Document:

posam1060308ex4-1.htm

    THE
WARRANTS EVIDENCED HEREBY HAVE NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF
1933, AS AMENDED, NOR ANY OTHER APPLICABLE SECURITIES ACT (THE “ACTS”), AND MAY
NOT BE SOLD, TRANSFERRED, ASSIGNED, PLEDGED OR OTHERWISE DISTRIBUTED, UNLESS
THERE IS AN  EFFECTIVE REGISTRATION STATEMENT UNDER SUCH ACTS COVERING
SUCH WARRANTS OR THE COMPANY RECEIVES AN OPINION OF COUNSEL FOR THE HOLDER OF
THESE SECURITIES (CONCURRED ON BY COUNSEL FOR THE COMPANY) STATING THAT SUCH
SALE, TRANSFER, ASSIGNMENT, PLEDGE OR DISTRIBUTION IS EXEMPT FROM OR IN
COMPLIANCE WITH THE REGISTRATION AND PROSPECTUS DELIVERY REQUIREMENTS OF SUCH
ACTS.

    

    Exercisable
on or before

    the
Expiration of Warrant Date

    (as
defined in Section 8 below)

    

    

    WARRANT
TO PURCHASE

    COMMON
STOCK

    

    of

    

    STERLING
OIL & GAS COMPANY

    (a
Nevada Corporation)

    

    WARRANT
NO. ____

    

    THIS
CERTIFIES THAT, for value received, ________________ (the “Holder”) is entitled
to subscribe for and purchase ___________________________ (______) shares (as
adjusted pursuant to Section 3 hereof) of the fully paid and nonassessable
Common Stock, $0.00001 par value (the “Shares”) of Sterling Oil & Gas
Company, a Nevada corporation (the “Company”), at the price of fifty cents
($0.50) per share (the “Exercise Price”) (as adjusted pursuant to Section 3
hereof), subject to the provisions and upon the terms and conditions hereinafter
set forth.

    

    This
Warrant is issued pursuant to and subject to the purchase of registered common
stock as of ___________, 2008, by the Holder.   In the event of
the sale by the Holder of the appurtenant registered common shares, this warrant
is detachable and may not be sold in the absence of an exemption from
registration, as provided in the legend above.

    

    1. Method of Exercise;
Payment.

    

    (a) Exercise.  The
purchase rights represented by this Warrant may be exercised by the Holder, in
whole or in part, by the surrender of this Warrant (with the notice of exercise
form attached hereto as Exhibit A duly executed) at the principal office of the
Company, and by the payment to the Company, by cash in the form of certified,
cashier's or other check acceptable to the Company in an amount equal to the
aggregate Exercise Price of the Shares being

    
      
         

      

      
        1

        
          

        

      

      
         

      

    

    purchased.

    

    (b) Stock
Certificates.  In the event of any exercise of the rights
represented by this Warrant, certificates for the Shares so purchased shall be
delivered to the Holder within a reasonable time and, unless this Warrant has
been fully exercised or has expired, a new Warrant representing the shares with
respect to which this Warrant shall not have been exercised shall also be issued
to the Holder within such time.

    

    2. Stock Fully Paid;
Reservation of Shares.  All of the Shares issuable upon the
exercise of the rights represented by this Warrant will, upon issuance and
receipt of the Exercise Price therefor, be fully paid and nonassessable, and
free from all taxes, liens and charges with respect to the issue
thereof.  During the period within which the rights represented by
this Warrant may be exercised, the Company shall at all times have authorized
and reserved for issuance sufficient shares of its undesignated Common
Stock  to provide for the exercise of the rights represented by this
Warrant.

    

    3. Adjustments.  Subject
to the provisions of Section 11 hereof, the number and kind of securities
purchasable upon the exercise of this Warrant and the Exercise Price therefor
shall be subject to adjustment from time to time upon the occurrence of certain
events, as follows:

    

    (a) Reclassification.  In
case of any reclassification or change of the Common Stock (other than a change
in par value, or as a result of a subdivision or combination), the Company shall
execute a new Warrant, providing that the holder of this Warrant shall have the
right to exercise such new Warrant, and procure upon such exercise and payment
of the same aggregate Exercise Price, in lieu of the shares of the Common Stock
theretofore issuable upon exercise of this Warrant, the kind and amount of
shares of stock, other securities, money and property receivable upon such
reclassification or change, by a holder of an equivalent number of shares of
Common Stock.  Such new Warrant shall provide for adjustments which
shall be as nearly equivalent as may be practicable to the adjustments provided
for in this Section 3. The provisions of this subsection (a), subject to Section
11 hereof, shall similarly apply to successive reclassifications or
changes.

    

    (b) Stock Splits, Dividends and
Combinations. In the event that the Company shall at any time subdivide
the outstanding shares of Common Stock or shall issue a stock dividend on its
outstanding shares of Common Stock the number of Shares issuable upon exercise
of this Warrant immediately prior to such subdivision or to the issuance of such
stock dividend shall be proportionately increased, and the Exercise Price shall
be proportionately decreased, and in the event that the Company shall at any
time combine the outstanding shares of Common Stock the number of Shares
issuable upon exercise of this Warrant immediately prior to such combination
shall be proportionately decreased, and the Exercise Price shall be
proportionately increased, effective at the close of business on the date of
such subdivision, stock dividend or combination, as the case may
be.

    

    4. Notice of
Adjustments. Whenever the number of Shares purchasable hereunder or the
Exercise Price thereof shall be adjusted pursuant to Section 3 hereof, the
Company shall provide notice to the Holder setting forth, in reasonable detail,
the event requiring the adjustment, the

    
      
         

      

      
        2

        
          

        

      

      
         

      

    

    amount of
the adjustment, the method by which such adjustment was calculated, and the
number and class of Shares which may be purchased and the Exercise Price
therefore after giving effect to such adjustment.

    

    5. Fractional
Shares.  This Warrant may not be exercised for fractional
shares.  In lieu of fractional shares the Company shall make a cash
payment therefore based upon the fair market value of the Shares or may round
the shares to be issued to the nearest whole share.

    

    6. Restrictive Legend;
Restrictions Upon Transfer.  The Shares to be issued pursuant
to exercise of the Warrant (unless registered under the Act) shall be stamped or
imprinted with a restrictive legend and will be subject to restrictions on
transfer, in each case as provided herein and in the Agreement.

    

    7. Rights of
Shareholders. No holder of this Warrant shall be entitled, as a Warrant
holder, to vote or receive dividends or be deemed the holder of the Shares or
any other securities of the Company which may at any time be issuable on the
exercise hereof for any purpose, nor shall anything contained herein be
construed to confer upon the holder of this Warrant, as such, any of the rights
of a stockholder of the Company or any right to vote for the election of
directors or upon any matter submitted to shareholders at any meeting thereof,
or to give or withhold consent to any corporate action (whether upon any
recapitalization, issuance of stock, reclassification of stock, change of par
value, consolidation, merger, conveyance, or otherwise) or to receive notice of
meetings, or to receive dividends or subscription rights or otherwise until the
Warrant shall have been exercised and the Shares purchasable upon the exercise
hereof shall have become deliverable, as provided herein.

    

    8. Expiration of
Warrant. This Warrant shall expire and shall no longer be exercisable at
5:00 p.m. Mountain Time, on ______________, 2011, a date exactly three (3) years
from the date of the purchase of the Warrant.

    

    9. Assignment.  Neither
this Warrant nor any of the rights, interests or obligations hereunder may be
assigned, by operation of law or otherwise, in whole or in part, by the Company
or the Holder without the prior written consent of the other, except in
connection with an assignment in whole to a successor corporation to the
Company, provided that such successor corporation acquires all or substantially
all of the Company's property and assets and the Holder's rights hereunder are
not impaired.

    

    10. Notices. All notices
and other communications required or permitted hereunder shall be in writing,
shall be effective when given, and shall in any event be deemed to be given upon
receipt or, if earlier, (a) five (5) days after deposit with the U.S. Postal
Service or other applicable postal service, if delivered by first class mail,
postage prepaid, (b) upon delivery, if delivered by hand, (c) one business day
after the business day of deposit with Federal Express or similar overnight
courier, freight prepaid for priority overnight delivery, or (d) one business
day after the business day of facsimile transmission, if delivered by facsimile
transmission with copy by first class mail, postage prepaid, and shall be to the
address set forth for such party in the Agreement or at such other address as a
party may designate by ten days advance written notice to the other party
pursuant to the provisions above.

    
      
         

      

      
        3

        
          

        

      

      
         

      

    

    

    11. Reorganization,
Reclassification, Consolidation, Merger or Sale.  If any
reorganization of the capital stock of the Company, or any consolidation or
merger of the Company with another corporation, or the sale of all or
substantially all of its assets to another corporation shall be effected in such
a way that holders of Common Stock shall be entitled to receive stock,
securities, or other assets or property, then, as a condition of such
reorganization, reclassification, consolidation, merger or sale, lawful and
adequate provisions shall be made whereby the holder hereof shall thereafter
have the right to purchase and receive (in lieu of the shares of the Common
Stock of the Company immediately theretofore purchasable and receivable upon the
exercise of the rights represented hereby) such shares of stock, securities or
other assets or property as may be issued or payable with respect to or in
exchange for a number of outstanding shares of Common Stock, equal to the number
of shares of such stock immediately theretofore purchasable and receivable upon
the exercise of the rights represented hereby.  In any reorganization
described above, appropriate provision shall be made with respect to the rights
and interests of the Holder of this Warrant that the provisions hereof
(including, without limitation, provisions for adjustments of the Exercise Price
and of the number of shares purchasable and receivable upon the exercise of this
Warrant) shall thereafter be applicable, as nearly as may be, in relation to any
shares of stock, securities or assets thereafter deliverable upon the exercise
hereof.

    

    12. Governing Law. This
Warrant shall be governed by and construed under the laws of the State of
Nevada.

    

    IN
WITNESS WHEREOF, the Company has caused this Warrant to be issued as of the date
first written above.

    

    

    STERLING
OIL & GAS COMPANY

    

    

    

    By:
_________________________

          Timothy
G. Barritt

          President

    

    

    Attachment

    Exhibit
A - Notice of Exercise

    

    

    

    

    

    

    

    
      
         

      

      
        4

        
          

        

      

      
         

      

    

    

    

    EXHIBIT
A

    

    NOTICE OF
EXERCISE

    

    

    To:                      
Sterling Oil & Gas Company

    Attention:                                
President

    

    1. The
undersigned hereby elects to purchase __________ shares of Common Stock of Big
Cat Energy Corp. (the “Company”) pursuant to the terms of the attached
Warrant.

    

    2. The
undersigned elects to exercise the attached Warrant by means of a cash payment,
and tenders herewith payment in full for the purchase price of the shares being
purchased.

    

    3. Please
issue a certificate or certificates representing said Warrant Shares in the name
of the undersigned.

    

    

    

    ________________________________

    

    [Investor
Name]

    Date:

     

    5exh10-1_agmt.htm

     

    
      

      

    

     

     

     

     

    EXHIBIT 10.1

     

    PURCHASE AND SALE AGREEMENT

    
 

    
      
         

      

      
         

        
          

        

      

      
         

      

    

    

    

    

    

    

    

    

    

    PURCHASE
AND SALE AGREEMENT

    

    BETWEEN

    

    PETROHUNTER
ENERGY CORPORATION

    AND

    PETROHUNTER
OPERATING COMPANY

    

    AS
SELLER

    

    AND

    

    LARAMIE
ENERGY II, LLC

    

    AS
BUYER

    

    

    DATED
EFFECTIVE APRIL 1, 2008

    

    

    

    

    MESA
AND GARFIELD COUNTIES, COLORADO

    

    CONFIDENTIAL

    
      
         

      

      
         

        
          

        

      

      
         

      

    

    TABLE OF
CONTENTS

     

    
      	
               
      

            	
              Page

            

    

    
 

    
      
        	
                ARTICLE
      1 PURCHASE AND SALE

              	
                1

              
	 	 	 	 
	 
      	
                1.1

              	Purchase
      and Sale	
                1

              
	 	 	 	 
	 
      	
                1.2

              	Assets	
                1

              
	 	 	 	 
	 
      	
                1.3

              	Effective
      Time	
                2

              
	 	 
	
                ARTICLE
      2 PURCHASE PRICE

              	
                2

              
	 	 	 	 
	 
      	
                2.1

              	Purchase
      Price	
                2

              
	 	 	 	 
	 
      	
                2.2

              	Escrow
      Account	
                2

              
	 	 	 	 
	 
      	
                2.3

              	Adjustments
      to Purchase Price	
                3

              
	 	 	 	 	 
	 
      	
                 

              	a.	
                Upward
      Adjustments

              	
                3

              
	 	 	 	 	 
	 
      	
                 

              	b. 	
                Downward
      Adjustments

              	
                3

              
	 	 	 	 
	 
      	
                2.4

              	 
      Allocated
      Values	
                4

              
	 	 
	
                ARTICLE
      3 DUE DILIGENCE REVIEW

              	
                4

              
	 	 	 	 
	 
      	
                3.1

              	Access
      to Records	
                4

              
	 	 	 	 
	 
      	
                3.2

              	Representation
      and Warranty	
                4

              
	 	 	 	 
	 
      	
                3.3

              	Access
      to Properties	
                4

              
	 	 
	
                ARTICLE
      4 TITLE MATTERS

              	
                4

              
	 	 	 	 
	 
      	
                4.1

              	Defensible
      Title	
                4

              
	 	 	 	 
	 
      	
                4.2

              	Permitted
      Encumbrances	
                5

              
	 	 	 	 
	 
      	
                4.3

              	Title
      Defects	
                5

              
	 	 	 	 
	 
      	
                4.4

              	Adjustments
      for Title Defects	
                5

              
	 	 	 	 	 
	 
      	
                 

              	a. 	
                Notice
      of Title Defects

              	
                5

              
	 	 	 	 	 
	 
      	
                 

              	b. 	
                Defect
      Adjustments

              	
                5

              
	 	 	 	 
	 
      	
                4.5

              	Dispute
      Resolution	
                6

              
	 	 	 	 
	 
      	
                4.6

              	Casualty
      Loss	
                7

              

      

       

      
        
          
          

        

        
          
          

          
            

          

        

        
          
          

        

        
          TABLE OF
CONTENTS

           

          
            	
                     
      

                  	
                    Page

                  

          

           

        

      

      
        	 	 
