1048136 ALBERTA LTD. c/o 2760 – 200 Granville Square 200 Granville Street Vancouver, British Columbia Canada V6C 1S4
1048136 ALBERTA
LTD.
c/o 2760 – 000 Xxxxxxxxx Xxxxxx
000 Xxxxxxxxx
Xxxxxx
Xxxxxxxxx, Xxxxxxx Xxxxxxxx
Xxxxxx X0X 0X0
July 22, 2005
Cascade Energy, Inc.
0000 Xxxxxx Xxxx.
Xxxxx 000
Xxxxxx, XX 00000
Attention: Xx. Xxx Xxxxx, President
Dear Sir:
Re: Farmout Proposal – Empress Prospect, Province of Alberta
This Agreement outlines the terms upon which 1048136 Alberta Ltd. (“1048136”) will assign and grant to Cascade Energy, Inc. a farmin opportunity on certain lands comprising a part of the “Empress Prospect”, located in the Province of Alberta.
Pursuant to an agreement (the “Acadia Farmout and Option Agreement") dated the 21st day of January, 2005, between Xxxxx Oil & Gas Company-Canada Inc., Firefly Resources Ltd. and Moraine Resources Ltd. (collectively referred to herein as the “Original Farmor”) and Xxxx Resources Ltd. (“Xxxx”), Xxxx can earn an interest in certain title documents and the lands associated therewith (all as more particularly described in Schedule “A” of the Acadia Farmout and Option Agreement) by performing the obligations contained in the Acadia Farmout and Option Agreement.
Pursuant to a subsequent agreement (the “Xxxx Participation Agreement") dated the 28th day of January, 2005, between Xxxx and 1048136 Alberta Ltd. (“1048136”), 1048136 can earn 100% of the interests that Xxxx can otherwise earn under the Acadia Farmout and Option Agreement (subject to the royalty reserved unto Xxxx by the Xxxx Participation Agreement) by performing the obligations contained in the Xxxx Participation Agreement. A true copy of the Xxxx Participation Agreement (which has a true copy of the Acadia Farmout and Option Agreement attached thereto as a schedule) is attached hereto as Appendix “A”.
Subject to compliance with the terms and conditions hereof, 1048136 will grant to Cascade Energy, Inc (“Cascade”) the right to a earn 49% of the interests that 1048136
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can otherwise earn under the Xxxx Participation Agreement in relation to Section 15 of those lands referred to and defined in the Acadia Farmout and Option Agreement as the “Farmout Lands”.
1. Interpretation
| (a) | The headings of the clauses of this Agreement are inserted for convenience of reference only and shall not affect the meaning or construction thereof. |
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| (b) | The terms and expressions used herein shall have the same meanings as are ascribed to such terms and expressions in the Xxxx Participation Agreement and the Acadia Farmout and Option Agreement, as the case may be. |
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| (c) | Wherever the plural or masculine or neuter is used the same shall be construed as meaning singular or feminine or body politic or corporate, or vice versa as the context so requires. |
2. Appointment of Operator
0000000 is appointed Operator, as between 0000000 and Cascade, with respect to all operations conducted hereunder.
3. Acadia Farmout and Option Agreement/Xxxx Participation Agreement
Except as modified by the terms of this Agreement, the terms and conditions of the Acadia Farmout and Option Agreement and Xxxx Participation Agreement, as applicable, shall control all operations of the parties and shall be deemed to be incorporated herein by reference.
4. Trust Conditions and Term
1048136 agrees that, to the extent that the assignment to Cascade of a portion of 1048136’s rights and obligations respecting Section 15 of the Farmout Lands under the Xxxx Participation Agreement is not formally recognized and recorded by Xxxx or the Original Farmor, as the case may be, 1048136 shall hold Cascade’s interests in the Xxxx Participation Agreement, Acadia Farmout and Option Agreement, and Farmout Lands, as the case may be, in trust for Cascade and shall ensure that all performance by Cascade under the terms of this Agreement, as assignee of some of the obligations of 1048136 under the Xxxx Participation Agreement, is noted, recorded and properly credited. If requested by Cascade, 1048136 agrees to record this trust in writing pursuant to a trust agreement (in a form similar to the form attached to the Acadia Farmout and Option Agreement as Schedule “E”, amended as applicable to reflect the interests of Cascade in the Farmout Lands, as they exist from time to time) until such time as the interests of Cascade in the Option Lands, may be formally recorded.
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5. Participating Interest
Cascade shall drill one (1) well (the “Earning Well”) on the Section 15 of the Farmout Lands and shall spud the Earning Well not later than 30-days after the full execution of this Agreement (as noted on the execution page hereof) in order to earn 49% of the interests that 1048136 may earn in Section 15 of the Farmout Lands.
6. Grants and Credits
Any credits or grants allowed under any acts, rules, regulations or other laws of the Province of Alberta and/or Canada shall be shared by the parties hereto, as to 49% of such credits or grants to Cascade, and 51% to 1048136.
