Document:

ex101.htm

    PURCHASE
AND SALE AGREEMENT

    WORDSWORTH
AREA, SE SASKATCHEWAN

    

    This
Agreement made the 1st day of July, 2010.

    

    BETWEEN:

    

    
      	
               
      

            	
              DELTA OIL & GAS (CANADA)
      INC., a body Corporate, with an office in the City of Vancouver,
      British Columbia (hereinafter called the “Vendor” or
      “Trasferor”)

            

    

    

    -and-

    

    
      	
               
      

            	
              PETREX ENERGY LTD., a
      body Corporate, with an office in the City of Calgary, Alberta
      (hereinafter called the “Purchaser” or
  “Transferee”)

            

    

    

    WHEREAS
the Vendor wishes to sell and the Purchaser wishes to purchase the Assets (5%
working interest) upon and subject to the terms and conditions set forth in this
Agreement.

    

    NOW THEREFORE the Parties
agree as follows:

    

    1.           Definitions

    

    Each
capitalized term used in this Agreement will have the meaning given to it in the
Canadian Association of Petroleum Landmen 2000 Property Transfer procedure (the
“Property Transfer Procedure”).  In addition:

     

    i)           “Effective
Date” means 12:01a.m. on July 1, 2010.

     

    ii)          
“Closing
Date” means 10:00a.m. on August 3, 2010 or such as may  be agreed upon
in writing by the Parties.

    

    2.           Schedules
& Exhibits

    

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

    

    i)           Schedule “A”, which is the
Land Schedule and identifies:

    

    (1)        
the Lands; (2) the
Leases; (3) any other
agreements, documents or data that are to be excluded form the Miscellaneous
Interests under that definition; (4) any encumbrances, Rights
of First Refusal, production sale agreements, other agreements or penalties
required to be included in the land Schedule under the definition of Permitted
Encumbrances or the definition of Title and Operating Documents; (5) any Facilities required to
be included in the land Schedule under the definition of Facilities, any other
Tangibles described in paragraph “C” of the definition of Tangibles and any
assets otherwise falling within the definition of Tangibles that are
specifically excluded therefrom; and (6) the Wells;
and

    

    
      
         

      

      
         

        
          

        

      

      
         

      

    

    

    ii)           Schedule “B” Property Transfer
Procedure elections and amendments and the Exhibit “A” thereto that is
the form of General Conveyance.

    

    3.           Purchase
and Sale

    

    The
Purchaser agrees to purchase from the Vendor and the Vendor agrees to sell the
Assets to the Purchaser on the terms and conditions set forth in the
Agreement.  Subject to the modifications that may be made under the
Property Transfer Procedure, the consideration payable by the Purchaser to the
Vendor for the Assets ifs $757,500.00 (the “Purchase Price” including 5% GST on
Tangibles), and shall be allocated among the Assets as follows:

    

    
      	
               
        i)

            	
              To
      Petroleum and Natural Gas Rights

            	
              80%

            	
              $   599,990.00

            
	
               
       ii)

            	
              To
      Tangibles (exclusive of GST)

            	
              20%

            	
              $   150,000.00

            
	
               
      iii)

            	
              To
      Miscellaneous

            	 
      	
              $           
      10.00

            
	 
      	
              SubTotal   
      

            	
              $  
      750,000.00

            
	
               
      iv)

            	
              5%
      GST on Tangibles

            	 
      	
              $      
      7,500.00

            
	 
      	 
      	 
      	
              __ 
      _______

            
	 
      	
              TOTAL   
      

            	
              $757,500.00

            

    

     

    4.        
Payment
of Purchase Price

     

    The
Purchaser will pay the Purchase Price to the Vendor at Closing.

     

    5.       
Incorporation
by Reference of Property Transfer Procedure

     

    The
Property Transfer Procedure is hereby incorporated by reference into this
Agreement, subject to the elections and amendments listed in Schedule
“B”.

     

    In witness whereof the Parties
have duly executed this Agreement.

    

     

    Per: /s/
Douglas
Bolen                                            

                  Douglas
Bolen

             
    DELTA
OIL & GAS (CANADA) INC.

    
 

    

    

    Per: /s/
William
Nixon                                             

                  
Willia Nixon

                  
PETREX
ENERGY LTD.

