Document:

EX-10.2

 Exhibit 10.2 

EXECUTION VERSION 

CONVEYANCE AND AGREEMENT OF NET PROFITS INTEREST 

By and among 
 AMERICAN
SHALE DEVELOPMENT, INC. 
 a Delaware corporation 

in favor of 
 MORGAN
STANLEY CAPITAL GROUP INC. 
 Dated May 21, 2014 

 TABLE OF CONTENTS 

 

							
	ARTICLE I DEFINITIONS	  	 	1	  
		
	ARTICLE II ASSIGNMENT AND PAYMENT OF NET PROFITS INTEREST	  	 	6	  
			
	2.1	 	Assignment of Net Profits Interest	  	 	6	  
	2.2	 	Payment of Net Profits Interest	  	 	6	  
	2.3	 	Statements	  	 	7	  
	2.4	 	Information/Access	  	 	8	  
		
	ARTICLE III OPERATION OF THE SUBJECT INTERESTS	  	 	8	  
			
	3.1	 	Operations Standard	  	 	8	  
	3.2	 	Pooling and Unitization	  	 	8	  
	3.3	 	Non-Consent	  	 	9	  
	3.4	 	Marketing	  	 	9	  
	3.5	 	Amendment of Project Properties	  	 	9	  
	3.6	 	Abandonment	  	 	9	  
	3.7	 	Contracts with Affiliates	  	 	10	  
	3.8	 	Conflict with the Credit Agreement	  	 	10	  
		
	ARTICLE IV RELEASE AND TRANSFERS	  	 	10	  
			
	4.1	 	Assignment by the Borrower	  	 	10	  
	4.2	 	Tag-Along Right	  	 	10	  
	4.3	 	Repurchase Right	  	 	11	  
	4.4	 	Assignment by Payee	  	 	11	  
	4.5	 	Farmouts	  	 	11	  
		
	 ARTICLE V OWNERSHIP OF PROPERTY; LIABILITY OF PAYEE; NO RIGHT OF OPERATIONS BY PAYEE
	  	 	12	  
			
	5.1	 	Certain Tax Matters; Ownership of Certain Property	  	 	12	  
	5.2	 	No Personal Liability	  	 	12	  
	5.3	 	No In-Kind Rights	  	 	12	  
	5.4	 	No Partnership	  	 	12	  
		
	ARTICLE VI NEGATIVE COVENANT	  	 	12	  
			
	6.1	 	Senior Obligation	  	 	12	  
		
	ARTICLE VII MISCELLANEOUS	  	 	13	  
			
	7.1	 	Notices	  	 	13	  
	7.2	 	Payments	  	 	13	  
	7.3	 	Amendments	  	 	13	  
	7.4	 	Further Assurances	  	 	13	  
	7.5	 	Waivers	  	 	13	  
	7.6	 	Governing Law	  	 	14	  
	7.7	 	Tax Matters	  	 	14	  
	7.8	 	Confidentiality	  	 	14	  

  
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	7.9	 	Counterparts	  	 	14	  
	7.10	 	Binding Effect	  	 	14	  
	7.11	 	Termination of Project Properties	  	 	14	  
	7.12	 	WAIVER OF JURY TRIAL	  	 	14	  
	7.13	 	Agreement upon Loan Repayment Date	  	 	15	  

 Exhibit A – Project Properties 

 CONVEYANCE AND AGREEMENT OF NET PROFITS INTEREST 

This Conveyance and Agreement of Net Profits Interest (this “Agreement”) is entered into as of May 21, 2014, by and
among AMERICAN SHALE DEVELOPMENT, INC., a Delaware corporation (the “Borrower”), in favor of MORGAN STANLEY CAPITAL GROUP, INC., a Delaware corporation (“Payee”), which are parties to that certain Credit Agreement
dated as of the date hereof (as the same may be modified, amended or supplemented from time to time, the “Credit Agreement”) among the Borrower, as borrower thereunder, Payee, as Administrative Agent and the Lenders party thereto.
Unless otherwise defined herein, capitalized terms shall have the meaning given them in the Credit Agreement. If the Credit Agreement is terminated, then capitalized terms shall have the meaning given them in the Credit Agreement immediately prior
to such termination. 
 ARTICLE I 

DEFINITIONS 
 As used
herein, the following terms shall have the meaning ascribed to them below: 
 “Adjusted Net Cash Proceeds” means the
product of (a) the Net Cash Proceeds (as defined in the Credit Agreement) received by the Borrower (either directly or from its Parent) in connection with the sale and issuance of Equity Interests of the Borrower or its Parent to non-Affiliates
occurring since the Effective Time multiplied by (b) a fraction (i) the numerator of which is the value of the Subject Interests (on a per acre basis) implied by such issuance of Equity Interests (provided that such value shall not exceed
the Effective Time Equity Value) and (ii) the denominator of which is the Effective Time Equity Value. 
 “Agreement”
means this Net Profits Interest Agreement, as the same may be amended or modified from time to time by one or more instruments executed by both the Borrower and Payee. 

“Applicable NPI” means, at the time of calculation, the product of (a) the sum of (i) the Initial NPI plus
(ii) the Contingent NPI multiplied by (b) the Dilution Factor. 
 “Available Funds” means, for any period and
without duplication, (a) operating revenues of the Borrower and the other Loan Parties as reported on the combined and consolidated statement of operations for such period whether or not attributable to the Subject Interests, (b) the
proceeds from the sale, condemnation or casualty of all or any part of or interest in the Subject Interests of any Loan Party, and (c) any other net proceeds of Borrower and the other Loan Parties not included in the foregoing clauses
(a) and (b). 
 “Borrower” means the Borrower as defined in the first paragraph of this Agreement, and its
successors and assigns; and, unless the context in which used shall otherwise require, such term shall include any successor owner at the time in question of any or all of the Subject Interests. 

“Capital Expenditure” has the meaning given it in the Credit Agreement. 

“Contingent NPI” means the product of (a) two and one-half percent (2.5%) multiplied by (b) a fraction
(i) the numerator of which is the total principal amount of Tranche B Loans made by the Lenders and (ii) the denominator of which is $47,500,000. 

“CPI” means the statistical amount quoted from time to time by the United States Bureau of Labor Statistics
(“BLS”) as the “Consumer Price Index for All Urban Consumers (CPI-U): U.S. city average, All Items” for the relevant period as quoted in the “Money Rates” section of the Wall Street

 Journal (or in such other section of the Wall Street Journal in which the CPI is published from time to time).

 “Credit Agreement” means the Credit Agreement as defined in the first paragraph of this Agreement. 

“Day” means each period of twenty-four (24) consecutive hours beginning and ending at 7:00 A.M., Central Time. The
reference date for any Day shall be the calendar date upon which the twenty-four (24) hour period commences. 
 “Dilution
Factor” means, on any date of determination, a fraction (a) the numerator of which is the Effective Time Equity Value and (b) the denominator of which is the sum of (i) such Effective Time Equity Value plus (ii) Adjusted
Net Cash Proceeds. 
 “Distributable Cash Flow” means, for any period, and without duplication: (1) Available Funds
reduced by Specified Cash Deductions for such period; plus (2) non-cash expenses (including but not limited to impairments, depreciation and amortization) to the extent such non-cash expenses are included in the Specified Cash Deductions for
such period, and in each case as reflected in the consolidated financial statements of the Borrower for such period. 
 “Effective
Time” means 7:00 a.m., local time in effect where the Subject Interests are located, on the date of this Agreement. 

“Effective Time Equity Value” means the product of (i) the average of the closing prices of Parent’s Equity
Interests as reported on the OTCQXB U.S. marketplace administered by OTC Markets Group Inc. for the 30 trading day period beginning on the date of this Agreement multiplied by (ii) the number of shares of such Equity Interests issued and
outstanding on the date of this Agreement. 
 “Equity Interest” means, with respect to any Person, any shares, interests,
participation, or other equivalents (however designated) of corporate stock, membership interests or partnership interests (or any other ownership interests) of such Person, including any options, warrants or similar rights to purchase such equity
interest. 
 “Fair Value” means, with respect the exercise by Payee of its rights under Section 4.2 or the exercise of
the Borrower of its rights under Section 4.3, (a) in the event of a sale of all or substantially all of the Equity Interests of the Borrower to one or more non-Affiliates of the Borrower, an amount equal to (i) the net cash proceeds
received by the Parent in connection with such sale that are attributable to the Borrower’s Equity Interests multiplied by (ii) the Applicable NPI, (b) in the event of a sale of all or substantially all of the Equity Interests of the
Parent to one or more non-Affiliates of the Parent, an amount equal to (i) the net cash proceeds received by the holders of the Equity Interests in the Parent in connection with such sale that are attributable to the Parent’s Equity
Interests in the Borrower multiplied by (ii) the Applicable NPI, and (c) in all other events, an amount equal to the proceeds which could reasonably be expected to be obtained from the sale of the Net Profits Interest to a Third Party on
an arms’-length negotiated basis, taking into account relevant market conditions and factors existing at the time of any such proposed sale or release, which shall be determined by agreement of the Borrower and Payee (provided that any Subject
Interest to which proved reserves are attributable, shall be based on the same commodity price assumption methodology used to calculate PV9 Value). If the Borrower and Payee have not agreed upon a Fair Value within 10 days after such event requiring
the determination of Fair Value, then the Borrower and Payee shall agree upon an Independent Valuator to determine Fair Value within 15 days after such event requiring the determination of Fair Value. If the Borrower and Payee cannot agree upon an
Independent Valuator to determine Fair Value, then either the Borrower or Payee 

  
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may petition to have a court of law appoint such Independent Valuator to determine Fair Value. If Fair Value is determined by an Independent Valuator (A) the Borrower will provide such
information regarding, in the case of clauses (a) and (b), the asset sale or stock sale, as applicable, and, in the case of clause (c), reserves in the Subject Interests, as such Independent Valuator may reasonably request, (B) the costs
of such Independent Valuator shall be shared equally by the Borrower and Payee, and (C) the determination of Fair Value by the Independent Valuator shall be conclusive, final and binding on the Borrower and Payee. For the avoidance of doubt,
“Fair Value” shall be calculated net of (i) any repayment of debt in connection with the transaction for which the calculation of fair value arises and (ii) any cash on the balance sheet of the Borrower that are proceeds of any
Transfer in connection with which the Borrower repurchased a portion of the Net Profits Interest in accordance with Section 4.2 or Section 4.3. 

“Farmout Agreement” means any farmout agreement, participation agreement, exploration agreement, development agreement or any
similar agreement. 
 “Gas” means natural gas and other gaseous Hydrocarbons or minerals, including helium, but excluding
any Gas Liquids. 
 “Gas Liquids” means those natural gas liquids and other liquid Hydrocarbons (other than Oil), including
ethane, propane, butane and natural gasoline, and mixtures thereof, that are removed from a Gas stream by the liquids extraction process of any field facility or gas processing plant and delivered by the facility or plant as natural gas liquids.

 “General and Administrative Costs” means normal and customary expenses and costs in any period that will be paid in
cash, that (a) in accordance with GAAP are classified as general and administrative costs, (b) are of a type consistent with prior general and administrative costs incurred by the Loan Parties, (c) are reported in the then-current
period in accordance with GAAP and (d) consist of consulting fees, salary, bonuses, employee benefits, rent, supplies, travel and entertainment, insurance, accounting, legal, engineering and broker related fees, required to manage the affairs
of the Loan Parties provided, that (y) to the extent any of the foregoing are capitalized, they shall be included in the definition of General and Administrative Costs and (z) the following shall be excluded from the calculation of General
and Administrative Costs: (1) cost of sales, (2) sales commissions, (3) taxes (including income, franchise, property and sales taxes), (4) interest expense or payments and financing costs, (5) impairments and (6) bad
debt expenses (as well as any General and Administrative Costs that are incurred in connection with such bad debt expenses). 

“General and Administrative Costs Cap” means, on an annual basis, $2,880,000, as such amount shall, effective as of
January 1, 2016, be subject to annual increases or decreases, as applicable, by a percentage equal to the annual percentage increase or decrease in the CPI as of January 1 of each year. 

“Hydrocarbons” means (i) Oil, (ii) Gas and (iii) Gas Liquids. 

“Independent Valuator” means an independent Third Party investment bank or financial institution of recognized national
standing in the oil and gas industry with respect to valuing oil and gas investments chosen by the Borrower and Payee or a court of law to determine Fair Value in accordance with the definition thereof. 

“Initial NPI” means six and one-half percent (6.5%). 

“Loan Repayment Date” means such time as Borrower has paid and discharged all of its Obligations under the
Credit Agreement (other than Obligations arising under this Agreement and 

  
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reimbursement and indemnification Obligations that expressly survive the termination of the Credit Agreement). 

“Month” means each period beginning at 7:00 A.M., Central Time, on the first Day of a calendar month and ending at
7:00 A.M., Central Time, on the first Day of the next succeeding calendar month. 
 “Net Profits Interest” has the
meaning given such term in Section 2.2. 
 “Oil” means crude oil and condensate, excluding Gas Liquids. 

“Parent” means Trans Energy, Inc., a Nevada corporation. 

“Parties” means collectively the Borrower and Payee. 

“Payee” means Payee as defined in the first paragraph of this Agreement, and its successors and assigns; and, unless the
context in which used shall otherwise require, such term shall include any successor owner at the time in question of any or all of such Payee’s percentage of the Net Profits Interest. 

“Paying Quantities” means quantities sufficient to cover the Borrower’s cost and expense of equipping, maintaining and
operating the Project Properties, and of satisfying lessor royalties, other royalty burdens (existing as of the date of this Agreement), and the Net Profits Interest payments herein provided to be made to Payee. 

“Payment Period” means a Month. The first Payment Period shall mean the first full Month following the Loan Repayment Date.

 “Permitted Interest Expense” means interest payments made by the Borrower in an amount not to exceed the lesser of
(i) interest payments paid and (ii) pro forma interest payments that would have been incurred based on the actual outstanding amount of any debt and the last applicable interest rate pursuant to Section 2.06 of the Credit Agreement.

