In consideration for its services hereunder, including, but not limited to, the ancillary service of acting as financial advisor to the Corporation in respect of the issue of the Offered Securities and advising on the terms and conditions of the Offering, the Agent shall be entitled to the fee and Agent’s Warrants (as defined below) provided for in Section 7, and the reimbursement of its expenses, which amounts shall be payable from the proceeds of the sale of the Offered Securities hereunder at the time and manner as specified in Sections 7 and 8.

 

Section 1                                              Definitions

 

In this Agreement, including the paragraphs prior to this definitional section and any amendment hereto:

 

(a)                                   “ ABCA ” means the Business Corporations Act (Alberta);

 

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

 

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

 

(d)                                  “ Agent’s Counsel ” means Davis & Company LLP, or such other legal counsel as the Agent, with the consent of the Corporation, may appoint;

 

(e)                                   “ Agent’s Warrants ” means the means the agent’s compensation warrants to acquire Common Shares pursuant to Section 7 hereof;

 

(f)                                     “ Agreement ” means this agreement and not any particular Article or Section or other portion except as may be specified, and words such as “hereto”, “herein”, and “hereby” refer to this Agreement as the context requires;

 

(g)                                  “ Applicable Securities Laws ” includes, collectively and without limitation, all applicable Canadian securities and corporate laws, rules, regulations, instruments, notices, blanket orders, statements, circulars, procedures and policies in the Selling Jurisdictions;

 

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

 

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

 

(j)                                      “ Closing Date ” means December 20, 2005, or such other date or dates on or before December 31, 2005 as the Agent and the Corporation may mutually agree upon in writing;

 

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(k)                                   “ Closing Time ” means 10:00 a.m.(Calgary time) or such other time, on the Closing Date, as the Agent and the Corporation may agree;

 

(l)                                      “ Commitment Amount ” means an amount equal to $1.30 multiplied by the number of Flow-Through Shares subscribed and paid for by Subscribers for Flow-Through Shares;

 

(m)                                “C ommon Shares ” means the common shares in the capital of the Corporation from time to time;

 

(n)                                  “ Corporation’s Counsel ” means Burnet, Duckworth & Palmer LLP, or such other legal counsel as the Corporation, with the consent of the Agent, may appoint;

 

(o)                                  “ Debentures ” means the 7% secured convertible debentures having the rights and entitlements set forth in the Indenture;

 

(p)                                  “ Deep Alta ” means Deep Well Oil & Gas (Alberta) Ltd.;

 

(q)                                  “ Deep Well ” means Deep Well Oil & Gas Inc.;

 

(r)                                     “ Deep Well Shares ” means collectively the 755,000 Common Shares issued to Deep Alta and the 6,795,000 Common Shares issued to Northern;

 

(s)                                   “ Dynamo Claim ” means the potential legal claim by Dynamo Energy Corporation against Surge U.S. and the Corporation arising from letter agreements (which were not signed by Surge U.S.) wherein Dynamo Energy Corporation requested Surge U.S. to pay a 2.5% cash finder’s fee on the acquisition cost of the Farmout Lands and a 5% gross overriding royalty on the Farmout Lands;

 

(t)                                     “ Environmental Laws ” has the meaning ascribed to such term in Section 4(ll);

 

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

 

(i)                                      the date on which the Commitment Amount has been fully expended in accordance with the terms hereof and the Subscription Agreements for Flow-Through Shares; and

 

(ii)                                   December 31, 2006;

 

(v)                                  “ Farmout Acknowledgment Agreement ” means the farmout acknowledgment agreement dated November 15, 2005 between Surge U.S., the Corporation, Deep Well, Northern, Deep Alta and the Agent, whereby the parties confirmed the validity, enforceability and continued existence of the Farmout Agreement;

 

(w)                                “ Farmout Agreement ” means the farmout agreement dated February 25, 2005 (as amended) between Surge U.S., the Corporation, Deep Well and Northern, whereby the Corporation has a right to earn a 40% working interest in the Farmout Lands;

 

(x)                                    “ Farmout Lands ” means the lands shown under the heading “Farmout Lands” in Schedule ”A” to the Farmout Agreement, provided that the “Farmout Lands” shall not

 

