Document:

ex4-1.htm

    Exhibit
4.1

     

    REGISTRATION
RIGHTS AGREEMENT

     

    This
REGISTRATION RIGHTS AGREEMENT
(this “Agreement”)
is made as of August 25, 2008, by and among (i) Canadian Superior Energy Inc., a
corporation incorporated under the laws of Canada (the “Company”),
(ii) each person listed on Exhibit A
attached hereto (collectively, the “Initial
Purchasers” and each individually, an “Initial
Purchaser”),
and (iii) each person or entity that subsequently becomes a party to this
Agreement pursuant to, and in accordance with, the provisions of Section 12
hereof (collectively, the “Purchaser
Permitted Transferees”
and each individually an “Purchaser
Permitted Transferee”).

     

    BACKGROUND

     

    A.           The
Company has agreed to issue and sell to the Initial Purchasers, and the Initial
Purchasers have agreed to purchase from the Company: (i) up to an aggregate of
8,750,000 shares
(the “Shares”) of the
Company’s common stock (the “Common Stock”); and (ii)
certain warrants to purchase up to an aggregate of 4,375,000 shares of Common Stock
(the “Warrants”), all
upon the terms and conditions set forth in that certain Securities Purchase
Agreement, dated of even date herewith, by and among the Company and the Initial
Purchasers (the “Securities
Purchase Agreement”). The shares of Common Stock underlying the Warrants
shall be referred to herein as the “Warrant Shares,” and the
Shares, the Warrants and the Warrant Shares shall be referred to herein as the
“Securities.” Other
capitalized terms used herein shall have the respective meanings ascribed
thereto in the Securities Purchase Agreement, unless otherwise defined
herein.

     

    B.           
The terms of the Securities Purchase Agreement provide that it shall be a
condition precedent to the Closing of the transactions contemplated thereunder,
for the Company and the Initial Purchasers to execute and deliver this
Agreement.

     

    AGREEMENT

    

    In
consideration of the premises and mutual covenants contained herein, the parties
hereto hereby agree as follows:

     

    1.           DEFINITIONS.  The
following terms shall have the meanings provided therefor below or elsewhere in
this Agreement as described below:

     

    “Board” shall mean the board of
directors of the Company.

     

    “Purchasers” shall mean,
collectively, the Initial Purchasers and the Purchaser Permitted Transferees;
provided, however that the term
“Purchasers” shall not include any of the Initial Purchasers or any of the
Purchaser Permitted Transferees that ceases to own or hold any
Securities.

     

    “Majority Holders” shall mean,
at the relevant time of reference thereto, those Purchasers holding more than
50% of the Registrable Shares held by all of the Purchasers.

     

    “Qualifying Holder” shall have
the meaning ascribed thereto in Section 12 hereof.

     

    “Registrable Shares” shall
mean: (i) the Shares; and (ii) the Warrant Shares; provided, however, such term shall not,
after the Mandatory Registration Termination Date, include any of the Shares or
Warrant Shares that become or have become eligible for resale without
restrictions pursuant to Rule 144 or pursuant to Regulation S.

     

     

    
      
        
        

      

      
        -1-

        
          

        

      

      
        
        

      

    

     

    “Rule 144” shall mean Rule 144
promulgated under the Securities Act and any successor or substitute rule, law
or provision.

     

    2.         MANDATORY
REGISTRATION.

     

    (a)           Within
30 Business Days after the Closing Date (the “Filing Deadline”), subject to
receipt of all necessary information from the Purchasers after prompt request
from the Company to the Purchasers to provide such information, the Company will
prepare and file with the SEC a registration statement on: (i) with the consent
of the Majority Holders, and if the Company is eligible to use Form F-10, Form
F-10; (ii) if the foregoing clause (i) does not apply, and if the Company is
eligible to use Form F-3, Form F-3; or (iii) if the foregoing clauses (i) and
(ii) do not apply, any other form of registration statement available to the
Company, for the purpose of registering under the Securities Act all of the
Registrable Shares for resale by, and for the account of, the Purchasers, as
selling stockholders thereunder (the “Registration
Statement”).  The Registration Statement shall permit the
Purchasers to offer and sell, on a delayed or continuous basis pursuant to Rule
415 under the Securities Act, any or all of the Registrable
Shares.  The Company agrees to use its reasonable best efforts to
cause the Registration Statement to become effective as soon as practicable
following filing.

     

    (b)           The
Company shall be required to keep the Registration Statement effective until
such date that is the earliest of: (i) the date as of which all of the
Purchasers may sell all of the Registrable Securities covered thereby without
restriction pursuant to Rule 144 (or the successor rule thereto) promulgated
under the Securities Act; (ii) the date when all of the Registrable Shares
registered thereunder shall have been sold; or (iii) the second anniversary of
the date on which such Registration Statement became effective (the “Effectiveness Date” of such
Registration Statement), subject to extension as set forth below (such date, the
“Mandatory Registration
Termination Date” for such Registration Statement).  Following
a the Mandatory Registration Termination Date for any Registration Statement,
the Company shall be entitled to withdraw such Registration Statement, and the
Purchasers shall have no further right to offer or sell any of the Registrable
Shares pursuant thereto (or any prospectus relating thereto).  In the
event that the right of the Purchasers to use a Registration Statement (and the
prospectus relating thereto) is delayed or suspended pursuant to Sections 5(c)
or 11 hereof, the Company shall be required to extend the Mandatory Registration
Termination Date for such Registration Statement beyond the second anniversary
of the Effectiveness Date of such Registration Statement by the same number of
days as such delay or Suspension Period (as defined in Section 11
hereof).

     

    3.         PENALTIES/SUSPENSION OF THE
REGISTRATION STATEMENTS

     

    (a)           If
the Registration Statement is not filed with the SEC on or prior to the Filing
Deadline, then Company will make payments to each Purchaser, as liquidated
damages and not as a penalty, in an amount equal to 1% of the aggregate amount
invested by such Purchaser in the Closing for each 30-calendar day period (or
pro rata portion
thereof) following the Filing Deadline during which no Registration Statement is
filed with respect to the Registrable Shares; provided, however, that in no event
shall the aggregate liquidated damages payable by the Company under this
Agreement to any Purchaser exceed 20% of the aggregate Purchase Price paid by
such Purchaser for all Securities acquired by such Purchaser pursuant to the
Securities Purchase Agreement.  Such payments shall be made to each
Purchaser in cash. The
amounts payable as liquidated damages pursuant to this paragraph shall be paid
in lawful money of the United States within three Business Days of the last day
of each such 30-calendar day period.

     

    (b)           The
Company shall use its reasonable best efforts to have the Registration Statement
declared effective as soon as practicable following filing.  The
Company shall notify the Purchasers as promptly as practicable, and in any
event, within one Business Day, after the Registration 

     

     

    
      
        
        

      

      
        -2-

        
          

        

      

      
        
        

      

    

     

     

    Statement
is declared effective and shall simultaneously provide the Purchasers with
copies of any related prospectus to be used in connection with the sale or other
disposition of the securities covered thereby.  If (A) the
Registration Statement is not declared effective by the SEC within 90 calendar
days following the filing date thereof (or 150 calendar days if reviewed by the
SEC) (for the purposes of this paragraph, the “Effectiveness Deadline” for
such Registration Statement), or (B) after the Registration Statement has been
declared effective by the SEC, sales cannot be made pursuant thereto for any
reason (including without limitation by reason of a stop order, or the Company’s
failure to update the Registration Statement), but excluding the inability of
any Purchaser to sell the Registrable Shares covered thereby due to market
conditions and except as excused pursuant to Section 11 below, and subject
to receipt of all necessary information from the Purchasers after prompt request
from the Company to the Purchasers to provide such information, then the Company
will make pro rata
payments to each Purchaser, as liquidated damages and not as a penalty, in an
amount equal to 1% of the aggregate amount invested by such Purchaser in the
Closing for each 30-calendar day period (or pro rata portion thereof)
following the Effectiveness Deadline during which such Registration Statement
has not been declared effective or cannot be used pursuant to the preceding
clause (B) (for the purposes of this paragraph, the “Blackout Period” for such
Registration Statement); provided, however that in no event
shall the aggregate liquidated damages payable by the Company to any Purchaser
exceed 20% of the aggregate Purchase Price paid by such Purchaser for all
Securities acquired by such Purchaser pursuant to the Securities Purchase
Agreement. The amounts payable as liquidated damages pursuant to this paragraph
shall be paid in lawful money of the United States within three Business Days of
the last day of each 30-calendar day period following the commencement of the
Blackout Period until the termination of the Blackout Period.

     

    (c)           No
Purchaser shall be entitled to a payment pursuant to this Section 3 if
effectiveness of a registration statement has been delayed or a prospectus has
been unavailable as a result of (i) a failure by such Purchaser to promptly
provide on request by the Company the information required under the Securities
Purchase Agreement or this Agreement or requested by the SEC as a condition to
effectiveness of the Registration Statement; (ii) the provision of inaccurate or
incomplete information by such Purchaser; or (iii) a statement or determination
of the SEC that any provision of the rights of the Purchaser under this
Agreement is contrary to the provisions of the Securities Act.

     

    4.         “PIGGYBACK” REGISTRATION
RIGHTS.

     

    (a)           If,
at any time after the Mandatory Registration Termination Date for the
Registration Statement, the Company proposes to register any of its Common Stock
under the Securities Act, whether as a result of a primary or secondary offering
of Common Stock or pursuant to registration rights granted to holders of other
securities of the Company (but excluding in all cases any registrations to be
effected on Forms F-4 or F-8 or other applicable successor Forms), the Company
shall, each such time, give to the Purchasers holding Registrable Shares written
notice of its intent to do so.  Upon the written request of any such
Purchaser given within 20 Business Days after the giving of any such notice by
the Company, the Company shall use its reasonable best efforts to cause to be
included in such registration the Registrable Shares of such selling Purchaser,
to the extent requested to be registered; provided, however that: (i) such
selling Purchaser agrees to sell those of its Registrable Shares to be included
in such registration in the same manner and on the same terms and conditions as
the other shares of Common Stock which the Company proposes to register; and
(ii) if the registration is to include shares of Common Stock to be sold for the
account of the Company or any party exercising demand registration rights
pursuant to any other agreement with the Company, the proposed managing
underwriter does not advise the Company that in its opinion the inclusion of
such selling Purchaser’s Registrable Shares (without any reduction in the number
of shares to be sold for the account of the Company or such party exercising
demand registration rights) is likely to affect materially and adversely the
success of the offering or the price that would be received for any shares of
Common Stock offered, in which case the rights of such selling Purchaser shall
be as provided in Section 4(b) hereof.

     

     

    
      
        
        

      

      
        -3-

        
          

        

      

      
        
        

      

    

     

     

    (b)           If
a registration pursuant to Section 4(a) hereof involves an underwritten offering
and the managing underwriter shall advise the Company in writing that, in its
opinion, the number of shares of Common Stock requested by the Purchasers to be
included in such registration is likely to affect materially and adversely the
success of the offering or the price that would be received for any shares of
Common Stock offered in such offering, then, notwithstanding anything in Section
4(a) to the contrary, the Company shall be required to include in such
registration only the number of shares of Common Stock which the Company is so
advised can be sold in such offering: (i) first, the number of shares of Common
Stock proposed to be included in such registration for the account of the
Company and/or any stockholders of the Company (other than the Purchasers) that
have exercised demand registration rights, in accordance with the priorities, if
any, then existing among the Company and/or such stockholders of the Company
with registration rights (other than the Purchasers); and (ii) second, the
shares of Common Stock requested to be included in such registration by all
other stockholders of the Company who have piggyback registration rights
(including, without limitation, the Purchasers), pro rata among such other
stockholders (including, without limitation, the Purchasers) on the basis of the
number of shares of Common Stock that each of them requested to be included in
such registration.

     

    (c)           In
connection with any offering involving an underwriting of shares, the Company
shall not be required under Section 4 hereof or otherwise to include the
Registrable Shares of any Purchaser therein unless such Purchaser accepts and
agrees to the terms of the underwriting, which shall be reasonable and
customary, as agreed upon between the Company and the underwriters selected by
the Company.

