1
Exhibit 10.3
March 1997
Beaver Lake Resources Corporation
Canadian Western Bank
Re-Financing
▇▇▇▇▇▇▇▇▇ ▇▇▇▇
BARRISTERS & SOLICITORS
1800 FIRST CANADIAN CENTRE
▇▇▇ - ▇▇▇ ▇▇▇▇▇▇ ▇.▇.
CALGARY, ALBERTA
T2P 3N9
2
BEAVER LAKE RESOURCES CORPORATION
CANADIAN WESTERN BANK RE-FINANCING
MARCH 1997
Tab No. Description of Document
1. First Amending Loan Agreement
2. Revolving Credit Agreement
3. First Supplemental Debenture
4. Acknowledgement and Postponement of Claim:
a. ▇▇▇▇▇ ▇▇▇▇▇▇
b. Qurat-ul-ain ▇▇▇▇
▇. ▇▇▇▇ ▇▇▇▇▇
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FIRST AMENDING LOAN AGREEMENT
This First Amending Loan Agreement dated March 25, 1997 is made by and between
(i) BEAVER LAKE RESOURCES CORPORATION, an Alberta corporation, as borrower (the
"BORROWER") and (ii) CANADIAN WESTERN BANK, a Canadian chartered bank with a
branch in Calgary, Alberta, as lender (the "BANK").
WHEREAS the parties hereto wish to amend the letter loan agreement dated March
5, 1996 between the Borrower and the Lender (the "LOAN AGREEMENT") in order to
increase the existing revolving credit facility to Cdn. $3,900,000.
NOW THEREFORE, the parties hereto agree as follows:
1. Defined Terms
Terms and expressions defined in the Loan Agreement shall, when used
herein and unless otherwise defined herein, have the same meanings as are
ascribed to them therein.
2. Amendments to Loan Agreement
The Loan Agreement is hereby amended as follows:
a. Section 3 is hereby deleted and substituted with the following:
"Demand revolving reducing loan in the amount of Cdn. $3,900,000 (the
"LOAN") to be drawn down from time to time in multiples of Cdn.
$75,000. The indebtedness of the Borrower under the Loan may increase
and decrease from time to time and the Borrower may borrow, repay and
reborrow the amounts available under the Loan in accordance with the
terms of this Loan Agreement. The maximum principal amount available
under the Loan shall be repaid and automatically reduced in accordance
with Section 9 hereof."
b. The first paragraph of Section 7 is hereby amended by deleting "one
percent (1.00%) per annum" and substituting therefor "three quarters of
one percent (0.75%) per annum".
c. The first paragraph of Section 8 is hereby deleted and substituted with
the following:
"On or before July 1, 1997, the Bank shall establish a principal
repayment and reduction schedule for the Loan (the "SCHEDULED
REDUCTIONS") based upon its review of the Engineering Report, the most
recent financial statements of the Borrower and such other criteria as
the Bank may consider appropriate. The Borrower acknowledges that the
Scheduled Reductions shall be established by the Bank in its sole and
absolute discretion.
The entire amount outstanding hereunder, including all accrued and
unpaid interest and any other amounts owing hereunder, shall be repaid
by the Borrower immediately on demand by the Bank. Until demand,
interest shall be payable on the principal amount of the Loan as
described in Section 7
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hereof and the principal amount outstanding on the Loan shall be repaid
to ensure that the indebtedness under the Loan does not exceed the
authorized principal amount of the Loan available from time to time
hereunder."
d. Section 13(b)(i)(B) is hereby deleted and substituted with the
following:
"(B) the aggregate estimated net revenue from such proven developed
producing reserves for the next fiscal year must exceed 150%
of all scheduled principal reductions plus interest payable on
the Loan for the corresponding period (on the assumption that
the full amount of the Loan is outstanding). Estimated
interest for each fiscal year will be based upon the average
Prime Rate for the calendar month preceding the start of each
fiscal year plus one and one-half percent (1.5%) per annum;
and"
3. Purpose
The Loan is to be used by the Borrower for general corporate purposes,
including financing day to day operations, capital expenditures and the
acquisition of oil and gas assets.
4. Drawdown
The Bank shall not be obliged to increase the principal amount of the
Loan unless the Bank has received a drawdown notice from the Borrower in
substantially the form of Schedule "A" hereto (the "DRAWDOWN NOTICE") prior to
the date of the initial advance of the Loan extension (the "DRAWDOWN DATE") and
each and every one of the Conditions Precedent (as hereinafter defined) is
satisfied on or prior to the Drawdown Date. A Drawdown Notice given by the
Borrower hereunder is irrevocable and shall oblige the Borrower to take the
action contemplated on the date specified therein.
5. Security
As continuing collateral security for the repayment of the Loan,
interest thereon and all other liabilities of the Borrower to the Bank hereunder
and under the Loan Agreement, the Bank shall be provided with the following
additional security (the "ADDITIONAL SECURITY") in form and substance
satisfactory to the Bank:
a. revolving credit agreement in the principal amount of the Loan;
b. first supplemental debenture (the "FIRST SUPPLEMENTAL DEBENTURE")
creating a first fixed charge over the Borrower's working interest in
the proven developed producing oil and gas properties described in the
reserve and economic evaluation of ▇▇▇▇▇▇▇ Associates Limited dated
March 10, 1997 with effect as of January 1, 1997 and located in the
Gilby Area of Alberta (the "ADDITIONAL PROPERTIES");
c. acknowledgement and postponement of claim from ▇▇▇▇▇ ▇▇▇▇▇▇,
Qurat-ul-ain ▇▇▇▇ and ▇▇▇▇ ▇▇▇▇▇ (collectively, the "INVESTORS");
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d. evidence of applicable insurance coverage relating to the Borrower and
the Additional Properties; and
e. any other ancillary documentation that the Bank or its counsel may
reasonably require.
Each item of the Additional Security shall be treated as separate
collateral security given in addition to any other item of Security. The
Borrower acknowledges that it continues to be bound by the existing Security,
that such Security continues to secure the obligations of the Borrower to the
Bank under this First Amending Loan Agreement and that the First Supplemental
Debenture is delivered to the Bank pursuant to the Instrument of Pledge dated
March 5, 1996 from the Borrower to the Bank.
The Bank shall also be provided with the following legal opinions:
i. a legal opinion from the Borrower's counsel addressed to the
Bank and its counsel, in form and substance satisfactory to
them, opining among other matters, but specifically as to the
Borrowers ability to borrow the Loan and as to the due
authorization, execution and delivery of this First Amending
Loan Agreement and the Additional Security;
ii. a favourable title opinion from the Borrower's counsel or
special counsel to the Borrower addressed to the Bank and its
counsel, in form and substance satisfactory to them, with
respect to the Additional Properties; and
iii. a legal opinion of the Bank's counsel addressed to the Bank,
in form and substance satisfactory to the Bank, with respect
to the enforceability of the First Amending Loan Agreement and
the Additional Security against the Borrower and the
registration of the Additional Security as a first fixed
charge on the Additional Properties subject only to those
encumbrances which are acceptable to the Bank.