7. Assignment by Cascade
Cascade shall not assign its rights under this Agreement in whole or in part without first obtaining the written consent of 1048136. Notwithstanding any assignment by the Cascade, 1048136 will remain entitled to look to Cascade for performance of any duties and obligations required to be carried out by it under this Agreement, unless otherwise agreed to in writing by 1048136.
8. Other Encumbrances
If the interest of either party in Section 15 of the Farmout Lands shall hereafter become encumbered by any royalty, production payment or other charge of a similar nature, other than the royalties as set forth under the Acadia Farmout and Option Agreement or Xxxx Participation Agreement, such royalty, production payment or other charge shall be charged to and paid entirely by the party whose interest is or becomes thus encumbered.
9. Warranty of Title
1048136 makes no representation or warranties as to the status of title to the Farmout Lands and such title must be independently verified by Cascade.
During the term of this Agreement, no party shall do or cause to be done any act nor make or cause to be made any omission whereby Section 15 of the Farmout Lands becomes encumbered in such a way as to adversely affect the interests of the other parties, or become subject to termination or forfeiture.
10. No Partnership
The rights, duties, obligations and liabilities of the parties shall be several and not joint or collective, it being the parties' express purpose and intention that nothing herein shall be construed as creating a partnership of any kind or imposing upon any party hereto any partnership duty, obligation or liability to the other party other than as specifically set forth herein.
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11. Notice Periods
The parties will endeavor on a bona-fide basis to meet at least ten (10) days prior to the date when either any election must be made or any notice must be made pursuant to the underlying agreements, for the purposes of discussing such election or notice in order to enable 1048136, as required, on behalf of the parties, to comply with the provisions of the Xxxx Participation Agreement and Xxxx to comply with the provisions of the Acadia Farmout and Option Agreement, as the case may be.
12. Further Assurance
Each of the parties shall at all times do all such further acts and deliver all such further deeds and documents as shall be reasonably required in order to fully perform and carry out the terms of this Agreement.
13. 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 any 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; or |
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| b) | by telecopy 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 British Columbia or at the commencement of the next ensuing business day following transmission if such notice is not received during such normal business hours; or |
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| c) | by mailing it first class (air mail if to or from a location outside of Canada) registered post, postage prepaid, directed to the party on which it is to be served at that party's address for service. Notices so served shall be deemed to be received by the addressee at noon, local time, on the earlier of the actual date of receipt or the fourth day (excluding Saturdays, Sundays and statutory holidays in British Columbia) following the mailing thereof. However, if postal service is (or is reasonably anticipated to be) interrupted or operating with unusual delay, notice shall not be served by such means during such interruption or period of delay. |
14. Address for Service
The address for service of notices hereunder of each of the parties shall be as follows:
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| 1048136: | x/x Xxxxxx & Xxxxxxx |
| Xxxxx 0000 – 000 Xxxxxxxxx Xxxxxx | |
| 000 Xxxxxxxxx Xxxxxx | |
| Xxxxxxxxx, X.X. X0X 0X0 | |
| Facsimile: (000) 000-0000 | |
| Cascade: | 0000 Xxxxxx Xxxx. |
| Xxxxx 000 | |
| Xxxxxx, XX 00000 | |
| Xxx Xxxxx, President | |
| Facsimile: (000) 000-0000 |
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.
15. Insurance
Cascade shall carry insurance with a reputable insurance company in the manner and in the amounts set out in the Operating Procedure.
16. Successors and Assigns
This Agreement shall enure to the benefit of and be binding upon the parties hereto and their respective successors and permitted assigns.
17. Proper Law
This Agreement and the relationship between the parties shall be construed and determined according to the laws of the Province of British Columbia, and the courts having original jurisdiction with respect to any matter or thing arising directly or indirectly relating to this Agreement shall be the courts of the Province of British Columbia.
18. Supercession
This Agreement supercedes and replaces all other agreements, documents, writings and verbal understandings between the parties with respect to the subject matter of this Agreement.
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19. Counterparts
This Agreement may be executed in counterparts and by facsimile.
IN WITNESS WHEREOF each of the parties hereto has caused this Agreement to be executed as of the day and year first noted below.
| 1048136 ALBERTA LTD. | CASCADE ENERGY. INC. |
| per: /s/ Xxxxx Xxxxxxxx | per: /s/ Xxxxx Xxxxxx |
| per:__________________________ | per:_____________________________ |
| May , 2005 | May , 2005 |
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SCHEDULE A
to the Agreement between 1048136 Alberta Ltd. and Cascade
Energy, Inc.