     

    

    
      
         

      

      
        - 2
-

        
          

        

      

      
         

      

    

    SCHEDULE
“A”

    to a
Purchase and Sale Agreement dated the 1st day
of July 2010, between

    Delta Oil
& Gas (CANADA) Inc. and Petrex Energy Ltd.

    as to a
five percent (5%) working interest

     

    
      	
              FILE
      NO.

            	
              LAND

            	
              LEASE

            	
              FORMATION

            	
              ENCUMBRANCES

            
	
               

              L.6-172

            	
               

              S/2
      25-7-3 W2M

            	
               

              FREEHOLD
      P&NGL

            	
               

              To
      base of Mississippian (Alida) Formation

            	
              FH

              ROY

            	
              15.00%

            
	
               

              L.6-176

            	
               

              NW/4
      14-7-3 W2M

            	
               

              FREEHOLD
      P&NGL

            	
               

              To
      base of Mississippian (Alida) Formation

            	
              FH

              ROY

            	
              15.00%

            
	
               

              L.6-179

            	
               

              NE/4
      23-7-3 W2M

            	
               

              FREEHOLD
      P&NGL

            	
               

              To
      base of Mississippian (Alida) Formation

            	
              FH

              ROY

            	
              15.00%

            
	
               

              L.6-180

            	
               

              NW/4
      23-7-3 W2M

            	
               

              FREEHOLD
      P&NGL

            	
               

              To
      base of Mississippian (Alida) Formation

            	
              FH

              ROY

            	
              15.00%

            
	
               

              L.6-181

            	
               

              SW/4
      23-7-3 W2M

            	
               

              FREEHOLD
      P&NGL

            	
               

              To
      base of Mississippian (Alida) Formation

            	
              FH

              ROY

            	
              15.00%

            
	
               

              L.6-182

            	
               

              SE/4
      23-7-3- W2M

            	
               

              FREEHOLD
      P&NGL

            	
               

              To
      base of Mississippian (Alida) Formation

            	
              FH

              ROY

            	
              15.00%

            
	
               

              L.6-184

            	
               

              NE/4
      12-7-3 W2M

            	
               

              FREEHOLD
      P&NGL

            	
               

              To
      basement

            	
              FH

              ROY

            	
              15.00%

            
	
               

              L.6-188

            	
               

              NW/4
      12-7-3 W2M

            	
               

              FREEHOLD
      P&NGL

            	
               

              To
      basement

            	
              FH

              ROY

            	
              15.00%

            
	
               

              L.6-189

            	
               

              NW/4
      12-7-3 W2M

            	
               

              FREEHOLD
      P&NGL

            	
               

              To
      basement

            	
              FH

              ROY

            	
              15.00%

            
	
               

              L.6-190

            	
               

              NW/4
      12-7-3 W2M

            	
               

              FREEHOLD
      P&NGL

            	
               

              To
      basement

            	
              FH

              ROY

            	
              15.00%

            
	
               

              L.6-192

            	
               

              NW/4
      12-7-3 W2M

            	
               

              FREEHOLD
      P&NGL

            	
               

              To
      basement

            	
              FH

              ROY

            	
              15.00%

            
	
               

              L.6-193

            	
               

              SW/4
      13-7-3 W2M

            	
               

              REEHOLD
      P&NGL

            	
               

              To
      basement

            	
              FH

              ROY

            	
              15.00%

            
	
               

              L.6-208

            	
               

              LSD
      3-23-7-3-2 W2M

            	
               

              FREEHOLD
      P&NGL

            	
               

              To
      base of Mississippian (Alida) Formation

            	
              FH

              ROY

            	
              22.50%

            
	
               

              L.6-215

            	
               

              LSD
      2-23-7-3 W2M

            	
               

              FREEHOLD
      P&NGL

            	
               

              To
      base of Mississippian (Alida) Formation

            	
              FH

              ROY

            	
              22.50%

            
	
               

              L.6-174

            	
               

              NW/4
      24-7-3 W2M

            	
              CROWN
      P&NG 

              LEASE
      #57355

            	
               

              To
      base of Mississippian (Alida) Formation

            	
              CR

              ROY

            	 
      
	
               

              L.6-175

            	
               