	
                ARTICLE
      5 ENVIRONMENTAL MATTERS

              	
                7

              
	 	 	 	 
	 
      	
                5.1

              	Definitions	
                7

              
	 	 	 	 	 
	 
      	
                 

              	a. 	
                Environmental
      Laws

              	
                7

              
	 	 	 	 	 
	 
      	
                 

              	b. 	
                Governmental
      Authority

              	
                7

              
	 	 	 	 	 
	 
      	
                 

              	c. 	
                Environmental
      Defect

              	
                7

              
	 	 	 	 	 
	 
      	
                 

              	d. 	
                Remediation

              	
                8

              
	 	 	 	 
	 
      	
                5.2

              	Environmental
      Assessment	
                8

              
	 	 	 	 
	 
      	
                5.3

              	Adjustments
      for Environmental Defects Pre-Closing	
                8

              
	 	 	 	 	 
	 
      	
                 

              	a. 	
                Notice
      of Environmental Defects

              	
                8

              
	 	 	 	 	 
	 
      	
                 

              	b.	
                Defect
      Adjustments

              	
                8

              
	 	 	 	 
	 
      	
                5.4

              	Environmental
      Dispute Resolution Pre-Closing	
                8

              
	 	 	 	 
	 
      	
                5.5

              	Seller’s
      Indemnity	
                9

              
	 	 	 	 
	 
      	
                5.6

              	Buyer’s
      Indemnity	
                9

              
	 	 
	
                ARTICLE
      6 SELLER’S REPRESENTATIONS

              	
                10

              
	 	 	 	 
	 
      	
                6.1

              	PetroHunter
      Energy Entity Representations	
                10

              
	 	 	 	 
	 
      	
                6.2

              	PetroHunter
      Operating Entity Representations	
                10

              
	 	 	 	 
	 
      	
                6.3

              	Power	
                10

              
	 	 	 	 
	 
      	
                6.4

              	Authorization
      and Enforceability	
                10

              
	 	 	 	 
	 
      	
                6.5

              	Liability
      for Brokers’ Fees	
                10

              
	 	 	 	 
	 
      	
                6.6

              	No
      Bankruptcy	
                10

              
	 	 	 	 
	 
      	
                6.7

              	Litigation	
                10

              
	 	 	 	 
	 
      	
                6.8

              	Taxes	
                11

              
	 	 	 	 
	 
      	
                6.9

              	Tax
      Partnerships	
                11

              
	 	 	 	 
	 
      	
                6.10

              	Agreements	
                11

              
	 	 	 	 
	 
      	
                6.11

              	Prepayments	
                11

              
	 	 	 	 
	 
      	
                6.12

              	Hydrocarbon
      Sales Contracts	
                11

              

      

       

       

      
        
          
          

        

        
          
          

          
            

          

        

        
          
          

        

      

      
        TABLE OF
CONTENTS

         

        
          	
                   
      

                	
                  Page

                

        

         

      

      
        	 	 	 	 
	 
      	
                6.13

              	Hedging
      Arrangements	
                11

              
	 	 	 	 
	 
      	
                6.14

              	Preferential
      Rights to Purchase and Areas of Mutual Interest	
                11

              
	 	 	 	 
	 
      	
                6.15

              	Third-Party
      Consents	
                11

              
	 	 	 	 
	 
      	
                6.16

              	Leases	
                11

              
	 	 	 	 
	 
      	
                6.17

              	Surface
      Use Agreements	
                12

              
	 	 	 	 
	 
      	
                6.18

              	Liens
      and Encumbrances	
                12

              
	 	 	 	 
	 
      	
                6.19

              	Imbalance
      Volumes	
                12

              
	 	 	 	 
	 
      	
                6.20

              	Lease
      Burdens	
                12

              
	 	 	 	 
	 
      	
                6.21

              	Compliance
      with Law	
                12

              
	 	 	 	 
	 
      	
                6.22

              	Outstanding
      Commitments, AFEs and Invoices	
                12

              
	 	 	 	 
	 
      	
                6.23

              	Plugging
      and Abandonment Obligations	
                12

              
	 	 
	
                ARTICLE
      7 BUYER’S REPRESENTATIONS

              	
                13

              
	 	 	 	 
	 
      	
                7.1

              	Organization
      and Standing	
                13

              
	 	 	 	 
	 
      	
                7.2

              	Power	
                13

              
	 	 	 	 
	 
      	
                7.3

              	Authorization
      and Enforceability	
                13

              
	 	 	 	 
	 
      	
                7.4

              	Liability
      for Brokers’ Fees	
                13

              
	 	 	 	 
	 
      	
                7.5

              	No
      Bankruptcy	
                13

              
	 	 	 	 
	 
      	
                7.6

              	Litigation	
                13

              
	 	 
	
                ARTICLE
      8 PRE-CLOSING OBLIGATIONS

              	
                13

              
	 	 	 	 
	 
      	
                8.1

              	Operations
      Prior to Closing	
                13

              
	 	 	 	 
	 
      	
                8.2

              	Restriction
      on Operations	
                14

              
	 	 	 	 
	 
      	
                8.3

              	Legal
      Status	
                14

              
	 	 	 	 
	 
      	
                8.4

              	Notices
      of Claims	
                14

              
	 	 	 	 
	 
      	
                8.5

              	Compliance
      with Laws	
                15

              
	 	 	 	 
	 
      	
                8.6

              	Government
      Reviews and Filings	
                15

              
	 	 	 	 
	 
      	
                8.7

              	Confidentiality
      of Data and Information	
                15

              

      

       

       

      
        
          
          

        

        
          
          

          
            

          

        

        
          
          

        

      

      
        TABLE OF
CONTENTS

         

        
          	
                   
      

                	
                  Page

                

        

         

      

      
        	 	 
	
                ARTICLE
      9 CONDITIONS TO CLOSING

              	
                15

              
	 	 	 	 
	 
      	
                9.1

              	Buyer’s
      Conditions	
                15

              
	 	 	 	 	 
	 
      	
                 

              	a.	
                Representations,
      Warranties and Covenants

              	
                15

              
	 	 	 	 	 
	 
      	
                 

              	b.	
                No
      Action

              	
                15

              
	 	 	 	 	 
	 
      	
                 

              	c.	
                Title
      Defects

              	
                15

              
	 	 	 	 	 
	 
      	
                 

              	d.	
                Dismissal
      of Furr Lawsuit

              	
                16

              
	 	 	 	 	 
	 
      	
                 

              	e.	
                Ratification
      of Furr Lease

              	
                16

              
	 	 	 	 	 
	 
      	
                 

              	f.	
                Ratifications
      and Extensions of Jolley Leases

              	
                16

              
	 	 	 	 	 
	 
      	
                 

              	g.	
                Termination
      of Apollo Agreement

              	
                16

              
	 	 	 	 	 
	 
      	
                 

              	h.	
                Remediation
      of Furr and Reppo Pitts

              	
                16

              
	 	 	 	 	 
	 
      	
                 

              	i.	
                Termination
      of Clear Creek Agreements

              	
                16

              
	 	 	 	 	 
	 
      	
                 

              	j.	
                Release
      of Global Project Finance AG Mortgage

              	
                16

              
	 	 	 	 	 
	 
      	
                 

              	k.	
                Release
      of CCES Deed of Trust

              	
                17

              
	 	 	 	 	 
	 
      	
                 

              	l.	
                Creditor
      Agreements

              	
                17

              
	 	 	 	 	 
	 
      	
                 

              	m.	
                MAB
      Resources, LLC Disclaimer

              	
                17

              
	 	 	 	 	 
	 
      	
                 

              	n.	
                Delivery
      of Reppo Wissler Area

              	
                17

              
	 	 	 	 	 
	 
      	
                 

              	o.	
                Access
      and Surface Use

              	
                17

              
	 	 	 	 	 
	 
      	
                 

              	p.	
                Hagen
      Road Access Agreement

              	
                17

              
	 	 	 	 
	 
      	
                9.2

              	Seller’s
      Conditions	
                17

              
	 	 	 	 	 
	 
      	
                 

              	a.	
                Representations,
      Warranties and Covenants

              	
                17

              
	 	 	 	 	 
	 
      	
                 

              	b.	
                No
      Action

              	
                17

              
	 	 	 	 	 
	 
      	
                 

              	c.	
                Title
      Defects

              	
                18

              
	 	 
	
                ARTICLE
      10 RIGHT OF TERMINATION AND ABANDONMENT

              	
                18

              
	 	 	 	 
	 
      	
                10.1

              	Termination	
                18

              
	 	 	 	 
	 
      	
                10.2

              	Liabilities
      Upon Termination	
                18

              
	 	 	 	 	 
	 
      	
                 

              	a.	
                Buyer’s
      Default

              	
                18

              

      

       

       

      
        
          
          

        

        
          
          

          
            

          

        

        
          
          

        

      

      
        TABLE OF
CONTENTS

         

        
          	
                   
      

                	
                  Page

                

        

         

      

      
        	 	 	 	 	 
	 
      	
                 

              	b.	
                Seller’s
      Default

              	
                18

              
	 	 	 	 	 
	 
      	
                 

              	c.	
                Other
      Termination

              	
                18

              
	 	 
	
                ARTICLE
      11 CLOSING

              	
                19

              
	 	 	 	 
	 
      	
                11.1

              	Date
      of Closing	
                19

              
	 	 	 	 
	 
      	
                11.2

              	Place
      of Closing	
                19

              
	 	 	 	 
	 
      	
                11.3

              	Title
      Escrow Agent	
                19

              
	 	 	 	 
	 
      	
                11.4

              	Closing
      Obligations	
                19

              
	 	 	 	 	 
	 
      	
                 

              	a.	
                Seller’s
      Certificates

              	
                19

              
	 	 	 	 	 
	 
      	
                 

              	b.	
                Buyer
      Certificate

              	
                19

              
	 	 	 	 	 
	 
      	
                 

              	c.	
                Non-Foreign
      Status

              	
                19

              
	 	 	 	 	 
	 
      	
                 

              	d.	
                Assignment

              	
                19

              
	 	 	 	 	 
	 
      	
                 

              	e.	
                Governmental
      Forms of Transfer

              	
                19

              
	 	 	 	 	 
	 
      	
                 

              	d.	
                Scheduled
      Creditor Releases

              	
                19

              
	 	 	 	 	 
	 
      	
                 

              	g.	
                Settlement
      Statement

              	
                19

              
	 	 	 	 	 
	 
      	
                 

              	h.	
                Purchase
      Price

              	
                19

              
	 	 	 	 	 
	 
      	
                 

              	i.	
                Change
      of Operator

              	
                20

              
	 	 	 	 	 
	 
      	
                 

              	j.	
                Possession

              	
                20

              
	 	 	 	 	 
	 
      	
                 

              	k.	
                Possession

              	
                20

              
	 	 
	
                ARTICLE
      12 POST-CLOSING OBLIGATIONS

              	
                20

              
	 	 	 	 
	 
      	
                12.1

              	Buyer’s
      Performance Deposit	
                20

              
	 	 	 	 
	 
      	
                12.2

              	Post-Closing
      Adjustments	
                20

              
	 	 	 	 
	 
      	
                12.3

              	Dispute
      Resolution	
                21

              
	 	 	 	 
	 
      	
                12.4

              	Records	
                21

              
	 	 	 	 
	 
      	
                12.5

              	Transfer
      Taxes and Recording Fees	
                21

              
	 	 	 	 
	 
      	
                12.6

              	Further
      Assurances	
                21

              
	 	 	 	 
	 
      	
                12.7

              	EnCana
      Road Maintenance Agreement	
                21

              

      

       

       

      
        
          
          

        

        
          
          

          
            

          

        

        
          
          

        

      

      
        TABLE OF
CONTENTS

         

        
          	
                   
      

                	
                  Page

                

        

         

      

      
        	 	 
	
                ARTICLE
      13 TAX MATTERS

              	
                21

              
	 	 	 	 
	 
      	
                13.1

              	Apportionment
      of Tax Liability	
                21

              
	 	 	 	 
	 
      	
                13.2

              	Tax
      Reports and Returns	
                21

              
	 	 	 	 
	 
      	
                13.3

              	Sales
      Taxes	
                22

              
	 	 	 	 
	 
      	
                13.4

              	Tax
      Information	
                22

              
	 	 
	
                ARTICLE
      14 ASSUMPTION AND RETENTION OF OBLIGATIONS AND
    INDEMNIFICATION

              	
                22

              
	 	 	 	 
	 
      	
                14.1

              	Buyer’s
      Assumption of Liabilities and Obligations	
                22

              
	 	 	 	 
	 
      	
                14.2

              	Seller’s
      Retention of Liabilities and Obligations	
                22

              
	 	 	 	 
	 
      	
                14.3

              	Indemnification	
                22

              
	 	 	 	 	 
	 
      	
                 

              	a.	
                Seller’s
      Indemnification of Buyer

              	
                22

              
	 	 	 	 	 
	 
      	
                 

              	b.	
                Buyer’s
      Indemnification of Seller

              	
                23

              
	 	 	 	 
	 
      	
                14.4

              	Release	
                23

              
	 	 	 	 
	 
      	
                14.5

              	Procedure	
                23

              
	 	 	 	 	 
	 
      	
                 

              	a.	
                Coverage

              	
                23

              
	 	 	 	 	 
	 
      	
                 

              	b.	
                Claim
      Notice

              	
                23

              
	 	 	 	 	 
	 
      	
                 

              	c.	
                Information

              	
                23

              
	 	 	 	 	 
	 
      	
                 

              	d.	
                Dispute

              	
                24

              
	 	 	 	 
	 
      	
                14.6

              	Reservation
      as to Non-Parties	
                24

              
	 	 
	
                ARTICLE
      15 MISCELLANEOUS

              	
                24

              
	 	 	 	 
	 
      	
                15.1

              	Exhibits	
                24

              
	 	 	 	 
	 
      	
                15.2

              	Expenses	
                24

              
	 	 	 	 
	 
      	
                15.3

              	Notices	
                25

              
	 	 	 	 
	 
      	
                15.4

              	Amendments	
                25

              
	 	 	 	 
	 
      	
                15.5

              	Assignment	
                26

              
	 	 	 	 
	 
      	
                15.6

              	Announcements	
                26

              
	 	 	 	 
	 
      	
                15.7

              	Headings	
                26

              

      

       

       

      
        
          
          

        

        
          
          

          
            

          

        

