Document:

LIMITED LIABILITY COMPANY AGREEMENT
                                       OF
                             NEW ALBANY-INDIANA, LLC

            THIS LIMITED LIABILITY COMPANY AGREEMENT (this "Agreement") is
entered into effective as of the 25th day of November, 2005, by and among those
Persons who have executed this Agreement, and whose names and addresses are set
forth in Schedule A annexed hereto, as Members.

            WHEREAS, New Albany-Indiana, LLC (the "Company") was organized in
accordance with the Delaware Limited Liability Company Law (the "Law"), by the
filing with the office of the Secretary of State of the State of Delaware on
November 9, 2005 of a Certificate of Formation; and

            WHEREAS, the Members (as hereinafter defined) desire to establish
their respective rights and obligations in connection with the ownership and
operation of the Company.

            NOW, THEREFORE, to reflect the foregoing, the parties hereto agree
as follows:

                                    ARTICLE 1
                                   THE COMPANY

            1.1 Formation. A Certificate of Formation under the Law (the
"Certificate") was filed in the office of the Delaware Secretary of State on
November 9, 2005. The Company shall execute such further documents (including
amendments to the Certificate) and take such further action as shall be
appropriate to comply with all requirements of law for the formation and
operation of a limited liability company in the State of Delaware and all other
counties and states where the Company may elect to do business.

            1.2 Name. The name of the Company shall be New Albany-Indiana, LLC,
provided, however, that the business of the Company may be conducted under any
other name designated by the Managing Member and, in such event, the Managing
Member shall thereafter notify the Members of such name change.

            1.3 Purpose. The Company is formed for the object and purpose to
acquire, own, operate, manage, lease, develop, and sell or otherwise dispose of,
directly or indirectly, interests in oil and gas properties and wells (and
property related to or used in connection with the foregoing), including,
without limitation, the Properties (as hereinafter defined), and to engage in
any other kind of lawful activity for profit related to the foregoing. This
Section 1.3 may not be amended without the written consent or approval of all of
the Members.

            1.4 Place of Business; Registered Office. The principal place of
business of the Company and the office of the Managing Member shall be
established at Highway 250, Box 318, Bridgeport, Illinois, 62417 or at such
other location as may be selected from time to time by the Managing Member. The
Company may maintain such other offices or agents as the Managing Member deems
advisable. The registered office of the Company in the State of Delaware shall
be c/o The Corporation Trust Company, 1209 Orange Street, Wilmington, Delaware
19801.

<PAGE>

            1.5 Fiscal Year. The fiscal year of the Company shall be the
calendar year.

            1.6 Agent for Process. The Corporation Trust company, having an
address at 1209 Orange Street, Wilmington, Delaware 19801, is hereby designated
as the agent of the Company upon whom process in any action or proceeding
against it may be served, and the address to which such agent shall mail a copy
of any process served on it against the Company shall be Highway 250, Box 318,
Bridgeport, Illinois, 62417, Attn: Benjamin W. Hulburt. CT Corporation Systems,
having an address at 251 East Ohio Street Suite 1100 Indianapolis, IN 46204, is
hereby designated as the agent of the Company upon whom process in any action or
proceeding against it may be served in Indiana, and the address to which such
agent shall mail a copy of any process served on it against the Company shall be
Highway 250, Box 318, Bridgeport, Illinois, 62417, Attn: Benjamin W. Hulburt.

            1.7 Foreign Qualification. Prior to the Company's conducting
business in any jurisdiction other than Delaware, the Company shall comply, to
the extent procedures are available and those matters are reasonably within the
control of the Company, with all requirements necessary to qualify the Company
as a foreign limited liability company in that jurisdiction. The officers of the
Company shall execute, acknowledge, swear to, and deliver all certificates and
other instruments conforming with this Agreement that are necessary or
appropriate to qualify, continue, or terminate the Company as a foreign limited
liability company in all such jurisdictions in which the Company may conduct
business.

            1.8 No State Law Partnership. The Members intend that the Company
not be a partnership (including, without limitation, a limited partnership) or
joint venture, and that no Member be a partner or joint venturer of any other
Member, for any purposes other than federal and state tax purposes, and this
Agreement may not be construed to suggest otherwise.

            1.9 Certificates. The Company shall have the authority, but no
obligation, to issue certificates, in form and substance satisfactory to the
Managing Member and in compliance with the Law, evidencing each Member's
Membership Interest in the Company. Any such certificate shall bear such legends
as the Managing Member may reasonably determine to be appropriate or as
otherwise may be required by the Law.

                                    ARTICLE 2
                                   DEFINITIONS

            The following defined terms used in this Agreement shall have the
respective meanings specified below.

            2.1 Affiliate. "Affiliate" shall mean (i) any person or entity
directly or indirectly controlling, controlled by, or under common control with,
another person or entity, (ii) a person or entity owning or controlling fifty
percent (50%) or more of the outstanding voting securities of another entity,
(iii) any officer, director, partner, member or employee of any person or
entity, and (iv) with respect to any officer, director, partner, member or
employee of a person or entity, any other person or entity for which such person
acts in any such capacity.

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            2.2 Aurora. "Aurora" shall mean Aurora Energy, Ltd., a Nevada
corporation.

            2.3 Bankruptcy. The "Bankruptcy" of a Member shall mean (i) the
filing by a Member of a voluntary petition seeking liquidation, reorganization,
arrangement or readjustment, in any form, of its debts under Title 11 of the
United States Code or any other federal or state insolvency law, (ii) the making
by a Member of any assignment for the benefit of its creditors, or (iii) the
expiration of sixty days after the filing of an involuntary petition under Title
11 of the United States Code, an application for the appointment of a receiver
for the assets of a Member, or an involuntary petition seeking liquidation,
reorganization, arrangement or readjustment of its debts under any other federal
or state insolvency law, provided that the same shall not have been vacated, set
aside or stayed within such sixty-day period or immediately upon a Member's
filing an answer consenting to or acquiescing in any such petition.

            2.4 Capital Account. "Capital Account" shall mean the account to be
maintained by the Company for each Member in accordance with the following
provisions:

            (a) a Member's Capital Account shall be increased by the Member's
Capital Contributions, the amount of any Company liabilities assumed by the
Member (or which are secured by Company property distributed to the Member), the
Member's share of Profit and any item in the nature of income or gain specially
allocated to the Member pursuant to the provisions of Article 5; and

            (b) a Member's Capital Account shall be decreased by the amount of
money and the fair market value of any Company property distributed to the
Member, the amount of any liabilities of the Member assumed by the Company (or
which are secured by property contributed by the Member to the Company), the
Member's share of Loss and any item in the nature of expenses or losses
specially allocated to the Member pursuant to the provisions of Article 5.

            If the book value of Company property is adjusted pursuant to
Section 5.1(b)(i), the Capital Account of each Member shall be adjusted to
reflect the aggregate adjustment in the same manner as if the Company had
recognized gain or loss equal to the amount of such aggregate adjustment.

            2.5 Capital Contribution. "Capital Contribution" shall mean the fair
market value of any contribution by a Member to the capital of the Company in
cash or property. Such property shall not include the value of any promissory
note for which the contributing Member is also the maker. In the event such
promissory note is contributed, such Member's capital account shall be increased
in accordance with Treasury Regulation Section 1.704-1(b)(2)(iv)(d)(2).

            2.6 Certificate. "Certificate" shall have the meaning given to such
term in Section 1.1.

            2.7 Code. "Code" shall mean the Internal Revenue Code of 1986, as
amended, or the corresponding provisions of any successor statute.

            2.8 Company. "Company" shall mean New Albany-Indiana, LLC.

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            2.9 Economic Interest. "Economic Interest" shall mean a Person's
right to share in the Profits and Losses of, and the right to receive
distributions and allocations from, the Company.

            2.10 Economic Interest Percentage. "Economic Interest Percentage"
shall mean, as to a Member, the percentage interest of such Member in residual
Profits and Losses set forth after the Member's name on Schedule A, as amended
from time to time, including, without limitation, to reflect changes in Economic
Interest Percentage upon additional Capital Contributions in accordance with the
provisions of Section 3.2 and, as to an assignee who is not a Member, the
Economic Interest Percentage of the Member whose Economic Interest has been
acquired by such assignee, to the extent the assignee has succeeded to that
Member's Economic Interest.

            2.11 Fiscal Year. "Fiscal Year" shall mean the calendar year.

            2.12 Majority-In-Interest. "Majority-In-Interest" shall mean one or
more Members having among them more than 50% of the Voting Interest of the
Company.

            2.13 Managing Member. "Managing Member" shall mean Rex Energy
Wabash, LLC.

            2.14 Members. "Member" shall mean each Person who or which executes
a counterpart of this Agreement as a Member (including the Managing Member) and
each person who or which may hereinafter become a Member or Managing Member of
the Company.

            2.15 Membership Interest. "Membership Interest" shall mean a
Member's aggregate rights in the Company, including, without limitation, the
Company's (i) Economic Interest and (ii) Voting Interest.

            2.16 Net Cash Flow. "Net Cash Flow" shall have the meaning given to
such term in Section 5.2.

            2.17 Person. "Person" shall mean any person, corporation,
governmental authority, limited liability company, partnership, trust,
unincorporated association or other entity.

            2.18 Pilot Program. "Pilot Program" shall have the meaning given to
such term in Section 3.2(b).

            2.19 Profits and Losses. "Profits" and "Losses" shall mean, for any
fiscal period, an amount equal to the Company's taxable income or loss for such
year or period, determined in accordance with Code Section 703(a) (for this
purpose, all items of income, gain, loss, or deduction required to be stated
separately pursuant to Code Section 703(a)(1) shall be included in taxable
income or loss), with the following adjustments:

                  (i) Any income of the Company that is exempt from federal
income tax and not otherwise taken into account in computing Profits and Losses
will be added to taxable income or loss; and

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                  (ii) Any expenditures of the Company described in Code Section
705(a)(2)(B) or treated as Code Section 705(a)(2)(B) expenditures pursuant to
Treasury Regulation Section 1.704-1(b)(2)(iv)(i), and not otherwise taken into
account in computing Profits and Losses will be subtracted from taxable income
or loss.

            2.20 Properties. "Properties" shall mean any and all oil, gas and
other mineral interests (and any tangible personal property, equipment or other
property associated therewith) purchased by the Company pursuant to the Purchase
Agreement.

            2.21 Purchase Agreement. "Purchase Agreement" shall mean the
Purchase and Sale Agreement dated as of November 15, 2005 by and between the
Company and Aurora Energy, Ltd.

            2.22 Transfer. "Transfer" shall mean when used as a noun, any gift,
sale, hypothecation, mortgage, pledge, assignment, attachment, or other
transfer, and, when used as a verb, means to gift, sell, hypothecate, pledge,
assign, or otherwise transfer.

            2.23 Transferee. "Transferee" shall mean any Person to whom is
Transferred a Membership Interest.

            2.24 Transferor. "Transferor" shall mean a Member who Transfers a
Membership Interest.

            2.25 Treasury Regulations. "Treasury Regulations" shall mean all
proposed, temporary and final regulations promulgated under the Code as from
time to time in effect.

            2.26 Voting Interest. "Voting Interest" shall mean a Person's right
to vote in matters coming before the Company and participate in the management
of the Company.

            2.27 Voting Interest Percentage. "Voting Interest Percentage" shall
mean, with respect to a particular Member, such Member's percentage of the
aggregate Voting Interests, as set forth after the Member's name on Schedule A,
as amended from time to time.

                                    ARTICLE 3
                              CAPITAL CONTRIBUTIONS

            3.1 The Members. The Members have contributed the amounts identified
on Schedule A as Capital Contributions to the Company, and such contributions
are reflected in such Members' Capital Accounts.

            3.2 Additional Contributions. The Members acknowledge and agree that
the Managing Member, may, upon execution of this Agreement, issue demands for
additional Capital Contributions to the Company for the purposes of:

            (a) The costs and expenses of the Company relating to the
acquisition of the Properties by the Company pursuant to the terms and
conditions of the Purchase Agreement, provided, however, that the aggregate
amount of the Capital Contributions demanded for this purpose, together with the
Capital Contributions contributed by the Members as shown on Exhibit A, shall
not exceed $11,000,000.00, and;

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<PAGE>

            (b) The costs and expenses of the Company relating to the drilling
of a ten well (10) pilot program on the Properties, not to exceed $4,500,000 in
the aggregate (the "Pilot Program"), and;

            (c) Such other subsequent capital requests as provided for in
paragraph 3.4 of this Agreement.

            If the Managing Member determines that a Capital Call is required,
the Managing Member shall notify each Member of (i) the aggregate amount of
additional Capital Contributions requested by the Managing Member (the "Capital
Call Amount") and the reason(s) for which the capital is being called, (ii) the
amount of such Member is required to contribute pursuant to the Capital Call
(the "Capital Call Obligation") and (iii) the date (which date may be no earlier
than the thirtieth (30th) day following the date of such notice) (the "Call
Obligation Deadline") before which the Capital Call Obligation must be
contributed to the Company. Each Member shall contribute to the Company, on or
before the Call Obligation Deadline, his, her or its Capital Call Obligation.
Immediately following the Call Obligation Deadline, the Economic Percentage
Interests of each of the Members shall be adjusted so that each Member receives
a Economic Percentage Interest determined by multiplying the total Economic
Percentage Interest of all Members by a fraction, the numerator of which is each
Member's aggregate Capital Contributions and the denominator of which is the sum
of all Members' aggregate Capital Contributions.

            3.3 Default. If a Member does not contribute, on or before the Call
Obligation Deadline, his, her or its Capital Call Obligation required to made
pursuant to Section 3.2(a) or 3.2(b), the Managing Member may exercise, on
notice to that Member (the "Delinquent Member"), one or more of the following
remedies:

            (a) permit the other Members, in proportion to their Economic
Percentage Interests or in such other percentages as they may agree (the
"Contributing Partner(s)"), to advance the portion of the Delinquent Member's
Capital Call Obligation that is in default with the following results:

                  (i) The sum so advanced shall constitute a Capital
Contribution from the Contributing Member(s) to the Company.