(dated July 22, 2005)
Copy of Xxxx Participation Agreement
-attached hereto-
PARTICIPATION AGREEMENT
THIS AGREEMENT made this 28th day of January 2005
BETWEEN:
XXXX RESOURCES LTD., a body corporate, having an office in the City of Calgary in the Province of Alberta
(herein called the "Grantor")
OF THE FIRST PART
AND
1048136 ALBERTA LTD., a body corporate, having its registered and records office in the City of Calgary in the Province of Alberta
(hereinafter called the "Participant")
OF THE SECOND PART
WHEREAS pursuant to an Agreement (hereinafter referred to as "the Farmout Agreement") dated the 21st day of January, 2005, and made between Xxxxx Oil and Gas Company -Canada, Inc, Firefly Resources Ltd. and Moraine Resources Ltd. (hereinafter collectively referred to as the “Farmor”) and the Grantor (hereinafter sometimes referred to as the “Farmee”), it is provided that the Farmee, by performing certain obligations contained in the Farmout Agreement, will become entitled to earn an interest in certain title documents and the lands associated therewith, all as more particularly described in the Farmout Agreement (a true and correct copy of which is attached hereto as Schedule "A");
AND WHEREAS the Participant desires to participate with the Grantor as if the Participant had been the Farmee in the Farmout Agreement, by assuming a share of the obligations therein contained and an interest in the lands thereunder.
NOW THEREFORE THIS AGREEMENT WITNESSETH that in consideration of the premises and of the covenants and agreements of the parties hereinafter set forth, the parties do hereby covenant and agree as follows:
1. INTERPRETATION
| (a) | The headings of the clauses of this Agreement are
inserted for convenience of reference only and shall not affect the meaning
or construction thereof. |
|
| (b) | The terms and expressions used herein shall have
the same meanings as are ascribed to such terms and expressions under
the Farmout Agreement. |
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| (c) | Wherever the plural or masculine or neuter is used
the same shall be construed as meaning singular or feminine or body politic
or corporate, or vice versa as the context so requires. |
2. APPOINTMENT OF OPERATOR
The Participant is appointed Operator, as between the Grantor and the Participant, with respect to all operations conducted hereunder; however, the Grantor shall have the joint authority with the Participant to deal with the Farmor on behalf of the parties in respect of matters arising out of the Farmout Agreement.
3. FARMOUT AGREEMENT
Except as modified by the terms of this Agreement, the Terms and conditions of the Farmout Agreement together with its operating provisions shall control the operation of the parties and shall be deemed to be incorporated herein.
4. TRUST CONDITIONS AND TERM
The Grantor agrees that, to the extent that the present assignment of the Grantor’s rights and obligations under the Farmout Agreement is not formally recognized and recorded by the Farmor, the Grantor shall hold the Participant’s interests in the Farmout Agreement, Farmout Lands and Option Lands, as the case may be, in trust for the Participant and shall ensure that all performance by the Participant under the terms of this Agreement and the Farmout Agreement are noted and recorded as the due performance of the Farmee under the Farmout Agreement. If requested by the Participant, the Grantor agrees to record this trust in writing pursuant to a trust agreement (in the form attached to the Farmout Agreement as Schedule “E”, amended as applicable to reflect the interests of the Participant in the Farmout Lands and Option Lands, as they exist from time to time) until such time as the interests of the Participant in the Farmout Agreement, Farmout Lands and Option Lands, as applicable, may be formally recorded.
5. PARTICIPATING INTEREST
The Participant shall assume all of the obligations of the Grantor under the Farmout Agreement, including the drilling of the Test Well, and the Participant shall thereby be entitled to 100% of the benefits and interests earned by the Farmee under the Farmout Agreement,, subject to the payment to the Grantor of a $15,000 fee for geological consulting and prospect engineering services (to be paid upon the execution of this Agreement) and the reservation of a 3% Gross Over-Riding Royalty by the Grantor, as more particularly set out in Schedule “B” attached hereto..
6. OPTION WELL(S)
| (a) | If the Participant, in its absolute discretion, wishes
to proceed with the drilling of the Option Well (s), the provisions of
clause 5 hereto will apply to the Options Well (s) drilled on the Farmout
Lands and/or Option Lands, as the case may be. |
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| (b) | If the Participant does not wish to proceed with
the drilling of certain Option Well (s), then the Grantor shall be free
to do so independently, provided there is no resulting liability to the
Participant. The Grantor shall be solely responsible for all costs, expenses
and liabilities thereby incurred and shall be entitled to all benefits
and interests pursuant to the Farmout Agreement that are earned as a result.
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7. SELETION OF WELL LOCATIONS
The parties agree to meet from time to time to discuss ongoing operations under the Farmout Agreement including selection of well locations. Notwithstanding such discussions, should the parties fail to agree on the location of an earning well then the Participant’s choice shall be binding upon the parties.
8. GRANT AND CREDITS
Any credits or grants allowable under any acts, rules, regulations or other laws of the Province of Alberta and/or Canada shall be shared by the parties in accordance with the manner in which the parties bear the cost of operations which give rise to the generation of such credits or grants.
9. ASSIGNMENT BY PARTICIPANT
The Participant shall not assign its rights under this Agreement in whole or in part without first obtaining the written consent of Grantor which consent may not be unreasonably withheld. Notwithstanding any assignment by the Participant, the Grantor will always look to the Participant for performance of any duties and obligations required to be carried out by the Participant under this Agreement during the Test Well phase of the Farmout Agreement, unless otherwise agreed to in writing by Grantor.
