Document:

Filed by Bowne Pure Compliance

 

Exhibit 10.23

THIS CREDIT AGREEMENT dated as of March 19, 2007 between The Toronto-Dominion Bank, as Lender,
Oilsands Quest Sask Inc., as Borrower, and Oilsands Quest Inc., as the Guarantor, evidences the
senior, non-revolving secured line of credit facility not to exceed $30,000,000 (the “Credit
Facility”) and cancels and supersedes any prior agreements, undertakings, declarations,
representations and warranties, written or verbal, among the parties in respect of the Credit
Facility.

	 	 	 
	Borrower:

	 	Oilsands Quest Sask Inc. (the “Borrower”).
	 
	 	 
	Guarantor:

	 	Oilsands Quest Inc. (the “Guarantor”).
	 
	 	 
	Lender:

	 	The Toronto-Dominion Bank (“Lender”).
	 
	 	 
	Amount:

	 	$30,000,000. 
	 
	 	 
	Purpose:

	 	To be used solely for the purpose of Crown lease and
exploration permit purchases from the Crown in right of the
Province of Alberta at the land auction occurring on March
21, 2007 (the “Lease Purchase”).
	 
	 	 
	Credit Facility:

	 	The Credit Facility is a non-revolving facility available for
a single drawdown until March 23, 2007 (the “Drawdown”),
after which time the undrawn portion of the Credit Facility
will automatically be cancelled. The Drawdown will be by way
of Prime Rate Loans, and thereafter rollovers and conversions
thereof may, at the option of the Borrower, be by way of any
combination of the following Availments:

	 	•	 	Prime Rate Loans; and

	 
	 	•	 	Bankers’ Acceptances.

	 	 	 
	Maturity Date and
Repayment:

	 	All obligations of the Borrower under the Credit Facility
will mature and be fully due and payable on October 31, 2007
(the “Maturity Date”).
	 
	 	 
	Mandatory Repayment:

	 	The Borrower will apply any net proceeds of any equity
financing, raised after the date hereof by the Borrower or
the Guarantor, as a permanent reduction and cancellation by
such net amount of the Credit Facility (whether drawn down or
not) but excluding any proceeds from any flow-through share
offering or any exercise of stock options.
	 
	 	 
	Prepayment:

	 	The Borrower may permanently prepay the Aggregate Principal
Amount, in whole or in part, without bonus or penalty except
that Availments by way of Bankers’ Acceptances can only be
repaid on maturity.

 

-2-

	 	 	 
	Interest Rates and Fees:

	 	Prime Rate Loans

	 	•	 	Prime Rate in effect from time to time.

	 	 	 
	 

	 	Bankers’ Acceptances

	 	•	 	A stamping fee on each Bankers’ Acceptance will be
calculated at CDOR plus 50 bps per annum (the “Stamping
Fee”).

	 	 	 
	Standby Fee:

	 	The Borrower will pay a standby fee of 20 bps per annum
calculated on the undrawn portion of the available and unused
Credit Facility (the “Standby Fee”).
	 
	 	 
	Commitment Fees:

	 	The Borrower will pay a commitment fee of 15 bps based on the
Amount payable upon the signing of this Credit Agreement, and
a subsequent commitment fee of 20 bps based on the Amount
then available at the close of business on and payable on
March 23, 2007 but only if the Lease Purchase is successful.
If the Borrower’s bid at the land auction occurring on March
21, 2007 is not successful, the Borrower will return the
Drawdown to the Lender as soon as reasonably practicable but
in any event by no later than March 23, 2007.
	 
	 	 
	Legal and Other Fees:

	 	All reasonable out of pocket expenses of the Lender incurred
in connection with the preparation, establishment, operation
or enforcement of the Credit Facility are for the account of
the Borrower.
	 
	 	 
	Increase in Rates:

	 	Effective upon receipt by the Borrower of notice from the
Lender of an Event of Default, the interest rates and fees
applicable to each Availment will increase by 20 bps per
annum and such increase will remain in effect for as long as
the Event of Default subsists. In addition to the above, the
Lender’s obligation to provide an Availment will be suspended
for as long as there exists a Default or Event of Default.
	 
	 	 
	Security:

	 	The Guarantor will provide, or cause to be provided to the
Lender, the following security for all obligations of the
Borrower arising under the Credit Facility:

	 	•	 	an unconditional guarantee from the Guarantor as
herein provided under the heading “Guarantee”;

	 
	 	•	 	the Account Control Agreement from the Borrower in
the form attached hereto as Schedule “E”;

	 
	 	•	 	an assignment by the Guarantor to the Lender of the
Guarantor’s entitlement to receive proceeds from the
flow-through share issuances occurring on each Second Closing
pursuant to the Underwriting Agreement; and

 

-3-

	 	•	 	any and all other documents, instruments and
agreements required by the Lender, acting reasonably, to
effect the foregoing,

	 	 	 
	 

	 	(collectively the “Security”).
	 
	 	 
	 

	 	If following the closing of the Lease Purchase, it is
determined that the amount on deposit with the Lender
pursuant to the Account Control Agreement exceeds the amount
of the Drawdown, at the request of the Borrower and provided
no Default or Event of Default is then subsisting, the Lender
shall release to the Borrower such excess amount.
The Lender will only be entitled to deliver a Notice of
Exclusive Control (as defined in the Account Control
Agreement) if an Event of Default has occurred and is
continuing.
	 
	 	 
	 

	 	In the event of any conflict between this Credit Agreement
and the Security, this Credit Agreement will govern.
	 
	 	 
	Conditions Precedent:

	 	The Lender’s obligation to provide the Drawdown is subject to
the following conditions being met, unless waived in writing
by the Lender:

	 	•	 	execution and delivery of this Credit Agreement;

	 
	 	•	 	execution and delivery of the Security, and all other
documents required to be delivered hereunder, in form and
substance satisfactory to the Lender, acting reasonably;

	 
	 	•	 	receipt by the Lender of a duly executed certificate
of each of the Borrower and the Guarantor with respect to
general corporate matters;

	 
	 	•	 	no Default or Event of Default subsisting;

	 
	 	•	 	receipt by the Lender of an opinion from counsel for
each of the Borrower and the Guarantor and an opinion of
counsel to the Lender, each in form satisfactory to the
Lender, acting reasonably;

	 
	 	•	 	receipt by the Lender of all fees then due and
payable by the Borrower to the Lender as herein provided;

 

-4-

	 	•	 	receipt by the Lender from the Guarantor of not less
than $17,800,000 for deposit by the Lender into the Deposit
Account pursuant to the Account Control Agreement; and

	 
	 	•	 	receipt by the Lender of the notice of borrowing in
the form annexed hereto as Schedule “C”.

Bankers’ Acceptances:

	 	•	 	Each draft tendered by the Borrower under the Credit
Facility for acceptance by the Lender will be in a form
acceptable to the Lender and will have a term of 1, 2 or 3
months, or such other periods as agreed to by the Borrower
and the Lender. The Borrower will not be entitled to request
a period which exceeds the Maturity Date.

	 
	 	•	 	It is the intention of the parties that pursuant to
the Depository Bills and Notes Act (Canada) (“DBNA”), all
drafts accepted by the Lender will be issued in the form of a
“depository bill” (as defined in the DBNA), deposited with a
“clearing house” (as defined in the DBNA) including The
Canadian Depository for Securities Ltd. (“CDS”) and will be
made payable to such clearing house or its nominee.

	 
	 	•	 	The issuance and rollover of Bankers’ Acceptances
will be conducted based on the Lender’s usual and customary
banking practice for similar type facilities.

	 	 	 
	Reporting Requirements:

	 	The Borrower and Guarantor, as applicable, will provide or
will cause to be provided to the Lender:

	 	•	 	unaudited quarterly financial statements of the
Guarantor within 45 days of the end of each fiscal quarter of
the Guarantor;

	 
	 	•	 	compliance certificate substantially in the form of
Schedule “B” hereto within 45 days of the end of each fiscal
quarter of the Guarantor; and

	 
	 	•	 	such other documentation and information of the
Borrower or the Guarantor as the Lender may reasonably
request.

	 	 	 
	Funding and Other
Mechanics:

	 	Funding of Availments. The Drawdown when requested by the
Borrower will be made available by deposit of the applicable
funds into the appropriate Borrower’s account kept with the
Lender for value on the Banking Day on which the Drawdown is
to take place.

 

-5-

	 	 	 
	 

	 	Notice Provisions. The Drawdown will be made available no
later than 10:00 a.m. Calgary, Alberta time on the Banking
Day immediately preceding the requested Drawdown date. Any
notice from the Borrower requesting the Drawdown or a
rollover or conversion thereof may be given by the Borrower,
at its sole risk, to the Lender by telephone and in such case
will be immediately followed by the Borrower delivering to
the Lender on the same day the written notice required
hereunder confirming such instructions.
	 
	 	 
	 

	 	Rollover/Conversion. The Borrower may request a rollover or
conversion of the Aggregate Principal Amount with the same
notice period applicable to the Drawdown by providing the
Lender with a notice of rollover/conversion in the form
annexed hereto as Schedule “F”, provided that, a rollover or
conversion of a Bankers’ Acceptance can only be made on its
maturity. Failure to provide the appropriate notice will be
deemed to be an election by the Borrower to request a
conversion into a Prime Rate Loan.
	 
	 	 
	 

	 	Irrevocability. A notice of borrowing when given by the
Borrower will be irrevocable and will oblige the Borrower and
the Lender to take the action contemplated herein and therein
on the date specified therein.
	 
	 	 
	Calculation of Interest
and Fees:

	 	Records. The Lender will maintain records, in written or
electronic form, evidencing all advances and all other
indebtedness owing by the Borrower to the Lender under the
Credit Facility. The Lender will enter in such records
details of all amounts from time to time owing, paid or
prepaid by the Borrower to it hereunder. The information
entered in such records will constitute prima facie evidence
of the indebtedness of the Borrower to the Lender under the
Credit Facility.
	 
	 	 
	 

	 	Payment of Interest and Fees.

	 	(a)	 	Interest. All Prime Rate Loans from time to time
outstanding hereunder will bear interest, as well after as
before maturity, default and judgment, with interest on
overdue interest, at the applicable rates set out herein.
Interest payable at a variable rate will be adjusted
automatically without notice to the Borrower whenever there
is a variation in such rate.

 

-6-

	 	(b)	 	Calculation of Interest. Interest on Prime Rate Loans
will accrue and be calculated but not compounded daily and be
payable on such Banking Day as is customary for the Lender
having regard to its then existing practice. Interest on
Prime Rate Loans will be calculated on the basis of a 365 day
year and is payable monthly in arrears.

	 
	 	(c)	 	Standby Fee. The Borrower will, effective from and
including the Closing Date to and including March 22, 2007,
pay to the Lender the Standby Fee calculated on the basis of
a 365 day year, multiplied by, (i) the Amount, less (ii) the
Aggregate Principal Amount. The Standby Fee will be
calculated but not compounded daily and will be payable
monthly in arrears on the third day of April, 2007.

	 
	 	(d)	 	Bankers’ Acceptance. The Borrower will pay to the Lender
the Stamping Fee, calculated at the rate herein provided on
the date of acceptance thereof by the Lender based on the
face amount thereof.

	 
	 	(e)	 	Interest Act (Canada). For the purposes of the Interest
Act (Canada) and all other applicable laws which may
hereafter regulate the calculation or computation of interest
in the Credit Facility, the annual rates of interest
applicable to the Prime Rate Loans, are the rates as
determined under the Credit Facility multiplied by the actual
number of days in a period of one year commencing on the
first day of the period for which such interest or fee is
payable and divided by 365.

	 	 	 
	 

	 	Waiver of Judgment Interest Act (Alberta). To the extent
permitted by applicable law, the provisions of the Judgment
Interest Act (Alberta) will not apply to the Credit Facility
and are hereby expressly waived by each of the Borrower and
the Guarantor.
	 
	 	 
	Change of Control:

	 	The Borrower will notify the Lender of a Change of Control as
soon as it becomes aware thereof, and the Lender may at its
sole discretion, by written notice to the Borrower, terminate
the Credit Facility upon a Change of Control occurring. Such
termination will be effective immediately upon such a Change
of Control and thereupon the Aggregate Principal Amount,
interest, fees and all amounts due by the Borrower to the
Lender under the Credit Facility will be due and payable.

 

-7-

	 	 	 
	Accounting Terms and
Principles:

	 	Except as otherwise expressly provided, all accounting terms,
principles and calculations applicable to the financial
statements of each of the Borrower and the Guarantor will be
interpreted, applied and calculated, as the case may be, in
accordance with U.S. generally accepted accounting
principles. The basis of accounting will be applied and made
on a consistent basis and will not be changed unless agreed
to by the Lender in writing, such consent not to be
unreasonably withheld.
	 
	 	 
	Increased Costs:

	 	(a)      If due to either:

	 	(i)	 	the introduction of, or any change in, or in the
interpretation of any law, whether having the force of law or
not, resulting in the imposition or increase of reserves,
deposits or similar requirements by any central bank or
administrative body charged with the administration thereof;
or

	 
	 	(ii)	 	the compliance with any guideline or request from any
central bank or other administrative body which the Lender,
acting reasonably, determines that it is required to comply
with,

	 	 	 	there will be any increase in the cost to the Lender of
agreeing to make or making, funding or maintaining the Credit
Facility or there will be any reduction in the effective
return to the Lender thereunder, then, subject to the
paragraph below, the Lender will promptly notify the Borrower
of such event and the Borrower will, within 5 Banking Days
after being notified by the Lender of such event, pay to the
Lender quarterly in arrears, that amount (the “Additional
Compensation”) which the Lender, acting reasonably,
determines will compensate it, after taking into account all
applicable taxes, for any such increased costs or reduced
returns incurred or suffered by the Lender.

	 
	 	(b)	 	If Additional Compensation is payable pursuant to the
above paragraph, the Borrower will have the option to prepay
any amount of the Aggregate Principal Amount owed to the
Lender, subject to provisions herein.

 

-8-

	 	 	 
	Illegality:

	 	Notwithstanding anything to the contrary herein contained, if
on any date the Lender determines in good faith, which
determination will be conclusive and binding on the parties,
and provided written notice is given to the Borrower that its
ability to maintain, or continue to offer any Availment has
become unlawful or impossible due to:

	 	(a)	 	any change in applicable laws, or in the interpretation
or administration thereof by authorities having jurisdiction
in the matter; or

	 
	 	(b)	 	the imposition of any condition, restriction or
limitation upon the Lender which is outside of its control,

	 	 	 
	 

	 	then, in any such case, the Borrower will forthwith repay to
the Lender all principal amounts affected thereby, together
with all unpaid interest accrued thereon to the date of
repayment and all other expenses incurred in connection with
the termination of any such Availment. The Borrower may
utilize other forms of Availments not so affected in order to
make any required repayment and after any such repayment, the
Borrower may elect to re-borrow the amount repaid by way of
some other Availment upon complying with applicable
requirements thereof.
	 
	 	 
	Representations and
Warranties of the
Borrower and the Guarantor:

	 	Each of the Borrower and the Guarantor where indicated below,
hereby represents and warrants to the Lender as of the date
of this Credit Agreement and as of the date the Borrower
requests the Drawdown that:

	 	(a)	 	Incorporation, Organization and Power. Each of the
Borrower and the Guarantor has been duly incorporated and is
validly existing under the laws of the jurisdiction of their
incorporation and each is duly registered to carry on
business in each jurisdiction in Canada in which the nature
of any material business carried on by it or the character of
any property owned or leased by it makes such registration
necessary, and each has full corporate power and capacity to
enter into and perform its obligations under this Credit
Agreement and the Security, where applicable, and to carry on
its business as currently conducted.

	 
	 	(b)	 	Authorization and Status of Agreements. This Credit
Agreement and the Security have been duly authorized,
executed and delivered by each of the Borrower and the
Guarantor, where applicable, and does not conflict with or
contravene or constitute a default or create an encumbrance,
other than a Permitted Encumbrance, under:

 

-9-

	 	(i)	 	its constating documents or by-laws or any resolution of
its directors or shareholders;

	 
	 	(ii)	 	any agreement or document to which it is a party or by
which any of its property is bound; or

	 
	 	(iii)	 	any applicable law,

the contravention of which would, or would reasonably be
expected to, result in a Material Adverse Change.

	 	(c)	 	Enforceability. This Credit Facility and the Security
constitute valid and binding obligations and is enforceable
against each of the Borrower and the Guarantor, where
applicable, in accordance with their terms, except to the
extent that enforceability may be limited by applicable
bankruptcy, insolvency, reorganization, or similar statutes
affecting the enforcement of creditors’ rights generally and
by general principles of equity.

	 
	 	(d)	 	Litigation. There are no actions, suits or proceedings
at law or before or by any administrative body existing or
pending, or to the knowledge of the Borrower or Guarantor,
threatened against the Borrower or the Guarantor which would
result, if successful against either, in a Material Adverse
Change.

	 
	 	(e)	 	Environmental Laws. Each of the Borrower and the
Guarantor has obtained all material permits, licenses and
other authorizations which are required under applicable
environmental laws. Each of the Borrower and the Guarantor
is in full compliance with applicable environmental laws and
with the terms and conditions of all such permits, licenses
and authorizations, except to the extent that failure to so
comply would not result in a Material Adverse Change.

