exh10-1_agreement.htm


     

    
      

      

    

     

     

     

     

     

     

     

    EXHIBIT 10.1

     

    PURCHASE AND SALE AGREEMENT BETWEEN

    PETROHUNTER ENERGY CORPORATION AND SWEETPEA
PETROLEUM PTY LTD.

    AND FALCON OIL & GAS LTD. AND FALCON OIL
& GAS AUSTRALIA PTY LTD.

    DATED AUGUST 22, 2008

    
 

    
      
         


      

      
         


        
          

        

      

      
         


      

    


    PURCHASE
AND SALE AGREEMENT

     

    


     

    B
E T W E E N:

     

    


     

    PETROHUNTER
ENERGY CORPORATION

     

    


     

    -
and -

     

    


     

    SWEETPEA
PETROLEUM PTY LTD.

     

    


     

    -
and -

     

    


     

    FALCON
OIL & GAS LTD.

     

    


     

    -
and -

     

    


     

    FALCON
OIL & GAS AUSTRALIA PTY LTD

     

    


     

    



    


    
      
        
           


        

        
           


          
            

          

        

        
           


        

      

    

    TABLE OF CONTENTS

    Page


    
      	
              ARTICLE
      1 INTERPRETATION AND GENERAL

            	
              1

            
	 
      	
              1.1

            	
              Defined
      Terms

            	
              1

            
	 
      	
              1.2

            	
              General

            	
              6

            
	 
      	
              1.3

            	
              Governing
      Law

            	
              6

            
	 
      	 
      
	
              ARTICLE
      2 PURCHASE AND SALE

            	
              6

            
	 
      	
              2.1

            	
              Transaction

            	
              6

            
	 
      	
              2.2

            	
              Satisfaction
      of the Purchase Price

            	
              6

            
	 
      	
              2.3

            	
              Convertible
      Securities

            	
              7

            
	 
      	
              2.4

            	
              Adjustments

            	
              7

            
	 
      	
              2.5

            	
              Earnest
      Money Security

            	
              8

            
	 
      	 
      
	
              ARTICLE
      3 REPRESENTATIONS AND WARRANTIES

            	
              9

            
	 
      	
              3.1

            	
              Representations
      and Warranties by Sellers

            	
              9

            
	 
      	
              3.2

            	
              Representations
      and Warranties of Falcon

            	
              13

            
	 
      	
              3.3

            	
              Representations
      and Warranties of Purchaser

            	
              14

            
	 
      	 
      
	
              ARTICLE
      4 WARRANTY CLAIMS

            	
              15

            
	 
      	
              4.1

            	
              Survival
      of Warranties

            	
              15

            
	 
      	
              4.2

            	
              Limitations
      on Warranty Claims

            	
              15

            
	 
      	 
      
	
              ARTICLE
      5 CLOSING

            	
              16

            
	 
      	
              5.1

            	
              Closing
      or Termination

            	
              16

            
	 
      	
              5.2

            	
              Conditions
      for the Benefit of Falcon and Purchaser

            	
              16

            
	 
      	
              5.3

            	
              Conditions
      for Benefit of Sellers

            	
              16

            
	 
      	
              5.4

            	
              Sellers’
      Deliveries on Closing

            	
              17

            
	 
      	
              5.5

            	
              Falcon
      Deliveries on Closing

            	
              19

            
	 
      	
              5.6

            	
              Purchaser
      Deliveries on Closing

            	
              20

            
	 
      	
              5.7

            	
              Approvals

            	
              21

            
	 
      	 
      
	
              ARTICLE
      6 RESOLUTION OF DISPUTES

            	
              21

            
	 
      	
              6.1

            	
              Arbitration
      – If Not Principally Related to Convertible Securities
    Issues

            	
              21

            
	 
      	
              6.2

            	
              Arbitration
      – If Principally Related to Convertible Securities Issues

            	
              22

            
	 
      	
              6.3

            	
              Arbitration—Mixed
      Issues

            	
              24

            
	 
      	 
      
	
              ARTICLE
      7 GENERAL

            	
              24

            
	 
      	
              7.1

            	
              Taxes
      and Fees

            	
              24

            
	 
      	
              7.2

            	
              Complete
      Closings

            	
              24

            
	 
      	
              7.3

            	
              Status
      of the Agreement

            	
              24

            
	 
      	
              7.4

            	
              Tender

            	
              24

            
	 
      	
              7.5

            	
              Specific
      Performance and other Remedies

            	
              24

            
	 
      	
              7.6

            	
              Obligations
      as Covenants

            	
              25

            
	 
      	
              7.7

            	
              Amendment
      of Agreement

            	
              25

            


    

     

     

    
      
        
        

      

      
        
        

        
          

        

      

      
        
        

      

    

    
      TABLE OF CONTENTS

      (continued)

      Page


    

    
      	 
      	
              7.8

            	
              Further
      Assurances

            	
              25

            
	 
      	
              7.9

            	
              Waiver

            	
              25

            
	 
      	
              7.10

            	
              Time

            	
              25

            
	 
      	
              7.11

            	
              Entire
      Agreement

            	
              25

            
	 
      	
              7.12

            	
              Severability

            	
              26

            
	 
      	
              7.13

            	
              Counterparts
      and Facsimile

            	
              26

            
	 
      	
              7.14

            	
              Notices

            	
              26

            
	 
      	
              7.15

            	
              Confidentiality

            	
              27

            
	 
      	
              7.16

            	
              Successors
      and Assigns

            	
              27

            
	 
      	
              7.17

            	
              Enurement

            	
              28

            
	 
      	
              7.18

            	
              Language

            	
              28

            


    

     

    SCHEDULE
“A” THE PERMITS

    


    SCHEDULE
“B” THE WELL

    


    SCHEDULE
“C” MATERIAL AGREEMENTS

    


    SCHEDULE
“D” PART 1 PERMIT TRANSFER INSTRUMENT

    


    SCHEDULE
“D” PART 2 ASSIGNMENT AND BILL OF SALE

    


    SCHEDULE
“E” ESCROW AGREEMENT

    


    SCHEDULE
“F” INITIAL BUCKSKIN MESA ESCROW AGREEMENT

    


    SCHEDULE
“G” BEETALOO JOINT OPERATING AGREEMENT

    


    SCHEDULE
“H” MORTGAGE

    


    SCHEDULE
“I” DISCLOSURE SCHEDULE

    



    
      
        
          
            	 
      	
                    -ii-

                  	 
      


          

          


        

         


      

      
         


        
          

        

      

      
         


      

    


    PURCHASE
AND SALE AGREEMENT

     

    THIS
PURCHASE AND SALE AGREEMENT (“Agreement”) is made and entered into August 22,
2008, by and between PetroHunter Energy Corporation (“PetroHunter Energy”),
Sweetpea Petroleum Pty Ltd (“Sweetpea”), Falcon Oil & Gas Ltd. (“Falcon”),
and Falcon Oil & Gas Australia Pty Ltd (“Purchaser”).  PetroHunter
Energy, Sweetpea, Falcon and Purchaser may sometimes be referred to herein
individually as a “Party” and collectively as the “Parties.”  This
Agreement is based on the following premises:

     

    WHEREAS Sweetpea is the owner
of the Beetaloo Basin Project (as hereinafter defined); and

     

    WHEREAS Seller (as hereinafter
defined) has agreed to sell an undivided 50% interest in the Beetaloo Basin
Project to Purchaser on the terms and conditions set out in this
Agreement;

     

    NOW THEREFORE, in
consideration of the mutual covenants and agreements set out in this Agreement
and for other good and valuable consideration (the receipt and sufficiency of
which are hereby acknowledged), the Parties hereto covenant and agree as
follows:

     

    ARTICLE
1

     

    INTERPRETATION
AND GENERAL

     

    
      	
              1.1  

            	
              Defined
      Terms

            


    

     

    In this
Agreement, the following defined terms shall mean as follows:

     

    “Acceptance Date” means the
last to occur of:

     

    
      	
              (a)    
        

            	
              the
      execution and delivery of this Agreement by all Parties;
    and

            


    

     

    
      	
              (b)    
        

            	
              written
      confirmation received by each Party that each other Party’s Board of
      Directors has approved the execution and delivery of this
      Agreement.

            


    

     

    “Acquisition Shares” means the
Common Shares issuable upon the exercise of the Convertible
Securities.

     

    “Adjustment Amount” has the
meaning attributed to it in Section 2.4(b).

     

    “Agreement” means this purchase
and sale agreement, including all Schedules hereto, as amended from time to time
in accordance with the terms hereof, “hereof”, “hereto” and “hereunder” and
similar expressions refer to this Agreement and not any particular section of
this Agreement; “Article”, “Section” and “Schedule” mean and refer to the
specified article, section or Schedule of or to this Agreement.

     

    “Allowable Discount” means the
Announcement Price less the following allowable discounts, if the Prospectus
Price is less than the Announcement Price:

     

    
      
        
        

      

      
        
        

        
          

        

      

      
        
        

      

    

    -2-

     

    
      	
              Announcement
      Price

            	
              Discount

            
	
              Up
      to $0.50

            	
              25%

            
	
              $0.51
      to $2.00

            	
              20%

            
	
              Above
      $2.00

            	
              15%

            


    

    


    “Announcement Price” means the
price of Common Shares on the TSXV at the close of trading on the day
immediately prior to the announcement of the entering into this
Agreement.

    


    “Applicable Laws” means all
laws, statutes, decrees, acts, treaties, orders, judgments, regulations and
directives of any Government Authority, to the extent the same are publicly
available, have been duly adopted in accordance with the proper procedures, and
are valid and effective at the relevant time.

    


    “Approvals” means all required
material consents, waivers, permits, orders and approvals of any Governmental
Authority or other persons, the TSXV, directors and shareholders, in connection
with, or required to permit, the consummation of the Transaction.

    


    “Assets” means the undivided
50% interest in the Beetaloo Basin Project that will be subject to the
assignment delivered by Seller to Falcon or Purchaser at the
Closing.

    


    “Bayless Override” means the
overriding royalty interest on production from lands covered by the Permits that
was created by Robert L. Bayless Estate and the other sellers under the terms of
the Stock Acquisition and Exploration Agreement with MAB Resources LLC dated
November 9, 2005.

