Document:

Filed by Automated Filing Services Inc. (604) 609-0244 - Megawest Energy Corp. - Exhibit 10.16

	 
	ASSET PURCHASE AGREEMENT 
	 

BY AND AMONG 

MEGAWEST ENERGY
CORP.,
A BRITISH COLUMBIA, CANADA CORPORATION 

MEGAWEST ENERGY
(USA) CORP.,
A NEVADA CORPORATION 

AND 

DEERFIELD ENERGY KANSAS
CORP., 
A DELAWARE CORPORATION 

DATED EFFECTIVE AS OF
MARCH 26, 2007

ASSET PURCHASE AGREEMENT 

          This
  Asset Purchase Agreement (this “Agreement”), executed to be
  effective as of March 26, 2007 (the “Effective Date”), is made
  and entered into by and between MEGAWEST ENERGY CORP., a British Columbia,
  Canada corporation formerly known as Brockton Capital Corp., with its principal
  place of business located at Suite 403, 850 West Hastings Street, Vancouver,
  British Columbia, Canada V6C 1E1 (the “Parent”), MEGAWEST
  ENERGY (USA) CORP., a Nevada corporation wholly owned by Parent (“Buyer”),
  and DEERFIELD ENERGY KANSAS CORP., a Delaware corporation with its principal
  place of business located at PO Box 149, Chetopa, Kansas 67336 (the “Seller”).

WITNESSETH: 

          WHEREAS,
  the Seller desires to sell and the Buyer desires to purchase certain assets
  of the Seller, as more particularly described herein, in exchange for the consideration
  as more particularly described herein; 

          NOW,
  THEREFORE, in consideration of the foregoing premises and the mutual undertakings
  and covenants set forth herein, and for other good and valuable consideration,
  the receipt and sufficiency of which is hereby acknowledged, the parties to
  this Agreement hereby agree as follows: 

ARTICLE I 

PURCHASE OF ASSETS; PURCHASE PRICE 

          1.01
  Assets to be Purchased; Purchase Price. On the Closing Date (as defined
  below), and subject to the terms and conditions of this Agreement, the Seller
  shall sell, assign, convey, and transfer, and the Buyer shall purchase, acquire,
  and accept, the Assets (as defined below), in exchange for Two Hundred Fifty
  Thousand (250,000) of Parent’s fully paid and non-assessable Common Shares
  and the release by the Parent of Deerfield of all of its obligations on the
  Parent Note (collectively, the “Purchase Price”). 

          1.02
  Definition of Assets. The term “Assets” shall mean all
  right, title, and interest that the Seller now has, or may have in the future,
  in and to the properties (both real and personal) and assets (both tangible
  and intangible) as set forth and described on Schedule 1.02. All properties
  and assets not set forth and fully described on Schedule 1.02 are expressly
  excluded from the term “Assets” for the purposes of this Agreement.
  

          1.03
  Assumed Liabilities. Schedule 1.03 sets forth and fully describes
  each and every liability, lien, mortgage, encumbrance, and imperfection of title
  to which the Assets are subject or may be subject in the future due to actions
  or omissions of the Seller (the “Assumed Liabilities”). Except
  for the Assumed Liabilities, the Seller shall convey to the Buyer marketable
  title to the Assets free and clear of any liabilities, liens, mortgages, encumbrances,
  and imperfections of title.

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          1.04
  Net Revenue Interest. The Buyer shall pay to the Seller the net revenue
  interest payable by Seller to Production Co., Inc. (“CPC”)
  pursuant to the Asset Purchase Agreement dated September 12, 2006 between the
  Seller and CPC. 

ARTICLE II 

CLOSING AND CLOSING DATE 

          2.01
  Closing. Subject to the satisfaction or waiver of all of the conditions
  contained in Article VI, the closing of the transactions contemplated by this
  Agreement (the “Closing”) shall be held on (i) March 26, 2007
  or (ii) such other date as the parties hereto may agree in writing, at such
  time and place as the parties hereto may agree. The date on which the Closing
  occurs is referred to herein as the “Closing Date”. At the
  Closing, the parties hereto shall deliver or cause to be delivered the following:

	 	(a) 	
      the Seller shall deliver or cause to be delivered to the
      Buyer:

	 	 	 	 
	 		(i) 	
      title to and possession of the Assets by means of an
      executed copy of the Bill of Sale and Assignment and Assumption Agreement
      attached hereto as Exhibit A and any other instruments of
      conveyance or other documents or instruments necessary to transfer and
      assign title and beneficial ownership of the Assets to the Buyer as
      determined by the Buyer in its sole discretion;

	 	 	 	 
	 		(ii) 	
      the Officer’s Certificate in substantially the form of
      Exhibit B attached hereto;

	 	 	 	 
	 		(iii) 	
      the Secretary’s Certificate in substantially the form of
      Exhibit C hereto;

	 	 	 	 
	 		(iv) 	
      the consents as set forth on Schedule 3.12, dated
      prior to the Closing Date, required to be obtained by the Seller from
      third parties in order to transfer certain of the Assets to the Buyer in
      accordance with this Agreement.

	 	 	 	 
	 	(b) 	
      The Buyer shall deliver to the Seller:

	 	 	 	 
	 		(i) 	
      the Officer’s Certificate in substantially the form of
      Exhibit D attached hereto; and

	 	 	 	 
	 		(ii) 	
      an executed copy of the Bill of Sale and Assignment and
      Assumption Agreement attached hereto as Exhibit A.

	 	 	 	 
	 		(iii) 	
      a release of the Parent Note in form and substance
      satisfactory to the Seller.

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	 	(iv) 	
      stock certificates representing 250,000 Common
    Shares.

ARTICLE III 

REPRESENTATIONS AND WARRANTIES OF THE SELLER 

          To
  induce the Buyer and Parent to enter into this Agreement and to consummate the
  transactions contemplated hereby, the Seller hereby represents and warrants
  to the Buyer and Parent, as of the Closing Date, the following: 

          3.01
  Organization and Good Standing. Seller is a corporation duly organized,
  validly existing, and in good standing under the laws of the State of Delaware.

          3.02
  Authority. Seller has all requisite corporate authority to own its property
  (including, without limitation, the Assets), to conduct its business, and to
  execute and deliver this Agreement and any instruments and agreements contemplated
  herein that are required to be executed and delivered by the Seller pursuant
  to its obligations under this Agreement, and to perform its obligations hereunder
  and thereunder. This Agreement has been approved by Seller’s Board of Directors,
  by Deerfield Energy LLC, a Delaware limited liability company (“Deerfield”),
  as the sole shareholder of Seller, and by Deerfield’s Board of Directors
  and has been duly executed and delivered by the Seller. No other statutory act
  or proceeding on the part of the Seller is necessary to authorize this Agreement
  or the transactions contemplated hereby. This Agreement represents a valid and
  binding obligation of the Seller, enforceable against the Seller in accordance
  with its terms, except as limited by applicable bankruptcy, insolvency, reorganization,
  moratorium, and similar laws affecting the enforcement of creditors’ rights
  generally and the application of general principles of equity and judicial discretion.

          3.03
  No Violation. Neither the execution and delivery by the Seller of this
  Agreement nor the consummation by the Seller of the transactions contemplated
  hereby will (i) violate any provision of the applicable statutes and governing
  agreements of the Seller; (ii) except as set forth on Schedule 3.12,
  violate, or be in conflict with, or constitute a default (or an event or condition
  that, with notice or lapse of time, or both, would constitute a default) under,
  or result in the termination of, or accelerate the performance required by,
  or cause the acceleration of the maturity of any of the Seller’s liabilities,
  including without limitation the Assumed Liabilities, or result in the creation
  or imposition of any security interest, lien, charge, or other encumbrance upon
  any of the Assets under, any note, bond, mortgage, indenture, deed of trust,
  license, lease, contract, commitment, understanding, arrangement, agreement,
  or restriction of any kind or character to which the Seller is a party or by
  which the Seller may be bound or affected or to which any of the Assets is subject;
  or (iii) violate any statute or law or any judgment, decree, order, writ, injunction,
  regulation, or rule of any court or Governmental Authority (as defined in Article
  VIII of this Agreement). 

          3.04
  Brokers. The Seller has not employed any broker, agent, or finder in
  connection with any transaction contemplated by this Agreement for which the
  Buyer may be liable or responsible to pay. 

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          3.05
  No Undisclosed Liabilities. Except for the Assumed Liabilities and express
  liabilities arising under the contracts set forth on Schedule 3.17, there
  are no liabilities or obligations of the Seller, whether accrued, absolute,
  contingent, or otherwise, that have affected or could affect in any way the
  Assets, or any of them. Seller has no knowledge of any basis for the assertion
  against the Seller of any liability or obligation of any nature whatsoever that
  could result in the creation or imposition of any security interest, lien, charge,
  or encumbrance upon any of the Assets. 

          3.06
  Title to the Assets; Encumbrances. Except for the Assumed Liabilities,
  the Seller has good and marketable title to the Assets free and clear of all
  liens, mortgages, claims, easements, pledges, security interests, or other imperfections
  of title. 

          3.07
  Environmental Compliance. 

     (a) With
respect to the Assets and any other Property (as defined in Article
VIII of this Agreement) owned or operated by the Seller, the Seller is in
material compliance with all applicable Environmental Laws (as defined in
Article VIII of this Agreement) and has obtained and is in material
compliance with all permits, licenses, and other authorizations required under
any Environmental Law. There is no past or present event, condition or
circumstance that is likely to interfere with the utilization of the Assets
constituting a violation of Environmental Laws or resulting from any failure to
comply therewith;

     (b) The
Seller does not now and has not leased, operated, owned, or exercised managerial
functions at any facilities or real property with respect to which such facility
or real property is subject to any Proceeding (as defined in Article VIII
of this Agreement) under any Environmental Law, and the Seller is not aware of
any facts or circumstances that could give rise to such a Proceeding; 

     (c) There
are no actions or Proceedings pending or, to the Seller’s Knowledge (as defined
in Article VIII of this Agreement), threatened against the Seller under
any Environmental Law, and the Seller has not received any notice (whether from
any regulatory body or private person) of any violation, or potential or
threatened violation, of any Environmental Law; 

     (d) There
are no actions or Proceedings pending or, to the Seller’s Knowledge, threatened
under any Environmental Law involving the release or threat of release of any
Polluting Substances (as defined in Article VIII of this Agreement) at or
on (i) any Property currently or in the past owned, operated or leased by the
Seller or over which the Seller exercised managerial functions, or (ii) at any
Property where Polluting Substances generated by the Seller have been disposed;

     (e) There
is no Property for which the Seller is or was required to obtain any permit
under an Environmental Law to construct, demolish, renovate, occupy, operate, or
use such Property or any portion of it, which permit has not been so obtained;

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     (f) There
has been no release of Polluting Substances by the Seller in violation of any
Environmental Law that would require any report or notification to any
governmental or regulatory authority in or on any Property; 

     (g) The
Seller is not under investigation or subject to pending or, to the Seller’s
Knowledge, threatened litigation by federal, state, or local officials or a
private litigant as a result of any previous on-site management, treatment,
storage, release, or disposal of Polluting Substances or exposure to any
Polluting Substances; 

     (h) There
are no underground or above ground storage tanks on or under any Property that
are not in conformity with any Environmental Law, and any Property previously
containing such tanks has been remediated in compliance with all Environmental
Laws; and 

     (i) There
is no asbestos-containing material on any Property of the Seller. 

