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EXHIBIT 10.7
AGREEMENT OF PURCHASE AND SALE
THIS AGREEMENT made this 1st day of October, 1997
BETWEEN:
PARAMOUNT RESOURCES LTD., a body corporate registered to carry on
business in the Province of Alberta and having an office in the
City of Calgary, in the Province of Alberta (hereinafter called
"PARAMOUNT")
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X. XXXX RESOURCES COMPANY, an unlimited liability company
constituted pursuant to the laws of the Province of Nova Scotia
and registered to carry on business in the Province of Alberta
(hereinafter called "X. XXXX")
(Paramount and X. Xxxx are collectively referred to as the
"Vendor")
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COTTON VALLEY RESOURCES CORPORATION, a body corporate registered
to carry on business in the Province of Alberta and having an
office in the City of Calgary, in the Province of Alberta
(hereinafter called the "Purchaser")
WHEREAS the Vendor has agreed to sell the Assets to the Purchaser and the
Purchaser has agreed to purchase the Assets from the Vendor on the terms and
conditions set forth herein;
NOW THEREFORE in consideration of the premises and the mutual covenants and
warranties herein contained, the Parties agree as follows:
1.00 INTERPRETATION
1.01 Definitions
In this Agreement, including the recitals and the Schedules, the
following terms shall have the respective meanings hereby assigned
to them, subject to Subclause 8.02D:
A. "Agreement" means this document, together with the Schedules
attached hereto and made a part hereof.
B. "Assets" means the Petroleum and Natural Gas Rights, the
Tangibles and the Miscellaneous Interests.
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C. "Closing" means the exchange of Conveyance Documents at the
Closing Date, as more particularly described in Clause 3.03,
and the delivery by the Purchaser to the Vendor of the Purchase
Price, as described in Paragraph 2.03 (b).
D. "Closing Date" means the hour of 2:00 p.m. on the later of:
(i) December 1, 1997; and
(ii) the third business day following the day on which any and
all preferential, pre-emptive or first purchase rights of
third parties that become operative by virtue of this
Agreement or the transaction to be effected by it shall
have been exercised or waived by the holders thereof or
all time periods within which such rights may be
exercised shall have expired
or such other time and date as may be agreed to by the Parties
pursuant to Clause 3.00 or Paragraph 8.02B(b)(i).
E. "Conveyance Documents" means the documents described in
Paragraphs 3.03 A (a) and (b), which provide for the
assignment, transfer or other disposition of the Assets to the
Purchaser.
F. "Deposit" means the payment set forth in Paragraph 2.03(a).
G. "Effective Date" means 8:00 a.m., on the thirtieth day of June,
1997.
H. "Lands" means the lands set forth and described in Schedule "A"
and any lands pooled or unitized therewith.
I. "Leases" means the leases, licences, permits and other
documents of title set forth and described in Schedule "A", by
virtue of which the holder thereof is entitled to drill for,
win, take, own or remove the Petroleum Substances within, upon
or under the Lands or by virtue of which the holder thereof is
deemed to be entitled to a share of Petroleum Substances
removed from the Lands or any lands with which the Lands are
pooled or unitized and includes, if applicable, all renewals
and extensions of such documents and all documents issued in
substitution therefor.
J. "Miscellaneous Interests" means the entire interest of the
Vendor in and to all property, assets and rights on or with
respect to the Lands, other than the Petroleum and Natural Gas
Rights and the Tangibles, to the extent such property, assets
and rights pertain to the Petroleum and Natural Gas Rights or
the Tangibles, or any rights relating thereto, including,
without limitation, the entire interest of the Vendor in:
(a) all contracts, agreements and documents, to the extent that
they relate directly to the Petroleum and Natural Gas
Rights or the Tangibles, including agreements for the sale,
processing or transportation of Petroleum Substances;
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(b) excepting for roads required by the Vendor for access to
other properties which roads are set forth and described in
Schedule "E", all subsisting rights to enter upon, use and
occupy the surface of any of the Lands, of any lands upon
which any Tangibles are located or of any lands to be
crossed in order to gain access to any of the Lands or the
Tangibles;
(c) all Well bores and casing located on the Lands which may be
used to produce Petroleum Substances from the Lands or
otherwise serve the Lands; and
(d) copies of geological, geophysical and engineering records,
files, reports and data that, in the Vendor's reasonable
judgement, relate directly to the Petroleum and Natural Gas
Rights, any Well thereon or the Tangibles, excluding the
Vendor's tax and financial records and financial xxxxxx and
economic evaluations.
Unless otherwise agreed in writing by the Parties, however, the
Miscellaneous Interests shall not include agreements, documents
or data to the extent that:
(i) they pertain to the Vendor's proprietary technology;
(ii) they are owned or licensed by third parties with
restrictions on their deliverability or disclosure by
the Vendor to any assignee which is not an affiliate
of the Vendor; or
(iii) they are referred to specifically as exclusions in
Schedule "A".
K. "Party" means a person, partnership or corporation which is
bound by this Agreement.
L. "Permitted Encumbrances" means:
(a) any encumbrances, overriding royalties, net profits
interests and other burdens identified in Schedule "A";
(b) any preferential rights of purchase or any similar
restriction applicable to any of the Assets including, but
not limited to, those identified in Schedule "A" hereto;
(c) the terms and conditions of the Leases, including, without
limitation, the requirement to pay any rentals or royalties
to the grantor thereof to maintain the Leases in good
standing and any gross royalty trusts applicable to the
grantor's interest in any of the Leases;
(d) the right reserved to or vested in any grantor, government
or other public authority by the term of any Lease or by
the Regulations to terminate any Lease;
(e) easements, rights of way, servitudes or other similar
rights in land, including, without limitation, rights of
way and servitudes for highways, railways, sewers, drains,
gas and oil pipelines, gas and water mains, electric light,
power, telephone or cable television conduits, poles, wires
or cables;
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(f) the right to levy taxes on Petroleum Substances or the
income or revenue therefrom and governmental requirements
pertaining to production rates from Xxxxx on the Lands or
operations being conducted on the Lands or otherwise
affecting the value of any of the Assets;
(g) agreements for the sale of Petroleum Substances, which
either are terminable on not greater than thirty (30) days'
notice (without an early termination penalty or other cost)
or are identified in Schedule "A";
(h) the Regulations and any rights reserved to or vested in any
municipality or governmental, statutory or public authority
to control or regulate any of the Assets in any manner;
(i) undetermined or inchoate liens incurred or created as
security in favour of any person with respect to the
development or operation of any of the Assets, as regards
the Vendor's share of the costs and expenses thereof;
(j) the reservations, limitations, provisos and conditions in
any grants or transfers from the Crown of any of the Lands
or interests therein, and statutory exceptions to title;
(k) agreements and plans relating to pooling or unitization,
provided that any pooled interest or unit agreement
applicable to the Lands shall be identified in Schedule
"A";
(l) agreements respecting the processing, treating or
transmission of Petroleum Substances or the operation of
Xxxxx by contract field operators as identified in
Schedule "A" hereto;
(m) provisions for penalties and forfeitures under agreements
as a consequence of non-participation in operations
provided that any such penalties or forfeitures which apply
to the Assets as a result of the Vendor's (or predecessor
in interest's) failure to participate in a particular
operation prior to the Effective Date shall be identified
in Schedule "A", and
(n) liens granted in the ordinary course of business to a
public utility, municipality or governmental authority with
respect to operations pertaining to any of the Assets.
M. "Petroleum and Natural Gas Rights" means the entire interest of
the Vendor in and to the Lands and, insofar as they pertain to
the Lands, the Leases, including the working and other
interests, if any, set forth and described in Schedule "A".
N. "Petroleum Substances" means petroleum, natural gas, sulphur
and every other mineral or substance, or any of them, the right
to explore for which, or an interest in which, is granted
pursuant to the Leases, insofar only as they pertain to the
Lands.
O. "Prepaid Gas Obligations" means, with respect to production,
sale or related contracts pertaining to the Petroleum and
Natural Gas Rights, the obligations of the Vendor under "take
or pay" and similar provisions either to repay payments
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made by the purchasers thereunder for Petroleum Substances not
taken by them or to deliver such gas or substances to such
purchasers without full payment therefor, and includes, without
limitation, any obligations to TransCanada Pipelines Limited,
Topgas Holdings Limited, Topgas Two Inc. or Alberta and
Southern Gas Co. Ltd. arising from such "take or pay"
provisions.
P. "Prime Rate" means the annual rate of interest announced from
time to time by the main branch of the Bank of Montreal in
Calgary, Alberta as a reference rate for the determination of
interest rates of Canadian dollar commercial loans to customers
in Canada which is in effect on the Effective Date;
Q. "Purchase Price" means the amount payable by the Purchaser to
the Vendor pursuant to Clause 2.02, as modified by the
adjustments and reductions provided for herein.
R. "Regulations" means all statutes, laws, rules, orders and
regulations in effect from time to time and made by governments
or governmental boards or agencies having jurisdiction over the
Assets.