	 
	 	(f)	 	Environmental Condition of Property. The property or any
part thereof owned, operated or controlled by each of the
Borrower or the Guarantor:

 

-10-

	 	(i)	 	is not, to the knowledge of the Borrower or Guarantor,
the subject of any outstanding claim, charge or order from an
administrative body alleging violation of environmental laws
or, if subject to any such claim, charge or order, the
Borrower is taking or causing to be taken, with respect to
its subsidiaries all such remedial, corrective or other
action required under the claim, charge or order or is
diligently and in good faith contesting or causing its
subsidiaries to contest the validity thereof; and

	 
	 	(ii)	 	complies, with respect to each of its use and operation,
in all material respects with applicable environmental laws
and with the terms and conditions of all permits, licenses
and other authorizations which are required to be obtained by
each of them under applicable environmental laws.

	 	(g)	 	Title to Properties. Each of the Borrower and the
Guarantor will maintain good, beneficial and valid title to
its oil and gas properties, subject only to Permitted
Encumbrances.

	 
	 	(h)	 	Operation of Properties. To the best of the Borrower’s
and Guarantor’s knowledge, information and belief, after due
enquiry, all oil, gas and other wells owned or operated by
them have been and will continue to be drilled, completed,
shut-in, abandoned (and if required to be so abandoned,
abandoned in accordance with applicable law), and the
facilities, plants and equipment in respect thereof have been
and will continue to be operated and maintained, as the case
may be, in a good and workmanlike manner in accordance with
sound industry practice and in accordance with all applicable
laws, except to the extent that the failure to comply would
not, or would not reasonably be expected to, cause a Material
Adverse Change.

	 
	 	(i)	 	No Adverse Change. The most recent audited financial
statements of the Guarantor provided to the Lender were
prepared in accordance with U.S. generally accepted
accounting principles and such audited financial statements
present fairly in all material respects the Guarantor’s
consolidated financial position as at the date thereof and
since that date there has been no Material Adverse Change.

 

-11-

	 	(j)	 	Information. All factual information heretofore or
contemporaneously furnished by or on behalf of each of the
Borrower and the Guarantor in writing to the Lender in
connection with the Borrower’s and the Guarantor’s business
is true and accurate in all material respects and since that
date there has been no change or event which could reasonably
be expected to result in a Material Adverse Change, except
where such factual information has been superceded by more
recent factual information furnished to the Lender. Neither
the Borrower nor the Guarantor is aware of any omission of
any material fact which renders such factual information
incomplete or misleading in any material way.

	 
	 	(k)	 	No Breach of Orders, Licences or Statutes. Neither the
Borrower nor the Guarantor is in breach of:

	 	(i)	 	any order, approval or mandatory requirement or directive
of any administrative body;

	 
	 	(ii)	 	any governmental licence or permit; or

	 
	 	(iii)	 	any applicable law,

the breach of which would result, or would reasonably be
expected to result, in a Material Adverse Change.

	 	(l)	 	No Default. No Default or Event of Default has occurred
and is continuing.

	 
	 	(m)	 	No Liens or Indebtedness. Neither the Borrower nor the
Guarantor has:

	 	(i)	 	incurred any indebtedness other than Permitted
Indebtedness, or

	 
	 	(ii)	 	granted any security interest, charges, mortgages, liens
or other encumbrances other than Permitted Encumbrances,

which is currently outstanding or in force, as the case may
be.

	 	(n)	 	Approvals. All material regulatory approvals, permits
and licenses necessary for the Borrower and the Guarantor to
carry on their business as at the date hereof, and all
approvals, and consents necessary for them to enter into the
Credit Agreement and the Security and perform their
respective obligations thereunder have, in each case, been
obtained and are in good standing.

 

-12-

	 	(o)	 	Subsidiaries. The Guarantor has no direct or indirect
Subsidiaries with the exception of those listed in Schedule
“D” annexed hereto.

	 
	 	(p)	 	Underwriting Agreement. The Guarantor:

	 	(i)	 	is not in default under, and to the best of its
knowledge, the Underwriters are not in default under, the
Underwriting Agreement;

	 
	 	(ii)	 	is not aware of any fact or circumstance which exists
now or which is likely to exist in the future that would or
could reasonably be expected to release the Underwriters or
any one of them, in whole or in part, of their respective
obligations to subscribe for additional flow-through shares
in the aggregate amount of the subscription proceeds payable
on the Second Closing; and

	 
	 	(iii)	 	the Underwriting Agreement has been duly authorized,
executed and delivered and constitutes valid and binding
obligations of the Guarantor in accordance with its terms,
except to the extent that enforceability may be limited by
applicable bankruptcy, insolvency, reorganization, or similar
statutes affecting the enforcement of creditors’ rights
generally and by general principles of equity.

	 	 	 
	 

	 	Acknowledgement. Each of the Borrower and the Guarantor
acknowledges that the Lender is relying upon the
representations and warranties in this Representation and
Warranties provision in making the Credit Facility available
to the Borrower and that the representations and warranties
herein will be deemed to be restated in every respect
effective on the date the Drawdown is made under the Credit
Facility.
	 

	 	Affirmative Covenants. While any indebtedness under this
Credit Agreement and the Security is outstanding or any of
the Availments remains available to the Borrower and except
with the written consent of the Lender, each of the Borrower
and the Guarantor covenants with the Lender that:

 

-13-

	 	(a)	 	Punctual Payment. The Borrower will pay or cause to be
paid all indebtedness and other amounts payable under the
Credit Facility punctually when due.

	 
	 	(b)	 	Corporate Existence. Each of the Borrower and the
Guarantor, where applicable, will do all things necessary to
preserve and keep in full force and effect its corporate
existence in good standing as a corporation under the laws of
its jurisdiction of incorporation.

	 
	 	(c)	 	Inspection by the Lender. Each of the Borrower and the
Guarantor, where applicable, will allow and do all things
necessary to enable the Lender, acting reasonably, from time
to time to inspect all of the Borrower’s and the Guarantor’s
corporate and financial records.

	 
	 	(d)	 	Notice of Event of Default. Each of the Borrower and the
Guarantor will notify the Lender of the occurrence of any
Default or Event of Default, forthwith upon becoming aware
thereof and specify in such notice the nature of the event
and the steps taken or proposed to be taken to remedy the
same.

	 
	 	(e)	 	Notice of Material Litigation. Each of the Borrower and
the Guarantor will, promptly upon acquiring knowledge
thereof, notify the Lender of the commencement of any legal
or administrative proceedings against the Borrower, the
Guarantor or any of their wholly-owned subsidiaries, which if
adversely determined against it could reasonably be expected
to result in a Material Adverse Change.

(f) Notice of Environmental Damage. Each of the Borrower and
the Guarantor will, promptly upon acquiring knowledge
thereof, notify the Lender of the discovery of any
contaminant or of any release of a contaminant into the
environment from or upon the land or property owned, operated
or controlled by the Borrower, the Guarantor or any of their
wholly-owned subsidiaries, which could reasonably be expected
to result in a Material Adverse Change.

	 
	 	(g)	 	Operation of Properties. Each of the Borrower and the
Guarantor will, and will cause each of their wholly-owned
subsidiaries to, operate its property or, if it is not the
operator, use reasonable efforts to ensure that such property
is operated, in accordance with sound industry practice and
in accordance with all applicable laws, except to the extent
that the failure to comply would not, or would not reasonably
be expected to, result in or cause a Material Adverse Change.

 

-14-

	 	(h)	 	Performance of Leases. Each of the Borrower and the
Guarantor, where applicable, will, and will cause each of
their wholly-owned subsidiaries to, perform all obligations
under all permits and leases relating to its oil and gas
properties, including payment of rentals, royalties, taxes or
other charges in respect thereof which are necessary to
maintain all such permits and leases in good standing in all
material respects, provided that this covenant will not
restrict its right to surrender leases which are uneconomic
to maintain.

(i) Insurance. Each of the Borrower and the Guarantor, where
applicable, will, and will cause each of their wholly-owned
subsidiaries to, maintain or cause to be maintained adequate
insurance in respect of its property, according to prudent
industry standards for similar companies in similar
businesses, and will provide the Lender with copies of all
insurance policies relating thereto if so requested.

	 
	 	(j)	 	Material Adverse Claims. Each of the Borrower and the
Guarantor will, and will cause each of their wholly-owned
subsidiaries to, except for Permitted Encumbrances, defend
its property from all material adverse claims where the
failure to do so may result in a Material Adverse Change.

	 
	 	(k)	 	Protection of Security. The Guarantor will, and will
cause the Borrower to, do all things reasonably requested by
the Lender to protect and maintain the Security and the
priority thereof in relation to other Persons.

	 
	 	(l)	 	Comply with Law and Maintain Permits. Each of the
Borrower and the Guarantor will, and will cause each of their
wholly-owned subsidiaries to, comply with applicable laws and
obtain and maintain all permits, licenses, consents and
approvals necessary to the ownership of its property and to
the conduct of its business in each jurisdiction where it
carries on business or owns property, including those issued
or granted by governmental bodies, except to the extent
failure to do so could not reasonably be expected to result
in a Material Adverse Change.

 

-15-

	 	(m)	 	Other Information. Each of the Borrower and the
Guarantor will provide to the Lender, at the request of the
Lender acting reasonably, such other documentation and
information concerning the Borrower and the Guarantor and
their business as the Lender may reasonably require.

	 
	 	(n)	 	Security. Should the Lender determine at any time and
from time to time that the form and nature of the then
existing Security is deficient in any way or does not fully
provide the Lender with the security interests and priority
to which the Lender is entitled hereunder, the Guarantor or
the Borrower, as applicable, will forthwith execute and
deliver or cause to be executed and delivered to the Lender,
at the Borrower’s expense, such amendments to the Security or
provide such new security as the Lender may reasonably
request.

	 
	 	(o)	 	Purpose. The Borrower will only use the proceeds of the
Drawdown for the purpose as herein.

	 
	 	(p)	 	Enforcement of Rights. The Guarantor will in a timely
manner enforce, to the greatest extent permitted by law, all
of its rights, benefits and entitlements against the
Underwriters, or any one of them, under or arising from the
Underwriting Agreement, and shall forthwith notify the Lender
of any default by the Underwriters or any one of them under
the Underwriting Agreement, or of any circumstance or fact
which could reasonably be expected to result in such default.

	 
	 	(q)	 	Second Closing. The Guarantor will provide the Lender
with a copy of each notice that it receives from the lead
underwriter pursuant to Section 10(b) of the Underwriting
Agreement within one Banking Day of receipt thereof. The
Guarantor will do all things and take all such actions as is
reasonably required by the Lender to cause the subscription
proceeds from the Second Closing to be deposited in the
Deposit Account immediately after the receipt thereof, with
such deposit to be held by the Lender as part of the
Security.

	 
	 	(r)	 	Lease Purchase. The Borrower will notify the Lender as
soon as practicable as to whether the Lease Purchase was
successful, and if successful, the reasonable particulars
thereof.

 

-16-

	 	 	 
	 

	 	Negative Covenants. While any indebtedness under this Credit
Agreement is outstanding or any of the Availments remain
available to the Borrower, and except with the prior written
consent of the Lender, such consent not to be unreasonably
withheld, each of the Borrower and the Guarantor, as
applicable, will not, and will not permit any of their
wholly-owned subsidiaries to:

	 	(a)	 	incur indebtedness except for Permitted Indebtedness and
indebtedness owed to the Guarantor or any of its wholly-owned
subsidiaries;

	 
	 	(b)	 	provide or permit a security interest or lien over any of
its property, except for Permitted Encumbrances;

	 
	 	(c)	 	make any Distribution (except to the Guarantor or any of
its wholly-owned subsidiaries);

	 
	 	(d)	 	merge, amalgamate, or consolidate with another Person
(except the Guarantor or any of its wholly-owned
subsidiaries);

	 
	 	(e)	 	make any material change in the nature of its business as
now carried on;

	 
	 	(f)	 	make material investments or enter into ventures of a
material nature which are outside the scope of its normal
course of business;

	 
	 	(g)	 	provide any financial support by way of guarantee, pledge
of its shares, granting of a security interest or other
mortgage, charge, lien or encumbrance of any kind, or
otherwise, to an Affiliate (except the Guarantor or any of
its wholly-owned subsidiaries) without the prior written
consent of the Lender, in its sole discretion;

	 
	 	(h)	 	make any sale or disposition of its property, other than
in the ordinary course of business or to the Guarantor or any
of its wholly-owned subsidiaries or as otherwise consented to
by the Lender, such consent not to be unreasonably withheld;
and

	 
	 	(i)	 	the Guarantor will not waive any of its rights, benefits
and entitlements under the Underwriting Agreement or agree to
any amendment thereto, in each case, without the prior
written consent of the Lender.

 

-17-

	 	 	 
	Events of Default:

	 	Event of Default. Each of the following events will
constitute an Event of Default under the Credit Facility:

	 	(a)	 	Failure to Pay. If the Borrower makes default in the due
and punctual payment of any principal, interest, fees or
other amounts owing under or pursuant to the Credit Facility
as and when the same becomes due and payable, whether at
maturity or otherwise and such default continues for a period
of 3 Banking Days after notice of such default is given by
the Lender to the Borrower.

	 
	 	(b)	 	Incorrect Representations. If any representation or
warranty made to the Lender by the Borrower or the Guarantor
hereunder, under any Security or under any other agreement or
certificate will prove to have been incorrect when so made or
deemed to have been repeated as herein provided and such
default continues for a period of 30 days after notice is
given to the Borrower by the Lender.

	 
	 	(c)	 	Breach of Covenants. Except for an Event of Default set
out in paragraph (a) above or paragraph (n) below, if the
Borrower or the Guarantor, where applicable, defaults in the
performance or observance of any covenant, obligation or
condition to be observed or performed by it under or pursuant
to this Credit Agreement or the Security or any other
agreement now or hereafter made by the Borrower or the
Guarantor, where applicable, with the Lender, and such
default continues for a period of 30 days after notice is
given to the Borrower by the Lender.

	 
	 	(d)	 	Insolvency. If a judgment, decree or order of a court of
competent jurisdiction is entered against either the Borrower
or the Guarantor, (i) adjudging it bankrupt or insolvent, or
approving a petition seeking its reorganization or winding-up
under the Bankruptcy and Insolvency Act (Canada), the
Companies’ Creditors Arrangement Act (Canada) or any other
bankruptcy, insolvency or analogous law, or (ii) appointing a
receiver, trustee, liquidator, or other Person with like
powers, over all, or substantially all, of its property or
(iii) ordering the involuntary winding up or liquidation of
affairs or (iv) if any receiver or other Person with like
powers is appointed over all, or substantially all, of its
property, unless such appointment is stayed and of no effect
against the Security and the rights of the Lender thereunder.

 

-18-

	 	(e)	 	Winding-Up. If (i) an order or a resolution is passed
for the dissolution, winding-up, reorganization or
liquidation of either the Borrower or the Guarantor, pursuant
to applicable laws, including the Business Corporations Act
(Alberta) or similar statutes in other applicable
jurisdictions, or (ii) either of the Borrower or the
Guarantor institutes proceedings to be adjudicated bankrupt
or insolvent, or consents to the institution of bankruptcy or
insolvency proceedings against it under the Bankruptcy and
Insolvency Act (Canada), the Companies’ Creditors Arrangement
Act (Canada) or any other bankruptcy, insolvency or analogous
law, or (iii) either of the Borrower or the Guarantor
consents to the appointment of a receiver, or other Person
with like powers, over all, or substantially all, of its
property, or (iv) either of the Borrower or the Guarantor
makes a general assignment for the benefit of creditors, or
becomes unable to pay its debts generally as they become due,
or (v) either of the Borrower or the Guarantor takes or
consents to any action in furtherance of any of the aforesaid
purposes.

	 
	 	(f)	 	Other Indebtedness. The Borrower or the Guarantor fails
to make any payment of principal or interest in regard to any
indebtedness whatsoever owed by it after the expiry of any
applicable grace period or demand therefor, whether incurred
before or after the date hereof, to any Person other than the
Lender where the outstanding principal amount of such
indebtedness in aggregate is more than $1,000,000, unless (i)
the Borrower or the Guarantor, as applicable, is contesting
the validity of such indebtedness in good faith by
appropriate proceedings diligently conducted, as long as such
proceedings do not involve any risk of unindemnified
liability on the part of the Lender, (ii) the Borrower or the
Guarantor, as applicable, notifies the Lender of such
contest, and (iii) the Borrower or the Guarantor, as
applicable, has established reasonable reserves therefor,
adequate in the opinion of the Lender, in accordance with the
generally accepted accounting principles in effect in the
United States at the time of such contest.

 

-19-

	 	(g)	 	Other Defaults. The Borrower or the Guarantor defaults
in the observance or performance of any non-monetary
obligation, covenant or condition to be observed or performed
by it pursuant to any agreement to which it is a party or by
which any of its property is bound, where such default would
result in a Material Adverse Change and it fails to remedy
such default within a period of 30 days after notice by the
Lender of such default.

	 
	 	(h)	 	Adverse Proceedings. The occurrence of any action, suit
or proceeding against or affecting either the Borrower or the
Guarantor before any court or before any administrative body
which, if successful, would constitute a Material Adverse
Change, unless the action, suit, or proceedings is contested
diligently and in good faith and, in circumstances where a
lower court or tribunal has rendered a decision adverse to
the Borrower or the Guarantor, as applicable, the Borrower or
the Guarantor, as applicable, is appealing such decision, and
has provided the Lender with a reserve in respect thereof,
adequate in the opinion of the Lender.

