Document:

Exhibit
4.5

    

    AGREEMENT
OF PURCHASE AND SALE

    GILBY
AREA, ALBERTA

    

    THIS AGREEMENT dated the 15th
day of April, 2009

    

    BETWEEN:

    

    Poplar
Point Energy Ltd., a body corporate, having an office in City of Calgary, in the
Province of Alberta, (hereinafter referred to as the "Vendor")

    

    and-

    

    Guildhall
Minerals Ltd., a body corporate, having an office in the City of Vancouver, in
the Province of British Columbia, (hereinafter referred to as the
''Purchaser'')

    

    Whereas
pursuant to an assignment agreement dated the 19th, of March, 2009, Quarry Bay
Capital LLC ("Quarry Bay") assigned to the Purchaser all of its right title and
interest in and to a Letter of Intent dated March 10, 2009 respecting certain
oil and gas concessions located in the province of Alberta and among Quarry Bay
and the Vendor (the "Letter of Intent") and the Vendor has agreed to sell and
the Purchaser has agreed to purchase, on the terms and conditions contained in
this Agreement, certain interests in the Vendor's oil and gas concessions as
more particularly set out in the attached Schedule "A" (the
"Assets")";

    

    NOW THEREFORE in consideration
of the premises and mutual covenants and warranties in this Agreement, the
Parties covenant and agree as follows:

    

    ARTICLE
1

    INTERPRETATION

    

    1.01       Definitions

    

    In this
Agreement, including the recitals and schedules to this Agreement:

    

    "Assets"
means the aggregate of the Petroleum and Natural Gas Rights, Tangibles, and
Miscellaneous Interests;

     

    "Business
Day" means any day of the week except Saturday, Sunday or any statutory
holiday in Alberta;

     

    "Closing
Date" means April 15th, 2009 or such other time .and date as may be
agreed to by the Parties pursuant to clause 6.01;

     

    "Dollar"
or "$" means a Canadian dollar;

     

    "Effective
Date" means April 15th, 2009;

     

    "Gas
Purchase Contracts" means the agreements described in Schedule "B", if
any;

     

    "GST"
means tile goods and services tax as provided for in the Excise Tax Act. R.S.C.
1985, c. E-15, as amended, or any successor or parallel provincial or federal
legislation that imposes a tax on the recipient of goods or services supplied
under this Agreement;

     

    "Lands"
means the lands described in Schedule "A" and, except as otherwise expressly
noted in that Schedule, includes all Petroleum Substances within, upon or under
those lands, together with the right to explore for and recover them, to the
extent those rights are granted by the Leases;

     

    "Leases"
means collectively the various leases, reservations, permits, licenses and other
documents of title by virtue of which the holder is entitled to explore for,
drill for. recover, own, remove or dispose of Petroleum Substances forming part
of 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 including, but not
limited to, the leases, reservations permits, licenses and other documents of
title described in Schedule “A":

     

    
      
         

      

      
        Exhibit
4.5

        
          

        

      

      
         

      

       

    

    "Miscellaneous
Interests" means the entire interest of Vendor in all property, assets
and rights (other than the Petroleum and Natural Gas Rights or Tangibles)
pertaining or ancillary to either the Petroleum and Natural Gas Rights or
Tangibles to which Vendor is entitled Including, but not limited to, the
interests of Vendor in:

     

    
      	
               
      

            	
              (a)

            	
              all
      contracts, agreements, and documents (including the Gas Purchase
      Contracts) relating directly to the Petroleum and Natural Gas Rights,
      Leases, Lands or Tangibles or any rights in relation to
    them;

            

    

     

    
      	
               
      

            	
              (b)

            	
              all
      subsisting rights to enter upon, use and occupy the surface of any of the
      Lands, or any lands upon which any of the Tangibles are
      situate

            

    

     

    
      	
               
      

            	
              (c)

            	
              all
      well, pipeline and other permits, licenses and authorizations relating to
      the Petroleum and Natural Gas Rights, Leases, Lands or
      Tangibles;

            

    

     

    
      	
               
      

            	
              (d)

            	
              all
      Petroleum Substances produced from the Lands except those that are beyond
      the wellhead at the Effective Date;

            

    

     

    
      	
               
      

            	
              (e)

            	
              all
      Wells on the Lands, including casing;
and

            

    

     

    
      	
               
      

            	
              (f)

            	
              engineering
      and production books, records, files, data and documents relating directly
      to the Petroleum and Natural Gas Rights, Leases, Lands or Tangibles but
      excluding Vendor's tax and financial records, economic evaluations and
      geophysical and geological data.

            

    

     

    Unless
otherwise agreed in writing by the Parties, however, the Miscellaneous Interests
shall not include agreements, documents or data to the extent that: (i) they
pertain to the Vendor's proprietary technology or interpretations; (ii) they are
owned or licensed by third parties with restrictions on their deliverability or
disclosure by Vendor to any assignee which is not an affiliate of Vendor; or
(iii) they are referred to specifically as exclusions in Schedule
"A";

     

    "Operator"
means Vendor in its capacity as operator of any of the Assets as designated
under agreements governing the ownership and operation of the
Assets

     

    "Party"
means a person, partnership or corporation which is bound by this
Agreement.

     

    "Permitted
Encumbrances" means:

     

    
      	
               
      

            	
              (a)

            	
              any
      encumbrances. overriding royalties, net profits interests and other
      burdens identified in Schedule "A"

            

    

     

    
      	
               
      

            	
              (b)

            	
              Preferential
      Rights or any right of first refusal 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 and any gross royalty trusts
      applicable to the grantor's interest in any of the
  Leases;

            

    

     

    
      	
               
      

            	
              (d)

            	
              agreements
      for the sale of Petroleum Substances, which shall include Gas Purchase
      Contracts, provided that any such agreement that is not terminable within
      30 days after notice being given (without an early termination penalty or
      other cost) is identified in Schedule
“B”;

            

    

     

    
      	
               
      

            	
              (e)

            	
              easements,
      rights of way. road use agreements, crossing agreements, servitudes or
      similar rights in land including, without limitation, rights of way and
      servitudes for highways and other roads. railways, sewers, drains, gas and
      oil pipelines, gas and water mains, electric light, power, telephone,
      telegraph or cable television conduits, poles. wires or
      cables;

            

    

     

    
      	
               
      

            	
              (f)

            	
              the
      right reserved to or vested in any government or other public authority by
      the terms of any Lease, license, franchise, grant or permit forming part
      of the Assets, or the Regulations, to terminate any lease, license,
      franchise, grant or permit, or to require annual or other periodic
      payments as a condition of the continuance of
  them;

            

    

     

    
      
         

      

      
         

        
          

        

      

      
         

      

    

     

    
      	
               
      

            	
              (g)

            	
              taxes
      on Petroleum Substances or the income or revenue from them, excluding
      income taxes, and governmental restrictions on production rates from wells
      on the Lands or on operations being conducted on the Lands or otherwise
      affecting the value of any of the
Assets;

            

    

     

    
      	
               
      

            	
              (h)

            	
              any
      agreements or plans relating to pooling or unitization which are binding
      on Vendor as well as agreements respecting the processing, treating or
      transmission of Petroleum Substances or the operation of Wells by contract
      field operators;

            

    

     

    
      	
               
      

            	
              (i)

            	
              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;

            

    

     

    
      	
               
      

            	
              (j)

            	
              liens
      incurred or created as security in favour of any person conducting the
      development or operation of any of the Assets, for Vendor’s proportionate
      share of the costs and expenses thereof, but only to the extent those
      liens relate to costs and expenses for which payment is not
      due;

            

    

     

    
      	
               
      

            	
              (k)

            	
              the
      reservations, limitations, provisos and conditions in any grants or
      transfers from the Crown of any of the Lands or interests in them and
      statutory exception to title:

            

    

     

    
      	
               
      

            	
              (l)

            	
              liens
      for taxes, assessments or governmental charges that are not
      due,  or the validity of which is being contested in good faith
      by Vendor;

            

    

     

    
      	
               
      

            	
              (m)

            	
              mechanics',
      builders', or materialmen's liens for services rendered or goods supplied,
      but only to the extent those liens relate to goods or services for which
      payment is not clue;

            

    

     

    
      	
               
      

            	
              (n)

            	
              registrations
      protecting interests of Vendor's joint interest partners and the secured
      interest holders of such partners;

            

    

     

    
      	
               
      

            	
              (o)

            	
              provisions
      for penalties and forfeitures under agreements as a consequence of
      non-participation in operations as identified in Schedule "A";
      and

            

    

     

    
      	
               
      

            	
              (p)

            	
              liens
      incurred, created and granted in the ordinary course of business to a
      public utility, municipality or governmental authority in connection with
      operations conducted with respect to the
Assets;

            

    

     

    "Petroleum
and Natural Gas Rights" means the interest of Vendor described in
Schedule "A", in and in respect of the Leases and the Lands;

     

    "Petroleum
Substances” means petroleum, natural gas and related hydrocarbons,
whether gaseous, liquid or solid, and whether hydrocarbons or not (including,
but not limited to, sulphur) that may be produced in association with them an
interest in which is granted pursuant to the Leases, insofar only as they
pertain to the Lands;

     

    "Preferential
Right" means a right of first refusal, pre-emptive right of purchase or
similar right whereby any person, other than Vendor, would have the right to
acquire or purchase all or a portion of the Assets as a consequence of Vendor
having agreed to sell the Assets to Purchaser in accordance
herewith;

     

    "Purchase
Price" has the meaning given in clause 2.02;

     

    "Regulations"
means all statutes laws, orders and regulations in effect from time to time and
made by governments or governmental boards or agencies having jurisdiction over
the Assets;

     

    "Take or
Pay Obligations" means the obligations of the Vendor under "take or pay"
and similar provisions in respect of payments for natural gas and related
hydrocarbons not taken by buyers under the Gas Purchase Contracts to either
repay such payments or to deliver such gas or substances without full payment
therefor and includes, without limitation, obligations to the successors of
Alberta and Southern Gas Co Ltd. or Trans-Canada Pipelines arising from such
Take or Pay provisions as of the Effective Date, as described in Schedule
"B"

     

    "Tangibles"
means the interest of Vendor in all tangible depreciable property, real property
and assets used or useful in connection with production, gathering, treatment,
storage, compression, processing, transportation, injection, removal or other
operations relating to (as applicable) Petroleum and Natural Gas Rights, Leases
or Lands whether they are situate within or- upon the Lands or elsewhere
including, but not limited to, all tangible depreciable property and assets that
form part of the Assets including, without limitation, the well equipment, if
any, relating to the Wells and all those facilities relating to the
Assets;

     

    
      
         

      

      
         

        
          

        

      

      
         

      

       

    

    "Title
Deficiencies" has the meaning given in clause 3.02, and

     

    "Wells"
means all producing, shut-in, water source, observation, disposal, injection,
suspended and similar wells located on the Lands or directly relating to the
operation of the Lands as described in Schedule “A”.

