production Following Effective Date.  All production from the Properties and all proceeds from the sale of production on and after the Effective Date shall be the property Buyer.  

4.2

Operation of the Properties Following Effective Date.  Seller agrees and obligates itself to continue usual and customary operation, consistent with past practice, of the Properties for up to thirty (30) days following Closing.  Buyer shall reimburse Seller for expenses incurred in Sellers operation of the Properties for the operation interval, not more than thirty (30) days, following the Effective Date.  Prior to reimbursement, Seller shall provide an accounting acceptable to Buyer of expenses incurred in the operation of the Properties for the interval, up to thirty (30) days, following the Effective Date.  In no event shall Buyer be obligated to reimburse seller for expenses greater than $15,000.00 incurred in the operation of the Properties for the thirty (30) day interval following the Effective Date.

4.3

For so long as Seller operates the Properties following the Effective Date, Seller agrees to maintain liability insurance, report to Buyer any event that may result in an infraction of environmental rules and/or regulations, report to Buyer any event that may result in a loss of production, provide to Buyer daily production, sales and well status reports.

5.

Taxes.  Seller shall be responsible for all taxes relating to the Properties prior to the Effective Date.  Buyer shall be responsible for all taxes (exclusive of federal, state or local income taxes due by Seller) relating to the Property from and after the Effective Date.

6.

Indemnity.  Seller shall indemnify and hold Buyer, its directors, officers, employees, and agents harmless from and against any and all liability, liens, demands, judgments, suits, and claims of any kind or character arising out of, in connection with, or resulting from Seller's ownership of the Properties, for all periods prior to the Effective Date.  Seller shall remain responsible for all claims relating to the drilling, operating, production, and sale of hydrocarbons from the Properties and the proper accounting and payment to parties for their interests and any retroactive payments, refunds, or penalties to any party or entity, insofar as any claims relate to periods of time prior to the Effective Date and any periods following the Effective Date in which Seller operates the Properties under paragraph 4.2 above.   

Buyer shall indemnify and hold Seller harmless from and against any and all liability, liens, demands, judgments, suits, and claims of any kind or character arising out of, in connection with, or resulting from Buyer's ownership of the Properties, for periods from and after the Effective Date.  Buyer shall be responsible for all claims relating to the drilling, operating, production, and sale of hydrocarbons from the Properties and the proper accounting and payment to parties for their interests, and any retroactive payments, refunds, or penalties to any party or entity as such claims relate to periods from and after the Effective Date.  

Buyer and Seller shall have the right to participate in the defense of any suit in which one of them may be a party without relieving the other party of the obligation to defend the suit.

7.

Representations and Warranties of Seller.  Seller represents and warrants to Buyer as follows:

7.1.

Organization.  Seller is a limited liability company, validly existing, and in good standing under the laws of the State of New Mexico.  Seller is qualified to do business in and is in good standing under the laws of each state in which the Properties are located.

7.2.

Authority and Conflicts.  Seller has full power and authority to carry on its business as presently conducted, to enter into this Agreement, and to perform its obligations under this Agreement.  The execution and delivery of this Agreement by Seller does not, and the consummation of the transactions contemplated by this Agreement shall not:  (a) violate, conflict with, or require the consent of any person (b) conflict with, result in a breach of, constitute a default (or an event that with the lapse of time or notice or both would constitute a default) or require any consent, authorization, or approval under any agreement or instrument to which Seller is a party or to which any of the Properties or Seller is bound; (c) violate any provision of or require any consent, authorization, or approval under any judgment, decree, judicial or administrative order, award, writ, injunction, statute, rule, or regulation applicable to Seller; or, (d) result in the creation of any lien, charge, or encumbrance on any of the Properties.

7.3.

Authorization.  The execution and delivery of this Agreement has been, and the performance of this Agreement and the transactions contemplated by this Agreement shall be at the time required to be performed, duly and validly authorized by all requisite action on the part of Seller.

7.4.

Enforceability.  This Agreement has been duly executed and delivered on behalf of Seller and constitutes the legal and binding obligation of Seller enforceable in accordance with its terms, except as enforceability may be limited by applicable bankruptcy, reorganization, or moratorium statues, equitable principles, or other similar laws affecting the rights of creditors generally ("Equitable Limitations").  At Closing, all documents and instruments required to be executed and delivered by Seller shall be duly executed and delivered and shall constitute legal, valid, enforceable, and binding obligations of Seller, except as enforceability may be limited by Equitable Limitations.

7.5

Title.

7.5.1.  Seller has Marketable title to the Property.  For the purposes of this Agreement, "Marketable Title" means such title will enable Buyer, as Seller's successor in title, to receive from each of the Properties at least the "Net Revenue Interest" for the Wells identified on Exhibit "A" associated with each of the Properties, without reduction, suspension, or termination throughout the productive life of the Wells, except for any reduction, suspension, or termination: (a) caused by Buyer, any of its affiliates successors in title or assigns; (b) caused by orders of the appropriate regulatory agency having jurisdiction over a Property that are promulgated after the Effective Date and that concern pooling, unitization, communitization, or spacing matters affecting a Property; (c) caused by any Contract containing a sliding-scale royalty clause or other similar clause with respect to a production burden associated with a particular Property; or, (d) otherwise set out in Exhibit "A."  "Marketable Title" also means title as will obligate Buyer, as Seller's successor in title, to bear no greater "Working Interest" than the Working Interest for each of the Wells identified on Exhibit "A" as being associated with each of the Properties, without increase throughout the productive life of the Wells, except for any increase: (a) caused by Buyer, any of its affiliates, successors in title or assigns; (b) that also results in the Net Revenue Interest associated with the Well being proportionately increased; (c) caused by contribution requirements provided for in any valid and existing Operating Agreement; (d) caused by orders of the appropriate regulatory agency having jurisdiction over a Property that are promulgated after the Effective Date and that concern pooling, unitization, communitization, or spacing matters affecting a particular Property; or, (e) otherwise set forth in Exhibit "A."  "Marketable Title" means the Properties are free and clear of all encumbrances, liens, claims, easements, rights, agreements, instruments, obligations, burdens, or defects (collectively the "Liens"), except for Permitted Encumbrances.

