Exhibit 10.1


PURCHASE AND SALE
AGREEMENT

(Goliath Project — North Dakota)


THIS PURCHASE AND
SALE AGREEMENT (the “Agreement”) is made as of April 10, 2006, by and between
American Oil & Gas, Inc. (“American”), a Nevada corporation
whose address is 1050 Seventeenth Street, Suite 1850, Denver, Colorado 80202, as seller, and Teton
Energy Corporation (“Teton”), a Delaware corporation whose address is 410
Seventeenth Street, Suite 1850, Denver, Colorado 80202, as buyer.


1.       Background.  American believes that it owns an undivided
75% leasehold interest in undeveloped oil and gas leases covering approximately
45,000 mineral acres in Dunn, McKenzie, Mountrail, and Williams Counties, North
Dakota, and that Evertson Energy Partners, LLC (“Evertson”) owns the remaining 25%.  American and Evertson are actively acquiring
new leases in the area and are discussing the possible adoption of a master
form joint operating agreement for use in the area.  Teton wishes to purchase an undivided 25%
interest in these leases, to establish an area of mutual interest with
American, and to become a party to any agreement that may be reached concerning
a master form joint operating agreement, all on the terms and conditions set
forth in this Agreement.


2.       Definitions.


“Area of Mutual Interest”
means the area identified in Appendix 2.


“Lease Deadline” means
5:00 p.m. on Monday, April 24, 2006.


 “Leases” means the leases identified in
Appendix 1 and all new leases within the Area of Mutual Interest in which
American may acquire an interest, either legally or beneficially, before the
Lease Deadline.


“Mineral Acre” means the
full fee oil and gas ownership interest in one acre of land, so that, for
example, a person may own one Mineral Acre either by owning a 100% fee oil and
gas interest in a single acre of land or by owning an undivided 25% fee oil and
gas interest in four acres of land.


“Net Leasehold Acre”
means the full oil and gas leasehold interest in one Mineral Acre, so that, for
example, a person may have one Net Leasehold Acre by owning the entire
leasehold interest in an oil and gas lease covering one Mineral Acre or by
owning an undivided 25% leasehold interest in an oil and gas lease covering
four Mineral Acres.


“Operator” means the
then-current operator of a well under a joint operating agreement covering the
lands comprising the drill site for that well.


“Tahosa Acquisition
Agreement” means the Purchase and Sale Agreement dated for identification
October 7, 2005, among American, Tahosa Holdings, LLC, Mélange International,
LLC, Evertson Energy Partners, LLC, Rose Exploration, Inc., and Empire Oil
Company, in accordance with which American acquired its interest in many of the
Leases.









 
  



“Title Defect” means a
cloud, encumbrance or other impediment rendering title to a Lease defective to a
degree that a reasonably prudent operator in the Rocky Mountains would not
acquire the lease as part of a very large exploratory acreage acquisition in
which it was seeking leases at an average 80% net revenue interest, unless and
until appropriate curative work had been performed to remove the cloud,
encumbrance or other impediment.  Teton
has full knowledge of the Tahosa Acquisition Agreement at the date hereof, and
expressly agrees that no term, condition or other provision of the Tahosa
Acquisition Agreement constitutes a Title Defect.


3.       Purchase and Sale.


3.1    Agreement.  American shall sell and assign to Teton, and
Teton shall purchase and accept from American, a 25% leasehold interest in the
Leases on the terms and conditions contained in this Agreement.


3.2    Purchase
Price.  The purchase price for
the Leases (the “Purchase Price”) shall be $450 per Net Leasehold Acre assigned
to Teton at Closing, payable as follows:


(a)        40% of the Purchase Price by wire
transfer to American at Closing; and


(b)       60% of the Purchase Price by wire
transfers to the Operator in payment of amounts due from American in connection
with drilling, completing and equipping operations within the Area of Mutual
Interest, when and as such amounts become due to the Operator; provided,
however, that if any portion of this 60% share of the Purchase Price has not
been paid to the Operator on behalf of American by May 31, 2007, then the
entire unpaid portion shall be paid by Teton to American on June 1, 2007,
thereby ending Teton’s obligation to pay further amounts to the Operator on
behalf of American.