                  (ii) The Economic Percentage Interests of all Members shall be
adjusted effective as of the date such Capital Call Obligation was due to be
made by the Delinquent Member with each Member's Economic Percentage Interest
being determined by multiplying the total Economic Percentage Interest of all
Members by a fraction, the numerator of which is each Member's aggregate Capital
Contributions and the denominator of which is the sum of all Members' aggregate
Capital Contributions; or

            (b) involuntarily withdraw the Delinquent Member from the Company (a
"Delinquent Member Withdrawal") within thirty (30) days of notice to the
Delinquent Member. The Delinquent Partner's Capital Contributions shall be
thereafter be forfeited to the Company and shall constitute liquidated damages.
Such liquidated damages shall be in lieu of any other remedies the Company may

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<PAGE>

have at law, in equity or otherwise. Upon the occurrence of a Delinquent Member
Withdraw, the Economic Percentage Interests of all Members shall be adjusted
effective as of the date the Capital Call Obligation was due to be made by the
Delinquent Member with each Member's Economic Percentage Interest being
determined by multiplying the total Economic Percentage Interest of all Members
by a fraction, the numerator of which is each Member's aggregate Capital
Contributions and the denominator of which is the sum of all Members' aggregate
Capital Contributions.

            3.4 Proposals for Subsequent Drilling Operations. During the term of
this Agreement, but after completion of the Pilot Program, any Member of the
Company shall have the right to propose exploration or development of wells in
any formation within the Area of Mutual Interest of which the Properties are or
will be a part (the "AMI") to the Managing Member. In all cases, all such
proposals shall be made for the development of 640 acres around a well, plus an
additional one-half mile radius around such acreage. In the event any such
proposal is made, the following conditions shall apply:

            (a) In the event that a Member proposes an area to develop well(s)
within the AMI and the other Member(s) or the Managing Member decline to
participate, the Managing Member shall, at the request of the proposing Member,
cause the Company to sell its interest in the proposed development acreage to
the proposing Member and the other electing Member(s) for their proportionate
share at a gross cost of $80 per acre. The Managing Member shall cause the
Company to propose such proposed development or exploration wells to Aurora
Energy Ltd on behalf of the proposing and electing Members.

            (b) In the event that Aurora declines to participate in a proposed
development, the Managing Member shall, at the request of the electing Members,
cause the Company to purchase Aurora's proportionate share of the proposed
development acreage at a gross cost of $80 per acre, and (i) in the event all
Members of the Company have elected to participate in such proposed development,
to make a Capital Call from all Members in proportion to the their Economic
Percentage Interest in the Company and to cause the Company to acquire the
acreage and subsequently implement the proposed development project, or (ii) in
the event that any Member has elected not to participate, to sell such proposed
development acreage to the electing Members directly in proportion to their
Economic Percentage Interest in the Company at a gross cost of $80 per acre.

            (c) In the event Aurora proposes an area to develop within the AMI,
the Managing Member shall distribute such proposal to all Members of the Company
within five (5) days of its receipt from Aurora. Members of the Company shall
have fifteen (15) days to notify the Managing Member that they elect to
participate in the development proposal. In the event 100% of the Members of the
Company elect to participate in the proposal, the Managing Member shall issue a
Capital Call to the Members of the Company for their proportionate share of such
proposed development, and shall notify Aurora of the Company's election to
participate in the proposed development. In the event that less than 100% of the
Members of the Company elect to participate in the proposed development, the
Managing Member shall sell the proportionate share of such proposed development
to the electing Members of the Company in proportion to their Economic
Percentage Interests at a gross cost of $80 per acre.

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            3.5 Withdrawal. Except as otherwise set forth herein, no Member
shall have the right to withdraw from the Company or to demand a return of all
or any part of its Capital Contribution during the existence of the Company. No
interest shall be paid on Capital Contributions.

            3.6 Negative Capital Accounts. At no time during the existence of
the Company or upon dissolution and liquidation of the Company shall a Member
with a negative balance in his, her or its Capital Account have any obligation
to the Company or the other Members to restore such negative balance, except (i)
as may be required by law, or (ii) in respect of any negative balance resulting
from a withdrawal of capital or dissolution in contravention of this Agreement.

            3.7 Advances by Members. If the Company does not have sufficient
cash to pay its obligations, any Member that may agree to do so, with the
consent of a Majority-In- Interest of the other Members, may advance all or part
of the needed funds to or on behalf of the Company. An advance described in this
Section 3.7 constitutes a loan from the Member to the Company, shall bear
interest per annum at the prime rate as stated in the Wall Street Journal from
the date of the advance until the date of payment, and is not a Capital
Contribution.

                                    ARTICLE 4
                               COSTS AND EXPENSES

            4.1 Operating Costs. The Company shall pay or cause to be paid all
costs and expenses of the Company incurred by the Company in pursuing and
conducting, or otherwise related to, the business of the Company.

            4.2 Reimbursement of Managing Member and Officers. The Company shall
reimburse the Managing Member and the officers of the Company for any
out-of-pocket costs and expenses incurred by them in pursuing and conducting, or
otherwise related to, the business of the Company.

                                    ARTICLE 5
                          ALLOCATIONS AND DISTRIBUTIONS

            5.1 Allocations.

            (a) Allocation of Profits and Losses. Except as provided in
subparagraphs (b) and (c) of this Section, all Profits and Losses for each
Fiscal Year shall be allocated to Members in accordance with their respective
Economic Interest Percentages.

            (b) Special Allocations. All capitalized terms used in this Section
not otherwise defined in this Agreement shall have the meaning set forth in the
Regulations promulgated pursuant to Section 704 of the Code. The following
special allocations shall be made in the following order:

                  (i) Property Contributions. In accordance with Code Section
704(c) and the Treasury Regulations thereunder, income, gain, loss and deduction
with respect to any property contributed to the capital of the Company or

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<PAGE>

revalued in accordance with Reg. 1.704-1(b)(2)(iv)(f) shall, solely for tax
purposes, be allocated among the Members so as to take account of any variation
between the adjusted basis of such property to the Company for federal income
tax purposes and its initial fair market value. Any elections or decisions
relating to such allocations shall be made by the Managing Member in any manner
that reasonably reflects the purpose and intention of this Agreement.

                  (ii) Minimum Gain Chargeback. Except as otherwise provided in
Section 1.704-2(f) of the Regulations, notwithstanding any other provision of
this Section 5.1, if there is a net decrease in Partnership Minimum Gain during
any Adjustment Period, each Member shall be specially allocated items of Company
income and gain for such period (and, if necessary, subsequent periods) in an
amount equal to such Member's share of the net decrease in Partnership Minimum
Gain, determined in accordance with Section 1.704-2(g) of the Regulations.
Allocations pursuant to the previous sentence shall be made in proportion to the
respective amounts required to be allocated to each Member pursuant thereto. The
items to be so allocated shall be determined in accordance with Section
1.704-2(f)(6) and 1.704-2(j)(2) of the Regulations. This Section 5.1(b)(ii) is
intended to comply with the minimum gain chargeback requirement in Section
1.704-2(f) of the Regulations and shall be interpreted consistently therewith.

                  (iii) Partner Minimum Gain Chargeback. Except as otherwise
provided in Section 1.704-2(i)(4) of the Regulations, notwithstanding any other
provision of this Section 5.1, if there is a net decrease in Partner Nonrecourse
Debt Minimum Gain attributable to a Partner Nonrecourse Debt during any period,
each Person who has a share of the Partner Nonrecourse Debt Minimum Gain
attributable to such Partner Nonrecourse Debt, determined in accordance with
Section 1.704-2(i)(5) of the Regulations, shall be specially allocated items of
Company income and gain for such Adjustment Period (and, if necessary,
subsequent Adjustment Periods) in an amount equal to such Member's share of the
net decrease in Partner Nonrecourse Debt Minimum Gain attributable to such
Partner Nonrecourse Debt, determined in accordance with Regulations Section
1.704-2(i)(4). Allocations pursuant to the previous sentence shall be made in
proportion to the respective amounts required to be allocated to each Member
pursuant thereto. The items to be so allocated shall be determined in accordance
with Sections 1.704-2(i)(4) and 1.704-2(j)(2) of the Regulations. This Section
5.1(b)(iii) is intended to comply with the minimum gain chargeback requirement
in Section 1.704-2(i)(4) of the Regulations and shall be interpreted
consistently therewith.

                  (iv) Qualified Income Offset. If any Member unexpectedly
receives any adjustments, allocations, or distributions described in Section
1.704-1(b)(2)(ii)(d)(4), Section 1.704-1(b)(2)(ii)(d)(5) or Section
1.704-1(b)(2)(ii)(d)(6) of the Regulations, items of Company income and gain
shall be specially allocated to each such Member in an amount and manner
sufficient to eliminate, to the extent required by the Regulations, the Capital
Account deficit of such Member as quickly as possible, provided that an
allocation pursuant to this Section 5.1(d)(iv) shall be made only if and to the
extent that such Member would have a Capital Account deficit after all other
allocations provided for in this Section 5.1 have been tentatively made as if
this Section 5.1(b)(iv) were not in the Agreement.

                  (v) Nonrecourse Deductions. Nonrecourse Deductions for any
period shall be specially allocated among the Members in proportion to their
Economic Interests.

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                  (vi) Partner Nonrecourse Deductions. Any Partner Nonrecourse
Deductions for any period shall be specially allocated to the Member who bears
the economic risk of loss with respect to the Partner Nonrecourse Debt to which
such Partner Nonrecourse Deductions are attributable in accordance with
Regulations Section 1.704-2(i)(1).

                  (vii) Section 754 Adjustments. To the extent an adjustment to
the adjusted tax basis of any Company asset pursuant to Code Section 734(b) or
Code Section 743(b) is required, pursuant to Regulations Section
1.704-1(b)(2)(iv)(m)(2) or Regulations Section 1.704-1(b)(2)(iv)(m)(4), to be
taken into account in determining Capital Accounts as the result of a
distribution to a Member in complete liquidation of his or her interests, the
amount of such adjustment to Capital Accounts shall be treated as an item of
gain (if the adjustment increases the basis of the asset) or loss (if the
adjustment decreases such basis) and such gain or loss shall be specially
allocated to the Members in accordance with their Economic Interests in the
event that Regulations Section 1.704-1(b)(2)(iv)(m)(2) applies, or to the Member
to whom such distribution was made in the event that Regulations Section
1.704-1(b)(2)(iv)(m)(4) applies.

                  (viii) Extraordinary Transactions. Gain or loss arising from
any disposition of the assets of the Company outside the ordinary course of the
Company's business shall be allocated to as to reduce as much as possible the
difference between the Members' respective percentages of the Company's total
Capital Accounts and the Economic Interest Percentages of such Members. Such
gain or loss shall be allocated to each Member to which this subparagraph (viii)
applies in the same proportion as the difference with respect to such Members
bears to the total differences with respect to all such Members. (ix)
Compensation Income. If any Member is determined to recognize compensation
income upon receipt of an Economic Interest, that Member will be allocated all
corresponding items of Company deduction.

            (c) Compliance with Treasury Regulations. The provisions of this
Agreement, as amended, relating to the maintenance of Capital Accounts are
intended to comply with Treasury Regulation Section 1.704-1(b), and must be
interpreted and applied in a manner consistent with such regulations. In the
event the Managing Member shall determine that it is prudent to modify the
manner in which the Capital Accounts, or any debits or credits thereto, are
computed in order to comply with such regulations, the Managing Member may make
such modification, provided that it is not likely to have a material effect on
the amounts distributable to any Member upon the dissolution of the Company.

            (d) Allocation to Transferred Interests. Items of Profit, Loss, and
credits allocated to an Economic Interest assigned during a Fiscal Year of the
Company and distributions with respect thereto shall be allocated or
distributed, as the case may be, to the person who was the holder of such
Economic Interest during such fiscal year on the basis of an interim closing or
closings of the Company's books or in any other proportion determined by the
Managing Member to be required by the Code or advisable in light of positions
(published or unpublished) taken or likely to be taken by the Internal Revenue
Service.

            (e) No Section 754 Election. Notwithstanding any other provision of
this Agreement, the Company shall not make an election under Section 754 of the
Code.

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            5.2 Distributions. The Managing Member shall cause the Company to
distribute its Net Cash Flows, if any, within thirty (30) days of receipt by the
Company to the Members in accordance with each Member's Economic Percentage
Interests. For purposes of this Agreement, the term "Net Cash Flow" shall mean
the excess, if any, of (a) cash received by the Company during the applicable
period from operations, plus releases from reserves over (b) the sum of (i) all
cash expenditures by the Company with respect to the Company's assets or
business, and (ii) such reasonable additions to reserves for anticipated
expenses, contingent or otherwise, in such amounts as the Managing Member, in
its discretion, deems necessary.

            5.3 Special Distribution of the Assets In Kind. The Managing Member
shall cause the Company to distribute its assets in kind to the Members in
proportion to their Economic Percentage Interest in the Company and to wind up
the affairs of the Company upon the earlier to occur of (i) the date which is
two (2) years following the closing of the acquisition of the Properties
pursuant to the Purchase Agreement or (ii) the completion the Pilot Program;
provided, however, that the applicable of this Section 5.3 may be delayed to
such later date or time as may be agreed upon by the unanimous vote or written
consent of the Members.

            5.4 Allocation of Distributions. Distributions to Members shall be
allocated among such Members as of the date of such distribution without regard
to the length of time such Member has held such Economic Interest. All
distributions by the Company upon its final liquidation and dissolution shall be
made to the Members, pro rata in accordance with the balance in the Members'
Capital Accounts, after adjustment to reflect all Profits and Losses for the
Fiscal Year in which such liquidation occurs.

            5.5 Credit. For all income tax purposes, credits of the Company
claimed for a Fiscal Year shall be allocated among the Members in the same
manner as Losses are allocated among the Members pursuant to Section 5.1(a).

            5.6 Offset. The Company may offset all amounts owing to the Company
by a Member against any distribution to be made to such Member.

            5.7 Limitation Upon Distributions. No distribution shall be declared
and paid unless, after such distribution is made, the assets of the Company are
in excess of all liabilities of the Company.

                                    ARTICLE 6
                                   MANAGEMENT

            6.1 Rights and Duties of Members. The Company is a "manager-managed"
limited liability company under the Law which shall be managed by the Managing
Member. Except as may hereafter be required or permitted by the Law or as
specifically provided herein, the Members (other than the Managing Member) shall
in such capacity take no part whatever in the control, management, direction or
operation of the affairs of the Company and shall have no power to act for or
bind the Company.

