Document:

Prepared and filed by St Ives Financial

Exhibit 10.6

PERFORMANCE BONUS AGREEMENT

     This PERFORMANCE BONUS AGREEMENT (“Agreement”), is made this 27th day of September, 2006, by and between Modern Medical Modalities Corporation, a New Jersey Corporation (“The Company”), and Minesh Patel.  

     The Company has established a plan for accelerated growth through mergers and acquisitions, and has decided that an experienced team be formed to increase the likelihood that its rapid growth plan will be achieved. The Company also realizes that cash bonus incentives are needed to reward each person on the team.

     The Company desires to provide a performance based cash bonus allocation of $113,250 to Minesh Patel for serving on the merger and acquisition team, and the Company has set forth specific cash bonus performance and payment criteria below to be met in order to be paid the earned portion of the allocation.

Cash Bonus Performance and Payment Criteria: 

		
1.	
$18,875 U.S. shall be paid to Minesh Patel upon his participation in and the successful completion of the Company achieving $3,850,000 in new revenues based upon business obtained through external business development combinations that includes mergers and acquisitions transactions. In the event that the Company decides to accept less than the $3,850,000 in revenues (1st alternate revenues) as part of a merger or acquisition, or other acceptable business combination transaction, the cash bonus shall be pro-rated by multiplying $18,875 U.S. by the percentage equal to the 1st alternate revenues divided by $3,850,000.
	 	 	 

		
2.	
$18,875 U.S. shall be paid to Minesh Patel upon his participation in and the successful completion of the Company achieving the next $6,500,000 in new revenues based upon business obtained through external business development combinations that includes mergers and acquisitions transactions. In the event that the Company decides to accept less than the $6,500,000 in revenues (2nd alternate revenues) as part of a merger or acquisition, or other acceptable business combination transaction, the number of shares shall be pro-rated by multiplying $18,875 U.S. by the percentage equal to the 2nd alternate revenues divided by $6,500,000.  
	 	 	 

1

		 	 
		
3.	
$28,750 U.S. shall be paid to Minesh Patel upon his participation in and the successful completion of the Company achieving the next $10,200,000 in new revenues based upon business obtained through external business development combinations that includes mergers and acquisitions transactions. In the event that the Company decides to accept less than the $10,200,000 in revenues (3rd alternate revenues) as part of a merger or acquisition, or other acceptable business combination transaction, the number of shares shall be pro-rated by multiplying $28,750 U.S. by the percentage equal to the 3rd alternate revenues divided by $10,200,000.  
	 	 	 

		
4.	
$46,750 U.S. shall be paid to Minesh Patel upon his participation in and the successful completion of the Company achieving the next $16,600,000 in new revenues based upon business obtained through external business development combinations that includes mergers and acquisitions transactions. In the event that the Company decides to accept less than the $16,600,000 in revenues (4th alternate revenues) as part of a merger or acquisition, or other acceptable business combination transaction, the number of shares shall be pro-rated by multiplying 46,750 U.S. by the percentage equal to the 4th alternate revenues divided by $16,600,000.  

TERM.  This Agreement shall commence upon execution hereof as of the Effective Date and continue until September 26, 2011.

GOVERNING LAW.  This Agreement is being entered into and shall be governed by and construed in accordance with the laws of the State of New Jersey without regard to any conflicts of law principles.

	Signed By:	/s/ Baruh Hayut	 	Signed By:	/s/ Minesh Patel
	 	

    	 	 	

    
	 	 	 	 	 
	Title:	Chairman & CEO	 	Title:	COO
	 	

    	 	 	

    
	 	 	 	 	 
	Effective Date:	9/27/06	 	Effective Date:	9/27/06
	 	

    	 	 	

    

2Prepared and filed by St Ives Financial

Exhibit 10.7

PERFORMANCE BONUS AGREEMENT

     This PERFORMANCE BONUS AGREEMENT (“Agreement”), is made this 27th day of September, 2006, by and between Modern Medical Modalities Corporation, a New Jersey Corporation (“The Company”), and Bruce Phillips.

     The Company has established a plan for accelerated growth through mergers and acquisitions, and has decided that an experienced team be formed to increase the likelihood that its rapid growth plan will be achieved. The Company also realizes that cash bonus incentives are needed to reward each person on the team.

     The Company desires to provide a performance based cash bonus allocation of $113,250 to Bruce Phillips for serving on the merger and acquisition team, and the Company has set forth specific cash bonus performance and payment criteria below to be met in order to be paid the earned portion of the allocation.

Cash Bonus Performance and Payment Criteria: 

		
1.	
$18,875 U.S. shall be paid to Bruce Phillips upon his participation in and the successful completion of the Company achieving $3,850,000 in new revenues based upon business obtained through external business development combinations that includes mergers and acquisitions transactions. In the event that the Company decides to accept less than the $3,850,000 in revenues (1st alternate revenues) as part of a merger or acquisition, or other acceptable business combination transaction, the cash bonus shall be pro-rated by multiplying $18,875 U.S. by the percentage equal to the 1st alternate revenues divided by $3,850,000.
	 	 	 

		
2.	
$18,875 U.S. shall be paid to Bruce Phillips upon his participation in and the successful completion of the Company achieving the next $6,500,000 in new revenues based upon business obtained through external business development combinations that includes mergers and acquisitions transactions. In the event that the Company decides to accept less than the $6,500,000 in revenues (2nd alternate revenues) as part of a merger or acquisition, or other acceptable business combination transaction, the number of shares shall be pro-rated by multiplying $18,875 U.S. by the percentage equal to the 2nd alternate revenues divided by $6,500,000.  
	 	 	 

1

		 	 
		
3.	
$28,750 U.S. shall be paid to Bruce Phillips upon his participation in and the successful completion of the Company achieving the next $10,200,000 in new revenues based upon business obtained through external business development combinations that includes mergers and acquisitions transactions. In the event that the Company decides to accept less than the $10,200,000 in revenues (3rd alternate revenues) as part of a merger or acquisition, or other acceptable business combination transaction, the number of shares shall be pro-rated by multiplying $28,750 U.S. by the percentage equal to the 3rd alternate revenues divided by $10,200,000.  
	 	 	 

		
4.	
$46,750 U.S. shall be paid to Bruce Phillips upon his participation in and the successful completion of the Company achieving the next $16,600,000 in new revenues based upon business obtained through external business development combinations that includes mergers and acquisitions transactions. In the event that the Company decides to accept less than the $16,600,000 in revenues (4th alternate revenues) as part of a merger or acquisition, or other acceptable business combination transaction, the number of shares shall be pro-rated by multiplying 46,750 U.S. by the percentage equal to the 4th alternate revenues divided by $16,600,000.  

TERM.  This Agreement shall commence upon execution hereof as of the Effective Date and continue until September 26, 2011.

GOVERNING LAW.  This Agreement is being entered into and shall be governed by and construed in accordance with the laws of the State of New Jersey without regard to any conflicts of law principles.

	Signed By:	/s/ Baruh Hayut	 	Signed By:	/s/ Bruce Phillips
	 	

    	 	 	

    
	 	 	 	 	 
	Title:	Chairman & CEO	 	Title:	Group Controller
	 	

    	 	 	

    
	 	 	 	 	 
	Effective Date:	9/27/06	 	Effective Date:	9/27/06
	 	

    	 	 	

    

2Exhibit 10.1

    
      

    

    PURCHASE
      AND SALE AGREEMENT

     

    THIS
      PURCHASE AND SALE AGREEMENT (“Agreement”), dated as of September 27, 2006 (the
“Execution Date”), is made and entered into between W. B. OSBORN OIL & GAS
      OPERATIONS, LTD., d/b/a W.B. Osborn Oil & Gas Operations (“WBO”), and ST. JO
      PIPELINE, LIMITED, both Texas Limited Partnerships and both located at P.O.
      Box
      8C, San Antonio, TX 78217, herein collectively called “Seller”, and Ignis
      Barnett Shale, LLC, a Texas limited liability company, 100 Crescent Court,
      7th
      Floor,
      Dallas, TX 75201, herein called “Buyer”. Seller and Buyer are hereinafter
      sometimes individually referred to as a “Party” hereto and together as “Parties”
hereto.

    

    WHEREAS,
      Seller owns and WBO operates certain oil and gas producing properties and a
      related pipeline facility as more fully described herein; and

    

    WHEREAS,
      Buyer desires to purchase and Seller desires to sell, pursuant to the terms
      hereof, an undivided interest in such properties and facility owned by Seller;
      

    

    NOW,
      THEREFORE, in consideration of the mutual agreements, covenants, promises,
      and
      payments for which provision is herein made, and for other good and valuable
      consideration, the receipt and sufficiency of which is hereby acknowledged
      by
      the Parties hereto, Buyer and Seller hereby agree as follows:

    

    ARTICLE
      I

    PURCHASE
      AND SALE

    

    1.1    PURCHASE
      AND SALE.
      Seller
      agrees to sell and convey, and Buyer agrees to purchase, a forty-five percent
      (45%) undivided interest in Seller’s interest in and to the Properties (as
      defined in Paragraph 1.2), pursuant to the terms and conditions of this
      Agreement.

    

    1.2    PROPERTIES.
      The
      Properties which are the subject of this Agreement, and in which said forty-five
      percent (45%) undivided interest is being herein conveyed, are comprised of
      all
      of the following (collectively, the “Properties”): 

    

    (a)    LEASES,
      WELLS, UNITS, AND LANDS.
      The
      interests described on Exhibit “A”, attached hereto and made a part hereof by
      this reference for all purposes, as to all depths and formations, in and to
      (i)
      the oil, gas and mineral leases listed on Exhibit “A” (collectively, the
“Leases” and any of which, singularly, a “Lease”); (ii) the units, whether
      pooled, acreage spacing or proration units, or other allocations of acreage,
      and
      all rights associated therewith, which are applicable to the Leases and have
      been established by, or in accordance with (A) applicable contractual provisions
      regarding unitization, communitization, pooling, spacing or proration, or (B)
      applicable state or federal law (collectively, the “Units”); and (iii) the oil
      and/or gas wells, salt water disposal wells, and water wells (collectively,
      the
“Wells”) located on either (A) the lands subject to the Leases or (B) the lands
      included within the lateral bounds of any of the Units (all of such lands being
      hereinafter called the “Lands”);

    

    (b)    PRODUCTION.
      For each
      of the Leases, the interest set forth on Exhibit “A” corresponding to such Lease
      in and to all oil, gas, casinghead gas, condensate, distillate or other liquid
      or gaseous hydrocarbons (collectively, the “Hydrocarbons”), and other minerals
      which are in, under, upon, or produced from or allocable (or to be produced
      from
      or allocable) to that portion of the Lands attributable to such Lease (such
      Hydrocarbons and other minerals being hereinafter referred to as “Production”),
      including without limitation (i) Production constituting “line fill” and
      inventory below the pipeline connection in tanks, attributable to such interest
      described in Exhibit “A”, and (ii) the proceeds from the sale of such Production
      referenced in item (i), immediately above;

    

    (c)    CONTRACTS.
      All
      farmout and farmin agreements, unitization or communitization agreements or
      orders, pooling agreements (or applicable governmental regulations or orders),
      unit declarations (or applicable governmental regulations or orders), division
      orders, transfer orders, gas sales or purchase contracts, crude oil purchase
      and
      sale agreements, agreements for the transportation of Production, agreements
      for
      the exchange of Hydrocarbons or Production, operating agreements, licenses
      and/or agreements to perform seismic testing, licenses to or agreements granting
      rights to the use of seismic data or other intellectual property relating to
      the
      Leases, the Lands, or both, contract operating agreements, unit operating
      agreements, participation agreements, processing agreements, options, or other
      agreements and instruments, including all amendments thereto and any agreements
      settling claims asserted thereunder) to the extent that the same relate,
      appertain, belong or are incidental to the Leases, the Lands, or both
      (collectively, the “Contracts”), including without limitation the Surface
      Leases, Operating Agreements, Pooling Declarations, Gas Contracts, and
      Miscellaneous Agreements (as those terms are defined in Exhibit
“A”);

     

    
      
        	 	
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                PURCHASE
                  AND SALE AGREEMENT

              	 
	
                BUYER

              	 	
                SELLER

              

      

       

    

    
      
        
        

      

      
        
        

        
          

        

      

      
        
        

      

    

    (d)    FIXTURES,
      EQUIPMENT, AND ASSOCIATED PERSONAL PROPERTY.
      All
      fixtures and equipment attached or appurtenant to the Leases, the Lands, and/or
      the Wells, including, but not limited to, any water source wells, water wells,
      injection wells, tanks, tank batteries, pipelines, gas plants, disposal
      facilities, operating warehouses (including parts, supplies and other inventory
      items), buildings, structures, roads, power lines, telephone lines, field
      separators and liquid extractors, pumps, pumping units, valves, fittings,
      machinery and parts, engines, boilers, meters, apparatus, appliances, cables,
      wires, towers, casing, tubing and rods, and gathering lines, to the extent
      that
      the same are used in connection with the ownership or operation of the Leases,
      the Wells, or both (collectively, the “Equipment”);

    

    (e)    EASEMENTS.
      All
      lands, tenements, appurtenances, surface leases, easements, permits, licenses,
      servitudes and rights-of-way in any way appertaining, belonging, affixed or
      incidental to or used in connection with the ownership or operation of the
      Leases, the Wells, or both (collectively, the “Easements”), including without
      limitation the Pipeline Easements and Roadway Easements (as those terms are
      defined in Exhibit “A”);

    

    (f)    
FILES.
      Copies
      of all of the following (collectively, the “Files”): Seller’s lease files, land
      files, well files, division order files, transfer order files, abstracts, title
      opinions, curative, ownership reports, reports on divisions of interest,
      accounting records and other similar documents and records which relate to
      the
      Leases, the Lands, the Wells, the Units, the Production, the Hydrocarbons,
      the
      Contracts, the Equipment, the Easements, the Records (as that term is defined
      below), and/or the Remaining Interests (as that term is defined below), Buyer
      being entitled to inspect and review same during Buyer’s due diligence period as
      described hereinbelow, and to make copies of any documents contained therein
      as
      may be requested by Buyer;

    

    (g)    RECORDS.
      Copies
      of all of the following (collectively, the “Records”): Seller’s geological,
      geophysical or seismic prospect maps, electric logs, survey maps, geological
      profiles, geological and geophysical interpretative data, production records,
      accounting records, engineering data, logs, core data, pressure data, decline
      curves and similar data, to the extent that the foregoing relate to the Leases,
      the Lands, the Wells, the Units, the Production, and/or the Hydrocarbons;
      and

    

    (h)    REMAINING
      INTERESTS.
      Without
      limiting the generality of the foregoing, the interest of Seller, whether now
      owned or hereafter acquired by operation of law, in any of the above, even
      though such interest may be incorrectly described in or omitted from Exhibit
“A”
(collectively, the “Remaining Interests”), including, but not limited to,
      interests in or derived from all oil, gas and mineral leases and leaseholds,
      fee
      and mineral interests, overriding royalties and all other interests of
      whatsoever character, insofar as the same cover or relate to the Lands, even
      though said interests or Lands may be incorrectly described in or omitted from
      Exhibit “A”.

