Document:

kodiaksb2ex10-6.htm

    
      

      

    

    Exhibit
      10.6

     

    AGENCY
      AGREEMENT

     

    October
      30, 2007

     

    Kodiak
      Energy, Inc.

    Suite
      460, 734 – 7th Avenue
      SW

    Calgary
      Alberta  T2P 3P6

     

    
      	
              Attention:

            	
              Mr. Mark
                Hlady

            

    

    Chairman
      and Chief Executive Officer

     

    Dear
      Sir:

     

    
      	
              Re:

            	
              Private
                Placement of Common Shares and “Flow-Through” Common
                Shares

            

    

    

      Research
        Capital Corporation (the “Agent”) understands that Kodiak
        Energy, Inc. (the “Corporation”) proposes to issue and sell up
        to US$9,000,000 worth of  common shares of the Corporation (the
“Offered Common Shares”) or common shares of the Corporation
        issued on a “flow-through” basis pursuant to the Tax Act (as defined below) (the
“Flow-Through Shares”), or a combination thereof.

       

      Subject
        to the terms and conditions hereof, the Agent agrees to act as, and the
        Corporation appoints the Agent as, the sole and exclusive agent of the
        Corporation to offer the Offered Securities (as defined below) for sale on
        the
        Closing Date in the Selling Jurisdictions (as defined below) on a private
        placement basis at a price of US$2.50 per Offered Common Share and US$3.00
        per
        Flow-Through Share and to use its best efforts to secure subscriptions
        therefor.  The Corporation acknowledges and agrees that the Agent may,
        but is not obligated to, purchase any of the Offered Securities as
        principal.

    

     

    The
      Agent
      shall be entitled in connection with the offering and sale of the Offered
      Securities to retain as sub agents other registered securities dealers and
      may
      receive (for delivery to the Corporation at the Closing Time (as defined below))
      subscriptions for Offered Securities from Subscribers (as defined below) from
      other registered dealers.  The fee payable to such sub agents shall be
      for the account of the Agent.

     

    In
      consideration for its services hereunder, including the ancillary service of
      acting as financial advisor to the Corporation in respect of the issue of the
      Offered Securities and advising on the terms and conditions of the subject
      private placement, the Agent shall be entitled to the commissions provided
      for
      in paragraph 9, which commissions shall be payable from the general
      corporate funds of the Corporation at the time specified in
      paragraph 9.  For greater certainty, the services provided by the
      Agent in connection herewith will not be subject to the Goods and Services
      Tax
      provided for in the Excise Tax Act (Canada) and taxable supplies
      provided will be incidental to the exempt financial services provided. The
      Agent
      is also entitled to the Agent’s Warrants (as defined below) provided for in
      paragraph 9.

     

    

     

    

    
      
        
          
          

        

        
          
          

          
            

          

        

        
          
          

        

      

    

    -
      2
      -

     

     

    The
      Corporation hereby grants to the Agent an option (the “Over-Allotment
      Option”), at the Agent’s election exercisable at any time and from time
      to time up to the Closing Time, to arrange for the issuance and sale of up
      to an
      additional 1,200,000 Offered Common Shares (the “Over-Allotment
      Shares”) for the purpose of covering over-allotments, if any, at the
      purchase price of US$2.50 per Over-Allotment Share.

     

    
      	
              1.

            	
              Definitions

            

    

     

    In
      this
      Agreement:

     

    
      	
               

            	
              (a)

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

            

    

     

    
      	
               

            	
              (b)

            	
              “Agent’s
                counsel” means Stikeman Elliott LLP or such other legal counsel
                as the Agent, with the consent of the Corporation, may
                appoint;

            

    

     

    
      	
               

            	
              (c)

            	
              “Agent’s
                Warrants” shall have the meaning ascribed thereto in
                paragraph 9 of this Agreement;

            

    

     

    
      	
               

            	
              (d)

            	
              “Alternative
                Transaction” means any equity or debt financing, merger,
                amalgamation, arrangement, business combination, take-over bid, insider
                bid, issuer bid, reorganization, joint venture, sale or exchange
                of all or
                substantially all of the assets or Common Shares of the Corporation
                or any
                similar transaction involving the Corporation with any arm’s length party
                that is introduced to the Corporation by the Agent in the course
                of the
                offering of Offered Securities;

            

    

     

    
      	
               

            	
              (e)

            	
              “Applicable
                Securities Laws” means all applicable securities, corporate and
                other laws, rules, regulations, notices and policies applicable in
                the
                Selling Jurisdictions and in the United States, and all notices,
                blanket
                orders, blanket rulings, rules and policies of the Exchange, the
                Securities Commissions and the United States Securities and Exchange
                Commission;

            

    

     

    
      	
               

            	
              (f)

            	
              “Business
                Day” means a day which is not Saturday or Sunday or a legal
                holiday in the City of Calgary,
                Alberta;

            

    

     

    
      	
               

            	
              (g)

            	
              “Canadian
                Development Expense” or “CDE” means Canadian
                development expense described in paragraphs (a) or (b) of the definition
                of “Canadian development expense” in subsection 66.2(5) of the Act or that
                would be described in paragraph (f) of such definition if the words
                “paragraphs (a) to (e)” in that paragraph were read as “paragraphs (a) and
                (b)”, excluding amounts which are prescribed to constitute “Canadian
                exploration and development overhead expense” under the Act and the amount
                of any assistance described in paragraph 66(12.62)(a)
                or  66(12.601)(c) of the
                Act;

            

    

     

    

    
      
        
          
          

        

        
          
          

          
            

          

        

        
          
          

        

      

    

    - 3
      -

     

    

    
      	
               

            	
              (h)

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

            

    

     

    
      	
               

            	
              (i)

            	
              “Cash
                Penalty” shall have the meaning ascribed thereto in
                subparagraph 2(i) of this
                Agreement;

            

    

     

    
      	
               

            	
              (j)

            	
              “CRA”
                means the Canada Revenue Agency;

            

    

     

    
      	
               

            	
              (k)

            	
              “Closing
                Date” means October 30, 2007 or such other date as the Agent and
                the Corporation may agree and, as the context requires, such subsequent
                dates as the Agent and the Corporation agree for the purpose of completing
                subsequent closings;

            

    

     

    
      	
               

            	
              (l)

            	
              “Closing
                Time” means 7:00 a.m. (Calgary time) or such other time on a
                Closing Date as the Agent and the Corporation may
                agree;

            

    

     

    
      	
               

            	
              (m)

            	
              “Commitment
                Amount” means the amount equal to US$3.00 multiplied by the
                number of Flow-Through Shares subscribed and paid for pursuant to
                the
                applicable Flow-Through Subscription
                Agreement;

            

    

     

    
      	
               

            	
              (n)

            	
              “Common
                Shares” means the common shares in the capital of the
                Corporation;

            

    

     

    
      	
               

            	
              (o)

            	
              “Corporation”
                means Kodiak Energy, Inc.;

            

    

     

    
      	
               

            	
              (p)

            	
              “Corporation’s
                counsel” means Borden Ladner Gervais LLP in Canada Golenbock
                Eiseman Assor Bell and Peskoe in the United States or such other
                legal
                counsel as the Corporation, with the consent of the Agent, may
                appoint;

            

    

     

    
      	
               

            	
              (q)

            	
              “Corporation’s
                Subsidiaries” has the meaning ascribed thereto in
                subparagraph 6(c) of this
                Agreement;

            

    

     

    

    
      
        
          
          

        

        
          
          

          
            

          

        

        
          
          

        

      

    

    -
      4
      -

     

     

    
      	
               

            	
               (r)

            	
              “Directed
                Selling Efforts” means “directed selling efforts” as that term is
                defined in Rule 902 of Regulation S.  Without limiting
                the foregoing, but for greater clarity, such term means, subject
                to the
                exclusions from the definition of “directed selling efforts” contained in
                Regulation S, any activity undertaken for the purpose of, or that
                could
                reasonably be expected to have the effect of, conditioning the market
                in
                the United States for any of the Offered Securities and includes,
                without
                limitation, the placement of any advertisement in a publication with
                a
                general circulation in the United States that refers to the offering
                of
                any of the Offered Securities;

            

    

     

    
      	
               

            	
              (s)

            	
              “Documents”
                means, collectively:

            

    

     

    
      	
               

            	
              (i)

            	
              the
                proxy statement of the Corporation dated July 11, 2007 relating to
                the annual meeting of shareholders of the Corporation held on
                August 7, 2007 (including without limitation those Annexes attached
                to the proxy statement);

            

    

     

    
      	
               

            	
              (ii)

            	
              Form 10-QSB
                – Quarterly Report under Section 13 or 15(d) of the U.S. Securities
                Act for the quarterly periods ended March 31, 2007 and June 30,
                2007;

            

    

     

    
      	
               

            	
              (iii)

            	
              Form 10-KSB
                - Annual Report under Section 13 or 15(d) of the U.S. Securities Act
                for the fiscal year ended December 31,
                2006;

            

    

     

    
      	
               

            	
              (iv)

            	
              Form 51-101F3
                – Report of Management and Directors on Reserves Data and Other
                Information dated July 18, 2007 for the year ended December 31,
                2006;

            

    

     

    
      	
               

            	
              (v)

            	
              Form 51-101F2
                – Report on Reserves Data by an Independent Qualified Reserves Evaluator
                dated July 18, 2007 as prepared by Trimble Engineering Associates
                Ltd.;

            

    

     

    
      	
               

            	
              (vi)

            	
              Form 51-101F1
                – Statement of Reserves Data and Other Oil and Gas Information dated
                May 22, 2007 for the year ended December 31,
                2006;

            

    

     

    
      	
               

            	
              (vii)

            	
              all
                press releases released by the Corporation since January 1, 2006;
                and

            

    

     

    
      	
               

            	
              (viii)

            	
              all
                material change reports or Form 8-K Current Reports pursuant to
                Section 13 or 15(d) of the U.S. Securities Act filed by the
                Corporation since January 1,
                2007;

            

    

     

    

    
      
        
          
          

        

        
          
          

          
            

          

        

        
          
          

        

      

    

    -
      5
      -

     

     

    
      	
               

            	
               (t)

            	
              “Environmental
                Laws” shall have the meaning ascribed thereto in
                subparagraph 6(ee) of this
                Agreement;

            

    

     

    
      	
               

            	
              (u)

            	
              “Environmental
                Permits” shall have the meaning ascribed thereto in
                subparagraph 6(ff) of this
                Agreement;

            

    

     

    
      	
               

            	
              (v)

            	
              “Exchange”
                means the TSX Venture Exchange
                Inc.;

            

    

     

    
      	
               

            	
              (w)

            	
              “Expenditure
                Period” means the period commencing on the Closing Date and
                ending on the earlier of:

            

    

     

    
      	
               

            	
              (i)

            	
              the
                date on which the Commitment Amount has been fully expended in accordance
                with the terms of the Flow-Through Subscription Agreements;
                and

            

    

     

    
      	
               

            	
              (ii)

            	
              December 31,
                2008;

            

    

     

    
      	
               

            	
              (x)

            	
              “Financial
                Statements” means, the consolidated financial statements of the
                Corporation for the six month period ended June 30, 2007 and the
                audited consolidated financial statements of the Corporation as at
                December 31, 2006;

            

    

     

    
      	
               

            	
              (y)

            	
              “Forward-looking
                Statement” shall have the meaning ascribed thereto in
                subparagraph 6(uu);

            

    

     

    
      	
               

            	
              (z)

            	
              “Flow-Through
                Subscription Agreement” means the agreement entered into by a
                Subscriber for Flow-Through Shares relating to a subscription for
                Flow-Through Shares which is accepted by the
                Corporation;

            

    

     

    
      	
               

            	
              (aa)

            	
              “Indemnified
                Parties” shall have the meaning ascribed thereto in
                paragraph 16 of this
                Agreement;

            

    

     

    
      	
               

            	
              (bb)

            	
              “Indemnitor”
                shall have the meaning ascribed thereto in paragraph 16 of this
                Agreement;

            

    

     

    
      	
               

            	
              (cc)

            	
              “Interests”
                shall have the meaning ascribed thereto in subparagraph 6(oo) of this
                Agreement;

            

    

     

    
      	
            	
              (dd)

            	
              “Liabilities”
                shall have the meaning ascribed thereto in paragraph 16 of this
                Agreement;

            

    

     

    
      	
               

            	
              (ee)

            	
              “OFAC”
                shall have the meaning ascribed thereto in subparagraph 6(ddd) of
                this Agreement;

            

    

     

    
      	
               

            	
              (ff)

            	
              “Offered
                Common ShareSubscription Agreement” means the
                agreement entered into by a Subscriber for Offered Common Shares
                relating
                to a subscription for Offered Common Shares which is accepted by
                the
                Corporation;

            

    

     

    

    
      
        
          
          

        

        
          
          

          
            

          

        

        
          
          

        

      

    

    -
      6
      -

    

     

    
      	
            	
               (gg)

            	
              “Offered
                Securities” means, collectively, the Offered Common Shares and
                the Flow-Through Shares and, to the extent the Over-Allotment Option
                has
                been or may still be validly exercised, also includes the Over-Allotment
                Shares;

            

    

     

    
      	
               

            	
              (hh)

            	
              “OTCBB”
                means the NASDAQ Over-The-Counter Bulletin
                Board;

            

    

     

    
      	
               

            	
              (ii)

            	
              “principal
                business corporation” means a principal business corporation as
                defined in subsection 66(15) of the
                Act;

            

    

     

    
      	
               

            	
              (jj)

            	
              “Proceedings”
                shall have the meaning ascribed thereto in paragraph 16 of this
                Agreement;

            

    

     

    
      	
               

            	
              (kk)

            	
              “Public
                Record” means all information filed by or on behalf of the
                Corporation with the securities commissions of the province of Alberta,
                and the Securities and Exchange Commission in the United States,
                including
                without limitation, the Documents and any other information filed
                with any
                securities commission in compliance, or intended compliance, with
                any
                Applicable Securities Laws;

            

    

     

    
      	
               

            	
              (ll)

            	
              “Qualifying
                CDE” means an amount of CDE incurred by the Corporation which
                is
                eligible for renunciation as CEE under Subsection 66(12.601) of the
                Act;

            

    

     

    
      	
            	
              (mm)

            	
              “Qualifying
                Expenditures” means expenses that are CEE or Qualifying CDE to be
                incurred by the Corporation during the Expenditure
                Period;

            

    

     

    
      	
               

            	
              (nn)

            	
              “Regulation S”
                means Regulation S under the U.S. Securities
                Act;

            

    

     

    
      	
               

            	
              (oo)

            	
              “Responses” means
                the responses delivered on behalf of the Corporation by certain officers
                of the Corporation at the Due Diligence
                Session;

            

    

     

    
      	
            	
              (pp)

            	
              “Resale
                Rules” means Multilateral Instrument 45-102 and Companion
                Policy 45-102CP (Resale of
                Securities);

            

    

     

    
      	
               

            	
              (qq)

            	
              “Securities
                Commissions” means the securities commissions or similar
                regulatory authorities in the Selling Jurisdictions and the United
                States
                Securities and Exchange Commission;

            

    

     

    
      	
               

            	
              (rr)

            	
              “Selling
                Jurisdictions” means the Provinces of Alberta, British Columbia,
                Ontario and Québec, to the extent permitted herein, and other foreign
                jurisdictions as the Agent and the Corporation may mutually agree
                to prior
                to the Closing Date;

            

    

     

    

    
      
        
          
          

        

        
          
          

          
            

          

        

        
          
          

        

      

    

    -
      7
      -

    

     

    
      	
               

            	
               (ss)

            	
              “Subscriber”
                means a person who executes a Subscription Agreement, as applicable,
                relating to the subscription for Offered Securities which is accepted
                by
                the Corporation;

            

    

     

    
      	
               

            	
              (tt)

            	
              “Subscription
                Agreement” means the Flow-Through Subscription Agreements and the
                Offered Common Share Subscription Agreements, as applicable, entered
                into
                by each Subscriber for Offered Securities and the Corporation in
                respect
                of the Subscriber’s subscription for Offered
                Securities;

            

    

     

    
      	
            	
              (uu)

            	
              “subsidiaries”
                has the meaning ascribed thereto in the Business Corporations Act
                (Alberta);

            

    

     

    
      	
               

            	
              (vv)

            	
              “Subscriber”
                means a person who executes a Subscription Agreement relating to
                a
                subscription for Offered Securities which is accepted by the
                Corporation;

            

    

     

    
      	
            	
              (ww)

            	
              “Swaps”
                means any transaction which is a rate swap transaction, basis swap,
                forward rate transaction, commodity swap, commodity option, equity
                or
                equity index swap, equity or equity index option, bond option, interest
                rate option, foreign exchange transaction, cap transaction, floor
                transaction, collar transaction, currency swap transaction, cross
                currency
                rate swap transaction, currency option, forward sale, exchange traded
                futures contract or any other similar transaction (including any
                option
                with respect to any of these transactions or any combination of these
                transactions);

            

    

    

      
        	
                 

              	
                (xx)

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

              

      

       

    

    “misrepresentation”,
      “material change” and “material fact” shall
      have the meanings ascribed thereto under the Applicable Securities Laws of
      the
      Selling Jurisdictions, “distribution” means “distribution” or
“distribution to the public”, as the case may be, as defined under the
      Applicable Securities Laws of the Selling Jurisdictions and
“distribute” has a corresponding meaning.

    
       

      The
        division of this Agreement into sections, subsections, paragraphs and other
        subdivisions and the insertion of headings are for convenience of reference
        only
        and shall not affect the construction or interpretation of this
        Agreement.  Unless something in the subject matter or context is
        inconsistent therewith, references herein to sections, subsections, paragraphs
        and other subdivisions are to sections, subsections, paragraphs and other
        subdivisions of this Agreement.

    

    

    
      
        
          
          

        

        
          
          

          
            

          

        

        
          
          

        

      

    

    -
      8
      -

     

     

    Unless
      otherwise expressly provided, all amounts expressed herein in terms of money
      refer to lawful currency of Canada and all payments to be made hereunder shall
      be made in such currency.

     

    If
      any
      provision of this Agreement shall be adjusted by a competent authority to be
      invalid or for any reason unenforceable, such invalidity or unenforceability
      shall not affect the validity, enforceability or operation of any other
      provision herein.

     

    Schedule
“A“
-Form
      of
      Agent’s Warrants

    

    
      	
              2.

            	
              Corporation’s
                Covenants as to Issuance

            

    

     

    The
      Corporation agrees:

     

    
      	
               

            	
              (a)

            	
              that
                at each Closing Time, the Offered Securities will be duly and validly
                created, allotted, reserved and authorized, and upon receiving full
                payment therefor will be issued as fully paid and non-assessable
                shares of
                the Corporation;

            

    

     

    
      	
               

            	
              (b)

            	
              to
                grant the Over-Allotment Option to the
                Agent;

            

    

     

    
      	
               

            	
              (c)

            	
              to
                enter into the Agent’s Warrants substantially in the form provided in
                Schedule “A“ hereto and grant the Agent’s Warrants in accordance with
                paragraph 9;

            

    

     

    
      	
               

            	
              (d)

            	
              at
                each Closing Time, the form and terms of the definitive certificates
                representing the Offered Securities will have been approved and adopted
                by
                the Corporation and comply with all corporate, legal and,  in
                respect of the form of Common Shares and OTCBB requirements relating
                thereto;

            

    

     

    
      	
               

            	
              (e)

            	
              to
                duly punctually and faithfully perform and comply with all the obligations
                to be performed by it, and all of its covenants and agreements, under
                and
                pursuant to this Agreement, the Subscription Agreements and the Agent’s
                Warrants, including, without limitation, all covenants and agreements
                of
                the Corporation relating to or in respect of the incurring and renouncing
                of Qualifying Expenditures to Subscribers for Flow-Through Shares
                and all
                reporting obligations relating
                thereto;

            

    

     

    
      	
               

            	
               (f)

            	
              to
                file all necessary forms and reports in connection with the issuance
                of
                the Offered Securities hereunder with the appropriate Securities
                Commissions and other regulatory authorities, including those regulatory
                authorities in the United States as applicable, such that the resale
                of
                the Offered Securities and the Common Shares issuable upon exercise
                of the
                Agent’s Warrants shall be subject to no greater than a four month and a
                day hold period under the Resale Rules in Canada (including the filing
                thereof on SEDAR);

            

    

    
      
 

      
        
          
            
            

          

          
            
            

            
              

            

          

          
            
            

          

        

      

      -
        9
        -

      

    

    
      	
               

            	
              (g)

            	
              to
                use its best commercial efforts to ensure that by December 29,
                2007 it will have
                obtained listing of the Common Shares on the Exchange, including
                filing of
                all necessary documentation in accordance with the requirements of
                the
                Exchange in connection with the listing and posting for trade of
                the
                Offered Securities and the Common Shares issuable upon exercise of
                the
                Agent’s Warrants on the Exchange;

            

    

    

      
        	
                 

              	
                (h)

              	
                to
                  notify the Exchange, in connection with its application to list
                  and post
                  for trading its Common Shares (including the Offered Securities
                  and the
                  Common Shares issuable upon exercise of the Agent’s Warrants) on the
                  Exchange, of this offering of Offered
                  Securities;

              

      

       

      
        	
                 

              	
                (i)

              	
                that
                  should it fail to have its Common Shares (including the Offered
                  Securities
                  and the Common Shares issuable upon exercise of the Agent’s Warrants)
                  listed and posted for trading on the Exchange by December 29, 2007,
                  the Corporation shall pay to the Subscribers, a cash penalty on
                  a pro
                  rata basis equal to 2% of the aggregate proceeds raised pursuant
                  to
                  the offering of Offered Securities (the “Cash
                  Penalty”).  At the end of each 30-day period subsequent
                  to December 29, 2007, if the Common Shares (including the Offered
                  Securities and the Common Shares issuable upon exercise of the
                  Agent’s
                  Warrants) are not listed and posted for trading on the Exchange,
                  then the
                  Corporation agrees to again pay the Cash Penalty by paying to the
                  Subscribers, cash on a pro rata basis equal to 2% of the
                  aggregate number of Offered Securities issued pursuant to the offering
                  of
                  Offered Securities;

              

      

       

      
        	
                 

              	
                (j)

              	
                to
                  allow the Agent, prior to each Closing Time and during the period
                  from the
                  date hereof until completion of the distribution of the Offered
                  Securities, to conduct all due diligence which the Agent may reasonably
                  require in order to:  (i) confirm the Public Record is
                  accurate, complete and current in all material respects; and
                  (ii) fulfill the Agent’s obligations as
                  registrants.  Without limiting the generality of the foregoing,
                  the Corporation shall, on reasonable notice, make available its
                  directors
                  and senior management and request that its auditors, legal counsel
                  and
                  independent engineers (if applicable) be available to answer any
                  questions
                  which the Agent may have and to participate in one or more due
                  diligence
                  sessions to be held prior to Closing Time (collectively, the “Due
                  Diligence Session”).  The Agent shall distribute a list
                  of written questions to be answered in advance of such Due Diligence
                  Session and the Corporation shall use its reasonable efforts to
                  provide
                  and to have its auditors, legal counsel and independent engineers
                  (if
                  applicable) provide written responses to such questions in advance
                  of the
                  Due Diligence Session.

              

      

       

    
      
        
          
          

        

        
          
          

          
            

          

        

        
          
          

        

      

    

    -
      10
      -

    

     

    
      	
              3.

            	
              Corporation’s
                Covenants as to Changes

            

    

     

    The
      Corporation agrees that:

     

    
      	
               

            	
              (a)

            	
              during
                the period of distribution of the Offered Securities, the Corporation
                will
                promptly inform the Agent of the full particulars
                of:

            

    

     

    
      	
               

            	
              (i)

            	
              any
                material change (actual, anticipated or threatened) in the assets,
                liabilities (absolute, accrued, contingent or otherwise), business,
                operations, capital or condition (financial or otherwise) of the
                Corporation;

            

    

     

    
      	
               

            	
              (ii)

            	
              any
                change in any material fact contained or referred to in any of the
                Public
                Record;

            

    

     

    
      	
               

            	
              (iii)

            	
              the
                occurrence of a material fact or event which, in any such case, is,
                or may
                be, of such a nature as to: i) render any part of the Public Record
                untrue, false or misleading in a material respect; ii) result in
                a
                misrepresentation in any part of the Public Record; or iii)result
                in any
                part of the Public Record not complying with Applicable Securities
                Laws;
                or

            

    

     

    
      	
               

            	
              (iv)

            	
              the
                discovery by the Corporation of any misrepresentation in any part
                of the
                Public Record or any information provided to the Agent by the
                Corporation,

            

    

     

    provided
      that if there may be any reasonable doubt as to whether a material change,
      change, occurrence or event of the nature referred to in this subsection has
      occurred, the Corporation shall promptly inform the Agent of the full
      particulars of the occurrence giving rise to the uncertainty and shall consult
      with the Agent as to whether the occurrence is of such nature;

     

    
      	
               

            	
              (b)

            	
              during
                the period of distribution of the Offered Securities, the Corporation
                will
                promptly inform the Agent of the full particulars
                of:

            

    

     

    
      	
               

            	
              (i)

            	
              any
                request of any Securities Commission or similar regulatory authority
                for
                any amendment to any part of the Public Record or for any additional
                information;

            

    

     

    

    
      
        
          
          

        

        
          
          

          
            

          

        

        
          
          

        

      

    

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               (ii)

            	
              the
                issuance by any Securities Commission or similar regulatory authority
                or
                by any other competent authority of any order to cease or suspend
                trading
                of any securities of the Corporation or of the institution or threat
                of
                institution of any proceedings for that purpose;
                or

            

    

     

    
      	
               

            	
              (iii)

            	
              the
                receipt by the Corporation of any communication from any Securities
                Commission or similar regulatory authority or any other competent
                authority relating to any part of the Public Record or the distribution
                of
                the Offered Securities; and

            

    

     

    
      	
               

            	
              (c)

            	
              during
                the period of distribution of the Offered Securities, the Corporation
                will
                promptly comply, to the reasonable satisfaction of the Agent and
                the
                Agent’s counsel, with Applicable Securities Laws with respect to any
                material change, change, occurrence or event of the nature referred
                to in
                subparagraph 3(a) and subparagraph 3(b) and the Corporation will
                prepare and file promptly at the Agent’s request, acting reasonably, any
                amendment to any part of the Public Record which in the Agent’s opinion
                may be reasonably necessary to comply with Applicable Securities
                Laws and
                the Corporation shall consult with the Agent with respect to the
                form and
                content of any amendment to any part of the Public Record proposed
                to be
                filed by the Corporation and shall not file any such amendment without
                the
                prior review and approval thereof by the Agent, acting
                reasonably.

            

    

     

    
      	
              4.