The payment method in
clause (b) is a method of regulating the timing of the payment of the 60% share
of the Purchase Price.  Payments to the
Operator on behalf of American will begin when the first advance or other
payment is due from American in connection with the first well drilled within
the Area of Mutual Interest, and will continue as additional amounts become due
from American for that first well and for all subsequent wells within the Area
of Mutual Interest, until the full 60% share of the Purchase Price has been
paid.  As long as a portion of the
Purchase Price remains unpaid, Teton must timely pay all amounts due from
American to the Operator, unless American provides Teton specific written
instructions to the contrary before Teton transmits such funds to the
Operator.  The unpaid portion of the 60%
share of the Purchase Price will not bear interest while awaiting expenditure,
unless a payment is not timely made to the Operator when due.  If Teton fails timely to pay a required
amount to the Operator on behalf of American, then (i) Teton will be solely
responsible for any additional fees, interest or charges due the Operator as a
result of later payment (which fees, interest or charges will not be taken from
or otherwise reduce the unpaid portion of the Purchase Price) and (ii) the
entire remaining unpaid portion of the Purchase Price will, at American’s
option exercised by written notice to Teton, become immediately due and payable
to American and will bear interest at an annual rate of 18% from the date the
unpaid amount was due to the Operator until the date the entire remaining
unpaid portion of the Purchase Price is paid to American.


.



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4.       Title Review.


4.1       Title Information.  American will continue to make available to
Teton, at American’s office during reasonable business hours, all title
information in American’s possession pertaining to the Leases, although
American does not warrant the accuracy or completeness of such information.


4.2     No Subsequent Transfers. 
American represents and warrants for the benefit of Teton that it has
made no assignments of leasehold interests or assignments of overriding
royalties in any Lease since it acquired such Lease, other than overriding royalty
assignments made pursuant to the area of mutual interest provision in the
Tahosa Acquisition Agreement.  American
further represents and warrants that it has not mortgaged or otherwise
encumbered for security purposes its interest in any Lease.   These representations and warranties are
true at the date hereof, and will continue to be true until the leasehold
interest assignment is delivered to Teton at Closing.


4.3     Notice of Title Defects.  Until 5:00 p.m. on Monday, May 1, 2006, Teton
will provide prompt notice to American whenever it concludes that particular
circumstances may give rise to a Title Defect. 
After receiving each such notice, American may undertake curative work,
may provide Teton more information explaining the circumstances, or may simply
take the position that the circumstances do not constitute a Title Defect.  If American agrees at any time up to 5:00
p.m. on May 2, 2006 that a Lease suffers from a Title Defect, then such lease
will be excluded from the Leases, no interest in that lease will be transferred
at Closing, and the net acres covered by that lease will not be considered in
computing the purchase price for the remaining Leases.  If American has not agreed by 5:00 p.m. on
May 2, 2006 that a Lease suffers from a Title Defect, then, unless Teton
withdraws its Title Defect claim by 5:00 p.m. on May 3, 2006, (i) closing will
proceed as scheduled, but the Leases suffering from putative Title Defects will
be temporarily removed from the Leases, no interest in such leases will be transferred
at Closing, and the net acres covered by such leases will not be considered in
computing the purchase price to be paid at Closing for the remaining Leases and
(ii) the existence of the putative Title Defects will be finally determined in
accordance with Section 4.5.


4.4     Net Leasehold Acre Determination.  American and Teton will meet on Thursday, May
4, 2006, to agree upon the total number of Net Leasehold Acres that will be
assigned to Teton at the Closing.  If
such agreed number of Net Leasehold Acres is less than 85% of the number of Net
Leasehold Acres that were included in the Leases at the Lease Deadline, then
Teton may, at its sole option exercised before 6:00 p.m. on May 4, 2006, elect
not to proceed with Closing under this Agreement and, in that event, neither
American nor Teton shall have any liability to the other whatsoever; provided, however, that if American disputes a sufficient
number of Title Defects that, if American were correct, the agreed number of
Net Leasehold Acres would be more than 85% of the number of Net Leasehold Acres
included in the Leases at the Lease Deadline, then any election by Teton not to
proceed with Closing will be held in abeyance and the Closing will be suspended
until the actual number of Net Leasehold Acres has been resolved under Section
4.5.  If American and Teton cannot agree
upon the exact number of Net Leasehold Acres that will be assigned to Teton at
the Closing, but do agree that such number is more than 85% of the Net
Leasehold Acres at the Lease Deadline or, being less, Teton still wishes to
proceed with Closing, then the Closing will nonetheless occur as to such Leases
and Net Leasehold Acres as they are able to agree, with closing as to the
remaining Leases and Net Leasehold Acres suspended until the disputed Net
Leasehold Acres have been resolved under Section 4.5.  The number of Net Leasehold Acres assigned to
Teton will conclusively be deemed correct upon the parties’ agreement or, if
necessary, upon the arbitrator’s determination, and shall not be challenged
thereafter.