        
          
          

        

      

      
        TABLE OF
CONTENTS

         

        
          	
                   
      

                	
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                15.8

              	Counterparts	
                26

              
	 	 	 	 
	 
      	
                15.9

              	References	
                26

              
	 	 	 	 
	 
      	
                15.10

              	Governing
      Law	
                26

              
	 	 	 	 
	 
      	
                15.11

              	Entire
      Agreement	
                26

              
	 	 	 	 
	 
      	
                15.12

              	Binding
      Effect	
                26

              
	 	 	 	 
	 
      	
                15.13

              	Survival	
                26

              
	 	 	 	 
	 
      	
                15.14

              	No
      Third-Party Beneficiaries	
                26

              
	 	 	 	 
	 
      	
                15.15

              	Limitation
      on Damages	
                26

              
	 	 	 	 
	 
      	
                15.16

              	Severability	
                26

              
	 	 	 	 
	 
      	
                15.17

              	Condition
      Precedent	
                27

              

      

    

    

      
        
           

        

        
           

          
            

          

        

        
           

        

      

EXHIBITS

     

    
      	
               

              Exhibit

            	
               

              Description

               

            	
              Section

              Reference

            
	
              A

            	
              Leases
      and Lands

               

            	
              1.2.a

            
	
              B

            	
              Wells,
      Undeveloped Locations and Allocated Values

               

            	
              1.2.b

            
	
              C

            	
              Easements
      and Surface Leases

               

            	
              1.2.e

            
	
              D

            	
              Personal
      Property and Equipment Inventory

               

            	
              1.2.e

            
	
              E

            	
              Officer’s
      Certificates of Seller

               

            	
              11.3.a

            
	
              F

            	
              Officer’s
      Certificate of Buyer

               

            	
              11.3.b

            
	
              G

            	
              Non-Foreign
      Affidavits of Seller

               

            	
              11.3.c

            
	
              H

            	
              Form
      of Assignment and Bill of Sale

               

            	
              11.3.d

            

    

    

    DISCLOSURE
SCHEDULES

    

    
      	
               

              Schedule

            	
               

              Description

               

            	
              Section

              Reference

            
	
              6.7

            	
              Litigation

               

            	
              6.7

            
	
              6.10

            	
              Material
      Agreements

               

            	
              6.10

            
	
              6.15

            	
              Consents
      to Assign

               

            	
              6.15

            
	
              6.18

            	
              Schedule
      of Creditors

               

            	
              6.18

            
	 
      	 
      	 
      
	 
      	 
      	 
      
	 
      	 
      	 
      

    

    

    

    

    

    

    
      
         

      

      
         

        
          

        

      

      
         

      

    

    PURCHASE AND SALE
AGREEMENT

     

    This
Purchase and Sale Agreement (“Agreement”), dated April 25,
2008, is by and between PetroHunter Energy Corporation (“PetroHunter Energy”) a
Maryland corporation, and PetroHunter Operating Company (“PetroHunter
Operating”), a Maryland corporation, (together “Seller”) with an address of
1600 Stout Street, Suite 2000, Denver, Colorado 80202, and Laramie Energy II,
LLC (“Laramie Energy”), a Delaware limited liability company (“Buyer”) with an address of
1512 Larimer Street, Suite 1000, Denver, Colorado 80202.  The
transaction contemplated by this Agreement may be referred to as the “Transaction.”  Seller
and Buyer may be referred to individually as a “Party” or collectively as the
“Parties.”

     

    RECITALS

     

    A. Seller
owns and desires to sell the Assets, as defined below, to Buyer upon the terms
and conditions set forth in this Agreement.

     

    B. Buyer
desires to purchase the Assets pursuant to the terms and conditions of this
Agreement.

     

    AGREEMENT

     

    In
consideration of the mutual promises contained herein and other good and
valuable consideration, the receipt and sufficiency of which are hereby
acknowledged, Seller and Buyer agree as follows:

     

    ARTICLE 1

    PURCHASE
AND SALE

     

    1.1 Purchase
and Sale.  Seller agrees to
sell and convey to Buyer, and Buyer agrees to purchase and receive from Seller,
the Assets, as defined below.

     

    1.2 Assets.  The “Assets” are all of Seller’s
right, title and interest in and to the following real and personal property
interests, located in Mesa and Garfield Counties, Colorado.

     

    a. The oil
and gas leases described on Exhibit A (the “Leases”) insofar as the Leases
cover the lands described on Exhibit A (the “Lands”), and the oil, gas and
all other hydrocarbons (including, but not limited to, coalbed methane) (“Hydrocarbons”), that may be
produced from the Leases and Lands;

     

    b. The oil
and gas wells located on the Leases and Lands, or lands pooled or unitized
therewith, including without limitation, the oil and gas wells specifically
described on Exhibit B,
whether producing or non-producing; all injection and disposal wells on the
Leases and Lands (the “Wells”), and all personal
property and equipment associated with the Wells as of the Effective
Time;

     

    c. The
rights, to the extent transferable, in and to all existing and effective
unitization, pooling and communitization agreements, declarations and orders,
and the properties covered and the units created thereby, to the extent that
they relate to or affect any of the interests described in Sections 1.2.a. and
1.2.b. or the post-Effective Time production of Hydrocarbons from the Leases and
Lands;

     

    
      
        
        

      

      
        -1-

        
          

        

      

      
        
        

      

    

    d. The
rights, to the extent transferable, in and to Hydrocarbon sales, purchase,
gathering, processing and transportation (both executed and pending) contracts,
operating agreements, balancing agreements, joint venture agreements,
partnership agreements, farmout agreements and other contracts, agreements and
instruments relating to the interests described in Sections 1.2.a., 1.2.b. and
1.2.c., including without limitation the Material Agreements described on Schedule 6.10, only insofar as
they relate to the Leases and Lands, excluding any insurance
contracts;

     

    e. All of
the personal property, fixtures, improvements, well equipment, permits,
licenses, approvals, servitudes, rights-of-way, easements, surface leases, and
other surface rights, tanks, injection facilities, saltwater disposal
facilities, compression facilities, gathering systems, other appurtenances and
facilities located on or used as of the Effective Date in connection with or
otherwise related to the exploration for or production, gathering, treatment,
processing, storing, sale or disposal of Hydrocarbons or water produced from the
properties and interests described in Sections 1.2.a through 1.2.d, including
without limitation the easements and surface leases described on Exhibit C and the personal
property and equipment described on Exhibit D;

     

    f. All raw
data and geophysical modeling seismic lines over the general area of the Assets
but excluding from the foregoing those files, records, data and information, (i)
subject to unaffiliated third party contractual restrictions on disclosure or
transfer, or (ii) subject to a transfer fee, unless Buyer agrees in writing to
pay such transfer fees; cores and core analysis relevant to the general area of
the Assets, and all geologic information, including mudlogs, electric log, well
files; daily drilling and completion reports, scout tickets, and other relevant
data; and

     

    g. All
files, records, correspondence, data and information relating to the items
described in Sections 1.2.a through 1.2.e maintained by Apollo Energy, LLC,
predecessor in interest to Seller (the “Records”), including, without
limitation, lease and land files, abstracts, title reports, memoranda and
opinions, well files, contract files, gas, oil and other hydrocarbon sales
contract files, gas gathering, processing, transportation and marketing files,
division order files, tax and accounting files related to the
Assets.

     

    1.3 Effective
Time.  The purchase and
sale of the Assets shall be effective as of April 1, 2008 at 7:00 a.m., Mountain
Time (the “Effective
Time”).

     

    ARTICLE 2

    PURCHASE
PRICE

     

    2.1 Purchase
Price.  The Purchase
Price for the Assets shall be Twenty-One Million Dollars ($21,000,000) (the
“Purchase Price”),
subject to Section 2.3 below.  Based on market valuations performed by
independent third parties, and Seller’s reasonable judgment based on several
factors, including but not limited to market solicitations, offers made to
Seller,  and expressions of interest made and received by Seller, the
Purchase Price is fair and reasonable consideration for the
Assets.  The Parties acknowledge that Buyer is not indebted to Seller
in any manner and that Buyer is not a creditor of Seller, a direct or indirect
equity holder of Seller, or in any way related to Seller.

     

    2.2 Escrow
Account.  Contemporaneously
with execution of this Agreement, the Parties and Wells Fargo Bank, National
Association (the “Escrow
Agent”) will enter into an escrow agreement (the “Escrow Agreement”), mutually
agreeable to the Parties, pursuant to which Buyer will deposit the Purchase
Price by wire transfer of immediately available funds in an escrow account with
Escrow Agent (the “Escrow
Account”).  Under the terms of the Escrow Agreement, the Escrow
Agent shall distribute 

     

     

    
      
        
        

      

      
        -2-

        
          

        

      

      
        
        

      

      the
Purchase Price as set forth in Article 11.  A specified portion of the
Purchase Price from the Escrow Account shall be earmarked by Buyer in writing
prior to Closing for and to be paid by the Escrow Agent to secured creditors in
accordance with Section 11.4 in exchange for the release of all claims of such
secured creditors.

    

     

    2.3 Adjustments
to Purchase Price.  The Purchase
Price shall be adjusted according to this Section without
duplication.  For all adjustments known as of Closing, the Purchase
Price shall be adjusted at Closing pursuant to a “Preliminary Settlement
Statement” approved by Seller and Buyer on or before
Closing.  A draft of the Preliminary Settlement Statement will be
prepared by Seller and provided to Buyer four business days prior to Closing for
Buyer’s comment and review.  The Preliminary Settlement Statement
shall set forth the Purchase Price as adjusted as provided in this Section using
the best information available at the Closing Date which amount shall be
deposited into the Escrow Account by wire transfer of immediately available
funds by Buyer at Closing and is referred to as the “Closing
Amount.”  After Closing, final adjustments to the Purchase
Price shall be made pursuant to the Final Settlement Statement to be delivered
pursuant to Section 12.1.  For the purposes of this Agreement, the
term “Property Expenses”
shall mean all capital expenses, joint interest billings, lease operating
expenses, lease rental and maintenance costs, Taxes (as defined and apportioned
as of the Effective Time pursuant to Article 13), drilling expenses, workover
expenses, geological, geophysical and any other exploration or development
expenditures chargeable under applicable operating agreements or other
agreements consistent with the standards established by the Council of Petroleum
Accountant Societies of North America that are attributable to the maintenance
and operation of the Assets during the period in question.  At
Closing, Buyer shall acquire any and all rights of Seller to obtain a cash
contribution from Fossil Creek Land Company (“Fossil”) and Williams
Production RMT Company (“Williams”) or any other
working interest owner for drilling costs associated with the Reppo A11-34B and
A10-34D wells (the “Reppo
Wells”) and any and all rights as a co-tenant of Fossil and Williams to
recoup Fossil’s and Williams’ share of the Reppo Drilling Costs from proceeds of
production attributable to Fossil’s and Williams’ working interests in the Reppo
Wells or drill sites.

     

    a. Upward
Adjustments.  The Purchase Price shall be adjusted upward by
the following:

     

    i. An amount
equal to all Property Expenses, including prepaid expenses, attributable to the
Assets after the Effective Time that were paid by Seller (all to be apportioned
as of the Effective Time except as otherwise provided), including without
limitation, prepaid rentals and royalties, including lease rentals;
and

     

    ii. Any other
amount provided in this Agreement or agreed upon by Seller and
Buyer.

     

    b. Downward
Adjustments.  The Purchase Price shall be adjusted downward by
the following:

     

    i. An amount
equal to all Property Expenses attributable to the Assets prior to the Effective
Time that are paid by Buyer, including without limitation, an amount equal to
any payables to Noble Energy arising prior to the Effective Time for amounts
owing for Seller’s participation in the Noble Energy operated wells on the
Grunska lease (note:  through January 2008 the dollar amount invoiced
by Noble Energy to the Seller was $101,934);

     

    ii. An amount
equal to the sum of all Title Defect adjustments under Section
4.4.b.;

     

    
      
        
        

      

      
        -3-

        
          

        

      

      
        
        

      

    

    iii. An amount
equal to the sum of all Environmental Defect adjustments under Section 5.3.b;
and

     

    iv. Any other
amount provided in this Agreement or agreed upon by Seller and
Buyer.

     

    2.4 Allocated
Values.  Buyer and Seller
have agreed to allocate the Purchase Price among the Assets as set forth on
Exhibit B, which amounts
shall be referred to as the “Allocated Value.”

     

    ARTICLE 3

    DUE
DILIGENCE REVIEW

     

    3.1 Access to
Records.  Subject to
Section 3.2, Seller will disclose and make available to Buyer and its
representatives at Seller’s or Seller’s agent’s office and during Seller’s
normal business hours, all Records in Seller’s possession or control, including
Records in the possession of Apollo Energy, LLC, Seller’s predecessor in
interest, relating to the Assets for the purpose of permitting Buyer to perform
its due diligence review including, but not limited to, all title opinions,
well, leasehold, unit, title, contract, division order, accounting, tax, gas
marketing, vendor and creditor files.  Seller agrees to cooperate with
Buyer in Buyer’s efforts to obtain, at Buyer’s sole expense, such additional
information relating to the Assets as Buyer may reasonably
desire.  Buyer may inspect the Records only to the extent it may do so
without violating any obligation, confidence or contractual commitment of Seller
to a third party.  Seller shall use reasonable efforts to obtain the
necessary consents to allow Buyer’s examination of any confidential information
that is material to this transaction.

     

    3.2 Representation
and
Warranty.  Seller represents
and warrants that the Records are accurate and complete in all material
respects.

     

    3.3 Access to
Properties.  Seller hereby
consents to Buyer conducting, upon advance notice to Seller, at Buyer’s sole
risk and expense, on site inspections and an environmental assessment of the
Assets.  Any information learned by Buyer in connection with its
on-site inspection and an environmental assessment of the Assets shall be deemed
to be confidential and proprietary to Seller, and Buyer agrees that all such
information is subject to the provisions of Section 8.8.  In
connection with the granting of such access, Buyer represents that it is
adequately insured and, except to the extent caused by Seller’s gross negligence
or willful misconduct, waives, releases and agrees to indemnify Seller and
Seller’s representatives from and against all liabilities, obligations, Losses
(as defined in Section 14.3) claims for injury to, or death of, persons or for
damage to property arising in any way from the access afforded to Buyer
hereunder or the activities of Buyer.  This waiver, release and
indemnity by Buyer shall survive termination of this Agreement.