    


    “Beetaloo Basin Project” means
(i) the Permits, (ii) the Well, (iii) the Data, (iv) the Material Contracts, (v)
all related licenses, permits, access rights, and other rights and privileges,
and (vi) all rights, titles and interests of Sellers, whether derived under the
Permits, the Material Contracts, or otherwise, in and to all equipment, fixtures
and personal property located on lands covered by the Permits or used in
connection with the exploration and development of such lands.

    


    “Beetaloo JOA” means the joint
operating agreement between Falcon and Seller dated the Closing Date in the form
attached hereto as Schedule “G.”

     

    “Board of Directors” means the
board of directors of a Party, as the context may require.

     

    “Breaching Party” has the
meaning ascribed thereto in Section 7.5.

     

    “Buckskin Mesa Purchase
Agreement” means the Purchase and Sale Agreement of even date herewith
among Falcon, PetroHunter and other parties related to certain properties in the
State of Colorado.

     

    “Business Day” means a day of
the week, other than a Saturday, Sunday or any other day which is a statutory
holiday in the Province of Ontario, the Northern Territory of Australia, or the
State of Colorado.

     

    
      
        
        

      

      
        
        

        
          

        

      

      
        
        

      

      -3-

       

    

    “Canadian Securities Laws”
means the applicable securities laws of the Province of Ontario and the
respective regulations made and forms prescribed thereunder, together with all
applicable published policy statements and blanket orders and rulings of the
Ontario Securities Commission.

     

    “Closing” means the transfer of
the Assets and the completion of all other matters contemplated by this
Agreement at the offices of Seller or Sellers’ Counsel on the Closing
Date.

     

    “Closing Date” means 11:00 a.m.
(Denver time) five Business Days after the first to occur of the
following:

     

    
      	
              (a)    
        

            	
              the
      Treasurer of the Commonwealth of Australia ceasing to be empowered to make
      an order under Part II of the Foreign Acquisitions and Takeovers Act 1975
      (Cth) in respect of the
Transaction;

            


    

     

    
      	
              (b)    
        

            	
              the
      Treasurer of the Commonwealth of Australia giving the Purchaser advice in
      writing of a decision by the Treasurer that the Commonwealth Government
      has no objection to the Transaction;
or

            


    

     

    
      	
              (c)    
        

            	
              the
      final decision by the Purchaser not to seek the approval of the Treasurer
      of the Commonwealth of Australia.

            


    

     

    “Common Shares” means common
shares in the capital of Falcon.

     

    “Convertible Securities” means
the securities of Falcon with the characteristics described in Section
2.3.

     

    “Counsel” means Falcon’s
Counsel, Purchaser’s Counsel and/or Sellers’ Counsel, as the context may
require.

     

    “Data” means all files,
records, correspondence and information relating to the Beetaloo Basin Project,
including without limitation invoice and payment records; Permit, contract, and
correspondence files; and geological, geophysical, engineering and interpretive
data, that is in the possession or under the control of Sellers.

     

    “Earnest Money Payment” has
the meaning ascribed thereto in Section 2.2(a).

     

    “Encumbrances” means liens,
charges, security interests, options, claims, mortgages, pledges, or other
restrictions on title or transfer, except for Permitted
Encumbrances.

    


    “Escrow Agent” means Patton
Boggs LLP, in its capacity as the escrow agent under the Escrow
Agreement.

     

    “Escrow Agreement” means the
escrow agreement among, the Escrow Agent, Falcon and Sellers dated the Closing
Date in the form of escrow agreement attached hereto as Schedule “E” to this
Agreement.

     

    
      
        
        

      

      
        
        

        
          

        

      

      
        
        

      

      -4-

       

    

    “Exercise Price” means the
deemed exercise price of the Convertible Securities which shall be equal to the
Announcement Price less the Allowable Discount.

     

    “Falcon’s Counsel” means,
together, Aird & Berlis LLP, Gadens Lawyers, and Lohf Shaiman Jacobs Hyman
& Feiger PC.

     

    “Governmental Authority” means
any federal, state or local government, regulatory authority, governmental
department, agency, commission, board, tribunal or court.

     

    “Initial Buckskin Mesa Escrow
Agreement” means the escrow agreement entered into between Falcon and
PetroHunter dated the date hereof and attached hereto as Schedule
“F”.

     

    “Material Agreements” means the
contracts identified on Schedule “C”.

     

    “Northern Land Council Exploration
Agreements” means the Exploration Agreement between Sweetpea, Local
Aboriginal Groups and the Northern Land Council relating to Petroleum
Exploration Permits 76, 98 and 99 and the Exploration Agreement between
Sweetpea, Local Aboriginal Groups and the Northern Land Council relating to
Petroleum Exploration Permit 117.

     

    “Northern Land Council Royalty”
means the royalty interest payable to the Local Aboriginal Groups
(through the Northern Land Council) in accordance with the Northern Land Council
Exploration Agreements.

     

    “Northern Territory Royalty”
means the royalty payable to the Northern Territory in accordance with Part III,
Division 5, Section 84 of the Petroleum Act of the Northern
Territory.

     

    “Notice” has the meaning
attributed to it in Section 7.14.

     

    “Permits” means Petroleum
Exploration Permits 76, 98, 99 and 117, together with any renewals or extensions
thereof as more fully described on Schedule “A”.

     

    “Permitted Encumbrances”
means:

     

    
      	
              (a)    
        

            	
              Bayless
      Override, Northern Land Council Royalty, Northern Territory Royalty, and
      Russenberger Override;

            


    

     

    
      	
              (b)    
        

            	
              liens
      for taxes or assessments, not yet due or
  payable;

            


    

     

    
      	
              (c)    
        

            	
              all
      rights to consent by, required notices to, filings with, or other actions
      by Northern Territory or Australian governmental entities in connection
      with the ownership of the Permits, but only if the same are customarily
      obtained after such transfer of
ownership;

            


    

     

    
      	
              (d)    
        

            	
              easements,
      rights-of-way, servitudes, permits, and surface leases held by third
      parties on, over, or in respect of lands covered by the
      Permits;

            


    

     

    
      	
              (e)    
        

            	
              any
      encumbrance, title defect or matter that is expressly waived by
      Purchaser.

            


    

     

    
      
        
        

      

      
        
        

        
          

        

      

      
        
        

      

      -5-

       

    

    “Person” is to be broadly
interpreted and includes an individual, a corporation, a partnership, a trust,
an unincorporated organization, the government of a country or any political
subdivision thereof, or any agency or department of any such government, and the
executors, administrators or other legal representatives of an individual in
such capacity.

     

    “Prospectus” means a short form
prospectus issued by Falcon, qualifying the distribution of the Common Shares
underlying the Convertible Securities.

     

    “Prospectus Price” means the
price of the Common Shares on the TSXV at the close of trading on the day
immediately prior to the day that Falcon receives a receipt for a (final)
Prospectus from one or more of the securities regulatory authorities in
Canada.

     

    “Purchase Price” has the
meaning ascribed thereto in Section 2.2.

     

    “Purchaser” means Falcon Oil
& Gas Australia Pty Ltd.

     

    “Purchaser’s Counsel” means,
together, Aird & Berlis LLP, Gadens Lawyers, and Lohf Shaiman Jacobs Hyman
& Feiger PC.

     

    “Russenberger Override” means
the overriding royalty interest on production from lands covered by the Permits
that was created by MAB Resources LLC under the terms of its Acquisition and
Consulting Agreement with PetroHunter Energy dated effective January 1,
2007.

     

    “Securities Payment” has the
meaning ascribed thereto in Section 2.2(b).

     

    “Seller” means either of
PetroHunter or Sweetpea, as the context may require.

     

    “Sellers” means, together,
PetroHunter and Sweetpea.

     

    “Sellers’ Counsel” means,
together, Dill Dill Carr Stonbraker & Hutchings, PC and Davis Graham &
Stubbs LLP.

     

    “Transaction” has the meaning
ascribed thereto in Section 2.1.

     

    “Transaction Agreements” mean,
together, this Agreement, the Beetaloo JOA and the Escrow
Agreement.

     

    “Trigger Price” means that
number which is 70 percent of the Announcement Price.

     

    “TSXV” means the TSX Venture
Exchange.

     

    “TSXV Policies” means the TSXV
Corporate Finance Manual as constituted on the date hereof.

     

    “U.S.” means the United States
of America and its territories.

     

    “U.S. Securities Act” means the
Securities Act of 1933, as amended, of the
U.S., and the rules and regulations promulgated thereunder.

     

    
      
        
        

      

      
        
        

        
          

        

      

      
        
        

      

      -6-

       

    

    “Warranty Claim” means a claim
made by a Party based on or with respect to the inaccuracy or non-performance or
non-fulfilment or breach of any representation, warranty or covenant made or
given by another Party contained in the Transaction Agreements or contained in
any document or certificate given in order to carry out the Transaction;
provided, however, that claims based on or with respect to the covenant and
indemnity set forth in Section 2.6 are not Warranty Claims.

     

    “Well” means the Shenandoah #1
well, as more fully described on Schedule “B.”

     

    
      	
              1.2  

            	
              General

            


    

     

    The
schedules attached to this Agreement are incorporated herein by reference and
shall be deemed to be a part hereof.  In this Agreement, the singular
includes the plural, the plural the singular, and any gender the other
genders.  Unless otherwise indicated references to dollars or amounts
stated in dollars are to Canadian dollars.  Headings are included for
convenience or reference only and shall not affect the interpretation
hereof.  If anything herein is to be done or held on a day which is
not a Business Day, the same shall be done or held either on the next succeeding
Business Day or as otherwise expressly provided in this Agreement.

     

    
      	
              1.3  

            	
              Governing
      Law

            


    

     

    With
respect to all matters related to the Assets, and related to the interpretation
and enforcement of this Agreement, this Agreement shall be governed by the laws
the Northern Territory of Australia and the applicable laws of Australia. With
respect to all matters related to the Convertible Securities, this Agreement
shall be governed by the laws of the Province of Ontario and the applicable laws
of Canada.

     

    ARTICLE
2

    PURCHASE
AND SALE

     

    
      	
              2.1  

            	
              Transaction

            


    

     

    Seller
shall sell to Purchaser, and Purchaser shall purchase from Seller, the Assets on
and subject to the terms and conditions of this Agreement (the “Transaction”).