10. OTHER ENCUMBERANCES
If the interest of either party in the Farmout Lands hereafter shall become encumbered by any royalty, production payment or other charge of a similar nature, other than the royalties as set forth under the Farmout Agreement, such royalty, production payment or other charge shall be charged to and paid entirely by the party whose interest is or becomes thus encumbered.
11. WARRANTY OF TITLE
The Grantor makes no representation or warranties as to its or Farmor's title to the Farmout Lands and Option Lands but covenants that they are encumbered only to the extent noted in the Farmout Agreement.
During the term of this Agreement, no party shall do or cause to be done any act nor make or cause to be made any omission whereby the Farmout Lands or Option Lands become encumbered in such a way as to adversely affect the interests of the other parties, or become subject to termination or forfeiture.
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12. NO PARTNERSHIP
The rights, duties, obligations and liabilities of the parties shall be several and not joint or collective, it being the parties' express purpose and intention that nothing herein shall be construed as creating a partnership of any kind or imposing upon any party hereto any partnership duty, obligation or liability to the other party.
13. NOTICE PERIODS
The parties will endeavor on a bonafide basis to meet at least five (5) days prior to the date when either any election must be made or any notice must be sent to the Farmor, for the purposes of discussing such election or notice in order to enable Grantor, on behalf of the parties, to comply with the provisions of the Farmout Agreement.
14. FURTHER ASSURANCE
Each of the parties shall at all times do all such further acts and deliver all such further deeds and documents as shall be reasonably required in order to fully perform and carry out the terms of this Agreement.
15. 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 any 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; or |
|
| b) | by telecopy 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; or |
|
| c) | by mailing it first class (air mail if to or from
a location outside of Canada) registered post, postage prepaid, directed
to the Party on which it is to be served at that Party's address for service.
Notices so served shall be deemed to be received by the addressee at noon,
local time, on the earlier of the actual date of receipt or the fourth
(4th) day (excluding Saturdays, Sundays and statutory holidays
in Alberta) following the mailing thereof. However, if postal service
is (or is reasonably anticipated to be) interrupted or operating with
unusual delay, notice shall not be served by such means during such interruption
or period of delay. |
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16. ADDRESS FOR SERVICE
The address for service of notices hereunder of each of the Parties shall be as follows:
| Grantor: | Xxxx Resources Ltd. | |
| 0000 Xxxxxxx Xxxxx X.X. | ||
| Xxxxxxx, Xxxxxxx X0X 0X0 | ||
| Facsimile: (000) 000-0000 | ||
| Participant: | 1048136 Alberta Ltd. | |
| x/x 0000, 000 X. Xxxxxxxx Xxxxxx | ||
| Xxxxxxxxx, X.X. X0X 0X0 | ||
| Facsimile: (000) 000-0000 |
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. INSURANCE
The parties shall individually carry insurance with a reputable insurance company in the manner and in the amounts set out in the Operating Procedure. To the extent of its cost sharing interest, the Participant agrees to be covered by Grantor's "Control of Well" insurance and Grantor agrees to make suitable arrangements in that regard. Participant will bear and pay its proportionate share of such coverage at cost.
18. SUCCESSORS AND ASSIGNS
This Agreement shall enure to the benefit of and be binding upon the parties hereto and their respective successors and permitted assigns.
19. PROPER LAW
This Agreement and the relationship between the parties shall be construed and determined according to the laws of the Province of Alberta, and the courts having original jurisdiction with respect to any matter or thing arising directly or indirectly relating to this Agreement shall be the courts of the Province of Alberta.
20. SUPERCESSION
This Agreement supercedes and replaces all other agreements, documents, writings and verbal understandings between the parties with respect to the subject matter of this Agreement.
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21. COUNTERPARTS
This Agreement may be executed in counterparts and by facsimile.
IN WITNESS WHEREOF the parties hereto have caused this Agreement to be executed as of the day and year first written above.
| XXXX RESOURCES LTD. | 1048136 ALBERTA LTD. | |||
| per: |
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per: |
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| per: |
per: |
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SCHEDULE A
to the Participation Agreement between Xxxx Resources Ltd. and
1048136 Alberta Ltd., dated January 28, 2005
Copy of Farmout Agreement
- attached hereto -
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FARMOUT and OPTION AGREEMENT
Empress Area, Alberta
Made as of the 21st day of January, 2005
BETWEEN:
XXXXX OIL AND GAS COMPANY-CANADA, INC., a body corporate with an office in the City of Calgary, Alberta (“Xxxxx”)
-and-
FIREFLY RESOURCES LTD. a body corporate with an office in the City of Calgary, Alberta (“Firefly”)
-and-
MORAINE RESOURCES LTD. a body corporate with an office in the City of Calgary, Alberta (“Moraine”)
(Xxxxx, Firefly and Moraine are hereinafter collectively referred to as “Farmor”)
-and-
XXXX RESOURCES LTD., a body corporate with an office in the City of Calgary, Alberta (“Xxxx”)
WHEREAS Farmor is prepared to xxxxx Xxxx the right to earn an interest in the Farmout Lands and the Option Lands in which Farmor holds an undivided one hundred percent (100%) working interest, on the terms and conditions herein provided.
