exhibit_10-6.htm


    
      

    


    Purchase
and Sale Agreement

    


    CRAWFORD
& BOURBON COUNTIES, KANSAS

    


    This
Agreement made February 18th,
2008

    


    


    BETWEEN:

    


    GALAXY
ENERGY INC.,

    a body
corporate, registered to carry on business in the State of Kansas

     and
having an office in the town of Stigler, Okalahoma

    (hereinafter
called the “Transferor”)

    


    


    - and -

    


    


    JAYHAWK
ENERGY INC.,

    a body
corporate, registered to carry

    on
business in the State of Colorado and having an office in the town of
Broomfield

    (hereinafter
called the “Transferee”)

    


    


    


    Whereas
Transferor wishes to sell and the Transferee wishes to purchase the Assets, the
Parties agree as follows:

    


    


    
      	
              1.

            	
              Definitions

            


    

    


    
      	
              (a)  

            	
              “Closing
      Date” means 3:00 p.m. on March 31st,
      2008, or such other time and date as may be agreed upon in writing by the
      Parties.

            


    

    


    
      	
              (b)  

            	
              “Effective
      Date” means March 1, 2008.

            


    

    


    
      	
              (c)  

            	
              “During
      the date of closing March 31, 2008 & time forward the revenue &
      expenses are all eligible to thee
Transferee.

            


    

    


    


    
      	
              2.

            	
              Schedules

            


    

    


    
      	
               
      

            	
              The
      following Schedules are attached hereto and made part of this
      Agreement:

            


    

    


    
      	
              (a)  

            	
              Schedule
      “A”, which is the Land Schedule, and
identifies:

            


    

    


    
      	
               
      

            	
              (i) 
      

            	
              the
      Lands;

            


    

    


    
      	
               
      

            	
              (ii) 
      

            	
              the
      Leases;

            


    

     

    
      
        
        

      

      
        1

        
          

        

      

      
        
        

      

    

     

    
      	
               
      

            	
              (iii)
       

            	
              any
      other agreements, documents or data that are relative to the wells,
      properties, lands & surface
equipment;

            


    

    


    
      	
              (iv)  

            	
              any
      encumbrances;

            


    

    


    
      	
              (v)  

            	
              any
      Rights of First Refusal;

            


    

    


    
      	
              (vi)  

            	
              production
      sale agreements;

            


    

    


    
      	
              (vii)  

            	
              other
      agreements, penalties or restrictions by contract on the use of the Assets
      required to be included in the Land Schedule under the definition of
      Permitted Encumbrances or the definition of Title and Operating
      Documents;

            


    

    


    
      	
              (viii)  

            	
              any
      Facilities required to be included in the Land Schedule under the
      definition of Facilities, any other Tangibles described in Paragraph (c)
      of the definition of Tangibles and any assets otherwise falling within the
      definition of Tangibles that are specifically excluded therefrom;
      and

            


    

    


    
      	
              (ix)  

            	
              the
      Wells;

            


    

    


    
      	
              (x)  

            	
              any
      lawsuits and claims;

            


    

    


    
      	
              (xi)  

            	
              any
      default notices;

            


    

    


    
      	
              (xii)  

            	
              any
      outstanding AFE’s;

            


    

    


    
      	
              (xiii)  

            	
              any
      knowledge of environmental matters of the Property Transfer
      Procedure;

            


    

    


    
      	
              (xiv)  

            	
              any
      areas of mutual interest; and

            




    
      
        
        

      

      
        2

        
          

        

      

      
        
        

      

    

     

    
      	
              3.

            	
              Purchase and
      Sale

            


    

     

    
      	
               
      

            	
              (a)  
      

            	
              The
      Transferor agrees to dispose of the Assets to the Transferee and the
      Transferee agrees to purchase the Assets from the Transferor on the terms
      and conditions set forth in this
Agreement.

            


    

    


    
      	
              (b)  

            	
              The
      purchase price for the assets listed
below.

