Document:

Convertible Senior Note

     

    Exhibit
      10.1

    
 

    CONVERTIBLE
      SENIOR NOTE

     

    
      	
              $3,000,000

            	
              June
                28, 2007

            

    

     

    FOR
      VALUE
      RECEIVED, the undersigned, TRITON DISTRIBUTION SYSTEMS, INC., a Colorado
      corporation (“Borrower”
or
      “Company"), hereby promises to pay to JMW FUND LLC., SAN GABRIEL FUND LLC.,
      UNDERWOOD FAMILY PARTNERS, LTD., AND BATTERSEA CAPITAL, INC., (hereinafter
      collectively the “Lender”
or
      “Lenders”),
      or
      order, the principal sum or so much of the principal sum of Three Million
      Dollars ($3,000,000) as remains unpaid together with accrued interest as
      provided herein on or before the Maturity Date. This Note is being delivered
      pursuant to a Term Sheet between the Borrower and Lender executed as of [insert
      date] which provides for the following:

    

    
      	 	
              A

            	
              Advances.
                Of the Three Million Dollars ($3,000,000), one million dollars
                ($1,000,000) may be drawn no later than June 30, 2007; one million
                dollars
                ($1,000,000) may be drawn no later than July 30, 2007; and the one
                million
                dollar promissory note payable to the Lender under The Line of Credit
                Loan
                Agreement dated March 28, 2007 (“Loan Agreement”), will be converted as
                the first drawdown upon execution of this Note. All terms and conditions
                of the promissory note dated March 28, 2007 under the Loan Agreement
                will
                be replaced by the terms and conditions of this
                Note.

            

    

     

    
      	 	
              B

            	
              Interest.
                Interest shall accrue on all obligations hereunder at one percent
                (1%) per
                month. Interest payable hereunder shall be calculated on the basis
                of a
                three hundred sixty (360) day year for actual days elapsed. All accrued
                interest shall be due and payable on the Maturity Date. Notwithstanding
                the foregoing, the principal sum hereunder shall bear interest, from
                and
                after the occurrence and during the continuance of an Event of Default,
                at
                a rate equal to one and one half percent (1.5%) per month the interest
                rate applicable immediately prior to the occurrence of the Event
                of
                Default. In no event, however, will the interest rate payable hereunder
                exceed the maximum interest rate allowed by applicable usury and
                other
                laws (the “Maximum
                Legal Rate”),
                and the Borrower’s obligations under this Note will be reduced if
                necessary to not exceed the Maximum Legal
                Rate.

            

    

     

    
      	 	
              C

            	
              Payment.

            

    

     

    
      	 	
              a.

            	
              Principal
                Payment.
                On the Maturity Date, all outstanding principal and all accrued and
                unpaid
                interest shall become immediately due and
                payable.

            

    

     

    
      	 	
              b.

            	
              Interest
                Payment.
                Borrower will pay accrued interest monthly in arrears beginning July
                1,
                2007 on the outstanding balance. 

            

    

     

    
      	 	
              c.

            	
              Prepayment.
                Borrower may prepay this Note and will not be subject to any penalty
                for
                prepayment made in whole or part prior to July 1, 2008.
                

            

    

     

    
      
        
        

      

      
        
        

        
          

        

      

      
        
        

      

    

    
      	 	
              d.

            	
               Form
                of Payment.
                Except as otherwise provided herein, principal and interest and all
                other
                amounts due hereunder are to be paid in lawful money of the United
                States
                of America in federal or other immediately available
                funds.

            

    

     

    
      	 	
              D

            	
              Commitment
                Fee:

            

    

     

    
      	 	
              a.

            	
              Two
                million warrants will be issued to the Lender at time of closing
                as per
                the “Schedule of Lenders” in Appendix A attached. These warrants will have
                a term of five years from closing. Each warrant will be exercisable
                into
                one share of common stock at a price of three dollars ($3.00) per
                share.
                Borrower agrees to register the underlying two million shares when
                they
                update their SB-2 filings but in no event later than December 31,
                2007.

            

    

     

    
      	 	
              b.

            	
              Cashless
                Exercise. The Lender shall have the option (the “Cashless Exercise
                Option”), to exercise these warrants, in whole but not in part, by the
                surrender of these warrants and the Form of Exercise (and without
                payment
                of the Purchase
                Price in cash) in exchange for a number of whole shares of the Company's
                Common Stock equal to the product of (i) the number of shares of
                Company's
                Common Stock for which these warrants are exercisable as of the business
                day on which these warrants are received by Borrower (the “Cashless
                Exercise Date"), and (ii) the Cashless Exercise Ratio (the “Cashless
                Exercise”). The “Cashless Exercise Ratio” shall be determined in
                accordance with the following formula:

            

    

     

    

    Final
      Price on Cashless Exercise Date - Exercise Price

    Final
      Price on Cashless Exercise Date

    

    where:
      “Final Price” means, on any day, the last reported sale price per share of the
      Company Common Stock for that day. The “Cashless Exercise Date” shall be deemed
      the “Exercise Date” under these warrants.

    

    
      	 	
              E

            	
              Convertibility
                of Note:

            

    

     

    
      	 	
              a.

            	
              This
                outstanding principal balance of the Note can be converted into common
                shares at any time thirty (30) days after execution of this Note
                at the
                Lender’s sole discretion. Common stock underlying existing derivatives or
                warrants (including, without limitation to, common stock pursuant
                to
                existing warrants and employee options) excepted, in the event that
                Borrower issues new common stock or any new security convertible
                into
                common stock at a price lower than three dollars ($3.00) per share
                following the delivery of this Note, then this Note will be convertible
                into the number of common shares at the then price issued divided
                into the
                outstanding principal of this Note immediately prior to
                conversion.

            

    

     

    
      
        
        

      

      
        
        

        
          

        

      

      
        
        

      

    

    
      	 	
              F

            	
              Security:
                

            

    

     

    
      	 	
              a.

            	
              Lender
                will be senior to any debt issued by Borrower including but not limited
                to
                any bank or institutional debt. Lenders will file a UCC-1 or other
                filing
                which secures their interest.

            

    

     

    
      	 	
              G

            	
              Conditions
                Precedent:

            

    

     

    
      	 	
              a.

            	
              The
                existing Board of Directors of the Company agrees to increase the
                Company’s current Board composition from two to five directors.
                

            

    

     

    
      	 	
              b.

            	
              The
                current Board Directors of the Company are Mr. Gregory Lykiardopoulos
                and
                Mr. Khaled Magdy El-Marsafy who shall reserve the right to remove
                any or
                all of the elected members following full payment of any outstanding
                amount of the principal owed. 

            

    

     

    
      	 	
              c.

            	
              Elected
                board members will be paid a nominal fee for each board meeting attended
                and will be participants in the Company’s qualified stock option plan
                (“Compensation”), such appropriate Compensation to be solely determined by
                the current Board Directors.

            

    

     

    
      	 	
              d.

            	
              Board
                members will have monthly financial and progress reports focused
                on the
                Company’s ability to implement its current contract obligations and
                development plans.

            

    

     

    
      	 	
              H

            	
              Events
                of Default; Remedies.

            

    

     

    
      	 	
              a.

            	
              Definition
                of Event of Default.
                The occurrence of any one or more of the following events shall constitute
                an “Event
                of Default”
                hereunder:

            

    

     

    
      	 	
              i.

            	
              Payment
                Default.
                Borrower’s breach of the obligation to pay the principal outstanding
                and/or interest accrued hereunder on the applicable due
                date.

            

    

     

    
      	 	
              ii.

            	
              Bankruptcy.
                If Borrower becomes insolvent or the institution by Borrower of an
                Insolvency Proceeding or the institution against Borrower of an Insolvency
                Proceeding;

            

    

     

    
      	 	
              iii.

            	
              Untimely
                filing of mandatory reports with the Securities and Exchange
                Commission.
                If Borrower is unable to file on a timely basis reports (including
                the
                Form 10-Q) with the Securities and Exchange Commission for the period
                starting June 30, 2007 until on or before December 31, 2008.
                Notwithstanding any provision herein, Borrower shall not be in default
                if
                an extension to file is permitted by the Securities and Exchange
                Commission or required in the ordinary conduct of the Company’s
                business.

            

    

     

    
      
        
        

      

      
        
        

        
          

        

      

      
        
        

      

    

    
      	 	
              I

            	
              Conversion
                Rights.

            

    

     

    
      	 	
              a.

            	
              Voluntary
                Conversion.
                Lender may, in its sole discretion, at any time thirty (30) days
                after
                execution of this Note elect to convert (the “Voluntary
                Conversion Right”)
                all of the outstanding principal balance hereunder into such number
                of
                fully paid and nonassessable Shares as determined by dividing the
                principal being converted by the Conversion Price subject to
                Section E hereof. 

            

    

     

    
      	 	
              b.

            	
              Exercise
                of Conversion Right.
                To convert any of the principal hereunder into Shares by exercise
                of the
                Voluntary Conversion Right, Lender shall deliver to Borrower a written
                notice of election to exercise the Voluntary Conversion Right (the
                “Voluntary
                Conversion Notice”).
                Borrower shall, as soon as practicable thereafter, issue and deliver
                to
                Lender a certificate or certificates, registered in Lender’s name, for the
                number of Shares to which Lender shall be entitled by virtue of such
                exercise (the “Voluntary
                Conversion Shares”).
                The conversion of the outstanding principal hereunder shall be deemed
                to
                have been made on the date that Borrower receives the Voluntary Conversion
                Notice (the “Conversion
                Date”)
                and Lender shall be treated for all purposes as the record holder
                of the
                Voluntary Conversion Shares as of such date to the extent permitted
                under
                applicable law.

            

    

     

    
      	 	
              c.

            	
              Interest.
                If Lender exercises its Voluntary Conversion Right with respect to
                any
                outstanding principal amount, Borrower shall, concurrent with the
                issuance
                of the related Voluntary Conversion Shares, pay to Lender all interest
                accrued with respect to the principal converted, which payment shall
                be
                made in the form of cash, by converting such interest into principal
                hereunder, or additional Voluntary Shares. The form of the payment
                shall
                be at the discretion of the
                Borrower.

            

    

     

    
      	 	
              d.

            	
              Fractional
                Shares.
                Borrower shall not issue fractional Shares upon exercise of the Voluntary
                Conversion Right. As to any fractional Share which Lender would otherwise
                be entitled to receive, Lender shall receive from Borrower an amount
                in
                cash equal to an amount calculated by multiplying such fractional
                Share by
                the fair market value of one Share as determined by the closing price
                of a
                Share as reported on the OTCBB or such other exchange where shares
                of
                Borrower's common stock are traded (or if not traded, as determined
                in the
                good faith judgment of the Board of Directors of Borrower) on the
                date of
                exercise of the Voluntary Conversion Right. Payment of such amount
                shall
                be made in cash or by check payable to the order of Lender at the
                time of
                delivery of any certificate or
                certificates.

            

    

     

    
      	 	
              J

            	
              Merger,
                Acquisition, Sale of Assets.

            

    

     

    
      	 	
              a.

            	
              In
                case of any consolidation of Borrower with any other person, any
                merger of
                Borrower into another person or of another person into Borrower (other
                than a merger which does not result in any reclassification, conversion,
                exchange or cancellation of the outstanding Shares) or any conveyance,
                sale, transfer or lease of all or substantially all of the properties
                and
                assets of Borrower (all of the foregoing transactions are collectively
                referred to herein as “M & A Transactions”; each, a “M & A
                Transaction”), the person formed by such consolidation or resulting from
                such merger or which acquires such properties and assets, as the
                case may
                be, shall assume this obligations of this Note such that Lender shall
                have
                the right thereafter, to convert this Note as specified in Section
                D into
                the kind and amount of securities, cash and other property receivable
                upon
                such M & A Transaction (including any Shares retainable) by a holder
                of the number and type of the Shares into which this Note might have
                been
                converted immediately prior to such M & A Transaction, assuming such
                holder (i) is not a person with which Borrower consolidated, into
                which
                Borrower merged or which merged into Borrower or to which such conveyance,
                sale, transfer or lease was made, as the case may be (a “Constituent
                Person”), or an Affiliate of a Constituent Person and (ii) failed to
                exercise his rights of election, if any, as to the kind or amount
                of
                securities, cash and other property receivable upon such M & A
                Transaction (provided that if the kind or amount of securities, cash
                and
                other property receivable upon such M & A Transaction is not the same
                for each Share held immediately prior to such M & A Transaction by
                persons who were not a Constituent Person or an Affiliate thereof
                and in
                respect of which such rights of election shall not have been exercised
                (“Non-electing Share”), then for the purpose of this Section the kind and
                amount of securities, cash and other property receivable upon such
                M &
                A Transaction by the holders of each Non-electing Share shall be
                deemed to
                be the kind and amount so receivable per share by a plurality of
                the
                Non-electing Shares). Such supplemental agreement shall provide for
                adjustments which, for events subsequent to the effective date of
                such
                supplemental agreement, shall be as nearly equivalent as may be
                practicable to the adjustments provided for in this Section E. The
                above
                provisions of this Section E shall similarly apply to successive
                M & A
                Transactions.

            

    

     

    
      
        
        

      

      
        
        

        
          

        

      

      
        
        

      

    

    
      	 	
              K

            	
              Piggyback
                Registration Rights.

            

    

     

    
      	 	
              a.

            	
              Borrower
                shall notify Lender in writing at least ten (10) days prior to filing
                any
                registration statement under the Securities Act for purposes of effecting
                a public offering of securities of Borrower (including, but not limited
                to, registration statements relating to secondary offerings of securities
                of Borrower, but excluding registration statements relating to any
                employee benefit plan, business combination, or to transactions
                contemplated by Rule 145 under the Securities Act) and will afford
                Lender
                an opportunity to include in such registration statement all or any
                part
                of the Shares issued upon conversion of this Note (the "Converted
                Shares")
                then held by Lender. Lender shall within five (5) days after receipt
                of
                the above described notice from Borrower, so notify Borrower in writing,
                and in such notice shall inform Borrower of the number of Converted
                Shares
                Lender wishes to include in such registration statement. [Subject
                to the
                requirement that Lender include at least 50% of the Converted Shares
                in
                the offering,] if Lender does not include all of its Converted Shares
                in a
                registration statement thereafter filed by Borrower, Lender shall
                continue
                to have the right to include Converted Shares in any subsequent
                registration statement or registration statements as may be filed
                by
                Borrower with respect to offerings of its securities, upon the terms
                and
                conditions set forth herein.

            

    

     

    
      	 	
              b.

            	
              Underwriting.
                If a registration statement under which Borrower gives notice under
                this
                Section F is for an underwritten offering, then Borrower shall so
                advise
                the Lender. In such event, the right of any Converted Shares to be
                included in a registration pursuant to this Section F shall be conditioned
                upon Lender’s participation in such underwriting and the inclusion of the
                Converted Shares in the underwriting to the extent provided herein.
                Lender
                proposing to distribute their Converted Shares through such underwriting
                shall enter into an underwriting agreement in customary form with
                the
                managing underwriter or underwriters selected for such underwriting
                (including a market stand-off agreement of up to 180 days if required
                by
                such underwriters). Notwithstanding any other provision herein, if
                the
                managing underwriter(s) determine(s) in good faith that marketing
                factors
                require a limitation of the number of shares to be underwritten,
                then the
                managing underwriter(s) may exclude shares from the registration
                and the
                underwriting, and the Converted Shares sought to be included in the
                registration and the underwriting may be excluded in whole or in
                part. Any
                Converted Shares excluded or withdrawn from such underwriting shall
                be
                excluded and withdrawn from the
                registration.

            

    

     

    
      	
            	c.	
              Expenses. All
                expenses incurred by Borrower in complying with its obligations under
                this
                Section F, including, without limitation, all registration and filing
                fees, fees and expenses of complying with securities and blue sky
                laws,
                printing expenses and fees and disbursements of counsel for Borrower
                and
                of independent certified public accountants shall be paid by Borrower;
                provided,
                however,
                that all underwriting discounts and selling commissions and stock
                transfer
                taxes applicable to the Converted Shares covered by any registration
                effected pursuant to this Section F and all fees and disbursements
                of
                counsel to Lender or any holder of Converted Shares shall be borne
                by the
                seller or sellers thereof.

            

    

     

    
      
        
        

      

      
        
        

        
          

        

      

      
        
        

      

    

    
      	 	
              d.

            	
              Termination
                of Registration Obligations.
                The registration rights and the registration obligations of Borrower
                set
                forth herein shall terminate on the fifth anniversary of the Note
                subject
                to earlier termination of such registration rights once the Converted
                Shares can be sold by Lender or any other holder thereof in any three
                month period pursuant to Rule 144 promulgated by the Commission under
                the
                Securities Act.

            

    

     

    
      	 	
              L

            	
              Additional
                Conversion Provisions.

            

    

     

    
      	 	
              a.

            	
              Borrower
                shall at all times reserve and keep available, free from preemptive
                rights, out of its authorized but unissued common stock, for the
                purpose
                of effecting the conversion of this Note, the full number of shares
                of
                common stock then issuable upon the conversion of this Note. Borrower
                agrees that all Shares which may be delivered upon conversion of
                this
                Note, upon such delivery, will have been duly authorized and validly
                issued and will be fully paid and nonassessable (and shall be issued
                out
                of Borrower’s authorized but unissued common stock) and, except as
                provided in the next subsection, Borrower will pay all taxes, liens
                and
                charges with respect to the issue
                thereof.

            

    

     

    
      	 	
              b.

            	
              Except
                as provided in the next sentence, Borrower will pay any and all taxes
                and
                duties that may be payable in respect of the issue or delivery of
                the
                Shares on conversion of this Note. Borrower shall not, however, be
                required to pay any tax or duty which may be payable in respect of
                any
                transfer involved in the issue and delivery of the Shares in a name
                other
                than that of Lender, and no such issue or delivery shall be made
                unless
                and until the person requesting such issue has paid to Borrower the
                amount
                of any such tax or duty, or has established to the satisfaction of
                Borrower that such tax or duty has been
                paid.

            

    

     

    
      	 	
              M

            	
              Definitions.
                As used herein, the following terms shall have the following
                meanings:

            

    

     

    
      	 	
              a.

            	
              “Conversion
                Price”:
                Three Dollars ($3.00), subject to adjustment as provided
                herein.

            

    

     

    
      	 	
              b.

            	
              “Convertible
                Securities”:
                evidence of indebtedness or other securities which are convertible
                into or
                exchangeable for, with or without payment of additional consideration,
                Shares, either immediately or upon the arrival of a specified date
                or the
                happening of a specified event or
                both.

            

    

     

    
      	 	
              c.

            	
              “Maturity
                Date”: July
                1, 2008.

            

    

     

    
      	 	
              d.

            	
              “Shares”:
                shares of the Borrower’s common stock, no par value per share, or any
                security issued in exchange for such common
                stock.

            

    

     

    
      
        
        

      

      
        
        

        
          

        

      

      
        
        

      

    

    
      	 	
              N

            	
              Governing
                Law and Jurisdiction & Arbitration.
                Except
                for either Borrower or Lender’s right to equitable remedies (including
                without limitation to injunctive relief) all controversies arising
                under
                this Agreement shall be submitted to final and binding arbitration
                in
                accordance with rules of the American Arbitration Association in
                the City
                and County of San Francisco, in the State of
                California.

            

    

     

    
      	 	
              O

            	
              Notices.
                Any notice or communication required or desired to be served, given
                or
                delivered hereunder shall be in the form and manner specified below,
                and
                shall be addressed to the party to be notified as
                follows:

            

    

     

    
      	
            	If
              to Lender:	
              JMW
                FUND, LLC.

            

    

    4
      Richland Place, Pasadena, CA 91103

    Attn:
      John McGrain

    Telecopier:

     

    SAN
      GABRIEL FUND LLC.

    4
      Richland Place, Pasadena, CA 91103

    Attn:
      Justin Yorke

    Telecopier:

     

    UNDERWOOD
      FAMILY PARTNERS, LTD.

    5
      Eagle
      Pointe Land, Castle Rock, CO 80108

    Attn:
      Michael Underwood

    Telecopier:

    

    BATTERSEA
      CAPITAL, INC.

    PO
      BOX
      153 Santa Monica, CA 90406

    Attn:
      Matt Lepo

    Telecopier:

    

     

    
      	
            	If
              to Borrower:	
              TRITON
                DISTRIBUTION SYSTEMS, INC.

            

    

    One
      Harbor Drive, Suite 300

    Sausalito,
      CA 94965

    Attention:
      Michael W. Overby, Chief Financial Officer

    Telecopier:
      (415) 332 6137

     

    or
      to
      such other address as each party designates to the other by notice in the manner
      herein prescribed. Notice shall be deemed given hereunder if (i) delivered
      personally or otherwise actually received, (ii) sent by overnight delivery
      service, (iii) mailed by first-class United States mail, postage prepaid,
      registered or certified, with return receipt requested, or (iv) sent
      via telecopy
      machine with a duplicate signed copy sent on the same day as provided in clause
      (ii) above. Notice mailed as provided in clause (iii) above shall be effective
      upon the expiration of three (3) business days after its deposit in the United
      States mail, and notice telecopied as provided in clause (iv) above shall be
      effective upon receipt of such telecopy if the duplicate signed copy is sent
      under clause (iv) above. Notice given in any other manner described in this
      section shall be effective upon receipt by the addressee thereof; provided,
      however,
      that if
      any notice is tendered to an addressee and delivery thereof is refused by such
      addressee, such notice shall be effective upon such tender unless expressly
      set
      forth in such notice.

     

    
      
        
        

      

      
        
        

        
          

        

      

      
        
        

      

    

    
      	 	
              P

            	
              Lender’s
                Rights; Borrower Waivers.
                Lender’s acceptance of partial or delinquent payment from Borrower
                hereunder, or Lender’s failure to exercise any right hereunder, shall not
                constitute a waiver of any obligation of Borrower hereunder, or any
                right
                of Lender hereunder, and shall not affect in any way the right to
                require
                full performance at any time thereafter. Borrower waives presentment,
                diligence, demand of payment, notice, protest and all other demands
                and
                notices in connection with the delivery, acceptance, performance,
                default
                or enforcement of this Note. In any action on this Note, Lender need
                not
                produce or file the original of this Note, but need only file a photocopy
                of this Note certified by Lender be a true and correct copy of this
                Note
                in all material respects. No provision of this Note shall alter or
                impair
                the obligation of Borrower, which is absolute and unconditional,
                to pay
                the principal of and interest on this Note at the times, places and
                rate,
                and in the coin or currency, herein prescribed or to convert this
                Note as
                herein provided. This clause shall not invalidate Borrower’s rights to
                set-off and counterclaim where Borrower has paid either partially
                or in
                full any outstanding amount that is in full satisfaction of the principal
                sum drawn under this Note to one or more of the Lenders.
                

            

    

     

    
      	 	
              Q

            	
              Arbitration
                Costs.
                Borrower shall pay all reasonable arbitration costs and expenses
                Lender
                expends or incurs arising from arbitration proceedings in connection
                with
                this Note.

            

    

     

    
      	 	
              R

            	
              Severability.
                Whenever possible each provision of this Note shall be interpreted
                in such
                manner as to be effective and valid under applicable law, but if
                any
                provision is prohibited by or invalid under applicable law, it shall
                be
                ineffective to the extent of such prohibition or invalidity, without
                invalidating the remainder of the provision or the remaining provisions
                of
                this Note.

            

    

     

    
      	 	
              S

            	
              Amendment
                Provisions.
                This Note may not be amended or modified, nor may any of its terms
                be
                waived, except by written instruments signed by Borrower and
                Lender.

            

    

     

    
      	 	
              T

            	
              Binding
                Effect.
                This Note shall be binding upon, and shall inure to the benefit of,
                each
                of Borrower and the holder hereof and their respective successors
                and
                assigns; provided,
                however,
                that Borrower’s rights and obligations shall not be assigned or delegated
                without Lender’s prior written consent, given in its sole discretion, and
                any purported assignment or delegation without such consent shall
                be void
                ab initio.

            

    

     

    
      	 	
              U

            	
              Time
                of Essence.
                Time is of the essence of each and every provision of this
                Note.

            

    

     

    
      	 	
              V

            	
              Headings.
                Section headings used in this Note have been set forth herein for
                convenience of reference only. Unless the contrary is compelled by
                the
                context, everything contained in each section hereof applies equally
                to
                this entire Note. 

            

    

     

    [Signatures
      on next page.]

     

    
      
        
        

      

      
        
        

        
          

        

      

      
        
        

      

    

    The
      execution and delivery of this Note reflects satisfaction in full for all of
      Borrower's outstanding obligations under The Loan Agreement and as amended
      per
      the terms and conditions of the Term Sheet for Triton Distribution Systems
      executed by both Borrower and Lender on _______________, and concurrent with
      the
      execution of this Note, Borrower shall have no further obligations outstanding
      under the Loan Agreement.

    

     

    
      	 	
              TRITON
                DISTRIBUTION SYSTEMS, INC.

            
	 	 
	 	
              By___________________________________

               

              Print
                Name Gregory
                Lykiardopoulos

               

              Title
                Chairman
                & Chief Executive Officer

            
	 	 
	 	 
	 	
              TRITON
                DISTRIBUTION SYSTEMS, INC.

            
	 	 
	 	
              By
                __________________________________

               

              Print
                Name Michael
                W. Overby

               

              Title
                Chief
                Financial Officer

            

    

     

     

    
      
        
        

      

      
        
        

        
          

        

      

      
        
        

      

    

    Appendix
      A

    

    Schedule
      of Lenders

    

    
      	
              Lender

            	
              Address
                & Fax No.