S. "Tangibles" means the entire interest of the Vendor in and to
all tangible depreciable property, real property and assets
that are:
(a) located in, on, or in the vicinity of the Lands and used,
or intended for use solely, in connection with
production, processing, gathering, storage, treatment or
transportation operations respecting the Lands,
including, without limitation, the Well equipment, if
any, relating to Xxxxx on the Lands; and
(b) notwithstanding Subclauses 1.01S(a) above, "Tangibles" do
not include items, whether located on or off the Lands
that are indicated in Schedule "A" to be specifically
excluded as Tangibles.
T. "Title Defect" means a defect, deficiency or discrepancy in or
affecting the title of the Vendor in and to any of the Assets,
other than as specifically disclosed herein or in Schedule "A",
which is sufficiently material and adverse to the enforcement
of title that it would not be acceptable to a knowledgeable,
prudent purchaser buying similar oil and gas properties, acting
reasonably.
U. "Xxxxx" means all producing, shut-in, water source,
observation, disposal, injection, abandoned, suspended and
similar xxxxx located on the Lands or directly relating to the
operation of the Lands, including without limitation, xxxxx
identified on Schedule "A".
1.02 Schedules
The following Schedules are attached hereto and made part of this
Agreement:
(a) Schedule "A", which includes: (i) the Lands; (ii) the Leases;
(iii) any agreements, documents or data which specifically are
to be excluded from the Miscellaneous Interests; (iv) any
encumbrances, preferential rights of purchase, production sale
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agreements, other agreements required to be included in
Schedule "A" pursuant to Subclause 1.01L and (v) any Tangibles
described in Paragraph 1.01S(b);
(b) Schedule "B", which is a General Conveyance;
(c) Schedule "C", which is a Disclosure Schedule;
(d) Schedule "D", which is the form of the certificate to be
provided pursuant to Article 10.00 with respect to the truth of
a Party's representations and warranties; and
(e) Schedule "E" which is a list of Vendor's roads excluded from
1.01J(b) Miscellaneous Interests.
1.03 References
The references "hereunder", "herein" and "hereof" refer to the
provisions of this Agreement, and references to Articles, Clauses,
Subclauses, Paragraphs or Subparagraphs herein refer to Articles,
Clauses, Subclauses, Paragraphs or Subparagraphs of this Agreement. Any
reference to time shall refer to Mountain Standard Time or Mountain
Daylight Savings Time during the respective intervals in which each is
in force.
1.04 Headings
The headings of the Articles, Clauses, Schedules and any other
headings, captions or indices herein are inserted for convenience of
reference only and shall not be used in any way in construing or
interpreting any provision hereof.
1.05 Singular/Plural
Whenever the singular or masculine or neuter is used in this Agreement
or in the Schedules, it shall be interpreted as meaning the plural or
feminine or body politic or corporate, and vice versa, as the context
requires.
1.06 Use Of Canadian Funds
All references to "dollars" or "$" herein shall refer to lawful
currency of Canada.
1.07 Derivatives
Where a term is defined herein a capitalized derivative of such term
shall have a corresponding meaning unless the context otherwise
requires.
1.08 Interpretation If Closing Does Not Occur
In the event that Closing does not occur, each provision of this
Agreement which presumes that the Purchaser has acquired the Assets
hereunder shall be construed as having been contingent upon Closing
having occurred.
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1.09 Conflicts
If there is any conflict or inconsistency between a provision of
the body of this Agreement and that of a Schedule or a Conveyance
Document, the provision of the body of this Agreement shall
prevail. If any term or condition of this Agreement conflicts with
a term or condition of a Lease or the Regulations, the term or
condition of such Lease or the Regulations shall prevail, and this
Agreement shall be deemed to be amended to the extent required to
eliminate any such conflict.
2.00 PURCHASE AND SALE
2.01 Agreement Of Purchase And Sale
The Purchaser agrees to purchase the Assets from the Vendor and
the Vendor agrees to sell the Assets to the Purchaser on the terms
and conditions set forth herein.
2.02 Allocation Of Purchase Price
Subject to the adjustments provided for in clause 2.04 and in
Article 4.00 and such other reductions as may be made pursuant to
Article 7.00 and Clause 8.02, the monetary consideration payable
by the Purchaser to the Vendor for the Assets is Nine Million Five
Hundred Thousand ($9,500,000.00) Dollars (Canadian), and shall be
allocated among the Assets as follows:
(a) To Petroleum and Natural Gas Rights $ 8,549,999.00
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(b) To Tangibles $ 950,000.00
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(c) To Miscellaneous Interests $ 1.00
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TOTAL $ 9,500,000.00
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The Parties comprising Vendor agree that the proceeds of
disposition shall be disbursed as follows: Paramount -
$6,531,250.00 (68.75%) and X. Xxxx - $2,968,750.00 (31.25%).
The Parties have taken into account the Purchaser's assumption of
responsibility for the future abandonment and reclamation costs
associated with the Assets, as set forth in this Agreement, and
the Vendor's release of responsibility therefor when they
determined the Purchase Price.
2.03 Payment Of Purchase Price
The Purchase Price shall be paid by the Purchaser to the Vendor as
follows:
(a) the deposit of $475,000.00 paid towards the Purchase Price by
Purchaser on or before October 30, 1997, such amount to be
deposited by Paramount at the Bank of Montreal and, upon
Closing, will be distributed to the parties comprising Vendor
in the same ratio as the disbursement of the Purchase Price as
provided in clause 2.02 hereof; and
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(b) the delivery of the Purchase Price, less the Deposit, to the
Vendor at Closing, subject to any adjustments as provided in
this Agreement.
The Purchaser shall also remit to the Vendor at Closing the seven
percent (7%) goods and services tax applicable to that portion of
the Purchase Price allocated to the Tangibles, in accordance with
the Excise Tax Act (Canada), being $66,500.00 (Paramount's GST
Registration Number - R132554775 and X. Xxxx'x GST Registration
Number - R136214087). Such amounts shall be paid by certified
cheque or bank draft payable in immediately available funds to the
Vendor.
2.04 Interest
Interest shall be paid by the Purchaser to the Vendor as follows:
(a) At closing the Purchaser shall pay to the Vendor interest at
the Prime Rate plus two (2%) percent which interest payment
shall be shared by the parties comprising Vendor in the same
ratio as the disbursement of the Purchase Price as provided in
Clause 2.02 hereof.
(b) Interest shall accrue on the Purchase Price from and including
June 30, 1997 to the date of payment of the Deposit, and shall
accrue on the Purchase Price less the Deposit from and
including the date of payment of the Deposit to the Closing
Date.
2.05 Refund of Deposit
The Vendor shall only be required to refund the Deposit together
with interest accrued thereon to the Purchaser where Closing does
not occur:
(a) and the failure to Close is occasioned by virtue of Vendor's
inability to meet any material obligation within its control
required for Closing to occur; or
(b) where the Vendor or Purchaser elects to terminate this
Agreement pursuant to Subclause 8.02B(c); or
(c) due to the nonsatisfaction of any one of the conditions
contained in Clause 10.02.
3.00 CLOSING
3.01 Place Of Closing
Unless otherwise agreed in writing by the Parties, Closing shall
take place at the offices of Paramount at 4000, 000 - 0xx Xxxxxx
X.X., Xxxxxxx, Xxxxxxx on the Closing Date.
3.02 Effective Date Of Transfer
The transfer and assignment of the Assets from the Vendor to the
Purchaser shall be effective as of the Effective Date, provided
Closing occurs. Possession of the Assets, however, shall not pass
to the Purchaser until after Closing on the Closing Date, and the
Vendor shall maintain the Assets on behalf of the Purchaser
between the Effective Date and the Closing Date pursuant to the
provisions of Article 5.00.
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3.03 Deliveries At Closing
A. At Closing, the Vendor shall deliver the following to the
Purchaser:
(a) a General Conveyance, in the form attached as Schedule
"B", which has been prepared and executed by the Vendor;
(b) all specific assignments, registrable transfers, novation
agreements, notices of assignment, trust agreements and
other instruments prepared by the Vendor at its sole cost
and which are required to convey the Vendor's interest in
the Assets to the Purchaser, unless and to the extent
that the Purchaser allows the Vendor to deliver such
documents to the Purchaser at a later date, provided that
such documents shall not require the Vendor to assume or
incur any obligation, or to provide any representation or
warranty, beyond that contained in this Agreement;
(c) copies of all waivers of rights of first refusal and of
requests for consents to disposition obtained by the
Vendor with respect to the sale of the Assets to the
Purchaser;
(d) the certificates required by Paragraphs 10.02(a) and (d);
(e) an assignment of a ten (10%) percent working interest
from the Vendor's twenty-seven decimal four (27.4%)
percent working interest in Meander River Road #2;
(f) notice of resignation and change of operatorship letters
substantially the same as those used in the July 1, 1994
acquisition by Paramount from Mobil Oil Canada;
(g) no interest letters relating to security registered
against the Vendor's name; and
(h) such other documents as may be specifically required
hereunder or as may be reasonably requested by the
Purchaser upon reasonable notice to the Vendor.
