ROYALTY INTEREST REPURCHASE AGREEMENT
ROYALTY INTEREST REPURCHASE AGREEMENT
THIS AGREEMENT is made as of the 6th day of July, 2003
BETWEEN:
DYNAMIC OIL & GAS, INC. a British Columbia company with its principal place of business located at 230 – ▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇▇▇ ▇▇▇, ▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇ ▇▇▇ ▇▇▇ (the “Purchaser”)
AND:
▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇, a professional engineer having a residence located at ▇▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇▇, ▇▇▇▇ ▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇ ▇▇▇ ▇▇▇ (the “Seller”)
WHEREAS:
| A. | The Seller was previously granted certain
royalty interests (the “Royalty Interests”) in respect
of petroleum substances within, upon or under certain lands in which the
Purchaser had an interest under the terms of an Overriding Royalty Agreement
dated August 31, 1990 (the “Royalty Agreement”); |
| B. | The Purchaser has agreed to purchase
and the Seller has agreed to sell the Royalty Interests for the price
and on the terms stated in this Agreement. |
NOW THEREFORE in consideration of the covenants, promises, representations and warranties set forth herein, and for other good and valuable consideration, intending to be legally bound hereby the parties agree as follows:
| 1. | Definitions.: |
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(a) |
the following terms shall
have the following meanings in this Agreement: |
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(i) |
“Closing Date” means
July 7, 2003 or such other date as the parties may agree; and |
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(ii) |
“Encumbrances” means
any lien, mortgage, charge, hypothec, pledge, security interest, prior
assignment, option, warrant, lease, sublease, right to possession, encumbrance,
claim, right or restriction which affects, by way of a conflicting ownership
interest or otherwise, the right, title or interest in or to the Royalty
Interests; and |
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(b) |
capitalized terms not otherwise
defined in this Agreement shall have the meaning assigned in the Royalty
Agreement. |
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| 2. | Purchase and Sale
of Royalty Interests. Upon the terms and subject to the conditions
of this Agreement, and in consideration of the Purchase Price, the Seller
shall sell, assign, transfer and deliver the Royalty Interests free of
Encumbrances to the Purchaser and the Purchaser shall purchase from the
Seller and take delivery of the Royalty Interests with effect from the
Closing Date. |
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| 3. | Purchase Price.
The aggregate purchase price for the Royalty Interests shall be Cdn.$2,172,000
(the “Purchase Price”), payable by the Purchaser to the
Seller, subject to section 4, through the issuance of 413,714 common shares
of the Purchaser on the Closing Date (the “Shares”) at
a deemed price per share of Cdn.$5.25. |
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| 4. | Withholding Taxes.
The Purchaser shall be entitled to withhold from the Purchase Price
those amounts required to be withheld as taxes, governmental charges or
assessments, including, but not limited to, all amounts required to be
withheld pursuant to the Income Tax Act (Canada), the Canada
Pension Plan, the Employment Insurance Act and any other applicable
legislation. |
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| 5. | Closing. The
closing of the purchase and sale of the Royalty Interests and the other
transactions contemplated herein (the “Closing”) shall
take place at 12:01 a.m. (Vancouver time) on July 7, 2003 at the offices
of the Purchaser. At the Closing, the Seller shall deliver to the Purchaser
a certificate confirming the representations and warranties contained
in section 6 are true and correct on and as if made at Closing. At the
Closing, the Purchaser shall deliver the Shares. |
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| 6. | Representations and
Warranties of the Seller. As an inducement to the Purchaser to
enter into this Agreement and consummate the transactions contemplated
hereby, the Seller represents and warrants to the Purchaser that: |
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(a) |
the Seller owns and has good and marketable
title to and possession of the Royalty Interests, free and clear of any
Encumbrances; |
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(b) |
no person other than the Purchaser has
any agreement, option, right or privilege capable of becoming an agreement
for the purchase from the Seller of the Royalty Interests; |
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(c) |
the execution of this Agreement by the
Seller does not and the consummation of the transfer of Royalty Interests
will not require any consents or approvals of any third party; |
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(d) |
the Seller is not in a any way subject
or party to any unsatisfied judgments, consent decrees, injunctions, litigation,
proceedings, actions or claims which could result in a judgment against
the Seller leading to the impairment or loss of the Seller’s title
to the Royalty Interests; |
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(e) |
the Seller is not violating, contravening,
