EXHIBIT 10.1 PURCHASE AND SALE AGREEMENT BETWEEN PETROHUNTERENERGY CORPORTION, PETROHUNTER OPERATING COMPANY AND SWEETPEAPETROLEUM PTY LTD. AND FALCON OIL & GAS LTD., FALCON OIL & GASUSA, INC. AND FALCON OIL & GAS AUSTRALIA PTY LTD. DATED MAY 26, 2009

(a)       

the execution and delivery of this Agreement by all Parties; and

(b)       

written confirmation received by each Party that each other Party’s Board of Directors has approved the execution and delivery of this Agreement.

(c)       

the first to occur of the following:

(i)       

the Treasurer of the Commonwealth of Australia ceasing to be empowered to make an order under Part II of the Foreign Acquisitions and Takeovers Act 1975 (Cth) in respect of the Transaction; or

(ii)      

the Treasurer of the Commonwealth of Australia giving the Purchaser advice in writing of a decision by the Treasurer that the Commonwealth Government has no objection to the Transaction; and

(d)       

the satisfaction or waiver of the closing conditions by the relevant Parties contained in Sections 6.2 and 6.3, as the case may be.

(a)       

liens for taxes or assessments, not yet due or payable;

(b)       

easements, rights-of-way, servitudes, permits, and surface leases held by third parties on, over, or in respect of lands covered by the Initial Working Interest; and

(c)       

any Falcon Encumbrance, title defect or matter that is expressly waived by PetroHunter Energy.

(a)       

Bayless Override, Northern Land Council Royalty, Northern Territory Royalty, and Russenberger Override;

(b)       

liens for taxes or assessments, not yet due or payable;

(c)       

all rights to consent by, required notices to, filings with, or other actions by Northern Territory or Australian governmental entities in connection with the ownership of the Permits, but only if the same are customarily obtained after such transfer of ownership;

(d)       

easements, rights-of-way, servitudes, permits, and surface leases held by third parties on, over, or in respect of lands covered by the Permits;

(e)       

the terms and conditions of the Material Agreements and all documents of record;

(f)       

the Beetaloo Payables; and

(g)       

any PetroHunter Encumbrance, title defect or matter that is expressly waived by Purchaser.

(a)      

it is controlled by,

(i)      

that other, or

(ii)     

that other and one or more Persons each of which is controlled by that other, or

(iii)    

two or more Persons each of which is controlled by that other; or

(b)     

it is a subsidiary of a Person that is that other’s subsidiary.

(a)  

voting securities of the first-mentioned Person carrying more than 50 percent of the votes for the election of directors are held, other than by way of security only, by or for the benefit of such other Person or by or for the benefit of such other Person; and

(b)  

the votes carried by such securities are sufficient, if exercised, to elect a majority of the board of directors of the first-mentioned Person.

(a)      

subject to the Permitted PetroHunter Encumbrances, assign the Assets to the Purchaser;

(b)      

assign the Beetaloo Inventory to the Purchaser;

(c)      

resign as operator under the Beetaloo JOA with immediate effect, despite any longer notice period that may otherwise be provided in the Beetaloo JOA;

(d)      

execute the Amended and Restated Beetaloo JOA;

(e)      

assign or cause to be assigned to the Purchaser or Purchaser’s designee 100% of the Operator Bonds in accordance with the terms thereof;

(f)      

grant the Falcon Parties the Indemnity;

(g)      

terminate the Buckskin JOA;

(h)      

enter into the Escrow Agreement, and comply with the terms and conditions therein; and

(i)      

grant the Falcon Parties the right provided in Section 5.3,

(a)      

subject to the Permitted Falcon Encumbrances, reassign the Initial Working Interest to PetroHunter;

(b)      

except as set forth in this Agreement, accept the PetroHunter Consideration as full and complete payment of any and all obligations owed by PetroHunter Energy to Falcon under the Loan and the Loan Agreement;

(c)      

execute the Amended and Restated Beetaloo JOA;

(d)      

release any and all interest of the Falcon Parties in the Mortgage;

(e)      

release any and all interest of the Falcon Parties in the Pledge Agreement and instruct the brokerage firm holding the Common Shares subject to the Pledge Agreement at the Closing Date to transfer such Common Shares to the Escrow Agent;

(f)      

convey any and all interest of the Falcon Parties in the Remaining Completion Capital;

