Oil and Gas Lease THIS AGREEMENT made and entered into

Oil and Gas Lease THIS AGREEMENT, made and entered into this by and between day of , , Phone #: hereinafter called the Lessor, and GFI Oil and Gas Inc., a Pennsylvania corporation, 503 West Southern Avenue, South Williamsport, PA 17702 , hereinafter called the Lessee, WITNESSETH: 1. That the Lessor, for and in consideration of One dollar ($1.00) and other valuable consideration in hand paid by the Lessee, the receipt of which is hereby acknowledged, and the covenants and agreements hereinafter contained, does hereby lease, demise and let exclusively unto the Lessee, all that certain tract of land situated as follows: Township of , County Commonwealth of Pennsylvania bounded substantially by lands now and/or formerly owned as follows: On the North by lands of On the East by lands of On the South by lands of On the West by lands of ; ; ; ; Lessor’s Tax Parcel Number(s): , being all the property owned by Lessor or to which the Lessor may have any rights in said Section/Lot/District or adjoining Sections/Lots/Districts, containing acres, more or less, and being the property described in Deed Volume , Page of the County Record of Deeds. This lease is intended to cover all of Lessor’s oil and gas mineral interests in the tract(s) identified hereinabove, whether Lessor’s mineral ownership in such tract(s) is more or less than _______ acres. TO HAVE AND TO HOLD for the purpose of exploring for by geophysical, seismic, and other methods, drilling, operating for, producing and removing oil and gas and all the constituents thereof, and of injecting air, gas, brine and other substances from any source and into any subsurface strata, other than potable water strata and workable coal strata (including but not limited to the right to inject into any wells on the leasehold property and to otherwise conduct all such secondary or tertiary operations as may be required in the opinion of the Lessee), the right to conduct surveys (including seismic surveys), and rights of way and easements for roads and the transport by pipelines or otherwise across and through said lands, of oil, gas and their constituents from the subject and other lands, regardless of the source of such gas or the location of the wells, for so long as the transportation of such gas may be desired by the Lessee, and to place tanks, equipment, roads and structures thereon to procure and operate for the said products, together with the right to enter into and upon the leased premises at all times for the aforesaid purposes. 2. This lease shall continue in force and the rights granted hereunder be quietly enjoyed by the Lessee for a term of five (5) years and so much longer thereafter as oil or gas or their constituents are produced or are capable of being produced on the premises in paying quantities, in the judgment of the Lessee, or as the premises shall be operated by the Lessee in the search for oil or gas and as provided in Paragraph 7 following. 3. This is a PAID-UP LEASE. In consideration of the down cash payment, Lessor agrees that Lessee shall not be obligated, except as otherwise provided herein, to commence or continue any operations during the primary term. 4. In consideration of the premises the Lessee covenants and agrees: (A) To deliver to the credit of the Lessor in tanks or pipelines, as royalty, free of cost, % of all oil produced and saved from the premises, or at Lessee's option to pay Lessor the market price for such % royalty oil at the published rate for oil of like grade and gravity prevailing on the date such oil is sold into tanks or pipelines. Payment of royalty for oil marketed during any calendar month shall be made on or about the 60th day after receipt of such funds by the Lessee. (B) To pay to the Lessor, as royalty for the gas marketed and used off the premises and produced from each well drilled thereon, the sum of % of the price paid to Lessee per thousand cubic feet of such gas so marketed and used, less Lessee’s pro rata share of any charges for transportation, dehydration and compression paid by Lessee to deliver the gas for sale. Payment of royalty for gas marketed during any calendar month shall be made on or about the 60th day after receipt of such funds by the Lessee. The time and method of producing, metering, delivering and selling gas produced from any well on the leased premises and the amount thereof that shall be used or sold within any period of time shall be entirely within the sole discretion of the Lessee. (C) Lessee shall deduct from payments in (A) and (B) above from receipts of proceeds by Lessee, Lessor's prorata share of any tax imposed by any government body. All money due under this lease shall be paid or tendered to the Lessor by check made payable to the order of and mailed to: at and the said named person shall continue as Lessor's agent to receive any and all sums payable under this lease regardless of changes in ownership in the premises, or in the oil or gas or their constituents, or in the royalties accruing hereunder until delivery to the Lessee of notice of change of ownership as hereinafter provided. 