Document:

kodiaksb2ex10-4.htm

    
      

      

    

    
      Exhibit
        10.4

       

    
      Canada
        -
        BC, AB, ON, QB

      KODIAK
        ENERGY, INC. – FLOW-THROUGH SUBSCRIPTION AGREEMENT

       

    

    A
      completed and originally executed copy of this Subscription Agreement and
      Schedules A. B and C, if applicable, duly completed and signed, must be
      delivered to the Agent.

     

    
      	
              TO:

            	
              Kodiak
                Energy, Inc. (the
“Corporation”)

            

    

     

    
      	
              AND
                TO:

            	
              Research
                Capital Corporation (the
“Agent”)

            

    

    

      The
        undersigned (the “Subscriber”) hereby irrevocably subscribes
        for and agrees to purchase the number of common shares of the Corporation
        to be
        issued on a “flow-through” basis pursuant to the Income Tax Act
        (Canada) (“Flow-Through Shares”) set forth below for the
        aggregate subscription price set forth below (the “Subscription
        Amount”), representing a subscription price of US$3.00 per Flow-Through
        Share, upon and subject to the terms and conditions set forth in the attached
        “Terms and Conditions of Subscription For FLOW-THROUGH SHARES
        of  KODIAK ENERGY, INC.”
(the “Terms and
        Conditions”) (together with this page and the
        attached Schedules, the “Subscription
        Agreement”).

    

     

    
      	
              Subscriber’s
                Particulars:

               

              ________________________________________________________

              Name
                of Subscriber - please print

               

              By:   
                   __________________________________________________

                       
                  Authorized Signature

               

              ________________________________________________________

              Name
                and Official Capacity or Title of signatory if not Subscriber

              (please
                print)

               

               

              ________________________________________________________

              Subscriber’s
                Residential Address

               

              ________________________________________________________

              City/Town                                 Province 
                    
                                       Postal
                Code

               

              _________________________         ___________________________

              Telephone
                Number                                  
                                            Fax
                Number

               

              ________________________________________________________

              e-mail
                address

              
                 

                ________________________________________________________

                SIN/Federal
                  Corporate Tax Account number

              

               

              The
                Subscriber owns, directly or indirectly, the following securities
                (including

              options)
                of
                the Corporation: ________________________

              The
                Subscriber isr
                or is not
                r
                an
                insider of the Corporation; or

              The
                Subscriber isr
                or is not
                r
                a
                member of the pro group of the Corporation

              [Please
                check the applicable box(s)]

            	 	
               

              Number
                of Flow-Through Shares :____________________

               

              Aggregate
                Subscription
                Price:  $_______________________ 

              
                

              

              If
                the Subscriber is signing as agent for a principal, unless it is
                deemed to
                be purchasing as principal under NI 45-106, complete the following
                and ensure that the applicable Schedule(s) are completed on behalf
                of such
                principal:

               

               

              ________________________________________________________

              Name
                of Principal

               

              ________________________________________________________

              Principal’s
                Residential  Address

               

              ________________________________________________________

              City/Town                                 Province       
                                      Postal
                Code

               

              ________________________________________________________

              Principal’s
                Telephone Number

               

              ________________________________________________________

              Principal’s
                e-mail address

               

              ________________________________________________________

              Principal’s
                SIN/Federal Corporate Tax Account Number

            
	
              Register
                the Flow-Through Shares as above o ,
                or as set forth below:

               

              ________________________________________________________

              Name

               

              ________________________________________________________

              Account
                reference, if applicable

               

              ________________________________________________________

              Address

               

              ________________________________________________________

              City/Town                                   Province                      
                      Postal Code

               

            	 	
              Certificates
                for Flow-Through Shares will be delivered to the registered shareholder
                unless delivery is otherwise specified as set forth
                below:

               

              ________________________________________________________

              Account
                reference, if applicable

               

              ________________________________________________________

              Contact
                Name and Telephone Number

               

              ________________________________________________________

              Address

               

              ________________________________________________________

              City/Town                                 Province       
                                      Postal
                Code

               

            

    

     

    
      ACCEPTANCE:  The
        Corporation hereby accepts the subscription as set forth above on the terms
        and
        conditions contained in this Subscription Agreement and the Corporation
        represents and warrants to the Subscriber that the representations and
        warranties made by the Corporation to the Agent  in the Agency
        Agreement (as defined herein) are true and correct in all material respects
        as
        of the Closing Date (as defined herein) (save and except as may be waived
        by the
        Agent) and that the Subscriber is entitled to rely thereon and on the terms,
        conditions and covenants contained in the Agency Agreement as if the Subscriber
        were a party thereto.

       

      
        	
                DATED
                  this _____ day of ___________________, 2007

                 

                KODIAK
                  ENERGY, INC.

              	
                Subscription
                  No:

              
	
                 

                Per:
                  __________________________________________

              	 

      

       

      This
        is
        the first page of an agreement comprised of 18 pages (not including Schedules
        A,
        B and C).

      
        
          
          

        

        
          
          

          
            

          

        

        
          
          

        

      

      
        	 	
                2

              	
                Canada
                  - BC, AB, ON, QB

              

      

      
 

      TERMS
        AND CONDITIONS OF SUBSCRIPTION FOR FLOW-THROUGH SHARES OF

      KODIAK
        ENERGY, INC.

       

      
        	
                1.

              	
                Terms
                  of the Offering.  The Subscriber (on its own behalf
                  and, if applicable, on behalf of each person on whose behalf the
                  Subscriber is contracting) acknowledges
                  that:

              

      

       

      
        	
                 

              	
                (a)

              	
                this
                  subscription is subject to rejection or allotment by the Corporation
                  in
                  whole or in part at any time and in accordance with applicable
                  Securities
                  Laws (as defined herein);

              

      

       

      
        	
                 

              	
                (b)

              	
                
                  the
                    Flow-Through Shares subscribed for by it hereunder form part
                    of a larger
                    issuance and sale by the Corporation of up to 2,250,000 Flow-Through
                    Shares at a subscription price of US$3.00 per Flow-Through Share
                    and up to
                    2,700,000 regular common shares in the capital of
                    the Corporation (the “Common Shares”) at a subscription
                    price of US$2.50 per Common Share (together the
                    “Offering”);

                

              

      

       

      
        	
                 

              	
                (c)

              	
                the
                  Offering is not subject to any minimum subscription level, and
                  therefore,
                  any funds invested under this Subscription Agreement are available
                  to the
                  Corporation and will be paid on the Closing Date to the Corporation,
                  and
                  need not be refunded to the Subscriber unless the Closing Date
                  does not
                  occur by such date as may be agreed to by the Corporation and the
                  Agent;

              

      

       

      
        	
                 

              	
                (d)

              	
                if
                  the Closing Date does not occur on or before October 30, 2007,
                  or such
                  other date as may be agreed to by the Corporation and the Agent,
                  or in the
                  event that the Corporation rejects the Subscription Agreement,
                  the
                  subscription proceeds will be promptly returned to the Subscriber,
                  without
                  interest or deduction;

              

      

       

      
        	
                 

              	
                (e)

              	
                the
                  Corporation has also granted the Agent an option (the
                  “Over-Allotment Option”), exercisable at any time up to
                  and including the closing of the Offering to increase the size
                  of the
                  Offering by up to 1,400,000 Common Shares at a
                  subscription price of US$2.50 per Common
                  Share;

              

      

       

      
        	
                 

              	
                (f)

              	
                the
                  Corporation and Agent have entered into, or will enter into prior
                  to the
                  Closing Date, an agreement (the “Agency Agreement”)
                  whereby the Agent, in connection with the Offering will receive
                  from the
                  Corporation a commission equal to 8% of the gross proceeds of the
                  Offering,  (including any gross proceeds of the Over-Allotment
                  Option) and options exercisable at any time up to 18 months following
                  the
                  closing of the Offering to purchase Common Shares in an amount
                  equal to 8%
                  of the Offering (including the Over-Allotment Option) at the same
                  prices
                  and in the same proportions as the Common Shares and Flow-Through
                  Shares
                  issued pursuant to the Offering (including the Over-Allotment
                  Option);

              

      

       

      
        	
                 

              	
                (g)

              	
                in
                  the event that the Offering closes but the Common Shares are not
                  listed
                  for trading on the Toronto Stock Exchange or the TSX Venture Exchange
                  by
                  December 15, 2007, the Corporation shall pay an interest penalty
                  to the
                  Subscriber in the amount of 2% of the Subscription Amount per month
                  thereafter on a pro rata basis, pursuant to the terms to be agreed
                  upon in
                  the Agency Agreement; and

              

      

       

      
        	
                 

              	
                (h)

              	
                the
                  Corporation is a company incorporated under the laws of the State
                  of
                  Delaware, and because the Corporation is located outside of Canada,
                  it may
                  not be possible for you to effect service of process on them within
                  Canada
                  or to enforce against them, in Canada, judgements obtained in Canadian
                  courts; further, it may not be possible to enforce judgments of
                  Canadian
                  courts against the Corporation in the United
                  States.

              

      

       

      
        	
                2.

              	
                Definitions.  In
                  this Subscription Agreement, unless the context otherwise
                  requires:

              

      

       

      
        	
                 

              	
                (a)

              	
                “Accredited
                  Investor Status Certificate” means the Accredited Investor Status
                  Certificate in the form attached hereto as Schedule A which is
                  required to be completed by a Subscriber who is purchasing securities
                  as
                  an “accredited investor” pursuant to
                  NI 45-106;

              

      

       

      
        
          
          

        

        
          
          

          
            

          

        

        
          
          

        

      

      
        	 	
                3

              	
                Canada
                  - BC, AB, ON, QB

              

      

       

       

      
        	
                 

              	
                (b)

              	
                “affiliate”,
                  “distribution” and “insider” have the
                  respective meanings ascribed to them in the Securities Act
                  (Alberta);

              

      

       

      
        	
                 

              	
                (c)

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

              

      

       

      
        	
                 

              	
                (d)

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

              

      

       

      
        	
                 

              	
                (e)

              	
                “Closing”
                  means the completion of the issue and sale by the Corporation and
                  the
                  purchase by the Subscribers of the Flow-Through Shares pursuant
                  to the
                  subscription agreements, in the form of this Subscription Agreement
                  or the
                  subscription agreement for Common Shares, completed by
                  Subscribers;

              

      

       

      
        	
                 

              	
                (f)

              	
                “Closing
                  Date” means October 15, 2007 or such other date as the
                  Corporation and Agent may
                  determine;

              

      

       

      
        	
                 

              	
                (g)

              	
                “Closing
                  Time” means 8:00 a.m. (Calgary time) on the Closing Date or
                  such
                  other time as the Corporation and Agent may
                  determine;

              

      

       

      
        	
                 

              	
                (h)

              	
                “CRA”
                  means Canada Revenue Agency;

              

      

       

      
        	
                 

              	
                (i)

              	
                “Designated
                  Provinces” means British Columbia, Alberta, Ontario and Quebec
                  and such other provinces that may be designated by the Corporation
                  and
                  Agent prior to the Closing Date;

              

      

       

      
        	
                 

              	
                (j)

              	
                “Expenditure
                  Period” means the period commencing on the date of acceptance
                  by
                  the Corporation of this Subscription Agreement and ending on the
                  earlier
                  of:

              

      

       

      
        	
                 

              	
                (i)

              	
                the
                  date on which the Subscription Amount has been fully expended in
                  accordance with the terms hereof;
                  and

              

      

       

      
        	
                 

              	
                (ii)

              	
                December
                  31, 2008;

              

      

       

      
        	
                 

              	
                (k)

              	
                “founder”
                  means, in respect of the Corporation, a person
                  who:

              

      

       

      
        	
                 

              	
                (i)

              	
                acting
                  alone, in conjunction, or in concert with one or more persons,
                  directly or
                  indirectly, takes the initiative in founding, organizing or substantially
                  reorganizing the business of the Corporation;
                  and

              

      

       

      
        	
                 

              	
                (ii)

              	
                at
                  the time of the trade is actively involved in the business of the
                  Corporation;

              

      

       

      
        	
                 

              	
                (l)

              	
                “material”
                  means material in relation to the Corporation and its subsidiaries
                  considered on a consolidated basis;

              

      

       

      

      
        
          
            
            

          

          
            
            

            
              

            

          

          
            
            

          

        

      

      
        	 	
                4

              	
                Canada
                  - BC, AB, ON, QB

              

      

       

       

      
        	
                 

              	
                (m)

              	
                “Offering”
                  has the meaning given thereto in section
                  1;

              

      

       

      
        	
                 

              	
                (n)

              	
                “NI 45-106”
                  means National Instrument 45-106 Prospectus and Registration
                  Exemptions;

              

      

       

      
        	
                 

              	
                (o)

              	
                “person”
                  includes:

              

      

       

      
        	
                 

              	
                (i)

              	
                an
                  individual;

              

      

       

      
        	
                 

              	
                (ii)

              	
                a
                  corporation;

              

      

       

      
        	
                 

              	
                (iii)

              	
                a
                  partnership, trust, fund and an association, syndicate, organization
                  or
                  other organized group of persons, whether incorporated or not;
                  and

              

      

       

      
        	
                 

              	
                (iv)

              	
                an
                  individual or other person in that person’s capacity as a trustee,
                  executor, administrator or personal or other legal
                  representative;

              

      

       

      
        	
                 

              	
                (p)

              	
                “Principal-Business
                  Corporation” means a “principal-business corporation” as defined
                  in subsection 66(15) of the Tax
                  Act;

              

      

       

      
        	
                 

              	
                (q)

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

              

      

       

      
        	
                 

              	
                (r)

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

              

      

       

      
        	
                 

              	
                (s)

              	
                “Regulation”
                  means a regulation promulgated pursuant to the Tax
                  Act;

              

      

       

      
        	
                 

              	
                (t)

              	
                “Securities
                  Commissions” means, collectively, the securities commission or
                  other securities regulatory authority in each of the Designated
                  Provinces;

              

      

       

      
        	
                 

              	
                (u)

              	
                “Securities
                  Laws” means collectively, the applicable securities laws of
                  each of the Designated Provinces and the respective instruments,
                  regulations and rules made and forms prescribed thereunder together
                  with
                  all applicable published policy statements, blanket orders, rulings
                  and
                  notices of the Securities
                  Commissions;

              

      

       

      
        	
                 

              	
                (v)

              	
                “Shares”
                  means Flow-Through Shares and Common Shares issued pursuant to
                  the
                  Offering;

              

      

       

      
        	
                 

              	
                (w)

              	
                “spouse”
                  means an individual who:

              

      

       

      
        	
                 

              	
                (i)

              	
                is
                  married to another individual and is not living separate and apart
                  within
                  the meaning of the Divorce Act (Canada), from the other
                  individual;

              

      

       

      
        	
                 

              	
                (ii)

              	
                is
                  living with another individual in a marriage-like relationship,
                  including
                  a marriage-like relationship between individuals of the same gender;
                  or

              

      

       

      
        	
                 

              	
                (iii)

              	
                in
                  Alberta, is an individual referred to in paragraph (i) or (ii), or is
                  an adult interdependent partner within the meaning of the Adult
                  Interdependent Relationships Act
                  (Alberta);

              

      

       

      
        	
                 

              	
                (x)

              	
                “Subscribers”
                  means all subscribers for the Shares pursuant to the Offering,
                  including
                  the Subscriber;

              

      

       

      
        	
                 

              	
                (y)

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

              

      

       

      

      
        
          
            
            

          

          
            
            

            
              

            

          

          
            
            

          

        

      

      
        	 	
                5

              	
                Canada
                  - BC, AB, ON, QB

              

      

       

      

      
        	
                 

              	
                (z)

              	
                “U.S.
                  Securities Act” means the United States Securities Act of
                  1933.

              

      

       

      
        	
                3.