(g)      

execute the assumption undertaking to retire the Beetaloo Payables;

(h)      

terminate the Buckskin JOA;

(i)      

assume all obligations arising after Closing with respect to the Beetaloo Inventory, including but not limited to storing and insuring the Beetaloo Inventory for the periods after the Closing Date; and

(j)      

enter into the Escrow Agreement, and comply with the terms and conditions therein,

(a)      

other than the Permitted PetroHunter Encumbrances, Sweetpea has good and valid title to the Assets;

(b)      

other than the Permitted PetroHunter Encumbrances, the Assets are free and clear of all PetroHunter Encumbrances, and the PetroHunter Parties have not agreed to encumber or alienate any interest in the Assets;

(c)      

other than the Permitted PetroHunter Encumbrances, Sweetpea has good and valid title to the Beetaloo Inventory;

(d)      

all storage, insurance and other charges in respect of the Beetaloo Inventory have been fully paid, the Beetaloo Inventory is free and clear of all PetroHunter Encumbrances, and the PetroHunter Parties have not agreed to encumber or alienate any interest in the Beetaloo Inventory;

(e)      

to the best knowledge of the PetroHunter Parties, the Operator Bonds will not be cancelled or terminated or any of the coverage thereunder allowed to lapse before the Closing;

(f)      

the PetroHunter Parties either have good and valid title to the Operator Bonds or have obtained the consent of the titleholder to assign the Operator Bonds to the Falcon Parties;

(g)      

none of the Operator Bonds are encumbered or alienated in any respect, nor have the PetroHunter Parties agreed to do so, and the Operator Bonds are free and clear of all PetroHunter Encumbrances;

(h)      

other than: (i) the Beetaloo Payables; (ii) except as may be set forth in the most recent joint interest billing sent to Purchaser under the Beetaloo JOA; (iii) the Transaction Fees; and (iv) and the fees related to the Permits, none of the PetroHunter Parties has any other accounts payable, indebtedness or liability to any other person or entity in connection with ownership of, or operations or activities conducted on or otherwise relating to, the Beetaloo Basin Project;

(i)      

the amount of the Remaining Completion Capital is $855,205, and such amount is more than sufficient to pay 100% of the cost of reclamation and plugging and abandonment requirements in connection with the Initial Working Interest;

(j)      

there are no unpaid amounts, whether billed or unbilled, due from PetroHunter Operating or Falcon USA for materials, services, fees or other reasons in connection with the Initial Working Interest or the Initial Completion Program;

(k)      

the Beetaloo Payables represents a true, complete and correct list of all amounts owing by any PetroHunter Parties to any persons in connection with the Beetaloo Basin Project, and there is no contingency, agreement or other legal basis upon which that total amount can increase between the date hereof and the Closing Date, absent the provision of new services or materials after the date hereof or any applicable interest thereon;

(l)      

the PetroHunter Parties directly or indirectly have control or direction over 26,100,000 Common Shares, of which 14,500,000 Common Shares are currently pledged as security for the Loan in accordance with the terms of the Loan Agreement;

(m)      

the PetroHunter Parties will continue to bear (i) their income tax liabilities and their GST liability associated with the Initial Transaction, and (ii) any obligations with respect to approval by Governmental Authorities, consent of the Northern Land Council, and registration on the Petroleum Register of the Bayless Override, the Russenberger Override (including any predecessor overrides), and the Initial Transaction;

(n)      

each of the PetroHunter Parties:

(i)      

is a corporation duly incorporated, organized and validly existing and in good standing under the laws of its applicable jurisdiction;

(ii)     

has the corporate power, authority and capacity to enter into the Transaction Agreements and all other agreements contemplated by the Transaction Agreements and to carry out and complete its obligations under the Transaction Agreements and all other agreements contemplated by the Transaction Agreements; and

(iii)    

the Transaction Agreements and the obligations of the PetroHunter Parties under the Transaction Agreements and the documents and transaction contemplated thereby have been duly and validly authorized by all requisite corporate proceedings; and

(o)      

except as modified by the guarantees, representations and warranties made in Sections 3.1(a) to (m), inclusive, the representations and warranties of PetroHunter and Sweetpea contained in Section 3.1 of the Beetaloo PSA are true and correct as of the date hereof, and, notwithstanding any express, implied or other type of limitation contained in or suggested by the foregoing, the following guarantees, representations and warranties of PetroHunter and Sweetpea contained in Section 3.1 of the Beetaloo PSA are true and correct as of the date hereof:

(i)      

except as set forth on Schedule “I” to the Beetaloo PSA, each Seller has performed all material obligations which are required to be performed by it under the Material Agreements, including without limitation the Northern Land Council Exploration Agreements, and it is not in default under or in breach of or in receipt of any claim of default or breach under any Material Agreement, including without limitation the Northern Land Council Exploration Agreements, and no event has occurred which, with the passage of time or the giving of notice or both, would result in a default, breach or event of noncompliance by a Seller under any Material Agreement, including without limitation the Northern Land Council Exploration Agreements;

(ii)     

no Seller has any present expectation or intention of not fully performing on a timely basis all material obligations required to be performed by it under any Material Agreement or other instrument to which it is subject and to the knowledge of Sellers, there has been no breach or cancellation by the other parties to any Material Agreement or other instrument to which the Sellers are a party;

(iii)    

all of the Permits are in full force and effect, in good standing, and enforceable; and

(iv)     

Sweetpea is not in breach of any term or condition of any Permit.

(a)      

none of the Falcon Parties has encumbered or alienated its interest in the Initial Working Interest in any respect or agreed to do so, and the Initial Working Interest is free and clear of all Falcon Encumbrances;

(b)      

Falcon has, or reasonably believes that it has access to, immediately available funds necessary to pay the Beetaloo Payables;

(c)      

each of the Falcon Parties:

(i)      

is a corporation duly incorporated, organized and validly existing and in good standing under the laws of its applicable jurisdiction;

(ii)     

has the corporate power, authority and capacity to enter into the Transaction Agreements and all other agreements contemplated by the Transaction Agreements and to carry out and complete its obligations under the Transaction Agreements and all other agreements contemplated by the Transaction Agreements; and

(iii)    

the Transaction Agreements and the obligations of the Falcon Parties under the Transaction Agreements and the documents and transaction contemplated thereby have been duly and validly authorized by all requisite corporate proceedings; and

(d)      

except as modified by the guarantees, representations and warranties made in Section 3.2(a) above, the representations and warranties of Falcon and Purchaser contained in Section 3.2 of the Beetaloo PSA are true and correct as of the date hereof.

(a)      

The representations and warranties contained in this Agreement or contained in any document or certificate given in order to carry out the Transaction will survive Closing and shall continue in full force and effect, subject to the following provisions of this section:

(i)      

except as expressly provided in this section, no Warranty Claim may be made or brought by any Party after the date which is 18 months after the Closing Date; and

(ii)     

any Warranty Claim which is based on intentional misrepresentation or fraud by a Party may be made or brought at any time.

(b)      

It is a condition of the liability of each Party under the representations and warranties contained in this Agreement that the Party making a Warranty Claim shall have given written notice to the other of such Warranty Claim, with such particularity as the circumstances reasonably permit, before the expiry of the 18 month period referred to above.  After the expiration of such 18 month period, each Party will be released from all obligations and liabilities in respect of the representations and warranties contained in this Agreement or contained in any document or certificate given in order to carry out the Transaction, except as  previously set forth in a written notice.

(a)      

No Party shall be entitled to make a Warranty Claim if that Party has been advised in a writing addressed to it and signed by an officer of the advising Party prior to Closing Date of the inaccuracy, non-performance, non-fulfilment or breach which is the basis for such Warranty Claim and that Party completes the Transaction hereunder notwithstanding such inaccuracy, non-performance, non-fulfilment or breach.

(b)      

The amount of any damages which may be claimed by a Party pursuant to a Warranty Claim shall be calculated to be the cost or loss to that Party after giving effect to any insurance proceeds available to that Party in relation to the matter which is the subject of the Warranty Claim.

(c)      

Subject to the receipt of all necessary approvals and all applicable laws, the satisfaction of any amounts owing by PetroHunter Parties to Falcon Parties, or by Falcon Parties to PetroHunter Parties, may be paid by the indemnifying party through the delivery of either cash or check, in either case such method of payment shall be determined by the indemnifying party in its discretion.

(a)      

take all such actions as are necessary to terminate the Buckskin JOA; and

(b)      

take all such actions as are necessary to enter into the Amended and Restated Beetaloo JOA.