              NE/4
      14-7-3 W2M

            	
              CROWN
      P&NG 

              LEASE
      #54268

            	
               

              To
      base of Mississippian (Alida) Formation

            	
              CR

              ROY

            	 
      
	
               

              L.6-194

            	
               

              SW
      1/4 11-7-3 W2M

            	
              CROWN
      P&NG 

              LEASE
      #58427

            	
               

              To
      basement

            	
              CR

              ROY

            	 
      
	
               

              L.6-195

            	
               

              SW
      1/4 12-7-3 W2M

            	
              CROWN
      P&NG

              LEASE
      #58428

            	
               

              To
      basement

            	
              CR

              ROY

            	 
      
	
               

              L.6-197

            	
               

              NW/4
      13-7-3 W2M

            	
              CROWN
      P&NG 

              LEASE
      #58646

            	
               

              To
      basement

            	
              CR

              ROY

            	 
      

    

    

    
      
         

      

      
        A -
1

        
          

        

      

      
         

      

    

    

    

    
      	
              FILE
      NO.

            	
              LAND

            	
              LEASE

            	
              DESCRIPTION

            	
              ENCUMBRANCES

            
	
              L.6-183

            	
              SE/4
      23-7-3 W2

            	
              SURFACE
      LEASE

               

            	
              SOUTHEAST
      QUARTER (1/4) OF SECTION TWENTY THREE (23), TOWNSHIP SEVEN 9&), RANGE
      THREE (3) WEST OF THE SECOND (2) MERIDIAN CERTIFICATE OF TITLE NO.
      107038043

            	 
      	 
      
	
              L.6-199

               

            	
              NE/4
      23-7-3- W2M

            	
              SURFACE
      LEASE

            	
              WELLSITE
      & ACCESS ROAD FOR THE TEXALTA ET AL WORDSWORTH EAST HZ
      3B9-23/3A11-23-7-3 W2

            	 
      	 
      
	
              L.6-200

               

            	
              SE/4
      23-7-3 W2M

            	
              SURFACE
      LEASE

            	
              ACCESS
      ROAD FOR THE TEXALTA ET AL WORDSWORTH EAST HZ 3B9-23/3A11-23-7-3 W2M
      HORIZONTAL WELL

            	 
      	 
      
	
              L.6-210

            	
              SE/4
      23-7-3 W2M

            	
              SURFACE
      LEASE

               

            	
              WELLSITE
      & ACCESS ROAD HZ1C2-23/1B14-14-7-3 W2 WELL AT SE/4 SECTION 23,
      TOWNSHIP 7 RANGE 3 W2. CERTIFICATE OF TITLE 107038043

            	 
      	 
      
	
              L.6-213

               

            	
              NE/4
      23-7-3 W2M

            	
              SURFACE
      LEASE

            	
              WELLSITE
      7 ACCESS ROAD FOR THE WORDSWORTH SWD - ROW

            	 
      	 
      
	
              L.6-217

               

            	
              SE/4
      23-7-3W2

            	
              SURFACE
      LEASE

            	
              SOUTHEAST
      QUARTER SECTION 23, TOWNSHIP 7, RANGE 3 WEST OF THE 2ND MERIDIAN 3.71
      ACRES (1.5 HA)

            	 
      	 
      
	
              L.6-218(A)

               

            	
              SE/4
      23-7-3 W2

            	
              SURFACE
      LEASE

               

            	
              SOUTHEAST
      QUARTER (1/4) OF SECTION TWENTY THREE (23), TOWNSHIP SEVEN (7), RANGE
      THREE (30) WEST OF THE SECOND (2) MERIDIAN CERTIFICATE OF TITLE NO.
      107038043 (ROW) SWD

            	 
      	 
      
	
              L.6-218(B)

               

            	
              SE/4
      23-7-3 W2

            	
              SURFACE
      LEASE

            	
              SOUTHEAST
      QUARTER (1/4) OF SECTION TWENTY THREE (23), TOWNSHIP SEVEN (7), RANGE
      THREE (30) WEST OF THE SECOND (2) MERIDIAN CERTIFICATE OF TITLE NO.
      107038043: FLOWLINE RIGHT OF WAY 2a2-23 TO 3B9 SWD

            	 
      	 
      
	