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4.5     Title Defect Dispute. 
American and Teton hereby agree that any dispute concerning the
existence of a Title Defect or the number of Net Leasehold Acres being assigned
to Teton (a “Title Dispute”) shall be resolved exclusively and solely by
arbitration in accordance with this Section 4.5.  Specifically, the parties agree that such
Title Dispute shall be finally determined by an independent arbitrator
knowledgeable about the oil and gas industry and mutually acceptable to the Parties
or, if no such arbitrator has been agreed by May 10, 2006, then by a member of
the law firm of Fleck, Mather & Strutz, Ltd., Bismarck, North Dakota,
acting as arbitrator, in either case with the assistance of such independent
landmen and other consultants as the arbitrator deems necessary.  No later than 21 days after the arbitrator’s
written agreement to serve, American and Teton shall present their respective
positions in writing to the arbitrator, together with such evidence as each
Party deems appropriate.  The arbitrator
shall be instructed to resolve the dispute through a final binding decision
within 21 days after such submission deadline and, when the arbitrator
determines the number of Net Leasehold Acres or finds that certain claimed
Title Defects do not exist, the arbitrator shall also set forth how and when
the assignment of such Leases to Teton and the payment of purchase price to
American shall be accomplished.  The
arbitrator may request oral presentations and shall decide any other procedural
matters presented by a party, which decisions shall be final and binding upon
the parties. Each party shall bear its own costs and expenses of the
arbitration, provided, however that the costs incurred in employing the
arbitrator (including not only the fees and costs of such arbitrator, but also
the fees and costs of landmen or other consultants engaged by the arbitrator)
shall be borne 50% by American and 50% by Teton.  The decision of the arbitrator may be filed
in any court of competent jurisdiction and may be enforced by any party as a
final judgment of such court.


5.       Tahosa Acquisition Agreement.  Teton has carefully reviewed the full text of
the Tahosa Acquisition Agreement and knows that, among other things, the Tahosa
Acquisition Agreement (i) requires the drilling of two horizontal wells by
October 1, 2008, (ii) requires the assignment of certain overriding royalties
on leases acquired within a specified area of mutual interest, and (iii)
imposes certain notice and reassignment obligations before leases expire or are
surrendered, abandoned or are released. 
Teton recognizes and agrees that it will be proportionately subject to
all continuing responsibilities of American imposed by the Tahosa Acquisition
Agreement, whether or not such responsibilities are mentioned or accurately
summarized in the preceding sentence. 
The assignment delivered by American at Closing will contain specific
language by which Teton assumes and agrees to perform such responsibilities in
accordance with their terms, just as surely as if Teton itself had been an
original party to the Tahosa Acquisition Agreement.


6.       Area of Mutual Interest.


6.1     Tahosa
AMI Responsibilities.  As noted in
Section 5, American is already subject to area of mutual interest
responsibilities under the Tahosa Acquisition Agreement.  Teton recognizes that it as well will be
burdened by such responsibilities following Closing.