          3.08
  Intentionally Deleted 

          3.09
  Taxes.

          (a)
  Except as set forth on Schedule 3.09, the Seller has (i) timely filed
  all returns required to be filed by it with respect to all federal, state, local,
  and foreign income, payroll, withholding, unemployment, excise, added value,
  social security, sales and use, real and personal property, use and occupancy,
  business and occupation, mercantile, real estate, capital stock, and franchise
  or other tax (including interest and penalties thereon and including estimated
  taxes thereof) (hereinafter referred to collectively as “Taxes”);
  (ii) paid all Taxes shown to have become due pursuant to such returns; and (iii)
  paid all other Taxes for which a notice of assessment or demand for payment
  has been received; 

          (b)
  All returns for Taxes filed by or on behalf of the Seller have been prepared
  in accordance with all applicable laws and requirements and accurately reflect
  the taxable income (or other measure of Tax) of the entity filing the return;
  and 

          (c)
  There are no Tax liens upon any of the Assets, and the Seller is not aware of
  any audit or other proceeding or investigation, or of any position taken on
  a Tax return of the Seller, that could give rise to a Tax lien upon any of the
  Assets. The Seller has previously provided the Buyer with complete, true, and
  correct copies of all of the Seller’s federal income tax returns. 

          3.10
  Intangible Assets. The Seller owns and possesses all necessary certificates,
  permits, authorizations, licenses (collectively, “Licenses”)
  that may be associated with any of the Assets, and, except as set forth on Schedule
  3.12, all of such Licenses are being transferred, conveyed, and assigned
  to the Buyer pursuant to this Agreement. The Seller owns and possesses all necessary
  patents, trademarks, trademark licenses, trade names, mastheads, brand names,
  slogans, copyrights, reprint rights, franchises, inventions, processes, know-how,
  formulas, trade 

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secrets, and other intangible assets, including all pending
applications, continuations-in-part, and extensions for any of the above, that
may be associated with any of the Assets. 

          3.11
  Litigation. There are no Proceedings (as defined in Article VIII
  of this Agreement) in progress, pending, or, to the Seller’s Knowledge,
  threatened against or affecting the Seller, the Assets, or the transactions
  contemplated hereby in any court or before any arbitration panel of any kind
  or before or by any Governmental Authority (as defined in Article VIII
  of this Agreement), nor does Seller have any knowledge of any valid basis for
  any such arbitration, claim, action, proceeding, inquiry or investigation. 

          3.12
  Consents. Except as listed on Schedule 3.12, and except for the
  consents of the Board of Directors and sole shareholder of Seller and the consent
  of the Board of Directors of Deerfield, no consent, approval, license, permit,
  authorization, or order of any Person is required in connection with the execution
  and delivery of this Agreement by the Seller or the consummation of the transactions
  contemplated hereby by the Seller. 

          3.13
  Permits, Licenses, Etc. The Seller has received no written notification
  of any threatened suspension or cancellation of any permit, license, franchise,
  order, certificate, consent, authorization, or approval of any Governmental
  Authority or administrative authority required to permit the Seller to conduct
  its business as conducted on the Closing Date. 

          3.14
  Absence of Unethical Business Practices. Neither the Seller nor any officer,
  employee or agent thereof has directly or indirectly given or agreed to give
  any gift or similar benefit to any customer, contractor, Governmental Authority,
  or any employee, agent, broker or affiliate of such Person or Governmental Authority
  who was or is in a possible position to help or hinder the Seller, which gift
  or benefit (a) would subject the Seller to any damages or penalties in any civil
  or criminal proceeding, or (b) would have a Material Adverse Effect on the Assets
  if discontinued. 

          3.15
  Books and Records. The books of account and other financial records of
  the Seller, all of which have been made available to the Buyer, are complete
  and correct and represent actual, bona fide transactions, and have been maintained
  in accordance with sound business practices, including the maintenance of an
  adequate system of internal controls. The minute books of Seller, all of which
  have been made available to the Buyer, contain accurate and complete records
  of all meetings held of the Board of Directors and the shareholders of Seller,
  and no meeting of any such Board of Directors, shareholders or members has been
  held for which minutes have not been prepared or are not contained in such minute
  books. 

          3.16
  Assets. The Assets include all of the assets used in Seller’s business
  that are currently in the possession of Seller. 

          3.17
  Contracts; No Defaults. Schedule 3.17 contains an accurate and
  complete list, and the Seller has delivered to the Buyer accurate and complete
  copies of each contract to which the Seller is a party and which is being assigned
  to or assumed by the Seller under this Agreement and each amendment, supplement
  and modification (whether oral or written) in respect thereof, including, without
  limitation, all leases (collectively, the “Assigned 

6 

Contracts”). Except as otherwise set forth on
Schedule 3.17, and except as limited by applicable bankruptcy,
insolvency, reorganization, moratorium, and similar laws affecting the
enforcement of creditors’ rights generally and the application of general
principles of equity and judicial discretion, to the Seller’s Knowledge, each
Assigned Contract is in full force and effect and is valid and enforceable in
accordance with its terms, is not in default nor has any event occurred which
with the passage of time would result in a default, and is assignable by the
Seller to the Buyer. There are no contracts with respect to the Chetopa Prospect
to which the Seller is a party and which is not being assigned to or assumed by
the Seller under this Agreement and each amendment, supplement and modification
(whether oral or written) in respect thereof. 

          3.18
  Full Disclosure. No representation or warranty regarding the Seller
  or the Assets made in this Agreement, the Exhibits and Schedules hereto, or
  the documents to be delivered by the Seller at the Closing pursuant to Section
  2.01(a), contains any untrue statement of a material fact that affects the
  Assets or the Seller’s title to the Assets, or omits to state a material
  fact necessary to make the statements or facts contained herein or therein not
  misleading. Each of the Exhibits and Schedules attached hereto is a true and
  complete list or description, as appropriate, of the items purported to be listed
  or described thereon.

ARTICLE IV 

REPRESENTATIONS AND WARRANTIES OF THE BUYER AND PARENT

          To
  induce the Seller to enter into this Agreement and to consummate the transactions
  contemplated hereby, the Buyer and the Parent hereby jointly and severally represent
  and warrant to the Seller, as of the Closing Date, the following: 

          4.01
  Organization and Good Standing. The Parent is a corporation duly organized
  and validly existing under the laws of British Columbia, Canada. The Buyer is
  a corporation duly organized and validly existing under the laws of Nevada.

          4.02
  Authority. Each of the Buyer and the Parent has all requisite corporate
  power and authority to execute and deliver this Agreement and to consummate
  the transactions contemplated hereby. This Agreement has been approved by the
  Boards of Directors of the Buyer and the Parent and has been duly authorized,
  executed, and delivered by the Buyer and the Parent. No other corporate act
  or proceeding on the part of the Buyer or the Parent is necessary to authorize
  this Agreement or the transactions contemplated hereby. This Agreement has been
  duly authorized, executed, and delivered by the Buyer and the Parent and constitutes
  a valid and binding obligation of the Buyer and the Parent enforceable against
  the Buyer and the Parent in accordance with its terms, except as limited by
  applicable bankruptcy, insolvency, reorganization, moratorium, and similar laws
  affecting the enforcement of creditors’ rights generally and the application
  of general principles of equity and judicial discretion.

          4.03
  No Violation. Neither the execution and delivery by the Buyer or the
  Parent of this Agreement nor the consummation by the Buyer or the Parent of
  the transactions contemplated hereby will (i) violate any provision of the applicable
  statutes and governing agreements of the Buyer or the Parent; (ii) violate,
  or be in conflict with, or constitute a default 

7 

(or an event or condition that, with notice or lapse of time,
or both, would constitute a default) under, or result in the termination of, or
accelerate the performance required by, or cause the acceleration of the
maturity of any agreement to which the Buyer or the Parent is subject, or result
in the creation or imposition of any security interest, lien, charge, or other
encumbrance upon any of the Buyer’s or the Parent’s assets under, any note,
bond, mortgage, indenture, deed of trust, license, lease, contract, commitment,
understanding, arrangement, agreement, or restriction of any kind or character
to which the Buyer or the Parent is a party or by which the Buyer or the Parent
may be bound or affected or to which any the Buyer’s or the Parent’s assets is
subject; or (iii) violate any statute or law or any judgment, decree, order,
writ, injunction, regulation, or rule of any court or Governmental Authority (as
defined in Article VIII of this Agreement). 

          4.04
  Brokers. Neither the Buyer nor the Parent has employed any broker, agent,
  or finder in connection with any transaction contemplated by this Agreement
  for which the Seller may be liable or responsible to pay. 

          4.05
  Full Disclosure. To the Buyer’s and the Parent’s Knowledge,
  no representation or warranty of the Buyer or the Parent made in this Agreement
  contains any untrue statement of a material fact that affects the ability of
  the Buyer or the Parent to consummate the transactions contemplated by this
  Agreement or omits to state a material fact necessary to make the statements
  or facts contained herein not misleading.

          4.06
  Consents. No consent, approval, license, permit, authorization, or order
  of any person is required in connection with the execution and delivery by the
  Buyer or the Parent of this Agreement or the consummation of the transactions
  contemplated hereby. 

          4.07
  Capitalization of the Parent. The number of outstanding Common Shares
  does not exceed Ninety-Five Million (95,000,000) shares and the total number
  of Common Shares that would be outstanding if all options, convertible and exchangeable
  securities of Parent were exercised or converted as of the Closing Date does
  not exceed One Hundred Fifty Million (150,000,000). The Common Shares to be
  issued in connection with this Agreement have been duly authorized and, when
  issued in accordance with the terms of this Agreement, will be validly issued,
  fully paid, nonassessable and free and clear of any preemptive rights. 

          4.08
  SEC Filings. The Parent has filed with the US Securities and Exchange
  Commission (the “SEC”) all forms, reports, schedules, statements,
  and other documents required to be filed by it since January 1, 2006. All forms,
  reports, schedules, statements, and other documents (including all amendments
  thereto) filed by the Parent with the SEC since such date are herein collectively
  referred to as the “SEC Filings.” The Parent has directed the
  Seller to the SEC website to obtain accurate and complete copies of all the
  SEC Filings that are available to the public and that are in the form filed
  by the Parent with the SEC. The SEC Filings, at the time filed, complied in
  all material respects with all applicable requirements of applicable law. None
  of the SEC Filings, including, without limitation, any financial statements
  or schedules included therein, at the time filed, contained any untrue statement
  of a material fact or omitted to state any material fact required to be stated
  therein or necessary in order to make the statements contained therein, in light
  of the circumstances under which they were made, not misleading.

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ARTICLE V 

COVENANTS OF THE SELLER AND THE SHAREHOLDERS 

          5.01
  Payment of Liabilities and Taxes; Bulk Transfer Laws. The Seller shall
  pay in full or otherwise satisfy all liabilities of the Seller other than Assumed
  Liabilities. The Seller shall promptly pay all Taxes due from the Seller as
  of the Closing Date, and all other Taxes for which a notice of assessment or
  demand for payment has been received as of the Closing Date. The Buyer and the
  Seller hereby waive compliance with the bulk transfer provisions of the UCC
  or any similar bulk sales laws in connection with the transactions contemplated
  by this Agreement. 

