**Exhibit 10.1****AOGI 3-20-06****PURCHASE AND SALE AGREEMENT****(Richland County, Montana)**     This Purchase and Sale Agreement (this “Agreement”) is made and entered into this ..... day ofMarch, 2006, by and between American Oil & Gas, Inc. (“American”), a Nevada corporation whoseaddress is 1050 Seventeenth Street, Suite 1850, Denver, Colorado 80265, and Enerplus Resources(USA) Corporation (“Enerplus”), a Delaware corporation whose address is 1700 Lincoln Street, Suite1300, Denver, Colorado 80203. American and Enerplus may be referred to individually as a “Party”or collectively as the “Parties.”**RECITALS**     A. American wishes to sell certain of its Assets, as defined in Section 1.2 below.     B. Enerplus (i) has conducted an independent investigation of the nature and extent of theAssets, (ii) will conduct further due diligence on the Assets after execution of this Agreement,and (iii) wishes to purchase the Assets.     C. Enerplus and American wish to accomplish the foregoing under the terms of this Agreement.**AGREEMENT**     In consideration of the mutual promises contained herein, Enerplus and American agree asfollows:**ARTICLE I****PURCHASE AND SALE OF THE ASSETS**     1.1 Purchase and Sale. American agrees to sell and Enerplus agrees to purchase theAssets pursuant to the terms of this Agreement, with such purchase and sale effective as of 7:00a.m., Mountain Time on February 1, 2006 (the “Effective Time”).     1.2 The Assets. As used herein, the term “Assets” means the entire right, title andinterest of American in and to the following:     (a) The leasehold estates created by the oil and gas leases described in Schedule1.2(a) (collectively, the “Leases”), together with all contract rights and privileges;surface, reversionary or remainder interests; and all other interests associated with theLeases.     (b) The oil and gas wells specifically described in Schedule 1.2(b) (collectively, the“Wells”), together with all equipment, fixtures, improvements, permits, rights-of-way andeasements used or held for use in connection with the dewatering, production, gathering,treatment, processing, compression, storing, sale or disposal of hydrocarbons or waterproduced from the properties and interests described in Section 1.2(a).     (c) The unitization, pooling and communitization agreements, declarations and orders,and the units created thereby (including all units formed under orders, regulations, rulesor other acts of any federal, state or other governmental agency having jurisdiction) andall other
 

 
such agreements relating to the properties and interests described in Sections 1.2(a)and (b) and to the production of hydrocarbons, if any, attributable to said properties andinterests.     (d) All sales, purchase, exchange, gathering, transportation and processing contracts,joint operating agreements, balancing agreements, farmout agreements, service agreements,participation agreements and other contracts, agreements and instruments (collectively, the“Contracts”), insofar as they relate to the properties and interests described in Sections1.2(a) through (c), including without limitation, the material agreements shown on Schedule1.2(d).     (e) The files, records and data relating to the items described in Sections 1.2(a)through (d) maintained by American and relating to the interests described in Sections1.2(a) through (d) (including without limitation all lease files, land files, well files,drilling reports, contact files, division order files, abstracts and title opinions, seismicdata, geophysical data and other geologic information and data), although only to the extentnot subject to unaffiliated third party contractual restrictions on disclosure or transferand only to the extent related to the Assets, and in all events excluding all of American’stax and financial records and all economic evaluations (collectively, after giving effect tothe limitations and exclusions set forthparticipation above, the “Records”).     1.3Purchase Price. The purchase price for the Assets (the “Purchase Price”) shall be$11,500,000. The Parties have allocated the Purchase Price among the Leases and Wells in themanner shown in Schedule 1.3. The value so allocated to a particular Lease or Well is referred toas the “Allocated Value” of such Lease or Well.     1.4 Adjustments to Purchase Price. All adjustments to the Purchase Price shall bemade (i) according to the factors described in this Section 1.4, (ii) in accordance with generallyaccepted accounting principles as consistently applied in the oil and gas industry, and (iii)without duplication.     (a) Settlement Statements. The Purchase Price shall be adjusted at Closing pursuant to a“Preliminary Settlement Statement” prepared by American and submitted to Enerplus three days priorto Closing for Enerplus’s comment and review. The Preliminary Settlement Statement shall set forththe Closing Amount and all adjustments to the Purchase Price and associated calculations. The term“Closing Amount” means the Purchase Price, adjusted as provided in this Section using reasonableestimates if actual numbers are not available. After Closing, the Purchase Price shall be adjustedpursuant to the Final Settlement Statement delivered pursuant to Section 12.1.     (b) Property Expenses. The term “Property Expenses” shall mean all capital expenses,joint interest billings, lease operating expenses, lease rental and maintenance costs, royalties,Taxes (as defined Section 8.1(a)), drilling expenses, dewatering expenses, completion expenses,geological, geophysical and any other exploration, development or maintenance expenditureschargeable under applicable operating agreements or other agreements consistent with the standardsestablished by the Council of Petroleum Accountant Societies of North America that are attributableto the Assets.     (c) Upward Adjustments. The Purchase Price shall be adjusted upward by:     (1) An amount equal to all proceeds (net of royalty and Taxes not otherwiseaccounted for hereunder) that are received by Enerplus from the sale of Hydrocarbonsproduced from or credited to the Assets prior to the Effective Time (excluding “tankbottoms,” if any, as that term is used in the oil and gas industry), provided,however, that
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this adjustment shall be made only on the Final Settlement Statement,and shall not be included on the Preliminary Settlement Statement or considered indetermining the Closing Amount;     (2) An amount equal to all direct and actual expenses attributable to theAssets, including, without limitation, the Property Expenses, paid by or on behalfof American that are attributable to the period after the Effective Time;     (3) To the extent not covered in the preceding paragraph, an amount equal toall prepaid expenses attributable to the Assets after the Effective Time that werepaid by or on behalf of American, including without limitation, prepaid drilling andcompletion costs, prepaid compressor rental charges, and prepaid utility charges;     (4) Any other amount as may be agreed to in writing by Enerplus and American.     (d) Downward Adjustments. The Purchase Price shall be adjusted downward by:     (1) The amount of all direct and actual expenses attributable to the Assets,including, without limitation, the Property Expenses that Enerplus agrees to pay, orthat have been paid by Enerplus, that are attributable to the period prior to theEffective Time;     (2) An amount equal to any Title Defect Adjustments (as defined in Section3.2);     (3) An amount equal to any Environmental Defect Adjustments (as defined inSection 4.4); and     (4) Any other amount as may be agreed to in writing by Enerplus and American.**ARTICLE II****ENERPLUS’S INSPECTION**     2.1 Access to Records. Subject to Sections 7.3(a) and (b), American will continue to makethe Records available to Enerplus and its representatives for inspection and review at the officesof American during normal business hours to permit Enerplus to perform, at its sole expense, itsdue diligence review. Subject to the consent and cooperation of third parties, American willassist Enerplus in Enerplus’s efforts to obtain, at Enerplus’s expense, such additional informationfrom third parties as Enerplus may reasonably request, for the purposes of Enerplus’s due diligencereview. Enerplus may inspect the Records and such additional information only to the extent suchinspection does not violate any contractual commitment of American to an unaffiliated third party.American shall make reasonableefforts to obtain consent from any such third party to disclose the information and Records toEnerplus, provided that Enerplus agrees to keep same confidential and not disclose it to anyoneother than its advisors in this transaction, and provided further that American shall have noobligation to make any payment to obtain such consent.     2.2 Access to the Assets. Immediately after execution of this Agreement, Americanwill grant Enerplus access to the Assets during reasonable business hours to permit Enerplus toconduct, at its sole risk and expense, on-site inspections and environmental assessments of theAssets. If Enerplus or its agent prepares an environmental assessment of any Asset, Enerplusagrees to keep such assessment confidential and to furnish copies thereof to American. Inconnection with any on-site inspections,