6. Conditions Precedent
The obligation of the Bank to advance the Loan extension is subject to
the fulfilment of each and every one of the following conditions precedent (the
"CONDITIONS PRECEDENT"):
a. the Bank shall have received the Drawdown Notice on or prior to the
Drawdown Date;
b. all loan documentation, legal opinions and the Additional Security as
contemplated herein shall have been executed and delivered to the Bank
and shall have been registered, or arrangements satisfactory to the
Bank to permit such registration following the advance of the Loan
shall have been made, where registration is required or of advantage,
subject only to such encumbrances as are acceptable to the Bank;
c. the representations and warranties of the Borrower contained in the
Loan Agreement, as amended hereby, shall be true and correct as of the
Drawdown Date;
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d. on the Drawdown Date there shall exist no condition or event which
constitutes an Event of Default or which, after the giving of notice or
the passing of time, or both, would constitute an Event of Default;
e. the Bank shall have received certified copies of resolutions of the
board of directors of the Borrower authorizing the Loan and the
execution, delivery and performance of this First Amending Loan
Agreement and the Additional Security;
f. the Bank shall have received certified copies of the consenting
documents and by-laws of the Borrower;
g. the Bank and its counsel shall have reviewed and found satisfactory the
documents and transactions related to the Borrower's acquisition of the
Additional Properties; and
h. prior to or contemporaneous with the Drawdown, the Borrower shall have
completed the acquisition of the Additional Properties.
The Conditions Precedent are for the sole and absolute benefit of the
Bank and may be waived in whole or in part by the Bank; provided that any waiver
shall not be binding unless given in writing and shall not derogate from the
right of the Bank to insist on the satisfaction of any condition not expressly
waived in writing or to insist on the satisfaction of any condition waived in
writing which may be requested in the future.
7. Representations and Warranties
Section 16 of the Loan Agreement is hereby incorporated into this First
Amending Loan Agreement, with references to "this Loan Agreement" changed to
"this First Amending Loan Agreement and the Loan Agreement", and the Borrower
acknowledges and confirms that such representations and warranties are true and
correct on the date hereof. In addition, the Borrower represents, warrants and
covenants to and in favour of the Bank as follows:
a. the Borrower is the legal and beneficial owner of the oil and gas
properties described on Schedule "B" hereto, except for the "Investors'
Interest" described in Schedule "B" which is beneficially owned by each
Investor pursuant to a Participation Agreement with the Borrower dated
July 16, 1996; and
b. the Borrower shall at all times comply with the terms of each
acknowledgement and postponement executed by each Investor in favour of
the Bank.
8. Events of Default
The Borrower acknowledges and confirms to the Bank that there does not
exist, on the date hereof, any condition or event which constitutes an Event of
Default or which, after the giving of notice or the passing of time, or both,
would constitute an Event of Default
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9. Extended Definitions
The definitions of Loan Agreement, Security and Properties in the Loan
Agreement are hereby amended to include a reference to this First Amending Loan
Agreement, the Additional Security and Additional Properties, respectively.
10. Commitment Fee
The Bank acknowledges having received a non-refundable commitment fee in
the amount of $14,000.
11. Ratification
Save and except as amended pursuant to the terms hereof, the Loan
Agreement is hereby ratified and confirmed.
12. First Amending Loan Agreement Governs
The terms of the Loan Agreement, as amended by this First Amending Loan
Agreement, express and constitute the entire agreement between the parties and
this First Amending Loan Agreement supersedes and replaces the financing
proposals dated February 27, 1997 and March 26, 1997 from the Bank to the
Borrower.
13. Enurement
This First Amending Loan Agreement shall enure to the benefit of and be
binding upon each of the parties hereto and their respective successors and
assigns.
IN WITNESS WHEREOF the parties hereto have executed this First Amending
Loan Agreement as of the date and year first above written.
BEAVER LAKE RESOURCES CORPORATION
Per: /s/ ▇▇▇▇▇ ▇▇▇▇▇▇▇
-----------------------------------------------
Name: ▇▇▇▇▇ ▇▇▇▇▇▇▇
Title: Executive V.P.
Per: /s/ ▇▇▇▇ ▇▇▇▇▇▇▇
-----------------------------------------------
Name: ▇▇▇▇ ▇▇▇▇▇▇▇
Title: Vice President
CANADIAN WESTERN BANK
Per: /s/ A.Y. IWASA
-----------------------------------------------
A.Y. Iwasa
Manager, Energy Lending
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SCHEDULE "A"
TO THE FIRST AMENDING LOAN AGREEMENT DATED MARCH 25, 1997 BETWEEN
CANADIAN WESTERN BANK, AS LENDER, AND BEAVER LAKE RESOURCES
CORPORATION, AS BORROWER
DRAWDOWN NOTICE
TO: CANADIAN WESTERN BANK
FROM: BEAVER LAKE RESOURCES CORPORATION
DATE: March X, 1997
1. This Drawdown Notice is delivered to you pursuant to Section 4 of the First
Amending Loan Agreement dated March 25, 1997 (the "Loan Agreement"). All defined
terms set forth in this Drawdown Notice shall have the respective meanings set
forth in the Loan Agreement.
2. We hereby request a Drawdown as follows:
(a) Date of Drawdown: March X, 1997
(b) Amount of Drawdown: $X
(c) Payment Instructions: X
3. No Event of Default has occurred and is continuing, nor will any Event of
Default occur as a result of the aforementioned Drawdown.
Yours very truly,
BEAVER LAKE RESOURCES CORPORATION
Per:
----------------------------------------------
Name:
Title:
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REVOLVING CREDIT AGREEMENT
TO: CANADIAN WESTERN BANK (the "BANK")
▇▇▇ - ▇▇▇ ▇▇▇▇▇▇ ▇.▇.
Calgary, Alberta
T2P 2V1
FROM: BEAVER LAKE RESOURCES CORPORATION (the "BORROWER")
1204, ▇▇▇ - ▇▇▇ ▇▇▇▇▇▇ ▇.▇.
Calgary, Alberta
T2P 2Z1
RE: Revolving Line of Credit (the "CREDIT")
Credit Limit - $3,900,000 (the "CREDIT LIMIT")
In consideration of the Bank authorizing the Credit subject to the
conditions contained herein, the Borrower acknowledges and agrees as follows:
1. The Borrower covenants to pay to the Bank ON DEMAND all amounts
outstanding under the Credit together with interest thereon at a variable
rate per annum equal to three quarters of one percent (0.75%) above the
Bank's prime lending rate in effect from time to time. The Bank's prime
lending rate is the variable per annum rate of interest published from
time to time by the Bank as its prime lending rate. On the date hereof,
the Bank's prime lending rate is 4.75% per annum. A statement by any
officer of the Bank confirming the Bank's prime lending rate at any time
or times shall be conclusive evidence thereof for all purposes hereunder.
Interest shall be calculated on the daily outstanding balance, shall
accrue from day to day and shall be compounded monthly in arrears and
shall be payable monthly on such day of the month as the Bank may from
time to time require. Interest calculated as aforesaid shall be payable at
the said rate before and after maturity, default and judgment, with
interest on overdue interest at the same rate as on principal.
2. The Bank is authorized but not obliged to advance or readvance funds under
the Credit from time to time by credit to the Borrower's account number
▇▇▇▇▇▇▇ (the "ACCOUNT") at the Bank's branch at the address noted above.
Advances or readvances, if made, shall be in the minimum amount of $75,000
or a multiple thereof and shall be made as required to meet directions to
pay on or other withdrawals or payments from the Account.
3. Neither the execution of this Agreement or any of the other documents
required by the Bank in connection with the Credit, nor the advance in
part of the Credit, shall bind the Bank to advance or readvance any
portion of the Credit and the Bank may do so in its sole and arbitrary
discretion. The Bank shall not be liable for, and the Borrower agrees that
no action shall lie against the Bank for, refusing to advance further
funds under the Credit at any time or for any reason whatsoever. The Bank
shall have the right to withdraw the Credit at any time without cause or
notice.
4. The Borrower covenants that at no time shall the balance owing under the
Credit exceed the Credit Limit and the Bank shall have no obligation to
honour any request for funds, however submitted, the honouring of which
would have the effect of making the balance owing exceed the Credit Limit.
