Document:

exhibit10-2.htm

     

    Exhibit
10.2

     

     

    LEASE
AMENDMENT AND

    LEASE
ROYALTY CONVEYANCE AGREEMENT

    

    This
LEASE AMENDMENT AND LEASE ROYALTY CONVEYANCE AGREEMENT (“Agreement”) is made
and entered into by and between Ben J. Fortson also
known as Benjamin J. Fortson,
trustee of the Mattie K. Carter Trust, and Ben J. Fortson, individually, Benco
Energy, Inc., Katherine Fortson Wynne, Karen Fortson Davis, and Lisa Fortson
Burton, each dealing in their separate property, Hannah E. Davis 2006 Trust,
David Paul Davis 2006 Trust a/k/a David P. Davis 2006 Trust, Katherine Rose
Davis 2006 Trust a/k/a Katherine R. Davis 2006 Trust, Wynne Children’s
Irrevocable Asset Trust f/b/o John R. Wynne II a/k/a Wynne Children’s
Irrevocable Asset Trust f/b/o John Robert Wynne II, Wynne Children’s Irrevocable
Asset Trust f/b/o Lisa Katherine Wynne a/k/a Wynne Children’s Irrevocable Asset
Trust f/b/o Lisa Wynne Trust, Wynne Children’s Irrevocable Asset Trust f/b/o
David Mitchell Wynne a/k/a Wynne Children’s Irrevocable Asset Trust f/b/o David
Mitchell Wynne Trust, and Burton Family Children’s
Trust (collectively the “Fortson Parties”),
and Vanguard Permian,
LLC (“Vanguard”).

    

    WHEREAS, Ben J. Fortson also known as
Benjamin J. Fortson, Trustee of the Mattie K. Carter Trust, and Ben J. Fortson,
individually,
Benco Energy, Inc., Katherine Fortson Wynne, Karen Fortson Davis, and
Lisa Fortson Burton, each dealing in their separate property, (the “Fortson Lessors”),
are current lessors under those certain oil and gas leases described on Exhibit “A” hereto
(the “Leases”);

    

    WHEREAS, Ben J. Fortson also known as
Benjamin J. Fortson, Trustee of the Mattie K. Carter
Trust, and Ben J. Fortson, individually, Benco Energy, Inc.,
Katherine Fortson Wynne, Karen Fortson Davis, and Lisa Fortson Burton, each
dealing in their separate property, Hannah E. Davis 2006 Trust, David Paul Davis
2006 Trust a/k/a David P. Davis 2006 Trust, Katherine Rose Davis 2006 Trust
a/k/a Katherine R. Davis 2006 Trust, Wynne Children’s Irrevocable Asset Trust
f/b/o John R. Wynne II a/k/a Wynne Children’s Irrevocable Asset Trust f/b/o John
Robert Wynne II, Wynne Children’s Irrevocable Asset Trust f/b/o Lisa Katherine
Wynne a/k/a Wynne Children’s Irrevocable Asset Trust f/b/o Lisa Wynne Trust,
Wynne Children’s Irrevocable Asset Trust f/b/o David Mitchell Wynne a/k/a Wynne
Children’s Irrevocable Asset Trust f/b/o David Mitchell Wynne Trust, and Burton
Family Children’s Trust (collectively the “Royalty Owners”) are
the current lessors and/or owners of the lessor’s royalties under the three oil
and gas leases described on Exhibit “B” hereto (the “Fortson 47
Leases”);

    

    WHEREAS, Vanguard has entered into a
Purchase and Sale Agreement (the “PSA”) of even date
herewith, in order to acquire working interests in the Leases and the Fortson 47
Leases and this Agreement constitutes the “letter agreement” described in
Section 9.2 and 9.3 of the PSA;

    

    WHEREAS, contingent upon, and
immediately after, the transfer of the working interest in the Leases to
Vanguard at the closing pursuant to the PSA (the “Closing”), Vanguard
and the Fortson Lessors have agreed to enter into one or more amendments of the
Leases, in the form attached hereto as Exhibit “C” (the
“Lease
Amendments”), in order to accomplish a reduction in the lessor’s royalty
burden in each of the Leases from one-quarter (1/4) to three-sixteenths
(3/16);

    

    WHEREAS, contingent upon, and
immediately after, the Closing, the Royalty Owners have agreed to execute and
deliver the conveyance of royalty interests, in the form attached hereto as
Exhibit “D”
(the “Royalty
Deed”), conveying to Vanguard one-quarter (1/4) of the royalties the
Royalty Owners are currently entitled to under the Fortson 47
Leases.

    
 

    NOW, THEREFORE, for good and valuable
consideration, the receipt and sufficiency of which is hereby acknowledged and
confessed, the Fortson Parties and Vanguard agree as follows:

    

    1.           Execution and Delivery of
the Lease Amendments.  At the Closing, immediately following
the transfer of the working interest in the Leases and the Fortson 47 Leases to
be transferred pursuant to the PSA, the Fortson Lessors shall execute and
deliver to Vanguard the Lease Amendments.  Vanguard shall promptly
record the Lease Amendments in the appropriate deed records, and thereafter
deliver to the Fortson Lessors a recorded copy of the Lease
Amendments.

    

    2.           Execution and Delivery of
the Royalty Deed.  At the Closing, immediately following the
transfer of the working interest in the Leases and the Fortson 47 Leases to be
transferred pursuant to the PSA, the Royalty Owners shall execute and deliver to
Vanguard the Royalty Deed in order to accomplish a reduction in the lessor’s
royalty burden (as to the Royalty Owners’ interest) in each of the Fortson 47
Leases from one-quarter (1/4) to three-sixteenths (3/16).  Vanguard
shall promptly record the Royalty Deed in the appropriate deed records and
notify Cimarex Energy Co. of the transfer, and thereafter deliver to the Royalty
Owners a recorded copy of the Royalty Deed.

