Document:

Unassociated Document

    Terence
      Yap

    8th
      Floor, Unit E, Block I

    Royal
      Ascot Shatin

    New
      Territories, Hong Kong

     

    February
      8, 2006

     

    China
      Security & Surveillance Technology, Inc.

    f/k/a
      Apex Wealth Enterprises Limited

    Room
      3505-06, 35th
      Floor,
      Edinburgh Tower, The Landmark 

    15
      Queen's Road Central

    HONG
      KONG

     

    THIS
      AGREEMENT,
      dated
      as of February 8, 2006 is entered into by and between Terence Yap with a mailing
      address at 8th
      Floor,
      Unit E, Block 1, Royal Ascot, Shatin, New Territories, Hong Kong ("Consultant")
      and China Security & Surveillance Technology, Inc. f/k/a
      APEX Wealth Enterprises Limited a British Virgin Islands Corporation (the
      "Company').

     

    RECITALS

     

    WHEREAS,
      the
      Consultant desires to provide services (the "Services") set forth in Section
      3
      hereof to the Company and the Company desires to retain the
      Consultant.

     

    NOW
      THEREFORE,
      in
      consideration of the premises and the mutual covenants and agreement hereinafter
      set forth, the parties hereto covenant and agree as follows:

     

    1.  Retention.
      The
      Company hereby retains the Consultant, and the Consultant agrees to be retained
      by the Company, to perform Services as Consultant to the Company on the terms
      and conditions set forth herein. The parties agree that the Consultant shall
      be
      retained by the Company as an independent contractor on a consulting basis
      not
      as an employee of the Company.

     

    2.  Term.
      The
      term of this Agreement shall commence on the date hereof and shall end on
      October 31, 2006 unless terminated earlier pursuant to Section 6
      hereof.

     

    3.  Duties
      of Consultant.
      Consultant shall prepare business plans and power point presentations for the
      Company. Consultant's services shall he rendered at such times as the Company
      and Consultant shall mutually agree. The Company acknowledges that Consultant
      has other business and employment arrangements and Consultant shall be required
      to devote only such time to consulting services for the Company as shall be
      reasonably required to perform such services.

     

    4.  Compensation
      for Services.
      In
      consideration for the consulting services rendered and to be rendered by
      Consultant to the Company, the Company hereby agrees to issue to Consultant
      one
      hundred thousand (100,000) shares of the Company's common stock. The Company
      agrees that these one hundred thousand (100,000) shares shall be restricted
      shares of common stock pursuant to SEC Rule 144 and as such, will bear a
      restrictive legend or other restrictions on transfer or resale. The one hundred
      thousand (100,000) shares shall be issued to the Consultant on or before
      1st
      March,
      2006.

    
      
         

      

      
         

        
          

        

      

      
         

      

    

     

    5.  Confidentiality.
      Consultant acknowledges that as a consequence of its relationship with the
      Company. it has been and will continue to be given access to ideas, trade
      secrets, methods, customer information, business plans and other confidential
      and proprietary information of the Company (collectively. "Confidential
      Information"). Consultant agrees that it shall maintain in confidence, and
      shall
      not disclose directly or indirectly, to any third parties or use for any
      purposes (other than performance hereof), any Confidential Information for
      the
      term of this Agreement and a period of seven years thereafter, unless previously
      approved by the Company in writing. The parties hereto agree that irreparable
      damage would occur in the event that any of the provisions of this Section
      5 are
      not performed by the Consultant in accordance with their specific terms or
      are
      otherwise breached by the Consultant. It is accordingly agreed that the Company
      shall be entitled to any injunction or injunctions to prevent breaches of this
      section 5 and to enforce specifically the terms and provisions hereof in any
      court of the United States or any State having jurisdiction in addition to
      any
      other remedy to which they are entitled at law or in equity.

     

    6.  Termination.
      This
      agreement shall terminate upon the earlier of:

     

    i)Expiration
      of the term of the agreement or

     

    ii)Thirty
      (30) days written notice by either party

     

    7.  Compliance
      with Law.
      The
      Consultant agrees that in performing this Agreement, the Consultant shall comply
      with the applicable provisions of the Securities Act of 1933, as amended. The
      applicable rules and regulations of the National Association of Securities
      Dealers, Inc. and any other applicable federal, state or foreign laws, rules
      and
      regulations.

     

    8.  Indemnity.
      The
      Consultant shall indemnify the Company. its directors, officers, stockholders,
      representatives, agents and affiliates (collectively, the "Affiliated Parties")
      from and against any and all losses. damages, fines, fees, penalties,
      deficiencies, expenses, including expenses of investigation, court costs and
      fees and expenses of attorneys, which the Company of its Affiliated Parties
      may
      sustain at any time resulting from, arising out of or relating to the breach
      or
      failure to comply with any of the covenants or agreements of the Consultant
      or
      its Affiliated Parties contained in this Agreement.

     

    9.  Notices.
      Notices, other communications or deliveries required or permitted under this
      Agreement shall be in writing delivered by hand against receipt, certified
      mail
      return receipt, or reputable overnight courier to the addresses set forth or
      to
      such address as a party may designate in accordance this paragraph and shall
      be
      effective upon the earlier of:

     

    
      	 	1) 	actual receipt 

      	 	 	 

      	 	
              2)

            	
              three
                (3) calendar days if sent by certified mail; or one (1) day if sent
                by
                overnight courier.

            

    

    

    A.          
      To
      the
      Company at:

    

    China
      Security & Surveillance Technology, Inc.

    flk/a
      Apex Wealth Enterprises Limited

    Room
      3505-06, 35`h Floor, Edinburgh Tower, The Landmark 

    15
      Queen's Road Central

    HONG
      KONG

    

    B.           
      To
      the
      Consultant at:

     

    Terence
      Yap

    8th
      Floor, Unit E, Block 1 

    Royal
      Ascot Shatin

    New
      Territories, Hong Kong

    
      
         

      

      
         

        
          

        

      

      
         

      

    

    

    10.  Applicable
      Law.
      This
      agreement shall be governed by the internal laws of the British Islands without
      regard to its conflict of law provisions.

     

    11.  Miscellaneous.
      This
      Agreement shall supersede all
      other
      agreements, whether written or oral, between the parties hereto relating to
      the
      subject matter hereof, including, but not limited to, the consulting agreement
      dated as of November 1, 2005 by and between the Company and
      Consultant.

     

    If
      the
      foregoing sets forth your understanding of our agreement, kindly indicate your
      agreement by signing on the space provided below.

     

    Very
      truly yours,

    

    /s/
      Terence
      Yap                                                                

    Terence
      Yap. Consultant

    

    China
      Security & Surveillance Technology, Inc.

    f/k/a
      APEX Wealth Enterprises Limited

    

    By:
      /s/
      Guoshen
      Tu                                                         

    Guoshen
      Tu, CEO & ChairmanREORGANIZATION
      AGREEMENT

     

    

     

    BETWEEN:

     

    

     

    CANWEST
      PETROLEUM CORPORATION

     

    

     

    -
      and -

     

    

     

    OILSANDS
      QUEST INC.

     

    

     

    June
      9, 2006

     

    
      
        
        

      

      
        
        

        
          

        

      

      
        
        

      

    

     

    
      TABLE
        OF CONTENTS

    

    
      	
              ARTICLE
                1    DEFINITIONS

            	
              1

            
	
              1.1

            	
              Definitions

            	
              1

            
	
              1.2

            	
              Singular,
                Plural, etc.

            	
              10

            
	
              1.3

            	
              Deemed
                Currency

            	
              10

            
	
              1.4

            	
              Date
                for Any Action

            	
              11

            
	
              1.5

            	
              Decision
                by Board of Directors

            	
              11

            
	
              1.6

            	
              Interpretation
                Not Affected by Party Drafting

            	
              11

            
	
              1.7

            	
              Statutes

            	
              11

            
	
              1.8

            	
              Knowledge

            	
              11

            
	
              ARTICLE
                2    THE
                REORGANIZATION

            	
              11

            
	
              2.1

            	
              Implementation
                Steps by the Corporation

            	
              11

            
	
              2.2

            	
              Implementation
                Steps by Acquirer

            	
              12

            
	
              2.3

            	
              Dissenting
                Shareholders

            	
              12

            
	
              2.4

            	
              Corporation
                Approval of the Reorganization

            	
              12

            
	
              2.5

            	
              Proxy
                Circular

            	
              13

            
	
              2.6

            	
              Securities
                and Tax Compliance

            	
              13

            
	
              2.7

            	
              Preparation
                of Filings

            	
              14

            
	
              2.8

            	
              Cooperation

            	
              17

            
	
              ARTICLE
                3    COVENANTS
                OF THE CORPORATION

            	
              19

            
	
              3.1

            	
              Ordinary
                Course of Business

            	
              19

            
	
              3.2

            	
              Non-Solicitation

            	
              22

            
	
              3.3

            	
              Notice
                of Material Change

            	
              25

            
	
              3.4

            	
              Access
                to Information

            	
              25

            
	
              3.5

            	
              Financial
                Statements

            	
              25

            
	
              ARTICLE
                4    TRANSACTION
                SUPPORT AGREEMENTS

            	
              26

            
	
              4.1

            	
              Transaction
                Support Agreements

            	
              26

            
	
              ARTICLE
                5    COVENANTS
                OF ACQUIRER

            	
              26

            
	
              5.1

            	
              Ordinary
                Course of Business

            	
              26

            
	
              5.2

            	
              Non-Solicitation

            	
              29

            
	
              5.3

            	
              Notice
                of Material Change

            	
              32

            
	
              5.4

            	
              Access
                to Information

            	
              32

            
	
              5.5

            	
              Financial
                Statements

            	
              32

            
	
              ARTICLE
                6    MUTUAL
                COVENANTS

            	
              33

            
	
              6.1

            	
              Consultation

            	
              33

            
	
              6.2

            	
              Other
                Filings

            	
              33

            
	
              ARTICLE
                7    REPRESENTATIONS
                AND WARRANTIES OF THE CORPORATION

            	
              33

            
	
              7.1

            	
              Representations

            	
              33

            
	
              7.2

            	
              Investigation

            	
              42

            

    

     

    
      
        
        

      

      
        -i-

        
          

        

      

      
        
        

      

    

     

    TABLE
      OF CONTENTS

    (continued)

     

    
      	
              ARTICLE
                8    REPRESENTATIONS
                AND WARRANTIES OF ACQUIRER

            	
              43

            
	
              8.1

            	
              Representations

            	
              43

            
	
              8.2

            	
              Investigation

            	
              52

            
	
              ARTICLE
                9    CONDITIONS

            	
              52

            
	
              9.1

            	
              Conditions
                Precedent to Obligations of Each Party

            	
              52

            
	
              9.2

            	
              Acquirer
                Conditions

            	
              53

            
	
              9.3

            	
              Corporation
                Conditions

            	
              55

            
	
              ARTICLE
                10    TERMINATION

            	
              56

            
	
              10.1

            	
              Termination

            	
              56

            
	
              ARTICLE
                11    MISCELLANEOUS

            	
              57

            
	
              11.1

            	
              Amendment
                or Waiver

            	
              57

            
	
              11.2

            	
              Entire
                Agreement

            	
              57

            
	
              11.3

            	
              Headings

            	
              57

            
	
              11.4

            	
              Notices

            	
              57

            
	
              11.5

            	
              Counterparts
                and Facsimiles

            	
              58

            
	
              11.6

            	
              Expenses

            	
              58

            
	
              11.7

            	
              Assignment

            	
              59

            
	
              11.8

            	
              Severability

            	
              59

            
	
              11.9

            	
              Choice
                of Law

            	
              59

            
	
              11.10

            	
              Attornment

            	
              59

            
	
              11.11

            	
              Remedies

            	
              59

            
	
              11.12

            	
              Survival
                of Representations and Warranties

            	
              60

            
	
              11.13

            	
              Time
                of Essence

            	
              60

            
	
              SCHEDULE
                A - REORGANIZATION
                RESOLUTION

            	 
	
              SCHEDULE
                B - REORGANIZATION
                STEPS

            	
               

            
	
              SCHEDULE
                C - FORM
                OF TRANSACTION SUPPORT AGREEMENT

            	
               

            
	
              SCHEDULE
                D - FORM OF EXCHANGEABLE SHARE PROVISIONS

            	
               

            
	
              SCHEDULE
                E - FORM OF VOTING AND EXCHANGE TRUST AGREEMENT

            	 
	
              SCHEDULE
                F - FORM OF SUPPORT AGREEMENT

            	 

    

    

    
      
        
        

      

      
        -ii-

        
          

        

      

      
        
        

      

    

    THIS
      REORGANIZATION AGREEMENT
      made as
      of the 9th
      day
      of
      June, 2006.

     

    BETWEEN:

     

    CANWEST
      PETROLEUM CORPORATION,
      a
      corporation incorporated under the laws of Colorado ("Acquirer")

     

    -
      and
      -

     

    OILSANDS
      QUEST INC.,
      a
      corporation incorporated under the laws of Alberta (the "Corporation")

     

    RECITALS

     

    WHEREAS:

     

    A.    The
      Acquirer has made a proposal for a reorganization of the share capital of the
      Corporation involving, among other things, changing all of the outstanding
      Shares not held by the Acquirer into Exchangeable Shares on the basis of 7.95
      Exchangeable Shares (subject to adjustment as provided herein) for each Share
      pursuant to the terms of the Reorganization; and

     

    B.    The
      Board
      of Directors has determined that it would be in the best interests of the
      Corporation and its Shareholders to enter into this Agreement, to recommend
      acceptance of the Reorganization to the Shareholders, to cooperate with Acquirer
      and to take all reasonable action to support the Reorganization;

     

    NOW
      THEREFORE IN CONSIDERATION
      of the
      mutual covenants set out below, Acquirer and the Corporation agree as
      follows:

     

    ARTICLE
      1

    DEFINITIONS

     

    1.1    Definitions

     

    In
      this
      Agreement, unless the context otherwise requires, the following terms have
      the
      meanings specified:

     

    "Acquirer
      Acquisition Proposal"
      means a
      proposal or offer by any Person, whether or not subject to conditions and
      whether or not in writing, to acquire in any manner, directly or indirectly,
      beneficial ownership of all or a material portion of the assets of the Acquirer
      or to acquire in any manner, directly or indirectly, beneficial ownership of
      or
      control or direction over more than 20% of the outstanding voting shares of
      the
      Acquirer, whether by means of an arrangement or amalgamation, a merger,
      consolidation or other business combination, a sale of shares or assets, a
      take-over bid, tender offer or exchange offer, or any other transaction
      involving the Acquirer, including, without limitation, any single or multi-step
      transaction or series of related transactions structured to permit such Person
      to acquire beneficial ownership of all or a material portion of the assets
      of
      the Acquirer or to acquire in any manner, directly or indirectly, more than
      20%
      of the outstanding voting shares of the Acquirer;

     

    
      
        
        

      

      
        
        

        
          

        

      

      
        
        

      

    

    -
      2 -

     

    "Acquirer
      Employee Obligations"
      means
      any obligations or liabilities of the Acquirer or any Subsidiary of the Acquirer
      to pay, whether or not on condition, any amount to its officers, directors,
      employees or consultants, (other than for salary, bonuses under their existing
      bonus arrangements and directors' fees in each case in the ordinary and regular
      course of business consistent with past practice) and, without limiting the
      generality of the foregoing, Acquirer Employee Obligations shall include the
      obligations or liabilities of the Acquirer or any of its Subsidiaries to
      officers or employees (i) for severance or termination payments on the
      change of control of the Acquirer pursuant to any executive involuntary
      severance and termination agreements in the case of officers and pursuant to
      the
      Acquirer's severance policy in the case of employees and (ii) for retention
      bonus payments pursuant to any retention bonus program, but shall exclude any
      statutory or common law obligations or liabilities in respect of termination
      or
      severance;

     

    "Acquirer
      Material Contract"
      means
      an agreement or understanding (whether or not in writing) to which the Acquirer
      or any of its Subsidiaries is a party or by which any thereof is bound
      (including any agreements with past and present directors, officers, employees
      or consultants and agreements containing obligations to issue securities and
      agreements relating to the payment of royalties or revenue sharing on existing
      assets) pursuant to which the Acquirer or any of its Subsidiaries has or may
      have an obligation in excess of, or having a value in excess of, $100,000 and
      which has a term in excess of 60 days without being terminable by the Acquirer
      or its Subsidiary without penalty or which is otherwise material to the business
      of the Acquirer and its Subsidiaries, taken as a whole;

     

    "Acquirer
      Returns"
      means
      all reports, estimates, declarations of estimated tax, information statements
      and returns relating to, or required to be filed in connection with, any
      Acquirer Taxes;

     

    "Acquirer
      Shares"
      means
      shares in the common stock of Acquirer;

     

    "Acquirer
      Taxes"
      shall
      mean all taxes, however denominated, including any interest, penalties or other
      additions that may become payable in respect thereof, imposed by any federal,
      territorial, provincial, state, local or foreign government or any agency or
      political subdivision of any such government, which taxes shall include, without
      limiting the generality of the foregoing, all income or profits taxes
      (including, but not limited to, federal income taxes and provincial income
      taxes), payroll and employee withholding taxes, unemployment insurance, social
      insurance taxes, sales and use taxes, ad valorem taxes, excise taxes, franchise
      taxes, gross receipts taxes, business license taxes, occupation taxes, real
      and
      personal property taxes, stamp taxes, environmental taxes, transfer taxes,
      workers' compensation and other governmental charges, and other obligations
      of
      the same or of a similar nature to any of the foregoing, which the Acquirer
      or
      any of its Subsidiaries is required to pay, withhold or collect;

     

    
      
        
        

      

      
        
        

        
          

        

      

      
        
        

      

    

    
      -
        3 -

       

    

    "Acquisition
      Proposal"
      means a
      proposal or offer by any Person (other than Acquirer or an affiliate of
      Acquirer), whether or not subject to conditions and whether or not in writing,
      to acquire in any manner, directly or indirectly, beneficial ownership of all
      or
      a material portion of the assets of the Corporation or to acquire in any manner,
      directly or indirectly, beneficial ownership of or control or direction over
      more than 20% of the outstanding voting shares of the Corporation, whether
      by
      means of an arrangement or amalgamation, a merger, consolidation or other
      business combination, a sale of shares or assets, a take-over bid, tender offer
      or exchange offer, or any other transaction involving the Corporation,
      including, without limitation, any single or multi-step transaction or series
      of
      related transactions structured to permit such Person to acquire beneficial
      ownership of all or a material portion of the assets of the Corporation or
      to
      acquire in any manner, directly or indirectly, more than 20% of the outstanding
      voting shares of the Corporation (other than the transactions contemplated
      by
      this Agreement);

     

    "Act"
      means
      the Business
      Corporations Act
      (Alberta);

     

    "Agreement",
      and
      "this
      Agreement",
      and
      similar expressions refer to this Agreement, as the same may be amended,
      restated or supplemented from time to time and, where applicable, to the
      appropriate Schedules to this Agreement;

     

    "Articles
      of Amendment"
      means
      the articles of amendment of the Corporation to be filed in connection with
      the
      Reorganization which articles shall:

     

    
      	 	
              (a)

            	
              create
                the Exchangeable Shares as a new class of shares in the capital of
                the
                Corporation; 

            

    

     

    
      	 	
              (b)

            	
              change
                each issued Share into that number of Exchangeable Shares equal to
                the
                Reorganization Ratio; and

            

    

     

    
      	 	
              (c)

            	
              change
                each issued Series 1 Preferred Share into one
                Share;

            

    

     

    "Board
      of Directors"
      means
      the board of directors of the Corporation as constituted from time to
      time;

     

    "Business
      Day"
      means
      any day excepting a Saturday, Sunday or statutory holiday in Calgary, Alberta
      or
      in Vancouver, British Columbia;

     

    "Canadian
      Securities Laws"
      has the
      meaning set forth in Section 2.6(a) hereof;

     

    "Closing"
      means
      the completion of the Reorganization (including the filing and effectiveness
      of
      the Articles of Amendment) and the other transactions contemplated
      hereby;

     

    "Closing
      Date"
      means
      the date of Closing; 

     

    "date
      hereof",
      "date
      of this Agreement"
      and
      other similar terms mean, unless the context otherwise requires, June 9,
      2006;

     

    
      
        
        

      

      
        
        

        
          

        

      

      
        
        

      

    

    
      -
        4 -

       

    

    "Disclosure
      Letter"
      means
      the letter delivered by the Corporation to Acquirer and by the Acquirer to
      the
      Corporation on the date of this Agreement, in each case referencing the Section
      or subsection of this Agreement in respect of which disclosure is being
      made;

     

    "Dissent
      Rights"
      means
      the rights of dissent in respect of the Reorganization Resolution provided
      under
      the Act;

     

    "Dissenters"
      and
      "Dissenting
      Shareholders"
      have
      the meanings set forth in Section 2.3 hereof;

     

    "Effective
      Time"
      means
      the time on the Closing Date at which the Articles of Amendment are filed under
      the Act;

     

    "Employee
      Obligations"
      means
      any obligations or liabilities of the Corporation to pay, whether or not on
      condition, any amount to its officers, directors, employees or consultants,
      (other than for salary, bonuses under their existing bonus arrangements and
      directors' fees in each case in the ordinary and regular course of business
      consistent with past practice) and, without limiting the generality of the
      foregoing, Employee Obligations shall include the obligations or liabilities
      of
      the Corporation to officers or employees (i) for severance or termination
      payments on the change of control of the Corporation pursuant to any executive
      involuntary severance and termination agreements in the case of officers and
      pursuant to the Corporation's severance policy in the case of employees and
      (ii) for retention bonus payments pursuant to any retention bonus program,
      but shall exclude any statutory or common law obligations or liabilities in
      respect of termination or severance;

     

    "Encumbrance"
      includes, without limitation, any mortgage, pledge, assignment, charge, lien,
      security interest or trust, royalty, carried, working, participation or net
      profits interest or other third party interest and any agreement, option, right
      or privilege (whether by law, contract or otherwise) capable of becoming any
      of
      the foregoing;

     

    
      
        
        

      

      
        
        

        
          

        

      

      
        
        

      

    

    
      - 5
        -

       

    