     

    
      	
              2.2  

            	
              Satisfaction
      of the Purchase Price

            


    

     

    Falcon
shall:

     

    
      	
              (a)    
        

            	
              within
      two Business Days after the Acceptance Date (subject to possible extension
      under Section 2.5), pay US$5,000,000 to Seller by wire transfer to an
      account designated by Seller (the “Earnest Money Payment”)
      as earnest money, which shall be refunded to Falcon if Falcon seeks, but
      does not obtain, approval of the Transaction by the Treasurer of the
      Commonwealth of Australia; and

            


    

     

    
      	
              (b)    
        

            	
              at
      the Closing, deposit into escrow pursuant to the terms of the Escrow
      Agreement one or more certificates representing the Convertible Securities
      registered in the name of PetroHunter (the “Securities Payment” and
      together with the Earnest Money Payment, the “Purchase
      Price”).

            


    

     

    
      
        
        

      

      
        
        

        
          

        

      

      
        
        

      

    

    -7-

     

    
      	
              2.3  

            	
              Convertible
      Securities

            


    

     

    The
Convertible Securities shall have the following characteristics:

     

    
      	
              (a)    
        

            	
              the
      number of Convertible Securities to be issued to PetroHunter shall be
      equal to the quotient resulting from dividing US$20,000,000 by the
      Exercise Price;

            


    

     

    
      	
              (b)    
        

            	
              such
      securities shall be subject to the following legending
      requirements:

            


    

     

    “UNLESS
PERMITTED UNDER SECURITIES LEGISLATION THE HOLDER OF THIS SECURITY MUST NOT
TRADE THE SECURITY BEFORE [insert date 4
months and one day after the distribution date].”

     

    “WITHOUT
PRIOR WRITTEN APPROVAL OF THE TSX VENTURE EXCHANGE AND COMPLIANCE WITH ALL
APPLICABLE SECURITIES LEGISLATION, THE SECURITIES REPRESENTED BY THIS
CERTIFICATE MAY NOT BE SOLD, TRANSFERRED, HYPOTHECATED OR OTHERWISE TRADED ON OR
THROUGH THE FACILITIES OF THE TSX VENTURE EXCHANGE OR OTHERWISE IN CANADA OR TO
OR FOR THE BENEFIT OF CANADIAN RESIDENT UNTIL [insert
date 4 months and one
day from the day of issue].”

     

    "THE
SECURITIES REPRESENTED BY THIS CERTIFICATE HAVE NOT BEEN REGISTERED UNDER THE
SECURITIES ACT OF 1933 (THE "ACT").  THE SECURITIES MAY NOT BE OFFERED FOR
SALE, SOLD, OR OTHERWISE TRANSFERRED IN THE UNITED STATES EXCEPT PURSUANT TO AN
EFFECTIVE REGISTRATION STATEMENT UNDER THE ACT OR AN EXEMPTION FROM
REGISTRATION, THE AVAILABILITY OF WHICH IS TO BE ESTABLISHED TO THE SATISFACTION
OF THE CORPORATION."

     

    
      	
              (c)    
        

            	
              a
      term of 12 months following the Closing
Date;

            


    

     

    
      	
              (d)    
        

            	
              non-transferable;
      and

            


    

     

    
      	
              (e)    
        

            	
              non-exercisable
      until: (i) a receipt for the (final) Prospectus has been received by
      Falcon from one or more of the securities regulatory authorities in
      Canada; and (ii) the Acquisition Shares have been admitted for trading on
      the TSXV, at which time the Convertible Securities will be immediately
      exercised in accordance with the terms set forth in Section
      2.3(a).

            


    

     

    
      	
              2.4  

            	
              Adjustments

            


    

     

    
      	
              (a)    
        

            	
              Except
      as provided for in Section 2.4(b), no adjustments shall be made to the
      Purchase Price for operating expenses, insurance premiums, realty taxes,
      local improvements rates and charges, utilities, or any items for which
      Sellers will continue to be responsible after Closing in accordance with
      the terms of this Agreement.

            


    

    
       

      
        
        

      

      
        
        

        
          

        

      

      
        
        

      

      -8-

       

       

    

    
      	
              (b)    
        

            	
              In
      the event that the Prospectus Price is lower than the Trigger Price, the
      Purchase Price will be adjusted to provide for a cash payment by Purchaser
      to PetroHunter (the “Adjustment Amount”) and
      be equal to that amount of dollars that is arrived at using the following
      formula (dollar amounts in the following formula are US
      dollars):

            


    

     

    

    


    The
Adjustment Amount shall not exceed US$7,000,000.

     

    
      	
              (c)    
        

            	
              If
      the Adjustment Amount is due prior to the Initial Closing Date (as such
      term is defined in the Buckskin Mesa Purchase Agreement), such Adjustment
      Amount shall be deposited into escrow, pursuant to the terms of the Escrow
      Agreement, within four business days of determining the Adjustment
      Amount.  If the Adjustment Amount is due after the Initial
      Closing Date, such Adjustment Amount shall be paid in accordance with
      Section 2.9(b) of the Buckskin Mesa Purchase
  Agreement.

            


    

     

    
      	
              2.5  

            	
              Earnest
      Money Security

            


    

     

    The
Earnest Money shall be secured by a mortgage in favor of Falcon in the form
attached hereto as Schedule “H” covering certain oil and gas wellbores and
leasehold interests in the State of Colorado, United States of
America.  PetroHunter, as the owner of 100% of all of the outstanding
common stock of PetroHunter Operating Company, represents and warrants for the
benefit of Falcon and Purchaser, (i) that PetroHunter Operating Company
substantially benefits from PetroHunter’s entry into this Agreement and
Sweetpea’s receipt of the Earnest Money and (ii) that the lien of the deed of
trust will be a first priority lien.  PetroHunter will cause both this
deed of trust and executed and acknowledged subordinations (satisfactory to
Purchaser in form and substance) of the liens of existing deeds of trust to be
delivered to Falcon before the Earnest Money is due from Falcon.  If
such items are not timely received, the payment date for the Earnest Money shall
be extended until Falcon receives such items.

     

    
      
        
        

      

      
        
        

        
          

        

      

      
        
        

      

      -9-

       

    

    
      	
              2.6  

            	
              Bayless
      AMI

            


    

     

    PetroHunter
and Seller hereby promise, covenant and guarantee that neither Falcon nor
Purchaser will have any benefits or obligations whatsoever under or in
connection with the area of mutual interest established by Section 19 of the
Stock Acquisition and Exploration Agreement dated November 9, 2005, between MAB
Resources LLC, on the one hand, and the Robert L. Bayless Estate and the other
sellers, on the other.  PetroHunter and Seller each jointly and
severally indemnify and agree to hold Falcon and Purchaser harmless against any
claim (including without limitation any claim for an overriding royalty
interest) at any time by the Robert L. Bayless Estate or any other seller, or
their respective successors and assigns, arising out of the acquisition of any
interest in any lands within that area of mutual interest.

     

    ARTICLE
3

    REPRESENTATIONS
AND WARRANTIES

     

    
      	
              3.1  

            	
              Representations
      and Warranties by Sellers

            


    

     

    PetroHunter
and Sweetpea jointly and severally guarantee, represent and warrant to Falcon
and Purchaser that as of the Closing Date:

     

    
      	
              (a)    
        

            	
              each
      of Sellers is a corporation duly incorporated, organized and validly
      existing and in good standing under the laws of its applicable
      jurisdiction;

            


    

     

    
      	
              (b)    
        

            	
              each
      of Sellers has the corporate power, authority and capacity to enter into
      the Transaction Agreements and all other agreements contemplated by the
      Transaction Agreements and to carry out and complete its obligations under
      the Transaction Agreements and all other agreements contemplated by the
      Transaction Agreements;

            


    

     

    
      	
              (c)       

            	
              the
      Transaction Agreements and the obligations of Sellers under the
      Transaction Agreements and the documents and transaction contemplated
      thereby have been duly and validly authorized by all requisite corporate
      proceedings and constitute, legal, valid and binding obligations of each
      of Sellers, enforceable against each of Sellers in accordance with their
      terms, subject to the limitations with respect to enforcement imposed by
      applicable laws in connection with bankruptcy, insolvency, liquidation,
      reorganization or other laws affecting the enforcement of creditors’
      rights generally and subject to the availability of equitable remedies
      such as specific performance and injunction which are only available in
      the discretion of the court from which they are
  sought;

            


    

     

    
      	
              (d)    
        

            	
              neither
      the entering into nor the delivery of the Transaction Agreements nor the
      completion by each of Sellers of the Transaction contemplated thereby will
      conflict with, or constitute a material default under, or result in a
      material violation of: (i) any of the provisions of the entity formation
      documents or by-laws of either of Sellers; or (ii) any applicable
      laws;

            


    

     

    
      	
              (e)    
        

            	
              each
      of Sellers: (i) has not made an assignment in favor of its creditors or a
      proposal in bankruptcy to its creditors or any class thereof; (ii) has not
      had any 

            


    

     

    
      
        
        

      

      
        
        

        
          

        

      

      
        
        

      

      -10-

       

    

    
      	 	petition
      for a receiving order presented in respect of it; and (iii) has not
      initiated proceedings with respect to a compromise or arrangement with its
      creditors or for its winding up, liquidation or
  dissolution;


    

     

    
      	
              (f)    
        

            	
              except
      as set forth on Schedule “I”, neither of Sellers is under any obligation,
      contractual or otherwise, to request or obtain the consent of any person,
      and no permits, licences, certifications, authorizations or approvals of,
      or notifications to, any federal, state, municipal or local government or
      governmental agency, board, commission or authority are required to be
      obtained by either of Sellers in connection with the Transaction as
      contemplated herein, except for consents that must be obtained from the
      Minister for Mines and Energy of the Northern Territory of Australia and
      the Local Aboriginal Groups acting through their
      representative;

            


    

     

    
      	
              (g)    
        

            	
              each
      of Sellers is aware that the Acquisition Shares have not been and will not
      be registered under the U.S. Securities Act or the securities laws of any
      state and that these securities may not be issued, offered or sold in the
      United States without registration under the U.S. Securities Act or
      compliance with requirements of an exemption from registration and the
      applicable laws of all applicable states and acknowledges that Falcon has
      no present intention of filing a registration statement under the U.S.
      Securities Act in respect of the Acquisition
  Shares;