    

    3.           Payment.  As
consideration for execution and delivery of the Lease Amendments and the Royalty
Deed, Vanguard will pay to the Fortson Parties, at Closing, the sum of Five
Million Six Hundred Sixty Eight Thousand Fifty Nine Dollars and No Cents ($5,668,059.00) by wire transfer
of immediately available funds into an account to be designated by the Fortson
Parties.

    

    4.           Agreements and
Acknowledgements by Royalty Owners.  The Royalty Owners
acknowledge and agree with Vanguard as follows:

    

    
      	
              a)  

            	
              All
      notices to Royalty Owners and/or information to be provided to Royalty
      Owners which are required or may be given under any Fortson 47 Lease may
      be made jointly to the Royalty Owners at the following
      address:

            

    

    

    Fortson
Production Company

    301
Commerce St., Suite 2900

    Fort
Worth, Texas 76102

    Attn:           David
Frazier

    Telephone:                      (817)
335-5641

    Telecopy:                      (817)
336-4853

    

    
      	
              b)  

            	
              The
      Royalty Owners hereby waive any claims against Vanguard (but no other
      working interest owners in the Fortson 47 Leases) for: (i) lack of consent
      to the execution of any currently in place production sales contracts,
      marketing contracts and other contracts applicable to the sale of oil or
      the sale of gas produced from the lands covered by the applicable Fortson
      47 Lease; or (ii) any claim asserting that the methodology for the
      calculation of prices under such existing contracts does not reflect the
      “market value” for purposes of the calculation of royalties under the
      applicable Fortson 47 Lease.

            

    

    

    

    

    
      	
              c)  

            	
              The
      Royalty Owners hereby waive any claims against Vanguard (but no other
      working interest owner in the Fortson 47 Leases) arising prior to the
      Effective Date of this Agreement, asserting that royalties under any of
      the Fortson 47 Leases have been improperly charged with deduction or cost
      of gathering, transporting, separating, dehydrating, compressing or
      otherwise in making the oil or gas ready for sale or use as prohibited by
      the Fortson 47 Leases.

            

    

    

    
      	
              d)  

            	
              Any
      forfeiture described in each Fortson 47 Lease shall apply with respect to
      the well for which the applicable sum has not been paid, and a portion of
      the leased premises sufficient (a) to include the entire wellbore, (b) to
      permit such well to produce with a full allowable, and (c) to make the
      location of its entire wellbore in compliance with all applicable well
      spacing and density rules of the Railroad Commission of Texas; such
      portion of the leased premises shall be designated by the Royalty Owners
      in their reasonable discretion.

            

    

    

    
      	
              e)  

            	
              Each
      Fortson 47 Lease is in full force and effect, and the Royalty Owners
      ratify each Fortson 47 Lease as to all of its terms including those
      contained herein, and agree that no default or breach has occurred under
      any Fortson 47 Lease.

            

    

    

    5.           Further
Assurances.  The Fortson Parties and Vanguard agree to execute
and deliver such other and further instruments, documents and assurances as
either of them may reasonably request of the other to effectuate the purpose and
intent of this agreement.

    

    6.           Ad-Valorem Tax
Issues.  Ad valorem real property and personal property taxes
and assessments related to the interest conveyed in the Royalty Deed, and the
reduced lessor’s royalty burden accomplished by the Lease Amendments, shall all
be prorated as of October 1, 2009.  All such prorations shall be
allocated so that those items relating to time periods ending on or prior
to October 1, 2009 shall be allocated to the Fortson Lessors in the case of the
Lease Amendments, and to the Royalty Owners in the case of the Royalty Deed, and
items relating to time periods beginning after October 1, 2009 shall be
allocated to Vanguard.  The amount of all such prorations shall be
finally settled and paid at Closing based upon the most recent available tax
bill, tax notice or notification of appraised value.

    

    7.           Entire
Agreement. This Agreement
(including the exhibits hereto) contains the entire agreement between the
parties, and no oral statements or prior written matter not specifically
incorporated herein shall be of any force and effect.  No variation,
modification, or changes hereof shall be binding on either party hereto unless
set forth in a document executed by all parties hereto.

    

    8.           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 or conflict of law provision or rule that would cause the
application of the laws of any jurisdiction other than the State of
Texas.

    

    9.           Counterparts.  This
Agreement may be executed in multiple counterparts, each of which shall, for all
purposes, be deemed an original, but which together shall constitute one and the
same instrument.

    

    

    EXECUTED
and EFFECTIVE on this the 27 day of November, 2009.

    

    

    FORTSON
PARTIES:

    

    
      

      By:   /s/ Ben J.
Fortson                          

      BEN J.
FORTSON,  INDIVIDUALLY

      

      

      

      

      
        
          
          

        

        
          
          

          
            

          

        

        
          
          

        

      

      
 

      

      FORTSON PARTIES
(con’t):

      

      

      

      

      /s/ Katherine Fortson Wynne

      KATHERINE
FORTSON WYNNE

      

      

      

      

      
        
          
          

        

        
          
          

          
            

          

        

        
          
          

        

      

      

      

      
 

      FORTSON PARTIES
(con’t):

      

      

      BENCO
ENERGY, INC.