5. Oil and Gas Lease Page 1 6. Lessor hereby excepts and reserves from any one (1) producing gas well drilled on the Leasehold that is completed and operated by Lessee (excepting wells utilized for gas storage), for which the Leasehold is included in the production unit therefore, for so long as commercial quantities of gas are capable of being produced from such well, a quantity of gas in the amount of three hundred thousand (300,000) cubic feet of gas per year. Lessor hereby permanently waives any right to secure such reserved gas by constructing a service line connected to such well and in consideration of Lessor waiving such right, Lessee agrees to pay Lessor the cash equivalency for such gas at the average wellhead price received by Lessee for the preceding production year. Such price shall be based on seven eighths (7/8th) of the gross proceeds realized from the sale of gas produced from the Leasehold. Lessee shall make one annual payment the timing of such which shall be made in such a manner that allows the price computation to be made based upon the average monthly price of gas for the previous year’s production of gas from the Leasehold, or if such price information is not available then the computation shall be made using the average monthly price of Lessee's production in the closest proximity to the Leasehold. If Lessor conveys a portion of its interest in the Leasehold, Lessor may convey its entitlement to the cash equivalency for the reserved gas as part of such conveyance, but may not subdivide such entitlement. If the Leasehold is pooled, unitized or combined with other lands, the cash equivalent entitlement for reserved gas, as herein referred to, shall extend only to the lessor upon whose property the surface location of the well is situated. Said payment to be made on or about March 1 st, for the previous year. 7. If, within three hundred sixty-five (365) days of expiration of the primary term of this lease, oil or gas is not being produced on the subject premises, or a consolidated development unit utilizing all or a portion of the subject premises, but Lessee is then engaged in drilling or re-working operations thereon (operations shall be considered begun when the equipment arrives on site) then this lease shall continue in force so long as operations are being continuously prosecuted on the subject premises, or a consolidated development unit utilizing all or a portion of the subject premises; and operations shall be considered to be continuously prosecuted if not more than three hundred sixty-five (365) days shall elapse between the completion or abandonment of one well and the beginning of operations for the drilling of a subsequent well. If after discovery of oil or gas on the subject premises, or a consolidated development unit utilizing all or a portion of the subject premises, the production thereof should cease from any cause after the primary term, this lease shall not terminate if Lessee commences additional drilling or re-working operations within three hundred sixty-five (365) days from date of cessation of production or from date of completion of a dry hole. If oil or gas shall be discovered and produced as a result of such operations at or after the expiration of the primary term of this lease, this lease shall continue in force so long as oil or gas is produced from the subject premises, or a consolidated development unit utilizing all or a portion of the subject premises. 8. In the event the first well drilled hereunder is a producing well and Lessee is unable to market the production therefrom, or should production cease from a producing well drilled on the premises, or should Lessee desire to shut in producing wells, whichever is later in time, and provided that there are no other producing wells on the lease or on an oil and gas development unit utilizing all or a portion of the lease as defined in Paragraph 11 below, then in that event Lessee agrees to pay Lessor, commencing on the anniversary date of this lease next ensuing after the later of the completion of such producing well or the cessation of production, or the shutting in of producing wells, an advance royalty of $25.00 per net mineral acre per year until production is marketed and sold off the premises or until such well is plugged and abandoned according to law. 9. The consideration or royalties paid and to be paid, as herein provided, are and will be accepted by the Lessor as adequate and full consideration for all the rights herein granted to the Lessee, including the further right of drilling or not drilling on the leased premises, whether to offset producing wells on adjacent or adjoining lands or otherwise, as the Lessee may elect. 