    "Environmental
      Laws"
      means
      the common law and all applicable statutes, regulations, ordinances, by laws,
      and codes and all international treaties and agreements, in Canada and the
      United States (whether federal, provincial, territorial, state or municipal)
      relating to pollution or the protection and preservation of the environment,
      occupational health and safety, product safety, product liability or Hazardous
      Substances, including, without limitation, laws relating to Releases or
      threatened Releases of Hazardous Substances into the indoor or outdoor
      environment (including, without limitation, ambient air, surface water,
      groundwater, land, surface and subsurface strata) or otherwise relating to
      the
      manufacture, processing, distribution, use, treatment, storage, Release,
      transport or handling of Hazardous Substances and all laws and regulations
      with
      regard to recordkeeping, notification, disclosure and reporting requirements
      respecting Hazardous Substances, and all laws relating to endangered or
      threatened species of fish, wildlife and plants and the management or use of
      natural resources, including, without limitation, the Occupational
      Health and Safety Act, 1993
      (Saskatchewan),
      Occupational
      Health and Safety Regulations, 1996
      (Saskatchewan),
      Mines
      Regulations, 2003
      (Saskatchewan),
      Environmental
      Management and Protection Act
      (Saskatchewan),
      Hazardous
      Substances and Waste Dangerous Goods Regulations
      (Saskatchewan),
      Environmental
      Spill Control Regulations
      (Saskatchewan),
      Water
      Regulations, 2002
      (Saskatchewan),
      Environmental
      Assessment Act
      (Saskatchewan),
      Oil
      and Gas Conservation Act
      (Saskatchewan),
      Oil
      and Gas Conservation Regulations, 1985
      (Saskatchewan),
      Oil
      and Gas Conservation Amendment Ac, 2001
      (Saskatchewan),
      Forest
      Resources Management Act
      (Saskatchewan),
      Forest
      Resources Management Regulations
      (Saskatchewan),
      Forest
      Resources Management Amendment Act, 2003
      (Saskatchewan),
      Pest
      Control Act
      (Saskatchewan),
      Pest
      Control Products (Saskatchewan) Act
      (Saskatchewan),
      Pest
      Control Products Regulations, 1995
      (Saskatchewan),
      Wildlife
      Act, 1998
      (Saskatchewan),
      Wildlife
      Regulations, 1981
      (Saskatchewan),
      Wildlife
      Habitat Protection Act
      (Saskatchewan),
      Wildlife
      Habitat Lands Designation Regulations
      (Saskatchewan),
      Boiler
      and Pressure Vessel Act
      (Saskatchewan),
      Design,
      Construction, Installation and Use of Boilers and Pressure
      Vessels Regulations
      (Saskatchewan),
      Clean
      Air Act
      (Saskatchewan),
      Clean
      Air Regulations
      (Saskatchewan),
      Dangerous
      Goods Transportation Act
      (Saskatchewan),
      Dangerous
      Goods Transportation Regulations
      (Saskatchewan),
      Ecological
      Reserves Act
      (Saskatchewan),
      Prairie
      and Forest Fires Act, 1982
      (Saskatchewan),
      Pipelines
      Act, 1998
      (Saskatchewan),
      Pipelines
      Regulations, 2000
      (Saskatchewan),
      Environmental
      Protection and Enhancement Act
      (Alberta), Activities
      Designation Regulation
      (Alberta), Approvals
      and Registrations Procedure Regulation
      (Alberta), Code
      of Practice for Compressor and Pumping Stations and Sweet Gas Processing
      Plants
      (Alberta), Code
      of Practice for Exploration Operations
      (Alberta), Code
      of Practice for Land Treatment of Soil Containing Hydrocarbons
      (Alberta), Code
      of Practice for Pesticides
      (Alberta), Code
      of Practice for the Release of Hydrostatic Test Water from Hydrostatic Testing
      of Petroleum Liquid and Gas Pipelines
      (Alberta),
      Conservation and Reclamation Regulation
      (Alberta), Environmental
      Assessment (Mandatory and Exempted Activities) Regulation
      (Alberta), Environmental
      Assessment Regulation
      (Alberta), Environmental
      Protection and Enhancement (Miscellaneous) Regulation
      (Alberta), Ozone-depleting
      Substances and Hydrocarbons Regulation
      (Alberta), Pesticide
      (Ministerial) Regulation
      (Alberta), Pesticide
      Sales, Handling, Use and Application Regulation
      (Alberta), Potable
      Water Regulation
      (Alberta), Release
      Reporting Regulation
      (Alberta), Substance
      Control Regulation
      (Alberta), Waste
      Control Regulation
      (Alberta), Water
      Act
      (Alberta), Code
      of Practice for Pipelines and Telecommunication Lines Crossing a Water
      Body
      (Alberta), Code
      of Practice for the Temporary Diversion of Water for Hydrostatic Testing of
      Pipelines (Alberta),
      Code
      of Practice for Watercourse Crossings
      (Alberta), Water
      (Ministerial) Regulation
      (Alberta), Water
      (Offences and Penalties) Regulation
      (Alberta), Oil
      and Gas Conservation Act
      (Alberta), Oil
      and Gas Conservation Regulations
      (Alberta), Energy
      Resources Conservation Act
      (Alberta), Oil
      Sands Conservation Act
      (Alberta), Oil
      Sands Conservation Regulation
      (Alberta), Pipeline
      Act
      (Alberta), Pipeline
      Regulation
      (Alberta), Occupational
      Health and Safety Act
      (Alberta), Occupational
      Health and Safety Code Order
      (Alberta), Occupational
      Health and Safety Regulation
      (Alberta), Forest
      and Prairie Protection Act
      (Alberta), Forest
      and Prairie Protection Regulation
      (Alberta), Fire
      Control Zone Regulation
      (Alberta), Weed
      Control Act
      (Alberta), Weed
      Regulation
      (Alberta), Wildlife
      Act
      (Alberta), Wildlife
      Regulation
      (Alberta), Public
      Lands Act
      (Alberta), Exploration
      Regulation
      (Alberta), Public
      Health Act
      (Alberta), Work
      Camp Regulation
      (Alberta), Canadian
      Environmental Protection Act, 1999
      (Canada), Species
      at Risk Act
      (Canada), Canadian
      Environmental Assessment Act
      (Canada), Fisheries
      Act
      (Canada), Navigable
      Waters Protection Act
      (Canada), Migratory
      Birds Act
      (Canada), Transportation
      of Dangerous Goods Act
      (Canada)
      and Transportation
      of Dangerous Goods Regulation
      (Canada);

     

    
      
        
        

      

      
        
        

        
          

        

      

      
        
        

      

    

    
      - 6
        -

       

    

    "Environmental
      Permits"
      includes all orders, permits, certificates, approvals, consents, registrations,
      exemptions and licences issued by any Governmental Entity under Environmental
      Laws;

     

    "Exchangeable
      Share Provisions"
      means
      the rights, privileges, restrictions and conditions attaching to the
      Exchangeable Shares substantially in the form set forth in Schedule D attached
      hereto;

     

    "Exchangeable
      Shares"
      means
      exchangeable shares of the Corporation as constituted at the Effective Time
      and
      governed by the Exchangeable Share Provisions;

     

    "Financial
      Statements"
      means
      the audited balance sheet and related statements of loss and deficit and
      statement of cash flow of the Corporation as at and for the period from
      September 24, 2004 to January 31, 2005 and the fiscal year ending January 31,
      2006; 

     

    "Fully-Diluted
      Acquirer Shares"
      means,
      at any specific time, the total number of Acquirer Shares issued and
      outstanding, plus the number of Acquirer Shares issuable upon the exercise
      of
      all outstanding options, warrants, conversion privileges or other rights,
      agreements, arrangements or commitments obligating the Acquirer to issue or
      sell
      any shares of any capital stock of the Acquirer or securities or obligations
      of
      any kind convertible into or exchangeable for any shares of capital stock of
      the
      Acquirer, plus the Acquirer Shares notionally represented by any stock
      appreciation rights, phantom equity or similar rights, agreements, arrangements
      or commitments based upon the book value, income or any other attribute of
      the
      Acquirer, but not including any Acquirer Shares issued or issuable in connection
      with any issuances of Acquirer securities for cash after the date hereof and
      any
      stock options granted after the date hereof by Acquirer provided the exercise
      price of such options is not less than the current market price of Acquirer
      Shares at the time of the grant (for greater certainty, any such issuances
      of
      securities are subject to the restrictions set out in this Agreement);

     

    "Fully-Diluted
      Shares"
      means,
      at any specific time, the total number of Shares issued and outstanding, plus
      the number of Shares issuable upon the exercise of all outstanding options,
      warrants, conversion privileges or other rights, agreements, arrangements or
      commitments obligating the Corporation to issue or sell any shares of any
      capital stock of the Corporation or securities or obligations of any kind
      convertible into or exchangeable for any shares of capital stock of the
      Corporation, plus the Shares notionally represented by any stock appreciation
      rights, phantom equity or similar rights, agreements, arrangements or
      commitments based upon the book value, income or any other attribute of the
      Corporation, but not including any Shares issued or issuable in connection
      with
      any issuances of the Corporation securities for cash after the date hereof
      and
      any stock options granted after the date hereof by Corporation provided the
      exercise price of such options is not less than the current market price of
      Shares at the time of the grant (for greater certainty, any such issuances
      of
      securities are subject to the restrictions set out in this
      Agreement);

     

    
      
        
        

      

      
        
        

        
          

        

      

      
        
        

      

    

    
      - 7
        -

       

    

    "governing
      documents"
      means,
      with respect to any Person, the certificate or articles of incorporation,
      by-laws, articles of organization, limited liability company agreement,
      partnership agreement, formation agreement, joint venture agreement, unanimous
      shareholder agreement or declaration or other similar governing documents of
      such Person;

     

    "Governmental
      Entity"
      means
      any (i) multinational, federal, provincial, territorial, state, municipal,
      local
      or other governmental or public department, central bank, court, commission,
      board, bureau, agency or instrumentality, domestic or foreign, (ii) any
      subdivision or authority of any of the foregoing, or (iii) any quasi
      governmental or private body exercising any regulatory, expropriation or taxing
      authority under or for the account of any of the above.

     

    "Hazardous
      Substance"
      means
      any contaminant (as defined in the Environmental
      Management and Protection Act, 2002
      (Saskatchewan)),
      any
      substance that may cause, is causing or has caused an adverse effect (as defined
      in the Environmental
      Protection and Enhancement Act
      (Alberta)), toxic substance (as defined in the Canadian
      Environmental Protection Act, 1999
      (Canada)), dangerous goods (as defined in the Transportation
      of Dangerous Goods Act
      (Canada), or pollutant or any other substance that when Released to the natural
      environment is likely to cause, at some immediate or future time, material
      harm
      or degradation to the natural environment or material risk to human health,
      including without limitation, (a) any petrochemical or petroleum products,
      radioactive materials, asbestos in any form that is or could become friable,
      urea formaldehyde foam insulation, transformers or other equipment that contains
      dielectric fluid containing polychlorinated biphenyls, and radon gas; (b) any
      chemicals, materials or substances defined as or included in the definition
      of
      "hazardous substances", "hazardous wastes", "hazardous materials", "restricted
      hazardous materials", "extremely hazardous substances", "toxic substances",
      "contaminants" or "pollutants", "hazardous recyclable", "dangerous oilfield
      waste", "non-dangerous oilfield waste" or words of similar meaning and
      regulatory effect; or (c) any other chemical, material or substance, exposure
      to
      which is prohibited, limited, or regulated by any applicable Environmental
      Law;

     

    "Material
      Adverse Change",
      in
      respect of the Corporation or the Acquirer, means any change (or changes which
      in the aggregate would be material) (or any condition, event or development
      involving a prospective material change) in the business, operations, results
      of
      operations, assets, capitalization, financial condition, rights, liabilities,
      prospects or privileges, whether contractual or otherwise, of the Corporation
      or
      the Acquirer, as the case may be, or any of its Subsidiaries which is materially
      adverse to the business thereof considered as a whole, other than a change:
      (i) resulting from conditions affecting the oil and gas industry as a
      whole; (ii) resulting from general economic, financial, currency exchange,
      securities or commodity market conditions in Canada, the United States or
      elsewhere; (iii)  disclosed in the Disclosure Letter; or
      (iv) resulting from changes in the market price of crude oil or natural
      gas; 

     

    
      
        
        

      

      
        
        

        
          

        

      

      
        
        

      

    

    
      - 8
        -

       

    

    "Material
      Adverse Effect"
      means,
      where used in relation to the Corporation or the Acquirer, a fact or
      circumstance, such fact or circumstance (together with all other facts or
      circumstances) has or is reasonably expected to: (i) have a material
      adverse effect on the business, operations, results of operations, assets,
      capitalization, condition (financial or otherwise), licenses, permits,
      concessions, rights, liabilities (contingent or otherwise), prospects or
      privileges, whether contractual or otherwise, of the Corporation or the Acquirer
      and its Subsidiaries considered as a whole, as the case may be, excluding any
      such effect: (A) resulting from conditions affecting the oil and gas
      industry as a whole; (B) resulting from general economic, financial,
      currency exchange, securities or commodity market conditions in Canada, the
      United States or elsewhere; (C)  disclosed in the Disclosure Letter; or
      (D) resulting from changes in the market price of crude oil or natural gas;
      (ii) prevent, materially delay or materially affect the consummation of the
      transactions contemplated by this Agreement; or (iii) materially affect the
      ability of the Corporation or the Acquirer, as the case may be, to perform
      its
      obligations hereunder or under the Reorganization;

     

    "Material
      Contract"
      means
      an agreement or understanding (whether or not in writing) to which the
      Corporation is a party or by which any thereof is bound (including any
      agreements with past and present directors, officers, employees or consultants
      and agreements containing obligations to issue securities and agreements
      relating to the payment of royalties or revenue sharing on existing assets)
      pursuant to which the Corporation has or may have an obligation in excess of,
      or
      having a value in excess of, $100,000 and
      which
      has a term in excess of 60 days without being terminable by the Corporation
      without penalty, or which is otherwise material to the Corporation;

     

    "misrepresentation"
      has the
      meaning set forth in the Securities
      Act
      (Alberta);

     

    "OS
      Permits"
      means
      Saskatchewan Oil Shale Permits PS00205 to PS00217 inclusive;

     

    "Permitted
      Proposal"
      has the
      meaning set forth in Section 5.2(a) hereof;

     

    "Person"
      includes an individual, partnership, trust, firm, body corporate, government,
      governmental body, agency or instrumentality, unincorporated body of persons
      or
      association;

     

    "Principal
      Shareholders"
      means
      Christopher H. Hopkins and Karim Hirji;

     

     "Proxy
      Circular"
      means
      the management information circular of the Corporation to be sent to the
      Shareholders in connection with the Shareholder Meeting (including, without
      limitation, information incorporated by reference);

     

    "Public
      Record"
      means
      all information and materials filed by, or on behalf of, the Acquirer with
      any
      of the Securities Authorities;

     

    "Real
      Property"
      has the
      meaning set forth in Section 7.1(n);

     

    "Registrar"
      means
      the Registrar appointed pursuant to Section 263 of the Act;

     

    
      
        
        

      

      
        
        

        
          

        

      

      
        
        

      

    

    
      - 9
        -

       

    

    "Registration
      Statement"
      has the
      meaning set forth in Section 2.6(b) hereof;

     

    "Regulatory
      Approvals"
      means
      all approvals, consents and authorizations of all Governmental Entities and
      other regulators (including stock exchanges) reasonably necessary or desirable
      in connection with the Reorganization and the other transactions contemplated
      hereby;

     

    "Release"
      means
      any release, spill, emission, discharge, leaking, pumping, dumping, escape,
      injection, deposit, disposal, discharge, dispersal, leaching or migration into
      the indoor or outdoor environment (including, without limitation, ambient air,
      surface water, groundwater, and surface or subsurface strata) or into or out
      of
      any property, including the movement of Hazardous Substances through or in
      the
      air, soil, surface water, groundwater or property;

     

    "Reorganization"
      means
      the transactions described in Schedule B attached hereto;

     

    "Reorganization
      Ratio"
      means
      7.95, subject to the following adjustments (which adjustments shall be made
      cumulatively if both apply):

     

    
      	          	(i)    	
              if
                at the Effective Time the number of Fully-Diluted Acquirer Shares
                exceeds
                139,000,000, then the Reorganization Ratio shall be increased by
                a number
                equal to the difference obtained by subtracting 7.95 from the product
                obtained by multiplying 7.95 by a fraction, the numerator of which
                is the
                number of Fully-Diluted Acquirer Shares at the Effective Time and
                the
                denominator of which is 139,000,000;
                and

            

    

     

    
      	          	(ii)    	
              if
                at the Effective Time the number of Fully-Diluted Shares exceeds
                22,922,785, then the Reorganization Ratio shall be decreased by a
                number
                equal to the difference obtained by subtracting 7.95 from the product
                obtained by multiplying 7.95 by a fraction, the numerator of which
                is the
                number of Fully-Diluted Shares at the Effective Time and the denominator
                of which is 22,922,785;

            

    

     

    "Reorganization
      Resolution"
      means
      the special resolution of the Shareholders to be substantially as set forth
      in
      Schedule A hereto;

     

    "Returns"
      means
      all reports, estimates, declarations of estimated tax, information statements
      and returns relating to, or required to be filed in connection with, any
      Taxes;

     

    "SEC"
      means
      the Securities and Exchange Commission of the United States;

     

    "Securities
      Authorities"
      means
      the appropriate securities commission or similar regulatory authorities in
      Canada and each of the provinces and territories thereof and in the United
      States and each of the states thereof;

     

    "Securities
      Laws"
      means,
      collectively, all applicable Canadian provincial and territorial corporate
      and
      securities laws, United States federal securities laws, the "blue sky" or
      securities laws of the states of the United States and any other applicable
      securities laws;

     

    
      
        
        

      

      
        
        

        
          

        

      

      
        
        

      

    

    
      - 10
        -

       

    

    "Shareholders"
      means
      the holders of Shares from time to time;

     

    "Shareholder
      Meeting"
      means
      the special meeting of the Shareholders, including any adjournments or
      postponement thereof, to be called and held in accordance with the provisions
      of
      the Act and the by-laws of the Corporation to consider and, if deemed advisable,
      approve the Reorganization Resolution;

     

    "Shares"
      means
      common shares in the share capital of the Corporation as constituted on the
      date
      hereof;

     

    "Subsidiary"
      has the
      meaning set forth in the Act and includes each other partnership or other entity
      controlled, directly or indirectly, by the referenced party but, in respect
      of
      the Acquirer, does not include the Corporation;

     

    "Superior
      Proposal"
      has the
      meaning set forth in Section 3.2(a) hereof;

     

    "Support
      Agreement"
      means
      an agreement substantially in the form attached hereto as Schedule
      F;

     

    "Taxes"
      shall
      mean all taxes, however denominated, including any interest, penalties or other
      additions that may become payable in respect thereof, imposed by any federal,
      territorial, provincial, state, local or foreign government or any agency or
      political subdivision of any such government, which taxes shall include, without
      limiting the generality of the foregoing, all income or profits taxes
      (including, but not limited to, federal income taxes and provincial income
      taxes), payroll and employee withholding taxes, unemployment insurance, social
      insurance taxes, sales and use taxes, ad valorem taxes, excise taxes, franchise
      taxes, gross receipts taxes, business license taxes, occupation taxes, real
      and
      personal property taxes, stamp taxes, environmental taxes, transfer taxes,
      workers' compensation and other governmental charges, and other obligations
      of
      the same or of a similar nature to any of the foregoing, which the Corporation
      is required to pay, withhold or collect;

     

    "U.S.
      Securities Act"
      means
      the United States Securities Act of 1933, as amended; and

     

    "Voting
      and Exchange Trust Agreement"
      means
      an agreement substantially in the form attached hereto as Schedule
      E.

     

    1.2    Singular,
      Plural, etc.

     

    Words
      importing the singular number include the plural and vice versa and words
      importing gender include the masculine, feminine and neuter
      genders.

     

    1.3    Deemed
      Currency

     

    In
      the
      absence of a specific designation of any currency, any undescribed dollar amount
      herein shall be deemed to refer to Canadian dollars.

     

    
      
        
        

      

      
        
        

        
          

        

      

      
        
        

      

    

    
      -
        11 -

       

    

    1.4    Date
      for Any Action

     

    In
      the
      event that any date on which any action is required to be taken hereunder by
      any
      of the parties hereunder is not a Business Day, such action shall be required
      to
      be taken on the next succeeding day which is a Business Day.

     

    1.5    Decision
      by Board of Directors

     

    Any
      reference herein to a decision or determination, unanimous or otherwise, of
      the
      Board of Directors means a decision or determination by a quorum of the
      directors of the Corporation entitled to vote under the Act and the constating
      documents of the Corporation.

     

    1.6    Interpretation
      Not Affected by Party Drafting

     

    The
      parties hereto acknowledge that their respective legal counsel have reviewed
      and
      participated in settling the terms of this Agreement, and the parties hereby
      agree that any rule of construction to the effect that any ambiguity is to
      be
      resolved against the drafting party will not be applicable in the interpretation
      of this Agreement.

     

    1.7    Statutes

     

    Any
      reference to a statute herein shall include any and all rules or regulations
      promulgated thereunder and any and all amendments made to such statute, rules
      or
      regulations prior to the date hereof and hereafter from time to
      time.

     

    1.8    Knowledge

     

    In
      this
      Agreement, each of the phrases "to the best of the knowledge of", "to the best
      of its knowledge" and "to its knowledge" means, unless otherwise expressly
      stated, a statement of the declarant's knowledge of the facts or circumstances
      in connection with such facts and circumstances; and where such statement is
      made in reference to the Acquirer or the Corporation means, unless otherwise
      expressly stated, a statement as to the best knowledge of each of the senior
      officers of the Acquirer or the Corporation, as the case may be, about the
      facts
      or circumstances to which such phrase related, with such facts and circumstances
      that would ordinarily be made in discharge of each such senior officer's
      duties.

     

    ARTICLE
      2

    THE
      REORGANIZATION

     

    2.1    Implementation
      Steps by the Corporation

     

    The
      Corporation agrees that it shall use its commercially reasonable efforts
      to:

     

    
      	 	
              (a)

            	
              as
                soon as reasonably practicable, and in any event, on or before July
                 21, 2006, provide
                due notice of the Shareholder Meeting and mail to Shareholders a
                notice of
                meeting, Proxy Circular and form of proxy all in accordance with
                applicable laws;

            

    

     

    
      
        
        

      

      
        
        

        
          

        

      

      
        
        

      

    

    
      
        - 12
          -

         

      

    

    
      	 	
              (b)

            	
              lawfully
                convene and hold the Shareholder Meeting as soon as reasonably practicable
                and, in any event, on or before August 14, 2006;
                and

            

    

     

    
      	 	
              (c)

            	
              subject
                to obtaining the approval of Shareholders of the Reorganization
                Resolution, and the satisfaction or waiver of the other conditions
                herein
                contained in favour of each party, use all reasonable commercial
                efforts
                to enter into the agreements and take the actions constituting the
                Reorganization including sending to the Registrar, for filing under
                the
                Act, the articles of amendment creating the Series 1 Preferred Shares
                to
                be issued to the Acquirer, and the Articles of Amendment and such
                other
                documents as may be required in connection therewith under the Act
                to give
                effect to the Reorganization.