            


    

    


    
      	 
      	 
      	 
      
	
                  (i) To
      Petroleum and Natural Gas    Rights.

               

                  (ii) 6500
      Acres Of Leases.

               

                  (iii) 6”
      Gas Pipeline

               

                  (iv) Easements
      of pipeline.

               

                  (v) All
      existing 34 wells.

               

                  (vi) 22,000’
      x 4” of SDR 11 stock pipe.

               

                         (vii)
      De-hy, Compressor & all equipment on all     

                          wells remain as
      per February, 08, 2008 lease visit.

               

            	 
      	 
      
	
              (ii)
      Cash

            	
               
      $ 1,000,000.00

            	 
      
	
              (iii)
      JAYHAWK ENERGY Stock

            	
                $
      1,000,000.00   

            	 
      
	
                     Total

            	
               $2,000,000.00

            	 
      


    

    


     

    
      	
              (c)  

            	
              The
      Transferee will pay the Purchase Price to the Transferor
  as

            


    

             follows:

    


    
      	
              (i)  

            	
              the
      delivery of ten percent (10%) of the Cash Purchase Price, representing a
      Deposit towards the Purchase Price, payable upon request anytime prior to
      Closing Date March 31st.

            


    

    


    
      	
              (ii)  

            	
              at
      Closing, the delivery of the remainder of the Purchase Price (ie. the
      Purchase Price less the Deposit).

            


    

    


                    In
witness whereof the Parties have duly executed this Agreement.

    


    


    


    
      	
               

              GALAXY
      ENERGY INC.

               

              Per:____________________

               

               

              Per:____________________

               

            	
               

              JAYHAWK
      ENERGY INC.

               

              Per:____________________

               

               

              Per:____________________

            


    

    


     

    This
is the execution page of that certain Purchase and Sale Agreement dated February
18, 2008 between GALAXY ENERGY  INC., as Transferor and JAYHAWK ENERGY
INC., as Transferee.

    


    
      
        
        

      

      
        3

        
          

        

      

      
        
        

      

    

    


    


    “Exhibit
A”

    


    Galaxy
Leases Held By Production

    


    County:
Bourbon

    


    Twp
26S

    Range
23E

    Section
26

    Description:
W/2SW & W/2NW less tract

    Acres:
155

    Lessor:
Leon Vernard Fry

    


    Twp
27S

    Range
23E

    Section
2

    Description:
N/W less right away

    Acres:
157

    Lessor:
David Schwalm

    


    Twp
27S

    Range
23E

    Section
14

    Description:
S/2 NW

    Acres:
79

    Lessor:
Dennis Fry

    


    Twp
27S

    Range
23E

    Section
14

    Description:
S/W less right away

    Acres:
160

    Lessor:
Stephen Parker Trust

    


    Twp
27S

    Range
23E

    Section
15

    Description:
S/E less right away

    Acres:
160

    Lessor:
Hervey/Ricci

    


    County:
Crawford

    


    Twp
27S

    Range
23E

    Section
26

    Description:
S/E

    Acres:
160

    Lessor:
Alvin Schamberger

    


    Twp
27

    Range
23

    Section
26

    Description:
S/W

    Acres:
160

    Lessor:
Ivan Pearson


    
      
         


      

      
        4

        
          

        

      

      
         


      

    

     

    Twp
27S

    Range
23E

    Section
27

    Description:
NE & E/2 NW less tract & SW

    Acres:
396

    Lessor:
Kevin O’Brien

    


    Twp
27S

    Range
23E

    Section
34

    Description:
NE less right away

    Acres:
162

    Lessor:
Janis Schiefelbein

    


    Twp
27S

    Range
23E

    Section
35

    Description:
SW less right away

    Acres:
158

    Lessor:
Greg Shireman

    


    Twp
28S

    Range
23E

    Section
3

    Description:
NE

    Acres:
160

    Lessor:
Bus Strobel

    