Notwithstanding the foregoing, if at any time amounts advanced and
outstanding on the Credit exceed the Credit Limit, any such overdraft
which occurs in excess of the Credit Limit shall be governed by the
provisions of this Agreement except that the Bank may, in its sole
decision, impose on the amount of such overdraft, and the Borrower hereby
agrees to pay thereon, a rate of interest equal to the Bank's highest
overdraft interest rate established from time to time and chargeable on
overdraft balances, even though such interest rate may be higher than the
rate set out in paragraph 1 hereof, with interest on overdue interest at
the same rate. A statement by any officer of the Bank confirming the
applicable overdraft interest rate chargeable on any such overdraft shall
be conclusive evidence thereof for all purposes hereunder.
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5. The Bank is authorized but not obliged to debit the Account as required
from time to time to pay interest, principal, administration fees
chargeable on the Credit as notified to the Borrower or posted in the
Bank's branches from time to time, and other costs (including legal costs
as between a solicitor and his own client on a full indemnity basis)
incurred in respect of the Credit or otherwise payable by the Borrower to
the Bank, including without limitation, costs related to preparation,
perfection and enforcement of this Agreement and any collateral securities
or documents and recovery of amounts outstanding on the Credit, all of
which fees and costs the Borrower agrees to pay on demand with interest
after demand at the rate hereinbefore set forth. Any interest accrued on
any such amounts which is not paid by the next date on which an interest
installment is payable shall be compounded on such date and on all further
installment dates until paid and, as overdue interest, bear interest at
the same rate as on principal. All monies received by the Bank, whether by
way of debit as aforesaid or otherwise, may be applied and allocated by
the Bank to such parts of the outstanding indebtedness (whether interest,
principal, fees or other costs) as the Bank deems best.
6. The Borrower agrees to maintain an average monthly minimum credit balance
in the Account, which may include compensating balances to cover service
fees, reserves and debit float. Such balance shall be an amount agreed to
in writing between the Borrower and the Bank from time to time.
7. In the Bank's sole discretion and for so long as the Bank thinks fit, the
Credit Limit may be reduced by an amount equal to the Borrower's liability
(as determined by the Bank in its sole discretion) on any letters of
credit or guarantee issued by the Bank at the request of the Borrower.
8. The Bank's written statement of the amount owing under the Credit at any
particular time shall, in the absence of manifest error, be conclusively
binding on the Borrower for all purposes.
9. Additional agreements may from time to time exist between the Bank and the
Borrower relating to the Credit and in the event of a conflict between
this Agreement and another agreement relating to the Credit such other
agreement shall prevail; if there is no conflict, this Agreement and such
other agreement shall be read in conjunction with and as supplementary to
each other. This Agreement and any other agreements in relation to the
Credit are in addition to and not in substitution for any other agreements
between the Borrower and the Bank, including but not limited to agreements
related generally to the operation of the Account. Without restricting the
generality of the foregoing, if the Bank at any time or from time to time
takes a promissory note or notes from the Borrower representing any
advances under the Credit, whether in whole or in part and whether in the
case of overdrafts or otherwise, such note or notes shall not extinguish
or pay such advances but shall evidence the same only.
IN WITNESS WHEREOF the Borrower has executed this Agreement on March 25,
1997.
BEAVER LAKE RESOURCES CORPORATION
Per: /s/ ▇▇▇▇▇ ▇▇▇▇▇▇▇
-----------------------------------------------
Name: ▇▇▇▇▇ ▇▇▇▇▇▇▇ c/s
Title: Executive V.P.
Per: /s/ ▇▇▇▇ ▇▇▇▇▇▇▇
-----------------------------------------------
Name: ▇▇▇▇ ▇▇▇▇▇▇▇
Title: Vice President
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FIRST SUPPLEMENTAL DEBENTURE
This First Supplemental Debenture dated March 25, 1997 is made by BEAVER LAKE
RESOURCES CORPORATION, an Alberta corporation (the "BORROWER") in favour of
CANADIAN WESTERN BANK, a Canadian chartered bank (the "BANK").
WHEREAS the Borrower issued and granted a debenture dated March 5, 1996 in
favour of the Bank in the principal amount of Cdn. $5,000,000 (the "DEBENTURE");
AND WHEREAS the Bank has agreed to extend additional credit to the Borrower and
the Borrower has agreed to grant, mortgage and charge to and in favour of the
Bank additional property and assets of the Borrower.
NOW THEREFORE, for good and valuable consideration, the receipt and sufficiency
of which are hereby acknowledged by the Borrower, the Borrower hereby covenants
and agrees with the Bank as follows:
1. Terms and expressions defined in the Debenture shall, when used herein,
have the same meanings as are ascribed to them therein.
2. Schedule "A" to the Debenture is hereby amended by adding thereto the
property and assets set forth and described in Schedule "A" attached to
this First Supplemental Debenture and, in order to give full and
further effect to such amendment, the Borrower hereby mortgages,
pledges and charges as and by way of a first fixed and specific
mortgage and charge to and in favour of the Bank all of its right,
title, estate and interest in and to (i) the lands listed and described
on Schedule "A" hereto and (ii) the Oil and Gas Properties relating to
such lands, which shall all constitute Specifically Mortgaged Property.
3. This First Supplemental Debenture is supplemental to the Debenture and
is to form part of and shall have the same effect as though
incorporated into the Debenture.
4. Save and except as amended pursuant to the terms hereof, the Debenture
is hereby ratified and confirmed.
5. This First Supplemental Debenture shall enure to the benefit of the
Bank and its successors and assigns and shall be binding upon the
Borrower and its successors and assigns.
IN WITNESS WHEREOF the Borrower has executed this First Supplemental
Debenture by its duly authorized officer on the date and year first above
written.
BEAVER LAKE RESOURCES CORPORATION
Per: /s/ ▇▇▇▇▇ ▇▇▇▇▇▇▇
-----------------------------------------------
Name: ▇▇▇▇▇ ▇▇▇▇▇▇▇ c/s
Title: Executive V.P.
Per: /s/ ▇▇▇▇ ▇▇▇▇▇▇▇
-----------------------------------------------
Name: ▇▇▇▇ ▇▇▇▇▇▇▇
Title: Vice President
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SCHEDULE "A"
FILE # LESSOR'S NO. TWP/RGE SECTION RIGHTS W.I.% ENCUM. EXPIRY ROFR
A-1176 39142 40-03W5 E/2 SEC. 36 P&NG TO BASE PEKISKO 56.25 CSS SEC.95 NO
A-1177 113765 40-03W5 W/2 SEC. 36 P&NG TO BASE PEKISKO 56.25 CSS SEC.95 NO
A-1181 PCP 2863 40-03W5 SE/4 SEC. 15 PETROLEUM TO UPPER 37' OF BANFF 100 12.5% LSR (i)(ii) HBP NO
(i) NON-CONV. 3.5% NOR OIL ON 100% PRODUCTION PAID 100% BY ▇▇▇▇▇▇▇▇
(ii) NON-CONV. 10.0% GORN OIL ON 100% PRODUCTION PAID 100% BY ▇▇▇▇▇▇▇▇
▇▇▇▇▇ BATTERY
100/06-36-040-03 W5/00 06-36-040-03 W5
100/11-36-040-03 W5/00
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ACKNOWLEDGEMENT AND POSTPONEMENT OF CLAIM
TO: CANADIAN WESTERN BANK
WHEREAS, Beaver Lake Resources Corporation ("Beaver Lake") is,
subject to the trusts described herein, the legal and beneficial owner of those
lands and interest described in Schedule "A" hereto;
AND WHEREAS pursuant to a trust agreement between Beaver Lake and the
undersigned attached hereto as Schedule "B" (the "Trust Agreement"), Beaver Lake
holds on certain trusts those interests described in Schedule "C" on behalf of
the undersigned;
AND WHEREAS Beaver Lake has existing financing with the Bank and has
applied to the Bank to amend its existing finance arrangements with the Bank;
AND WHEREAS the Bank has agreed to amend the existing finance
arrangements with Beaver Lake subject to the granting of the appropriate loan
and security documents. All loan and security documents previously granted by
Beaver Lake (including its predecessors Beaver Lake Energy Corporation and Capco
Resource Properties Ltd.), to the Bank and all loan and security documents to be
granted by Beaver Lake to the Bank pursuant to the amendments to the financing
arrangements are hereinafter referred to as the "Securities");
AND WHEREAS it is the intention of the undersigned and Beaver Lake
that the Bank be able to deal with Beaver Lake in all respects with respect to
the granting of the Securities without any requirement of approval from the
undersigned;
THEREFORE, in consideration of the Bank amending its existing
financing with Beaver Lake and other good and valuable consideration, the
undersigned acknowledges and agrees as follows:
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1. The Trust Agreement, all interests of the undersigned under the Trust
Agreement (including the oil and gas properties described in Schedule "C")
and all indebtedness, obligations and liabilities, present and future, of
Beaver Lake to the undersigned are hereby subordinated and postponed to
the rights and interests of the Bank under the Securities;
2. The Bank shall deal with Beaver Lake and the Securities in the same manner
and as if Beaver Lake was the owner of 100% of the legal and beneficial
owner of the lands and interests described in Schedule "A" and the
undersigned is estopped in any proceeding brought by the Bank with respect
to the Securities from claiming any interest in the lands and interests
described in Schedule "A" in priority to the Bank.