            

    

     

    2.2    Implementation
      Steps by Acquirer

     

    Acquirer
      agrees that, on or prior to the Closing Date and subject to the satisfaction
      or
      waiver of the conditions herein contained in favour of Acquirer, Acquirer shall
      use all reasonable commercial efforts to enter into the Voting and Exchange
      Trust Agreement and the Support Agreement and to issue to the trustee under
      the
      Voting and Exchange Trust Agreement such share or shares as required by the
      Voting and Exchange Trust Agreement, if any, in respect of the Exchangeable
      Shares to be issued pursuant to the Reorganization.

     

    2.3    Dissenting
      Shareholders

     

    Holders
      of Shares shall have the right to exercise Dissent Rights in connection with
      the
      Reorganization pursuant to Section 191 of the Act (such holders referred to
      as "Dissenters"
      or as
      "Dissenting
      Shareholders"
      when
      referring exclusively to Shareholders). The Corporation shall give Acquirer
      (i) prompt notice of any written notices of exercise of rights of dissent,
      withdrawals of such notices, and any other instruments served pursuant to the
      Act and received by the Corporation and (ii) the opportunity to participate
      in all negotiations and proceedings with respect to such rights. Without the
      prior written consent of Acquirer, except as required by applicable law, the
      Corporation shall not make any payment with respect to any such rights or offer
      to settle or settle any such rights.

     

    2.4    Corporation
      Approval of the Reorganization

     

    
      	      	
              (a)

            	
              The
                Corporation represents that the Board of Directors, upon consultation
                with
                its advisors, has unanimously determined
                that:

            

    

     

    
      	 	
              (i)

            	
              the
                Reorganization is fair from a financial point of view to the Shareholders
                and is in the best interests of the Corporation and the Shareholders;
                and

            

    

     

    
      	 	
              (ii)

            	
              the
                Board of Directors will unanimously recommend that Shareholders vote
                in
                favour of the Reorganization Resolution, which recommendation, subject
                to
                the fiduciary duties of the Board of Directors, may not be withdrawn,
                modified or changed in any manner except in the event of the termination
                of this Agreement pursuant to
                Section 10.1.

            

    

     

    
      
        
        

      

      
        
        

        
          

        

      

      
        
        

      

    

    
      
        -
          13 -

         

      

    

    
      	 	
              (b)

            	
              The
                Corporation represents that the independent committee of the Board
                of
                Directors has received a verbal opinion from Genuity Capital Markets
                that
                the consideration under the Reorganization is fair from a financial
                point
                of view to the Shareholders
                and that Genuity Capital Markets has advised that it will provide
                a
                written opinion to such effect on or before the mailing of the Shareholder
                Meeting materials described in Section 2.1(a).

            

    

     

    
      	 	
              (c)

            	
              The
                Corporation represents that its senior officers and directors have
                advised
                the Corporation that, at the date hereof, they intend to vote any
                Shares
                held by them in favour of the Reorganization Resolution and will
                so
                represent in the Proxy Circular.

            

    

     

    2.5    Proxy
      Circular

     

    As
      promptly as reasonably practicable, the Corporation shall prepare the Proxy
      Circular (setting forth inter
      alia
      the
      recommendation of the Board of Directors set forth in Section 2.4(a) and
      the fairness opinion referred to in Section 2.4(b) and reflecting the
      execution of the Transaction Support agreements referred to in
      Section 9.2(d) and the intention of the senior officers and directors
      referred to in Section 2.4(c)) together with any other documents required
      by corporate laws, Securities Laws or other applicable laws in connection with
      the approval of the Reorganization by the Shareholders and the Corporation
      shall, on a confidential basis, provide Acquirer and its legal and financial
      advisors timely opportunity to review and a reasonable period of time in the
      circumstances to comment on all such documentation and all such documentation
      shall be reasonably satisfactory to Acquirer before it is filed or distributed
      to the Shareholders. 

     

    2.6    Securities
      and Tax Compliance

     

    
      	 	
              (a)

            	
              Acquirer
                agrees to use all commercially reasonable efforts to cause the Acquirer
                to
                become a reporting issuer for the purposes of the Securities
                Act
                (Alberta) (or equivalent status in another province of Canada) on
                or
                before the Closing Date.  In
                the event the Acquirer is not a reporting issuer for the purposes
                of any
                Canadian federal, provincial or territorial securities laws ("Canadian
                Securities Laws")
                on or before the Closing Date, Acquirer shall, or shall cause its
                Subsidiaries (and the Corporation agrees to cooperate in respect
                thereof)
                to use commercially reasonable efforts to obtain all orders required
                from
                the applicable Canadian Governmental Entities to permit the first
                resale
                of Acquirer Shares issuable upon exchange of the Exchangeable Shares
                from
                time to time, without qualification with, or approval of, or the
                filing of
                any prospectus or similar document, or undertaking, from, any Canadian
                Governmental Entity under any Canadian Securities Laws or pursuant
                to the
                rules and regulations of any Governmental Entity administering such
                laws,
                or the fulfilment of any other legal requirement in any such jurisdiction
                (other than, with respect to such first resale being from the holdings
                of
                a "control
                person"
                for purposes of Canadian Securities
                Laws).

            

    

     

    
      
        
        

      

      
        
        

        
          

        

      

      
        
        

      

    

    
      
        - 14
          -

         

      

    

    
      	 	
              (b)

            	
              Acquirer
                agrees to use all commercially reasonable efforts to file a registration
                statement (the "Registration
                Statement")
                with the SEC not more than ten Business Days following the later
                of the
                date that the Acquirer's Form 10-K is filed with the SEC and the
                Closing
                Date in order to register under the U.S. Securities Act the resale
                of the
                Acquirer Shares issuable from time to time after the Effective Time
                upon
                exchange of the Exchangeable Shares, and shall use all commercially
                reasonable efforts to cause the Registration Statement to become
                effective
                and to maintain the effectiveness of such registration for one year
                following the date on which all Exchangeable Shares have been exchanged
                for Acquirer Shares (other than those Exchangeable Shares held by
                Acquirer
                or any of its affiliates).

            

    

     

    
      	 	
              (c)

            	
              Acquirer
                agrees to use all commercially reasonable efforts to cause the Acquirer
                Shares to be listed on the American Stock Exchange, the Toronto Stock
                Exchange or another senior stock exchange in the United States promptly
                following the Effective Time.

            

    

     

    
      	 	
              (d)

            	
              The
                Acquirer shall, on a confidential basis, provide the Corporation
                and its
                legal and financial advisors timely opportunity to review and a reasonable
                period of time in the circumstances to comment on all such documentation
                as may be prepared for filing in connection with Subsections 2.6(a),
                (b)
                and (c) and all such documentation shall be reasonably satisfactory
                to the
                Corporation before it is filed.

            

    

     

    
      	 	
              (e)

            	
              The
                Corporation and the Acquirer and its transfer agent shall be entitled
                to
                deduct and withhold from any Exchangeable Shares or other consideration
                payable to any holders of Shares pursuant to the transactions contemplated
                hereby, such amounts as is required to be deducted and withheld with
                respect to such payment under the Income
                Tax Act
                (Canada), the United States Internal Revenue Code of 1986 or any
                provision
                of provincial, state, territorial, local or foreign tax law, in each
                case,
                as amended. To the extent that amounts are so withhold, such withhold
                amounts shall be treated for all purposes hereof as having been paid
                to
                the holder of the Shares in respect of which such deduction and
                withholding was made, provided that such withheld amounts are actually
                remitted to the appropriate taxing authority. To the extent that
                the
                amount so required or permitted to be deducted or withheld exceeds
                the
                cash portion of the consideration otherwise payable to the holder,
                the
                Corporation, the Acquirer or the transfer agent are hereby authorized
                to
                sell or otherwise dispose of such portion of the consideration as
                is
                necessary to provide sufficient funds to enable compliance with such
                deduction or withholding obligation and the Corporation, the Acquirer
                or
                the transfer agent, as the case may be, shall notify the holder thereof
                and remit any unapplied balance of the net proceeds of such
                sale.

            

    

     

    2.7    Preparation
      of Filings

     

    
      	 	
              (a)

            	
              Acquirer
                and the Corporation shall, acting reasonably and promptly in the
                circumstances, cooperate in:

            

    

     

    
      
        
        

      

      
        
        

        
          

        

      

      
        
        

      

    

    
      
        - 15
          -

         

      

    

    
      	 	
              (i)

            	
              the
                preparation of the Proxy Circular, the Registration Statement, the
                stock
                exchange application, the application to become a reporting issuer
                and any
                application for the orders and the preparation of any required
                registration statements and any other documents reasonably deemed
                by
                Acquirer or the Corporation to be necessary to discharge their respective
                obligations under corporate laws, Securities Laws or other applicable
                laws
                in connection with the Reorganization and the other transactions
                contemplated hereby;

            

    

     

    
      	 	
              (ii)

            	
              the
                taking of all such action as may be required under any applicable
                Securities Laws in connection with the issuance of the Exchangeable
                Shares
                and Acquirer Shares in connection with the Reorganization; provided,
                however, that with respect to the United States "blue sky" and Canadian
                provincial qualifications neither Acquirer nor the Corporation shall
                be
                required to register or qualify as a foreign corporation or to take
                any
                action that would subject it to service of process in any jurisdiction
                where such entity is not now so subject, except as to matters and
                transactions arising solely from the offer and sale of the Exchangeable
                Shares and Acquirer Shares; 

            

    

     

    
      	 	
              (iii)

            	
              the
                taking of all such actions as may be required under the Act in connection
                with the transactions contemplated by this Agreement and the
                Reorganization; and

            

    

     

    
      	 	
              (iv)

            	
              the
                preparation of materials in connection with any financing activities
                of
                the Acquirer.

            

    

     

    
      	 	
              (b)

            	
              Each
                of Acquirer and the Corporation agree to promptly furnish to the
                other all
                information concerning each of them and the Shareholders as may be
                required to give effect to the actions described in Sections 2.5 and
                2.6 and the foregoing provisions of this Section 2.7, and each
                covenants that no information furnished by it (to its knowledge in
                the
                case of information concerning its shareholders) in connection with
                such
                actions or otherwise in connection with the consummation of the
                Reorganization and the other transactions contemplated by this Agreement
                will contain any misrepresentation or any untrue statement of a material
                fact or omit to state a material fact required to be stated in any
                such
                document or necessary in order to make any information so furnished
                for
                use in any such document not misleading in the light of the circumstances
                in which it is furnished. All such information shall be used only
                for the
                purposes of the transactions contemplated hereby and, except to the
                extent
                necessary to give effect to the actions described in Sections 2.5
                and 2.6
                and the foregoing provisions of this Section 2.7, shall be treated
                confidentially. 

            

    

     

    
      
        
        

      

      
        
        

        
          

        

      

      
        
        

      

    

    
      
        - 16
          -

         

      

    

    
      	 	
              (c)

            	
              Each
                of Acquirer and the Corporation agree to promptly notify the other
                if at
                any time before or after the Shareholder Meeting it becomes aware
                that the
                Proxy Circular or the Registration Statement or an application for
                an
                order or stock exchange listing or any financing disclosure document
                contains any misrepresentation or any untrue statement of a material
                fact
                or omits to state a material fact required to be stated therein or
                necessary to make the statements contained therein not misleading
                in light
                of the circumstances in which they are made, or that otherwise requires
                an
                amendment or supplement to the Proxy Circular or such Registration
                Statement or application or disclosure document. In any such event,
                Acquirer and the Corporation agree to cooperate in the preparation
                of a
                supplement or amendment to the Proxy Circular, Registration Statement
                application, disclosure document or such other document, as required
                and
                as the case may be, and, if required, shall cause the same to be
                distributed to the Shareholders or filed with the relevant securities
                regulatory authorities, as
                applicable.

            

    

     

    
      	 	
              (d)

            	
              The
                Corporation shall ensure that the Proxy Circular complies with all
                applicable laws and, without limiting the generality of the foregoing,
                that the Proxy Circular does not contain any misrepresentation or
                any
                untrue statement of a material fact or omit to state a material fact
                required to be stated therein or necessary to make the statements
                contained there not misleading in light of the circumstances in which
                they
                are made (other than with respect to any information relating to
                and
                provided by Acquirer). Without limiting the generality of the foregoing,
                the Corporation shall ensure that the Proxy Circular complies with
                National Instrument 51-102, to the extent applicable, and provides
                Shareholders with information in sufficient detail to permit them
                to form
                a reasoned judgement concerning the matters to be placed before them
                at
                the Shareholder Meeting. The Corporation shall ensure that none of
                the
                information supplied or to be supplied by the Corporation for inclusion
                or
                incorporation by reference in any application or any Registration
                Statement will at the relevant effective time contain any untrue
                statement
                of material fact or omit to state a material fact required to be
                stated
                therein or necessary in order to make the statements made therein
                in light
                of the circumstances under which they were made not misleading. The
                Corporation will take all reasonable steps within its control to
                ensure
                that the Proxy Circular is prepared as to form in all material respects
                in
                compliance with the provisions of the Act and Canadian Securities
                Laws.

            

    

     

    
      	 	
              (e)

            	
              Acquirer
                shall ensure that any Registration Statement complies with all U.S.
                Securities Laws and, without limiting the generality of the foregoing,
                that such document does not contain any untrue statement of a material
                fact or omit to state a material fact required to be stated therein
                or
                necessary to make the statements contained therein not misleading
                in light
                of the circumstances in which they are made (other than with respect
                to
                any information relating to and provided by the Corporation or any
                security holder named therein). The Acquirer shall ensure that none
                of the
                information supplied or to be supplied by the Acquirer for inclusion
                or
                incorporation by reference in the Proxy Circular will at the relevant
                effective time contain any untrue statement of material fact or omit
                to
                state a material fact required to be stated therein or necessary
                in order
                to make the statements made therein in light of the circumstances
                under
                which they were made not
                misleading.

            

    

     

    
      
        
        

      

      
        
        

        
          

        

      

      
        
        

      

    

    
      
        - 17
          -

         

      

    

    2.8    Cooperation

     

    
      	 	
              (a)

            	
              The
                Corporation agrees to use its commercially reasonable efforts to
                perform
                all obligations required to be performed by the Corporation under
                this
                Agreement, cooperate with Acquirer in connection therewith, and do
                all
                such other acts and things as may be necessary or desirable in order
                to
                consummate and make effective, as soon as reasonably practicable,
                the
                transactions contemplated in this Agreement and, without limiting
                the
                generality of the foregoing, the Corporation shall:
                

            

    

     

    
      	 	
              (i)

            	
              subject
                to Section 3.2, solicit from the Shareholders proxies in favour of
                approval of the Reorganization Resolution and use commercially reasonable
                efforts to obtain the approval by such Shareholders of the Reorganization
                Resolution;

            

    

     

    
      	 	
              (ii)

            	
              not
                adjourn, postpone or cancel (or propose adjournment, postponement
                or
                cancellation of) the Shareholder Meeting without Acquirer's prior
                written
                consent, acting reasonably, except as required by applicable
                laws;

            

    

     

    
      	 	
              (iii)

            	
              use
                commercially reasonable efforts to satisfy or cause to be satisfied
                as
                soon as reasonably practicable all the conditions precedent that
                are set
                forth in Article 9;

            

    

     

    
      	 	
              (iv)

            	
              apply
                for and use commercially reasonable efforts to obtain as promptly
                as
                practicable all Regulatory Approvals relating to the Corporation
                and, in
                doing so, to keep Acquirer reasonably informed as to the status of
                the
                proceedings related to obtaining the Regulatory Approvals, including,
                but
                not limited to, providing Acquirer the opportunity to be present
                for or
                participate in all communications with any Governmental Entity and
                providing Acquirer with copies of all related applications and
                notifications, in draft form, in order for Acquirer to provide its
                reasonable comments;

            

    

     

    
      	 	
              (v)

            	
              use
                commercially reasonable efforts to defend all lawsuits or other legal,
                regulatory or other proceedings to which it is a party challenging
                or
                affecting this Agreement or the consummation of the transactions
                contemplated hereby;

            

    

     

    
      	 	
              (vi)

            	
              use
                commercially reasonable efforts to have lifted or rescinded any injunction
                or restraining order or other order which may adversely affect the
                ability
                of the parties to consummate the transactions contemplated
                hereby;

            

    

     

    
      	 	
              (vii)

            	
              effect
                all necessary registrations, filings and submissions of information
                required by Governmental Entities from the Corporation in connection
                with
                the transactions contemplated hereby;
                and

            

    

     

    
      
        
        

      

      
        
        

        
          

        

      

      
        
        

      

    

    
      
        - 18
          -

         

      

    

    
      	 	
              (viii)

            	
              use
                commercially reasonable efforts to obtain all waivers, consents and
                approvals from other parties to loan agreements, leases or other
                contracts
                required to be obtained by the Corporation to consummate the transactions
                contemplated hereby which the failure to obtain would have a Material
                Adverse Effect.

            

    

     

    
      	 	
              (b)

            	
              Acquirer
                agrees to use its commercially reasonable efforts to, and shall use
                its
                commercially reasonable efforts to cause its Subsidiaries to, perform
                all
                obligations required to be performed by it or any of its Subsidiaries
                under this Agreement, cooperate with the Corporation in connection
                therewith, and do all such other acts and things as may be necessary
                or
                desirable in order to consummate and make effective, as soon as reasonably
                practicable, the transactions contemplated by this Agreement and,
                without
                limiting the generality of the following, the Acquirer
                shall:

            

    

     

    
      	 	
              (i)

            	
              use
                commercially reasonable efforts to satisfy or cause to be satisfied
                as
                soon as reasonably practicable all conditions precedent that are
                set forth
                in Article 9 hereof;

            

    

     

    
      	 	
              (ii)

            	
              apply
                for and use commercially reasonable efforts to obtain as promptly
                as
                practicable the order respecting reporting issuer or similar status
                and
                all Regulatory Approvals relating to Acquirer or any of its Subsidiaries,
                and, in doing so, to keep the Corporation reasonably informed as
                to the
                status of the proceedings related to obtaining the order and the
                Regulatory Approvals, including, but not limited to, providing the
                Corporation with copies of all related applications and notifications,
                in
                draft form, in order for the Corporation to provide its reasonable
                comments;

            

    

     

    
      	 	
              (iii)

            	
              use
                commercially reasonable efforts to defend all lawsuits or other legal,
                regulatory or other proceedings to which it is a party challenging
                or
                affecting this Agreement or the consummation of the transactions
                contemplated hereby;

            

    

     

    
      	 	
              (iv)

            	
              use
                commercially reasonable efforts to have lifted or rescinded any injunction
                or restraining order or other order relating to Acquirer or any of
                its
                Subsidiaries which may adversely affect the ability of the parties
                to
                consummate the transactions contemplated
                hereby;

            

    

     

    
      	 	
              (v)

            	
              effect
                all necessary registrations, filings and submissions of information
                required by Governmental Entities from Acquirer or any of its Subsidiaries
                in connection with the transactions contemplated hereby;
                and

            

    

     

    
      	 	
              (vi)

            	
              reserve
                or have available a sufficient number of Acquirer Shares for issuance
                upon
                the exchange from time to time of Exchangeable Shares issued pursuant
                to
                the Reorganization, and use its reasonable best efforts and in good
                faith
                expeditiously take all such actions and do all such things as are
                reasonably necessary or desirable to cause such Acquirer Shares to
                be
                approved for listing on any stock exchange that the Acquirer Shares
                are
                listed at the time.

            

    

     

    
      
        
        

      

      
        
        

        
          

        

      

      
        
        

      

    

    
      
        - 19
          -

         

      

    

    
      	 	
              (c)

            	
              The
                Acquirer shall not exercise its voting rights as a Shareholder in
                connection with the Reorganization
                Resolution.