     

    5.         OBLIGATIONS OF THE
PARTIES.  In connection with the Company's obligation under
Section 2 and 4 hereof to file the Registration Statements with the SEC and to
use its reasonable best efforts to cause the Registration Statements to become
effective as soon as practicable, the Company shall, as expeditiously as
reasonably possible:

     

    (a)           Prepare
and file with the SEC such amendments and supplements to the Registration
Statements and the prospectuses used in connection therewith as may be necessary
to comply with the provisions of the Securities Act with respect to the
disposition of all Registrable Shares covered by such Registration
Statements;

     

    (b)           Furnish
to the selling Purchasers such number of copies of each prospectus, including
each preliminary prospectus, in conformity with the requirements of the
Securities Act, and such other documents (including, without limitation,
prospectus amendments and supplements as are prepared by the Company in
accordance with Section 5(a) above) as the selling Purchasers may reasonably
request in order to facilitate the disposition of such selling Purchasers'
Registrable Shares;

     

    (c)           Notify
the selling Purchasers, at any time when a prospectus relating to any
Registration Statement is required to be delivered under the Securities Act, of
the happening of any event as a result of which the prospectus included in or
relating to such Registration Statement contains an untrue statement of a
material fact or omits any fact necessary to make the statements therein not
misleading; and, thereafter, the Company will promptly prepare (and, when
completed, give notice to each selling Purchaser) a supplement or amendment to
such prospectus so that, as thereafter delivered to the purchasers of such
Registrable Shares, such prospectus will not contain an untrue statement of a
material fact or omit to state any fact necessary to make the statements therein
not misleading; provided,
however that upon such notification by the Company, the selling
Purchasers will not offer or sell Registrable Shares until the Company has
notified the selling Purchasers that it has prepared a supplement or amendment
to such prospectus and delivered copies of such supplement or amendment to the
selling Purchasers (it being understood and agreed by the Company that the
foregoing proviso shall in no way diminish or otherwise impair the Company's
obligation to promptly prepare a prospectus amendment 

     

    
      
        
        

      

      
        -4-

        
          

        

      

      
        
        

      

    

     

     

    or
supplement as above provided in this Section 5(c) and deliver copies of same as
above provided in Section 5(b) hereof); and

     

    (d)           Use
its reasonable best efforts to register and qualify the Registrable Shares
covered by the Registration Statements under such other securities or Blue Sky
laws of such states as shall be reasonably appropriate in the opinion of the
Company and the managing underwriters, if any; provided, however that the Company
shall not be required in connection therewith or as a condition thereto to
qualify to do business or to file a general consent to service of process in any
such states or jurisdictions; and provided, further that (notwithstanding
anything in this Agreement to the contrary with respect to the bearing of
expenses) if any jurisdiction in which any of such Registrable Shares shall be
qualified shall require that expenses incurred in connection with the
qualification therein of any such Registrable Shares be borne by the selling
Purchasers, then the selling Purchasers shall, to the extent required by such
jurisdiction, pay their pro
rata share of such qualification expenses.

     

    (e)           Subject
to the terms and conditions of this Agreement, including Section 3 hereof, the
Company shall use its reasonable best efforts to: (i) prevent the issuance of
any stop order or other suspension of effectiveness of any Registration
Statement, or the suspension of the qualification of any of the Registrable
Securities for sale in any jurisdiction in the United States; (ii)  if
such an order or suspension is issued, obtain the withdrawal of such order or
suspension at the earliest practicable moment and notify each holder of
Registrable Securities of the issuance of such order and the resolution thereof
or its receipt of notice of the initiation or threat of any proceeding such
purpose.

     

    (f)           The
Company shall: (i) comply with all requirements of the Financial Industry
Regulatory Authority, the Toronto Stock Exchange and the American Stock Exchange
with regard to the issuance of the Shares and the listing thereof on such
exchange; and (ii) engage a transfer agent and registrar to maintain the
Company's stock ledger for all Shares covered by each Registration Statement not
later than the effective date of such Registration Statement.

     

    6.         FURNISH
INFORMATION.  It shall be a condition precedent to the
obligations of the Company to take any action pursuant to this Agreement that
the selling Purchasers shall furnish to the Company such information regarding
them and the securities held by them as the Company shall reasonably request and
as shall be required in order to effect any registration by the Company pursuant
to this Agreement.  Each Purchaser shall promptly notify the Company
of any changes in the information furnished to the Company.

     

    7.         EXPENSES OF
REGISTRATION.  All expenses incurred in connection with the
registration of the Registrable Shares pursuant to this Agreement (excluding
underwriting, brokerage and other selling commissions and discounts), including
without limitation all registration and qualification and filing fees, printing,
and fees and disbursements of counsel for the Company, shall be borne by the
Company.

     

    8.         DELAY OF
REGISTRATION.  The Purchasers shall not take any action to
restrain, enjoin or otherwise delay any registration as the result of any
controversy which might arise with respect to the interpretation or
implementation of this Agreement.

     

    9.         INDEMNIFICATION.

     

    (a)           To
the extent permitted by law, the Company will indemnify and hold harmless each
selling Purchaser, any investment banking firm acting as an underwriter for the
selling Purchasers, any broker/dealer acting on behalf of any selling Purchasers
and each officer and director of such selling Purchaser, such underwriter, such
broker/dealer and each person, if any, who controls such selling 

     

     

    
      
        
        

      

      
        -5-

        
          

        

      

      
        
        

      

    

     

     

    Purchaser,
such underwriter or broker/dealer within the meaning of the Securities Act,
against any losses, claims, damages or liabilities, joint or several, to which
they may become subject under the Securities Act or otherwise, insofar as such
losses, claims, damages or liabilities (or actions in respect thereof) arise out
of or are based upon any untrue or alleged untrue statement of any material fact
contained in any Registration Statement, in any preliminary prospectus or final
prospectus relating thereto or in any amendments or supplements to such
Registration Statement or any such preliminary prospectus or final prospectus,
or arise out of or are based upon the omission or alleged omission to state
therein a material fact required to be stated therein, or necessary to make the
statements therein not misleading; and will reimburse such selling Purchaser,
such underwriter, broker/dealer or such officer, director or controlling person
for any legal or other expenses reasonably incurred by them in connection with
investigating or defending any such loss, claim, damage, liability or action;
provided, however, that the indemnity
agreement contained in this Section 9(a) shall not apply to amounts paid in
settlement of any such loss, claim, damage, liability or action if such
settlement is effected without the consent of the Company (which consent shall
not be unreasonably withheld), nor shall the Company be liable in any such case
for any such loss, damage, liability or action to the extent that it arises out
of or is based upon: (i) an untrue statement or alleged untrue statement or
omission made in connection with any Registration Statement, any preliminary
prospectus or final prospectus relating thereto or any amendments or supplements
to such Registration Statement or any such preliminary prospectus or final
prospectus, in reliance upon and in conformity with written information
furnished expressly for use in connection with such Registration Statement or
any such preliminary prospectus or final prospectus by such selling Purchaser,
any underwriter for them or controlling person with respect to them; or (ii) any
transaction effected by such selling Purchaser following receipt of a
certificate referred to below in Section 11 relating to a Suspension Period (as
defined in Section 11), which transaction is effected by such selling Purchaser
in violation of Section 11.

     

    (b)           To
the extent permitted by law, each selling Purchaser will, severally and not
jointly, indemnify and hold harmless the Company, each of its directors, each of
its officers who have signed the Registration Statement, each person, if any,
who controls the Company within the meaning of the Securities Act, any
investment banking firm acting as underwriter for the Company or the selling
Purchasers, or any broker/dealer acting on behalf of the Company or any selling
Purchasers, and all other selling Purchasers against any losses, claims, damages
or liabilities to which the Company or any such director, officer, controlling
person, underwriter, or broker/dealer or such other selling Purchaser may become
subject to, under the Securities Act or otherwise, insofar as such losses,
claims, damages or liabilities (or actions in respect thereto) arise out of or
are based upon any untrue or alleged untrue statement of any material fact
contained in any Registration Statement or any preliminary prospectus or final
prospectus, relating thereto or in any amendments or supplements to such
Registration Statement or any such preliminary prospectus or final prospectus,
or arise out of or are based upon the omission or alleged omission to state
therein a material fact required to be stated therein or necessary to make the
statements therein not misleading, in each case to the extent and only to the
extent that such untrue statement or alleged untrue statement or omission or
alleged omission was made in such Registration Statement, in any preliminary
prospectus or final prospectus relating thereto or in any amendments or
supplements to such Registration Statement or any such preliminary prospectus or
final prospectus, in reliance upon and in conformity with written information
furnished by the selling Purchaser expressly for use in connection with such
Registration Statement, or any preliminary prospectus or final prospectus; and
such selling Purchaser will reimburse any legal or other expenses reasonably
incurred by the Company or any such director, officer, controlling person,
underwriter, broker/dealer or other selling Purchaser in connection with
investigating or defending any such loss, claim,
damage, liability or action, provided, however, that the liability
of each selling Purchaser hereunder shall be limited to the proceeds (net of
underwriting discounts and commissions, if any) received by such selling
Purchaser from the sale of Registrable Shares covered by such Registration
Statement; and provided, further that the indemnity
agreement contained in this Section 9(b) shall not apply to amounts paid in
settlement of any such loss, 

     

     

     

    
      
        
        

      

      
        -6-

        
          

        

      

      
        
        

      

    

     

     

    claim,
damage, liability or action if such settlement is effected without the consent
of those selling Purchaser(s) against which the request for indemnity is being
made (which consent shall not be unreasonably withheld).

     

    (c)           Promptly
after receipt by an indemnified party under this Section 9 of notice of the
commencement of any action, such indemnified party will, if a claim in respect
thereof is to be made against any indemnifying party under this Section 9,
notify the indemnifying party in writing of the commencement thereof and the
indemnifying party shall have the right to participate in and, to the extent the
indemnifying party desires, jointly with any other indemnifying party similarly
noticed, to assume at its expense the defense thereof with counsel mutually
satisfactory to the indemnifying parties.  In the event that the
indemnifying party assumes any such defense, the indemnified party may
participate in such defense with its own counsel and at its own expense, provided, however, that the counsel for
the indemnifying party shall act as lead counsel in all matters pertaining to
such defense or settlement of such claim and the indemnifying party shall only
pay for such indemnified party's expenses for the period prior to the date of
its participation on such defense.  The failure to notify an
indemnifying party promptly of the commencement of any such action, if
prejudicial to his ability to defend such action, shall relieve such
indemnifying party of any liability to the indemnified party under this Section
9, but the omission so to notify the indemnifying party will not relieve him of
any liability which he may have to any indemnified party otherwise other than
under this Section 9.

     

    (d)           Notwithstanding
anything to the contrary herein, the indemnifying party shall not be entitled to
settle any claim, suit or proceeding unless in connection with such settlement
the indemnified party receives an unconditional release with respect to the
subject matter of such claim, suit or proceeding and such settlement does not
contain any admission of fault by the indemnified party.

     

    10.       REPORTS UNDER THE EXCHANGE
ACT.  With a view to making available to the Purchasers the
benefits of Rule 144 and any other rule or regulation of the SEC that may at any
time permit the Purchasers to sell the Securities to the public without
registration, the Company agrees to use its reasonable best efforts: (i) to make
and keep public information available as those terms are understood in Rule 144;
(ii) to file with the SEC in a timely manner all reports and other documents
required to be filed by an issuer of securities registered under the Securities
Act or the Exchange Act; (iii) as long as any Purchaser owns any Securities, to
furnish in writing upon such Purchaser's request a written statement by the
Company that it has complied with the reporting requirements of Rule 144 and of
the Securities Act and the Exchange Act, and to furnish to such Purchaser a copy
of the most recent annual or quarterly report of the Company, and such other
reports and documents so filed by the Company as may be reasonably requested in
availing such Purchaser of any rule or regulation of the SEC permitting the
selling of any such Securities without registration; and (iv) undertake any
additional actions reasonably necessary to maintain the availability of any
Registration Statement or the use of Rule 144.

     

    11.       DEFERRAL.
Notwithstanding anything in this Agreement to the contrary, if the Company shall
furnish to the selling Purchasers a certificate signed by the President or Chief
Executive Officer of the Company stating that the Board has made the good faith
determination that either: (A) any event or circumstance has occurred or will
occur, which upon the advice of counsel, necessitates the making of any changes
in any Registration Statement or related prospectus, or any document
incorporated or deemed to be incorporated therein by reference, so that in the
case of such Registration Statement, it will not contain any untrue statement of
a material fact or any omission to state a material fact required to be stated
therein or necessary to make the statements therein not misleading, and that in
the case of the prospectus, it will not contain any untrue statement of a
material fact or any omission to state a material fact required to be stated
therein or necessary to make the statements therein, in the light of the
circumstances under which they were made, not misleading; or (B) (i) continued
use by the selling 

     

     

    
      
        
        

      

      
        -7-

        
          

        

      

      
        
        

      

    

     

     

    Purchasers
of a Registration Statement for purposes of effecting offers or sales of
Registrable Shares pursuant thereto would require, under the Securities Act,
premature disclosure in such Registration Statement (or the prospectus relating
thereto) of material, nonpublic information concerning the Company, its business
or prospects or any proposed material transaction involving the Company; (ii)
such premature disclosure would be materially adverse to the Company, its
business or prospects or any such proposed material transaction or would make
the successful consummation by the Company of any such material transaction
significantly less likely; and (iii) it is therefore essential to suspend the
use by the Purchasers of such Registration Statement (and the prospectus
relating thereto) for purposes of effecting offers or sales of Registrable
Shares pursuant thereto, then the right of the Purchasers to use such
Registration Statement (and the prospectus relating thereto) for purposes of
effecting offers or sales of Registrable Shares pursuant thereto shall be
suspended for a period (the “Suspension Period”) of not
more than 30 calendar days after delivery by the Company of the certificate
referred to above in this Section 11; provided, however that the Company
shall be entitled to no more than two such Suspension Periods during any
12-month period. During the Suspension Period, none of the Purchasers shall
offer or sell, or attempt to offer or sell, any Registrable Shares pursuant to
or in reliance upon the Registration Statement (or the prospectus relating
thereto).  The Company shall use reasonable best efforts to terminate
any Suspension Period as promptly as practicable.