10. Lessor hereby grants to the Lessee the right at any time to consolidate the leased premises or any part thereof or strata therein with other lands to form an oil and gas development unit of not more than 640 acres, or such larger unit as may be required for the purpose of drilling a well thereon under the rules and regulations of any lawful governmental authority having jurisdiction in the premises, but the Lessee shall in no event be required to drill more than one well on such unit. Any well drilled on said development unit whether or not located on the leased premises, shall nevertheless be deemed to be located upon the leased premises within the meaning and for the provisions and covenants of this lease to the same effect as if all the lands comprising said unit were described in and subject to this lease; provided, however, that only the owner of the lands on which such well is located may take gas for use in one dwelling house on such owner's lands in accordance with the provisions of this lease, and provided further that the Lessor agrees to accept, in lieu of the % oil and gas royalty hereinbefore provided, that proportion of such % royalty which the acreage consolidated bears to the total number of acres comprising said development unit. Lessee shall effect such consolidation by executing a declaration of consolidation setting forth the leases or portions thereof consolidated, the royalty distribution and recording the same in the recorder's office at the courthouse in the county in which the leased premises are located and by mailing a copy thereof to the Lessor at the address hereinabove set forth unless the Lessee is furnished with another address. If the well on said development unit shall thereafter be shut in, the shut-in royalty hereinbefore provided for such use shall be payable to the owners of the parcels of land comprising said unit in the proportion that the acreage of each parcel bears to the entire acreage consolidated. Lessee shall have the right to amend, alter or correct any such consolidation at any time in the same manner as herein provided. 11. In the event the Lessor owns a lesser interest in the above described premises than the entire and undivided fee simple therein, then the royalties herein provided for shall be paid to the Lessor only in the proportion which such interest bears to the whole and undivided fee. 12. No change of ownership in the leased premises or in the royalties hereunder shall be binding on the Lessee until after notice to the Lessee by delivery of notice in writing duly signed by the parties to the instrument of conveyance or assignment and delivery of a duly certified copy thereof to the Lessee. 13. Lessee shall have the right to assign and transfer this lease in whole or in part, and Lessee shall notify Lessor within 30 business days of any assignment or transfer of this lease. Lessor agrees that when and if this lease is assigned, the Lessee herein shall have no further obligations hereunder. Upon assignment Lessee shall be obligated to pay all royalties due to Lessor. Lessor further grants to the Lessee, for the protection of the Lessee's interest hereunder, the right to pay and satisfy any claim or lien against the Lessor's interest in the premises as herein leased and thereupon to become subrogated to the rights of such claimant or lien holder, and the right to direct payment of all royalties to apply on the payment of any existing liens on the premises. 14. Lessee shall bury all pipelines used to conduct oil or gas to, on, through and off the premises and pay all damages to growing crops, timber and drainage tiles and/or other artificial drainage fixture caused by operations under this lease. Lessee agrees to restore the premises in accordance with state laws. No well shall be drilled within 300 feet of any existing barn or dwelling, without the express written consent of Lessor. Lessee shall be solely responsible for, and promptly pay, prior to any delinquency, any all increase in Real Estate Taxes which may be assessed against the Leasehold by virtue of any of Lessee’s activites in, on, or under the Leasehold premises. 15. Lessor agrees to abide by all reasonable safety policies of Lessee with respect to Lessee’s operations, including but not limited to the following: No structures shall be erected or moved on a location within one hundred feet (100’) of a well or tank battery, or within twenty feet (20’) of Lessee’s pipelines. Oil and Gas Lease Page 2 16. Lessor grants to Lessee and/or any assignee, subcontractor or agent of Lessee the exclusive right and permission to conduct seismic operations for the purpose of acquiring seismic data over all or a portion of the Leasehold Premises, and Lessee and Lessee’s geophysical agents are hereby granted, for both personnel and equipment, access to the Leasehold Premises for the purpose of conducting the seismic operations including, but not limited to surveying and the use of any seismic acquisition equipment on the Leasehold Premises used in the acquisition of such seismic data. Lessee agrees to protect Lessor from any and all claims and damages that may result from the seismic operations conducted hereunder. Lessee and Lessee’s geophysical agent will conduct seismic operations in such a manner as to leave the surface of the land in as near the original condition as reasonably possible. 