            

    

     

    ARTICLE
      3

    COVENANTS
      OF THE CORPORATION

     

    3.1    Ordinary
      Course of Business

     

    The
      Corporation covenants and agrees that, from the date hereof until the earlier
      of
      the Effective Time and the date this Agreement is terminated pursuant to its
      terms, unless Acquirer otherwise agrees in writing or except as otherwise
      expressly contemplated or permitted by this Agreement or the Disclosure
      Letter:

     

    
      	 	
              (a)

            	
              the
                Corporation shall conduct its business only in, and not take action
                except
                in, the usual, ordinary and regular course of business and consistent
                with
                past practice;

            

    

     

    
      	 	
              (b)

            	
              the
                Corporation shall not directly or indirectly do or permit to occur
                any of
                the following:

            

    

     

    
      	 	
              (i)

            	
              issue,
                sell, pledge, lease, dispose of, encumber or agree to issue, sell,
                pledge,
                lease, dispose of or encumber:

            

    

     

    
      	 	
              (A)

            	
              any
                additional shares of, or any options, warrants, calls, conversion
                privileges or rights of any kind to acquire any shares of, any capital
                stock of the Corporation (other than pursuant to the exercise of
                outstanding options or warrants),
                or

            

    

     

    
      	 	
              (B)

            	
              except
                in the ordinary and regular course of business, consistent with past
                practice, any assets of the
                Corporation;

            

    

     

    
      	 	
              (ii)

            	
              amend
                or propose to amend its governing
                documents;

            

    

     

    
      	 	
              (iii)

            	
              split,
                combine or reclassify any outstanding Shares, or declare, set aside
                or pay
                any dividend or other distribution payable in cash, stock, property
                or
                otherwise with respect to the
                Shares;

            

    

     

    
      	 	
              (iv)

            	
              redeem,
                purchase or offer to purchase any Shares or other securities of the
                Corporation;

            

    

     

    
      	 	
              (v)

            	
              reorganize,
                amalgamate or merge the Corporation with any other
                Person;

            

    

     

    
      	 	
              (vi)

            	
              acquire
                or agree to acquire (by merger, amalgamation, acquisition of stock
                or
                assets or otherwise) any Person or acquire or agree to acquire any
                assets,
                except in the ordinary and regular course of business, consistent
                with
                past practice;

            

    

     

    
      
        
        

      

      
        
        

        
          

        

      

      
        
        

      

    

    
      
        -
          20 -

         

      

    

    
      	 	
              (vii)

            	
              pay,
                discharge or satisfy any material claims, liabilities or obligations
                or  relinquish any material contractual
                rights;

            

    

     

    
      	 	
              (viii)

            	
              enter
                into any interest rate, currency or commodity swaps, hedges or other
                similar financial instruments;

            

    

     

    
      	 	
              (ix)

            	
              waive,
                release, grant or transfer any rights of material value or modify
                or
                change in any material respect any existing material licence, lease,
                contract or other document, other than in the ordinary and regular
                course
                of business, consistent with past
                practice;

            

    

     

    
      	 	
              (x)

            	
              authorize,
                recommend or propose any release or relinquishment of any material
                contract right other than in the ordinary and regular course of business,
                consistent with past practice;

            

    

     

    
      	 	
              (xi)

            	
              incur
                or commit to incur any indebtedness for borrowed money or any other
                material liability or obligation or issue any debt or assume, guarantee,
                endorse or otherwise as an accommodation become responsible for,
                the
                obligations of any other person, or make loans or advances, except,
                in
                either case, in the ordinary and regular course of business consistent
                with past practice;

            

    

     

    
      	 	
              (xii)

            	
              issue
                any press release, make any public statement or grant any media interviews
                of any kind except in connection with ongoing community consultation
                and
                similar activities in the ordinary course consistent with past practice
                and subject to consultation, coordination and cooperation with the
                Acquirer and its investor relations personnel;

            

    

     

    
      	 	
              (xiii)

            	
              create
                or acquire any Subsidiary; 

            

    

     

    
      	 	
              (xiv)

            	
              pay,
                give or agree to pay or give any commission or other remuneration
                directly
                or indirectly for soliciting the exchange (as such phrase is used
                and
                interpreted under Section 3(a)(9) of the Securities Act of 1933,
                as
                amended) of Shares into Exchangeable Shares pursuant to the terms
                of the
                Reorganization; or

            

    

     

    
      	 	
              (xv)

            	
              authorize
                or propose any of the foregoing, or enter into or modify any contract,
                agreement, commitment or arrangement to do any of the
                foregoing;

            

    

     

    
      	 	
              (c)

            	
              other
                than as set forth in the Disclosure Letter, the Corporation shall
                not:

            

    

     

    
      	 	
              (i)

            	
              take
                any action with respect to the entering into, assuming or modifying
                of any
                employment, severance, collective bargaining or similar agreements,
                policies or arrangements with respect to the grant of any bonuses,
                salary
                increases, stock options, pension benefits, retirement allowances,
                deferred compensation, severance or termination pay or any other
                form of
                compensation or profit sharing or with respect to any increase of
                benefits
                payable; or

            

    

     

    
      
        
        

      

      
        
        

        
          

        

      

      
        
        

      

    

    
      
        -
          21 -

         

      

    

    
      	 	
              (ii)

            	
              without
                limiting the foregoing, create, enter into, assume or modify any
                Employee
                Obligations;

            

    

     

    
      	 	
              (d)

            	
              the
                Corporation shall use its reasonable efforts to cause its current
                insurance (or re-insurance) policies not to be cancelled or terminated
                or
                any of the coverage thereunder to lapse, unless simultaneously with
                such
                termination, cancellation or lapse, replacement policies underwritten
                by
                insurance and re insurance companies of nationally recognized standing
                providing commercially reasonable coverage in accordance with industry
                practice for similar entities carrying on comparable business are
                obtained;

            

    

     

    
      	 	
              (e)

            	
              the
                Corporation shall:

            

    

     

    
      	 	
              (i)

            	
              in
                the context of the transactions contemplated hereby, use its commercially
                reasonable efforts to preserve intact its business organization and
                goodwill, to keep available the services of its officers and employees
                as
                a group and to maintain satisfactory relationships with suppliers,
                agents,
                distributors, customers and others having business relationships
                with
                it;

            

    

     

    
      	 	
              (ii)

            	
              not
                take any action, that would render, or that reasonably may be expected
                to
                render, any representation or warranty made by it in this Agreement
                untrue
                in any material respect at any time prior to the Effective Time if
                then
                made; 

            

    

     

    
      	 	
              (iii)

            	
              confer
                on a regular basis with Acquirer with respect to material operational
                matters and shall cooperate with the Acquirer to develop a communications
                strategy regarding the progress of its exploration program and preparation
                of technical reports required to comply with applicable laws and
                stock
                exchange rules; and

            

    

     

    
      	 	
              (iv)

            	
              cooperate
                with the Acquirer and provide all reasonable support and information
                necessary or desirable in connection with financing activities of
                the
                Acquirer and any disclosure documents and technical reports prepared
                in
                connection therewith;

            

    

     

    
      	 	
              (f)

            	
              the
                Corporation shall not settle or compromise any claim brought by any
                present, former or purported holder of any securities of the Corporation
                in connection with the transactions contemplated by this Agreement
                or the
                Reorganization;

            

    

     

    
      	 	
              (g)

            	
              the
                Corporation shall not enter into or modify any contract, agreement,
                commitment or arrangement inconsistent with any of the matters set
                forth
                in this Section 3.1; and

            

    

     

    
      
        
        

      

      
        
        

        
          

        

      

      
        
        

      

    

    
      
        -
          22 -

         

      

    

    
      	 	
              (h)

            	
              the
                Corporation shall use all commercially reasonable efforts to obtain
                receipt of the consents of any and all lenders to the Corporation
                whose
                consent is required to prevent a default or any event that with the
                passage of time may constitute an event of default thereunder, to
                the
                transactions contemplated herein.

            

    

     

    3.2    Non-Solicitation

     

    
      	 	
              (a)

            	
              The
                Corporation shall not, directly or indirectly, through any officer,
                director, employee, representative or agent of the Corporation,
                (i) solicit, initiate or encourage (including by way of furnishing
                information or entering into any form of agreement, arrangement or
                understanding) the initiation of any inquiries, discussions, negotiations,
                proposals or offers from any Person or other entity or group (other
                than
                Acquirer) in respect of any matter or thing inconsistent with the
                successful completion of the Reorganization, including, without
                limitation, any Acquisition Proposal or (ii)  provide any non-public
                information to, participate in any discussions or negotiations relating
                to
                any such matter or thing with, or otherwise cooperate with or assist
                or
                participate in any effort to take such action by, any Person or other
                entity or group; provided nothing contained in this Section 3.2 or
                otherwise in this Agreement shall prevent the Board of Directors
                from:

            

    

     

    
      	 	
              (i)

            	
              considering,
                negotiating or providing information in connection with, or otherwise
                (except as provided for in (iii) below) responding to, an unsolicited
                bona
                fide written Acquisition Proposal in respect of
                which:

            

    

     

    
      	 	
              (A)

            	
              the
                Board of Directors has determined in good faith (after receiving
                the
                advice of its financial advisors that is reflected in the minutes
                of the
                Board of Directors) to be a commercially feasible transaction that
                could
                be carried out within a time frame that is reasonable in the circumstances
                and would, if consummated in accordance with its terms, result in
                a
                transaction demonstrably superior to the Reorganization from a financial
                point of view to the Shareholders;
                and

            

    

     

    
      	 	
              (B)

            	
              after
                consultation with its financial advisors, and after receiving advice
                of
                counsel that is reflected in the minutes of the Board of Directors,
                the
                Board of Directors concludes in good faith such action is necessary
                for
                the Board of Directors to discharge properly its fiduciary duties
                under
                applicable law;

            

    

    
       

      
        	 	
                 

              	
                (any
                  such Acquisition Proposal that meets such requirements being referred
                  to
                  herein as a “Superior
                  Proposal”),
                  provided that the Corporation is in compliance with Sections 3.2(c)
                  and
                  (d) in respect of the Acquisition
                  Proposal;

              

      

       

    

    
      	 	
              (ii)

            	
              complying
                with Securities Laws relating to the provision of directors' circulars
                and
                making appropriate disclosure with respect thereto to Shareholders;
                and

            

    

     

    
      
        
        

      

      
        
        

        
          

        

      

      
        
        

      

    

    
      
        -
          23 -

         

      

    

    
      	 	
              (iii)

            	
              accepting,
                recommending, approving or implementing any Superior Proposal if
                the
                Corporation has complied with Sections 3.2(c) and (d) in respect
                of the
                Superior Proposal and prior to such acceptance, recommendation, approval
                or implementation:

            

    

     

    
      	 	
              (A)

            	
              after
                consultation with its financial advisors, and after receiving advice
                of
                counsel that is reflected in the minutes of the Board of Directors,
                the
                Board of Directors concludes in good faith such action is necessary
                for
                the Board of Directors to discharge properly its fiduciary duties
                under
                applicable law; and

            

    

     

    
      	 	
              (B)

            	
              in
                arriving at such conclusion, the Board of Directors gives consideration
                to
                any amendment proposed by Acquirer in writing in the three Business
                Day
                period referred to in Section
                3.2(d).

            

    

     

    
      	 	
              (b)

            	
              The
                Corporation shall, and shall direct and use reasonable efforts to
                cause
                its officers, directors, employees, representatives and agents to,
                immediately cease and cause to be terminated any existing discussions
                or
                negotiations with any parties (other than Acquirer or an affiliate
                of
                Acquirer) with respect to any potential Acquisition Proposal. To
                the
                extent not already done so, the Corporation shall immediately close
                any
                and all data rooms which may have been opened. The Corporation agrees
                not
                to waive, in whole or in part, or release, in whole or in part, any
                third
                party from, or consent to any action pursuant to, any confidentiality
                or
                standstill obligation to which the Corporation and such third party
                is a
                party except in respect of a Superior Proposal in accordance with
                Section
                3.2(d). The Corporation shall immediately request the return or
                destruction of all confidential non-public information provided to
                any
                third parties who have entered into a confidentiality agreement with
                the
                Corporation relating to a potential Acquisition Proposal, shall use
                all
                reasonable efforts to ensure that such requests are honoured and
                shall
                immediately advise Acquirer orally and in writing of any responses
                or
                action (actual or threatened) by any recipient of such request which
                could
                hinder, prevent, delay or otherwise adversely affect the completion
                of the
                Reorganization.

            

    

     

    
      	 	
              (c)

            	
              The
                Corporation shall immediately notify Acquirer of any Acquisition
                Proposal
                (including, without limitation any amended, supplemented, replaced
                or
                renewed Acquisition Proposal previously made) or any request for
                non-public information relating to the Corporation or for access
                to the
                properties, books or records of the Corporation by any Person or
                other
                entity or group that informs the Corporation that it is considering
                making, or has made, an Acquisition Proposal. Such notice to Acquirer
                shall be made, from time to time, orally and in writing, and shall
                indicate such details of the proposal, inquiry or contact known to
                such
                person as Acquirer may reasonably request including, without limitation,
                the identity of the Person or other entity or group making such proposal,
                inquiry or contact and shall include a copy of any written form of
                Acquisition Proposal.

            

    

     

    
      
        
        

      

      
        
        

        
          

        

      

      
        
        

      

    

    
      
        -
          24 -

         

      

    

    
      	 	
              (d)

            	
              If
                the Board of Directors determines that an Acquisition Proposal constitutes
                a Superior Proposal pursuant to Section 3.2(a), the Corporation shall
                give
                immediate notice of such determination to the Acquirer (together
                with a
                copy of any written advice of counsel that is reflected in the minutes
                of
                the Board of Directors, referred to in Section 3.2(a)) and shall
                give
                Acquirer not less than three Business Days advance notice of any
                action to
                be taken by the Board of Directors to withdraw, modify or change
                any
                recommendation regarding the Reorganization or to enter into any
                agreement
                to implement the Superior Proposal, and provide to Acquirer the right,
                during such three Business Days, to advise the Board of Directors
                that
                Acquirer will, within such period, announce its intention to, and,
                as soon
                as practicable in the circumstances and, in any event, within three
                Business Days of such announcement, amend the terms of the Reorganization
                to provide that the holders of Shares shall, pursuant to the
                Reorganization as amended, receive a value per Share equal to or
                greater
                than the value per Share provided in the Superior Proposal. If Acquirer
                so
                advises the Board of Directors and so amends the Reorganization,
                the Board
                of Directors shall not withdraw, modify or change any recommendation
                with
                respect to the Reorganization, as so amended, and neither the Corporation
                nor the Board of Directors shall take any action to accept, recommend,
                approve or implement the Superior Proposal, including, without limitation,
                any release of the party making the Superior Proposal from any standstill
                or confidentiality obligation, any further consideration or negotiation
                of
                the Superior Proposal or entry into of any agreement regarding the
                Superior Proposal and the Corporation agrees to amend this Agreement
                to
                provide for the Reorganization as so amended.

            

    

     

    
      	 	
              (e)

            	
              If
                the Board of Directors receives a request for non-public information
                from
                a party who has made or is considering making an unsolicited bona
                fide
                Acquisition Proposal and the Board of Directors determines that such
                Acquisition Proposal constitutes a Superior Proposal pursuant to
                Section
                3.2(a), then, and only in such case, the Corporation may, subject
                to the
                execution of a confidentiality agreement, provide such party with
                access
                to information regarding the Corporation provided that the Corporation
                complies with its obligations pursuant to Section 3.2(c), sends a
                copy of
                any such confidentiality agreement to Acquirer immediately upon its
                execution and provides copies to Acquirer of any information provided
                to
                such party (that has not been previously provided to Acquirer)
                concurrently with its provision to such
                part.

            

    

     

    
      	 	
              (f)

            	
              The
                Corporation shall ensure that the officers, directors and employees
                of the
                Corporation and any investment bankers or other advisors or
                representatives retained by the Corporation are aware of the provisions
                of
                this Section, and the Corporation shall be responsible for any breach
                of
                this Section 3.2 by such investment bankers, advisors or other
                representatives.

            

    

     

    
      
        
        

      

      
        
        

        
          

        

      

      
        
        

      

    

    
      
        -
          25 -

         

      

    

    3.3    Notice
      of Material Change

     

    From
      the
      date hereof until the earlier of the Effective Time and the date this Agreement
      is terminated pursuant to its terms, the Corporation shall promptly notify
      Acquirer in writing of:

     

    
      	 	
              (a)

            	
              any
                Material Adverse Change with respect to the
                Corporation;

            

    

     

    
      	 	
              (b)

            	
              any
                change in information relating to any representation or warranty
                of the
                Corporation set forth in this Agreement which is or may be of such
                a
                nature as to render any such representation or warranty misleading
                or
                untrue in a material respect; 

            

    

     

    
      	 	
              (c)

            	
              any
                material fact that arises and which would have been required to be
                stated
                herein or disclosed to Acquirer had such fact arisen on or prior
                to the
                date of this Agreement;

            

    

     

    
      	 	
              (d)

            	
              any
                claim, action, proceeding or investigation pending or, to the knowledge
                of
                the Corporation, threatened referred to in Section 7.1(m) or any
                basis for any such claim, action, proceeding or investigation; and
                

            

    

     

    
      	 	
              (e)

            	
              any
                claim under policies of insurance referred to in
                Section 7.1(r).

            

    

     

    The
      Corporation shall in good faith discuss with Acquirer any change in
      circumstances (actual, anticipated, contemplated or, to the knowledge of the
      Corporation, threatened), financial or otherwise, which is of such a nature
      that
      there may be a reasonable question as to whether notice is required to be given
      pursuant to this Section.

     

    3.4    Access
      to Information

     

    Upon
      reasonable notice, the Corporation shall afford the Acquirer's officers,
      employees, counsel, accountants and other authorized representatives and
      advisors ("Representatives")
      reasonable access, during normal business hours from the date hereof and until
      the earlier of the Effective Time and the date this Agreement is terminated
      pursuant to its terms, to its facilities (including the ability to conduct
      reasonable environmental tests in respect of any of the properties of the
      Corporation at Acquirer's cost) properties, books, contracts and records as
      well
      as to its management personnel, and, during such period, the Corporation shall
      furnish promptly to the Acquirer all information concerning its business,
      properties and personnel as the Acquirer may reasonably request, provided that
      the Acquirer shall make reasonable efforts to minimize the number of
      Representatives attending at the Corporation's offices and facilities and to
      work cooperatively with the Corporation to minimize disruptions in the business
      of the Corporation.

     

    3.5    Financial
      Statements

     

    The
      Corporation shall deliver to Acquirer as soon as they become available true
      and
      complete copies of any report or statement provided to its Shareholders
      subsequent to the date of this Agreement. As of their respective dates, such
      reports and statements (excluding any information therein provided by Acquirer,
      as to which the Corporation makes no representation) will not contain any untrue
      statement of a material fact or omit to state a material fact required to be
      stated therein or necessary to make the statements therein, in light of the
      circumstances under which they are made, not misleading and will comply in
      all
      material respects with the requirements of applicable law and stock exchange
      rules. The financial statements of the Corporation issued by the Corporation
      or
      to be included in such reports and statements (excluding any information therein
      provided by Acquirer, as to which the Corporation makes no representation)
      will
      be prepared in accordance with generally accepted accounting principles
      applicable in Canada (except as otherwise indicated in such financial statements
      and the notes thereto or, in the case of audited statements, in the related
      report of the auditor), and will present fairly the financial position, results
      of operations and changes in financial position of the Corporation as of the
      dates thereof and for the periods indicated therein (subject, in the case of
      any
      unaudited interim financial statements, to normal year-end audit
      adjustments).

     

    
      
        
        

      

      
        
        

        
          

        

      

      
        
        

      

    

    
      
        -
          26 -

         

      

    

    ARTICLE
      4

    TRANSACTION
      SUPPORT AGREEMENTS

     

    4.1    Transaction
      Support Agreements

     

    The
      Corporation shall use commercially reasonable efforts to contact the Principal
      Shareholders of the Corporation for the purpose of discussing the Transaction
      Support Agreements.

     

    ARTICLE
      5

    COVENANTS
      OF ACQUIRER

     

    5.1    Ordinary
      Course of Business

     

    The
      Acquirer covenants and agrees that, from the date hereof until the earlier
      of
      the Effective Time and the date this Agreement is terminated pursuant to its
      terms, unless the Corporation otherwise agrees in writing or except as otherwise
      expressly contemplated or permitted by this Agreement or the Disclosure
      Letter:

     

    
      	 	
              (a)

            	
              the
                Acquirer shall, and shall cause each of its Subsidiaries to, conduct
                its
                and their respective business only in, and not take action except in, the
                usual, ordinary and regular course of business;

            

    

     

    
      	 	
              (b)

            	
              the
                Acquirer shall not directly or indirectly do or permit to occur any
                of the
                following:

            

    

     

    
      	 	
              (i)

            	
              issue,
                sell, pledge, lease, dispose of, encumber or agree to issue, sell,
                pledge,
                lease, dispose of or encumber (or permit any of its Subsidiaries
                to issue,
                sell, pledge, lease, dispose of, encumber or agree to issue, sell,
                pledge,
                lease, dispose of or encumber):

            

    

     

    
      	 	
              (A)

            	
              any
                additional shares of, or any options, warrants, calls, conversion
                privileges or rights of any kind to acquire any shares of, any capital
                stock of the Acquirer or any of its Subsidiaries (other than pursuant
                to
                the exercise of outstanding options, warrants or convertible debentures),
                or

            

    

     

    
      
        
        

      

      
        
        

        
          

        

      

      
        
        

      

    

    
      
        -
          27 -

         

      

    

    
      	 	
              (B)

            	
              except
                in the ordinary and regular course of business, any assets of the
                Acquirer
                or any of its Subsidiaries;

            

    

     

    
      	 	
              (ii)

            	
              amend
                or propose to amend its governing documents or those of any of its
                Subsidiaries;

            

    

     

    
      	 	
              (iii)

            	
              split,
                combine or reclassify any outstanding shares, or declare, set aside
                or pay
                any dividend or other distribution payable in cash, stock, property
                or
                otherwise with respect to the shares of the Acquirer or any of its
                Subsidiaries;

            

    

     

    
      	 	
              (iv)

            	
              redeem,
                purchase or offer to purchase (or permit any of its Subsidiaries
                to
                redeem, purchase or offer to purchase) any shares or other securities
                of
                the Acquirer or any of its
                Subsidiaries;

            

    

     

    
      	 	
              (v)

            	
              reorganize,
                amalgamate or merge the Acquirer or any of its Subsidiaries with
                any other
                Person;

            

    

     

    
      	 	
              (vi)

            	
              acquire
                or agree to acquire (by merger, amalgamation, acquisition of stock
                or
                assets or otherwise) any Person or acquire or agree to acquire any
                assets,
                except in the ordinary and regular course of
                business;

            

    

     

    
      	 	
              (vii)

            	
              pay,
                discharge or satisfy any material claims, liabilities or obligations,
                or
                relinquish any material contractual
                rights;

            

    

     

    
      	 	
              (viii)

            	
              enter
                into any interest rate, currency or commodity swaps, hedges or other
                similar financial instruments;

            

    

     

    
      	 	
              (ix)

            	
              waive,
                release, grant or transfer any rights of material value or modify
                or
                change in any material respect any existing material licence, lease,
                contract or other document, other than in the ordinary and regular
                course
                of business;

            

    

     

    
      	 	
              (x)

            	
              authorize,
                recommend or propose any release or relinquishment of any material
                contract right other than in the ordinary and regular course of
                business;

            

    

     

    
      	 	
              (xi)

            	
              incur
                or commit to incur any indebtedness for borrowed money or any other
                material liability or obligation or issue any debt or assume, guarantee,
                endorse or otherwise as an accommodation become responsible for,
                the
                obligations of any other person, or make loans or advances, except,
                in
                either case, in the ordinary and regular course of
                business;

            

    

     

    
      	 	
              (xii)

            	
              issue
                any press release, make any public statement or grant any media interviews
                of any kind; 

            

    

     

    
      	 	
              (xiii)

            	
              pay,
                give or agree to pay or give any commission or other remuneration
                directly
                or indirectly for soliciting the exchange (as such phrase is used
                and
                interpreted under Section 3(a)(9) of the Securities Act of 1933,
                as
                amended) of Shares into Exchangeable Shares pursuant to the terms
                of the
                Reorganization; or 

            

    

     

    
      
        
        

      

      
        
        

        
          

        

      

      
        
        

      

    

    
      
        -
          28 -

         

      

    

    
      	 	
              (xiv)

            	
              authorize
                or propose any of the foregoing, or enter into or modify any contract,
                agreement, commitment or arrangement to do any of the
                foregoing;

            

    

     

    
      	 	
              (c)

            	
              the
                Acquirer shall not, and shall cause each of its Subsidiaries to
                not:

            

    

     

    
      	 	
              (i)

            	
              take
                any action with respect to the entering into, assuming or modifying
                of any
                employment, severance, collective bargaining or similar agreements,
                policies or arrangements with respect to the grant of any bonuses,
                salary
                increases, stock options, pension benefits, retirement allowances,
                deferred compensation, severance or termination pay or any other
                form of
                compensation or profit sharing or with respect to any increase of
                benefits
                payable; or

            

    

     

    
      	 	
              (ii)

            	
              without
                limiting the foregoing, create, enter into, assume or modify any
                Acquirer
                Employee Obligations;

            

    

     

    
      	 	
              (d)

            	
              the
                Acquirer shall use its reasonable efforts to cause its current insurance
                (or re-insurance) policies not to be cancelled or terminated or any
                of the
                coverage thereunder to lapse, unless simultaneously with such termination,
                cancellation or lapse, replacement policies underwritten by insurance
                and
                re insurance companies of nationally recognized standing providing
                commercially reasonable coverage in accordance with industry practice
                for
                similar entities carrying on comparable business are
                obtained;

            

    

     

    
      	 	
              (e)

            	
              the
                Acquirer shall:

            

    

     

    
      	 	
              (i)

            	
              in
                the context of the transactions contemplated hereby, use its commercially
                reasonable efforts, and cause each of its Subsidiaries to use its
                commercially reasonable efforts, to preserve intact their respective
                business organizations and goodwill, to keep available the services
                of its
                officers and employees as a group and to maintain satisfactory
                relationships with suppliers, agents, distributors, customers and
                others
                having business relationships with it or its Subsidiaries;
                

            

    

     

    
      	 	
              (ii)

            	
              not
                take any action, or permit any of its Subsidiaries to take any action,
                that would render, or that reasonably may be expected to render,
                any
                representation or warranty made by it in this Agreement untrue in
                any
                material respect at any time prior to the Effective Time if then
                made;
                and

            

    

     

    
      	 	
              (iii)

            	
              confer
                on a regular basis with the Corporation with respect to material
                operational matters, including equity financing matters, the status
                of
                applications to the American Stock Exchange or other stock exchanges,
                and
                applications for reporting issuer status and registration
                statements;

            

    

     

    
      
        
        

      

      
        
        

        
          

        

      

      
        
        

      

    

    
      
        -
          29 -

         

      

    

    
      	 	
              (f)

            	
              the
                Acquirer shall not settle or compromise any claim brought by any
                present,
                former or purported holder of any securities of the Acquirer in connection
                with the transactions contemplated by this Agreement or the
                Reorganization; 

            

    

     

    
      	 	
              (g)

            	
              the
                Acquirer shall not enter into or modify any contract, agreement,
                commitment or arrangement inconsistent with any of the matters set
                forth
                in this Section 5.1; and

            

    

     

    
      	 	
              (h)

            	
              the
                Acquirer shall use all commercially reasonable efforts to obtain
                receipt
                of the consents of any and all lenders to the Acquirer whose consent
                is
                required to prevent a default or any event that with the passage
                of time
                may constitute an event of default thereunder, to the transactions
                contemplated herein.