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Enerplus (i) agrees not to interfere with the normaloperation of the Assets, (ii) agrees to comply with all requirements of the operators of the Assetsand (iii) represents that it is adequately insured. Enerplus waives, releases and agrees toindemnify American, and its respective directors, officers, shareholders, members, employees,agents and representatives against all liabilities and obligations, including without limitation,personal injury, death and/or property damage, arising from Enerplus’s activities on the Assetsexcept to the extent such liability or damages are caused by American’s willful misconduct. Theprovisions of this Section shall survive termination of this Agreement.**ARTICLE III****TITLE MATTERS**     3.1 Definitions.     (a) Defensible Title. “Defensible Title” means such record title to the Leases that (i)would lead a reasonable prudent operator to distribute to American not less than the net revenueinterest set forth on Schedule 1.2(a) for each Lease (“NRI”); (ii) would lead a reasonable prudentoperator to bill American for costs and expenses relating to the maintenance, development, andoperation of wells located on the Leases in an amount not greater than the working interest setforth in Schedule 1.2(a) (“WI”); and (iii) is free and clear of encumbrances, liens and defects,other than Permitted Encumbrances.     (b) Permitted Encumbrances. “Permitted Encumbrances” means:     (1) lessors’ royalties, overriding royalties, net profits interests, productionpayments, reversionary interests and similar burdens (payable or in suspense) if thenet cumulative effect of such burdens does not operate to reduce the NRI;     (2) liens for Taxes [as defined in Section 8.1(a)], or assessments not yet dueand delinquent or, if delinquent, that are being contested in good faith in thenormal course of business and if so required by statute for which bond has beenposted;     (3) all required notices, consents, actions, or filings with any governmentalagency related to conveyance of the applicable Lease, if the same are customarilyobtained after Closing;     (4) rights of reassignment upon the surrender or expiration of any Lease;     (5) easements, rights-of-way, servitudes, permits, surface leases and othersurface rights on or over the Leases or any restrictions on access thereto that donot materially interfere with the operation of the affected Lease as they have beenconducted in the past;     (6) materialmen’s, mechanics’, operators’ or other similar liens arising in theordinary course of business incidental to operation of the Leases (i) if such liensand charges have not been filed pursuant to law and the time for filing such liensand charges has expired, (ii) if filed, such liens and charges have not yet becomedue and payable or payment is being withheld as provided by law, or (iii) if theirvalidity is being contested in good faith by appropriate action; and     (7) depth limitations on American’s ownership of leasehold interests.
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     (c) Title Defect. “Title Defect” means any lien, encumbrance, claim, defect in orobjection to real property title, other than Permitted Encumbrances, that alone or in combinationwith other defects (i) renders American’s title to the Lease less than Defensible Title and that(ii) reduces the Allocated Value of the affected Lease by more than $5,000.     (d) Title Defect Value. “Title Defect Value” means the amount by which theAllocated Value of a Lease is reduced by a Title Defect, although the Title Defect Value maynever exceed the Allocated Value of the Lease. The Title Defect Value shall be determinedby the Parties as follows:     (1) If the Title Defect is an indebtedness secured by a lien or encumbrance ona Lease that may be discharged in full by the satisfaction of such indebtedness, theTitle Defect Value shall be the total amount to discharge such indebtedness so thatsuch lien or encumbrance no longer burdens the Lease.     (2) If the Title Defect is an actual reduction in NRI with no change in WI, theTitle Defect Value shall be the Allocated Value for the particular Lease,proportionately reduced by the ratio of the actual NRI to the NRI as set forth onSchedule 1.2(a).     (3) If the Title Defect does not fall into Section (1) or (2), then the TitleDefect Value shall be determined by the Parties in good faith, taking into accountall relevant factors, including without limitation, the following:     (i) The Allocated Value of the affected Lease;     (ii) If the Title Defect represents only a possibility of titlefailure, the probability that such failure will occur; and     (iii) The legal effect of the Title Defect.     (e) Title Disputes. Any dispute between American and Enerplus concerning theexistence, nature or extent of a Title Defect, the Title Defect Value, or the adequacy ofcurative work performed in respect of such Title Defect shall be resolved as provided inSection 14.8, below.     3.2 Purchase Price Adjustments for Title Defects.     (a) Notice of Title Defects. Enerplus may give American written “Title Defect Notice” assoon as reasonably possible but no later than Tuesday, March 28, 2006 at 5:00 p.m. Mountain Time(“Title Defect Notice Date”). The Title Defect Notice must be in writing, name the affected Lease,describe each Title Defect and its basis in reasonable detail, state Enerplus’s good faith estimateof the Title Defect Value, and, if applicable, contain the information required by Section 3.2(b).     (b) Defect Adjustments. No adjustments to the Purchase Price shall be madeunless and until the aggregate Title Defect Value exceeds $150,000.00. In its Title DefectNotice, Enerplus shall identify Leases of its choice (the “Included Leases”) that sufferTitle Defects in an amount equal to the lesser of (i) the aggregate Title Defect Value ofall uncured Title Defects or (ii) $150,000.00. American shall be under no obligation tocure Title Defects in the Included Leases; instead, American’s entire interest in all of theIncluded Leases shall be assigned to
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Enerplus at Closing, without any reduction in thePurchase Price and without any continuing liability or responsibility on the part ofAmerican in respect of such Title Defects. If, however, the aggregate value of all uncuredTitle Defects exceeds $150,000.00, then, only as to Leases suffering from Title Defects thatare not Included Leases, each such Lease will not be assigned to Enerplus at Closing and thePurchase Price will be reduced at Closing by the Title Defect Value, unless (i) Americanelects to cure the Title Defect prior to Closing, (ii) Enerplus agrees to waive the relevantTitle Defect, (iii) American elects on or before Closing to cure such Title Defect no laterthan 90 days after Closing, or (iv) American, with Enerplus’s consent, elects on or beforeClosing to indemnify Enerplus against any loss attributable to the relevant Title Defect.     (c) Post-Closing Cure.     (1) If American elects to cure the applicable Title Defect post-Closing, thenEnerplus shall, pending such post Closing period, withhold and retain from thePurchase Price payable at Closing an amount equal to the Title Defect Valueattributable to the affected Lease and American shall not assign the affected Leaseto Enerplus at Closing.     (2) If American elects to cure the applicable Title Defect post-Closing, butdoes not cure the applicable Title Defect to Enerplus’s reasonable satisfactionwithin the 90 day time period (or such longer period as may be agreed to by theParties), Enerplus may waive the applicable Title Defect, or if Enerplus does notwaive the Title Defect, then, the Purchase Price shall be adjusted for the TitleDefect Value of the affected Lease in accordance with the terms of this Agreement.If American cures the applicable Title Defect to Enerplus’s reasonable satisfactionwithin the 90-day time period (or such longer period as may be agreed to by theParties), Enerplus shall pay to American the Title Defect Value attributable to theaffected Lease and American shall assign such Lease to Enerplus.     3.3 Casualty Loss. Prior to Closing, if a portion of the Assets is destroyed by fireor other casualty (“Casualty Loss”), Enerplus shall purchase the Asset at Closing for the AllocatedValue of the Asset reduced by the estimated cost to Enerplus for repair of such Asset (withequipment of similar utility) up to the Allocated Value thereof net of any payments as may bereceived from American’s insurers and paid to Enerplus attributable to any applicable insuranceclaims made on such Casualty Loss (the net reduction being the “Net Casualty Loss”). American, atits sole option, may elect to cure such Casualty Loss by replacing any personal property that isthe subject of a Casualty Loss with equipment of equal (or better if American elects in its solediscretion) grade and utility and, if American elects to so cure the Casualty Loss, Enerplus shallpurchase the affected Asset at Closing for the Allocated Value thereof.     3.4 Preferential Rights and Consents.     Schedule 3.4 identifies preferential purchaserights and Required Consents. “Required Consents” are consents that, if not obtained by Closing,would invalidate the conveyance of an Asset; provided, however, that consents and approvalscustomarily obtained after Closing (such as federal and state approvals of assignments), andconsents that do not specifically invalidate the conveyance if not obtained are not RequiredConsents. American shall use reasonable efforts to obtain all Required Consents and to givenotices required in connection with preferential purchase rights prior to Closing. If, beforeClosing, Enerplus discovers other Required Consents or preferential purchase rights, Enerplus shallnotify American immediately and American shall use reasonable efforts to obtain such consents andto give the notices required in connection with the preferential rights prior to Closing.