      

      

      

      By:   /s/ Ben J.
Fortson, III_____________

      Ben J. Fortson, III, its
President

      

      

      

      
 

      
        
          
          

        

        
          
          

          
            

          

        

        
          
          

        

      

      

      

      

      FORTSON PARTIES
(con’t):

      

      

      

      

      /s/ Karen Fortson
Davis             

      KAREN
FORTSON DAVIS

      

      

      

      

      
        
          
          

        

        
          
          

          
            

          

        

        
          
          

        

      

      

      

      
 

      

      FORTSON PARTIES
(con’t):

      

      

      

      

      /s/ Lisa Fortson
Burton           
 

      LISA
FORTSON BURTON

      

      

      

      

      
        
          
          

        

        
          
          

          
            

          

        

        
          
          

        

      

       

      

      

      FORTSON PARTIES
(con’t):

      

      

      MATTIE
K. CARTER TRUST

      

      

      

      By: /s/ Ben J.
Fortson                      

      Ben J. Fortson, as Trustee

      

      

      

      

      

      
        
          
          

        

        
          
          

          
            

          

        

        
          
          

        

      

      
 

      

      FORTSON PARTIES
(con’t):

      

      

      HANNAH
E. DAVIS 2006 TRUST

      

      

      

      By:_/s/ Ben J. Fortson,
III                         

      Ben J. Fortson, III, as
Trustee

      

      

      

      

      

      

      
        
          
          

        

        
          
          

          
            

          

        

        
          
          

        

      

      
 

      

      FORTSON PARTIES
(con’t):

      

      

      KATHERINE
ROSE DAVIS 2006 TRUST

      

      

      

      By:_ /s/ Ben J. Fortson,
III                     

      Ben J. Fortson, III, as
Trustee

      

      

      

      

      

      

      

      
        
          
          

        

        
          
          

          
            

          

        

        
          
          

        

      

      

      

 

      

      FORTSON PARTIES
(con’t):

      

      

      DAVID
PAUL DAVIS 2006 TRUST

      

      

      

      By:_ /s/ Ben J. Fortson,
III                  
 

      Ben J.
Fortson, III, as Trustee

      

      

      

      

      

      
        
          
          

        

        
          
          

          
            

          

        

        
          
          

        

      

       

      

      

      FORTSON PARTIES
(con’t):

      

      

      WYNNE
CHILDREN’S IRREVOCABLE ASSET TRUST

      F/B/O
JOHN R. WYNNE II

      

      

      

      By: /s/ Mitchell S.
Wynne                    
   

      Mitchell S. Wynne, as
Trustee

      

      

      

      

      

      
        
          
          

        

        
          
          

          
            

          

        

        
          
          

        

      

      
 

      

      

      

      FORTSON PARTIES
(con’t):

      

      

      WYNNE
CHILDREN’S IRREVOCABLE ASSET TRUST

      F/B/O
LISA KATHERINE WYNNE

      

      

      

      By:_ /s/ Mitchell S.
Wynne                      
 

      Mitchell S. Wynne, as
Trustee

      

      

      
 

      
        
          
          

        

        
          
          

          
            

          

        

        
          
          

        

      

      
 

      

      FORTSON PARTIES
(con’t):

      

      

      WYNNE
CHILDREN’S IRREVOCABLE ASSET TRUST

      F/B/O
DAVID MITCHELL WYNNE

      

      

      

      By:  
/s/ Mitchell S.
Wynne                               

      Mitchell S. Wynne, as
Trustee

      

      

      

      

      

      

      
        
          
          

        

        
          
          

          
            

          

        

        
          
          

        

      

       

      
 

      FORTSON PARTIES
(con’t):

      

      

      BURTON
FAMILY CHILDREN’S TRUST

      

      

      

      By: /s/ William K.
Burton                            

      William K. Burton, as
Trustee

      

      

      

      
 

      
        
          
          

        

        
          
          

          
            

          

        

        
          
          

        

      

      

      

      

      

      

      

      VANGUARD:

      

      VANGUARD
PERMIAN, LLC.

      

      

      By:           /s/ Scott W.
Smith                                              

      

      Name: 
Scott W.
Smith                                                     

                         

      Title:   
Manager                                                            

    

    
 

    
      
        
        

      

      
        
        

        
          

        

      

      
        
        

      

    

    

    EXHIBIT
“A”

    

    [list
“Leases” to be amended]

    

    

    

    
      
        	
                Lease
      #

              	
                Lessor

              	
                Lessee

              	
                Lease
      Date

              	
                Vol.
      /Page

              	
                Description

              
	
                Benjamin

              	 
      	 
      	 
      	 
      
	
                FEE-0002

              	
                Mattie
      Kay Carter Trust, et al

              	
                Fortson
      Oil Company

              	
                5/1/2003

              	
                740  /695

              	
                Tract
      1:  526.64 acres, more or less, being all of Section No. 47, Scrap
      File 7850, Ward County, Texas by re-survey determined to contain 766.64
      acres, LESS AND
      EXCEPT 80 acres covered by those two certain Oil, Gas and Mineral
      Leases(“Pioneer and Parker & Parsley Leases”), one dated September 20,
      1997, by and between Ben J. Fortson, Trustee, et al, Lessor, and Pioneer
      Natural Resources USA, Inc., Lessee, recorded in Volume 663, Pages
      681-688; and one dated July 18, 1997, by and between Benjamin J. Fortson,
      Trustee, et al, Lessor, and Parker & Parsley Development, L.P., Lessee
      recorded in Volume 662, Page 66-74 of the Deed Records, Ward County,
      Texas, and  LESS AND EXCEPT 80 acres
      covered by that certain Oil and Gas Lease dated February 22, 1998, by and
      between Ben J. Fortson, Trustee of the Mattie K. Carter Trust, Lessor, and
      Ben J. Fortson, Individually, et al, Lessees, recorded in Volume 666, Page
      573, of the Deed Records, Ward County, Texas, said 80 acres surrounding
      the Fortson Oil Company Benjamin #3, located 660 feet from the northwest
      line and 330 feet from the southwest line of Section 47, D. T. Johnson
      Survey, Ward County, Texas, as described in that certain Correction of
      Assignment and Bill of Sale dated August 7, 2003 from Benjamin J. Fortson,
      Trustee, et al, to Fortson Oil Company, recorded in Volume743, Page 433,
      Official Public Records, Ward County, Texas, and LESS AND EXCEPT the
      south 80 acres, more or less, also known as the Fortson Tract, being those
      acres not included in the “Pioneer and Parker and Parsley
      Leases”,  included in that certain Pooling Agreement and
      Designation of Pooled Unit Fortson 47 Unit No. 1H Well (160-Acre Oil and
      Gas Unit No. 1), dated effective February 6, 2008, by and between Cimarex
      Energy Co., Fortson Oil Company, and Energen Resources Corporation,
      recorded in Volume 837, Page 88, Official Public Records, Ward County,
      Texas, limited INSOFAR AS
      AND ONLY INSOFAR AS to the Interval Pooled as more fully described
      therein.