7.5.2  For the purposes of this Agreement, "Permitted Encumbrances" means:  (a) liens for taxes not yet delinquent; (b) lessor's royalties, overriding royalties,  reversionary interests, and similar burdens that do not operate to reduce the Net Revenue Interest of Seller in any of the Properties to less than the amount set forth on Exhibit "A"; (c) the consents and rights described in Exhibit "A" insofar as such contracts and agreements do not operate to increase the Working Interest of Seller or decrease the Net Revenue Interest of Seller, as set forth on Exhibit "A," for any of the Properties.

7.5.3  Seller has good and defensible title, subject to the Permitted Encumbrances, to all of the Properties.

7.5.4  Seller warrants all rights, title and interest and further warrants that no Quit Claims or “Blanket Conveyances” have been executed by the Seller which cover, or could be construed to cover the Properties.  Buyer shall have a period of twelve (12) consecutive months from the Effective Date for full recourse of the purchase price, as well as any funds deployed for capital expenditures, should a discrepancy of ownership arise.

7.5.5  Seller warrants that all Oil and Gas Leases subject to this Agreement are in full force and effect, are valid and subsisting and cover the entire estates they purport to cover.

7.6.

Contracts.  Buyer agrees and warrants that all contracts and agreements pertaining to the operation of the Property and purchase or sale of oil and gas produced  from the property, including, but not limited to, exploration, development, operation, or maintenance of the Properties or the treatment, storage, transportation, or marketing of production from or allocated to the Properties, shall be transferred to Seller and remain in full force and effect upon the Effective Date.

7.7

Litigation and Claims.  No claim, demand, filing, cause of action, administrative proceeding, lawsuit, or other litigation is pending, or to the best knowledge of Seller, threatened, that could now or later adversely affect the ownership or operation of any of the Properties, other than proceedings relating to the industry generally and to which Seller is not a named party.  No written or oral notice from any governmental agency or any other person has been received by Seller:  (a) claiming any violation or repudiation of all or any part of the Properties or any violation of any law or any environmental, conservation or other ordinance, code, rule or regulation; or, (b) require or calling attention to the need for any work, repairs, construction, alterations, or installations on or in connection with the Properties, with which Seller has not complied.  Seller agrees to indemnify, defend and protect Buyer should any violation of any law or any environmental, conservation or other ordinance, code, rule or regulation be alleged to have occurred on the Properties at any time prior to six (6) months following the Effective Date. 

7.8.

Approvals and Preferential Rights.  Seller warrants that it has obtained all approvals required to be obtained by Seller for the assignment of the Properties to Buyer and all preferential purchase rights that affect the Properties.

7.9.

Compliance with Law and Permits.  The Properties have been operated in compliance with the provision and requirements of the applicable oil and gas leases, and all laws, orders, regulations, rules, and ordinances issued or promulgated by all governmental authorities having jurisdiction with respect to the Properties.  All necessary governmental certificates, consents, permits, licenses, or other authorizations with regard to the ownership or operation of the Properties have been obtained and no violations exist or have been recorded in respect of such licenses, permits or authorizations. 

 None of the documents and materials filed with or furnished to any governmental authority with respect to the Properties contains any untrue statement of a material fact or omits any statement of a material fact necessary to make the statement not misleading.

7.10. Status of Contracts.  All of the Contracts and other obligations of Seller relating to the Properties are in full force and effect.  Seller and to the knowledge of Seller, any other party to the Contracts is in breach of or default, or with the lapse of time or the giving of notice, or both, would be in breach or default, with respect to any of its obligations to the extent that any breaches or defaults have an adverse impact on any of the Properties; has given or threatened to give notice of any default under or inquiry into any possible default under, or action to alter, terminate, rescind, or procure a judicial reformation of any Contract; and, Seller does not anticipate any other party to a Contract will be in breach of or default under or repudiate any of its obligations to the extent such breach or default will have an adverse impact on any of the Properties.

7.11. Production Burdens, Taxes, Expenses and Revenues.  All rentals, royalties, excess royalty, overriding royalty interests, and other payments due under or with respect to the Properties have been properly and timely paid.  All ad valorem, property, production, severance, and other taxes based on or measured by the ownership of the Properties or the production from the Properties have been properly and timely paid.  All expenses payable under the terms of any contracts to which the Seller is obligated have been properly and timely paid except for expenses currently paid, prior to delinquency, in the ordinary course of business.  All proceeds from the sale of production are being properly and timely paid to Seller by the purchasers of production, without suspense.

7.12. Pricing.  The prices being received for production do not violate any contract, law or regulation.  Where applicable, all of the wells and production from the wells have been properly classified under appropriate governmental regulations.

7.13. Production Balances.  No purchasers under any production sales contracts are entitled to "makeup" or otherwise receive deliveries of oil or gas at any time after the Effective Date without paying, at such time, the full contract price for oil or gas.  No person is entitled to receive any portion of the interest of Seller in any oil or gas, or to receive cash or other payments to "balance" any disproportionate allocation of oil or gas under any operating agreement, gas balancing and storage agreement, gas processing or dehydration agreement, or other similar agreements.

7.14. Adverse Changes.  Since September 20, 2009 the Properties, viewed as a whole, have not experienced any material reduction in the rate of production, other than changes in the ordinary course of operations, changes that result from depletion in the ordinary course of operations, and changes that result from variances in markets for oil and gas production.  None of the Properties have suffered any material destruction, damage or loss.

7.15. Well Status.  There are no Wells located on the Properties that:  (a) Seller is currently obligated by law, rule, regulation, agreement, order or contract to plug and abandon; (b) Seller will be obligated by law, rule, regulation, agreement, order or contract to plug or abandon with the lapse of time or notice or both because the Well is not currently capable of producing in commercial quantities; 

(c) are subject to exceptions to a requirement to plug and abandon issued by a regulatory authority having jurisdiction over the Properties; or, (d) to the best knowledge of Seller, have been plugged and abandoned but have not been plugged in accordance with all applicable requirements of each regulatory authority having jurisdiction over the Properties.