     

    The
Parties agree that the foregoing defined terms shall be modified to the extent
that a portion of the Assets are excluded pursuant to clause 3.04, if
applicable.

     

    1.02 Schedules

     

    The
following schedules are attached to and form part of this
Agreement.

     

    
      	
            	
              Schedule
      "A"-

            	
              Lands,
      Leases, Petroleum and Natural Gas Rights, Certain Permitted Encumbrances,
      Wells;

            

    

     

    
      	
            	
              Schedule
      "B"-

            	
              Gas
      Purchase Contracts;

            

    

     

    
      	
            	
              Schedule
      "C"-

            	
              Outstanding
      Authorizations For Expenditure and Capital Expenditures For Which
      Purchaser Is Responsible;

            

    

     

    
      	
            	
              Schedule
      "D"-

            	
              General
      Conveyance (Assets); and

            

    

     

    
      	
            	
              Schedule
      "E"-

            	
              Form
      of Officer's Certificate Respecting Representations and
      Warranties.

            

    

     

    1.03
Headings

    

    The
insertion of headings in this Agreement is for convenience of reference only and
shall not affect the construction or interpretation of this
Agreement.

    

    1.04
Gender

    

    Whenever
the singular or masculine or neuter is used in this Agreement, it shall be
construed as meaning plural or -feminine or referring to a corporation, firm,
partnership or body politic and vice versa.

    

    1.05
Time

    

    In this
Agreement all times are Mountain Standard Time or Daylight Saving Time,
whichever is in effect pursuant to the Daylight Saving Time Act
(Alberta).

    

    1.06
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 tile 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

    

    ARTICLE
2

    PURCHASE
AND SALE

    

    2.01           Agreement of Purchase and
Sale

    

    Vendor
agrees to sell a portion of its right, estate and interest in and to the Assets
as more particularly set out in Schedule "A" to Purchaser, and Purchaser agrees
to purchase the said portion of right, estate and interest of Vendor in and to
the Assets, subject to the Permitted Encumbrances, from Vendor, on the terms and
conditions of this Agreement. If the purchase and sale contemplated by this
Agreement is completed, the Assets, and risk associated with the Assets, shall
be deemed to have passed to Purchaser as of the Effective Date.

    

    
      
         

      

      
         

        
          

        

      

      
         

      

    

    

    2.02           Purchase
Price and Allocation of Purchase Price

    

    The
monetary consideration for the sale of the Assets shall be $1,500,000 ("Purchase
Price"), payable in Canadian funds to Vendor in accordance with the provisions
of Article 6 respecting completion, The Purchase Price shall be allocated among
the Assets as follows:

    

    
      
        
          
            
              
                
                  
                    
                      
                        
                          
                            	
                                    (a)

                                  	 	
                                    To
      Petroleum and Natural Gas Rights

                                  	 	$	1,200,000	 
	
                                    (b)

                                  	 	
                                    To
      Tangibles

                                  	 	$	300,000	 
	
                                    (c)

                                  	 	
                                    To
      Miscellaneous Interests

                                  	 	 	0	 
	 	 	 	 	 	 	 
	  
      	        
      	TOTAL 	 	$	1,500,000	 

                          

                        

                      

                    

                  

                

              

            

          

        

      

    

    

    2.03           Sales
Taxes

    

    If
Vendor, as agent of the Crown, is required to collect from Purchaser any tax,
fee or charge imposed by any governmental authority for the Assets, including
GST, then Purchaser shall pay the amount of these taxes, charges or fees to
Vendor, and Vendor shall remit those amounts to the Crown in the manner required
by the Regulations. If the amount of the taxes, fees or charges paid by
Purchaser is adjusted as a result of any re-assessment by Revenue Canada,
Customs and Excise or any governmental authority, then any increase or decrease
from the re-assessment are for Purchaser's account.

    

    ARTICLE
3

    INTERIM
MATTERS

    

    3.01           Title Examination, Vendor's
Records and Access to the Assets

    

    
      	
               
      

            	
              (a)

            	
              Subject
      to subclause (b), Vendor shall, if and as requested by Purchaser, make or
      cause to be made available at the offices of Vendor during normal business
      hours the documents relating to the title of Vendor to the Assets for the
      review of Purchaser and its solicitors, employees and
    agents;

            

    

    

    
      	
            	
              (b) 

            	
              Vendor
      shall, if and as requested by
Purchaser:

            

    

    

    
      	
               
      

            	
              (i)

            	
              make
      or cause to be made available for the review of Purchaser, its solicitors,
      employees and agents (subject to their being covered t)y a Confidentiality
      Agreement), Vendor's records, files and documents directly relating to the
      Assets, for the purpose of Purchaser's review of the Assets and Vendor's
      title thereto, including, without limitation, the leases and applicable
      operating agreements, unit agreements, overriding royalty agreements and
      production sale contracts (subject to the exclusions identified in
      Miscellaneous Interests); and

            

    

    

    
      	
               
      

            	
              (ii)

            	
              at
      Purchaser’s cost, risk and expense and upon reasonable notice, allow
      physical access to the Assets to the extent Vendor has or can reasonably
      obtain access.

            

    

    

    3.02           Title
Deficiencies

    

    Purchaser
shall conduct its review of Vendor's title to the Assets with diligence.
Purchaser shall from time to time but no later than 4:00 p.m. five (5) Business
Days before Closing Date, give notice to Vendor describing in detail all
material title defects and irregularities relating to the Assets that, in the
reasonable opinion of Purchaser, adversely affect the title of Vendor to the
Assets and that Purchaser wants to have remedied ("Title Deficiencies"). Such
notice shall specify such Title Deficiencies in detail, the Assets directly
affected thereby and the Purchaser's requirements for the remedying thereof
Vendor shall use reasonable efforts to promptly remedy the Title Deficiencies
specified by Purchaser, Vendor will have until 400 p.m. on the third Business
Day before Closing Date to supply any missing title documentation or to remedy
the Title Deficiencies specified by Purchaser.

    

    If all
Title Deficiencies are not satisfactorily remedied prior to 4:00 p.m. on the
third Business Day before Closing Date, Purchaser may elect by giving notice to
Vendor prior to 4:00 p.m. on the second Business Day before Closing
Date:

     

    
      	
               
      

            	
              (a)

            	
              with
      the agreement of Vendor, to grant a further period of time within which
      Vendor may remedy the uncured Title
  Deficiencies;

            

    

     

    
      	
               
      

            	
              (b)

            	
              subject
      to clause 3.03, to waive the unremedied Title Deficiencies and proceed
      with the completion of the transaction contemplated by this Agreement;
      or

            

    

     

    
      
         

      

      
         

        
          

        

      

      
         

      

    

     

    
      	
               
      

            	
              (c)

            	
              to
      terminate this Agreement.

            

    

     

    However,
failure of Purchaser to make such election on time shall be deemed to be an
election pursuant to subclause (b).

    

    3.03           Preferential Right of
Purchase

    

    Each
Preferential Right of purchase requiring the procurement of a waiver from a
third party prior to disposition of any of the Assets constitutes a Title
Deficiency for the purpose of clause 3.02 until the right is waived by the
holder of it, it lapses or it is extinguished in any way except by exercise. If
a Preferential Right is exercised it will not constitute a Title Deficiency
Purchaser may not waive as Title Deficiencies the existence or operation of any
Preferential Right. If in Vendor's opinion any of the Assets is subject to a
Preferential Right made effective as a result of this Agreement then Vendor
shall, after consultation with Purchaser, promptly serve all notices required
under the Preferential Right. Each notice shall include a request for a waiver
of the Preferential Right.

    

    If the
Purchaser exercises a Right of First Refusal issued to it in respect to any
Asset of Vendor in which Purchaser presently has an interest pursuant to the
agreement granting the Right of First Refusal, the Assets to be acquired by
Purchaser pursuant to such exercise shall be acquired under the terms of this
Agreement.

    

    3.04 Excluded
Assets

    

    If a
Preferential Right is exercised, the portion of the Assets subject to the
exercised Preferential Right shall be excluded from this Agreement. If a
Preferential Right is exercised or if portions of the Assets are excluded under
clause 3.02, then:

    

    
      	
               
      

            	
              (a)

            	
              the
      terms "Assets", "Petroleum and Natural Gas Rights", "Miscellaneous
      Interests" and "Tangibles" shall in this Agreement and related documents
      be construed as meaning the non-excluded portion of the subject matters of
      those terms: and

            

    

    

    
      	
               
      

            	
              (b)

            	
              the
      Purchase Price shall be reduced by the aggregate value allocated to the
      excluded portions of the Assets, as provided under clause
      3.05.