              	
                Delivery
                  and Payment.  The Subscriber agrees that the following
                  documents shall be delivered to Research Capital Corporation, 199
                  Bay
                  Street, Suite 4500, Commerce Court West, Box 368, Toronto, Ontario
                  M5L
                  1G2, Attention:  P. Gage Jull, not later than 5:00 p.m. (Toronto
                  time) on the day that is 2 business days prior to the Closing Date
                  or such
                  other date or place as the Corporation may
                  advise:

              

      

       

      
        	
                 

              	
                (a)

              	
                a
                  completed and duly signed copy of this Subscription
                  Agreement;

              

      

       

      
        	
                 

              	
                (b)

              	
                if
                  the Subscriber is purchasing Flow-Through Shares as an “accredited
                  investor” (as such term is defined in NI 45-106), a completed and
                  duly signed copy of the NI 45-106 Accredited Investor Status
                  Certificate attached hereto as Schedule
                  A;

              

      

       

      
        	
                 

              	
                (c)

              	
                if
                  the Subscriber is purchasing Flow-Through Shares as a close friend
                  or
                  business associate pursuant to section 7(g)(ii), a completed and
                  duly
                  signed copy of the close personal friend/close business associate
                  questionnaire attached hereto as Schedule
                  B;

              

      

       

      
        	
                 

              	
                (d)

              	
                if
                  the Subscriber is a corporation, a completed and duly signed copy
                  of Form
                  4C, Corporate Placee Registration Form attached hereto as Schedule
                  C;

              

      

       

      
        	
                 

              	
                (e)

              	
                any
                  other documents required by applicable Securities Laws which the
                  Corporation or Agent requests; and

              

      

       

      
        	
                 

              	
                (f)

              	
                a
                  certified cheque or bank draft made payable in same day freely
                  transferable Canadian funds at par in Calgary, Alberta to “Research
                  Capital Corporation” representing the aggregate Subscription Amount
                  payable by the Subscriber for the Flow-Through Shares, or such
                  other
                  method of payment as the Agent may
                  accept.

              

      

       

      The
        Subscriber acknowledges and agrees that documents referred to in subsections
        3(b), (c), (d) and (e), when executed and delivered by the Subscriber, will
        form
        part of and will be incorporated into this Subscription Agreement with the
        same
        effect as if each constituted a representation and warranty or covenant of
        the
        Subscriber hereunder in favour of the Corporation.  The Subscriber
        consents to the filing of such documents as may be required to be filed with
        the
        applicable securities regulatory authorities in connection with the transactions
        contemplated hereby.  The Subscriber acknowledges and agrees that this
        subscription, the Subscription Amount and any other documents delivered in
        connection herewith will be held by the Agent until Closing.

       

      
        	
                4.

              	
                Closing.  The
                  transactions contemplated hereby will be completed at the Closing
                  Time at
                  the offices of Borden Ladner Gervais LLP in Calgary, Alberta and
                  the
                  Subscriber agrees and acknowledges as
                  follows:

              

      

       

      
        	
                 

              	
                (a)

              	
                at
                  the Closing Time, subject to the terms and conditions of the Agency
                  Agreement, the Agent shall deliver to the Corporation all completed
                  subscription agreements, including this Subscription Agreement,
                  and the
                  aggregate Subscription Amount against delivery by the Corporation
                  of the
                  certificates representing the Flow-Through Shares and such other
                  documentation as may be required,
                  and

              

      

       

      
        	
                 

              	
                (b)

              	
                the
                  Agent is hereby irrevocably appointed to act in its sole and absolute
                  discretion as the Subscriber’s agent to represent the Subscriber at the
                  Closing for the purpose of all closing matters and deliveries of
                  documents
                  and receipt of certificates representing the Flow-Through
                  Shares.  Without limiting the generality of the foregoing, the
                  Agent is irrevocably authorized, in its sole and absolute discretion:
                  (i)
                  to complete or correct manifest errors or omissions in the information
                  provided by the Subscriber in this Subscription Agreement and any
                  other
                  forms or documents delivered by the Subscriber in connection with
                  the
                  transactions contemplated hereby, if any; (ii) to receive on its
                  behalf
                  certificates representing the Flow-Through Shares purchased under
                  this
                  Subscription Agreement (iii)  to act as its representative at
                  the closing and to execute in its name and on its behalf all closing
                  receipts and documents required; (iv) to approve any opinions,
                  certificates or other documents addressed to the Subscriber; (v) to
                  waive, in whole or in part, any representations, warranties, covenants
                  or
                  conditions for the benefit of the Subscriber and contained in the
                  Agency
                  Agreement; (vi) to register or permit the registration of the
                  Flow-Through Shares purchased hereunder by way of one or more certificates
                  registered in the name of the Agent and/or in the name of each
                  subscriber
                  to the offering of Flow-Through Shares and/or in the name of such
                  other
                  nominee or nominees as the Corporation and the Agent may agree;
                  and (vii)
                  to exercise any rights of termination contained in the Agency
                  Agreement.

              

      

       

      

      
        
          
            
            

          

          
            
            

            
              

            

          

          
            
            

          

        

      

      
        	 	
                6

              	
                Canada
                  - BC, AB, ON, QB

              

      

       

      

      
        	
                5.

              	
                Representations,
                  Warranties and Covenants of the Corporation Regarding the Flow-Through
                  Shares.  By accepting this Subscription Agreement, the
                  Corporation represents, warrants and covenants to the Subscriber
                  as
                  follows:

              

      

       

      
        	
                 

              	
                (a)

              	
                the
                  Corporation and each of its subsidiaries have been duly incorporated
                  and
                  are validly subsisting and in good standing under the laws of their
                  incorporation and the Corporation has all requisite corporate power
                  and
                  capacity to enter into, and has all requisite corporate power and
                  capability to carry out its obligations under, this Subscription
                  Agreement;

              

      

       

      
        	
                 

              	
                (b)

              	
                on
                  the Closing Date, the Corporation will have taken all corporate
                  steps and
                  proceedings necessary to approve the transactions contemplated
                  hereby,
                  including the execution and delivery of this Subscription
                  Agreement;

              

      

       

      
        	
                 

              	
                (c)

              	
                no
                  order ceasing or suspending trading in the securities of the Corporation
                  nor prohibiting the sale of such securities has been issued to
                  the
                  Corporation or its directors, officers or promoters and, to the
                  best of
                  the knowledge of the Corporation, no investigations or proceedings
                  for
                  such purposes are pending or
                  threatened;

              

      

       

      
        	
                 

              	
                (d)

              	
                the
                  Corporation has full corporate power and authority to undertake
                  the
                  Offering of Flow-Through Shares contemplated hereby and to issue
                  the
                  Flow-Through Shares;

              

      

       

      
        	
                 

              	
                (e)

              	
                as
                  of the date hereof, the taxable capital amount of the Corporation,
                  as that
                  expression is defined under subsection 66(12.6011) of the Tax Act,
                  does
                  not exceed $15,000,000 for the purpose of determining the Corporation’s
                  right to renounce Qualifying CDE to the Subscriber pursuant to
                  subsection
                  66(12.601) of the Tax Act;

              

      

      
         

        
          	
                   

                	
                  (f)

                	
                  the
                    Corporation is not a party to any other agreement for the issuance
                    of
                    Flow-Through Shares for which the required expenditures have
                    not been
                    incurred;

                

        

         

      

      
        	
                 

              	
                (g)

              	
                at
                  the Closing Time, the Flow-Through Shares will be duly and validly
                  created, authorized and issued as fully paid and non-assessable
                  Common
                  Shares;

              

      

       

      
        	
                 

              	
                (h)

              	
                the
                  Corporation has complied and will comply with all applicable corporate
                  and
                  securities laws in connection with the offer, sale and issuance
                  of the
                  Flow-Through Shares;

              

      

       

      
        	
                 

              	
                (i)

              	
                the
                  issuance and sale of the Flow-Through Shares and the incurring
                  and
                  renouncing of Qualifying Expenditures to the Subscriber pursuant
                  hereto
                  does not and will not conflict with and does not and will not result
                  in a
                  breach of any of the terms, conditions or provisions of its constating
                  documents or any law, regulation, order or ruling applicable to
                  the
                  Corporation, or any agreement or instrument to which the Corporation
                  is a
                  party or by which it is bound;

              

      

       

      
        	
                 

              	
                (j)

              	
                the
                  Corporation has not received notice from any applicable regulatory
                  authority that it is in material default of any applicable securities
                  laws;

              

      

       

      
        	
                 

              	
                (k)

              	
                the
                  Corporation acknowledges that it is not now entitled to receive
                  any
                  assistance, as defined in the Tax Act, in respect of Qualifying
                  Expenditures and in the event that the Corporation has received,
                  is
                  entitled to receive, or may reasonably be expected to receive,
                  assistance
                  at any time that may be reasonably be related to the Qualifying
                  Expenditures, the Corporation will incur additional Qualifying
                  Expenditures during the Expenditure Period in an amount sufficient
                  to
                  allow it to renounce to the Subscriber, the Subscription
                  Amount;

              

      

       

      

      
        
          
            
            

          

          
            
            

            
              

            

          

          
            
            

          

        

      

      
        	 	
                7

              	
                Canada
                  - BC, AB, ON, QB

              

      

       

      

      
        	
                 

              	
                (l)

              	
                the
                  Corporation is, and, at all material times will be, a Principal-Business
                  Corporation;

              

      

       

      
        	
                 

              	
                (m)

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

              

      

       

      
        	
                 

              	
                (n)

              	
                the
                  Corporation will not be subject to the provisions of
                  subsection 66(12.67) of the Tax Act in a manner which impairs the
                  ability to renounce Qualifying Expenditures to the Subscriber in
                  an amount
                  equal to the Subscription Amount;

              

      

       

      
        	
                 

              	
                (o)

              	
                all
                  Qualifying Expenditures renounced to the Subscriber pursuant to
                  this
                  Subscription Agreement will be Qualifying Expenditures incurred
                  by the
                  Corporation that, but for the renunciation to the Subscriber, the
                  Corporation would be entitled to deduct in computing its income
                  for the
                  purposes of Part I of the Tax Act;

              

      

       

      
        	
                 

              	
                (p)

              	
                the
                  Corporation will keep proper books, records and accounts of all
                  Qualifying
                  Expenditures and all transactions affecting the Subscription Amount
                  and
                  the Qualifying Expenditures and upon reasonable notice, to make
                  such
                  books, records and accounts available for inspection and audit
                  by or on
                  behalf of the Subscriber during normal business hours at the Subscriber’s
                  expense and to provide such other assistance to the Subscriber
                  as may be
                  reasonably required should a dispute arise between the Subscriber
                  and CRA
                  with respect to the Qualifying
                  Expenditures;

              

      

       

      
        	
                 

              	
                (q)

              	
                the
                  Corporation will or will cause its wholly owned subsidiaries to
                  incur,
                  during the Expenditure Period, Qualifying Expenditures in such
                  amount as
                  enables the Corporation to renounce to the Subscriber, Qualifying
                  Expenditures in an amount equal to the Subscription
                  Amount;

              

      

       

      
        	
                 

              	
                (r)

              	
                the
                  Corporation will renounce (in accordance with the Tax Act and this
                  Subscription Agreement) to the Subscriber, effective on or before
                  December
                  31, 2007, Qualifying Expenditures incurred during the Expenditure
                  Period
                  in an amount equal to Subscription
                  Amount;

              

      

       

      
        	
                 

              	
                (s)

              	
                the
                  Corporation will renounce the Qualifying CDE incurred hereunder
                  only in
                  accordance with subsection 66(12.601) of the Tax
                  Act;

              

      

       

      
        	
                 

              	
                (t)

              	
                the
                  Corporation will file with CRA, the form prescribed by
                  subsection 66(12.68) of the Tax Act together with a copy of the form
                  of this Subscription Agreement, within the time period prescribed
                  by the
                  Tax Act;

              

      

       

      
        	
                 

              	
                (u)

              	
                the
                  Corporation will file with CRA, the form prescribed by
                  subsection 66(12.7) of the Tax Act on or before the last day of the
                  first month following each month in which any renunciation is made
                  pursuant to the terms of this Subscription
                  Agreement;

              

      

       

      
        	
                 

              	
                (v)

              	
                if
                  the Corporation does not incur during the Expenditure Period and
                  renounce
                  to the Subscriber, effective on or before December 31, 2007,
                  Qualifying Expenditures in an amount equal to the Subscription
                  Amount, the
                  Corporation shall indemnify the Subscriber as to, and pay to the
                  Subscriber, an amount equal to the amount of any tax payable or
                  that may
                  become payable under the Tax Act (and under any corresponding provincial
                  legislation) by the Subscriber as a consequence of such failure,
                  such
                  payment to be made on a timely basis once the amount is definitively
                  determined;

              

      

    

     

    
      

      
        
          
            
            

          

          
            
            

            
              

            

          

          
            
            

          

        

      

      
        	 	
                8

              	
                Canada
                  - BC, AB, ON, QB

              

      

      
         

         

        
          	
                   

                	
                  (w)

                	
                  the
                    Corporation will deliver to the Subscriber at the Subscriber’s address set
                    forth above, not later than March 31, 2008, Form T101 Supplementary
                    setting forth the aggregate amount of Qualifying Expenditures
                    renounced to
                    the Subscriber pursuant hereto for filing with the Subscriber’s tax
                    return;

                

        

         

      

      
        	
                 

              	
                (x)

              	
                that
                  the Corporation will not reduce the amount renounced to the Subscriber
                  hereunder and, in the event the Minister responsible for CRA reduces
                  the
                  amount renounced to the Subscriber pursuant to subsection 66(12.73)
                  of the Tax Act, the Corporation will indemnify the Subscriber as
                  to, and
                  pay to the Subscriber, an amount equal to the amount of any tax
                  payable
                  under the Tax Act (and under any corresponding provincial legislation)
                  by
                  the Subscriber as a consequence of such reduction, such payment
                  to be made
                  on a timely basis once the amount is definitively
                  determined;

              

      

       

      
        	
                 

              	
                (y)

              	
                the
                  Corporation will maintain its status as a Principal-Business Corporation
                  until the earlier of January 1, 2009 and the date the Corporation
                  has
                  fulfilled its obligations to incur and renounce to the Subscriber
                  Qualifying Expenditures or an amount equal to the Subscriber
                  Amount;

              

      

       

      
        	
                 

              	
                (z)

              	
                that
                  the Corporation has not and will not enter into transactions or
                  take
                  deductions which would otherwise reduce its cumulative CEE or cumulative
                  CDE to an extent which would preclude a renunciation of Qualifying
                  Expenditures hereunder in an amount equal to the Subscription Amount
                  as
                  contemplated herein;

              

      

       

      
        	
                 

              	
                (aa)

              	
                that
                  none of the Qualifying Expenditures will be renounced pursuant
                  to a
                  “prohibited relationship” as defined in subsection 66(12.671) of the
                  Tax Act;

              

      

       

      
        	
                 

              	
                (bb)

              	
                the
                  Corporation will file, within the time(s) prescribed by the Tax
                  Act or the
                  Regulations, as applicable, all forms required under the Tax Act
                  or the
                  Regulations necessary to effectively renounce Qualifying Expenditures
                  equal to the Subscription Amount to the Subscriber effective on
                  or before
                  December 31, 2007 and to provide the Subscriber with a copy of all
                  such forms as required to be provided thereto, all on a timely
                  basis;

              

      

       

      
        	
                 

              	
                (cc)

              	
                the
                  Corporation will renounce Qualifying Expenditures pursuant to this
                  Subscription Agreement and other subscription agreements entered
                  into
                  pursuant to the Offering pro rata based on the number of Flow-Through
                  Shares issued or to be issued pursuant hereto and thereto before
                  or
                  concurrent with the renouncing of Qualifying Expenditures pursuant
                  to any
                  other agreement (a “Subsequent Agreement”) which the
                  Corporation shall, after the Closing Date, enter into and if the
                  Corporation is required by the Tax Act or the Regulations or the
                  Minister
                  of National Revenue to reduce Qualifying Expenditures previously
                  renounced
                  to Subscribers pursuant to this Subscription Agreement and all
                  other
                  subscription agreements entered into in connection with the Offering
                  in
                  respect of Flow-Through Shares, such reduction shall, to the extent
                  possible, be made pro rata based on the number of Flow-Through
                  Shares
                  issued pursuant to the Offering only after it has first reduced
                  to the
                  extent possible all Qualifying Expenditures renounced to persons
                  under
                  Subsequent Agreements;

              

      

       

      
        	
                 

              	
                (dd)

              	
                the
                  Corporation has no reason to believe that it will be unable to
                  incur
                  Qualifying Expenditures during the Expenditure Period in an amount
                  equal
                  to the Subscription Amount or that it will be unable to renounce
                  to the
                  Subscriber effective on or before December 31, 2007, Qualifying
                  Expenditures in an amount equal to the Subscription
                  Amount;

              

      

       

      
        	
                 

              	
                (ee)

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

              

      

       

      
        	
                 

              	
                (ff)

              	
                that
                  the Flow-Through Shares do not constitute “United States real property
                  interests” within the meaning of the Internal Revenue Code of the United
                  States.