(a)      

allow the Falcon Parties, any of their respective representatives or agents access during normal business hours to the premises and the properties of PetroHunter Parties and their respective subsidiaries and to all of the files, books, records and offices of PetroHunter Parties and their subsidiaries related to the Beetaloo Basin Project;

(b)      

resign as operator under the Beetaloo JOA with immediate effect, despite any longer notice period that may otherwise be provided in the Beetaloo JOA;

(c)      

use their best efforts (and cause each of its Subsidiaries to use reasonable commercial efforts) to cause its current insurance policies, as such item relates to the Beetaloo Basin Project, and the Operator Bonds not to be cancelled or terminated or any of the coverage thereunder to lapse;

(d)      

each of the PetroHunter Parties: (i) will not make an assignment in favour of its creditors or a proposal in bankruptcy to its creditors or any class thereof; (ii) have not initiated proceedings with respect to a compromise or arrangement with its creditors or for its winding up, liquidation or dissolution; and (iii) will immediately deliver written notice to Falcon if the PetroHunter Parties’ creditors delivers a notice to the PetroHunter Parties demanding payment in 21 days or otherwise, which notice shall contain reasonable detail sufficient to inform Falcon of the nature of any such notice;

(e)      

allow Falcon the full, exclusive and unfettered authority to: (i) negotiate with any Governmental Authority related to the Beetaloo Basin Project and agree to any changes in the timing, extent and nature of the work required to keep the Permits in effect; and (ii) bind both Falcon and PetroHunter to any such changes related to the Beetaloo Basin Project;

(f)      

accept, support and vote in favour of such work plans and budgets as Falcon may propose under the Beetaloo Basin JOA for the remainder of 2009, but only to the extent such work programs and budgets are intended by Falcon in good faith to satisfy the minimum work requirements under the Permits in a manner that Falcon believes to be commercially and technically reasonable, and with the understanding that Falcon’s present intention is to limit the capital expenditures in the work plan and budget for 2010 to the minimum believed necessary to keep the Permits in full force and effect;

(g)      

not with respect to the Beetaloo Basin Project: (i) undertake any material operations; (ii) incur any material obligations; or (iii) enter into any transaction or

(h)      

pay all interest owing under the Loan until the Closing Date; and

(i)      

immediately deliver written notice to Falcon if litigation is commenced against any PetroHunter Parties, which notice shall contain reasonable detail sufficient to inform Falcon of the nature of any such litigation, so long as Falcon maintains the confidentiality of any material non-public information in accordance with Section 10.15 of this Agreement.

(a)      

Following the Closing Date and subject to Section  5.3(e), if any of the PetroHunter Parties desires or is obliged by law or otherwise to sell, assign,  transfer or otherwise dispose of the Offered Interest to a third party, the Falcon Parties shall have the prior right to purchase the Offered Interest (the “First Offer”) and the PetroHunter Parties shall deliver to the Falcon Parties a copy of the First Offer addressed to the Falcon Parties together with a statement executed by the PetroHunter Parties (the “First Offer Notice”) notifying the Falcon Parties that the PetroHunter Parties are exercising their rights and obligations under this Section 5.3, with full particulars of any proposed transfer of the Offered Interest.

(b)      

The First Offer Notice shall:

(i)      

set out the price for which the sale of the Offered Interest is to be transacted;

(ii)     

specify the date on which the sale is to close and the other closing arrangements;

(iii)    

specify the date by which a written response to the First Offer must be received by The PetroHunter Parties (which, in any event, shall be not less than fifteen (15) days from the date of the First Offer Notice); and

(iv)     

provide for the method and timing of payment.

(c)      

The Falcon Parties shall be entitled to accept and purchase all but not less than all the Offered Interest upon the terms and conditions specified in the First Offer Notice by delivering a written notice to purchase (the “Purchase Notice”) to the PetroHunter Parties within the time period specified in the First Offer Notice.

(d)      

If the Falcon Parties offer to purchase all, but not less than all, of the Offered Interest and the PetroHunter Parties have received the Purchase Notice within the time period specified in the First Offer Notice, then closing shall take place at the offices of Falcon on the date which is fifteen (15) days following receipt of all necessary documents required to be obtained in order to effect a valid transfer of the Offered Interest (and the parties hereto covenant and agree to use their best efforts to obtain such documents) and such closing shall include all documentation customary for transactions of this nature.