          5.02
  Restricted Securities. 

          (a)
  Seller acknowledges and understands that none of the Common Shares issuable
  as Purchase Price have been registered under the US Securities Act of 1933 (the
  “Securities Act”), and that such securities are being issued pursuant
  to an available exemption from registration under the Securities Act. As a result,
  the Common Shares may be transferred only: (A) to the Parent, (B) in accordance
  with the exemption from registration under the Securities Act provided by Rule
  144 thereunder, if available, and in compliance with any applicable state securities
  laws, or (C) in a transaction that does not require registration under the Securities
  Act or any applicable United States state laws and regulations governing the
  offer and sale of securities. 

          (b)
  Seller is a wholly owned subsidiary of Deerfield and Deerfield is owned by 17
  members. Notwithstanding Section 5.02(a), the Parent hereby agrees to
  consent to the transfer of Common Shares issuable pursuant to this Agreement
  from Seller and Deerfield to the members of Deerfield, upon the delivery of
  an appropriate representation letter from each such member to the Parent acknowledging
  the restrictions on resale applicable to such Common Shares. 

ARTICLE VI 

CONDITIONS 

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          6.01
  Conditions to Obligation of the Buyer. The obligation of the Buyer to
  effect the Closing is subject to the satisfaction or waiver by the Buyer on
  or prior to the Closing Date of the following conditions: 

          (a)
  Representations and Warranties. The representations and warranties of
  Seller set forth in Article III shall be true and correct in all respects
  in all material respects, in each case, as though made on and as of the Closing
  Date, except for representations or warranties made as of a specified date,
  the accuracy of which shall be determined as of that specified date. 

          (b)
  Performance of Obligations. Seller shall have performed in all material
  respects all obligations required to be performed by it under this Agreement
  at or prior to the Closing Date. 

          (c)
  Material Adverse Effect. Since the date of this Agreement, there shall
  have been no any event, change, occurrence, circumstance or development which,
  individually or together with any one or more other events, changes, occurrences,
  circumstances or developments has had or would reasonably be expected to have
  a Material Adverse Effect on the Assets or on the ability of Seller to perform
  its obligations under this Agreement or consummate the transactions contemplated
  by this Agreement, whether or not the applicable event, change, occurrence,
  circumstance or development is covered by insurance. 

          (d)
  Deliveries. The Buyer shall have received from the Seller the items described
  in Section 2.01(a). 

          (e)
  Lien Searches; Environmental Studies. The Buyer shall have received,
  and is satisfied (in its sole discretion) with the results of certain lien searches
  with respect to the Assets and certain environmental studies to be performed
  by consultants retained by the Buyer in the Buyer’s sole discretion and
  at the Buyer’s sole expense. 

          6.02
  Conditions to Obligation of the Seller. The obligation of the Seller
  to effect the Closing is subject to the satisfaction or waiver by the Seller
  on or prior to the Closing Date of the following conditions: 

          (a)
  Representations and Warranties. The representations and warranties of
  Buyer and Parent set forth in Article IV shall be true and correct in
  all respects in all material respects, in each case, as though made on and as
  of the Closing Date, except for representations or warranties made as of a specified
  date, the accuracy of which shall be determined as of that specified date. 

          (b)
  Performance of Obligations. Buyer and Parent shall have performed in
  all material respects all obligations required to be performed by them under
  this Agreement at or prior to the Closing Date. 

          (c)
  Material Adverse Effect. Since the date of this Agreement, there shall
  have been no any event, change, occurrence, circumstance or development which,
  individually or together with any one or more other events, changes, occurrences,
  circumstances or developments has had or would reasonably be expected to have
  a Material Adverse Effect on the Buyer or Parent or on the ability of Buyer
  or Parent to perform its obligations under this Agreement or consummate the

10 

transactions contemplated by this Agreement, whether or not the
applicable event, change, occurrence, circumstance or development is covered by
insurance. 

          (d)
  Deliveries. The Seller shall have received from the Buyer the items described
  in Section 2.01(b). 

ARTICLE VII 

INDEMNIFICATION 

          7.01.
  Indemnification of the Buyer and Parent. The Seller hereby agrees to
  indemnify, defend, and hold harmless the Buyer and Parent and their respective
  successors in interest, and their respective officers, directors, employees,
  agents, attorneys, and stockholders (each a “Buyer Indemnitee”)
  from and against all demands, claims, actions, or causes of action, assessments,
  losses, taxes, damages, liabilities, costs, and expenses, including, without
  limitation, interest, penalties, and reasonable attorneys’ fees and expenses
  (collectively “Damages”), asserted against, assessed upon,
  resulting to, imposed upon, or incurred by a Buyer Indemnitee by reason of or
  resulting from (a) a breach of any representation, warranty, or a breach or
  threatened breach of any covenant, obligation, or agreement of the Seller contained
  in or made pursuant to this Agreement, including the Schedules and Exhibits
  hereto, or any facts or circumstances constituting such a breach; or (b) the
  operation of the businesses of the Seller, including, but not limited to, any
  products sold or services rendered, on or prior to the Closing Date, other than
  Assumed Liabilities.

          7.02.
  Indemnification of the Seller. The Buyer and Parent, hereby jointly and
  severally agree to indemnify, defend, and hold harmless the Seller, its successors
  in interest, and their respective officers, directors, employees, agents, attorneys,
  members and shareholders (each a “Seller Indemnitee”) from
  and against all Damages asserted against, assessed upon, resulting to, imposed
  upon, or incurred by a Seller Indemnitee by reason of or resulting from (a)
  a breach of any representation, warranty, or a breach or threatened breach of
  any covenant, obligation, or agreement of the Buyer or Parent contained in or
  made pursuant to this Agreement, including the Schedules and Exhibits hereto,
  or any facts or circumstances constituting such a breach; (b) the operation
  of the Assets, including, but not limited to, any products sold or services
  rendered, after the Closing Date; or (c) the Assumed Liabilities.

          7.03.
  Indemnification Claims Procedure. All claims subject to indemnification
  under Section 7.01 or 7.02 above shall be asserted and resolved
  in accordance with the following provisions. Promptly after receipt by a Buyer
  Indemnitee or a Seller Indemnitee (either is referred to as an “Indemnitee”
  in this Section 7.03) of notice of the commencement of any action (including
  any governmental action), such Indemnitee will, if a claim in respect thereof
  is to be made against any indemnifying party (the “Indemnifying Party”)
  under this Article VII, deliver to the Indemnifying Party a written notice
  of the commencement thereof and the Indemnifying Party shall have the right
  to participate in, and, to the extent the Indemnifying Party so desires, jointly
  with any other Indemnifying Party similarly noticed, to assume the defense thereof
  with counsel mutually satisfactory to the parties; provided, however,
  that an Indemnitee (together with all other Indemnitees that may be represented
  without conflict by one 

11 

counsel) shall have the right to retain one separate counsel,
with the fees and expenses to be paid by the Indemnifying Party, if
representation of such Indemnified Party by the counsel retained by the
Indemnifying Party would be inappropriate due to actual or potential conflicts
of interest between such Indemnified Party and any other party represented by
such counsel in such proceeding. The failure to deliver written notice to the
Indemnifying Party within a reasonable time of the commencement of any such
action, if materially prejudicial to its ability to defend such action, shall
relieve such Indemnifying Party of any liability to the Indemnitee under this
Article VII to the extent of the prejudice caused by such failure. 

          7.04.
  Expiration of Indemnification Obligations. All obligations to provide
  indemnification pursuant to this Article VII shall terminate on the first
  anniversary of the Closing Date, other than claims arising from environmental,
  employee benefit or tax issues, which shall not terminate until the applicable
  statutes of limitations for such claims have expired. 

ARTICLE VIII 

DEFINITIONS 

The following terms as used in this Agreement shall have the
meanings set forth below: 

          “Affiliate”
  shall mean, as to any Person, any Person controlled by, controlling, or under
  common control with such Person, and, in the case of a Person who is an individual,
  a member of the family of such individual consisting of a spouse, sibling, in-law,
  lineal descendant, or ancestor (including by adoption), and the spouses of any
  such individuals. For purposes of this definition, “control”
  (including the terms “controlling”, “controlled by” and
  “under common control with”) of a Person means the possession, directly
  or indirectly, alone or in concert with others, of the power to direct or cause
  the direction of the management and policies of such Person, whether through
  the ownership of securities, by contract, or otherwise, and no Person shall
  be deemed in control of another solely by virtue of being a director, officer,
  or holder of voting securities of any entity. A Person shall be presumed to
  control any partnership of which such Person is a general partner. 

          “Business
  Day” shall mean any day other than a Saturday, Sunday, or any day on
  which banks located in Wilmington, Delaware are authorized to be closed by applicable
  law. 

          “Chetopa
  Prospect” shall mean the small, heavy oil prospect located 2 miles
  south of Chetopa, Kansas that was originally developed by Central Production
  Company, Inc. and Petrohunter, LLC. 

          “Code”
  shall mean the Internal Revenue Code of 1986, as amended. All references herein
  to sections of the Code shall include any corresponding provision or provisions
  of succeeding law. 

          “Common
  Shares” shall mean the common shares of Parent, without par value.

          “Deerfield”
  shall mean Deerfield Energy, LLC, a Delaware limited liability company and sole
  shareholder of the Seller. 

12 

          “Environmental
  Laws” shall mean laws, including, without limitation, federal, state,
  or local laws, ordinances, rules, regulations, interpretations, and orders of
  courts or administrative agencies or authorities relating to pollution, environmental
  protection, health and safety, or similar laws (including, without limitation,
  ambient air, surface water, ground water, land surface, and subsurface strata),
  including, without limitation, the Comprehensive Environmental Response Compensation
  and Liability Act of 1980, as amended (“CERCLA”), the Federal
  Clean Water Act (“CWA”), the Safe Drinking Water Act (“SDWA”),
  the Resource Conservation and Recovery Act of 1976, as amended (“RCRA”),
  the Clean Air Act (“CAA”), the Emergency Planning and Community
  Right to Know Act (“EPCRA”), OSHA, the Medical Waste Tracking
  Act of 1988 (“MWTA”), the Hazardous Materials Transportation
  Authorization Act of 1994 (“HMTAA”), any similar laws issued
  by any Governmental Authority in the State of Kansas, and other laws relating
  to pollution or protection of the environment, or to the manufacturing, processing,
  distribution, use, treatment, handling, storage, disposal, or transportation
  of Polluting Substances. 

          “Governmental
  Authority” means any nation or government, any state, regional, local,
  or other political subdivision thereof, and any entity or official exercising
  executive, legislative, judicial, regulatory, or administrative functions of
  or pertaining to government. 

          “Knowledge”
  An individual shall be deemed to have “knowledge” of a particular
  fact or other matter if (i) such individual is actually aware of such fact or
  other matter, or (ii) a person serving in the same capacity as such individual
  would be expected to discover or otherwise become aware, after due inquiry,
  of such fact or other matter in the course of performing the official duties
  of such individual. Buyer or Parent shall be deemed to have “knowledge”
  of a particular fact or other matter if an executive officer or director of
  the Buyer or Parent has Knowledge (as set forth above) of such fact or other
  matter. Seller shall be deemed to have “knowledge” of a particular
  fact or other matter if an executive officer or director of the Seller has Knowledge
  (as set forth above) of such fact or other matter. 