              

      

       

      
        
          	
                  6.

                	
                  Covenants,
                    Representations and Warranties of the Subscriber Regarding the
                    Flow-Through Shares.  The Subscriber covenants, agrees
                    and represents and warrants to the Corporation
                    that:

                

        

         

      
        
          
            
            

          

          
            
            

            
              

            

          

          
            
            

          

        

      

      
        	 	
                9

              	
                Canada
                  - BC, AB, ON, QB

              

      

       

       

      
        	
                 

              	
                (a)

              	
                the
                  Subscriber or beneficial purchaser, as the case may be, deals and
                  will
                  continue to deal at arm’s length with the Corporation, for purposes of the
                  Tax Act, at all times which are relevant for this Subscription
                  Agreement;

              

      

       

      
        	
                 

              	
                (b)

              	
                if
                  the Subscriber or beneficial purchaser, as the case may be, is
                  a
                  corporation, trust or partnership, it does not have and will not
                  have in
                  respect of a renunciation of Qualified Expenditures hereunder a
                  “prohibited relationship” with the Corporation within the
                  meaning of subsection 66(12.671) of the
                  Act;

              

      

       

      
        	
                 

              	
                (c)

              	
                neither
                  the Subscriber, nor the beneficial purchaser, as the case may be,
                  will
                  enter into any agreement or arrangement which will cause the Flow-Through
                  Shares to become “prescribed shares” for purposes of the
                  Tax Act; and

              

      

       

      
        	
                 

              	
                (d)

              	
                the
                  Subscriber is not a non-resident of Canada for purposes of the
                  Tax
                  Act.

              

      

       

      
        	
                7.

              	
                Subscriber’s
                  Representations, Warranties, Covenants &
                  Acknowledgments.  The Subscriber (on its own behalf
                  and, if applicable, on behalf of each person on whose behalf the
                  Subscriber is contracting) represents, warrants, covenants and
                  acknowledges to the Corporation and the Agent (and acknowledges
                  that the
                  Corporation and the Agent and respective counsel are relying thereon),
                  that both at the date hereof and at the Closing
                  Time:

              

      

       

      
        	
                 

              	
                (a)

              	
                Authorization
                  and Effectiveness.  If the Subscriber is an
                  individual, it is of the full age of majority and has all requisite
                  legal
                  capacity and competence to execute and deliver this Subscription
                  Agreement
                  and to observe and perform its covenants and obligations hereunder,
                  or if
                  the Subscriber is a corporation, the Subscriber is a valid and
                  subsisting
                  corporation, has the necessary corporate capacity and authority
                  to execute
                  and deliver this Subscription Agreement and to observe and perform
                  its
                  covenants and obligations hereunder and has taken all necessary
                  corporate
                  action in respect thereof or, if the Subscriber is a partnership,
                  syndicate or other form of unincorporated organization, the Subscriber
                  has
                  the necessary legal capacity and authority to execute and deliver
                  this
                  Subscription Agreement and to observe and perform its covenants
                  and
                  obligations hereunder and has obtained all necessary approvals
                  in respect
                  thereof, and, if the Subscriber is subscribing for Flow-Through
                  Shares
                  hereunder as agent for a principal, it is duly authorized to execute
                  and
                  deliver this Subscription Agreement and all other necessary documentation
                  in connection with such subscription on behalf of such principal
                  and, in
                  any case, upon acceptance by the Corporation, this Subscription
                  Agreement
                  has been duly and validly authorized, executed and delivered by
                  the
                  Subscriber and constitutes a legal, valid and binding contract
                  of the
                  Subscriber (and any beneficial purchaser whom the Subscriber is
                  subscribing on behalf of) enforceable against the Subscriber (and
                  any
                  beneficial purchaser whom the Subscriber is subscribing on behalf
                  of) in
                  accordance with its terms and will not result in a violation of
                  any of the
                  Subscriber’s applicable constating documents, any of the terms or
                  provisions of any law applicable to the Subscriber or any agreement
                  to
                  which the Subscriber is a party or by which it is
                  bound;

              

      

       

      
        	
                 

              	
                (b)

              	
                Residence.  The
                  Subscriber is a resident of the jurisdiction referred to under
                  “Subscriber’s Particulars” on page 1
                  hereof;

              

      

       

      
        	
                 

              	
                (c)

              	
                No
                  Offering Memorandum.  The Subscriber has not
                  received, nor has it requested, nor does it have any need to receive,
                  any
                  offering memorandum, or any other document (other than financial
                  statements, interim financial statements or any other document,
                  the
                  content of which is prescribed by statute or regulation) describing
                  the
                  business and affairs of the Corporation which has been prepared
                  for
                  delivery to, and review by, prospective subscribers in order to
                  assist it
                  in making an investment decision in connection with this Offering
                  and it
                  has not become aware of any advertisement in printed media of general
                  and
                  regular paid circulation (or other printed public media) or on
                  radio,
                  television or telecommunications or other form of advertisement
                  (including
                  electronic display such as the Internet) with respect to the distribution
                  of the Flow-Through Shares;

              

      

       

      

      
        
          
            
            

          

          
            
            

            
              

            

          

          
            
            

          

        

      

      
        	 	
                10

              	
                Canada
                  - BC, AB, ON, QB

              

      

       

      

      
        	
                 

              	
                (d)

              	
                Purchasing
                  as Principal.  Except as provided in
                  subsection 7(f) hereof, the Subscriber is purchasing the Flow-Through
                  Shares as principal (as defined in all applicable Securities Laws)
                  for its
                  own account, and not for the benefit of any other
                  person;

              

      

       

      
        	
                 

              	
                (e)

              	
                Purchasing
                  for Investment Only.  Except as provided in
                  subsection 7(f) hereof, the Subscriber is purchasing the Subscriber’s
                  Flow-Through Shares for investment only and not with a view to
                  resale or
                  distribution.  The Subscriber is aware that no prospectus has
                  been filed with any of the Securities Commissions or similar regulatory
                  authority in connection with the sale of the Flow-Through Shares,
                  and it
                  is purchasing the Flow-Through Shares pursuant to an exemption
                  from the
                  prospectus requirement or similar requirement under applicable
                  Securities
                  Laws and, as a consequence: (i) it is restricted from using most of
                  the civil remedies available under Securities Laws; (ii) it may not
                  receive information that would otherwise be required to be provided
                  to it
                  under Securities Laws; and (iii) the Corporation is relieved of
                  certain obligations that would otherwise apply under Securities
                  Laws;

              

      

       

      
        	
                 

              	
                (f)

              	
                Purchasing
                  as Agent or Trustee.  In the case of the purchase
                  hereunder by the Subscriber of Flow-Through Shares as agent or
                  trustee for
                  any principal whose identity is disclosed or undisclosed or identified
                  by
                  account number only, each beneficial purchaser of the Flow-Through
                  Shares
                  hereunder is purchasing the Flow-Through Shares as principal for
                  its own
                  account, and not for the benefit of any other person, for investment
                  only
                  and not with a view to resale or distribution, is a resident of
                  the
                  jurisdiction as set out under “Subscriber’s Particulars” on page 1
                  hereof, and the Subscriber has due and proper authority to act
                  as agent or
                  trustee for and on behalf of such beneficial purchaser in connection
                  with
                  the transactions contemplated hereby, and this Subscription Agreement
                  has
                  been duly authorized, executed and delivered by or on behalf of,
                  and
                  constitutes a legal, valid and binding agreement of, such beneficial
                  purchaser, and:

              

      

       

      
        	
                 

              	
                (i)

              	
                it
                  is an “accredited investor” as defined in paragraph (p) or (q) of the
                  definition of “accredited investor” in NI 45-106 provided, however
                  that it is not a trust company or trust corporation registered
                  under the
                  laws of Prince Edward Island that is not registered under the Trust
                  and Loan Companies Act (Canada) or under comparable legislation in
                  another jurisdiction of Canada and has concurrently executed and
                  delivered
                  the Accredited Investor Status Certificate in the form attached
                  hereto as
                  Schedule A and has initialled indicating that the Subscriber
                  satisfies the category of “accredited investor” set forth in
                  paragraph (p) or (q) thereof;
                  or

              

      

       

      
        	
                 

              	
                (ii)

              	
                the
                  Subscriber is acting as agent for one or more disclosed principals,
                  each
                  of which principal is purchasing as a principal for its own account,
                  not
                  for the benefit of any other person, and not with a view to the
                  resale or
                  distribution of all or any of the Flow-Through Shares, and each
                  of which
                  principals complies with subsection 7(g)
                  below;

              

      

       

      
        	
                 

              	
                (g)

              	
                Subscriber
                  Has Benefit of Statutory Exemptions.  Unless the
                  Subscriber complies with the provisions of subsection 7(f) hereof,
                  the Subscriber fully complies with one of the criteria set forth
                  below:

              

      

       

      [MARK
        BELOW THE CATEGORY WHICH DESCRIBES YOU]

       

      
        	
                 

              	
                (i)        
                  r

              	
                it
                  is a resident of a Designated Province and is an “accredited investor” as
                  such term is defined in NI 45-106 and specifically represents and
                  warrants that one or more of the categories set forth in the Accredited
                  Investor Status Certificate correctly, and in all respects, describes
                  the
                  Subscriber and the Subscriber has so indicated by marking the box
                  next to
                  the category which so describes it and executing and delivering
                  a copy of
                  the Accredited Investor Status Certificate attached hereto as
                  Schedule A with this Subscription Agreement and if the Subscriber is
                  purchasing Flow-Through Shares as an “accredited investor” as defined in
                  paragraph (m) of the definition of “accredited investor” in
                  NI 45-106 it is not a person created or used solely to purchase or
                  hold securities as an “accredited investor”;
                  or

              

      

       

      

      
        
          
            
            

          

          
            
            

            
              

            

          

          
            
            

          

        

      

      
        	 	
                11

              	
                Canada
                  - BC, AB, ON, QB

              

      

       

      

      
        	
                 

              	
                (ii)        r

              	
                it
                  is a resident of British Columbia or Alberta and in the case of
                  subclauses
                  D, E and F, and if applicable H or I, it has completed and duly
                  executed
                  Schedule B, and it is:

              

      

       

      [CIRCLE
        THE APPROPRIATE SUBCLAUSE A - I]

       

      
        	
                 

              	
                A.

              	
                a
                  “director”, “executive officer” or “control person” (as such terms are
                  defined in NI 45-106 and reproduced in Schedule A to this
                  Subscription Agreement) of the Corporation or of an affiliate of
                  the
                  Corporation; or

              

      

       

      
        	
                 

              	
                B.

              	
                a
                  spouse, parent, grandparent, brother, sister or child of any person
                  referred to in subclause A above;
                  or

              

      

       

      
        	
                 

              	
                C.

              	
                a
                  parent, grandparent, brother, sister or child of the spouse of
                  any person
                  referred to in subclause A above;
                  or

              

      

       

      
        	
                 

              	
                D.

              	
                a
                  “close personal friend” (within the meaning thereof as set out in
                  Companion Policy 45-106CP to NI 45-106) of any person referred to in
                  subclause A above and; or

              

      

       

      
        	
                 

              	
                E.

              	
                a
                  “close business associate” (within the meaning thereof as set out in
                  Companion Policy 45-106CP to NI 45-106) of any person referred to in
                  subclause A above; or

              

      

       

      
        	
                 

              	
                F.

              	
                a
                  “founder” (as such term is defined in NI 45-106 and reproduced in Schedule
                  A to this Subscription Agreement) of the Corporation or a spouse,
                  parent,
                  grandparent, brother, sister, child, close personal friend or close
                  business associate of a founder of the Corporation;
                  or

              

      

       

      
        	
                 

              	
                G.

              	
                a
                  parent, grandparent, brother, sister or child of the spouse of
                  a founder
                  of the Corporation; or

              

      

       

      
        	
                 

              	
                H.

              	
                a
                  person or company of which a majority of the voting securities
                  are
                  beneficially owned by, or a majority of the directors are, persons
                  referred to in subclauses A to G above;
                  or

              

      

       

      
        	
                 

              	
                I.

              	
                a
                  trust or estate of which all of the beneficiaries or a majority
                  of the
                  trustees are persons described in subclauses A to G above;
                  or

              

      

       

      (Note:  for
        the purposes of subparagraphs (D) and (F) above, a person is not a” close
        personal friend” solely because the individual is a relative or a member of the
        same organization, association or religious group or because the individual
        is a
        client, customer or former client or customer, nor is an individual a close
        personal friend as a result of being a close personal friend of a close personal
        friend of one of the listed individuals above, rather the relationship must
        be
        direct.  A close personal friend is one who knows the director,
        executive officer, founder or control person well enough and has known them
        for
        a sufficient period of time to be in a position to assess their capabilities
        and
        trustworthiness.  Further, for the purposes of subparagraphs (E)
        and (F) above, a person is not a "close business associate" if the person
        is a
        casual business associate or a person introduced or solicited for purposes
        of
        purchasing securities nor is the individual a close business associate solely
        because the individual is a client, customer, former client or customer,
        nor is
        the individual a close business associate if they are a close business associate
        of a close business associate of one of the listed individuals above, rather
        the
        relationship must be direct.  A close business associate is an
        individual who had sufficient prior dealings with the director, executive
        officer, founder or control person to be in a position to assess their
        capabilities and trustworthiness.)

       

      

      
        
          
            
            

          

          
            
            

            
              

            

          

          
            
            

          

        

      

      
        	 	
                12

              	
                Canada
                  - BC, AB, ON, QB

              

      

       

      

      
        	
                 

              	
                (iii)       
                  r

              	
                it
                  is a resident of Ontario and it has purchased the Flow-Through
                  Shares as
                  principal and it is:

              

      

       

      [CIRCLE
        THE APPROPRIATE SUBCLAUSE A - D]

       

      
        	
                 

              	
                A.

              	
                a
                  founder of the Corporation;

              

      

       

      
        	
                 

              	
                B.

              	
                an
                  affiliate of a founder of the
                  Corporation;

              

      

       

      
        	
                 

              	
                C.

              	
                a
                  spouse, parent, brother, sister, grandparent or child of an executive
                  officer, director or founder of the Corporation;
                  or

              

      

       

      
        	
                 

              	
                D.