            

    

    

    
      	
               
      

            	
              3.05

            	
              Value of the
      Assets

            

    

    

    Purchaser
and Vendor, acting reasonably and in good faith shall allocate values to each of
the parcels comprising the Assets affected by Title Deficiencies which have not
been cured or removed under clause 3.02. Such values shall be given by Purchaser
to Vendor Witt, sufficient time to allow for timely issuance of notices of
Preferential Rights, if applicable

    

    3.06           Interim
Provisions

    

    Between
the Effective Date and Closing Date, where Vendor is not Operator, Vendor shall,
to the extent that the nature of its interest permits, continue to cause the
Assets to be operated and maintained or, where Vendor is Operator, it shall
operate and maintain the Assets in material compliance with the regulations and
in a proper and prudent manner in accordance with good industry practices and
the agreements governing the ownership and operation of the Assets. Vendor shall
not, without the prior written consent of Purchaser:

    

    
      	
               
      

            	
              (a)

            	
              authorize
      or make any expenditure in respect of the Assets, other
    than:

            

    

    

    
      	
               
      

            	
              (i)

            	
              usual
      operating expenditures incurred and allocable to the Assets pursuant to
      existing operating agreements with arm's length third
    parties;

            

    

    

    
      	
               
      

            	
              (ii)

            	
              capital
      expenditures (as defined by the operator of the relevant property in an
      authorization for expenditure) required in accordance with accepted.
      industry practice, for which Vendor's share does not exceed $5,000.00 for
      any single operation; and

            

    

    

    
      	
               
      

            	
              (iii)

            	
              expenditures
      which the operator of any of the Assets deems necessary to protect lives,
      property or income;

            

    

    
      	
               
      

            	
              (b)

            	
              propose
      or initiate any operations in respect of the
  Assets;

            

    

    

    
      	
               
      

            	
              (c)

            	
              surrender
      or abandon any of the Assets;

            

    

    

    
      	
               
      

            	
              (d)

            	
              amend,
      cancel or enter into any significant agreement or Instrument relating to
      the Assets; or

            

    

     

    
      
         

      

      
         

        
          

        

      

      
         

      

    

     

    
      	
               
      

            	
              (e)

            	
              sell,
      transfer or otherwise dispose of or encumber any of the
      Assets.

            

    

    

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

    

    The
request for written approval and the response given by Purchaser may be carried
out by the use of a telecommunication device. If Purchaser does not respond to a
request for an approval within four (4) Business Days, it will be deemed to have
given its approval.

    

    3.07 Confidentiality

    

    
      	
               
      

            	
              (a)

            	
              Information
      respecting the Assets shall be retained in confidence by Purchaser and
      used only for the purposes of this transaction, provided that upon
      Closing, Purchaser's rights to use or disclose such information shall be
      subject to any operating, unit or other agreements that may apply to them.
      Notwithstanding the foregoing, the Parties agree that information
      respecting the Purchase Price shall be retained in confidence both before
      and after the Closing Date. Any additional information obtained as a
      result of access under clause 3.01 which does not relate to the Assets
      shall continue to be treated as confidential and shall not be used by
      Purchaser without the prior written consent of Vendor. However, the
      restrictions on disclosure and use of information in this Agreement shall
      not apply to information to the extent
it:

            

    

    

    
      	
               
      

            	
              (i)

            	
              is
      or becomes publicly available through no act or omission of Purchaser or
      its consultants or advisers;

            

    

    

    
      	
               
      

            	
               (ii)

            	
              is
      subsequently obtained lawfully from a third party, which, after reasonable
      inquiry, Purchaser will not be bound to Vendor to restrict the use or
      disclosure of such information;

            

    

    

    
      	
               
      

            	
              (iii)

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

            

    

    

    
      	
               
      

            	
              iv)

            	
              is
      required by law to be disclosed, provided that Purchaser shall take all
      reasonable steps to bind the party receiving such information to
      obligations of confidentiality similar to the
  foregoing.

            

    

    

    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.

    

    
      	
               
      

            	
              (b)

            	
              If
      Purchaser employs consultants, advisors or agents to assist in its review
      of the Assets pursuant to this Article 3, Purchaser shall be responsible
      to Vendor for ensuring that such consultants, advisors and agents comply
      with the restrictions on the use and disclosure of information set forth
      in this clause.

            

    

    

    
      	
               
      

            	
              (e)

            	
              The
      obligations of Purchaser pursuant to this Article are III addition to and
      not in substitution for the obligations of Purchaser under the
      Confidentiality Agreement.

            

    

    

    ARTICLE
4

    REPRESENTATIONS AND
WARRANTIES

    

    4.01        Vendor's
Representations

    

    Vendor
represents and warrants to Purchaser as of the Effective Date and Closing Date
that:

    

    
      	
               
      

            	
              (a)

            	
              Standing: It is
      a corporation duly organized and validly subsisting under the laws of its
      jurisdiction of incorporation and the laws of those jurisdictions in which
      it is required to be registered for the purposes of this
      transaction;

            

    

     

    
      	
               
      

            	
              (b)

            	
              Requisite
      Authority: It has the corporate capacity, power and authority to
      execute and deliver this Agreement and all other documents to be executed
      by it hereunder, to sell the Assets on the terms described in this
      Agreement and to perform its obligations under this
    Agreement;

            

    

     

    
      
         

      

      
         

        
          

        

      

      
         

      

    

     

    
      	
               
      

            	
              (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 do not
      and will not violate or conflict with any provision
  of:

            

    

     

    
      	
               
      

            	
              (i)

            	
              the
      charter, bylaws or equivalent governing documents relating to it or any
      Regulations applicable to it; or

            

    

     

    
      	
               
      

            	
              (ii)

            	
              any
      agreement or instrument to which it is a party or by which it is bound and
      of which it has knowledge or any judgment, decree or order applicable to
      it;

            

    

     

    
      	
               
      

            	
              (d)

            	
              Execution and
      Enforceability This Agreement and all documents executed and
      delivered pursuant to this Agreement have been duly authorized, executed
      and delivered by it and are legal, valid and binding obligations of it,
      enforceable against it in accordance with their
  terms;

            

    

     

    
      	
               
      

            	
              (e)

            	
              Authorizations:
      No authorization or approval or other action by, or notice to or filing
      with, any governmental authority or regulatory body exercising
      jurisdiction over the Assets is required for the due execution, delivery
      and performance by it of this Agreement, other than authorizations,
      approvals or exemptions previously obtained and currently in force or
      regulatory consents or approvals to the transfer of well and pipeline
      licenses and permits and other similar licenses and permits available only
      after Closing in the ordinary
course;

            

    

     

    
      	
               
      

            	
              (f)

            	
              Encumbrances:
      No Cancellation or Reduction: It does not warrant title to the Petroleum
      and Natural Gas Rights, however, it does represent and warrant that it has
      not committed any act which would result in any of the Petroleum and
      Natural Gas Rights being cancelled and that the Petroleum and Natural Gas
      Rights are free and clear of all liens, encumbrances, adverse claims,
      demands and royalties or other interests created by, through or under it,
      except for those set forth in Schedule "A" the Permitted Encumbrances and
      those title defects waived by Purchaser; and the interest of it in the
      Petroleum and Natural Gas Rights is not subject to reduction by virtue of
      the conversion or other alteration of the interest of any person, other
      than as may be set out in Schedule "A". Except as expressly stated in this
      subclause, Vendor does not make or give any representation or warranty as
      to its title to the Assets nor does it agree to transfer any greater
      interest or title to the Purchaser than that which the Vendor
      has;

            

    

     

    
      	
               
      

            	
              (g)

            	
              Quiet
      Enjoyment: Subject to the rents, covenants and conditions of the
      leases to be paid, performed and observed by the lessee and the Permitted
      Encumbrances, Purchaser will be entitled to hold the Petroleum and Natural
      Gas Rights for the remainder of the terms of the Leases, and all renewals
      or extensions of them, for its own benefit without interruption by it or
      any other person claiming by, through or under
  it;

            

    

     

    
      	
               
      

            	
              (h)

            	
              Authorized
      Expenditures: In respect of those portions of the Assets where
      Vendor is Operator and, in respect of other portions of the Assets to the
      best of its knowledge, there are no authorizations for expenditures
      pursuant to which expenditures are or may be made, nor any other financial
      commitments outstanding or due, or that may become due for the Assets or
      their operation after the Effective Date other than those described in
      Schedule "C",
      those to which Purchaser has given its consent or those contained
      in the Leases:

            

    

     

    
      	
               
      

            	
              (i)

            	
              Knowledge of
      Default: .To the best of its knowledge, it has not received any
      notice or default under the Leases or any notice alleging its default
      under any  agreement pertaining to the Assets, which default has
      not been rectified or' waived as of the date of this
      Agreement;

            

    

     

    
      	
               
      

            	
              (j)

            	
              Lawsuits and
      Claims: In respect of those portions of the Assets where Vendor is
      Operator and in respect of other portions of the Assets to the best of its
      knowledge, there are no charges, claims, proceedings or actions in
      existence contemplated or threatened, against the Assets or the interest
      of it in them;

            

    

     

    
      	
               
      

            	
              (k)

            	
              Payment of Royalties
      and Taxes: In respect of those portions of the Assets where Vendor
      is Operator and, in respect of other portions of the Assets to the best of
      its knowledge, all ad valorem, property, production, severance and similar
      taxes and assessments based on, or measured by, the ownership of the
      Assets or the production of Petroleum Substances from the Assets, or the
      receipt of proceeds from them, and all royalties and rentals accruing
      prior to Effective Date and Closing Date, that are payable by it will be
      or will have been properly paid and
discharged:

            

    

     

    
      	
               
      

            	
              (l)

            	
              Residency For Tax
      Purposes: It is not a non-resident of Canada within the meaning of
      Section 116 of the Income Tax Act
(Canada);

