Document:

June 30, 2005

PERSONAL AND CONFIDENTIAL

Mr. Wolfgang Grabher
7932 Prospect Place
La Jolla, Ca 92037

Dear Mr. Grabher:

      This later memorializes the agreement (the "Agreement") that you reached
with Patient Safety Technologies, Inc. ("PST") under which directly or though
its agents or representatives PST agreed to serve as a consultant to IPEX, Inc.
(the "Company") a Nevada Corporation whose principal place of business is 9255
Towne Centre Drive, Suite 235, San Diego, California (the "Company") in
connection with the provision of certain turnaround services described below to
the Company. You acknowledge that you are the principal and largest shareholder
of the Company and that you have a substantial interest in its viability and
financial performance.

      Pursuant to the Agreement, PST has provided and/or Will provide if
reasonably necessary within the next 12 months, the following services (the
"Services") to the Company: (a) substantial review of the Company% business and
operations in order to facilitate an analysis of the Company's strategic options
regarding a turnaround of the Company; (b) providing advice in the following
areas: (i) identification of financing sources for the Company; (ii) providing
capital introductions to the Company of financial institutions and/or strategic
investors; (iii) evaluation and recommendation of candidates for appointment as
officers, directors or employees of the Company; (iv) making personnel of PSI
available to the Company to provide services to the Company on a temporary or
permanent basis; (v) evaluation and/or negotiation of merger or sate
opportunities for the Company, or such other form of transaction or endeavor
which the Company may elect to pursue; and (vi) providing any other services as
are mutually agreed upon in writing by PST and Grabher from time to time; and
(c) assisting the Company in installing a new management team.

      In consideration of the Services provided by PSI to the Company under the
Agreement, Grabher agrees to pay to PST, on or before August 15, 2005 either (1)
500,000 shares of common stock of the Company (the "Shares") or (2)
$1,500,000.00 (one and a half million dollars) in cash (the "Cash") as a
non-refundable consulting fee (the "Consulting Fee") Whether the Consulting Fee
shall be paid in the form of the Shares or the Cash shall be in the sole
discretion of Grabber.

<PAGE>

Mr. Wolfgang Grabher
June 30, 2005
Page 2

      If Grabher determines to pay the Consulting Fee by Shares, then for the
purpose of ensuring the transfer of the Shares to PST as contemplated herein,
Grabber agrees to enter into such additional agreements, sign such additional
documents, and provide such additional certifications and documentation as may
be requested by PST, the Transfer Agent, the Company or such other parties
necessary to carry out the terms of the Agreement. Grabher represents and
warrants that all Shares owned by Grabher have been duly authorized and validly
issued, and are free and clear of all liens and other encumbrances, and are
fully paid and non-assessable.

      This letter agreement contains the entire agreement between the parties
hereto with respect to the subject matter hereof', and all prior negotiations,
agreements and understandings are merged herein. This letter agreement may not
be modified or rescinded except pursuant to a written instrument signed by the
party against whom enforcement is sought.

      The terms and conditions of this Agreement shall inure to the benefit of
and be binding upon the respective successors, heirs and assigns of the parties.
Nothing in this Agreement, express or implied, is intended to confer upon any
party other than the parties hereto or their respective successors, heirs and
assigns any rights, remedies, obligations, or liabilities under or by reason of
this Agreement, except as expressly provided in this Agreement.

      If the foregoing correctly sets forth our mutual understanding, please
indicate your acceptance hereof by signing and returning the original copy of
this letter agreement to the undersigned.

                                    Sincerely,

                                    PATIENT SAFETY TECHNOLOGIES, INC.

                                    By: /s/ Milton Ault
                                        -----------------------------
                                            Milton "Todd" Ault, III
                                            Chief Executive Officer

Accepted and Agreed to this 30 day of
June, 2005

Wolfgang Grabher

By: /s/ Wolfgang Grabher
    ---------------------------------July 7, 2005

PERSONAL AND CONFIDENTIAL

VIA FEDEX

Mr. Mr. Russell Ingledew President and Chief Financial Officer IPEX, Inc.
9255 Towne Centre Drive, Suite 235
San Diego, California 92121

      RE:   Agreement between Patient Safety Technologies and Wolfgang
            Grabher for services to IPEX, Inc.