          “Material
  Adverse Effect” means any effect(s), individually or in the aggregate,
  that would be materially adverse to: (i) a party’s assets; or (ii) the
  ability of a party to timely consummate the transactions contemplated hereby.

          “Parent
  Note” means that certain promissory note of Deerfield dated December
  20, 2006 made payable to the Parent in the original principal amount of US$500,000.

          “Person”
  shall have the meaning given in Section 3(a)(9) of the Securities Exchange Act
  of 1934, as amended, as modified and used in Sections 13(d)(3) and 14(d)(2)
  of such act.

          “Polluting
  Substances” shall be construed broadly to include (a) asbestos, (b)
  petroleum products or wastes, (c) biomedical or biological wastes, and (d) all
  pollutants, contaminants, chemicals, or industrial, toxic, or hazardous substances
  or wastes and shall include, without limitation, any flammable explosives, radioactive
  materials, oil, hazardous materials, hazardous or solid wastes, hazardous or
  toxic substances or regulated materials defined in CERCLA, CWA, SDWA, RCRA,
  EPCRA, CAA, OSHA, MWTA, and HMTAA, and/or any other Environmental Laws, as amended,
  and in the regulations adopted and publications promulgated thereto, 

13 

including without limitation those issued by a Governing
Authority in the State of Kansas provided, to the extent that the laws of the
State of Kansas establish a meaning for “hazardous substance,” “hazardous
waste,” “hazardous materials,” “solid waste,” or “toxic substance,” which is
broader than that specified in any of CERCLA, CWA, SDWA, RCRA, EPCRA, CAA, OSHA,
MWTA, HMTAA or other Environmental Laws such broader meaning shall apply. 

          “Proceeding”
  shall mean any action, arbitration, audit, hearing, investigation, litigation,
  or suit (whether civil, criminal, administrative, judicial, or investigative,
  whether formal or informal, whether public or private) commenced, brought, conducted,
  or heard by or before, or otherwise involving any Governmental Authority or
  arbitrator. 

          “Property”
  includes any property (whether real or personal) that the Seller currently or
  in the past has leased, operated, owned, or managed in any manner, including,
  without limitation, any property acquired by foreclosure or deed in lieu thereof
  and property held as security for a loan or other indebtedness on the Closing
  Date. 

ARTICLE IX 

MISCELLANEOUS 

          9.01
  Reformation and Severability. If any provision of this Agreement is held
  to be illegal, invalid or unenforceable under present or future laws effective
  during the term hereof:

          (a)
  in lieu of such illegal, invalid, or unenforceable provision, there shall be
  added automatically as a part of this Agreement a provision as similar in terms
  to such illegal, invalid, or unenforceable provision as may be possible and
  be legal, valid, and enforceable; and 

          (b)
  the legality, validity, and enforceability of the remaining provisions hereof
  shall not in any way be affected or impaired thereby. 

          9.02
  Further Assurances. Each party hereto shall, from time to time after
  the Closing Date, at the request of any other party hereto and without further
  consideration, execute and deliver such other instruments of conveyance, assignments,
  transfer, and assumption, and take such other actions, as such other party may
  reasonably request to more effectively consummate the transactions contemplated
  by this Agreement. 

          9.03
  Notices. Any notice or other communication required or permitted to be
  given hereunder shall be in writing and shall be sent by first class U.S. mail
  (certified mail – return receipt requested), or by facsimile transmission
  (if facsimile transmission is also sent by regular U.S. mail the same day),
  or delivered by hand or by overnight or similar delivery service, fees prepaid,
  to the party to whom it is to be given at the address of such party set forth
  below or to such other address for notice as such party shall provide in accordance
  with the terms of this section. Except as otherwise specifically provided in
  this Agreement, notice so given shall, in the case of notice given by certified
  mail (or by such comparable method) be deemed to be given and received three
  Business Days after the time of certification thereof (or comparable act), in

14 

the case of notice so given by overnight delivery service, on
the date of actual delivery, and, in the case of notice so given by facsimile
transmission or personal delivery, on the date of actual transmission or, as the
case may be, personal delivery. 

	 	If to the Buyer or Parent: 	MegaWest Energy Corporation 
	 	  	Suite 403, 850 West Hastings Street 
	 	  	Vancouver, British Columbia, Canada V6C 1E1 
	 	  	  
	 	With a copy to (delivery of which shall not be deemed
      as notice to Buyer): 
	 	  	  
	 	  	Haynes and Boone, LLP 
	 	  	901 Main Street, Suite 3100 
	 	  	Dallas, Texas 75202 
	 	Attn: Terry Cross 	 
	 	  	Fax: (214) 200-0417 
	 	  	  
	 	If to the Seller: 	Deerfield Energy Kansas Corp. 
	 	  	c/o Raymond T. Pirraglia 
	 	  	74 Narrows Road South 
	 	  	Staten Island, NY 10305 
	 	  	Fax: (718) 815-2987 
	 	  	  
	 	With a copy to (delivery of which shall not be deemed
      as notice to Seller): 
	 	  	  
	 	 	Boyer & Ketchand  
	 	  	9 Greenway Plaza, Suite 3100 
	 	  	Houston, Texas 77046 
	 	  	Attn: John W. Menke 
	 	  	Fax: (713) 871-2024 

          9.04
  Headings. The headings of sections contained in this Agreement are for
  convenience only and shall not be deemed to control or affect the meaning or
  construction of any provision of this Agreement. 

          9.05
  Waiver. The failure of any party to insist, in any one or more instances,
  upon performance of any of the terms, covenants, or conditions of this Agreement
  shall not be construed as a waiver or a relinquishment of any right or claim
  granted or arising hereunder or of the future performance of any such term,
  covenant, or condition, and such failure shall in no way affect the validity
  of this Agreement or the rights and obligations of the parties hereto. No waiver
  of any provision or condition of this Agreement shall be valid unless executed
  in writing and signed by the party to be bound thereby, and then only to the
  extent specified in such waiver. No waiver of any provision or condition of
  this Agreement shall be construed as a waiver of any other provision or condition
  of this Agreement, and no present waiver of any provision or condition of this
  Agreement shall be construed as a future waiver of such provision or condition.

15 

          9.06
  Specific Performance. The parties hereto agree that irreparable damage
  would occur in the event that any of the provisions of this Agreement were not
  performed in accordance with their specific terms or were otherwise breached.
  It is accordingly agreed that the parties hereto shall be entitled to an injunction
  or injunctions to prevent breaches of this Agreement and to enforce specifically
  breaches of this Agreement and to enforce specifically the terms and provisions
  hereof in any court of the United States or any state having jurisdiction, this
  being in addition to any other remedy to which they are entitled at law or in
  equity. 

          9.07
  GOVERNING LAW; VENUE. THIS AGREEMENT SHALL BE GOVERNED
  BY AND CONSTRUED IN ACCORDANCE WITH THE LAWS OF THE STATE OF DELAWARE WITHOUT
  GIVING EFFECT TO THE CONFLICT OF LAWS RULES OR CHOICE OF LAWS RULES THEREOF
  OR OF ANY STATE TO THE EXTENT THAT SUCH CHOICE OF LAW RULES PROVIDE FOR THE
  APPLICATION OF THE LAWS OF ANY JURISDICTION OTHER THAN DELAWARE. THE PARTIES
  TO THIS AGREEMENT HEREBY MUTUALLY AGREE THAT VENUE FOR ANY ACTION BROUGHT WITH
  RESPECT TO THIS AGREEMENT SHALL BE PROPER EXCLUSIVELY IN DELAWARE. 

          9.08
  Court Costs and Attorneys’ Fees. If any action at law or in equity,
  including an action for declaratory relief, is brought to enforce or interpret
  the provisions of this Agreement, the prevailing party shall be entitled to
  recover costs of court and reasonable attorneys’ fees from the other party
  or parties to such action, which fees may be set by the court in the trial of
  such action or may be enforced in a separate action brought for that purpose,
  and which fees shall be in addition to any other relief that may be awarded.

          9.09
  Assignability and Binding Effect. This Agreement shall inure to the benefit
  of and be binding upon the parties hereto and their respective successors, heirs,
  and permitted assigns. This Agreement and the rights and obligations hereunder
  shall not be assignable without the express written consent of all parties hereto.

          9.10
  Amendments. This Agreement may not be modified, amended, or supplemented
  except by an agreement in writing signed by all of the parties hereto. 

          9.11
  Expenses, Taxes, Etc. Except as otherwise provided herein, the Seller
  shall pay all fees, taxes, and expenses incurred by it in connection with this
  Agreement, and the Buyer shall pay all fees and expenses incurred by it in connection
  with the transactions contemplated by this Agreement. 

          9.12
  Third Parties. Except with respect to indemnification under Section 7.01
  or Section 7.02 herein, nothing herein expressed or implied is intended or shall
  be construed to confer upon or give to any person other than the parties hereto
  and their successors, heirs or permitted assigns, any rights or remedies under
  or by reason of this Agreement. 

          9.13
  Number and Gender of Words. When the context so requires in this Agreement,
  words of gender shall include either or both genders and the singular number
  shall include the plural. 

16 

          9.14
  Entire Agreement. This Agreement and the executed documents, the forms
  of which are attached hereto as Exhibits, together with the Schedules and Exhibits
  attached hereto and thereto, shall constitute the entire agreement between the
  parties hereto with respect to the transactions contemplated hereby and shall
  supersede all prior or contemporaneous negotiations, understandings and agreements.
  There are no representations, agreements, arrangements, or understandings, oral
  or written, between or among the parties hereto relating to the subject matter
  of this Agreement that are not fully expressed herein. 

          9.15
  Multiple Counterparts. This Agreement may be executed in multiple counterparts,
  including by facsimile signature, each of which shall be deemed to be an original
  but all of which together shall constitute one and the same instrument. 

[Remainder of page intentionally left blank.] 

17 

          IN
  WITNESS WHEREOF, the parties hereto have caused this Agreement to be executed
  as of the date first above written. 

	 	THE SELLER: 
	 	 
	 	DEERFIELD ENERGY KANSAS CORP.
    
	 	 
	 	By: 	/s/ George T. Stapleton, II 
	 	Name: 	George T. Stapleton, II 
	 	Title: 	President 
	 	 	 
	 	THE BUYER: 
	 	 
	 	MEGAWEST ENERGY (USA) CORP.
  
	 	 
	 	By: 	/s/ R. William Thornton 
	 	Name: 	R. William Thornton 
	 	Title: 	Director 
	 	 	 
	 	THE PARENT: 
	 	 
	 	MEGAWEST ENERGY CORP. 
	 	 
