Document:

exv10w1

 

Exhibit 10.1

INDEMNITY AND CONTRIBUTION AGREEMENT

     This Indemnity and Contribution Agreement (this “Agreement”), dated November 15, 2005, is by
and between Digene Corporation, a Delaware corporation (the “Company”) and Armonk Partners, a
Connecticut partnership (the “Selling Stockholder”).

RECITALS

     WHEREAS, pursuant to an Underwriting Agreement, dated as of the date hereof (the “Underwriting
Agreement”), among the Company, the Selling Stockholder and J.P. Morgan Securities Inc., as
representative of the several underwriters identified therein (the “Underwriters”), the Company
proposes to issue and sell to the Underwriters an aggregate of 2,000,000 shares and, at the option
of the Underwriters, up to an additional 300,000 shares, of Common Stock, par value $0.01 per
share, of the Company (the “Stock”) and the Selling Stockholder proposes to sell to the
Underwriters an aggregate of 1,000,000 shares of Stock and, at the option of the Underwriters, up
to an additional 150,000 shares of Stock.

     WHEREAS, under the Underwriting Agreement each of the Company and the Selling Stockholder
makes certain representations and warranties to the Underwriters with respect to information about
the Company and the Selling Stockholder, as the case may be, for use in the Registration Statement,
Prospectus or Preliminary Prospectus, and provides the Underwriters with certain indemnification
and contribution protections.

     WHEREAS, the Company and the Selling Stockholder desire to provide that the indemnification
and contribution provisions contained in this Agreement will control as between the Company and the
Selling Stockholder in the event that the Underwriters seek indemnification and/or contribution
from the Company and/or the Selling Stockholder under the Underwriting Agreement.

     NOW, THEREFORE, the parties hereby, intending to be legally bound, agree as follows:

          1. Defined Terms. Capitalized terms used in this Agreement without definition shall have
the meanings set forth in the Underwriting Agreement.

          2. Representations and Warranties.

               (a) Representations and Warranties Made by the Selling Stockholder. Notwithstanding the
representations and warranties made by the Selling Stockholder to the Underwriters in paragraph
4(e) of the Underwriting Agreement, the Company hereby agrees to indemnify and hold harmless each
of the Selling Stockholder and its partners and their respective successors, heirs and assigns,
from and against any and all losses, claims, damages and liabilities (including, without
limitation, legal fees and other expenses incurred in connection with any suit, action or
proceeding or any claim asserted, as such fees and expenses are incurred) (the “Liabilities”),
joint and several, that arise out of, or are based upon, any claims for indemnification by an
Indemnified Person from the Selling Stockholder under paragraph 8(b) of the Underwriting Agreement, except to the extent that the
representations and warranties in paragraph 4(e) of the Underwriting Agreement relate to any
statements in or omissions from the

 

 

Registration Statement, the Prospectus or any Preliminary
Prospectus that are based on written information furnished to the Company by the Selling
Stockholder specifically for use therein, it being understood and agreed that all such information
is described in Exhibit A attached hereto.

               (b) Representations and Warranties Made by the Company. Notwithstanding the representations and
warranties made by the Company to the Underwriters in paragraph 3(b) of the Underwriting Agreement,
the Selling Stockholder hereby agrees to indemnify and hold harmless each of the Company, its
affiliates, directors, officers and employees and their respective successors, heirs and assigns,
from and against any and all Liabilities, joint and several, that arise out of, or are based upon,
any claims for indemnification by an Indemnified Person from the Company under paragraph 8(a) of
the Underwriting Agreement to the extent that the representations and warranties in paragraph 3(b)
of the Underwriting Agreement relate to any statements in or omissions from the Registration
Statement, the Prospectus or any Preliminary Prospectus that are based on written information
furnished to the Company by the Selling Stockholder specifically for use therein, it being
understood and agreed that all such information is described in Exhibit A attached hereto.

          3. Indemnification and Contribution.

               (a) Indemnification of the Selling Stockholder by the Company. Notwithstanding the
indemnification provided by the Selling Stockholder to the Underwriters in paragraph 8(b) of the
Underwriting Agreement, the Company hereby agrees to indemnify and hold harmless each of the
Selling Stockholder and its partners and their respective successors, heirs and assigns, from and
against any and all Liabilities, joint and several, to any Indemnified Person under paragraph 8(b)
of the Underwriting Agreement to the extent that the Liabilities arise out of, or are based upon
any untrue statement or alleged untrue statement of a material fact contained in the Registration
Statement or Prospectus (or any amendment or supplement thereto) or any Preliminary Prospectus, or
caused by any omission or alleged omission to state therein a material fact required to be stated
therein or necessary in order to make the statements therein, in the light of the circumstances
under which they were made, not misleading, except insofar as such Liabilities arise out of, or are
based upon, any untrue statement or omission or alleged untrue statement or omission made in
reliance upon and in conformity with any information relating to the Selling Stockholder furnished
to the Company in writing by the Selling Stockholder expressly for use therein, it being understood
and agreed that all such information is described in Exhibit A attached hereto.