            	
              Number
                of 

              Warrants

            	
              Purchase
                Price

            	
              Legal
                Representative’s 

              Address
                & Fax No.

            
	
              JMW
                FUND LLC., 

            	
              4
                Richland Place,

              Pasadena,
                CA 91103.

              Fax:

            	
              1,000,000

            	
              $1,500,000

            	 
	
              SAN
                GABRIEL FUND LLC.

            	
              4
                Richland Place, 

              Pasadena,
                CA 91103.

              Fax:

            	
              333,333

            	
              $500,000

            	 
	
              UNDERWOOD
                FAMILY PARTNERS, LTD. 

            	
              5
                Eagle Pointe Land, 

              Castle
                Rock, CO 80108.

              Fax:

            	
              333,333

            	
              $500,000

            	 
	
              BATTERSEA
                CAPITAL, INC.,

            	
              Po
                Box 156, 

              Santa
                Monica, CA 90406.

              Fax:

            	
              333,333

            	
              $500,000

            	 
	
              TOTAL

            	 	
              2,000,000

            	
              $3,000,000Agreement of Purchase and Sale

    EXHIBIT
      10.63

    
 

    Red
      Earth Area, Alberta

     

    AGREEMENT
      OF PURCHASE AND SALE

     

     

    DATED
      as of June 25, 2007

     

     

    AMONG

     

     

    Peace
      Oil Corp.

     

     

    AND

     

     

    North
      Peace Energy Corp.

     

     

    AND

     

     

    Surge
      Global Energy, Inc.

     

    
      
        
        

      

      
        
        

        
          

        

      

      
        
        

      

    

     

    TABLE
      OF CONTENTS

     

    Page

     

    
      
        	1.	DEFINITIONS	
                1

              
	2.	INTERPRETATION	
                8

              
	3.	PURCHASE AND SALE	
                9

              
	4.	ALLOCATION OF PURCHASE PRICE	
                9

              
	5.	PAYMENT OF PURCHASE PRICE	
                9

              
	6.	CLOSING	
                10

              
	7.	THE PURCHASER'S REVIEW AND TITLE
                DEFECTS	
                10

              
	8.	CONVEYANCES AND DELIVERIES	
                10

              
	9.	ADJUSTMENTS	
                11

              
	10.	THE VENDOR'S REPRESENTATIONS AND
                WARRANTIES	
                12

              
	11.	LIMITATIONS ON VENDOR'S REPRESENTATIONS
                AND
                WARRANTIES	
                16

              
	12.	THE PURCHASER'S REPRESENTATIONS AND
                WARRANTIES	
                17

              
	13.	MAINTENANCE OF BUSINESS	
                20

              
	14.	CONDITIONS TO THE CLOSING	
                21

              
	15.	CONSENTS AND PREFERENTIAL RIGHTS	
                24

              
	16.	TERMINATION	
                24

              
	17.	CONFIDENTIALITY	
                26

              
	18.	INFORMATION AND MATERIALS	
                26

              
	19.	LIABILITIES AND INDEMNITIES	
                26

              
	20.	COVENANTS OF THE VENDOR AND THE
                PURCHASER	
                27

              
	21.	VENDOR ACKNOWLEDGEMENT	
                29

              
	22.	SUBROGATION	
                29

              
	23.	WAIVER	
                29

              
	24.	FURTHER ASSURANCES	
                29

              
	25.	ASSIGNMENT	
                29

              
	26.	NOTICE	
                29

              
	27.	GOVERNING LAW	
                30

              
	28.	ENTIRE AGREEMENT	
                30

              
	29.	ENUREMENT	
                31

              
	30.	SEVERABILITY	
                31

              
	31.	TIME	
                31

              
	32.	PROMISSORY NOTES	
                31

              
	33.	GUARANTEE OF OBLIGATIONS	
                31

              

      

    

    Schedule "A" Petroleum
      and Natural Gas Rights

    Schedule "B" Wells

    Schedule "C" Tangibles

    Schedule "D" AFE's

    Schedule "E" Take
      or
      Pay, Production Sales and Transportation Contracts

    Schedule "F" Conveyance

    Schedule "G" Vendor's
      Disclosure Schedule

    Schedule "H" Officer's
      Certificates

    Schedule "I"
      Certified
      Copy of Vendor's Shareholders' Special Resolution Approving Sale

    Schedule "J" Promissory
      Note No. 1 Form

    Schedule "K" Promissory
      Note No. 2 Form

    Schedule "L" Promissory
      Note No. 3 Form

    Schedule "M" General
      Security Agreement Form

    

    
      
        
        

      

      
        
        

        
          

        

      

      
        
        

      

    

    AGREEMENT
      OF PURCHASE AND SALE

     

    THIS
      AGREEMENT is made the 25th
      day of
      June, 2007

     

    AMONG:

     

    PEACE
      OIL CORP.,
      a
      corporation having an office in Calgary, Alberta (hereinafter called
      the "Vendor")

     

    AND

     

    NORTH
      PEACE ENERGY CORP., a
      corporation having an office in Calgary, Alberta (hereinafter called
      the "Purchaser")

     

    AND

     

    SURGE
      GLOBAL ENERGY, INC.,
      a
      corporation having an office in San Diego, California (hereinafter called
      the "Guarantor")

     

    WHEREAS
      the Purchaser wishes to acquire from the Vendor and the Vendor wishes to sell
      to
      the Purchaser, the Assets on the terms and conditions set forth
      herein.

     

    AND
      WHEREAS the Guarantor has agreed to guarantee the obligations of the Vendor
      hereunder on the terms and conditions contained herein.

     

    For
      good
      and valuable consideration, the receipt and sufficiency of which is hereby
      acknowledged by the Purchaser and the Vendor, the Parties covenant and agree
      with each other as follows:

    
      
         

        
          
            	1.             	
                    DEFINITIONS

                  

          

        

      

    

       

    In
      this
      Agreement (including the recitals hereto, this Clause and each schedule) the
      words and phrases set forth below shall have the meanings ascribed thereto
      below, namely:

     

    
      	(a)  
                	
              "ABCA"
                means the Business
                Corporations Act
                (Alberta) and the regulations promulgated thereunder, as from time
                to time
                amended;

            

    

     

    
      	(b)  
                	
              "Adjusted
                Purchase Price" has the meaning ascribed thereto in
                Subclause 4(b);

            

    

     

    
      	(c)     	
              "Adjustment
                Date" means the Closing Date;

            

    

     

    
      	(d)  
                	
              "AEUB"
                means the Alberta Energy and Utilities
                Board;

            

    

     

    
      	(e)  
                	
              "Applicable
                Laws" means all statutes, laws, rules, orders, directives and regulations
                in effect from time to time and made by governments or governmental
                agencies having jurisdiction over the Assets or the
                Parties;

            

    

     

    
      	(f)  
                	
              "Assets"
                means the Petroleum and Natural Gas Rights, the Tangibles and the
                Miscellaneous Interests;

            

    

     

    
      	(g)  
                	
              "Burdens"
                means all royalty burdens, including lessor's royalties, liens, penalties,
                reduction of interests, adverse claims and
                encumbrances;

            

    

     

    
      
        
        

      

      
        1

        
          

        

      

      
        
        

      

    

     

    
      	(h)  
                	
              "Business
                Day" means any day exclusive of Saturdays, Sundays or statutory holidays
                observed by the post office in Calgary,
                Alberta;

            

    

     

    
      	(i)  
                	
              "Closing"
                means the closing of the purchase and sale herein provided for, including
                the exchange of Conveyance Documents and the payment of the Adjusted
                Purchase Price as set forth in Clause 5
                hereof on the Closing Date;

            

    

     

    
      	(j)  
                	
              "Closing
                Date" means June 28, 2007 unless amended by agreement in writing by
                all Parties and "Closing Time" means 10:00 a.m. (Calgary time) on
                the
                Closing Date;

            

    

     

    
      	(k)  
                	
              "Conveyance
                Documents" means the documents described in Clause 8
                hereof providing for the assignment, conveyance, transfer or other
                disposition of the Assets to the
                Purchaser;

            

    

     

    
      	(l)  
                	
              "Defaulting
                Party" has the meaning ascribed thereto in Subclause 16(b);

            

    

     

    
      	(m)    	
              "Deposit"
                has the meaning ascribed thereto in Subclause 5(a);

            

    

     

    
      	(n)  
                	
              "Dollar"
                or "$" means Canadian currency;

            

    

     

    
      	(o)   
               	
              "Entity"
                shall mean any corporation, including any non-profit corporation,
                general
                partnership, limited partnership, unincorporated association,
                unincorporated syndicate, unincorporated organization, joint venture,
                estate, trust (or a natural person's capacity as trustee, executor,
                administrator or other legal representative) or company (including
                any
                limited liability company), unlimited liability company or joint
                stock
                company;

            

    

     

    
      	(p)  
                	
              "Environmental
                Liabilities" means, but shall not be limited to, all losses, costs,
                damages, penalties, fines, expenses or claims, direct or indirect,
                pertaining to the Assets or arising in connection with ownership
                or
                operations pertaining to the Assets (including liabilities to compensate
                Third Parties) and the effects of and costs of both non-compliance
                or
                compliance with any Applicable Laws that result from or are related
                to:

            

    

     

    
      	(i)    
                	
              pollution
                or contamination of or damage to air, soil, the surface and subsurface
                of
                the earth, bodies of water (including rivers, streams, lakes and
                aquifers)
                and plant and animal life (including human beings) or otherwise to
                the
                environment;

            

    

     

    
      	(ii)   
                	
              corrosion
                or deterioration of structures, equipment, fences and other
                property;

            

    

     

    
      	(iii)  
                	
              transportation,
                storage, use or disposal of toxic or hazardous substances, hazardous,
                dangerous or non-dangerous oilfield substances or
                waste;

            

    

     

    
      	(iv)  
                	
              release,
                spill, escape or emission of toxic or hazardous substances or energy;
                or

            

    

     

    
      	(v)   
                	
              accrued
                abandonment and reclamation
                obligations;

            

    

     

    
      	(q)  
                	
              "Final
                Statement of Adjustments" has the meaning ascribed thereto in
                Subclause 9(h);

            

    

     

    
      	(r)   
                	
              "Governmental
                Authority" shall mean any:

            

    

     

    
      	(i)       	
              nation,
                principality, state, commonwealth, province, territory, county,
                municipality, district or other jurisdiction of any
                nature;

            

    

     

    
      	(ii)      	
              federal,
                state, local, municipal, foreign or other
                government;

            

    

     

    
      
        
        

      

      
        2

        
          

        

      

      
        
        

      

    

     

    
      	(iii)     	
              governmental
                or quasi-governmental authority of any nature (including any governmental
                division, subdivision, department, agency, bureau, branch, office,
                commission, counsel, board, instrumentality, officer, official,
                representative, organization, unit, body or Entity or body exercising,
                or
                entitled to exercise, any executive, legislative, judicial,
                administrative, regulatory, policy, military or taxing authority
                or power
                of any nature);

            

    

     

    
      	(s)  
                	
              "Injured
                Party" has the meaning ascribed thereto in Subclause 16(b);

            

    

     

    
      	(t)   
                	
              "Interim
                Statement of Adjustments" has the meaning ascribed thereto in
                Subclause 9(h);

            

    

     

    
      	(u)  
                	
              "Joint
                Venture Agreement" means that certain Joint Venture Agreement dated
                December 12, 2005 between the Purchaser and the Vendor, as in effect
                on the date of this Agreement, relating to the rights and obligations
                of
                the Purchaser and the Vendor to certain
                lands;

            

    

     

    
      	(v)  
                	
              "Lands"
                means all right, title, interest and estate of the Vendor in the
                lands set
                forth and described in Schedule "A";

            

    

     

    
      	(w) 
                	
              "Leases"
                means collectively the fee simple certificates of title, leases (including
                all oil sands leases), reservations, licenses, permits, royalty agreements
                and other instruments or documents of title, by virtue of which the
                holder
                is entitled to drill for, win, take, own or remove the Petroleum
                Substances within, upon or under all or any part of the Lands (or
                any
                replacement thereof, renewals thereof or leases derived therefrom),
                but
                only insofar as the same relate to the
                Lands;

            

    

     

    
      	(x)  
                	
              "Losses"
                means, in respect of a Party, its officers, directors, employees
                or
                agents, and in relation to any matter, all losses, costs, expenses,
                liabilities and damages which such Party suffers, sustains, pays
                or incurs
                in connection with such matter or circumstance and includes reasonable
                costs of legal counsel (on a full indemnity basis) and such reasonable
                costs of investigating and defending claims arising from such matter,
                but
                does not include consequential, special, indirect losses or damage,
                including without limitation, loss of future
                profit;

            

    

     

    
      	(y) 
                	
              "Miscellaneous
                Interests" means, subject to any and all limitations and exclusions
                provided for in this definition, all right, title, interest and estate
                of
                the Vendor in and to all property, assets and rights, other than
                Petroleum
                and Natural Gas Rights or Tangibles to the extent the same pertain
                to the
                Petroleum and Natural Gas Rights, or the Tangibles and to which the
                Vendor
                is entitled at the Closing Time including, without
                limitation:

            

    

     

    
      	(i)    
                	
              all
                contracts, agreements, and documents to the extent that they directly
                relate to the Petroleum and Natural Gas Rights, the Tangibles, including,
                without limitation, the Title and Operating Documents and any rights
                of
                the Vendor in relation thereto;

            

    

     

    
      	(ii)   
                	
              all
                Surface Interests;

            

    

     

    
      	(iii)  
                	
              all
                Seismic Data;

            

    

     

    
      	(iv)    	
              all
                Technical Information;

            

    

     

    
      	(v)  
                	
              all
                Permits relating to the Petroleum and Natural Gas Rights or the Tangibles;
                and

            

    

     

    
      
        
        

      

      
        3

        
          

        

      

      
        
        

      

    

     

    
      	(vi) 
                	
              all
                Wells including the well bores;

            

    

     

    but
      excluding from each of the foregoing:

     

    
      	(A)  
                	
              the
                Vendor's proprietary technology or
                interpretations;

            

    

     

    
      	(B)  
                	
              the
                Vendor's tax and financial records and economic
                evaluations;

            

    

     

    
      	(C)  
                	
              legal
                opinions;

            

    

     

    
      	(D)  
                	
              documents
                prepared by or on behalf of the Vendor in contemplation of
                litigation;

            

    

     

    
      	(E)  
                	
              such
                of the foregoing as are owned or licensed by Third Parties with
                restrictions that prevent their deliverability or disclosure to the
                Purchaser; and

            

    

     

    
      	(F)  
                	
              those
                that pertain to records required to be maintained under Applicable
                Laws if
                the retention period for those records has
                expired;

            

    

     

    
      	(z)   
                	
              "Party"
                means a person, partnership, corporation or other legal entity who
                has
                agreed to be bound by this
                Agreement;

            

    

     

    
      	(aa) 
                	
              "Permits"
                means permits, licenses, approvals and authorizations issued or granted by
                Government Authorities;

            

    

     

    
      	(bb) 
               	
              "Permitted
                Encumbrances" means any of the
                following:

            

    

     

    
      	(i)     
                	
              liens
                for taxes, assessments and governmental charges for which payment
                is not
                due or if due, the validity of which is being contested in good faith
                by
                or on behalf of the Vendor;

            

    

     

    
      	(ii)    
                	
              easements,
                rights of way, servitudes or other similar rights in land including,
                without limiting the generality of the foregoing, rights of way and
                servitudes for highways, railways, sewers, drains, gas and oil pipelines,
                gas and water mains, electric light, power, telephone, telegraph,
                fibre
                optic or cable television conduits, poles, wires and
                cables;

            

    

     

    
      	(iii)   
                	
              the
                right reserved to or vested in any government or other public authority
                by
                the terms of any or by any statutory provision, to terminate any
                of the
                Title and Operating Documents or to require annual or other periodic
                payments as a condition of the continuance
                thereof;

            

    

     

    
      	(iv)     	
              the
                rights of general application reserved to or vested in any government
                or
                public authority to levy taxes on Petroleum Substances or the income
                or
                revenue therefrom and governmental requirements as to production
                rates on
                the operations of any property or otherwise affecting the value of
                any
                property;

            

    

     

    
      	(v)   
                	
              the
                terms and conditions of the Title and Operating Agreements including
                any
                terms providing for the reversion to the grantor of the rights granted
                thereunder;

            

    

     

    
      	(vi)  
                	
              all
                Burdens listed or referred to in Schedule "A"
                hereto;

            

    

     

    
      
        
        

      

      
        4

        
          

        

      

      
        
        

      

    

     

    
      	(vii) 
                	
              rights
                reserved to or vested in any municipality or governmental, statutory
                or
                public authority to control or regulate any of the Assets in any
                manner
                and all Applicable Laws;

            

    

     

    
      	(viii)
                	
              undetermined
                or inchoate liens incurred or created as a security in favour of
                the
                person conducting the operation of the Assets or supplying goods
                or
                services for the Vendor's proportion of the costs and expenses of
                such
                operations provided such costs and expenses are not due or
                delinquent;

            

    

     

    
      	(ix)   
                	
              the
                reservations, limitations, provisos and conditions in any original
                grants
                from the Crown of any of the Petroleum and Natural Gas Rights or
                interests
                therein and statutory exceptions to
                title;

            

    

     

    
      	(x)    
                	
              provisions
                for penalties and forfeitures under agreements as a consequence of
                non-participation in operations including those penalties under
                independent operations provisions which are described in Schedule "A";

            

    

     

    
      	(xi)   
                	
              the
                proceedings referenced in Subclause 10(k);

            

    

     

    
      	(xii)  
                	
              all
                trust obligations arising out of interests held for Third Parties
                which
                are described in Schedule "A";

            

    

     

    
      	(xiii) 
                	
              liens
                granted in the ordinary course of business to a public utility,
                municipality or governmental authority or liens in connection with
                operations conducted with respect to the Assets, but only to the
                extent
                those liens relate to costs and expenses for which payment is not
                due or
                the validity of which is being contested in good faith by or on behalf
                of
                the Vendor;

            

    

     

    
      	(xiv) 
                	
              agreements
                and plans related to pooling or unitization;
                and

            

    

     

    
      	(xv)  
                	
              any
                defects or deficiencies in title to the Assets disclosed in this
                Agreement
                and any other defects or deficiencies in title to the Assets that
                are
                waived or deemed to be waived
                hereunder;

            

    

     

    
      	(cc) 
                	
              "Person"
                shall mean any individual, sole proprietorship, Entity or Governmental
                Authority;

            

    

     

    
      	(dd) 
                	
              "Petroleum
                and Natural Gas Rights" means all right, title, interest and estate
                of the
                Vendor in and to the Lands, including, without limitation, the interests
                set forth in Schedule "A"
                hereto in and to the Leases to the extent they apply to the
                Lands;

            

    

     

    
      	(ee) 
                	
              "Petroleum
                Substances" means oil sands, bitumen, petroleum, natural gas and
                all
                related hydrocarbons including, without limitation, all liquid
                hydrocarbons and all other mineral substances, whether liquid, solid
                or
                gaseous and whether hydrocarbons or not (except coal but including
                sulphur
                and hydrogen sulphide), produced in association with such oil sands,
                bitumen, petroleum, natural gas or related hydrocarbons or found
                in any
                water produced from the Lands, insofar only as the rights to the
                same are
                granted by the Leases;

            

    

     

    
      	(ff)  
                	
              "Promissory
                Notes" means the promissory notes to be issued by the Vendor to the
                Purchaser pursuant to Subclause 16(c)
                in
                the forms attached hereto as Schedules "J", "K" and
                "L";

            

    

     

    
      	(gg)
                	
              "Purchase
                Price" has the meaning ascribed thereto in Clause 3;

            

    

     

    
      
        
        

      

      
        5

        
          

        

      

      
        
        

      

    

     

    
      	(hh)
                	
              "Right
                of First Refusal" means any pre-emptive right of purchase or similar
                right
                under an agreement in writing whereby any person, other than the
                Vendor or
                the Purchaser, has the right to acquire or purchase all or a portion
                of
                the Assets as a consequence of the Vendor having agreed to sell the
                Assets
                to the Purchaser in accordance
                herewith;

            

    

     

    
      	(ii)  
                	
              "Securities
                Laws" includes, without limitation, all applicable securities laws,
                rules,
                regulations, instruments, notices, blanket orders, statements, procedures
                and policies in the Province of Alberta and the other provinces where
                the
                Purchaser is a reporting issuer or has similar status, including,
                without
                limitation, the rules, regulations and policies of the TSXV, as each
                may
                be amended from time to time;

            

    

     

    
      	(jj)  
                	
              "Seismic
                Data" means all records, books, documents, licences, reports and
                other raw
                data associated with all seismic lines situated on the Lands, including
                without limitation:

            

    

     

    
      	(i)     
                	
              all
                permanent records of basic field data including, but not limited
                to, any
                and all microfilm or paper copies of seismic driller's reports, monitor
                records, observer's reports and survey notes and any and all copies
                of
                magnetic field tapes or conversions
                thereof;

            

    

     

    
      	(ii)    
                	
              all
                permanent records of the processed field data including, but not
                limited
                to, any and all microfilm or paper copies of shot point maps, pre-
                and
                post-stacked record sections including amplitude, phase and structural
                displays, post-stack data manipulations including filters, migrations
                and
                wavelet enhancements, and any and all copies of final stacked tapes
                and
                any manipulations and conversions thereof;
                and

            

    

     

    
      	(iii)   
                	
              in
                the case of 3D seismic, in addition to the foregoing, all permanent
                records or bin locations, bind fold, static corrections, surface
                elevations and any other relevant
                information;

            

    

     

    
      	(kk) 
                	
              "Shares"
                has the meaning ascribed thereto in Subclause 5(c);

            

    

     

    
      	(ll)   
                	
              "Sites"
                means all lands subject to the Surface Interests whether or not the
                Surface Interests are presently in the name of the
                Vendor;

            

    

     

    
      	(mm)  	
              "Surface
                Interests" means all rights of the Vendor to enter upon, use, occupy
                and
                enjoy the surface of the Lands, any lands with which the same have
                been
                pooled or unitized and any lands upon which any Tangibles or any
                Wells are
                located and any lands to be traversed to gain access to the Lands,
                the
                Tangibles or any Wells, which are held for purposes related to the
                use,
                ownership or operation of the Petroleum and Natural Gas Rights, the
                Wells
                or Tangibles, whether the same are held in fee simple, by lease,
                by
                right-of-way, or otherwise;

            

    

     

    
      	(nn)
                	
              "Take
                or Pay Obligations" means, as of a particular time, all obligations
                (including, without limitation, the future obligations of the Vendor
                under
                "take or pay" or similar provisions in respect of contracts for the
                sale
                of Petroleum Substances allowable to the Petroleum and Natural Gas
                Rights)
                of the Vendor at such time arising under, in respect of or related
                to such
                contracts whereby the Vendor is obligated
                to:

            

    

     

    
      	(i)     
                	
              sell
                or deliver Petroleum Substances allocated to any of the Petroleum
                and
                Natural Gas Rights without in due course receiving or being entitled
                to
                retain full payment therefore at the full price which would otherwise
                be
                applicable thereunder; or

            

    

     

    
      
        
        

      

      
        6

        
          

        

      

      
        
        

      

    

     

    
      	(ii)    
                	
              pay
                any person an amount on account of payments previously made in respect
                of
                quantities of Petroleum Substances allocated to the Petroleum and
                Natural
                Gas Rights which were not previously
                delivered;

            

    

     

    
      	(oo)  	
              "Tangibles"
                means the right, title, interest and estate of the Vendor in and
                to all
                tangible depreciable property and assets that are situated in, on
                or about
                the Lands or lands pooled or unitized therewith and used, useful
                or
                intended for use in connection with production, gathering, processing,
                transmission, compression or treatment operations or sale relating
                to the
                Petroleum and Natural Gas Rights including, without limitation, the
                tangible depreciable property described in Schedule "C" under the
                heading "Tangibles", the Well equipment, if any, and casing relating
                to
                the Wells but excluding from the foregoing the tangible depreciable
                property described in Schedule "C" under the heading "Excluded
                Tangibles";

            

    

     

    
      	(pp)  	
              "Technical
                Information" means such production and engineering information (excepting
                interpretations and analysis) relating to the Petroleum and Natural
                Gas
                Rights, the Lands and the Tangibles which the Vendor either has in
                its
                custody or to which the Vendor has access including all production
                and
                engineering information, any archive samples, core and liquid samples
                and
                cuttings;

            

    

     

    
      	(qq)  	
              "Third
                Party" means any individual or entity other than the Vendor, the
                Purchaser
                or the Guarantor, including without limitation any partnership,
                corporation, trust, unincorporated organization, union, government
                and any
                department and agency thereof and any heir, executor, administrator
                or
                other legal representative of an
                individual;

            

    

     

    
      	(rr) 
                	
              "Thirteenth
                Month Adjustment" means the accounting procedure performed annually
                by an
                operator of particular Tangibles for the purpose of redistributing
                certain
                revenues and expenses, including, without limitation, operating expenses,
                processing fee revenues, excess capacity utilization fees and recoveries,
                royalties and gas cost allowances (or similar cost allowances) and
                in this
                Agreement may include adjustments required by an audit of the joint
                venture between the Vendor and the Purchaser pursuant to the Joint
                Venture
                Agreement dated effective December 12,
                2006;

            

    

     

    
      	(ss)  	
              "Title
                and Operating Documents" means, in respect of any of the Petroleum
                and
                Natural Gas Rights, or the Tangibles, or the Surface Interests, all
                documents of title (including, without limitation, the Leases, permits,
                joint venture agreements, operating agreements, unit agreements,
                pooling
                agreements, royalty agreements, overriding royalty agreements, gross
                overriding royalty agreements, participation agreements, farmin
                agreements, sale and purchase agreements, trust declarations, net
                profits
                agreements, common stream agreements, gas and liquid sales agreements,
                agreements for the construction, ownership and operation of the Tangibles,
                gathering, transportation and processing agreements) or other agreements
                which relate to such Petroleum and Natural Gas Rights, Tangibles
                and
                Surface Interests or the ownership, operation or exploitation
                thereof;

            

    

     

    
      	(tt)  
               	
              "TSXV"
                means the TSX Venture Exchange;

            

    

     

    
      	(uu)  	
              "TSXV
                Approval" means the approval by the TSX Venture Exchange for the
                issuance
                of Shares to the Vendor as contemplated by this
                Agreement;

            

    

     

    
      	(vv)  	
              "Well(s)"
                means all producing, suspended, shut-in, capped, disposal, injection
                wells
                or other wells located on the Lands or lands pooled or unitized therewith
                in which the Vendor or any Affiliate of the Vendor has an interest,
                including, without limitation, the wells described in Schedule "B",
                but excluding abandoned wells; and

            

    

     

    
      
        
        

      

      
        7

        
          

        

      

      
        
        

      

    

     

    
      	(ww)  	
              "Well
                Licenses" has the meaning ascribed thereto in
                subparagraph 14(a)(i)(A);

            

    

    
      
         

        
          
            	2.             	
                    INTERPRETATION

                  

          

        

      

    

       

    
      	(a)   
                	
              The
                headings of the Clauses of this Agreement and of the schedules are
                inserted for convenience of reference only and shall not affect the
                meaning or construction hereof.