(e)      

If the Falcon Parties do not offer to purchase all, but not less than all, of the Offered Interest or the PetroHunter Parties do not receive the Purchase Notice within the time period specified in the First Offer Notice, then Section 5.3 shall become null and void in respect of the particular transaction described in the First Offer Notice.

(f)      

For greater certainty, until such time as the PetroHunter Parties sell, assign, transfer or otherwise dispose of the 100% of the Offered Interest, each offer to sell, assign, transfer or otherwise dispose of the Offered Interest shall be subject to Section 5.3.

(a)      

This Agreement may be terminated at any time prior to the Closing Date:

(i)      

at any time with the written consent of the Parties; and

(ii)     

by Falcon if Falcon is not satisfied in its sole discretion:

(A)     

with the performance by PetroHunter of the PetroHunter Covenants contained in ARTICLE 5; or

(B)     

Falcon otherwise concludes that PetroHunter will not be able to fulfill the condition contained in Section 6.2(a) on or before the Closing Date.

(b)      

This Agreement shall automatically terminate if the closing falls on or after June 10, 2009 or such other date as may be agreed to in writing by the Parties.

(a)      

all representations and warranties of PetroHunter Parties contained in Section 3.1 must be true in all material respects at and as of the Closing Date;

(b)      

all of the covenants and conditions in favour of the Falcon Parties to be complied with, performed or waived by the PetroHunter Parties on or before the Closing Date shall have been complied with, performed or waived;

(c)      

the timing, extent and nature of the work required under the Permits must have been changed by the Government in a way satisfactory to Purchaser, or Purchaser must believe, in its sole discretion, that satisfactory changes will be made; and

(d)      

the 50% interest in the Beetaloo Basin Project previously purchased by the Purchaser must have been transferred of record in the appropriate government offices, or Purchaser must believe, in its sole discretion, that such transfer will occur in due course.

(a)      

all representations and warranties of the applicable Falcon Parties contained in Section 3.2 must be true in all material respect at and as of the Closing Date; and

(b)      

all of the covenants and conditions in favour of the PetroHunter Parties to be complied with, performed or waived by the Falcon Parties on or before the Closing Date shall have been complied with, performed or waived.

(a)      

an executed copy of the Transaction Agreements;

(b)      

a legal opinion, satisfactory to the TSXV and Aird & Berlis LLP, relating to the status of each PetroHunter Parties, the Permits, and other matters as required by the TSXV;

(c)      

a permit transfer instrument conveying an undivided 25% interest in the Permits, substantially in the form attached as SCHEDULE "A";

(d)      

an assignment and bill of sale substantially in the form attached as SCHEDULE "B", assigning and selling an undivided 25% interest in the Assets;

(e)      

a deed of assignment and assumption substantially in the form attached as SCHEDULE "D", assigning and selling an undivided 25% interest in the Assets and by which Purchaser assumes its proportionate share of the obligations owed to Northern Land Council;

(f)      

a countersigned Resignation of Beetaloo Operator and Appointment of Successor executed by Sweetpea, in a form satisfactory to the Purchaser acting reasonably, whereby Sweetpea will:

(i)      

resign as operator under the Beetaloo JOA with immediate effect; and

(ii)     

appoint Falcon Australia as the operator of the Beetaloo Basin Project with immediate effect;

(g)      

an assignment and bill of sale substantially in the form attached as SCHEDULE "C" hereto, assigning and selling a 100% interest in the Beetaloo Inventory on an “as is, where is” basis;

(h)      

a letter executed by Sweetpea, in a form satisfactory to the Purchaser acting reasonably, instructing Wells Fargo Bank, National Association, to transfer and, if necessary, reissue all standby letters of credit forming a part of the Operator Bonds, so that such letters of credit support and secure the obligations of Purchaser, rather than Sweetpea, to the Government Authorities;

(i)      

assignments, signature cards, and all other instruments necessary, in a form satisfactory to the Purchaser acting reasonably, to transfer to Purchaser’s designee the accounts, cash and certificates of deposit that secure Wells Fargo Bank, National Association, under the standby letters of credit forming a part of the Operator Bonds, in each case fully executed by the owner of the concerned account, cash or certificate of deposit, so that such accounts, cash and certificates of deposit are then owned by Purchaser, rather than the current owners;

(j)      

the escrow agreement substantially in the form attached as SCHEDULE "G" hereto;

(k)      

any financial information if required by TSXV or other Governmental Authority;

(l)      

all other documents or information as may be required by the TSXV, corporate or securities regulatory authorities;

