Unassociated Document


    

      DEBT
        SETTLEMENT AGREEMENT AND SUBSCRIPTION FOR UNITS

      (Rule
        122.2 of the Alberta Securities Commission Rules)

      


      


      
        	TO:	Deep Well Oil & Gas, Inc. (the
                "Corporation")	 
	 	510 Royal Bank
                Building	 
	 	10117 Jasper Avenue, AB T5J
                1W8	 


      

        

      The
        undersigned subscriber (the "Subscriber") hereby tenders to the Corporation
        this
        subscription offer which, upon acceptance by the Corporation, will constitute
        an
        agreement of the Subscriber to subscribe for, take up, purchase and pay for
        and,
        on the part of the Corporation, to issue and sell to the Subscriber, the
        number
        of Units set out below on the terms and subject to the conditions set out
        in
        this Subscription Agreement. The Subscriber hereby acknowledges and agrees
        that
        the terms and conditions contained in the attached Schedule “A” form part of
        this Subscription Agreement and are incorporated herein by reference.
        The
        Corporation and the Subscriber acknowledge and agree that the Subscription
        Price
        for the Units will be entirely paid and satisfied by way of the forgiveness
        of
        certain indebtedness of the Corporation to the Subscriber.

       

      
        	
                 

                J.C.
                  GLASS SYSTEMS LTD.

                Name
                  of Subscriber - please print

                 

                By: 

                Authorized
                  Signature

                 

                Official
                  Capacity or Title - please print

                 

                (Please
                  print name of individual whose signature appears above if different
                  than
                  the name of the Subscriber printed above.)

                 

                Subscriber's
                  Address

                 

                Facsimile
                  Number

                 

                Telephone
                  Number                     E-Mail
                  Address

              	 	 	
                 

                Number
                  of Units: 210,946

              
	 
	 
	
                 

                Aggregate
                  Subscription Price (No. of Units X US$0.40 per Unit):
                  

                 

                US$
                  84,378.40

              
	 
	
                 

                No.
                  of Common Shares Currently Held (excluding Common Shares comprising
                  the
                  Units subscribed for herein):

              
	 
	 	
                Deliver
                  the Units as set forth below:

                 

                Name

                 

                Account
                  reference, if applicable

                 

                Contact
                  Name

                 

                Address

                 

                Telephone
                  Number                             E-Mail
                  Address

              
	 
	
                Register
                  the Units as set forth below:

                 

                Name

                 

                Account
                  reference, if applicable

                 

                Address

                 

              


      

      


      


      ACCEPTANCE:
        The
        Corporation hereby accepts the above subscription as of this   
        day of
        August, 2005 and the Corporation represents and warrants to the Subscriber
        that
        the representations and warranties made by the Corporation are true and correct
        in all material respects as in all material respects as of this date and
        that
        the Subscriber is entitled to rely thereon.

      


      
        	 	
                 

              	
                DEEP
                  WELL OIL & GAS, INC.

              
	
                 

                By:

              	 


      

       

      This
        is the first page of an agreement comprised of 8
        pages.

      



      
        
           

        

        
           

          
            

          

        

        
           

        

      



      SCHEDULE
        “A” -TERMS AND CONDITIONS OF SUBSCRIPTION FOR

       

      UNITS
        OF DEEP WELL OIL & GAS, INC.

       

      Definitions

       

      In
        this
        Subscription Agreement:

       

      
        	 	
                (a)

              	
                "Closing"
                  or
                  "Closing
                  Date"
                  means the closing of the purchase and sale of Units pursuant to
                  this
                  Subscription Agreement expected to occur on or about August 12,
                  2005 or
                  such other date as may be determined by the Corporation in its
                  sole
                  discretion;

              


      

       

      
        	 	
                (b)

              	
                “Common
                  Share” means
                  a common share in the capital stock of the
                  Corporation;

              


      

       

      
        	 	
                (c)

              	
                “Corporation”means Deep
                  Well Oil & Gas, Inc.;

              


      

       

      
        	 	
                (d)