            

    

     

    For
      greater certainty, nothing in this Section 5.1 shall prohibit or restrict the
      right of Acquirer to comply with its obligations, including without limitation
      its continuous disclosure obligations, pursuant to Securities Laws or the
      applicable rules of any stock exchange or similar trading market. For the
      purposes of this Section 5.1 the phrase "the usual, ordinary and regular course
      of business" shall mean what is reasonably considered to be usual, ordinary
      and
      regular course of business for a public company listed on a stock exchange
      in
      the United States or Canada.

     

    5.2    Non-Solicitation

     

    
      	 	
              (a)

            	
              The
                Acquirer shall not, directly or indirectly, through any officer,
                director,
                employee, representative or agent of the Acquirer, (i) solicit,
                initiate or encourage (including by way of furnishing information
                or
                entering into any form of agreement, arrangement or understanding)
                the
                initiation of any inquiries, discussions, negotiations, proposals
                or
                offers from any Person or other entity or group (other than Corporation)
                in respect of any matter or thing inconsistent with the successful
                completion of the Reorganization, including, without limitation,
                any
                Acquirer Acquisition Proposal or (ii)  provide any non-public
                information to, participate in any discussions or negotiations relating
                to
                any such matter or thing with, or otherwise cooperate with or assist
                or
                participate in any effort to take such action by, any Person or other
                entity or group; provided nothing contained in this Section 5.2 or
                otherwise in this Agreement shall prevent the Acquirer
                from:

            

    

     

    
      	 	
              (i)

            	
              considering,
                negotiating or providing information in connection with, or otherwise
                responding to, an unsolicited bona fide written Acquirer Acquisition
                Proposal in respect of which, after consultation with its financial
                advisors, and after receiving advice of counsel that is reflected
                in the
                minutes of the Acquirer Board of Directors, the Acquirer Board of
                Directors concludes in good faith such action is necessary for the
                Acquirer Board of Directors to discharge properly its fiduciary duties
                under applicable law (any such Acquirer Acquisition Proposal that
                meets
                such requirements being referred to herein as a "Permitted
                Proposal");

            

    

     

    
      
        
        

      

      
        
        

        
          

        

      

      
        
        

      

    

    
      
        -
          30 -

         

      

    

    
      	 	
              (ii)

            	
              complying
                with Securities Laws relating to the provision of directors' circulars
                and
                making appropriate disclosure with respect thereto to holders of
                Acquirer
                Shares; and

            

    

     

    
      	 	
              (iii)

            	
              accepting,
                recommending, approving or implementing any Acquirer Acquisition
                Proposal
                if prior to such acceptance, recommendation, approval or implementation,
                after consultation with its financial advisors, and after receiving
                advice
                of counsel that is reflected in the minutes of the Acquirer Board
                of
                Directors, the Acquirer Board of Directors concludes in good faith
                such
                action is necessary for the Acquirer Board of Directors to discharge
                properly its fiduciary duties under applicable
                law.

            

    

     

    
      	 	
              (b)

            	
              The
                Acquirer shall, and shall direct and use reasonable efforts to cause
                its
                officers, directors, employees, representatives and agents to, immediately
                cease and cause to be terminated any existing discussions or negotiations
                with any parties with respect to any potential Acquirer Acquisition
                Proposal. To the extent not already done so, the Acquirer shall
                immediately close any and all data rooms which may have been opened.
                The
                Acquirer agrees not to waive, in whole or in part, or release, in
                whole or
                in part, any third party from, or consent to any action pursuant
                to, any
                confidentiality or standstill obligation to which the Acquirer and
                such
                third party is a party except in respect of a Permitted Proposal.
                The
                Acquirer shall immediately request the return or destruction of all
                confidential non-public information provided to any third parties
                who have
                entered into a confidentiality agreement with the Acquirer relating
                to a
                potential Acquirer Acquisition Proposal, shall use all reasonable
                efforts
                to ensure that such requests are honoured and shall immediately advise
                the
                Corporation orally and in writing of any responses or action (actual
                or
                threatened) by any recipient of such request which could hinder,
                prevent,
                delay or otherwise adversely affect the completion of the Reorganization.
                

            

    

     

    
      	 	
              (c)

            	
              The
                Acquirer shall immediately notify the Corporation of any Acquirer
                Acquisition Proposal (including, without limitation any amended,
                supplemented, replaced or renewed Acquirer Acquisition Proposal previously
                made) or any request for non-public information relating to the Acquirer
                or for access to the properties, books or records of the Acquirer
                by any
                Person or other entity or group that informs the Acquirer that it
                is
                considering making, or has made, an Acquirer Acquisition Proposal.
                Such
                notice to the Corporation shall be made, from time to time, orally
                and in
                writing, and shall indicate such details of the proposal, inquiry
                or
                contact known to such person as the Corporation may reasonably request
                including, without limitation, the identity of the Person or other
                entity
                or group making such proposal, inquiry or contact and shall include
                a copy
                of any written form of Acquirer Acquisition
                Proposal.

            

    

     

    
      
        
        

      

      
        
        

        
          

        

      

      
        
        

      

    

    
      
        - 31
          -

         

      

    

    
      	 	
              (d)

            	
              If
                an Acquirer Acquisition Proposal is recommended by the board of directors
                of Acquirer, or is otherwise effected or to be effected with the
                consent
                or approval of the board of directors of Acquirer, then Acquirer
                will use
                its reasonable commercial efforts expeditiously and in good faith
                to take
                all such actions and do such things as are necessary or desirable
                and
                within its power to enable and permit holders of Shares (other than
                Acquirer and its Affiliates) to participate in such transaction to
                the
                same extent and on an economically equivalent basis as the holders
                of
                Acquirer Shares, without discrimination. If an Acquirer Acquisition
                Proposal is recommended by the board of directors of Acquirer, or
                is
                otherwise to be effected with the consent or approval of the board
                of
                directors of Acquirer, and the terms of such Acquirer Acquisition
                Proposal
                do not enable and permit holders of Shares (other than Acquirer and
                its
                Affiliates) to participate in such transaction to the same extent
                and on
                an economically equivalent basis as the holders of Acquirer Shares,
                without discrimination, then the Acquirer agrees that its rights
                of first
                offer in the letter agreement with the Corporation dated November
                12, 2004
                shall forthwith terminate upon such recommendation being made by
                the board
                of directors of Acquirer, or such consent or approval being provided
                by
                the board of directors of Acquirer. The Acquirer further agrees that,
                from
                the date of such termination, it shall not take any actions, or permit
                its
                Subsidiaries to take any actions, that could reasonably be expected
                to
                prevent the Corporation from conducting any financing activities
                to
                further its business plan.

            

    

     

    
      	 	
              (e)

            	
              If
                an Acquirer Acquisition Proposal is completed and does not enable
                and
                permit holders of Shares to participate in such transaction to the
                same
                extent and on an economically equivalent basis as the holders of
                Acquirer
                Shares, without discrimination, then the Acquirer agrees that its
                rights
                of first offer in the letter agreement with the Corporation dated
                November
                12, 2004 shall forthwith terminate upon the Person making the Acquirer
                Acquisition Proposal acquiring in any manner, directly or indirectly,
                beneficial ownership of all or a material portion of the assets of
                the
                Acquirer or acquiring in any manner, directly or indirectly, beneficial
                ownership of or control or direction over more than 20% of the outstanding
                voting shares of the Acquirer. The Acquirer further agrees that,
                from the
                date of such termination, it shall not take any actions, or permit
                its
                Subsidiaries to take any actions, that could reasonably be expected
                to
                prevent the Corporation from conducting any financing activities
                to
                further its business plan.

            

    

     

    
      	 	
              (f)

            	
              If
                the board of directors of Acquirer receives a request for non-public
                information from a party who has made or is considering making an
                unsolicited bona fide Acquirer Acquisition Proposal and the board
                of
                directors of Acquirer determines that such Acquirer Acquisition Proposal
                constitutes a Permitted Proposal, then, and only in such case, the
                Acquirer may, subject to the execution of a confidentiality agreement,
                provide such party with access to information regarding the Acquirer
                provided that the Acquirer sends a copy of any such confidentiality
                agreement to the Corporation immediately upon its execution and provides
                copies to Corporation of any information provided to such party (that
                has
                not been previously provided to Corporation) concurrently with its
                provision to such party.

            

    

     

    
      	 	
              (g)

            	
              The
                Acquirer shall ensure that the officers, directors and employees
                of the
                Acquirer and any investment bankers or other advisors or representatives
                retained by the Acquirer are aware of the provisions of this Section,
                and
                the Acquirer shall be responsible for any breach of this Section 5.2
                by such investment bankers, advisors or other
                representatives.

            

    

     

    
      
        
        

      

      
        
        

        
          

        

      

      
        
        

      

    

    
      
        -
          32 -

         

      

    

    5.3    Notice
      of Material Change

     

    From
      the
      date hereof until the earlier of the Effective Time and the date this Agreement
      is terminated pursuant to its terms, the Acquirer shall promptly notify
      Corporation in writing of:

     

    
      	 	
              (a)

            	
              any
                Material Adverse Change with respect to the
                Acquirer;

            

    

     

    
      	 	
              (b)

            	
              any
                change in information relating to any representation or warranty
                of the
                Acquirer set forth in this Agreement which is or may be of such a
                nature
                as to render any such representation or warranty misleading or untrue
                in a
                material respect; 

            

    

     

    
      	 	
              (c)

            	
              any
                material fact that arises and which would have been required to be
                stated
                herein or disclosed to the Corporation had such fact arisen on or
                prior to
                the date of this Agreement; 

            

    

     

    
      	 	
              (d)

            	
              any
                claim, action, proceeding or investigation pending or, to the knowledge
                of
                the Acquirer, threatened referred to in Section 8.1(k) or any basis
                for any such claim, action, proceeding or investigation;
                and

            

    

     

    
      	 	
              (e)

            	
              any
                claim under policies of insurance referred to in Section
                8.1(s).

            

    

     

    The
      Acquirer shall in good faith discuss with Corporation any change in
      circumstances (actual, anticipated, contemplated or, to the knowledge of the
      Acquirer, threatened), financial or otherwise, which is of such a nature that
      there may be a reasonable question as to whether notice is required to be given
      pursuant to this Section.

     

    5.4    Access
      to Information

     

    Upon
      reasonable notice, Acquirer shall, and shall cause each of its Subsidiaries
      to,
      afford the Corporation's officers, employees, counsel, accountants and other
      authorized representatives and advisors ("Representatives")
      reasonable access, during normal business hours from the date hereof and until
      the earlier of the Effective Time and the date this Agreement is terminated
      pursuant to its terms, to its facilities, properties, books, contracts and
      records as well as to its management personnel, and, during such period,
      Acquirer shall, and shall cause such of its Subsidiaries to, furnish promptly
      to
      the Corporation all information concerning its business, properties and
      personnel as Corporation may reasonably request, provided that Corporation
      shall
      make reasonable efforts to minimize the number of Representatives attending
      at
      the Acquirer's offices and facilities and to work cooperatively with the
      Acquirer to minimize disruptions in the business of the Acquirer.

     

    
      
        
        

      

      
        
        

        
          

        

      

      
        
        

      

    

    
      
        - 33
          -

         

      

    

    5.5    Financial
      Statements

     

    The
      Acquirer shall deliver to the Corporation as soon as they become available
      true
      and complete copies of any report or statement provided to its Shareholders
      subsequent to the date of this Agreement. As of their respective dates, such
      reports and statements (excluding any information therein provided by Acquirer,
      as to which the Acquirer makes no representation) will not contain any untrue
      statement of a material fact or omit to state a material fact required to be
      stated therein or necessary to make the statements therein, in light of the
      circumstances under which they are made, not misleading and will comply in
      all
      material respects with the requirements of applicable law and stock exchange
      rules. The financial statements of the Acquirer issued by the Acquirer or to
      be
      included in such reports and statements (excluding any information therein
      provided by Corporation, as to which the Acquirer makes no representation)
      will
      be prepared in accordance with generally accepted accounting principles
      applicable in the United States (except as otherwise indicated in such financial
      statements and the notes thereto or, in the case of audited statements, in
      the
      related report of the auditor), and will present fairly the financial position,
      results of operations and changes in financial position of the Acquirer as
      of
      the dates thereof and for the periods indicated therein (subject, in the case
      of
      any unaudited interim financial statements, to normal year-end audit
      adjustments).

     

    ARTICLE
      6

     

    MUTUAL
      COVENANTS

     

    6.1    Consultation

     

    Except
      as
      and to the extent required by Securities Laws, other applicable law or the
      rules
      of any stock exchange or similar trading market, without the prior written
      consent of the other party hereto, neither the Acquirer nor the Corporation
      shall, directly or indirectly, make any public statement or communication and
      each party shall direct its representatives not to do any of the foregoing
      without such prior written consent. Acquirer and the Corporation agree to
      consult with each other in issuing any press releases or otherwise making public
      statements and in making any filings with any federal, provincial or state
      governmental or regulatory agency or with any securities exchange with respect
      thereto.

     

    6.2    Other
      Filings

     

    Acquirer
      and the Corporation shall, as promptly as practicable hereafter, prepare and
      file any filings required under the Competition
      Act
      (Canada), any Securities Laws, the rules of the American Stock Exchange, the
      United States Securities
      Exchange Act of 1934,
      as
      amended, state securities or "blue sky" laws of the states of the United States,
      as amended, or any other applicable law or rule of applicable stock exchange
      relating to the transactions contemplated in this Agreement.

     

    ARTICLE
      7

     

    REPRESENTATIONS
      AND WARRANTIES OF THE CORPORATION

     

    7.1    Representations

     

    The
      Corporation hereby represents and warrants, except as otherwise set forth in
      the
      Disclosure Letter, to the Acquirer (and acknowledges that the Acquirer is
      relying upon such representations and warranties in connection with entering
      into this Agreement):

     

    
      
        
        

      

      
        
        

        
          

        

      

      
        
        

      

    

    
      
        - 34
          -

         

      

    

    
      	 	
              (a)

            	
              Organization

               

              The
                Corporation has been duly incorporated or
                formed under applicable law, is validly existing and has full corporate
                or
                legal power and authority to own its properties and conduct its business
                as presently owned and conducted. The Corporation is duly registered
                to do
                business and is in good standing in each jurisdiction in which the
                character of its properties, owned or leased, or the nature of its
                activities makes such registration necessary, except where the failure
                to
                be so registered or in good standing would not have a Material Adverse
                Effect in respect of the Corporation. Except as disclosed in the
                Disclosure Letter, the Corporation has no Subsidiaries and has never
                had
                any Subsidiaries since the Corporation was originally incorporated.
                

            

    

     

    
      	 	
              (b)

            	
              Capitalization

               

              As
                of the date hereof, the authorized capital
                of the Corporation consists of an unlimited number of Shares and
                an
                unlimited number of preferred shares issuable in series; there are
                only
                18,692,147 Shares issued and outstanding; up to a maximum of 4,230,638
                Shares may be issued pursuant to outstanding options and warrants
                and the
                details of such options and warrants are as set forth in the Disclosure
                Letter. Except as described in the immediately preceding sentence
                or as
                set forth in the Disclosure Letter, there are no other issued or
                outstanding securities of the Corporation and, without limitation,
                there
                are no options, warrants, conversion privileges or other rights,
                agreements, arrangements or commitments obligating the Corporation
                to
                issue or sell any shares of any capital stock of the Corporation
                or
                securities or obligations of any kind convertible into or exchangeable
                for
                any shares of capital stock of the Corporation, nor are there outstanding
                any stock appreciation rights, phantom equity or similar rights,
                agreements, arrangements or commitments based upon the book value,
                income
                or any other attribute of the Corporation.

            

    

     

    
      	 	
              (c)

            	
              Authority

               

              The
                Corporation has the requisite corporate
                power and authority to enter into this Agreement and to perform its
                obligations hereunder and to complete the transactions contemplated
                hereby. The execution and delivery of this Agreement by the Corporation
                and the consummation by the Corporation of the transactions contemplated
                by this Agreement have been duly authorized by the Board of Directors
                and
                no other corporate proceedings on the part of the Corporation are
                necessary to authorize this Agreement or the transactions contemplated
                hereby other than the approval of the Shareholders as provided in
                this
                Agreement. There is no agreement in force or effect to which the
                Corporation is a party and, to the knowledge of the Corporation,
                between
                any other parties, which in any manner affects or will affect the
                voting
                or control of any of the securities of the Corporation. This Agreement
                has
                been duly executed and delivered by the Corporation and constitutes
                a
                valid and binding obligation of the Corporation, enforceable against
                the
                Corporation in accordance with its terms subject to bankruptcy,
                insolvency, reorganization, fraudulent transfer, moratorium and other
                laws
                relating to or affecting creditors' rights generally, to general
                principles of equity and the qualifications that the consummation
                of the
                Reorganization is subject to approval of Shareholders as provided
                in this
                Agreement. Except as disclosed in the Disclosure Letter, the execution
                and
                delivery by the Corporation of this Agreement and performance by
                it of its
                obligations hereunder and the completion of the Reorganization and
                the
                transactions contemplated thereby, will
                not:

            

    

     

    
      
        
        

      

      
        
        

        
          

        

      

      
        
        

      

    

    
      
        -
          35 -

         

      

    

    
      	 	
              (i)

            	
              result
                in a violation or breach of, require any consent to be obtained under
                or
                give rise to any termination rights under any provision
                of:

            

    

     

    
      	 	
              (A)

            	
              its
                certificate of incorporation, articles, by laws or other charter
                documents, including any unanimous shareholder agreement or any other
                agreement or understanding with any
                party;

            

    

     

    
      	 	
              (B)

            	
              any
                law, regulation, order, judgment or decree;
                or

            

    

     

    
      	 	
              (C)

            	
              any
                Material Contract;

            

    

     

    
      	 	
              (ii)

            	
              give
                rise to any right of termination or acceleration of indebtedness,
                or cause
                any indebtedness to come due before its stated maturity or cause
                any
                available credit to cease to be available;

            

    

     

    
      	 	
              (iii)

            	
              result
                in the imposition of any Encumbrance upon any of its assets, or restrict,
                hinder, impair or limit the ability of the Corporation to carry on
                the
                business of the Corporation as and where it is now being carried
                on or as
                and where it may be carried on in the future;
                or

            

    

     

    
      	 	
              (iv)

            	
              result
                (alone or together with other adverse changes) in a Material Adverse
                Change.

            

    

     

    
      	 	
              (d)

            	
              Impediments

               

              
                There
                  are no legal restrictions to the consummation by the Corporation
                  of the
                  transactions contemplated by this Agreement or the performance
                  by the
                  Corporation of its obligations hereunder. No filing or registration
                  by the
                  Corporation with, or authorization, consent or approval of, any
                  domestic
                  or foreign public body or authority is necessary in connection
                  with the
                  consummation of the Reorganization, except for filing of the articles
                  of
                  amendment to create the Series 1 Preferred Shares, the filing of
                  the
                  Articles of Amendment and such other filings or registrations which,
                  if
                  not made, or such authorizations, consents or approvals, which,
                  if not
                  received, would not have a Material Adverse Effect in respect of
                  the
                  Corporation.

              

            

    

     

    
      
        
        

      

      
        
        

        
          

        

      

      
        
        

      

    

    
      
        - 36
          -

         

      

    

    
      	 	
              (e)

            	
              Books
                and Records

               

              
                All
                  financial transactions of the Corporation have been recorded in
                  the
                  financial books and records of the Corporation in accordance with
                  good
                  business practice, and such financial books and records accurately
                  reflect
                  the basis for the financial condition and the revenues, expenses
                  and
                  results of operations of the Corporation shown in the Financial
                  Statements. The Corporation has not entered into and is not a party
                  to any
                  material financial transactions which are not reflected in the
                  Financial
                  Statements. No information, records or systems pertaining to the
                  operation
                  or administration of the business of the Corporation are in the
                  possession
                  of, recorded, stored, maintained by or otherwise dependent upon
                  any Person
                  other than the Corporation, other than corporate minute books held
                  by
                  counsel.