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     (a) Consents.If a Required Consent has not been obtained by Closing, then (i) theportion of the Assets for which such consent has not been obtained shall not be conveyed atthe Closing, (ii) the Allocated Value for that Asset shall not be paid to American, and(iii) American shall use reasonable efforts to obtain such consent as promptly as possibleafter Closing. If such consent has been obtained as of the Final Settlement Date, Americanshall convey the affected Asset to Enerplus effective as of the Effective Time and Enerplusshall pay American the Allocated Value of the affected Asset, together with any proceedsfrom the affected Asset attributable to the period of time after the Effective Time. Ifsuch consent has not been obtained as of the Final Settlement Date, American shall retainsuch Asset. Enerplus shall reasonably cooperate with American in obtaining any RequiredConsent, including providing assurance of financial condition, but Enerplus shall not berequired to expend funds or make any other type of financial commitment as a condition ofobtaining such consent.     (b) Preferential Purchase Rights.     (1) If any preferential right to purchase any portion of the Assets isexercised prior to the Closing Date, or if the time for exercise of suchpreferential purchase rights has not expired and American has not received notice ofan intent not to exercise or otherwise to waive the preferential purchase right,that portion of the Assets affected by the preferential purchase right shall beexcluded from the Assets and the Purchase Price shall be adjusted downward by anamount equal to the Allocated Value of such affected Assets.     (2) If a third party exercises its preferential right to purchase, but fails toconsummate the transaction prior to the Closing, American shall retain the affectedAssetand the Purchase Price shall be adjusted downward by an amount equal to theAllocated Value of such affected Assets.     (3) If a third party exercises its preferential right to purchase, but does notconsummate the transaction within the time specified in the preferential purchaseright, provided that the reason therefor is not American’s fault, American shallconvey the affected Asset to Enerplus as soon as possible after the expiration ofthe time for consummation of the transaction, effective as of the Effective Time,and Enerplus shall pay American the Allocated Value of the affected Asset.     (4) If a preferential purchase right is not discovered before Closing and theaffected Asset is conveyed to Enerplus at Closing, and if the preferential purchaseright is later exercised, then Enerplus agrees to convey the affected Asset to theparty exercising such right on the same terms and conditions under which Americanconveyed such Asset to Enerplus (with the purchase price being the Allocated Valuefor the affected Asset) and retain all amounts paid by the party exercising suchpreferential right to purchase. In the event of such exercise, Enerplus shallprepare, execute and deliver an appropriate form of conveyance of such Asset to theexercising party, and American agrees to hold harmless and indemnify Enerplus fromany and all Losses, liabilities and obligations associated with such conveyed Asset,including, without limitation, any deficiency in the amount paid by such third partybelow the Allocated Value, if any, of the Asset.     (c) Remedies.The remedies set forth in this Section 3.4 are the exclusiveremedies for the preferential purchase rights and Required Consents as listed on Schedule3.4.
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**ARTICLE IV****ENVIRONMENTAL MATTERS**     4.1 Definitions. For the purposes of the Agreement, the following terms shall havethe following meanings:     “Environmental Consultant” means a third party environmental consultant with experiencein the geologic basin where the Assets are located, selected by Enerplus, and approved byAmerican, which approval shall not be unreasonably withheld.     “Environmental Defect” means a condition in, on or under the Asset (including, withoutlimitation, air, land, soil, surface and subsurface strata, surface water and ground water)that (i) causes an Asset to be in material violation of an Environmental Law or (ii) wouldgive rise to a claim for damages by a third party.     “Environmental Defect Notice” means a written notice of an Environmental Defect, asmore specifically described in Section 4.3, made by Enerplus to American, on or before theEnvironmental Defect Notice Date.     “Environmental Defect Notice Date” means Tuesday, March 28, 2006 at 5:00 p.m. MountainTime.     “Environmental Law” means any statute, law, ordinance, rule, regulation, code, order,judicial writ, injunction, or decree issued by any federal, state, or local governmentalauthorityincluding common law, in effect on or before the Effective Time relating to the controlof any pollutant or protection of the air, water, land, or environment or the release ordisposal of hazardous materials, hazardous substances or waste materials.     “Remediation” means actions taken to correct an Environmental Defect as recommended byan Environmental Consultant.     “Remediation Costs” means the costs or estimates thereof, to remediate a particularEnvironmental Defect, as estimated in writing by an Environmental Consultant.     4.2 Environmental Liabilities and Obligations.     (a) Retained Environmental Liabilities. If American receives a valid Environmental DefectNotice for a particular Environmental Defect and such Environmental Defect Notice is not contestedunder the provisions of Section 4.5, then, subject to the provisions of Section 4.4 and ArticleXIII, American agrees to retain all claims, cost, expenses, liabilities and obligations accruing orrelating to the Environmental Defect that was the subject of the valid and complete EnvironmentalDefect Notice (“Retained Environmental Liabilities”). Timely receipt of a valid and completeEnvironmental Defect Notice is a condition precedent to American’s obligations under this Section.     (b) Assumed Environmental Liabilities. Except for Retained EnvironmentalLiabilities and subject to the provisions of Section 4.4 and Article XIII, upon Closing,Enerplus agrees to assume and pay, perform, fulfill and discharge and release American fromall Losses relating to environmental conditions in, on or under the Assets attributable tothe period of time before and after the Effective Time, including without limitation any andall liability for naturally occurring radioactive materials and man-made material fibers,and the obligation to plug and
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abandon all of the Wells and reclamation of existing Wellsites (collectively, “Assumed Environmental Liabilities”). Assumed EnvironmentalLiabilities shall include any and all claims, costs, expenses, liabilities, and obligationsattributable to the environmental condition of the Assets that were not the subject of avalid Environmental Defect Notice.     4.3 Environmental Defect Notice. An Environmental Defect Notice must be in writingand received on or before the Environmental Defect Notice Date, name the affected Asset andidentify the condition in, on or under the Asset that causes the Environmental Defect, and containa written statement of the estimated Remediation Costs by an Environmental Consultant.     4.4 Remedies for Environmental Defects. If Enerplus delivers a valid and completeEnvironmental Defect Notice to American, American may elect one of the following options: (i)American remediates the Environmental Defect, such remediation to be consistent with EnvironmentalLaws; or (ii) American contests the existence of the Environmental Defect or the Remediation Costsin accordance with Section 4.5; or (iii) American pays Enerplus’s estimate of the Remediation Cost(“Environmental Defect Adjustment”). If American elects one of the foregoing three alternatives inrespect of a particular Environmental Defect, American shall have no Retained EnvironmentalLiability as to that Environmental Defect.     4.5 Contested Environmental Defects. If American contests the existence of anEnvironmental Defect or the Remediation Costs, American shall notify Enerplus in writing on orbefore ten days after receipt of the Environmental Defect Notice (“Rejection Notice”). TheRejection Notice shall state with reasonable specificity the basis of the rejection of theEnvironmental Defect or the Remediation Costs. Within 5 days of receipt of the Rejection Notice,representatives of Enerplus and American knowledgeable in environmental matters, shall meet andeither (i) mutually agree to reject the particular Environmental Defect or (ii) agree on thevalidity of such Environmental Defect and the Remediation Costs. If the Parties cannot agree oneither option (i) or (ii) in the preceding sentence, the Environmental Defect and/or theRemediation Costs subject to the Rejection Notice shall be resolved as provided in Section 14.8,below. If American fails timely to deliver a Rejection Notice, American shall be deemed to haveaccepted the validity of the Environmental Defect and Enerplus’s estimate of the Remediation Costs,and shall be deemed to have waived its own option to contest the Environmental Defect pursuant tothis Section.     4.6 Exclusive Remedies. The rights and remedies granted each Party in this Article,together with the indemnifications set forth in Article XIII, are the exclusive rights and remediesagainst the other Party related to any Environmental matter, including, without limitation,Environmental Defects.**ARTICLE V****AMERICAN’S REPRESENTATIONS AND WARRANTIES**     5.1 Corporate/Limited Liability Company Representations. American makes the followingrepresentations and warranties:     (a) Incorporation/Qualification. American is a Nevada corporation, dulyorganized, validly existing and in good standing under the laws of the State of Nevada andis qualified to conduct business in Montana.     (b) Power and Authority. American has all requisite power and authority to ownits proportionate share of the Assets and to carry on its businesses as presently conductedand to execute and deliver this Agreement and perform its respective obligations under thisAgreement.