              	
                "Indebtedness"
                  includes,
                  without limitation, principal in the amount of US$75,000.00, interest
                  in
                  the amount of US$9,378.40, prepayment fees, penalties and other
                  indebtedness, fees and charges owing or payable by the Corporation
                  to the
                  Subscriber under the Loan Documents;


              


      

       

      
        	 	
                (e)

              	
                "Loan
                  Documents"
                  means commitment letters, loan agreements, promissory notes, guarantees,
                  security documents, other loan documents, and liabilities, obligations,
                  covenants of every nature and kind whatsoever evidencing, securing
                  or
                  guaranteeing any and all indebtedness, liabilities and obligations
                  of the
                  Corporation to the Subscriber;

              


      

       

      
        	 	
                (f)

              	
                “MI
                  45-102”means
                  Multilateral Instrument 45-102 - Resale
                  of Securities; 

              


      

       

      
        	 	
                (g)

              	
                “Securities”
                  means the Units, the Common Shares and the Warrants comprising
                  the Units,
                  and the Warrant Shares;

              


      

       

      
        	 	
                (h)

              	
                “Subscriber”
                  means the person or company identified as the Subscriber on the
                  face page
                  of this Subscription Agreement;

              


      

       

      
        	 	
                (i)

              	
                “Subscription
                  Agreement”
                  means this debt settlement and subscription for Units agreement,
                  as
                  amended or supplemented from time to
                  time;

              


      

       

      
        	 	
                (j)

              	
                “Subscription
                  Price”
                  means the aggregate subscription price paid by the Subscriber,
                  being the
                  number of Units subscribed for multiplied by US$0.40 per
                  Unit;

              


      

       

      
        	 	
                (k)

              	
                “Unit”
                  means a unit consisting of one (1) Common Share and one (1) Warrant
                  of the
                  Corporation;

              


      

       

      
        	 	
                (l)

              	
                “Warrant”
                  means one (1) Common Share purchase warrant of the Corporation
                  which
                  entitles the holder to purchase one (1) Common Share at a price
                  of US$0.60
                  for a period of three (3) years from the Closing Date;
                  and

              


      

       

      
        	 	
                (m)

              	
                “Warrant
                  Share”
                  means a Common Share issuable upon exercise of a
                  Warrant.

              


      

       

      Terms
        of the Settlement

       

      1. The
        Subscriber hereby confirms that, upon receipt of a share certificate
        representing 210,946 Common Shares and a warrant certificate representing
        210,946 Warrants (such Common Shares and Warrants comprising the 210,946
        Units
        subscribed for by the Subscriber pursuant hereto) by the Subscriber at a
        deemed
        Subscription Price of US$84,378.40 all Indebtedness owing or payable by the
        Corporation to the Subscriber under the Loan Documents will have been paid,
        satisfied and discharged in full.

       

      2. Subject
        to section 1
        hereof,
        the Subscriber hereby releases and discharges all claims, actions, causes
        of
        action, demands, damages, costs, expenses, bonds, suits, legal fees,
        disbursements, liens, charges, security interests, encumbrances which the
        Subscriber has in the property and assets of the Corporation or any other
        person
        under or pursuant to the Loan Documents including, without limitation, any
        interest that the Subscriber has in or under any and all insurance policies
        applicable to the Corporation and any of its property and assets.

       

      
        
           

        

        
           

          
            

          

        

        
           

        

      

      3. Subject
        to section 1
        hereof,
        the Subscriber hereby releases, remises and forever discharges the Corporation
        and any guarantors, co-obligors and other parties directly or indirectly
        liable
        to the Subscriber for any of the Indebtedness of the Corporation under or
        in
        connection with the Loan Documents (collectively the “Releasees”) from and
        against (a) any and all liabilities and obligations of the Releasees or any
        of
        them under or in connection with the Loan Documents or any of them, and (b)
        any
        and all claims, actions or causes of action, suits, debts, sums of money,
        dues,
        expenses, general damages, special damages, costs, and demands of any and
        every
        kind whatsoever that the Subscriber has or may have against the Releasees
        or any
        of them under or in connection with the Loan Documents or any of them or
        the
        Indebtedness of the Corporation to the Subscriber.

