Document:

exv10w01

 

EXHIBIT 10.01

LAS VEGAS GAMING

SERIES A CONVERTIBLE PREFERRED STOCK

	 	 	 
	To:

	 	Holders of Las Vegas Gaming, Inc. Series A Preferred Stock
	From:

	 	Russell Roth — CEO Las Vegas Gaming, Inc.
	Date:

	 	February 12, 2007
	Subject:

	 	Exchanging Series A Convertible Preferred Stock for Series A Common Stock

Las Vegas Gaming, Inc. (“LVGI” or “the Company”) recently entered into an agreement with Treasure
Island Hotel and Casino (“TI”), a wholly-owned subsidiary of MGM Mirage, whereby TI will maintain
the required base jackpot bankroll for LVGI’s linked, progressive keno game, Nevada Numbers. Cash
resources previously required by the Nevada Gaming Control Board to be maintained as security for
the Nevada Numbers jackpot will now be available to the Company for operations in addition to its
planned rollout of PortalVisionTM.

In light of this development, and pursuant to
 the provisions of the Series A Convertible Preferred
Private Placement Memorandum (and the associated Certificate of Designation), the Company is hereby
exercising its right to convert all the Series A Convertible Preferred Shares into Series A Common
Shares on a one-for-one basis. The redemption date will be March 15, 2007. Accordingly, we
respectfully request that you sign the Series A Preferred stock certificate on the reverse side of
the certificate, with a gold medallion signature guarantee from your
bank or stock broker, and mail it to the Company in the pre-addressed envelope enclosed. In addition,
please indicate on the enclosed card the name in which you would like the Series A Common shares to
be registered along with the address to which you want the certificate mailed. If you have any
questions, please contact our Chief Financial Officer, Bruce Shepherd at 702-871-7111.

We thank you for the confidence that you have shown by your investment in our Company and for your
continued patience as we strive to achieve the success that we all anticipated at the time of the
Series A Offering.

Sincerely,

/s/ Russell Roth

Russell Roth

CEO

Las Vegas Gaming, Inc.

5 of 6exv10w02

 

EXHIBIT 10.02

LAS VEGAS GAMING

SERIES B CONVERTIBLE PREFERRED STOCK

	 	 	 
	To:

	 	Holders of Las Vegas Gaming, Inc. Series B Preferred Stock
	From:

	 	Russell Roth — CEO Las Vegas Gaming, Inc.
	Date:

	 	February 12, 2007
	Subject:

	 	Exchanging Series B Convertible Preferred Stock for Series A Common Stock or Cash

Las Vegas Gaming, Inc. (“LVGI” or “the Company”) recently entered into an agreement with Treasure
Island Hotel and Casino (“TI”), a wholly-owned subsidiary of MGM Mirage, whereby TI will maintain
the required base jackpot bankroll for LVGI’s linked, progressive keno game, Nevada Numbers. Cash
resources previously required by the Nevada Gaming Control Board to be maintained as security for
the Nevada Numbers jackpot will now be available to the Company for operations in addition to its
planned rollout of PortalVisionTM.

In light of this development, and pursuant to the Certificate of Designation for Series B
Convertible Preferred Stock, the Company is hereby providing notice of your right to exchange
one-half of your Series B Preferred Shares for either:

	(a)	 	your original investment in the shares exchanged, i.e., $5 per share, or
	 
	(b)	 	Series A common shares — at the rate of 5 Series A Common Shares for every 1
Series B Preferred Share or
	 
	(c)	 	you may also elect to exchange all of your Series B
Preferred Shares, for Series A Common Shares at a rate of
5 Series A Common Shares for every
1 Series B Preferred Share.

The funds represented by the remaining one-half of your Series B Preferred Shares will continue to
be held by the Company as security for its linked, progressive keno game, The Million Dollar
Ticket.

We respectfully request that you notify the Company
 of your decision as soon as possible, but not
later than May 13, 2007. In so doing, we ask that you complete the accompanying form and return it,
along with your Series B Preferred Certificate, which has been
signed on the reverse side, with a gold medallion signature guarantee
from your bank or stock broker, and mail it to the Company in the pre-addressed envelope provided for your
convenience.

If, in making your decision, you desire updated
 information about LVGI, we encourage you to visit
our website at www.LVGI.com or to contact our Chief Financial
Officer, Bruce Shepard, at 702-871-7111.

We thank you for the confidence that you have shown by your investment in our Company and for your
continued patience as we strive to achieve the success that we all anticipated at the time of the
Series B Offering.

Sincerely,

/s/ Russell Roth

Russell Roth

CEO

Las Vegas Gaming, Inc.