            


    

     

    
      	
              (h)    
        

            	
              PetroHunter
      is a U.S. Resident as defined under the U.S. Securities Act. and Sweetpea
      is not a U.S. Resident as defined under the U.S. Securities
      Act.  Each is an “accredited investor” as that term is defined
      in Section 501(a) of Regulation D promulgated under the Securities Act of
      1933.  Neither of Sellers will offer or sell the Acquisition
      Shares in the United States unless such securities are registered under
      the U.S. Securities Act and the securities laws of all applicable states
      of the United States or an exemption from such registration requirements
      is available, and further that it will not resell the Acquisition Shares,
      except in accordance with the provisions of applicable securities
      legislation, regulations, rules, policies and orders and stock exchange
      rules;

            


    

     

    
      	
              (i)    
        

            	
              each
      of Sellers acknowledges that there are restrictions on Sellers ability to
      resell the Acquisition Shares and it is the responsibility of each of
      Sellers to find out what those restrictions are and to comply with them
      before selling the Acquisition
Shares;

            


    

     

    
      	
              (j)    
        

            	
              each
      of Sellers acknowledges that the Convertible Securities and Acquisition
      Shares, if applicable, will be subject to resale restrictions under
      applicable Canadian Securities Laws and the TSXV Policies.  Each
      of Sellers acknowledges that all certificates issued representing the
      Convertible Securities and the Acquisition Shares, as well as all
      certificates issued in exchange for or in substitution therefore, will
      bear legends to the following
effect:

            


    

     

    
      
        
        

      

      
        
        

        
          

        

      

      
        
        

      

      -11-

       

       

    

    “UNLESS
PERMITTED UNDER SECURITIES LEGISLATION THE HOLDER OF THIS SECURITY MUST NOT
TRADE THE SECURITY BEFORE [insert date 4
months and one day after the distribution date].”

     

    “WITHOUT
PRIOR WRITTEN APPROVAL OF THE TSX VENTURE EXCHANGE AND COMPLIANCE WITH ALL
APPLICABLE SECURITIES LEGISLATION, THE SECURITIES REPRESENTED BY THIS
CERTIFICATE MAY NOT BE SOLD, TRANSFERRED, HYPOTHECATED OR OTHERWISE TRADED ON OR
THROUGH THE FACILITIES OF THE TSX VENTURE EXCHANGE OR OTHERWISE IN CANADA OR TO
OR FOR THE BENEFIT OF CANADIAN RESIDENT UNTIL [insert date 4
months and one day from the day of issue].”

     

    “THE
SECURITIES REPRESENTED BY THIS CERTIFICATE HAVE NOT BEEN REGISTERED UNDER THE
SECURITIES ACT OF 1933 (THE “ACT”).  THE SECURITIES MAY NOT BE OFFERED
FOR SALE, SOLD OR OTHERWISE TRANSFERRED IN THE UNITED STATES EXCEPT PURSUANT TO
AN EFFECTIVE REGISTRATION STATEMENT UNDER THE ACT OR AN EXEMPTION FROM
REGISTRATION, THE AVAILABILITY OF WHICH IS TO BE ESTABLISHED TO THE SATISFACTION
OF THE CORPORATION.”

     

    
      	
              (k)    
        

            	
              each
      of Sellers acknowledges that any securities of Falcon held by either of
      Sellers including the Convertible Securities and Acquisition Shares issued
      to PetroHunter will be subject to the TSXV providing its final acceptance
      to the Transaction;

            


    

     

    
      	
              (l)    
        

            	
              all
      Data has been made available to Falcon and Falcon’s
    Counsel;

            


    

     

    
      	
              (m)    
        

            	
              each
      of Sellers has not filed all tax returns that it was required to file, but
      each has no reason to believe that it has any significant liability for
      taxes due, including interest and
penalties;

            


    

     

    
      	
              (n)    
        

            	
              to
      the best knowledge of Sellers, all of the contracts, agreements and
      instruments set forth on Schedule “C” are valid, binding and enforceable
      in accordance with their respective terms, except when such enforceability
      may be limited by applicable bankruptcy, insolvency, moratorium,
      reorganization or similar laws from time to time in effect which effect
      the enforcement of creditors’ rights generally and shall be in full force
      and effect without penalty in accordance with their terms upon
      consummation of the transactions contemplated
  hereby;

            


    

     

    
      	
              (o)    
        

            	
              except
      as set forth on Schedule “I”, each Seller has performed all material
      obligations which are required to be performed by it under the Material
      Agreements and it is not in default under or in breach of or in receipt of
      any claim of default or breach under any Material Agreement, and no event
      has occurred which, with the passage of time or the giving of notice or
      both, would result in a 

            


    

     

    
      
        
        

      

      
        
        

        
          

        

      

      
        
        

      

      -12-

       

       

    

    
      	 	default,
      breach or event of noncompliance by a Seller under any Material
      Agreement;


    

     

    
      	
              (p)    
        

            	
              no
      Seller has any present expectation or intention of not fully performing on
      a timely basis all material obligations required to be performed by it
      under any Material Agreement or other instrument to which it is subject
      and to the knowledge of Sellers, there has been no breach or cancellation
      by the other parties to any Material Agreement or other instrument to
      which the Company is a party;

            


    

     

    
      	
              (q)    
        

            	
              no
      Seller is a party to any oral contract, agreement, or other arrangement
      which, if reduced to written form, would be required to be listed in
      Schedule “C;”

            


    

     

    
      	
              (r)    
        

            	
              all
      of the Permits are in full force and effect, in good standing, and
      enforceable;

            


    

     

    
      	
              (s)    
        

            	
              Sweetpea
      is not in breach of any term or condition of any
  Permit;

            


    

     

    
      	
              (t)    
        

            	
              all
      minimum work and expenditures required to be performed up to the Closing
      Date have been satisfied in relation to each
  Permit;

            


    

     

    
      	
              (u)    
        

            	
              all
      taxes, stamp duties and government charges in relation to the Northern
      Land Council Exploration Agreements have been
  paid;

            


    

     

    
      	
              (v)    
        

            	
              all
      of the Assets are free and clear of all liens, writs, charges and
      encumbrances, except liens for taxes arising in Sweetpea’s ordinary course
      of business that are not yet due and payable, and except for Permitted
      Encumbrances;

            


    

     

    
      	
              (w)    
        

            	
              neither
      of Sellers have received nor delivered any written notices of violation or
      alleged violation of any provisions of any Applicable Law (including
      without limitation laws relating to public health, safety, and protection
      of the environment), and, to the best knowledge of Sellers, there exists
      no basis upon which any such charge, complaint, action, suit, proceeding,
      hearing, or investigation may be brought or threatened against Seller by
      any Governmental Authority;

            


    

     

    
      	
              (x)    
        

            	
              except
      as set forth on Schedule “I”, there is no material uninsured litigation,
      claim or proceeding, including appeals and applications for review, in
      progress, pending or, to the best of the knowledge of each of Sellers,
      threatened against either of Sellers or relating to the Beetaloo Basin
      Project before any Governmental Authority or arbitration panel, and there
      is not presently outstanding against either of Sellers or in respect of
      the Beetaloo Basin Project, any judgment, decree, injunction, rule or
      order of any Governmental Authority or arbitrator which would have
      material adverse affect on the Beetaloo Basin Project, including, without
      limitation, the value thereof;

            


    

     

    
      	
              (y)    
        

            	
              neither
      Seller nor any director, officer, agent, employee or other person
      associated with or acting on behalf of either Seller (i) has used any
      corporate funds of such Seller for any unlawful contributions, gift,
      entertainment or other unlawful expense relating to political activity;
      (ii) made any direct or indirect unlawful


            


    

     

    
      
        
        

      

      
        
        

        
          

        

      

      
        
        

      

      -13-

       

       

    

    
      	 	
              payment
      to any governmental official or employee from corporate funds of either
      Seller; (iii) has violated or is in violation of any provision of the
      United States Foreign Corrupt Practice Act, the OECD Convention on
      Combating Bribery in International Business Transactions, or any national
      legislation promulgated thereunder; or (iv) made any bribe, unlawful
      rebate, payoff, influence payment, kickback or other unlawful payment in
      connection with the business of either
Seller;

            


    

     

    
      	
              (z)    
        

            	
              Sellers
      have paid all amounts due to date under the various creditor repayment
      schedules summarized in a document entitled “Sweetpea Petroleum Payout
      Program June 2008” and delivered to Falcon before the Acceptance Date,
      except the last payment due thereon, which will be paid by Sellers no
      later than August 31, 2008, and Sellers will make all future payments on a
      timely basis; and

            


    

     

    
      	
              (aa)   
        

            	
              to
      the best of Seller’s knowledge, all material outstanding trade payables of
      Sweetpea in respect of the Beetaloo Basin Project at the Agreement Date
      are set forth in the document entitled “Sweetpea Petroleum Payout Program
      June 2008”.