 “Person” means any individual, partnership, limited liability company, corporation, trust, unincorporated association,
governmental agency, subdivision, or instrumentality, or other entity or association. 
 “Permitted Capital Expenditures”
means any Capital Expenditure made by a Loan Party in good faith and in accordance with the Prudent Operator Standard. 
 “Prime
Rate” means the prime rate published in The Wall Street Journal’s “Money Rates” or similar table. If multiple prime rates are quoted in the table, then the highest prime rate will be the Prime Rate. In the event that the
prime rate is no longer published by The Wall Street Journal in the “Money Rates” or similar table, then Payee may select an alternative published index based upon comparable information as a substitute Prime Rate. Upon the selection of a
substitute Prime Rate, the applicable interest rate shall thereafter vary in relation to the substitute index. 
 “Project
Properties” means (i) the oil, gas and mineral leases and the oil and gas leases described on Exhibit A hereto or acquired by the Borrower before the Loan Repayment Date as to all lands and depths described in such leases and any
interests therein and any leasehold interests in any other leases of Hydrocarbons derived from the pooling or unitization of such leases (or portion thereof if limited) with other leases of Hydrocarbons, together with any interests acquired or
maintained by the Borrower in any 

  
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and all extensions of such leases, and (ii) any replacement leases taken upon or in anticipation of termination of any such leases (if executed and delivered during the term of or within one
year after the expiration of the predecessor lease), as to all lands and depths described in the predecessor lease (unless the extended or predecessor lease is specifically limited in depth or areal extent, in which event only the corresponding
portion of such lease shall be considered a renewal or extension or a replacement lease as to which this Agreement applies). 

“Prudent Operator Standard” means the standard of conduct of a prudent oil and gas operator under the same or similar
circumstances, acting with respect to its own property and disregarding the existence of the Net Profits Interest as a burden on such property. 

“Record Date” means the forty-fifth (45th) day (or the next
Business Day, if the 45th day is not a Business Day) of the Payment Period following the close of the previous Payment Period. 

“Refinancing Debt” has the meaning given such term in Section 8.13. 

“Required NPI Valuation” means a Fair Value equal to the product of (a) the sum of (i) the Initial NPI plus
(ii) the Contingent NPI multiplied by (b) $150,000,000. 
 “Specified Cash Deductions” means, to the extent such
deduction is paid in cash during such period: (a) operating expenses (including marketing fees permitted under Section 3.4 and cost of sales), Specified Taxes, bad debt expenses, sales commissions and General and Administrative Costs that
do not exceed the General and Administrative Costs Cap of the Loan Parties, (b) Permitted Interest Expense, and (c) Permitted Capital Expenditures. 

“Specified Taxes” means all ad valorem, property, occupation, gathering, pipeline, severance, gross production, gross
receipts, Btu, energy, excise, and other taxes and governmental charges and assessments imposed on the Subject Interests, the Subject Hydrocarbons, the Net Profits Interests, or the proceeds therefrom, other than income, franchise, transfer,
mortgage, inheritance, estate or similar taxes. 
 “Subject Hydrocarbons” means all Hydrocarbons in and under and that may
be produced, saved, and sold from, and are attributable to, the Subject Interests from and after the Loan Repayment Date, after deducting the appropriate share of all royalties and any overriding royalties, production payments and other similar
charges (except the Net Profits Interest) burdening the Subject Interests at the Loan Repayment Date, provided that, (a) there shall not be included in the Subject Hydrocarbons (i) any Hydrocarbons attributable to non-consent
operations conducted with respect to the Subject Interests (or any portion thereof) as to which the Borrower shall be a non-consenting party as of the Loan Repayment Date that are dedicated to the recoupment or reimbursement of costs and expenses of
the consenting party or parties by the terms of the relevant operating agreement, unit agreement, contract for development, or other instrument providing for such non-consent operations (including any interest, penalty or other amounts related
thereto), or (ii) any Hydrocarbons unavoidably lost in production or used by the Borrower for production operations (including without limitation, fuel, secondary or tertiary recovery) conducted solely for the purpose of producing Subject
Hydrocarbons and (b) there shall be included in the Subject Hydrocarbons any Hydrocarbons attributable to non-consent operations conducted with respect to the Subject Interests (or any portion thereof) as to which the Borrower shall be a
non-consenting party as of the Loan Repayment Date that are produced, saved, and sold from, and are attributable to the Subject Interests after the Loan Repayment Date from and after the recoupment or reimbursement of costs and expenses (including
any interest, penalty or other amounts related thereto) of the consenting party or parties by the terms of the relevant operating agreement, unit agreement, contract agreement, contract development, or other instruments providing for such
non-consent operations. 

  
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 “Subject Interests” means each kind and character of right, title, claim, or
interest (collectively the “rights”), that the Borrower owns in the Project Properties whether such right be under or by virtue of a lease, a unitization or pooling order, an operating agreement, a division order, or a transfer order or be
under or by virtue of any other type of claim or title, legal or equitable, recorded or unrecorded, all as such rights shall be (a) enlarged or diminished by virtue of the provisions of Section 4.2 and Section 4.3, and
(b) enlarged by the discharge of any payments out of production or by the removal of any charges or encumbrances to which any of such rights are subject at the Loan Repayment Date (provided that such removal is pursuant to the
express terms of the instrument that created such charge or encumbrance) and any and all renewals and extensions of the rights occurring within one year after the expiration of such rights. 

“Subject Well” means each well on the Subject Interests in respect of which the Borrower owns any interest or is entitled to
any of the Hydrocarbons production or the proceeds therefrom (whether directly or indirectly by virtue of the effect of any farmout or farm-in provisions or other provisions). 

“Third Party” means any Person other than the Borrower or Payee, or an Affiliate of the Borrower or Payee. 

“Transfer” including its syntactical variants, means any assignment, sale, transfer, conveyance, or disposition of any
property, whether direct or indirect; provided, Transfer as used herein does not include (a) the granting of a lien or security interest in the Borrower’s interest in any property, including the Subject Interests or the Subject
Hydrocarbons or (b) a farmout unless and until the farmee earns Subject Interests and receives an assignment therefor. 

“Treasury Regulations” means the United States federal income tax regulations promulgated under
the Code. 
 ARTICLE II 

ASSIGNMENT AND PAYMENT OF NET PROFITS INTEREST 

2.1 Assignment of Net Profits Interest. 

For and in consideration of Ten Dollars ($10.00) and other good and valuable consideration to it paid by Payee, the receipt and sufficiency of
which are hereby acknowledged, the Borrower has granted, conveyed, sold and assigned, and does hereby grant, convey, sell and assign unto Payee, its successors and assigns, as of the Effective Time, the Net Profits Interest. 

TO HAVE AND TO HOLD the Net Profits Interest together with all and singular the rights and appurtenances thereto in anywise belonging, unto
Payee, its successors and assigns, forever, subject, however, to the following terms and provisions. 
 2.2 Payment of Net Profits
Interest. 
 (a) The Borrower hereby grants, conveys, sells and assigns to Payee and covenants and agrees to pay unto Payee the
product of (a) Distributable Cash Flow multiplied by (b) the Applicable NPI (such product, the “Net Profits Interest”). The calculation of Distributable Cash Flow shall commence on the Loan Repayment Date and the Borrower
shall pay to Payee the Net Profits Interest commencing with the first Payment Period. 

  
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 (b) To the extent that, at the end of any Payment Period after the Loan Repayment Date, there
exists Distributable Cash Flow, the Borrower shall disburse to Payee, within forty-five (45) Days after the end of the relevant Payment Period (the “Due Date”), the Net Profits Interest as of the end of such Payment Period. If
any amount due from the Borrower to Payee hereunder is not paid by the applicable Due Date, then such amount shall bear interest from such Due Date through the date of receipt of such amount by Payee, at the Prime Rate. If, at any time, the Borrower
inadvertently pays Payee more than the amount due under this Agreement, then Section 2.2(c) of this Agreement shall apply. 
 (c) If
the Borrower pays Payee more than the amount of money then due and payable to Payee under this Agreement, Payee shall not be obligated to return the overpayment, but the Borrower may at any time thereafter reduce Distributable Cash Flow and retain
for its own account an amount equal to the overpayment. Any amount not paid by the Borrower to Payee with respect to the Net Profits Interest within five (5) Business Days after the Due Date (other than underpayments for which the Borrower did
not have knowledge of their existence and underpayments caused by third party error) shall bear, and the Borrower hereby agrees to pay, interest at the Prime Rate from such fifth
(5th) Business Day until such amount has been paid. The Borrower shall give Payee or Payee shall give the Borrower, as appropriate depending upon who first obtains knowledge of an
underpayment or overpayment, written notice with respect to any underpayment or overpayment described in this Section 2.2(c), together with supporting worksheets and data. 

2.3 Statements. 

(a) On each Record Date, the Borrower shall deliver to Payee a statement showing the calculation of Distributable Cash Flow, including gross
proceeds and debits therefrom (including any reductions to such gross proceeds and/or debits), with respect to the Payment Period applicable to such Record Date. 

(b) Within ninety (90) days after the end of each calendar year, the Borrower shall deliver to Payee a statement showing the computation
of Distributable Cash Flow, including gross proceeds and debits therefrom (including any reductions to such gross proceeds and/or debits), for the preceding calendar year (or portion thereof during which Distributable Cash Flow is required to be
calculated). 
 (c) If Payee takes exception to any item or items included in any monthly statement required by Section 2.3(a), Payee
must notify the Borrower in writing within one hundred and twenty (120) days after the end of the calendar year with respect to which such statement relates. Such notice must set forth in reasonable detail the specific debits complained of and
to which exception is taken or the specific credits which should have been made and allowed. Adjustments shall be made for all complaints and exceptions that are agreed to by the Parties and the Borrower and Payee hereby agree to use commercially
reasonable efforts to resolve any dispute regarding Payee’s complaints and exceptions; provided that if the Borrower and Payee have not resolved such dispute within 60 days after Payee provides an exception notice pursuant to this
Section 2.3, then the Borrower and Payee shall agree upon an independent Third Party oil and gas accountant to resolve such dispute. If the Borrower and Payee cannot agree upon an independent Third Party oil and gas accountant to resolve such
dispute, then either the Borrower or Payee may petition to have a court of law appoint such independent Third Party oil and gas accountant. If such dispute is to be resolved by an independent Third Party oil and gas accountant (A) the Borrower
and Payee will provide such information as such accountant may reasonably request, (B) the costs of such accountant shall be shared equally by the Borrower and Payee, and (C) the decision by such accountant shall be conclusive, final and
binding on the Borrower and Payee. 

  
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 2.4 Information/Access. 

(a) The Borrower shall maintain true and correct books, records, and accounts of (i) all transactions required or permitted by this
Agreement and (ii) the financial information necessary to properly reflect such transactions, including the financial information needed to calculate Distributable Cash Flow with respect to any Payment Period. 

(b) After the Loan Repayment Date, Payee or its representative, at Payee’s expense, may twice in any calendar year inspect and copy such
books, records, and accounts in the offices of the Borrower during normal business hours and upon reasonable notice. Upon request, the Borrower will provide all financial or other information necessary (as reasonably determined by Payee or its
consultants or advisors) for Payee to determine the proper treatment of the Net Profits Interest for federal income or any other tax purpose. 

(c) After the Loan Repayment Date, at Payee’s request, and upon reasonable notice, subject to applicable restrictions on disclosure and
transfer of information, the Borrower shall give Payee and its designated representatives reasonable access in the Borrower’s office during normal business hours to (i) all geological, Subject Well and production data in the
Borrower’s possession or the Borrower’s Affiliates’ possession, relating to operations on the Project Properties and (ii) all reserve reports and reserve studies in the possession of the Borrower or of the Borrower’s
Affiliates, relating to the Subject Interests, whether prepared by the Borrower, by the Borrower’s Affiliates, or by consulting engineers; provided that the Borrower shall not be required to provide such access more than four times in
any calendar year. 
 (d) The Borrower makes no representations or warranties about the accuracy or completeness of any such data, reports
or studies referred to in Section 2.4(c) and shall have no liability to Payee, or any other Person resulting from such data, studies or reports. 

ARTICLE III 
 OPERATION
OF THE SUBJECT INTERESTS 
 3.1 Operations Standard. The Borrower and Payee acknowledge that Payee has no right or power
to participate in the selection of a drilling contractor, to propose the drilling of a well, to determine the timing or sequence of drilling operations, to commence or shut down production, to take over operations, or to share in any operating
decision whatsoever. The Borrower and Payee hereby expressly negate any intent to create (and this Agreement shall never be construed as creating) a mining or other partnership or joint venture or other relationship subjecting the Borrower and Payee
to joint liability. Nothing contained in this Agreement shall be deemed to prevent or restrict the Borrower from electing not to participate in any operations that are to be conducted under the terms of any operating agreement, development
agreement, unit operating agreement, contract for development, or similar instrument affecting or pertaining to the Subject Interests (or any portion thereof) and permitting consenting parties to conduct non-consent operations thereon consistent
with the Prudent Operator Standard. 
 3.2 Pooling and Unitization. The Borrower shall have the right to pool or unitize all
or any of the Project Properties as to any one or more of the formations or horizons thereunder, and as to any of the Subject Interests, when, in the reasonable judgment of the Borrower, it is necessary or advisable to do so in order to form a
drilling or proration unit to facilitate the orderly development of the Project Properties or to comply with the requirements of any law or governmental order or regulation relating to the spacing of wells or proration of the production therefrom.