	 
	 	(i)	 	Judgment. A judgment or judgments are obtained against
either the Borrower or the Guarantor for an aggregate amount
in excess of $1,000,000, in the aggregate, which remains
unsatisfied and undischarged for a period or 30 days during
which such judgment or judgments will not be on appeal or
execution thereof will not be effectively stayed.

	 
	 	(j)	 	Material Lien. The property of the Borrower with a fair
market value in excess of $1,000,000, in the aggregate, is
seized (including by way of execution, attachment,
garnishment or distraint) or any lien, charge or security
interest thereon will be enforced, or such property will
become subject to any charging order or equitable execution
of a court, or any writ of enforcement, writ of execution or
distress warrant with respect to obligations in excess of
$1,000,000, in the aggregate, exists in respect of the
Borrower or the Guarantor or such property, or any sheriff,
civil enforcement agent or other Person will become lawfully
entitled to seize or distrain upon any such property under
the Civil Enforcement Act (Alberta), the Workers’
Compensation Act (Alberta), the Personal Property Security
Act (Alberta) or any other applicable laws whereunder similar
remedies are provided, and in any case such seizure,
execution, attachment, garnishment, distraint, charging order
or equitable execution, or other seizure or right, will
continue in effect and not released or discharged for more
than 30 days.

 

-20-

	 	(k)	 	Enforceability of Documents. If any material provision
of this Credit Agreement or the Security will at any time
cease to be in full force and effect, be declared to be void
or voidable or will be repudiated, or the validity or
enforceability thereof will at any time be contested by the
Borrower or the Guarantor or if any lien, charge or security
interest constituted pursuant to the Security ceases to have
the priority contemplated herein.

	 
	 	(l)	 	Cessation of Business. The Borrower or the Guarantor
ceases or proposes to cease carrying on business, or a
substantial part thereof, or makes or threatens to make a
bulk sale of its property.

	 
	 	(m)	 	Material Adverse Change. Any Material Adverse Change
occurs, as determined by the Lender acting reasonably, and
the Borrower or the Guarantor, as applicable, fails to remedy
such Material Adverse Change within a period of 30 days after
notice thereof from the Lender.

	 
	 	(n)	 	Underwriting Agreement. If a default occurs under the
Underwriting Agreement by the Guarantor or by any of the
Underwriters and such default is not cured within the
applicable cure period, if any, or if the Borrower does not
deposit the subscription proceeds from any Second Closing
into the Deposit Account immediately after the receipt
thereof.

	 	 	 
	 

	 	Remedies. Upon the occurrence of an Event of Default, the
Lender may forthwith terminate any further obligation to
provide Availments, make advances or to grant any further
credits to the Borrower and may declare the Aggregate
Principal Amount together with unpaid accrued interest
thereon and any other amounts owing under or pursuant to this
Credit Agreement or the Security, contingent or otherwise, to
be immediately due and payable, whereupon the Borrower and
the Guarantor will be obligated without any further grace
period to forthwith pay such amounts to the Lender and the
Lender may exercise any and all rights, remedies, powers and
privileges afforded by applicable law or under any and all
other instruments, documents and agreements made to secure or
assure payment and performance of the obligations of the
Borrower under this Credit Facility, including the Security.

 

-21-

	 	 	 
	 

	 	Waivers. An Event of Default may only be waived in writing
by the Lender.
	 
	 	 
	Assignment:

	 	Assignment of Interests. The rights and obligations of each
of the Borrower and the Guarantor under the Credit Facility
and the Security are not assignable, in whole or in part,
without the prior written consent of the Lender.
	 
	 	 
	 

	 	Assignment by the Lender. The Lender will have the right to
syndicate, participate, sell or assign any portion of the
Credit Facility to one or more Persons acceptable to the
Borrower, acting reasonably; provided, that, such Person is a
Canadian chartered bank and is a resident of Canada for the
purposes of the Income Tax Act (Canada), such syndication,
participation, sale or assignment does not result in the
imposition of any additional obligation upon the Borrower or
result in the Borrower incurring any additional costs or
liabilities hereunder, and all expenses incurred by the
Lender and the Borrower in connection with such syndication,
participation, sole or assignment (including legal costs and
agency fees) will be for the account of the Lender. In the
event of such syndication, participation, sale or assignment,
the Borrower will, subject to the preceding limitations,
execute and deliver all such agreements, documents and
instruments as the Lender may reasonably request to effect
and recognize such syndication, participation, sale or
assignment, including amendments to this Credit Agreement,
the Security or any other documents related thereto.
	 
	 	 
	Guarantee:

	 	In consideration of the Lender making the Credit Facility
available to the Borrower hereunder, the Guarantor hereby
irrevocably, absolutely and unconditionally guarantees to the
Lender the due payment by the Borrower to the Lender of the
Aggregate Principal Amount, together with any and all
interest, fees, expenses and costs due, or which may become
due, under this Credit Agreement as well as the due
performance by the Borrower of any and all of its obligations
arising hereunder (collectively the “Obligations”).
	 
	 	 
	 

	 	The obligations and liabilities of the Guarantor hereunder
will represent a continuing guarantee and is not limited by
amount, time or otherwise.

 

-22-

	 	 	 
	 

	 	The overdue obligations and liabilities of the Guarantor
hereunder will bear interest at the rate applicable to Prime
Rate Loans as herein provided.
	 
	 	 
	 

	 	Without releasing, discharging, limiting or otherwise
affecting in whole or in part the obligations and liabilities
of the Guarantor hereunder and without the consent of or
notice to the Guarantor, the Lender may as it sees fit and
regardless of whether the Guarantor’s risk is increased:

	 	(a)	 	grant time, renewals, extensions, indulgences, releases
and discharges to the Borrower or any other Person or Persons
now or hereafter liable to the Lender in respect of the
Obligations,

	 
	 	(b)	 	take or refrain from taking security or collateral from
the Borrower or any other Person or Persons or from
perfecting such security or collateral in connection with the
Obligations,

	 
	 	(c)	 	give up, modify, exchange, renew, release, discharge,
compromise, realize, enforce or otherwise deal with or do any
act or thing in respect of (with or without consideration)
any and all collateral, mortgages or other security given by
the Borrower or any other Person or Persons with respect to
the Obligations,

	 
	 	(d)	 	accept compromises, settlements or arrangements from the
Borrower or any other Person or Persons,

	 
	 	(e)	 	exercise any right or remedy which it may have against
the Borrower or any other Person or Persons or with respect
to any security relating to the Credit Facility, including
judicial and non-judicial foreclosure,

	 
	 	(f)	 	apply money at any time received from the Borrower or any
Person or Persons or from security upon such part of the
Obligations as it may see fit or change any such application
in whole or in part as it may see fit,

	 
	 	(g)	 	give credit or make advances to the Borrower, the
Guarantor or any other Person, and discontinue, release,
increase or otherwise vary such credit, and

	 
	 	(h)	 	otherwise deal with, or waive or modify its right to deal
with the Borrower and any other Person or Persons as it may
see fit, and in no case will the Guarantor be released from
its obligations and liabilities hereunder by any neglect or
omission of the Lender with respect to any of the foregoing.

 

-23-

	 	 	 
	 

	 	The Guarantor will be bound by any account settled between
the Lender and the Borrower, and if no such account has been
so settled any account stated by the Lender will be accepted
by the Guarantor as prima facie evidence of the amount which
at the date of the account so stated is due by the Borrower
to the Lender or remains unpaid by the Borrower to the
Lender, in the absence of manifest error.
	 
	 	 
	 

	 	The Guarantor will not at any time claim to be subrogated in
any manner to the rights and position of the Lender and will
not claim the benefit of any security at any time held by the
Lender until the Lender has received irrevocable and
unconditional payment in full of all of the Obligations. The
Lender will not be bound to exhaust its recourse against the
Borrower or any other Person or Persons or the security or
other securities it may hold, or any of them, before
requiring payment by the Guarantor.
	 
	 	 
	 

	 	This Guarantee will not be discharged, limited or otherwise

affected by:

	 	(a)	 	the insolvency or bankruptcy or ceasing to exist of the
Borrower or any other Person or Persons,

	 
	 	(b)	 	the appointment of a receiver for the assets of the
Borrower or any other Person or Persons,

	 
	 	(c)	 	any extension, other indulgence, renewal, settlement,
discharge, compromise, waiver, subordination or release in
respect of the Obligations,

	 
	 	(d)	 	any modification or amendment of or supplement to the
Credit Facility, including any increase or decrease in the
principal, the rates of interest or other amounts payable
hereunder,

	 
	 	(e)	 	any change in the name, status, organization or
composition of the Borrower, or

	 
	 	(f)	 	any other circumstance which might otherwise constitute a
legal or equitable defence available to, or a complete or
partial discharge of, the Borrower in respect of the
Obligations hereunder.

 

-24-

	 	 	 
	Miscellaneous:

	 	Telephone Instructions. Any verbal instructions given by the
Borrower in relation to the Credit Facility will be at the
risk of the Borrower, and the Lender will have no liability
for any error or omission in such verbal instructions or in
the interpretation or execution thereof by the Lender
provided the Lender acted without gross negligence in the
circumstances.
	 
	 	 
	 

	 	No Partnership, Joint Venture or Agency. The Borrower agrees
that nothing contained in the Credit Agreement nor the
conduct of any party will in any manner whatsoever constitute
or be intended to constitute any party as the agent or
representative or fiduciary of the other, constitute or be
intended to constitute a partnership or joint venture between
the Lender and the Borrower.
	 
	 	 
	 

	 	Further Assurances. Each of the Borrower and the Guarantor
will, from time to time forthwith at the Lender’s request and
at the Borrower’s own cost and expense, do, make, execute and
deliver, or cause to be done, made, executed and delivered,
all such further documents, financing statements,
assignments, acts, matters and things which may be reasonably
required by the Lender with respect to this Credit Agreement,
the Security or any part thereof and to give effect to any
provision thereof.
	 
	 	 
	 

	 	Waiver of Laws. To the extent legally permitted, each of the
Borrower and the Guarantor hereby irrevocably and absolutely
waives the provisions of any applicable law which may be
inconsistent at any time with, or which may delay or limit in
any way, the enforcement of this Credit Agreement and the
Security in accordance with their terms.
	 
	 	 
	 

	 	Attornment. Each of the Borrower and the Guarantor does
hereby irrevocably submit and attorn to the non-exclusive
jurisdiction of the courts of the Province of Alberta for all
matters arising out of or relating to this Credit Agreement
and the Security or any of the transactions contemplated
thereby.
	 
	 	 
	 

	 	Interest on Payments in Arrears. Except as otherwise
provided in the Credit Agreement, interest will be paid by
the Borrower or the Guarantor, where applicable, as follows:

	 	(a)	 	on amounts for which the Lender has actually incurred an
out-of-pocket expense and for which the Lender has an
obligation under this Credit Facility to reimburse such
amounts to any third party incurring the expenses, interest
will be payable on such amount at the Prime Rate plus 20 bps
from and including the day on which the amount was incurred
to but excluding the day on which the amount is reimbursed;
and

 

-25-

	 	(b)	 	on amounts payable by the Borrower to the Lender under
the Credit Facility where such payment is in default but the
non-payment of such amount has not required an actual
out-of-pocket expense by the Lender, at the Prime Rate plus
20 bps from and including the day on which the payment was
due, but excluding the day on which the payment is made
whether before or after judgment.

	 	 	 
	 

	 	Payments Due on Banking Day. Whenever any payment hereunder
will be due on a day other than a Banking Day, such payment
will be made on the next succeeding Banking Day and such
extension of time will in such case be included in the
computation of payment of interest thereunder.
	 
	 	 
	 

	 	Application of Proceeds. Except as otherwise agreed to by
the Lender in its sole discretion and as otherwise expressly
provided hereunder, all payments made by or on behalf of the
Borrower under the Credit Facility, after acceleration of the
Aggregate Principal Amount, will be applied by the Lender in
the following order:

	 	(a)	 	in payment of any amounts due and payable by way of
recoverable expenses;

	 
	 	(b)	 	in payment of any amounts by way of any fees (other than
the Standby Fees);

	 
	 	(c)	 	in payment of any amounts due and payable as and by way
of interest or the Standby Fees, including any interest on
overdue amounts;

	 
	 	(d)	 	in payment of the Aggregate Principal Amount; and

	 
	 	(e)	 	in payment of all other indebtedness under the Credit
Facility or the Security.

	 	 	 
	Enurement:

	 	This Credit Agreement and the Security will be binding upon
and will enure to the benefit of the Borrower, the Guarantor
and the Lender and their respective successors and permitted
assigns.
	 
	 	 
	Governing Law:

	 	This Credit Agreement will be governed by and construed in
accordance with the laws in force in the Province of Alberta
from time to time.

 

-26-

	 	 	 
	Agreement:

	 	The Borrower and the Lender agree to the foregoing as of the
date first above written.
	 
	 	 
	Indemnity:

	 	Each of the Borrower and the Guarantor indemnifies and holds
the Lender, its Affiliates and their respective officers,
directors, employees and agents harmless against any and all
liabilities and costs associated with or as a result of the
Lender entering into and performing its obligations under
this Credit Agreement and the Security, including but not
limited to liabilities or costs associated with or as a
result of (i) any transaction financed or to be financed in
whole or in part, directly or indirectly, by the proceeds of
this Credit Facility; (ii) any breach or non-compliance of
any legislation, order, directive or judgment for the
protection of the environment, or (iii) any breach or
non-compliance of any legislation, order, directive,
regulation or judgment in connection with any proceeds raised
by either of them from the issuance of securities but
excluding liabilities or costs arising from the gross
negligence or wilful misconduct of the indemnified person.
This indemnity will survive the repayment, cancellation or
termination of the Credit Facility.
	 
	 	 
	Notices:

	 	Any notice or communication to be given hereunder and under
the Security may be effectively given by delivering the same
at the addresses hereinafter set forth or by facsimile or by
sending the same by prepaid registered mail to the parties at
such addresses. Any notice so mailed will be deemed to have
been given upon actual receipt thereof. The mailing address
of the parties are:

Oilsands Quest Sask Inc.

205, 707 - 7th Avenue S.W.

Calgary, AB T2P 3H6

Attention: Chief Financial Officer

Fax: (403) 263-9812

Oilsands Quest Inc.

205, 707 - 7th Avenue S.W.

Calgary, AB T2P 3H6

Attention: Chief Financial Officer

Fax: (403) 263-9812

The Toronto-Dominion Bank

800 Home Oil Tower

324 - 8th Avenue S.W.

P.O. Box 2850

Calgary, AB T2P 2Z2

Attention: Vice President, Corporate Credit

Fax: (403) 292-2772

 

-27-

	 	 	 
	 

	 	A party may from time to time notify the others, in
accordance with the provisions hereof, of any change of
address or addressee, which thereafter, until changed by like
notice, will be the address of such party for all purposes of
the Credit Facility.
	 
	 	 
	Execution:

	 	This Credit Agreement and the Security may be executed in
separate counterparts and delivered by electronic facsimile
and when so executed and delivered, will be deemed to be an
original, all of which taken together will constitute one and
the same instrument, and production of an originally executed
or copy of a transmittal facsimile of each counterpart
execution page hereof will be sufficient for purposes of
proof of the execution and delivery of this Credit Agreement
and the Security.
	 
	 	 
	Number:

	 	Wherever the context of this Credit Agreement so requires, a
term used herein importing the singular will also include the
plural and vice versa.
	 
	 	 
	Monetary References:

	 	Whenever an amount of money is referred to in this Credit
Agreement or any document entered into pursuant hereto, such
amount will, unless otherwise expressly stated, be in Cdn.
Dollars.
	 
	 	 
	Time:

	 	Time will be of the essence in this Credit Agreement and the
Security.
	 
	 	 
	Amendments:

	 	This Credit Agreement may only be amended by an instrument in
writing signed by the Lender, the Borrower and the Guarantor.

No Waiver:

	 	(a)	 	No waiver by a party of any provision or of the breach of
any provision of any of this Credit Agreement and the
Security will be effective unless it is contained in a
written instrument duly executed by an authorized officer or
representative of such party. Such written waiver will
affect only the matter specifically identified in the
instrument granting the waiver and will not extend to any
other matter, provision or breach.

	 
	 	(b)	 	The failure of a party to take any steps in exercising
any right in respect of the breach or nonfulfillment of any
provision of any of this Credit Agreement and the Security
will not operate as a waiver of that right, breach or
provision, nor will any single or partial exercise of any
right preclude any other or future exercise of that right or
the exercise of any other right, whether in law or otherwise.

 

-28-

	 	 	 
	Severability:

	 	If the whole or any portion of this Credit Agreement and the
Security or the application thereof to any circumstance is
held invalid or unenforceable to an extent that does not
affect the operation of this Credit Agreement and the
Security in a fundamental way, the remainder of the provision
in question, or its application to any circumstance other
than that to which it has been held invalid or unenforceable,
and the remainder of this Credit Agreement and the Security,
will not be affected thereby and will be valid and
enforceable to the fullest extent permitted by law.