In consideration of the mutual covenants contained in this Agreement the Parties agree as follows:
1. DEFINITIONS
In this Head Agreement the definitions in the Farmout & Royalty Procedure shall apply, unless the context otherwise requires, and, the words below shall have the meanings indicated:
“Agreement” means the Head Agreement and the Schedules attached to it.
“Contract Depth” means a depth sufficient to penetrate fifteen metres (15 m) into the Paleozoic formation or nine hundred and fifty meters (950 m) subsurface, whichever first occurs;
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“Earning Well” means the Test Well and the Option Well(s), as the case may be;
“Effective Date” means January 21, 2005;
“Farmee” means Xxxx;
“Farmor” means Xxxxx as to a 56% interest, Firefly as to a 24% interest and Moraine as to 20%;
“Farmout & Royalty Procedure” means the 1997 CAPL Farmout & Royalty Procedure which is hereby modified by the 1997 CAPL Farmout & Royalty Procedure election and amendment sheet attached hereto as Schedule “B”;
“Farmout Lands” means the areal, stratigraphic and substance rights described as “Farmout Lands” in Schedule “A” of the Agreement or so much of those rights as remain subject to the Agreement and the Title Documents, excluding any Reserved Formations;
“Head Agreement” means the Agreement, other than the Schedules;
“Lessor Royalty” means a lessor royalty under a Title Document;
“Operating Procedure” means the standard form 1990 CAPL Operating Procedure and 1996 PASC Accounting Procedure with elections attached hereto as Schedule “C”;
“Option Lands” means the areal, stratigraphic and substance rights described as “Option Lands” in Schedule “A” of the Agreement or so much of those rights as remain subject to the Agreement and the Title Documents, excluding any Reserved Formations;
“Option Well” means the well or xxxxx, in addition to the Test Well, that the Farmee has the option to drill, pursuant to clause 6 entitled ROLLING OPTION WELL(s) of the Head Agreement, to earn a Working Interest in the Farmout Lands and/or the Option Lands, as the case may be;
“Pre-Farmout Working Interests” means the undivided Working Interests of the Parties the Farmout Lands and Option Lands, prior to any earning hereunder, as described in Schedule “A”;
“Test Well” means the first well drilled under the Head Agreement as provided for in clause 4 entitled TEST WELL of the Head Agreement;
“Title Documents” means the documents of title described as “Title Documents” in Schedule “A” to the Agreement, insofar as they relate to the Farmout Lands, the Option Lands and all renewals, extensions, continuations or documents of title issued in substitution or by selection.
“Trust Agreement” means the form of trust agreement attached hereto as Schedule “E”.
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“Well Requirement Sheet” means the document specifying the type of information required to be supplied by the Farmee to the Farmor pursuant to the Farmout & Royalty Procedure and attached hereto as Schedule “D”.
2. INCORPORATION OF PROVISIONS FROM THE FARMOUT & ROYALTY PROCEDURE
Except as otherwise set out herein and unless the context otherwise requires, clause 1.02 of the Farmout & Royalty Procedure which incorporates certain provisions of the Operating Procedure is hereby incorporated into the Head Agreement, except that any reference to “Operating Procedure” or “Farmout & Royalty Procedure” shall mean the Head Agreement. The following clauses are not incorporated as a conflicts clause and superseding clause are provided for in the clauses entitled “Supersedes Previous Agreements” and “Conflicts” of the Head Agreement”:
107 (Conflicts)
2801 (Supersedes Previous Agreements).
3. SCHEDULES
The schedules described below are attached to and form part of this Agreement.
Schedule “A” describes the Farmout Lands, Option Lands, Title Documents, Encumbrances and Pre-Farmout Working Interests;
Schedule “B” is the 1997 CAPL
Farmout & Royalty Procedure and the 1997 CAPL Farmout & Royalty Procedure
election
and amendment sheet;
Schedule “C” is the Operating Procedure;
Schedule “D” is the Well Requirement Sheet;
Schedule “E” is the Trust Agreement.
4. TEST WELL
Farmee shall, on or before March 15, 2005, subject to surface access, regulatory approvals and rig availability, commence drilling a well (hereinafter referred to as the “Test Well”) at a location of its choice on the Farmout Lands and shall continuously and diligently drill the Test Well to Contract Depth and complete, cap or abandon same at its sole cost, risk and expense. Farmee shall conduct all operations hereunder in accordance with good oilfield practices and in strict compliance with the terms of the Title Documents, this Agreement and the Regulations.
5. INTEREST EARNED
Subject to Article 3.00 of the Farmout & Royalty Procedure and Clause 4 herein and provided Farmee is not in default under this Agreement, Farmee will earn 100% of the Farmor’s Pre-Farmout Working Interests in four (4) sections of the Farmout Lands from surface to base of the
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deepest formation fully penetrated and evaluated, subject to the Overriding Royalty reserved by Farmor under the Farmout & Royalty Procedure. The said four (4) sections shall be selected with fourteen (14) days of rig release of the Test Well, which selection must conform to the Department of Energy Regulations governing lease selection from a PNG License.