              L.6-219

            	
              SE/4
      23-7-3 W2M

            	
              SURFACE
      LEASE

               

            	
              FLOWLINE
      RIGHT OF WAY FROM TEXALTA ET AL WORDSWORTH E. HZ 1B1-23-7-3 W2 TO
      2A2-23-7-3- BATTERY

            	 
      	 
      
	
              L.6-220

            	
              SW/4
      24-7-3 W2M

            	
              SURFACE
      LEASE

               

            	
              SOUTHWEST
      QUARTER (1/4) OF SECTION TWENTY FOUR (24), TOWNSHIP SEVEN (7), RANGE THREE
      (3) WEST OF THE SECOND (2) MERIDIAN CERTIFICATE OF TITLE NO. 105486240 HZ
      1B4-24

            	 
      	 
      
	
              L.6-223

            	
              SE/4
      23-7-3 W2

            	
              SURFACE
      LEASE

               

            	
              SE
      1/4 SEC 23, TWP 7, RGE 3 W2M COT #107038043

            	 
      	 
      
	
              L.6-238

            	
              SE/4
      3-23-7-3 W2

            	
              SURFACE
      LEASE

               

            	
              TEXALTA
      ET AL WORDSWORTH HZ 1C3-23/3A13-13-7-3 W2; S/2 23, 7-3 W2 WELLSITE AND
      ACCESS ROAD

            	 
      	 
      
	
              L.6-224

            	
              SE/4
      23-7-3 W2

            	
              SURFACE
      LEASE

               

            	
              SOUTHWEST
      QUARTER (1/4) OF SECTION TWENTY THREE (23), TOWNSHIP SEVEN (7), RANGE
      THREE (3) WEST OF THE SECOND (2) MERIDIAN CERTIFICATE OF TITLE NO.
      87R0412Ra (ROW) HZ 1B4-24

            	 
      	 
      
	
              L.6-214

            	
              ROW
      3C1-23 TO 2A2-23

            	
              EASEMENT

               

            	
              FLOWLINE
      RIGHT OF WAY FROM 3C1-23 TO 2A2-23 BATTERY SE/4 SECTION 23, TOWNSHIP 7,
      RANGE 3W2 - CERTIFICATE OF TITLE NO: 90R37104D (SK CERT
      #107038043)

            	 
      	 
      

    

    

    
      
         

      

      
        A -
2

        
          

        

      

      
         

      

    

    

    
      	
              AGREEMENTS

            
	
              1 -
      A.6-094

            	
              Farmout,
      Option & Participation Agreement dated April 10,
  2006

            
	
              2 -
      A.6-110

            	
              Farmout,
      Option & Participation Agreement dated March 16,
  2009

            
	
              3 -
      A.6-117

            	
              Farmout
      & Participation Agreement dated October 1, 2009

            
	
              4 -
      A.6-109

            	
              Salt
      Water Disposal Agreement dated May 15,
2009

            

    

    

    

    
      	
              WELLS

            
	
              1

            	
              Texalta
      et al Wordsworth E HZ2A1-23-3111-14-7-3 W2 (5% WI)

            
	
              2

            	
              Texalta
      et al Wordsworth E HZ1C2-23-1B14-14-7-3 W2 (5% WI)

            
	
              3

            	
              Texalta
      et al Wordsworth E HZ1B1-23-3B9-14-7-3 W@ (5% WI)

            
	
              4

            	
              Texalta
      et al Wordsworth E HZ1B4-24/1C5-13-7-3-W2 (BPO 0% /APO
    2.5%)

            
	
              5

            	
              Texalta
      et al Wordsworth E SWD RE DD 3B9-23-4A10-23-7-3 W2 (5%
  WI)

            
	
              6

            	
              2A2-23-7-3
      W2 Wordsworth Battery

            

    

    

     

    
      	
              EQUIPMENT
      AND FACILITIES

            
	
              PUMPING
      UNIT AND BASE (wells 1-3 above)  > 5% WI

            
	
              PUMPING
      UNIT AND BASE (well 4 above)  > BPO 0%/APO
    2.5%

            
	
              FLOWLINE
      to 2A2-23 BATTERY (well 4 above) > BPO o%/APO 2.5%

            
	
