8-K

UNITED STATES
SECURITIES AND EXCHANGE COMMISSION

Washington, D.C.  20549

FORM 8-K

CURRENT REPORT

Pursuant to Section 13 or 15(d) of
the Securities Exchange Act of 1934

Date of Report

March 11, 2008

(Date of earliest event reported)

STRATUM HOLDINGS, INC.

(Exact name of registrant as specified in its charter)

Nevada	000-51229	51-0482104
(State or other jurisdiction of	(Commission File Number)	(I.R.S. Employer
incorporation or organization)		Identification Number)

Three Riverway
Suite 1500
Houston, Texas	77056
(Address of principal executive offices)	(Zip Code)

(713) 479-7000

(Registrant’s telephone number, including area code)

Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provisions:

o Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425)

o Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12)

o Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b))

o Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c))

Section 1 — Registrant’s Business and Operations

Item 1.01.  Entry into a Material Definitive Agreement

Stratum Holdings, Inc. (the “Company”) obtained requisite approval in meetings of the Board of Directors and stockholders on February 21, 2008 to sell the Company’s wholly-owned subsidiaries, Decca Consulting Ltd. (“Decca”) of Calgary, Alberta, and Petroleum Engineers, Inc. (“PEI”) of Lafayette, Louisiana to Hamilton Acquisition, Inc. (“Hamilton”).  Subsequently, the parties negotiated to sell only PEI to Hamilton and to grant Hamilton an option to purchase Decca, exercisable during a 90-day period commencing upon the closing of the PEI Transaction (as defined below).  On March 3, 2008, the Company obtained requisite approval in a meeting of the Board of Directors to sell only PEI to Hamilton.  On March 11, 2008, the Company closed the sale of PEI to Hamilton.

Securities Purchase Agreement and Ancillary Documents

The Company entered into a Securities Purchase Agreement (the “Purchase Agreement”) pursuant to which the Company sold 100% of the outstanding common stock of PEI, consisting of 2,040 shares to Hamilton (the “PEI Transaction”).  The proposed terms and conditions of the transaction are set forth in a Securities Purchase Agreement that has been entered into among the Company, CYMRI, L.L.C., a Nevada limited liability company and wholly owned subsidiary of the Company (“CYMRI”), and Hamilton, a copy of which is attached as Exhibit 10.1.

Purchase Price

The purchase price for the stock of PEI is $15,000,000 less the aggregate of (i) the outstanding debt of PEI; (ii) amounts payable to employees as a result of the PEI Transaction; (iii) liabilities more than 60 days outstanding or not incurred in the ordinary course of business; (iv) $100,000, which represents the estimated pre-closing state income tax liability of PEI; and (v) certain transaction-related expenses of the Company.  Additionally, $1,600,000 of the purchase price is being escrowed for 24 months to partially secure the indemnification obligations of the Company under the Securities Purchase Agreement (see “Escrow Agreement” description below). Finally, $1,500,000 of the purchase price is being deposited in a restricted cash account to secure the payment of pre-closing federal, foreign and state tax liabilities of PEI.  If the Company does not sell CYMRI on or before December 31, 2008, beginning January 1, 2009, the Company may withdraw $300,000 from the restricted cash account and utilize such funds without restriction.

Representations and Warranties

In the Purchase Agreement, the Company and CYMRI make extensive representations and warranties concerning the Company, CYMRI and PEI, which generally survive for a period of 24 months following the closing of the PEI Transaction, except for fundamental representations which survive until the expiration of the applicable statute of limitations established by law.

Indemnification

The Company and CYMRI have agreed to indemnify Hamilton under the Purchase Agreement, on a joint and several basis, against damages and liabilities arising out of (i) breaches of the representations, warranties and covenants of the Company and CYMRI, fees payable to brokers/finders hired by the Company or CYMRI, and inaccuracies in the amounts deducted from the purchase price resulting in a further decrease in the purchase price; and (ii) pre-closing tax liabilities.  The Company and CYMRI have agreed to indemnify Hamilton against damages and liabilities arising out of its failure to collect accounts receivable of PEI existing on the closing date within 270 days after the closing date, to the extent such accounts receivable exceed $60,000 in the aggregate. The obligation of the Company and CYMRI to indemnify Hamilton for breaches of representations and warranties (other than certain “fundamental” representations and warranties) is subject to a $200,000 threshold and a $2,000,000 cap.  Additionally, the Company and CYMRI have agreed to indemnify Hamilton from (a) damages arising out of actions by Franklin M. Cantrell, Jr. that would be a breach under the non-competition agreement (discussed below) had he executed such agreement, and (b) damages arising out of the Company employee benefit plans which relate to an event, transaction, action or omission occurring on or prior to the closing date of the PEI Transaction.  These specific indemnities are not subject to the threshold or the cap.

1

Escrow Agreement

Pursuant to an Escrow Agreement entered into in connection with the Purchase Agreement, Hamilton will deposit $1,600,000 of the purchase price (the “Escrow Deposit”) into an escrow account maintained by U.S. Bank National Association, as escrow agent, to partially secure the indemnification obligations of the Company and CYMRI under the Securities Purchase Agreement.  If Hamilton timely exercises the Decca Option, an additional $400,000 of the purchase price will be added to the Escrow Deposit with the escrow agent to raise the amount of the Escrow Deposit to $2,000,000.  Promptly following the 24 month anniversary of the closing date of the PEI Transaction, the escrow agent will release to the Company the Escrow Deposit less any amounts previously distributed to Hamilton to satisfy indemnification claims and any amounts required to be retained to potentially fund unresolved indemnification claims. A copy of the Escrow Agreement is attached as Exhibit 10.2 to this Current Report on Form 8-K.

Option Agreement

Pursuant to an Option Agreement entered into in connection with the Purchase Agreement, the Company granted Hamilton an option to purchase all of the issued and outstanding capital stock of Decca for $4,250,000, exercisable at any time during the 90-day period following the closing of the PEI Transaction (the “Decca Option”).  The Option Agreement contains a “no shop” clause in which the Company and Decca agree not to initiate or solicit proposals for the sale of stock, merger or any similar transaction involving Decca, or any sale, lease or pledge of any assets of Decca other than in the ordinary course of business.  The Company also agrees not to permit Decca to issue any shares of capital stock or grant any options, warrants, subscription rights or other stock commitments.  A copy of the Option Agreement is attached as Exhibit 10.3 to this Current Report on Form 8-K.

Transition Services Agreement

The Company and two of its subsidiaries, CYMRI and Triumph Energy, Inc., a Louisiana corporation, (“Triumph”), have also entered into a Transition Services Agreement with PEI under which the Company, CYMRI and Triumph will provide certain administrative, accounting, information technology and transfer of information services to PEI for a limited period of time in consideration for PEI providing certain administrative, accounting and information technology services to the Company, CYMRI and Triumph.  A copy of the Transition Services Agreement is attached as Exhibit 10.4 to this Current Report on Form 8-K.

Non-Competition Agreements

In connection with the Purchase Agreement, the Company, CYMRI, PEI, Hamilton and certain stockholders of the Company have entered into a Non-Competition Agreement wherein the Company, CYMRI and such stockholders agree not to compete with Hamilton or PEI or solicit suppliers, customers, consultants or employees for a period of five years after the closing date of the PEI Transaction.  The geographic scope of the non-compete is worldwide, except that Decca will be permitted to (i) complete specified ongoing projects in the United States and (ii) engage in business outside the United States.

Also in connection with the Purchase Agreement, the Company, Decca, PEI and Hamilton have entered into an a Non-Competition Agreement wherein the Company and Decca agree not to compete with Hamilton or PEI or solicit suppliers, customers, consultants or employees for a period of five years after the closing date of the PEI Transaction.  The geographic scope of the non-compete is the United States, with the understanding the Decca can complete specified ongoing projects in the United States.  If the Company sells Decca to a third party other than Hamilton, the third party purchaser will be bound by the non-compete for a period of six months after the closing of its acquisition of Decca.

The foregoing descriptions are not complete and are qualified in their entirety by reference to the full text of the Purchase Agreement and ancillary documents, copies of which are filed as Exhibits 10.1, 10.2, 10.3 and 10.4 to this Current Report on Form 8-K.

A copy of the press release announcing this sale is attached as Exhibit 99.1 to this Current Report on Form 8-K and is incorporated herein by reference.

2

Item 1.02.  Termination of a Material Definitive Agreement

Termination of Secured Credit Facility

As described in Item 1.01, a portion of the proceeds from the PEI Transaction were used to pay all of PEI’s outstanding indebtedness or guarantees thereof and other indebtedness of the Company and CYMRI.  Such indebtedness is described in the following paragraphs.

PEI’s indebtedness included amounts due and owing to Wells Fargo Bank, National Association (“Wells Fargo USA”), under a revolving credit facility provided to PEI pursuant to a Credit and Security Agreement, dated as of May 23, 2006, as amended by the First Amendment, dated as of March 2, 2007 (the “Wells Fargo USA Credit Agreement”).  The revolving credit facility provided for aggregate borrowings of up to $8.5 million, consisting of a revolving credit line of up to $7.0 million (subject to a borrowing base) and a $1.5 million term structural overadvance, which borrowings were guaranteed by the Company and secured by substantially all of the assets of PEI.  The revolving credit facility was to mature in May 2010 and bore interest at prime plus 1% per annum.  Borrowings under the structural overadvance of $1.5 million bore interest at prime plus 4.5% per annum and was to mature in March 2009.

On the closing date of the PEI Transaction, PEI paid all of the then outstanding principal and accrued interest on the advances made to PEI under the revolving credit facility (which totaled $2,562,274), plus fees, costs, reserves and expenses in the aggregate amount of $215,748), and paid all of the then outstanding principal and accrued interest due on the structural overadvance (which totaled $427,400).  As a result of such payments, (i) the Wells Fargo USA Credit Agreement and all of the related loan documents were terminated and released, and ceased to be of any further force or effect, except for provisions which by their terms survive the termination thereof, (ii) PEI’s guaranty of the obligations of Decca to Wells Fargo Financial Corporation Canada (“Wells Fargo Canada”) and all agreements and documents related thereto were terminated and released, and ceased to be of any further force or effect, and (iii) the security interests of Wells Fargo USA and Wells Fargo Canada in the assets of PEI were extinguished and released.

Termination of Other Secured Debt

On May 23, 2006, the Company acquired from Larry M. Wright (“Wright”), a director of the Company and an officer of CYMRI and Triumph, Franklin M. Cantrell, Jr. (“Cantrell”), and certain other individuals, all of the issued and outstanding stock of The CYMRI Corporation (“Old CYMRI”), which was subsequently merged with and into CYMRI.  In partial consideration for the acquisition of such stock, the Company executed in favor of Wright and Cantrell Promissory Notes (the “Wright and Cantrell Notes”) in the principal amount of $1,500,000 and $1,575,000, respectively.  As security for its obligations under the Wright and Cantrell Notes, the Company pledged to Wright and Cantrell its 100% membership interest in CYMRI, pursuant to the terms of a Pledge and Security Agreement dated as of May 23, 2006 (the “Pledge Agreement”).  On the closing date of the PEI Transaction, (i) the Company paid to Wright and Cantrell all outstanding principal and accrued interest under the Wright and Cantrell Notes, which totaled $2,214,675, and (ii) Wright and Cantrell released the Company from any and all obligations arising under the Wright and Cantrell Notes and the Pledge Agreement, and released their security interest in the above-referenced collateral.

On May 23, 2006, the Company and CYMRI, in connection with their acquisition of The CYMRI Corporation, assumed the obligations of Old CYMRI under Promissory Notes, each dated December 3, 2004, in favor of Don E. Claxton and Betty Jane Claxton, C.F. Kimball, III and Linda R. Kimball, and The Alvin Bellaire, Jr. Trust (the “PEI Notes”).  The obligations of Old CYMRI under the PEI Notes were guaranteed by Wright, Cantrell, PEI, Triumph, and Robert Wonish, a director of the Company and an officer of CYMRI and Triumph.  The debt represented by the PEI Notes was secured by the oil and gas properties of Triumph, subject to the prior security interest of Sterling Bank, and by Old CYMRI’s pledge of the stock of PEI and Triumph to the holders of the PEI Notes.  The Company, CYMRI, Wright and Cantrell entered into an Assumption and Indemnification Agreement as of May 23, 2006 (the “Assumption and Indemnification Agreement”), under which the Company and CYMRI assumed the obligations of Old CYMRI under the PEI Notes and agreed to indemnify Wright and Cantrell from any and all liabilities and obligations arising under the PEI Notes as a result of their guarantees of the debt represented by the PEI Notes.  On the closing date of the PEI Transaction, (a) the Company (on behalf of itself and CYMRI) paid to the holders of the PEI Notes all outstanding principal and accrued interest under the PEI Notes, which totaled $1,152,616, and (b) the holders of the PEI Notes released the Company and CYMRI from any and all obligations arising under or incurred in connection with the PEI Notes and the Assumption and Indemnification Agreement, and released their security interest in the above-referenced collateral.

3

Item 2.01.  Completion of Acquisition or Disposition of Assets

The description of the Securities Purchase Agreement and the ancillary documents described in Item 1.01 of this form 8-K is incorporated by reference into this Item.

Item 3.02.  Unregistered Sales of Equity Securities

The description of the Severance Agreement included in Item 5.02 of this form 8-K is incorporated by reference into this Item.

Item 5.02.  Departure of Directors or Certain Officers; Election of Directors; Appointment of Certain Officers; Compensatory Arrangements with Certain Officers

On March 11, 2008 Richard A. Piske, III resigned as Chief Executive Officer of the Company effective immediately.  The Company has entered into a Severance Agreement with Mr. Piske, which was approved by the Board of Directors, under which the Company paid to Mr. Piske as severance (i) a cash lump sum payment of $200,000 on the closing date of the PEI Transaction; (ii) issued to Mr. Piske a number of shares of the Company’s common stock having an aggregate value of $280,000 (based on an average of the bid and ask prices for the 20 trading days of the Company’s common stock immediately prior to the effective date of his resignation); and (iii) transferred to Mr. Piske legal title to the automobile currently being used by him in his employment with the Company.  In exchange for such severance, Mr. Piske signed a release of claims against the Company.  In issuing such shares, the Company is relying on an exemption from registration under Section 4(2) of the Securities Act of 1933, as amended.  A copy of the Severance Agreement is attached as Exhibit 10.5.1 to this Current Report.

The Board of Directors of the Company also approved the award of stay bonuses in the amount of $70,000 to each of D. Hughes Watler, Jr., the Chief Financial Officer of the Company, and Kenneth L. Thomas, the Senior Vice President-Finance, Treasurer and Secretary of the Company, in consideration for services rendered by each of them to the Company in connection with the PEI Transaction and for consulting services to be rendered by each of them to the Company after the closing of the PEI Transaction.  Pursuant to the terms of letter agreements between the Company and each of Messrs. Watler and Thomas (the “Stay Bonus Agreements”), the Company will pay the stay bonuses to those individuals upon the completion of their service to the Company, which for Mr. Watler is scheduled to occur on or about May 15, 2008 and for Mr. Thomas is scheduled to occur on or about March 31, 2008.  Copies of the Stay Bonus Agreements are attached as Exhibits 10.5.2 and 10.5.3 to this Current Report.

The foregoing descriptions are not complete and are qualified in their entirety by reference to the full text of the Severance Agreement and the Stay Bonus Agreements, copies of which are filed as Exhibits 10.5.1, 10.5.2 and 10.5.3 to this Current Report on Form 8-K.

Item 9.01.  Financial Statements and Exhibits

(b)Pro Forma Financial Information

The Company has prepared unaudited pro forma financial statements to present the impact of the following completed sales transactions:

·Sale of substantially all of the assets of the Company’s wholly-owned subsidiary, Tradestar Construction Services, Inc. (“Tradestar Construction”).  This sale was made to a wholly-owned subsidiary of Tradesmen International, Inc. on October 26, 2007, for a sales price of $3,200,000 plus a working capital adjustment.

·Sale of the outstanding capital stock of PEI to Hamilton on March 11, 2008 for a sales price of $15,000,000 and the related payments of long-term debt and other accrued obligations which are more fully described elsewhere in this Form 8-K.

These unaudited pro forma financial statements should be read in conjunction with the Company’s historical consolidated financial statements and the related notes that are included in its Annual Report on Form 10-KSB for the year ended December 31, 2006 and its Quarterly Report on Form 10-QSB for the nine months ended September 30, 2007.

4

The following unaudited pro forma balance sheet as of September 30, 2007 gives effect to the sales transactions summarized above as if the receipts of the sales proceeds and related payments of long-term debt and other accrued obligations had occurred on that date.  The following unaudited pro forma statements of operations for the nine months ended September 30, 2007 and for the year ended December 31, 2006 give effect to the sales transactions summarized above as if the receipts of the sales proceeds and related payments of long-term debt and other accrued obligations had occurred as of the beginning of each period.

The following unaudited pro forma financial statements are presented for illustrative purposes only and do not necessarily indicate the financial results of the Company had the receipts of the sales proceeds and related payments of long-term debt and other accrued obligations actually occurred as of the dates indicated.  This financial information has been derived from and should be read together with the historical consolidated financial statements and the related notes of the Company incorporated by reference in this Form 8-K.  In addition, the allocations of the sales prices reflected in the unaudited pro forma financial statements are preliminary and are subject to adjustment and may vary from the actual sales price allocations that will be recorded as of the effective date of the transactions.

5

STRATUM HOLDINGS, INC.

PRO FORMA BALANCE SHEET

SEPTEMBER  30, 2007

	Pro Forma Adjustments for Sale of
	As			Tradestar				Petroleum				Pro Forma
	Reported			Construction				Engineers				Total
Assets
Current assets:
Cash and cash equivalents	$	74,170		$	1,325,921		(A)	$	1,699,909		(B)	$	3,100,000
Accounts receivable	10,834,420			(2,348,781		)	(A)	(4,702,291		)	(B)	3,783,348
Prepaid expenses and other	2,070,214			(806,978		)	(A)	(1,136,614		)	(B)	126,622
Total current assets	12,978,804			(1,829,838		)		(4,138,996		)		7,009,970
Property and equipment:
Oil and gas properties (full cost method)	13,592,039			—				—				13,592,039
Other property and equipment	1,107,656			(159,175		)	(A)	(934,379		)	(B)	14,102
	14,699,695			(159,175		)		(934,379		)		13,606,141
Less: Accum. DD&A and impairment	(8,392,645		)	107,693			(A)	685,943			(B)	(7,599,009		)
Net property and equipment	6,307,050			(51,482		)		(248,436		)		6,007,132
Other assets:
Goodwill	14,160,475			—				(9,224,162		)	(B)	4,936,313
Deferred income taxes	489,100			—				—				489,100
Other	255,781			(140,906		)	(A)	(19,234		)	(B)	95,641
Total other assets	14,905,356			(140,906		)		(9,243,396		)		5,521,054
Total assets	$	34,191,210		$	(2,022,226	)		$	(13,630,828	)		$	18,538,156
Liabilities and Stockholders’ Equity
Current liabilities:
Current portion of long-term debt	$	14,546,875		$	—			$	(8,874,481	)	(B)	$	5,672,394
Accounts payable	4,067,136			(318,808		)	(A)	(1,560,360		)	(B)	2,187,968
Accrued liabilities	1,568,032			(151,752		)	(A)	(836,702		)	(B)	579,578
Total current liabilities	20,182,043			(470,560		)		(11,271,543		)		8,439,940
Long-term debt, net of current portion	7,959,296			(1,555,342		)	(A)	(4,114,541		)	(B)	2,289,413
Deferred income taxes	801,100			460,300			(A)	(61,400		)	(B)	1,200,000
Total liabilities	28,942,439			(1,565,602		)		(15,447,484		)		11,929,353
Stockholders’ equity:
Common stock	25,394			—				—				25,394
Additional paid-in capital	11,980,239			—				—				11,980,239
Accumulated deficit	(6,587,166		)	(456,624		)	(A)	1,816,656			(B)	(5,227,134		)
Cumulative foreign currency translation	(169,696		)	—				—				(169,696		)
Total stockholders’ equity	5,248,771			(456,624		)		1,816,656				6,608,803
Total liabilities and stockholders’ equity	$	34,191,210		$	(2,022,226	)		$	(13,630,828	)		$	18,538,156

6

STRATUM HOLDINGS, INC.
PRO FORMA STATEMENT OF OPERATIONS
NINE MONTHS ENDED SEPTEMBER 30, 2007

	Pro Forma Adjustments for Sale of
	As			Tradestar				Petroleum				Pro Forma
	Reported			Construction				Engineers				Total
Revenues:
Staffing services
Construction	$	11,841,377		$	(11,841,377	)	(C)	$	—			$	—
Petroleum engineering	30,599,927			—				(20,820,494		)	(D)	9,779,433
Oil and gas sales	2,233,880			—								2,233,880
Other	95,948			—				—				95,948
	44,771,132			(11,841,377		)		(20,820,494		)		12,109,261
Expenses:
Cost of staffing services
Construction	9,335,129			(9,335,129		)	(C)					—
Petroleum engineering	24,074,233			—				(15,106,632		)	(D)	8,967,601
Lease operating expense	1,052,387			—								1,052,387
Depreciation, depletion & amortization	727,735			—				(98,921		)	(D)	628,814
Impairment expense	7,000,000			—								7,000,000
Workover expense	528,638			—								528,638
General and administrative	8,124,065			(1,860,592		)	(C)	(4,913,592		)	(D/E)	1,349,881
Interest expense	1,509,358			(77,877		)	(C)	(882,506		)	(D)	548,975
	52,351,545			(11,273,598		)		(21,001,651		)		20,076,296
Income (loss) before income taxes	(7,580,413		)	(567,779		)		181,157				(7,967,035		)
Benefit (provision) for income taxes	2,577,341			193,045			(C)	(61,593		)	(D)	2,708,792
Net loss from continuing operations	(5,003,072		)	(374,734		)		119,564				(5,258,243		)
Gain from sale of discontinued operations	—			924,000			(C)	1,476,000			(D)	2,400,000
Net income (loss)	$	(5,003,072	)	$	549,266			$	1,595,564			$	(2,858,243	)
Net income (loss) per share, basic and diluted	$	(0.20	)									$	(0.11	)
Weighted average shares outstanding	25,112,620											25,112,620

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STRATUM HOLDINGS, INC.