     

    12.       TRANSFER OF REGISTRATION
RIGHTS.  None of the rights of any Purchaser under this
Agreement shall be transferred or assigned to any person unless: (i) such person
is a Qualifying Holder (as defined below); and (ii) such person agrees to become
a party to, and bound by, all of the terms and conditions of, this Agreement by
duly executing and delivering to the Company an Instrument of Adherence in the
form attached as Exhibit B
hereto.  For purposes of this Section 12, the term “Qualifying Holder” shall mean,
with respect to any Purchaser: (i) any partner or member thereof; (ii) any
corporation, partnership or limited liability company controlling, controlled
by, or under common control with, such Purchaser or any partner or member
thereof; or (iii) any other direct transferee from such Purchaser of at least
50% of those Registrable Shares held by such Purchaser.  None of the
rights of any Purchaser under this Agreement shall be transferred or assigned to
any person (including, without limitation, a Qualifying Holder) that acquires
Registrable Shares in the event that and to the extent that such person is
eligible to resell such Registrable Shares without restrictions pursuant to Rule
144 of the Securities Act or may otherwise resell such Registrable Shares
without restrictions pursuant to an exemption from the registration provisions
of the Securities Act.  After any transfer in accordance with this
Section 12, the rights and obligations of a Purchaser as to any transferred
Registrable Shares shall be the rights and obligations of the Purchaser
Permitted Transferee holding such Registrable Shares.

     

    13.       ENTIRE
AGREEMENT.  This Agreement constitutes and contains the entire
agreement and understanding of the parties with respect to the subject matter
hereof, and it also supersedes any and all prior negotiations, correspondence,
agreements or understandings with respect to the subject matter
hereof.

     

    14.       MISCELLANEOUS.

     

    (a)           This
Agreement may not be amended, modified or terminated, and no rights or
provisions may be waived, except with the written consent of the Majority
Holders and the Company.

     

    (b)           THIS
AGREEMENT (INCLUDING ANY CLAIM OR CONTROVERSY ARISING OUT OF OR RELATING TO THIS
AGREEMENT) SHALL BE GOVERNED BY AND CONSTRUED IN ACCORDANCE WITH THE LAWS OF THE
STATE OF NEW YORK, WITHOUT GIVING EFFECT TO CONFLICT OF LAWS PRINCIPLES THAT
WOULD RESULT IN THE APPLICATION OF ANY LAW OTHER THAN THE LAW OF THE STATE OF
NEW YORK.

     

     

    
      
        
        

      

      
        -8-

        
          

        

      

      
        
        

      

    

     

     

    (c)           This
Agreement shall be binding upon and inure to the benefit of the parties hereto
and their respective heirs, personal representatives, successors or assigns
(including any Purchaser Permitted Transferee); provided, however that the terms and
conditions of Section 12 hereof are satisfied. Notwithstanding anything in this
Agreement to the contrary, if at any time any Purchaser shall cease to own any
Purchased Shares, all of such Purchaser's rights under this Agreement shall
immediately terminate.

     

    (d)           Wherever
in this Agreement there is a reference to a specific number of shares of the
Company’s Common Stock, then, upon the occurrence of any subdivision,
combination or stock dividend of such class of stock, the specific number of
shares so referenced in this Agreement shall automatically be proportionally
adjusted to reflect the affect on the outstanding shares of such class by such
subdivision, combination or stock dividend.

     

    (e)           Any
notices, reports or other correspondence (hereinafter collectively referred to
as “correspondence”) required or permitted to be given hereunder shall be sent
by courier (overnight or same day) or telecopy or delivered by hand to the party
to whom such correspondence is required or permitted to be given
hereunder.  The date of giving any notice shall be the date of its
actual receipt.

     

    (i)       All
correspondence to the Company shall be addressed as follows:

     

    Canadian
Superior Energy Inc.

    3200,
500 – 4th Avenue SW

    Calgary,
AB T2P 2V6

    ATTN:
Chief Executive Officer

    

         with a copy
(not constituting notice) addressed to:

     

    Borden
Ladner Gervais LLP

    1000
Canterra Tower

    400
Third Avenue S.W.

    Calgary,
AB T2P 4H2

    ATTN:
John J. Poetker, Esq.

    

    (ii)      All
correspondence to any Purchaser shall be sent to such Purchaser at the address
set forth in Exhibit A, with
a copy (not constituting notice) addressed to:

     

    Howard
Rice Nemerovski Canady Falk & Rabkin

    A
Professional Corporation

    Three
Embarcadero Center

    Seventh
Floor

    San
Francisco, CA 94111

    ATTN:
Mark D. Whatley, Esq.

    

    (f)           Any
person may change the address to which correspondence to it is to be addressed
by notification as provided for herein.

     

    (g)           The
parties acknowledge and agree that in the event of any breach of this Agreement,
remedies at law may be inadequate, and each of the parties hereto shall be
entitled to seek specific performance of the obligations of the other parties
hereto and such appropriate injunctive relief as may be granted by a court of
competent jurisdiction.

     

     

    
      
        
        

      

      
        -9-

        
          

        

      

      
        
        

      

    

     

     

    (h)           This
Agreement may be executed in a number of counterparts, any of which together
shall for all purposes constitute one Agreement, binding on all the parties
hereto notwithstanding that all such parties have not signed the same
counterpart. A facsimile, telecopy or electronic reproduction of this Agreement
may be executed by one or more parties hereto and delivered by such party by
facsimile or by electronic transmission pursuant to which the signature of such
party can be seen. Such execution and delivery shall be considered valid,
binding and effective for all purposes.

     

    [Signature
Pages Follow]

     

    
      
        
        

      

      
        -10-

        
          

        

      

      
        
        

      

    

     

    IN
WITNESS WHEREOF, the parties hereto have executed this Registration Rights
Agreement as of the date and year first above written.

     

    

    
      	 
      	
              CANADIAN
      SUPERIOR ENERGY INC.

            
	 
      	 
      	 
      
	 
      	 
      	 
      
	 
      	
              By:

            	 
      
	 
      	
              Name:

            	
              Craig
      McKenzie

            
	 
      	
              Title:

            	
              Chief
      Executive Officer

            

    

     

     

    
      
        
        

      

      
        
          [SIGNATURE
PAGE TO REGISTRATION RIGHTS
AGREEMENT]

        

        
          

        

      

      
        
        

      

    

     

    IN
WITNESS WHEREOF, the parties hereto have executed this Registration Rights
Agreement as of the date and year first above written.

     

    

    
      	 
      	
              STEELHEAD
      NAVIGATOR MASTER, L.P.

            
	 
      	 
      	 
      	 
      	 
      	 
      	 
      	 
      
	 
      	 
      	
              By:

            	
              STEELHEAD
      OFFSHORE PARTNERS, LLC,

              its
      General Partner

            
	 
      	 
      	
               

            	
              By:

            	
              Steelhead
      Partners, LLC, its sole Member

            
	 
      	 
      	 
      	 
      	 
      	 
      	 
      	 
      
	 
      	 
      	 
      	 
      	 	 
      
	 
      	 
      	 
      	
              By

            	
              Carol
      Lokey, Chief Financial Officer

            

    

     

    
      
        
        

      

      
        
          [SIGNATURE
PAGE TO REGISTRATION RIGHTS AGREEMENT]

        

        
          

        

      

      
        
        

      

    

     

    IN
WITNESS WHEREOF, the parties hereto have executed this Registration Rights
Agreement as of the date and year first above written.

     

    

    

    
      	 
      	
              Buyer:
      Micro Cap Partners, L.P.

            
	 
      	
              By:

            	
              Palo
      Alto Investors, LLC, its general partner

            
	 
      	 
      	 
      
	 
      	 
      	 
      
	 
      	
              By:

            	 
      
	 
      	
              Name:

            	
              Mark
      Shamia

            
	 
      	
              Title:

            	
              Chief
      Operating Officer

            
	 
      	 
      	 
      
	 
      	 
      	 
      
	 
      	
              Buyer:
      UBTI Free, L.P.

            
	 
      	
              By:

            	
              Palo
      Alto Investors, LLC, its general partner

            
	 
      	 
      	 
      
	 
      	 
      	 
      
	 
      	
              By:

            	 
      
	 
      	
              Name:

            	
              Mark
      Shamia

            
	 
      	
              Title:

            	
              Chief
      Operating Officer

            
	 
      	 
      	 
      
	 
      	 
      	 
      
	 
      	
              Buyer:
      Palo Alto Small Cap Master Fund, L.P.

            
	 
      	
              By:

            	
              Palo
      Alto Investors, LLC, its general partner

            
	 
      	 
      	 
      
	 
      	 
      	 
      
	 
      	
              By:

            	 
      
	 
      	
              Name:

            	
              Mark
      Shamia

            
	 
      	
              Title:

            	
              Chief
      Operating Officer

            
	 
      	 
      	 
      
	 
      	 
      	 
      
	 
      	
              Buyer:
      Palo Alto Global Energy Master Fund, L.P.

            
	 
      	
              By:

            	
              Palo
      Alto Investors, LLC, its general partner

            
	 
      	 
      	 
      
	 
      	 
      	 
      
	 
      	
              By:

            	 
      
	 
      	
              Name:

            	
              Mark
      Shamia

            
	 
      	
              Title:

            	
              Chief
      Operating Officer

            

    

     

     

    
      
        
        

      

      
        
          [SIGNATURE
PAGE TO REGISTRATION RIGHTS AGREEMENT]

        

        
          

        

      

      
        
        

      

    

    
 

    IN
WITNESS WHEREOF, the parties hereto have executed this Registration Rights
Agreement as of the date and year first above written.

     

    

    

    
      	 
      	
              TALKOT
      CAPITAL LLC

            
	 
      	 
      	 
      
	 
      	 
      	 
      
	 
      	
              By:

            	 
      
	 
      	
              Name:

            	 
      
	 
      	
              Title:

            	 
      

    

     

     

    
      
        
        

      

      
        
          [SIGNATURE
PAGE TO REGISTRATION RIGHTS AGREEMENT]

        

        
          

        

      

      
        
        

      

    

     

    Exhibit
A

     

    SCHEDULE OF
PURCHASERS

     

    
      	
              Purchaser
      Name and Address

            	 
	
               

              Steelhead
      Navigator Master, L.P.

              1301
      – 1st Avenue, Suite 201

              Seattle,
      WA 98101

               

            	 
	
               

              Palo
      Alto Small Cap Master Fund, L.P.

              470
      University Avenue

              Palo
      Alto, CA 94301

               

            	 
	
               

              Palo
      Alto Global Energy Master Fund, L.P.

              470
      University Avenue

              Palo
      Alto, CA 94301

               

            	 
	
               

              Micro
      Cap Partners, L.P.

              470
      University Avenue

              Palo
      Alto, CA 94301

               

            	 
	
               

              UBTI
      Free, L.P.

              470
      University Avenue

              Palo
      Alto, CA 94301

               

            	 
	
               

              Talkot
      Capital LLC

              2400
      Bridgeway, Suite 300

              Sausalito,
      CA 94965-2851

            	 

    

    

    

    
      
        
        

      

      
        A-1

        
          

        

      

      
        
        

      

    

     

    

     

    EXHIBIT
B

     

    INSTRUMENT OF
ADHERENCE

     

    Reference
is hereby made to that certain Registration Rights Agreement, dated as of August
25, 2008, among Canadian Superior Energy Inc., a corporation incorporated under
the laws of Canada (the “Company”), the Initial
Purchasers and the Purchaser Permitted Transferees, as amended and in effect
from time to time (the “Registration Rights Agreement”). Capitalized terms
used herein without definition shall have the respective meanings ascribed
thereto in the Registration Rights Agreement.

     

    The
undersigned, in order to become the owner or holder of [___________] shares of
the Common Stock of the Company, hereby agrees that, from and after the date
hereof, the undersigned has become a party to the Registration Rights Agreement
in the capacity of a Purchaser Permitted Transferee, and is entitled to all of
the benefits under, and is subject to all of the obligations, restrictions and
limitations set forth in, the Registration Rights Agreement that are applicable
to Purchaser Permitted Transferees.  This Instrument of Adherence
shall take effect and shall become a part of the Registration Rights Agreement
immediately upon execution.

     

    Executed
as of the date set forth below.

     

    
      	 
      	
              By:

            	 
      
	 
      	 
      	 
      
	 
      	
              Name:

            	 
      
	 
      	 
      	 
      
	 
      	
              Title:

            	 
      

    

     

    Accepted:

     

    CANADIAN
SUPERIOR ENERGY INC.

    

    

    
      	
              By:

            	 
      	 
      
	 
      	 
      	 
      
	
              Name:

            	 
      	 
      
	 
      	 
      	 
      
	
              Title:

            	 
      	 
      

    

    
 

     

     

     

     

     

     

     

     B-1ex4-2.htm

    Exhibit
4.2

     

     

     

    SECURITIES
PURCHASE AGREEMENT

     

    This
SECURITIES PURCHASE AGREEMENT (this “Agreement”) is dated as of
August 25, 2008, by and between Canadian Superior Energy Inc., a corporation
incorporated under the laws of Alberta (the “Company”), and the several
purchasers identified in the attached Exhibit A
(individually, a “Purchaser” and collectively,
the “Purchasers”).

     

    RECITALS

     

    A.           The
Company and the Purchasers are executing and delivering this Agreement in
reliance upon the exemption from securities registration afforded by the
provisions of Regulation D (“Regulation D”), as promulgated
by the U.S. Securities and Exchange Commission (the “SEC”) under the Securities Act
of 1933, as amended (the “Securities Act”).