B. At Closing, the Purchaser shall deliver the following to the
Vendor:
(a) the Purchase Price, less the Deposit, and the applicable
goods and services tax (if any), in accordance with
Clause 2.03;
(b) a General Conveyance in the form attached as Schedule
"B", which has been executed by the Purchaser;
(c) the certificate required by Paragraph 10.03(c); and
(d) such other documents as may be specifically required
hereunder.
3.04 Costs Of Xxxxxxxxxxxx
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Xxx Xxxxxxxxx shall bear all costs incurred in registering any
conveyances of title to the Assets to it and all costs of
preparing and registering any further assurances required to
convey the Assets to it. Paramount shall register all such
conveyances promptly after Closing.
3.05 File Delivery
The Vendor shall deliver to Purchaser copies of the Vendor's
records, files, reports and data pertaining to the Assets promptly
after Closing.
4.00 ADJUSTMENTS
4.01 Benefits And Obligations To Be Apportioned
A. All benefits and obligations of any kind and nature accruing,
payable, paid, received or receivable with respect to the
Assets (including, without limitation, maintenance,
development, capital and operating costs, advances, payments
with respect to the Permitted Encumbrances, proceeds from the
sale of production, accounts receivable and incentives
accruing pursuant to the Regulations) shall be apportioned, as
of the Effective Date, between the Vendor and the Purchaser in
accordance with generally accepted accounting principles,
subject to the provisions of this Agreement. All costs of
whatever nature pertaining to work performed or goods or
services provided with respect to the Assets prior to the
Effective Date shall be borne by the Vendor, notwithstanding
that such costs may be payable in whole or in part after the
Effective Date.
B. Notwithstanding the provisions of Subclause 4.01A, all rentals
and all similar payments required to preserve any of the
Leases and all taxes (other than income taxes and taxes based
on the volume of the production of Petroleum Substances)
levied with respect to the Assets shall be apportioned between
the Vendor and the Purchaser on a per diem basis as of the
Effective Date.
C. Petroleum Substances which were produced, but not sold, as of
the Effective Date shall not form part of the Assets and shall
be credited to the Vendor.
D. Adjustments made pursuant to this Article shall be shared by
the parties comprising Vendor in accordance with the following
interests: Paramount 68.75% and X. Xxxx - 31.25%.
4.02 Adjustments To Accounts
A. An interim accounting and adjustment shall be conducted for
Closing, based on the Vendor's and the Purchaser's good faith
estimate of all adjustments to be made for the transactions
herein pursuant to this Article, and a final accounting and
adjustment shall be conducted within one hundred and eighty
(180) days following the Closing Date. Subject to Subclauses B
and C of this Clause, the Parties shall not be obligated to
make any adjustments after such one hundred and eighty (180)
day period unless such adjustment has been specifically
requested, by notice, within such period. All adjustments
shall be settled by payment by the Party required to make
payment hereunder within fifteen (15) days of being notified
of the determination of the amount owing.
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B. During the one hundred and eighty (180) day period following
the Closing Date, the Purchaser may audit the books, records
and accounts of the Vendor respecting the Assets, for the
purpose of effecting adjustments pursuant to this Article.
Such audit shall be conducted upon reasonable notice to the
Vendor at the Vendor's offices during the Vendor's normal
business hours, and shall be conducted at the sole expense of
the Purchaser. Any claims of discrepancies disclosed by such
audit shall be made in writing to the Vendor within two (2)
months following the completion of such audit, and the Vendor
shall respond in writing to any claims of discrepancies within
six (6) months of the receipt of such claims. To the extent
that the Parties are unable to resolve any outstanding claims
of discrepancies disclosed by such audit within two (2) months
of the Vendor's response thereto, such audit exceptions shall
be resolved pursuant to Article 9.00.
C. Notwithstanding the preceding Subclauses of this Clause,
Clause 6.01, Clause 6.03 and Clause 13.01, any adjustments
resulting from joint venture or royalty audits for the Assets:
(i) relating to the period prior to Closing Date and for
which audit queries are outstanding at Closing Date; or
(ii) that occur after Closing Date but not later than two (2)
years after Closing Date or for the applicable period in
the governing agreements included in Miscellaneous
Interests, whichever is later (in the case of joint
venture audits), or four (4) years after Closing Date (in
the case of Crown royalty audits);
shall be made as they occur and payment for them shall be made
within thirty (30) days of each adjustment and shall be made
by Purchaser to Vendor, or vice versa, as the case may be.
5.00 MAINTENANCE OF BUSINESS
5.01 The Vendor shall continue to maintain the Assets in a proper and
prudent manner in accordance with good oil field practice and the
Regulations until the Closing Date.
5.02 Prior to the Closing Date, the Vendor shall not, without the prior
consent of the Purchaser, assume any material obligation or
commitment or propose or initiate any operation with respect to
the Assets where the Vendor's share of the expenditure associated
with such obligation, commitment or operation is estimated to
exceed $25,000, unless and to the extent that the Vendor
reasonably determines that such expenditures or actions are
necessary for the protection of life or property, in which case
the Vendor shall promptly notify the Purchaser of such intention
or actions and the Vendor's estimate of the costs and expenses
associated therewith.
5.03 Following Closing and to the extent that the Purchaser must be
novated into operating agreements or other agreements governing
any of the Assets, the Vendor shall be deemed to have been acting
as the agent of the Purchaser until the novation has been
effected. Insofar as the Vendor maintains the Assets and takes
actions with respect thereto on behalf of the Purchaser pursuant
to this Article, the Vendor shall be deemed to have been
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the agent of the Purchaser hereunder. The Purchaser ratifies all
actions taken by the Vendor or refrained to be taken by the Vendor
as authorized hereunder in such capacity during such period, with
the intention that all such actions shall be deemed to be those of
the Purchaser. In addition to the foregoing, prior to the Closing
Date Vendor shall not, without first obtaining the prior written
consent of the Purchaser (which consent shall not be unreasonably
withheld), make any material amendment to any of the Leases or
contracts applicable to the Assets, or enter into any new
contracts applicable to the Assets, save where this would be done
in the ordinary and usual course of business.
5.04 The Purchaser shall indemnify the Vendor and its directors,
officers, servants, agents or employees against all liabilities,
losses, costs (including reasonable legal costs on a
solicitor-client basis), claims or damages which the Vendor or its
directors, officers, servants, agents or employees may suffer or
incur as a result of maintaining the Assets as the agent of the
Purchaser pursuant to this Article, insofar as such liabilities,
losses, costs, claims or damages are not a direct result of the
gross negligence or wilful misconduct of the Vendor or its
directors, officers, servants, agents or employees. An action or
omission of the Vendor or its directors, officers, servants,
agents or employees shall not be regarded as gross negligence or
wilful misconduct, however, to the extent it was done or omitted
to be done in accordance with the instructions of or with the
concurrence of the Purchaser.
5.05 Notwithstanding anything to the contrary herein contained, if
prior to Closing:
(i) Vendor seeks recourse against Purchaser pursuant to Clause
5.04; or
(ii) Vendor or Purchaser identify any third party unsatisfied
judgments, claims, proceedings, actions, investigations or
lawsuits in existence against Purchaser and/or contemplated or
threatened in writing against Purchaser,
with respect to the Assets, with a claimed amount in excess of
$50,000.00 and which arise out of any matter or thing occurring,
attributable or arising during the period between and including
the Effective Date to and including the day prior to the Closing
Date, Purchaser may, on or before Closing, terminate this
Agreement by written notice to Vendor without prejudice to any
other rights of Purchaser against Vendor hereunder. The Purchaser,
in electing to terminate the Agreement pursuant to this clause,
must act reasonably and in good faith.
5.06 Paramount hereby agrees that it will make necessary surface and
mines and minerals lease rental payments on behalf of the
Purchaser through to and including January 31st, 1998. Such
payments will be adjusted in accordance with the provisions of
Clause 4.02.