PRO FORMA STATEMENT OF OPERATIONS

YEAR ENDED DECEMBER 31, 2006

	Pro Forma Adjustments for Sale of
	As			Tradestar				Petroleum				Pro Forma
	Reported			Construction				Engineers				Total
Revenues:
Staffing services
Construction	$	16,758,412		$	(16,758,412	)	(C)	$	—			$	—
Petroleum engineering	15,239,239			—				(15,239,239		)	(D)	—
Oil and gas sales	2,187,827			—								2,187,827
Other	65,724			—								65,724
	34,251,202			(16,758,412		)		(15,239,239		)		2,253,551
Expenses:
Cost of staffing services
Construction	13,591,864			(13,591,864		)	(C)					—
Petroleum engineering	10,952,316			—				(10,952,316		)	(D)	—
Lease operating expense	1,185,902			—								1,185,902
Depreciation, depletion & amortization	876,161			—				(239,686		)	(D)	636,475
Impairment expense	—			—				—				—
Workover expense	525,867			—								525,867
General and administrative	6,436,071			(2,449,749		)	(C)	(2,923,972		)	(D/E)	1,062,350
Interest expense	1,036,100			(139,695		)	(C)	(555,473		)	(D)	340,932
	34,604,281			(16,181,308		)		(14,671,447		)		3,751,526
Income (loss) before income taxes	(353,079		)	(577,104		)		(567,792		)		(1,497,975		)
Benefit (provision) for income taxes	120,002			196,215			(C)	193,049			(D)	509,267
Net loss from continuing operations	(233,077		)	(380,889		)		(374,743		)		(988,708		)
Gain from sale of discontinued operations	—			924,000			(C)	1,476,000			(D)	2,400,000
Net income (loss)	$	(233,077	)	$	543,111			$	1,101,257			$	1,411,292
Net income (loss) per share, basic and diluted	$	(0.01	)									$	0.08
Weighted average shares outstanding	18,579,652											18,579,652

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NOTES TO UNAUDITED PRO FORMA FINANCIAL STATEMENTS

(A)	To record the sale of substantially all of the assets of Tradestar Construction to a wholly-owned subsidiary of Tradesmen International, Inc., for a sales price of $3,200,000 plus a working capital adjustment.
(B)	To record the sale of the outstanding capital stock of PEI to Hamilton, for a sales price of $15,000,000 and the related payments of its long-term debt and other accrued obligations, as well as the required paydown of short-term debt secured by the Company’s retained oil and gas properties to a remaining balance of $2,750,000.
(C)	To eliminate the revenues and expenses of Tradestar Construction and to recognize the after-tax gain on the sale of substantially all of its assets to a wholly-owned subsidiary of Tradesmen International, Inc.
(D)	To eliminate the revenues and expenses of PEI and to recognize the after-tax gain on the sale of the outstanding capital stock of PEI to Hamilton.
(E)	To further adjust general and administrative expenses associated with non-continuing operations after completion of the sales transactions indicated in (A) and (B) above.

(d)Exhibits

Exhibit Number	Title of Document
10.1	Securities Purchase Agreement dated as of March 11, 2008, by and among Hamilton Acquisition, Inc., Stratum Holdings, Inc. and CYMRI, L.L.C.
10.2	Escrow Agreement dated as of March 11, 2008, by and among Hamilton Acquisition, Inc., Stratum Holdings, Inc. and U.S. Bank National Association
10.3	Option Agreement dated as of March 11, 2008, by and among Stratum Holdings, Inc., Decca Consulting Ltd., and Hamilton Acquisition, Inc.
10.4	Transition Services Agreement dated as of March 11, 2008, by and among Petroleum Engineers, Inc., Stratum Holdings, Inc., CYMRI, L.L.C. and Triumph Energy, Inc.
10.5.1	Severance Agreement, dated March 11, 2008 between Stratum Holdings, Inc. and Richard A. Piske, III
10.5.2	Letter agreement, dated March 3, 2008 between Stratum Holdings, Inc. and D. Hughes Watler, Jr
10.5.3	Letter agreement, dated March 3, 2008 between Stratum Holdings, Inc. and Kenneth L. Thomas
99.1	Press release dated March 12, 2008 announcing sale of Petroleum Engineers, Inc.

9

SIGNATURES

Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned hereunto duly authorized.

	STRATUM HOLDINGS, INC.
March 14, 2008	By:	/s/ D. Hughes Watler, Jr.
	Name:		D. Hughes Watler, Jr.
	Title:		Chief Financial Officer

10

Exhibit Index

Exhibit Number	Title of Document
10.1	Securities Purchase Agreement dated as of March 11, 2008, by and among Hamilton Acquisition, Inc., Stratum Holdings, Inc. and CYMRI, L.L.C.
10.2	Escrow Agreement dated as of March 11, 2008, by and among Hamilton Acquisition, Inc., Stratum Holdings, Inc. and U.S. Bank National Association
10.3	Option Agreement dated as of March 11, 2008, by and among Stratum Holdings, Inc., Decca Consulting Ltd., and Hamilton Acquisition, Inc.
10.4	Transition Services Agreement dated as of March 11, 2008, by and among Petroleum Engineers, Inc., Stratum Holdings, Inc., CYMRI, L.L.C. and Triumph Energy, Inc.
10.5.1	Severance Agreement, dated March 11, 2008 between Stratum Holdings, Inc. and Richard A. Piske, III
10.5.2	Letter agreement, dated March 3, 2008 between Stratum Holdings, Inc. and D. Hughes Watler, Jr
10.5.3	Letter agreement, dated March 3, 2008 between Stratum Holdings, Inc. and Kenneth L. Thomas
99.1	Press release dated March 12, 2008 announcing sale of Petroleum Engineers, Inc.

11

EX-10.1

Exhibit 10.1

SECURITIES PURCHASE AGREEMENT

by and among

HAMILTON ACQUISITION, INC.

as Buyer,

STRATUM HOLDINGS, INC.,

as Seller,

and

CYMRI, L.L.C.

March 11, 2008

TABLE OF CONTENTS

				Page
ARTICLE 1		DEFINITIONS		1
	ARTICLE 2		PURCHASE AND SALE OF SECURITIES		7
	2.1		Purchase and Sale		7
	2.2		Purchase Price		7
	2.3		Payment of the Purchase Price and Other Amounts		7
	2.4		The Closing		8
	ARTICLE 3		REPRESENTATIONS AND WARRANTIES OF SELLER AND CYMRI		8
	3.1		Organization, Power and Authorization		8
	3.2		Binding Effect and Noncontravention		9
	3.3		Brokers		9
	3.4		Capitalization		10
	3.5		Subsidiaries		10
	3.6		Financial Statements		10
	3.7		Subsequent Events		10
	3.8		Title to Assets		12
	3.9		Compliance With Laws		12
	3.10		Undisclosed Liabilties		12
	3.11		Tax Matters		12
	3.12		Environmental Matters		13
	3.13		Intellectual Property		13
	3.14		Real Estate		14
	3.15		Litigation		14
	3.16		Employee Benefits		15
	3.17		Insurance		17
	3.18		Contracts		17
	3.19		Employees		19
	3.20		Affiliate Transactions		19
	3.21		Receivables		19
	3.22		Permits and Licenses		19
	3.23		Tangible Assets		20
	3.24		Service Warranty		20
	3.25		Service Liability		20
	3.26		Bank Accounts		20
	3.27		Debt, Liabilities and Expenses		20
	ARTICLE 4		REPRESENTATIONS AND WARRANTIES OF BUYER		20
	4.1		Organization, Power and Authorization		20
	4.2		Binding Effect and Noncontravention		21
	4.3		Brokers		21
	4.4		Litigation		21

i

4.4	Consents and Approvals	21
4.7	Investment Intent	21
ARTICLE 5	CONDITIONS TO THE CLOSING	22
5.1	Conditions to Buyer’s Obligation	22
5.2	Conditions to Seller’s and CYMRI’s Obligation	24
ARTICLE 6	COVENANTS	25
6.1	Further Assurances	25
6.2	Litigation Support	25
6.3	Release	25
6.4	Continued Existence/Reserve Account	25
6.5	Accounts Receivable Aging	26
6.6	Preparation of Tax Returns; Payment of Taxes	26
6.7	Cooperation with Respect to Tax Returns	29
6.8	Tax Sharing Agreements	29
6.9	Sterling Bank Account	29
ARTICLE 7	SURVIVAL AND INDEMNIFICATION	29
7.1	Survival of Representations and Warranties	29
7.2	Indemnification Obligations of Seller	29
7.3	Indemnification Obligations of Buyer	30
7.4	Limitations on Indemnification	31
7.5	Third Party Claims	31
ARTICLE 8	MISCELLANEOUS	32
8.1	Public Announcements	32
8.2	Transaction Expenses	32
8.3	Amendments	32
8.4	Successors and Assigns	32
8.5	Governing Law	32
8.6	Notices	32
8.7	Schedules and Exhibits	33
8.8	Termination of Certain Pre-Closing Agreements	34
8.9	Counterparts	34
8.10	No Third Party Beneficiaries	34
8.11	Headings	34
8.12	Entire Agreement	34
8.13	Severability	34
8.14	Construction	34
8.15	Cumulative Remedies	34

ii

EXHIBITS AND SCHEDULES

Exhibit A	Decca Non-competition Agreement
Exhibit B	Decca Option Agreement
Exhibit C	Escrow Agreement
Exhibit D	Non-competition Agreement
Exhibit E	Sublease Agreement
Exhibit F	Transition Services Agreement
Exhibit G	Triumph MOU
Exhibit H	Opinion of Seller’s Legal Counsel
Exhibit I	Opinion of Buyer’s Legal Counsel
Exhibit 2.2	Purchase Price Calculation
Exhibit 5.1(e)	MSA Amendments
Exhibit 5.1(f)	MSA Agreements

Disclosure Schedule

iii

SECURITIES PURCHASE AGREEMENT

This SECURITIES PURCHASE AGREEMENT (this “Agreement”) is made as of March 11, 2008, by and among Hamilton Acquisition, Inc., a Delaware corporation (“Buyer”), Stratum Holdings, Inc., a Nevada corporation (“Seller”), and CYMRI, L.L.C., a Nevada limited liability company (“CYMRI”).

BACKGROUND

A.Seller owns all of the issued and outstanding capital stock of Petroleum Engineers, Inc., a Louisiana corporation (the “Company”), which, as of the date hereof, consists of 2,040 issued and outstanding shares of common stock (the “Securities”).

B.The parties desire to enter into this Agreement pursuant to which Seller agrees to sell to Buyer, and Buyer agrees to purchase from Seller, all of the Securities.

NOW, THEREFORE, the parties agree as follows:

ARTICLE 1

DEFINITIONS

For purposes of this Agreement, the following terms have the meanings set forth below:

“2007 and 2008 State Income Tax Returns of PEI” has the meaning set forth in Section 6.6(b).

“Annual Financial Statements” has the meaning set forth in Section 3.6.

“Business Day” means a day, other than a Saturday, Sunday or other day on which commercial banks in Houston, Texas are authorized or required by law to close.

“Buyer” has the meaning set forth in the preamble.

“Cantrell” means Franklin M. Cantrell, Jr.

“Closing” has the meaning set forth in Section 2.4.

“Closing Date” has the meaning set forth in Section 2.4.

“COBRA” means the requirements of Part 6 of Subtitle B of Title I of ERISA and Section 4980B of the Code and of any similar state law.

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

“Company” has the meaning set forth in the background.

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“Company Material Adverse Effect” means, as to the Company, any change, event, effect, claim, circumstance or matter that (individually or in the aggregate with all other changes, effects, claims, circumstances or matters) is, or could reasonably be expected to be or to become, materially adverse to the business, condition (financial or otherwise), operations, results of operations, liabilities, or prospects of the business of the Company, or to the ability of the Company to consummate the transactions contemplated by this Agreement; provided that none of the following shall be deemed to constitute, and none of the following shall be taken into account in determining whether there has occurred a Company Material Adverse Effect: (i) any adverse change or development resulting from conditions affecting the United States or any foreign economy generally; or (ii) any change required by any amendment to applicable accounting requirements or principles applicable to the Company.

“CYMRI” has the meaning set forth in the preamble.

“CYMRI Merger Agreement” means the Agreement and Plan of Merger, dated May 23, 2006, by and among Seller, CYMRI, The Cymri Corporation, Larry M. Wright, Cantrell, Robert G. Wonish and Michael W. Hopkins.

“Damages” means all actions, suits, proceedings, hearings, investigations, charges, complaints, claims, demands, injunctions, judgments, orders, decrees, rulings, damages, dues, penalties, fines, costs, amounts paid in settlement, Liabilities, obligations, Taxes, Liens, losses, expenses, and fees, including court costs and attorneys’ fees and expenses (without giving effect to the Company Material Adverse Effect or other materiality qualification or any similar qualification).

“Debt” means (i) indebtedness for borrowed money, (ii) indebtedness secured by any Lien on property owned whether or not the indebtedness secured has been assumed, (iii) indebtedness evidenced by notes, bonds, debentures or similar instruments, (iv) capital leases, including, without limitation, all amounts representing the capitalization of rentals in accordance with GAAP, (v) “earnouts” and similar payment obligations, (vi) guarantees with respect to liabilities of a type described in any of clauses (i) through (v) above, and (vii) interest, penalties, premiums, fees and expenses related to any of the foregoing; provided that, for the purposes of Sections 2.2(ii), 2.3(b) and 3.27, this definition shall not include the indebtedness represented by the PEI Insurance Finance Agreement.

“Decca” means Decca Consulting Ltd., an Alberta corporation.

“Decca Non-competition Agreement” means the Non-competition Agreement to be entered into at the Closing by Seller, the Company, Decca and Buyer, in substantially the form attached as Exhibit A.

“Decca Option Agreement” means the Option Agreement to be entered into at the Closing by Seller, Decca and Buyer, in substantially the form attached as Exhibit B.

“Deferred Compensation Plan” has the meaning set forth in Section 3.16(a).

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“Disclosure Schedule” means the disclosure schedule prepared by Seller attached to this Agreement, which sets forth the exceptions to the representations and warranties contained in Articles 3 and certain other information called for by this Agreement.

“Employee Benefit Plan” means any “employee benefit plan” (as such term is defined in Section 3(3) of ERISA) and any other employee benefit plan, program or arrangement of any kind.

“Environmental Laws” means all Legal Requirements concerning public health and safety, worker health and safety, pollution or protection of the environment, including without limitation all those relating to the presence, use, production, generation, handling, transportation, treatment, storage, disposal, distribution, labeling, testing, processing, discharge, release, threatened release, control, or cleanup of any hazardous materials, substances, or wastes, chemical substances or mixtures, pesticides, pollutants, contaminants, toxic chemicals, petroleum products or byproducts, asbestos, polychlorinated byphenyls, noise, or radiation.

“ERISA” means the Employee Retirement Income Security Act of 1974, as amended.

“ERISA Affiliate” means each entity that is treated as a single employer with the Company for purposes of Section 414 of the Code.

“Escrow Agent” means U.S. Bank National Association.

“Escrow Agreement” means the Escrow Agreement to be entered into at the Closing by the Escrow Agent, Buyer and Seller, in substantially the form attached as Exhibit C.

“Escrow Amount” means $1,600,000.

“Estimated Pre-Closing State Tax Liability” has the meaning set forth in Section 2.2(v).

“Financial Statements” has the meaning set forth in Section 3.6.

“Generally Accepted Accounting Principles” or “GAAP” means generally accepted accounting principles in effect in the United States from time to time.

“Government Entity” means any (i) nation, principality, state, commonwealth, province, territory, county, municipality, district or other jurisdiction of any nature; (ii) federal, state, local, municipal, foreign or other government; (iii) governmental or quasi governmental authority of any nature; (iv) multi-national organization or body; or (v) Person exercising, or entitled to exercise, any executive, legislative, judicial, administrative, regulatory, police, military or taxing authority or power of any nature.

“Income Tax” means any federal, state, local or foreign income and franchise tax, including any interest, penalty, or addition thereto, whether disputed or not.

3

“Indemnified Party” means a party who is seeking indemnification under Section 7.2 or 7.3.

“Indemnifying Party” means a party from whom indemnification is being sought under Section 7.2 or 7.3.

“Insurance Policies” has the meaning set forth in Section 3.17.

“Intellectual Property” means all of the following: (i) inventions (whether patentable or unpatentable and whether or not reduced to practice), all improvements thereto, and all patents, patent applications and patent disclosures, together will all reissuances, continuations, continuations-in-part, revisions, extensions and reexaminations thereof; (ii) trademarks, service marks, trade dress, logos, slogans, trade names, corporate names, Internet domain names, and brand names, together with all translations, adaptations, derivations, and combinations thereof and including all goodwill associated therewith, and all applications, registrations, and renewals in connection therewith; (iii) copyrightable works, copyrights, and all applications, registrations and renewals in connection therewith; (iv) trade secrets, confidential information, and know-how (including customer and independent contractor lists); (v) computer software (including all code, data, databases and related documentation), and (vi) all other proprietary rights.

“Interim Financial Statements” has the meaning set forth in Section 3.6.

“Latest Balance Sheet” has the meaning set forth in Section 3.6.

“Leased Real Property” has the meaning set forth in Section 3.14(b).

“Legal Requirement” means any law, statute, legislation, constitution, principle of common law, resolution, ordinance, code, judgment, order, decree, treaty, rule, regulation, ruling, determination, charge, direction or other restriction of an arbitrator or Government Entity.

“Liability” means any liability or obligation of any kind or nature (whether known or unknown, whether asserted or unasserted, whether absolute or contingent, whether accrued or unaccrued, whether liquidated or unliquidated, and whether due or to become due), including any liability for Taxes.

“Lien” means any mortgage, pledge, lien, encumbrance, charge, assessment, deed of trust, lease, adverse claim, levy, restriction on transfer, any conditional sale or title retention agreement, or other security interest.

“Majority Shareholder” means each of Frederick A. Huttner, Larry M. Wright, Michael W. Hopkins, Robert G. Wonish, Clarence J. Downs, and Richard A. Piske III.

“Material Contracts” has the meaning set forth in Section 3.18(a).

4

“Material Customer” means a customer of the Company that is one of the twenty largest customers based on the net revenue of the Company for either of the fiscal years ended December 31, 2006 or December 31, 2007.

“Non-competition Agreement” means the Non-competition Agreement to be entered into at the Closing by Buyer, the Company, Seller, CYMRI, the Majority Shareholders and such employees of the Company required by Buyer in its sole discretion in substantially the form attached as Exhibit D.

“PEI Insurance Finance Agreement” means the Premium Finance Agreement, Disclosure Statement and Security Agreement made as of July 12, 2007 by the Company in favor of AICCO, Inc.

“Permits” has the meaning set forth in Section 3.22.

“Person” means an individual, a partnership, a corporation, a limited liability company, an association, a joint stock company, a trust, a joint venture, an unincorporated organization, any other business entity, an estate, a labor union, or a Government Entity.

“Post-Closing Tax Period” means any Taxable period beginning on the day after the Closing Date, and, with respect to any Taxable period beginning before and ending after the Closing Date, means the portion of such Taxable period commencing on the day after the Closing Date.

“Pre-Closing State Tax Liability” has the meaning set forth in Section 6.6(f).

“Pre-Closing Tax Period” means any Taxable period ending on or before the Closing Date, and, with respect to any Taxable period beginning before and ending after the Closing Date, means the portion of such Taxable Period through the end of the Closing Date.

“Purchase Price” has the meaning set forth in Section 2.2.

“Reserve Account” has the meaning set forth in Section 6.4.

“Reserve Tax Liabilities” has the meaning set forth in Section 6.4.

“Sale of CYMRI” means (i) the sale, transfer or other disposition (including a stock sale, merger or similar transaction) by Seller of more than fifty percent (50%) of its equity interest in CYMRI to any Person, or (ii) a sale, lease, transfer or other disposition of all or substantially all of the assets of CYMRI to any Person.

“Securities” has the meaning set forth in the background.

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

“Seller” has the meaning set forth in the preamble.

5

“Seller Transaction Expenses” has the meaning set forth in Section 2.2(vi).

“Seller’s Knowledge” means the actual knowledge of the officers, directors and managers of Seller and CYMRI after due inquiry and reasonable investigation. For purposes of this Agreement, “due inquiry and reasonable investigation” means the knowledge that Seller’s and CYMRI’s officers and directors would reasonably be expected to obtain by reviewing with each key employee of Seller or the Company, the representations and warranties set forth in this Agreement which are applicable to the duties performed by such key employee or contractor on behalf of Seller or the Company.

“Straddle Period” has the meaning set forth in Section 6.6(e).

“Sublease Agreement” means the Sublease Agreement to be entered into at the Closing between the Company and Triumph in substantially the form attached as Exhibit E.

“Tax” or “Taxes” means any federal, state, provincial, local or foreign income, gross receipts, license, payroll, employment, excise (including taxes under Section 409A of the Code), severance, stamp, occupation, premium, windfall profits, environmental (including taxes under Section 59A of the Code), customs duties, capital stock, franchise, profits, withholding, social security (or similar), unemployment, disability, real property, personal property, sales, use, goods and services, transfer, registration, value added, alternative or add-on minimum, estimated, or other tax of any kind, including any interest, penalty or addition thereto, whether disputed or not and including any obligations to indemnify or otherwise assume or succeed to the Tax liability of any other Person and any liability as a result of being a Person required by law to withhold or collect taxes imposed on another Person.

“Tax Return” means any return, declaration, report, claim for refund, or information return or statement relating to Taxes (including any schedule or attachment thereto, and any amendment thereof).

“Third Party Claim” has the meaning set forth in Section 7.5(a).

“Transaction Documents” means this Agreement, the Decca Non-competition Agreement, the Decca Option Agreement, the Escrow Agreement, the Non-competition Agreement, the Sublease Agreement, the Transition Services Agreement and the Triumph MOU.

“Transition Services Agreement” means the Transition Services Agreement to be entered into at the Closing by the Company and Seller, in substantially the form attached as Exhibit F.

“Triumph” means Triumph Energy, Inc., a Louisiana corporation.

“Triumph MOU” means the Memorandum of Understanding to be entered into at the Closing by the Company and Triumph, in substantially the form attached as Exhibit G.

6

ARTICLE 2

PURCHASE AND SALE OF SECURITIES

2.1Purchase and Sale.  On and subject to the terms and conditions of this Agreement, Buyer agrees to purchase the Securities from Seller, and Seller agrees to sell the Securities to Buyer.