    

    B.           The
Purchasers wish to purchase from the Company, and the Company wishes to sell and
issue to the Purchasers, upon the terms and conditions stated in this Agreement:
(i) up to an aggregate of 8,750,000 shares (the “Shares”) of the Company’s
common stock (the “Common
Stock”); and (ii) warrants in the form attached hereto as Exhibit B to purchase
up to an aggregate of 4,375,000 shares of Common Stock (the “Warrants”). Solely for
descriptive purposes as set forth herein, the Securities may be denominated in
“Units”, with each Unit
consisting of one Share and one Warrant exercisable for one-half (1/2) of one
Share of Common Stock. Subject to the transfer restrictions set forth herein,
the Shares and the Warrants will immediately separate upon issuance. The shares
of Common Stock underlying the Warrants shall be referred to herein as the
“Warrant Shares,” and
the Shares, the Warrants and the Warrant Shares shall be referred to herein as
the “Securities.”

    

    C.           Subject
to the terms and conditions set forth herein, 8,750,000 Units will be issued and
sold to the Purchasers on the Closing Date (as defined below) for a per Unit
purchase price equal to USD $4.00 (the “Per Unit Purchase Price”), or USD
$35,000,000 in the
aggregate.

    

    D.           Contemporaneously
with the sale of the Securities, the parties hereto will execute and deliver a
Registration Rights Agreement, in the form attached hereto as Exhibit C (the “Registration Rights Agreement”), pursuant
to which the Company will agree to provide certain registration rights under the
Securities Act, and the rules and regulations promulgated thereunder, and
applicable state securities laws.

    

    AGREEMENT

    

    In
consideration of the mutual agreements, representations, warranties and
covenants herein contained, the parties hereto agree as follows:

     

    
      	
              1.

            	
              Definitions.  As
      used in this Agreement, the following terms shall have the following
      respective meanings:

            

    

     

    (a)         “Business Day” means a day,
other than a Saturday or Sunday, on which banks in New York City are open for
the general transaction of business.

     

    (b)         “Exchange Act” means the
Securities Exchange Act of 1934, as amended, and all of the rules and
regulations promulgated thereunder.

     

    (c)         “Majority Purchasers” shall
mean Purchasers holding a majority of the Securities issued
hereunder.

     

     

    
      
        
        

      

      
        1

        
          

        

      

      
        
        

      

    

     

    (d)         “Registration Rights Agreement”
shall mean that certain Registration Rights Agreement, dated as of the date
hereof, among the Company and the Purchasers.

     

    (e)         “Registration Statement” shall
mean any registration statement
to be filed by the Company pursuant to Registration Rights
Agreement.

     

    (f)         “SEC Documents” shall mean: (i)
the Company’s Annual Report on Form 40-F for the year ended December 31,
2007; and (ii) any other
statement, report, registration statement or definitive proxy statement filed by
the Company with the SEC following the date hereof.

     

    (g)         “Transaction Agreements” shall
mean this Agreement, the Warrants and the Registration Rights
Agreement.

     

    
      	
              2.

            	
              Purchase and Sale of
      Securities.

            

    

     

    2.1      
     Purchase and
Sale.  Subject to and upon the terms and conditions set forth
in this Agreement, the Company agrees to issue and sell to each Purchaser, and
each Purchaser, severally and not jointly with the other Purchasers, hereby
agrees to purchase from the Company, at the Closing (as defined below), the
number of Units set forth opposite the name of such Purchaser under the heading
“Number of Securities
to be Purchased” on Exhibit A
hereto, for a per Unit purchase price equal to the Per Unit Purchase Price. The
total purchase price payable by each Purchaser for the Units that such Purchaser
is hereby agreeing to purchase at the Closing is set forth opposite the name of
such Purchaser under the heading “Aggregate Purchase Price
” on Exhibit A hereto
(such Purchaser’s “Purchase
Price”).

     

    2.2      
     Closing.  Upon
confirmation that all of the conditions to closing specified in Sections 5.1
and/or 5.2 have been satisfied or duly waived by the Purchasers and/or the
Company, as applicable, the Company shall deliver to Borden Ladner Gervais LLP,
counsel to the Company, in trust, a certificate or certificates, each registered
in the Purchasers’ respective names, representing the Securities to be purchased
by such Purchasers, with instructions that such certificates are to be held for
release to the Purchasers only upon payment in full of the Purchase Price to the
Company by all the Purchasers.  Upon such receipt by Borden Ladner
Gervais LLP of such certificates, each Purchaser shall promptly, but no more
than one Business Day thereafter, cause a wire transfer in same day funds to be
sent to the account of the Company as instructed in writing by the Company, in
the amount representing such Purchaser’s Purchase Price as set forth on Exhibit A
hereto.  On the date (the “Closing Date”) the Company
receives the Purchase Price from all of the Purchasers, the certificates
evidencing the Securities shall be released to the Purchasers (the “Closing”).  The
Closing shall take place at the offices of Borden Ladner Gervais LLP, 1000
Canterra Tower, 400 Third Avenue S.W., Calgary, Alberta, Canada T2P-4H2, or at
such other location and on such other date as the Company and the Purchasers
shall mutually agree.

     

    
      	
              3.

            	
              Representations and
      Warranties of the Company.

            

    

     

    Except as otherwise described in the
SEC Documents or in the Disclosure Schedules delivered herewith (and dated as of
the date of this Agreement), the Company hereby represents and warrants to each
of the Purchasers as follows:

     

    3.1       
    Financial Statements.
The financial statements of the Company included in the SEC Documents, together
with the related schedules and notes, present fairly the financial position of
the Company and its consolidated subsidiaries at the dates indicated and the
statement of operations, stockholders’ equity and cash flows of the Company and
its consolidated subsidiaries for the periods specified; said financial
statements have been prepared in conformity with accounting principles generally
accepted in Canada with a reconciliation to generally accepted accounting
principles in the United States  (“GAAP”) applied on a consistent
basis throughout the periods involved. No other financial statements
or

     

     

    
      
        
        

      

      
        2

        
          

        

      

      
        
        

      

    

     

    schedules
are required to be included in the SEC Documents. Any disclosures contained in
the SEC Documents regarding “non-GAAP financial measures” (as such term is
defined by the rules and regulations of the SEC) comply with Regulation G of the
Exchange Act and Item 10 of Regulation S-K under the Securities Act, to the
extent applicable. There are no material off-balance sheet transactions,
arrangements, obligations (including contingent obligations), or any other
relationships with unconsolidated entities or other persons, that may have a
material effect on the Company’s financial condition, changes in financial
condition, results of operations, liquidity, capital expenditures, capital
resources or significant components of revenue or expenses.

     

    3.2         
  No
Material Adverse Change in Business. Since December 31, 2007: (a) there
has been no material adverse change, or any development that would be reasonably
expected to result in a material adverse change, in the condition, financial or
otherwise, or in the earnings or business affairs of the Company and its
subsidiaries taken as a whole, whether or not arising in the ordinary course of
business (a “Material Adverse
Effect”); (b) there have been no transactions entered into by the Company
or any of its subsidiaries, other than those in the ordinary course of business,
which are material with respect to the Company and its subsidiaries taken as a
whole; and (c) there has been no dividend or distribution of any kind declared,
paid or made by the Company on any class of its capital stock.

     

    3.3        
   Good
Standing of the Company. The Company has been duly organized and is
validly existing as a corporation in good standing under the laws of Alberta and
has full corporate power and authority to own, lease and operate its properties
and to conduct its business as described in the SEC Documents and to enter into
and perform its obligations under the Transaction Agreements; and the Company is
duly qualified as a foreign corporation to transact business and is in good
standing in each other jurisdiction in which such qualification is required,
whether by reason of the ownership or leasing of property or the conduct of
business, except where the failure so to qualify or to be in good standing would
not reasonably be expected to result in a Material Adverse Effect.

     

    3.4          
 Good Standing of
Subsidiaries. Each subsidiary of the Company has been duly formed and is
validly existing as a corporation in good standing under the laws of the
jurisdiction of its formation, has full corporate power and authority to own,
lease and operate its properties and to conduct its business as described in the
SEC Documents, and is duly qualified as a foreign corporation to transact
business and is in good standing in each jurisdiction in which such
qualification is required, whether by reason of the ownership or leasing of
property or the conduct of business, except where the failure so to qualify or
to be in good standing would not reasonably be expected to result in a Material
Adverse Effect; all of the issued and outstanding securities of each of the
Company’s subsidiaries have been duly authorized and are validly issued,
fully-paid and non-assessable and are owned by the Company free and clear of any
security interest, mortgage, pledge, lien, encumbrance, claim or equity; and
none of the securities of any subsidiary was issued in violation of the
preemptive or similar rights of any securityholder of such
subsidiary.

     

    3.5         
  Capitalization. As of
the Closing, the authorized capital stock of the Company consisted of unlimited
shares of common stock (the “Common Stock”), and unlimited
shares of preferred stock (the “Preferred Stock”). As of
immediately following the Closing:

     

        
(a)         The issued and
outstanding capital stock of the Company will consist of: (x) 157,650,169 shares
of Common Stock; and (y) 8,750 shares of Preferred Stock; and

     

        
(b)         The Company will have:
(x) an aggregate of 15,177,119 shares of Common Stock reserved for issuance upon
the exercise of outstanding options granted under the Company’s outstanding
option plans and employee stock purchase programs (collectively, the “Option Plans”); and (y) 4,375,000
Warrant Shares reserved for issuance upon the exercise of the
Warrants.

     

     

    
      
        
        

      

      
        3

        
          

        

      

      
        
        

      

    

     

    Except
for the Warrants and options granted under the Option Plans, the Company does
not have outstanding any options to purchase, any securities or obligations
convertible into, or any contracts or commitments to issue or sell, shares of
its capital stock. All of the shares of issued and outstanding capital stock of
the Company have been duly authorized and validly issued and are fully paid and
non assessable, and none of the outstanding shares of capital stock of the
Company was issued in violation of the preemptive or other similar rights of any
securityholder of the Company.

     

    3.6          
 Authorization of
Agreement. The Company has full corporate power and authority to: (a)
enter into the Transaction Agreements and to consummate the transactions
contemplated hereby and thereby; and (b) authorize, execute, issue, and deliver
the Securities as contemplated by the Transaction Agreements. The Transaction
Agreements have been duly authorized, executed and delivered by the Company, and
constitute legal and binding obligations of the Company, enforceable in
accordance with their terms, except to the extent that rights to indemnity
hereunder may be limited by federal or state securities laws and except as such
enforceability may be limited by bankruptcy, fraudulent conveyance, insolvency,
reorganization or similar laws affecting the rights of creditors generally and
subject to general principles of equity.

     

    3.7      
     Authorization of the
Securities.

     

        
(a)         The Shares to be issued
at the Closing have been duly authorized and reserved for issuance and sale to
the Purchasers pursuant to this Agreement, and, when issued and delivered by the
Company pursuant to this Agreement against payment of the consideration set
forth herein, the Shares will be duly and validly issued and fully paid and
non-assessable.

     

        
(b)         The Warrant Shares
underlying the Warrants to be issued at the Closing have been duly and validly
authorized and reserved for issuance upon exercise of the Warrants to be issued
at the Closing, and, when issued and delivered by the Company pursuant to the
such Warrants against payment of the consideration set forth therein, the
Warrant Shares will be duly and validly issued and will be fully paid and
non-assessable.

     

        
(c)         No holder of the
Securities will be subject to personal liability by reason of being such a
holder, and the issuance of the Securities is not and will not be subject to
preemptive or other similar rights of any securityholder of the
Company.

     

    3.8          
 Absence of
Defaults and Conflicts. Neither the Company nor any of its subsidiaries
is (A) in violation of its charter or bylaws, or (B) except for such defaults
that would not, individually or in the aggregate, reasonably be expected to
result in a Material Adverse Effect, in default in the performance or observance
of any obligation, agreement, covenant or condition contained in any material
contract, indenture, mortgage, deed of trust, loan or credit agreement, note,
lease or other agreement or instrument to which the Company or any of its
subsidiaries is a party or by which it or any of them may be bound, or to which
any of the property or assets of the Company or any subsidiary is subject
(collectively, “Agreements and
Instruments”) and the execution, delivery and performance of this
Agreement and the consummation of the transactions contemplated herein and
compliance by the Company with its obligations hereunder, have been duly
authorized by all necessary corporate action and do not and will not, whether
with or without the giving of notice or passage of time or both, conflict with
or constitute a breach of, or default or Repayment Event (as defined below)
under, or result in the creation or imposition of any lien, charge or
encumbrance upon any property or assets of the Company or any subsidiary
pursuant to, the Agreements and Instruments (except for such conflicts,
breaches, defaults or Repayment Events or liens, charges or encumbrances that
would not be reasonably likely to result in a Material Adverse Effect), nor will
such action result in (C) any violation of the provisions of the charter or
by-laws of the Company or any subsidiary or (D) except for such violations that
would not, individually or in the aggregate, reasonably be expected to result in
a Material Adverse Effect, a violation of any applicable

     

    
      
        
        

      

      
        4

        
          

        

      

      
        
        

      

    

     

     law,
statute, rule, regulation, judgment, order, writ or decree of any government,
government instrumentality or court, domestic or foreign, having jurisdiction
over the Company or any subsidiary or any of their assets, properties or
operations. As used herein, a “Repayment Event” means any
event or condition which gives the holder of any note, debenture or other
evidence of indebtedness (or any person acting on such holder’s behalf) the
right to require the repurchase, redemption or repayment of all or a portion of
such indebtedness by the Company or any subsidiary of the Company.