            

    

     

    
      
         

      

      
         

        
          

        

      

      
         

      

    

     

    
      	
               
      

            	
              (m)

            	
              Take or Pay
      Obligations It has no Take or Pay Obligations relating to the
      Assets;

            

    

     

    
      	
               
      

            	
              (n)

            	
              Tangibles: It
      does not warrant: title to the Tangibles; however, it does represent and
      warrant that the Tangibles are free and clear of all liens, encumbrance,
      and adverse claims or other interests created by, through or under it,
      except for the Permitted Encumbrances, and, to the best of its knowledge
      where Vendor is not the operator thereof, and where it is the operator
      thereof the Tangibles have been maintained and operated in accordance with
      good oilfield practice;

            

    

     

    
      	
               
      

            	
              (o)

            	
              Operations: In
      respect of those portions of the Assets where Vendor is Operator and, in
      respect of other portions of the Assets to the best of its knowledge, the
      Assets have been managed and operated in accordance with good oilfield
      practice;

            

    

     

    
      	
               
      

            	
              (p)

            	
              Environmental
      Matters: To the best of its
knowledge,

            

    

     

    
      	
               
      

            	
              (i)

            	
              it
      is not aware of and has not received any orders or directions under the
      Regulations relating to environmental matters requiring any work, repairs.
      construction or capital expenditures with respect to the Assets, which
      order or direction remains outstanding on the Closing Date;
      and

            

    

     

    
      	
               
      

            	
              (ii)

            	
              it
      is not aware of and has not received any demand or notice under the
      Regulations from any third party or regulatory body relating to the breach
      of any environmental, health or safety law applicable to the Assets,
      including any law relating to the use, storage, treatment shipping or
      disposition of environmental contaminants, which demand or notice remains
      outstanding on the Closing Date, except as has been specifically disclosed
      by Vendor, by notice to Purchaser prior to Vendor's submission of this
      Agreement to Purchaser for Purchaser's
  execution;

            

    

     

    
      	
               
      

            	
              (q)

            	
              Sales
      Contracts: .Except as described in Schedule "B", it is not
      obligated to sell or deliver Petroleum Substances produced from the Lands
      to any person pursuant to agreements which cannot be terminated on 30
      days' notice or less and it has not assigned or in any way restricted its
      right to receive the proceeds from the sale of Petroleum Substances
      produced from the Lands, except where Permitted Encumbrances would apply;
      and

            

    

     

    
      	
               
      

            	
              (r)

            	
              Inquiries and
      Searches: Vendor has made all reasonable enquiries and searches for
      material documents and information, and to the best of Vendor's knowledge.
      it has delivered or made available to Purchaser, all documents,
      instruments records and book relevant to Vendor's title to the Lands and
      the Leases ,n its possession or to which it has reasonable
      access.

            

    

     

    
      4.02 Limitation

    

     

    
      	
               
      

            	
              (a)

            	
              Vendor
      makes no representations or warranties with respect to the Assets except
      as contained in clause 4.01. Vendor disclaims any liability or
      responsibility for any representation or warranty that may have been made
      or alleged to have been made and contained in any document or statement
      made or communicated to Purchaser including, but not limited to, any
      opinion, information or advice provided to Purchaser by any shareholder,
      director, officer, employee, agent consultant or representative of Vendor
      in respect of

            

    

     

    
      	
               
      

            	
              (i)

            	
              the
      quantity, quality or recoverability of Petroleum Substances within or
      under the Lands;

            

    

     

    
      	
               
      

            	
              (ii)

            	
              estimates
      of prices or future cash flows arising from the sale of Petroleum
      Substances produced from the Lands or estimates of other revenues
      attributable to the Assets or the availability or continued availability
      of transportation to sell those Petroleum
  Substances,

            

    

     

    
      	
               
      

            	
              (iii)

            	
              any
      engineering, geological or other interpretations or economic evaluations
      respecting the Assets; and (iv) the quality condition, fitness or
      suitability for purpose or merchantability of any of the
      Assets;

            

    

     

    
      	
               
      

            	
              (b)

            	
              Purchaser
      acknowledges it has made. and will continue prior to Closing Date to make.
      its own independent examination, investigation, analysis, evaluation and
      verification of the Assets, including Purchaser's own estimate and
      appraisal of the extent and value of the Petroleum Substances attributable
      to the Lands and it has relied solely on same as to its assessment of the
      condition (environmental or otherwise), quantum and value of the
      Assets;

            

    

     

    
      
         

      

      
         

        
          

        

      

      
         

      

    

     

    
      	
               
      

            	
              (c)

            	
              Except
      with respect to the representations and warranties in clause 4.01 or in
      the event of fraud, Purchaser forever releases and discharges Vendor and
      its directors, officers servants, consultants, agents and employees from
      any claims and all liability to Purchaser or Purchaser’s assigns and
      successors, as a result of the use or reliance upon advice, information or
      materials pertaining to the Assets which was delivered or made available
      to Purchaser by Vendor or its directors, officers, servants, consultants
      agents or employees prior to or pursuant to this Agreement, including,
      without limitation, any evaluations, projections, reports and interpretive
      or non-factual materials prepared by or for Vendor, or otherwise in
      Vendor's possession.

            

    

     

    
      	
               
      

            	
              4.03

            	
              Purchaser's
      Representations

            

    

     

    Purchaser
represents and warrants to Vendor as of the Effective Date and Closing Date
that:

     

    
      	
               
      

            	
              (a)

            	
              Standing. It is
      a corporation duly organized and validly subsisting under the laws of its
      jurisdiction of incorporation and the laws of those jurisdictions in which
      it is required to be registered for the purposes of this
      transaction:

            

    

     

    
      	
               
      

            	
              (b)

            	
              Requisite
      Authority: It has the corporate capacity, power and authority to
      execute and deliver this Agreement and to purchase and pay for the Assets
      on the terms described in this Agreement and to perform its other
      obligations under this Agreement;

            

    

     

    
      	
               
      

            	
              (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 do
      not and will not violate or conflict with any provision
  of:

            

    

     

    
      	
               
      

            	
              (i)

            	
              the
      charter, bylaws or equivalent governing documents relating to it or any
      Regulations applicable to it; or

            

    

     

    
      	
               
      

            	
              (ii)

            	
              any
      agreement or instrument to which it is a party or by which it is bound and
      of which it has knowledge or any judgment, decree or order applicable to
      it;

            

    

     

    
      	
               
      

            	
              (d)

            	
              Execution and
      Enforceability: This Agreement and all documents executed and
      delivered pursuant to this Agreement have been duly authorized, executed
      and delivered by it and are legal, valid and binding obligations of it
      enforceable against it In accordance with their
  terms;

            

    

     

    
      	
               
      

            	
              (e)

            	
              Investment Canada
      Act: It is not a "non-Canadian" as that term is defined in tile
      Investment Canada Act (Canada);

            

    

     

    
      	
               
      

            	
              (f)

            	
              Authorizations:
      No authorization or approval or other action by, or notice to or filing
      with, any governmental authority or regulatory body exercising
      jurisdiction over tile Assets is required for the due execution, delivery
      and performance by it of this Agreement, other than authorizations,
      approvals or exemptions previously obtained and currently in force or
      regulatory consents or approvals to the transfer of well and pipeline
      licenses and permits and other similar licenses and permits available only
      after Closing in the ordinary
course.

            

    

     

    
      	
               
      

            	
              4.04

            	
              Enforcement
      Limitation

            

    

     

    Except
for fraud on the part of Vendor, Purchaser may not enforce any claim for any
breach or failure of any representation and warranty contained in clause 4.01
unless it has given Vendor notice of the claim within one (1) year of the
Closing Date, including particulars of the representation and warranty alleged
to have failed or been breached and of the alleged facts giving rise to the
breach or failure. Similarly, except for fraud on the part of Purchaser Vendor
may not enforce any claim for any breach or failure of any representation and
warranty contained in clause 4.0:3 unless it has given Purchaser notice of the
claim within one (1) year of the Closing Date, including particulars of the
representation and warranty alleged to have failed or been breached and of the
alleged facts giving rise to the breach or failure. A breach or failure of the
representations and warranties prior to Closing Date (unless it has previously
been remedied in full to the satisfaction of the other Party by the Party whose
representation and warranty has failed) entitles tile other Party to declare
this Agreement terminated and of no effect. A misrepresentation or failure of
the representations and warranties subsequent to Closing Date shall only entitle
a party to claim damages.

     

    
      
         

      

      
         

        
          

        

      

      
         

      

    

     

    ARTICLE
5

    RECOURSE

    

    5.01       Liabilities and
Indemnities

     

    
      	
               
      

            	
              (a)

            	
              Except
      as provided in sub-clauses (c) and (d) of this clause, Vendor shall to
      tine extent of the interest in the Assets to be purchased by the
      Purchaser:

            

    

     

    
      	
               
      

            	
              (i)

            	
              be
      liable to Purchaser for all losses, costs, damages (including legal costs
      on a solicitor/client basis) and expenses whatsoever which Purchaser may
      suffer, sustain, payor incur: and in
addition

            

    

     

    
      	
               
      

            	
              (ii)

            	
              Indemnify
      and save Purchaser and its directors, officers, servants, consultants,
      agents and employees harmless from and against all claims. liabilities,
      actions, proceedings, demands, losses, costs, damages (including ,legal
      costs on a solicitor/client basis) and expenses whatsoever which may be
      brought against or suffered by Purchaser or its directors, officers,
      servants, consultants, agents or employees or which it may suffer, sustain
      payor incur;

            

    

     

    
      	
               
      

            	
              by
      reason of any matter or thing arising out of, resulting from, attributable
      to or connected with the Assets and occurring or accruing prior to the
      Effective Date, except any losses, costs, damages, expenses, claims,
      liabilities, actions, proceedings and demands to the extent that the same
      are caused by the gross negligence or willful or wanton misconduct of
      Purchaser. This subclause (a) is not a title warranty and does not provide
      an extension of any warranty contained in clause 4.01 or any additional
      remedy with respect to the Vendor's breach of such a representation or
      warranty. Notwithstanding any provision herein, Purchaser may not enforce
      any claim respecting the liability of Vendor or the indemnity hereby
      granted by Vendor to Purchaser in this subclause (a) unless it has given
      Vendor notice of the claim within six (6) months of the Closing Date,
      including particulars of the alleged facts giving rise to the
      claim.