	 	 	 	 	 
	 	 	THE TORONTO-DOMINION BANK, as Lender
	 
	 	 	 	 
	 

	 	Per:	 	 
	 

	 	 	 	 
	 

	 	Name:	 	 
	 

	 	Title:	 	 
	 
	 	 	 	 
	 

	 	Per:	 	 
	 

	 	 	 	 
	 

	 	Name:	 	 
	 

	 	Title:	 	 

	 	 	 	 	 
	 	 	OILSANDS QUEST SASK INC., as Borrower
	 
	 	 	 	 
	 

	 	Per:	 	 
	 

	 	 	 	 
	 

	 	Name:	 	 
	 

	 	Title:	 	 
	 
	 	 	 	 
	 

	 	Per:	 	 
	 

	 	 	 	 
	 

	 	Name:	 	 
	 

	 	Title:	 	 

	 	 	 	 	 
	 	 	OILSANDS QUEST INC., as Guarantor
	 
	 	 	 	 
	 

	 	Per:	 	 
	 

	 	 	 	 
	 

	 	Name:	 	 
	 

	 	Title:	 	 
	 
	 	 	 	 
	 

	 	Per:	 	 
	 

	 	 	 	 
	 

	 	Name:	 	 
	 

	 	Title:	 	 

 

 

THIS IS SCHEDULE A TO THE CREDIT AGREEMENT BETWEEN

THE TORONTO-DOMINION BANK AND

OILSANDS QUEST SASK INC. DATED AS OF MARCH 19, 2007

DEFINITIONS

Definitions. The following words and phrases used in the Credit Agreement and the
Security, including this Schedule A, and in all notices, communications, certificates and other
documents expressed to be made pursuant thereto will have the meanings set out below:

“Affiliate” has the meaning set forth in the Securities Act (Alberta).

“Aggregate Principal Amount” means the aggregate of the Amount outstanding from time to
time under the Credit Facility, including the face amount of all Bankers’ Acceptances outstanding
thereunder.

“Amount” means the available funds under the Credit Facility not to exceed $35,000,000.

“Availment” means an availment by the Borrower permitted under the Credit Facility.

“Basis Points” or “bps” means one one-hundredth of (1%) one percent.

“Bankers’ Acceptance” means drafts or bills of exchange in Canadian Dollars drawn by the
Borrower and accepted by the Lender pursuant to the Credit Facility, or depository bills as defined
in the Depository Bills and Notes Act (Canada) in Canadian Dollars that are signed by the Borrower,
made payable to CDS and accepted by the Lender pursuant to the Credit Facility.

“Banking Day” means any day excluding Saturday, Sunday and any day which is a legal holiday
in Toronto, Ontario or Calgary, Alberta.

“Cdn. Dollars” or "Cdn. $” means such currency of Canada which, as at the time of
payment or determination, is legal tender in Canada for the payment of public or private debts.

“CDOR” means the arithmetic average of the yields to maturity for bankers’ acceptances
accepted by the Lender and quoted on the Reuter’s Canadian Deposit Offered Rate screen, at 10:00
a.m., (Toronto, Ontario time) on the applicable date on which an Availment will take place, for
bankers’ acceptances having a term similar to the term requested for each Bankers’ Acceptance
issued pursuant to the applicable Availment.

“Change of Control” means if any Person acquires, directly or indirectly, alone or in
concert with other Persons within the meaning of the Securities Act (Alberta), over a period of
time or at any one time, securities in the capital of the Borrower or the Guarantor aggregating in
excess of 50% of all of the then issued and outstanding Voting Shares of the Borrower or the
Guarantor.

“Default” means any event which, after notice or lapse of time or both, would become an
Event of Default.

 

-2-

“Deposit Account” has the meaning attributed to such term in the Account Control Agreement.

“Distribution”, in respect of any Person, means any:

	(a)	 	payment of any dividend on or in respect of any shares of any class in the capital of such
Person (including any shares thereof acquired through the exercise of warrants or rights of
conversion, exchange or purchase);

	 
	(b)	 	redemption, retraction, purchase or other acquisition or retirement, in whole or in part, of
 shares of any class in the capital of such Person (including any shares thereof acquired
through the exercise of warrants or rights of conversion, exchange or purchase); or

	 
	(c)	 	payment of principal, interest or other amounts in whole or in part, of any indebtedness of
such Person for borrowed money (including without limitation, any indebtedness incurred or
assumed by such Person pursuant to a capital lease or operating lease);

to (in the case of paragraphs (a) and (c) above) or by or from (in the case of paragraph (b) above)
any shareholder or any affiliate of a shareholder of such Person, whether made or paid in or for
cash, property or both, or the transfer of any property for consideration of less than fair market
value to any shareholder or any affiliate of a shareholder of such Person.

“Event of Default” means an Event of Default in the Events of Default provision in the
Credit Agreement.

“Floor Rate” means, for any day, the CDOR at or about 10:00 a.m., (Toronto time) on that
day, plus 1%.

“including” means “including without limitation”.

“Lender” means The Toronto-Dominion Bank, its successors and permitted assigns.

“Material Adverse Change” means a material adverse change in:

	(a)	 	the financial condition of the Guarantor on a consolidated basis;

	 
	(b)	 	the Borrower and the Guarantor’s collective ability to perform their respective obligations
under the Credit Agreement or the Security, where applicable;

	 
	(c)	 	the property, business, operations or liabilities of the Guarantor on a consolidated basis.

“Maturity Date” has the meaning given it under the heading “Maturity and Repayment”.

“Permitted Encumbrances” means with respect to the Guarantor, the Borrower or any of their
wholly-owned subsidiaries:

	(a)	 	undetermined or inchoate liens arising in the ordinary course of and incidental to
construction or current operations which have not been filed pursuant to law against the
Borrower or the Guarantor or in respect of which no steps or proceedings to enforce such
lien have been initiated or which relate to obligations which are not due or delinquent or
if due or delinquent, any lien which the Borrower or the Guarantor will be contesting in
good faith if such contest will involve, in the reasonable opinion of the Lender, no risk of
loss of any material part of the property of the Guarantor taken as a whole;

 

-3-

	(b)	 	liens incurred or created in the ordinary course of business and in accordance with sound
industry practice in respect of the joint operation of oil and gas properties or related
production or processing facilities as security in favour of a Person conducting the
development or operation of the property to which such liens relate, for the portion of the
costs and expenses of such development or operation, provided that such costs or expenses are
not due or delinquent or if due or delinquent, any lien which the Borrower or the Guarantor
will be contesting in good faith if such contest will involve, in the reasonable opinion of
the Lender, no risk of loss of any material part of the property of the Guarantor taken as a
whole;

	 
	(c)	 	to the extent a security interest is constituted or created thereby, a sale or disposition of
oil and gas properties resulting from any pooling or unit agreement entered into in the
ordinary course of business when, in the Guarantor’s reasonable judgement, it is necessary to
do so to facilitate the orderly exploration, development or operation of such properties,
provided that the resulting pooled or unitized interest is proportional to the interest
contributed and is not materially less than the interest in such oil and gas properties prior
to such pooling or unitization, and the obligations in respect thereof, are not greater than
the proportional share based on the interest acquired;

	 
	(d)	 	to the extent a security interest is constituted or created thereby, farmouts or overriding
royalty interests, net profit interests, reversionary interests and carried interests in
respect of oil and gas properties that are entered into with or granted to arm’s length third
parties in the ordinary course of business and in accordance with sound industry practice;

	 
	(e)	 	liens for penalties arising under non-participation provisions of operating agreements in
respect of oil and gas properties, if such liens do not, in the reasonable opinion of the
Lender, materially detract from the value of any material part of the property of the
Guarantor taken as a whole;

	 
	(f)	 	easements, rights-of-way, servitudes, zoning or other similar rights or restrictions in
respect of land (including rights-of-way and servitudes for railways, sewers, drains, pipe
lines, gas and water mains, electric light and power and telephone or telegraph or cable
television conduits, poles, wires and cables) which, either alone or in the aggregate, do not,
in the reasonable opinion of the Lender, materially detract from the value of such land or
materially impair its use in the operation of the business of the Guarantor taken as a whole;

	 
	(g)	 	any lien or trust arising in connection with worker’s compensation, unemployment insurance,
pension and employment laws or regulations;

 

-4-

	(h)	 	the right reserved to or vested in any municipality or governmental or other public authority
by the terms of any lease, license, franchise, grant or permit, or by any statutory provision
to terminate any such lease, license, franchise, grant or permit or to require annual or other
periodic payments as a condition of the continuance thereof;

	 
	(i)	 	all reservations in the original grant from the Crown of any lands and premises or any
interests therein and all statutory exceptions, qualifications and reservations in respect of
title;

	 
	(j)	 	to the extent a security interest is constituted or created thereby, any right of first
refusal in favour of any Person granted in the ordinary course of business;

	 
	(k)	 	any claim or encumbrance from time to time disclosed by the Borrower or the Guarantor to the
Lender and which is consented to in writing by the Lender;

	 
	(l)	 	to the extent a security interest is constituted or created thereby, sales of production made
in the ordinary course of business, leases, sale and leaseback transactions and purchase money
security interests on property;

	 
	(m)	 	public and statutory liens not yet due arising by operation of law;

	 
	(n)	 	any security interest securing any Permitted Indebtedness included within paragraph (c) of
the definition thereof; and

	 
	(o)	 	any security interest created by the Security.

“Permitted Indebtedness” means with respect to the Guarantor, the Borrower or any of their
wholly-owned subsidiaries:

	(a)	 	all trade payables and other similar indebtedness (other than indebtedness for borrowed
money) incurred in the normal course of business, provided each such indebtedness is
classified as a current liability on the consolidated financial statements of the Guarantor
and based on generally accepted accounting principles in the United States of America;

	 
	(b)	 	all indebtedness of the Borrower or the Guarantor to the Lender under the Credit Facility and
the Security;

	 
	(c)	 	all indebtedness arising from capital leases, purchase money security interests and the sale
and leaseback of personal property to be used in ongoing oil and gas operations or any other
indebtedness otherwise secured by a Permitted Encumbrance, provided such indebtedness does not
in the aggregate exceed at any one time $1,000,000; and

	 
	(d)	 	any other indebtedness consented to in writing by the Lender.

“Person” is to be broadly interpreted and will include an individual, a corporation, a
partnership, a trust, an unincorporated organization, a joint venture, the government of a country
or any
political subdivision thereof, or an agency or department of any such government, and the
executors, administrators or other legal representatives of an individual in such capacity.

 

-5-

“Prime Rate” means the variable rate of interest quoted by the Lender from time to time as
the reference rate of interest which it employs to determine the interest rate it will charge for
demand loans in Cdn. Dollars to its customers in Canada and which it designates as its prime rate.
If on the date an outstanding advance under the Credit Facility is converted into a Prime Rate
Loan, Prime Rate is less than the Floor Rate on that date, then the interest rate applicable to
such Prime Rate Loan will be the Floor Rate.

“Prime Rate Loan” means a loan in Cdn. Dollars made available hereunder which bears
interest calculated at the Prime Rate.

“Second Closing” means, collectively, each of the closings for the subscriptions by the
Underwriters or other Subscribers (as defined in the Underwriting Agreement) of flow-through shares
pursuant to section 10 of the Underwriting Agreement of not less than $12,200,000, with the last
such closing to occur no later than May 6, 2007.

“Underwriters” means the underwriters under the Underwriting Agreement.

“Underwriting Agreement” means the Underwriting Agreement dated March 6, 2007 between the
Guarantor and the Underwriters.

“Voting Shares” means shares of capital stock of any class of any corporation carrying
voting rights under all circumstances, provided that, for the purposes of this definition, shares
which only carry the right to vote conditionally on the happening of an event will not be
considered Voting Shares, whether or not such event will have occurred, nor will any shares be
deemed to cease to be Voting Shares of another class or classes by reason of the happening of such
event.

 

 

THIS IS SCHEDULE B TO THE CREDIT AGREEMENT BETWEEN

THE TORONTO-DOMINION BANK AND

OILSANDS QUEST SASK INC. DATED AS OF MARCH 19, 2007

FORM OF COMPLIANCE CERTIFICATE

			
	TO:                    	 	THE TORONTO-DOMINION BANK (the “Lender “)

			
	RE:                    	 	CREDIT AGREEMENT dated as of March 19, 2007 between Oilsands Quest
Sask Inc. (the “Borrower”), Oilsands Quest Inc. (the “Guarantor”) and
the Lender (as amended from time to time, the “Credit Agreement”).

This Compliance Certificate is delivered pursuant to the Credit Facility.

We are respectively the [Chief Executive Officer/Chief Operating Officer/Chief Financial
Officer/President/Vice President/Treasurer] [Note to draft: Delete as applicable] and the [Chief
Executive Officer/Chief Operating Officer/Chief Financial Officer/President/Vice
President/Treasurer] [Note to draft: Delete as applicable] of the Borrower;

This Compliance Certificate applies to the fiscal quarter of the Guarantor ending                     ,
2007;

We are familiar with and have examined the provisions of the Credit Agreement and we have made such
reasonable investigations of corporate records and inquiries of other officers and senior personnel
of the Borrower and of the Guarantor as we have deemed necessary for purposes of this Compliance
Certificate;

Based on the foregoing, neither of the Borrower nor the Guarantor is in breach of or has it
breached any provision of the Credit Agreement (other than as previously disclosed in writing to
the Lender) and no event or circumstance has occurred which constitutes, or which with the giving
of notice, lapse of time or both would constitute, an Event of Default thereunder;

Except as disclosed to the Lender in writing, each of the representations and warranties made in
the Credit Agreement were true and correct as at the last day of the fiscal quarter of each of the
Borrower and the Guarantor as set forth above.

 

-2-

This Compliance Certificate is given by the undersigned officers in their respective capacity as
officers of the Borrower or the Guarantor, as applicable, without any personal liability on the
part of such officers.

Made at the City of Calgary, in the Province of Alberta, this       day of                     ,
2007.

	 	 	 	 	 
	 	 	OILSANDS QUEST SASK INC.
	 
	 	 	 	 
	 

	 	By:	 	 
	 

	 	 	 	 
	 

	 	Name:	 	 
	 

	 	Title:	 	 
	 
	 	 	 	 
	 	 	OILSANDS QUEST INC.
	 
	 	 	 	 
	 

	 	By:	 	 
	 

	 	 	 	 
	 

	 	Name:	 	 
	 

	 	Title:	 	 

 

 

THIS IS SCHEDULE C TO THE CREDIT AGREEMENT BETWEEN

THE TORONTO-DOMINION BANK AND

OILSANDS QUEST SASK INC. DATED AS OF MARCH 19, 2007

FORM OF NOTICE OF BORROWING

			
	TO:                    	 	THE TORONTO-DOMINION BANK, as Lender

			
	RE:                    	 	CREDIT AGREEMENT dated as of March 19, 2007 between Oilsands Quest
Sask Inc. (the “Borrower”), Oilsands Quest Inc. (the “Guarantor”) and
the Lender (as amended from time to time, the “Credit Agreement”).

The undersigned, Oilsands Quest Sask Inc., hereby gives you notice, irrevocably, pursuant to the
Credit Agreement that the undersigned hereby requests a Borrowing under the Credit Agreement, and
in that connection sets forth below the information relating to such Borrowing (the “Proposed
Borrowing”) as required by the Credit Agreement:

	1.	 	The undersigned hereby irrevocably requests a Borrowing of an Availment on [•] (a Business
Day) in the amount of $[•] comprised of:

	 
	(a)	 	Prime Rate Loan(s) in the amount of $[•]; [and/or]

	 
	(b)	 	Bankers’ Acceptance(s) in the amount of $[•] having a term of [•].

	 
	2.	 	The undersigned hereby confirms and certifies that no Default or Event of Default has
occurred and is continuing.

	 
	3.	 	Capitalized words and phrases used herein and not otherwise defined herein have the same
meanings attributed to them in and for the purposes of the Credit Agreement.

	 
	4.	 	Delivery of an executed counterpart of this Notice of Borrowing by telecopier will be
effective as delivery of an original executed counterpart of this Notice of Borrowing.

DATED this
 _____ 
day of March, 2007.

	 	 	 	 	 
	 	 	OILSANDS QUEST SASK INC.
	 
	 	 	 	 
	 

	 	By:	 	 
	 

	 	 	 	 
	 

	 	Name:	 	 
	 

	 	Title:	 	 

 

 

THIS IS SCHEDULE D TO THE CREDIT AGREEMENT BETWEEN

THE TORONTO-DOMINION BANK AND

OILSANDS QUEST SASK INC. DATED AS OF MARCH 19, 2007

SUBSIDIARIES OF THE GUARANTOR

	1.	 	Oilsands Quest Sask Inc.

	 
	2.	 	Township Petroleum Corporation

	 
	3.	 	1291329 Alberta Ltd.

	 
	4.	 	Stripper Energy Services Inc., Anhydride Petroleum (USA) Inc. and Western Petrochemical
Corporation, all of which are inactive.