6 of 6AutoCoded Document

Exhibit 10.1

PARTICIPATION
AGREEMENT

		
	Effective Date:       January 31, 2007	 		 
	 			
	 			
	Parties:                  Nautilus Poplar, LLC	 		 
	                                 825 East Speer Boulevard, Suite 100E	 		
	                                 Denver, Colorado 80218	 		
	        
                    
    (“Nautilus”)	 		
	 			
	                                 and	 		
	 			
	       
                 
       Aspen Exploration Corporation	 		
	                                 PO Box 22530	 		
	                                 Bakersfield, California 93390-2530	 		
	        
                    
     (“ASPEN”)	 		
	 			
	 			

Recitals:

A.    Nautilus, a
Montana limited liability company, is a party to an Agreement of Purchase and Sale (“PSA”)
dated January 2, 2007 with Ballard Petroleum Holdings, LLC pursuant to which Nautilus
will acquire from Seller certain oil and gas properties, rights and assets (as more
specifically described in the PSA, the “Assets”).

B.    Aspen, a
Delaware corporation, desires to acquire from Nautilus an undivided interest in the
Assets subject to and promptly after the closing of the sale and purchase transactions
contemplated by the PSA (the “Closing”), and Nautilus is willing to assign and transfer such undivided
interest on the terms and conditions of this Participation Agreement (this Agreement).

C.    Nautilus
intends to finance a  portion of the Purchase Price (as defined in the PSA) for the
Assets, and  certain related cash bonding costs, through a $3,335,000 credit facility  (“Credit
Facility”) established pursuant a  Loan Agreement dated February 12, 2007
between Nautilus, as borrower, and Jonah  Bank of Wyoming (“Bank”), as
lender (the  “Loan Agreement”).

D.    Aspen
desires to participate in  the benefits under the Credit Facility in order to finance a
portion of the  price to be paid Nautilus for an undivided interest in the Assets and a
portion  of Aspen’s share of the cash bonding costs, and Nautilus is willing to
allow such participation on the terms and conditions of this  Agreement.

E.    Nautilus
intends to operate the Assets and to develop the Assets through the management of
Nautilus by its subsidiary, Nautilus Technical Group, LLC, a Colorado limited liability
company ("Nautilus Tech").

F.   Aspen
desires to convey a portion of its interest in the Assets to Nautilus Tech after Payout
(as defined below).

G.    HRC Partners
LLC, another  working interest owner according to terms of an agreement similar to this,
desires to evaluate the hydrocarbon potential of the Assets insofar as they  cover and
affect certain formations.

Agreements:

In
consideration of the Recitals, and for other good and valuable consideration, the
receipt and sufficiency of which is hereby acknowledged, and intending to be bound
hereby, Nautilus and Aspen (each a “Party” and collectively the (“Parties”)
hereby agree as follows:

ARTICLE I

SALE
AND PURCHASE

     Section
1.1    Sale and Purchase.

     Subject
to and immediately following the Closing under the PSA, and subject to the terms and
conditions hereof, effective January 1, 2007, Nautilus hereby agrees to sell, assign,
transfer, convey and set over to ASPEN, and ASPEN hereby agrees to purchase from
Nautilus, an undivided 12.5% of all of Nautilus’ right, title, estate and interest
(whether absolute or contingent, legal or beneficial) in and to the Assets (such
undivided 12.5% right, title, estate and interest being referred to herein as the “ASPEN
Assets”).

     Section
1.2    ASPEN Purchase Price; Payments by ASPEN.

	 	     a.   
The  aggregate consideration to be paid by ASPEN for the ASPEN Assets is the sum of One
Million Three Hundred Eighty Seven Thousand Five Hundred Dollars ($1,387,500) (the  “ASPEN
Purchase Price”). The ASPEN Purchase Price shall be adjusted in  proportion to
any operating adjustments made to the Purchase Price payable by Nautilus  under Sections
2.5 and 7.1 of the PSA. The ASPEN Purchase Price shall be payable as  follows:

	 	     i.   
No later than 5:00 pm, Mountain  Time, February 1, 2007, ASPEN shall pay Nautilus the sum
of One Million Twelve  Thousand Five Hundred Dollars ($1,012,500) in immediately
available funds by  certified or cashiers’ check, or by wire transfer to an
account  designated by Nautilus (the “ASPEN Cash  Payment”). ASPEN hereby
authorizes and directs Nautilus, and  Nautilus hereby expressly and unconditionally
undertakes and agrees, to remit  the ASPEN Cash Payment to Seller at Closing, and the
ASPEN Cash Payment shall be  credited against the Purchase Price payable to Seller at
Closing.

	 	     
ii.   
At Closing, Nautilus shall  remit, or cause to be remitted, to Seller, from the loan
proceeds under the Loan  Agreement, an amount equal to the difference between the ASPEN
Purchase Price  and the ASPEN Cash Payment, or Three Hundred and Seventy Five Thousand
Dollars  ($375,000), which amount shall be credited against the Purchase Price payable to
Seller at Closing.

	 	     
b.   
Any adjustments to the ASPEN  Purchase Price which are not determined as of January 31
2007 shall be settled by payment to or by Nautilus and ASPEN, as the case may  be,
without interest, as soon as practicable after January 31, 2007, and in any  event no
later than the date the final settlement between Nautilus and Seller  occurs under the
PSA.

