exh10-1_agreement.htm


     

    
      

      

    

     

     

     

     

     

    EXHIBIT 10.1

     

    PURCHASE AND SALE AGREEMENT BETWEEN PETROHUNTER
ENERGY CORPORTION,

    PETROHUNTER OPERATING COMPANY AND SWEETPEA
PETROLEUM PTY LTD. AND

    FALCON OIL & GAS LTD., FALCON OIL & GAS
USA, INC. AND FALCON OIL & GAS AUSTRALIA PTY LTD.

    DATED MAY 26, 2009

    
 

    
      
         


      

      
         


        
          

        

      

      
         


        
          EXECUTION
COPY

        

      

    


    SECOND
PURCHASE AND SALE AGREEMENT

     

    


     

    BY
AND BETWEEN:

     

    


     

    PETROHUNTER
ENERGY CORPORATION

     

    -
and -

     

    PETROHUNTER
OPERATING COMPANY

     

    -
and -

     

    SWEETPEA
PETROLEUM PTY LTD

     

    -
and -

     

    FALCON
OIL & GAS LTD.

     

    -
and -

     

    FALCON
OIL & GAS USA, INC.

     

    -
and -

     

    FALCON
OIL & GAS AUSTRALIA PTY LTD

     

    


     

    


     


    
      
         


      

      
         


        
          

        

      

      
         


        
           

        

      

    

     

    
      TABLE
OF CONTENTS

      


      Page

    

    
 

    
      
        
          
            
              
                	
                        ARTICLE
      1 INTERPRETATION AND GENERAL

                      	
                        1

                      
	 
      	
                        1.1

                      	
                        Defined
      Terms

                      	
                        1

                      
	 
      	
                        1.2

                      	
                        Meaning
      of Subsidiary

                      	
                        6

                      
	 
      	
                        1.3

                      	
                        Meaning
      of Control or Controlled

                      	
                        7

                      
	 
      	
                        1.4

                      	
                        General

                      	
                        7

                      
	 
      	
                        1.5

                      	
                        Governing
      Law

                      	
                        7

                      
	 
      	 
      	 
      	 
      
	
                        ARTICLE
      2 PURCHASE AND SALE

                      	
                        8

                      
	 
      	
                        2.1

                      	
                        PetroHunter
      Parties’ Consideration

                      	
                        8

                      
	 
      	
                        2.2

                      	
                        Falcon
      Parties’ Consideration

                      	
                        8

                      
	 
      	 
      	 
      	 
      
	
                        ARTICLE
      3 REPRESENTATIONS AND WARRANTIES

                      	
                        9

                      
	 
      	
                        3.1

                      	
                        Representations
      and Warranties by PetroHunter Parties

                      	
                        9

                      
	 
      	
                        3.2

                      	
                        Representations
      and Warranties of Falcon Parties

                      	
                        12

                      
	 
      	 
      	 
      	
                         
      

                      
	
                        ARTICLE
      4 WARRANTY CLAIMS

                      	
                        12

                      
	 
      	
                        4.1

                      	
                        Survival
      of Warranties

                      	
                        12

                      
	 
      	
                        4.2

                      	
                        Limitations
      on Warranty Claims

                      	
                        13

                      
	 
      	 
      	 
      	 
      
	
                        ARTICLE
      5 COVENANTS

                      	
                         13 

                      
	 
      	
                        5.1

                      	
                        Mutual
      Covenants

                      	
                        13

                      
	 
      	
                        5.2

                      	
                        Covenants
      of PetroHunter Parties

                      	
                        14

                      
	 
      	
                        5.3

                      	
                        Covenants
      of Falcon Parties

                      	
                        15

                      
	 
      	
                        5.4

                      	
                        Right
      of First Offer

                      	
                        15

                      
	 
      	 
      	 
      	 
      
	
                        ARTICLE
      6 CLOSING

                      	
                        16

                      
	 
      	
                        6.1

                      	
                        Closing
      or Termination

                      	
                        16

                      
	 
      	
                        6.2

                      	
                        Conditions
      for the Benefit of the Falcon Parties

                      	
                        17

                      
	 
      	
                        6.3

                      	
                        Conditions
      for Benefit of PetroHunter Parties

                      	
                        17

                      
	 
      	
                        6.4

                      	
                        PetroHunter
      Parties’ Deliveries on Closing

                      	
                        17

                      
	 
      	
                        6.5

                      	
                        Falcon
      Parties’ Deliveries on Closing

                      	
                        19

                      
	 
      	 
      	 
      	 
      
	
                        ARTICLE
      7 RESOLUTION OF DISPUTES

                      	
                        21

                      
	 
      	
                        7.1

                      	
                        Artibration

                      	
                        21

                      
	 
      	 
      	 
      	 
      
	
                        ARTICLE
      8 INDEMNITY

                      	
                        22

                      
	 
      	
                        8.1

                      	
                        Indemnity
      by the PetroHunter Parties

                      	
                        22

                      
	 
      	
                        8.2

                      	
                        Provisions
      Relating to Indemnity Claims

                      	
                        23

                      
	 
      	 
      	 
      	 
      
	
                        ARTICLE
      9 GST

                      	
                        25

                      
	 
      	
                        9.1

                      	
                        Interpretation

                      	
                        25

                      


                 

                -i-

                
                  
                     

                  

                  
                     

                    
                      

                    

                  

                  
                     

                  

                

                
                  TABLE
OF CONTENTS

                  (continued)

                  


                  Page

                

                 

                	 
      	
                        9.2

                      	
                        Going
      concern

                      	
                        25

                      
	 
      	
                        9.3

                      	
                        GST
      gross-up

                      	
                        26

                      
	 
      	
                        9.4

                      	
                        Tax
      invoice

                      	
                        26

                      
	 
      	
                        9.5

                      	
                        Adjustment
      event

                      	
                        26

                      
	 
      	
                        9.6

                      	
                        Reimbursements

                      	
                        26

                      
	 
      	
                        9.7

                      	
                        Survival
      of Article 9

                      	
                        26

                      
	 
      	 
      	 
      	 
      
	
                        ARTICLE
      10 GENERAL

                      	
                        26

                      
	 
      	
                        10.1

                      	
                        Taxes
      and Fees

                      	
                        26

                      
	 
      	
                        10.2

                      	
                        Complete
      Closings

                      	
                        27

                      
	 
      	
                        10.3

                      	
                        Status
      of the Agreement

                      	
                        27

                      
	 
      	
                        10.4

                      	
                        Tender

                      	
                        27

                      
	 
      	
                        10.5

                      	
                        Specific
      Performance and other Remedies

                      	
                        27

                      
	 
      	
                        10.6

                      	
                        Obligations
      as Covenants

                      	
                        27

                      
	 
      	
                        10.7

                      	
                        Amendment
      of Agreement

                      	
                        27

                      
	 
      	
                        10.8

                      	
                        Further
      Assurances

                      	
                        27

                      
	 
      	
                        10.9

                      	
                        Waiver

                      	
                        28

                      
	 
      	
                        10.10

                      	
                        Time

                      	
                        28

                      
	 
      	
                        10.11

                      	
                        Entire
      Agreement

                      	
                        28

                      
	 
      	
                        10.12

                      	
                        Severability

                      	
                        28

                      
	 
      	
                        10.13

                      	
                        Counterparts
      and Facsimile

                      	
                        28

                      
	 
      	
                        10.14

                      	
                        Notices

                      	
                        29

                      
	 
      	
                        10.15

                      	
                        Confidentiality

                      	
                        30

                      
	 
      	
                        10.16

                      	
                        Successors
      and Assigns

                      	
                        30

                      
	 
      	
                        10.17

                      	
                        Enurement

                      	
                        30

                      
	 
      	
                        10.18

                      	
                        Language

                      	
                        30

                      
	
                        SCHEDULE
      "A" PERMIT TRANSFER INSTRUMENT

                      	 
      
	
                        SCHEDULE
      "B" ASSIGNMENT AND BILL OF SALE

                      	 
      
	
                        SCHEDULE
      "C" ASSIGNMENT AND BILL OF SALE (BEETALOO INVENTORY)

                      	 
      
	
                        SCHEDULE
      "D" ASSIGNMENT AND BILL OF SALE (25% INTEREST IN THE
    ASSETS)

                      	 
      
	
                        SCHEDULE
      "E" ASSIGNMENT AND BILL OF SALE (INITIAL WORKING INTEREST)

                      	 
      
	
                        SCHEDULE
      "F" BEETALOO PAYABLES

                      	 
      
	
                        SCHEDULE
      "G" ESCROW AGREEMENT

                      	 
      
	 SCHEDULE
      "H" ASSUMPTION UNDERTAKING	 


                 

                -ii-

                
                  
                     