2.2Purchase Price.  The aggregate purchase price for the Securities (the “Purchase Price”) equals the sum of:

(i)$15,000,000;

(ii)minus the amount of Debt of the Company as of the Closing, which is set forth on Exhibit 2.2;

(iii)minus the amount of all distributions, bonus payments, and all other contractual payments due or earned by employees of the Company (other than normal periodic compensation payments and any incentive plans put into place by Buyer) as of, or resulting from, the Closing, which is set forth on Exhibit 2.2;

(iv)minus the amount of all Liabilities of the Company as of the Closing Date that are (A) outstanding more than 60 days on the Closing Date or (B) not incurred in the ordinary course of business, which is set forth on Exhibit 2.2;

(v)minus $100,000, which represents the estimated Liability of the Company for state Income Taxes in Texas, Louisiana and Mississippi for taxable periods ending in 2007, and the pre-Closing portion of such Liability for the taxable period of the Company ending in 2008 that has not been paid as of the Closing Date (the “Estimated Pre-Closing State Tax Liability”); and

(vi)minus the aggregate amount of fees and expenses owing by Seller, CYMRI or the Company in connection with the transactions contemplated by this Agreement in the amounts indicated on Exhibit 2.2 (the “Seller Transaction Expenses”).

2.3Payment of the Purchase Price and Other Amounts.  At the Closing, subject to the satisfaction or waiver of each of the conditions specified in Section 5:

(a)Purchase Price.  Buyer will pay the Purchase Price as follows:

(i)Escrow Amount.  Buyer will deliver the Escrow Amount to the Escrow Agent by wire transfer or delivery of other immediately available funds to an account designated by the Escrow Agent to be held in escrow pursuant to the terms of the Escrow Agreement.

7

(ii)Cash Consideration.  Buyer will deliver to Seller an amount of cash equal to the Purchase Price less the Escrow Amount by wire transfer or delivery of other immediately available funds to the accounts designated by Seller in writing to Buyer.

(b)Debt.  On behalf of the Company, and at the direction of Seller, Buyer shall deliver payment to the appropriate parties in respect of the Debt of the Company as of immediately prior to Closing, if any, pursuant to payoff letters or invoices delivered by such parties to Seller, Buyer and the Company, which are in form and substance reasonably satisfactory to Buyer.

(c)Seller Transaction Expenses.  On behalf of the Company and Seller, and at the direction of Seller, Buyer will deliver payment of the Seller Transaction Expenses to the Persons identified on Exhibit 2.2 for which Buyer has received a release of Seller and the Company from such parties (in a form acceptable to the Buyer in its sole discretion) at or prior to the Closing, by wire transfer or delivery of other immediately available funds to the accounts designated by Seller.

2.4The Closing.  The closing of the purchase and sale of the Securities and the transactions relating thereto (the “Closing”), will take place on the date hereof simultaneously with the execution and delivery by the parties of this Agreement.  The date and time of the Closing is the “Closing Date.”

ARTICLE 3

REPRESENTATIONS AND WARRANTIES OF SELLER AND CYMRI

Except as otherwise set forth on the Disclosure Schedule, CYMRI and Seller, jointly and severally, represent and warrant to Buyer as follows:

3.1Organization, Power and Authorization.

(a)Seller is a corporation duly organized, validly existing and in good standing under the laws of Nevada, and is duly authorized to conduct business and is in good standing under the laws of each jurisdiction where such qualification is required.  Seller has the corporate power to carry on the businesses in which it is engaged and to own and use the properties owned and used by it.  Seller has the requisite power and authority necessary to enter into, deliver and perform its obligations pursuant to each of the Transaction Documents to which it is a party.  Seller’s execution, delivery and performance of each Transaction Document to which it is a party has been duly authorized by Seller.  Upon the consummation of the transactions contemplated by the Transaction Documents and immediately after the Closing, Seller will be solvent and will be able to continue to pay its Liabilities in the ordinary course of business.

(b)CYMRI is a limited liability company duly organized, validly existing and in good standing under the laws of Nevada, and is duly authorized to conduct business and is in good standing under the laws of each jurisdiction where such qualification is required.  CYMRI

8

has the organizational power to carry on the businesses in which it is engaged and to own and use the properties owned and used by it.  CYMRI has the requisite power and authority necessary to enter into, deliver and perform its obligations pursuant to each of the Transaction Documents to which it is a party.  CYMRI’s execution, delivery and performance of each Transaction Document to which it is a party has been duly authorized by CYMRI.

(c)The Company is a corporation, duly organized, validly existing and in good standing under the laws of Louisiana.  The Company is duly authorized to conduct business and is in good standing under the laws of each jurisdiction where such qualification is required.  The Company has the corporate power to carry on the businesses in which it is engaged and to own and use the properties owned and used by it.  The Company has the requisite power and authority necessary to enter into, deliver and perform its obligations pursuant to each of the Transaction Documents to which it is a party.  The Company’s execution, delivery and performance of each Transaction Document to which it is a party has been duly authorized by the Company.

3.2Binding Effect and Noncontravention.

(a)This Agreement has been duly executed and delivered by Seller and CYMRI and constitutes, and each other Transaction Document to which Seller, CYMRI or the Company is a party when executed and delivered will constitute, a valid and binding obligation of Seller, CYMRI or the Company, as the case may be, enforceable against Seller, CYMRI or the Company in accordance with its terms except as such enforceability may be limited by (i) applicable insolvency, bankruptcy, reorganization, moratorium or other similar laws affecting creditors’ rights generally, and (ii) applicable equitable principles (whether considered in a proceeding at law or in equity).

(b)The execution, delivery and performance of the Transaction Documents by Seller, CYMRI and the Company does not (i) violate any Legal Requirement to which Seller, CYMRI or the Company is subject or any provision of its charter or bylaws or equivalent organizational documents, (ii) conflict with, result in a breach of, constitute a default under, result in the acceleration of, create in any party the right to accelerate, terminate, modify, or cancel, or require any notice under any agreement, contract, lease, license, instrument, or other arrangement to which Seller, CYMRI or the Company is a party or by which Seller or the Company is bound or to which Seller’s, CYMRI’s or the Company’s assets are subject, (iii) result in the creation of any Lien on the Securities or the assets of the Company, or (iv) require any authorization, consent, approval or notice by or to any Person.

3.3Brokers.  Neither Seller nor the Company has retained any broker in connection with the transactions contemplated by this Agreement and neither the Company nor Buyer will have any obligation to pay any broker’s, finder’s, investment banker’s, financial advisor’s or similar fee in connection with this Agreement or the transactions contemplated by this Agreement by reason of any action taken by or on behalf of Seller or the Company.

9

3.4Capitalization.  Seller holds of record, owns beneficially, and has good and marketable title to the Securities, free and clear of all Liens.  The authorized capital stock of the Company consists of 2,500 shares of common stock, having no par value per share, of which 2,040 are issued and outstanding.  All of the issued and outstanding shares of the Company’s capital stock have been duly authorized, are validly issued, fully paid, and nonassessable, and are held of record by Seller.  There are no outstanding or authorized options, warrants, purchase rights, subscription rights, conversion rights, exchange rights, or other contracts or commitments that could require the Company to issue, sell, or otherwise cause to become outstanding any of its capital stock.  There are no voting trusts, proxies, or other agreements or understandings with respect to the voting of the capital stock of the Company.

3.5Subsidiaries.  The Company currently has no subsidiaries, and the Company has not had in the past, any investment, equity, or ownership interest (whether controlling or not) of any kind in any other Person.  The Company is not engaged in any joint venture or partnership with any other Person.

3.6Financial Statements.  The Disclosure Schedule contains the following financial statements (the “Financial Statements”):  (i) the Company’s respective stand-alone balance sheet and related statement of income for the calendar years ended December 31, 2005 and December 31, 2006 (the “Annual Financial Statements”); (ii) the Company’s respective interim stand-alone balance sheet and related statement of income for the eight month period ended August 31, 2007 (the “Interim Financial Statements”); and (iii) for each month after August 31, 2007 through January 31, 2008, the Company’s interim stand-alone balance sheet for such month (the most recent such balance sheet being the “Latest Balance Sheet”) along with the Company’s related statement of income for such month and the year-to-date period.  The Financial Statements have been prepared in accordance with GAAP applied on a materially consistent basis for the periods covered thereby and present fairly in all material respects the financial condition of the Company as of such dates and the results of operations for the periods specified.

3.7Subsequent Events.

(a)Since August 31, 2007:

(i)there has been no event or occurrence which has had a Company Material Adverse Effect,

(ii)the Company has conducted its business only in the ordinary course of business; and

(iii)the Company has not:

(A)entered into any agreement, contract, lease, or license either involving more than $25,000 or outside the ordinary course of business;

(B)accelerated, terminated, modified, or cancelled any agreement, contract, lease, or license either involving more than $25,000 or

10

outside the ordinary course of business (or had any other party thereto take such action);

(C)imposed or granted any Lien on any of its assets;

(D)made any capital expenditures or commitments therefore either involving more than $25,000 (in the aggregate) or outside the ordinary course of business;

(E)made any capital investment in, any loan to, or any acquisition of the securities or other assets of, any Person either involving more than $25,000 (individually or in the aggregate) or outside the ordinary course of business;

(F)incurred any Debt other than periodic draw downs on the Company’s credit facility with Wells Fargo Bank, National Association in the ordinary course of business;

(G)delayed or postponed the payment of accounts payable or other Liabilities outside the ordinary course of business;

(H)cancelled, compromised, waived, or released any right or claim either involving more than $25,000 (individually or in the aggregate) or outside the ordinary course of business;

(I)sold, assigned, transferred, or licensed any Intellectual Property;

(J)issued, sold or transferred any of its capital stock or other equity securities, securities convertible into its capital stock or other equity securities or warrants, options or other rights to acquire its capital stock or other equity securities, or any bonds or debt securities;

(K)accelerated or modified in any material respect the terms of any account receivable, changed any customer’s payment terms, changed any policies related to accounts receivable, or written off any account receivable;

(L)experienced any material damage, destruction or loss to its assets (whether or not covered by insurance);

(M)made any changes in any material employee compensation, benefits, severance or termination agreement other than routine salary increases in the ordinary course of business;

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(N)received any formal or actual notice from any customer with respect to any warranty claims, termination of contracts or work orders, or disputes as to billed fees in excess of $25,000; or

(O)agreed to do any of the foregoing.

(b)Since January 31, 2008, the Company has not (i) declared or made any payment or distribution of cash or other property to its shareholders with respect to its capital stock; (ii) purchased or redeemed any shares of capital stock; or (iii) made any cash payments or transfers to any affiliate of the Company.

3.8Title to Assets.  The Company has good and marketable title to, or a valid leasehold interest in, the assets used in the conduct of its business, that are reflected on the Latest Balance Sheet, or acquired since the date thereof, free and clear of all Liens, except assets disposed of in the ordinary course of business since the date of the Latest Balance Sheet.

3.9Compliance With Laws.  The Company has complied in all material respects with all applicable Legal Requirements, and no action, suit, proceeding, hearing, investigation, charge, complaint, claim, demand or notice has been filed or commenced against the Company alleging any failure to so comply.

3.10Undisclosed Liabilities.  The Company has no Liability except for (i) Liabilities set forth on the face of the Latest Balance Sheet, and (ii) Liabilities which have arisen after the date thereof in the ordinary course of business (none of which results from, arises out of, relates to, is in the nature of, or was caused by any breach of contract, breach of warranty, tort, infringement, or violation of law).

3.11Tax Matters.

(a)The Company has filed all Tax Returns which it was required to file by all Legal Requirements.  All such Tax Returns are true, correct and complete and were prepared in compliance with all Legal Requirements.  All Taxes due and owing by the Company (whether or not shown on any Tax Return) have been paid.  The Company is not currently the beneficiary of any extension of time within which to file any Tax Return.  The Company has withheld and paid all Taxes required to have been withheld and paid in connection with any amounts paid or owing to any employee, independent contractor, creditor, stockholder, or other Person.

(b)No audits or administrative or judicial Tax proceedings are pending or being conducted with respect to the Company.  The Company has not received from any Government Entity any (i) notice indicating an intent to open an audit or other review, (ii) request for additional information related to Tax matters, or (iii) notice of deficiency or proposed adjustment for any Tax.  The Company has not waived or extended any statute of limitations in respect of Taxes or agreed to the extension of time with respect to a Tax assessment or deficiency.

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(c)The Company is not a party to any agreement, contract, arrangement or plan that has resulted or would result, separately or in the aggregate, in the payment of (i) any “excess parachute payment” within the meaning of Section 280G of the Code (or any corresponding provision of state, local or foreign tax law) or (ii) any amount that will not be fully deductible as a result of Section 162(m) of the Code (or any corresponding provision of state, local or foreign tax law).  The Company is not a party to or bound by any tax allocation or sharing agreement.  The Company has not been a member of an affiliated group filing a consolidated federal income tax return (other than a group the common parent of which was the Company).  The Company has no Liability for the Taxes of any Person under Treasury Regulation Section §1.1502-6 (or any similar provision of state, local, or foreign law), as a transferee or successor, by contract, or otherwise.

(d)The unpaid Taxes of the Company (i) did not, as of the Latest Balance Sheet, exceed the reserve for Tax Liability set forth on the face of the Latest Balance Sheet, and (ii) do not exceed that reserve as adjusted to reflect operations thereafter in accordance with past practice.  Since the Latest Balance Sheet, the Company has not incurred any Liability for Taxes outside the ordinary course of business.

(e)Every Person who has provided service to the Company or any other Person at the request of the Company has been properly classified by the Company as an employee or independent contractor in compliance with all Legal Requirements.

3.12Environmental Matters.  The Company has complied in all material respects with all applicable Environmental Laws, and no action, suit, proceeding, hearing, investigation, charge, complaint, claim, demand or notice has been filed or commenced against the Company alleging any failure to so comply.  The Company has obtained and is in compliance with all permits, licenses and other authorizations required pursuant to Environmental Laws for the occupation of the Leased Real Property and/or the operation of its business; and all such permits, licenses and other authorization are set forth on the Disclosure Schedule.  The Company has not received any notice from any Government Entity of any actual or alleged violations or Liabilities, including any investigatory, remedial or corrective obligations, arising under Environmental Laws.  The Company has not assumed or otherwise become subject to any Liability, including any investigatory, remedial or corrective obligations, of any other Person arising under Environmental Laws.  The Company has provided Buyer with all environmental audits, reports and other material environmental documents relating to the Company’s past or current properties, facilities and operations.

3.13Intellectual Property.

(a)The Company owns or has a valid right to use all Intellectual Property that it uses in the conduct of its business.  Each item of Intellectual Property owned or used by the Company immediately prior to the Closing will be owned or available for use by the Company on the same terms and conditions immediately after the Closing.  The Company has taken all action necessary and desirable to maintain and protect each item of Intellectual Property that it owns or uses.

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(b)The Company has not interfered with, infringed upon, misappropriated, or otherwise come into conflict with any Intellectual Property rights of any Person, and the Company has not received any charge, complaint, claim, demand or notice alleging any of the foregoing.  To Seller’s Knowledge, no Person has interfered with, infringed upon, misappropriated, or otherwise come into conflict with any Intellectual Property rights of the Company.

(c)Set forth on the Disclosure Schedule are all of the following that are owned or used by the Company: (i) patents and patent applications; (ii) registered trademarks and applications to register trademarks; (iii) registered copyrights and applications to register copyrights; (iv) all Intellectual Property owned by any other Person (and all licenses, sublicenses, grants, or other agreements related thereto); (v) all computer software and databases; and (vi) any other Intellectual Property that is material to the Company’s business.

3.14Real Estate.

(a)The Company does not own any real property.

(b)Set forth on the Disclosure Schedule is a list of all real property leased by the Company (the “Leased Real Property”) and each lease pursuant to which the Company leases the Leased Real Property.  The Company has provided to Buyer a true, correct and complete copy of each such lease.  Each such lease is a valid and binding obligation of the parties thereto, enforceable against such parties in accordance with its terms except as such enforceability may be limited by (i) applicable insolvency, bankruptcy, reorganization, moratorium or other similar laws affecting creditors’ rights generally, and (ii) applicable equitable principles (whether considered in a proceeding at law or in equity).  The Company is not, and, to Seller’s Knowledge, no other Person is, in violation or breach of or default under any such lease.  The transactions contemplated by this Agreement do not require the consent of any party to any such lease, will not result in a violation or breach of or default under any such lease, and will not otherwise cause any such lease to cease to be legal, binding, enforceable and in full force and effect on the same terms following the Closing.

(c)To Seller’s Knowledge, all buildings, structures, fixtures, building systems and equipment, and all components thereof (including the roof, foundation, walls, and other structural elements thereof, heating, ventilation, air conditioning, mechanical, electrical, plumbing and other building systems, environmental control, remediation and abatement systems, sewer, storm and waste water systems, irrigation and other water distribution systems, parking facilities, fire protection security and surveillance systems, and telecommunications, computer, wiring and cable installations), included in the Leased Real Property are in good condition and repair and sufficient for the operations of the Company’s businesses.

3.15Litigation.  The Disclosure Schedule (i) describes all outstanding injunctions, judgments, orders, decrees, rulings, or charges related to the Company, (ii) describes all actions, suits, proceedings, hearings, investigations, arbitrations, and other legal or administrative proceedings to which the Company is a party or, to Seller’s Knowledge, threatened to be made a party, and (iii) indicates if any of such matters, if determined adversely to the Company, could

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reasonably be expected to subject the Company to Liabilities in excess of $50,000.  There is no reason to believe that any action, suit, proceeding, hearing, investigation, arbitration, or other legal or administrative proceeding may be brought or threatened against the Company or that there is any reasonable basis for any of the foregoing.  The Disclosure Schedule describes all reported incidents of which Seller has Knowledge involving the Company that could reasonably be expected to result in any claim being made against the Company.

3.16Employee Benefits.

(a)The Disclosure Schedule lists each Employee Benefit Plan that the Company maintains, to which the Company contributes or has any obligation to contribute, or with respect to which the Company has any Liability.

(i)Each such Employee Benefit Plan (and each related trust, insurance contract, or fund) has been maintained, funded and administered, in all material respects, in accordance with the terms of such Employee Benefit Plan, the terms of any applicable collective bargaining agreement and all Legal Requirements.

(ii)All required reports and descriptions (including annual reports (IRS Form 5500), summary annual reports, and summary plan descriptions) have been timely filed and/or distributed in accordance with the applicable requirements of ERISA and the Code with respect to each such Employee Benefit Plan.  The requirements of COBRA have been met, in all material respects, with respect to each such Employee Benefit Plan which is an “employee welfare benefit plan” (as such term is defined in Section 3(1) of ERISA) subject to COBRA.

(iii)All contributions (including all employer contributions and employee salary reduction contributions) that are due have been made within the time periods prescribed by ERISA and the Code to each such Employee Benefit Plan that is an “employee pension benefit plan” (as such term is defined in Section 3(2) of ERISA) and all contributions for any period ending on or before the Closing Date which are not yet due have been made to each such employee pension benefit plan or funds have been reserved and set aside in an amount sufficient to satisfy such contributions.  All premiums or other payments for all periods ending on or before the Closing Date have been paid with respect to each such Employee Benefit Plan that is an employee welfare benefit plan.

(iv)Each such Employee Benefit Plan which is intended to meet the requirements of a “qualified plan” under Section 401(a) of the Code has received a determination from the Internal Revenue Service that such Employee Benefit Plan is so qualified, and nothing has occurred since the date of such determination that could adversely affect the qualified status of any such Employee Benefit Plan.  Each such Employee Benefit Plan has been timely amended to reflect the provisions of any and all Legal Requirements in effect for any period prior to or as of the Closing other than amendments for which the remedial amendment period under Section 401(b) of the Code (including, if applicable, any extension of the remedial amendment period) has not

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expired, and there are no plan document failures, operational failures, demographic failures or employee eligibility failures which have not been corrected within the meaning of Rev. Proc. 2006-27 with respect to any such Employee Benefit Plan.

(v)There have been no “prohibited transactions” (within the meaning of Section 406 of ERISA or Section 4975 of the Code) with respect to any such Employee Benefit Plan.  No fiduciary has any Liability for breach of fiduciary duty or any other failure to act or comply in connection with the administration or investment of the assets of any such Employee Benefit Plan.  No action, suit, proceeding, hearing, or investigation with respect to the administration or the investment of the assets of any such Employee Benefit Plan (other than routine claims for benefits) is pending or, to Seller’s Knowledge, threatened.  To Seller’s Knowledge, there is no basis for any such action, suit, proceeding, hearing, or investigation.

(vi)The Company has delivered to the Buyer correct and complete copies of the plan documents and summary plan descriptions, the most recent determination letter received from the Internal Revenue Service, the most recent annual report (IRS Form 5500, with all applicable attachments), and all related trust agreements, insurance contracts, service or investment agreements, most recent testing information, list of assets and other funding arrangements which implement each such Employee Benefit Plan.

(vii)The Disclosure Schedule lists each such Employee Benefit Plan providing for deferred compensation that constitutes a “nonqualified deferred compensation plan” (as defined in Section 409A(d)(1) of the Code and applicable regulations (including IRS Notice 2005-1)) for the Company or any ERISA Affiliate (the “Deferred Compensation Plans”).  Each Deferred Compensation Plan (i) complies, in all material respects, with requirements of Section 409A of the Code and regulations promulgated thereunder, or (ii) is exempt from compliance under the “grandfather” provisions of applicable regulations, and has not been materially modified since October 3, 2004, or (iii) may, without the consent of any service provider or other Person and without any Liability to the Company or any ERISA Affiliate other than for the payment of benefits due thereunder, the full amount of which has been reflected on the Latest Balance Sheet, be amended or terminated to comply with or to be exempt from, the requirements of Section 409A of the Code and regulations promulgated thereunder.

(b)Neither the Company nor any ERISA Affiliate maintains, contributes to, has any obligation to contribute to, or has (or has ever had during the six years prior to the Closing Date) any Liability under or with respect to any “defined benefit plan” (as defined in Section (3)(35) of ERISA) or any “multiemployer plan” (as defined in Section (3)(37) or 4001(a)(3) of ERISA).  Neither the Company nor any ERISA Affiliate maintains or contributes (or has ever maintained or contributed during the six years prior to the Closing Date) or has any Liability under a plan subject to Section 412 of the Code.

(c)The Company does not maintain, contribute to or have any obligation to contribute to, or has any Liability with respect to, any employee welfare benefit plan providing

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medical, health, or life insurance or other welfare-type benefits for current or future retired or terminated directors, officers or employees of the Company (or any spouse of other dependent thereof) other than in accordance with COBRA or a similar state law.  Set forth on the Disclosure Schedule is a list of all Persons who are receiving COBRA benefits through the Company or any ERISA Affiliate and a list of all employees of the Company who are currently on leave.

