Document:

Filed by sedaredgar.com - Doral Energy Corp. - Exhibit 10.35

THE SECURITIES OFFERED HEREBY HAVE NOT BEEN REGISTERED UNDER
THE SECURITIES ACT OF 1933 (THE “SECURITIES ACT”), AND ARE PROPOSED TO BE ISSUED
IN RELIANCE UPON AN EXEMPTION FROM THE REGISTRATION REQUIREMENTS OF THE
SECURITIES ACT PROVIDED BY REGULATION S PROMULGATED UNDER THE SECURITIES ACT.
UPON ANY SALE, SUCH SECURITIES MAY NOT BE REOFFERED FOR SALE OR RESOLD OR
OTHERWISE TRANSFERRED IN THE UNITED STATES OR TO U.S. PERSONS EXCEPT IN
ACCORDANCE WITH THE PROVISIONS OF REGULATION S, PURSUANT TO AN EFFECTIVE
REGISTRATION UNDER THE SECURITIES ACT, OR PURSUANT TO AN AVAILABLE EXEMPTION
FROM REGISTRATION UNDER THE SECURITIES ACT. HEDGING TRANSACTIONS INVOLVING THE
SECURITIES MAY NOT BE CONDUCTED UNLESS IN COMPLIANCE WITH THE SECURITIES ACT.

CONVERTIBLE NOTE AGREEMENT

THIS AGREEMENT is made effective as of the 28th day of
May, 2009.

BETWEEN:

GREEN SHOE INVESTMENTS
LTD., a Nevis corporation with a corporate office at P.O. Box 556, Main
Street, Charlestown, Nevis, West Indies

(hereinafter called the
"Subscriber")

OF THE FIRST PART

AND:

DORAL ENERGY CORP.,
a Nevada corporation with a corporate office at 415 West Wall, Suite 500,
Midland, TX 79701

(hereinafter called the “Company")

OF THE SECOND PART

THE PARTIES HEREBY AGREE AS FOLLOWS:

1. DEFINITIONS

1.1 The following terms will have the following meanings for
all purposes of this Agreement:

	 	(a) 	
      “Agreement” means this Agreement, and all
      schedules and amendments to this Agreement;

	 	 	 
	 	(b) 	
      “Common Stock” means the shares of Common Stock in
      the capital of the Company, $0.001 par value per share;

	 	 	 
	 	(c) 	
      “Conversion” means the conversion of all or any
      portion of the Convertible Note held by such holder into that number of
      fully-paid and non-assessable shares of Common Stock as shall be equal to
      the Principal Amount to be converted divided by the Conversion Price as
      set out in the Terms and Conditions set out in Schedule B
hereto;

	 	 	 
	 	(d) 	
      “Convertible Note” means a convertible note in a
      form substantially similar to that attached as Schedule A hereto and
      subject to the Terms and Conditions set out in Schedule B
hereto;

	 	 	 
	 	(e) 	
      “Due Date” means 10 business days after the
      earlier of (i) the closing of a Qualified Refinancing, or (ii) the
      Macquarie Maturity Date;

	 	 	 
	 	(f) 	
      “Exchange Act” means the United States Securities
      Exchange Act of 1934, as amended;

2

	 	(g) 	
      “Hanson Properties” means those oil and gas
      properties acquired by the Company pursuant to the Purchase and Sale
      Agreement between the Company, J. Warren Hanson (doing business as Hanson
      Energy) and Kathie Hanson dated April 25, 2008, as amended;

	 	 	 
	 	(h) 	
      “Macquarie Agreement” means the $50,000,000 Senior
      First Lien Secured Credit Agreement dated July 29, 2008 between Macquarie
      Bank Limited and the Company;

	 	 	 
	 	(i) 	
      “Macquarie Maturity Date” means the Maturity Date,
      as that term is defined in the Macquarie Agreement, including any and all
      extensions to the Maturity Date

	 	 	 
	 	(j) 	
      “Note Shares” means the Common Stock issuable upon
      Conversion of the Convertible Notes or as payment of interest on the
      Convertible Notes;

	 	 	 
	 	(k) 	
      “Offering” means the offering of Convertible Notes
      and Note Shares by the Company to the Subscriber;

	 	 	 
	 	(l) 	
      “Principal Amount” means the principal amount of a
      Convertible Note;

	 	 	 
	 	(m) 	
      “Purchase Price” means the purchase price payable
      by the Subscriber to the Company in consideration for the purchase and
      sale of the Convertible Notes in accordance with Section 2.1 of this
      Agreement;

	 	 	 
	 	(n) 	
      “Qualified Refinancing” means a debt, equity or
      other financing obtained by the Company (or any combination thereof) that
      (i) is obtained on or before the Macquarie Maturity Date, and (ii) when
      added with any other debt, equity or other financing obtained by the
      Company, is in an amount sufficient to enable the Company to pay all of
      the amounts owed by it under the terms of the Macquarie
  Agreement;

	 	 	 
	 	(o) 	
      “SEC” means the United States Securities and
      Exchange Commission;

	 	 	 
	 	(p) 	
      “Securities Act” means the United States
      Securities Act of 1933, as amended;

	 	 	 
	 	(q) 	
      “Subordination Agreement” means a subordination
      agreement in the form and substance attached as Schedule C hereto;
    and

	 	 	 
	 	(r) 	
      “Subscriber Subordination Agreement” means the
      subordination agreement dated July 29, 2008 between the Subscriber, the
      Company and Macquarie Bank Limited.

1.2 All dollar amounts referred to in this Agreement are in
United States funds, unless expressly stated otherwise.

2. PURCHASE AND SALE OF CONVERTIBLE
NOTES

2.1 Subject to the terms and conditions of this Agreement, the
Subscriber hereby agrees to pay to the Company the Purchase Price of $150,000.
The Purchaser shall pay the Purchase Price to the Company by check, bank draft
or cashier’s check payable to the Company, or by such other means as the Company
may find acceptable. Upon execution, the subscription by the Subscriber shall be
irrevocable.

2.2 As consideration for the Purchase Price, the Company agrees
to issue to the Subscriber a Convertible Note in the Principal Amount of
$300,000, due on the Due Date.

2.3 If the Company does not obtain a Qualified Refinancing on
or before the Macquarie Maturity Date and the Company sells, transfers or
otherwise disposes of all or substantially all of the Hanson Properties,
including, but not limited to, any realization by a secured debtor of the
Company of their security interest in the Hanson Properties, the Company agrees
to issue to the Subscriber an additional Convertible Note in the Principal
Amount of $150,000, immediately due and payable. Such additional Convertible
Note shall have terms and conditions substantially similar to the Convertible
Note issued in accordance with Section 

3

2.2 of this Agreement, except that no interest shall be payable
by the Company on the Principal Amount of such additional Convertible Note.

2.4 Notwithstanding any provisions of this Agreement to the
contrary, any obligation of the Company to issue securities of the Company is
conditional upon compliance with all securities laws and other applicable laws
of the jurisdiction in which the Subscriber is resident. The Subscriber agrees
to deliver to the Company all documents, agreements, representations and
requisite government forms required to comply with any securities laws or other
laws applicable to the Offering.

2.5 The Subscriber hereby authorizes and directs the Company to
deliver the securities to be issued to such Subscriber pursuant to this
Agreement to the Subscriber’s address indicated above.

3. REGULATION S AGREEMENTS OF THE
SUBSCRIBER

3.1 The Subscriber represents and warrants to the Company that
the Subscriber is not a “U.S. Person” as defined by Regulation S of the
Securities Act and is not acquiring the Convertible Notes and the Note Shares
for the account or benefit of a U.S. Person.

A “U.S. Person” is defined by
Regulation S of the Securities Act to be any person who is:

	 	(a) 	
      any natural person resident in the United
      States;

	 	 	 
	 	(b) 	
      any partnership or corporation organized or
      incorporated under the laws of the United States;

	 	 	 
	 	(c) 	
      any estate of which any executor or administrator is a
      U.S. person;

	 	 	 
	 	(d) 	
      any trust of which any trustee is a U.S.
      person;

	 	 	 
	 	(e) 	
      any agency or branch of a foreign entity located in
      the United States;

	 	 	 
	 	(f) 	
      any non-discretionary account or similar account
      (other than an estate or trust) held by a dealer or other
      fiduciary organized, incorporate, or (if an individual) resident in
      the United States; and

	 	 	 
	 	(g) 	
      any partnership or corporation if:

	 	 	 
	 		
      (i) 
	 organized or incorporated under the laws of any foreign
      jurisdiction; and
	 	 	 	 
	 		
      (ii) 
	formed by a U.S. person principally for the purpose of investing
      in securities not registered under the Securities Act, unless it
      is organized or incorporated, and owned, by accredited investors [as
      defined in Rule 501(a) of Regulation D promulgated under the Securities
      Act] who are not natural persons, estates or
trusts.