3. Any decrease or increase in the amount advanced or to be advanced to
Beaver Lake, and any amendment, variation or modification of the terms of
the Securities and the granting of time, extensions, renewals,
compromises, indulgences, waivers, releases or other concessions to Beaver
Lake shall not require the agreement or approval of the undersigned.
4. This Acknowledgement and Postponement shall not be affected by the death
or loss or diminution of capacity of the undersigned or by any change in
the name of Beaver Lake by the acquisition of Beaver Lake's business by a
corporation, or by any change whatsoever in the objects, capital structure
or constitution of Beaver Lake, or by Beaver Lake being amalgamated or
otherwise merged with or into any other corporation, but shall
notwithstanding the happening of any such event continue to apply to all
the Securities whether theretofore or thereafter incurred or arising and
in this instrument the word "Beaver Lake" shall include every such
corporation.
5. The term "Securities" as used herein shall include and extend to any
money, loaned or advanced by the Bank to or for the account of Beaver Lake
in
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connection with or incidental to the Securities or any amounts owing
pursuant to the Securities, and shall also include and extend to any
renewal of or substitution for the Securities.
6. This Acknowledgement and Postponement shall extend to and enure to the
benefit of the Bank and its successors and assigns, and every reference
herein to the undersigned, is a reference to and shall be construed as
including the undersigned and the heirs, executors, administrators, legal
representatives, successors and assigns of the undersigned or of any of
them, as the case may be, to and upon all of whom this Acknowledgement and
Postponement shall extend and be binding.
7. This Acknowledgement and Postponement of Claim shall be governed by and
construed in accordance with the laws of the Province of Alberta. The
undersigned irrevocably submits to the courts of the Province of Alberta
in any action or proceeding arising out of or relating to this
Acknowledgement and Postponement of Claim, and irrevocably agrees that all
such actions and proceedings may be heard and determined in such courts,
and irrevocably waives, to the fullest extent possible, the defense of any
inconvenient forum.
GIVEN UNDER SEAL at City of Industry this 1st day of April, 1997
SIGNED, SEALED AND DELIVERED IN THE )
PRESENCE OF )
)
)
[SIG] ) /s/ ▇▇▇▇▇ ▇▇▇▇▇▇
----------------------------------- ) ----------------------------------------
WITNESS ) ▇▇▇▇▇ ▇▇▇▇▇▇
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AFFIDAVIT OF EXECUTION
STATE OF CALIFORNIA ) I, /s/ ▇▇▇ ▇▇▇ ▇▇▇▇▇▇
COUNTY OF LOS ANGELES ) in the city of Industry
TO WIT ) in the state of California
MAKE OATH AND SAY THAT
1. I was personally present and did see ▇▇▇▇▇ ▇▇▇▇▇▇, named in the within
instrument, who is personally known to me to be the person therein, duly sign,
the same for the purposes named therein.
2. The same was executed in the City of Industry of California, and that I am
the subscribing witness thereof.
3. I know the said ▇▇▇▇▇ ▇▇▇▇▇▇, and she is in my belief of the full age of
eighteen years.
SWORN BEFORE ME, at the City of Industry, )
in the State of California, ) [SEAL] ▇▇▇ ▇▇▇ ▇▇▇▇▇▇
this 1st day of April, 1997 ) COMM. #1013906
) Notary Public -- California
/s/ ▇▇▇ ▇▇▇ ▇▇▇▇▇▇ ) LOS ANGELES COUNTY
-------------------------------------- ) My Comm. Expires JAN. 18, 1998
A Notary Public )
in and for the State of California )
17
SCHEDULE "A"
[96ANNUAL.XLW]LAND.XLS
BEAVER LAKE RESOURCES CORPORATION
LAND HOLDINGS AS AT DECEMBER 31, 1996
Purpose: to split land between Beaver Lake and Investor Group
AMOUNT OF INVESTOR GROUP AND BEAVER LAKE
AS PER LAND RECORDS WHICH INCLUDES THE INVESTOR GROUP LAND HOLDINGS
---------------------------------------------------------------- -------------------------------------------------
Non Non PRODUCING NON-PRODUCING
Producing Producing Producing Producing ------------------------- ----------------------
Total Total Total Total Total Total BLRC+I/G I/G BLRC BLRC+I/G I/G BLRC
gross gross gross net net net net net net net net net
acres acres acres acres acres acres acres acres acres acres acres acres
-------------------------------------------------------------------------------------------------------------------
▇▇▇▇▇▇▇
▇▇▇▇▇▇▇ West ▇▇▇▇ 480 480 0 0 0 0 0 0 0 0 0 0
Armada 320 160 160 24 12 12 12 (2) 10 12 (2) 10
Badger 640 640 0 96 96 0 96 (14) 82 0 0 0
▇▇▇▇▇ 8,960 2,400 6,560 208 14 194 14 (2) 12 194 (29) 165
Bergen 1,440 1,280 160 108 96 12 96 (14) 82 12 (2) 10
Big Valley 960 640 320 19 17 2 17 (3) 14 2 0 2
▇▇▇▇▇▇▇▇ 480 160 320 480 160 320 160 (24) 136 320 (48) 272
Chip Lake 960 320 640 120 0 120 0 0 0 120 (18) 102
▇▇▇▇▇▇▇▇▇ 10,240 8,480 1,760 1,532 1,283 249 1,283 (192) 1,091 249 (37) 212
Crimson Lake ▇▇▇▇ 160 160 0 0 0 0 0 0 0 0 0 0
Drumhellar South 4,480 2,720 1,760 1,580 505 1,075 505 (76) 429 1,075 (161) 914
Eaglesham CRL 27,040 5,600 21,440 16,693 3,332 13,361 3,332 0 3,332 13,361 0 13,361
East Scandia Farm-in 640 640 0 400 400 0 400 0 400 0 0 0
▇▇▇▇▇▇ 640 640 0 40 40 0 40 (6) 34 0 0 0
▇▇▇▇ West ▇▇▇▇ 720 720 0 0 0 0 0 0 0 0 0 0
▇▇▇▇▇▇▇ 320 160 160 120 80 40 80 (12) 68 40 (6) 34
Health 800 800 0 120 120 0 120 (18) 102 0 0 0
Healthdale ▇▇▇▇ 640 640 0 0 0 0 0 0 0 0 0 0
Highvale 640 640 0 32 32 0 32 (5) 27 0 0 0
▇▇▇▇▇▇ 32,200 3,200 0 427 427 0 427 (64) 363 0 0 0
▇▇▇▇▇▇ ▇▇▇▇ 640 640 0 0 0 0 0 0 0 0 0 0
Kiron 640 640 0 428 428 0 428 (64) 364 0 0 0
Lait ▇▇▇▇ 640 0 640 0 0 0 0 0 0 0 0 0
Leduc 240 240 0 139 139 0 139 (21) 118 0 0 0
Leedale 1,280 1,280 0 60 60 0 60 (9) 51 0 0 0