3.17Insurance.  The Disclosure Schedule contains a list of each insurance policy, bond or other form of insurance maintained by the Company (the “Insurance Policies”).  With respect to each Insurance Policy:  (i) the policy is legal, valid, binding, enforceable, and in full force and effect; (ii) the policy will continue to be legal, valid, binding, enforceable, and in full force and effect on the same terms immediately following the consummation of the transactions contemplated hereby; (iii) the Company nor, to Seller’s Knowledge, any other party to the policy is in breach or default (including with respect to the payment of premiums or the giving of notices), and no event has occurred which, with notice or the lapse of time, would constitute such a breach or default, or permit termination, modification, or acceleration, under the policy; (iv) no party to the policy has repudiated any provision thereof; and (v) the Company has provided to Buyer a true, correct and complete copy of the policy.

3.18Contracts.

(a)The Disclosure Schedule contains a list of each of the following contracts, agreements or other arrangements to which the Company is a party or by which any of its assets or properties is bound (the “Material Contracts”):

(i)master services agreement with a Material Customer;

(ii)consulting agreement or work agreement that involves the performance of services for, or delivery of goods or materials to, the Company that (A) resulted in expenses to the Company in excess of $50,000 for the calendar year ending December 31, 2007 or (B) is reasonably expected to result in expenses to the Company in excess of $50,000 after the Closing Date;

(iii)other than the agreements described in Section 3.18(a)(i) above, any agreement that involves the performance of services or delivery of goods or materials by the Company that (A) resulted in revenue to the Company in excess of $50,000 for the calendar year ending December 31, 2007 or (B) is reasonably expected to result in revenue to the Company in excess of $50,000 after the Closing Date;

(iv)other than the agreements described in Section 3.18(a)(ii) above, any agreement that involves the performance of services for, or delivery of goods or materials to, the Company that (A) resulted in expenses to the Company in excess of $50,000 for the calendar year ending December 31, 2007 or (B) is reasonably expected to result in expenses to the Company in excess of $50,000 after the Closing Date;

(v)collective bargaining agreement or other similar contract with any labor union;

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(vi)agreement for the employment of any Person on a full-time, part-time, consulting or other basis (A) providing annual cash or other compensation in excess of $100,000, or (B) providing for the payment of any cash or other compensation or benefits upon the consummation of the transactions contemplated hereby;

(vii)agreement, guaranty or indenture relating to borrowed money or other Debt of the Company, or any Lien on any asset of the Company;

(viii)agreement that restricts in any respect the ability of the Company to engage in any line of business or compete with any Person;

(ix)joint venture or partnership agreement involving a sharing of profits, losses, costs or liabilities by the Company with any other Person;

(x)lease or agreement under which the Company is (A) lessee of or holds or operates any tangible personal property owned by any other Person, except for any lease of tangible personal property under which the aggregate annual rental payments do not exceed $25,000, or (B) lessor of or permits any other Person to hold or operate any tangible property (real or personal) owned by the Company;

(xi)power of attorney granted by or to the Company;

(xii)agreement with any shareholder, director, officer, employee, agent or other affiliate of the Company (other than the agreements described in Section 3.18(a)(ii)) and 3.18(a)(vi);

(xiii)agreement not entered into the ordinary course of business;

(xiv)other agreement that (A) involves the payment or potential payment, pursuant to the terms of any such contract or agreement, to or by the Company of more than $25,000, and (B) cannot be terminated within 90 days after giving notice of termination without resulting in any cost or penalty to the Company; and

(xv)other agreement that is material to the Company or its business.

(b)Each Material Contract and each other master service agreement to which the Company is a party is a valid and binding obligation of the parties thereto, enforceable against them in accordance with its terms except as such enforceability may be limited by (i) applicable insolvency, bankruptcy, reorganization, moratorium or other similar laws affecting creditors’ rights generally, and (ii) applicable equitable principles (whether considered in a proceeding at law or in equity).  Neither the Company nor, to Seller’s Knowledge, any other Person, is in violation or breach of or default under such Material Contract or master service agreement to which the Company is a party.  The Company has provided to Buyer a true, correct and complete copy of each written Material Contract and a written description of the material terms of each oral Material Contract.

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(c)The Company has provided to Buyer a true, correct and complete copy of (i) each Material Contract, (ii) each master service agreement to which the Company is a party or by which it is bound, (iii) the résumé of each consultant providing engineering services for or on behalf of the Company, and (iv) the billing history of each consultant providing engineering services for or on behalf of the Company for the fiscal year ended December 31, 2006 and the eight month period ended August 31, 2007.  To Seller’s Knowledge, no consultant that is performing or has performed engineering services for or on behalf of the Company has a claim against or dispute with the Company.  The Company has a valid and binding master service agreement with each Material Customer.  To Seller’s Knowledge, no Material Customer or material group of independent contractors intends to cease doing business with the Company or decrease the amount of business it does with the Company in any material respect.

3.19Employees.  The Company has not experienced any strike or material grievance, claim of unfair labor practices, or other collective bargaining dispute.  To Seller’s Knowledge, no organizational effort is presently being made or threatened by or on behalf of any labor union with respect to employees of the Company.  To Seller’s Knowledge, no officer or executive manager of the Company has any plans to terminate his or her employment or independent contractor relationship with the Company or is a party to any agreement that materially and adversely affects the ability of such officer or executive manager to perform his or her duties with the Company.  There are no uninsured workers’ compensation claims pending or, to Seller’s Knowledge, threatened against the Company.  The qualifications for employment of each of the Company’s employees under applicable immigration laws have been reviewed by the Company and a properly completed Form I-9 is on file with the Company for each employee, as applicable.  The Company has complied with the U.S. Immigration and Nationality Act, as amended from time to time, and the rules and regulations promulgated thereunder, and to Seller’s Knowledge, there is no reasonable basis for any claim that the Company is not in compliance with the terms thereof.  All employees and consultants of the Company are properly classified as such and the Company is not subject to any Liability for misclassification of such persons.  The Disclosure Schedule contains a list of the employees and contractors of the Company as of March 1, 2008.  None of such employees are or have been employees of either Seller or its affiliates, other than the Company, for a period of three months prior to Closing.

3.20Affiliate Transactions.  None of Seller, its affiliates, or any of the Company’s directors, officers, employees, or affiliates (i) has been involved in any business arrangement or relationship with the Company within the past 12 months, or (ii) owns any asset which is used in the business of the Company.

3.21Receivables.  All notes and accounts receivable of the Company are reflected properly on its books and records, are valid receivables subject to no setoffs or counterclaims.

3.22Permits and Licenses.  The Disclosure Schedule contains a true and complete list of all licenses, permits, certificates of authority, authorizations, approvals, registrations and similar consents granted or issued by any Government Entity to the Company (the “Permits”).  All of the Permits are currently effective and valid and they are sufficient to enable the Company to conduct its business in compliance with all Legal Requirements.  The execution, delivery or

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performance of this Agreement by the parties will not have any effect on the continued validity or sufficiency of the Permits, nor will any additional licenses, permits, certificates of authority, authorizations, approvals, registrations or similar consents be required by virtue of the execution, delivery or performance of this Agreement by the parties hereto to enable the Company to conduct its business.

3.23Tangible Assets.  The Company owns or leases all buildings, machinery, equipment, computers and related equipment, furniture, vehicles, and other tangible assets necessary for the conduct of its businesses.  Each such tangible asset is in good operating condition and repair (ordinary wear and tear excepted), and is suitable for the purposes for which it is used.

3.24Service Warranty.  To Sellers’ Knowledge, all services provided by the Company (or any Person for which the Company may be responsible, including independent contractors) have been in conformity with all applicable contractual commitments and all express and implied warranties, and the Company has no Liability for replacement or repair thereof or other damages in connection therewith.

3.25Service Liability.  The Company has no Liability arising out of any injury to individuals or property as a result of any service provided by the Company (nor any Person for which the Company may be responsible, including independent contractors).

3.26Bank Accounts.  The Disclosure Schedule contains a complete and accurate list of each deposit account or asset maintained by or on behalf of the Company with any bank, brokerage house or other financial institution, specifying with respect to each the name and address of the institution, the name under which the account is maintained, the account number, and the name and title or capacity of each Person authorized to have access thereto.

3.27Debt, Liabilities, and Expenses.  Exhibit 2.2 sets forth, as of the Closing Date, (a) all of the Debt of the Company, (b) all of the Liabilities of the Company that are (i) outstanding more than 60 days on the Closing Date or (ii) not incurred in the ordinary course of business, (c) all payments and expenses described in Section 2.2(iii), and (d) all Seller Transaction Expenses.  Exhibit 2.2 sets forth all of the fees and expenses owing by Seller, CYMRI or the Company in connection with the transactions contemplated in this Agreement.

ARTICLE 4

REPRESENTATIONS AND WARRANTIES OF BUYER

Buyer represents and warrants to Seller and CYMRI as follows:

4.1Organization, Power and Authorization.  Buyer is a corporation duly organized, validly existing and in good standing under the laws of Delaware.  Buyer is duly authorized to conduct business and is in good standing under the laws of each jurisdiction where such qualification is required.  Buyer has the requisite power to carry on the businesses in which it is engaged and to own and use the properties owned and used by it.  Buyer has the requisite power and authority necessary to enter into, deliver and perform its obligations pursuant to each of the

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Transaction Documents to which it is a party.  Buyer’s execution, delivery and performance of each Transaction Document to which it is a party has been duly authorized by Buyer.

4.2Binding Effect and Noncontravention.

(a)This Agreement has been duly executed and delivered by Buyer and constitutes, and each other Transaction Document to which Buyer is a party when executed and delivered will constitute, a valid and binding obligation of Buyer, enforceable against Buyer in accordance with its terms except as such enforceability may be limited by (i) applicable insolvency, bankruptcy, reorganization, moratorium or other similar laws affecting creditors’ rights generally, and (ii) applicable equitable principles (whether considered in a proceeding at law or in equity).

(b)The execution, delivery and performance by Buyer of the Transaction Documents to which it is a party do not (i) violate any Legal Requirement to which Buyer is subject or its charter or bylaws or equivalent organizational documents, (ii) conflict with, result in a breach of, constitute a default under, result in the acceleration of, create in any party the right to accelerate, terminate, modify, or cancel, or require any notice under any agreement, contract, lease, license, instrument, or other arrangement to which Buyer is a party or by which Buyer is bound or to which Buyer’s assets are subject, (iii) result in the creation of any Lien on any assets of Buyer, or (iv) require any authorization, consent, approval or notice by or to any Person.

4.3Brokers.  Buyer has not retained any broker in connection with the transactions contemplated by this Agreement.  Neither Seller nor CYMRI will have any obligation to pay any broker’s, finder’s, investment banker’s, financial advisor’s or similar fee in connection with this Agreement or the transactions contemplated by this Agreement by reason of any action taken by or on behalf of Buyer.

4.4Litigation.  Buyer (i) is not subject to any outstanding injunction, judgment, order or decree, and (ii) is not party to or, to Buyer’s knowledge, threatened to be made a party to, any proceeding, hearing, investigation, claim, legal action, suit, arbitration, governmental investigation or other legal or administrative proceeding, which would reasonably be expected to have a material adverse effect on Buyer’s ability to consummate the transactions contemplated by this Agreement or otherwise perform its obligations under any Transaction Document to which it is a party.

4.5Consents and Approvals.  No consent, authorization or approval of, filing or registration with, or cooperation from, any Governmental Authority or any other Person not a party to this Agreement is necessary in connection with the execution, delivery and performance by Buyer of this Agreement or the consummation of the transactions contemplated hereby.

4.6Investment Intent.  Buyer acknowledges that the Securities have not been registered under the Securities Act and that the Securities may not be resold absent such registration or unless an exemption therefrom is available.  The Buyer is acquiring the Securities for its own account, for investment purposes only and not with a view toward distribution

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thereof.  The Buyer qualifies as an “accredited investor”, as such term is defined in Rule 501(a) promulgated pursuant to the Securities Act.

ARTICLE 5

CONDITIONS TO THE CLOSING

5.1Conditions to Buyer’s Obligation.  Buyer’s obligation to effect the transactions contemplated by this Agreement is subject to the satisfaction as of the Closing of the following conditions precedent:

(a)Representations and Warranties.  Each representation and warranty set forth in Article 3 must be true and correct in all material respects at and as of the Closing as though then made; provided that any representation or warranty that specifically addresses matters only as of a certain date shall be true and correct in all material respects as of such date.

(b)Proceedings.  There must not be any action, suit, or proceeding pending or threatened before any Government Entity wherein an unfavorable injunction, judgment, order, decree, ruling or charge would (i) prevent or prohibit the consummation of the transactions contemplated by this Agreement, (ii) cause any of the transactions contemplated by this Agreement to be rescinded following consummation, (iii) adversely affect the right of Buyer to own the Securities and to control the Company, or (iv) adversely affect the right of the Company to own its assets and to operate its business (and no such injunction, judgment, order, decree, ruling or charge must be in effect).

(c)Notices, Consents and Approvals.  All of the notices, consents and approvals required for the consummation of the transactions contemplated hereby, as set forth on the Disclosure Schedule pursuant to Section 3.2(b), must have been given or obtained.

(d)Seller’s and CYMRI’s Closing Documents.  The following documents (duly executed as appropriate) must have been delivered to Buyer:

(i)this Agreement;

(ii)the Decca Non-competition Agreement;

(iii)the Decca Option Agreement;

(iv)the Escrow Agreement;

(v)the Non-competition Agreement;

(vi)the Sublease Agreement;

(vii)the Transition Services Agreement;

(viii)the Triumph MOU;

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(ix)a certificate (dated not more than 10 days prior to the Closing), as to the good standing of the Company in its jurisdiction of incorporation;

(x)a certificate dated as of the Closing Date from Seller, signed by the Secretary thereof and in form and substance reasonably satisfactory to Buyer, certifying (A) that resolutions in the form attached to the certificate have been duly adopted by Seller’s board of directors and shareholders, as applicable, authorizing the execution of the Transaction Documents to which it is a party, (B) the names and incumbency of its officers who are empowered to execute the foregoing documents for and on behalf of Seller, and (C) the authenticity of attached copies of the Articles of Incorporation and Bylaws (or other organizational documents) of the Company and Seller;

(xi)a certificate dated as of the Closing Date from CYMRI, signed by the Secretary thereof and in form and substance reasonably satisfactory to Buyer, certifying (A) that resolutions in the form attached to the certificate have been duly adopted by CYMRI’s board of managers, authorizing the execution of the Transaction Documents to which it is a party, (B) the names and incumbency of its officers who are empowered to execute the foregoing documents for and on behalf of CYMRI, and (C) the authenticity of attached copies of the Certificate of Formation and operating agreement (or other organizational documents) of CYMRI;

(xii)a certificate dated as of the Closing Date signed by Seller in form and substance reasonably satisfactory to the Buyer certifying that the Company’s consolidated earnings before interest, taxes, depreciation, and amortization (after considering certain reasonable pro forma adjustments satisfactory to Buyer, in its discretion), for the latest 12 month period ending just prior to the Closing Date is at least $3,000,000;

(xiii)a certificate dated as of the Closing date signed by Seller and CYMRI in form and substance reasonably satisfactory to the Buyer certifying (A) the accuracy of the attached accounts receivable aging as of the Closing Date; (B) the accuracy of the accounts payable aging as of the Closing Date; (C) the cash balance of the Company as of the Closing Date; and (D) the balance of the prepaid insurance of the Company as of Closing Date.

(xiv)an opinion of the legal counsel to Seller as to the matters referred to on Exhibit H;

(xv)the certificates representing the Securities, endorsed in blank or accompanied by duly executed stock powers;

(xvi)the resignations of each director and officer of the Company, effective as of the Closing;

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(xvii)an assignment of all of Seller’s and CYMRI’s rights related to the Company under the CYMRI Merger Agreement;

(xviii)estoppel certificates for the Leased Real Property, in form and substance reasonably satisfactory to Buyer; and

(xix)such other documents, certificates, instruments or opinions as Buyer may reasonably request, in form reasonably satisfactory to Buyer.

(e)MSA Amendments.  The Company and each of the customers listed on Exhibit 5.1(e) must have entered into an amendment to each of the respective master services agreements in form and substance satisfactory to Buyer.

(f)MSA Agreements.  The Company and each of the customers listed on Exhibit 5.1(f) must have entered into master services agreements in form and substance satisfactory to Buyer.

(g)Releases.  Each of the Majority Shareholders, Cantrell, the holders of any Debt or Lien with respect to the Company and the Persons identified on Exhibit 2.2 to whom Seller Transaction Expenses were paid must have entered into an agreement releasing and discharging the Company and its assets from all claims and Liens in form and substance satisfactory to Buyer.

5.2Conditions to Seller’s and CYMRI’s Obligation.  Seller’s and CYMRI’s obligation to effect the transactions contemplated by this Agreement is subject to the satisfaction as of the Closing of the following conditions precedent:

(a)Representations and Warranties.  Each representation and warranty set forth in Article 4 must be true and correct in all material respects at and as of the Closing as though then made.

(b)Proceedings.  There must not be any action, suit, or proceeding pending or threatened before any Government Entity wherein an unfavorable injunction, judgment, order, decree, ruling or charge would (i) prevent or prohibit the consummation of the transactions contemplated by this Agreement, or (ii) cause any of the transactions contemplated by this Agreement to be rescinded following consummation.

(c)Buyer’s Closing Documents.  The following documents (duly executed as appropriate) must have been delivered to Seller:

(i)this Agreement;

(ii)the Escrow Agreement;

(iii)the Transition Services Agreement;

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(iv)a certificate (dated not more than 10 days prior to the Closing), as to the good standing of Buyer in its jurisdiction of organization or incorporation;

(v)a certificate dated as of the Closing Date from Buyer, signed by the Secretary thereof and in form and substance reasonably satisfactory to Seller certifying (A) that resolutions in the form attached to the certificate have been duly adopted by Buyer’s board of directors authorizing the execution of this Agreement and the other Transaction Documents to which it is a party, (B) the names and incumbency of its officers who are empowered to execute the foregoing documents for and on behalf of Buyer, and (C) the authenticity of attached copies of the certificate of incorporation and bylaws of Buyer;

(vi)an opinion of the legal counsel to Buyer as to the matters referred to on Exhibit I; and

(vii)such other documents, certificates, instruments or opinions as Seller may reasonably request, in form reasonably satisfactory to Seller.

ARTICLE 6

COVENANTS

6.1Further Assurances.  Buyer, Seller and CYMRI will take such further actions (including the execution and delivery of such further instruments and documents) as the other party may reasonably request to carry out the purposes of this Agreement.

6.2Litigation Support.  From and after the Closing, in the event that and for so long as the Company is actively contesting or defending against any third party action, suit, proceeding, hearing, investigation, charge, complaint, claim, or demand in connection with any fact, situation, circumstance, status, condition, activity, practice, plan, occurrence, event, incident, action, failure to act, or transaction arising on or prior to the Closing Date involving the Company or its operations, Seller and CYMRI agree to reasonably cooperate with Buyer and the Company.

6.3Release.  Each of Seller and CYMRI, on behalf of itself and any Person claiming through or under it, whether derivatively or otherwise, releases and forever discharges the Company and its subsidiaries, shareholders, officers, directors, employees, agents, attorneys, affiliates, successors and assigns, and all of their respective assets, tangible and intangible, real and personal from all actions, causes of actions, suits, debts, sums of money, accounts, or other claims or demands whatsoever, in law, equity or otherwise, whether fixed or contingent, known or unknown, which Seller or CYMRI ever had, now has or hereafter may have, upon or by reason of, or arising out of, any circumstance, agreement, event or matter occurring or existing on or prior to the Closing Date, except for the rights, liabilities and obligations arising out of, and the transactions contemplated by, this Agreement and the other Transaction Documents.

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6.4Continued Existence/Reserve Account.

(a)On the Closing Date, Seller will deposit $1,500,000 in a separate cash deposit account (the “Reserve Account”).  Until such time as all Tax Liabilities of the Company or Seller that result from the operations up to and including the Closing Date of the Company or from the transactions contemplated herein (the “Reserve Tax Liabilities”) have been paid, Seller agrees (i) to maintain its corporate existence, (ii) to maintain the Reserve Account in accordance with this Section 6.4 and to not commingle the funds held in the Reserve Account and (iii) to ensure that the Reserve Account and the funds held therein remain free from any Lien that would restrict the Company from accessing any portion of such funds to satisfy its obligations under this Section 6.4 from time to time; provided, however, that if Seller does not consummate a Sale of CYMRI on or prior to December 31, 2008, Seller shall be entitled to withdraw $300,000 from the Reserve Account at any time after December 31, 2008 and utilize such funds in any manner without restriction.

(b)During such times as the Reserve Tax Liabilities remain unpaid, within 15 days of the end each month, Seller will deliver to Buyer the bank statements of the Reserve Account and a record of the disbursements of the Reserve Account for the previous month.  Seller will give Buyer access to the books, records and other information of Seller and the Reserve Account to verify the balance and the disbursements of the Reserve Account and matters related thereto.

(c)During such time as the Reserve Tax Liabilities remain unpaid, the Reserve Account will only be used to pay Reserve Tax Liabilities or indemnify Buyer for its payment of Tax Liabilities of Seller as provided for in this Agreement.  In the event there is a positive balance remaining in the Reserve Account after the payment of all the Reserve Tax Liabilities, Seller may utilize the remaining funds in any manner without restriction.

(d)Seller acknowledges and agrees that any payment to Buyer for the indemnification of Tax Liabilities under this Agreement will be paid out of the Reserve Account until such account has a zero balance prior to any payment out of the funds escrowed pursuant to the terms of the Escrow Agreement.

6.5Accounts Receivable Aging.  For a period of 270 days after the Closing Date, Buyer will deliver to Seller a quarterly aging of the accounts receivable of the Company that were outstanding as of the Closing Date.

6.6Preparation of Tax Returns; Payment of Taxes.