              

            

    

     

    
      	 	
              (f)

            	
              Absence
                of Changes

               

              
                Since
                  January 31, 2006: (i) the Corporation has conducted its business only
                  in the ordinary course, (ii) no liability or obligation of any nature
                  (whether absolute, accrued, contingent or otherwise) material to
                  the
                  Corporation has been incurred, and (iii) there has not been any
                  (alone or together with other adverse changes) Material Adverse
                  Change.

              

            

    

     

    
      	 	
              (g)

            	
              Employment
                Agreements and Benefit Plans

               

              
                Except
                  as set forth in the Disclosure Letter, the Corporation is not a
                  party to
                  any written or oral policy, agreement, obligation or understanding
                  providing for severance or termination payments to, or any employment
                  agreement or, without limitation, any Employee Obligation, with,
                  any
                  Person; all benefit plans covering active, former or retired employees,
                  officers or directors of the Corporation is listed in the Disclosure
                  Letter; the Corporation has made available to Acquirer true and
                  complete
                  copies of all of the respective terms thereof and: each such plan
                  has been
                  maintained and administered in material compliance with its terms
                  and is,
                  to the extent required by applicable law or contract, fully funded
                  without
                  any deficit or unfunded actuarial liability or adequate provision
                  therefor
                  having been made; all such plans are in compliance with applicable
                  laws,
                  rules, regulations and policies (including those as to registration
                  or
                  other qualification); to the knowledge of the Corporation there
                  are no
                  pending, anticipated or threatened claims against or involving
                  any of the
                  plans; and all contributions, reserves or premium payments required
                  or
                  provided for have been made.

              

            

    

     

    
      	 	
              (h)

            	
              Disclosure

               

              
                To
                  the knowledge of the Corporation there is no information regarding
                  any
                  event, circumstance or action taken or failed to be taken which
                  may
                  reasonably be expected to result in (alone or together with other
                  adverse
                  changes) a Material Adverse
                  Change.

              

            

    

     

    
      
        
        

      

      
        
        

        
          

        

      

      
        
        

      

    

    
      
        - 37
          -

         

      

    

    
      	 	
              (i)

            	
              Material
                Contracts

               

              
                The
                  Corporation has provided Acquirer with access to true and complete
                  copies
                  of all Material Contracts and all Material Contracts are listed
                  in the
                  Disclosure Letter. Except as disclosed in the Disclosure Letter,
                  such
                  agreements do not contain any "change of control" provisions which
                  would
                  be triggered or affected by the Reorganization. The Corporation
                  has
                  performed in all material respects the obligations required to
                  be
                  performed by it and is entitled to all benefits under the Material
                  Contracts. The Corporation has not violated or breached, in any
                  material
                  respect, any of the terms or conditions of the Material Contracts
                  and
                  there exists no default or event of default or event, occurrence,
                  condition or act which, with the giving of notice, the lapse of
                  time or
                  the happening of any other event or condition, would become a default
                  or
                  event of default by the Corporation under any of the Material Contracts.
                  Except as disclosed in the Disclosure Letter, the Corporation is
                  not a
                  party to or bound by any agreement containing any standstill, restrictive
                  covenant or similar provision that would restrict or limit its
                  right to
                  acquire or hold any asset, carry on any business or activity, solicit
                  business from any Person or in any geographical area, or otherwise
                  to
                  conduct its business as it may
                  determine.

              

            

    

     

    
      	 	
              (j)

            	
              Financial
                Statements

               

              
                The
                  Financial Statements were prepared in accordance with generally
                  accepted
                  accounting principles in Canada consistently applied, and fairly
                  present
                  the financial condition of the Corporation at the respective dates
                  indicated and the results of operations of the Corporation for
                  the periods
                  covered (subject, in the case of unaudited interim financial statements,
                  to normal year-end adjustments). Except (a) as disclosed or reflected
                  in
                  the Financial Statements or (b) liabilities and obligations
                  (i) incurred in the ordinary course of business and consistent with
                  past practice or (ii) pursuant to the terms of this Agreement, the
                  Corporation has not incurred any liabilities of any nature, whether
                  accrued, contingent or otherwise (or which would be required by
                  generally
                  accepted accounting principles applicable in Canada to be reflected
                  on a
                  balance sheet of the Corporation) that have constituted or would
                  be
                  reasonably likely to constitute (alone or together with other adverse
                  changes) a Material Adverse Change. Without limiting the generality
                  of the
                  foregoing provisions of this Section and except as set forth in the
                  Disclosure Letter, the Corporation has not committed to make any
                  capital
                  expenditures, nor have any capital expenditures been authorized
                  by the
                  Corporation.

              

            

    

     

    
      	 	
              (k)

            	
              Employee
                Obligations, Etc.

               

              
                The
                  Employee Obligations (all of which are listed in the Disclosure
                  Letter) do
                  not exceed the amounts set forth in the Disclosure Letter in respect
                  of
                  each of the persons listed therein in respect of this subsection
                  nor
                  exceed in aggregate $100,000.

              

            

    

     

    
      
        
        

      

      
        
        

        
          

        

      

      
        
        

      

    

    
      
        - 38
          -

         

      

    

    
      	 	
              (l)

            	
              Compliance
                with Law

               

              
                Each
                  of the Corporation and, to the knowledge of the Corporation, any
                  predecessor corporations, has complied with and is in compliance
                  with all
                  laws and regulations applicable to the operation of its business,
                  including without limitation all Environmental Laws, except where
                  such
                  non-compliance, considered individually or in the aggregate, would
                  not
                  constitute (alone or together with other adverse changes) a Material
                  Adverse Change or have a Material Adverse Effect in respect of
                  the
                  Corporation and would not materially affect the consummation of
                  the
                  transactions contemplated hereby or the ability of the Corporation
                  to
                  perform its obligations
                  hereunder.

              

            

    

     

    
      	 	
              (m)

            	
              Litigation,
                etc.

               

              
                Except
                  as set forth in the Disclosure Letter, there is no claim, action,
                  proceeding or investigation pending or, to the knowledge of the
                  Corporation threatened against or relating to the Corporation or
                  affecting
                  any of its properties or assets before any court or governmental
                  or
                  regulatory authority or body, nor is the Corporation aware of any
                  basis
                  for any such claim, action, proceeding or investigation. The Corporation
                  is not subject to any outstanding order, writ, injunction or decree
                  that
                  has had or is reasonably likely to have a Material Adverse Effect
                  in
                  respect of the Corporation.

              

            

    

     

    
      	 	
              (n)

            	
              Oil
                Shale Permits and other Real Property

               

              Subject
                only
                to:

            

    

     

    
      
        	 	
                (i)

              	
                the
                  relinquishment provisions of the terms of the respective OS Permits,
                  and
                  

              

      

       

      
        	 	
                (ii)

              	
                royalties
                  payable to the Crown in the original grant thereof,
                  

              

      

       

      
        
          	 	
                   

                	
                  
                    the
                      Corporation holds good, valid and marketable legal and beneficial
                      title to
                      the OS Permits and free and clear of any and all Encumbrances,
                      easements,
                      or other third party rights of any nature whatsoever. Except
                      such property
                      as is described in the Financial Statements (the "Real Property"),
                      the
                      Corporation does not own or lease and has not agreed to acquire
                      or lease
                      any real property or interest in real property other than the
                      Real
                      Property. The Corporation has the exclusive right to possess,
                      use and
                      occupy, and as applicable, has good and marketable title in
                      fee simple to,
                      all the Real Property, free and clear of all Encumbrances,
                      easements or
                      other third party rights of any kind other than as set forth
                      in the
                      Disclosure Letter. All buildings, structures, improvements
                      and
                      appurtenances situated on the Real Property are in good operating
                      condition and in a state of good maintenance and repair, except
                      as set out
                      in the Disclosure Letter, are adequate and suitable for the
                      purposes for
                      which they are currently being used and the Corporation has
                      adequate
                      rights of ingress and egress for the operation of its business
                      in the
                      ordinary course with such exceptions as would not have a Material
                      Adverse
                      Effect in respect of the Corporation. None of the buildings,
                      structures,
                      improvements or appurtenances located on the Real Property
                      (or any
                      equipment therein), nor the operation or maintenance thereof,
                      violates any
                      restrictive covenant or any provision of any federal, provincial
                      or
                      municipal law, ordinance, rule or regulation, or encroaches
                      on any
                      property owned by others, other than violations or encroachments
                      that do
                      not, individually or in the aggregate, have a material adverse
                      effect on
                      the current use of such property or a Material Adverse Effect
                      in respect
                      of the Corporation.

                  

                

        

         

        
          
            
            

          

          
            
            

            
              

            

          

          
            
            

          

        

        
          
            -
              39 -

             

          

        

      

    

    
      	 	
              (o)

            	
              Environmental

            

    

     

    
      	 	
              (i)

            	
              The
                operation of the business of the Corporation, the property and assets
                owned or used by the Corporation and the use, maintenance and operation
                thereof have been and are in compliance with all Environmental Laws
                (except where non-compliance would not have a Material Adverse Effect
                in
                respect of the Corporation). The Corporation has complied with all
                reporting and monitoring requirements under all Environmental Laws
                (except
                where non compliance would not have a Material Adverse Effect in
                respect
                of the Corporation). The Corporation has not received any notice
                of any
                non-compliance with any Environmental Laws or Environmental Permits,
                and
                the Corporation has not been convicted of an offence for non compliance
                with any Environmental Laws or Environmental Permits or been fined
                or
                otherwise sentenced or settled such prosecution short of conviction,
                (except where such non-compliance would not have a Material Adverse
                Effect
                in respect of the Corporation). There is no civil, criminal or
                administrative action, suit, demand, claim, hearing, notice of violation,
                investigation, proceeding, notice or demand letter existing or pending,
                or
                to the best knowledge of the Corporation, threatened, relating to
                the
                property or assets owned or used by the Corporation, relating in
                any way
                to the Environmental Laws or Environmental
                Permits.

            

    

     

    
      	 	
              (ii)

            	
              The
                Corporation has obtained all Environmental Permits necessary to conduct
                its business and to own, use and operate its properties and assets
                (except
                where the failure to obtain any such permit would not have a Material
                Adverse Effect in respect of the Corporation), all such Environmental
                Permits are in effect, no appeal and no other action is pending to
                revoke
                any such Environmental Permits (except where revocation of any such
                Environmental Permit would not have a Material Adverse Effect in
                respect
                of the Corporation) and the operation of the business of the Corporation,
                the property and assets owned by the Corporation and the use, maintenance
                and operation thereof have been and are in compliance with all
                Environmental Permits (except where such non compliance would not
                have a
                Material Adverse Effect in respect of the Corporation). To the extent
                required by applicable Environmental Laws, the Corporation has filed
                all
                applications necessary to renew or obtain any necessary Environmental
                Permits in a timely fashion so as to allow it to continue to operate
                its
                business in compliance with applicable Environmental Laws, and the
                Corporation does not expect such new or renewed Environmental Permits
                to
                include any terms or conditions that will have a Material Adverse
                Effect
                in respect of the Corporation.

            

    

     

    
      
        
        

      

      
        
        

        
          

        

      

      
        
        

      

    

    
      
        - 40
          -

         

      

    

    
      	 	
              (iii)

            	
              The
                Corporation has, at all times, used, generated, treated, stored,
                transported, disposed of or otherwise handled its Hazardous Substances
                in
                compliance with all Environmental Laws and Environmental Permits
                (except
                where such non-compliance would not have a Material Adverse Effect
                in
                respect of the Corporation).

            

    

     

    
      	 	
              (iv)

            	
              The
                Corporation is not, and, to the knowledge of the Corporation, there
                is no
                reasonable basis upon which the Corporation could become, responsible
                for
                any material clean up or corrective action under any Environmental
                Laws or
                Environmental Permits. All audits, assessments and studies with respect
                to
                environmental matters relating to the Corporation have been referenced
                in
                the Disclosure Letter. 

            

    

     

    
      	 	
              (v)

            	
              There
                are no past or present (or, to the best of the Corporation's knowledge,
                future) events, conditions, circumstances, activities, practices,
                incidents, actions or plans which may interfere with or prevent compliance
                or continued compliance with the Environmental Laws as in effect
                on the
                date hereof or which may give rise to any legal liability under any
                Environmental Laws, or otherwise form the basis of any claim, action,
                demand, suit, proceeding, hearing, notice of violation, study or
                investigation, based on or related to the manufacture, generation,
                processing, distribution, use, treatment, storage, disposal, transport
                or
                handling, or the Release or threatened Release into the indoor or
                outdoor
                environment by the Corporation of any Hazardous Substances (except,
                in any
                event, where it would not have a Material Adverse Effect in respect
                of the
                Corporation).

            

    

     

    
      	 	
              (vi)

            	
              Prior
                to the Effective Time, the Corporation shall allow the Acquirer to
                conduct
                at its expense such audits, assessments and studies deemed necessary
                by
                the Acquirer to satisfy itself of the status of the environmental
                matters
                and accuracy of the representations and warranties contained in this
                Agreement.

            

    

     

    
      	 	
              (p)

            	
              Operations

               

              
                Any
                  and all operations of the Corporation, and to the best of the
                  Corporation's knowledge, any and all operations by third parties,
                  on or in
                  respect of the assets and properties of the Corporation, have been
                  conducted in accordance with good oil and gas industry and mining
                  industry
                  practices where the failure to so operate would have a Material
                  Adverse
                  Effect on the Corporation.

              

            

    

     

    
      
        
        

      

      
        
        

        
          

        

      

      
        
        

      

    

    
      
        - 41
          -

         

      

    

    
      	 	
              (q)

            	
              Patent,
                Trademark and Related Matters

               

              
                All
                  of the patents, registered trademarks and service marks, trade
                  names and
                  licenses owned or used by the Corporation are in good standing,
                  valid and
                  adequate to permit the Corporation to conduct its business as presently
                  conducted (except, in any event, where it would not have a Material
                  Adverse Effect in respect of the Corporation). To the knowledge
                  of the
                  Corporation, the Corporation is not infringing or is alleged to
                  be
                  infringing on the rights of any Person with respect to any patent,
                  trademark, service mark, trade name, copyright (or any application
                  or
                  registration in respect thereof), licence, discovery, improvement,
                  process, formula, know-how, data, plan or specification where the
                  infringement or alleged infringement could reasonably be expected
                  to have
                  a Material Adverse Effect.

              

            

    

     

    
      	 	
              (r)

            	
              Insurance

               

              
                Policies
                  of insurance in force as of the date hereof naming the Corporation
                  as an
                  insured adequately cover all risks reasonably and prudently foreseeable
                  in
                  the operation and conduct of the business of the Corporation as
                  would be
                  customary in respect of the businesses carried on by the Corporation
                  and
                  all such policies of insurance are as listed in the Disclosure
                  Letter. All
                  such policies of insurance shall remain in force and effect and
                  shall not
                  be cancelled or otherwise terminated as a result of the transactions
                  contemplated hereby. There are no outstanding claims under any
                  such
                  policies of insurance, except as set forth in the Disclosure
                  Letter.

              

            

    

     

    
      	 	
              (s)

            	
              Tax
                Matters

            

    

     

    
      	 	
              (i)

            	
              Returns
                Filed and Taxes Paid.
                All Returns required to be filed prior to the date hereof by or on
                behalf
                of the Corporation have been duly filed on a timely basis and such
                Returns
                are true, complete and correct in all material respects. All taxes
                shown
                to be payable on the Returns or on subsequent assessments or reassessments
                with respect thereto have been paid in full or objected to on a timely
                basis, and no other Taxes are payable by the Corporation with respect
                to
                items or periods covered by such
                Returns.

            

    

     

    
      	 	
              (ii)

            	
              Tax
                Reserves.
                The Corporation has paid or provided adequate accruals in its financial
                statements for Taxes, including income taxes and related future taxes,
                in
                conformity with generally accepted accounting principles applicable
                in
                Canada.

            

    

     

    
      	 	
              (iii)

            	
              Returns
                Furnished.
                For all periods ending on and before January 31, 2006, Acquirer has
                been
                provided access by the Corporation to true and complete copies of
                all
                federal and provincial income tax returns for the
                Corporation.

            

    

     

    
      
        
        

      

      
        
        

        
          

        

      

      
        
        

      

    

    
      
        -
          42 -

         

      

    

    
      	 	
              (iv)

            	
              Tax
                Deficiencies; Audits; Statutes of Limitations.
                Except as disclosed in the Disclosure Letter: (i) no deficiencies
                exist or have been asserted with respect to Taxes of the Corporation;
                (ii)  the Corporation is not a party to any action or proceeding for
                assessment or collection of Taxes, nor has such event been asserted
                or
                threatened against the Corporation or any of its assets which, if
                successful, would constitute (alone or together with other adverse
                changes) a Material Adverse Change; (iii) no waiver or extension of
                any statute of limitations is in effect with respect to Taxes or
                Returns
                of the Corporation; and (iv) the Returns of the Corporation have
                never been audited by a government or taxing authority, nor is any
                such
                audit in process, pending or
                threatened.

            

    

     

    
      	 	
              (t)

            	
              Pension
                and Termination Benefits

               

              
                The
                  Corporation has provided adequate accruals in its financial statements
                  (or
                  such amounts are fully funded) for all pension or other employee
                  benefit
                  obligations of the Corporation arising under or relating to each
                  of the
                  pension or retirement income plans or other employee benefit plans
                  or
                  agreements or policies maintained by or binding on the Corporation
                  as well
                  as for any other payment required to be made by the Corporation
                  in
                  connection with the termination of employment or retirement of
                  any
                  employee of the Corporation.

              

            

    

     

    
      	 	
              (u)

            	
              Securities
                Law Status and Shareholder Residency

               

              
                The
                  Corporation is not, and has never been, a reporting issuer, or
                  similar
                  status, under any jurisdiction in Canada. The Corporation's shares
                  are not
                  traded on any Canadian or United States national securities exchange
                  or
                  quoted on the NASDAQ Stock Market in the United States nor are
                  any of its
                  securities registered under the United States Securities Exchange
                  Act of
                  1934, as amended, or any state securities laws. The Corporation
                  is not,
                  and has never been, required to file reports pursuant to Section
                  13 or
                  15(d) of the United States Securities Exchange Act of 1934. To
                  the best of
                  its knowledge, other than the Acquirer, the Corporation has no
                  shareholders who are resident in the United States, "U.S. persons"
                  (as
                  defined in Regulation S under the United States Securities Act
                  of 1933, as
                  amended) or otherwise subject to the securities laws of the United
                  States.

              

            

    

     

    
      	 	
              (v)

            	
              Corrupt
                Practices

               

              
                There
                  have been no actions taken by the Corporation or any of its affiliates
                  which are in violation of the United States Foreign Corrupt Practices
                  Act
                  or the Corruption
                  of Foreign Public Officials Act
                  (Canada).

              

            

    

     

    7.2    Investigation

     

    Any
      investigation by the Acquirer and its advisors shall not mitigate, diminish
      or
      affect the representations and warranties of the Corporation provided pursuant
      to this Agreement. Where the provisions of Section 7.1 refer to disclosure
      in writing, such disclosure shall be made expressly in response to the
      applicable provision and shall be signed by a senior officer of the
      Corporation.

     

    
      
        
        

      

      
        
        

        
          

        

      

      
        
        

      

    

    
      
        - 43
          -

         

      

    

    ARTICLE
      8

     

    REPRESENTATIONS
      AND WARRANTIES OF ACQUIRER

     

    8.1    Representations

     

    Acquirer
      hereby represents and warrants, except as set forth in the Disclosure Letter,
      to
      the Corporation (and acknowledges that the Corporation is relying upon such
      representations and warranties in connection with entering into this
      Agreement):

     

    
      	 	
              (a)

            	
              Organization

               

              
                The
                  Acquirer and each of its Subsidiaries, has been duly incorporated
                  or
                  formed under applicable law, is validly existing and has full corporate
                  or
                  legal power and authority to own its properties and conduct its
                  business
                  as presently owned and conducted. The Acquirer and each of its
                  Subsidiaries is duly registered to do business and is in good standing
                  in
                  each jurisdiction in which the character of its properties, owned
                  or
                  leased, or the nature of its activities makes such registration
                  necessary,
                  except where the failure to be so registered or in good standing
                  would not
                  have a Material Adverse Effect in respect of the Acquirer. All
                  of the
                  outstanding shares of capital stock and other ownership interests
                  of the
                  Subsidiaries are validly issued, fully paid and non assessable
                  and all
                  such shares and other ownership interests owned directly or indirectly
                  by
                  the Acquirer are, except in connection with the Acquirer's existing
                  banking arrangements, owned free and clear of all material liens,
                  claims
                  or encumbrances, and there are no outstanding options, rights,
                  entitlements, understandings or commitments (contingent or otherwise)
                  regarding the right to acquire any shares of capital stock or other
                  ownership interests in any of its Subsidiaries. The Acquirer has
                  no
                  Subsidiaries other than as set forth in the Disclosure
                  Letter.

              

            

    

     

    
      	 	
              (b)

            	
              Capitalization

               

              
                As
                  of the date hereof, the authorized share capital of Acquirer consists
                  of
                  250,000,000 shares of common stock, par value U.S. $0.001 per share,
                  of
                  which 240,000,000 are Acquirer Shares and 10,000,000 are shares
                  of
                  preferred stock. As of May 31, 2006, there are 115,943,166 Acquirer
                  Shares
                  and no preferred shares issued and outstanding and, up to a maximum
                  of
                  23,943,138 Acquirer Shares are reserved for issuance pursuant to
                  stock
                  option plans or upon exchange or conversion of outstanding Acquirer
                  debt
                  securities or warrants. Except as described in the immediately
                  preceding
                  sentences or in the Disclosure Letter, there are no other issued
                  or
                  outstanding securities of Acquirer or (other than those owned by
                  Acquirer)
                  its Subsidiaries and, without limitation, there are no options,
                  warrants,
                  conversion privileges or other rights, agreements, arrangements
                  or
                  commitments obligating Acquirer or any of its Subsidiaries to issue
                  or
                  sell any shares of any capital stock of Acquirer or any of its
                  Subsidiaries or securities or obligations of any kind convertible
                  into or
                  exchangeable for any shares of capital stock of Acquirer or any
                  of its
                  Subsidiaries, nor, is there outstanding any stock appreciation
                  rights,
                  phantom equity or similar rights, agreements, arrangements or commitments
                  based upon the book value, income or any other attribute of Acquirer
                  or
                  any of its Subsidiaries.

