Purchase and Sale Agreement CRAWFORD & BOURBON COUNTIES, KANSAS



XXXXXXXX & BOURBON COUNTIES, KANSAS

This Agreement made February 18th, 2008


BETWEEN:

GALAXY ENERGY INC.,
a body corporate, registered to carry on business in the State of Kansas
 and having an office in the town of Stigler, Okalahoma
(hereinafter called the “Transferor”)


- and -


JAYHAWK ENERGY INC.,
a body corporate, registered to carry
on business in the State of Colorado and having an office in the town of Broomfield
(hereinafter called the “Transferee”)



Whereas Transferor wishes to sell and the Transferee wishes to purchase the Assets, the Parties agree as follows:


1.
Definitions

(a)  
“Closing Date” means 3:00 p.m. on March 31st, 2008, or such other time and date as may be agreed upon in writing by the Parties.

(b)  
“Effective Date” means March 1, 2008.

(c)  
“During the date of closing March 31, 2008 & time forward the revenue & expenses are all eligible to thee Transferee.


2.
Schedules

 
The following Schedules are attached hereto and made part of this Agreement:

(a)  
Schedule “A”, which is the Land Schedule, and identifies:

 
(i) 
the Lands;

 
(ii) 
the Leases;
 
1
 
 
(iii)  
any other agreements, documents or data that are relative to the xxxxx, properties, lands & surface equipment;

(iv)  
any encumbrances;

(v)  
any Rights of First Refusal;

(vi)  
production sale agreements;

(vii)  
other agreements, penalties or restrictions by contract on the use of the Assets required to be included in the Land Schedule under the definition of Permitted Encumbrances or the definition of Title and Operating Documents;

(viii)  
any Facilities required to be included in the Land Schedule under the definition of Facilities, any other Tangibles described in Paragraph (c) of the definition of Tangibles and any assets otherwise falling within the definition of Tangibles that are specifically excluded therefrom; and

(ix)  
the Xxxxx;

(x)  
any lawsuits and claims;

(xi)  
any default notices;

(xii)  
any outstanding AFE’s;

(xiii)  
any knowledge of environmental matters of the Property Transfer Procedure;

(xiv)  
any areas of mutual interest; and

2
 
3.
Purchase and Sale
 
 
(a)  
The Transferor agrees to dispose of the Assets to the Transferee and the Transferee agrees to purchase the Assets from the Transferor on the terms and conditions set forth in this Agreement.

(b)  
The purchase price for the assets listed below.

     
    (i) To Petroleum and Natural Gas    Rights.
 
    (ii) 6500 Acres Of Leases.
 
    (iii) 6” Gas Pipeline
 
    (iv) Easements of pipeline.
 
    (v) All existing 34 xxxxx.
 
    (vi) 22,000’ x 4” of SDR 11 stock pipe.
 
           (vii) De-hy, Compressor & all equipment on all     
            xxxxx remain as per February, 08, 2008 lease visit.
 
    
(ii) Cash
  $ 1,000,000.00
  
(iii) JAYHAWK ENERGY Stock
  $ 1,000,000.00  
 
       Total
 $2,000,000.00
  

 
(c)  
The Transferee will pay the Purchase Price to the Transferor as
         follows:

(i)  
the delivery of ten percent (10%) of the Cash Purchase Price, representing a Deposit towards the Purchase Price, payable upon request anytime prior to Closing Date March 31st.

(ii)  
at Closing, the delivery of the remainder of the Purchase Price (ie. the Purchase Price less the Deposit).

                In witness whereof the Parties have duly executed this Agreement.



 
GALAXY ENERGY INC.
 
Per:____________________
 
 
Per:____________________
 
 
JAYHAWK ENERGY INC.
 
Per:____________________
 
 
Per:____________________

 
This is the execution page of that certain Purchase and Sale Agreement dated February 18, 2008 between GALAXY ENERGY  INC., as Transferor and JAYHAWK ENERGY INC., as Transferee.