(a)Consolidated or Combined Tax Returns.  Seller will include the Company, or cause the Company to be included in, and will file or cause to be filed (at Seller’s expense), (i) the United States consolidated federal income Tax Returns of Seller or its affiliates for all taxable periods of the Company ending on or prior to the Closing Date (including, without limitation, the consolidated federal income Tax Return for the period ending on December 31, 2007 and the short period of the Company ending on the Closing Date) and (ii) where applicable, all other consolidated, combined or unitary Tax Returns of Seller and its affiliates for the taxable periods of the Company ending (or the portion of any taxable period ending) on or prior to the Closing Date, and will pay any and all Taxes due with respect to the returns referred to in clause

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(i) or (ii) of this Section 6.6(a).  Seller will include any income, gain, loss, deduction or other tax item arising from or attributable to the transactions contemplated by this Agreement on its federal, state and local Income Tax Returns for the taxable period of Seller which includes the Closing Date and will pay all Taxes attributable thereto.  Seller also will file or will cause the Company to file (at Seller’s expense) all other Tax Returns of or which include the Company required to be filed (taking into account any extensions) on or prior to the Closing Date and will pay any and all Taxes due with respect to such Tax Returns.  All Tax Returns described in this Section 6.6(a) will be prepared in a manner consistent with prior practice of Seller unless otherwise required by applicable Legal Requirements.  Prior to filing the Tax Returns described in this Section 6.6(a), Seller will, no later than 15 Business Days prior to the due date of such Tax Returns (taking into account valid extensions of time in which to file such Tax Returns), submit copies of such Tax Returns and all supporting work papers and schedules to Buyer for its review and approval.  Any comments Buyer desires to make with respect to such Tax Returns will be provided to Seller in writing no later than five Business Days following receipt of such Tax Returns and all supporting work papers and schedules from Seller.  Seller will provide Buyer a final copy of any such Tax Returns.  Seller will cause such Tax Returns to be timely filed and all Taxes shown as due thereon to be timely and fully paid.

(b)Certain State, Local and Foreign Income Tax Returns.  Except for the state income and franchise Tax Returns of the Company which are required to be filed in Texas, Louisiana and Mississippi for the taxable period of the Company ending on December 31, 2007 and in 2008 (the “2007 and 2008 State Income Tax Returns of PEI”), Seller will cause to be prepared (at Seller’s expense) all foreign, state and local Income Tax Returns of the Company for periods ending on or prior to the Closing Date which are required to be filed after the Closing Date.  Buyer will cooperate with Seller in connection with Seller’s preparation of such Income Tax Returns, and will make available to Seller such books, records and other information necessary for the preparation of such Income Tax Returns.  Such Income Tax Returns will be prepared based on and consistent with tax accounting methods and principles used in preparing such Income Tax Returns for prior periods unless otherwise required by applicable Legal Requirements.  Prior to filing the Tax Returns described in this Section 6.6(b), Seller will, no later than 15 Business Days prior to the due date of such Tax Returns (taking into account valid extensions of time in which to file such Tax Returns), submit copies of such Tax Returns and all supporting work papers and schedules to Buyer for its review and approval.  Any comments Buyer desires to make with respect to such Tax Returns will be provided to Seller in writing no later than five Business Days following receipt of such Tax Returns and all supporting work papers and schedules from Seller.  Seller will provide Buyer will a copy of each such Income Tax Return within five Business Days of receipt of comments from Buyer incorporating any such comments Seller accepts.  Buyer will cause each such Income Tax Return to be timely filed following receipt thereof from Sellers.  Seller will be solely responsible for, and will pay to Buyer not later than five (5) Business Days prior to the due date for the payment thereof, all Taxes required to be paid with respect to such Income Tax Returns.

(c)2007 and 2008 Tax Returns of PEI; Other Tax Returns.  Following the Closing Date, Buyer will be responsible for preparing or causing to be prepared (i) the 2007 and 2008 State Income Tax Returns of PEI and (ii) all federal, foreign, state and local Tax Returns required to be filed by the Company after the Closing Date other than the Tax Returns required

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to be prepared and/or filed by Seller pursuant to Sections 6.7(a) and 6.7(b).  Prior to filing the 2007 and 2008 State Income Tax Returns of PEI, Buyer will, no later than ten (10) Business Days prior to the due date of such Tax Returns (taking into account valid extensions of time in which to file such Tax Returns), submit copies of such Tax Returns and all supporting work papers and schedules to Seller for its review and approval.  Any comments Seller desires to make with respect to such Tax Returns will be provided to Buyer in writing no later than five (5) Business Days following receipt of such Tax Returns and all supporting work papers and schedules from Buyer.  Prior to filing such Tax Returns, Buyer will provide Seller a final copy of any such Tax Returns.  Buyer will cause such Tax Returns to be timely filed and, subject to receiving the payments from Seller referred to in Section 6.6(d), pay the Taxes shown as due thereon.

(d)Payment of Taxes.  Not later than five Business Days before the due date for payment of Taxes with respect to any Tax Returns which Buyer has the responsibility to file, Seller will pay to Buyer an amount equal to that portion of the Taxes shown on such return for which Seller has an obligation to indemnify Buyer pursuant to the provisions of Section 7.2(b).

(e)Allocation of Taxes.  For U.S. federal income tax purposes, the taxable year of the Company for 2008 will end as of the end of the day on the Closing Date and, with respect to all other Taxes, Seller and Buyer will, unless prohibited by applicable law, close the taxable period of the Company for 2008 as of the end of the day on the Closing Date.  Neither Seller nor Buyer will take any position inconsistent with the preceding sentence on any Tax Return.  In any case where applicable law does not permit the Company to close its taxable year on the Closing Date or in any case in which a Tax is assessed with respect to a taxable period which includes the Closing Date (but does not begin or end on that day) (a “Straddle Period”), then Taxes will be allocated as follows:  (i) in the case of a Tax that is based on net or gross income, the amount of any Taxes of the Company for the Pre-Closing Tax Period will be determined based on an interim closing of the books as of the close of business on the Closing Date, (ii) in the case of a tax that is based on a specific event or transaction, the amount of any Taxes for the Pre-Closing Tax Period or Post-Closing Tax Period will be determined based on the actual date of such event or transaction and (iii) the amount of other Taxes of the Company for a Straddle Period which relate to the Pre-Closing Tax Period will be deemed to be the amount of such Tax for the entire Taxable period multiplied by a fraction the numerator of which is the number of days in the Taxable period ending on the Closing Date and the denominator of which is the number of days in such Straddle Period.  For Taxable periods ending on or prior to the Closing Date, the entire amount of Taxes with respect to such Taxable period (whether or not shown on the Tax Return) will be allocable to Seller.

(f)Pre-Closing Tax Attributes.  All Tax refunds and credits of the Company attributable to the pre-Closing periods will be the property of Seller, and if received by Buyer or the Company such refunds and credits will be promptly delivered to Seller.  If it is determined that the Company’s Tax Liability for state Income Taxes in Texas, Louisiana and Mississippi for the taxable period ending in 2007 and the pre-Closing portion of such Liability for the taxable period ending in 2008 (the “Pre-Closing State Tax Liability”) is less than the Estimated Pre-Closing State Tax Liability, Buyer will pay to Seller the amount by which Estimated Pre-Closing State Tax Liability exceeds the Pre-Closing State Tax Liability.

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6.7Cooperation with Respect to Tax Returns.  Buyer and Seller agree to furnish or cause to be furnished to each other, and each at their own expense, as promptly as practicable, such information (including access to books and records) and assistance, including making employees available on a mutually convenient basis to provide additional information and explanations of any material provided, relating to the Company as is reasonably necessary for the filing of any Tax Return, for the preparation for any audit, and for the prosecution or defense of any claim, suit or proceeding relating to any adjustment or proposed adjustment with respect to Taxes.

6.8Tax Sharing Agreements.  To the extent there are any, all Tax sharing agreements and arrangements between (i) the Company on the one hand, and (ii) Seller or any of its affiliates on the other hand, are terminated effective as of the Closing Date and have no further effect for any taxable year or period (whether a past, present or future year or period), and the Company does not have any additional payment obligations thereunder with respect to any period (whether a past, present or future period) in respect of the re-determination of Tax liabilities or otherwise.

6.9Sterling Bank Account.  Seller and CYMRI will prompty deliver to the Company any and all checks and other payments received by Seller or CYMRI that belong to the Company including, without limitation, all payments for the Company received in [Sterling Bank Account No.             ] (the “Sterling Bank Account”).  Seller and CYMRI agree to work in good faith with Buyer and the Company to have the funds in the Sterling Bank Account automatically transferred to an account designated by the Company, including, without limitation, executing a letter of direction to transfer such funds and/or transfer such account to the Company.

ARTICLE 7

SURVIVAL AND INDEMNIFICATION

7.1Survival of Representations and Warranties.  All of the representations and warranties contained in this Agreement will survive the Closing and continue in full force and effect for a period of 24 months thereafter, except that (i) the representations and warranties in Sections 3.1 (Organization, Power and Authorization), 3.2 (Binding Effect and Noncontravention), and 3.4 (Capitalization) will survive forever, and (ii) the representations and warranties in Sections 3.11 (Tax Matters) and 3.16 (Employee Benefits) will survive until the expiration of the applicable statute of limitations established by law.

7.2Indemnification Obligations of Seller and CYMRI.

(a)General.  Seller and CYMRI agree, on a joint and several basis, to indemnify Buyer from and against any Damages that Buyer incurs as a result of, without duplication, (i) the breach of any of the representations and warranties made by Seller or CYMRI in this Agreement, (ii) the breach of any covenant made by Seller or CYMRI in this Agreement, (iii) any fees or commissions to any broker, finder or agent with respect to the transactions contemplated by this Agreement engaged by Seller, CYMRI or the Company, (iv) any inaccuracies in the amounts set forth in Exhibit 2.2 which, when corrected and taken together, result in a decrease in the Purchase Price; and (v) inaccuracies taken as a whole in the items included in the certificate delivered by Seller to Buyer under Section 5.1(d)(xiii).

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(b)Taxes.  Seller and CYMRI agree, on a joint and several basis, to indemnify Buyer from and against any Damages that Buyer incurs as a result of, without duplication, (i) all Taxes (or the non-payment thereof) of the Company for all Pre-Closing Tax Periods, (ii) all Taxes of any member of an affiliated, consolidated, combined or unitary group of which the Company (or any predecessor) is or was a member on or prior to the Closing Date, including pursuant to Treasury Regulation Section 1.1502-6 or any analogous or similar Legal Requirement, and (iii) any and all Taxes of any Person imposed on the Company as a transferee or successor, by contract or pursuant to any Legal Requirement, which Taxes relate to an event or transaction occurring prior to the Closing Date, provided, however, that Seller’s and CYMRI’s obligation to indemnify Buyer pursuant to clause (i) of this Section 7.2(b) shall be reduced by the amount by which the Estimated Pre-Closing State Tax Liability exceeds the Pre-Closing State Tax Liability.  Seller and CYMRI agree, on a joint and several basis, to reimburse Buyer for any Taxes which are the responsibility of the Seller under this Section within 30 days after payment of such Taxes by Buyer or the Company unless otherwise required by this Agreement to reimburse Buyer at an earlier time, in which case Seller and CYMRI shall make such payments to Buyer at such earlier time.

(c)Accounts Receivable.  In the event the accounts receivable of the Company as of the Closing Date that are not collected in full within 270 days of the Closing Date exceeds $60,000 in the aggregate, Seller agrees to pay the amount of such uncollected accounts receivable to the extent they exceed $60,000 in the aggregate to Buyer by wire transfer or delivery of other immediately available funds within ten days after receipt from Buyer of written notice of such fact; provided, however, the uncollected accounts receivable up to $60,000 in the aggregate for which no indemnity payment is required pursuant to this Section 7.2(c) shall be included in the calculation of Damages for purposes of Section 7.4(i) below.

(d)Competition of Cantrell.  Seller and CYMRI agree, on a joint and several basis, to indemnify Buyer from and against any Damages that Buyer incurs as a result of any actions of Cantrell that would be a breach under the Non-competition Agreement had he executed such agreement as a Selling Party (as defined in the Non-competition Agreement).

(e)Employee Benefits.  Seller and CYMRI agree, on a joint and several basis, to indemnify Buyer from and against any Damages that Buyer incurs arising out of any Employee Benefit Plan which relate to any event, transaction, action or omission occurring on or prior to the Closing Date, including without limitation, any liability arising out of an employee stock ownership plan, failure of any Employee Benefit Plan to comply with Legal Requirements, and any cost related to bringing any Employee Benefit Plan into compliance with Legal Requirements.

7.3Indemnification Obligations of Buyer.  Buyer will indemnify Seller and CYMRI from and against any Damages that Seller and CYMRI incurs as a result of, without duplication, (a) the breach of any of the representations and warranties made by Buyer in this Agreement, (b) the breach of any covenant made by Buyer in this Agreement, and (c) any fees or commissions to any broker, finder or agent with respect to the transactions contemplated by this Agreement engaged by Buyer.

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7.4Limitations on Indemnification.  Seller and CYMRI will have no obligation to indemnify Buyer from and against any Damages resulting from any breach of any representation or warranty made by Seller or CYMRI in this Agreement (i) until the total of all such Damages exceeds $200,000 in the aggregate (at which point Seller and CYMRI will be obligated to indemnify Buyer from and against all such Damages relating back to the first dollar), and (ii) the maximum amount of indemnification payments Buyer will be entitled to receive from Seller and CYMRI for such Damages will be $2,000,000 in the aggregate; provided, however, that the foregoing limitations will not apply to (i) any breach of the representations and warranties made by Seller or CYMRI in Sections 3.1 (Organization, Power and Authorization), 3.2 (Binding Effect and Noncontravention), 3.4 (Capitalization) and 3.16 (Employee Benefits) or (ii) for clarification purposes, the obligations of Seller and CYMRI under Section 7.2(a)(ii), 7.2(a)(iii), 7.2(b), 7.2(c), 7.2(d), and 7.2(e).

7.5Third Party Claims.

(a)Notice.  If any third party notifies any Indemnified Party of any matter that may give rise to a claim by such Indemnified Party for indemnification pursuant to Section 7.2 or 7.3 (a “Third Party Claim”), such Indemnified Party must give the Indemnifying Party from whom indemnification is sought written notice of such Indemnified Party’s claim for indemnification promptly after the Indemnified Party receives written notice of such Third Party Claim; provided, however, that the failure of any Indemnified Party to give timely notice will not affect any rights to indemnification hereunder except to the extent that the Indemnifying Party is prejudiced by such failure.

(b)Control of Defense; Settlement.  An Indemnifying Party, at its option, may defend the Indemnified Party against any Third Party Claim so long as (i) the Indemnifying Party notifies the Indemnified Party in writing within 30 days after the Indemnified Party has given notice of the Third Party Claim that the Indemnifying Party will indemnify the Indemnified Party for the Damages the Indemnified Party may suffer as a result of such Third Party Claim, (ii) the Third Party Claim involves only money damages and does not seek an injunction or other equitable relief, (iii) the Indemnifying Party is not a party to the Third Party Claim such that the Indemnified Party determines in good faith that joint representation would be inappropriate, and (iv) the Indemnifying Party diligently defends the Third Party Claim.  If the Indemnifying Party defends against the Third Party Claim, the Indemnified Party may participate in the defense and employ counsel of its choice for such purpose; provided, that such employment will be at the Indemnified Party’s own expense.  The Indemnifying Party may not consent to the entry of any judgment or enter into any settlement with respect to any Third Party Claim without the prior written consent of the Indemnified Party (such consent not to be withheld unreasonably).  If any of the conditions in clauses (i)-(iv) above become unsatisfied, the Indemnified Party may defend against, and consent to the entry of any judgment or enter into any settlement with respect to, the Third Party Claim and the Indemnifying Party will be responsible for any Damages the Indemnified Party may suffer as a result of the Third Party Claim to the extent provided in this Article 7.

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ARTICLE 8

MISCELLANEOUS

8.1Public Announcements.  Seller, CYMRI and Buyer will not issue and press release or make any public announcement relating to the subject matter of this Agreement without the prior written consent of the parties, which will not be unreasonably withheld.

8.2Transaction Expenses.  Buyer, Seller and CYMRI will each bear their own respective costs and expenses (including legal fees and expenses) incurred in connection with this Agreement and the transactions contemplated hereby.  In addition, Seller will bear the Company’s costs and expenses (including legal fees and expenses) incurred in connection with this Agreement and the transactions contemplated hereby.

8.3Amendments.  No amendment, modification or waiver of this Agreement will be effective unless made in writing and signed by the party to be bound thereby.  No other course of dealing between or among any of the parties or any delay in exercising any rights pursuant to this Agreement shall operate as a waiver of any rights of any party.

8.4Successors and Assigns.  All covenants and agreements set forth in this Agreement will bind and inure to the benefit of the respective successors and permitted assigns of the parties.  No party may assign this Agreement nor any of its rights, interests or obligations hereunder without the prior written consent of the other parties; provided, however, that Buyer may assign any or all of its rights, interests, and obligations hereunder (i) to one or more of its affiliates, (ii) for collateral security purposes to any lender providing financing to Buyer, the Company or any of their affiliates and any such lender may exercise all of the rights and remedies of Buyer hereunder, and (iii) to any subsequent purchaser of Buyer, the Company, or any material portion of their assets (whether such sale is structured as a sale of equity, a sale of assets, a merger or otherwise).

8.5Governing Law.  This Agreement will be governed by and construed in accordance with the laws of the State of Delaware, without giving effect to any choice of law or conflict provision or rule (whether of such State or any other jurisdiction) that would cause the laws of any other jurisdiction to be applied.

8.6Notices.  All demands, notices, communications and reports provided for in this Agreement will be in writing and will be sent by facsimile with confirmation to the number specified below, personally delivered or sent by reputable overnight courier service (delivery charges prepaid) to the address specified below, or at such address as the recipient party has specified by prior written notice to the sending party pursuant to the provisions of this Section.

If to Buyer:

Hamilton Acquisition, Inc.

Attention: CEO

2040 North Loop West, Suite 390

Houston, TX 77018

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Facsimile: 713-956-0365

and

ShoreView Industries

Attention: Jeffrey A. Mudge

222 South Ninth Street, Suite 3230

Minneapolis, MN 55402

Facsimile: 612-436-0576

with a copy to:

Lindquist & Vennum P.L.L.P.

Attention: Dennis M. O’Malley and John D. Wambold

4200 IDS Center

80 South 8th Street

Minneapolis, MN 55402

Facsimile: 612-371-3207

If to Seller or CYMRI:

c/o Stratum Holdings, Inc.

Attention: Chairman/CEO

Three Riverway, Suite 1500

Houston, TX 77056

Facsimile: 713-973-6271

with a copy to:

Haynes and Boone, LLP

Attention: Bryce Linsenmayer

1221 McKinney Street, Suite 2100

Houston, TX 77010

Facsimile: 713-236-5540

Any such demand, notice, communication or report will be deemed to have been given pursuant to this Agreement when delivered personally, when confirmed if by facsimile or on the second day after deposit with a reputable overnight courier service, as the case may be.

8.7Schedules and Exhibits.  The exhibits and schedules to this Agreement constitute a part of this Agreement and are incorporated into this Agreement for all purposes as if fully set forth herein.  The Disclosure Schedule includes references to the particular Section of the Agreement that relates to each disclosure.  Any disclosure which may be applicable to another Section of this Agreement will be deemed to be made with respect to such other Section if reasonably apparent from the face of such disclosure, regardless of whether or not a specific

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cross reference is made thereto; provided, however, that no disclosure will be deemed adequate to disclose an exception to a representation or warranty unless the disclosure identifies the exception with reasonable particularity and describes the relevant facts in reasonable detail.

8.8Termination of Certain Pre-Closing Agreements.  Effective as of the Closing, the Letter of Intent dated September 11, 2007, by and among Hamilton Engineering, Inc., Seller, the Majority Shareholders and Cantrell, will be terminated and of no further force or effect.

8.9Counterparts.  The parties may execute this Agreement in two or more counterparts (no one of which need contain the signatures of all parties), each of which will be an original and all of which together will constitute one and the same instrument.  Facsimile signatures shall be deemed to be and shall be treated for all purposes as original signature pages.

8.10No Third Party Beneficiaries.  Except as otherwise expressly provided in this Agreement, no Person which is not a party will have any right or obligation pursuant to this Agreement.

8.11Headings.  The headings used in this Agreement are for the purpose of reference only and will not affect the meaning or interpretation of any provision of this Agreement.

8.12Entire Agreement.  This Agreement (including the exhibits and schedules referred to herein) constitutes the entire agreement of the parties relating to the subject matter hereof, and all prior understandings, whether written or oral are superseded by this Agreement, and all prior understandings, and all related agreements and understandings are terminated.

8.13Severability.  In case any one or more of the provisions contained in this Agreement are held to be invalid, illegal, or unenforceable in any respect, such invalidity, illegality, or unenforceability will not effect any other provision of this Agreement.

8.14Construction. The parties have participated jointly in the negotiation and drafting of this Agreement.  In the event an ambiguity or question of intent or interpretation arises, this Agreement will be construed as if drafted jointly by the parties and no presumption or burden of proof will arise favoring or disfavoring any party by virtue of the authorship of any of the provisions of this Agreement.

8.15Cumulative Remedies.  The rights, remedies, powers and privileges provided in this Agreement are cumulative and not exclusive and will be in addition to any and all other rights, remedies, powers and privileges granted by law, rule, regulation or instrument.  In addition, Buyer may set off any amount to which it may be entitled under this Agreement, including, without limitation, Article 7, against any amounts payable by Buyer or the Company under this Agreement or any other Transaction Document.  The exercise of this right by Buyer in good faith, whether or not ultimately determined to be justified, will not constitute a default under this Agreement or any other Transaction Document.

* * * * *

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IN WITNESS WHEREOF, the parties have executed this Securities Purchase Agreement as of the date first written above.

BUYER:			SELLER:
HAMILTON ACQUISITION, INC.			STRATUM HOLDINGS, INC.
By:	/s/ Charles R. Brown II		By:		/s/ D. Hughes Watler, Jr.
Its:		Chief Executive Officer	Its:			Chief Financial Officer
			CYMRI:
			CYMRI, L.L.C.
			By:	/s/ Kenneth L. Thomas
			Its:			Chief Financial Officer

[Signature Page to Securities Purchase Agreement]

EX-10.2

Exhibit 10.2

ESCROW AGREEMENT

This Escrow Agreement (the “Agreement”) is entered into as of March 11, 2008 by and among Hamilton Acquisition, Inc., a Delaware corporation (“Buyer”), Stratum Holdings, Inc., a Nevada corporation (“Seller”), and U.S. Bank National Association, a national banking association (the “Escrow Agent”).

BACKGROUND

A.Pursuant to a Securities Purchase Agreement (the “Purchase Agreement”) by and among Buyer, Seller and CYMRI, L.L.C., a Nevada limited liability company (“CYMRI”) and wholly owned subsidiary of Seller, Buyer will acquire all of the outstanding capital stock of Petroleum Engineers, Inc., a Louisiana corporation.

B.In order to partially secure the indemnification obligations of Seller and CYMRI under the Purchase Agreement, Buyer has deposited the sum of $1,600,000 from the amounts payable to Seller under the Purchase Agreement with the Escrow Agent.