	 	By: 	/s/ R. William Thornton 
	 	Name: 	R. William Thornton 
	 	Title: 	Chief Operating Officer 

18 

EXHIBIT A 

 

FORM OF BILL OF SALE AND 

  ASSIGNMENT AND ASSUMPTION AGREEMENT 

BILL OF SALE AND ASSIGNMENT AND ASSUMPTION AGREEMENT

	THE STATE OF ______	 )	
	  	 )	KNOWN BY ALL MEN BY THESE PRESENTS: 
	COUNTY OF _______	 )	

          THIS
  BILL OF SALE AND ASSIGNMENT AND ASSUMPTION AGREEMENT (this “Agreement”)
  is effective as of March 26, 2007 (the “Closing Date”),
  by and between Deerfield Energy Kansas Corp., a Delaware corporation (“Assignor”),
  MegaWest Energy Corp., a British Columbia, Canada corporation (“Parent”),
  and MegaWest Energy (USA) Corp, a Nevada corporation (“Assignee”).

          Assignee
  is a party to that certain Asset Purchase Agreement dated as of March 26, 2007
  by and among Assignee, Parent and Assignor (the “Purchase Agreement”).
  The Purchase Agreement contemplates the making and delivery of this Agreement.
  Capitalized terms used in this Agreement but not otherwise defined herein shall
  have the meanings given to such terms in the Purchase Agreement. 

          NOW,
  THEREFORE, as contemplated by the Purchase Agreement, and for good and valuable
  consideration, the receipt and adequacy of which are hereby acknowledged, the
  parties hereto hereby agree as follows: 

          1.      Effective
  as of the Closing Date, Assignor hereby sells, conveys, assigns, transfers,
  and delivers to Assignee, its successors and assigns, forever, and Assignee
  hereby accepts, all of Assignor’s right, title, and interest in and to
  all of the properties, assets and agreements listed on Exhibit A attached
  hereto (the “Assigned Assets”), free and clear of all
  liens, charges, security interests, encumbrances, and restrictions of whatever
  nature, except as otherwise set forth pursuant to the Purchase Agreement, and
  the Assignor does hereby bind itself and its successors and assigns to WARRANT
  and FOREVER DEFEND, all and singular, title to the Assigned Assets unto the
  Assignee, its successors and assigns, against every person whomsoever lawfully
  claiming or to claim the same, or any part thereof. Except as otherwise set
  forth pursuant to the Purchase Agreement, it is agreed that the Assignee shall
  not be responsible for the discharge and performance of any duties or obligations
  required to be performed and/or discharged in connection with the Assigned Assets
  on or prior to the Closing Date, and Assignor agrees to indemnify, as set forth
  in Article VII of the Purchase Agreement, save, and hold harmless the Assignee
  from and against any and all losses, costs, damages, liabilities, expenses (including
  reasonable attorneys’ fees) actions, claims, or causes of action existing
  in favor of or asserted by any party arising from or related to any failure
  by the Assignor to perform or discharge its obligation as the owner of the Assigned
  Assets on and prior to the Closing Date. 

          2.     
  Effective as of the Closing Date, Assignee hereby assumes and agrees to pay,
  discharge, and perform when due certain of Assignor’s debts, liabilities,
  and obligations (whether accrued, absolute, contingent or otherwise, whether
  known or unknown, whether due or 

to become due, and regardless of when or by whom asserted) (the
  “Assumed Liabilities”) listed on Exhibit B attached
  hereto. Assignee hereby indemnifies, as set forth in Article VII of the Purchase
  Agreement, and holds harmless Assignor from and against any and all liabilities,
  costs, losses, and expenses arising from or relating to the Assumed Liabilities.

          3.      The
  Assignor hereby constitutes and appoints the Assignee as the Assignor’s
  true and lawful attorney, with full power of substitution, for it and in its
  name, place, and stead, or otherwise, but on behalf of and or the benefit of
  the Assignee, to demand and receive from time to time any and all Assigned Assets
  and Assumed Liabilities, hereby sold, assigned, and conveyed, or intended so
  to be, and to get receipts and release for and in respect of the same or any
  part thereof, and from time to time to institute and prosecute in the name of
  the Assignor or otherwise, but at the expense and for the benefit of the Assignee,
  any and all proceedings at law, inequity or otherwise, that the Assignee may
  deem proper in order to collect, assert, or enforce any claim, right, or title,
  of any kind, in and to the Assigned Assets and Assumed Liabilities hereby assigned
  and conveyed, or intended so to be, and to defend and compromise any and all
  actions, suits, or proceedings relating to any of the said Assigned Assets and
  Assumed Liabilities, and generally to do all and any such acts and things in
  relation thereto as the Assignee shall deem advisable. 

          4.      Notwithstanding
  any other provision in this Agreement to the contrary, in the event that any
  Assigned Asset is not legally or equitably assignable (whether pursuant to its
  express terms or otherwise) at the Closing Date, or if the purported assignment
  of such Assigned Asset pursuant to this Agreement would adversely affect, or
  diminish the value to Assignee of, such Assigned Asset, then in any such case
  (a) such Assigned Asset shall not be deemed assigned to Assignee hereunder,
  (b) Assignor shall, until such time as such Assigned Asset is so assignable
  without any such adverse effect or diminution in value, hold such Assigned Asset
  in trust for the benefit of Assignee, and act as agent of Assignee in order
  to obtain for Assignee the economic and other benefits of such Assigned Asset
  as though such Assigned Asset had been assigned to Assignee hereunder, (c) Assignor
  shall transfer or deliver to Assignee any and all sums, proceeds and other consideration
  received or collected by Assignor in respect of such Assigned Asset or as a
  result of any liquidation or other capitalization thereof, and (d) if and when
  such Assigned Asset thereafter becomes so assignable without any such adverse
  effect or diminution in value, then Assignor shall promptly, at Assignee’s
  reasonable request and without further consideration, execute and deliver such
  instruments of conveyance and transfer and take such action to effect, consummate,
  confirm and evidence the transfer to Assignee of such Assigned Asset.

          5.      Each
  party hereby covenants that, from and after the Closing Date, upon the other
  party’s reasonable request and without further consideration, such party
  shall execute and deliver such further instruments of conveyance and transfer
  and take such additional action to effect, consummate, confirm and evidence
  the transfer to Assignee of the Assigned Assets and the assumption by Assignee
  of the Assumed Liabilities. 

          6.      This
  Agreement may be executed in one or more counterparts, each of which shall be
  deemed an original but all of which shall constitute one and the same Agreement.

          7.      THIS
  AGREEMENT SHALL BE GOVERNED BY AND CONSTRUED AND ENFORCED IN ACCORDANCE WITH
  THE LAWS OF THE STATE OF DELAWARE, WITHOUT GIVING EFFECT TO THE CONFLICT OF
  LAWS RULES OR CHOICE OF LAWS RULES THEREOF. 

          8.      This
  instrument shall insure to the benefit of, and be binding upon, the parties
  hereto and their respective successors and assigns. 

 

 

[The remainder of page is intentionally left blank.] 

          IN
  WITNESS WHEREOF, Assignor and Assignee have caused this Agreement to be executed
  and delivered as of the date first written above. 

ASSIGNOR: 

DEERFIELD ENERGY KANSAS CORP. 

By: _______________________________

  Name: _____________________________

  Title: ______________________________

ASSIGNEE: 

MEGAWEST ENERGY (USA) CORP. 

By: _______________________________

  Name: _____________________________

  Title: ______________________________

Attachments:

                   
  Exhibit A – Assigned Assets 

                   
  Exhibit B – Assumed Liabilities

ACKNOWLEDGMENT 

THE STATE OF ________) 

                                                 
  ) 

  COUNTY OF   ________   ) 

          On this
  _____ day of March, 2007, before me appeared _____________________ , to me personally
  known, who being by me duly sworn, did say that he is the _____________ of Deerfield
  Energy Kansas Corp., a Delaware corporation, and that said instrument was signed
  and sealed in behalf of said company by authority of its ___________________,
  and acknowledged said instrument to be the free act of said company. 

  ________________________________________

  Notary Public 

[SEAL] 

____________________________

  My commission expires 

ACKNOWLEDGMENT 

THE STATE OF _______      ) 

                                                     
  ) 

  COUNTY OF      _______     
  ) 

          On this
  _____ day of March, 2007, before me appeared __________________ , to me personally
  known, who being by me duly sworn, did say that he is the __________________
  of MegaWest Energy (USA) Corp., a Nevada corporation, and that said instrument
  was signed and sealed in behalf of said company by authority of its Board of
  Directors, and acknowledged said instrument to be the free act of said company.

 

  ________________________________________

  Notary Public 

[SEAL] 

____________________________

  My commission expires 

EXHIBIT B 

DEERFIELD ENERGY KANSAS CORP. 

OFFICER’S CERTIFICATE 

          I,
  _________________, ___________ of Deerfield Energy Kansas Corp., a Delaware
  corporation (the “Seller”), hereby certifies the following
  pursuant to Section 2.01(a)(ii) of the Asset Purchase Agreement (the “Agreement”),
  dated as of March 26, 2007, between MegaWest Energy Corp., a British Columbia,
  Canada corporation, MegaWest Energy (USA) Corp., a Nevada corporation, and the
  Seller. Capitalized terms used herein and not otherwise defined herein shall
  have the respective meanings ascribed to them in the Agreement. 

          1.      All
  representations and warranties of the Seller set forth in the Agreement are
  true and correct as of the date hereof, except to the extent such representations
  and warranties are specifically made as of an earlier date (in which case such
  representations and warranties are true and correct as of such earlier date).

     2.      The
  Seller has performed or complied with in all respects its agreements and covenants
  required to be performed or complied with under the Agreement as of or prior
  to the date hereof. 

          IN
  WITNESS WHEREOF, I have executed this Certificate as of March 26, 2007. 

DEERFIELD ENERGY KANSAS CORP., 

  a Delaware corporation 

By: _______________________________

  Name: _____________________________

  Title: ______________________________

EXHIBIT C 

DEERFIELD ENERGY KANSAS CORP. 

CERTIFICATE OF SECRETARY 

          This
  Certificate of Secretary is made and attested to this 26th day of March, 2007,
  pursuant to the Asset Purchase Agreement dated March 26, 2007 (the “Agreement”),
  by and between Deerfield Energy Kansas Corp., a Delaware corporation
  (the “Seller”), MegaWest Energy Corp., a British Columbia,
  Canada corporation, and MegaWest (USA) Energy (the “Buyer”).

          1.      The
  Seller has provided the Buyer with a copy of the Action by Unanimous Written
  Consent of the Board of Directors and the Action by Written Consent of the Sole
  Shareholder of the Seller, which approves the Agreement and the execution thereof
  by the authorized officers of the Seller, and I hereby certify and attest that
  each of such Actions is true and complete and has not been rescinded. 

          IN
  WITNESS WHEREOF, I have set my hand hereto as of the date first written above.

  ___________________________________________

  Raymond T. Pirraglia, Secretary 

EXHIBIT D 

MEGAWEST ENERGY (USA) CORP. 

CERTIFICATE OF SECRETARY 

          This
  Certificate of Secretary is made and attested to this 26th day of March, 2007,
  pursuant to the Asset Purchase Agreement dated March 26, 2007 (the “Agreement”),
  by and between Deerfield Energy Kansas Corp., a Delaware corporation
  (the “Seller”), and MegaWest Energy Corp., a British
  Columbia, Canada corporation and MegaWest Energy (USA) Corp., (the “Buyer”).

          1.      The
  Buyer has provided the Seller with a copy of the Action by Unanimous Written
  Consent of the Board of Directors of the Buyer, which approves the Agreement
  and the execution thereof by the authorized officers of the Buyer, and I hereby
  certify and attest that each of such Actions by Unanimous Written Consent is
  true and complete and has not been rescinded. 