breaching, or creating a default under any law, statute, regulation, order,
judgment, or decree applicable to the Seller by becoming party to this
Agreement or performing the provisions hereof; |
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(f) |
the Seller is not in a relationship
in respect of which a “triggering event” (as defined in Part
5 of the Family Relations Act (British Columbia), or any applicable
similar legislation in any other jurisdictions) has occurred; |
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(g) |
the Seller has obtained independent
legal advice for himself and for his spouse in connection with the purchase
and sale of the Royalty Interests; and |
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(h) |
the Seller is not a non-resident of
Canada within the meaning of section 116 of the Income Tax Act (Canada). |
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| 7. | Representations and
Warranties of the Purchaser. As an inducement to the Seller to
enter into this Agreement and consummate the transactions contemplated
hereby, the Purchaser represents and warrants to the Seller that: |
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(a) |
the Purchaser is a corporation
duly incorporated under the laws of the jurisdiction of British Columbia
and is duly organized, validly subsisting and in good standing under such
laws; |
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(b) |
as at the Closing Date,
this Agreement has been duly executed and delivered by and constitutes
the legal, valid and binding obligations of the Purchaser, enforceable
against it in accordance with its terms. All actions contemplated by the
Purchaser have been duly and validly authorized by all necessary proceedings
by the Purchaser; and |
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(c) |
as a the Closing Date, the
Shares will be duly and validly authorized, allotted and issued as fully
paid and non-assessable. |
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| 8. | Conditions of Closing.
The Purchaser shall not be obligated to complete the purchase and
sale of the Royalty Interests pursuant to this Agreement unless at or
before the Closing Date, unless each of the following conditions, which
conditions are for the sole benefit of the Purchaser and may be waived
in whole or in part by the Purchaser, has been satisfied, and the Seller
agrees with the Purchaser to take all such actions, steps and proceedings
as necessary to ensure the following conditions are fulfilled at or before
the Closing Date: |
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(a) |
the representations and
warranties of the Seller contained in section 6 shall be true and correct
at Closing; |
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(b) |
the Seller shall have performed
and complied with all of the terms and conditions in this Agreement on
its part to be performed or complied with at or before Closing and shall
have executed and delivered or caused to have been executed and delivered
to the Purchaser at the Closing all the documents contemplated in this
Agreement, tendered in accordance with this Agreement; |
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(c) |
there shall be no litigation
or proceedings: |
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(i) |
pending against the Seller
or involving the assets or properties of the Seller, for the purpose of
enjoining, preventing or restraining the completion of the transactions
contemplated hereby or otherwise claiming that such completion is improper;
or |
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(ii) |
pending against the Seller
which: |
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(A) |
in the result, could adversely affect
the right of the Purchaser to acquire or retain the Royalty Interests;
or |
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(B) |
in the judgment of the Purchaser, would
make the completion of the transactions contemplated by this Agreement
inadvisable; and |
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(d) |
the Seller shall have delivered
to the Purchaser an executed release in the form attached as Schedule
“A” which: |
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(i) |
fully discharges and releases
the Purchaser from any obligations under the Royalty Agreement; and |
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(ii) |
fully discharges and releases
any Lien arising under the Royalty Agreement; |
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(e) |
the Seller shall have delivered to the
Purchaser an executed general conveyance agreement in the form attached
as Schedule “B”; and |
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(f) |
the Seller shall have delivered to the
Purchaser an executed copy of this Agreement. |
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| 9. | Time. Time
shall be of the essence of this Agreement. |
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| 10. | Further Actions.
Each of the Seller and the Purchaser shall promptly do, execute, deliver
or cause to be done, executed and delivered all further acts, documents
and things in connection with this Agreement that the other party may
reasonably require, for the purposes of giving effect to this Agreement. |
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| 11. | Entire Agreement.