       

      4. Subject
        to section 1
        hereof,
        (a) the Subscriber hereby covenants and agrees to execute and deliver any
        and
        all documents and to take any and all actions necessary to give further effect
        to sections 1,
        2
        and
3
        hereof
        including, without limitation, termination agreements, releases and discharges
        of security interests registered or filed at any public registries, and (b)
        the
        Subscriber hereby authorizes the Corporation or its legal counsel to register
        or
        otherwise effect the discharge and termination of any financing statements
        or
        other mortgages, caveats or notice registered or filed against the Corporation
        and any of its property and assets.

       

      5. The
        Subscriber acknowledges that this Subscription Agreement requires the Subscriber
        to provide certain personal information to the Corporation. Such information
        is
        being collected by the Corporation for the purposes of determining the
        Subscriber's eligibility to purchase the Units under applicable securities
        legislation, preparing and registering certificates representing Units to
        be
        issued to the Subscriber and completing filings required by any stock exchange
        or securities regulatory authority. The Subscriber's personal information
        may be
        disclosed by the Corporation to: (a) stock exchanges or securities
        regulatory authorities, (b) the Corporation's registrar and transfer
        agent,
        and (c) any of the other parties involved in the closing of the purchase
        and sale of the Units, including legal counsel and may be included in record
        books in connection therewith. By executing this Subscription Agreement,
        the
        Subscriber is deemed to be consenting to the foregoing collection, use and
        disclosure of the Subscriber's personal information. 

       

      6. THE
        SUBSCRIBER FURTHER ACKNOWLEDGES THAT AN INVESTMENT IN THE UNITS MUST BE
        CONSIDERED SPECULATIVE AND IS SUBJECT TO A NUMBER OF RISK FACTORS. THE
        SUBSCRIBER COVENANTS AND AGREES TO COMPLY WITH MI 45-102 AND ANY OTHER
        APPLICABLE SECURITIES LEGISLATION, RULES, REGULATIONS, ORDERS OR POLICIES
        CONCERNING THE PURCHASE, HOLDING OF, AND RESALE OF THE SECURITIES. THE
        SECURITIES ARE SUBJECT TO RESALE RESTRICTIONS AND WILL BEAR A LEGEND TO THAT
        EFFECT.

       

      7. In
        addition to one manually signed, completed copy of this Subscription Agreement,
        the Subscriber will execute and deliver to the Corporation all other
        documentation as may be required by applicable securities legislation, rules,
        policy statements, and orders to permit the issue and sale of the Units.
        The
        Subscriber acknowledges and agrees that any such documentation, when executed
        and delivered by the Subscriber, will form part of and will be incorporated
        into
        this Subscription Agreement with the same effect as if each constituted a
        representation and warranty or covenant of the Subscriber hereunder in favour
        of
        the Corporation, and the Subscriber consents to the filing of such documents
        and/or information contained in such documents as may be required to be filed
        with any securities or the regulatory authority in connection with the
        transactions contemplated hereby.

       

      Representations,
        Warranties and Covenants by Subscriber

       

      8. The
        Subscriber represents, warrants and covenants to the Corporation (and
        acknowledges that the Corporation and its counsel are relying thereon) both
        at
        the date hereof and at the Closing Date that:

       

      
        	
                (a)

              	
                the
                  Subscriber has been independently advised as to restrictions with
                  respect
                  to trading in the Units imposed by applicable securities legislation,
                  confirms that no representation has been made to it by or on behalf
                  of the
                  Corporation with respect thereto, acknowledges that it is aware
                  of the
                  characteristics of the Units, the risks relating to an investment
                  therein
                  and of the fact that it may not be able to resell the Securities
                  except in
                  accordance with limited exemptions under applicable securities
                  legislation
                  and regulatory policy, including MI 45-102 and the United States
                  Securities Act of 1933, as amended (as defined below) until expiry
                  of the
                  applicable restricted period and compliance with the other requirements
                  of
                  applicable law; and the Subscriber agrees that any certificates
                  representing the Securities, and all certificates issued in exchange
                  therefor or in substitution thereof, will bear a legend indicating
                  that
                  the resale of such Securities is restricted;
                  and

              


      

       

      
        
           

        

        
           

          
            

          

        

        
           

        

      