Dear Mr. Ingledew:

      As you know, Patient Safety Technologies, Inc. ("PST") recently entered
into an agreement with Wolfgang Grabher ("Grabher") whereby PST has agreed to
serve as a consultant to IPEX, Inc. (the "Company") in connection with the
provision of certain turnaround services to the Company (the "Agreement").

      Pursuant to that Agreement (a copy of which is attached hereto as Exhibit
A), PST agreed to provide the following services ("the "Services") to the
Company: (a) substantial review of the Company's business and operations in
order to facilitate an analysis of the Company's strategic options regarding a
turnaround of the Company; (b) providing advice in the following areas: (i)
identification of financing sources for the Company; (ii) providing capital
introductions to the Company of financial institutions and/or strategic
investors; (iii) evaluation and recommendation of candidates for appointment as
officers, directors or employees of the Company; (iv) making personnel of PST
available to the Company to provide services to the Company on a temporary or
permanent basis; (v) evaluation and/or negotiation of merger or sale
opportunities for the Company, or such other form of transaction or endeavor
which the Company may elect to pursue; and (vi) providing any other services as
are mutually agreed upon in writing by PST and Grabher from time to time; and
(c) assisting the Company in installing a new management team.

      The parties to the Agreement agree that the Company is an intended third
party beneficiary of the Agreement, and, as such, shall have the right to
enforce any provision of the Agreement against either party thereto by
instituting all necessary actions at law or suits in equity, including, without
limitation, suits for specific performance.

      We therefore request that you consent to the rendering of Services by PST
to the Company pursuant the Agreement, and the Company's third-party beneficiary
interest in such Agreement.

<PAGE>

Mr. Russell Ingledew
IPEX, Inc.
July 7, 2005
Page 2

      Please evidence your consent to and acknowledgement of the foregoing by
signing the acknowledgment below, faxing the executed page to (310) 752-1486,
and returning the original executed letter to PST at 100 Wilshire Blvd, Suite
1500, Santa Monica, CA 90401.

      Should you have any questions, please do not hesitate to contact me at
(310) 752-1416. Thank you for your assistance with this matter. Your prompt
attention is greatly appreciated.

                                    Sincerely,

                                    PATIENT SAFETY TECHNOLOGIES, INC.

                                    By: /s/ Milton Ault
                                        -----------------------------
                                            Milton C. Ault, III
                                            Chief Executive Officer

Accepted and Agreed to this 7th
day of July, 2005.

IPEX, Inc.

       /s/ Russell Ingledew
       -------------------------------------
By:    Russell Ingledew
Title: President and Chief Financial Officer

Enclosures /

cc:  Wolfgang Grabher

<PAGE>

Mr. Russell Ingledew
IPEX, Inc.
July 7, 2005
Page 3

                                    EXHIBIT A

                               [FORM OF AGREEMENT]REVOLVING CREDIT LOAN AGREEMENT

      THIS REVOLVING CREDIT LOAN AGREEMENT, is made this 30th day of June, 2005,
by and between Kestrel Energy, Inc. (the "Borrower"), a Colorado corporation,
and Samson Oil & Gas N.L., an Australian corporation ("Lender").

                                    RECITALS

      A. WHEREAS, Borrower is desirous of borrowing sums from time to time up to
an aggregate amount of Three Million Five Hundred Thousand Dollars ($3,500,000)
from Lender in the form of a revolving line of credit; and

      B. WHEREAS, Lender is willing to provide the above-described loans to
Borrower on the terms and conditions hereinafter set forth.

            NOW, THEREFORE, in consideration of the foregoing and the mutual
covenants herein contained, the parties agree as follows:

      1. Terms of Revolving Credit. Subject to the terms and conditions of this
Agreement, Lender hereby agrees to establish a revolving credit facility
(hereinafter, the "Revolving Credit") in the maximum amount of Three Million
Five Hundred Thousand Dollars ($3,500,000) in favor of Borrower on the following
terms and conditions:

            a. The term of the Revolving Credit shall begin on the date hereof
and shall end on the earlier to occur of three (3) years from the date of this
agreement or the date which is mutually agreed upon by the Lender and the
Borrower (the "Repayment Date").

            b. Concurrently herewith, Borrower shall execute a Revolving Credit
Master Note of even date herewith in the form attached hereto as Exhibit A in
favor of Lender in the face amount of $3,500,000 (the "Note"), payable on the
Repayment Date.

            c. Advances under the Revolving Credit may be made, upon request of
Borrower in accordance with the terms of this Agreement, at any time prior to
the Repayment Date upon receipt by Lender of a request therefor signed by
Borrower. At no time shall the aggregate obligation of Borrower to Lender exceed
Three Million Five Hundred Thousand Dollars ($3,500,000) plus accrued but unpaid
interest on amounts previously received. Borrower may at any time prior to the
Repayment Date repay all or any part of said loans under the Revolving Credit
and subsequently receive further advances, consistent with the terms and
conditions hereof.

            d. Principal amounts due under the Revolving Credit shall bear
interest and principal and interest shall be payable in accordance with the
terms of the Note.

            e. Borrower may prepay under the Note at any time in any amount
without premium or penalty.