     

    ARTICLE 4

    TITLE
MATTERS

     

    4.1 Defensible
Title.  The term
“Defensible Title” means such title to the Assets, that, subject to and except
for Permitted Encumbrances:  (i) entitles Seller to receive not less
than the net revenue interest set forth on Exhibit B for each Well or
undeveloped location listed on Exhibit B (“NRI”); (ii) obligates Seller
to bear costs and expenses relating to the maintenance, development, operation
and the production of Hydrocarbons from each Well or undeveloped location in an
amount not greater than the working interest set forth in Exhibit B (“WI”); (iii) is not subject to
reduction by virtue of the exercise by any third party of a reversionary
interest, back in or similar right except as scheduled in Exhibit B; (iv) is free and
clear of mortgages, encumbrances, liens, delinquent taxes and preferential
rights to purchase or rights of first refusal unless the foregoing rights are
waived by the holders thereof; 

     

    
      
        
        

      

      
        -4-

        
          

        

      

      
        
        

      

      (v) is
not subject to access and surface use limitations, restrictions, conditions,
compensation for use or damage provisions that are unacceptable to Buyer in its
sole judgment; (vi) is not subject to unperformed drilling obligations except as
expressly assumed by Buyer; and (vii) is not subject to defects or conditions
that would create a material impairment of use or loss of interest in the
affected Asset.

    

     

    4.2 Permitted
Encumbrances.  The term “Permitted Encumbrances” shall
mean:

     

    a. lessors’
royalties, overriding royalties, net profits interests, production payments,
reversionary interests and similar burdens if the net cumulative effect of such
burdens does not operate to reduce the NRI set forth on Exhibit B.

     

    b. liens for
Taxes, or assessments, not yet due or delinquent;

     

    c. all
rights to consent by, required notices to, filings with, or other actions by
federal, state and local governmental entities in connection with the ownership
or operation of the Leases if the same are customarily obtained subsequent to
such transfer of ownership or operations;

     

    d. easements,
rights-of-way, servitudes, permits, and surface leases on, over, or in respect
of property owned or leased by Seller or over which Seller owns rights-of-way,
easements, permits, or licenses that are of record in the applicable county to
the extent such matters, individually or in the aggregate, do not materially
interfere with oil and gas operations on the Leases and do not materially affect
the value thereof;

     

    e. any
encumbrance, title defect or matter (whether or not constituting a Title Defect)
waived or deemed waived by Buyer pursuant to Section 4.4.a.

     

    4.3 Title
Defects.  The term “Title Defect”
means:

     

    a. Any
encumbrance, encroachment, irregularity, defect in or objection to real property
title, excluding Permitted Encumbrances, that alone or in combination with other
defects renders title to an Asset less than Defensible Title.

     

    b. Surface
use restrictions, use, compensation or damage provisions contained in any
conveyance, lease or other contract, including the Leases and Material
Agreements, which could interfere with access to the Leases and Lands or
operations for the exploration, development and production of Hydrocarbons from
the Leases and Lands.

     

    4.4 Adjustments for Title
Defects.

     

    a. Notice of Title
Defects.  Buyer shall deliver to Seller a written “Notice of Title Defects” on or
before May 2, 2008.  The Notice of Title Defects shall describe the
Title Defect and state the reduction in the Allocated Value of an Asset caused
by the Title Defect (the “Defect
Value”).  Other than matters which are violative of Seller’s
special warranty of title set out in Exhibit F, any matters not
described in a written Notice of Title Defect shall conclusively be deemed to
have been waived and accepted by Buyer, and shall be deemed Permitted
Encumbrances hereunder.

     

    b. Defect
Adjustments.  With respect to adjustments to the Purchase Price
for Title Defects, the Parties agree as follows:

     

    
      
        
        

      

      
        -5-

        
          

        

      

      
        
        

      

    

    i. “Excluded Assets” are Assets
excluded from this Agreement pursuant to Sections 4.4.b.iii and iv.

     

    ii. Seller
shall have the option of attempting to cure Title Defects to the reasonable
satisfaction of Buyer on or before the Closing Date, which option shall be
communicated to Buyer no later than two days prior to the Closing
Date;

     

    iii. If Seller
does not elect to cure or cannot cure a Title Defect to Buyer’s reasonable
satisfaction, Buyer shall have the option to either accept assignment of the
Asset affected by a Title Defect, and the Purchase Price shall be adjusted
downward by the Defect Value, or to exclude such Asset from this
Agreement.  If Buyer elects to exclude such Asset, the Purchase Price
shall be adjusted downward by an amount equal to the Allocated Value of the
Excluded Asset; and

     

    iv. If a
Title Defect is not cured to Buyer’s reasonable satisfaction on or before
Closing, then Seller has the right to extend the Closing Date as to the affected
Asset for up to thirty (30) days.  If Seller extends the Closing Date
under this subsection as to any Asset, an amount equal to the applicable Defect
Value shall be retained in the Escrow Account for up to thirty (30) days after
Closing.  The total of all such Defect Values are referred to as the
“Title Escrow
Amount”.  Upon Seller’s cure of a Title Defect to Buyer’s
reasonable satisfaction on or before thirty (30) days after Closing, Seller and
Buyer shall execute and deliver written instructions to the Escrow Agent
instructing the Escrow Agent to transfer an amount equal to the Defect Values
for any such cured Title Defects to Seller by wire transfer of immediately
available funds.  If Seller is unable to cure a Title Defect to the
reasonable satisfaction of Buyer on or before thirty (30) days after Closing,
Buyer shall have the option to either accept assignment of the Asset affected by
a Title Defect, and the Purchase Price shall be adjusted downward by the Defect
Value, or to exclude such Asset from this Agreement.  If Buyer elects
to exclude such Asset, the Purchase Price shall be adjusted downward by an
amount equal to the Allocated Value of the Excluded Asset.  As to any
portion of the Title Escrow Amount that are attributable to Title Defects which
have not been cured to Buyer’s reasonable satisfaction on or before thirty (30)
days after Closing, Buyer and Seller shall execute and deliver written
instructions to the Escrow Agent to transfer funds in accordance with Buyer’s
election under this subsection to either accept assignment of the affected Asset
or to exclude the affected Asset from this Agreement.

     

    4.5 Dispute
Resolution.  The Parties agree
to resolve disputes concerning the following matters pursuant to this Section
4.5:  (i) the existence of a Title Defect, and (ii) the adequacy of
Title Defect curative materials submitted pursuant to Section 4.4.b
(collectively, the “Disputed
Defect Matters”).  The Parties agree to attempt to initially
resolve all disputes through good-faith negotiations.  Subject to
Buyer’s and Seller’s right to terminate this Agreement under Article 10 prior to
Closing, if the Parties cannot resolve such disputes on or before five (5)
Business Days after Closing, the Disputed Defect Matters shall be submitted to
binding arbitration in accordance with the procedures set forth in Section
14.5.d.  In such event, an amount equal to the Defect Values
associated with the Disputed Defect Matters shall be withheld from the Purchase
Price paid by Buyer to Seller at Closing, and the affected Assets shall be
retained by Seller at Closing.  If, following binding arbitration, the
Seller is obligated to sell and the Buyer is obligated to purchase the Assets or
portions of the Assets affected by a Disputed Defect Matter, the closing date
for the affected Assets shall occur within ten (10) Business Days following the
decision of the arbitrators or as otherwise agreed to by the
Parties.  “Business
Day” means a day on which commercial banks located in Denver, Colorado
are open for business.  Notwithstanding the foregoing, Closing shall
occur on April 30, 2008 as to Assets which are not affected by a Disputed

     

    
      
        
        

      

      
        -6-

        
          

        

      

      
        
        

      

      Defect
Matter, subject, however, to the rights of Seller and Buyer to terminate this
Agreement under Article 10.

    

     

    4.6 Casualty
Loss.  After the
Effective Time and prior to Closing, if a portion of the Assets is destroyed by
fire or other casualty, or is taken or threatened to be taken in condemnation or
under the right of eminent domain, (with such event being a “Casualty Loss”), Buyer shall
purchase the Asset at Closing for the Allocated Value of the Asset reduced by
the estimated cost to repair or replace such Asset (with equipment of similar
utility).  At its sole option, Seller may elect to cure such Casualty
Loss.  If Seller elects to cure such Casualty Loss, Seller may replace
any personal property that is the subject of a Casualty Loss with equipment of
similar grade and utility and Seller shall be entitled to keep all associated
insurance proceeds, if any.  If Seller cures the Casualty Loss to
Buyer’s reasonable satisfaction, Buyer shall purchase the affected Asset at
Closing for the Allocated Value thereof without any Purchase Price adjustment
for such Casualty Loss.  In no event shall the watering out of a well,
casing collapse, or breakage of equipment constitute a Casualty
Loss.

     

    ARTICLE 5

    ENVIRONMENTAL
MATTERS

     

    5.1 Definitions.  For the purposes
of the Agreement, the following terms shall have the following
meanings:

     

    a. Environmental
Laws.  “Environmental Laws” shall mean
all laws, rules, regulations, statutes, ordinances, decrees or orders of any
Governmental Authority relating to (a) the control of any potential pollutant or
protection of the air, water or land, (b) solid, gaseous or liquid waste
generation, handling, treatment, storage, disposal or transportation, and (c)
exposure to hazardous, toxic or other substances alleged to be harmful, and
includes without limitation final and binding requirements related to the
foregoing imposed by (i) the terms and conditions of any license, permit,
approval or other authorization by any Governmental Authority, and (ii)
applicable judicial, administrative or other regulatory decrees, judgments and
orders of any Governmental Authority.  The term “Environmental Laws” shall
include, but not be limited to, the following statutes and the regulations
promulgated thereunder, as currently in effect: the Clean Air Act, 42 U.S.C. §
7401 et seq., the Clean Water Act, 33 U.S.C. § 1251 et seq., the Resource
Conservation Recovery Act, 42 U.S.C. § 6901 et seq., the Superfund Amendments
and Reauthorization Act, 42 U.S.C. § 11011 et seq., the Toxic Substances Control
Act, 15 U.S.C. § 2601 et seq., the Water Pollution Control Act, 33 U.S.C. §
1251, et seq., the Safe Drinking Water Act, 42 U.S.C. § 300f et seq., the
Comprehensive Environmental Response, Compensation, and Liability Act, 42 U.S.C.
§ 9601 et seq., the Federal Insecticide, Fungicide and Rodenticide Act, 7 U.S.C.
§ 136, et. seq., and any similar state, federal or local statute or
ordinance.

     

    b. Governmental
Authority.  “Governmental Authority” shall
mean any and all foreign, federal, state or local governments, governmental
institutions, public authorities and governmental entities of any nature
whatsoever, and any subdivisions or instrumentalities thereof, including, but
not limited to, departments, boards, bureaus, commissions, agencies, courts,
administrations and panels, and any divisions or instrumentalities thereof,
whether permanent or ad hoc and whether now or hereafter constituted or
existing.

     

    c. Environmental
Defect.  “Environmental Defect” means a
condition in, on or under the Assets (including, without limitation, air, land,
soil, surface and subsurface strata, surface water, ground water, or sediments)
that causes any portion of the Assets to be in material violation of an
Environmental Law or a condition that can reasonably be expected to give rise to
costs or liability under applicable Environmental Laws.

     

    
      
        
        

      

      
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    d. Remediation.  “Remediation” means actions or
activities required to comply with Environmental Laws to (a) clean up or remove
hazardous materials from the environment, (b) prevent or minimize the movement,
leaching or migration of hazardous materials into the environment, (c) prevent,
minimize or mitigate the release or threatened release of hazardous materials
into the environment, or injury or damage from such release, and including
without limitation, costs and expenses payable in connection with the foregoing
for legal, engineering or other consultant services, for investigation, testing,
sampling and monitoring, for boring excavation and construction, for removal,
modifications or replacement of equipment or facilities, for labor and material,
and for proper storage treatment and disposal of hazardous
materials.

     

    5.2 Environmental
Assessment.  Buyer may conduct
an on-site inspection, environmental assessment and compliance audit of the
Assets (an “Environmental
Assessment”) at Buyer’s cost and expense.  Seller shall provide
Buyer with access to the Assets and to all information in Seller’s possession or
control pertaining to the environmental condition of the Assets, including, but
not limited to, status or any environmental audits, permits, records and
assessments in Seller’s possession or control, and shall make available to Buyer
all past or present personnel who would reasonably be expected to have knowledge
or information regarding the environmental status or condition of the
Assets.  Buyer shall provide Seller prior written notice of any
environmental inspections and tests, including sampling activities, and Buyer
shall give Seller the opportunity to participate in all such inspections and
tests.  Buyer shall provide Seller, at no cost to Seller, all reports
of environmental inspections and tests, provided that all such reports shall be
deemed to be confidential between the parties and subject to the confidentiality
provisions of Section 8.6.a of this Agreement.  Buyer agrees to
release, indemnify, defend, and hold harmless Seller against all Losses (as
defined in Section 14.3) arising from or related to the activities of Buyer, its
employees, agents, contractors and other representatives in connection with
Buyer’s Environmental Assessment regardless of the negligence or strict
liability of Seller.

     

    5.3 Adjustments for
Environmental Defects Pre-Closing.

     

    a. Notice of Environmental
Defects.  Buyer shall provide Seller with written notice of any
Environmental Defect which Buyer’s Environmental Assessment reveals and will
provide evidence thereof.  Such notice and evidence shall be given on
or before May 2, 2008.  Buyer will be deemed to have conclusively
waived the right to adjust the Purchase Price with respect to any Environmental
Defect about which it fails to notify Seller in writing prior to the expiration
of the Due Diligence Period.

     

    b. Defect
Adjustments.  Upon receipt of a notice of Environmental Defect,
Seller may, at its sole election prior to the Closing Date,
either:  (i) agree with Buyer on an adjustment to the Purchase Price
which shall be reflected on the Preliminary Settlement Statement, which
adjustment shall reflect the cost to remediate such Environmental Defect (“Environmental Defect Value”);
or (ii) in the event of the failure of the parties to come to agreement under
(i), remove the affected Asset(s) from this Agreement and adjust the Purchase
Price downward by the Allocated Value(s) of the excluded Asset(s) on the
Preliminary Settlement Statement.  In no event will Seller have any
obligation to remediate any such Environmental Defect unless Seller expressly
agrees in writing to do so.