	 	     
c.   
In addition to and  simultaneously with the ASPEN Cash Payment, ASPEN shall pay  Nautilus;

	 	     i.    the
sum of up to Fifty Three Thousand Seven Hundred Fifty Dollars ($53,750) representing
ASPEN’s 12.5% share of the estimated acquisition costs of Four Hundred and
Thirty Thousand Dollars ($430,000) incurred by Nautilus in the connection with the
acquisition of the Assets (the “Additional ASPEN Payment”). At such time as
the actual acquisition costs incurred by Nautilus are determined, ASPEN shall pay
Nautilus an amount, if any, by which such actual costs exceed the Additional ASPEN
Payment or, if applicable, Nautilus shall refund to ASPEN an amount, if any, by which
such actual costs are less than the Additional ASPEN Payment;

	 	     ii.   
the sum of up to Nine Thousand  Three Hundred Seventy Five Dollars ($9,375) representing
ASPEN’s 12.5%  share of the cost (estimated at Seventy-Five Thousand Dollars
($75,000)) of a  Bureau of Indian Affairs cash bond relating to the Assets;  and

	 	     
iii.   
at the request of Nautilus,  ASPEN’s proportionate share of the cost of any
additional bond or bond  amount required by the Environmental Protection Agency  (“EPA”)
in excess of the $235,000 EPA bond  to be secured by a letter of credit issued by the
Bank pursuant to the Credit  Facility.

	 	     
d.   
At Closing, Nautilus shall apply, or cause to be applied, from the loan proceeds under
the Loan Agreement, an amount equal to ASPEN’s proportionate 12.5% share of the
out-of-pocket cost to Nautilus of a Bureau of Land Management bond (in the principal
amount of $25,000), a Montana Board of Oil & Gas bond (in the principal amount of
$75,000), and an EPA bond (in the principal amount of $235,000), which amount in the
aggregate is estimated to be $ 3,335.00 (the “ASPEN Bond Premium Amount”).

	 	     
e.   
Notwithstanding anything herein  to the contrary, in the event the Closing under the PSA
does not occur by  February 28, 2007, or the PSA is otherwise terminated, Nautilus shall,
on the  first business day following such date or termination, return the ASPEN Cash
Payment and Additional ASPEN Payment to ASPEN, without  interest.

     Section
1.3    Conveyances by Nautilus.

     No
later than the first business day following the Closing under the PSA, Nautilus shall
execute and deliver to ASPEN one or assignments and bills of sale, and deeds, in
recordable form, conveying to ASPEN an undivided 12.5% of all Nautilus’ right,
title and estate and interest in and to the Assets, together with a corresponding
interest in Nautilu’ rights, benefits and privileges under the PSA, subject to the
lien of and security interest created by a mortgage or deed of trust and financing
statements executed by Nautilus in favor of the Bank (the “Bank Lien”) and
containing an assignment obligation to Nautilus Tech effective on the Date of Payout as
set forth in Section 4.2 below, but in each case free and clear of all other liens,
claims and encumbrances arising by, through or under Nautilus, and containing other
terms, conditions and provisions reasonably acceptable to ASPEN. Nautilus shall also
execute and deliver to ASPEN one or more assignments on appropriate federal, state or
tribal forms conveying a corresponding interest in any of the Assets which are federal,
state or tribal leases (together the recordable conveyances and deeds, the “Conveyances”).
All Conveyances shall be effective as of the same date and time as the conveyances of
the Assets from Seller to Nautilus. With the consent and at the direction of ASPEN,
Nautilus shall deliver the executed Conveyances to the Bank for recordation purposes.
The Parties acknowledge and agree that the execution and delivery by Nautilus of the
Conveyances, and delivery by ASPEN of the ASPEN Cash Payment and ASPEN Loan Proceeds (as
defined in Section 2.1 below), are to be treated as simultaneous conditions precedent,
and that failure of Nautilus to timely execute and deliver the Conveyances shall create
an immediate obligation on the part of Nautilus to return the ASPEN Cash Payment to
ASPEN and to assume sole and full responsibility for repaying the ASPEN Loan Proceeds to
the Bank under the terms of the Loan Agreement.