7.16 Future Plugging Obligation of Seller.  Any Well located on the Property ordered to be plugged and abandoned by law, rule, regulation, agreement, order or contract within six (6) months of the Effective Date of this Agreement shall be properly plugged by Seller at Seller’s sole cost and expense.  Any wells plugged by Seller following the Effective date of this Agreement will be properly plugged in accordance with all applicable requirements of each regulatory authority having jurisdiction over the Properties.

7.17. Equipment.  The equipment constituting a part of the Properties is in good repair, working order, and operating condition, and is adequate for the operation of the Properties.

7.18. Current Commitments.  Seller represents that there are no (a) authorities for expenditure ("AFEs") and other oral or written commitments to drill or rework wells on the Properties or for capital expenditures pursuant to any contracts, that have been proposed by any person on or after the Effective Date, whether or not accepted by Seller or any other person; and, (b) all AFEs and oral or written commitments to drill or rework wells or for other capital expenditures pursuant to any contracts, for which all of the activities anticipated in AFEs or commitments have not been completed by the date of this Agreement.

7.19. Accuracy of Representation.  No representation or warranty by Seller in this Agreement or any agreement or document delivered by Seller pursuant to this Agreement contains an untrue statement of a material fact or omits to state a material fact necessary to make the statements contained in any representation or warranty, in light of the circumstances under which it was made, not misleading.  There is no fact known to Seller that materially and adversely affects, or may materially and adversely affect the operation, prospects or condition of any portion of the Properties that has not been identified in this Agreement.

7.20 Environmental Conditions.  Seller warrants that there are no environmental conditions or circumstances, including, without limitation, the presence or release of any hazardous substance, on any property presently or previously owned by Seller, or on any property to which hazardous substances or waste generated by the operations of Seller or by the use of the assets of Seller were disposed of, which would result in a material adverse change in the business or business prospects of Seller. The term “hazardous substances” means any chemicals, materials, wastes or substances that are defined, regulated, determined or identified as toxic or hazardous in any Applicable Environmental Laws, including, but not limited to, substances defined as “hazardous substances”, “hazardous materials”, or “hazardous waste” in CERCLA, RCRA, HMTA, or comparable state and local statues or in the regulations adopted and promulgated pursuant to said statutes.

7.21 Current Debt Held by Seller.  Any and all long-term debt of the Seller unrelated to the Properties will be the responsibility of the Seller, including but not limited to loans to shareholders and/or excessive accrued vacation or personal leave.  Sellers Bank lines of credit shall reflect a zero balance prior to Closing.

8.

Representations by Buyer.  Buyer represents to Seller that the following statements are true and correct:

a.

Organization.  Buyer is a Nevada corporation duly organized, in good standing, and qualified to carry on its business in each state in which the Properties are located, and has the power and authority to carry on its business as presently conducted, to own and hold the Properties, and to perform all obligations required by this Agreement.

b.

Authority.  Pursuant to its bylaws and certificate of incorporation, Buyer has the power and authority to acquire, own, and hold the Properties and to perform the obligations required by this Agreement.

9.

Title and Other Examinations and Curative.

a.  Prior to the expiration of twelve (12) months following the Effective Date, Buyer shall examine title to the Properties at its own expense.  However, Seller shall make available to Buyer all of Seller's title opinions, certificates of title, abstracts of title, title data, records and files relating to the Properties (including without limitation all well files and well logs) and information relating to the Properties as soon as possible after the execution of this Agreement.  Seller will, at Seller's expense, use Seller's best efforts to promptly cure all title defects discovered by Buyer and obtain all consents and waivers of preferential or other rights to purchase from third parties and governmental authorities as in the opinion of Buyer may be desirable or necessary to the conveyance, assignment, and transfer to Buyer of the Properties.  In the event title to the Properties is not satisfactory, or if the Properties are otherwise not as represented, Buyer may, at its option, within twelve (12) months following the Effective Date, either terminate this Agreement for full recourse of Purchase Price, or reduce the Purchase Price by an amount agreeable to both parties.  Seller shall promptly furnish Buyer a copy of all gas contracts, gas transportation and treating agreements, operating agreements and all amendments to each, and provide a schedule showing the status of any gas balancing, take or pay, or other similar arrangements.

b.

If Buyer's review and appraisal of the data, contracts and agreements reflects such data, contracts, or agreements are materially different, and that such difference results in a material difference in the value of the Properties, from those assumed by Buyer at the time of its September 20, 2009 offer, Buyer shall have the option to either terminate this Agreement without penalty or request renegotiations of the Purchase Price to reflect the adverse changes.  Except for title matters, Buyer must exercise this option, if applicable, on or before twelve (12) months following the Effective Date, or any material differences shall be deemed waived, but without prejudice to Buyer's other rights under this Agreement.

10.

Conditions.  The consummation of the sale and purchase contemplated by this Agreement will be subject to the following conditions:

a.

The representations and warranties by Seller set forth in Section 7 shall be true and correct in all material respects as of the date when made and as of the Closing.

b.

There shall have been no material adverse change in the condition of the Properties except depletion through normal production within authorized allowables and rates of production, depreciation of equipment through ordinary wear and tear, and other transactions permitted under this Agreement or approved in writing by Buyer between the date of this Agreement and Closing.

c.

All consents, approvals and authorizations of assignments, and waivers of preferential rights to purchase required by Buyer shall have been submitted to and approved by Buyer.

d.