               (b) Indemnification of the Company by the Selling Stockholder. Notwithstanding the indemnification
provided by the Company to the Underwriters in paragraph 8(a) of the Underwriting Agreement, the
Selling Stockholder hereby agrees to indemnify and hold harmless each of the Company , its
affiliates, directors, officers and employees and their respective successors, heirs and assigns,
from and against any and all Liabilities, joint and several, to any Indemnified Person under
paragraph 8(a) of the Underwriting Agreement to the extent that the Liabilities arise out of, or
are based upon any untrue statement or omission or alleged untrue statement or omission made in
reliance upon and in conformity with the written information furnished to the Company by the
Selling Stockholder specifically for use in the Registration Statement or Prospectus (or any
amendment or supplement thereto) or any

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Preliminary Prospectus, it being understood and agreed that
all such information is described in Exhibit A attached hereto.

          4. Contribution. If the indemnification provided for in paragraphs 8(a), 8(b) and 8(c) of
the Underwriting Agreement is unavailable to an Indemnified Person or insufficient in respect of
any losses, claims, damages or liabilities referred to therein, then as between the Company and the
Selling Stockholder, the aggregate contribution provided for in paragraph 8(d) of the Underwriting
Agreement by the Company and the Selling Stockholder shall be (i) in such proportion as is
appropriate to reflect the relative benefits received by the Company and the Selling Stockholder
from the offering of the Shares or (ii) if the allocation provided by clause (i) is not permitted
by applicable law, in such proportion as is appropriate to reflect not only the relative benefits
referred to in clause (i) but also the relative fault of the Company and the Selling Stockholder in
connection with the statements or omissions that resulted in such losses, claims, damages or
liabilities, as well as any other relevant equitable considerations. The relative benefits
received by the Company and the Selling Stockholder shall be deemed to be in the same respective
proportions as the net proceeds (before deducting expenses) received by the Company and the Selling
Stockholder from the sale of the Shares, in each case as set forth in the table on the cover of the
Prospectus, bear to the aggregate offering price of the Shares. The relative fault of the Company
and the Selling Stockholder shall be determined by reference to, among other things, whether the
untrue or alleged untrue statement of a material fact or the omission or alleged omission to state
a material fact relates to information supplied by the Company or the Selling Stockholder, if
applicable, and the parties’ relative intent, knowledge, access to information and opportunity to
correct or prevent such statement or omission. To the extent that information, other than the information described in Exhibit A attached hereto,
provided by a partner of the Selling Stockholder who is also an officer or director of the Company
is the basis for any Liabilities under paragraph 8(a) or paragraph 8(b) of the Underwriting
Agreement, the Company and the Selling Stockholder hereby agree that such information shall be
deemed to have been provided by the Company rather than by the Selling Stockholder.

          5. Due Authority. Each of the Company and the Selling Stockholder has full and unencumbered
right, power and authority to execute and deliver this Agreement and to perform its obligations
hereunder; and all action required to be taken for the due and proper authorization, execution and
delivery by it of this Agreement and the consummation by it of the transactions contemplated hereby
has been duly and validly taken. Upon execution, this Agreement shall constitute a legal, valid
and binding agreement of each of the Company and the Selling Stockholder, enforceable in accordance
with its terms.

          6. Miscellaneous.

               (a) Notices. All notices and other communications hereunder shall be in writing and shall be
deemed to have been duly given if mailed or transmitted and confirmed by any standard form of
telecommunication. Notices to the Company shall be given to it at Digene Corporation, 1201 Clopper
Road, Gaithersburg, Maryland 20878 (Fax: (301) 944-7017); Attention: General Counsel. Notices to
the Selling Stockholder shall be given to it at 1201 Clopper Road, Gaithersburg, Maryland 20878
(Fax: (301) 944-7017); Attention: Charles M. Fleischman.

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               (b) Governing Law. This Agreement shall be governed by and construed in accordance with the laws of
the State of New York.

               (c) Counterparts. This Agreement may be signed in counterparts (which may include counterparts
delivered by any standard form of telecommunication), each of which shall be an original and all of
which together shall constitute one and the same instrument.

               (d) Amendments or Waivers. No amendment or waiver of any provision of this Agreement, and no any
consent or approval to any departure therefrom, shall in any event be effective unless the same
shall be in writing and signed by the parties hereto.