 

 

THIS IS SCHEDULE E TO THE CREDIT AGREEMENT BETWEEN

THE TORONTO-DOMINION BANK AND

OILSANDS QUEST SASK INC. DATED AS OF MARCH 19, 2007

FORM OF ACCOUNT CONTROL AGREEMENT

ACCOUNT CONTROL AGREEMENT

March 19, 2007

The Toronto-Dominion Bank, having an address at 800 Home Oil Tower, 324 – 8th
Avenue S.W., P.O. Box 2850, Calgary, AB T2P 2Z2 (“TD”); Oilsands Quest Sask Inc., having an address
at 205, 707 – 7th Avenue S.W., Calgary, AB T2P 3H6 (the “Borrower”); and Oilsands Quest Inc.,
having an address at 205, 707 – 7th Avenue S.W., Calgary, AB T2P 3H6 (the “Guarantor”), hereby
agree as follows:

PREAMBLE:

1. Pursuant to the terms of the Credit Agreement dated March 19, 2007 between the Borrower,
the Guarantor and the Lender (the “Credit Agreement”), the Borrower has covenanted to the Lender to
provide the Security as herein set forth. Capitalized terms used herein and not otherwise defined
herein will have the meaning attributed to such terms in the Credit Agreement.

2. As all or part of the Security, TD has established an account in the name of the Borrower
(the “Account”) into which Account the Borrower shall deposit, (i) initially $17,800,000 on or
prior to March 19, 2007, and (ii) not less than $12,200,000 on or prior to May 6, 2007
(collectively, the “Deposit Amount”). The Deposit Amount may from time to time, include cash
balances, term deposits, Government of Canada or provincial bonds or T-bills, or Canadian Schedule
1 bankers’ acceptances (the “Acceptable Market Securities”). The Account and the Acceptable Market
Securities are herein referred to as the “Collateral”.

3. The Borrower has agreed to provide to the Lender a security interest in the Collateral as
security for repayment of all of the obligations and liabilities of the Borrower to the Lender
arising under the Credit Agreement (the “Obligations”).

4. TD, the Borrower and the Guarantor are entering into this Agreement to evidence and perfect
the Security.

TERMS:

5. The Account. The Borrower hereby grants a security interest in and to the Collateral as general
and continuing collateral security for the due payment of the Obligations, and TD hereby confirms
to the Borrower and the Guarantor that the Account has been established in the name of the Borrower
as recited above. The parties agree that the Account is a “securities account” within the meaning
of Section 1(1)(dd) of the Securities Transfer Act (Alberta) as in effect from time to time in the
Province of Alberta (the “Act”) and that the Collateral held by TD in the Account will be treated
as financial assets under the Act.

 

-2-

6. Account. The Borrower hereby confirms that the Account is a cash account and that TD will not
advance any margin or other credit to the Guarantor or the Borrower nor hypothecate any securities
carried in the Account except in connection with the Security and the settlement of trading
activity permitted to be conducted by the Borrower hereunder.

7. Control. Except as otherwise provided in 8 below, TD shall comply with entitlement orders and
other instructions concerning the Account originated by the Borrower or its authorized
representatives to acquire solely with the use of the Collateral for deposit in the Account
Acceptable Market Securities which will form part of the Collateral, until such time as the Lender
delivers a written notice to the Borrower and the Guarantor that the Lender is thereby exercising
exclusive control over the Collateral as provided for in the Credit Agreement. Such notice is
referred to herein as the “Notice of Exclusive Control”. Until the Borrower and the Guarantor
receive a Notice of Exclusive Control, TD may distribute to the Borrower all interest and regular
cash dividends on the Collateral provided the aggregate value of Acceptable Market Securities does
not at any time, determined in the reasonable discretion of TD, fall below the Deposit Amount.
After the Borrower and the Guarantor receive a Notice of Exclusive Control, TD will cease complying
with entitlement orders or other instructions concerning the Account originated by the Borrower or
its representatives and cease distributing interest and dividends on the Collateral to the
Borrower. Until TD receives a Notice of Exclusive Control, TD shall be entitled to continue to act
on such instructions as are delivered in form satisfactory to TD.

8. No Withdrawals. Notwithstanding the provisions of 7 above, TD shall not comply with any
entitlement order from the Borrower requiring a free delivery of any financial assets from the
Account nor deliver any such financial assets to the Borrower nor pay any free credit balance or
other amount owing to the Borrower with respect to the Account, except for the distribution of
interest or dividends permitted under 7 above.

9. Statements, Confirmations and Notices of Adverse Claims. TD will send copies of all statements
and confirmations concerning the Account to the Borrower at the address set forth in the heading of
this Agreement.

10. Limited Responsibility. TD shall have no responsibility or liability to the Guarantor or the
Borrower for (i) complying or failing to comply with entitlement orders concerning the Account from
the Borrower or its authorized representatives; (ii) investigating or failing to investigate the
appropriateness of any such entitlement order, or (iii) determining or failing to determine the
value of the Account or any asset held therein. Notwithstanding anything herein to the contrary,
this Agreement does not create any obligation or duty of TD other than those expressly set forth
herein.

11. Indemnification of TD. The Guarantor and the Borrower hereby agree to indemnify and hold
harmless TD, its directors, officers, agents and employees against any and all claims, causes of
action, liabilities, lawsuits, demands and damages, including without limitation, any and all court
costs and reasonable attorney’s fees, in any way related to or arising out of or in connection with
this Agreement or any action taken or not taken pursuant hereto, except to the extent caused by
TD’s gross negligence or wilful misconduct.

12. Termination. This Agreement shall continue in effect until the Borrower and the Guarantor are
entitled to request from the Lender a full discharge and release of the Security as provided for in
the Credit Agreement

 

-3-

13. Complete Agreement. This Agreement, the instructions and notices required or permitted to be
executed and delivered hereunder and the Credit Agreement set forth in the entire agreement of the
parties with respect to the subject matter hereof.

14. Severability. If any term or provision set forth in this Agreement shall be invalid or
unenforceable, the remainder of this Agreement, other than those provisions held invalid or
unenforceable, shall be construed in all respects as if such invalid or unenforceable term or
provision were omitted.

15. Successors. The terms of this Agreement shall be binding upon, and shall inure to the benefit
of, the parties hereto and their respective successors and permitted assigns.

16. Notices. Except as otherwise expressly provided herein, any notice, order, instruction,
request or other communication required or permitted to be given under this Agreement shall be
given in accordance with the terms of the Credit Agreement.

17. Counterparts. This Agreement may be executed in any number of counterparts, all of which shall
constitute one and the same instrument, and any party hereto may execute this Agreement by signing
and delivering one or more counterparts.

18. Choice of Law. Regardless of any provision in any other agreement relating to the Account, the
parties hereto agree that the establishment and maintenance of the Account, and all interests,
duties and obligations with respect to the Account, shall be governed by the law of the Province of
Alberta.

	 	 	 	 	 
	 	 	THE TORONTO-DOMINION BANK, as Lender
	 
	 	 	 	 
	 

	 	By:	 	 
	 

	 	 	 	 
	 

	 	Name:	 	 
	 

	 	Title:	 	 
	 
	 	 	 	 
	 	 	OILSANDS QUEST SASK INC., as Borrower
	 
	 	 	 	 
	 

	 	By:	 	 
	 

	 	 	 	 
	 

	 	Name:	 	 
	 

	 	Title:	 	 

 

-4-

	 	 	 	 	 
	 	 	OILSANDS QUEST INC., as Guarantor
	 
	 	 	 	 
	 

	 	By:	 	 
	 

	 	 	 	 
	 

	 	Name:	 	 
	 

	 	Title:	 	 

 

 

THIS IS SCHEDULE F TO THE CREDIT AGREEMENT BETWEEN

THE TORONTO-DOMINION BANK AND

OILSANDS QUEST SASK INC. DATED AS OF MARCH 19, 2007

FORM OF NOTICE OF ROLLOVER/CONVERSION

			
	TO:                    	 	THE TORONTO-DOMINION BANK, as Lender

			
	RE:                    	 	CREDIT AGREEMENT dated as of March 19, 2007 between Oilsands Quest
Sask Inc. (the “Borrower”), Oilsands Quest Inc. (the “Guarantor”) and
the Lender (as amended from time to time, the “Credit Agreement”).

The undersigned hereby requests a [rollover/conversion] under the Credit Agreement, and in that
connection sets forth below the information relating to such [rollover/conversion]:

	1.	 	A Conversion as follows:

	 
	(a)	 	its [Prime Rate Loan/Bankers’ Acceptance(s)];

	 
	(b)	 	in the amount of $[•];

	 
	(c)	 	with a maturity date (if applicable) of [•]

	 
	 	 	into the following Loan(s):

	 
	(a)	 	[Prime Rate Loan/Bankers’ Acceptances];

	 
	(b)	 	in the amount of $[•];

	 
	(c)	 	with a maturity date (if applicable) of [•];

	 
	(d)	 	effective the [•] day of [•], 20[•]; [and/or]

	 
	2.	 	A Rollover as follows:

	 
	(a)	 	its Bankers’ Acceptances Loan(s);

	 
	(b)	 	in the amount of $[•];

	 
	(c)	 	with a maturity date (if applicable) of [•];

	 
	 	 	into the following Bankers’ Acceptances:

	 
	(a)	 	Bankers’ Acceptances;

	 
	(b)	 	in the amount of $[•];

 

-2-

	(c)	 	with a maturity date (if applicable) of [•];

	 
	(d)	 	effective the [•] day of [•], 2007.

	 
	3.	 	The undersigned hereby confirms and certifies that no Default or Event of Default has
occurred and is continuing.

	 
	4.	 	Capitalized words and phrases used herein and not otherwise defined herein have the same
meanings attributed to them in and for the purposes of the Credit Agreement.

	 
	5.	 	Delivery of an executed counterpart of this Notice of Rollover/Conversion by telecopier will
be effective as delivery of an original executed counterpart of this Notice of
Rollover/Conversion.

DATED this
 _____ 
day of [•], 2007.

	 	 	 	 	 
	 	 	OILSANDS QUEST SASK INC.
	 
	 	 	 	 
	 

	 	By:	 	 
	 

	 	 	 	 
	 

	 	Name:	 	 
	 

	 	Title:Filed by Bowne Pure Compliance

 

Exhibit 10.24

CANADA — AB, BC, MB, ON, SK

SUBSCRIPTION AGREEMENT FOR FLOW-THROUGH SHARES

INSTRUCTIONS: To properly complete this Subscription Agreement:

	(1)	 	All subscribers must complete all boxes on this face page and page 2 to this face page and sign this face page.

	 
	(2)	 	All subscribers must complete and sign Exhibit 1.

	 
	(3)	 	If the subscriber is a fully managed account, please complete the “Name of Subscriber” below in the following format: “Account
 _____ 
by [insert name of adviser, trust company or trust corporation]”.

	 
	(4)	 	All completed documents should be returned to TD Securities Inc., 77 King Street West, Toronto, Ontario M5K 1A5 Attention: Mary Ziotas; Telephone (416) 308-3770; Fax (416) 308-1335; E-mail — mary.ziotas@tdsecurites.com, no later than March 2, 2007.

This agreement is comprised of 12 pages (not including Exhibit 1).

	 	 	 
	TO:

	 	Oilsands Quest Inc. (the “Corporation”)
	 
	 	 
	AND TO:

	 	Oilsands Quest Sask Inc. (“OQSI”)
	 
	 	 
	AND TO:

	 	TD Securities Inc., CIBC World Markets Inc., J.F. Mackie & Company
Ltd., Genuity Capital Markets and Peters & Co. Limited
(collectively, the “Underwriters”)

The undersigned (hereinafter referred to as the “Subscriber”) hereby irrevocably subscribes for
and agrees to purchase the number of common shares of the Corporation to be issued on a
“flow-through” basis pursuant to the Income Tax Act (Canada) (“Flow-Through Shares”) set forth
below for the aggregate subscription price set forth below (the “Aggregate Flow-Through
Subscription Price”), representing a subscription price of $5.64 per Flow-Through Share, upon and
subject to the adjustments, terms and conditions set forth in “Terms and Conditions of Subscription
for Flow-Through Shares of Oilsands Quest Inc.” attached hereto (together with the face pages and
Exhibit 1 hereto, the “Subscription Agreement”).

 

(Name of Subscriber — please print)

	 	 	 
	By:
	 	 
	 

	 	 
	 

	 	(Authorized Signature)

 

(Official Capacity or Title — please print)

 

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

 

(Subscriber’s Address)

 

 

			
	(Telephone Number)
	 	(E-Mail Address)

 

(Social Insurance Number, Federal Corporate Tax Account Number or Tax Shelter
ID Number)

Register the Flow-Through Shares as set forth below:

 

(Name)

 

(Account reference, if applicable)

 

(Address)

 

Number of Flow-Through Shares:

Aggregate Flow-Through Subscription Price:

If the Subscriber is signing as agent for a principal pursuant to paragraph
6(e), complete the following and ensure that Exhibit 1 is completed in respect
of each such principal:

 

(Name of Principal)

 

(Principal’s Address)

 

(Principal’s Social Insurance Number, Federal Corporate Tax Account Number or
Tax Shelter ID Number)

 

Deliver the Flow-Through Shares as set forth below:

 

(Name)

 

(Account reference, if applicable)

 

(Contact Name)

 

(Address)

 

(SUBSCRIBERS MUST ALSO COMPLETE THE SECOND PAGE OF THIS FACE PAGE)

 

 

					
	 
	 	-2-
	 	CANADA — AB, BC, MB, ON, SK

Subscriber’s Present Holdings:

The Subscriber represents that securities of the
Corporation presently owned (beneficially, directly or
indirectly) by the Subscriber are as follows (please
indicate “nil” if you do not currently own any securities
of the Corporation):

	 	 	 
	Type of Securities Presently Owned

	 	Number or Amount
	 
	 	 
	 

	 	 
	 
	 	 
	 

	 	 
	 
	 	 
	 

	 	 

ACCEPTANCE: The Corporation hereby accepts the subscription as set forth above on the terms and
conditions contained in this Subscription Agreement and the Corporation represents and warrants to
the Subscriber that the representations and warranties made by the Corporation to the Underwriters
in the Underwriting Agreement (as defined herein) are true and correct in all material respects as
of the Closing Date (as defined herein) (save and except as waived by the Underwriters) and that
the Subscriber is entitled to rely thereon.

	 	 	 	 	 
	 

	 	, 2007
	 	 
	 

	 	 	 	 

	 	 	 	 	 	 	 
	OILSANDS QUEST INC.	 	 	 	Subscription No:
	 
	 	 	 	 	 	 
	By:

	 	 	 	 	 	 
	 

	 	 	 	 	 	 

ACCEPTANCE: OQSI hereby agrees to be bound by the joint and several indemnification provisions set
forth in paragraph 9(g) of this Subscription Agreement and OQSI represents and warrants to the
Subscriber that the representations and warranties made by OQSI to the Underwriters in the
Underwriting Agreement are true and correct in all material respects as of the Closing Date (save
and except as waived by the Underwriters) and that the Subscriber is entitled to rely thereon.

	 	 	 	 	 
	 

	 	, 2007
	 	 
	 

	 	 	 	 

	 	 	 	 	 	 	 
	OILSANDS QUEST SASK INC.	 	 	 	 
	 
	 	 	 	 	 	 
	By:

	 	 	 	 	 	 
	 

	 	 	 	 	 	 

 

 

 

					
	 
	 	-3-
	 	CANADA — AB, BC, MB, ON, SK

TERMS AND CONDITIONS OF SUBSCRIPTION FOR

FLOW-THROUGH SHARES OF OILSANDS QUEST INC.

Terms of the Offering

	1.	 	The Subscriber acknowledges (on its own behalf and, if applicable, on behalf of each
person on whose behalf the Subscriber is contracting) that this subscription is subject to
rejection or allotment by the Corporation in whole or in part and is effective only upon acceptance
by the Corporation. If this subscription is rejected or allotted in whole or in part, the
Subscriber acknowledges that the unused portion of the Aggregate Flow-Through Subscription Price
will be promptly returned to the Subscriber without interest or deduction.

	 
	2.	 	The Subscriber acknowledges (on its own behalf and, if applicable, on behalf of each
person on whose behalf the Subscriber is contracting) that the Flow-Through Shares subscribed for
by it hereunder form part of a larger issuance and sale by the Corporation of 5,320,000
Flow-Through Shares at a subscription price of $5.64 per Flow-Through Share (subject to adjustment
as provided in paragraph 4 hereof) for aggregate gross proceeds of $30,004,800 (the “Offering”).

	 
	3.	 	The Subscriber acknowledges (on its own behalf and, if applicable, on behalf of each
person on whose behalf the Subscriber is contracting) that the gross proceeds of the Offering will
be used by the Corporation immediately after the Closing Date (as hereinafter defined) to subscribe
for common shares of OQSI issued on a flow-through basis and OQSI will renounce to the Corporation
an amount of Qualifying Expenditures (as hereinafter defined) equal to the Commitment Amount (as
hereinafter defined).

	 
	4.	 	The Corporation will use commercially reasonable efforts to cause the Flow-Through
Shares to be included in a shelf registration statement (the “Registration Statement”) filed with
the U.S. Securities and Exchange Commission (the “SEC”) with respect to the resale of the
Flow-Through Shares in the United States within 60 days of the Closing Date (as defined herein).
If the Corporation does not file the Registration Statement with the SEC on or before 5:00 p.m.
(Calgary time) on the sixtieth day following the Closing Date (the “Adjustment Date”) then at 5:01
p.m. (Calgary time) on the Adjustment Date, the subscription price per Flow-Through Share will be
reduced to $5.13 per Flow-Through Share, and such reduction in price shall be satisfied by the
Corporation forthwith issuing to the Subscriber 0.1 of a Flow-Through Share for each Flow-Through
Share subscribed for by the Subscriber pursuant to the terms of this Subscription Agreement and
certificates representing such Flow-Through Shares will be registered and delivered as specified on
the face page of this Subscription Agreement. In no event shall fractional Flow-Through Shares be
issued in connection with the adjustment referred to in this paragraph 4 or payment made in lieu
thereof. All fractional Flow-Through Shares shall be rounded down to the nearest whole number of
Flow-Through Shares.