Seller and Buyer understand and agree that if: (1) title to the Properties is not satisfactory to Buyer; (2) Seller's actual interests in the Properties is different than as represented by Seller and the difference causes a diminution in Seller's net revenue interest; (3) contracts, claims or litigation to which Buyer takes exception are material; or, (4) Seller fails to comply with any of the conditions set forth in this Agreement; Buyer may, at its option, either terminate this Agreement within twelve (12) months following the date of closing for full recourse of Purchase Price, or reduce the Purchase Price by an amount agreeable to both parties.  However, any reduction in Seller's net revenue interests below that which is represented in Exhibit "A" shall result in an automatic reduction in the Purchase Price commensurate with the reduction in such net revenue interest.

e.

The parties shall have performed or complied with all agreements and covenants required by this Agreement of which performance or compliance is required prior to or at Closing.

f.

All legal matters in connection with and the consummation of the transactions contemplated by this Agreement shall be approved by counsel for Buyer and there shall have been furnished by Seller such records and information as Buyer's counsel may reasonably request for that purpose.

g.

Notwithstanding anything to the contrary in this Agreement, at Buyer's option, Buyer shall have the unilateral right to terminate this Agreement for full recourse of Purchase Price not later than twelve (12) months following the Effective Date if Buyer determines it does not have the rights to obtain and maintain the rights to be Operator of the Properties pursuant to existing Operating Agreements at Closing.  Operations shall be transferred from Seller to Buyer at Closing.

h.

Any Employment and Non-Competition Agreements requested by Buyer have been fully executed by Seller and/or Seller’s employees.

11.

Transfer, Documentary Taxes, and Commission, Brokerage Fees.  Seller shall pay and bear all documentary or transfer taxes resulting from this transaction.  No commission or brokerage fees will be paid by Buyer in connection with this transaction.  Seller will indemnify and hold Buyer harmless from any claims of brokers or finders acting, or claiming to be have acted, on behalf of Seller.

12.

Further Assurances, Intent.  It is Seller's intent to convey to Buyer all of Seller's interests, legal, beneficial, or equitable in the Properties.  Seller agrees to execute and deliver to Buyer all instruments, conveyances, and other documents and to do such other acts not inconsistent with this Agreement as may be necessary or advisable to carry out Seller's intent. 

13.

Notices.  All notices and communications required or permitted under this Agreement shall be in writing, delivered to or sent by U.S. Mail or Express Delivery, postage prepaid, or by prepaid telegram, or facsimile addressed as follows:

Seller:  Robinhood L.L.C., P.O. Box 1089, Hobbs, New Mexico 88241

Buyer:  Blugrass Energy Inc., 7609 Ralston Road Arvada, Colorado 80002

14.

Parties in Interest.  This Agreement shall inure to the benefit of and be binding upon Seller and Buyer and their respective successors and assigns.  However, no assignment by any party shall relieve any party of any duties or obligations under this Agreement.

15.

Complete Agreement.  This Agreement constitutes the complete agreement between the parties regarding the purchase and sale of the Properties.  Where applicable, all of the terms of this Agreement shall survive the Closing.

16.

Survival.  All representatives and warranties in this Agreement shall be deemed conditions to the Closing.  All other terms of this Agreement shall survive the Closing, including, but not limited to, the indemnification and hold harmless provisions contained in Section 6.

17.

Termination.  Should either party terminate this Agreement pursuant to a right granted in this Agreement to do so, the termination shall be without liability to the other party, and the nonterminating party shall have no liability to the terminating party.

18.

This Purchase and Sale Agreement may be executed in multiple counterparts.

Seller:

Robinhood L.L.C.

By:  ___/s/ Mickey Welborne_____

        Mickey Welborn

, Co-Owner

Date:  October 12, 2009

By:  __/s/ Quinton Welborn ___

        Quinton Welborn, Co-Owner

Date:  October 12, 2009

Buyer:

Blugrass Energy Inc.

By:  ____/s/ Ken Berscht, 

 Ken Berscht, President

Date:  October 12, 2009

        

EXHIBIT "A"

TO

PURCHASE AND SALE AGREEMENT

It is the express intent of Seller to convey to Buyer all of Seller’s right, title and interest in and to the Properties, as defined in Paragraph 1. of the Purchase and Sale Agreement, including but not limited to the described lands (A-1), working and net revenue interests (A-2), and wells (A-3).

Exhibit “A-1”

All of Seller’s interest in Properties, defined in the Purchase and Sale Agreement, located in Eddy County, New Mexico, including but not limited to the following lands:

Section 33, Township 16 South, Range 29 East;

Section 3, Township 17 South, Range 29 East;

Section 4, Township 17 South, Range 29 East;

Section 5, Township 17 South, Range 29 East;

Section 7, Township 17 South, Range 29 East;

Section 8, Township 17 South, Range 29 East; and,

Section 9, Township 17 South, Range 29 East.

Exhibit “A-2”

Schedule of Working Interests and Net Revenue Interests:

						
	 
	 
	 
	 
	 
	 

	PROPERTIES  OF  SELLER:     ROBINHOOD  L.L.C.

	SCHEDULE  OF  SELLER'S  WORKING  &  NET  REVENUE  INTERESTS

	IN  THE  CAVE  POOL  UNIT  and  ASSOCIATED  LEASES

	OPERATED AS:    14070 MARKS AND GARNER PRODUCTION LTD CO

	 
	 
	 
	 
	 
	 

	 
	 
	 
	 
	 
	 

	Lease

	Location

	Working

	Net Revenue Interest

	Name

	County

	Sec-Twp-Rnge

	Interest

	Oil

	Gas

	CAVE POOL UNIT

	Eddy

	04-17S-29E

	100.000%

	57.000%

	57.000%

	 
	 
	05-17S-29E

	ORRI

	10.000%

	10.000%

	 
	 
	08-17S-29E

	 
	67.000%

	67.000%

	 
	 
	33-16S-29E

	 
	 
	 

	 
	 
	 
	 
	 
	 

	CAVE STATE

	Eddy

	04-17S-29E

	100.000%

	N/A

	70.000%

	 
	 
	05-17S-29E

	 
	 
	 

	 
	 
	 
	 
	 
	 