     

    5.4 Environmental
Dispute Resolution Pre-Closing.  The parties agree
to resolve disputes concerning the following matters pursuant to this
Section:  (i) the existence and scope of Environmental Defect, (ii)
Buyer’s estimate of costs of Remediation of an Environmental Act and (iii) the
effectiveness of Seller’s Remediation.  The parties agree to attempt
to initially solve all disputes through good faith negotiations.  If
the parties cannot resolve disputes regarding items (i), (ii) or (iii) on or
before the Closing Date, the disputed matters will be finally determined by
binding arbitration pursuant to Section 14.5.d.

     

    
      
        
        

      

      
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    5.5 Seller’s
Indemnity.

     

    a. Seller
shall indemnify, hold harmless, release and defend Buyer from and against all
damages, losses, claims, demands, causes of action, judgments and other costs
(including but not limited to any civil fines, penalties, costs of assessment,
clean-up, removal and remediation of pollution or contamination, and expenses
for the modification, repair or replacement of facilities on the Lands) brought
by any and all persons and any agency or other body of federal, state or local
government, on account of any personal injury, illness or death, any damage to,
destruction or loss of property, and any contamination or pollution of natural
resources (including soil, air, surface water or groundwater) to the extent any
of the foregoing directly or indirectly is caused by or otherwise involves any
environmental condition of the Assets or Lands, which is created and arises
prior to Closing, including, but not limited to, the presence, disposal or
release of any material (whether hazardous, extremely hazardous, toxic or
otherwise) of any kind in, on or under the Assets or the Lands before Closing
(the “Pre-Closing Environmental
Liabilities”).

     

    b. Seller’s
indemnification obligations shall extend to and include, but not be limited to
the following with respect to Pre-Closing Environmental Matters:  (i)
the negligence or other fault of Seller, Buyer, third parties and its agents,
whether such negligence is active or passive, joint, sole or concurrent, (ii)
Seller’s or Buyer’s strict liability, and (iii) Seller’s or Buyer’s liabilities
or obligations under the Comprehensive Environmental Response, Compensation and
Liability Act of 1980, as amended (42 U.S.C. §§ 9601 et seq.), the Resource
Conservation and Recovery Act of 1976 (42 U.S.C. § 6901 et seq.), the Clean
Water Act (33 U.S.C. §§ 466 et seq., the Safe Drinking Water Act (14 U.S.C. §§
1401-1450), the Hazardous Materials Transportation Act (49 U.S.C. §§ 1801 et
seq.), the Toxic Substances Control Act (15 U.S.C. §§ 2601-2629), the Clean Air
Act (42 U.S.C. § 7401 et seq.) as amended, the Clean Air Act Amendments of 1990
and all state and local laws and any replacement or successor legislation or
regulation thereto.  This indemnification shall be in addition to any
other indemnity provisions contained in this Agreement, and it is expressly
understood and agreed that any terms of this article shall control over any
conflicting or contradicting terms or provisions contained in this
Agreement.

     

    c. Seller’s
indemnification shall not extend to matters or conditions for which an
adjustment of the Purchase Price was made pursuant to Section
5.3.b(i).

     

    5.6 Buyer’s
Indemnity.

     

    a. Except
for Excluded Assets, Buyer shall indemnify, hold harmless, release and defend
Seller from and against all damages, losses, claims, demands, causes of action,
judgments and other costs (including but not limited to any civil fines,
penalties, costs of assessment, clean-up, removal and remediation of pollution
or contamination, and expenses for the modification, repair or replacement of
facilities on the Lands) brought by any and all persons and any agency or other
body of federal, state or local government, on account of any personal injury,
illness or death, any damage to, destruction or loss of property, and any
contamination or pollution of natural resources including soil, air, surface
water or groundwater) to the extent any of the foregoing directly or indirectly
is caused by or otherwise involves any environmental condition of the Assets or
Lands, which is created and arises after Closing, including, but not limited to,
the presence, disposal or release of any material (whether hazardous, extremely
hazardous, toxic or otherwise) of any kind in, on or under the Assets or the
Lands after Closing (the “Post-Closing Environmental
Liabilities”).

     

    
      
        
        

      

      
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    b. Buyer’s
indemnification obligations shall extend to and include, but not be limited to
the following with respect to Post-Closing Environmental Matters:  (i)
the negligence or other fault of Buyer, third parties, and its agents, whether
such negligence is active or passive, joint, sole or concurrent, (ii) Seller’s
or Buyer’s strict liability, and (iii) Seller’s or Buyer’s liabilities or
obligations under the Comprehensive Environmental Response, Compensation and
Liability Act of 1980, as amended (42 U.S.C. §§ 9601 et seq.), the Resource
Conservation and Recovery Act of 1976 (42 U.S.C. § 6901 et seq.), the Clean
Water Act (33 U.S.C. §§ 466 et seq.), the Safe Drinking Water Act (14 U.S.C. §§
1401-1450), the Hazardous Materials Transportation Act (49 U.S.C. §§ 1801 et
seq.), the Toxic Substances Control Act (15 U.S.C. §§ 2601-2629), the Clean Air
Act (42 U.S.C. § 7401 et seq.) as amended, the Clean Air Act Amendments of 1990
and all state and local laws and any replacement or successor legislation or
regulation thereto.  This indemnification shall be in addition to any
other indemnity provisions contained in this Agreement, and it is expressly
understood and agreed that any terms of this Section shall control over any
conflicting or contradicting terms or provisions contained in this
Agreement.

     

    ARTICLE 6

    SELLER’S
REPRESENTATIONS

     

    Seller
makes the following representations and warranties as of the date of this
Agreement and as of Closing:

     

    6.1 PetroHunter
Energy Entity
Representations.  PetroHunter
Energy is a corporation duly organized and validly existing pursuant to the laws
of the State of Maryland.

     

    6.2 PetroHunter
Operating Entity
Representations.  PetroHunter
Operating is a corporation duly organized and validly existing pursuant to the
laws of the State of Maryland.

     

    6.3 Power.  Seller has all
requisite power and authority to carry on its business as presently conducted
and to enter into this Agreement and convey the Assets.  The execution
and delivery of this Agreement, consummation of the Transaction, and the
fulfillment of and compliance with the terms and conditions hereof will not
violate, or be in conflict with, any material provision of the governing
documents of Seller or any material provision of any agreement or instrument to
which Seller is a party or by which Seller is bound, or any judgment, decree,
order, statute, rule or regulation applicable to Seller.

     

    6.4 Authorization
and Enforceability.  The execution,
delivery and performance of this Agreement and the Transaction have been duly
and validly authorized by all requisite action on Seller’s part.  This
Agreement constitutes Seller’s legal, valid and binding obligation, enforceable
in accordance with its terms, subject, however, to the effects of bankruptcy,
insolvency, reorganization, moratorium and similar laws for the protection of
creditors, as well as to general principles of equity, regardless whether such
enforceability is considered in a proceeding in equity or at law.

     

    6.5 Liability
for Brokers’ Fees.  Seller has not
incurred any liability, contingent or otherwise, for brokers’ or finders’ fees
relating to the Transaction for which Buyer shall have any responsibility
whatsoever.

     

    6.6 No
Bankruptcy.  There are no
bankruptcy proceedings pending, being contemplated by, or to Seller’s knowledge,
based upon reasonable inquiry and investigation, threatened against
Seller.

     

    6.7 Litigation.  Except as set
forth on Schedule 6.7, Seller has not received written notice of any pending
proceeding, notice of violation, action, suit, claim or investigation before any
federal, state or other governmental court, or agency involving the ownership,
operation or environmental condition of the 

     

    
      
        
        

      

      
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      Leases.  Except
as set forth on Schedule 6.7, there is no action, suit, proceeding, protest,
claim or investigation by any person, entity, administrative agency or
governmental body pending or, to Seller’s knowledge, threatened, against Seller
before any governmental authority that impedes or is likely to impede Seller’s
ability to consummate the Transaction or to assume the liabilities to be assumed
by Seller under this Agreement.

    

     

    6.8 Taxes.  All taxes and
assessments pertaining to the Assets based on ownership of the Assets for all
taxable periods prior to the taxable period in which this Agreement is executed
have been properly paid.  All income taxes and obligations relating
thereto that could result in a lien or other claim against any of the Leases
have been properly paid, unless contested in good faith by appropriate
proceeding.

     

    6.9 Tax
Partnerships.  The Assets are
not subject to any tax partnership agreements requiring a partnership income tax
return to be filed under Subchapter K of Chapter 1 of Subtitle A of the
Code.

     

    6.10 Agreements.  All of the
material agreements pertaining to the Leases and Lands, which affect the
interest being acquired by Buyer in the Assets pursuant to this Agreement, or
Buyer’s exploration, development, or production operations on the Leases and
Lands, including surface use agreements, or the gathering and transportation of
Hydrocarbons produced from the Leases and Lands (the “Material Agreements”), are
listed on Schedule
6.10.

     

    6.11 Prepayments.  Except as set
forth on Schedule 6.10,
there are no agreements involving any prepayments for production or any
agreements requiring the delivery of oil, gas or other minerals produced from or
allocated to any of the Leases at some future time without receiving full
payment therefor at the time of delivery.

     

    6.12 Hydrocarbon
Sales Contracts.  Except as set
forth on Schedule 6.10,
no Hydrocarbons are subject to a sales contract (other than division orders or
spot sales agreements terminable on no more than 30 days notice) and no person
has any call upon, option to purchase or similar rights with respect to the
production from the Assets.

     

    6.13 Hedging
Arrangements.  The Leases are
not subject to any gas sales, gathering or transportation contracts which
include provisions for hedging, price risk management or other such financial
arrangements or transactions, which will affect or burden the Leases from and
after the Closing Date.

     

    6.14 Preferential
Rights to Purchase and Areas of Mutual Interest.  There are no
preferential rights to purchase or area of mutual interest obligations which
entitle any third party to receive a portion of Seller’s interest in the Assets
or that would obligate Buyer to offer any portion of oil and gas rights or
interests acquired by Buyer in the Lands or the area of the Assets after
Closing.

     

    6.15 Third-Party
Consents.  Except for
consents that are Permitted Encumbrances, or are identified on Schedule 6.15, no third-party
consents are required for Seller’s assignment and conveyance of the Assets to
Buyer.

     

    6.16 Leases.  All bonuses,
rentals, royalties, shut-in royalty payments and other payments due under the
Leases have been properly and timely paid and the Leases are in full force and
effect, subject to an amendment to the Furr Lease currently being negotiated
among Seller, Buyer, and the lessor.

     

    
      
        
        

      

      
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    6.17 Surface
Use Agreements.  With the
exception of Lease provisions, including provisions set forth in recorded
addendums to Leases, and agreements listed on Schedule 6.10, there are no
surface use agreements to which Seller is a party covering any portion of the
Lands.  With the exception of the surface use agreements and
conservation easements identified on Schedule 6.10, there are no
access or surface use restrictions, limitations or conditions applicable to oil
and gas operations on the Lands.

     

    6.18 Liens and
Encumbrances.  Except for (i)
the burdens and obligations created by or arising under the Leases, (ii)
Permitted Encumbrances, and (iii) liens of Scheduled Creditors, as defined
below, as to the amounts shown on Schedule 6.18, there are no loan agreements,
promissory notes, pledges, mortgages, guaranties, security agreements, financing
statements, mechanics liens, judgment liens or other liens or encumbrances of
any type, which are secured by or constitute a lien or encumbrance on the
Assets.  Schedule 6.18 is a full and complete list of all (i) senior,
secured, unsecured and trade creditors owed $10,000 or more by Seller and
comprises creditors whose aggregate debt against Seller constitutes not less
than 85% of all Seller’s outstanding debt and (ii) all unpaid amounts owed
lessors of the Leases and surface owners for use of, damages to or access to the
Lands.  Creditors, lienholders, lessors and surface owners identified
on Schedule 6.18 are referred to as the “Scheduled
Creditors.”

     

    6.19 Imbalance
Volumes.  There do not exist any gas imbalances other than
those listed in Exhibit E (i) which are with gatherers, processors, or
transporters or with co-tenants or working interest owners in a well, unit, or
field (ii) which are associated with the Assets and (iii) where Seller has
received a quantity of gas prior to the Effective Time for which Buyer will have
a duty after the Effective Time to deliver an equivalent quantity of gas or pay
a sum of money.

     

    6.20 Lease
Burdens.  All obligations of Seller to assign or convey
overriding royalty interests, production payments, net profits interests or any
other burden on the Leases and Wells have been performed, and all instruments
reflecting such burdens have been recorded, or have been provided to Buyer and
will be recorded by April 30, 2008, in the real property records where the
applicable Lease or Well is located.

     

    6.21 Compliance
with Law.  Seller has not
received a written notice of a material violation of any statute, law,
ordinance, regulation, permit, rule or order of any federal, state or local
government or any other governmental department or agency, or any judgment,
decree or order of any court, applicable to the Assets or operations on the
Assets, which remains uncured.

     

    6.22 Outstanding
Commitments, AFEs and Invoices.  Seller has
incurred no expenses, and has made no commitments to make expenditures in
connection with the ownership or operation of the Assets after the Effective
Time, other than with respect to routine operations performed in the ordinary
course of operating the existing wells on the Assets, which operations are, in
the aggregate, estimated to cost $25,000.00 or less, net to Seller’s interest,
and (ii) no proposals or authorities for expenditures are currently outstanding
(whether made by Seller or by any other party) to drill additional wells, or to
deepen, plug back, or rework existing wells, or to conduct other operations on
the Assets for which consent is required under the applicable operating
agreement or to abandon any wells on the Assets, or to conduct any other
operation on the Assets.

     

    6.23 Plugging
and Abandonment Obligations.  There are no
wells which are required to be plugged and abandoned at the present time under
applicable governmental laws, rules and regulations or the terms of any Lease or
agreement to which Seller is a party.

     

    
      
        
        

      

      
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    ARTICLE 7

    BUYER’S
REPRESENTATIONS

     

    Buyer
makes the following representations and warranties as of the date of this
Agreement and as of Closing:

     

    7.1 Organization
and Standing.  Buyer is a
limited liability company duly organized, validly existing and in good standing
under the laws of the State of Delaware, and is duly qualified to carry on its
business in the State of Colorado.