            	
              Corporation’s
                Other Covenants

            

    

     

    The
      Corporation agrees:

     

    
      	
               

            	
              (a)

            	
              during
                the period of distribution of the Offered Securities, the Corporation
                will
                promptly provide to the Agent for review by the Agent and the Agent’s
                counsel, prior to filing or issuance of the same, any proposed public
                disclosure document, including without limitation, any financial
                statements of the Corporation, report to shareholders, information
                circular or any press release or material change
                report;

            

    

     

    
      	
               

            	
              (b)

            	
              that
                the subscription funds for the Flow-Through Shares will be expended
                in
                accordance with the terms of the Flow-Through Subscription Agreements
                and
                the provisions hereof;

            

    

     

    
      	
               

            	
              (c)

            	
              it
                will use the proceeds from the issuance and sale of the Flow-Through
                Shares to fund the Corporation’s ongoing crude oil and natural gas
                exploration and development activities, such that an amount equal
                to the
                Commitment Amount shall be expended on Qualifying Expenditures in
                accordance with the Flow-Through Subscription Agreements, and will
                use the
                proceeds from the issuance and sale of the Offered Common Shares
                for other
                oil and gas exploration and development activities other than those
                incurred by expending the proceeds from the offering of Flow-Through
                Shares;

            

    

     

    

    
      
        
          
          

        

        
          
          

          
            

          

        

        
          
          

        

      

    

    -
      12
      -

    

     

    
      	
               

            	
               (d)

            	
              neither
                the Corporation, nor its affiliates nor any person acting on its
                or their
                behalf have engaged in or will engage in any Directed Selling Efforts
                in
                the United States with respect to the Offered
                Securities;

            

    

     

    
      	
               

            	
              (e)

            	
              neither
                the Corporation, nor its affiliates nor any person acting on its
                or their
                behalf has offered or sold, nor will any of them offer or sell, any
                Offered Securities except in an offshore transaction in accordance
                with
                Rule 903 of Regulation S;

            

    

     

    
      	
               

            	
              (f)

            	
              all
                certificates representing the Offered Securities shall contain a
                legend to
                the effect that transfer is prohibited except in accordance with
                the
                provisions of Regulation S, pursuant to a registration statement
                under the U.S. Securities Act, or pursuant to an available exemption
                therefrom; and that hedging transactions may not be conducted except
                in
                compliance with the U.S. Securities
                Act;

            

    

     

    
      	
               

            	
              (g)

            	
              it
                shall refuse to register any transfer of the Offered Securities not
                made
                in accordance with the provisions of Regulation S, pursuant to
                registration under the U.S. Securities Act, or pursuant to an available
                exemption therefrom;

            

    

     

    
      	
               

            	
              (h)

            	
              it
                shall use its best efforts to maintain its status as a reporting
                issuer
                not in default of any Applicable Securities Laws in the province
                of
                Alberta until January 1, 2009;
                and

            

    

     

    
      	
               

            	
              (i)

            	
              to
                keep proper books, records and accounts of all Qualifying Expenditures
                and
                all transactions affecting the Commitment Amounts and the Qualifying
                Expenditures and to provide such assistance to the Subscribers as
                may be
                reasonably required should a dispute arise with respect to the Qualifying
                Expenditures;

            

    

     

    
      	
               

            	
              (j)

            	
              to
                incur, during the Expenditure Period, Qualifying Expenditures in
                such
                amount as enables the Corporation to renounce to each Subscriber
                for
                Flow-Through Shares, as CEE, in accordance with the Act and the applicable
                Flow-Through Subscription Agreement, Qualifying Expenditures in the
                amount
                equal to the Commitment Amount;

            

    

     

    
      	
               

            	
              (k)

            	
              to
                renounce (in accordance with the Act and the applicable Flow-Through
                Subscription Agreement) to each Subscriber for Flow-Through Shares,
                effective on or before December 31, 2007, Qualifying Expenditures to
                be incurred during the Expenditure Period equal to the Commitment
                Amount;

            

    

     

    

    
      
        
          
          

        

        
          
          

          
            

          

        

        
          
          

        

      

    

    -
      13
      -

    

     

    
      	
               

            	
               (l)

            	
              if
                it does not incur during the Expenditure Period and renounce to each
                Subscriber for Flow-Through Shares, effective on or before
                December 31, 2007, Qualifying Expenditures equal to the Commitment
                Amount, the Corporation shall indemnify each such Subscriber as to,
                and
                pay to each such Subscriber, an amount equal to the amount of any
                tax
                payable under the Act (and under any corresponding provincial legislation)
                by the Subscriber for Flow-Through Shares as a consequence of such
                failure
                such payment to be made on a timely basis once the amount is definitively
                determined; provided that nothing in this paragraph shall derogate
                from
                any rights or remedies the Subscriber may have at common law with
                respect
                to liabilities other than those payable under the Act and any
                corresponding provincial legislation and for certainty, the foregoing
                indemnity shall have no force or effect and the Subscriber shall
                not have
                any recourse or rights of action to the extent that such indemnity,
                recourse or rights of action would otherwise cause the Flow-Through
                Shares
                to be “prescribed shares” within the meaning of Section 6202.1 of the
                regulations to the Act;

            

    

     

    
      	
               

            	
              (m)

            	
              to
                deliver to each Subscriber at the Subscriber’s address set forth in the
                applicable Flow-Through Subscription Agreement, not later than
                March 1, 2008, Form T101 Supplementary setting forth the
                aggregate amounts of Qualifying Expenditures renounced to the Subscriber
                pursuant to the Flow-Through Subscription Agreement for filing with
                the
                Subscriber’s tax return;

            

    

     

    
      	
               

            	
              (n)

            	
              that
                it will not reduce the amount renounced to each Subscriber for
                Flow-Through Shares pursuant to subsections 66(12.6) and 66(12.601)
                of the Act and, in the event that the amount renounced to each such
                Subscriber pursuant to subsection 66(12.73) of the Act is reduced,
                the Corporation will indemnify each Subscriber for Flow-Through Shares
                as
                to, and pay to each such Subscriber, an amount equal to the amount
                of any
                tax payable under the Act (and under any corresponding provincial
                legislation) by each such Subscriber as a consequence of such reduction,
                such payment to be made on a timely basis once the amount is definitively
                determined, provided that nothing in this paragraph shall derogate
                from
                any rights or remedies the Subscriber may have at common law with
                respect
                to liabilities other than those payable under the Act and any
                corresponding provincial legislation and for certainty, the foregoing
                indemnity shall have no force or effect and the Subscriber shall
                not have
                any recourse or rights of action to the extent that such indemnity,
                recourse or rights of action would otherwise cause the Flow-Through
                Shares
                to be “prescribed shares” within the meaning of section 6202.1 of the
                regulations to the Act ;

            

    

     

    

    
      
        
          
          

        

        
          
          

          
            

          

        

        
          
          

        

      

    

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      14
      -

    

     

    
      	
               

            	
               (o)

            	
              to
                maintain its status as a “principal business corporation” until
                December 31, 2008;

            

    

     

    
      	
               

            	
              (p)

            	
              that
                it has not and will not enter into transactions or take deductions
                which
                would otherwise reduce its cumulative CEE or cumulative CDE to an
                extent
                which would preclude a renunciation of Qualifying Expenditures hereunder
                and in an amount equal to Commitment Amounts effective on or before
                December 31, 2007; and

            

    

     

    
      	
               

            	
              (q)

            	
              to
                file all forms required under the Act necessary to effectively renounce
                Qualifying Expenditures equal to the Commitment Amount of each Subscriber
                effective on or before December 31, 2007, and to provide the
                Subscriber with a copy of all such forms on a timely basis and, in
                particular, to file with the CRA the form prescribed by
                subsection 66(12.68) of the Act together with a copy of the
                Flow-Through Subscription Agreement and any “selling instruments”
                contemplated by such subsection within the time prescribed by the
                Act.

            

    

     

    
      	
              5.

            	
              Agent’s
                Covenants

            

    

     

    The
      Agent
      covenants and agrees with the Corporation that it will:

     

    
      	
               

            	
              (a)

            	
              use
                its best efforts to identify Subscribers for the Offered
                Securities;

            

    

     

    
      	
               

            	
              (b)

            	
              conduct
                its activities in connection with the proposed offer and sale of
                the
                Offered Securities in compliance with all Applicable Securities Laws
                of
                the Selling Jurisdictions and cause a similar covenant to be contained
                in
                any agreement entered into with any selling dealer group in connection
                with the distribution of the Offered
                Securities;

            

    

     

    
      	
               

            	
              (c)

            	
              not
                solicit subscriptions for Offered Securities, trade in Common Shares
                or
                otherwise do any act in furtherance of a trade of Common Shares outside
                of
                the Selling Jurisdictions;

            

    

     

    
      	
               

            	
              (d)

            	
              not
                advertise the proposed offering or sale of the Offered Securities
                in
                printed media of general or regular paid circulation, radio or
                television;

            

    

     

    
      	
               

            	
              (e)

            	
              obtain
                from each Subscriber an executed Subscription Agreement, including
                all
                applicable exhibits thereto and deliver all such Subscription Agreements
                to the Corporation at least 24 hours prior to the applicable Closing
                Time;

            

    

     

    

    
      
        
          
          

        

        
          
          

          
            

          

        

        
          
          

        

      

    

    -
      15
      -

    

     

    
      	
               

            	
               (f)

            	
              obtain
                from each Subscriber such applicable forms as may be required by
                the
                Exchange, the OTCBB or the relevant Securities Commissions and supplied
                to
                the Agent for completion in connection with the distribution of the
                Offered Securities;

            

    

     

    
      	
               

            	
              (g)

            	
              provide
                to the Corporation as soon as practicable following the applicable
                Closing
                Date all information necessary to allow the Corporation to file with
                each
                of the Securities Commissions, if required, a report of trade in
                accordance with securities laws, rules, regulations and policies
                of the
                Selling Jurisdictions within 10 days of the applicable Closing
                Date;

            

    

     

    
      	
               

            	
              (h)

            	
              not
                offer or sell any Offered Securities, except in accordance with
                Rule 903 of Regulation S and accordingly, neither the Agent, its
                affiliates nor any persons acting on its or their behalf will engage
                in
                any Directed Selling Efforts in the United States with respect to
                the
                Offered Securities; and

            

    

     

    
      	
               

            	
              (i)

            	
              not
                engage in hedging transactions with regard to the Offered Securities
                prior
                to the expiration of the one-year period commencing on the later
                of the
                commencement of the offering of Offered Securities and the Closing
                Date,
                in each case unless such securities are registered under the U.S.
                Securities Act and the securities laws of all applicable states of
                the
                United States or unless such hedging transactions are pursuant to
                an
                exemption therefrom, and they will comply with the “offering restrictions”
                requirement in Rule 902(g) of
                Regulation S.

            

    

     

    
      	
              6.

            	
              Representations
                and Warranties of the
                Corporation

            

    

     

    The
      Corporation represents and warrants to the Agent, and acknowledges that the
      Agent is relying upon such representations and warranties, that:

     

    
      	
               

            	
              (a)

            	
              the
                Corporation has been duly incorporated in the State of Delaware and
                is
                organized and is validly subsisting under the laws of the State of
                Delaware and has all requisite corporate authority and power to carry
                on
                its business, as now conducted and as presently proposed to be conducted
                by it, and to own, lease and operate its properties and
                assets;

            

    

     

    
      	
               

            	
              (b)

            	
              the
                Corporation is qualified to carry on business under the laws of each
                jurisdiction in which it carries on a material portion of its
                business;

            

    

     

    
      	
               

            	
              (c)

            	
              other
                than Kodiak Petroleum ULC, Kodiak Petroleum (Montana), Inc. and Kodiak
                Petroleum (Utah), Inc. (collectively, the “Corporation’s
                Subsidiaries”) and, the Corporation has no subsidiaries and the
                Corporation is not affiliated with, nor is it a holding corporation
                of any
                other body corporate;

            

    

     

    

    
      
        
          
          

        

        
          
          

          
            

          

        

        
          
          

        

      

    

    -
      16
      -

    

     

    
      	
               

            	
               (d)

            	
              the
                Corporation’s Subsidiaries have been duly incorporated and are valid and
                subsisting in good standing under the laws of their jurisdiction
                of
                incorporation and have all requisite corporate power and capacity
                to carry
                on their business as now conducted and as presently proposed to be
                conducted by them and to own, lease and operate their properties
                and
                assets;

            

    

     

    
      	
               

            	
              (e)

            	
              all
                of the issued and outstanding shares in the capital of the Corporation’s
                Subsidiaries are fully paid and non-assessable and legally and
                beneficially owned by the Corporation free and clear of all mortgages,
                liens, charges, pledges, security interests, encumbrances, claims
                or
                demands whatsoever (other than as provided in the credit facilities
                of the
                Corporation) and no person holds any securities convertible into
                or
                exchangeable for issued or unissued shares of the Corporation’s
                Subsidiaries or has any agreement, warrant, option, right or privilege
                (whether pre emptive or contractual) being or capable of becoming
                an
                agreement, warrant, option or right for the acquisition of any unissued
                or
                issued securities of the Corporation’s
                Subsidiaries;

            

    

     

    
      	
               

            	
              (f)

            	
              at
                each Closing Time, the Offered Securities subscribed for will, upon
                receipt by the Corporation of the consideration therefor, be duly
                and
                validly created, authorized and issued as fully paid and
                non-assessable;

            

    

     

    
      	
               

            	
              (g)

            	
              at
                each Closing Time, the Common Shares issuable pursuant to the exercise
                of
                the Agent’s Warrants granted pursuant to this Agreement will be duly and
                validly authorized, allotted and reserved for issuance and, upon
                exercise
                of such Agent’s Warrants, upon receipt by the Corporation of the
                consideration therefor, the Common Shares issued pursuant to the
                Agent’s
                Warrants will be issued as fully paid and
                non-assessable;

            

    

     

    
      	
               

            	
              (h)

            	
              the
                form and terms of the definitive certificates representing the Offered
                Securities have been approved and adopted by the Corporation and
                will
                comply with all corporate and legal requirements relating thereto,
                including, without limitation, the requirements of the Exchange and
                the
                OTCBB and Rule 903 of Regulation
                S;

            

    

     

    
      	
               

            	
              (i)

            	
              the
                Corporation is not in default or breach of, and the execution and
                delivery
                of, and the performance of and compliance with the terms of, this
                Agreement, the Agent’s Warrants and the Subscription Agreements and the
                performance of any of the transactions contemplated hereby (including,
                without limitation, the grant of the Over-Allotment Option) and thereby
                by
                the Corporation, do not and will not result in any breach of, or
                constitute a default under, and do not and will not create a state
                of
                facts which, after notice or lapse of time or both, will result in
                a
                breach of or constitute a default under any applicable laws which
                are
                material to the Corporation or any term or provision of the articles,
                by
                laws or resolutions of the directors or shareholders of the Corporation,
                or any mortgage, note, indenture, contract, agreement (written or
                oral),
                instrument, lease or other document to which the Corporation is a
                party or
                by which it is bound, or any judgment, decree, order, statute, rule
                or
                regulation applicable to the Corporation, which default or breach
                might
                reasonably be expected to materially adversely affect the business,
                operations, capital or condition (financial or otherwise) of the
                Corporation (taken as a whole) or its properties or
                assets;

            

    

     

    

    
      
        
          
          

        

        
          
          

          
            

          

        

        
          
          

        

      

    

    -
      17
      -

    

     

    
      	
               

            	
               (j)

            	
              the
                Corporation has full corporate power and authority to grant the
                Over-Allotment Option and to enter into this Agreement, the Agent’s
                Warrants and the Subscription Agreements and to perform its obligations
                set out herein and therein including, without limitation, to issue
                the
                Offered Securities, the Agent’s Warrants and the Common Shares to be
                issued to the Agent upon exercise of the Agent’s Warrants and this
                Agreement has been, and the Subscription Agreements and Agent’s Warrants
                will be duly authorized, executed and delivered by the Corporation,
                and
                this Agreement is, and the Subscription Agreements, and the Agent’s
                Warrants will be legal, valid and binding obligations of the Corporation
                enforceable against the Corporation in accordance with their respective
                terms subject to the general qualifications
                that:

            

    

     

    
      	
               

            	
              (i)

            	
              the
                enforceability may be limited by bankruptcy, insolvency, moratorium,
                reorganization or other similar laws of general application affecting
                creditors’ rights;

            

    

     

    
      	
               

            	
              (ii)

            	
              equitable
                remedies, including the remedies of specific performance and injunctive
                relief, are available only in the discretion of the applicable
                court;

            

    

     

    
      	
               

            	
              (iii)

            	
              the
                enforceability of any provision exculpating a party from liability
                or duty
                otherwise owed by it may be limited under applicable
                law;

            

    

     

    
      	
               

            	
              (iv)

            	
              the
                enforceability of provisions which purport to sever any provision
                which is
                prohibited or unenforceable under applicable law without affecting
                the
                enforceability or validity of the remainder of such document would
                be
                determined only in the discretion of the
                court;

            

    

     

     

     

     

     

    

    
      
        
          
          

        

        
          
          

          
            

          

        

        
          
          

        

      

    

    -
      18
      -

    

     

    
      	
               

            	
               (v)

            	
              the
                equitable or statutory powers of the courts in Canada having jurisdiction
                to stay proceedings before them and the execution of
                judgments;

            

    

     

    
      	
               

            	
              (vi)

            	
              rights
                to indemnity and contribution hereunder may be limited under applicable
                law and may not be ordered by a court on grounds of public policy
                and may
                therefore not be available in particular
                instances;

            

    

     

    
      	
               

            	
              (vii)

            	
              the
                enforceability may be limited by applicable laws regarding limitation
                of
                actions; and

            

    

     

    
      	
               

            	
              (viii)

            	
              the
                costs of and incidental to proceedings authorized to be taken in
                court or
                before a judge are within the discretion of the court or judge before
                which such proceedings are brought and a court or judge has full
                power to
                determine by whom and to what extent the costs of such proceedings
                will be
                paid;

            

    

     

    
      	
               

            	
              (k)

            	
              other
                than as disclosed in the Documents, there has not been any materially
                adverse change in the assets, liabilities or obligations (absolute,
                contingent or otherwise) of the Corporation from the position set
                forth in
                the Financial Statements and there has not been any material adverse
                change in the business, operations, capital or condition (financial
                or
                otherwise) or results of the operations of the Corporation since
                January
                30, 2006; and since January 30, 2006 there have been no material
                facts,
                transactions, events or occurrences which could materially adversely
                affect the capital, assets, liabilities (absolute, accrued, contingent
                or
                otherwise), business, operations or condition (financial or otherwise)
                or
                results of the operations of the Corporation which have not been
                publicly
                disclosed;

            

    

     

    
      	
               

            	
              (l)

            	
              the
                Financial Statements fairly present in all material respects, in
                accordance with generally accepted accounting principles in the United
                States, consistently applied, the financial position and condition
                of the
                Corporation at the dates thereof and the results of the operations
                of the
                Corporation for the periods then ended and reflect all assets, liabilities
                or obligations (absolute, accrued, contingent or otherwise) of the
                Corporation as at the dates thereof that are required to be disclosed
                therein in accordance with generally accepted accounting principles
                in the
                United States;

            

    

     

    

    
      
        
          
          

        

        
          
          

          
            

          

        

        
          
          

        

      

    

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      19
      -

    

     

    
      	
               

            	
               (m)

            	
              there
                are no actions, suits, proceedings or inquiries, including, to the
                best of
                the Corporation’s knowledge, information and belief, after due inquiry,
                pending or threatened against or affecting the Corporation or the
                Corporation’s Subsidiaries at law or in equity or before or by any
                federal, provincial, municipal or other governmental department,
                commission, board, bureau, agency or instrumentality which in any
                way
                materially adversely affects, or may in any way materially adversely
                affect, the assets, business, operations or condition (financial
                or
                otherwise) of the Corporation or the Corporation’s Subsidiaries (taken as
                a whole) or which affects or may affect the distribution of the Offered
                Securities;

            

    

     

    
      	
               

            	
              (n)

            	
              the
                Corporation or the Corporation’s Subsidiaries are not a party to or bound
                by any agreement of guarantee, indemnification (other than an
                indemnification of directors and officers in accordance with the
                bylaws of
                the Corporation or the Corporation’s Subsidiaries and applicable laws and
                indemnities in favour of Subscribers pursuant to the Flow-Through
                Subscription Agreements or in favour of subscribers for “flow-through”
                Common Shares issued by the Corporation and other indemnities in
                favour of
                agents or underwriters in connection with an issuance of securities
                on
                like transactions and other than standard indemnities in favour of
                purchasers of assets in purchase and sale agreements and indemnities
                and
                guarantees in favour of the Corporation’s bankers) or any other like
                commitment of the obligations, liabilities (contingent or otherwise)
                of
                indebtedness of any other person;

            

    

     

    
      	
               

            	
              (o)

            	
              other
                than as disclosed in the Documents, the Corporation and the Corporation’s
                Subsidiaries do not have any loans or other indebtedness outstanding
                which
                have been made to or from any of its shareholders, officers, directors
                or
                employees or any other person not dealing at arm’s length with the
                Corporation or the Corporation’s Subsidiaries that are currently
                outstanding;

            

    

     

    
      	
               

            	
              (p)

            	
              other
                than as disclosed in the Documents, no officer, director, employee
                or any
                other person not dealing at arm’s length with the Corporation or the
                Corporation’s Subsidiaries or, to the knowledge of the Corporation, any
                associate or affiliate of any such person, owns, has or is entitled
                to any
                royalty, net profits interest, carried interest or any other encumbrances
                or claims of any nature whatsoever which are based on production
                from the
                Corporation’s or the Corporation’s Subsidiaries properties or assets or
                any revenue or rights attributed
                thereto;

            

    

     

    
      	
               

            	
              (q)

            	
              other
                than as disclosed in the Documents, none of the directors or senior
                officers of the Corporation, or to the knowledge of the Corporation,
                any
                “associate” or “affiliate” of any of the foregoing persons or companies
                (as such terms are defined in the Securities Act (Alberta)), has
                or has had any material interest, direct or indirect, in any continuing
                or
                existing material transaction or has any material interest, direct
                or
                indirect, in any proposed material transaction which is material
                to or
                will materially affect the
                Corporation;

            

    

     

    

    
      
        
          
          

        

        
          
          

          
            

          

        

        
          
          

        

      

    

    -
      20
      -

    

     

    
      	
               

            	
               (r)

            	
              the
                information and statements set forth in the Public Record, as it
                relates
                to the Corporation and the Corporation’s Subsidiaries, were in all
                material respects, true, correct, and complete and did not contain
                any
                misrepresentation, as of the respective dates of such information
                or
                statements, and no material change has occurred in relation to the
                Corporation or the Corporation’s Subsidiaries which is not disclosed in
                the Public Record, and the Corporation has not filed any confidential
                material change reports which continue to be
                confidential;

            

    

     

    
      	
               

            	
              (s)

            	
              other
                than as disclosed in the Documents, no event of material default
                under any
                agreement or instrument pursuant to which indebtedness of the Corporation
                has been issued, has occurred, and no event which with the giving
                of
                notice or the passage of time or both would constitute an event of
                material default under any such agreement or instrument has occurred
                and
                is continuing;

            

    

    

      
        	
                 

              	
                (t)

              	
                the
                  authorized capital of the Corporation consists of 300,000,000 with
                  par
                  value of US$0.001 per share, of which prior to the issuance of
                  the Offered
                  Securities, 105,242,498 Common
                  Shares are
                  outstanding, which shares are validly issued and fully paid and
                  non-assessable shares;

              

      

       

    

    
      	
               

            	
              (u)

            	
              no
                person, firm, corporation or other entity holds any securities convertible
                or exchangeable into securities of the Corporation or now has any
                agreement, warrant, option, right or privilege (whether pre emptive
                or
                contractual) being or capable of becoming an agreement for the purchase,
                subscription or issuance of any unissued shares or other securities
                (including convertible securities) of the Corporation other
                than:

            

    

     

    
      	
               

            	
              (i)

            	
              stock
                options to acquire up to 1,935,000 Common Shares at prices ranging
                from US$1.28 to US$2.74 per share until August 1, 2010, currently
                issued to directors, officers, employees and consultants of the
                Corporation; and

            

    

     

    
      	
               

            	
              (ii)

            	
              share
                purchase warrants to acquire up to 4,437,000 Common Shares at an
                exercise prices ranging from US$1.50 to US$2.70 per share issued
                pursuant
                to private placements expiring on or before May 10,
                2004;

            

    

     

    
      	
               

            	
              (v)

            	
              the
                issued and outstanding Common Shares currently are trading on the
                OTCBB;

            

    

     

    

    
      
        
          
          

        

        
          
          

          
            

          

        

        
          
          

        

      

    

    -
      21
      -

    

     

    
      	
               

            	
               (w)

            	
              the
                Corporation has made application to list and post for trading its
                Common
                Shares (including the Offered Securities and the Common Shares issuable
                upon exercise of the Agent’s Warrants) on the
                Exchange;

            

    

     

    
      	
               

            	
              (x)

            	
              other
                than as disclosed to the Agent that the Corporation
                and the Corporation's Subsidiaries have not
                filed Federal U.S. Income Tax returns in 2005 and 2006 as required,
                provided that the Corporation represents and warrants that no taxes,
                charges, penalties, interest or other fines are or will be payable
                in
                respect of any periods for which returns have not been filed and
                with such
                exceptions as are not material to the Corporation, the Corporation
                and
                the Corporation's Subsidiaries have duly and on a timely basis filed
                all tax returns required to be filed by them, has paid all taxes
                due and
                payable by them and has paid all assessments and
                re-assessments and all other taxes, governmental charges,
                penalties, interest and other fines due and payable by them and which
                are
                claimed by any governmental authority to be due and owing and adequate
                provision has been made for taxes payable for any completed fiscal
                period
                for which tax returns are not yet required and there are no agreements,
                waivers, or other arrangements providing for an extension of time
                with
                respect to the filing of any tax return or payment of any tax,
                governmental charge or deficiency by the Corporation or the Corporation's
                Subsidiaries and to the knowledge of the Corporation there are no
                actions,
                suits, proceedings, investigations or claims threatened or pending
                against
                the Corporation or the Corporation's Subsidiaries in respect of taxes,
                governmental charges or assessments or any matters under discussion
                with
                any governmental authority relating to taxes, governmental charges
                or
                assessments asserted by any such
                authority;

            

    

     

    
      	
               

            	
              (y)

            	
              the
                minute books of the Corporation and the Corporation’s Subsidiaries as
                provided to the Agent’s counsel are materially true and correct and
                contain the minutes of all meetings and all the resolutions of directors
                and shareholders thereof;

            

    

     

    
      	
               

            	
              (z)

            	
              the
                books of account and other records of the Corporation and the
                Corporation’s Subsidiaries, whether of a financial or accounting nature or
                otherwise, have been maintained in accordance with prudent business
                practices;

            

    

     

    
      	
               

            	
              (aa)

            	
              the
                Corporation is a “reporting issuer” in the province of Alberta within the
                meaning of the Applicable Securities Laws in such province, has held
                that
                status without interruption or suspension in that jurisdiction since
                August 27, 2007 and is not in default of any requirements of
                Applicable Securities Laws thereof;

            

    

     

    

    
      
        
          
          

        

        
          
          

          
            

          

        

        
          
          

        

      

    

    -
      22
      -

    

     

    
      	
            	
               (bb)

            	
              Olde
                Monmouth Stock Transfer Co. Inc. at its office in Atlantic Highlands,
                New
                Jersey is the duly appointed registrar and transfer agent of the
                Corporation with respect to the Common
                Shares;

            

    

     

    
      	
               

            	
              (cc)

            	
              the
                Corporation and the Corporation’s Subsidiaries have conducted and are
                conducting their business in compliance in all
                material respects with all applicable laws, rules and regulations
                and, in
                particular, all applicable licensing and environmental legislation,
                regulations or by laws or other lawful requirement of any governmental
                or
                regulatory bodies applicable to the Corporation and the Corporation’s
                Subsidiaries in each jurisdiction in which they carry on business
                and hold
                all licences, registrations and qualifications in all jurisdictions
                in
                which they carry on business which are necessary or desirable to
                carry on
                the business of the Corporation and the Corporation’s Subsidiaries, as now
                conducted and as presently proposed to be conducted, and all such
                licenses, registrations or qualifications are valid and existing
                and in
                good standing and none of such licenses, registrations or qualifications
                contains any burdensome term, provision, condition or limitation
                which has
                or is likely to have any material adverse effect on the business
                of the
                Corporation and the Corporation’s Subsidiaries as now conducted or as
                proposed to be conducted;

            

    

     

    
      	
            	
              (dd)

            	
              any
                and all operations of the Corporation and the Corporation’s Subsidiaries
                and, to the best of the Corporation’s knowledge, any and all operations by
                third parties, on or in respect of the assets and properties of the
                Corporation and the Corporation’s Subsidiaries, have been conducted in all
                material respects in accordance with good oilfield
                practices;

            

    

     

    
      	
               

            	
              (ee)

            	
              to
                the Corporation's knowledge, the Corporation and the Corporation’s
                Subsidiaries have been and are in material compliance with all applicable
                federal, provincial, state, municipal and local laws, statutes,
                ordinances, by laws and regulations and orders, directives and decisions
                rendered by any ministry, department or administrative or regulatory
                agency, domestic or foreign, (“Environmental Laws”)
                relating to the protection of the environment, occupational health
                and
                safety or the processing, use, treatment, storage, disposal, discharge,
                transport or handling of any pollutants, contaminants, chemicals
                or
                industrial, toxic or hazardous wastes or
                substance;

            

    

     

    
      	
               

            	
              (ff)

            	
              in
                respect of their properties and assets in which the Corporation or
                the
                Corporation’s Subsidiaries are an operator, the Corporation and the
                Corporation’s Subsidiaries have obtained all material licences, permits,
                approvals, consents, certificates, registrations and other authorizations
                under Environmental Laws (the “Environmental Permits”)
                necessary for the operation of their projects as currently operated
                and
                each Environmental Permit is valid, subsisting and in good standing
                and
                the holders of the Environmental Permits are not in default or breach
                thereof and no proceeding is pending or threatened to revoke or limit
                any
                Environmental Permit, except in each case where the result would
                not have
                a material adverse effect on the Corporation and the Corporation’s
                Subsidiaries on a consolidated
                basis;

            

    

     

    

    
      
        
          
          

        

        
          
          

          
            

          

        

        
          
          

        

      

    

    -
      23
      -

    

     

    
      	
            	
               (gg)

            	
              to
                the Corporation’s knowledge, in respect of their property and assets in
                which the Corporation or the Corporation’s Subsidiaries are not an
                operator, the Corporation and the Corporation’s Subsidiaries have obtained
                all Environmental Permits necessary for the operation of their projects
                as
                currently operated and each Environmental Permit is valid, subsisting
                and
                in good standing and the holders of the Environmental Permits are
                not in
                default or breach thereof and no proceeding is pending or threatened
                to
                revoke or limit any Environmental Permit, except in each case where
                the
                result would not have a material adverse effect on the Corporation
                and the
                Corporation’s Subsidiaries on a consolidated
                basis;