<PAGE>

            f. Amounts borrowed under the Revolving Credit shall be used for the
purposes specified in Section 8.a(2) of this Agreement.

      2. Fees and Expenses. Borrower agrees to bear all legal expenses required
for the preparation of this Agreement, the Note, and other documents in
connection with this Revolving Credit and the making, protection, enforcement
and collection of all amounts advanced under the Revolving Credit. These costs
do not include, however, the fees of separate counsel for Lender, if any, or the
costs and expenses incurred in enforcing the rights of Lender under this
Agreement except upon the occurrence of an Event of Default (hereinafter
defined).

      3. Promise to Pay and Conversion Rights. Borrower promises to pay to
Lender when due, whether by normal maturity, acceleration or otherwise, the
entire outstanding principal amount of the Revolving Credit together with
interest, and all other amounts payable by Borrower to Lender hereunder,
including costs of collection. Borrower also agrees that Lender may elect to
convert all or any portion of the unpaid principal and interest owed under this
Agreement and the Note into shares of the Borrower's common stock at a
conversion price of $1.50 per share (the "Conversion Price").

      4. Events of Default; Acceleration. Any or all of the liabilities of
Borrower to the Lender in connection with the Revolving Credit shall, at
Lender's option, be due and payable upon the occurrence of any of the following
events of default (each of which shall be hereinafter referred to as an "Event
of Default") ") and the failure by Borrower to cure such Event of Default within
thirty (30) days of receipt of written notice from Lender of its intent to
accelerate the repayment of the Note on account thereof: (a) default in the
payment, when due or payable, of any obligation of Borrower under this Agreement
or the Note; (b) failure of Borrower after reasonable written request by Lender
to permit the inspection of books or records of Borrower at a reasonable time
and place; (c) issuance of any injunction or of an attachment or judgment
against any property of Borrower securing the Note which is not discharged
within ten (10) business days after issuance; (d) the insolvency of Borrower, or
the filing of any bankruptcy, reorganization, debt arrangement or other
proceeding or case against Borrower under any bankruptcy or insolvency law or
commencement of any dissolution or liquidation proceeding against Borrower, any
of which is either consented to or acquiesced in by Borrower or remains
undismissed for thirty (30) days after the date of entry or the commencement by
Borrower of a voluntary case under the federal bankruptcy laws or any state
insolvency or similar laws, or the consent by Borrower to the appointment of a
receiver, liquidator, assignee, trustee, custodian or similar official for
Borrower or any of its property, as the case may be, or the making by Borrower
of any assignment for the benefit of creditors; or (e) material failure of a
"Condition of Lending" described hereinafter in Section 6. A violation or breach
of a representation or warranty by the Borrower shall not constitute an Event of
Default and will not excuse Lender from performance of its obligations hereunder
but such violation or breach may entitle Lender to seek damages from Borrower
resulting from such violation or breach.

      5. Waivers. Borrower waives demand, notice, protest, notice of acceptance
of this Agreement, notice of loans made, credit extended, and all other action
taken in reliance hereon and all other demands and notices of any type.

                                       2
<PAGE>

      6. Conditions of Lending. This Agreement and any and all advances under
the Revolving Credit are and shall at all times be subject to the following:

            a. The representations and warranties of Borrower to Lender shall be
materially accurate on the date hereof and on and as of the date of each advance
under the Revolving Credit with the same effect as though such representations
and warranties had been made on and as of such date.

            b. All covenants and agreements required to be performed by Borrower
under this Agreement and under the Note shall have been materially performed to
the reasonable satisfaction of Lender as and when required.

            c. On the date hereof and on and as of the date of each advance
under the Revolving Credit no Event of Default shall have occurred and no
condition, event or act which, with the giving of notice or the lapse of time or
both, would constitute an Event of Default shall have occurred or shall exist.

            d. All legal details and proceedings in connection with the
transactions contemplated by this Agreement shall be in form and substance
reasonably satisfactory to Lender and its counsel.