Loon South 960 480 480 149 108 41 108 (16) 92 41 (6) 35
Lousana A 160 160 0 160 160 0 160 (12) 148 0 0 0
Malmo CRL 80 80 0 80 80 0 80 0 80 0 0 0
96 136 (20) 116 96 (14) 82
18
[96ANNUAL.XLS]LAND.XLS
Beaver Lake Resources Corporation
Land Holdings as at December 31,1996
Purpose: to split land between Beaver Lake and Investor Group
AS PER LAND RECORDS WHICH INCLUDES THE INVESTOR GROUP
Non NON
Producing Producing PRODUCING PRODUCING
Total Total Total Total Total Total
gross gross gross net net net
acres acres acres acres acres acres
Penhold 160 80 80 160 80 80
Pigeon Lake 800 480 320 18 0 18
Princess 640 640 0 640 640 0
Rainbow East C 640 480 160 192 172 20
Red Earth 160 160 0 53 53 0
Redwater ▇▇▇▇ 1,280 640 640 0 0 0
Rumsey 4,480 3,840 640 2,692 2,052 640
Shekille 640 640 0 80 80 0
Simonettle BLEC 320 320 0 3 3 0
Sounding Lake B 1,920 1,430 490 1,178 1,095 83
Three Hills Creek 640 640 0 64 64 0
UtiKuma D 960 640 320 351 221 130
▇▇▇▇▇▇▇▇▇▇ 7,840 7,680 160 1,892 1,849 43
Willow Now 1,920 160 1,760 1,584 160 1,424
▇▇▇▇▇▇▇▇▇ ▇▇▇▇ 4,320 1,760 2,560 672 0 672
Zama Farm-in 1,440 480 960 625 69 556
98,640 55,830 42,810 33,688 14,380 19,308
British Columbia
North Pine BLEC 640 160 480 36 12 24
Saskatchewan
Bench West 161 161 0 32 32 0
▇▇▇▇▇▇▇ Midale ▇▇▇▇ 483 483 0 0 0 0
▇▇▇▇▇ ▇▇▇▇ 321 80 241 34 0 34
Gull Lake BLEC 483 0 483 48 0 48
Inglenook ▇▇▇▇ 2,817 644 2,173 0 0 0
Rosebank ▇▇▇▇ 80 80 0 0 0 0
West ▇▇▇▇▇▇▇ BLEC 2,537 0 2,537 127 0 127
209
AMOUNT OF INVESTOR GROUP AND BEAVER LAKE LAND HOLDINGS
Producing PRODUCING NON-PRODUCING
BLRC + I/G I/G BLRC BLRC + I/G I/G BLRC
net net net net net net
acres acres acres acres acres acres
Penhold 80 0 80 80 0 80
Pigeon Lake 0 0 0 18 (3) 15
Princess 640 (96) .544 0 0 0
Rainbow East C 172 (20) 152 20 (3) 17
Red Earth 53 (8) 45 0 0 0
Redwater ▇▇▇▇ 0 0 0 0 0 0
▇▇▇▇▇▇ 2,052 (308) 1,744 640 (96) 544
Shekille 80 (12) 68 0 0 0
Simonettle BLEC 3 0 3 0 0 0
Sounding Lake B 1,095 (122) 973 83 (12) 71
Three Hills Creek 64 (10) 54 0 0 0
Utikuma P 221 (30) 191 130 (18) 112
▇▇▇▇▇▇▇▇▇▇ 1,649 (277) 1,572 43 (6) 37
Willow Now 160 0 160 1,424 0 1,424
▇▇▇▇▇▇▇▇▇ ▇▇▇▇ 0 0 0 672 (101) 571
Zama Form-in 69 0 69 556 0 556
14,380 (1,476) 12,904 19,308 (582) 18,726
British Columbia
North Pine BLEC 12 0 12 24 0 24
Saskatchewan
Bench West 32 (5) 27 0 0 0
▇▇▇▇▇▇▇ Midale ▇▇▇▇ 0 0 0 0 0 0
▇▇▇▇▇ ▇▇▇▇ 0 0 0 34 (5) 29
Gull Lake BLEC 0 0 0 48 0 48
Inglenook ▇▇▇▇ 0 0 0 0 0 0
Rosebank ▇▇▇▇ 0 0 0 0 0 0
West ▇▇▇▇▇▇▇ BLEC 0 0 0 127 (19) 108
12 (5 27 209 (24) 185
19
[96ANNUAL.XLW]LAND.XLS
Beaver Lake Resources Corporation
Land Holdings as at December 31, 1996
Purpose: to calculate BLRC lands as actual (remove investor group) where
additional interests acquired
Producing Non-producing
--------------------------------- --------------------------------------
BLRC + BLRC +
I/G I/G BLRC I/G I/G BLRC
--------------------------------- --------------------------------------
A Lousana
origional acquisition Ulster 80.00 (12.00) 68.00 0.00 0.00 0.00
BLRC acquisition of Jolliet 80.00 0.00 80.00 0.00 0.00 0.00
--------------------------------- --------------------------------------
160.00 (12.00) 148.00 0.00 0.00 0.00
================================ ======================================
Producing Non-producing
--------------------------------- --------------------------------------
BLRC + BLRC +
I/G I/G BLRC I/G I/G BLRC
--------------------------------- --------------------------------------
B Sounding Lake
origional acquisition Ulster
Section 11 (Pinnacle)
215-MOO1A 17.00000% 23.80000 (3.57000) 20.23000 30.60000 (4.59000) 26.01000
216-M001B 17.00000% 1.70000 (0.25500) 1.44500 52.70000 (7.90500) 44.79500
Section 14 & 15
216-M002B 50.00150% 80.00240 (12.00036) 68.00204 0.00000 0.00000 0.00000
216-M003C 50.00150% 240.00720 (36.00108) 204.00612 0.00000 0.00000 0.00000
216-M004B 73.47000% 117.55200 (17.63280) 99.91920 0.00000 0.00000 0.00000
216-M005B 73.47000% 235.10400 (35.26560) 199.83840 0.00000 0.00000 0.00000
216-M006D 73.47000% 117.55200 (17.63280) 99.91920 0.00000 0.00000 0.00000
▇▇▇▇▇▇▇ ▇▇▇▇▇▇ Acquisition
216-M002B 7.33300% 11.73280 0.00000 11.73280 0.00000 0.00000 0.00000
216-MO03C 7.33300% 35.19840 0.00000 35.19840 0.00000 0.00000 0.00000
216-MW004B 1.83000% 2.92800 0.00000 2.92800 0.00000 0.00000 0.00000
216-M005B 1.83000% 5.85600 0.00000 5.85600 0.00000 0.00000 0.00000
216-M006D 1.83000% 2.92800 0.00000 2.92800 0.00000 0.00000 0.00000
First Calgary Acquisition
216-MOO28 23.70510% 37.92816 0.00000 37.92816 0.00000 0.00000 0.00000
216-MO03C 23.70510% 113,78448 0.00000 113.78448 0.00000 0.00000 0,00000
216-MOO48 10.70000% 17.12000 0.00000 17.12000 0.00000 0.00000 0.00000
216-MO05B 10.70000% 34.24000 0.00000 34.24000 0.00000 0.00000 0.00000
216-MO06D 10.70000% 17.12000 0.00000 17A2000 0.00000 0.00000 0.00000
-------- ------- -- ---- ------- ------- -------
????? (????????) 972.19580 83.30000 (12.49500) 70.80600
20
[96ANNUAL.XLW]LAND.XLS
Beaver Lake Resources Corporation
Land Holdings as at December 31, 1996
Purpose: to calculate BLRC lands as actual (remove investor group)
where additional interests acquired
PRODUCING NON-PRODUCING
------------------------------ -----------------------------
BLRC + BLRC +
C Rainbow East I/G I/G BLRC I/G I/G BLRC
------------------------------ -----------------------------
original acquisition Ulster 136.00 (20.40) 115.60 20.00 (3.00) 17.00
Canadian Natural Acquisition 36.00 0.00 36.00 0.00 0.00 0.00
------------------------------ -----------------------------
172.00 (20.40) 161.60 20.00 (3.00) 17.00
============================== =============================
PRODUCING NON-PRODUCING
------------------------------ -----------------------------
D Utikuma BLRC + (00.00) 000.00 BLRC + (0.00) BLRC