                                      -11-
<PAGE>

            6.2 Powers of the Managing Member.

            (a) The Managing Member shall have full and complete charge of all
affairs of the Company, and the management and control of the Company's business
shall rest exclusively with the Managing Member, subject to the terms and
conditions of this Agreement. The Managing Member shall devote to the conduct of
the business of the Company such time and attention as is reasonably necessary
to accomplish the purposes, and to conduct the business, of the Company.

            (b) Subject to the limitations set forth in this Agreement,
including but not limited to those limitations set forth in Section 6.3, the
Managing Member shall perform or cause to be performed all management and
operational functions relating to the business of the Company. Without limiting
the generality of the foregoing, the Managing Member is authorized on behalf of
the Company, without the consent of any other Member, to:

                  (i) invest and expend the capital and revenues of the Company
in furtherance of the Company's business and pay, in accordance with the
provisions of this Agreement, all expenses, debts and obligations of the Company
to the extent that funds of the Company are available therefor;

                  (ii) to purchase, lease, rent, or otherwise acquire or obtain
the use of office equipment, materials, supplies, and all other kinds and types
of real or personal property, and to incur expenses for travel, telephone,
telegraph and for such other things, services and facilities, as may be deemed
necessary, convenient or advisable for carrying on the business of the Company;

                  (iii) make investments in United States government securities,
securities of governmental agencies, commercial paper, insured money market
funds, bankers' acceptances, certificates of deposit and other securities,
pending disbursement of the Company funds or to provide a source from which to
meet contingencies;

                  (iv) enter into agreements and contracts with any Person, and
modify, supplement or terminate any such agreements, subject, however, to the
provisions of Section 6.3 (xiii) of this Agreement;

                  (v) maintain, at the expense of the Company, adequate records
and accounts of all operations and expenditures and furnish the Members with the
reports of such records and accounts;

                  (vi) purchase, at the expense of the Company, liability,
casualty, fire and other insurance and bonds to protect the Company's
properties, business, Members and employees;

                  (vii) sell, lease, trade, exchange or otherwise dispose of all
or any portion of the property or assets of the Company, subject, however, to
the provisions of Section 6.3(xiv);

                                      -12-
<PAGE>

                  (viii) employ or retain, at the expense of the Company,
consultants, accountants, attorneys, brokers, engineers, escrow agents and
others and terminate such employment;

                  (ix) to appoint one or more officers of the Company as the
Managing Member deems necessary, convenient or advisable in carrying out the
businesses and purposes of the Company;

                  (x) execute and deliver purchase agreements, notes, leases,
subleases, applications, transfer documents and other documents, agreements and
instruments necessary or incidental to the conduct of the businesses and
purposes of the Company;

                  (xi) permit an assignment of the Members' Interest in the
Company and admit an assignee of the Members' Interest as a substituted Member
in the Company, pursuant to and subject to the limitations of Article X hereof;

                  (xii) determine the accounting methods and conventions to be
used in the preparation of the Returns (as defined in Section 7.1), and make any
and all elections under the tax laws of the United States, the several states
and other relevant jurisdictions as to the treatment of items of income, gain,
loss, deduction and credit of the Company, or any other method or procedure
related to the preparation of the Returns;

                  (xiii) defend claims or litigation in the name of the Company,
subject, however, to Section 6.3(xii) of this Agreement; and

                  (xiv) to take such other action and perform such other tasks
as the Managing Member deems reasonably necessary, convenient or advisable in
carrying out the purposes and businesses of the Company.

            The enumeration of powers in this Agreement shall not limit the
general or implied powers of the Managing Member or any additional powers
provided by law. By executing this Agreement, the Members shall be deemed to
have consented to any exercise by the Managing Member of any of the foregoing
powers. Any third party may rely on the signature of an officer of the Company
as a valid exercise or execution of any of the foregoing powers of the Managing
Member on behalf of the Company.

            6.3 Restrictions on the Managing Member's Authority.

            (a) Unless otherwise provided for in this Agreement, the Managing
Member may not, without the approval, written consent or ratification of the
specific act by Members holding at least a Majority-In-Interest (which
calculation shall include the Voting Interest of the Managing Member), given in
this Agreement or given by other written instrument executed and delivered by
the Members subsequent to the date of this Agreement, do any of the following:

                  (i) any act in contravention of this Agreement or the
Certificate of Formation;

                  (ii) any act which would make it impossible to carry on the
ordinary business of the Company, except as otherwise provided in this
Agreement;

                                      -13-
<PAGE>

                  (iii) the engagement of the Company in any business other than
the ones specified in this Agreement;

                  (iv) the sale, lease or exchange, other than in the ordinary
course of business, of substantially all of the assets of the Company;

                  (v) the filing of a voluntary petition or otherwise initiating
proceedings to have the Company adjudicated bankrupt or insolvent, or consenting
to the institution of bankruptcy or insolvency proceedings against the Company,
or the filing of a petition seeking or consenting to reorganization or relief of
the Company as debtor under any applicable federal or state law relating to
bankruptcy, insolvency, or other relief for debtors with respect to the Company;
or the seeking or consenting to the appointment of any trustee, receiver,
conservator, assignee, sequestrator, custodian, liquidator (or other similar
official) of the Company or of all or any substantial part of the properties and
assets of the of the Company, or the admitting in writing the inability of the
Company to pay its debts generally as they become due or declare or effect a
moratorium on the Company debt or the taking of any action in furtherance of any
such action;

                  (vi) the merging or consolidating of the Company with any
Member or other Person or entity,

                  (vii) the conversion of the Company to a partnership, limited
partnership, corporation or other entity;

                  (viii) the borrowing of funds on behalf of the Company, and,
in connection therewith, the issuance of notes, debentures and other debt
securities, and mortgaging, pledging, or encumbering of the assets of the
Company in an amount in excess of $100,000;

                  (ix) the guaranteeing in the name or on behalf of the Company
of the payment of money or the performance of any contract or other obligation
of any other Person, except for responsibilities customarily assumed under
operating agreements or hedging contracts considered standard in the industry;

                  (x) the making of any one expenditure of the Company funds in
excess of $100,000, except for any expenditure required under the terms or
conditions of the Purchase Agreement and any document or instrument contemplated
thereby;

                  (xi) the loaning of any Company funds to a Member or any of
its Affiliates;

                  (xii) the initiation of litigation or claims in the name of
the Company or the dismissal or settlement of any litigation or claims in the
name of the Company;

                  (xiii) the entering into of any agreement or contract with any
Person obligating the payment by the Company, or providing for the receipt by
the Company, of more than $100,000, or the modification or termination of any
such agreements; or

                                      -14-
<PAGE>

                  (xiv) the sale, lease, trade, exchange or other disposition of
all or any portion of the property or assets of the Company in a transaction or
series of related transactions of an aggregate value in excess of $100,000.

            6.4 Officers.

            (a) The Managing Member may, from time to time, designate one or
more persons to be an officer of the Company. Any officer so designated shall
have such authority and perform such duties on behalf of the Company as the
Managing Member may, from time to time, delegate to them subject to the
limitations set forth in the Law or this Agreement. The Managing Member may
assign titles to particular officers.

            (b) No officer need be a resident of the State of Delaware or a
Member. Each officer shall hold his office until his successor shall be duly
designated and qualified or until his death or until he shall resign or shall
have been removed in the manner hereinafter provided. Any number of offices may
be held by the same person. Except as provided in Section 4.2, no officer shall
receive a salary or other compensation from the Company without the prior
written consent of the Majority-In-Interest of the Members.

            (c) Any officer may resign as such at any time. Such resignation may
be made in writing and shall take effect at the time specified therein, or if no
time is specified, upon receipt by the Managing Member. Acceptance of a
resignation shall not be necessary to make it effective, unless expressly so
provided in the resignation. Any officer may be removed as such, either with or
without cause, by the Managing Member at any time when, in the Managing Member's
judgment, the best interest of the Company will be served by the officer's
removal. Any vacancy occurring in any office of the Company may be filled by the
Managing Member.

            6.5 Initial Officers. The following person shall serve as the
initial officers of the Company in the positions indicated below until his
successor is duly designated and qualified, or until his death, resignation or
removal:

            Lance T. Shaner           Chairman
            Thomas F. Shields         Chief Executive Officer
            Benjamin W. Hulburt       President
            Thomas C. Stabley         Vice President, Treasurer and Chief
                                      Financial Officer
            Christopher K. Hulburt    Vice President and Secretary
            Michael J. Carlson        Vice President
            Jack Shawver              Vice President

            6.6 Exculpation. The Managing Member and the officers of the Company
shall not be liable, in damages or otherwise, to the Company or to any of the
Members for any act or omission performed or omitted by a the Managing Member or
officer pursuant to the authority granted by this Agreement, except if such act
or omission results from willful misconduct, bad faith, malfeasance or fraud.
The Company shall indemnify, defend and hold harmless the Managing Member and
the officers of the Company from and against any and all claims or liabilities
of any nature whatsoever, including reasonable attorneys' fees, arising out of
or in connection with any action taken or omitted by them pursuant to the
authority granted by this Agreement, except where attributable to the willful

                                      -15-
<PAGE>

misconduct, bad faith, malfeasance or fraud of a Managing Member or such
officer. The Managing Member and the officers of the Company shall be entitled
to rely on the advice of counsel, accountants or other independent experts
experienced in the matter at issue, and any act or omission of the Managing
Member or an officer of the Company pursuant to such advice shall in no event
subject them to liability to the Company or any Member. The Company shall
advance funds to the Managing Member or any officer of the Company for the costs
of defending any claim upon receipt of an undertaking from the Managing Member
or officer to repay such amounts to the Company upon any judicial determination
that the Managing Member or officer is not entitled to indemnification under
this Section 6.6.

            6.7 Other Activities. Any Member (including the Managing Member) or
its Affiliates may engage in or possess an interest in other business ventures
of any nature or description, independently or with others, whether presently
existing or hereafter created and neither the Company nor any Member or its
Affiliates shall have any rights in or to such independent ventures or the
income or profits deprived therefrom.

            6.8 Transactions with Affiliates. This Agreement shall not preclude
transactions between the Company and its Members, the Managing Member and/or an
Affiliate of a Member or the Managing Member, acting in and for its own account,
provided that any services performed by such Member, the Managing Member or any
of their Affiliates are services that the Managing Member reasonably believes,
at the time of requesting such services, to be in the best interests of the
Company, and provided that the rate of compensation to be paid for any such
services shall be commercially reasonable and shall not exceed amounts which
would have been paid in an arms-length transaction to an independent third party
similar in size, stature and commercial experience.

            6.9 Power of Attorney. Each Member hereby appoints the Managing
Member (and any liquidator pursuant to Section 11.3) as that Member's
attorneys-in-fact for the purpose of executing, acknowledging, and delivering
all certificates, documents, and other instruments as may be necessary,
appropriate, or advisable in the judgment of the Managing Member (or the
liquidator) in furtherance of the business of the Company or complying with
applicable law. On request by the Managing Member (or the liquidator), a Member
shall confirm its grant of this power of attorney or any use thereof by the
Managing Member (or the liquidator) and shall execute, acknowledge, and deliver
any such certificate, document, or other instrument.

                                    ARTICLE 7
                                      TAXES

            7.1 Tax Returns. The Managing Member of the Company shall cause to
be prepared and filed all necessary federal, state and local income tax returns
for the Company (the "Returns"). The Managing Member is designated as the Tax
Matters Partner as defined in Section 6231(a)(7) of the Code with respect to
operations conducted by the Company.

                                      -16-
<PAGE>

            7.2 Tax Status of the Company. The Managing Member and the Members
covenant and agree to use their reasonable best efforts to establish and
maintain the classification of the Company as a partnership for federal income
tax purposes.

                                    ARTICLE 8
                                  COMPENSATION

            8.1 Fees. Except as expressly authorized by a Majority-In-Interest
of the Members, the Managing Member will not receive any fees or other
compensation (except as contemplated by Article 4) from the Company solely for
its service as the Managing Member.

                                    ARTICLE 9
                                    ACCOUNTS

            9.1 Books. The officers of the Company, as selected by the Managing
Member, shall maintain complete and accurate books of account of the Company's
affairs at the Company's principal offices, including a list of the names and
addresses of all Members and the interest held by each Member. Each Member and
its accountants, lawyers and agents shall have the right to inspect the
Company's books and records (including the list of the names and addresses of
Members) during reasonable business hours at the offices of the Company.

            9.2 Members' Accounts. Separate Capital Accounts shall be maintained
for each Member.

            9.3 Reports and Returns. Within 120 days of the end of each Fiscal
Year, each Member shall be provided with an information letter containing all
information concerning the Company necessary for the preparation of the Member's
income tax return(s).

            9.4 Bank Account. The officers of the Company, as selected by the
Managing Member, shall establish and maintain a separate bank account in the
name of the Company. All funds of the Company shall be deposited and maintained
in said account.

                                   ARTICLE 10
                                    TRANSFERS

            10.1 Transfer of Membership Interest. No Member may Transfer his,
her, or its Membership Interest or Economic Interest to another Person except as
set forth in this Agreement. A Transfer of Membership Interest or Economic
Interest may not be effected unless:

            (a) the Transfer is approved by a Majority-In-Interest of the
Members, provided, however, that Rex Energy Operating Corp. may transfer all or
any portion of its Membership Interest or Economic Interest to any of its
Affiliates without the approval of the Members;

            (b) the Transfer of such Interest complies with (as may be
determined in good faith by the Managing Member) any and all terms and
conditions of this Agreement;

                                      -17-
<PAGE>

            (c) a duly executed and acknowledged written instrument of
assignment in form satisfactory to the Managing Member is filed with the
Company;

            (d) the Transferee consents in writing, in form satisfactory to the
Managing Member, to be bound by the terms of this Agreement as if he, she, or it
were the Transferor;

            (e) the Transferor and the Transferee execute and acknowledge other
instruments, in form and substance satisfactory to the Managing Member, as the
Managing Member may deem necessary or desirable to effect the substitution;

            (f) the Transfer will not jeopardize the status of the Company as an
entity taxed as a partnership for federal income tax purposes, cause a
termination of the Company for the purposes of the then applicable provisions of
the Code, or violate or cause the Company to violate any applicable law or
governmental rule or Treasury Regulation, including without limitation, any
applicable federal or state securities law;

            (g) if requested by the Managing Member, an opinion from counsel to
the assignee (which counsel and opinion must be satisfactory to counsel for the
Company) is furnished to the Company stating that, in the opinion of the
counsel, the Transfer would not jeopardize the status of the Company as a
partnership for federal income tax purposes, or cause a termination of the
Company for the purposes of the then applicable provisions of the Code, or
violate, or cause the Company to violate any applicable law or governmental rule
or Treasury Regulation, including without limitation, any applicable federal or
state securities law or cause the Company to be subject to any reporting
requirements of any applicable federal or state securities law; and

            (h) each Transferor agrees to pay, prior to the time the Managing
Member consents to a Transfer of such Interest in the Company, all reasonable
expenses, including attorneys fees, incurred by the Company in connection with
the Transfer.