    

    The
      term
“Properties” shall not include, and Seller shall retain, all liability for all
      Litigation (as defined in Section 4.1[d]), if any, pending or threatened in
      writing before any court or governmental agency as of the date of Closing (as
      defined in Paragraph 7.1), to the extent it relates to the period of time prior
      to the Effective Date (collectively, the “Retained Obligations”). 

    

    1.3    EFFECTIVE
      DATE.
      The
      transfer of the Properties shall occur at Closing (as defined in Paragraph
      7.1),
      effective as of 7:00 a.m. local Texas time, on June 1, 2006 (“Effective
      Date”).

    

    1.4    ALLOCATION
      OF REVENUES AND EXPENSES:

    

    (a)    ALLOCATION
      OF REVENUES AND EXPENSES PRIOR TO EFFECTIVE DATE.
      Seller
      shall receive all proceeds from the sale of Production physically produced
      prior
      to the Effective Date, and Seller shall be entitled to receive all other
      revenues and benefits attributable to the Properties accruing or relating to
      all
      periods before the Effective Date. Seller alone shall bear and be solely
      responsible for all expenses incurred with respect to the Properties relating
      to
      periods before the Effective Date.

    
       

      
        
          	 	
                  2

                	 
	 	
                  PURCHASE
                    AND SALE AGREEMENT

                	 
	
                  BUYER

                	 	
                  SELLER

                

        

         

      

    

    
      
        
        

      

      
        
        

        
          

        

      

      
        
        

      

    

     

    (b)    ALLOCATION
      OF REVENUES AND EXPENSES AFTER EFFECTIVE DATE.
      Subject
      to Paragraph 1.5 (a), (b) and (c) hereof, the working interest share (net
      revenue interest) of all proceeds from the sale of Production physically
      produced after the Effective Date, and all other revenues and benefits
      attributable to the Properties accruing or relating to all periods after the
      Effective Date shall be owned and received by Seller and Buyer in the
      proportions of Seller - fifty-five percent (55%) and Buyer - forty-five percent
      (45%). Likewise, all expenses incurred with respect to the Properties relating
      to all periods after the Effective Date shall be borne by Seller and Buyer
      in
      the same proportions. 

    

    (c)    AD
      VALOREM TAXES.
      WBO, as
      operator, shall be responsible for the payment of all ad
      valorem
      property
      taxes on the personal property and/or reserves which comprise a portion of
      the
      Properties. Such taxes shall be allocated between Buyer and Seller, with Seller
      being liable for all such taxes attributable to the period ending on the
      Effective Date and Buyer being liable for all Buyer’s prorata
      forty-five percent (45%) share of such taxes for the period beginning on the
      Effective Date, Seller being liable for Seller’s prorata
      fifty-five percent (55%) share of such taxes for the period beginning on the
      Effective Date. Following payment of said taxes by WBO, Seller shall bill Buyer
      for its said prorata
      share
      and Buyer shall promptly remit such payment to Seller. Ad
      valorem
      taxes
      based upon Production shall be allocated on the basis of the time when such
      Production physically occurred, without regard to the year in which such taxes
      were assessed, Seller being liable for taxes on production occurring prior
      to
      the Effective Date and each Party being liable for its respective prorata
      share
      (Seller - 55%, Buyer - 45%) of taxes on production occurring beginning on the
      Effective Date.

    

    (d)    SURVIVAL.
      The
      provisions of this Section 1.4 shall survive the Closing.

    

    1.5    OPERATION
      OF PROPERTIES AFTER EFFECTIVE DATE:

    

    (a)    LEASEHOLD
      PROPERTIES ON WHICH SELLER OWNS LESS THAN 100%. Operations
      on Properties
      with existing Operating Agreements (being those as set forth on Exhibit “A”
attached hereto) and on Properties where Seller owns less than one hundred
      percent (100%) working interest and Seller is contracted to enter into a certain
      form of Operating Agreement, will continue to be governed by those agreements,
      with the Exhibit “A’s” to such agreements revised to include Buyer’s working
      interest, Buyer hereby taking such interests in the Properties subject to said
      existing Operating Agreements.

    

    (b)    LEASEHOLD
      PROPERTIES ON WHICH SELLER OWNS 100%. Operations
      on Properties where no Operating Agreement currently exists and Seller owns
      one
      hundred percent (100%) working interest, and on all new leasehold, if any,
      acquired jointly by Seller and Buyer will be governed by the form of Operating
      Agreement attached hereto as Exhibit “B”, a recordable Notice of which is
      attached hereto as Exhibit “B-1”, both exhibits being incorporated herein by
      this reference for all purposes.

    

    (c)    PIPELINE
      PROPERTIES.
      Operations
      of that portion of the Properties comprising the pipeline and pipeline-related
      facilities will be governed by the Joint Ownership Agreement (with the Contract
      Operating Agreement attached thereto) attached hereto as Exhibit “C” and made a
      part hereof by this reference for all purposes, Buyer hereby taking such
      interests in the pipeline and pipeline-related facilities subject to said Joint
      Ownership Agreement and Contract Operating Agreement.

    

    ARTICLE
      II

    PURCHASE
      PRICE

    

    2.1    PURCHASE
      PRICE AND EARNEST MONEY.

    

    (a)    EARNEST
      MONEY.
      Contemporaneously with Buyer’s execution and delivery of this Agreement to
      Seller, but in no event later than 5:00 PM, September 28, 2006, Buyer shall
      deposit with Seller, by wire transfer to Seller’s account (being account number
      010181838 in the name of W. B. Osborn Oil and Gas Operations at Frost National
      Bank of San Antonio, bank routing number 114000093) the sum of Fifty Thousand
      ($50,000.00) Dollars in funds immediately available to Seller before the close
      of business on September 28, 2006 (the “Earnest Money”). The Earnest Money will
      be applied to the Purchase Price, as defined in Paragraph 2.1 (b) hereinbelow
      if
      this transaction is closed as herein provided, and will otherwise be subject
      to
      the provisions of Section 7.1 and 7.4, below. Seller shall retain, disburse,
      apply, or otherwise deal with the Earnest Money as provided in this
      Agreement.

     

    
      
        	 	
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                PURCHASE
                  AND SALE AGREEMENT

              	 
	
                BUYER

              	 	
                SELLER

              

      

      

        
          
            
            

          

          
            
            

            
              

            

          

          
            
            

          

        

      

       

    

    (b)    PURCHASE
      PRICE.
      The
      purchase price for said forty-five percent (45%) interest in the Properties
      (“Purchase Price”) shall be the sum of Seventeen Million Six Hundred Thousand
      ($17,600,000.00) Dollars, to be paid by Buyer to Seller at Closing, in
      immediately available funds or in another manner acceptable to Seller, subject
      to adjustment at Closing as provided in this Paragraph 2.1, plus
      the sum
      of Eight Hundred Fifty Thousand ($850,000.00) Dollars, payable in thirty-six
      (36) monthly installments of Twenty Three Thousand Six Hundred Eleven
      ($23,611.00) Dollars each, beginning November 1, 2006, which shall be evidenced
      by, and further detailed in the Promissory Note attached hereto as Exhibit
“D”
and made a part hereof by this reference for all purposes, plus
      the
      commitment to fund additional lease acquisitions in the Area Of Mutual Interest,
      described in Exhibit “B”, (“AMI”) up to a total of Five Million ($5,000,000.00)
      Dollars, to be spent on behalf of both Seller’s and Buyer’s respective working
      interests hereunder, for a period of two (2) years, all as further defined,
      detailed and set forth in the Operating Agreement attached hereto as Exhibit
      “B”, under Article XVI.Q.

    

    (c)    The
      Seventeen Million Six Hundred Thousand ($17,600,000.00) Dollars to be paid
      to
      Seller at Closing shall be reduced by the amount of:

    

    (i)    
Forty-five
      percent (45%) of the revenue received by Seller from the Effective Date to
      the
      date of Closing (as
      defined in Paragraph 7.1) and
      attributable to (a) the sale of Production attributable to Seller’s working
      interest and (b) fees collected by Seller for gas gathering, treating and
      transportation during such period; 

    

    (ii)    Forty-five
      percent (45%) of the Allocated Value of any Defective Interest, as determined
      pursuant to Article III;

    

    (iii)   any
      reduction in value of the Properties resulting from the existence of any
      casualty defect occurring prior to Closing.

    

    (d)    The
      Seventeen Million Six Hundred Thousand ($17,600,000.00) Dollars to be paid
      at
      Closing shall be increased by the amount of:

    

    (i)    
Forty-five
      percent (45%) of any capital expenditures which Seller has incurred and paid
      from the Effective Date to the date of Closing (as defined in Paragraph 7.1)
      with respect to the Properties, including, but not limited to, drilling,
      completion, and equipping costs on well(s) spudded after the Effective Date
      and
      gathering system pipeline extensions or improvements. It is understood and
      agreed that on any wells spudded after the Effective Date to the date of Closing
      (as defined in Paragraph 7.1), Buyer is considered a consenting party pursuant
      to the terms of the governing Operating Agreement.

    

    (ii)    Forty-five
      percent (45%) of any expenses Seller has incurred and paid from the Effective
      Date to the date of Closing (as defined in Paragraph 7.1) with respect to the
      Properties, including, but not limited to, lease and pipeline operating
      expenses, pipeline right-of-way consideration, damage payments, regulatory
      compliance expenses, rig mobilization costs, administrative expenses, overhead
      expenses pursuant to applicable operation agreements, and all other costs or
      fees. 

    

    (e)    At
      the
      Closing, the Purchase Price shall be adjusted in accordance with Paragraph
      2.1(c) and (d) above, based upon the best information and estimates then
      available. A post-Closing accounting shall thereafter take place, in accordance
      with the provisions of Paragraph 8.2, to arrive at a definite settlement of
      any
      discrepancies between the estimated and actual amounts of the items contained
      in
      Paragraph 2.1(c) and (d) above. All production of Hydrocarbons from the
      Properties and all fees collected for gas gathering, treating and transportation
      prior to the Effective Date, and all proceeds from the sale of such production,
      shall be the property of Seller. All such production attributable to working
      interests after the Effective Date, all proceeds from the sale thereof, and
      all
      fees collected for gas gathering, treating and transportation shall be the
      property of, owned and received by Seller and Buyer in the proportions of Seller
      - fifty-five percent (55%) and Buyer - forty-five percent (45%). Such allocation
      of production shall be made based upon the most reliable measurement method
      or
      allocation calculation information available and mutually acceptable to the
      Parties. Buyer shall pay Seller for 45% of the Hydrocarbons in inventory,
      including “line fill” and inventory below pipeline connections in tanks, at the
      Effective Date at Seller’s posted field price for Hydrocarbons of like grade and
      gravity in the field at the Effective Date. 