            

    

     

    
      	(b)   
                	
              Whenever
                the singular or masculine or neuter is used in this Agreement or
                in the
                schedules, each shall be interpreted as meaning the plural or feminine
                or
                body politic or corporate, and vice
                versa,
                as the context requires.

            

    

     

    
      	(c)   
                	
              If
                there is any conflict or inconsistency between the provisions of
                this
                Agreement and those of a Schedule attached hereto, the provisions of
                this Agreement shall prevail and the Schedule shall be deemed to be
                amended to the extent required to eliminate the
                conflict.

            

    

     

    
      	(d)   
                	
              For
                all purposes of this Agreement, references to the "knowledge" or
                "awareness" of a Party and to matters of which a Party is aware refer
                to
                the actual knowledge of the applicable officers of the Party who
                are, as
                part of their normal duties, responsible for the ownership and
                administration of the Assets, the business of the Party or the matters
                in
                question, all of whom shall be required to confirm that knowledge
                or
                awareness to the extent required to comply with the usual internal
                certification procedures of the Party. For these purposes, knowledge
                does
                not include the knowledge of any other Person or constructive knowledge.
                Subject to the foregoing provisions of this Subclause 2(d),
                neither Party nor any of its officers has any obligation to make
                additional inquiry of any other Person, any files and records or
                any
                Governmental Authority in connection with representations and warranties
                that are made to their respective knowledge or to matters of which
                they
                are respectively aware.

            

    

     

    
      	(e)   
                	
              The
                following schedules are attached to, form part of and are incorporated
                in
                this Agreement:

            

    

     

    A    Petroleum
      and Natural Gas Rights

     

    B    Wells

     

    C    Tangibles

     

    D    AFEs

     

    E    Take
      or
      Pay, Production Sales and Transportation Contracts

     

    F    Conveyance

     

    G    Vendor's
      Disclosure Schedule

     

    H    Officer's
      Certificates

     

    I    
Certified
      copy of Vendor's Shareholder Special Resolution Approving Sale

     

    J    
Promissory
      Note No. 1 Form

     

    K    Promissory
      Note No. 2 Form

     

    L    Promissory
      Note No. 3 Form

     

    M   General
      Security Agreement Form

     

    
      	(f)   
                	
              Reference
                to any matter on any Schedule shall not be deemed to be an
                acknowledgement by the Vendor or the Guarantor, or to otherwise imply,
                that the matter meets or exceeds any applicable threshold of materiality
                or any other relevant threshold.

            

    

     

    
      
        
        

      

      
        8

        
          

        

      

      
        
        

      

    

    
      
         

        
          
            	3.             	
                    PURCHASE
                      AND SALE

                  

          

        

      

    

       

    Subject
      to the terms hereof, the Purchaser agrees to purchase the Assets from the Vendor
      and the Vendor agrees to sell and convey the Assets to the Purchaser on the
      Closing Date, to have and hold absolutely, subject to the Permitted Encumbrances
      and the Title and Operating Documents, for a purchase price of TWENTY
      MILLION DOLLARS ($20,000,000)
      (the "Purchase Price").

    
       

      
        
          	4.             	
                  ALLOCATION
                    OF PURCHASE
                    PRICE

                

        

      

    

    
       

    

    
      	(a)   
                	
              The
                Purchase Price shall be allocated among the Assets as
                follows:

            

    

     

    
      	
              To
                Petroleum and Natural Gas Rights

               

            	
              90%
                of the Purchase Price less $1.00

               

            
	
              To
                Tangibles (exclusive of Goods and Services Tax)

               

            	
              10%
                of the Purchase Price

               

            
	
              To
                Miscellaneous Interests 

               

            	
              $1.00

               

            

    

    
      	(b)   
                	
              The
                Purchase Price, shall be increased or decreased, as the case may
                be, in
                accordance with the provisions of Clauses 9
                and 15
                (the "Adjusted Purchase Price").

            

    

     

    
      	(c)   
                	
              Adjustments
                to the Purchase Price made in accordance with Clauses 9
                and 15
                shall be allocated to the Petroleum and Natural Gas Rights and the
                Tangibles in accordance with the nature of the
                adjustment.

            

    

    
       

      
        
          	5.             	
                  PAYMENT
                    OF PURCHASE PRICE

                

        

         

      

    

    The
      Adjusted Purchase Price shall be payable by the Purchaser as
      follows:

     

    
      	(a)   
                	
              by
                delivery in trust to the solicitors for the Vendor, Stikeman Elliott
                LLP,
                prior to execution of this Agreement, of twenty-two and one-half
                (22.5%)
                percent of the Purchase Price ($4,500,000.00), the receipt of which
                is
                acknowledged by the Vendor, representing a good faith deposit to
                be
                applied against the Purchase Price on Closing (the "Deposit"), which
                shall
                be held and applied in accordance with this
                Agreement;

            

    

     

    
      	(b)   
                	
              $10,500,000.00
                of the Adjusted Purchase Price shall be paid by wire or other immediately
                available funds delivered to the Vendor at
                Closing;

            

    

     

    
      	(c)   
                	
              the
                balance of the Adjusted Purchase Price ($5,000,000.00) (subject to
                the
                Interim Statement of Adjustments) shall be paid by the issuance at
                Closing
                of 2,272,727 common shares (the "Shares") of Purchaser at a deemed
                share
                price of $2.20 per Share, and such number of Shares shall be subject
                to
                adjustment based upon the Interim Statement of Adjustments. The Shares
                shall be subject to a one year hold period pursuant to
                Subclause 20(c)
                herein; and

            

    

     

    
      	(d)   
                	
              if
                the purchase and sale contemplated herein is closed, then the Deposit
                and
                interest earned thereon by the Vendor from and including the date
                of
                payment of such Deposit to the Vendor to, but not including, the
                Closing
                Date, shall be credited to the Purchaser at Closing as partial payment
                of
                the Adjusted Purchase Price. If Closing does not occur, or if Closing
                occurs after June 28, 2007, the Deposit and any interest earned
                thereon shall be dealt with in accordance with Clause 16;

            

    

     

    
      
        
        

      

      
        9

        
          

        

      

      
        
        

      

    

     

    
      
        	6.             	
                CLOSING

              

      

       

    

    
      	(a)   
                	
              The
                Closing shall take place on the Closing Date at the offices of the
                solicitors for the Purchaser, Burnet, Duckworth & Palmer
                LLP.

            

    

     

    
      	(b)   
                	
              Risk,
                title and possession of the Assets shall pass at Closing from the
                Vendor
                to the Purchaser.

            

    

     

    
      	7.             	
              THE
                PURCHASER'S REVIEW AND TITLE
                DEFECTS

            

    

               
      

    The
      Purchaser acknowledges that it has been provided with the right and the
      opportunity to conduct its own due diligence investigations of and with respect
      to the Vendor's title to the Assets and Environmental Liabilities, if any,
      and
      compliance with all Applicable Laws, and the Purchaser is satisfied with such
      due diligence investigations and subject to a breach of the representations
      and
      warranties contained in Clause 10
      and
      except as otherwise expressly provided for herein, the Purchaser waives any
      right to claim any title defects or Environmental Liabilities against the
      Vendor.

    
       

      
        	8.             	
                CONVEYANCES
                  AND DELIVERIES

              

      

    

     

    
      	(a)   
                	
              The
                Vendor shall execute and deliver to the Purchaser at the Closing
                Time a
                conveyance, substantially in the form attached as Schedule "F"
                to
                this Agreement.

            

    

     

    
      	(b)   
                	
              On
                or before the Closing Date, the Vendor shall prepare at its sole
                cost and
                expense any specific assignments, novations, transfers, directions
                to pay,
                or further assurances as the Purchaser may reasonably request in
                writing
                not later than Closing which are reasonably required to acquire the
                Vendor's interest in the Assets, including, without restriction,
                the
                license transfer application form and supporting schedules in the
                form
                prescribed by the AEUB, but no such documents shall require the Vendor
                or
                the Purchaser to assume or incur any obligations, or to provide any
                representation or warranty, beyond that contained in this Agreement.
                The
                Vendor shall not be required to have such documents signed by Third
                Parties at or before the Closing Date and the Parties agree that
                the
                Purchaser shall be responsible, at its expense, for circulating all
                required Conveyance Documents to Third Parties for execution,
                post-Closing. The Vendor shall cooperate with the Purchaser as reasonably
                required to secure execution of such documents and other substitutions,
                amendments or replacements thereof by the Third Parties thereafter.
                If the
                Vendor is unable to prepare all such documents by Closing Time, the
                Vendor
                shall have no liability to the Purchaser as a result thereof, provided
                that the Vendor shall continue to be bound by such obligation until
                completed.

            

    

     

    
      	(c)   
                	
              The
                Purchaser shall, unless otherwise agreed in writing by the Vendor,
                promptly register in the applicable registry all registerable transfers
                and conveyances of the Assets. All costs incurred in registering
                any
                transfer and conveyance, and all costs of registering any further
                assurances required to convey the Assets, shall be borne by the
                Purchaser.

            

    

     

    
      	(d)   
                	
              The
                Purchaser acknowledges and agrees that nothing in this Agreement
                shall be
                interpreted as any assurance by the Vendor that the Purchaser will
                be able
                to serve as operator of any of the
                Assets.

            

    

     

    
      	(e)   
                	
              All
                documents executed and delivered pursuant to the provisions of this
                Clause 8
                or
                otherwise pursuant to this Agreement are subordinate to the provisions
                hereof and the provisions hereof shall govern and prevail in the
                event of
                a conflict.

            

    

     

    
      
        
        

      

      
        10

        
          

        

      

      
        
        

      

    

     

    
      	(f)   
                	
              In
                accordance with Applicable Laws, the Purchaser agrees to accept the
                transfer of the Wells from the Vendor's inventory into the Purchaser's
                inventory for reporting to any regulatory
                body.

            

    

    
      
         

        
          	9.             	
                  ADJUSTMENTS

                

        

      

    

     

    
      	(a)   
                	
              For
                the purpose of calculating the Adjusted Purchase Price, all benefits
                and
                obligations of every kind and nature payable or paid and received
                or
                receivable in respect of the Assets, including, without limitation,
                maintenance, development, capital and operating costs and proceeds
                from
                the sale of production shall, subject to the provisions of this Agreement,
                be apportioned between the Vendor and the Purchaser as of the Adjustment
                Date.

            

    

     

    
      	(b)   
                	
              All
                rentals and all similar payments required to preserve any of the
                Leases,
                any cash advances (other than prepaid rentals) and all taxes (other
                than
                income taxes) levied with respect to the Assets, shall be apportioned
                between the Vendor and the Purchaser on a per diem basis as of the
                Adjustment Date.

            

    

     

    
      	(c)   
                	
              Advances
                made by the Vendor to operators relative to operations on the Assets
                prior
                to the Adjustment Date in excess of the costs of such operations
                shall be
                adjusted pursuant to this Clause and shall be for the credit of the
                Vendor.

            

    

     

    
      	(d)   
                	
              All
                Petroleum Substances in the course of production from the Lands or
                lands
                pooled or unitized therewith or in inventory but not at the Adjustment
                Date beyond the point of delivery to the purchaser of production
                from the
                Lands or lands pooled or unitized therewith shall be sold for the
                account
                of the Vendor on a "first-in, first -out"
                basis.

            

    

     

    
      	(e)   
                	
              All
                Burdens payable on or in respect of Petroleum Substances produced
                prior to
                the Adjustment Date shall be for the account of the Vendor and all
                Burdens
                payable on or in respect of Petroleum Substances produced after the
                Adjustment Date shall be for the account of the
                Purchaser.

            

    

     

    
      	(f)   
                	
              All
                incentives attributable to costs or revenues which pertain to the
                period
                of time prior to the Adjustment Date and which are for the account
                of the
                Vendor hereunder shall be for the account of the Vendor and all incentives
                attributable to costs or revenues which pertain to the period of
                time
                after the Adjustment Date and which are for the account of the Purchaser
                hereunder shall be for the account of the
                Purchaser.

            

    

     

    
      	(g)  
                	
              The
                Purchaser shall be responsible for payment of any and all Goods and
                Services Tax ("GST") exigible pursuant to the Excise
                Tax Act
                (Canada) with respect to the Assets purchased under this Agreement
                together with any and all taxes, fees, charges or other costs levied
                or
                assessed upon the purchase of the Assets. The Vendor will collect
                from the
                Purchaser such GST and remit in a timely manner the GST to the appropriate
                governmental agency. Any such GST or additional taxes, fees, charges
                or
                costs shall be paid by the Purchaser in addition to the Purchase
                Price. If
                the amount of GST or any other such tax, fee, charge or cost paid
                by the
                Purchaser is adjusted as a result of any re-assessment by any governmental
                agency or authority, as the case may be, then any increase or decrease
                in
                GST exigible or in any other such tax, fee, charge or costs and any
                interest and penalties resulting from the re-assessment are for the
                Purchaser's account. The Purchaser shall calculate and remit taxes
                levied
                pursuant to applicable provincial legislation directly to the taxation
                authorities entitled to receive such payments under such legislation
                and
                the Purchaser agrees to make such payments on or before the respective
                dates for such payments.

            

    

     

    
      
        
        

      

      
        11

        
          

        

      

      
        
        

      

    

     

    
      	(h)   
                	
              An
                interim accounting and adjustment shall be carried out on the Closing
                Date, based on the Vendor's good faith estimate of all adjustments
                to be
                made for the transaction herein. The Vendor shall prepare and deliver
                to
                the Purchaser a statement of such interim accounting and adjustment
                at
                least two (2) Business Days before the Closing (the "Interim
                Statement of Adjustments"). A final accounting and adjustment shall
                be
                carried out six (6) months following the Closing Date (the "Final
                Statement of Adjustments"). No further accounting or adjustment shall
                be
                made between the Parties after such six (6) month period, except
                for
                adjustments arising from:

            

    

     

    
      	(i)    
                	
              a
                joint venture audit under a joint operating agreement within one
                hundred
                and eighty (180) days of the completion of the audit and initial
                identification of audit queries;

            

    

     

    
      	(ii)   
                	
              a
                Thirteenth Month Adjustment within thirty-six (36) months after the
                Closing Date;

            

    

     

    
      	(iii)  
                	
              a
                Crown royalty audit initiated by the Crown, if the adjustment is
                requested
                in writing within one hundred and eighty (180) days after the final
                results are received by the Party requesting the adjustment;
                and

            

    

     

    
      	(iv) 
                	
              errors
                established by an audit or other review of lessor royalty payments
                conducted under the Leases within sixty (60) months after the Closing
                Date.

            

    

     

    
      	(i)   
                	
              The
                Parties agree to arbitrate any disputes concerning adjustment figures
                pursuant to the Arbitration
                Act
                (Alberta).

            

    

     

    
      	(j)   
                	
              For
                greater certainty, notwithstanding the adjustments contemplated pursuant
                to this Clause 9,
                the Vendor shall remain the owner of the Assets until the Closing,
                and as
                a result thereof, shall be responsible for reporting income (or loss)
                for
                income tax purposes to such date, including reporting of production
                volumes.

            

    

     

    
      	(k)   
                	
              The
                adjustments required at Closing pursuant to this Clause 9
                shall be made by way of an adjustment of the number of Shares to
                be issued
                by the Purchaser to the Vendor. The adjustments required post-Closing
                pursuant to this Clause 9
                shall be made by way of a cash payment by the Vendor or the Purchaser,
                as
                the case may be.

            

    

     

    
      	(l)   
                	
              The
                value of all adjustments pursuant to this Clause 9
                shall be limited to no more than $250,000.00 in aggregate and no
                adjustments shall be made to the credit of the Purchaser or the Vendor
                in
                excess of such limit, regardless of whether or not the adjustment
                amount
                is greater than such limit. In the case of adjustments at Closing,
                the
                numbers of Shares to be issued shall be based upon a deemed Share
                price of
                $2.20 per share.

            

    

    
      
         

        
          	10.        	
                  
                     THE
                      VENDOR'S REPRESENTATIONS AND
                      WARRANTIES

                  

                

        

      

    

    
      	 	
               

            

    

    The
      Vendor represents and warrants to the Purchaser as of the date hereof and as
      of
      the Closing Date, except and subject in all instances to Permitted Encumbrances
      or to any matter disclosed in any of Schedules "A", "B", "C", "D", "E" or "G"
      hereto, that:

     

    
      	(a)   
                	
              the
                Vendor is, and at the Closing Date shall continue to be, a body corporate,
                duly organized, validly existing and in good standing under the laws
                of
                its jurisdiction of formation and is duly registered and authorized
                to
                carry on business in all jurisdictions in which the Lands are
                located;

            

    

     

    
      
        
        

      

      
        12

        
          

        

      

      
        
        

      

    

     

    
      	(b)   
                	
              all
                necessary corporate action has been taken by the Vendor to authorize
                the
                execution, delivery and performance of this Agreement and all documents
                executed and delivered pursuant hereto, and in particular, the Vendor
                has
                obtained all authorization and approval required by Applicable Laws
                from
                its shareholders and directors to:

            

    

     

    
      	(i)    
                	
              sell
                the Assets to the Purchaser; and

            

    

     

    
      	(ii)   
                	
              accept
                the Shares as partial payment of the Purchase
                Price;

            

    

     

    
      	(c)   
                	
              except
                for regulatory approvals, if any, any consents or approvals required
                by
                the Title and Operating Agreements and waivers of Rights of First
                Refusal
                (or expiration of the period of time in which the same may be exercised)
                to be obtained by the Vendor prior to Closing, the execution and
                delivery
                of this Agreement, and the fulfilment of and compliance with the
                terms and
                provisions hereof, do not and will
                not:

            

    

     

    
      	(i)    
                	
              conflict
                with, result in a breach of, constitute a material default under,
                or
                prohibit the performance required by, any material agreement, instrument,
                licence, permit or authority to which it is a party or by which it
                is
                bound or to which any property of the Vendor is subject or result
                in the
                creation of any lien, charge or encumbrance upon the Assets under
                any such
                agreement or instrument; or

            

    

     

    
      	(ii)   
                	
              violate
                any provisions of law or administrative regulation or any judicial
                or
                administrative order, award, judgment or decree applicable to it
                of which
                it is aware; or

            

    

     

    
      	(iii)  
                	
              violate
                or conflict with any provision of the constating documents of the
                Vendor;

            

    

     

    
      	(d)   
                	
              this
                Agreement has been duly executed and delivered by the Vendor and
                all
                Conveyance Documents to be executed and delivered by it to the Purchaser
                on the Closing Date or thereafter shall be duly executed and delivered
                by
                the Vendor;

            

    

     

    
      	(e)   
                	
              this
                Agreement and all documents executed and delivered pursuant to this
                Agreement are and will be legal, valid and binding obligations of
                the
                Vendor enforceable against the Vendor in accordance with their terms,
                subject to bankruptcy, winding-up, insolvency, moratorium, arrangement,
                reorganization or similar laws affecting creditors' rights generally
                and
                to general principles of equity;

            

    

     

    
      	(f)   
                	
              the
                Vendor has not incurred any obligation or liability, contingent or
                otherwise, for brokerage fees, finder's fees, agent's commission
                or other
                similar forms of compensation with respect to this transaction for
                which
                the Purchaser shall have any obligation or liability
                whatsoever;

            

    

     

    
      	(g)  
                	
              except
                as otherwise expressly provided herein, the Vendor does not warrant
                its
                title to the Assets but does warrant that it has not done any act
                or thing
                whereby any of the Assets may be encumbered, alienated or cancelled
                and
                that except for Permitted Encumbrances, the Assets will be at the
                Closing
                Date, free and clear of all Burdens created by, through or under
                the
                Vendor;

            

    

     

    
      	(h)     	
              the
                Vendor is not a party to any swap, hedging or similar arrangement
                with a
                financial institution in respect of commodity prices, rates of exchange
                or
                currencies which the Purchaser is required to
                assume;

            

    

     

    
      
        
        

      

      
        13

        
          

        

      

      
        
        

      

    

     

    
      	(i)   
                	
              to
                the Vendor's knowledge, all ad
                valorem,
                property, royalties, production, severance and similar taxes and
                assessments based on or measured by the ownership of the Assets or
                the
                production of Petroleum Substances or the receipt of proceeds therefrom
                payable by the Vendor in respect of the Assets have been paid and
                discharged, except where the failure to make payment would not have
                a
                material adverse effect on the
                Assets;

            

    

     

    
      	(j)   
                	
              subject
                to the Title and Operating Documents and the Permitted Encumbrances,
                to
                the Vendor's knowledge the Purchaser may enter into and upon, hold and
                enjoy the Assets for the residue of their respective terms and all
                renewals or extensions thereof for its own use and benefit, without
                any
                lawful interruption by the Vendor or any person claiming by, through
                or
                under the Vendor;

            

    

     

    
      	(k)  
                	
              to
                the Vendor's knowledge, other than as disclosed in 0,
                there are no actions, suits or proceedings affecting the Vendor at
                law or
                in equity or before or by any federal, provincial or other governmental
                department, commission, board, bureau, agency or instrumentality,
                domestic
                or foreign and which might have a material adverse effect on the
                Assets;

            

    

     

    
      	(l)   
                	
              to
                the Vendor's knowledge, the Assets are not affected by any Take or
                Pay
                Obligations or any other obligation to deliver Petroleum Substances
                to any
                Person without receiving (and being entitled to retain without deduction)
                full payment for such Petroleum Substances at current prices at the
                time
                of delivery;

            

    

     

    
      	(m)    	
              to
                the Vendor's knowledge, other than as disclosed in Schedule "D",
                there are no authorizations for capital expenditures relating to
                the
                Assets;

            

    

     

    
      	(n)  
                	
              other
                than as disclosed in Schedule "E",
                there are no production sales contracts or contracts for the
                transportation of Petroleum Substances by a Third Party on behalf
                of the
                Vendor to which the Vendor is a party applicable to the production
                of
                Petroleum Substances from the Lands, except for agreements terminable
                by
                the seller without bonus, penalty or other costs on not more than
                31 days
                notice or less;

            

    

     

    
      	(o)  
                	
              the
                Vendor is not a non-resident of Canada within the meaning of the
                Income
                Tax Act
                (Canada);

            

    

     

    
      	(p)  
                	
              the
                Vendor represents and warrants that at Closing, no person will have
                any
                agreement, option, right or privilege (including, without limitation,
                whether by law, pre-emptive right, Right of First Refusal, contract
                or
                otherwise) to purchase, convert into, exchange for or otherwise require
                the conveyance of any of the Assets, nor any agreement, option, right
                or
                privilege capable of becoming any such agreement, option, right or
                privilege, to purchase, convert into, exchange for or otherwise require
                the conveyance of any of the
                Assets;

            

    

     

    
      	(q)  
                	
              to
                the Vendor's knowledge, the Vendor has not
                received:

            

    

     

    
      	(i)    
                	
              any
                orders or directives from any governmental regulatory body which
                related
                to Environmental Liabilities and which require any work, repairs,
                construction or capital expenditures with respect to the Assets,
                where
                such order or directives have not been complied with in all material
                respects; or

            

    

     

    
      	(ii)   
                	
              any
                demand or notice issued with respect to the material breach of any
                Applicable Laws applicable to the Assets, which demand or notice
                remains
                outstanding on the date hereof;

            

    

     

    
      
        
        

      

      
        14

        
          

        

      

      
        
        

      

    

     

    
      	(r)    
                	
              to
                the Vendor's knowledge, it has not received written notice of any
                Environmental Liabilities with respect to the Assets, which require
                any
                work or repairs, construction or capital expenditures, which have
                not been
                complied with in all material
                respects;

            

    

     

    
      	(s)   
                	
              to
                the Vendor's knowledge, none of the Tangibles are leased or subject
                to a
                sale and leaseback arrangement, other than as set out on 0;

            

    

     

    
      	(t)   
                	
              to
                the Vendor's knowledge, it has not received written notice of any
                material
                default of the Vendor with respect to any Title and Operating Documents,
                which has not been complied with in all material respects, other
                than
                those set out in 0;

            

    

     

    
      	(u)     	
              to
                the Vendor's knowledge, all Wells abandoned by the Vendor have been
                abandoned in compliance with such good oilfield practices as existed
                at
                the relevant time;

            

    

     

    
      	(v)  
                	
              to
                the Vendor's knowledge, the Assets have been operated in accordance
                with
                generally accepted oil and gas industry practices and, in all material
                respects, in accordance with all Applicable
                Laws;

            

    

     

    
      	(w)  
                	
              (i)       
                the
                Vendor is eligible under Applicable Law to transfer the Permits for
                the
                Assets operated by it, if any, and no circumstance exists with respect
                to
                the Vendor which could reasonably be expected to result in an undue
                delay
                or an inability to register any of the Permit transfers, to the extent
                any
                are required; and

            

    

     

    
      	(ii)    
                	
              neither
                the Vendor nor, to the best of the knowledge of the Vendor, any other
                person has challenged the AEUB's designation of the Vendor as the
                licensee
                for any facilities comprising a part of the
                Assets;

            

    

     

    
      	(x)   
                	
              the
                Vendor has made available to the Purchaser, prior to Closing, all
                of the
                Title and Operating Documents and documents comprising the Miscellaneous
                Interests in its possession or to which it has access and any other
                information, documents and agreements that are relevant to the Assets,
                including information, documents and agreements relevant to the Vendor’s
                title to the Assets, abandonment and reclamation obligations,
                Environmental Liabilities, production or revenue from the Assets
                and other
                information, documents and agreements that that are reasonably required
                by
                the Purchaser or which have otherwise been reasonably requested by
                the
                Purchaser. In addition, the Vendor has not knowingly withheld from
                the
                Purchaser any information, documents and agreements relevant to the
                Assets;

            

    

     

    
      	(y)  
                	
              in
                respect to the Assets:

            

    

     

    
      	(i)     
                	
              it
                holds its thirty percent (30%) undivided working interests in the
                Assets
                as described in Schedule "A"
                hereto;

            

    

     

    
      	(ii)    
                	
              the
                Vendor's interests are subject to Crown royalty in accordance with
                Schedule "A" hereto; and

            

    

     

    
      	(iii)   
                	
              the
                Assets are not subject to reduction by virtue of conversion or other
                alteration of the interest to any Third Party under existing documents
                of
                which Vendor is aware, except as described in Schedule "A"
                hereto;

            

    

     

    
      	(z)   
                	
              in
                respect to the Assets on Closing, the Assets will be free and clear
                of all
                liens, charges, encumbrances and adverse claims created by, through
                or
                under the Vendor except for the applicable Crown Lessor Royalty (if
                any).
                In particular, the Vendor warrants that the non-convertible, absolute
                gross overriding royalty created by Royalty Agreement dated March 2,
                2007 between the Vendor and 1304146 Alberta Ltd. shall have been
                terminated prior to or concurrently with Closing and such royalty
                reconveyed to the Vendor prior to the Closing Date, on terms and
                conditions satisfactory to the
                Purchaser;

            

    

     

    
      
        
        

      

      
        15

        
          

        

      

      
        
        

      

    

     

    
      	(aa) 
                	
              on
                or before Closing, the Vendor shall have paid all Burdens or encumbrances
                amounts owing by the Vendor in respect of the
                Assets;

            

    

     

    
      	(bb) 
                	
              the
                Purchaser will be under no obligation, financial or otherwise, to
                any past
                or present employees of the Vendor.