	 
	5.	 	The Corporation will use its commercially reasonable efforts to cause: (i) the shelf
registration statement to be declared effective as soon as practicable, but no later than six
months from the Closing Time (as hereinafter defined); and (ii) the shelf registration statement to
remain effective, subject to reasonable blackout periods, until the date that is 1 year following
the Closing Date.

Representations, Warranties and Covenants by Subscriber

	6.	 	The Subscriber (on its own behalf and, if applicable, on behalf of each person on whose
behalf the Subscriber is contracting) represents, warrants and covenants to the Corporation, OQSI
and the Underwriters and their respective counsel (and acknowledges that the Corporation, OQSI and
the Underwriters, and their respective counsel, are relying thereon) both at the date hereof and at
the Closing Time (as defined herein) that:

	 	(a)	 	it has been independently advised as to restrictions with respect to trading in the
Flow-Through Shares imposed by applicable securities laws, confirms that no representation
(written or oral) has been made to it by or on behalf of the Corporation, OQSI or the
Underwriters with respect thereto, acknowledges that it is aware of the characteristics of the
Flow-Through Shares and the risks relating to an investment therein and of the fact that it
may not be able to resell the Flow-Through Shares except in accordance with limited exemptions
under applicable securities legislation until expiry of the applicable hold period or
restricted period and compliance with the other requirements of applicable law, and it agrees
that any certificates representing the Flow-Through Shares will bear a legend indicating that
the resale of such Flow-Through Shares is restricted;

 

 

 

					
	 
	 	-4-
	 	CANADA — AB, BC, MB, ON, SK

	 	(b)	 	it has not received or been provided with, nor has it requested, nor does it have any
need to receive, any offering memorandum, any prospectus, sales or advertising literature, or
any other document (other than an annual report, annual information form, interim report,
information circular or any other continuous disclosure document, other than an offering
memorandum, the content of which is prescribed by statute or regulation) describing or
purporting to describe the business and affairs of the Corporation which has been prepared for
delivery to, and review by, prospective purchasers in order to assist it in making an
investment decision in respect of the Flow-Through Shares; and

	 	(c)	 	it has not become aware of any advertisement in printed media of general and regular
paid circulation (or other printed public media), radio, television or telecommunications or
other form of advertisement (including electronic display) with respect to the distribution
of the Flow-Through Shares; and

	 	(d)	 	unless it is purchasing under paragraph 6(e) or (f), it is purchasing the Flow-Through
Shares as principal for its own account, not for the benefit of any other person, for
investment only and not with a view to the resale or distribution of all or any of the
Flow-Through Shares, it is resident in or otherwise subject to applicable securities laws of
the jurisdiction set out as the “Subscriber’s Address” on the face page hereof and it is an
“accredited investor”, as such term is defined in National Instrument 45-106 — “Prospectus and
Registration Exemptions” (“NI 45-106”) promulgated under the securities legislation of all of
the provinces of Canada (other than Quebec), it was not created or used solely to purchase or
hold securities as an “accredited investor” as described in paragraph (m) of the definition of
“accredited investor” in NI 45-106 and has concurrently executed and delivered a
Representation Letter in the form attached as Exhibit 1 to this Subscription Agreement and has
initialed in Appendix “A” thereto indicating that the Subscriber satisfies (and will satisfy
at the Closing Time) one of the categories of “accredited investor” set forth in such
definition; and

	 	(e)	 	if it is purchasing the Flow-Through Shares and is acting as agent for one or more
disclosed principals, each of such principals is purchasing as principal for its own account,
not for the benefit of any other person, for investment only, and not with a view to the
resale or distribution of all or any of the Flow-Through Shares, and

	 	(i)	 	each of such principals complies with paragraph 6(d) hereof and the Subscriber
acknowledges the Corporation is required by law to disclose to certain regulatory
authorities the identity of each beneficial purchaser of Flow-Through Shares for whom
it may be acting, it is resident in the jurisdiction set out as the “Subscriber’s
Address” and each beneficial purchaser is resident in the jurisdiction set out as the
“Principal’s Address”; and

	 	(ii)	 	if it is not an individual, it pre-existed the offering of the Flow-Through
Shares and has a bona fide business purpose other than the investment in the
Flow-Through Shares and was not created, formed or established solely or primarily to
acquire securities, or to permit purchases of securities without a prospectus, in
reliance on an exemption from the prospectus requirements of applicable securities
legislation; and

	 	(f)	 	if it is a resident of or otherwise subject to applicable securities laws of any
jurisdiction other than the Provinces of Alberta, British Columbia, Manitoba, Ontario or
Saskatchewan, it is resident in the jurisdiction set out as the “Subscriber’s address”, it is
an “accredited investor” as such term is defined in NI 45-106 and has concurrently executed
and delivered a Representation Letter in the form attached as Exhibit 1 to this Subscription
Agreement and has initialed in Appendix “A” thereto indicating that the Subscriber satisfies
(and will satisfy at the Closing Time) one of the categories of “accredited investor” set
forth in such definition and, it, or any beneficial purchaser for whom it is acting, complies
with the requirements of all applicable securities legislation in the jurisdiction of its
residence and will provide such evidence of compliance with all such matters as the
Corporation, OQSI or the Underwriters may request; and

	 	(g)	 	if it is resident in Alberta, British Columbia, Manitoba, Ontario or Saskatchewan and
it is one of the following and the Subscriber has so indicated by initialling the applicable
paragraph:

	 	 	 	 	 	 	 
	 

	 	          
	 	(I)
	 	an employee, “executive officer”, “director” or
“consultant” (as such terms are defined in National Instrument 45-106
and reproduced in Appendix A to Exhibit 1 of this
Subscription Agreement) of the Corporation and participation in the
trade is “voluntary”, meaning it is not induced to participate in the
trade by expectation of employment or continued employment with,
appointment or continued appointment with, or engagement to provide
services or continued engagement to provide services to, as applicable,
the Corporation; or

 

 

 

					
	 
	 	-5-
	 	CANADA — AB, BC, MB, ON, SK

	 	 	 	 	 	 	 
	 

	 	          
	 	(II)
	 	an employee, “executive officer”, “director” or
“consultant” of a “related entity” (as such term is defined in National
Instrument 45-106 and reproduced in Appendix A to Exhibit 1 of this
Subscription Agreement) of the Corporation and participation in the
trade is voluntary (as defined above); or

	 	 	 	 	 	 	 
	 

	 	          
	 	(III)
	 	a “permitted assign” (as such term is defined in
National Instrument 45-106 and reproduced in Appendix A to Exhibit 1 of
this Subscription Agreement) of a person referred to in paragraphs (I)
or (II) and participation in the trade is voluntary (as defined above);
and

	 	(h)	 	it is purchasing the Flow-Through Shares pursuant to paragraph 6(d), (e), (f) or (g), and:

	 	(i)	 	the Flow-Through Shares have not been offered to the Subscriber in the United
States and the Subscriber and the individuals making the order to purchase the
Flow-Through Shares and executing and delivering this Subscription Agreement on behalf
of the Subscriber were not in the United States when the order was placed and this
Subscription Agreement was executed and delivered; and

	 	(ii)	 	it is not a U.S. person (a “U.S. Person”) (as defined in Regulation S under the
United States Securities Act of 1933, as amended (the “U.S. Securities Act”), which
definition includes, but is not limited to, an individual resident in the United
States, an estate or trust of which any executor or administrator or trustee,
respectively, is a U.S. Person and any partnership or corporation organized or
incorporated under the laws of the United States and any partnership or corporation if
organized or incorporated under the laws of any foreign jurisdiction and formed by a
U.S. Person principally for the purpose of investing in securities not registered under
the U.S. Securities Act, unless it is organized or incorporated and owned by
“accredited investors” (as such term is defined in Rule 501(a) of Regulation D under
the U.S. Securities Act) who are not natural persons, estates or trusts) and is not
purchasing the Flow-Through Shares on behalf of, or for the account or benefit of, a
person in the United States or a U.S. Person; and

	 	(i)	 	it is aware that the Flow-Through Shares have not been and will not be registered
under the U.S. Securities Act or the securities laws of any state and that these securities
are not being offered or sold in the United States, it understands that the Flow-Through
Shares are “restricted securities” as defined in Rule 144 under the U.S. Securities Act and
agrees that if it decides to offer, sell or otherwise transfer the Flow-Through Shares, such
 shares may only be offered, sold or otherwise transferred in accordance with the provisions of
Regulation S under the U.S. Securities Act, pursuant to registration under the U.S. Securities
Act, or pursuant to an available exemption from registration under the U.S. Securities Act and
applicable State securities laws and it agrees not to engage in hedging transactions with
regard to the Flow-Through Shares unless in compliance with the U.S. Securities Act; and it
acknowledges that the certificates representing the Flow-Through Shares (and all certificates
issued in exchange therfor or in substitution thereof) will bear a legend to the effect that
transfer is prohibited except in accordance with the provisions of Regulation S, pursuant to
registration under the U.S. Securities Act, or pursuant to an available exemption from
registration under the U.S. Securities Act and applicable State securities laws, and that
hedging transactions involving the securities may not be conducted unless in compliance with
the U.S. Securities Act, until such time as such legend is no longer required under applicable
requirements of the U.S. Securities Act or applicable state securities laws; and

 

 

 

					
	 
	 	-6-
	 	CANADA — AB, BC, MB, ON, SK

	 	(j)	 	it acknowledges that:

	 	(i)	 	no securities commission or similar regulatory authority has reviewed or passed
on the merits of the Flow-Through Shares; and

	 
	 	(ii)	 	there is no government or other insurance covering the Flow-Through Shares; and

	 
	 	(iii)	 	there are risks associated with the purchase of the Flow-Through Shares; and

	 
	 	(iv)	 	there are restrictions on the Subscriber’s ability to resell the Flow-Through
Shares and it is the responsibility of the Subscriber to find out what those
restrictions are and to comply with them before selling the Flow-Through Shares; and

	 
	 	(v)	 	the Corporation has advised the Subscriber that the Corporation is relying on
an exemption from the requirements to provide the Subscriber with a prospectus and to
sell securities through a person or company registered to sell securities under the
Securities Act (Alberta) and other applicable securities laws and, as a consequence of
acquiring securities pursuant to this exemption, certain protections, rights and
remedies provided by the Securities Act (Alberta) and other applicable securities laws,
including statutory rights of rescission or damages, will not be available to the
Subscriber; and

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

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

	 	(m)	 	the entering into of this Subscription Agreement and the completion of the
transactions contemplated hereby will not result in a violation of any of the terms or
provisions of any law applicable to the Subscriber, or if the Subscriber is not a natural
person, any of the Subscriber’s constating documents, or any agreement to which the Subscriber
is a party or by which it is bound; and

	 	(n)	 	if the Subscriber is a body corporate, it is duly incorporated and validly subsisting
under the laws of its jurisdiction of incorporation; and

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

	 	(p)	 	in the case of a subscription by it for Flow-Through Shares acting as agent for a
disclosed principal, it is duly authorized to execute and deliver this Subscription Agreement
and all other necessary documentation in connection with such subscription on behalf of such
principal and this Subscription Agreement has been duly authorized, executed and delivered by
or on behalf of, and constitutes a legal, valid and binding agreement of, such principal; and

	 	(q)	 	it has such knowledge in financial and business affairs as to be capable of evaluating
the merits and risks of its investment and is able to bear the economic risk of loss of its
investments or, where it is not purchasing as principal, each beneficial purchaser is able to
bear the economic risk of loss of its investment; and

	 	(r)	 	the Subscriber confirms that neither the Corporation, OQSI, the Underwriters nor any
of their representative directors, employees, officers or affiliates, have made any
representations (written or oral) to the Subscriber: (i) regarding the future value of the
Flow-Through Shares; (ii) that any person will resell or repurchase the Flow-Through Shares;
or (iii) that any person will refund the purchase price of the Flow-Through Shares other than
as provided in this Subscription Agreement; and

 

 

 

					
	 
	 	-7-
	 	CANADA — AB, BC, MB, ON, SK

	 	(s)	 	except for the representations and warranties made by the Corporation to the
Underwriters in the Underwriting Agreement, it has relied solely upon publicly available
information relating to the Corporation and not upon any
verbal or written representation as to fact or otherwise made by or on behalf of the
Corporation, OQSI or the Underwriters, such publicly available information having been
delivered to the Subscriber without independent investigation or verification by the
Underwriters, and agrees that the Underwriters and the counsel to the Underwriters assume no
responsibility or liability of any nature whatsoever for the accuracy, adequacy or
completeness of the publicly available information or as to whether all information
concerning the Corporation required to be disclosed by the Corporation has been generally
disclosed and acknowledges that the Corporation’s counsel, OQSI’s counsel and the counsel to
the Underwriters are acting as counsel to the Corporation, OQSI and the Underwriters
respectively, and not as counsel to the Subscriber; and

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

	 	(u)	 	if required by applicable securities legislation, regulations, rules, policies or
orders or by any securities commission, stock exchange or other regulatory authority, the
Subscriber will execute, deliver, file and otherwise assist the Corporation in filing such
reports, undertakings and other documents with respect to the issue of the Flow-Through Shares
(including, without limitation, a Representation Letter in the form attached as Exhibit 1);
and

	 	(v)	 	it undertakes and agrees that it will not offer or sell the Flow-Through Shares in the
United States unless such securities are registered under the U.S. Securities Act and the
securities laws of all applicable states of the United States or an exemption from such
registration requirements is available; and

	 	(w)	 	it will not resell the Flow-Through Shares except in accordance with the provisions of
applicable securities legislation and stock exchange rules; and

	 	(x)	 	the acquisition of the Flow-Through Shares hereunder by the Subscriber will not result
in the Subscriber becoming a “control person”, as defined under applicable securities laws;
and

	 	(y)	 	the Subscriber does not act jointly or in concert with any other person or company for
the purposes of acquiring securities of the Corporation; and

	 	(z)	 	the Subscriber acknowledges that the Corporation may complete additional equity
financings in the future which may have a dilutive effect on the Subscriber’s shareholdings in
the Corporation; and

	 	(aa)	 	the funds representing the Aggregate Flow-Through Subscription Price which will be
advanced by the Subscriber hereunder will not represent proceeds of crime for the purposes of
the Proceeds of Crime (Money Laundering) and Terrorist Financing Act (Canada) and the
Subscriber acknowledges that the Corporation or the Underwriters may in the future be required
by law to disclose the Subscriber’s name and other information relating to this Subscription
Agreement and the Subscriber’s subscription hereunder, on a confidential basis, pursuant to
the Proceeds of Crime (Money Laundering) and Terrorist Financing Act (Canada) and to the best
of the Subscriber’s knowledge (i) none of the subscription funds to be provided by the
Subscriber (A) have been or will be derived from or related to any activity that is deemed
criminal under the law of Canada, the United States of America, or any other jurisdiction, or
(B) are being tendered on behalf of a person or entity who has not been identified to the
Subscriber, and (ii) it shall promptly notify the Corporation and the Underwriters if the
Subscriber discovers that any of such representations ceases to be true, and to provide the
Corporation and the Underwriters with appropriate information in connection therewith; and

 

 

 

					
	 
	 	-8-
	 	CANADA — AB, BC, MB, ON, SK

	 	(bb)	 	it acknowledges that this Subscription Agreement and the Exhibit hereto require the
Subscriber (or any beneficial purchaser for whom the Subscriber is contracting) to provide
certain personal information to the Corporation and the
Underwriters. Such information is being collected by the Corporation, OQSI and the
Underwriters for the purposes of completing the offering of Flow-Through Shares, which
includes, without limitation, determining the Subscriber’s (or any beneficial purchaser for
whom the Subscriber is contracting) eligibility to purchase the Flow-Through Shares under
applicable securities legislation, preparing and registering any certificates representing
Flow-Through Shares to be issued to the Subscriber and completing filings required by any
stock exchange or securities regulatory authority or by the Canada Revenue Agency (the
“CRA”). The Subscriber’s (or any beneficial purchaser for whom the Subscriber is
contracting) personal information may be disclosed by the Corporation, OQSI or the
Underwriters to: (a) stock exchanges or securities regulatory authorities or the CRA, (b)
the Corporation’s registrar and transfer agent, and (c) any of the other parties involved in
the offering, including legal counsel to the Corporation, OQSI and the Underwriters. By
executing this Subscription Agreement, the Subscriber (or any beneficial purchaser for whom
the Subscriber is contracting) consents to the foregoing collection, use and disclosure of
the Subscriber’s (or any beneficial purchaser for whom the Subscriber is contracting)
personal information. The Subscriber (or any beneficial purchaser for whom the Subscriber is
contracting) also consents to the filing of copies or originals of any of the Subscriber’s
(or any beneficial purchaser for whom the Subscriber is contracting) documents described in
Section 11 below as may be required to be filed with any stock exchange or securities
regulatory authority or the CRA in connection with the transactions contemplated hereby.
Without limiting the generality of the foregoing, the Subscriber (or any beneficial
purchaser for whom the Subscriber is contracting) (if resident in the Province of Ontario)
further acknowledges that: (a) the Corporation will deliver to the Ontario Securities
Commission (the “OSC”) the Subscriber’s (or any beneficial purchaser for whom the Subscriber
is contracting) full name, residential address and telephone number, the number of
Flow-Through Shares purchased by the Subscriber (or any beneficial purchaser for whom the
Subscriber is contracting) hereunder, the total purchase price paid by the Subscriber (or
any beneficial purchaser for whom the Subscriber is contracting) hereunder, the exemption
under applicable securities laws relied upon in respect of the Subscriber’s (or any
beneficial purchaser for whom the Subscriber is contracting) purchase of Flow-Through Shares
hereunder and the date the Flow-Through Shares subscribed for hereunder were distributed to
the Subscriber (or any beneficial purchaser for whom the Subscriber is contracting); (b) the
information set forth in (a) immediately above is being collected indirectly by the OSC
under the authority granted to it under securities legislation for the purposes of the
administration and enforcement of the securities legislation of Ontario; and (c) the title,
business address and telephone number of the public official in Ontario who can answer
questions about the OSC’s indirect collection of the information is as follows:
Administrative Assistant to the Director of Corporate Finance, Suite 1903, Box 5520 Queen
Street West, Toronto, Ontario, M5H 3S8, Telephone (416) 593-8086. The Subscriber (or any
beneficial purchaser for whom the Subscriber is contracting) (if resident in the Province of
Ontario) hereby authorizes the indirect collection of the information set forth in (a)
immediately above by the OSC; and

	 	(cc)	 	the Subscriber acknowledges that it has been encouraged to obtain independent legal,
income tax and investment advice with respect to its subscription for the Flow-Through Shares
and accordingly, has had the opportunity to acquire an understanding of the meanings of all
terms contained herein relevant to the Subscriber for purposes of giving representations,
warranties and covenants under this Subscription Agreement.