            10.2 Transferee's Rights.

            (a) Any purported Transfer of a Membership Interest or an Economic
Interest in the Company that is not in compliance with this Agreement is hereby
declared to be null and void and of no force and effect whatsoever. Any Person
acquiring a Membership Interest in a manner that is not in compliance with this
Agreement shall not become a Member.

            (b) The "effective date" of a Transfer of a Membership Interest or
an Economic Interest in the Company is the day next following receipt by the
Managing Member of written notice of Transfer and fulfillment of all conditions
precedent to the Transfer provided for in this Agreement.

            10.3 Satisfactory Written Assignment Required. Anything herein to
the contrary notwithstanding, both the Company and the Managing Member will be
entitled to treat the Transferor of a Membership Interest or an Economic
Interest in the Company as the absolute owner thereof in all respects, and will
incur no liability for distributions made in good faith to him or her, until a
written assignment that conforms to the requirements of this Agreement has been
received by, accepted and recorded on the books of the Company.

                                      -18-
<PAGE>

            10.4 Substituted Member. Upon compliance with the requirements of
Section 10.1, the Transferee of any Membership Interest (but not an Economic
Interest) in the Company will become a substituted Member in place of his or her
Transferor. The Transferee then will acquire the entire Membership Interest
assigned, including, without limitation, the Voting Interest held by the
Transferor. By executing this Agreement, each Member is deemed to have consented
to any substitution of a Transferee in the place of a Transferor upon compliance
with Article 10 of this Agreement.

            10.5 Death, Bankruptcy or Incapacity of a Member. Subject to the
terms of this Agreement, the death, Bankruptcy or adjudicated incompetency of a
Member will not cause a dissolution of the Company, but the rights of the Member
to share in the Profits and Losses of the Company, to receive distributions and
to Transfer his or her Membership Interest in the Company pursuant to Section
10.1 or cause the substitution of a substitute Member pursuant to Section 10.4,
on the happening of one of these events, devolve on his or her successor,
executor, administrator, guardian or other legal representative for the purpose
of settling his or her estate or administering his or her property, or in the
event of the death of one whose Membership Interest is held in joint tenancy,
pass to the surviving joint tenant, subject to the terms and conditions of this
Agreement, and the Company will continue as a limited liability company. The
estate of the Member is liable for all the obligations of the deceased, Bankrupt
or incapacitated Member.

                                   ARTICLE 11
                                   DISSOLUTION

            11.1 Events of Dissolution. The Company shall dissolve and its
affairs shall be wound up upon the first to occur of the following:

            (a) the sale, exchange or other disposition by the Company of all or
substantially all of the Company's assets;

            (b) upon the earlier of (i) two (2) years following the closing of
the acquisition of the Properties by the Company pursuant to the Purchase
Agreement or (ii) the completion of the Pilot Program; provided, however that
the application of this Section 11.1(b) may be delayed to such time as one
hundred percent (100%) of the vote or consent of the Members may elect; or

            (c) at any time, with the approval or written consent of Members
holding an aggregate of sixty-seven percent (67%) of the Voting Interest
Percentage of the Members.

            11.2 Final Accounting. Upon the dissolution of the Company, a proper
accounting shall be made from the date of the last previous accounting to the
date of dissolution.

            11.3 Liquidation. Upon the dissolution of the Company, an officer of
the Company, as selected by the Managing Member, shall act as liquidator to wind
up the affairs of the Company. The liquidator shall have full power and
authority to sell, assign and encumber any or all of the Company's assets and to
wind up and liquidate the affairs of the Company in an orderly and business-like
manner. All proceeds from liquidation shall be distributed in the following
order of priority: (i) to the payment of the debts and liabilities of the
Company and expenses of liquidation, (ii) to the setting up of such reserves as
the liquidator may reasonably deem necessary for any contingent liability of the
Company, and (iii) the balance to the Members in accordance with Section 5.2(c).

                                      -19-
<PAGE>

            11.4 Distribution in Kind. If the liquidator shall determine that a
portion of the Company's assets should be distributed in kind to the Members,
such distribution shall be made pursuant to Section 5.3 of this Agreement.

            11.5 Cancellation of Certificate. Upon the completion of the
distribution of Company assets as provided in Section 11.3 and 11.4, the Company
shall be terminated and the person acting as liquidator shall cause the
cancellation of the Certificate and shall take such other actions as may be
necessary or appropriate to terminate the Company.

                                   ARTICLE 12
                             MEETINGS OF THE MEMBERS

            12.1 Meetings. Meetings of Members, for any purpose, may be called
by the Managing Member, and shall be called by the Managing Member upon receipt
of a request in writing signed by any Member. Such request shall state the
purpose or purposes of the proposed meeting and the business to be transacted.
Such meetings shall be held at the principal office of the Company, or at such
other place as may be designated by the Managing Member. Notice of any such
meeting shall be delivered to all Members in the manner prescribed in Article 13
within 10 days after receipt of such request and not fewer than 15 days nor more
than 60 days before the date of such meeting. The notice shall state the place,
date, hour and purpose or purposes of the meeting. At each meeting of the
Members, the Members present or represented by proxy shall adopt such rules for
the conduct of such meeting as they shall deem appropriate. The expenses of any
such meeting, including the cost of providing notice thereof, shall be borne by
the Company.

            12.2 Proxy. Each Member may authorize any person or persons to act
for him by proxy in all matters in which a Member is entitled to participate.
Every proxy must be signed by the Member or his or her attorney-in-fact. No
proxy shall be valid after the expiration of six months from the date thereof.
Every proxy shall be revocable by the Member executing it.

            12.3 Written Consents. Whenever Members are required or permitted to
take any action by vote or at a meeting, such action may be taken without a
meeting, without prior notice and without a vote, if a written consent setting
forth the action so taken is signed by the Members whose Voting Interest
Percentages aggregate at least the minimum level that would be necessary to
authorize or take such action by vote or at a meeting. Notice of any action so
taken by written consent shall be given by the Managing Member to all Members
who have not so consented, in the manner prescribed in Article 13, promptly
after the taking of such action.

            12.4 Manner of Acting. The vote or written consent of Members whose
Voting Percentages aggregates to a Majority-In-Interest will be the act of the
Members, unless the vote of a greater or lesser proportion or number is
otherwise required by law, the Certificate or this Agreement.

                                      -20-
<PAGE>

                                   ARTICLE 13
                                     NOTICES

            13.1 Method for Notices. Except as expressly set forth to the
contrary in this Agreement, all notices, requests, or consents provided for or
permitted to be given under this Agreement must be in writing and must be given
either (i) by depositing that writing in the United States mail, addressed to
the recipient, postage paid, and registered or certified with return receipt
requested, (ii) by delivering that writing to the recipient in person, (iii) by
reputable overnight courier service or (iv) by facsimile; and a notice, request,
or consent given under this Agreement is effective on receipt by the Person to
receive it. All notices, requests, and consents to be sent to a Member must be
sent to or made at the addresses given for that Member on Schedule A, or such
other address as that Member may specify by notice to the Managing Member and
the other Members. Whenever any notice is required to be given by law, the
Certificate of Formation or this Agreement, a written waiver thereof, signed by
the Person entitled to notice, whether before or after the time stated therein,
shall be deemed equivalent to the giving of such notice.

            13.2 Routine Communications. Notwithstanding the provisions of
Section 13.1, routine communications such as distribution checks or financial
statements of the Company may be sent by first-class mail, postage prepaid, via
facsimile, or by other electronic communications, as circumstances reasonably
permit.

            13.3 Computation of Time. In computing any period of time under this
Agreement, the day of the act, event or default from which the designated period
of time begins to run shall not be included. The last day of the period so
computed shall be included, unless it is a Saturday, Sunday or legal holiday, in
which event the period shall run until the end of the next day which is not a
Saturday, Sunday or legal holiday.

            13.4 Communications Pursuant to the Purchase Agreement. The Managing
Member shall promptly provide the Members with copies of any notices or other
communications sent or received by the Managing Member which are permitted or
required by the terms of the Purchase Agreement.

                                   ARTICLE 14
                             AMENDMENTS TO AGREEMENT

            Amendments to this Agreement which are of an inconsequential nature
and do not affect the rights of the Members in any material respect, or which
are contemplated by this Agreement, may be made by the Managing Member without
the approval or written consent of the Members. Any other amendments only shall
be made upon the approval or written consent of sixty-seven percent (67%) of the
Voting Interest Percentage of the Members. Notwithstanding anything to the
contrary contained in the foregoing and except where approval of the Members is
specifically provided for elsewhere in this Agreement, without the approval or
written consent of each Member, no amendment shall cause the Company to become a
general partnership, alter the liability of the Members, alter the Members'
Economic Percentage Interest in Profits and Losses or distributions or alter the
provisions of this Article 14. The Managing Member shall give written notice, in
accordance with Section 13.1 hereof, to the Members promptly after any amendment
has become effective, other than amendments solely for the purposes of the
admission of substitute Members.

                                      -21-
<PAGE>

                                   ARTICLE 15
                               GENERAL PROVISIONS

            15.1 Entire Agreement. This Agreement constitutes the entire
agreement among the parties with respect to the subject matter, and supersedes
any prior agreement or understanding among the parties with respect to the
subject matter hereof. Nothing in this Agreement, express or implied, is
intended to confer upon any Person any rights, remedies, obligations or
liabilities under or by reason of this Agreement.

            15.2 Waiver. Except as provided otherwise herein, no rights under
this Agreement may be waived except by an instrument in writing signed by the
party sought to be charged with such waiver.

            15.3 Governing Law. This Agreement shall be governed by and
construed in accordance with the domestic laws of the State of Delaware without
giving effect to any choice or conflicts of law provision or rule (whether of
the State of Delaware or any other jurisdiction) that would cause the
application of the laws of any jurisdiction other than the State of Delaware.
Any action or proceeding seeking to enforce any provision of, or based on any
right arising out of, or otherwise relating to, this Agreement shall be brought
in the courts of the State of Delaware, and each of the parties, for itself, its
shareholders and its members, hereby submits to the exclusive jurisdiction of
such courts (and of the appropriate appellate courts) in any such action or
proceeding and waives any objection to venue laid therein. Process in any action
or proceeding referred to in this Section 15.3 may be served anywhere in the
world, whether within or without the State of Delaware, by personal service or
by overnight delivery service to the address herein provided for notices.

            15.4 Binding Effect. Except as provided otherwise herein, this
Agreement shall be binding upon and shall inure to the benefit of the parties
hereto and their respective legal representatives, heirs, successors and
assigns.

            15.5 Counterparts; Facsimile Signatures. This Agreement may be
executed in any number of counterparts of the signature pages, each of which
shall be considered an original. Any party may execute this Agreement by
facsimile signature and the other parties shall be entitled to rely on such
facsimile signature as evidence that this Agreement has been duly executed by
such party. Any party executing this Agreement by facsimile signature shall
immediately forward to the other parties an original signature page by overnight
mail.

            15.6 Separability. Any provision of this Agreement which is
prohibited or unenforceable in any jurisdiction shall, as to such jurisdiction,
be ineffective to the extent of such prohibition or unenforceability without
invalidating the remaining portions hereof or affecting the validity or
enforceability of such provision in any other jurisdiction.

            15.7 Headings. The section and other headings contained in this
Agreement are for reference purposes only and shall not affect the meaning or
interpretation of this Agreement.

                                      -22-
<PAGE>

            15.8 Gender and Number. Whenever required by the context hereof, the
singular shall include the plural and the plural shall include the singular. The
masculine gender shall include the feminine and neuter genders.

            15.9 Taxable Year. The Company shall elect the calendar year as its
taxable year for federal income tax purposes. Each Member acquiring an interest
of 5% or more in Company capital or Profits must have elected properly to use
the calendar year as its taxable year for federal income tax purposes unless
this requirement is waived by the Managing Member, in its sole discretion. The
Managing Member will not waive this requirement without first obtaining an
opinion of counsel that the admission of such a Member would not jeopardize the
Company's ability to use the calendar year as its taxable year for federal
income tax purposes.

            15.10 Further Assurances. In connection with this Agreement and the
transactions contemplated hereby, each Member shall execute and deliver any
additional documents and instruments and perform any additional acts that may be
necessary or appropriate to effectuate and perform the provisions of this
Agreement and those transactions.

            15.11 Purchase Agreement Paramount. If and to the extent that any of
the provisions of this Agreement conflict with or are otherwise inconsistent
with the Purchase Agreement, the provisions of the Purchase Agreement shall
prevail. Nothing herein shall be deemed to amend or modify the terms of the
Purchase Agreement.

        [Remainder of Page Intentionally Left Blank. Signatures Follow.]

                                      -23-
<PAGE>

            IN WITNESS WHEREOF the parties hereto have executed this Agreement,
to be effective as of the day and year first above written.

                                                  Managing Member:

                                                  REX ENERGY WABASH, LLC

                                                  By: /s/ Benjamin W. Hulburt
                                                      --------------------------
                                                      Name:  Benjamin W. Hulburt
                                                      Title: President

                                                  Members:

                                                  COLLEGE OAK INVESTMENTS, INC.

                                                  By: /s/ Carey G. Birmingham
                                                      --------------------------
                                                      Name:  Carey G. Birmingham
                                                      Title: President

                                                  REX ENERGY OPERATING CORP.