ARTICLE II

FINANCING

     Section
2.1    Credit Facility; ASPEN Loan Proceeds.

	 	     
a.   
As between Nautilus and ASPEN, the Parties acknowledge and agree that ASPEN shall be
permitted to use and apply a proportionate 12.5% share of the Credit Facility loan
proceeds to fund a portion of its obligation to pay the ASPEN Purchase Price under
Section 1.2(a)(ii) above and the ASPEN Bond Premium Amount under Section under Section
1.2(d) above. The aggregate amount of such loan proceeds is estimated to be Forty Two
Thousand Two Hundred Ninety Four ($42,294) and is referred to herein as the “ASPEN
Loan Proceeds”.

	 	     
b.   
ASPEN covenants and agrees with  and for the benefit of Nautilus to repay the ASPEN Loan
Proceeds (plus interest)  in proportionate amounts, on the repayment schedule and
pursuant to the other  terms and conditions of the Loan Agreement as fully as if ASPEN
were a party to  the Loan Agreement. Nautilus agrees to use its reasonable best efforts
to cause  the Bank to consent to repayment of the ASPEN Loan Proceeds by ASPEN directly
to  the Bank; provided that if the Bank does not give such consent, ASPEN shall  repay
the ASPEN Loan Proceeds (plus interest) to Nautilus, and Nautilus agrees  to remit such
amounts to the Bank simultaneously with repayments made by  Nautilus of its share of loan
proceeds. Nautilus covenants and agrees with and  for the benefit of ASPEN to repay its
proportionate share of the loan (plus  interest) under the Loan Agreement in amounts, on
the repayment schedule and  pursuant to the other terms and conditions of the Loan
Agreement, and to obtain  a release of the Bank Lien promptly upon repayment in full of
the loan under the  Loan Agreement. ASPEN acknowledges that until and unless the full
amount of the  loan (plus interest) under the Loan Agreement is repaid, the ASPEN Assets
shall  be subject to and encumbered by the Bank  Lien.

	 	     
c.   
The Parties shall each be  individually, and not jointly and severally, liable for
repayment of their  respective proportionate shares of all loan proceeds (plus interest)
used or  applied on their respective behalves under the Loan  Agreement.

     Section
2.2     Defaults.

	 	     a.    Nautilus
agrees to use its  reasonable best efforts to cause the Bank to deliver copies  of
demands, or  default, nonpayment or similar notices, if any, under the Loan Agreement  to
ASPEN simultaneously with delivery of any such notices to  Nautilus.

	 	     b.    Upon
receipt of any notice of  default or similar notice from the Bank, or otherwise upon
becoming aware of a  default in the performance of any obligation of the other Party
under Section  2.1(b) hereof or under the Loan Agreement to repay any of the loan
proceeds  (plus interest) or otherwise to perform any of the covenants under the Loan
Agreement, which default shall not have been timely cured by the defaulting  Party, and
subject to the rights of the Guarantor under the Commercial Guaranty  as described in
Section 2.3 below, the non-defaulting Party shall have the  right, but not the
obligation, to repay in full all defaulted amounts plus any  interest or penalties or to
otherwise cure the  default.

	 	     
c.   
Promptly upon receipt of  written notice from the non-defaulting Party that it has cured
the defaulting  Party’s default under Section 2.1(b) hereof or under or with respect
to  the Loan Agreement, accompanied by documentation evidencing the cure, the  defaulting
Party shall assign and transfer to the non-defaulting Party all  right, title, estate and
interest of the defaulting Party in and to the Assets,  without warranty of title express
or implied, but free and clear of all liens,  claims and encumbrances created by, through
or under the defaulting Party (other  than the Bank Lien, unless released prior thereto).
The foregoing remedy shall  be in addition to, and not in lieu of, the rights and
remedies of the  non-defaulting Party set forth in Section 5.2  hereof.

     Section
2.3    Undertaking of Guarantor.

     ASPEN
acknowledges that under that certain Commercial Guaranty in favor of Bank dated January
31, 2007, Nikolay Bogachev (‘Guarantor”) guaranteed certain obligations of
Nautilus under the Credit Facility and that, in the event of a default under the Loan
Agreement, Guarantor has the right to cure the default and to take an assignment of the
promissory note executed in favor of the Bank by Nautilus and the Bank Lien. ASPEN’s
obligations hereunder to purchase and pay for the ASPEN Assets are expressly subject to
the condition that ASPEN shall first have received from Guarantor a written undertaking
in form and substance reasonably satisfactory to ASPEN that Guarantor shall not,
subject to and for so long as ASPEN shall be not be in default of its obligation under
Section 2.1(b) hereof to repay the amount of the ASPEN Loan Proceeds (plus interest),
foreclose or seek to foreclose on the Bank Lien, or otherwise enforce or seek to enforce
any right or remedy available to him under the Bank Lien, applicable law or otherwise,
in each case insofar and only insofar as the Bank Lien covers, affects and encumbers the
ASPEN Assets.

ARTICLE III

OPERATIONS;
OTHER ACTIVITIES

     Section
3.1    Operator.

     The
Parties acknowledge that at or after Closing, and subject to Section 11.20 of the PSA,
Nautilus shall succeed Seller as operator of the Assets pursuant to certain Unit
Agreements, Unit Operating Agreements and Joint Operating Agreements (collectively, the
“Operating Agreements”) included in and covering the Assets.

     Section
3.2    Certain Activities by HRC.