origional acquisition Ulster I/G I/G BLRC I/G I/G BLRC
------------------------------ -----------------------------
6-30-80-19W5M 120.00 (18.0) 102.0 120.00 (18.0) 102.0
7-30-80-19W5M 80.00 (12.0) 68.0 0.0 0.0 0.0
BLEC 100% lands
8-15-81-9W5M 20.8 0.0 20.8 10.4 0.0 10.4
------------------------------ -----------------------------
220.8 (30.0) 190.8 130.4 (18.0) 112.4
============================== =============================
Notes: All Ulster Acquisition properties are owned 15% by investor group
All BLEC properties have no investor group participation
All CRL, SEL properties have no investor group participation
All acquisitions made by BLRC have no investor group interest
21
BEAVER LAKE
RESOURCES CORPORATION
July 16, 1996
▇▇▇. ▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇ ▇▇▇▇
▇▇▇▇▇▇▇ ▇▇▇, ▇▇ ▇▇▇▇▇
Dear ▇▇▇. ▇▇▇▇▇▇:
RE: PARTICIPATION AGREEMENT ULSTER PROPERTIES, ALBERTA CANADA
Beaver Lake Resources Corporation (Beaver Lake) is the successor to Capco
Resource Properties Ltd. (CRPL). CRPL acquired certain properties (Ulster
Properties) from Ulster Petroleums in Canada on February 10, 1994. At that time,
an arrangement was made for you to acquire a portion of that interest. Your
interest is now five percent (5%) of the interest of Beaver Lake in and to the
Ulster Properties which are listed on Schedule "A" attached hereto.
The following is therefore intended to provide for the ongoing ownership and
operation of the Ulster properties and to evidence the arrangement between ▇▇▇▇▇
▇▇▇▇▇▇ and ▇▇▇▇▇▇ Lake Resources Corporation
1) The interests of Pharar and Beaver Lake are set out in Schedule "A" and
such interests shall be operated as between them pursuant to the terms of
any operating agreement which governs the interests of any third party in
those specific parts of the Ulster Properties. In the event any or all of
the Ulster Properties are not subject to a third party Operating Agreement
then they shall be operated pursuant to the terms of the Operating
Agreement attached as Schedule "B". As between the parties hereto, Beaver
Lake shall act as Operator. Under such Operating Agreement or Agreements,
where a response is require or notice must be given to a third party, then
the time prescribed for Pharar to respond or give notice shall be
shortened by two working days so that Beaver Lake will be able to respond
or give proper notice on behalf of the parties. In the event of a conflict
between the terms of this agreement and the Operating Agreement, this
Agreement shall prevail.
2) In addition to Pharar's share of any charges under the Operating
Agreement, Pharar shall pay to Beaver Lake a charge of 1% of Beaver Lake's
administration overhead per month to compensate Beaver Lake for the
additional work required in its capacity as Operator. Beaver Lake shall
not be required to provide its interpretation of any data respecting any
of the Ulster Properties.
▇▇▇▇ ▇▇▇▇ ▇▇▇▇▇, ▇▇▇▇▇▇▇ Dominion Square
▇▇▇ - ▇▇▇ ▇▇▇▇▇▇ ▇.▇. Calgary, AB 12P 2Z1
Phone (▇▇▇) ▇▇▇-▇▇▇▇ * Fax (▇▇▇) ▇▇▇-▇▇▇▇
22
▇▇▇. ▇▇▇▇▇ ▇▇▇▇▇▇
PARTICIPATION AGREEMENT
PAGE 2
JULY 16, 1996
3) The interest of Pharar's in the Ulster Properties and only the interest of
Pharar's shall be subject to Clause 2401 B of the Operating Agreement
attached as Schedule "B" thereby giving Beaver Lake a Right of First
Refusal in the event that Pharar wishes to sell her interest.
4) Pharar's principal balance of the bank loan remaining as at July 1, 1996
is $55,000.00 (Canadian). At this time, principal repayments are not being
made to the Bank by Beaver Lake or Pharar.
If and when Beaver Lake Resources Corporation is requested to make
principal repayments to the bank, then Pharar shall be required to
reimburse Beaver Lake for her proportionate share of such principal
payments. This will be done through deductions from monthly revenues where
such revenues exceed the required payments. Pharar will be invoiced if
required payments exceed monthly revenues.
Interest charged on the principal balance shall be at the same rate as
Beaver Lake is charged by the bank, and will be deducted from monthly
revenues.
5) The rights, duties, obligations and liabilities of the Parties hereunder
shall be separate and not joint or collective, nor joint and several, it
being the express purpose and intention of the parties that their interest
in the Ulster Properties shall be held as tenants in common. Nothing
contained herein shall be construed as creating a partnership, joint
venture or association of any kind.
6) Time shall be of essence in this agreement.
7) This agreement supersedes all previous agreements with CRPL, whether
written or verbal between parties respecting the Ulster Properties.
8) This agreement shall enure to the benefit of, and shall bind the parties
and their respective successors and assigns.
9) This agreement shall for all purposes be construed and interpreted
according to the Laws of the Province of Alberta, Canada.
10) Pharar agrees that she will not use, suffer or permit to be used, directly
or indirectly the name of Beaver Lake for the purpose of, or in connection
with any financing, offering of securities or the formation or promotion
of any business enterprise or for any other purpose.
23
▇▇▇. ▇▇▇▇▇ ▇▇▇▇▇▇
PARTICIPATION AGREEMENT
PAGE 3
JULY 16, 1996
Should the above be your understanding of the agreement reached between the
parties, please so indicate by signing in the space provided below and return
fully executed copy to the undersigned.
Yours truly
BEAVER LAKE RESOURCE CORPORATION
/s/ ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇
▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇,
Vice President
ACKNOWLEDGED AND AGREED TO THIS 12TH DAY OF NOVEMBER, 1996.