               (e)Headings. The headings herein are included for convenience of reference only and are not intended
to be part of, or to affect the meaning or interpretation of, this Agreement.

     IN WITNESS WHEREOF, the parties have caused this Agreement to be executed by their duly
authorized representatives as of the date first written above.

	 	 	 	 	 	 
	 	 	DIGENE CORPORATION
	 
	 	 	 	 
	 

	 	By:
	/s/ Vincent J. Napoleon
	 

	 	 	 
	 	 	Name: Vincent J. Napoleon
	 	 	Title: Senior Vice President, General Counsel and Secretary
	 
	 	 	 	 
	 	 	ARMONK PARTNERS
	 
	 	 	 	 
	 

	 	By:
	/s/ Charles M. Fleischman
	 

	 	 	 
	 	 	Name: Charles M. Fleischman
	 	 	Title: Managing Partner

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Exhibit A

INFORMATION SUPPLIED BY THE SELLING STOCKHOLDER

The following information in the Registration Statement, Prospectus and any Preliminary Prospectus:

	 	•	 	The information regarding the Selling Stockholder on the cover page.
	 
	 	•	 	Common Stock offered by the Selling Stockholder under the caption “The Offering”.
	 
	 	•	 	The information set forth under the heading “Members of our management team
together own a substantial interest in us, which may lead potential acquirors to
require the prior approval of proposed acquisition transaction” under the caption “Risk
Factors” insofar as it relates to the Selling Stockholder.
	 
	 	•	 	The information under the caption “Selling Stockholder”.
	 
	 	•	 	The information under the headings “Over-allotment option”, “Commisions and
discounts” and “No sales of similar securities” under the caption “Underwriting”
insofar as it relates to the Selling Stockholder.

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Exhibit 10(viii)

PURCHASE AND SALE AGREEMENT

GOLIATH PROJECT – DUNN, McKENZIE, MOUNTRAIL

AND WILLIAMS COUNTIES, NORTH DAKOTA

This Purchase and Sale Agreement (“Agreement”), dated for identification as of October 7, 2005, is
between Tahosa Holdings, LLC (“Tahosa”), 555 Seventeenth Street, Suite 710, Denver, Colorado 80202,
Mélange International, LLC (“Mélange”), 475 Seventeenth Street, Suite 540, Denver, Colorado 80202,
Evertson Energy Partners, LLC (“Evertson”), 4362 East Highway 30, Kimball, Nebraska, 69145, Rose
Exploration, Inc. (“Rose”), 518 Seventeenth Street, Suite 430, Denver, Colorado 80202, Empire Oil
Company (“Empire”), 510 Second Street West, Williston, North Dakota 58801 and American Oil and Gas,
Inc., (“AOGI”), 1050 Seventeenth Street, Suite 1850, Denver, Colorado 80202. Tahosa, Mélange,
Evertson, Rose, and Empire are collectively referred to herein as “Tahosa et al”. Tahosa et al and
AOGI are collectively referred to herein as the “Parties.”

RECITALS

WHEREAS, Tahosa et al owns record title and beneficial interests in and to the Current Leasehold
(as defined in Article 1.4, below); and

WHEREAS, Tahosa et al wishes to sell its right, title and interest in the Current Leasehold,
subject to overriding royalty interests previously conveyed, to AOGI in accordance with the terms
of this Agreement and subject to a 25% working interest (being the same 25% leasehold interest as
is excluded in the definition of Current Leasehold, rather than an additional 25% interest) in the
leasehold previously conveyed to Evertson;

NOW, THEREFORE, in consideration of One Hundred Dollars ($100.00), the mutual promises and
covenants contained herein, and other good and valuable consideration, the receipt and sufficiency
of which are hereby acknowledged, the Parties hereby agree as follows:

Article 1.

DEFINITIONS

Whenever used in this Agreement, the following terms will have the below defined meaning:

	 	1.1	 	Affiliate means, with respect to the relationship between corporations, that
one of them is controlled by the other or that both of them are controlled by the same
person, corporation or body politic; and for this purpose a corporation shall be deemed
to be controlled by those persons, corporations or bodies politic who own or
effectively control, other than by way of security only, sufficient voting shares of
the corporation (whether directly through the ownership of shares of the corporation or
indirectly through the ownership of shares of another corporation which owns shares of
the corporation) to elect a majority of its board of directors, provided that a
partnership that is a Party and that is comprised solely of corporations that are
Affiliates, as described above, shall be

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	 	 	 	deemed to be an Affiliate of each such corporation and its other Affiliates. In
addition, a member of a limited liability company shall be deemed an Affiliate of
the limited liability company and any partner of a general partnership or a general
partner of a limited partnership shall be deemed an Affiliate of the partnership.
	 
