Document:

Unassociated Document

    WAIVER
REGARDING AMENDED AND RESTATED

    FIRST
LIEN CREDIT AGREEMENT

    

    This WAIVER
REGARDING AMENDED AND RESTATED FIRST LIEN CREDIT AGREEMENT (“Waiver”), dated
effective as of November 17, 2010 (the “Effective Date”), is
by and among Energy XXI Gulf Coast, Inc., a Delaware corporation (the “Borrower”), the
lenders party to the First Lien Credit Agreement described below (the “Lenders”), and The
Royal Bank of Scotland plc, as administrative agent for the Lenders (in such
capacity, the “Administrative
Agent”).

     

    Whereas,
the Borrower, the Lenders, the Administrative Agent and certain other Persons
are parties to the Amended and Restated First Lien Credit Agreement, dated as of
June 8, 2007, as modified by the Consent Regarding Amended and Restated
First Lien Credit Agreement dated as of July 27, 2007, as amended by that
certain First Amendment to Amended and Restated First Lien Credit Agreement
dated effective as of November 19, 2007, as amended by that certain Waiver,
Consent and Second Amendment to Amended and Restated First Lien Credit Agreement
dated effective as of December 1, 2008, as amended by the Third Amendment to
Amended and Restated First Lien Credit Agreement dated as of April 6, 2009,
as modified by the Waiver and Consent to Amended and Restated First Lien Credit
Agreement dated as of June 30, 2009, as amended and modified by the Waiver,
Consent and Fourth Amendment to Amended and Restated First Lien Credit Agreement
dated as of September 11, 2009 and as amended and modified by the
Fifth Amendment to Amended and Restated First Lien Credit Agreement dated as of
December 11, 2009, as amended and modified by the Sixth Amendment to
Amended and Restated First Lien Credit Agreement dated as of February 5,
2010, and as amended and modified by the Seventh Amendment to Amended and
Restated First Lien Credit Agreement dated as of October 15, 2010 (as so
modified, and as amended, supplemented and amended, and restated or otherwise
modified from time to time, the “First Lien Credit
Agreement”);

     

    WHEREAS,
Section 7.2.15 of the First Lien Credit Agreement imposes certain limitations on
the Borrower’s ability to pay, prepay, redeem, defease, purchase, acquire or
otherwise retire the any PP Debt;

     

    WHEREAS,
Section 7.2.21 of the First Lien Credit Agreement imposes certain limitations on
the Borrower’s ability to pay, prepay, redeem, defease, purchase, acquire or
otherwise retire any Second Lien Indebtedness;

     

    WHEREAS,
the Borrower has requested that the Lenders waive the requirements of Sections
7.2.15 and 7.2.21 of the First Lien Credit Agreement so that the Borrower can
use proceeds of an issuance of its Capital Securities, on or about November 8,
2010, to Intermediate Holdco (the “Issuance”), to pay,
prepay, redeem, defease, purchase, acquire and/or otherwise retire Second Lien
Notes and/or PP Notes and pay any premium and any accrued and unpaid interest
with respect thereto (the “Specified
Redemptions”); and

     

    WHEREAS,
the undersigned Secured Parties are willing to agree to such waiver and to
provide certain other consents as provided herein, on the terms and conditions
set forth herein.

     

    
      
        
        

      

      
        
        

        
          

        

      

      
        
        

      

    

    NOW THEREFORE,
in consideration of the premises and the mutual covenants, representations and
warranties contained herein, and for other good and valuable consideration, the
receipt and sufficiency of which are hereby acknowledged, the parties hereto
hereby agree as follows:

     

    AGREEMENT

     

    Section
1. Definitions.  Capitalized
terms used herein but not defined herein shall have the meanings as given them
in the First Lien Credit Agreement, unless the context otherwise
requires.

     

    Section
2. Waiver.