              FLOWLINE
      TO 2A2023 BATTERY (Wells 1-3 above) > 5% APO

            
	
              BATTERY
      2A2-23-14-7-eW2 5 > % WI

                     Storage
      Tank - Fiberglass API Spec Tank 400 BBL 12x20

                     Storage
      Tank - Fiberglass API Spec Tank 500 BBL 12x25

                     TREATER
      BUILDING

                     TREATER

            
	
              Texalta
      et al Wordsworth # 3B9-23/4B11-23-7-3 W2M

                     Salt
      Water Disposal Well and Flowline

            

    

    

     

    
      	
              SEISMIC

            
	
              Lines
      WO 1, 2, 3 & 4

            

    

    

     

    
      
         

      

      
        A -
3

        
          

        

      

      
         

      

    

    

     

    SCHEDULE
“B”

    to
a Purchase and Sale Agreement dated the 1st day
of July 2010, between

    Delta
Oil & Gas (CANADA) Inc. and Petrex Energy Ltd.

    as
to a five percent (5%) working interest

     

    CAPL
PROPERTY TRANSFER PROCEDURE ELECTIONS AND AMENDMENTS

     

    
      

       

      

      
        	
                1.

              	
                GST
      (Subclause 2.03A):

              	
                N/A

              
	 	 	 
	 
      	
                a)  GST
      Election: Alternative

              	
                N/A

              
	 
      	
                b)  GST
      Business # (Vendor):

              	
                N/A

              
	 
      	
                c)  GST
      Business # (Purchaser):

              	
                N/A

              
	 	 	 
	
                2.

              	
                Interest
      Accrual (Clause 2.04): Alternate _________ Neither Alternate 1 nor
      2    
      X   apply.

              
	 	 
	
                3.

              	
                Place
      of Closing (Clause 3.01):

              	
                Office
      of Purchaser

              
	 	 	 
	
                4.

              	
                Access
      to Transferee’s Files (Subclause 3.04B):

              	
                6
      months

              
	 	 	 
	
                5.

              	
                Distribution
      of specific conveyances (Clause 3.05):

              	
                N/A

              
	 	 	 
	
                6.

              	
                Final
      Statement of Adjustments (Paragraph 4.02A(b)):

              	
                60
      day period

              
	 
      	 
      	 
      
	
                7.

              	
                Treatment
      of income during interim period (Clause 4.03):

              	
                N/A

              
	 
      	
                Income
      tax adjustment if alternate 1 applies:

              	
                N/A

              
	 
      	
                Exception
      to 4.03A if Alternative 1 applies (Subclause 4.03B):

              	
                will
      not apply

              
	 
      	 
      	 
      
	
                8.

              	
                Transferor’s
      representations and warranties (Clause 6.02). Those representations and
      warranties in that Clause that apply are indicated by an “X” below.
      (Scenario A and B elections as
indicated.)

              

      

    

     

    
      	
              X   
      Residency for tax purposes

            	
              X   
      Abandonment of wells

            
	
              X  
       Lawsuits and claims

            	
              X  
       Condition of tangibles

            
	
              X    No
      default notices

            	
              X  
       Well/intangibles license transfers

            
	
              X   
      Compliance with leases

            	
              X    
      Reg. production penalties

            
	
              X  
       Payment of Royalties

            	
              X     Reg.
      production allowables

            
	
              X  
       Encumbrances

            	
              X    
      Area of mutual interest

            
	
              X    No
      reduction

            	
              X   
       No offset obligations

            
	
              X    Sale
      Agreements

            	
              X    
      Commitment to deliver

            
	
              X  
       Provisions of documents

            	
              X    
      ARTC

            
	
              X  
       Authorized expenditures

            	
              X    
      Quiet enjoyment

            
	
              X   
      Environmental matters

            	
              __   Additional
      representations

            
	
              X  
       Condition of wells

            	 
      

    

     

    
      
        	
                9.

              	
                Survival
      of representations and warranties (Clause 6.04):

              	
                12
      months

              
	 
      	 
      	 
      
	
                10.

              	
                Option
      to terminate re: ROFR Exercises (Subclause 7.01D):

              	
                will
      not apply

              
	 
      	 
      	 
      
	
                11.