      
        	
                (b)

              	
                the
                  Subscriber has not received or been provided with, nor has it requested,
                  nor does it have any need to receive, any offering memorandum,
                  or any
                  other document (other than an annual report, annual information
                  form,
                  interim report, information circular, take-over bid circular, issuer
                  bid
                  circular, prospectus, or continuous disclosure document, the content
                  of
                  which is prescribed by applicable securities laws, that, in each
                  case, has
                  been filed with the Alberta Securities Commission) describing the
                  business
                  and affairs of the Corporation which has been prepared for delivery
                  to,
                  and review by, prospective purchasers in order to assist it in
                  making an
                  investment decision in respect of the Units;
                  and

              


      

       

      
        	
                (c)

              	
                the
                  Subscriber has been afforded the opportunity (i) to ask such questions
                  as
                  it deemed necessary of, and to receive answers from, representatives
                  of
                  the Corporation concerning the terms and conditions of the offering
                  of the
                  Units and (ii) to obtain such additional information which the
                  Corporation
                  possesses or can acquire without unreasonable effort or expense
                  that the
                  Subscriber considered necessary in connection with its decision
                  to invest
                  in the Units; and

              


      

       

      
        	
                (d)

              	
                the
                  Subscriber has not become aware of any advertisement, article,
                  notice or
                  other communication in printed media of general and regular paid
                  circulation (or other printed public media), radio, television,
                  the
                  internet or telecommunications or other form of advertisement (including
                  electronic display) with respect to the distribution of the Units;
                  and

              


      

       

      
        	
                (e)

              	
                this
                  Agreement is made unconditionally as a result of the Subscriber’s desire
                  to participate in the future development of the Corporation;
                  and

              


      

       

      
        	
                (f)

              	
                the
                  Subscriber is purchasing as principal and it knows that it is purchasing
                  the Units pursuant to an exemption under applicable securities
                  legislation
                  and, as a consequence, is restricted from using most of the civil
                  remedies
                  available under applicable securities legislation, may not receive
                  information that would otherwise be required to be provided to
                  it under
                  applicable securities legislation, and the Corporation is relieved
                  from
                  certain obligations that would otherwise apply under applicable
                  securities
                  legislation; and

              


      

       

      
        	
                (g)

              	
                it
                  is an individual resident in Alberta
                  and is purchasing the Units as principal for its own account, not
                  for the
                  benefit of any person, and the aggregate acquisition cost of the
                  Units
                  purchased by it is not less than CAD$97,000 and, if the Subscriber
                  is not
                  an individual but is a corporation, syndicate, partnership or other
                  form
                  of unincorporated organization, it pre-existed the offering of
                  the Units
                  and has a bona fide purpose other than investment in the Units
                  or, if
                  created to permit such investment, the individual share of the
                  aggregate
                  acquisition cost for each participant is not less than
                  CAD$97,000;
                  and

              


      

       

      
        	
                (h)

              	
                no
                  person has made to the Subscriber any written or oral
                  representations:

              


      

       

      
        	 	
                (i)

              	
                that
                  any person will resell or repurchase any of the
                  Securities;

              


      

       

      
        	 	
                (ii)

              	
                that
                  any person will refund the purchase price of any of the
                  Securities;

              


      

       

      
        	 	
                (iii)

              	
                as
                  to the future price or value of any of the Securities;
                  or

              


      

       

      
        	 	
                (iv)

              	
                that
                  any of the Securities will be listed and posted for trading on
                  a stock
                  exchange or that application has been made to list and post any
                  of the
                  Securities for trading on a stock exchange;
                  and

              


      

       

      
        	
                (i)

              	
                the
                  Subscriber has no knowledge of a “material fact” or “material change” (as
                  those terms are defined by applicable securities legislation) in
                  respect
                  of the affairs of the Corporation that has not been generally disclosed
                  to
                  the public, other than knowledge relating directly to its subscription
                  for
                  the Units; and

              


      

       

      
        	
                (j)

              	
                the
                  Corporation may complete additional financings in the future, and
                  such
                  future financings may have a dilutive effect on then-current security
                  holders of the Corporation, including the Subscriber;
                  and

              