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     (c) No Lien, No Violation. The execution and delivery of this Agreement doesnot, and the fulfillment of and compliance with the terms and conditions hereof will not, asof Closing, (i) create a lien or encumbrance on the Assets or trigger an outstandingsecurity interest in the Assets that will remain in existence after Closing, (ii) violate,or be in conflict with, any material provision of any statute, rule or regulation applicableto American or any agreement or instrument to which American is a party or by which it isbound, or, (iii) to its knowledge, violate, or be in conflict with any statute, rule,regulation, judgment, decree or order applicable to American.     (d) Authorization and Enforceability. This Agreement is duly and validlyauthorized and constitutes the legal, valid and binding obligation of American, enforceablein accordance with its terms, subject, however, to the effects of bankruptcy, insolvency,reorganization, moratorium and other laws for the protection of creditors, as well as togeneral principles of equity, regardless whether such enforceability is considered in aproceeding in equity or at law.     (e) Liability for Brokers’ Fees. American has not incurred any liability,contingent or otherwise, for brokers’ or finders’ fees relating to the transactionscontemplated by this Agreement for which Enerplus shall have any responsibility whatsoever.     (f) No Bankruptcy. There are no bankruptcy proceedings pending, beingcontemplated by or, to its knowledge, threatened against American.     (g) Litigation. American has not received any written claim or written demandnotice that has not been resolved that would materially adversely affect the Assets. Thereare no actions, suits, ongoing governmental investigations, written governmental inquiriesor proceedings pending or, to its knowledge, threatened in writing against them or any ofthe Assets, in any court or by or before any federal, state, municipal or other governmentalagency that would affect American’s ability to consummate the transaction contemplatedhereby, or materially adversely affect the Assets or American’s ownership or operation ofthe Assets.     5.2 American’s Representations and Warranties with Respect to the Assets. Americanmakes the following representations and warranties regarding the Assets:     (a) Liens. Except for the Permitted Encumbrances or as otherwise agreed to inwriting by Enerplus, the Assets will be conveyed to Enerplus free and clear of all liensand encumbrances created by, through or under American.     (b) Lease Effectiveness. American does not have actual knowledge that anyLease is not in full force and effect.     (c) To the actual knowledge of American, the Assets are not subject to any pre-emptiveright or preferential rights of purchase by any third party.     (d) American does not warrant title to the Assets, but to its actual knowledge has doneno act or thing, nor is aware of any act or thing having been done whereby any of itsinterest in and to the Assets may be reduced, cancelled or determined, nor has it encumberedor alienated the Assets or any interest therein except for Permitted Encumbrances.     (e) To the aactual knowledge of American, it has not received: (i) any orders ordirectives which relate to environmental matters with respect to the assets or (ii) anydemand or notice issued with respect to the breach of any environmental, health or safetylaw applicable to
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the Assets, including without limitation, respecting use, storage,treatment, transportation or disposition of environmental contaminants, which demand fornotice remains outstanding on the Effective Date hereof.     (f) To the actual knowledge of American, except for Material Contracts in Schedule 1.2dthere are no active area of mutual interest provisions to which the Assets are subject.     (g) To the actual knowledge of American, there are no authorizations for expenditure inexcess of $50,000.00 pursuant to which expenditures are or may be made, nor any otherfinancial commitments which are outstanding or due, or thereafter may become due, other thanrentals in respect to the Assets, or operations in respect thereto, other than those whichhave been incurred by American in the ordinary course of business other than those which arescheduled in Schedule 5.2(f).     (h) To the actual knowledge of American, all operations by third parties, on or inrespect of the the Assets have been conducted in accordance with good oil and gas industrypractices and in material compliance with all applicable laws, rules, regulations, ordersand directions of governmental and other competent authorities.     (i) Other than disclosed in Schedule 1.2(d), to the actual knowledge of American it isnot obligated to sell or deliver petroleum substances produced from the Assets to any personpursuant to agreements which cannot be terminated on 30 days notice or less.**ARTICLE VI****ENERPLUS’S REPRESENTATIONS AND WARRANTIES**     Enerplus makes the following representations and warranties:     6.1 Organization and Standing. Enerplus is a Delaware corporation duly organized,validly existing and in good standing under the laws of the State of Delaware and is duly qualifiedto carry on business in Montana.     6.2 Power. Enerplus has all requisite power and authority to carry on its business aspresently conducted and to execute and deliver this Agreement and perform its obligations underthis Agreement. The execution and delivery of this Agreement and consummation of the transactionscontemplated hereby and the fulfillment of and compliance with the terms and conditions hereof willnot violate, or be in conflict with, any material provision of its governing documents or anymaterial provision of any agreement or instrument to which it is a party or by which it is bound,or, to its knowledge, any judgment, decree, order, statute, rule or regulation applicable to it.     6.3 Authorization and Enforceability. The execution, delivery and performance of thisAgreement and the transaction contemplated hereby have been duly and validly authorized by allrequisite corporate action on behalf of Enerplus. This Agreement constitutes Enerplus’s legal,valid and binding obligation, enforceable in accordance with its terms, subject, however, to theeffects of bankruptcy, insolvency, reorganization, moratorium and similar laws for the protectionof creditors, as well as to general principles of equity, regardless whether such enforceability isconsidered in a proceeding in equity or at law.     6.4 Liability for Brokers’ Fees. Enerplus has not incurred any liability, contingentor otherwise, for brokers’ or finders’ fees relating to the transactions contemplated by thisAgreement for which American shall have any responsibility whatsoever.