              	
                a
                  person that is a control person of the Corporation;
                  or

              

      

       

      
        	
                 

              	
                (iv)       r

              	
                it
                  is purchasing the Flow-Through Shares as principal and is purchasing
                  a
                  sufficient number of Flow-Through Shares such that the aggregate
                  acquisition cost to the Subscriber is not less than $150,000, paid
                  in cash
                  at the time of the trade; provided however that the Subscriber
                  has not
                  been created or used solely to purchase or hold securities in reliance
                  on
                  this exemption; or

              

      

       

      
        	
                 

              	
                (v)       
                  r

              	
                it
                  is an “employee”, “executive officer”, “director” or “consultant” (as such
                  terms (other than employee) are defined in NI 45-106 and reproduced
                  in Appendix A to this Subscription Agreement) of the Corporation
                  or a
                  related entity of the Corporation or a permitted assign (as defined
                  in Ni
                  45-106) of such person and its participation in the trade is voluntary,
                  meaning it is not induced to participate in the trade by expectation
                  of
                  employment or continued employment with the Corporation or a related
                  entity of the Corporation; or

              

      

       

      
        	
                 

              	
                (vi)       r

              	
                it
                  is a resident of a jurisdiction referred to in the preceding paragraphs
                  but it is not purchasing thereunder, and instead is purchasing
                  pursuant to
                  a statutory exemption or an exemption order permitting such purchase,
                  which exemption or order has the effect of eliminating any requirement
                  for
                  a prospectus or similar disclosure document in respect of the purchase
                  of
                  Flow-Through Shares by the Subscriber, the details of which are
                  disclosed
                  to the Corporation to its
                  satisfaction;

              

      

       

      
        	
                 

              	
                (h)

              	
                Residents
                  of Other Jurisdictions.  If the Subscriber is a
                  resident of any jurisdiction not referred to in subsection 7(g) it
                  complies with all requirements under applicable securities legislation
                  and
                  shall deliver to the Corporation such particulars of the exemption(s)
                  and
                  the Subscriber’s qualifications thereunder as the Corporation may
                  reasonably request and it acknowledges
                  that:

              

      

       

      
        	
                 

              	
                (i)

              	
                no
                  securities commission or similar regulatory authority has reviewed
                  or
                  passed on the merits of the Flow-Through Shares;
                  and

              

      

       

      
        	
                 

              	
                (ii)

              	
                there
                  is no government or other insurance covering the Flow-Through Shares;
                  and

              

      

       

      
        	
                 

              	
                (iii)

              	
                there
                  are risks associated with the purchase of the Flow-Through Shares;
                  and

              

      

       

      

      
        
          
            
            

          

          
            
            

            
              

            

          

          
            
            

          

        

      

      
        	 	
                13

              	
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                  - BC, AB, ON, QB

              

      

       

      

      
        	
                 

              	
                (iv)

              	
                there
                  are restrictions on the Subscriber’s (and if applicable, each beneficial
                  purchaser for whom the Subscriber is contracting hereunder) ability
                  to
                  resell the Flow-Through Shares and it is the responsibility of
                  the
                  Subscriber (and if applicable, each beneficial purchaser for whom
                  the
                  Subscriber is contracting hereunder) to find out what those restrictions
                  are and to comply with them before selling the Flow-Through Shares;
                  and

              

      

       

      
        	
                 

              	
                (v)

              	
                the
                  Corporation has advised the Subscriber that the Corporation is
                  relying on
                  exemptions from the requirements to provide the Subscriber with
                  a
                  prospectus under the applicable securities legislation of the province
                  or
                  territory in which the Subscriber is resident, and, as a consequence
                  of
                  acquiring Flow-Through Shares pursuant to these exemptions, certain
                  protections, rights and remedies provided by the applicable securities
                  legislation of the province or territory in which the Subscriber
                  is
                  resident, including statutory or contractual rights of rescission
                  or
                  damages, will not be available to the Subscriber;
                  and

              

      

       

      
        	
                 

              	
                (i)

              	
                No
                  Undisclosed Information.  The Subscriber’s
                  Flow-Through Shares are not being purchased by the Subscriber as
                  a result
                  of any material information concerning the Corporation that has
                  not been
                  publicly disclosed and the Subscriber’s decision to enter into this
                  Subscription Agreement and acquire the Subscriber’s Flow-Through Shares
                  has not been made as a result of any oral or written representation
                  as to
                  fact or otherwise made by or on behalf of the Corporation or any
                  other
                  person and is based entirely upon currently available public information
                  concerning the Corporation;

              

      

       

      
        	
                 

              	
                (j)

              	
                Investment
                  Suitability.  The Subscriber and any beneficial
                  purchaser referred to in subsection 7(f) hereof has such knowledge
                  and experience in financial and business affairs as to be capable
                  of
                  evaluating the merits and risks of the investment hereunder in
                  the
                  Flow-Through Shares and is able to bear the economic risk of loss
                  of such
                  investment;

              

      

       

      
        	
                 

              	
                (k)

              	
                Subscription
                  Funds.  The Subscriber represents and warrants that
                  the funds representing the Subscription Amount which will be advanced
                  by
                  the Subscriber to the Corporation hereunder will not represent
                  proceeds of
                  crime for the purposes of the Proceeds of Crime (Money Laundering) and
                  Terrorist Financing Act (Canada) (the “PCMLTFA”) and
                  the Subscriber acknowledges that the Corporation may in the future
                  be
                  required by law to disclose the Subscriber’s name and other information
                  relating to this Subscription Agreement and the Subscriber’s subscription
                  hereunder, on a confidential basis, pursuant to the PCMLTFA.  To
                  the best of its knowledge: (a) none of the subscription funds to be
                  provided by the Subscriber (i) have been or will be derived from or
                  related to any activity that is deemed criminal under the laws
                  of Canada,
                  the United States of America, or any other jurisdiction or (ii) are
                  being tendered on behalf of a person or entity who has not been
                  identified
                  to the Subscriber; and (b) it shall promptly notify the Corporation
                  if the Subscriber discovers that any of such representations ceases
                  to be
                  true and provide the Corporation with appropriate information in
                  connection therewith; and

              

      

       

      
        	
                 

              	
                (l)

              	
                Further
                  Acknowledgments.  The Subscriber acknowledges
                  that:

              

      

       

      
        	
                 

              	
                (i)

              	
                no
                  securities commission or similar regulatory authority has reviewed
                  or
                  passed on the merits of the Flow-Through
                  Shares;

              

      

       

      
        	
                 

              	
                (ii)

              	
                there
                  is no government or other insurance covering the Flow-Through
                  Shares;

              

      

       

      
        	
                 

              	
                (iii)

              	
                there
                  are risks associated with the purchase of the Flow-Through
                  Shares;

              

      

       

      
        	
                 

              	
                (iv)

              	
                there
                  are restrictions on the Subscriber’s ability to resell the Flow-Through
                  Shares and it is the responsibility of the Subscriber to find out
                  what
                  those restrictions are and to comply with them before selling the
                  Flow-Through Shares;

              

      

       

      

      
        
          
            
            

          

          
            
            

            
              

            

          

          
            
            

          

        

      

      
        	 	
                14

              	
                Canada
                  - BC, AB, ON, QB

              

      

       

      

      
        	
                 

              	
                (v)

              	
                all
                  certificates representing Flow-Through Shares held by the Subscriber
                  will
                  have a legend affixed thereto which describes certain resale restrictions
                  applicable under Securities Laws applicable in the Designated Provinces
                  and, if applicable, the United
                  States;

              

      

       

      
        	
                 

              	
                (vi)

              	
                except
                  for this Subscription Agreement and the Agency Agreement including
                  the
                  representations and warranties made by the Corporation therein,
                  it has
                  relied solely upon publicly available information relating to the
                  Corporation and not upon any verbal or written representation as
                  to fact
                  or otherwise made by or on behalf of the Corporation or the Agent,
                  such
                  publicly available information having been delivered to the Subscriber
                  without independent investigation or verification by the Agent,
                  and agrees
                  that the Agent and Agent’s counsel assume no responsibility or liability
                  of any nature whatsoever for the accuracy, adequacy or completeness
                  of the
                  publicly available information or as to whether all information
                  concerning
                  the Corporation required to be disclosed by the Corporation has
                  been
                  generally disclosed and acknowledges that the Corporation’s counsel and
                  the Agent’s counsel are acting as counsel to the Corporation and the
                  Agent, respectively, and not as counsel to the
                  Subscriber.

              

      

       

      The
        Subscriber acknowledges and agrees that the foregoing representations,
        warranties and acknowledgments are made by it with the intention that they
        may
        be relied upon in determining its eligibility or (if applicable) the eligibility
        of others on whose behalf it is contracting hereunder to purchase the
        Flow-Through Shares under applicable Securities Laws.  The Subscriber
        further agrees that acceptance of delivery of certificates for the Flow-Through
        Shares by or on behalf of the Subscriber on the Closing Date, it shall be
        representing and warranting that the foregoing representations and warranties
        are true and correct as at the Closing Time with the same force and effect
        as if
        they had been made by the Subscriber at the Closing Time and that they shall
        survive the purchase by the Subscriber of the Flow-Through Shares and shall
        continue in full force and effect notwithstanding any subsequent disposition
        by
        the Subscriber of the Flow-Through Shares. The Subscriber undertakes to notify
        the Agent immediately of any change in any representation, warranty or other
        information relating to the Subscriber set forth herein which takes place
        prior
        to the Closing Time.

       

      
        	
                8.

              	
                U.S.
                  Matters.  The
                  Subscriber:

              

      

       

      
        	
                 

              	
                (a)

              	
                No
                  U.S. Registration.  The Subscriber is aware that the
                  Flow-Through Shares have not been registered and will not be registered
                  under the U.S. Securities Act or the securities laws of any state
                  and that
                  these securities may not be offered or sold in the United States
                  without
                  registration under the U.S. Securities Act or compliance with requirements
                  of an exemption from registration;

              

      

       

      
        	
                 

              	
                (b)

              	
                No
                  Sale in the U.S.  The Subscriber acknowledges the
                  Flow-Through Shares have not been offered to the Subscriber in
                  the United
                  States, and the individuals making the order to purchase the Flow-Through
                  Shares or executing and delivering this Subscription Agreement
                  on behalf
                  of the Subscriber were not in the United States when the order
                  was placed
                  and this Subscription Agreement was executed and
                  delivered;

              

      

       

      
        	
                 

              	
                (c)

              	
                Not
                  a U.S. Person.  The Subscriber is not a “U.S. Person”
                  (as defined in Regulation S under the U.S. Securities Act, which
                  definition includes, but is not limited to, an individual resident
                  in the
                  United States, an estate or trust of which any executor or administrator
                  or trustee, respectively, is a U.S. Person and any partnership
                  or
                  corporation organized or incorporated under the laws of the United
                  States)
                  and is not purchasing the Flow-Through Shares on behalf of, or
                  for the
                  account or benefit of, a person in the United States or a U.S.
                  Person;

              

      

       

      
        	
                 

              	
                (d)

              	
                Will
                  Not Sell in U.S.  The Subscriber undertakes and agrees
                  that it will not offer or sell the Flow-Through Shares in the United
                  States unless such securities are registered under the U.S. Securities
                  Act
                  and the securities laws of all applicable states of the United
                  States or
                  an exemption from such registration requirements is available,
                  and further
                  that it will not resell the Flow-Through Shares except in accordance
                  with
                  the provisions of applicable securities
                  laws;

              

      

       

      

      
        
          
            
            

          

          
            
            

            
              

            

          

          
            
            

          

        

      

      
        	 	
                15

              	
                Canada
                  - BC, AB, ON, QB

              

      

       

      

      
        	
                 

              	
                (e)

              	
                Reliance
                  on Exemptions.  The Subscriber acknowledges that the
                  Offering has not been reviewed by the United States Securities
                  and
                  Exchange Commission (the “SEC”) or any state agency
                  because it is intended to be an offshore transaction pursuant to
                  Regulation S (“Regulation S”) as promulgated by the SEC
                  under the U.S. Securities Act, as amended.  The Subscriber
                  understands that the Corporation is relying in part upon the truth
                  and
                  accuracy of, and the Subscriber’s compliance with the representations,
                  warranties, agreements, acknowledgments and understandings of the
                  Subscriber set forth herein in order to determine the availability
                  of such
                  exemptions and the eligibility of the Subscriber to acquire the
                  Flow-Through Shares;

              

      

       

      
        	
                 

              	
                (f)

              	
                Offshore
                  Transaction.  The Subscriber agrees that it is
                  acquiring the Flow-Through Shares in an offshore transaction pursuant
                  to
                  Regulation S, promulgated under the U.S. Securities Act, and hereby
                  represents to the Corporation as
                  follows:

              

      

       

      
        	
                 

              	
                (i)

              	
                the
                  Subscriber is outside the United States when receiving and executing
                  this
                  Subscription Agreement; and

              

      

       

      
        	
                 

              	
                (ii)

              	
                the
                  Subscriber has not acquired the Flow-Through Shares as a result
                  of, and
                  will not itself engage in, any “directed selling efforts” (as defined in
                  Regulation S under the U.S. Securities Act) in the United States
                  in
                  respect of the Flow-Through Shares which would include any activities
                  undertaken for the purpose of, or that could reasonably be expected
                  to
                  have the effect of, conditioning the market in the United States
                  for the
                  resale of the Flow-Through Shares; provided, however, that the
                  Subscriber
                  may sell or otherwise dispose of the Flow-Through Shares pursuant
                  to
                  registration of the Flow-Through Shares under the U.S. Securities
                  Act and
                  any applicable state and provincial securities laws or under an
                  exemption
                  from such registration requirements and as otherwise provided
                  herein;

              

      

       

      
        	
                 

              	
                (g)

              	
                Compliance
                  with U.S. Securities Laws.  The Subscriber agrees that
                  the Corporation will refuse to register any transfer of the Flow-Through
                  Shares not made in accordance with the provisions of Regulation
                  S,
                  pursuant to an effective registration statement under the U.S.
                  Securities
                  Act, or pursuant to an available exemption from the registration
                  requirements of the U.S. Securities Act and in accordance with
                  applicable
                  state and provincial securities
                  laws;

              

      

       

      
        	
                 

              	
                (h)

              	
                Distribution
                  Compliance Period.  The Subscriber understands and
                  agrees that offers and sales of any of the Flow-Through Shares
                  prior to
                  the expiration of a period of two years after the date of transfer
                  of the
                  Flow-Through Shares under this Subscription Agreement (the
                  “Distribution Compliance Period”), shall only be made in
                  compliance with the safe harbor provisions set forth in Regulation
                  S,
                  pursuant to the registration provisions of the U.S. Securities
                  Act or an
                  exemption therefrom, and that all offers and sales after the Distribution
                  Compliance Period shall be made only in compliance with the registration
                  provisions of the U.S. Securities Act or an exemption therefrom,
                  and in
                  each case only in accordance with all applicable securities laws;
                  and

              

      

       

      
        	
                 

              	
                (i)

              	
                Legends.  The
                  Subscriber understands that the certificates representing the Flow-Through
                  Shares, until such time as they have been registered under the
                  U.S.
                  Securities Act may have a distinct CUSIP number from other Common
                  Shares
                  of the Corporation and shall bear a restrictive legend in substantially
                  the following form (and a stop-transfer order may be placed against
                  transfer of such certificates or other
                  instruments):

              

      

       

      THESE
        SECURITIES WERE ISSUED IN AN OFFSHORE TRANSACTION TO PERSONS WHO ARE NOT
        U.S.
        PERSONS (AS DEFINED HEREIN) PURSUANT TO REGULATION S UNDER THE UNITED STATES
        SECURITIES ACT OF 1933, AS AMENDED (THE “1933 ACT”). ACCORDINGLY, NONE OF THE
        SECURITIES TO WHICH THIS CERTIFICATE RELATES HAVE BEEN REGISTERED UNDER THE
        1933
        ACT, OR ANY U.S. STATE SECURITIES LAWS, AND, UNLESS SO REGISTERED, NONE MAY
        BE
        OFFERED OR SOLD IN THE UNITED STATES OR, DIRECTLY OR INDIRECTLY, TO U.S.
        PERSONS
        (AS DEFINED HEREIN) EXCEPT PURSUANT TO AN EFFECTIVE REGISTRATION STATEMENT
        OR
        PURSUANT TO AN EXEMPTION FROM, OR IN A TRANSACTION NOT SUBJECT TO, THE
        REGISTRATION REQUIREMENTS OF THE 1933 ACT AND IN EACH CASE ONLY IN ACCORDANCE
        WITH APPLICABLE STATE SECURITIES LAWS. IN ADDITION, HEDGING TRANSACTIONS
        INVOLVING THE SECURITIES MAY NOT BE CONDUCTED UNLESS IN ACCORDANCE WITH THE
        1933
        ACT.

       

      

      
        
          
            
            

          

          
            
            

            
              

            

          

          
            
            

          

        

      

      
        	 	
                16

              	
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                  - BC, AB, ON, QB

              

      

       

      

      The
        legend set forth above shall be removed and the Corporation shall issue a
        certificate without such legend to the holder of the Flow-Through Shares
        upon
        which it is stamped, if (a) such Flow-Through Shares are being sold
        pursuant to a registration statement under the U.S. Securities Act, or
        (b) such holder delivers to the Corporation an opinion of counsel, in a
        reasonably acceptable form, to the Corporation that a disposition of the
        Flow-Through Shares is being made pursuant to an exemption from such
        registration.

       

      
        	
                9.

              	
                Covenants
                  of the Subscriber.  The Subscriber
                  will:

              

      

       

      
        	
                 

              	
                (a)

              	
                not
                  resell any of the Flow-Through Shares acquired (directly or indirectly)
                  hereunder, in whole or in part, directly or indirectly, except
                  in
                  accordance with the provisions of applicable Securities
                  Laws;

              

      

       

      
        	
                 

              	
                (b)

              	
                execute,
                  deliver, file and otherwise assist the Corporation in filing such
                  further
                  reports, undertakings, agreements, documents and writings, do all
                  acts and
                  things, and provide such further assurances as may be required
                  to give
                  effect to this Subscription Agreement as required, and, without
                  limiting
                  the generality of the foregoing, will execute and deliver all documents,
                  agreements and writings and provide such assurances, undertakings,
                  information and investment letters as may be required from time
                  to time by
                  the Securities Commissions or other regulatory authorities having
                  jurisdiction over the Corporation’s affairs or as may be required under
                  the applicable Securities Laws with respect to the issue and resale
                  of the
                  Flow-Through Shares; and

              

      

       

      
        	
                 

              	
                (c)

              	
                provide
                  the Corporation and applicable securities regulatory authorities,
                  on
                  request, particulars as to the identity of any undisclosed principals
                  as
                  may be required by the Corporation.