            

    

     

    
      	
               

            	
              (hh)

            	
              none
                of the Corporation and the Corporation’s Subsidiaries (including, if
                applicable, any predecessor companies thereof) have received any
                notice
                of, or been prosecuted for an offence alleging, material non-compliance
                with any Environmental Laws, and none of the Corporation and the
                Corporation’s Subsidiaries (including, if applicable, any predecessor
                companies) have settled any allegation of material non-compliance
                short of
                prosecution.  There are no orders or directions relating to
                environmental matters requiring any material work, repairs, construction
                or capital expenditures to be made with respect to any of the assets of
                the Corporation and the Corporation’s Subsidiaries nor have the
                Corporation or the Corporation’s Subsidiaries received notice of any of
                the same and which orders directions or notices remain outstanding
                as
                unresolved;

            

    

     

    
      	
               

            	
              (ii)

            	
              no
                Securities Commission or any other securities commission or similar
                regulatory authority or the OTCBB has issued any order preventing
                or
                suspending trading of any securities of the Corporation, the Corporation
                is not in default of any requirement of Applicable Securities Laws
                that
                would have a material effect on this offering or the Corporation
                and the
                Corporation is entitled to avail itself of the applicable prospectus
                exemptions available under such Applicable Securities Laws in Canada
                in
                respect of the trades in the Offered Securities to Subscribers as
                contemplated by this Agreement;

            

    

     

    

    
      
        
          
          

        

        
          
          

          
            

          

        

        
          
          

        

      

    

    -
      24
      -

    

     

    
      	
               

            	
               (jj)

            	
              to
                the knowledge of the Corporation after due inquiry, as at the date
                of this
                Agreement, no insider of the Corporation has a present intention
                to sell
                any securities of the Corporation held by
                it;

            

    

     

    
      	
               

            	
              (kk)

            	
              the
                Corporation has filed a Form 51-101F1 – Statement of Reserves Data
                and Other Oil and Gas Information for the year ended December 31,
                2006 and a Form 51-101F3 – Report of Management and Directors on
                Reserves Data and Other Information for the year ended December 31,
                2006 and such reports were correct as of the respective effective
                date
                thereof;

            

    

     

    
      	
               

            	
              (ll)

            	
              the
                Corporation made available to Trimble Engineering Associates Ltd.,
                in
                connection with the issuance of Form 51-101F2 - Report on Reserves
                Data by an Independent Qualified Reserves Evaluator dated July 18,
                2007 with respect to the Corporation’s petroleum and natural gas
                properties, for the purpose of preparing such document, all information
                requested by Trimble Engineering Associates Ltd., which information
                did
                not contain any material misrepresentation at the date such information
                was provided.  The Corporation has no knowledge of any material
                adverse change in any information provided to Trimble Engineering
                Associates Ltd. since the date that such information was
                provided;

            

    

     

    
      	
            	
              (mm)

            	
              the
                document as prepared by Trimble Engineering Associates Ltd. as described
                in subparagraph 6(ll) above considers and reports on all material
                petroleum and natural gas properties of the Corporation as at the
                effective date of that document;

            

    

     

    
      	
               

            	
              (nn)

            	
              the
                Corporation made available to Chapman Petroleum Engineering Ltd.,
                in
                connection with the issuance of the engineering report of Chapman
                Petroleum Engineering Ltd. dated August 1, 2007 with respect to the
                Corporation’s petroleum and natural gas properties in the Northwest
                Territories, for the purpose of preparing such document, all information
                requested by Chapman Petroleum Engineering Ltd., which information
                did not
                contain any material misrepresentation at the date such information
                was
                provided.  The Corporation has no knowledge of any material
                adverse change in any information provided to Chapman Petroleum
                Engineering Ltd. since the date that such information was
                provided;

            

    

     

    
      	
               

            	
              (oo)

            	
              although
                it does not warrant title:

            

    

     

    

    
      
        
          
          

        

        
          
          

          
            

          

        

        
          
          

        

      

    

    -
      25
      -

    

     

    
      	
               

            	
               (i)

            	
              the
                Corporation does not have reason to believe that it and the Corporation’s
                Subsidiaries do not have title to or the irrevocable right to produce
                and
                sell their petroleum, natural gas and related hydrocarbons (for the
                purposes of this clause, the foregoing are referred to as the
                “Interests”) and does represent and warrant that the
                Interests are free and clear of adverse claims created by, through
                or
                under the Corporation and the Corporation’s Subsidiaries, except as
                disclosed in the Public Record or those arising in the ordinary course
                of
                business (including, without limitation, security interests and charges
                by
                way of security granted to the Corporation’s and the Corporation’s
                Subsidiaries senior lender(s)), which are not material in the aggregate,
                and, to the knowledge of the Corporation and the Corporation’s
                Subsidiaries, the Corporation holds their Interests under valid and
                subsisting leases, licenses, permits, concessions, concession agreements,
                contracts, subleases, reservations or other agreements;
                and

            

    

     

    
      	
               

            	
              (ii)

            	
              to
                the Corporation’s knowledge, there are no material defects, failures or
                impairments in the title of the Corporation and the Corporation’s
                Subsidiaries to their oil and gas properties, whether or not an action,
                suit, proceeding or inquiry is pending or threatened and whether
                or not
                discovered by any third party, which in aggregate could have a material
                adverse affect on: (A) the quantity and pre tax present worth values
                of the oil and gas reserves of the Corporation shown in the technical
                reports for the Corporation’s petroleum and natural gas properties;
                (B) any current production of the Corporation; or (C) the
                current cash flow of the
                Corporation;

            

    

     

    
      	
            	
              (pp)

            	
              the
                Corporation is a principal business corporation as defined in
                subparagraph 1(ee) of this
                Agreement;

            

    

     

    
      	
               

            	
              (qq)

            	
              the
                Corporation is carrying on business in Canada for the purposes of
                the
                Act;

            

    

     

    
      	
               

            	
              (rr)

            	
              the
                Offered Securities do not constitute “United States real property
                interests” within the meaning of the Internal Revenue Code of the United
                States;

            

    

     

    
      	
               

            	
              (ss)

            	
              except
                as a result of any agreement or arrangement to which the Corporation
                is
                not a party or of which it has no knowledge, upon issuance pursuant
                to the
                provisions of the Flow-Through Subscription Agreements, the Flow-Through
                Shares will be “flow-through shares’’ as defined in subsection 66(15)
                of the Act and such Flow-Through Shares will not constitute “prescribed
                shares” for the purpose of Regulation 6202.1 included in the Regulations
                to the Act;

            

    

     

    
      	
               

            	
              (tt)

            	
              the
                Corporation currently has no Swaps
                outstanding;

            

    

     

    

    
      
        
          
          

        

        
          
          

          
            

          

        

        
          
          

        

      

    

    -
      26
      -

    

     

    
      	
            	
               (uu)

            	
              the
                Responses are true and correct where they relate to matters of fact,
                and
                the Corporation and its directors and officers have responded in
                a
                thorough and complete fashion.  Where the Responses reflect the
                opinion or view of the Corporation or its directors or officers (including
                Responses or portions of such Responses which are forward-looking
                or
                otherwise relate to projections, forecasts or estimates of future
                performance or results (operating, financial or otherwise)
                (“Forward-looking Statements”)), such opinions or views
                are subject to the qualifications set forth in the Responses and
                were
                honestly held and believed to be reasonable at the time they were
                given;
                provided, however, it shall not constitute a breach of this subparagraph,
                solely if the actual results vary or differ from those contained
                in
                Forward-looking Statements;

            

    

     

    
      	
               

            	
              (vv)

            	
              the
                Corporation has not incurred any obligation or liability, contingent
                or
                otherwise, for brokerage fees, finder’s fees, agent’s commission or other
                forms of compensation with respect to the transactions contemplated
                herein
                for which the Corporation will have any liability or obligation except
                as
                provided herein;

            

    

     

    
      	
            	
              (ww)

            	
              the
                Corporation does not have in place a shareholder rights protection
                plan;

            

    

     

    
      	
               

            	
              (xx)

            	
              the
                Corporation is not a party to any unanimous shareholders agreement
                and to
                its actual knowledge, neither the Corporation nor any of its shareholders
                is a party to any unanimous shareholders agreement, pooling agreement,
                voting trust or other similar type of arrangements in respect of
                outstanding securities of the
                Corporation;

            

    

    

      
        	
                 

              	
                (yy)

              	
                (other
                  than commitments in respect of the remaining expenditure of approximately $6,605,010
                  renounceable as CEE on or before
                  December 31, 2007) the Corporation has not entered into any agreements
                  or
                  made any covenants with any parties with respect to the renunciation
                  of
                  CEE or CDE, which amounts have not been fully expended and renounced
                  as
                  required thereunder;

              

      

       

      
        	
                 

              	
                (zz)

              	
                the
                  representations and warranties
                  of the Corporation in the Subscription Agreements are, or will
                  be at the
                  Closing Date, true and
                  correct;

              

      

       

      
        	
              	
                (aaa)

              	
                (other
                  than commitments in respect
                  of the remaining expenditure of approximately $6,605,010  renounceable
                  as CEE on or before December 31, 2007) the Corporation has not
                  entered
                  into any agreements or made any covenants with any parties that
                  would
                  restrict the Corporation from entering into the Flow-Through Subscription
                  Agreements and agreeing to incur and renounce Qualifying Expenditures
                  in
                  accordance with the Flow-Through Subscription Agreements, nor that
                  would
                  require the prior renunciation to any other person of Qualifying
                  Expenditures prior to the renunciation of the aggregate Commitment
                  Amount
                  in favour of the Subscribers and the Corporation has no outstanding
                  obligations to incur and renounce Qualifying Expenditures to any
                  persons;

              

      

       

    

    

    
      
        
          
          

        

        
          
          

          
            

          

        

        
          
          

        

      

    

    -
      27
      -

    

     

    
      	
            	
               (bbb)

            	
              no
                approval, authorization, consent or other order of any governmental
                authority is required in connection with the execution and delivery or the
                performance by the Corporation of this Agreement (including, without
                limitation, the grant of the Over-Allotment Option), the Agent’s Warrants,
                and the Subscription Agreements;

            

    

     

    
      	
            	
              (ccc)

            	
              neither
                the Corporation nor the Corporation’s Subsidiaries have, directly or
                indirectly: (i) made or authorized any contribution, payment or gift
                of funds or property to any official, employee or agent of any
                governmental agency, authority or instrumentality of any jurisdiction;
                or
                (ii) made any contribution to any candidate for public office, in
                either case, where either the payment or the purpose of such contribution,
                payment or gift was, is, or would be prohibited under the Canada
                Corruption of Foreign Public Officials Act (Canada) or the
                Proceeds of Crime (Money Laundering) and Terrorist Financing
                Act
                (Canada) or the rules and regulations promulgated thereunder or under
                any
                other legislation of any relevant jurisdiction covering a similar
                subject
                matter applicable to the Corporation or the Corporation’s Subsidiaries and
                their respective operations and have instituted and maintained policies
                and procedures designed to ensure, and which are reasonably expected
                to
                continue to ensure, continued compliance with such
                legislation;

            

    

    

      
        	
              	
                (ddd)

              	
                none
                  of the Corporation, the Corporation’s Subsidiaries or, to the knowledge of
                  the Corporation, any director, officer, agent, employee, affiliate
                  or
                  person acting on behalf of the Corporation and/or the Corporation’s
                  Subsidiaries (or all of them) have been or is currently subject
                  to any
                  United States sanctions administered by the Office of Foreign Assets
                  Control of the United States Treasury Department
                  (“OFAC”); and the Corporation will not directly or
                  indirectly use any proceeds of the distribution of the Offered
                  Securities,
                  or lend, contribute or otherwise make available such proceeds to
                  the
                  Corporation and the Corporation’s Subsidiaries or to any affiliated
                  entity, joint venture partner or other person or entity, to finance
                  any
                  investments in, or make any payments to, any country or person
                  targeted by
                  any of the sanctions of the United States administered by
                  OFAC;  and

              

      

       

       

       

    

    
      
        
          
          

        

        
          
          

          
            

          

        

        
          
          

        

      

    

    -
      28
      -

    

    
       

      
        	
              	
                (eee)

              	
                the
                  Corporation has not completed any private placements that would
                  preclude
                  the Corporation from relying upon any exemptions contemplated by
                  the
                  Subscription Agreements.

              

      

       

    

    
      	
              7.

            	
              Conditions

            

    

     

    The
      obligations of the Agent hereunder shall be conditional upon the Agent
      receiving, and the Agent shall have the right on the Closing Date on behalf
      of
      Subscribers for Offered Securities to withdraw all Subscription Agreements
      delivered and not previously withdrawn by Subscribers unless the Agent receives,
      on or before each Closing Date:

     

    
      	
               

            	
              (a)

            	
              favourable
                legal opinions of the Corporation’s counsel addressed to the Agent and the
                Subscribers, in form and substance reasonably satisfactory to the
                Agent,
                with respect to such matters as the Agent may reasonably request
                relating
                to the offering of the Offered Securities, as applicable, including,
                without limitation, that:

            

    

     

    
      	
               

            	
              (i)

            	
              the
                Corporation has been duly incorporated in Delaware, is validly subsisting
                and has all requisite corporate power and authority to carry on its
                business as now conducted by it and to own its properties and assets
                and
                is qualified to carry on business in
                Delaware;

            

    

     

    
      	
               

            	
              (ii)

            	
              the
                Corporation has full corporate power and authority to enter into
                this
                Agreement, the Agent’s Warrants and the Subscription Agreements and this
                Agreement, the Subscription Agreements and the Agent’s Warrants have been
                duly authorized by the Corporation and constitute legal, valid and
                binding
                obligations of the Corporation enforceable against the Corporation
                in
                accordance with their respective terms subject to normal qualifications
                including those relating to creditors’ rights generally and except that
                rights to indemnity may be limited by applicable
                law;

            

    

     

    
      	
               

            	
              (iii)

            	
              the
                execution and delivery of this Agreement, the Agent’s Warrants, and the
                Subscription Agreements, and the fulfilment of the terms hereof and
                thereof by the Corporation, and the performance of and compliance
                with the
                terms of this Agreement (including, without limitation, the grant
                of the
                Over-Allotment Option), the Agent’s Warrants and the Subscription
                Agreements by the Corporation do not and will not result in a breach
                of,
                or constitute a default under, and do not and will not create a state
                of
                facts which, after notice or lapse of time or both, will result in
                a
                breach of or constitute a default under, (i) any laws in the Province
                of Alberta; (ii) any term or provision of the articles or by laws of
                the Corporation, or (iii) so far as counsel is aware, any mortgage,
                note, indenture, contract, agreement (written or oral), instrument,
                lease
                or other document to which the Corporation is a party or by which
                the
                Corporation is bound on the Closing Date, which might reasonably
                be
                expected to materially adversely affect the business, operations,
                capital
                or condition (financial or otherwise) of the Corporation or the
                Corporation’s Subsidiaries (taken as a whole) or its properties or
                assets;

            

    

     

    

    
      
        
          
          

        

        
          
          

          
            

          

        

        
          
          

        

      

    

    -
      29
      -

    

     

    
      	
               

            	
               (iv)

            	
              all
                Applicable Securities Laws in connection with the creation, offering,
                issuance and sale of the Offered Securities and the creation, issuance
                and
                delivery of the Agent’s Warrants have been complied
                with;

            

    

     

    
      	
               

            	
              (v)

            	
              in
                reliance upon a certificate of an officer of the Corporation, except
                as a
                result of any agreement to which the Corporation is not a party and
                of
                which the Corporation has no knowledge, the Flow-Through Shares,
                at the
                time of issuance, will be Flow-Through shares as defined in
                subsection 66(15) of the Act and will not constitute “prescribed
                shares” for purposes of Regulation 6202.1 of the Regulations of the
                Act;

            

    

     

    and
      additionally, relating to:

     

    
      	
               

            	
              (vi)

            	
              the
                first trade in the Offered Securities (including any Over-Allotment
                Shares
                issuable upon exercise of the Over-Allotment Option) and the Common
                Shares
                received upon exercise of the Agent’s
                Warrants;

            

    

     

    and
      as to
      all other legal matters as the Agent or Agent’s counsel may reasonably request,
      including, compliance with Applicable Securities Laws in any way connected
      with
      the creation, issuance, sale and delivery of the Offered Securities, the first
      trade of the Offered Securities and the Common Shares issuable upon exercise
      of
      the Agent’s Warrants, being subject to a hold period, including a four month and
      a day hold period under Applicable Securities Laws in the Selling Jurisdictions
      (subject to the conditions provided for under the Resale Rules).  It
      is understood that the respective counsel may rely on the opinions of local
      counsel acceptable to them as to matters governed by the laws of jurisdictions
      other than Alberta, British Columbia, Ontario or Québec and on certificates of
      officers of the Corporation and the auditors of the Corporation and the
      registrar and transfer agent of the Common Shares as to relevant matters of
      fact;

     

    

    
      
        
          
          

        

        
          
          

          
            

          

        

        
          
          

        

      

    

    -
      30
      -

    

     

    
      	
               

            	
               (b)

            	
              a
                certificate of the Corporation dated the Closing Date, addressed
                to the
                Agent and the Agent’s counsel and signed on the Corporation’s behalf by
                its Chief Executive Officer and Chief Financial Officer (or other
                senior
                officer of the Corporation acceptable to the Agent), certifying
                that:

            

    

     

    
      	
               

            	
              (i)

            	
              the
                Corporation has complied with and satisfied all terms and conditions
                of
                this Agreement on its part to be complied with or satisfied at or
                prior to
                the Closing Time;

            

    

     

    
      	
               

            	
              (ii)

            	
              the
                representations and warranties of the Corporation set forth in this
                Agreement are true and correct at the Closing Time, as if made at
                such
                time except for any increase in the number of issued Common Shares
                resulting from the exercise of stock options or share purchase warrants
                referred to in subparagraph 6(u) of this
                Agreement;

            

    

     

    
      	
               

            	
              (iii)

            	
              no
                event of a nature referred to in subparagraphs 12(a), (b), (c) or (d)
                has occurred or to the knowledge of such officers is pending, contemplated
                or threatened, excluding with respect to subparagraphs 12(b), (c) and
                (d) of this Agreement any obligation to make a determination as to
                the
                Agent’s opinion; and

            

    

     

    
      	
               

            	
              (iv)

            	
              the
                Corporation has made or obtained on or prior to the Closing Time,
                all
                necessary filings, approvals, consents and acceptances of applicable
                regulatory authorities and under any applicable agreement or document
                to
                which the Corporation is a party or by which it is bound, required
                for the
                execution and delivery of this Agreement, the offering and sale of
                the
                Offered Securities and the consummation of the other transactions
                contemplated hereby (subject to completion of filings with certain
                regulatory authorities following the applicable Closing
                Date,

            

    

     

    and
      the
      Agent shall have no knowledge to the contrary;

    

      
        	
                 

              	
                (c)

              	
                definitive
                  certificates representing, in the aggregate, all of the Offered
                  Securities, issued on the applicable Closing Date and registered
                  in such
                  name or names as the Agent shall notify the Corporation in writing
                  not
                  less than twenty-four (24) hours prior to each Closing Time;
                  and

              

      

       

      
        	
                 

              	
                (d)

              	
                copies
                  of the Subscription Agreements delivered by the Agent and duly
                  executed by
                  the Corporation, each in form and substance reasonably satisfactory
                  to the
                  Agent and the Agent’s counsel.

              

      

       

       

    

    
      
        
          
          

        

        
          
          

          
            

          

        

        
          
          

        

      

    

    -
      31
      -

     

     

    
      	
              8.

            	
              Closing

            

    

     

    
      	
               

            	
              (a)

            	
              The
                sale of the Offered Securities shall be completed at the Closing
                Time at
                the offices of Corporation’s counsel in Calgary, Alberta or at such other
                place as the Corporation and the Agent may agree.  Subject to
                the conditions set forth in paragraph 7, the Agent, on the applicable
                Closing Date, shall deliver to the
                Corporation:

            

    

     

    
      	
               

            	
              (i)

            	
              all
                duly executed and properly completed Subscription Agreements;
                and

            

    

     

    
      	
               

            	
              (ii)

            	
              a
                certified cheque(s) or bank draft(s) payable to the Corporation at
                par in
                Calgary in an amount equal to US$3.00 for each Flow-Through Share
                and
                US$2.50 for each Offered Common Share issued hereunder or effect
                payment
                in such other manner as the Corporation and the Agent may
                agree;

            

    

     

    against
      delivery by the Corporation:

     

    
      	
               

            	
              (i)

            	
              the
                opinions, certificates and documents referred to in paragraph 7,
                including but not limited to the definitive certificates referred
                to in
                subparagraph 7(c) for the Offered Securities subscribed
                for;

            

    

     

    
      	
               

            	
              (ii)

            	
              to
                the Agent of a certified cheque or bank draft payable to “Research Capital
                Corporation” at par in Calgary in an amount equal to the aggregate
                commissions as calculated pursuant to subparagraphs 9(a)(i) and
                9(a)(ii);

            

    

     

    
      	
               

            	
              (iii)

            	
              to
                the Agent, the Agent’s Warrants as granted pursuant to
                subparagraph 9(a)(iii); and

            

    

     

    
      	
               

            	
               (iv)

            	
              of
                such further documentation as may be contemplated by this Agreement
                or
                that may reasonably be requested by Agent’s
                counsel.

            

    

     

    
      	
              9.

            	
              Commissions
                and Agent’s Warrants

            

    

     

    In
      consideration for services of the Agent hereunder the Corporation
      agrees:

     

    
      	
               

            	
              (a)

            	
              at
                each Closing Time:

            

    

     

    
      	
               

            	
              (i)

            	
              to
                pay to the Agent, in the aggregate, a corporate finance fee equal
                to 2.0%
                of the gross subscription proceeds from the issue and sale of the
                Offered
                Securities subscribed for (including any Over-Allotment Shares subscribed
                for and any Offered Securities purchased by the Agent as principal,
                if
                any) and for which subscription is accepted by the
                Corporation;

            

    

    
       

       

      
        
          
            
            

          

          
            
            

            
              

            

          

          
            
            

          

        

      

      -
        32
        -

      

    

    
      	
               

            	
              (ii)

            	
              to
                pay to the Agent, in the aggregate, a cash commission equal to 6.0%
                of the
                gross proceeds from the issuance and sale of the Offered Securities
                subscribed for (including any Over-Allotment Shares subscribed for
                and any
                Offered Securities purchased by the Agent as principal, if any) and
                for
                which subscription is accepted by the Corporation;
                and

            

    

     

    
      	
               

            	
              (iii)

            	
              to
                grant to the Agent, in the aggregate, warrants (the “Agent’s
                Warrants”) entitling the Agent to acquire, upon exercise by the
                Agent in accordance with the terms of such Agent’s Warrants, that number
                of Common Shares equal to:

            

    

     

    
      	
               

            	
              (A)

            	
              8.0%
                of the number of Offered Common Shares subscribed for (including
                any
                Over-Allotment Shares subscribed for and any Offered Securities purchased
                by the Agent as principal, if any) and for which subscription is
                accepted
                by the Corporation, at a price of US$2.50 per Common Share expiring
                18
                months from the applicable Closing Date;
                and

            

    

     

    
      	
               

            	
              (B)

            	
              8.0%
                of the number of Flow-Through Shares subscribed for (including any
                Flow-Through Shares purchased by the Agent as principal, if any)
                and for
                which subscription is accepted by the Corporation, at a price of
                US$3.00
                per Common Share expiring 18 months from the applicable Closing
                Date.

            

    

     

    The
      form of the Agent’s Warrants will be substantially in the form
      as attached as Schedule “A”.
       

    

    The
      Agent
      agrees it will prepare a sponsorship report and/or a prospectus, if required,
      to
      assist the Corporation in becoming publicly listed in Canada on the Exchange
      and
      that the Corporation will provide any such sponsorship report and/or prospectus
      to the Corporation at a cost of $25,000, payable upon the listing of the
      Corporation to the Exchange and deductible from the corporate finance fee and
      cash commission payable by the Corporation pursuant to subparagraphs 9(a)(i)
      and
      9(a)(ii) of this Agreement, respectively, on a pro rata
basis.

     

    
      	
              10.

            	
              Expenses

            

    

     

    Whether
      or not the transactions contemplated herein shall be completed, all costs and
      expenses of or incidental to the creation and distribution of the Offered
      Securities shall be borne by the Corporation, including, without
      limitation:

    
       

      

      
        
          
            
            

          

          
            
            

            
              

            

          

          
            
            

          

        

      

      -
        33
        -

      

    

    
      	
               

            	
              (a)

            	
              the
                fees and expenses of the Corporation’s counsel and of agent counsel
                retained by the Corporation or the Corporation’s
                counsel;

            

    

     

    
      	
               

            	
              (b)

            	
              the
                fees and expenses of the Corporation’s auditor and independent
                engineers;

            

    

     

    
      	
               

            	
              (c)

            	
              fees
                of any stock exchange or Securities
                Commission;

            

    

     

    
      	
               

            	
              (d)

            	
              any
                other filing fees;

            

    

     

    
      	
               

            	
              (e)

            	
              all
                out-of-pocket expenses of the Agent plus any applicable provincial
                sales
                tax and Goods and Services Tax; and

            

    

     

    
      	
               

            	
              (f)

            	
              the
                fees of the Agent’s counsel plus disbursements and Goods and Services
                Tax.

            

    

     

    
      	
              11.

            	
              Waiver

            

    

     

    Either
      party to this Agreement may waive in whole or in part any breach of, default
      under or non-compliance with any representation, warranty, term or condition
      hereof on the part of the other party, or extend the time for compliance
      therewith, without prejudice to any of its rights in respect of any other
      representation, warranty, term or condition hereof or any other breach of,
      default under or non-compliance with any other representation, warranty, term
      or
      condition hereof, provided that any such waiver or extension shall be binding
      on
      the waiving party only if the same is in writing.

     

    
      	
              12.

            	
              Termination
                Events

            

    

     

    The
      Agent
      may terminate their obligations hereunder, by written notice to the Corporation,
      in the event that after the date hereof and at or prior to the applicable
      Closing Time:

     

    
      	
               

            	
               (a)

            	
              any
                order to cease or suspend trading in any securities of the Corporation,
                or
                prohibiting or restricting the distribution of the Offered Securities
                is
                made, or proceedings are announced or commenced for the making of
                any such
                order, by any Securities Commission or similar regulatory authority,
                OTCBB, stock exchange or by any other competent authority, and has
                not
                been rescinded, revoked or
                withdrawn;

            

    

     

    
      	
               

            	
              (b)

            	
              a
                change of law or the interpretation or administration thereof in
                the
                Applicable Securities Laws has occurred or an inquiry, action, suit,
                investigation or other proceeding (whether formal or informal) is
                announced, commenced or threatened (and has not been rescinded, revoked
                or
                withdrawn) by any federal, provincial, state, municipal or other
                governmental department, commission, board, bureau, agency or
                instrumentality (including the OTCBB or any
                securities regulatory authority), or Securities Commission, stock
                exchange
                or similar regulatory authority, or any order is issued in relation
                to the
                Corporation, any of its affiliates, or any of its directors or officers
                or
                any of the Corporation’s securities (other than any such inquiry, action,
                suit, investigation or proceeding relating solely to the Agent) which
                in
                the opinion of the Agent, acting reasonably, seriously adversely
                affects,
                or involves, or will materially adversely affect or involve, the
                financial
                markets or the business, operations or affairs of the Corporation
                or the
                marketability of the Offered
                Securities;

            

    

    
       

      

      
        
          
            
            

          

          
            
            

            
              

            

          

          
            
            

          

        

      

      -
        34
        -

       

       

    

    
      	
               

            	
              (c)

            	
              there
                should develop, occur or come into effect or existence any event,
                action,
                state, condition or major financial occurrence of national or
                international consequence or any law or regulation, or any occurrence
                of
                any nature whatsoever, which, in the sole opinion of the Agent, acting
                reasonably, materially adversely affects, or involves, or will materially
                adversely affect or involve, the financial markets or the business,
                operations or affairs of the Corporation or the state of the financial
                markets is such that the Offered Securities cannot, in the opinion
                of the
                Agent be successfully or profitably
                marketed;

            

    

     

    
      	
               

            	
              (d)

            	
              there
                should occur any material change, change of a material fact, occurrence
                or
                event of the nature referred to in subparagraph 3(a) or any
                development that could result in a material change or change of a
                material
                fact in which, in the opinion of the Agent as determined by the Agent
                in
                their sole discretion, acting reasonably, could reasonably be expected
                to
                have a material adverse effect on the business, operations or affairs
                of
                the Corporation or value or the marketability of the Offered
                Securities;

            

    

     

    
      	
               

            	
              (e)

            	
              the
                Agent, acting reasonably, determines that the Corporation shall be
                in
                breach of, default under or non-compliance in any material respect
                with
                any material representation, warranty, term or condition of this
                Agreement
                or the Subscription Agreements;

            

    

     

    
      	
               

            	
               (f)

            	
              the
                state of the financial markets is such that, in the opinion of the
                Agent,
                acting reasonably, it would be unprofitable to offer or continue
                to offer
                the Offered Securities for sale; or

            

    

     

    
      	
               

            	
              (g)

            	
              the
                Agent shall become aware, as a result of their due diligence review
                or
                otherwise, of any adverse material change with respect to the Corporation
                (in the sole opinion of the Agent, acting reasonably) which had not
                been
                disclosed to the Agent prior to the date
                hereof.