This Agreement constitutes the entire agreement between the parties
with respect to the subject matter hereof and supercedes all prior negotiations,
proposals and agreements, whether oral or written, with respect to the
subject matter of this Agreement. |
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| 12. | Amendment. No
term or provision hereof may be amended except by an instrument in writing
signed by all of the parties to this Agreement. |
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| 13. | Waiver. Failure
by any party hereto to insist in any instance upon the strict performance
of any one of the covenants contained herein will not be construed as
a waiver or relinquishment of such covenant. No waiver by any party hereto
of any such covenant will be deemed to have been made unless expressed
in writing and signed by the waiving party. |
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| 14. | Severability.
The unlawfulness or invalidity of any provision in this Agreement
or of any covenant herein contained on the part of any party will not
affect the validity or enforceability of any other provision or covenant
hereof or herein contained and may be individually severed herefrom. |
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| 15. | Successors and Assigns.
This Agreement will enure to the benefit of and be binding upon the
parties hereto, their permitted assigns and their personal representatives,
administrators, heirs and successors. |
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| 16. | Governing Law.
This Agreement shall be governed by and construed in accordance with
the laws of the Province of British Columbia and the laws of Canada applicable
in that Province and shall be treated in all respect as a British Columbia
contract. |
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| 17. | Counterparts. This Agreement may be
executed in any number of counterparts, each of which shall be deemed
to be an original and all of which taken together shall be deemed to constitute
one and the same instrument. |
IN WITNESS WHEREOF the parties have executed this Agreement.
| DYNAMIC OIL & GAS, INC. | |||||
| Per: | |||||
| (Authorized Signatory) | |||||
| Signed, Sealed and Delivered by ▇▇▇▇▇ ▇. | ) | ||||
| ▇▇▇▇▇▇▇: | ) | ||||
| ) | |||||
| In the presence of: | ) | ||||
| ) | |||||
| ) | |||||
| Witness (Signature) | ) | ▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇ | (seal) | ||
| ) | |||||
| ) | |||||
| Name (Please print) | ) | ||||
SCHEDULE A - RELEASE
[ATTACHED]
RELEASE
I, ▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇, in consideration of payments made to me under a Royalty Interest Repurchase Agreement dated as of the date hereof between J.R. ▇▇▇▇▇▇▇ and Dynamic Oil & Gas, Inc. (the “Company”) hereby release and forever discharge the Company, its subsidiaries and affiliates, their directors, officers, employees, agents, successors, executors, estates, assigns and representatives, of and from all manner of actions, causes of action, suits, debts, accounts, convenants, contracts, liabilities, expenses, claims and demands of every nature and kind whatsoever which I have had, now have or which any affiliates, associates, agents, successors, personal representatives, assigns or administrators or any of them, hereafter can, shall or may have against the Company, its subsidiaries and affiliates, their directors, officers, employees, agents, successors, executors, estates, assigns and representatives, for or by reason of any cause, matter or thing whatsoever in connection with certain royalty interests (the “Royalty Interests”) in respect of petroleum substances within, upon or under certain lands in which the Company had an interest, including, without limitation, any and all liens, charges, security interests, obligations, liabilities, arrangements and payments under the Overriding Royalty Agreement dated as of August 31, 1990 between J.R. ▇▇▇▇▇▇▇ and the Company.
I, ▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇ also hereby acknowledge and warrant that I have had an opportunity to consult and obtain advice from my own solicitors before entering into this Release and I have read this Release and know the contents and fully understand them.
IN WITNESS WHEREOF the undersigned has hereunto set his hand and seal this day of June, 2003.