  
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 3.3 Non-Consent. If the Borrower elects to be a non-participating party (whether
pursuant to an operating agreement or other agreement or arrangement, including without limitation, non-consent rights and obligations imposed by statute or regulatory agency) with respect to any operation on any Project Properties or elects to be
an abandoning party with respect to a Subject Well, the consequence of which election is that the Borrower’s interest in such Subject Interest or part thereof is temporarily (i.e., during a recoupment period) or permanently forfeited to the
parties participating in such operations, or electing not to abandon such Subject Well, then the costs and proceeds attributable to such forfeited interest shall not, for the period of such forfeiture (which may be a continuous and permanent
period), be debited or credited to Distributable Cash Flow and such forfeited interest shall not, for the period of such forfeiture, be included in the calculation of Distributable Cash Flow. Notwithstanding anything to the contrary contained
herein, the Borrower shall not elect, as to any Subject Interest, to be a non-participating party with respect to any operation contemplated in this Section 3.3 in the event any Affiliate of the Borrower will also be a participating party in
such operation. 
 3.4 Marketing. As between the Borrower and Payee, the Borrower shall have exclusive charge and control of
the marketing of all Subject Hydrocarbons. The Borrower shall not be entitled to deduct from the calculation of Distributable Cash Flow any fee for marketing the Subject Hydrocarbons other than actual costs paid to Third Parties. 

3.5 Amendment of Project Properties. The Borrower shall have the unrestricted right to renew, extend, modify, amend, or
supplement the Project Properties with respect to any of the lands covered thereby without the consent of Payee; provided that Distributable Cash Flow shall be calculated with respect to all renewals, extensions, modifications, amendment,
supplements and other similar arrangements (and/or interests therein) of the Project Properties, whether or not such renewals, extensions modifications, amendment, supplements or arrangements have heretofore been obtained, or are hereafter obtained,
by the Borrower and no renewal, extension, modification, amendment, or supplementation shall adversely affect any of Payee’s rights hereunder, including, without limitation, the amount, computation, or method of payment of Distributable Cash
Flow. The Borrower shall furnish Payee with written notice of any renewal, extension, modification, amendment, or supplementation that materially affects Distributable Cash Flow within 30 days after the Borrower has entered into the same, which
notice shall specify the date thereof and the location and the acreage covered thereby. 
 3.6 Abandonment. The Borrower shall
have the right to release, surrender and/or abandon its interest in the Subject Interests, or any part thereof, or interest therein (it being understood that for purposes of this Section 3.6, allowing any Subject Interest to lapse or
expire pursuant to the terms of the instrument or agreement creating such Subject Interest shall not otherwise constitute abandonment); provided, however, that the Borrower shall not release, surrender or abandon any Subject Interest unless
and until the Borrower has determined (in accordance with the Prudent Operator Standard) that such Subject Interest will no longer produce Subject Hydrocarbons in Paying Quantities; provided further that the Borrower will, at least thirty
(30) days prior to the release, surrender or abandonment of any Subject Interest, or any part thereof or interest therein, (a) notify Payee in writing (a “Notice of Abandonment”), giving a description of each Subject
Interest, or part thereof or interest therein, proposed to be released, surrendered or abandoned, and the date upon which such release, surrender or abandonment is projected to occur and (b) subject to any required consents related to the
Subject Interests described in any such Notice of Abandonment, give Payee the option of assuming (or causing their designee to assume) for zero dollars the Subject Interest that is described in the applicable Notice of Abandonment. The Borrower
shall have an unequivocal right to abandon the Subject Interests, or any part thereof if (i) such abandonment is necessary for health, safety or environmental reasons, or (ii) the Subject Hydrocarbons that would have been produced from the
abandoned Subject Interests would otherwise be produced from Subject Wells located on the remaining Project Properties. 

  
 9 

 3.7 Contracts with Affiliates. The Borrower or its Affiliates may perform services
and furnish supplies and/or equipment with respect to the Subject Interests that are required to operate the Subject Interests in accordance with the operations standard set forth in Section 3.1 hereof, and debit Distributable Cash Flow for the
costs of such services and/or furnishing of such supplies and/or equipment; provided that the terms of the provision of such services or furnishing of supplies and/or equipment shall not be less favorable than those terms available from
non-Affiliates of similar skill and experience in the area engaged in the business of rendering comparable services or furnishing comparable equipment and supplies, taking into consideration all such terms, including the price, term, condition of
supplies or equipment, availability of supplies and/or equipment, and all other terms. 
 3.8 Conflict with the Credit
Agreement. To the extent that any of the terms in Article III and IV conflict with the terms of the Credit Agreement, the terms of the Credit Agreement shall control until the Loan Repayment Date. Prior to the Loan Repayment Date, the
Borrower’s rights under Sections 3.2, 3.3, 3.5, 3.6, 3.7, 4.4(a) and 7.10 will be subject to the Credit Agreement. 
 ARTICLE IV

 RELEASE AND TRANSFERS 

4.1 Assignment by the Borrower. Unless and until the Net Profits Interest shall have been repurchased as provided in this
Agreement, the Borrower may only Transfer all or any part of the Project Properties or Subject Interests (including any Transfer of such Project Properties or such Subject Interests pursuant to the Transfer of the Equity Interests of the Borrower or
Parent) without Payee’s consent upon repurchase of the applicable portion of Net Profits Interest in accordance with Section 4.2 or Section 4.3. 

4.2 Tag-Along Right. 

(a) In connection with any Transfer of the Subject Interests by the Borrower (including any Transfer of such Subject Interests
pursuant to the Transfer of the Equity Interests of the Borrower or Parent, as applicable) for an aggregate purchase price that would result in a Fair Value for the Net Profits Interest in excess of the Required NPI Valuation, Payee may elect to
cause the Borrower to purchase (i) in the case of a Transfer of all of the Subject Interests (or all the Equity Interests in the Borrower or Parent, as applicable), all of the Net Profits Interest, or (ii) in the case of a Transfer of less
than all of the Subject Interests (or less than all the Equity Interests in the Borrower or Parent, as applicable), a corresponding portion of the Net Profits Interest for an amount equal to the Fair Value thereof by giving the Borrower irrevocable
notice thereof thirty (30) days prior to the Transfer. The Borrower shall remit to Payee an amount equal to the Fair Value of all or the portion of the Net Profits Interest being transferred, as applicable, in immediately available funds on the
date of sale of the applicable Subject Interests (or Equity Interests, as applicable). In lieu of the Borrower purchasing all or a portion of the Net Profits Interest prior to the consummation of such Transfer, as applicable, the Borrower may cause
the buyer of its Subject Interests (or Equity Interests, as applicable) to purchase a portion of the Net Profits Interest corresponding to the portion of the Subject Interests (or Equity Interests, as applicable) being sold for Fair Value or such
other value agreed to between such buyer and Payee. In such instance the buyer of such Subject Interests shall pay the price agreed with Payee at the closing of the sale of such Subject Interests. 

(b) In connection with the closing of any transaction pursuant to Section 4.2(a), Payee shall, on request, execute,
acknowledge, and deliver to the Borrower a document or agreement (reasonably acceptable to the Borrower) that releases the Net Profits 

  
 10 

 
Interest (in the case of a transaction pursuant to Section 4.2(a)(i)) or the applicable portion thereof (in the case of a transaction pursuant to Section 4.2(a)(ii)). 

4.3 Repurchase Right. In connection with any Transfer of the Subject Interests by the Borrower (including any Transfer of such
Subject Interests pursuant to the Transfer of the Equity Interests of the Borrower or Parent, as applicable) for an aggregate purchase price that would result in a Fair Value for the Net Profits Interest in excess of the Required NPI Valuation, the
Borrower may elect to repurchase from Payee (or, if applicable, cause Payee to Transfer to the buyer of such Subject Interest (or Equity Interests, as applicable)) all of the Net Profits Interest under special warranty for an amount equal to the
Fair Value thereof by giving Payee irrevocable notice thereof (the “Repurchase Notice”) which Repurchase Notice shall specify the date of repurchase (the “Repurchase Date”). The Borrower shall remit to Payee an
amount equal to such Fair Value of all or the portion of the Net Profits Interest being repurchased, as applicable, in immediately available funds on the Repurchase Date. The Repurchase Date shall be within 90 days of the Repurchase Notice or 15
days of the determination of Fair Value, whichever is later. 
 (b) Upon the occurrence of the Loan Repayment Date, the Borrower may elect
to repurchase from Payee all of the Net Profits Interest under special warranty for an amount equal to the greater of (i) the Fair Value for the Net Profits Interest or (ii) the Required NPI Valuation. If the Borrower so elects to
repurchase the Net Profits Interest, the Borrower shall remit to Payee an amount equal to such greater amount in immediately available funds on the Loan Repayment Date. 

4.4 Assignment by Payee. 

(a) Upon obtaining the written consent of the Borrower (which shall not be unreasonably withheld), Payee may Transfer all of its rights and
obligations in the Net Profits Interest so long as such Transfer is made expressly subject to the provisions of this Agreement; provided, however, no assignment by Payee shall affect the method in which charges, reductions and credits are made to
Distributable Cash Flow. 
 (b) No change of ownership or right to receive payment of the Net Profits Interest, or of any part thereof,
however accomplished shall be binding upon the Borrower until notice thereof shall have been furnished by the Person claiming the benefit thereof, and with respect to payments to be made hereunder, after such notice is made. Notice of sale or
assignment shall consist of a copy of the agreement accomplishing the same; notice of change of ownership or right to receive payment accomplished in any other manner (for example by reason of incapacity, death or dissolution) shall consist of
copies of complete proceedings legally binding and conclusive of the rights of all parties. Until such notice shall have been furnished to the Borrower as provided above, the payment or tender of all sums payable on the Net Profits Interest may be
made in the manner provided herein precisely as if no such change in interest or ownership or right to receive payment had occurred. The kind of notice herein provided shall be exclusive, and no other kind, whether actual or constructive, shall be
binding on the Borrower. 
 4.5 Farmouts. The Borrower may from time to time enter into Farmout Agreements with Third Parties
with respect to a Subject Interest. In the event that the Borrower enters into any Farmout Agreement with a Third Party, (a) the Net Profits Interest and this Agreement shall be calculated only from the Borrower’s retained interest in the
Subject Interest after giving effect to any interest in the Subject Interest that a counterparty to the Farmout Agreement may earn under such Farmout Agreement and (b) Payee shall execute and deliver to the Borrower, at the Borrower’s
expense, recordable documentation, in form and substance reasonably satisfactory to the Borrower and Payee, pursuant to 

  
 11 

 
which Payee shall convey, transfer, assign and deliver under special warranty such non-retained portion of the Net Profits Interest to Borrower. 

ARTICLE V 
 OWNERSHIP OF
PROPERTY; LIABILITY OF PAYEE; NO RIGHT OF OPERATIONS BY 
 PAYEE 

5.1 Certain Tax Matters; Ownership of Certain Property. Nothing herein contained shall be construed to constitute either party
hereto (under state law or for tax purposes) the agent of, or in partnership with, the other party. If, however, the parties hereto are deemed to constitute a partnership for federal income tax purposes, the parties elect to be excluded from the
application of Subchapter K, Chapter 1, Subtitle A of the Internal Revenue Code of 1986, and agree not to take any position inconsistent with such election. In addition, the parties hereto intend that the Net Profits Interests shall at all times be
treated as (a) an incorporeal (i.e., a non-possessory) interest in real property or land under the laws of each state in which any of the Subject Leases are located and (b) an “economic interest” in the Subject Hydrocarbons and
as a net profits interest or net profits overriding royalty interest (rather than as a working or any other interest) within the meaning of the Treasury Regulations, the Internal Revenue Code of 1986 and the regulations and judicial authority
relating thereto, and all provisions of this Agreement shall be construed and treated accordingly. The parties hereto agree that (a) all obligations of the Borrower owing to Payee hereunder shall be secured by the Borrower NPI Mortgage and
(b) to the extent that the Net Profits Interest is not treated as an interest in real property, any determination of damages owed by the Borrower to Payee hereunder shall be determined as provided in the definition of Fair Value. 

5.2 No Personal Liability. NOTWITHSTANDING ANYTHING TO THE CONTRARY CONTAINED IN THIS AGREEMENT, PAYEE SHALL NEVER PERSONALLY BE
RESPONSIBLE FOR PAYMENT OF ANY PART OF THE COSTS, EXPENSES OR LIABILITIES INCURRED IN CONNECTION WITH THE EXPLORING, DEVELOPING, OPERATING AND MAINTAINING THE PROJECT PROPERTIES. 

5.3 No In-Kind Rights. Payee shall have no right to take in kind any Subject Hydrocarbons allocable to the Net Profits Interest.

 5.4 No Partnership. Notwithstanding anything to the contrary contained in this Agreement, Payee, by its acceptance hereof,
does not become a member of or equity holder of the Borrower, and in no event shall Payee be liable for any of the debts, obligations, or liabilities of the Borrower or any affiliate of the Borrower, or claim any of the tax benefits resulting from
the ownership of the Project Properties, including, without limitation, any depreciation or investment tax credit on all or any portion of the Project Property, nor is Payee liable for any contributions to the Borrower. 

ARTICLE VI 
 NEGATIVE
COVENANT 
 6.1 Senior Obligation. The Borrower agrees that it shall cause each agreement, indenture, bond, deed of trust,
filing, application or other instrument that creates or purports to create a lien, mortgage, security interest or other charge secured by the Subject Interests, Subject Hydrocarbons or the proceeds from the sale of the Subject Hydrocarbons that is
entered into on or after the date hereof to include an express agreement and acknowledgement by the parties thereto that the Net Profits Interest is senior in right of payment and collection to any and all obligations created thereby in respect of
the Subject Interests, Subject Hydrocarbons or the proceeds from the sale of the Subject Hydrocarbons other 

  
 12 

 
than the Loan; provided, however, that this Section 6.1 shall not apply to any Permitted Lien or to any agreement, indenture, bond, deed of trust, filing, application or other
instrument that creates a lien, mortgage, security interest or other charge secured by not more than the Borrower’s residual interest in the Subject Interests, Subject Hydrocarbons or the proceeds from the sale of the Subject Hydrocarbons, (in
each case) subject and subordinate to the Net Profits Interest (and the Net Profits Interest shall not be burdened or encumbered by any such lien, mortgage, security interest or other charge). 