3.2 The Subscriber represents and warrants to the Company that
the Subscriber was not in the United States: (a) at the time the offer to
purchase the Convertible Notes and the Note Shares was received; and (b) at the
time the Subscriber made its decision to purchase the Convertible Notes and the
Note Shares.

3.3 The Subscriber represents and warrants to the Company that
it is not aware of any “directed selling efforts” (as that term is defined in
Regulation S of the Securities Act) made by the Company in relation to the
securities being offered to the Subscriber herein.

3.4 The Subscriber acknowledges that the Convertible Notes and
the Note Shares are “restricted securities” within the meaning of the Securities
Act and will be issued to the Subscriber in accordance with Regulation S of the
Securities Act based on the representations and warranties of the Subscriber
contained in this Agreement.

4

3.5 The Subscriber agrees not to engage in hedging transactions
with regard to the Convertible Notes or the Note Shares unless in compliance
with the Securities Act.

3.6 The Subscriber agrees not to offer, sell, transfer, pledge
or hypothecate the Convertible Notes or the Note Shares unless such offer, sale,
transfer, pledge or hypothecation is made in accordance with the provisions of
Regulation S of the Securities Act, pursuant to an effective registration under
the Securities Act or pursuant to an available exemption from the registration
requirements of the Securities Act, and further agrees that the Company will
refuse to register any transfer or other change in the ownership of the
Convertible Notes or the Note Shares not made in accordance with the provisions
of Regulation S of the Securities Act, pursuant to an effective registration
under the Securities Act or pursuant to an available exemption from the
registration requirements of the Securities Act.

3.7 The Subscriber acknowledges and agrees that all
certificates representing the Convertible Notes and the Note Shares will be
endorsed with a restrictive legend substantially similar to the following in
accordance with Regulation S of the Securities Act, and/or such other legends as
the lawyers for the Company may deem advisable to ensure compliance with all
applicable laws: 

  “THE SECURITIES REPRESENTED BY THIS CERTIFICATE HAVE
    NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933 (THE “SECURITIES
    ACT”), AND HAVE BEEN ISSUED IN RELIANCE UPON AN EXEMPTION FROM THE REGISTRATION
    REQUIREMENTS OF THE SECURITIES ACT PROVIDED BY REGULATION S PROMULGATED UNDER
    THE SECURITIES ACT. SUCH SECURITIES MAY NOT BE REOFFERED FOR SALE OR RESOLD
    OR OTHERWISE TRANSFERRED EXCEPT IN ACCORDANCE WITH THE PROVISIONS OF REGULATION
    S, PURSUANT TO AN EFFECTIVE REGISTRATION UNDER THE SECURITIES ACT, OR PURSUANT
    TO AN AVAILABLE EXEMPTION FROM REGISTRATION UNDER THE SECURITIES ACT. HEDGING
    TRANSACTIONS INVOLVING THE SECURITIES MAY NOT BE CONDUCTED UNLESS IN COMPLIANCE
    WITH THE SECURITIES ACT.”

4. REPRESENTATIONS, WARRANTIES AND COVENANTS OF
THE SUBSCRIBER

The Subscriber represents, warrants and covenants to and with
the Company as follows, and acknowledges that the Company is relying upon such
covenants, representations and warranties in connection with the offer and sale
of the Convertible Notes and the Note Shares to such Subscriber:

4.1 The Subscriber is an investor in securities of companies in
the development stage and acknowledges that it is able to fend for itself, can
bear the economic risk of its investment, and has such knowledge and experience
in financial or business matters such that it is capable of evaluating the
merits and risks of the investment in the Convertible Notes and the Note Shares.
The Subscriber acknowledges that an investment in the Company is highly
speculative in that investors could lose their entire investment. The Subscriber
represents and warrants that it can bear the economic risk of this investment,
and was not organized for the purpose of acquiring the Convertible Notes or the
Note Shares.

4.2 The Subscriber has had full opportunity to review the
Company’s filings with the SEC pursuant to the Exchange Act, including the
Company’s annual reports, quarterly reports and current reports and additional
information regarding the business and financial condition of the Company. The
Subscriber believes it has received all the information it considers necessary
or appropriate for deciding whether to purchase the Convertible Notes and the
Note Shares. The Subscriber further represents that it has had an opportunity to
ask questions and receive answers from the Company regarding the terms and
conditions of the Offering and the business, properties, prospects and financial
condition of the Company. The Subscriber has had full opportunity to discuss
this information with the Subscriber’s legal and financial advisers prior to
execution of this Agreement.

4.3 The Subscriber acknowledges that the offering of the
Convertible Notes and the Note Shares by the Company has not been reviewed by
the SEC and that the Convertible Notes are being, and the Note Shares will be,
issued by the Company pursuant to an exemption from registration under the
Securities Act.

4.4 The Subscriber understands that the Convertible Notes and
the Note Shares are characterized as "restricted securities" under the
Securities Act inasmuch as they are being acquired from the 

5

Company in a transaction not involving a public offering and
that under such laws and applicable regulations such securities may be resold
without an effective registration under the Securities Act only in certain
limited circumstances. The Subscriber represents that it is familiar with SEC
Rule 144, as presently in effect, and understands the resale limitations imposed
thereby and by the Securities Act.

4.5 The Convertible Notes and the Note Shares will be acquired
by the Subscriber for investment for the Subscriber's own account, not as a
nominee or agent, and not with a view to the resale or distribution of any part
thereof, and that the Subscriber has no present intention of selling, granting
any participation in, or otherwise distributing the same. The Subscriber does
not have any contract, undertaking, agreement or arrangement with any person to
sell, transfer or grant participations to such person or to any third person,
with respect to any of the Convertible Notes or the Note Shares.

4.6 The Subscriber is not aware of any advertisement of the
Convertible Notes or the Note Shares.

4.7 This Agreement has been duly authorized, validly executed
and delivered by the Subscriber.

4.8 The Subscriber has satisfied himself or herself as to the
full observance of the laws of his or her jurisdiction in connection with any
invitation to subscribe for the Convertible Notes and purchase the Note Shares
or any use of this Agreement, including (i) the legal requirements within his
jurisdiction for the purchase of the Convertible Notes and the Note Shares; (ii)
any foreign exchange restrictions applicable to such purchase; (iii) any
governmental or other consents that may need to be obtained; (iv) the income tax
and other tax consequences, if any, that may be relevant to an investment in the
Convertible Notes and the Note Shares; and (v) any restrictions on transfer
applicable to any disposition of the Convertible Notes and the Note Shares
imposed by the jurisdiction in which the Subscriber is resident.

5. REPRESENTATIONS BY THE COMPANY

5.1 The Company represents and warrants to the Subscriber
that:

	 	(a) 	
      The Company is a corporation duly organized, existing and
      in good standing under the laws of the State of Nevada and has the
      corporate power to conduct the business which it conducts and proposes to
      conduct;

	 	 	 
	 	(b) 	
      Upon their issuance in accordance with the terms and
      conditions of this Agreement, the Convertible Notes will be valid and
      binding obligations of the Company, enforceable in accordance with their
      terms; and

	 	 	 
	 	(c) 	
      Upon Conversion of the Convertible Notes made in
      accordance with the Terms and Conditions set out in Schedule B hereto, the
      Note Shares will be duly and validly issued, fully paid and non-assessable
      common shares in the capital of the Company.

6. MISCELLANEOUS

6.1 The Subscriber acknowledges and agrees that this Agreement
and the schedules hereto have been prepared by O’Neill Law Group PLLC solely as
legal counsel for the Company and that the Subscriber has been advised to obtain
independent legal advice with respect to the matters contained in this
Agreement.