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include the 6.5 Section Block (as defined in the Farmout Agreement) unless or until Deep Well or Northern acquire a legal or beneficial interest in the Title Documents (as defined in the Farmout Agreement) that comprise the 6.5 Section Block;

 

(y)                                  “ Governmental Entity ” means any (i) federal, provincial, territorial, state, regional, municipal, local or other government, governmental or public department, central bank, court, tribunal, arbitral body, commission, board, bureau or agency, domestic or foreign, (ii) subdivision, agent, commission, board, or authority of any of the foregoing, or (iii) quasi-governmental or private body exercising any regulatory, expropriation or taxing authority under, or for the account of, any of the foregoing;

 

(z)                                    “ Indenture ” means the trust indenture to be dated on or about the Closing Date between the Corporation and the Trustee, as trustee, governing the terms and conditions of the Debentures;

 

(aa)                             “ Jurisdiction ” means one of the jurisdictions listed in Appendix B to NI 45-102;

 

(bb)                           “ Laws ” means all statutes, regulations, statutory rules, orders, judgments, decrees and terms and conditions of any grant of approval, permission, authority, permit or license of any court, Governmental Entity, statutory body or self-regulatory authority;

 

(cc)                             “ Management Group ” means Messrs. Kelly and Cassidy;

 

(dd)                           “ Management Shares ” means an aggregate of 5,100,000 Common Shares issued to Messrs. Kelly, Cassidy (for himself and in trust for issuance to others) and Perez;

 

(ee)                             “ Material Adverse Effec t”, when used in connection with the Corporation, means any change, effect, event or occurrence with respect to its condition (financial or otherwise), properties, assets, liabilities, obligations (whether absolute, accrued, conditional or otherwise), businesses, prospects, operations or results of operations or those of its subsidiaries, that is, or would be reasonably expected to be, material and adverse to the current or future business, operations, regulatory status, financial condition or results of operations of the Corporation, as the case may be, and its subsidiaries taken as a whole;

 

(ff)                                 “ NI 45-102 ” means National Instrument 45 – 102 - Resale of Securities ;

 

(gg)                           “ Northern ” means Northern Alberta Oil Ltd.;

 

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

 

(ii)                                   “ Public Record ” means all information filed by or on behalf of the Corporation with the Securities Commissions, including without limitation, any information so filed with any Securities Commission in compliance, or intended compliance, with any Applicable Securities Laws;

 

(jj)                                   “ Qualifying Expenditures ” means expenses that are CEE at the date they are incurred;

 

(kk)                             “ Release and Indemnification Agreement ” means the agreement dated November 15, 2005 between the Corporation and Surge U.S. which provides for, among other things,

 

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the fixing of the Corporation’s liabilities and an indemnity from Surge U.S. for any additional liabilities above the thresholds set out therein;

 

(ll)                                   “ Sawn Lake Project ” means the proposed oil and gas exploration project to be conducted on the Farmout Lands by the Corporation;

 

(mm)                       “ Securities Commissions ” means the securities commissions or similar regulatory authorities in the Selling Jurisdictions and “ Securities Commission ” means any one of them;

 

(nn)                           “ Selling Jurisdictions ” means the provinces of Alberta and Ontario and such other provinces and foreign jurisdictions as may be agreed by the Agent and the Corporation prior to the Closing Date, as evidenced by the Corporation’s acceptance of a Subscription Agreement with respect thereto;

 

(oo)                           “ Series I Agent’s Warrants ” means the 684,000 common share purchase warrants of the Corporation issued to the Agent entitling the Agent to purchase up to 684,000 Common Shares at an exercise price of $1.00 per share until 4:30 p.m. (Calgary time) on that date that is the earlier of: (i) 12 months following the date on which the Corporation completes a Going Public Transaction (as defined therein); and (ii) November 17, 2008;

 

(pp)                           “ Series I Debentures ” means the aggregate principal amount of $8,550,000 of 7% secured convertible debentures issued on November 15, 2005 having the rights and entitlements set forth in the Series I Indenture;

 

(qq)                           “ Series I Indenture ” means the trust indenture dated November 15, 2005 among the Corporation, Surge U.S. and the Trustee, as trustee, governing the terms and conditions of the Series I Debentures;

 