                                                  By: /s/ Benjamin W. Hulburt
                                                      --------------------------
                                                      Name:  Benjamin W. Hulburt
                                                      Title: President

                                      -24-
<PAGE>

                             NEW ALBANY-INDIANA, LLC

                                   SCHEDULE A

<TABLE>
====================================================================================================================
                                                                               VOTING                  ECONOMIC
                NAME AND                           CAPITAL                    INTEREST                 INTEREST
                ADDRESS                          CONTRIBUTION                PERCENTAGE               PERCENTAGE
--------------------------------------------------------------------------------------------------------------------
<S>                                             <C>                             <C>                       <C>
Managing Member:
--------------------------------------------------------------------------------------------------------------------
REX ENERGY WABASH, LLC                            $35,000.00                     1%                       1%
1965 Waddle Road
State College, PA 16803
Fax:  814-278-7286
--------------------------------------------------------------------------------------------------------------------

Members:
--------------------------------------------------------------------------------------------------------------------
REX ENERGY OPERATING CORP.                      $1,715,000.00                   49%                       49%
1965 Waddle Road
State College, PA, 16803
Fax:  814-278-7286
--------------------------------------------------------------------------------------------------------------------
COLLEGE OAK INVESTMENTS, INC.                   $1,750,000.00                   50%                       50%
37 Franklin Street
Westport, Connecticut 06880

With copies of notices to:

Eaton & Van Winkle
Attn:  Mathew S. Cohen
3 park Avenue - 16th Floor
New York, New York 10016
Fax: 212-779-9928
====================================================================================================================
</TABLE>PURCHASE AND SALE AGREEMENT

      This Purchase and Sale Agreement (this "Agreement") dated as of the 15th
day of November 2005, is between AURORA ENERGY LTD., a Nevada corporation with
an address at 3760 N. US 31 South, P.O. Box 961, Traverse City, Michigan
49685-0961 ("Seller") and NEW ALBANY-INDIANA, LLC, a Delaware limited liability
company with an address at 1965 Waddle Road, State College, Pennsylvania 16803
("Buyer"). Seller and Buyer are also referred to herein individually as a
"Party" and collectively as the "Parties."

      In consideration of the mutual promises contained herein, the benefits to
be derived by each Party hereunder and other good and valuable consideration,
the receipt and sufficiency of which are hereby acknowledged, Buyer and Seller
agree as follows:

                                    ARTICLE 1
                                PURCHASE AND SALE

      1.1 Purchase and Sale. Subject to the terms and conditions of this
Agreement, Seller agrees to sell and convey and Buyer agrees to purchase and pay
for all of Seller's right, title and interest in and to the Interests (as
hereinafter defined).

      1.2 Interests. For purposes of this Agreement, the term "Interests" shall
be defined as an undivided 48.75% working interest (40.7063% net revenue
interest) in and to all of the following interests (of whatever kind or
character, whether legal or equitable and whether vested or unvested or
contingent), less and except for the Reserved Interests (as hereinafter
defined):

            (a) All of Seller's right, title and interest in and to the oil, gas
and mineral leases located in Greene, Clay, Owen and Sullivan Counties, Indiana,
as more particularly described on Exhibit A attached hereto (collectively, the
"Wabash Leases");

            (b) All of Seller's right, title and interest in and to that certain
Farmout and Participation Agreement dated effective July 19, 2005 between
Aurora, as Farmor, and Jet Ex, L.L.C., a Michigan limited liability company, as
Farmee, attached hereto as Exhibit B (the "Farmout Agreement").

            (c) Originals or copies of all computer tapes and discs, files,
records, information, instruments, documents, agreements or data relating to the
Interests in the possession of Seller, including, without limitation, title
records (including abstracts of title, title opinions, certificate of title and
title curative documents), accounting records and files, contracts,
correspondence, regulatory reports, seismic and geophysical data, tapes and
records, and all related materials, INSOFAR AND ONLY INSOFAR as the foregoing
items constitute materials that may be lawfully conveyed to Buyer (i.e., the
materials are not subject to an agreement precluding their transfer to Buyer),
and, to the extent transferable, all other contract rights, intangible rights,
inchoate rights, choses in action, rights under warranties made by prior owners,
manufacturers, vendors or other third parties, and rights accruing under
applicable statutes of limitation or prescription, attributable to the
Interests.

<PAGE>

      1.3 Option to Purchase. At Closing, and in addition to the conveyance of
the Interests, Seller shall grant to Buyer an option, to be exercised at anytime
and from time to time within five hundred and forty (540) days following the
Closing, to acquire a fifty percent (50%) working interest in any and all
acreage leased or acquired by Seller or its affiliates within Lawrence, Jackson,
Washington and Orange Counties, Indiana (measured as of the date of the exercise
of the option) (the "Option Counties") for the net cost to Buyer of twenty five
($25.00) per acre (the "Option"). The acreage leased or acquired by Seller as of
November 1, 2005 within the Option Counties is attached hereto as Exhibit C.

      1.4 Reserved Interests. Notwithstanding any provision of this Agreement to
the contrary, Seller shall retain following the Closing, a one-half percent
(.5%) overriding royalty interest attributable to, or associated with, the
Wabash Leases (the "Reserved Interests"), thus delivering an 83.5% to the 8/8ths
revenue interest to Buyer. The Reserve Interests shall bear its pro-rata share
of the costs and expenses of all transportation fees, Carbon Dioxide, Hydrogen
Sulfide, Nitrogen and any other contaminate removal treatments required for the
marketability of production, and production taxes. Buyer hereby acknowledges and
agrees that the Reserved Interests shall be retained by Seller following the
Closing and shall not be included in the Interests. Seller and Buyer acknowledge
and agree that the Reserved Interests shall be retained by Seller and transfer
by Seller from time to time to certain key persons as project and land
management incentives which may be conducted for the future benefit of both
Seller and Buyer.

      1.5 Risk of Loss. If, after the execution of this Agreement and prior to
the Closing, any part of the Interests shall be destroyed or harmed by fire or
any other casualty or cause or shall be taken by condemnation or the exercise of
eminent domain, this Agreement may be terminated by Buyer, in its sole
discretion, if the amount of such damage or loss exceeds $1,000,000, and the
Deposits (as hereinafter defined) shall promptly be returned to Buyer. In the
event this Agreement is continued following the occurrence of the events
described above, this Agreement shall remain in full force and effect, and as to
each Interest affected, Seller shall, at its election, either collect (and when
collected promptly pay over to Buyer its proportionate share of such amount) or
assign to Buyer any and all insurance or other claims related to Buyer's
proportionate share of such damage or loss. In the event Buyer elects to
continue this Agreement, Buyer shall take title to the affected Interest without
reduction in the Purchase Price, provided that Seller fully complies with its
obligations arising under this Section.

                                    ARTICLE 2
                                 PURCHASE PRICE

      2.1 Purchase Price. In consideration for the purchase of the Interests
(which shall include the purchase of the Option), Buyer shall pay to Seller at
Closing, to an account designated by Seller at least three (3) business days
prior to Closing, in cash or immediately available funds, the sum of Ten Million
Five Hundred Thousand Dollars ($10,500,000) (the "Purchase Price").

                                      -2-
<PAGE>

      2.2 Deposits.

            (a) Seller hereby acknowledges its prior receipt of a deposit in the
amount of $500,000 (the "Initial Deposit") paid to Seller by an affiliate of
Buyer, Rex Energy Operating Corp. ("Rex Energy") pursuant to that certain letter
of intent dated October 7, 2005 by and between Seller and Rex Energy, as amended
by that certain letter agreement dated October 27, 2005 (the "Letter of
Intent"). Seller agrees to continue to hold the Initial Deposit in accordance
with the terms and conditions of the Letter of Intent and acknowledges and
agrees that the Initial Deposit is now being held for the benefit of Buyer.

            (b) Upon the earlier of (i) December 1st, 2005, or (ii) completion
of Buyer's title investigation, Buyer shall promptly deposit, by wire transfer
to a bank account designated by Seller (which shall be the same bank account in
which the Initial Deposit was deposited), an additional deposit in an amount
equal to Three Million Dollars ($3,000,000.00) (the "Subsequent Deposit", and
collectively with the Initial Deposit, referred to herein as the "Deposits"). If
the Closing occurs, the Deposits and all interest accrued shall be applied to
reduce the Purchase Price. If Closing does not occur, the Deposits and all
accrued interest accrued shall be applied as provided in Section 12.2 of this
Agreement.

            (c) Seller hereby agrees that it shall hold, invest and disburse the
Deposits only in accordance with the terms and conditions of this Agreement. The
account designated by Seller for the Deposits shall be an interest bearing
account held by a third party banking institution which is not in anyway
affiliated with Seller. Seller hereby agrees that the Deposits shall be held at
all times until disbursement in the account designated by Seller, and that
Seller shall at no time commingle any of its funds with the Deposits or withdraw
all or any portion of the Deposits except as provided under the terms and
conditions of this Agreement. Any and all accrued interest or gains shall be
deemed to be part of Deposits and will be paid to the party receiving the
Deposits as and when distribution is made therefrom, the parties specifically
acknowledging that in the event that the Closing of the transactions
contemplated by this Agreement occurs, any such accrued interest shall be
applied with the Deposits as a credit toward payment of the Purchase Price by
Buyer. Seller hereby agrees to provide Buyer with written notification of its
intention to withdraw all or any portion of the Deposits at least five (5)
business days before any such withdrawal.

            (d) At all times prior to the Closing, the Deposits shall, without
any notice, demand, presentment or protest of any kind (each of which is waived
by Seller), automatically and immediately become due and payable to Buyer upon
the occurrence of any one or more of the following events: (i) Seller is
adjudicated as bankrupt, (ii) Seller commences or has commenced against it any
bankruptcy or insolvency proceeding under the federal bankruptcy code or
otherwise which is not rescinded within sixty (60) days, (iii) the making by
Seller of a general assignment for the benefit of creditors, or (iv) the
appointment of a receiver or trustee in bankruptcy of Seller or for any of the
Seller's assets which is not rescinded within sixty (60) days. Seller agrees to
immediately return the Deposits to Buyer upon the occurrence of any of the above
events.

                                      -3-
<PAGE>

            (e) Seller shall indemnify and hold Buyer and its affiliates
harmless from and against any and all losses or damages suffered or incurred by
Buyer or its affiliates (including, without limitation, reasonable attorney's
fees and court costs) by reason of the breach of this Section 2.2 or the
non-fulfillment of any covenant or agreement of Seller contained in this Section
2.2. Seller further acknowledges and agrees that in the event of a breach or
threatened breach of any agreement by it contained in this Section 2.2 or in
Section 12.2 of this Agreement, Buyer shall be entitled, in addition to all
other applicable remedies, to seek specific performance of the terms of this
Section 2.2 and Section 12.2 of this Agreement, including immediate injunctive
relief in any court of competent jurisdiction enjoining Seller from any activity
constituting such breach or threatened breach. No right or remedy herein
conferred upon or reserved to Buyer is exclusive of any right or remedy herein
or permitted by law or equity, but each shall be cumulative of every other right
or remedy given hereunder or now or hereafter existing at law or in equity (or
by statute or otherwise), and may be enforced concurrently therewith or from
time to time and as often as may be deemed expedient or necessary by Buyer, in
its sole discretion. The covenants, agreements and obligations of Seller
pursuant to this Section 2.2 shall survive the Closing until fully discharged or
performed.

                                    ARTICLE 3
                         REPRESENTATIONS AND WARRANTIES

      3.1 Representations and Warranties of Seller. Seller represents and
warrants to Buyer the following:

            (a) Seller is a corporation duly organized, validly existing and in
good standing under the laws of the State of Nevada. Seller is duly qualified to
carry on its business and is in good standing in the State of Indiana and in
each other state where the Interests are located.

            (b) Seller has all requisite power and authority to carry on its
business as presently conducted, to enter into this Agreement, and to perform
its obligations hereunder. The execution and delivery of this Agreement by
Seller does not, and the consummation of the transactions contemplated by this
Agreement shall not: (i) violate, conflict with, or require the consent of any
person or entity under any provision of Seller's Articles or Certificate of
Incorporation, as the case may be, or Bylaws or other governing documents, (ii)
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, (iii) 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 (iv) result in the creation of any lien, charge, or
encumbrances on any of the Interests.

            (c) 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 corporate action on the part of Seller. The
transactions contemplated by this Agreement do not constitute the sale of all or
substantially all of the assets of Seller.

                                      -4-
<PAGE>

            (d) 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.

            (e) Seller has incurred no liability, contingent or otherwise, for
broker's or finder's fees or commissions relating to the transactions
contemplated by this Agreement for which Buyer shall have any responsibility
whatsoever.

            (f) During the period of Seller's ownership of the Interests, Seller
has properly paid all ad valorem, property, production, severance, excise and
similar taxes and assessments based on or measured by the ownership of property
on the Interests that have become due and payable before the Closing Date.

            (g) No suit, action or other proceeding is pending or, to the best
of Seller's Knowledge, threatened before any court, arbitration panel or
governmental agency which relates to the Interests and which might result in a
material loss of Seller's title to any portion of the Interests, or a material
diminution of the value of any of the Interests, or that might materially hinder
or impede the operation of the Interests. No written or oral notice from any
governmental agency or any other person has been received by Seller: (i)
claiming any violation or repudiation of all or any part of the Interests or any
violation of any law or any environmental, conservation or other ordinance,
code, rule or regulation or (ii) requiring or calling attention to the need for
any work, repairs, construction, alterations, or installations on or in
connection with the Interests, with which Seller has not complied.

            (h) There is no investigation, proceeding, action, suit or other
legal proceeding pending, or to the Knowledge of Buyer, threatened to which
Seller or any affiliate of Seller is a party which seeks to prevent the
consummation by Seller of the transactions contemplated by this Agreement, or
which, individually or in the aggregate with other such actions, is reasonably
likely to materially impair Seller's ability to perform its obligations under
this Agreement.

            (i) Seller has not provided any information to Buyer with respect to
the Interests that Seller knows to be false or inaccurate. To the best of
Seller's Knowledge, all information furnished to Buyer by Seller with respect to
the Interests has been and will be true and accurate in all material respects.

            (j) The Interests are not subject to any agreement or arrangement
regarding the sale of the production of hydrocarbons from the Interests.