    Twp
28S

    Range
23E

    Section
7

    Description:
W/2 less NE-NW

    Acres:
280

    Lessor:
William Segebartt

    


    Twp
28S

    Range
23E

    Section
11

    Description:
SW

    Acres:
160

    Lessor:
Robert Gladson

    


    Twp
28S

    Range
23E

    Section
13

    Description:
W/2 NE & E/2 N/2 NW

    Acres:
120

    Lessor:
Robert Gladson

    


    Twp
28S

    Range
23E

    Section
13

    Description:
S/2 NW & NW SE & SW SE

    Acres:
200

    Lessor:
Chris Senecaut


    
      
         


      

      
        5

        
          

        

      

      
         


      

    

     

    Twp
28S

    Range
23E

    Section
14

    Description:
SW NE & NW SE & SW SE

    Acres:
121

    Lessor:
Nelson Anderson

    


    Twp
28S

    Range
23E

    Section
17

    Description:
E/2 less right away

    Acres:
317

    Lessor:
Don Ralph

    


    Twp
28S

    Range
23E

    Section
23

    Description:
NW

    Acres:
161

    Lessor:
Don Ralph

    


    Twp
28S

    Range
23E

    Section
24

    Description:
W/2 NE

    Acres:
80

    Lessor:
Nelson & Tony Anderson

    


    Twp
28S

    Range
23E

    Section
24

    Description:
W/2 less tract

    Acres:
314

    Lessor:
Nelson Anderson

    


    Twp
28S

    Range
23E

    Section
26

    Description:
NW less tract

    Acres:
158

    Lessor:
Lawrence Karhoff

    


    Twp
28S

    Range
23E

    Section
34

    Description:
NW less tract

    Acres:
78

    Lessor:
Krog Trust

    


    Twp
29S

    Range
23E

    Section
3

    Description:
NE & E/2 SE

    Acres:
240

    Lessor:
Twylet Enterprises


    
      
         


      

      
        6

        
          

        

      

      
         


      

    


    Twp
29S

    Range
23E

    Section
12

    Description:
E/2 NE

    Acres:
80

    Lessor:
Richard Murphy

    


    Galaxy
Leases Not Held By Production

    


    
      	
               
      

            	
              County:
      Bourbon

            


    

    


    Twp
27S

    Range
21E

    Section
23

    Description:
SE/4 less right away

    Acres:
157

    Lessor:
Charles Shireman

    


    Twp
27S

    Range
21E

    Section
24

    Description:
W/2 SW & SE SW less right away

    Acres:
120

    Lessor:
Charles Shireman

    


    
      	
               
      

            	
              County:
      Crawford

            


    

    


    Twp
27S

    Range
21E

    Section
25

    Description:
NW less right away

    Acres:
158

    Lessor:
Charles Shireman Jr

     

    Twp
27S

    Range
21E

    Section
25

    Description:
S/2 less right away

    Acres:
320

    Lessor:
Roger Shireman

    


    Twp
27S

    Range
21E

    Section
26

    Description:
NE less right away

    Acres:
156

    Lessor:
Charles Shireman Jr

    


    Twp
27S

    Range
21E

    Section
36

    Description:
S/2 NW less right away

    Acres
80

    Lessor:
Roger Shireman


    
      
         


      

      
        7

        
          

        

      

      
         


      

    


    Twp
27S

    Range
21E

    Section
36

    Description:
N/2 NW less right away

    Acres:
80

    Lessor:
John Shireman

    


    
      	
               
      

            	
              County:
      Bourbon

            


    

    


    Twp
27S

    Range
22E

    Section
11

    Description:
S/2 SE less right away

    Acres:
80

    Lessor:
Greg Harris

    


    Twp
27S

    Range
22E

    Section
14

    Description:
NW SE less right away

    Acres:
40

    Lessor:
Greg Harris

    


    Twp
27S

    Range
22E

    Section
21

    Description:
N/2 SE less tract

    Acres:
75

    Lessor:
Gary Gier

    