      

       

      
        
           

        

        
           

          
            

          

        

        
           

        

      

      
        	
                (k)

              	
                it
                  is aware that the Securities have not been and will not be registered
                  under the United States Securities Act of 1933, as amended (“U.S.
                  Securities Act”) and that the Securities may not be offered or sold in the
                  United States or to, or for the account or benefit of, a U.S. Person
                  (as
                  defined in Regulation S under the U.S. Securities Act) (a "U.S.
                  Person")
                  without registration under the U.S. Securities Act or compliance
                  with
                  requirements of an exemption or exclusion from registration and
                  the
                  applicable laws of all applicable states and acknowledges that
                  the
                  Corporation has no present intention of filing a registration statement
                  under the U.S. Securities Act in respect of the Securities;
                  and

              


      

       

      
        	
                (l)

              	
                the
                  Units have not been offered to the Subscriber in the United States;
                  and

              


      

       

      
        	
                (m)

              	
                it
                  is not a U.S. Person and is not purchasing the Units on behalf
                  of, or for
                  the account or benefit of, a U.S. Person;
                  and

              


      

       

      
        	
                (n)

              	
                the
                  Subscriber undertakes and agrees that it will not offer or sell
                  the
                  Securities in the United States unless such securities are registered
                  under the U.S. Securities Act and the securities laws of all applicable
                  states of the United States or an exemption or exclusion from such
                  registration requirements is available, and further that it will
                  not
                  resell the Securities except in accordance with the provisions
                  of
                  applicable securities legislation, regulations, rules, policies
                  and orders
                  and stock exchange rules; and

              


      

       

      
        	
                (o)

              	
                it
                  will not engage in hedging transactions with regard to the Securities
                  except in compliance with the U.S. Securities Act;
                  and

              


      

       

      
        	
                (p)

              	
                it
                  understands and acknowledges that the Corporation must refuse to
                  register
                  any transfer of the Securities not made in accordance with an available
                  exemption or exclusion from the registration requirements of the
                  U.S.
                  Securities Act or pursuant to registration under the U.S. Securities
                  Act;
                  and

              


      

       

      
        	
                (q)

              	
                if
                  the Subscriber is a “distributor” (as defined in Regulation S under the
                  U.S. Securities Act) or is an “affiliate” (as defined in Rule 405 under
                  the U.S. Securities Act) of a distributor or is acting on behalf
                  of a
                  distributor, (i) it agrees that it will not offer or sell the Securities
                  during the one year period after the completion of the distribution
                  of the
                  Units (the “Distribution Compliance Period”) to a U.S. Person or for the
                  account or benefit of a U.S. Person (other than a distributor),
                  and (ii)
                  if it sells Securities to another distributor, a dealer (as defined
                  in
                  Section 2(a)(12) of the U.S. Securities Act) or a person receiving
                  a
                  selling concession fee or other remuneration, during the Distribution
                  Compliance Period, the Subscriber agrees that it will send a written
                  confirmation or other notice to the purchaser stating that the
                  purchaser
                  is subject to the same restrictions on offers and sales that apply
                  to a
                  distributor and setting forth the restrictions on offers and sales
                  of
                  Securities within the United States or to, or for the account or
                  benefit
                  of, U.S. Persons; and

              


      

       

      
        	
                (r)

              	
                the
                  Subscriber understands and acknowledges that the Warrants may not
                  be
                  exercised by or on behalf of a U.S. Person unless the Warrant Shares
                  issuable upon such exercise have been registered under the U.S.
                  Securities
                  Act or an exemption or exclusion from such registration is available;
                  and

              


      

       

      
        	
                (s)

              	
                the
                  Subscriber understands and acknowledges that each person exercising
                  a
                  Warrant will be required to provide either (i) written certification
                  that
                  it is not a U.S. Person and the Warrant is not being exercised
                  on behalf
                  of a U.S. Person, or (ii) a written opinion of counsel, of recognized
                  standing reasonably satisfactory to the Corporation, to the effect
                  that
                  the Warrant being exercised and the Warrant Shares issuable upon
                  such
                  exercise have been registered under the U.S. Securities Act or
                  are exempt
                  from registration thereunder; and