     

    (a) Subject
to the other terms and conditions of this Waiver, the Administrative Agent, the
Swing Line Lender, the Issuers and the undersigned Lenders hereby (i) waive the
limitations of Section 7.2.21 of the First Lien Credit Agreement that restrict
the Borrower’s ability to pay, prepay, redeem, defease, purchase, acquire or
otherwise retire any Second Lien Indebtedness, but only to the extent (x) the
amounts used by the Borrower for such actions arise from proceeds of the
Issuance, (y) such Specified Redemptions of Second Lien Indebtedness may only be
made until March 31, 2011 and (z) after giving effect to each Specified
Redemption, the Borrower shall have unused availability under the Borrowing Base
of at least $100,000,000, (ii) waive the limitations of Section 7.2.15 of the
First Lien Credit Agreement that restrict the Borrower’s ability to pay, prepay,
redeem, defease, purchase, acquire or otherwise retire any PP Debt, but only to
the extent (w) the amounts used by the Borrower for such actions arise from
proceeds of the Issuance, (x) such Specified Redemptions of PP Debt may only be
made until September 30, 2011, (y) any such payment, prepayment, redemption,
defeasance, purchase, acquisition or other retirement of PP Debt occurs only
upon the Second Lien Indebtedness having been paid, prepaid, redeemed, defeased,
purchased, acquired or otherwise retired in full, and (z) after giving effect to
each Specified Redemption, the Borrower shall have unused availability under the
Borrowing Base of at least $100,000,000, and (iii) agree that the Borrower’s
undertaking of the Specified Redemptions in accordance with and as contemplated
by this Waiver shall not constitute a Default or Event of Default as a result of
a violation of such Sections 7.2.15 and 7.2.21 of the First Lien Credit
Agreement.

     

    (b) The
express waiver set forth in this Section 2 is limited
to the extent described herein and shall not be construed to be a consent to or
a waiver of any terms, provisions, covenants, warranties or agreements contained
in the First Lien Credit Agreement or in any of the other Loan Documents, unless
expressly provided so herein.  The Lenders reserve the right to
exercise any rights and remedies available to them in connection with any
present or future defaults with respect to the First Lien Credit Agreement or
any other provision of any Loan Document.

     

    Section
3. Conditions to
Effectiveness.  This Waiver shall be deemed effective as of the
Effective Date when the Administrative Agent shall have received counterparts
hereof duly executed by the Borrower, the Administrative Agent, the Swing Line
Lender, the Issuers and the Required Lenders.

     

    
      
        
        

      

      
        -2-

        
          

        

      

      
        
        

      

    

    Section
4. Representations and
Warranties.  The Borrower hereby represents and warrants that
after giving effect hereto:

     

    (a) the
representations and warranties of the Obligors contained in the Loan Documents
are true and correct in all material respects, other than those representations
and warranties that expressly relate solely to a specific earlier date, which
shall remain correct in all material respects as of such earlier
date;

     

    (b) the
execution, delivery and performance by the Borrower and each other Obligor of
this Waiver have been duly authorized by all necessary corporate or other action
required on their part and this Waiver, along with the First Lien Credit
Agreement and other Loan Documents, constitutes the legal, valid and binding
obligation of each Obligor a party thereto enforceable against them in
accordance with its terms, except as its enforceability may be affected by the
effect of bankruptcy, insolvency, reorganization, moratorium or other similar
laws now or hereafter in effect relating to or affecting the rights or remedies
of creditors generally;

     

    (c) neither
the execution, delivery and performance of this Waiver by the Borrower and each
other Obligor, the performance by them of the First Lien Credit Agreement nor
the consummation of the transactions contemplated hereby does or shall
contravene, result in a breach of, or violate (i) any provision of any Obligor’s
certificate or articles of incorporation or bylaws or other similar documents,
or agreements, (ii) any law or regulation, or any order or decree of any court
or government instrumentality, or (iii) any indenture, mortgage, deed of trust,
lease, agreement or other instrument to which any Obligor or any of its
Subsidiaries is a party or by which any Obligor or any of its Subsidiaries or
any of their property is bound, except in any such case to the extent such
conflict or breach has been waived by a written waiver document, a copy of which
has been delivered to Administrative Agent on or before the date
hereof;

     

    (d) no
Material Adverse Effect has occurred since June 30, 2010; and

     

    (e) no
Default or Event of Default or Borrowing Base Deficiency has occurred and is
continuing.

     

    Section
5. Loan Document;
Ratification.

     

    (a) This
Waiver is a Loan Document.

     

    (b) The
Borrower and each other Obligor hereby ratifies, approves and confirms in every
respect all the terms, provisions, conditions and obligations of the First Lien
Credit Agreement and each of the other Loan Documents, including without
limitation all Mortgages, Security Agreements, Guaranties, Control Agreements
and other Security Documents, to which it is a party.