6.2     New
AMI Responsibilities.  If either
American or Teton acquires leases or rights to acquire leases within the Area
of Mutual Interest during the period beginning at 5:01 p.m. on Monday, April
24, 2006 and ending October 1, 2010 (excluding, of course, the interests in the
Leases that are assigned by American to Teton pursuant to this Agreement), then
the acquiring party shall offer an interest (50% of Teton’s interest in the
case of an offer made by Teton to American and 25% of American’s interest in
the case of an offer made by American to Teton) in such leases or rights to the
other party.  The party to whom the offer
is made will have a period of 21 calendar days following receipt of the offer
in which to elect to acquire the offered interest by paying its



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proportionate share of the offering party’s
out-of-pocket acquisition costs for such leases or rights.  Failure of a party to respond within the
21-day period shall be an election not to acquire the interest.  If, pursuant to this Section 6.2, a party
acquires an interest in a farmin or other earning agreement but then elects not
to participate in the drilling of an earning well under that agreement, it
shall retain only those rights it previously earned by participating in past
drilling and will immediately assign its rights to participate in all future
drilling and earning to the other party.


7.       Joint Operating Agreement. 
American and Evertson have recently begun discussing a master form of
joint operating agreement, which, if mutually agreed, would be used to prepare
individual joint operating agreements as needed in the Area of Mutual Interest,
each of which would have as its contract area the anticipated drilling unit for
a particular well.  Immediately after
execution of this Agreement, American will use its best efforts to secure
Evertson’s permission for Teton to participate in such discussions.  If, despite American’s best efforts, Evertson
does not grant permission for Teton to participate in these master form
discussions, then American shall continue its discussions with Evertson,
keeping Teton informed of all material developments in the discussions and
carefully considering any requests, suggestions or comments made by Teton in
respect of the master form.  In either
event, if a master form is unanimously agreed by American, Teton and Evertson
before Closing, then American and Evertson shall execute appropriate evidence
of such agreement, which Teton shall join, ratify and confirm at Closing.  If the master form is not unanimously agreed
by American, Teton and Evertson before Closing, then either Teton or American
may independently elect, at any time before Closing occurs, not to proceed with
Closing under this Agreement and, in that event, neither American nor Teton
shall have any liability to the other whatsoever.  In any event, American will use reasonable
efforts in the negotiations to ensure that (i) Evertson is appointed Operator,
(ii) the first individual joint operating agreement provides in Article VI.A
that the initial well shall be commenced on or before June 30, 2006, and (iii)
the second well shall, if the first well is completed as a producer and subject
to delay upon the occurrence of an event of force majeure, be commenced within
120 days of release of the drilling rig from the first well location.


8.       Closing.


8.1     Date and Time.  Closing shall occur in American’s Denver
office at 10:30 a.m. on Friday, May 5, 2006, or at such other place and time as
may be agreed by the parties.


8.2     Closing Obligations.  At Closing, the following events shall occur,
each being a condition precedent to the others and each being deemed to have
occurred simultaneously with the others:


(a)    American shall execute, acknowledge and
deliver to Teton (or a subsidiary of Teton if Teton so desires), an assignment
of the Leases, substantially in the form attached as Appendix 3 and containing
a special warranty of title by, through and under American, but not otherwise;


(b)    Teton shall deliver 40% of the Purchase
Price by wire transfer to an account designated by American;


(c)    if American and Evertson have agreed upon a
master form of joint operating agreement, as explained in Section 7.3 above,
then Teton will join, ratify and confirm that agreement as if it had been an
original party thereto; and



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(d)    the Parties shall take such other actions
and deliver such other documents as may be necessary or convenient to effect
the purchase and sale contemplated herein.


9.      Miscellaneous.


9.1     Notices. 
Except as otherwise expressly provided in this Agreement, all communications
required or permitted under this Agreement will be in writing and any such
communication or delivery will be deemed to have been duly given and received
when actually delivered to the address set forth below of the party to be
notified personally (by a recognized commercial courier or delivery service
that provides a receipt) or by telecopier (confirmed in writing by a personal
delivery as set forth above), addressed as follows:


 


	
  If to American:

  	
   

  	
  American Oil & Gas, Inc.

