Document:

ex107

    
      
 

    

    April
      10,
      2006

    

    

    
      	
               

              Mr.
                William Nixon

              Texalta
                Petroleum Ltd.

              8228
                Elbow Drive S.W.

              Calgary,
                AB T2V 1K4

              PH:
                (403) 255-8380

              FX:
                (403) 255-8007

              E-mail:
                texalta@texalta.com

            	
               

              Mr.
                Peter Philipchuck

              Odin
                Capital Inc.

              P.O.
                Box 36007, Lakeview RPO

              6449
                Crowchild Trail S.W.

              Calgary,
                AB T3E 7C6

              PH:
                (403) 461-6790

              FX:
                (403) 246-7935

              E-mail:
                peter@winenergycorp.com

            	
               

              Mr.
                Douglas Bolen

              Delta
                Oil and Gas (Canada) Inc.

              300,
                1055 West Hastings Street

              Vancouver,
                BC V6E 2E9

              PH:
                (604) 506-4243

              FX:
                (604) 602-1525

              E-Mail:
                douglasbolen@yahoo.com

            
	 	 	 
	
              Last
                Mountain Investments Inc.

              608
                Sandollar Place

              Tsawwassen,
                BC V4L 2G9

              PH:
                (604) 506-4243

              FX:
                (604) 602-1525

              E-Mail:
                na

            	
              Mr.
                Victor Walls

              264646
                Alberta Ltd.

              6711
                Golden West Avenue

              Red
                Deer, AB T4P 1A7

              PH:
                (403) 343-1177

              FX:
                (403) 346-9690

              E-Mail:
                asphalt@borderpaving.com

            	
              Mr.
                John Niedermaier

              LL
                & S Holdings Ltd.

              200,
                435 - 4th
                Avenue S.W.

              Calgary,
                AB T2P 3A8

              PH:
                (403) 262-2288

              FX:
                (403) 266-3810

              E-Mail:
                jan@micasa-rentals.com

            
	 	 	 
	
              Mr.
                Chris Bunka

              0743608
                B.C. Ltd.

              5774
                Deadpine Drive

              Kelowna,
                BC V1P 1A3

              PH:
                (250) 765-6424

              FX:
                (250) 765-4408

              E-Mail:
                bossbunka@gmail.com

            	 	 

    

     

    Dear
      Sirs:

    

    RE:        
      FARMOUT,
      OPTION AND PARTICIPATION LETTER AGREEMENT 

    Dated
      April 10th,
      2006 between Petrex Energy Ltd., Texalta Petroleum Ltd., Odin Capital Inc.,
      Delta Oil and Gas (Canada) Inc., Last Mountain Investments Inc., 264646 Alberta
      Ltd., LL & S Holdings Ltd. and 0743608 B.C. Ltd.

    WORDSWORTH,
      SASKATCHEWAN

    

    Petrex
      Energy Ltd. (“Petrex”) has a 42.50% working interest in Petroleum and Natural
      Gas leases as described in Schedule “A” attached. Texalta Petroleum Ltd.
      (“Texalta”) has the remaining 57.50% working interest in these
      leases.

    

    Subject
      to rig availability, Texalta as operator proposes to commence drilling the
      Texalta et al Wordsworth East HZ 2A2-23-4B11-14-7-3 W2M well prior to July
      1,
      2006. Texalta intends to participate in the test well as to its 57.50% working
      interest.

    

    Petrex
      now proposes to farmout its 42.50% working interest in the test well and Farmout
      and Option lands to Odin
      Capital Inc., Delta Oil and Gas (Canada) Inc., Last Mountain Investments Inc.,
      264646 Alberta Ltd., LL & S Holdings Ltd. and 0743608 B.C.
      Ltd.
      (“Farmees”) on the following terms and conditions:

     

    
      
        
        

      

      
        1

        
          

        

      

      
        
        

      

    

    

    
      	a)  	
              Farmees
                to pay 100% of the Petrex 42.50% cost of drilling, completing and
                equipping the test well to earn a 42.50% before payout (“BPO”) and 21.25%
                working interest after payout (“APO”) in the test well subject to a 5.00%
                Gross Overriding Royalty to Petrex until payout and a 21.25% working
                interest in the Farmout lands.

            

    

    

    
      	b)  	
              Upon
                completion or abandonment of the test well, Farmees will have a three
                month period to elect to participate in a vertical test well on the
                option
                lands to earn the same working interests in the test well and balance
                of
                the Option Lands as set forth in item a)
                above.

            

    

    

    Now
      therefore,
      in
      consideration of the premises and covenants and agreements herein contained,
      it
      is agreed by the parties as follows:

    

    1.00 DEFINITIONS

    

    
      	 	
              The
                following terms and expressions shall have the meanings hereinafter
                assigned to them, namely:

            

    

    

    
      	(a)  	
              "Abandon"
                or "Abandonment"
                and the derivatives thereof means the proper plugging and abandoning
                of a
                well in compliance with all Regulations and shall also include the
                restoration of the wellsite to the satisfaction of any governmental
                body
                having jurisdiction with respect thereto and to the reasonable
                satisfaction of the owner or occupier of the surface, and the furnishing
                of satisfactory evidence by Farmees to Farmor of the performance
                hereunder
                if so requested;

            

    

    

    
      	(b)  	
              "Accounting
                Procedure"
                means the Exhibit entitled "Accounting Procedure" attached to and
                made a
                part of the Operating Procedure;

            

    

    

    
      	(c)  	
              "Agreement"
                means this agreement and the Schedules attached
                thereto;

            

    

    

    
      	(d)  	
              "Complete"
                or "Completion"
                and the derivatives thereof means in the case of a well capable of
                producing Petroleum Substances in at least Paying
                Quantities:

            

    

    

    
      	(i)  	
              in
                the case of an oil well, the acquisition and installation of production
                casing in the hole (exclusive of surface and intermediate casing)
                and all
                other equipment, materials and services required for completion of
                the
                well up to and including the outlet valve at the wellhead, and the
                conduct
                of a cumulative production test sufficient to establish the initial
                producibility of the well; and

            

    

    

    
      	(e)  	
              "Completion
                Costs"
                means the costs of Completing a
                well;

            

    

    

    
      	(f)  	
              "Contract
                Depth"
                means a horizontal test well for an estimated open hole length of
                840
                meters at a depth of approximately 1200 (-582 subsea) meters to test
                the
                Mississippian (Alida) formation;

            

    

    

    
      	(g)  	
              "Drilling"
                and the derivatives thereof means all activities incidental to the
                drilling of a well and all services in respect thereof including,
                without
                restricting the generality of the foregoing, the acquisition of all
                surface rights, construction of access roadways and wellsite, drilling,
                testing, logging and the acquisition and installation of all surface
                and
                intermediate casing as well as material and services in respect
                thereof;

            

    

    

    
      	(h)  	
              "Drilling
                Costs"
                means the costs of Drilling a well;

            

    

    

    
      	(i)  	
              "Drilling
                Parties"
                means those parties participating in all costs associated with the
                Test
                Well as such parties are identified in Subclause
                4.02;

            

    

     

    
      
        
        

      

      
        2

        
          

        

      

      
        
        

      

    

     

    
      	(j)  	
              "Earning
                Depth"
                means the base of the Mississippian (Alida)
                formation;

            

    

    

    
      	(k)  	
              "Effective
                Date"
                means April 10, 2006;

            

    

    

    
      	(l)  	
              "Equip"
                or "Equipping"
                and the derivatives thereof means the acquisition and installation
                of
                equipment beyond the outlet valve at the wellhead required to produce
                Petroleum Substances from a well, including without limiting the
                generality of the foregoing:

            

    

    

    
      	(i)  	
              in
                the case of an oil well, the acquisition and installation of pumping
                equipment, flowlines, production tankage and all other equipment
                necessary
                for the production of Petroleum
                Substances;

            

    

    

    
      	 	 	
              but
                specifically excluding any equipment required to Complete the well
                and any
                costs incurred beyond the point of entry into a gathering system,
                plant or
                other common facility which is or will be operated pursuant to a
                separate
                agreement.

            

    

    

    
      	(m)  	
              "Equipping
                Costs"
                means the costs of Equipping a
                well;

            

    

    

    
      	(n)  	
              "Farmees"
                means Odin
                Capital Inc., Delta Oil and Gas (Canada) Inc., Last Mountain Investments
                Inc., 264646 Alberta Ltd., LL & S Holdings Ltd. and 0743608 B.C.
                Ltd.;

            

    

    

    
      	(o)  	
              "Farmor"
                means Petrex Energy Ltd.;

            

    

    

    
      	(p)  	
              "Farmout
                Lands"
                means the lands set forth and described in Schedule "A" attached
                hereto
                and includes the Petroleum Substances within, upon or under such
                lands to
                the extent that such substances are granted by the Title
                Documents;

            

    

    

    
      	(q)  	
              “Option
                Lands”
                means the lands set forth and described in Schedule "A" attached
                hereto
                and includes the Petroleum Substances within, upon or under such
                lands to
                the extent that such substances are granted by the Title
                Documents;

            

    

    

    
      	(r)  	
              “Option
                Test Well”
                means the well drilled by operator pursuant to the clause hereof
                entitled
                “Option Test Well”

            

    

    

    
      	(s)  	
              "Operate"
                and "Operating"
                and the derivatives thereof means to carry out functions similar
                to those
                imposed on an operator pursuant to the Operating Procedure after
                earning
                has occurred in the Test Well, exclusive of the operation of any
                production facility, together with such additional duties imposed
                by this
                Agreement;

            

    

    

    
      	(t)  	
              "Operating
                Costs"
                means all monies expended (exclusive of Drilling Costs, Completion
                Costs
                and Equipping Costs) to Operate a well for the recovery of Petroleum
                Substances, as more particularly set forth in the Accounting
                Procedure;

            

    

    

    
      	(u)  	
              "Operating
                Procedure"
                means the Schedule, if any, hereto entitled "CAPL Operating
                Procedure";

            

    

    

    
      	(v)  	
              "Overriding
                Royalty"
                means that interest in the Petroleum Substances which may be reserved
                to
                Farmor under this Agreement;

            

    

    

    
      	(w)  	
              "Paying
                Quantities"
                means the anticipated output from a well of that quantity of Petroleum
                Substances which would reasonably warrant incurring (or having incurred)
                the Completion Costs and Equipping Costs of the well, considering
                the
                anticipated Operating Costs associated therewith, the kind and quality
                of
                Petroleum Substances indicated, the anticipated availability
                

            

    

     

    
      
        
        

      

      
        3

        
          

        

      

      
        
        

      

    

     

    
      	
            	of facilities for treating and processing such Petroleum
              Substances and the anticipated cost of such
              services, the anticipated availability of markets for such Petroleum
              Substances, the anticipated availability of transportation service
              for the
              delivery of such production to market and the anticipated cost of such
              service, the royalties and other burdens payable by the Farmees with
              respect to such production, the probable life of the well and the
              anticipated price to be received for the Petroleum Substances produced
              therefrom as and when sold;

    

     

    
      	(x)  	
              "Payout"
                means that point in time when Farmees share of the gross income
                attributable to the production of or allocation of production of
                Petroleum
                Substances from the Test Well Spacing Unit equals for the first time
                Farmees share of the total Drilling, Completion, Equipping and Operating
                Costs of the Test Well, including payment of the royalties payable
                to the
                lessor under the Title Documents, as set forth in Schedule "A" and
                the
                Overriding Royalty payable to Farmor pursuant to this Agreement,
                but less
                any payments received by Farmees related to the Test Well pursuant
                to any
                incentives, credits, payments or grants, governmental or
                otherwise;

            

    

    

    
      	(y)  	
              "Participant"
                means Texalta Petroleum Ltd.

            

    

    

    
      	(z)  	
              "Petroleum
                Substances"
                means petroleum, natural gas and every other mineral or substance,
                or any
                of them, in which an interest in or the right to explore for is granted
                or
                acquired under the Title Documents insofar as they relate to the
                Farmout
                Lands;

            

    

    

    
      	(aa)  	
              "Regulations"
                means all statutes, laws, rules, orders and regulations in effect
                from
                time to time made by governments or governmental boards or agencies
                having
                jurisdiction over the Farmout Lands and over the operations to be
                conducted thereon; 

            

    

    

    
      	(bb)  	
              "Test
                Well"
                means the well drilled by operator pursuant to the Clause hereof
                entitled
                "Test Well";

            

    

    

    
      	(cc)  	
              "Title
                Documents"
                means the documents set forth and described as such in Schedule "A"
                attached hereto and any renewals or extensions thereof or further
                Title
                Documents issued pursuant thereto insofar as they relate to the Farmout
                Lands.