              	
                Delivery
      of Title Defects Notice (Subclause 8.02A):

              	
                5
      business days

              

      

      

        
          
             

          

          
            B -
1

            
              

            

          

          
             

          

        

         

         

        
          	
                  12.

                	
                  Title
      defects mechanism (Subclause 8.02B):

                	 
      
	 
      	 
      	 
      	 
      
	
                  13.

                	
                  Responsibility
      of Transferor (Clause 13.01):

                	 
      
	 
      	 
      	 
      	 
      
	 
      	
                  i)  Subclause
      13.01A

                	
                  Alternate
      1

                
	 
      	
                  ii)
      Subclause
      13.01B

                	
                  12
      months

                
	 
      	 
      	 
      	 
      
	
                  14.

                	
                  Limit
      on Transferor’s Responsibility (Subclause 13.03A):

                	
                  will
      apply

                
	 
      	 
      	 
      	 
      
	
                  15.

                	
                  Minimum
      claim threshold (Subclause 13.03B):

                	
                  will
      not apply

                
	 
      	 
      	 
      	 
      
	
                  16.

                	
                  Addresses
      for Service (Clause 15.02):

                	 
      

        

        
 

      

    

    
      	
               
      Delta Oil & Gas (Canada) Inc.

               
      Attention:  Douglas Bolen

               
      Suite 605-700 West Pender Street

               
      Vancouver, BC  V6C  1G8

               
      Tel:  (604) 506-4243

               
      Fax: (604) 602-1525

               
      Email: douglasbolen@yahoo.com

               

            	
               
      Petrex Energy Ltd.

               
      Attention: William Nixon

               
      8228 Elbow Drive S.W.

               
      Calgary, Alberta  T2V 1K4

               
      Tel:  (403) 255-8190

               
      Fax:  (403) 255-8007

                Email: Petrex@texalta.com

            

    

     

    
 

    
      
         

      

      
        B -
2

        
          

        

      

      
         

      

    

    Exhibit
“A” to the Property Transfer Procedure included as Schedule “B”

    to a
Purchase and Sale Agreement dated the1stday
of July 2010, between

    Delta Oil
& Gas (Canada) Inc, and Petrex Energy Ltd. as to five percent (5%) working
interest.

    

     

    GENERAL
CONVEYANCE

    Wordsworth,
Saskatchewan

     

    This
General Conveyance made this 1st day
of July 2010

     

    BETWEEN:

     

    DELTA OIL & GAS (CANADA) INC., a body
Corporate, with an office in the City of Vancouver, British Columbia
(hereinafter called the “Vendor” or “Transferor”)

     

    -and
-

     

    PETREX ENERGY LTD., a body
Corporate, with an office in the City of Calgary, Alberta (hereinafter called
the “Purchaser” or the “Transferee”)

    

    WHEREAS the Transferor has
agreed to convey and the Transferee has agreed to acquire the Transferor’s
entire five percent (5%) working interest in the Assets, the Parties agree as
follows:

     

    
      1.            
Definitions

    

     

    In this
General Conveyance, “Agreement” means the Purchase and Sale Agreement dated the
1st
day of July 2010 between the Transferor and the Transferee. In addition,
the definitions provided for in the Agreement and in the Property Transfer
Procedure included as Schedule “B” to the Agreement are adopted in this General
Conveyance.

     

    2.           
Conveyance

     

    The
Transferor, for the consideration provided for in the Agreement, the receipt and
sufficiency of which is acknowledged by the Transferor, conveys the Assets, to
the Transferee. The Transferee acquires the Assets from the Transferor, subject
to the terms of the Agreement, and Permitted Encumbrances and to compliance with
the terms of the Title and Operating Documents.

    

    3.             Effective Time

    

    This General Conveyance is effective as
of the Effective Date.

    

    
      
         

      

      
        B -
3

        
          

        

      

      
         

      

    

    

    4.                 Subordinate
Document

    

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

     

    5.                 Enurement

    

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

     

    6.                 Further
Assurances

    

    Each
Party will, after the date of this General Conveyance, on a timely basis and
without further consideration, do all further acts and execute and deliver all
further documents that are reasonably required to carry out the terms of the
General Conveyance.

    
      

    

     

    IN WITNESS WHEREOF the Parties
have duly executed this General Conveyance.