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     6.5 Litigation. There is no action, suit, proceeding, claim or investigation by anyperson, entity, administrative agency or governmental body pending or, to Enerplus’s knowledge,threatened against it before any governmental authority that impedes or is likely to impede itsability (i) to consummate the transactions contemplated by this Agreement or (ii) to assume theliabilities to be assumed by it under this Agreement.     6.6 Securities Laws; Access to Data and Information. Enerplus acknowledges that theAssets are or may be deemed to be “securities” under the Securities Act of 1933, as amended, andcertain applicable state securities or Blue Sky laws and that resales thereof may therefore besubject to the registration requirements of such acts. The Assets are being acquired solely forEnerplus’s own account for the purpose of investment and not with a view to resale, distribution orgranting a participation therein in violation of any securities laws. Enerplus has fullyinvestigated the Assets and accepts the risks and absence of liquidity inherent in ownership of theAssets.     6.7 Enerplus’s Evaluation. In entering into this Agreement, Enerplus acknowledges andaffirms that it has relied and will rely solely on the terms of this Agreement and upon itsindependent analysis, evaluation and investigation of, and judgment with respect to, the business,economic, legal, tax or other consequences of this transaction, including without limitation, itsown estimate and appraisal ofthe extent and value of the Assets, and the petroleum, natural gas and other reservesassociated with the Assets.**ARTICLE VII****COVENANTS AND AGREEMENTS**     7.1 Covenants and Agreements of American. American covenants and agrees with Enerplusas follows:     (a) Operations Prior to Closing. Except as otherwise consented to in writing by Enerplusor provided in this Agreement, from the date of execution hereof to the Closing, American will useits reasonable efforts to cause the operator to operate the Assets in a good and workmanlike mannerconsistent with past practices. From the date of execution of this Agreement to the Closing Date,American will pay or cause to be paid its proportionate share of all costs and expenses incurred inconnection with such operations and American will notify Enerplus of ongoing activities and majorcapital expenditures in excess of $50,000 per activity conducted on the Assets and shall consultwith Enerplus regarding all such matters and operations involving such expenditures.     (b) Restriction on Operations. Unless American obtains the prior written consent ofEnerplus to act otherwise, American will use good-faith efforts within the constraints of theapplicable operating agreements and other applicable agreements and affording Enerplus’srepresentatives sufficient information and time to reasonably respond, not to (i) abandon any partof the Assets (except in the ordinary course of business or the abandonment of leases upon theexpiration of their respective primary terms or if not capable of production in paying quantities),(ii) approve any operations on the Assets anticipated in any instance to cost the owner of theAssets more than $50,000 per activity (excepting emergency operations, operations required underpresently existing contractual obligations, ongoing commitments under existing AFEs and operationsundertaken to avoid a monetary penalty or forfeiture provision of any applicable agreement ororder), (iii) convey or dispose of any part of the Assets (other than replacement of equipment orsale of oil, gas, and other liquid products produced from the Assets in the regular course ofbusiness) or enter into any new farmout, farmin or other similar contract affecting the Assets,(iv) let lapse any insurance now in force with respect to the Assets, (v) modify or
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terminate anycontract relating to the operation of the Assets, or (vi) enter into any new contracts withoutprior approval of Enerplus’s representatives.     (c)Notices of Claims.American shall promptly notify Enerplus, if, between thedate of execution of this Agreement and the Closing Date, American receives written noticeofany claim, suit, action or other proceeding or written notice of any material defaultunder any Material Agreement.     7.2 Covenants and Agreements of Both Parties. Each Party covenants and agrees withthe other as follows:     (a) Confidentiality. Until the closing (and thereafter, if Closing should not accur forany reason) all data and information, whether written or oral, obtained from American in connectionwith the transaction contemplated by this Agreement, whether before or after the execution of thisAgreement, and data and information generated by Enerplus in connection with this transaction(collectively, the “Information”), is deemed by the Parties to be confidential and proprietary toAmerican. Until the Closing (and thereafter, if Closing should not occur for any reason), exceptas required by law, Enerplus and its officers, agents and representatives will hold in strictconfidence the terms of this Agreement, and all Information, except any Information which: (1) atthe time of disclosure to Enerplus by American is in the public domain; (2) after disclosure toEnerplus by American becomes part of the public domain by publication or otherwise, except bybreach of this commitment by Enerplus; (3) Enerplus can establish by competent proof was rightfullyin its possession at the time of its disclosure to Enerplus by American; (4) Enerplus rightfullyreceives from third parties free of any obligation of confidence; or (5) is disclosed to Enerplus’sconsultants, investors and lenders and those engaged by Enerplus to operate the Assets whosimilarly agree in writing to protect the confidentiality of such Information and agree to use suchInformation only for their due diligence evaluation of the Assets.     (b) Return of Information. If the transaction contemplated by this Agreement does notclose on or before April 14, 2006, for reasons other than American’s wrongful breach of thisAgreement under circumstances where, Enerplus is, but for such breach, ready to close, if Americanso requests at any time, Enerplus shall (i) return to American all copies of the Information inpossession of Enerplus obtained pursuant to any provision of this Agreement, which Information isat the time of termination required to be held in confidence pursuant to Section 7.3(a); (ii) notutilize or permit utilization of the Information to compete with American; and (iii) destroy anyand all notes, reports, studies or analyses based on or generated when incorporating or analyzingthe Information. The terms of Sections 7.2(a) and (b) shall survive termination of this Agreement.     (c) Communication Between The Parties. If one Party develops information during its duediligence that leads it to believe that the other Party may have breached a representation orwarranty under this Agreement, the Party discovering the potential breach shall promptly inform theother Party of such potential breach so that it may attempt to remedy or cure such breach prior toClosing.     (d) Cure Period for Breach. If any Party believes any other Party has breachedthe terms of this Agreement, the Party who believes the breach has occurred shall givewritten notice to the breaching Party of the nature of the breach and give that Party 48hours to cure. Notwithstanding the foregoing, this Section 7.2(d) shall not apply to breachof the Parties’ obligations at Closing and shall not operate to delay Closing.
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**ARTICLE VIII****TAX MATTERS**     8.1 Apportionment of Tax Liability.     (a) Liability for Oil and Gas Taxes. “Taxes” shall mean all ad valorem, property,production, excise, net proceeds, severance and all other taxes and similar obligations (includingpenalties) assessed against the Assets or based upon or measured by the ownership of the Assets orthe production of Hydrocarbons or the receipt of proceeds therefrom, other than income taxes orother taxes levied or assessed against American. All Taxes based or calculated on production ofhydrocarbons shall be deemed attributable to the period during which such production occurred andnot during the period such Taxes are assessed. With respect to the Assets, all Taxes shall beprorated between Enerplus and American as of the Effective Time for all taxable periods thatinclude the Effective Time; *i.e.*, American shall be responsible for all Taxes for ownership of theAssets prior to the Effective Time, and Enerplus shall be responsible for all Taxes for assessedownership of the Assets after the Effective Time. Accordingly, for the Assets, (i) Enerplusexpressly assumes all obligations and liabilities for all Taxes related to the Assets that areattributable to the period of time after the Effective Time and (ii) American expressly retains allobligations and liabilities for all Taxes related to the Assets that are attributable to the periodprior to the Effective Time.     (b) Liability for Income and Other Taxes. Except Taxes allocated to Enerpluspursuant to Section 8.1(a), American expressly retains and indemnifies Enerplus for alltaxes levied and assessed against American with respect to the Assets, or otherwise, suchtaxes to include without limitation, federal, state, local or foreign income taxes, grossreceipts, license, withholding, payroll, employment or other taxes (with such Taxes being“Other Taxes”).     8.2 Calculation of Tax Liability. Consistent with Section 8.1, and based on the bestcurrent information available as of Closing, the proration of Taxes shall be made between theParties as an adjustment to the Purchase Price pursuant to Section 1.4 and thereafter from time totime as the Parties agree.     8.3 Tax Reports and Returns. For the tax period in which the Effective Time occurs,American agrees promptly to forward to Enerplus any such tax reports and returns received byAmerican after Closing and provide Enerplus with appropriate information which is necessary forEnerplus to file any required tax reports and returns related to the Assets. Enerplus agrees tofile all tax returns and reports applicable to the Assets that are required to be filed after theClosing, and pay all required Taxes payable with respect to the Assets subject to the provisions ofSection 8.1.     8.4 Sales Taxes. Enerplus shall be liable for and shall indemnify American for anysales and use taxes, conveyance, transfer and recording fees and real estate transfer stamps ortaxes that may be imposed on any transfer of the Assets pursuant to this Agreement. If required byapplicable law, American shall, in accordance with applicable law, calculate and remit any sales orsimilar taxes that are required to be paid as a result of the transfer of the Assets to Enerplusand Enerplus shall promptly reimburse American therefor. If American receives notice that anysales and/or use taxes are due, American shall promptly forward such notice to Enerplus forhandling.