            

    

    
       

      

      
        
          
            
            

          

          
            
            

            
              

            

          

          
            
            

          

        

      

      -
        35
        -

      

       

    

    
      	
              13.

            	
              Continuation
                of Termination Right

            

    

     

    The
      Agent
      may exercise any or all of the rights provided for in paragraphs 7, 11 or 12
      notwithstanding any material change, change, event or state of facts and
      notwithstanding any act or thing taken or done by the Agent or any inaction
      by
      the Agent, whether before or after the occurrence of any material change,
      change, event or state of facts including, without limitation, any act of the
      Agent related to the offering or continued offering of the Offered Securities
      for sale and any act taken by the Agent shall only be considered to have waived
      or be estoppel from exercising or relying upon any of their rights under or
      pursuant to paragraphs 7, 11 or 12 if such waiver or estoppel is in writing
      and specifically waives or estops such exercise or reliance.

     

    
      	
              14.

            	
              Exercise
                of Termination Right

            

    

     

    Any
      termination pursuant to the terms of this Agreement shall be effected by notice
      in writing delivered to the Corporation prior to the Closing Time, provided
      that
      no termination shall discharge or otherwise affect any obligation of the
      Corporation under paragraphs 10, 15, 16, 17 or 18.  The rights of
      the Agent to terminate its obligations hereunder are in addition to, and without
      prejudice to, any other remedies it may have.

     

    
      	
              15.

            	
              Survival

            

    

     

    It
      is
      understood that all representations and warranties herein or contained in
      certificates or documents submitted pursuant to or in connection with the
      transactions contemplated herein shall survive the payment for the Offered
      Securities and the termination of this Agreement and shall continue in full
      force and effect for the benefit of the Agent, the Subscribers and the
      Corporation for a period for two years from the date hereof.

     

    
      	
              16.

            	
              Indemnity

            

    

     

    The
      Corporation (the “Indemnitor”) shall indemnify and save
      harmless the Agent and the Agent’s affiliates, shareholders, directors,
      officers, employees and agent (collectively the “Indemnified
      Parties”) from and against all actual or threatened claims, actions,
      suits, investigations and proceedings (collectively
“Proceedings”) and all losses (other than loss of profits),
      expenses, fees, damages, obligations, payments and liabilities (collectively
      “Liabilities”) (including without limitation all statutory
      duties and obligations, all amounts paid to settle any action or to satisfy
      any
      judgment or award and all legal fees and disbursements actually incurred) to
      which one or more Indemnified Persons are subject or which one or more
      Indemnified Persons suffer or incur, now or any time hereafter, by reason of
      any
      event, act or omission in any way connected, directly or indirectly,
      with:

    
       

      

      
        
          
            
            

          

          
            
            

            
              

            

          

          
            
            

          

        

      

      -
        36
        -

       

    

     

    
      	
               

            	
              (a)

            	
              any
                information or statement contained in the Subscription Agreements,
                the
                Documents or the Public Record (other than any information or statement
                relating solely to the Agent and furnished to the Corporation by
                the Agent
                expressly for inclusion in the Subscription Agreements, the Documents
                or
                the Public Record), which is or is alleged to be untrue or any omission
                or
                alleged omission to provide any information or state any fact the
                omission
                of which makes or is alleged to make any such information or statement
                untrue or misleading in light of the circumstances in which it was
                made;

            

    

     

    
      	
               

            	
              (b)

            	
              any
                misrepresentation or alleged misrepresentation (except a misrepresentation
                or alleged misrepresentation which is based upon information relating
                to
                the Agent and furnished to the Corporation by the Agent expressly
                for
                inclusion in the Subscription Agreements, the Documents or the Public
                Record) contained in the Subscription Agreements, the Documents or
                the
                Public Record;

            

    

     

    
      	
               

            	
              (c)

            	
              any
                misrepresentation or alleged misrepresentation contained in any of
                the
                responses (excluding responses which comprise “forward looking”
                information) provided to the Agent or the Agent’s counsel by the
                Corporation or its directors, officers or employees pursuant to a
                written
                request for information made by the Agent or by the Agent’s counsel to the
                Corporation or otherwise provided in response to a request by the
                Agent in
                a context where the Corporation understood the Agent to be relying
                on such
                information in assessing the suitability of the offering of the Offered
                Securities;

            

    

     

    
      	
               

            	
              (d)

            	
              any
                prohibition or restriction of trading in the securities of the Corporation
                or any prohibition or restriction affecting the distribution of the
                Offered Securities imposed by any competent authority if such prohibition
                or restriction is based on any misrepresentation or alleged
                misrepresentation of a kind referred to in
                subparagraph 16(b);

            

    

     

    
      	
               

            	
               (e)

            	
              any
                order made or any inquiry, investigation (whether formal or informal)
                or
                other proceeding commenced or threatened by any one or more competent
                authorities (not based upon the activities or the alleged activities
                of
                the Agent or their banking or selling group members, if any) relating
                to
                or materially affecting the trading of the Common Shares (including
                the
                Common Shares issuable upon exercise of the Agent’s Warrants), or
                distribution of the Offered
                Securities;

            

    

     

    
      	
               

            	
              (f)

            	
              any
                breach of, default under or non-compliance by the Corporation with
                any
                representation, warranty, term or condition of this Agreement, the
                Subscription Agreements or any requirement of Applicable Securities
                Laws;
                or

            

    

    
      

      
        
          
            
            

          

          
            
            

            
              

            

          

          
            
            

          

        

      

      -
        37
        -

      

       

    

    
      	
               

            	
              (g)

            	
              the
                exercise by any Subscriber of the Offered Securities of any contractual
                right or statutory right of rescission in connection with the purchase
                of
                the Offered Securities;

            

    

     

    provided
      that in the event and to the extent that a court of competent jurisdiction
      in a
      final judgment from which no appeal can be made or a regulatory authority in
      a
      final ruling from which no appeal can be made shall determine that such
      Proceedings or Liabilities resulted solely from the negligence, fraud or wilful
      misconduct of, or the violation of applicable laws by, the Indemnified Party
      claiming indemnity, this indemnity shall not apply.

     

    The
      Corporation hereby waives its right to recover contribution from the Agent
      with
      respect to any liability of the Corporation by reason of or arising out of
      any
      misrepresentation in the Documents or the Public Record provided, however,
      that
      such waiver shall not apply in respect of liability caused or incurred by reason
      of or arising out of (i) any misrepresentation which is based upon information
      relating solely to the Agent contained in such document and furnished to the
      Corporation by the Agent expressly for inclusion in such document; or (ii)
      any
      failure by the Agent to provide to prospective purchasers of Offered Securities
      any document which the Corporation is required to provide to such prospective
      purchasers and which the Corporation has provided to the Agent to forward to
      such prospective purchasers.

     

    The
      Corporation agrees that in case any legal proceeding or investigation shall
      be
      brought against or initiated against the Corporation by any governmental
      commission, regulatory authority, exchange, court or other authority and an
      Indemnified Party or other representative of the Agent shall be required to
      testify or respond to procedures designed to discover information regarding,
      in
      connection with or relating to the performance of professional services rendered
      to the Corporation by the Agent hereunder, the Corporation shall pay the Agent
      the reasonable costs (including an amount to reimburse the Agent for the time
      spent by their personnel in connection therewith on a normal per diem basis
      and
      out of pocket expenses) in connection therewith unless such proceedings or
      investigations shall be brought or initiated as a result of any negligence,
      fraud or any actions or inactions of the Agent, or any of their
      affiliates.

     

    
      	
              17.

            	
              Notice
                of Indemnity Claim

            

    

     

    If
      any
      Proceeding is brought, instituted or threatened in respect of any Indemnified
      Party which may result in a claim for indemnification under this agreement,
      such
      Indemnified Party shall promptly after receiving notice thereof notify the
      Corporation of the nature of such claim, in writing, and the Corporation shall
      be entitled (but not required) to assume conduct of the defence thereof and
      retain counsel on behalf of the Indemnified Party who is reasonably satisfactory
      to the Indemnified Party, to represent the Indemnified Party in such Proceeding
      and the Corporation shall pay the fees and disbursements of such counsel and
      all
      other reasonable expenses of the Indemnified Party relating to such Proceeding
      as incurred.  Failure to so notify the Corporation shall not relieve
      the Corporation from liability except and only to the extent that the failure
      materially prejudices the Corporation.  If the Corporation assumes
      conduct of the defence for an Indemnified Party, the Indemnified Party shall
      fully cooperate in the defence including without limitation the provision of
      documents, appropriate officers and employees to give witness statements, attend
      examinations for discovery, make affidavits, meet with counsel, testify and
      divulge all information reasonably required to defend or prosecute the
      Proceedings.

    
       

      

      
        
          
            
            

          

          
            
            

            
              

            

          

          
            
            

          

        

      

      -
        38
        -

      

    

    In
      any
      such Proceeding the Indemnified Party shall have the right to employ separate
      counsel and to participate in the defence thereof if:

     

    
      	
               

            	
              (a)

            	
              the
                Indemnified Party has been advised in writing by counsel that there
                may be
                a reasonable legal defence available to the Indemnified Party that
                is
                different from or in addition to those available to the Corporation
                or
                that a conflict of interest exists which makes representation by
                counsel
                chosen by the Corporation not
                advisable;

            

    

     

    
      	
               

            	
              (b)

            	
              the
                Indemnitor has not assumed the defence of the Proceeding and employed
                counsel therefor reasonably satisfactory to the Indemnified Party
                within
                ten (10) days after receiving notice thereof;
                or

            

    

     

    
      	
               

            	
              (c)

            	
              employment
                of such other counsel has been authorized by the
                Corporation;

            

    

     

    in
      which
      event the reasonable fees and disbursements of such counsel (on a solicitor
      and
      his client basis) shall be paid by the Corporation.  It being
      understood, however, that the Corporation shall not, in connection with any
      one
      such action or separate but substantially similar or related actions in the
      same
      jurisdiction arising out of the same general allegations or circumstances,
      be
      liable for the reasonable fees and expenses of more than one separate law firm
      (in addition to any local counsel) for all such Indemnified
      Parties.

     

    No
      admission of liability and no settlement of any Proceeding shall be made by
      the
      Indemnitor without the consent of the Indemnified Parties affected, such consent
      not to be unreasonably withheld.  No admission of liability shall be
      made by an Indemnified Party without the consent of the Indemnitor, such consent
      not to be unreasonably withheld, and the Indemnitor shall not be liable for
      any
      settlement of any Proceeding made without its consent, such consent not to
      be
      unreasonably withheld.

    
       

      

      
        
          
            
            

          

          
            
            

            
              

            

          

          
            
            

          

        

      

      -
        39
        -

      

    

    
      	
              18.

            	
              Right
                of Contribution

            

    

     

    In
      order
      to provide for just and equitable contribution in circumstances in which the
      indemnification provided for in this Agreement is due in accordance with its
      terms but is (in whole or in part), for any reason, held by a court to be
      unavailable from the Corporation on ground of policy or otherwise, each of
      the
      Corporation and the party or parties seeking indemnification shall contribute
      to
      the aggregate Liabilities (or Proceedings in respect thereof) to which they
      may
      be subject or which they may suffer or incur:

     

    
      	
               

            	
              (a)

            	
              in
                such proportion as is appropriate to reflect the relative benefit
                received
                by the Corporation on the one hand and by the Agent on the other
                hand from
                the offering of the Offered Securities;
                or

            

    

     

    
      	
               

            	
              (b)

            	
              if
                the allocation provided by subparagraph (a) above is not permitted by
                applicable law, in such proportion as is appropriate to reflect not
                only
                the relative benefits referred to in subparagraph (a) above but also
                to reflect the relative fault of the party or parties seeking indemnity,
                on the one hand, and the parties from whom indemnity is sought, on
                the
                other hand, in connection with the statement, omission, misrepresentation
                or alleged misrepresentation, order, inquiry, investigation or other
                matter or thing which resulted in such liabilities, claims, demands,
                losses, costs, damages or expenses, as well as any other relevant
                equitable considerations.

            

    

     

    The
      relative benefits received by the Corporation, on the one hand, and the Agent,
      on the other hand, shall be deemed to be in the same proportion that the total
      proceeds of the offering received by the Corporation (net of fees but before
      deducting expenses) bear to the fees received by the Agent.  The
      relative fault of the Corporation, on the one hand, and of the Agent, on the
      other hand, shall be determined by reference, among other things, to whether
      the
      misrepresentation or alleged misrepresentation, order, inquiry, investigation
      or
      other matter referred to in paragraph 16 hereof relates to information
      supplied or which ought to have been supplied by the Corporation or the Agent
      or
      steps taken or done or which ought to have been done by the Corporation or
      the
      Agent and the parties’ relevant intent, knowledge, access to information and
      opportunity to correct or prevent such misrepresentation or alleged
      misrepresentation, order, inquiry, investigation or other matter referred to
      in
      paragraph 16 hereof.

     

    The
      amount paid or payable by the Indemnitor as a result of any Proceedings or
      Liabilities without limitation, include any legal or other expenses reasonably
      incurred by the Indemnified Person in connection with investigating or defending
      such liabilities, claims, demands, losses, costs, damages and expenses (or
      claims, actions, suits or proceedings in respect thereof), whether or not
      resulting in any action, suit, proceeding or claim.

    
      

      
        
          
            
            

          

          
            
            

            
              

            

          

          
            
            

          

        

      

      -
        40
        -

      

       

    

    The
      Corporation agrees that it would not be just and equitable if contributions
      pursuant to this Agreement were determined by pro rata allocation or by any
      other method of allocation which does not take into account the equitable
      considerations referred to in the immediately preceding paragraphs.

     

    Any
      liability of the Agent under this paragraph 18 shall be limited to the
      amount of the cash fees paid to the Agent pursuant to paragraph 9
      hereof.

     

    The
      rights to indemnify and right of contribution provided in the foregoing
      paragraphs shall be in addition to and not in derogation of any other right
      to
      contribution which the Indemnified Parties may have by statute or otherwise
      at
      law or in equity.  Subject to the proviso following
      subparagraph 16(g), the Indemnitor waives all rights of contribution that
      it may have against any Indemnified Party relating to any Liability in respect
      of which the Indemnitor has agreed to indemnify the Indemnified Parties
      hereunder.

     

    It
      is the
      intention of the Corporation to constitute the Agent as trustee for the
      Indemnified Parties for the purposes of paragraphs 16 to 18 inclusive and
      the Agent, shall be entitled, as trustee, to enforce such covenants on behalf
      of
      any other Indemnified Persons.

     

    If
      any
      Proceeding is brought in connection with the transactions contemplated by this
      Agreement and the Agent is required to testify in connection therewith or is
      required to respond to procedures designed to discover information relating
      thereto, the Corporation shall pay to the Agent reasonable fees at the normal
      per diem rate for its directors, officers, employees and agent involved in
      preparation for and attendance at such Proceeding or in so responding, and
      any
      other reasonable costs and out-of-pocket expenses incurred by it in connection
      therewith will be paid by the Corporation as they are incurred, except in each
      case to the extent that such Proceeding is caused solely by or is the result
      of
      the negligence, fraud or wilful misconduct of, or violation of applicable laws
      by, an Indemnified Party.

     

    The
      obligations under the indemnity and right of contribution provided herein shall
      apply whether or not the transactions contemplated by this Agreement are
      completed and shall survive the completion of the transactions contemplated
      under this Agreement and the termination of this Agreement.

    
       

      

      
        
          
            
            

          

          
            
            

            
              

            

          

          
            
            

          

        

      

      -
        41
        -

      

    

    
      	
              19.

            	
              Notices

            

    

     

    Any
      notice or other communication to be given hereunder shall, in the case of notice
      to be given to the Corporation, be addressed to:

     

    Kodiak
      Energy, Inc.

    Suite 460,
      734 – 7th
      Avenue SW

    Calgary,
      Alberta

    T2P
      3P6

     

    
      	
               

            	
              Attention:

            	
              Mark
                Hlady

            

    

    Chairman
      and Chief Executive Officer

    
      	
               

            	
              Telecopy
                No :

            	
              (403)
                513-2670

            

    

     

    and
      a
      copy to:

     

    Borden
      Ladner Gervais

    1000
      Canterra Tower, 400 – 3rd Avenue
      S.W.

    Calgary,
      Alberta

    T2P
      4H2

     

    
      	
               

            	
              Attention:

            	
              Bruce
                Lawrence

            

    

    
      	
               

            	
              Telecopy
                No:

            	
              (403)
                266-1395

            

    

     

    and,
      in
      the case of notice to be given to the Agent, be addressed to:

     

    Research
      Capital Corporation

    199
      Bay
      Street, Suite 4500

    Commerce
      Court West, Box 368

    Toronto,
      Ontario

    M5L
      1G2

    
      	
               

            	
              Attention:

            	
              Gage
                Jull

            

    

    
      	
               

            	
              Telecopy
                No.:

            	
              (416)
                860-7614

            

    

     

    and
      a
      copy to:

     

    Stikeman
      Elliott LLP

    4300
      Bankers Hall West

    888
–
      3rd Street
      S.W.

    Calgary,
      Alberta

    T2P
      5C5

     

    
      	
               

            	
              Attention:

            	
              Stuart
                M. Olley

            

    

    
      	
               

            	
              Telecopy
                No:

            	
              (403)
                266-9034

            

    

    
       

      

      
        
          
            
            

          

          
            
            

            
              

            

          

          
            
            

          

        

      

      -
        42
        -

      

       

    

    or
      to
      such other address as the party may designate by notice given to the others.
      Each communication shall be personally delivered to the addressee or sent by
      facsimile transmission to the addressee, and:

     

    
      	
               

            	
              (a)

            	
              a
                communication which is personally delivered shall, if delivered before
                4:30 p.m. (Calgary time) on a Business Day, be deemed to be given
                and
                received on that day and, in any other case be deemed to be given
                and
                received on the first Business Day following the day on which it
                is
                delivered; and

            

    

     

    
      	
               

            	
              (b)

            	
              a
                communication which is sent by facsimile transmission shall, if sent
                on a
                Business Day before 4:30 p.m. (Calgary time), be deemed to be given
                and
                received on that day and, in any other case, be deemed to be given
                and
                received on the first business day following the day on which it
                is
                sent.

            

    

     

    
      	
              20.

            	
              Restrictions
                of Offerings

            

    

     

    The
      Corporation agrees that, prior to 120 days after the final Closing Date, it
      shall not, directly or indirectly, sell or offer to sell any Common Shares
      or
      other equity securities of the Corporation, or otherwise issue, lend, transfer
      or dispose of any securities exchangeable, convertible or exercisable into
      Common Shares, or announce any intention to do any of the foregoing without
      the
      prior written consent of the Agent, which consent shall not be unreasonably
      withheld provided that the foregoing shall not apply to: iv) Common Shares
      issued upon exercise of outstanding stock options or warrants; and v) grants
      of
      options to acquire Common Shares.

     

    
      	
              21.

            	
              Alternative
                Transaction

            

    

     

    The
      Corporation agrees that in the event that the offering of Offered Securities
      as
      contemplated hereby is not completed due to the Corporation deciding in its
      sole
      and absolute discretion not to proceed with such offering, and following the
      termination of this Agreement, the Corporation enters into a binding agreement
      in respect of, or makes a public announcement in respect of, an Alternative
      Transaction, then the Corporation shall, forthwith, to the extent not already
      paid, pay such expenses of the Agent pursuant to paragraph 10 hereof and
      the corporate finance fee and cash commission to the Agent pursuant to
      subparagraphs 9(a)(i) and 9(a)(ii) hereunder, that would be payable
      hereunder in respect of the completion of the offering of Offered Securities
      in
      its entirety, as contemplated hereby.  The corporate finance fee,
      commission and any unpaid expenses payable pursuant to
      subparagraphs 9(a)(i), 9(a)(ii) and paragraph 10 hereof, respectively,
      shall be payable immediately following completion of the Alternative
      Transaction. For greater certainty, in the event that this Agreement is
      terminated by the Agent and the Corporation subsequently enters into a binding
      agreement in respect of, or makes a public announcement in respect of, an
      Alternative Transaction, the Corporation shall have no obligation to pay the
      corporate finance fee and commission payable pursuant to
      subparagraphs 9(a)(i) and 9(a)(ii) hereunder, respectively, or to grant the
      Agent’s Warrants.

    
       

      

      
        
          
            
            

          

          
            
            

            
              

            

          

          
            
            

          

        

      

      -
        43
        -

      

    

    
      	
              22.

            	
              Rights
                of First Refusal

            

    

     

    In
      the
      event that within 18 months after the completion of the sale of the Offered
      Securities the Corporation proposes to undertake a merger, acquisition or
      similar transaction involving the sale of all or substantially all of the assets
      or common shares of the Corporation, the Corporation will retain the Agent
      as
      its sole financial advisor and exclusive agent to advise in the completion
      of
      such transaction, subject to agreeing on mutually acceptable fee
      arrangements.  The terms and conditions relating to any such services
      will be outlined in a separate agreement and the fees for such services will
      be
      in addition to the corporate finance fee and cash commission payable pursuant
      to
      subparagraphs 9(a)(i) and 9(a)(ii) hereunder, will be negotiated separately
      and in good faith and will be consistent with fees paid to investment bankers
      in
      North America for similar services in connection with similar
      transactions.  The Corporation agrees not to engage any other party
      for the services described in this paragraph without first complying with the
      provisions of this paragraph 22 or obtaining the prior written consent of
      the Agent.

    

      The
        Corporation agrees that for a period of 18 months following the final
        Closing Date, the Corporation will offer to the Agent (for a period of
        10 Business Days) a right of first refusal to provide lead agent or primary
        investment banking services, as the case may be, to the Corporation or any
        of
        its subsidiaries, and any successor entity to the Corporation’s business or
        assets by reorganization (such as, but not limited to, an income trust) relating
        to any equity or debt, or equity or debt related, financing involving a
        distribution to the public in Canada.  The terms and conditions
        relating to any such services will be outlined in a separate engagement letter,
        underwriting or agency agreement and the fees for such services will be in
        addition to the corporate finance fee and cash commission payable pursuant
        to
        subparagraphs 9(a)(i) and 9(a)(ii) hereunder, will be negotiated separately
        and in good faith and will be consistent with fees paid to investment bankers
        in
        North America for similar services in connection with similar
        transactions.  The Corporation agrees not to engage any other party
        for the services described in this paragraph without first complying with
        the
        provisions of this paragraph 22 or obtaining the prior written consent of
        the Agent.

       

      The
        Corporation agrees to cooperate with Morgarten Financial Services Inc. of
        Zurich, Switzerland in seeking investors to any equity or debt, or equity
        or
        debt related financing of the Corporation involving a distribution to the
        public
        in Canada as per the preceding paragraph, on terms and conditions negotiated
        between the Agent and Morgarten Financial Services Inc. at such
        time.  On the condition that Morgarten Financial Services Inc. makes
        reciprocal invitations to the Agent, the Agent will invite Morgarten Financial
        Services Inc. to participate in any equity or debt, or equity or debt related
        financing of the Corporation involving a distribution to the public in Europe,
        on terms and conditions negotiated between the Agent and Morgarten Financial
        Services Inc. at such time.

    

    
       

      

      
        
          
            
            

          

          
            
            

            
              

            

          

          
            
            

          

        

      

      -
        44
        -

      

    

    
      	
              23.

            	
              Relationship
                between the Corporation and the
                Agent

            

    

     

    The
      Corporation: b) acknowledges and agrees that the Agent have certain statutory
      obligations as a registrant under the Applicable Securities Laws and have
      fiduciary relationships with their clients; and c) consents to the Agent acting
      hereunder while continuing to act for its clients.  To the extent that
      the Agent’s statutory obligations as a registrant under Applicable Securities
      Laws or fiduciary relationships with its clients conflicts with its obligations
      hereunder, the Agent shall be entitled to fulfil its statutory obligations
      as a
      registrant under Applicable Securities Laws and its duties to its clients.
      Nothing in this Agreement shall be interpreted to prevent the Agent from
      fulfilling its statutory obligations as a registrant under Applicable Securities
      Laws or to act as a fiduciary of its clients.

     

    
      	
              24.

            	
              Severance

            

    

     

    If
      one or
      more of the provisions contained herein shall, for any reason, be held to be
      invalid, illegal or unenforceable in any respect, such invalidity, illegality
      or
      unenforceability shall not affect any other provision of this Agreement, but
      this Agreement shall be construed as if such invalid, illegal or unenforceable
      provision or provisions had never been contained herein.

     

    
      	
              25.

            	
              Trust

            

    

     

    The
      Corporation acknowledges and agrees that it is the intention of the parties
      hereto and the Corporation that each of the Subscribers be entitled to rely
      on
      the representations, warranties, terms, conditions and covenants of the
      Corporation contained herein (save and except as waived in whole or in part
      by
      the Agent pursuant to this Agreement).

     

    
      	
              26.

            	
              Governing
                Law

            

    

     

    This
      Agreement shall be governed by and construed in accordance with the laws of
      the
      Province of Alberta and the laws of Canada applicable therein.  The
      parties hereto irrevocably attorn to the jurisdiction of the courts of the
      Province of Alberta with respect to any matters arising out of this Agreement
      and agree to be bound by any suit, action or proceeding commenced in such courts
      and by any order or judgment resulting from such suit, action or
      proceeding.  Each of the parties hereto irrevocably waives, to the
      fullest extent it may effectively do so, the defense of an inconvenient forum
      to
      the maintenance of such action or proceeding.

    
       

      

      
        
          
            
            

          

          
            
            

            
              

            

          

          
            
            

          

        

      

      -
        45
        -

      

    

    
      	
              27.

            	
              Time
                of the Essence

            

    

     

    Time
      is
      of the essence of this Agreement.

     

    
      	
              28.

            	
              Counterpart
                Execution

            

    

     

    This
      Agreement may be executed in one or more counterparts each of which so executed
      shall constitute an original and all of which together shall constitute one
      and
      the same Agreement.

     

    
      	
              29.

            	
              Entire
                Agreement

            

    

     

    It
      is
      understood that the terms and conditions of this Agreement supersede any
      previous verbal or written agreement between the Agent and the Corporation
      in
      respect of the offer for sale by the Corporation of Offered Securities,
      including the letter agreement dated October 22, 2007 between the Corporation
      and the Agent.

     

    

     

     

     

     

     

     

    

     

    

    
      
        
          
          

        

        
          
          

          
            

          

        

        
          
          

        

      

    

    -
      46
      -

     

    

     

    If
      the
      foregoing is in accordance with your understanding and is agreed to by you,
      please confirm your acceptance by signing the enclosed copies of this letter
      at
      the place indicated and returning same to the Agent.

     

    
      	 	
              RESEARCH
                CAPITAL CORPORATION

            
	 	 	 
	 	
              Per:

            	 

    

     

    

     

     

    
      	
              ACCEPTED
                AND AGREED to as of the 30th
                day of
                October, 2007.

            
	
               

              KODIAK
                ENERGY, INC.