                  

                  
                     

                    
                      

                    

                  

                  
                     

                  

                

                
                  TABLE
OF CONTENTS

                  


                  Page

                

                 

                 

                	SCHEDULE
      "I" BEETALOO BASIN JOINT OPERATING AGREEMENT 	 
	SCHEDULE
      "J" MATERIAL AGREEMENTS	 


              

            

          

        

      

    

     

     

     

     

     

     

     

     

     

     

     

     

    -iii-


    
      
         


      

      
         


        
          

        

      

      
         


      

    


    SECOND
PURCHASE AND SALE AGREEMENT

     

    THIS SECOND PURCHASE AND SALE
AGREEMENT (“Agreement”) is made and
entered into May 26, 2009, by and between PetroHunter Energy Corporation (“PetroHunter Energy”), Sweetpea
Petroleum Pty Ltd (“Sweetpea”), PetroHunter
Operating Company (“PetroHunter
Operating”), Falcon Oil & Gas Ltd. (“Falcon”), Falcon Oil & Gas
USA, Inc. (“Falcon USA”)
and Falcon Oil & Gas Australia Pty Ltd (“Purchaser”). PetroHunter
Energy, PetroHunter Operating, Sweetpea, Falcon, Falcon USA and Purchaser may
sometimes be referred to herein individually as a “Party” and collectively as the
“Parties”.

     

    WHEREAS, PetroHunter Energy and
Sweetpea, and Falcon and Purchaser entered into a purchase and sale agreement
dated August 22, 2008 (the “Beetaloo PSA”) with respect to
the Beetaloo Basin Project (as hereinafter defined) whereby Purchaser bought an
undivided 50% interest in the Beetaloo Basin Project from Sweetpea on September
30, 2008 (the “Initial
Transaction”);

     

    AND WHEREAS, Sweetpea is now
operator of the Beetaloo Basin Project and owner of the other undivided 50%
interest in the Beetaloo Basin Project;

     

    AND WHEREAS, Purchaser wishes
to buy an additional 25% undivided interest in the Beetaloo Basin Project from
Sweetpea and become the operator of the Beetaloo Basin Project;

     

    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.

            


    

     

    “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.

     

     

    
      
         

      

      
         

        
          

        

      

      
         

      

    

    -2-

     

    “Amended and Restated Beetaloo
JOA” means the joint operating agreement between the Purchaser and
Sweetpea dated the Closing Date in the form attached hereto as SCHEDULE "I"
hereto.

    


    “Assets” means the undivided
25% interest in the Beetaloo Basin Project that will be subject to the
assignment delivered by Sweetpea to Purchaser at the Closing.

    


    “Bayless Override” has the
meaning ascribed thereto in the Beetaloo PSA.

    


    “Beetaloo Basin Project” means
(i) the Permits, (ii) the Well, (iii) the Data, (iv) the Material Agreements,
(v) all related licenses, permits, access rights, and other rights and
privileges, and (vi) all rights, titles and interests of the PetroHunter
Parties, whether derived under the Permits, the Material Agreements, 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 Inventory” means the entire 100%
ownership interest in the inventory identified on SCHEDULE "C" hereto (together
with any other personal property owned, leased or otherwise held for use by or
on behalf of a PetroHunter Party that is related to the Beetaloo Basin Project,
even if such property is omitted or misdescribed in SCHEDULE "C") that will be
subject to the bill of sale delivered by Sweetpea to Purchaser at the
Closing.

    


    “Beetaloo JOA” means the joint
operating agreement between Purchaser and Sweetpea dated August 22,
2008.

     

    “Beetaloo Payables” means all
amounts owing by the PetroHunter Parties to contractors, creditors and all other
parties in connection with the Beetaloo Basin Project up to a maximum of
A$1,500,000.

     

    “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 10.5.

     

    “Buckskin JOA” means the joint
operating agreement dated October 31, 2008, between PetroHunter Operating, as
operator, and Falcon USA, as non-operator.

     

    “Buckskin PSA” means the
purchase and sale agreement between PetroHunter Energy and PetroHunter
Operating, and Falcon and Falcon USA dated August 22, 2008, as amended on
October 31, 2008.

     

    “Buckskin Mesa Project” means
PetroHunter’s 20,000-acre Buckskin Mesa project located in the Piceance Basin,
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-

       

    

    “Closing” means the matters
contemplated by ARTICLE 6 of this Agreement at the offices of Davis Graham &
Stubbs LLP in Denver, Colorado on the Closing Date.

     

    “Closing Date” means 11:00 a.m.
(Denver time) five Business Days after:

     

    
      	
              (c)    
        

            	
              the
      first to occur of the following:

            


    

     

    
      	
              (i)    
        

            	
              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;
or

            


    

     

    
      	
              (ii)      

            	
              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;
and

            


    

     

    
      	
              (d)    
        

            	
              the
      satisfaction or waiver of the closing conditions by the relevant Parties
      contained in Sections 6.2 and 6.3, as the case may
  be.

            


    

     

    “Commissioner of Taxation”
means the commissioner of taxation of the Australian Taxation
Office.

     

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

     

    “Completion Capital” has the
meaning ascribed thereto in the Buckskin PSA.

     

    “Control” has the meaning
ascribed in Section 1.3;

     

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

     

    “Escrow Agent” means the escrow
agent appointed by Falcon in its sole discretion under the Escrow
Agreement.

     

    “Escrow Agreement” means the
escrow agreement among, the Escrow Agent, the Falcon Parties and PetroHunter
Parties dated the Closing Date in the form of escrow agreement attached hereto
as SCHEDULE "G" to this Agreement and which will be dated the Closing
Date.

     

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

     

    “Falcon Parties” means,
together, Falcon, Falcon USA and the Purchaser, or any one of them, as the case
may be.

     

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

     

    “GST” has the meaning given to
that expression in the GST Law.

     

    
      
         

      

      
         

        
          

        

      

      
         

      

      -4-

       

    

    “GST Law” has the meaning given
to that expression in the A
New Tax System (Goods and Services Tax) Act 1999, as amended, of the
Commonwealth of Australia.

     

    “Indemnity” has the meaning
ascribed thereto in ARTICLE 8.

     

    “Initial Working Interest” has
the meaning ascribed thereto in the Buckskin PSA.

     

    “Loan” means the $5,000,000
loan made by Falcon to PetroHunter Energy in accordance with the Loan
Agreement.

     

    “Loan Agreement” means the loan
agreement dated October 1, 2008, as amended on December 10, 2008, between
PetroHunter Energy and Falcon.

     

    “Material Agreements” means the
contracts identified on Schedule “C” to the Beetaloo PSA and those identified on
SCHEDULE "J" hereto.

     

    “Mortgage” means the mortgage,
assignment, security agreement, fixture filing and security agreement, dated
October 1, 2008 and recorded in the real property records of Rio Blanco County,
Colorado under Document No. 293828, from PetroHunter Energy and PetroHunter
Operating, as mortgagors, to Falcon, as mortgagee.

     

    “New Wells” means the five
wells (Excalibur Nos. 5054 through 5058, inclusive) identified on Schedule 3 to
the Buckskin PSA.

     

    “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 10.14.

     

    “Offered Interest” means the
remaining 25% interest in the Beetaloo Basin Project held by the PetroHunter
Parties immediately following the Closing Date.

     

    “Operator Bonds” means,
collectively: (i) the five standby letters of credit issued by Wells Fargo Bank,
National Association, relating to the Beetaloo Basin Project in the aggregate
amount of A$496,000; (ii) all underlying cash security provided to Wells Fargo
Bank, National Association, in connection with such letters of credit; and (iii)
all other bonds and instruments that may now be in place for the benefit of the
Northern Land Council or any Governmental 

     

     

    
      
         

      

      
         

        
          

        

      

      
         

      

      -5-

    

     

    Authority,
together with all security given in connection therewith, relating to Sweetpea’s
status as title holder of the Permits or its activities as operator of the
Permits.

     

    “Permits” means Petroleum
Exploration Permits 76, 98, 99 and 117, together with any renewals or extensions
thereof as more fully described on SCHEDULE "A" to the Beetaloo
PSA.

     

    “Permitted Falcon
Encumbrances” means:

     

    
      	
              (a)    
        

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

            


    

     

    
      	
              (b)    
        

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

            


    

     

    
      	
              (c)    
        

            	
              any
      Falcon Encumbrance, title defect or matter that is expressly waived by
      PetroHunter Energy.

            


    

     

    “Permitted PetroHunter
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)    
        

            	
              the
      terms and conditions of the Material Agreements and all documents of
      record;

            


    

     

    
      	
              (f)    
        

            	
              the
      Beetaloo Payables; and

            


    

     

    
      	
              (g)    
        

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

            


    

     

    “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.