     

    
      
        	 	
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                PURCHASE
                  AND SALE AGREEMENT

              	 
	
                BUYER

              	 	
                SELLER

              

      

      

        
          
            
            

          

          
            
            

            
              

            

          

          
            
            

          

        

      

       

    

    ARTICLE
      III

    INFORMATION
      AND ACCESS

    

    3.1    TITLE
      INFORMATION

    

    (a)    RECORDS
      TO BE PROVIDED. From
      the
      date of this Agreement until Closing, Buyer (and any person designated by Buyer)
      shall have reasonable access to the following records relating to the
      Properties:

    

    (i)    
all
      title
      opinions, title curative material, title reports, run sheets, title policies
      and
      abstracts of title in the possession of Seller;

    

    (ii)    all
      Leases, water rights arrangements, conveyances of interests relating to the
      Leases, unit declarations, division and transfer orders, mortgages, deeds of
      trust, security agreements, chattel mortgages, financing statements and all
      other instruments affecting title to or the operation or value of the Properties
      in the possession of Seller;

    

    (iii)   all
      rentals, royalties, shut-in gas royalty receipts and receipts with respect
      to
      other payments attributable to the Leases, or other documents or information
      relating to or reflecting payment of the foregoing in the possession of
      Seller;

    

    (iv)   records
      reflecting assessment or payment of all ad
      valorem,
      property, production, severance, or other similar taxes and assessments against
      the Properties based on or measured by the ownership of Property or the
      production of Hydrocarbons or the receipt of proceeds therefrom in the
      possession of Seller;

    

    (v)    all
      lease
      records and data sheets relating to the Leases and to bonuses and rentals
      payable thereunder in the possession of Seller;

    

    (vi)   all
      Contracts and all correspondence or other documents relating to the Properties
      in the possession of Seller;

    

    (vii)   
        all
      instruments relating to the Easements in the possession of Seller;

    

    (viii) 
        all
      pleadings, briefs, motions and similar documents filed with any court,
      arbitration panel, federal or state government agency, or other tribunal, and
      all correspondence related thereto, in connection with any lawsuit, arbitration,
      or administrative proceedings affecting either Seller or any of the Properties
      in the possession of Seller;

    

    (ix)   all
      ownership maps, plats, and surveys relating to the Properties in the possession
      of Seller;

    

    (x)    all
      seismic, geological and geophysical, engineering and reserve data in the
      possession of Seller;

    

    (xi)   an
      inventory of all personal property and fixtures included within the Properties
      in the possession of Seller;

    

    (xii)      all
      bonds
      and other policies of insurance obtained by Seller relating to the operation
      of
      the Properties in the possession of Seller;

    

    (xiii)      
       all
      plans
      for exploration  and development, applications, inspection reports,
      environmental impact statements, assessments and studies, permits, licenses,
      orders, consents, notices, correspondence, and other statements and instruments
      pertaining to environmental matters and requirements that have been filed with
      or supplied to or by a local, state or federal body, authority or agency which
      relate to the Properties in the possession of Seller; and

     

    
      
        	 	
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                  AND SALE AGREEMENT

              	 
	
                BUYER

              	 	
                SELLER

              

      

      

        
          
            
            

          

          
            
            

            
              

            

          

          
            
            

          

        

      

       

    

    (xiv)      
       all
      production records, and all other books, records, information, contracts and
      documents (including but not limited to records relating to accounting and
      engineering data) relating to the Properties in the possession of
      Seller.

    

    (b)    OTHER
      INFORMATION.
      From
      date of this Agreement until Closing, Seller shall provide Buyer (and any person
      designated by Buyer) with reasonable access, at Buyer’s sole risk, cost and
      expense, to the Properties, including but not limited to the Files, the Records,
      the Lands, and the Wells.

    

    (c)    ACCESS
      TO INFORMATION.
      Seller’s obligations under Paragraph 3.1 (a) and (b) shall be limited only to
      such matters, data and information as are in Seller’s actual possession, or to
      which Seller has reasonable access. Seller shall use all reasonable diligence
      to
      secure copies of any such information to which Seller has access or to which
      it
      is legally entitled except to the extent that it is prohibited from doing so
      by
      any agreement or contract to which it is a party; provided that Seller shall
      use
      all reasonable diligence to obtain the waiver of any such prohibition.

    

    3.2    TITLE
      DEFECTS.
      Exhibit
“A” contains, among other information, a schedule of the Leases. The Leases are
      organized according to the respective portions of the Lands covered thereby.
      Each Lease is identified by a serial number. The first four digits in each
      serial number are the same for each of the Leases (being “0506”), representing
      the general area in Montague County and/or Cooke County in which the Lands
      are
      located. The following three digits represent a distinct parcel out of the
      Lands
      covered by the Lease. (Note that the first four digits and following three
      digits are separated by a hyphen.) In those instances where a serial number
      ends
      with a capital letter, the capital letter designates a specific Lease in a
      group
      of Leases that cover a distinct parcel out of the Lands. By way of example,
      Lease number 0506-005A is one of two Leases (the other being 0506-005B) which
      purport to cover 640 acres of land out of the B.B.B.&C. R.R. Co. Survey,
      Abstract No. 91, Montague County, Texas. The digits “005” indicate the distinct
      parcel comprised of that 640 acres. For the purposes of this Agreement, the
      parcel out of the Lands represented by the three digits following the hyphen
      in
      each serial number shall be referred to herein generically as a “Parcel”;
      provided, however, that with respect to Lease No. 0506-006A, the term “Parcel”
shall refer to each of the specified acreage amounts set forth in the Lease
      Interest Table (as that term is defined below) in Exhibit “A”. When there is
      only one Lease covering a Parcel, its serial number will not contain a capital
      letter, thus indicating that it is the only Lease covering that identified
      Parcel. Each group of Leases which covers lands out of the same distinct Parcel
      is referred to herein as a “Group” of Leases; provided, however, that (i) when
      only one Lease covers a distinct Parcel, it will still be referred to herein
      as
      a “Group” of the Leases, even though in that instance the “Group” is only
      comprised of one Lease, and (ii) Lease Nos. 0506-006A and 0506-006B will each
      constitute a separate and distinct “Group”. Following the Schedule of Leases on
      Exhibit “A” is a table setting forth the “Net Revenue Interest” and “Working
      Interest” covered by and/or attributable to each Group of Leases (the “Lease
      Interest Table”)

    

    (a)    For
      the
      purpose of the Agreement, “Defensible Title” shall mean as to the Properties and
      each of them, such title which 

    

    (i)    
is
      free
      and clear (except for Permitted Encumbrances [as that term is defined below])
      of
      mortgages, liens, security interests, pledges, charges, encumbrances, claims,
      limitations, irregularities, burdens or defects, and (A) is otherwise only
      subject to contractually binding arrangements which are conventional and which
      are customarily experienced in the oil and gas industry and (B) is not subject
      to any matters which will result in a breach of any warranty or representation
      made by Seller hereunder; 

    

    (ii)    as
      to
      each Group of Leases, entitles Seller to receive (and, but for the transaction
      contemplated by this Agreement, continue to receive) not less than the “Net
      Revenue Interest” corresponding to such Group (as set forth in the Lease
      Interest Table in Exhibit “A”) of all Hydrocarbons produced, saved, and marketed
      from, and attributable to, the Parcel covered by such Group, after deducting
      all
      royalty, overriding royalty and other leasehold burdens; 

    

    (iii)   as
      to
      each Group of Leases, obligates Seller to bear costs and expenses relating
      to
      the maintenance, development and operation of the Parcel covered by such Group
      in an amount not greater than the “Working Interest” corresponding to such Group
      (as set forth in the Lease Interest Table in Exhibit “A”); 

    

    (iv)   is
      free
      of any default by Seller under a material provision of a lease, agreement or
      other contract affecting the Properties; and 

     

    
      
        	 	
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                BUYER

              	 	
                SELLER

              

      

      

        
          
            
            

          

          
            
            

            
              

            

          

          
            
            

          

        

      

       

    

    (v)    does
      not
      represent rights or interests that are subject to being reduced by virtue of
      the
      exercise by a third party of a reversionary, back-in or similar
      right.

    

    (b)    For
      purposes of this Agreement, “Permitted Encumbrances” shall mean (i) any liens
      encumbering the Properties which are required herein to be released by Seller
      at
      the time of the Closing and (ii) any valid and subsisting contracts for the
      purchase of production from the Property;

    

    (c)    For
      the
      purposes of this Agreement, “Title Defect” shall mean any encumbrance,
      encroachment, irregularity, defect in, or objection to Seller’s title to any of
      the Properties (expressly excluding Permitted Encumbrances), that alone or
      in
      combination with other defects renders Seller’s title thereto less than
      Defensible Title.

     

    (d)    “Defective
      Interest” shall mean 

     

    (i)    
that
      portion of the Properties affected by a Title Defect; 

     

    (ii)    that
      portion of the Properties materially and adversely affected by Seller’s
      noncompliance with the material laws, rules, regulations, ordinances or orders
      of any governmental agency or authority having jurisdiction over any portion
      of
      the Properties; 

     

    (iii)   that
      portion of the Properties with respect to which any preferential right to
      purchase is exercised unless Buyer elects to receive the consideration received
      from the exercise of such preferential right to purchase;

     

    (iv)   that
      portion of the Properties affected by any suit, action or other proceeding
      before any court or government agency that would result in substantial loss
      or
      impairment of Seller’s title to any material portion of the Properties, or a
      material portion of the value thereof; or

     

    (v)    that
      portion of the Properties with respect to which Seller has the obligation under
      a take-or-pay contract to deliver gas without receiving full payment at the
      time
      of delivery, or with respect to which Seller has produced more than its share
      of
      gas thereby creating an imbalance unless Buyer and Seller can agree to an
      appropriate adjustment to the Purchase Price.

    

    3.3    NOTICE
      AND ALLOCATION OF VALUE REGARDING TITLE DEFECTS:

    

    (a)    NOTICE
      OF TITLE DEFECT.
      Buyer
      shall give Seller notice of Defective Interests (a “Defect Notice”) not later
      than ten days prior to the date of Closing (as defined in Paragraph 7.1). A
      Defect Notice shall be in writing and shall include (i) a description of the
      Defective Interest, (ii) a general explanation of the reason Buyer believes
      such
      portion of the Properties constitutes a Defective Interest, and (iii) the
      allocation of that portion of the Purchase Price affected by the Defective
      Interest (the “Allocated Value”) such allocation of value being proposed in
      accordance with the provisions of Sections 3.3(b) and/or (c) hereinbelow, as
      applicable. Buyer shall be deemed to have waived all Defective Interests of
      which Seller has not been so given such Defect Notice. On or before the
      expiration of five (5) days following Buyer’s delivery of a Defect Notice to
      Seller, Seller shall give written counter-notice to Buyer that it (i) intends
      to
      cure the asserted Defective Interest, (ii) does not intend to cure the Defective
      Interest, or (iii) disagrees that either the asserted Defective Interest exists
      and/or that the Allocated Value for the Defective Interest set forth in the
      Defect Notice is accurate. If Seller gives counter-notice of intent to cure
      such
      asserted Defective Interest, it shall have a period of thirty (30) days
      following delivery of Buyer’s Defect Notice (the “Cure Period”) to cure such
      asserted Defective Interest at its own expense; provided, however, that (i)
      the
      date of Closing (as defined in Paragraph 7.1) will not be extended as a result
      of such procedure, or as a result of arbitration with respect to the Allocated
      Value of the asserted Defective Interest (if applicable); and (ii) if Seller
      is
      unable to cure the asserted Defective Interest on or before the expiration
      of
      the Cure Period, the Allocated Value of the Defective Interest (as set forth
      in
      the Defect Notice or as determined via arbitration, as applicable) will be
      handled in a post-closing adjustment in Buyer’s favor pursuant to Section 8.2
      hereinbelow. If Seller gives counter-notice that is does not intend to cure
      the
      Defective Interest, the Purchase Price shall be adjusted pursuant to Section
      2.1(c)(ii), above, by the Allocated Value of the Defective Interest as set
      forth
      in the Defect Notice. If Seller gives counter-notice that it either disagrees
      there is a Defective Interest or disagrees with the Allocated Value set forth
      in
      the Defect Notice, then the existence and/or the Allocated Value thereof (and
      hence the amount of the post-closing adjustment in Buyer’s favor pursuant to
      Section 8.2, below, as a result of the Defective Interest ), as the case may
      be,
      will be determined by arbitration pursuant to Section 3.5, below without any
      delay in Closing. The failure of Seller to deliver written counter-notice shall
      be deemed to be (i) an admission of the existence of such Defective Interest
      and
      a waiver of its right to cure such Defective Interest (which waiver shall be
      deemed to be an intent to not cure), and (ii) an admission that the Allocated
      Value of the Defective Interest, and hence the amount by which the Purchase
      Price will be reduced pursuant to Section 2.1(c)(ii) because of the Defective
      Interest should Buyer elect to proceed, is the amount stated in Buyer’s Defect
      Notice relating thereto.

     

    
      
        	 	
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                BUYER

              	 	
                SELLER

              

      

      

        
          
            
            

          

          
            
            

            
              

            

          

          
            
            

          

        

      

       

    

    (b)    ALLOCATION
      OF VALUE REGARDING TITLE DEFECTS RELATING TO LEASES, WELLS, LANDS, AND
      UNITS.
      Each
      Lease by its terms covers a specific number of gross acres; and each of the
      Wells has a number of acres allocated to such Well pursuant to proration rules
      promulgated by the Texas Railroad Commission. Acreage so allocated to a Well
      is
      considered herein to be Proved Developed Producing acreage (“PDP”). All
      remaining acreage is considered herein to be Proved Undeveloped acreage (“PUD”).
      With respect to PUD, the Net Acreage (herein so called) in each separate tract
      covered by a given Lease shall be equal to the product of (i) the amount of
      gross acreage included within the separate tract, multiplied by (ii) the
      undivided interest in the mineral fee estate in such tract covered by the Lease,
      multiplied by (iii) Seller’s working interest in the Group of Leases of which
      the Lease is a part as reflected on Exhibit “A”. With respect to PDP, the
      Beneficial Acreage (herein so called) in each separate tract covered by a given
      Lease that has been allocated to a Well pursuant to proration rules promulgated
      by the Texas Railroad Commission shall be equal to the product of (i) the amount
      of gross acreage included within such separate tract, multiplied by (ii) the
      undivided interest in the mineral fee estate in such tract covered by the Lease,
      multiplied by (iii) Seller’s net revenue interest in the Group of Leases of
      which the Lease is a part as reflected on Exhibit “A”. Beneficial Acreage
      attributable to a PDP is hereby assigned a value of Five Thousand Four Hundred
      and Four ($5,404.00) Dollars per acre, and Net Acreage attributable to a PUD
      is
      hereby assigned a value of Five Thousand Five Hundred Seventy-Six ($5,576.00)
      Dollars per acre. The Allocated Value of a Defective Interest, insofar as it
      affects PUD, shall be determined by multiplying the Net Acreage affected by
      such
      Defective Interest by Five Thousand Five Hundred Seventy-Six ($5,576.00)
      Dollars. The Allocated Value of a Defective Interest, insofar as it affects
      PDP
      shall be determined by multiplying the Beneficial Acreage affected by the
      Defective Interest by Five Thousand Four Hundred and Four ($5,404.00) Dollars.
      