            
	
               

              By:

            	 
	 	
              Mark
                Hlady,

              Chairman
                and Chief Executive Officer

            

    

    

     

    

     

    

     

    

     

    

     

    

     

    

     

    

     

    

    
      
        
          
          

        

        
          
          

          
            

          

        

        
          
          

        

      

    

    

    SCHEDULE
      “A“

     

    FORM
      OF AGENT’S WARRANTSkodiaksb2ex10-7.htm

    
      

      
Exhibit
      10.7

    
      AGREEMENT
        OF PURCHASE AND SALE

      TABLE
        OF CONTENTS

      
        
          
            	 	 	Page
	
                    1.00

                  	
                    INTERPRETATION

                  	
                    1

                  
	 	 	 
	
                    1.01

                  	
                    DEFINITIONS

                  	
                    1

                  
	
                    1.02

                  	
                    SCHEDULES

                  	
                    5

                  
	
                    1.03

                  	
                    REFERENCES

                  	
                    6

                  
	
                    1.04

                  	
                    HEADINGS

                  	
                    6

                  
	
                    1.05

                  	
                    SINGULAR/PLURAL

                  	
                    6

                  
	
                    1.06

                  	
                    USE
                      OF FUNDS

                  	
                    6

                  
	
                    1.07

                  	
                    DERIVATIVES

                  	
                    6

                  
	
                    1.08

                  	
                    INTERPRETATION
                      IF CLOSING DOES NOT OCCUR

                  	
                    6

                  
	
                    1.09

                  	
                    CONFLICTS

                  	
                    6

                  
	
                    1.10

                  	
                    RESPONSIBILITY
                      EXTENDS TO LEGAL COSTS

                  	
                    7

                  
	
                    1.11

                  	
                    KNOWLEDGE
                      OR AWARENESS

                  	
                    7

                  
	 	 	 
	
                    2.00

                  	
                    PURCHASE
                      AND SALE

                  	
                    7

                  
	 	 	 
	
                    2.01

                  	
                    AGREEMENT
                      OF PURCHASE AND SALE

                  	
                    7

                  
	
                    2.02

                  	
                    PAYMENT
                      OF PURCHASE PRICE

                  	
                    7

                  
	
                    2.03

                  	
                    GST

                  	
                    8

                  
	
                    2.04

                  	
                    DEPOSIT

                  	 8
	 	 	 
	
                    3.00

                  	
                    CLOSING

                  	
                    8

                  
	 	 	 
	
                    3.01

                  	
                    PLACE
                      OF CLOSING

                  	
                    8

                  
	
                    3.02

                  	
                    REQUIRED
                      APPROVALS

                  	
                    9

                  
	
                    3.03

                  	
                    SPECIFIC
                      CONVEYANCES

                  	
                    9

                  
	 	 	 
	
                    4.00

                  	
                    ADJUSTMENTS

                  	
                    9

                  
	 	 	 
	
                    4.01

                  	
                    BENEFITS
                      AND OBLIGATIONS TO BE APPORTIONED

                  	
                    9

                  
	
                    4.02

                  	
                    ADJUSTMENTS
                      TO ACCOUNTS

                  	
                    9

                  
	 	 	 
	
                    5.00

                  	
                    INTERIM
                      PROVISIONS

                  	
                    10

                  
	 	 	 
	
                    5.01

                  	
                    ASSETS
                      TO BE MAINTAINED IN PROPER MANNER

                  	
                    10

                  
	
                    5.02

                  	
                    VENDOR
                      AS AGENT

                  	
                    10

                  
	
                    5.03

                  	
                    RESTRICTIONS
                      ON CONDUCT OF BUSINESS

                  	
                    11

                  
	
                    5.04

                  	
                    OBLIGATIONS
                      OF THE PURCHASER

                  	
                    11

                  
	 	 	 
	
                    6.00

                  	
                    REPRESENTATIONS
                      AND WARRANTIES OF PARTIES

                  	
                    12

                  
	 	 	 
	
                    6.01

                  	
                    THUNDER'S
                      REPRESENTATIONS AND WARRANTIES

                  	
                    12

                  
	
                    6.02

                  	
                    CIMA’S
                      REPRESENTATIONS AND WARRANTIES

                  	
                    15

                  
	
                    6.03

                  	
                    PURCHASER'S
                      REPRESENTATIONS AND WARRANTIES

                  	
                    18

                  
	
                    6.04

                  	
                    SURVIVAL
                      OF REPRESENTATIONS AND WARRANTIES

                  	
                    19

                  
	
                    6.05

                  	
                    NO
                      ADDITIONAL REPRESENTATIONS OR WARRANTIES BY VENDOR

                  	
                    19

                  
	 	 	 
	
                    7.00

                  	
                    THIRD
                      PARTY RIGHTS AND CONSENTS

                  	
                    20

                  
	 	 	 
	
                    7.01

                  	
                    PREFERENTIAL
                      RIGHTS OF PURCHASE AND CONSENTS

                  	
                    20

                  
	 	 	 
	
                    8.00

                  	
                    PURCHASER'S
                      INSPECTION OF ASSETS

                  	
                    20

                  
	 	 	 
	
                    8.01

                  	
                    VENDORS
                      TO PROVIDE ACCESS

                  	
                    20

                  
	 	 	 
	
                    9.00

                  	
                    ARBITRATION

                  	
                    20

                  
	 	 	 
	
                    9.01

                  	
                    REFERENCE
                      TO ARBITRATION

                  	
                    20

                  
	
                    9.02

                  	
                    PROCEEDINGS

                  	
                    21

                  
	 	 	 
	
                    10.00

                  	
                    CONDITIONS
                      TO CLOSING

                  	
                    21

                  
	 	 	 
	
                    10.01

                  	
                    REQUIRED
                      CONSENTS

                  	
                    21

                  
	
                    10.02

                  	
                    CONDITIONS
                      FOR BENEFIT OF PURCHASER

                  	
                    21

                  
	
                    10.03

                  	
                    CONDITIONS
                      FOR BENEFIT OF VENDORS

                  	
                    22

                  
	
                    10.04

                  	
                    WAIVER
                      OF CONDITIONS

                  	
                    23

                  
	
                    10.05

                  	
                    FAILURE
                      TO SATISFY CONDITIONS

                  	
                    23

                  

          

          
            
              
              

            

            
              
              

              
                

              

            

            
              
              

            

          

           

          
            	
                    11.00

                  	
                    CONFIDENTIALITY

                  	
                    23

                  
	 	 	 
	
                    11.01

                  	
                    OBLIGATION
                      TO MAINTAIN INFORMATION CONFIDENTIAL

                  	
                    23

                  
	
                    11.02

                  	
                    CONSULTANTS
                      AND ADVISORS BOUND

                  	
                    24

                  
	 	 	 
	
                    12.00

                  	
                    INDEMNITIES
                      FOR REPRESENTATIONS AND WARRANTIES

                  	
                    24

                  
	 	 	 
	
                    12.01

                  	
                    VENDOR’S
                      INDEMNITIES FOR REPRESENTATIONS AND WARRANTIES

                  	
                    24

                  
	
                    12.02

                  	
                    PURCHASER’S
                      INDEMNITIES FOR REPRESENTATIONS AND WARRANTIES

                  	
                    24

                  
	
                    12.03

                  	
                    TIME
                      LIMITATION

                  	
                    24

                  
	 	 	 
	
                    13.00

                  	
                    PURCHASER’S
                      INDEMNITIES

                  	
                    24

                  
	 	 	 
	
                    13.01

                  	
                    PURCHASER
                      GENERAL INDEMNITY

                  	
                    24

                  
	
                    13.02

                  	
                    VENDOR
                      GENERAL INDEMNITY

                  	
                    25

                  
	
                    13.03

                  	
                    ENVIRONMENTAL
                      INDEMNITY

                  	
                    25

                  
	
                    13.04

                  	
                    NO
                      MERGER OF LEGAL RESPONSIBILITIES

                  	
                    26

                  
	 	 	 
	
                    14.00

                  	
                    WAIVER

                  	
                    26

                  
	 	 	 
	
                    14.01

                  	
                    WAIVER
                      MUST BE IN WRITING

                  	
                    26

                  
	 	 	 
	
                    15.00

                  	
                    ASSIGNMENT

                  	
                    27

                  
	 	 	 
	
                    15.01

                  	
                    ASSIGNMENTS
                      BEFORE CLOSING

                  	
                    27

                  
	 	 	 
	
                    16.00

                  	
                    NOTICE

                  	
                    27

                  
	 	 	 
	
                    16.01

                  	
                    SERVICE
                      OF NOTICE

                  	
                    27

                  
	
                    16.02

                  	
                    ADDRESSES
                      FOR NOTICES

                  	
                    27

                  
	
                    16.03

                  	
                    RIGHT
                      TO CHANGE ADDRESS

                  	
                    28

                  
	 	 	 
	
                    17.00

                  	
                    POST
                      CLOSING  ADMINISTRATION

                  	
                    28

                  
	 	 	 
	
                    17.01

                  	
                    REGISTRATION
                      OF DOCUMENTS

                  	
                    28

                  
	
                    17.02

                  	
                    COORDINATION
                      OF ADMINISTRATIVE MATTERS

                  	
                    28

                  
	
                    17.03

                  	
                    VENDORS’
                      ACCESS TO DOCUMENTS

                  	
                    29

                  
	 	 	 
	
                    18.00

                  	
                    MISCELLANEOUS
                      PROVISIONS

                  	
                    29

                  
	 	 	 
	
                    18.01

                  	
                    FURTHER
                      ASSURANCES

                  	
                    29

                  
	
                    18.02

                  	
                    GOVERNING
                      LAW

                  	
                    29

                  
	
                    18.03

                  	
                    TIME

                  	
                    29

                  
	
                    18.04

                  	
                    NO
                      AMENDMENT EXCEPT IN WRITING

                  	
                    29

                  
	
                    18.05

                  	
                    CONSEQUENCES
                      OF TERMINATION

                  	
                    29

                  
	
                    18.06

                  	
                    SUPERSEDES
                      EARLIER AGREEMENTS

                  	
                    30

                  
	
                    18.07

                  	
                    ENUREMENT

                  	
                    30

                  

          

        

      

       

      SCHEDULES

      
        	
                Schedule
                  “A”:

              	
                Schedule
                  “A”, which includes: Part I - Lands, Leases and Encumbrances (including
                  preferential purchase rights and penalties);  Part II –
                  Production Sales Contracts; Part III- Facilities; Gas Gathering
                  Lines,
                  Pipelines, Facility, Processing, Treating, Transportation and Contract
                  Operating Agreements; Part IV- Wells; Part V-  Authorizations
                  for Expenditure;  Part VI- Areas of Mutual Interest; Part
                  VII-Default Notices, Claims, Lawsuits & Offset Drilling
                  Notices;

              

      

      
        	
                Schedule
                  “B”:

              	
                General
                  Conveyance for Canadian Assets

              

      

      
        	
                Schedule
                  “C”:

              	
                General
                  Conveyance for U.S. Assets

              

      

      
        	
                Schedule
                  “D”:

              	
                Specific
                  Conveyances for U.S. Assets

              

      

       

       

      
        
          
          

        

        
          
          

          
            

          

        

        
          
          

        

      

      AGREEMENT
        OF PURCHASE AND SALE

       

      THIS
        AGREEMENT made this 28th
        day of September,
        2007.

       

      BETWEEN:

       

      THUNDER
        RIVER ENERGY INC. (“Thunder”), a body corporate,
        registered to carry on business in the Province of Alberta and CIMA
        HOLDINGS INC. (“CIMA”), a New Mexico corporation (Thunder and CIMA
        hereinafter collectively called the “Vendors”)

       

      -
        and
        -

       

      KODIAK
        ENERGY, INC., a body corporate formed under the laws of Delaware and
        having an office in the City of Calgary, in the Province of Alberta (hereinafter
        called the “Purchaser”)

       

      WHEREAS
        the Vendors have agreed to sell the Assets to the Purchaser and the Purchaser
        has agreed to purchase the Assets from the Vendors on the terms and conditions
        set forth herein;

       

      NOW
        THEREFORE in consideration of the premises and the mutual covenants and
        warranties herein contained, the Parties agree as follows:

       

      
        	
                1.00

              	
                INTERPRETATION

              

      

       

      
        	
                1.01

              	
                Definitions

              

      

       

      In
        this
        Agreement, including the recitals and the Schedules, the following terms
        shall
        have the respective meanings hereby assigned to them:

       

      “Agreement”
        means this document, together with the Schedules attached hereto and made
        a part
        hereof.

       

      “Assets”
        means Petroleum and Natural Gas Rights, the Tangibles and the Miscellaneous
        Interests.

       

      “Business
        Day” means any day other than a Saturday, Sunday or a statutory holiday
        in Alberta or New Mexico.

       

      “Closing”
        means the exchange of Conveyance Documents on the Closing Date,
        the
        delivery by the Purchaser to the Vendors of the Purchase Price, and the transfer
        of the Assets by the Vendor to the Purchaser.

       

      “CIMA
        Assets” means the portion of the Assets located in the United States of
        America.

       

      “Closing
        Date” means 7:00 a.m. on September 28, 2007, or such other time and
        date as may be agreed to by the Parties.

       

      “Conveyance
        Documents” means, collectively, the documents which provide for the
        assignment, transfer or other disposition of the Assets to the Purchaser
        including those in Schedule “B” and “C”.

       

      
        
          
          

        

        
          
          

          
            

          

        

        
          
          

        

      

      “Effective
        Time” means 4:00 p.m. (Calgary time) on July 11, 2007.

       

      “EL-413” means
        exploration licence 413 issued under the Law of Canada.

       

      “Facilities”
        means the facilities set forth in Part IV of Schedule “A”.

       

      “GST”
        means tax payable pursuant to the Excise Tax Act (Canada) and in
        accordance with Subclause 2.03 hereof.

       

      “Lands”
        means the lands set forth and described in Schedule ”A”, insofar as rights
        to the Petroleum Substances underlying those lands are granted by the
        Leases.

       

      “Leases”
        means the leases, licences, permits, reservations, interests and other documents
        of title set forth and described in Schedule “A”, by virtue of which the holder
        thereof is entitled to explore for, drill for, win, take, own or remove
        Petroleum Substances within, upon or under the Lands or by virtue of which
        the
        holder thereof is deemed to be entitled to a share of Petroleum Substances
        removed from the Lands or share in the proceeds generated by, or to receive
        payments calculated by reference to the quantity or value of such production,
        and includes, if applicable, all renewals, extensions of and amendments to
        such
        documents and all documents issued in substitution therefor.

       

      “Miscellaneous
        Interests” means the Vendors’ entire right, title and interest in and
        to all property, assets and rights, other than the Petroleum and Natural
        Gas
        Rights and the Tangibles, to the extent such property, assets and rights
        pertain
        to the Petroleum and Natural Gas Rights or the Tangibles, or any rights relating
        thereto, including, without restricting the generality of the foregoing,
        the
        Vendors’ entire interest in:

       

      
        	
                 

              	
                (a)

              	
                the
                  Title and Operating Documents;

              

      

       

      
        	
                 

              	
                (b)

              	
                the
                  Surface Rights;

              

      

       

      
        	
                 

              	
                (c)

              	
                the
                  wellbores and casing of all Wells;
                  and

              

      

       

      
        	
                 

              	
                (d)

              	
                copies
                  of the geological, engineering, seismic, Facilities records and
                  other
                  records, files, reports data, correspondence and documents that
                  relate
                  directly to the Assets.

              

      

       

      “Parties”  means
        the parties to this Agreement, and “Party” means the Purchaser
        or one of the Vendors.

       

      “Permitted
        Encumbrances” means:

       

      
        	
                 

              	
                (a)

              	
                any
                  rents, royalties, production payments, net carried interests, net
                  profit
                  interests, reduction in interests, or other similar interests,
                  rights,
                  encumbrances, burdens or obligations described in Schedule ”A”
                  ;

              

      

       

      
        	
                 

              	
                (b)

              	
                any
                  preferential rights of purchase, right of first refusal or any
                  similar
                  restriction applicable to any of the Assets, as identified in
                  Schedule ”A”;

              

      

       

      
        	
                 

              	
                (c)

              	
                the
                  terms and conditions of the Leases, including, without limitation,
                  the
                  requirement to pay any rentals or royalties to the grantor thereof
                  to
                  maintain the Leases in good
                  standing;

              

      

       

      
        	
                 

              	
                (d)

              	
                the
                  right reserved to or vested in any grantor, government or other
                  public
                  authority by the term of any Lease or by the Regulations to terminate
                  any
                  Lease;

              

      

       

      
        
          
          

        

        
          -
            2 -

          
            

          

        

        
          
          

        

      

      
        	
                 

              	
                (e)

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

              

      

       

      
        	
                 

              	
                (f)

              	
                rights
                  of general application reserved to or vested in any governmental
                  authority
                  to levy taxes on Petroleum Substances or the income or revenue
                  therefrom
                  and governmental restrictions on production rates from the Wells
                  or on
                  operations being conducted on the Lands or otherwise affecting
                  the value
                  of any of the Assets;

              

      

       

      
        	
                 

              	
                (g)

              	
                agreements
                  for the sale of Petroleum Substances, which are terminable on thirty
                  (30)
                  days' notice or less (without an early termination penalty or other
                  cost)
                  or which are set forth in
                  Schedule ”A”;

              

      

       

      
        	
                 

              	
                (h)

              	
                the
                  Regulations and any rights reserved to or vested in any municipality
                  or
                  governmental, statutory or public authority to control or regulate
                  any of
                  the Assets in any manner;

              

      

       

      
        	
                 

              	
                (i)

              	
                undetermined
                  or inchoate liens incurred or created as security in favour of
                  any person
                  with respect to the development or operation of any of the Assets,
                  as
                  regards a Vendor's share of the costs and expenses thereof, which
                  costs
                  and expenses are not due or delinquent as of the Closing
                  Date;

              

      

       

      
        	
                 

              	
                (j)

              	
                the
                  reservations, limitations, provisos and conditions in any grants
                  or
                  transfers from the Crown, United States government or State of
                  New Mexico
                  of any of the Lands or interests therein, and statutory exceptions
                  to
                  title;

              

      

       

      
        	
                 

              	
                (k)

              	
                the
                  terms and conditions of all agreements which relate to the Assets,
                  including but not limited to earning, ownership, operating, pooling
                  and
                  unitization agreements (other than those described in paragraph
                  (b)
                  above), except to the extent the foregoing create any Security
                  Interests,
                  burden, royalty, production payment, net carried interest, liens,
                  charges,
                  net profits interest or other similar interest, right, encumbrance,
                  obligation or liability which is not otherwise described in
                  Schedule ”A” or elsewhere in this
                  definition;

              

      

       

      
        	
                 

              	
                (l)

              	
                the
                  agreements identified in Schedule ”A” respecting the processing,
                  treating or transmission of Petroleum Substances or the operation
                  of Wells
                  by contract field operators;

              

      

       

      
        	
                 

              	
                (m)

              	
                penalties
                  which are disclosed in Schedule ”A” and which have arisen under
                  operating procedures or similar agreements as a consequence of
                  elections
                  by either or the Vendors not to participate in operations on the
                  Lands to
                  which the penalty applies;

              

      

       

      
        	
                 

              	
                (n)

              	
                liens
                  granted in the ordinary course of business to a public utility,
                  municipality or governmental authority with respect to operations
                  pertaining to any of the Assets;
                  and

              

      

       

      
        	
                 

              	
                (o)

              	
                mechanics',
                  builders' or materialman's liens in respect of services rendered
                  or goods
                  supplied, but only insofar as such liens relate to goods or services
                  for
                  which payment is not due, or the validity of which is being diligently
                  contested by or on behalf of either of the
                  Vendor.

              

      

       

      
        
          
          

        

        
          -
            3 -

          
            

          

        

        
          
          

        

      

      “Petroleum
        and Natural Gas Rights” means the entire right, title and interest of
        the Vendors described in Schedule ”A” in respect of the Leases to the
        extent that they apply to the Lands, including any existing contractual right
        of
        either of the Vendors to earn an interest under a farm-in or similar
        arrangement, and any overriding royalty or net profits interests accruing
        to
        either of the Vendors;

       

      “Petroleum
        Substances” means petroleum, natural gas and related hydrocarbons,
        sulphur, CO2,
        coalbed natural gas and every other mineral or substance, or any of them,
        whether gaseous, liquid or solid and whether hydrocarbons or not and includes
        helium;

       

      “Prepaid
        Gas Obligations” means, with respect to production, sale or related
        contracts pertaining to the Petroleum and Natural Gas Rights, the obligations
        of
        the Vendors under “take or pay” and similar provisions either to repay payments
        made by the purchasers thereunder for Petroleum Substances not taken by them
        or
        to deliver such gas or substances to such purchasers without full payment
        therefor.

       

      “Purchase
        Price” means the amount payable by the Purchaser to the Vendors
        pursuant to Clause 2.02 as modified by the adjustments and reductions
        provided for herein.

       

      “Prime
        Rate” means the per annum rate designated as the prime rate for
        Canadian dollar commercial loans by the main Calgary branch of the Royal
        Bank of
        Canada, with any change to that rate being effective under this Agreement
        on the
        same day as it is made effective by the Royal Bank of Canada.

       

      “Regulations”
        means all statutes, laws, rules, orders and regulations in effect from time
        to
        time and made by governments or governmental boards or agencies having
        jurisdiction over the Assets or any part thereof.

       

      “Security
        Interests” means any assignment, security, general security agreement,
        deed of trust, debenture, land charge, mortgage, charge, pledge, negative
        pledge, lien or other security interest whatsoever or howsoever created,
        which
        encumbers the title of either of the Vendors in and to any or all of the
        Assets
        or the proceeds to be received under this Agreement.

       

      “Specific
        Conveyances” means all conveyances, assignments, transfers, novations,
        trust agreements and other documents and instruments that are reasonably
        required or desirable to convey, assign and transfer the Assets to the Purchaser
        and to novate the Purchaser in the place and stead of the Vendors with respect
        to the Assets;

       

      “Surface
        Rights” means all rights to enter upon, use and occupy the surface of
        the Lands or any lands with which the Lands have been pooled or unitized
        or any
        lands upon which any Tangibles are located or of any lands to be crossed
        in
        order to gain access to any of the Lands or the Tangibles;

       

      “Tangibles”
        means the Vendors’ entire right, title and interest, whether leased or
        owned, in and to all tangible depreciable property and assets that
        are:

       

      
        	
              	
                (a)

              	
                the
                  Facilities;

              

      

       

      
        	
              	
                (b)

              	
                all
                  gas gathering lines and oil flow lines related to any of the
                  Wells;

              

      

       

      
        	
                 

              	
                (c)

              	
                located
                  in, on or about the Lands used or intended for use, in connection
                  with the
                  exploration, development, injection, production, processing, gathering,
                  storage, treatment, transportation of the Petroleum Substances
                  produced
                  from the Petroleum and Natural Gas Rights and the Lands or the
                  operations
                  thereon or relative thereto, including, without limitation, well
                  equipment, if any, relating to the
                  Wells;

              

      

       

      
        
          
          

        

        
          -
            4 -

          
            

          

        

        
          
          

        

      

      
        	
                 

              	
                (d)

              	
                all
                  field inventory used or intended to be used in connection with
                  the assets
                  in existence as at the Effective Date which is not otherwise consumed
                  by
                  the Vendors in the ordinary course of operating the Assets;
                  and

              

      

       

      
        	
                 

              	
                (e)

              	
                any
                  additional items, whether located on or off the Lands, that are
                  indicated
                  in Schedule “A” to be specifically included as
                  Tangibles.

              

      

       

      “Thunder
        Assets” means the portion of the Assets located in Canada.

       

      “Title
        and Operating Documents” means, to the extent directly related to the
        Petroleum and Natural Gas Rights and the Tangibles, or either of
        them:

       

      
        	
                 

              	
                (a)

              	
                the
                  Leases;

              

      

       

      
        	
                 

              	
                (b)

              	
                agreements
                  affecting the Vendors’ interests in the Petroleum and Natural Gas Rights,
                  including, without limitation, operating agreements, royalty agreements,
                  farm-out or farm-in agreements, option agreements, participation
                  agreements, pooling agreements, sale and purchase agreements and
                  asset
                  exchange agreements;

              

      

       

      
        	
              	
                (c)

              	
                agreements
                  pertaining to the Surface Rights;

              

      

       

      
        	
                 

              	
                (d)

              	
                agreements
                  for the construction, ownership and operation of gas plants, gas
                  gathering
                  systems and other Tangibles;

              

      

       

      
        	
                 

              	
                (e)

              	
                service
                  agreements for the treating, gathering, storage, transportation
                  or
                  processing of Petroleum Substances or other third party Petroleum
                  Substances, the injection or subsurface disposal of substances,
                  the use of
                  wellbores or the operation of any Wells or Tangibles by a third
                  party;

              

      

       

      
        	
                 

              	
                (f)

              	
                any
                  approvals, authorizations or licenses required under the Regulations
                  for
                  the conduct of operations with respect to the Assets, including,
                  without
                  limitation, well and pipeline licences;
                  and

              

      

       

      
        	
                 

              	
                (g)

              	
                all
                  other documents that relate to the ownership, operation or exploitation
                  of
                  the Petroleum Substances or
                  Tangibles.

              

      

       

      “Title
        Defect” means a defect, deficiency or discrepancy in or affecting the
        title of the Vendors in and to any of the Assets, other than specifically
        disclosed herein or in Schedule ”A”, which is sufficiently material and
        adverse to the enforcement of title that it would not be acceptable to a
        prudent
        purchaser buying similar oil and gas properties, acting reasonably and excluding
        Permitted Encumbrances.

       

      “Wells”
        means all producing, shut-in, water source, disposal, injection, suspended
        and
        similar wells located upon or having bottom hole coordinates lying under
        the
        Lands or otherwise directly relating to Vendor’s operations and to the Petroleum
        Substances thereto which are set forth in Schedule ”A”.

       

      
        	
                1.02

              	
                Schedules

              

      

       

      The
        following Schedules are attached hereto and made part of this
        Agreement:

       

      
        
          
          

        

        
          -
            5 -

          
            

          

        

        
          
          

        

      

      
        	
                 

              	
                (a)

              	
                Schedule ”A”,
                  which includes: Part I - Lands, Leases and Encumbrances ( including
                  preferential purchase rights and penalties);  Part II –
                  Production Sales Contracts;  Part III- Facilities; Gas Gathering
                  Lines, Pipelines, Facility, Processing, Treating, Transportation
                  and
                  Contract Operating Agreements;  Part IV- Wells; Part
                  V-  Authorizations for Expenditure;  Part VI- Areas of
                  Mutual Interest; Part VII-Default Notices, Claims, Lawsuits & Offset
                  Drilling Notices;

              

      

       

      
        	
                 

              	
                (b)

              	
                Schedule ”B”,
                  which is the form of general conveyance;
                  and

              

      

       

      
        	
                 

              	
                (c)

              	
                Schedule
                  “C”,  which are the conveyances for CIMA
                  Assets.

              

      

       

      
        	
                1.03

              	
                References

              

      

       

      The
        references “hereunder”, “herein” and “hereof” refer to the provisions of this
        Agreement, and references to Articles, Clauses, Subclauses, Paragraphs or
        Subparagraphs herein refer to Articles, Clauses, Subclauses, Paragraphs or
        Subparagraphs of this Agreement.  Any reference to time shall refer to
        the time in Calgary, Alberta, Canada during the respective intervals in which
        each is in force.

       

      
        	
                1.04

              	
                Headings

              

      

       

      The
        headings of the Articles, Clauses, Subclauses, Schedules and any other headings,
        captions or indices herein are inserted for convenience of reference only
        and
        shall not be used in any way in construing or interpreting any provision
        hereof.

       

      
        	
                1.05

              	
                Singular/Plural

              

      

       

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

       

      
        	
                1.06

              	
                Use
                  Of Funds

              

      

       

      All
        references to “dollars” or “$” herein shall refer to lawful currency of the
        United Sates of America.

       

      
        	
                1.07

              	
                Derivatives

              

      

       

      Where
        a
        term is defined herein, a capitalized derivative of such term shall have
        a
        corresponding meaning unless the context otherwise requires.

       

      
        	
                1.08

              	
                Interpretation
                  If Closing Does Not
                  Occur

              

      

       

      In
        the
        event that Closing does not occur, each provision of this Agreement which
        presumes that the Purchaser has acquired the Assets hereunder shall be construed
        as having been contingent upon Closing having occurred.

       

      
        	
                1.09

              	
                Conflicts

              

      

       

      If
        there
        is any conflict or inconsistency between a provision of the body of this
        Agreement and that of a Schedule or a Conveyance Document, the provision
        of the
        body of this Agreement shall prevail.  If any term or condition of
        this Agreement conflicts with a term or condition of a Lease or the Regulations,
        the term or condition of such Lease or the Regulations shall prevail, and
        this
        Agreement shall be deemed to be amended to the extent required to eliminate
        any
        such conflict.

       

      
        
          
          

        

        
          -
            6 -

          
            

          

        

        
          
          

        

      

      
        	
                1.10

              	
                Responsibility
                  Extends to Legal Costs

              

      

       

      References
        to costs in the liability and indemnification obligations prescribed in this
        Agreement shall be deemed to include reasonable legal costs on a solicitor
        and
        his own client basis or attorney costs.

       

      
        	
                1.11

              	
                Knowledge
                  or Awareness

              

      

       

      Where
        a
        representation or warranty in this Agreement is made on the basis of the
        knowledge or awareness of a Vendor, such knowledge or awareness consists
        of the
        actual knowledge or awareness of the current officers and supervisory employees
        of that Vendor which are primarily responsible for the matters in question
        in
        the course of their normal duties.

       

      
        	
                2.00

              	
                PURCHASE
                  AND SALE

              

      

       

      
        	
                2.01

              	
                Agreement
                  of Purchase and Sale

              

      

       

      The
        Purchaser agrees to purchase the Assets from the Vendors and the Vendors
        agree
        to sell the Assets to the Purchaser on the terms and conditions set forth
        herein.