     

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

     

    “PetroHunter Parties” means,
together, PetroHunter, PetroHunter Operating and Sweetpea, or any one of them,
as the case may be.

     

    
      
         

      

      
         

        
          

        

      

      
         

      

      -6-

       

       

    

    “Pledge Agreement” means the
pledge and security agreement dated October 1, 2008, as modified by letter
agreement dated December 10, 2008, between PetroHunter Energy, as pledgor, and
Falcon, as pledgee.

     

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

     

    “Remaining Completion Capital”
means the Completion Capital that has not been expended on costs relating to the
Buckskin Mesa Project as of the Closing Date.

     

    “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.

     

    “Seller” has the meaning
ascribed thereto in the Beetaloo PSA.

     

    “Sellers” has the meaning
ascribed thereto in the Beetaloo PSA.

     

    “Subsidiary” has the meaning
ascribed in Section 1.2.

     

    “Transaction” has the meaning
ascribed thereto in ARTICLE 2.

     

    “Transaction Agreements” means,
collectively, this Agreement, the Amended and Restated Beetaloo JOA and the
Escrow Agreement.

     

    “Transaction Fees” means,
collectively, all fees, costs and expenses of every type and nature arising out
of or relating to the activities of the PetroHunter Parties in Australia that
are not specifically set forth in SCHEDULE "F".

     

    “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.

     

    “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.

     

    “Well” means the Shenandoah #1
well, as more fully described on SCHEDULE "B" to the Beetaloo PSA.

     

    
      	
              1.2  

            	
              Meaning
      of Subsidiary

            


    

     

    A Person
shall be deemed to be a subsidiary of another Person if:

     

    
      
         

      

      
         

        
          

        

      

      
         

      

      -7-

       

       

    

    
      	
              (a)    
       

            	
              it
      is controlled by,

            


    

     

    
      	
              (i)    
       

            	
              that
      other, or

            


    

     

    
      	
              (ii)     
      

            	
              that
      other and one or more Persons each of which is controlled by that other,
      or

            


    

     

    
      	
              (iii)    
      

            	
              two
      or more Persons each of which is controlled by that other;
    or

            


    

     

    
      	
              (b)     

            	
              it
      is a subsidiary of a Person that is that other’s
    subsidiary.

            


    

     

    
      	
              1.3  

            	
              Meaning
      of Control or Controlled

            


    

     

    A Person
shall be deemed to be controlled by another Person or by two or more Persons
if:

     

    
      	
              (a)  

            	
              voting
      securities of the first-mentioned Person carrying more than 50 percent of
      the votes for the election of directors are held, other than by way of
      security only, by or for the benefit of such other Person or by or for the
      benefit of such other Person; and

            


    

     

    
      	
              (b)  

            	
              the
      votes carried by such securities are sufficient, if exercised, to elect a
      majority of the board of directors of the first-mentioned
      Person.

            


    

     

    
      	
              1.4  

            	
              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 United States 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.

     

    
      	
              1.5  

            	
              Governing
      Law

            


    

     

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

     

    
      
         

      

      
         

        
          

        

      

      
         

      

      -8-

       

      ARTICLE
2

    

    PURCHASE
AND SALE

     

    
      	
              2.1  

            	
              PetroHunter
      Parties’ Consideration

            


    

     

    As
consideration for the actions described in Section 2.2, the PetroHunter Parties,
as the case may be, shall at Closing:

     

    
      	
              (a)    
       

            	
              subject
      to the Permitted PetroHunter Encumbrances, assign the Assets to the
      Purchaser;

            


    

     

    
      	
              (b)    
       

            	
              assign
      the Beetaloo Inventory to the
Purchaser;

            


    

     

    
      	
              (c)    
       

            	
              resign
      as operator under the Beetaloo JOA with immediate effect, despite any
      longer notice period that may otherwise be provided in the Beetaloo
      JOA;

            


    

     

    
      	
              (d)    
       

            	
              execute
      the Amended and Restated Beetaloo JOA;


            


    

     

    
      	
              (e)    
       

            	
              assign
      or cause to be assigned to the Purchaser or Purchaser’s designee 100% of
      the Operator Bonds in accordance with the terms
  thereof;

            


    

     

    
      	
              (f)    
       

            	
              grant
      the Falcon Parties the Indemnity;

            


    

     

    
      	
              (g)    
       

            	
              terminate
      the Buckskin JOA;

            


    

     

    
      	
              (h)    
       

            	
              enter
      into the Escrow Agreement, and comply with the terms and conditions
      therein; and

            


    

     

    
      	
              (i)    
       

            	
              grant
      the Falcon Parties the right provided in Section
  5.3,

            


    

     

    and the
PetroHunter Parties agree to such actions on and subject to the terms and
conditions of this Agreement (collectively, the “PetroHunter
Consideration”).

     

    
      	
              2.2  

            	
              Falcon
      Parties’ Consideration

            


    

     

    As
consideration for the actions described in Section 2.1, the Falcon Parties, as
the case may be, shall at Closing:

     

    
      	
              (a)    
       

            	
              subject
      to the Permitted Falcon Encumbrances, reassign the Initial Working
      Interest to PetroHunter;

            


    

     

    
      	
              (b)    
       

            	
              except
      as set forth in this Agreement, accept the PetroHunter Consideration as
      full and complete payment of any and all obligations owed by PetroHunter
      Energy to Falcon under the Loan and the Loan
  Agreement;

            


    

     

    
      	
              (c)    
       

            	
              execute
      the Amended and Restated Beetaloo
JOA;

            


    

     

    
      	
              (d)    
       

            	
              release
      any and all interest of the Falcon Parties in the
  Mortgage;

            


    

     

    
      
         

      

      
         

        
          

        

      

      
         

      

      -9-

       

       

    

    
      	
              (e)    
       

            	
              release
      any and all interest of the Falcon Parties in the Pledge Agreement and
      instruct the brokerage firm holding the Common Shares subject to the
      Pledge Agreement at the Closing Date to transfer such Common Shares to the
      Escrow Agent;

            


    

     

    
      	
              (f)    
       

            	
              convey
      any and all interest of the Falcon Parties in the Remaining Completion
      Capital;

            


    

     

    
      	
              (g)    
       

            	
              execute
      the assumption undertaking to retire the Beetaloo
  Payables;

            


    

     

    
      	
              (h)    
       

            	
              terminate
      the Buckskin JOA;

            


    

     

    
      	
              (i)    
       

            	
              assume
      all obligations arising after Closing with respect to the Beetaloo
      Inventory, including but not limited to storing and insuring the Beetaloo
      Inventory for the periods after the Closing Date;
  and

            


    

     

    
      	
              (j)    
       

            	
              enter
      into the Escrow Agreement, and comply with the terms and conditions
      therein,

            


    

     

    and the
Falcon Parties agree to such actions on and subject to the terms and conditions
of this Agreement (collectively, the “Falcon Consideration” and
together with the PetroHunter Consideration, the “Transaction”).

     

    ARTICLE
3

    REPRESENTATIONS
AND WARRANTIES

     

    
      	
              3.1  

            	
              Representations
      and Warranties by PetroHunter
Parties

            


    

     

    The
PetroHunter Parties hereby jointly and severally guarantee, represent and
warrant to the Falcon Parties that as at the date hereof:

     

    
      	
              (a)    
       

            	
              other
      than the Permitted PetroHunter Encumbrances, Sweetpea has good and valid
      title to the Assets;

            


    

     

    
      	
              (b)    
       

            	
              other
      than the Permitted PetroHunter Encumbrances, the Assets are free and clear
      of all PetroHunter Encumbrances, and the PetroHunter Parties have not
      agreed to encumber or alienate any interest in the
  Assets;

            


    

     

    
      	
              (c)      
      

            	
              other
      than the Permitted PetroHunter Encumbrances, Sweetpea has good and valid
      title to the Beetaloo Inventory;

            


    

     

    
      	
              (d)    
       

            	
              all
      storage, insurance and other charges in respect of the Beetaloo Inventory
      have been fully paid, the Beetaloo Inventory is free and clear of all
      PetroHunter Encumbrances, and the PetroHunter Parties have not agreed to
      encumber or alienate any interest in the Beetaloo
    Inventory;

            


    

     

    
      
         

      

      
         

        
          

        

      

      
         

      

      -10-

       

       

    

    
      	
              (e)    
       

            	
              to
      the best knowledge of the PetroHunter Parties, the Operator Bonds will not
      be cancelled or terminated or any of the coverage thereunder allowed to
      lapse before the Closing;

            


    

     

    
      	
              (f)    
       

            	
              the
      PetroHunter Parties either have good and valid title to the Operator Bonds
      or have obtained the consent of the titleholder to assign the Operator
      Bonds to the Falcon Parties;