	DIAMOND STATE

	Eddy

	04-17S-29E

	100.000%

	70.000%

	82.500%

	 
	 
	 
	 
	 
	 

	HODGES FEDERAL

	Eddy

	05-17S-29E

	 
	 
	 

	 
	 
	 
	 
	 
	 

	LEVERS

	Eddy

	33-16S-29E

	100.000%

	N/A

	68.500%

	 
	 
	 
	 
	 
	 

	LEVERS FEDERAL

	Eddy

	33-16S-29E

	100.000%

	70.000%

	70.000%

	 
	 
	 
	 
	 
	 

	RED STATE

	Eddy

	04-17S-29E

	100.000%

	75.500%

	75.500%

	 
	 
	 
	 
	 
	 

	RED TWELVE FEDERAL

	Eddy

	33-16S-29E

	100.000%

	65.000%

	75.000%

	 
	 
	 
	 
	 
	 

	RED TWELVE LEVERS FEDERAL

	Eddy

	33-16S-29E

	 
	 
	 

	 
	 
	 
	 
	 
	 

	RED TWELVE STATE

	 
	 
	 
	 
	 

	Red Twelve State #001

	Eddy

	N-04-17S-29E

	100.000%

	N/A

	70.000%

	Red Twelve State #002

	Eddy

	H-04-17S-29E

	100.000%

	N/A

	63.000%

	Red Twelve State #003

	Eddy

	I-05-17S-29E

	100.000%

	N/A

	63.000%

	 
	 
	 
	 
	 
	 

	STATE

	Eddy

	04-17S-29E

	100.000%

	70.000%

	70.000%

	 
	 
	 
	 
	 
	 

	Average NRI for Leases = 73%

	 
	 
	 
	 
	 

	 
	 
	 
	 
	 
	 

Exhibit “A-3”

Schedule of Wells:

																				
	WELL  LIST  OF  SELLER:     ROBINHOOD  L.L.C.

	OPERATED AS:    14070 MARKS AND GARNER PRODUCTION LTD CO

	Source:  NM OCD - October 11, 2009

	 
	 
	 
	 
	 
	 
	 
	 
	 
	 
	 
	 
	 
	 
	 
	 
	 
	 
	 
	 

	 

	Property

	Lease

	Well

	LOCATION

	 

	 

	 

	 

	 

	 

	 

	API

	Well

	OCD  Pool

	Last

	 
	 
	 

	 

	No.

	Name

	Name

	County

	UL

	-

	Sec

	-

	Twp

	-

	Rnge

	No.

	Type

	No.

	Zones

	Prod/Inj

	 
	 
	 

	1

	16230

	CAVE POOL UNIT

	CAVE POOL UNIT #001

	Eddy

	O

	-

	33

	-

	16S

	-

	29E

	30-015-02784

	O

	28509

	GRAYBURG JACKSON;SR-Q-G-SA

	May-09

	 
	 
	 

	2

	 

	 

	CAVE POOL UNIT #010

	Eddy

	G

	-

	5

	-

	17S

	-

	29E

	30-015-00993

	O

	28509

	GRAYBURG JACKSON;SR-Q-G-SA

	May-09

	 
	 
	 

	3

	 

	 

	CAVE POOL UNIT #012

	Eddy

	E

	-

	4

	-

	17S

	-

	29E

	30-015-02880

	O

	28509

	GRAYBURG JACKSON;SR-Q-G-SA

	May-09

	 
	 
	 

	4

	 

	 

	CAVE POOL UNIT #019

	Eddy

	K

	-

	4

	-

	17S

	-

	29E

	30-015-02886

	O

	28509

	GRAYBURG JACKSON;SR-Q-G-SA

	May-09

	 
	 
	 

	5

	 

	 

	CAVE POOL UNIT #023

	Eddy

	K

	-

	5

	-

	17S

	-

	29E

	30-015-02902

	O

	28509

	GRAYBURG JACKSON;SR-Q-G-SA

	May-09

	 
	 
	 

	6

	 

	 

	CAVE POOL UNIT #026

	Eddy

	O

	-

	5

	-

	17S

	-

	29E

	30-015-02904

	O

	28509

	GRAYBURG JACKSON;SR-Q-G-SA

	May-09

	 
	 
	 

	7

	 

	 

	CAVE POOL UNIT #027

	Eddy

	P

	-

	5

	-

	17S

	-

	29E

	30-015-02897

	P&A

	 

	 

	Nov-05

	 
	 
	 

	8

	 

	 

	CAVE POOL UNIT #028

	Eddy

	M

	-

	4

	-

	17S

	-

	29E

	30-015-02887

	O

	28509

	GRAYBURG JACKSON;SR-Q-G-SA

	May-09

	 
	 
	 

	9

	 

	 

	CAVE POOL UNIT #030

	Eddy

	O

	-

	4

	-

	17S

	-

	29E

	30-015-02891

	O

	28509

	GRAYBURG JACKSON;SR-Q-G-SA

	May-09

	 
	 
	 

	10

	 

	 

	CAVE POOL UNIT #035

	Eddy

	A

	-

	8

	-

	17S

	-

	29E

	30-015-02914

	O

	28509

	GRAYBURG JACKSON;SR-Q-G-SA

	May-09

	 
	 
	 

	11

	 

	 

	CAVE POOL UNIT #036

	Eddy

	B

	-

	8

	-

	17S

	-

	29E

	30-015-02915

	P&A

	 

	 

	Nov-05

	 
	 
	 

	12

	 

	 

	CAVE POOL UNIT #041

	Eddy

	E

	-

	8

	-

	17S

	-

	29E

	30-015-02926

	O

	28509

	GRAYBURG JACKSON;SR-Q-G-SA

	Aug-07

	 
	 
	 

	13

	 

	 

	CAVE POOL UNIT #051

	Eddy

	L

	-

	5

	-

	17S

	-

	29E

	30-015-02903

	I

	28509

	GRAYBURG JACKSON;SR-Q-G-SA

	Aug-07

	 
	 
	 