     

    3.9       
    Absence of Labor
Dispute. No material labor dispute with the employees of the Company or
any subsidiary exists or, to the knowledge of the Company, is imminent, and the
Company is not aware of any existing or imminent labor disturbance by the
employees of any of its or any of its subsidiaries’ principal suppliers,
manufacturers, customers or contractors, which, in either case, would result in
a Material Adverse Effect.

     

    3.10          Absence of
Proceedings. There is no claim, action, suit, proceeding, inquiry, audit,
review or investigation before or brought by any court or governmental agency or
body, domestic or foreign, now pending, or, to the knowledge of the Company,
threatened against the Company or any subsidiary of the Company, or, to the
knowledge of the Company, otherwise involving the Company or any subsidiary of
the Company which is required to be disclosed in the SEC Documents (other than
as disclosed therein), or which would be reasonably likely to result in a
Material Adverse Effect, or which would be reasonably likely to materially and
adversely affect the consummation of the transactions contemplated in this
Agreement or the performance by the Company of its obligations hereunder; the
aggregate of all pending legal or governmental proceedings to which the Company
or any subsidiary is a party or of which any of their respective property or
assets is the subject which are not described in the SEC Documents, including
ordinary routine litigation incidental to the Company’s conduct of its business,
would not be reasonably likely to result in a Material Adverse
Effect.

     

    3.11          Absence of Rulemaking or
Similar Proceedings. To the Company’s knowledge, there are no rulemaking
or similar proceedings before any federal, state, local or foreign governmental
bodies that regulate the Company’s or any of its subsidiaries’ activities, which
would reasonably be expected to have a Material Adverse Effect.

     

    3.12          Accuracy of Descriptions and
Exhibits. There are no statutes, regulations, contracts or documents
which are required to be described in the SEC Documents or to be filed as
exhibits thereto which have not been so described and filed as
required.

     

    3.13          Intellectual
Property. The Company and its subsidiaries own or license or have rights
to use, make, sell, and otherwise exploit, all Intellectual Property necessary
for the conduct of the Company’s business as now conducted except as such
failure to own or license such rights would not have a Material Adverse Effect.
To the knowledge of the Company, there is no infringement, misappropriation or
violation by other parties of any Intellectual Property described in the
preceding sentence, except as such infringement, misappropriation or violation
would not reasonably be expected to have a Material Adverse Effect. There is no
pending, or, to the knowledge of the Company, threatened action, suit,
proceeding or claim by others to which the Company or any of its subsidiaries is
a party, or to the knowledge of the Company, otherwise challenging the Company’s
or its subsidiaries’ rights in or to, or exploitation of, any such Intellectual
Property, and the Company has no knowledge of any facts which would form a
reasonable basis for any such claim. The Intellectual Property owned by the
Company and, to the knowledge of the Company, the Intellectual Property licensed
to the Company have not been adjudged invalid or unenforceable, in whole or in
part, and there is no pending or, to the knowledge of the Company, threatened
action, suit, proceeding or claim by others challenging the validity or scope of
any Intellectual Property, and the Company has no knowledge of any facts which
would form a reasonable basis for any such claim. There is no pending or to the
knowledge of the Company, threatened action,

     

     

    
      
        
        

      

      
        5

        
          

        

      

      
        
        

      

    

     suit,
proceeding or claim by others that the Company infringes, misappropriates or
otherwise violates any Intellectual Property or other proprietary rights of
others, and the Company has not received any written notice of such claim and
has no knowledge of any other fact which would form a reasonable basis for any
such claim. To the Company’s knowledge, no employee or independent contractor of
the Company is in or has ever been in violation of any term of any employment
contract, patent disclosure agreement, invention assignment agreement,
non-competition agreement, non-solicitation agreement, nondisclosure agreement
or any restrictive covenant to or with a former employer or independent
contractor where the basis of such violation relates to such employee’s
employment or independent contractor’s engagement with the Company or actions
undertaken while employed or engaged with the Company, except as such violation
would not reasonably be expected to have a Material Adverse Effect. “Intellectual Property” shall
mean all patents, patent rights, patent applications, trade and service marks,
trade and service mark registrations, trade names, copyrights, licenses,
inventions, trade secrets, technology, know-how and other unpatented and/or
unpatentable proprietary or confidential information, systems or procedures
owned, licensed or used by the Company.

     

    3.14          Absence of Further
Requirements. Except for such approvals as may be required by the Toronto
Stock Exchange or the American Stock Exchange (which the Company will obtain
prior to Closing), no filing with, or authorization, approval, consent, license,
order, registration, qualification or decree of, any court or governmental
authority or agency is necessary or required for the performance by the Company
of its obligations hereunder, in connection with the offering, issuance or sale
of the Securities hereunder or the consummation of the transactions contemplated
by this Agreement, except such as: (a) have been already obtained or made; or
(b) as may be required under the Securities Act, the rules and regulations
promulgated thereunder or state securities laws.

     

    3.15          Absence of
Manipulation. Neither the Company nor, to the knowledge of the Company
any affiliate of the Company has taken, nor will the Company or, to the
knowledge of the Company, any affiliate take, directly or indirectly, any action
which is designed to or which has constituted or which would be expected to
cause or result in stabilization or manipulation of the price of any security of
the Company to facilitate the sale or resale of the Securities.

     

    3.16          Possession of Licenses and
Permits. The Company and its subsidiaries possess such regulatory and
quasi-regulatory permits, licenses, approvals, consents and other authorizations
(collectively, “Governmental
Licenses”) issued by the appropriate federal, state, local or foreign
regulatory agencies or bodies necessary to conduct the business now operated by
them, except where the failure so to possess would not, singly or in the
aggregate, reasonably be expected to result in a Material Adverse Effect; the
Company and its subsidiaries are in compliance with the terms and conditions of
all such Governmental Licenses, except where the failure so to comply would not,
singly or in the aggregate, reasonably be expected to result in a Material
Adverse Effect; all of the Governmental Licenses are valid and in full force and
effect, except when the invalidity of such Governmental Licenses or the failure
of such Governmental Licenses to be in full force and effect would not, singly
or in the aggregate, reasonably be expected to result in a Material Adverse
Effect; and neither the Company nor any of its subsidiaries has received notice
of any proceedings relating to the revocation or modification of any such
Governmental Licenses which, singly or in the aggregate, if the subject of an
unfavorable decision, ruling or finding, would reasonably be expected to result
in a Material Adverse Effect.

     

    3.17          Regulatory
Authorities.  Each of the Company and its subsidiaries: (A) is
and at all times has been in material compliance with all statutes, rules or
regulations applicable to the Company (“Applicable Laws”); (B) has not
received any correspondence or notice from any Canadian, U.S. federal or state
or foreign governmental authority having authority over the Company (“Governmental Authority”)
alleging or asserting material noncompliance with any Applicable Laws or any
licenses, certificates, approvals, clearances, authorizations, permits and
supplements or amendments thereto

     

    
      
        
        

      

      
        6

        
          

        

      

      
        
        

      

    

     

     required
by any such Applicable Laws (“Authorizations”); (C)
possesses all Authorizations (except as would not reasonably be expected to have
a Material Adverse Effect) and such Authorizations are valid and in full force
and effect and are not in material violation of any term of any such
Authorizations (except as would not reasonably be expected to have a Material
Adverse Effect); (D) has not received notice of any claim, action, suit,
proceeding, hearing, enforcement, investigation, arbitration or other action
from any Governmental Authority or third party alleging that any product,
operation or activity is in violation of any Applicable Laws or Authorizations
and have no knowledge that any such Governmental Authority or third party is
considering any such claim, litigation, arbitration, action, suit, investigation
or proceeding; (E) has not received notice that any Governmental Authority has
taken, is taking or intends to take action to limit, suspend, modify or revoke
any Authorizations and has no knowledge that any such Governmental Authority is
considering such action; and (F) has filed, obtained, maintained or submitted
all material reports, documents, forms, notices, applications, records, claims,
submissions and supplements or amendments as required by any Applicable Laws or
Authorizations and that all such reports, documents, forms, notices,
applications, records, claims, submissions and supplements or amendments were
materially complete and correct on the date filed (or were corrected or
supplemented by a subsequent submission).

     

    3.18           Title to Property.
The Company and each of its subsidiaries have good and marketable title to all
real property owned by the Company and such subsidiary and good title to all
other properties owned by them, in each case, free and clear of all mortgages,
pledges, liens, security interests, claims, restrictions or encumbrances of any
kind except such as would not, singly or in the aggregate, materially adversely
affect the value of such property, and do not interfere with the use made and
proposed to be made of such property by the Company or any of its subsidiaries;
and all of the leases and subleases material to the business of the Company and
its subsidiaries, taken as a whole, and under which the Company or any of its
subsidiaries holds properties described in the SEC Documents, are in full force
and effect, and neither the Company nor any subsidiary has any notice of any
material claim of any sort that has been asserted by anyone adverse to the
rights of the Company or any subsidiary under any of the leases or subleases
mentioned above, or affecting or questioning the rights of the Company or such
subsidiary to the continued possession of the leased or subleased premises under
any such lease or sublease.

     

    3.19          Investment Company
Act. The Company is not required, and upon the issuance and sale of the
Securities as contemplated hereunder or under the Warrants will not be required,
to register as an “investment company” under the Investment Company Act of 1940,
as amended.

     

    3.20          Environmental Laws.
Except as would not, singly or in the aggregate, reasonably be expected to
result in a Material Adverse Effect, (A) neither the Company nor any of its
subsidiaries is in violation of any federal, state, local or foreign statute,
law, rule, regulation, ordinance, code, policy or rule of common law or any
judicial or administrative interpretation thereof, including any judicial or
administrative order, consent, decree or judgment, relating to pollution or
protection of human health, the environment (including, without limitation,
ambient air, surface water, groundwater, land surface or subsurface strata) or
wildlife, including, without limitation, laws and regulations relating to the
release or threatened release of chemicals, pollutants, contaminants, wastes,
toxic substances, hazardous substances, petroleum or petroleum products,
asbestos-containing materials or mold (collectively, “Hazardous Materials”) or to the
manufacture, processing, distribution, use, treatment, storage, disposal,
transport or handling of Hazardous Materials (collectively, “Environmental Laws”), (B) the
Company and its subsidiaries have all permits, authorizations and approvals
required under any applicable Environmental Laws (except where the absence of
such permits, authorizations and approvals would not reasonably be expected to
have a Material Adverse Effect) and are each in compliance with their
requirements in all material respects, (C) there are no pending or, to the
knowledge of the Company, threatened administrative, regulatory or judicial
actions, suits, demands, demand letters, claims, liens, notices of 

     

     

    
      
        
        

      

      
        7

        
          

        

      

      
        
        

      

    

     

    noncompliance
or violation, investigation or proceedings relating to any Environmental Law
against the Company or any of its subsidiaries and (D) to the knowledge of the
Company, there are no events or circumstances that would reasonably be expected
to form the basis of an order for clean-up or remediation, or an action, suit or
proceeding by any private party or governmental body or agency, against or
affecting the Company or any of its subsidiaries relating to Hazardous Materials
or any Environmental Laws.

     

    3.21          Registration Rights.
There are no persons with registration rights or other similar rights to have
any securities registered pursuant to the SEC Documents or otherwise registered
by the Company under the Securities Act or any applicable securities law,
including the laws of Alberta or Canada.

     

    3.22          Accounting Controls.
The Company and its subsidiaries maintain a system of internal accounting
controls sufficient to provide reasonable assurances that (A) transactions are
executed in accordance with management’s general or specific authorization; (B)
transactions are recorded as necessary to permit preparation of financial
statements in conformity with generally accepted accounting principles and to
maintain accountability for assets; (C) access to assets is permitted only in
accordance with management’s general or specific authorization; and (D) the
recorded value for assets is compared with existing assets at reasonable
intervals and appropriate action is taken with respect to any
differences.

     

    3.23          Insurance. The
Company and its subsidiaries carry, or are covered by, insurance issued by
insurers in such amounts and covering such risks as the Company has determined
is reasonably adequate for the conduct of its business and the value of its
properties and as is customary for companies engaged in similar businesses in
similar industries; and neither the Company nor any of its subsidiaries has (i)
received written notice from any insurer or agent of such insurer that material
capital improvements or other material expenditures are required or necessary to
be made in order to continue such insurance or (ii) any reason to believe that
it will not be able to renew its existing insurance coverage as and when such
coverage expires or to obtain similar coverage at reasonable cost from similar
insurers as may be necessary to continue its business. All such insurance is
outstanding and duly in force on the date hereof (except where failure would not
reasonably be expected to have a Material Adverse Effect).

     

    3.24          Related Party
Transactions. No relationship, direct or indirect, exists between or
among the Company or any of its subsidiaries, on the one hand, and the
directors, officers, stockholders, customers or suppliers of the Company or any
of its subsidiaries, on the other, that is required by the Securities Act to be
described in the SEC Documents and that is not so described
therein.

     

    3.25          Foreign Corrupt Practices
Act. Neither the Company nor any of its subsidiaries nor, to the
knowledge of the Company, any director, officer, agent, employee acting on
behalf of the Company or any of its subsidiaries has (A) used any corporate
funds for any unlawful contribution, gift, entertainment or other unlawful
expense relating to political activity; (B) made any direct or indirect unlawful
payment to any foreign or domestic government official or employee from
corporate funds; (C) violated or is in violation of any provision of the Foreign
Corrupt Practices Act of 1977; or (D) made any bribe, rebate, payoff, influence
payment, kickback or other unlawful payment.