            


    

     

    
      	
              (g)    
       

            	
              none
      of the Operator Bonds are encumbered or alienated in any respect, nor have
      the PetroHunter Parties agreed to do so, and the Operator Bonds are free
      and clear of all PetroHunter
Encumbrances;

            


    

     

    
      	
              (h)    
       

            	
              other
      than: (i) the Beetaloo Payables; (ii) except as may be set forth in the
      most recent joint interest billing sent to Purchaser under the Beetaloo
      JOA; (iii) the Transaction Fees; and (iv) and the fees related to the
      Permits, none of the PetroHunter Parties has any other accounts payable,
      indebtedness or liability to any other person or entity in connection with
      ownership of, or operations or activities conducted on or otherwise
      relating to, the Beetaloo Basin
Project;

            


    

     

    
      	
              (i)    
       

            	
              the
      amount of the Remaining Completion Capital is $855,205, and such amount is
      more than sufficient to pay 100% of the cost of reclamation and plugging
      and abandonment requirements in connection with the Initial Working
      Interest;

            


    

     

    
      	
              (j)    
       

            	
              there
      are no unpaid amounts, whether billed or unbilled, due from PetroHunter
      Operating or Falcon USA for materials, services, fees or other reasons in
      connection with the Initial Working Interest or the Initial Completion
      Program;

            


    

     

    
      	
              (k)    
       

            	
              the
      Beetaloo Payables represents a true, complete and correct list of all
      amounts owing by any PetroHunter Parties to any persons in connection with
      the Beetaloo Basin Project, and there is no contingency, agreement or
      other legal basis upon which that total amount can increase between the
      date hereof and the Closing Date, absent the provision of new services or
      materials after the date hereof or any applicable interest
      thereon;

            


    

     

    
      	
              (l)    
       

            	
              the
      PetroHunter Parties directly or indirectly have control or direction over
      26,100,000 Common Shares, of which 14,500,000 Common Shares are currently
      pledged as security for the Loan in accordance with the terms of the Loan
      Agreement;

            


    

     

    
      	
              (m)    
       

            	
              the
      PetroHunter Parties will continue to bear (i) their income tax liabilities
      and their GST liability associated with the Initial Transaction, and (ii)
      any obligations with respect to approval by Governmental Authorities,
      consent of the Northern Land Council, and registration on the Petroleum
      Register of the Bayless Override, the Russenberger Override (including any
      predecessor overrides), and the Initial
  Transaction;

            


    

     

    
      	
              (n)    
       

            	
              each
      of the PetroHunter Parties:

            


    

     

    
      
         

      

      
         

        
          

        

      

      
         

      

      -11-

       

       

    

    
      	
              (i)    
       

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

            


    

    


    
      	
              (ii)   
       

            	
              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; and

            


    

    


    
      	
              (iii)  
       

            	
              the
      Transaction Agreements and the obligations of the PetroHunter Parties
      under the Transaction Agreements and the documents and transaction
      contemplated thereby have been duly and validly authorized by all
      requisite corporate proceedings;
and

            


    

    


    
      	
              (o)    
       

            	
              except
      as modified by the guarantees, representations and warranties made in
      Sections 3.1(a) to (m), inclusive, the representations and warranties of
      PetroHunter and Sweetpea contained in Section 3.1 of the Beetaloo PSA are
      true and correct as of the date hereof, and, notwithstanding any express,
      implied or other type of limitation contained in or suggested by the
      foregoing, the following guarantees, representations and warranties of
      PetroHunter and Sweetpea contained in Section 3.1 of the Beetaloo PSA are
      true and correct as of the date hereof:


            


    

     

    
      	
              (i)    
       

            	
              except
      as set forth on Schedule “I” to the Beetaloo PSA, each Seller has
      performed all material obligations which are required to be performed by
      it under the Material Agreements, including without limitation the
      Northern Land Council Exploration 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, including without limitation the Northern
      Land Council Exploration Agreements, and no event has occurred which, with
      the passage of time or the giving of notice or both, would result in a
      default, breach or event of noncompliance by a Seller under any Material
      Agreement, including without limitation the Northern Land Council
      Exploration Agreements;

            


    

    


    
      	
              (ii)   
       

            	
              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 Sellers are a party;

            


    

    


    
      	
              (iii)  
       

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

            


    

    


    
      	
              (iv)   
       

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

            


    

    


    
      
         

      

      
         

        
          

        

      

      
         

      

      -12-

       

       

    

    
      	
              3.2  

            	
              Representations
      and Warranties of Falcon Parties

            


    

     

    The
Falcon Parties hereby jointly and severally guarantee, represent and warrant to
the PetroHunter Parties that as at the date hereof:

     

    
      	
              (a)    
       

            	
              none
      of the Falcon Parties has encumbered or alienated its interest in the
      Initial Working Interest in any respect or agreed to do so, and the
      Initial Working Interest is free and clear of all Falcon
      Encumbrances;

            


    

     

    
      	
              (b)    
       

            	
              Falcon
      has, or reasonably believes that it has access to, immediately available
      funds necessary to pay the Beetaloo
Payables;

            


    

     

    
      	
              (c)    
       

            	
              each
      of the Falcon Parties:

            


    

     

    
      	
              (i)    
       

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

            


    

     

    
      	
              (ii)     

            	
              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; and

            


    

     

    
      	
              (iii)  
       

            	
              the
      Transaction Agreements and the obligations of the Falcon Parties under the
      Transaction Agreements and the documents and transaction contemplated
      thereby have been duly and validly authorized by all requisite corporate
      proceedings; and

            


    

     

    
      	
              (d)    
       

            	
              except
      as modified by the guarantees, representations and warranties made in
      Section 3.2(a) above, the representations and warranties of Falcon and
      Purchaser contained in Section 3.2 of the Beetaloo PSA are true and
      correct as of the date hereof.

            


    

     

    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

            


    

     

    
      
         

      

      
         

        
          

        

      

      
         

      

      -13-

       

       

       

    

    
      	
              (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 written 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  previously set forth in a written
    notice.

            


    

     

    
      	
              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 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 PetroHunter Parties to Falcon
      Parties, or by Falcon Parties to PetroHunter Parties, 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

    COVENANTS

     

    
      	
              5.1  

            	
              Mutual
      Covenants

            


    

     

    The
PetroHunter Parties and the Falcon Parties hereby covenant and agree that,
without the prior written consent of the other Party (such consent not to be
unreasonably withheld or delayed) or except as expressly contemplated in this
Agreement, from the date hereof until the earlier of the Closing Date or the day
upon which this Agreement is terminated, each shall:

     

    
      	
              (a)    
       

            	
              take
      all such actions as are necessary to terminate the Buckskin JOA;
      and

            


    

     

    
      	
              (b)    
       

            	
              take
      all such actions as are necessary to enter into the Amended and Restated
      Beetaloo JOA.

            


    

     

    
      
         

      

      
         

        
          

        

      

      
         

      

      -14-

       

       

    

    
      	
              5.2  

            	
              Covenants
      of PetroHunter Parties

            


    

     

    The
PetroHunter Parties hereby covenant and agree that, except as expressly
contemplated by this Agreement and the other elements of the Transaction, until
the earlier of five days prior to the Closing Date and the day upon which this
Agreement is terminated (unless otherwise indicated in the covenant), the
PetroHunter Parties, in a timely and expeditious manner, shall:

     

    
      	
              (a)    
       

            	
              allow
      the Falcon Parties, any of their respective representatives or agents
      access during normal business hours to the premises and the properties of
      PetroHunter Parties and their respective subsidiaries and to all of the
      files, books, records and offices of PetroHunter Parties and their
      subsidiaries related to the Beetaloo Basin
  Project;

            


    

     

    
      	
              (b)    
       

            	
              resign
      as operator under the Beetaloo JOA with immediate effect, despite any
      longer notice period that may otherwise be provided in the Beetaloo
      JOA;

            


    

     

    
      	
              (c)    
       

            	
              use
      their best efforts (and cause each of its Subsidiaries to use reasonable
      commercial efforts) to cause its current insurance policies, as such item
      relates to the Beetaloo Basin Project, and the Operator Bonds not to be
      cancelled or terminated or any of the coverage thereunder to
      lapse;

            


    

     

    
      	
              (d)    
       

            	
              each
      of the PetroHunter Parties: (i) will not make an assignment in favour of
      its creditors or a proposal in bankruptcy to its creditors or any class
      thereof; (ii) have not initiated proceedings with respect to a compromise
      or arrangement with its creditors or for its winding up, liquidation or
      dissolution; and (iii) will immediately deliver written notice to Falcon
      if the PetroHunter Parties’ creditors delivers a notice to the PetroHunter
      Parties demanding payment in 21 days or otherwise, which notice shall
      contain reasonable detail sufficient to inform Falcon of the nature of any
      such notice;