     After
Closing, HRC Partners LLC shall be permitted to conduct certain exploration and
evaluation activities in or with respect to Assets insofar as they cover and affect
formations below the base of the Charles Formation as set forth in the authority for
expenditure and exploration proposal attached hereto as Exhibit A (“HRC Exploration
Activities”). Aspen shall have the right, but not the obligation, to participate in
the HRC Exploration Activities. In the event Aspen (and any other working interest
owner) so elects, it shall execute the authority for expenditure, whereupon HRC shall
charge Aspen and any other electing working interest owners for their proportionate
shares of the costs of the HRC Exploration Activities. The Parties shall amend, and
shall use their reasonable best efforts to cause other owners of working interests in
the Assets covering such formations to agree to amend, to the extent necessary, all
Operating Agreements to incorporate the Farmout Terms dated January 22, 2007 and
attached hereto as Exhibit B.

     Section
3.3    Workover Expenses.

     Simultaneously
with, and subject to, receipt of the executed Conveyances, ASPEN shall remit to Nautilus
the sum of Sixty Two Thousand Five Hundred Dollars ($62,500) as ASPEN’s
proportionate share of the cost of workover activities associated with the Assets for
the first quarter of 2007 as set forth in the 2007 Operating Plan and Budget attached
hereto as Exhibit C (the “Plan”). By their execution hereof,
ASPEN and Nautilus hereby agree to participate in and pay for a proportionate share of
the workover activities for the second quarter of 2007 as set forth in the Plan. The
aggregate estimated cost of the workover activities contemplated for the first two
quarters of 2007 is One Million Six Hundred and Thirty Thousand Dollars ($1,630,000) to
the 100% interest. Nautilus represents that each other owner of a working interest in
the Assets has also agreed to participate in and pay a proportionate share of the cost
of such second quarter workover activities. Upon completion of the second quarter
workover activities contemplated by the Plan, Nautilus and ASPEN (and any other working
interest owners) shall meet to review the results of such activities and to determine,
pursuant to the applicable Unit Operating Agreement or joint Operating Agreement,
whether to proceed with, participate in and pay for the additional workover activities
contemplated for the balance of 2007 by the Plan in amounts up to Three Million Two
Hundred Thousand Dollars ($3,200,000). If and after any such determination is made,
either Nautilus or ASPEN fail to participate in and pay for its proportionate share of
the costs of such workover activities, the non-consent penalties of the applicable Unit
Operating Agreement or joint Operating Agreement shall apply.

     Section
3.4    Operating Agreements.

     ASPEN
agrees to execute and be bound by any Unit Operating Agreements and joint  Operating
Agreements affecting or included in the  Assets.

ARTICLE IV

PAYOUT

     Section
4.1    Date of Payout.

     As
used herein, “Date of Payout” shall mean the first day of the month following the date on
which cumulative revenues received by ASPEN (as shown by ASPEN’s monthly statements) from
the sale of production attributable to its interest in the Assets (less, without
duplication, royalties, overriding royalties and other burdens on production, and
severance, excise, property, production and other taxes of any nature on such production
or chargeable to ASPEN’s interest in the Assets, paid or borne by ASPEN) first exceed the
sum of (a) one hundred and ten percent (110%) of all costs incurred by ASPEN in
acquiring the ASPEN’s Assets, including without limitation, the ASPEN Payment and all
financing, closing or other similar costs or expenses in connection with such
acquisition, (b) one hundred and ten percent (110%) of all working interest costs
incurred by ASPEN (as shown in ASPEN's monthly statements) in connection with
the drilling, testing, completing or plugging and abandoning, equipping and connecting
to and including the tanks or separator, any well on or included in the Assets, plus (c) one
hundred percent (100%) of the costs incurred by ASPEN (as shown in ASPEN’s monthly
statements), during the foregoing time period, in connection with the operation of such
wells and all other Assets, such recoverable costs in clauses (b) and (c) being limited
in each case to the those chargeable to the joint account in accordance with the
applicable Accounting Procedure attached to the applicable Operating Agreement included
in or affecting the Assets. Notwithstanding the foregoing, all revenues received by
ASPEN from, and all costs incurred by ASPEN in connection with, the HRC Exploration
Activities shall be excluded from the Date of Payout calculation.

     Section
4.2     Assignment Upon Payout.

     The
Conveyances shall provide that, effective as of the Date of Payout, ASPEN shall  be
deemed to have assigned, and shall assign, to Nautilus Tech (who shall be a  party to the
Conveyances) an undivided 20% of ASPEN’s right, title and  interest in and to
the Assets, without warranty of title, express or implied,  subject to the Bank Lien (if
applicable), but free and clear of all liens,  claims and encumbrances created by,
through or under ASPEN; it being the  intention of the Parties that, from and after the
Date of Payout, ASPEN shall  own, and the ASPEN Assets shall constitute, 10% of the
rights, titles, estates  and interests in the Assets acquired by Nautilus from  Seller.