     

    

    Per:
/s/
Douglas
Bolen                                                  

                  Douglas Bolen

                 
DELTA
OIL & GAS (CANADA) INC.

    

    

    

    Per: /s/
William
Nixon                                                   

                   William Nixon

                  
PETREX ENERGY LTD.

    

     

    
      
         

      

      
        B -
4frcconsent.htm

Exhibit 10.1

 

UNITED STATES OF AMERICA

BEFORE THE

BOARD OF GOVERNORS OF THE FEDERAL RESERVE SYSTEM

WASHINGTON, D.C.

 

	
Written Agreement by and between

 

SONOMA VALLEY BANCORP

Sonoma, California

 

and

FEDERAL RESERVE BANK OF

SAN FRANCISCO

San Francisco, California

	
Docket No. 10-173 -WA/RB-HC

WHEREAS, Sonoma Valley Bancorp, Sonoma, California (“Sonoma”), a registered bank holding company, owns and controls Sonoma 

Valley Bank, Sonoma, California (the “Bank”), a state-chartered nonmember bank;

 

WHEREAS, it is the common goal of Sonoma and the Federal Reserve Bank of San Francisco (the “Reserve Bank”) to maintain the 

financial soundness of Sonoma so that Sonoma may serve as a source of strength to the Bank;

 

WHEREAS, Sonoma and the Reserve Bank have mutually agreed to enter into this Written Agreement (the “Agreement”); and

 

WHEREAS, on August 4, 2010, the board of directors of Sonoma, at a duly constituted meeting, adopted a resolution authorizing

 and directing Robert Nicholas to enter into this Agreement on behalf of Sonoma, and consenting to compliance with each and

 

 

 

 

  

  

  

 

                every provision of this Agreement by Sonoma and its institution-affiliated parties, as defined in sections 3(u) and 8(b)(3) of the Federal Deposit 

                Insurance Act, as amended (the “FDI Act”) (12 U.S.C. §§ 1813(u) and 1818(b)(3)).

 

NOW, THEREFORE, Sonoma and the Reserve Bank agree as follows:

 

                Source of Strength

 

1.     The board of directors of Sonoma shall take appropriate steps to fully utilize Sonoma’s financial and managerial resources, pursuant to section 

225.4(a) of Regulation Y of the Board of Governors of the Federal Reserve System (the “Board of Governors”) (12 C.F.R. § 225.4(a)), to serve as a 

source of strength to the Bank, including, but not limited to, taking steps to ensure that the Bank complies with the Consent Order entered into with

the Federal Deposit Insurance Corporation (the “FDIC”) and the California Department of Financial Institutions (the “CDFI”) on May 18, 2010 and any 

other supervisory action taken by the Bank’s federal or state regulator.

 

                Dividends

 

2. (a)     Sonoma shall not declare or pay any dividends without the prior written approval of the Reserve Bank and the Director of the Division of Banking 

               Supervision and Regulation of the Board of Governors.

 

     (b)    Sonoma shall not directly or indirectly take dividends or any other form of payment representing a reduction in capital from the Bank without the 

               prior written approval of the Reserve Bank.

 

     (c)    All requests for prior approval shall be received by the Reserve Bank at least 30 days prior to the proposed dividend declaration date. All requests 

              shall contain, at a minimum, current and projected information on Sonoma’s capital, earnings, and cash flow; the

  

  

  

 

             Bank’s capital, asset quality, earnings, and allowance for loan and lease losses; and identification of the sources of funds for the proposed payment. For requests

             to declare or pay dividends, Sonoma must also demonstrate that the requested declaration or payment of dividends is consistent with the B oard of Governors’

             Policy Statement on the Payment of Cash Dividends by State Member Banks and Bank Holding Companies, dated November 14, 1985 (Federal Reserve Regulatory 

             Service, 4-877 at page 4-323).

 

              Debt and Stock Redemption

 

              3. (a)       Sonoma and any nonbank subsidiary shall not, directly or indirectly, incur, increase, or guarantee any debt without the prior written approval of the 

               Reserve Bank. All requests for prior written approval shall contain, but not be limited to, a statement regarding the purpose of the debt, the terms 

               of the debt, and the planned source(s) for debt repayment, and an analysis of the cash flow resources available to meet such debt repayment.