            

    

     

    
      	
               
      

            	
              (b)

            	
              Purchaser
      shall to the extent of the interest in the Assets to be purchased by the
      Purchaser:

            

    

     

    
      	
               
      

            	
              (i)

            	
              be
      liable to Vendor for all losses, costs, damages (including legal costs on
      a solicitor/client basis) and expenses whatsoever which Vendor may suffer
      sustain, payor incur; and, in
addition

            

    

     

    
      	
               
      

            	
              (ii)

            	
              indemnify
      and save Vendor and its directors, officers, servants, consultants, agents
      and employees harmless from and against all claims, liabilities, actions,
      proceedings, demands, losses, costs, damages (including legal costs on a
      solicitor/client basis) and expenses whatsoever which may be brought
      against or suffered by Vendor or its directors officers, servants,
      consultants, agents or employees or which it may suffer, sustain, payor
      incur;

            

    

     

    by reason
of any matter or thing arising out of, resulting from, attributable t() or
connected with the Assets and occurring or accruing on or after the Effective
Date, except any losses, costs, damages, expenses, claims, liabilities, actions,
proceedings and demands to the extent that the same are caused by tile gross
negligence or willful or wanton misconduct of Vendor;

     

    
      	
               
      

            	
              (c)

            	
              In
      no event shall the total of the liabilities and indemnities of Vendor
      under this Agreement, including without limitation any claims relating to
      its representations and warranties, exceed the Purchase
    Price;

            

    

     

    
      	
               
      

            	
              (d)

            	
              Notwithstanding
      the foregoing provisions of this clause, but subject to the
      representations and warranties of Vendor herein contained, it is
      understood and agreed that Purchaser is acquiring the Assets on an "as is,
      where is" basis as of the Effective Date. Purchaser agrees that it is
      familiar with the condition and use of the Assets, that Vendor has
      provided Purchaser with a reasonable opportunity to inspect the Assets at
      the sole cost, risk and expense of Purchaser (insofar as Vendor could
      reasonably provide such access) and that it is not relying upon any
      representation or warranty from Vendor as to the condition, environmental
      or otherwise, of the Assets except as is specifically made pursuant to
      clause 401 Purchaser further agrees that on and after the Effective Date
      it shall:

            

    

     

    
      	
               
      

            	
              (i)

            	
              be
      solely liable and responsible for any and all losses, costs, damages
      (including legal costs on a solicitor/client basis) and expenses which
      Vendor may suffer, sustain, pay or incur; and, in
  addition

            

    

     

    
      
         

      

      
         

        
          

        

      

      
         

      

    

     

    
      	
               
      

            	
              (ii)

            	
              indemnify
      and save Vendor and its directors, officers, servants, agents and
      employees harmless from and against any and all claims, liabilities,
      actions, proceedings, demands, losses, costs, damages (including legal
      costs on a solicitor/client basis) and expenses whatsoever which may be
      brought against or suffered by Vendor or its directors, officers,
      servants, consultants, agents or employees or which it may suffer,
      sustain, payor incur;

            

    

     

    by reason
of any matter or thing arising out of, resulting from, attributable to or
connected with any environmental responsibilities pertaining to tile Assets, or
any of them whether occurring or accruing before, on or after the Effective Date
including without limitation, damage from or removal of hazardous or toxic
substances, spills of any nature whatsoever, clean-up, well abandonment and
reclamation. Purchaser hereby releases Vendor from any claims Purchaser may have
against Vendor with respect to all such liabilities and responsibilities, except
for any claims which Purchaser may have for the breach of a representation or
warranty made by Vendor pursuant to clause 4.01

     

    5.02        Application To Other
Documentation

    

    The
liabilities and indemnities contained in clause 5.01 shall be deemed to apply
to. and shall not merge in, any conveyances, transfers, assignments, novation
agreements and other documents or instruments conveying the Assets to Purchaser
or otherwise provided with respect to the transactions herein, despite the
actual terms of such agreements. notwithstanding any rule of law, equity or
statute to the contrary, and all such rules are hereby waived. Any claim by a
Party must be made by notice to the other Party and include particulars of the
claim and of the facts giving rise to it.

    

    5.03        Substitution and
Subrogation

    

    To tile
extent possible, Vendor shall convey the Assets to Purchaser with full right of
substitution and subrogation of Purchaser in the position of Vendor with respect
to the benefit of

    all
covenants and warranties previously given by others for the Assets or any part
of them.

    

    ARTICLE
6

    COMPLETION

    

    6.01        Closing and
Adjustments

    

    The
closing of the purchase and sale contemplated by this Agreement with respect to
the Assets shall take place at the offices of Vendor at ("Closing Date"), or at
any other place or on any other Closing Date agreed to in writing among the
Parties;

    

    6.02        Purchaser's Conditions
Precedent

    

    The
following are conditions precedent to Purchaser's obligation to complete the
purchase contemplated by this Agreement:

     

    
      	
               
      

            	
              (a)

            	
              Damage Except
      as approved in writing by Purchaser, between the Effective Date and
      Closing Date there shall have been no damage to or alteration of the
      Assets (including but not limited to, any significant amendment to any
      agreement or instrument forming a part of them) which would materially and
      adversely affect the aggregate value of the
  Assets;

            

    

     

    
      	
               
      

            	
              (b)

            	
              Warranties
      True: Vendor's representations and warranties contained in clause
      4.01 shall be true and correct In all material respects, on the Effective
      Date and on Closing Date. Purchaser shall not on Closing Date be aware of
      any facts indicating the contrary and Vendor shall on Closing Date have
      delivered to Purchaser a Certificate of a Vice-President, Corporate
      Secretary or other senior officer of Vendor, in the form attached as
      Schedule "E", dated as of Closing Date, stating that the representations
      and warranties contained in clause 4 01 are true and correct on the
      Effective Date and on Closing Date;

            

    

     

    
      	
               
      

            	
              (c)

            	
              Conveyances:
      Purchaser shall on Closing Date have received the
  followmg

            

    

     

    
      	
               
      

            	
              (i)

            	
              the
      General Conveyance, in the form attached as Schedule "D", and all
      transfers, conveyances, assignments, novation agreements, notices and
      other documents and Instruments reasonably required by Purchaser for the
      purpose of effecting the purchase and sale of all of the Assets in
      accordance with, the terms of this Agreement, executed by Vendor (but
      execution by third parties shall not be required);
  and

            

    

     

    
      
         

      

      
         

        
          

        

      

      
         

      

    

     

    
      	
               
      

            	
              (ii)

            	
              either
      the documents included in Miscellaneous Interests 01 an undertaking to
      Purchaser to provide them within thirty (30) days following Closing Date
      or any longer period required to allow Vendor to complete the production
      and revenue accounting up to the Closing Date. Purchaser shall provide
      Vendor reasonable access to all of the documents Included in Miscellaneous
      Interests after Closing Date or until Purchaser divests or disposes of the
      Assets, whichever occurs first; provided that in the event of divestment
      or disposal of the Assets or any of them by Purchaser, Purchaser shall use
      reasonable efforts in its arrangement with a Subsequent Purchaser, to
      maintain access by Vendor to the
documents

            

    

     

    
      	
               
      

            	
              (d)

            	
              Agreement
      Compliance: Vendor shall have complied in all material respects with all
      of its covenants and agreements herein
  contained;

            

    

     

    
      	
               
      

            	
              (e)

            	
              Regulatory
      Approval: The Purchaser shall have received all necessary
      regulatory and TSX Venture Exchange approvals for the transactions herein
      contained.

            

    

     

    The
conditions in this clause 602 are for the sole benefit of Purchaser and may be
waived in whole or in part by Purchaser in writing. If any of the preceding
conditions is not satisfied or waived on or before Closing Date, Purchaser may
terminate this Agreement by notice given to Vendor on or before Closing Date and
clause 7.01 shall apply.

     

    6.03        Vendor's Conditions
Precedent

    

    The
following are conditions precedent to Vendor's obligation to complete the sale
contemplated by this Agreement

     

    
      	
               
      

            	
              (a)

            	
              Payment:
      Purchaser shall on Closing Date have delivered to Vendor a certified
      cheque or bank draft payable in Canadian funds to Vendor in the amount
      equal to the Purchase Price, as adjusted pursuant to clause
      2.02;

            

    

     

    
      	
               
      

            	
              (b)

            	
              Warranties
      True: Purchaser's representations and warranties contained in
      clause 4.03 shall be true and correct in all material respects, on the
      Effective Date and on Closing Date. Vendor shall not on Closing Date be
      aware of any facts indicating the contrary and Purchaser shall on Closing
      Date have delivered to Vendor a Certificate of a Vice-President, Corporate
      Secretary or other senior officer of Purchaser, in the form attached as
      Schedule "E", dated as of Closing Date, stating that the representations
      and warranties contained in clause 4.03 are true and correct on the
      Effective Date and on Closing Date;

            

    

     

    
      	
               
      

            	
              (c)

            	
              Conveyances:
      Vendor shall on Closing Date have received from Purchaser the Genera!
      Conveyance, in the form attached as Schedule "D", executed by
      Purchaser:

            

    

     

    
      	
               
      

            	
              (d)

            	
              Agreement
      Compliance: Purchaser shall have complied in all material respects
      with all of its covenants and agreements herein
  contained;

            

    

     

    
      	
               
      

            	
              (e)

            	
              Regulatory
      Approval: The Purchaser shall have received all necessary
      regulatory and TSX Venture Exchange approvals for the transactions herein
      contained:

            

    

     

    
      	
               
      

            	
              (f)

            	
              Board
      Approval:  The Board of Directors of Vendor shall have
      approved the transaction

            

    

     

    The
conditions in this clause 6.03 are for the sole benefit of Vendor and may be
waived in whole or in part by Vendor in writing. If any of the preceding
conditions is not satisfied or waived on or before Closing Date, Vendor may
terminate this Agreement by notice given to Purchaser on or before Closing Date
and clause 7.01 shall apply.