     

    Section
6. Costs And
Expenses.  As provided in Section 10.3 of the First Lien Credit
Agreement, the Borrower agrees to reimburse Administrative Agent for all fees,
costs, and expenses, including the reasonable fees, costs, and expenses of
counsel or other advisors for advice, assistance, or other representation, in
connection with this Waiver and any other agreements, documents, instruments,
releases, terminations or other collateral instruments delivered by the
Administrative Agent in connection with this Waiver.

     

    
      
        
        

      

      
        -3-

        
          

        

      

      
        
        

      

    

    Section
7. GOVERNING
LAW.  THIS WAIVER SHALL BE DEEMED A CONTRACT AND INSTRUMENT
MADE UNDER THE LAWS OF THE STATE OF NEW YORK AND SHALL BE CONSTRUED AND ENFORCED
IN ACCORDANCE WITH AND GOVERNED BY THE LAWS OF THE STATE OF NEW YORK AND THE
LAWS OF THE UNITED STATES OF AMERICA, WITHOUT REGARD TO PRINCIPLES OF CONFLICTS
OF LAW.

     

    Section
8. Severability.  Any
provision of this Waiver that is prohibited or unenforceable in any jurisdiction
shall, as to such provision and such jurisdiction, be ineffective to the extent
of such prohibition or unenforceability without invalidating the remaining
provisions of this Waiver or affecting the validity or enforceability of such
provision in any other jurisdiction.

     

    Section
9. Counterparts.  This
Waiver may be executed in any number of counterparts, all of which taken
together shall constitute one and the same instrument, and any party hereto may
execute this Waiver by signing one or more counterparts.  Any
signature hereto delivered by a party by facsimile or electronic transmission
shall be deemed to be an original signature hereto.

     

    Section
10. No
Waiver.  The express waivers set forth herein are limited to
the extent expressly provided in this Waiver and, except as expressly set forth
in this Waiver, the execution, delivery and effectiveness of this Waiver shall
not operate as a waiver of any default of the Borrower or any other Obligor or
any right, power or remedy of the Administrative Agent or the other Secured
Parties under any of the Loan Documents, nor constitute a waiver of (or consent
to departure from) any terms, provisions, covenants, warranties or agreements of
any of the Loan Documents.  The parties hereto reserve the right to
exercise any rights and remedies available to them in connection with any
present or future defaults with respect to the First Lien Credit Agreement or
any other provision of any Loan Document

     

    Section
11. Successors and
Assigns.  This Waiver shall be binding upon the Borrower and
its successors and permitted assigns and shall inure, together with all rights
and remedies of each Lender Party hereunder, to the benefit of each Lender Party
and the respective successors, transferees and assigns.

     

    Section
12. Entire
Agreement.  THIS WAIVER, THE FIRST LIEN CREDIT AGREEMENT AND
THE OTHER LOAN DOCUMENTS REPRESENT THE FINAL AGREEMENT OF THE PARTIES WITH
RESPECT TO THE SUBJECT MATTER HEREOF AND MAY NOT BE CONTRADICTED BY EVIDENCE OF
PRIOR, CONTEMPORANEOUS, OR SUBSEQUENT ORAL AGREEMENTS OF THE
PARTIES.

     

    THERE ARE NO UNWRITTEN ORAL AGREEMENTS
BETWEEN THE PARTIES.

     

    
      
        
        

      

      
        -4-

        
          

        

      

      
        
        

      

    

     

    [Signature
Pages Follow]

     

     

     

     

    
      
        
        

      

      
        -5-

        
          

        

      

      
        
        

      

    

     

    IN WITNESS WHEREOF,
the parties hereto have caused this Waiver to be duly executed and delivered by
their respective duly authorized officers as of the Effective
Date.

    

    
      
        
          
            
              
                
                  
                    
                      
                        
                          
                            
                              
                                
                                  	 	
                                          BORROWER:

                                        	 
	 	 	 
	 	
                                          ENERGY
      XXI GULF COAST, INC.