    

    (c)    ALLOCATION
      OF VALUE REGARDING TITLE DEFECTS RELATING TO PROPERTIES OTHER THAN LEASES,
      WELLS, LANDS, AND UNITS. Notwithstanding
      the above, Buyer shall propose the Allocated Value of a Defective Interest
      in
      the exercise of its reasonable business judgment whenever either (i) a Defective
      Interest relates to Properties other than Leases, Wells, Lands, or Units, or
      (ii) in the exercise Buyer’s reasonable business judgment, the allocation
      formula set forth in Section 3.3(b), above, either cannot be applied accurately
      to the Defective Interest in question or results in an allocation of value
      to
      the Defective Interest which is unfair and/or inaccurate; provided, however,
      that prior to proposing the Allocated Value pursuant to this Section 3.3(c)
      and
      if time permits, Buyer shall use its reasonable business efforts to consult
      with
      Seller about the Allocated Value to see if a consensus can be reached regarding
      its amount. 

    

    3.4    REMEDIES
      FOR TITLE DEFECTS.
      Subject
      to Buyer’s termination rights set forth in Section 3.6, below, with respect to
      any Defective Interest, the Purchase Price shall be reduced in accordance with
      Section 2.1(c)(ii) hereof by an amount equal to the Allocated Value thereof,
      determined in accordance with Section 3.3, unless (i) prior to expiration by
      the
      Cure Period, the basis for treating such Properties as Defective Interests
      has
      been removed, or (ii) the existence of the Defective Interest and/or the
      Allocated Value thereof is being determined by arbitration pursuant to Section
      3.5 hereof,
      in which case Buyer shall receive a post-closing adjustment pursuant to Section
      8.2. If the parties disagree as to whether the basis of an asserted Defective
      Interest has been eliminated, the matter shall be submitted to the arbitrator
      pursuant to Section 3.5 hereof. In determining which portions of the Properties
      are Defective Interests, it is the intent of the parties to include, when
      possible, only that portion of the Properties affected by the
      defect.

    

    3.5    ARBITRATION
      PROCEDURES.
      If
      any
      matter is required to be arbitrated, such arbitration shall be conducted as
      set
      forth in this Section 3.5.

     

    
      
        
          	 	
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                    AND SALE AGREEMENT

                	 
	
                  BUYER

                	 	
                  SELLER

                

        

         

      

    

    
      
        
        

      

      
        
        

        
          

        

      

      
        
        

      

    

    (a)    The
      parties shall jointly select a mutually acceptable person as the sole arbitrator
      under this Agreement. If the parties are unable to agree upon the designation
      of
      a person as arbitrator, then either Seller or Buyer, or both of such parties,
      may in writing request the judge of the United States District Court for the
      Western District of Texas senior in term of service to appoint a qualified
      arbitrator.

    

    (b)    Any
      arbitration hearing shall be held at a place in San Antonio, Texas, acceptable
      to the arbitrator. 

    

    (c)    The
      arbitrator shall settle disputes regarding existence and value of Defective
      Interests and Seller’s attempts to cure any Title Defect in accordance with the
      Texas General Arbitration Act and the Rules of the American Arbitration
      Association, to the extent such rules do not conflict with the terms of such
      act
      and the terms hereof. Such arbitrator shall hear all arbitration matters arising
      hereunder. The decision of the arbitrator shall be binding upon the parties,
      and
      may be enforced in any court of competent jurisdiction. Seller and Buyer,
      respectively, shall bear their own legal fees and other costs incurred in
      presenting their respective cases. The charges and expenses of the arbitrator
      shall be shared equally by Seller and Buyer.

    

    (d)    The
      arbitration shall commence within ten days after the arbitrator is selected
      as
      set forth in Section 3.5(a), above. In fulfilling his duties hereunder, the
      arbitrator shall be bound by the terms of this Agreement. In fulfilling any
      of
      his arbitration duties, the arbitrator may consider such other matters as in
      the
      opinion of the arbitrator are necessary or helpful to make a proper evaluation.
      Additionally, the arbitrator may consult with and engage disinterested third
      parties, including without limitation petroleum engineers, attorneys and
      consultants, to advise the arbitrator.

    

    (e)    If
      any
      arbitrator selected hereunder (whether selected by Seller and Buyer or the
      senior judge) should die, resign or be unable to perform his duties hereunder,
      the parties or senior judge (or such judge’s successor selecting such
      arbitrator) shall select a replacement arbitrator. The aforesaid procedure
      shall
      be followed from time to time as necessary. 

    

    3.6    TERMINATION
      RIGHT.
      If
      Buyer determines in the exercise of its sole discretion that the Properties
      are
      unsuitable for its purposes for any reason, or for no reason at all, Buyer
      may,
      upon written notice to Seller delivered no later than four (4) business days
      prior to the date of the Closing, cancel and terminate this Agreement, in which
      event this Agreement shall be of no further force and effect, neither party
      thereafter having any further claim, obligation, or rights hereunder, provided,
      however that (i) Buyer shall still comply with the provisions of Section 10.3,
      (ii) Buyer shall remain obligated under the terms of the Confidentiality
      Agreement heretofore executed between the parties, and (iii) Seller shall retain
      the Earnest Money as provided in Paragraph 7.4 hereinbelow. 

    

    3.7    SCOTT
      AND PAYNE TITLE OPINIONS.
      Prior
      to Closing, Seller shall use its reasonable business efforts to obtain the
      following (collectively, the “Pending Title Opinions”) from a licensed attorney
      at law: (i) a drilling title opinion or opinions, addressed to both WBO and
      Buyer, covering that portion of the Lands covered by the Group of Leases
      designated on Exhibit “A” as Group 0506-011 (collectively, the “Scott Title
      Opinions”), and (ii) a drilling title opinion or opinions, addressed to both WBO
      and Buyer, covering that portion of the Lands covered by the Group of Leases
      designated on Exhibit “A” as Group 0506-013 (collectively, the “Payne Title
      Opinions”). Buyer agrees to pay Seller 45% of the cost of obtaining the Pending
      Title Opinions. If Seller receives an invoice or invoices for the costs of
      any
      of the Pending Title Opinions prior to the date of Closing, the Purchase Price
      shall be adjusted pursuant to Section 2.1(c); and Buyer shall pay its share
      of
      the cost of any of the Pending Title Opinions for which invoices have not been
      received by Seller prior to Closing, pursuant to the provisions of the Model
      Form Operating Agreement executed by Buyer and Seller in the form attached
      hereto as Exhibit “B”, pursuant to Section 7.3(g), below.

     

    
      
        
          	 	
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                  BUYER

                	 	
                  SELLER

                

        

         

      

    

    
      
        
        

      

      
        
        

        
          

        

      

      
        
        

      

    

    

    (a)    Buyer
      shall have the following review rights for any of the title opinions
      constituting the Pending Title Opinions, and these rights may be exercised
      by
      Buyer from time to time upon its receipt of any of said Pending Title Opinions.
      Upon Buyer’s receipt of any of the Pending Title Opinions, Buyer shall have ten
      (10) business days to review the title opinion following Buyer’s actual receipt.
      Buyer shall give Seller notice of any Defective Interest (any such notice being
      referred to herein as a “Post-Closing Defect Notice”) on or before the
      expiration of such ten-business-day period. A Post-Closing Defect Notice shall
      contain the same information required for a Defect Notice, as discussed in
      Section 3.3, above, including the Allocated Value determined in accordance
      with
      the provisions of Sections 3.3(b) and/or (c), above, as applicable. For each
      of
      the Pending Title Opinions received by Buyer, Buyer shall be deemed to have
      waived all Defective Interests of which Seller has not been so given such
      Post-Closing Defect Notice. On or before the expiration of five (5) days
      following Buyer’s delivery of a Post-Closing Defect Notice to Seller, Seller
      shall give written counter-notice to Buyer that it (i) intends to cure the
      asserted Defective Interest, (ii) does not intend to cure the Defective
      Interest, or (iii) disagrees that either the asserted Defective Interest exists
      and/or that the Allocated Value for the Defective Interest set forth in the
      Post-Closing Defect Notice is accurate. If Seller gives counter-notice of intent
      to cure such asserted Defective Interest, it shall have a period of thirty
      (30)
      days following delivery of Buyer’s Post-Closing Defect Notice (the “Post-Closing
      Cure Period”) to cure such asserted Defective Interest at its own expense (and
      such expense shall not be charged to Buyer’s account in any operating agreement
      to which Buyer is a party); provided, however, that, if Seller is unable to
      cure
      the asserted Defective Interest on or before the expiration of the Post-Closing
      Cure Period, the Allocated Value of the Defective Interest (as set forth in
      the
      Post-Closing Defect Notice or as determined via arbitration, as applicable)
      will
      be handled in a post-closing adjustment in Buyer’s favor pursuant to Section 8.2
      hereinbelow. If Seller gives counter-notice that it does not intend to cure
      the
      Defective Interest, the Allocated Value of the Defective Interest (as set forth
      in the Post-Closing Defect Notice or as determined via arbitration, as
      applicable) will be handled in a post-closing adjustment in Buyer’s favor
      pursuant to Section 8.2 below. If Seller gives counter-notice that it either
      disagrees there is a Defective Interest and/or disagrees with the Allocated
      Value set forth in the Post-Closing Defect Notice, then the existence and/or
      the
      Allocated Value thereof, as the case may be, will be determined by arbitration
      pursuant to Section 3.5, above. The failure of Seller to deliver counter-notice
      shall be deemed to be (i) an admission of the existence of such Defective
      Interest and a waiver of its right to cure such Defective Interest (which waiver
      shall be deemed to be an intent to not cure), and (ii) an admission that the
      Allocated Value of the Defective Interest is the amount stated in Buyer’s
      Post-Closing Defect Notice relating thereto. 

    

    (b)    The
      provisions of this Section 3.7 shall survive the Closing.

    

    3.8    DISCLOSURE
      OF EXPENDITURES AND MATERIAL TRANSACTIONS.
      Prior
      to Closing, Seller shall deliver to Buyer (i) a list of all capital expenditures
      and commitments to make capital expenditures in excess of Twenty-Five Thousand
      ($25,000.00) Dollars individually, or Seventy-Five Thousand ($75,000.00) Dollars
      in the aggregate, net to Seller’s interest, with respect to the Properties,
      which Seller has made since the Effective Date, and (ii) a list of all material
      transactions, contracts, and commitments entered into by Seller with respect
      to
      the Properties since the Effective Date which are outside the ordinary course
      of
      business. 

    

    3.9    AFFILIATES
      OF SELLER.
      Buyer
      acknowledges that Seller has disclosed to it that all or part of Seller’s
      interest in the Properties is owned as nominee for one or more Osborn family
      related Affiliates of Seller. On or before the third (3rd) business day prior
      to
      the date of Closing, Seller shall provide to Buyer (i) documentation
      establishing the nature of the relationship between Seller and each Osborn
      family related Affiliate which owns any beneficial or equitable interest in
      the
      Properties, and (ii) an instrument, in such form as Buyer shall approve (which
      approval shall not be unreasonably withheld, delayed, or conditioned), in
      recordable form, which (A) binds each Osborn family related Affiliate which
      owns
      any beneficial or equitable interest in the Properties, and (B) acknowledges
      that Seller has the right under this Agreement to bind such Affiliate’s interest
      in the Properties, and convey such interest, in the sale to Buyer contemplated
      by this Agreement and consummated at the Closing.

    

    ARTICLE
      IV

    REPRESENTATIONS
      AND WARRANTIES

    

    4.1    SELLER’S
      REPRESENTATIONS AND WARRANTIES.
      Seller
      represents and warrants to Buyer that:

    

    (a)    QUALIFICATION.
      Seller
      is a legally created business entity and is not subject to any legal incapacity
      or limitation to enter into this Agreement and consummate the transactions
      contemplated herein.

     

    
      
        	 	
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                PURCHASE
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                BUYER

              	 	
                SELLER

              

      

      

        
          
            
            

          

          
            
            

            
              

            

          

          
            
            

          

        

      

       

    

    (b)    AUTHORITY.
      Seller
      has all requisite power and authority to own the Properties, to carry on its
      business as presently conducted, to enter into this Agreement and to perform
      its
      obligations hereunder. The consummation of the transactions contemplated by
      this
      Agreement will not violate or conflict with (i) any agreement or instrument
      (including but not limited to the Contracts) to which Seller is a party or
      is
      bound or to which any of the Properties is subject, or (ii) any judgment,
      decree, order, statue, rule or regulation applicable to Seller or to any of
      the
      Properties. No consents of third parties, whether private, judicial, or
      governmental, to the sale of any of the Properties are required under any
      agreement or instrument (including but not limited to the Contracts) to which
      Seller is a party or is bound or to which any of the Properties is subject,
      nor
      does any person have any call upon, option to purchase, preferential right
      to
      purchase, or similar rights with respect to the Properties or the
      Production.

    

    (c)    EXECUTION
      OF AGREEMENT AND CLOSING DOCUMENTS.
      This
      Agreement has been duly authorized, executed, and delivered on behalf of Seller,
      and at the Closing all documents and instruments required hereunder to be
      executed and delivered by Seller shall have been duly executed and delivered.
      This Agreement does, and such documents and instruments shall, constitute legal,
      valid and binding obligations of Seller in accordance with their terms, subject,
      however, to (i) the effects of bankruptcy, insolvency, reorganization and
      similar laws affecting creditors’ rights generally and (ii) general equitable
      principles which may limit the availability of certain equitable remedies (such
      as specific performance) in certain instances.