6. ROLLING OPTION WELL(s)
If the Farmee has drilled the Test Well, has earned as provided for in clause 5 herein, and is not otherwise in default under this Agreement, the Farmee will have the right and option, for thirty (30) days from rig release of the last Earning Well drilled on the Farmout Lands or Option Lands, as the case may be, in which to elect in writing to Farmor to:
| (a) | drill a well (hereinafter referred to as the “Option
Well”) at a location of its choice on four pre-selected unearned
sections of the Farmout Lands, which Option Well must be spudded by Farmee
no later than forty five (45) days after its election, subject to surface
access, rig availability and regulatory approvals. Farmee shall continuously
and diligently drill the Option Well to Contract Depth and complete, cap
or abandon same at its sole cost, risk and expense. Farmee shall conduct
all operations hereunder in accordance with good oilfield practices and
in strict compliance with the terms of the Title Documents, this Agreement
and the Regulations; or |
| (b) | drill an Option Well at a location of its choice
on the Option Lands, which Option Well must be spudded by Farmee no later
than sixty (60) days after its election, subject to surface access, rig
availability and regulatory approvals. Farmee shall continuously and diligently
drill the Option Well to Contract Depth and complete, cap or abandon same
at its sole cost, risk and expense. Farmee shall conduct all operations
hereunder in accordance with good oilfield practices and in strict compliance
with the terms of the Title Documents, this Agreement and the Regulations.
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Failure by Farmee to elect to drill an Option Well in accordance with the provisions of subclause (a) or (b) above shall be deemed to be an election to surrender its rights to drill an Option Well and to earn an interest in the unearned Farmout Lands and Option Lands.
7. OPTION WELL EARNING
| (a) | In the event Farmee elects to drill an Option Well
pursuant to clause 6 (a) herein, Farmee will, subject to Article 3.00
of the Farmout & Royalty Procedure and clause 6 (a) herein and provided
Farmee is not in default under this Agreement, will earn 100% of the Farmor’s
Pre-Farmout Working Interests in four (4) sections of the unearned Farmout
Lands from surface to base of the deepest formation fully penetrated and
evaluated, subject to the Overriding Royalty reserved by Farmor under
the Farmout & Royalty Procedure. The said four (4) sections shall
be selected with fourteen (14) days of rig release of the Option Well,
which selection must conform to the Department of Energy Regulations governing
lease selection from a PNG License. |
| (b) | In the event Farmee elects to drill an Option Well
pursuant to clause 6 (b) herein, Farmee will, subject to Article 3.00
of the Farmout & Royalty Procedure and clause 6 (b) herein |
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and provided Farmee is not in default under this Agreement, earn one hundred (100%) percent of the Farmor’s Pre-Farmout Working Interest from surface to the base of the deepest formation penetrated and evaluated, in that section of the Option Lands in which the Option Well was drilled, subject to the Overriding Royalty and rights of conversion reserved by Farmor as set out in the Farmout & Royalty Procedure.
For clarification, the Option Lands earned pursuant to sub-clauses 7(b) above shall be held as follows:
| Before Payout | After Payout | |
| Farmee | 100% | 60.0% |
| Hanna | GOR | 22.4% |
| Firefly | GOR | 9.6% |
| Moraine | GOR | 8.0% |
8. AREA OF MUTUAL INTERST
The Parties hereto agree that Section 8-24-2W4 shall be an Area of Mutual Interest (“AMI”). The AMI shall have a term of the later of one (1) year from rig release of the last Earning Well drilled hereunder or the termination of earning by Farmee as provided for in this agreement. The Parties interest in the AMI shall be Farmee 60%, Xxxxx 22.4%, Firefly 9.6% and Moraine 8.0% .
9. TRUST AGREEMENT
Farmor shall assign to Farmee the entire interest earned in the Farmout Lands, but if such assignment is not possible or practical, it shall hold such interests in trust for Farmee in accordance with the Trust Agreement.
8. ASSIGNMENT
| (a) | Until Farmee has earned the entire interest it is
entitled to earn hereunder or its right to earn any further interest hereunder
has terminated or expired, Farmee may not assign this Agreement, either
in whole or in part. |
| (b) | Once Farmee has earned the entire interest it is
entitled to earn hereunder or its right to earn any further interest hereunder
has terminated or expired, 2401(A) of the standard form 1990 CAPL Operating
Procedure shall apply to all dispositions of Working Interests hereunder
and any reference to “party” therein shall mean “Party”.
|
9. LIMITATIONS
The two (2) year period for seeking a remedial order under section 3(1)(a) of the Limitations Act, S.A. 2000 c. L-12, as amended, for any claim (as defined in that Act) arising in connection with this agreement is extended to: (a) for claims disclosed by an audit, two (2) years after the time this agreement permitted that audit to be performed, and (b) for all other claims, four (4) years.