            

    

    

    2.00 SCHEDULES

    

    
      	 	
              The
                following Schedules are attached hereto and incorporated into this
                Agreement:

            

    

    

    (a)
      Schedule "A" which sets forth the Farmout Lands, Option Lands, Title Documents
      and BPO / APO Working Interests.

    

    
      	(b)  	
              Schedule
                "B" which is the Operating Procedure, the Accounting Procedure and
                the
                Assignment Procedure together with Elections and Rates for the Operating
                Procedure;

            

    

    

    
      	(c)  	
              Schedule
                “C” showing the area of mutual
                interest.

            

    

    

    
      	3.00  	
              TITLE

            

    

     

    3.01 Requisite
      Authority

    
      	 	
              Each
                of the parties hereto represents and warrants that it has the requisite
                capacity, power and authority to execute this Agreement and to perform
                the
                obligations to which it thereby becomes subject.
                

            

    

    

    3.02 Farmor
      Makes No Warranty of Title

    
      	 	
              Farmor
                does not warrant title to the Farmout and Option Lands or the Title
                Documents or agree to convey to Farmees any better title thereto
                than
                Farmor has on the Effective Date. Farmor, to the
                

            

    

     

    
      
        
        

      

      
        4

        
          

        

      

      
        
        

      

    

    

      	
            	extent of its interest in the Title Documents and
              Farmout
              and Option Lands, covenants that the Farmout and Option Lands are only
              encumbered by the applicable lessor's royalty and any other encumbrances
              as set forth in Schedule "A", and that it has complied with all the
              terms
              of the Title Documents to the extent necessary to maintain them in
              force
              as of the Effective Date.

    

     

    3.03 Responsibility
      for Encumbrances

    
      	 	
              Except
                as otherwise provided herein, if the interest of any party in the
                Farmout
                and Option Lands is now or hereafter shall become encumbered by any
                royalty, overriding royalty, production payment or other charge of
                a
                similar nature, other than the lessor's royalty under the Title Documents,
                as set forth in Schedule "A" and the Overriding Royalty reserved
                to Farmor
                hereunder which shall be borne as herein provided, such royalty,
                overriding royalty, production payment or other charge of a similar
                nature
                shall be charged to and paid entirely by the party whose interest
                is or
                becomes thus encumbered.

            

    

    

    4.00 TEST
      WELL

     

    4.01 Operator
      to Spud Test Well

    
      	 	
              Subject
                to rig availability, on or before July 1, 2006, operator shall commence
                the drilling of the Test Well and shall diligently and continuously,
                at
                the sole cost, risk and expense of the Drilling Cost Interests, drill
                same
                to at least Contract Depth, log, test to the reasonable satisfaction
                of
                Operator all formations prospective of containing Petroleum Substances
                and
                either Complete or Abandon it in accordance with the terms of this
                Agreement and the Regulations.

            

    

    

    
      	4.02  	
              Drilling
                Cost Interests

            

    

    

    
      	(a)  	
              All
                costs associated with the Test Well shall be shared by the Drilling
                Parties in the following percentages:

            

    

     

    
      	
              Texalta
                Petroleum Ltd.

            	
              57.50%

            
	
              Odin
                Capital Inc.

            	
              5.00%

            
	
              Delta
                Oil and Gas (Canada) Inc.

            	
              15.00%

            
	
              Last
                Mountain Investments Inc.

            	
              5.00%

            
	
              264646
                Alberta Ltd.

            	
              5.00%

            
	
              LL
                & S Holdings Ltd.

            	
              5.00%

            
	
              0743608
                B.C. Ltd.

            	
              7.50%

            
	 	
              100.00%

            

    

    

    in
      this
      Agreement sometimes referred to as the "Drilling Cost Interests".

    

    
      	(b)  	
              Upon
                receipt of an Authority For Expenditure (“AFE”) from the operator setting
                for the costs of site preparation, drilling, casing or abandoning
                either
                the test well or the option well, Farmees will have a period of fourteen
                (14) days in which to submit their proportionate share of such costs
                to
                the Operator. Failure to make such payments to the Operator within
                the
                time specified herein, will result in a termination of this Agreement
                insofar as it relates to a particular
                Farmee.

            

    

    

    5.00 OPERATIONS

    

    5.01 Operations
      Conducted in Proper Manner

    

    Operator
      shall, in conducting all Operations hereunder:

    

    
      	(a)  	
              perform
                in a diligent and workmanlike manner, in accordance with good oilfield
                practice and in strict compliance with the terms of the Title Documents,
                this Agreement and the Regulations.

            

    

    

    
      
        
        

      

      
        5

        
          

        

      

      
        
        

      

    

    

    6.00
      INTEREST EARNED

     

    6.01
      Interest
      to be Earned by Farmees - Test Well

    

    
      	 	
              Provided
                operator has fulfilled its obligations pursuant to the Clause entitled
                "Test Well" hereof, then Farmees shall have earned and Farmor shall
                hold
                in trust for Farmees:

            

    

    

    
      	 	
              (a)

            	
              One
                hundred percent (100%) of Farmor's interest down to Earning Depth
                in the
                Title Documents and Farmout Lands insofar as they comprise the Test
                Well,
                subject to the lessor's royalty as set forth in Schedule "A" and
                the
                Overriding Royalty reserved to Farmor until conversion of such Overriding
                Royalty as provided herein; and

            

    

    

    
      	(b)  	
              Fifty
                percent (50%)
                of Farmor's interest down to Earning Depth in the balance of the
                Farmout
                Lands and in the Title Documents pertaining
                thereto.

            

    

    

    7.00
       OPTION
      WELL

    

    
      	
              7.01

            	
              Option
                Well 

            

    

    
      	 	
              Farmees
                have a period of three (3) months from the completion or abandonment
                of
                the test well to elect to join with Texalta in the drilling of a
                vertical
                test well to a depth of approximately 1200 meters to test the
                Mississippian (Alida) formation in LSD 13 of section 24, township
                7, range
                3 W2.

            

    

    

    
      	
              7.02

            	
              Interest
                to be Earned by Farmees - Option Well 

            

    

    
      	 	
              Upon
                payment by the Farmees of their 42.50% share of the cost of drilling,
                completing and equipping the test well on the Option Lands, Farmees
                shall
                have earned and Farmor shall hold in trust for
                Farmees:

            

    

    

    
      	(a)  	
              One
                hundred percent (100%) of Farmor’s interest down to earning depth in the
                Title Documents and Option Lands insofar as they comprise the test
                well in
                LSD 13 of section 24 subject to the lessor’s royalty as set forth in
                Schedule “A” and the Overriding Royalty reserved to Farmor until
                conversion of such Overriding Royalty on the same terms and conditions
                as
                apply in Clause 6 hereof;

            

    

    

    
      	(b)  	
              Fifty
                percent (50%) of Farmor’s interest down to earning depth in the balance of
                the Option Lands and in the Title Documents pertaining
                thereto.

            

    

    

    8.00
      AREA
      OF MUTUAL INTEREST

    

    
      	(a)  	
              It
                is understood and agreed that the term “additional lands” shall mean those
                lands within the area indicated on the attached Schedule “C” (hereinafter
                referred to as the “Area of Mutual
                Interest”).

            

    

    

    
      	(b)  	
              The
                Area of Mutual Interest shall remain in effect for a period commencing
                as
                of the date hereof and continuing for two (2) years from the rig
                release
                date of the test well if the test well is drilled. The Area of Mutual
                Interest shall be held by the parties in accordance with their working
                interests. 

            

    

    

    
      	(c)  	
              In
                the event that any party hereto acquires an interest or the right
                to
                acquire an interest in and to petroleum and natural gas rights or
                either
                of them in additional lands within the Area of Mutual Interest, that
                party
                shall forthwith give written notice thereof to the other parties
                of:

            

    

    
      	i)  	
              the
                interest acquired and the terms and conditions thereof; and;
                

            

    

    
      	ii)  	
              if
                the consideration is a form that the parties receiving notice cannot
                provide in kind, the fair market value
                thereof.

            

    

     

    
      
        
        

      

      
        6

        
          

        

      

      
        
        

      

    

     

    
      	(d)  	
              If
                any Crown rights are posted for sale by public tender within the
                Area of
                Mutual Interest, the parties shall consult each other with a view
                to
                reaching an agreeable bid price for the additional lands and, if
                agreement
                can be reached, Operator shall make a bid therefore in the names
                and on
                behalf of the parties hereto in the proportion of the respective
                participating interests. If agreement has not been reached twenty-four
                (24) hours before the hour of the sale, each party may tender separate
                bids and the provisions of subclause (c) of this clause shall not
                apply
                unless an party acquires an interest in such rights for a price that
                varies by more than five percent (5%) from the price which the acquiring
                party had presented it was prepared to agree to for the acquisition
                of
                such rights, in which event the acquiring party shall offer the same
                to
                the other parties as provide in subclause (c ) of this
                clause.

            

    

    

    
      	(e)  	
              Texalta
                shall be named Operator of any additional lands acquired under the
                provisions of this Clause and the additional lands shall be maintained
                and
                operated in accordance with the Operating
                Procedure.

            

    

    

    9.00 JOINT
      OPERATIONS

    

    9.01 Operating
      Procedure to Govern

    

    
      	 	
              Forthwith
                upon Farmees having earned their interest in the Farmout and Option
                Lands,
                the Farmout and Option Lands excluding the Test Well Spacing Unit
                and the
                Title Documents as they relate thereto shall become subject to the
                Operating Procedure which shall govern all future Operations of the
                parties with respect to the exploration, development and maintenance
                of
                such Farmout and Option Lands and Title
                Documents.

            

    

    

    9.02 Appointment
      of Operator

    

    
      	 	
              TEXALTA
                PETROLEUM LTD. is hereby appointed the Operator under the Operating
                Procedure, accepts such appointment and agrees to assume the duties,
                obligations and rights of the Operator under the Operating
                Procedure.

            

    

    

    9.03 Proposal
      of Joint Operations

    

    
      	 	
              Notwithstanding
                anything herein contained, the parties agree that no party shall
                propose
                any joint operations pursuant to the Operating Procedure until such
                time
                as Farmees have earned their complete interest under this Agreement
                or
                their right to earn has expired or been surrendered, whichever first
                occurs.

            

    

    

    10.00
      CONVERSION
      OF OVERRIDING ROYALTY

    

    10.01
      Farmor’s
      Right to Convert

    

    
      	(a)  	
              Upon
                payout being reached, Farmor shall automatically convert to an undivided
                working interest in the test well, all equipment therin and thereon
                and
                all production therefrom. Following payout the working interests
                in the
                test well will be as follows:

               

            

    

    
      	
              Texalta
                Petroleum Ltd.

            	
              57.50%

            
	
              Petrex
                Energy Ltd.

            	
              21.25%

            
	
              Odin
                Capital Inc.

            	
              2.50%

            
	
              Delta
                Oil and Gas (Canada) Inc.

            	
              7.50%

            
	
              Last
                Mountain Investments Inc.

            	
              2.50%

            
	
              264646
                Alberta Ltd.

            	
              2.50%

            
	
              LL
                & S Holdings Ltd.

            	
              2.50%

            
	
              0743608
                B.C. Ltd.

            	
              3.75%

            
	 	
              100.00%

            

    

     

    
      
        
        

      

      
        7

        
          

        

      

      
        
        

      

    

     

    11.00
      APPLICATION
      OF OPERATING PROCEDURE

    

    11.01 Incorporation
      of Clauses

    The
      following Clauses (including all Clauses contained within referenced Articles)
      of the Operating Procedure shall apply, mutatis mutandis, to this Agreement
      and
      to all Operations of Farmees carried out with respect to the Farmout Lands
      pursuant to this Agreement and shall be deemed to be incorporated herein and
      where reference in such Clauses is made to "Operator" the word " "
      shall
      be substituted therefor and, similarly, "Joint-Operator" shall be substituted
      by
      "Farmor" and "Participant", and "joint lands" shall be substituted by "Farmout
      Lands", provided, however, that nothing in any of the Clauses of the Operating
      Procedure that are incorporated by reference into this Agreement shall be
      interpreted to require Farmor to pay all or any portion of the cost or assume
      any of the risk of any Operation conducted pursuant hereto.