6.2 Any notice or other communication given hereunder shall be
deemed sufficient if in writing and sent by registered or certified mail, return
receipt requested, addressed to the Company, at its corporate office at West
Wall, Suite 500, Midland, TX 79701, Attention: E. Willard Gray, II, Chief
Executive Officer, and to the Subscriber at his/her address indicated on the
first page of this Agreement. Notices shall be deemed to have been given on the
date of mailing, except notices of change of address, which shall be deemed to
have been given when received.

6.3 The parties agree to execute and deliver all such further
documents, agreements and instruments and take such other and further action as
may be necessary or appropriate to carry out the purposes and intent of this
Agreement.

6

6.4 This Agreement will be governed by and construed in
accordance with the laws of the State of Nevada applicable to contracts made and
to be performed therein. The parties hereby submit to personal jurisdiction in
the Courts of the State of Nevada for the enforcement of this Agreement and
waive any and all rights under the laws of any state to object to jurisdiction
within the State of Nevada for the purposes of litigation to enforce this
Agreement. 

6.5 The Subscriber agrees that the representations, warranties
and covenants of the Subscriber herein will be true and correct both as of the
execution of this Agreement and as of the date of this Agreement will survive
the completion of the issuance of the Convertible Notes and the Note Shares. The
representations, warranties and covenants of the Subscriber herein are made with
the intent that they be relied upon by the Company in determining the
eligibility of a purchaser of Convertible Notes and the Note Shares, and the
Subscriber agrees to indemnify the Company and its respective trustees,
affiliates, shareholders, directors, officers, partners, employees, advisors and
agents against all losses, claims, costs, expenses and damages or liabilities
which any of them may suffer or incur which are caused or arise from a breach
thereof. The Subscriber undertakes to immediately notify the Company of any
change in any statement or other information relating to the Subscriber set
forth herein.

6.6 The obligations of the parties hereunder are subject to
receipt of all applicable regulatory approvals.

6.7 The Subscriber acknowledges and agrees that all costs
incurred by the Subscriber (including any fees and disbursements of any special
counsel retained by the Subscriber) relating to the sale of the Convertible
Notes or the Note Shares to the Subscriber shall be borne by the Subscriber.

6.8 Time shall be of the essence hereof.

6.9 This Agreement represents the entire agreement of the
parties hereto relating to the subject matter hereof and there are no
representations, covenants or other agreements relating to the subject matter
hereof except as stated or referred to herein. 

6.10 The terms and provisions of this Agreement shall at all
times be subject to the Subscriber Subordination Agreement, and the terms and
provisions of this Agreement shall be binding upon and enure to the benefit of
the Subscriber and the Company and their respective heirs, executors,
administrators, successors and assigns; provided that this Agreement shall not
be assignable by any party without prior written consent of the other parties.
Notwithstanding any provision of this Agreement to the contrary, this Agreement
and any Convertible Notes issued pursuant to this Agreement may not be assigned,
pledged, transferred or sold by the Subscriber unless such assignee, pledge,
transferee or purchaser has duly executed a Subordination Agreement.

6.11 The Subscriber, on its own behalf and, if applicable, on
behalf of others for whom it is contracting hereunder, agrees that this
subscription is made for valuable consideration and may not be withdrawn,
cancelled, terminated or revoked by the Subscriber, on its own behalf and, if
applicable, on behalf of others for whom it is contracting hereunder. 

6.12 Neither this Agreement nor any provision hereof shall be
modified, changed, discharged or terminated except by an instrument in writing
signed by the party against whom any waiver, change, discharge or termination is
sought.

6.13 The invalidity, illegality or unenforceability of any
provision of this Agreement shall not affect the validity, legality or
enforceability of any other provision hereof.

6.14 The headings used in this Agreement have been inserted for
convenience of reference only and shall not affect the meaning or interpretation
of this Agreement or any provision hereof. 

6.15 The covenants, representations and warranties contained
herein shall survive the closing of the transactions contemplated hereby.

7

6.16 Notwithstanding the place where this Agreement may be
executed by any of the parties hereto, the parties expressly agree that all the
terms and provisions hereof shall be construed in accordance with and governed
by the laws of the State of Nevada.

* INCLUDING NOTES 1 & 2 BELOW:

IN WITNESS WHEREOF, this Agreement is executed as of the
day and year first written above.

	Signature of Authorized Signatory: 	  
	  	/s/ Roger Knox 
	 	 
	Name of Subscriber: 	GREEN SHOE INVESTMENTS LTD. 
	 	 
	Name and Title of Authorized Signatory: 	R. KNOX, Director 
	 	 
	Address of Subscriber: 	P.O.
      Box 556 Main Street 
	  	
	 	Charlestown, Nevis, West Indies  
	 	 
	Jurisdiction of Incorporation of Subscriber: 	Nevis 
	 	 
	Telephone Number of Subscriber: 	+44
      22 799 0800 
	 	 
	ACCEPTED BY: 	  
	 	 
	DORAL ENERGY CORP. 	  
	 	 
	Signature Of Authorized Signatory: 	/s/ Everett W. Gray, II 
	 	 
	Name of Authorized Signatory: 	Everett W. Gray, II 
	 	 
	Position of Authorized Signatory: 	CEO
    
	 	 
	Date of Acceptance: 	5-28-09 

NOTE:

	 	(1) 	
      THIS CONVERTIBLE NOTE AGREEMENT, LIKE THE OTHER GREEN
      SHOE INVESTMENTS LTD. LOANS, IS SUBJECT TO THE SUBORDINATION
    AGREEMENT.

	 	 	 
	 	(2) 	
      THIS CONVERTIBLE NOTE AGREEMENT MAY NOT BE SOLD OR
      TRANSFERRED TO ANY PARTY UNLESS THAT PARTY ALSO SIGNS A SUBORDINATION
      AGREEMENT WITH MACQUARRIE BANK LIMITED.

(/s/ R. Knox)
R.KNOX

SCHEDULE A

	No. 	U.S. $ 

DORAL ENERGY CORP.
(Incorporated under the laws of the
State of Nevada)

CONVERTIBLE NOTE 

THIS NOTE IS SUBJECT TO THE TERMS AND CONDITIONS (THE
“TERMS”) SET OUT IN THE CONVERTIBLE NOTE AGREEMENT BETWEEN DORAL ENERGY CORP.
AND GREEN SHOE INVESTMENTS LTD. DATED MAY 28, 2009 (THE “NOTE AGREEMENT”).
UNLESS OTHERWISE PROVIDED FOR IN THIS NOTE, CAPITALIZED TERMS SHALL HAVE
THE MEANINGS SET FORTH IN THE NOTE AGREEMENT.

FOR VALUE RECEIVED, DORAL ENERGY CORP. (herein referred
to as the “Company”) promises to pay to 

	or any subsequent
      registered holder hereof (the “Holder”), the principal sum of 
	  
	  
	(the “Principal Amount”) 
	on or prior to the Due Date. No interest shall be payable
      on the Principal Amount prior to the Due Date. 

Subject to the prior exercise of the conversion rights set out
in the Terms, if the Company obtains a Qualified Refinancing on or before the
Macquarie Maturity Date, any part or all of the Principal Amount that remains
unpaid after the Due Date (the “Unpaid Principal Amount”) shall, beginning on
the Due Date, bear interest at a rate of 18% per annum, calculated annually.
Such interest shall be paid in United States currency or shares of the Company’s
Common Stock in accordance with the Terms of this Note, to the person and at the
address in whose name this Note is registered on the records of the Company
regarding registration and transfers of the Notes (the “Note Register”) on the
business day immediately preceding the payment date. If the Company does not
obtain a Qualified Refinancing on or before the Macquarie Maturity Date, no
interest shall be payable by the Company on any Unpaid Principal Amount.

The principal of this Note is payable, if converted, in shares
of Common Stock, or if not converted, in such coin or currency of the United
States of America as at the time of payment is legal tender for payment of
public and private debts, to the person and at the address in whose name this
Note is registered on the Note Register on the business day immediately
preceding the payment date. The forwarding of such payment shall constitute a
payment hereunder and shall satisfy and discharge the liability for principal on
this Note to the extent of the sum or number of shares of Common Stock so
paid.

     THIS NOTE is subject to the Terms
as set out in the Note Agreement, which are incorporated herein by reference. A
copy of the Terms may be obtained by the Holder by contacting the Company at its
principal executive office at West Wall, Suite 500, Midland, Texas, 79701,
Telephone: (432) 789-1180.