	14

	 

	 

	CAVE POOL UNIT #052

	Eddy

	M

	-

	5

	-

	17S

	-

	29E

	30-015-02909

	O

	28509

	GRAYBURG JACKSON;SR-Q-G-SA

	May-09

	 
	 
	 

	15

	 

	 

	CAVE POOL UNIT #059

	Eddy

	J

	-

	5

	-

	17S

	-

	29E

	30-015-24723

	O

	28509

	GRAYBURG JACKSON;SR-Q-G-SA

	May-09

	 
	 
	 

	16

	 

	 

	CAVE POOL UNIT #062

	Eddy

	P

	-

	5

	-

	17S

	-

	29E

	30-015-24761

	O

	28509

	GRAYBURG JACKSON;SR-Q-G-SA

	May-09

	 
	 
	 

	17

	16248

	CAVE STATE

	CAVE STATE #001

	Eddy

	D

	-

	4

	-

	17S

	-

	29E

	30-015-24672

	O

	28509

	GRAYBURG JACKSON;SR-Q-G-SA

	Jul-08

	 
	 
	 

	18

	 

	 

	CAVE STATE #002

	Eddy

	H

	-

	5

	-

	17S

	-

	29E

	30-015-24714

	O

	28509

	GRAYBURG JACKSON;SR-Q-G-SA

	Jul-08

	 
	 
	 

	19

	 

	 

	CAVE STATE #003

	Eddy

	E

	-

	4

	-

	17S

	-

	29E

	30-015-24743

	O

	28509

	GRAYBURG JACKSON;SR-Q-G-SA

	Jul-08

	 
	 
	 

	20

	 

	 

	CAVE STATE #004

	Eddy

	F

	-

	4

	-

	17S

	-

	29E

	30-015-24742

	O

	28509

	GRAYBURG JACKSON;SR-Q-G-SA

	Jul-08

	 
	 
	 

	21

	 

	 

	CAVE STATE #005

	Eddy

	C

	-

	4

	-

	17S

	-

	29E

	30-015-24741

	O

	28509

	GRAYBURG JACKSON;SR-Q-G-SA

	Jul-08

	 
	 
	 

	22

	16249

	DIAMOND STATE

	DIAMOND STATE #001

	Eddy

	O

	-

	4

	-

	17S

	-

	29E

	30-015-24759

	O

	28509

	GRAYBURG JACKSON;SR-Q-G-SA

	May-09

	 
	 
	 

	23

	 

	 

	DIAMOND STATE #002

	Eddy

	M

	-

	4

	-

	17S

	-

	29E

	30-015-24760

	O

	28509

	GRAYBURG JACKSON;SR-Q-G-SA

	May-09

	 
	 
	 

	24

	16253

	HODGES FEDERAL

	HODGES FEDERAL #002

	Eddy

	A

	-

	5

	-

	17S

	-

	29E

	30-015-02898

	O

	28509

	GRAYBURG JACKSON;SR-Q-G-SA

	May-09

	 
	 
	 

	25

	16255

	LEVERS

	LEVERS #003Y

	Eddy

	N

	-

	33

	-

	16S

	-

	29E

	30-015-02787

	O

	28509

	GRAYBURG JACKSON;SR-Q-G-SA

	May-09

	 
	 
	 

	26

	 

	 

	LEVERS #005

	Eddy

	M

	-

	33

	-

	16S

	-

	29E

	30-015-22443

	O

	28509

	GRAYBURG JACKSON;SR-Q-G-SA

	May-09

	 
	 
	 

	27

	 

	 

	LEVERS #006

	Eddy

	L

	-

	33

	-

	16S

	-

	29E

	30-015-23032

	G

	28509

	GRAYBURG JACKSON;SR-Q-G-SA

	Jul-08

	 
	 
	 

	28

	16254

	LEVERS FEDERAL

	LEVERS FEDERAL #007

	Eddy

	J

	-

	33

	-

	16S

	-

	29E

	30-015-25091

	O

	28509

	GRAYBURG JACKSON;SR-Q-G-SA

	Jul-08

	 
	 
	 

	29

	16250

	RED STATE

	RED STATE #001

	Eddy

	B

	-

	4

	-

	17S

	-

	29E

	30-015-24855

	O

	28509

	GRAYBURG JACKSON;SR-Q-G-SA

	May-09

	 
	 
	 

	30

	 

	 

	RED STATE #002

	Eddy

	G

	-

	4

	-

	17S

	-

	29E

	30-015-24896

	O

	28509

	GRAYBURG JACKSON;SR-Q-G-SA

	May-09

	 
	 
	 

	31

	16219

	RED TWELVE FEDERAL

	RED TWELVE FEDERAL #001

	Eddy

	O

	-

	33

	-

	16S

	-

	29E

	30-015-25058

	O

	28509

	GRAYBURG JACKSON;SR-Q-G-SA

	May-09

	 
	 
	 

	32

	 

	 

	RED TWELVE FEDERAL #002

	Eddy

	P

	-

	33

	-

	16S

	-

	29E

	30-015-25059

	O

	28509

	GRAYBURG JACKSON;SR-Q-G-SA

	Jul-08

	 
	 
	 

	33

	16268

	RED TWELVE LEVERS FEDERAL

	RED TWELVE LEVERS FED #008Q

	Eddy

	I

	-

	33

	-

	16S

	-

	29E

	30-015-25090

	O

	28509

	GRAYBURG JACKSON;SR-Q-G-SA

	Jun-05

	 
	 
	 

	34

	 

	 

	RED TWELVE LEVERS FED #012

	Eddy

	D

	-

	33

	-

	16S

	-

	29E

	30-015-25152

	O

	28509

	GRAYBURG JACKSON;SR-Q-G-SA

	Nov-04

	 
	 
	 

	35

	16256

	RED TWELVE STATE

	RED TWELVE STATE #001

	Eddy

	N

	-

	4

	-

	17S

	-

	29E

	30-015-24962

	O

	28509

	GRAYBURG JACKSON;SR-Q-G-SA

	May-09

	 
	 