17. Lessee shall have the privilege of using sufficient oil, gas, water, and minerals for operating on the premises and the right at any time during or after the expiration of this lease to remove all pipe, well casing, machinery, equipment or fixtures placed on the premises. The Lessee shall have the right to surrender this lease or any portion thereof by written notice to the Lessor describing the portion which it elects to surrender, or by returning the lease to the Lessor with the endorsement of surrender thereof, or by recording the surrender or partial surrender of this lease, any of which shall be a full and legal surrender of this lease as to all of the premises or such portion thereof as the surrender shall indicate and a cancellation of all liabilities under the same of each and all parties hereto relating in any way to the portion or all the premises indicated on said surrender. 18. In the event Lessee is rendered unable in whole or in part, by a force majeure to carry out its obligations under this lease, other than to make payments of amounts due hereunder, its obligations so far as they are affected by such force majeure shall be suspended during the continuance of an inability so caused. The term “force majeure” as used herein shall include, but not be limited to Acts of God, strikes, lockouts, or other industrial disturbances, loss or failure of power or communication services, acts of the public enemy, wars, blockades, riots, terrorist activities, epidemics, lightning, earthquakes, explosions, accidents or repairs to machinery or pipes, delays of carriers, inability to obtain materials or rights of way on reasonable terms, acts of public authorities, or any other causes, whether or not of the same kind as enumerated herein, not within the control of the Lessee and which by the exercise of due diligence Lessee is unable to overcome, and in no event shall this lease expire for a period of ninety days after the termination of any force majeure. 19. In the event Lessor considers that Lessee has not complied with any of its obligations hereunder, either express or implied, Lessor shall notify Lessee in writing setting out specifically in what respects Lessee has breached this contract. Lessee shall then have thirty (30) days after receipt of said notice within which to meet or commence to meet all or any part of the breaches alleged by Lessor. The service of said notice shall be precedent to the bringing of any action by Lessor on said lease for any cause, and no such action shall be brought until the lapse of thirty (30) days after service of such notice on Lessee. Neither the service of said notice nor the doing of any acts by Lessee aimed to meet all or any part of the alleged breaches shall be deemed an admission or presumption that Lessee has failed to perform all its obligations hereunder. 20. In consideration of the acceptance of this lease by the Lessee, the Lessor agrees for himself and his heirs, successors and assigns, that no other lease for the oil and gas covered by this lease shall be granted by the Lessor during the term of this lease or any extension or renewal thereof granted to the Lessee herein. Upon the expiration of this lease and within thirty (30) days thereinafter, Lessor grants to Lessee an option to extend or renew the lease for an additional term of three years for the consideration of $2000 per net mineral acre due within thirty (30) days after the end of the first primary term. Failure to make this payment shall terminate the primary term of the lease. Lessor hereby grants the three year extension of this lease without necessity of an amendment to said lease. 21. Lessor hereby warrants that Lessor is not currently receiving any bonus, rental, or production royalty as the result of any prior oil and gas lease covering any or all of the subject premises, and that there are no commercially producing wells currently existing on the subject premises, or upon other lands within the boundaries of a drilling or production unit utilizing all or a part of the subject premises. 22. All covenants and conditions between the parties hereto shall extend to their heirs, personal representatives, successors and assigns, and the Lessor hereby warrants and agrees to defend the title to the lands herein described. It is mutually agreed that this instrument contains and expresses all of the agreements and understandings of the parties in regard to the subject matter thereof, and no implied covenant, agreement or obligation shall be read into this agreement or imposed upon the parties or either of them. Lessor further agrees to sign such additional documents as may be reasonably requested by Lessee to perfect Lessee's title to the oil and gas leased herein and such other documents relating to the sale of production as may be required by Lessee or others. 