            

    

    
      
        
           

          
            	
                    11.          
                      

                  	
                    
                      
                        LIMITATIONS
                          ON VENDOR'S REPRESENTATIONS AND
                          WARRANTIES

                      

                    

                  

          

        

      

    

     

    
      	(a)    
                	
              Except
                as expressly set out in Clause 10 hereto, the Vendor does not warrant
                title to the Assets, nor does the Vendor agree to give any greater
                interest or title to the Purchaser than that which the Vendor has.
                For
                greater certainty, the Vendor makes no warranty, express or implied
                in
                fact or by law, with respect to:

            

    

     

    
      	(i)     
                	
              the
                quality, quantity or recoverability of the Petroleum Substances within
                or
                under the Lands or lands pooled or unitized
                therewith;

            

    

     

    
      	(ii)    
                	
              the
                value of the Assets or the future revenues or cash flows applicable
                thereto;

            

    

     

    
      	(iii)   
                	
              any
                engineering, geological information or interpretations thereof, or
                any
                economic evaluations respecting the
                Assets;

            

    

     

    
      	(iv)     	
              the
                quality, condition, merchantability or serviceability of all or any
                of the
                Assets or their suitability for any particular purpose;
                or

            

    

     

    
      	(v)   
                	
              any
                data or information supplied by the Vendor or its representatives
                to the
                Purchaser or its representatives.

            

    

     

    
      	(b)    
                	
              The
                Purchaser shall, after Closing, have no claim or action against the
                Vendor
                in respect of the location, state, condition, suitability or fitness
                of
                the Assets, or any of them, for the Purchaser's intended use or purpose
                of
                their merchantability or title to any Asset, other than in the case
                of a
                breach of or untruth of any express representation, warranty or covenant
                made herein by the Vendor.

            

    

     

    
      	(c)     
               	
              The
                Vendor expressly negates and disclaims, and shall not be liable for,
                any
                representation or warranty which may have been made or alleged to
                be made
                in any other document or instrument in connection herewith or in
                any
                statement or information (including, without limitation, engineering
                reports and any opinion, information or advice which may have been
                provided by the Vendor, or any director, officer, employee, agent,
                consultant or representative of the Vendor) made or communicated
                to the
                Purchaser or its representatives in any
                manner.

            

    

     

    
      	(d)       
              	
              The
                representations and warranties of the Vendor in Clause 10 shall
                survive the Closing for a period of eighteen (18) months and shall
                not be
                merged in any conveyances or other documents provided pursuant to
                this
                Agreement, provided that, except in the case of fraud, no claim may
                be
                made against the Vendor, its successors or assigns, pursuant to or
                based
                in any way upon any of these representations and warranties unless
                written
                notice thereof with reasonable particulars shall have been provided
                by the
                Purchaser to the Vendor within eighteen (18) months of the Closing
                Date
                other than pursuant to Clause 19(a).

            

    

     

    
      
        
        

      

      
        16

        
          

        

      

      
        
        

      

    

    
      
         

        
          	
                  12.          
                    

                	
                  
                    
                      
                        THE
                          PURCHASER'S REPRESENTATIONS AND
                          WARRANTIES

                      

                    

                  

                

        

      

    

     

    The
      Purchaser represents and warrants to and with the Vendor as of the date hereof
      and as of the Closing Date that:

     

    
      	(a)    
                	
              the
                Purchaser is, and at the Closing Date shall continue to be a body
                corporate duly organized, validly existing and in good standing under
                the
                laws of its jurisdiction of formation and is, and at Closing shall
                be duly
                registered and authorized to carry on business in all jurisdictions
                in
                which the Lands are located;

            

    

     

    
      	(b)    
                	
              all
                necessary corporate action has been taken by the Purchaser to authorize
                the execution, delivery and performance of this Agreement and as
                at
                Closing, all documents executed and delivered pursuant hereto, including
                for greater certainty, the issuance of the Shares issuable as partial
                payment of the Adjusted Purchase Price, and this Agreement when delivered,
                will have been duly executed and delivered by the
                Purchaser;

            

    

     

    
      	(c)    
                	
              The
                Purchaser is conducting and has conducted its business in compliance
                in
                all material respects with all Applicable Laws, including without
                limitation all environmental laws, regulations and rules, of each
                jurisdiction in which its business is carried on and holds and maintains
                in good standing all necessary licences, leases, permits, authorizations
                and other approvals necessary to permit it to conduct its business
                or to
                own, lease or operate its properties and assets (including without
                limitation any rights or registrations relating to any intellectual
                property rights) except where the failure to obtain any licence,
                lease,
                permit, authorization or other approval would not have a material
                adverse
                effect on the Purchaser;

            

    

     

    
      	(d)    
                	
              the
                authorized capital of the Purchaser consists of an unlimited number
                of
                common shares, an unlimited number of first preferred shares issuable
                in
                series and an unlimited number of second preferred shares issuable
                in
                series, and as at June 25, 2007, the issued and outstanding capital
                of the
                Corporation consisted of 26,256,400 common shares, and no preferred
                shares;

            

    

     

    
      	(e)    
                	
              the
                execution and delivery of this Agreement and the fulfilment of and
                compliance with the terms and provisions hereof, do not and will
                not:

            

    

     

    
      	(i)    
                	
              conflict
                with, result in a breach of, constitute a material default under,
                or
                prohibit the performance required by, any material agreement, instrument,
                licence, permit or authority to which it is a party or by which it
                is
                bound or to which any property of the Purchaser is subject;
                or

            

    

     

    
      	(ii)   
                	
              subject
                to receipt of TSXV Approval and any and all regulatory or governmental
                approvals required by Applicable Laws in respect to the issuance
                of the
                Shares by the Purchaser to the Vendor, violate any provisions of
                law or
                administrative regulation or any judicial or administrative order,
                award,
                judgment or decree applicable to it of which it is aware;
                or

            

    

     

    
      	(iii)  
                	
              violate
                or conflict with any provision of the constating documents of the
                Purchaser;

            

    

     

    
      
        
        

      

      
        17

        
          

        

      

      
        
        

      

    

     

    
      	(f)    
                	
              this
                Agreement has been duly executed and delivered by the Purchaser and
                all
                Conveyance Documents to be executed and delivered by it to the Vendor
                on
                the Closing Date or thereafter shall be duly executed and delivered
                by the
                Purchaser;

            

    

     

    
      	(g)   
                	
              this
                Agreement and all documents executed and delivered pursuant to this
                Agreement are and will be legal, valid and binding obligations of
                the
                Purchaser enforceable against the Purchaser in accordance with their
                terms, subject to bankruptcy, winding-up, insolvency, moratorium,
                arrangement, reorganization or similar laws effecting creditors'
                rights
                generally and to general principles of
                equity;

            

    

     

    
      	(h)   
                	
              the
                Purchaser has not incurred any obligation or liability, contingent
                or
                otherwise, for brokerage fees, finder's fees, agent's commission
                or other
                similar forms of compensation with respect to this transaction for
                which
                to the Vendor shall have any obligation or liability
                whatsoever;

            

    

     

    
      	(i)    
                	
              except
                as described in Subclause 12(e)(ii),
                no authorization or approval or other action by, and no notice to
                or
                filing with, any Governmental Authority or regulatory body exercising
                jurisdiction over the Assets is required for the due execution, delivery
                and performance by the Purchaser of this Agreement, including the
                issuance
                of the Shares to the Vendor as contemplated herein, other than
                authorizations, approvals or exemptions from requirements therefore,
                previously obtained and currently in
                force;

            

    

     

    
      	(j)    
                	
              completion
                of the purchase of the Assets in accordance with the term of this
                Agreement will not be in conflict with, constitute a default under,
                or be
                in violation or breach of any agreement or instrument to which the
                Purchaser is a party or by which it is bound or any judgment, decree,
                order, statute, rule or regulation applicable to the
                Purchaser;

            

    

     

    
      	(k)   
                	
              the
                Purchaser has taken into account the Purchaser's assumption of
                responsibility for the Environmental Liabilities, and the release
                of the
                Vendor from responsibility therefore when the Purchaser evaluated
                the
                Assets and determined the Purchase
                Price;

            

    

     

    
      	(l)    
                	
              the
                Purchaser is acquiring the Assets as
                principal;

            

    

     

    
      	(m)  
                	
              the
                Purchaser is eligible under Applicable Laws to accept the transfer
                of the
                applicable licence or approval for any Well or Tangibles for which
                it is
                intended to replace the Vendor as operator following
                Closing;

            

    

     

    
      	(n)   
                	
              subject
                to the issuance of 9,523,810 common shares pursuant to a private
                placement
                of subscription receipts of the Purchaser described in the press
                release
                of the Purchaser dated June 14, 2007, the authorized and issued
                capital of the Purchaser is 26,256,400 common shares as at the date
                hereof;

            

    

     

    
      	(o)   
                	
              the
                Shares to be issued pursuant to Subclause 5(c),
                upon issuance as partial payment of the Purchase Price in the manner
                contemplated herein, shall be validly issued as fully paid and
                non-assessable shares in the capital of the Purchaser in full compliance
                with all Applicable Laws and will be free and clear of all encumbrances,
                other than encumbrances created by this
                Agreement;

            

    

     

    
      	(p)   
                	
              the
                Purchaser is not in violation of its constating documents or by-laws
                and
                is not in default in the performance or observance of any material
                obligation, agreement, covenant or condition contained in any material
                contract, indenture, mortgage, loan agreement, note, lease or other
                instrument to which it is a party or by which it may be bound or
                to which
                any of its property or assets is
                subject;

            

    

     

    
      
        
        

      

      
        18

        
          

        

      

      
        
        

      

    

     

    
      	(q)   
                	
              except
                pursuant to the Purchaser's share option plan and pursuant to 6,300,000
                performance warrants as described in the Corporation's continuous
                disclosure filings under Securities Laws, and except for the issuance
                of
                approximately 9,523,810 common shares pursuant to the private placement
                of
                subscription receipts of the Purchaser described in the press release
                of
                the Purchaser dated June 14, 2007, no person has any agreement,
                option, right or privilege with or against the Purchaser for the
                purchase,
                subscription or issuance of common shares, issued or unissued, in
                the
                capital of the Purchaser;

            

    

     

    
      	(r)    
                	
              to
                its knowledge, the Purchaser is not in default in any material respect
                of
                any requirement of the Securities
                Act
                (Alberta) and the regulations thereunder, and has a similar status
                under
                the Securities Laws of each of the other Provinces in which it is
                a
                reporting issuer or the equivalent;

            

    

     

    
      	(s)   
                	
              to
                its knowledge, the Purchaser is in material compliance with its continuous
                disclosure obligations under applicable Securities Laws and without
                limiting the generality of the foregoing, there has not occurred
                any
                material adverse change, financial or otherwise, in the assets,
                liabilities (contingent or otherwise), activities, financial condition,
                capital or prospects of the Purchaser, since December 31, 2006, which
                has not been publicly disclosed in a filing made in accordance with
                applicable Securities Laws;

            

    

     

    
      	(t)      	
              the
                audited financial statements of the Purchaser as at and for the years
                ended December 31, 2006 and 2005, together with the notes thereto and
                the auditors’ report thereon and the unaudited financial statements of the
                Purchaser as at and for the three months ended March 31, 2007,
                together with the notes thereto are correct to the knowledge of the
                Purchaser and have been prepared in accordance with Canadian generally
                accepted accounting principles consistently
                applied;

            

    

     

    
      	(u)  
                	
              there
                are no actions, suits or proceedings, whether on behalf of or against
                the
                Purchaser pending or, to the knowledge of the Purchaser, threatened
                against or affecting the Purchaser at law or in equity, before or
                by any
                court or federal, provincial, municipal or governmental or regulatory
                department, commission, board, bureau, agency or instrumentality,
                domestic
                or foreign, which materially adversely affect the business and affairs
                of
                the Purchaser;

            

    

     

    
      	(v)  
                	
              no
                order, ruling or determination having the effect of ceasing, suspending
                or
                restricting trading in any securities of the Purchaser or the issue
                of the
                Shares hereunder, has been issued and no proceedings, investigations
                or
                inquiry for such purpose are pending or, to the knowledge of the
                Purchaser, contemplated or threatened;
                and

            

    

     

    
      	(w)  
                	
              the
                Purchaser has no subsidiaries.

            

    

     

    The
      Purchaser makes no representation or warranty, express or implied, by fact
      or by
      law, and the Purchaser expressly negates and disclaims, and shall not be liable
      for, any representation or warranty which may have been made or alleged to
      be
      made in any other document or instrument in connection herewith or in any
      statement or information which may have been provided by the Purchaser, or
      any
      director, officer, employee, agent, consultant or representative of the
      Purchaser, made or communicated to the Vendor or its representatives in any
      manner with respect to:

     

    
      	(i)   
                 	
              the
                business of the Purchaser or the viability
                thereof;

            

    

     

    
      	(ii)   
                	
              the
                operations conducted in respect to the Assets during the time that
                the
                Purchaser did not operate the Assets under the Joint Venture
                Agreement;

            

    

     

    
      
        
        

      

      
        19

        
          

        

      

      
        
        

      

    

     

    
      	(iii)  
                	
              the
                value of its assets or the future revenues or cash flow of the
                Purchaser;

            

    

     

    
      	(iv)  
                	
              the
                quantity, quality, condition or merchantability of any of the Purchaser's
                assets; or

            

    

     

    
      	(v)   
                	
              any
                other information regarding the liability of the business, the value
                of
                its Shares or other such similar
                information;

            

    

     

    other
      than has been disclosed and filed pursuant to applicable Securities
      Laws.

     

    The
      representations and warranties of the Purchaser in this Clause 12
      shall
      survive the Closing for a period of eighteen (18) months and not be merged
      in
      any conveyances or other documents provided pursuant to this Agreement, provided
      that no claim may be made against the Purchaser, its successors or assigns,
      pursuant to or based in any way upon any of these representations and warranties
      unless written notice thereof with reasonable particulars shall have been
      provided by the Vendor to the Purchaser within eighteen (18) months of the
      Closing Date.

     

    The
      Vendor expressly negates and disclaims, and shall not be liable for, any
      representation or warranty which may have been made or alleged to be made in
      any
      other document or instrument in connection herewith or in any statement or
      information (including, without limitation, engineering reports and any opinion,
      information or advice which may have been provided by the Vendor, or any
      director, officer, employee, agent, consultant or representative of the Vendor)
      made or communicated to the Purchaser or its representatives in any
      manner.

    
      
         

        
          	
                  13.          
                    

                	
                  
                    
                      
                        
                          MAINTENANCE
                            OF
                            BUSINESS

                        

                      

                    

                  

                

        

      

    

    
    

     

    
      	(a)    
                	
              Until
                the Closing Date, the Vendor, to the extent its interest allows,
                shall
                operate and maintain the Assets in a proper and prudent manner in
                accordance with its past practices.

            

    

     

    
      	(b)    
                	
              From
                the date of execution of this Agreement, the Vendor shall not, without
                the
                prior approval of the Purchaser, which approval shall not be unreasonably
                withheld or delayed:

            

    

     

    
      	(i)    
                	
              surrender
                or abandon any of the Assets other than in accordance with the terms
                of
                the Title and Operating Agreements;

            

    

     

    
      	(ii)   
                	
              amend
                or terminate any agreement or instrument relating to the Assets if
                the
                amendment or termination would have a material adverse effect on
                the value
                of any one or more of the Assets;

            

    

     

    
      	(iii)  
                	
              mortgage,
                pledge, assign, sell, transfer, or otherwise dispose of or encumber,
                or
                allow the mortgaging, pledging, assigning, sale, transfer or other
                disposition or encumbrance, of any of the Assets other than chattel
                property or other personal property that is replaced by equivalent
                property or consumed in the operation of the Assets, and other than
                liens
                arising in the ordinary course of business as a result of the operations
                under agreements affecting the
                Assets;

            

    

     

    
      	(iv)  
                	
              remove
                or cause to be removed any Tangibles out of the ordinary course of
                business; or

            

    

     

    
      	(v)   
                	
              propose
                or initiate the exercise of any right (including bidding rights at
                Crown
                sales) or option relative to or arising as a result of the ownership
                of
                the Assets, or propose or initiate any operations on the Lands which
                have
                not been commenced or committed to by the Vendor on the date hereof
                except
                that the Vendor may propose or initiate any operations on the Lands
                for,
                and may propose or initiate the exercise of any right or option relative
                to, the preservation of any of the Leases or
                Assets.

            

    

     

    
      
        
        

      

      
        20

        
          

        

      

      
        
        

      

    

     

    
      	(c)   
                	
              From
                the date hereof until the Closing Date, the Vendor shall not enter
                into
                any obligations or commitments out of the ordinary course of business
                with
                respect to the Assets, without the prior consent of the Purchaser,
                which
                consent shall not be unreasonably withheld or delayed, except as
                may be
                reasonably necessary to protect, ensure life and safety or to preserve
                the
                Assets or title to the Assets.

            

    

     

    
      	(d)   
                	
              Without
                the written consent of the Vendor, the Purchaser shall not, and shall
                not
                be entitled to, propose to the Vendor, or to cause the Vendor to
                propose
                to others, the conduct of any operations on the Lands or the exercise
                of
                any right or option relative to the Assets except pursuant to this
                Clause 13.

            

    

    
      
        
           

          
            	
                    14.          
                      

                  	
                    
                      
                        
                          
                            
                              CONDITIONS
                                TO THE
                                CLOSING

                            

                          

                        

                      

                    

                  

          

        

      

      
      

    

     

    
      	(a)   
                	
              The
                following are conditions to the Closing of the purchase herein, for
                the
                benefit of the Purchaser, which may be waived at the discretion of
                the
                Purchaser:

            

    

     

    
      	(i)     
                	
              that
                any and all necessary regulatory or governmental approvals required
                to
                permit the transaction to be completed that can be secured prior
                to
                Closing, or are normally secured prior to Closing in transactions
                of this
                type, and such approvals as are required to be obtained from the
                AEUB or
                similar agency, shall have been obtained. To the extent
                that:

            

    

     

    
      	(A) 
                  	
              the
                approval of the AEUB in respect of the application for the transfer
                of the
                licenses for any of the Wells (the "Well Licenses") is required and
                such approval has not been secured on or before the Closing Date;
                or

            

    

     

    
      	(B) 
                  	
              a
                security deposit or deposits must be made by the Vendor in respect
                of
                securing the approval of the AEUB to the Well License transfer application
                and such deposits have not been made on or before the Closing
                Date;

            

    

     

    the
      Purchaser shall be satisfied, in its sole judgement, acting reasonably, firstly
      that the Well Licenses transfer application will be accepted by the AEUB, and
      secondly that any security deposits to be made by the Vendor shall be made
      in a
      timely fashion;

     

    
      	(ii)   
                	
              the
                Vendor shall have performed or complied in all material respects
                with all
                of the terms, covenants and conditions of this Agreement to be performed
                or complied with by the Vendor at or prior to the Closing
                Date;

            

    

     

    
      	(iii)  
                	
              the
                representations and warranties of the Vendor contained in this Agreement
                shall be true in all material respects as of the Closing Date and
                the
                Vendor shall have delivered to the Purchaser a certificate of an
                officer
                of the Vendor dated the Closing Date in the form attached hereto
                as
                Schedule "H", to the effect that the representations and warranties
                contained in Clause 10
                hereof are true and correct in all material
                respects;

            

    

     

    
      
        
        

      

      
        21

        
          

        

      

      
        
        

      

    

     

    
      	(iv)  
                	
              the
                Vendor shall have delivered the certified copy of the shareholder's
                special resolution approving the transaction contemplated herein
                in the
                form attached hereto as Schedule "I";

            

    

     

    
      	(v)   
                	
              the
                Vendor shall have executed and delivered the Conveyance Documents
                executed
                by the Vendor to the Purchaser as of the Closing Date except that
                the
                Vendor shall not be required, subject to Subclause 14(a)(vi),
                to have obtained signatures from Third Parties;
                and

            

    

     

    
      	(vi)  
                	
              prior
                to Closing, the Vendor shall have received all Third Party consents
                and
                waivers of Rights of First Refusal, if any, affecting the Assets
                such that
                no Rights of First Refusal, remain in force at
                Closing;

            

    

     

    
      	(vii) 
                	
              on
                Closing, there shall be no outstanding commitments to make capital
                expenditures in respect of the Assets, other than those that are
                set out
                in Schedule "D" hereto;

            

    

     

    
      	(viii)
                	
              the
                Purchaser shall be satisfied in its sole discretion, acting reasonably,
                with the terms and conditions of all contracts (not including the
                Joint
                Venture Agreement), agreements and documents affecting the Assets,
                including agreements for the sale, processing or transportation of
                Petroleum Substances and all contracts, agreements and documents
                relative
                to the rights to enter, use and occupy the surface of the Lands and
                the
                Assets;

            

    

     

    
      	(ix)  
                	
              there
                shall be no Take or Pay Obligations or other gas contracts associated
                with
                the Assets other than described in Schedule "E"
                hereto;

            

    

     

    
      	(x)   
                	
              the
                Vendor shall provide at Closing releases and registerable discharges
                from
                all parties holding security interests in the Assets, including any
                by
                1304146 Alberta Ltd.;

            

    

     

    
      	(xi)  
                	
              the
                Vendor shall confirm that the Assets are not subject to any agreements
                which include an area of mutual interest, other than pursuant to
                the Joint
                Venture Agreement;

            

    

     

    
      	(xii)  
                	
              on
                or before Closing and in no event later than September 1, 2007, the
                Purchaser shall have completed an equity financing for not less than
                $20
                million on terms and conditions satisfactory to the Purchaser in
                its sole
                discretion;

            

    

     

    
      	(xiii)  	
              the
                non-convertible, absolute gross overriding royalty created by Royalty
                Agreement dated March 2, 2007 between POC and 1304146 Alberta Ltd.
                shall have been terminated and such royalty reconveyed to the Vendor
                prior
                to the Closing Date, on terms and conditions satisfactory to the
                Purchaser, acting reasonably; and 

            

    

     

    
      	(xiv)  	
              no
                substantial unrepaired physical damage to the Assets, except as shall
                have
                been consented to in writing by the Purchaser, shall have occurred
                between
                the date of execution of this Agreement and the Closing Date which,
                in the
                Purchaser's reasonable opinion, would materially adversely affect
                the
                value of the Assets, provided that none of a decrease in the market
                price
                of any Petroleum Substances, changes in the reservoir, or production
                of
                Petroleum Substances in the ordinary course of business shall be
                considered substantial damage for the purposes of this
                Subclause.