                                        	 
	 	 	 	 
	 	 	 	 
	 	By:   	 /s/ Rick
      Fox	 
	 	Name: 
      Rick Fox	 
	 	Title: 
       Chief Financial Officer 	 
	 	 	 	 

                                

                              

                            

                          

                        

                      

                    

                  

                

              

            

          

        

      

    

     

     

    
      
        
        

      

      
        
        

        
          

        

      

      
        
        

      

    

     

    
      
        	 	
                

                  ADMINISTRATIVE AGENT,
      ISSUERS AND LENDERS:

                

              	 
	 	 	 
	 	
                THE
      ROYAL BANK OF SCOTLAND plc, as Administrative Agent, Issuer and
      Lender

              	 
	 	 	 	 
	 	 	 	 
	 	By:   	 /s/
      Phillip R. Ballard	 
	 	Name:
      Phillip R. Ballard	 
	 	Title:  Managing
      Director	 
	 	 	 	 

      

    

     

    

    
      
        
        

      

      
        
        

        
          

        

      

      
        
        

      

    

    

                                                                              

    
      
        
          
            
              
                
                  
                    
                      
                        
                          
                            	 	
                                    
                                      BNP
      PARIBAS, as Issuer and Lender

                                    

                                  	 
	 	 	 
	 	 	 	 
	 	By:   	 /s/
      Douglas R. Liftman	 
	 	Name:
      Douglas R. Liftman	 
	 	Title:  Managing
      Director	 
	 	 	 	 
	 	 	 	 
	 	By:  	/s/
      Greg Smothers	 
	 	

                                    Name:  Greg
      Smothers

                                  	 
	 	

                                    Title:  Director

                                  	 
	 	 	 	 
	 	 	 	 

                          

                        

                      

                    

                  

                

              

            

          

        

      

    

     

    
      
        
        

      

      
        
        

        
          

        

      

      
        
        

      

    

     

     

    
      
        
          
            	 	
                    
                      AMEGY
      BANK NATIONAL ASSOCIATION, as Lender

                    

                  	 
	 	 	 
	 	 	 	 
	 	By:   	 /s/
      Charles W. Patterson	 
	 	Name:
      Charles W. Patterson	 
	 	Title:  
      Senior Vice President	 
	 	 	 	 

          

        

      

    

     

     

    
      
        
        

      

      
        
        

        
          

        

      

      
        
        

      

    

     

    
      
        
          	 	
                  
                    THE
      BANK OF NOVA SCOTIA, as Lender

                  

                	 
	 	 	 
	 	 	 	 
	 	By:   	 /s/
      J Frazell	 
	 	Name: 
      J Frazell	 
	 	Title:   
      Director	 
	 	 	 	 

        

      

    

    
      
        
        

      

      
        
        

        
          

        

      

      
        
        

      

    

     

    
      	 	
              
                TORONTO
      DOMINION (TEXAS) LLC, as Lender

              

            	 
	 	 	 
	 	 	 	 
	 	By:   	/s/ Debbie
      L. Brito	 
	 	Name: 
      Debbie L. Brito	 
	 	Title:  
      Authorized Signatory	 
	 	 	 	 

    

     

    
      
        
        

      

      
        
        

        
          

        

      

      
        
        

      

    

     

    
      	 	
              
                CAPITAL
      ONE, NATIONAL ASSOCIATION, as Lender

              

            	 
	 	 	 
	 	 	 	 
	 	By:   	 /s/
      Peter Shen	 
	 	Name: 
      Peter Shen	 
	 	Title:   
      Vice President	 
	 	 	 	 

    

    
 

    
      
        
        

      

      
        
        

        
          

        

      

      
        
        

      

    

    

    
      
        
          
            
              
                
                  
                    	 	
                            
                              NATIXIS,
      as Lender

                            

                          	 
	 	 	 
	 	 	 	 
	 	By:   	 /s/
      Donovan C. Broussard	 
	 	Name: 
      Donovan C. Broussard	 
	 	Title:   
      Managing Director	 
	 	 	 	 
	 	 	 	 
	 	By: 	/s/ Liana
      Tchernysheva	 
	 	

                            Name:  Liana
      Tchernysheva

                          	 
	 	
                            Title:  Director

                          	 
	 	 	 	 

                  

                

              

            

          

        

      

    
      
        
        

      

      
        
        

        
          

        

      

      
        
        

      

       

    

    
      	 	
              
                ALLIED
      IRISH BANKS p.l.c., as Lender

              

            	 
	 	 	 
	 	 	 	 
	 	By:   	 /s/
      Mark Connelly	 
	 	Name: 
      Mark Connelly	 
	 	Title:   
      Senior Vice President	 
	 	 	 	 