23. If any provision or portion of a provision of this Lease becomes illegal or unenforceable, the provision, or relevant portion thereof, will be deemed to be severed to the extent necessary to resolve the illegal or unenforceable issue, and this Lease shall continue as amended. See Addendum and Order of Payment Attached and hereto and made a part of the Oil and Gas Lease. IN WITNESS WHEREOF the Lessors have hereunder set their hands. WITNESS (as to all): SIGNATURES: _______________________________________________________ _______________________________________________________ Oil and Gas Lease Page 3 INDIVIDUAL ACKNOWLEDGMENT COMMONWEALTH OF COUNTY OF _ ______ , ) )SS: ) , before me , the On this, the day of undersigned officer, personally appeared, known to me (or satisfactorily proven) to be the person whose name he/she/they subscribed to the within instrument, and acknowledged that he/she/they executed the same for the purposes therein contained. IN WITNESS WHEREOF, I hereunto set my hand and official seal. _______________________________________ Notary Public My Commission Expires: ______________________ CORPORATION ACKNOWLEDGEMENT COMMONWEALTH OF COUNTY OF _ ______ ) )SS: ) On this, the day of , , before me , the undersigned officer, personally appeared , who acknowledged himself/herself to be the of , a Pennsylvania corporation, and that he/she as such , being authorized to do so, executed the foregoing instrument for the purposes therein contained by signing the name of the corporation by himself/herself as. IN WITNESS WHEREOF, I hereunto set my hand and official seal. ____________________________________________ Notary Public My Commission Expires: ______________________ Oil and Gas Lease Page 4 ADDENDUM Attached to and by reference made a part of that certain Oil and Gas Lease dated the day of , , between , as lessor, and GFI Oil and Gas, Inc., a Pennsylvania corporation, as Lessee, covering lands situate in the Township of , County of , Commonwealth of Pennsylvania. The terms contained in this addendum supplement and control the terms and provisions contained in the printed lease form to which this addendum is attached, anything to the contrary in the printed form notwithstanding. Lessee’s operations on said land shall be in accordance with regulations set forth by the Pennsylvania Department of Environmental Protection. This lease does not allow for the production of Coal Bed Methane from coal bearing formations, without the express written consent of the Lessor. Lessee shall indemnify and hold Lessor harmless from any and all liability, liens, demands, judgments, suits, and claims of any kind or character arising out of, in connection with, or relating to Lessee's operations under the terms of this Lease, including, but not limited to, environmental issues, claims for injury to or death of any persons, or damage, loss or destruction of any property, real or personal, under any theory of tort, contract, or strict liability. Lessee further covenants and agrees to defend any suits brought against Lessor on any claims, and to pay any judgment against Lessor resulting from any suit or suits, together with all costs and expenses relating to any claims, including attorney's fees, arising from Lessees operations under the terms of this lease. Lessor, if it so elects, shall have the right to participate, at its sole expense, in its defense in any suit or suits in which it may be a party, without relieving Lessee of the obligation to defend Lessor. Lessee shall test Lessor’s domestic and livestock water supply, within 1250’ of wellbore, prior to commencement of and following drilling operations on said land in order to ensure that said water supply is not adversely affected by said operations. In the event it is determined that said operations have adversely affected said water supply, then Lessee, at its own expense, shall take steps necessary to return said water supply to pre-drilling conditions. Water supply referring to both water quality and water quantity. It is also understood that Lessee will be prepared to supply the farm owner with water immediately (to protect livestock) should their operations adversely affect water supply. Lessee shall construct or install all well sites, access roads and pipeline right-of-ways in a manner which would minimize any related soil erosion. Further, any related surface reclamation shall be done in a manner which restores said land as nearly to original contours as reasonably possible. Without a separate written agreement, pipelines shall not be constructed on the leased premises except for those used to transport oil and/or gas from a well(s) drilled on leased premises or land pooled therewith as long as at least one-third of the leasehold is part of a production unit. Lessee shall bury Lessee’s pipeline to a depth of four feet or deeper, when possible. Also, the Lessee shall strip the topsoil (and properly replace said topsoil) when laying pipelines in agriculture and other fields. Lessee shall pay Lessor a spud fee of $3000.00 USD within 30 days after spud. Notwithstanding anything to the contrary contained in the Lease, Lessee is not granted any right whatsoever to use the Leasehold, or any portion thereof, for gas storage