            


    

     

    
      	
              3.2  

            	
              Representations
      and Warranties of Falcon

            


    

     

    Falcon
hereby guarantees, represents and warrants to each of Sellers that as of the
Closing Date:

     

    
      	
              (a)    
        

            	
              Falcon
      has all necessary corporate power, authority and capacity to enter into
      the Transaction Agreements and all other agreements contemplated by the
      Transaction Agreements and to carry out and complete its obligations under
      the Transaction Agreements and all other agreements contemplated by the
      Transaction Agreements;

            


    

     

    
      	
              (b)    
        

            	
              Falcon
      is a corporation duly incorporated, organized and validly existing and in
      good standing under the laws of the Province of British
      Columbia;

            


    

     

    
      	
              (c)    
        

            	
              the
      Transaction Agreements and the obligations of Falcon thereunder and the
      documents and transaction contemplated therein have been duly and validly
      authorized by all requisite corporate proceedings and constitute, legal,
      valid and binding obligations of Falcon, enforceable against Falcon in
      accordance with their terms, subject to the limitations with respect to
      enforcement imposed by applicable laws in connection with bankruptcy,
      insolvency, liquidation, reorganization or other laws affecting the
      enforcement of creditors’ rights generally and subject to the availability
      of equitable remedies such as specific performance and injunction which
      are only available in the discretion of the court from which they are
      sought;

            


    

     

    
      	
              (d)    
        

            	
              neither
      the entering into nor the delivery of the Transaction Agreements nor the
      completion by Falcon of the Transaction will conflict with, or constitute
      a material default under, or result in a material violation of (i) any of
      the provisions of the entity formation documents or by-laws of Falcon, or
      (ii) any applicable laws;

            


    

     

    
      
        
        

      

      
        
        

        
          

        

      

      
        
        

      

      -14-

       

       

    

    
      	
              (e)    
        

            	
              Falcon
      (i) is not an insolvent person within the meaning of the Bankruptcy and Insolvency
      Act (Canada), the Companies Creditors
      Arrangement Act (Canada) or the Winding-up and Restructuring
      Act (Canada), (ii) has not made an assignment in favor of its
      creditors or a proposal in bankruptcy to its creditors or any class
      thereof, (iii) has not had any petition for a receiving order presented in
      respect of it, and (iv) has not initiated proceedings with respect to a
      compromise or arrangement with its creditors or for its winding up,
      liquidation or dissolution;

            


    

     

    
      	
              (f)    
        

            	
              to
      the best of the knowledge of Falcon, there is no outstanding suit, action,
      litigation, claim or legal proceeding, including appeals and applications
      for review, in progress relating to Falcon before any court, commission,
      board or arbitration panel which, if determined adversely to Falcon,
      would:

            


    

     

    
      	
              (i)    
        

            	
              prevent
      Falcon from satisfying the Purchase Price;
or

            


    

     

    
      	
              (ii)   
        

            	
              prevent
      Falcon from fulfilling in any material respect its obligations contained
      in the Transaction Agreements or arising from the Transaction
      Agreements.

            


    

     

    
      	
              (g)    
        

            	
              the
      Convertible Securities shall have the characteristics described in Section
      2.3;

            


    

     

    
      	
              (h)    
        

            	
              the
      Acquisition Shares when issued shall be duly and validly issued as fully
      paid and non-assessable Common
Shares;

            


    

     

    
      	
              (i)    
        

            	
              Falcon
      shall use its commercially reasonable best efforts to have the
      distribution of the Acquisition Shares qualified as “free trading” Common
      Shares by any Prospectus issued;
and

            


    

     

    
      	
              (j)    
        

            	
              Falcon
      shall use its commercially reasonable best efforts to have the preliminary
      Prospectus filed within 20 Business Days from the Closing
      Date.

            


    

     

    
      	
              3.3  

            	
              Representations
      and Warranties of Purchaser

            


    

     

    Purchaser
hereby guarantees, represents and warrants to each of Sellers that as of the
Closing Date:

     

    
      	
              (a)    
        

            	
              Purchaser
      has all necessary corporate power, authority and capacity to enter into
      the Transaction Agreements and all other agreements contemplated by the
      Transaction Agreements and to carry out and complete its obligations under
      the Transaction Agreements and all other agreements contemplated by the
      Transaction Agreements;

            


    

     

    
      	
              (b)    
        

            	
              Purchaser
      is a corporation duly incorporated, organized and validly existing and in
      good standing under the laws of
Australia;

            


    

     

    
      	
              (c)    
        

            	
              the
      Transaction Agreements and the obligations of Purchaser thereunder and the
      documents and transaction contemplated therein have been duly and validly
      authorized by all requisite corporate proceedings and constitute, legal,
      valid and 

            


    

     

    
      
        
        

      

      
        
        

        
          

        

      

      
        
        

      

      -15-

       

       

    

    
      	 	
              binding
      obligations of Purchaser, enforceable against Purchaser in accordance with
      their terms, subject to the limitations with respect to enforcement
      imposed by applicable laws in connection with bankruptcy, insolvency,
      liquidation, reorganization or other laws affecting the enforcement of
      creditors’ rights generally and subject to the availability of equitable
      remedies such as specific performance and injunction which are only
      available in the discretion of the court from which they are
      sought;  and

            


    

     

    
      	
              (d)    
        

            	
              neither
      the entering into nor the delivery of the Transaction Agreements nor the
      completion by Purchaser or the Transaction will conflict with, or
      constitute a material default under, or result in a material violation of
      (i) any of the provisions of the entity formation documents or by-laws of
      Purchaser, or (ii) any applicable
laws.

            


    

     

    ARTICLE
4

    WARRANTY
CLAIMS

     

    
      	
              4.1  

            	
              Survival
      of Warranties

            


    

     

    
      	
              (a)    
        

            	
              The
      representations and warranties contained in this Agreement or contained in
      any document or certificate given in order to carry out the Transaction
      will survive Closing and shall continue in full force and effect, subject
      to the following provisions of this
section:

            


    

     

    
      	
              (i)    
        

            	
              except
      as expressly provided in this section, no Warranty Claim may be made or
      brought by any Party after the date which is 18 months after
      the Closing Date; and

            


    

     

    
      	
              (ii)   
        

            	
              any
      Warranty Claim which is based on intentional misrepresentation or fraud by
      a Party may be made or brought at any
time.

            


    

     

    
      	
              (b)    
        

            	
              It
      is a condition of the liability of each Party under the representations
      and warranties contained in this Agreement that the Party making a
      Warranty Claim shall have given notice to the other of such Warranty
      Claim, with such particularity as the circumstances reasonably permit,
      before the expiry of the 18 month period referred to
      above.  After the expiration of such 18 month period, each Party
      will be released from all obligations and liabilities in respect of the
      representations and warranties contained in this Agreement or contained in
      any document or certificate given in order to carry out the Transaction
      except as otherwise specifically
provided.

            


    

     

    
      	
              4.2  

            	
              Limitations
      on Warranty Claims

            


    

     

    
      	
              (a)    
        

            	
              No
      Party shall be entitled to make a Warranty Claim if that Party has been
      advised in a writing addressed to it and signed by an officer of the
      advising Party prior to Closing Date of the inaccuracy, non-performance,
      non-fulfilment or breach which is the basis for such Warranty Claim and
      that Party completes 

            


    

     

    
      
        
        

      

      
        
        

        
          

        

      

      
        
        

      

      -16-

       

       

    

    
      	 	the
      Transaction hereunder notwithstanding such inaccuracy, non-performance,
      non-fulfilment or breach.


    

     

    
      	
              (b)    
        

            	
              The
      amount of any damages which may be claimed by a Party pursuant to a
      Warranty Claim shall be calculated to be the cost or loss to that Party
      after giving effect to any insurance proceeds available to that Party in
      relation to the matter which is the subject of the Warranty
      Claim.

            


    

     

    
      	
              (c)    
        

            	
              Subject
      to the receipt of all necessary approvals and all applicable laws, the
      satisfaction of any amounts owing by Sellers to Falcon or Purchaser, or by
      Falcon or Purchaser to Sellers, may be paid by the indemnifying party
      through the delivery of either cash or check, in either case such method
      of payment shall be determined by the indemnifying party in its
      discretion.

            


    

     

    ARTICLE
5

    CLOSING

     

    
      	
              5.1  

            	
              Closing
      or Termination

            


    

     

    
      	
              (a)    
        

            	
              The
      Transaction contemplated by this Agreement shall be completed on the
      Closing Date, if the Closing Date falls on or before February 5,
      2009.

            


    

     

    
      	
              (b)    
        

            	
              If
      the Transaction has not been completed by February 5, 2009, the Earnest
      Money shall be refunded by Seller to Purchaser no later than February 10,
      2009, and, following this refund, the Agreement shall be terminated, with
      no Party having any further obligation to any other Party under or in
      connection with the Agreement.  If the refund is not timely
      made, Falcon may proceed against the security provided under Section
      2.5.

            


    

     

    
      	
              5.2  

            	
              Conditions
      for the Benefit of Falcon and
Purchaser

            


    

     

    The
obligation of Falcon to complete the Transaction is subject to the satisfaction
on or before the Closing Date, for the exclusive benefit of Falcon, of the
following condition:

     

    
      	
               
      

            	
              (a)

            	
              all
      representations of Sellers contained in Section 3.1 must be true in all
      material respects at and as of the Closing
Date.

            


    

     

    
      	
              5.3  

            	
              Conditions
      for Benefit of Sellers

            


    

     

    The
obligation of Sellers to complete the Transaction is subject to the satisfaction
on or before the Closing Date, for the exclusive benefit of Sellers, of each of
the following conditions:

     

    
      	
               
      

            	
              (a)

            	
              All
      representations of Falcon contained in Section 3.2 must be true in all
      material respect at and as of the Closing
Date;

            


    

     

    
      	
               
      

            	
              (b)

            	
              Falcon
      will have made the payments outlined in Section 2.2;
  and

            


    

     

    
      
        
        

      

      
        
        

        
          

        

      

      
        
        

      

      -17-

       

       

    

    
      	
               
      

            	
              (c)

            	
              Sellers
      shall have received confirmation satisfactory to Sellers that the delivery
      of the Convertible Securities and the Acquisition Shares have received all
      requisite approvals (other than in respect of the
      Prospectus)  or that such approvals are not
      required.