              

            

    

     

    
      
        
        

      

      
        
        

        
          

        

      

      
        
        

      

    

    
      
        -
          44 -

         

      

    

    
      	 	
              (c)

            	
              Authority

               

              
                Acquirer
                  has the requisite corporate power and authority to enter into this
                  Agreement and to perform its obligations hereunder and to complete
                  the
                  transactions contemplated hereby. The execution and delivery of
                  this
                  Agreement by the Acquirer and the consummation by the Acquirer
                  of the
                  transactions contemplated by this Agreement and the Reorganization
                  have
                  been duly authorized by the board of directors of the Acquirer
                  and no
                  other corporate proceedings on the part of Acquirer are necessary
                  to
                  authorize this Agreement or the transactions contemplated hereby
                  and by
                  the Reorganization. There is no agreement in force or effect to
                  which the
                  Acquirer is a party and, to the knowledge of the Acquirer, which
                  in any
                  manner affects or will affect the voting or control of any of the
                  securities of the Acquirer. This Agreement has been duly executed
                  and
                  delivered by Acquirer and constitutes a valid and binding obligation
                  of
                  Acquirer, enforceable against Acquirer in accordance with its terms,
                  subject to bankruptcy, insolvency, reorganization, fraudulent transfer,
                  moratorium and other laws relating to or affecting creditors' rights
                  generally and to general principles of equity. The execution and
                  delivery
                  by Acquirer of this Agreement and performance by it of its obligations
                  hereunder and the completion of the Reorganization and the transactions
                  contemplated thereby, will
                  not:

              

            

    

     

    
      	 	
              (i)

            	
              result
                in a violation or breach of, require any consent to be obtained under
                or
                give rise to any termination rights under any provision
                of:

            

    

     

    
      	 	
              (A)

            	
              its
                or any of its Subsidiaries' certificate of incorporation, articles,
                by
                laws or other charter documents, including any unanimous shareholder
                agreement or any other agreement or understanding with any party
                holding
                an ownership interest in any
                Subsidiary;

            

    

     

    
      	 	
              (B)

            	
              any
                law, regulation, order, judgment or decree;
                or

            

    

     

    
      	 	
              (C)

            	
              any
                Acquirer Material Contract, agreement, license, franchise or permit
                to
                which the Acquirer or any Subsidiary is bound or is subject or is
                the
                beneficiary;

            

    

     

    
      	 	
              (ii)

            	
              give
                rise to any right of termination or acceleration of indebtedness,
                or cause
                any indebtedness to come due before its stated maturity or cause
                any
                available credit to cease to be available;

            

    

     

    
      	 	
              (iii)

            	
              result
                in the imposition of any Encumbrance, upon any of its assets or the
                assets
                of any Subsidiary, or restrict, hinder, impair or limit the ability
                of
                Acquirer or any Subsidiary to carry on the business of Acquirer or
                any
                Subsidiary as and where it is now being carried on or as and where
                it is
                currently intended to be carried on in the future;
                or

            

    

     

    
      
        
        

      

      
        
        

        
          

        

      

      
        
        

      

    

    
      -
        45 -

    

     

    
      	 	
              (iv)

            	
              result
                (alone or together with other adverse changes) in a Material Adverse
                Change.

            

    

     

    
      	 	
              (d)

            	
              Impediments

               

              
                Other
                  than in connection with or in compliance with the provisions of
                  Securities
                  Laws (i) there are no legal restrictions to the consummation by
                  Acquirer of the transactions contemplated by this Agreement or
                  the
                  performance by each of Acquirer of its obligations hereunder and
                  (ii) no filing or registration by Acquirer with, or authorization,
                  consent or approval of, any domestic or foreign public body or
                  authority
                  is necessary in connection with the consummation of the Reorganization,
                  except for the filings, registrations and applications expressly
                  contemplated by this Agreement and such other filings or registrations
                  which, if not made, or such authorizations, consents or approvals,
                  which,
                  if not received, would not have a Material Adverse Effect in respect
                  of
                  Acquirer.

              

            

    

     

    
      	 	
              (e)

            	
              Public
                Record

               

              
                As
                  of their respective dates, the documents and materials comprising
                  the
                  Public Record of Acquirer (including all exhibits and schedules
                  thereto
                  and documents incorporated by reference therein) did not contain
                  any
                  untrue statement of a material fact or omit to state a material
                  fact
                  required to be stated therein or necessary to make the statements
                  therein,
                  in light of the circumstances under which they were made, not misleading,
                  and complied in all material respects with all applicable legal
                  and stock
                  exchange requirements and the Public Record is complete and up-to-date
                  in
                  all material respects.

              

            

    

     

    
      	 	
              (f)

            	
              Books
                and Records

               

              
                All
                  financial transactions of Acquirer and its Subsidiaries have been
                  recorded
                  in the financial books and records of Acquirer and each Subsidiary,
                  as
                  applicable, in accordance with good business practice, and such
                  financial
                  books and records accurately reflect the basis for the financial
                  condition
                  and the revenues, expenses and results of operations of Acquirer
                  and its
                  Subsidiaries shown in the audited financial statements of Acquirer
                  for the
                  unaudited interim financial statements of Acquirer for the nine-month
                  period ended January 31, 2006 and the audited financial statements
                  for the
                  year ended April 30, 2005 (collectively, the "Acquirer
                  Financial Statements").
                  Acquirer and its Subsidiaries have not entered into and are not
                  parties to
                  any material financial transactions which are not reflected in
                  such
                  financial statements. No information, records or systems pertaining
                  to the
                  operation or administration of the business of the Acquirer are
                  in the
                  possession of, recorded, stored, maintained by or otherwise dependent
                  upon
                  any Person other than the Acquirer, other than corporate minute
                  books held
                  by counsel.

              

            

    

     

    
      
        
        

      

      
        
        

        
          

        

      

      
        
        

      

    

    
      -
        46 -

       

    

    
      	 	
              (g)

            	
              Absence
                of Changes

               

              
                Since
                  January 31, 2006 and except as has been disclosed in the Disclosure
                  Letter: (i) Acquirer and its Subsidiaries have conducted their
                  respective businesses only in the ordinary course, (ii) no liability
                  or obligation of any nature (whether absolute, accrued, contingent
                  or
                  otherwise) material to Acquirer (on a consolidated basis) has been
                  incurred, and (iii) there has not been any (alone or together with
                  other adverse changes) Material Adverse
                  Change.

              

            

    

     

    
      	 	
              (h)

            	
              Employment
                Agreements and Benefit Plans

               

              
                Except
                  as set forth in the Disclosure Letter, the Acquirer is not a party
                  to any
                  written or oral policy, agreement, obligation or understanding
                  providing
                  for severance or termination payments to, or any employment agreement
                  or,
                  without limitation, any employee obligation, with, any Person;
                  all benefit
                  plans covering active, former or retired employees, officers or
                  directors
                  of the Acquirer is listed in the Disclosure Letter; the Acquirer
                  has made
                  available to Corporation true and complete copies of all of the
                  respective
                  terms thereof and: each such plan has been maintained and administered
                  in
                  material compliance with its terms and is, to the extent required
                  by
                  applicable law or contract, fully funded without any deficit or
                  unfunded
                  actuarial liability or adequate provision therefor having been
                  made; all
                  such plans are in compliance with applicable laws, rules, regulations
                  and
                  policies (including those as to registration or other qualification);
                  to
                  the knowledge of the Acquirer there are no pending, anticipated
                  or
                  threatened claims against or involving any of the plans; and all
                  contributions, reserves or premium payments required or provided
                  for have
                  been made.

              

            

    

     

    
      	 	
              (i)

            	
              Disclosure

               

              To
                the knowledge of the Acquirer, there is no
                information regarding any event, circumstance or action taken or
                failed to
                be taken which may reasonably be expected to result in (alone or
                together
                with other adverse changes) a Material Adverse
                Change.

            

    

     

    
      	 	
              (j)

            	
              Material
                Contracts

               

              
                The
                  Acquirer has provided the Corporation with access to true and complete
                  copies of all Acquirer Material Contracts and all Acquirer Material
                  Contracts are listed in the Disclosure Letter. Except as disclosed
                  in the
                  Disclosure Letter, such agreements do not contain any "change of
                  control"
                  provisions which would be triggered or affected by the Reorganization.
                  Each of the Acquirer and its Subsidiaries has performed in all
                  material
                  respects the obligations required to be performed by it and is
                  entitled to
                  all benefits under the Acquirer Material Contracts. None of the
                  Acquirer
                  or its Subsidiaries has violated or breached, in any material respect,
                  any
                  of the terms or conditions of the Acquirer Material Contracts and
                  there
                  exists no default or event of default or event, occurrence, condition
                  or
                  act which, with the giving of notice, the lapse of time or the
                  happening
                  of any other event or condition, would become a default or event
                  of
                  default by the Acquirer or any of its Subsidiaries under any of
                  the
                  Acquirer Material Contracts. Except as disclosed in the Disclosure
                  Letter,
                  none of the Acquirer or the Subsidiaries is a party to or bound
                  by any
                  agreement containing any standstill, restrictive covenant or similar
                  provision that would restrict or limit its right to acquire or
                  hold any
                  asset, carry on any business or activity, solicit business from
                  any Person
                  or in any geographical area, or otherwise to conduct its business
                  as it
                  may determine.

              

            

    

     

    
      
        
        

      

      
        
        

        
          

        

      

      
        
        

      

    

    
      - 47
        -

       

    

    
      	 	
              (k)

            	
              Acquirer
                Financial Statements

               

              
                The
                  Acquirer Financial Statements were prepared in accordance with
                  generally
                  accepted accounting principles in the United States consistently
                  applied,
                  and fairly present the consolidated financial condition of Acquirer
                  at the
                  respective dates indicated and the results of operations of Acquirer
                  (on a
                  consolidated basis) for the periods covered. Except (a) as disclosed
                  or
                  reflected in the Acquirer Financial Statements and (b) liabilities
                  and
                  obligations (i) incurred in the ordinary course of business or
                  (ii) pursuant to the terms of this Agreement, neither Acquirer nor
                  any of its Subsidiaries has incurred any liabilities of any nature,
                  whether accrued, contingent or otherwise (or which would be required
                  by
                  generally accepted accounting principles applicable in the United
                  States
                  to be reflected on a consolidated balance sheet of Acquirer) that
                  have
                  constituted or would be reasonably likely constitute (alone or
                  together
                  with other adverse changes) a Material Adverse Change. Without
                  limiting
                  the generality of the foregoing provisions of this Section and
                  except as
                  set forth in the Disclosure Letter, the Acquirer has not committed
                  to make
                  any capital expenditures, nor have any capital expenditures been
                  authorized by Acquirer. 

              

            

    

     

    
      	 	
              (l)

            	
              Acquirer
                Employee Obligations, etc.

               

              
                The
                  Acquirer Employee Obligations (all of which are listed in the Disclosure
                  Letter) do not exceed the amounts set forth in the Disclosure Letter
                  in
                  respect of each of the persons listed therein in respect of this
                  subsection nor exceed in aggregate
                  $100,000.

              

            

    

     

    
      	 	
              (m)

            	
              Compliance
                with Law

               

              Each
                of Acquirer and its Subsidiaries has
                complied with and is in compliance with all laws and regulations
                applicable to the operation of its business, except where such non
                compliance, considered individually or in the aggregate, would not
                constitute (alone or together with other adverse changes) a Material
                Adverse Change or have a Material Adverse Effect in respect of the
                Acquirer and would not materially affect the consummation of the
                transactions contemplated hereby or the ability of Acquirer to perform
                its
                obligations hereunder.

            

    

     

    
      
        
        

      

      
        
        

        
          

        

      

      
        
        

      

    

    
      - 48
        -

    

     

    
      	 	
              (n)

            	
              Litigation,
                etc.

               

              Except
                as set forth in the Disclosure Letter,
                there is no claim, action, proceeding or investigation pending or,
                to the
                knowledge of the Acquirer threatened against or relating to the Acquirer
                or any of its Subsidiaries or affecting any of their properties or
                assets
                before any court or governmental or regulatory authority or body,
                nor is
                the Acquirer aware of any basis for any such claim, action, proceeding
                or
                investigation. Neither the Acquirer nor any of its Subsidiaries is
                subject
                to any outstanding order, writ, injunction or decree that has had
                or is
                reasonably likely to have a Material Adverse Effect in respect of
                the
                Acquirer.

            

    

     

    
      	 	
              (o)

            	
              Information
                Supplied

               

              None
                of the information supplied or to be
                supplied by Acquirer for inclusion or incorporation by reference
                in the
                Proxy Circular will, at the time the Proxy Circular is mailed to
                the
                Shareholders and at the time of the Shareholder Meeting, as may be
                adjourned from time to time, contain any untrue statement which,
                at the
                time and in light of the circumstances under which it is made, is
                false or
                misleading with respect to any material fact or omit to state any
                material
                fact required to be stated therein or necessary in order to make
                the
                statements therein not false or misleading or necessary to correct
                any
                statement in any earlier communication with respect to the solicitation
                of
                a proxy for the same meeting or subject matter which has become false
                or
                misleading.

            

    

     

    
      	 	
              (p)

            	
              Environmental

            

    

     

    
      	 	
              (i)

            	
              The
                operation of the business of the Acquirer, the property and assets
                owned
                or used by the Acquirer and the use, maintenance and operation thereof
                have been and are in compliance with all Environmental Laws (except
                where
                non-compliance would not have a Material Adverse Effect in respect
                of the
                Acquirer). The Acquirer has complied with all reporting and monitoring
                requirements under all Environmental Laws (except where non compliance
                would not have a Material Adverse Effect in respect of the Acquirer).
                The
                Acquirer has not received any notice of any non-compliance with any
                Environmental Laws or Environmental Permits, and the Acquirer has
                not been
                convicted of an offence for non compliance with any Environmental
                Laws or
                Environmental Permits or been fined or otherwise sentenced or settled
                such
                prosecution short of conviction, (except where such non-compliance
                would
                not have a Material Adverse Effect in respect of the Acquirer). There
                is
                no civil, criminal or administrative action, suit, demand, claim,
                hearing,
                notice of violation, investigation, proceeding, notice or demand
                letter
                existing or pending, or to the best knowledge of the Acquirer, threatened,
                relating to the property or assets owned or used by the Acquirer,
                relating
                in any way to the Environmental Laws or Environmental
                Permits.

            

    

     

    
      
        
        

      

      
        
        

        
          

        

      

      
        
        

      

    

    
      - 49
        -

       

    

    
      	 	
              (ii)

            	
              The
                Acquirer has obtained all Environmental Permits necessary to conduct
                its
                business and to own, use and operate its properties and assets (except
                where the failure to obtain any such permit would not have a Material
                Adverse Effect in respect of the Acquirer), all such Environmental
                Permits
                are in effect, no appeal and no other action is pending to revoke
                any such
                Environmental Permits (except where revocation of any such Environmental
                Permit would not have a Material Adverse Effect in respect of the
                Acquirer) and the operation of the business of the Acquirer, the
                property
                and assets owned by the Acquirer and the use, maintenance and operation
                thereof have been and are in compliance with all Environmental Permits
                (except where such non compliance would not have a Material Adverse
                Effect
                in respect of the Acquirer). To the extent required by applicable
                Environmental Laws, the Acquirer has filed all applications necessary
                to
                renew or obtain any necessary Environmental Permits in a timely fashion
                so
                as to allow it to continue to operate its business in compliance
                with
                applicable Environmental Laws, and the Acquirer does not expect such
                new
                or renewed Environmental Permits to include any terms or conditions
                that
                will have a Material Adverse Effect in respect of the
                Acquirer.

            

    

     

    
      	 	
              (iii)

            	
              The
                Acquirer has, at all times, used, generated, treated, stored, transported,
                disposed of or otherwise handled its Hazardous Substances in compliance
                with all Environmental Laws and Environmental Permits (except where
                such
                non-compliance would not have a Material Adverse Effect in respect
                of the
                Acquirer).

            

    

     

    
      	 	
              (iv)

            	
              The
                Acquirer is not, and, to the knowledge of the Acquirer, there is
                no
                reasonable basis upon which the Acquirer could become, responsible
                for any
                material clean up or corrective action under any Environmental Laws
                or
                Environmental Permits. All audits, assessments and studies with respect
                to
                environmental matters relating to the Acquirer have been referenced
                in the
                Disclosure Letter. 

            

    

     

    
      	 	
              (v)

            	
              There
                are no past or present (or, to the best of the Acquirer's knowledge,
                future) events, conditions, circumstances, activities, practices,
                incidents, actions or plans which may interfere with or prevent compliance
                or continued compliance with the Environmental Laws as in effect
                on the
                date hereof or which may give rise to any legal liability under any
                Environmental Laws, or otherwise form the basis of any claim, action,
                demand, suit, proceeding, hearing, notice of violation, study or
                investigation, based on or related to the manufacture, generation,
                processing, distribution, use, treatment, storage, disposal, transport
                or
                handling, or the Release or threatened Release into the indoor or
                outdoor
                environment by the Acquirer of any Hazardous Substances (except,
                in any
                event, where it would not have a Material Adverse Effect in respect
                of the
                Acquirer).

            

    

     

    
      
        
        

      

      
        
        

        
          

        

      

      
        
        

      

    

    
      
        - 50
          -

         

      

    

    
      	 	
              (vi)

            	
              Prior
                to the Effective Time, the Acquirer shall allow the Corporation to
                conduct
                at its expense such audits, assessments and studies deemed necessary
                by
                the Acquirer to satisfy itself of the status of the environmental
                matters
                and accuracy of the representations and warranties contained in this
                Agreement. 

            

    

     

    
      	 	
              (vii)

            	
              All
                references to the Acquirer in this paragraph (p) are deemed to include
                all
                Subsidiaries of the Acquirer.

            

    

     

    
      	 	
              (q)

            	
              Operations

               

              Any
                and all operations of the Acquirer and its
                Subsidiaries, and to the best of the Acquirer's knowledge, any and
                all
                operations by third parties, on or in respect of the assets and properties
                of the Acquirer and its Subsidiaries, have been conducted in accordance
                with good oil and gas industry and mining industry practices where
                the
                failure to so operate would have a Material Adverse Effect on the
                Acquirer.

            

    

     

    
      	 	
              (r)

            	
              Patent,
                Trademark and Related Matters

               

              All
                of the patents, registered trademarks and
                service marks, trade names and licenses owned or used by the Acquirer
                and
                its Subsidiaries are in good standing, valid and adequate to permit
                the
                Acquirer and its Subsidiaries to conduct their businesses as presently
                conducted (except, in any event, where it would not have a Material
                Adverse Effect in respect of the Acquirer). To the knowledge of the
                Acquirer, the Acquirer and its Subsidiaries are not infringing or
                are
                alleged to be infringing on the rights of any Person with respect
                to any
                patent, trademark, service mark, trade name, copyright (or any application
                or registration in respect thereof), licence, discovery, improvement,
                process, formula, know-how, data, plan or specification where the
                infringement or alleged infringement could reasonably be expected
                to have
                a Material Adverse Effect.

            

    

     

    
      	 	
              (s)

            	
              Insurance

               

              Policies
                of insurance in force as of the date
                hereof naming the Acquirer as an insured adequately cover all risks
                reasonably and prudently foreseeable in the operation and conduct
                of the
                business of the Acquirer and its Subsidiaries as would be customary
                in
                respect of the businesses carried on by the Acquirer and its Subsidiaries
                and all such policies of insurance are as listed in the Disclosure
                Letter.
                All such policies of insurance shall remain in force and effect and
                shall
                not be cancelled or otherwise terminated as a result of the transactions
                contemplated hereby. There are no outstanding claims under any such
                policies of insurance, except as set forth in the Disclosure
                Letter.

            

    

     

    
      	 	
              (t)

            	
              Tax
                Matters

            

    

     

    
      	 	
              (i)

            	
              Returns
                Filed and Taxes Paid.
                All Acquirer Returns required to be filed prior to the date hereof
                by or
                on behalf of the Acquirer or any Subsidiaries have been duly filed
                on a
                timely basis and such Acquirer Returns are true, complete and correct
                in
                all material respects. All taxes shown to be payable on the Acquirer
                Returns or on subsequent assessments or reassessments with respect
                thereto
                have been paid in full or objected to on a timely basis, and no other
                Acquirer Taxes are payable by the Acquirer or any of its Subsidiaries
                with
                respect to items or periods covered by such Acquirer
                Returns.

            

    

     

    
      
        
        

      

      
        
        

        
          

        

      

      
        
        

      

    

    
      -
        51 -

    

     

    
      	 	
              (ii)

            	
              Tax
                Reserves.
                The Acquirer has paid or provided adequate accruals in its financial
                statements for Acquirer Taxes, including income taxes and related
                future
                taxes, in conformity with generally accepted accounting principles
                applicable in the United States.

            

    

     

    
      	 	
              (iii)

            	
              Returns
                Furnished.
                For all periods from incorporation of the Acquirer until April 30,
                2005,
                the Corporation has been provided access by the Acquirer to true
                and
                complete copies of all federal and state income tax returns for the
                Acquirer or any of its
                Subsidiaries.

            

    

     

    
      	 	
              (iv)

            	
              Tax
                Deficiencies; Audits; Statutes of Limitations.
                Except as disclosed in the Disclosure Letter: (i) no deficiencies
                exist or have been asserted with respect to Acquirer Taxes of the
                Acquirer
                or any of its Subsidiaries; (ii) neither the Acquirer nor any of its
                Subsidiaries is a party to any action or proceeding for assessment
                or
                collection of Acquirer Taxes, nor has such event been asserted or
                threatened against the Acquirer or any of its Subsidiaries or any
                of their
                respective assets which, if successful, would constitute (alone or
                together with other adverse changes) a Material Adverse Change;
                (iii) no waiver or extension of any statute of limitations is in
                effect with respect to Acquirer Taxes or Acquirer Returns of the
                Acquirer
                or any Subsidiary; and (iv) the Acquirer Returns of the Acquirer and
                any Subsidiary have never been audited by a government or taxing
                authority, nor is any such audit in process, pending or
                threatened.

            

    

     

    
      	 	
              (u)

            	
              Pension
                and Termination Benefits

               

              The
                Acquirer has provided adequate accruals in
                its financial statements (or such amounts are fully funded) for all
                pension or other employee benefit obligations of the Acquirer arising
                under or relating to each of the pension or retirement income plans
                or
                other employee benefit plans or agreements or policies maintained
                by or
                binding on the Acquirer or any of its Subsidiaries as well as for
                any
                other payment required to be made by the Acquirer in connection with
                the
                termination of employment or retirement of any employee of the Acquirer
                or
                any of its Subsidiaries.

            

    

     

    
      	 	
              (v)

            	
              U.S.
                Registrant Status

               

              The
                Acquirer has filed all reports required to
                be filed with the Securities and Exchange Commission pursuant to
                Section
                13 of the United States Securities Exchange Act of 1934, as amended,
                and
                the Acquirer Shares are quoted on the OTC Bulletin Board.
                