and/or other underground storage purposes. If Lessor wishes to enter into an agreement regarding gas storage using the leased premises with a third party, Lessor shall first give Lessee written notice of the identity of the third party, the price or the consideration for which the third party is prepared to offer, the effective date and closing date of the transaction and any other information respecting the transaction which Lessee believes would be material to the exercise of the offering. Lessor does hereby grant Lessee the first option and right to purchase the gas storage rights by matching and tendering to the Lessor any third party’s offering. Lessor does hereby grant Lessee the first option and right to purchase the gas storage rights by matching and tendering to Lessor any third party’s offer during the term of the Oil and Gas Lease. Royalties shall be paid without deductions for the costs of producing, gathering, storing, separating, treating, dehydrating, compressing, transporting, or otherwise making the oil and/or gas produced from the lease premises ready for sale or use. All oil and/or gas royalty shall be delivered free of cost into the tank or pipeline (for oil) and into the pipeline (for gas), with the exception of Lessor’s prorated share of taxes, measured by volume, on the oil and/or gas production. If the leasehold covered by this Oil and Gas lease covers more than (50) fifty net acres and less than (50 %) fifty percent of the Leasehold covered by this Oil and Gas lease is not included in the production unit established by Lessee, this lease shall automatically terminate two (2) years (“Extended term”) after the expiration of the primary term or any extension provided herein, insofar as to all leasehold outside the production unit established by Lessee for a well, provided if the Lessee, its successors or assigns shall be engaged in operations for the drilling, completing or testing of a new well or wells or the drilling, completing, testing, or deepening of an existing well or wells on the leased premises or on lands with which said leasehold or a portion hereof have been included in a production unit, then this Oil and Gas lease shall continue in full force and effect until such drilling, completing, testing or deepening operations have been completed. Lessee may, at its option, pay $25 per net mineral acre up to five (5) years after the expiration of the two year Extended term on the leasehold not included in a production unit to continue all its rights in and to the leasehold or surrender such leasehold not included in a production unit. It is understood that Lessor specially warrants title. Page 5 1. 2. 3. 4. 5. 6. 7. 8. 9. 10. 11. 12. Oil and Gas Lease 13. Lessee further grants to Lessor, at Lessor’s expense, the right annually to examine, audit, or inspect books, records, and accounts of Lessee pertinent to the purpose of verifying the accuracy of the reports and statements furnished to Lessor, and for checking the amount of payments lawfully due the Lessor under the terms of this agreement. In exercising this right, Lessor shall give reasonable notice to Lessee of its intended audit and such audit shall be conducted during normal business hours at the office of Lessee no more than once a year. 14. Lessee agrees that if any penalty, rollback or re-capture of tax abatements created or imposed under any governmental program such as, but not limited to CREP, CRP and Clean and Green that is levied on Lessor solely as a result of Lessee’s operations on leased premises, Lessee will reimburse Lessor upon written request and provide a copy of the penalty notice within 30 business days. 15. Any questions concerning this lease or performance there under shall be ascertained and determined by three disinterested arbitrators, one thereof to be appointed by Lessor, one by the Lessee and the third by the two so appointed as aforesaid, and the award of such collective group shall be final and conclusive. The Cost of such arbitrators will be borne equally by the parties. 16. If the lease becomes forfeited, terminated or expires, the lessee is required to provide a document canceling the lease as of record, at no cost the current landowner. 17. Location of any well(s), access road(s), pipeline(s) shall be approved by the Lessors or one of their representatives in writing prior to location thereof. Such approval shall not be unreasonably withheld or delayed. Upon receipt of Lessee’s written location approval form, Lessor shall have fourteen (14) days from the date of receipt to approve and return said form or to advise Lessee in writing of their disapproval of a specific location(s) associated with said form and provide Lessee with an alternate location(s) that Lessee deems to be economically feasible and at a legal location pursuant to the rules and regulations of the Commonwealth. Lessor’s failure to notify and return Lessee’s written location approval form or to provide Lessee with such alternate location(s) within fourteen (14) days shall constitute Lessor’s approval of the location(s) associated with said form. Upon Lessor’s written request, Lessee shall provide the Lessor with the anticipated horizontal direction, if possible, only if the well is drilled on Lessor’s tract and if the well is a horizontal. The Lessee shall only disclose the proposed horizontal direction through the Lessor’s tract and Lessor agrees to sign a confidentiality agreement before the proposed horizontal is disclosed. 