     

    6.04        Post-Completion
Administration

     

    
      	
               
      

            	
              (a)

            	
              If
      the purchase and sale contemplated by this Agreement is completed, then
      until Purchaser becomes the recognized holder of the Assets in the place
      of Vendor the provisions of clause 3.06 shall apply to the assets and
      Vendor shall:

            

    

    

    
      	
               
      

            	
              (i)

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

            

    

     

    
      
         

      

      
         

        
          

        

      

      
         

      

    

     

    
      	
               
      

            	
              (ii)

            	
              in
      a timely manner deliver to Purchaser all revenues, proceeds and other
      benefits received by Vendor for the Assets after deduction of any amounts
      owing by Purchaser to Vendor relating to the
  Assets:

            

    

     

    
      	
               
      

            	
              (iii)

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

            

    

     

    
      	
               
      

            	
              (iv)

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

            

    

     

    
      	
               
      

            	
              (v)

            	
              as
      agent of Purchaser, do and perform all acts and things, and execute and
      deliver all agreements, notices and other documents and instruments, that
      Purchaser reasonably requests for the purpose of facilitating the exercise
      of rights incidental to the ownership of the Assets. Vendor shall not be
      liable to Purchaser for any loss or damage suffered by Purchaser in
      connection with the arrangement established by this clause 6.04, except to
      the extent that the loss or damage is caused by Vendor's gross negligence
      or its willful misconduct and Purchaser shall indemnify and save Vendor
      and its directors, officers, servants, consultants, agents and employees
      harmless from and against any liabilities, losses, costs, claims, demands,
      actions, proceedings and damages (including legal costs on a
      solicitor/client basis) which may be brought against or suffered by any of
      them arising out of the performance by Vendor of its obligations under
      this clause 6.04 An action or omission of Vendor or its directors,
      officers, servants, consultants, agents or employees shall not be regarded
      as gross negligence or willful misconduct, however, to the extent it was
      done or omitted to be done in accordance with the instructions of or with
      the concurrence of Purchaser. Nothing in this clause 6.04 shall be
      construed as extending or restricting or limiting in any manner any of the
      other covenants, warranties, representations or other obligations of the
      Parties under this Agreement.

            

    

     

    
      	
               
      

            	
              (b)

            	
              All
      costs incurred in connection with the operation of the Assets, for which
      Vendor is also Operator, after the Closing Date until Vendor is relieved
      of its responsibilities as Operator of the Assets, shall be reimbursed by
      Purchaser to Vendor as to the Purchaser's
  interest.

            

    

     

    
      	
               
      

            	
              (c)

            	
              Vendor
      may retain or subsequently obtain from Purchaser copies or photocopies of
      any of the documents comprised in Miscellaneous Interests that it
      considers necessary to enable it to comply with any Regulations or the
      requirements of any authority or to conduct audits relating to the period
      prior to the Effective Date

            

    

     

    
      	
               
      

            	
              (d)

            	
              Purchaser
      shall register any conveyances of title to the Assets to it in accordance
      with clause 7.09.

            

    

     

    
      	
               
      

            	
              6.05

            	
              Default - Remedies of
      Injured Party and Interest
Payable

            

    

     

    
      	
               
      

            	
              (a)

            	
              If
      a Party (hereinafter referred to as lithe Defaulting Party") fails to
      comply with any of the terms and conditions of this Agreement such that
      closing does not occur, the other Party (hereinafter referred to as lithe
      Injured Party") may, by notice to the Defaulting Party, elect
      to:

            

    

     

    
      	
               
      

            	
              (i)

            	
              treat
      this agreement as terminated by reason of the non-fulfillment of the
      obligations of the Defaulting
Party;

            

    

     

    
      	
               
      

            	
              (ii)

            	
              treat
      this Agreement as terminated by reason of the non-fulfillment of the
      obligations of the Defaulting Party and pursue a claim for damages;
      or

            

    

     

    
      	
               
      

            	
              (iii)

            	
              continue
      to treat this Agreement as binding and
  enforceable.

            

    

     

    However,
the Injured Party shall be deemed to be treating the agreement as in effect and
enforceable, unless and until it specifically elects to give notice to the
Defaulting Party that it is pursuing an alternative in either paragraph (i) or
(ii)

     

    
      	
               
      

            	
              (b)

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

            

    

     

    
      
         

      

      
         

        
          

        

      

      
         

      

    

    ARTICLE
7

     

    GENERAL

    

    7.01        Consequences of
'Termination

    

    If this
Agreement is terminated in accordance with its terms prior to the completion of
the purchase and sale, then except for obligations respecting confidentiality
and for covenants, warranties, representations or other obligations breached or
accrued prior to the time at which termination occurs, the Parties shall be
released from all of their obligations under this Agreement and each Party shall
be responsible for its own costs, If this Agreement is so terminated, Purchaser
shall immediately return to Vendor all materials delivered to Purchaser by
Vendor, together with all copies of them that may have been made by or for
Purchaser or its agents or consultants.

    

    7.02        Brokers'
Fees

     

    Neither
Party will be liable for the payment of any commissions or compensation in the
nature of finders' fees to any broker or agent acting on behalf of the other
Party, and each of the Parties indemnifies the other from any payment or claim
for finders' fees and from any liabilities, losses, costs, claims, demands,
actions, proceedings and damages (including legal costs on a solicitor/client
basis) suffered or incurred in connection with finders' fees.

     

    7.03        Notices

     

    
      	
               
      

            	
              (a)

            	
              All
      notices and other communications permitted or required hereunder shall be
      in writing to the Parties at their address for service and may be given by
      personal delivery or by mail in a sealed and properly addressed envelope
      with postage prepaid or by facsimile, telegram, telex. telecommunication
      device or other similar form of
communication;

            

    

     

    
      	
               
      

            	
              (b)

            	
              Any
      notice or communication shall:

            

    

     

    
      	
               
      

            	
              (i)

            	
              if
      delivered, be deemed to have been given or made at the time of
      delivery;

            

    

     

    
      	
               
      

            	
              (ii)

            	
              if
      mailed, postage prepaid and properly addressed. be deemed to have been
      given or made at noon, local time, on the earlier of the actual date of
      receipt or the 4th Business Day following the day on which It was mailed.
      If at the time of mailing or between the time of mailing and the actual
      receipt of the notice, a postal disruption, mail strike, slowdown or other
      labour dispute occurs that may affect the delivery of the notice by mail,
      then the notice is effective only if actually delivered or if given in
      accordance with paragraph (b)(iii);
and

            

    

     

    
      	
               
      

            	
              (iii)

            	
              if
      sent by facsimile telegraph, telex, telecommunication device or other
      similar form of communication, be deemed to have been given or made on the
      Business Day following the day on which it was
  sent;

            

    

     

    
      	
               
      

            	
              (c)

            	
              For
      the purposes of this clause 7.03. the address for service of the Parties
      shall be as follows:

            

    

     

    
      	
               
      

            	
              Purchaser:

            

    

     

    
      	
               
      

            	
              Vendor:

            

    

    

    Any Party
may give notice of change of address in the same manner described in this
clause. In which event subsequent notices and other communications shall be
given to that Party at the changed address.

    

    
      
         

      

      
         

        
          

        

      

      
         

      

       

    

    7.04        Public
Announcements

    

    Vendor
and Purchaser shall cooperate with each other in releasing information
concerning this Agreement and the transactions provided for by it, and shall
furnish to and discuss with the other Party drafts of all press and other
releases prior to publication. This clause does not prevent either Party from
furnishing information to any governmental agency or regulatory authority or to
the public if required by the Regulations, however, the Parties shall advise
each other in advance of any public statement they propose to make regarding
this Agreement. Vendor may provide information relating to this Agreement and
the identity of Purchaser in connection with any Preferential Right or similar
restriction on the Assets.

    

    7.05        Assignment

    

    Prior to
and including the Closing Date, the Vendor and the Purchaser will not assign
their interest in this Agreement without the prior written consent of the other
Party.

    

    7.06        Enurement

    

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

    

    7.07        Time of
Essence

    

    Time is
of the essence in this Agreement

    

    7.08        Governing
Law

    

    This
Agreement shall be governed by and construed in accordance with the Regulations
in force in the Province of Alberta and each of the Parties submits to the
jurisdiction of the courts of the Province of Alberta for the interpretation and
enforcement of this Agreement

    

    7.09        Further
Assurances

    

    
      	
               
      

            	
              (a)

            	
              Each
      of the Parties shall on and after Closing Date, at the request of the
      other and without further consideration, do and perform all further acts
      and execute and deliver all further documents reasonably required to
      assure the conveyance of the Assets to Purchaser in accordance with the
      provisions of this Agreement and to assure the carrying out of the terms
      of this Agreement:

            

    

     

    
      	
               
      

            	
              (b)

            	
              Vendor
      shall co-operate with Purchaser in securing execution of all documents by
      third parties where their execution is required and in registering those
      documents at the public offices where, in the reasonable opinion of
      Purchaser, registration is appropriate. Purchaser shall be responsible for
      all costs of registration and all costs associated with obtaining
      execution by third Parties. Purchaser shall also be responsible for
      preparing and registering any further assurances required to convey the
      Assets to it. Purchaser shall register all such documents
      promptly.