	 	1.2	 	Additional Leasehold means the oil and gas leases in which AOGI acquires a
leasehold interest pursuant to Article 5, below.
	 
	 	1.3	 	Agreement means this Agreement, inclusive of all exhibits and attachments, as
the same may be modified or amended from time to time. The Agreement shall replace and
supersede all previous agreements and representations in their entirety.
Notwithstanding the foregoing, that certain Confidentiality Agreement, dated July 7,
2005, by and between the Parties, shall remain in full force and effect.
	 
	 	1.4	 	Current Leasehold means all of the leasehold and net revenue interests (but not
the overriding royalty interests) that are owned by Tahosa et al in the oil and gas
leases described on Exhibit A attached hereto, but excluding an undivided 25% leasehold
interest and corresponding net revenue interest owned by Evertson in such leases.
	 
	 	1.5	 	Effective Date means October 11, 2005.
	 
	 	1.6	 	Existing Burdens means all landowner royalties, overriding royalties and other
burdens existing on the Effective Date and burdening the Current Leasehold, or existing
prior to, or created as a condition to, a Party’s acquisition of Additional Leasehold.
	 
	 	1.7	 	Leasehold means the Current Leasehold and the Additional Leasehold.
	 
	 	1.8	 	Material Title Defect means a title defect which results in the leasehold
interest, net revenue interest or net acres owned by Tahosa et al (before the exclusion
of the 25% Evertson interest) being less than that shown on Exhibit A, but only if a
reasonably prudent operator in the Rocky Mountain region would undertake to cure such
title defect before commencing drilling operations on the leased land or lands pooled
therewith.

Article 2.

PURCHASE AND SALE

	 	2.1	 	Purchase and Sale. Tahosa et al shall sell and assign, and AOGI shall purchase
and accept, the interest of Tahosa et al in and to the Current Leasehold on the terms
and conditions set forth herein.

Article 3.

GOLIATH PROJECT

	 	3.1	 	Current Leasehold. Tahosa et al represents that the Current Leasehold covers
approximately 24,750 net acres. Specifically, Tahosa et al believes that the oil and
gas leases described on Exhibit A cover approximately 33,000 net acres, although Tahosa
will be assigning an undivided 25% interest in such leases to Evertson before Closing.
The undivided 25% that will be assigned of record to Evertson before Closing is the 25%

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	 	 	 	that is excluded in the definition of Current Leasehold set forth in Article 1.4,
above, so that the net acres covered by the Current Leasehold is 24,750 (75% of
33,000 net acres).
	 
	 	3.2	 	Pre-Closing Title Examination. Immediately following the execution of this
Agreement, Tahosa et al will make available to AOGI, at AOGI’s office, all title
information pertaining to the Current Leasehold. Tahosa et al does not warrant the
accuracy or completeness of such information, but does represent that, to the best of
its knowledge, (i) all rentals, royalties (including minimum advance royalties),
shut-in payments, and other payments and obligations necessary to perpetuate the
Current Leasehold have been timely and properly paid or satisfied to date and (ii) all
oil and gas leases included in the Current Leasehold are in full force and effect. If
AOGI and Tahosa et al unanimously agree before the closing that if a Current Leasehold
has a Material Title Defect, then such Current Leasehold shall, to the extent affected
by the Material Title Defect, be excluded from the assignment delivered to AOGI at
closing and the stock consideration provided in Article 6.1 shall be proportionately
reduced.
	 
	 	3.3	 	Net Revenue Interest. As to Current Leaseholds, Tahosa et al will assign
overriding royalties to third parties between the Effective Date and Closing and, as to
Additional Leaseholds, Tahosa et al will reserve overriding royalties in its
assignments to AOGI and AOGI will assign overriding royalty interests on any leases it
acquires within the Area of Mutual Interest established in Article 5.1 herein (other
than leases it acquires from Tahosa et al); provided, however, that such assignments
and reservations must (i) provide proportionate reduction if the concerned lease covers
less than the full fee oil and gas interest or if Tahosa owns less than the full
leasehold interest and (ii) the aggregate sum of overriding royalties (before
proportionate reduction) assigned by Tahosa et al in a particular Current Leasehold
prior to Closing or reserved by Tahosa et al or assigned to Tahosa et al by AOGI in a
later assignment of Additional Leasehold shall be equal to:

5% of 8/8ths, if Existing Burdens are not more than 15%;

an amount equal to the difference between 20% and Existing Burdens, if Existing
Burdens are greater than 15% but not greater 18%; and

2% of 8/8ths, if Existing Burdens are greater than 18%.