ARTICLE VII 

MISCELLANEOUS 
 7.1
Notices. All notices and other communications required or permitted under this Agreement shall be in writing and, unless otherwise specifically provided, shall be delivered personally, by electronic transmission, by registered or
certified mail, postage prepaid, or by delivery service for which a receipt is obtained (except for statements provided for under Section 2.3 above which may be sent by regular mail), at the respective addresses of the Borrower and Payee shown
below, and shall be deemed delivered on the date of receipt. Either party may specify his proper address or any other post office address within the continental limits of the United States by giving notice to the other party, in the manner provided
in this Section, at least fifteen (15) days prior to the effective date of such change of address. For purposes of notice, the addresses of the Borrower and Payee shall be as follows: 

 

			
	If to the Borrower:	  	American Shale Development,Inc.
		  	 P.O. Box 393 – 210 Second Street

		  	 St. Marys, WV 26170

		  	Telephone: (304) 684-7053
		  	Fax: (304) 684-3658
		
	If to Payee:	  	Morgan Stanley Capital Group Inc.
		  	 2000 Westchester Avenue, 1st Floor

		  	 Purchase, NY 10577

		  	Attention: David Lazarus
		  	Telephone: (914) 225-1474

 7.2 Payments. The Borrower shall transfer or cause to be transferred all monies to which Payee
are entitled hereunder by Federal funds wire transfer not later than the date when due, to Payee at the bank account specified by Payee in writing to the Borrower. 

7.3 Amendments. This Agreement may not be amended, altered, or modified except pursuant to a written instrument executed by the
Borrower and Payee. 
 7.4 Further Assurances. The Borrower and Payee shall from time to time do and perform such further acts
and execute and deliver such further instruments, conveyances, and documents as may be required or reasonably requested by the other party to establish, maintain, or protect the respective rights and remedies of the Borrower and Payee and to carry
out and effectuate the intentions and purposes of this Agreement, provided in each case the same does not conflict with any provision of this Agreement. 

7.5 Waivers. The failure of the Borrower or Payee to insist upon strict performance of any provision hereof shall not constitute
a waiver of or estoppel against asserting the right to require such performance in the future, nor shall a waiver or estoppel in any one instance constitute a waiver or estoppel with respect to a later breach of a similar nature or otherwise. 

  
 13 

 7.6 Governing Law. THIS AGREEMENT SHALL BE GOVERNED BY, AND CONSTRUED IN ACCORDANCE
WITH THE LAWS OF THE STATE OF NEW YORK WITHOUT GIVING EFFECT TO ITS LAWS RELATING TO CONFLICTS OF LAWS, EXCEPT TO THE EXTENT THAT THE LAWS OF ANY OTHER JURISDICTION MANDATORILY GOVERN THE CREATION, VALIDITY, OR MANNER OR PROCEDURE FOR ENFORCEMENT OF
THE INTERESTS CREATED BY THIS AGREEMENT; PROVIDED, HOWEVER, ANY REMEDIES PROVIDED IN THIS AGREEMENT WHICH ARE VALID UNDER THE LAWS OF THE JURISDICTION WHERE PROCEEDINGS FOR THE ENFORCEMENT OF THIS AGREEMENT ARE TAKEN SHALL NOT BE AFFECTED BY ANY
INVALIDITY UNDER THE LAWS OF THE STATE OF NEW YORK. 
 7.7 Tax Matters. The Borrower may, to the extent required by applicable
law, cause to be withheld from any payment hereunder any tax withholding required by law or regulations, including, in the case of any withholding obligation arising from income that does not give rise to any cash or property from which any
applicable withholding tax could be satisfied, by way of set off against any subsequent payment of cash or property hereunder. 
 7.8
Confidentiality. Any information provided by the Borrower to Payee pursuant to this Agreement shall be used solely for the purpose of administering the Net Profits Interest and shall be confidential and may not be disclosed by Payee in
whole or in part to any person without the Borrower’s prior written consent, except (a) to Payee or any Lender (each a “Lending Party”) or any Affiliate of any Lending Party, or any officer, director, employee, agent, or
advisor of any Lending Party or Affiliate of any Lending Party solely for purposes of administering, negotiating, considering, processing, implementing, syndicating, assigning, or evaluating the transactions contemplated hereby, (b) to any
other Person if directly incidental to the administration of the transactions contemplated hereby, (c) as required by any Legal Requirement, (d) upon the order of any court or administrative agency, (e) as may be required by any
regulatory agency or authority or in connection with any pledge or assignment pursuant to Section 9.06(f) of the Credit Agreement, (f) that is or becomes available to the public or that is or becomes available to any Lending Party other
than as a result of a disclosure by any Lending Party or officer, director, employee, agent, advisor or Affiliate of any Lender Party prohibited by this Agreement, (g) to the extent necessary in connection with any litigation relating to this
Agreement or any other Loan Document to which such Lending Party or any of its Affiliates may be a party, (h) to the extent necessary in connection with the exercise of any right or remedy under this Agreement or any other Loan Document, and
(i) to any actual or proposed participant or assignee, in each case, subject to provisions similar to those contained in this Section 7.8 

7.9 Counterparts. This Agreement may be executed in counterparts, each of which shall be deemed an original, but any of which
together shall constitute one and the same instrument. 
 7.10 Binding Effect. All of the provisions hereof shall inure to the
benefit of Payee and their successors and assigns and shall be binding upon the Borrower and its successors and assigns. 
 7.11
Termination of Project Properties. In the event any of the Project Properties or the Subject Interests (or portion thereof, as applicable) should be released, surrendered or abandoned by the Borrower pursuant to Section 3.6, the
Net Profits Interest no longer shall be calculated with respect to the Project Properties or the Subject Interests (or such portion thereof, as applicable) so released, surrendered or abandoned, but the Net Profits Interest shall continue to be
calculated undiminished with respect to all remaining Subject Interests (and the remainder portion of the Subject Interests, as applicable). 

7.12 WAIVER OF JURY TRIAL. THE PARTIES HEREBY ACKNOWLEDGE THAT THEY HAVE BEEN REPRESENTED BY AND HAVE CONSULTED WITH COUNSEL OF
THEIR 

  
 14 

 
CHOICE, AND HEREBY KNOWINGLY, VOLUNTARILY, INTENTIONALLY, UNCONDITIONALLY AND IRREVOCABLY WAIVE ANY AND ALL RIGHT TO TRIAL BY JURY IN RESPECT OF ANY LEGAL PROCEEDING ARISING OUT OF OR RELATING TO
THIS AGREEMENT OR ANY OF THE TRANSACTIONS CONTEMPLATED HEREBY AND IN RESPECT OF ANY COUNTERCLAIM RELATED TO ANY OF THE FOREGOING. 
 7.13
Agreement upon Loan Repayment Date. If on or prior to the Loan Repayment Date the Borrower (i) incurs Debt (the “Refinancing Debt”) to refinance the Borrower’s Obligations under the Credit Agreement and
(ii) does not elect to repurchase from Payee all of the Net Profits Interest pursuant to Section 4.3(b), Payee agrees to enter into a lien subordination agreement, in form and substance satisfactory to Payee in its sole reasonable
discretion, with the entity or entities providing such Refinancing Debt, provided that in no event shall (i) the Refinancing Debt exceed the aggregate outstanding amount of Obligations (other than any Obligations arising under this Agreement)
on the Loan Repayment Date and (ii) either the contemplated subordination agreement or any document or agreement evidencing such Refinancing Debt restrict or limit the Borrower’s ability to make any payment in respect of its obligations
under this Agreement, including the obligation to pay the Net Profits Interest. 
 [Remainder of page intentionally blank.] 

  
 15 

 EXECUTED as of the date set forth in the respective acknowledgement blocks below, but effective
for all purposes as of the Effective Time. 
  

			
	 Borrower:

	
	 AMERICAN SHALE DEVELOPMENT, INC.

		
	 By:
	 	  

	 Name:
	 	
	 Title:
	 	

  

			
	STATE OF [            ]	 	§
		 	 §

	
COUNTY OF [                    ]
	 	§

 This instrument was acknowledged before me on this     day of May, 2014, by
                    ,                      of
American Shale Development, Inc., a Delaware corporation, on behalf of said corporation. 
  

							
		 		  	  
	  	
		 		  	NOTARY PUBLIC in and for	  	
		 		  	the State of                     	  	
	 My Commission Expires:
	 		  		  	
				
	  
	 		  	  
	  	
		 		  	(Printed Name of Notary Public)	  	
				
	 [SEAL]
	 		  		  	

 Signature Page to Conveyance and Agreement of Net Profits Interest 

  
 S - 1 

 
			
	PAYEE:
	
	MORGAN STANLEY CAPITAL GROUP INC.
		
	By:	 	  

	Name:	 	
	Title:	 	
	
	[            ]
	
	Attention:
	Telephone:

  

			
	STATE OF [            ]	 	§
		 	§
	COUNTY OF [                    ]	 	§

 This instrument was acknowledged before me on this      day of May, 2014, by
                    ,                      of
Morgan Stanley Capital Group Inc., a Delaware corporation, on behalf of said corporation. 
  

					
		 		  	  
 NOTARY PUBLIC in and
for

		 		  	the State of                    
			
	My Commission Expires:	 		  	
			
	  
	 		  	  

		 		  	(Printed Name of Notary Public)
			
	[SEAL]	 		  	

 Signature Page to Conveyance and Agreement of Net Profits Interest 

  
 S - 1 

 EXHIBIT A 

PROJECT PROPERTIES 
 The Borrower’s
interest in the attached described Project Properties: 

  
 Exhibit A – Page 1EX-10.3

 Exhibit 10.3 

PURCHASE AND SALE AGREEMENT 

THIS AGREEMENT is dated May 20, 2014, between AMERICAN SHALE DEVELOPMENT, INC., a Delaware corporation (“ASD” or
“Seller”), and REPUBLIC PARTNERS VIII, LLC, a Texas limited liability company (“Buyer”). For value received, Seller and Buyer agree as follows: 

ARTICLE I 
 PURCHASE AND
SALE 
 1.1. Purchase and Sale. Subject to the terms of this Agreement, Seller agrees to sell the Properties, as defined in
Section 1.2 below, to Buyer and Buyer agrees to purchase the Properties from Seller. 
 1.2. Properties. The Properties are:

 (a) an undivided 24.843993% (subject to adjustment in such percentage as hereinafter described) of Seller’s existing
interest in all oil, gas and mineral leases described on Exhibit A, and within the definition of “Eligible Lease,” together with all other rights and interests arising by operation of law or otherwise in connection with the pooling,
unitization or communitization of any of the oil, gas and mineral leases described in this paragraph, and as such leases are described in Exhibit “A” attached hereto (the “Leases”), subject to the “Quarter
BIAPO” as hereinafter defined; 
 (b) to the extent assignable or transferable, equivalent interests in all
agreements and other rights relating to the Leases, including, without limitation, those listed in Schedule 1.2(b) and any other of the following: production purchase or sale agreements; net profits agreements; production processing,
balancing, compression and transportation agreements; farmout, dry hole, bottom hole, acreage contribution and operating agreements; area of mutual interest agreements; salt water disposal agreements; unitization and pooling agreements; and claims
and causes of action arising after the Closing out of any of the items described in this paragraph (“Contracts”); 

(c) to the extent assignable or transferable, equivalent interests in all surface interests, rights-of-way, easements,
leases, permits, licenses and other similar rights and interests which are held or used in connection with the Leases, including, without limitation, those listed in Schedule 1.2(c) (“Surface Rights”);  

(d) copies of all of Seller’s data, records and information relating to the Leases, the transfer of which is not
prohibited, including, without limitation, geological, geophysical and engineering data and interpretations; production records; land, legal, title and contract files; and revenue, expense and other accounting records for the twelve month period
preceding Closing (“Data”); 

  
 Page 1 

 (e) an overriding royalty interest of one percent (1%) of 8/8ths of all oil,
gas, hydrocarbons and substances produced in association therewith from wells and associated leases and acreage located on Schedule 1.2(e) (the “Well Specific Overrides”); and 

(f) an overriding royalty interest of one and one-half percent (1-1/2%) of 8/8ths of all oil, gas, hydrocarbons and substances
produced in association therewith from certain wells located on any of the Leases covering acreage within Wetzel County, West Virginia (the “Blanket Wetzel Overrides”), as such wells and Leases are more particularly described in the
Blanket Wetzel Overrides Conveyance (as defined). 
 1.3. Definitions. As used in this Agreement: 

“AJDA” means that certain Amended and Restated Farmout and Area of Joint Development Agreement by and between Seller, Buyer,
Republic Partners VI, LP, and Republic Energy Ventures, LLC dated effective as of April 26, 2012. 
 “AJDA Amendment” has the
meaning specified in Section 8.1(e). 
 “Affiliate” means, with respect to any Person, any other Person which, directly or
indirectly, controls, is controlled by, or is under common control with such Person. 
 “Agreement” has the meaning specified in
the preamble hereof. 
 “Blanket Wetzel Overrides has the meaning specified in Section 1.2(f). 

“Blanket Wetzel Overrides Conveyance” shall mean an overriding royalty conveyance substantially in the form of Exhibit B-3
attached. 
 “Buyer” has the meaning specified in the preamble hereof. 

“Buyer’s Title Review” has the meaning specified in Section 6.3. 

“Closing” has the meaning specified in Section 2.1. 

“Closing Date” has the meaning specified in Section 2.1. 

“Code” means the Internal Revenue Code of 1986, as amended. 

“Contract” has the meaning specified in Section 1.2(b) above. 

“Conveyance” shall mean a Conveyance and Bill of Sale substantially of the form set forth in Exhibit “B-1”. 