            


    

     

    
      	
              (e)    
       

            	
              allow
      Falcon the full, exclusive and unfettered authority to: (i) negotiate with
      any Governmental Authority related to the Beetaloo Basin Project and agree
      to any changes in the timing, extent and nature of the work required to
      keep the Permits in effect; and (ii) bind both Falcon and PetroHunter to
      any such changes related to the Beetaloo Basin
  Project;

            


    

     

    
      	
              (f)    
       

            	
              accept,
      support and vote in favour of such work plans and budgets as Falcon may
      propose under the Beetaloo Basin JOA for the remainder of 2009, but only
      to the extent such work programs and budgets are intended by Falcon in
      good faith to satisfy the minimum work requirements under the Permits in a
      manner that Falcon believes to be commercially and technically reasonable,
      and with the understanding that Falcon’s present intention is to limit the
      capital expenditures in the work plan and budget for 2010 to the minimum
      believed necessary to keep the Permits in full force and
      effect;

            


    

     

    
      	
              (g)    
       

            	
              not
      with respect to the Beetaloo Basin Project: (i) undertake any material
      operations; (ii) incur any material obligations; or (iii) enter into any
      transaction or 

            


       

      
        
           

        

        
           

          
            

          

        

        
           

        

        -15-

         

         

      

      	 	
              refrain
      from doing any action which, if effected before the date of this
      Agreement, would constitute a breach of any representation, warranty,
      covenant or other obligation of one or more of the PetroHunter Parties
      contained herein, in connection with the Beetaloo Basin Project, without
      the prior written consent of
Falcon;

            


    

     

    
      	
              (h)    
       

            	
              pay
      all interest owing under the Loan until the Closing Date;
    and

            


    

     

    
      	
              (i)    
       

            	
              immediately
      deliver written notice to Falcon if litigation is commenced against any
      PetroHunter Parties, which notice shall contain reasonable detail
      sufficient to inform Falcon of the nature of any such litigation, so long
      as Falcon maintains the confidentiality of any material non-public
      information in accordance with Section 10.15 of this
      Agreement.

            


    

     

    
      	
              5.3  

            	
              Covenants
      of Falcon Parties

            


    

     

    As of the
Closing Date, the Falcon Parties hereby covenant and agree to assume their
proportionate share of all costs, duties, liabilities and obligations with
respect to their ownership interests in the Beetaloo Basin Project including,
but not limited to, those burdens described in the Permitted PetroHunter
Encumbrances.

     

    
      	
              5.4  

            	
              Right
      of First Offer

            


    

     

    
      	
              (a)    
       

            	
              Following
      the Closing Date and subject to Section  5.3(e), if any of the
      PetroHunter Parties desires or is obliged by law or otherwise to sell,
      assign,  transfer or otherwise dispose of the Offered Interest
      to a third party, the Falcon Parties shall have the prior right to
      purchase the Offered Interest (the “First Offer”) and the
      PetroHunter Parties shall deliver to the Falcon Parties a copy of the
      First Offer addressed to the Falcon Parties together with a statement
      executed by the PetroHunter Parties (the “First Offer Notice”)
      notifying the Falcon Parties that the PetroHunter Parties are exercising
      their rights and obligations under this Section 5.3, with full particulars
      of any proposed transfer of the Offered
  Interest.

            


    

     

    
      	
              (b)    
       

            	
              The
      First Offer Notice shall:

            


    

     

    
      	
              (i)    
       

            	
              set
      out the price for which the sale of the Offered Interest is to be
      transacted;

            


    

     

    
      	
              (ii)   
       

            	
              specify
      the date on which the sale is to close and the other closing
      arrangements;

            


    

     

    
      	
              (iii)  
       

            	
              specify
      the date by which a written response to the First Offer must be received
      by The PetroHunter Parties (which, in any event, shall be not less than
      fifteen (15) days from the date of the First Offer Notice);
      and

            


    

     

    
      	
              (iv)   
       

            	
              provide
      for the method and timing of
payment.

            


    

     

    
      
         

      

      
         

        
          

        

      

      
         

      

      -16-

       

       

    

    
      	
              (c)    
       

            	
              The
      Falcon Parties shall be entitled to accept and purchase all but not less
      than all the Offered Interest upon the terms and conditions specified in
      the First Offer Notice by delivering a written notice to purchase (the
      “Purchase Notice”)
      to the PetroHunter Parties within the time period specified in the First
      Offer Notice.

            


    

     

    
      	
              (d)    
       

            	
              If
      the Falcon Parties offer to purchase all, but not less than all, of the
      Offered Interest and the PetroHunter Parties have received the Purchase
      Notice within the time period specified in the First Offer Notice, then
      closing shall take place at the offices of Falcon on the date which is
      fifteen (15) days following receipt of all necessary documents required to
      be obtained in order to effect a valid transfer of the Offered Interest
      (and the parties hereto covenant and agree to use their best efforts to
      obtain such documents) and such closing shall include all documentation
      customary for transactions of this
nature.

            


    

     

    
      	
              (e)    
       

            	
              If
      the Falcon Parties do not offer to purchase all, but not less than all, of
      the Offered Interest or the PetroHunter Parties do not receive the
      Purchase Notice within the time period specified in the First Offer
      Notice, then Section 5.3 shall become null and void in respect of the
      particular transaction described in the First Offer
  Notice.

            


    

     

    
      	
              (f)    
       

            	
              For
      greater certainty, until such time as the PetroHunter Parties sell,
      assign, transfer or otherwise dispose of the 100% of the Offered Interest,
      each offer to sell, assign, transfer or otherwise dispose of the Offered
      Interest shall be subject to Section
5.3.

            


    

     

    ARTICLE
6

    CLOSING

     

    
      	
              6.1  

            	
              Closing
      or Termination

            


    

     

    
      	
              (a)    
       

            	
              This
      Agreement may be terminated at any time prior to the Closing
      Date:

            


    

     

    
      	
              (i)    
       

            	
              at
      any time with the written consent of the Parties;
  and

            


    

     

    
      	
              (ii)   
       

            	
              by
      Falcon if Falcon is not satisfied in its sole
  discretion:

            


    

     

    
      	
              (A)   
       

            	
              with
      the performance by PetroHunter of the PetroHunter Covenants contained in
      ARTICLE 5; or

            


    

     

    
      	
              (B)   
       

            	
              Falcon
      otherwise concludes that PetroHunter will not be able to fulfill the
      condition contained in Section 6.2(a) on or before the Closing
      Date.

            


    

     

    
      	
              (b)    
       

            	
              This
      Agreement shall automatically terminate if the closing falls on or after
      June 10, 2009 or such other date as may be agreed to in writing by the
      Parties.

            


    

     

    
      
         

      

      
         

        
          

        

      

      
         

      

      -17-

       

       

    

    
      	
              6.2  

            	
              Conditions
      for the Benefit of the Falcon
Parties

            


    

     

    The
obligation of the Falcon Parties to complete the Transaction is subject to the
satisfaction by the PetroHunter Parties or waiver by the Falcon Parties on or
before the Closing Date, for the exclusive benefit of the Falcon Parties, of the
following conditions:

     

    
      	
              (a)    
       

            	
              all
      representations and warranties of PetroHunter Parties contained in Section
      3.1 must be true in all material respects at and as of the Closing Date;
      

            


    

     

    
      	
              (b)    
       

            	
              all
      of the covenants and conditions in favour of the Falcon Parties to be
      complied with, performed or waived by the PetroHunter Parties on or before
      the Closing Date shall have been complied with, performed or
      waived;

            


    

     

    
      	
              (c)    
       

            	
              the
      timing, extent and nature of the work required under the Permits must have
      been changed by the Government in a way satisfactory to Purchaser, or
      Purchaser must believe, in its sole discretion, that satisfactory changes
      will be made; and

            


    

     

    
      	
              (d)    
       

            	
              the
      50% interest in the Beetaloo Basin Project previously purchased by the
      Purchaser must have been transferred of record in the appropriate
      government offices, or Purchaser must believe, in its sole discretion,
      that such transfer will occur in due
course.

            


    

     

    
      	
              6.3  

            	
              Conditions
      for Benefit of PetroHunter Parties

            


    

     

    The
obligation of PetroHunter Parties to complete the Transaction is subject to the
satisfaction by the Falcon Parties or waiver by the PetroHunter Parties on or
before the Closing Date, for the exclusive benefit of PetroHunter Parties, of
each of the following conditions:

     

    
      	
              (a)    
       

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

            


    

     

    
      	
              (b)    
       

            	
              all
      of the covenants and conditions in favour of the PetroHunter Parties to be
      complied with, performed or waived by the Falcon Parties on or before the
      Closing Date shall have been complied with, performed or
      waived.