            

    

     

    
      
        
        

      

      
        22

        
          

        

      

      
        
        

      

    

     

    The
      foregoing conditions shall be for the benefit of the Purchaser and may waived
      by
      the Purchaser in writing, in whole or part, at any time, provided the Purchaser
      may not waive the existence or operation of any Rights of First Refusal. In
      case
      any of the said conditions (i) to (xiv) inclusive shall not be complied with,
      or
      waived by the Purchaser, at or before the Closing Date, the Purchaser may
      rescind or terminate this Agreement by written notice to the
      Vendor.

     

    
      	(b)    
                	
              The
                following are conditions to the Closing of the sale herein, for the
                benefit of the Vendor, which may be waived at the discretion of the
                Vendor:

            

    

     

    
      	(i)     
                	
              that
                any and all necessary regulatory or governmental approvals required
                to
                permit the transaction to be completed that can be secured prior
                to
                Closing, or are normally secured prior to Closing in transactions
                of this
                type and such approvals as are required to be obtained from the AEUB
                or
                similar agency, shall have been obtained. To the extent
                that:

            

    

     

    
      	(A)   
                	
              the
                approval of the AEUB to the application for the transfer of the Well
                Licenses is required and such approval has not been secured on or
                before
                the Closing Date; or

            

    

     

    
      	(B)   
                	
              a
                security deposit or deposits must be made by the Purchaser in respect
                of
                securing the approval of the AEUB to the Well License transfer application
                and such deposits have not been made on or before the Closing
                Date;

            

    

     

    the
      Vendor shall be satisfied, in its sole judgement, acting reasonably, firstly
      that the Well Licenses transfer application will be accepted by the AEUB, and
      secondly that any security deposits to be made by the Purchaser shall be made
      in
      a timely fashion;

     

    
      	(ii)     
                	
              that
                TSXV Approval and any and all regulatory or governmental approvals
                required by Applicable Laws in respect to the issuance of the Shares
                by
                the Purchaser to the Vendor shall have been
                obtained;

            

    

     

    
      	(iii)    
                	
              the
                Purchaser shall have performed or complied in all material respects
                with
                all of the terms, covenants and conditions of this Agreement to be
                performed or complied with by the Purchaser at or prior to the Closing
                Date;

            

    

     

    
      	(iv)   
                	
              the
                Purchaser shall have tendered to the Vendor the Adjusted Purchase
                Price in
                the manner provided for in Clause 5;

            

    

     

    
      	(v)    
                	
              the
                representations and warranties of the Purchaser outlined in this
                Agreement
                shall be true in all material respects at and as of the Closing Date
                and
                the Purchaser shall have delivered to the Vendor a certificate of
                an
                officer of the Purchaser, dated the Closing Date in the form attached
                hereto as Schedule "H", to the effect that the representations and
                warranties contained in Clause 12
                hereof are true and correct in all material respects;
                and

            

    

     

    
      	(vi)   
                	
              the
                Purchaser shall have executed and delivered to the Vendor at least
                one
                copy of the Conveyance Documents tendered by the
                Vendor.

            

    

     

    
      
        
        

      

      
        23

        
          

        

      

      
        
        

      

    

     

    The
      foregoing conditions shall be for the benefit of the Vendor and may be waived
      by
      the Vendor in writing, in whole or part, at any time, provided the Vendor may
      not waive the existence or operation of any preferential right to purchase
      any
      of the Assets. In case any of the said conditions (i) to (vi) inclusive shall
      not be complied with, or waived by the Vendor, at or before the Closing Date,
      the Vendor may rescind or terminate this Agreement by written notice to the
      Purchaser.

     

    
      	(c)    
                	
              The
                Purchaser and the Vendor shall proceed diligently and in good faith
                and
                use commercially reasonable efforts to satisfy and comply with and
                assist
                in the satisfaction and compliance with the conditions precedent.
                If there
                is a condition precedent that is to be satisfied or complied with
                prior to
                the Closing Time, and if, by the time the condition precedent is
                to be
                satisfied or complied with, the Party whose benefit the condition
                precedent exists fails to notify the other Party whether or not the
                condition precedent has been satisfied or complied with, the condition
                precedent shall be conclusively deemed to have been satisfied or
                complied
                with.

            

    

    
      
        
          
             

            
              	
                      15.          
                        

                    	
                      
                        
                          
                            
                              
                                
                                  CONSENTS
                                    AND PREFERENTIAL
                                    RIGHTS

                                

                              

                            

                          

                        

                      

                    

            

          

        

        
        

      

    

     

    
      	(a)    
                	
              If
                all or any portion of the Assets are subject to Rights of First Refusal,
                as soon as is practicable after execution of this Agreement, the
                Purchaser, acting reasonably, shall advise the Vendor in writing
                of the
                Purchaser's valuation of the Assets which are subject to such Rights
                of
                First Refusal and such allocations shall be used for the purposes
                of this
                Clause except where such allocations are unreasonable. The Vendor
                shall
                upon receipt of the Purchaser's values, promptly serve all notices
                as are
                required under the applicable Rights of First Refusal provisions.
                Each
                such notice shall include full particulars of this transaction and
                a
                request for a waiver of the applicable Right of First Refusal.
                Notwithstanding anything to the contrary herein expressed or implied,
                the
                Vendor and the Purchaser acknowledge and agree that if any of such
                Rights
                of First Refusal are exercised, then the Purchase Price shall be
                reduced
                by the total amounts allocated pursuant to this
                Subclause 15(a)
                to
                that portion of the Assets upon which Rights of First Refusal are
                exercised.

            

    

     

    
      	(b)    
                	
              Prior
                to Closing the Parties shall use all reasonable efforts to obtain
                and
                deliver to the other Party all necessary consents (other than consents
                which may not be unreasonably withheld), waivers, permissions and
                approvals by Third Parties and governmental and regulatory authorities
                in
                connection with the transaction contemplated
                herein.

            

    

    
      
        
          
             

            
              	
                      16.          
                        

                    	
                      
                        
                          
                            
                              
                                
                                  
                                    TERMINATION

                                  

                                

                              

                            

                          

                        

                      

                    

            

          

        

        
        

      

    

     

    
      	(a)    
                	
              If
                this Agreement is terminated in accordance with its terms prior to
                Closing, then except for this Clause 16
                and Clause 17
                and the covenants, warranties, representations or other obligations
                breached prior to the time at which such termination occurs, the
                Parties
                shall be released from all of their obligations under this Agreement.
                If
                this Agreement is so terminated, the Purchaser shall promptly return
                to
                the Vendor all materials delivered to the Purchaser by the Vendor
                hereunder, together with all copies of them that may have been made
                by or
                for the Purchaser, and, subject to the provisions of
                Subclause 16(b),
                the Vendor shall promptly return to the Purchaser the portion of
                the
                Deposit not already released to the Vendor pursuant to Subclause
                16(c)
                and any interest earned thereon, and the balance of the Deposit released
                to Vendor shall be repaid by Vendor to Purchaser pursuant to the
                terms of
                the Promissory Notes.

            

    

     

    
      	(b)    
                	
              If
                a Party (the "Defaulting Party") fails to comply with any of the
                terms and conditions of this Agreement and Closing does not occur
                because
                of such failure, the other Party (the "Injured Party") may, by notice
                to the Defaulting Party, elect to
                either:

            

    

     

    
      
        
        

      

      
        24

        
          

        

      

      
        
        

      

    

     

    
      	(i)     
                	
              where
                the Defaulting Party is the Purchaser and the Closing does not occur
                by
                reason that the Vendor's Closing conditions contained in
                Subclause 14(b)
                have not been satisfied and the failure to satisfy such conditions
                is a
                direct result of the Purchaser's failure or refusal to satisfy its
                material obligations hereunder, treat the Agreement as terminated
                by
                reason of the non-fulfilment of the obligations of the Defaulting
                Party,
                in which case the Injured Party's remedy for such default shall be
                limited
                to that prescribed by this Subclause 16(b)(i)
                and the Injured Party shall be deemed to have waived all other remedies
                which may otherwise have been available to it at law or equity with
                respect to such default. In such event, the Deposit and the interest
                accrued thereon shall be paid to the Vendor as a genuine pre-estimate
                of
                liquidated damages and not as a penalty, and the payment of such
                liquidated damages shall be the Vendor's sole remedy hereunder;
                or

            

    

     

    
      	(ii)    
                	
              in
                the case of default by the Vendor, treat this Agreement as terminated
                by
                reason of the non-fulfilment of the Vendor's obligations, in which
                case,
                Stikeman Elliott LLP shall return the Deposit or that portion thereof
                remaining in trust, including any interest accrued thereon to the
                Purchaser and, if the Purchaser so decides, pursue a claim for losses
                resulting from such default;
                or

            

    

     

    
      	(iii)   
                	
              continue
                to treat the Agreement as binding and enforceable, in which event
                the
                Deposit shall be retained by the Vendor pending resolution of the
                default
                by agreement of the Parties or in accordance with a final order of
                a court
                of competent jurisdiction.

            

    

     

    However,
      the Injured Party shall be deemed to be treating this Agreement as in effect
      and
      enforceable, unless and until it specifically elects in writing to pursue an
      alternative in Subclause 16(b)(i)
      or
16(b)(ii).

     

    
      	(c)    
                	
              In
                the event Closing has not occurred
                by:

            

    

     

    
      	(i)     
                	
              June 28,
                2007, Stikeman Elliott LLP shall release $2 million dollars of the
                Deposit to the Vendor to be used by the Vendor to satisfy previously
                existing debt obligations to 1304146 Alberta Ltd. pursuant to a
                promissory note in the principal amount of $1,500,000 in the form
                attached
                hereto as Schedule "J" and for general corporate
                purposes;

            

    

     

    
      	(ii)   
                	
              July 29,
                2007, Stikeman Elliott LLP shall release an additional $1 million
                dollars of the Deposit to the Vendor to be used by the Vendor to
                satisfy
                previously existing debt obligations to 1304146 Alberta Ltd. pursuant
                to a
                promissory note in the principal amount of $1,000,000 in the form
                attached
                hereto as Schedule "K"; and

            

    

     

    
      	(iii)  
                	
              August 29,
                2007, Stikeman Elliott LLP shall release the remaining balance of
                the
                Deposit (plus any accrued interest) to the Vendor to be used by the
                Vendor
                to satisfy previously existing debt obligations to 1304146 Alberta
                Ltd.
                pursuant to a promissory note in the principal amount of $1,500,000
                in the
                form attached hereto as Schedule "L" and for general corporate
                purposes;

            

    

     

    and
      in
      each case, the portion of the Deposit so released shall be deemed to be a loan
      by the Purchaser to the Vendor pursuant to the terms of the Promissory Notes
      and
      a general security agreement granted by the Vendor in favour of the Purchaser,
      in the form attached hereto as Schedule "M". The
      Purchaser shall not be obligated and Stikeman Elliott LLP shall not be
      authorized to advance any portions of the Deposit not already advanced pursuant
      to this Subclause 16(c)
      if the
      Vendor is in default of its obligations hereunder at the time such advance
      is to
      be made pursuant to this Subclause 16(c),
      unless
      expressly and specifically authorized in writing by the Purchaser.

     

    
      
        
        

      

      
        25

        
          

        

      

      
        
        

      

    

    
      
        
          
             

            
              	
                      17.          
                        

                    	
                      
                        
                          
                            
                              
                                
                                  
                                    CONFIDENTIALITY

                                  

                                

                              

                            

                          

                        

                      

                    

            

          

        

        
        

      

    

     

    Information
      obtained by the Purchaser, its directors, officers, employees, agents,
      consultants or advisors, under this Agreement concerning the Assets and
      information contained in this Agreement shall be retained in confidence and
      used
      only for the purposes contemplated by this Agreement unless and until the
      Closing of the purchase of such Assets, whereupon the Purchaser's rights to
      use
      or disclose such information shall be subject to any Title and Operating
      Documents that may apply thereto. Any additional information obtained by the
      Purchaser, its directors, officers, employees, agents, consultants or advisors,
      under this Agreement which does not relate to the Assets shall continue to
      be
      treated as confidential and not used by the Purchaser without the prior written
      consent of the Vendor.

     

    Neither
      the Vendor nor the Guarantor shall directly or indirectly, discuss, negotiate
      with, entertain, solicit or accept any offers from any Third Parties relating
      to
      the sale of the Assets or convey any of the Assets to any Third Parties between
      the date of this Agreement and Closing. In addition, both Parties agree to
      only
      disclose, if necessary, minimum disclosure requirements to comply with
      Securities Laws or to those of its representatives, legal or financial advisors
      or lenders who have a need to know such information in connection with the
      Closing of the transactions described herein. The disclosing Party will inform,
      and seek comments from the other Parties, prior to any public release of such
      information.

    
      
        
          
             

            
              	
                      18.          
                        

                    	
                      
                        
                          
                            
                              
                                
                                  
                                    
                                      INFORMATION
                                        AND
                                        MATERIALS

                                    

                                  

                                

                              

                            

                          

                        

                      

                    

            

          

        

        
        

      

    

     

    
      	(a)    
                	
              The
                Vendor shall, subject to contractual restrictions relating to disclosure,
                deliver copies of such Technical Information and records in organized
                form
                to the Purchaser promptly after Closing and the Purchaser shall receive
                such Technical Information and records. The Purchaser shall maintain
                such
                Technical Information and records and shall not destroy same prior
                to the
                latest of any period under Applicable Laws for which a Party is required
                to maintain such documents and
                records.

            

    

     

    
      	(b)    
                	
              After
                the Closing Date, the Vendor and its representatives may, upon reasonable
                notice to the Purchaser, have access during business hours to the
                Technical Information and records delivered hereunder (to the extent
                the
                same is retained by the Purchaser or to which it has access) to obtain
                and
                copy information in respect of matters arising prior to the Closing
                Date
                if the information derived from such access is required in connection
                with
                audits or the Vendor's dealings with taxing or other regulatory
                authorities or is required to comply with any Applicable Law, regulation
                or ruling by a relevant government or regulatory authority or in
                any court
                of law or other tribunal having
                jurisdiction.

            

    

    
      
        
          
             

            
              	
                      19.          
                        

                    	
                      
                        
                          
                            
                              
                                
                                  
                                    
                                      
                                        LIABILITIES
                                          AND
                                          INDEMNITIES

                                      

                                    

                                  

                                

                              

                            

                          

                        

                      

                    

            

          

        

        
        

      

    

     

    
      	(a)    
                	
              Except
                as otherwise expressly provided for herein, and subject to
                Subclauses 19(c)
                and 19(d),
                the Vendor, after Closing, shall be liable to the Purchaser for all
                Losses
                which the Purchaser may suffer and, in addition, shall indemnify
                and save
                harmless the Purchaser, its directors, officers, employees, agents,
                successors and assigns from and against any Losses which arise or
                are
                directly attributable to any breach of any representation or warranty
                made
                by the Vendor herein excepting to the extent such Losses are caused
                by the
                gross negligence or wilful default of the Purchaser, its successors
                or
                assigns, provided however that written notice of a claim hereunder
                together with reasonable particulars must have been provided by the
                Purchaser to the Vendor within eighteen (18) months of the Closing
                Date.
                The indemnity granted herein by the Vendor is not a title warranty
                and
                does not provide an extension of any representation or warranty contained
                in Clause 10.

            

    

     

    
      
        
        

      

      
        26

        
          

        

      

      
        
        

      

    

     

    
      	(b)    
                	
              Except
                as otherwise expressly provided for herein, the Purchaser, after
                Closing,
                shall be liable to the Vendor for all Losses which the Vendor may
                suffer
                and, in addition, shall indemnify and save harmless the Vendor, its
                directors, officers, employees, agents, successors and assigns from
                and
                against any Losses pertaining to the Assets and occurring or accruing
                on
                or after the Closing Date excepting to the extent such Losses are
                caused
                by the gross negligence or wilful default of the Vendor and its successors
                or assigns.

            

    

     

    
      	(c)    
                	
              The
                Parties agree that all costs, expenses, risks, liabilities and obligations
                respecting the abandonment of any Wells which are part of the Assets;
                closure, decommissioning, dismantling and removing the Tangibles
                and
                restoration, remediation and reclamation of all Sites and the lands
                to
                which the Surface Rights relate, shall be borne and paid for solely
                by the
                Purchaser. The Purchaser shall, in respect thereof, indemnify, defend
                and
                save harmless the Vendor, its directors, officers, employees, agents,
                successors and assigns from and against any claims or demands by
                any
                person for or resulting in expense, liability, loss, costs, claims
                or
                damages, direct or indirect (including the effects of, and the costs
                of
                complying with any order, direction, or claim of any government,
                or
                agency, department, official or tribunal thereof having jurisdiction)
                pertaining to the foregoing operations conducted or failed to be
                conducted
                by the Purchaser.

            

    

     

    
      	(d)    
                	
              The
                Purchaser shall, after Closing, be liable to the Vendor for all
                Environmental Liabilities, regardless of the date on which they may
                have
                occurred or from which they may have accrued, which the Vendor, its
                directors, officers, employees, agents, successors and assigns may
                suffer,
                sustain, pay or incur and, in addition, shall indemnify, defend and
                save
                harmless the Vendor, its directors, officers, employees, agents,
                successors and assigns from and against any claims or demands by
                any
                person for any Environmental Liability. The Purchaser shall not be
                entitled to exercise and hereby waives any rights or remedies which
                the
                Purchaser may now or in the future have against the Vendor in respect
                of
                Environmental Liabilities, whether pursuant to common law or statute
                or
                otherwise, including, without limitation, the right to name the Vendor,
                its directors, officers, employees, agents, successors and assigns
                as a
                third party to any action by any Third Party against the
                Purchaser.

            

    

     

    
      	(e)    
                	
              Subject
                to the terms of the Promissory Notes to be entered pursuant to the
                terms
                of this Agreement, the total of the liabilities and indemnities of
                the
                Vendor, its successors and assigns under this Agreement or any document
                delivered pursuant hereto (including, without limitation, claims
                relating
                to its covenants, representations, warranties and indemnities) shall
                not
                exceed the Purchase Price.

            

    

    
      
        
          
             

            
              	
                      20.          
                        

                    	
                      
                        
                          
                            
                              
                                
                                  
                                    
                                      
                                        
                                          COVENANTS
                                            OF THE VENDOR AND THE
                                            PURCHASER

                                        

                                      

                                    

                                  

                                

                              

                            

                          

                        

                      

                    

            

          

        

        
        

      

    

     

    
      	(a)    
                	
              No
                Party will make any press release or other announcement respecting
                this
                Agreement without the consent of the other Party unless a Party refuses
                to
                consent and the Party desiring to make the release or other announcement
                is advised by its counsel that the release or other announcement
                is
                required to comply with any Applicable Law. This obligation will
                expire
                after all post-closing announcements required by Securities Laws
                relating
                to the transaction contemplated herein have been
                completed.

            

    

     

    
      
        
        

      

      
        27

        
          

        

      

      
        
        

      

    

     

    
      	(b)    
                	
              If
                the purchase and sale contemplated by this Agreement is closed, then,
                from
                the Closing Date until the Purchaser or its nominee becomes the recognized
                holder of the Assets in the place of the Vendor, the Vendor
                shall:

            

    

     

    
      	(i)     
                	
              represent
                the Purchaser and receive and hold all proceeds, benefits and advantages
                accruing in respect of such Assets for the benefit, use and ownership
                of
                the Purchaser;

            

    

     

    
      	(ii)    
                	
              on
                a monthly basis, deliver to the Purchaser all revenues, proceeds
                and other
                benefits received by the Vendor attributable to production after
                the
                Adjustment Date in respect of the Assets and all amounts received
                in
                respect of the Trust Agreements together with the relevant statements
                of
                operations and related documents;

            

    

     

    
      	(iii)   
                	
              deliver
                to the Purchaser all Third Party notices and communications received
                by
                the Vendor in respect of the Assets in order to permit the Purchaser
                to
                exercise its rights in accordance with the terms of the relevant
                Title and
                Operating Documents;

            

    

     

    
      	(iv)   
                	
              deliver
                to the Purchaser all Third Party invoices, cash calls and other billings
                in respect of such Assets in order to permit the Purchaser to make
                all
                payments required thereunder in a timely fashion;
                and

            

    

     

    
      	(v)    
                	
              in
                a timely manner deliver to Third Parties all notices and communications
                as
                the Purchaser may reasonably request in writing and all monies and
                other
                items the Purchaser provides in respect of such
                Assets;

            

    

     

    
      	(c)    
                	
              the
                Vendor shall not transfer, assign, sell, convey or otherwise dispose
                of
                the Shares to any other person during the one year hold period prescribed
                in Subclause 5(c)
                herein;

            

    

     

    
      	(d)    
                	
              the
                Vendor shall not encumber the Shares during the one year hold period
                prescribed in Subclause 5(c)
                herein unless such encumbrance is in respect to a bona fide loan
                from a
                Third Party lender and the lender agrees with the Purchaser to be
                bound by
                the provisions of Subclause 20(c)
                during the one year hold period.

            

    

     

    
      	(e)    
                	
              the
                Purchaser shall, on and after the Closing Date, observe, perform
                and be
                bound by, as they become due, all covenants, obligations and liabilities
                in respect of the Assets, including, without limitation, all obligations
                of the Vendor under the Title and Operating Documents;
                and

            

    

     

    
      	(f)    
                	
              the
                Parties each agree to use all reasonable commercial efforts and to
                cooperate in respect of determining, prior to Closing, if a security
                deposit will required to be made by either Party in order to secure
                the
                consent of the AEUB to the transfer of the Well Licenses to the Purchaser.
                Specifically, the Purchaser shall assist the Vendor in estimating
                the "Licensee Liability Rating" of either Party, assuming Closing
                occurs. In the event that either Party is required by the AEUB to
                place a
                security deposit or deposits with the AEUB in order to secure the
                AEUB's
                consent to the transfer of the Well Licenses, the Party required
                to place
                such a deposit agrees and covenants that it shall post such a deposit
                or
                deposits forthwith upon being required to do
                so.

            

    

     

    Nothing
      in this Subclause shall be construed as extending or restricting or limiting
      in
      any manner any of the other covenants, warranties, representations and other
      obligations of the Parties under this Agreement. The Vendor shall not be liable
      to the Purchaser for any Losses suffered by the Purchaser in connection with
      the
      arrangement established by this Subclause, except to the extent that the loss
      is
      caused by the Vendor's gross negligence or its wilful misconduct. The Purchaser
      indemnifies the Vendor, its directors, officers, contractors, agents, employees,
      successors and assigns from and against any Losses arising out of the
      performance by the Vendor or its directors, officers, employees, agents,
      contractors, successors or assigns of their obligations under this
      Subclause.

     

    
      
        
        

      

      
        28

        
          

        

      

      
        
        

      

    

    
      
        
          
             

            
              	
                      21.          
                        

                    	
                      
                        
                          
                            
                              
                                
                                  
                                    
                                      
                                        
                                          
                                            VENDOR
                                              ACKNOWLEDGEMENT

                                          

                                        

                                      

                                    

                                  

                                

                              

                            

                          

                        

                      

                    

            

          

        

        
        

      

    

     

    The
      Vendor hereby acknowledges that, in addition to the one year hold period
      pursuant to Subclause 20(c)
      herein,
      the Shares to be issued to it upon Closing pursuant to the terms hereof shall
      be
      subject to a "restricted period" in accordance with Section 2.5 of National
      Instrument 45-102 - Resale
      of Securities.

    
      
        
          
             

            
              	
                      22.          
                        

                    	
                      
                        
                          
                            
                              
                                
                                  
                                    
                                      
                                        
                                          
                                            
                                              SUBROGATION

                                            

                                          

                                        

                                      

                                    

                                  

                                

                              

                            

                          

                        

                      

                    

            

          

        

        
        

      

    

     

    Insofar
      as is reasonably practicable, the Purchaser shall have full rights of
      substitution and subrogation in and to all covenants, representations and
      warranties previously given by Third Parties with respect to the Assets or
      any
      of them.

    
      
        
          
             

            
              	
                      23.          
                        

                    	
                      
                        
                          
                            
                              
                                
                                  
                                    
                                      
                                        
                                          
                                            
                                              
                                                WAIVER

                                              

                                            

                                          

                                        

                                      

                                    

                                  

                                

                              

                            

                          

                        

                      

                    

            

          

        

        
        

      

    

     

    No
      waiver
      by any Party of any breach of any of the terms, conditions, representations
      or
      warranties in this Agreement shall take effect or be binding upon that Party
      unless the waiver is expressed in writing under the authority of that Party
      and
      any waiver so given shall extend only to the particular breach so waived and
      shall not limit or affect any rights with respect to any other or future
      breach.

    
      
        
          
             

            
              	
                      24.          
                        