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

	 	DORAL ENERGY CORP. 
	 	 	  
	 	 	  
	 	By:	 
	 	 	E. Willard Gray, II, CEO 

THESE SECURITIES AND THE SECURITIES TO BE ISSUED UPON
CONVERSION HEREOF OR AS PAYMENT OF INTEREST HEREON HAVE NOT BEEN REGISTERED
UNDER THE SECURITIES ACT OF 1933, AS AMENDED (THE "SECURITIES ACT"), AND HAVE
BEEN ISSUED IN RELIANCE UPON AN EXEMPTION FROM THE REGISTRATION REQUIREMENTS OF
THE SECURITIES ACT PROVIDED BY REGULATION S PROMULGATED UNDER THE SECURITIES
ACT. SUCH SECURITIES MAY NOT BE REOFFERED, RESOLD, PLEDGED OR OTHERWISE
TRANSFERRED EXCEPT IN ACCORDANCE WITH THE PROVISIONS OF REGULATION S, PURSUANT
TO AN EFFECTIVE REGISTRATION UNDER THE SECURITIES ACT, OR PURSUANT TO AN
AVAILABLE EXEMPTION FROM REGISTRATION UNDER THE SECURITIES ACT. THE CONVERSION
RIGHTS ATTACHED TO THESE SECURITIES MAY NOT BE EXERCISED IN THE UNITED STATES OR
BY OR ON BEHALF OF A PERSON IN THE UNITED STATES OR A U.S. PERSON UNLESS THESE
SECURITIES AND THE UNDERLYING SHARES HAVE BEEN REGISTERED UNDER THE SECURITIES
ACT AND THE APPLICABLE SECURITIES LEGISLATION OF ANY SUCH STATE OR AN EXEMPTION
FROM SUCH REGISTRATION REQUIREMENTS IS AVAILABLE. "UNITED STATES" AND "U.S.
PERSON" ARE AS DEFINED BY REGULATION S UNDER THE SECURITIES ACT. HEDGING
TRANSACTIONS INVOLVING THE SECURITIES MAY NOT BE CONDUCTED UNLESS IN COMPLIANCE
WITH THE ACT.

NOTICE OF CONVERSION

TO: DORAL ENERGY CORP.

The undersigned hereby irrevocably elects to convert Note No.
____ in the principal amount of $____________________________ (the “Note”) into
shares of common stock (“Common Stock”) of DORAL ENERGY CORP. (the “Company”)
according to the Terms of the Note, as of the date written below.

The undersigned represents and warrants to the Company that, as
of the date hereof, the undersigned is not a “US Person” as such term is defined
in Regulation S promulgated under the Securities Act of 1933, as amended (the
“Securities Act”) and that the undersigned is not acquiring the shares of Common
Stock issuable upon conversion of the Note (the “Note Shares”) for the account
or benefit of a US Person. The undersigned further represents and warrants to
the Company that the Note Shares are being acquired by the undersigned for
investment purposes for the undersigned’s own account and not as a nominee or
agent, and not with a view to the resale or distribution of any part thereof,
and the undersigned has no present intention of selling, granting any
participation in, or otherwise distributing the same.

The undersigned agrees not to offer, resell, pledge or
otherwise transfer the Note Shares unless such offer, resale, pledge or transfer
is made pursuant Regulation S promulgated under the Securities Act, pursuant to
an effective registration under the Securities Act or pursuant to an available
exemption from the registration requirements of the Securities Act.

	 	 	 
	DATE OF CONVERSION 	 	AUTHORIZED SIGNATURE 
	 	 	 
	AMOUNT OF CONVERSION 	 	NAME 
	 	 	 
	  	 	ADDRESS 
	  	 	  
	 	 	 
	 	 	 
	  	 	CITY, STATE, ZIP CODE 

	* 	
      No shares of Common Stock will be issued until the
      original Note(s) to be converted and the Notice of conversion are received
      by the Company.

	SCHEDULE B 
	 

TERMS AND CONDITIONS OF THE CONVERTIBLE NOTES (THE “NOTES”)
DUE ON THE DUE DATE (THE “DUE DATE”) AS THAT TERM IS DEFINED IN THE CONVERTIBLE
NOTE AGREEMENT BETWEEN DORAL ENERGY CORP. (THE “COMPANY”) AND GREEN SHOE
INVESTMENTS LTD. DATED MAY 28, 2009 (THE “NOTE AGREEMENT”). UNLESS OTHERWISE
PROVIDED FOR HEREIN, CAPITALIZED TERMS SHALL HAVE THE MEANINGS SET FORTH IN THE
NOTE AGREEMENT.

Section 1. Note Denominations. The Notes are initially
issuable in denominations of at least One Thousand ($1,000 U.S.) and integral
multiples of $1.00 U.S. in excess thereof. Upon conversion of a portion, but not
all, of a Note in accordance with the terms hereof, a new note or notes may be
issued to the person in whose name the Note is registered on the records of the
Company regarding the registration and transfer of the Notes (the "Note
Register", such person being hereinafter referred to as the "Holder") in a
denomination equal to the exact amount of the unconverted portion of the
Note.

Section 2. Interest. No interest shall be payable on the
Principal Amount of the Notes prior to the Due Date. Subject to the prior
exercise of the Conversion Rights, if the Company obtains a Qualified
Refinancing on or before the Macquarie Maturity Date, any part or all of the
Principal Amount that remains unpaid after the Due Date (the “Unpaid Principal
Amount”) shall, beginning on the Due Date, bear interest at a rate of 18% per
annum, calculated annually. If the Company does not obtain a Qualified
Refinancing on or before the Macquarie Maturity Date, no interest shall be
payable by the Company on any Unpaid Principal Amount. The Company shall have
the right (but not the obligation) to elect to pay all interest due and payable
on the Notes by the issuance of shares of the Company’s common stock, with the
number of shares of the Company’s common stock to be issued determined by
dividing the amount of the interest payable by the Conversion Price.

Section 3. Priority. The amounts due and owing under the
Notes on account of the Principal Amount and any interest due and payable
thereon shall be paid by the Company in priority to any other amounts due and
owing by the Company to Green Shoe Investments Ltd. and Little Bay Consulting
SA. 

Section 4. Sale, Transfer or Exchange. Except as
otherwise provided for herein or in the Note Agreement, the Notes and any shares
of the Company’s common stock issued upon conversion of the Notes or as payment
of interest on the Notes (collectively, the "Note Shares”) will not be
registered under the Securities Act of 1933, as amended, (the "Act") and will be
issued to the Holder pursuant to an exemption from the registration requirements
of the Act upon representations and warranties made by the Holder in favor of
the Company. Neither the Notes nor the Note Shares may be offered, sold,
transferred, pledged or hypothecated in the absence of an effective registration
statement under the Act relating to such securities or an opinion of legal
counsel reasonably satisfactory to the Company that registration is not required
under the Act. Each certificate for the Notes and the Note Shares shall contain
a legend on the face thereof, in form and substance satisfactory to legal
counsel for the Company, setting forth the restrictions on transfer contained in
these terms and conditions. By acceptance of any certificate representing the
Notes, the Holder acknowledges and agrees that:

     (a) The Holder will only offer,
sell, transfer, pledge or hypothecate the Notes and the Note Shares in
accordance with the provisions of Regulation S promulgated under the Act,
pursuant to an effective registration under the Act, or pursuant to an available
exemption from the registration requirements of the Act;

     (b) The Company will refuse to
register any transfer of the Notes and the Note Shares not made in accordance
with the provisions of Regulation S of the Act, pursuant to an effective
registration under the Act, or pursuant to an available exemption from the
registration requirements of the Act; 

     (c) The Holder will not engage in
hedging transactions unless such transactions are made in compliance with the
Act; and

     (d) Except as set out herein, the
Holder is not entitled to any registration rights with respect to the Notes and
the Note Shares.

All certificates representing the Notes and the Note Shares
will be endorsed with an appropriate restrictive 

1

legend. In addition, the Holder will comply with all other
applicable securities legislation in addition to the Act to which the Holder is
subject in selling or transferring any Notes or Note Shares and the Company may
refuse to register any sale or transfer not in compliance with such other
securities legislation.

Any Holder of a Note, by acceptance thereof, agrees to the
representations, warranties and covenants herein.