            


    

     

    
      	
              6.4  

            	
              PetroHunter
      Parties’ Deliveries on Closing

            


    

     

    On the
Closing Date, PetroHunter Parties 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 Aird & Berlis LLP,
      relating to the status of each PetroHunter Parties, the Permits, and other
      matters as required by the TSXV;

            


    

     

    
      	
              (c)    
       

            	
              a
      permit transfer instrument conveying an undivided 25% interest in the
      Permits, substantially in the form attached as SCHEDULE
    "A";

            


    

     

    
      
         

      

      
         

        
          

        

      

      
         

      

      -18-

       

       

    

    
      	
              (d)    
       

            	
              an
      assignment and bill of sale substantially in the form attached as SCHEDULE
      "B", assigning and selling an undivided 25% interest in the
      Assets;

            


    

     

    
      	
              (e)    
       

            	
              a
      deed of assignment and assumption substantially in the form attached as
      SCHEDULE "D", assigning and selling an undivided 25% interest in the
      Assets and by which Purchaser assumes its proportionate share of the
      obligations owed to Northern Land
Council;

            


    

     

    
      	
              (f)    
       

            	
              a
      countersigned Resignation of Beetaloo Operator and Appointment of
      Successor executed by Sweetpea, in a form satisfactory to the Purchaser
      acting reasonably, whereby Sweetpea
will:

            


    

     

    
      	
              (i)    
       

            	
              resign
      as operator under the Beetaloo JOA with immediate effect;
    and

            


    

     

    
      	
              (ii)   
       

            	
              appoint
      Falcon Australia as the operator of the Beetaloo Basin Project with
      immediate effect;

            


    

     

    
      	
              (g)    
       

            	
              an
      assignment and bill of sale substantially in the form attached as SCHEDULE
      "C" hereto, assigning and selling a 100% interest in the Beetaloo
      Inventory on an “as is, where is”
basis;

            


    

     

    
      	
              (h)    
       

            	
              a
      letter executed by Sweetpea, in a form satisfactory to the Purchaser
      acting reasonably, instructing Wells Fargo Bank, National Association, to
      transfer and, if necessary, reissue all standby letters of credit forming
      a part of the Operator Bonds, so that such letters of credit support and
      secure the obligations of Purchaser, rather than Sweetpea, to the
      Government Authorities;

            


    

     

    
      	
              (i)    
       

            	
              assignments,
      signature cards, and all other instruments necessary, in a form
      satisfactory to the Purchaser acting reasonably, to transfer to
      Purchaser’s designee the accounts, cash and certificates of deposit that
      secure Wells Fargo Bank, National Association, under the standby letters
      of credit forming a part of the Operator Bonds, in each case fully
      executed by the owner of the concerned account, cash or certificate of
      deposit, so that such accounts, cash and certificates of deposit are then
      owned by Purchaser, rather than the current
  owners;

            


    

     

    
      	
              (j)    
       

            	
              the
      escrow agreement substantially in the form attached as SCHEDULE "G"
      hereto;

            


    

     

    
      	
              (k)    
       

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

            


    

     

    
      	
              (l)    
       

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

            


    

     

    
      	
              (m)    
       

            	
              the
      approval, acceptance, authorization, exemption, waiver or consent of each
      of the third parties from whom consents are
  required;

            


    

     

    
      	
              (n)    
       

            	
              a
      certificate of each of PetroHunter Parties’ signed by any two of their
      respective officers certifying
that:

            


    

     

    
      
         

      

      
         

        
          

        

      

      
         

      

      -19-

       

       

    

    
      	
              (i)    
       

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

            


    

     

    
      	
              (ii)   
       

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

            


    

     

    
      	
              (iii)  
       

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

            


    

     

    
      	
              (iv)   
       

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

            


    

     

    
      	
              (o)    
       

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

            


    

     

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

     

    
      	
              6.5  

            	
              Falcon
      Parties’ Deliveries on Closing

            


    

     

    On the
Closing Date, the applicable Falcon Parties 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
      permit transfer instrument conveying an undivided 25% interest in the
      Permits, substantially in the form attached as SCHEDULE
    "A";

            


    

     

    
      	
              (c)    
       

            	
              an
      assignment and bill of sale substantially in the form attached as SCHEDULE
      "B", assigning and selling an undivided 25% interest in the
      Assets;

            


    

     

    
      	
              (d)    
       

            	
              a
      countersigned Resignation of Beetaloo Operator and Appointment of
      Successor executed by Purchaser, in a form satisfactory to the Purchaser
      acting reasonably, whereby Sweetpea
will:

            


    

     

    
      	
              (i)    
       

            	
              resign
      as operator under the Beetaloo JOA with immediate effect;
    and

            


    

     

    
      	
              (ii)   
       

            	
              appoint
      Falcon Australia as the operator of the Beetaloo Basin Project with
      immediate effect;

            


    

     

    
      	
              (e)    
       

            	
              an
      assignment and bill of sale substantially in the form attached as SCHEDULE
      "C" hereto, assigning and selling a 100% interest in the Beetaloo
      Inventory on an “as is, where is”
basis;

            


    

     

    
      
         

      

      
         

        
          

        

      

      
         

      

      -20-

       

       

    

    
      	
              (f)    
       

            	
              an
      assignment and bill of sale substantially in the form attached as SCHEDULE
      "E" hereto assigning and selling the Initial Working Interest to
      PetroHunter Operating;

            


    

     

    
      	
              (g)    
       

            	
              the
      escrow agreement substantially in the form attached as SCHEDULE "G"
      hereto;

            


    

     

    
      	
              (h)    
       

            	
              a
      release of the Mortgage;

            


    

     

    
      	
              (i)    
       

            	
              an
      assumption undertaking substantially in the form as attached as SCHEDULE
      "H" hereto undertaking to retire the Beetaloo
  Payables;

            


    

     

    
      	
              (j)    
       

            	
              the
      approval, acceptance, authorization, exemption, waiver or consent of each
      of the TSXV;

            


    

     

    
      	
              (k)    
       

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

            


    

     

    
      	
              (i)    
       

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

            


    

     

    
      	
              (ii)   
       

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

            


    

     

    
      	
              (iii)  
       

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

            


    

     

    
      	
              (iv)   
       

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

            


    

     

    
      	
              (l)    
       

            	
              conditional
      approval of the TSXV for the Transaction if required;
  and

            


    

     

    
      	
              (m)     

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

            


    

     

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

     

    
      
         

      

      
         

        
          

        

      

      
         

      

      -21-

       

    

    ARTICLE
7

    RESOLUTION
OF DISPUTES

     

    
      	
              7.1  

            	
              Arbitration

            


    

     

    Except
with respect to matters where irreparable damage would occur and that the
Parties are entitled to seek an injunction or specific performance of the terms
hereof under applicable law, 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 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
      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 

              


         

         

        
          
             

          

          
             

            
              

            

          

          
             

          

        

        -22-

         

         

         

        	 	 	
                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.
      

            


    

     

    ARTICLE
8

    INDEMNITY

     

    
      	
              8.1  

            	
              Indemnity
      by the PetroHunter Parties

            


    

     

    The
PetroHunter Parties hereby jointly and severally agree to indemnify, defend,
hold and save the Falcon Parties and their respective officers, directors,
partners, shareholders, employees, agents, representatives, successors and
assigns harmless from and against any claims, demands, actions, causes of
action, damage, loss, deficiency, cost, liability and expense which may be made
or brought against the Falcon Parties or which the Falcon Parties may suffer or
incur as a result of, in respect of or arising out of:

     

    
      	
              (a)    
       

            	
              any
      obligation, commitment or liability or claim (whether absolute, accrued or
      contingent) relating to the Assets, other than the Beetaloo Payables,
      arising prior to the Closing Date;

            


    

     

    
      	
              (b)    
       

            	
              any
      obligation, commitment or liability or claim (whether absolute, accrued or
      contingent) relating to the Beetaloo Basin Inventory, other than the
      Beetaloo Payables, arising prior to the Closing
  Date;

            


    

     

    
      	
              (c)    
       

            	
              any
      obligation, commitment or liability or claim (whether absolute, accrued or
      contingent) relating to the Initial Working Interest, including, without
      limitation, all plugging, abandonment and reclamation costs associated
      with the New Wells arising at any
time;

            


    

     

    
      
         

      

      
         

        
          

        

      

      
         

      

      -23-

       

       

       

    

    
      	
              (d)    
       

            	
              any
      loss, damage or liability or claim (whether absolute, accrued or
      contingent) relating to any failure to pay duties or stamp duties in
      relation to the Transaction or any Transaction Agreement and any failure
      to lodge any document or statement required by a Government Authority
      (including a revenue office of an Australian State or Territory) in
      connection with the Transaction or any Transaction
    Agreement;

            


    

     

    
      	
              (e)    
       

            	
              any
      non-performance or non-fulfillment of any covenant or agreement on the
      part of the PetroHunter Parties contained in this Agreement or in any
      document given in order to carry out the transactions contemplated hereby;
      and

            


    

     

    
      	
              (f)    
       

            	
              all
      costs and expenses including, without limitation, legal fees on a
      solicitor and client basis, incidental to, arising from or in respect of
      the foregoing.