                    	
                      
                        
                          
                            
                              
                                
                                  
                                    
                                      
                                        
                                          
                                            
                                              
                                                
                                                  FURTHER
                                                    ASSURANCES

                                                

                                              

                                            

                                          

                                        

                                      

                                    

                                  

                                

                              

                            

                          

                        

                      

                    

            

          

        

        
        

      

    

     

    At
      the
      Closing Date and thereafter as may be necessary, the Parties shall execute,
      acknowledge and deliver such other instruments and take such other action as
      may
      be reasonably necessary to carry out their obligations under this
      Agreement.

    
      
        
          
             

            
              	
                      25.          
                        

                    	
                      
                        
                          
                            
                              
                                
                                  
                                    
                                      
                                        
                                          
                                            
                                              
                                                
                                                  
                                                    ASSIGNMENT

                                                  

                                                

                                              

                                            

                                          

                                        

                                      

                                    

                                  

                                

                              

                            

                          

                        

                      

                    

            

          

        

        
        

      

    

     

    The
      Purchaser shall not assign its interest in or under this Agreement without
      obtaining the prior written consent of the Vendor and provided that the
      Purchaser shall in any event remain liable for all of its obligations and
      liabilities under this Agreement and shall not thereby be released from any
      of
      its obligations or liabilities under this Agreement.

    
      
        
          
             

            
              	
                      26.          
                        

                    	
                      
                        
                          
                            
                              
                                
                                  
                                    
                                      
                                        
                                          
                                            
                                              
                                                
                                                  
                                                    NOTICE

                                                  

                                                

                                              

                                            

                                          

                                        

                                      

                                    

                                  

                                

                              

                            

                          

                        

                      

                    

            

          

        

        
        

      

    

     

    All
      notices required or permitted hereunder or with respect to this Agreement shall
      be in writing and shall be deemed to have been properly given and delivered
      when
      delivered personally, or when sent from a point within Canada by confirmed
      facsimile (or by any other like method by which a written and recorded message
      may be sent), and addressed to the Parties, respectively, as
      follows:

     

    
      
        
        

      

      
        29

        
          

        

      

      
        
        

      

    

     

     

    
      	The Purchaser: 	
              North Peace Energy Corp.

              470, 505 - 3rd
                Street S.W.

              
                Calgary,
                  Alberta

                T2P 3E6

              

            	 
	 	 	 
	 	
              Attention: Louis Dufresne, President

               

              Telephone
                No.: (403) 262-6024

              Facsimile
                No.: (403)262-6072

            	 
	 	 	 
	 	 	 
	The Vendor:	
              Peace Oil Corp.

              
                c/o
                  Surge Global Energy

                12220
                  El Camino Real, Suite 410

                San
                  Diego, CA

                92130

              

            	 
	 	 	 
	 	
              Attention:
                Chief Executive Officer

               

              Phone:
                (858)704-5012

              Fax:
                (858)704-5013

            	 
	 	 	 
	 	 	 
	The Guarantor:	
              Surge Global Energy, Inc.

              
                2220
                  El Camino Road, #410

                San
                  Diego, CA

                92130

              

            	 
	 	 	 
	 	
              Attention:
                Chief Executive Officer

               

              Phone:
                (858)704-5012

              Fax:
                (858)704-5013

            	 

    

     

    Any
      notice or communication sent by personal service, facsimile or other means
      shall
      be deemed received when delivery or reception of the transmission is complete
      except that, if such delivery or transmission is sent on a Saturday, Sunday or
      day when the receiving Party's office is not open for the regular conduct of
      business, on or after 4:00 p.m., such notice or communication shall be
      deemed to be received on the next day that such office is open for the regular
      conduct of business. Any Party may change its address for the purposes hereof
      by
      directing a notice in writing of such change to the other Parties at their
      above
      addresses.

    
      
        
          
             

            
              	
                      27.          
                        

                    	
                      
                        
                          
                            
                              
                                
                                  
                                    
                                      
                                        
                                          
                                            
                                              
                                                
                                                  
                                                    
                                                      GOVERNING
                                                        LAW

                                                    

                                                  

                                                

                                              

                                            

                                          

                                        

                                      

                                    

                                  

                                

                              

                            

                          

                        

                      

                    

            

          

        

        
        

      

    

     

    This
      Agreement shall in all respects be subject to and be interpreted, construed
      and
      enforced in accordance with the laws in effect in the Province of Alberta.
      Each
      Party accepts the jurisdiction of the courts of the Province of Alberta and
      all
      courts of appeal therefrom.

    
      
        
          
             

            
              	
                      28.          
                        

                    	
                      
                        
                          
                            
                              
                                
                                  
                                    
                                      
                                        
                                          
                                            
                                              
                                                
                                                  
                                                    
                                                      ENTIRE
                                                        AGREEMENT

                                                    

                                                  

                                                

                                              

                                            

                                          

                                        

                                      

                                    

                                  

                                

                              

                            

                          

                        

                      

                    

            

          

        

        
        

      

    

     

    
      	(a)    
                	
              This
                Agreement supersedes all previous agreements and states the entire
                agreement between the Parties concerning the
                Assets.

            

    

     

    
      	(b)    
                	
              This
                Agreement may be amended only by written instrument signed by the
                Vendor
                and the Purchaser.

            

    

     

    
      
        
        

      

      
        30

        
          

        

      

      
        
        

      

    

    
      
         

        
          	
                  29.          
                    

                	
                  
                    
                      
                        
                          
                            
                              
                                
                                  
                                    
                                      
                                        
                                          
                                            
                                              
                                                
                                                  
                                                    ENUREMENT

                                                  

                                                

                                              

                                            

                                          

                                        

                                      

                                    

                                  

                                

                              

                            

                          

                        

                      

                    

                  

                

        

      

    

     

    This
      Agreement shall be binding upon and enure to the benefit of the Parties and
      their respective successors and permitted assigns.

    
      
         

        
          	
                  30.          
                    

                	
                  
                    
                      
                        
                          
                            
                              
                                
                                  
                                    
                                      
                                        
                                          
                                            
                                              
                                                
                                                  
                                                    SEVERABILITY

                                                  

                                                

                                              

                                            

                                          

                                        

                                      

                                    

                                  

                                

                              

                            

                          

                        

                      

                    

                  

                

        

      

    

     

    If
      any
      provision of this Agreement is held to be invalid, illegal or unenforceable,
      the
      invalidity, illegality or unenforceability will not affect any other provision
      of this Agreement and this Agreement will be construed as if the invalid,
      illegal or unenforceable provision had never been contained herein unless the
      deletion of the provision would result in such material change to cause the
      completion of the transactions contemplated herein to be
      unreasonable.

    
      
         

        
          	
                  31.          
                    

                	
                  
                    
                      
                        
                          
                            
                              
                                
                                  
                                    
                                      
                                        
                                          
                                            
                                              
                                                
                                                  
                                                    TIME

                                                  

                                                

                                              

                                            

                                          

                                        

                                      

                                    

                                  

                                

                              

                            

                          

                        

                      

                    

                  

                

        

      

    

     

    Time
      shall be of the essence in this Agreement.

    
      
         

        
          	
                  32.          
                    

                	
                  
                    
                      
                        
                          
                            
                              
                                
                                  
                                    
                                      
                                        
                                          
                                            
                                              
                                                
                                                  
                                                    
                                                      PROMISSORY
                                                        NOTES

                                                    

                                                  

                                                

                                              

                                            

                                          

                                        

                                      

                                    

                                  

                                

                              

                            

                          

                        

                      

                    

                  

                

        

      

    

     

    In
      the
      event that Closing has not occurred by the dates set out in
      Subclause 16(c)
      herein,
      then all Deposit funds advanced and released to the Vendor pursuant to the
      terms
      of this Agreement shall be governed by the terms of the Promissory Notes entered
      into in respect thereto, including the repayment of the Deposit funds to the
      Purchaser and such failure to Close shall not give rise to any claims by the
      Vendor against the Purchaser for damage, loss or forfeiture of the
      Deposit.

    
      
         

        
          	
                  33.          
                    

                	
                  
                    
                      
                        
                          
                            
                              
                                
                                  
                                    
                                      
                                        
                                          
                                            
                                              
                                                
                                                  
                                                    
                                                      GUARANTEE
                                                        OF
                                                        OBLIGATIONS

                                                    

                                                  

                                                

                                              

                                            

                                          

                                        

                                      

                                    

                                  

                                

                              

                            

                          

                        

                      

                    

                  

                

        

      

    

     

    The
      Guarantor guarantees and shall be jointly and severally liable for the
      obligations and liabilities of the Vendor hereunder and shall indemnify and
      save
      harmless the Purchaser from all Losses incurred as a result of any breach of
      the
      covenants, representations or warranties contained herein, subject to
      Subclause 19(e).

     

    IN
      WITNESS WHEREOF the Parties have duly executed this Agreement in accordance
      with
      their respective requirements therefore, as of the date first above
      written.

     

    
      	
              PEACE
                OIL CORP.

               

            	 	
              NORTH
                PEACE ENERGY CORP.

               

            
	
              Per:

            	/s/
              David
              Perez                                                   	
              Per:

            	/s/
              Louis R.
              Dufresne                                               
	 	
              David
                Perez

              Chief
                Executive Officer

               

            	 	
              Louis
                R. Dufresne, President

               

            
	
               

              SURGE
                GLOBAL ENERGY, INC.

               

            	 
	
              Per:

            	/s/
              David
              Perez                                                   
	 	
              David
                Perez

              Chief
                Executive Officer

               

            

    

    This
      is
      the execution page to the Agreement of Purchase and Sale dated June 25,
      2007 among Peace Oil Corp., North Peace Energy Corp. and Surge Global Energy,
      Inc. 

     

    
      
        
        

      

      
        31

        
          

        

      

      
        
        

      

    

     

    
      SCHEDULE "A"
        ATTACHED
        TO AND FORMING PART OF THE AGREEMENT OF PURCHASE AND SALE AMONG PEACE OIL
        CORP.,
        NORTH PEACE ENERGY CORP. AND SURGE GLOBAL ENERGY, INC. MADE THE 25TH
        DAY OF
        JUNE, 2007.

       

      PETROLEUM
        AND NATURAL GAS RIGHTS

       

      
        	
                 

                Oil
                  Sands 

                Leases

                 

              	
                 

                Lands

                 

              	
                Vendor's
                  Working

                 Interest

              	
                 

                Ha

                 

              	
                 

                Annual
                  

                Rental

                 

              	
                 

                Due
                  date

                 

              	
                 

                Encumbrances

                 

              
	
                 

                OS7405120334

                 

              	
                Twp
                  89, Rge 8 W5

                Sections
                  1-3,10-15

                 

              	
                30%

                 

              	
                 

                2,304

                 

              	
                 

                $8064.00

                 

              	
                 

                Dec
                  15 2006

                 

              	
                 

                Crown
                  Royalty

                 

              
	
                 

                OS7405120335

                 

              	
                Twp
                  89, Rge 8 W5 Sections
                  4-9, 16-18

              	
                30%

                 

              	
                 

                2,304

                 

              	
                 

                $8064.00

                 

              	
                 

                Dec
                  15 2006

                 

              	
                 

                Crown
                  Royalty

                 

              
	
                 

                OS7405120336

                 

              	
                Twp
                  89, Rge 8 W5

                Sections
                  19-21, 28-33

                 

              	
                30%

                 

              	
                 

                2,304

                 

              	
                 

                $8064.00

                 

              	
                 

                Dec
                  15 2006

                 

              	
                 

                Crown
                  Royalty

                 

              
	
                OS7405120337

                 

              	
                Twp
                  89, Rge 8 W5

                Sections
                  22-27, 34-36

                 

              	
                30%

                 

              	
                 

                2,304

                 

              	
                 

                $8064.00

                 

              	
                 

                Dec
                  15 2006

                 

              	
                 

                Crown
                  Royalty

                 

              
	
                OS7405120339

                 

              	
                Twp
                  89, Rge 10 W5 Sections 1-3, 10-15

              	
                30%

                 

              	
                 

                2,304

                 

              	
                 

                $8064.00

                 

              	
                 

                Dec
                  15 2006

                 

              	
                 

                Crown
                  Royalty

                 

              
	
                OS7405120340

                 

              	
                Twp
                  89, Rge 10 W5 Sections 22-27, 34-36

              	
                30%

                 

              	
                 

                2,304

                 

              	
                 

                $8064.00

                 

              	
                 

                Dec
                  15 2006

                 

              	
                 

                Crown
                  Royalty

                 

              
	
                OS7406020462

                 

              	
                Twp
                  88, Rge 08 W5

                Sections
                  04-09, 16-18

                 

              	
                30%

                 

              	
                 

                2,304

                 

              	
                 

                $8064.00

                 

              	
                 

                Feb.
                  9 2007

                 

              	
                 

                Crown
                  Royalty

                 

              
	
                OS7406020463

                 

              	
                Twp
                  88, Rge 08 W5

                Sections
                  19-21, 28-33

                 

              	
                30%

                 

              	
                 

                2,304

                 

              	
                 

                $8064.00

                 

              	
                 

                Feb.
                  9 2007

                 

              	
                 

                Crown
                  Royalty

                 

              
	
                OS7406020464

                 

              	
                Twp
                  88, Rge 09 W5

                Sections
                  01-03, 10-15

                 

              	
                30%

                 

              	
                 

                2,304

                 

              	
                 

                $8064.00

                 

              	
                 

                Feb.
                  9 2007

                 

              	
                 

                Crown
                  Royalty

                 

              
	
                OS7406020467

                 

              	
                Twp
                  88, Rge 09 W5

                Sections
                  22-27, 34-36

                 

              	
                30%

                 

              	
                 

                2,304

                 

              	
                 

                $8064.00

                 

              	
                 

                Feb.
                  9 2007

                 

              	
                 

                Crown
                  Royalty

                 

              

      

       

      
        
          
          

        

        
          
          

          
            

          

        

        
          
          

        

      

       

      
        	
                OS7406020465

                 

              	
                Twp
                  88, Rge 09 W5

                Sections
                  04-09, 16-18

                 

              	
                30%

                 

              	
                 

                2,304

                 

              	
                 

                $8064.00

                 

              	
                 

                Feb.
                  9 2007

                 

              	
                 

                Crown
                  Royalty

                 

              
	
                OS7406030666

                 

              	
                Twp
                  88, Rge 07 W5

                Sections
                  22-27, 34-36

                 

              	
                30%

                 

              	
                 

                2,304

                 

              	
                 

                $8064.00

                 

              	
                 

                Mar.
                  9 2007

                 

              	
                 

                Crown
                  Royalty

                 

              
	
                OS7406030667

                 

              	
                Twp
                  89, Rge 07 W5

                Sections
                  1-3,10-15

                 

              	
                30%

                 

              	
                 

                2,304

                 

              	
                 

                $8064.00

                 

              	
                 

                Mar.
                  9 2007

                 

              	
                 

                Crown
                  Royalty

                 

              
	
                OS7406030668

                 

              	
                Twp
                  89, Rge 07 W5

                Sections
                  04-09, 16-18

                 

              	
                30%

                 

              	
                 

                2,304

                 

              	
                 

                $8064.00

                 

              	
                 

                Mar.
                  9 2007

                 

              	
                 

                Crown
                  Royalty

                 

              
	
                OS7406060674

                 

              	
                Twp
                  87, Rge 11 W5

                Sections
                  19-21,28-33

                 

              	
                30%

                 

              	
                 

                2,304

                 

              	
                 

                $8064.00

                 

              	
                 

                June
                  15, 2007

                 

              	
                 

                Crown
                  Royalty

                 

              
	
                 

                TOTALS

                 

              	
                 

                135
                  sections

                 

              	 	
                 

                34,560
                  ha 

                 

                86,400
                  acres

              	
                 

                $120,960.00

                 

              	 	 

      

      

      
        
          
          

        

        
          
          

          
            

          

        

        
          
          

        

      

       

      SCHEDULE "B"
        ATTACHED
        TO AND FORMING PART OF THE AGREEMENT OF PURCHASE AND SALE AMONG PEACE OIL
        CORP.,
        NORTH PEACE ENERGY CORP. AND SURGE GLOBAL ENERGY, INC. MADE THE 25TH
        DAY OF
        JUNE, 2007.

       

      WELLS

       

      
        	
                WELL
                  LISTING - RED EARTH PROPERTY

                 

              	 	 
	
                (At
                  June 25, 2007)

                 

              	 	 	 
	 	 	 	 
	
                WELL
                  LSD

                 

              	
                ZONE

                 

              	
                OPERATOR

                 

              	
                Vendor's
                  Working Interest

                 

              
	
                07-26-088-09
                  W5M

                 

              	
                Bluesky

                 

              	
                Vendor

                 

              	
                30%

                 

              
	
                09-35-088-09
                  W5M

                 

              	
                Bluesky

                 

              	
                Vendor

                 

              	
                30%

                 

              
	
                05-10-088-09
                  W5M

                 

              	
                Bluesky

                 

              	
                Vendor

                 

              	
                30%

                 

              
	
                02-12-088-09
                  W5M

                 

              	
                Bluesky

                 

              	
                Vendor

                 

              	
                30%

                 

              
	
                04-18-088-08
                  W5M

                 

              	
                Bluesky

                 

              	
                Vendor

                 

              	
                30%

                 

              
	
                14-23-088-09
                  W5M

                 

              	
                Bluesky

                 

              	
                Vendor

                 

              	
                30%

                 

              
	
                102/05-10-088-09
                  W5M

                 

              	
                Spirit
                  River

                 

              	
                Vendor

                 

              	
                30%

                 

              
	
                01-01-089-10
                  W5M

                 

              	
                Bluesky

                 

              	
                Purchaser

                 

              	
                30%

                 

              
	
                12-24-089-10
                  W5M

                 

              	
                Bluesky

                 

              	
                Purchaser

                 

              	
                30%

                 

              

      

      

       

      
        
          
          

        

        
          
          

          
            

          

        

        
          
          

        

      

      SCHEDULE "C"
        ATTACHED
        TO AND FORMING PART OF THE AGREEMENT OF PURCHASE AND SALE AMONG PEACE OIL
        CORP.,
        NORTH PEACE ENERGY CORP. AND SURGE GLOBAL ENERGY, INC. MADE THE 25TH
        DAY OF
        JUNE, 2007.

       

      TANGIBLES

       

      
        	·   
                 	
                Tubulars
                  - Casing - installed in the Wells. Leftovers include 2 joints of
                  8-5/8”
                  casing, 17 joints 5-1/2” casing and one joint of 7” casing stored at the
                  Winalta Trucking yard in Red Earth Creek.

              

      

       

      
        	·   
                 	
                Tubulars
                  - Tubing - string in 07-26. Remainder approx 90 joints 2-7/8 inch
                  tubing
                  is stored at Winalta yard in Red Earth Creek (50 Joints) and Edmonton
                  (40
                  joints).

              

      

       

      
        	·   
                 	
                Tubulars
                  - Polish rod and rods - remain in
                  07-26

              

      

       

      
        	·   
                 	
                No
                  Tanks purchased (rentals only -
                  returned)

              

      

       

      
        	·   
                 	
                No
                  Pumps purchased (rentals only - returned) 

              

      

       

      
        	·   
                 	
                Drive
                  Head & Prime Mover (rented for 07-26 - returned). NOTE:
                  The Drive
                  Head unit was thought to have been returned to Weatherford,
                  but it
                  was discovered in early June that the unit was left on-site
                  during clean-up
                  (Still bolted to the wellhead). Weatherford has been accruing rental
                  charges (approx $2500/month). The cost to buy this unit out is approx
                  $10k. Weatherford has been contacted to this
                  effect.

              

      

       

      
        	·   
                 	
                Misc
                  Items - Stored at Winalta Trucking Yard - Red Earth, 1 or 2 used
                  drill
                  bits, some partial cut-off joints of casing. Some misc fittings,
                  valves
                  etc used for tie-in to rental tank during 07-26 testing operations
                  were
                  cleaned up and stored at Apex Distribution in Red Earth. (Low level
                  storage in the event of future
                  need.)

              

      

       

      
        	·   
                 	
                Casing
                  Bowls: Salvaged casing bowls are at Superior Welding in Red Earth
                  - these
                  may be used for future operations. For 07-26 and 14-23, bowls and
                  related
                  equipment are still on these wells.

              

      

       

      
        	·   
                 	
                Signs
                  and Posts - installed on wellsites

              

      

       

       

      EXCLUDED
        TANGIBLES

       

      -NIL-

       

      
        
          
          

        

        
          
          

          
            

          

        

        
          
          

        

      

      

      SCHEDULE "D"
        ATTACHED
        TO AND FORMING PART OF THE AGREEMENT OF PURCHASE AND SALE AMONG PEACE OIL
        CORP.,
        NORTH PEACE ENERGY CORP. AND SURGE GLOBAL ENERGY, INC. MADE THE 25TH
        DAY OF
        JUNE, 2007.

       

      AFE'S

      
 

       

       

      -NIL-

       

      
        
          
          

        

        
          
          

          
            

          

        

        
          
          

        

      

      SCHEDULE "E"
        ATTACHED
        TO AND FORMING PART OF THE AGREEMENT OF PURCHASE AND SALE AMONG PEACE OIL
        CORP.,
        NORTH PEACE ENERGY CORP. AND SURGE GLOBAL ENERGY, INC. MADE THE 25TH
        DAY OF
        JUNE, 2007.

       

      TAKE
        OR PAY, PRODUCTION SALES

      AND
        TRANSPORTATION CONTRACTS

       

       

      

       

      

       

      -NIL-

       

      
        
          
          

        

        
          
          

          
            

          

        

        
          
          

        

      

      SCHEDULE "F"
        ATTACHED
        TO AND FORMING PART OF THE AGREEMENT OF PURCHASE AND SALE AMONG PEACE OIL
        CORP.,
        NORTH PEACE ENERGY CORP. AND SURGE GLOBAL ENERGY, INC. MADE THE 25TH
        DAY OF
        JUNE, 2007.

       

      CONVEYANCE

      

      THIS
        AGREEMENT
        is made
        the 28th
        day of
        June, 2007.

      

      BETWEEN:

      

      Peace
        Oil Corporation,
        a body
        corporate having offices in Calgary, Alberta (hereinafter referred to as
        the
“Vendor”)

      

      AND

      

      North
        Peace Energy Corp., a
        body
        corporate having offices in Calgary, Alberta (hereinafter referred to as
        the
“Purchaser”)

      

      WHEREAS
        the
        Vendor has agreed to sell and convey the Assets to the Purchaser and the
        Purchaser has agreed to purchase and receive the Assets from the
        Vendor;

      

      For
        the
        consideration provided in the Purchase Agreement and in consideration of
        the
        premises hereto and the covenants and agreements hereinafter set forth and
        contained, the Parties covenant and agree as follows:

      

      1.    DEFINITIONS

       

      In
        this
        Agreement, including the premises hereto, “Purchase Agreement” means the
        agreement entitled “Agreement of Purchase and Sale”, made the 25th
        day of
        June, 2007 and made among
        the
        Vendor, as vendor, the Purchaser, as purchaser and Surge Global Energy, Inc.
        as
        guarantor.

       

      In
        addition, the definitions provided for in the Purchase Agreement are adopted
        herein by this reference.

      

      2.    CONVEYANCE

      

      The
        Vendor, pursuant to and for the consideration provided for in the Purchase
        Agreement, the receipt and sufficiency of such consideration being hereby
        acknowledged by the Vendor, hereby sells, assigns, transfers, conveys and
        sets
        over to the Purchaser the entire right, title, estate and interest of the
        Vendor
        in and to the Assets, to have and to hold the same absolutely, together with
        all
        benefit and advantage to be derived therefrom.

      

      3.    EFFECTIVE
        TIME

      

      This
        Conveyance shall be effective as of the Closing Date.

      

      4.    SUBORDINATE
        DOCUMENT

      

      This
        Agreement is executed and delivered by the Parties pursuant to and for the
        purposes of the provisions of the Purchase Agreement and the provisions of
        the
        Purchase Agreement shall prevail and govern in the event of a conflict between
        the provisions of the Purchase Agreement of the provisions of this
        Agreement.

      

      
        
          
          

        

        
          
          

          
            

          

        

        
          
          

        

         

      

      5.    MERGER
        CLAUSE

      

      There
        shall be no merger of any covenant, representation or warranty contained
        in the
        Purchase Agreement by virtue of the execution and delivery hereof.

      

      6.    ENUREMENT

      

      This
        Agreement shall be binding upon and shall enure to the benefit of each of
        the
        Parties and their respective trustees, receivers, receiver-managers, successors
        and assigns.

      

      7.    FURTHER
        ASSURANCES

      

      Each
        Party will, from time to time and at all times hereafter, at the request
        of the
        other Party but without further consideration, do all such further acts and
        execute and deliver all such further documents as shall be reasonably required
        in order to fully perform and carry out the terms thereof.

      

      IN
        WITNESS WHEREOF
        the
        Parties have executed this Agreement on the date first above
        written.

      

      
        	
                PEACE
                  OIL CORP.

                 

              	 	
                 

                NORTH
                  PEACE ENERGY CORP.

                 

              
	
                 

                By:

              	 	 	
                 

                By:

              	 
	 	
                David
                  Perez

              	 	
              	 

      

      

      This
        is
        the execution page to the Conveyance from Peace Oil Corp. to North Peace
        Energy
        Corp. made the 28th
        day of
        June, 2007.