                Tract
      2:  462.63 acres, more or less, out of Section 45, D. T. Johnson
      Survey, Scrap 7849, Ward County, Texas.

              
	
                Miller

              	 
      	 
      	 
      	 
      
	
                FEE-0003

              	
                Mattie
      Kay Carter Trust, et al

              	
                Fortson
      Oil Company

              	
                9/1/2008

              	
                850  /399

              	
                Section
      7, G. D. Houston Survey, SF 7038, Ward County, Texas, containing 634.5
      acres, more or less.

              
	
                Benjamin
      #3-H

              	 
      	 
      	 
      	 
      
	
                FEE-0004

              	
                Mattie
      Kay Carter Trust et al

              	
                Benjamin
      J. Fortson, Trustee, et al

              	
                2/22/1998

              	
                666  /573

              	
                80
      acres surrounding and associated with the Fortson Oil Company Benjamin #3,
      located 660 feet from the northwest line and 330 feet from the southwest
      line of Section 47, D. T. Johnson Survey, Ward County, Texas, as described
      in that certain Correction of Assignment and Bill of Sale dated August 7,
      2003 from Benjamin J. Fortson, Trustee, et al, to Fortson Oil Company,
      recorded in Volume743, Page 433, Official Public Records, Ward County,
      Texas, as to those depths described in that certain Amendment of Oil and
      Gas Lease dated effective July 1, 2007 from Ben J. Fortson, Trustee, et
      al, to Mattie K. Carter Trust, et al, recorded in Vol.   , Page  , Official Public Records, Ward,
      County, Texas.

              

      

    

    

    

    
 

    
      
        
        

      

      
        
        

        
          

        

      

      
        
        

      

    

    

    EXHIBIT
“B”

    

    [list
the three “Fortson 47 Leases”]

    

    

    

    

    
      	
              Lease
      #

            	
              Lessor

            	
              Lessee

            	
              Lease
      Date

            	
              Vol.
      /Page

            	
               

              Description

            
	
              Fortson
      47 #1-H

            	 
      	 
      	 
      	 
      
	
              FEE-0002

            	
              Mattie
      Kay Carter Trust, et al

            	
              Fortson
      Oil Company

            	
              5/1/2003

            	
              740  /695

            	
              80
      acres, more or less, out of Tract 1 being the south 80 acres, also known
      as the Fortson Tract, described in that certain Pooling Agreement and
      Designation of Pooled Unit Fortson 47 Unit No. 1H Well (160-Acre Oil and
      Gas Unit No. 1), dated effective February 6, 2008, by and between Cimarex
      Energy Co., Fortson Oil Company, and Energen Resources Corporation,
      recorded in Volume 837, Page 88, Official Public Records, Ward County,
      Texas, limited INSOFAR AS
      AND ONLY INSOFAR AS to the Interval Pooled as more fully described
      therein.

            
	
              FEE-0005

            	
              Mattie
      Kay Carter Trust et al

            	
              Pioneer
      Natural Resources USA, Inc.

            	
              9/20/1997

            	
              663  /681

            	
              80
      acres of land out of Section 47, Scrap File 7850 Ward County,
      Texas.

            
	
              FEE-0006

            	
              Benjamin
      J. Fortson, Trustee

            	
              Parker
      & Parsley Development L.P.

            	
              7/18/1997

            	
              662  /66

            	
              80
      acres of land out of Section 47, Scrap File 7850 Ward County,
      Texas.

            

    

    

    

    

    
 

    
      
        
        

      

      
        
        

        
          

        

      

      
        
        

      

    

    

    

    

    

    

    EXHIBIT
“C”

    

    NOTICE
OF CONFIDENTIALITY RIGHTS: IF YOU ARE A NATURAL PERSON, YOU MAY REMOVE OR STRIKE
ANY OR ALL OF THE FOLLOWING INFORMATION FROM ANY INSTRUMENT THAT TRANSFERS AN
INTEREST IN REAL PROPERTY BEFORE IT IS FILED FOR RECORD IN THE PUBLIC RECORDS:
YOUR SOCIAL SECURITY NUMBER OR YOUR DRIVER'S LICENSE NUMBER. 

     

    

    
      	
              STATE OF TEXAS

            	
              §

            	 
      
	 
      	
              §

            	
              KNOW ALL MEN BY THESE
    PRESENTS:

            
	
              COUNTY OF WARD

            	
              §

            	 
      

    

    

    AMENDMENT TO OIL AND GAS
LEASE

    

    Reference is hereby made to that
certain Oil and Gas Lease, entered into as of the ___ day of _____ ___, by and
between _______________________________, and _____________________, recorded at
Volume ___ Page _____ of the Deed Records of Ward County, Texas (the “Lease”).