    

    (d)    LITIGATION
      AND UNDISCLOSED LIABILITIES.
      No
      demand, claim, suit, action, insolvency case or proceeding, or other proceeding
      (collectively, “Litigation”) is pending or, to the best of Seller’s knowledge,
      threatened before any court or governmental agency which might (i) result in
      impairment or loss of Seller’s title to any part of the Properties or the value
      thereof; (ii) hinder or impede the operation of the Properties; or (iii) hinder,
      impede, or prevent Seller from being able to consummate the transactions
      contemplated by this Agreement.

     

    (e)    TITLE
      TO THE PROPERTIES.
      Seller
      has good and Defensible Title to the Properties, free and clear of all liens,
      encumbrances and burdens, except for the Permitted Encumbrances.

    

    (f)    
LEASES.
      The
      Leases (i) are in full force and effect and shall continue for so long as
      Hydrocarbons are produced from the Lands in commercial quantities, (ii) are
      valid and subsisting, and (iii) cover the Lands and the entire estates which
      they purport to cover as to all depths. All royalties and other amounts due
      and
      owing under the Leases (including, but not limited to, shut-in royalties, delay
      rentals, and payments in respect of damages to the surface of the Lands) have
      been timely paid in full. Seller has complied with the provisions of the Leases,
      and there are no defaults thereunder, nor has Seller been advised by any person
      of (A) an uncured default under the Lease or, (B) the termination of any lease
      (whether because of cessation of production in commercial quantities or
      otherwise). Production in commercial quantities is being obtained from all
      of
      the Hydrocarbon producing Wells, and no Wells have been plugged or
      abandoned.

    

    (g)    VALIDITY
      OF CONTRACTS.
      The
      Contracts and Easements are in full force and effect, are valid and subsisting
      and cover the entire estates or rights that they purport to cover. Seller has
      not been advised of a default under any Contract or Easement, and there are
      no
      joint interest audits being conducted, nor any disputes with any joint interest
      owners in any of the Properties pursuant to the terms of any Contract.

    

    (h)    PREPAYMENTS
      REGARDING PRODUCTION.
      Seller
      is not obligated, by virtue of a “take or pay” or other prepayment arrangement,
      a gas balancing agreement, a gas balancing arrangement, or similar provision
      in
      any contract for the sale of Hydrocarbons, to deliver Hydrocarbons produced
      from
      the Properties at some future time without receiving full payment therefor.
      Other than line fill, no natural gas included in the Production and physically
      produced (but not sold) before the Effective Date is in storage and there are
      no
      gas imbalances

    

    (i)    
NO
      OVERCHARGES.
      To the
      best of Seller’s knowledge and belief, Seller has not charged or received any
      proceeds from the sale of Production in excess of the amounts permitted under
      applicable laws, rules and regulations of the United States Government or any
      state government, including, but not limited to, the rules and regulations
      promulgated by the FERC, the Department of Energy (“DOE”) and all predecessor
      agencies of the DOE. Seller has no actual or asserted liability, or, to the
      best
      knowledge of Seller, no potential liability, for the refund of any such amounts
      or any interests or penalties thereon.

    

    (j)    
PAYMENT
      OF TAXES.
      Any and
      all ad
      valorem,
      production, severance and similar taxes and assessments based on or measured
      by
      the ownership of real or personal property, reserves attributable to the
      Properties, the production of Hydrocarbons, or the receipt of proceeds therefrom
      for all years prior to the year in which this Agreement is executed have been
      properly paid, and all such taxes and assessments which become due and payable
      prior to the Closing shall be properly paid by Seller. There are no assessed
      tax
      deficiencies against Seller, the Properties or the Production and no audits
      presently being conducted by any federal, state or local authority regarding
      taxes allegedly due and owing by the Seller and affecting the Properties or
      the
      Production.

     

    
      
        	 	
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                BUYER

              	 	
                SELLER

              

      

       

    

    
      
        
        

      

      
        
        

        
          

        

      

      
        
        

      

    

    (k)    BROKERS’
      FEES.
      Seller
      has incurred no liability, contingent or otherwise, for brokers’ or finders’
fees in respect of this transaction for which Buyer shall have any
      responsibility whatsoever, and Seller hereby indemnifies and holds Buyer
      harmless from and with respect to any such brokers’ or finders’ fees alleged to
      have been incurred by Seller.

    

    (l)    
REVENUE
      AND WORKING INTERESTS.
      Each
      Group of Leases entitles Seller, and shall entitle Buyer after its purchase,
      to
      receive not less than forty-five percent (45%) of the Net Revenue Interest,
      set
      forth for such Group of Leases in the Lease Interest Table on Exhibit “A”, of
      all Hydrocarbons produced, saved, and marketed from, and attributable to, the
      Parcel covered by such Group, and Seller is currently receiving from all
      purchasers of Hydrocarbons produced, saved, and marketed from, and attributable
      to, each currently producing Parcel represented in the Lease Interest Table,
      no
      less than the Net Revenue Interest set forth for the Group of Leases covering
      such Parcel, without suspense or indemnity other than the normal division order
      (i.e., a division order containing no information other than that allowed by
      Section 91.402 of the Texas Natural Resources Code). Each such Net Revenue
      Interest is not subject to reduction by virtue of (A) the exercise of any
      reversionary, back-in, or other similar rights in favor of third persons, or
      (B)
      any change in payout status. For each Group of Leases, Seller’s obligation, and
      Buyer’s obligation after its purchase, to bear costs and expenses relating to
      the development of and operations on, the Leases, Lands and Wells thereon is
      not, and through the plugging, abandonment and salvage of such Wells, shall
      not,
      be greater than the “Working Interest” set forth for such Group of Leases in the
      Lease Interest Table in Exhibit “A”. As used in this Agreement, the term “Net
      Revenue Interest” shall mean a share of the proceeds of the sale of
      Hydrocarbons, expressed as a percentage or decimal fraction, from or allocable
      to a Lease and the Lands described therein, or to a Unit, or to a Well, net
      of
      all landowner’s royalties, overriding royalties, production payments or other
      burdens or other non-operating interests attributable thereto. As used in this
      Agreement, the term “Working Interest” shall mean the ownership of an interest,
      expressed as a percentage or decimal fraction, in a Lease and the Lands
      described therein, or in a Unit, or in a Well, that correspondingly expresses
      a
      share of the costs of operations, development, or production to be borne by
      the
      owner of such interest. It is understood and agreed, with regard to the Working
      Interests and Net Revenue Interests shown in the Schedule of Wells, Working,
      Interest, and Net Revenue Interest on Exhibit “A”, that those are the interests
      established in the Wells shown on Exhibit “A”, and that in future wells drilled
      on currently undeveloped Leases, those interests may vary slightly given the
      leasehold involved in future development; however, the Net Revenue Interests
      will be calculated based on the leasehold burdens of record existing as of
      the
      Effective Date.

    

    (m)   COMPLIANCE
      WITH APPLICABLE LAWS.
      To the
      best of Seller’s knowledge, Seller has complied with all laws, regulations and
      orders of all governmental agencies having jurisdiction over the Properties,
      including, but not limited to, all state, federal and local environmental laws,
      all applicable permitting procedures for the drilling or operation of oil and
      gas wells, and all applicable laws regarding the spacing, completion and
      bottoming of wells, the disposal of water therefrom, the prorating of production
      therefrom, and all other conservation matters, and Seller will continue to
      comply therewith from the date hereof through Closing. Without limiting the
      generality of the foregoing, no Well is shut in, curtailed or otherwise subject
      to penalties on allowables because of any overproduction which would prevent
      the
      full legal and regular allowable (including maximum permissible tolerance),
      as
      prescribed by any court or federal, state or local governmental body or agency,
      to be assigned to any such Well.

    

    (n)    NO
      LIABILITIES.
      At the
      Closing, Seller shall deliver to Buyer a schedule setting forth all costs and
      expenses which Seller has incurred with respect to the Properties between the
      Effective Date and the date of Closing (as defined in Paragraph 7.1), along
      with
      supporting data reasonably satisfactory to Buyer with respect to such costs
      and
      expenses. However, it is specifically understood and agreed that such schedule
      shall not change Buyer’s and Seller’s rights under Paragraph 8.2 (settlement for
      Interim Period revenues and liabilities).

    

    (o)    TRANSFER
      OF PROPERTIES.
      Seller
      acknowledges that the transfer of the interest in the Properties contemplated
      hereby is being made in the ordinary course of its business affairs and
      according to ordinary business terms. Such transfer (i) has not been made with
      intent to hinder, delay or defraud any entity to which Seller was or shall
      be
      indebted and (ii) has been made for reasonably equivalent value in exchange
      for
      the interest. 

     

    
      
        	 	
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                  AND SALE AGREEMENT

              	 
	
                BUYER

              	 	
                SELLER

              

      

      

        
          
            
            

          

          
            
            

            
              

            

          

          
            
            

          

        

      

       

    

    (p)    EASEMENTS.
      The
      Properties include all Easements and rights of ingress and egress and other
      rights necessary for operations currently conducted on the Leases and for the
      production, treating, storing, marketing or transportation of
      Hydrocarbons.

    

    (q)    SUITABILITY
      OF PERSONAL PROPERTY.
      Except
      as otherwise expressly provided herein, and with respect to the personal
      property and equipment described herein which is located on or used in
      connection with the Properties, Seller makes no representation, warranty or
      covenant, express or implied. With respect to all such personal property and
      equipment included in this transaction, any IMPLIED
      WARRANTY OF MERCHANTABILITY or IMPLIED WARRANTY OF FITNESS FOR A PARTICULAR
      PURPOSE ARE HEREBY EXPRESSLY NEGATED.

    

    (r)    
CONDEMNATION.
      Neither
      the whole nor any portion of the Properties has been condemned, requisitioned
      or
      otherwise taken by any public or private authority and, to the best of Seller’s
      knowledge, no such condemnation, requisition or taking is threatened or
      contemplated.

    

    (s)    INSURANCE.
      Any
      policies of fire, casualty, liability, burglary, fidelity, workers’ compensation
      or other forms of insurance are in amounts adequate to insure the Properties,
      all premiums due and payable for such insurance have been duly paid and such
      policies or extensions or renewals thereof in such amounts shall be outstanding
      and duly in force without interruption from the date of this Agreement to the
      date of Closing (as defined in Paragraph 7.1) and thereafter. 

    

    (t)    
NO
      MATERIAL OMISSION.
      Seller
      has provided Buyer access to Seller’s files, and access to and an opportunity to
      review complete and accurate copies of all Contracts and amendments thereto
      affecting the Properties. Set forth on Exhibit “A” hereto is a list and
      description, complete and accurate in all material respects, of the Lands,
      Leases, Wells, Easements and any other Contract materially affecting the
      operation or value of each of the Properties, and all other information
      contained in such exhibit is complete and accurate in all material respects.
      Neither this Agreement, nor any exhibit hereto, nor any information, instrument
      or document delivered, or to be delivered, to Buyer, or to be made available
      for
      its review, contains any untrue statement of a material fact required to be
      stated therein, or omits any material fact necessary to make the statements
      therein not misleading, at the time such statement was made. For the period
      from
      the date hereof until the date of Closing there shall not have been any material
      adverse change in the condition, business or prospects, financial or otherwise,
      of Seller, it being understood and agreed, however, that Seller will continue
      to
      drill wells and develop the Properties as a prudent Operator, fulfilling the
      intent of Buyer and Seller.

    

    (u)    NO
      AFFILIATE OWNERSHIP.
      Except
      for affiliations between WBO, any Osborn family related entity which is an
      Affiliate (as defined below) of either or both of the parties constituting
      Seller, and St. Jo Pipeline, Limited, no Affiliate of Seller and no officer,
      director, shareholder, general partner or member of Seller or any of its
      Affiliates owns any interest in (i) any of the Properties or (ii) in any of
      the
      Lands, Leases or Wells described on Exhibit A. As used in this Agreement,
“Affiliate” shall mean, with respect to any party, any individual or entity
      which directly or indirectly through one or more intermediaries Controls (as
      defined below), is Controlled by or is under common Control with such party.
      As
      used in this Agreement, “Control” shall mean, with respect to any entity, an
      individual or entity which beneficially owns or holds, directly or indirectly,
      50% or more of any class of the voting stock or other equity interests of such
      entity.

    

    (v)    ABSENCE
      OF CERTAIN CHANGES OR EVENTS.
      Since
      the Effective Date the Properties have been operated in the ordinary course
      of
      business consistent with past practice and there has not been any

    

    (i)    
damage,
      destruction or loss to any of the Properties in excess of $25,000, whether
      or
      not covered by insurance;

    

    (ii)    material
      business interruption in the use or operation of any of the
      Properties;

     

    
      
        	 	
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                  AND SALE AGREEMENT

              	 
	
                BUYER

              	 	
                SELLER

              

      

      

        
          
            
            

          

          
            
            

            
              

            

          

          
            
            

          

        

      

       

    

    (iii)   disposition,
      transfer or abandonment of any of the Properties having a value in excess of
      $25,000, other than sales of Hydrocarbons from the Properties in the ordinary
      course of business;

    

    (iv)   known
      waiver or release of any rights of Seller under any of the
      Contracts;

    

    (v)    material
      change in any accounting practice or procedures relating to the
      Properties;

    

    (vi)   material
      change in maintenance practices with respect to any of the
      Properties;

    

    (vii)   
        material
      change in purchasing or selling practices with respect to Hydrocarbons produced
      from the Properties;

    

    (viii)  
        mortgage,
      pledge or lien or other encumbrance (other than Permitted Encumbrances) on
      any
      of the Properties; 

    

    (ix)   material
      payment or incurrence of any obligation or liability, absolute or contingent,
      with respect to the Properties, other than current liabilities incurred in
      the
      ordinary course of business; or 

    

    (x)    
agreement
      or commitment of Seller to do any of the foregoing.