                                      -5-
<PAGE>

            (k) To the Knowledge of Seller, the Interests are not subject to (i)
any preferential right to purchase, (ii) any requirement that consent to
assignment be obtained, or (iii) any farm-out agreement (other than the Farmout
Agreement).

            (l) To the Knowledge of Seller, all royalties, overriding royalties
and other leasehold burdens, if any, have been paid by Seller or other parties
and will have been paid by Seller or other parties up to the Closing Date and
Seller has no Knowledge of any claims, demands or causes of action asserted by
any owners of royalty, overriding royalty or other leasehold burdens affecting
the Interests.

            (m) There are no bankruptcy, reorganization or receivership
proceedings pending against, contemplated by, or, to the Knowledge of Seller,
threatened against Seller or any affiliate of Seller. Seller is not now
insolvent and will not be rendered insolvent by any of the transactions
contemplated by this Agreement. The term "insolvent" shall mean that the sum of
the debts and other probable liabilities of Seller exceeds the present saleable
value of the Seller's assets.

            (n) 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.

      3.2 Representations and Warranties of Buyer. Buyer represents and warrants
to Seller the following:

            (a) Buyer is a limited liability company, duly organized, validly
existing and in good standing under the laws of the State of Delaware. Buyer is,
or will be prior to the Closing, duly qualified to carry on its business and is
in good standing in the State of Indiana.

            (b) Buyer has all requisite power and authority to carry on its
business as presently conducted and has all requisite power and authority to
enter into this Agreement, and to purchase the Interests on the terms described
in this Agreement and perform its other obligations under this Agreement. The
execution and delivery of this Agreement by Buyer does not, and the consummation
of the transactions contemplated by this Agreement will not: (i) violate,
conflict with, or require the consent of any person or entity under any
provision of Buyer's Certificate of Formation, limited liability company
agreement or other governing documents, or (ii) violate any provision of or
require any consent, authorization or approval under any agreement, judgment,
judicial or administrative order, award, writ, injunction, statute, rule or
regulation applicable to Buyer.

            (c) 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 company action on the part of Buyer.

                                      -6-
<PAGE>

            (d) This Agreement has been duly executed and delivered on behalf of
Buyer and constitutes the legal and binding obligation of Buyer enforceable in
accordance with its terms, except as enforceability may be limited by Equitable
Limitations. At Closing, all documents and instruments required to be executed
and delivered by Buyer shall be duly executed and delivered and shall constitute
legal, valid, enforceable, and binding obligations of Buyer, except as
enforceability may be limited by Equitable Limitations.

            (e) Buyer has incurred no liability, contingent or otherwise, for
broker's or finder's fees or commissions relating to the transactions
contemplated by this Agreement for which Seller shall have any responsibility
whatsoever.

            (f) Buyer has sufficient funds, available lines of credit or other
sources of immediately available funds sufficient to enable the payment to
Seller, by wire transfer, of the Purchase Price at Closing and to otherwise
perform Buyer's obligations under this Agreement.

            (g) There are no bankruptcy, reorganization or receivership
proceedings pending against, contemplated by, or, to the Knowledge of Buyer,
threatened against Buyer or any affiliate of Buyer.

            (h) There is no investigation, proceeding, action, suit or other
legal proceeding pending, or to the Knowledge of Buyer, threatened to which
Buyer or any affiliate of Buyer is a party which seeks to prevent the
consummation by Buyer of the transactions contemplated by this Agreement, or
which, individually or in the aggregate with other such actions, is reasonably
likely to materially impair Buyer's ability to perform its obligations under
this Agreement.

            (i) No representation or warranty by Buyer in this Agreement or any
agreement or document delivered by Buyer 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.

                                    ARTICLE 4
                          CERTAIN AGREEMENTS OF SELLER

      4.1 Cooperation. During the period between execution of this Agreement and
the Closing Date, Seller shall cooperate with Buyer to assist Buyer in carrying
out the agreements of Buyer hereunder.

      4.2 Agreements Between Execution of Agreement and Closing. During the
period between the execution of this Agreement and the Closing Date, Seller
shall maintain the Interests in a commercially reasonable manner and shall not
without the prior written consent of Buyer, (i) sell, convey, assign, transfer
or encumber any of the Interests; (ii) drill any well on the Interests, or
permit any other party to drill any well on the Interests, (iii) sell oil, gas
or other minerals produced from the Interests; (iv) enter into any agreement
amending, modifying or terminating any of the Interests; or (v) take any other
action with respect to any of the Interests that would cause a material
diminution the value thereof or that would materially and adversely affect the
use and enjoyment thereof.

                                      -7-
<PAGE>

      4.3 Notification of Additional Proceedings. During the period between
execution of this Agreement and the Closing Date, Seller shall promptly notify
Buyer in writing (i) of any new suits, actions or other proceedings threatened
or pending before any court, arbitrator or governmental agency which relate to
the Interests or (ii) any material change in the condition of the Interests
(financial or otherwise).

                                    ARTICLE 5
                           CERTAIN AGREEMENTS OF BUYER

      5.1 Cooperation. During the period between execution of this Agreement and
the Closing Date, Buyer shall cooperate with Seller to assist Seller in carrying
out the agreements of Seller hereunder.

      5.2 Return of Records. Buyer agrees that if this Agreement is terminated
for any reason whatsoever, Buyer shall, at Seller's request, promptly return to
Seller all records, information and data furnished by or on behalf of Seller to
Buyer, its officers, employees and representatives in connection with this
Agreement or Buyer's investigation of the Interests, and Buyer shall deliver to
Seller all copies, extracts, or excerpts of such records, information and data
and all documents generated by Buyer that contain any portion of such records,
information, and data.

      5.3 Confidentiality. Buyer agrees that if this Agreement is terminated for
any reason whatsoever, Buyer shall keep the terms and conditions of this
Agreement and all proprietary and confidential information provided to Buyer or
obtained by Buyer in connection with this Agreement confidential, and not
disclose the same to any third party without the prior written consent of Seller
for a period of one (1) year after such termination.

                                    ARTICLE 6
                          BUYER'S CONDITIONS TO CLOSING

      The obligations of Buyer to consummate the transactions provided for
herein are subject, at the option of Buyer, to the fulfillment on or prior to
Closing of each of the following conditions:

      6.1 Representations. The representations and warranties by Seller set
forth in Section 3.1 above shall be true and correct in all material respects as
of the date of this Agreement and as of the Closing Date.

      6.2 Performance. Seller shall have, in all material respects, timely
performed and complied with all agreements and covenants required by this
Agreement.

      6.3 No Legal Proceedings. No suit, action or other proceeding shall be
pending or threatened before any court, arbitration panel or governmental agency
seeking to restrain, prohibit or declare illegal, or seeking substantial damages

                                      -8-
<PAGE>

in connection with the purchase and sale contemplated by this Agreement, or
which might result in a material loss of any portion of the Interests, a
material diminution in the value of any of the Interests, or materially
interfere with the use or enjoyment of the Interests.

      6.4 No Encumbrances. Buyer shall have been provided with copies of
releases, in forms reasonably satisfactory to Buyer, of any encumbrances
affecting the Interests, except for Permitted Encumbrances.

      6.5 Resolutions. Seller shall have furnished Buyer a certified copy of
resolutions of the Board of Directors of Seller authorizing the execution and
delivery of this Agreement and the delivery of all documents contemplated
herein.

      6.6 Exploration Agreement. At or before Closing, Seller shall have
executed and delivered (or be ready, willing and able to execute and deliver)
the Exploration Agreement substantially in the form attached hereto as Exhibit D
(the "Exploration Agreement").

      6.7 Joint Operating Agreement. At or before Closing, Seller shall have
executed and delivered (or be ready, willing and able to execute and deliver)
the Joint Operating Agreement substantially in the form attached hereto as
Exhibit E (the "Joint Operating Agreement").

      6.8 Due Diligence. The results of Buyer's continuing due diligence review
shall not have revealed any material variance from the representations and
warranties of Seller set forth in this Agreement that would have a Material
Adverse Effect on the business, assets or condition of the Interests. "Material
Adverse Effect" shall mean any effect that is both material and adverse to the
operations or value of the Interests, taken as a whole and as currently
operated; provided, however, that none of the following shall be deemed to be a
Material Adverse Effect: (i) any effect resulting from entering into this
Agreement or the announcement of the transactions contemplated by this
Agreement; (ii) any effect resulting from changes in general market, economic,
financial or political conditions in Indiana, the United States or worldwide or
any outbreak of hostilities or war; and (iii) any effect that affects the
hydrocarbon exploration, production, processing, gathering or transportation
industry generally.

                                    ARTICLE 7
                         SELLER'S CONDITIONS TO CLOSING

      The obligations of Seller to consummate the transactions provided for
herein are subject, at the option of Seller, to the fulfillment on or prior to
Closing of each of the following conditions:

      7.1 Representations. The representations and warranties by Buyer set forth
in Section 3.2 above shall be true and correct in all material respects as of
the date of this Agreement and as of the Closing Date.

      7.2 Performance. Buyer shall have, in all material respects, timely
performed and complied with all agreements and covenants required by this
Agreement.

                                      -9-
<PAGE>

      7.3 No Legal Proceedings. No suit or other proceeding shall be pending or
threatened before any court, arbitration panel or governmental agency seeking to
restrain prohibit or declare illegal, or seeking substantial damages in
connection with, the purchase and sale contemplated by this Agreement, except
matters with respect to which Seller has been adequately indemnified by Buyer.

      7.4 Resolutions. Buyer shall have furnished Seller a certified copy of
resolutions of the Manager of Buyer authorizing the execution and delivery of
this Agreement and delivery of all documents contemplated herein.

      7.5 Exploration Agreement. At or before Closing, Buyer shall have executed
and delivered (or be ready, willing and able to execute and deliver) the
Exploration Agreement substantially in the form of Exhibit D.

      7.6 Joint Operating Agreement. At or before Closing, Buyer shall have
executed and delivered (or be ready, willing and able to execute and deliver)
the Joint Operating Agreement substantially in the form of Exhibit E.

      7.7 Payment. Buyer shall have paid (or be ready, willing and able to
immediately pay) the Purchase Price (less the amount of the Deposits).

                                    ARTICLE 8
                                     CLOSING

      8.1 Date of Closing. Subject to the conditions stated in this Agreement,
the purchase and sale of the Interests pursuant to this Agreement (the
"Closing") shall occur on or before February 1, 2005, at 10:00 a.m., Central
Standard Time, or on such other date and time as Buyer and Seller may agree in
writing (the "Closing Date").

      8.2 Place of Closing. The Closing shall be held at a place to be mutually
agreed upon by Buyer and Seller, provided that in the event the parties can not
agree upon the place of the Closing, the Closing shall be held at the offices of
Seller.

      8.3 Closing Obligations. At the Closing, the following documents shall be
delivered and the following events shall occur, each being deemed to have
occurred simultaneously with the others:

            (a) Seller shall execute and deliver: (1) an Assignment and Bill of
Sale conveying the Interests to Buyer with covenants of special warranty of
title, and free and clear of all liens, security interests and other
encumbrances, other than the Permitted Encumbrances, in form and substance
reasonably satisfactory to Seller and Buyer (the "Assignment"); (2) an
Assignment conveying a 48.75% interest in the Farmout Agreement to Buyer, free
and clear of all liens, security interests and other encumbrances, in form and
substance reasonably satisfactory to Seller and Buyer, (3) an assignment and
grant of the Option to Buyer, in form and substance reasonably satisfactory to
Seller and Buyer, (4) such other instruments as may be required to fully convey
the Interests to Buyer and otherwise effectuate the transactions contemplated by

                                      -10-
<PAGE>

this Agreement, in form and substance reasonably satisfactory to Seller and
Buyer, (5) a certified copy of resolutions of the Board of Directors of Seller
authorizing the execution and delivery of this Agreement and the delivery of all
instruments or documents contemplated herein, (6) certified copies of good
standing certificates of the Seller, issued not earlier than ten (10) days prior
to the Closing Date, by the Secretary of State of Nevada and the Secretary of
State of Indiana, (7) an incumbency and specimen signature certificate with
respect to the officers of Seller executing this Agreement and any instruments
or documents contemplated hereby and (8) a closing certificate duly executed by
an authorized officer of Seller pursuant to which Seller represents and warrants
to Buyer that Seller's representations and warranties to Buyer are true and
correct in all material respects as of the Closing Date as if then originally
made, that all covenants required by the terms of this Agreement to be performed
by Seller on or before the Closing Date, to the extent not waived by Buyer in
writing, have been so performed, and that all documents to be executed and
delivered by Seller at Closing have been executed by duly authorized officers of
Seller.

            (b) Buyer shall execute and deliver: (1) a certified copy of
resolutions of the Manager of Buyer authorizing the execution and delivery of
this Agreement and the delivery of all instruments or documents contemplated
herein, (2) certified copies of good standing certificates of the Buyer, issued
not earlier than ten (10) days prior to the Closing Date, by the Secretary of
State of Delaware and by the Secretary of State of Indiana, (3) an incumbency
and specimen signature certificate with respect to the officers of Buyer
executing this Agreement and any instruments or documents contemplated hereby
and (4) a closing certificate duly executed by an authorized officer of Buyer
pursuant to which Buyer represents and warrants to Seller that Buyer's
representations and warranties to Seller are true and correct in all material
respects as of the Closing Date as if then originally made, that all covenants
required by the terms of this Agreement to be performed by Buyer on or before
the Closing Date, to the extent not waived by Seller in writing, have been so
performed, and that all documents to be executed and delivered by Buyer at
Closing have been executed by duly authorized officers of Buyer.

            (c) Buyer shall deliver to Seller or to Seller's account by wire
transfer the Purchase Price.

            (d) Buyer and Seller shall execute and deliver the Exploration
Agreement and the Joint Operating Agreement.

      8.4 Records. In addition to the obligations set forth under Section 8.3
above, Seller shall deliver at Closing to Buyer copies of land files in its
possession or to which it has access with respect to the Interests. Buyer shall
be entitled to copies of all original records affecting the Interests assigned
to Buyer pursuant to the terms of this Agreement. Seller shall be entitled to
keep the originals for its files.

                                      -11-
<PAGE>

                                    ARTICLE 9
                              POST-CLOSING MATTERS

      9.1 Further Assurances. After Closing, Seller and Buyer shall execute,
acknowledge and deliver or cause to be executed, acknowledged and delivered such
instruments and take such other action as may be necessary or advisable to carry
out their obligations under this Agreement and under any exhibit, document,
certificate or other instrument delivered pursuant hereto, and to fully transfer
the Interests to the Buyer.