	 	3.4	 	Data. AOGI agrees to provide Tahosa et al with all title, geologic,
geophysical and well data acquired by AOGI within the Goliath Project in the same time
frame and under the same conditions as if Tahosa et al had participated in the
acquisition of said data. Notwithstanding the foregoing, AOGI shall not be obligated
to provide Tahosa et al geophysical data that is governed by a license which
specifically forbids the sale or dissemination of such data. Tahosa et al shall, at
its sole risk, have access to the rig floor on all wells drilled in the Goliath
Project.
	 
	 	3.5	 	Commitment Test Wells. AOGI must commence the drilling of two horizontal test
wells no later than October 1, 2008. One of these horizontal test wells must be
located in either Township 157 North, Range 96 West, or in Township 157 North, Range 97
West, and drilled to a depth sufficient to test the Middle Member of the Bakken
Formation. The other horizontal test well must be located in either Township 156
North, Range 97 West, or in Township 156 North, Range 98 West, and drilled to a depth
sufficient to test the Middle Member of the Bakken Formation. The spacing unit for
each horizontal test well must consist of at least 50% Leasehold acreage. If, for any
reason other than the

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	 	 	 	occurrence of an event of force majeure under Article 9.5 herein, AOGI fails to
commence drilling of both of these horizontal test wells before October 1, 2008,
then AOGI shall, no later than October 15, 2008, reassign to Tahosa et al an
undivided 50% of the Leasehold acquired by AOGI hereunder (excluding Leasehold that
expired or terminated prior to October 15, 2008, without having been replaced by
AOGI), free and clear of any liens, judgments or burdens, other than Existing
Burdens and the overriding royalty interests provided for herein. Notwithstanding
the foregoing, in the event AOGI elects to drop any leases by non-payment of rentals
or elects not to exercise an option to extend any of the Leasehold, AOGI shall be
obligated to Tahosa et al as set forth in Article 4.3. This reassignment shall be
the sole consequence and the sole remedy for a failure to drill either or both of
the horizontal test wells and, in particular, the required reassignment of 50% is
the same consequence and remedy whether one or both of the horizontal wells are not
timely commenced. AOGI will always retain an undivided 50% interest, even if it
fails timely to commence both of the horizontal test wells.

Article 4.

LEASE MANAGEMENT

	 	4.1	 	Rentals, Minimum Royalties and Production Accounting. Rental payments and
minimum royalty payments required under the terms of any Leasehold will be paid by
AOGI; provided, however, that AOGI shall have no liability or responsibility whatsoever
to any other Party if AOGI inadvertently fails to timely make any option, rental,
royalty or minimum royalty payment.
	 
	 	4.2	 	Lease Records. AOGI will maintain appropriate land and lease records relating
to the Leaseholds.
	 
	 	4.3	 	Reassignment Obligation. If AOGI receives an assignment under this Agreement
or acquires a lease subject to this Agreement and thereafter elects to surrender, let
expire, abandon or release said lease, AOGI will notify the remaining Parties not less
than 60 days in advance of such surrender, expiration, abandonment or release. At the
request of some or all of the remaining Parties, which request must be made within 30
days of receipt of such notice, AOGI will then immediately assign those rights to the
requesting Parties and, upon receipt of that assignment, the requesting Parties will
pay the relinquishing Party the reasonable salvage value of any material or equipment
received, less the estimated costs of reclamation and surface restoration. Any wells
affected by such assignment and not taken over by some or all of the remaining Parties
will be plugged and abandoned, according to state and federal regulations, at the
owning Parties’ sole cost, risk and expense. In no event shall AOGI have any liability
or responsibility whatsoever to any other Party if AOGI inadvertently fails to timely
notify the remaining Parties in advance of a surrender, expiration, abandonment or
release of a lease.

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Article 5.

AREA OF MUTUAL INTEREST

	 	5.1	 	AMI. The Parties agree that all lands set forth on Exhibit B constitute an
Area of Mutual Interest (“AMI”) between the Parties.
	 
	 	5.2	 	After Acquired Acreage. The AMI between the Parties will continue in effect
for the term of this Agreement, unless sooner terminated by the express written consent
of the Parties. During the term of this Agreement, if AOGI or its Affiliate acquires
any oil and gas leasehold, operating or working interest within the AMI, whether by
purchase, farmin, option or otherwise, but expressly excluding any oil and gas
leasehold, operating or working interest acquired by AOGI from Tahosa et al, then AOGI
will, within 30 days after the acquisition, assign Tahosa et al a proportionately
reduced overriding royalty interest under the acquired interest, the amount of which
shall be determined in accordance with the three-tiered schedule set forth in Article
3.3, above.
	 