 

   (b)       Sonoma shall not, directly or indirectly, purchase or redeem any shares of its stock without the prior written approval of the Reserve Bank.

 

              Cash Flow Projections

 

              4.     Within 60 days of this Agreement, Sonoma shall submit to the Reserve Bank a written statement of its planned sources and uses of cash for debt 

              service, operating expenses, and other purposes (“Cash Flow Projection”) for the remainder of 2010. Sonoma shall submit to the Reserve Bank a 

              Cash Flow Projection for each calendar year subsequent to 2010 at least one month prior to the beginning of that calendar year.

 

              Affiliate Transactions

 

              5. (a)        Sonoma shall take all necessary action to ensure that the Bank complies with sections 23A and 23B of the Federal Reserve Act (12 U .S.C. §§ 371 c 

               and 371 c-1) and

  

  

  

 

              Regulation W of the Board of Governors (12 C.F.R. Part 223) in all transactions between the Bank and Sonoma.

 

                     (b)     Sonoma shall not cause the Bank to violate any provision of sections 23A and 23B of the Federal Reserve Act or Regulation W 

                               of the Board of Governors. 

 

              Compliance with Laws and Regulations

 

              6. (a)     In appointing any new director or senior executive officer, or changing the responsibilities of any senior executive officer so 

              that the officer would assume a different senior executive officer position, Sonoma shall comply with the notice provisions

              of section 32 of the FDI Act (12 U.S.C. § 1831i) and Subpart H of Regulation Y of the Board of Governors (12 C.F.R. §§ 225.71 et seq.).

 

    (b)     Sonoma shall comply with the restrictions on indemnification and severance payments of section 18(k) of the FD I Act (12 U .S.C. § 1828(k))

              and Part 359 of the Federal Deposit Insurance Corporation’s regulations (12 C.F.R. Part 359).

 

              Progress Reports

 

              7. Within 30 days after the end of each calendar quarter following the date of this Agreement, the board of directors shall submit to the Reserve Bank 

              written progress reports detailing the form and manner of all actions taken to secure compliance with the provisions of this Agreement and the results

             thereof, and a parent company only balance sheet, income statement, and, as applicable, report of changes in stockholders’ equity.

  

  

  

 

               Communications

 

                8.     All communications regarding this Agreement shall be sent to:

 

                           

	
 (a)  

	
Mr. Kevin E. Zerbe

  

Vice President

Banking Supervision and Regulation

Federal Reserve Bank of San Francisco

101 Market Street, Mail Stop 920

San Francisco, California 94105

                

     

	
   (b)  

	
M r. Robert Nicholas 

Chairman of the Board 

Sonoma Valley Bancorp 

202 West Napa Street 

Sonoma, California 95476

 

               Miscellaneous

 

                9.      Notwithstanding any provision of this Agreement, the Reserve Bank may, in its sole discretion, grant written extensions of time to Sonoma to comply with 

         any provision of this  Agreement.

 

10.    The provisions of this Agreement shall be binding upon Sonoma and its institution-affiliated parties, in their capacities as such, and their successors and 

          assigns.

 

11.     Each provision of this Agreement shall remain effective and enforceable until stayed, modified, terminated, or suspended in writing by the Reserve Bank.

 

12.     The provisions of this Agreement shall not bar, estop, or otherwise prevent the Board of Governors, the Reserve Bank, or any other federal or state agency 

          from taking any other action affecting Sonoma, the Bank, any nonbank subsidiary of Sonoma, or any of their current or former institution-affiliated parties 

          and their successors and assigns.

  

  

  

                  13.     Pursuant to section 50 of the FDI Act (12 U.S.C. § 1831aa), this Agreement is enforceable by the Board of Governors under section

                            8 of the FDI Act (12 U.S.C. § 1818).

 

  IN W ITN ESS WHEREOF, the parties have caused this Agreement to be executed as of the 4th day of August, 2010.

 

 

	
    SONOMA BANCORP

	
FEDERAL RESERVE BANK

OF SAN FRANCISCO

	
    By:       /s/  Robert Nicholas

	
By:    /s/ Kenneth R. Binning

	
    Robert Nicholas

	
Kenneth R. Binning

	
    Chairman of the Board

	
Vice President

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