       

      
        
          
          

        

        
          
          

          
            

          

        

        
          
          

        

      

      SCHEDULE "G"
        ATTACHED
        TO AND FORMING PART OF THE AGREEMENT OF PURCHASE AND SALE AMONG PEACE OIL
        CORP.,
        NORTH PEACE ENERGY CORP. AND SURGE GLOBAL ENERGY, INC. MADE THE 25TH
        DAY OF
        JUNE, 2007.

       

      DISCLOSURE

       

      One
        Rental Drive-Head is still in place on the 07-26 wellhead. This unit was
        thought
        to have been returned to Weatherford, but it was discovered in early June
        that
        the unit was left on-site. Weatherford has been accruing rental charges (approx
        $2500/month). The cost to buy this unit out is approximately $10,000.
        Weatherford has been contacted to this effect.

       

      
        
          
          

        

        
          
          

          
            

          

        

        
          
          

        

      

       

      SCHEDULE "H"
        ATTACHED
        TO AND FORMING PART OF THE AGREEMENT OF PURCHASE AND SALE AMONG PEACE OIL
        CORP.,
        NORTH PEACE ENERGY CORP. AND SURGE GLOBAL ENERGY, INC. MADE THE 25TH
        DAY OF
        JUNE, 2007.

       

      OFFICER'S
        CERTIFICATE

       

      TO:         North
        Peace Energy Corp. (the "Purchaser")

       

      The
        undersigned, David Perez, being the Chief Executive Officer of Peace Oil
        Corp. (the "Vendor"), does hereby certify, for and on behalf of the Vendor
        and not in his/her personal capacity and without any personal liability to
        the
        undersigned, as follows:

       

      
        	1.          
                 	
                The
                  undersigned is personally familiar, in his/her capacity as an officer
                  or
                  employee or the Vendor, with the matters hereinafter
                  mentioned.

              

      

       

      
        	2.          
                 	
                This
                  certificate is made pursuant to Subparagraph 14(a)(iii)
                  of
                  an Agreement of Purchase and Sale made June 25, 2007 among the
                  Vendor, the Purchaser and Surge Global Energy, Inc. (the "Sale
                  Agreement").

              

      

       

      
        	3.          
                 	
                The
                  definitions contained in the Sale Agreement are herein adopted
                  and
                  wherever used shall have the meanings ascribed to them in the Sale
                  Agreement.

              

      

       

      
        	4.          
                 	
                The
                  representations and warranties of the Vendor contained in the Sale
                  Agreement were true in all material respects when made and are
                  true in all
                  material respects as of the date
                  hereof.

              

      

       

      
        	5.          
                 	
                All
                  obligations of the Vendor contained in the Sale Agreement to be
                  performed
                  by it or on its behalf prior to or at Closing have been performed
                  in a
                  timely manner in all material
                  respects.

              

      

       

      DATED
        at
        Calgary, Alberta as of the 28th
        day of
        June, 2007.

       

      
        	
                 

              
	
                David
                  Perez

              

      

       

      
        
          
          

        

        
          
          

          
            

          

        

        
          
          

        

      

      OFFICER'S
        CERTIFICATE

       

      TO:        
        Peace
        Oil
        Corp. (the "Vendor")

       

      The
        undersigned, Louis R. Dufresne, being an officer or employee of North Peace
        Energy Corp. (the "Purchaser"), does hereby certify, for and on behalf of
        the Purchaser and not in his/her personal capacity and without any personal
        liability to the undersigned, as follows:

       

      
        	1.         
                  	
                The
                  undersigned is personally familiar, in his/her capacity as an officer
                  or
                  employee or the Purchaser, with the matters hereinafter
                  mentioned.

              

      

       

      
        	2.         
                  	
                This
                  certificate is made pursuant to Subparagraph 14(b)(v)
                  of
                  an Agreement of Purchase and Sale made June 25, 2007 among the
                  Vendor, the Purchaser and Surge Global Energy, Inc. (the "Sale
                  Agreement").

              

      

       

      
        	3.         
                  	
                The
                  definitions contained in the Sale Agreement are herein adopted
                  and
                  wherever used shall have the meanings ascribed to them in the Sale
                  Agreement.

              

      

       

      
        	4.         
                  	
                The
                  representations and warranties of the Purchaser contained in the
                  Sale
                  Agreement were true in all material respects when made and are
                  true in all
                  material respects as of the date
                  hereof.

              

      

       

      
        	5.         
                  	
                All
                  obligations of the Purchaser contained in the Sale Agreement to
                  be
                  performed by it or on its behalf prior to or at Closing have been
                  performed in a timely manner in all material
                  respects.

              

      

       

      DATED
        at
        Calgary, Alberta as of the 28th
        day of
        June, 2007.

       

      
        	
                 

              
	
                Louis
                  R. Dufresne

              

      

      

      
        
          
          

        

        
          
          

          
            

          

        

        
          
          

        

      

       

      SCHEDULE "I"
        ATTACHED
        TO AND FORMING PART OF THE AGREEMENT OF PURCHASE AND SALE AMONG PEACE OIL
        CORP.,
        NORTH PEACE ENERGY CORP. AND SURGE GLOBAL ENERGY, INC. MADE THE 25TH
        DAY OF
        JUNE, 2007.

       

      CERTIFIED
        COPY OF VENDOR'S SHAREHOLDER'S RESOLUTION APPROVING SALE

       

      SEE
        ATTACHED

       

      
        
          
          

        

        
          
          

          
            

          

        

        
          
          

        

      

       

      SCHEDULE "J"
        ATTACHED
        TO AND FORMING PART OF THE AGREEMENT OF PURCHASE AND SALE AMONG PEACE OIL
        CORP.,
        NORTH PEACE ENERGY CORP. AND SURGE GLOBAL ENERGY, INC. MADE THE 25TH
        DAY OF
        JUNE, 2007.

       

      PROMISSORY
        NOTE #1

       

      PROMISSORY
        NOTE

       

      AMOUNT:    CDN.
        $·

       

      FOR
        VALUE
        RECEIVED Peace
        Oil Corp.
        (the "Debtor"),
        hereby promises to pay, in accordance with the provisions hereof, to the
        order
        of North
        Peace Energy Corp.
        (the
        "Creditor"),
        the
        aggregate sum of CDN.$·
        (the
        "Principal
        Sum")
        together with interest thereon from and after the date hereof, before and
        after
        demand, default and judgment, at the rate of interest quoted by Royal Bank
        of
        Canada on the day prior to the advance as the reference rate of interest
        which
        it employs to determine the interest it will charge for demand loans in Canadian
        dollars and which it will designate as its prime rate on a per annum basis.
        

       

      Interest
        accruing due hereunder shall be calculated daily in accordance with the "nominal
        rate" method of interest calculation on the basis of a 365 or 366 day year
        (as
        the case may be) and shall be due and payable in arrears on the date of
        repayment.

       

      
        	34.      
                  	
                Payments

              

      

       

      Reference
        is made to the purchase and sale agreement dated June 25, 2007 between the
        Debtor and the Creditor (the "Agreement")
        whereby the Creditor has agreed, inter
        alia,
        in
        accordance with the terms of the Agreement, to purchase certain assets of
        the
        Debtor (the "Transaction").
        Repayment of the Principal Sum hereunder shall be made in following
        manner:

       

      
        	(a)           	
                if
                  the Creditor fails to consummate the Transaction by September 1,
                  2007 as a
                  result of its failure to obtain the equity financing as contemplated
                  in
                  subclause 14(a)(xii) of the Agreement, or the Agreement is terminated
                  by reason of any default of the Debtor other than a default that
                  would
                  constitute an Event of Default as set forth in subparagraph 35(a)(iv)
                  below, the Principal Sum and any and all accrued interest thereon
                  shall be
                  repaid to the Creditor on September 1, 2008;

              

      

       

      
        	(b)        
                  	
                if
                  the Transaction fails to close by September 1, 2007 or the Agreement
                  is
                  otherwise terminated due to a default by Creditor of its obligation
                  to
                  close pursuant to the Agreement, (and for greater certainty, a
                  failure to
                  obtain equity financing as contemplated in paragraph (a) herein
                  does not
                  constitute a default by Creditor), then the Principal Sum and any
                  and all
                  accrued interest thereon shall be deemed to have been repaid by
                  the Debtor
                  and this Promissory Note shall be returned to the Debtor by the
                  Creditor
                  to surrender for cancellation;

              

      

       

      
        	(c)        
                  	
                if
                  the Transaction is completed and has closed as more particularly
                  set out
                  in the Agreement, then the Principal Sum and any and all accrued
                  interest
                  thereon shall be deemed to have been repaid by the Debtor and this
                  Promissory Note shall be returned to the Debtor by the Creditor
                  to
                  surrender for cancellation;

              

      

       

      
        
          
          

        

        
          
          

          
            

          

        

        
          
          

        

         

      

      
        	(d)        
                  	
                if
                  any payment date set forth above falls on a day which is not a
                  business
                  day in Calgary, Alberta, then the payment owing shall be due on
                  the first
                  business day immediately following such payment date; and
                  

              

      

       

      
        	(e)        
                  	
                each
                  payment made by the Debtor to the Creditor hereunder shall be made
                  at the
                  offices of the Creditor in Calgary, Alberta.

              

      

       

      
        	35.       
                  	
                Default 

              

      

       

      
        	(a)        
                  	
                For
                  the purposes of this Promissory Note, the following shall constitute
                  an
                  "Event
                  of Default"
                  hereunder:

              

      

       

      
        	(i)         
                  	
                if
                  the Debtor fails to pay when and as required to be paid herein,
                  any amount
                  within two (2) days after the same becomes due;

              

      

       

      
        	(ii)        
                  	
                if
                  the Debtor ceases to carry on
                  business;

              

      

       

      
        	(iii)       
                  	
                if
                  a decree or order of a court of competent jurisdiction is entered
                  adjudging the Debtor a bankrupt or insolvent or approving as properly
                  filed a petition seeking the winding-up of the Debtor under the
                  Companies'
                  Creditors Arrangement Act
                  (Canada), the Bankruptcy
                  and Insolvency Act
                  (Canada) or the Winding-Up
                  Act
                  (Canada) or any other bankruptcy, insolvency or analogous laws,
                  or issuing
                  sequestration or process of execution against, or against any substantial
                  part of the assets of, the Debtor or ordering the winding up or
                  liquidation of its affairs (provided that, if any such proceedings
                  are
                  commenced by another person, such proceedings shall only constitute
                  a
                  Default if (x) such proceedings are not being diligently defended
                  or (y)
                  such proceedings have not been discharged, vacated or stayed within
                  30
                  days after commencement);

              

      

       

      
        	(iv)          	
                if
                  the Debtor becomes insolvent, makes any assignment in bankruptcy
                  or makes
                  any other assignment for the benefit of creditors, makes any proposal
                  under the Bankruptcy
                  and Insolvency Act
                  (Canada), as amended from time to time, or any comparable law,
                  seeks
                  relief under the Companies'
                  Creditors Arrangement Act
                  (Canada), the Winding-Up
                  Act
                  (Canada) or any other bankruptcy, insolvency or analogous law,
                  files a
                  petition or proposal to take advantage of any act of insolvency,
                  consents
                  to or acquiesces in the appointment of a trustee, receiver, receiver
                  and
                  manager, interim receiver, custodian, sequestrator or other person
                  with
                  similar powers of itself or of all or any substantial portion of
                  its
                  assets, or files a petition or otherwise commences any proceeding
                  seeking
                  any reorganization, arrangement, composition or readjustment under
                  any
                  applicable bankruptcy, insolvency, moratorium, reorganization or
                  other
                  similar law affecting creditors' rights or consents to, or acquiesces
                  in,
                  the filing of such a petition, or takes any corporate action in
                  furtherance of any of the foregoing (provided that, if any such
                  proceedings are commenced by another person, such proceedings shall
                  only
                  constitute a Default if (x) such proceedings are not being diligently
                  defended or (y) such proceedings have not been discharged, vacated
                  or
                  stayed within 30 days after commencement);

              

      

       

      
        	(v)           	
                if
                  the Transaction does not close or the Agreement is otherwise terminated,
                  in each case, by reason of any default of the Debtor under the
                  Agreement,
                  provided that such default is the result of a direct act by, or
                  omission
                  of, the Debtor;
                  and

              

      

       

      
        
          
          

        

        
          
          

          
            

          

        

        
          
          

        

         

      

      after
        September 1, 2007, the following shall also constitute Events of Default
        hereunder:

       

      
        	(vi)      
                  	
                any
                  representation or warranty made or deemed made by the Debtor in
                  this
                  Promissory Note or in the general security agreement dated as of
                  even date
                  herewith made by the Debtor in favour of the Creditor proves to
                  have been
                  incorrect in any material respect when made or furnished which
                  has not
                  been remedied within 20 days after written notice to do so has
                  been given
                  by the Creditor to the Debtor; and

              

      

       

      
        	(vii)     
                  	
                the
                  breach or failure of the Debtor to comply with any covenant or
                  provision
                  of this Promissory Note or the general security agreement dated
                  as of even
                  date herewith made by the Debtor in favour of the Creditor, other
                  than
                  those heretofore or hereafter dealt with in this paragraph 2(a),
                  which
                  breach or failure is not cured or waived within 20 days of the
                  Creditor
                  providing written notice of such breach or failure to the
                  Debtor.

              

      

       

      
        	(b)         
                 	
                If
                  any Event of Default occurs, the Creditor may take any or all of
                  the
                  following actions:

              

      

       

      
        	(i)         
                  	
                demand
                  immediate payment of the amount then due and payable, without presentment,
                  demand, protest or other notice of any kind, all of which are hereby
                  expressly waived by each of the Debtor;
                  and

              

      

       

      
        	(ii)        
                  	
                exercise
                  all rights and remedies available to it under the GSA
                  or
                  other remedies as are available to it under the Personal
                  Property Security Act
                  (Alberta) or at law.

              

      

      
         

      

      
        	(c)         
                 	
                Upon
                  the occurrence of an Event of Default, the Creditor may by notice
                  in
                  writing to the Debtor declare the then outstanding amount of the
                  Principal
                  Sum to be immediately due and payable and the same shall become
                  immediately due and payable to the Creditor and the Debtor shall
                  forthwith
                  pay the same to the Creditor failing which all rights and remedies
                  of the
                  Creditor hereunder or at law or equity in respect of such non-payment
                  shall become enforceable.

              

      

       

      
        	36.       
                  	
                Miscellaneous

              

      

       

      The
        Debtor represents and warrants to the Creditor that the Debtor has duly executed
        and delivered this Promissory Note and such Promissory Note constitutes a
        legal,
        valid and binding obligation of the Debtor enforceable against it in accordance
        with its terms except to the extent that the enforceability thereof may be
        limited by applicable bankruptcy, insolvency or other similar laws of general
        application limiting the enforcement of creditors' rights generally and
        principles of equity.

       

      The
        Debtor hereby waives presentment, notice of dishonour, protest and notice
        of
        protest of this Promissory Note. This Promissory Note shall be construed
        in
        accordance with and governed by the terms of the laws of the Province of
        Alberta
        and the federal laws of Canada applicable therein.

       

      [signature
        page follows]

       

      
        
          
          

        

        
          
          

          
            

          

        

        
          
          

        

      

      DATED
        at
        Calgary, Alberta on ____________________, 2007.

       

      
        	
                PEACE
                  OIL CORP.

                 

              
	
                Per:

              	 
	 	
                Name:

                Title:

              

      

       

      
        
          
          

        

        
          
          

          
            

          

        

        
          
          

        

      

       

      SCHEDULE "K"
        ATTACHED
        TO AND FORMING PART OF THE AGREEMENT OF PURCHASE AND SALE AMONG PEACE OIL
        CORP.,
        NORTH PEACE ENERGY CORP. AND SURGE GLOBAL ENERGY, INC. MADE THE 25TH
        DAY OF
        JUNE, 2007.

       

      PROMISSORY
        NOTE #2

       

      SEE
        ATTACHED

       

      
        
          
          

        

        
          
          

          
            

          

        

        
          
          

        

      

      SCHEDULE "L"
        ATTACHED
        TO AND FORMING PART OF THE AGREEMENT OF PURCHASE AND SALE AMONG PEACE OIL
        CORP.,
        NORTH PEACE ENERGY CORP. AND SURGE GLOBAL ENERGY, INC. MADE THE 25TH
        DAY OF
        JUNE, 2007.

       

      PROMISSORY
        NOTE #3

       

      SEE
        ATTACHED

       

      
        
          
          

        

        
          
          

          
            

          

        

        
          
          

        

      

      SCHEDULE "M"ATTACHED
        TO AND FORMING PART OF THE AGREEMENT OF PURCHASE AND SALE AMONG PEACE OIL
        CORP.,
        NORTH PEACE ENERGY CORP. AND SURGE GLOBAL ENERGY, INC. MADE THE 25TH
        DAY OF
        JUNE, 2007.

       

      GENERAL
        SECURITY AGREEMENT

       

      This
        General Security Agreement made as of June 28, 2007.

       

      
        	37.       
                  	
                DEFINITIONS

              

      

       

      The
        following definitions shall apply herein:

       

      
        	(a)        
                  	
                "Act"
                  means the Personal
                  Property Security Act
                  of
                  the Province of Alberta in effect on the date
                  hereof;

              

      

       

      
        	(b)        
                  	
                "Accessions",
                  "Account",
                  "Chattel
                  Paper",
                  "Consumer
                  Goods",
                  "Document
                  of Title",
                  "Equipment",
                  "Entitlement
                  Order",
                  "Financing
                  Change Statement",
                  "Financing
                  Statement",
                  "Goods",
                  "Instrument",
                  "Intangible",
                  "Inventory",
                  "Investment
                  Property", "Money",
                  "Purchase
                  Money Security Interest",
                  "Securities
                  Account",
                  "Securities
                  Intermediary"
                  and "Security"
                  shall have the meanings ascribed to them in the Act and shall be
                  deemed to
                  include both the singular and plural of such terms. All other capitalized
                  words or terms used herein, unless otherwise defined herein, shall
                  have
                  the meanings ascribed to them in the Act and the Regulations passed
                  pursuant thereto;

              

      

       

      
        	(c)        
                  	
                "Agreement",
                  "herein",
                  and similar expressions refer to the whole of this Security Agreement
                  and
                  not to any particular section or other portion thereof and extend
                  to and
                  include every instrument which amends or supplements this
                  Agreement;

              

      

       

      
        	(d)        
                  	
                "Collateral"
                  means all present and after-acquired personal property of the Debtor
                  of
                  whatever kind and wherever situate, including, without limiting
                  the
                  generality of the foregoing, those specific items, if any, described
                  on
                  the attached Schedule "A", together with all documents, writings,
                  papers,
                  books of account and records relating to the foregoing and all
                  rights and
                  interests therein, but shall not
                  include:

              

      

       

      
        	(i)         
                  	
                the
                  last day of any term of years reserved by any lease, verbal or
                  written, or
                  any agreement therefor now or hereafter held by the Debtor, it
                  being the
                  intention that the Debtor shall stand possessed of the reversion
                  remaining
                  in respect of any leasehold interest forming part of the Collateral
                  upon
                  trust to assign and dispose thereof as the Secured Party may after
                  default
                  direct, or

              

      

       

      
        	(ii)           	
                Consumer
                  Goods;

              

      

       

      
        	(e)        
                 	
                "Notes"
                  mean collectively: (i) the promissory note entered into between
                  the Debtor
                  and the Secured Party dated as of June 28, 2007, as amended, amended
                  and
                  restated, supplemented, amended or otherwise modified from time
                  to time,
                  (ii) and any such other promissory note entered into between the
                  Debtor
                  and Secured Party from time to time pursuant to the Purchase Agreement,
                  and "Note"
                  shall mean any of such promissory
                  notes;

              

      

       

      
        	(f)          	
                "Debtor"
                  means Peace Oil Corp., a corporation formed under the laws of the
                  Province
                  of Alberta;

              

      

       

      
        	(g)         	
                "Default"
                  means the happening of any one or more of the events or conditions
                  described in Section 43
                  and such term shall be deemed to include each, any, or all such
                  events or
                  conditions, whether any such event is voluntary or involuntary
                  or is
                  effected by operation of law or pursuant to or in compliance with
                  any
                  judgement, decree or order of any Court or any order, rule or regulation
                  of any administrative or governmental
                  body;

              

      

       

      
        
          
          

        

        
          
          

          
            

          

        

        
          
          

        

         

      

      
        	(h)      
                  	
                "Indebtedness"
                  means and includes any and all obligations, indebtedness and liability
                  of
                  the Debtor to the Secured Party pursuant to the Notes, (including
                  but not
                  limited to principal, interest and all costs on a full indemnity
                  basis)
                  present or future, direct or indirect, absolute or contingent,
                  matured or
                  not, extended or renewed, wherever and however incurred, together
                  with any
                  ultimate unpaid balance thereof, whether the same is from time
                  to time
                  reduced and thereafter increased or entirely extinguished and thereafter
                  incurred again, and whether the Debtor is bound alone or with another
                  or
                  others and whether as principal or
                  surety;

              

      

       

      
        	(i)      
                  	
                "Permitted
                  Liens"
                  shall have the meaning ascribed to "Permitted Encumbrances" in
                  the
                  Purchase Agreement, in addition to any Security Interest in favour
                  of the
                  Secured Party.

              

      

       

      
        	(j)      
                  	
                "Proceeds"
                  shall have the meaning ascribed to it in the
                  Act;

              

      

       

      
        	(k)     
                  	
                "Purchase
                  Agreement"
                  means the purchase and sale agreement dated as of June 25, 2007
                  among the
                  Debtor, the Secured Party and Surge Global Energy,
                  Inc.;

              

      

       

      
        	(l)      
                  	
                "Receiver"
                  means any one or more persons (whether officers of the Secured
                  Party or
                  not), firms or corporations appointed pursuant to
                  Section 45(f)
                  and shall be deemed to include a receiver, manager, receiver-manager,
                  or
                  receiver and manager;

              

      

       

      
        	(m)        	
                "Secured
                  Party"
                  means North Peace Energy Corp.;

              

      

       

      
        	(n)     
                  	
                "Security
                  Interest"
                  means the security interest granted by the Debtor to the Secured
                  Party
                  pursuant to this Agreement; and

              

      

       

      
        	(o)     
                  	
                "Specifically
                  Described Collateral"
                  means those items, if any, described in Schedule "A" which comprise
                  part
                  of the Collateral.

              

      

       

      All
        capitalized terms used herein and not otherwise defined have the meaning
        ascribed thereto in the Notes.

       

      
        	38.       
                  	
                GRANT
                  OF SECURITY INTEREST

              

      

       

      For
        value
        received (the receipt and sufficiency of which is hereby acknowledged) the
        Debtor hereby grants, assigns, conveys, mortgages, pledges and charges, as
        and
        by way of a specific mortgage, pledge and charge and grants a continuing
        Security Interest to and in favour of the Secured Party in the
        Collateral.

       

      
        	39.       
                  	
                INDEBTEDNESS
                  SECURED

              

      

       

      The
        Security Interest secures payment and satisfaction of the Indebtedness; provided
        however, that if the Security Interest in the Collateral is not sufficient
        to
        satisfy the Indebtedness of the Debtor in full, the Debtor agrees that the
        Debtor shall continue to be liable for any Indebtedness remaining outstanding
        and the Secured Party shall be entitled to pursue full payment and satisfaction
        thereof.

       

      
        
          
          

        

        
          
          

          
            

          

        

        
          
          

        

         

      

      
        	40.       
                  	
                ATTACHMENT
                  OF SECURITY INTEREST

              

      

       

      The
        Security Interest shall attach to the Collateral at the earliest possible
        moment
        in accordance with the Act, there being no intention on the part of the Debtor
        and the Secured Party that it attach at any later time.

       

      
        	41.       
                  	
                REPRESENTATIONS
                  AND WARRANTIES OF THE
                  DEBTOR

              

      

       

      The
        Debtor represents and warrants, and as long as this Agreement remains in
        effect
        shall be deemed to continuously represent and warrant, that:

       

      
        	(a)        
                  	
                the
                  Debtor has not previously carried on business and does not currently
                  carry
                  on business under any name other than the name set forth in
                  Section 37(f);

              

      

       

      
        	(b)        
                  	
                the
                  Collateral is legally and beneficially owned by the Debtor free
                  of all
                  security interests except for the Security Interest and the Permitted
                  Liens;

              

      

       

      
        	(c)        
                  	
                the
                  description of the Specifically Described Collateral, whether contained
                  herein or provided elsewhere by the Debtor to the Secured Party,
                  is
                  complete and accurate and all serial numbers affixed or ascribed
                  to any of
                  the Collateral have been provided to the Secured
                  Party;

              

      

       

      
        	(d)        
                  	
                each
                  Chattel Paper, Intangible and Instrument constituting Collateral
                  is
                  enforceable in accordance with its terms (subject to applicable
                  bankruptcy
                  and insolvency laws and general principles of law and equity) against
                  the
                  party obligated to pay the same ("Account
                  Debtor"),
                  the amount represented by the Debtor to the Secured Party from
                  time to
                  time as owing by each Account Debtor shall be the correct amount
                  owing
                  unconditionally by such Account
                  Debtor;

              

      

       

      
        	(e)        
                  	
                the
                  locations specified in the attached Schedule "B" as to business
                  operations
                  and records are accurate and complete and, except for Goods in
                  transit to
                  such locations and Inventory on lease or consignment, all Collateral
                  shall
                  be situate at one of such locations;
                  and

              

      

       

      
        	(f)        
                  	
                all
                  financial statements, certificates and other information concerning
                  the
                  Debtor's financial condition or otherwise from time to time furnished
                  by
                  the Debtor to the Secured Party are and shall be in all respects
                  complete,
                  correct and fair representations of the affairs of the Debtor stated
                  in
                  accordance with generally accepted accounting principles applied
                  on a
                  consistent basis.