	 	 	 	In the event Tahosa et al acquires or has the opportunity to acquire any oil and gas
leasehold, operating or working interest whether by purchase, farmin, option or
otherwise, within the AMI, Tahosa shall, within 30 days of acquisition, offer AOGI
the interest acquired at the actual out-of-pocket acquisition cost incurred by
Tahosa at al and AOGI shall have 10 days in which to make an election to acquire or
decline the applicable interest. In the event AOGI declines the interest, Tahosa et
al shall have no further obligation to AOGI regarding said interest. On any such
interest Tahosa et al shall retain a proportionately reduced overriding royalty
interest under the acquired interest, the amount of which shall be determined in
accordance with the three-tiered schedule set forth in Article 3.3, above.
	 
	 	 	 	Tahosa et al and AOGI shall independently have the right to acquire any mineral or
royalty interests within the AMI without any obligation to the other Party.

Article 6.

ASSIGNMENTS AND CONSIDERATION

	 	6.1	 	Assignments and Consideration. Closing shall occur on October 11, 2005. At
Closing, AOGI shall remit to Tahosa et al (i) cash consideration equal to the number of
net acres of leasehold assigned multiplied by $120.00 and (ii) 675,000 shares of AOGI
stock. Notwithstanding the foregoing, in the event the number of net acres of
Leasehold assigned exceeds 24,750 net acres the consideration for all of the excess
Leasehold shall be equal to the consideration actually paid for the Leasehold by Tahosa
et al plus actual acquisition costs (i.e. broker costs, title costs, recording fees,
etc.). In the event the number of net acres of leasehold assigned is less than 24,750
net acres, the stock consideration provided for herein shall be reduced
proportionately, although no fractional shares shall ever be delivered.
	 
	 	 	 	Tahosa et al shall assign to AOGI all of Tahosa et al’s right, title and interest
(but not its overriding royalty interest) in the Current Leasehold, subject to the
overriding royalty interests described in Article 3.3 and the 25% leasehold interest
(being the same 25% leasehold interest as is excluded in the definition of Current
Leasehold, rather than an

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	 	 	 	additional 25% interest) previously conveyed to Evertson. All assignments from
Tahosa et al to AOGI shall be on a form of assignment acceptable to all Parties.
Once the assignments have been fully executed by the Parties, AOGI shall be
responsible for submitting the assignments to the proper agency for approval or to
the proper county for recording.
	 
	 	 	 	The AOGI stock provided for hereunder shall be registered pursuant to the
Registration Statement on Form S-3 filed by AOGI with the Securities and Exchange
Commission on June 9, 2005. AOGI agrees that, commencing upon the closing of the
transactions contemplated by this agreement, it will apply for listing approval from
the American Stock Exchange of the aforementioned stock. Tahosa et al agree not to
sell more than 25,000 shares of AOGI stock in any given trading day without the
express written permission of AOGI.
	 
	 	6.2	 	Qualifications. Each Party represents that: (i) it is a citizen of the United
States, an association of such citizens or a corporation organized under the laws of
the United States or a State thereof; (ii) it will not acquire any oil and gas
interests from and after the date of this Agreement, including any interest to be
acquired under this Agreement, that would cause representations and warranties as set
forth in this paragraph to be false if made at the time of such acquisition.
	 
	 	6.3	 	Post-Closing Title Examination. Tahosa et al will not warrant title to the
Current Leasehold in the assignments that are delivered at closing.
	 
	 	 	 	Tahosa et al does, however, hereby promise, jointly and severally, to repurchase
from time to time any Current Leasehold that suffered from a Material Title Defect
at the Effective Date, if AOGI notifies Tahosa et al in writing of such Material
Title Defect prior to April 1, 2007. Tahosa et al may, of course, cure the Material
Title Defect at its own expense, but if it chooses not to cure the Material Title
Defect or if the Material Title Defect is not cured within 60 days after the AOGI
notice, then (unless AOGI chooses in writing to waive such Material Title Defect),
Tahosa et al must repurchase the defective Current Leasehold for the following cash
purchase price: until the net acres of Current Leasehold acquired by AOGI pursuant
to this Agreement fall below 24,750 net acres, the purchase price shall be equal to
the consideration actually paid for the leasehold by Tahosa et al plus actual
acquisition costs (i.e. broker costs, title costs, recording fees, etc.) and, after
the net acres of Current Leasehold acquired by AOGI pursuant to this Agreement fall
below 24,750 net acres, the purchase price shall be equal to $290 per net acre.