      7. Borrower's Representations and Warranties. To induce Lender to enter
into this Agreement, Borrower represents and warrants to Lender as follows:

            a. Existence; Power; Authority. Borrower is a corporation duly
organized, validly existing and in good standing under the laws of Colorado.
Borrower is duly and validly authorized by all necessary corporation action and
has full power and authority to enter into this Agreement, to make the
borrowings hereunder, to execute and deliver this Agreement and the Note, and to
perform and comply with the terms, conditions, and agreements set forth herein
and therein.

            b. Binding Agreement. This Agreement constitutes, and the Note, when
made and delivered for value received will constitute, the valid and legally
binding obligations of Borrower, enforceable in accordance with their respective
terms.

            c. No Conflicting Agreements. The execution of and performance under
this Agreement and the Note and the borrowings hereunder and thereunder by the
Borrower will not violate: (i) any statute, regulation or other provision of
law; (ii) any order of a court or instrumentality of government having
jurisdiction over the Borrower; (iii) any provision of the Articles of
Incorporation of the Borrower; or (iv) any indenture, contract, agreement or
other instrument to which the Borrower is a party or by which the Borrower or
any of its property is bound. There are no provisions of any existing mortgage,
deed of trust, contract, lease, or other agreement of any kind binding on the
Borrower or affecting its business or property which would prohibit the
execution, delivery or performance of the terms of this Agreement or the Note.

            h. Violation of Laws. Neither the consummation of this Agreement nor
the use, directly or indirectly, of all or any portion of the proceeds of the
Revolving Credit will violate or result in a violation of any provision of any
applicable law or of any applicable order of, or restriction imposed by, any
applicable governmental or regulatory entity or authority.

                                       3
<PAGE>

      8. Borrower's Covenants. Until all obligations and liabilities of Borrower
to Lender under this Agreement and the Note have been paid and performed in
full, Borrower shall keep and perform the following covenants, and does hereby
covenant, agree and promise to Lender as follows:

            a. General Affirmative Covenants. Borrower shall, at all times
during the term of the Revolving Credit and at all times that any advances
hereunder are outstanding, do the following:

                  (1) Insurance. After acquisition thereof, maintain adequate
      general public liability and other insurance on the collateral securing
      the Note as is customarily maintained by similar companies operating in
      the same vicinities as Borrower, and Borrower will upon request of Lender,
      deliver to Lender copies of the policies concerned.

                  (2) Use of Proceeds. Use any and all amounts advanced under
      this Agreement solely for the working capital needs of Borrower.

                  (3) Information. Furnish to Lender, promptly from time to
      time, such non-confidential information concerning the operations,
      business, affairs, and financial condition of the Borrower as Lender may
      reasonably request.

                  (4) Books, Records, and Inspections. At all times (a) maintain
      complete and accurate books and records and (b) permit Lender to examine
      and inspect all properties, books, operations and records of Borrower at
      any reasonable time and from time to time wherever such properties, books,
      and records are located.

                  (5) Events of Default. Promptly inform Lender of the
      occurrence of any Event of Default or the occurrence of any condition,
      event or act which, with the giving of notice or lapse of time or both,
      would constitute an Event of Default hereunder.

            b. Negative Covenant. Without the prior written consent of Lender,
      Borrower shall not at any time during the term of the Revolving Credit
      sell, sell and leaseback, mortgage, pledge or otherwise encumber or
      dispose of any of the collateral securing the Note, or permit any new
      liens or security interests to be placed thereon, except for Permitted
      Liens, as such term is defined in the Mortgage, Deed of Trust, Security
      Agreement, Assignment of Production and Financing Statement, of even date
      herewith, by Mortgagor for the use and benefit of Mortgagee.

      9. Jurisdiction and Venue. In any action brought by Lender under this
Agreement, Borrower consents to the exercise of personal jurisdiction over it by
the courts of the State of Colorado and agrees that venue shall be proper in any
County of the State of Colorado or in the City and County of Denver, in addition
to any other court where venue may be proper. Borrower waives and releases, to
the extent permitted by law, all errors and all rights of exemption, appeal,
stay of execution, inquisition and extension upon any levy on real estate or
personal property to which the Borrower may otherwise be entitled under the laws
of the United States of America now in force or which may hereafter be passed,
as well as the benefit of any or every statute, ordinance, or rule of court
which may be lawfully waived conferring upon Borrower any right or privilege of
exemption, stay of exercise, or supplementary proceedings, or other relief from
the enforcement or immediate enforcement of a judgment or related proceedings on
a judgment.