3


“Exhibit A”

Galaxy Leases Held By Production

County: Bourbon

Twp 26S
Range 23E
Section 26
Description: W/2SW & W/2NW less tract
Acres: 155
Lessor: Xxxx Xxxxxxx Xxx

Twp 27S
Range 23E
Section 2
Description: N/W less right away
Acres: 157
Lessor: Xxxxx Xxxxxxx

Twp 27S
Range 23E
Section 14
Description: S/2 NW
Acres: 79
Lessor: Xxxxxx Xxx

Twp 27S
Range 23E
Section 14
Description: S/W less right away
Acres: 160
Lessor: Xxxxxxx Xxxxxx Trust

Twp 27S
Range 23E
Section 15
Description: S/E less right away
Acres: 160
Lessor: Hervey/Ricci

County: Xxxxxxxx

Twp 27S
Range 23E
Section 26
Description: S/E
Acres: 160
Lessor: Xxxxx Xxxxxxxxxxx

Xxx 00
Xxxxx 00
Xxxxxxx 00
Description: S/W
Acres: 160
Lessor: Xxxx Xxxxxxx

 
4
 
 
Twp 27S
Range 23E
Section 27
Description: NE & E/2 NW less tract & SW
Acres: 396
Lessor: Xxxxx X’Xxxxx

Twp 27S
Range 23E
Section 34
Description: NE less right away
Acres: 162
Lessor: Xxxxx Xxxxxxxxxxxx

Twp 27S
Range 23E
Section 35
Description: SW less right away
Acres: 158
Lessor: Xxxx Xxxxxxxx

Twp 28S
Range 23E
Section 3
Description: NE
Acres: 160
Lessor: Bus Xxxxxxx

Twp 28S
Range 23E
Section 7
Description: W/2 less NE-NW
Acres: 280
Lessor: Xxxxxxx Xxxxxxxxx

Twp 28S
Range 23E
Section 11
Description: SW
Acres: 160
Lessor: Xxxxxx Xxxxxxx

Twp 28S
Range 23E
Section 13
Description: W/2 NE & E/2 N/2 NW
Acres: 120
Lessor: Xxxxxx Xxxxxxx

Twp 28S
Range 23E
Section 13
Description: S/2 NW & NW SE & SW SE
Acres: 200
Lessor: Xxxxx Xxxxxxxx

 
5
 
 
Twp 28S
Range 23E
Section 14
Description: SW NE & NW SE & SW SE
Acres: 121
Lessor: Xxxxxx Xxxxxxxx

Twp 28S
Range 23E
Section 17
Description: E/2 less right away
Acres: 317
Lessor: Don Ralph

Twp 28S
Range 23E
Section 23
Description: NW
Acres: 161
Lessor: Don Ralph

Twp 28S
Range 23E
Section 24
Description: W/2 NE
Acres: 80
Lessor: Xxxxxx & Xxxx Xxxxxxxx

Twp 28S
Range 23E
Section 24
Description: W/2 less tract
Acres: 314
Lessor: Xxxxxx Xxxxxxxx

Twp 28S
Range 23E
Section 26
Description: NW less tract
Acres: 158
Lessor: Xxxxxxxx Xxxxxxx

Twp 28S
Range 23E
Section 34
Description: NW less tract
Acres: 78
Lessor: Xxxx Trust

Twp 29S
Range 23E
Section 3
Description: NE & E/2 SE
Acres: 240
Lessor: Twylet Enterprises

 
6
 

Twp 29S
Range 23E
Section 12
Description: E/2 NE
Acres: 80
Lessor: Xxxxxxx Xxxxxx

Galaxy Leases Not Held By Production

 
County: Bourbon

Twp 27S
Range 21E
Section 23
Description: SE/4 less right away
Acres: 157
Lessor: Xxxxxxx Xxxxxxxx

Twp 27S
Range 21E
Section 24
Description: W/2 SW & SE SW less right away
Acres: 120
Lessor: Xxxxxxx Xxxxxxxx

 
County: Xxxxxxxx

Twp 27S
Range 21E
Section 25
Description: NW less right away
Acres: 158
Lessor: Xxxxxxx Xxxxxxxx Xx
 