/s/ ▇▇▇▇▇ ▇▇▇▇▇▇
-----------------------------
▇▇▇▇▇ ▇▇▇▇▇▇
24
ACKNOWLEDGEMENT AND POSTPONEMENT OF CLAIM
TO: CANADIAN WESTERN BANK
WHEREAS, Beaver Lake Resources Corporation ( "Beaver Lake") is,
subject to the trusts described herein, the legal and beneficial owner of those
lands and interest described in Schedule "A" hereto;
AND WHEREAS pursuant to a trust agreement between Beaver Lake and the
undersigned attached hereto as Schedule "B" (the "Trust Agreement"), Beaver Lake
holds on certain trusts those interests described in Schedule "C" on behalf of
the undersigned;
AND WHEREAS Beaver Lake has existing financing with the Bank and has
applied to the Bank to amend its existing finance arrangements with the Bank;
AND WHEREAS the Bank has agreed to amend the existing finance
arrangements with Beaver Lake subject to the granting of the appropriate loan
and security documents. All loan and security documents previously granted by
Beaver Lake (including its predecessors Beaver Lake Energy Corporation and Capco
Resource Properties Ltd.), to the Bank and all loan and security documents to be
granted by Beaver Lake to the Bank pursuant to the amendments to the financing
arrangements are hereinafter referred to as the "Securities");
AND WHEREAS it is the intention of the undersigned and Beaver Lake
that the Bank be able to deal with Beaver Lake in all respects with respect to
the granting of the Securities without any requirement of approval from the
undersigned;
THEREFORE, in consideration of the Bank amending its existing
financing with Beaver Lake and other good and valuable consideration, the
undersigned acknowledges and agrees as follows:
25
- 2 -
1. The Trust Agreement, all interests of the undersigned under the Trust
Agreement (including the oil and gas properties described in Schedule "C")
and all indebtedness, obligations and liabilities, present and future, of
Beaver Lake to the undersigned are hereby subordinated and postponed to
the rights and interests of the Bank under the Securities;
2. The Bank shall deal with Beaver Lake and the Securities in the same manner
and as if Beaver Lake was the owner of 100% of the legal and beneficial
owner of the lands and interests described in Schedule "A" and the
undersigned is estopped in any proceeding brought by the Bank with respect
to the Securities from claiming any interest in the lands and interests
described in Schedule "A" in priority to the Bank.
3. Any decrease or increase in the amount advanced or to be advanced to
Beaver Lake, and any amendment, variation or modification of the terms of
the Securities and the granting of time, extensions, renewals,
compromises, indulgences, waivers, releases or other concessions to Beaver
Lake shall not require the agreement or approval of the undersigned.
4. This Acknowledgement and Postponement shall not be affected by the death
or loss or diminution of capacity of the undersigned or by any change in
the name of Beaver Lake by the acquisition of Beaver Lake's business by a
corporation, or by any change whatsoever in the objects, capital structure
or constitution of Beaver Lake, or by Beaver Lake being amalgamated or
otherwise merged with or into any other corporation, but shall
notwithstanding the happening of any such event continue to apply to all
the Securities whether theretofore or thereafter incurred or arising and
in this instrument the word "Beaver Lake" shall include every such
corporation.
5. The term "Securities" as used herein shall include and extend to any
moneys loaned or advanced by the Bank to or for the account of Beaver Lake
in
26
- 3 -
connection with or incidental to the Securities or any amounts owing
pursuant to the Securities, and shall also include and extend to any
renewal of or substitution for the Securities.
6. This Acknowledgement and Postponement shall extend to and enure to the
benefit of the Bank and its successors and assigns, and every reference
herein to the undersigned, is a reference to and shall be construed as
including the undersigned and the heirs, executors, administrators, legal
representatives, successors and assigns of the undersigned or of any of
them, as the case may be, to and upon all of whom this Acknowledgement and
Postponement shall extend and be binding.
7. This Acknowledgement and Postponement of Claim shall be governed by and
construed in accordance with the laws of the Province of Alberta. The
undersigned irrevocably submits to the courts of the Province of Alberta
in any action or proceeding arising out of or relating to this
Acknowledgement and Postponement of Claim, and irrevocably agrees that all
such actions and proceedings may be heard and determined in such courts,
and irrevocably waives to the fullest extent possible, the defence of any
inconvenient forum.
GIVEN UNDER SEAL at CAMROSE ALBERTA this 7th day of April, 1997.
SIGNED, SEALED AND DELIVERED IN THE )
PRESENCE OF )
)
) /s/ ▇ ▇▇▇▇
------------------------------------ ) -----------------------------------------
WITNESS ) QURAT-UL-AIN-SYED
27
AFFIDAVIT OF EXECUTION
CANADA ) I, ▇▇▇▇▇▇ ▇▇▇▇ of the City of
PROVINCE OF ALBERTA ) CAMROSE in the Province of
TO WIT ) ALBERTA MAKE OATH AND SAY THAT
SAY THAT
1. I was personally present and did see QURAT-UL-AIN ▇▇▇▇, named in the within
instrument, who is personally known to me to be the person named therein, duly
sign, the same for the purposes named therein.
2. The same was executed at the City of Camrose, in the Province of Alberta, and
that I am the subscribing witness thereto.
3. I know the said QURAT-UL-AIN ▇▇▇▇, and she is in my belief of the full age of
eighteen years.
SWORN BEFORE ME, at the City of )
CAMROSE, in the Province of )
ALBERTA, this 7th day of )
April, 1997. ----------------------------------------
/s/ ▇▇▇▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇
-----------------------------------
A Commission in and for the Province of
▇▇▇▇▇▇▇
▇▇▇▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇
A COMMISSIONER FOR OATHS
COMMISSION EXPIRES JANUARY 25, 1998
28
SCHEDULE "B"
[BEAVER LAKE LETTERHEAD]
July 16, 1996
MRS. QURAT-UL-AIN SYED
▇▇▇▇ - ▇▇ ▇▇▇▇▇▇
▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇
▇▇▇ ▇▇▇
Dear ▇▇▇. ▇▇▇▇:
RE: PARTICIPATION AGREEMENT ULSTER PROPERTIES, ALBERTA CANADA
Beaver Lake Resources Corporation (Beaver Lake) is the successor to Capco
Resource Properties Ltd. (CRPL). CRPL acquired certain properties (Ulster
Properties) from Ulster Petroleums in Canada on February 10, 1994. At that time,
an arrangement was made for you to acquire a portion of that interest. Your
interest is now five percent (5%) of the interest of Beaver Lake in and to the
Ulster Properties which are listed on Schedule "A" attached hereto.
The following is therefore intended to provide for the ongoing ownership and
operation of the Ulster properties and to evidence the arrangement between
Qurat-ul-ain Syed and Beaver Lake Resources Corporation:
1) The interests of Syed and Beaver Lake are set out in Schedule "A" and such
interests shall be operated as between them pursuant to the terms of any
operating agreement which governs the interests of any third party in
those specific parts of the Ulster Properties. In the event any or all of
the Ulster Properties are not subject to a third party Operating Agreement
then they shall be operated pursuant to the terms of the Operating
Agreement attached as Schedule "B". As between the parties hereto, Beaver
Lake shall act as Operator. Under such Operating Agreement or Agreements,
where a response is required or notice must be given to a third party,
then the time prescribed for ▇▇▇▇ to respond or give notice shall be
shortened by two working days so that Beaver Lake will be able to respond
or give proper notice on behalf of the parties. In the event of a conflict
between the terms of this agreement and the Operating Agreement, this
Agreement shall prevail.
2) In addition to ▇▇▇▇'s share of any charges under the Operating Agreement,
▇▇▇▇ shall pay to Beaver Lake a charge of 1% of Beaver Lake's
administration overhead per month to compensate Beaver Lake for the
additional work required in its capacity as Operator. Beaver Lake shall
not be required to provide its interpretation of any data respecting any
of the Ulster Properties.