    

    (w)   WELLS.

    

    (i)    All
      of
      the Wells have been drilled and completed within the boundaries of the Leases
      included in the Properties or within the limits otherwise permitted by the
      Contracts, and by law. 

    

    (ii)    All
      drilling and completion of the Wells and all development and operations of
      the
      Properties have been conducted in compliance, in all material respects, with
      all
      applicable laws, ordinances, rules, regulations and permits, and judgments,
      orders and decrees of any governmental entity.

    

    (iii)   To
      the
      best of Seller’s knowledge and belief, no Well is subject to penalties on
      allowable production because of any overproduction or any other violation of
      applicable laws, rules, regulations or permits or judgments, orders or decrees
      of any governmental entity that would prevent any Well from being entitled
      to
      its full legal and regular allowable production as prescribed by any
      governmental entity.

    

    (x)    NO
      FUNDS IN SUSPENSE.
      All
      proceeds from the sale of Hydrocarbons produced from the Properties are
      currently being paid to Seller and no portion of such proceeds is currently
      being held in suspense by any purchaser thereof or any other party by whom
      proceeds are paid except for immaterial amounts. 

    

    4.2    BUYER’S
      REPRESENTATIONS.
      Buyer
      represents and warrants to Seller that:

    

    (a)    CORPORATE
      ORGANIZATION AND QUALIFICATION.
      Ignis
      Barnett Shale, LLC is a Texas limited liability company, duly organized, validly
      existing and in good standing under the laws of the State of Texas.

    

    (b)    AUTHORITY.
      Buyer
      has all requisite power and authority to carry on its business as presently
      conducted, to enter into this Agreement, to purchase an interest in the
      Properties on the terms and conditions described in this Agreement and to
      perform its other obligations under this Agreement. The consummation of the
      transaction contemplated by this Agreement will not violate or conflict with
      (i)
      any provision of Buyer’s articles of incorporation, charter, bylaws, or other
      governing documents, (ii) any loan agreement or any other document related
      to
      any borrowing or debt of Buyer, or any other agreement or instrument to which
      Buyer is a party or is bound, or (iii) any judgment, decree, order, statue,
      rule, requirement or regulation applicable to Buyer, including without
      limitation any securities or SEC rule requirement or regulation.

     

    
      
        	 	
                14

              	 
	 	
                PURCHASE
                  AND SALE AGREEMENT

              	 
	
                BUYER

              	 	
                SELLER

              

      

      

        
          
            
            

          

          
            
            

            
              

            

          

          
            
            

          

        

      

       

    

    (c)    EXECUTION
      OF AGREEMENT.
      This
      Agreement has been duly authorized, executed and delivered on behalf of Buyer,
      and at the Closing, all documents and instruments required hereunder to be
      executed and delivered by Buyer shall have been duly executed and delivered.
      This Agreement does, and such documents and instruments will, constitute legal,
      valid and binding obligations of Buyer in accordance with their terms, subject,
      however, to (i) the effects of bankruptcy, insolvency, reorganization and
      similar laws affecting creditors’ rights generally, and (ii) general equitable
      principles which may limit the availability of certain equitable remedies (such
      as specific performance) in certain instances.

    

    (d)    BROKERS’
      FEES.
      Buyer
      has incurred no liability, contingent or otherwise, for brokers’ or finders’
fees in respect of this transaction for which Seller shall have any
      responsibility whatsoever; and Buyer hereby indemnifies and holds Seller
      harmless from and with respect to any such brokers’ or finders’ fees alleged to
      have been incurred by Buyer. 

    

    ARTICLE
      V

    COVENANTS

    

    5.1    COVENANTS
      OF SELLER.
      Seller
      covenants and agrees with Buyer that, prior to Closing:

    

    (a)    CONTINUING
      OPERATION.
      Seller
      will cause the Properties to be produced, maintained and operated in a good
      and
      workmanlike manner, will maintain insurance now in force with respect to the
      Properties, will pay or cause to be paid all costs and expenses incurred in
      connection therewith, will keep the Leases, Contracts and Easements in full
      force and effect and will perform and comply with all of the covenants and
      conditions contained in the Leases, Contracts and Easements. Seller shall keep
      Buyer fully informed of all material operations conducted on the Properties
      as
      Seller continues its drilling program. 

    

    (b)    CONTINUING
      MANAGEMENT.
      Seller
      shall carry on its business with respect to the Properties in substantially
      the
      same manner as Seller has heretofore and shall not introduce any new method
      of
      management, operation or accounting with respect to the Properties.

    

    (c)    LEGAL
      PROCEEDINGS.
      Seller
      shall promptly notify Buyer in writing of any suit, action or other proceeding
      before any court or governmental body, authority, or agency and any cause of
      action of which Seller has knowledge that (i) relates to the Properties, (ii)
      might result in impairment or loss of Seller’s title to any portion of the
      Properties or the value thereof, (iii) might prevent or delay consummation
      of
      the transactions contemplated hereby, or (iv) might otherwise result in a
      material breach of Seller’s representations and warranties
      hereunder.

    

    (d)    CONFIDENTIAL
      INFORMATION.
      Seller
      shall exercise all reasonable diligence in safeguarding and maintaining the
      security of all engineering, geological and geophysical data, reports and maps,
      and all data in the possession of Seller, relating to the
      Properties.

    

    (e)    ACCESS
      TO PROPERTIES.
      Buyer,
      the employees and agents of Buyer, and any other persons designated by Buyer,
      shall have access to the Properties at reasonable times, and under reasonable
      conditions; provided, however, that any damage to any property of Buyer or
      its
      representatives or any injury or death of any individual representing Buyer
      shall be at Buyer’s sole risk, and Buyer shall indemnify and hold Seller
      harmless from and with respect to all claims, costs, damages, attorneys fees,
      litigation expenses and all other expenses related thereto, unless arising
      out
      of or related to the gross negligence or willful misconduct of
      Seller.

    

    (f)
    GENERAL
      COMPLIANCE.
      Prior
      to Closing, Seller shall comply in all material respects with all laws, rules,
      regulations, ordinances and orders of all local, tribal, state, federal and
      foreign governmental bodies, authorities and agencies having jurisdiction over
      the Properties.

    

    (g)    CONSUMMATION
      OF TRANSACTIONS.
      Seller
      shall take or cause to be taken all such actions as may be reasonably necessary
      and advisable to consummate and make effective the sale of an interest in the
      Properties and the other transactions contemplated by this
      Agreement.

    

    (h)    INABILITY
      TO PERFORM.
      Seller
      shall promptly notify Buyer (i) if any material representation or warranty
      of
      Seller contained in this Agreement is discovered to be or becomes untrue, (ii)
      if Seller becomes aware of any credible statements or claim that, if true,
      would
      cause any material representation or warranty of Seller contained in this
      Agreement to become untrue, or (iii) if Seller fails to perform or comply with
      any material covenant or agreement contained in this Agreement, or it is
      reasonably anticipated that Seller will be unable to perform or comply with
      any
      material covenant or agreement contained in this Agreement.

     

    
      
        	 	
                15

              	 
	 	
                PURCHASE
                  AND SALE AGREEMENT

              	 
	
                BUYER

              	 	
                SELLER

              

      

      

        
          
            
            

          

          
            
            

            
              

            

          

          
            
            

          

        

      

       

    

    (i)    
CASUALTY
      LOSS.
      If,
      prior to the Closing, all or any material part of the Properties shall be
      destroyed by fire or other casualty, or if any material part of the Properties
      shall be taken in condemnation or under the right of eminent domain or if
      proceedings for such purposes shall be pending or threatened, Buyer may elect
      to
      terminate this Agreement or proceed to Closing with an appropriate adjustment
      to
      the Purchase Price. If Buyer elects to terminate this Agreement, neither Party
      shall have any further obligation to the other hereunder except for those which
      expressly survive the termination hereof. If not so terminated, this Agreement
      shall remain in full force and effect notwithstanding any such destruction
      or
      taking. 

    

    5.2    COVENANTS
      OF BUYER.
      Buyer
      covenants and agrees with Seller that, prior to the Closing:

    

    (a)    CONSUMMATION
      OF TRANSACTIONS.
      Buyer
      shall take or cause to be taken all such actions as may be reasonably necessary
      or advisable to consummate and make effective the purchase of an interest in
      the
      Properties and the transactions contemplated by this Agreement.

    

    (b)    MAINTENANCE
      OF INFORMATION.
      Buyer
      shall exercise all reasonable diligence in safeguarding and maintaining the
      security and confidentiality of all engineering, geological, geophysical and
      land data, reports and maps, and all other data reviewed and/or in the
      possession of Buyer, relating to the Properties, for the purposes hereof and
      in
      accordance with that certain Confidentiality Agreement between Buyer and Seller,
      dated June 29, 2006.

    

    (c)    INABILITY
      TO PERFORM.
      Buyer
      shall promptly notify Seller (i) if any representation or warranty of Buyer
      contained in this Agreement is discovered to be, or becomes, untrue, (ii) if
      Buyer becomes aware of any credible statement or claim that, if true, would
      cause any representation or warranty of Buyer contained in this Agreement to
      become untrue, or (iii) if Buyer fails to perform or comply with any covenant
      or
      agreement contained in this Agreement, or it is reasonably anticipated that
      buyer will be unable to perform or comply with any covenant or agreement
      contained in this Agreement.

    

    ARTICLE
      VI

    CONDITIONS
      TO CLOSING

    

    6.1    CONDITIONS
      TO OBLIGATIONS OF SELLER.
      The
      obligations of Seller to consummate the transactions contemplated by this
      Agreement are subject, at the option of Seller, to the satisfaction or waiver
      of
      the following conditions:

    

    (a)    VALIDITY
      OF REPRESENTATIONS.
      All
      representations and warranties of Buyer contained in this Agreement shall be
      true in all material respects at and as of the Closing as if such
      representations and warranties were made at and as of the Closing.

    

    (b)    COMPLIANCE
      WITH COVENANTS.
      Buyer
      shall have performed and satisfied in all material respects all agreements
      required by this Agreement to be performed and satisfied by Buyer at or prior
      to
      the Closing.

    

    (c)    PENDING
      LEGAL PROCEEDINGS.
      There
      shall not be pending or instituted, threatened or proposed, any action or
      proceeding, by any individual or entity other than Seller or an Affiliate or
      Seller, by or before any court, administration agency, or other tribunal
      challenging or complaining of, or seeking to collect damages or other relief
      in
      connection with the transactions contemplated by this Agreement.

    

    (d)    PROHIBITION
      OF TRANSACTIONS.
      No
      state or federal statue, rule, regulation or action shall exist or shall have
      been adopted or taken and no judicial or administrative decision shall have
      been
      entered (whether on a preliminary or final basis), that would prohibit, restrict
      or delay the consummation of the transactions contemplated by this Agreement
      or
      make illegal the payments due hereunder.

    

    (e)    CONVEYANCES.
      Exhibits
      in form acceptable to Seller shall have been prepared to attach to the
      Assignment (defined in Paragraph 7.3(a)) and other conveyancing documents to
      be
      delivered at Closing, which exhibits shall be in a proper form and legally
      sufficient to convey the Properties to Buyer and shall set forth the specific
      leasehold interest, and describe the Net Revenue Interest and Working Interest
      in accordance with this Agreement on a Well-by-Well, Lease-by-Lease or
      Unit-by-Unit basis.

     

    
      
        	 	
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                BUYER

              	 	
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    6.2    CONDITIONS
      TO OBLIGATIONS OF BUYER.
      The
      obligations of Buyer to consummate the transactions contemplated by this
      Agreement are subject, at the option of Buyer, to the satisfaction or waiver
      of
      the following conditions:

    

    (a)    [INTENTIONALLY
      DELETED]. 

    

    (b)    COMPLIANCE
      WITH COVENANTS.
      Seller
      shall have performed and satisfied in all material respects all agreements
      required by this Agreement to be performed and satisfied by Seller at or prior
      to the Closing.

    

    (c)    PENDING
      LEGAL PROCEEDINGS.
      There
      shall not be pending or instituted, threatened or proposed, any action or
      proceeding, by any individual or entity other than Buyer or an Affiliate of
      Buyer, by or before any court, administrative agency, or other tribunal
      challenging or complaining of, or seeking to collect material damages or other
      material relief in connection with the transactions contemplated by this
      Agreement.

    

    (d)    PROHIBITION
      OF TRANSACTIONS.
      No
      state or federal statue, rule, regulation or action shall exist or shall have
      been adopted or taken and no judicial or administrative decision shall have
      been
      entered (whether on a preliminary or final basis), that would prohibit, restrict
      or delay the consummation of the transactions contemplated by this Agreement
      or
      make illegal the payments due hereunder.

    

    (e)    CONVEYANCES.
      Exhibits
      in form acceptable to Buyer shall have been prepared to attach to the Assignment
      and other conveying documents to be delivered at Closing, which exhibits shall
      be in a proper form and legally sufficient to convey the Properties to Buyer
      and
      shall set forth the specific leasehold interest, subject to documents and
      encumbrances permitted hereunder and the Net Revenue Interest and Working
      Interest in accordance with this Agreement on a Well-by-Well, Lease-by-Lease,
      or
      Unit-by-Unit basis.

    

    (f)    
NO
      MATERIAL ADVERSE CHANGE.
      There
      shall have been no material adverse change in the physical condition of the
      Properties, since the date of this Agreement, it being understood that the
      current drilling program will continue.