     

    3.26          Money Laundering
Laws. The operations of the Company and its subsidiaries are and have
been conducted at all times in compliance with applicable financial
recordkeeping and reporting requirements of the Currency and Foreign
Transactions Reporting Act of 1970, as amended, the money laundering statutes of
all jurisdictions, the rules and regulations thereunder and any related or
similar rules, regulations or guidelines, issued, administered or enforced by
any governmental agency (collectively, the “Money Laundering Laws”) and no
action, suit or proceeding by or before any court or governmental agency,
authority or body or any arbitrator involving the Company or any of its
subsidiaries

     

    
      
        
        

      

      
        8

        
          

        

      

      
        
        

      

    

     

    with
respect to the Money Laundering Laws is pending or, to the best knowledge of the
Company, threatened.

     

    3.27          F-3 and F-10
Eligibility. The Company is eligible to use Form F-3 and Form F-10 to
register the Registrable Securities (as such term is defined in the Registration
Rights Agreement) for resale by the Purchasers as contemplated by the
Registration Rights Agreement, according to the eligibility requirements for the
use of such forms in transactions involving secondary offerings.

     

    3.28          Insider Trading. The
Company has a written insider trading policy applicable to all officers and
directors of the Company.

     

    3.29          Certifications. The
Chief Executive Officer and the Chief Operating Officer of the Company have
signed, and the Company has furnished to the SEC, all certifications required by
Rule 13a-14(a), Rule 13a-14(b) and Section 1350 of Chapter 63 of Title 18 of the
United States Code (18 U.S.C. 1350). Such certifications contain no
qualifications or exceptions to the matters certified therein other than such
qualifications or exceptions as are part of the standard form of certification
promulgated by the SEC, and have not been modified or withdrawn; and neither the
Company nor any of its officers has received notice from any governmental entity
questioning or challenging the accuracy, completeness, form or manner of filing
or submission of such certifications. The Company is otherwise in compliance in
all material respects with all applicable provisions currently in effect of the
Sarbanes-Oxley Act and the rules and regulations issued thereunder by the
SEC.

     

    3.30          Taxes. The Company
and each of its subsidiaries have timely filed all federal, state, local and
foreign income and franchise tax returns required to be filed and is not in
default in the payment of any taxes which were payable pursuant to said returns
or any assessments with respect thereto, other than any which the Company or any
of its subsidiaries is contesting in good faith or which are not material. There
is no pending dispute with any taxing authority relating to any of such returns
and the Company has no knowledge of any proposed liability for any tax to be
imposed upon the properties or assets of the Company or any of its subsidiaries
for which there is not an adequate reserve reflected in the Company’s financial
statements included in the SEC Documents.

     

    3.31          Stock Options. All
Company options have been appropriately authorized by the board of directors of
the Company or an appropriate committee thereof, including approval of the
option exercise price or the methodology for determining the option exercise
price and the substantive option terms. No Company options have been
retroactively granted, or the exercise price of any Company option determined
retroactively. All Company options have been properly accounted for by the
Company in accordance with GAAP, and no change is expected in respect of any
prior Company Financial Statement relating to expenses for stock compensation.
There is no pending audit, investigation or inquiry by any governmental agency
or by the Company with respect to the Company’s stock option granting practices
or other equity compensation practices.

     

    3.32          Listing on the Toronto Stock
Exchange and the American Stock Exchange. The Common Stock of the Company
is listed on the Toronto Stock Exchange and the American Stock Exchange under
the ticker symbol “SNG.” The Company is in compliance with the listing
requirements of the Toronto Stock Exchange or the American Stock Exchange. The
Company is, and has no reason to believe that it will not in the foreseeable
future continue to be (except as a result of minimum trading price
requirements), in compliance with all such listing requirements.

     

    3.33           Private
Placement.  Assuming the accuracy of the Purchasers’
representations and warranties under Section 4, the offer and sale of the
Securities to the Purchasers as contemplated hereby is exempt from the
registration requirements of the Securities Act.

     

    
      
        
        

      

      
        9

        
          

        

      

      
        
        

      

    

     

    4.           Representations and Warranties of the
Purchasers.

     

    Each
Purchaser severally for itself, and not jointly with the other Purchasers,
represents and warrants to the Company as follows:

     

    4.1        
   Authorization.  All
action on the part of such Purchaser and, if applicable, its officers, directors
and shareholders necessary for the authorization, execution, delivery and
performance of the Transaction Agreements and the consummation of the
transactions contemplated therein has been taken.  When executed and
delivered, each of the Transaction Agreements will constitute the legal, valid
and binding obligation of such Purchaser, enforceable against such Purchaser in
accordance with its terms, except as such may be limited by bankruptcy,
insolvency, reorganization or other laws affecting creditors’ rights generally
and by general equitable principles.  Such Purchaser has all requisite
corporate power to enter into each of the Transaction Agreements and to carry
out and perform its obligations under the terms of the Transaction
Agreements.  Such Purchaser has the knowledge and experience in
financial and business matters as to be capable of evaluating the merits and
risks of an investment in the Shares and has the ability to bear the economic
risks of an investment in the Shares for an indefinite period of
time.

     

    4.2         
  Purchase
Entirely for Own Account.  Such Purchaser is acquiring the
Securities being purchased by it hereunder for investment, for its own account,
and not for resale or with a view to distribution thereof in violation of the
Securities Act. Such Purchaser has not entered into an agreement or
understanding with any other party to resell or distribute such
shares.

     

    4.3      
     Investor Status;
Etc.  Such Purchaser certifies and represents to the Company
that it is an “Accredited Investor” as defined in Rule 501 of Regulation D
promulgated under the Securities Act and was not organized for the purpose of
acquiring the Securities.  Such Purchaser’s financial condition is
such that it is able to bear the risk of holding the Securities for an
indefinite period of time and the risk of loss of its entire
investment.  Such Purchaser has received, reviewed and considered all
information it deems necessary in making an informed decision to make an
investment in the Securities and has been afforded the opportunity to ask
questions of and receive answers from the management of the Company concerning
this investment and has sufficient knowledge and experience in investing in
companies similar to the Company in terms of the Company’s stage of development
so as to be able to evaluate the risks and merits of its investment in the
Company.

     

    4.4    
       Securities Not
Registered.  Such Purchaser understands that the Securities
have not been registered under the Securities Act or any applicable securities
law, by reason of their issuance by the Company in a transaction exempt from the
registration requirements therefrom, and that the Securities must continue to be
held by such Purchaser unless a subsequent disposition thereof is registered
under the Securities Act or is exempt from such registration.  The
Purchaser understands that the exemptions from registration afforded by Rule 144
(the provisions of which are known to it) promulgated under the Securities Act
depend on the satisfaction of various conditions, and that, if applicable, Rule
144 may, in certain cases, afford the basis for sales only in limited
amounts.

     

    4.5       
    No
Conflict.  The execution and delivery of the Transaction
Agreements by such Purchaser and the consummation of the transactions
contemplated thereby will not conflict with or result in any violation of or
default by such Purchaser (with or without notice or lapse of time, or both)
under, or give rise to a right of termination, cancellation or acceleration of
any obligation or to a loss of a material benefit under (i) any provision
of the organizational documents of such Purchaser, (ii) any material
agreement or instrument, permit, franchise, or license or (iii) any judgment,
order, statute, law, ordinance, rule or regulations, applicable to such
Purchaser or its respective properties or assets.

     

    4.6       
    Consents.  All
consents, approvals, orders and authorizations required on the part of such
Purchaser in connection with the execution, delivery or performance of this
Agreement and the

     

    
      
        
        

      

      
        10

        
          

        

      

      
        
        

      

    

     

    consummation
of the transactions contemplated herein have been obtained and are effective as
of the Closing Date.

     

    
      	
              5.

            	
              Conditions
      Precedent.

            

    

     

    5.1         
  Conditions
to the Obligation of the Purchasers to Consummate the
Closing.  The obligation of each Purchaser to consummate the
Closing and to purchase and pay for the Securities being purchased by it
pursuant to this Agreement is subject to the satisfaction of the following
conditions precedent:

     

      
  (a)         The
representations and warranties of the Company contained herein shall be true and
correct on and as of the Closing Date with the same force and effect as though
made on and as of the Closing Date (it being understood and agreed by each
Purchaser that, in the case of any representation and warranty of the Company
contained herein which is not hereinabove qualified by application thereto of a
materiality standard, such representation and warranty need be true and correct
only in all material respects in order to satisfy as to such representation or
warranty the condition precedent set forth in the foregoing provisions of this
Section 5.1(a)).

     

        
(b)         The Company shall have
obtained any and all consents, permits, approvals, registrations and waivers
necessary or appropriate for consummation of the purchase and sale of the
Securities and the consummation of the other transactions contemplated herein to
be consummated on or prior to the Closing Date, all of which shall be in full
force and effect.

     

        
(c)         The Registration Rights
Agreement and the Warrants shall have been executed and delivered by the
Company.

     

        
(d)         The Company shall have
performed all obligations and conditions herein and therein required to be
performed or observed by the Company on or prior to the Closing
Date.

     

        
(e)         No proceeding
challenging this Agreement or the transactions contemplated hereby, or seeking
to prohibit, alter, prevent or materially delay the Closing, shall have been
instituted before any court, arbitrator or governmental body, agency or official
and shall be pending.

     

        
(f)         The purchase of and
payment for the Securities by the Purchasers shall not be prohibited by any law
or governmental order or regulation.  All necessary consents,
approvals, licenses, permits, orders and authorizations of, or registrations,
declarations and filings with, any governmental or administrative agency or of
any other person with respect to any of the transactions contemplated hereby
shall have been duly obtained or made and shall be in full force and
effect.

     

        
(g)         All instruments and
corporate proceedings in connection with the transactions contemplated by this
Agreement to be consummated at the Closing shall be satisfactory in form and
substance to such Purchaser, and such Purchaser shall have received such
certificates of the Company’s officers as such Purchaser may have reasonably
requested in connection with such transactions.

     

    5.2       
    Conditions to the Obligation
of the Company to Consummate the Closing.  The obligation of
the Company to consummate the Closing and to issue and sell to each of the
Purchasers the Securities to be purchased by it at the Closing is subject to the
satisfaction of the following conditions precedent:

     

     
   (a)         The
representations and warranties contained herein of such Purchaser shall be true
and correct on and as of the Closing Date with the same force and effect as
though made on and as of the  Closing Date (it being understood and
agreed by the Company that, in the case of any representation and warranty of
each Purchaser contained herein which is not hereinabove qualified by
application thereto of

     

     

    
      
        
        

      

      
        11

        
          

        

      

      
        
        

      

    

     

    a
materiality standard, such representation and warranty need be true and correct
only in all material respects in order to satisfy as to such representation or
warranty the condition precedent set forth in the foregoing provisions of this
Section 5.2(a)).

     

        
(b)         The Company shall have
obtained any and all consents, permits, approvals, registrations and waivers
necessary or appropriate for consummation of the purchase and sale of the
Securities and the consummation of the other transactions contemplated herein to
be consummated on or prior to the Closing Date, all of which shall be in full
force and effect.

     

        
(c)         The Registration Rights
Agreement shall have been executed and delivered by each Purchaser.

     

        
(d)         The Purchasers shall
have performed all obligations and conditions herein required to be performed or
observed by the Purchasers on or prior to the Closing Date.

     

        
(e)         No proceeding
challenging this Agreement or the transactions contemplated hereby, or seeking
to prohibit, alter, prevent or materially delay the Closing, shall have been
instituted before any court, arbitrator or governmental body, agency or official
and shall be pending.

     

        
(f)         The sale of the
Securities by the Company shall not be prohibited by any law or governmental
order or regulation.  All necessary consents, approvals, licenses,
permits, orders and authorizations of, or registrations, declarations and
filings with, any governmental or administrative agency or of any other person
with respect to any of the transactions contemplated hereby shall have been duly
obtained or made and shall be in full force and effect.

     

        
(g)         Each of the other
Purchasers shall have purchased, in accordance with this Agreement, the number
of Units set forth opposite its name under the heading “Number of Securities to be
Purchased.”

     

        
(h)         All instruments and
corporate proceedings in connection with the transactions contemplated by this
Agreement to be consummated at the Closing shall be satisfactory in form and
substance to the Company.

     

    
      	
              6.

            	
              Transfer,
      Legends.