    

    WHEREAS,
___________________________________, whose addresses collectively are 301
Commerce Street, Suite 2900, Fort Worth, Texas  76102 are the current
owners of the lessor’s interest under the Lease (collectively the “Current Lessors”);

    

    WHEREAS, Vanguard Permian, LLC, whose
address is 7700 San Felipe, Suite 465, Houston, Texas  77063 is the
current owner of the lessee’s interest in the Lease (the “Current Lessee”);
and

    

    WHEREAS, the Current Lessors and the
Current Lessee hereby desire to execute this Amendment to Oil and Gas Lease (the
“Lease
Amendment”) to reduce the Current Lessors’ royalty currently provided for
in the Lease;

    

    NOW, THEREFORE, the Current Lessors and
Current Lessee, for good and valuable consideration, the receipt and sufficiency
of which is hereby acknowledged and confessed, and the covenants and agreements
stated herein, hereby amend the terms of the Lease as set forth
below:

    

    1.           All
of the references to the amount “twenty-five percent (25%)” in paragraph 5 of
the Lease shall be deleted and replaced with the amount
“three-sixteenths (3/16th).”

    

    2.           All
notices to Current Lessors and/or information to be provided to Current Lessors
which are required or may be given under the Lease may be made jointly to the
Current Lessors at the following address:

    

    

                                               Fortson
Production Company

    301 Commerce St., Suite
2900

    Fort Worth, Texas 76102

    Attn:           David
Frazier

    Telephone:                      (817)
335-5641

    Telecopy:                      (817)
336-4853

    

     3.           Current
Lessors acknowledge that Current Lessors have provided their consent to the
execution of all currently in place production sales contracts, marketing
contracts and other contracts applicable to the sale of oil or the sale of gas
produced from the lands covered by the Lease, and that the methodology for the
calculation of prices under such contracts reflects “market value” for purposes
of the calculation of royalties under the Lease.

    

    4.           Current
Lessors acknowledge that all royalties that have been paid under the Lease have
been made without deduction or cost of gathering, transporting, separating,
dehydrating, compressing or otherwise in making the oil or gas ready for sale or
use as required by the Lease.

    

    5.           Current
Lessors agree that any forfeiture described in Section 5(i) of the Lease shall
apply with respect to the well for which the applicable sum has not been paid,
and a portion of the leased premises sufficient (a) to include the entire
wellbore, (b) to permit such well to produce with a full allowable, and (c) to
make the location of its entire wellbore in compliance with all applicable well
spacing and density rules of the Railroad Commission of Texas; such portion of
the leased premises shall be designated by the Current Lessors in their
reasonable discretion.

    

               6.           Pursuant
to Section 14 of the Lease, Current Lessors acknowledge that Current Lessors
have received all information required to be furnished to Current Lessors and
Current Lessors have approved the assignment of the Lease to the Current
Lessee.

    

    7.           This
Lease Amendment may be signed in any number of counterparts, each of which shall
be considered an original for all purposes, with the same effect as if the
signatures thereto and hereto were upon the same instrument.

    

    8.           By
executing this Lease Amendment, the Current Lessors acknowledge that the Lease
is in full force and effect, and ratify the Lease as to all of its terms
including those contained herein, and the Current Lessors acknowledge that no
default or breach has occurred under the Lease.

    

    EXECUTED on the date(s) subscribed to
the acknowledgements below, but for all purposes effective as of 7:00
am CST, on October 1, 2009.

    

    CURRENT
LESSORS:

    

    [insert
signature blocks]

    

    CURRENT
LESSEE:

    

    [insert
signature blocks]

    ACKNOWLEDGMENTS

    [insert
acknowledgements]

     

    
      
        
        

      

      
        
        

        
          

        

      

      
        
        

      

    

    EXHIBIT
“D”

    

    NOTICE
OF CONFIDENTIALITY RIGHTS:  IF YOU ARE A NATURAL PERSON, YOU MAY
REMOVE OR STRIKE ANY OR ALL OF THE FOLLOWING INFORMATION FROM ANY INSTRUMENT
THAT TRANSFERS AN INTEREST IN REAL PROPERTY BEFORE IT IS FILED FOR RECORD IN THE
PUBLIC RECORDS:  YOUR SOCIAL SECURITY NUMBER OR YOUR DRIVER’S LICENSE
NUMBER.

    

    ROYALTY
DEED

    

    
      	
              STATE OF TEXAS

            	
              §

            	 
      
	 
      	
              §

            	
              KNOW ALL MEN BY THESE
    PRESENTS:

            
	
              COUNTY OF WARD

            	
              §

            	 
      

    

    

    That Ben J. Fortson also known as
Benjamin J. Fortson, Trustee of the Mattie K. Carter
Trust, and Ben J. Fortson, individually, Benco Energy, Inc.,
Katherine Fortson Wynne, Karen Fortson Davis, and Lisa Fortson Burton, each
dealing in their separate property, Hannah E. Davis 2006 Trust, David Paul Davis
2006 Trust a/k/a David P. Davis 2006 Trust, Katherine Rose Davis 2006 Trust
a/k/a Katherine R. Davis 2006 Trust, Wynne Children’s Irrevocable Asset Trust
f/b/o John R. Wynne II a/k/a Wynne Children’s Irrevocable Asset Trust f/b/o John
Robert Wynne II, Wynne Children’s Irrevocable Asset Trust f/b/o Lisa Katherine
Wynne a/k/a Wynne Children’s Irrevocable Asset Trust f/b/o Lisa Wynne Trust,
Wynne Children’s Irrevocable Asset Trust f/b/o David Mitchell Wynne a/k/a Wynne
Children’s Irrevocable Asset Trust f/b/o David Mitchell Wynne Trust, and Burton
Family Children’s Trust, all of whose
address is 301 Commerce Street, Suite 2900, Fort Worth, Texas  76102
(collectively, “Grantor”), for good
and valuable consideration in hand paid by Vanguard Permian, LLC, whose address is 7700
San Felipe, Suite 465, Houston, Texas  77063  (“Grantee”), the
receipt and sufficiency of which is hereby acknowledged and confessed, has
GRANTED, BARGAINED, SOLD and CONVEYED, and by these presents does hereby GRANT,
BARGAIN, SELL and CONVEY unto Grantee, an undivided twenty-five percent (25%) of
Grantor’s right, title, and interest in and to all of the royalties payable to
the lessor under the three oil and gas leases described on Exhibit “1” hereto
(the “Subject
Leases”), reserving unto Grantor an undivided seventy-five percent (75%)
of Grantor’s right, title, and interest in and to all of the royalties payable
to the lessor under the Subject Leases.