6.00 REPRESENTATIONS AND WARRANTIES OF PARTIES
6.01 Vendor's Representations And Warranties
The Vendor represents and warrants to the Purchaser that:
(a) Standing: Paramount is a corporation, duly organized, validly
subsisting and registered under the laws of the Province of
Alberta, and X. Xxxx is a corporation duly organized, validly
subsisting and registered under the laws of the Province
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of Nova Scotia, and both are authorized to carry on business
in the jurisdiction where the Lands are located;
(b) Requisite Authority: The Vendor has the requisite capacity,
power and authority to execute this Agreement and the
Conveyance Documents and to perform the obligations to which
it thereby becomes subject;
(c) No Conflict: The execution and delivery of this Agreement and
the completion of the sale of the Assets in accordance with
the terms of this Agreement are not and will not be in
violation or breach of, or be in conflict with:
(i) any term or provision of the charter, by-laws or other
governing documents of the Vendor;
(ii) any agreement, instrument, permit or authority to which
the Vendor is a party or by which the Vendor is bound;
or
(iii) the Regulations or any judicial order, award, judgement
or decree applicable to the Vendor or the Assets;
(d) Execution And Enforceability: The Vendor has taken all actions
necessary to authorize the execution and delivery of this
Agreement, and, as of the Closing Date, the Vendor shall have
taken all actions necessary to authorize and complete the sale
of the Assets in accordance with the provisions of this
Agreement. This Agreement has been validly executed and
delivered by the Vendor, and this Agreement and all other
documents executed and delivered on behalf of the Vendor
hereunder shall constitute valid and binding obligations of
the Vendor enforceable in accordance with their respective
terms and conditions, subject to the qualifications that such
enforcement may be limited by bankruptcy, insolvency,
liquidation, re-organization or similar laws of general
application relating to or affecting creditors rights;
(e) Residency For Tax Purposes: The Vendor is not a non-resident
of Canada within the meaning of the Income Tax Act (Canada);
(f) No Finders' Fees: The Purchaser shall not have any
responsibility for any obligation or liability, contingent or
otherwise, for brokers' or finders' fees, if any, incurred by
the Vendor with respect to the transactions herein;
(g) Lawsuits And Claims: There are no unsatisfied judgments,
claims, proceedings, actions, governmental investigations or
lawsuits in existence, or to the best of the information,
knowledge and belief of the Vendor contemplated or threatened
against or with respect to the Assets or the interest of the
Vendor therein other than as previously disclosed in writing
to the Purchaser,
(h) Compliance With Leases And Agreements: To the best of the
information, knowledge and belief of the Vendor, no act or
omission has occurred whereby the Vendor is, or would be, in
default under the terms of the Regulations, any Lease or any
agreement pertaining to the Assets, where such a default would
impact materially and adversely upon the Assets, or any of
them;
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No Default Notices: Except as has been specifically identified
in Schedule "A", the Vendor has not received any notice of
default under the Leases or any notice alleging its default
under any agreement pertaining to any of the Assets, which
default has not been rectified as of the date of this
Agreement, or which if not rectified would materially and
adversely impact upon the Assets or any of them;
(j) Payment Of Royalties And Taxes: To the best of the
information, knowledge and belief of the Vendor, all royalties
and all ad valorem, property, production, severance and
similar taxes and assessments based on, or measured by, the
Vendor's ownership of the Assets, the production of Petroleum
Substances from the Lands or the receipt of proceeds therefrom
that are payable by the Vendor and which accrued prior to the
Effective Date will have been properly and fully paid and
discharged in the manner and at the time prescribed by the
Leases and the Regulations;
(k) Encumbrances: The Vendor does not warrant its title to the
Assets, but does warrant that the interest of the Vendor in
the Assets is free and clear of any and all liens, mortgages,
pledges, claims, options, preferential rights of purchase,
encumbrances, overriding royalties, net profits interests or
other burdens created by, through or under the Vendor or of
which the Vendor is otherwise actually aware, other than the
Permitted Encumbrances;
(l) No Reduction: The interests of the Vendor in the Assets are
not subject either to reduction, or to change to an interest
of any other size or nature whatsoever by virtue of any right
or interest granted by, through or under the Vendor or of
which the Vendor is otherwise actually aware, except for the
Permitted Encumbrances and any such rights and interests
identified in Schedule "A";
(m) Sale Agreements: The Petroleum and Natural Gas Rights are not
subject to any gas balancing agreement or, except as
identified in Schedule "A", any agreement for the sale of
Petroleum Substances therefrom which the Purchaser is required
to assume that requires either the sale of more than thirty
(30) days of production (without an early termination penalty
or other cost) or the delivery of Petroleum Substances to the
purchaser thereof without receiving in due course (and being
entitled to retain) full payment at current market price or
the contract price therefor;
(n) Environmental Matters: The Vendor is not aware of and has not
received:
i) any orders or directives under the Regulations which
relate to environmental matters and which require any
work, repairs, construction or capital expenditures with
respect to the Assets, where such orders or directives
have not been complied with in all material respects; and
ii) any demand or notice issued under the Regulations with
respect to the breach of any environmental, health or
safety law applicable to the Assets, including, without
limitation, any Regulations respecting the use, storage,
treatment, transportation or disposition of environmental
contaminants, which demand or notice remains outstanding
on the Closing Date
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except as have been specifically disclosed in writing by the
Vendor, by notice to the Purchaser prior to the Vendor's
submission of this Agreement to the Purchaser for the
Purchaser's execution;
(o) Authorized Expenditures: There are no outstanding
authorizations for expenditure or outstanding financial
commitments respecting the Assets, pursuant to which
expenditures are or may be required by the Purchaser as a
result of the acquisition of the Assets or in respect of which
any amount is outstanding, other than as specifically
identified in Schedule "C";
(p) Assets Do Not Comprise Substantially All Of Vendor's Assets:
The Assets do not comprise all or substantially all of the
Vendor's assets;
(q) Quiet Enjoyment: Subject at all times to the Vendor's other
representations and warranties made pursuant to this Clause,
the Permitted Encumbrances and the satisfaction of the
obligations required to maintain the Leases in good standing
by the applicable lessees, the Purchaser may, for the residue
of the term of the Leases, hold and utilize the Assets for the
Purchaser's own use and benefit without any interruption by
the Vendor or any other person claiming by, through or under
the Vendor;
(r) Prepaid Gas Obligations: There are no existing or future
Prepaid Gas Obligations applicable to the Petroleum and
Natural Gas Rights;
(s) Condition of Xxxxx: To the best of the information, knowledge
and belief of the Vendor, each Well located on the Lands,
whether producing, shut-in, injection, disposal or otherwise,
has been drilled and, if completed, completed and operated in
accordance with good oil and gas field practises and the
material requirement of the Regulations during the period of
Vendor's ownership;
(t) Abandonment of Xxxxx: To the best of the information,
knowledge and belief of the Vendor, each Well located on the
Lands which has been abandoned by Vendor has been plugged and
abandoned, and the wellsite therefor properly restored, in
accordance with good oil and gas field practises and the
material requirements of the Regulations;
(u) Condition of Tangibles: To the best of the information,
knowledge and belief of the Vendor, the Tangibles constructed,
installed or maintained by Vendor have been constructed,
installed maintained and operated in accordance with generally
accepted engineering practises, good oil and gas field
practises and the material requirements of the Regulations;
(v) Regulatory Production Penalties and Allowables: Except as
specifically identified in Schedule "A", to the best of the
information, knowledge and belief of the Vendor:
(a) each Well located on the Lands drilled by Vendor which
has been drilled for the purpose of producing Petroleum
Substances therefrom has been drilled at a location for
which an off target penalty is not applicable under the
Regulations; and
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(b) none of the Xxxxx located on the Lands have been produced
in excess of applicable production allowables imposed by
the Regulations and there is no pending change in such
production allowable, other as may generally be
applicable pursuant to a change in the Regulations during
the period of ownership by Vendor;
(w) No Removal of Tangibles: To the best of the information,
knowledge and belief of Vendor, no tangible depreciable
property and assets which are used, were used or are intended
to be used in producing, processing, gathering, treating,
measuring, making marketable or injecting the leased
substances or any of them or in connection with water
injection or removal operations that pertain to the Petroleum
and Natural Gas Rights, has been removed from its location
since the Effective Date, nor has Vendor alienated or
encumbered any such tangible depreciable property and assets
since such date;
(x) Licences and Permits: To the best of its information,
knowledge and belief, Paramount, in its capacity as operator,
holds all valid licenses, permits and similar rights and
privileges that are required and necessary under applicable
law to operate the Assets as presently operated;
(y) Area of Mutual Interest: Except for an area of mutual interest
provision between the two Vendors, there are no active area of
mutual interest provisions in any of the Title Documents or
other agreements or documents to which the Assets are subject;
and
(z) Well Licences: Paramount is validly able to assign all well
licences in respect of those xxxxx for which Paramount is the
licencee.