     

    7.2 Power.  Buyer has all
requisite corporate power and authority to carry on its business as presently
conducted and to enter into this Agreement and to acquire the
Assets.  The execution and delivery of this Agreement, consummation of
the Transaction, and the fulfillment of and compliance with the terms and
conditions hereof will not violate, or be in conflict with, any material
provision of Buyer’s articles of incorporation or bylaws or any material
provision of any agreement or instrument to which Buyer is a party or by which
Buyer is bound, or, to its knowledge, any judgment, decree, order, statute, rule
or regulation applicable to it.

     

    7.3 Authorization
and Enforceability.  The execution,
delivery and performance of this Agreement and the Transaction have been duly
and validly authorized by all requisite corporate action on Buyer’s
part.  This Agreement constitutes Buyer’s legal, valid and binding
obligation, enforceable in accordance with its terms, subject, however, to the
effects of bankruptcy, insolvency, reorganization, moratorium and similar laws
for the protection of creditors, as well as to general principles of equity,
regardless whether such enforceability is considered in a proceeding in equity
or at law.

     

    7.4 Liability
for Brokers’ Fees.  Buyer has not
incurred any liability, contingent or otherwise, for brokers’ or finders’ fees
relating to the Transaction for which Seller shall have any responsibility
whatsoever.

     

    7.5 No
Bankruptcy.  There are no
bankruptcy proceedings pending, being contemplated by, or to Buyer’s knowledge,
based upon reasonable inquiry and investigation, threatened against
Buyer.

     

    7.6 Litigation.  There is no
action, suit, proceeding, claim or investigation by any person, entity,
administrative agency or governmental body pending or, to Buyer’s knowledge,
threatened in writing, against Buyer before any governmental authority that
impedes or is likely to impede Buyer’s ability to consummate the Transaction and
to assume the liabilities to be assumed by Buyer under this
Agreement.

     

    ARTICLE 8

    PRE-CLOSING
OBLIGATIONS

     

    As to the
period of time from the execution hereof until Closing, Seller and Buyer
covenant and agree as follows:

     

    8.1 Operations
Prior to Closing.  From the date of
execution hereof to the Closing, Seller will operate the Assets in a good and
workmanlike manner and consistent with past practices.  Seller agrees
to maintain the insurance now in effect with respect to the Assets through the
date of Closing.  From the date of execution of this Agreement to the
Closing Date, Seller shall pay or cause to be paid its proportionate shares of
all Property Expenses incurred in connection with the ownership or operation of
the Assets.

     

    
      
        
        

      

      
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    8.2 Restriction
on Operations.  Except in the
case of an emergency, Seller will promptly inform Buyer of all requests for
commitments to expend funds in excess of $25,000 per activity net to Seller’s
interests conducted on or with respect to the Assets, and will keep Buyer timely
informed of all material developments affecting any of the
Assets.  Without the prior written consent of Buyer, Seller shall
not:

     

    a. enter
into any new agreements or commitments with respect to the Assets which extend
beyond the Closing;

     

    b. commit to
or incur any expenditures in excess of $25,000 (net to Seller’s interest) with
respect to any part of the Assets;

     

    c. make any
nonconsent elections with respect to operations affecting the
Assets;

     

    d. abandon
any Well or release (or permit to terminate), or modify or reduce its rights
under all or any portion of any of the Leases;

     

    e. modify or
terminate any of the Material Agreements or waive or relinquish any right
thereunder;

     

    f. agree to
any renegotiated price, take or other terms under existing gas purchase
agreements;

     

    g. agree to
any credit or prepayment arrangement that would reduce the share of gas
deliverable with respect to the Assets following the Effective
Time;

     

    h. enter
into any agreement or instrument for the sale, treatment, or transportation of
production from the Assets (except for sales agreements terminable on no more
than 30 days’ notice);

     

    i. create
any material gas imbalance affecting the Assets; or

     

    j. encumber,
sell or otherwise dispose of any of the Assets, other than personal property
that is replaced by equivalent property or consumed in the normal operation of
the Assets.

     

    For the
purposes of obtaining the written consents required in this Section 8.2, Buyer
designates the persons set forth in Section 15.3.  Such consents may
be given in writing by overnight courier or facsimile transmission.

     

    8.3 Legal
Status.  Buyer and Seller
shall use all reasonable efforts to maintain their respective legal statuses
from the date hereof until the Closing Date and to assure that as of the Closing
Date they will not be under any material corporate, legal or contractual
restriction that would prohibit or delay the timely consummation of the
Transaction.

     

    8.4 Notices
of Claims.  Seller shall
promptly notify Buyer and Buyer shall promptly notify Seller, if, between the
date hereof and the Closing Date, Seller or Buyer, as the case may be, receives
notice of any claim, suit, action or other proceeding of the type referred to in
Sections 6.6 and 7.6.

     

    
      
        
        

      

      
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    8.5 Compliance
with Laws.  During the period
from the date of this Agreement to the Closing Date, Seller shall attempt in
good faith to comply in all material respects with all applicable statutes,
ordinances, rules, regulations and orders relating to the ownership and
operation of the Leases.

     

    8.6 Government
Reviews and Filings.  Before and after
the Closing, Buyer and Seller shall cooperate to provide requested information,
make required filings with, prepare applications to and conduct negotiations
with each governmental agency as required to consummate the
Transaction.  Each Party shall make any governmental filings
occasioned by its ownership or structure.  Buyer shall make all
filings after the Closing at its expense with governmental agencies necessary to
comply with laws and shall indemnify and hold harmless Seller from and against
all claims, costs, expenses, liabilities and actions arising out of Buyer’s
holding of title after the Closing and prior to the securing of any necessary
governmental approvals of the transfer.

     

    8.7 Confidentiality
of Data and Information.  All data and
information obtained from Seller in connection with the Transaction whether
before or after the execution of this Agreement, including data and information
generated by Buyer in connection with this Transaction (collectively, the “Information”) is deemed by the
Parties to be confidential and proprietary to Seller.  Buyer shall
take reasonable steps to ensure that Buyer’s employees, consultants and agents
comply with the provisions of this Section 8.7.  Until completion of
the Closing, except as required by law, Buyer and its officers, agents and
representatives will hold in strict confidence the terms of this Agreement and
all Information, except any Information which:  (i) at the time of
Seller’s disclosure to Buyer is in the public domain; (ii) after Seller’s
disclosure to Buyer becomes part of the public domain by publication or
otherwise, except by Buyer’s breach of this commitment; (iii) Buyer can
establish by competent proof that Buyer was rightfully in its possession at the
time of Seller’s disclosure to Buyer; (iv) Buyer rightfully receives from third
parties free of any obligation of confidence; (v) is disclosed to Buyer’s
consultants, investors and lenders who similarly agree to protect the
confidentiality of such Information and agree to use such Information only for
their due diligence evaluation of the Assets; or (vi) is developed independently
by Buyer, provided that the person or persons developing the Information shall
not have had access to the Information.  The terms of this Section 8.7
shall survive termination of this Agreement for a period of two years from the
Effective Time.

     

    ARTICLE 9

    CONDITIONS
TO CLOSING

     

    9.1 Buyer’s
Conditions.  The obligations
of Buyer at Closing are subject, at the option of Buyer, to the satisfaction on
or prior to the Closing of the following conditions precedent:

     

    a. Representations, Warranties
and Covenants.  All of Seller’s representations and warranties
contained in Article 6 of this Agreement shall be true in all material respects
at and as of the Closing in accordance with their terms as if such
representations and warranties were remade at and as of the Closing, and Seller
shall have performed and satisfied all covenants and agreements required by this
Agreement to be performed and satisfied by Seller at or prior to the Closing in
all material respects and in form acceptable to Buyer in its sole
judgment;

     

    b. No
Action.  No order has been entered by any court or governmental
agency having jurisdiction over the Parties or the subject matter of this
Agreement that restrains or prohibits this Transaction and that remains in
effect at the time of Closing;

     

    c. Title
Defects.  The aggregate value of all uncured Title Defects and
Environmental Defects as of Closing does not exceed ten percent (10%) of the
Purchase Price;

     

    
      
        
        

      

      
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    d. Dismissal of Furr
Lawsuit.  Seller has obtained and delivered to Buyer a
stipulated settlement agreement and signed court order dismissing with prejudice
all claims asserted in action styled David L. Furr v. PetroHunter
Operating Company, Apollo Energy, LLC and MAB Resources,
LLC, Case No. 2008CV40, District Court, Garfield County, Colorado, with
both the settlement agreement and court order expressly binding on successors
and assigns and in forms acceptable to Buyer;

     

    e. Ratification of Furr
Lease.  Seller has obtained and delivered to Buyer a
ratification of Oil and Gas Lease from David L. Furr to Apollo Energy, LLC dated
November 17, 2005, effective November 1, 2005, a Memorandum of which is recorded
in Book 1784, Page 507, Garfield County (the “Furr Lease”), in form acceptable to
Buyer, providing, among other provisions, that the Furr Lease continues in full
force and effect for a period of time adequate in Buyer’s sole judgment for the
lessee to satisfy any lease requirements of well drilling, testing, completion
or other operations and for obtaining a well or wells capable of producing
Hydrocarbons in paying quantities;

     

    f. Ratifications and Extensions
of Jolley Leases.  Seller has obtained and delivered to Buyer
ratifications and one-year extensions of (i) Oil and Gas Lease from M. Carter
Jolley, Jr. to Apollo Energy, LLC dated November 1, 2005, a Memorandum of which
is recorded in Book 1768, Page 771, Garfield County and (ii) Oil and Gas Lease
from M. Carter Jolley, Jr. to Apollo Energy, LLC dated January 25, 2006,
effective February 1, 2009, a Memorandum of which is recorded in Book 1784, Page
208, Garfield County, and at Reception No. 2341180, Mesa County (the “Jolley Leases”);

     

    g. Termination of Apollo
Agreement.  .  Seller has obtained and delivered to
Buyer (i) written terminations and releases, effective as of the Effective Date,
of Lease Acquisition and Development Agreement by and between MAB Resources,
LLC, ATEC Energy Ventures, LLC, Apollo Energy, LLC and Apollo Nominees dated
November 4, 2005, in recordable form acceptable to Buyer, and (ii) a release and
assignment from Apollo Energy, LLC, to Seller, releasing and assigning any claim
for an overriding royalty interest in Oil and Gas Lease from EnCana Oil &
Gas (USA) Inc. to PetroHunter Operating Company, dated December 10, 2007,
recorded at Reception No.739253, Garfield County, Colorado.

     

    h. Remediation of Furr and
Reppo Pits.  Seller has conducted all necessary remediation of
mud pits on the Furr Lease and Oil and Gas Lease from Steven W. Weller and Toni
L. Weller, et al. to MAB Resources, LLC dated February 15, 2006, recorded in
Book 1802, Page 933, Garfield County, in full compliance with all applicable
Environmental Laws; and Seller has provided to Buyer written evidence of
Colorado Oil and Gas Conservation Commission (“COGCC”) inspection and
certification of compliance with COGCC rules and regulations;

     

    i. Termination of Clear Creek
Agreements.  Seller has obtained and delivered to Buyer written
terminations and releases, effective as of the Effective Time, of all gathering,
transportation and similar agreements between Seller and Clear Creek Energy
Services, LLC.

     

    j. Release of Global Project
Finance AG Mortgage.  .  Seller has obtained and
delivered to Buyer a release of Deed of Trust, Security Agreement, Assignment,
Financing Statement and fixture Filing, dated May 21, 2007, from PetroHunter
Operating Company (formerly GSL Energy Corporation) a Maryland corporation to
the Public Trustees of Garfield, Mesa and Rio Blanco Counties, Colorado for the
benefit of Global Project Finance AG, and 

     

    
      
        
        

      

      
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      recorded
in Garfield County at Reception No. 723805 (the “Global Mortgage”), insofar as
the same covers the Assets and in sufficient counterparts to facilitate
recording.

    

     

    k. Release of CCES Deed of
Trust.  Seller has obtained and delivered to Buyer a release of
Second Deed of Trust, Security Agreement, Financing Statement and Fixture
Filing, dated January 29, 2008, from PetroHunter Energy Corporation, a Maryland
corporation, and PetroHunter Operating Company, f/k/a GSL Energy Corporation, a
Maryland corporation to the Public Trustees of Garfield, Mesa and Rio Blanco
Counties, Colorado, for the benefit of CCES Piceance Partners I, LLC, and
recorded in Garfield County at Reception No. 744541 (the “CCES Mortgage”), insofar as
the same covers the Assets and in sufficient counterparts to facilitate
recording.

     

    l. Creditor
Agreements.  Seller has obtained and delivered to Buyer written
agreements in form acceptable to Buyer from Seller’s creditors holding in
aggregate not less than 85% of Seller’s outstanding debt, pursuant to which such
creditors agree to the amount of their debt against Seller (the “Creditor Settlement Amounts”)
and agree to provide Buyer, upon payment of the applicable Creditor Settlement
Amounts out of the Escrow Account, with a full recordable release of liens and
claims in form acceptable to Buyer of any and all liens and claims against the
Assets held by such creditors (the “Creditor
Releases”);

     

    m. MAB Resources, LLC
Disclaimer.  Seller has obtained and delivered to Buyer a
disclaimer, release and assignment of all right, title, interest and claims of
MAB Resources, LLC, its members and any affiliated entity, in the
Assets;

     

    n. Delivery of Reppo Wissler
Area Title Opinion.  Seller shall deliver to Buyer a legal
title opinion, covering Seller’s interest in the Reppo Wissler Area;
and

     

    o. Access and Surface
Use.  Buyer shall have satisfied itself that access to and
surface use in connection with each Well and undeveloped location identified on
Exhibit B are not
subject to limitations, restrictions, conditions, compensation for use or damage
provisions, which in Buyer’s sole judgment are unacceptable to
Buyer.

     

    p. Hagen Road Access
Agreement.  Seller has obtained and shall assign to Buyer at
Closing a road access agreement, providing for a right-of-way across the
SE/4SW/4 of Section 15, T. 7 S., R. 95 W., 6th P.M., in form acceptable to
Buyer, between Seller and Kenneth Hagen and Christie Hagen.