	 

	36

	 

	 

	RED TWELVE STATE #002

	Eddy

	H

	-

	4

	-

	17S

	-

	29E

	30-015-24966

	O

	28509

	GRAYBURG JACKSON;SR-Q-G-SA

	Sep-07

	 
	 
	 

	37

	 

	 

	RED TWELVE STATE #003

	Eddy

	I

	-

	5

	-

	17S

	-

	29E

	30-015-24989

	O

	28509

	GRAYBURG JACKSON;SR-Q-G-SA

	Jul-08

	 
	 
	 

	38

	 

	 

	RED TWELVE STATE #004

	Eddy

	O

	-

	5

	-

	17S

	-

	29E

	30-015-24991

	S

	96121

	SWD;SAN ANDRES

	Apr-09

	 
	 
	 

	39

	 

	 

	RED TWELVE STATE #006

	Eddy

	K

	-

	5

	-

	17S

	-

	29E

	30-015-25055

	O

	 

	 

	Aug-01

	 
	 
	 

	40

	16251

	STATE

	STATE #001

	Eddy

	D

	-

	4

	-

	17S

	-

	29E

	30-015-02888

	O

	 

	 

	May-01

	 
	 
	 

	41

	 

	 

	STATE #002

	Eddy

	C

	-

	4

	-

	17S

	-

	29E

	30-015-02889

	O

	28509

	GRAYBURG JACKSON;SR-Q-G-SA

	May-09

	 
	 
	 

ASSIGNMENT AND BILL OF SALE

(Of all Assignor's Interest in Multiple Producing Leases)

State:

New Mexico

County:

Eddy

Assignor: 

Robinhood L.L.C., P.O. Box 1089, Hobbs, New Mexico 88241

Assignee:

Blugrass Energy Inc., 7609 Ralston Road Arvada, Colorado 80002

Effective Date:  October 12, 2009

For adequate consideration, Assignor, named above, assigns, sells and conveys to Assignee, named above, all of Assignor's rights, title, and interests in the Oil and Gas Leases (the "Leases") and lands (the "Lands") described in Exhibit "A" to this Assignment, together with all of Assignor's rights, title, and interests in all wells located on the Lands.  Exhibit "A" is incorporated into this Assignment for all purposes.  It is the Assignor's intent to assign Assignee all of Assignor's interests in the Leases and Lands, whether or not such interests, Leases, and Lands are accurately described in Exhibit "A," including all of Assignor's rights and interests in the following, all of which are referred to in this Assignment collectively as the "Properties":

1.

Assignor's leasehold interests in oil, gas, and other minerals, including working interests, carried working interests, net profits interests, rights of assignment and reassignment, and all other rights and interests in the Leases.

2.

All fee interests in oil, gas, and other minerals, including rights under mineral deeds, conveyances, options, and assignments.

3.

All royalty interests, overriding royalty interests, production payments, rights to take royalties in kind, and all other interests in and/or payable out of production of oil, gas, and other minerals.

4.

All rights and interests in or derived from unit agreements, orders and decisions of state and federal regulatory authorities establishing units, joint operating agreements, enhanced recovery agreements, waterflood agreements, farmout and farmin agreements, options, drilling agreements, unitization, pooling and communitization agreements, oil and/or gas sales agreements, processing agreements, gas gathering and transmission agreements, gas balancing agreements, salt water disposal and injection agreements, assignments of operating rights, subleases, and any and all other agreements to the extent they pertain to the Leases, Lands, and the wells located on the Leases.

5.

All rights of way, easements, surface fees, surface leases, servitudes and franchises insofar as they pertain to the Leases and the wells located on the Leases.

6.

All permits and licenses of any nature, owned, held, or operated by Assignor in connection with the Leases, Lands and the wells located on the Leases.

7.

All producing, nonproducing, and shut-in oil and gas wells, salt water disposal wells, water wells, injection wells, and all other wells on or attributable to the Leases, whether or not identified in the Exhibit to this Assignment.

8.

All pumping units, pumps, casing, rods, tubing, wellhead equipment, separators, heater treaters, tanks, pipelines, gathering lines, flow lines, valves, fittings and all other surface and downhole equipment, fixtures, related inventory, gathering and treating facilities, personal property and equipment used in connection with the Leases and the wells located on the Leases and all other interests described above.

This Assignment is made by Assignor and accepted by Assignee with warranty of title by, through, and under Assignor and not otherwise.  It shall be deemed effective, for all purposes, as of the Effective Date stated above.

Assignor:  Robinhood L.L.C.

By:  _____/s/ Mickey Welborn ______

        Mickey Welborn, Co-Owner

Date:  October 12, 2009

By:  ___ /s/Quinton Welborn _____

        Quinton Welborn, Co-Owner

Date:  October 12, 2009

STATE OF NEW MEXICO

§

COUNTY OF EDDY

§

The foregoing instrument was acknowledged before me this ___12____ day of October, 2009 by MICKEY WELBORN, CO-OWNER, and QUINTON WELBORN, CO-OWNER, in their respective official capacities, on behalf of ROBINHOOD L.L.C., a Limited Liability Company.

___________Debra Y. Ray____________

Notary Public in and for the State of ____New Mexico___

Printed Name:  ____ Debra Y. Ray 

  

Commission Expires:  ____July 27, 2013___

    

EXHIBIT "A"

TO

ASSIGNMENT AND BILL OF SALE

Lands:

All of Seller’s interest in lands located in Eddy County, New Mexico, including but not limited to the following lands:

Section 33, Township 16 South, Range 29 East;

Section 3, Township 17 South, Range 29 East;

Section 4, Township 17 South, Range 29 East;

Section 5, Township 17 South, Range 29 East;

Section 7, Township 17 South, Range 29 East;

Section 8, Township 17 South, Range 29 East; and,

Section 9, Township 17 South, Range 29 East.

