PURCHASE AND SALE AGREEMENT

Purchase and Sale Agreement

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Laramie Energy II, LLC | PetroHunter Energy Corporation | PetroHunter Operating Company

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Title: PURCHASE AND SALE AGREEMENT
Governing Law: Colorado Date: 6/5/2008
Industry: Oil and Gas Operations Law Firm: Holland Hart Sector: Energy

EXHIBIT 10.1

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

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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

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	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

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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

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		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

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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

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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;

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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

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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.;

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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;

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(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:

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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

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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

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