6.02 Purchaser's Representations And Warranties
The Purchaser represents and warrants to the Vendor that:
(a) Standing: The Purchaser is a corporation, duly organized,
valid and subsisting under the laws of its jurisdiction of
incorporation, and duly registered and authorized to carry on
business in the jurisdiction in which the Lands are located;
(b) Requisite Authority: The Purchaser has the requisite capacity,
power and authority to execute this Agreement and the
Conveyance Documents and to perform the obligations to which
it thereby becomes subject;
(c) No Conflict: The execution and delivery of this Agreement and
the completion of the purchase of the Assets in accordance
with the terms of this Agreement are not and will not be in
violation or breach of, or be in conflict with;
(i) any term or provision of the charter, by-laws or other
governing documents of the Purchaser; or
(ii) the Regulations or any judicial order, award, judgement
or decree applicable to the Purchaser;
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(d) Execution And Enforceability: The Purchaser has taken all
actions necessary to authorize the execution and delivery of
this Agreement, and, as of the Closing Date, the Purchaser
shall have taken all actions necessary to authorize and
complete the purchase of the Assets in accordance with the
provisions of this Agreement. This Agreement has been validly
executed and delivered by the Purchaser, and this Agreement
and all other documents executed and delivered on behalf of
the Purchaser hereunder shall constitute valid and binding
obligations of the Purchaser enforceable in accordance with
their respective terms and conditions, subject to the
qualifications that such enforcement may be limited by
bankruptcy, insolvency, liquidation, re-organization or
similar laws of general application relating to or affecting
creditors rights;
(e) Purchaser as Principal: Purchaser is acquiring the Assets as
principal;
(f) No Sales Commission: The Purchaser has not incurred any
obligation or liability, contingent or otherwise, for brokers'
or finders' fees with respect to the transactions herein for
which the Vendor shall have any responsibility;
(g) Investment Canada Act: The Purchaser shall comply with the
Investment Canada Act to the extent, if any, that it is
applicable to the transactions herein; and
(h) Well Licence Transfers: The Purchaser is validly able to be
assigned all well licences in respect of those xxxxx for which
the Vendor is the licencee.
6.03 Survival Of Representations And Warranties
Each Party acknowledges that the other may rely on the
representations and warranties made by such Party pursuant to
Clause 6.01 or 6.02, as the case may be. The representations and
warranties in Clauses 6.01 and 6.02 shall be true on the Effective
Date and on the Closing Date, and such representations and
warranties shall continue in full force and effect and shall
survive the Closing Date for a period of one (1) year, for the
benefit of the Party for which such representations and warranties
were made. No claim or action shall be commenced with respect to a
breach of any such representation or warranty, unless, within such
period, written notice specifying such breach in reasonable detail
has been provided to the Party which made such representation or
warranty.
6.04 No Merger
The representations and warranties in Clauses 6.01 and 6.02 shall
be deemed to apply to all assignments, conveyances, transfers and
other documents conveying any of the Assets from the Vendor to the
Purchaser. There shall not be any merger of any of such
representations or warranties in such assignments, conveyances,
transfers or other documents, notwithstanding any rule of law,
equity or statute to the contrary, and all such rules are hereby
waived.
6.05 No Additional Representations Or Warranties By Vendor
A. The Vendor makes no representations or warranties to the
Purchaser in addition to those expressly enumerated in Clause
6.01. Except and to the extent provided in Clause 6.01, the
Vendor does not warrant title to the Assets or make
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representations or warranties with respect to: (i) the
quantity, quality or recoverability of Petroleum Substances
respecting the Lands; (ii) any estimates of the value of the
Assets or the revenues applicable to future production from
the Lands; (iii) any engineering, geological or other
interpretations or economic evaluations respecting the Assets;
(iv) the rates of production of Petroleum Substances from the
Lands; (v) the quality, condition or serviceability of the
Assets; or (vi) the suitability of their use for any purpose.
Without restricting the generality of the foregoing, but
subject always to Clause 6.03, the Purchaser acknowledges that
it has made its own independent investigation, analysis,
evaluation and inspection of the Vendor's interests in the
Assets and the state and condition thereof and that it has
relied solely on such investigation, analysis, evaluation and
inspection as to its assessment of the condition, quantum and
value of the Assets.
B. Except with respect to the representations and warranties in
Clause 6.01, the Purchaser forever releases and discharges the
Vendor and its directors, officers, servants, agents and
employees from any claims and all liability to the Purchaser
or the Purchaser's assigns and successors, as a result of the
use or reliance upon advice, information or materials
pertaining to the Assets which was delivered or made available
to the Purchaser by the Vendor or its directors, officers,
servants, agents or employees prior to or pursuant to this
Agreement, including, without limitation, any evaluations,
projections, reports and interpretive or non-factual materials
prepared by or for the Vendor, or otherwise in the Vendor's
possession.
7.00 THIRD PARTY RIGHTS AND CONSENTS
7.01 Preferential Right Of Purchase
A. If any of the Assets are subject to a preferential right of
purchase or similar restriction the Vendor shall promptly
serve all notices as are required under such preferential
purchase. Unless otherwise agreed by the Purchaser, each such
notice shall include a request for a waiver of any
preferential or similar right to purchase any of the Assets.
B. The Purchaser, acting reasonably, shall advise the Vendor of
the value placed by the Purchaser, for the purposes of this
purchase, on any of the Assets with respect to which the
Vendor is required to give notice pursuant to this Clause, and
such allocation shall be used for the purposes of this Clause
except where such allocations are deemed to be unreasonable by
the Vendor.
C. The Purchaser shall indemnify and save the Vendor and its
directors, officers, servants, agents and employees harmless
from and against all losses, costs, damages and expenses
whatsoever which the Vendor and its directors, officers,
servants, agents and employees may sustain, pay or incur as a
result of any matter or thing arising out of, resulting from,
attributable to or connected with the Purchaser's placement of
value on any of the Assets with respect to which the Vendor is
required to give notice pursuant to this clause.
D. If the holder of any preferential right to purchase any of the
Assets exercises such right, Vendor shall notify Purchaser in
writing forthwith and such right shall not be considered a
Title Defect.
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7.02 Consents Under Sales Agreements
The Parties acknowledge that the consent to assignment from buyers
under production sales agreements included in the Assets may not
be obtainable until after Closing. The Parties shall cooperate in
seeking such consents.
7.03 Operatorship And Third Parties
Nothing in this Agreement shall be interpreted as any assurance by
the Vendor that the Purchaser will be able to serve as operator
with respect to any of the Assets in which interests are held by
third parties, whether or not such Assets are presently operated
by the Vendor. Where Paramount is the operator Paramount shall,
after Closing, recommend to third parties that the Purchaser be
appointed operator of the Assets.
8.00 PURCHASER'S REVIEW
8.01 Vendor To Provide Access
The Vendor shall, subject to the Regulations and all contractual
and fiduciary obligations and limits:
(a) at the office of Paramount during normal business hours,
provide the Purchaser and its nominees reasonable access to
the Vendor's records, files and documents directly relating to
the Assets, for the purpose of the Purchaser's review of the
Assets and the Vendor's title thereto, including, without
limitation, the Leases and applicable operating agreements,
unit agreements, overriding royalty agreements and production
sale contracts; and
(b) subject to sub-clause 10.02(f), provide the Purchaser and its
nominees with a reasonable opportunity to inspect the Assets
at the Purchaser's sole cost, risk and expense, insofar as the
Vendor can reasonably provide such access to the Assets.
8.02 Title Defects
A. The Purchaser shall conduct its review of the Vendor's title
to the Assets with reasonable diligence. Not later than ten
(10) business days prior to the Closing Date, the Purchaser
shall give the Vendor written notice of the Title Defects
which the Purchaser does not waive. Such notice shall specify
such Title Defects in reasonable detail, the Assets directly
affected thereby and the Purchaser's requirements for the
rectification or curing thereof. The Vendor shall thereupon
diligently make reasonable efforts to cure such Title Defects
on or before the Closing Date.
B. Insofar as the Title Defects described in the Purchaser's
notice (the "Affected Interests") have not been cured to the
Purchaser's reasonable satisfaction, but subject at all times
to Clause 10.04 with respect to prior third party rights, the
Purchaser may elect, at or before the Closing Date by notice
to the Vendor, to do one of the following:
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(a) where the cumulative amount by which the value of the Assets
has been reduced is, in Purchaser's opinion, acting
reasonably, less than Four Hundred and Seventy-Five Thousand
($475,000.00) Dollars, Purchaser shall complete the purchase
of Vendor's interest in and to the Assets without any
adjustment of the Purchase Price.
(b) where the cumulative amount by which the value of the Assets
has been reduced is, in Purchaser's opinion, acting
reasonably, equal to or greater than Four Hundred and
Seventy-Five Thousand ($475,000.00) Dollars, the following
options shall arise:
(i) the Parties may delay Closing to a mutually agreeable
time and date during which time Vendor shall make further
attempts to cure or remove the uncured Title Defects. In
the event that said Title Defects have not been cured
prior to December 1, 1997, the elections set out in this
Paragraph 8.02B(b) shall once again be made; or
(ii) Purchaser may waive the uncured Title Defects, in which
case all of Vendor's interest in and to the Assets shall
be purchased by Purchaser without an adjustment to the
Purchase Price; or
(iii)Purchaser shall purchase Vendor's interest in and to the
Assets in which case the Purchase Price shall be adjusted
by an amount equal to that number arrived at by
subtracting $475,000.00 from the value attributed to the
Affected Interest by the Parties, or any arbitrator, such
that only positive values resulting from this calculation
are to be adjusted. Provided that in reaching the
mutually agreed upon value, the Parties, or any
arbitrator appointed hereunder, shall take into account
the probability of the Title Defect actually
materializing having regard to the particular
circumstances.