	 	 	 	 
	 	By: 	/s/ Vaughn
      Buck	 
	 	

              Name:  Vaughn
      Buck

            	 
	 	
              Title:    
      Director

            	 
	 	 	 	 

    

     

     

    
      
        
        

      

      
        
        

        
          

        

      

      
        
        

      

    

     

     

    
      	 	
              
                CREDIT
      SUISSE AG, CAYMAN ISLANDS BRANCH, as Lender

              

            	 
	 	 	 
	 	 	 	 
	 	By:   	 /s/
      Mikhail Faybusovich 	 
	 	Name: 
      Mikhail Faybusovich 	 
	 	Title:   
      Vice President	 
	 	 	 	 
	 	 	 	 
	 	By: 	/s/
      Vipul Dhadda 	 
	 	

              Name: Vipul
      Dhadda 

            	 
	 	
              Title:   Associate

            	 
	 	 	 	 

    

     

    
      
        
        

      

      
        
        

        
          

        

      

      
        
        

      

    

     

    
      	 	
              
                UBS
      LOAN FINANCE LLC, as Lender

              

            	 
	 	 	 
	 	 	 	 
	 	By:   	 /s/
      Irja R. Otsa	 
	 	Name: 
      Irja R. Otsa	 
	 	Title:   
      Associate Director Banking Product, US	 
	 	 	 	 
	 	 	 	 
	 	By: 	/s/
      Michael Cerniglia	 
	 	

              Name: 
      Michael Cerniglia

            	 
	 	
              Title:   
      Director Banking Products Services, US

            	 
	 	 	 	 

    

     

     

     

    
      
        
        

      

      
        
        

        
          

        

      

      
        
        

      

       

       

    

    
      	 	
              
                ING
      CAPITAL LLC, as Lender

              

            	 
	 	 	 
	 	 	 	 
	 	By:   	 /s/
      Juli Bieser	 
	 	Name: 
      Juli Bieser	 
	 	Title:  
      Director	 
	 	 	 	 

    

    

    
      
        
        

      

      
        
        

        
          

        

      

      
        
        

      

       

    

    
      	 	
              
                REGIONS
      BANK, as Lender and as
      Swing Line Lender

              

            	 
	 	 	 
	 	 	 	 
	 	By:   	 /s/ Kelly
      L. Elmore III	 
	 	Name: 
      Kelly L. Elmore III	 
	 	Title:  
      Senior Vice President	 
	 	 	 	 

    

    
 

    
      
        
        

      

      
        
        

        
          

        

      

      
        
        

      

    

    

    
      
        
          
            
              
                
                  
                    
                      
                        
                          
                            
                              
                                
                                  
                                    
                                      
                                        
                                          
                                            
                                              
                                                
                                                  
                                                    
                                                      
                                                        	 	
                                                                
                                                                  ACKNOWLEDGED
      AND AGREED AS OF THE DATE FIRST ABOVE WRITTEN:

                                                                

                                                              	 
	 	 	 
	 	

                                                                ENERGY
      XXI GOM, LLC

                                                              	 
	 	 	 
	 	 	 	 
	 	By:  	/s/
      Rick Fox	 
	 	Name:  Rick
      Fox	 
	 	Title:    Chief
      Financial Officer	 
	 	 	 	 
	 	ENERGY
      XXI TEXAS ONSHORE, LLC	 
	 	 	 
	 	 	 
	 	By:
      	 /s/
      Rick Fox	 
	 	Name:  Rick
      Fox	 
	 	Title:    Chief
      Financial Officer	 
	 	 	 	 
	 	ENERGY
      XXI ONSHORE, LLC	 
	 	 	 
	 	 	 	 
	 	By:
      	 /s/  Rick
      Fox	 
	 	Name: 
      Rick Fox	 
	 	Title:   
      Chief Financial Officer	 
	 	 	 	 

                                                      

                                                    

                                                  

                                                

                                              

                                            

                                          

                                        

                                      

                                    

                                  

                                

                              

                            

                          

                        

                      

                    

                  

                

              

            

          

        

      

    
      
        
        

      

      
        
        

        
          

        

      

      
        
        

      

    

     

     

    
      
        	 	
                
                  ACKNOWLEDGED
      AND AGREED AS OF THE DATE FIRST ABOVE WRITTEN IN ITS CAPACITY AS GUARANTOR
      UNDER ITS LIMITED RECOURSE GUARANTY AND GRANTOR UNDER ITS PLEDGE AGREEMENT
      AND IRREVOCABLE PROXY DELIVERED IN CONNECTION WITH THE FIRST LIEN CREDIT
      AGREEMENT:

                

              	 
	 	 	 
	 	ENERGY
      XXI USA, INC.	 
	 	 	 	 