(rr)                                 “ Shareholder Agreement ” means the agreement dated November 15, 2005 (as amended) among the Corporation, Surge U.S., Leigh Cassidy, Fred Kelly and David Perez which provides for certain voting restrictions of the Common Shares;

 

(ss)                             “ Subscriber ” means a person who executes a Subscription Agreement which is accepted by the Corporation in form and substance satisfactory to the Corporation’s Counsel and the Agent’s Counsel, acting reasonably;

 

(tt)                                 “ Subscription Agreement ” means the agreement entered into by each Subscriber for Offered Securities and accepted by the Corporation at the Closing Time in respect of the Subscriber’s subscription for Offered Securities pursuant to this Offering;

 

(uu)                           “ subsidiary ” has the meaning ascribed thereto in the Securities Act (Alberta);

 

(vv)                           “ Surge U.S. ” means Surge Global Energy, Inc.;

 

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

 

(xx)                               “ to the knowledge ” or “ to the best of the knowledge ” of the Corporation (or words to like effect in this Agreement), means that the Corporation shall be required, in addition

 

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to making any other reasonable inquiries, to make inquiries of officers of the Corporation;

 

(yy)                           “ Trustee ” means Valiant Trust Company, and such successor trustee as may be appointed from time to time under the Indenture and the Series I Indenture;

 

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

 

(aaa)                       “ Voting Agreement ” means the voting trust agreement dated November 15, 2005 among Surge U.S., Northern and Deep Alta which provides Surge U.S. with voting proxy over the Deep Well Shares until February 25, 2007.

 

“ misrepresentation ”, “ material change ” and “ material fact ” shall have the meanings ascribed thereto under the Applicable Securities Laws of the Selling Jurisdictions, “ distribution ” means “ distribution ” or “ distribution to the public ”, as the case may be, as defined under the Applicable Securities Laws of the Selling Jurisdictions and “ distribute ” has a corresponding meaning.  In this Agreement, words importing the singular include the plural and words importing gender include all genders.

 

Section 2                                              Corporation’s Covenants

 

The Corporation covenants and agrees:

 

(a)                                   that the Offered Securities will be duly and validly authorized and issued pursuant to the terms of the Subscription Agreements;

 

(b)                                  the Common Shares issuable upon the conversion of the Debentures will be reserved for issuance at the Closing Time;

 

(c)                                   as soon as reasonably possible, and in any event by the Closing Date, to take all such steps as may reasonably be necessary to enable the Offered Securities to be offered for sale and sold on a private placement basis to Subscribers in the Selling Jurisdictions through the Agent or any other investment dealers or brokers registered in any of the Selling Jurisdictions by way of the exemptions under Applicable Securities Laws of each of the Selling Jurisdictions, and not to take any action that would prevent the Corporation and the Agent from relying on the exemptions from the prospectus requirements of Applicable Securities Laws as contemplated by the Subscription Agreements;

 

(d)                                  to duly, punctually and faithfully perform and comply with all the obligations to be performed by it, and all of its covenants and agreements under and pursuant to this Agreement, the Subscription Agreements and the Indenture;

 

(e)                                   it will file all necessary forms and reports with the appropriate Securities Commissions and other regulatory authorities in connection with the issuance of the Offered Securities and the Agent’s Warrants;

 

(f)                                     the Corporation will carry on its business in a prudent manner in accordance with industry standards and good business practice and will keep or cause to be kept proper books of accounts in accordance with applicable law;

 

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(g)                                  the Corporation will not, from the date hereof until the earlier of the conversion of all of the issued Debentures into Common Shares or the repayment of all of the issued Debentures (including all interest payable thereon); approve, implement, adopt or authorize any stock option plan, performance warrant plan or other stock based compensation plan (collectively, the “ Option Plan ”) which allows for the issuance of Common Shares in an aggregate amount greater than 5% of the issued and outstanding Common Shares;

 

(h)                                  the Corporation will not, from the date hereof until the earlier of: (i) the conversion of all of the issued Debentures into Common Shares or the repayment of all of the issued Debentures (including all interest payable thereon); or (ii) the date on which the Corporation has completed an offering (or offerings) of securities to the public for gross proceeds of at least an aggregate of $10,000,000 (calculated from November 16, 2005), grant options or similar convertible securities issuable pursuant to the Option Plan to the Management Group or to any director nominated by Surge U.S. pursuant to the Shareholder Agreement;