            


    

     

    
      	
              5.4  

            	
              Sellers’
      Deliveries on Closing

            


    

     

    On the
Closing Date, Sellers will deliver the following documents, all duly executed
and to be dated as of the Closing Date:

     

    
      	
              (a)    
        

            	
              an
      executed copy of the Transaction
Agreements;

            


    

     

    
      	
              (b)    
        

            	
              a
      legal opinion, satisfactory to the TSXV and Purchaser’s Counsel, relating
      to the status of each Seller, the Permits, and other matters as TSXV
      requires;

            


    

     

    
      	
              (c)    
        

            	
              a
      permit transfer instrument conveying an undivided 50% interest in the
      Permits, substantially in the form attached as Schedule “D”, Part
      1;

            


    

     

    
      	
              (d)    
        

            	
              an
      assignment and bill of sale substantially in the form attached as Schedule
      “D”, Part 2, assigning and selling an undivided 50% interest in the Well;
      Data; Material Contracts; all related licenses, permits, access rights,
      and other rights and privileges; and all rights, titles and interests of
      Sellers, whether derived under the Permits, the Material Contracts, or
      otherwise, in and to all equipment, fixtures and personal property located
      on lands covered by the Permits or used in connection with the exploration
      and development of such lands.,

            


    

     

    
      	
              (e)    
        

            	
              any
      financial information if required by TSXV or other Governmental
      Authority;

            


    

     

    
      	
              (f)    
        

            	
              a
      technical report with respect to the Beetaloo Basin Project as required by
      TSXV prepared in accordance with National Instrument 51-101 Standards of Disclosure for
      Oil and Gas Activities, published by Canadian Governmental
      Authorities, if required;

            


    

     

    
      	
              (g)    
        

            	
              all
      other documents or information as may be required by the TSXV, corporate
      or securities regulatory
authorities;

            


    

     

    
      	
              (h)    
        

            	
              all
      material Approvals, acceptances, authorizations, exemptions, waivers or
      consents, including approvals by Governmental Authorities, regulatory
      authorities, lenders, lessors and other third parties and judicial
      approvals and orders legally required for the consummation of the
      Agreement and the Transaction contemplated by this
    Agreement;

            


    

     

    
      	
              (i)    
        

            	
              confirmation
      satisfactory to Falcon that the purchase of the Assets and the Transaction
      contemplated by this Agreement have received all requisite approvals or
      that such approvals are not
required;

            


    

     

    
      	
              (j)    
        

            	
              confirmation
      satisfactory to Falcon that Falcon is not required to prepare and file a
      prospectus or similar document or to register the Convertible Securities
      or the 

            


    

     

    
      
        
        

      

      
        
        

        
          

        

      

      
        
        

      

      -18-

       

       

    

    
      	 	
              Acquisition
      Shares or make any filings or seek any approvals of any nature whatsoever
      from any governmental or regulatory authority of any kind whatsoever in
      the United States, Australia or any other non Canadian jurisdiction in
      connection with the issue and sale or resale of the Convertible Securities
      and/or the Acquisition Shares;

            


    

     

    
      	
              (k)    
        

            	
              a
      certificate of each of Sellers signed by any two of their respective
      officers certifying that:

            


    

     

    
      	
              (i)    
        

            	
              the
      representations and warranties of such Seller herein contained are true
      and correct as of the Closing Date;

            


    

     

    
      	
              (ii)  
        

            	
              the
      resolutions of the Boards of Directors of such Seller approving the
      Transaction Agreements are in full force and
  effect;

            


    

     

    
      	
              (iii) 
        

            	
              Seller
      has performed and complied with all covenants and agreements contained in
      the Transaction Agreements to be performed or complied with by such Seller
      at or prior to the Closing Date;
and

            


    

     

    
      	
              (iv)  
        

            	
              all
      necessary corporate action has been taken by such Seller to authorize the
      execution and delivery of the Transaction Agreements and to consummate the
      Transaction contemplated by the
Transaction.

            


    

     

    
      	
              (l)    
        

            	
              an
      opinion of PetroHunter Energy’s Counsel, dated at the Closing Date,
      that

            


    

     

    
      	
              (i)    
        

            	
              PetroHunter
      Energy is duly incorporated and validly exists under the laws of Maryland
      and is in good standing under the laws of
  Maryland;

            


    

     

    
      	
              (ii)   
        

            	
              the
      Transaction Agreements have been duly executed and delivered by
      PetroHunter Energy and constitute valid and binding obligations of
      PetroHunter Energy, enforceable against PetroHunter Energy in accordance
      with their terms;  and

            


    

     

    
      	
              (iii)  
        

            	
              PetroHunter
      Energy directly owns all of the issued and outstanding securities of
      Seller;

            


    

     

    
      	
              (m) 
          

            	
              an
      opinion of Seller’s Counsel, dated at the Closing Date,
    that

            


    

     

    
      	
              (i)    
        

            	
              Seller
      is duly incorporated and validly exists under the laws of Australia and is
      in good standing under the laws of
Australia;

            


    

     

    
      	
              (ii)   
        

            	
              the
      Transaction Agreements have been duly executed and delivered by Seller and
      constitute valid and binding obligations of Seller, enforceable against
      Seller in accordance with their
  terms;  and

            


    

     

    
      	
              (n)    
        

            	
              such
      other documents and assurances as may be reasonably required by Falcon
      or  Purchaser,

            


    

     

    
      
        
        

      

      
        
        

        
          

        

      

      
        
        

      

    

    -19-

     

     

    all in
form and substance satisfactory to Falcon and Purchaser, each acting reasonably
and in good faith.

     

    
      	
              5.5  

            	
              Falcon
      Deliveries on Closing

            


    

     

    On the
Closing Date, Falcon will deliver the Purchase Price in the amount and in the
manner provided by this Agreement and the following documents all duly executed
and to be dated as of the Closing Date:

     

    
      	
              (a)    
        

            	
              an
      executed copy of the Transaction
Agreements;

            


    

     

    
      	
              (b)    
        

            	
              all
      material Approvals, acceptances, authorizations, exemptions, waivers or
      consents, including approvals by the TSXV, Governmental Authorities,
      regulatory authorities, lenders, lessors and other third parties and
      judicial approvals and orders legally required for the consummation of the
      Agreement and the Transaction contemplated by this
    Agreement;

            


    

     

    
      	
              (c)    
        

            	
              confirmation
      satisfactory to Sellers that the delivery of the Convertible Securities
      and the Acquisition Shares and the Transaction contemplated by this
      Agreement have received all requisite approvals or that such approvals are
      not required;

            


    

     

    
      	
              (d)    
        

            	
              a
      certificate signed by any two of its officers certifying
    that:

            


    

     

    
      	
              (i)    
        

            	
              the
      representations and warranties of Falcon herein contained are true and
      correct as of the Closing Date;

            


    

     

    
      	
              (ii)   
        

            	
              the
      resolutions of the Board of Directors of Falcon approving the Transaction
      Agreements and the Transaction are in full force and
    effect;

            


    

     

    
      	
              (iii)  
        

            	
              Falcon
      has performed and complied with all covenants and agreements contained in
      this Agreement to be performed or complied with by Falcon at or prior to
      the Closing Date; and

            


    

     

    
      	
              (iv)   
        

            	
              all
      necessary corporate action has been taken by Falcon to authorize the
      execution and delivery of the Transaction Agreements and to consummate the
      Transaction contemplated by the
Transaction;

            


    

     

    
      	
              (e)    
        

            	
              an
      opinion of Falcon’s Counsel, dated at the Closing Date,
    that

            


    

     

    
      	
              (i)    
        

            	
              Falcon
      is duly incorporated and validly exists under the laws of British Columbia
      is in good standing under the laws of British Columbia;
  and

            


    

     

    
      	
              (ii)   
        

            	
              the
      Transaction Agreements have been duly executed and delivered by Falcon and
      constitute valid and binding obligations of Falcon, enforceable against
      Purchaser in accordance with their
terms.

            


    

     

    
      	
              (f)    
        

            	
              conditional
      approval of the TSXV for the Transaction;
and

            


    

     

    
      
        
        

      

      
        
        

        
          

        

      

      
        
        

      

      -20-

       

       

    

    
      	
              (g)    
        

            	
              such
      other documentation and assurances as may be reasonably required by the
      Sellers,

            


    

     

    all in
form and substance satisfactory to PetroHunter and Seller, each acting
reasonably and in good faith.

     

    
      	
              5.6  

            	
              Purchaser
      Deliveries on Closing

            


    

     

    On the
Closing Date, Purchaser shall deliver the following documents all duly executed
and to be dated as of the Closing Date:

     

    
      	
              (a)    
        

            	
              an
      executed copy of the Transaction
Agreements;

            


    

     

    
      	
              (b)    
        

            	
              a
      certificate signed by any two of its officers certifying
    that:

            


    

     

    
      	
              (i)    
        

            	
              the
      representations and warranties of Purchaser herein contained are true and
      correct as of the Closing Date;

            


    

     

    
      	
              (ii)   
        

            	
              the
      resolutions of the Board of Directors of Purchase approving the
      Transaction Agreements and the Transaction are in full force and
      effect;

            


    

     

    
      	
              (iii)  
        

            	
              Purchaser
      has performed and complied with all covenants and agreements contained in
      this Agreement to be performed or complied with by Purchaser at or prior
      to the Closing Date; and

            


    

     

    
      	
              (iv)   
        

            	
              all
      necessary corporate action has been taken by Purchaser to authorize the
      execution and delivery of the Transaction Agreements and to consummate the
      Transaction contemplated by the Transaction;
and

            


    

     

    
      	
              (c)    
        

            	
              an
      opinion of Purchaser’s Counsel, dated at the Subsequent Closing Date,
      that

            


    

     

    
      	
              (i)    
        

            	
              Purchaser
      is duly organized and validly exists under the laws of Australia and is in
      good standing under the laws of
Australia;

            


    

     

    
      	
              (ii)   
        

            	
              the
      Transaction Agreements have been duly executed and delivered by Purchaser
      and constitute valid and binding obligations of Purchaser, enforceable
      against Purchaser in accordance with their terms;
  and

            


    

     

    
      	
              (iii)  
        

            	
              Falcon
      directly owns all of the issued and outstanding securities of
      Purchaser.

            


    

     

    
      	
              (d)    
        

            	
              such
      other documents and assurances as may be reasonably required by
      PetroHunter Energy or Seller,

            


    

     

    all in
form and substance satisfactory to PetroHunter or Seller, each acting reasonably
and in good faith.

     

    
      
        
        

      

      
        
        

        
          

        

      

      
        
        

      

      -21-

       

       

    

    
      	
              5.7  

            	
              Approvals

            


    

     

    Falcon
may, in its sole discretion, seek Approval of the Transaction from the Treasurer
of the Commonwealth of Australia.  All Parties recognize and agree
that Sweetpea may assign an undivided interest in the Permits to Purchaser only
with the Approval of the Minister for Mines and Energy of the Northern Territory
of Australia, and the Local Aboriginal Groups acting through their
representative.  Each Party agrees to use their best efforts to obtain
the Northern Territory and Local Aboriginal Group Approvals, and, if sought by
Falcon, the approval of the Treasurer of the Commonwealth of Australia, in as
expeditious a manner as possible.  If Falcon seeks Approval of the
Treasurer of the Commonwealth of Australia, then the Transaction shall not close
unless and until such Approval is obtained.  Thereafter, until the
Approvals of the Minister for Mines and Energy of the Northern Territory of
Australia and the Local Aboriginal Groups acting through their representative
are obtained, PetroHunter Energy shall cause Sweetpea to act as the nominee
owner of Falcon’s or Purchaser’s interest in the Permits.  In this
event, Falcon or Purchaser shall hold beneficial title to its interest in the
Permits, and the Parties shall have all rights and obligations that would
otherwise be applicable if the Approvals had been obtained.  Without
limiting the foregoing, Falcon shall be responsible for, and shall pay and
reimburse Sellers for its undivided 50% working interest pursuant to the
Beetaloo Operating Agreement, in the same manner as if Purchaser were a record
title owner of said undivided 50% interest in the Permits.