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**ARTICLE IX****CONDITIONS PRECEDENT TO CLOSING**     9.1 American’s Conditions Precedent. The obligations of American at the Closing aresubject, at the option of American, to the satisfaction or waiver at or prior to the Closing of thefollowing conditions precedent:     (a) All representations and warranties of Enerplus contained in this Agreement are truein all material respects (considering the transaction as a whole) at and as of the Closingin accordance with their terms as if such representations and warranties were remade at andas of the Closing, and Enerplus has performed and satisfied all covenants and agreementsrequired by this Agreement to be performed and satisfied by Enerplus at or prior to theClosing in all material respects;     (b) No order has been entered by any court or governmental agency having jurisdictionover the Parties or the subject matter of this Agreement that restrains or prohibits thepurchase and sale contemplated by this Agreement and that remains in effect at the time ofClosing; and     (c) The aggregate of Title Defect Adjustments and Environmental Defect Adjustments doesnot exceed $575,000.     9.2 Enerplus’s Conditions Precedent. The obligations of Enerplus at the Closing aresubject, at the option of Enerplus, to the satisfaction or waiver at or prior to the Closing of thefollowing conditions precedent:     (a) All representations and warranties of American contained in this Agreement are truein all material respects (considering the transaction as a whole) at and as of the Closingin accordance with their terms as if such representations were remade at and as of theClosing, and American has performed and satisfied all covenants and agreements required bythis Agreement to be performed and satisfied by American at or prior to the Closing in allmaterial respects;     (b) No order has been entered by any court or governmental agency having jurisdictionover the Parties or the subject matter of this Agreement that restrains or prohibits thepurchase and sale contemplated by this Agreement and that remains in effect at the time ofClosing;     (c) The aggregate of Title Defect Adjustments and Environmental Defect Adjustments doesnot exceed $575,000; and     (d) From the date of this Agreement until Closing, there shall not have been anymaterial change in the Assets, taken as a whole, except for the following: (i) changes toproduction rates in individual wells consistent with historical production, (ii) depletiondue tonormal production, and (iii) general economic condition of the oil and gas industry,including without limitation, changes in pricing and other market conditions.**ARTICLE X****RIGHT OF TERMINATION AND ABANDONMENT**     10.1 Termination. This Agreement may be terminated in accordance with the followingprovisions:
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     (a) by American, if American’s conditions set forth in Section 9.1 are not satisfiedthrough no fault of American, or are not waived by American, as of the Closing Date (asdefined in Section 11.1, below);     (b) by Enerplus, if Enerplus’s conditions set forth in Section 9.2 are not satisfiedthrough no fault of Enerplus, or are not waived by Enerplus, as of the Closing Date;     (c) by American, if through no fault of American the Closing does not occur on orbefore the Closing Date;     (d) by Enerplus, if through no fault of Enerplus the Closing does not occur on orbefore the Closing Date; or     (e) by mutual agreement of the Parties.     10.2 Liabilities Upon Termination. If Closing does not occur because any Party wrongfullyfails to tender performance at Closing and the other Party is ready to close, then the other Partyshall have all available legal and equitable remedies (including, without limitation, specificperformance), for the Party’s wrongful failure to close; provided, however, that if the other Partyelects not to seek specific performance but instead to seek monetary damages, the Party wrongfullyfailing to close shall not have any liability for consequential, special, punitive or exemplarydamages.**ARTICLE XI****CLOSING**     11.1 Date of Closing. The closing of the transactions contemplated hereby (the “Closing”)shall be held on or before Friday, March 31, 2006, or such date as Enerplus and American may agreein writing (the “Closing Date”).     11.2 Place of Closing. The Closing shall be held at American’s offices in Denver,Colorado, or at such other time and place as Enerplus and American may agree in writing.     11.3 Closing Obligations. At Closing, the following events shall occur, each being acondition precedent to the others and each being deemed to have occurred simultaneously with theothers:     (a) American shall execute, acknowledge and deliver to Enerplus an Assignment, Bill ofSale and Conveyance in the form attached as Exhibit A, conveying the Assets to Enerplus asof the Effective Time, disclaiming merchantability, fitness for a particular use, andsimilar personal property warranties but containing a special warranty of title by, throughand under American.     (b) American and Enerplus shall execute and deliver the Preliminary SettlementStatement.     (c) Enerplus shall deliver the Closing Amount by wire transfer in immediately availablefunds to an account designated by American.          American and Enerplus shall take such other actions and deliver such other documents asare contemplated by this Agreement.
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**ARTICLE XII****POST-CLOSING OBLIGATIONS**     12.1 Final Settlement Statement. As soon as practicable after the Closing, but in no eventlater than Friday, May 26, 2006, American will prepare and deliver to Enerplus, in accordance withcustomary industry accounting practices, the final settlement statement (the “Final SettlementStatement”) setting forth each adjustment or payment that was not finally determined as of theClosing and showing the calculation of such adjustment and the resulting final purchase price (the“Final Purchase Price”). As soon as practicable after receipt of the Final Settlement Statement,but in no event later than on or before Friday, June 9, 2006, Enerplus shall deliver to American awritten report containing any changes that Enerplus proposes to make to the Final SettlementStatement. Enerplus’s failure to deliver to American a written report detailing proposed changesto the Final Settlement Statement by that date shall be deemed an acceptance by Enerplus of theFinal Settlement Statement as submitted by American. The Parties shall agree with respect to thechanges proposed by Enerplus, if any, no later than Friday, June 16, 2006. The Final SettlementStatement shall set forth the “Second Closing Amount” and all adjustments to the Purchase Price andassociated calculations. The date upon which such agreement is reached or upon which the FinalPurchase Price is established shall be herein called the “Final Settlement Date.” Enerplus agreesto pay American the Second Closing Amount on Friday, July 14, 2006. For a period of six monthsfollowing the Closing, Enerplus agrees to provide American monthly with copies of joint interestbillings and revenue remittances received from the operator of the Assets.     12.2 Records. American agrees to make the Records available for pick up by Enerplus assoon as is reasonably practical, but in any event within seven days after Closing. American mayretain copies of the Records and American shall have the right to review and copy the Recordsduring standard business hours upon reasonable notice for so long as Enerplus retains the Records.Enerplus agrees that the Records will be maintained in compliance with all applicable lawsgoverning document retention. Enerplus will not destroy or otherwise dispose of Records afterClosing, unless Enerplus first gives American reasonable notice and an opportunity to copy theRecords to be destroyed. If and to the extent certain portions of the Records are subject tounaffiliated third party contractual restrictions on disclosureor transfer, American agrees to use reasonable efforts to obtain the waiver of suchcontractual restrictions; provided, however, that American shall not be required to expend anymoney in connection with obtaining such waivers.     12.3 Proceeds and Invoices For Property Expenses Received After Closing. After theFinal Settlement Date, those proceeds attributable to the Assets received by a Party, or invoicesfor Property Expenses, or invoices paid by one Party for or on behalf of the other Party which werenot already included as a Purchase Price adjustment at Closing, shall be settled as follows:     (a) Proceeds. Proceeds received by Enerplus with respect to sales of Hydrocarbonsproduced prior to the Effective Time shall be immediately remitted or forwarded to American.Proceeds received by American with respect to sales of Hydrocarbons produced after the EffectiveTime shall be immediately forwarded to Enerplus.     (b) Property Expenses. Invoices for Property Expenses received by Enerpluswhich relate to operations on the Assets prior to the Effective Time shall be forwarded toAmerican by Enerplus, or if already paid by Enerplus, invoiced by Enerplus to American.Invoices for Property Expenses received by American that relate to operations on the Assetsafter the Effective Time shall be immediately forwarded to Enerplus by American, or ifalready paid by American, invoiced by American to Enerplus.