    

    If
      the
      conditions set forth in this Section 6.2 have not been satisfied as of the
      date
      of the Closing, Buyer shall have the right to terminate this Agreement by notice
      delivered to Seller on the day of the Closing or on the next business day
      following the scheduled day of the Closing, in which event the Earnest Money
      shall be returned to Buyer and neither party shall be further obligated to
      the
      other, except for obligations which expressly survive the termination of this
      Agreement. Seller’s obligation to return the Earnest Money shall survive the
      termination of this Agreement.

    

    ARTICLE
      VII

    CLOSING

    

    7.1    DATE
      OF CLOSING.
      The
      Closing (“Closing”) shall occur at 10:00 a.m., Central Daylight Savings Time (or
      Standard Time, as the case may then be) on October 31, 2006; provided, however
      that Buyer shall have the right to extend the date of the Closing one time
      by up
      to an additional fifteen (15) days, by notice delivered to Seller on or before
      October 27, 2006, accompanied by Buyer’s deposit with Seller of the additional
      amount (i.e., additional to the original amount of $50,000.00 delivered as
      Earnest Money pursuant to Section 2.1[a]) of Fifty Thousand ($50,000.00)
      Dollars, which amount shall become part of the Earnest Money.

    

    7.2    PLACE
      OF CLOSING.
      The
      Closing shall be in the offices of W.
      B.
      Osborn Oil & Gas Operations, at 1250 N.E. Loop 410, Suite 600, San Antonio,
      Texas 78209, or another place mutually agreeable to Buyer and
      Seller.

    

    7.3    CLOSING
      OBLIGATIONS.
      At the
      Closing, the following shall occur:

    

    (a)    EXECUTION
      OF TRANSFER DOCUMENTS.
      Seller
      shall execute, acknowledge and deliver an Assignment, Bill of Sale and
      Conveyance (“Assignment”), on the form attached hereto as Exhibit “E”, conveying
      title to a forty-five percent (45%) interest in the Properties to Buyer, free
      and clear of all liens, encumbrances and burdens except for the Permitted
      Encumbrances. The Assignment shall be effective as of the Effective Date, with
      no warranty by Seller, either express or implied, as to title or any other
      matter.

     

    
      
        	 	
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    (b)    DELIVERY
      OF FUNDS.
      Buyer
      shall deliver the Seventeen Million Six Hundred Thousand ($17,600,000.00)
      Dollars portion of the Purchase Price (adjusted as set forth herein) to Seller
      by either cashier’s check, certified check or wire transfer to an account
      designated by Seller or other immediately available funds in the amount of
      the
      Purchase Price, as adjusted hereunder pursuant to Paragraph 2.1 and Paragraph
      3.4.

    

    (c)    SCHEDULE
      OF LIABILITIES.
      Seller
      shall deliver to Buyer a Settlement Statement listing the adjustments made
      under
      Paragraph 7.3 (b).

    

    (d)    RELEASE
      OF LIENS.
      All
      liens affecting Buyer’s purchased interest in the Properties and securing unpaid
      indebtedness of Seller (if any) shall be released at Seller’s expense by the
      execution, acknowledgment and delivery of such instruments as are reasonably
      satisfactory to Buyer.

    

    (e)    POSSESSION
      OF PROPERTIES.
      Seller
      shall retain possession of the Properties, and continue as Operator pursuant
      to
      this Agreement and the exhibits hereto.

    

    (f)    
COPIES
      OF FILES.
      Seller
      shall deliver to Buyer copies of such documents in Seller’s files and records
      relating to the Properties, as may be requested by Buyer. 

    

    (g)    FURTHER
      ASSURANCES.
      At the
      Closing, the Parties hereto shall execute, acknowledge and deliver such other
      instruments, and shall take such other action as may be necessary, to carry
      out
      the obligations under this Agreement, including, but not limited to, the
      instruments attached as Exhibits “B”, “B-1”, “C” and “D”, and Letters In Lieu of
      Transfer Orders for revenue payment purposes.

    

    7.4    DEFAULT.
      IF THE
      PURCHASE AND SALE OF THE PROPERTIES IS NOT COMPLETED AS CONTEMPLATED HEREIN
      BY
      REASON OF ANY MATERIAL BREACH OR DEFAULT OR FAILURE TO PROCEED BY SELLER, BUYER
      SHALL HAVE THE OPTION TO EITHER (i) TERMINATE THIS AGREEMENT AND RECEIVE ALL
      EARNEST MONEY THERETOFORE DEPOSITED WITH SELLER, OR (ii) ENFORCE SPECIFIC
      PERFORMANCE OF THIS AGREEMENT, BUYER
      HEREBY WAIVING ALL OTHER REMEDIES WHETHER AT LAW OR IN EQUITY.
      IF THE
      PURCHASE AND SALE OF THE PROPERTIES IS NOT COMPLETED AS CONTEMPLATED HEREIN
      BY
      REASON OF ANY MATERIAL BREACH OR DEFAULT OR FAILURE TO PROCEED BY BUYER, SELLER
      MAY, AS SELLER’S SOLE REMEDY FOR ANY SUCH BREACH, DEFAULT OR FAILURE TO PROCEED,
      TERMINATE THIS AGREEMENT AND RETAIN ALL EARNEST MONEY THERETOFORE DEPOSITED
      WITH
      SELLER AS LIQUIDATED DAMAGES FOR SUCH BREACH, DEFAULT OR FAILURE TO PROCEED,
      SELLER HEREBY WAIVING (SUBJECT TO SECTION 7.6, BELOW) ALL OTHER REMEDIES WHETHER
      AT LAW OR IN EQUITY. FURTHERMORE, IF BUYER TERMINATES THIS AGREEMENT FOR ANY
      REASON OR FOR NO REASON AT ALL, AND IF THIS AGREEMENT DOES NOT GIVE BUYER THE
      EXPRESS RIGHT TO A RETURN OF THE EARNEST MONEY IN THE EVENT OF SUCH TERMINATION,
      SUCH TERMINATION SHALL BE DEEMED A FAILURE TO PROCEED BY BUYER AS SET FORTH
      IMMEDIATELY ABOVE AND SELLER MAY RETAIN THE EARNEST MONEY AS PROVIDED
      BELOW.

    

    7.5    STIPULATION
      AS TO LIQUIDATED DAMAGES. Seller
      and Buyer stipulate and agree (i) that, due to the unique character of oil
      and
      gas property, to the volatility of the oil and gas market, to the fluctuating
      value of oil and gas, and to other factors, just compensation for the harm
      that
      would be caused by the Buyer’s default cannot be accurately estimated or would
      be very difficult to accurately estimate and that the Earnest Money is a
      reasonable forecast of just compensation to Seller for the harm that would
      be
      caused by Buyer’s default, (ii) that the reasonable forecast has been made
      specific to the transaction contemplated hereby, and (iii) that the liquidated
      damages are not, and are not intended as, a penalty. The provisions of this
      stipulation and agreement shall survive the termination of this
      Agreement.

    

    7.6    SELLER’S
      RIGHT TO ASSERT COUNTERCLAIM.
      In the
      event Buyer exercises its right under Section 7.4, above, to sue for specific
      performance, Seller shall have the right, notwithstanding any other provision
      in
      this Article VII to the contrary, to bring and assert any counterclaim against
      Buyer to recover actual, direct damages (but neither party may assert against
      the other party indirect, consequential, multiple, punitive, or exemplary
      damages, whether allowed by statute or under the common law) incurred by Seller
      and caused by or resulting from Buyer’s default hereunder.

     

    
      
        	 	
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                BUYER

              	 	
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    ARTICLE
      VIII

    OBLIGATIONS
      AFTER CLOSING

    

    8.1    AD
      VALOREM TAXES, SALES TAXES AND RECORDING FEES.

    

    (a)    AD
      VALOREM TAXES.
      As
      provided in Paragraph 1.4(c) hereinabove, ad
      valorem
      property
      taxes, real property taxes, personal property taxes and similar obligations
      with
      respect to the Properties for the tax period in which the Effective Date occurs
      shall be paid by WBO for the joint account of Buyer and Seller and shall be
      apportioned as of the Effective Date between Seller and Buyer WBO also shall
      file or cause to be filed all required reports and returns incident to such
      taxes, and shall supply Buyer with copies of the filed reports and proof of
      payment promptly after filing and paying them. Buyer shall reimburse to Seller,
      promptly upon receipt of Seller’s invoice therefor Buyer’s prorata
      (forty-five percent 45%) share of such taxes attributable to periods beginning
      with the Effective Date, pursuant to Paragraph 1.4(c) hereinabove. 

    

    (b)    SALES
      TAXES.
      Buyer
      shall be liable for any sales tax or any other transfer tax or fee arising
      out
      of Buyer’s purchase of the interest in the Properties, including the personalty
      contained therein, and Buyer shall indemnify and hold Seller harmless with
      respect thereto. If Seller is required by applicable state law to report and
      pay
      any such taxes and/or fees, Buyer shall, upon Seller’s presentation of an
      invoice, promptly pay same to Seller.

    

    (c)    RECORDING
      FEES.
      Seller
      shall pay all recording fees required in connection with releasing liens or
      other encumbrances on the Properties in accordance with this Agreement. Buyer
      shall pay all required documentary, filing and recording fees, taxes, and all
      other costs incurred and/or required in connection with the filing and recording
      of the Assignment.

    

    8.2    SETTLEMENT
      FOR INTERIM PERIOD REVENUES AND LIABILITIES, AND OTHER
      ADJUSTMENTS.
      To the
      extent necessary and within sixty (60) days after the Closing, Seller shall
      prepare, in accordance with this Agreement and with standard industry practice,
      and deliver to Buyer, a final accounting statement showing the proration of
      credits and payment obligations of Buyer and Seller. As soon as reasonably
      practicable thereafter, Buyer shall deliver to Seller a written report
      containing any changes that Buyer proposes to be made to such statement. The
      Parties shall use their best efforts to reach agreement on such final statement
      within ninety (90) days after the date of Closing (as defined in Paragraph
      7.1),
      and to make such payments as may be required pursuant thereto. Furthermore,
      any
      post-closing adjustments in Buyer’s favor to which Buyer is entitled pursuant to
      Article III, above, shall be made from time to time after the Closing as
      necessary to ensure compliance with Article III; provided, however, that the
      provisions of this Section 8.2 shall not be construed to enlarge the rights
      given to Buyer under Article III. Seller shall pay to Buyer, unless Buyer and
      Seller make other provisions therefor, the amount of such post-closing
      adjustments pursuant to Article III to which Buyer is entitled, and such payment
      shall be made by Seller to Buyer within ten (10) days following Buyer’s written
      request therefor. The provisions of this Section 8.2 shall survive the Closing.
      

    

    8.3    FURTHER
      ASSURANCES.
      After
      Closing, Buyer and Seller shall execute, acknowledge and deliver or cause to
      be
      executed, acknowledged and delivered such instruments and shall take such other
      action as may be reasonably necessary or desirable to carry out their respective
      obligations under this Agreement and under any exhibit, document, certificate
      or
      other instrument delivered pursuant hereto. Without limiting the generality
      of
      the foregoing, (i) should either Seller or Buyer receive revenues to which
      the
      other is entitled, then such revenues shall be paid over to the appropriate
      Party within thirty (30) days of receipt thereof, and (ii) should either Seller
      or Buyer pay for costs and expenses for which the other is responsible, then
      the
      responsible Party shall reimburse the other Party within thirty (30) days of
      the
      date the responsible Party receives an invoice for such costs and
      expenses.

    

    8.4    SURVIVAL.
      The
      provisions of this Article VIII shall survive the Closing.

    

    ARTICLE
      IX

    INDEMNITIES
      OF SELLER

    

    Seller
      shall indemnify, defend and hold Buyer, its members, and their respective
      officers, directors, employees, agents, representatives, members, shareholders,
      affiliates and subsidiaries harmless from and against, and will pay to Buyer
      the
      amount of, any damage, loss, liability or expense (including, but not limited
      to, reasonable attorneys fees, litigation and court costs, and reasonable costs
      of investigating any claim) resulting from, arising out of or relating to the
      Retained Obligations. The provisions of this Article IX shall survive the
      Closing.

     

    
      
        	 	
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    ARTICLE
      X

    TERMINATION
      OF AGREEMENT

    

    10.1   
        TERMINATION.
      This
      Agreement and the transactions contemplated hereby may be terminated in the
      following instances:

    

    (a)    By
      Buyer
      in accordance with Paragraph 3.6;

    

    (b)    By
      Buyer
      in accordance with Paragraph 5.1(i);

    

    (c)    By
      Buyer
      if any condition set forth in Paragraph 6.2 shall not have been satisfied or
      waived on or before Closing;

    

    (d)    By
      Seller
      if any condition set forth in Paragraph 6.1 shall not have been satisfied or
      waived on or before Closing; or

    

    (e)    By
      the
      mutual written agreement of Buyer and Seller.

    

    This
      Agreement shall terminate without any further action by Seller or Buyer if
      the
      Closing has not occurred on or before November 15, 2006, unless the date of
      such
      Closing shall have been extended by a written agreement of all of the Parties
      hereto, provided, however, that the Parties’ remedies for breach of, or failure
      to consummate this Agreement shall survive such termination.

    

    10.2  
        LIABILITIES
      UPON TERMINATION.
      If this
      Agreement is terminated for any reason or is breached, nothing contained herein
      shall be construed to limit Buyer’s right to enforce specific performance of
      this Agreement.

    

    10.3  
         RETURN
      OF INFORMATION.
      If this
      Agreement is terminated in accordance with the terms of this Agreement, Buyer
      shall return to Seller all information and material provided by Seller to Buyer
      pursuant to this Agreement, and Buyer shall exercise all reasonable diligence
      in
      maintaining the confidentiality of such information. In addition, Buyer shall
      provide to Seller, without cost, copies of any analyses or reports obtained
      by
      Buyer pertaining to any assessment of the Properties.