Prior to due presentment to the Company for transfer of a Note,
the Company and any agent of the Company may treat the person in whose name the
Note is duly registered on the Company’s Note Register as the owner hereof for
the purpose of receiving payment as herein provided and for all other purposes,
whether or not the Note be overdue, and neither the Company nor any such agent
shall be affected by notice to the contrary.

Section 5. Conversion. The Holder of a Note shall have
conversion rights as follows (the "Conversion Rights"):

     (a) Right to Convert. The
Holder of a Note shall be entitled, at any time, at the office of the Company,
to convert the Note in whole, or in partial allotments of no less than 1,000
shares, into that number of fully-paid and non-assessable shares of the
Company’s common stock as shall be equal to the Principal Amount to be converted
divided by the Conversion Price.

     (b) Conversion Price.
Subject to any adjustments to the Conversion Price made in accordance with
this Section 5, the Conversion Price shall be equal to $1.00 per share. In the
case of a dispute as the calculation of the Conversion Price, the Company’s
calculation shall be deemed conclusive absent manifest error.

     (c) Mechanics of
Conversion. In order to exercise the Conversion Rights, the Holder shall
deliver a copy of the fully executed notice of conversion in the form on the
rear of the certificate evidencing the Note (a "Notice of Conversion") to the
Company at the office of the Company which notice shall specify the amount of
the Note to be converted (together with a copy of the first page of each Note to
be converted) prior to midnight, Pacific time (the "Conversion Notice Deadline")
on the date of Conversion specified on the Notice of Conversion and (ii)
surrender the original Note(s); provided, however, that the Company shall not be
obligated to issue certificates evidencing the Note Shares issuable upon such
conversion unless either the original Notes are delivered to the Company as
provided above, or the Holder notifies the Company that such Note(s) have been
lost, stolen or destroyed, together with any indemnity or security that the
Company may reasonably require in respect thereof.

     (d) Lost or Stolen Notes.
Upon receipt by the Company of evidence of the loss, theft, destruction or
mutilation of a Note, and (in the case of loss, theft or destruction) indemnity
or security reasonably satisfactory to the Company, and upon surrender and
cancellation of the Note, if mutilated, the Company shall execute and deliver
new Note(s) of like tenor and date.

     (e) Delivery of Common Stock
upon Conversion. The Company shall issue and use commercially reasonable
efforts to deliver within a reasonable time after delivery to the Company of a
Note and Notice of Conversion, or after provision for security or
indemnification required by (i) above, to such Holder of the Note at the address
of the Holder on the books of the company, a certificate for the number of Note
Shares to which the Holder shall be entitled as aforesaid.

     (f) No Fractional Shares.
No fractional shares shall be issued upon conversion of a Note. If any
conversion of the Note would create a fractional share or a right to acquire a
fractional share, a cash adjustment will be made for the fractional
interest.

     (g) Date of Conversion.
The date of which conversion occurs (the "Date of Conversion") shall be deemed
to be the date set forth in such Notice of Conversion, provided that the copy of
the Notice of Conversion is delivered or faxed to the Company before the
Conversion Notice Deadline, and (ii) that the original Notes to be converted are
surrendered, and received by the Company within five (5) business days from the
Date of Conversion. The person or persons entitled to receive the shares of
common Stock issuable upon such conversion shall be treated for all purposes as
the record holder or holders of such shares of common stock on such date. If the
original Notes to be converted are not received by the Company within five
business days after the Date of Conversion or if the facsimile of the Notice of
Conversion is not received by the 

2

Company or its designated transfer agent prior to the
Conversion Notice Deadline, the Notice of Conversion, at the Company’s option,
may be declared null and void.

     (h) Reservation of Stock
Issuable Upon Conversion. The Company shall at all times reserve and keep
available out of its authorized but unissued shares of common stock, solely for
the purpose of effecting the conversion of the Notes, such number of its shares
of common stock as shall from time to time be sufficient to effect the
conversion of all then outstanding Notes; and if at any time the number of
authorized but unissued shares of common stock shall not be sufficient to effect
the conversion of all then outstanding Notes, the Company will immediately take
such corporate action as may be necessary to increase its authorized but
unissued shares of common stock to such number of shares as shall be sufficient
for such purpose.

     (i) Adjustment to Conversion
Price.

	 	(1) 	
      Adjustment Due to Stock Split, Stock Dividend,
      Etc. If at any time when the Notes are issued and outstanding, the
      number of outstanding shares of common stock is increased by a stock
      split, stock dividend, or other similar event, the Conversion Price shall
      be proportionately reduced, or if the number of outstanding shares of
      common stock is decreased by a combination or reclassification of shares,
      or other similar event, the Conversion Price shall be proportionately
      increased.

	 	 	 
	 	(2) 	
      Adjustment Due to Merger, Consolidation, Etc. If
      at any time when the Notes are issued and outstanding, there shall be any
      merger, amalgamation, consolidation, exchange of shares, recapitalization,
      reorganization, or other similar event, as a result of which shares of
      common stock of the Company shall be changed into the same or a different
      number of shares of another class or classes of stock or securities of the
      company or another entity, then the Holders of the Notes shall thereafter
      have the right to receive upon conversion of the Notes, upon the basis and
      upon the terms and conditions specified herein and in lieu of the shares
      of common stock immediately theretofore issuable upon conversion, such
      stock and/or securities which the Holder would have been entitled to
      receive in such transaction had the Notes been converted immediately prior
      to such transaction, and in any such case appropriate provisions shall be
      made with respect to the rights and interest of the Holders of the Notes
      to the end that the provisions hereof (including, without limitation,
      provisions for adjustment of the Conversion Price and of the number of
      shares issuable upon conversion of the Notes) shall thereafter be
      applicable, as nearly as may be practicable in relation to any securities
      thereafter deliverable upon the exercise hereof.

     (j) Interest Upon
Conversion. Upon the exercise of the Conversion Rights, any accrued and
unpaid interest on the Principal Amount to be converted shall, on the Date of
Conversion immediately become due and shall be payable without further interest
thereon by the Company to the Holder within 20 business days after the Date of
Conversion.

Section 6. Modification and Waiver. Modification and
amendment of the Notes may be made by the Company with the consent of the
Holders of not less than a majority in principal amount of the outstanding
Notes, provided that no such modification or amendment may, without the consent
of the Holder of each Note affected thereby (i) change the stated maturity of
the principal of or any installment of interest on any Note, (ii) reduce the
principal of, or the rate of interest on, any Note, (iii) change the currency of
payment of principal of or interest on any Note, (iv) reduce the above-stated
percentage of Holders of Notes necessary to modify or amend the Notes or (v)
modify any of the foregoing provisions or reduce the percentage of outstanding
Notes necessary to waive any covenant or past default. Holders of not less than
a majority in principal amount of the outstanding Notes may waive any covenant
or past defaults (see "Events of Default and Notice Thereof"). An amendment to
the Notes may not adversely affect the rights under the subordination provisions
of the Holders of any issue of senior indebtedness without the consent of such
Holders.

Section 7. No Voting Rights. The Notes shall not entitle
the Holders thereof to any of the rights of a stockholder of the Company,
including without limitation, the right to vote, to receive dividends and other
distributions, or to receive any notice of, or to attend meetings of
stockholders or any other proceedings of the Company.

3

Section 8. Governing Law. The Notes shall be governed by
and construed in accordance with the laws of the State of Nevada USA without
giving effect to the principles of conflicts of laws, except for matters arising
under the Act or the Securities Exchange Act of 1934, as amended, which matters
shall be governed by and construed in accordance with such laws or matters
relating to realization on the security which shall be governed by the laws of
the jurisdiction under which such security is located.

Section 9. Business Day Definition. For purposes hereof,
the term "business day" shall mean any day on which banks are generally open for
business in the State of Nevada, USA and excluding any Saturday and Sunday.

Section 10. Notices. Any notice or other communication
required or permitted to be given hereunder shall be given as provided herein or
delivered against receipt if to (i) the Company at 415 West Wall, Suite 500,
Midland, TX 79701, Facsimile No: (888) 311-8708 and (ii) the Holder of a Note,
to such Holder at its last address as shown on the Note Register (or to such
other address as the party shall have furnished in writing as its new address to
be entered on the Note Register (which address must include a facsimile number)
in accordance with the provisions of this Section 10). Any notice or other
communication needs to be made by facsimile and delivery shall be deemed given,
except as otherwise required herein, at the time of transmission of said
facsimile. Any notice given on a day that is not a business day shall be
effective upon the next business day.