    

    Grantor hereby agrees to WARRANT and
FOREVER DEFEND, all and singular the above-conveyed undivided interest in the
lease royalties unto Grantee and Grantee’s successors and assigns, against every
person whomsoever lawfully claiming or to claim the same or any
part  thereof, by, through, or under Grantor, but not
otherwise.

    

    This conveyance may be executed in
multiple counterparts, each of which shall constitute an original hereof, and
the execution and delivery of any one of such counterparts by any signatory
party shall have the same force and effect and shall be binding upon such
signatory to the same extent as if the same counterpart were executed and
delivered by all of the signatory parties.

    

    IN WITNESS WHEREOF, this Royalty Deed
is executed as of the dates subscribed to the respective acknowledgments set
forth below to be EFFECTIVE as of 7:00 A.M., C.S.T., on October 1,
2009.

    

    

    [INSERT SIGNATURE BLOCK FOR EACH
GRANTOR]

    ACKNOWLEDGMENTS

    

    [INSERT FORM OF ACKNOWLEDGMENT FOR
EACH GRANTOR]

    

    STATE OF
TEXAS                                                      §

    §

    COUNTY
OF__________                                                      §

    

    This instrument was acknowledged before
me on this the ___ day of __________, 2009 by
______________________.

    

    

    

    Notary
Public in and for the State of Texas

    

    

    (Type or
print Notary's name)

    My
commission
expires:                                                                

    

    
 

    
      
        
        

      

      
        
        

        
          

        

      

      
        
        

      

    

    

    Exhibit
“1”

    

    [describe
the 3 Fortson 47 Leases here]exhibit10-3.htm

    

     

                                                                       

    Exhibit 10.3

     

    NOTICE
OF CONFIDENTIALITY RIGHTS:  IF YOU ARE A NATURAL PERSON, YOU MAY
REMOVE OR STRIKE ANY OF THE FOLLOWING INFORMATION FROM THIS INSTRUMENT BEFORE IT
IS FILED FOR RECORD IN THE PUBLIC RECORDS:  YOUR SOCIAL SECURITY
NUMBER OR YOUR DRIVER'S LICENSE NUMBER.

     

    

     

    CONVEYANCE

     

    

     

    EXILE OIL
& GAS COMPANY, a Texas corporation, whose address is 512 Main Street, Suite
1007, Fort Worth, Texas 76102 (herein called "Grantor"), for Ten Dollars and
other good and valuable consideration (the receipt and sufficiency of which are
hereby acknowledged), does hereby GRANT, BARGAIN, SELL, CONVEY, ASSIGN,
TRANSFER, SET OVER, and DELIVER unto VANGUARD PERMIAN, LLC, a
Delaware  limited liability company, whose address is 7700 San Felipe,
Ste 485 Houston, Texas 77063 (herein called "Grantee"), the following described
properties, rights and interests:

     

    
      (a)         The
"Gross Working Interests" and "Net Revenue Interests" specified on Exhibit A
attached hereto and made a part hereof in, and in addition thereto, but subject
to the reservation set forth below, all right, title and interest of Grantor in
and to the oil and gas leases described on Exhibit A attached
hereto and made a part hereof (and any extensions, ratifications and amendments
thereof, whether or not the same are described on Exhibit A) and in and
to the wells located thereon; and

    

    
      

    

    (b)           Without
limitation of the foregoing, all other right, title and interest (of whatever
kind or character, whether legal or equitable, and whether vested or contingent)
of Grantor in and to the oil, gas and other minerals in and under or that may be
produced from the lands described in Exhibit A hereto
(including interests in oil, gas or mineral leases covering such lands,
overriding royalties, production payments and net profits interests in such
lands or such leases, and fee mineral interests, fee royalty interests and other
interests in such oil, gas and other minerals), whether such lands be described
in a description set forth in such Exhibit A or be
described in such Exhibit A by
reference to another instrument (and without limitation by any depth limitations
that may be set forth in such Exhibit A or in any
such instrument so referred to for description), even though Grantor's interest
in such oil, gas and other minerals may be incorrectly described in, or omitted
from, such Exhibit
A;

     

    (c)           All
rights, titles and interests of Grantor in and to, or otherwise derived from,
all presently existing and valid oil, gas or mineral unitization, pooling,
and/or communitization agreements, declarations and/or orders and in and to the
properties covered and the units created thereby (including all units formed
under orders, rules, regulations, or other official acts of any federal, state,
or other authority having jurisdiction, voluntary unitization agreements,
designations and/or declarations) relating to the properties described in paragraphs (a)
and (b)
above;

     

    (d)           All
rights, titles and interests of Grantor in and to all presently existing and
valid production sales (and sales related) contracts, operating agreements, and
other agreements and contracts which relate to any of the properties described
in paragraphs (a),
(b) and (c) above, or which
relate to the exploration, development, operation, or maintenance thereof or the
treatment, storage, transportation or marketing of production therefrom (or
allocated thereto);

     

    (e)           All
rights, titles and interests of Grantor in and to all materials, supplies,
machinery, equipment, improvements and other personal property and fixtures
(including all wells, wellhead equipment, pumping units, flowlines, tanks,
buildings, injection facilities, saltwater disposal facilities, compression
facilities, gathering systems, and other equipment), and all easements,
rights-of-way, surface leases and other surface rights, all permits and
licenses, and all other appurtenances being used or held for use in connection
with, or otherwise related to, the exploration, development, operation or
maintenance of any of the properties described in paragraphs (a),
(b) and (c) above, or the
treatment, storage, transportation or marketing of production therefrom (or
allocated thereto); and

     

    (f)           All
of Grantor's lease files, abstracts and title opinions, production records, well
files, accounting records (but not including general financial accounting
records), seismic records and surveys, gravity maps, electric logs, geological
or geophysical data and records, and other files, documents and records of every
kind and description which relate to the properties described
above.