       

      
        	
                 

              	
                (a)

              	
                The
                  Purchase Price payable for the Assets is up to Twenty-Seven Million
                  Dollars ($27,000,000.00).

              

      

       

      
        	
                 

              	
                (b)

              	
                In
                  determining the Purchase Price, the Parties have taken into account
                  the
                  Purchaser's assumption of responsibility, if any, for any future
                  plugging,
                  abandonment and reclamation costs associated with the Assets, as
                  set forth
                  in this Agreement and the Vendors’ release of responsibility
                  therefor.

              

      

       

      
        	
                2.02

              	
                Payment
                  of Purchase Price

              

      

       

      The
        Purchase Price shall be paid as follows:

       

      
        	
                 

              	
                (a)

              	
                by
                  payment of a $100,000 deposit (receipt whereof is hereby acknowledged
                  by
                  the Vendors);

              

      

       

      
        	
                 

              	
                (b)

              	
                by
                  payment of $900,000 by way of bank draft or certified cheque to
                  Thunder
                  and the issuance of Seven Million (7,000,000) shares of the Purchaser
                  to
                  Thunder on Closing;

              

      

       

      
        	
                 

              	
                (c)

              	
                by
                  way of the issuance by the Purchaser of shares from treasury as
                  follows:

              

      

       

      
        	
                 

              	
                (i)

              	
                2
                  million shares on the earlier of June 30, 2008 and the date of
                  completion
                  of the Purchasers seismic program on
                  EL-413;

              

      

       

      
        	
                 

              	
                (ii)

              	
                1
                  million further shares on the earlier of March 30, 2009 and date
                  of the
                  spudding of a well on EL-413 with a proposed total depth of 1,500
                  meters;

              

      

       

      
        	
                 

              	
                (iii)

              	
                1.5
                  million further shares on the spudding of a well on EL-413 with
                  a proposed
                  total depth of 2,500 meters or greater;
                  and

              

      

       

      
        
          
          

        

        
          -
            7 -

          
            

          

        

        
          
          

        

      

      
        	
                 

              	
                (iv)

              	
                1.5
                  million further shares within ten (10) Business Days of the conversion
                  of
                  any part of EL-413 to a Significant Discovery
                  License.

              

      

       

      It
        is
        acknowledged that the actions described in (ii), (iii) or (iv) above will
        only
        occur if the Purchaser is satisfied that the actions are justified and should
        be
        undertaken.  Therefore it is agreed that if those actions are not
        taken the Purchaser shall reconvey EL-413 to Thunder provided that:

       

      
        	
                 

              	
                (v)

              	
                the
                  Purchaser shall have earned an undivided 6.25% working interest
                  in 200,000
                  acres of EL-413 if it satisfies (c)(i) above,
                  or

              

      

       

      
        	
                 

              	
                (vi)

              	
                the
                  Purchaser shall have earned an additional undivided 12.50% working
                  interest in 200,000 acres of EL-413 if it satisfies (c)(ii) above,
                  or

              

      

       

      
        	
                 

              	
                (vii)

              	
                the
                  Purchaser shall have earned an additional undivided 25.00% working
                  interest in 200,000 acres of EL-413 if it satisfies (c)(iii)
                  above.

              

      

       

      If
        all of
        the actions described in (c) above are satisfied then the Purchaser shall
        issue
        at least 100,000 further shares to Thunder if an engineering report prepared
        in
        accordance with industry standards from a qualified, experienced professional
        engineering firm shows that there are at least 100 million barrels of possible
        commercial reserves of Petroleum Substances in place under EL-413.  If
        such reports shows there are more than 100 million barrels of possible
        commercial reserves of Petroleum Substances in place under EL-413 then the
        Purchaser shall make a further payment of up to a maximum of Four Million
        Nine
        Hundred Thousand (4,900,000) shares with the Vendors being issued 100,000
        shares
        for each 10 million barrels of possible commercial reserves of Petroleum
        Substances in place under EL-413.  For the purpose of all calculations
        in this Aricle 2.00 each share of the Purchaser issued as part of the Purchase
        Price shall have a deemed value of $2.00.  The class of shares issued
        shall be that class of shares of the Purchaser which are trading.

       

      
        	
                2.03

              	
                GST

              

      

       

      The
        Purchaser shall remit to Thunder at Closing the six percent (6%) GST applicable
        to that portion of the Purchase Price allocated to the Tangibles forming
        part of
        the Thunder Assets in accordance with the Excise Tax Act
        (Canada).  The Vendor undertakes to remit the GST to the appropriate
        governmental authority in accordance with the Excise Tax Act
(Canada).

       

      The
        Parties acknowledge and agree that seismic being purchased by the Purchaer
        has
        been valued at $416,000.00, and GST is payable thereon.

       

      
        	
                2.04

              	
                DEPOSIT

              

      

       

      If
        the
        transactions described in this Agreement do not close for any reason other
        then
        a default by the Purchaser then the deposit and any interest earned thereon
        shall be promptly returned to the Purchaser.  Otherwise if the
        transactions do not close the deposit and any interest earned thereon shall
        be
        forfeited to the Vendors as liquidated damages.

       

      
        	
                3.00

              	
                CLOSING

              

      

       

      
        	
                3.01

              	
                Place
                  of Closing

              

      

       

      Unless
        otherwise agreed in writing by the Parties, Closing shall take place at the
        offices of the Purchaser on the Closing Date.

       

      
        
          
          

        

        
          -
            8 -

          
            

          

        

        
          
          

        

      

      
        	
                3.02

              	
                Required
                  Approvals

              

      

       

      In
        accordance with Clause 10.01,
        it is a condition precedent to Closing that any and all approvals and consents
        required under the Regulations shall have been obtained or that such approval
        or
        consent shall have been waived in writing or otherwise lapsed or, as agreed
        in
        writing between the Parties, shall be obtained subsequent to
        Closing.

       

      
        	
                3.03

              	
                Specific
                  Conveyances

              

      

       

      
        	
                 

              	
                (a)

              	
                The
                  Vendors and the Purchaser shall cooperate in the preparation of
                  the
                  Specific Conveyances so that all Specific Conveyances can be executed
                  and
                  delivered at Closing.

              

      

       

      
        	
                 

              	
                (b)

              	
                The
                  costs of preparation of the Specific Conveyances, are to be borne
                  by the
                  Vendors and the costs of registration, filing and/or recording
                  of the
                  Specific Conveyances are to be borne by the
                  Purchaser.

              

      

       

      
        	
                4.00

              	
                ADJUSTMENTS

              

      

       

      
        	
                4.01

              	
                Benefits
                  and Obligations to be
                  Apportioned

              

      

       

      
        	
                 

              	
                (a)

              	
                All
                  benefits and obligations of any kind and nature accruing, payable,
                  paid,
                  received or receivable with respect to the Assets (including, without
                  limitation, maintenance, development, capital and operating costs,
                  advances, payments with respect to the Permitted Encumbrances,
                  proceeds
                  from the sale of production, accounts receivable and incentives
                  accruing
                  pursuant to the Regulations) shall be apportioned, as of the Effective
                  Time, between the Vendors and the Purchaser in accordance with
                  generally
                  accepted accounting principles, subject to the provisions of this
                  Agreement.  All such benefits and obligations which relate to
                  any matter or time period occurring before the Effective Time shall
                  be for
                  the Vendors’ account and all those benefits and obligations which relate
                  to any matter or time period occurring after the Effective Time
                  shall be
                  for the Purchaser's account.  All costs of whatever nature
                  pertaining to work performed or goods or services provided with
                  respect to
                  the Assets prior to the Effective Time shall be borne by the Vendors,
                  notwithstanding that such costs may be payable in whole or in part
                  after
                  the Effective Time.

              

      

       

      
        	
                 

              	
                (b)

              	
                All
                  rentals and all similar payments required to preserve any of the
                  Leases
                  and all taxes (other than income taxes and taxes based on the volume
                  of
                  the production of Petroleum Substances) levied with respect to
                  the Assets
                  shall be apportioned between the Vendors and the Purchaser on a
                  per diem
                  basis as of the Effective Time, unless and to the extent that such
                  apportionment in favour of the Vendors is waived by the
                  Vendors.

              

      

       

      
        	
                 

              	
                (c)

              	
                Petroleum
                  Substances which were produced, but not sold, as of the Effective
                  Time
                  shall be credited to the Vendors.

              

      

       

      
        	
                4.02

              	
                Adjustments
                  to Accounts

              

      

       

      
        	
                 

              	
                (a)

              	
                An
                  interim accounting and adjustment will be conducted for Closing,
                  based on
                  the Vendors’ good faith estimate of all adjustments to be made for the
                  transactions herein pursuant to this Article.  Such interim
                  accounting and adjustment shall be delivered to the Purchaser for
                  its
                  review and comment at least two (2) Business Days prior to Closing,
                  together with all applicable back-up information related
                  thereto.  A final accounting and adjustment (“Final
                  Statement”) shall be conducted within ninety (90) days of the
                  Closing Date.  Subject to Subclauses (b) and (c) of this
                  Clause, the Parties shall not be obligated to make any adjustments
                  after
                  such ninety (90) day period (excluding any amount owing to a Party
                  by the
                  other Party pursuant to a Final Statement) unless such adjustment
                  has been
                  specifically requested, by notice, within such period.  All
                  adjustments shall be settled by payment by the Party required to
                  make
                  payment hereunder within thirty (30) days of being notified of
                  the
                  determination of the amount owing.

              

      

       

      
        
          
          

        

        
          -
            9 -

          
            

          

        

        
          
          

        

      

      
        	
                 

              	
                (b)

              	
                The
                  Purchaser may audit the books, records and accounts of the Vendors
                  respecting the Assets for the purpose of effecting adjustments
                  pursuant to
                  this Article.  Such audit shall be conducted upon reasonable
                  notice to the Vendors at the Vendors’ offices during the Vendors’ normal
                  business hours, and shall be conducted at the sole expense of the
                  Purchaser.  Any claims of discrepancies disclosed by such audit
                  which relate to the Final Statement shall be made in writing to
                  the
                  Vendors within two (2) months following  the receipt by
                  Purchaser of the Final Statement, and the Vendors shall respond
                  in writing
                  to any claims of discrepancies within two (2) months of the receipt
                  of
                  such claims.  To the extent that the Parties are unable to
                  resolve any outstanding claims of discrepancies disclosed by such
                  audit
                  within two (2) months of the Vendors’ response thereto, such audit
                  exceptions shall be resolved pursuant to
                  Article 9.00.

              

      

       

      
        	
                 

              	
                (c)

              	
                Notwithstanding
                  the preceding Subclauses of this Clause, any adjustments resulting
                  from
                  joint venture audits, Crown, New Mexico or United States Federal
                  or other
                  royalty audits or Crown, New Mexico or United States Federal royalty
                  invoices relating to the Assets and established by an audit conducted
                  pursuant to the Regulations, the Leases or any joint venture or
                  other
                  agreements to which the Assets are subject shall be made within
                  the period
                  set out in the applicable audit provisions, with payment being
                  made by the
                  Party required to make payment hereunder in accordance with the
                  Effective
                  Time within thirty (30) days of being notified of the determination
                  of the
                  amount owing.

              

      

       

      
        	
                 

              	
                (d)

              	
                Any
                  amount owing to a Party by the other Party pursuant to any provision
                  of
                  this Agreement after Closing and remaining unpaid shall bear compound
                  interest, as computed monthly, from the day such amount is due
                  to be paid
                  until the day such amount was paid, at the Prime Rate plus 2% per
                  annum,
                  regardless of whether such Party has given the other Party prior
                  notice of
                  the accrual of interest hereunder.

              

      

       

      
        	
                5.00

              	
                INTERIM
                  PROVISIONS

              

      

       

      
        	
                5.01

              	
                Assets
                  to be Maintained in Proper
                  Manner

              

      

       

      Prior
        to
        Closing, the Assets shall be and remain at the risk of the Vendors in respect
        of
        any material damage or destruction to the Assets.  For purposes of
        this provision, the phrase “damage or destruction” shall not include the effect
        of any change of pricing of Petroleum Substances produced or the effect of
        changes to any of the items described in Section 6.05(a), (b) and
        (d).  Legal title, ownership and possession of the Assets shall not
        pass to the Purchaser until Closing.

       

      
        	
                5.02

              	
                Vendor
                  as Agent

              

      

       

      If
        Closing occurs, insofar as the Vendors maintain the Assets and take actions
        with
        respect thereto on behalf of the Purchaser in accordance with this
        Article 5.00, at Closing the Vendors shall be deemed to have been the agent
        of the Purchaser hereunder.  The Purchaser ratifies all actions which
        the Vendors took or refrained from taking in accordance with the terms of
        this
        Article 5.00, with the intention that all such actions shall be those of
        the Purchaser.

       

      
        
          
          

        

        
          -
            10 -

          
            

          

        

        
          
          

        

      

      
        	
                5.03

              	
                Restrictions
                  on Conduct of Business

              

      

       

      Prior
        to
        Closing, the Vendors shall not, without the prior written consent of the
        Purchaser:

       

      
        	
                 

              	
                (a)

              	
                voluntarily
                  assume any new obligation or new commitment with respect to the
                  Assets,
                  where the Vendors’ share of the expenditure associated with such
                  obligation or commitment is estimated to exceed One Thousand Dollars
                  ($1,000.00);

              

      

       

      
        	
                 

              	
                (b)

              	
                surrender
                  or abandon any of the Assets;

              

      

       

      
        	
                 

              	
                (c)

              	
                amend
                  or terminate any agreement or enter into any new agreement respecting
                  the
                  Assets;

              

      

       

      
        	
                 

              	
                (d)

              	
                propose
                  any operation with respect to the Assets or initiate the exercise
                  of any
                  right arising as a result of the ownership of the
                  Assets;

              

      

       

      
        	
                 

              	
                (e)

              	
                sell,
                  transfer or otherwise dispose of the Assets, or any of them, except
                  as may
                  be required by the Vendors to comply with its obligations respecting
                  any
                  preferential rights, as provided in Clause 7.01;
                  or

              

      

       

      
        	
                 

              	
                (f)

              	
                grant
                  a Security Interest or any encumbrance with respect to any of the
                  Assets.

              

      

       

      However,
        the Vendors may assume such obligations or commitments and propose or initiate
        such operations or exercise any such right or option without the prior consent
        of the Purchaser, if the Vendors reasonably determine that such expenditures
        or
        actions are necessary for the protection of life or property, in which case
        the
        Vendors shall promptly notify the Purchaser of such intention or actions
        and the
        Vendors’ estimate of the costs and expenses associated therewith.

       

      
        	
                5.04

              	
                Obligations
                  of the Purchaser

              

      

       

      Subject
        to Clause 5.03,
        if an operation or the exercise of any right or option respecting the Assets
        is
        proposed in circumstances in which such operation or the exercise of such
        right
        or option would result in an obligation of the Purchaser, the following
        Paragraphs shall apply to such operation or the exercise of such right or
        option
        (hereinafter referred to as the “Proposal”):

       

      
        	
                 

              	
                (a)

              	
                the
                  Vendors shall promptly give notice of the Proposal to the Purchaser,
                  including with such notice the particulars of such Proposal in
                  reasonable
                  detail;

              

      

       

      
        	
                 

              	
                (b)

              	
                the
                  Purchaser shall, not later than twenty-four (24) hours prior to the
                  time the Vendors are required to make an election with respect
                  to the
                  Proposal, advise the Vendors, by notice, whether it wishes the
                  Vendors to
                  exercise its rights with respect to the Proposal on behalf of the
                  Purchaser, provided that failure of the Purchaser to make such
                  election
                  within such period shall be deemed to be an election by the Purchaser
                  to
                  participate in the Proposal;

              

      

       

      
        	
                 

              	
                (c)

              	
                the
                  Vendors shall make the election authorized by the Purchaser with
                  respect
                  to the Proposal within the period during which the Vendors may
                  respond to
                  the Proposal; and 

              

      

       

      
        
          
          

        

        
          -
            11 -

          
            

          

        

        
          
          

        

      

      the
        election by the Purchaser not to participate in any Proposal required to
        preserve the existence of any of the Assets shall not entitle the Purchaser
        to
        any reduction of the Purchase Price in the event that the Vendors’ interest
        therein is terminated as a result of such election, and such termination
        shall
        not constitute a failure of the Vendors’ representations and warranties
        pertaining to such Assets.

       

      
        	
                6.00

              	
                REPRESENTATIONS
                  AND WARRANTIES OF
                  PARTIES

              

      

       

      
        	
                6.01

              	
                Thunder's
                  Representations and
                  Warranties

              

      

       

      Thunder
        represents and warrants to the Purchaser that:

       

      
        	
                 

              	
                (a)

              	
                Standing:  Thunder
                  is a corporation, duly organized, valid and subsisting, and authorized
                  to
                  carry on business in the Province of Alberta and the Northwest
                  Territories;

              

      

       

      
        	
                 

              	
                (b)

              	
                Requisite
                  Authority: Thunder has the requisite capacity, power and authority to
                  execute this Agreement and the Conveyance Documents and to perform
                  the
                  obligations to which it thereby becomes
                  subject;

              

      

       

      
        	
                 

              	
                (c)

              	
                No
                  Conflict: The execution and delivery of this Agreement and the
                  completion of the sale of the Assets in accordance with the terms
                  of this
                  Agreement are not and will not be in violation or breach of, or
                  be in
                  conflict with:

              

      

       

      
        	
                 

              	
                (i)

              	
                any
                  term or provision of the constating or other governing documents
                  of
                  Thunder;

              

      

       

      
        	
                 

              	
                (ii)

              	
                any
                  agreement, instrument, permit or authority to which Thunder is
                  a party or
                  by which Thunder is bound; or

              

      

       

      
        	
                 

              	
                (iii)

              	
                the
                  Regulations or any judicial order, award, judgement or decree applicable
                  to Thunder or the Assets;

              

      

       

      
        	
                 

              	
                (d)

              	
                Execution
                  and Enforceability: Thunder has taken all actions necessary to
                  authorize the execution and delivery of this Agreement, and, as
                  of the
                  Closing Date, Thunder shall have taken all actions necessary to
                  authorize
                  and complete the sale of the Assets in accordance with the provisions
                  of
                  this Agreement.  This Agreement has been validly executed and
                  delivered by Thunder, and this Agreement and all other documents
                  executed
                  and delivered on behalf of Thunder hereunder shall constitute legal,
                  valid
                  and binding obligations of Thunder enforceable in accordance with
                  their
                  respective terms and conditions;

              

      

       

      
        	
                 

              	
                (e)

              	
                Residency
                  for Tax Purposes: Thunder is not a non-resident of Canada within the
                  meaning of the Income Tax Act
                  (Canada);

              

      

       

      
        	
                 

              	
                (f)

              	
                No
                  Finders' Fees: The Purchaser shall not have any responsibility for any
                  obligation or liability, contingent or otherwise, for brokers'
                  or finders'
                  fees, if any, incurred by Thunder with respect to the transactions
                  herein;

              

      

       

      
        	
                 

              	
                (g)

              	
                Lawsuits
                  and Claims: Except as specifically identified in Schedule ”A”,
                  there are no unsatisfied judgements, claims, proceedings, actions,
                  governmental investigations or lawsuits in existence, or to the
                  best of
                  the knowledge of Thunder, contemplated or threatened against or
                  with
                  respect to the Assets, and there exists no particular circumstance
                  which
                  Thunder reasonably believes will give rise to such a claim, proceeding,
                  action, governmental investigation or lawsuit and no matter described
                  in
                  Schedule “A” will affect title to the Assets or the Purchaser’s enjoyment
                  thereof;

              

      

       

      
        
          
          

        

        
          -
            12 -

          
            

          

        

        
          
          

        

      

      
        	
                 

              	
                (h)

              	
                Compliance
                  with Leases and Agreements: No act or omission has occurred whereby
                  Thunder is, or would be, in default under the terms of the Regulations,
                  any Lease or any agreement pertaining to the Thunder Assets, where
                  such a
                  default would impact materially and adversely upon the Assets,
                  or any of
                  them and to the best of the knowledge of Thunder, no third party
                  is in
                  default under the terms of any Lease of any agreement pertaining
                  to the
                  Thunder Assets, where such a default would impact materially and
                  adversely
                  upon the Thunder Assets;

              

      

       

      
        	
                 

              	
                (i)

              	
                No
                  Default Notices:  Thunder has not received any notice of
                  default under the Leases or any notice alleging its default under
                  any
                  agreement pertaining to any of the Assets, which default has not
                  been
                  rectified as of the date of this Agreement or to the best knowledge
                  of
                  Thunder, there exists no particular circumstance which Thunder
                  reasonably
                  believes will give rise to such a
                  notice;

              

      

       

      
        	
                 

              	
                (j)

              	
                Payment
                  of Royalties and Taxes:  To the best of the knowledge of the
                  Vendor, all royalties and all ad valorem, property, production,
                  severance
                  and similar taxes and assessments based on, or measured by, its
                  ownership
                  of the Assets, the production of Petroleum Substances from the
                  Lands or
                  the receipt of proceeds therefrom that are payable by Thunder and
                  which
                  accrued prior to the Effective Time have been or will be properly
                  and
                  fully paid and discharged in the manner and at the time prescribed
                  by the
                  Leases and the Regulations;

              

      

       

      
        	
                 

              	
                (k)

              	
                Encumbrances:
                  Thunder does not warrant its title to the Thunder Assets, but does
                  warrant
                  that it’s interest in the Thunder Assets is free and clear of any and all
                  liens, Security Interests, mortgages, pledges, claims, options,
                  encumbrances, rights of first refusal, preferential rights, overriding
                  royalties, net profits interests or other similar interests or
                  burdens
                  created by, through or under Thunder or of which Thunder has knowledge,
                  other than the Permitted
                  Encumbrances;

              

      

       

      
        	
                 

              	
                (l)

              	
                Agreements:  The
                  Agreements disclosed in Schedule A” comprise all agreements for the
                  sale of Petroleum Substances produced from the Thunder Assets not
                  terminable on 30 days without penalty, all gas balancing agreements
                  affecting the Thunder Assets, and all of the material agreements
                  described
                  in paragraphs (c), (d), (e) and (f) in the definition of “Title and
                  Operating Documents”;

              

      

       

      
        	
                 

              	
                (m)

              	
                Meeting
                  of Shareholders: The Special Meeting of Shareholders of Thunder at
                  which the sale of the Thunder Assets to the Purchaser was approved
                  was
                  properly called and properly held and all resolutions passed at
                  such
                  meeting were validly passed in accordance with applicable
                  law;

              

      

       

      
        	
                 

              	
                (n)

              	
                Sale
                  of Petroleum Substances: No purchaser or seller of Petroleum
                  Substances has refused to remit to the Vendor proceeds from the
                  sale
                  thereof and the Petroleum and Natural Gas Rights are not subject
                  to any
                  Prepaid Gas Obligations;

              

      

       

      
        	
                 

              	
                (o)

              	
                Environmental
                  Matters: Except as specifically identified in Schedule ”A”,
                  Thunder is not aware of:

              

      

       

      
        
          
          

        

        
          -
            13 -

          
            

          

        

        
          
          

        

      

      
        	
                 

              	
                (i)

              	
                and
                  has not received any orders or directives pursuant to the Regulations
                  which relate to environmental matters and which require any work,
                  repairs,
                  construction or capital expenditures with respect to the Assets,
                  where
                  such orders or directives have not been complied with in all material
                  respects or to the best knowledge of Thunder, there exists no particular
                  circumstance which Thunder reasonably believes will give rise to
                  any such
                  order, directive, demand or notice;
                  or

              

      

       

      
        	
                 

              	
                (ii)

              	
                and
                  has not received any demand or notice issued pursuant to the Regulations
                  with respect to any spill or the breach of any environmental, health
                  or
                  safety law applicable to any of the Assets, including, without
                  limitation,
                  any Regulations respecting the use, storage, treatment, transportation
                  or
                  disposition of environmental contaminants, which demand or notice
                  remains
                  outstanding as of the date hereof or to the best knowledge of Thunder,
                  there exists no particular circumstance which Thunder reasonably
                  believes
                  will give rise to any such order, directive, demand or
                  notice;

              

      

       

      
        	
                 

              	
                (p)

              	
                Authorized
                  Expenditures: Except for the usual operating expenses incurred in
                  normal operations, there are no outstanding authorizations for
                  expenditure
                  or outstanding financial commitments respecting the Thunder Assets,
                  pursuant to which expenditures are or may be required by the Purchaser
                  or
                  in respect of which any amount is outstanding, other than those
                  set forth
                  in Schedule ”A” or as may be authorized on behalf of the Purchaser in
                  accordance herewith;

              

      

       

      
        	
                 

              	
                (q)

              	
                Area
                  of Mutual Interest: None of the Lands are subject to an agreement
                  which provides for an area of mutual interest, except as specifically
                  identified in Schedule ”A”;

              

      

       

      
        	
                 

              	
                (r)

              	
                Assets
                  Comprise Substantially All of Vendor’s Assets: The Thunder Assets do
                  comprise all or substantially all of Thunder’s
                  assets;

              

      

       

      
        	
                 

              	
                (s)

              	
                Full
                  Access:  Except as otherwise provided in this Agreement,
                  Thunder has made available to the Purchaser all material information
                  within its possession and control pertaining to or affecting the
                  Assets
                  (other than economic evaluations or other proprietary evaluations
                  to which
                  the Purchaser is not entitled access hereunder and other than trade
                  seismic, geological interpretations and financial records), insofar
                  as
                  such documents and information are known to Thunder, and it has
                  not
                  withheld from the Purchaser any material documents or information
                  reasonably required to make not misleading those documents and
                  information
                  made available by Thunder to the
                  Purchaser;

              

      

       

      
        	
                 

              	
                (t)

              	
                Investors:  The
                  Vendors represent that each of them is a sophisticated investor
                  and has
                  the knowledge and intellectual skill to evaluate an investment
                  in the
                  Purchaser.  Each of the Vendors represent that they were not
                  established for the purpose of obtaining an investment in the Purchaser
                  or
                  any similar company. The Vendors represent that they have sufficient
                  other
                  assets than the consideration securities to meet their operational
                  and
                  other ordinary expenses and do not need the value of the consideration
                  shares for any purpose now or in the future. The consideration
                  securities
                  to be acquired by each of the Vendors will be acquired for investment
                  for
                  such Vendor's own account and not with a view for the resale or
                  distribution of any part thereof.  Each Vendor agrees that it
                  will not resell any of the securities received under this Agreement
                  except
                  in compliance with the United States and state securities laws,
                  including
                  pursuant to a registration under the Securities Act of 1933 or
                  pursuant to
                  an available exemption from registration and agrees not to engage
                  in
                  hedging transactions with regard to such securities unless in compliance
                  with the Securities Act. The Vendors agree that have not and will
                  not take
                  any action to have the consideration securities transferred into
                  bearer
                  form, regardless if the law of any state permits securities to
                  be held in
                  bearer form;

              

      

       

      
        
          
          

        

        
          -
            14 -

          
            

          

        

        
          
          

        

      

      
        	
                 

              	
                (u)

              	
                Legend:  Each
                  of the Vendors understands that it will acquire securities under
                  this
                  Agreement that are characterized as "restricted securities" under
                  the
                  United States federal securities laws. It is understood that the
                  certificates evidencing the consideration securities may bear the
                  legend
                  set forth below in this section. The Vendors hereby consent to
                  the
                  inclusion of such legend on certificates of securities they receive
                  hereunder and for the placement of stop orders against the transfer
                  of
                  such securities, which may be enforced by the Company by instruction
                  to
                  its transfer agent or recourse to appropriate judicial authorities
                  to
                  prevent the registration of any transfer not in accordance with
                  the
                  provisions of this Agreement and the legend set forth
                  below:

              

      

       

      "THE
        SECURITIES REPRESENTED BY THIS CERTIFICATE HAVE NOT BEEN REGISTERED UNDER
        THE
        SECURITIES ACT OF 1933, AS AMENDED (THE "ACT"). THE SECURITIES REPRESENTED
        HEREBY MAY NOT BE SOLD, TRANSFERRED, OR OTHERWISE DISPOSED OF IN THE ABSENCE
        OF
        AN EFFECTIVE REGISTRATION STATEMENT UNDER THE ACT OR AN OPINION OF COUNSEL,
        REASONABLY ACCEPTABLE TO COUNSEL FOR THE COMPANY TO THE EFFECT THAT THE PROPOSED
        SALE, TRANSFER, OR DISPOSITION MAY BE EFFECTUATED WITHOUT REGISTRATION UNDER
        THE
        ACT AND SUCH SALE, TRANSFER OR DISPOSITION IS IN COMPLIANCE WITH REGULATION
        S
        PROMULGATED UNDER THE ACT, TO THE EXTENT THEN APPLICABLE”; AND

       

      
        	
                 

              	
                (v)

              	
                Statements:  No
                  representation or warranty by any Vendor contained in this Agreement
                  and
                  no information contained in any Schedule or other instrument furnished
                  or
                  to be furnished to the Purchaser pursuant to this Agreement or
                  in
                  connection with the transactions contemplated hereby contains or
                  will
                  contain any untrue statement of a material fact or omits or will
                  omit to
                  state a material fact necessary in order to make the statements
                  contained
                  therein not misleading.