     

    ARTICLE
6

    RESOLUTION
OF DISPUTES

     

    
      	
              6.1  

            	
              Arbitration
      – If Not Principally Related to Convertible Securities
    Issues

            


    

     

    Any
dispute between the Parties arising during the period of this Agreement or at
any time thereafter which touches upon the validity, construction, meaning,
performance or effect of this Agreement or the rights and liabilities of the
Parties or any matter arising out of or connected with this Agreement, except a
dispute principally related to the Convertible Securities, shall be exclusively
and definitively resolved through final and binding arbitration.

     

    
      	
               
      

            	
              (a)

            	
              The
      arbitration shall be conducted in accordance with and subject to The
      Institute of Arbitrators & Mediators Australia Rules for the Conduct
      of Commercial Arbitrations.

            


    

     

    
      	
               
      

            	
              (b)

            	
              The
      arbitration shall be conducted by three arbitrators, unless all parties to
      the dispute agree to a sole arbitrator within 30 days after the filing of
      the arbitration.

            


    

     

    
      	
               
      

            	
              (c)

            	
              If
      the arbitration is to be conducted by a sole arbitrator, then the
      arbitrator will be jointly selected by the parties to the
      dispute.  If the parties to the dispute fail to agree on the
      arbitrator within 30 days after the filing of the arbitration, then the
      IAMA shall appoint the arbitrator. If the arbitration is to be conducted
      by three arbitrators and there are only two parties to the dispute, then
      each party to the dispute shall appoint one arbitrator within 30 days of
      the filing of the arbitration, and the two arbitrators so appointed shall
      select the presiding arbitrator within 30 days after the latter of the two
      arbitrators has been appointed by the parties to
      the   

            


    

     

    
      
        
        

      

      
        
        

        
          

        

      

      
        
        

      

      -22-

       

       

    

    
      	 	 	
              dispute.  If
      a party to the dispute fails to appoint its party-appointed arbitrator or
      if the two party-appointed arbitrators cannot reach an agreement on the
      presiding arbitrator within the applicable time period, then the IAMA
      shall appoint the remainder of the three arbitrators not yet
      appointed.

            


    

     

    
      	
               
      

            	
              (d)

            	
              Unless
      otherwise agreed by all parties to the dispute, the place of arbitration
      shall be Sydney, New South Wales.

            


    

     

    
      	
               
      

            	
              (e)

            	
              The
      award of the arbitral tribunal shall be final and
      binding.  Judgment on the award of the arbitral tribunal may be
      entered and enforced by any court of competent
    jurisdiction.

            


    

     

    
      	
               
      

            	
              (f)

            	
              Any
      party to the dispute may apply to a court for interim measures (i) prior
      to the constitution of the arbitral tribunal (and thereafter as necessary
      to enforce the arbitral tribunal’s rulings); or (ii) in the absence of the
      jurisdiction of the arbitral tribunal to rule on interim measures in a
      given jurisdiction.  The Parties agree that seeking and
      obtaining such interim measures shall not waive the right to
      arbitration.  The arbitrators (or in an emergency the presiding
      arbitrator acting alone in the event one or more of the other arbitrators
      is unable to be involved in a timely fashion) may grant interim measures
      including injunctions, attachments and conservation orders in appropriate
      circumstances, which measures may be immediately enforced by court
      order.  Hearings on requests for interim measures may be held in
      person, by telephone, by video conference or by other means that permit
      the parties to the dispute to present evidence and
      arguments.  Without limiting the generality of the foregoing,
      any party to the dispute may have recourse to and shall be bound by the
      Pre-arbitral Referee Procedure of the International Chamber of Commerce in
      accordance with its rules then in
effect.

            


    

     

    
      	
               
      

            	
              (g)

            	
              The
      arbitral tribunal is authorized to award costs and attorneys’ fees and to
      allocate them between the parties to the dispute.  The costs of
      the arbitration proceedings, including attorneys’ fees, shall be borne in
      the manner determined by the arbitral
      tribunal.   

            


    

     

    
      	
               
      

            	
              (h)

            	
              The
      Parties waive their rights to claim or recover, and the arbitral tribunal
      shall not award, any punitive, multiple, or other exemplary damages
      (whether statutory or common law) except to the extent such damages have
      been awarded to a third party and are subject to allocation between or
      among the parties to the dispute.

            


    

     

    
      	
               
      

            	
              (i)

            	
              To
      the extent permitted by law, any right to appeal or challenge any arbitral
      decision or award, or to oppose enforcement of any such decision or award
      before a court or any governmental authority, is hereby waived by the
      Parties except with respect to the limited grounds for modification or
      non-enforcement provided by any applicable arbitration statute.
      

            


    

     

    
      	
              6.2  

            	
              Arbitration
      – If Principally Related to Convertible Securities
  Issues

            


    

     

    Any
dispute between the Parties arising during the period of this Agreement or at
any time thereafter which principally relates to the Convertible Securities
shall be subject to arbitration 

     

    
      
        
        

      

      
        
        

        
          

        

      

      
        
        

      

    

    -23-

     

     

    pursuant
to Arbitration Act, 1991
(Ontario) and as provided in this Article and the decision of the
arbitrational tribunal shall be final and binding as between the Parties and
shall not be subject to appeal.  Such arbitration shall be subject to
the following provisions, namely:

     

    
      	
              (a)    
        

            	
              The
      party desiring arbitration shall nominate one arbitrator and shall notify
      the other party hereto of such nomination.  Such notice shall
      set forth a brief description of the matter submitted for arbitration and,
      if appropriate, the paragraph hereof pursuant to which such matter is so
      submitted.  Such other party shall, within 30 days after
      receiving such notice, nominate an arbitrator and the two arbitrators
      shall select a third person as an arbitrator and as chairman of the
      arbitral tribunal to act jointly with them.  If said arbitrators
      shall be unable to agree on the selection of such chairman, the chairman
      shall be appointed by a Judge of the Ontario Superior Court upon the
      application of any of the parties
hereto.

            


    

     

    
      	
              (b)    
        

            	
              The
      arbitration shall take place in Toronto, Ontario and the chairman shall
      fix the time and location in such city for the purpose of hearing such
      evidence and representations as either of the parties may present and,
      subject to the provisions hereof, the decisions of the arbitrators or of
      any two of them in writing shall be binding upon the parties both in
      respect of procedure and the conduct of the parties during the proceedings
      and the final determination of the issues therein.  Said
      arbitrators shall, after hearing any evidence and representations that the
      parties may submit, make their decision and reduce the same to writing and
      deliver one copy thereof to each of the parties hereto.  The
      majority of the arbitrators may determine any matters of procedure for the
      arbitration not specified herein.

            


    

     

    
      	
              (c)    
        

            	
              If
      the party hereto receiving the notice of the nomination of an arbitrator
      by the party desiring arbitration fails within the said 30 days to
      nominate an arbitrator, then the arbitrator nominated by the party
      desiring arbitration may proceed alone to determine the dispute in such
      manner and at such time as he shall think fit and his decision shall,
      subject to the provisions hereof, be binding upon the
    parties.

            


    

     

    
      	
              (d)    
        

            	
              Notwithstanding
      the foregoing, the arbitration may be carried out by a single arbitrator
      if the parties hereto so agree, in which event the provisions of this
      paragraph shall apply, mutatis
      mutandis.

            


    

     

    
      	
              (e)    
        

            	
              The
      cost of the arbitration shall be borne equally by the Parties, unless the
      chairman and arbitrators decide otherwise in their final written
      decision.

            


    

     

    
      	
              (f)    
        

            	
              Insofar
      as they do not conflict with the provisions of this Article, the Ontario
      Arbitration Act shall be applicable to arbitration held under this Article
      and the chairman and arbitrators shall have jurisdiction to do all acts
      and make such orders as provided
therein.

            


    

     

    
      	
              (g)    
        

            	
              Submission
      to arbitration pursuant to the provisions of this Article and the
      obtaining of the decision of the arbitration tribunal on the matters and
      claims in 

            


    

     

    
      
        
        

      

      
        
        

        
          

        

      

      
        
        

      

      -24-

       

       

    

    
      	 	dispute
      shall be a condition precedent to the bringing of any action at law or
      suit in equity with respect to this
Agreement.


    

     

    
      	
              6.3  

            	
              Arbitration—Mixed
      Issues

            


    

     

    The
Parties recognize that disputes may involve more than one issue, and
consequently have provided that the correct arbitration venue and procedure will
turn upon whether the disputed issues principally relate to Convertible
Securities or to other matters.  An arbitrator or arbitral panel
constituted under this Agreement shall always have power to determine whether
the disputed issues principally relate to Convertible Securities or other
matters, with the understanding that principal relationship will be determined
based on numerosity and complexity of the issues that need to be resolved and
the applicable governing law, rather than monetary value of the
issues.  Under no circumstances will the Parties ever be involved in
cotemporaneous arbitration proceedings in two different venues, unless all
Parties to each putative proceeding agree.

     

    ARTICLE
7

    GENERAL

     

    
      	
              7.1  

            	
              Taxes
      and Fees

            


    

     

    Sellers
shall be responsible for any stamp duties applicable to the
Transaction.  Each Party shall pay its own legal and other
professional fees in respect of the Transaction.

     

    
      	
              7.2  

            	
              Complete
      Closings

            


    

     

    All
matters of payment, execution and delivery of documents by each Party to the
other at the Closing shall be deemed to be concurrent requirements and nothing
will be complete at Closing until everything required at Closing has been paid,
executed and delivered.  Upon the written request of either Party, all
documents and monies shall be deemed delivered in escrow at Closing until the
Parties’ Counsel can agree that all requirements of Closing have been
satisfied.

     

    
      	
              7.3  

            	
              Status
      of the Agreement

            


    

     

    Notwithstanding
anything else contained in this Agreement, this Agreement shall not constitute a
binding agreement between the Parties until the Acceptance Date.