                                       4
<PAGE>

      10. Notices. All notices, consents, approvals, requests, demands and other
communications which are required or may be given hereunder shall be in writing
and shall be duly given if personally delivered, sent by telefax, telegram or
overnight courier or posted by U.S. registered or certified mail, return receipt
requested, postage prepaid and addressed to the other parties at the addresses
set forth below.

Lender

      Samson Oil & Gas N.L.
      Level 36, Exchange Plaza
      2 The Esplanade
      Perth, Western Australia 6000

Borrower:

      Kestrel Energy, Inc.
      1726 Cole Boulevard, Suite 210
      Lakewood, Colorado 80401
      Attention: Timothy L. Hoops

Any party may from time to time change the address to which notices to it are to
be sent by giving notice of such change to the other parties in the manner set
forth herein. Notices shall be deemed given on the next business day following
the day such notice is posted or sent by courier in the manner described above,
and if sent by telefax or telegram, on the date such notice is sent, and if
delivered in person, on the date so delivered. Any notice period shall commence
on the day such notice is deemed given. For the purposes of this Agreement, the
term "business day" shall include all days other than Saturdays, Sundays and
federal banking holidays.

      11. Security and Subordination. The debts evidenced by the Note shall be
secured by a security interest in the oil and gas properties of Borrower listed
on Exhibit B hereto, provided, however, that such security interest shall be
subordinated to the existing security interest of Borrower's primary lenders,
currently R&M Oil and Gas, Ltd..

                                       5
<PAGE>

      12. Miscellaneous

            a. No Waiver. No failure or delay of any party hereto to exercise
any right given to it hereunder, or to insist on strict compliance with any
provision hereunder, shall constitute a waiver of such provision or of any other
provision hereof, or a waiver of any breach, and no waiver of any provision or
breach of any provision shall constitute a waiver of any other provision or
breach or of any subsequent breach of the same provision. No waiver shall be
effective unless in writing and signed by the party having the right to waive
such provision.

            b. Survival. All covenants, agreements, representations and
warranties made herein and in any other instruments or documents delivered
pursuant hereto shall survive the execution and delivery of this Agreement and
shall continue in full force and effect so long as any of the amounts due
hereunder are outstanding and unpaid.

            c. Entire Agreement; Modification. This Agreement constitutes the
entire agreement between the parties hereto with respect to the subject matter
hereof, superseding all prior negotiations, correspondence, understandings and
agreements, if any, between the parties; no amendment or modification of this
Agreement shall be binding on the parties unless made in writing and duly
executed by all parties. There are no oral or implied agreements and no oral or
implied warranties between the parties hereto other than those expressed herein.

            d. Binding Effect; Assignability. This Agreement shall be binding
upon and inure to the benefit of the parties hereto and their respective
successors and assigns. This Agreement shall not be assignable by the Borrower
without the prior written consent of Lender.

            e. Headings. The section and other headings in this Agreement are
for reference only and shall not limit or otherwise affect any of the terms
hereof.

            f. Further Assurances and Corrective Instruments. The parties hereto
agree to execute, acknowledge, seal and deliver, after the date hereof, without
additional consideration, such further assurances, instruments and documents,
and to take such further actions, as the parties hereto shall request in order
to fulfill the intent of this Agreement and the transactions contemplated
hereby.

            g. Severability. Any provision in this Agreement which is prohibited
or unenforceable in any jurisdiction shall, as to such jurisdiction, be
ineffective to the extent of such prohibition or unenforceability without
invalidating the remaining provisions hereof or affecting the validity or
enforceability of such provisions in any other jurisdiction.

            h. Expenses of Collection. Should this Agreement be referred to an
attorney for collection, whether or not judgment has been confessed or suit has
been filed, Borrower shall pay all of Lender's actual costs, fees (including
reasonable attorneys' fees) and expenses resulting from such referral.

            i. Governing Law. This Agreement is made in and shall be governed by
and construed and interpreted in accordance with this laws of the State of
Colorado.