              


      

       

      
        	
                (t)

              	
                if
                  any Securities are being sold in the United States pursuant to
                  Rule 144
                  under the U.S. Securities Act, the United States restrictive legend
                  may be
                  removed from the certificates representing the Securities by delivering
                  to
                  the Corporation a written opinion of counsel, of recognized standing
                  reasonably satisfactory to the Corporation, to the effect that
                  the legend
                  is no longer required under applicable requirements of the U.S.
                  Securities
                  Act or state securities laws; and

              


      

       

      
        	
                (u)

              	
                if
                  a corporation, partnership, unincorporated association or other
                  entity, it
                  has the legal capacity to enter into and be bound by this Subscription
                  Agreement and further certifies that all necessary approvals of
                  directors,
                  shareholders or otherwise have been given and obtained;
                  and

              


      

       

      
        	
                (v)

              	
                if
                  an individual, it is of the full age of majority and is legally
                  competent
                  to execute this Subscription Agreement and take all action pursuant
                  hereto; and

              


      

       

      
        
           

        

        
           

          
            

          

        

        
           

        

      

      
        	
                (w)

              	
                this
                  Subscription Agreement has been duly and validly authorized, executed
                  and
                  delivered by and constitutes a legal, valid, binding and enforceable
                  obligation of the Subscriber; and

              


      

       

      
        	
                (x)

              	
                the
                  entering into of this Subscription Agreement and the transactions
                  contemplated hereby will not result in a violation of any of the
                  terms and
                  provisions of any law applicable to it, or any of its constating
                  documents, or of any agreement to which the Subscriber is a party
                  or by
                  which it is bound; and

              


      

       

      
        	
                (y)

              	
                the
                  Subscriber has such knowledge in financial and business affairs
                  as to be
                  capable of evaluating the merits and risks of the Subscriber’s investment
                  and the Subscriber is able to bear the economic risk of loss of
                  the
                  Subscriber’s entire investment in the Units;
                  and

              


      

       

      
        	
                (z)

              	
                except
                  for the representations and warranties made by the Corporation
                  herein, it
                  has relied solely upon publicly available information relating
                  to the
                  Corporation and not upon any verbal or written representation as
                  to fact
                  or otherwise made by or on behalf of the Corporation and acknowledges
                  that
                  the Corporation's counsel are acting as counsel to the Corporation
                  and not
                  as counsel to the Subscriber; and

              


      

       

      
        	
                (aa)

              	
                the
                  Subscriber understands that Units are being offered for sale only
                  on a
                  "private placement" basis and that the sale and delivery of the
                  Units is
                  conditional upon such sale being exempt from the requirements as
                  to the
                  filing of a prospectus or delivery of an offering memorandum or
                  upon the
                  issuance of such orders, consents or approvals as may be required
                  to
                  permit such sale without the requirement of filing a prospectus
                  or
                  delivering an offering memorandum and, as a consequence (i)
                  it is
                  restricted from using most of the civil remedies available under
                  securities legislation; (ii) it may not receive information
                  that
                  would otherwise be required to be provided to it under securities
                  legislation; and (iii) the Corporation is relieved from
                  certain
                  obligations that would otherwise apply under securities legislation;
                  and

              


      

       

      
        	
                (bb)

              	
                if
                  required by applicable securities legislation, regulations, rules,
                  policies or orders or by any securities commission, stock exchange
                  or
                  other regulatory authority, the Subscriber will execute, deliver,
                  file and
                  otherwise assist the Corporation in filing, such reports, undertakings
                  and
                  other documents with respect to the issue of the Units;
                  and

              


      

       

      
        	
                (cc)

              	
                the
                  Subscriber will not resell the Securities except in accordance
                  with the
                  provisions of applicable securities legislation and stock exchange
                  rules,
                  if applicable, in the future; and

              


      

       

      
        	
                (dd)

              	
                the
                  Subscriber deals at arm's length with the Corporation within the
                  meaning
                  of the Income
                  Tax Act
                  (Canada) and will continue to deal at arm's length with the Corporation
                  at
                  all times which are relevant for this Subscription Agreement;
                  and

              


      

       

      
        	
                (ee)

              	
                the
                  Subscriber acknowledges that the Corporation has advised it to
                  obtain
                  independent legal, income tax and investment advice with respect
                  to its
                  subscription for these Units and the execution of the Subscription
                  Agreement and accordingly, the Subscriber has either been independently
                  advised as to the meanings of all terms contained herein relevant
                  to the
                  Subscriber for purposes of giving releases, representations, warranties
                  and covenants under this Subscription Agreement or alternatively,
                  notwithstanding such advice has voluntarily chosen not to do
                  so.