    

    Clause 304 Proper
      Practices in Operations

    Clause 305 Books,
      Records and Accounts

    Clause 306 Protection
      from Liens

    Clause 307 Joint-Operator's
      Rights of Access

    Clause 308 Surface
      Rights

    Clause 309 Maintenance
      of Leases

    Clause 311 Insurance
      (as amended)

    

    Article VIII Velocity
      Surveys and Other Geophysical Tests

    Article XV Relationship
      of Parties

    Article XVI Force
      Majeure

    Article XVII Cash
      and
      Acreage Contributions

    Article XVIII Confidential
      Information

    Article XX Waiver

    Article XXI Further
      Assurances

    Article XXII Notice
      

    Article XXIII No
      Partition

    Article XXV Perpetuities

    Article XXVII Miscellaneous

    

    12.00 ASSIGNMENT

    

    12.01 Permitted
      Assignments

    
      	 	
              Farmees
                shall not, during the period that they have a right to earn an interest
                hereunder, encumber, grant or assign any legal or equitable interest
                in
                this Agreement, the Title Documents or the Farmout Lands without
                the prior
                written consent of Farmor which consent shall not be unreasonably
                withheld. If after obtaining Farmor's consent, Farmees make any such
                assignment, then Farmees shall continue to be bound by and be responsible
                for carrying out the terms and conditions of this Agreement and Farmor
                shall only be required to look to Farmees for performance hereunder.
                Upon
                Farmees having earned their interest hereunder, any further assignment
                shall be subject to the provisions of the Operating Procedure.
                

            

    

    

    12.02 Assignments
      to More than One Party

    
      	 	
              Notwithstanding
                anything contained in this Agreement, in the event any Farmee wishes
                to
                assign to more than one party, Farmor may require such assignees,
                and the
                Farmee if it retains an interest, to appoint one of their number
                to act as
                representative for all of them to the end that Farmor shall never
                have to
                deal with more than one Farmee
                party.

            

    

     

    
      
        
        

      

      
        8

        
          

        

      

      
        
        

      

    

     

    13.00 MISCELLANEOUS

    

    13.01 Entire
      Agreement

    
      	 	
              The
                terms of this Agreement express and constitute the entire agreement
                amongst the parties and no implied covenants or liability of any
                kind on
                the part of the parties is created or shall arise by reason of anything
                contained in this Agreement. This Agreement supersedes all other
                agreements, documents, writings and verbal understandings amongst
                the
                parties relating to the Farmout
                Lands.

            

    

    

    13.02 Parties
      to do All Further Acts

    
      	 	
              The
                parties hereto shall from time to time and at all times without additional
                cost or charge to any other party hereto do all such further acts
                and
                execute and deliver all such further deeds and documents as shall
                be
                reasonably required in order fully to perform and carry out the terms
                of
                this Agreement.

            

    

    

    13.03 Conflicts

    
      	 	
              Wherever
                any term or condition of any Schedule conflicts or is at variance
                with any
                term or condition in the body hereof, the latter shall prevail. In
                the
                event of any conflict or inconsistency between the provisions of
                this
                Agreement and the Title Documents, the provisions of the Title Documents
                shall prevail.

            

    

    

    13.04 Headings

    
      	 	
              The
                headings of the clauses of this Agreement are inserted for convenience
                of
                reference only and shall not affect the meaning or construction
                thereof.

            

    

    

    13.05 Number
      and Gender

    
      	 	
              Whenever
                the singular or masculine or neuter is used in this Agreement, the
                same
                shall be construed as meaning plural or feminine or body politic
                or
                corporate and vice versa where the context so requires, and the expression
                "person" shall refer to a body corporate and to a governmental body,
                agency or department as well as to a natural
                person.

            

    

    

    13.06 Terms
      Binding Upon Farmout and Option Lands

    
      	 	
              All
                terms, covenants, provisions and conditions of this Agreement shall
                run
                with and be binding upon the Farmout and Option Lands during the
                term
                hereof.

            

    

    

    13.07 Counterpart
      Execution

    
      	 	
              This
                Agreement may be executed in counterpart and, when each party has
                executed
                a counterpart, all counterparts taken together shall constitute one
                Agreement.

            

    

    

    
      	
              13.08

            	
              Laws
                of Jurisdiction to
                Apply

            

    

    
      	 	
              This
                Agreement, the Operating Procedure and the relationship between the
                parties shall be construed and determined according to the laws of
                the
                Province of Alberta and the courts having exclusive jurisdiction
                with
                respect to any matters or thing arising or indirectly relative to
                this
                Agreement or to the Operating Procedure shall be the courts of the
                Province of Alberta.

            

    

    

    
      	
              13.09

            	
              Time
                of Essence

            

    

    
      	 	
              Time
                shall be of the essence in this
                Agreement.

            

    

    

    
      	
              13.10

            	
              Enurement

            

    

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

            

    

    

    13.11
      Use
      of Facilities

    Farmees
      have the right to process effluent from its share of production from the Farmout
      and Option Lands at existing treating and water disposal facilities located
      on
      or about 8-26-6-2 W2M. 

     

    
      
        
        

      

      
        9

        
          

        

      

      
        
        

      

    

     

    These
      facilities include, but are not limited to, inlet manifold, separation,
      treating, tanks, water disposal pumps, water disposal lines, and water disposal
      well. 

    

    The
      fee
      for use of such facilities shall be allocated on actual oil throughput through
      the facilities. Farmees proportionate share of such allocated costs shall be
      in
      accordance with its working interest. Such combined costs not to exceed $8.00
      per cubic meter for clean oil and $1.95 per cubic meter for produced
      water.

    

    The
      working interest owners reserve the right to audit the Operator’s books,
      accounts, and records relating to the fees for use of facilities and the actual
      costs of processing production from the Farmout and Option Lands. Article 108
      of
      the 1996 PASC Accounting Procedure attached to this agreement as Exhibit B,
      shall apply mutatis mutandis, to the audit of the fees for use of
      facilities.

    

    If
      the
      foregoing is in accordance with your understanding of the agreement reached
      between our companies, would you please indicate your acknowledgement and
      acceptance by signing and dating in the space provided and returning 1 copy
      of
      the execution page of this Agreement to this office.

    

    Yours
      truly,

    

    PETREX
      ENERGY LTD.

     

    /s/
      W.H. Nixon

    W.
      H.
      Nixon

    President

    

    /att

     

    
      
        
        

      

      
        10

        
          

        

      

      
        
        

      

    

     

    This
      is the counterpart execution page attached to and forming part of
      a

    Farmout,
      Option and Participation Letter Agreement dated the 10th
      day of
      April 2006 between 

    Petrex
      Energy Ltd., Texalta Petroleum Ltd., Odin Capital Inc., Delta Oil and Gas
      (Canada) Inc.,

    Last
      Mountain Investments Inc., 264646 Alberta Ltd., LL & S Holdings Ltd.
      and

    0743608
      B.C. Ltd.

    

    

    

    ACKNOWLEDGED
      AND AGREED TO
      this
      _______ day of _________________, 2006

    

            
/s/
      William Nixon

    Per:____________________________________________

    PETREX
      ENERGY LTD.

     

           
/s/
      William Nixon

    Per:____________________________________________

    TEXALTA
      PETROLEUM LTD.

    

    

    

    Per:____________________________________________

    ODIN
      CAPTIAL INC.

    

    

           
/s/
      Douglas Bolen

    Per:____________________________________________

    DELTA
      OIL AND GAS (CANADA) INC.

    

    

    

    Per:____________________________________________

    LAST
      MOUNTAIN INVESTMENTS INC.

    

    

    

    Per:____________________________________________

    264646
      ALBERTA LTD.

    

    

    

    Per:____________________________________________

    LL
      & S HOLDINGS LTD.

    

    

    

    Per:____________________________________________

    0743608
      B.C. LTD.

     

    
      
        
        

      

      
        11

        
          

        

      

      
        
        

      

    

    
      	 	
              
                This
                  is page 1 of Schedule “A” consisting of 2 pages, attached to and forming
                  part of a Farmout, Option and Participation Letter Agreement dated
                  the
                  10th day of APRIL 2006 between Petrex Energy Ltd., Texalta Petroleum
                  Ltd.,
                  Odin Capital Inc., Delta Oil and Gas (Canada) Inc., Last Mountain
                  Investments Inc., 264646 Alberta Ltd., Chessor Holdings Ltd. and
                  0743608
                  B.C. Ltd.

              

            
	
              FARMOUT
                LANDS

            	 	 	 	 	 	 	 
	 	 	 	 	
               

            	 	 	 	 	 
	 	
              Land

            	
              File
                No(s):

            	
              Lease
                Type

            	
              Lease
                Date

            	
              Lessor(s)

            	
              Lessor(s)
                Interest

            	
              Lease
                Term

            	
              Lessor(s)
                Royalty

            
	
              1

            	
              SE/4
                14-7-3 W2M

            	
              L.2-238

            	
              L.6-063

            	
              FREEHOLD
                P&NG 

            	
              2003-Jul-04

            	
              MARY
                LEONA PORTER (A.K.A. LEONA RINGROSE) EXECUTRIX OF THE ESTATE OF RUBY
                ANDERSON

            	
              2/24
                Interest

            	
              3
                Years

            	
              15%

            
	
              2

            	
              SE/4
                14-7-3 W2M

            	
              L.2-239

            	
              L.6-064

            	
              FREEHOLD
                P&NG 

            	
              2003-Jun-16

            	
              HELEN
                WEBB

            	
              2/24
                Interest

            	
              3
                Years

            	
              15%

            
	
              3

            	
              SE/4
                14-7-3 W2M

            	
              L.2-240

            	
              L.6-065

            	
              FREEHOLD
                P&NG 

            	
              2003-Jun-27

            	
              ESTATE
                OF R. D. ROBINSON

            	
              2/24
                Interest

            	
              3
                Years

            	
              15%

            
	
              4

            	
              SE/4
                14-7-3 W2M

            	
              L.2-241

            	
              L.6-066

            	
              FREEHOLD
                P&NG 

            	
              2003-Jul-10

            	
              JOHN
                ROBINSON

            	
              2/24
                Interest

            	
              3
                Years

            	
              15%

            
	
              5

            	
              SE/4
                14-7-3 W2M

            	
              L.2-242

            	
              L.6-067

            	
              FREEHOLD
                P&NG 

            	
              2003-Jun-22

            	
              NOREEN
                HAYTER

            	
              2/24
                Interest

            	
              3
                Years

            	
              15%

            
	
              6

            	
              SE/4
                14-7-3 W2M

            	
              L.2-243

            	
              L.6-068

            	
              FREEHOLD
                P&NG 

            	
              2003-Jul-10

            	
              MASIE
                KERR ROBINSON EXECTRIX FOR BILL ROBINSON

            	
              2/24
                Interest

            	
              3
                Years

            	
              15%

            
	
              7

            	
              SE/4
                14-7-3 W2M

            	
              L.2-244

            	
              L.6-069

            	
              FREEHOLD
                P&NG 

            	
              2003-Jun-19

            	
              ISABEL
                MCKENZIE

            	
              2/24
                Interest

            	
              3
                Years

            	
              15%

            
	
              8

            	
              SE/4
                14-7-3 W2M

            	
              L.2-245

            	
              L.6-070

            	
              FREEHOLD
                P&NG 

            	
              2003-Jun-19

            	
              MARGARET
                STEPHENSON

            	
              2/24
                Interest

            	
              3
                Years

            	
              15%

            
	
              9

            	
              SE/4
                14-7-3 W2M

            	
              L.2-246

            	
              L.6-071

            	
              FREEHOLD
                P&NG 

            	
              2003-Jun-15

            	
              CHARLES
                HENRY STEPHENSON

            	
              2/24
                Interest

            	
              3
                Years

            	
              15%

            
	
              10

            	
              SE/4
                14-7-3 W2M

            	
              L.2-247

            	
              L.6-072

            	
              FREEHOLD
                P&NG 

            	
              2003-Oct-10

            	
              RONALD
                McCLINCHEY, RAYMOND McCLINCHEY,JEAN IMANSE AND JOANNE
                BRUNK

            	
              2/24
                Interest

            	
              3
                Years

            	
              15%

            
	
              11

            	
              SE/4
                14-7-3 W2M

            	
              L.2-248

            	
              L.6-073

            	
              FREEHOLD
                P&NG 

            	
              2003-Jun-13

            	
              HELEN
                TAYLOR

            	
              2/24
                Interest

            	
              3
                Years

            	
              15%

            
	
              12

            	
              NE/4
                14-7-3 W2M

            	
              L.2-339

            	
              L.6-175

            	
              CROWN
                P&NG PN#54268

            	
              2004-Aug-10

            	
              SASKATCHEWAN
                INDUSTRY & RESOURCES

            	
               