              

      

       

      
        	
                6.02

              	
                CIMA’s
                  Representations and
                  Warranties

              

      

       

      CIMA
        represents and warrants to the Purchaser that:

       

      
        	
                 

              	
                (a)

              	
                Standing:  CIMA
                  is a corporation, duly organized, valid and subsisting, and authorized
                  to
                  carry on business in the State of New
                  Mexico;

              

      

       

      
        	
                 

              	
                (b)

              	
                Requisite
                  Authority: CIMA has the requisite capacity, power and authority to
                  execute this Agreement and the Conveyance Documents and to perform
                  the
                  obligations to which it thereby becomes
                  subject;

              

      

       

      
        	
                 

              	
                (c)

              	
                No
                  Conflict: The execution and delivery of this Agreement and the
                  completion of the sale of the CIMA Assets in accordance with the
                  terms of
                  this Agreement are not and will not be in violation or breach of,
                  or be in
                  conflict with:

              

      

       

      
        	
                 

              	
                (i)

              	
                any
                  term or provision of the constating or other governing documents
                  of
                  CIMA;

              

      

       

      
        
          
          

        

        
          -
            15 -

          
            

          

        

        
          
          

        

      

      
        	
                 

              	
                (ii)

              	
                any
                  agreement, instrument, permit or authority to which CIMA is a party
                  or by
                  which CIMA is bound; or

              

      

       

      
        	
                 

              	
                (iii)

              	
                the
                  Regulations or any judicial order, award, judgement or decree applicable
                  to CIMA or the Assets;

              

      

       

      
        	
                 

              	
                (d)

              	
                Execution
                  and Enforceability: CIMA has taken all actions necessary to authorize
                  the execution and delivery of this Agreement, and, as of the Closing
                  Date,
                  CIMA shall have taken all actions necessary to authorize and complete
                  the
                  sale of the Assets in accordance with the provisions of this
                  Agreement.  This Agreement has been validly executed and
                  delivered by CIMA, and this Agreement and all other documents executed
                  and
                  delivered on behalf of CIMA hereunder shall constitute legal, valid
                  and
                  binding obligations of CIMA enforceable in accordance with their
                  respective terms and conditions;

              

      

       

      
        	
                 

              	
                (e)

              	
                Residency
                  for Tax Purposes: CIMA is a resident of the United States of America
                  for tax purposes;

              

      

       

      
        	
                 

              	
                (f)

              	
                No
                  Finders' Fees: The Purchaser shall not have any responsibility for any
                  obligation or liability, contingent or otherwise, for brokers'
                  or finders'
                  fees, if any, incurred by CIMA with respect to the transactions
                  herein;

              

      

       

      
        	
                 

              	
                (g)

              	
                Lawsuits
                  and Claims: Except as specifically identified in Schedule ”A”,
                  there are no unsatisfied judgements, claims, proceedings, actions,
                  governmental investigations or lawsuits in existence, or to the
                  best of
                  the knowledge of CIMA, contemplated or threatened against or with
                  respect
                  to the CIMA Assets, and there exists no particular circumstance
                  which CIMA
                  reasonably believes will give rise to such a claim, proceeding,
                  action,
                  governmental investigation or
                  lawsuit;

              

      

       

      
        	
                 

              	
                (h)

              	
                Compliance
                  with Leases and Agreements: No act or omission has occurred whereby
                  CIMA is, or would be, in default under the terms of the Regulations,
                  any
                  Lease or any agreement pertaining to the CIMA Assets, where such
                  a default
                  would impact materially and adversely upon the CIMA Assets, or
                  any of them
                  and to the best of the knowledge of CIMA, no third party is in
                  default
                  under the terms of any Lease of any agreement pertaining to the
                  CIMA
                  Assets, where such a default would impact materially and adversely
                  upon
                  the CIMA Assets;

              

      

       

      
        	
                 

              	
                (i)

              	
                No
                  Default Notices:  CIMA has not received any notice of
                  default under the Leases or any notice alleging its default under
                  any
                  agreement pertaining to any of the CIMA Assets, which default has
                  not been
                  rectified as of the date of this Agreement or to the best knowledge
                  of
                  CIMA, there exists no particular circumstance which the Vendor
                  reasonably
                  believes will give rise to such a
                  notice;

              

      

       

      
        	
                 

              	
                (j)

              	
                Payment
                  of Royalties and Taxes:  To the best of the knowledge of
                  CIMA, all royalties and all ad valorem, property, production, severance
                  and similar taxes and assessments based on, or measured by, its
                  ownership
                  of the CIMA Assets, the production of Petroleum Substances from
                  the Lands
                  or the receipt of proceeds therefrom that are payable by CIMA and
                  which
                  accrued prior to the Effective Time have been or will be properly
                  and
                  fully paid and discharged in the manner and at the time prescribed
                  by the
                  Leases and the Regulations;

              

      

       

      
        
          
          

        

        
          -
            16 -

          
            

          

        

        
          
          

        

      

      
        	
                 

              	
                (k)

              	
                Encumbrances:
                  CIMA does not warrant its title to the CIMA Assets, but does warrant
                  that
                  it’s interest in the CIMA Assets is free and clear of any and all
                  liens,
                  Security Interests, mortgages, pledges, claims, options, encumbrances,
                  rights of first refusal, preferential rights, overriding royalties,
                  net
                  profits interests or other similar interests or burdens created
                  by,
                  through or under CIMA or of which CIMA has knowledge, other than
                  the
                  Permitted Encumbrances;

              

      

       

      
        	
                 

              	
                (l)

              	
                Agreements:  The
                  Agreements disclosed in Schedule A” comprise all agreements for the
                  sale of Petroleum Substances produced from the CIMA Assets not
                  terminable
                  on 30 days without penalty, all gas balancing agreements affecting
                  the
                  CIMA Assets, and all of the material agreements described in paragraphs
                  (c), (d), (e) and (f) in the definition of “Title and Operating
                  Documents”;

              

      

       

      
        	
                 

              	
                (m)

              	
                Meeting
                  of Shareholders: The Meeting of Shareholders of CIMA at which the sale
                  of the CIMA Assets to the Purchaser was approved was properly called
                  and
                  properly held and all resolutions passed at such meeting were validly
                  passed in accordance with applicable
                  law.

              

      

       

      
        	
                 

              	
                (n)

              	
                Sale
                  of Petroleum Substances: No purchaser or seller of Petroleum
                  Substances has refused to remit to CIMA proceeds from the sale
                  thereof and
                  the Petroleum and Natural Gas Rights are not subject to any Prepaid
                  Gas
                  Obligations;

              

      

       

      
        	
                 

              	
                (o)

              	
                Environmental
                  Matters: Except as specifically identified in Schedule ”A”, CIMA
                  is not aware of:

              

      

       

      
        	
                 

              	
                (i)

              	
                and
                  has not received any orders or directives pursuant to the Regulations
                  which relate to environmental matters and which require any work,
                  repairs,
                  construction or capital expenditures with respect to the CIMA Assets,
                  where such orders or directives have not been complied with in
                  all
                  material respects or to the best knowledge of CIMA, there exists
                  no
                  particular circumstance which CIMA reasonably believes will give
                  rise to
                  any such order, directive, demand or notice;
                  or

              

      

       

      
        	
                 

              	
                (ii)

              	
                and
                  has not received any demand or notice issued pursuant to the Regulations
                  with respect to any spill or the breach of any environmental, health
                  or
                  safety law applicable to any of the CIMA Assets, including, without
                  limitation, any Regulations respecting the use, storage, treatment,
                  transportation or disposition of environmental contaminants, which
                  demand
                  or notice remains outstanding as of the date hereof or to the best
                  knowledge of CIMA, there exists no particular circumstance which
                  CIMA
                  reasonably believes will give rise to any such order, directive,
                  demand or
                  notice;

              

      

       

      
        	
                 

              	
                (p)

              	
                Authorized
                  Expenditures: Except for the usual operating expenses incurred in
                  normal operations, there are no outstanding authorizations for
                  expenditure
                  or outstanding financial commitments respecting the CIMA Assets,
                  pursuant
                  to which expenditures are or may be required by the Purchaser or
                  in
                  respect of which any amount is outstanding, other than those set
                  forth in
                  Schedule ”A” or as may be authorized on behalf of the Purchaser in
                  accordance herewith;

              

      

       

      
        	
                 

              	
                (q)

              	
                Area
                  of Mutual Interest: None of the Lands are subject to an agreement
                  which provides for an area of mutual interest, except as specifically
                  identified in Schedule ”A”;

              

      

       

      
        
          
          

        

        
          -
            17 -

          
            

          

        

        
          
          

        

      

      
        	
                 

              	
                (r)

              	
                CIMA
                  Assets Comprise Substantially All of CIMA’s Assets: The CIMA Assets do
                  comprise all or substantially all of CIMA’s CIMA
                  Assets;

              

      

       

      
        	
                 

              	
                (s)

              	
                Full
                  Access:  Except as otherwise provided in this Agreement,
                  CIMA has made available to the Purchaser all material information
                  within
                  its possession and control pertaining to or affecting the CIMA
                  Assets
                  (other than economic evaluations or other proprietary evaluations
                  to which
                  the Purchaser is not entitled access hereunder and other than trade
                  seismic, geological interpretations and financial records), insofar
                  as
                  such documents and information are known to CIMA, and it has not
                  withheld
                  from the Purchaser any material documents or information reasonably
                  required to make not misleading those documents and information
                  made
                  available by CIMA to the Purchaser;
                  and

              

      

       

      
        	
                 

              	
                (t)

              	
                Burdens
                  on Production:  No Lease is subject to royalty, overriding
                  royalty, production payments and other burdens on production to
                  an extent
                  greater than 17.5% and CIMA has not created, conveyed, assigned,
                  granted,
                  or transferred overriding royalty interests, production payments,
                  or other
                  burdens on production burdening any Lease, save and except the
                  following
                  which may pertain to one or more
                  Lease:

              

      

       

      
        
          	
                  Grizzly
                    Land & Permit Service, Inc.

                	 	
                    .5%

                
	
                  Canadian
                    Wildcat Corporation

                	 	
                  1.0%

                
	
                  Charles
                    Reynolds

                	 	
                  2.0%

                
	
                  John
                    Michael Richardson

                	 	
                  1.0%

                
	
                  Murray
                    Welch

                	 	
                    .5%

                
	
                  Total

                	 	
                  5.0%

                

        

      

       

      The
        overriding royalty interests shall be subject to pooling for purposes of
        forming
        a standard proration or spacing unit fixed by law for the pool or area in
        which
        the land is situated, plus a tolerance of 10%.  In addition, all
        burdens shall be subject to proportionate reduction in the event Vendor’s
        interest in a Lease is less than the entire leasehold estate or the Lease
        covers
        less than the entire oil and gas mineral estate.

       

      
        	
                6.03

              	
                Purchaser's
                  Representations and
                  Warranties

              

      

       

      The
        Purchaser represents and warrants to the Vendors that:

       

      
        	
                 

              	
                (a)

              	
                Standing:
                  The Purchaser is a corporation duly organized, valid and subsisting
                  under
                  the laws of its jurisdiction  of
                  incorporation;

              

      

       

      
        	
                 

              	
                (b)

              	
                Requisite
                  Authority: The Purchaser has the requisite capacity, power and
                  authority to execute this Agreement and the Conveyance Documents
                  and to
                  perform the obligations to which it thereby becomes subject, and
                  delivery
                  and performance of this Agreement has been duly and validly authorized
                  by
                  any and all requisite corporate, shareholders’ and directors’ actions and
                  will not result in any violation of, be in conflict with or constitute
                  a
                  default under any articles, charter, bylaw or other governing document
                  to
                  which the Purchaser is bound;

              

      

       

      
        	
                 

              	
                (c)

              	
                No
                  Conflict: The execution and delivery of this Agreement and the
                  completion of the purchase of the Assets in accordance with the
                  terms of
                  this Agreement are not and will not be in violation or breach of,
                  or be in
                  conflict with the Regulations or any judicial order, award, judgement
                  or
                  decree applicable to the Purchaser;

              

      

       

      
        
          
          

        

        
          -
            18 -

          
            

          

        

        
          
          

        

      

      
        	
                 

              	
                (d)

              	
                Execution
                  and Enforceability: The Purchaser has taken all actions necessary to
                  authorize the execution and delivery of this Agreement and, as
                  of the
                  Closing Date, the Purchaser shall have taken all actions necessary
                  to
                  authorize and complete the purchase of the Assets in accordance
                  with the
                  provisions of this Agreement.  This Agreement has been validly
                  executed and delivered by the Purchaser, and this Agreement and
                  all other
                  documents executed and delivered on behalf of the Purchaser hereunder
                  shall constitute valid and binding obligations of the Purchaser
                  enforceable in accordance with their respective terms and
                  conditions;

              

      

       

      
        	
                 

              	
                (e)

              	
                No
                  Sales Commission: The Purchaser has not incurred any obligation or
                  liability, contingent or otherwise, for brokers' or finders' fees
                  with
                  respect to the transactions herein for which the Vendors shall
                  have any
                  responsibility; and

              

      

       

      
        	
                 

              	
                (f)

              	
                Transfers
                  of Licences, Permits and Authorizations:  The Purchaser is
                  not aware of anything that would prohibit the Purchaser from obtaining
                  or
                  holding any well licences, authorizations or other permits or licences
                  related to the Assets with the relevant governmental
                  authorities.

              

      

       

      
        	
                6.04

              	
                Survival
                  of Representations and
                  Warranties

              

      

       

      Each
        Party acknowledges that the other may rely on the representations and warranties
        made by such Party pursuant to Clauses 6.01,
        6.02
        or 6.03,
        as the case may be.  The representations and warranties in to
        Clauses 6.01,
        6.02
        or 6.03
        shall be true at the time of Closing, and such representations and warranties
        shall continue in full force and effect and shall survive the Closing for
        a
        period of two (2) years from the Closing, for the benefit of the Party for
        which
        such representations and warranties were made.  In the absence of
        fraud, however, no claim or action shall be commenced with respect to a breach
        of any such representation or warranty, unless, within such period, written
        notice specifying such breach in reasonable detail has been provided to the
        Party which made such representation or warranty.

       

      
        	
                6.05

              	
                No
                  Additional Representations or Warranties by
                  Vendor

              

      

       

      The
        Vendors makes no representation or warranties to the Purchaser in addition
        to
        those expressly enumerated in Clauses 6.01 and 6.02.  Except
        and to the extent provided in Clauses 6.01 and 6.02,
        the Vendors do not warrant title to the Assets or make representations or
        warranties with respect to:

       

      
        	
                 

              	
                (a)

              	
                the
                  quantity, quality or recoverability of Petroleum Substances respecting
                  the
                  Lands;

              

      

       

      
        	
                 

              	
                (b)

              	
                any
                  estimates of the value of the Assets or the revenues applicable
                  to future
                  production from the Lands;

              

      

       

      
        	
                 

              	
                (c)

              	
                any
                  engineering, geological or other interpretations or economic evaluations
                  respecting the Assets;

              

      

       

      
        	
                 

              	
                (d)

              	
                the
                  rates of production of Petroleum Substances from the Lands;
                  or

              

      

       

      
        	
                 

              	
                (e)

              	
                any
                  environmental matters relating to the
                  Assets.

              

      

       

      The
        Purchaser acknowledges that it has made its own independent investigation,
        analysis, evaluation, verification and inspection of the Vendors’ interests in
        the Assets and the state and condition thereof and that it has relied solely
        on
        such investigation, analysis, evaluation, verification and inspection as
        to its
        assessment of the condition (environmental or otherwise), quantum and value
        of
        the Assets.

       

      
        
          
          

        

        
          -
            19 -

          
            

          

        

        
          
          

        

      

      
        	
                7.00

              	
                THIRD
                  PARTY RIGHTS AND
                  CONSENTS

              

      

       

      
        	
                7.01

              	
                Preferential
                  Rights Of Purchase and
                  Consents

              

      

       

      
        	
                 

              	
                (a)

              	
                If
                  any of the Assets are subject to a preferential right of purchase
                  or
                  similar restriction, or if the disposition herein requires the
                  consent of
                  any third party, the relevant Vendor shall promptly serve all notices
                  as
                  are required under such preferential purchase or consent
                  provision.  Each such notice shall include a request for a
                  waiver of any preferential or similar right to purchase any of
                  the Assets
                  and for the granting of any consent that may be
                  required.

              

      

       

      
        	
                 

              	
                (b)

              	
                The
                  Purchaser, as soon as possible after signing this Agreement, acting
                  reasonably and in good faith, shall provide to the relevant Vendor
                  the
                  value placed by the Purchaser on any of the Assets with respect
                  to which
                  the such Vendor is required to specify a value in a notice served
                  pursuant
                  to this Clause.  The Vendors shall not be obligated to use such
                  a value where, in their opinion, acting reasonably, the value is
                  unreasonable.  If the Vendor makes such a determination, the
                  Vendors and Purchaser shall consult with each other with respect
                  to the
                  value to be included in the subject
                  notice.

              

      

       

      
        	
                 

              	
                (c)

              	
                If
                  the holder of any preferential right to purchase any of the Assets
                  exercises such right, the Purchaser may elect not to proceed with
                  the
                  transaction contemplated herein.

              

      

       

      
        	
                8.00

              	
                PURCHASER'S
                  INSPECTION OF ASSETS

              

      

       

      
        	
                8.01

              	
                Vendors
                  to Provide Access

              

      

       

      
        	
                 

              	
                (a)

              	
                The
                  Vendors shall, subject to the Regulations and all contractual and
                  fiduciary obligations and limits, at the Vendors’ office during normal
                  business hours, provide the Purchaser and its nominees reasonable
                  access
                  to the Vendors’ records, files and documents directly relating to the
                  Assets, for the purpose of the Purchaser's review of Vendor's title
                  thereto, including, without limitation, the Leases and applicable
                  operating agreements, unit agreements, overriding royalty agreements
                  and
                  production sale contracts; and

              

      

       

      
        	
                 

              	
                (b)

              	
                Prior
                  to signing this Agreement, Purchaser and its nominees acknowledge
                  they
                  have been provided by Vendors with a reasonable opportunity to
                  inspect the
                  field Assets at Purchaser's sole cost, risk and expense, insofar
                  as the
                  Vendors could  reasonably provide access to such field
                  Assets.

              

      

       

      
        	
                9.00

              	
                ARBITRATION

              

      

       

      
        	
                9.01

              	
                Reference
                  to Arbitration

              

      

       

      
        	
                 

              	
                (a)

              	
                Insofar
                  as the Parties are unable to agree on any matter which expressly
                  may be
                  referred to arbitration hereunder, either Party may serve the other
                  Party
                  written notice that it wishes such matter referred to
                  arbitration.

              

      

       

      
        
          
          

        

        
          -
            20 -

          
            

          

        

        
          
          

        

      

      
        	
                 

              	
                (b)

              	
                The
                  Parties shall meet within seven (7) days of the receipt of a notice
                  issued
                  pursuant to Subclause 9.01(a), to attempt to agree on a single
                  arbitrator qualified by experience, education and training, to
                  determine
                  such matter.  If the Parties are unable to agree on the
                  selection of the arbitrator, the Party which issued such notice
                  shall
                  forthwith make application to a judge of the Court of Queen's Bench
                  of the
                  Province of Alberta pursuant to the Arbitration Act of the Province
                  of
                  Alberta (“Arbitration Act”) for the appointment of a single arbitrator,
                  and failing such action on the part of the Party which issued such
                  notice,
                  the other Party may make such
                  application.

              

      

       

      
        	
                9.02

              	
                Proceedings

              

      

       

      
        	
                 

              	
                (a)

              	
                The
                  arbitrator selected pursuant to Clause 9.01(a) shall proceed as soon
                  as is practicable to hear and determine the matter in dispute,
                  and shall
                  be directed to provide a written decision respecting such matter
                  within
                  forty-five (45) days of appointment.  The Parties shall provide
                  such assistance and information as may be reasonably necessary
                  to enable
                  the arbitrator to determine such
                  matter.

              

      

       

      
        	
                 

              	
                (b)

              	
                Except
                  to the extent modified in this Article, the arbitrator shall conduct
                  any
                  arbitration hereunder pursuant to the provisions of the Arbitration
                  Act.

              

      

       

      
        	
                10.00

              	
                CONDITIONS
                  TO CLOSING

              

      

       

      
        	
                10.01

              	
                Required
                  Consents

              

      

       

      
        	
                 

              	
                (a)

              	
                It
                  is a condition precedent to Closing for the benefit of both the
                  Vendors
                  and the Purchaser that any and all approvals required under the
                  Regulations and any and all consents of third parties required
                  pursuant to
                  Article 7.00 to permit the transactions to be completed shall have
                  been
                  obtained or that such approval or consent requirement shall have
                  been
                  waived in writing or otherwise lapsed.  Each of the Parties
                  shall use all reasonable efforts to obtain any such
                  consents.

              

      

       

      
        	
                 

              	
                (b)

              	
                The
                  Parties shall co-operate in seeking, any approvals or consents
                  required
                  from regulatory or governmental authorities, including without
                  limitation,
                  well licences, facilities, pipelines, mineral licences, permits
                  or Leases
                  which are to be obtained after
                  Closing.

              

      

       

      
        	
                10.02

              	
                Conditions
                  for Benefit of
                  Purchaser

              

      

       

      The
        obligation of the Purchaser to complete the purchase hereunder is subject
        to the
        following conditions precedent:

       

      
        	
                 

              	
                (a)

              	
                No
                  Substantial Damage:  There shall have been no damage to or
                  alteration of any of the Assets between the Effective Time and
                  the Closing
                  Date which, in the Purchaser's reasonable opinion, would materially
                  and
                  adversely affect the value of the Assets, except and to the extent
                  approved in writing by the Purchaser, provided that a change in
                  the prices
                  at which Petroleum Substances may be sold in no event shall be
                  regarded as
                  material damage to or an alteration of the
                  Assets;

              

      

       

      
        	
                 

              	
                (b)

              	
                Availability
                  of Documents:  The Vendors shall have provided the nominees
                  of the Purchaser with reasonable access to the Vendors’ records and
                  documents pertaining to the Assets, in order to confirm the Vendors’ title
                  to the Assets;

              

      

       

      
        
          
          

        

        
          -
            21 -

          
            

          

        

        
          
          

        

      

      
        	
                 

              	
                (c)

              	
                Material
                  Compliance by Vendors:  The Vendors shall have performed or
                  complied in all material respects with each of the terms, covenants
                  and
                  conditions of this Agreement to be performed or complied with by
                  the
                  Vendors at or prior to the Closing
                  Date;

              

      

       

      
        	
                 

              	
                (d)

              	
                Representations
                  are Correct:  The representations and warranties of each of
                  the Vendors contained in Clauses 6.01 and 6.02
                  is true and correct in all material respects as of the Closing
                  Date;

              

      

       

      
        	
                 

              	
                (e)

              	
                Delivery
                  of Conveyance Documents:  The Vendors shall have delivered
                  the following to the Purchaser:

              

      

       

      
        	
                 

              	
                (i)

              	
                conveyances,
                  in the forms attached as Schedule  ”B” and “C”, which have been
                  executed by the Vendors;

              

      

       

      
        	
                 

              	
                (ii)

              	
                the
                  Specific Conveyances, all specific assignments, registerable transfers,
                  novation agreements, notices of assignment, trust agreements and
                  other
                  instruments required to convey the Vendors’ interest in the Assets to the
                  Purchaser, unless and to the extent that the Purchaser allows the
                  Vendors
                  to deliver such documents to the Purchaser at a later date, provided
                  that
                  such documents shall not require the Vendors to assume or incur
                  any
                  obligation, or to provide any representation or warranty, beyond
                  that
                  contained in this Agreement;

              

      

       

      
        	
                 

              	
                (iii)

              	
                copies
                  of all consents to disposition and waivers of preferential rights
                  of
                  purchase, rights of first refusal or any similar restriction obtained
                  by
                  the Vendors with respect to the sale of the Assets to the
                  Purchaser;

              

      

       

      
        	
                 

              	
                (iv)

              	
                originals
                  of the Vendors’ records (or, if unavailable, photocopies of records),
                  files, reports and data pertaining to the Assets, insofar as such
                  delivery
                  is permitted and required hereunder, unless and to the extent that
                  the
                  Purchaser agrees to allow the Vendors to deliver such records,
                  files,
                  reports and data at a later date;
                  and

              

      

       

      
        	
                 

              	
                (v)

              	
                such
                  other documents as may be specifically required hereunder or as
                  may be
                  reasonably requested by the Purchaser upon reasonable notice to
                  the
                  Vendors;

              

      

       

      
        	
                 

              	
                (f)

              	
                Title:  Purchaser
                  shall have received opinions, satisfactory to it, as to the title
                  to the
                  Assets;

              

      

       

      
        	
                 

              	
                (g)

              	
                Royalties:  CIMA
                  shall have rectified all filing and description errors in connection
                  with
                  any interest of any nature affecting the CIMA Assets to the satisfaction
                  of the Purchaser and at the sole cost of CIMA;
                  and

              

      

       

      
        	
                 

              	
                (h)

              	
                Legal
                  Opinion:  Legal opinions shall have been provided to the
                  Purchaser, satisfactory to it and its solicitor, respecting the
                  enforceability of this Agreement and the General Conveyance against
                  Thunder and the validity of the Special Shareholder Meeting held
                  by
                  Thunder to approve the transaction described in this
                  Agreement.

              

      

       

      
        	
                10.03

              	
                Conditions
                  for Benefit of
                  Vendors

              

      

       

      The
        obligation of the Vendors to complete the sale hereunder is subject to the
        following conditions precedent:

       

      
        
          
          

        

        
          -
            22 -

          
            

          

        

        
          
          

        

      

      
        	
                 

              	
                (a)

              	
                Material
                  Compliance by Purchaser: The Purchaser shall have performed or
                  complied in all material respects with each of the terms, covenants
                  and
                  conditions of this Agreement to be performed or complied with by
                  the
                  Purchaser at or prior to the Closing
                  Date;

              

      

       

      
        	
                 

              	
                (b)

              	
                Payment
                  of Purchase Price: The Purchaser shall have tendered to the Vendor the
                  Purchase Price and the applicable GST in the manner provided for
                  in
                  Clause Error!
                  Reference source not found., subject
                  to any adjustments
                  provided for in Article 4 and any alteration expressly provided for
                  herein;

              

      

       

      
        	
                 

              	
                (c)

              	
                Representations
                  are Correct: Each of the representations and warranties of the
                  Purchaser contained in Clause 6.03
                  is true and correct in all material respects as of the Closing
                  Date;
                  and

              

      

       

      
        	
                 

              	
                (d)

              	
                Delivery
                  of Documents:  The Purchaser shall have executed and
                  delivered to the Vendors one copy of the conveyance in the form
                  attached
                  as Schedules ”B” and “C” and such other documents as may be
                  specifically required hereunder.

              

      

       

      
        	
                10.04

              	
                Waiver
                  of Conditions

              

      

       

      The
        conditions in Clauses 10.02 and 10.03 are for the sole benefit of the
        Purchaser and the Vendors respectively.  The Party for the benefit of
        which such conditions have been included may waive any of them, in whole
        or in
        part, by written notice to the other Party, without prejudice to any of the
        rights of the Party waiving such condition, including, without limitation,
        reliance on or enforcement of the representations, warranties or covenants
        which
        are preserved and pertain to conditions similar to the condition so
        waived.  However, the Purchaser may not waive the existence and
        operation of any preferential right of a third party to purchaser any of
        the
        Assets or, without the concurrence of the Vendors, any required consent of
        a
        third party to the Vendor’s disposition of any of the Assets.

       

      
        	
                10.05

              	
                Failure
                  to Satisfy Conditions

              

      

       

      In
        the
        event any of the conditions in Clauses 10.02 or 10.03 have not been
        satisfied at or before the Closing Date and such condition has not been waived
        by the Party for the benefit of which such condition has been included, such
        Party may terminate this Agreement by written notice to the other Party
        specifying the reason for termination, provided that except as otherwise
        provided in this Agreement, any such termination shall not affect any rights
        or
        claims such Party may have against any other Party for breach of such other
        Party's representations or obligations under this Agreement.  A Party
        may not terminate this Agreement in such manner after Closing, and its remedies
        thereafter, if any, with respect to the failure to satisfy such conditions
        shall
        be limited to damages.  A termination under this provision does not
        affect the rights of the Parties with respect to the deposit as provided
        in
        section 2.04.