              

      

       

      
        	
                10.

              	
                No
                  Representations.  The Subscriber acknowledges that no
                  person has made to the Subscriber any written or oral representations
                  that
                  any person will resell or repurchase the Flow-Through Shares, that
                  any
                  person will refund the Subscription Amount of the Flow-Through
                  Shares, or
                  to the future price or value of the Flow-Through Shares.  In
                  addition, except as provided in this Subscription Agreement, the
                  Subscriber has relied solely upon publicly available information
                  relating
                  to the Corporation and not upon any verbal or written representation
                  as to
                  fact or otherwise made by or on behalf of the
                  Corporation.

              

      

       

      
        	
                11.

              	
                Subscriber’s
                  Expenses.  The Subscriber acknowledges and agrees that
                  all costs and expenses incurred by the Subscriber (including any
                  fees and
                  disbursements of special counsel retained by the Subscriber) relating
                  to
                  the purchase of the Flow-Through Shares shall be borne by the
                  Subscriber.

              

      

       

      
        	
                12.

              	
                Legal
                  and Tax Advice.  The Subscriber acknowledges and agrees
                  that it is solely responsible for obtaining such legal advice and
                  tax
                  advice as it considers appropriate in connection with the execution,
                  delivery and performance by it of this Subscription Agreement and
                  the
                  completion of the transactions contemplated hereby.  The
                  Subscriber further acknowledges and agrees that the Corporation’s legal
                  counsel is acting exclusively on the Corporation’s behalf and not as
                  counsel to the Subscriber.

              

      

       

      
        	
                13.

              	
                Indemnity.  The
                  Subscriber agrees to indemnify and hold harmless the Corporation,
                  the
                  Agent and their respective directors, officers, employees, agents,
                  partners, advisers, affiliates and shareholders from and against
                  any and
                  all loss, liability, claim, damage and expense (including, but
                  not limited
                  to, any and all fees, costs and expenses reasonably incurred in
                  investigating, preparing or defending against any claim, law suit,
                  administrative proceeding or investigation whether commenced or
                  threatened) arising out of or based upon any representation or
                  warranty of
                  the Subscriber contained herein or in any document furnished by
                  the
                  Subscriber to the Corporation in connection herewith being untrue
                  in any
                  material respect or any breach or failure by the Subscriber to
                  comply with
                  any covenant or agreement made by the Subscriber herein or in any
                  document
                  furnished by the Subscriber to the Corporation in connection
                  herewith.

              

      

       

      

      
        
          
            
            

          

          
            
            

            
              

            

          

          
            
            

          

        

      

      
        	 	
                17

              	
                Canada
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                14.

              	
                Assignment.  The
                  terms and provisions of this Subscription Agreement shall be binding
                  upon
                  and enure to the benefit of the Subscriber, the Corporation and
                  their
                  respective successors and assigns; provided that this Subscription
                  Agreement shall not be assignable by the Subscriber without the
                  prior
                  written consent of the Corporation.

              

      

       

      
        	
                15.

              	
                Personal
                  Information.  This Subscription Agreement and the
                  schedules hereto require the Subscriber to provide certain personal
                  information to the Corporation.  Such information is being
                  collected by the Corporation for the purposes of completing this
                  offering
                  of Flow-Through Shares, which includes, without limitation, determining
                  the Subscriber’s eligibility to purchase the Flow-Through Shares under
                  applicable Securities Laws, preparing and registering certificates
                  representing Flow-Through Shares to be issued to the Subscriber
                  and
                  completing filings required by any securities regulatory authority.
                  The
                  Subscriber’s personal information may be disclosed by the Corporation to:
                  (a) stock exchanges and securities regulatory authorities,
                  (b) the Corporation’s registrar and transfer agent, (c) CRA, and
                  (d) any of the other parties involved in this offering of
                  Flow-Through Shares, including the Corporation’s legal
                  counsel.  By executing this Subscription Agreement, the
                  Subscriber is deemed to be consenting to the foregoing collection,
                  use and
                  disclosure of the Subscriber’s personal information.  The
                  Subscriber also consents to the filing of copies or originals of
                  any of
                  the Subscriber’s documents described in this Subscription Agreement as may
                  be required to be filed with any securities regulatory authority
                  in
                  connection with the transactions contemplated by this Subscription
                  Agreement and the inclusion of them in the closing books prepared
                  in
                  connection with the transactions contemplated by this Subscription
                  Agreement.  The Subscriber hereby acknowledges that it has been
                  notified by the Corporation: (i) of the delivery to the Ontario
                  Securities Commission (the “OSC”) of the Subscriber’s
                  personal information; (ii) that the Subscriber’s personal information
                  is being collected indirectly by the OSC under the authority granted
                  to it
                  in the securities legislation; (iii) the Subscriber’s personal
                  information is being collected for the purposes of the administration
                  and
                  enforcement of the securities legislation of Ontario; and (iv) the
                  contact information of the public official in Ontario who can answer
                  questions about the OSC’s indirect collection of personal information is,
                  Administrative Assistant to the Director of Corporate Finance,
                  the Ontario
                  Securities Commission, Suite 1903, Box 5520, Queen Street West,
                  Toronto,
                  Ontario, M5H 3S8, telephone (416) 593-8086, facsimile
                  (416) 593-8252.

              

      

       

      
        	
                16.

              	
                Survival.  All
                  representations, warranties, agreements and covenants made or deemed
                  to be
                  made by the Subscriber herein will survive Closing of the
                  Offering.

              

      

       

      
        	
                17.

              	
                Governing
                  Law.  This Subscription Agreement shall be governed by
                  and construed in accordance with the laws of the Province of Alberta
                  and
                  the federal laws of Canada applicable therein.  The Subscriber,
                  on its own behalf and, if applicable, on behalf of others for whom
                  it is
                  contracting hereunder, and the Corporation hereby irrevocably attorn
                  to
                  the jurisdiction of the courts of the Province of Alberta with
                  respect to
                  any matters arising out of this Subscription Agreement and agree
                  to be
                  bound by any suit, action or proceeding commenced in such courts
                  and by
                  any order or judgment resulting from such suit, action or
                  proceeding.  Each of the parties hereto irrevocably waives, to
                  the fullest extent it may effectively do so, the defense of an
                  inconvenient forum to the maintenance of such action or
                  proceeding.

              

      

       

      
        	
                18.

              	
                Facsimile
                  Subscriptions and Counterparts.  The Corporation shall
                  be entitled to rely on delivery by facsimile machine of an executed
                  copy
                  of this Subscription Agreement, including the completed schedule
                  hereto,
                  and acceptance by the Corporation of such facsimile copy shall
                  be legally
                  effective to create a valid and binding agreement between the Subscriber
                  and the Corporation in accordance with the terms hereof.  This
                  Subscription Agreement may be executed in any number of counterparts,
                  each
                  of which when delivered, either in original or facsimile form,
                  shall be
                  deemed to be an original and all of which together shall constitute
                  one
                  and the same document.

              

      

       

      

      
        
          
            
            

          

          
            
            

            
              

            

          

          
            
            

          

        

      

      
        	 	
                18

              	
                Canada
                  - BC, AB, ON, QB

              

      

       

      

      
        	
                19.

              	
                Entire
                  Agreement and Modification.  This Subscription
                  Agreement (including the schedules hereto) contains the entire
                  agreement
                  of the parties hereto relating to the subject matter hereof and
                  there are
                  no representations, covenants or other agreements relating to the
                  subject
                  matter hereof except as stated or referred to herein.  Subject
                  to the terms hereof, neither this Subscription Agreement nor any
                  provision
                  hereof shall be modified, changed, discharged or terminated except
                  by an
                  instrument in writing signed by the party against whom any waiver,
                  change,
                  discharge or termination is sought.

              

      

       

      
        	
                20.

              	
                Headings.  The
                  headings contained herein are for convenience only and shall not
                  affect
                  the meanings or interpretation
                  hereof.

              

      

       

      
        	
                21.

              	
                Language.  The
                  Subscriber acknowledges its consent and requests that all documents
                  evidencing or relating in any way to its purchase of Flow-Through
                  Shares
                  be drawn up in the English language only.  Nous reconnaissons
                  par les présentes avoir consenti et demandé que tous les documents faisant
                  foi ou se rapportant de quelque manière à notre achat des actions
                  accréditives soient rédigés en anglais
                  seulement.

              

      

       

      
        	
                22.

              	
                Time
                  of Essence.  Time is of the essence of this
                  Subscription Agreement.

              

      

       

      
        	
                23.

              	
                Effective
                  Date.  This Subscription Agreement is intended to and
                  shall take effect on the Closing Date, notwithstanding its actual
                  date of
                  execution or delivery by any of the
                  parties.

              

      

       

      
        	
                24.

              	
                Currency.  Except
                  if specifically stated otherwise, all dollar amounts herein (including
                  the
                  Schedule hereto) are in Canadian
                  dollars.

              

      

       

      
        	
                25.

              	
                Severability.  If
                  any one or more of the provisions contained in this Subscription
                  Agreement
                  should be invalid, illegal or unenforceable in any respect in any
                  jurisdiction, the validity, legality and enforceability of such
                  provision
                  or provisions shall not in any way be affected or impaired thereby
                  in any
                  other jurisdiction and the validity, legality and enforceability
                  of the
                  remaining provisions contained herein shall not in any way be affected
                  or
                  impaired thereby, unless in either case as a result of such determination
                  this Subscription Agreement would fail of its essential
                  purpose.

              

      

       

      

      

      

      

      

      

      

      

      

      

      

      

      

      

      

      

      

       

      
        
          
          

        

        
          
          

          
            

          

        

         

      

      	 	
              A-1

            	
              Canada
                - BC, AB, ON, QB

            

       

      SCHEDULE
        A

       

      ACCREDITED
        INVESTOR STATUS CERTIFICATE

       

      The
        undersigned Subscriber hereby represents and warrants to the Corporation,
        as an
        integral part of the attached Subscription Agreement, that he, she or it
        is
        correctly and in all respects described by the category or categories set
        forth
        directly next to which the Subscriber has marked below.

       

      [MARK
        BELOW THE CATEGORY OR CATEGORIES WHICH DESCRIBES YOU]

       

      
        	r 	
                (a)

              	
                A
                  Canadian financial institution, or a Schedule III bank.

              
	r	
                (b)

              	
                The
                  Business Development Bank of Canada incorporated under the Business
                  Development Bank of Canada Act (Canada).

              
	r	
                (c)

              	
                A
                  subsidiary of any person referred to in paragraphs  (a) or (b), if
                  the person owns all of the voting securities of the subsidiary,
                  except the
                  voting securities required by law to be owned by directors of that
                  subsidiary.

              
	r	
                (d)

              	
                A
                  person registered under the securities legislation of a jurisdiction
                  of
                  Canada as an adviser or dealer, other than a person registered
                  solely as a
                  limited market dealer under one or both of the Securities Act
                  (Ontario) or the Securities Act (Newfoundland and
                  Labrador).

              
	r	
                (e)

              	
                An
                  individual registered or formerly registered under the securities
                  legislation of a jurisdiction of Canada as a representative of
                  a person
                  referred to in paragraph (d).

              
	r	
                (f)

              	
                The
                  Government of Canada or a jurisdiction of Canada, or any crown
                  corporation, agency or wholly owned entity of the Government of
                  Canada or
                  a jurisdiction of Canada.

              
	r	
                (g)

              	
                A
                  municipality, public board or commission in Canada and a metropolitan
                  community, school board, the Comité de gestion de la taxe scolaire de
                  l’île de Montréal or an intermunicipal management board in
                  Québec.

              
	r	
                (h)

              	
                Any
                  national, federal, state, provincial, territorial or municipal
                  government
                  of or in any foreign jurisdiction, or any agency of that
                  government.

              
	r	
                (i)

              	
                A
                  pension fund that is regulated by either the Office of the Superintendent
                  of Financial Institutions (Canada) or a pension commission or similar
                  regulatory authority of a jurisdiction of Canada.

              
	r	
                (j)

              	
                An
                  individual who, either alone or with a spouse, beneficially owns,
                  directly
                  or indirectly, financial assets having an aggregate realizable
                  value that
                  before taxes, but net of any related liabilities, exceeds
                  $1,000,000.

              
	r	
                (k)

              	
                An
                  individual whose net income before taxes exceeded $200,000 in each
                  of the
                  2 most recent calendar years or whose net income before taxes combined
                  with that of a spouse exceeded $300,000 in each of the 2 most recent
                  calendar years and who, in either case, reasonably expects to exceed
                  the
                  net income level in the current calendar year.

              
	r	
                (l)

              	
                An
                  individual who, either alone or with a spouse, has net assets of
                  at least
                  $5,000,000.

              
	r	
                (m)

              	
                A
                  person, other than an individual or investment fund, that has net
                  assets
                  of at least $5,000,000 as shown on its most recently prepared financial
                  statements.

              
	r	
                (n)

              	
                An
                  investment fund that distributes or has distributed its securities
                  only
                  to:

              
	 	 	
                (A)

              	
                a
                  person that is or was an accredited investor at the time of the
                  distribution,

              
	 	 	
                (B)

              	
                a
                  person that acquires or acquired securities in the circumstances
                  referred
                  to in sections 2.10 and 2.19 of NI 45-106, or

              
	 	 	
                (C)

              	
                a
                  person described in paragraph (A) or (B) that acquires or acquired
                  securities under section 2.18 of NI 45-106.

              
	r	
                (o)

              	
                An
                  investment fund that distributes or has distributed securities
                  under a
                  prospectus in a jurisdiction of Canada for which the regulator
                  or, in
                  Québec, the securities regulatory authority, has issued a
                  receipt.

              
	r	
                (p)

              	
                A
                  trust company or trust corporation registered or authorized to
                  carry on
                  business under the Trust and Loan Companies Act (Canada) or under
                  comparable legislation in a jurisdiction of Canada or a foreign
                  jurisdiction, acting on behalf of a fully managed account managed
                  by the
                  trust company or trust corporation, as the case may
                  be.

              

      

       

       

      
        
          
          

        

        
          
          

          
            

          

        

        
          
          

        

      

      
        	 	
                A-2

              	
                Canada
                  - BC, AB, ON, QB

              

         

         

      

      
        	r	
                (q)

              	
                A
                  person acting on behalf of a fully managed account managed by that
                  person,
                  if that person:

              
	 	 	
                (A)

              	
                is
                  registered or authorized to carry on business as an adviser or
                  the
                  equivalent under the securities legislation of a jurisdiction of
                  Canada or
                  a foreign jurisdiction, and

              
	 	 	
                (B)

              	
                in
                  Ontario, is purchasing a security that is not a security of an
                  investment
                  fund.

              
	r	
                (r)

              	
                A
                  registered charity under the Income Tax Act (Canada) that, in
                  regard to the trade, has obtained advice from an eligibility adviser
                  or an
                  adviser registered under the securities legislation of the jurisdiction
                  of
                  the registered charity to give advice on the securities being
                  traded.

              
	r	
                (s)

              	
                An
                  entity organized in a foreign jurisdiction that is analogous to
                  any of the
                  entities referred to in paragraphs (a) to (d) or paragraph (i)
                  in form and function.

              
	r	
                (t)

              	
                A
                  person in respect of which all of the owners of interests, direct,
                  indirect or beneficial, except the voting securities required by
                  law to be
                  owned by directors, are persons that are accredited
                  investors.

              
	r	
                (u)

              	
                An
                  investment fund that is advised by a person registered as an adviser
                  or a
                  person that is exempt from registration as an adviser.

              
	r	
                (v)

              	
                A
                  person that is recognized or designated by the securities regulatory
                  authority or, except in Ontario and Québec, the regulator
                  as:

              
	 	 	
                (A)

              	
                an
                  accredited investor, or

              
	 	 	
                (B)

              	
                an
                  exempt purchaser in Alberta or British
                  Columbia.

              

      

      

      Note:                      A
        summary of the meanings of certain of the terms used in this Accredited Investor
        Status Certificate follows the signature block below.