(c) where the cumulative amount by which the value of the Assets
has been reduced, in Purchaser's opinion, acting reasonably,
by Twenty (20%) Percent or more of the Purchase Price then, in
addition to the elections set out in Clause 8.02B(b), either
Vendor or Purchaser may terminate this Agreement upon written
notice to the other Party, in which case Vendor shall
forthwith return the Deposit and accrued interest to Purchaser
and the Parties shall have no further obligation to each other
hereunder, and shall have no right to claim further damages or
other remedies.
C. If the Purchaser elects to proceed with Closing pursuant to
Paragraph 8.02B(b)(iii) and the Parties have neither previously
determined the portion of the Purchase Price applicable to the
Assets directly affected by the applicable uncured Title Defects
nor otherwise agreed upon such portion prior to the Closing Date,
the following shall apply:
(a) the Purchaser shall deduct from the Purchase Price an amount
equal to the Purchaser's good faith estimate of the portion of
the Purchase Price applicable to the directly affected Assets,
as of the Effective Date, less $475,000.00 and deposit such
amount with a Canadian chartered bank in an interest bearing
account, in trust for the purposes of this Agreement;
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(b) the Parties then shall refer the determination of the portion
of the Purchase Price applicable to the directly affected
Assets, as of the Effective Date, to an arbitrator pursuant to
Article 9.00, insofar as they are unable to agree on such
portion; and
(c) the funds retained in trust pursuant to Paragraph (b) of this
Subclause and the accrued interest thereon shall be released
from such trust account following such determination. To the
extent (if any) that the Purchaser's estimate of the
applicable portion of the Purchase Price varies from the
amount determined pursuant to Paragraph (b) of this Subclause,
the excess or deficiency and the interest which accrued
thereon shall be paid by the Purchaser to the Vendor within
fifteen (15) days of such determination or be retained by the
Purchaser, as applicable.
D. If a portion of the Assets is excluded from the Closing pursuant
to Article 7.00:
(a) the terms "Assets", "Lands", "Leases", "Miscellaneous
Interests", "Petroleum and Natural Gas Rights" and "Tangibles"
shall be construed as meaning only that portion of the subject
matter of those terms with respect to which Closing occurs;
(b) the Purchase Price shall be reduced by the aggregate value
attributed to the Assets with respect to which Closing does
not occur, the term "Purchase Price" shall then be construed
to be such reduced amount and the allocation of the Purchase
Price pursuant to Clause 2.02 shall be determined by agreement
of the Parties or by Article 9.00 and adjusted accordingly.
9.00 ARBITRATION
9.01 Reference To Arbitration
A. Insofar as the Parties are unable to agree on any matter which
expressly may be referred to arbitration hereunder, either
Party may serve the other Party written notice that it wishes
such matter referred to arbitration.
B. The Parties shall meet within seven (7) days of the receipt of
a notice issued pursuant to Subclause 9.01A, to attempt to
agree on a single arbitrator qualified by experience,
education and training, to determine such matter. If the
Parties are unable to agree on the selection of the
arbitrator, the Party which issued such notice shall forthwith
make application to a judge of the Court of Queen's Bench of
the Province of Alberta pursuant to the Arbitration Act of the
Province of Alberta (S.A. 1991 c.43-1, as amended from time to
time, hereinafter referred to as the "Arbitration Act") for
the appointment of a single arbitrator, and failing such
action on the part of the Party which issued such notice, the
other Party may make such application.
9.02 Proceeding
A. The arbitrator selected pursuant to Clause 9.01 shall proceed
as soon as is practicable to hear and determine the matter in
dispute, and shall be directed to
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provide a written decision respecting such matter within
forty-five (45) days of appointment. The Parties shall provide
such assistance and information as may be reasonably necessary to
enable the arbitrator to determine such matter.
B. Except to the extent modified in this Article, the arbitrator
shall conduct any arbitration hereunder pursuant to the provisions
of the Arbitration Act.
10.00 CONDITIONS TO CLOSING
10.01 Conditions for the Benefit of Vendor and Purchaser
(a) Required Approvals It is a condition precedent to Closing that
any and all approvals required under the Regulations
(including, without limitation, any approval required under
the Investment Canada Act) required to permit the transactions
to be completed shall have been obtained or that such approval
requirement shall have been waived or otherwise lapsed. Each
of the Parties shall use all reasonable efforts to obtain any
such consents. Notwithstanding the foregoing, the Parties
acknowledge that the consent of buyers under production sale
agreements and approvals required for the transfer of a well
licence from the Vendor to the Purchaser may not be obtainable
until after Closing and that the acquisition of such consents
shall not be a condition precedent to Closing.
10.02 Conditions For Benefit Of Purchaser
The obligation of the Purchaser to complete the purchase hereunder
is subject to the following conditions precedent:
(a) No Substantial Damage: There shall have been no damage to or
alteration of any of the Assets between the Effective Date and
the Closing Date which, in the Purchaser's reasonable opinion,
would materially and adversely affect the value of the Assets,
except and to the extent approved in writing by the Purchaser,
and the Vendor shall have delivered to the Purchaser a
certificate of a Vice President, Corporate Secretary or other
senior officer of the Vendor, dated as of the Closing Date,
that, to the best of the information, knowledge and belief of
the Vendor, there has been no such damage or alteration of any
of the Assets during such period, provided that a change in
the prices at which Petroleum Substances may be sold in no
event shall be regarded as material damage to or an alteration
of the Assets;
(b) Availability Of Documents: The Vendor shall have provided the
nominees of the Purchaser with reasonable access to the
Vendor's records and documents pertaining to the Assets
pursuant to Article 8.00, in order to confirm the Vendor's
title to the Assets;
(c) Material Compliance By Vendor: The Vendor shall have performed
or complied in all material respects with each of the terms,
covenants and conditions of this Agreement to be performed or
complied with by the Vendor at or prior to the Closing Date;
(d) Certificate That Representations Are Correct: The Vendor shall
have delivered to the Purchaser the certificate of a
Vice-President, Corporate Secretary or other
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senior officer of the Vendor, in the form of Schedule "D" and
dated as of the Closing Date, to the effect that each of the
covenants, representations and warranties contained in Clause
6.01 was, as of the Effective Date, and is, as of the Closing
Date, true and correct in all material respects, except for
those changes thereto which necessarily arise as a consequence
of the operation of the provisions of this Agreement, as
specifically provided herein;
(e) Delivery Of Conveyance Documents: The Vendor shall have
delivered to the Purchaser those of the Conveyance Documents
described in Paragraph 3.03A(a) executed by the Vendor and
those other documents and materials described in Paragraphs
3.03 A(b), (c), (d), (e) and (f) which are to be provided to
the Purchaser at Closing;
(f) Physical Review of Assets: The Vendor shall permit Purchaser
and its nominees to conduct an evaluation and physical review
of any or all of the Assets. The purpose of such review is for
the Purchaser to satisfy itself as to the environmental
condition of the Assets. If, in the reasonable opinion of the
Purchaser, material and adverse deficiencies are identified,
Purchaser may, by written notice issued on or before September
22, 1997, terminate this Agreement. If Purchaser elects to
proceed, or fails to notify Vendor of any deficiencies within
the time frame herein contemplate, Purchaser acknowledges that
the Assets shall be purchased on an 'as is, where is basis;
(g) Transfer of Well Licences: If Purchaser obtains a written
notification from the Alberta Energy and Utilities Board
relative to new operatorship requirements to be imposed on the
Purchaser as a condition for approval of the transfer of well
licences to the Purchaser, which aggregate new operatorship
requirements include posting cash security in excess of
$250,000.00, then Purchase may, within five (5) business days
of execution of this Agreement but no later than October 30,
1997, elect to terminate this Agreement;
(h) No Unidentified Preferential Right of Purchase: If the Vendor
has omitted to identify in Schedule "A" a preferential right
of purchase or similar restriction that was both material and
adverse taking into account the magnitude of the Lands
affected by the unidentified preferential right of purchase,
then Purchaser may, on or before Closing, terminate this
Agreement;
(i) No Clause 5.05 Termination: Purchaser has not terminated this
Agreement in accordance with Clause 5.05; and
(j) Contractual Arrangements: On or before Closing, Purchaser
shall be satisfied, acting reasonably, with the existing
contractual arrangements for the transportation, processing
and sale of the Petroleum Substances, to ensure that the terms
thereof are not materially adverse to the interest of the
Purchaser.
10.03 Conditions For Benefit Of Vendor
The obligation of the Vendor to complete the sale hereunder is subject to
the following conditions precedent:
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(a) Material Compliance By Purchaser: The Purchaser shall have
performed or complied in all material respects with each of
the terms, covenants and conditions of this Agreement to be
performed or complied with by the Purchaser at or prior to the
Closing Date;
(b) Payment Of Purchase Price: The Purchaser shall have tendered
to the Vendor the Purchase Price and the applicable goods and
services tax (if any) in the manner provided for in Clause
2.03, subject to any adjustments provided for in Article 4.00
and any alteration expressly provided for herein;
(c) Certificate That Representations Are Correct: The Purchaser
shall have delivered to the Vendor a certificate of a
Vice-President, Corporate Secretary or other senior officer of
the Purchaser, in the form of Schedule "D" and dated as of the
Closing Date, to the effect each of the covenants,
representations and warranties contained in Clause 6.02 was,
as of the Effective Date, and is, as of the Closing Date, true
and correct in all material respects; and
(d) Delivery Of Conveyance Documents: The Purchaser shall have
delivered to the Vendor at least one copy of the Conveyance
Documents described in Paragraph 3.03B(b) executed by the
Purchaser.