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Article 7.

NOTICES

	 	7.1	 	Notice. All notices required between the Parties by any of the provisions of
this Agreement, unless otherwise specifically provided, must be in writing and
delivered in person or by United States mail, courier service, telegram, telex,
telecopier or any other form of facsimile, postage or charges prepaid, addressed to
such Parties at the addresses listed above. Notice given under any provision hereof
will be deemed delivered only when received by the Party to whom such notice is
directed and the time for such Party to deliver any notice in response thereto will run
from the date the originating notice is received. “Receipt” for purposes of this
Agreement with respect to written notice delivered hereunder by mail or courier is the
earlier of actual delivery of the notice to the address of the Party to be notified or
six days (excluding Saturdays, Sundays or national holidays) after deposit of such
notice by the notifying Party, postage prepaid and properly addressed, into the United
States mail or courier service, as the case may be. “Receipt” for purposes of this
Agreement with respect to written notice delivered by telecopy, facsimile or telex
machine is the earlier of actual receipt or four hours after transmission by the
notifying Party to the telex, telecopy or facsimile number of the Party to be notified.
Each Party shall have the right to change its address at any time, and from time to
time, by giving written notice thereof to all other Parties.

Article 8.

TERMINATION

	 	8.1	 	Termination. This Agreement will terminate upon the first to occur of the following:

	 	 	 	8.1.a. October 1, 2010.
	 
	 	 	 	8.1.b. the unanimous written agreement of all Parties to this Agreement.

Article 9.

MISCELLANEOUS

	 	9.1	 	Amendments. This Agreement may be amended only by written instrument executed
by all Parties.
	 
	 	9.2	 	Overriding Royalty Interests. The overriding royalty interests provided for
herein shall be treated as a lease burden existing on the Effective Date not as a
subsequently created interest. Said overriding royalties shall not merge with any
working interest assigned or retained herein. The overriding royalties provided for
hereunder shall apply to any extension or renewal of the Leasehold, insofar as such
extension and renewal leases include lands covered by the Leasehold. For the purposes
of this provision a renewal of an oil and gas lease is the taking by any Party of any
oil and/or gas lease taken within one year of the expiration, termination, or release
of the preceding lease and a top lease. In the event of federal or state oil and gas
leases a renewal of a federal or state oil and gas lease is the taking by any Party of
any oil and gas lease offered at the next federal or state lease sale at which all or a
part of the acreage covered by the preceding federal or state lease subject to this
Agreement is offered for lease, as long as any party hereto has made

7

 

	 	 	 	a request to the BLM or State, within six months from the expiration or termination
of the preceding federal or state lease, to post such acreage for lease. The
overriding royalties assigned hereunder shall apply to any extension or renewal of
the Leasehold and such assignments of overriding royalties on renewals and
extensions are to be provided in recordable form to each Party entitled thereto
within 30 days of the acquiring party’s acquisition of the lease(s).
	 
	 	9.3	 	Applicable Law. This Agreement shall be interpreted under the laws of the
State of Colorado. With respect to any claims asserted or court proceedings initiated
relating in whole or in part to this Agreement, the Parties consent to venue and
jurisdiction in the Colorado District Court for the City and County of Denver (Second
Judicial District) and in the Federal District Court for the District of Colorado.
	 
	 	9.4	 	Counterpart. This Agreement may be executed in counterpart and will be binding
upon the Parties and their heirs, successors, assigns, and legal representatives.
	 
	 	9.5	 	Force Majeure. If any Party is rendered unable, wholly or in part, by force
majeure to carry out its obligations under this Agreement, other than the obligation to
indemnify or make money payments or furnish security, that Party shall give to all
other Parties prompt written notice of the force majeure with reasonably full
particulars concerning it; thereupon, the time allowed for performing such obligations
shall be enlarged by a period of time equal to the period of the force majeure. The
term “force majeure,” as here employed, means an act of God, strike, lockout, or other
industrial disturbance, act of the public enemy, war, blockade, public riot, lightning,
fire, storm, flood, or other act of Nature, explosion, governmental action,
governmental delay, litigation, restraint, injunction, unavailability of equipment,
drilling permits, and any other cause, whether of the kind specifically enumerated
above or otherwise, which is not reasonably within the control of the Party claiming
suspension.
	 
	 	 	 	The affected Party must use reasonable diligence to remove the force majeure
situation as quickly as practicable. The requirement that any force majeure must be
remedied with reasonable dispatch does not require the settlement of litigation or
the settlement of strikes, lockouts, or other labor difficulty by the Party
involved, contrary to its wishes; how all such difficulties are handled will be
entirely within the discretion of the Party concerned.
	 