       

      DATED  ________________________________________,
        2007

       

      

      _______________________________________________

      Name
        of
        Subscriber  (please print)

      

       

      By:         ________________________________________

      

       

      _______________________________________________

      Official
        Capacity or Title, if any  (please print)

       

       

      _______________________________________________

      Name
        of
        Authorized Signing Authority (please print)

       

       

       

       

       

       

       

       

       

       

       

       

       

       

       

       

      
         

        
          
            

          

        

        
          
          

        

      

      	 	
              A-3

            	
              Canada
                - BC, AB, ON, QB

            

      

       

      For
        the
        purposes of this Accredited Investor Status Certificate the following
        definitions are included for convenience:

       

      
        	
                 

              	
                (a)

              	
                “affiliate”
                  means an issuer connected with another issuer
                  because

              

      

       

      
        	
                 

              	
                (i)

              	
                one
                  of them is the subsidiary of the
                  other;

              

      

       

      
        	
                 

              	
                (ii)

              	
                each
                  of them is controlled by the same person;
                  or

              

      

       

      
        	
                 

              	
                (iii)

              	
                for
                  the purposes of Saskatchewan securities law, both are subsidiaries
                  of the
                  same issuer;

              

      

       

      
        	
                 

              	
                (b)

              	
                “bank”
                  means a bank named in Schedule I or II of the Bank Act
                  (Canada);

              

      

       

      
        	
                 

              	
                (c)

              	
                “Canadian
                  financial institution”
means:

              

      

       

      
        	
                 

              	
                (i)

              	
                an
                  association governed by the Cooperative Credit Associations Act
                  (Canada) or a central cooperative credit society for which an order
                  has
                  been made under section 473(1) of that Act;
                  or

              

      

       

      
        	
                 

              	
                (ii)

              	
                a
                  bank, loan corporation, trust company, trust corporation, insurance
                  company, treasury branch, credit union, caisse populaire, financial
                  services cooperative, or league that, in each case, is authorized
                  by an
                  enactment of Canada or a jurisdiction of Canada to carry on business
                  in
                  Canada or a jurisdiction of Canada;

              

      

       

      
        	
                 

              	
                (d)

              	
                “consultant”
                  means, for an issuer, a person, other than an employee, executive
                  officer,
                  or director of the issuer or of a related entity of the issuer,
                  that:

              

      

       

      
        	
                 

              	
                (i)

              	
                is
                  engaged to provide services to the issuer or a related entity of
                  the
                  issuer, other than services provided in relation to a
                  distribution;

              

      

       

      
        	
                 

              	
                (ii)

              	
                provides
                  the services under a written contract with the issuer or a related
                  entity
                  of the issuer; and

              

      

       

      
        	
                 

              	
                (iii)

              	
                spends
                  or will spend a significant amount of time and attention on the
                  affairs
                  and business of the issuer or a related entity of the
                  issuer,

              

      

       

      and
        includes, for an individual consultant, a corporation of which the individual
        consultant is an employee or shareholder, and a partnership of which the
        individual consultant is an employee or partner;

       

      
        	
                 

              	
                (e)

              	
                “control
                  person” has the same meaning as in securities legislation except
                  in Manitoba, Newfoundland and Labrador, Northwest Territories,
                  Nova
                  Scotia, Nunavut, Ontario, Prince Edward Island and Québec, where control
                  person means any person that holds or is one of a combination of
                  persons
                  that holds:

              

      

       

      
        	
                 

              	
                (i)

              	
                a
                  sufficient number of any securities of an issuer so as to affect
                  materially the control of the issuer;
                  or

              

      

       

      
        	
                 

              	
                (ii)

              	
                more
                  than 20% of the outstanding voting securities of an issuer except
                  where
                  there is evidence showing that the holding of those securities
                  does not
                  affect materially the control of that
                  issuer;

              

      

       

      
        	
                 

              	
                (f)

              	
                “debt
                  security” means any bond, debenture, note or similar instrument
                  representing indebtedness, whether secured or
                  unsecured;

              

      

       

      
        
          
          

        

        
          
          

          
            

          

        

        
          
          

        

      

      	 	
              A-4

            	
              Canada
                - BC, AB, ON, QB

            

      

       

      
        	
                 

              	
                (g)

              	
                “director”
                  means:

              

      

       

      
        	
                 

              	
                (i)

              	
                a
                  member of the board of directors of a company or an individual
                  who
                  performs similar functions for a company;
                  and

              

      

       

      
        	
                 

              	
                (ii)

              	
                with
                  respect to a person that is not a company, an individual who performs
                  functions similar to those of a director of a
                  company;

              

      

       

      
        	
                 

              	
                (h)

              	
                “eligibility
                  adviser” means:

              

      

       

      
        	
                 

              	
                (i)

              	
                a
                  person that is registered as an investment dealer or in an equivalent
                  category of registration under the securities legislation of the
                  jurisdiction of a purchaser and authorized to give advice with
                  respect to
                  the type of security being distributed;
                  and

              

      

       

      
        	
                 

              	
                (ii)

              	
                in
                  Saskatchewan or Manitoba, also means a lawyer who is a practicing
                  member
                  in good standing with a law society of a jurisdiction of Canada
                  or a
                  public accountant who is a member in good standing of an institute
                  or
                  association of chartered accountants, certified general accountants
                  or
                  certified management accountants in a jurisdiction of Canada provided
                  that
                  the lawyer or public accountant must
                  not:

              

      

       

      
        	
                 

              	
                (A)

              	
                have
                  a professional, business or personal relationship with the issuer,
                  or any
                  of its directors, executive officers, founders, or control persons,
                  and

              

      

       

      
        	
                 

              	
                (B)

              	
                have
                  acted for or been retained personally or otherwise as an employee,
                  executive officer, director, associate or partner of a person that has
                  acted for or been retained by the issuer or any of its directors,
                  executive officers, founders or control persons within the previous
                  12
                  months;

              

      

       

      
        	
                 

              	
                (i)

              	
                “executive
                  officer” means, for the Corporation, an individual who
                  is:

              

      

       

      
        	
                 

              	
                (i)

              	
                a
                  chair, vice-chair or president;

              

      

       

      
        	
                 

              	
                (ii)

              	
                a
                  vice-president in charge of a principal business unit, division
                  or
                  function including sales, finance or
                  production;

              

      

       

      
        	
                 

              	
                (iii)

              	
                an
                  officer of the Corporation or any of its subsidiaries and who performs
                  a
                  policy-making function in respect of the Corporation;
                  or

              

      

       

      
        	
                 

              	
                (iv)

              	
                performing
                  a policy-making function in respect of the
                  Corporation;

              

      

       

      
        	
                 

              	
                (j)

              	
                “financial
                  assets” means:

              

      

       

      
        	
                 

              	
                (i)

              	
                cash;

              

      

       

      
        	
                 

              	
                (ii)

              	
                securities;
                  or

              

      

       

      
        	
                 

              	
                (iii)

              	
                a
                  contract of insurance, a deposit or an evidence of a deposit that
                  is not a
                  security for the purposes of securities
                  legislation;

              

      

       

      
        	
                 

              	
                (k)

              	
                “foreign
                  jurisdiction” means a country other than Canada or a political
                  subdivision of a country other than
                  Canada;

              

      

       

      

       

      
        
          
          

        

        
          
          

          
            

          

        

        
          
          

        

      

      	 	
              A-5

            	
              Canada
                - BC, AB, ON, QB

            

       

       

      
        	
                 

              	
                (l)

              	
                “founder”
                  means, in respect of an issuer, a person
                  who,

              

      

       

      
        	
                 

              	
                (i)

              	
                acting
                  alone, in conjunction, or in concert with one or more persons,
                  directly or
                  indirectly, takes the initiative in founding, organizing or substantially
                  reorganizing the business of the issuer,
                  and

              

      

       

      
        	
                 

              	
                (ii)

              	
                at
                  the time of the trade is actively involved in the business of the
                  issuer;

              

      

       

      
        	
                 

              	
                (m)

              	
                “fully
                  managed account” means an account of a client for which a person
                  makes the investment decisions if that person has full discretion
                  to trade
                  in securities for the account without requiring the client’s express
                  consent to a transaction;

              

      

       

      
        	
                 

              	
                (n)

              	
                “individual”
                  means a natural person, but does not
                  include

              

      

       

      
        	
                 

              	
                (i)

              	
                a
                  partnership, unincorporated association, unincorporated syndicate,
                  unincorporated organization or a trust,
                  or

              

      

       

      
        	
                 

              	
                (ii)

              	
                a
                  natural person in the person’s capacity as trustee, executor,
                  administrator or other legal
                  representative;

              

      

       

      
        	
                 

              	
                (o)

              	
                “investment
                  fund” means a mutual fund or a non-redeemable investment fund,
                  and, for greater certainty in British Columbia, includes an EVCC
                  and a
                  VCC, both as defined in National Instrument 81-106 Investment Fund
                  Continuous Disclosure;

              

      

       

      
        	
                 

              	
                (p)

              	
                “jurisdiction”
                  means a province or territory of Canada except when used in the
                  term
                  foreign jurisdiction;

              

      

       

      
        	
                 

              	
                (q)

              	
                “mutual
                  fund” includes an issuer of securities that entitles the holder
                  to receive on demand or within a specified period after demand,
                  an amount
                  computed by reference to the value of a proportionate interest
                  in the
                  whole or in part of the net assets, including a separate fund or
                  trust
                  account, of the issuer of the
                  securities;

              

      

       

      
        	
                 

              	
                (r)

              	
                “NI 45-106”
                  means National Instrument 45-106 Prospectus and Registration
                  Exemptions;

              

      

       

      
        	
                 

              	
                (s)

              	
                “non-redeemable
                  investment fund” means an
                  issuer,

              

      

       

      
        	
                 

              	
                (i)

              	
                whose
                  primary purpose is to invest money provided by its
                  securityholders;

              

      

       

      
        	
                 

              	
                (ii)

              	
                that
                  does not invest for the purpose of exercising or seeking to exercise
                  effective control of an issuer, other than an issuer that is a
                  mutual fund
                  or a non-redeemable investment fund or for the purpose of being
                  actively
                  involved in the management of any issuer in which it invests, other
                  than
                  an issuer that is a mutual fund or a non-redeemable investment
                  fund;
                  and

              

      

       

      
        	
                 

              	
                (iii)

              	
                that
                  is not a mutual fund;

              

      

       

      
        	
                 

              	
                (t)

              	
                “person”
                  includes:

              

      

       

      
        	
                 

              	
                (i)

              	
                an
                  individual;

              

      

       

      
        	
                 

              	
                (ii)

              	
                a
                  corporation;

              

      

       

      
        	
                 

              	
                (iii)

              	
                a
                  partnership, trust, fund and an association, syndicate, organization
                  or
                  other organized group of persons, whether incorporated or not;
                  and

              

      

       

      
        
          
          

        

        
          
          

          
            

          

        

        
          
          

        

      

      	 	
              A-6

            	
              Canada
                - BC, AB, ON, QB

            

       

       

      
        	
                 

              	
                (iv)

              	
                an
                  individual or other person in that person’s capacity as a trustee,
                  executor, administrator or personal or other legal
                  representative;

              

      

       

      
        	
                 

              	
                (u)

              	
                “related
                  liabilities” means:

              

      

       

      
        	
                 

              	
                (i)

              	
                liabilities
                  incurred or assumed for the purpose of financing the acquisition
                  or
                  ownership of financial assets; or

              

      

       

      
        	
                 

              	
                (ii)

              	
                liabilities
                  that are secured by financial
                  assets;

              

      

       

      
        	
                 

              	
                (v)

              	
                “Schedule
                  III bank” means an authorized foreign bank named in
                  Schedule III of the Bank Act
                  (Canada);

              

      

       

      
        	
                 

              	
                (w)

              	
                “spouse”
                  means, an individual who:

              

      

       

      
        	
                 

              	
                (i)

              	
                is
                  married to another individual and is not living separate and apart
                  within
                  the meaning of the Divorce Act (Canada), from the other
                  individual;

              

      

       

      
        	
                 

              	
                (ii)

              	
                is
                  living with another individual in a marriage-like relationship,
                  including
                  a marriage-like relationship between individuals of the same gender;
                  or

              

      

       

      
        	
                 

              	
                (iii)

              	
                in
                  Alberta, is an individual referred to in paragraph (i) or (ii), or is
                  an adult interdependent partner within the meaning of the Adult
                  Interdependent Relationships Act (Alberta);
                  and

              

      

       

      
        	
                 

              	
                (x)

              	
                “subsidiary”
                  means an issuer that is controlled directly or indirectly by another
                  issuer and includes a subsidiary of that
                  subsidiary.

              

      

       

      All
        monetary references in this Schedule A are in Canadian
        dollars.

       

      

       

      

       

      

       

      

       

      

       

      

       

      

       

      

       

      
        
          
          

        

        
          
          

          
            

          

        

        
          
          

        

      

      	 	
              B-1

            	
              Canada
                - BC, AB, ON, QB

            

       

       

      SCHEDULE
        B

       

      CLOSE
        PERSONAL FRIEND / CLOSE BUSINESS ASSOCIATE QUESTIONNAIRE

       

      To
        be
        completed by Subscribers to whom section 7(g)(ii)(D), (E) or (F) of the
        Subscription Agreement applies.

       

      
         

        
          

        

      

      Name
        of
        director, executive officer, control person or founder

       

       

      
        

      

      Length
        of
        relationship

       

      

      
        

        Details of relationship or prior business dealings

       

      
        

      

       

      
 

      
        

      

       

      
 

      
        

      

       

      
 

      
        

      

       

      
 

      
        
 

       

      The
        undersigned understands that the Corporation is relying on this information
        in
        determining to sell securities to the undersigned in a manner exempt from
        the
        registration and prospectus requirements of applicable securities
        laws.

       

      Dated:    _________________________,
        2007

      
        	 	
                 

                
                  

                

                Print
                  name of Subscriber

              
	 	
              
	 	
                By:

              	
                
                  

                  Signature

              
	 	 	
                 

                
                  

                

                Print
                  name of Signatory (if different from
                  Subscriber)

              
	 	 	
                 

                
                  

                

                Title

              

      

      

       

      
        
          
          

        

        
          
          

          
            

          

        

        
          
          

        

      

      	 	
              C-1

            	
              Canada
                - BC, AB, ON, QB

            

      

      

      SCHEDULE
        C

       

      NOTE:  IF
        YOU HAVE ALREADY COMPLETED THIS FORM FOR ANOTHER TRANSACTION
        PLEASE

       

      INDICATE
        IN THE FIRST QUESTION THAT IT IS ALREADY ON FILE WITH THE
        EXCHANGE.

       

      
        	 	
                 

                FORM
                  4C

                CORPORATE
                  PLACEE REGISTRATION FORM

              	
                

              

      

      

       

      Where
        subscribers to a Private
        Placement are not individuals, the following information about the placee
        must
        be provided.  This Form will remain on file with the
        Exchange.  The corporation, trust, portfolio manager or other entity
        (the “Placee”) need only file it on one time basis, and it will be referenced
        for all subsequent Private Placements in which it participates.  If
        any of the information provided in this Form changes, the Placee must notify
        the
        Exchange prior to participating in further placements with Exchange listed
        companies.  If as a result of the Private Placement, the Placee
        becomes an Insider of the Issuer, Insiders of the Placee are reminded that
        they
        must file a Personal Information Form (2A) or, if applicable, Declarations,
        with
        the Exchange.

       

      

       

      
        	
                1.

              	
                Placee
                  Information:

              

      

       

      
        	
                (a)

              	
                Name:  __________________________________________________________________

              

      

       

      
        	
                (b)

              	
                Complete
                  Address:
                    ________________________________________________________

              

      

       

      
        	
                 

              	
                 ________________________________________________________________________

              

      

       

      
        	
                (c)

              	
                Jurisdiction
                  of Incorporation or Creation:
                   _________________________________________

              

      

       

      
        	
                2.       
                   (a)

              	
                Is
                  the Placee purchasing securities as a portfolio manager (Yes/No)?
                  __________

              

      

       

      
        	
                 

              	
                (b)

              	
                Is
                  the Placee carrying on business as a portfolio manager outside
                  of Canada
                  (Yes/No)? __________

              

      

       

      
        	
                3.