 

(i)                                      the Corporation will not, from the date hereof until that date that is 90 days following the Closing Date, directly or indirectly, sell, or offer to sell, or announce the offering of, or enter into or make any agreement or understanding, or announce the making or entry into of any agreement or understanding, to issue, sell or exchange any Common Shares, securities exchangeable or convertible into Common Shares without the prior written consent of the Agent, not to be unreasonably withheld, provided that the foregoing will not restrict the Corporation from granting options pursuant to a share option plan or issuing Common Shares on the exercise of outstanding securities of the Corporation;

 

(j)                                      to keep proper books, records and accounts of all Qualifying Expenditures and all transactions affecting the Commitment Amount and the Qualifying Expenditures and upon reasonable notice and on a reasonable basis, to make such books, records and accounts available for inspection and review by the Agent;

 

(k)                                   to incur, during the Expenditure Period, Qualifying Expenditures in such amount as enables the Corporation to renounce to the Subscribers for Flow-Through Shares, Qualifying Expenditures in an amount equal to the Commitment Amount;

 

(l)                                      to renounce to the Subscribers for Flow-Through Shares, pursuant to subsections 66(12.6) and 66(12.66) of the Act and effective on or before December 31, 2005, Qualifying Expenditures incurred during the Expenditure Period in an amount equal to the Commitment Amount;

 

(m)                                to deliver to the Subscribers for Flow-Through Shares within the time period required by the Act and in any event, not later than March 31, 2006, a statement setting forth the aggregate amounts of such Qualifying Expenditures renounced to the Subscribers for Flow-Through Shares;

 

(n)                                  that all Qualifying Expenditures renounced to the Subscribers for Flow-Through Shares pursuant to the Flow-Through Share Subscription Agreements will be Qualifying Expenditures incurred by the Corporation that, but for the renunciation to the Subscribers for Flow-Through Shares, the Corporation would be entitled to deduct in computing its income for the purposes of Part I of the Act;

 

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(o)                                  that the Corporation will not reduce the amount to be renounced to the Subscribers for Flow-Through Shares and, in the event the Minister of National Revenue reduces the amount renounced to the Subscribers for Flow-Through Shares pursuant to subsection 66(12.73) of the Act, the Corporation shall indemnify the Subscribers for Flow-Through Shares as to, and pay in full settlement thereof to the Subscribers for Flow-Through Shares, an amount equal to the amount of any tax payable under the Act (and under any corresponding provincial legislation) by the Subscribers for Flow-Through Shares as a consequence of such reduction;

 

(p)                                  that if the Corporation does not renounce to the Subscribers for Flow-Through Shares Qualifying Expenditures equal to the Commitment Amount effective on or before December 31, 2005, the Corporation shall indemnify the Subscribers for Flow-Through Shares as to, and pay in full settlement thereof to the Subscribers for Flow-Through Shares, an amount equal to the amount of any tax payable under the Act (and under any corresponding provincial legislation) by the Subscribers for Flow-Through Shares as a consequence of such failure;

 

(q)                                  that the Corporation will maintain its status as a Principal Business Corporation throughout the Expenditure Period;

 

(r)                                     to file all prescribed forms required under the Act with respect to the issuance of the Flow-Through Shares as “flow-through shares” as defined in subsection 66(15) of the Act and that are necessary to renounce Qualifying Expenditures equal to the Commitment Amount to the Subscribers for Flow-Through Shares effective on or before December 31, 2005 and to provide the Subscribers for Flow-Through Shares with a copy of all such forms as are required to be provided thereto, all on a timely basis;

 

(s)                                   that the Corporation will not be subject to the provisions of subsection 66(12.67) of the Act in a manner which impairs its ability to renounce Qualifying Expenditures to the Subscribers for Flow-Through Shares in an amount equal to the Commitment Amount; and

 

(t)                                     that the Corporation will refrain from entering into transactions or taking deductions which would otherwise reduce its cumulative CEE to an extent it would preclude renunciation of Qualifying Expenditures in an amount equal to the Commitment Amount as contemplated herein and in the Subscription Agreements for Flow-Through Shares.