18. No well shall be shut-in for a period of three consecutive years unless: (a) the shut-in a due to force majeure; (b) the shut-in is due to pipeline or equipment breakage, damage or malfunction; or (c) the shut-in is required because Lessee, in exercise of good faith and reasonable diligence, has been unable to secure a market for the production from such well. The shut-in status of any well shall persist only for so long as it is necessary to correct, through the exercise of good faith and due diligence, the condition giving rise to the shut-in or the well. No well shall be shut-in for the direct or indirect purpose of holding oil and/or gas reserves in place. 19. If the Lessee elects to unitize, Lessee shall limit the production unit size to 160 acres for a vertical well that produces in formations above the Marcellus. Vertical wells that penetrate the Marcellus shall not exceed a 320 acre production unit. Vertical wells that produce from formations below the Marcellus shall not exceed a production unit size of 640 AC. Horizontal wells above the Marcellus shall not exceed a 320 AC production unit. Horizontal wells that produce from the Marcellus or deeper may not exceed a 640 AC production unit, without the express written consent of the Lessor. A horizontal well in this clause is defined by the horizontal leg exceeding 1000’. If the Lessee decides to drill multiple horizontals from the same location, the above mentioned production unit sizes may increase, only with the express written consent of the Lessor. 20. Lessee agrees not to use any water from Lessor’s ponds, springs, or creeks without Lessor’s written consent. Any and all damages of Lessor’s crops and/or Lessor’s tenant’s crop shall be paid for by Lessee based on the current value in the area of whatever type of crops are being cultivated at the time of the disturbance. Lessee shall indemnify Lessor and the surface owner for any and all or liability, including reasonable attorney fee, resulting from injury or death to any livestock on the leased premises, which are owned by Lessor, Lessor’s tenant or the surface owner, if Lessee or its operations are responsible for such injury or death. Signed for identification this . day of , Lessee: GFI Oil and Gas, Inc., a Pennsylvania Corporation Lessor: By: Anthony A. Mussare, President Oil and Gas Lease Page 6 MEMORANDUM OF OIL AND GAS LEASE THIS MEMORANDUM OF OIL AND GAS LEASE, dated this by and between day of , , hereinafter called Lessor (whether one or more), and GFI Oil and Gas Inc., a Pennsylvania corporation, whose address is 503 West Southern Avenue, South Williamsport, PA 17702 hereinafter referred to as “LESSEE”. WITNESSETH: 1. For and in consideration of One Dollar ($1.00) and other good and valuable consideration paid and to be paid by Lessee to Lessor and in further consideration of the rents reserved and the covenants and conditions more particularly set forth in a certain lease between Lessor and Lessee dated (hereinafter referred to as the “Lease”), Lessor does demise and let unto Lessee the following described premises: On the North by lands of On the East by lands of On the South by lands of On the West by lands of ; ; ; ; , Lessor’s Tax Parcel Number(s): ; Containing acres more or less and located in Township, County, Commonwealth of Pennsylvania, (hereinafter referred to as the “Premises”) for the purpose of exploring for by geophysical, seismic, and other methods, drilling, operating for, producing and removing oil and gas and all the constituents thereof, and of injecting air, gas, brine and other substances from any source and into any subsurface strata, other than potable water strata and workable coal strata (including but not limited to the right to inject into any wells on the leasehold property and to otherwise conduct all such secondary or tertiary operations as may be required in the opinion of the Lessee), the right to conduct surveys (including seismic surveys), and rights of way and easements for roads and the transport by pipelines or otherwise across and through said lands, of oil, gas and their constituents from the subject and other lands for so long as the transportation of such gas may be desired by the Lessee, and to place tanks, equipment, roads and structures thereon to procure and operate for the said products, together with the right to enter into and upon the leased premises at all times for the aforesaid purposes. Title to the Premises was conveyed to Lessor by deed recorded in Volume/Book , the County Records. Page in 2. TO HAVE AND TO HOLD the Premises for a term commencing , , and terminating 5 years thereafter, which term may be extended pursuant to paragraph 20 of the lease, and so much longer thereafter as oil or gas or their constituents are produced or are capable of being produced on the Premises in paying quantities, in the judgment of Lessee, or as the Premises shall be operated by Lessee in the search of oil or gas and as further set forth in the Lease, unless earlier terminated in accordance with the terms and provisions of the Lease. 