10.04 Waiver Of Conditions
The conditions in Clauses 10.02 and 10.03 are for the sole benefit
of the Purchaser and the Vendor respectively. The Party for the
benefit of which such conditions have been included may waive any
of them, in whole or in part, by written notice to the other
Party, without prejudice to any of the rights of the Party waiving
such condition, including, without limitation, reliance on or
enforcement of the representations, warranties or covenants which
are preserved and pertain to conditions similar to the condition
so waived. However, the Purchaser may not waive the existence and
operation of any preferential right of a third party to purchase
any of the Assets.
10.05 Failure To Satisfy Conditions
(a) In the event any of the conditions in Clauses 10.02 or 10.03
has not been satisfied at or before the Closing Date and such
condition has not been waived by the Party for the benefit of
which such condition has been included, such Party may
terminate this Agreement by written notice to the other Party.
However, a Party may not terminate this Agreement in such
manner after Closing, and its remedies thereafter, if any,
with respect to the failure to satisfy such condition shall be
limited to damages.
(b) If Purchaser terminates this Agreement pursuant to any one of
the conditions contained in Clause 10.02, Vendor shall
forthwith return the Deposit and any accrued interest thereon
to Purchaser with no right to claim further damages or other
remedies from Vendor. Other than as outlined in Subclause
8.02B(c), if Vendor terminates this Agreement, Vendor shall be
entitled to retain the Deposit and any accrued interest
thereon as liquidated damages and not as a penalty, with no
right to claim further damages or other remedies from
Purchaser.
10.06 Parties To Exercise Diligence With Respect To Conditions
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Each Party shall proceed diligently, honestly and in good faith
and use all reasonable efforts with respect to all matters within
its control to satisfy the conditions referred to in Clauses
10.01, 10.02 and 10.03.
11.00 CONFIDENTIALITY
11.01 Information respecting the Assets shall be retained in confidence
and used only for the purposes of this acquisition, provided that
the Purchaser's rights to use or disclose such information shall
be subject only to any operating, unit or other agreements that
may apply thereto following the Purchaser's acquisition of the
Assets. Any additional information obtained as a result of such
access which does not relate to the Assets shall continue to be
treated as confidential and shall not be used by the Purchaser
without the prior written consent of the Vendor, to the extent
that such information is not in the public domain.
12.00 INTEREST ACCRUES ON AMOUNTS OWING
Any amount owing to a Party by the other Party pursuant to any
provision of this Agreement after Closing and remaining unpaid
shall bear compound interest, as computed monthly, from the day
such amount was due to be paid until the day such amount was paid,
at the rate of two (2%) percent per annum above the Prime Rate
regardless of whether such Party has given the other Party prior
notice of the accrual of interest hereunder.
13.00 LIABILITY AND INDEMNIFICATION
13.01 Responsibility Of Vendor
Subject to Clauses 13.03 and 13.04 and provided that Closing has
occurred, the Vendor shall:
(a) be liable to the Purchaser for all losses, costs, damages and
expenses whatsoever which the Purchaser may suffer, sustain,
pay or incur; and
(b) indemnify and save the Purchaser and its directors, officers,
servants, agents and employees harmless from and against all
claims, liabilities, actions, proceedings, demands, losses,
costs, damages and expenses whatsoever which may be brought
against or suffered by the Purchaser, its directors, officers,
servants, agents or employees or which they may sustain, pay
or incur;
as a direct result of a breach as of the Closing Date of any
warranty or representation of Vendor contained in this Agreement,
except any losses, costs, damages, expenses, claims, liabilities,
actions, proceedings and demands to the extent that the same
either are reimbursed (or reimbursable) by insurance maintained by
the Purchaser or are caused by the gross negligence or wilful
misconduct of the Purchaser, its directors, officers, servants,
agents, employees or assigns. The indemnity granted by the Vendor
herein, however, is not a title warranty and does not provide
either an extension of any representation or warranty contained in
Clause 6.01 or an additional remedy with respect to the Vendor's
breach of such a representation or warranty. Notwithstanding any
provision herein, the liability of the Vendor and the indemnity
hereby granted by the
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Vendor to the Purchaser shall only apply with respect to claims
made within one (1) year following the Closing Date.
13.02 Responsibility Of Purchaser
Provided that Closing has occurred, the Purchaser shall:
(a) be liable to the Vendor for all losses, costs, damages and
expenses whatsoever which the Vendor may suffer, sustain, pay
or incur; and
(b) indemnify and save the Vendor and its directors, officers,
servants, agents and employees harmless from and against all
claims, liabilities, actions, proceedings, demands, losses,
costs, damages and expenses whatsoever which may be brought
against or suffered by the Vendor, its directors, officers,
servants, agents or employees or which they may sustain, pay
or incur;
as a direct result of any matter or thing arising out of,
resulting from, attributable to or connected with the Assets and
occurring or attributable to the period after the Effective Date,
except any losses, costs, damages, expenses, claims, liabilities,
actions, proceedings and demands to the extent that the same
either are reimbursed (or reimbursable) by insurance maintained by
the Vendor or are caused by the gross negligence or wilful
misconduct of the Vendor, its directors, officers, servants,
agents, employees or assigns. Nothing in this Clause, however,
shall operate either to limit any representation or warranty made
by the Vendor pursuant to Clause 6.01 or to affect the Purchaser's
right to make a claim against the Vendor for the breach of such a
representation or warranty within a period of one (1) year
following Closing.
13.03 Limit On Vendor's Responsibility
In no event shall the total of the liabilities and indemnities of
the Vendor under this Agreement, including, without limitation,
any claims relating to its representations and warranties, exceed
the Purchase Price, except in the event of fraud.
13.04 Assets Acquired On "As Is" Basis
Notwithstanding the foregoing provisions of this Article, the
Purchaser acknowledges that it is acquiring the Assets on an "as
is" basis, as of the Effective Date. The Purchaser acknowledges
that it is familiar with the condition of the Assets, including
the past and present use of the Lands and the Tangibles, that the
Vendor has provided the Purchaser with a reasonable opportunity to
inspect the Assets at the sole cost, risk and expense of the
Purchaser (insofar as the Vendor could reasonably provide such
access) and that the Purchaser is not relying upon any
representation or warranty of the Vendor as to the condition,
environmental or otherwise, of the Assets, except as is
specifically made pursuant to Clause 6.01(n). Provided that
Closing has occurred, the Purchaser further agrees that, as of the
Effective Date, it shall:
(a) be solely liable and responsible for any and all losses,
costs, damages and expenses which the Vendor may suffer,
sustain, pay or incur; and
(b) indemnify and save the Vendor and its directors, officers,
servants, agents and employees harmless from any and all
claims, liabilities, actions, proceedings,
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demands, losses, costs, damages and expenses whatsoever which
may be brought against or suffered by the Vendor, its
directors, officers, servants, agents or employees or which
they may sustain, pay or incur;
as a result of any matter or thing arising out of, resulting from,
attributable to or connected with any environmental liabilities
pertaining to the acquired Assets, or any of them, including,
without limitation, damage from or removal of hazardous or toxic
substances, clean-up, Well abandonment and reclamation. Once
Closing has occurred, the Purchaser shall be solely responsible
for all environmental liabilities respecting the Lands, the
abandonment of all Xxxxx on the Lands and the reclamation of the
Lands as between the Vendor and the Purchaser, and hereby releases
the Vendor from any claims the Purchaser may have against the
Vendor with respect to all such liabilities and responsibilities.
Nothing in this Clause, however, shall operate either to limit any
representation or warranty made by the Vendor pursuant to Clause
6.01(n) or to affect the Purchaser's right to make a claim
against the Vendor for the breach of such a representation or
warranty within a period of one (1) year following Closing.
13.05 No Merger Of Legal Responsibilities
The liabilities and indemnities created in this Article shall be
deemed to apply to, and shall not merge in, all assignments,
transfers, conveyances, novations, trust agreements and other
documents conveying any of the Assets from the Vendor to the
Purchaser, notwithstanding the terms of such assignments,
transfers, conveyances, novations and other documents, the
Regulations or any rule of law or equity to the contrary, and all
such rules are hereby waived.
13.06 Responsibility Extends To Legal Costs
Notwithstanding any provision to the contrary contained in this
Article, references to costs in the liability and indemnification
obligations prescribed by Clauses 13.01, 13.02 and 13.04 shall be
deemed to include reasonable legal costs on a solicitor-client
basis.