    

    ARTICLE
      XI

    MISCELLANEOUS

    

    11.1
           SURVIVAL
      OF AGREEMENT.
      Notwithstanding anything to the contrary contained in this Agreement or in
      the
      Assignment, Seller and Buyer agree that none of the terms and provisions of
      this
      Agreement are superseded, diminished or enlarged by any of the terms of the
      Assignment.

    

    11.2
           NOTICES.
      All
      communications required or permitted under this Agreement shall be in writing,
      and any communication or delivery hereunder shall be deemed to have been duly
      made if (i) delivered by messenger or express mail service, (ii) sent by
      telecopier, telex, fax, or similar device (with confirmation of receipt by
      telecopier sent within thirty minutes of completion of transmission with the
      result that if there is no such confirmation of receipt by telecopy, the
      original notice sent by telecopier shall not
      be
      deemed effective notice), (iii) sent by email, or (iv) mailed by registered
      mail
      or certified mail, return receipt requested, postage prepared and addressed
      to
      the noticed Party as set forth below:

    

    IF
      TO
      SELLER:

    

    W.
      B.
      Osborn Oil & Gas Operations

    Attn:
      Mr.
      Rex Bourland

    P.O.
      Box
      8C

    San
      Antonio, Texas 78217

    FAX:
      (210) 826-7318

    Email:
      rexb@wbosborn.com

     

    
      
        	 	
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                BUYER

              	 	
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    With
      a
      copy (which shall not
      be
      deemed to be notice to Seller) to:

    

    R.
      H.
      Tibaut Bowman, P. C.

    1250
      NE
      Loop 410, Suite 900

    San
      Antonio, Texas 78209

    FAX:
      (210) 826-5475

    Email:
      rhtblaw@aol.com

    

    IF
      TO
      BUYER:

    

    Ignis
      Barnett Shale, LLC

    Attn:
      Michael P. Piazza

    100
      Crescent Court, 7th
      Floor

    Dallas,
      TX 75201

    FAX:
      (214) 459-3101

    Email:
      mpp@ignispetro.com

    

    With
      a
      copy (which shall not
      be
      deemed to be notice to Buyer) to:

    

    Douglas
      W. Clayton

    Cantey
      & Hanger, L.L.P.

    801
      Cherry Street, Suite 2100

    Fort
      Worth, Texas 76102

    FAX:
      (817) 877-2807

    Email:
      dclayton@cantyhanger.com

    

    Any
      such
      notice shall be deemed to have been given by the sending Party upon the receipt
      of such notice by the other Party; provided, however, notices mailed in
      accordance with this Section 11.2 shall be deemed given on the earlier to occur
      of (i) actual receipt or (ii) the third (3rd) day following the day of posting.
      Either Party may, by written notice so delivered to the other, change the
      address to which delivery shall thereafter be made.

    

    11.3     EXPENSES.
      Except
      as otherwise specifically provided in this Agreement, all fees, costs and
      expenses incurred by Buyer or Seller in negotiating this Agreement or in
      consummating the transactions contemplated by this Agreement shall be paid
      by
      the Party incurring the same, including, but not limited to, legal, accounting
      and engineering fees, costs and expenses, and any brokerage or commission
      incurred by a Party.

    

    11.4  
        AMENDMENT.
      This
      Agreement may not be altered or amended, nor any rights hereunder be waived,
      except by an instrument in writing executed by the Party or Parties to be
      charged with such amendment or waiver. No waiver of any term, provision or
      condition of this Agreement, in any one or more instances, shall be deemed
      to
      be, or construed as, a further or continuing waiver of any such term, provision
      or condition or as a waiver of any other term, provision or condition of this
      Agreement.

    

    11.5  
        ASSIGNMENT.
      Neither
      Buyer nor Seller may assign its rights or delegate its duties or obligations
      under the terms of this Agreement without the prior written consent of the
      other
      Party; provided, however, Buyer may assign all or any portion of its rights
      and
      delegate all or any portion of its duties and obligations under this Agreement
      to any Affiliate (as defined in Section 11.10 below) of Buyer without obtaining
      Seller’s prior written consent, provided that such Affiliate assumes and agrees
      to be bound by the provisions of this Agreement. Any such assignee of Buyer
      shall execute and acknowledge all instruments to be delivered by Buyer at the
      Closing in lieu of Buyer.

    

    11.6   
        ENTIRE
      AGREEMENT.
      This
      Agreement and the exhibits attached hereto state the entire agreement between
      the Parties with respect to the subject matter hereof, superseding all
      negotiations, prior discussions and prior letters of intent, amendments and
      understandings relating to such subject matter.

    

    11.7  
        EXECUTION
      IN COUNTERPARTS.
      This
      Agreement may be executed in one or more counterparts with the same effect
      as if
      all signatures of the Parties hereto were on the same document, but in such
      event each counterpart shall constitute an original, and all of such
      counterparts shall constitute one Agreement; but in making proof of this
      Agreement, it shall not be necessary to produce or account for more than one
      such counterpart.

     

    
      
        	 	
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                BUYER

              	 	
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    11.8   
        GOVERNING
      LAW.
      THIS
      AGREEMENT SHALL BE GOVERNED BY AND CONSTRUED AND ENFORCED IN ACCORDANCE WITH
      THE
      LAWS OF THE STATE OF TEXAS.

    

    11.9        
       INVALID
      PROVISIONS.
      If any
      provision of this Agreement is held to be illegal, invalid or unenforceable
      under present or future laws effective during the term hereof, such provision
      shall be fully severable; this Agreement shall be construed and enforced as
      if
      such illegal, invalid or unenforceable provision had never comprised a part
      hereof and the remaining provisions of this Agreement shall remain in full
      force
      and effect and shall not be affected by the illegal, invalid or unenforceable
      provision or by its severance from this Agreement. Furthermore, in lieu of
      each
      such illegal, invalid or unenforceable provision there shall be added
      automatically as a part of this Agreement a provision as similar in terms to
      such illegal, invalid or unenforceable provision as may be possible and be
      legal, valid and enforceable.

    

    11.10 
        REFERENCES.
      References made in this Agreement, including use of a pronoun, shall be deemed
      to include where applicable, masculine, feminine, singular or plural,
      individuals, partnerships or corporations. As used in this Agreement, (i)
“Party” shall mean any natural person, corporation partnership, trust estate or
      other entity; and (ii) the “Affiliate” of a Party shall mean any partnership,
      joint venture, corporation or other entity in which such Party has an interest
      or which controls, is controlled by or is under common control with such
      Party.

    

    11.1     PARTIES
      IN INTEREST.
      This
      Agreement shall be binding upon, and shall inure to the benefit of, the Parties
      hereto and, except as otherwise prohibited, their respective successors and
      assigns, and nothing contained in this Agreement, express or implied, is
      intended to confer upon any other person or entity any benefits, rights or
      remedies.

    

    11.12 
        CAPTIONS
      AND HEADINGS.
      All
      captions and headings herein are used solely for the reference and convenience
      of the Parties and shall not affect the construction of this
      Agreement.

    

    ARTICLE
      XII

    PREFERENTIAL
      RIGHT TO PURCHASE 

    

    12.1  
        BUYER’S
      PREFERENTIAL RIGHT TO PURCHASE.
      Following
      Closing, should either of the parties constituting Seller receive an offer
      to
      purchase all or any part of its interest in the Properties, which offer it
      is
      prepared to accept, it shall promptly give written notice to Buyer, with full
      information concerning the proposed disposition, which shall include the name
      and address of the prospective transferee, the purchase price, a legal
      description sufficient to identify the interest in the Properties desired to
      be
      sold, and all other material terms of the offer. Buyer shall have an optional
      prior right, for a period of thirty (30) days after the notice is delivered,
      to
      purchase for the stated consideration on the same terms and conditions the
      interest which the other party constituting Seller desires to sell. This
      preferential right to purchase shall not apply to (i) a mortgage or a transfer
      of title to a mortgagee in lieu of or pursuant to a foreclosure of a mortgage,
      or (ii) any transfer to an Affiliate of Seller or by an Affiliate of Seller
      to
      any other Affiliate of Seller; but the preferential right to purchase
shall
      apply to
      (A) a disposition of an interest in the proposed transferor by merger,
      reorganization, or consolidation, (B) a sale of stock, membership interests,
      limited partnership interests, general partnership interests, or other entity
      interests in the transferor, and (iii) a transfer of an interest in the
      Properties to a subsidiary or parent company or to a subsidiary of a parent
      company, or to any company to which the transferor party owns a majority of
      the
      equity interests. The parties intend that this preferential right shall apply
      to
      any proposed disposition by either of the parties constituting Seller of all
      or
      any part of its interest in the Properties, regardless if such disposition
      is
      intended to be effected as an asset sale, sale of stock, membership interest,
      limited partnership interest, general partnership interest, or other entity
      interest, or merger, reorganization, or consolidation. Notwithstanding the
      above, Buyer’s preferential right shall never apply to any transfer by Seller to
      an Affiliate of Seller or by any Affiliate of Seller to any other Affiliate
      of
      Seller. This right of Buyer shall be reoccurring from time to time as to all
      or
      any part of the interest in the Properties owned as of the Closing by either
      of
      the parties constituting Seller. Should Buyer elect to not exercise its
      preferential right as to a specific offer, but the transaction contemplated
      by
      the offer is not consummated, Buyer’s preferential right shall again apply to
      any future offers received by either of the parties constituting Seller covering
      all or any part of an interest in the Properties.

     

    
      
        	 	
                22

              	 
	 	
                PURCHASE
                  AND SALE AGREEMENT

              	 
	
                BUYER

              	 	
                SELLER

              

      

      

        
          
            
            

          

          
            
            

            
              

            

          

          
            
            

          

        

      

       

    

    12.02
        WBO’S
      PREFERENTIAL RIGHT TO PURCHASE. Following
      Closing, should Buyer receive an offer to purchase all or any part of its
      interest in the Properties, which offer it is prepared to accept, it shall
      promptly give written notice to WBO, with full information concerning its
      proposed disposition, which shall include the name and address of the
      prospective transferee, the purchase price, a legal description sufficient
      to
      identify the interest in the Properties desired to be sold, and all other
      material terms of the offer. WBO shall have an optional prior right, for a
      period of thirty (30) days after the notice is delivered, to purchase for the
      stated consideration on the same terms and conditions the interest which Buyer
      desires to sell. This preferential right to purchase shall not apply to (i)
      a
      mortgage or a transfer of title to a mortgagee in lieu of or pursuant to a
      foreclosure of a mortgage, or (ii) any transfer to an Affiliate of Buyer or
      by
      an Affiliate of Buyer to any other Affiliate of Buyer; but the preferential
      right to purchase shall
      apply to
      (A) a disposition of an interest in the proposed transferor by merger,
      reorganization, or consolidation, (B) a sale of stock, membership interests,
      limited partnership interests, general partnership interests, or other entity
      interests in the transferor, and (iii) a transfer of an interest in the
      Properties to a subsidiary, or to any company to which the transferor party
      owns
      a majority of the equity interests. The parties intend that this preferential
      right shall apply to any proposed disposition by Buyer of all or any part of
      its
      interest in the Properties, regardless if such disposition is intended to be
      effected as an asset sale, sale of stock, membership interest, limited
      partnership interest, general partnership interest, or other entity interest,
      or
      merger, reorganization, or consolidation (except for a disposition to a parent
      company or to a subsidiary of a parent company). Notwithstanding the above,
      Seller’s preferential right shall never apply to any transfer by Buyer to an
      Affiliate of Buyer or by any Affiliate of Buyer to any other Affiliate of Buyer.
      This right of WBO shall be reoccurring from time to time as to all or any part
      of the interest in the Properties owned as of the Closing by Buyer. Should
      WBO
      elect to not exercise its preferential right as to a specific offer, but the
      transaction contemplated by the offer is not consummated, WBO’s preferential
      right shall again apply to any future offers received by Buyer covering all
      or
      any part of an interest in the Properties.

    

    12.03 
        SURVIVAL.
       The
      provisions of this Article XII shall survive the Closing. 

    

    12.04
         CONSTRUCTIVE
      NOTICE. At
      Closing, Seller and Buyer shall execute in recordable form and thereafter file
      for record in the offices of the County Clerks of Montague and Cooke Counties,
      Texas, a memorandum, in such form as is reasonably acceptable to Seller and
      Buyer, placing the public on constructive notice of the preferential rights
      granted in this Article XII. 

    

    EXECUTED
      on the dates set forth below.

    

    
      	 	 	
              SELLER:

            
	 	 	 
	 	 	
              W.
                B. OSBORN OIL & GAS OPERATIONS, LTD.

            
	 	 	
              d/b/a
                W.B. Osborn Oil & Gas Operations, and

            
	 	 	
              ST.
                JO PIPELINE, LIMITED

            
	 	 	
              By
                WBO III, Inc., their General Partner

            
	 	 	 
	 	 	
              By:
                /s/
                W.B. Osborn III

            
	
              Attest:

            	 	
              Name: 
                W. B. Osborn III

            
	 	 	
              Title:   
                President

            
	 	 	
              Date:
                9/28/06

            
	 	 	 
	 	 	 
	 	 	
              BUYER:

            
	 	 	 
	 	 	
              IGNIS
                BARNETT SHALE, LLC

            
	 	 	 
	 	 	
              By:
                /s/
                Michael P. Piazza

            
	
              Attest:

            	 	
              Name: 
                Michael P. Piazza

            
	 	 	
              Title:   
                President

            
	 	 	
              Date:
                9/27/06

            

    

     

    
      
        
          	
                   

                	
                  23

                	 
	 	
                  PURCHASE
                    AND SALE AGREEMENT

                	 
	
                  BUYER

                	 	
                  SELLER

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