	 	9.6	 	United States Funds. All accounts under this Agreement and all payments due
hereunder must be settled and made in United States dollars. All dollar amounts stated
herein are stated in United States dollars.
	 
	 	9.7	 	Successors and Assigns. This Agreement shall be binding upon and shall inure
to the benefit of the Parties to it and their respective legal representatives,
successors, and assigns. No assignment by a Party shall in any way diminish or
otherwise adversely affect the rights, interest, or obligations of any other Party. If
any Party to this Agreement assigns or conveys all, or a portion of its interest in
this Agreement, said assignment or conveyance shall be specifically made subject to all
of the terms and provisions of this Agreement. The Party assigning or conveying an
interest shall notify all other Parties in writing of the conveyance and provide all
other Parties with appropriate documents and information concerning the successor in
interest.

8

 

	 	9.8	 	Event of Conflict. In the event of any conflict or inconsistency between the
provisions of this Agreement and those of the Exhibits, the provisions of this
Agreement shall prevail.
	 
	 	9.9	 	Announcements. AOGI and Tahosa et al shall consult with each other with
regard to all press releases and other announcements concerning this Agreement or the
operations within the AMI contemplated hereby and, except as may be required by
applicable laws or the applicable rules and regulations of any governmental agency or
stock exchange, neither AOGI nor Tahosa et al shall issue any such press release or
make any other announcement without the prior consent of the other Party.
	 
	 	9.10	 	Representations and Warranties.
	 
	 	 	 	9.10a. AOGI Representation – AOGI represents, warrants, and agrees to and with the
other Parties hereto that AOGI has all requisite power and authority to enter into
and to perform its obligations under this Agreement.
	 
	 	 	 	9.10b Tahosa et al Representation – Tahosa et al represents, warrants, and agrees
to and with AOGI that each of the companies comprising Tahosa et al has all
requisite power and authority to enter into and to perform its obligations under
this Agreement.
	 
	 	9.11	 	Arbitration. In the event of any dispute between the Parties which arises
under this Agreement, such dispute shall be settled by arbitration in accordance with
the rules for commercial arbitration of the American Arbitration Association in effect
at the time such arbitration is initiated. A list of arbitrators shall be presented to
the Claimant and Respondent from which one will be chosen using the applicable rules.
The hearing shall be conducted in the City of Denver, Colorado, unless all Parties
consent to a different location. The decision of the arbitrator shall be final and
binding upon all Parties.
	 
	 	 	 	The prevailing party shall be awarded all of the filing fees and related
administrative costs. Administrative and other costs of enforcing an arbitration
award, including the costs of subpoenas, depositions, transcripts and the like,
witness fees, payment of reasonable attorney’s fees, and similar costs related to
collecting an arbitrator’s award, will be added to, and become a part of, the amount
due under the award. Any questions involving contract interpretation shall use the
laws of Colorado. An arbitrator’s decision may be entered in any jurisdiction in
which the party has assets in order to collect any amounts due hereunder.

9

 

IN WITNESS WHEREOF, this Agreement is executed the date of acknowledgement for each of the Parties,
effective as of the Effective Date.

	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	 

	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	TAHOSA HOLDINGS, LLC	 	 	 	EVERTSON ENERGY PARTNERS, LLC
	 
	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	By:

	 	/s/ Paul Urban
	 	 	 	By:
	 	/s/ Bruce Evertson	 	 	 	 	 	 
	 

	 	 
	 	 	 	 	 	 	 	 	 	 	 	 
	 

	 	     Paul Urban, Member
	 	 	 	 	 	     Bruce Evertson, Manager	 	 	 	 	 	 
	 
	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	MELANGE INTERNATIONAL, LLC	 	 	 	ROSE EXPLORATION, INC.
	 
	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	By:

	 	/s/ Gary C. Stewart
	 	 	 	By:
	 	/s/ Robert Coskey	 	 	 	 	 	 
	 

	 	 
	 	 	 	 	 	 	 	 	 	 	 	 
	 

	 	     Gary C. Stewart, Manager
	 	 	 	 	 	      Robert Coskey, President	 	 	 	 	 	 
	 
	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	EMPIRE OIL COMPANY	 	 	 	AMERICAN OIL AND GAS, INC.
	 
	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	By:

	 	/s/ William LaCrosse
	 	 	 	By:
	 	/s/ Patrick D. O’Brien	 	 	 	 	 	 
	 

	 	 
	 	 	 	 	 	 	 	 	 	 	 	 
	 

	 	      William LaCrosse, President
	 	 	 	 	 	      Patrick D. O’Brien, CEO	 	 	 	 	 	 

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