Section 11. Waiver of any Breach to be in Writing. Any
waiver by the Company or the Holder of a Note of a breach of any provision of
the Note shall not operate as, or be construed to be a waiver of any other
breach of such provision or of any breach of any other provision of the Note.
The failure of the Company or the Holder hereof to insist upon strict adherence
to any term of the Note on one or more occasions shall not be considered a
waiver or deprive that party of the right thereafter to insist upon strict
adherence to that term or any other term of the Note. Any waiver must be in
writing.

Section 12. Unenforceable Provisions. If any provision
of a Note is invalid, illegal or unenforceable, the balance of the Note shall
remain in effect, and if any provision is inapplicable to any person or
circumstance, it shall nevertheless remain applicable to all other persons and
circumstances.

Section 13. Prepayment. Subject to the provisions of the
Subscriber Subordination Agreement, or such other Subordination Agreement
executed by the Holder pursuant to the terms of the Note Agreement, the Company
shall have the right to prepay this Note at any time subject to ten (10) days
prior written notice to the Holder. In the event that the Company gives notice
of its intention to prepay the Note to the Holder, the Holder will have the
right, during the 10 day notice period, to exercise the right of Conversion set
out in Section 4 and in the event of such exercise, the Company’s right to
prepay the Note shall be extinguished.

SCHEDULE C

SUBORDINATION AGREEMENT

[FORM OF]

     This SUBORDINATION AGREEMENT (as
amended or modified, the “Subordination Agreement”) is by and
among [Insert name of subordinated creditor] [Insert organizational
information] (“Subordinated Creditor”, whether one or more), whose
address is [__________________________], DORAL ENERGY CORP., a Nevada
corporation (“Borrower”), whose address is 415 West Wall, Suite 500,
Midland, TX 79701 and MACQUARIE BANK LIMITED, a bank incorporated under the laws
of Australia (“Administrative Agent”), with offices at Level 15, 1 Martin
Place, Sydney, New South Wales, 2000 Australia.

Background

     1. Borrower, Administrative Agent
and each of the Lenders (as defined in the Credit Agreement) are parties to the
Senior First Lien Secured Credit Agreement dated as of July ___, 2008 (as
amended, supplemented or modified from time to time, the “Credit
Agreement”). Borrower’s obligations to each of the Lenders under the Credit
Agreement are secured by a senior mortgage lien and first-priority security
interest conveying all of the real and personal property of Borrower.

     2. Each of Lenders’ obligations
under the Credit Agreement is conditioned upon, among other things, the
subordination of all obligations owed by Borrower to the Subordinated Creditor
to the obligations owed by Borrower to Lenders under the Credit Agreement and
the other Loan Documents (as defined in the Credit Agreement).

     3. Capitalized terms not defined
in this Subordination Agreement shall have the meanings set forth in the Credit
Agreement.

Agreements

     To comply with the terms and
conditions of the Credit Agreement and for other good and valuable
consideration, the receipt and sufficiency of which are acknowledged by the
parties, the Subordinated Creditor, Borrower and Lenders agree as follows:

Section 1. Subordination of Obligations and
Priority.

     (a) The payment of and any liens
or security interests securing payment of any and all Subordinated Debt (defined
below) is expressly subordinated to the extent and in the manner set forth in
this Subordination Agreement to the Senior Indebtedness (defined below) and the
liens and security interests securing the Senior Indebtedness. The term
“Subordinated Debt” as used in this Subordination Agreement means
any and all indebtedness, liabilities and obligations of Borrower to the
Subordinated Creditor, absolute or contingent, direct or indirect, joint,
several or independent, now outstanding or owing or which may hereafter be
existing or incurred, arising by operation of law or otherwise, due or to become
due, or held or to be held by 

the Subordinated Creditor, whether created directly or acquired
by assignment, as a participation, conditionally, as collateral security from
another or otherwise, including indebtedness, obligations and liabilities of
Borrower to Subordinated Creditor as a member of any partnership, syndicate,
association or other group, and whether incurred by Borrower as principal,
surety, endorser, guarantor, accommodation party or otherwise, including,
without limiting the generality of the foregoing, all indebtedness, liabilities
and obligations of Borrower to the Subordinated Creditor arising out of any
operating agreement or similar agreement between Subordinated Creditor and
Borrower.

     The term “Senior
Indebtedness” as used in this Subordination Agreement means any and all
indebtedness, liabilities and other Obligations of Borrower to Senior Creditor
(as defined below) absolute or contingent, direct or indirect, joint, several or
independent, now outstanding or owing or which may hereafter be existing or
incurred, arising by operation of law or otherwise, due or to become due, or
held or to be held by Senior Creditor whether created directly or acquired by
assignment, as a participation, conditionally, as collateral security from
another or otherwise, including indebtedness, obligations and liabilities of
Borrower to Senior Creditor as a member of any partnership, syndicate,
association or other group, and whether incurred by Borrower as principal,
surety, endorser, guarantor, accommodation party or otherwise and including,
without limitation, all Obligations (as defined in the Credit Agreement) owed by
Borrower to Senior Creditor under the Credit Agreement, the Swap Agreement and
the other Loan Documents.

     (b) Priority. The agreements of
Borrower, Senior Creditor and Subordinated Creditor herein are applicable
without regard to the date a loan or extension of credit is made to Borrower.
The term “Senior Creditor” includes Administrative Agent, each of the
Lenders party to the Credit Agreement and Macquarie Bank Limited under the Swap
Agreement.

     Section 2. Restrictions on
Subordinated Creditor. During such time as any Senior Indebtedness remains
unpaid, Subordinated Creditor will not ask for, demand, sue for, take, receive
or accept from the Borrower, by set off or in any other manner, any payment or
distribution on account of the Subordinated Debt, nor present any instrument
evidencing the Subordinated Debt for payment (other than such presentment as may
be necessary to prevent discharge of other liable parties on such instrument);
[provided, however, nothing contained herein shall
prevent Subordinated Creditor from (a) receiving any scheduled payment from
Borrower pursuant to the instruments set forth on Exhibit A (the
“Subordinated Debt Instruments”) and (b) receiving payment from
Borrower for goods and services provided to Borrower by Subordinated Creditor in
the ordinary course of business within thirty (30) days of the date hereof or
after the date hereof.]

Section 3. Prohibition of All Payments Following Default and
Notice.

     (a) If there shall occur and be
continuing any Event of Default, then, unless and until such Event of Default
shall have been cured, or unless and until the Senior Indebtedness shall be paid
in full, the Subordinated Creditor will not ask for, sue for, take, demand,
receive or accept from Borrower, by set off or in any other manner, any payment
or distribution on account of the Subordinated Debt nor present any Subordinated
Debt Instrument 

6

or any instrument evidencing the Subordinated Debt for payment
(other than such presentment as may be necessary to prevent discharge of other
liable parties on such instrument).

     (b) In the event that Borrower
defaults under the Subordinated Debt prior to the full and final payment of the
Senior Indebtedness, Borrower shall provide Lender with notice of such
default.

     Section 4. Payments Cannot
Create a Default. The Subordinated Creditor will not ask for, demand, sue
for, take, receive or accept from Borrower, by set off or in any other manner,
any payment or distribution on account of the Subordinated Debt, if the making
of such payment would constitute, or would result in the occurrence of, a
violation of the provisions of any instrument or agreement evidencing, in
connection with, as security for or providing for the issuance of any Senior
Indebtedness or would result in the occurrence of any event which with the
giving of notice or lapse of time or both would constitute a default or an event
of default under the Credit Agreement or any other Loan Document.

     Section 5. Unauthorized
Receipt of Payment by Subordinated Creditor. In the event the Subordinated
Creditor shall receive any payment or distribution on account of the
Subordinated Debt which Subordinated Creditor is not entitled to receive under
this Subordination Agreement, Subordinated Creditor will hold any amount so
received in trust for Senior Creditor and will promptly turn over such payment
to Senior Creditor in the form received by Subordinated Creditor (together with
any necessary endorsement) to be applied against the Senior Indebtedness.