              

      

       

      
        	42.       
                  	
                COVENANTS
                  OF THE DEBTOR

              

      

       

      The
        Debtor covenants:

       

      
        	(a)        
                  	
                to
                  keep the Collateral free from all security interests except for
                  the
                  Security Interest and the Permitted
                  Liens;

              

      

       

      
        	(b)       
                  	
                to
                  notify the Secured Party promptly in writing
                  of:

              

      

       

      
        	(i)         
                  	
                any
                  change in the information contained in this Agreement including
                  any
                  information relating to the Debtor (including its name), the Debtor's
                  business, the Collateral, or the locations of the Collateral or
                  the
                  records of the Debtor, so that the Secured Party shall be constantly
                  advised of all places where the Debtor conducts its business, maintains
                  the Collateral and maintains its
                  records;

              

      

       

      
        
          
          

        

        
          
          

          
            

          

        

        
          
          

        

         

         

      

      
        	(ii)        
                  	
                the
                  removal of any of the Collateral to any jurisdiction in which any
                  registration of, or in respect of, this Agreement may not be effective
                  to
                  protect the Security Interest, and in the case of such removal
                  to provide
                  the Secured Party with a written certificate stating the time of
                  removal,
                  what is being removed and the intended new locality of such Collateral,
                  and to assist the Secured Party in effecting such further registrations
                  as
                  may be required by the Secured Party to protect its Security
                  Interest;

              

      

       

      
        	(iii)       
                  	
                any
                  material loss or damage to the
                  Collateral;

              

      

       

      
        	(iv)      
                  	
                any
                  default by an Account Debtor in payment or other performance of
                  its
                  obligations with respect to any Collateral;
                  and

              

      

       

      
        	(v)       
                  	
                the
                  return to or repossession by the Debtor of any
                  Collateral;

              

      

       

      
        	(c)        
                  	
                to
                  execute, acknowledge and deliver such further agreements and documents
                  supplemental hereto (including financing statements, further schedules
                  to
                  this Agreement, assignments and transfers) and to do all acts,
                  matters and
                  things as may be requested by the Secured Party in order to give
                  effect to
                  this Agreement and to perfect the Security Interest, including
                  but not
                  limited to any of the same which may be required to correct or
                  amplify the
                  description of any Collateral or for any other purpose not inconsistent
                  with the terms of this Agreement;

              

      

       

      
        	(d)        
                  	
                to
                  pay all costs and expenses on a full indemnity basis (including
                  legal fees
                  as between a solicitor and his own client) incidental
                  to:

              

      

       

      
        	(i)         
                  	
                the
                  preparation, execution and filing of this
                  Agreement;

              

      

       

      
        	(ii)        
                  	
                maintaining,
                  protecting and defending the Collateral, the Security Interest,
                  and all of
                  the Secured Party's rights and interest arising pursuant to this
                  Agreement; and

              

      

       

      
        	(iii)       
                  	
                the
                  exercise of any rights or remedies of the Secured Party pursuant
                  to this
                  Agreement, including but not limited to the costs of the appointment
                  of a
                  Receiver and all expenditures incurred by such Receiver, the cost
                  of any
                  sale proceedings (whether the same prove abortive or not), and
                  all costs
                  of inspection, and all other costs and expenses incurred by the
                  Secured
                  Party in connection with or arising out of, directly or indirectly,
                  this
                  Agreement, all without limitation. All such costs and expenses
                  shall be
                  payable by the Debtor immediately upon demand from the Secured
                  Party and
                  until paid shall bear interest from the date of demand therefore
                  by the
                  Secured Party at the highest rate of interest then chargeable by
                  the
                  Secured Party to the Debtor on any of the Indebtedness. The amount
                  of all
                  such costs and expenses shall be added to the Indebtedness and
                  shall be
                  secured by this Agreement.

              

      

       

      
        	43.       
                  	
                EVENTS
                  OF DEFAULT

              

      

       

      The
        following constitute Default:

       

      
        	(a)        
                  	
                non-payment
                  when due, whether by acceleration or otherwise, of any principal
                  or
                  interest forming part of the Indebtedness;
                  or

              

      

       

      
        	(b)       
                  	
                the
                  occurrence of an Event of Default under any
                  Note.

              

      

       

      
        
          
          

        

        
          
          

          
            

          

        

        
          
          

        

         

      

      
        	44.       
                  	
                ACCELERATION

              

      

       

      In
        the
        event of Default the Secured Party, in its sole discretion, may declare all
        or
        any part of the Indebtedness which is not by its terms payable on demand
        to be
        immediately due and payable, without demand or notice of any kind. The
        provisions of this clause shall not in any way affect any rights of the Secured
        Party with respect to any Indebtedness which may now or hereafter by payable
        on
        demand.

       

      
        	45.       
                  	
                REMEDIES

              

      

       

      Upon
        Default the Secured Party shall have the following rights and powers, which
        the
        Secured Party may exercise immediately:

       

      
        	(a)        
                  	
                to
                  enter upon the premises of the Debtor or any other premises where
                  the
                  Collateral may be situated and to take possession of all or any
                  part of
                  the Collateral, by any method permitted by law, to the exclusion
                  of all
                  others, including the Debtor, its directors, officers, agents and
                  employees, and the Debtor hereby waives and releases the Secured
                  Party and
                  any Receiver from all claims in connection therewith or arising
                  therefrom;

              

      

       

      
        	(b)       
                  	
                to
                  remove all or any part of the Collateral to such place as the Secured
                  Party deems advisable;

              

      

       

      
        	(c)        
                  	
                to
                  preserve and maintain the Collateral and to do all such acts incidental
                  thereto as the Secured Party considers advisable, including but
                  not
                  limited to making replacements and additions to the
                  Collateral;

              

      

       

      
        	(d)        
                  	
                to
                  collect, demand, sue on, enforce, recover and receive Collateral
                  and give
                  receipts and discharges therefor, and may do any such act and take
                  any
                  proceedings related thereto in the name of the Debtor or otherwise
                  as the
                  Secured Party considers
                  appropriate;

              

      

       

      
        	(e)        
                  	
                to
                  sell, lease, or otherwise dispose of the Collateral in such manner,
                  at
                  such time or times and place or places, for such consideration
                  and upon
                  such terms and conditions as the Secured Party deems reasonable
                  (including
                  without limitation, by deferred payment) all in the Secured Party's
                  absolute discretion and without the concurrence of the Debtor;
                  provided
                  however, that the Secured Party shall not be required to do so
                  and it
                  shall be lawful for the Secured Party to use and possess the Collateral
                  for any and all purposes and in any manner the Secured Party sees
                  fit, all
                  without hindrance or interruption by the Debtor or any other person
                  or
                  persons, provided however that none of the foregoing shall prejudice
                  the
                  Secured Party's right to pursue the Debtor for recovery in full
                  of the
                  amount of the Indebtedness, including the amount of any deficiency
                  owing
                  after the application of the proceeds of realization (and to the
                  extend
                  permitted by laws, the Debtor waives its rights to the protection
                  afforded
                  by any rule of law or legislation respecting such
                  deficiency);

              

      

       

      
        	(f)        
                  	
                to
                  appoint by instrument in writing, with or without bond, or by application
                  to any Court of competent jurisdiction, a Receiver of the Collateral
                  and
                  to remove any Receiver so appointed and appoint another or others
                  in his
                  stead. Any such Receiver shall, so far as concerns responsibility
                  for his
                  acts, be deemed the agent of the Debtor and not of the Secured
                  Party and
                  the Secured Party shall not be in any way responsible for any misconduct,
                  negligence or non-feasance on the part of any such Receiver, his
                  agents,
                  servants or employees. Subject to the provisions of the instrument
                  appointing him, any such Receiver shall have the power to take
                  possession
                  of the Collateral, to preserve the Collateral or its value, to
                  carry on or
                  concur in carrying on all or any part of the business of the Debtor
                  and to
                  sell, lease or otherwise dispose of or concur in selling, leasing
                  or
                  otherwise disposing of the Collateral (including dispositions by
                  way of
                  deferred payment). To facilitate the foregoing powers, any such
                  Receiver
                  may, to the exclusion of all others including the Debtor, enter
                  upon, use
                  and occupy all premises owned or occupied by the Debtor where Collateral
                  may be situate, to employ and discharge such employees, agents
                  or
                  professional advisors as the Receiver deems advisable, to enter
                  into such
                  compromises, arrangements or settlements as the Receiver deems
                  advisable,
                  to borrow or otherwise raise money on the security of the Collateral
                  and
                  to issue Receiver's certificates and do all such other acts as
                  the
                  Receiver deems advisable in connection with any of the powers referred
                  to
                  herein. Except as may be otherwise directed by the Secured Party,
                  all
                  monies received from time to time by the Receiver in carrying out
                  his
                  appointment shall be received in trust for and paid over to the
                  Secured
                  Party. In addition, every Receiver may, in the discretion of Secured
                  Party, be vested with all or any of the rights and powers of the
                  Secured
                  Party under the Act or any other applicable legislation or under
                  this
                  Agreement or any other agreement;

              

      

       

      
        
          
          

        

        
          
          

          
            

          

        

        
          
          

        

         

      

      
        	(g)       
                  	
                to
                  rescind or vary any contract for sale, lease or other disposition
                  that the
                  Debtor or the Secured Party may have entered into and to resell,
                  release
                  or redispose of the Collateral;

              

      

       

      
        	(h)       
                  	
                to
                  deliver to any purchasers of the Collateral good and sufficient
                  conveyances or deeds for the same free and clear of any claim by
                  the
                  Debtor. For such purposes, the purchaser or lessee receiving any
                  disposition of the Collateral need not inquire whether Default
                  under this
                  Agreement has actually occurred but may as to this and all other
                  matters
                  rely upon a statutory declaration of an officer of the Secured
                  Party,
                  which declaration shall be conclusive evidence absent manifest
                  error as
                  between the Debtor and such purchaser or lessee, and any such disposition
                  shall not be affected by any irregularity of any nature or kind
                  relating
                  to the enforcement of this Agreement or the exercise of the rights
                  and
                  remedies of the Secured Party;

              

      

       

      
        	(i)        
                  	
                to
                  exercise any of the powers and rights given to a Receiver pursuant
                  to this
                  Agreement;

              

      

       

      
        	(j)        
                  	
                to
                  provide written notice to the Debtor that all the powers, functions,
                  rights and privileges of the directors and officers of the Debtor
                  with
                  respect to the Collateral, business and undertaking of the Debtor
                  have or
                  shall cease as of the date notified therein, except to the extent
                  specifically continued at any time by the Secured Party in writing;
                  and

              

      

       

      
        	(k)       
                  	
                to
                  take the benefit of or to exercise any other right, proceeding
                  or remedy
                  authorized or permitted at law or in equity, whether as a secured
                  party
                  pursuant to the Act as the same is in force from time to time or
                  otherwise.

              

      

       

      All
        rights and remedies of the Secured Party are cumulative and may be exercised
        at
        any time and from time to time independently or in combination. No delay
        or
        omission by the Secured Party in exercising any right or remedy shall operate
        as
        a waiver thereof or of any other right or remedy, and no singular partial
        exercise thereof shall preclude any other or further exercise thereof or
        the
        exercise of any other right or remedy. Provided always that the Secured Party
        shall not be liable or accountable for any failure to exercise its remedies,
        take possession of, collect, enforce, realize, sell, maintain, lease or
        otherwise dispose of the Collateral, or to institute any proceedings for
        such
        purposes. The Secured Party shall have no obligation to take any steps to
        preserve rights against other parties, shall have no obligation to exercise
        any
        of the rights and remedies available to it on Default and shall not be liable
        or
        accountable for not exercising any such rights and remedies.

       

      The
        Secured Party may waive any Default but no such waiver shall be effective
        unless
        made in writing and signed by an authorized officer of the Secured Party.
        Any
        such waiver shall not extend to, or be taken in any manner whatsoever to
        affect,
        any subsequent Default or the rights resulting therefrom.

       

      
        
          
          

        

        
          
          

          
            

          

        

        
          
          

        

         

      

      
        	46.       
                  	
                SECURED
                  PARTY MAY REMEDY DEFAULT

              

      

       

      The
        Secured Party shall have the right, but shall not be obliged to, remedy any
        Default of the Debtor and all sums thereby expended by the Secured Party
        shall
        be payable immediately by the Debtor, together with interest thereon at the
        highest rate of interest then chargeable by the Secured Party to the Debtor
        on
        any portion of the Indebtedness. All such sums shall be added to the
        Indebtedness and shall be secured by this Agreement. In no case shall the
        exercise of the Secured Party's rights pursuant to this
        Section 46
        be
        deemed to relieve the Debtor from such Default or be deemed a waiver of such
        Default or of any other prior or subsequent Default.

       

      
        	47.       
                  	
                USE
                  OF COLLATERAL

              

      

       

      Subject
        to compliance with the Debtor's covenants contained herein, the terms of
        the
        Notes, and to the following provisions of this Section 47,
        until
        Default the Debtor may possess, collect, use, enjoy and deal with the Collateral
        in the ordinary course of the Debtor's business in any manner not expressly
        or
        impliedly prohibited herein or otherwise inconsistent with the provisions
        of
        this Agreement.

       

      Notwithstanding
        the foregoing:

       

      
        	(a)        
                  	
                after
                  Default the Secured Party may notify all or any Account Debtors
                  and may
                  direct such Account Debtors to make all payments owed in respect
                  of the
                  Collateral directly to the Secured Party;
                  and

              

      

       

      
        	(b)        
                  	
                the
                  Debtor agrees that any payments on or other Proceeds of Collateral
                  received by the Debtor, after Default, shall be received and held
                  by the
                  Debtor in trust for the Secured Party and shall be turned over
                  to the
                  Secured Party upon request.

              

      

       

      If
        the
        Collateral at any time includes Securities, the Debtor authorizes the Secured
        Party to transfer the same or any part thereof into its own name or that
        of its
        nominees so that the Secured Party or its nominees may appear on record as
        the
        sole owner thereof; provided however that until Default the Secured Party
        shall
        deliver to the Debtor all notices or other communications received by it
        or its
        nominees as registered owner and upon demand and receipt of payment of any
        necessary expenses shall issue to the Debtor or its order a proxy to vote
        and
        take all action with respect to such Securities. However, after Default the
        Debtor waives all rights to receive any notices or communications in respect
        of
        such Securities and agrees that no proxy issued by the Secured Party to the
        Debtor or its order as aforesaid shall thereafter be effective.

       

      If
        the
        Collateral at anytime includes Investment Property which is or is to be credited
        to a Securities Account established by the Debtor with a Securities
        Intermediary, the Debtor shall notify the Secured Party and, at the request
        of
        the Secured Party, shall and shall procure that the relevant Securities
        Intermediary shall enter into an agreement with the Secured Party which includes
        such terms as may be required by the Secured Party to ensure that the Secured
        has exclusive control over all Investment Property held in the relevant
        securities account following Default including, but not limited to, an agreement
        of the Securities Intermediary that it will comply with Entitlement Orders
        that
        are originated by the Secured Party without the further consent of the
        Debtor.

       

      
        	48.       
                  	
                APPROPRIATION
                  OF PAYMENTS

              

      

       

      All
        payments made at any time in respect of the Indebtedness and all Proceeds
        realized from any Securities held therefor may be applied (and reapplied
        from
        time to time notwithstanding any previous application) in such manner as
        the
        Secured Party sees fit or, at the option of the Secured Party, may be held
        unappropriated in a collateral account or released to the Debtor all without
        prejudice to the rights of the Secured Party hereunder, including the Secured
        Party's right to collect from the Debtor the amount of any deficiency remaining
        after application of all such payments and Proceeds.

       

      
        
          
          

        

        
          
          

          
            

          

        

        
          
          

        

         

      

      
        	49.       
                  	
                POWER
                  OF ATTORNEY AND AUTHORIZATION TO
                  FILE

              

      

       

      The
        Debtor hereby authorizes the Secured Party to file such Financing Statements
        and
        other documents and do such acts, matters and things as the Secured Party
        from
        time to time deems appropriate to perfect, continue and realize upon the
        Security Interest and to protect and preserve the Collateral. In addition,
        for
        valuable consideration, upon the occurrence of a Default which is continuing,
        the Debtor hereby irrevocably appoints the Secured Party and its officers
        from
        time to time, or any one or more of them, to be the true and lawful attorney
        of
        the Debtor, with full power of substitution, in the name of and on behalf
        of the
        Debtor to execute and to do all deeds, transfers, conveyances, assignments,
        assurances, and other things which the Debtor ought to execute and do under
        the
        covenants and provisions contained in this Agreement and generally to use
        the
        name of the Debtor in the exercise of all or any of the rights, remedies
        and
        powers of the Secured Party.

       

      
        	50.       
                  	
                MISCELLANEOUS

              

      

       

      
        	(a)        
                  	
                The
                  Secured Party may grant extensions of time and other indulgences,
                  take and
                  give up security, accept compositions, compound, comprise, settle,
                  grant
                  releases and discharges and otherwise deal with the Debtor, debtors
                  of the
                  Debtor, sureties and others and with the Collateral and other securities
                  as the Secured Party sees fit, all without prejudice to the liability
                  of
                  the Debtor to the Secured Party or to the Secured Party's rights
                  in
                  respect thereof. In addition, upon the occurrence of a Default
                  which is
                  continuing, the Secured Party may demand, collect, and sue on the
                  Collateral in either the Debtor's or the Secured Party's name,
                  all at the
                  Secured Party's option, and may endorse the Debtor's name on any
                  and all
                  cheques, commercial paper and other Instruments pertaining to or
                  constituting the Collateral.

              

      

       

      
        	(b)       
                  	
                Neither
                  the execution or registration of this Agreement, nor the advance
                  or
                  readvance of part of the monies hereby intended to be secured,
                  shall bind
                  the Secured Party to advance or readvance the said monies or any
                  unadvanced part thereof. The advance or readvance of the said monies
                  or
                  any part thereof from time to time shall be in the sole discretion
                  of the
                  Secured Party.

              

      

       

      
        	(c)       
                  	
                The
                  Debtor hereby waives protest of any Instrument constituting Collateral
                  at
                  any time held by the Secured Party on which the Debtor is in any
                  way
                  liable and, except as expressly prohibited by law, waives notice
                  of any
                  other action taken by the Secured
                  Party.

              

      

       

      
        	(d)       
                  	
                Without
                  limiting any other right of the Secured Party, whenever the Indebtedness
                  is due and payable or the Secured Party has the right to declare
                  it to be
                  due and payable (whether or not it has been so declared), the Secured
                  Party may, in its sole discretion, set off against the Indebtedness
                  any
                  and all monies then owed to the Debtor by the Secured Party in
                  any
                  capacity, whether or not due, and the Secured Party shall be deemed
                  to
                  have exercised such right to set-off immediately at the time of
                  making its
                  decision to do so even though any charge therefor is made or entered
                  on
                  the Secured Party's records subsequent
                  thereto.

              

      

       

      
        	(e)          	
                In
                  any action brought by an assignee of this Agreement and the Security
                  Interest or any part thereof to enforce any rights hereunder, the
                  Debtor
                  shall not assert against such assignee any claim or defence which
                  the
                  Debtor now has or may hereafter have against the Secured
                  Party.

              

      

       

      
        
          
          

        

        
          
          

          
            

          

        

        
          
          

        

         

      

      
        	51.       
                  	
                NOTICE

              

      

       

      In
        addition to the notice provisions contained in the Act, whenever the Debtor
        or
        the Secured Party is required or entitled to notify or direct the other or
        to
        make a demand or request upon the other, such notice, direction, demand or
        request shall be in writing and shall be sufficiently given only if delivered,
        transmitted by facsimile, or sent by prepaid registered mail addressed to
        the
        party for whom it is intended at the address contained in the Purchase Agreement
        or as changed pursuant hereto. Either party may notify the other of any change
        in such party's address to be used for the purposes hereof. All such
        communications shall, in the case of delivery or facsimile, be deemed received
        on the date of delivery and, if mailed as aforesaid, shall be deemed received
        on
        the third business day following the date of posting. In the case of a
        disruption in postal service all such communications shall be delivered or
        transmitted by facsimile.

       

      
        	52.       
                  	
                INTERPRETATION

              

      

       

      
        	(a)        
                  	
                This
                  Agreement shall be governed by and construed in accordance with
                  the laws
                  of the Province of Alberta.

              

      

       

      
        	(b)        
                  	
                This
                  Agreement and the security afforded by it is in addition to and
                  not in
                  substitution for any other security now or hereafter held by the
                  Secured
                  Party and is intended to be a continuing security agreement and
                  shall
                  remain in full force and effect until released in writing by the
                  Secured
                  Party. The Secured Party shall have no obligation to provide such
                  release
                  unless and until the full amount of the Indebtedness has been paid
                  in
                  full.

              

      

       

      
        	(c)        
                  	
                If
                  any provision of this Agreement is held invalid, in whole or in
                  part, by
                  any Court of competent jurisdiction, the remaining terms and provisions
                  of
                  this Agreement shall remain in full force and effect and this Agreement
                  shall be enforced to the fullest extent permitted by
                  law.

              

      

       

      
        	(d)           	
                The
                  Debtor hereby waives the benefit of all statutory, common law and
                  equitable rights, benefits and provisions which in any way limit
                  or
                  restrict the Secured Party's rights and remedies, to the extent
                  that such
                  waiver is not expressly prohibited by law. The Debtor acknowledges
                  and
                  agrees that the Secured Party shall have the right to recover the
                  full
                  amount of the Indebtedness by all lawful means, including the right
                  to
                  seek recovery of any deficiency remaining after the sale of the
                  Collateral, including any sale thereof to the Secured
                  Party.

              

      

       

      
        	(e)           	
                The
                  headings of the sections of this Agreement are inserted for convenience
                  of
                  reference only and shall not affect or limit the construction or
                  interpretation of this Agreement.

              

      

       

      
        	(f)        
                  	
                All
                  schedules, whether attached hereto on the date hereof or subsequently
                  attached pursuant to the provisions of this Agreement, form part
                  of this
                  Agreement. No modification, variation or amendment of this Agreement
                  shall
                  be made except by a written agreement executed by the Debtor and
                  the
                  Secured Party.

              

      

       

      
        	(g)          	
                When
                  the context so requires, words importing the singular number shall
                  be read
                  to include the plural and vice versa, and words importing gender
                  shall be
                  read with all grammatical changes necessary to reflect the identity
                  of the
                  parties.

              

      

       

      
        	(h)       
                  	
                This
                  Agreement shall enure to the benefit of the Secured Party, its
                  successors
                  and assigns and shall be binding upon the Debtor, its personal
                  representatives, administrators, successors and permitted assigns.
                  If more
                  than one Debtor executes this Agreement, the obligations of the
                  Debtor
                  shall be joint and several.

              

      

       

      
        
          
          

        

        
          
          

          
            

          

        

        
          
          

        

         

      

      
        	(i)
                           	
                Time
                  shall be in all respects of the essence of this
                  Agreement.

              

      

       

      
        	53.       
                  	
                RECEIPT
                  OF DOCUMENTS

              

      

       

      
        	(a)           	
                The
                  Debtor hereby acknowledges receiving a copy of this
                  Agreement.

              

      

       

      
        	(b)           	
                The
                  Debtor hereby waives its right to receive a copy of any Financing
                  Statement, Financing Change Statement or verification statement
                  which may
                  be filed by or issued to the Secured Party pursuant to the
                  Act.

              

      

       

      [Signatures
        follow on next page]

       

      
        
          
          

        

        
          
          

          
            

          

        

        
          
          

        

      

       

      IN
        WITNESS WHEREOF
        the
        Debtor has executed this Agreement as of the day and year first above
        written.

      
         

        
          	
                  PEACE
                    OIL CORP.

                   

                
	
                  Per:

                	 
	 	
                  Name:

                  Title:

                

        

      

       

      
        
          
          

        

        
          
          

          
            

          

        

        
          
          

        

      

      

      SCHEDULE
        "A"

       

      
        	54.       
                  	
                SPECIFICALLY
                  DESCRIBED COLLATERAL

              

      

       

      
        	(a)        
                  	
                Serial
                  Number Goods

              

      

       

      
        	
                Make

              	 	
                Model

              	 	
                Year
                  of Manufacture

              	 	
                Serial
                  Number

              
	
                 

                [Not
                  applicable.]

              	 	 	 	 	 	 

      

       

       

      
        	(b)       
                  	
                Other

              

      

       

      [Not
        applicable.]

       

      
        	55.       
                  	
                PURCHASE
                  MONEY SECURITY INTERESTS

              

      

       

      [Not
        applicable.]

       

      
        
          
          

        

        
          
          

          
            

          

        

        
          
          

        

      

       

      SCHEDULE
        "B"

       

      
        	56.       
                  	
                LOCATIONS
                  OF DEBTOR'S BUSINESS
                  OPERATIONS

              

      

       

      
        	(a)        
                  	
                Chief
                  Executive Office

              

      

       

      [·]

       

      
        	(b)          	
                Other
                  Locations

              

      

       

      [·]

       

       

      
        	57.        
                 	
                LOCATIONS
                  OF RECORDS RELATING TO
                  COLLATERAL

              

      

       

      [·]

       

       

      
        	58.       
                  	
                LOCATIONS
                  OF COLLATERAL

              

      

       

      [Alberta.]

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