     

    The
properties, rights and interests described in subparagraphs (a)
through (e)
above, are herein sometimes called the "Properties".

     

    TO HAVE
AND TO HOLD the Properties unto Grantee, and its successors and assigns,
forever, and Grantor agrees to warrant and forever defend title to the
Properties unto Grantee and its successors and assigns by, through and under
Grantor only, but not otherwise.

     

     Grantee
hereby agrees (a) to assume, and to timely pay and perform, all duties,
obligations and liabilities relating to the ownership and/or operation of the
Properties arising or occurring after the Effective Time, and (b) to
indemnify and hold Grantor (and the affiliates of Grantor, and the respective
directors, officers, employees, attorneys, contractors and agents of such
affiliates and Grantor) harmless from and against any and all claims, actions,
causes of action, liabilities, damages, losses, costs or expenses (including,
without limitation, court costs and attorneys' fees) of any kind or character
arising out of or otherwise relating to the duties, obligations and liabilities
assumed by Grantee.  In connection with (but not in limitation of) the
foregoing, it is specifically understood and agreed that such duties,
obligations and liabilities arising out or otherwise relating to the ownership
and/or operation of the Properties arising or occurring after the Effective Time
shall (notwithstanding anything herein appearing to be to the contrary) be
deemed to include all matters arising out of the condition of the Properties on
the Effective Time (including, without limitation, within such matters all
obligations to properly plug and abandon, or replug and re-abandon, wells
located on the Properties, to restore the surface of the Properties and to
comply with, or to bring the Properties into compliance with, applicable
environmental laws, rules, regulations and orders, including conducting any
remediation activities which may be required on or otherwise in connection with
activities on the Properties), regardless of whether such condition or the
events giving rise to such condition arose or occurred before or after the
Effective Time, and the assumptions and indemnifications by Grantee provided for
in the first sentence of this paragraph shall expressly cover and include such
matters.  Grantor hereby agrees (a)
to timely pay and perform, all duties, obligations and liabilities relating to
the ownership and/or operation of the Properties arising or occurring prior to
the Effective Time, and (b) to indemnify and hold Grantee (and the
affiliates of Grantee, and the respective directors, officers, employees,
attorneys, contractors and agents of such affiliates and Grantee) harmless from
and against any and all claims, actions, causes of action, liabilities, damages,
losses, costs or expenses (including, without limitation, court costs and
attorneys' fees) of any kind or character arising out of or otherwise relating
to the duties, obligations and liabilities arising or occurring prior to the
Effective Time. THE
FOREGOING ASSUMPTIONS AND INDEMNIFICATIONS SHALL APPLY WHETHER OR NOT SUCH
DUTIES, OBLIGATIONS OR LIABILITIES, OR SUCH CLAIMS, ACTIONS, CAUSES OF ACTION,
LIABILITIES, DAMAGES, LOSSES, COSTS OR EXPENSES ARISE OUT OF (i) NEGLIGENCE
(INCLUDING SOLE NEGLIGENCE, SINGLE NEGLIGENCE, CONCURRENT NEGLIGENCE, ACTIVE OR
PASSIVE NEGLIGENCE, BUT EXPRESSLY NOT INCLUDING GROSS NEGLIGENCE OR WILLFUL
MISCONDUCT) OF ANY INDEMNIFIED PARTY, OR (ii) STRICT
LIABILITY.

     

    Grantor
agrees to execute and deliver to Grantee, from time to time, such other and
additional instruments, notices, division orders, transfer orders and other
documents, and to do all such other and further acts and things as may be
necessary to more fully and effectively grant, convey and assign to Grantee the
Properties.

     

    Grantor shall be entitled to all
proceeds of production from the Properties and shall bear all costs,
liabilities, obligations and expenses arising from or related to the ownership
and operation of the Properties prior to the Effective Time (as defined below)
and Grantee shall be entitled to all proceeds of production from the Properties
and shall bear all costs, liabilities, obligations and expenses arising from or
related to the ownership and operation of the Properties after the Effective
Time.

    

    Grantor
warrants and represents to Grantee that:

    

    
      	
              1.  

            	
              The
      Properties are free and clear of all liens, charges and encumbrances
      created by, through or under
Grantor;

            

    

    

    
      	
              2.  

            	
              Grantor
      has the right and power to make the transfer and conveyance effectuated by
      this instrument.

            

    

    

    This
Conveyance may be executed in several counterparts all of which are
identical.  All of such counterparts together shall constitute one and
the same instrument.

    

    IN
WITNESS WHEREOF this Conveyance has been executed by the Grantor on the dates of
its acknowledgement, effective as to runs of oil and deliveries of gas, and for
all other purposes, as of 7:00 a.m. Central Time on October 1, 2009 (the
"Effective Time").

     

    

    EXILE
OIL & GAS COMPANY

    

    By:           /s/ John S.
Tittl                                                 

    

    Title:          President                                                   

    

    

    STATE OF
TEXAS                                                                §

    §

    COUNTY OF
______________                                                                §

    

    

    The
foregoing instrument was acknowledged before me this _____ day of _____________,
2009, by ________________, _____________ of EXILE OIL & GAS COMPANY, a Texas
corporation, on behalf of said corporation.