13
10. ADDRESS FOR NOTICE
The address for service of notices hereunder for each Party is:
| Xxxxx Oil and Gas Company- | ||
| Canada, Inc. | Firefly Resources Ltd. | |
| 1400, 715 – 5th Avenue SW | 1400, 715 – 5th Avenue SW | |
| Calgary, AB T2P 2X6 | Xxxxxxx, XX X0X 0X0 | |
| Attn: Land Department | Attn: Xxx Xxxxxx, President | |
| Fax: (000) 000-0000 | Fax: (000) 000-0000 | |
| Moraine Resources Ltd. | Xxxx Resources Ltd. | |
| 1411, 715 – 5th Avenue SW | 5008 Varsity Drive NW | |
| Calgary, AB T2P 2X6 | Xxxxxxx, XX X0X 0X0 | |
| Attn: Xxxxxxx Xxxxxxxx, President | Attn: Xxxxxxx Xxxxxxx | |
| Fax: (000) 000-0000 | Fax: (000) 000-0000 |
11. SUPERSEDES PREVIOUS AGREEMENTS
This Agreement supersedes all other agreements, documents, writings and verbal understandings between the Parties with respect to the Farmout Lands and the Option Lands and contains the entire agreement between the Parties with respect thereto.
12. CONFLICTS
| (a) | If any provision in the Head Agreement conflicts
with any provision in an exhibit or schedule attached hereto (other than
any Title Document), the provision of the Head Agreement shall prevail.
|
| (b) | If there is a conflict between any provision of the
Agreement and the Regulations or Title Documents, the Regulations or Title
Documents, as the case may be, shall govern, except that: (i) as between
the Parties in their capacities or as Working Interest owners, the Working
Interests shall prevail if there is a difference between the Working Interests
and the registered interests in the Title Documents; and (ii) the allocation
of responsibility for losses as provided herein shall govern the relationship
of the Parties. |
| (c) | If there is a conflict as provided in any subclause
above, the Agreement (excluding Title Documents) shall be modified accordingly
to the extent necessary to resolve such conflict, and, as so modified,
shall continue in full force and effect. |
14
13. JURISDICTION
This Agreement shall be subject to and 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.
IN WITNESS WHEREOF the parties have executed this Agreement on the date first set out above.
| XXXXX OIL AND GAS COMPANY- | FIREFLY RESOURCES LTD. | |||
| CANADA, INC. | ||||
| Per: | Per: | |||
| Xxxxx Xxxx, Manager | Xxxxxxx Xxxxxx, President | |||
| MORAINE RESOURCES LTD. | XXXX RESOURCES LTD. | |||
| Per: | Per: | |||
| Xxxxxxx (Xxxx) Xxxxxxxx, President | Name & Title | |||
This is the execution page of a Farmout and Option Agreement dated
January 21, 2005 between
Xxxxx Oil and Gas Company-Canada, Inc., Firefly Resources Ltd., Moraine Resources
Ltd
and Xxxx Resources Ltd.
15
SCHEDULE “A”
Attached to and made a part of a Farmout and Option Agreement dated January
21, 2005 between
Xxxxx Oil and Gas Company-Canada, Inc., Firefly Resources Ltd., Moraine Resources
Ltd and
Xxxx Resources Ltd.
| Title Documents | Encumbrances | Pre-Farmout Working Interests | ||
| Farmout Lands | ||||
| Xxx 00 Xxx 0X0X: | Xxxxxxx Xxxxx | Xxxxxxx Crown | Xxxxx | 56% |
| Section’s 9, 10, 11, 12, | PNG License | Royalty | Firefly | 24% |
| 13, 14, 15, 16, 22 & 23 | #0000000000 | Moraine | 20% | |
| All PNG Rights | ||||
| Xxx 00 Xxx 0X0X: | ||||
| Section 17 | ||||
| All PNG Rights below | ||||
| base Viking formation | ||||
| Xxx 00 Xxx 0X0X: | ||||
| Section 21 | ||||
| All PNG Rights to base | ||||
| Viking formation | ||||
| Xxx 00 Xxx 0X0X: | Xxxxxxx Xxxxx | Xxxxxxx Crown | Xxxxx | 56% |
| Section 21 | PNG Lease | Royalty | Firefly | 24% |
| All PNG Rights below | #0400080023 | Moraine | 20% | |
| base Viking formation to | ||||
| basement | ||||
| Title Documents | Encumbrances | Pre-Farmout Working Interests | ||
| Option Lands | ||||
| Xxx 00 Xxx 0X0X: | Xxxxxxx Xxxxx | Xxxxxxx Crown | Xxxxx | 56% |
| Section 5 | PNG Lease | Royalty | Firefly | 24% |
| All PNG rights below base | #0403010070 | Moraine | 20% | |
| Medicine Hat formation to | ||||
| basement | ||||
| Xxx 00 Xxx 0X0X: | Xxxxxxx Xxxxx | Xxxxxxx Crown | Xxxxx | 56% |
| Section 6 | PNG Lease | Royalty | Firefly | 24% |
| All PNG rights below base | #0000000000 | Moraine | 20% | |
| Medicine Hat formation to | ||||
| basement | ||||
| Xxx 00 Xxx 0X0X: | Xxxxxxx Xxxxx | Xxxxxxx Crown | Xxxxx | 56% |
| Section 7 | PNG Lease | Royalty | Firefly | 24% |
| All PNG rights | #0402010037 | Moraine | 20% | |
16
SCHEDULE “B”
Attached to and made a part of a Farmout and Option Agreement dated January
21, 2005 between Xxxxx Oil
and Gas Company-Canada, Inc., Firefly Resources Ltd., Moraine Resources Ltd
and Xxxx Resources Ltd.