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     12.4 Further Assurances. From time to time after Closing, American and Enerplusshall each execute, acknowledge and deliver to the other such further instruments and take suchother action as may be reasonably requested in order to accomplish more effectively the purposes ofthe transactions contemplated by this Agreement.**ARTICLE XIII****ASSUMPTION AND RETENTION OF OBLIGATIONS AND INDEMNIFICATION**     13.1 Enerplus’s Assumption of Liabilities and Obligations. Upon Closing and subject to theprovisions of Section 12.3, and except for Retained Liabilities, Enerplus shall assume and pay,perform, fulfill and discharge of all claims, costs, expenses, liabilities and obligationsattributable to the (i) the Assumed Environmental Liabilities and (ii) the Assets and the period oftime after the Effective Time, including, without limitation the following as they relate to theperiod of time after the Effective Date: (a) the Agreements, (b) all liability for royalty andoverriding royalty payments and Taxes made with respect to the Assets, (c) the payment of PropertyExpenses, and (d) the obligation to plug and abandon all wells located on the Lands and reclaim allWell sites located on the Lands (collectively, the “Assumed Liabilities”).     13.2 American’s Retention of Liabilities and Obligations. Upon Closing and subject tothe provisions of Section 12.3, American shall retain all claims, costs, expenses, liabilities andobligations accruing or relating to (i) the Retained Environmental Liabilities, (ii) the OtherTaxes, and (iii) the Assets and period of time prior to the Effective Time, including withoutlimitation, the following as they relate to the period of time prior to the Effective Time: (a)the liability for royalty and overriding royalty payments and Taxes made with respect to the Assetsand (b) any injury, death, casualty, or tortious action occurring on or attributable to the Assets(the “Retained Liabilities”).          By assuming or retaining liabilities or obligations in Sections 13.1 or 13.2, American andEnerplus do not intend to, and shall not be deemed by any third parties to, have admitted anyliability for the period of time before American owned the Assets.     13.3 Indemnification. “Losses” shall mean any actual losses, costs, expenses(including court costs, reasonable fees and expenses of attorneys, technical experts and expertwitnesses and the cost of investigation), liabilities, damages, demands, suits, claims, andsanctions of every kind and character (including civil fines) arising from, related to orreasonably incident to matters indemnified against; excluding however any special, consequential,punitive or exemplary damages, loss of profits incurred by a Party hereto or Loss incurred as aresult of the indemnified Party indemnifying a third party.          After the Closing, the Parties shall indemnify each other as follows:     (a) American’s Indemnification of Enerplus. American assumes all risk, liability,obligation and Losses in connection with, and shall defend, indemnify, and save and hold harmlessEnerplus, its partners and all officers, directors, employees and agents of Enerplus and itspartners, from and against all Losses which arise from or in connection with (i) the RetainedLiabilities and (ii) any matter for which American has specifically agreed to indemnify Enerplusunder this Agreement.     (b) Enerplus’s Indemnification of American. Enerplus assumes all risk, liability,obligation and Losses in connection with, and shall defend, indemnify, and save and hold harmlessAmerican, its officers, directors, employees and agents, from and against all Losses which arisefrom or in connection with (i) the Assumed Liabilities and (ii) any matter for which Enerplus hasspecifically agreed to indemnify American under this Agreement.
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     (c) Release. Enerplus shall be deemed to have released American at the Closingfrom any Losses for which Enerplus has agreed to indemnify American hereunder, and Americanshall be deemed to have released Enerplus at the Closing from any Losses for which Americanhas agreed to indemnify Enerplus hereunder.     13.4 Procedure. The indemnifications contained in Section 13.3 shall be implementedas follows:     (a) Coverage. Such indemnity shall extend to all Losses suffered or incurredby the indemnified Party.     (b) Claim Notice. The Party seeking indemnification under the terms of thisAgreement (“Indemnified Party”) shall submit a written “Claim Notice” to the other Party(“Indemnifying Party”) which, to be effective, must state: (i) the amount of each paymentclaimed by an Indemnified Party to be owing, (ii) the basis for such claim, with supportingdocumentation, and (iii) a list identifying to the extent reasonably possible each separateitem of Loss for which payment is so claimed. The amount claimed shall be paid by theIndemnifying Party to the extent required herein within 30 days after receipt of the ClaimNotice, or after the amount of such payment has been finally established, whichever lastoccurs.     (c) Information. Within 60 days after the Indemnified Party receives notice ofa claim or legal action that may result in a Loss for which indemnification may be soughtunder this Article XIII (a “Claim”), the Indemnified Party shall give written notice of suchClaim to the Indemnifying Party. If the Indemnifying Party or its counsel so requests, theIndemnified Party shall furnish the Indemnifying Party with copies of all pleadings andother information with respect to such Claim. At the election of the Indemnifying Partymade within 60 days after receipt of such notice, the Indemnified Party shall permit theIndemnifying Party to assume control of such Claim (to the extent only that such Claim,legal action or other matter relates to a Loss for which the Indemnifying Party is liable),including the determination of all appropriate actions, the negotiation of settlements onbehalf of the Indemnified Party, and the conduct of litigation through attorneys of theIndemnifying Party’s choice; provided, however, that no such settlement can result in anyliability or cost to the Indemnified Party for which it is entitled to be indemnifiedhereunder without its consent. If the Indemnifying Party elects to assume control, (i) anyexpense incurred by the Indemnified Party thereafter for investigation or defense of thematter shall be borne by the Indemnified Party, and (ii) the Indemnified Party shall giveall reasonable information and assistance, other than pecuniary, that the Indemnifying Partyshall deem necessary to the proper defense of such Claim, legal action, or other matter. Inthe absence of such an election, the Indemnified Party will use its best efforts to defend,at the Indemnifying Party’s expense, any claim, legal action or other matter to which suchother Party’s indemnification under this Article XIII applies until the Indemnifying Partyassumes such defense, and, if the Indemnifying Party fails to assume such defense within thetime period provided above, settle the same in the Indemnified Party’s reasonable discretionat the Indemnifying Party’s expense. If such a Claim requires immediate action, both theIndemnified Party and the Indemnifying Party will cooperate in good faith to takeappropriate action so as not to jeopardize defense of such Claim or either Party’s positionwith respect to such Claim.     13.5 No Insurance; Subrogation. The indemnifications provided in this Article XIII shallnot be construed as a form of insurance. Enerplus and American hereby waive for themselves, theirsuccessors or assigns, including, without limitation, any insurers, any rights to subrogation forLosses for which each of them is respectively liable or against which each respectively indemnifiesthe other, and, if