                                   ARTICLE 10
                         INVESTIGATION AND TITLE MATTERS

      10.1 Investigation; Access to Title and Other Documents.

            (a) During the period beginning on the date of this Agreement and
ending on the Closing Date, Buyer and each representative of Buyer may continue
to conduct a review of the Interests. In connection with such review, Buyer and
each representative of Buyer shall be granted full access to the Interests upon
reasonable notice, at Buyer's sole risk and during reasonable hours so as not to
unreasonably interfere with the operations of Seller. In connection with such
review, Seller agrees, and shall cause each representative of Seller, upon
reasonable notice, to (i) cooperate with Buyer and each representative of Buyer,
and (ii) provide all information, and all documents and other data relating to
such information, reasonably requested by Buyer or any representative of Buyer
with respect to the Interests.

            (b) Immediately upon final execution hereof, Seller will make
available to Buyer and to its representatives (such representatives to include
employees, consultants, independent contractors, attorneys and other advisors of
Buyer) for Buyer's copying and/or inspection (at Buyer's cost and expense), at
Seller's offices during normal business hours such of the following documents as
are in Seller's possession or under its control (if any):

                        (i)         All abstracts of title, title opinions,
                                    title curative materials, ownership reports,
                                    bills of sale, other documents evidencing
                                    transfers of title, tax receipts, and
                                    licenses and registrations pertaining to the
                                    Interests.

                        (ii)        All of the lease records, lease files,
                                    leases, conveyances and assignments of
                                    interest in the Interests; contracts; orders
                                    of applicable regulatory authorities or
                                    administrative agencies; mortgages, deeds of
                                    trust, security agreements, and financing
                                    statements; and all other contracts,
                                    agreements and documents affecting the
                                    Interests.

                        (iii)       Instruments and documents concerning proper
                                    payment of all general and special
                                    assessments, ad valorem and property taxes,
                                    and similar taxes and assessments based on

                                      -12-
<PAGE>

                                    or measured by the ownership of the
                                    Interests for 2005 and years prior for which
                                    the applicable statute of limitations has
                                    not expired.

                        (iv)        All geological maps, geophysical surveys as
                                    to which Seller has the right to show Buyer
                                    and engineering studies, ownership maps,
                                    reserve reports, logs, core studies, and
                                    surveys relating to the Interests.

                        (v)         All bonds, leases, permits, easements,
                                    licenses, orders, saltwater disposal
                                    agreements, agreements with pumpers and
                                    other agreements in any way relating to the
                                    Interests or the operation thereof.

                        (vi)        All environmental reports, assessments and
                                    studies relating to any of the Interests.

      To the extent such has not already been furnished, after the date hereof
Seller shall use its reasonable efforts to obtain and submit to Buyer or its
representatives, as promptly as practicable, such abstracts, title reports,
status reports, certificates of title, certificates of fact and other evidence
of title covering the Interests as Buyer may reasonably request that are in the
possession of a third person to which Seller has access. In addition, Seller
shall authorize Buyer and its representatives to consult with attorneys,
abstract companies and other consultants or independent contractors of Seller
(whether utilized in the past or present) concerning title related matters.
Reliance on such information of such third parties shall be at the sole risk of
the Buyer, and Seller makes no guaranty or representation as to the accuracy or
completeness of such data.

      10.2 Seller's Special Warranty of Title; The Assignment.

            (a) Seller represents and warrants that Seller shall convey to Buyer
at Closing all of Seller's right, title and interest in and to the Interests,
free and clear of all liens, security interests and other encumbrances, subject
only to the Permitted Encumbrances. Seller hereby represents and warrants to
Buyer that it has done nothing to encumber title to the Interests and warrants
title as against all persons claiming by, through or under Seller, but not
otherwise, Seller further agreeing that Buyer shall have the benefit of all
prior warranties in the chain of title to the Interests. The Assignment shall
provide for a special warranty of title consistent with this Section 10.2.

            (b) Seller will cooperate with Buyer in requesting approvals,
consents and waivers from governmental authorities or third parties having the
right to approve the assignment of any Interest covered hereby.

      10.3 Permitted Encumbrances. As used in this Agreement, the term
"Permitted Encumbrances" shall mean the following, provided that the same shall
not operate to reduce the net revenue interest or increase the gross working
interest of an Interest beyond that shown on Exhibit A.

                                      -13-
<PAGE>

            (a) Lessors' royalties, non-participating royalties, overriding
royalties, division orders, reversionary interests, and similar burdens.

            (b) Liens for taxes or assessments not yet due or delinquent or, if
delinquent, that are being contested in good faith in the normal course of
business.

            (c) All rights to consent by, required notices to, filing with, or
other actions by governmental entities in connection with the sale or conveyance
of oil and gas leases or interests therein, if the same are customarily obtained
subsequent to such sale or conveyance and neither Seller nor Buyer has reason to
believe they cannot be obtained.

            (d) Rights reserved to or vested in any governmental authority.

            (e) Easements, conditions, covenants, restrictions, servitudes,
permits, rights-of-way, surface leases and other rights in the Interests for the
purpose of surface operations, roads, alleys, highways, railways, pipelines,
transmission lines, transportation lines, distribution lines, power lines,
telephone lines, and removal of timber, grazing, logging operations, canals,
ditches, reservoirs and other like purposes, or for the joint or common use of
real estate, rights-of-way, facilities and equipment which do not materially
impair the rights held by Seller or the use and enjoyment of the Interests.

            (f) Defects, irregularities and deficiencies in title to any
rights-of-way, easements, surface lease or other rights which in the aggregate
do not materially impair the use of such right-of-way, easements, surface leases
or other rights for the purpose of which such rights will be held by Buyer.

            (g) Zoning, planning and environmental laws and ordinances and
municipal regulations.

            (h) Vendors, carriers, warehousemen, repairmen, mechanics, workmen,
materialmen, construction or other like liens arising by operation of law in the
ordinary course of business or incident to the construction or improvement of
any property in respect of obligations which are not yet due, or which are being
contested in good faith by appropriate proceedings by or on behalf of Seller,
and not reasonably likely to materially reduce the value of the Interests and
for which Seller and Buyer agree at Closing to provide proper credits or escrow
of funds for any liability that might arise after Closing.

      10.4 Notice of Title Defect. Except for Permitted Encumbrances, any lien,
encumbrance, or defect in title that would, in Buyer's reasonable opinion,
materially affect the value of the Interests, or materially diminish Buyer' use
or enjoyment of the Interests shall be a title defect ("Title Defect"). Not
later than December 1, 2005 at 5:00 p.m. Central Time (the "Claim Date"), Buyer
must notify Seller in writing of any matter that Buyer considers to be a Title
Defect ("Notice of Title Defect"), which notice shall include, (i) a specific
description of the matter or matters Buyer asserts as a Title Defect or Defects,
(ii) a specific description of the Interests or the portion of the Interest that

                                      -14-
<PAGE>

is affected by the Title Defect or Defects, (iii) Buyer's reasonable calculation
of the fair market value of the portion or portions of the Interests affected by
the Title Defect or Defects (the "Title Defect Amount"), (iv) appropriate
documentation supporting the Title Defect or Defects in the possession of Buyer,
not subject to the attorney-client privilege; provided, however, that Buyer
acknowledges and agrees that it may not submit a Notice of Title Defect unless
and until Buyer has reasonably determined that aggregate Title Defect Amount of
all Title Defects equals or exceeds an amount equal to five percent (5%) of the
Purchase Price. In the event that aggregate title Defect Amount of all Title
Defects equals or exceeds ten percent (10%) of the Purchase Price, Buyer may
immediately terminate this Agreement, and upon such termination, the Deposits
shall be promptly returned to Buyer.

      10.5 Seller's Options and Opportunity to Cure. Upon receipt of a Notice of
Title Defect, as to each Title Defect, Seller may, at its option, (i) cure or
remove any Title Defect at Seller's sole cost and expense prior to Closing, (ii)
agree (but only with the consent of Buyer) to reduce the Purchase Price by the
applicable Title Defect Amount or by such other, lesser amount to which the
Parties may agree in writing, (iii) dispute that any item described in the
Notice of Title Defect actually constitutes a Title Defect and, after a twenty
(20) day period of good faith negotiation between Buyer and Seller in attempt to
resolve such dispute, submit the issue to arbitration as provided in Article 14
of this Agreement, or (iv) if the aggregate amount of all Title Defects equals
or exceeds ten percent (10%) of the Purchase Price, immediately terminate this
Agreement. In the event of such termination by Seller, the Deposits shall be
promptly returned to Buyer.

                                   ARTICLE 11
                                 INDEMNIFICATION

      11.1 Definitions. The following terms contained in this Article 11 shall
have for purposes of this Agreement the meaning given to such terms as provided
below:

            (a) "Claims Period" shall mean the period beginning on the Closing
Date and ending twelve (12) months following the Closing Date.

            (b) "Losses" shall mean all losses, liabilities, deficiencies,
damages (including without limitation indirect or consequential damages),
encumbrances, fines, penalties, claims, costs and expenses (including, without
limitation all fines, penalties and other amounts paid pursuant to a judgment,
compromise or settlement), court costs and reasonable legal and accounting fees
and disbursements.

      11.2 Survival of Representations, Warranties, Covenants and Agreements.

            (a) All representations and warranties of Seller contained in this
Agreement shall survive the Closing Date for the duration of the Claims Period;
except that the representations and warranties in Section 10.2 (Title) shall
survive the Closing indefinitely. Any claim made by Buyer with respect to the
representations and warranties of Seller contained in this Agreement must be
initiated by Buyer during the Claims Period, except that there shall be no time
limit on when claims may be initiated with respect to the representations and
warranties in Section 10.2 (Title). All of the representations and warranties of
Seller contained in this Agreement shall in no respect be limited or diminished

                                      -15-
<PAGE>

by any past or future inspection, investigation, examination or possession on
the part of Buyer or its Representatives. All covenants and agreements made by
Seller contained in this Agreement shall survive the Closing Date until fully
performed or discharged.

            (b) All representations and warranties of Buyer contained in this
Agreement shall survive the Closing Date for the duration of the Claims Period.
Any claim made by Seller with respect to the representations and warranties of
Buyer contained in this Agreement must be initiated during the Claims Period.
All of the representations and warranties of Buyer contained in this Agreement
shall in no respect be limited or diminished by any past or future inspection,
investigation, examination or possession on the part of Seller or its
Representatives. All covenants and agreements made by Buyer contained in this
Agreement shall survive the Closing Date until fully performed or discharged.

      11.3 Indemnification by Seller. Except as otherwise specifically provided
in this Agreement, Seller shall indemnify and hold harmless Buyer and its
subsidiaries, affiliates, and parents, and its and their employees,
representatives, officers, directors, attorneys and agents from and against:

            (a) any and all Losses suffered or incurred by any of them by reason
of any breached or untrue representation or warranty of Seller contained in this
Agreement;

            (b) any and all Losses suffered or incurred by any of them by reason
of the non-fulfillment of any covenant or agreement by Seller contained in this
Agreement; and

            (c) any and all Losses suffered or incurred by any of them resulting
from, related to, on account of, and proximately caused by Seller during its
ownership, management or control of the Interests prior to the Closing Date.

      11.4 Indemnification by Buyer. Except as otherwise specifically provided
in this Agreement, Buyer shall indemnify and hold harmless Seller and its
subsidiaries, affiliates, and parents, and its and their employees,
representatives, officers, directors, attorneys and agents from and against:

            (a) any and all Losses suffered or incurred by any of them by reason
of any breached or untrue representation or warranty of Buyer contained in this
Agreement; and

            (b) any and all Losses suffered or incurred by any of them by reason
of the non-fulfillment of any covenant or agreement by Buyer contained in this
Agreement.

      11.5 Notification and Defense of Claims or Actions.

            (a) As used in this Article 11, any party seeking indemnification
pursuant to this Article 11 is referred to as an "indemnified party" and any
party from whom indemnification is sought pursuant to this Article 11 is
referred to as an "indemnifying party." An indemnified party which proposes to
assert the right to be indemnified under this Article 11 shall submit a written
demand for indemnification within fifteen (15) business days of becoming aware

                                      -16-
<PAGE>

of such potential claim setting forth in summary form the facts as then known
which form the basis for the claim for indemnification; provided, however, that
the failure to give such notice will not affect such claim of indemnification
except to the extent of actual prejudice to the indemnifying party. With respect
to claims based on actions by third parties, an indemnified party shall, within
fifteen (15) business days after the receipt of notice of the commencement of
any Proceeding against it in respect of which a claim for indemnification is to
be made against an indemnifying party, notify the indemnifying party in writing
of the commencement of such Proceeding, enclosing a copy of all papers served;
provided, however, that the failure to so notify the indemnifying party of any
such Proceeding shall not relieve the indemnifying party from any liability
which it may have to the indemnified party, except to the extent that the
indemnifying party is prejudiced thereby. Thereafter, the indemnified party
shall deliver to the indemnifying party, within fifteen (15) days after receipt
by the indemnified party, copies of all further notices relating to such claim.

            (b) If an indemnified party gives notice to the indemnifying party
pursuant to Section 11.5(a) of the assertion of a third-party claim, the
indemnifying party shall be entitled to participate in the defense of such
third-party claim and, to the extent that it wishes, to assume the defense of
such third-party claim with counsel satisfactory to the indemnified party. After
notice from the indemnifying party to the indemnified party of its election to
assume the defense of such third-party claim, the indemnifying party shall not,
so long as it diligently conducts such defense, be liable to the indemnified
party under this Article 11 for any fees of other counsel or any other expenses
with respect to the defense of such third-party claim, in each case subsequently
incurred by the indemnified party in connection with the defense of such
third-party claim, other than reasonable costs of investigation. If the
indemnifying party assumes the defense of a third-party claim, (i) such
assumption will conclusively establish for purposes of this Agreement that the
claims made in that third-party claim are within the scope of and subject to
indemnification, and (ii) no compromise or settlement of such third-party claims
may be effected by the indemnifying party without the indemnified party's
consent unless (A) there is no finding or admission of any violation of law or
governmental rule or regulation or any violation of the rights of any person or
entity; (B) the sole relief provided is monetary damages that are paid in full
by the indemnifying party; and (C) the indemnified party shall have no liability
with respect to any compromise or settlement of such third-party claims effected
without its consent. If notice is given to an indemnifying party of the
assertion of any third-party claim and the indemnifying party does not, within
ten (10) days after the indemnified party's notice is given, give notice to the
indemnified party of its election to assume the defense of such third-party
claim, the indemnifying party will be bound by any determination made in such
third-party claim or any compromise or settlement effected by the indemnified
party. Any control of the defense of a third-party claim given to an
indemnifying party pursuant to this Section 11.5(b) shall, upon notice from the
indemnified party, be reversed and given back to the indemnified party if, at
any point during the course of such third-party claim the conditions necessary
to have been met to allow such indemnifying party to so control such defense are
no longer true whether because all unsatisfied claims increase in amount or
because any other factors arise.