              	
                If
                  the answer to 2(b) above was “Yes”, the undersigned certifies
                  that:

              

      

       

      
        	
                 

              	
                (a)

              	
                It
                  is purchasing securities of an Issuer on behalf of managed accounts
                  for
                  which it is making the investment decision to purchase the securities
                  and
                  has full discretion to purchase or sell securities for such accounts
                  without requiring the client’s express consent to a
                  transaction;

              

      

       

      
        	
                 

              	
                (b)

              	
                it
                  carries on the business of managing the investment portfolios of
                  clients
                  through discretionary authority granted by those clients (a “portfolio
                  manager” business) in ________________ [jurisdiction], and it is permitted
                  by law to carry on a portfolio manager business in that
                  jurisdiction;

              

      

       

      
        	
                 

              	
                (c)

              	
                it
                  was not created solely or primarily for the purpose of purchasing
                  securities of the Issuer;

              

      

       

      
        	
                 

              	
                (d)

              	
                the
                  total asset value of the investment portfolios it manages on behalf
                  of
                  clients is not less than $20,000,000;
                  and

              

      

       

      
        	
                 

              	
                (e)

              	
                it
                  has no reasonable grounds to believe, that any of the directors,
                  senior
                  officers and other insiders of the Issuer, and the persons that
                  carry on
                  investor relations activities for the Issuer has a beneficial interest
                  in
                  any of the managed accounts for which it is
                  purchasing.

              

      

       

      
        
          
          

        

        
          
          

          
            

          

        

        
          
          

        

      

      	 	
              C-2

            	
              Canada
                - BC, AB, ON, QB

            

      

       

      
        	
                4.

              	
                If
                  the answer to 2(a). above was “No”, please provide the names and addresses
                  of control persons of the Placee:

              

      

       

      
        	
                Name

              	
                City

              	
                Province
                  or State

              	
                Country

                 

              
	 	 	 	
                 

                 

              
	 	 	 	
                 

                 

              
	 	 	 	
                 

                 

              

      

       

      The
        undersigned acknowledges that it is bound by the provisions of applicable
        Securities Law, including provisions concerning the filing of insider reports
        and reports of acquisitions (See for example, sections 87 and 111 of the
Securities Act (British Columbia) and sections 176 and 182 of the
Securities Act (Alberta).

       

      Acknowledgement
        - Personal Information

       

      “Personal
        Information” means any information about an identifiable individual, and
        includes information contained in sections 1, 2 and 4, as applicable, of
        this Form.

       

      The
        undersigned hereby acknowledges and agrees that it has obtained the express
        written consent of each individual to:

       

      
        	
                (a)

              	
                the
                  disclosure of Personal Information by the undersigned to the Exchange
                  (as
                  defined in Appendix 6B) pursuant to this Form;
                  and

              

      

       

      
        	
                (b)

              	
                the
                  collection, use and disclosure of Personal Information by the Exchange
                  for
                  the purposes described in Appendix 6B or as otherwise identified by
                  the Exchange, from time to time.

              

      

       

      Dated
        at
        _________________________ on
        ______________________________________.

       

      
        	 	
                 

                
                  

                

                (Name
                  of Purchaser - please print)

              
	 	 
	 	 
	 	
                
                  

                  (Authorized Signature)

              
	 	 
	 	 
	 	
                
                  

                  (Official Capacity - please print)

              
	 	 
	 	 
	 	
                
                  

                  (please print name of individual whose signature appears
                  above)

              

      

      

      

      THIS
        IS
        NOT A PUBLIC DOCUMENTkodiaksb2ex10-5.htm

    
      

      

    

      
      Exhibit
        10.5

       

   

    AGENCY
      AGREEMENT

     

    September 28,
      2007

     

    Kodiak
      Energy, Inc.

    Suite
      460, 734 – 7th Avenue
      SW

    Calgary
      AB  T2P 3P6

     

    
      	
              Attention:

            	
              Mr. Mark
                Hlady

            

    

    Chairman
      and Chief Executive Officer

     

    Dear
      Sir:

     

    
      	
              Re:

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

            

    

     

    Research
      Capital Corporation (the “Agent”) understands that Kodiak
      Energy, Inc. (the “Corporation”) proposes to issue and sell up
      to 2,700,000 common shares of the Corporation (the “Offered Common
      Shares”) and up to 2,250,000 common shares of the Corporation issued on
      a “flow-through” basis pursuant to the Tax Act (as defined below) (the
“Flow-Through Shares”).

     

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

     

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

     

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

     

    

     

    

    
      
        
           

        

        
           

          
            

          

        

        
           

        

      

    

    -
      2
      -

     

     

    The
      Corporation hereby grants to the Agent an option (the “Over-Allotment
      Option”), at the Agent’s election exercisable at any time and from time
      to time up to the Closing Time, to arrange for the issuance and sale of up
      to an
      additional 1,400,000 Offered Common Shares (the “Over-Allotment
      Shares”) for the purpose of covering over-allotments, if any, at the
      purchase price of US$2.50 per Over-Allotment Share.

     

    
      	
              1.

            	
              Definitions

            

    

     

    In
      this
      Agreement:

     

    
      	
               

            	
              (a)

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

            

    

     

    
      	
               

            	
              (b)

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

            

    

     

    
      	
               

            	
              (c)

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

            

    

     

    
      	
               

            	
              (d)

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

            

    

     

    
      	
               

            	
              (e)

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

            

    

     

    
      	
               

            	
              (f)

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

            

    

     

    
      	
               

            	
              (g)

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

            

    

     

    

    
      
        
           

        

        
           

          
            

          

        

        
           

        

      

    

    - 3
      -

     

    

    
      	
               

            	
              (h)

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

            

    

     

    
      	
               

            	
              (i)

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

            

    

     

    
      	
               

            	
              (j)

            	
              “CRA”
                means the Canada Revenue Agency;

            

    

     

    
      	
               

            	
              (k)

            	
              “Closing
                Date” means September 27, 2007 or such other date as the
                Agent and the Corporation may agree and, as the context requires,
                such
                subsequent dates as the Agent and the Corporation agree for the purpose
                of
                completing subsequent closings;

            

    

     

    
      	
               

            	
              (l)

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

            

    

     

    
      	
               

            	
              (m)

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

            

    

     

    
      	
               

            	
              (n)

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

            

    

     

    
      	
               

            	
              (o)

            	
              “Corporation”
                means Kodiak Energy, Inc.;

            

    

     

    
      	
               

            	
              (p)

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

            

    

     

    
      	
               

            	
              (q)

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

            

    

     

    

    
      
        
           

        

        
           

          
            

          

        

        
           

        

      

    

    -
      4
      -

     

     

    
      	
               

            	
               (r)

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

            

    

     

    
      	
               

            	
              (s)

            	
              “Documents”
                means, collectively:

            

    

     

    
      	
               

            	
              (i)

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

            

    

     

    
      	
               

            	
              (ii)

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

            

    

     

    
      	
               

            	
              (iii)

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

            

    

     

    
      	
               

            	
              (iv)

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

            

    

     

    
      	
               

            	
              (v)

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

            

    

     

    
      	
               

            	
              (vi)

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

            

    

     

    
      	
               

            	
              (vii)

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

            

    

     

    
      	
               

            	
              (viii)

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

            

    

     

    

    
      
        
           

        

        
           

          
            

          

        

        
           

        

      

    

    -
      5
      -

     

     

    
      	
               

            	
               (t)

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

            

    

     

    
      	
               

            	
              (u)

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

            

    

     

    
      	
               

            	
              (v)

            	
              “Exchange”
                means the TSX Venture Exchange
                Inc.;

            

    

     

    
      	
               

            	
              (w)

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

            

    

     

    
      	
               

            	
              (i)

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

            

    

     

    
      	
               

            	
              (ii)

            	
              December 31,
                2008;

            

    

     

    
      	
               

            	
              (x)

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

            

    

     

    
      	
               

            	
              (y)

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

            

    

     

    
      	
               

            	
              (z)

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

            

    

     

    
      	
               

            	
              (aa)

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

            

    

     

    
      	
               

            	
              (bb)

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

            

    

     

    
      	
               

            	
              (cc)

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

            

    

     

    
      	
            	
              (dd)

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

            

    

     

    
      	
               

            	
              (ee)

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

            

    

     

    
      	
               

            	
              (ff)

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

            

    

     

    

    
      
        
           

        

        
           

          
            

          

        

        
           

        

      

    

    -
      6
      -

    

     

    
      	
            	
               (gg)

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

            

    

     

    
      	
               

            	
              (hh)

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

            

    

     

    
      	
               

            	
              (ii)

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

            

    

     

    
      	
               

            	
              (jj)

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

            

    

     

    
      	
               

            	
              (kk)

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

            

    

     

    
      	
               

            	
              (ll)

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

            

    

     

    
      	
            	
              (mm)

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

            

    

     

    
      	
               

            	
              (nn)

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

            

    

     

    
      	
               

            	
              (oo)

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

            

    

     

    
      	
            	
              (pp)

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

            

    

     

    
      	
               

            	
              (qq)

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

            

    

     

    
      	
               

            	
              (rr)

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

            

    

     

    

    
      
        
           

        

        
           

          
            

          

        

        
           

        

      

    

    -
      7
      -

    

     

    
      	
               

            	
               (ss)

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

            

    

     

    
      	
               

            	
              (tt)

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

            

    

     

    
      	
            	
              (uu)

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

            

    

     

    
      	
               

            	
              (vv)

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

            

    

     

    
      	
            	
              (ww)

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

            

    

     

    
      	
               

            	
              (xx)

            	
              “Thunder
                Acquisition” means the acquisition by the Corporation on
                September 28, 2007 of certain petroleum and natural gas rights from
                Thunder River Energy Inc. pursuant to the Thunder
                Agreement;

            

    

     

    
      	
               

            	
              (yy)

            	
              “Thunder
                Agreement” means the Agreement of Purchase and Sale dated
                September 28, 2007 between the Corporation and Thunder River Energy
                Inc. in respect of the Thunder
                Acquisition;

            

    

     

    
      	
               

            	
              (zz)

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

            

    

     

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

     

    

    
      
        
           

        

        
           

          
            

          

        

        
           

        

      

    

    -
      8
      -

    

     

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

     

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

     

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

     

    
      	
            	
              Schedule
“A“
-

            	
              Form
                of Agent’s Warrants

            

    

    

    
      	
              2.

            	
              Corporation’s
                Covenants as to Issuance

            

    

     

    The
      Corporation agrees:

     

    
      	
               

            	
              (a)

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

            

    

     

    
      	
               

            	
              (b)

            	
              to
                grant the Over-Allotment Option to the
                Agent;

            

    

     

    
      	
               

            	
              (c)

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

            

    

     

    
      	
               

            	
              (d)

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

            

    

     

    
      	
               

            	
              (e)

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

            

    

     

    

    
      
        
           

        

        
           

          
            

          

        

        
           

        

      

    

    -
      9
      -

    

     

    
      	
               

            	
               (f)

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

            

    

     

    
      	
               

            	
              (g)

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

            

    

     

    
      	
               

            	
              (h)

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

            

    

     

    
      	
               

            	
              (i)

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

            

    

     

    

    
      
        
           

        

        
           

          
            

          

        

        
           

        

      

    

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      10
      -

    

     

    
      	
              3.

            	
              Corporation’s
                Covenants as to Changes

            

    

     

    The
      Corporation agrees that:

     

    
      	
               

            	
              (a)

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

            

    

     

    
      	
               

            	
              (i)

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

            

    

     

    
      	
               

            	
              (ii)

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

            

    

     

    
      	
               

            	
              (iii)

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

            

    

     

    
      	
               

            	
              (iv)

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

            

    

     

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

     

    
      	
               

            	
              (b)

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

            

    

     

    
      	
               

            	
              (i)

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

            

    

     

    

    
      
        
           

        

        
           

          
            

          

        

        
           

        

      

    

    -
      11
      -

    

     

    
      	
               

            	
               (ii)

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

            

    

     

    
      	
               

            	
              (iii)

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

            

    

     

    
      	
               

            	
              (c)

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

            

    

     

    
      	
              4.

            	
              Corporation’s
                Other Covenants

            

    

     

    The
      Corporation agrees:

     

    
      	
               

            	
              (a)

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

            

    

     

    
      	
               

            	
              (b)

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

            

    

     

    
      	
               

            	
              (c)

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

            

    

     

    

    
      
        
           

        

        
           

          
            

          

        

        
           

        

      

    

    -
      12
      -

    

     

    
      	
               

            	
               (d)

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

            

    

     

    
      	
               

            	
              (e)

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

            

    

     

    
      	
               

            	
              (f)

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

            

    

     

    
      	
               

            	
              (g)

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

            

    

     

    
      	
               

            	
              (h)

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

            

    

     

    
      	
               

            	
              (i)

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

            

    

     

    
      	
               

            	
              (j)

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

            

    

     

    
      	
               

            	
              (k)

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

            

    

     

    

    
      
        
           

        

        
           

          
            

          

        

        
           

        

      

    

    -
      13
      -

    

     

    
      	
               

            	
               (l)

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

            

    

     

    
      	
               

            	
              (m)

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

            

    

     

    
      	
               

            	
              (n)

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

            

    

     

    

    
      
        
           

        

        
           

          
            

          

        

        
           

        

      

    

    -
      14
      -

    

     

    
      	
               

            	
               (o)

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

            

    

     

    
      	
               

            	
              (p)

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

            

    

     

    
      	
               

            	
              (q)

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

            

    

     

    
      	
              5.

            	
              Agent’s
                Covenants

            

    

     

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

     

    
      	
               

            	
              (a)

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

            

    

     

    
      	
               

            	
              (b)

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

            

    

     

    
      	
               

            	
              (c)

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

            

    

     

    
      	
               

            	
              (d)

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

            

    

     

    
      	
               

            	
              (e)

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

            

    

     

    

    
      
        
           

        

        
           

          
            

          

        

        
           

        

      

    

    -
      15
      -

    

     

    
      	
               

            	
               (f)

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

            

    

     

    
      	
               

            	
              (g)

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

            

    

     

    
      	
               

            	
              (h)

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

            

    

     

    
      	
               

            	
              (i)

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

            

    

     

    
      	
              6.