	 	By:   	 /s/
      Rick Fox	 
	 	Name: 
      Rick Fox	 
	 	Title:   Chief
      Financial OfficerEXHIBIT 10.1

	 

STOCK PURCHASE AGREEMENT

              This Stock Purchase Agreement (the “Agreement”), dated as of October 20, 2010, by and between ALL Fuels
& Energy Company, a Delaware corporation (“AFSE”), and Loras Wolfe (“Buyer”).

WHEREAS:

 

WHEREAS, AFSE and Buyer are executing and delivering this Agreement in reliance upon the
exemption from securities registration afforded by the rules and regulations as promulgated by the
United States Securities and Exchange Commission (the “SEC”) under the Securities Act of 1933, as
amended (the “1933 Act”); and

 

WHEREAS, Buyer desires to purchase and AFSE desires to issue and sell, upon the terms and
conditions set forth in this Agreement, shares of common stock, $.01 par value per share, of AFSE (the
“Common Stock”);

 

WHEREAS, the Buyer wishes to purchase, upon the terms and conditions stated in this Agreement,
the shares of Common Stock set forth herein; and

              NOW THEREFORE, AFSE and the Buyer hereby agree as follows:

I.  DEFINITIONS

              Whenever used in this Agreement, the following terms shall have the meanings set forth below, including the
exhibit hereto or amendments hereof.

 

              A.          “AFSE” shall mean ALL Fuels & Energy Company, a Delaware corporation.

 

              B.          “Agreement” shall mean this Stock Purchase Agreement and all exhibits hereto or amendments hereof.

 

              C.          “Buyer” shall mean the person acquiring the Common Stock of AFSE, pursuant to this Agreement.

 

              D.          “Knowledge of AFSE” or matters “known to AFSE” shall mean matters actually known to the Board
of Directors or officers of AFSE, or which reasonably should be or should have been known by them
upon reasonable investigation.

 

              E.          “Securities Act” shall mean the Securities Act of 1933, as amended, and includes the rules and
regulations of the Securities and Exchange Commission (“SEC”) promulgated thereunder, as such
shall then be in effect.

              Any term used herein to which a special meaning has been ascribed shall be construed in accordance with either
(1) the context in which such term is used, or (2) the definition provided for such terms in the place in this Agreement
at which such term is first used.

II.  DISCLOSURES

              AFSE hereby incorporates herein the following documents by this reference (the “Referenced Documents”):

 

              A.          Quarterly Report on Form 10-Q, for the period ended June 30, 2010, as filed with the SEC;

 

              C.          Quarterly Report on Form 10-Q for the period ended March 31, 2010, as filed with the SEC; and

 

              D.          Annual Report on Form 10-K for the year ended December 31, 2009, as filed with the SEC.

              Buyer hereby acknowledges that he has had the opportunity to ask questions of, and receive answers from, the
principals of AFSE regarding the disclosures contained in the documents incorporated herein by reference.  Further,
Buyer understands and acknowledges that AFSE is a development-stage company and may never earn a profit.

III.  PURCHASE AND SALE

              AFSE hereby sells to Buyer and Buyer hereby buys from AFSE 5,000,000 shares of AFSE Common Stock.
The Common Stock shall be sold to Buyer at the price and subject to all of the terms and conditions set forth herein.

IV.  PURCHASE PRICE - PAYMENT

              Buyer shall deliver to AFSE the sum of $50,000 in payment of the 5,000,000 shares of Common Stock
purchased by Buyer hereunder, a per share price of $.01, which payment shall be delivered as provided in paragraphs
VI and VII hereinbelow.

V.  ISSUANCE OF THE COMMON STOCK

              AFSE shall cause the shares of Common Stock purchased and sold hereunder to be issued as provided in
paragraphs VI and VII hereinbelow.