“Defensible Title” means (1) with respect to the Leases, such record title and ownership by Seller that: 

(a) except as set forth on Schedule 4.6, entitles Seller to receive and retain, without reduction, suspension or
termination, not less than the percentage set forth in Exhibit “A” as Seller’s “net revenue interest” or “CO NRI” of any future Hydrocarbons 

  
 Page 2 

 
produced, saved and marketed from each Lease as set forth in Exhibit “A” through plugging, abandonment and salvage of all wells drilled pursuant to such Lease, and except
for changes or adjustments that result from the establishment of units, changes in existing units (or the participating areas therein), or the entry into pooling or unitization agreements after the date hereof unless made in breach of the provisions
of Section 6.2; 
 (b) obligates Seller to bear not greater than the percentage set forth in
Exhibit “A” as Seller’s “working interest” or “CO WI” of the costs and expenses relating to the maintenance, development and operation of each Lease (including the plugging and abandonment and site
restoration with respect to all future wells located thereon or attributable thereto), through plugging, abandonment and salvage of all wells drilled pursuant to such Lease, and except for changes or adjustments that result from the establishment of
units, changes in existing units (or the participating areas therein), or the entry into pooling or unitization agreements after the date hereof unless made in breach of the provisions of Section 6.2; 

(c) is free and clear of all Liens, except Permitted Liens; 

(d) reflects that all bonuses, royalties, rentals, Pugh clause payments, shut-in gas
payments and other payments due with respect to such Lease have been properly and timely paid; and 
 (e) reflects that all
consents to assignment, notices of assignment or preferential purchase rights which are applicable to or must be complied with in connection with the transaction contemplated by this Agreement, or any prior sale, assignment or the transfer of such
Lease or Retained ORRI’s, have been obtained and complied with, 
 and (2) with respect to the Well Specific Overrides and the Blanket Wetzel
Overrides such record title or ownership by Seller that entitles Seller to receive the indicated percentage of gross production revenue from the wells or leases indicated. 

“Eligible Lease” means a Lease which: 

(f) if not held by production, has a primary term which will not expire prior to December 31, 2015, or is scheduled on
Schedule 1.3; 
 (g) has a term extending for as long as oil or gas is produced in paying quantities; 

(h) contains customary pooling rights and the right to extend the Lease by reworking, new drilling, shut-in royalties, or in
the event of force majeure conditions; 
 (i) imposes no obligations on the lessee for development or exploration beyond a
reasonable obligation to protect against drainage or a continuous drilling or Pugh clause where acreage not within the spacing units for producing wells may be subject to release if a reasonable drilling schedule beyond the primary term is not
maintained, except as to Leases scheduled on Schedule 1.3; 

  
 Page 3 

 (j) does not restrict the lessee’s ability to assign the Lease; and 

(k) is not a “top lease” and represents the first priority Lease granted by the mineral owner lessor. 

“Excluded Records” means: 
  

	 	(a)	all corporate, financial, Tax, and legal data and records of Seller that relate to Seller’s business generally and are not predominantly related to the Properties; 

 

	 	(b)	all geological, geophysical or seismic data, materials or information, including maps, interpretations, records or other technical information related to or based upon any such data, materials or information, and any
other asset, data, materials or information the transfer of which is restricted or prohibited under the terms of any third party license, confidentiality agreement or other agreement or the transfer of which would require the payment of a fee or
other consideration to any third party and Buyer has not agreed to pay the fee or other consideration, as applicable; 

  

	 	(c)	all legal records and legal files of Seller that may be protected by attorney-client privilege (exclusive of Leases, title opinions and Contracts in respect of the Properties); and 

 

	 	(d)	all data and records directly relating to the sale of the Properties, including without limitation, communications with advisors or representatives of Seller and records of negotiations with third parties.

 “Governmental Authority” means any federal, state, local or foreign government or governmental regulatory body
and any of their respective subdivisions, agencies, instrumentalities, authorities, courts or tribunals. 
 “Hedging Transaction”
means any futures, hedge, swap, collar, put, call, floor, cap, option or other contract that is intended to benefit from, relate to or reduce or eliminate the risk of fluctuations in the price of commodities, including Hydrocarbons, interest rates,
currencies or securities. 
 “Hydrocarbons” means oil, condensate, gas, casinghead gas and other liquid or gaseous hydrocarbons.

 “Indemnified Party” has the meaning specified in Section 10.2(a). 

“Indemnifying Party” has the meaning specified in Section 10.2(a). 

“Injunction” means a temporary restraining order, preliminary or permanent injunction or other order issued by a court of competent
jurisdiction, an order of a Governmental Entity having jurisdiction over any party hereto, or any legal restraint or prohibition. 

  
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 “JOA” shall have the meaning specified in Section 3.2(b). 

“Law” means any federal, state, local or foreign law, statute, rule, ordinance, code or regulation. 

“Leases” has the meaning specified in Section 1.2(a) above. 

“Legal Proceeding” means any judicial, administrative or arbitral action, suit, proceeding (public or private), litigation,
investigation, complaint, claim or governmental proceeding. 
 “Lien” means any lien, pledge, mortgage, deed of trust, security
interest, attachment, right of first refusal, option, easement, covenant, encroachment, or any other adverse claim whatsoever. 

“Litigation” shall mean the Legal Proceedings, Orders and Official Actions. 

“Losses” has the meaning specified in Section 10.1(d). 

“Material Adverse Effect” shall mean: 

(a) As to Buyer, any breach of Buyer’s representations and warranties, which individually or in the aggregate would
materially impair Buyer’s ability to consummate the transactions contemplated by this Agreement or prevent the consummation of any of the transactions contemplated hereby. 

(b) As to Seller, any breach of Seller’s representations and warranties, which individually or in the aggregate would
materially impair Seller’s ability to consummate the transactions contemplated by this Agreement or prevent the consummation of any of the transactions contemplated hereby. 

“Net Mineral Acres” shall mean the number of gross acres of minerals under a tract multiplied by the percentage of minerals owned by
the lessors executing an Eligible Lease, multiplied by percentage Seller owns in such Eligible Leases, with “ownership” for such purposes understood to mean a fee simple determinable estate under a currently effective oil, gas, and mineral
lease. 
 “Official Action” shall mean any domestic or foreign decision, order, writ, injunction, decree, judgment, award or any
determination, both as presently existing and effective and as may become effective in the future, by any court, administrative body, or other tribunal. 

“Option Assets” has the meaning specified in Section 6.9. 

“Order” means any order, judgment, Injunction, ruling, writ, award, decree, statute, law, ordinance, rule or regulation. 

“Payout” shall mean the first day of the first calendar month after such time as the cumulative revenues received by Buyer and its
successors from the ownership and operation of the interests in the Leases described in Section 1.2(a) first exceed the Purchase Price plus the expenses incurred by Buyer and its successors related to the acquisition, ownership, and

  
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operation of such interests, which expenses shall include but not be limited to (i) drilling, completion, testing, and equipping expenses for wells and gathering lines, infrastructure, and
other capital expenses, to the extent attributable to such interests, (ii) costs of the transaction effected hereby, and (iii) expenses of curing title to the interests to be acquired hereunder. 

“Permit” means any permit, license, certificate (including a certificate of occupancy), registration, authorization, application,
filing, notice, qualification, waiver of any of the foregoing or approval of a Governmental Authority. 
 “Permitted Liens” means:
(i) Liens for Taxes that are not yet due and payable or that are being contested in good faith by appropriate proceedings, (ii) operators’ liens and statutory liens, for taxes, assessments, labor and materials, where payment is not
due (or that, if delinquent, are being contested in good faith); (iii) operating agreements, unit agreements, unitization and pooling designations and declarations, gathering and transportation agreements, processing agreements, gas, oil and
liquids purchase, sale and exchange agreements and other contracts, agreements and installments that do not have a Material Adverse Effect or unreasonably interfere with the operation of the Properties; (iv) statutory or regulatory authority of
governmental agencies; (v) easements, surface leases and rights, plat restrictions, pipelines, grazing, logging, canals, ditches, reservoirs, telephone lines, power lines, railways and similar encumbrances that do not unreasonably interfere
with the operation of the Properties; (vi) liens, charges, encumbrances and irregularities in the chain of title which, because of remoteness in or passage of time, statutory cure periods, marketable title acts or other similar reasons, have
not materially affected or interrupted, and are not reasonably expected to materially affect or interrupt, the claimed ownership of the party or the receipt of production revenues from the Properties affected thereby; and (vii) other liens set
forth in Schedule 4.6. 
 “Person” means any natural person, corporation, partnership, limited liability company, trust,
unincorporated organization, Governmental Authority, or other entity. 
 “Purchase Price” has the meaning specified in
Section 3.1. 
 “Quarter BIAPO” shall mean an interest reserved by Seller in the Conveyance representing an undivided 25% of
the interests in the Leases, contracts and surface rights conveyed to Buyer hereunder solely with respect to revenues, expenses, production, and operations from and after “Payout.” 

“Repurchase Option,” “Repurchase Option Assets,” “Repurchase Option Closing” shall have the meanings specified
in Section 6.9. 
 “Repurchase Option Expiration Date” shall mean (a) if on such date Seller and Buyer have not jointly
entered into an agreement then in effect to sell interests in some or all of the Leases, the six month anniversary of the Closing Date or (b) if Seller and Buyer have jointly entered into an agreement to sell interests in some or all of the
Leases and such agreement is in effect on the six month anniversary of the Closing Date, on the earlier of (i) the closing under such joint sale transaction or (ii) December 31, 2014. 

“Schedule” means a disclosure schedule provided by Seller to Buyer pursuant to this Agreement. 

  
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 “Securities Act” means the Securities Act of 1933, as amended. 

“Seller” has the meaning specified in the preamble hereof. 

“Subsidiaries” means, with respect to any Person, each entity as to which such Person (either alone or through or together with any
other Subsidiary) (i) owns beneficially or of record or has the power to vote or control, 50% or more of the voting securities of such entity or of any class of equity interests of such entity the holders of which are ordinarily entitled to
vote for the election of the members of the Board of Directors or other persons performing similar functions, (ii) in the case of partnerships, serves as a general partner, (iii) in the case of a limited liability company, serves as a
managing member or owns a majority of the equity interests or (iv) otherwise has the ability to elect a majority of the directors, trustees or managing members thereof. 

“Surface Rights” has the meaning specified in Section 1.2(c) above. 

“Tax” or “Taxes” means all income, profits, franchise, gross receipts, capital, sales, use, withholding, value added, ad
valorem, transfer, employment, social security, disability, occupation, asset, property, severance, documentary stamp, excise and other taxes, duties and similar governmental charges or assessments imposed by or on behalf of any Governmental
Authority and any interest, fines, penalties or additions relating to any such tax, duty, charge or assessment. 
 “Tax Return”
means any return, report, information statement, or similar statement required to be filed with respect to any Taxes (including any attached schedules), including, without limitation, any information return, claim for refund, amended return and
declaration of estimated Tax. 
 “Title Defect Amount” has the meaning specified in Section 6.3(c). 

“Title Defect Notice” has the meaning specified in Section 6.3(b). 

“Title Defect Property” has the meaning specified in Section 6.3(b). 

“Title Defect” has the meaning specified in Section 6.3. 

“Title Objection Period” has the meaning specified in Section 6.3(b). 

“Well Specific Overrides” has the meaning specified in Section 1.2(e). 

“Well Specific Overrides Conveyance” shall mean an overriding royalty conveyance substantially in the form of Exhibit D-2
attached. 
 ARTICLE II  

CLOSING 
 2.1.
Closing. The Closing of the transactions contemplated hereby (the “Closing”) shall take place at the offices of Buyer at 4:00 p.m., Central Time, on May 20, 2014, or such other place or date as the parties hereto may
mutually agree (the “Closing Date”). 

  
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 2.2. Proceedings at Closing. All proceedings to be taken and all documents to be executed
and delivered by all parties at the Closing shall be deemed to have been taken and executed simultaneously, and no proceedings shall be deemed taken nor any documents executed or delivered until all have been taken, executed and delivered. 

ARTICLE III 
 SALE AND
PURCHASE CONSIDERATION 
 3.1. Amount of Consideration. The total purchase price to be paid by Buyer to Seller in
consideration of the Properties (the “Purchase Price”) shall be the product of $6,700.00 times the number of full or partial Net Mineral Acres in the Eligible Leases conveyed to Buyer at Closing. Buyer shall have the option to increase the
percentage of Seller’s interest in the Eligible Leases to be conveyed to Buyer at Closing, up to a maximum Purchase Price of $15,000,000.00. 

For the purpose of the multiplication to be performed in the above calculations, partial Net Mineral Acres shall be expressed as the decimal
percentage of a full Net Mineral Acre they represent. 
 3.2. Form of Consideration. The full amount of the Purchase Price shall be
represented by a credit to be provided to Seller by Buyer toward currently outstanding or future joint interest billings to Seller pursuant to the Joint Operating Agreement referenced in paragraph 3 of the AJDA (the “JOA”). 

ARTICLE IV  

REPRESENTATIONS AND WARRANTIES OF SELLER 

Seller hereby represents and warrants to Buyer: 

4.1. Organization and Good Standing. Seller is duly organized, validly existing and in good standing under the laws of the jurisdiction
in which it is organized and has all requisite power and authority to execute, deliver and perform its obligations under this Agreement and to consummate the transactions contemplated hereby. Seller is not a “foreign person” within the
meaning of Section 1445 of the Code. 
 4.2. Authorization of Agreement. The execution and delivery of this Agreement by Seller
and the performance of the transactions contemplated herein by Seller have been, or will be prior to Closing, duly authorized by all necessary action, and no other action on the part of Seller is (or will be) necessary to authorize this Agreement or
consummate the transactions contemplated hereby. This Agreement has been duly and validly executed and delivered by Seller and constitutes a valid and binding obligation of Seller and is enforceable against Seller in accordance with its terms,
except as such enforceability may be limited by bankruptcy, insolvency, reorganization and similar laws affecting creditors generally and by the availability of equitable remedies. 

4.3. Conflicts, Consents of Third Parties. Neither the execution and delivery by Seller of this Agreement nor consummation or
performance by Seller of the transactions contemplated hereby to be consummated or performed by Seller will: (a) violate any Law, (b) violate the certificate of organization or bylaws of Seller, (c) violate any Order to which Seller
is a party or 

  
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by which Seller is bound, (d) breach the provisions of any contract or agreement to which Seller is a party, or (e) require any consent from, authorization or approval or other action
by, notice to or declaration, filing or registration with any Governmental Authority except for governmental consents and approvals that are customarily obtained after Closing. 