14.00 WAIVER
14.01 Waiver Must Be In Writing
No waiver by any Party of any breach (whether actual or
anticipated) of any of the terms, conditions, representations or
warranties contained herein shall take effect or be binding upon
that Party unless the waiver is expressed in writing under the
authority of that Party. Any waiver so given shall extend only to
the particular breach so waived and shall not limit or affect any
rights with respect to any other or future breach.
15.00 ASSIGNMENT
15.01 Assignments Before Closing
Prior to Closing, neither Party may assign its interest in or
under this Agreement or to the Assets without the prior written
consent of the other Party, except as may be required by the
Vendor to comply with its obligations respecting any preferential
rights, as provided in Article 7.00.
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15.02 Assignments By Purchaser After Closing
No assignment, transfer or other disposition of this Agreement or
all or any portion of the Assets by the Purchaser after Closing
shall relieve the Purchaser from its obligations to the Vendor
herein. The Vendor shall have the option to claim payment or
performance of such obligations from the Purchaser or the assignee
or transferee, and to bring proceedings in the event of default
against either or all of them, provided that nothing herein shall
entitle the Vendor to receive duplicate payment or performance of
the same obligation.
16.00 NOTICE
16.01 Service Of Notice
Notwithstanding anything to the contrary contained herein, all
notices required or permitted hereunder shall be in writing. Any
notice to be given hereunder shall be deemed to be served properly
if served in either of the following modes:
(a) personally, by delivering the notice to the Party on which it
is to be served at that Party's address for service.
Personally served notices shall be deemed to be received by
the addressee when actually delivered as aforesaid, provided
that such delivery shall be during normal business hours on
any day other than a Saturday, Sunday or statutory holiday in
Alberta. If a notice is not delivered on such a day or is
delivered after the addressee's normal business hours, such
notice shall be deemed to have been received by such Party at
the commencement of the addressee's first business day next
following the time of the delivery; or
(b) by telecopier or telex (or by any other like method by which a
written message may be sent) directed to the Party on which it
is to be served at that Party's address for service. A notice
so served shall be deemed to be received by the addressee
when actually received by it, if received within normal
business hours on any day other than a Saturday, Sunday or
statutory holiday in Alberta or at the commencement of the
next ensuing business day following transmission if such
notice is not received during such normal business hours.
16.02 Addresses For Notices
The address for service of notices hereunder of each of the
Parties shall be as follows:
VENDOR:
PARAMOUNT RESOURCES LTD. X. XXXX RESOURCES COMPANY
4000 - First Canadian Centre c/o GOLDMAN SACHS & CO.
000 - 0xx Xxxxxx X.X. 23rd Floor, 85 Broad Street
Calgary, Alberta Xxx Xxxx, Xxx Xxxx
X0X 0X0 XXX 00000
Attention: Manager, Land & Legal Attention: Xx. Xxxxxxxx Xxxxxx
Fax: (000) 000-0000 Fax: (000) 000-0000
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and
x/x XXXXXX XXXXXXXXX & XXXXXX
Xxxxx Xxxxxxxx Xxxxxx
0000, 000 - 0 Xxxxxx XX
Xxxxxxx, Xxxxxxx
X0X 0X0
Attention: Xx. Xxx Xxxxxxxxx
Fax: (000) 000-0000
PURCHASER:
COTTON VALLEY RESOURCES CORPORATION
0000 X. Xxxxxxx Xxxxxxxxxx, Xxxxx XX000
Xxxxxx, Xxxxx
XXX 00000
Attention: Xx. Xxxxxx Xxxxxxx and Mr. Xxxxx Xxxxx
Fax: (000) 000-0000
and
c/o APEX ENERGY CONSULTANTS INC.
Xxxxx 000, 000 - 0 Xxxxxx XX
Xxxxxxx, Xxxxxxx
X0X 0X0
Attention: Xx. Xxxxxxx Xxxxx
Fax: (000) 000-0000
16.03 Right To Change Address
A Party may change its address for service by notice to the other
Party, and such changed address for service thereafter shall be
effective for all purposes of this Agreement.
17.00 PUBLIC ANNOUNCEMENTS
17.01 Parties To Discuss Press Releases
A. The Parties shall cooperate with each other in relaying to
third parties information concerning this Agreement and the
transactions contemplated herein, and shall discuss drafts of
all press releases and other releases of information for
dissemination to the public pertaining hereto. However,
nothing in this Clause shall prevent a Party from furnishing
any information to any governmental agency or regulatory
authority or to the public, insofar only as is required by the
Regulations or securities laws applicable to such Party,
provided that a Party which proposes to make such a public
disclosure shall, to the extent reasonably possible, provide
the other Party with a draft of such statement a sufficient
time
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prior to its release to enable such other Party to review such
draft and advise that Party of any comments it may have with
respect thereto.
B. Notwithstanding Subclause 17.01A, the Vendor shall be
permitted to disclose information pertaining to this Agreement
and the identity of the Purchaser, to the extent required to
enable the Vendor to fulfill its obligations pertaining to
preferential rights of purchase and other third party rights,
in accordance with Article 7.00.
17.02 Signs And Notification To Governmental Agencies
Following Closing, the Vendor may remove any signs which indicate
the Vendor's ownership or operation of the Assets. If the
Purchaser will be the operator of the Assets, it shall be the
responsibility of the Purchaser to erect or install any signs
required by governmental agencies which pertain to the Assets. In
addition, the Purchaser shall be responsible for promptly advising
governmental agencies, contractors, suppliers and other affected
third parties of the Purchaser's interest in the Assets, subject
to Article 7.00 and Clause 10.01.
18.00 MISCELLANEOUS PROVISIONS
18.01 Further Assurances
At the Closing Date and thereafter as may be necessary, the
Parties shall execute, acknowledge and deliver such instruments
and take such other actions as may be reasonably necessary to
fulfill their respective obligations under this Agreement. The
Vendor shall cooperate with the Purchaser as reasonably required
to secure execution by third parties of the documents referred to
in Paragraph 3.03A(b).
18.02 Governing Law
This Agreement shall be subject to and be interpreted, construed
and enforced in accordance with the laws in effect in the Province
of Alberta. Each Party accepts the jurisdiction of the courts of
the Province of Alberta and all courts of appeal therefrom.
18.03 Time
Time shall be of the essence in this Agreement.
18.04 No Amendment Except In Writing
Subject to Clause 16.03, this Agreement may be amended only by
written instrument executed by the Vendor and the Purchaser.
18.05 Consequences Of Termination
If this Agreement is terminated in accordance with its terms prior
to Closing, then except for the provisions of Articles 11.00 and
12.00 and the covenants, warranties, representations or other
obligations breached prior to the time at which such termination
occurs, the Parties shall be released from all of their
obligations under this Agreement other than in respect of the
provisions of Subclause 2.03(a). If this Agreement is so
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terminated, the Purchaser shall promptly return to the Vendor
all materials delivered to the Purchaser by the Vendor hereunder,
together with all copies of them that may have been made by or for
the Purchaser.
18.06 Supersedes Earlier Agreements
This Agreement supersedes all other agreements between the Parties
with respect to the Assets and expresses the entire agreement of
the Parties with respect to the transactions contained herein.
18.07 Enurement
Subject to the provisions of Article 15.00, this Agreement shall
be binding upon and enure to the benefit of the Parties and their
respective successors and permitted assigns.
18.08 Obligations of Vendor
Notwithstanding anything contained herein to the contrary, the
rights, duties, obligations, indemnities and liabilities of each
of the Parties comprising the Vendor are several and not joint or
collective and the representations and warranties made by the
Vendor shall be construed as being made by each of the Parties
comprising the Vendor with respect only to itself and in any event
only as to its percentage share, as set out in Clause 4.01D, in
the Assets. Purchaser's right of recovery, if any, from each Party
comprising Vendor shall be limited to that portion of the Purchase
Price received by each such Party.
18.09 Counterpart Execution
This Agreement may be executed in counterpart and when each Party
has executed a counterpart, all counterparts taken together shall
constitute one agreement.
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IN WITNESS WHEREOF the parties have duly executed this Agreement.
(VENDOR) PARAMOUNT RESOURCES LTD.
PER: /s/ XXXXXXX X. XXXXX
-------------------------------
Xxxxxxx X. Xxxxx L.L.B.
Manager, Land & Legal
PER: /s/ G. XXXXX XXXXXX
-------------------------------
G. Xxxxx Xxxxxx
Chief Financial Officer
X. XXXX RESOURCES COMPANY
PER: /s/ XXXXXX X. TEXTAR
-------------------------------
PER:
-------------------------------
(PURCHASER) COTTON VALLEY RESOURCES CORPORATION
PER: /s/ XXXX XXXXXXX, CEO
-------------------------------
PER:
-------------------------------
THIS COUNTERPART EXECUTION PAGE IS ATTACHED TO AN AGREEMENT OF PURCHASE AND
SALE DATED OCTOBER 1, 1997 AMONG PARAMOUNT RESOURCES LTD., X. XXXX RESOURCES
COMPANY AND COTTON VALLEY RESOURCES CORPORATION.