    Twp
27S

    Range
22E

    Section
22

    Description:
W/2 SW less right away

    Acres:
78

    Lessor:
Gary Gier

    


    
      	
               
      

            	
              County:
      Neosho

            


    

    


    Twp
28S

    Range
21E

    Section
3

    Description:
S/2 NE

    Acres:
80

    Lessor:
Roger Shireman

    


    


    
      	
               
      

            	
              County:
      Crawford

            


    

    


    Twp
27S

    Range
22E

    Section
25

    Description:
NW & W/2 NE & S/2 less right away

    Acres:
560

    Lessor:
William Segebartt


    
      
         


      

      
        8

        
          

        

      

      
         


      

    

     

    Twp
27S

    Range
22E

    Section
25

    Description:
E/2 NE less right away

    Acres:
79

    Lessor:
J.T Grain (Troike)

    


    Twp
27S

    Range
22E

    Section
26

    Description:
S/2 NE & NE NW SE

    Acres:
91

    Lessor:
Bernard O’Brien

    


    Twp
27S

    Range
22E

    Section
26

    Description:
NE SE & E/2 SE SE & tract

    Acres:
64

    Lessor:
Donna Harris

    


    Twp
27S

    Range
22E

    Section
26

    Description:
NW NW & SW NW & W/2 SW

    Acres:
Combined from above

    Lessor:
Donna Harris

    


    Twp
27S

    Range
22E

    Section
26

    Description:
less tracts & right away

    Acres:
165

    Lessor:
Douglas Harris

    


    Twp
27S

    Range:
22E

    Section
27

    Description:
E/2 SE less right away

    Acres:
81

    Lessor:
Douglas Harris

    


    Twp
27S

    Range
22E

    Section
29

    Description:
N/2 SW less right away

    Acres:
81

    Lessor:
Larry Long

    


    Twp
27S

    Range
22E

    Section
33

    Description:
S/2 NE

    Acres:
80

    Lessor:
Gary Gier


    
      
         


      

      
        9

        
          

        

      

      
         


      

    

     

    Twp
27S

    Range
22E

    Section
34

    Description:
E/2 NE & SW & S/2 SE less right away

    Acres:
314

    Lessor:
William Segebartt

    


    Twp
27S

    Range
22E

    Section
35

    Description:
S/2 NW & SW & N/2 NW less tract

    Acres:
218

    Lessor:
William Segebartt

    


    Twp
27S

    Range
22E

    Section
35

    Description:
SE SE less right away

    Acres:
39

    Lessor:
James Ruff

    


    
      	
               
      

            	
              Galaxy
      Easements

            


    

    


    
      	
               
      

            	
              County:
      Bourbon

            


    

    Twp
26S

    Range
23E

    Section
26

    Description:
W/2 W/2

    Grantor:
Leon Vernard Fry

    


    Twp
26S

    Range
23E

    Section
35

    Description:
SW SW

    Grantor:
Pat Vincent

    


    Twp
26S

    Range
23E

    Section
35

    Description:
W/2 W/2

    Grantor:
Glenn Oberst

    


    Twp
27S

    Range
23E

    Section
2

    Description:
NW

    Grantor:
David Schwalm

    


    Twp
27S

    Range
23E

    Section
2

    Description:
SW

    Grantor:
Jetta Heaton


    
      
         


      

      
        10

        
          

        

      

      
         


      

    


    Twp
27S

    Range
23E

    Section
2

    Description:
Highway Crossing Permit

    Grantor:
Kansas Dept Of Transportation

    


    Twp
27S

    Range
23E

    Section
11

    Description:
NW

    Grantor:
Mary Westcoat

    


    Twp
27S

    Range
23E

    Section
11

    Description:
SW SW

    Grantor:
Leon Vernard Fry

    


    Twp
27S

    Range
23E

    Section
11

    Description:
Highway Crossing Permit

    Grantor:
Dept Of Transportation

    