            

    

     

    6.1         
  Securities
Law Transfer Restrictions.

     

        
(a)         Each Purchaser
understands that, except as provided in the Registration Rights Agreement, the
Securities have not been registered under the Securities Act or any other
applicable securities laws. Accordingly, each Purchaser agrees that it will not
sell, offer to sell, solicit offers to buy, dispose of, loan, pledge or grant
any right with respect to (collectively, a “Disposition”), the Securities,
nor will such Purchaser engage in any hedging or other transaction which is
designed to or could be reasonably expected to lead to or result in a
Disposition of Securities by such Purchaser or any other person or entity,
unless: (i) the Securities are registered under the Securities Act;
(ii) such Purchaser shall have delivered to the Company an opinion of
counsel in form, substance and scope reasonably acceptable to the Company, to
the effect that registration is not required under the Securities Act or any
applicable securities law due to the applicability of an exemption therefrom,
(iii) the Disposition of Securities is in compliance with Rule 144 under the
Securities Act or is made inside Canada after four months from the Closing Date,
or (iv) the Disposition of Securities is to a partner, stockholder, member or an
affiliate of the Purchaser for no additional consideration.  Each
Purchaser is aware of Rule 144 under the Securities Act and the restrictions
imposed thereby.  Each Purchaser acknowledges and agrees that no sales
of the

     

    
      
        
        

      

      
        12

        
          

        

      

      
        
        

      

    

     

    Securities
may be made under the Registration Statements and that the Securities are not
transferable on the books of the Company unless the certificates submitted to
the transfer agent representing the Securities is accompanied by a separate
Purchaser’s Certificate of Subsequent Sale in the form of Exhibit D hereto and
executed by an officer of, or other authorized person designated by, the
Purchaser.

     

        
(b)         Each Purchaser
acknowledges that no action has been or will be taken in any jurisdiction
outside the United States by the Company that would permit an offering of the
Securities, or possession or distribution of offering materials in connection
with the issue of Securities, in any jurisdiction outside of the United States
where action for that purpose is required.  Each Purchaser outside the
United States will comply with all applicable laws and regulations in each
foreign jurisdiction in which it purchases, offers, sells or delivers Securities
or has in its possession or distributes any offering material, in all cases at
its own expense.

     

    6.2       
    Legends.

     

        
(a)         Each certificate
representing any of the Securities shall be endorsed with the legends set forth
below, and each Purchaser covenants that, except to the extent such restrictions
are waived by the Company, it shall not transfer the Securities represented by
any such certificate without complying with the restrictions on transfer
described in this Agreement and the legends endorsed on such
certificate:

     

    “THE
SECURITIES REPRESENTED HEREBY HAVE NOT BEEN REGISTERED UNDER THE UNITED STATES
SECURITIES ACT OF 1933, AS AMENDED (THE “SECURITIES ACT”), OR THE SECURITIES
LAWS OF ANY STATE OF THE UNITED STATES. THE HOLDER HEREOF, BY PURCHASING THE
SECURITIES, AGREES FOR THE BENEFIT OF THE COMPANY THAT SUCH SECURITIES MAY BE
OFFERED, SOLD OR OTHERWISE TRANSFERRED ONLY: (A) TO THE COMPANY, (B) OUTSIDE THE
UNITED STATES IN AN OFFSHORE TRANSACTION IN COMPLIANCE WITH RULE 904 OF
REGULATION S UNDER THE SECURITIES ACT AND IN COMPLIANCE WITH APPLICABLE LOCAL OR
STATE LAWS AND REGULATIONS, (C) INSIDE THE UNITED STATES PURSUANT TO THE
EXEMPTION FROM REGISTRATION UNDER THE SECURITIES ACT PROVIDED BY RULE 144
THEREUNDER, IF AVAILABLE, AND ANY APPLICABLE STATE SECURITIES LAWS OR (D) IN A
TRANSACTION THAT DOES NOT REQUIRE REGISTRATION UNDER THE SECURITIES ACT OR ANY
APPLICABLE UNITED STATES FEDERAL OR STATE SECURITIES LAWS, AFTER PROVIDING AN
OPINION OF COUNSEL OF RECOGNIZED STANDING REASONABLY SATISFACTORY TO THE COMPANY
TO THAT EFFECT. DELIVERY OF THIS CERTIFICATE MAY NOT CONSTITUTE “GOOD DELIVERY”
IN SETTLEMENT OF TRANSACTIONS OF STOCK EXCHANGES IN CANADA. IF THE SECURITIES
REPRESENTED HEREBY ARE SOLD AT THE TIME THE COMPANY IS A “FOREIGN ISSUER” WITHIN
THE MEANING OF REGULATION S UNDER THE SECURITIES ACT, A NEW CERTIFICATE, BEARING
NO LEGEND MAY BE OBTAINED FROM THE COMPANY’S TRANSFER AGENT AND REGISTRAR UPON
DELIVERY OF THIS CERTIFICATE AND A DULY EXECUTED DECLARATION, IN A FORM
SATISFACTORY TO THE COMPANY’S TRANSFER AGENT AND THE COMPANY, TO THE EFFECT THAT
THE SALE IS BEING MADE IN COMPLIANCE WITH RULE 904 OF REGULATION S UNDER THE
SECURITIES ACT.”

     

    In
addition, each certificate representing any of the Securities will bear the
following legend in respect of resales in Canada:

     

     

    
      
        
        

      

      
        13

        
          

        

      

      
        
        

      

    

     

    “UNLESS PERMITTED UNDER SECURITIES
LEGISLATION, THE HOLDER OF THIS SECURITY MUST NOT TRADE THE SECURITY BEFORE THE
DATE THAT IS FOUR MONTHS AND A DAY AFTER THE DISTRIBUTION DATE.”

     

        
(b)         After the earlier of:
(i) the effectiveness of any Registration Statement and receipt by the Company
of a Purchaser’s written confirmation that the Shares or Warrant Shares covered
thereby will not be disposed of except in compliance with the prospectus
delivery requirements of the Securities Act; or (ii) the date the Shares or
Warrant Shares are eligible for resale without restrictions pursuant to Rule 144
under the Securities Act or other applicable securities laws, the Company shall,
upon such Purchaser’s written request, promptly cause certificates evidencing
such Shares or Warrant Shares to be replaced with certificates that do not bear
such restrictive legends.  When the Company is required to cause
unlegended certificates to replace previously issued legended certificates, if
unlegended certificates are not delivered to a Purchaser within three Business
Days following submission by that Purchaser of legended certificate(s) to the
Company’s transfer agent, together with a representation letter in customary
form, the Company shall be liable to the Purchaser for liquidated damages in an
amount equal to 1% of the aggregate purchase price of the Shares or Warrant
Shares evidenced by such certificate(s) for each 30-day period or portion
thereof (on a pro rata
basis following the first such 30-day period) beyond such three Business Day
period that the unlegended certificates have not been so
delivered.  The Company’s obligation to issue unlegended certificates
pursuant to this Paragraph 6.2(b) shall be excused if: (i) the SEC
promulgates any rule or interpretation expressly prohibiting removal of legends
in such circumstances; (ii) the SEC or other regulatory authority instructs the
Company or its transfer agent not to remove such legends; or (iii) the SEC makes
it a condition to the effectiveness of any Registration Statement to that the
Company continue to keep such legends in place.

     

        
(c)         Notwithstanding the
removal of legends as provided in Paragraph 6.2(b), until a Purchaser’s
Shares or Warrant Shares are sold pursuant to a Registration Statement or are
eligible for resale without restrictions pursuant to Rule 144 under the
Securities Act, the Purchaser shall continue to hold such Shares and Warrant
Shares in the form of a definitive stock certificate and shall not hold the same
in street name or in book-entry form with a securities depository.

     

    
      	
              7.

            	
              Covenants and
      Agreements of the Company.

            

    

     

    7.1           Reports.  The
Company will furnish to the Purchasers and/or their assignees such information
relating to the Company and its subsidiaries as from time to time may reasonably
be requested by the Purchasers and/or their assignees; provided, however, that the Company
shall not disclose material nonpublic information to the Purchasers, or to
advisors to or representatives of the Purchasers, unless prior to disclosure of
such information the Company identifies such information as being material
nonpublic information and provides the Purchasers, such advisors and
representatives with the opportunity to accept or refuse to accept such material
nonpublic information for review and any Purchaser wishing to obtain such
information enters into an appropriate confidentiality agreement with the
Company with respect thereto.

     

    7.2           No Conflicting
Agreements.  The Company will not take any action, enter into
any agreement or make any commitment that would conflict or interfere in any
material respect with the Company’s obligations to the Purchasers under the
Transaction Agreements.

     

    7.3           Compliance with
Laws.  The Company will comply in all material respects with
all applicable laws, rules, regulations, orders and decrees of all governmental
authorities.

     

     

    
      
        
        

      

      
        14

        
          

        

      

      
        
        

      

    

     

    7.4         
  Listing of
Underlying Shares and Related Matters.  The Company shall take
all necessary action to cause the Shares and the Warrant Shares to be listed on
the Toronto Stock Exchange and the American
Stock Exchange no later the earlier of (i) the effective date of the
Registration Statement or (ii) four months after the Closing.  In
addition, if the Company applies to have shares of its Common Stock or other
securities traded on any other principal stock exchange or market, the Company
shall include in such application the Shares and the Warrant Shares and will
take such other action as is necessary to cause such Shares and the Warrant
Shares to be so listed.  The Company will use commercially reasonable
efforts to continue the listing and trading of its Common Stock on the Toronto
Stock Exchange and the American Stock Exchange and, in accordance, therewith,
will use commercially reasonable efforts to comply in all respects with the
Company’s reporting, filing and other obligations under the bylaws or rules of
such market or exchange, as applicable.

     

    7.5        
   Equal Treatment of
Purchasers.  No consideration shall be offered or paid to any
Person to amend or consent to a waiver or modification of any provision of any
of the Transaction Agreements unless the same consideration is also offered to
all of the parties to the Transaction Agreements.  For clarification
purposes, this provision constitutes a separate right granted to each Purchaser
by the Company and negotiated separately by each Purchaser, and is intended for
the Company to treat the Purchasers as a class and shall not in any way be
construed as the Purchasers acting in concert or as a group with respect to the
purchase, disposition or voting of Securities or otherwise.

     

    7.6        
   Termination of Certain
Covenants.  The provisions of Sections 7.1 through 7.4 shall
terminate and be of no further force and effect on the earlier of: (i) the
mutual consent of the Company and the Majority Purchasers; or (ii) the date on
which the Company’s obligations under the Registration Rights Agreement to
register or maintain the effectiveness of any registration covering the
Registrable Securities (as such term is defined in the Registration Rights
Agreement) have terminated.

     

    
      	
              8.

            	
              Miscellaneous
      Provisions.

            

    

     

    8.1       
    Public Statements or
Releases.  Except as set forth below, no public release or
announcement concerning the transactions contemplated hereby shall be issued by
the Company or the Investors without the prior consent of the Company (in the
case of a release or announcement by the Purchasers) or the Majority Purchasers
(in the case of a release or announcement by the Company) (which consents shall
not be unreasonably withheld), except as such release or announcement may be
required by law or the applicable rules or regulations of any securities
exchange or securities market, in which case the Company or the Purchasers, as
the case may be, shall allow the Purchasers or the Company, as applicable, to
the extent reasonably practicable in the circumstances, reasonable time to
comment on such release or announcement in advance of such
issuance.  By 8:30 a.m. (New York City time) on the trading day
immediately following the Closing Date, the Company shall issue a press release
disclosing the transactions contemplated by this Agreement.  In
addition, the Company will make such other filings and notices relating to the
Transaction Agreements and the transactions contemplated thereby in the manner
and time required by the SEC or the Toronto Stock Exchange or the American Stock
Exchange.

     

    8.2         
  Further
Assurances.  Each party agrees to cooperate fully with the
other party and to execute such further instruments, documents and agreements
and to give such further written assurances, as may be reasonably requested by
the other party to better evidence and reflect the transactions described herein
and contemplated hereby, and to carry into effect the intents and purposes of
this Agreement.

     

    8.3      
     Rights
Cumulative.  Each and all of the various rights, powers and
remedies of the parties shall be considered to be cumulative with and in
addition to any other rights, powers and remedies which such parties may have at
law or in equity in the event of the breach of any of the terms of this
Agreement. 

     

     

    
      
        
        

      

      
        15

        
          

        

      

      
        
        

      

    

     The
exercise or partial exercise of any right, power or remedy shall neither
constitute the exclusive election thereof nor the waiver of any other right,
power or remedy available to such party.

     

    8.4       
    Pronouns.  All
pronouns or any variation thereof shall be deemed to refer to the masculine,
feminine or neuter, singular or plural, as the identity of the person, persons,
entity or entities may require.

     

    8.5        
   Notices.  Any
notices, reports or other correspondence (hereinafter collectively referred to
as “correspondence”) required or permitted to be given hereunder shall be in
writing and shall be sent by postage prepaid first class mail, courier or
telecopy or delivered by hand to the party to whom such correspondence is
required or permitted to be given hereunder, and shall be deemed sufficient upon
receipt when delivered personally or by courier, overnight delivery service or
confirmed facsimile, or three business days after being deposited in the regular
mail as certified or registered mail (airmail if sent internationally) with
postage prepaid, if such notice is addressed to the party to be notified at such
party’s address or facsimile number as set forth below:

     

        
(a)       All correspondence to the Company
shall be addressed as follows:

    
    

     

    
      	 	Canadian Superior Energy Inc. 

              3200,
      500 – 4th Avenue SW

              Calgary,
      AB T2P 2V6

              ATTN:
      Chief Executive Officer

            

    

     

    with
a copy (not constituting notice) addressed to:

    
       

      
        	 	
                
                  Borden
      Ladner Gervais LLP

                  1000
      Canterra Tower

                  400
      Third Avenue S.W.

                  Calgary,
      AB T2P 4H2

                  ATTN:
      John J. Poetker, Esq.