              


      

       

      Representations,
        Warranties and Covenants of the Corporation

       

      9. The
        Corporation hereby represents and warrants to the Subscriber that it has
        been
        duly incorporated and is a valid and subsisting corporation under the laws
        of
        the State of Nevada, United States, is extra-provincially registered in the
        Province of Alberta, Canada and has full corporate power and authority to
        enter
        into this Subscription Agreement and to perform its obligations
        hereunder.

       

      10. The
        Corporation hereby covenants with the Subscriber that it will take all corporate
        action required to issue to the Subscriber the Units and the Common Shares
        and
        the Warrants comprising the Units on the Closing Date.

       

      
        
           

        

        
           

          
            

          

        

        
           

        

      

      Registration
        Rights

       

      11. If
        the
        Corporation proposes to register, pursuant to any registration rights agreement
        (a “Registration Rights Agreement”), for shareholders other than the Subscriber,
        any of its Common Shares or other equity securities (or securities convertible
        into equity securities) under the U.S. Securities Act in connection with
        the
        public offering of such securities solely for cash (other than a registration
        on
        Form S-8, Form S-4 or Form F-4), the Corporation will, at all such times,
        promptly give the Subscriber written notice of such proposed registration.
        Upon
        the written request of the Subscriber, given within 20 days after the mailing
        of
        such notice by the Corporation, the Corporation will, subject to the provisions
        of applicable Registration Rights Agreements, use its commercial best efforts
        to
        cause a registration statement covering all of the (i) Common Shares being
        acquired hereunder and (ii) Warrant Shares that each such holder has requested
        to be registered to become effective under the U.S. Securities Act. Only
        to the
        extent they apply to “piggy back” registrations, such registration shall also be
        subject to the other provisions of each applicable Registration Rights
        Agreement. For greater certainty, (i) such registration shall not be subject
        to
        any provisions of any Registration Rights Agreement that are applicable only
        to
“demand” registrations, and (ii) the Subscriber acknowledges that except as
        contemplated by this Section, the Corporation is under no obligation hereunder
        to register any of its securities or to complete any offering of its securities
        it proposes to make, and the Corporation will therefore incur no liability
        (including any penalties that may be incurred under a Registration Rights
        Agreement) to the Subscriber for its failure to register any of its securities
        or to complete any offering of its securities.

       

      Closing

       

      12. The
        purchase and sale of the Units pursuant to this Subscription Agreement will
        be
        completed at the offices of the Corporation’s solicitors, Parlee McLaws
llp,
        in
        Edmonton, Alberta on the Closing Date or such other place or time as the
        Corporation decides in its sole discretion. 

       

      13. The
        Corporation shall be entitled to rely on delivery of a facsimile copy of
        executed subscriptions, and acceptance by the Corporation of such facsimile
        subscriptions shall be legally effective to create a valid and binding agreement
        between the Subscriber and the Corporation in accordance with the terms
        hereof.

       

      General

       

      14. The
        Subscriber agrees that the representations, warranties and covenants of the
        Subscriber herein will be true and correct both as of the execution of this
        Subscription Agreement and as of the Closing Date and will survive the
        completion of the issuance of the Units. The representations, warranties
        and
        covenants of the Subscriber herein are made with the intent that they be
        relied
        upon by the Corporation and it’s counsel in determining the eligibility of a
        purchaser of Units and the Subscriber agrees to indemnify the Corporation,
        including its respective affiliates, shareholders, directors, officers,
        partners, employees, advisors and agents, against all losses, claims, costs,
        expenses and damages or liabilities which any of them may suffer or incur
        which
        are caused or arise from a breach thereof. The Subscriber undertakes to
        immediately notify the Corporation at 510 Royal Bank Building, 10117 Jasper
        Avenue, Edmonton, Alberta, T5J 1W8, Attention: Curtis Sparrow (Fax Number:
        (780)
        409-8146), of any change in any statement or other information relating to
        the
        Subscriber set forth herein which takes place prior to the Closing
        Date.