            	
              Representations
                and Warranties of the
                Corporation

            

    

     

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

     

    
      	
               

            	
              (a)

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

            

    

     

    
      	
               

            	
              (b)

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

            

    

     

    
      	
               

            	
              (c)

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

            

    

     

    

    
      
        
           

        

        
           

          
            

          

        

        
           

        

      

    

    -
      16
      -

    

     

    
      	
               

            	
               (d)

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

            

    

     

    
      	
               

            	
              (e)

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

            

    

     

    
      	
               

            	
              (f)

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

            

    

     

    
      	
               

            	
              (g)

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

            

    

     

    
      	
               

            	
              (h)

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

            

    

     

    
      	
               

            	
              (i)

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

            

    

     

    

    
      
        
           

        

        
           

          
            

          

        

        
           

        

      

    

    -
      17
      -

    

     

    
      	
               

            	
               (j)

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

            

    

     

    
      	
               

            	
              (i)

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

            

    

     

    
      	
               

            	
              (ii)

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

            

    

     

    
      	
               

            	
              (iii)

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

            

    

     

    
      	
               

            	
              (iv)

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

            

    

     

     

     

     

     

    

    
      
        
           

        

        
           

          
            

          

        

        
           

        

      

    

    -
      18
      -

    

     

    
      	
               

            	
               (v)

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

            

    

     

    
      	
               

            	
              (vi)

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

            

    

     

    
      	
               

            	
              (vii)

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

            

    

     

    
      	
               

            	
              (viii)

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

            

    

     

    
      	
               

            	
              (k)

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

            

    

     

    
      	
               

            	
              (l)

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

            

    

     

    

    
      
        
           

        

        
           

          
            

          

        

        
           

        

      

    

    -
      19
      -

    

     

    
      	
               

            	
               (m)

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

            

    

     

    
      	
               

            	
              (n)

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

            

    

     

    
      	
               

            	
              (o)

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

            

    

     

    
      	
               

            	
              (p)

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

            

    

     

    
      	
               

            	
              (q)

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

            

    

     

    

    
      
        
           

        

        
           

          
            

          

        

        
           

        

      

    

    -
      20
      -

    

     

    
      	
               

            	
               (r)

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

            

    

     

    
      	
               

            	
              (s)

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

            

    

     

    
      	
               

            	
              (t)

            	
              the
                authorized capital of the Corporation consists of 300,000,000 with
                par
                value of US$0.001 per share, of which prior to the issuance of the
                Offered
                Securities, 93,284,828 Common Shares are outstanding, which shares
                are validly issued and fully paid and non-assessable
                shares;

            

    

     

    
      	
               

            	
              (u)

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

            

    

     

    
      	
               

            	
              (i)

            	
              stock
                options to acquire up to 2,035,000 Common Shares at prices ranging
                from US$1.28 to US$2.74 per share until August 1, 2010, currently
                issued to directors, officers, employees and consultants of the
                Corporation; and

            

    

     

    
      	
               

            	
              (ii)

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

            

    

     

    
      	
               

            	
              (v)

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

            

    

     

    

    
      
        
           

        

        
           

          
            

          

        

        
           

        

      

    

    -
      21
      -

    

     

    
      	
               

            	
               (w)

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

            

    

     

    
      	
               

            	
              (x)

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

            

    

     

    
      	
               

            	
              (y)

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

            

    

     

    
      	
               

            	
              (z)

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

            

    

     

    
      	
               

            	
              (aa)

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

            

    

     

    

    
      
        
           

        

        
           

          
            

          

        

        
           

        

      

    

    -
      22
      -

    

     

    
      	
            	
               (bb)

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

            

    

     

    
      	
               

            	
              (cc)

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

            

    

     

    
      	
            	
              (dd)

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

            

    

     

    
      	
               

            	
              (ee)

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

            

    

     

    
      	
               

            	
              (ff)

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

            

    

     

    

    
      
        
           

        

        
           

          
            

          

        

        
           

        

      

    

    -
      23
      -

    

     

    
      	
            	
               (gg)

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

            

    

     

    
      	
               

            	
              (hh)

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

            

    

     

    
      	
               

            	
              (ii)

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

            

    

     

    

    
      
        
           

        

        
           

          
            

          

        

        
           

        

      

    

    -
      24
      -

    

     

    
      	
               

            	
               (jj)

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

            

    

     

    
      	
               

            	
              (kk)

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

            

    

     

    
      	
               

            	
              (ll)

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

            

    

     

    
      	
            	
              (mm)

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

            

    

     

    
      	
               

            	
              (nn)

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

            

    

     

    
      	
               

            	
              (oo)

            	
              although
                it does not warrant title:

            

    

     

    

    
      
        
           

        

        
           

          
            

          

        

        
           

        

      

    

    -
      25
      -

    

     

    
      	
               

            	
               (i)

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

            

    

     

    
      	
               

            	
              (ii)

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

            

    

     

    
      	
            	
              (pp)

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

            

    

     

    
      	
               

            	
              (qq)

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

            

    

     

    
      	
               

            	
              (rr)

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

            

    

     

    
      	
               

            	
              (ss)

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

            

    

     

    
      	
               

            	
              (tt)

            	
              the
                Corporation currently has no Swaps
                outstanding;

            

    

     

    

    
      
        
           

        

        
           

          
            

          

        

        
           

        

      

    

    -
      26
      -

    

     

    
      	
            	
               (uu)

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

            

    

     

    
      	
               

            	
              (vv)

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

            

    

     

    
      	
            	
              (ww)

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

            

    

     

    
      	
               

            	
              (xx)

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

            

    

     

    
      	
               

            	
              (yy)

            	
              the
                Corporation has not entered into any agreements or made any covenants
                with
                any parties with respect to the renunciation of CEE or CDE, which
                amounts
                have not been fully expended and renounced as required
                thereunder;

            

    

     

    
      	
               

            	
              (zz)

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

            

    

     

    
      	
            	
              (aaa)

            	
              the
                Corporation has not entered into any agreements or made any covenants
                with
                any parties that would restrict the Corporation from entering into
                the
                Flow-Through Subscription Agreements and agreeing to incur and renounce
                Qualifying Expenditures in accordance with the Flow-Through Subscription
                Agreements, nor that would require the prior renunciation to any
                other
                person of Qualifying Expenditures prior to the renunciation of the
                aggregate Commitment Amount in favour of the Subscribers and the
                Corporation has no outstanding obligations to incur and renounce
                Qualifying Expenditures to any
                persons;

            

    

     

    

    
      
        
           

        

        
           

          
            

          

        

        
           

        

      

    

    -
      27
      -

    

     

    
      	
            	
               (bbb)

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

            

    

     

    
      	
            	
              (ccc)

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

            

    

     

    
      	
            	
              (ddd)

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

            

    

     

    
      	
            	
              (eee)

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

            

    

     

    

    
      
        
           

        

        
           

          
            

          

        

        
           

        

      

    

    -
      28
      -

    

     

    
      	
            	
               (fff)

            	
              all
                necessary steps, procedures and conditions (including all conditions
                to
                closing pursuant to the Thunder Agreement) have been fulfilled or
                waived
                to close the Thunder Acquisition, subject to US$900,000 being paid
                by the
                Corporation to Thunder River Energy
                Inc.

            

    

     

    
      	
              7.

            	
              Conditions

            

    

     

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

     

    
      	
               

            	
              (a)

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

            

    

     

    
      	
               

            	
              (i)

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

            

    

     

    
      	
               

            	
              (ii)

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

            

    

     

    
      	
               

            	
              (iii)

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

            

    

     

    

    
      
        
           

        

        
           

          
            

          

        

        
           

        

      

    

    -
      29
      -

    

     

    
      	
               

            	
               (iv)

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

            

    

     

    
      	
               

            	
              (v)

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

            

    

     

    and
      additionally, relating to:

     

    
      	
               

            	
              (vi)

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

            

    

     

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

     

    

    
      
        
           

        

        
           

          
            

          

        

        
           

        

      

    

    -
      30
      -

    

     

    
      	
               

            	
               (b)

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

            

    

     

    
      	
               

            	
              (i)

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

            

    

     

    
      	
               

            	
              (ii)

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

            

    

     

    
      	
               

            	
              (iii)

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

            

    

     

    
      	
               

            	
              (iv)

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

            

    

     

    and
      the
      Agent shall have no knowledge to the contrary;

     

    
      	
               

            	
              (c)

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

            

    

     

    
      	
               

            	
              (d)

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

            

    

     

    

    
      
        
           

        

        
           

          
            

          

        

        
           

        

      

    

    -
      31
      -

    

     

    
      	
               

            	
               (e)

            	
              evidence
                satisfactory to the Agent that all necessary steps, procedures and
                conditions (including all conditions to closing pursuant to the Thunder
                Agreement) have been fulfilled or waived to close the Thunder Acquisition,
                subject to US$900,000 being paid by the Corporation to Thunder River
                Energy Inc.; and

            

    

     

    
      	
               

            	
              (f)

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

            

    

     

    
      	
              8.

            	
              Closing

            

    

     

    
      	
               

            	
              (a)

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

            

    

     

    
      	
               

            	
              (i)

            	
              all
                duly executed and properly completed Subscription Agreements;
                and

            

    

     

    
      	
               

            	
              (ii)

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

            

    

     

    against
      delivery by the Corporation:

     

    
      	
               

            	
              (i)

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

            

    

     

    
      	
               

            	
              (ii)

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

            

    

     

    
      	
               

            	
              (iii)

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

            

    

     

    

    
      
        
           

        

        
           

          
            

          

        

        
           

        

      

    

    -
      32
      -

    

     

    
      	
               

            	
               (iv)

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

            

    

     

    
      	
              9.

            	
              Commissions
                and Agent’s Warrants

            

    

     

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

     

    
      	
               

            	
              (a)

            	
              at
                each Closing Time:

            

    

     

    
      	
               

            	
              (i)

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

            

    

     

    
      	
               

            	
              (ii)

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

            

    

     

    
      	
               

            	
              (iii)

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

            

    

     

    
      	
               

            	
              (A)

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

            

    

     

    
      	
               

            	
              (B)

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

            

    

     

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

    

     

    

    
      
        
           

        

        
           

          
            

          

        

        
           

        

      

    

    -
      33
      -

    

     

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

     

    
      	
              10.

            	
              Expenses

            

    

     

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

     

    
      	
               

            	
              (a)

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

            

    

     

    
      	
               

            	
              (b)

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

            

    

     

    
      	
               

            	
              (c)

            	
              fees
                of any stock exchange or Securities
                Commission;

            

    

     

    
      	
               

            	
              (d)

            	
              any
                other filing fees;

            

    

     

    
      	
               

            	
              (e)

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

            

    

     

    
      	
               

            	
              (f)

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

            

    

     

    
      	
              11.

            	
              Waiver

            

    

     

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

     

    
      	
              12.

            	
              Termination
                Events

            

    

     

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

     

    

    
      
        
           

        

        
           

          
            

          

        

        
           

        

      

    

    -
      34
      -

    

     

    
      	
               

            	
               (a)

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

            

    

     

    
      	
               

            	
              (b)

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

            

    

     

    
      	
               

            	
              (c)

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

            

    

     

    
      	
               

            	
              (d)

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

            

    

     

    
      	
               

            	
              (e)

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

            

    

     

    

    
      
        
           

        

        
           

          
            

          

        

        
           

        

      

    

    -
      35
      -

    

     

    
      	
               

            	
               (f)

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

            

    

     

    
      	
               

            	
              (g)

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

            

    

     

    
      	
              13.

            	
              Continuation
                of Termination Right

            

    

     

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

     

    
      	
              14.

            	
              Exercise
                of Termination Right

            

    

     

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

     

    
      	
              15.

            	
              Survival

            

    

     

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

     

    

    
      
        
           

        

        
           

          
            

          

        

        
           

        

      

    

    -
      36
      -

    

     

    
      	
              16.

            	
              Indemnity

            

    

     

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

     

    
      	
               

            	
              (a)

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

            

    

     

    
      	
               

            	
              (b)

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

            

    

     

    
      	
               

            	
              (c)

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

            

    

     

    
      	
               

            	
              (d)

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

            

    

     

    

    
      
        
           

        

        
           

          
            

          

        

        
           

        

      

    

    -
      37
      -

    

     

    
      	
               

            	
               (e)

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

            

    

     

    
      	
               

            	
              (f)

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

            

    

     

    
      	
               

            	
              (g)

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

            

    

     

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

     

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

     

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

     

    

    
      
        
           

        

        
           

          
            

          

        

        
           

        

      

    

    -
      38
      -

    

     

    
      	
              17.

            	
              Notice
                of Indemnity Claim

            

    

     

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

     

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

     

    
      	
               

            	
              (a)

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

            

    

     

    
      	
               

            	
              (b)

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

            

    

     

    
      	
               

            	
              (c)

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

            

    

     

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

     

    

    
      
        
           

        

        
           

          
            

          

        

        
           

        

      

    

    -
      39
      -

    

     

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

     

    
      	
              18.

            	
              Right
                of Contribution

            

    

     

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

     

    
      	
               

            	
              (a)

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

            

    

     

    
      	
               

            	
              (b)

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

            

    

     

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

     

    

    
      
        
           

        

        
           

          
            

          

        

        
           

        

      

    

    -
      40
      -

    

     

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

     

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

     

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

     

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

     

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

     

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

     

    

    
      
        
           

        

        
           

          
            

          

        

        
           

        

      

    

    -
      41
      -

    

     

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

     

    
      	
              19.

            	
              Notices

            

    

     

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

     

    Kodiak
      Energy, Inc.

    Suite 460,
      734 – 7th
      Avenue SW

    Calgary,
      Alberta

    T2P
      3P6

     

    
      	
               

            	
              Attention:

            	
              Mark
                Hlady

            

    

    Chairman
      and Chief Executive Officer

    
      	
               

            	
              Telecopy
                No :

            	
              (403)
                513-2670

            

    

     

    and
      a
      copy to:

     

    Borden
      Ladner Gervais

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

    Calgary,
      Alberta

    T2P
      4H2

     

    
      	
               

            	
              Attention:

            	
              Bruce
                Lawrence

            

    

    
      	
               

            	
              Telecopy
                No:

            	
              (403)
                266-1395

            

    

     

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

     

    Research
      Capital Corporation

    199
      Bay
      Street, Suite 4500

    Commerce
      Court West, Box 368

    Toronto,
      Ontario

    M5L
      1G2

    
      	
               

            	
              Attention:

            	
              Gage
                Jull

            

    

    
      	
               

            	
              Telecopy
                No.:

            	
              (416)
                860-7614

            

    

     

     

    

    
      
        
           

        

        
           

          
            

          

        

        
           

        

      

    

    -
      42
      -

    

     

    and
      a
      copy to:

     

    Stikeman
      Elliott LLP

    4300
      Bankers Hall West

    888
–
      3rd Street
      S.W.

    Calgary,
      Alberta

    T2P
      5C5

     

    
      	
               

            	
              Attention:

            	
              Stuart
                M. Olley

            

    

    
      	
               

            	
              Telecopy
                No:

            	
              (403)
                266-9034

            

    

     

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

     

    
      	
               

            	
              (a)

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

            

    

     

    
      	
               

            	
              (b)

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

            

    

     

    
      	
              20.

            	
              Restrictions
                of Offerings

            

    

     

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

     

    

    
      
        
           

        

        
           

          
            

          

        

        
           

        

      

    

    -
      43
      -

    

     

    
      	
              21.

            	
              Alternative
                Transaction

            

    

     

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

     

    
      	
              22.

            	
              Rights
                of First Refusal

            

    

     

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

     

    The
      Corporation agrees that for a period of 18 months following the final
      Closing Date, the Corporation will offer to the Agent (for a period of
      10 Business Days) a right of first refusal to provide lead agent or primary
      investment banking services, as the case may be, to the Corporation or any
      of
      its subsidiaries, and any successor entity to the Corporation’s business or
      assets by reorganization (such as, but not limited to, an income trust) relating
      to any equity or debt, or equity or debt related, financing involving a
      distribution to the public in Canada.  The terms and conditions
      relating to any such services will be outlined in a separate engagement letter,
      underwriting or agency agreement and the fees for such services will be in
      addition to the corporate finance fee and cash commission payable pursuant
      to
      subparagraphs 9(a)(i) and 9(a)(ii) hereunder, will be negotiated separately
      and in good faith and will be consistent with fees paid to investment bankers
      in
      North America for similar services in connection with similar
      transactions.  The Corporation agrees not to engage any other party
      for the services described in this paragraph without first complying with the
      provisions of this paragraph 20 or obtaining the prior written consent of
      the Agent.

     

    

    
      
        
           

        

        
           

          
            

          

        

        
           

        

      

    

    -
      44
      -

    

     

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

     

    
      	
              23.

            	
              Relationship
                between the Corporation and the
                Agent

            

    

     

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

     

    
      	
              24.

            	
              Severance

            

    

     

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

     

    
      	
              25.

            	
              Trust

            

    

     

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

     

    

    
      
        
           

        

        
           

          
            

          

        

        
           

        

      

    

    -
      45
      -

    

     

    
      	
              26.

            	
              Governing
                Law

            

    

     

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

     

    
      	
              27.

            	
              Time
                of the Essence

            

    

     

    Time
      is
      of the essence of this Agreement.

     

    
      	
              28.

            	
              Counterpart
                Execution

            

    

     

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

     

    
      	
              29.

            	
              Entire
                Agreement

            

    

     

    It
      is
      understood that the terms and conditions of this Agreement supersede any
      previous verbal or written agreement between the Agent and the Corporation
      in
      respect of the offer for sale by the Corporation of Offered Securities,
      including the letter agreement dated August 17, 2007 between the
      Corporation and the Agent.

     

    

     

     

     

     

     

     

    

     

    

    
      
        
           

        

        
           

          
            

          

        

        
           

        

      

    

    -
      46
      -

     

    

     

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

     

    
      	 	
              RESEARCH
                CAPITAL CORPORATION

            
	 	 	 
	 	
              Per:

            	 

    

     

    

     

     

    
      	
              ACCEPTED
                AND AGREED to as of the 28th
                day of
                September, 2007.

            
	
               

              KODIAK
                ENERGY, INC.

            
	
               

              By:

            	 
	 	
              Mark
                Hlady,

              Chairman
                and Chief Executive Officer

            

    

    

     

    

     

    

     

    

     

    

     

    

     

    

     

    

     

    

    
      
        
           

        

        
           

          
            

          

        

        
           

        

      

    

    

    SCHEDULE
      “A“

     

    FORM
      OF AGENT’S WARRANTS

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