29
MRS. QURAT-UL-AIN SYED
PARTICIPATION AGREEMENT
PAGE 2
JULY 16, 1996
3) The interest of ▇▇▇▇'s in the Ulster Properties and only the interest of
▇▇▇▇'s shall be subject to Clause 2401B of the Operating Agreement
attached as Schedule "B" thereby giving Beaver Lake a Right of First
Refusal in the event that ▇▇▇▇ wishes to sell her interest.
4) ▇▇▇▇'s principal balance of the bank loan remaining as at July 1, 1996 is
$55,000.00 (Canadian). At this time, principal repayments are not being
made to the Bank by Beaver Lake or Syed.
If and when Beaver Lake Resources Corporation is requested to make
principal repayments to the bank, then ▇▇▇▇ shall be required to reimburse
Beaver Lake for her proportionate share of such principal payments. This
will be done through deductions from monthly revenues where such revenues
exceed the required payments. ▇▇▇▇ will be invoiced if required payments
exceed monthly revenues.
Interest charged on the principal balance shall be at the same rate as
Beaver Lake is charged by the bank, and will be deducted from monthly
revenues.
5) The rights, duties, obligations and liabilities of the Parties hereunder
shall be separate and not joint or collective, nor joint and several, it
being the express purpose and intention of the parties that their interest
in the Ulster Properties shall be held as tenants in common. Nothing
contained herein shall be construed as creating a partnership, joint
venture or association of any kind.
6) Time shall be of essence in this agreement.
7) This agreement supersedes all previous agreements with CRPL, whether
written or verbal between parties respecting the Ulster Properties.
8) This agreement shall enure to the benefit of, and shall bind the parties
and their respective successors and assigns.
9) This agreement shall for all purposes be construed and interpreted
according to the Laws of the Province of Alberta, Canada.
10) ▇▇▇▇ agrees that she will not use, suffer or permit to be used, directly
or indirectly the name of Beaver Lake for the purpose of, or in connection
with any financing, offering of securities or the formation or promotion
of any business enterprise or for any other purpose.
30
MRS. QURAT-UL-AIN SYED
PARTICIPATION AGREEMENT
PAGE 3
JULY 16, 1996
-------------------------------------------------------------------------------
Should the above be your understanding of the agreement reached between the
parties, please so indicate by signing in the space provided below and return a
fully executed copy to the undersigned.
Yours truly,
BEAVER LAKE RESOURCES CORPORATION
/s/ ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇
▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇,
Vice President
ACKNOWLEDGED AND AGREED TO THIS 16th DAY OF July, 1996.
/s/ ▇ ▇▇▇▇
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QURAT-UL-▇▇▇ ▇▇▇▇
31
SCHEDULE "B"
[BEAVER LAKE LETTERHEAD]
July 16, 1996
▇▇. ▇▇▇▇ ▇▇▇▇▇
703, 404 - 2811
▇▇ ▇▇▇▇ ▇▇▇▇▇, ▇▇▇▇ ▇▇▇▇
▇▇▇▇▇▇▇ ▇▇▇▇▇▇
SWI2 ONF
Dear ▇▇. ▇▇▇▇▇:
RE: PARTICIPATION AGREEMENT
ULSTER PROPERTIES, ALBERTA
CANADA
Beaver Lake Resources Corporation (Beaver Lake) is the successor to Capco
Resource Properties Ltd. (CRPL). CRPL acquired certain properties (Ulster
Properties) from Ulster Petroleums in Canada on February 10, 1994. At that time,
an arrangement was made for you to acquire a portion of that interest. Your
interest is now five percent (5%) of the interest of Beaver Lake in and to the
Ulster Properties which are listed on Schedule "A" attached hereto.
The following is therefore intended to provide for the ongoing ownership and
operation of the Ulster properties and to evidence the arrangement between ▇▇▇▇
▇▇▇▇▇ and ▇▇▇▇▇▇ Lake Resource Corporation:
1) The interests of ▇▇▇▇▇ and Beaver Lake are set out in Schedule "A" and
such interest shall be operated as between them pursuant to the terms of
any operating agreement which governs the interests of any third party in
those specific parts of the Ulster Properties. In the event any or all of
the Ulster Properties are not subject to a third party Operating Agreement
then they shall be operated pursuant to the terms of the Operating
Agreement attached as Schedule "B". As between the parties hereto, Beaver
Lake shall act ?? Operator. Under such Operating Agreement or Agreements,
where a response is require??, or notice must be given to a third party,
then the time prescribed for ▇▇▇▇▇ to respond ?? give notice shall be
shortened by two working days so that Beaver Lake will be able to respond
or give proper notice on behalf of the parties. In the event of a conflict
between ?? terms of this agreement and the Operating Agreement, this
Agreement shall prevail.
2) In addition to ▇▇▇▇▇'▇ share of any charges under the Operating Agreement,
▇▇▇▇▇ shall pay to Beaver Lake a charge of 1% of Beaver Lake's
administration overhead per month to ?? compensate Beaver Lake for the
additional work required in its capacity as Operator ?? Beaver Lake shall
not be required to provide its interpretation of any data respecting any
the Ulster Properties.
32
▇▇. ▇▇▇▇ ▇▇▇▇▇
PARTICIPATION AGREEMENT
PAGE 2
JULY 16, 1996
3) The interest of ▇▇▇▇▇'▇ in the Ulster Properties and only the interest of
▇▇▇▇▇'▇ shall ?? subject to Clause 2401B of the Operating Agreement
attached as Schedule "B" there?? giving Beaver Lake a Right of First
Refusal in the event that ▇▇▇▇▇ wishes to sell his interest ??
4) ▇▇▇▇▇'▇ principal balance of the bank loan remaining as at July 1, 1996 is
$55,000.00 (Canadian). At this time, principal repayments are not being
made to the Bank by Beaver Lake or Malik.
If and when Beaver Lake Resources Corporation is requested to make
principal repayment to the bank, then ▇▇▇▇▇ shall be required to reimburse
Beaver Lake for his proportion?? share of such principal payments. This
will be done through deductions from month?? revenues where such revenues
exceed the required payments. ▇▇▇▇▇ will be invoiced ?? required payments
exceed monthly revenues.
Interest charged on the principal balance shall be at the same rate as
Beaver Lake is char??? by the bank, and will be deducted from monthly
revenues.
5) The rights, duties, obligations and liabilities of the Parties hereunder
shall be separate and not joint or collective, nor joint and several, it
being the express purpose and intention of the parties that their interest
in the Ulster Properties shall be held as tenants in common. Nothing
contained herein shall be construed as creating a partnership, joint
venture association of any kind.
6) Time shall be of essence in this agreement.
7) This agreement supersedes all previous agreements with CRPL, whether
written verbal between parties respecting the Ulster Properties.
8) This agreement shall enure to the benefit of, and shall bind the parties
and their respective successors and assigns.
9) This agreement shall for all purposes be construed and interpreted
according to the L?? of the Province of Alberta, Canada.
10) ▇▇▇▇▇ agrees that he will not use, suffer or permit to be used, directly
or indirectly the name of Beaver Lake for the purpose of, or in connection
with any financing, offering securities or the formation or promotion of
any business enterprise or for any other purp??
33
▇▇. ▇▇▇▇ ▇▇▇▇▇
PARTICIPATION AGREEMENT
PAGE 3
JULY 16, 1996
Should the above be your understanding of the agreement reached between the
parties, please so indicate by signing in the space provided below and return a
fully executed copy to the undersigned.
Yours truly,
BEAVER LAKE RESOURCES CORPORATION
/s/ ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇
▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇
Vice President
ACKNOWLEDGED AND AGREED TO THIS 19TH DAY OF AUGUST, 1996
/s/ ▇▇▇▇ ▇▇▇▇▇
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ATTACHMENTS