C.Buyer and Seller desire to appoint the Escrow Agent as the escrow agent under this Agreement, and the Escrow Agent desires to accept such appointment and to hold, invest, reinvest, administer and distribute the Escrow Funds in accordance with the provisions of this Agreement.

NOW, THEREFORE, the parties agree as follows:

1.Appointment of the Escrow Agent.  Buyer and Seller hereby appoint and designate the Escrow Agent as the escrow agent for the purposes set forth in this Agreement, and the Escrow Agent hereby accepts such appointment under the terms and conditions set forth in this Agreement.  Notwithstanding the references in this Agreement to the Purchase Agreement, Buyer and Seller acknowledge that the Escrow Agent is not a party to the Purchase Agreement for any purpose or responsible for its interpretation or enforcement.

2.Receipt of Escrow Funds.  On the date hereof, the Buyer shall deposit, or cause to be deposited, with the Escrow Agent, the amount of $1,600,000 by wire transfer of immediately available funds.  The Escrow Agent acknowledges receipt of such amount and agrees to hold, invest, reinvest, administer and distribute such amount and all interest and earnings thereon (the “Escrow Funds”) in accordance with the terms of this Agreement.  The balance of the Escrow Funds, which may be reduced from time to time by distributions made to Buyer or Seller under this Agreement, is referred to as the “Escrow Fund Balance.”

3.Investment of Escrow Funds.  The Escrow Fund Balance, to the fullest extent possible, will promptly be invested and reinvested as directed in writing by Buyer and Seller.  If Buyer and Seller do not provide the Escrow Agent with written directions regarding a choice of investments, the Escrow Agent will invest the Escrow Fund Balance in the interest-bearing

money market account identified on Exhibit B, which funds may be managed by an affiliate of the Escrow Agent.  Notwithstanding anything in the foregoing to the contrary, the Escrow Agent is authorized to reduce any investments to cash in order to satisfy any claims against the Escrow Fund Balance to be distributed by the Escrow Agent under this Agreement.  The Escrow Agent shall have no responsibility or liability for any loss which may directly result from any investment or sale of investment made pursuant to this Agreement, except for any such losses arising from the Escrow Agent’s gross negligence or willful misconduct.  Buyer and Seller acknowledge that the Escrow Agent is not providing investment supervision, recommendations, or advice.

4.Claims Against and Release of the Escrow Fund Balance.

(a)Claims Notice.  In the event Buyer proposes to make any claim for indemnification under the Purchase Agreement, Buyer shall deliver written notice of such claim signed by an authorized officer of Buyer, in substantially the form of Exhibit C (a “Claims Notice”), to the Escrow Agent and Seller, which Claims Notice will state that Buyer has claims against Seller for which Buyer is entitled to indemnification under the Purchase Agreement, and will specify in reasonable detail the amounts and nature of the claims.

(b)Seller’s Response.  Within 30 days after receipt of the Claims Notice, Seller will deliver a written response to Buyer and the Escrow Agent, accepting Buyer’s claims in whole or in part, or rejecting Buyer’s claims.  Unless Seller accepts Buyer’s claims in whole, Seller’s response will include a reasonably detailed statement of the reasons for that portion of Buyer’s claims not being accepted by Seller.  If Seller accepts any portion of Buyer’s claims, the Escrow Agent will promptly distribute to Buyer cash from the Escrow Fund Balance equal to the amount of the claims accepted by Seller.  If Seller fails to deliver a written response within such 30 day period, Seller will be deemed to have accepted Buyer’s claims in whole, and the Escrow Agent will promptly distribute to Buyer cash from the Escrow Fund Balance equal to the full amount of Buyer’s claims.

(c)Negotiation Period.  If Seller rejects all or any portion of Buyer’s claims in accordance with Section 4(b), upon Buyer’s receipt of such rejection, Seller and Buyer will attempt in good faith to settle such claims within 90 days after the date of the Claims Notice.  If Buyer and Seller agree to a settlement, Buyer and Seller shall jointly prepare and execute a memorandum evidencing such settlement and deliver such memorandum to the Escrow Agent.  Upon receipt of such memorandum, the Escrow Agent will promptly distribute to Buyer cash from the Escrow Fund Balance in accordance with the terms of such memorandum.

(d)Dispute Resolution.  If Buyer and Seller fail to settle all of Buyer’s claims within 90 days after the date of the Claims Notice, then either Buyer or Seller may commence an action in federal or state court, or Buyer and Seller may agree to binding arbitration, to resolve any such remaining claims.  Upon receipt of a final non-appealable judgment of such court or an award, order or judgment issued pursuant to such arbitration in favor of Buyer, the Escrow Agent will promptly distribute to Buyer cash from the Escrow Fund Balance in accordance with the terms of such judgment, award or order.

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5.Scheduled Release of Escrow Fund Balance.

(a)Promptly following the 24 month anniversary of the date of this Agreement (the “Release Date”), the Escrow Agent will distribute the Escrow Fund Balance to the Seller; provided that if there are any outstanding claims under a Claims Notice as of the Release Date, then the Escrow Agent will retain an Escrow Fund Balance equal to all such unsatisfied claims and the Escrow Agent will distribute only the remaining balance to the Seller on the Release Date.  Upon the resolution of any outstanding claim in favor of Seller after the Release Date in accordance with Sections 4(c) and 4(d), the Escrow Agent shall promptly distribute to Seller the amounts associated with such claim.  This Agreement will remain in effect until all outstanding claims have been resolved in accordance with the procedures set forth in this Agreement.

(b)The parties agree that all earnings in any tax year on the Escrow Funds will be reported as allocated to Buyer until the distribution of the Escrow Funds (or portion thereof) is determined in accordance with this Agreement and thereafter to Buyer and Seller in accordance with their respective interests in the Escrow Funds, consistent with Proposed Treasury Regulation Section 1.468B-8(e).  To offset Buyer’s tax liability related to such allocation, prior to the distribution of all or any portion of the Escrow Fund Balance to Seller, the Escrow Agent will distribute to Buyer cash from the Escrow Fund Balance in the amount equal to 40% of the aggregate amount of net taxable income of the Escrow Funds allocated to Buyer.

6.Provisions Concerning the Escrow Agent.

(a)Compensation.  The fees of the Escrow Agent and the reasonable expenses and disbursements incurred by the Escrow Agent under this Agreement as set forth on Exhibit A will be paid by Seller.  In the event that the Escrow Agent is authorized to make distributions to any party to this Agreement pursuant to and in accordance with the terms of this Agreement, and expenses and disbursements are due and payable to the Escrow Agent pursuant to the terms of this Agreement by the party receiving such disbursement, the Escrow Agent is authorized to offset such amounts due and payable to it against such disbursement to that party.

(b)Resignation.  The Escrow Agent (and any successor escrow agent) may resign from its duties under this Agreement at any time by delivering the Escrow Fund Balance to any successor escrow agent jointly designated by Buyer and Seller, or if such parties cannot agree on a successor within 30 days after the Escrow Agent has given Buyer and Seller notice of its resignation, to any court of competent jurisdiction, whereupon the Escrow Agent will be discharged of and from any and all further obligations arising in connection with this Agreement.  The resignation of the Escrow Agent will take effect on the earlier of (i) the appointment of a successor escrow agent (including by a court of competent jurisdiction) or (ii) the day that is 30 days after the date of delivery of its written notice of resignation to Buyer and Seller.  If at that time the Escrow Agent has not received a designation of a successor escrow agent, the Escrow Agent’s sole responsibility after that time will be to retain and safeguard the Escrow Fund Balance until its receipt of a designation of a successor escrow agent, a joint written disposition instruction by Buyer and Seller, or a final non-appealable order of a court of competent jurisdiction.  The parties agree that any successor escrow agent (other than a court of competent

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jurisdiction) will be a banking corporation or trust company having capital and surplus in excess of $100,000,000, and organized under the laws of the United States or of a State of the United States.

(c)Limitation on Liability.  The duties of the Escrow Agent are only those specifically set forth in this Agreement, and the Escrow Agent will incur no liability whatsoever for acting as the escrow agent under this Agreement except for its own willful misconduct or gross negligence.  The Escrow Agent will have no responsibility with respect to the Escrow Fund Balance other than to faithfully follow the instructions set forth in this Agreement.  The Escrow Agent may consult with counsel and will be fully protected in any action taken in good faith in accordance with the advice of counsel.  THE ESCROW AGENT SHALL NOT BE LIABLE, DIRECTLY OR INDIRECTLY, FOR ANY (I) DAMAGES, LOSSES OR EXPENSES ARISING OUT OF THE SERVICES PROVIDED HEREUNDER, OTHER THAN DAMAGES, LOSSES OR EXPENSES WHICH HAVE BEEN FINALLY ADJUDICATED TO HAVE DIRECTLY RESULTED FROM THE ESCROW AGENT’S GROSS NEGLIGENCE OR WILLFUL MISCONDUCT, OR (II) SPECIAL, INDIRECT OR CONSEQUENTIAL DAMAGES OR LOSSES OF ANY KIND WHATSOEVER (INCLUDING WITHOUT LIMITATION LOST PROFITS), EVEN IF THE ESCROW AGENT HAS BEEN ADVISED OF THE POSSIBILITY OF SUCH LOSSES OR DAMAGES AND REGARDLESS OF THE FORM OF ACTION.

(d)Controversies.  If any controversy exists between or among any of the parties to this Agreement or with any third person with respect to the Escrow Fund Balance or the subject matter of this Agreement, the Escrow Agent will not be required to take any action with respect thereto, but is authorized to retain the Escrow Fund Balance until the Escrow Agent (i) receives a final non-appealable order of a court of competent jurisdiction or a final non appealable arbitration decision directing delivery of the Escrow Fund Balance, (ii) receives a written agreement executed by each of the parties involved in such disagreement or dispute directing delivery of the Escrow Fund Balance, in which event the Escrow Agent shall be authorized to disburse the Escrow Fund Balance in accordance with such final court order, arbitration decision, or agreement, or (iii) files an interpleader action in any court of competent jurisdiction, and upon the filing thereof and the deposit of the Escrow Fund Balance with the court of competent jurisdiction, the Escrow Agent shall be relieved of all liability as to the Escrow Fund Balance and shall be entitled to recover attorneys’ fees, expenses and other costs incurred in commencing and maintaining any such interpleader action.  The Escrow Agent shall be entitled to act on any such agreement, court order, or final arbitration decision without further question, inquiry, or consent.  The Escrow Agent will have no responsibility for the genuineness or validity of any document or other item deposited with it and will be fully protected in acting in accordance with any written instructions given to it by the parties to this Agreement and believed by the Escrow Agent to have been signed by the proper officers or other representatives of the parties.  The Escrow Agent will not be required to institute any legal action or to defend any legal proceedings which may be instituted against it in respect of the subject matter of this Agreement.

(e)Discharge of Escrow Agent.  Buyer and Seller may, by mutual agreement at any time, remove the Escrow Agent as escrow agent under this Agreement and substitute a

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different escrow agent.  Upon receipt of written notice thereof and payment of any accrued but unpaid fees due under this Agreement, the Escrow Agent will account for and deliver to such substitute escrow agent the Escrow Fund Balance and all other amounts held by it under this Agreement, and the Escrow Agent will be discharged from all liability under or in relation to this Agreement.

(f)Indemnification.  Seller and Buyer, jointly and severally, will indemnify, defend and hold harmless the Escrow Agent from and against any liability or demand which the Escrow Agent incurs in the exercise or performance of its powers and duties under this Agreement except those resulting from the Escrow Agent’s gross negligence or willful misconduct.  The cost of any indemnification arising under this Section will be paid one-half by Buyer and one-half by Seller.

(g)Tax Matters.  The Escrow Agent does not have any interest in the funds in the Escrow Fund Balance and its possession of the Escrow Fund Balance is incident to its duties as the Escrow Agent under this Agreement.  Any payments of income from the Escrow Fund Balance will be subject to withholding regulations then in force with respect to United States taxes.  The parties will provide the Escrow Agent with appropriate Internal Revenue Service Forms W-9 for tax identification number certification, or nonresident alien certifications.

(h)No Financial Obligation.  No provision of this Agreement shall require the Escrow Agent to risk or advance its own funds or otherwise incur any financial liability or potential financial liability in the performance of its duties or the exercise of its rights hereunder.

7.Miscellaneous.

(a)Governing Law; Jurisdiction.  This Agreement will be governed by and construed in accordance with the laws of the State of Delaware, without giving effect to any choice of law or conflict provision or rule (whether of such State or any other jurisdiction) that would cause the laws of any other jurisdiction to be applied.

(b)Notices.  All notices required or permitted to be given under this Agreement will be in writing and will be deemed given (i) when delivered in person, (ii) three business days after being deposited in the United States mail, postage prepaid, registered or certified mail addressed as set forth below, (iii) on the next business day after being deposited with a nationally recognized overnight courier service addressed as set forth below or (iv) upon dispatch if sent by facsimile with telephonic confirmation of receipt from the intended recipient to the facsimile number set forth below (or to such other respective addresses as may be designated by notice given in accordance with the provisions of this Section, except that any notice of change of address will not be deemed given until actually received by the party to whom directed):

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If to Seller:

Stratum Holdings, Inc.

Attention:  Chairman/CEO

Three Riverway, Suite 1500

Houston, Texas 77056

Tel. No.:   713-479-7000

Fax No.:  713-973-6271

with a copy to:

Haynes and Boone, LLP

Attention:  Bryce Linsenmayer

1221 McKinney Street, Suite 2100

Houston, Texas 77010

Tel. No.:   713-547-2007

Fax No.:  713-236-5540

If to Buyer:

Hamilton Acquisition, Inc.

Attention:  Chief Executive Officer

2040 North Loop West, Suite 390

Houston, Texas 77018

Tel. No.:  713-956-0956

Fax No.:  713-956-0365

and

ShoreView Industries

Attention:  Jeffrey A. Mudge

222 South Ninth Street, Suite 3230

Minneapolis, MN 55402

Tel. No.:  612-436-4283

Fax No.:  612-436-0576

with a copy to:

Lindquist & Vennum P.L.L.P.

Attention:  Dennis M. O’Malley and John D. Wambold

4200 IDS Center

80 South 8th Street

Minneapolis, MN 55402

Tel. No.:  612-371-3947

Fax No.:  612-371-3207

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If to the Escrow Agent:

U.S. Bank National Association

Attention:  Georgette Kleinbaum

EP-MN-WS3C

60 Livingston Avenue

St. Paul, Minnesota 55107

Tel. No.:  651-495-3922

Fax No.:  651-495-8096

with a copy to Buyer and Seller.

(c)Entire Agreement.  This Agreement supersedes all prior agreements between the parties with respect to the subject matter of this Agreement.  This Agreement constitutes a complete and exclusive statement of the terms of the agreement between the parties with respect to its subject matter.

(d)Amendments and Waivers.  This Agreement may not be amended, modified, altered or supplemented except by a written agreement executed by the party to be bound thereby.  No failure or delay by any party to exercise any right or remedy under this Agreement will constitute as a waiver of such right or remedy.

(e)Severability of Invalid Provision.  If any provision of this Agreement is held invalid or unenforceable by any court of competent jurisdiction, the other provisions of this Agreement will remain in full force and effect.  Any provision of this Agreement held invalid or unenforceable only in part or degree will remain in full force and effect to the extent not held invalid or unenforceable.

(f)Successors and Assigns.  This Agreement is enforceable by, and inures to the benefit of, the parties to this Agreement and their respective successors and assigns.  Neither this Agreement nor any right, interest or obligation under this Agreement may be assigned by any party to this Agreement without the prior written consent of the other parties hereto and any attempt to do so will be void; provided, however, that Buyer may assign any or all of its rights and interests hereunder (i) to one or more of its affiliates, (ii) for collateral security purposes to any lender providing financing to Buyer or its affiliates and any such lender may exercise all of the rights and remedies of Buyer hereunder, and (iii) to any subsequent purchaser of Buyer or any material portion of its assets (whether such sale is structured as a sale of stock or membership interests, a sale of assets, a merger or otherwise).

(g)Rules of Construction.  Section headings contained in this Agreement are inserted only as a matter of convenience and in no way define, limit, extend or describe the scope of this Agreement or the intent of any of the provisions of this Agreement.  This Agreement has been negotiated on behalf of the parties with the advice of legal counsel and no general rule of contract construction requiring an agreement to be more stringently construed against the drafter or proponent of any particular provision may be applied in the construction or interpretation of

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this Agreement.  Unless otherwise expressly provided, the word “including” does not limit the preceding words or terms.

(h)Counterparts.  This Agreement may be executed in one or more counterparts, each of which will be deemed to be an original copy of this Agreement and all of which, when taken together, will be deemed to constitute one and the same agreement.  The exchange of copies of this Agreement and of signature pages by facsimile transmission or e-mail of a PDF file will constitute effective execution and delivery of this Agreement as to the parties and may be used in lieu of the original Agreement for all purposes.  Signatures of the parties transmitted by facsimile or e-mail of a PDF file will be deemed to be their original signatures for all purposes.  Any party delivering an executed counterpart of this Agreement by facsimile or e-mail of a PDF file also will deliver an original executed counterpart of this Agreement but the failure to deliver an original executed counterpart will not affect the validity, enforceability, and binding effect of this Agreement.

(i)Cumulative Remedies.  The powers, rights, privileges and remedies provided in this Agreement are cumulative and not exclusive or alternative and are in addition to any and all other powers, rights, privileges and remedies granted by law, rule, regulation or instrument.  Nothing in this Agreement will limit Seller’s indemnity obligations to Buyer under the Purchase Agreement to the amount of the Escrow Fund Balance and Seller will continue to be obligated to indemnify Buyer as provided in the Purchase Agreements irrespective of the expiration or termination of this Agreement.

(j)Further Assurances.  Each of the parties will execute and deliver such additional instruments and other documents and will take such further actions as may be necessary or appropriate to effectuate, carry out and comply with all of the terms of this Agreement.

(k)Merger or Consolidation.  Any corporation or association into which the Escrow Agent may be converted or merged, or with which it may be consolidated, or to which it may sell or transfer all or substantially all of its corporate trust business and assets as a whole or substantially as a whole, or any corporation or association resulting from any such conversion, sale, merger, consolidation or transfer to which the Escrow Agent is a party, shall be and become the successor escrow agent under this Agreement and shall have and succeed to the rights, powers, duties, immunities and privileges as its predecessor, without the execution or filing of any instrument or paper or the performance of any further act.

(l)Attachment of Escrow Fund Balance; Compliance with Legal Orders.  In the event that any Escrow Fund Balance shall be attached, garnished or levied upon by any court order, or the delivery thereof shall be stayed or enjoined by an order of a court, or any order, judgment or decree shall be made or entered by any court order affecting the Escrow Fund Balance, the Escrow Agent is hereby expressly authorized, in its sole discretion, to respond as it deems appropriate or to comply with all writs, orders or decrees so entered or issued, or which it is advised by legal counsel of its own choosing is binding upon it, whether with or without jurisdiction.  In the event that the Escrow Agent obeys or complies with any such writ, order or decree it shall not be liable to any of the parties or to any other person, firm or corporation,

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should, by reason of such compliance notwithstanding, such writ, order or decree be subsequently reversed, modified, annulled, set aside or vacated.

(m)Patriot Act.  To help the government fight the funding of terrorism and money laundering activities, federal law requires all financial institutions to obtain, verify and record information that identifies each person who opens an account.  For a non-individual person such as a business entity, a charity, a trust or other legal entity the Escrow Agent requires documentation to verify such entity’s formation and existence as a legal entity.  The Escrow Agent may also ask to see financial statements, licenses, identification and authorization documents from individuals claiming authority to represent the entity or other relevant documentation.

(n)Security Advice Waiver.  The parties acknowledge that regulations of the Comptroller of the Currency grant parties the right to receive brokerage confirmations of security transactions as they occur.  The parties specifically waive such notification to the extent permitted by law and acknowledge that parties will receive periodic cash transaction statements, which will detail all investment transactions.

* * * * *

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IN WITNESS WHEREOF, this Agreement has been duly executed by the parties hereto as of the day and year first above written.

THE ESCROW AGENT:		SELLER:
U.S. BANK NATIONAL ASSOCIATION		STRATUM HOLDINGS, INC.
By:	/s/ Georgette Kleinbaum	By:	/s/ D. Hughes Watler, Jr.
Its:	Assistant Vice President	Its:	Chief Financial Officer
		BUYER:
		HAMILTON ACQUISITION, INC.
		By:	/s/ Charles R. Brown II
		Its:	Chief Executive Officer

[Signature Page to Escrow Agreement]

EXHIBIT A

FEES AND EXPENSES

I.	Acceptance Fee:	$750
	The acceptance fee includes the administrative review of documents, initial set-up of the account, and other reasonably required services up to and including the closing. This is a flat one-time fee, payable at closing.
II.	Annual Administration Fee:	$0
	Annual administration fee for performance of the routine duties of the Depositary associated with the management of the account. Administration fees are payable in advance.
III.	Out-of-Pocket Expenses:	At Cost
	Reimbursement of expenses associated with the performance of our duties, including but not limited to fees and expenses of legal counsel, accountants and other agents, tax preparation, reporting and filing, publications, and filing fees.
IV.	Extraordinary Expenses:	At Cost
	Extraordinary services are duties or responsibilities of an unusual nature, including termination, but not provided for in the governing documents or otherwise set forth in this schedule. A reasonable charge will be assessed based on the nature of the service and the responsibility involved. At our option, these charges will be billed at a flat fee or our hourly rate then in effect.

IMPORTANT INFORMATION ABOUT PROCEDURES FOR OPENING A NEW ACCOUNT

To help the government fight the funding of terrorism and money laundering activities, Federal law requires all financial institutions to obtain, verify and record information that identifies each person who opens an account.

For a non-individual person such as a business entity, a charity, a Trust or other legal entity we will ask for documentation to verify its formation and existence as a legal entity. We may also ask to see financial statements, licenses, identification and authorization documents from individuals claiming authority to represent the entity or other relevant documentation.

EXHIBIT B

U.S. BANK NATIONAL ASSOCIATION

MONEY MARKET ACCOUNT

DESCRIPTION AND TERMS

U.S. Bank MMkt Acct – ImoneyNet, Cusip 9AMMF05i7, DDAWAC

The U.S. Bank Money Market account is a U.S. Bank National Association (“U.S. Bank”) interest-bearing money market deposit account designed to meet the needs of U.S. Bank’s Corporate Trust Services Escrow Group and other Corporate Trust customers of U.S. Bank.   Selection of this investment includes authorization to place funds on deposit with U.S. Bank.