     Section 6. Restrictions on
Actions to Recover Subordinated Debt. The Subordinated Creditor will not
commence any action or proceeding against Borrower to recover all or any part of
the Subordinated Debt or join with any other creditor, unless Senior Creditor
shall also join, in bringing any proceedings against Borrower under any
bankruptcy, reorganization, readjustment of debt, arrangement of debt,
receivership, liquidation or insolvency law or statute of the Federal or any
state government unless and until all Senior Indebtedness shall have been paid
in full.

     Section 7. Insolvency or
Bankruptcy by Borrower. In the event of any receivership, insolvency,
bankruptcy, assignment for the benefit of creditors, reorganization or
arrangement with creditors, adjustment of debt, whether or not pursuant to
bankruptcy laws, the sale of all or substantially all of the assets,
dissolution, liquidation, or any other marshaling of the assets and liabilities
of Borrower, the Subordinated Creditor will at Senior Creditor’s request file
any claim, proof of claim, proof of interest or other instrument of similar
character necessary to enforce the obligations of Borrower in respect of the
Subordinated Debt and will hold in trust for Senior Creditor and pay over to
Senior Creditor, in the form received (together with any necessary endorsement),
to be applied on the Senior Indebtedness, any and all monies, dividends or other
assets received in any such proceedings on account of the Subordinated Debt
unless and until the Senior Indebtedness shall be paid in full. In the event
that the Subordinated Creditor shall fail to take any such action requested by
Senior Creditor, Senior Creditor, may, as attorney in fact for the Subordinated
Creditor take such action on behalf of the Subordinated Creditor, and the
Subordinated Creditor hereby appoints Senior Creditor as attorney in fact for
the Subordinated Creditor to demand, sue for, collect and receive any and all
such monies, dividends or other assets and give acquittance therefor and to file
any claim, proof of claim, proof of interest or 

7

other instrument of similar character and to take such other
proceedings in Senior Creditor’s own name or in the name of the Subordinated
Creditor as Senior Creditor may deem necessary or advisable for the enforcement
of this Subordination Agreement, and the Subordinated Creditor will execute and
deliver to Senior Creditor such other and further powers of attorney or other
instruments as Senior Creditor may request in order to accomplish the
foregoing.

     Section 8. Senior Creditor’s
Rights. Senior Creditor may, at any time, and from time to time, without the
consent of or notice to the Subordinated Creditor, without incurring
responsibility to the Subordinated Creditor and without impairing or releasing
any of Senior Creditor’s rights or any of the obligations of the Subordinated
Creditor under this Subordination Agreement:

     (a) change the amount of the
Senior Indebtedness, manner, place or terms of payment, or change or extend for
any period the time of payment of, or renew, rearrange or otherwise modify or
alter, the Senior Indebtedness or any instrument or agreement now or hereafter
executed evidencing, in connection with, as security for or providing for the
issuance of any of the Senior Indebtedness in any manner, or enter into or amend
in any manner any other agreement relating to the Senior Indebtedness (including
provisions restricting or further restricting payments of the Subordinated
Debt);

     (b) sell, exchange, release or
otherwise deal with all or any part of any property by whomsoever at any time
pledged or mortgaged to secure, howsoever securing, the Senior Indebtedness in
accordance with the applicable Loan Documents;

     (c) release anyone liable in any
manner for payment or collection of the Senior Indebtedness;

     (d) exercise or refrain from
exercising any rights against Borrower or others (including the Subordinated
Creditor); and

     (e) apply any sums received by
Senior Creditor, by whomsoever paid and however realized, to payment of the
Senior Indebtedness in such a manner as Senior Creditor, in its sole discretion,
may deem appropriate.

Section 9. Documentation of Subordinated Debt. The
Subordinated Creditor will:

     (a) cause all Subordinated Debt
to be evidenced by a note, debenture or other instrument evidencing the
Subordinated Debt;

     (b) at Senior Creditor’s request,
promptly surrender or cause to be surrendered any such note, debenture, or
instrument evidencing the Subordinated Debt so that a statement or legend may be
entered thereon to the effect that such note, debenture, or other instrument is
subordinated to the Senior Indebtedness in favor of Senior Creditor in the
manner and to the extent set forth in this Subordination Agreement;

     (c) mark the books of
Subordinated Creditor to show that the Subordinated Debt is subordinated to the
Senior Indebtedness in the manner and to the extent set forth in this
Subordination Agreement; and

8

     (d) cause all financial
statements of the Subordinated Creditor hereafter prepared for delivery to any
person to make specific reference to the provisions of this Subordination
Agreement.

     Section 10. Notices. All
notices and other communications provided for hereunder shall be in writing
(including by facsimile transmission). All such written notices shall be mailed,
faxed or delivered, to the applicable address, or facsimile number set out below
or to such other address, or facsimile number, as shall be designated by such
party in a notice to the other parties. All such notices and other
communications shall be deemed to be given or made upon the earlier to occur of
(a) actual receipt by the relevant party hereto and (b) (i) if delivered
by hand or by courier, upon delivery; (ii) if delivered by mail, four
Business Days after deposit in the mails, postage prepaid; and (iii) if
delivered by facsimile, when sent and the sender has received electronic
confirmation of error free receipt. In no event shall a voicemail message be
effective as a notice, communication or confirmation hereunder.

	If to Administrative Agent: 	Macquarie Bank Limited 
	  	Houston Representative Office 
		
      One Allen Center 

	  	500 Dallas Street, Suite 3100 
	  	Houston, Texas 77002 
	  	Attention: 	Michael Sextro 
	  	Telephone: 	713-275-6207 
	  	Facsimile: 	713-275-6222 
	  	E-Mail: 	michael.sextro@macquarie.com 
	  	  	  
	With a copy to: 	Greenberg Traurig, LLP 
	  	1000 Louisiana, Suite 1700 
	  	Houston, Texas 77002 
	  	Attention: 	Douglas C. Atnipp 
	  	Telephone: 	713-374-3500 
	  	Facsimile: 	713-374-3505 
	  	E-Mail: 	atnippd@gtlaw.com 
	  	  	  
	[If to Subordinated Creditor: 	 
    	 
    
	  	  	  
	  	  	  
	  	Attention: 	 
    
	  	Telephone: 	 
    
	  	Facsimile: 	 
    
	  	E-Mail: 	] 
	  	  	  
	[With a copy to: 	 
    	 
    
	  	  	  
	  	  	  
	  	Attention: 	 
    
	  	Telephone: 	 
    

9

	  	Facsimile: 	 
    
	  	E-Mail: 	] 
	  	  	  
	If to Borrower: 	Doral Energy Corp 
		
      415 West Wall  

	  	Suite 500 
	  	Midland, TX 79701 
	  	Attention: 	 
    
	  	Telephone: 	 
    
	  	Facsimile: 	 
    
	  	E-Mail: 	 
    

     Section 11. Execution of
Instruments. The Subordinated Creditor agrees to execute any and all other
instruments necessary as required by the Lender to subordinate the Subordinated
Debt to the Senior Indebtedness as herein provided.

     Section 12. Assignment by
Subordinated Creditor. Subordinated Creditor will not assign or transfer to
others any claim the Subordinated Creditor has or may have against Borrower as
long as any of the Senior Indebtedness remains outstanding, unless such
assignment or transfer is expressly made subject to this Subordination
Agreement.

     Section 13. Warranties and
Representations. The Subordinated Creditor represents and warrants that (a)
neither the execution nor delivery of this Subordination Agreement nor
fulfillment of or compliance with the terms and provisions hereof will conflict
with, or result in a breach of the terms, conditions or provisions of, or
constitute a default under, any agreement or instrument (including, without
limitation, any formation documents) to which Subordinated Creditor is now
subject, (b) none of the Subordinated Debt is or will be subordinated to any
other indebtedness of Borrower other than the Senior Indebtedness unless
otherwise agreed by Lender, (c) except for the Subordinated Debt evidenced by
the Subordinated Debt Instruments, as of the date of this Agreement, Borrower
has no additional debt due and owing to Subordinated Creditors and (d) Exhibit B
contains a listing of all liens filed by Subordinated Creditor relating to the
Subordinated Debt.

     Section 14. Waiver of Notice
of Acceptance. Notice of acceptance of this Subordination Agreement is
waived, acceptance on the part of Lender being conclusively presumed by its
request for this Subordination Agreement and delivery of the same to it.