(m)      

the approval, acceptance, authorization, exemption, waiver or consent of each of the third parties from whom consents are required;

(n)      

a certificate of each of PetroHunter Parties’ signed by any two of their respective officers certifying that:

(i)      

the representations and warranties of such PetroHunter Parties herein contained are true and correct as of the Closing Date;

(ii)     

the resolutions of the Boards of Directors of such PetroHunter Parties approving the Transaction Agreements are in full force and effect;

(iii)    

PetroHunter Parties have performed and complied with all covenants and agreements contained in the Transaction Agreements to be performed or complied with by such PetroHunter Parties at or prior to the Closing Date; and

(iv)     

all necessary corporate action has been taken by such PetroHunter Parties to authorize the execution and delivery of the Transaction Agreements and to consummate the Transaction contemplated by the Transaction; and

(o)      

such other documents and assurances as may be reasonably required by Falcon or Purchaser,

(a)      

an executed copy of the Transaction Agreements;

(b)      

a permit transfer instrument conveying an undivided 25% interest in the Permits, substantially in the form attached as SCHEDULE "A";

(c)      

an assignment and bill of sale substantially in the form attached as SCHEDULE "B", assigning and selling an undivided 25% interest in the Assets;

(d)      

a countersigned Resignation of Beetaloo Operator and Appointment of Successor executed by Purchaser, in a form satisfactory to the Purchaser acting reasonably, whereby Sweetpea will:

(i)      

resign as operator under the Beetaloo JOA with immediate effect; and

(ii)     

appoint Falcon Australia as the operator of the Beetaloo Basin Project with immediate effect;

(e)      

an assignment and bill of sale substantially in the form attached as SCHEDULE "C" hereto, assigning and selling a 100% interest in the Beetaloo Inventory on an “as is, where is” basis;

(f)      

an assignment and bill of sale substantially in the form attached as SCHEDULE "E" hereto assigning and selling the Initial Working Interest to PetroHunter Operating;

(g)      

the escrow agreement substantially in the form attached as SCHEDULE "G" hereto;

(h)      

a release of the Mortgage;

(i)      

an assumption undertaking substantially in the form as attached as SCHEDULE "H" hereto undertaking to retire the Beetaloo Payables;

(j)      

the approval, acceptance, authorization, exemption, waiver or consent of each of the TSXV;

(k)      

a certificate of each of Falcon Parties signed by any two of their respective officers certifying that:

(i)      

the representations and warranties of the appropriate Falcon Party herein contained are true and correct as of the Closing Date;

(ii)     

the resolutions of the Board of Directors of the appropriate Falcon Party approving the Transaction Agreements and the Transaction are in full force and effect;

(iii)    

the appropriate Falcon Party has performed and complied with all covenants and agreements contained in this Agreement to be performed or complied with by the appropriate Falcon Party at or prior to the Closing Date; and

(iv)     

all necessary corporate action has been taken by the appropriate Falcon Party to authorize the execution and delivery of the Transaction Agreements and to consummate the Transaction contemplated by the Transaction;

(l)      

conditional approval of the TSXV for the Transaction if required; and

(m)     

such other documentation and assurances as may be reasonably required by the PetroHunter Parties,

 

(a)

The arbitration shall be conducted in accordance with and subject to The Institute of Arbitrators & Mediators Australia Rules for the Conduct of Commercial Arbitrations.

 

(b)

The arbitration shall be conducted by three arbitrators, unless all parties to the dispute agree to a sole arbitrator within 30 days after the filing of the arbitration.

 

(c)

If the arbitration is to be conducted by a sole arbitrator, then the arbitrator will be jointly selected by the parties to the dispute.  If the parties to the dispute fail to agree on the arbitrator within 30 days after the filing of the arbitration, then the IAMA shall appoint the arbitrator. If the arbitration is to be conducted by three arbitrators and there are only two parties to the dispute, then each party to the dispute shall appoint one arbitrator within 30 days of the filing of the arbitration, and the two arbitrators so appointed shall select the presiding arbitrator within 30 days after the latter of the two arbitrators has been appointed by the parties to the dispute.  If a party to the dispute fails to appoint its party-appointed arbitrator or if the two party-appointed arbitrators cannot reach an agreement on the presiding arbitrator within the applicable time period, then the IAMA shall appoint the remainder of the three arbitrators not yet appointed.  