                                       6
<PAGE>

      IN WITNESS WHEREOF, the parties hereto have executed and delivered this
Agreement under seal, with the intention of making it a sealed instrument, as of
the day and year first above written.

BORROWER:

KESTREL ENERGY, INC.

By: /s/ Timothy L. Hoops
    -------------------------------------
    Timothy L. Hoops
    President and Chief Executive Officer

LENDER:

SAMSON OIL & GAS N.L.

By: /s/ Terry Barr
    -------------------------------------
    Terry Barr, Managing Director

                                       7
<PAGE>

                                    EXHIBIT A

                          REVOLVING CREDIT MASTER NOTE

$3,500,000                                                    Lakewood, Colorado
                                                                   June 30, 2005

      FOR VALUE RECEIVED, the undersigned (hereinafter, the "Borrower") promises
to pay to the order of Samson Oil & Gas N.L., an Australian corporation
(hereinafter, "Lender") at Lender's offices at Level 36, Exchange Plaza, 2 The
Esplanade, Perth, Western Australia 6000 or at such other place as the holder of
this Note may from time to time designate, in lawful money of the United States
of America, the principal sum of Three Million Five Hundred Thousand Dollars
($3,500,000) (or so much thereof as has been advanced or re-advanced hereunder
from time to time) together with interest thereon at the rate and upon the terms
hereinafter provided. This promissory note (this "Note") is issued pursuant to
the Revolving Credit Loan Agreement between the Borrower and the Lender of even
date herewith (the "Loan Agreement") and is in all respect subject to the
various terms and conditions described in the Loan Agreement. In addition, the
following terms shall apply to this Note:

            1. Interest Rate. For the period from the date of this Note until
      the date on which the entire principal balance outstanding is paid in full
      (at stated maturity, on acceleration or otherwise), interest shall accrue
      on the principal balance from time to time outstanding at the rate of
      5.25% per annum.

            2. Repayment. The entire amount of principal outstanding shall be
      due and payable on the Repayment Date (as hereafter defined). On the 15th
      day of each month that there is an outstanding balance under this Note
      Borrower shall make a monthly payment equal to the accrued interest on
      this Note as of that date. Any accrued but unpaid interest shall be due
      and payable on the Repayment Date (as hereinafter defined). For purposes
      of this Note, the "Repayment Date" is the earlier to occur of that date
      which is three (3) years following the date of this Agreement or the date
      which is mutually agreed upon by the Lender and the Borrower, including
      but not limited to any requirements for early repayment found in the
      Revolving Credit Loan Agreement between the parties of even date herewith
      (the "Loan Agreement").

            3. Calculation of Interest. Interest shall be calculated on the
      basis of a three hundred sixty five (365) days per year factor applied to
      the actual days on which there exists an unpaid principal balance.
      Interest shall be calculated by Lender and billed to Borrower for each
      appropriate period; provided, however, that failure of Lender to bill
      Borrower shall not relieve Borrower's payment obligations hereunder.

            4. Application of Payments. All payments made hereunder shall be
      applied first to late penalties or other sums owing the holder, next to
      accrued and unpaid interest, and then to principal.

                                      A-1
<PAGE>

            5. Optional Prepayment. Borrower may prepay this Note in whole or in
      part at any time or from time to time without penalty, additional interest
      or premium.

            6. Event of Default. As used herein the term "Event of Default"
      shall mean (a) a failure to make any payment of any amount required to be
      paid pursuant to this Note on the date such payment is due under this
      Note; and (b) an Event of Default as such term is defined under the Loan
      Agreement.

            7. Late Payment Penalty. Should any payment of interest or principal
      and interest due hereunder be received by the holder of this Note more
      than ten (10) days after its due date, Borrower shall, in addition to the
      default interest rate, pay a late payment penalty equal to five percent
      (5%) of the amount overdue.

            8. Acceleration Upon Event of Default. Upon the occurrence of an
      Event of Default, Lender may, at its option, in its sole and absolute
      discretion and without notice or demand, declare the entire unpaid balance
      of principal plus accrued interest and any other sums payable hereunder
      immediately due and payable.

            9. Default Interest Rate. Upon the occurrence of an Event of
      Default, the rate of interest accruing on the disbursed unpaid principal
      balance shall automatically and without further action by Lender be
      increased to 10% per annum, independent of whether Lender elects to
      accelerate the unpaid principal balance as a result of such default.