 

Section 3                                              Agent’s Covenants

 

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

 

(a)                                   conduct its activities in connection with the proposed offer and sale of the Offered Securities in compliance with all Applicable Securities Laws in the Selling Jurisdictions;

 

(b)                                  not solicit subscriptions for Offered Securities, trade in Offered Securities or otherwise do any act in furtherance of a trade of Offered Securities outside of the Selling Jurisdictions, provided that the Agent may so solicit, trade or act within such jurisdiction only if such solicitation, trade or act is in compliance with Applicable Securities Laws in such jurisdiction and does not: (i) obligate the Corporation to file a prospectus or registration statement or otherwise take any action to qualify any of its securities or any

 

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trade of any of its securities; (ii) obligate the Corporation to establish or maintain any office or director or officer in such jurisdiction; or (iii) subject the Corporation to any reporting or other requirement in such jurisdiction;

 

(c)                                   obtain from each Subscriber an executed Subscription Agreement, and all applicable undertakings, questionnaires and other forms required under Applicable Securities Laws of the Selling Jurisdictions and supplied to the Agent by the Corporation for completion in connection with the distribution of the Offered Securities; and

 

(d)                                  not: (i) advertise the proposed Offering or sale of the Offered Securities in printed media of general and regular paid circulation or any similar medium, radio, television or telecommunications, including electronic display; or (ii) provide or make available to prospective purchasers of Offered Securities any document or material which would constitute an offering memorandum as defined under Applicable Securities Laws in the Selling Jurisdictions.

 

Section 4                                              Representations and Warranties of the Corporation

 

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

 

(a)                                   the Corporation has been duly incorporated and is a valid and subsisting corporation under the provisions of the laws of its jurisdiction of incorporation, has all requisite corporate power and authority to carry on its business as now being carried on by it and to own or lease and operate its properties and assets and is duly licensed or otherwise qualified to carry on business in each jurisdiction in which the nature of the business conducted by it or the ownership or leasing of its properties makes such qualification necessary, except where, individually or in the aggregate, the failure to be so licensed or qualified would not have a Material Adverse Effect on the Corporation;

 

(b)                                  the authorized share capital of the Corporation consists of an unlimited number of the Common Shares.  As at December 20, 2005, 24,000,000 Common Shares are issued and outstanding as fully paid and non-assessable shares.  All the Common Shares were offered, issued and sold in compliance with Applicable Securities Laws in distributions exempt from the prospectus and registration requirements of such securities laws, and all notices and filings in respect of such distributions have been made by the Corporation within the time and within the manner required by the securities laws;

 

(c)                                   except for the Series I Debentures and the Series I Agent’s Warrants, the Corporation does not have any outstanding agreements, subscriptions, warrants, options or commitments (pre-emptive, contingent or otherwise), nor has it granted any rights or privileges capable of becoming an agreement, subscription, warrant, option or commitment, obligating the Corporation to offer, sell, repurchase or otherwise acquire, transfer, pledge or encumber any shares in the capital of the Corporation, or other securities, nor are there outstanding any securities or obligations of any kind convertible into or exercisable or exchangeable for any capital stock of the Corporation.  Except as set out above, there are no outstanding bonds, debentures or other evidences of indebtedness of the Corporation having the right to vote or that are exchangeable or convertible for or exercisable into securities having the right to vote with holders of Common Shares on any matter as of the date hereof.  There are no outstanding securities

 

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of the Corporation in addition to Common Shares having the right to vote with holders of Common Shares on any matter;

 

(d)                                  the Corporation has no subsidiaries;

 

(e)                                   the Corporation has full corporate power, capacity and authority to issue the Debentures, and at the Closing Time, all necessary corporate action will have been taken by the Corporation to allot and authorize the issuance of the Debentures and upon receipt of payment therefor, the Debentures will be validly issued;

 

(f)                                     the Corporation has full corporate power, capacity and authority to issue the Common Shares issuable upon the conversion of the Debentures, and at the Closing Time, all necessary corporate action will have been taken by the Corporation to allot and authorize the issuance of the Common Shares issuable upon the conversion of the Debentures and such Common Shares will be validly issued as fully-paid and non-assessable Common Shares in the capital of the Corporation;

 