            (c) In the event that any claim for indemnification is made with
respect to any third-party claim pursuant to this Article 11, (i) the party
assuming primary responsibility for the defense of such claim shall at all times

                                      -17-
<PAGE>

keep the other party reasonably informed as to the status of such claim and (ii)
the party not primarily responsible for the defense of such claim shall
cooperate fully with the other party in connection with such defense.

      11.6 Sole Remedy. The sole remedy of the Parties for any and all claims
against the other Party with respect to the transactions contemplated herein
shall be a claim for indemnification under this Article 11 on the terms and
subject to the conditions of this Agreement, except for claims of willful or
intentional misconduct or fraud.

      11.7 General Liability Limitation. Notwithstanding anything contained in
this Agreement to the contrary, Seller shall not be required to indemnify or
otherwise compensate Buyer for aggregate Losses in excess of the Purchase Price;
provided, however, that such limitation of Seller's liability shall not apply to
claims resulting from Seller's gross negligence, willful misconduct or fraud.

                                   ARTICLE 12
                        TERMINATION, DEFAULT AND REMEDIES

      12.1 Right of Termination. The Agreement and the transactions contemplated
herein may be terminated at any time at or prior to Closing:

                        (i)   By Seller, at Seller's option, in the event any of
                              the conditions set forth in Article 7 have not
                              been satisfied as provided therein as of the date
                              specified for the Closing, or if satisfaction of
                              such condition by such date is or becomes
                              impossible (other than through the failure of
                              Seller to comply with its obligations under this
                              Agreement), and Seller has not waived such
                              condition on or before such date;

                        (ii)  By Buyer, at Buyer's option, in the event any of
                              the conditions set forth in Article 6 have not
                              been satisfied as provided therein as of the date
                              specified for the Closing, or if satisfaction of
                              such condition by such date is or becomes
                              impossible (other than through the failure of
                              Buyer to comply with its obligations under this
                              Agreement), and Buyer has not waived such
                              condition on or before such date;

                        (iii) At any time by the mutual written agreement of the
                              Parties;

                        (iv)  By Buyer, at Buyer's option, as set forth in 10.4
                              of this Agreement;

                        (v)   By Seller, at Seller's option, as set forth in
                              10.5 of this Agreement; or

                        (vi)  By either Party in the event that that the Closing
                              has not occurred at or before 11:59 p.m. on
                              February 28th, 2006; provided, however, that the
                              right to terminate this Agreement under this

                                      -18-
<PAGE>

                              Section 12.1(vi) shall not be available to any
                              Party whose failure to fulfill any material
                              obligation under this Agreement has been the cause
                              of or resulted in the failure of the Closing to
                              occur on or prior to the aforesaid date.

      12.2 Effect of Termination and Remedies Upon Default. Upon the termination
of this Agreement by Seller through no fault of Seller pursuant to Section
12.1(i) or 12.1(vi) of this Agreement, Seller shall be entitled to retain the
Deposits and all accrued interest thereon as its sole remedy. Upon such
termination of this Agreement through no fault of Seller, Seller shall be free
immediately to enjoy all rights of ownership of the Interests and to sell,
transfer, encumber, or otherwise dispose of the Interests to any party without
any restriction under this Agreement. Upon the failure of Seller to meet a
material condition to Closing, Buyer, at its sole option, may (i) enforce
whatever legal or equitable remedies may be appropriate and applicable, or (ii)
terminate this Agreement and immediately receive back the Deposits as its sole
remedy, thereby waiving all other remedies available to it. Upon termination of
this Agreement by Buyer through no fault of Buyer pursuant to either Section
12.1(ii),(iii), (iv), (v), or (vi), or as required elsewhere in this Agreement,
Seller shall, upon written demand, promptly return the Deposits to Buyer by wire
transfer to an account designed by Buyer. Except for the obligations set forth
in this Article 12 and in Sections 5.2, 5.3 and 11.2, upon termination of this
Agreement, the Parties shall have no further obligations to, nor rights against,
one another.

                                   ARTICLE 13
                                  MISCELLANEOUS

      13.1 Fees and Taxes. Except as otherwise specifically provided, all fees,
costs and expense incurred by Buyer or Seller in negotiating this Agreement or
in consummating the transactions contemplated by this Agreement shall be paid by
the Party incurring the same, including, without limitation, legal and
accounting fees, costs and expenses. All required documentary, filing and
recording fees for the assignments, conveyance or other instruments required to
convey title to the Interests to Buyer shall be borne by Buyer. In addition, the
liability for any sales, use, transfer or similar tax associated with the sale
and/or transfer of the Interests shall be the liability of, and for the account
of, the Buyer and such liability shall not be subject to proration as provided
in Section 2.3.

      13.2 Notices. Unless otherwise provided in this Agreement, any agreement,
notice, request, instruction or other communication to be given hereunder by any
Party to the other shall be in writing and (i) delivered personally (such
delivered notice to be effective on the date it is delivered), (ii) mailed by
certified mail, postage prepaid (such mailed notice to be effective four (4)
days after the date it is mailed), (iii) deposited with a reputable overnight
courier service (such couriered notice to be effective one (1) day after the
date it is mailed), or (iv) sent by facsimile transmission (such facsimile
notice to be effective on the date that confirmation of such facsimile
transmission is received), with a confirmation sent by way of one of the above
methods, as follows:

                                      -19-
<PAGE>

                  If to Seller addressed to:

                  Aurora Energy Ltd.
                  3760 N. US 31 South
                  P.O. Box 961
                  Traverse City, MI 49685-0961
                  Attention: John Miller

                  If to Buyer, addressed to:

                  New Albany-Indiana, LLC
                  c/o Rex Energy Operating Corp.
                  1965 Waddle Road
                  State College, Pennsylvania 16803
                  Attention:  Benjamin W. Hulburt
                  Telecopier: (814) 278-7286

Any Party may designate in a writing to any other Party any other address or
telecopier number to which, and any other person to whom or which, a copy of any
such notice, request, instruction or other communication should be sent.

      13.3 Amendments. This Agreement may not be amended except by an instrument
in writing signed by Buyer and Seller.

      13.4 Preparation of Agreement. Both Seller and Buyer and their respective
counsel participated in the preparation of this Agreement. In the event of any
ambiguity in this Agreement, no presumption shall arise based on the identity of
the draftsman of this Agreement.

      13.5 Headings. The headings of the articles and sections of this Agreement
are for guidance and convenience of reference only and shall not limit or
otherwise affect any of the terms or provisions of this Agreement.

      13.6 Counterparts; Facsimile Signature. This Agreement may be executed by
Buyer and Seller in any number of counterparts, each of which shall be deemed an
original instrument, but all of which together shall constitute but one and the
same instrument. Any Party may execute this Agreement by facsimile signature and
the other Party will be entitled to rely on such facsimile signature as evidence
that this Agreement has been duly executed by such Party. Any Party executing
this Agreement by facsimile signature will promptly forward to the other Party
an original signature page by overnight courier.

      13.7 References. References made in this Agreement, including use of a
pronoun, shall be deemed to include, where applicable, masculine, feminine,
singular or plural, individuals or corporations. As used in this Agreement,
"person" shall mean any natural person, corporation, partnership, trust, estate
or other entity.

                                      -20-
<PAGE>

      13.8 Governing Law. This Agreement and the transactions contemplated
hereby shall be construed in accordance with, and governed by, the laws of the
State of Indiana without giving effect to the conflicts of law rules thereof.
Any disputes concerning this Agreement or the subject matter hereof shall be
brought in the County of Greene, State of Indiana in a court of competent
jurisdiction.

      13.9 Assignment. Neither this Agreement nor the rights and obligations
hereunder may be assigned or delegated by either Party without the prior written
consent of the other Party, which consent shall not be unreasonably withheld,
and any assignment or delegation made without such consent shall be void;
provided, however, Buyer shall have the right to assign this Agreement and to
delegate its obligations under this Agreement to any entity that (i) Buyer
controls, (ii) controls Buyer or (iii) is under common control with Buyer,
subject to the assumption of all obligations by any such entity. In the event of
any assignment, this Agreement shall be binding upon said party the same as if
it had been the original party hereto. Subject to the foregoing, the terms and
conditions of this Agreement shall be binding on the Parties' successors and
assigns.

      13.10 Entire Agreement. This Agreement (including the Exhibits hereto)
constitutes the entire understanding between the Parties with respect to the
subject matter hereof, superseding all negotiations, prior discussions and prior
agreements and understanding relating to such subject matter.

      13.11 Parties in Interest. This Agreement shall be binding upon, and shall
inure to the benefit of, the Parties and their respective successors and
assigns.

      13.12 Further Cooperation. After the Closing, Buyer and Seller shall
execute and deliver, or shall caused to be executed and delivered from time to
time, such further instruments of conveyance and transfer and shall take such
other action as any Party may reasonably request to convey and deliver the
Interests to Buyer, to accomplish the orderly transfer of the Interests to
Buyer, or to otherwise effectuate the transactions contemplated by this
Agreement. If either Party hereto receives monies belonging to the other, such
amount shall immediately be paid over to the proper Party. If an invoice or
other evidence of an obligation is received by a Party, which is partially an
obligation of both Seller and Buyer, then the Parties shall consult with each
other and each shall promptly pay its portion of such obligation to the obligee.

      13.13 Waiver. No failure of any Party to this Agreement to require, and no
delay by any Party to this Agreement in requiring, any other Party to comply
with any provision of this Agreement shall constitute a waiver of the right to
require such compliance. No failure of any Party to this Agreement to exercise,
and no delay by any Party to this Agreement in exercising, any right or remedy
under this Agreement shall constitute a waiver of such right or remedy. No
waiver by any Party to this Agreement of any right or remedy under this
Agreement shall be effective unless made in writing. Any waiver by any Party to
this Agreement of any right or remedy under this Agreement shall be limited to
the specific instance and shall not constitute a waiver of such right or remedy
in the future.

      13.14 Press Release. Neither Party shall make any press release or other
announcement in connection with the execution of this Agreement or the Closing

                                      -21-
<PAGE>
without first consulting with the other Party. Following such consultation and
good faith attempt to make reasonable accommodations, either Party may make any
announcement or press release that it believes is either required by applicable
law or is advisable in connection with such Party's interest in providing public
disclosure regarding its activities. This provision shall not apply to any
filing with any governmental body or any stock exchange required by law, rule or
regulation.

      13.15 Invalidity. In the event that any one or more of the provisions
contained in this Agreement or in any other instrument referred to herein,
shall, for any reason, be held to be invalid, illegal or unenforceable in any
respect, then to the maximum extent permitted by law, such invalidity,
illegality or unenforceability will not affect any other provision of this
Agreement or any other such instrument.

      13.16 Knowledge. For purposes of this Agreement, "knowledge",
"information" or "belief" shall mean (except as otherwise provided in this
sentence) the actual knowledge, information or belief, as appropriate to the
context of the statement in which the term is used, of any principal shareholder
or of any officer or director of the relevant Party, or the knowledge,
information or belief which such individual would have after (a) having made a
review of documents of a date not more than three (3) years old in files under
their immediate personal control and (b) having made reasonable inquiry of those
executive, management or supervisory employees under their direct supervision,
with respect to the matters which are relevant to the representation, warranty,
covenant or agreement being made or given.

                                   ARTICLE 14
                                   ARBITRATION

      14.1 Selection of Arbitrators. Any controversy between the Parties hereto
arising under this Agreement, and not resolved by negotiation and agreement,
shall be determined by a board of arbitration upon notice of submission given by
either Party to the other, which notice shall name a qualified, independent
arbitrator. Within ten (10) days after the receipt of such notice, the other
Party shall name a qualified, independent arbitrator, or failing to do so, the
Party giving notice shall name the second. The two arbitrators so appointed
shall name the third qualified, independent arbitrator. Any board or arbitration
called pursuant to this section shall take place in Geene County, State of
Indiana.

      14.2 Determination. The arbitrators selected to act hereunder shall be
qualified by education and experience to pass on the particular question in
dispute. The arbitrators shall promptly hear and determine (after due notice of
hearing and giving the parties a reasonable opportunity to be heard) the
questions submitted, and shall render their decision within sixty (60) days
after appointment of the third arbitrator. If within said period a decision is
not rendered by the board, or majority thereof, new arbitrators may be named and
shall act hereunder at the election of either Buyer or Seller in like manner as
if none had been previously named.

      14.3 Decision Binding. The decision of the arbitrators, or the majority
thereof, made in writing shall be final and binding upon the Parties hereto as
to the questions submitted, and Buyer and Seller will abide by and comply with

                                      -22-
<PAGE>

such decision. The prevailing Party shall be entitled to recoup all of the
expenses of arbitration, including reasonable compensation to the arbitrators,
expenses of counsel, witnesses, and employees.

        [Remainder of page intentionally left blank. Signatures follow.]

                                      -23-
<PAGE>

      IN WITNESS WHEREOF, each of the parties has executed this Agreement as of
the date first above written.

                                                  SELLER:

                                                  AURORA ENERGY LTD.

                                                  By:    /s/ William W. Deneau
                                                         -----------------------
                                                  Name:  William W. Deneau
                                                  Title: President

                                                  BUYER:

                                                  NEW ALBANY-INDIANA, LLC

                                                  By:    /s/ Benjamin W. Hulburt
                                                         -----------------------
                                                  Name:  Benjamin W. Hulburt
                                                  Title: President

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