4.4. Brokers. Seller has not paid or become obligated to pay any fee or commission to any broker, finder or intermediary in connection
with the transactions contemplated hereby for which the Buyer shall have any liability following the Closing. 
 4.5. Litigation. As
of the date of this Agreement there is no suit, action or proceeding pending, or, to the knowledge of Seller, threatened against or affecting Seller or its interest in the Properties that is reasonably likely to have a Material Adverse Effect on
Seller or the transactions contemplated in this Agreement, nor is there any judgment, decree, injunction, rule or order of any Governmental Entity or arbitrator outstanding against Seller that is reasonably likely to have a Material Adverse Effect
on Seller. 
 4.6. Title to Properties. Except as set forth in Schedule 4.6, Seller has Defensible Title to the interests in
the Leases set forth on Exhibit A other than with respect to Title Defects that are dealt with pursuant to Section 6.3 and has defensible title to the Well Specific Overrides and the Blanket Wetzel Overrides. 

4.7. Taxes and Assessments. Seller has caused to be timely filed all material Tax returns relating to the Properties the failure to pay
which could result in the placement of a Lien on all or a portion of the Properties. Seller has paid or caused to be paid all ad valorem, property, and similar Taxes, except those being contested in good faith and disclosed to Buyer in writing.
Seller has not received written notice of any pending claim against Seller from any applicable taxing authority for assessment of Taxes with respect to the Properties. There are no audits of Seller by any applicable taxing authority with respect to
Taxes attributable to the Properties. Except for statutory liens for property taxes and ad valorem taxes, there are no tax liens on or with respect to the Properties. 

4.8. Compliance with Laws. To the knowledge of Seller, Seller is in possession of all material Permits necessary to own, lease and
operate its Properties and to carry on its business with respect to the Properties as it is now being conducted, except where the failure to be in possession of any of the Permits would not have a Material Adverse Effect and there is no action,
proceeding or, to the knowledge of Seller, investigation pending or threatened regarding suspension or cancellation of any of the Permits. Except as disclosed in Schedule 4.8, Seller is not in conflict with, or in default or violation
of, (a) any Law to which any of the Properties is bound or subject or (b) any of the Permits, except where such conflict, default or violation would not have a Material Adverse Effect. 

4.9. Forward Sales. Seller is not obligated by virtue of a take or pay payment, advance payment or other similar payment (other than
royalties, overriding royalties and similar arrangements reflected on Exhibit “A”), to deliver Hydrocarbons, or proceeds from the sale thereof, attributable to the Leases at some future time without receiving payment therefor
at or after the time of delivery. 

  
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 4.10. Hydrocarbon Sales. 

(a) Except for Hydrocarbon sales contracts with a term not greater than ninety (90) days, no Hydrocarbons produced from
the Properties are subject to a sales contract or other agreement relating to the marketing of Hydrocarbons, and no person has any call upon, option to purchase or similar rights with respect to such Properties or the rights therefrom, except for
third party operator rights under operating agreements covering the Properties. 
 (b) With respect to the Properties, Seller
has the ability and right to obtain access to, produce, treat, transport, process, or otherwise market Hydrocarbons from the Leases without the need for any additional agreements. 

4.11. Consents and Preferential Purchase Rights. Except as listed on Schedule 4.11, none of the Leases are subject to any
preferential rights to purchase or restrictions on assignment or required third-party consents to assignment which may be applicable to the transactions contemplated by this Agreement, except for governmental consents and approvals of assignments
that are customarily obtained after Closing. 
 4.12. Contracts. All Contracts affecting the Properties are listed on
Schedule 1.2(b) attached. Neither Seller nor any other party is in default under any Contract except for such defaults as would not have a Material Adverse Effect. There are no Contracts with Affiliates of Seller which will be binding on
the Properties after Closing. None of the Contracts consist of, nor are the Properties subject to any, Hedging Transaction which will be binding on Buyer. 

ARTICLE V 

REPRESENTATIONS AND WARRANTIES OF BUYER 

Buyer hereby represents and warrants to Seller as follows: 

5.1. Organization and Good Standing. Buyer is a limited liability company duly organized, validly existing and in good standing under
the laws of the State of Delaware. Buyer has all requisite power and authority to execute, deliver and perform its obligations under this Agreement and to consummate the transactions contemplated hereby and thereby to be consummated by it. 

5.2. Authorization of Agreement. The execution and delivery of this Agreement by Buyer and the performance of the transactions
contemplated herein by the Buyer have been duly authorized by all necessary action by the Buyer, and no other action on the part of Buyer is necessary to authorize this Agreement or to consummate the transactions contemplated hereby. This Agreement
has been duly and validly executed and delivered by Buyer and constitutes a valid and binding obligation of Buyer and is enforceable against Buyer in accordance with its terms, except as such enforceability may be limited by bankruptcy, insolvency,
reorganization, moratorium and similar laws affecting creditors generally and by the availability of equitable remedies. 
 5.3.
Conflicts, Consents of Third Parties. Neither the execution and delivery by Buyer of this Agreement nor consummation or performance by Buyer of the transactions contemplated 

  
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hereby to be consummated or performed by Buyer will: (a) violate any Law, (b) violate the certificate of incorporation or bylaws of Buyer, (c) violate any Order to which Buyer is a
party or by which Buyer is bound (d) violate any loan or credit agreement, note, bond, mortgage, indenture, lease or other agreement, instrument, permit, concession, franchise, or license applicable to Buyer, (e) any joint venture or other
ownership arrangement of Buyer or (f) require any consent from, authorization or approval or other action by, and no notice to or declaration, filing or registration with any Governmental Authority. 

5.4. No Default. Except as would not reasonably be expected to have a Material Adverse Effect on Buyer, Buyer is not in default or
violation of any term, condition or provision of (a) the certificate of incorporation or bylaws of Buyer, (b) any loan or credit agreement, note, bond, mortgage, indenture, lease or other agreement, instrument, permit, concession,
franchise or license to which Buyer is now a party or by which Buyer or any of its properties or assets is bound, or (c) any Order applicable to Buyer. 

5.5. Litigation. As of the date of this Agreement there is no suit, action or proceeding pending, or, to the knowledge of Buyer,
threatened against or affecting Buyer that is reasonably likely to have a Material Adverse Effect on Buyer, nor is there any judgment, decree, injunction, rule or order of any Governmental Authority or arbitrator outstanding against Buyer that is
reasonably likely to have a Material Adverse Effect on Buyer. 
 5.6. Brokers. Buyer has not paid or become obligated to pay any fee
or commission to any broker, finder or intermediary in connection with the transactions contemplated hereby for which Seller shall have any liability following the Closing. 

ARTICLE VI  

ADDITIONAL AGREEMENTS 

6.1. Further Actions. At any time from and after the Closing, at the request of a party and without further consideration, each other
party shall promptly execute and deliver such further agreements, certificates, instruments and documents and perform such other actions, at no cost to such party, as the requesting party may reasonably request in order to fully consummate the
transactions contemplated hereby and carry out the purposes and intent of this Agreement. 
 6.2. Conduct of Business Pending
Closing. Prior to the Closing Date, Seller will (except as consented to in writing by Buyer, such consent not to be unreasonably withheld, or otherwise permitted under this Agreement): 

(a) not terminate, materially amend, or extend any material Contracts affecting the Properties, or enter into or commit to
enter into any new material Contract relating to the Properties, or settle, compromise or waive any material right relating to the Properties, 

(b) maintain insurance coverage on the Properties in the amounts and of the types presently in force, 

(c) maintain in full force and effect the Leases, and pay all costs and expenses and perform all material obligations of the
owner of the Properties promptly when due, 

  
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 (d) maintain all Permits, 

(e) not transfer, sell, hypothecate, encumber, or otherwise dispose of any Properties, 

(f) not grant or create any preferential right to purchase, right of first opportunity or other transfer restriction or
requirement with respect to the Properties, and 
 (g) not make any change in any method of accounting or accounting practice
or policy with respect to the Properties, except as required by Law. 
 6.3. Title Due Diligence Examination. 

(a) From the date of this Agreement, Seller shall afford to Buyer and Buyer’s authorized representatives reasonable access
during normal business hours to the office, personnel and books and records of the Seller other than Excluded Records, in order for Buyer to conduct a title examination as it may in its sole discretion choose to conduct with respect to those of the
Leases in order to determine whether Title Defects (as below defined) exist (“Buyer’s Title Review”); provided, however, that such investigation shall be upon reasonable notice and shall not unreasonably disrupt the personnel
and operations of the Seller or impede the efforts of the Seller to comply with its other obligations under this Agreement. Such books and records shall include all abstracts of title, title opinions, title files, ownership maps, lease files,
assignments, division orders, operating records and agreements, well files, financial and accounting records, geological, geophysical and engineering records, in each case insofar as same may now be in existence and in the possession of Seller and
relate predominately to title to the Leases. The cost and expense of Buyer’s Title Review, if any, shall be borne solely by Buyer. 

(b) If Buyer discovers any Title Defect, Buyer shall notify Seller as soon as reasonably possible, but in all cases prior to
the Repurchase Option Expiration Date (the “Title Objection Period”) of such alleged Title Defect. To be effective, such notice (“Title Defect Notice”) must (i) be in writing, (ii) be received by Seller
prior to the expiration of the Title Objection Period, (iii) describe the Title Defect in reasonable detail (including any alleged variance in the Net Revenue Interest), (iv) identify the specific Lease affected by such Title Defect, and
(v) include the value of such Title Defect as determined by Buyer in good faith. The Lease affected by such alleged Title Defect shall be a “Title Defect Property”. 

(c) The “Title Defect Amount” shall mean, with respect to a Title Defect Property, the amount by which such
Title Defect Property is impaired as a result of the existence of one or more Title Defects, which amount shall not exceed the portion of the Purchase Price attributable to such Lease (based on the Purchase Price formula set forth in
Section 3.1) and shall be determined as follows: 
 (i) The Title Defect Amount with respect to a Title Defect Property
shall be determined by taking into consideration the portion of the Purchase Price attributable to the Lease subject to such Title Defect (based on the Purchase Price 

  
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formula set forth in Section 3.1), the portion of the Lease subject to such Title Defect, and the legal effect of such Title Defect on the Lease affected thereby; provided, however, that:
(A) if such Title Defect is in the nature of Seller’s Net Revenue Interest in a Lease being less than the Net Revenue Interest set forth on Exhibit “A” to this Agreement and the Working Interest remains the same, then
the Seller and Buyer agree that the Purchase Price shall be reduced in an amount equal to the Purchase Price attributable to the relevant Lease multiplied by the percentage reduction in such net revenue interest as a result of such Title Defect or
(B) if such Title Defect is in the nature of a Lien which is undisputed and liquidated in amount, then the Seller and Buyer agree that the Purchase Price shall be reduced in the amount equal to the amount required to fully discharge such Lien;
and 
 (ii) If the Title Defect results from any matter not described in this Section 6.3, the Title Defect Amount shall
be an amount equal to the difference between the value of the Lease affected by such Title Defect with such Title Defect and the value of such Lease without such Title Defect (taking into account the portion of the Purchase Price allocated to the
Title Defect Property). 
 (d) If the amount of the adjustment for each Title Defect cannot be determined based on the above
criteria, and if the Seller and Buyer cannot otherwise agree on the amount of an adjustment or the parties are unable to agree upon whether a Title Defect exists, either party may elect to resolve the dispute under the arbitration provisions in
Section 12.1 of this Agreement. 
 (e) Within sixty (60) days following receipt of a Title Defect Notice, Seller,
at its sole option, shall either (a) cure or remove such Title Defect at Seller’s sole cost, or (b) pay in cash to Buyer the Title Defect Amount associated with such Title Defect (the Title Defect Amount shall be determined in
accordance with the procedures in Section 6.3(c) above), or (c) repurchase the Lease affected by such Title Defect from Buyer at the portion of the Purchase Price allocated to such Lease (such Closing shall occur within thirty
(30) days after expiration of the sixty (60) day election period provided to Seller). 
 As used in this Section 6.3, “Title
Defect” shall mean any particular defect in or failure of Seller’s ownership of any Lease (expressly excluding the Quarter BIAPO): (i) that causes Seller to not have conveyed Defensible Title to such Lease to Buyer at Closing or
causes a Lease not to be an Eligible Lease and (ii) regarding which a Title Defect Notice has been timely and otherwise validly delivered.  

(f) Certain of the Leases described on Exhibit A (“Counterpart Leases”) share the same Lease ID number
except for the letter at the end of the Lease ID number (A, B, C, D, etc.). For purposes hereof, the values assigned to the individual leases within a group of Counterpart Leases shall be aggregated and then allocated among the constituent
individual leases proportionately on a Net Mineral Acre basis as if title were as represented. 
 (g) Buyer or its Affiliates
have heretofore acquired other interests in certain of the Leases from Seller or its Affiliates. To the extent that Buyer or an Affiliate of Buyer has a right pursuant to other agreements with Seller or an Affiliate of Seller to assert a

  
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Title Defect with respect to a Lease in which additional interests are being purchased by Buyer hereunder, an exercise of such right shall constitute a valid assertion of a Title Defect with
regard to the additional interest in such Lease being purchased hereunder even if such assertion occurs after the Title Objection Period. 

6.4. Access to Information. Upon reasonable notice, Seller shall afford to Buyer’s officers, employees, accountants, counsel and
other representatives access, from the date hereof until the termination of the AJDA, to all its books, contracts, commitments, files and records relating to the Properties other than Excluded Records, as well as to its officers and employees and,
during such period, Seller shall furnish to Buyer (a) a copy of each material report, schedule, and other document filed or received by it during such period and (b) all other information, other than Excluded Records, concerning the
Properties as such other party may reasonably request that is not subject to a confidentiality agreement prohibiting Seller from furnishing. Buyer agrees that it will not, and will cause its respective representatives not to, use any information
obtained pursuant to this Section 6.4 for any purpose unrelated to the consummation of the transactions contemplated by this Agreement. Buyer shall indemnify, defend and hold harmless the Seller from and against any and all claims,
actions, causes of action, demands, assessments, losses, damages, liabilities, judgments, settlements, penalties, costs and expenses (including reasonable attorneys’ fees and expenses), of any nature whatsoever asserted against or suffered by
the Seller relating to, resulting from or arising out of examinations or inspections made by Buyer or its representatives pursuant to this Section 6.4. The foregoing indemnity is not intended to negate any rights or remedies Buyer may
have under the remaining provisions hereof. 
 6.5. Regulatory Approvals. Each party hereto shall cooperate and use its reasonable
best efforts to promptly prepare and file all necessary documentation to effect all necessary applications, notices, petitions, filings and other documents, and use all commercially reasonable efforts to obtain (and will cooperate with each other in
obtaining) any consent, acquiescence, authorization, order or approval of, and any exemption or non-opposition by, any Governmental Authority required to be obtained or made by Seller or Buyer or any of their respective Affiliates in connection with
the transactions contemplated hereby or the taking of any action contemplated by this Agreement. 
 6.6. Agreement to Defend. In the
event any claim, action, suit, investigation or other proceeding by any Governmental Authority or other legal or administrative proceeding is commenced that questions the validity or legality of the transactions contemplated hereby or seeks damages
in connection therewith, the parties hereby agree to cooperate and use their commercially reasonable efforts to defend against and respond thereto. 