            


    

     

    
      	
              8.2  

            	
              Provisions
      Relating to Indemnity Claims

            


    

     

    The
following provisions will apply to any claim by any Falcon Party or its
respective officers, directors, partners, shareholders, employees, agents,
representatives, successors and assigns (the “Claiming Party”) for
indemnification by one or more of the PetroHunter Parties, as the case may be
(the “Responding
Party”), pursuant to Section 8.1 (an “Indemnity
Claim”):

    


    
      	
              (a)    
       

            	
              promptly
      after becoming aware of any matter that may give rise to an Indemnity
      Claim, the Claiming Party will provide to the Responding Party written
      notice of the Indemnity Claim specifying (to the extent that information
      is available) the factual basis for the Indemnity Claim and the amount of
      the Indemnity Claim or, if an amount is not then determinable, an estimate
      of the amount of the Indemnity Claim, if an estimate is feasible in the
      circumstances;

            


    

     

    
      	
              (b)    
       

            	
              if
      an Indemnity Claim relates to an alleged liability to any other person (a
      “Third Party
      Liability”), including without limitation any Governmental
      Authority or regulatory body, which is of a nature such that the Claiming
      Party is required by applicable law to make a payment to a third party
      before the relevant procedure for challenging the existence or quantum of
      the alleged liability can be implemented or completed, then the Claiming
      Party may, notwithstanding the provisions of subsection (c) of this
      section, make such payment and forthwith demand reimbursement for such
      payment from the Responding Party in accordance with this Agreement;
      provided that, if the alleged Third Party Liability as finally determined
      on completion of settlement negotiations or related legal proceedings is
      less than the amount which is paid by the Responding Party in respect of
      the related Indemnity Claim, then the Claiming Party shall forthwith
      following the final determination pay to the Responding Party the amount
      by which the amount of the Third Party Liability as finally determined is
      less than the amount which is so paid by the Responding
    Party;

            


    

     

    
      	
              (c)    
       

            	
              the
      Claiming Party shall not negotiate, settle, compromise or pay (except in
      the case of payment of a judgment) any Third Party Liability as to which
      it proposes 

            


       

       

      
        
           

        

        
           

          
            

          

        

        
           

        

      

      -24-

       

       

      	 	
              to
      assert an Indemnity Claim, except with the prior written consent of the
      Responding Party (which consent shall not be unreasonably withheld or
      delayed);

            


    

     

    
      	
              (d)    
       

            	
              with
      respect to any Third Party Liability, provided the Responding Party first
      admits the Claiming Party’s right to indemnification for the amount of
      such Third Party Liability which may at any time be determined or settled,
      then, in any legal, administrative or other proceedings in connection with
      the matters forming the basis of the Third Party Liability, the following
      procedures will apply:

            


    

     

    
      	
              (i)    
       

            	
              except
      as contemplated by paragraph (iii) of this subsection, the Responding
      Party will have the right to assume carriage of the compromise or
      settlement of the Third Party Liability and the conduct of any related
      legal, administrative or other proceedings, but the Claiming Party shall
      have the right and shall be given the opportunity to participate in the
      defence of the Third Party Liability, to consult with the Responding Party
      in the settlement of the Third Party Liability and the conduct of related
      legal, administrative and other proceedings (including consultation with
      counsel) and to disagree on reasonable grounds with the selection and
      retention of counsel, in which case counsel satisfactory to the Responding
      Party and the Claiming Party shall be retained by the Responding
      Party;

            


    

     

    
      	
              (ii)   
       

            	
              the
      Responding Party will co-operate with the Claiming Party in relation to
      the Third Party Liability, will keep it fully advised with respect
      thereto, will provide it with copies of all relevant documentation as it
      becomes available, will provide it with access to all records and files
      relating to the defence of the Third Party Liability and will meet with
      representatives of the Claiming Party at all reasonable times to discuss
      the Third Party Liability; and

            


    

     

    
      	
              (iii)  
       

            	
              notwithstanding
      paragraph (i) of this subsection, the Responding Party will not settle the
      Third Party Liability or conduct any legal, administrative or other
      proceedings in any manner which could, in the reasonable opinion of the
      Claiming Party, have a material adverse affect on the Condition of the
      Business or the Claiming Party, except with the prior written consent of
      the Claiming Party;

            


    

     

    
      	
              (e)    
       

            	
              If,
      with respect to any Third Party Liability, the Responding Party does not
      admit the Claiming Party’s right to indemnification or declines to assume
      carriage of the settlement or of any legal, administrative or other
      proceedings relating to the Third Party Liability, then the following
      provisions will apply:

            


    

     

    
      	
              (i)    
       

            	
              the
      Claiming Party, at its discretion, may assume carriage of the settlement
      or of any legal, administrative or other proceedings relating to the Third
      Party Liability and may defend or settle the Third Party Liability on such
      terms as the Claiming Party, acting in good faith, considers advisable;
      and

            


    

     

    
      
         

      

      
         

        
          

        

      

      
         

      

      -25-

       

       

    

    
      	
              (ii)   
       

            	
              any
      cost, loss, damage or expense incurred or suffered by the Claiming Party
      in the settlement or defence of such Third Party Liability or the conduct
      of any legal, administrative or other proceedings shall be added to the
      amount of the Indemnity Claim;

            


    

     

    
      	
              (f)    
       

            	
              The
      amount of any damage, loss, cost, liability or expense (including
      reasonable professional fees and disbursements) in connection with any
      claim for which indemnification is provided hereunder shall be net of any
      amounts actually received by the Claiming Party under insurance policies
      with third parties (i.e.: actual insurance policies and not self insurance
      or retention programs) with respect to such claim and shall be net of any
      tax benefit received by the Claiming Party in respect of such claim;
      and

            


    

     

    
      	
              (g)    
       

            	
              Any
      liability for indemnification hereunder shall be determined without
      duplication of recovery by reason of the state of facts giving rise to
      such liability constituting a breach of more than one representation,
      warranty, covenant or agreement.

            


    

     

    ARTICLE
9

    GST

     

    
      	
              9.1  

            	
              Interpretation

            


    

     

    For the
purposes of ARTICLE 9, terms that are not otherwise defined in this Agreement
shall have the meaning ascribed thereto in the GST Law.

     

    
      	
              9.2  

            	
              Going
      concern

            


    

     

    
      	
              (a)    
       

            	
              The
      parties covenant and agree that the supplies described in Section 2.1 are
      the supply of a going concern by the Seller to the Purchaser that is
      GST-free under the GST Law; and

            


    

     

    
      	
              (b)    
       

            	
              The
      Seller warrants and represents that it carries on, and will continue to
      carry on, the enterprise to which the supply in Section 9.2(a) relates up
      to and including the Closing Date.

            


    

     

    
      	
              (c)    
       

            	
              Section
      9.3 shall not apply to a supply described in Section 2.1 unless the
      Commissioner of Taxation issues a private ruling or otherwise determines
      in writing that the supply is a taxable supply. If Section 9.3 does apply
      to a supply described in Section 2.1, the recipient can withhold payment
      of the GST Amount until three business days after the later
      of:

            


    

     

    
      	
              (i)    
       

            	
              the
      day it receives a copy of a private ruling or written determination issued
      by the Commissioner of Taxation;
and

            


    

     

    
      	
              (ii)    
       

            	
              the
      day the supplier (or the representative member for a GST group of which
      the supplier is a member) is required to lodge its GST return for the tax
      period to which the supply is
attributable.

            


    

     

    
      
         

      

      
         

        
          

        

      

      
         

      

      -26-

       

       

    

    
      	
              9.3  

            	
              GST
      gross-up

            


    

     

    If GST is
payable by a supplier (or by the representative member for a GST group of which
the supplier is a member) on any supply made under this Agreement, the recipient
will pay to the supplier an amount (the “GST Amount”) equal to the GST
payable on the supply.  Subject to Section 9.2, the GST Amount is
payable by the recipient in addition to and at the same time that the
consideration for the supply is to be provided under this
Agreement.

     

    
      	
              9.4  

            	
              Tax
      invoice

            


    

     

    The
supplier must deliver a tax invoice to the recipient before the supplier is
entitled to payment of the GST Amount.  The recipient can withhold
payment of the GST Amount until the supplier provides a tax
invoice.