    Twp
27S

    Range
23E

    Section
14

    Description:
S/2 NW

    Grantor:
Dennis Fry

    


    Twp
27S

    Range
23E

    Section
14

    Description:
SW

    Grantor:
Stephen Parker Trust

    


    Twp
27S

    Range
23E

    Section
23

    Description:
SW

    Grantor:
Ferdinand Gobl III

    


    Twp
27S

    Range
23E

    Section
23

    Description:
NW

    Grantor:
Jerry Gobl

    


    


    
      	
               
      

            	
              County:
      Crawford

            


    

    


    Twp
27S

    Range
23E

    Section
26

    Description:
NW

    Grantor:
Ivan Pearson


    
      
         


      

      
        11

        
          

        

      

      
         


      

    

     

    Twp
27S

    Range
23E

    Section
26

    Description:
W/2 NW

    Grantor:
Kevin O’Brien

    


    Twp
27S

    Range
23E

    Section
35

    Description:
NW

    Grantor:
Fred Gobl

    


    Twp
27S

    Range
23E

    Section
35

    Description:
SW

    Grantor:
Greg Shireman

    


    Twp
28S

    Range
23E

    Section
2

    Description:
NW

    Grantor:
Billie Hamilton

    


    Twp
28S

    Range
23E

    Section
2

    Description:
W 3⁄4 of SW

    Grantor:
Sharon Goodwin

    


    Twp
28S

    Range
23E

    Section
10

    Description:
S/2 SE

    Grantor:
Jason Johnson

    


    Twp
28S

    Range
23E

    Section
10

    Description:
N/2 SE

    Grantor:
Vernon Ulbrich

    


    Twp
28S

    Range
23E

    Section
15

    Description:
E/2

    Grantor:
James Troike

    


    Twp
28S

    Range
23E

    Section
23

    Description:
NW

    Grantor:
Don Ralph

    


    Twp
28S

    Range
23E

    Section
26

    Description:
NW

    Grantor:
Lawrence Karhoff


    
      
         


      

      
        12

        
          

        

      

      
         


      

    

     

    Twp
28S

    Range
23E

    Section
26

    Description:
SW

    Grantor:
Patsy DeLange

     

    
      	
               
      

            	
              Assets

            


    

    


    16mile x
6.0” x 150psi MOP group pipeline (Poly)

    400Mcf x
3phase gas compressor

    2- H2s
scrubbers

    Dehydration

    34-wells
(7-producing)

    22,000’
(Feet) Stock 4.0” x 150psi MOP pipeline (Poly)

    Various
production packages (Seperator, meter run, tanks & chart
recorders)

    


    
      	
               
      

            	
              Well
      Descriptions

            


    

    


    WELLS                LEASE
NAME

    


    #26
–1                       L.Fry

    #26-2                         L.Fry

    #2-1                         Schwalm

    #14-1                          D.Fry

    #14-1                     Schamberger

    #27-1                       K.
O’Brien

    #27-1                       Schiefelbein

    #27-1                       Shireman

    #27-1                         Strobel

    #27-1                        Segebartt

    #27-1                         Senecaut

    #27-1                         Gladson

    #27-3                         Gladson

    #27-1                    Chris
Johnson

    #27-1                    Craig
Johnson

    #OLD                   Chris
Johnson

    #OLD                   Chris
Johnson

    #27-2                      Anderson

    
WELLS            
 LEASE
NAME

    


    #27-1                      D.
Ralph (West)

    #27-1                      D.Ralph
(House)

    #27-1                        T.
Anderson

    #27-1                        N.
Anderson

    #27-2                        N.
Anderson

    #27-3                        N.
Anderson

    #27-4                        N.
Anderson

    #27-4                   Old
Existing (No Name)

    #26-1                          Karhoff

    #26-2                          Karhoff

    #34-1                             Krog

    #34-1                           Twylet

    #34-1                            Murphy

    #34-1                        Roye-Davis

    #34-1                           Grother

    #34-1                          McVeigh