       

      15. The
        obligations of the parties hereunder are subject to acceptance by any required
        regulatory approvals.

       

      16. The
        Subscriber acknowledges and agrees that all costs incurred by the Subscriber
        (including any fees and disbursements of any special counsel retained by
        the
        Subscriber) relating to the purchase of the Units by the Subscriber shall
        be
        borne by the Subscriber.

       

      17. The
        contract arising out of this Subscription Agreement and all documents relating
        thereto shall be governed by and construed in accordance with the laws of
        the
        Province of Alberta and the federal laws of Canada applicable therein. The
        parties irrevocably attorn to the exclusive jurisdiction of the courts of
        the
        Province of Alberta.

       

      18. Time
        shall be of the essence hereof.

       

      19. This
        Subscription Agreement represents the entire agreement of the parties hereto
        relating to the subject matter hereof and there are no representations,
        covenants or other agreements relating to the subject matter hereof except
        as
        stated or referred to herein.

       

      20. The
        terms
        and provisions of this Subscription Agreement shall be binding upon and enure
        to
        the benefit of the Subscriber, the Corporation and the Releasees and their
        respective heirs, executors, administrators, successors and assigns. This
        Subscription Agreement shall not be assignable by any party without prior
        written consent of the other parties.

       

      
        
           

        

        
           

          
            

          

        

        
           

        

      

      21. The
        Subscriber agrees that this subscription is made for valuable consideration
        and
        may not be withdrawn, cancelled, terminated or revoked by the
        Subscriber.

       

      22. Neither
        this Subscription Agreement nor any provision hereof shall be modified, changed,
        discharged or terminated except by an instrument in writing signed by the
        party
        against whom any waiver, change, discharge or termination is
        sought.

       

      23. The
        invalidity, illegality or unenforceability of any provision of this Subscription
        Agreement shall not affect the validity, legality or enforceability of any
        other
        provision hereof.

       

      24. The
        Subscriber acknowledges and agrees that acceptance of this Subscription
        Agreement will be conditional, among other things, upon the sale of Units
        to the
        Subscriber being exempt from any prospectus and offering memorandum requirements
        of all applicable securities laws. The Corporation will be deemed to have
        accepted this Subscription Agreement upon the delivery on the Closing Date
        of
        the certificates representing the Units to or upon the direction of the
        Subscriber in accordance with the provisions hereof.

       

      25. The
        headings used in this Subscription Agreement have been inserted for convenience
        of reference only and shall not affect the meaning or interpretation of this
        Subscription Agreement or any provision hereof.

       

      26. The
        covenants, representations and warranties contained herein shall survive
        the
        Closing of the transactions contemplated hereby.

       

      27. Each
        party shall from time to time do such further acts and execute and deliver
        such
        further documents as shall be reasonably required in order to fully perform
        and
        carry out the terms of this Subscription Agreement. 

       

      28. In
        this
        Subscription Agreement, words importing the singular include the plural and
        vice
        versa and words importing persons include firms or corporations.

       

      29. This
        Subscription Agreement may be executed in any number of counterparts with
        the
        same effect as if all parties to this Subscription Agreement had signed the
        same
        document and all counterparts will be construed together and constitute one
        and
        the same instrument.

       

      30. All
        notices hereunder will be in writing and addressed to the party for whom
        it is
        intended at the address indicated herein. Either party may by notice to the
        other party change its address for service. Any notice personally delivered
        will
        be deemed to have been given or made on the date it was actually delivered,
        or
        if sent by electronic facsimile, will be deemed to have been given or made
        on
        the business day next following the date upon which it was
        transmitted.

       

      31. In
        this
        Subscription Agreement references to "$" or "US$" are to United States dollars
        and references to "CAD$" are to Canadian dollars unless stated
        otherwise.