                

              

      

       

    

        
(b)       All correspondence to any Purchaser
shall be sent to such Purchaser at the address set forth in Exhibit A, with
a copy (not constituting notice) addressed to:

    
       

      
        	 	
                
                  Howard
      Rice Nemerovski Canady Falk & Rabkin

                  A
      Professional Corporation

                  Three
      Embarcadero Center

                  Seventh
      Floor

                  San
      Francisco, CA 94111

                  ATTN:
      Mark D. Whatley, Esq.

                

              

      

    

     

        
(c)       Any entity may change the address to
which correspondence to it is to be addressed by written notification as
provided for herein.

     

    8.6          
 Captions.  The
captions and paragraph headings of this Agreement are solely for the convenience
of reference and shall not affect its interpretation.

     

    8.7         
  Severability.  Should
any part or provision of this Agreement be held unenforceable or in conflict
with the applicable laws or regulations of any jurisdiction, the invalid or
unenforceable part or provisions shall be replaced with a provision which
accomplishes, to the extent possible, the original business purpose of such part
or provision in a valid and enforceable manner, and the remainder of this
Agreement shall remain binding upon the parties hereto.

     

     

    
      
        
        

      

      
        16

        
          

        

      

      
        
        

      

    

     

    8.8         
  Governing
Law. THIS AGREEMENT (INCLUDING ANY CLAIM OR CONTROVERSY ARISING OUT OF OR
RELATING TO THIS AGREEMENT) SHALL BE GOVERNED
BY AND CONSTRUED IN ACCORDANCE WITH THE LAWS OF THE STATE OF NEW YORK, WITHOUT
GIVING EFFECT TO CONFLICT OF LAWS PRINCIPLES THAT WOULD RESULT IN THE
APPLICATION OF ANY LAW OTHER THAN THE LAW OF THE STATE OF NEW YORK.

     

    8.9         
  Amendments. This
Agreement may not be amended or modified except pursuant to an instrument in
writing signed by the Company and the Majority Purchasers.

     

    8.10          Waiver.  No
waiver of any term, provision or condition of this Agreement, whether by conduct
or otherwise, in any one or more instances, shall be deemed to be, or be
construed as, a further or continuing waiver of any such term, provision or
condition or as a waiver of any other term, provision or condition of this
Agreement.

     

    8.11          Expenses.  Each
party will bear its own costs and expenses in connection with this Agreement;
provided, however that the Company
shall pay the reasonable fees and expenses of Howard Rice Nemerovski Canady Falk
& Rabkin, A Professional Corporation, counsel for Steelhead Partners, LLC
(an affiliate of Steelhead Navigator Master, L.P., one of the Purchasers), in an
amount not to exceed $20,000.

     

    8.12          Assignment.  The
rights and obligations of the parties hereto shall inure to the benefit of and
shall be binding upon the authorized successors and permitted assigns of each
party.  No party may assign its rights or obligations under this
Agreement or designate another person: (i) to perform all or part of its
obligations under this Agreement; or (ii) to have all or part of its rights
and benefits under this Agreement, in each case without the prior written
consent of the other party, provided, however, that a Purchaser may
assign its rights hereunder with respect to any Securities transferred to a
“Qualified Holder” pursuant to and in compliance with Section 12 of the
Registration Rights Agreement, and may designate such Qualified Holder to
perform the duties of the Purchaser hereunder with respect to such transferred
Securities; provided,
further that
irrespective of such transfer and designation the Purchaser shall remain
obligated hereunder with respect to all of such Purchaser’s purchased
Securities.  In the event of any assignment in accordance with the
terms of this Agreement, the assignee shall specifically assume and be bound by
the provisions of the Agreement by executing and agreeing to an assumption
agreement reasonably acceptable to the other party.

     

    8.13          Survival.  The
respective representations and warranties given by the parties hereto, and the
other covenants and agreements contained herein, shall survive the Closing Date
and the consummation of the transactions contemplated herein for a period of two
years, without regard to any investigation made by any party.

     

    8.14          Counterparts; Facsimile
Signatures. This Agreement may be executed in two or more counterparts,
each of which shall be deemed an original and all of which together shall
constitute one instrument. A facsimile, telecopy or electronic reproduction of
this Agreement may be executed by one or more parties hereto and delivered by
such party by facsimile or by electronic transmission pursuant to which the
signature of such party can be seen. Such execution and delivery shall be
considered valid, binding and effective for all purposes.

     

    8.15          Entire
Agreement.  This Agreement, the Warrant and the Registration
Rights Agreement constitute the entire agreement between the parties hereto
respecting the subject matter hereof and supersede all prior agreements,
negotiations, understandings, representations and statements respecting the
subject matter hereof, whether written or oral.  No modification,
alteration, waiver or change in any of 

     

     

    
      
        
        

      

      
        17

        
          

        

      

      
        
        

      

    

    the
terms of this Agreement shall be valid or binding upon the parties hereto unless
made in writing and duly executed by the Company and the Majority
Purchasers.

     

    8.16           Termination.
Notwithstanding anything contained herein to the contrary, if the Closing has
not occurred on or before September 25, 2008, this Agreement may be terminated
at the election of either the Company or the Majority Purchasers; provided, however, that the right to
terminate this Agreement under this Section 8.16 shall not be available to any
party whose action or failure to act has been a principal cause of or resulted
in the failure of the Closing to occur on or before such date and such action or
failure to act constitutes material breach of this Agreement.

     

    [Signature
Pages Follow]

     

     

    
      
        
        

      

      
        18

        
          

        

      

      
        
        

      

    

     

    IN WITNESS WHEREOF, the parties hereto
have executed this Securities Purchase Agreement as of the
day and year first above written.

     

    
      
        	 	CANADIAN
      SUPERIOR ENERGY INC.	 
	 	 	 	 
	
                 

              	
                By:
      

              	 	 
	 	 	 Name:   Craig McKenzie	 
	 	 	 Title:    Chief Executive Officer	 
	 	 	 	 

      

    

    

     

     

     

     

     

     

     

     

     

     

    
      [SIGNATURE
PAGE TO SECURITIES PURCHASE AGREEMENT]

    

     

    
      
        
        

      

      
        
        

        
          

        

      

      
        
        

      

    

     

     

    IN WITNESS WHEREOF, the parties hereto
have executed this Securities Purchase Agreement as of the day and year first
above written.

     

    
       

      
        
          	 	STEELHEAD
      NAVIGATOR MASTER, L.P.	 
	 	 	 	 
	
                   

                	
                  By:
      

                	
                  STEELHEAD
      OFFSHORE PARTNERS, LLC,

                  its
      General Partner

                	 
	 	 	 By:   Steelhead
      Partners, LLC, its sole Member	 
	 	 	 	 
	 	 	 	 
	 	 	By
      Carol Lokey, Chief Financial Officer	 

        

      

      
 

       

       

       

       

       

    

     

     

     

    
      [SIGNATURE
PAGE TO SECURITIES PURCHASE AGREEMENT]

    

     

    
      
        
        

      

      
        
        

        
          

        

      

      
        
        

      

    

    

     

    

    
    

    IN WITNESS WHEREOF, the parties hereto
have executed this Securities Purchase Agreement as of the day and year first
above written.

     

    

    
      
        	 
      	Buyer:
      	
                Micro
      Cap Partners, L.P.

              	 
      
	 
      	By:
      	
                Palo
      Alto Investors, LLC, its general partner

              	 
      
	 
      	 
      	 
      
	 
      	 
      	 
      
	 
      	
                By:

              	 	
                 

              	 
      
	 
      	Name:	
                Mark
      Shamia

              	 
      
	 
      	Title:	
                Chief
      Operating Officer

              	 
      
	 
      	 
      	 
      
	 
      	 
      	 
      
	 
      	Buyer:
      	
                UBTI
      Free, L.P.

              	 
      
	 
      	By:
      	
                Palo
      Alto Investors, LLC, its general partner

              	 
      
	 
      	 
      	 
      
	 
      	 
      	 
      
	 
      	
                By:

              	 	
                 

              	 
      
	 
      	Name:	
                Mark
      Shamia

              	 
      
	 
      	Title:	
                Chief
      Operating Officer

              	 
      
	 
      	 
      	 
      
	 
      	 
      	 
      
	 
      	Buyer:
      	
                Palo
      Alto Small Cap Master Fund, L.P.

              	 
      
	 
      	By:	
                Palo
      Alto Investors, LLC, its general partner

              	 
      
	 
      	 
      	 
      
	 
      	 
      	 
      
	 
      	
                By:

              	 	
                 

              	 
      
	 
      	Name:	
                Mark
      Shamia

              	 
      
	 
      	Title:	
                Chief
      Operating Officer

              	 
      
	 
      	 
      	 
      
	 
      	 
      	 
      
	 
      	Buyer:	
                Palo
      Alto Global Energy Master Fund, L.P.

              	 
      
	 
      	By:
      	
                Palo
      Alto Investors, LLC, its general partner

              	 
      
	 
      	 
      	 
      
	 
      	 
      	 
      
	 
      	
                By:

              	 	
                 

              	 
      
	 
      	Name:	
                Mark
      Shamia

              	 
      
	 
      	Title:	
                Chief
      Operating Officer

              	 
      

      

    

    
 

     

     

     

     

    
      [SIGNATURE
PAGE TO SECURITIES PURCHASE AGREEMENT]

    

     

    
      
        
        

      

      
        
        

        
          

        

      

      
        
        

      

    

    IN WITNESS WHEREOF, the parties hereto
have executed this Securities Purchase Agreement as of the day and year first
above written.

     

    
       

      
        
          	 	TALKOT
      CAPITAL LLC	 
	 	 	 	 
	 	By:	 	 
	 	Name:
      
	 	Title:
      
	 	 	 	 

        

      

      
 

       

       

       

       

      
        [SIGNATURE
PAGE TO SECURITIES PURCHASE AGREEMENT]

      

    

     

    
      
        
        

      

      
        
        

        
          

        

      

      
        
        

      

    

     

    

     

    Exhibit
A

     

    SCHEDULE OF
PURCHASERS

     

    
      	
              Purchaser
      Name and Address

            	
              Number
      of Securities to be Purchased

              (in
      Units)

            	
              Aggregate
      Purchase Price

              (in
      U.S. Dollars)

            
	
               

              Steelhead
      Navigator Master, L.P.

              1301
      – 1st Avenue, Suite 201

              Seattle,
      WA 98101

               

            	
               

              7,000,000

               

            	
               

              $28,000,000

               

            
	
               

              Palo
      Alto Small Cap Master Fund, L.P.

              470
      University Avenue

              Palo
      Alto, CA 94301

               

            	
               

              764,470

               

            	
               

              $3,057,880

               

            
	
               

              Palo
      Alto Global Energy Master Fund, L.P.

              470
      University Avenue

              Palo
      Alto, CA 94301

               

            	
               

              411,500

               

            	
               

              $1,646,000

               

            
	
               

              Micro
      Cap Partners, L.P.

              470
      University Avenue

              Palo
      Alto, CA 94301

               

            	
               

              292,426

               

            	
               

              $1,169,704

               

            
	
               

              UBTI
      Free, L.P.

              470
      University Avenue

              Palo
      Alto, CA 94301

               

            	
               

              31,604

               

            	
               

              $126,416

               

            
	
               

              Talkot
      Capital LLC

              2400
      Bridgeway, Suite 300

              Sausalito,
      CA 94965-2851

               

            	
               

              250,000

               

            	
               

              $1,000,000

               

            
	
               

              TOTAL

               

            	
               

              8,750,000

               

            	
               

              $35,000,000

               

            

    

    

     

    

    
      
        
        

      

      
        
        

        
          

        

      

      
        
        

      

    

     

    Exhibit
B

     

    FORM
OF WARRANT

     

     

    
      
        
        

      

      
        
        

        
          

        

      

      
        
        

      

    

     

    

     

    Exhibit
C

     

    REGISTRATION
RIGHTS AGREEMENT

     

     

    
      
        
        

      

      
        
        

        
          

        

      

      
        
        

      

    

     

    Exhibit
D

     

    PURCHASER’S
CERTIFICATE OF SUBSEQUENT SALE

     

    
      	
              Attention:

               

            	
              Canadian
      Superior Energy Inc.

              Chief
      Financial Officer

               

            

    

    

     

    The
undersigned, [an officer of, or other person duly authorized
by]  ___________________________________________________________  [fill
in official name of individual or institution] hereby certifies that he/she
[said institution] is the Purchaser of the Securities evidenced by the attached
certificate(s), and as such, sold the shares on _____________________ in
accordance with the Registration Statement number ________________________ [fill
in the number of or otherwise identify Registration Statement] and the
requirement of delivering a current prospectus forming a part of such
Registration Statement has been complied with in connection with such
sale.

     

    Print
or Type:

     

    
      	 	
              Name
      of Purchaser

              (Individual
      or Institution):

               

            	
              ___________________________

               

            
	 	
              Name
      of Individual

              Representing
      Purchaser

              (if
      an institution):

               

            	
              ___________________________

               

            
	 	
              Title
      of Individual

              Representing
      Purchaser

              (if
      an institution):

               

            	
              ___________________________

               

            

    

    

     

    Signature
by:

     

    
      	 	
              Individual
      Purchaser

              or
      Individual Representing

              Purchaser:

               

            	
              ___________________________

Source: [{"source": "alea-institute/alea-institute/kl3m-data-edgar-agreements/train-00147-of-00352.parquet"}, [{"source": "alea-institute/alea-institute/kl3m-data-edgar-agreements/train-00147-of-00352.parquet"}]]