            	
              5
                Years

            	
              Crown

            
	
              13

            	
              NW/4
                14-7-3 W2M

            	
              L.2-340

            	
              L.6-176

            	
              FREEHOLD
                P&NG 

            	
              2006-Mar-25

            	
              JOHN
                BAX 

            	
              100.00%

            	
              3
                Years

            	
              15%

            
	
              14

            	
              NE/4
                15-7-3 W2M

            	
              L.2-341

            	
              L.6-177

            	
              FREEHOLD
                P&NG 

            	
              2006-Mar-25

            	
              JOHN
                BAX 

            	
              100.00%

            	
              3
                Years

            	
              15%

            
	
              15

            	
              SW/4
                15-7-3 W2M

            	
              L.2-342

            	
              L.6-178

            	
              FREEHOLD
                P&NG 

            	
              2006-Mar-25

            	
              JOHN
                BAX 

            	
              100.00%

            	
              3
                Years

            	
              15%

            
	 	 	 	 	 	 	 	 	 	 
	
              OPTION
                LANDS

            	 	 	 	 	 	 	 
	 	 	 	 	 	 	 	 	 	 
	 	
              Land

            	
              File
                No(s):

            	
              Lease
                Type

            	
              Lease
                Date

            	
              Lessor(s)

            	
              Lessor(s)
                Interest

            	
              Lease
                Term

            	
              Lessor(s)
                Royalty

            
	
              1

            	
              NW/4
                24-7-3 W2M

            	
              L.2-338

            	
              L.6-174

            	
              CROWN
                P&NG PN#57355

            	
              2006-Feb-14

            	
              SASKATCHEWAN
                INDUSTRY & RESOURCES

            	
               

            	
              5
                Years

            	
              Crown

            
	
              2

            	
              SW/4
                23-7-3 W2M

            	
              L.2-345

            	
              L.6-181

            	
              FREEHOLD
                P&NG 

            	
              2006-Mar-14

            	
              DALE
                KEITH CUTLER

            	
              1/2
                Interest

            	
              4
                Years

            	
              15%

            
	
              3

            	
              SE/4
                23-7-3 W2M

            	
              L.2-346

            	
              L.6-182

            	
              FREEHOLD
                P&NG 

            	
              2006-Mar-14

            	
              DALE
                KEITH CUTLER

            	
              1/2
                Interest

            	
              4
                Years

            	
              15%

            
	
              4

            	
              NE/4
                23-7-3 W2M

            	
              L.2-343

            	
              L.6-179

            	
              FREEHOLD
                P&NG 

            	
              2006-Mar-17

            	
              ROBERT
                JAMES CUTLER & DELORES ELAINE CUTLER

            	
              100.00%

            	
              4
                Years

            	
              15%

            
	
              5

            	
              NW/4
                23-7-3 W2M

            	
              L.2-344

            	
              L.6-180

            	
              FREEHOLD
                P&NG 

            	
              2006-Mar-17

            	
              ROBERT
                JAMES CUTLER & DELORES ELAINE CUTLER

            	
              100.00%

            	
              4
                Years

            	
              15%

            
	
              6

            	
              S/2
                25-7-3 W2M

            	
              L.2-336

            	
              L.6-172

            	
              FREEHOLD
                P&NG 

            	
              2005-Nov-03

            	
              CHARLOTTE
                KISSOCK

            	
              1/2
                Interest

            	
              3
                Years

            	
              15%

            

    

    
       

      
        
        

      

      
        12

        
          

        

      

      
        
        

      

    

    This
      is page 2 of 2 of Schedule “A” consisting of 2 pages, attached to and forming
      part of a Farmout, Option and Participation Letter Agreement

    dated
      the 10th day
      of APRIL 2006 between Petrex Energy Ltd., Texalta Petroleum Ltd., Odin Capital
      Inc., Delta Oil and Gas 

    (Canada)
      Inc., Last Mountain Investments Inc., 264646 Alberta Ltd., LL & S Holdings
      Ltd. and 0743608
      B.C. Ltd.

     

    BPO
      / APO WORKING INTERESTS

    TO
      BASE OF MISSISSIPPIAN (ALIDA) FORMATION

     

    

    FARMOUT
      LANDS

    
      Test
        Well

    

    
      	
            	
              BPO

            	
              APO

            
	
              Texalta
                Petroleum Ltd.

            	
              57.50%

            	
              57.50%

            
	
              Petrex
                Energy Ltd.

            	
              0.00%

            	
              21.25%

            
	
              Odin
                Capital Inc. 

            	
              **5.00%

            	
              2.50%

            
	
              Delta
                Oil and Gas (Canada) Inc.
                

            	
              **15.00%

            	
              7.50%

            
	
              Last
                Mountain Investments Inc. 

            	
              **5.00%

            	
              2.50%

            
	
              264646
                Alberta Ltd. 

            	
              **5.00%

            	
              2.50%

            
	
              LL
                & S Holdings Ltd. 

            	
              **5.00%

            	
              2.50%

            
	
              0743608
                B.C. Ltd. 

            	
              **7.50%

            	
              3.75%

            
	 	
              100.00%

            	
              100.00%

            

      
        Balance
          of Farmout Lands

      

      
        	
              	
                 

              
	
                Texalta
                  Petroleum Ltd.

              	
                57.50%

              
	
                Petrex
                  Energy Ltd.

              	
                21.25%

              
	
                Odin
                  Capital Inc. 

              	
                2.50%

              
	
                Delta
                  Oil and Gas (Canada) Inc.
                  

              	
                7.50%

              
	
                Last
                  Mountain Investments Inc. 

              	
                2.50%

              
	
                264646
                  Alberta Ltd. 

              	
                2.50%

              
	
                LL
                  & S Holdings Ltd. 

              	
                2.50%

              
	
                0743608
                  B.C. Ltd. 

              	
                3.75%

              
	 	
                100.00%

              

      

    

     

    OPTION
      LANDS

    
      Test
        Well

    

    
      	 	
              BPO

            	
              APO

            
	
              Texalta
                Petroleum Ltd.

            	
              57.50%

            	
              57.50%

            
	
              Petrex
                Energy Ltd.

            	
              0.00%

            	
              21.25%

            
	
              Odin
                Capital Inc. 

            	
              **5.00%

            	
              2.50%

            
	
              Delta
                Oil and Gas (Canada) Inc.
                

            	
              **15.00%

            	
              7.50%

            
	
              Last
                Mountain Investments Inc. 

            	
              **5.00%

            	
              2.50%

            
	
              264646
                Alberta Ltd. 

            	
              **5.00%

            	
              2.50%

            
	
              LL
                & S Holdings Ltd. 

            	
              **5.00%

            	
              2.50%

            
	
              0743608
                B.C. Ltd. 

            	
              **7.50%

            	
              3.75%

            
	 	
              100.00%

            	
              100.00%

            

    

    Balance
      of Option Lands

    
      
        	 	
                 

              
	
                Texalta
                  Petroleum Ltd.

              	
                57.50%

              
	
                Petrex
                  Energy Ltd.

              	
                21.25%

              
	
                Odin
                  Capital Inc. 

              	
                2.50%

              
	
                Delta
                  Oil and Gas (Canada) Inc.
                  

              	
                7.50%

              
	
                Last
                  Mountain Investments Inc. 

              	
                2.50%

              
	
                264646
                  Alberta Ltd. 

              	
                2.50%

              
	
                LL
                  & S Holdings Ltd. 

              	
                2.50%

              
	
                0743608
                  B.C. Ltd. 

              	
                3.75%

              
	 	
                100.00%

              

      

       

    

    **
      Subject to a 5.00% GORR to Petrex Energy Ltd. until
      payout.

    

    
      
        
        

      

      
        13

        
          

        

      

      
        
        

      

    

     

    
      This
        is page1 of 2 of Schedule “B” consisting of 2 pages, attached to and forming
        part of a Farmout, Option and Participation Letter Agreement dated the 10th
        
        day
          of APRIL 2006 between Petrex Energy Ltd., Texalta Petroleum Ltd., Odin
          Capital
          Inc., Delta Oil and Gas 

        (Canada)
          Inc., Last Mountain Investments Inc., 264646 Alberta Ltd., LL & S Holdings
          Ltd. and 0743608
          B.C. Ltd.

      

    

     

    SCHEDULE
      “B”

    

    ELECTIONS
      AND RATES FOR THE 1990 CAPL OPERATING PROCEDURE

    

    
      	
              ARTICLE

            	
              CLAUSE

            	 	 
	
              III

            	
              311

            	
              Insurance

            	
              “B”

            
	
              VI

            	
              604

            	
              Marketing
                Fee

            	
              “A”

            
	
              IX

            	
              903

            	
              Casing
                Point Election

            	
              “A”

            
	
              X

            	
              1007

            	
              Penalty

            	
              Horizontal
                wells: 400% - Dev.; 600% - Expl.

            
	 	
              1010

            	
              Title
                Preservation

            	
              365
                days

            
	
              XXII

            	
              2202

            	
              Notices

            	 
	
               

            
	
               

              Mr.
                William Nixon

              Petrex
                Energy Ltd.

              8228
                Elbow Drive S.W.

              Calgary,
                AB T2V 1K4

              PH:
                (403) 255-8190

              FX:
                (403) 255-8007

              E-mail:
                petrex@texalta.com

            	
               

              Mr.
                William Nixon

              Texalta
                Petroleum Ltd.

              8228
                Elbow Drive S.W.

              Calgary,
                AB T2V 1K4

              PH:
                (403) 255-8380

              FX:
                (403) 255-8007

              E-mail:
                texalta@texalta.com

            	
               

              Mr.
                Peter Philipchuck

              Odin
                Capital Inc.

              P.O.
                Box 36007, Lakeview RPO

              6449
                Crowchild Trail S.W.

              Calgary,
                AB T3E 7C6

              PH:
                (403) 461-6790

              FX:
                (403) 246-7935

              E-mail:
                peter@winenergycorp.com

            
	 	 	 
	
              Mr.
                Douglas Bolen

              Delta
                Oil and Gas (Canada) Inc.

              300,
                1055 West Hastings Street

              Vancouver,
                BC V6E 2E9

              PH:
                (604) 506-4243

              FX:
                (604) 602-1525

              E-Mail:
                douglasbolen@yahoo.com

            	
              Last
                Mountain Investments Inc.

              608
                Sandollar Place

              Tsawwassen,
                BC V4L 2G9

              PH:
                (604) 506-4243

              FX:
                (604) 602-1525

              E-Mail:
                na

            	
              Mr.
                Victor Walls

              264646
                Alberta Ltd.

              6711
                Golden West Avenue

              Red
                Deer, AB T4P 1A7

              PH:
                (403) 343-1177

              FX:
                (403) 346-9690

              E-Mail:
                asphalt@borderpaving.com

            
	 	 	 
	
              Mr.
                John Niedermaier

              LL
                & S Holdings Ltd.

              200,
                435 - 4th
                Avenue S.W.

              Calgary,
                AB T2P 3A8

              PH:
                (403) 262-2288

              FX:
                (403) 266-3810

              E-Mail:
                jan@micasa-rentals.com

            	
              Mr.
                Chris Bunka

              0743608
                B.C. Ltd.

              5774
                Deadpine Drive

              Kelowna,
                BC V1P 1A3

              PH:
                (250) 765-6424

              FX:
                (250) 765-4408

              E-Mail:
                bossbunka@gmail.com

            	 
	 	 	 	 
	 	 	 	 
	
              XXIV

            	
              2401

            	
              Right
                to assign, sell or dispose

            	
              “A”

            
	 	
              2404

            	
              Recognition
                upon Assignment

            	
              The
                parties hereto agree to adopt and abide by the provisions of the
                CAPL 1993
                Assignment Procedure

            

    

     

    
      
        
        

      

      
        14

        
          

        

      

      
        
        

      

    

     

    
      This
        is page2 of 2 of Schedule “B” consisting of 2 pages, attached to and forming
        part of a Farmout, Option and Participation Letter Agreement

      dated
        the 10th day
        of APRIL 2006 between Petrex Energy Ltd., Texalta Petroleum Ltd., Odin Capital
        Inc., Delta Oil and Gas 

      (Canada)
        Inc., Last Mountain Investments Inc., 264646 Alberta Ltd., LL & S Holdings
        Ltd. and 0743608
        B.C. Ltd.