            

    

     

    
      	
               
      

            	
              7.10

            	
              Waiver

            

    

     

    A waiver
by either Party is not effective unless in writing and a waiver affects only the
matter and its occurrence specifically identified in the writing granting the
waiver and does not extend to any other matter or occurrence.

    

    7.11        Non-Merger

    

    The
provisions contained in this Agreement including without limitation those in
Articles 4 and 5 shall survive Closing and shall not merge in, but be deemed to
apply to, all conveyances, transfers. assignments, novation agreements and other
documents or instruments conveying the Assets to Purchaser or otherwise provided
with respect to the transactions herein, despite the actual terms of such
agreements, notwithstanding any rule of law, equity or statute to the contrary,
and all such rules are hereby waived.

    

    7.12        No Amendment Except in
Writing

    

    This
Agreement may be amended only by written instrument executed by the Parties,
except that Schedule "A" may be amended if evidenced in writing by the signature
or initials of an authorized signatory of each F)'arty.

    

    7.13        Supersedes Prior
Agreements

    

    This
Agreement supersedes all other agreements between the Parties with respect to
the purchase and sale of the Assets and expresses the entire agreement of the
Parties with respect to the transactions contained herein.

    

    
      
         

      

      
         

        
          

        

      

      
         

      

    

     

    7.14        Counterpart

    

    This
Agreement may be! executed in as many counterpart!) as are necessary and all
executed counterparts together shall constitute one agreement.

    

    IN WITNESS WHEREOF the Parties
have duly executed this agreement.

    

    
      
        
          
            
              
                
                  
                    
                      
                        	
                                Poplar
      Point Energy Ltd

                              	 	
                                Guildhall
      Minerals Ltd.

                              
	 
      	 	 
      
	 
      	 	 
      
	
                                Brad
      Nichol

                              	 	 
      

                      

                    

                  

                

              

            

          

        

      

    

    

    Execution
page to an Agreement of Purchase and Sale dated the 15th day of April, 2009,
between Poplar Point Energy Ltd, as Vendor, and Guildhall Minerals Ltd., as
PurchaserSTOCK
OPTION AGREEMENT

     

    THIS
STOCK OPTION AGREEMENT (“Agreement”) is made
and entered into by and between ZST Digital Networks, Inc. (“Company”), a Delaware
corporation, and John Chen, M.D. (“Optionee”), effective
on October 20, 2009.  (Company and Optionee are sometimes referred to
herein as “party” or
collectively as the “parties.”)

     

    RECITALS

     

    WHEREAS, the Company has entered into
an employment agreement dated as of October 8, 2009 for the purpose of retaining
the services of the Optionee in the service of the Company (or any Parent or
Subsidiary) (the “Employment
Agreement”);

     

    WHEREAS, Optionee is to render valuable
services to the Company (or a Parent or Subsidiary), and this Agreement is
executed pursuant to, and is intended to carry out the purposes of, the
Employment Agreement in connection with the Company’s grant of an option to
Optionee.  All capitalized terms in this Agreement shall have the
meaning assigned to them in the attached Appendix.

     

    NOW, THEREFORE, it is hereby agreed as
follows:

     

    1.           Grant of
Option.  The Company hereby grants to Optionee, on October 20,
2009 (the “Grant
Date”), an option to purchase up to Twenty-Five Thousand (25,000) shares
of Common Stock (the “Option
Shares”).  The Option Shares shall be purchasable from time to
time during the option term specified in Paragraph 2 at $8.00 per share (the
“Exercise
Price”).

     

    2.           Option
Term.  This option shall have a term of five (5) years measured
from the Grant Date (the “Expiration Date”) and
shall accordingly expire at the close of business on the Expiration Date, unless
sooner terminated in accordance with Paragraph 5.

     

    3.           Limited
Transferability.

     

    (a)           This
option shall be neither transferable nor assignable by Optionee other than by
will or the laws of inheritance following Optionee’s death and may be exercised,
during Optionee’s lifetime, only by Optionee.  However, Optionee may
designate one or more persons as the beneficiary or beneficiaries of this
option, and this option shall, in accordance with such designation,
automatically be transferred to such beneficiary or beneficiaries upon the
Optionee’s death while holding this option.  Such beneficiary or
beneficiaries shall take the transferred option subject to all the terms and
conditions of this Agreement, including (without limitation) the limited time
period during which this option may, pursuant to Paragraph 5, be exercised
following Optionee’s death.

    
      
         

      

      
        1

        
          

        

      

      
         

      

    

     

    (b)           As
a Non-Statutory Option, this option may be assigned in whole or in part during
Optionee’s lifetime to one or more members of Optionee’s family or to a trust
established for the exclusive benefit of one or more such family members or to
Optionee’s former spouse, to the extent such assignment is in connection with
the Optionee’s estate plan or pursuant to a domestic relations
order.  The assigned portion shall be exercisable only by the person
or persons who acquire a proprietary interest in the option pursuant to such
assignment.  The terms applicable to the assigned portion shall be the
same as those in effect for this option immediately prior to such
assignment.

     

    4.           Dates of
Exercise.  This option shall become immediately exercisable on
the Grant Date, but to the extent exercised, will be subject to a repurchase
right of the Company specified in Paragraph 10, which will lapse as follows: 50%
of this option and Option Shares will vest six (6) months after the Grant Date
and the remaining 50% will vest twelve (12) months after the Grant Date (the
“Vesting
Schedule”).

     

    5.           Cessation
of Service.  The option term specified in Paragraph 2 shall
terminate (and this option shall cease to be outstanding) prior to the
Expiration Date should any of the following provisions become
applicable:

     

    (a)           Should
Optionee cease to remain in Service for any reason (other than Optionee’s
termination of his employment without Good Reason or the Company’s termination
of Optionee’s employment for Cause) while this option is outstanding, then
Optionee (or any person or persons to whom this option is transferred pursuant
to a permitted transfer under Paragraph 3) shall have a period of thirty
(30) days (commencing with the date of such cessation of Service) during which
to exercise this option, but in no event shall this option be exercisable at any
time after the Expiration Date.

     

    (b)           During
the limited period of post-Service exercisability, this option may not be
exercised in the aggregate for more than the number of Option Shares in which
Optionee is, at the time of Optionee’s cessation of Service, vested pursuant to
the Vesting Schedule or the special vesting acceleration provisions of Paragraph
6.  Upon the expiration of such limited exercise period or (if
earlier) upon the Expiration Date, this option shall terminate and cease to be
outstanding for any vested Option Shares for which the option has not been
exercised.  To the extent Optionee is not vested in one or more Option
Shares at the time of Optionee’s cessation of Service, this option shall
immediately terminate and cease to be outstanding with respect to those
shares.

     

    (c)           Should
Optionee’s Service be terminated by Optionee without Good Reason or by the
Company for Cause, then this option shall terminate immediately and cease to
remain outstanding.

    
      
         

      

      
        2

        
          

        

      

      
         

      

    

     

    6.           Accelerated
Vesting.  In the event that Optionee’s Service is terminated by
the Company for Cause or by Optionee for Good Reason, then the Option Shares at
the time subject to this option but not otherwise vested shall automatically
vest in full so that this option shall become exercisable for all of the Option
Shares as fully vested shares and may be exercised for any or all of those
Option Shares as vested shares pursuant to the terms of Section 5.

     

    7.           Adjustment
in Option Shares.  Should any change be made to the Common
Stock by reason of any stock split, stock dividend, recapitalization,
combination of shares, exchange of shares or other change affecting the
outstanding Common Stock as a class without the Company’s receipt of
consideration, appropriate adjustments shall be made to (i) the total number
and/or class of securities subject to this option and (ii) the Exercise Price in
order to reflect such change and thereby preclude a dilution or enlargement of
benefits hereunder.

     

    8.           Stockholder
Rights.  The holder of this option shall not have any
stockholder rights with respect to the Option Shares until such person shall
have exercised the option, paid the Exercise Price and become the record holder
of the purchased shares.

     

    9.           Manner of
Exercising Option.

     

    (a)           In
order to exercise this option with respect to all or any part of the Option
Shares for which this option is at the time exercisable, Optionee (or any other
person or persons exercising the option) must take the following
actions:

     

    (i)           Execute
and deliver to the Company a Purchase Agreement for the Option Shares for which
the option is exercised.

     

    (ii)           Pay
the aggregate Exercise Price for the purchased shares in cash or check made
payable to the Company.

     

    Should
the Common Stock be registered under Section 12 of the 1934 Act at the time the
option is exercised, then the Exercise Price may also be paid as
follows:

     

    (A)           in
shares of Common Stock held by Optionee (or any other person or persons
exercising the option) for the requisite period necessary to avoid a charge to
the Company’s earnings for financial reporting purposes and valued at Fair
Market Value on the Exercise Date; or

     

    (B)           to
the extent the option is exercised for vested Option Shares, through a special
sale and remittance procedure pursuant to which Optionee (or any other person or
persons exercising the option) shall concurrently provide irrevocable
instructions (a) to a Company-designated brokerage firm to effect the immediate
sale of the purchased shares and remit to the Company, out of the sale proceeds
available on the settlement date, sufficient funds to cover the aggregate
Exercise Price payable for the purchased shares plus all applicable income and
employment taxes required to be withheld by the Company by reason of such
exercise and (b) to the Company to deliver the certificates for the purchased
shares directly to such brokerage firm in order to complete the
sale.

    
      
         

      

      
        3

        
          

        

      

      
         

      

    

     

    Except to
the extent the sale and remittance procedure is utilized in connection with the
option exercise, payment of the Exercise Price must accompany the Purchase
Agreement delivered to the Company in connection with the option
exercise.