     Section 15. Assignment by
Lender. This Subordination Agreement may be assigned by Lender in connection
with any assignment or transfer of the Senior Indebtedness.

     Section 16. GOVERNING LAW.
THIS SUBORDINATION AGREEMENT SHALL BE CONSTRUED UNDER AND GOVERNED BY THE LAWS
OF THE STATE OF TEXAS AND APPLICABLE FEDERAL LAW.

     Section 17. Severability.
If any provision (or portion of any provision) of this Subordination Agreement
is rendered or declared invalid, illegal or unenforceable by reason of any
existing or subsequently enacted legislation or by a final decision of any court
of competent jurisdiction, the parties shall promptly meet and negotiate
substitute provisions for those 

10

rendered invalid, illegal or unenforceable, but all of the
remaining provisions will remain in full force and effect.

     Section 18. Counterparts.
This Subordination Agreement may be executed in two or more counterparts, and it
shall not be necessary that the signatures of all parties be contained together
on any one counterpart of this Subordination Agreement. Each counterpart will be
deemed an original, but all counterparts taken together will constitute one and
the same agreement.

     Section 19. ENTIRE AGREEMENT;
AMENDMENT. THIS SUBORDINATION AGREEMENT REFLECTS THE ENTIRE AGREEMENT OF THE
PARTIES WITH RESPECT TO THE MATTERS COVERED BY THIS SUBORDINATION AGREEMENT AND
CANNOT BE CONTRADICTED BY EVIDENCE OF PRIOR, CONTEMPORANEOUS OR SUBSEQUENT ORAL
AGREEMENTS AMONG ANY OF THE PARTIES. THERE ARE NO UNWRITTEN ORAL AGREEMENTS
AMONG THE PARTIES. This Subordination Agreement may be amended and the rights of
any party under this Subordination Agreement may be waived only pursuant to a
written agreement signed by each of the parties to this Subordination
Agreement.

[SIGNATURES BEGIN ON THE FOLLOWING PAGE]

11

     IN WITNESS WHEREOF, the
undersigned has executed this instrument effective as of July ___, 2008.

	 	SUBORDINATED CREDITOR: 
	 	 
	 	[____________________________], 
	 	a ___________________corporation
  
	 	  	  
	 	  	  
	 	By: 	 
    
	 	Name: 	 
    
	 	Title: 	 
    

[SIGNATURE PAGE TO SUBORDINATION AGREEMENT]

     IN WITNESS WHEREOF, the
undersigned has caused this instrument to be executed by its duly authorized
undersigned officer effective as of July ___, 2008.

	 	BORROWER: 
	 	 
	 	DORAL ENERGY CORP., 
	 	a Nevada corporation 
	 	 	  
	 	 	  
	 	By: 	
	 	Name: 	
	 	Title: 	

[SIGNATURE PAGE TO SUBORDINATION AGREEMENT]

     IN WITNESS WHEREOF, the
undersigned has caused this instrument to be executed by its duly authorized
undersigned officers effective as of July ___, 2008.

	 	LENDER: 
	 	 
	 	MACQUARIE BANK LIMITED, 
	 	a bank incorporated under the laws of
      Australia 
	 	  	 
	 	  	 
	 	By: 	 
	 	Name: 	 
	 	Title: 	 
	 	  	 
	 	  	 
	 	By: 	 
	 	Name: 	 
	 	Title: 	 

[SIGNATURE PAGE TO SUBORDINATION AGREEMENT]

EXHIBIT A

Subordinated Debt Instruments

EXHIBIT B

LiensFiled by sedaredgar.com - Yellowcake Mining, Inc. - Exhibit 10.17

RELINQUISHMENT and SURRENDER of LEASE and OPTION 

Yellowcake Mining, Inc. (the “Lessee”), pursuant to a
certain lease and option agreement made between the Lessee and Beckworth
Corporation (the “Lessor”) dated December 28, 2007 (the “Lease and Option”),
hereby terminates and cancels said Lease and Option effective immediately and
all rights and obligations under said Lease and Option are hereby cancelled.

All the interests of Lessee in the property
under or by virtue of the Lease and Option are hereby absolutely extinguished
effective immediately. 

The Lessee hereby quits claims to the real property more
particularly described in Schedule “A” attached hereto, together with all
appurtenances and water rights incident thereto.

This agreement shall be binding upon the parties, their
successors, assigns and personal representatives. 

In witness whereof, the Lessee has signed this 15th day of May,
2009. 

YELLOWCAKE MINING INC. 

	By: 	/s/ William Tafuri 
	Name: 	William Tafuri 
	Title: 	President, CFO, Secretary and
      Treasurer 

	PROVINCE OF BRITISH COLUMBIA 	) 
	  	)SS 
	COUNTY OF ____________________	) 

On this 15th day of May, 2009, there personally came before me
William Tafuri, as President and CEO of Yellowcake Mining, Inc., a Nevada
corporation and acknowledged the foregoing to be his free act and deed in his
said capacity and the free act and deed of said a Nevada corporation. 

/s/ Karen Richardson 

NOTARY PUBLIC 

	 	Residing at: 	KAREN F. RICHARDSON 
	 	  	Barrister & Solicitor 
	 	  	800-885 West Georgia Street 
	 	  	Vancouver, BC V6C 3H1 
	 	  	Telephone: (604) 687-5700 

My Commission Expires: 

My commission never expires 

- 2 - 

Schedule “A”

Mining Properties and Disclosure of Matters Relating to
Mining Properties 

The Titan Claims 

Legal Description: 

	
CLAIM GROUPS AND 
CLAIM NAMES 	
LOCATION 
DATE 	

CMC NO. 	DATE 
FILED 
WITH
      BLM 	
CO. DOC. 
NO. 	

DATE REC. 	

LOCATOR 
	 	  	  	  	  	  	  
	Titan #1
      Group 	 
    	 
    	 
    	 
    	 
    	 
    
	 	  	  	  	  	  	  
	
Titan #1 	
5-8-2007 	
268790 	
6-22-2007 	
775159 	
6-6-2007 	Beckworth 
Corp. 
	Titan #2 	"
	268791 	"
	775160 	"
	"
  
	Titan #3 	"
	268792 	"
	775161 	"
	"
  
	Titan #4 	"
	268793 	"
	775163 	"
	"
  
	Titan #5 	"
	268794 	"
	775164 	"
	"
  
	Titan #6 	"
	268795 	"
	775162 	"
	"
  
	Titan #7 	"
	268796 	"
	775165 	"
	"
  
	Titan #8 	"
	268797 	"
	775166 	"
	"
  
	Titan #9 	"
	268798 	"
	775167 	"
	"
  
	Titan #10 	"
	268799 	"
	775168 	"
	"
  
	Titan #11 	"
	268800 	"
	775169 	"
	"
  
	Titan #12 	"
	268801 	"
	775170 	"
	"
  
	Titan #13 	"
	268802 	"
	775171 	"
	"
  
	Titan #14 	"
	268803 	"
	775172 	"
	"
  

Disclosure of Matters Relating to Mining
Properties 

Lessor’s title to the Mining Properties is expressly subject to
the following defects, encroachments, impairments or overlaps of the Mining
Properties, upon rights of others. 

	 	1. 	
      Overlaps of any portion of any Mining Properties upon
      State Lands where the State of Colorado has the mineral interest, or upon
      federal lands withdrawn from mineral entry.

	 	2. 	
      Surface rights grantees, licensees and permittees of the
      United States and State of Colorado, including, but not limited to grazing
      rights (permits or leases), rights of ways, roads, utility corridors, and
      water rights recognized by the Colorado State Engineer or reserved to the
      Federal Government

	 	3. 	
      Rights of parties to non-locatable minerals, including
      but not limited to oil, gas, coal, hydrocarbons, leaseable minerals,
      leaseable resources, and common minerals

	 	4. 	
      Overlaps of any claims constituting the Mining
      Properties, where the claim is in itself otherwise valid except to the
      extent of its overlaps upon (1) other mining claims having a valid
      priority of the area of the overlap, (2) patented mineral estates, (3)
      State Lands or (4) federal lands not open to mineral entry such as the
      lands in Atomic Energy Withdrawal areas.

	 	5. 	
      Defects resulting from the location of claims within
      Power Site Classifications where such claims have been relocated and have
      been or will be timely filed with the Bureau of Land
  Management.

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