Twp 27S
Range 21E
Section 25
Description: S/2 less right away
Acres: 320
Lessor: Xxxxx Xxxxxxxx

Twp 27S
Range 21E
Section 26
Description: NE less right away
Acres: 156
Lessor: Xxxxxxx Xxxxxxxx Xx

Twp 27S
Range 21E
Section 36
Description: S/2 NW less right away
Acres 80
Lessor: Xxxxx Xxxxxxxx

 
7
 

Twp 27S
Range 21E
Section 36
Description: N/2 NW less right away
Acres: 80
Lessor: Xxxx Xxxxxxxx

 
County: Bourbon

Twp 27S
Range 22E
Section 11
Description: S/2 SE less right away
Acres: 80
Lessor: Xxxx Xxxxxx

Twp 27S
Range 22E
Section 14
Description: NW SE less right away
Acres: 40
Lessor: Xxxx Xxxxxx

Twp 27S
Range 22E
Section 21
Description: N/2 SE less tract
Acres: 75
Lessor: Xxxx Xxxx

Twp 27S
Range 22E
Section 22
Description: W/2 SW less right away
Acres: 78
Lessor: Xxxx Xxxx

 
County: Neosho

Twp 28S
Range 21E
Section 3
Description: S/2 NE
Acres: 80
Lessor: Xxxxx Xxxxxxxx


 
County: Xxxxxxxx

Twp 27S
Range 22E
Section 25
Description: NW & W/2 NE & S/2 less right away
Acres: 560
Lessor: Xxxxxxx Xxxxxxxxx

 
8
 
 
Twp 27S
Range 22E
Section 25
Description: E/2 NE less right away
Acres: 79
Lessor: X.X Grain (Xxxxxx)

Twp 27S
Range 22E
Section 26
Description: S/2 NE & NE NW SE
Acres: 91
Lessor: Xxxxxxx X’Xxxxx

Twp 27S
Range 22E
Section 26
Description: NE SE & E/2 SE SE & tract
Acres: 64
Lessor: Xxxxx Xxxxxx

Twp 27S
Range 22E
Section 26
Description: NW NW & SW NW & W/2 SW
Acres: Combined from above
Lessor: Xxxxx Xxxxxx

Twp 27S
Range 22E
Section 26
Description: less tracts & right away
Acres: 165
Lessor: Xxxxxxx Xxxxxx

Twp 27S
Range: 22E
Section 27
Description: E/2 SE less right away
Acres: 81
Lessor: Xxxxxxx Xxxxxx

Twp 27S
Range 22E
Section 29
Description: N/2 SW less right away
Acres: 81
Lessor: Xxxxx Xxxx

Twp 27S
Range 22E
Section 33
Description: S/2 NE
Acres: 80
Lessor: Xxxx Xxxx

 
9
 
 
Twp 27S
Range 22E
Section 34
Description: X/0 XX & XX & X/0 XX less right away
Acres: 314
Lessor: Xxxxxxx Xxxxxxxxx

Twp 27S
Range 22E
Section 35
Description: S/2 NW & SW & N/2 NW less tract
Acres: 218
Lessor: Xxxxxxx Xxxxxxxxx

Twp 27S
Range 22E
Section 35
Description: SE SE less right away
Acres: 39
Lessor: Xxxxx Xxxx

 
Galaxy Easements

 
County: Bourbon
Twp 26S
Range 23E
Section 26
Description: W/2 W/2
Grantor: Xxxx Xxxxxxx Xxx

Twp 26S
Range 23E
Section 35
Description: SW SW
Grantor: Xxx Xxxxxxx

Twp 26S
Range 23E
Section 35
Description: W/2 W/2
Grantor: Xxxxx Xxxxxx

Twp 27S
Range 23E
Section 2
Description: NW
Grantor: Xxxxx Xxxxxxx

Twp 27S
Range 23E
Section 2
Description: SW
Grantor: Jetta Xxxxxx

 
10
 

Twp 27S
Range 23E
Section 2
Description: Highway Crossing Permit
Grantor: Kansas Dept Of Transportation