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required by applicable policies, Enerplus and American shall obtain waiver ofsuch subrogation from their respective insurers.     13.6 Reservation as to Non-Parties. Nothing herein is intended to limit or otherwisewaive any recourse Enerplus or American may have against any non-party for any obligations orliabilities that may be incurred with respect to the Assets.**ARTICLE XIV****MISCELLANEOUS**     14.1 Schedules. The Schedules to this Agreement are hereby incorporated into thisAgreement by reference and constitute a part of this Agreement.     14.2 Expenses. All legal and accounting fees incurred by Enerplus or American innegotiating this Agreement or in consummating the transactions contemplated by this Agreement shallbe paid by the Party incurring the same.     14.3 Notices. All notices and communications required or permitted under thisAgreement shall be in writing and addressed as set forth below. Any communication or deliveryhereunder shall be deemed to have been duly made and the receiving Party charged with notice (i) ifpersonally delivered, when received, (ii) if sent by telecopy or facsimile transmission, whenreceived (iii) if mailed, five business days after mailing, certified mail, return receiptrequested, or (iv) if sent by overnight courier, one day after sending. All notices shall beaddressed as follows:       If to American: American Oil & Gas, Inc.    1050 Seventeenth Street, Suite 1850    Denver, Colorado 80265    Attention: Patrick D. O’Brien    Telephone: 303.595.0125    Fax: 303.595.0709       If to Enerplus: Enerplus Resources (USA) Corporation    1700 Lincoln Street, Suite 1300    Denver, Colorado 80203    Attention: Land Manager    Telephone: 720.279.5500    Fax: 720.279.5550          Any Party may, by written notice so delivered to the other Parties, change the address orindividual to which delivery shall thereafter be made.     14.4 Amendments. Except for waivers specifically provided for in this Agreement, thisAgreement may not be amended nor any rights hereunder waived except by an instrument in writingsigned by the Party to be charged with such amendment or waiver and delivered by such Party to theParty claiming the benefit of such amendment or waiver.     14.5 Assignment. Enerplus and American shall not assign all or any portion of theirrespective rights or delegate all or any portion of their respective duties hereunder unless theycontinue to remain liable for the performance of their obligations hereunder. Enerplus may notassign the benefits of any of American’s indemnity obligations contained in this Agreement, andany permitted assignment shall not include such benefits. No such assignment or obligation shallincrease the burden on American
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or impose any duty on American to communicate with or report to anytransferee, and American may continue to look to Enerplus for all purposes under this Agreement.     14.6 Counterparts; Fax Signatures. This Agreement may be executed by Enerplus and Americanin any number of counterparts, each of which shall be deemed an original instrument, but all ofwhich together shall constitute but one and the same instrument. Facsimile signatures shall beconsidered binding.     14.7 Governing Law. This Agreement and the transactions contemplated hereby shall beconstrued in accordance with, and governed by, the laws of the State of Montana without referenceto the conflict of laws principles thereof.     14.8 Dispute Resolution. The Parties agree to resolve disputes concerning (i) theexistence and scope of a Title Defect, (ii) the Title Defect Amount or that portion of the Leaseaffected by a Title Defect, (iii) the adequacy of American’s Title Defect curative work, (iv) theexistence of an Environmental Defect, and (v) the Environmental Defect Amount of an EnvironmentalDefect (collectively, the “Disputed Matters”), exclusively and solely by arbitration in accordancewith this Section 14.8. Specifically, the Parties agree that the Disputed Matters will be finallydetermined by an independent arbitrator knowledgeable about the oil and gas industry and mutuallyacceptable to the Parties or, if no such arbitrator is picked within 14 days after one Party’snotice to the other of the existence of an arbitrable dispute, by the law firm of Gough, Shanahan,Johnson & Waterman, Helena, Montana, in either case employing such independent landmen, petroleumengineers and environmental consultants as the arbitrator deems necessary. No later than 21 daysafter the arbitrator’s written agreement to serve, Enerplus and American shall present theirrespective positions in writing to the arbitrator, together with such evidence as each Party deemsappropriate. The arbitrator shall be instructed to resolve the dispute through a final bindingdecision within 21 days after such submission deadline. The arbitrator may request oralpresentations and shall decide any other procedural matters presented by a Party, which decisionsshall be final and binding upon the Parties. Each Party shall bear its own costs and expenses ofthe arbitration, provided, however that the costs incurred in employing the arbitrator shall beborne 50% by American and 50% by Enerplus. The decision of the arbitrator may be filed in anycourt of competent jurisdiction and may be enforced by any Party as a final judgment of such court.     14.9 Entire Agreement. This Agreement constitutes the entire understanding among theParties, their respective partners, members, trustees, shareholders, officers, directors andemployees with respect to the subject matter hereof, superseding all negotiations, priordiscussions and prior agreements and understandings relating to such subject matter.     14.10 Binding Effect. This Agreement shall be binding upon, and shall inure to the benefitof, the Parties hereto, and their respective successors and assigns.     14.11 Limitation on Damages; Provision for Recovery of Costs and Attorney’s Fees. TheParties expressly waive any and all rights to consequential, special, incidental, punitive orexemplary damages, or loss of profits resulting from breach of this Agreement. The prevailingParty in any litigation seeking a remedy for the breach of this Agreement shall, however, beentitled to recover all attorneys’ fees and costs incurred in such litigation.     14.12 No Third-Party Beneficiaries. This Agreement is intended to benefit only theParties hereto and their respective permitted successors and assigns.     14.13 Severability. If at any time subsequent to the date hereof, any provision ofthis Agreement shall be held by any court of competent jurisdiction to be illegal, void orunenforceable, such
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provision shall be of no force and effect, but the illegality or unenforceability of suchprovision shall have no effect upon and shall not impair the enforceability of any other provisionof this Agreement.     14.14 14.10 Waiver. No consent or waiver, express of implied, to or of any breach ordefault in the performance of any obligation or covenant hereunder shall constitute a consent orwaiver to or of any other breach or default in the performance of the same or any other obligationshereunder.     14.15 Survival of Representations and Warranties; Time Limit for Claims. Allrepresentations and warranties made in Articles V and VI of this Agreement will survive for aperiod of one year after the Closing. No claim for liability in respect of any such representationor warranty may be made after the end of that one-year survival period.     In witness whereof, the Parties have executed this Agreement.**SELLER:****AMERICAN OIL & GAS, INC.**     By: /s/ Patrick D. O’Brien     Patrick D. O’Brien, Chief Executive Officer  **BUYER:****ENERPLUS RESOURCES (USA) CORPORATION**     By: /s/ Ward Polzin Ward Polzin    Country Manager   By: /s/ Ian C. Dundas Ian C. Dundas    Senior Vice President, Business Development     Schedule 1.2(a): The LeasesSchedule 1.2(b): The WellsSchedule 1.2(d): Certain Material ContractsSchedule 1.3: Allocated ValuesSchedule 3.6: Preferential Rights and Required ConsentsSchedule 5.2(f) Authorization for Expenditures in excess of $50,000 Exhibit A: Assignment, Bill of Sale and Conveyance
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