    

     

    RATES
      AND ELECTIONS TO THE 1996 PASC ACCOUNTING

    

    

    
      	
              ARTICLE

            	
              CLAUSE

            	 	 
	
              I

            	
              105

            	
              Operating
                Fund

            	
              (a)
                10% of approved forecast

            
	 	
              110

            	
              Approvals

            	
              Approvals
                from one 2 or more party having interest in the Joint Property totalling
                75%

            
	 	
              112

            	
              Expenditure
                Limitations

            	
              (a)
                $25,000.00

            
	 	 	 	
              (c)
                $25,000.00

            
	
              II

            	
              202

            	
              Employee
                Benefits

            	
              (b)
                Non-Compulsory - 25%

            
	
              III

            	
              302

            	
              Overhead

            	 
	 	
              (a)

            	
              For
                each Exploration Project

            	
              (1)
                5% of the first $50,000 plus

            
	 	 	 	
              (2)
                3% of the next $100,000 plus

            
	 	 	 	
              (3)
                1% of the cost exceeding $150,000

            
	 	
              (b)

            	
              For
                each Drilling Well

            	
              (1)
                5% of the first $50,000 plus

            
	 	 	 	
              (2)
                3% of the next $100,000 plus

            
	 	 	 	
              (3)
                1% of the cost exceeding $150,000

            
	 	
              (c)

            	
              For
                each Construction Project

            	
              (1)
                5% of the first $50,000 plus

            
	 	 	 	
              (2)
                3% of the next $100,000 plus

            
	 	 	 	
              (3)
                1% of the cost exceeding $150,000

            
	 	
              (d)

            	
              For
                each subsequent Construction Project

            	
              (1)
                5% of the first $50,000 plus

            
	 	 	 	
              (2)
                3% of the next $100,000 plus

            
	 	 	 	
              (3)
                1% of the cost exceeding $150,000

            
	 	
              (e)

            	
              For
                Operation and Maintenance

            	
              (2)
                $350 per producing well / month

              Sub
                clause 302(e)(2) shall be adjusted the 1st
                day of October each year 

            
	
              IV

            	
              406

            	
              Dispositions

            	
              $25,000

            

    

    

    
      
        
        

      

      
        15

        
          

        

      

      
        
        

      

    

    
       

      This
        is Schedule “C” attached to and forming part of a Farmout, Option and
        Participation Letter Agreement 

      dated
        the 10th day of APRIL 2006 between Petrex Energy Ltd., Texalta Petroleum
        Ltd.,
        Odin Capital Inc., Delta Oil and Gas 

      (Canada)
        Inc., Last Mountain Investments Inc., 264646 Alberta Ltd., LL & S Holdings
        Ltd. and 0743608 B.C. Ltd.EXHIBIT 10.1

AMCOL INTERNATIONAL CORPORATION
 2006 LONG-TERM INCENTIVE PLAN

             1.            Preamble.

             AMCOL International Corporation, a Delaware corporation (the “Company”), hereby establishes the AMCOL International Corporation 2006 Long-Term Incentive Plan (the “Plan”) as a means whereby the Company may, through awards of (i) incentive stock options (“ISOs”) within the meaning of section 422 of the Code, (ii) non-qualified stock options (“NSOs”), (iii) stock appreciation rights (“SARs”), (iv) restricted stock (“Restricted Stock”) and (v) restricted stock units (“Restricted Stock Units”):

	
  
 
  	
  
(a)
  	
  
provide selected officers,   directors and employees with additional incentive to promote the success of   the Company’s business;
  
	
  
 
  	
  
 
  	
  
 
  
	
  
 
  	
  
(b)
  	
  
encourage such persons to   remain in the service of the Company; and
  
	
   
  	
  
 
  	
  
 
  
	
  
 
  	
  
(c)
  	
  
enable such persons to   acquire proprietary interests in the Company.
  

             2.          Definitions and Rules of Construction.

             2.01     “Affiliate” means any entity during any period that, in the opinion of the Committee, the Company has a significant economic interest in the entity.

             2.02     “Award” means the grant of Options, SARs, Restricted Stock and/or Restricted Stock Units to a Participant.

             2.03     “Award Date” means the date upon which an Award is awarded to a Participant under the Plan.

             2.04     “Board” or “Board of Directors” means the board of directors of the Company.

             2.05     “Cause” with respect to any Award shall have the meaning set forth in the Participant’s employment agreement, or if no meaning is set forth in the Participant’s employment agreement or there is no employment agreement, “Cause” shall mean: Participant’s commission of a felony or misdemeanor that involves fraud, dishonesty or moral turpitude; or Participant’s gross negligence or willful or intentional material misconduct in the performance of his duties.  The Participant shall be considered to have been discharged for “Cause” if the Company determines, within 30 days after the Participant’s resignation, that discharge for Cause was warranted.

             2.06     “Change of Control” with respect to any Award shall have the meaning set forth in the Participant’s employment agreement, or if no meaning is set forth in the Participant’s employment agreement or there is no employment agreement, “Change of Control” shall be deemed to have occurred on the first to occur of any of the following:

	
  
 
  	
  
(a)
  	
  
any person (as such term   is used in Rule 13d-5 under the Exchange Act) or group (as such term is   defined in Section 3(a)(9) and 13(d)(3) of the Exchange Act), other than a   Subsidiary, any employee benefit plan (or any related trust) of the Company   or any of its Subsidiaries or any Excluded Person, becomes the Beneficial   Owner (as defined in Rule 13d-3 (or any successor rule) of the Securities and   Exchange Commission under the Exchange Act of 1934) of 50.1% or more of the   Common Stock of the Company or of Voting Securities representing 50.1% or   more of the combined voting power of the Company (such a person or group, a   “50.1% Owner”), except that (i) no Change of Control shall be deemed to have   occurred solely by reason of such beneficial ownership by a corporation with   respect to which both more than 49.9% of the common stock of such corporation   and Voting Securities representing more than 49.9% of the aggregate voting   power of
such corporation are then owned, directly or indirectly, by the   persons who were the direct or indirect owners of the common stock and Voting   Securities of the Company immediately before such acquisition in   substantially the same proportions as their ownership, immediately before   such acquisition, of the Common Stock and Voting Securities of the Company,   as the case may be and (ii) such corporation shall not be deemed a 50.1%   Owner; or
  

	
  
 
  	
  
(b)
  	
  
the Incumbent Directors   (determined using the Effective Date of this Plan as the baseline) cease for   any reason to constitute at least one-half of the directors of the Company   then serving; or
  
	
  
 
  	
  
 
  	
  
 
  
	
  
 
  	
  
(c)
  	
  
immediately prior to the   consummation by the Company of a merger, reorganization, consolidation, or   similar transaction, or a plan or agreement for the sale or other disposition   of 50.1% of the consolidated assets of the Company or a plan of liquidation   of the Company (any of the foregoing transactions, a “Reorganization   Transaction”) which is not an Exempt Reorganization Transaction (provided   however, there shall be no Change of Control unless the Reorganization Transaction   is actually consummated); or
  
	
  
 
  	
  
 
  	
  
 
  
	
   
  	
  
(d)
  	
  
the approval by the   stockholders of the Company of a plan of liquidation of the Company which,   based on information included in the proxy and other written materials   distributed to the Company’s stockholders in connection with the solicitation   by the Company of such stockholder approval, is not expected to qualify as an   Exempt Reorganization Transaction.
  
	
  
 
  	
  
 
  	
  
 
  

             2.07     “Code” means the Internal Revenue Code of 1986, as amended from time to time or any successor thereto.

             2.08     “Committee” means the Compensation Committee of the Board of Directors.

             2.08     “Common Stock” means Common Stock of the Company, par value $.01 per share.

             2.10     “Company” means AMCOL International Corporation, a Delaware corporation, and any successor thereto.

             2.11     “Covered Employee” means an Employee who is, or as determined by the Committee may become, a “covered employee” within the meaning of section 162(m) of the Code (or any successor provision), which generally means, the chief executive officer and the four other highest compensated executive officers of the Company for whom total compensation is required to be reported to stockholders under the Securities Exchange Act of 1934.

             2.12     “Exchange Act” shall mean the Securities Exchange Act of 1934, as it exists now or from time to time may hereafter be amended.

             2.13     “Excluded Person” means any of the Paul Bechtner Trust, Everett P. Weaver, The Estate of William D. Weaver or any Named Executive, any Affiliates or Family Member of any of the foregoing and any group (as such term is defined in Section 3(a)(9) and 13(d)(3) of the Exchange Act) of which any of the foregoing is a member.

             2.14     “Exempt Reorganization Transaction” means a Reorganization Transaction which results (i) in the Persons who were the direct or indirect owners of the outstanding Common Stock and Voting Securities of the Company immediately before such Reorganization Transaction becoming, immediately after the consummation of such Reorganization Transaction, the direct or indirect owners of both more than 49.9% of the then-outstanding common stock of the Surviving Corporation and Voting Securities representing more than 49.9% of the aggregate voting power of the Surviving Corporation, in substantially the same respective proportions as such Persons’ ownership of the common stock and voting Securities of the Company immediately before such Reorganization Transaction; (ii) in the Excluded Person owning 50% or more of the common stock of the Surviving
Corporation or Voting Securities representing 50% or more of the combined voting power of the Surviving Corporation; or (iii) from any merger, reorganization, consolidation or similar transaction or a plan or agreement for sale or other disposition of 50.1% of the consolidated assets of the Company or a plan of liquidation of the Company pursuant to the Bankruptcy Code of Title 11 of the United States Code, as amended from time to time, or any similar or successor statute, domestic or foreign.

             2.15     “Fair Market Value” means as of any date, the closing price for the Common Stock on that date, or if no sales occurred on that date, the next trading day on which actual sales occurred (as reported by the New York Stock Exchange or any securities exchange or automated quotation system of a registered securities association on which the Common Stock is then traded or quoted).

             2.16     “Family Members” mean with respect to an individual, any child, stepchild, grandchild, parent, stepparent, grandparent, spouse, former spouse, sibling, niece, nephew, mother-in-law, father-in-law, son-in-law, daughter-in-law, brother-in-law, or sister-in-law, including adoptive relationships, any person sharing the individual’s household (other than a tenant or employee), a trust in which these persons have more than 50% of the beneficial interest, a foundation in which these persons (or the individual) control the management of assets, and any other entity in which these persons (or the individual) own more than 50% of the voting interests.

             2.17     “Good Reason” with respect to any Award shall have the meaning set forth in the Participant’s employment agreement, or if no meaning is set forth in the Participant’s employment agreement or there is no employment agreement, shall mean any of the following:

	
  
 
  	
  
(a)
  	
  
any significant diminution   in the Participant’s title, authority, or responsibilities from and after a   Change of Control;
  
	
  
 
  	
  
 
  	
  
 
  
	
  
 
  	
  
(b)
  	
  
any reduction in the base   compensation payable to the Participant from and after a Change of Control;   or
  
	
   
  	
  
 
  	
  
 
  
	
  
 
  	
  
(c)
  	
  
the relocation after a   Change of Control of the Company’s place of business at which the Participant   is principally located to a location that is greater than 50 miles from the   site immediately prior to the Change of Control.
  

             2.18     “Incumbent Directors” means individuals serving as members of the Board as of the Effective Date of this Plan; provided that any subsequently-appointed or elected member of the Board whose election, or nomination for election by stockholders of the Company or the Surviving Corporation, as applicable, was approved by a vote or written consent of at least one-half of the directors then comprising the Incumbent Directors shall also thereafter be considered an Incumbent Director, unless the initial assumption of office of such subsequently-elected or appointed director was in connection with (i) an actual or threatened election contest, including a consent solicitation, relating to the election or removal of one or more members of the Board, (ii) a “tender offer” (as such term is used in Section 14(d) of the Exchange Act), (iii) a
proposed Reorganization Transaction, or (iv) a request, nomination or suggestion of any Beneficial Owner of Voting Securities representing 35% or more of the aggregate voting power of the Voting Securities of the Company or the Surviving Corporation, as applicable.

             2.19     “ISO” means an incentive stock option within the meaning of section 422 of the Code. “NSO” means a non-qualified stock option which is not intended to or does not qualify as an ISO under section 422 of the Code.

             2.21     “Option” means an ISO or an NSO.

             2.22     “Option Price” means the price per share of Common Stock at which an Option may be exercised.

             2.23     “Participant” means an individual to whom an Award has been granted under the Plan.