U.S. Bank uses the daily balance method to calculate interest on this account (actual/365 or 366).  This method applies a daily periodic rate to the principal balance in the account each day.  Interest is accrued daily and credited monthly to the account.  Interest rates are determined at U.S. Bank’s discretion, and may be tiered by customer deposit amount.

The owner of the account is U.S. Bank as Agent for its trust customers.  U.S. Bank’s trust department performs all account deposits and withdrawals. The deposit account is insured by the Federal Deposit Insurance Corporation up to $100,000.

AUTOMATIC AUTHORIZATION

In the absence of specific written direction to the contrary, U.S. Bank is hereby directed to invest and reinvest proceeds and other available moneys in the U.S. Bank Money Market Account.

EXHIBIT C

FORM OF CLAIMS NOTICE

                               , 200    

U.S. Bank National Association

Attention:  Georgette Kleinbaum

EP-MN-WS3C

60 Livingston Avenue

St. Paul, Minnesota 55107

Fax No.:  651-495-8096

Stratum Holdings, Inc.

Attention:  Chairman/CEO

Three Riverway, Suite 1500

Houston, Texas 77056

Fax No.:  713-973-6271

Ladies and Gentlemen:

Reference is hereby made to the Escrow Agreement, dated as of March 11, 2008 (the “Escrow Agreement”), by and among Hamilton Acquisition, Inc., a Delaware corporation (“Buyer”), Stratum Holdings, Inc., a Nevada corporation (“Seller”), and U.S. Bank National Association, a national banking association (the “Escrow Agent”).  Capitalized terms used but not defined herein have the meanings given to them in the Escrow Agreement.

Pursuant to Section 4(a) of the Escrow Agreement, this Claims Notice will serve as instructions to the Escrow Agent to deliver $[                          ] of the Escrow Fund Balance to the Buyer for [(i) specify the portion of Escrow Fund Balance, which amount shall take into account any applicable limitations set forth in the Securities Purchase Agreement, and (ii) describe in reasonable detail the matter or matters entitling Buyer to such portion of the Escrow Fund Balance and the aggregate dollar amount of the claims (including the amount by which the amounts claimed hereunder exceed the limitations set forth in the Purchase Agreement)] via wire transfer as follows:

[specify the Buyer wire transfer instructions].

Unless the Escrow Agent and Buyer receive a written notice from Seller rejecting Buyer’s claims in whole or in part within 30 days following the receipt of this Claims Notice, such amount must be delivered to Buyer as promptly as possible after the expiration of such 30-day period.

Very truly yours,
Hamilton Acquisition, Inc.
By:
	Name:
	Title:

EX-10.3

Exhibit 10.3

OPTION AGREEMENT

This Option Agreement (the “Agreement”) is entered into as of March 11, 2008 by and between Stratum Holdings, Inc., a Nevada corporation (“Seller”), Decca Consulting Ltd., an Alberta corporation (“Decca”), and Hamilton Acquisition, Inc., a Delaware corporation (“Buyer”).

RECITALS

A.Pursuant to a Securities Purchase Agreement dated the date hereof by and among Buyer, Seller and CYMRI, L.L.C. (the “PEI Purchase Agreement”), Buyer will acquire all of the issued and outstanding capital stock of PEI from Seller on the terms and conditions and for the consideration set forth in the PEI Purchase Agreement.

B.Seller owns all of the issued and outstanding capital stock of Decca, which consists of [200 common shares] (the “Decca Shares”) and Seller desires to grant Buyer an option to purchase the Decca Shares.

C.It is a condition to the consummation of the transactions contemplated by the PEI Purchase Agreement that Seller enter into this Agreement.

NOW, THEREFORE, the parties agree as follows:

1.Defined Terms.  Capitalized terms used in this Agreement, unless otherwise defined in this Agreement, have the meanings assigned to them in the PEI Purchase Agreement.

2.Grant of Option.  Seller hereby grants to Buyer an option to purchase the Decca Shares (the “Decca Option”), which Buyer may exercise at any time during the 90 day period commencing on the date hereof and ending at 5:00 p.m., Central time, on June 9, 2008 (the “Decca Option Period”).  Buyer shall evidence its intent to exercise the Decca Option by providing written notice (the “Exercise Notice”) thereof to Seller at any time prior to the end of the Decca Option Period.  Commencing on the date Seller receives the Exercise Notice, Buyer and Seller shall each make a good faith effort to (i) negotiate the terms and conditions of Seller’s sale to Buyer of the Decca Shares (as reflected in a written agreement between Seller and Buyer) on the terms set forth in Section 3 of this Agreement and (ii) consummate such transaction no more than 30 days after such date.

3.Terms of Purchase.  The terms of the purchase and sale of the Decca Shares pursuant to the Decca Option shall be set forth in a purchase agreement (the “Decca Purchase Agreement”) which will be substantially similar to the terms for the purchase of the Decca Shares set forth in the Securities Purchase Agreement included in the FORM DEFM14A filed by Seller with the Securities and Exchange Commission on February 11, 2008 (the “Draft Agreement”); provided, that (i) the “$19,250,000” set forth in Section 2.2(i) of the Draft  Agreement will be “$4,250,000”, (ii) the Escrow Agreement will be amended to include any

claim made by Buyer pursuant to the Decca Purchase Agreement and the PEI Purchase Agreement, (iii) the threshold and cap for breaches of certain representations and warranties set forth in Section 7.4 of the Draft Agreement will apply to both the Decca Purchase Agreement and the PEI Purchase Agreement on an aggregate basis, and (iv) the Decca Purchase Agreement would appropriately take into account any outstanding lawsuits or claims against Decca to the satisfaction Buyer in its sole discretion.

4.No Shop.  From and after the date of this Agreement and continuing through the consummation of the purchase of the Decca Shares by Buyer or termination of this Agreement, Seller and Decca shall not, nor shall they authorize or permit any officer, director, employee or affiliate of Seller or Decca or any investment banker, attorney, accountant or other representative retained by Seller or Decca or the shareholders of Seller, to initiate, solicit or knowingly encourage, directly or indirectly, or take any other action to facilitate any inquiries or the making of any proposal that constitutes, or may reasonably be expected to lead to, an Acquisition Proposal (as defined below), or enter into or continue any discussions or negotiations with any person or entity in the furtherance of such inquiries or to obtain an Acquisition Proposal, or agree to or endorse any Acquisition Proposal, or authorize any of the officers, directors, employees or affiliates of Seller or Decca or the shareholders of Seller, or any investment banker, financial advisor, attorney, accountant or other representative retained by Seller or Decca or the shareholders of Seller  to take any such action.  As used in this Agreement, “Acquisition Proposal” shall mean (a) any sale of stock, merger, consolidation, share exchange, business combination, stock redemption, recapitalization, or similar transaction involving the Decca (other than the transaction contemplated by this Agreement); or (b) any sale, lease, exchange, mortgage, pledge or disposition of any of the assets of the Decca other than in the ordinary course of business.  In the event Seller or its affiliates receive an Acquisition Proposal, Seller will notify Buyer promptly of Acquisition Proposal and the terms of the Acquisition Proposal.

5.Issuance of Stock.  From and after the date of this Agreement and continuing through the consummation of the purchase of the Decca Shares by Buyer or termination of this Agreement, Seller will not permit Decca to issue any shares of capital stock of Decca or grant or agree to grant any options, warrants, purchase rights, subscription rights, conversion rights, exchange rights, or other contracts or commitments that could require Decca to issue, sell, or otherwise cause to become outstanding any of its capital stock

6.Operation of Decca.  From and after the date of this Agreement and continuing through the consummation of the purchase of the Decca Shares by Buyer or termination of this Agreement, the Seller and Decca will (i) conduct the business and operations of Decca in the ordinary course and in substantially the same manner as such business and operations have been conducted prior to the date of this Agreement; (ii) use their best efforts to preserve the current business organization of Decca, keep available the services of Decca’s current officers, independent contractors and agents, and maintain the relations and good will with all suppliers, customers, distributors, landlords, creditors, independent contractors, agents and other Persons having business relationships with Decca; (iii) report periodically to Buyer concerning the status of (a) the business, operations and finances of Decca and (b) any claims filed against Decca, including, without limitation, Golden Eagle Exploration, LLC, vs. Weatherford U.S., L.P. and  Decca, Civil No. 0707-119 filed in the Seventh Judicial District Court, Grand County, Utah and

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(iv) not permit Decca to pay any dividends or make any distributions to Seller other than necessary to satisfy intercompany advances.

7.Termination.  This Agreement will terminate upon the expiration of the Decca Option Period, however, in the event Buyer exercises the Option, all rights and obligations under this Agreement will continue until through the consummation of the purchase of the Decca Shares.

8.Miscellaneous.

(a)Amendments.  No amendment, modification or waiver of this Agreement will be effective unless made in writing and signed by the party to be bound thereby.  No other course of dealing between or among any of the parties or any delay in exercising any rights pursuant to this Agreement will operate as a waiver of any rights of any party.

(b)Successors and Assigns.  All covenants and agreements set forth in this Agreement will bind and inure to the benefit of the respective successors and permitted assigns of the parties.  No party may assign this Agreement nor any of its rights, interests or obligations hereunder without the prior written consent of the other parties; provided, however, that Buyer may assign any or all of their rights, interests, and obligations hereunder (i) to one or more of their affiliates, (ii) for collateral security purposes to any lender providing financing to Buyer or any of its  affiliates and any such lender may exercise all of the rights and remedies of Buyer hereunder, and (iii) to any subsequent purchaser of Buyer or any material portion of its assets (whether such sale is structured as a sale of equity, a sale of assets, a merger or otherwise).

(c)Governing Law.  This Agreement will be governed by and construed in accordance with the laws of the State of Delaware, without giving effect to any choice of law or conflict provision or rule (whether of such State or any other jurisdiction) that would cause the laws of any other jurisdiction to be applied.

(d)Notices.  All demands, notices, communications and reports provided for in this Agreement will be given in accordance with Section 8.6 of the Purchase Agreement.

(e)Counterparts.  The parties may execute this Agreement in two or more counterparts (no one of which need contain the signatures of all parties), each of which will be an original and all of which together will constitute one and the same instrument.

(f)No Third Party Beneficiaries.  Except as otherwise expressly provided in this Agreement, no person which is not a party will have any right or obligation pursuant to this Agreement.

(g)Headings.  The headings used in this Agreement are for the purpose of reference only and will not affect the meaning or interpretation of any provision of this Agreement.

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(h)Entire Agreement.  This Agreement constitutes the entire agreement of the parties relating to the subject matter hereof, and all prior understandings, whether written or oral are superseded by this Agreement, and all prior understandings, and all related agreements and understandings are terminated.

(i)Severability.  In case any one or more of the provisions contained in this Agreement are held to be invalid, illegal, or unenforceable in any respect, such invalidity, illegality, or unenforceability will not effect any other provision of this Agreement.

(j)Construction. The parties have participated jointly in the negotiation and drafting of this Agreement.  In the event an ambiguity or question of intent or interpretation arises, this Agreement will be construed as if drafted jointly by the parties and no presumption or burden of proof will arise favoring or disfavoring any party by virtue of the authorship of any of the provisions of this Agreement.

(k)Cumulative Remedies.  The rights, remedies, powers and privileges provided in this Agreement are cumulative and not exclusive and will be in addition to any and all other rights, remedies, powers and privileges granted by law, rule, regulation or instrument.

(l)Further Assurances.  Each of the parties will execute and deliver such additional instruments and other documents and will take such further actions as may be necessary or appropriate to effectuate, carry out and comply with all of the terms of this Agreement.

[The balance of this page is intentionally left blank.]

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IN WITNESS WHEREOF, the undersigned have executed this Agreement as of this date first above written.

STRATUM HOLDINGS, INC.
By:	/s/ D. Hughes Watler, Jr.
Its:	Chief Financial Officer
DECCA CONSULTING LTD.
By:	/s/ D. Hughes Watler, Jr.
Its:	Chief Financial Officer
HAMILTON ACQUISITION, INC.
By:	/s/ Charles R. Brown II
Its:	Chief Executive Officer

Signature page to Option Agreement

EX-10.4

Exhibit 10.4

TRANSITION SERVICES AGREEMENT

THIS TRANSITION SERVICES AGREEMENT (this “Agreement”) is entered into as of March 11, 2008, by and among Petroleum Engineers, Inc., a Louisiana corporation (“PEI”), Stratum Holdings, Inc., a Nevada corporation (“Stratum”), CYMRI, L.L.C., a Nevada limited liability company (“CYMRI”), and Triumph Energy, Inc., a Louisiana corporation (“Triumph”).  Stratum, CYMRI and Triumph are referred to as the “Stratum Parties”.

BACKGROUND

A.Pursuant to a Securities Purchase Agreement dated the date hereof (the “Purchase Agreement”), by and among Hamilton Acquisition, Inc., a Delaware corporation (“HAI”), Stratum and CYMRI, HAI will acquire all the issued and outstanding capital stock of PEI from Stratum.  CYMRI and Triumph are direct or indirect wholly-owned subsidiaries of Stratum.

B.The parties to the Purchase Agreement recognize that it is advisable for the Stratum Parties to provide to PEI: (i) the administrative, accounting support and other services for a transitional period described on Annex A to this Agreement (the “Stratum General Services”); (ii) the information technology services for a transitional period described on Annex B to this Agreement (the “Stratum IT Services”); and (iii) the certain services related to the transfer of property, files and other information described on Annex C to this Agreement (the “Stratum Transfer Services” and together with the Stratum General Services and the Stratum IT Services, the “Stratum Services”).

C.The parties to the Purchase Agreement also recognize that it is advisable for PEI to provide to the Stratum Parties: (i) the administrative, accounting support and other services for a transitional period described on Annex A to this Agreement (the “PEI General Services”); and (ii) the information technology services for a transitional period described on Annex B to this Agreement (the “PEI IT Services” and together with the PEI General Services, the “PEI Services”).

D.The execution of this Agreement is a condition to the consummation of the transactions contemplated by the Purchase Agreement.

NOW, THEREFORE, the parties agree as follows:

1.Transition Services.

(a)For purposes of this Agreement:

(i)“Recipient” means PEI with respect to the Stratum Services and the Stratum Parties with respect to the PEI Services.

(ii)“Service Provider” means the Stratum Parties with respect to the Stratum Services and PEI with respect to the PEI Services.

(iii)“Services” means the Stratum Services or the PEI Services, as applicable.

(b)In consideration of the consummation of the transactions contemplated by the Purchase Agreement, the Service Provider will provide the Services to the Recipient for a term commencing on the date of this Agreement and ending at the time specified with respect to each such Service indicated as applicable on Annex A, Annex B and Annex C (and with respect to each such Service, at a cost indicated as applicable on Annex A, Annex B and Annex C); provided, however, the Stratum Parties and PEI each acknowledge and agree that the aggregate cost of all of the Stratum General Services on Annex A (other than the “Stratum office space” indicated in Annex A at a cost of $1,500 pro rated rent per month) and the aggregate cost of all of the PEI General Services on Annex A are intended to be offset and result in no (i.e., zero) net cost to either PEI or the Stratum Parties.  Each respective Recipient is under no obligation to continue to use any of such Services and may terminate any or all of such Services upon written notice to the Service Provider.

(c)For any applicable Stratum IT Services or PEI IT Services indicated on Annex B, the Service Provider will periodically, but not more frequently than semi-monthly, submit to the Recipient statements of amounts due (based on actual hours and the applicable rates) in accordance with Annex B; provided, further, that all amounts billed and payable in accordance with Annex B will be paid within 30 days after receipt of each such statement hereunder.

(d)For the rent payable by PEI to the Stratum Parties (as indicated under “Stratum office space” in Annex A), the Stratum Parties shall prepare a statement of amount due (based on a pro rated calculation for the number of days occupied and the applicable $1,500 rent cost per month) and submit such statement to PEI upon vacating the applicable premises and PEI shall pay such invoiced amount within 15 days after receipt of such statement hereunder.

2.Responsibility.  The Service Provider will use those efforts and degree of care in providing the Services that are comparable to those used by the Service Provider for its own account in providing services, activities and work similar in nature to the Services.  To the extent reasonably possible, the Services will be substantially similar in nature and quality to the services provided or otherwise made available by the Service Provider to the Recipient immediately prior to the date of this Agreement.

3.Confidentiality.

(a)The Service Provider acknowledges that in connection with the performance of the Services it may have access to confidential information of the Recipient, including, without limitation, financial and operating results, internal accounting reports and systems, customer lists, consultant lists, vendor names, and employee information (the “Confidential Information”).  The Service Provider must keep all Confidential Information in

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strict confidence and, except as may be necessary to perform the Services or as may be otherwise required by applicable law, must not use any Confidential Information for any purpose other than for the Recipient’s exclusive benefit or disclose any portion of any Confidential Information to any third party without the prior written consent of the Recipient.  The Service Provider must use the same degree of care to protect the Confidential Information as it uses to protect its own confidential information, but, in no event, may the Service Provider use less than a commercially reasonable degree of care to protect the Confidential Information.  Information will not constitute Confidential Information which (i) is in or enters the public domain through no fault or wrongful action of the Service Provider, or (ii) after the termination of this Agreement, is independently developed by the Service Provider or is received by the Service Provider from a third party which, to the knowledge of the Service Provider, is not subject to any legal restriction on its right to use and disclose such information.

(b)The Service Provider acknowledges that any unauthorized disclosure or use of any Confidential Information would cause irreparable harm and significant injury, the degree of which may be difficult to ascertain, to the Recipient.  Accordingly, the Service Provider agrees that the Recipient will have the right to injunctive relief from a court of competent jurisdiction, as well as the right to pursue any and all other rights and remedies available at law or in equity for such a breach.

4.Duration and Termination.

(a)This Agreement is effective as of the date hereof and will continue until the expiration or termination of this Agreement upon the earliest to occur of the following:

(i)the latest expiration date for the provision of all the Services by the Service Provider set forth in Annex A, Annex B or Annex C;

(ii)each Recipient notifies the Service Provider that it terminates all of the Services that have not been previously terminated in accordance with Section 1;

(iii)the mutual written consent of the parties;

(iv)either the Stratum Parties (as a group) or PEI provides written notice of termination to the other party, in the event that the other party commences a case as debtor under Title 11 of the United States Code or any similar proceeding for the relief of debtors, or has any such case or proceeding commenced against it which is not vacated within 60 days of such commencement, or otherwise ceases to function as a going concern; and

(v)either the Stratum Parties (as a group) or PEI provides written notice of termination to the other party, in the event that the other party defaults in the performance of its obligations under this Agreement in any material respect and such default continues for 10 days following written notice to the other party specifying such default in reasonable detail.

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(b)Upon the expiration or termination of this Agreement pursuant to this Section 4, the rights and obligations of the parties will terminate, except for the rights and obligations of the parties under Section 3, which will survive such expiration or termination without limitation; provided, however, that the termination of this Agreement will not relieve any party of its payment obligations for Services provided under this Agreement.  Upon such expiration or termination, the Stratum Parties and PEI will cease to have any obligation to provide any Services, and each party will promptly deliver to the other all data, programs, software materials, and other properties owned by the other and held by it in connection with the performance of its obligations under this Agreement.  Each party will assist the other at such other party’s reasonable request and expense in effecting an orderly termination of this Agreement.

5.Relationship of Parties.  No Service Provider will act or represent or hold itself out as having authority to act as an agent or partner of the Recipient, or in any way bind or commit the Recipient to any obligations.  Nothing contained in this Agreement will be construed as creating a partnership, joint venture, agency, trust or other association of any kind, each party being individually responsible only for its obligations as set forth in this Agreement.  The employees (or contractors) performing the services contemplated by this Agreement will remain employees (or contractors) of each respective Service Provider.

6.Successors and Assigns.  This Agreement will be binding upon and inure to the benefit of the parties hereto and their respective successors and permitted assigns.  Neither this Agreement nor any right, interest or obligation under this Agreement may be assigned by any party to this Agreement without the prior written consent of the other parties hereto and any attempt to do so will be void.

7.Governing Law.  This Agreement will be governed by and construed and enforced in accordance with the laws of the State of Delaware without giving effect to its conflict of laws principles.

8.Entire Agreement.  This Agreement and the Annexes attached hereto contain the entire understanding of the parties hereto with respect to the subject matter contained herein.  There are no restrictions, promises, warranties, covenants, or undertakings, other than those expressly provided for herein.  This Agreement and the Annexes supersede all prior agreements and undertakings between the parties with respect to such subject matter.

9.Severability.  If any one or more covenants or agreements provided in this Agreement should be contrary to law, then such covenants or agreements will be null and void and will in no way affect the validity of the other provisions of this Agreement, which will otherwise be fully effective and enforceable.

10.Further Assurances.  Each party will cooperate and take such action as may be reasonably requested by the other party to carry out the provisions and purpose of this Agreement and the transaction contemplated hereby.

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11.Amendment and Waiver.  No waiver, modification, amendment of any provision of this Agreement, or any consent will be effective unless specifically made in writing and duly signed by the party to be bound thereby.  No waiver of any term or condition of this Agreement, in any one or more instances, will constitute a waiver of the same term or condition of this Agreement on any future occasion.

12.Counterparts.  This Agreement may be executed in any number of counterparts, each of which will be deemed an original and all of which together will constitute one and the same agreement.

* * * * *

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IN WITNESS WHEREOF, the parties have caused this Agreement to be duly executed effective as of the date first written above.

PEI:		STRATUM PARTIES:
PETROLEUM ENGINEERS, INC.		STRATUM HOLDINGS, INC.
By:	/s/ Charles R. Brown II	By:		/s/ D. Hughes Watler, Jr.
Its:	Chief Executive Officer	Its:		Chief Financial Officer
		CYMRI, L.L.C.
		By:	/s/ Kenneth L. Thomas
		Its:	Chief Financial Officer
		TRIUMPH ENERGY, INC.
		By:		/s/ Kenneth L. Thomas
		Its:		Chief Financial Officer

EX-10.5.1

Exhibit 10.5.1

SEVERANCE AGREEMENT

This Severance Agreement (the “Agreement”) sets forth certain understandings and agreements reached by and between Richard Piske, III, acting on his own behalf (the “Employee”), Stratum Holdings, Inc., a Nevada corporation, and all of its parents, subsidiaries, and affiliated companies and divisions, including all officers, directors, agents, and employees (collectively, the “Company”).  The Employee and the Company are collectively referred to herein as the “Parties”.