            

    

     

    
      
        
        

      

      
        
        

        
          

        

      

      
        
        

      

      
        
          - 52
            -

           

        

      

    

    
      	 	
              (w)

            	
              Securities
                Law Exemption

               

              It
                will not be necessary in connection with the
                issuance and delivery of the Acquirer Shares to holders of the
                Exchangeable Shares upon retraction, redemption or exchange of the
                Exchangeable Shares in the manner contemplated by the Exchangeable
                Share
                Provisions to register such issuance and delivery of Acquirer Shares
                under
                the U.S. Securities Act or any applicable state securities
                laws.

            

    

     

    
      	 	
              (x)

            	
              Corrupt
                Practices

               

              There
                have been no actions taken by the
                Acquirer, any of its Subsidiaries or any of their affiliates which
                are in
                violation of the United States Foreign Corrupt Practices Act or the
Corruption
                of Foreign Public Officials Act
                (Canada).

            

    

     

    8.2    Investigation

     

    Any
      investigation by the Corporation and its advisors shall not mitigate, diminish
      or affect the representations and warranties of Acquirer provided pursuant
      to
      this Agreement. Where the provisions of Section 8.1 refer to disclosure in
      writing, such disclosure shall be made expressly in response to the applicable
      provision and shall be signed by a senior officer of Acquirer.

     

    ARTICLE
      9

    CONDITIONS

     

    9.1    Conditions
      Precedent to Obligations of Each Party

     

    The
      obligations of the parties hereto to consummate and effect the transactions
      contemplated hereunder shall be subject to the satisfaction or waiver by both
      parties on or before the Closing Date of the following conditions:

     

    
      	 	
              (a)

            	
              the
                Reorganization and the other transactions contemplated hereby shall
                have
                been approved and adopted by the Shareholders, in accordance with
                applicable law and the Corporation's articles and
                bylaws;

            

    

     

    
      	 	
              (b)

            	
              the
                Voting and Exchange Trust Agreement and Support Agreement shall have
                been
                executed and delivered by each of the parties
                thereto;

            

    

     

    
      	 	
              (c)

            	
              all
                Regulatory Approvals shall have been obtained on reasonably satisfactory
                terms and conditions and shall be in full force and effect and all
                applicable statutory or regulatory waiting periods shall have expired
                or
                been terminated and no objection or opposition shall have been filed,
                initiated or made during any applicable statutory or regulatory waiting
                period which would adversely affect Acquirer's ability to consummate
                the
                Reorganization or the transactions contemplated hereby or which is
                or
                would be materially adverse to the business of the Corporation or
                to the
                value of the Shares to Acquirer;

            

    

     

    
      
        
        

      

      
        
        

        
          

        

      

      
        
        

      

    

    
      - 53
        -

       

    

    
      	 	
              (d)

            	
              no
                Shareholders shall have exercised their dissent rights under
                Section 191 of the Act;

            

    

     

    
      	 	
              (e)

            	
              there
                shall not exist any prohibition at law against the consummation of
                the
                Reorganization or the transactions contemplated hereby;
                

            

    

     

    
      	 	
              (f)

            	
              the
                board of directors of the Acquirer shall be comprised of T. Murray
                Wilson,
                Christopher H. Hopkins, Ron Phillips, Tom Milne, Scott Thompson and
                Gordon
                Tallman. The officers of the Acquirer shall be T. Murray Wilson,
                Executive
                Chairman; Christopher H. Hopkins, President and Chief Executive Officer;
                Karim Hirji, Chief Financial Officer; and Errin Kimball, Vice-President,
                Exploration; 

            

    

     

    
      	 	
              (g)

            	
              the
                Acquirer shall have entered into employment agreements in replacement
                of
                the existing employment agreements with each of T. Murray Wilson,
                Christopher H. Hopkins, Karim Hirji and Errin Kimball on terms and
                conditions consistent with customary industry practices and standards;
                and

            

    

     

    
      	 	
              (h)

            	
              the
                fairness opinion described in Section 2.4(b) shall have been delivered
                to
                the Board of Directors.

            

    

     

    9.2    Acquirer
      Conditions

     

    The
      obligations of Acquirer to consummate and effect the transactions contemplated
      hereunder shall be subject to the following conditions:

     

    
      	 	
              (a)

            	
              the
                Corporation shall have performed or complied with, in all material
                respects, each of its obligations, covenants and agreements hereunder
                to
                be performed and complied with by it on or before the Effective Time
                and a
                certificate of the Chief Executive Officer of Corporation, dated
                the
                Closing Date, to that effect shall have been delivered to the Acquirer,
                such certificate to be in form and substance satisfactory to the
                Acquirer,
                acting reasonably;

            

    

     

    
      	 	
              (b)

            	
              each
                of the representations and warranties of the Corporation in this
                Agreement
                (which for purposes of this clause (b) shall be read as though none
                of
                them contained any Material Adverse Effect or other materiality
                qualification), shall be true and correct in all respects on the
                date of
                this Agreement and as of the Closing Date as if made on and as of
                such
                date (except for such representations and warranties made as of a
                specified date, which shall be true and correct as of such specified
                date)
                except where the failure of such representations and warranties in
                the
                aggregate to be true and correct in all respects is not and would
                not be
                reasonably expected to result in a Material Adverse Effect and a
                certificate of the Chief Executive Officer of Corporation, dated
                the
                Closing Date, to that effect shall have been delivered to the Acquirer,
                such certificate to be in form and substance satisfactory to the
                Acquirer,
                acting reasonably;

            

    

     

    
      
        
        

      

      
        
        

        
          

        

      

      
        
        

      

    

    
      - 54
        -

       

    

    
      	 	
              (c)

            	
              no
                act, action, suit or proceeding shall have been taken before or by
                any
                Canadian or United States federal, provincial, territorial, state
                or
                foreign court or other tribunal or governmental agency or other regulatory
                or administrative agency or commission or by any elected or appointed
                public official or other Person in Canada, the United States or elsewhere,
                whether or not having the force of law, and no law, regulation or
                policy
                have been proposed, enacted, promulgated or applied, whether or not
                having
                the force of law, which could reasonably be expected to have the
                effect
                of:

            

    

     

    
      	 	
              (i)

            	
              making
                illegal, or otherwise directly or indirectly restraining or prohibiting
                the Reorganization, the acceptance for payment of, payment for, or
                ownership, directly or indirectly, of some or all of the Shares by
                Acquirer, or the consummation of any of the transactions contemplated
                by
                the Reorganization;

            

    

     

    
      	 	
              (ii)

            	
              prohibiting
                or materially limiting the ownership or operation by the Corporation
                or by
                Acquirer, directly or indirectly, of all or any material portion
                of the
                business or assets of the Corporation, or Acquirer, directly or
                indirectly, or compelling Acquirer, directly or indirectly, to dispose
                of
                or hold separate all or any material portion of the business or assets
                of
                the Corporation or Acquirer, directly or indirectly, as a result
                of the
                transactions contemplated by the
                Reorganization;

            

    

     

    
      	 	
              (iii)

            	
              imposing
                or confirming limitations on the ability of Acquirer, directly or
                indirectly, effectively to acquire or hold or to exercise full rights
                of
                ownership of the Shares, including without limitation the right to
                vote
                any Shares acquired or owned by Acquirer, directly or indirectly,
                on all
                matters properly presented to the Shareholders of the Corporation,
                materially adversely affecting the business, financial condition
                or
                results of operations of the Corporation or the value of the Shares
                to
                Acquirer; or

            

    

     

    
      	 	
              (iv)

            	
              requiring
                divestiture by Acquirer, directly or indirectly, of any Shares or
                any
                Subsidiary;

            

    

     

    
      	 	
              (d)

            	
              the
                Principal Shareholders shall have entered into, and continue to be
                bound
                by and not to have breached, Transaction Support agreements in the
                form
                attached as Schedule C hereto. In addition to the Principal Shareholders,
                all officers and directors of the Corporation shall have entered
                into, and
                continue to be bound by and not to have breached, Transaction Support
                agreements in the form attached as Schedule C hereto, except that
                such
                Transaction Support Agreements shall not include the Option to Purchase
                in
                Section 2 thereof; 

            

    

     

    
      	 	
              (e)

            	
              Christopher
                H. Hopkins and Karim Hirji shall have entered into escrow agreements,
                in
                form and substance satisfactory to the Acquirer, acting reasonably
                in
                consultation with its financial advisors, providing for restrictions
                on
                volume and timing of resale of Acquirer Shares and Exchangeable Shares
                held by them; 

            

    

     

    
      
        
        

      

      
        
        

        
          

        

      

      
        
        

      

    

    
      -
        55 -

       

    

    
      	 	
              (f)

            	
              the
                Corporation shall have delivered to the Acquirer legal opinions of
                Canadian and United States counsel to the Corporation addressing
                the
                matters set out in the Disclosure Letter;
                and

            

    

     

    
      	 	
              (g)

            	
              the
                Acquirer shall be satisfied, acting reasonably, that, after giving
                effect
                to the Reorganization and other than as set forth in the Disclosure
                Letter, none of Acquirer or its then Subsidiaries will be subject
                to any
                limitations under the OS Permits; 

            

    

     

    which
      conditions are for the exclusive benefit of Acquirer and may be waived by
      Acquirer in whole or in part at any time and from time to time, before the
      Effective Time.

     

    9.3    Corporation
      Conditions

     

    The
      obligations of the Corporation to consummate and effect the transactions
      contemplated hereunder shall be subject to the following
      conditions:

     

    
      	 	
              (a)

            	
              the
                Acquirer shall have performed or complied with, in all material respects,
                each of its obligations, covenants and agreements hereunder to be
                performed and complied with by it on or before the Effective Time
                and a
                certificate of the Chief Executive Officer of Acquirer, dated the
                Closing
                Date, to that effect shall have been delivered to the Corporation,
                such
                certificate to be in form and substance satisfactory to the Corporation,
                acting reasonably; 

            

    

     

    
      	 	
              (b)

            	
              each
                of the representations and warranties of Acquirer in this Agreement
                (which
                for purposes of this clause (b) shall be read as though none of them
                contained any material adverse effect or other materiality qualification,
                and with respect to the Acquirer Financial Statements, shall be deemed
                to
                refer to the Acquirer's audited financial statements for the year
                ended
                April 30, 2006), shall be true and correct in all respects on the
                date of
                this Agreement and as of the Closing Date as if made on and as of
                such
                date (except for such representations and warranties made as of a
                specified date, which shall be true and correct as of such specified
                date)
                except where the failure of such representations and warranties in
                the
                aggregate to be true and correct in all respects is not and would
                not be
                reasonably expected to result in a Material Adverse Effect and a
                certificate of the Chief Executive Officer of Acquirer, dated the
                Closing
                Date, to that effect shall have been delivered to the Corporation,
                such
                certificate to be in form and substance satisfactory to the Corporation,
                acting reasonably;

            

    

     

    
      	 	
              (c)

            	
              no
                act, action, suit or proceeding shall have been taken before or by
                any
                Canadian or United States federal, provincial, state or foreign court
                or
                other tribunal or governmental agency or other regulatory or
                administrative agency or commission or by any elected or appointed
                public
                official or other Person in Canada, the United States or elsewhere,
                whether or not having the force of law, and no law, regulation or
                policy
                have been proposed, enacted, promulgated or applied, whether or not
                having
                the force of law, which could reasonably be expected to have the
                effect of
                making illegal, or otherwise directly or indirectly restraining or
                prohibiting the Reorganization, the acceptance for payment of, payment
                for, or ownership, directly or indirectly, of some or all of the
                Shares by
                Acquirer, or the consummation of any of the transactions contemplated
                by
                the Reorganization; 

            

    

     

    
      
        
        

      

      
        
        

        
          

        

      

      
        
        

      

    

    
      
        -
          56 -

         

      

    

    
      	 	
              (d)

            	
              the
                Acquirer shall be a reporting issuer in a jurisdiction of Canada
                for the
                purposes of National Instrument 45-102;

            

    

     

    
      	 	
              (e)

            	
              the
                Acquirer shall have delivered to the Corporation legal opinions of
                Canadian and United States counsel to the Acquirer addressing matters
                set
                forth in the Disclosure Letter; 

            

    

     

    
      	 	
              (f)

            	
              the
                Corporation shall not have identified to the Acquirer through the
                Corporation's due diligence review of the Acquirer any matters which,
                in
                the aggregate, do, or would be reasonably expected to, result in
                a
                Material Adverse Effect on the Acquirer immediately following completion
                of the transactions contemplated by this Agreement; and
                

            

    

     

    
      	 	
              (g)

            	
              the
                Corporation shall be satisfied, acting reasonably, that listing of
                the
                Acquirer Shares on the American Stock Exchange, the Toronto Stock
                Exchange
                or another senior stock exchange in the United States is pending
                and is
                reasonably expected to occur promptly following the Effective
                Time;

            

    

     

    which
      conditions are for the exclusive benefit of the Corporation and may be waived
      by
      the Corporation in whole or in part at any time and from time to time, before
      the Effective Time. 

     

    ARTICLE
      10

    TERMINATION

     

    10.1    Termination

     

    This
      Agreement may be terminated at any time prior to the Effective Time
      (notwithstanding any approval of the Reorganization Resolution):

     

    
      	 	
              (a)

            	
              by
                mutual written consent of Acquirer and the
                Corporation;

            

    

     

    
      	 	
              (b)

            	
              by
                either Acquirer or the Corporation if the Shareholders do not approve
                the
                Reorganization Resolution at the Shareholder
                Meeting;

            

    

     

    
      	 	
              (c)

            	
              by
                either the Corporation or Acquirer, if the Closing Date does not
                occur on
                or before October 31, 2006 (or such other date that the Acquirer
                and the
                Corporation may agree in writing ) provided that the failure is not
                due to
                the party seeking to terminate this Agreement to perform the obligations
                required to be performed by it under this
                Agreement;

            

    

     

    
      	 	
              (d)

            	
              by
                Acquirer, if the Corporation has breached any of its representations,
                warranties, agreements or obligations herein which breach would result
                in
                the failure to satisfy one or more conditions set forth in
                Section 9.2(a) or (b); or

            

    

     

    
      
        
        

      

      
        
        

        
          

        

      

      
        
        

      

    

    
      - 57
        -

       

    

    
      	 	
              (e)

            	
              by
                the Corporation, if Acquirer has breached any of its representations,
                warranties, agreements or obligations herein which breach would result
                in
                the failure to satisfy one or more conditions set forth in
                Section 9.3(a) or (b).

            

    

     

    ARTICLE
      11

    MISCELLANEOUS

     

    11.1    Amendment
      or Waiver

     

    This
      Agreement, may be amended, modified or superseded, and any of the terms,
      covenants, representations, warranties or conditions hereof may be waived,
      but
      only by written instrument executed by Acquirer and the Corporation; provided,
      however, that either Acquirer or the Corporation may in its discretion waive
      a
      condition herein which is solely for its benefit without the consent of the
      other. No waiver of any nature, in any one or more instances, shall be deemed
      or
      construed as a further or continued waiver of any condition or any breach of
      any
      other term, representation or warranty in this Agreement.

     

    11.2    Entire
      Agreement

     

    This
      Agreement and the other documents referred to herein constitute the entire
      agreement between the parties with respect to the subject matter hereof and
      supersede all prior agreements, arrangement or understandings with respect
      thereto.

     

    11.3    Headings

     

    The
      division of the Agreement into Articles, Sections and other partitions and
      the insertion of headings are for convenience of reference only and shall not
      control or affect the meaning or construction of any provisions of this
      Agreement.

     

    11.4    Notices

     

    All
      notices or other communication which are required or permitted hereunder shall
      be communicated confidentially and in writing and shall be sufficient if
      delivered personally, or sent by confidential telecopier addressed as
      follows:

     

       
      To Acquirer:

     

       
      CanWest Petroleum Corporation

       
      1005, 550 - 11th
      Avenue
      S.W.

       
      Calgary, Alberta

       
      T2R 1M7

    

       
      Attention: T.
      Murray
      Wilson

       
      Fax: (403)
      263-9812

     

    
      
        
        

      

      
        
        

        
          

        

      

      
        
        

      

    

    
      - 58
        -

       

    

       
      With a copy to:

     

       
      Macleod Dixon llp

       
      3700 Canterra Tower

       
      400 Third Avenue S.W.

       
      Calgary, Alberta T2P 4H2

       
      Attention:  Craig
      Hoskins 

       
      Fax: (403)
      264-5973

     

       
      To the Corporation:

     

       
      Oilsands Quest Inc.

       
      1005, 550 - 11th
      Avenue
      S.W.

       
      Calgary, Alberta

       
      T2R 1M7

      

       
      Attention: Christopher
      H. Hopkins

       
      Fax: (403)
      263-9812

     

       
      With a copy to:

    
    

       
      Tingle Merrett LLP

       
      1250, 639 - 5th
      Avenue,
      S.W.

       
      Calgary, Alberta

       
      T2P 0M9

    
 

       
      Attention:  Jeff
      Helper

       
      Telecopier:  (403)
      571-8008

     

    11.5    Counterparts
      and Facsimiles

     

    This
      Agreement may be executed in any number of counterparts and each such
      counterpart shall be deemed to be an original instrument but all such
      counterparts together shall constitute but one Agreement. The parties hereto
      shall be entitled to rely upon delivery of an executed facsimile copy of the
      Agreement, and such facsimile copy shall be legally effective to create a valid
      and binding agreement between the parties hereto.

     

    11.6    Expenses

     

    Each
      party will pay its own expenses. The Corporation represents and warrants that,
      except for fees payable to CIBC World Markets Inc. pursuant to the engagement
      letter dated April 28, 2006 and to Genuity Capital Markets pursuant to the
      engagement letter dated June 7, 2006, copies of which has been provided to
      Acquirer, no broker, finder or investment banker is entitled to any brokerage,
      finder's or other fee or commission, or to the reimbursement of any of its
      expenses, in connection with the Reorganization. The Corporation has provided
      to
      Acquirer a correct and complete copy of all agreements between the Corporation
      and its financial advisors as are in existence at the date hereof. The
      Corporation covenants not to amend the terms of any such agreements relating
      to
      the payment of fees and expenses without the prior written approval of Acquirer.
      The Acquirer represents and warrants that, except for fees payable to TD
      Securities Inc. pursuant to the engagement letter dated March 22, 2006, a copy
      of which has been provided to Corporation, no broker, finder or investment
      banker is entitled to any brokerage, finder's or other fee or commission, or
      to
      the reimbursement of any of its expenses, in connection with the Reorganization.
      The Acquirer has provided to the Corporation a correct and complete copy of
      all
      agreements between the Acquirer and its financial advisors as are in existence
      at the date hereof. The Acquirer covenants not to amend the terms of any such
      agreements relating to the payment of fees and expenses without the prior
      written approval of the Corporation. 

     

    
      
        
        

      

      
        
        

        
          

        

      

      
        
        

      

    

    
      
        - 59
          -

         

      

    

    11.7    Assignment

     

    Acquirer
      may assign all or any part of its rights or obligations under this Agreement
      to
      a direct or indirect wholly-owned Subsidiary of Acquirer or any other party
      related to Acquirer, but, if such assignment takes place, Acquirer shall
      continue to be liable to the Corporation for any default in performance by
      the
      assignee. This Agreement shall not otherwise be assignable by either party
      without the prior written consent of the other party.

     

    11.8    Severability

     

    If
      any
      term, provision, covenant or restriction of this Agreement is held by a court
      of
      competent jurisdiction to be invalid, void or unenforceable, the remainder
      of
      the terms, provisions, covenants and restrictions of this Agreement shall remain
      in full force and effect and shall in no way be affected, impaired or
      invalidated and the parties shall negotiate in good faith to modify this
      Agreement to preserve each party's anticipated benefits under this
      Agreement.

     

    11.9    Choice
      of Law

     

    This
      Agreement shall be governed by, construed and interpreted in accordance with
      the
      laws of the Province of Alberta.

     

    11.10   Attornment

     

    The
      parties hereby irrevocably and unconditionally consent to and submit to the
      courts of the Province of Alberta for any actions, suits or proceedings arising
      out of or relating to this Agreement or the matters contemplated hereby (and
      agree not to commence any action, suit or proceeding relating thereto except
      in
      such courts) and further agree that service of any process, summons, notice
      or
      document by single registered mail to the addresses of the parties set forth
      in
      this Agreement shall be effective service of process for any action, suit or
      proceeding brought against either party in such court. The parties hereby
      irrevocably and unconditionally waive any objection to the laying of venue
      of
      any action, suit or proceeding arising out of this Agreement or the matters
      contemplated hereby in the courts of the Province of Alberta and hereby further
      irrevocably and unconditionally waive and agree not to plead or claim in any
      such court that any such action, suit or proceeding so brought has been brought
      in an inconvenient forum.

     

    
      
        
        

      

      
        
        

        
          

        

      

      
        
        

      

    

    
      - 60
        -

       

    

    11.11    Remedies

     

    The
      parties hereto agree that irreparable damage would occur in the event that
      any
      of the provisions of this Agreement were not performed in accordance with their
      specific terms or were otherwise breached. It is accordingly agreed that the
      parties shall be entitled to an injunction or injunctions to remedy or prevent
      non-compliance with or breaches of the terms of this Agreement and to enforce
      specifically the terms and provisions hereof in any court of the Province of
      Alberta having jurisdiction; provided that such remedies shall be in addition
      to, and not in substitution for, any other remedy to which the parties may
      be
      entitled at law or in equity.

     

    11.12    Survival
      of Representations and Warranties

     

    The
      representations and warranties of the Corporation and Acquirer contained in
      this
      Agreement shall not survive the completion of the Reorganization and shall
      expire and be terminated at the earlier of the Effective Time and (except in
      respect of a termination pursuant to Sections 10.1(d) or (e) in
      which
      respect the covenants, representations and warranties of the Corporation or
      Acquirer, respectively, shall survive the termination of this Agreement) the
      date on which this Agreement is terminated in accordance with its
      terms.

     

    11.13    Time
      of Essence

     

    Time
      shall be of the essence in this Agreement.

     

    IN
      WITNESS WHEREOF the parties hereto have caused this Agreement to be executed
      on
      their behalf by their officers thereunto duly authorized as of the date first
      written above.

     

    
      	 	 	 
	 	CANWEST
              PETROLEUM CORPORATION
	 
 	 
 	 
 
	 	By:  	/s/ T.
              Murray
              Wilson 
	 	
              

            

    

    
      
        	 	 	 
	 	OILSANDS
                QUEST INC.
	 
 	 
 	 
 
	 	By:  	/s/ Christopher
                H. Hopkins

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