             2.24     “Performance Criteria” means the criteria the Committee selects for purposes of establishing the Performance Goal or Performance Goals for a Participant for a Performance Period.  The Performance Criteria that will be used to establish Performance Goals are limited to the following: (i) return on capital; (ii) earnings per share; (iii) net sales; (iv) net earnings; (v) net operating profits; (vi) expense control; (vii) working capital relating to inventory and/or accounts receivable; (viii) operating margin; (ix) share price performance; (x) implementation or completion of critical projects; and (xi) total return to shareholders.  The Committee shall, within the time prescribed by section 162(m) of the Code, define in an objective fashion the manner of calculating the Performance Criteria it selects to use for such Performance Period
for such Participant.

             2.25     “Performance Goals” means the goals established in writing by the Committee for the Performance Period based upon the Performance Criteria.  Depending on the Performance Criteria used to establish such Performance Goals, the Performance Goals may be expressed in terms of overall Company performance or the performance of an Affiliate, a division or business unit of the Company, or an individual.  The Committee shall establish Performance Goals for each Performance Period prior to, or as soon as practicable after, the commencement of such Performance Period.  The Committee, in its discretion, may, within the time prescribed by section 162(m) of the Code, adjust or modify the calculation of Performance Goals for such Performance Period in order to prevent the dilution or enlargement of the rights of Participants (i) in the event of,
or in anticipation of, any unusual or extraordinary corporate item, transaction, event, or development, or (ii) in recognition of, or in anticipation of, any other unusual or nonrecurring events affecting the Company, or the financial statements of the Company, or in response to, or in anticipation of, changes in applicable laws, regulations, accounting principles, or business conditions.

             2.26     “Performance Period” means the designated period during which the Performance Goals must be satisfied with respect to the Award to which the Performance Goals relate.

             2.27     “Plan” means this AMCOL International Corporation 2006 Long-Term Incentive Plan, as set forth herein and from time to time amended.

             2.28     “Qualified Performance-Based Award” means an Award that is intended to qualify as “qualified performance-based compensation” within the meaning of section 162(m) of the Code and is designated as a Qualified Performance-Based Award pursuant to Section 14 hereof.

             2.29     “Restricted Stock” means the Common Stock awarded to a Participant pursuant to Section 8 of this Plan.

             2.30     “Restricted Stock Unit” means a unit awarded to a Participant pursuant to Section 8 of this Plan evidencing the right of a Participant to receive a fixed number of shares of Common Stock at some future date. 

             2.31     “SAR” means a stock appreciation right issued to a Participant pursuant to Section 9 of this Plan.

             2.32     “SEC” means the Securities and Exchange Commission.

             2.33     “Subsidiary” means any entity during any period which the Company owns or controls more than 50% of (i) the outstanding capital stock, or (ii) the combined voting power of all classes of stock.

             2.34     “Surviving Corporation” means the corporation resulting from a Reorganization Transaction or, if securities representing more than 50% of the aggregate Voting Power of such resulting corporation are directly or indirectly owned by another corporation, such other corporation.

             2.35     “Voting Securities” of a corporation means securities of such corporation that are entitled to vote generally in the election of directors of such corporation, but not including any other class of securities of such corporation that may have voting power by reason of the occurrence of a contingency.

             2.36
      Rules of Construction:

	
  
 
  	
  
          2.36.1     Governing   Law and Venue.  The construction   and operation of this Plan are governed by the laws of the State of Delaware   without regard to any conflicts or choice of law rules or principles that   might otherwise refer construction or interpretation of this Plan to the   substantive law of another jurisdiction, and any litigation arising out of   this Plan shall be brought in the Circuit Court of the State of Illinois or   the United States District Court for the Eastern Division of the Northern   District of Illinois.
  
	
  
 
  	
  
 
  
	
   
  	
  
          2.36.2     Undefined   Terms.  Unless the context   requires another meaning, any term not specifically defined in this Plan is   used in the sense given to it by the Code.
  
	
  
 
  	
  
 
  
	
  
 
  	
  
          2.36.3     Headings.  All headings in this Plan are for   reference only and are not to be utilized in construing the Plan.
  
	
  
 
  	
  
 
  
	
  
 
  	
  
          2.36.4     Conformity   with Section 422.  Any ISOs issued   under this Plan are intended to qualify as incentive stock options described   in section 422 of the Code, and all provisions of the Plan relating to ISOs   shall be construed in conformity with this intention.  Any NSOs issued under this Plan are not   intended to qualify as incentive stock options described in section 422 of   the Code, and all provisions of the Plan relating to NSOs shall be construed   in conformity with this intention.
  
	
  
 
  	
  
 
  
	
  
 
  	
  
          2.36.5     Gender.  Unless clearly inappropriate, all nouns of   whatever gender refer indifferently to persons or objects of any gender.
  
	
   
  	
  
 
  
	
  
 
  	
  
          2.36.6     Singular   and Plural.  Unless clearly   inappropriate, singular terms refer also to the plural and vice versa.
  
	
  
 
  	
  
 
  
	
  
 
  	
  
          2.36.7     Severability.  If any provision of this Plan is   determined to be illegal or invalid for any reason, the remaining provisions   are to continue in full force and effect and to be construed and enforced as   if the illegal or invalid provision did not exist, unless the continuance of   the Plan in such circumstances is not consistent with its purposes.
  

             3.         Stock Subject to the Plan.

             3.01     General Limitation.  Subject to adjustment as provided in Section 12 hereof, the aggregate number of shares of Common Stock for which Awards may be issued under this Plan may not exceed 1,500,000 shares.  Reserved shares may be either authorized but unissued shares or treasury shares, in the Board’s discretion.  If any Award shall terminate, expire, be cancelled or forfeited as to any number of shares of Common Stock (other than a cancellation within the meaning of Code section 162(m)), new Awards may thereafter be awarded with respect to such shares.  

             3.02     Individual Limitations.  Subject to adjustment as provided in Section 12 of the Plan:

	
  
 
  	
  
(a)
  	
  
the maximum number of   shares of Common Stock with respect to which Awards may be granted to any   individual during any one calendar year is 200,000 shares; and
  
	
  
 
  	
  
 
  	
  
 
  
	
  
 
  	
  
(b)
  	
  
the maximum number of   shares of Common Stock with respect to Qualified Performance-Based Awards   that can be paid to any Covered Employee under the Plan for a Performance   Period is 100,000 shares.
  

             3.03     Incentive Stock Option Limitation.  Subject to adjustment as provided in Section 12 of the Plan, the maximum number of shares of Common Stock for which Awards may be granted under the Plan pursuant to ISOs shall be 500,000. 

             3.04     Restricted Stock Limitation.  Subject to adjustment as provided in Section 12 of the Plan, the maximum number of shares of Common Stock for which Awards of Restricted Stock and Restricted Stock Units may be granted under the Plan shall be 500,000.  

             4.          Administration.

             The Committee shall administer the Plan.  All determinations of the Committee are made by a majority vote of its members.  The Committee’s determinations are final and binding on all Participants.  In addition to any other powers set forth in this Plan, the Committee has the following powers:

	
  
 
  	
  
(a)
  	
  
to construe and interpret   the Plan;
  
	
  
 
  	
  
 
  	
  
 
  
	
  
 
  	
  
(b)
  	
  
to establish, amend and   rescind appropriate rules and regulations relating to the Plan;
  
	
  
 
  	
  
 
  	
  
 
  
	
   
  	
  
(c)
  	
  
subject to the terms of   the Plan, to select the individuals who will receive Awards, the times when   they will receive them, the form of agreements which evidence such Awards,   the number of Options, Restricted Stock, Restricted Stock Units and/or SARs   to be subject to each Award, the Option Price, the vesting schedule   (including any performance targets to be achieved in connection with the   vesting of any Award), the expiration date applicable to each Award and other   terms, provisions and restrictions of the Awards (which need not be   identical) and subject to Section 18 hereof, to amend or modify any of the   terms of outstanding Awards provided, however, that except as permitted by   Section 12.01, no outstanding Award may be repriced, whether through   cancellation of the Award and the grant of a new Award, or the amendment of   the Award, without the approval of the stockholders of the Company;
  
	
  
 
  	
  
 
  	
  
 
  
	
  
 
  	
  
(d)
  	
  
to contest on behalf of   the Company or Participants, at the expense of the Company, any ruling or   decision on any matter relating to the Plan or to any Awards;
  
	
  
 
  	
  
 
  	
  
 
  
	
  
 
  	
  
(e)
  	
  
generally, to administer   the Plan, and to take all such steps and make all such determinations in   connection with the Plan and the Awards granted thereunder as it may deem   necessary or advisable; and
  
	
   
  	
  
 
  	
  
 
  
	
  
 
  	
  
(f)
  	
  
to determine the form in   which tax withholding under Section 16 of this Plan will be made (i.e., cash,   Common Stock or a combination thereof).
  

Except to the extent prohibited by applicable law or the applicable rules of a stock exchange, and except with respect to any Qualified Performance-Based Award intended to satisfy the requirements of Code section 162(m), the Committee may allocate all or any portion of its responsibilities and powers to any one or more of its members and may delegate all or any part of its responsibilities and powers to any person or persons selected by it.  Any such allocation or delegation may be revoked by the Committee at any time.

             5.          Eligible Participants.

             Present and future directors, officers and employees of the Company or any Subsidiary or Affiliate shall be eligible to participate in the Plan.  The Committee from time to time shall select those officers, directors and employees of the Company and any Subsidiary or Affiliate of the Company who shall be designated as Participants and shall designate in accordance with the terms of the Plan the number, if any, of ISOs, NSOs, SARs, Restricted Stock Units and shares of Restricted Stock or any combination thereof, to be awarded to each Participant.

             6.          Terms and Conditions of Non-Qualified Stock Options.

             Subject to the terms of the Plan, the Committee, in its discretion, may award an NSO to any Participant.  Each NSO shall be evidenced by an agreement, in such form as is approved by the Committee, and except as otherwise provided by the Committee, each NSO shall be subject to the following express terms and conditions, and to such other terms and conditions, not inconsistent with the Plan, as the Committee may deem appropriate:

             6.01      Option Period.  Each NSO will expire as of the earliest of:

	
  
 
  	
  
(i)
  	
  
the date on which it is   forfeited under the provisions of Section 11.01;
  
	
  
 
  	
  
 
  	
  
 
  
	
  
 
  	
  
(ii)
  	
  
10 years from the Award   Date;
  
	
  
 
  	
  
 
  	
  
 
  
	
   
  	
  
(iii)
  	
  
in the case of a   Participant who is an employee of the Company, a Subsidiary or an Affiliate,   three months after the Participant’s termination of employment with the   Company and its Subsidiaries and Affiliates for any reason other than for   Cause, death, total and permanent disability or retirement on or after age   65;
  
	
  
 
  	
  
 
  	
  
 
  
	
  
 
  	
  
(iv)
  	
  
in the case of a   Participant who is a member of the board of directors of the Company or a   Subsidiary or Affiliate, but not an employee of the Company, a Subsidiary or   an Affiliate, three months after the Participant’s termination as a member of   the board for any reason other than for Cause, death, total and permanent   disability or retirement on or after age 65;
  
	
  
 
  	
  
 
  	
  
 
  
	
  
 
  	
  
(v)
  	
  
immediately upon the   Participant’s termination of employment with the Company and its Subsidiaries   and Affiliates or service on a board of directors of the Company or a   Subsidiary or Affiliate for Cause;
  
	
   
  	
  
 
  	
  
 
  
	
  
 
  	
  
(vi)
  	
  
12 months after the   Participant’s death or total and permanent disability;
  
	
  
 
  	
  
 
  	
  
 
  
	
  
 
  	
  
(vii)
  	
  
60 months after the   Participant’s termination of employment    with the Company and its parent and Subsidiaries or service on the   Board on account of retirement on or after age 65; or
  
	
  
 
  	
  
 
  	
  
 
  
	
  
 
  	
  
(viii)
  	
  
any other date specified   by the Committee when the NSO is granted.
  

             6.02     Option Price.  At the time granted, the Committee shall determine the Option Price of any NSO.  However, the Option Price shall not be less than 100% of the Fair Market Value of the Common Stock subject to the NSO on the Award Date.

             6.03     Vesting.  Unless otherwise determined by the Committee and set forth in the agreement evidencing an Award, NSO Awards shall vest in accordance with Section 11.01.

             6.04     Other Option Provisions.  The form of NSO authorized by the Plan may contain such other provisions as the Committee may from time to time determine.