 

(d)

Unless otherwise agreed by all parties to the dispute, the place of arbitration shall be Sydney, New South Wales.

 

(e)

The award of the arbitral tribunal shall be final and binding.  Judgment on the award of the arbitral tribunal may be entered and enforced by any court of competent jurisdiction.

 

(g)

The arbitral tribunal is authorized to award costs and attorneys’ fees and to allocate them between the parties to the dispute.  The costs of the arbitration proceedings, including attorneys’ fees, shall be borne in the manner determined by the arbitral tribunal.   

 

(h)

The Parties waive their rights to claim or recover, and the arbitral tribunal shall not award, any punitive, multiple, or other exemplary damages (whether statutory or common law) except to the extent such damages have been awarded to a third party and are subject to allocation between or among the parties to the dispute.

 

(i)

To the extent permitted by law, any right to appeal or challenge any arbitral decision or award, or to oppose enforcement of any such decision or award before a court or any Governmental Authority, is hereby waived by the Parties except with respect to the limited grounds for modification or non-enforcement provided by any applicable arbitration statute.

(a)      

any obligation, commitment or liability or claim (whether absolute, accrued or contingent) relating to the Assets, other than the Beetaloo Payables, arising prior to the Closing Date;

(b)      

any obligation, commitment or liability or claim (whether absolute, accrued or contingent) relating to the Beetaloo Basin Inventory, other than the Beetaloo Payables, arising prior to the Closing Date;

(c)      

any obligation, commitment or liability or claim (whether absolute, accrued or contingent) relating to the Initial Working Interest, including, without limitation, all plugging, abandonment and reclamation costs associated with the New Wells arising at any time;

(d)      

any loss, damage or liability or claim (whether absolute, accrued or contingent) relating to any failure to pay duties or stamp duties in relation to the Transaction or any Transaction Agreement and any failure to lodge any document or statement required by a Government Authority (including a revenue office of an Australian State or Territory) in connection with the Transaction or any Transaction Agreement;

(e)      

any non-performance or non-fulfillment of any covenant or agreement on the part of the PetroHunter Parties contained in this Agreement or in any document given in order to carry out the transactions contemplated hereby; and

(f)      

all costs and expenses including, without limitation, legal fees on a solicitor and client basis, incidental to, arising from or in respect of the foregoing.

(a)      

promptly after becoming aware of any matter that may give rise to an Indemnity Claim, the Claiming Party will provide to the Responding Party written notice of the Indemnity Claim specifying (to the extent that information is available) the factual basis for the Indemnity Claim and the amount of the Indemnity Claim or, if an amount is not then determinable, an estimate of the amount of the Indemnity Claim, if an estimate is feasible in the circumstances;

(b)      

if an Indemnity Claim relates to an alleged liability to any other person (a “Third Party Liability”), including without limitation any Governmental Authority or regulatory body, which is of a nature such that the Claiming Party is required by applicable law to make a payment to a third party before the relevant procedure for challenging the existence or quantum of the alleged liability can be implemented or completed, then the Claiming Party may, notwithstanding the provisions of subsection (c) of this section, make such payment and forthwith demand reimbursement for such payment from the Responding Party in accordance with this Agreement; provided that, if the alleged Third Party Liability as finally determined on completion of settlement negotiations or related legal proceedings is less than the amount which is paid by the Responding Party in respect of the related Indemnity Claim, then the Claiming Party shall forthwith following the final determination pay to the Responding Party the amount by which the amount of the Third Party Liability as finally determined is less than the amount which is so paid by the Responding Party;

(c)      

the Claiming Party shall not negotiate, settle, compromise or pay (except in the case of payment of a judgment) any Third Party Liability as to which it proposes

(d)      

with respect to any Third Party Liability, provided the Responding Party first admits the Claiming Party’s right to indemnification for the amount of such Third Party Liability which may at any time be determined or settled, then, in any legal, administrative or other proceedings in connection with the matters forming the basis of the Third Party Liability, the following procedures will apply:

(i)      

except as contemplated by paragraph (iii) of this subsection, the Responding Party will have the right to assume carriage of the compromise or settlement of the Third Party Liability and the conduct of any related legal, administrative or other proceedings, but the Claiming Party shall have the right and shall be given the opportunity to participate in the defence of the Third Party Liability, to consult with the Responding Party in the settlement of the Third Party Liability and the conduct of related legal, administrative and other proceedings (including consultation with counsel) and to disagree on reasonable grounds with the selection and retention of counsel, in which case counsel satisfactory to the Responding Party and the Claiming Party shall be retained by the Responding Party;