          IN
  WITNESS WHEREOF, I have set my hand hereto as of the date first written above.

 

  ___________________________________________

  ______________________, Secretary 

Index to Disclosure Schedules 

 

	Schedule 1.02 	Purchased Assets 
	Schedule 1.03 	Assumed Liabilities 
	Schedule 3.09 	Taxes 
	Schedule 3.12 	Consents 
	Schedule 3.17 	Contracts Assigned or Assumed
    

Schedule 1.02 - Purchased Assets 

Barr Lease Removable Equipment (Estimated Cost)

	  	  	Approx. Original 
	  	  	Cost 
	Item 	Number 	w/Improvements 
	Drilling Rig, Upgraded 	1 	$ 35,000 
	Pump Jacks ($350/each) 	34 	13,600 
	Pulling Unit, (w/new engine) 	1 	15,000 
	Ditch Witch 	1 	10,900 
	Triplex Pumps (w/new valves) 	3 	14,000 
	Air Compressor 	1 	4,500 
	Electric Motors 	35 	3,436 
	Large Electric Motors (20-25 hp) 	3 	3,000 
	Fiberglass 200-bbl Tank 	1 	1,500 
	Downhole Pumps, Anchors 	33 	14,264 
	(Includes water well pump at approx. $2,700.)
    	  	  
	Fuel Tank Battery - 200 bbl 	4 	4,500 
	Stairs and Walkway 	1 	1,000 
	Power Threader 	1 	650 
	2-3 / 8” Ø
      Tubing, 3,100 feet 	  	5,734 
	1” Ø Tubing, 3,960 feet unburied 	  	2,772 
	High Pressure Wellheads 	20 	7,000 
	Production Wellheads 	33 	4,620 
	Miscellaneous Valves, wellheads 	  	3,000 
	Test/Transfer Valves Sleeves 	  	3,000 
	Electric Boxes @ Wells, etc. 	30 	1,200 
	Water Well Downhole Pump 	1 	2,700 
	Water Well Electric Box and Sensors 	1 	500 
	Water Well, 350 feet pdt Tubing 	  	700 
	Water Well Wellhead,Valves 	  	300 
	Centrifugal Pumps 	2 	700 
	Used Lease Truck 	1 	1,000 
	Main Electric Breaker Box 	1 	  
	  	  	  
	Free Water Knockout 	1 	2,000 
	Heater Treater 	1 	2,000 
	400-bbl Stock Tanks 	4 	8,000 
	High Stairs and Walkway 	1 	1,000 
	200-bbl Steel Water Tank 	1 	1,000 
	100-bbl SWD Tank 	1 	500 
	  	Sub-Total 	$ 169,076 
	  	  	  
	Struthers Steam Generator and Water Softener 	1 	$ 178,000 
	  	Total 	$ 347,076 

Fixed Equipment (excluding any Removable Equipment) 

	Item 	Approx. Cost 
	  	w/Improvements 
	  	  
	  	  
	33 producing oil wells cased to approximately
      100 feet, 4-1⁄2” Ø and 5” Ø casing cemented with
      high temperature cement(consolidated), 25-30 feet open hole completion.
      Approximate cost of material and labor = $3,700 each. 	$ 122,100 
	 	 
	20 steam injection wells cased to approximately
      100 feet, 4-1⁄2” Ø and 5” Ø casing cemented with
      high temperature cement(consolidated), 10-15 feet open hole completion.
      One well from each pair cored including geological analysis. Approximate
      cost of material and labor = $3,900 each. 	78,000 
	 	 
	10,760 feet of buried 1”Ø oil production
      lines @ $2.00/ft. including trenching; includes bleeder lines from injection
      wells. 	21,520 
	 	 
	600 feet of buried 3”Ø lines from
      test and transfer stations to gunbarrel @ $3.00/ft. 	1,800 
	 	 
	Approximately 7,000 feet of buried electric
      lines to producers at 	  
	$0.50/ft 	  
	  	3,500 
	                 
                           
                           
                           
       Approximate Cost of Fixed Equipment 	$226,920 
	  	  
	                                             Approximate
      Value of All Equipment (Removable and Fixed) 	$573,996 

Schedule 1.03 - Assumed Liabilities 

 

	  	Amount 
	Creditors 	Owed 
	  	  
	Any vendor amounts incurred on Chetopa Prospect
      and not invoiced to Deerfield Energy Kansas Corp. prior to Closing Date
    	TBD 

Schedule 3.09 - Taxes 

For the year ended December 31, 2006, Deerfield Energy Kansas
  Corp. has filed for an extension of time to file its Federal income tax
  return, but has not filed for any extension with respect to state and local
  income tax returns.

Schedule 3.10 - Consents 

NONE 

Schedule 3.17 - Contracts Assigned or Assumed
  

Oil and Gas Lease by and between Duane Barr, Nadine Barr and
  Deerfield Energy Kansas Corp. 

[WAKEFIELD LEASE – NEED TO GET COPY FROM JIM LONG]EXECUTION COPY

 

	
             
 

 

 

BA CREDIT CARD TRUST

as Issuer

 

CLASS B(2007-3) TERMS DOCUMENT

dated as of March 30, 2007

to

AMENDED AND RESTATED BASERIES INDENTURE SUPPLEMENT

dated as of June 10, 2006

to

SECOND AMENDED AND RESTATED INDENTURE

dated as of October 20, 2006

 

THE BANK OF NEW YORK

as Indenture Trustee

 

 

	
             
 

 

 

 

 

 

	
            ARTICLE I
 
	
             
 
	
            Definitions and Other Provisions of General Application
 
	
             
 
	
            Section 1.01.
 	
            Definitions
 	
            1
 
	
             
 	
             
 	
             
 
	
            Section 1.02.
 	
            Governing Law; Submission to Jurisdiction; Agent for Service of Process
 	
            5
 
	
             
 	
             
 	
             
 
	
            Section 1.03.
 	
            Counterparts
 	
            6
 
	
             
 	
             
 	
             
 
	
            Section 1.04.
 	
            Ratification of Indenture and Indenture Supplement
 	
            6
 
	
             
 	
             
 	
             
 
	
            ARTICLE II
 	
             
 
	
             
 	
             
 	
             
 
	
            The Class B(2007-3) Notes
 	
             
 
	
             
 	
             
 	
             
 
	
            Section 2.01.
 	
            Creation and Designation
 	
            7
 
	
             
 	
             
 	
             
 
	
            Section 2.02.
 	
            Specification of Required Subordinated Amount and other Terms
 	
            7
 
	
             
 	
             
 	
             
 
	
            Section 2.03.
 	
            Interest Payment
 	
            8
 
	
             
 	
             
 	
             
 
	
            Section 2.04.
 	
            Calculation Agent; Determination of LIBOR
 	
            8
 
	
             
 	
             
 	
             
 
	
            Section 2.05.
 	
            Payments of Interest and Principal
 	
            9
 
	
             
 	
             
 	
             
 
	
            Section 2.06.
 	
            Form of Delivery of Class B(2007-3) Notes; Depository; Denominations
 	
            10
 
	
             
 	
             
 	
             
 
	
            Section 2.07.
 	
            Delivery and Payment for the Class B(2007-3) Notes
 	
            10
 
	
             
 	
             
 	
             
 
	
            Section 2.08.
 	
            Targeted Deposits to the Accumulation Reserve Account
 	
            10
 
	
             
 	
             
 	
             
 
	
            ARTICLE III
 	
             
 
	
             
 	
             
 	
             
 
	
            Representations and Warranties
 	
             
 
	
             
 	
             
 	
             
 
	
            Section 3.01.
 	
            Issuer’s Representations and Warranties
 	
            11
 

 

 

 

 

THIS CLASS B(2007-3) TERMS DOCUMENT (this “Terms Document”), by and between BA CREDIT CARD TRUST, a statutory trust created under the laws of the State of Delaware (the “Issuer”), having its principal office at Rodney Square North, 1100 North Market Street, Wilmington, Delaware 19890, and THE BANK OF NEW YORK, a New York banking corporation, as Indenture Trustee (the “Indenture Trustee”), is made and entered into as of March 30, 2007.

 

Pursuant to this Terms Document, the Issuer and the Indenture Trustee shall create a new tranche of Class B Notes and shall specify the principal terms thereof.

 

ARTICLE I

 

Definitions and Other Provisions of General Application

Section 1.01.     Definitions.  For all purposes of this Terms Document, except as otherwise expressly provided or unless the context otherwise requires:

(a)          the terms defined in this Article have the meanings assigned to them in this Article, and include the plural as well as the singular;

(b)          all other terms used herein which are defined in the Amended and Restated BAseries Indenture Supplement, dated as of June 10, 2006 (the “Indenture Supplement”), between the Issuer and the Indenture Trustee, or the Second Amended and Restated Indenture, dated as of October 20, 2006 (the “Indenture”), between the Issuer and the Indenture Trustee, as acknowledged and accepted by FIA, as Servicer, either directly or by reference therein, have the meanings assigned to them therein; 

(c)          all accounting terms not otherwise defined herein have the meanings assigned to them in accordance with generally accepted accounting principles and, except as otherwise herein expressly provided, the term “generally accepted accounting principles” with respect to any computation required or permitted hereunder means such accounting principles as are generally accepted in the United States of America at the date of such computation;

(d)          all references in this Terms Document to designated “Articles,” “Sections” and other subdivisions are to the designated Articles, Sections and other subdivisions of this Terms Document as originally executed;

(e)          the words “herein,” “hereof” and “hereunder” and other words of similar import refer to this Terms Document as a whole and not to any particular Article, Section or other subdivision; 

(f)           in the event that any term or provision contained herein shall conflict with or be inconsistent with any term or provision contained in the Indenture Supplement or the Indenture, the terms and provisions of this Terms Document shall be controlling;

(g)          each capitalized term defined herein shall relate only to the Class   B(2007-3) Notes and no other tranche of Notes issued by the Issuer; and 

 

 

 

 

(h)          “including” and words of similar import will be deemed to be followed by “without limitation.”

“Accumulation Reserve Funding Period” shall mean, (a) if the Accumulation Period Length is determined to be one (1) month, there shall be no Accumulation Reserve Funding Period and (b) otherwise, the period (x) commencing on the earliest to occur of (i) the Monthly Period beginning three (3) calendar months prior to the first Transfer Date for which a budgeted deposit is targeted to be made into the Principal Funding sub-Account of the Class B(2007-3) Notes pursuant to Section 3.10(b) of the Indenture Supplement, (ii) the Monthly Period following the first Transfer Date following and including the February 2012 Transfer Date for which the Quarterly Excess Available Funds Percentage is less than 2%, but in such event the Accumulation Reserve Funding Period shall not be required to
commence earlier than 24 months prior to the Expected Principal Payment Date, (iii) the Monthly Period following the first Transfer Date following and including the August 2012 Transfer Date for which the Quarterly Excess Available Funds Percentage is less than 3%, but in such event the Accumulation Reserve Funding Period shall not be required to commence earlier than 18 months prior to the Expected Principal Payment Date, and (iv) the Monthly Period following the first Transfer Date following and including the October 2012 Transfer Date for which the Quarterly Excess Available Funds Percentage is less than 4%, but in such event the Accumulation Reserve Funding Period shall not be required to commence earlier than 16 months prior to the Expected Principal Payment Date and (y) ending on the close of business on the last day of the Monthly Period preceding the earlier to occur of (i) the Expected Principal Payment Date for the Class B(2007-3) Notes and (ii) the date on
which the Class B(2007-3) Notes are paid in full.