Leases:

												
	 

	Property

	Lease

	Well

	LOCATION

	 

	 

	 

	 

	 

	 

	 

	 

	No.

	Name

	Name

	County

	UL

	-

	Sec

	-

	Twp

	-

	Rnge

	1

	16230

	CAVE POOL UNIT

	CAVE POOL UNIT #001

	Eddy

	O

	-

	33

	-

	16S

	-

	29E

	2

	 

	 

	CAVE POOL UNIT #010

	Eddy

	G

	-

	5

	-

	17S

	-

	29E

	3

	 

	 

	CAVE POOL UNIT #012

	Eddy

	E

	-

	4

	-

	17S

	-

	29E

	4

	 

	 

	CAVE POOL UNIT #019

	Eddy

	K

	-

	4

	-

	17S

	-

	29E

	5

	 

	 

	CAVE POOL UNIT #023

	Eddy

	K

	-

	5

	-

	17S

	-

	29E

	6

	 

	 

	CAVE POOL UNIT #026

	Eddy

	O

	-

	5

	-

	17S

	-

	29E

	7

	 

	 

	CAVE POOL UNIT #027

	Eddy

	P

	-

	5

	-

	17S

	-

	29E

	8

	 

	 

	CAVE POOL UNIT #028

	Eddy

	M

	-

	4

	-

	17S

	-

	29E

	9

	 

	 

	CAVE POOL UNIT #030

	Eddy

	O

	-

	4

	-

	17S

	-

	29E

	10

	 

	 

	CAVE POOL UNIT #035

	Eddy

	A

	-

	8

	-

	17S

	-

	29E

	11

	 

	 

	CAVE POOL UNIT #036

	Eddy

	B

	-

	8

	-

	17S

	-

	29E

	12

	 

	 

	CAVE POOL UNIT #041

	Eddy

	E

	-

	8

	-

	17S

	-

	29E

	13

	 

	 

	CAVE POOL UNIT #051

	Eddy

	L

	-

	5

	-

	17S

	-

	29E

	14

	 

	 

	CAVE POOL UNIT #052

	Eddy

	M

	-

	5

	-

	17S

	-

	29E

	15

	 

	 

	CAVE POOL UNIT #059

	Eddy

	J

	-

	5

	-

	17S

	-

	29E

	16

	 

	 

	CAVE POOL UNIT #062

	Eddy

	P

	-

	5

	-

	17S

	-

	29E

	17

	16248

	CAVE STATE

	CAVE STATE #001

	Eddy

	D

	-

	4

	-

	17S

	-

	29E

	18

	 

	 

	CAVE STATE #002

	Eddy

	H

	-

	5

	-

	17S

	-

	29E

	19

	 

	 

	CAVE STATE #003

	Eddy

	E

	-

	4

	-

	17S

	-

	29E

	20

	 

	 

	CAVE STATE #004

	Eddy

	F

	-

	4

	-

	17S

	-

	29E

	21

	 

	 

	CAVE STATE #005

	Eddy

	C

	-

	4

	-

	17S

	-

	29E

	22

	16249

	DIAMOND STATE

	DIAMOND STATE #001

	Eddy

	O

	-

	4

	-

	17S

	-

	29E

	23

	 

	 

	DIAMOND STATE #002

	Eddy

	M

	-

	4

	-

	17S

	-

	29E

	24

	16253

	HODGES FEDERAL

	HODGES FEDERAL #002

	Eddy

	A

	-

	5

	-

	17S

	-

	29E

	25

	16255

	LEVERS

	LEVERS #003Y

	Eddy

	N

	-

	33

	-

	16S

	-

	29E

	26

	 

	 

	LEVERS #005

	Eddy

	M

	-

	33

	-

	16S

	-

	29E

	27

	 

	 

	LEVERS #006

	Eddy

	L

	-

	33

	-

	16S

	-

	29E

	28

	16254

	LEVERS FEDERAL

	LEVERS FEDERAL #007

	Eddy

	J

	-

	33

	-

	16S

	-

	29E

	29

	16250

	RED STATE

	RED STATE #001

	Eddy

	B

	-

	4

	-

	17S

	-

	29E

	30

	 

	 

	RED STATE #002

	Eddy

	G

	-

	4

	-

	17S

	-

	29E

	31

	16219

	RED TWELVE FEDERAL

	RED TWELVE FEDERAL #001

	Eddy

	O

	-

	33

	-

	16S

	-

	29E

	32

	 

	 

	RED TWELVE FEDERAL #002

	Eddy

	P

	-

	33

	-

	16S

	-

	29E

	33

	16268

	RED TWELVE LEVERS FEDERAL

	RED TWELVE LEVERS FED #008Q

	Eddy

	I

	-

	33

	-

	16S

	-

	29E

	34

	 

	 

	RED TWELVE LEVERS FED #012

	Eddy

	D

	-

	33

	-

	16S

	-

	29E

	35

	16256

	RED TWELVE STATE

	RED TWELVE STATE #001

	Eddy

	N

	-

	4

	-

	17S

	-

	29E

	36

	 

	 

	RED TWELVE STATE #002

	Eddy

	H

	-

	4

	-

	17S

	-

	29E

	37

	 

	 

	RED TWELVE STATE #003

	Eddy

	I

	-

	5

	-

	17S

	-

	29E

	38

	 

	 

	RED TWELVE STATE #004

	Eddy

	O

	-

	5

	-

	17S

	-

	29E

	39

	 

	 

	RED TWELVE STATE #006

	Eddy

	K

	-

	5

	-

	17S

	-

	29E

	40

	16251

	STATE

	STATE #001

	Eddy

	D

	-

	4

	-

	17S

	-

	29E

	41

	 

	 

	STATE #002

	Eddy

	C

	-

	4

	-

	17S

	-

	29E

Source: [{"source": "alea-institute/alea-institute/kl3m-data-edgar-agreements/train-00164-of-00352.parquet"}, [{"source": "alea-institute/alea-institute/kl3m-data-edgar-agreements/train-00164-of-00352.parquet"}]]