     

    
      	
              9.5  

            	
              Adjustment
      event

            


    

     

    If an
adjustment event arises in respect of a taxable supply made under this
Agreement, the GST Amount will be recalculated to reflect the adjustment event
and a payment will be made by the recipient to the supplier or by the supplier
to the recipient, as the case may be, to reflect the recalculation.

     

    
      	
              9.6  

            	
              Reimbursements

            


    

     

    If a
Party is required under this Agreement to reimburse or pay to another Party an
amount calculated by reference to a cost, expense, outgoing, or an amount paid
or incurred by that Party, the amount of the reimbursement or payment will be
reduced by the amount of any input tax credits or reduced input tax credits to
which that Party (or the representative member for a GST group of which it is a
member) is entitled in respect of any acquisition relating to that cost,
expense, outgoing or other amount.

     

    
      	
              9.7  

            	
              Survival
      of Article 9

            


    

     

    The
provisions of this ARTICLE 9 shall not merge on Closing.

     

    ARTICLE
10

    GENERAL

     

    
      	
              10.1  

            	
              Taxes
      and Fees

            


    

     

    The
PetroHunter Parties and the Falcon Parties agree that:

     

    
      	
              (a)    
       

            	
              the
      PetroHunter Parties shall be responsible for any duties or stamp duties
      applicable to the Transaction or in relation to any Transaction
      Agreements; and

            


    

     

    
      	
              (b)    
       

            	
              each
      Party shall pay its own legal and other professional fees in respect of
      the Transaction.

            


    

     

    
      
         

      

      
         

        
          

        

      

      
         

      

      -27-

       

       

       

    

    
      	
              10.2  

            	
              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.

     

    
      	
              10.3  

            	
              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.

     

    
      	
              10.4  

            	
              Tender

            


    

     

    Any
tender of documents or money or delivery of Notice pursuant to this Agreement
may be given by or made upon a Party’s legal counsel on behalf of such
Party.

     

    
      	
              10.5  

            	
              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 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.

     

    
      	
              10.6  

            	
              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.

     

    
      	
              10.7  

            	
              Amendment
      of Agreement

            


    

     

    Subject
to Section 10.9, 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.

     

    
      	
              10.8  

            	
              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.

     

    
      
         

      

      
         

        
          

        

      

      
         

      

      -28-

       

       

       

    

    
      	
              10.9  

            	
              Waiver

            


    

     

    Subject
to Section 10.7, 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 10.7, 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).

     

    
      	
              10.10  

            	
              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 PetroHunter Energy 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.

     

    
      	
              10.11  

            	
              Entire
      Agreement

            


    

     

    Except
for the defined terms identified in Section 1.1, 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 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.

     

    
      	
              10.12  

            	
              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.

     

    
      	
              10.13  

            	
              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.

     

    
      
         

      

      
         

        
          

        

      

      
         

      

      -29-

       

       

    

    
      	
              10.14  

            	
              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
      PetroHunter Parties:

            


    

     

    c/o
PetroHunter Energy Corporation

    1600
Stout Street, Suite 2000

    Denver,
Colorado 80202

    


    Attention:
Martin Oring, Chairman

    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

    


    
      	
              (b)    
       

            	
              to
      Falcon Parties:

            


    

     

    c/o
Falcon Oil & Gas Ltd.

    1875
Lawrence Street, Suite 1400

    Denver,
Colorado  80202

    


    Attention:
Chief Financial 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 

     

     

    
      
         

      

      
         

        
          

        

      

      
         

      

    

    -30-

     

     

    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.

     

    
      	
              10.15  

            	
              Confidentiality

            


    

     

    PetroHunter
Parties and Falcon Parties agree that:

     

    
      	
              (a)    
       

            	
              their
      respective officers, directors, partners, shareholders, employees, agents
      and representatives shall keep the existence of and the terms of this
      Agreement in strictest confidence;
and

            


    

     

    
      	
              (b)    
       

            	
              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.

            


    

     

    
      	
              10.16  

            	
              Successors
      and Assigns

            


    

     

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

     

    
      	
              10.17  

            	
              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.

     

    
      	
              10.18  

            	
              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:	
                                                                                                            /s/
      Martin B. Oring

                                                                                                          
	 	
                                                                                                            Name:   Martin
      B. Oring

                                                                                                          
	 	
                                                                                                            Title:     Chairman
      and CEO

                                                                                                          
	 	 
      
	 Per:	
                                                                                                            /s/
      Kyle L. WhiteJohnson

                                                                                                          
	 	
                                                                                                            Name:   Kyle
      L. WhiteJohnson

                                                                                                          
	 	
                                                                                                            Title:     Executive
      Vice President

                                                                                                          
	 	
                                                                                                            I/We
      have the authority to bind the corporation.

                                                                                                          
	 
      	 	 
      
	 
      	 
      PETROHUNTER
      OPERATING COMPANY
	 Per:	
                                                                                                            /s/
      Martin B. Oring

                                                                                                          
	 	
                                                                                                            Name:   Martin
      B. Oring

                                                                                                          
	 	
                                                                                                            Title:     Chairman
      and CEO

                                                                                                          
	 	 
      
	 Per:	
                                                                                                            /s/
      Kyle L. WhiteJohnson

                                                                                                          
	 	
                                                                                                            Name:   Kyle
      L. WhiteJohnson

                                                                                                          
	 	
                                                                                                            Title:     Executive
      Vice President

                                                                                                          
	 	
                                                                                                            I/We
      have the authority to bind the corporation.

                                                                                                          
	 
      	 	 
      
	 
      	 
      SWEETPEA
      PETROLEUM PTY LTD.
	 Per:	
                                                                                                            /s/
      Martin B. Oring

                                                                                                          
	 	
                                                                                                            Name:   Martin
      B. Oring

                                                                                                          
	 	
                                                                                                            Title:     Director

                                                                                                          
	 	 
      
	 Per:	
                                                                                                            /s/
      Kyle L. WhiteJohnson

                                                                                                          
	 	
                                                                                                            Name:   Kyle
      L. WhiteJohnson

                                                                                                          
	 	
                                                                                                            Title:     Director
      and Secretary

                                                                                                          
	 	
                                                                                                            I/We
      have the authority to bind the corporation.

                                                                                                          
	 
      	 	
                                                                                                             

                                                                                                          


                                                                                                  

                                                                                                

                                                                                              

                                                                                            

                                                                                          

                                                                                        

                                                                                      

                                                                                    

                                                                                  

                                                                                

                                                                              

                                                                            

                                                                          

                                                                        

                                                                      

                                                                    

                                                                  

                                                                

                                                              

                                                            

                                                          

                                                        

                                                      

                                                    

                                                  

                                                

                                              

                                            

                                          

                                        

                                      

                                    

                                  

                                

                              

                            

                          

                        

                      

                    

                  

                

              

            

          

        

      

    

    


    


    
      
         

      

      
         

        
          

        

      

      
         

      

       

      -2-

       

    

    
      	
            	 
      	 
      
	 
      	 
      	
              FALCON
      OIL & GAS LTD.

            
	
              Per:

            	
              /s/
      Marc A. Bruner

            
	 
      	
              Name:  Marc
      A. Bruner

            
	 
      	
              Title:     CEO

            
	 
      	 
      
	
              Per:

            	
              /s/
      Evan L. Wasoff

            
	 
      	
              Name:  Evan
      L. Wasoff

            
	 
      	
              Title:    Chief
      Financial Officer

            
	
              I/We
      have the authority to bind the corporation.

            
	 
      	 
      	 
      
	 
      	 
      	
              FALCON
      OIL & GAS USA, INC.

            
	
              Per:

            	
              /s/
      Marc A. Bruner

            
	 
      	
              Name:  Marc
      A. Bruner

            
	 
      	
              Title:    President

            
	 
      	 
      
	
              Per:

            	
              /s/
      Evan L. Wasoff

            
	 
      	
              Name:  Evan
      L. Wasoff

            
	 
      	
              Title:    VP/Sec

            
	
              I/We
      have the authority to bind the corporation.

            
	 
      	 
      	 
      
	 
      	 
      	
              FALCON
      OIL & GAS AUSTRALIA TY
      LTD

            
	
              Per:

            	
              /s/
      Carmen J. Lotito

            
	 
      	
              Name:     Carmen
      J. Lotito

            
	 
      	
              Title:       Director

            
	 
      	 
      
	
              Per:

            	
              /s/
      Evan L. Wasoff

            
	 
      	
              Name:     Evan
      L. Wasoff

            
	 
      	
              Title:       Director

            
	
              I/We
      have the authority to bind the
corporation.