 

“Base Rate” means, with respect to any Monthly Period, the sum of (i) the Weighted Average Interest Rates for the Outstanding BAseries Notes, (ii) the Net Servicing Fee Rate (as such term is defined in the Series 2001-D Supplement) and (iii) so long as FIA or The Bank of New York is the Servicer, the Servicer Interchange Rate, in each case, for such Monthly Period.

 

“BAseries Servicer Interchange” means, with respect to any Monthly Period, an amount equal to the product of (a) the Servicer Interchange (as such term is defined in the Series 2001-D Supplement) with respect to such Monthly Period and (b) a fraction the numerator of which is the Weighted Average Available Funds Allocation Amount for the BAseries for such Monthly Period and the denominator of which is the Weighted Average Available Funds Allocation Amount for all series of Notes for such Monthly Period.

 

“Calculation Agent” is defined in Section 2.04(a).

 

“Class B(2007-3) Note” means any Note, substantially in the form set forth in Exhibit A-2 to the Indenture Supplement, designated therein as a Class B(2007-3) Note and duly executed and authenticated in accordance with the Indenture.

 

“Class B(2007-3) Noteholder” means a Person in whose name a Class B(2007-3) Note is registered in the Note Register.

 

 

2

 

 

 

“Class B(2007-3) Termination Date” means the earliest to occur of (a) the Principal Payment Date on which the Outstanding Dollar Principal Amount of the Class  B(2007-3) Notes is paid in full, (b) the Legal Maturity Date and (c) the date on which the Indenture is discharged and satisfied pursuant to Article VI thereof.

 

“Class B Required Subordinated Amount of Class C Notes” is defined in Section 2.02(b). 

 

“Controlled Accumulation Amount” means $14,583,333.34; provided, however, if the Accumulation Period Length is determined to be less than twelve (12) months pursuant to Section 3.10(b)(ii) of the Indenture Supplement, the Controlled Accumulation Amount shall be the amount specified in the definition of “Controlled Accumulation Amount” in the Indenture Supplement.

 

“Excess Available Funds Percentage” means, with respect to any Transfer Date, the amount, if any, by which the Portfolio Yield for the preceding Monthly Period exceeds the Base Rate for such Monthly Period.

 

“Expected Principal Payment Date” means March 17, 2014.

 

“Initial Dollar Principal Amount” means $175,000,000.

 

“Interest Payment Date” means the fifteenth day of each month, or if such fifteenth day is not a Business Day, the next succeeding Business Day, commencing May 15, 2007.

 

“Interest Period” means, with respect to any Interest Payment Date, the period from and including the previous Interest Payment Date (or in the case of the initial Interest Payment Date, from and including the Issuance Date) through the day preceding such Interest Payment Date.

 

“Issuance Date” means March 30, 2007.

 

“Legal Maturity Date” means August 15, 2016.

 

“LIBOR” means, for any Interest Period, the London interbank offered rate for one-month United States dollar deposits or, for the first Interest Period, the rate that corresponds to the actual number of days in the first Interest Period determined by the Calculation Agent on the LIBOR Determination Date for that Interest Period in accordance with the provisions of Section 2.04.

 

“LIBOR Determination Date” means March 28, 2007 for the period from and including the Issuance Date to but excluding May 15, 2007, and for each Interest Period thereafter, the second London Business Day prior to the Interest Payment Date on which such Interest Period commences.

 

 

3

 

 

 

“London Business Day” means any Business Day on which dealings in deposits in United States Dollars are transacted in the London interbank market.

 

 “Note Interest Rate” means a per annum rate equal to 0.20% in excess of LIBOR as determined by the Calculation Agent on the related LIBOR Determination Date with respect to each Interest Period.

 

“Paying Agent” means The Bank of New York.

 

“Portfolio Yield” means, with respect to any Monthly Period, the annualized percentage equivalent of a fraction, the numerator of which is (a) the amount of Available Funds allocated to the BAseries pursuant to Section 501 of the Indenture, plus (b) any Interest Funding sub-Account Earnings on the related Transfer Date, plus (c) any amounts to be treated as BAseries Available Funds pursuant to Sections 3.20(d) and 3.27(a) of the Indenture Supplement, plus (d) the BAseries Servicer Interchange for such Monthly Period, minus (e) the excess, if any, of the sum of the PFA Prefunding Earnings Shortfall plus the PFA Accumulation Earnings Shortfall over the sum of the aggregate amount to be treated as BAseries Available Funds for such Monthly Period pursuant to Sections 3.04(a)(ii) and 3.25(a) of the Indenture Supplement plus any other amounts applied to cover earnings shortfalls on amounts in the Principal Funding sub-Account for any tranche of BAseries Notes for such Monthly Period, minus (f) the BAseries Investor Default Amount for such Monthly Period, and the denominator of which is the Weighted Average Available Funds Allocation Amount for the BAseries for such Monthly Period.

 

“Predecessor Note” means, with respect to any particular Note, every previous Note evidencing all or a portion of the same debt as that evidenced by such particular Note; and, for the purpose of this definition, any Note authenticated and delivered under Section 306 of the Indenture in lieu of a mutilated, lost, destroyed or stolen Note shall be deemed to evidence the same debt as the mutilated, lost, destroyed or stolen Note.

 

“Quarterly Excess Available Funds Percentage” means, with respect to the February 2012 Transfer Date and each Transfer Date thereafter, the percentage equivalent of a fraction the numerator of which is the sum of the Excess Available Funds Percentages with respect to the immediately preceding three Monthly Periods and the denominator of which is three.

 

“Record Date” means, for any Transfer Date, the last Business Day of the preceding Monthly Period.

 

“Reference Banks” means four major banks in the London interbank market selected by the Beneficiary.

 

“Required Accumulation Reserve sub-Account Amount” means, with respect to any Monthly Period during the Accumulation Reserve Funding Period, an amount equal to (i) 0.5% of the Outstanding Dollar Principal Amount of the Class B(2007-3) Notes as of the close of business on the last day of the preceding Monthly Period or (ii) any other amount 

 

4

 

 

designated by the Issuer; provided, however, that if such designation is of a lesser amount, the Note Rating Agencies shall have provided prior written confirmation that a Ratings Effect will not occur with respect to such change.

 

“Servicer Interchange Rate” means, for any Monthly Period, the percentage equivalent of a fraction, the numerator of which is the BAseries Servicer Interchange for such Monthly Period, and the denominator of which is the Weighted Average Available Funds Allocation Amount for the BAseries for such Monthly Period.

 

“Stated Principal Amount” means $175,000,000.

 

“Reuters Screen LIBOR01 Page” means the display page currently so designated on the Reuters Monitor Money Rates (or such other page as may replace that page on that service, or such other service as may be nominated as the information vendor, for the purpose of displaying comparable rates or prices).

 

“Weighted Average Interest Rates” means, with respect to any Outstanding Notes of a class or tranche of the BAseries, or of all of the Outstanding Notes of the BAseries, on any date, the weighted average (weighted based on the Outstanding Dollar Principal Amount of the related Notes on such date) of the following rates of interest:

 

(a)          in the case of a tranche of Dollar Interest-bearing Notes with no Derivative Agreement for interest, the rate of interest applicable to that tranche on that date;

(b)          in the case of a tranche of Discount Notes, the rate of accretion (converted to an accrual rate) of that tranche on that date;

(c)          in the case of a tranche of Notes with a payment due under a Performing Derivative Agreement for interest, the rate at which payments by the Issuer to the applicable Derivative Counterparty accrue on that date (prior to the netting of such payments, if applicable); and 

(d)          in the case of a tranche of Notes with a non-Performing Derivative Agreement for interest, the rate specified for that date in the related terms document.

Section 1.02.     Governing Law; Submission to Jurisdiction; Agent for Service of Process.  This Terms Document shall be governed by and construed in accordance with the laws of the State of Delaware, without regard to principles of conflict of laws.  The parties hereto declare that it is their intention that this Terms Document shall be regarded as made under the laws of the State of Delaware and that the laws of said State shall be applied in interpreting its provisions in all cases where legal interpretation shall be required.  Each of the parties hereto agrees (a) that this Terms Document involves at least $100,000.00, and (b) that this Terms Document has been entered into by the parties hereto in express reliance upon 6 DEL. C. § 2708.  Each of
the parties hereto hereby irrevocably and unconditionally agrees (a) to be subject to the jurisdiction of the courts of the State of Delaware and of the federal courts sitting in the State of Delaware, and (b)(1) to the extent such party is not otherwise subject to service of process in the State of Delaware, to appoint and maintain an agent in the State of Delaware as such party’s 

 

5

 

 

agent for acceptance of legal process, and (2) that, to the fullest extent permitted by applicable law, service of process may also be made on such party by prepaid certified mail with a proof of mailing receipt validated by the United States Postal Service constituting evidence of valid service, and that service made pursuant to (b)(1) or (2) above shall, to the fullest extent permitted by applicable law, have the same legal force and effect as if served upon such party personally within the State of Delaware.

Section 1.03.     Counterparts.  This Terms Document may be executed in any number of counterparts, each of which so executed will be deemed to be an original, but all such counterparts will together constitute but one and the same instrument.

Section 1.04.     Ratification of Indenture and Indenture Supplement.  As supplemented by this Terms Document, each of the Indenture and the Indenture Supplement is in all respects ratified and confirmed and the Indenture as so supplemented by the Indenture Supplement as so supplemented and this Terms Document shall be read, taken and construed as one and the same instrument.

[END OF ARTICLE I]

 

6

 

 

 

ARTICLE II

 

The Class B(2007-3) Notes

Section 2.01.     Creation and Designation.  There is hereby created a tranche of BAseries Class B Notes to be issued pursuant to the Indenture and the Indenture Supplement to be known as the “BAseries Class B(2007-3) Notes.” 

Section 2.02.     Specification of Required Subordinated Amount and other Terms.

(a)          Notwithstanding any provision of Section 2.03 of the Indenture Supplement to the contrary, on any date of determination, the available subordinated amount of Class C Notes for the Class B(2007-3) Notes shall be at least equal to the Class B Required Subordinated Amount of Class C Notes for the Class B(2007-3) Notes.  For purposes of this clause, the available subordinated amount of Class C Notes for the Class B(2007-3) Notes as of any date will be an amount equal to, after giving effect to any issuances, deposits, allocations, reallocations or payments to be made on that date:

(i)           the aggregate Nominal Liquidation Amount of all tranches of Class C Notes which are Outstanding on that date; minus

(ii)          the sum of (A) the aggregate Class B Required Subordinated Amount of Class C Notes for all other tranches of Class B Notes which are Outstanding on that date plus (B) the aggregate Class A Required Subordinated Amount of Class C Notes for all tranches of Class A Notes for which the Class A Required Subordinated Amount of Class B Notes is equal to zero which are Outstanding on that date.