     

    
      	
              7.4  

            	
              Tender

            


    

     

    Any
tender of documents or money or delivery of Notice pursuant to this Agreement
may be given by or made upon the Parties’ Counsel on behalf of the
Parties.

     

    
      	
              7.5  

            	
              Specific
      Performance and other Remedies

            


    

     

    Each of
the Parties hereto hereby recognizes and acknowledges that a breach by any other
Party (the “Breaching
Party”) of any covenants or other commitments contained in this Agreement
will cause the non-Breaching Party to sustain injury for which it would not have
an adequate remedy at law for money damages.  Therefore, each of the
Parties hereto hereby agree that, in the 

     

     

    
      
        
        

      

      
        
        

        
          

        

      

      
        
        

      

    

    -25-

     

     

    event of
any such breach, the non-Breaching Party shall be entitled to the remedy of
specific performance of such covenants or commitments and provisional,
interlocutory and permanent injunctive and other equitable relief in addition to
any other remedy to which it may be entitled, at law or in equity, and each of
the Parties hereto further hereby agrees to waive any requirement for the
securing or posting of any bond in connection with the obtaining of any such
injunctive or other equitable relief.

     

    
      	
              7.6  

            	
              Obligations
      as Covenants

            


    

     

    Each
agreement and obligation of the Parties contained in this Agreement, even though
not expressed as a covenant, shall be considered for all purposes to be a
covenant.

     

    
      	
              7.7  

            	
              Amendment
      of Agreement

            


    

     

    Subject
to Section 7.9, no modification or amendment of this Agreement shall be binding
unless executed in writing by the Parties in the same manner as the execution of
this Agreement.

     

    
      	
              7.8  

            	
              Further
      Assurances

            


    

     

    Each of
the Parties shall from time to time hereafter and upon any reasonable request of
any other Party, make or cause to be made all such further acts, deeds,
assurances and things as may be required or necessary to more effectually
implement and carry out the true intent and meaning of this
Agreement.

     

    
      	
              7.9  

            	
              Waiver

            


    

     

    Subject
to Section 7.7, no waiver of any default, breach or non-compliance under this
Agreement shall be effective unless in writing and signed by the Party to be
bound by the waiver or by its counsel.  Subject to Section 7.7, no
waiver shall be inferred from or implied by any failure to act or delay in
acting by a Party in respect of any default, breach or non-observance or by
anything done or omitted to be done by the other Party.  The waiver by
a Party of any default, breach or non-compliance under this Agreement shall not
operate as a waiver of that Party’s rights under this Agreement in respect of
any continuing or subsequent default, breach or non-observance (whether of the
same or any other nature).

     

    
      	
              7.10  

            	
              Time

            


    

     

    Time
shall in all respects be of the essence hereof provided that the time for doing
or completing any matter may be extended or abridged by an agreement in writing
between Falcon and Sellers or their respective counsel.  Except as
expressly set out in this Agreement, the computation of any period of time
referred to in this Agreement shall exclude the first day and include the last
day of such period.

     

    
      	
              7.11  

            	
              Entire
      Agreement

            


    

     

    This
Agreement constitutes the entire agreement between the Parties with respect to
the subject matter hereof and, except as stated in the instruments and documents
to be executed and delivered pursuant hereto, contains all of the
representations, conditions, warranties and 

     

     

    
      
        
        

      

      
        
        

        
          

        

      

      
        
        

      

    

    -26-

     

    agreements
of the respective Parties with respect to the subject matter hereof. There are
no verbal representations, undertakings or agreements of any kind between the
Parties. This Agreement
supersedes all prior negotiations or agreements between the Parties, whether
written or verbal, with respect to the subject matter of this
Agreement.

     

    
      	
              7.12  

            	
              Severability

            


    

     

    If any
covenant, obligation or provision of this Agreement, or the application thereof
to any person or circumstance shall, to any extent, be invalid or unenforceable,
the remainder of this Agreement or the application of such covenant, obligation
or provision to persons or circumstances other than those as to which it is held
invalid or unenforceable, shall not be affected thereby.  Each
covenant, obligation and provision of this Agreement shall be separately valid
and enforceable to the fullest extent permitted by law.

     

    
      	
              7.13  

            	
              Counterparts
      and Facsimile

            


    

     

    For the
convenience of the Parties, this Agreement may be executed in several
counterparts, and delivered by facsimile transmission, each of which when so
executed and delivered shall be deemed to be an original instrument and such
counterparts together shall constitute one and the same instrument.

     

    
      	
              7.14  

            	
              Notices

            


    

     

    Every
notice, consent, request, instruction, approval and other communication provided
for or permitted by this Agreement (each, a “Notice”) and all legal process
in regard hereto shall be validly given, made or served, if in writing and
delivered to, or sent by facsimile, to the Party to whom it is be given
at:

     

    
      	
              (a)    
        

            	
              to
      Sellers (which to Sweetpea shall be c/o
  PetroHunter):

            


    

     

    PetroHunter
Energy Corporation

    1600
Stout Street, Suite 2000

    Denver,
Colorado 80202

    


    Attention:
Chief Executive Officer

    Facsimile
number:  (720) 889-8371

    


    with a
copy to (which copy shall not constitute notice hereunder):

    


    Dill Dill
Carr Stonbraker & Hutchings, P.C.

    455
Sherman Street, Suite 300

    Denver,
Colorado 80203

    


    Attention:
Fay M. Matsukage, Esq.

    Facsimile
number: (303) 777-3823

    


    And

    


    
      
        
        

      

      
        
        

        
          

        

      

      
        
        

      

      -27-

       

       

    

    Davis
Graham & Stubbs LLP

    1550
Seventeenth Street, Suite 500

    Denver,
Colorado 80202

    


    Attention:  Gregory
Danielson, Esq. and Shannon Ponder, Esq.

    Facsimile
number:  (303) 893-1379

    


    
      	
              (b)    
        

            	
              to
      Falcon or Purchaser:

            


    

     

    Falcon
Oil & Gas Ltd.

    1875
Lawrence Street, Suite 1400

    Denver,
Colorado  80202

    


    Attention:
Chief Executive Officer

    Facsimile
number: (303) 572-8927

    


    with a
copy to (which copy shall not constitute notice hereunder):

    


    Aird
& Berlis LLP

    Brookfield
Place, 181 Bay Street

    Suite
1800, Box 754

    Toronto,
Ontario

    M5J
2T9

    


    Attention:
Daniel N. Bloch

    Facsimile
number: (416) 863-1515

    


    or to
such other address as any Party hereto may, from time to time, designate in
writing delivered in a like manner.  If delivered or sent by
facsimile, Notice shall be deemed delivered on the date of delivery or facsimile
transmission, unless delivered or transmitted after 4:00 p.m. on a Business
Day or on a day which is not a Business Day, in which event Notice shall be
deemed delivered on the next Business Day.

     

    
      	
              7.15  

            	
              Confidentiality

            


    

     

    
      	
              (a)    
        

            	
              Falcon,
      Purchaser and its employees, officers, directors, contractors, agents and
      professional representatives shall keep the existence of and the terms of
      this Agreement in strictest
confidence.

            


    

     

    
      	
              (b)    
        

            	
              Sellers,
      Falcon and Purchaser agree that prior to making any press releases
      concerning the Transaction, each of them shall provide a copy of such
      press release to the other in advance of it being
  released.

            


    

     

    
      	
              7.16  

            	
              Successors
      and Assigns

            


    

     

    This
Agreement shall not be assignable by Falcon to Purchaser, or otherwise, without
the written consent of Seller, which shall not be unreasonably
withheld.

     

    
      
        
        

      

      
        
        

        
          

        

      

      
        
        

      

      -28-

       

       

    

    
      	
              7.17  

            	
              Enurement

            


    

     

    All of
the covenants and agreements contained in this Agreement shall be binding upon
the Parties and their respective successors and permitted assigns and shall
enure to the benefit of and be enforceable by the Parties and their respective
successors and permitted assigns pursuant to the terms and conditions of this
Agreement.

     

    
      	
              7.18  

            	
              Language

            


    

     

    The
Parties hereto acknowledge that they have requested and consented that this
Agreement and all documents related hereto be drawn up in
English.  Les Parties aux présentes reconnaissent qu’elles ont exigé
cette convention ainsi que tous les documents qui y ont rapport soient rédigés
en anglais, ce a quoi les parties aux présentes consentent.

     

    [REMAINDER
OF PAGE INTENTIONALLY LEFT BLANK]

     


    
      
         


      

      
         


        
          

        

      

      
         


        
          -

        

      

    


    IN WITNESS WHEREOF, the
Parties hereto have duly executed this agreement under seal as of the day and
year first above written.

     

    
      	 
      	 
      	
              PETROHUNTER
      ENERGY CORPORATION

            
	
              Per:

            	 
      
	 
      	
              Name:

            
	 
      	
              Title:

            
	 
      	 
      
	
              Per:

            	 
      
	 
      	
              Name:

            
	 
      	
              Title:

            
	
              I/We
      have the authority to bind the corporation.

            
	 
      	 
      	
              SWEETPEA
      PETROLEUM PTY LTD.

            
	
              Per:

            	 
      
	 
      	
              Name:

            
	 
      	
              Title:

            
	 
      	 
      
	
              Per:

            	 
      
	 
      	
              Name:

            
	 
      	
              Title:

            
	
              I/We
      have the authority to bind the corporation.

            
	 
      	 
      	
              FALCON
      OIL & GAS LTD.

            
	
              Per:

            	 
      
	 
      	
              Name:

            
	 
      	
              Title:

            
	 
      	 
      
	
              Per:

            	 
      
	 
      	
              Name:

            
	 
      	
              Title:

            
	
              I/We
      have the authority to bind the
corporation.

            


    

     

    
      
        
        

      

      
        
        

        
          

        

      

      
        
        

      

      -2-

       

       

    

    
      	 
      	 
      	 
      
	 
      	 
      	
              FALCON
      OIL & GAS AUSTRALIA

              PTY
      LTD

            
	
              Per:

            	 
      
	 
      	
              Name:

            
	 
      	
              Title:

            
	 
      	 
      
	
              Per:

            	 
      
	 
      	
              Name:

            
	 
      	
              Title:

            
	
              I/We
      have the authority to bind the
corporation.