            10. Jurisdiction and Venue. In any action brought by Lender under
      this Agreement, Borrower consents to the exercise of personal jurisdiction
      over it by the courts of the State of Colorado and agrees that venue shall
      be proper in any County of the State of Colorado or in the City and County
      of Denver, in addition to any other court where venue may be proper.
      Borrower waives and releases, to the extent permitted by law, all errors
      and all rights of exemption, appeal, stay of execution, inquisition and
      extension upon any levy on real estate or personal property to which
      Borrower may otherwise be entitled under the laws of the United States of
      America now in force or which may hereafter be passed, as well as the
      benefit of any or every statute, ordinance, or rule of court which may be
      lawfully waived conferring upon Borrower any right or privilege of
      exemption, stay of exercise, or supplementary proceedings, or other relief
      from the enforcement or immediate enforcement of a judgment or related
      proceedings on a judgment.

            11. Interest Rate After Judgment. If judgment is entered against
      Borrower on this Note, the amount of the judgment entered (which may
      include principal, interest, default interest, late charges, fees and
      costs) shall bear interest at the highest rate authorized under this Note
      as of the date of entry of the judgment.

            12. Expenses of Collection. Should this Note be referred to an
      attorney for collection, whether or not judgment has been confessed or
      suit has been filed, Borrower shall pay all of Lender's actual costs, fees
      (including reasonable attorneys' fees) and expenses resulting from such
      referral.

                                      A-2
<PAGE>

            13. Waiver of Protest. Borrower hereby waives presentment, notice of
      dishonor and protest.

            14. Commercial Loan. Borrower acknowledges and warrants that this
      Note evidences a "commercial loan" and that the proceeds of the Note will
      be used for the sole purpose of carrying on a business or commercial
      enterprise and not for personal, family, household or agricultural
      purposes.

            15. Waiver. No failure or delay by the holder hereof to insist upon
      the strict performance of any term, provision, or agreement of this Note,
      or to exercise any right, power or remedy consequent upon a breach
      thereof, shall constitute a waiver of any such term, provision or
      agreement or of any such breach, or preclude the holder hereof from
      exercising any such right, power or remedy at any later time or times. By
      accepting payment after the due date of any amount payable under this
      Note, the holder hereof shall not be deemed to have waived the right
      either to require prompt payment when due of all other amounts due under
      this Note, or to declare a default hereunder.

            16. Notices. All notices, consents, approvals, requests, demands and
      other communications which are required or may be given hereunder shall be
      in writing and shall be duly given if personally delivered, sent by
      telefax, telegram or overnight courier or posted by U.S. registered or
      certified mail, return receipt requested, postage prepaid and addressed to
      the other parties at the addresses set forth below.

If to the Lender:

      Samson Oil & Gas N.L.
      Level 36, Exchange Plaza
      2 The Esplanade
      Perth, Western Australia 6000

If to the Borrower:

      Kestrel Energy, Inc.
      1726 Cole Boulevard, Suite 210
      Lakewood, Colorado 80401
      Attention:  Timothy L. Hoops

Any party may from time to time change the address to which notices to it are to
be sent by giving notice of such change to the other parties in the manner set
forth herein. Notices shall be deemed given on the next business day following
the day such notice is posted or sent by courier in the manner described above,
and if sent by telefax or telegram, on the date such notice is sent, and if
delivered in person, on the date so delivered. Any notice period shall commence
on the day such notice is deemed given. For the purposes of this Agreement, the
term "business day" shall include all days other than Saturdays, Sundays and
federal banking holidays.

                                      A-3
<PAGE>

            17. Headings. The section headings in this Note are for reference
      only, and shall not limit or otherwise affect any of the terms hereof.

            18. Choice of Law. This Note is executed in and shall be governed,
      construed and enforced in accordance with the laws of the State of
      Colorado.

            19. Binding Effect. This Note shall be binding upon Borrower and its
      successors and assigns.

      IN WITNESS WHEREOF, the undersigned has executed this Note under seal,
with the intention that it be a sealed instrument on the day and year first
above written.

                                       BORROWER:

                                       Kestrel Energy, Inc.

                                       By:
                                           -------------------------------------
                                           Timothy L. Hoops,
                                           President and Chief Executive Officer

                                      A-4
<PAGE>

                                    EXHIBIT B

All right title and interest of Kestrel Energy, Inc. in the oil and gas
interests in Campbell, Converse, Sublette and Sweetwater Counties, Wyoming and
in Lea County, New Mexico.

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