(ii)     

the Responding Party will co-operate with the Claiming Party in relation to the Third Party Liability, will keep it fully advised with respect thereto, will provide it with copies of all relevant documentation as it becomes available, will provide it with access to all records and files relating to the defence of the Third Party Liability and will meet with representatives of the Claiming Party at all reasonable times to discuss the Third Party Liability; and

(iii)    

notwithstanding paragraph (i) of this subsection, the Responding Party will not settle the Third Party Liability or conduct any legal, administrative or other proceedings in any manner which could, in the reasonable opinion of the Claiming Party, have a material adverse affect on the Condition of the Business or the Claiming Party, except with the prior written consent of the Claiming Party;

(e)      

If, with respect to any Third Party Liability, the Responding Party does not admit the Claiming Party’s right to indemnification or declines to assume carriage of the settlement or of any legal, administrative or other proceedings relating to the Third Party Liability, then the following provisions will apply:

(i)      

the Claiming Party, at its discretion, may assume carriage of the settlement or of any legal, administrative or other proceedings relating to the Third Party Liability and may defend or settle the Third Party Liability on such terms as the Claiming Party, acting in good faith, considers advisable; and

(ii)     

any cost, loss, damage or expense incurred or suffered by the Claiming Party in the settlement or defence of such Third Party Liability or the conduct of any legal, administrative or other proceedings shall be added to the amount of the Indemnity Claim;

(f)      

The amount of any damage, loss, cost, liability or expense (including reasonable professional fees and disbursements) in connection with any claim for which indemnification is provided hereunder shall be net of any amounts actually received by the Claiming Party under insurance policies with third parties (i.e.: actual insurance policies and not self insurance or retention programs) with respect to such claim and shall be net of any tax benefit received by the Claiming Party in respect of such claim; and

(g)      

Any liability for indemnification hereunder shall be determined without duplication of recovery by reason of the state of facts giving rise to such liability constituting a breach of more than one representation, warranty, covenant or agreement.

(a)      

The parties covenant and agree that the supplies described in Section 2.1 are the supply of a going concern by the Seller to the Purchaser that is GST-free under the GST Law; and

(b)      

The Seller warrants and represents that it carries on, and will continue to carry on, the enterprise to which the supply in Section 9.2(a) relates up to and including the Closing Date.

(c)      

Section 9.3 shall not apply to a supply described in Section 2.1 unless the Commissioner of Taxation issues a private ruling or otherwise determines in writing that the supply is a taxable supply. If Section 9.3 does apply to a supply described in Section 2.1, the recipient can withhold payment of the GST Amount until three business days after the later of:

(i)      

the day it receives a copy of a private ruling or written determination issued by the Commissioner of Taxation; and

(ii)      

the day the supplier (or the representative member for a GST group of which the supplier is a member) is required to lodge its GST return for the tax period to which the supply is attributable.

(a)      

the PetroHunter Parties shall be responsible for any duties or stamp duties applicable to the Transaction or in relation to any Transaction Agreements; and

(b)      

each Party shall pay its own legal and other professional fees in respect of the Transaction.

(a)      

to PetroHunter Parties:

(b)      

to Falcon Parties:

(a)      

their respective officers, directors, partners, shareholders, employees, agents and representatives shall keep the existence of and the terms of this Agreement in strictest confidence; and

(b)      

prior to making any press releases concerning the Transaction, each of them shall provide a copy of such press release to the other in advance of it being released.

Per:

/s/ Marc A. Bruner

Name:  Marc A. Bruner

Title:     CEO

Per:

/s/ Evan L. Wasoff

Name:  Evan L. Wasoff

Title:    Chief Financial Officer

I/We have the authority to bind the corporation.

Per:

/s/ Marc A. Bruner

Name:  Marc A. Bruner

Title:    President

Per:

/s/ Evan L. Wasoff

Name:  Evan L. Wasoff

Title:    VP/Sec

I/We have the authority to bind the corporation.

Per:

/s/ Carmen J. Lotito

Name:     Carmen J. Lotito

Title:       Director

Per:

/s/ Evan L. Wasoff

Name:     Evan L. Wasoff

Title:       Director

I/We have the authority to bind the corporation.