ARTICLE V

MISCELLANEOUS

     Section
5.1    Assignability.

	 	     
a.   
Neither Party may assign its  rights or delegate its obligations under this Agreement
without the prior  written consent of the other Party, which shall not be unreasonably
withheld or  delayed; provided that, by its execution hereof, Nautilus hereby consents to
any  future assignment and delegation by ASPEN of all or any portion of its rights  and
obligations hereunder to it’s subsidiary companies or its designee.  No such
assignment or delegation shall be effective unless the assignee or  delegee agrees to
assume and be bound by the assigning or delegating  Party’s obligations hereunder.
Subject to the foregoing, this Agreement  shall bind and inure to the benefit of the
Parties, their successors and  permitted assigns.

	 	     b.    Nautilus
shall not  transfer all or any portion of its share of the Assets, and ASPEN  shall not
transfer all or any portion of the ASPEN Assets (other than to Hunter Energy  LLC  or its
designee), unless (i) the transfer is pursuant to a bona fide written  offer  to purchase
(“Third Party Offer”) and (ii) such portion  of the Assets  or ASPEN
Assets, as applicable, are first offered to the other  Party on the terms set  forth
herein. If the transferring Party desires to accept  the Third Party Offer, it  shall
first make a written offer  (“Offer”) to sell such Assets or  ASPEN
Assets, as applicable,  to the other Party on the same terms and conditions as set  forth
in the Third  Party Offer. The Offer shall be accompanied by a copy of the Third  Party
Offer.  The non-transferring Party shall have the right for a period of thirty days
after receipt of the Offer to elect to purchase all, but not less than all, of  the
Assets or ASPEN Assets, as applicable, so offered by the transferring Party  by giving
written notice of this election to the transferring Party. If the  non-transferring Party
elects to purchase the offered Assets or ASPEN Assets, as  applicable, the purchase shall
be closed and payment made on the same terms and  conditions as set forth in the Offer.
If the non-transferring Party does not  elect to purchase the offered Assets or ASPEN
Assets, as applicable, the  transferring Party may transfer the offered Assets or ASPEN
Assets, as  applicable, to a third party on the same terms and conditions as set forth in
the Third Party Offer (except for immaterial changes to the Offer which are no  more
favorable to the third party transferee than the terms set forth in the  Offer). If a
transfer to a third party is not made within sixty days after the  non-transferring Party’s
right to purchase has terminated, and the  transferring Party desires to transfer the
Assets or ASPEN Assets, as  applicable, such transfer shall be made only after again
complying with the  terms of this Section 5.1(b).

     Section
5.2    Defaults.

     If
either Party defaults in the timely and proper performance of any obligation  hereunder
(time being of the essence), including without limitation the  covenants made to each
other to repay to the Bank any and all loan proceeds  (plus interest) under the Loan
Agreement, the non-defaulting Party shall be  entitled to exercise any and all rights and
remedies (all of which shall be  cumulative and not exclusive), including specific
performance of this Agreement  or claims for damages, which it may have against the
defaulting Party, either at  law or in equity, for the breach of this Agreement, in whole
or in  part.

     Section
5.3    Relationship of the Parties.

     The
Parties do not intend to create, nor shall this Agreement be construed as  creating, a
mining or other partnership or association. This Agreement does not  render the Parties
liable as partners. The liability of the Parties shall be  several and not joint or
collective.

     Section 5.4    Arbitration.

     Any
unresolved dispute or controversy arising under or in connection with this  Agreement
shall be resolved by arbitration in accordance with the procedures set  forth in Article
XVII of the Operating Agreement of Nautilus attached hereto as  Exhibit D.

     Section
5.5    Area of Mutual Interest.

     There
is hereby created an area of mutual interest (“AMI”) between the Parties as
described on Exhibit E attached hereto for the duration of Nautilus’ ownership of
the Assets from the Effective Date of this Agreement applicable to the acquisition of
oil and gas rights within the AMI. In the event either Party acquires any oil and gas
rights within the AMI after the Effective Date, including rights acquired by virtue of
farmouts or other contracts covering lands within the AMI (collectively, “Oil and
Gas Rights”), the acquiring Party shall given written notice thereof to the
non-acquiring Party. The non-acquiring Party shall have a period of 30 days from receipt
of such notice to acquire its proportionate share of the Oil and Gas Rights by providing
written notice to the Acquiring Party within said period. If the non-acquiring Party
timely elects to acquire its proportionate share of the Oil and Gas Rights, it shall pay
to the acquiring Party its proportionate share of the cost of the acquisition and/or, in
the case of a farmout or other agreement providing for certain performance such as the
drilling of a well, agree to bear its proportionate share of the cost of any performance
required to earn thereunder. Thereupon, the acquiring Party shall immediately execute
and deliver the appropriate assignment or deed, without warranty of title, to the
non-acquiring Party, and thereafter the jointly-owned Oil and Gas Rights shall be
subject to the terms of the applicable Unit Operating Agreement or joint Operating
Agreement. In the event the non-acquiring Party elects not to acquire its proportionate
share of the Oil and Gas Rights, or fails to timely make its election, the acquiring
Party shall thereafter own such Oil and Gas Rights and such rights shall be excluded
from such Operating Agreements.