6.7. Consents and Preferential Rights. Seller shall promptly prepare and send (i) notices to the holders of any required consents
to assignment requesting such consents and (ii) notices to the holders of any applicable preferential rights to purchase which are set forth on Schedule 4.11 requesting waivers of such preferential rights to purchase. The consideration
payable under this Agreement for any particular property for purposes of preferential purchase right notices shall be the portion of the Purchase Price attributable to such property. Seller shall use commercially reasonable efforts to cause such
consents and waivers of preferential rights to purchase (or the exercise thereof) to be obtained and delivered prior to Closing. Buyer shall cooperate with Seller in seeking to obtain such consents and waivers of preferential rights. 

  
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 6.8. Other Actions. Except as contemplated by this Agreement, neither Seller nor Buyer
shall, nor permit any of its Affiliates to, take or agree or commit to take any action that is reasonably likely to result in any of its respective representations or warranties hereunder being untrue in any material respect or in any of the
conditions to the transactions contemplated hereby set forth in Article VI not being satisfied. Each of the parties agrees to use its reasonable best efforts to satisfy the conditions to Closing set forth in this Agreement. 

6.9. Repurchase Option. Seller shall have a “Repurchase Option” (herein so called) from the Closing until the
Repurchase Option Expiration Date, to repurchase the Properties, with the exception of the Well Specific Overrides (which shall not be subject to repurchase and which shall be retained by Buyer) (the “Option Assets”), for the
Purchase Price. If Seller elects to exercise the Repurchase Option, Seller shall deliver a written notice to Buyer specifying a date not earlier than ten (10) business days nor later than forty-five (45) business days after the date of
such notice, but in any case prior to the Option Expiration Date for the closing of the repurchase and resale of the Option Assets (the “Repurchase Option Closing”). The terms governing the repurchase and resale of the Option Assets
shall be substantially the same as the terms governing the purchase and sale pursuant to this Agreement (with such changes as shall have been agreed upon by Seller and Buyer), except that the representations and warranties made by Seller with
respect to the Option Assets shall be modified to reflect the title to such Option Assets held by Seller. At the Repurchase Closing, Buyer shall deliver a Conveyance in the form attached hereto as Exhibit B-1 and a Blanket Wetzel Overrides
Conveyance in the form attached hereto as Exhibit B-3, and such other assignments, general conveyances, endorsements, and other good and sufficient instruments of conveyance as are necessary in order to revest in Seller all right, title and
interest in the Option Assets and Seller shall pay the Purchase Price to Buyer in good funds. 
 ARTICLE VII 

CONDITIONS TO CLOSING 

7.1. Buyer’s Conditions. Unless otherwise waived in writing prior to the Closing, the obligation of Buyer to complete the Closing
is subject to fulfillment prior to or at the Closing of each of the following conditions: 
 (a) No Legal Proceeding.
At the Closing, no Legal Proceeding shall be pending or threatened seeking to enjoin or prevent, nor shall an Injunction, Order or Official Action have been issued prohibiting, consummation of the transactions contemplated hereby. 

(b) Fulfillment of Obligations. Seller shall have duly performed or complied with all of the obligations and covenants
to be performed or to which compliance by Seller is required under the terms of this Agreement at or prior to the Closing Date. 

(c) Accuracy of Representations and Warranties. The representations and warranties of Seller set forth herein shall be
true and correct in all material respects as of the date of this Agreement and as of the Closing Date as though made on and as of the Closing Date. 

  
 Page 15 

 (d) Closing Deliveries. Seller shall have delivered at or before Closing
all of the items listed in Section 8.1. 
 (e) Seller’s Credit Facility. Seller shall have obtained a
credit facility from Morgan Stanley on terms and conditions acceptable to Buyer. 
 7.2. Seller’s Conditions. Unless otherwise
waived in writing prior to Closing, the obligation of Seller to complete the Closing is subject to fulfillment prior to or at Closing of each of the following conditions. 

(a) No Legal Proceeding. At the Closing, no Legal Proceeding shall be pending or threatened seeking to enjoin or
prevent, nor shall an Injunction, Order or Official Action have been issued prohibiting, consummation of the transactions contemplated hereby. 

(b) Fulfillment of Obligations. Buyer shall have duly performed or complied with all of the obligations and covenants to
be performed or to which compliance by Buyer is required under the terms of this Agreement at or prior to the Closing Date. 

(c) Accuracy of Representations and Warranties. The representations and warranties of Buyer set forth herein shall be
true and correct in all material respects as of the date of this Agreement and as of the Closing Date as though made on and as of the Closing Date. 

(d) Closing Deliveries. Buyer shall have delivered at or before Closing all of the items listed in Section 8.2.

 ARTICLE VIII 

DELIVERIES AT CLOSING 

8.1. Deliveries by Seller to Buyer. At the Closing, Seller shall deliver, or shall cause to be delivered, to Buyer the following: 

(a) A certificate duly executed by the secretary or any assistant secretary of Seller, dated the Closing Date,
(i) attaching and certifying on behalf of the Seller complete and correct copies of resolutions of the board of directors or other governing body of Seller authorizing the execution, delivery and performance by Seller of this Agreement and the
transactions contemplated hereby and that such authorizations are in full force and effect and have not been rescinded or amended as of the Closing Date, and (ii) certifying on behalf of Seller the incumbency and signature of each officer of
Seller executing this Agreement or any document delivered in connection with the Closing; 
 (b) A certificate of Seller or
duly authorized officer thereof certifying as to those matters set out in Section 7.1(a), (b) and (c) hereof; 

(c) The Conveyance, Well Specific Overrides Conveyance, and Blanket Wetzel Overrides Conveyance in sufficient multiple
originals to allow recording in all appropriate jurisdictions and offices, duly executed by Seller; 

  
 Page 16 

 (d) Executed statements described in Treasury Regulation 1.1445-2(b)(2)
certifying that each Seller is not a foreign person within the meaning of the Code. 
 (e) Two fully executed counterparts of
a First Amendment to Amended and Restated Farmout and Area of Joint Development Agreement in the form attached hereto as Exhibit C (the “AJDA Amendment”), amending the AJDA as stated therein. 

8.2. Deliveries by Buyer to Seller. At the Closing, in addition to making the payments described in Section 3.2, Buyer shall
deliver to each Seller the following: 
 (a) A certificate of a duly authorized representative of Buyer, dated the Closing
Date, (i) attaching and certifying on behalf of the Buyer complete and correct copies of resolutions of the board of directors or other governing body of Buyer authorizing the execution, delivery and performance by Buyer of this Agreement and
the transactions contemplated hereby and that such authorizations are in full force and effect and have not been rescinded or amended as of the Closing Date, and (ii) certifying on behalf of Buyer the incumbency and signature of each officer of
Buyer executing this Agreement or any document delivered in connection with the Closing; 
 (b) A certificate of Buyer or
duly authorized officer thereof certifying as to those matters set out in Section 7.2(a), (b) and (c) hereof; 

(c) The Conveyance, Well Specific Overrides Conveyance, and Blanket Wetzel Conveyance, duly executed by Buyer on each multiple
original delivered by Seller; and 
 (d) Two fully executed counterparts of the AJDA Amendment. 

ARTICLE IX 

TERMINATION 
 9.1.
Termination. This Agreement may be terminated and the transactions contemplated hereby may be abandoned at any time prior to the Closing Date: 

(a) by mutual written consent of the Seller and Buyer; 

(b) by the Seller or Buyer if any Governmental Authority shall have issued any Injunction or taken any other action permanently
restraining, enjoining or otherwise prohibiting the consummation of the transactions contemplated hereby and such Injunction or other action shall have become final and non-appealable; or 

(c) by Seller or Buyer if the other shall have failed or refused to Close the transaction contemplated hereby on or before
June 1, 2014, or such later date as mutually agreed. 
 9.2. Effect of Termination. In the event of termination of this
Agreement by any party hereto as provided in Section 9.1, this Agreement shall forthwith become void and there shall be no liability or obligation on the part of any party hereto except (i) with respect to this Section 9.2,
Section 12.12, and the last sentence of Section 6.4, and (iii) to the extent that such termination 

  
 Page 17 

 
results from the willful breach by a party hereto of any of its representations and warranties or of any of its covenants or agreements contained in this Agreement. 

ARTICLE X 

INDEMNIFICATION 

10.1. Assumption and Indemnification. 

(a) FROM AND AFTER CLOSING, BUYER SHALL INDEMNIFY, DEFEND AND HOLD HARMLESS SELLER, ITS AFFILIATES AND THEIR RESPECTIVE
OFFICERS, DIRECTORS, AGENTS, EMPLOYEES AND REPRESENTATIVES (“SELLER GROUP”) FROM AND AGAINST ALL LOSSES (as defined below in Subsection 10.1(d)) INCURRED OR SUFFERED BY SELLER GROUP: 

(i) CAUSED BY OR ARISING OUT OF OR RESULTING FROM THE ASSUMED OBLIGATIONS (defined below); 

(ii) CAUSED BY OR ARISING OUT OF OR RESULTING FROM THE OWNERSHIP, USE OR OPERATION OF THE PROPERTIES, ON OR AFTER THE CLOSING
DATE; OR 
 (iii) CAUSED BY OR ARISING OUT OF OR RESULTING FROM ANY BREACH OF ANY REPRESENTATION, WARRANTY OR COVENANT MADE
BY BUYER CONTAINED IN ARTICLE V OF THIS AGREEMENT. 
 Upon and after Closing, Buyer shall assume and perform all the rights, duties,
obligations and liabilities of ownership of the Properties including, without limitation: (A) a proportionate share of Seller’s express and implied obligations and covenants after the Closing Date under the terms of the Leases, the
Contracts, and all other orders, rules and regulations to which the Properties are subject; (B) a proportionate share of responsibility for all royalties, overriding royalties, rentals, shut-in payments and other burdens or encumbrances to
which the Properties are subject accruing after the Closing Date; (C) responsibility for compliance with all applicable Laws pertaining to the Properties, and the procurement and maintenance of all permits required by public authorities in
connection with the Properties after the Closing Date; and (D) all other obligations assumed by Buyer under this Agreement (the “Assumed Obligations”). Seller remains responsible for all costs, expenses and liabilities incurred
by Seller in connection with the ownership or operation of the Properties before the Closing Date, except (A) those for which Buyer indemnifies Seller under 10.1(a)(i) or 10.1(a)(iii); or, (B) those arising out of specific matters or
claims for which Buyer has received an adjustment to the Purchase Price (the “Retained Obligations”). 
 (b)
FROM AND AFTER CLOSING, AND EXCEPT AS PROVIDED IN SUBSECTION 10.1(a), SELLER SHALL INDEMNIFY, DEFEND AND HOLD HARMLESS BUYER AND ITS OFFICERS, DIRECTORS, AGENTS, EMPLOYEES AND REPRESENTATIVES AGAINST AND FROM ALL LOSSES INCURRED OR SUFFERED
BY BUYER: 

  
 Page 18 

 (i) CAUSED BY OR ARISING OUT OF OR RESULTING FROM THE OWNERSHIP, USE OR OPERATION
OF THE PROPERTIES ON OR BEFORE THE CLOSING DATE; 
 (ii) CAUSED BY OR ARISING OUT OF OR RESULTING FROM ANY BREACH OF ANY
REPRESENTATION OR WARRANTY MADE BY SUCH SELLER CONTAINED IN ARTICLE IV OF THIS AGREEMENT; OR 
 (iii) CAUSED BY OR
ARISING OUT OF OR RESULTING FROM THE RETAINED OBLIGATIONS. 
 (c) Damages or other claims for Title Defects shall be
exclusively handled pursuant to Section 6.3 and are excluded from indemnification under this Article X or otherwise. 

(d) “Losses”, for purposes of this Article X shall mean the amount of any actual liability, loss, cost,
expense, claim, award or judgment incurred or suffered by any Indemnified Party (as defined in Section 10.2) arising out of or resulting from the indemnified matter, including reasonable fees and expenses of attorneys, consultants,
accountants or other agents and experts reasonably incident to matters indemnified against, and the costs of investigation and/or monitoring of such matters, and the costs of enforcement of the indemnity; provided, however, that Buyer and Seller
shall not be entitled to indemnification under this Section 10.1(d) for, and “Losses” shall not include, (i) loss of profits or other consequential damages suffered by the party claiming indemnification, or
(ii) any special or punitive damages (other than indirect, consequential, special or punitive damages suffered by third Persons and payable by an Indemnified Person). 

(e) The indemnity of each party provided in this Article X shall be for the benefit of and extend to such party’s present
and former Affiliates, and its and their respective directors, officers, employees, and agents. Any claim for indemnity under this Article X by any such Affiliate, director, officer, employee, or agent must be brought and administered by the
applicable party to this Agreement. No Indemnified Party other than Seller and Buyer shall have any rights against either Seller or Buyer under the terms of this Article X except as may be exercised on its behalf by Buyer or Seller, as applicable,
pursuant to this Section 10.1(e). Seller and Buyer may elect to exercise or not exercise indemnification rights under this Section on behalf of the other Indemnified Parties affiliated with it in its sole discretion and shall have no
liability to any such other Indemnified Party for any action or inaction under this Section. 
 (f) Notwithstanding anything
to the contrary set forth in this Agreement, Seller shall have no liability to Buyer or its officers, directors, agents, employees and representatives or obligation to indemnify Buyer for any specific matter or claim for which Buyer has received an
adjustment to the Purchase Price. 