     

    

    

    ____________________________________

    Notary
Public in and for the State of Texas

    

    

    Name:__________________________

    (typed, printed or
stamped)

    

    My
Commission Expires:

    

    ______________________

    

    

    
      
        
        

      

      
        
        

        
          

        

      

      
        
        

      

    

    Exhibit
A

    

    Attached
to and made a part of that certain Conveyance from Exile Oil & Gas Company
to Vanguard Permian, LLC

    

    
      	
              LESSOR

            	
              LESSEE

            	
              LEASE
      DATE

            	
              RECORDING

            
	 
      	 
      	 
      	 
      
	
              Lochridge,
      Lloyd P. Jr

            	
              Fortson
      Oil Company

            	
              4/1/2003

            	
              738/738

            
	
              Bull,
      Stephen Medaris

            	
              Fortson
      Oil Company

            	
              4/1/2003

            	
              738/720

            
	
              Bull,
      Jefferson Lochridge

            	
              Fortson
      Oil Company

            	
              4/1/2003

            	
              738/718

            
	
              Hartwell,
      Ware

            	
              Fortson
      Oil Company

            	
              4/1/2003

            	
              739/632

            
	
              Hartwell,
      Jay

            	
              Fortson
      Oil Company

            	
              4/1/2003

            	
              738/730

            
	
              Beyer,
      John L., III

            	
              Fortson
      Oil Company

            	
              4/1/2003

            	
              741/486

            
	
              Beyersmith,
      Holly

            	
              Fortson
      Oil Company

            	
              4/1/2003

            	
              685/686

            
	
              Beyer,
      Andrew L.

            	
              Fortson
      Oil Company

            	
              4/1/2003

            	
              738/716

            
	
              Beyer
      John, Jr. Trust

            	
              Fortson
      Oil Company

            	
              4/1/2003

            	
              741/488

            
	
              Massie,
      Chloe Lochridge

            	
              Fortson
      Oil Company

            	
              4/1/2003

            	
              738/740

            
	
              Ross,
      James B.

            	
              Fortson
      Oil Company

            	
              4/1/2003

            	
              738/742

            
	
              Hoover,
      Wanda Sue

            	
              Fortson
      Oil Company

            	
              4/1/2003

            	
              740/657

            
	
              Whitener,
      Charles C.

            	
              Fortson
      Oil Company

            	
              4/1/2003

            	
              740/661

            
	
              Lewis,
      Ben H. Estate

            	
              Fortson
      Oil Company

            	
              4/1/2003

            	
              738/736

            
	
              Kirk,
      Mary Anne

            	
              Fortson
      Oil Company

            	
              4/1/2003

            	
              738/734

            
	
              Graham,
      Charles Carter

            	
              Fortson
      Oil Company

            	
              4/1/2003

            	
              738/726

            
	
              Graham,
      Ambrose W., Jr.

            	
              Fortson
      Oil Company

            	
              4/1/2003

            	
              738/746

            
	
              Chinn,
      Elizabeth Graham

            	
              Fortson
      Oil Company

            	
              4/1/2003

            	
              738/724

            
	
              Graham,
      Cecilia Louise

            	
              Fortson
      Oil Company

            	
              4/1/2003

            	
              738/744

            
	
              Graham,
      Grady Ross

            	
              Fortson
      Oil Company

            	
              4/1/2003

            	
              738/728

            
	
              Graham,
      Robert Bruce Trust

            	
              Fortson
      Oil Company

            	
              4/1/2003

            	
              740/659

            
	
              Carter,
      Reeves B.

            	
              Fortson
      Oil Company

            	
              4/1/2003

            	
              738/722

            
	
              Jones,
      Susan Carter

            	
              Fortson
      Oil Company

            	
              4/1/2003

            	
              739/634

            
	
              Hill,
      Vernon B. Jr., et al

            	
              Fortson
      Oil Company

            	
              4/1/2003

            	
              738/732

            
	
              Seely,
      Linda Byrd

            	
              Fortson
      Oil Company

            	
              2/10/2003

            	
              738/445

            
	
              Stacey,
      Gretchen

            	
              Fortson
      Oil Company

            	
              2/10/2003

            	
              738/443

            
	
              Williamson,
      Ralph E.

            	
              Fortson
      Oil Company

            	
              2/10/2003

            	
              738/441

            
	
              Lord,
      Hodge Edward

            	
              Fortson
      Oil Company

            	
              2/10/2003

            	
              738/439

            
	
              Lord,
      Brenda Gail

            	
              Fortson
      Oil Company

            	
              2/10/2003

            	
              738/437

            
	
              Lord,
      Kent Edward

            	
              Fortson
      Oil Company

            	
              2/10/2003

            	
              738/435

            
	
              Richards,
      Sidney Lord Trust

            	
              Fortson
      Oil Company

            	
              2/10/2003

            	
              738/447

            
	
              Cotugno,
      Jane L. Martin

            	
              Fortson
      Oil Company

            	
              2/10/2003

            	
              738/427

            
	
              Martin,
      Mark G.

            	
              Fortson
      Oil Company

            	
              2/10/2003

            	
              738/429

            
	
              Martin,
      Roy Jr.

            	
              Fortson
      Oil Company

            	
              2/10/2003

            	
              738/431

            
	
              Martin,
      Stewart K.

            	
              Fortson
      Oil Company

            	
              2/10/2003

            	
              738/433

            
	
              Martin,
      Thomas L.

            	
              Fortson
      Oil Company

            	
              2/10/2003

            	
              738/748

            
	
              Uppercu,
      Ella K. et al

            	
              C.
      L. Milburn

            	
              4/21/1962

            	
              246/444

            
	
              McDonnold,
      M., Jr.

            	
              Fortson
      Oil Company

            	
              4/28/2003

            	
              739/366

            
	
              Uppercu,
      Ella K. et al

            	
              C.
      L. Milburn

            	
              4/21/1962

            	
              246/444

            
	 
      	 
      	 
      	 
      

    

    All
Memorandum and Leases recorded in the Official Records of Ward County,
Texas

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