     Section
5.6    Entire Agreement.

     This
Agreement, the exhibits hereto, and the Unit Agreements, Unit Operating  Agreements and
Operating Agreements referred to herein contain the entire  agreement of the Parties and
supersede all previous agreements or communications  between the Parties, verbal or
written, with regard to the subject matter  hereof.

     Section
5.7    Governing Law.

     This
Agreement shall be governed by, and interpreted in accordance with, the laws of  the
State of Colorado.

     Section
5.8    Counterparts.

     This
Agreement may be executed by signing the original or a counterpart thereof. If  this
Agreement is executed in counterparts, all counterparts taken together  shall have the
same effect as if all Parties had signed the same  instrument.

     Section
5.9    Third-Party Beneficiaries; Other Participants.

	 	     a.   
Nautilus Tech is an intended  third-party beneficiary of this Agreement, and shall be
entitled to enforce the  provisions of Section 4.2 against ASPEN. The Bank is an intended
third-party  beneficiary of this Agreement, and shall be entitled to enforce the
provisions  of Section 2.1(b) against the applicable Party. No other third-parties are
intended to benefit by the covenants, agreements, representations, warranties or  any
other terms or provisions of this  Agreement.

	 	     b.   
ASPEN and Nautilus acknowledge  and agree that one or more third parties will acquire
interests in the Assets  from Nautilus simultaneously with ASPEN on terms similar to
those set forth  herein.

	 	     
c.   
The Seller has made certain  representations and warranties in the PSA to Nautilus as the
purchaser of the  Assets. At the time of the completion of the purchase by Nautilus,
Nautilus is the sole purchaser under the PSA and is entitled to 100% of the  benefits of
the Seller’s representations and warranties.  Under the terms of the PSA, Aspen is
not entitled to directly rely on the  Seller’s representations and warranties. If,
in  Aspen’s reasonable judgment, any of the Seller’s  representations and
warranties in the PSA prove to be inaccurate, incomplete, or  misleading in any material
respect to the extent that liability would exist  under the PSA if asserted by Nautilus
against the Seller, Nautilus will enforce  the representations and warranties in the PSA
in its own name, for the benefit  of Aspen, unless Nautilus’; counsel issues his or
her written opinion to  Aspen that such enforcement would not be reasonable in the
circumstances.

     Section
5.10    Amendments.

     This
Agreement shall not be varied in its terms or amended by oral agreement or by
representations or otherwise other than by an instrument in writing dated  subsequent to
the date hereof, and executed by a duly authorized representative  of each Party.

     Section
5.11    Further Assurances.

     Each
Party will, from time to time and at all times after Closing, without further
consideration, do such further acts and deliver such further assurances, deeds  and
documents as shall be reasonably required in order to fully perform and  carry out the
terms of this Agreement.

     Section
5.12    Severability.

     Should
any of the provisions of this Agreement to any extent be held to be invalid or
unenforceable, the remainder of this Agreement shall continue in full force and  effect
to the full extent possible.

     Section
5.13    Survival. 

     The
enforceability of the  representations and warranties contained herein are enforceable
against the  person making such representation or warranty in accordance with the terms
thereof notwithstanding any investigation by the party seeking such  enforcement.

     Section
5.14    Waiver.

     No
provision of this Agreement may be waived, except by an agreement in writing  signed by
all the Parties. A waiver of any term or provision shall not be  construed as a wavier of
any other term or  provision.

[signature
page follows] 

     IN
WITNESS WHEREOF, this Agreement is executed and effective as of the Effective  Date.

	 	NAUTILUS: 

	 	Nautilus
Poplar, LLC  -  

	 	By:   
Nautilus Technical Group, LLC,  
its  Managing Member 

	 	By:   /s/    Roland E. Blauer 
Roland E. Blauer 
Its Managing Member 

	 	ASPEN: 

	 	Aspen
Exploration Corporation 

	 	
By:   /s/    Robert A. Cohan 
Robert A. Cohan President & CEO 

Exhibit
“A”
to
Participation Agreement
dated effecive January 29,2007

Work
proposal and Authority for Expenditure
Nisku &Duperow formation program

To identify and
define potential  exploration opportunities in formations deeper than the base of the
Charles  “C” formation HRC Partners LLC will conduct detailed  petrographic
sample analysis and log analysis on the existing sample cuttings  and logs on the wells
drilled into the Nisku and Duperow formations in the  Popular Unit area and N.W. Popular
Unit. The petrographic and log interpretation  work is expected to take approximately two
months to complete, after which HRC  will present its technical findings to
Nautilus/Aspen, propose drilling on any  new prospects, and market such prospects to
industry partners in accordance with  the terms contained in Exhibit “B”.