Matters Relating to the Flow-Through Shares

	7.	 	In addition to other terms defined herein, for the purposes of paragraphs 7, 8, 9 and
10 hereof, the following words and phrases have the following meanings:

	 	(a)	 	“Act” means the Income Tax Act (Canada), together with any and all regulations
promulgated thereunder, as amended from time to time;

	 	(b)	 	“Canadian Exploration Expense(s)” or “CEE” means Canadian exploration expense
described in paragraphs (a), (d) or (f) of the definition of “Canadian exploration expense” in
subsection 66.1(6) of the Act or that would be described in paragraph (h) of such definition
if the reference therein to “paragraphs (a) to (d) and (f) to (g.1)” were a reference to
“paragraphs (a), (d) or (f)”, excluding amounts which are prescribed to constitute “Canadian
exploration and development overhead expense” under the Act, the amount of any assistance
described in paragraph 66(12.6)(a) of the Act and any expense described in paragraph
66(12.6)(b.1) of the Act;

 

 

 

					
	 
	 	-9-
	 	CANADA — AB, BC, MB, ON, SK

	 	(c)	 	“Commitment Amount” means the Aggregate Flow-Through Subscription Price indicated on
the face-page of this Subscription Agreement;

	 	(d)	 	“Expenditure Period” means the period commencing on the date of acceptance by the
Corporation of this Subscription Agreement and ending on the earlier of the date on which the
Commitment Amount has been fully expended in accordance with the terms hereof, and December
31, 2008;

	 	(e)	 	“Principal Business Corporation” means a principal-business corporation as defined in
subsection 66(15) of the Act; and

	 	(f)	 	“Qualifying Expenditures” means expenses that are CEE on the date that they are
incurred or are deemed to be incurred.

	8.	 	The Corporation hereby represents and warrants to the Subscriber (on its own behalf
and, if applicable, on behalf of each person on whose behalf the Subscriber is contracting) and
acknowledges that the Subscriber is relying thereon that:

	 	(a)	 	the Corporation has the full corporate right, power and authority to enter into this
Subscription Agreement, to issue the Flow-Through Shares and to incur and renounce to the
Subscriber Qualifying Expenditures in an amount equal to the Commitment Amount; and

	 	(b)	 	as at the date hereof, the Corporation has no reason to believe that it will be unable
to incur Qualifying Expenditures during the Expenditure Period in an amount equal to the
Commitment Amount, that it will be unable to renounce to the Subscriber effective on or before
December 31, 2007 Qualifying Expenditures in an amount equal to the Commitment Amount or to
expect any reduction of such amount by virtue of subsection 66(12.73) of the Act; and

	 	(c)	 	the incurring and renunciation of Qualifying Expenditures to the Subscriber pursuant
hereto, does not and will not constitute a breach of or default under the constating documents
of the Corporation or any law, regulation, order or ruling applicable to the Corporation or
any agreement, contract or indenture to which the Corporation is a party or by which it is
bound; and

	 	(d)	 	the Corporation is, and at all material times will be, a Principal Business
Corporation; and

	 	(e)	 	upon issuance pursuant to the provisions hereof, the Flow-Through Shares will be
“flow-through shares” as defined in subsection 66(15) of the Act and will not constitute
“prescribed shares” for the purpose of Regulation 6202.1 of the Act assuming that there are no
agreements, arrangements, obligations or undertakings as contemplated by such provisions in
respect of the Flow-Through Shares to which, or in respect of which, the Corporation is not a
party and in respect of which the Corporation has no knowledge; and

	 	(f)	 	the Corporation is related to OQSI within the meaning of the Act, and will be related
to OQSI at all times during the Expenditure Period.

	9.	 	The Corporation covenants and agrees with the Subscriber:

	 	(a)	 	to keep proper books, records and accounts, including books, records and accounts of
all Qualifying Expenditures and all transactions affecting the Commitment Amount and the
Qualifying Expenditures, and, in the event the Canada Revenue Agency denies or proposes to
deny the deduction of Qualifying Expenditures renounced to the Subscriber hereunder and upon
reasonable notice and on a reasonable basis, to make such books, records and accounts
available for inspection and review by or on behalf of the Subscriber at the Subscriber’s
expense for the sole purpose of responding to the demand or proposal of the Canada Revenue
Agency; and

	 	(b)	 	to incur (or be deemed to incur pursuant to subsection 66(12.61) of the Act), during
the Expenditure Period, Qualifying Expenditures in such amount as enables the Corporation to
renounce to the Subscriber, Qualifying Expenditures in an amount equal to the Commitment
Amount effective on or before December 31, 2007; and

 

 

 

					
	 
	 	-10-
	 	CANADA — AB, BC, MB, ON, SK

	 	(c)	 	to renounce to the Subscriber, effective on or before December 31, 2007, Qualifying
Expenditures incurred (or deemed to be incurred) during the Expenditure Period as required
under the Act in an amount equal to the Commitment Amount; and

	 	(d)	 	to deliver to the Subscriber within the time periods required by the Act, and in any
event not later than March 31, 2008, a statement setting forth the aggregate amounts of such
Qualifying Expenditures renounced to the Subscriber; and

	 	(e)	 	that all Qualifying Expenditures renounced to the Subscriber pursuant to this
Subscription Agreement will be Qualifying Expenditures incurred by the Corporation that, but
for the renunciation to the Subscriber, the Corporation would be entitled to deduct in
computing its income for the purposes of Part I of the Act; and

	 	(f)	 	that, subject to the requirements of subsection 66(12.73) of the Act, the Corporation
will not reduce the amount renounced to the Subscriber hereunder; and

	 	(g)	 	in the event the amount renounced to the Subscriber hereunder is reduced pursuant to
subsection 66(12.73) of the Act (except as a result of any amendment to the Act) or if the
Corporation fails to renounce Qualifying Expenditures to the Subscriber in an amount or
amounts which in aggregate are equal to the Commitment Amount and with an effective date or
dates of not later than December 31, 2007, the Corporation and OQSI shall jointly and
severally indemnify the Subscriber and pay in settlement thereof to the Subscriber an amount
equal to the amount of any tax payable under the Act (and under any corresponding provincial
tax legislation) by the Subscriber as a consequence of such failure to renounce or such
reduction, as the case may be, by the later of April 15, 2008 and the date on which the amount
of tax so payable by the Subscriber is determined; and

	 	(h)	 	that the Corporation will maintain its status as a Principal Business Corporation
throughout the Expenditure Period; and

	 	(i)	 	to file all prescribed forms required under the Act or any corresponding provincial
tax legislation with respect to the issuance of the shares as “flow-through shares” as defined
in subsection 66(15) of the Act or that are necessary to renounce Qualifying Expenditures
equal to the Commitment Amount to the Subscriber effective on or before December 31, 2007 and
to provide the Subscriber with a copy of all such forms as are required to be provided
thereto, all on a timely basis; and

	 	(j)	 	that the Corporation will not be subject to the provisions of subsection 66(12.67) of
the Act in a manner which impairs its ability to renounce Qualifying Expenditures to the
Subscriber in an amount equal to the Commitment Amount; and

	 	(k)	 	that the Corporation has not and will not enter into transactions, take deductions or
make any tax elections or designations which would otherwise reduce its cumulative Qualifying
Expenditures to an extent which would preclude a renunciation of Qualifying Expenditures
hereunder in an amount equal to the Commitment Amount effective on or before December 31,
2007; and

	 	(l)	 	that in the event that the Corporation cannot renounce to Subscribers Qualifying
Expenditures equal to 100% of the Commitment Amount, the Corporation shall renounce such
lesser amount as is permitted and, to the extent the Corporation has incurred expenses which
are capable of renunciation, but which are not Qualifying Expenditures, the Corporation shall,
if agreed to by the Subscriber, renounce such expenses to the Subscriber, without any
prejudice to any other rights the Subscriber may have under this Subscription Agreement.

	10.	 	The Subscriber covenants, agrees and represents and warrants to the Corporation that:

	 	(a)	 	neither the Subscriber, nor the beneficial purchaser, as the case may be, has or will
knowingly enter into any agreement or arrangement which will cause the Flow-Through Shares to
be or become “prescribed shares” for purposes of the Act; and

 

 

 

					
	 
	 	-11-
	 	CANADA — AB, BC, MB, ON, SK

	 	(b)	 	it (and each beneficial purchaser for whom it is acting) deals at arm’s length with
the Corporation within the meaning of the Act and will continue to deal at arm’s length with
the Corporation to and including January 1, 2009.

Closing

	11.	 	The Subscriber agrees to deliver to TD Securities Inc., 77 King Street West, Toronto,
Ontario M5K 1A2 Attention: Mary Ziotas, not later than 4:00 p.m. (Calgary time) on March 2, 2007:
(a) this duly completed and executed Subscription Agreement; (b) a fully executed and completed
Representation Letter in the form of Exhibit 1; and (c) a certified cheque or bank draft payable to
TD Securities Inc. for the Aggregate Flow-Through Subscription Price or payment of the same amount
in such other manner as is acceptable to the Underwriters.

	12.	 	The sale of the Flow-Through Shares pursuant to this Subscription Agreement will be
completed at the offices of Macleod Dixon LLP, the Corporation’s counsel, in Calgary,
Alberta at 10:00 a.m. (Calgary time) or such other time as the Corporation, OQSI and the
Underwriters may agree (the “Closing Time”) on March 6, 2007 or such other date as the Corporation,
OQSI and the Underwriters may agree (the “Closing Date”). At the Closing Time, the Underwriters
shall deliver to the Corporation all completed subscription agreements, including this Subscription
Agreement, and the aggregate subscription amount against delivery by the Corporation of the
certificates representing the Flow-Through Shares.

	13.	 	The Corporation, OQSI and the Underwriters shall be entitled to rely on delivery of a
facsimile copy of executed subscriptions, and acceptance by the Corporation of such facsimile
subscriptions shall be legally effective to create a valid and binding agreement between the
Subscriber and the Corporation in accordance with the terms hereof. In addition, this Subscription
Agreement may be executed in counterparts, each of which shall be deemed to be an original and all
of which shall constitute one and the same document.

General

	14.	 	The Subscriber agrees that the representations, warranties and covenants of the
Subscriber herein will be true and correct both as of the execution of this Subscription Agreement
and as of the Closing Time and will survive the completion of the issuance of the Flow-Through
Shares. The representations, warranties and covenants of the Subscriber herein are made with the
intent that they be relied upon by the Corporation, OQSI and the Underwriters and their respective
counsel in determining the eligibility of a purchaser of Flow-Through Shares and the Subscriber (on
its own behalf and, if applicable, on behalf of each person on whose behalf the Subscriber is
contracting) agrees to indemnify and hold harmless the Corporation, OQSI and the Underwriters and
their respective affiliates, shareholders, directors, officers, partners, employees, legal counsel
and agents, from and against all losses, claims, costs, expenses and damages or liabilities
whatsoever which any of them may suffer or incur which are caused or arise from a breach thereof.
The Subscriber undertakes to immediately notify the Corporation at Oilsands Quest Inc., Suite 205,
707 — 7 Avenue S.W., Calgary, Alberta, Canada T2P 3H6, Attention: Karim Hirji (Fax Number: (403)
263-9812) and the Underwriters at TD Securities Inc., 77 King Street West, Toronto, Ontario M5K
1A2, Attention: Mary Ziotas (Fax Number: (416) 308-1335), of any change in any statement or other
information relating to the Subscriber set forth herein which takes place prior to the Closing
Time.

	15.	 	The Subscriber acknowledges that the Underwriters have agreed to offer the
Flow-Through Shares on a “private placement” basis and, in connection therewith, the Corporation,
OQSI and the Underwriters have entered into, or will enter into prior to the Closing Date, an
agreement (the “Underwriting Agreement”) pursuant to which the Underwriters, in connection with the
issue and sale of the Flow-Through Shares, will receive from the Corporation a commission on the
gross proceeds of the Offering of 5.0%. The Subscriber hereby irrevocably authorizes TD Securities
Inc. to: (a) act as its representative at the closing and to execute in its name and on its behalf
all closing receipts and documents required; (b) complete or correct any errors or omissions in any
form or document, including this Subscription Agreement, provided by the Subscriber; (c) receive on
its behalf certificates representing the Flow-Through Shares purchased under this Subscription
Agreement; (d) approve any opinions, certificates or other documents addressed to the Subscriber;
(e) waive, in whole or in part, any representations, warranties, covenants or conditions for the
benefit of the Subscriber and contained in the Underwriting Agreement; and (f) exercise any rights
of termination contained in the Underwriting Agreement.

 

 

 

					
	 
	 	-12-
	 	CANADA — AB, BC, MB, ON, SK

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

	17.	 	By acceptance of this Subscription Agreement, the Corporation agrees that the
Subscriber is directly entitled to the benefit of all representations and warranties of the
Corporation made by the Corporation to the Underwriters in the Underwriting Agreement.

	18.	 	By acceptance of this Subscription Agreement, OQSI agrees that the Subscriber is
directly entitled to the benefit of all representations and warranties of OQSI made by OQSI to the
Underwriters in the Underwriting Agreement.

	19.	 	The obligations of the parties hereunder are subject to all required regulatory
approvals being obtained.

	20.	 	The Subscriber acknowledges that it has consented to and requested that all documents
evidencing or relating in any way to the sale of the Flow-Through Shares be drawn up in the English
language only. Le soussigné reconnaît par les présentes avoir consenti et exigé que tous les
documents faisant foi ou se repportant de quelque manière à la vente de ces actions soient rédigés
en anglais seulement.

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

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

	23.	 	The terms and provisions of this Subscription Agreement shall be binding upon and
enure to the benefit of the Subscriber and the Corporation and their respective heirs, executors,
administrators, successors and assigns; provided that, except for the assignment by a Subscriber
who is acting as nominee or agent to the beneficial owner and as otherwise herein provided, this
Subscription Agreement shall not be assignable by any party without prior written consent of the
other parties.

	24.	 	The Subscriber, on its own behalf and, if applicable, on behalf of others for whom it
is contracting hereunder, agrees that this subscription is made for valuable consideration and may
not be withdrawn, cancelled, terminated or revoked by the Subscriber, on its own behalf and, if
applicable, on behalf of others for whom it is contracting hereunder.

	25.	 	Subject to Section 15, neither this Subscription Agreement nor any provision hereof
shall be modified, changed, discharged or terminated except by an instrument in writing signed by
the party against whom any waiver, change, discharge or termination is sought.

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

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

	28.	 	The covenants, representations and warranties contained herein shall survive the
closing of the transactions contemplated hereby. In this Subscription Agreement (including
attachments), references to “$” are to Canadian dollars.