3. The rental, covenants, provisions and conditions of the within Memorandum of Lease shall be the same as the rental, covenants, provisions and conditions set forth in the Lease to which rental, covenants, provisions and conditions reference is hereby made and the same are hereby incorporated by reference as though fully written herein. 4. In the event the Lease is in the future amended or supplemented by written instrument executed by the parties in interest thereto or shall be assigned or terminated in any manner permitted under the terms thereof, then without any further act or instrument whatsoever, this Memorandum of Lease shall likewise and to the same effect be amended, assigned or terminated, as the case may be. 5. This Memorandum of Lease is executed in simplified short form for the convenience of the parties and for the purpose of recording the same, and this Memorandum of Lease shall not have the effect of in any way modifying, supplementing or abridging the Lease or any of its provisions as the same or now or may hereafter be in force and effect. Oil and Gas Lease Page 7 IN WITNESS WHEREOF, the parties hereto have set their hands to duplicates hereof the day and year first above written LESSOR: LESSEE: GFI Oil and Gas, Inc., a Pennsylvania Corporation By: ___________________________________ Anthony A. Mussare, President INDIVIDUAL ACKNOWLEDGMENT COMMONWEALTH OF COUNTY OF On this, the day of the undersigned officer, personally appeared _ ) )SS: ______ ) , , before me , known to me (or satisfactorily proven) to be the person whose name he/she/they subscribed to the within instrument, and acknowledged that he/she/they executed the same for the purposes therein contained. IN WITNESS WHEREOF, I hereunto set my hand and official seal. _______________________________________ Notary Public My Commission Expires: ______________________ CORPORATION ACKNOWLEDGEMENT COMMONWEALTH OF COUNTY OF ) )SS: Lycoming ___________ _ ) Pennsylvania On this, the day of , , before me , the undersigned officer, personally appeared Anthony A. Mussare, who acknowledged himself/herself to b the President of GFI Oil and Gas Inc., a Pennsylvania corporation, and that he/she as such President, being authorized to do so, executed the foregoing instrument for the purposes therein contained by signing the name of the corporation by himself/herself as President. IN WITNESS WHEREOF, I hereunto set my hand and official seal. ____________________________________________ Notary Public My Commission Expires: ______________________ Oil and Gas Lease Page 8 ORDER OF PAYMENT On approval by GFI Oil and Gas, Inc., a Pennsylvania corporation, (Lessee) of the Oil and Gas Lease Agreement associated herewith and on approval of a title examination to leasehold, Lessee will make payment as indicated herein by check within business days of the date of the Oil and Gas Lease Agreement. No default shall be declared for failure to make payment until business days after receipt of written notice from payee of intention to declare such default, after which this lease shall cancel in it entirety for failure to make the payment described herein. In the event the Lessor owns a lesser interest than the entire and undivided fee simple therein, then the Bonus and Rental Payment herein provided for shall be paid to the Lessor only in the proportion which such interest bears to the whole and undivided fee. Lessee shall have the right to assign and transfer this lease (Order of Payment) in whole or in part, and Lessee shall notify Lessor within 30 business days of any assignment of transfer of this lease (Order of Payment). Lessor agrees that when and if this lease (Order of Payment) is assigned, the Lessee herein shall have no further obligations hereunder. For collection, the original copy of this Order of Payment will be forwarded along with the Oil and Gas Lease Agreement to Lessee at the address listed in the Oil and Gas Lease Agreement. A copy of this is to be retained by payee. Pay To: The amount of: Address: Payee Social Security No./Tax ID No: ; ; ; ; Note: The payment listed above includes all bonus and rental payments due for the primary term of the Oil and Gas Lease Agreement. Consideration for: Oil and Gas Lease dated, covering Tax Parcel No(s) Township(s) of Prospect: New: X Renewal: ______ Landowner (s) –Lessor(s) Date Signed: ______________________________________ acres, more or less, described as follows: situate in the , County of Prospect No.: , Commonwealth of Pennsylvania. . . ______________________________________ Completed By: ______________________ Land Agent Signature Oil and Gas Lease Page 9