WHEREAS, the Company has employed the Employee pursuant to an Employment Agreement dated March 1, 2007 (the “Employment Agreement”);

WHEREAS, the Employee and the Company have mutually agreed to gradually end the Employee’s employment and transition his responsibilities pursuant to the terms of this Agreement;

WHEREAS, the Employee desires to voluntarily resign his employment with the Company following the closing of a contemplated transaction with Hamilton Engineering, Inc. (the “Transaction”) and the Company desires to accept such resignation;

WHEREAS, the Transaction would not constitute a Change in Control as defined in Section 6.5 of the Employment Agreement, and the Employment Agreement does not otherwise provide any severance to the Employee upon his voluntary resignation;

WHEREAS, the Company desires to retain the Employee through the closing date of the Transaction (the “Resignation Date”) and to provide severance benefits to the Employee upon his termination of employment on the Resignation Date; and

WHEREAS, the Parties each desire to formalize the terms, benefits, and conditions relating to the Employee’s termination of employment by agreeing to the terms in this Agreement.

NOW THEREFORE, in exchange for the consideration and mutual promises recited below, the Parties agree to the following terms:

1.Resignation of Employment.  Subject to the provisions of this Section 1, the Employee will continue to serve as President and Chief Executive Officer of the Company until Resignation Date, on which date he will resign said position and all other employment, officer or director positions he holds with the Company or any of its parents, subsidiaries and affiliated entities (collectively “Affiliates”); provided that, on and after the Resignation Date, the Employee may continue to serve on the Board of Directors of the Company for as long as the Company and the Employee mutually agree.  The Company will continue to pay the Employee his current base salary of $15,000 per month and will provide the Employee all other employee benefits through the Resignation Date.

2.Announcements. Following execution of this Agreement, the parties agree to develop and agree on an overall plan for the formal announcement of the Employee’s resignation to employees of the Company and third parties and the parties agree that neither the Company nor the Employee will make any formal announcements concerning the Employee’s resignation to employees of the Company or third parties until finalization of such plan except (i) as and when mutually agreed by the parties, which agreement shall not unreasonably be withheld, or (ii) as required by law.

3.Early Termination.  Prior to the Resignation Date, the Company may terminate the Employee’s service with or without “Cause” (as defined in the Employment Agreement), and the Employee may terminate his service as President and as Chief Executive Officer for any reason.  Any such termination shall be referred to herein as an “Early Termination”.  In the event of any Early Termination, such Early Termination shall be governed by and subject to the terms and conditions of the Employment Agreement and the Employee shall be entitled to the payments and benefits, if any, provided thereunder.

4.Severance Payments and Other Actions. In consideration of the amicable end to their employment relationship, if an Early Termination does not occur, and subject to the Employee’s execution of the Separation Agreement and Release  (a copy of which is attached as Exhibit A) on or about the Resignation Date, the Company will provide the Employee with the following severance payments in accordance with the terms of the Separation Agreement and Release in full and complete settlement of any and all claims (including any the Employee may have for attorneys’ fees and costs):

(a)The Company will pay as severance pay to the Employee the total amount of (i) a cash lump sum payment of $200,000.00 upon the earlier to occur of (A) seven (7) days following the date hereof or (B) the Resignation Date, and (ii) the number of shares of the Company’s common stock with an aggregate value of $280,000, which amount is equal to his Salary (as defined in the Employment Agreement) for the remainder of the unexpired term of the Employment Agreement less the amount paid under clause (i) above, which amount shall be divided by the average of the common stock’s bid and ask prices for the 20 trading days immediately prior to the Resignation Date (clauses (i) and (ii) referred to herein as “Severance Pay”).  The Parties acknowledge and agree that this Agreement sets forth all of the terms, conditions, payments, and benefits relating to the Employee’s separation from employment and the termination of the Employment Agreement.

(b)On or prior to the Resignation Date, the Company agrees to transfer legal title to the Employee of the BMW 5-Series automobile currently being used by the Employee in his employment with the Company.

The Employee acknowledges that the Company’s obligation to pay severance, if any, will arise only after the Employee’s employment has ended and, only if the Employee signs and returns the Separation Agreement and Release in the form attached hereto as Exhibit A.  The Employee further acknowledges and agrees that the Severance Pay constitutes consideration for the Employee’s release of claims at the time of his resignation.  In the event the Employee declines

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to sign the Separation Agreement and Release, he shall not be entitled to any severance, and the Company will have no further liability or obligation to the Employee under this Agreement or in connection with his employment or resignation.  The Employee agrees and understands that the Employee must return any and all property belonging to the Company, including, but not limited to, copiers, printers, fax machines, telephones, credit cards, files, and other equipment as a condition to receiving the amounts described herein.  In the event that the Transaction is not consummated, the Company and the Employee agree that the Employment Agreement will remain in full force and effect, and both parties will perform their respective rights, duties and obligations thereunder, including, but not limited to, the salary adjustment contemplated thereunder.

5.Stock Option Grants.  On the Resignation Date, the Company will vest all outstanding stock options currently held by the Employee (the “Options”), and all such Options shall remain exercisable for the remainder of their unexpired terms in accordance with the original grant agreements.

6.Waiver of Additional Compensation or Benefits.  Other than compensation and benefits provided for in this Agreement, the Employee shall not be entitled to any additional compensation, benefits, payments or grants under any benefit plan, employment agreement, severance plan or bonus or incentive program established by the Company or any affiliate.  Any vested interest held by the Employee in the Company’s 401(k) Plan, retirement plan and any other plans in which the Employee participates shall be distributed in accordance with the terms of the plan and applicable law.  The Employee has no right to any stock options or grants under any plan.

7.Confidentiality and Return of the Company Property. The Employee further agrees that the Employee will keep any proprietary or confidential information pertaining to the business of the Company and its owners, principals, and partners, gained during the Employee’s employment strictly confidential, unless required by law to disclose such information. Such information includes customer lists and names, pricing methods, prices charged to customers, customer proposals, methods of doing business, and computer programs and designs. The Employee will also immediately return all documents and electronic data and information that the Employee obtained during employment at the Company. The Employee also agrees to keep the terms and existence of this Agreement confidential and will not disclose any of its terms to a third party.

8.Breach of Confidentiality. The Employee agrees that a breach by the Employee of the promises of confidentiality and nondisclosure set forth in this Agreement shall be a material breach of this Agreement, for which the Company will suffer damages and may seek legal damages (including the return of any consideration provided to the Employee under this Agreement), including attorney’s fees and costs, injunctive relief and other appropriate relief against him in a court of law.

9.References. Unless otherwise required by law or upon advice of counsel, the Company agrees to provide the Employee with a reference, giving only dates of employment and job title should the Employee seek new employment. The Employee acknowledges and agrees

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that the Company is otherwise required to provide such a reference is adequate consideration for this Agreement.

10.Acknowledgement. The Employee represents and acknowledges that the Employee has read all of the terms of this Agreement and has had an adequate opportunity to discuss it with others not associated with the Company, including his own independent legal counsel. The Employee agrees that the Company, or its respective representatives, employees, or agents have made any representations to the Employee concerning the terms or effects of this Agreement other than those contained in this Agreement.

11.Indemnification. In further consideration of the amounts paid by the Company and the releases contained herein, each of the Employee and the Company agrees to indemnify unconditionally and hold harmless the other party from any and all damages, costs, fines, or penalties, arising out of or relating to a claim, suit, action, or petition by any person or entity seeking relief against the other party based in whole or in part on the negligence or wrongful acts of such party.

12.Governing Law: No Modifications: Venue. This Severance Agreement shall be governed by and construed in accordance with the laws of the State of Texas, and cannot be amended, modified, or supplemented except by a written agreement entered into by all parties hereto. Any action or suit to enforce or interpret this Severance Agreement shall be filed in Harris, Texas.

13.Severability: Survival of Terms. In the event any provision of this Severance Agreement is invalidated by a court of competent jurisdiction, then all of the remaining provisions of this Severance Agreement shall continue unabated and in full force and effect. All obligations of a continuing nature created by this Severance Agreement shall survive its expiration or termination.

14.No Admissions of Liability. Neither this Agreement, nor anything contained herein, is to be construed as an admission by any party of any liability or unlawful conduct whatsoever. The Employee understands and agrees that the obligation of the Company to perform under this Agreement is conditioned on the Employee’s performance of all agreements, releases, and covenants as set forth herein.

15.Survival.  The provisions of Sections 7, 8 and 9 of the Employment Agreement shall survive the termination of the Employee’s employment in accordance with their terms.  Without limiting the generality of the foregoing, the Employee confirms his commitment to complying with Section 7 and 8 of the Employment Agreement.  For the purposes of Sections 7 and 8 of the Employment Agreement, the date of termination of the Employee’s employment shall be the Resignation Date.  Furthermore, Section 9 of the Employment Agreement shall apply to any controversy or claim arising out of or relating to this Agreement.  The parties agree that nothing contemplated or effectuated by the terms of this Agreement or the execution and delivery of this Agreement shall constitute “Cause” (as defined in the Employment Agreement) for the Company to terminate the Employee’s employment and the Employment Agreement.

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16.No Assignment: Binding Effect. The Employee warrants and represents that the Employee has not assigned or transferred any rights or claims against the Company. In addition, this Agreement shall apply to the Employee and any of his assigns and transferees. This Agreement shall inure to the benefit of and be binding on the Parties hereto and their respective heirs, representatives, successors, transferees, and assigns.

[Signature Page Follows]

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IN WITNESS WHEREOF, the Company and the Employee hereto evidence their agreement by their signatures.

Stratum Holdings, Inc.		Richard Piske, III
By:	/s/ D. Hughes Watler, Jr.		/s/ Richard Piske, III
		Signature
Its:	Chief Financial Officer
	Title	Date:   March 3, 2008
Date:   March 3, 2008

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EXHIBIT A

FORM OF SEPARATION AGREEMENT AND RELEASE

This Separation Agreement and Release (“Release Agreement”) is between Stratum Holdings, Inc., a Nevada corporation, and all of its parents, subsidiaries and affiliated companies and divisions, including all officers, directors, agents, and employees (collectively, the “Company”) and Richard Piske, III, acting on his own behalf (the “Employee”).

WHEREAS, the Employee has been employed by the Company pursuant to an Employment Agreement dated March 1, 2007 (the “Employment Agreement”); and

WHEREAS, the Employee has voluntarily resigned his employment with the Company, effective [DATE] (the “Resignation Date”).

WHEREAS, the Employee and the Company wish to resolve amicably all outstanding issues between them.

THEREFORE, in consideration of the promises set forth below, and for other good and valuable consideration, the receipt of which is hereby acknowledged, the parties hereto agree as follows:

1.Resignation.  The Employee’s employment with the Company will end effective [DATE].

2.Severance. The Company shall provide the Employee Severance Pay as described in the parties’ Severance Agreement, subject to the Employee’s compliance with the terms of the Severance Agreement, and provided that the Employee does not revoke this Release Agreement.

A.The Employee acknowledges that he is not otherwise entitled to the Severance Pay but for his execution of this Release Agreement.  The Employee acknowledges that he is not entitled to any further compensation from the Company pursuant to this Release Agreement or his employment.

B.If the Employee breaches the Severance Agreement prior to full payment of the Severance Pay, then, in addition to any other remedy at law or in equity which the Company may have, the Company shall not be obligated to pay any unpaid part of the Severance Pay.

3.Release.  The Employee on behalf of the Employee, his heirs, executors, successors and assigns, hereby releases, remises and discharges the Company and each and every one of its former or current directors, officers, employees, members, agents, successors, predecessors, subsidiaries, assigns and attorneys of and from all actions, causes of action, claims or complaints (collectively, “Claims”) in law or equity which the Employee or his heirs, executors, administrators, assigns, agents, representatives, attorneys, officers or employees

ever had or now has by reason of any matter, cause or thing whatsoever at any time up to and including the date of execution of this Release Agreement, including but not limited to any Claim of discrimination, harassment, retaliation, breach of contract, wrongful termination, interference with contractual relations, intentional infliction of emotional distress, any alleged violation of any federal, state or local statutes, regulations or ordinances, including but not limited to the federal and state laws known as the Civil Rights Acts of 1964 and 1991, the Age Discrimination in Employment Act, the Americans With Disabilities Act, the Employee Retirement Income Security Act (other than any accrued benefit(s) to which the Employee has a non-forfeitable right under any ERISA pension benefit plan), the retaliation provisions of the Fair Labor Standards Act, the Family and Medical Leave Act, the Worker Adjustment and Retraining Notification Act, and any amendments to any of the foregoing, or any other Claims of any kind. Such release includes, but is not limited to, any claim the Employee or his counsel may have, or had, for payment of attorney’s fees, commissions or reimbursement of expenses. Furthermore, except as provided herein, the Employee shall not pursue any such Claim in any court, agency, board, committee or forum whatsoever, and shall reimburse the Company for all fees and expenses associated with the Company’s defense should the Employee pursue such a Claim, unless that claim challenges the knowing and voluntary nature or the validity of this Separation Agreement and Release under the Older Workers Benefit Protection Act.  The Employee acknowledges that the Severance Pay provided for in the Severance Agreement constitutes good and valuable consideration for the release contained in this Section 3.

4.Confidentiality.  The content of this Release Agreement, the fact of the execution of this Release Agreement and the circumstances leading to the execution of the Release Agreement, are confidential and are not to be disclosed by any party except as necessary to a party’s respective accountants, attorneys, income tax preparers or similar professionals, each of whom shall be bound by this confidentiality requirement.  All documents, records, techniques, business secrets and other information which have come into the Employee’s possession from time to time during the Employee’s affiliation with the Company and/or any of its subsidiaries or affiliates shall be deemed to be confidential and proprietary to the Company and/or any of its subsidiaries or affiliates and shall be their sole and exclusive property.  The Employee agrees that the Employee will keep confidential and not divulge to any other party any of the Company’s or its subsidiaries’ or affiliates’ confidential information and business secrets, including, but not limited to, such matters as investor information, proprietary investment strategies, portfolio information, key personnel, operational methods, plans for future developments, and other business affairs and methods and other information not readily available to the public, except as required by law.  Additionally, the Employee agrees that he shall promptly return to the Company any and all confidential and proprietary information that is currently in the Employee’s possession.

8

5.Nondisparagement/Nondisruption.

A.The Employee and the Company shall reasonably cooperate with one another to effect a smooth transition of the Employee’s workload.

B.The Employee shall not disparage the Company, including its parents, subsidiaries, affiliated companies, divisions, officers, directors, agents, and employees, nor will the Company’s officers and directors disparage the Employee in any communication with any third party.  The Company and the Employee agree that this is a material term of this Release Agreement. This Section 5.B. does not restrict either party from responding fully and truthfully in the context of a legal or other government proceeding in which either is under oath or responding to subpoena or otherwise required by law to cooperate with a government entity.

C.Neither the Employee nor the Company shall not take any action to disrupt the business operations of the other.

6.Non-Admission. The Employee understands and agrees that this Release Agreement shall not in any way be construed as an admission by the Company of any unlawful or wrongful acts whatsoever against employee or any other employee, and the Company specifically disclaims any liability to or wrongful acts against the Employee or any other person.

7.Right to Review.  The Employee represents and agrees that he has had a reasonable time to review the Release Agreement and is voluntarily entering into this Release Agreement. The Employee understands that he may revoke this Release Agreement within seven (7) days after execution. The Employee’s notice of revocation must be in writing and addressed and delivered to the attention of the Company, on or before the end of the seven (7)-day period. This Release Agreement will not be effective or enforceable against the Company until eight (8) days after the Company has received employee’s signed copy of this Release Agreement. That will be the “effective date” of this Release Agreement. If the Employee revokes this Release Agreement as described herein, the Release Agreement will not become effective, and the Employee will not receive the payments set forth in the Severance Agreement. By signing below, the Employee further confirms that he: (a) has read this Release Agreement carefully and completely; (b) has been given a period of at least twenty-one (21) days to consider and review this Release Agreement; (c) has been advised to consult with legal counsel; and (d) understands all the provisions in this Release Agreement.  The Employee understands that it is his choice whether or not to enter into this Release Agreement and that his decision to do so is voluntary and made knowingly in the absence of fraud, duress, or coercion.

8.Applicable Law.  This Agreement shall be governed by and construed in accordance with the laws of the State of Texas.  Venue of any litigation arising

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from this Release Agreement shall be in a court of competent jurisdiction in state or federal court located in Harris County, Texas.  The Employee agrees that he shall be subject to the personal jurisdiction of the district courts of Harris County, the State of Texas and the U.S. District Courts, Southern District of Texas.

9.Severability.  If any portion of this Agreement is void or deemed unenforceable for any reason, the unenforceable portion shall be deemed severed from the remaining portions of this Agreement that shall otherwise remain in full force and effect.

10.Entire Agreement. This Agreement constitutes the entire agreement between the parties and supersedes any and all prior agreements or understandings relating thereto. This Agreement may be modified only in writing and signed by both parties.

Please read carefully as this document includes a release of claims.

As evidenced by my signature below, I hereby certify that I have carefully read the above Separation Agreement and Release and agree to its terms.

Richard Piske, III	Stratum Holdings, Inc.
	By:
	Name:
	Title:
Date:	Date:

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EX-10.5.2

Exhibit 10.5.2

Stratum Holdings, Inc.

Three Riverway, Suite 1500

Houston, Texas  77056

March 3, 2008

Mr. D. Hughes Watler, Jr.

c/o Stratum Holdings, Inc.

Three Riverway, Suite 1500

Houston, Texas  77056

Re:Stay Bonus Arrangement

Dear Mr. Watler:

As you are aware, pursuant to resolutions adopted at a special meeting of the Board of Directors of Stratum Holdings, Inc., a Nevada corporation (the “Company”), held on March 3, 2008, the Board of Directors of the Company has approved the payment of a stay bonus to you in the amount of $70,000.  The Company is paying such amount to you in consideration for services you rendered to the Company in connection with the sale of Petroleum Engineers, Inc., a Louisiana corporation and wholly owned subsidiary of the Company, and for consulting services to be rendered by you to the Company after the closing of such transaction.  The Company will arrange for payment of such amount to be made to you upon your completion of your service to the Company, which is scheduled to occur on or about May 15, 2008.

Please acknowledge your receipt of this letter and your agreement with the above terms by signing your name in the space provided below.

Sincerely,

/s/ Richard A. Piske, III

Richard A. Piske, III

Chief Executive Officer

Accepted and Agreed:

/s/ D. Hughes Watler, Jr.

D. Hughes Watler, Jr.

EX-10.5.3

Exhibit 10.5.3

Stratum Holdings, Inc.

Three Riverway, Suite 1500

Houston, Texas  77056

March 3, 2008

Mr. Kenneth L. Thomas

c/o Stratum Holdings, Inc.

Three Riverway, Suite 1500

Houston, Texas  77056

Re:Stay Bonus Arrangement

Dear Mr. Thomas:

As you are aware, pursuant to resolutions adopted at a special meeting of the Board of Directors of Stratum Holdings, Inc., a Nevada corporation (the “Company”), held on March 3, 2008, the Board of Directors of the Company has approved the payment of a stay bonus to you in the amount of $70,000.  The Company is paying such amount to you in consideration for services you rendered to the Company in connection with the sale of Petroleum Engineers, Inc., a Louisiana corporation and wholly owned subsidiary of the Company, and for consulting services to be rendered by you to the Company after the closing of such transaction.  The Company will arrange for payment of such amount to be made to you upon your completion of your service to the Company, which is scheduled to occur on or about March 31, 2008.

Please acknowledge your receipt of this letter and your agreement with the above terms by signing your name in the space provided below.

Sincerely,

/s/ Richard A. Piske, III

Richard A. Piske, III

Chief Executive Officer

Accepted and Agreed:

/s/ Kenneth L. Thomas

Kenneth L. Thomas

EX-99.1

Exhibit 99.1

STRATUM HOLDINGS, INC.

Three Riverway, Suite 1500

Houston, Texas 77056

(713) 479-7000

Fax (713) 975-6271

Contact:

D. Hughes Watler, Jr.                                                                                                                          OTC: STTH.OB

Chief Financial Officer

(713) 479-7000

www.stratum-holdings.com

STRATUM HOLDINGS ANNOUNCES SALE OF

PETROLEUM ENGINEERS, INC.

Houston, Texas — March 12, 2008.  Stratum Holdings, Inc. today announced that it has completed the sale of its domestic Energy Services subsidiary, Petroleum Engineers, Inc. (“PEI”) to an affiliate of Houston-based Hamilton Engineering, Inc. (“Hamilton”) for a total sales price of $15.0 million.  Pursuant to the terms of the Securities Purchase Agreement for the sale of PEI, Stratum granted Hamilton a three month option, at Hamilton’s sole discretion, to acquire the outstanding capital stock of its Canadian Energy Services subsidiary, Decca Consulting, Ltd., for $4.25 million. The sale of PEI and Decca was approved by Stratum’s stockholders at a Special Meeting held on February 21, 2008.  Stratum applied the proceeds from the sale of PEI to repay debt and other accrued obligations, including the outstanding indebtedness of PEI under a revolving bank credit agreement in the amount of $3.2 million and secured and unsecured debt and other liabilities in the aggregate amount of $4.5 million.   Stratum expects to report a pre-tax gain from the sale of PEI in the first quarter of 2008.

As a result of this sale, Stratum exited from the domestic portion of its Energy Services segment and granted an option to Hamilton to purchase the Canadian portion of its Energy Services segment.  Stratum’s remaining Exploration & Production segment owns working interests through its wholly-owned subsidiaries, CYMRI, L.L.C. and Triumph Energy, Inc., in approximately 62 operated and non-operated oil and gas wells in South Texas and South Louisiana, with net production of approximately 1,000 Mcf equivalent per day.

Prior to October 26, 2007, Stratum also conducted operations in a third segment, Construction Staffing, via a wholly-owned subsidiary, Tradestar Construction Services, Inc. (“Tradestar Construction”).  In that business, the Company provided pre-screened, skilled construction employees to major, non-union contractors in the Southwestern U.S.  On that date, the Company sold substantially all of the assets of Tradestar Construction to a private construction staffing company for a sales price of $3.2 million, plus a working capital adjustment, and exited from the Construction Staffing segment.

*****

Statements contained in this press release with respect to the future are forward-looking statements.  These statements reflect management’s reasonable judgment with respect to future events.  Forward-looking statements involve risks and uncertainties.  Actual results could differ materially from those anticipated as a result of various factors, including cyclical or other downturns in demand, significant pricing competition, unanticipated additions to industry capacity, and the timing and number of additional acquisitions made by Stratum. Forward-looking statements are based on currently available information, and Stratum assumes no obligation to update any such statements.  A list of additional risk factors can be found in Stratum’s annual report on Form 10-KSB for the year ended December 31, 2006 filed with the US Securities and Exchange Commission.