VI.  THE EXCHANGE

              Upon the mutual execution of this Agreement, Buyer agrees to deliver forthwith the sum of $50,000 required
to be delivered pursuant to paragraph IV hereof.  Upon receipt of such funds, AFSE shall deliver to Buyer the shares of
Common Stock purchased and sold hereunder.

VII.  REPRESENTATIONS AND WARRANTIES OF AFSE

              AFSE represents and warrants to Buyer:

              A.          Organization and Corporate Authority.  AFSE is a corporation duly organized, validly existing and
in good standing under the laws of the State of Delaware and is qualified to do business as a foreign corporation in all
jurisdictions where the ownership of property or maintenance of an office would require qualification.  AFSE has all
requisite corporate power and authority, governmental permits, consents, authorizations, registrations, licenses and
memberships necessary to own its property and to carry on its business in the places where such properties are now
owned and operated or such business is being conducted.

              B.          Subsidiaries.  AFSE has two subsidiary corporations: ALL Energy Company, a Delaware corporation;
ALL Fuels - Steamboat Rock, LLC, an Iowa limited liability company; ALL Fuels - Jefferson, a Wisconsin limited
liability company; ALL Fuels - Rosholt, LLC, a South Dakota limited liability company.

              C.          Options, Warrants and Rights.  Prior to the consummation of the transactions contemplated by this
Agreement, except as disclosed in the Referenced Documents, AFSE has no warrants or rights, conversion rights or other
agreements for the purchase or acquisition from AFSE of any shares of its capital stock.

              D.          Issuance of the Common Stock.  The shares of Common Stock, when issued and delivered in
accordance with this Agreement, will be duly and validly issued, fully paid and non-assessable, and will be free and clear
of any liens or encumbrances and, to the knowledge of AFSE, will be issued in compliance with applicable state and
federal laws.

              E.           Financial Condition; Use of Proceeds. AFSE is a development-stage company without significant
revenues.  AFSE requires substantial additional capital with which to implement its complete business plan.  There is
no assurance that AFSE will obtain such needed capital or that its business plan, when implemented, will prove to be
successful.  The funds derived under this Agreement will be utilized for general and administrative expenses and working
capital.

              F.           Undisclosed or Contingent Liabilities.  To the best knowledge of AFSE and to its officers and directors,
AFSE has no material liabilities and, to the best knowledge of the officers and directors of AFSE, AFSE has no
contingent liabilities.

              G.          Litigation. AFSE is not a party to any suit, action, proceeding, investigation or labor dispute
(collectively “actions”) pending or currently threatened against it other than administrative matters arising in the ordinary
course of business .

              H.          Compliance with Agreements.  The execution and performance of this Agreement will not result in
any violation or be in conflict with any agreement to which AFSE is a party.

              I.            Title to Property and Assets.  AFSE has good and marketable title to its properties and assets free and
clear of all mortgages, liens, security interests and encumbrances.

              J.           Franchises and Permits; Taxes and Other Liabilities. To the knowledge of AFSE, it has all franchises,
permits, licenses, orders and approvals of any federal, state, local or foreign government of self regulatory body that are
material to or necessary for the conduct of its business.  To the knowledge of AFSE, it has no outstanding tax liabilities,
no unsatisfied final judgment or valid lien filed against it or any of its property.

              K.          Governmental Consents. To the knowledge of AFSE, no consent, approval, order or authorization of,
or registration, qualification, designation, declaration or filing with, any governmental authority on the part of AFSE is
required in connection with the valid execution, delivery and performance of this Agreement.

              L.          Authorization.  All corporate action on the part of AFSE and its officers, directors and shareholders
necessary for the authorization, execution and delivery of this Agreement, for the performance of AFSE’s obligations
hereunder and for the issuance and delivery of the securities comprising the Units has been taken. This Agreement, when
executed and delivered, shall constitute a legal, valid and binding obligation of AFSE.

              M.         Regulatory Compliance. To the knowledge of AFSE, it is in compliance with all applicable
environmental regulations relating to its business operations.

              N.          Employee Matters.  To the knowledge of AFSE, it is in compliance with all laws and regulations
applicable to employee-related matters.