| Signed, Sealed and Delivered by ▇▇▇▇▇ ▇. | ) | ||||
| ▇▇▇▇▇▇▇: | ) | ||||
| ) | |||||
| In the presence of: | ) | ||||
| ) | |||||
| ) | |||||
| Witness (Signature) | ) | ▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇ | (seal) | ||
| ) | |||||
| ) | |||||
| Name (Please print) | ) | ||||
SCHEDULE B - CONVEYANCE
[ATTACHED]
GENERAL CONVEYANCE AND ASSUMPTION OF LIABILITIES AGREEMENT
(Section 8(e))
This General Conveyance Agreement (“this Conveyance”) dated July 6, 2003 is made
B E T W E E N
▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇ (the “Seller”)
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DYNAMIC OIL & GAS, INC. (the “Purchaser”)
WHEREAS pursuant to a royalty interest repurchase agreement made between the Seller and the Purchaser dated July 6, 2003 (the “Agreement”), the Seller has agreed to sell to the Purchaser and the Purchaser has agreed to purchase from the Seller certain royalty interests, all on the terms and conditions more particularly set out therein;
THIS CONVEYANCE WITNESSES that in pursuance of the Agreement and for good and valuable consideration, the receipt and adequacy of which are hereby acknowledged by the parties, the parties agree as follows:
1. Unless otherwise stated, the terms used in this Conveyance have the meanings given to them in the Agreement.
2. The Seller hereby absolutely and irrevocably grants, bargains, sells, assigns, transfers, conveys and sets over the Royalty Interests, with effect as of July 7, 2003, together with all the Seller’s right, title, interest, property, claim and demand in and to the Royalty Interests, to the Purchaser, its successors and assigns, to have and to hold the said Royalty Interests and all such right, title, interest, property, claim and demand unto and to the use of the Purchaser, its successors and assigns.
3. The Seller covenants, represents and warrants as follows:
| (a) | The Seller is now rightfully and absolutely
possessed of and entitled to the Royalty Interests and every part thereof,
and the Seller now has good right to transfer and assign the same to the
Purchaser, and the Purchaser shall and may immediately upon the execution
and delivery of this Conveyance have possession of and may from time to
time and at all times hereafter peaceably and quietly have, hold, possess
and enjoy the Royalty Interests and every part thereof to and for its
own use and benefit without any manner of hindrance, interruption, molestation,
claim or demand of, from or by the Seller or any other Person and free
and clear and absolutely released and discharged from and against all
former and other bargains, sales, gifts, grants and Encumbrances. |
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| (b) | The Seller will from time to time and
at all times hereafter, upon every reasonable request of the Purchaser,
make, do and execute or cause and procure to be made, done and executed
all such further acts, deeds or assurances as may be reasonably |
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required by the Purchaser to give effect to this
Conveyance, whether for more effectually and completely vesting in the
Purchaser the Royalty Interests or for the purpose of registration or
otherwise. |
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| (c) | In any instance where the Seller has not complied
with the provisions of Section 3(b) hereof, the Seller on behalf of itself
and its successors hereby irrevocably appoints any Director for the time
being of the Purchaser as the true and lawful attorney of the Seller to
do, sign and execute all acts, deeds, assurances and other instruments
which in the discretion of the said attorney may be necessary, desirable
or expedient for the purpose of vesting in the Purchaser the Royalty Interests.
Such power of attorney, being coupled with an interest, shall not be revoked
by the dissolution of the Seller and may be exercised in the name and
on behalf of the Purchaser. |
4. This Conveyance is delivered pursuant to, and is subject to all of the terms and conditions contained in, the Agreement. In the event of any inconsistency between the provisions of this Conveyance and the provisions of the Agreement, the provisions of the Agreement shall prevail.
5. This Conveyance shall be governed by and construed in accordance with the laws of the province of British Columbia and the laws of Canada applicable therein. This Conveyance shall enure to the benefit of and be binding upon the parties and their respective successors and permitted assigns.
IN WITNESS WHEREOF the parties have executed this Conveyance.
| DYNAMIC OIL & GAS, INC. | |||||
| Per: | “▇▇▇▇▇ ▇▇▇▇▇▇▇▇” | ||||
| (Authorized Signatory) | |||||
| Signed, Sealed and Delivered by ▇▇▇▇▇ ▇. | ) | ||||
| ▇▇▇▇▇▇▇: | ) | ||||
| ) | |||||
| In the presence of: | ) | ||||
| ) | |||||
| ) | “▇▇▇▇▇ ▇▇▇▇▇▇▇” | ||||
| Witness (Signature) | ) | ▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇ | (seal) | ||
| ) | |||||
| ) | |||||
| Name (Please print) | ) | ||||