 

 

 

CANADA — AB, BC, MB, ON, SK

EXHIBIT 1

REPRESENTATION LETTER

	 	 	 
	TO:

	 	Oilsands Quest Inc. (the “Corporation”)
	 
	 	 
	AND TO:

	 	Oilsands Quest Sask Inc. (“OQSI”)
	 
	 	 
	AND TO:

	 	TD Securities Inc., CIBC World Markets Inc., J.F. Mackie & Company
Ltd., Genuity Capital Markets and Peters & Co. Limited
(collectively, the “Underwriters”)

In connection with the purchase of common shares of the Corporation to be issued on a
“flow-through” basis (“Flow-Through Shares”) by the undersigned subscriber or, if applicable, the
disclosed principal on whose behalf the undersigned is purchasing as agent (the “Subscriber” for
the purposes of this Exhibit 1), the Subscriber hereby represents, warrants, covenants and
certifies to the Corporation, OQSI and the Underwriters that:

	1.	 	The Subscriber is resident in one of the Provinces of British Columbia, Alberta,
Saskatchewan, Manitoba or Ontario or is otherwise subject to applicable securities laws of one of
the Provinces of British Columbia, Alberta, Saskatchewan, Manitoba or Ontario;

	2.	 	The Subscriber is purchasing the Flow-Through Shares as principal (NOTE: For this
purpose, a trust company or trust corporation described in paragraph (p) in Appendix “A” to this
Representation Letter (other than a trust company or trust corporation registered under the laws of
Prince Edward Island that is not registered or authorized under the Trust and Loan Companies Act
(Canada) or under comparable legislation in another jurisdiction of Canada) and a person described
in paragraph (q) in Appendix “A” to this Representation Letter is deemed to be purchasing as
principal);

	3.	 	The Subscriber is (and will be at the Closing Time) an “accredited investor” within the
meaning of National Instrument 45-106 entitled “Prospectus and Registration Exemptions” by virtue
of satisfying the indicated criterion as set out in Appendix “A” to this Representation Letter; and

	4.	 	Upon execution of this Exhibit 1 by or on behalf of the Subscriber, this Exhibit 1
shall be incorporated into and form a part of the Subscription Agreement to which this Exhibit is
attached.

	 	 	 	 	 
	Dated:

	 	 	 	, 2007
	 

	 	 

	 	 

	 	 	 	 	 
	 	 	Print name of Subscriber, or person signing as agent on behalf of Subscriber
	 
	 	 	 	 
	 

	 	By:	 	 
	 

	 	 	 	 
	 

	 	 	 	Signature
	 
	 	 	 	 
	 

	 	 	 	 
	 

	 	 	 	Print name of Signatory (if different from Subscriber or agent, as applicable)
	 
	 	 	 	 
	 

	 	 	 	 
	 

	 	 	 	Title

* If the Subscriber is a fully managed account, please complete in the following format: “Account
 _____ 
by [insert name of adviser, trust company or trust corporation]”

** PLEASE INITIAL THE APPLICABLE PROVISION IN APPENDIX “A” ON THE FOLLOWING PAGES **

 

 

 

					
	 
	 	 
	 	CANADA — AB, BC, MB, ON, SK

APPENDIX “A”

TO EXHIBIT 1

NOTE: THE INVESTOR MUST INITIAL BESIDE THE APPLICABLE PORTION OF THE DEFINITION BELOW.

Accredited Investor - (defined in National Instrument 45-106) means:

	 	 	 	 	 	 	 
	          	 	(a)	 	a Canadian financial institution, or a Schedule III bank; or
	 
	 	 	 	 	 	 
	          	 	(b)	 	the Business Development Bank of Canada incorporated under the Business Development Bank of
Canada Act (Canada); or
	 
	 	 	 	 	 	 
	          	 	(c)	 	a subsidiary of any person referred to in paragraphs (a) or (b), if the person owns all of
the voting securities of the subsidiary, except the voting securities required by law to be
owned by directors of that subsidiary; or
	 
	 	 	 	 	 	 
	          	 	(d)	 	a person registered under the securities legislation of a jurisdiction of Canada as an
adviser or dealer, other than a person registered solely as a limited market dealer under one or
both of the Securities Act (Ontario) or the Securities Act (Newfoundland and Labrador); or
	 
	 	 	 	 	 	 
	          	 	(e)	 	an individual registered or formerly registered under the securities legislation of a
jurisdiction of Canada as a representative of a person referred to in paragraph (d); or
	 
	 	 	 	 	 	 
	          	 	(f)	 	the Government of Canada or a jurisdiction of Canada, or any crown corporation, agency or
wholly owned entity of the Government of Canada or a jurisdiction of Canada; or
	 
	 	 	 	 	 	 
	          	 	(g)	 	a municipality, public board or commission in Canada and a metropolitan community, school
board, the Comite de gestion de la taxe scolaire de l’ile de Montreal or an intermuncipal
management board in Quebec; or
	 
	 	 	 	 	 	 
	          	 	(h)	 	any national, federal, state, provincial, territorial or municipal government of or in any
foreign jurisdiction, or any agency of that government; or
	 
	 	 	 	 	 	 
	          	 	(i)	 	a pension fund that is regulated by either the Office of the Superintendent of Financial
Institutions (Canada) or a pension commission or similar regulatory authority of a jurisdiction
of Canada; or
	 
	 	 	 	 	 	 
	          	 	(j)	 	an individual who, either alone or with a spouse, beneficially owns, directly or indirectly,
financial assets having an aggregate realizable value that before taxes, but net of any related
liabilities, exceeds $1,000,000; or
	 
	 	 	 	 	 	 
	 	 	**Note: if individual accredited investors wish to purchase through wholly-owned holding
companies or similar entities, such purchasing entities must qualify under (t) below, which must
be initialed.
	 
	 	 	 	 	 	 
	          	 	(k)	 	an individual whose net income before taxes exceeded $200,000 in each of the 2 most recent
calendar years or whose net income before taxes combined with that of a spouse exceeded $300,000
in each of the 2 most recent calendar years and who, in either case, reasonably expects to
exceed that net income level in the current calendar year; or
	 
	 	 	 	 	 	 
	 	 	**Note: if individual accredited investors wish to purchase through wholly-owned holding
companies or similar entities, such purchasing entities must qualify under (t) below, which must
be initialed.
	 
	 	 	 	 	 	 
	          	 	(l)	 	an individual who, either alone or with a spouse, has net assets of at least $5,000,000; or
	 
	 	 	 	 	 	 
	 	 	**Note: if individual accredited investors wish to purchase through wholly-owned holding
companies or similar entities, such purchasing entities must qualify under (t) below, which must
be initialed.

 

 

 

					
	 
	 	-2-
	 	CANADA — AB, BC, MB, ON, SK

	 	 	 	 	 	 	 
	          	 	(m)	 	a person, other than an individual or investment fund, that has net assets of at least
$5,000,000 as shown on its most recently prepared financial statements; or
	 
	 	 	 	 	 	 
	          	 	(n)	 	an investment fund that distributes or has distributed its securities only to:
	 
	 	 	 	 	 	 
	 

	 	 	 	(i)
	 	a person that is or was an accredited investor at the time of the distribution,
	 
	 	 	 	 	 	 
	 

	 	 	 	(ii)
	 	a person that acquires or acquired securities in the circumstances referred to in sections
2.10 [Minimum amount investment], and 2.19 [Additional investment in investment funds], or
	 
	 	 	 	 	 	 
	 

	 	 	 	(iii)
	 	a person described in paragraph (i) or (ii) that acquires or acquired securities under
section 2.18 [Investment fund reinvestment]; or
	 
	 	 	 	 	 	 
	          	 	(o)	 	an investment fund that distributes or has distributed securities under a prospectus in a
jurisdiction of Canada for which the regulator or, in Quebec, the securities regulatory
authority, has issued a receipt; or
	 
	 	 	 	 	 	 
	          	 	(p)	 	a trust company or trust corporation registered or authorized to carry on business under the
Trust and Loan Companies Act (Canada) or under comparable legislation in a jurisdiction of
Canada or a foreign jurisdiction, acting on behalf of a fully managed account managed by the
trust company or trust corporation, as the case may be; or
	 
	 	 	 	 	 	 
	          	 	(q)	 	a person acting on behalf of a fully managed account managed by that person, if that person:
	 
	 	 	 	 	 	 
	 

	 	 	 	(i)
	 	is registered or authorized to carry on business as an adviser or the equivalent under the
securities legislation of a jurisdiction of Canada or a foreign jurisdiction, and
	 
	 	 	 	 	 	 
	 

	 	 	 	(ii)
	 	in Ontario, is purchasing a security that is not a security of an investment fund; or
	 
	 	 	 	 	 	 
	          	 	(r)	 	a registered charity under the Income Tax Act (Canada) that, in regard to the trade, has
obtained advice from an eligibility adviser or an adviser registered under the securities
legislation of the jurisdiction of the registered charity to give advice on the securities being
traded; or
	 
	 	 	 	 	 	 
	          	 	(s)	 	an entity organized in a foreign jurisdiction that is analogous to any of the entities
referred to in paragraphs (a) to (d) or paragraph (i) in form and function; or
	 
	 	 	 	 	 	 
	          	 	(t)	 	a person in respect of which all of the owners of interests, direct, indirect or beneficial,
except the voting securities required by law to be owned by directors, are persons that are
accredited investors;
	 
	 	 	 	 	 	 
	          	 	(u)	 	an investment fund that is advised by a person registered as an adviser or a person that is
exempt from registration as an adviser; or
	 
	 	 	 	 	 	 
	          	 	(v)	 	a person that is recognized or designated by the securities regulatory authority or, except
in Ontario and Quebec, the regulator as:
	 
	 	 	 	 	 	 
	 

	 	 	 	(i)
	 	an accredited investor, or
	 
	 	 	 	 	 	 
	 

	 	 	 	(ii)
	 	an exempt purchaser in Alberta or British Columbia after National Instrument 45-106 came into force.

 

 

 

					
	 
	 	-3-
	 	CANADA — AB, BC, MB, ON, SK

For the purposes hereof:

an issuer is an “affiliate” of another issuer if

	 	(a)	 	one of them is the subsidiary of the other, or

	 
	 	(b)	 	each of them is controlled by the same person;

“bank” means a bank named in Schedule I or II of the Bank Act (Canada);

“beneficial ownership” of securities by a person has the meaning given thereto under securities
laws of the applicable province of Canada;

“Canadian financial institution” means

	 	(a)	 	an association governed by the Cooperative Credit Associations Act (Canada) or
a central cooperative credit society for which an order has been made under section
473(1) of that Act, or

	 	(b)	 	a bank, loan corporation, trust company, trust corporation, insurance company,
treasury branch, credit union, caisse populaire, financial services cooperative, or
league that, in each case, is authorized by an enactment of Canada or a jurisdiction of
Canada to carry on business in Canada or a jurisdiction in Canada;

a person (first person) is considered to “control” another person (second person) if

	 	(a)	 	the first person, directly or indirectly, beneficially owns or exercises
control or direction over securities of the second person carrying votes which, if
exercised, would entitle the first person to elect a majority of the directors of the
second person, unless that first person holds the voting securities only to secure an
obligation,

	 	(b)	 	the second person is a partnership, other than a limited partnership, and first
person holds more than 50% of the interests of the partnership, or

	 	(c)	 	the second person is a limited partnership and the general partner of the
limited partnership is the first person;

“consultant” means, for an issuer, a person, other than an employee, executive officer, or director
of the issuer or of a related entity of the issuer, that:

	 	(a)	 	is engaged to provide services to the issuer or a related entity of the issuer, other than
services provided in relation to a distribution,

	 	(b)	 	provides the services under a written contract with the issuer or a related entity of the
issuer, and

	 	(c)	 	spends or will spend a significant amount of time and attention on the affairs and
business of the issuer or a related entity of the issuer

and includes, for an individual consultant, a corporation of which the individual consultant is an
employee or shareholder, and a partnership of which the individual consultant is an employee or
partner;

“director” means

	 	(a)	 	a member of the board of directors of a company or an individual who performs
similar functions for a company, and

	 	(b)	 	with respect to a person that is not a company, an individual who performs
functions similar to those of a director of a company;

 

 

 

					
	 
	 	-4-
	 	CANADA — AB, BC, MB, ON, SK

“executive officer” means, for an issuer, an individual who is

	 	(a)	 	a chair, vice-chair or president,

	 	(b)	 	a vice-president in charge of a principal business unit, division or function
including sales, finance or production,

	 	(c)	 	an officer of the issuer or any of its subsidiaries and who performs a
policy-making function in respect of the issuer, or

	 	(d)	 	performing a policy-making function in respect of the issuer;

“financial assets” means

	 	(a)	 	cash,

	 	(b)	 	securities, or

	 	(c)	 	a contract of insurance, a deposit or an evidence of a deposit that is not a
security for the purposes of securities legislation;

“foreign jurisdiction” means a country other than Canada or a political subdivision of a country
other than Canada;

“fully managed account” means an account of a client for which a person makes the investment
decisions if that person has full discretion to trade in securities for the account without
requiring the client’s express consent to a transaction;

“investment fund” means a mutual fund or non-redeemable investment fund, and, for greater
certainty, in British Columbia includes an employee venture capital corporation that does not have
a restricted constitution , and is registered under Part 2 of the Employee Investment Act (British
Columbia), R.S.B.C. 1996 c. 112, and whose business objective is making multiple investments and a
venture capital corporation registered under Part 1 of the Small Business Venture Capital Act
(British Columbia), R.S.B.C. 1996 c.429 whose business objective is making multiple investments;

“jurisdiction” means a province or territory of Canada except when used in the term “foreign
jurisdiction”;

“individual” means a natural person, but does not include

	 	(a)	 	a partnership, unincorporated association, unincorporated syndicate,
unincorporated organization or a trust, or

	 	(b)	 	a natural person in the person’s capacity as trustee, executor, administrator
or other legal representative;

“mutual fund” includes an issuer of securities that entitles the holder to receive on demand, or
within a specified period after demand, an amount computed by reference to the value of a
proportionate interest in the whole or in part of the net assets, including a separate fund or
trust account, of the issuer of the securities, and, for the purposes of British Columbia
securities law, also includes

	 	(a)	 	an issuer described in an order that the British Columbia Securities Commission
may make pursuant to section 3.2 of the Securities Act (British Columbia); and

	 	(b)	 	an issuer that is in a class of prescribed issuers,

but does not include an issuer, or a class of issuers, described in an order that the British
Columbia Securities Commission may make under section 3.1 of the Securities Act (British Columbia);

 

 

 

					
	 
	 	-5-
	 	CANADA — AB, BC, MB, ON, SK

“non-redeemable investment fund” means an issuer,

	 	(a)	 	whose primary purpose is to invest money provided by its securityholders,

	 	(b)	 	that does not invest,

	 	(A)	 	for the purpose of exercising or seeking to exercise control of
an issuer, other than an issuer that is a mutual fund or a nonredeemable
investment fund, or

	 	(B)	 	for the purpose of being actively involved in the management of
any issuer in which it invests, other than an issuer that is a mutual fund or a
non-redeemable investment fund, and

	 	(c)	 	that is not a mutual fund;

“permitted assign” means, for a person that is an employee, executive officer, director or
consultant of an issuer or of a related entity of the issuer:

	 	(a)	 	a trustee, custodian or administrator acting on behalf of, or for the benefit of the
person,

	 	(b)	 	a holding entity of the person,

	 	(c)	 	an RRSP or RRIF of the person,

	 	(d)	 	a spouse of the person,

	 	(e)	 	a trustee, custodian, or administrator acting on behalf of, or for the benefit of the
spouse of the person,

	 	(f)	 	a holding entity of the spouse of the person, or

	 	(g)	 	an RRSP or a RRIF of the spouse of the person.

“person” includes

	 	(a)	 	an individual,

	 	(b)	 	a corporation,

	 	(c)	 	a partnership, trust, fund and an association, syndicate, organization or other
organized group of persons, whether incorporated or not, and

	 	(d)	 	an individual or other person in that person’s capacity as a trustee, executor,
administrator or personal or other legal representative;

“regulator” means, for the local jurisdiction, the Executive Director or Director as defined under
securities legislation of the local jurisdiction;

“related entity” means, for an issuer, a person that controls or is controlled by the issuer or
that is controlled by the same person that controls the issuer;

“related liabilities” means:

	 	(a)	 	liabilities incurred or assumed for the purpose of financing the acquisition or
ownership of financial assets; or

	 	(b)	 	liabilities that are secured by financial assets;

“Schedule III bank” means an authorized foreign bank named in Schedule III of the Bank Act
(Canada);

“securities legislation” means the securities act, regulations, rules, blanket rulings and orders
of the applicable province of Canada;

“securities regulatory authority” means the securities commission or similar authority of the
applicable province of Canada;

 

 

 

					
	 
	 	-6-
	 	CANADA — AB, BC, MB, ON, SK

“spouse” means an individual who,

	 	(a)	 	is married to another individual and is not living separate and apart within
the meaning of the Divorce Act (Canada), from the other individual,

	 	(b)	 	is living with another individual in a marriage-like relationship, including a
marriage-like relationship between individuals of the same gender, or

	 	(c)	 	in Alberta, is an individual referred to in paragraph (a) or (b), or is an
adult interdependent partner within the meaning of the Adult Interdependent
Relationships Act (Alberta);

“subsidiary” means an issuer that is controlled directly or indirectly by another issuer and
includes a subsidiary of that subsidiary; and

“voting security” means any security which:

	 	(a)	 	is not a debt security; and

	 	(b)	 	carries a voting right either under all circumstances or under some contingency
that has occurred and is continuing.

Source: [{"source": "alea-institute/alea-institute/kl3m-data-edgar-agreements/train-00126-of-00352.parquet"}, [{"source": "alea-institute/alea-institute/kl3m-data-edgar-agreements/train-00126-of-00352.parquet"}]]