       

      
        	
                11.00

              	
                CONFIDENTIALITY

              

      

       

      
        	
                11.01

              	
                Obligation
                  to Maintain Information
                  Confidential

              

      

       

      Information
        respecting the Assets shall be retained in confidence and used only for the
        purposes of this acquisition, provided that upon Closing, the Purchaser's
        rights
        to use or disclose such information shall be subject only to any operating,
        unit
        or other agreements that may apply thereto.  Any additional
        information obtained as a result of such access which does not relate to
        the
        Assets shall continue to be treated as confidential and shall not be used
        by the
        Purchaser without the prior written consent of the Vendors.  After
        Closing, the Vendors agree that all information respecting the Assets shall
        be
        retained in confidence.  However, the restrictions on disclosure and
        use of information in this Agreement shall not apply to information to the
        extent it:

       

      
        
          
          

        

        
          -
            23 -

          
            

          

        

        
          
          

        

      

      
        	
                 

              	
                (a)

              	
                is
                  or becomes publicly available through no act or omission of the
                  Vendors or
                  Purchaser, as the case may be, or its respective consultants or
                  advisors;

              

      

       

      
        	
                 

              	
                (b)

              	
                is
                  obtained lawfully from a third party, where the Vendors or Purchaser,
                  as
                  the case may be, has made reasonable efforts to determine that
                  such third
                  party is not a party to or bound by any confidentiality agreement
                  with the
                  Vendors; or

              

      

       

      
        	
                 

              	
                (c)

              	
                in
                  the case of the Purchaser, is already in the Purchaser's possession
                  at the
                  time of disclosure, without restriction on
                  disclosure.

              

      

       

      However,
        specific items of information shall not be considered to be in the public
        domain
        merely because more general information respecting the Assets is in the public
        domain.

       

      
        	
                11.02

              	
                Consultants
                  and Advisors Bound

              

      

       

      If
        the
        Purchaser employs consultants, advisors or agents to assist in its review
        of the
        Assets pursuant to Article 8.00 the Purchaser shall be responsible to the
        Vendors for ensuring that such consultants, advisors and agents comply with
        the
        restrictions on the use and disclosure of information set forth in
        Clause 11.01.

       

      
        	
                12.00

              	
                INDEMNITIES
                  FOR REPRESENTATIONS AND
                  WARRANTIES

              

      

       

      
        	
                12.01

              	
                Vendor’s
                  Indemnities for Representations and
                  Warranties

              

      

       

      From
        and
        after Closing, the Vendors shall be liable to the Purchaser and be responsible
        for and shall, in addition, indemnify, release and save the Purchaser harmless
        from and against all losses, costs, claims, damages, expenses and liabilities
        which the Purchaser may suffer, sustain, pay or incur resulting from, arising
        out of, attributable to or connected with any breach of any representation
        or
        warranty made by the Vendors under Clauses 6.01 or 6.02.

       

      
        	
                12.02

              	
                Purchaser’s
                  Indemnities for Representations and
                  Warranties

              

      

       

      From
        and
        after Closing, the Purchaser shall be liable to the Vendors and be responsible
        for and shall, in addition, indemnify, release and save the Vendors harmless
        from and against, all losses, costs, claims, damages, expenses and liabilities
        which the Vendors may suffer, sustain, pay or incur resulting from, arising
        out
        of, attributable to or connected with any breach of any representation or
        warranty made by the Purchaser under Clause 6.03.

       

      
        	
                12.03

              	
                Time
                  Limitation

              

      

       

      No
        claim
        under this Article 12.00 shall be made or be enforceable by a Party unless
        written notice of such claim, with reasonable particulars, is given by such
        Party to the Party against whom the claim is made within a period of two
        (2)
        years from Closing.

       

      
        	
                13.00

              	
                PURCHASER’S
                  INDEMNITIES

              

      

       

      
        	
                13.01

              	
                Purchaser
                  General Indemnity

              

      

       

      Provided
        that Closing has occurred, the Purchaser shall:

       

      
        
          
          

        

        
          -
            24 -

          
            

          

        

        
          
          

        

      

      
        	
                 

              	
                (a)

              	
                be
                  liable to the Vendors for all losses, costs, damages and expenses
                  whatsoever which the Vendors may suffer, sustain, pay or incur;
                  and

              

      

       

      
        	
                 

              	
                (b)

              	
                indemnify,
                  defend and save the Vendors and their directors, officers, servants,
                  agents, consultants and employees harmless from and against all
                  claims,
                  liabilities, actions, proceedings, demands, losses, costs, damages
                  and
                  expenses whatsoever which may be brought against or suffered by
                  the
                  Vendors, their directors, officers, servants, agents, consultants
                  or
                  employees or which they may sustain, pay or
                  incur;

              

      

       

      as
        a result of any matter or thing arising out of, resulting from, attributable
        to
        or connected with the Assets and occurring or accruing subsequent to the
        Effective Time, except any losses, costs, damages, expense, claims, liabilities,
        actions, proceedings and demands to the extent that the same are caused by
        the
        gross negligence or wilful misconduct of the Vendors, their directors, officers,
        servants, agents, consultants, employees or assigns, and excluding any claims,
        liability, actions, proceedings or demands brought or filed after the Effective
        Time and pertaining to events that occurred before the Effective
        Time.  The responsibility prescribed by this Clause, however, does not
        provide either an extension of any representation or warranty contained in
        Clause 6.03 or an additional remedy for the Purchaser's breach of such a
        representation or warranty.  No claim may be brought pursuant to this
        Clause 13.01 unless written notification thereof is given to Vendors within
        two
        (2) years following the Closing.

       

      
        	
                13.02

              	
                Vendor
                  General Indemnity

              

      

       

      Provided
        that Closing has occurred, the Vendors shall, jointly and
        severally:

       

      
        	
                 

              	
                (a)

              	
                be
                  liable to the Purchaser for all losses, costs, damages and expenses
                  whatsoever which the Purchaser may suffer, sustain, pay or incur;
                  and

              

      

       

      
        	
                 

              	
                (b)

              	
                indemnify,
                  defend and save the Purchaser and its directors, officers, servants,
                  agents, consultants, employees or assigns harmless from and against
                  all
                  claims, liabilities, actions, proceedings, demands, losses, costs,
                  damages
                  and expenses whatsoever which may be brought against or suffered
                  by the
                  Purchaser, its directors, officers, servants, agents, consultants,
                  employees or assigns or which they may sustain, pay or
                  incur;

              

      

       

      as
        a
        result of any matter or thing arising out of, resulting from, attributable
        to or
        connected with the Assets and occurring or accruing on or before the Effective
        Time, except any losses, costs, damages, expense, claims, liabilities, actions,
        proceedings and demands to the extent that the same are caused by the gross
        negligence or wilful misconduct of the Purchaser, its directors, officers,
        servants, agents, consultants, employees or assigns.  The
        responsibility prescribed by this Clause, however, does not provide either
        an
        extension of any representation or warranty contained in Clauses 6.01 or
6.02
        or an additional remedy for the Vendors’ breach of such a representation or
        warranty.  No claim may be brought pursuant to this Clause 13.02
        unless written notification thereof is given to Vendors within two (2) years
        following the Closing.

       

      
        	
                13.03

              	
                Environmental
                  Indemnity

              

      

       

      The
        Purchaser acknowledges that with respect to the environmental condition of
        the
        Assets, it is acquiring the Assets on an “as is” basis, subject only to the
        representations and warranties set forth in Clause 6.01.

       

      
        
          
          

        

        
          -
            25 -

          
            

          

        

        
          
          

        

      

      The
        Purchaser acknowledges that it is familiar with the condition of the Assets,
        including the past and present use of the Lands and the Tangibles, that the
        Vendor has provided the Purchaser with a reasonable opportunity to inspect
        the
        Assets at the sole cost, risk and expense of the Purchaser (insofar as the
        Vendor could reasonably provide access) and the Purchaser is not relying
        upon
        any representation or warranty of the Vendor as to the condition, environmental
        or otherwise, of the Assets, except as is specifically made pursuant to
        Clauses 6.01 and 6.02.

       

      Provided
        that Closing has occurred, the Purchaser shall:

       

      
        	
                 

              	
                (a)

              	
                be
                  solely liable and responsible for any and all losses, costs, damages
                  and
                  expenses which the Vendors may suffer, sustain, pay or incur;
                  and

              

      

       

      
        	
                 

              	
                (b)

              	
                indemnify,
                  defend and save the Vendors and each of its directors, officers,
                  servants,
                  agents, consultants and employees harmless from any and all claims,
                  liabilities, actions, proceedings, demands, losses, costs, damages
                  and
                  expenses whatsoever which may be brought against or suffered by
                  the
                  Vendors, their directors, officers, servants, agents, consultants
                  or
                  employees or which they may sustain, pay or
                  incur;

              

      

       

      as
        a
        direct result of any environmental liabilities regardless of the date from
        which
        they may have accrued, including without limitation, the abandonment of all
        Wells and the reclamation of the surface lands pertaining to the Lands, except
        in each case for environmental liabilities and liabilities to Purchaser which
        constitute or result from a breach of the representations and warranties
        made by
        the Vendors in Clauses 6.01 and 6.02.

       

      This
        liability and indemnity, pursuant to section 13.03, shall apply without
        limit and without regard to cause or causes, including without limitation,
        the
        negligence of the Parties or any other person.

       

      Notwithstanding
        any other provision of this Agreement, Purchaser shall have no responsibility
        or
        liability for the abandonment of wells which are not included in the
        Wells.

       

      
        	
                13.04

              	
                No
                  Merger of Legal
                  Responsibilities

              

      

       

      The
        representations, warranties, liabilities and indemnities created in this
        Agreement shall be deemed to apply to, and shall not merge in, all assignments,
        transfers, conveyances, novations, trust agreements and other documents
        conveying any of the Assets from the Vendors to the Purchaser, notwithstanding
        the terms of such assignments, transfers, conveyances, novations and other
        documents, the Regulations or any rule of law or equity to the contrary,
        and all
        such rules are hereby waived.

       

      
        	
                14.00

              	
                WAIVER

              

      

       

      
        	
                14.01

              	
                Waiver
                  Must be in Writing

              

      

       

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

       

      
        
          
          

        

        
          -
            26 -

          
            

          

        

        
          
          

        

      

      
        	
                15.00

              	
                ASSIGNMENT

              

      

       

      
        	
                15.01

              	
                Assignments
                  Before Closing

              

      

       

      Prior
        to
        Closing, neither Party may assign its interest in or under this Agreement
        or to
        the Assets without the prior written consent of the other Party, except as
        may
        be required by the Vendor to comply with its obligations respecting any
        preferential rights, as provided in Article 7.00.

       

      
        	
                16.00

              	
                NOTICE

              

      

       

      
        	
                16.01

              	
                Service
                  of Notice

              

      

       

      Notwithstanding
        anything to the contrary contained herein, all notices required or permitted
        hereunder shall be in writing.  Any notice to be given hereunder shall
        be deemed to be served properly if served in any of the following
        modes:

       

      
        	
                 

              	
                (a)

              	
                personally,
                  by delivering the notice to the Party on which it is to be served
                  at that
                  Party's address for service.  Personally served notices shall be
                  deemed to be received by the addressee when actually delivered
                  as
                  aforesaid, provided that such delivery shall be during normal business
                  hours on any Business Day in Alberta.  If a notice is not
                  delivered on such a day or is delivered after the addressee's normal
                  business hours, such notice shall be deemed to have been received
                  by such
                  Party at the commencement of the addressee's first Business Day
                  next
                  following the time of the delivery;
                  or

              

      

       

      
        	
                 

              	
                (b)

              	
                by
                  fax (or by any other like method by which a written message may
                  be sent)
                  directed to the Party on which it is to be served at that Party's
                  address
                  for service.  A notice so served shall be deemed to be received
                  by the addressee when actually received by it, if received within
                  normal
                  business hours on any Business Day in Alberta or at the commencement
                  of
                  the next ensuing Business Day following transmission if such notice
                  is not
                  received during such normal business
                  hours.

              

      

       

      
        	
                16.02

              	
                Addresses
                  for Notices

              

      

       

      The
        address for service of notices hereunder of each of the Parties shall be
        as
        follows:

      

        
          	
                   

                	
                  Vendors:

                	
                  Thunder
                    River Energy Inc.

                

        

        P.O.
          Box
          636, Station M

        Calgary,
          Alberta

        T2J
          2J3

         

        
          	
                   

                	
                  Attention:

                	
                  President

                

        

        

         

        
          	
                   

                	
                  With
                    a copy to:

                	
                  McLeod
                    & Company LLP

                

        

        Gulf
          Canada Square, Suite 850

        401
          -
          9th Avenue
          S.W.

        Calgary,
          AB  T2P 3C5

         

        
          	
                   

                	
                  Attention:

                	
                  R.
                    Gordon Cormie

                

        

      

      

       

      
        
          
          

        

        
          -
            27 -

          
            

          

        

        
          
          

        

      

      

        
          	
                   

                	
                  Purchaser:

                	
                  Kodiak
                    Energy, Inc.

                

        

        Suite
          460, 734 7 Ave. SW

        Calgary,
          Alberta

        T2P
          3P8

         

        Attention:
          President

        Fax:
          (403) 513-2670

         

      

      
        	
                16.03

              	
                Right
                  to Change Address

              

      

       

      A
        Party
        may change its address for service by notice to the other Party, and such
        changed address for service thereafter shall be effective for all purposes
        of
        this Agreement.

       

      
        	
                17.00

              	
                POST
                  CLOSING  ADMINISTRATION

              

      

       

      
        	
                17.01

              	
                Registration
                  of Documents

              

      

       

      The
        Purchaser shall register promptly after Closing all Specific Conveyances
        and any
        other documents which require registration.  The Purchaser shall be
        responsible for registration of any document contemplated in this section
        and
        any fees related to such registrations.  After Closing, Purchaser
        shall bear all costs of preparing and registering any further assurances
        required to convey title to the Assets.

       

      
        	
                17.02

              	
                Coordination
                  of Administrative
                  Matters

              

      

       

      
        	
                 

              	
                (a)

              	
                After
                  Closing, until the Purchaser becomes the recognized holder of the
                  Assets
                  in the place of the Vendors, the Vendors shall, to the extent that
                  the
                  Purchaser is not recognized:

              

      

       

      
        	
                 

              	
                (i)

              	
                receive
                  and hold in trust all proceeds, benefits and advantages accruing
                  from the
                  Assets for the benefit, use and ownership of the Purchaser, with
                  entitlement to commingle any of them with its own or any other
                  assets;

              

      

       

      
        	
                 

              	
                (ii)

              	
                in
                  a timely manner deliver to the Purchaser all revenues, proceeds
                  and other
                  benefits received by the Vendors for the
                  Assets;

              

      

       

      
        	
                 

              	
                (iii)

              	
                in
                  a timely manner deliver to the Purchaser all third party notices
                  and
                  communications received by the Vendors for the
                  Assets;

              

      

       

      
        	
                 

              	
                (iv)

              	
                in
                  a timely manner deliver to third parties all notices and communications
                  as
                  the Purchaser may reasonably request and all monies and other items
                  the
                  Purchaser reasonably provides for the Assets;
                  and

              

      

       

      
        	
                 

              	
                (v)

              	
                as
                  agent of the Purchaser, do and perform all acts and things, and
                  execute
                  and deliver all agreements, notices and other documents and instruments,
                  that the Purchaser reasonably requests for the purpose of facilitating
                  the
                  exercise of rights incidental to the ownership of the
                  Assets.

              

      

       

      
        
          
          

        

        
          -
            28 -

          
            

          

        

        
          
          

        

      

      
        	
                 

              	
                (b)

              	
                The
                  Vendors shall not be liable to the Purchaser for any loss or damage
                  suffered by the Purchaser in connection with the arrangements established
                  by the Purchaser in connection with the arrangement established
                  by
                  Subclause 17.02(a),
                  except to the extent that the loss or damage is caused
                  by
                  the Vendors’ gross negligence or its wilful
                  misconduct.

              

      

       

      
        	
                17.03

              	
                Vendors’
                  Access to Documents

              

      

       

      The
        Vendors may retain or subsequently obtain from the Purchaser copies or
        photocopies of any of the documents comprised in Miscellaneous Interests
        necessary to enable them to comply with any Regulations or the requirements
        of
        any authority or to conduct audits relating to the period prior to the Effective
        Time.

       

      
        	
                18.00

              	
                MISCELLANEOUS
                  PROVISIONS

              

      

       

      
        	
                18.01

              	
                Further
                  Assurances

              

      

       

      At
        the
        Closing Date and thereafter as may be necessary, the Parties shall execute,
        acknowledge and deliver such instruments and take such other actions as may
        be
        reasonably necessary to fulfil their respective obligations under this
        Agreement.  The Vendors shall cooperate with the Purchaser as
        reasonably required to secure execution by third parties of the documents
        referred to in Subclause 10.02(e).

       

      
        	
                18.02

              	
                Governing
                  Law

              

      

       

      This
        Agreement shall be subject to and be interpreted, construed and enforced
        in
        accordance with the laws in effect in the Province of Alberta and, where
        applicable in relation to CIMA Assets, the laws of the State of New
        Mexico.

       

      
        	
                18.03

              	
                Time

              

      

       

      Time
        shall be of the essence in this Agreement.

       

      
        	
                18.04

              	
                No
                  Amendment Except in
                  Writing

              

      

       

      This
        Agreement may be amended only by written instrument executed by the Vendors
        and
        the Purchaser.

       

      
        	
                18.05

              	
                Consequences
                  of Termination

              

      

       

      If
        this
        Agreement is terminated in accordance with its terms prior to Closing, then
        except for the provisions of Article 11.00 and the covenants, warranties,
        representations or other obligations breached prior to the time at which
        such
        termination occurs, the Parties shall be released from all of their obligations
        under this Agreement.  If this Agreement is so terminated, the
        Purchaser shall promptly return to the Vendors all materials delivered to
        the
        Purchaser by the Vendors hereunder, together with all copies of them that
        may
        have been made by or for the Purchaser and the Vendors shall return the
        deposit.

       

      
        
          
          

        

        
          -
            29 -

          
            

          

        

        
          
          

        

      

      
        	
                18.06

              	
                Supersedes
                  Earlier Agreements

              

      

       

      This
        Agreement supersedes all other agreements between the Parties with respect
        to
        the Assets and expresses the entire agreement of the Parties with respect
        to the
        transactions contained herein and any prior agreements between the Parties
        regarding the transaction contemplated herein are hereby
        terminated.

       

      
        	
                18.07

              	
                Enurement

              

      

       

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

       

      IN
        WITNESS WHEREOF the Parties have duly executed this
        Agreement.

      

      

      
        	 	
                THUNDER
                  RIVER ENERGY INC.

              
	 	 
	 	
                Per:  ___________________________________

              
	 	 
	 	
                Per:  ___________________________________

              
	 	 
	 	 
	 	 
	 	
                CIMA
                  HOLDINGS INC.

              
	 	 
	 	
                Per:  ___________________________________

              
	 	 
	 	
                Per:  ___________________________________

              
	 	 
	 	 
	 	 
	 	
                KODIAK
                  ENERGY, INC.

              
	 	 
	 	
                Per:  ___________________________________

              
	 	 
	 	
                Per:  ___________________________________

              

      

      

       

       

       

       

       

       

      
        
          
          

        

        
          -
            30 -

          
            

          

        

        
          
          

        

      

      SCHEDULE
        “A”

       

      
        

      

      
      

       

      Lands,
        Leases and Encumbrances (including penalties and preferential
        rights)

       

      

       

      

       

      

       

      

       

      

       

      

       

      

       

      

       

      

       

      

       

       

       

       

      

       

      
        
          
          

        

        
          
          

          
            

          

        

        
          
          

        

      

      SCHEDULE
        “A”

       

      
        

      

       

      PART
        II

       

      Production
        Sales Contracts

      
         

        

         

        

         

        

         

        

         

        

         

        

         

        

         

        

         

        

         

        

         

         

         

         

        

         

      
        
          
          

        

        
          
          

          
            

          

        

        
          
          

        

      

      SCHEDULE
        “A”

       

      
        
          

        

      

       

      PART
        III

       

      Facilities,
        Gas Gathering Lines, Pipelines, Facility, Processing, Treating, Transportation
        and Contract Operating Agreements

      
         

        

         

        

         

        

         

        

         

        

         

        

         

        

         

        

         

        

         

        

         

         

         

         

        

         

      
        
          
          

        

        
          
          

          
            

          

        

        
          
          

        

      

      SCHEDULE
        “A”

       

      
        
          

        

      

       

      PART
        IV

       

      N/A

      
         

        

         

        

         

        

         

        

         

        

         

        

         

        

         

        

         

        

         

        

         

         

         

         

        

         

        
          
            
            

          

          
            
            

            
              

            

          

          
            
            

          

        

      

       

      SCHEDULE
        “A”

       
        
          

        

      

       

      PART
        V

       

      Authorizations
        for Expenditure

       

      None

      
         

        

         

        

         

        

         

        

         

        

         

        

         

        

         

        

         

        

         

        

         

         

         

         

        

         

      
        
          
          

        

        
          
          

          
            

          

        

        
          
          

        

      

      SCHEDULE
        “A”

       

      
        
          

        

      

       

      PART
        VI

       

      Areas
        of Mutual Interest

       

      None

      
         

        

         

        

         

        

         

        

         

        

         

        

         

        

         

        

         

        

         

        

         

         

         

         

        

         

        
          
            
            

          

          
            
            

            
              

            

          

          
            
            

          

        

      

       

      SCHEDULE
        “A”

       

      
        
          

        

      

       

      PART
        VII

       

      Default
        Notices, Claims, Lawsuits & Offset Drilling Notice

      
         

        

         

        

         

        

         

        

         

        

         

        

         

        

         

        

         

        

         

        

         

         

         

         

        

         

        
          
            
            

          

          
            
            

            
              

            

          

          
            
            

          

        

      

       

      SCHEDULE
        “B”

       

      GENERAL
        CONVEYANCE

       

      This
        Conveyance made this 28th day of
        September,
        2007.

       

      BETWEEN:

       

      THUNDER
        RIVER ENERGY INC., a body corporate, registered
        to carry on business in the Province of Alberta and having an office in the
        City
        of Calgary, in the Province of Alberta (hereinafter called the
“Vendor”)

       

      -
        and
        -

       

      KODIAK
        ENERGY, INC., a body corporate having an office in the City of Calgary,
        in the Province of Alberta (hereinafter called the
“Purchaser”)

       

      WHEREAS
        the Vendor has agreed to sell and convey the Vendor's entire right, title,
        estate and interest in the Assets to the Purchaser and the Purchaser has
        agreed
        to purchase and accept all of the Vendor's right, title, estate and interest
        in
        and to the Assets;

       

      THE
        PARTIES AGREE AS FOLLOWS:

       

      
        	
                1.

              	
                Definitions

              

      

       

      In
        this
        Conveyance, including the recitals, “Agreement” means the Agreement of Purchase
        and Sale dated the 28th day of
        September,
        2007, between the Vendor, CIMA Holdings Inc. and the Purchaser.  In
        addition, the definitions provided for in the Agreement are adopted in this
        Conveyance.

       

      
        	
                2.

              	
                Conveyance

              

      

       

      The
        Vendor, for the consideration provided for in the Agreement, the receipt
        and
        sufficiency of which is acknowledged by the Vendor, sells, assigns, transfers
        and conveys the Vendor's interest in the Assets to the Purchaser, and the
        Purchaser purchases and accepts such interest from the Vendor, TO HAVE AND
        TO
        HOLD the same absolutely, subject to the terms of the Agreement, the Permitted
        Encumbrances and compliance with the terms of the Leases.

       

      
        	
                3.

              	
                Effective
                  Time

              

      

       

      This
        Conveyance is effective as of the Effective Time.

       

      
        	
                4.

              	
                Subordinate
                  Document

              

      

       

      This
        Conveyance is executed and delivered by the Parties pursuant to the Agreement
        for the purposes of the provisions of the Agreement, and the terms hereof
        shall
        be read in conjunction with the terms of the Agreement.  The Agreement
        shall prevail if there is a conflict between the provisions of the Agreement
        and
        this Conveyance.

       

      
        
          
          

        

        
          
          

          
            

          

        

        
          
          

        

      

      
        	
                5.

              	
                Enurement

              

      

       

      This
        Conveyance enures to the benefit of and is binding upon the Parties and their
        respective successors and permitted assigns.

       

      
        	
                6.

              	
                Further
                  Assurances

              

      

       

      Each
        Party shall, after the date of this Conveyance, at the request of the other
        Party and without further consideration, do all further acts and execute
        and
        deliver all further documents which are reasonably required to perform and
        carry
        out the terms of this Conveyance.

       

      IN
        WITNESS WHEREOF the Parties have duly executed this Conveyance.

       

      

      
        	 	
                THUNDER
                  RIVER ENERGY INC.

              
	 	 
	 	
                Per:  __________________________________

              
	 	 
	 	
                Per:  __________________________________

              
	 	 
	 	 
	 	 
	 	
                KODIAK
                  ENERGY, INC.

              
	 	 
	 	
                Per:  __________________________________

              
	 	 
	 	
                Per:  __________________________________

              

      

      

       

      

       

      

       

      

       

      

       

      

       

      

       

      

       

      
        
          
          

        

        
          2

          
            

          

        

        
          
          

        

      

      SCHEDULE
        “C”

       

      GENERAL
        CONVEYANCE

       

      This
        Conveyance made this 28th day of
        September,
        2007.

       

      BETWEEN:

       

      CIMA
        HOLDINGS INC., a body corporate, incorporated in
        the State of New Mexico, United States of America (hereinafter called the
        “Vendor”)

       

      -
        and
        -

       

      KODIAK
        ENERGY, INC., a body corporate having an office in the City of Calgary,
        in the Province of Alberta (hereinafter called the
“Purchaser”)

       

      WHEREAS
        the Vendor has agreed to sell and convey the Vendor's entire right, title,
        estate and interest in the Assets to the Purchaser and the Purchaser has
        agreed
        to purchase and accept all of the Vendor's right, title, estate and interest
        in
        and to the Assets;

       

      THE
        PARTIES AGREE AS FOLLOWS:

       

      
        	
                7.

              	
                Definitions

              

      

       

      In
        this
        Conveyance, including the recitals, “Agreement” means the Agreement of Purchase
        and Sale dated the 28th day of
        September
        2007, between the Vendor, Thunder River Energy Inc. and the
        Purchaser.  In addition, the definitions provided for in the Agreement
        are adopted in this Conveyance.

       

      
        	
                8.

              	
                Conveyance

              

      

       

      The
        Vendor, for the consideration provided for in the Agreement, the receipt
        and
        sufficiency of which is acknowledged by the Vendor, sells, assigns, transfers
        and conveys the Vendor's interest in the Assets to the Purchaser, and the
        Purchaser purchases and accepts such interest from the Vendor, TO HAVE AND
        TO
        HOLD the same absolutely, subject to the terms of the Agreement, the Permitted
        Encumbrances and compliance with the terms of the Leases.

       

      
        	
                9.

              	
                Effective
                  Time

              

      

       

      This
        Conveyance is effective as of the Effective Time.

       

      
        	
                10.

              	
                Subordinate
                  Document

              

      

       

      This
        Conveyance is executed and delivered by the Parties pursuant to the Agreement
        for the purposes of the provisions of the Agreement, and the terms hereof
        shall
        be read in conjunction with the terms of the Agreement.  The Agreement
        shall prevail if there is a conflict between the provisions of the Agreement
        and
        this Conveyance.

       

      
        
          
          

        

        
          
          

          
            

          

        

        
          
          

        

      

      
        	
                11.

              	
                Enurement

              

      

       

      This
        Conveyance enures to the benefit of and is binding upon the Parties and their
        respective successors and permitted assigns.

       

      
        	
                12.

              	
                Further
                  Assurances

              

      

       

      Each
        Party shall, after the date of this Conveyance, at the request of the other
        Party and without further consideration, do all further acts and execute
        and
        deliver all further documents which are reasonably required to perform and
        carry
        out the terms of this Conveyance.

       

      IN
        WITNESS WHEREOF the Parties have duly executed this Conveyance.

       

      

      
        	 	
                CIMA
                  HOLDINGS INC.

              
	 	 
	 	
                Per:  ___________________________________

              
	 	 
	 	
                Per:  ___________________________________

              
	 	 
	 	 
	 	 
	 	
                KODIAK
                  ENERGY, INC.

              
	 	 
	 	
                Per:  ___________________________________

              
	 	 
	 	
                         __________________________________

              

      

      

       

      

      

       

      

       

      

       

      

       

      

       

      

       

      

       

      
        
          
          

        

        
          2

          
            

          

        

        
          
          

        

      

      SCHEDULE
        “D”

       

      SPECIFIC
        COVENYANCES FOR U.S. ASSETS

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