		
	Estimated program expenditures:	 		 
	         Petrographic and log interpretation work	 	$25,000	 
	         Prospect marketing expense	 	$25,000	 
	 			
	                        Total cost estimate	 	$50,000	 
	 			
	 			

WORKING
INTEREST OWNER APPROVAL:

The undersigned
party hereby  agrees to and accepts the foregoing proposal and cost  estimate:

By:____________________________________

Date:___________________________________

Exhibit “B”
to 
Participation
Agreement
dated effective January 31, 2007 

Pursuant  to
that certain Work Proposal and Authority for Expenditure attached as Exhibit  A to this
Participation Agreement, Hunter shall conduct certain exploration  activities in the
Poplar field area with respect to the Nisku and Duperow  formations, which are situated
below the current producing Charles formations. In  conjunction with this effort Nautilus
(and specifically the Nautilus Members)  and Hunter agree as follows:

	a. 	 	 Nisku
and Duperow formation prospects (deep prospects) 

	1. 	 	Hunter
intends to evaluate,  generate and market prospects in formations situated deeper than
the Charles  “C” formation in the Poplar field area and has submitted an  authority
for expenditure (AFE) to Nautilus detailing its  estimate of the costs and expenses
(including the costs of  it’s; employees/consultants) to evaluate, generate and
market  these prospects. 

	2. 	 	Within
30 days if receipt of  Hunter’s proposal, Nautilus shall make an election to
indicate whether  or not it will participate in the proposed work as to it’s
interest. If  Nautilus approves Hunter’s AFE, Nautilus will reimburse Hunter for
68.75% of its costs and expenses incurred in this effort, and thereafter have  the right
to participate for up to, but not more than, 50% of its right, title  and interest in any
such deep prospects generated by Hunter. In respect to any  well proposed by Hunter to a
formation deeper than the Charles  “C” formation, Nautilus agrees to farmout to
Hunter at least  50% of its interest. Such proposed operations will be conducted under
and  governed by the applicable Operating Agreement, provided however, in lieu of any
non-consent provision contained in the Operating Agreement, farmout terms for  its
non-participating interest shall be as set out in a. or b. below (as  applicable). 

	a.	 	Nautilus
  will  farmout and assign its non participating interest (not less than 50%) in
the proposed  well and the corresponding Prospect Area from the base of the  Charles
“C” formation  down to the stratigraphic equivalent of  total depth drilled in
the proposed well  (excluding any currently producing  formations) subject to Nautilus’;
reservation of  a proportionately  reduced 12.5% carry to the casing point in the initial
well and  designated  Prospect Area (Nautilus will retain 12.5% of its right, title and
interest in  the Prospect Area in return for a proportionately reduced 12.5% carry to
casing  point in  the proposed well). Further, Hunter will pay a consideration of $ 10.00
per net acre for  the relinquished net acres in the Prospect  Area. 

	b. 	 	 In
the  event Nautilus (or a member thereof) does not fund its share of  Hunter's
costs in evaluating, generating and marketing such prospects,  Nautilus will farmout and
assign its non participating interest (not less than  50%) in the proposed well and the
corresponding Prospect Area from the base of  the Charles “C” formation down to
the stratigraphic equivalent  of total depth drilled in the proposed well (excluding any
currently producing  formations) subject to Nautilus’ reservation of a
proportionately  reduced 6.25% carry to the casing point in the initial well and
designated  Prospect Area (Nautilus will retain 6.25% of its right, title and interest in
the Prospect Area in return for a proportionately reduced 6.25% carry to casing  point in
the proposed well). Further, the Hunter will pay a consideration of $  10.00 per net acre
for the relinquished net acres in the Prospect  Area. 

	3. 	 	 Notwithstanding
anything to the  contrary contained herein, it is the intent that Nautilus will not have
the  right to participate for more than 50% of its working interest in any prospects
generated by Hunter as to those formations which are deeper in depth than the  base of
the Charles  formation. 

EXHIBIT C
to

Participation Agreement 
dated effective January 31, 2007

Operating
Plan and Budget

[see
attached]   

EXHIBIT
D
to
Participation  Agreement 
dated effective January __, 2007

Nautilus
Operating Agreement

[see
attached] 

EXHIBIT
E
to
Participation  Agreement 
dated  effective January __, 2007

Area
of Mutual Interest

An area within
two miles of the  outside boundaries of the East Poplar Unit and Northwest Poplar Field
depicted  on the plat attached hereto.

Source: [{"source": "alea-institute/alea-institute/kl3m-data-edgar-agreements/train-00117-of-00352.parquet"}, [{"source": "alea-institute/alea-institute/kl3m-data-edgar-agreements/train-00117-of-00352.parquet"}], [{"source": "alea-institute/alea-institute/kl3m-data-edgar-agreements/train-00117-of-00352.parquet"}]]