     

    9.2 Seller’s
Conditions.  The obligations
of Seller at the Closing are subject, at the option of Seller, to the
satisfaction at or prior to Closing of the following conditions
precedent:

     

    a. Representations, Warranties
and Covenants.  All of Buyer’s representations and warranties
contained in Article 7 of this Agreement shall be true in all material respects
at and as of the Closing in accordance with their terms as if such
representations were remade at and as of the Closing and Buyer shall have
performed and satisfied all covenants and agreements required by this Agreement
to be performed and satisfied by Buyer at or prior to the Closing in all
material respects;

     

    b. No
Action.  No order has been entered by any court or governmental
agency having jurisdiction over the Parties or the subject matter of this
Agreement that restrains or prohibits this Transaction and that remains in
effect at the time of Closing; and

     

    
      
        
        

      

      
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    c. Title
Defects.  The aggregate value of all uncured Title Defects and
Environmental Defects as of Closing does not exceed ten percent (10%) of the
Purchase Price.

     

    ARTICLE 10

    RIGHT OF
TERMINATION AND ABANDONMENT

     

    10.1 Termination.  This Agreement
may be terminated in accordance with the following provisions:

     

    a. by Buyer
if any of the conditions set forth in Section 9.1 are not satisfied, through no
fault of Buyer, or waived by Buyer in writing, as of the Closing
Date;

     

    b. by Seller
if any of the conditions set forth in Section 9.2 are not satisfied, through no
fault of Seller, or waived by Seller in writing, as of the Closing Date;
or

     

    c. by Buyer
or Seller if, through no fault of the Party claiming termination, the Closing
does not occur on or before the date specified in Section 11.1; or

     

    d. by Buyer
or Seller if the aggregate value of all uncured Title Defects and Environmental
Defects as of Closing exceeds ten percent (10%) of the Purchase
Price.

     

    e. by Buyer
if the conditions for payment of the escrowed Purchase Price in accordance with
Article 11, with the exception of Buyer’s Performance Deposit, as defined in
Section 12.1, are not satisfied on or before May 30, 2008, at 5:00 p.m.,
Mountain Time.

     

    10.2 Liabilities Upon
Termination.

     

    a. Buyer’s
Default.  If the Transaction is not consummated on or before
the Closing Date by reason of Buyer’s wrongful failure to tender performance at
Closing, and if Seller is not in material default under the terms of this
Agreement and is ready, willing and able to close, and Seller terminates this
Agreement, Buyer shall pay Seller One Hundred Thousand Dollars ($100,000) as a
“Liquidated Damages
Payment” and as Seller’s sole and exclusive remedy for failure of the
Transaction to close.  Seller and Buyer agree that Seller’s damages if
Buyer fails to close are difficult to measure and both Seller and Buyer agree
that the amount of the Liquidated Damages Payment bears a reasonable
relationship to and is a reasonable estimation of such damages.  After
termination of the Agreement, Buyer shall have no further obligation or
liability to Seller under this Agreement except for the provisions of Section
8.7.

     

    b. Seller’s
Default.  If the Transaction is not consummated on or before
the Closing Date by reason of Seller’s wrongful failure to tender performance at
Closing and if Buyer is not in material default under this Agreement and is
ready, willing and able to close, the Escrow Agent shall return any funds in its
possession, and any accrued interest, to Buyer not later than 10 days after the
determination that Closing will not occur, or Buyer may pursue specific
performance of this Agreement, and in any event Buyer shall have all other
remedies available to it for Seller’s wrongful failure to close.

     

    c. Other
Termination.  If Seller and Buyer agree to terminate this
Agreement, each Party shall release the other Party from any and all liability
for termination of this Agreement, except the provisions of Section
8.7.

     

    
      
        
        

      

      
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    ARTICLE 11

    CLOSING

     

    11.1 Date of
Closing.  Subject to the
conditions stated in this Agreement, consummation of the Transaction (the “Closing”) shall be held on or
before April 30, 2008.  The date the Closing actually occurs is called
the “Closing
Date.”

     

    11.2 Place of
Closing.  The Closing shall
be held on the Closing Date at Holland & Hart LLP’s offices in Denver,
Colorado at 10:00 a.m. or at such other time and place as Seller and Buyer may
agree in writing.

     

    11.3 Title
Escrow Agent.  The Parties and
the Scheduled Creditors shall agree upon a third party to take possession on or
before one (1) day prior to the Closing Date of all instruments required to be
executed and delivered to Buyer under Sections 11.4.d, 11.4.e, 11.4.f and 11.4.i
(the “Title Escrow
Agent”).

     

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

     

    a. Seller’s
Certificates.  Seller shall deliver to
Buyer Officer’s Certificates in the form of Exhibit
E.

     

    b. Buyer
Certificate.  Buyer shall deliver to
Seller an Officer’s Certificate in the form of Exhibit
F.

     

    c. Non-Foreign Status.
Seller shall deliver
to Buyer affidavits of non-foreign status and no requirement for withholding
under Section 1445 of the Internal Revenue Code in the form of Exhibit
G.

     

    d. Assignment.  Seller
and Buyer shall execute, acknowledge and deliver to the Title Escrow Agent an
Assignment and Bill of Sale, conveying the Assets to Buyer effective as of the
Effective Time (in sufficient counterparts to facilitate filing and recording)
substantially in the form of Exhibit H, conveying the
Assets with a special warranty of title by, through and under Seller but not
otherwise;

     

    e. Governmental Forms of
Transfer.  Seller and Buyer shall execute and deliver to the
Title Escrow Agent such other assignments or transfers necessary to transfer the
Assets to Buyer, including without limitation any conveyances on official forms
and related documentation necessary to transfer the Assets to Buyer in
accordance with requirements of governmental regulations.

     

    f. Scheduled Creditor
Releases.  The Scheduled Creditors, or certain Scheduled
Creditors to be specified in writing by Buyer, shall execute and deliver the
Creditor Releases to the Title Escrow Agent on or before one (1) day prior to
the Closing Date.

     

    g. Settlement
Statement.  Buyer and Seller shall execute and deliver the
Preliminary Settlement Statement;

     

    h. Purchase
Price.

     

    
      
        
        

      

      
        -19-

        
          

        

      

      
        
        

      

    

    i. Buyer
shall deposit into the Escrow Account the Closing Amount by wire transfer of
immediately available funds;

     

    ii. Upon
Buyer’s confirmation that all Scheduled Creditors (as defined in Section 6.18)
have been paid in full and that assignments and/or releases of all such liens
and claims, in forms acceptable to Buyer, have been executed and delivered to
the Escrow Agent by such parties, Seller and Buyer shall execute and deliver
written instructions to the Escrow Agent instructing the Escrow Agent (1) to
transfer the Creditor Settlement Amounts to the Scheduled Creditors by wire
transfer of immediately available funds; (2) retain in the Escrow Account an
amount equal to the sum of Five Hundred Thousand Dollars ($500,000) as the
Buyer’s Performance Deposit, as defined in Section 12.1 and the Title Escrow
Amount, as defined in Section 4.4.b.iv., and (3) transfer an amount equal to the
Closing Amount less Creditor Settlement Amounts, Buyer’s Performance Deposit and
the Title Escrow Amount to Seller by wire transfer of immediately available
funds; and

     

    iii. Upon
confirmation by the Title Escrow Agent that all wire transfers of Creditor’s
Settlement Amounts and the amount due Seller at Closing under Section
11.4.h.ii.(3) have been received, the Title Escrow Agent shall deliver to Buyer
all instruments delivered to the Title Escrow Agent under Sections 11.4.d,
11.4.e, 11.4.f and 11.4.i. 00

     

    i. Change of
Operator.  Seller and Buyer shall execute and deliver to the
Title Escrow Agent all required change of operator forms and
notices;

     

    j. Possession.  Seller
shall deliver to Buyer possession of the Assets; and

     

    k. Records.  Seller
shall deliver the Records to Buyer.

     

    ARTICLE 12

    POST-CLOSING
OBLIGATIONS

     

    12.1 Buyer’s
Performance Deposit.  Five Hundred Thousand Dollars ($500,000)
shall be retained in the Escrow Account for 91 days following Closing to cover
Defect Values related to Title Defects which have not been cured by Seller on or
before the Closing Date and Losses, as defined in Section 14.3, incurred by
Buyer as a result of breach of Seller’s representations and warranties in
Article 6 of this Agreement or Seller’s failure to perform all covenants and
agreements required to be performed and satisfied by Seller under this
Agreement.

     

    12.2 Post-Closing
Adjustments.  As soon as
practicable after the Closing, but on or before 90 days after Closing, Seller
shall prepare and deliver to Buyer a final settlement statement (the “Final Settlement Statement”)
setting forth each adjustment or payment that was not finally determined as of
the Closing and showing the calculation of such adjustment and the resulting
final purchase price (the “Final Purchase
Price”).  As soon as practicable after receipt of Seller’s
proposed Final Settlement Statement, but on or before 15 days after receipt of
Seller’s proposed Final Settlement Statement, Buyer shall deliver to Seller a
written report containing any changes that Buyer proposes to make to the Final
Settlement Statement.  Buyer’s failure to deliver to Seller a written
report detailing changes to the proposed Final Settlement Statement by that date
shall be deemed an acceptance by Buyer of the Final Settlement Statement as
submitted by Seller.  The parties shall endeavor to agree with respect
to the changes proposed by Buyer, if any, no later than 15 days after receipt by
Seller of Buyer’s comments to the proposed Final Settlement
Statement.  The date upon which such agreement is reached or upon
which 

     

    
      
        
        

      

      
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      the Final
Purchase Price is established for the transaction shall be called the “Final Settlement
Date.”  If the Final Purchase Price is more than the Closing
Amount, Buyer shall pay Seller the amount of such difference.  If the
Final Purchase Price is less than the Closing Amount, Seller shall pay to Buyer
the amount of such difference.  Any payment by Buyer or Seller shall
be by wire transfer of immediately available funds.  Any such payment
shall be within five days of the Final Settlement Date.

    

     

    12.3 Dispute
Resolution.  If the Parties
are unable to resolve disputes concerning the Final Settlement Statement or
Final Purchase Price on or before 30 days after the Final Settlement Statement
is received by Buyer, such disputes shall be resolved in accordance with Section
14.5.d.

     

    12.4 Records.  Records shall be
available for pick up by Buyer on the Closing Date.  Seller may retain
copies of the Records and shall be granted reasonable access, during ordinary
business hours and with reasonable notice to those records provided to Buyer for
any future needs which may arise out of Seller’s ownership of the
Assets.

     

    12.5 Transfer
Taxes and Recording Fees.  Buyer shall pay
all transfer taxes occasioned by the sale or transfer of the Leases and all
governmental filing and recording fees required in connection with the
processing, filing, or recording of any assignments.

     

    12.6 Further
Assurances.  From time to time
after Closing, Buyer and Seller shall each execute, acknowledge and deliver to
the other such further instruments and take such other action as may be
reasonably requested in order to more effectively assure the other the full
beneficial use and enjoyment of the Assets and otherwise to accomplish the
purposes of the Transaction.

     

    12.7 EnCana
Road Maintenance Agreement.  For a period of
up to 120 days from Closing, Seller reserves the exclusive right to:
(a) negotiate a road access and maintenance agreement for execution by
Buyer and EnCana Oil & Gas (USA) Inc. ("EnCana"), and (b) collect
funds of up to $250,000 from EnCana to reimburse Seller for the construction
cost of the road that Seller constructed leading to Pad #1 in Section 15, T7S,
R95W, Garfield County, Colorado (the “Furr Road Agreement”).   Buyer
shall have the right to accept or reject the Furr Road Agreement, in its sole
discretion.  Said agreement must be executed by both Buyer and EnCana in
order for it to be effective.  In the event Buyer does not enter into the
Furr Road Agreement, Buyer shall have no liability to Seller for Seller's
inability to obtain the above-described reimbursement from EnCana.

     

    ARTICLE 13

    TAX
MATTERS

     

    13.1 Apportionment
of Tax Liability.  “Taxes” shall
mean all ad valorem, property, production, excise, net proceeds, severance and
all other taxes and similar obligations assessed against the Assets or based
upon or measured by the ownership of the Assets or the production of
Hydrocarbons or the receipt of proceeds therefrom, other than income
taxes.  All Taxes based on or measured by production of Hydrocarbons
shall be deemed attributable to the period during which such production occurred
and not attributable to the year in which such Taxes are
assessed.  The apportionment of Taxes between the Parties shall take
place as an adjustment to the Purchase Price pursuant to Sections 2.2 and 12.1
in the Preliminary Settlement Statement for Taxes for which information is
available at Closing and in the Final Settlement Statement for all remaining
Taxes, using estimates of such Taxes if actual numbers are not
available.

     

    13.2 Tax
Reports and Returns.  Seller agrees to
file all tax reports and returns required to be filed prior to Closing and Buyer
agrees to file all tax reports and returns required to be filed after
Closing.  The non-filing Party agrees to provide the filing Party with
all information in or ascertainable from their 

     

    
      
        
        

      

      
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      records
necessary to file any required tax reports and returns related to the
Assets.  Buyer agrees to pay all Taxes due and payable with respect to
the Assets after Closing subject to the provisions of Sections 13.1 and
12.4.

    

     

    13.3 Sales
Taxes.  Buyer shall be
liable for and shall indemnify Seller for, any sales and use taxes, conveyance,
transfer and recording fees and real estate transfer stamps or taxes that may be
imposed on any transfer of the Assets pursuant to this Agreement.  If
required by applicable law, Seller shall, in accordance with applicable law,
calculate and remit any sales or similar taxes that are required to be paid as a
result of the transfer of the Assets to Buyer and Buyer shall promptly reimburse
Seller therefor.  If Seller receives notice that any sales and/or use
taxes are due, Seller shall promptly forward such notice to Buyer for
handling.

     

    13.4 Tax
Information.  Buyer and Seller
shall cooperate and agree upon allocation of the proceeds for the respective
properties and shall agree to file any necessary tax forms with the United
States Internal Revenue Service.

     

    ARTICLE 14

    ASSUMPTION
AND RETENTION OF OBLIGATIONS

    AND
INDEMNIFICATION

     

    14.1 Buyer’s
Assumption of Liabilities and Obligations.  Upon Closing,
Buyer shall assume and pay, perform, fulfill and discharge all duties, claims,
costs, expenses, liabilities and obligations (the “Liabilities”) accruing or
relating to (i) the owning, operating or maintaining of the Assets to the extent
such Liabilities relate to periods on or after the Effective Time, including
without limitation the Post-Closing Environmental Liabilities (the “Buyer’s Liabilities”) and (ii)
any breach of any representation, warranty, covenant or agreement of Buyer
contained in this Agreement (together, the “Assumed Liabilities”).