  
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 10.2. Indemnification Procedures. 

(a) If any third party asserts any claim against a party to this Agreement which, if successful, would entitle the party to
indemnification under this Article X (the “Indemnified Party”), it shall give notice of such claim to the party from whom it intends to seek indemnification (the “Indemnifying Party”) and the Indemnifying Party
shall have the right to assume the defense and, subject to Section 10.2(b), settlement of such claim at its expense by representatives of its own choosing acceptable to the Indemnified Party (which acceptance shall not be unreasonably
withheld). The failure of the Indemnified Party to notify the Indemnifying Party of such claim shall not relieve the Indemnifying Party of any liability that the Indemnifying Party may have with respect to such claim, except to the extent that the
defense is materially prejudiced by such failure. The Indemnified Party shall have the right to participate in the defense of such claim at its expense (which expense shall not be deemed to be a Loss), in which case the Indemnifying Party shall
cooperate in providing information to and consulting with the Indemnified Party about the claim. If the Indemnifying Party fails or does not assume the defense of any such claim within 15 days after written notice of such claim has been given by the
Indemnified Party to the Indemnifying Party, the Indemnified Party may defend against or, subject to Section 10.2(b), settle such claim with counsel of its own choosing at the expense (to the extent reasonable under the circumstances) of
the Indemnifying Party. 
 (b) If the Indemnifying Party does not assume the defense of a claim involving the asserted
liability of the Indemnified Party under this Article X, no settlement of such claim shall be made by the Indemnified Party without the prior written consent of the Indemnifying Party, which consent shall not be unreasonably withheld or delayed. If
the Indemnifying Party assumes the defense of such a claim, (i) no settlement thereof 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 any violation of the rights of any Person and no effect on any other claim that may be made against the Indemnified Party, (B) the sole relief provided is monetary damages that have been paid in full by the Indemnifying Party, and
(C) the settlement includes, as an unconditional term thereof, the giving by the claimant or the plaintiff to the Indemnified Party of a release in form and substance reasonably satisfactory to the Indemnified Party, from all liability in
respect of such claim, and (ii) the Indemnified Party shall have no liability with respect to any compromise or settlement thereof effected without its consent. Notwithstanding anything in this Agreement to the contrary, the Litigation shall
not be settled or compromised on any terms and conditions without the prior written consent of Seller’s Representative. 
 10.3.
Limits on Indemnification. Notwithstanding anything to the contrary contained in this Agreement: 
 (a) The respective
representations of the Seller and Buyer contained in this Agreement shall survive the Closing, subject to applicable statutes of limitation or repose. 

  
 Page 20 

 (b) Any payments made to Seller or the Buyer pursuant to this Article X shall
constitute an adjustment of the Purchase Price for Tax purposes and shall be treated as such by the Buyer and Seller on their Tax Returns. 

ARTICLE XI  

TAXES 
 11.1.
Cooperation. Each party shall provide the other party with such cooperation and information as it reasonably may request with respect to the Properties in filing any Tax Return, amended Tax Return or claim for refund, determining a liability
for Taxes or a right to a refund of Taxes or participating in or conducting any audit or other proceeding in respect of Taxes. Each party shall bear its own expenses in complying with the foregoing provisions. 

11.2. Sales or Use Tax, Recording Fees and Similar Taxes and Fees. Buyer shall pay its proportionate share of any sales, use, excise,
documentary, stamp or transfer Taxes, recording fees and similar Taxes and fees incurred and imposed upon, or with respect to, the property transfers or other transactions contemplated hereby. If such transfers or transactions are exempt from any
such taxes or fees upon the filing of an appropriate certificate or other evidence of exemption, Buyer will timely furnish to Seller such certificate or evidence. 

ARTICLE XII 
 GENERAL

 12.1. Arbitration. 

(a) Except for the right to apply to a court of competent jurisdiction for a temporary restraining order, a preliminary
injunction, or other equitable relief to preserve the status quo or prevent irreparable harm, any controversy or failure to agree arising under this Agreement and not resolved by agreement shall be determined by a board of arbitration upon notice of
submission given by Buyer to Seller, or vice versa, which notice shall name a qualified, impartial, and independent arbitrator. Within ten (10) days after the receipt of such notice, the other party or parties shall name a second qualified,
impartial and independent arbitrator, or failing to do so, the party giving notice shall name the second arbitrator. Within twenty-five (25) days after sending the original notice of submission the two arbitrators so appointed shall name the
third qualified, independent arbitrator, or failing to do so, the third arbitrator may be appointed by the American Arbitration Association. 

(b) 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 has
been previously named. 

  
 Page 21 

 (c) The arbitration proceeding shall be held in Kanawha County, West Virginia in
accordance with the Commercial Arbitration Rules of the AAA as in effect on the date thereof. 
 (d) The decision of the
arbitrators, or the majority thereof, made in writing shall be final, binding and non-appealable upon the parties hereto as to the questions submitted, and Buyer and Seller will abide by and comply with such decision. The expenses of arbitration,
including reasonable compensation of the arbitrators, shall be borne equally by the parties hereto, except that each party shall bear the compensation and expenses of its own counsel, witnesses, and employees. 

12.2. Amendments. This Agreement may only be amended by an instrument in writing executed by Buyer and Seller. 

12.3. Waivers. The observance of any term of this Agreement may be waived (either generally or in a particular instance and either
retroactively or prospectively) by the party entitled to enforce such term, but such waiver shall be effective only if it is in a writing signed by the party entitled to enforce such term and against which such waiver is to be asserted. Unless
otherwise expressly provided in this Agreement, no delay or omission on the part of any party in exercising any right or privilege under this Agreement shall operate as a waiver thereof, nor shall any waiver on the part of any party of any right or
privilege under this Agreement operate as a waiver of any other right or privilege under this Agreement nor shall any single or partial exercise of any right or privilege preclude any other or further exercise thereof or the exercise of any other
right or privilege under this Agreement. 
 12.4. Notices. Any notice or other communications required or permitted hereunder shall
be in writing and shall be sufficiently given (and shall be deemed to have been duly given upon receipt) if sent by overnight mail, electronic mail, registered mail or certified mail, postage prepaid, or by hand, to the parties at the following
addresses (or at such other address for a party as shall be specified by like notice): 
  

	 	(a)	If to Buyer, to: 

 Republic Partners VIII, LLC 

4925 Greenville Avenue, Suite 1050 

Dallas, Texas 75206 
 Attn: John
Swanson 
 jswanson@republicenergy.com 

With a copy to: 

Carrington Coleman Sloman & Blumenthal, LLP 

901 Main Street, Suite 5500 

Dallas, Texas 75202 
 Attn:
David G. Drumm, Esq. 
 ddrumm@ccsb.com 

  
 Page 22 

	 	(b)	If to the Seller, to: 

 American Shale Development, Inc. 

210 Second Street 
 St. Marys,
West Virginia 26170 
 Attn: John G. Corp, President 

johncorp@transenergyinc.com 

12.5. Successor and Assigns, Parties in Interest. This Agreement shall be binding upon and shall inure solely to the benefit of the
parties hereto and their respective successors, legal representatives and permitted assigns. Nothing in this Agreement, express or implied, is intended to or shall confer upon any Person, other than the parties hereto and their respective
successors, legal representatives and permitted assigns, any rights, benefits or remedies of any nature whatsoever under or by reason of this Agreement, and no Person shall be deemed a third party beneficiary under or by reason of this Agreement.
Seller waives any preferential rights, “tag-along rights” or similar rights it may have under the AJDA with respect to the assignment by Buyer of its rights under this Agreement to an entity to which Buyer makes a contribution of such
rights as a constituent member thereof. 
 12.6. Severability. If any provision of this Agreement or the application of any such
provision to any Person or circumstance, shall be declared judicially to be invalid, unenforceable or void, such decision shall not have the effect of invalidating or voiding the remainder of this Agreement, it being the intent and agreement of the
parties that this Agreement shall be deemed amended by modifying such provision to the extent necessary to render it valid, legal and enforceable while preserving its intent or, if such modification is not possible, by substituting therefor another
provision that is valid, legal and enforceable and that achieves the same objective. 
 12.7. Entire Agreement. This Agreement
(including the Exhibits and Schedules hereto, and the documents and instruments executed and delivered in connection herewith) constitutes the entire agreement among the parties with respect to the subject matter hereof and supersedes all prior and
contemporaneous agreements and understandings, whether written or oral, among the parties or any of them with respect to the subject matter hereof, and there are no representations, understandings or agreements relating to the subject matter hereof
that are not fully expressed in this Agreement and the documents and instruments executed and delivered in connection herewith. All Exhibits and Schedules attached to this Agreement are expressly made a part of, and incorporated by reference into,
this Agreement. 
 12.8. Schedules. Nothing in the Schedules is intended to broaden the scope of any representation or warranty
contained in the Agreement or to create any covenant unless clearly specified to the contrary herein. Any disclosure on one Schedule shall be deemed to be disclosed on all Schedules and under the Agreement. Inclusion of any item in the Schedules
(a) shall be deemed to be disclosure of such item on all Schedules and under the Agreement, (b) does not represent a determination that such item is material nor shall it be deemed to establish a standard of materiality, (c) does not
represent a determination that such item did not arise in the ordinary course of business, (d) does not represent a determination that the transactions contemplated by the Agreement require the consent of third parties and (e) shall not
constitute, or be deemed to be, an admission to any third party concerning such item. The Schedules include descriptions of 

  
 Page 23 

 
instruments or brief summaries of certain aspects of Seller and the Properties. The descriptions and brief summaries are not necessarily complete and are provided in the Schedules to identify
documents or other materials previously delivered or made available. 
 12.9. Governing Law. This Agreement shall be governed by and
construed in accordance with the laws of the State of Texas, without giving effect to any choice-of-law rules that may require the application of the laws of another jurisdiction. Venue for any proceeding hereunder shall be in the District Court of
Kanawha County, West Virginia. 
 12.10. Remedies. Each of the parties hereto acknowledges and agrees that (i) the provisions of
this Agreement are reasonable and necessary to protect the proper and legitimate interests of the other parties hereto, and (ii) the other parties hereto would be irreparably damaged in the event any of the provisions of this Agreement were not
performed in accordance with their specific terms or were otherwise breached. It is accordingly agreed that the parties hereto shall be entitled to preliminary and permanent injunctive relief to prevent breaches of the provisions of this Agreement
by other parties hereto without the necessity of proving actual damages upon posting of a suitable bond, and to enforce specifically the terms and provisions hereof and thereof, which rights shall be cumulative and in addition to any other remedy to
which the parties hereto may be entitled hereunder or at law or equity. 
 12.11. Expenses. The Seller and Buyer shall each bear
their own expenses (including, without limitation, fees and disbursements of counsel, accountants and other experts) incurred by it in connection with the preparation, negotiation, execution, delivery and performance of this Agreement, each of the
other documents and instruments executed in connection with or contemplated by this Agreement and the consummation of the transactions contemplated hereby and thereby. 

12.12. Release of Information; Confidentiality. The parties shall cooperate with each other in releasing information concerning this
Agreement and the transactions contemplated hereby. No press releases or other public announcements concerning the transactions contemplated by this Agreement shall be made by any party without prior consultation with and written consent of each
other party, except for any legally required communication by any party and then only with prior consultation and at least 12 hours notice together with copies of all drafts of the proposed text, prior to the time the communication is made public.
Neither party shall disclose, without the prior written consent of the other party, the economic terms of the transaction effected hereby, or the terms and provisions of this Agreement, except as may be required by law. 

12.13. Certain Construction Rules. The article and section headings contained in this Agreement are for convenience of reference only
and shall in no way define, limit, extend or describe the scope or intent of any provisions of this Agreement. Whenever the context may require, any pronoun used in this Agreement shall include the corresponding masculine, feminine or neuter forms,
and the singular form of nouns, pronouns and verbs shall include the plural and vice versa. In addition, as used in this Agreement, unless otherwise provided to the contrary, (a) all references to days, months or years shall be deemed
references to calendar days, months or years and (b) any reference to a “Section,” “Article,” or “Schedule” shall be deemed to refer to a section or article of this Agreement or an Exhibit or Schedule attached to
this Agreement. The words “hereof”, “herein”, and “hereunder” and words of similar import referring to this 

  
 Page 24 

 
Agreement refer to this Agreement as a whole and not to any particular provision of this Agreement. Unless otherwise specifically provided for herein, the term “or” shall not be deemed
to be exclusive. 
 12.14. Counterparts. This Agreement may be executed (including by facsimile transmission) in multiple
counterparts, each of which shall be deemed an original and all of which taken together shall constitute one instrument binding on all the parties, notwithstanding that all the parties are not signatories to the original or the same counterpart.

 12.15. Consent and Waiver. Each of the parties hereto (other than ASD) hereby irrevocably consents to and waives their respective
rights under Section 9 of the ADJA, including any required notice period with respect to the exercise of the rights under such Section, with respect to American’s grant of a mortgage lien and conveyance of a net profits interest in certain
of the acreage subject to the JDA pursuant to the Mortgage and NPI Conveyance, respectively, in each case as defined in that certain Credit Agreement dated as of May [20], 2014 among ASD, as Borrower, Trans-Energy, Inc., as Parent, Morgan Stanley
Capital Group Inc., as Administrative Agent and the lenders from time to time party thereto. 
 [Signatures on Next Pages] 

  
 Page 25 

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

			
	BUYER:
	
	 REPUBLIC PARTNERS VIII, LLC 

a Texas limited liability company

		
	By:	 	  

		 	John D. Swanson, President
	
	SELLER:
	
	 AMERICAN SHALE DEVELOPMENT, INC.,

a Delaware corporation

		
	By:	 	  

	Name:	 	  

	Title:	 	  

  
 Page 26

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