     

    (iii)           Furnish
to the Company appropriate documentation that the person or persons exercising
the option (if other than Optionee) have the right to exercise this
option.

     

    (iv)           Execute
and deliver to the Company such written representations as may be requested by
the Company in order for it to comply with the applicable requirements of
applicable securities laws.

     

    (v)           Make
appropriate arrangements with the Company (or Parent or Subsidiary employing or
retaining Optionee) for the satisfaction of all applicable income and employment
tax withholding requirements applicable to the option exercise.

     

     (b)          As
soon as practical after the Exercise Date, the Company shall issue to or on
behalf of Optionee (or any other person or persons exercising this option) a
certificate for the purchased Option Shares, with the applicable appropriate
legends affixed thereto.

     

     (c)          In
no event may this option be exercised for any fractional shares.

     

    10.           REPURCHASE
RIGHTS.  ALL
OPTION SHARES ACQUIRED UPON THE EXERCISE OF THIS OPTION SHALL BE SUBJECT TO
CERTAIN RIGHTS OF THE COMPANY AND ITS ASSIGNS TO REPURCHASE THOSE SHARES IN
ACCORDANCE WITH THE TERMS SPECIFIED IN THE PURCHASE
AGREEMENT.

     

    11.           Compliance
with Laws and Regulations.

     

     (a)          The
exercise of this option and the issuance of the Option Shares upon such exercise
shall be subject to compliance by the Company and Optionee with all applicable
requirements of law relating thereto and with all applicable regulations of any
Stock Exchange on which the Common Stock may be listed for trading at the time
of such exercise and issuance.

     

     (b)          The
inability of the Company to obtain approval from any regulatory body having
authority deemed by the Company to be necessary to the lawful issuance and sale
of any Common Stock pursuant to this option shall relieve the Company of any
liability with respect to the non-issuance or sale of the Common Stock as to
which such approval shall not have been obtained.  The Company,
however, shall use its best efforts to obtain all such
approvals.

    
      
         

      

      
        4

        
          

        

      

      
         

      

    

     

     (c)           The
Company intends that this option not be considered to provide for the deferral
of compensation under Section 409A of the Code and that this Agreement shall be
so administered and construed.  Further, the Company may modify this
award to the extent necessary to fulfill this intent.

     

    12.           Successors
and Assigns.  Except to the extent otherwise provided in
Paragraph 3, the provisions of this Agreement shall inure to the benefit of, and
be binding upon, the Company and its successors and assigns and Optionee,
Optionee’s assigns and the legal representatives, heirs and legatees of
Optionee’s estate.

     

    13.           Notices.  Any
notice required to be given or delivered to the Company under the terms of this
Agreement shall be in writing and addressed to the Company at its principal
corporate offices.  Any notice required to be given or delivered to
Optionee shall be in writing and addressed to Optionee at the address indicated
below Optionee’s signature line on the this Agreement.  All notices
shall be deemed effective upon personal delivery or upon deposit in the U.S.
mail, postage prepaid and properly addressed to the party to be
notified.

     

    14.           Construction.  This
Agreement and the option evidenced hereby are made and granted pursuant to the
Employment Agreement and are in all respects limited by and subject to the terms
of the Employment Agreement.  All decisions of the Board with respect
to any question or issue arising under the Employment Agreement or this
Agreement shall be conclusive and binding on all persons having an interest in
this option.

     

    15.           Governing
Law.  The interpretation, performance and enforcement of this
Agreement shall be governed by the laws of the State of Delaware without resort
to that State’s conflict-of-laws rules.

     

    [SIGNATURES
ON FOLLOWING PAGE]

    
      
         

      

      
        5

        
          

        

      

      
         

      

    

    WHEREFORE, the parties hereto have
executed this Agreement on the dates indicated below.

     

    
      
        
          
            
              
                
                  	 
      	
                          ZST
      DIGITAL NETWORKS, INC.

                        
	 	 
	 
      	
                          By:

                        	
                            
      /s/ Zhong Bo

                        
	 
      	 
      	
                          Name:
      Zhong Bo

                        
	 
      	 
      	
                          Title:
      Chief Executive Officer

                        
	 
      	 
      	 
      
	 
      	
                          JOHN
      CHEN, M.D.

                        
	 	 
	 
      	
                             /s/ John
  Chen

                        
	 
      	 
      
	
                          Address
      for Notice:

                        	
                           

                        
	 
      	 
      
	 
      	
                           

                        
	 
      	 
      
	 
      	
                           

                        

                

              

            

          

        

      

    

     

    
      
         

      

      
        6

        
          

        

      

      
         

      

    

    APPENDIX

     

    The following definitions shall be in
effect under the Agreement:

     

    A.           Agreement
shall mean this Stock Option Agreement.

     

    B.           Board
shall mean the Company’s Board of Directors or the Compensation Committee or
other similar committee of the Board acting in its capacity.

     

    C.           Cause shall mean (i) the
commission of an act or acts of dishonesty, fraud, embezzlement, or
misappropriation of funds or proprietary information by Optionee in connection
with his employment duties or responsibilities; or (ii) Optionee’s conviction
of, or plea of nolo contendere to, a felony or a crime involving moral turpitude
(other than minor traffic violations); or (iii) Optionee materially breaches his
obligations under the Employment Agreement, including failure to perform his job
duties satisfactorily or failure to follow the Company’s policies or any
directive of the Company, if such failure or refusal is not cured by Optionee
within ten (10) days after receiving written notice of such from the Company; or
(iv) Optionee’s willful or gross misconduct in connection with his employment
duties.

     

    D.           Code
shall mean the Internal Revenue Code of 1986, as amended.

     

    E.           Common
Stock shall mean the Company’s common stock, $0.0001 par value per
share.

     

    F.           Company
shall mean ZST Digital Networks, Inc., a Delaware corporation, and any successor
corporation to all or substantially all of the assets or voting stock of ZST
Digital Networks, Inc.

     

    G.           Employee
shall mean an individual who is in the employ of the Company (or any Parent or
Subsidiary), subject to the control and direction of the employer entity as to
both the work to be performed and the manner and method of
performance.

     

    H.           Employment
Agreement shall mean that certain employment agreement dated October 8,
2009 by and between the Company and Optionee.

     

    I.           Exercise
Date shall mean the date on which the option shall have been exercised in
accordance with Paragraph 9 of the Agreement.

     

    J.           Exercise
Price shall have the meaning set forth in Paragraph 1 of the
Agreement

     

    K.           Expiration
Date shall have the meaning set forth in Paragraph 2 of the Agreement,
unless sooner terminated in accordance with Paragraph 5.

    
      
         

      

      
        7

        
          

        

      

      
         

      

    

     

    L.           Fair
Market Value per share of Common Stock on any relevant date shall be
determined in accordance with the following provisions:

     

    (i)           If
the Common Stock is at the time listed on any Stock Exchange, then the Fair
Market Value shall be the closing selling price per share of Common Stock on the
date in question on the Stock Exchange determined by the Board to be the primary
market for the Common Stock, as such price is officially quoted in the composite
tape of transactions on such exchange and published in The Wall Street
Journal.  If there is no closing selling price for the Common
Stock on the date in question, then the Fair Market Value shall be the closing
selling price on the last preceding date for which such quotation
exists.

     

    (ii)           If
the Common Stock is at the time not listed on any Stock Exchange, then the Fair
Market Value shall be determined by the Board after taking into account such
factors as the Board shall deem appropriate.

     

    M.           Good
Reason shall mean any of the following, without Optionee’s written
consent: (a) upon a material breach or default of any term of the Employment
Agreement by the Company, or (b) any material reduction in the Optionee’s
duties, position, authority or responsibilities with the Company relative to the
duties, position, authority or responsibilities in effect immediately prior to
such reduction; provided that the Company has not cured or remedied such Good
Reason within fifteen (15) days after written notice of the Good Reason from the
Optionee.

     

    N.           Grant
Date shall.have the meaning set forth in Paragraph 1 of the
Agreement

     

    O.           1934
Act shall mean the Securities Exchange Act of 1934, as
amended.

     

    P.           Non-Statutory
Option shall mean an option not intended to satisfy the requirements of
Code Section 422.

     

    Q.           Option
Shares shall have the meaning set forth in Paragraph 1 of the
Agreement.

     

    R.           Optionee shall mean John Chen,
M.D.

     

    S.           Parent
shall mean any corporation (other than the Company) in an unbroken chain of
corporations ending with the Company, provided each corporation in the unbroken
chain (other than the Company) owns, at the time of the determination, stock
possessing fifty percent (50%) or more of the total combined voting power of all
classes of stock in one of the other corporations in such chain.

     

    T.           Purchase
Agreement shall mean the stock purchase agreement in substantially the
form of Exhibit A to this Agreement.

     

    U.           Service
shall mean the Optionee’s performance of services for the Company (or any Parent
or Subsidiary) in the capacity of an Employee, a non-employee member of the
board of directors or an independent consultant.

    
      
         

      

      
        8

        
          

        

      

      
         

      

    

     

    V.           Stock
Exchange shall mean the NYSE Amex, New York Stock Exchange, Nasdaq Global
Market, Nasdaq Capital Market or the OTC Bulletin Board.

     

    W.           Subsidiary
shall mean any corporation (other than the Company) in an unbroken chain of
corporations beginning with the Company, provided each corporation (other than
the last corporation) in the unbroken chain owns, at the time of the
determination, stock possessing fifty percent (50%) or more of the total
combined voting power of all classes of stock in one of the other corporations
in such chain.

     

    X.           Vesting
Schedule shall have the meaning set forth in Paragraph 4 of the
Agreement.

    
      
         

      

      
        9

        
          

        

      

      
         

      

    

    Exhibit
A

    

    Form
of Stock Purchase Agreement

    
      
         

      

      
        10

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