(g)                                  the Corporation has full corporate power, capacity and authority to issue the Flow-Through Shares, and at the Closing Time, all necessary corporate action will have been taken by the Corporation to allot and authorize the issuance of the Flow-Through Shares and upon receipt of payment therefor, the Flow-Through Shares will be validly issued as fully paid and non-assessable Common Shares in the capital of the Corporation;

 

(h)                                  the Corporation is not in default or breach of, and the execution and delivery of, and the performance of and compliance with the terms of, this Agreement, the Indenture and the Subscription Agreements by the Corporation or any of the transactions contemplated thereby, do not and will not result in any breach of, or constitute a default under, and do not and will not create a state of facts which, after notice or lapse of time or both, will result in a breach of or constitute a default under: (i) any applicable laws; (ii) any term or provision of the articles, by-laws or resolutions of the directors (or committee thereof) or shareholders of the Corporation; (iii) any mortgage, note, indenture, contract, agreement (written or oral), instrument, lease or other document to which the Corporation is a party or by which it is bound; or (iv) any judgment, decree, order, statute, rule or regulation applicable to the Corporation or its properties or assets, which default or breach might reasonably be expected to materially adversely affect the business, operations, capital or condition (financial or otherwise) of the Corporation or its properties or assets (on a combined basis) or would impair the ability of the Corporation to consummate the transaction contemplated hereby or to duly observe and perform any of its covenants or obligations contained in this Agreement, the Indenture and the Subscription Agreements;

 

(i)                                      the Corporation has full corporate power, capacity and authority to enter into this Agreement, the Indenture and the Subscription Agreements, and to perform its obligations set out herein and therein, and this Agreement is, and the Indenture and the Subscription Agreements will on the Closing Date be, duly authorized, executed and delivered by the Corporation, and this Agreement is, and the Indenture and the Subscription Agreements will on the Closing Date be, legal, valid and binding obligations of the Corporation enforceable against the Corporation in accordance with their respective terms, subject to the general qualifications that:

 

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

 

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

 

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

 

(iv)                               the enforceability of any provision may be limited by and subject to applicable laws regarding limitations of actions;

 

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

 

(vi)                               enforceability may be limited by the equitable or statutory powers of the courts in Canada having jurisdiction to stay proceedings before them and the execution of judgments; and

 

(vii)                            rights to indemnity and contribution hereunder may be limited under applicable law;

 

(j)                                      the Corporation has not received any communications alleging that the Corporation has violated or, by conducting its business as proposed, would violate any of the patents, trademarks, service marks, trade names, copyrights or trade secrets or other proprietary rights of any other person or entity and the Corporation is not aware of any potential basis for such an allegation or of any reason to believe that such an allegation may be forthcoming;

 

(k)                                   the Corporation is not a party to or bound by any agreement of guarantee, indemnification (other than an indemnification of directors and officers in accordance with the by-laws of the Corporation and applicable laws, and the indemnification provided for herein) or any other like commitment of the obligations, liabilities (contingent or otherwise) or indebtedness of any other person;

 

(l)                                      except as disclosed to the Agent in the due diligence session on December 19, 2005, the Corporation does not have any loans or other indebtedness outstanding which have been made to or from any of its shareholders, officers, directors or employees or any other person not dealing at arm’s length with it that are currently outstanding;

 

(m)                                except as disclosed to the Agent in the due diligence session on December 19, 2005, no shareholder, officer, director, employee or any other person not dealing at arm’s length with the Corporation or, to the knowledge of the Corporation, any associate or affiliate of any such person, owns, has or is entitled to any royalty, net profits interest, carried interest or any other encumbrances or claims of any nature whatsoever which are based on the Sawn Lake Project, the Farmout Agreement, the Farmout Acknowledgement Agreement or any revenue or rights attributed thereto;

 

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(n)                                  the Corporation is not a “reporting issuer”, within the meaning of the Applicable Securities Laws, of any jurisdiction and the Common Shares are not currently listed for trading on any stock exchange;

 

(o)                                  the form and terms of definitive certificates representing the Common Shares of the Corporation have been duly approved and adopted by the Corporation and comply with all legal requirements relating thereto;

 

(p)                                  the form and terms of definitive certificates representing the Debentures have been duly approved and adopted by the Corporation;

 

(q)                                  no authorization, approval or consent