  	
   

  	
   

  
	
   

  	
   

  	
  1050 Seventeenth Street, Suite 1850

  	
   

  	
   

  
	
   

  	
   

  	
  Denver, Colorado 80265

  	
   

  	
   

  
	
   

  	
   

  	
  Attention: Patrick D. O’Brien

  	
   

  	
   

  
	
   

  	
   

  	
  Telephone: 
  303.595.0125

  	
   

  	
   

  
	
   

  	
   

  	
  Facsimile: 
  303.595.0709

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
  If to Teton:

  	
   

  	
  Teton Energy Corporation

  
	
   

  	
   

  	
  410 Seventeenth Street, Suite 1850

  
	
   

  	
   

  	
  Denver, Colorado 80202

  
	
   

  	
   

  	
  Attention: Karl F. Arleth, President and Chief
  Executive Officer

  
	
   

  	
   

  	
  Telephone: 303.565.4600

  
	
   

  	
   

  	
  Facsimile: 303.542.1817 

  



 


Any party may, by written notice so delivered to the
other, change the address to which delivery will thereafter be made.


9.2      Expenses. 
Each party will be solely responsible for all costs that it incurs in
connection with this Agreement and the activities contemplated herein, with no
right to recovery or contribution from any other party.


9.3      Entire Agreement.  This Agreement embodies the entire agreement
between the Parties with respect to the subject matter of this Agreement
(superseding all prior agreements, arrangements, understandings and
solicitations of interest or offers related to the subject matter of this
Agreement, including the letter from Teton dated March 17, 2006), and may be
supplemented, altered, amended, modified or revoked by writing only, signed by
all of the Parties to this Agreement. 
The headings in this Agreement are for convenience only and will have no
significance in the interpretation of any term or provision of this Agreement.


9.4      Governing Law.  This Agreement will be governed and construed
and enforced in accordance with the laws of the State of Colorado, without
regard to rules concerning conflicts of laws.


9.5      Counterparts.  This Agreement may be executed in any number
of counterparts, and each and every counterpart will be deemed for all purposes
one agreement.



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9.6      Binding Effect; Assignment.  All the terms, provisions, covenants,
representations and conditions of this Agreement will be binding upon and inure
to the benefit of and be enforceable by the Parties to this Agreement and their
respective successors and assigns, although this Agreement and the rights and
obligations hereunder will not be assignable or delegable by any party without
the prior written consent of the non-assigning or non-delegating party, which
may be withheld at the sole discretion of such party.  Notwithstanding the foregoing, Teton may
assign all of its rights and obligations under this Agreement to a wholly owned
subsidiary, without the need for any consent by American.


9.7       Independent Analysis.  In entering into this Agreement, Teton
acknowledges that it has relied solely upon its own independent analysis,
evaluation and investigation of, and judgment with respect to, the business,
economic, legal, tax or other consequences of the transaction contemplated
herein, including its own estimate, analysis and appraisal of the extent and
value of the hydrocarbon resources associated with the Leases, the future
operation, maintenance and development costs associated with the Leases, and
the legal risks of owning and operating the Leases.


9.8       Survival.  All terms
and conditions of this Agreement will survive the Closing and delivery of the
assignment from American to Teton.


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


	
  

  	
   

  	
   

  	
   

  	
   

  
	
  AMERICAN OIL
  & GAS, INC.

  	
   

  	
  TETON ENERGY CORPORATION

  
	
   

  	
   

  	
   

  
	
  By: 

  	
  /s/ Patrick D.
  O’Brien

  	
   

  	
  By: 

  	
  /s/ Karl F. Arleth

  
	
   

  	
  Patrick D. O’Brien, Chief Executive Officer

  	
   

  	
   

  	
  Karl F. Arleth, President and

  
	
   

  	
   

  	
   

  	
   

  	
  Chief Executive Officer

  
							



 


Appendix 1:      The Leases

Appendix 2:      AMI

Appendix 3:      Assignment


 



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APPENDIX 2:  AMI

(Goliath Project — North Dakota)




The Area of Mutual Interest consists of the following lands:


Township 155
North, Range 97 West

Sections: 1-9


Township 155
North, Range 98 West

Sections: 1-12


Township 155
North, Range 99 West

Sections: 1, 2, 11, 12


Township 156
North, Range 96 West

Sections: 5, 6


Township 156
North, Range 97 West

Sections: All


Township 156
North, Range 98 West

Sections: All


Township 156
North, Range 99 West

Sections: 1-4, 9-15, 23-26, 35, 36


Township 157
North, Range 96 West

Sections: 4-9, 16-23, 26-35


Township 157
North, Range 97 West

Sections: All


Township 157
North, Range 98 West

Sections: 1-3, 10-15, 22-36