             7.          Terms and Conditions of Incentive Stock Options

             Subject to the terms of the Plan, the Committee, in its discretion, may award an ISO to any employee of the Company or a Subsidiary.  Each ISO shall be evidenced by an agreement, in such form as is approved by the Committee, and except as otherwise provided by the Committee, each ISO shall be subject to the following express terms and conditions and to such other terms and conditions, not inconsistent with the Plan, as the Committee may deem appropriate:

             7.01     Option Period.  Each ISO will expire as of the earliest of:

	
  
 
  	
  
(i)
  	
  
the date on which it is   forfeited under the provisions of Section 11.01;
  
	
   
  	
  
 
  	
  
 
  
	
  
 
  	
  
(ii)
  	
  
10 years from the Award   Date, except as set forth in Section 7.02 below;
  
	
  
 
  	
  
 
  	
  
 
  
	
  
 
  	
  
(iii)
  	
  
immediately upon the   Participant’s termination of employment with the Company and its Subsidiaries   for Cause;
  
	
  
 
  	
  
 
  	
  
 
  
	
  
 
  	
  
(iv)
  	
  
three months after the   Participant’s termination of employment with the Company and its Subsidiaries   for any reason other than for Cause or death or total and permanent   disability;
  

	
  
 
  	
  
(v)
  	
  
12 months after the   Participant’s death or total and permanent disability;
  
	
  
 
  	
  
 
  	
  
 
  
	
  
 
  	
  
(vi)
  	
  
any other date (within the   limits of the Code) specified by the Committee when the ISO is granted.
  

Notwithstanding the foregoing provisions granting discretion to the Committee to determine the terms and conditions of ISOs, such terms and conditions shall meet the requirements set forth in section 422 of the Code or any successor thereto.

             7.02     Option Price and Expiration.  The Option Price of any ISO shall be determined by the Committee at the time an ISO is granted, and shall be no less than 100% of the Fair Market Value of the Common Stock subject to the ISO on the Award Date; provided, however, that if an ISO is granted to a Participant who, immediately before the grant of the ISO, beneficially owns stock representing more than 10% of the total combined voting power of all classes of stock of the Company or its parent or subsidiary corporations, the Option Price shall be at least 110% of the Fair Market Value of the Common Stock subject to the ISO on the Award Date and in such cases, the exercise period specified in the Option agreement shall not exceed five years from the Award Date.

             7.03     Vesting.  Unless otherwise determined by the Committee and set forth in the agreement evidencing an Award, ISO Awards shall vest in accordance with Section 11.01.

             7.04     Other Option Provisions.  The form of ISO authorized by the Plan may contain such other provisions as the Committee may, from time to time, determine; provided, however, that such other provisions may not be inconsistent with any requirements imposed on incentive stock options under Code section 422 and the regulations thereunder. 

             7.05     $100,000 Limitation.  To the extent required by Code section 422, if the aggregate Fair Market Value (determined as of the time of grant) of Common Stock with respect to which ISOs are exercisable for the first time by a Participant during any calendar year (under this Plan and all other plans of the Company and its Subsidiaries) exceeds $100,000, the Options or portions thereof which exceed such limit (according to the order in which they were granted) shall be treated as NSOs. 

             8.
        Terms and Conditions of Awards of Restricted Stock or Restricted Stock Units.

             Subject to the terms of the Plan, the Committee, in its discretion, may award Restricted Stock or Restricted Stock Units to any Participant.  Each Award of Restricted Stock or Restricted Stock Units shall be evidenced by an agreement, in such form as is approved by the Committee, and, except as otherwise provided by the Committee, all shares of Common Stock awarded to Participants under the Plan as Restricted Stock and all Restricted Stock Units shall be subject to the following express terms and conditions and to such other terms and conditions, not inconsistent with the Plan, as the Committee shall deem appropriate:

	
  
 
  	
  
(a)
  	
  
Restricted Period.    Restricted Stock Units and shares of Restricted Stock awarded under   this Section 8 may not be sold, assigned, transferred, pledged or otherwise   encumbered before they vest, other than as permitted by Section 13   hereof.  
  
	
  
 
  	
  
 
  	
  
 
  
	
  
 
  	
  
(b)
  	
  
Vesting.    Unless otherwise determined by the Committee, Awards of Restricted   Stock and Restricted Stock Units under this Section 8 shall vest in   accordance with Section 11.02.  Until   a Participant’s shares of Restricted Stock vest, he will have all of the   rights of a shareholder of the Company including, but not limited to, the   right to vote such shares and the right to receive cash dividends declared   thereon, but all noncash dividends and distributions with respect to shares   of Restricted Stock shall be subject to the same vesting and other   restrictions applicable to the underlying shares of Restricted Stock.
  

	
   
  	
  
(c)
  	
  
Certificate Legend for   Restricted Stock Awards.  Each certificate issued in   respect of shares of Restricted Stock awarded under this Section 8 shall be   registered in the name of the Participant and shall bear the following (or a   similar) legend until such shares have vested:
  
	
  
 
  	
  
 
  	
  
 
  
	
  
 
  	
  
 
  	
  
“The transferability of   this certificate and the shares of stock represented hereby are subject to   the terms and conditions (including forfeiture) relating to Restricted Stock   contained in Section 8 of the AMCOL International Corporation 2006 Long-Term   Incentive Plan and an Agreement entered into between the registered owner and   AMCOL International Corporation.    Copies of such Plan and Agreement are on file at the principal office   of AMCOL International Corporation.”
  
	
  
 
  	
  
 
  	
  
 
  
	
  
 
  	
  
(d)
  	
  
Restricted Stock Units.    In the case of an Award of Restricted Stock Units, no shares of Common   Stock or other property shall be issued at the time such Award is   granted.  Upon the lapse or waiver of   restrictions and the restricted period relating to Restricted Stock Units,   shares of Common Stock shall be issued to the holder of the Restricted Stock   Units and evidenced in such manner as the Committee may deem   appropriate.  
  

             9.
        Terms and Conditions of Stock Appreciation Rights.

             The Committee may, in its discretion, grant a SAR to any Participant under the Plan.  Each SAR shall be evidenced by an agreement between the Company and the Participant, and may relate to and be associated with all or any part of a specific ISO or NSO.  A SAR shall entitle the Participant to whom it is granted the right, so long as such SAR is exercisable and subject to such limitations as the Committee shall have imposed, to surrender any then exercisable portion of his SAR and, if applicable, the related ISO or NSO, in whole or in part, and receive from the Company in exchange, without any payment of cash (except for applicable employee withholding taxes), that number of shares of Common Stock having an aggregate Fair Market Value on the date of surrender equal to the product of (i) the excess of the Fair Market Value of a share of Common Stock on the date of surrender over
the Fair Market Value of the Common Stock on the date the SARs were issued, or, if the SARs are related to an ISO or an NSO, the per share Option Price under such ISO or NSO on the Award Date, and (ii) the number of shares of Common Stock subject to such SAR, and, if applicable, the related ISO or NSO or portion thereof which is surrendered.

             Except as otherwise determined by the Committee and set forth in the Agreement, a SAR granted in conjunction with an ISO or NSO shall terminate on the same date as the related ISO or NSO and shall be exercisable only if the Fair Market Value of a share of Common Stock exceeds the Option Price for the related ISO or NSO, and then shall be exercisable to the extent, and only to the extent, that the related ISO or NSO is exercisable.  The Committee may at the time of granting any SAR add such additional conditions and limitations to the SAR as it shall deem advisable, including, but not limited to, limitations on the period or periods within which the SAR shall be exercisable and the maximum amount of appreciation to be recognized with regard to such SAR.  Any ISO or NSO or portion thereof which is surrendered with a SAR shall no longer be exercisable.  A SAR that is not
granted in conjunction with an ISO or NSO shall terminate on such date as is specified by the Committee in the SAR agreement and shall vest in accordance with Section 11.02.  The Committee, in its sole discretion, may allow the Company to settle all or part of the Company’s obligation arising out of the exercise of a SAR by the payment of cash equal to the aggregate Fair Market Value of the shares of Common Stock which the Company would otherwise be obligated to deliver.

             10.     Manner of Exercise of Options.

To exercise an Option in whole or in part, a Participant (or, after his death, his executor or administrator) must give written notice to the Committee, stating the number of shares with respect to which he intends to exercise the Option.  The Company will issue the shares with respect to which the Option is exercised upon payment in full of the Option Price.  The Committee may permit the Option Price to be paid in cash or shares of Common Stock held by the Participant having an aggregate Fair Market Value, as determined on the date of delivery, equal to the Option Price, provided such shares of Common Stock meet such criteria as the Committee shall from time to time establish (e.g. that such shares are “mature” shares under generally accepted accounting principles).

The Committee may permit a Participant to elect to pay the Option Price upon the exercise of an Option by authorizing a third party to sell shares of Common Stock (or a sufficient portion of the shares) acquired upon exercise of the Option and remit to the Company a sufficient portion of the sale proceeds to pay the entire Option Price and any tax withholding resulting from such exercise.  The Committee may also permit the Option Price to be paid by any other method permitted by law, including by delivery to the Committee from the Participant of an election directing the Company to withhold the number of shares of Common Stock from the Common Stock otherwise due upon exercise of the Option having an aggregate Fair Market Value on that date equal to the Option Price.  If a Participant pays the Option Price with shares of Common Stock which were received by the Participant upon exercise of one or more ISOs, and such Common Stock has not been held by the
Participant for at least the greater of:

	
   
  	
  
(a)
  	
  
two years from the date   the ISOs were granted; or
  
	
  
 
  	
  
 
  	
  
 
  
	
  
 
  	
  
(b)
  	
  
one year after the   transfer of the shares of Common Stock to the Participant,
  

the use of the shares shall constitute a disqualifying disposition and the ISO underlying the shares used to pay the Option Price shall no longer satisfy all of the requirements of Code Section 422.

             11.      Vesting.

             11.01  Options.  A Participant may not exercise an Option until it has vested.  The portion of an Award of Options that is vested depends upon the period that has elapsed since the Award Date.  The following schedule applies to any Award of Options under this Plan unless the Committee establishes a different vesting schedule:

	
  
Number of   Years Since Award Date
  	
   
 	
  
Vested   Percentage
  
	
  

  	
   
 	
  

  
	
  Fewer   than one
  	
   
 	
  
0%
  
	
  
One   but fewer than two
  	
   
 	
  
33%
  
	
  
Two   but fewer than three
  	
   
 	
  
66%
  
	
  
Three   or more
  	
   
 	
  
100%
  

             Notwithstanding the above schedule, unless otherwise determined by the Committee, a Participant’s Awards shall become fully vested if a Participant’s employment with the Company and its Subsidiaries and Affiliates or service on the board of directors of the Company, a Subsidiary or an Affiliate is terminated due to: (i) retirement on or after his sixty-fifth birthday; (ii) retirement on or after his fifty-fifth birthday with consent of the Company; (iii) retirement at any age on account of total and permanent disability as determined by the Company; or (iv) death.  Unless the Committee otherwise provides or the preceding sentence of this Section or Section 11.03 applies, if a Participant’s employment with or service to the Company, a Subsidiary or an Affiliate terminates for any other reason, any Awards that are not yet vested are immediately and automatically
forfeited; provided, however, in such special circumstances as the Committee deems appropriate, the Committee may take such action as it deems equitable in the circumstances or in the best interests of the Company, including, without limitation, fully vesting an Award or waiving or modifying any other limitation or requirement under the Award.

             A Participant’s employment shall not be considered to be terminated hereunder by reason of a transfer of his employment from the Company to a Subsidiary or Affiliate, or vice versa, or a leave of absence approved by the Participant’s employer.  A Participant’s employment shall be considered to be terminated hereunder if, as a result of a sale or other transaction, the Participant’s employer ceases to be a Subsidiary or Affiliate (and the Participant’s employer is or becomes an entity that is separate from the Company and its Subsidiaries and Affiliates).

             11.02     Restricted Stock, Restricted Stock Units and SARs.  The Committee shall establish the vesting schedule to apply to any Award of Restricted Stock, Restricted Stock Units or SAR that is not associated with an ISO or NSO granted under the Plan to a Participant, and in the absence of such a vesting schedule set forth in the Agreement evidencing the Award, such Award shall vest in accordance with Section 11.01.

             11.03     Effect of “Change of Control”.   Notwithstanding Sections 11.01 and 11.02 above, if within 12 months following a “Change of Control” the employment of a Participant with the Company and its Subsidiaries and Affiliates is terminated without Cause or the Participant resigns for Good Reason, any Award issued to the Participant shall be fully vested, and in the case of an Award other than an Award of Restricted Stock or Restricted Stock Units, fully exercisable for 90 days following the date on which the Participant’s service with the Company and its Subsidiaries and Affiliates is terminated, but not beyond the date the Award would otherwise expire but for the Participant’s termination of employment.