              O.          Suppliers and Customers.  To the knowledge of AFSE, its relations with its suppliers and customers
are good.

VIII.  REPRESENTATIONS AND WARRANTIES OF BUYER

              A.          Buyer is under no legal disability with respect to entering into, and performing under, this Agreement.

              B.          Buyer represents and warrants that he is an “accredited investor”, as that term is defined in Regulation
D of the SEC, is financially responsible, able to meet his obligations and acknowledges that this investment will be long
term, must be held indefinitely and is by its nature speculative.

              C.          Buyer represents and warrants that he understands that the Common Stock has not been registered
under the Securities Act and applicable state securities laws in reliance on the exemption provided by Section 4(6) of
the Securities Act, relating to transactions not involving a public offering and corresponding state securities laws
regarding non-public offerings.

              D.          Buyer represents and warrants that the Common Stock is not being purchased with a view to or for the
resale or distribution thereof and that he has no present plans to enter into any contract, undertaking, agreement or
arrangement for such resale or distribution.

              E.          Buyer further consents to the placement of the following legend, or a legend similar thereto, on the
certificates representing the Common Stock:

 

“THESE SECURITIES HAVE BEEN ISSUED IN RELIANCE UPON THE EXEMPTION FROM
REGISTRATION AFFORDED BY SECTION 4(6) OF THE SECURITIES ACT OF 1933, AS
AMENDED, AND MAY NOT BE TRANSFERRED WITHOUT AN OPINION OF COUNSEL
SATISFACTORY TO THE CORPORATION TO THE EFFECT THAT ANY SUCH PROPOSED
TRANSFER IS IN ACCORDANCE WITH ALL APPLICABLE LAWS, RULES AND
REGULATIONS.”

IX.  MISCELLANEOUS

              A.          Notices. All notices, requests and other communications to any party hereunder shall be in writing
(including facsimile transmission) and shall be given,

 

                            if to AFSE, to:                   ALL Fuels & Energy Company

                                                                                      6165 N.W. 86th Street

                                                                                      Johnston, Iowa 50131

                                                                                      Facsimile No.: (419) 730-6068

 

                            with a copy to:                   Newlan & Newlan

                                                                                      800 Parker Square, Suite 205

                                                                                      Flower Mound, Texas 75022

                                                                                      Facsimile No.: (877) 796-3934

 

                            if to Buyer, to:                   Loras Wolfe

                                                                                      P. O. Box 175

                                                                                      Worthington, Iowa 52078

 

                            with a copy to:                                 ______________________

                                                                                                    ______________________

                                                                                                    ______________________

                                                                                                    Facsimile No.: (___) ___-____

              B.          Survival of Covenants. Unless otherwise waived as provided herein, all covenants agreements,
representations and warranties of the parties made in this Agreement and in the financial statements or other written
information delivered or furnished in connection therewith and herewith shall survive the Exchange hereunder, and shall
be binding upon, and inure to the benefit of, the parties and their respective successors and assigns.

              C.          Arbitration.  In the event of a dispute between the parties hereto that arises out of this Agreement, the
parties hereby agree to submit such dispute to arbitration before the American Arbitration Association (the
“Association”) at its Minneapolis, Minnesota, offices, in accordance with the then-current rules of the Association; the
award given by the arbitrators shall be binding and a judgment can be obtained on any such award in any court of
competent jurisdiction. It is expressly agreed that the arbitrators, as part of their award, can award attorneys fees to the
prevailing party.

              D.          Governing Law.  This Agreement shall be deemed to be a contract made under, governed by and
construed in accordance with the substantive laws of the State of Delaware.

              E.          Counterparts.  This Agreement may be executed simultaneously in counterparts, each of which when
so executed and delivered shall be taken to be an original; but such counterparts shall together constitute but one and the
same documents.

              F.           Successors and Assigns.  Except as otherwise expressly provided herein, the provisions hereof shall
inure to the benefit of, and be binding upon, the successors, assigns and administrators of the parties hereto.

              G.          Entire Agreement.  This Agreement, the other agreements and the other documents delivered pursuant
hereto and thereto constitute the full and entire understanding and agreement between the parties with regard to the
subjects hereof and thereof.

              IN WITNESS WHEREOF, the parties have signed this Agreement as of the day and year first above written.

 

              “AFSE”:                                                                                      “BUYER”:

              ALL FUELS & ENERGY COMPANY

                                                                                                                   /s/ LORAS WOLFE

                                                                                                                   Loras Wolfe

              By: /s/ DEAN E. SUKOWATEY

                            Dean E. Sukowatey

                            President

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