Twp 27S
Range 23E
Section 11
Description: NW
Grantor: Xxxx Xxxxxxxx

Twp 27S
Range 23E
Section 11
Description: SW SW
Grantor: Xxxx Xxxxxxx Xxx

Twp 27S
Range 23E
Section 11
Description: Highway Crossing Permit
Grantor: Dept Of Transportation

Twp 27S
Range 23E
Section 14
Description: S/2 NW
Grantor: Xxxxxx Xxx

Twp 27S
Range 23E
Section 14
Description: SW
Grantor: Xxxxxxx Xxxxxx Trust

Twp 27S
Range 23E
Section 23
Description: SW
Grantor: Xxxxxxxxx Xxxx III

Twp 27S
Range 23E
Section 23
Description: NW
Grantor: Xxxxx Xxxx


 
County: Xxxxxxxx

Twp 27S
Range 23E
Section 26
Description: NW
Grantor: Xxxx Xxxxxxx

 
11
 
 
Twp 27S
Range 23E
Section 26
Description: W/2 NW
Grantor: Xxxxx X’Xxxxx

Twp 27S
Range 23E
Section 35
Description: NW
Grantor: Xxxx Xxxx

Twp 27S
Range 23E
Section 35
Description: SW
Grantor: Xxxx Xxxxxxxx

Twp 28S
Range 23E
Section 2
Description: NW
Grantor: Xxxxxx Xxxxxxxx

Twp 28S
Range 23E
Section 2
Description: W ¾ of SW
Grantor: Xxxxxx Xxxxxxx

Twp 28S
Range 23E
Section 10
Description: S/2 SE
Grantor: Xxxxx Xxxxxxx

Twp 28S
Range 23E
Section 10
Description: N/2 SE
Grantor: Xxxxxx Xxxxxxx

Twp 28S
Range 23E
Section 15
Description: E/2
Grantor: Xxxxx Xxxxxx

Twp 28S
Range 23E
Section 23
Description: NW
Grantor: Don Ralph

Twp 28S
Range 23E
Section 26
Description: NW
Grantor: Xxxxxxxx Xxxxxxx

 
00
 
 
Xxx 00X
Range 23E
Section 26
Description: SW
Grantor: Xxxxx XxXxxxx
 
 
Assets

16mile x 6.0” x 150psi MOP group pipeline (Poly)
400Mcf x 3phase gas compressor
2- H2s scrubbers
Dehydration
34-xxxxx (7-producing)
22,000’ (Feet) Stock 4.0” x 150psi MOP pipeline (Poly)
Various production packages (Seperator, meter run, tanks & chart recorders)

 
Well Descriptions

XXXXX                LEASE NAME

#26 –1                       X.Xxx
#00-0                         X.Xxx
#0-0                         Xxxxxxx
#00-0                          X.Xxx
#14-1                     Xxxxxxxxxxx
#27-1                       X. X’Xxxxx
#00-0                       Xxxxxxxxxxxx
#00-0                       Xxxxxxxx
#00-0                         Xxxxxxx
#00-0                        Xxxxxxxxx
#27-1                         Senecaut
#00-0                         Xxxxxxx
#00-0                         Xxxxxxx
#27-1                    Xxxxx Xxxxxxx
#27-1                    Xxxxx Xxxxxxx
#OLD                   Xxxxx Xxxxxxx
#OLD                   Xxxxx Xxxxxxx
#27-2                      Xxxxxxxx

XXXXX              LEASE NAME

#27-1                      D. Ralph (West)
#00-0                      X.Xxxxx (Xxxxx)
#00-0                        X. Xxxxxxxx
#00-0                        X. Xxxxxxxx
#27-2                        X. Xxxxxxxx
#27-3                        X. Xxxxxxxx
#27-4                        X. Xxxxxxxx
#00-0                   Xxx Xxxxxxxx (Xx Xxxx)
#00-0                          Xxxxxxx
#00-0                          Xxxxxxx
#00-0                             Xxxx
#00-0                           Xxxxxx
#00-0                            Xxxxxx
#00-0                        Xxxx-Xxxxx
#00-0                           Xxxxxxx
#00-0                          XxXxxxx
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Filed: March 5th, 2008
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