     

    14.2 Seller’s
Retention of Liabilities and Obligations.  Upon Closing,
Seller shall retain all Liabilities, accruing or relating to (i) the owning,
operating or maintaining of the Assets to the extent such Liabilities relate to
periods prior to the Effective Time, but including without limitation the
payment of royalties, overriding royalties and Taxes attributable to the period
of time prior to the Effective Time and the Pre-Closing Environmental
Liabilities; (ii) any injury, death, casualty, tortious action or inaction
occurring on or attributable to the Assets and attributable to the period of
time prior to the Closing Date, (iii) employee-related claims of Seller
attributable to the period of time prior to the Closing Date (Subsections
14.2(i) through (iii) being the “Seller’s Liabilities”), and
(v) any breach of any representation, warranty, covenant or agreement of Seller
contained in this Agreement (collectively, the “Retained
Liabilities”).

     

    14.3 Indemnification.  “Losses” shall mean any actual
losses, costs, expenses (including court costs, reasonable fees and expenses of
attorneys, technical experts and expert witnesses and the cost of
investigation), liabilities, damages, demands, suits, claims, and sanctions of
every kind and character (including civil fines) arising from, related to or
reasonably incident to matters indemnified against; excluding however any
special, consequential, punitive or exemplary damages, diminution of value of an
Asset, loss of profits incurred by a Party or Loss incurred as a result of the
indemnified Party indemnifying a third party.

     

    After the
Closing, Buyer and Seller shall indemnify each other as follows:

     

    a. Seller’s Indemnification of
Buyer.  Seller assumes all risk, liability, obligation and
Losses in connection with, and shall defend, indemnify, and save and hold
harmless Buyer, 

     

    
      
        
        

      

      
        -22-

        
          

        

      

      
        
        

      

      its
officers, directors, employees and agents, from and against all Losses which
arise from or in connection with (i) Seller’s Liabilities, (ii) any breach of
any representation or warranty made by Seller, (iii) any breach by Seller of
their special warranty of title for the Assets contained in any conveyance, and
(iv) any breach by Seller of this Agreement.

    

     

    b. Buyer’s Indemnification of
Seller.  Buyer assumes all risk, liability, obligation and
Losses in connection with, and shall defend, indemnify, and save and hold
harmless Seller, Seller’s partners, employees and agents, from and against all
Losses which arise from or in connection with (i) Buyer’s Liabilities, and (ii)
any breach of any representation or warranty made by Buyer, and (iii) any breach
by Buyer of this Agreement.

     

    14.4 Release.  Buyer shall be
deemed to have released Seller at the Closing from any Losses for which Buyer
has agreed to indemnify Seller hereunder, and Seller shall be deemed to have
released Buyer at the Closing from any Losses for which Seller has agreed to
indemnify Buyer hereunder.

     

    14.5 Procedure.  The
indemnifications contained in Section 14.3 shall be implemented as
follows:

     

    a. Coverage.  Such
indemnity shall extend to all Losses suffered or incurred by the indemnified
party.

     

    b. Claim
Notice.  The Party seeking indemnification under the terms of
this Agreement (“Indemnified
Party”) shall submit a written “Claim Notice” to the other
Party (“Indemnifying
Party”) stating:  (i) the amount of each payment claimed by an
Indemnified Party to be owing, (ii) the basis for such claim, with supporting
documentation, and (iii) a list identifying to the extent reasonably possible
each separate item of Loss for which payment is so claimed.  The
amount claimed shall be paid by the Indemnifying Party to the extent required
herein within 30 days after receipt of the Claim Notice, or after the amount of
such payment has been finally established, whichever last occurs.

     

    c. Information.  Within
20 days after the Indemnified Party receives notice of a claim or legal action
that may result in a Loss for which indemnification may be sought under this
Article 14 (“Claim”),
the Indemnified Party shall give written notice of such Claim to the
Indemnifying Party.  If the Indemnifying Party or its counsel so
requests, the Indemnified Party shall furnish the Indemnifying Party with copies
of all pleadings and other information with respect to such Claim.  At
the election of the Indemnifying Party made within 60 days after receipt of such
notice, the Indemnified Party shall permit the Indemnifying Party to assume
control of such Claim (to the extent only that such Claim, legal action or other
matter relates to a Loss for which the Indemnifying Party is liable), including
the determination of all appropriate actions, the negotiation of settlements on
behalf of the Indemnified Party, and the conduct of litigation through attorneys
of the Indemnifying Party’s choice; provided, however, that no such settlement
can result in any liability or cost to the Indemnified Party for which it is
entitled to be indemnified hereunder without its consent.  If the
Indemnifying Party elects to assume control, (i) any expense incurred by the
Indemnified Party thereafter for investigation or defense of the matter shall be
borne by the Indemnified Party, and (ii) the Indemnified Party shall give all
reasonable information and assistance, other than pecuniary, that the
Indemnifying Party shall deem necessary to the proper defense of such Claim,
legal action, or other matter.  In the absence of such an election,
the Indemnified Party will use its best efforts to defend, at the Indemnifying
Party’s expense, any claim, legal action or other matter to which such other
Party’s indemnification under this Article 14 applies until the Indemnifying
Party assumes such defense, and, if the Indemnifying Party fails to assume such
defense within the time period provided 

     

    
      
        
        

      

      
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      above,
settle the same in the Indemnified Party’s reasonable discretion at the
Indemnifying Party’s expense.  If such a Claim requires immediate
action, both the Indemnified Party and the Indemnifying Party will cooperate in
good faith to take appropriate action so as not to jeopardize defense of such
Claim or either Party’s position with respect to such Claim.

    

     

    d. Dispute.  Other
than with respect to a Claim based on an issue for which another method of
dispute resolution is provided in this Agreement, if the existence of a valid
Claim or amount to be paid by an Indemnifying Party is in dispute, the Parties
agree to submit determination of the existence of a valid Claim or the amount to
be paid pursuant to the Claim Notice to binding arbitration in Denver, Colorado,
such arbitration to be conducted as follows:  The arbitration
proceeding shall be governed by Colorado law and shall be conducted in
accordance with the Commercial Arbitration Rules of the American Arbitration
Association (“AAA”),
with discovery to be conducted in accordance with the Federal Rules of Civil
Procedure, and with any disputes over the scope of discovery to be determined by
the arbitrators.  The arbitration shall be before a three person panel
of neutral arbitrators, consisting of one person from each of the following
categories:  (1) an attorney who has practiced in the area of oil and
gas law for at least ten years; (2) a retired judge at the Colorado or United
States District Court or Appellate Court level; and (3) a person with at least
ten years of oil and gas industry experience as a petroleum
engineer.  The AAA shall submit a list of persons meeting the criteria
outlined above for each category of arbitrator, and the Parties shall select one
person from each category in the manner established by the AAA.  If
the Parties cannot agree, AAA shall select the arbitrator(s) on which the
Parties cannot agree.  The arbitrators will have no authority to award
punitive damages or any other damages not measured by the prevailing Party’s
actual damages, and may not, in any event, make any ruling, finding or award
that does not conform to the terms and conditions of the
Agreement.  The arbitrators shall conduct a hearing no later than 30
days after submission of the matter to arbitration.  At the hearing,
the Parties shall present such evidence and witnesses as they may choose, with
or without counsel.  Adherence to formal rules of evidence shall not
be required but the arbitration panel shall consider any evidence and testimony
that it determines to be relevant, in accordance with procedures that it
determines to be appropriate.  Any award entered in the arbitration
shall be made in writing and any payment due pursuant to the arbitration shall
be made within 15 days of the arbitrators’ award.  The award of the
arbitrators need not be accompanied by a reasoned opinion.  The
arbitrator shall award to the prevailing Party, if any, as determined by the
arbitrator, all of its costs and fees.  “Costs and fees” means all
reasonable pre-award expenses of an arbitration, including the arbitrators’
fees, administrative fees, travel expenses, out-of-pocket expenses such as
copying, telephone, court costs, witness fees, and reasonable attorneys’
fees.  The award may be filed in a court of competent jurisdiction and
may be enforced by any Party as a final judgment of such court.

     

    14.6 Reservation
as to Non-Parties.  Nothing herein is
intended to limit or otherwise waive any recourse Buyer or Seller may have
against any non-party for any obligations or liabilities that may be incurred
with respect to the Assets.

     

    ARTICLE 15

    MISCELLANEOUS

     

    15.1 Exhibits.  The Exhibits
referred to in this Agreement are hereby incorporated in this Agreement by
reference and constitute a part of this Agreement.

     

    15.2 Expenses.  All fees, costs
and expenses incurred by Buyer or Seller in negotiating this Agreement or in
consummating the Transaction shall be paid by the Party incurring same,
including, without limitation, legal and accounting fees, costs and
expenses.

     

    
      
        
        

      

      
        -24-

        
          

        

      

      
        
        

      

    

    15.3 Notices.  All notices and
communications required or permitted under this Agreement shall be in writing
and addressed as follows:

     

    If to
Seller:

    

    David E.
Brody

    Vice
President and General Counsel

    PetroHunter
Energy Corporation

    PetroHunter
Operating Company

    1600
Stout Street, Suite 2000

    Denver,
Colorado 80202

    Telephone:

    Facsimile:

    Email:  dbrody@petrohunter.com

    

    

    If to
Buyer:

    

    Bruce L.
Payne

    President
and Chief Financial Officer

    Laramie
Energy II, LLC

    1512
Larimer Street, Suite 1000

    Denver,
Colorado 80202

    Telephone:  303-339-4403

    Facsimile:  303-339-4399

    Email:  bpayne@laramie-energy.com

    

    

    With
copies to:

    

    Janet N.
Harris

    Holland
& Hart LLP

    555 17th
Street, Suite 3200

    Denver,
Colorado 80202

    Telephone:  303-295-8302

    Facsimile:  303-291-9127

    Email:  jnharris@hollandhart.com

    

    Any
notice or communication hereunder shall be deemed to have been duly made and the
receiving Party charged with notice (i) if personally delivered, when received,
(ii) if faxed, when received if receipt is confirmed, (iii) if mailed, certified
mail, return receipt requested, on the date set forth on the return receipt, or
(iv) if sent by overnight courier, one day after sending.  Any Party
may, by written notice so delivered to the other Parties, change the address or
individual to which delivery shall thereafter be made.

     

    15.4 Amendments.  This Agreement
may not be amended nor any rights hereunder waived except by an instrument in
writing signed by the Party to be charged with such amendment or waiver and
delivered by such Party to the Party claiming the benefit of such amendment or
waiver.

     

    
      
        
        

      

      
        -25-

        
          

        

      

      
        
        

      

    

    15.5 Assignment.  Subject to
Section 15.18, prior to Closing, neither Seller nor Buyer shall assign all or
any portion of its respective rights or delegate all or any portion of its
respective duties hereunder without the prior written consent of the other
Party.

     

    15.6 Announcements.  Buyer and Seller
agree that prior to making any press releases and other public announcements
concerning this Agreement and the Transaction, the Party desiring to make such
public announcement shall obtain the prior written consent of the other
Party.

     

    15.7 Headings.  The headings of
the Articles and Sections of this Agreement are for guidance and convenience of
reference only and shall not limit or otherwise affect any of the terms or
provisions of this Agreement.

     

    15.8 Counterparts.  This Agreement
may be executed by Buyer and Seller in any number of counterparts, each of which
shall be deemed an original instrument, but all of which together shall
constitute one and the same instrument.  Execution can be evidenced by
fax or electronic signatures with original signature pages to follow in due
course.

     

    15.9 References.  References made
in this Agreement, including use of a pronoun, shall be deemed to include, where
applicable, masculine, feminine, singular or plural, individuals, partnerships
or corporations.  As used in this Agreement, “person” shall mean any natural
person, corporation, partnership, court, agency, government, board, commission,
trust, estate or other entity or authority.

     

    15.10 Governing
Law.  This Agreement
and the Transaction and any arbitration or dispute resolution conducted pursuant
hereto shall be construed in accordance with, and governed by, the laws of the
State of Colorado and the Parties hereby subject themselves to the sole and
exclusive jurisdiction of the Federal or State courts of Colorado for resolution
of any dispute related to this Agreement.

     

    15.11 Entire
Agreement.  This Agreement
constitutes the entire understanding among the Parties, their respective
partners, shareholders, officers, directors and employees with respect to the
subject matter hereof, superseding all negotiations, prior discussions,
preliminary term sheets and prior agreements, notwithstanding language to the
contrary therein.

     

    15.12 Binding
Effect.  This Agreement
shall be binding upon, and shall inure to the benefit of, the Parties, and their
respective successors and assigns.

     

    15.13 Survival.  The
representations and warranties set forth in Article 6 and Article 7 shall
survive the Closing without limitation as to time.  Delivery of the
Assignment and Bill of Sale at the time of the closing will not constitute a
merger of this Agreement with the Assignment.

     

    15.14 No
Third-Party Beneficiaries.  This Agreement is
intended only to benefit the Parties and their respective permitted successors
and assigns.

     

    15.15 Limitation
on Damages.  The Parties
expressly waive any and all rights to consequential, special, incidental,
punitive or exemplary damages, or loss of profits resulting from breach of this
Agreement.

     

    15.16 Severability.  It is the intent
of the Parties that the provisions contained in this Agreement shall be
severable.  Should any provisions, in whole or in part, be held
invalid as a matter of law, such holding shall not affect the other portions of
this Agreement, and such portions that are not invalid shall be given effect
without the invalid portion.

     

    
      
        
        

      

      
        -26-

        
          

        

      

      
        
        

      

    

    15.17 Condition
Precedent.  A condition
precedent to the effectiveness of this Agreement is signature by both Buyer and
Seller.  Unless and until both Buyer and Seller have executed this
Agreement, the Agreement will not be legally binding.

     

    Executed
on the dates of the acknowledgments set forth below.

     

    SELLER:

    

    PETROHUNTER
ENERGY CORPORATION

    

    

    

    By:    /s/ Charles B.
Crowell                                        

    Charles
B. Crowell

    Chief
Executive Officer

    

    

    PETROHUNTER
OPERATING COMPANY

    

     

    
      

      By:    /s/ Charles B.
Crowell                                        

      Charles
B. Crowell

      Chief
Executive Officer

      
 

    

    BUYER:

    

    LARAMIE
ENERGY II, LLC

    

    

    

    By:  /s/ Bruce L.
Payne                                               

    Bruce L.
Payne

    President
and Chief Financial Officer

    

    

    

    -27-

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