             12.         Adjustments to Reflect Changes in Capital Structure.

             12.01     Adjustments.  If there is any change in the corporate structure or shares of the Company, the Committee may make any appropriate adjustments, including, but not limited to, such adjustments deemed necessary to prevent accretion, or to protect against dilution, in the number and kind of shares of Common Stock with respect to which Awards may be granted under this Plan (including the maximum number of shares of Common Stock with respect to which Awards may be granted under this Plan in the aggregate and individually to any Participant during any calendar year as specified in Section 3) and, with respect to outstanding Awards, in the number and kind of shares covered thereby and in the applicable Option Price.  For the purposes of this Section 12, a change in the corporate structure or shares of the Company includes, without limitation,
any change resulting from a recapitalization, stock split, stock dividend, consolidation, rights offering, separation, reorganization, or liquidation (including a partial liquidation) and any transaction in which shares of Common Stock are changed into or exchanged for a different number or kind of shares of stock or other securities of the Company or another corporation.

             12.02     Cashouts.  In the event of an extraordinary dividend or other distribution, merger, reorganization, consolidation, combination, sale of assets, split up, exchange, or spin off, or other extraordinary corporate transaction, the Committee may, in such manner and to such extent (if any) as it deems appropriate and equitable, make provision for a cash payment or for the substitution or exchange of any or all outstanding Awards for the cash, securities or property deliverable to the holder of any or all outstanding Awards based upon the distribution or consideration payable to holders of Common Stock upon or in respect of such event; provided, however, in each case, that with respect to any ISO no such adjustment may be made that would cause the Plan to violate section 422 of the Code (or any successor provision).

             12.03     Section 409A.  Notwithstanding the foregoing: (i) any adjustments made pursuant to Section 12 hereof to Awards that are considered “deferred compensation” within the meaning of section 409A of the Code shall be made in compliance with the requirements of section 409A of the Code unless the Participant consents otherwise; (ii) any adjustments made pursuant to Section 12 of the Plan to Awards that are not considered “deferred compensation” subject to section 409A of the Code shall be made in such a manner as to ensure that after such adjustment, the Awards either continue not to be subject to section 409A of the Code or comply with the requirements of section 409A of the Code unless the Participant consents otherwise; and (iii) the Committee shall not have the authority to make any adjustments pursuant to Section 12 of the
Plan to the extent that the existence of such authority would cause an Award that is not intended to be subject to section 409A of the Code to be subject thereto.

             13.         Nontransferability of Awards.

             13.01     ISOs.  ISOs are not transferable, voluntarily or involuntarily, other than by will or by the laws of descent and distribution or pursuant to a qualified domestic relations order as defined by the Code.  During a Participant’s lifetime, his ISOs may be exercised only by him.  

             13.02     Awards Other Than ISOs.  All Awards granted pursuant to this Plan other than ISOs are transferable by will or by the laws of descent and distribution or pursuant to a qualified domestic relations order as defined by the Code, or in the Committee’s discretion after vesting.  With the approval of the Committee, a Participant may transfer an Award (other than an ISO) for no consideration to or for the benefit of one or more Family Members of the Participant subject to such limits as the Committee may establish, and the transferee shall remain subject to all the terms and conditions applicable to the Award prior to such transfer.  The transfer of an Award pursuant to this Section 13 shall include a transfer of the right set forth in Section 18 hereof to consent to an amendment or revision of the Plan and, in the discretion of the
Committee, shall also include transfer of ancillary rights associated with the Award.  The provisions of this Section 13 shall not apply to any Common Stock issued pursuant to an Award for which all restrictions have lapsed and is fully vested.

             14.         PERFORMANCE-BASED AWARDS

             14.01     Purpose.  The purpose of this Section 14 is to provide the Committee the ability to qualify Awards of Restricted Stock and Restricted Stock Units as Qualified Performance-Based Awards.  If the Committee, in its discretion, decides to grant to a Covered Employee an Award of Restricted Stock or Restricted Stock Units that is intended to constitute a Qualified Performance-Based Award, the provisions of this Section 14 shall control over any contrary provision contained herein; provided, however, that the Committee may in its discretion grant Awards of Restricted Stock or Restricted Stock Units to Covered Employees that are based on Performance Criteria or Performance Goals but that do not satisfy the requirements of this Section 14.

             14.02     Applicability.  This Section 14 shall apply only to those Covered Employees selected by the Committee to receive Qualified Performance-Based Awards.  The designation of a Covered Employee as a Participant for a Performance Period shall not in any manner entitle the Participant to receive an Award for the relevant Performance Period.  Moreover, designation of a Covered Employee as a Participant for a particular Performance Period shall not require designation of such Covered Employee as a Participant in any subsequent Performance Period and designation of one Covered Employee as a Participant shall not require designation of any other Covered Employees as a Participant in such period or in any other period.

             14.03     Procedures with Respect to Qualified Performance-Based Awards.  To the extent necessary to comply with the Qualified Performance-Based Award requirements of section 162(m)(4)(C) of the Code, with respect to any Award of Restricted Stock or Restricted Stock Units that may be granted to one or more Covered Employees, no later than 90 days following the commencement of any fiscal year in question or any other designated fiscal period or period of service (or such other time as may be required or permitted by section 162(m) of the Code), the Committee shall, in writing, (a) designate one or more Covered Employees, (b) select the Performance Criteria applicable to the Performance Period, (c) establish the Performance Goals, and amounts of such Awards, as applicable, which may be earned for such Performance Period, and (d) specify the relationship
between Performance Criteria and the Performance Goals and the amounts of such Awards, as applicable, to be earned by each Covered Employee for such Performance Period.  Following the completion of each Performance Period, the Committee shall certify in writing whether the applicable Performance Goals have been achieved for such Performance Period.  No Award or portion thereof that is subject to the satisfaction of any condition shall be considered to be earned or vested until the Committee certifies in writing that the conditions to which the distribution, earning or vesting of such Award is subject have been achieved.  The Committee may not increase during a year the amount of a Qualified Performance-Based Award that would otherwise be payable upon satisfaction of the conditions but may reduce or eliminate the payments as provided for in the agreement evidencing the Award.

             14.04     Payment of Qualified Performance-Based Awards.  Unless otherwise provided in the applicable agreement evidencing the Award, a Participant must be employed by the Company or a subsidiary on the day a Qualified Performance-Based Award for such Performance Period is paid to the Participant.  Furthermore, a Participant shall be eligible to receive payment pursuant to a Qualified Performance-Based Award for a Performance Period only if the Performance Goals for such period are achieved.

             14.05     Additional Limitations.  Notwithstanding any other provision of the Plan, any Award granted to a Covered Employee that is intended to constitute a Qualified Performance-Based Award under this Section 14 shall be subject to any additional limitations set forth in section 162(m) of the Code (including any amendment to section 162(m) of the Code) or any regulations or rulings issued thereunder that are requirements for qualification as qualified performance-based compensation as described in section 162(m)(4)(C) of the Code, and the Plan shall be deemed amended to the extent necessary to conform to such requirements.

             14.06     Effect on Other Plans and Arrangements.  Nothing contained in the Plan will be deemed in any way to limit or restrict the Committee from making any award or payment to any person under any other plan, arrangement or understanding, whether now existing or hereafter in effect.

             14.         Rights as Stockholder.

             No Common Stock may be delivered upon the exercise of any Option until full payment has been made.  A Participant has no rights whatsoever as a stockholder with respect to any shares covered by an Option until the date of the issuance of a stock certificate for the shares except as otherwise determined by the Committee and set forth in the Agreement.

             16.       Withholding Taxes.

             The Committee may, in its discretion and subject to such rules as it may adopt, permit or require a Participant to pay all or a portion of the federal, state and local taxes, including FICA and Medicare withholding tax, arising in connection with any Awards by (i) having the Company withhold shares of Common Stock at the minimum rate legally required, (ii) tendering back shares of Common Stock received in connection with such Award or (iii) delivering other previously acquired shares of Common Stock having a Fair Market Value approximately equal to the amount to be withheld.

             17.        No Right to Employment.

             Participation in the Plan will not give any Participant a right to be retained as an employee or director of the Company or its Subsidiaries or Affiliates, or any right or claim to any benefit under the Plan, unless the right or claim has specifically accrued under the Plan.

             18.        Amendment of the Plan.

             The Board of Directors may from time to time amend or revise the terms of this Plan in whole or in part, subject to the following limitations:

	
  
 
  	
  
(a)
  	
  
no amendment may, in the   absence of written consent to the change by the affected Participant (or, if   the Participant is not then living, the affected beneficiary), adversely   affect the rights of any Participant or beneficiary under any Award granted   under the Plan prior to the date such amendment is adopted by the Board;   provided, however, no such consent shall be required if the Committee determines   in its sole and absolute discretion that the amendment or revision (i) is   required or advisable in order for the Company, the Plan or the Award to   satisfy applicable law, to meet the requirements of any accounting standard   or to avoid any adverse accounting treatment, or (ii) in connection with any   transaction or event described in Section 12, is in the best interests of the   Company or its shareholders. The Committee may, but need not, take the tax   consequences to affected Participants into consideration in acting under the   preceding
sentence.
  
	
   
  	
  
 
  	
  
 
  
	
  
 
  	
  
(b)
  	
  
no amendment may increase   the limitations on the number of shares set forth in Section 3, unless any   such amendment is approved by the Company’s stockholders; and
  
	
  
 
  	
  
 
  	
  
 
  
	
  
 
  	
  
(c)
  	
  
no amendment may be made to   the provisions of Section 4(c) relating to repricing unless such amendment is   approved by the Company’s stockholders;
  

provided, however, that adjustments pursuant to Section 12.01 shall not be subject to the foregoing limitations of this Section 18.

             19.        Conditions Upon Issuance of Shares.

             An Option shall not be exercisable and a share of Common Stock shall not be issued pursuant to the exercise of an Option, and Restricted Stock or Restricted Stock Units shall not be awarded until and unless the Award of Restricted Stock or Restricted Stock Units, exercise of such Option and the issuance and delivery of such share pursuant thereto shall comply with all relevant provisions of law, including, without limitation, the Securities Act of 1933, as amended, the Exchange Act, the rules and regulations promulgated thereunder, and the requirements of any stock exchange or national securities association upon which the shares of Common Stock may then be listed or quoted, and shall be further subject to the approval of counsel for the Company with respect to such compliance.

             As a condition to the exercise of an Option, the Company may require the person exercising such Option to represent and warrant at the time of any such exercise that the shares of Common Stock are being purchased only for investment and without any present intention to sell or distribute such shares if, in the opinion of counsel for the Company, such a representation is required by any of the aforementioned relevant provisions of law.

             20.        Substitution or Assumption of Awards by the Company.

             The Company, from time to time, also may substitute or assume outstanding awards granted by another company, whether in connection with an acquisition of such other company or otherwise, by either (a) granting an Award under the Plan in substitution of such other company’s award, or (b) assuming such award as if it had been granted under the Plan if the terms of such assumed award could be applied to an Award granted under the Plan.  Such substitution or assumption shall be permissible if the holder of the substituted or assumed award would have been eligible to be granted an Award under the Plan if the other company had applied the rules of the Plan to such grant.  In the event the Company assumes an award granted by another company, the terms and conditions of such award shall remain unchanged (except that the exercise price and the number and nature of shares issuable
upon exercise of any such option will be adjusted appropriately pursuant to section 424(a) of the Code).  In the event the Company elects to grant a new Award rather than assuming an existing option, such new Award may be granted with a similarly adjusted exercise price.

             21.        Section 409A. 

             It is the intention of the Company that no Award shall be “deferred compensation” subject to section 409A of the Code, unless and to the extent that the Committee specifically determines otherwise, and the Plan and the terms and conditions of all Awards shall be interpreted accordingly.  The terms and conditions governing any Awards that the Committee determines will be subject to section 409A of the Code, including any rules for elective or mandatory deferral of the delivery of cash or Shares pursuant thereto, shall be set forth in the applicable agreement governing the Award, and shall comply in all respects with section 409A of the Code.

             22.     Effective Date and Termination of Plan.

             22.01  Effective Date.  This Plan is effective as of the date of its approval by the stockholders of the Company. 

             22.02  Termination of the Plan.  The Plan will terminate 10 years after the date it is approved by the stockholders of the Company; provided, however, that the Board of Directors may terminate the Plan at any time prior thereto with respect to any shares that are not then subject to Awards.  Termination of the Plan will not affect the rights and obligations of any Participant with respect to Awards granted before termination.

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