(b)          (i)          For the Class B(2007-3) Notes for any date of determination, the Class B Required Subordinated Amount of Class C Notes will be an amount equal to the product of (A) the Adjusted Outstanding Dollar Principal Amount of the Class B(2007-3) Notes on such date, times (B) the sum of:

(A)         a fraction, the numerator of which is the aggregate Class A Required Subordinated Amount of Class C Notes for all tranches of Class A Notes which are Outstanding on that date, for which the Class A Required Subordinated Amount of Class B Notes is greater than zero and the denominator of which is the aggregate Adjusted Outstanding Dollar Principal Amount for all tranches of Class B Notes (including the Class B(2007-3) Notes) which are Outstanding on that date; plus 

(B)         the product of:

(1)          6.95187%; times

(2)          a fraction, the numerator of which is the aggregate Adjusted Outstanding Dollar Principal Amount for all tranches of Class B Notes (including the Class B(2007-3) Notes) which are Outstanding on that date minus the aggregate Class A Required Subordinated Amount of Class B Notes for all tranches of Class A 

 

7

 

 

Notes which are Outstanding on that date, and the denominator of which is the aggregate Adjusted Outstanding Dollar Principal Amount for all tranches of Class B Notes (including the Class B(2007-3) Notes) which are Outstanding on that date.

(ii)          If an Early Redemption Event with respect to the Class B(2007-3) Notes shall have occurred, if an Event of Default and acceleration of the Class B(2007-3) Notes shall have occurred or if the Class B Usage of the Class C Required Subordinated Amount for the Class B(2007-3) Notes is greater than zero, on any date of determination following any such event, the Class B Required Subordinated Amount of Class C Notes for the Class B(2007-2) Notes shall be the greater of (i) the amount determined pursuant to subsection 2.02(b)(i) on such date of determination and (ii) the amount determined pursuant to subsection 2.02(b)(i) as of close of business on the day immediately preceding the occurrence of such
Early Redemption Event, such Event of Default and acceleration or the date on which the Class B Usage of Class C Required Subordinated Amount exceeded zero.

(c)          The Issuer may change the definition of the Class B Required Subordinated Amount of Class C Notes with respect to the Class B(2007-3) Notes without the consent of any Noteholder so long as the Issuer has (i) received written confirmation from each Note Rating Agency that has rated any Outstanding Notes of the BAseries that the change in such definition will not result in a Ratings Effect with respect to any Outstanding Class 

B(2007-3) Notes and (ii) delivered to the Indenture Trustee and the Note Rating Agencies a Master Trust Tax Opinion and an Issuer Tax Opinion with respect to such change.

Section 2.03.     Interest Payment.

(a)          For each Interest Payment Date, the amount of interest due with respect to the Class B(2007-3) Notes shall be an amount equal to the product of (i)(A) a fraction, the numerator of which is the actual number of days in the related Interest Period and the denominator of which is 360, times (B) the Note Interest Rate in effect with respect to the related Interest Period, times (ii) the Outstanding Dollar Principal Amount of the Class B(2007-3) Notes determined as of the Record Date preceding the related Transfer Date.  Interest on the Class B(2007-3) Notes will be calculated on the basis of the actual number of days in the related Interest Period and a 360-day year.

(b)          Pursuant to Section 3.03 of the Indenture Supplement, on each Transfer Date, the Indenture Trustee shall deposit into the Class B(2007-3) Interest Funding sub-Account the portion of BAseries Available Funds allocable to the Class B(2007-3) Notes. 

Section 2.04.     Calculation Agent; Determination of LIBOR.

(a)          The Issuer hereby agrees that for so long as any Class B(2007-3) Notes are Outstanding, there shall at all times be an agent appointed to calculate LIBOR for each Interest Period (the “Calculation Agent”).  The Issuer hereby initially appoints the Indenture Trustee as the Calculation Agent for purposes of determining LIBOR for each Interest Period.  The Calculation Agent may be removed by the Issuer at any time.  If the Calculation Agent is unable or unwilling to act as such or is removed by the Issuer, or if the Calculation Agent fails to 

 

8

 

 

determine LIBOR for an Interest Period, the Issuer shall promptly appoint a replacement Calculation Agent that does not control or is not controlled by or under common control with the Issuer or its Affiliates.  The Calculation Agent may not resign its duties, and the Issuer may not remove the Calculation Agent, without a successor having been duly appointed.

(b)          On each LIBOR Determination Date, the Calculation Agent shall determine LIBOR on the basis of the rate for deposits in United States dollars for a one-month period which appears on Reuters Screen LIBOR01 Page as of 11:00 a.m., London time, on such date (or, for the first Interest Period, the rate that corresponds to the actual number of days in the first Interest Period).  If such rate does not appear on Reuters Screen LIBOR01 Page, the rate for that LIBOR Determination Date shall be determined on the basis of the rates at which deposits in United States dollars are offered by the Reference Banks at approximately 11:00 a.m., London time, on that day to prime banks in the London interbank market for a one-month period.  The Calculation Agent shall request the principal London office of each
of the Reference Banks to provide a quotation of its rate.  If at least two such quotations are provided, the rate for that LIBOR Determination Date shall be the arithmetic mean of the quotations.  If fewer than two quotations are provided as requested, the rate for that LIBOR Determination Date will be the arithmetic mean of the rates quoted by four major banks in New York City, selected by the Beneficiary, at approximately 11:00 a.m., New York City time, on that day for loans in United States dollars to leading European banks for a one-month period.

(c)          The Note Interest Rate applicable to the then current and the immediately preceding Interest Periods may be obtained by telephoning the Indenture Trustee at its corporate trust office at (212) 815-3247 or such other telephone number as shall be designated by the Indenture Trustee for such purpose by prior written notice by the Indenture Trustee to each Noteholder from time to time.

(d)          On each LIBOR Determination Date, the Calculation Agent shall send to the Indenture Trustee, the Beneficiary and the Servicer, by facsimile transmission, notification of LIBOR for the following Interest Period.

Section 2.05.     Payments of Interest and Principal.  

(a)          Any installment of interest or principal, if any, payable on any Class    B(2007-2) Note which is punctually paid or duly provided for by the Issuer and the Indenture Trustee on the applicable Interest Payment Date or Principal Payment Date shall be paid by the Paying Agent to the Person in whose name such Class B(2007-3) Note (or one or more Predecessor Notes) is registered on the Record Date, by wire transfer of immediately available funds to such Person’s account as has been designated by written instructions received by the Paying Agent from such Person not later than the close of business on the third Business Day preceding the date of payment or, if no such account has been so designated, by check mailed first-class, postage prepaid to such Person’s address as it appears on
the Note Register on such Record Date, except that with respect to Notes registered on the Record Date in the name of the nominee of Cede & Co., payment shall be made by wire transfer in immediately available funds to the account designated by such nominee.

 

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(b)          The right of the Class B(2007-3) Noteholders to receive payments from the Issuer will terminate on the first Business Day following the Class B(2007-3) Termination Date.

Section 2.06.     Form of Delivery of Class B(2007-3) Notes; Depository; Denominations.

(a)          The Class B(2007-3) Notes shall be delivered in the form of a global Registered Note as provided in Sections 202 and 301(i) of the Indenture, respectively.

(b)          The Depository for the Class B(2007-3) Notes shall be The Depository Trust Company, and the Class B(2007-3) Notes shall initially be registered in the name of Cede & Co., its nominee.

(c)          The Class B(2007-3) Notes will be issued in minimum denominations of $5,000 and multiples of $1,000 in excess of that amount.

Section 2.07.     Delivery and Payment for the Class B(2007-3) Notes.  The Issuer shall execute and deliver the Class B(2007-3) Notes to the Indenture Trustee for authentication, and the Indenture Trustee shall deliver the Class B(2007-3) Notes when authenticated, each in accordance with Section 303 of the Indenture.

Section 2.08.     Targeted Deposits to the Accumulation Reserve Account.  The deposit targeted to be made to the Accumulation Reserve Account for any Monthly Period during the Accumulation Reserve Funding Period will be an amount equal to the Required Accumulation Reserve sub-Account Amount.

[END OF ARTICLE II]

 

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ARTICLE III

 

Representations and Warranties

Section 3.01.     Issuer’s Representations and Warranties.  The Issuer makes the following representations and warranties as to the Collateral Certificate on which the Indenture Trustee is deemed to have relied in acquiring the Collateral Certificate.  Such representations and warranties speak as of the execution and delivery of this Terms Document, but shall survive until the termination of this Terms Document.  Such representations and warranties shall not be waived by any of the parties to this Terms Document unless the Issuer has obtained written confirmation from each Note Rating Agency that there will be no Ratings Effect with respect to such waiver.

(a)          The Indenture creates a valid and continuing security interest (as defined in the Delaware UCC) in the Collateral Certificate in favor of the Indenture Trustee, which security interest is prior to all other liens, and is enforceable as such as against creditors of and purchasers from the Issuer.

(b)          The Collateral Certificate constitutes either an “account,” a “general intangible,” an “instrument,” or a “certificated security,” each within the meaning of the Delaware UCC.

(c)          At the time of the transfer and assignment of the Collateral Certificate to the Indenture Trustee pursuant to the Indenture, the Issuer owned and had good and marketable title to the Collateral Certificate free and clear of any lien, claim or encumbrance of any Person.

(d)          The Issuer has caused, within ten days of the execution of the Indenture, the filing of all appropriate financing statements in the proper filing office in the appropriate jurisdictions under applicable law in order to perfect the security interest in the Collateral Certificate granted to the Indenture Trustee pursuant to the Indenture. 

(e)          Other than the security interest granted to the Indenture Trustee pursuant to the Indenture, the Issuer has not pledged, assigned, sold, granted a security interest in, or otherwise conveyed the Collateral Certificate.  The Issuer has not authorized the filing of and is not aware of any financing statements against the Issuer that include a description of collateral covering the Collateral Certificate other than any financing statement relating to the security interest granted to the Indenture Trustee pursuant to the Indenture or any financing statement that has been terminated.  The Issuer is not aware of any judgment or tax lien filings against the Issuer.

(f)           All original executed copies of the Collateral Certificate have been delivered to the Indenture Trustee.

(g)          At the time of the transfer and assignment of the Collateral Certificate to the Indenture Trustee pursuant to the Indenture, the Collateral Certificate had no marks or notations indicating that it has been pledged, assigned or otherwise conveyed to any Person other than the Indenture Trustee.

 

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[END OF ARTICLE III]

 

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IN WITNESS WHEREOF, the parties hereto have caused this Terms Document to be duly executed, all as of the day and year first above written.

 

 

	
            BA CREDIT CARD TRUST,
 
	
            by BA CREDIT CARD FUNDING, LLC, 
 
	
            as Beneficiary and not in its individual capacity
 
	
             
 
	
             
 
	
             
 
	
            By:   /s/ Keith W. Landis               
 
	
            Keith W. Landis
 
	
            Vice President
 
	
             
 
	
             
 
	
             
 
	
            THE BANK OF NEW YORK, as Indenture Trustee
 
	
            and not in its individual capacity
 
	
             
 
	
             
 
	
             
 
	
            By:   /s/ Bryon Tinnin               
 
	
            Name:  Bryon Tinnin
 
	
            Title:    Vice President
 

 

 

 

 

 

 

 

 

 

 

 

[Signature Page to the Class B(2007-3) Terms Document]

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