1997 CAPL FARMOUT AND ROYALTY PROCEDURE
ELECTIONS AND AMENDMENTS
| 1. | EFFECTIVE DATE [Subclause
1.01(f)]: January 21, 2005 |
| 2. | PAYOUT [Subclause 1.01(t)]
Alternate A – With respect to the Option Lands only
|
| 3. | INCORPORATION OF CLAUSES
FROM 1990 CAPL OPERATING PROCEDURE |
[Clause 1.02] |
|
Clause 311 (Insurance) –
Alternate A. |
|
Add Subclause 311h |
|
“In addition
to the policies of insurance required under Clause 311A of the Operating
Procedure, Farmee shall obtain and maintain control of well insurance
to the extent of a minimum of three million dollars ($3,000,000)
with respect to each well drilled hereunder and each such policy
shall also include the waivers of subrogation required by Clause
311A of the Operating Procedure. All costs of insurance maintained by
Farmee pursuant to this Clause shall be borne solely by Farmee and,
upon request of Farmor, Farmee shall promptly provide Farmor with
evidence that such insurance is maintained by Farmee, including
a copy of any particular policy of insurance if so requested by
Farmor.” |
|
| 4. | OPTION XXXXX [Article
4.00] |
This optional Article 4.00
will X / will not __ apply herein. |
|
| 5. | OVERRIDING ROYALTY [Article
5.00] |
This optional Article 5.00
will X / will not __ apply herein. |
|
| 6. | QUANTIFICATION OF OVERRIDING
ROYALTY [Clause 5.01] |
for crude oil, Alternate 1
will apply |
|
Alternate 1: 15%
of gross monthly production; or |
|
Alternate 2: (divisor); not
less than __% and not more than __% |
|
for all other Petroleum Substances,
Alternate 1 will apply |
17
| Alternate 1: 15% of gross monthly
production; or |
|
| 7. | ROYALTY PAYOR’S ALLOWED DEDUCTIONS
OF OVERRIDING ROYALTY NOT TAKEN IN KIND [Subclause
5.04B] |
DEDUCTIONS (5.04 B) Alternates: |
|
1 only __
|
|
2 only __ |
|
1 and 2 X
|
|
neither 1 nor 2 __
|
|
Alternate 2 - 20% |
|
Marketing Fees are not an allowed deduction.
|
|
| 8. | ROYALTY OWNER’S RIGHTS UPON SURRENDER
[Subclause 5.08] |
Add new paragraph: |
|
“Surrender in this Clause shall
include the Royalty Payor’s intention not to make application
to continue a Title Document beyond its primary term. The Royalty
Owner shall have the right for fifteen (15) days from the date of such
surrender notice to request an assignment from the Royalty Payor
of the interest that it desires to surrender. From and after the
date of such surrender or assignment the Royalty Payor shall be
discharged of, from and against any and all obligations with respect
to the interests so surrendered or assigned to the extent that such
obligations are attributable to the period commencing with the
date of the surrender or assignment, and the lands and the leases
as hereinbefore defined, shall thereafter be deemed to exclude
the interests so surrendered or assigned. The provisions of this Clause
shall be subject to the Title Documents covering the lands and
in the event of conflict, the provisions of the Title Documents
shall prevail.” |
|
| 9. | CONVERSION OF OVERRIDING ROYALTY [Article
6.00] |
This optional Article 6.00 will X
/ will not __ apply herein with respect to the Option Lands
only. |
|
| 10. | OPERATIONS AT CONVERSION [Clause
6.04] |
If Article 6.00 applies, conversion will
be to 40% of the Working Interest by Farmor. This Article
applies only to the Option Lands. |
|
| 11. | AREA OF MUTUAL INTEREST [Article
8.00] |
This optional Article 8.00 will X/
will not apply herein. |
|
| 12. | LIABILITY AND INDEMNITY [Article
10.00] |
18
Add: |
|
“10.03 Survives Termination |
|
This Article shall survive the termination of the
Agreement until Farmee has fully and properly abandoned all well sites,
surface and subsurface facilities on the Farmout Lands or used in connection
with production from the Farmout Lands in accordance with the regulations
and has fully restored the surface for such well sites, surface and subsurface
facilities in accordance with the regulations.” |
|
| 13. | LAND MAINTENANCE COSTS [Clause 11.02] |
This optional Clause 11.02 will X / will not
__ apply herein. |
|
The Farmee will pay the Farmor $__________with 30
days of Effective Date. |
|
Add: |
|
“Farmee shall be responsible for all rentals
on a per diem basis payable on the Title Documents from the Effective
Date until Farmee has earned an interest in the Farmout Lands and or the
Option Lands or until Farmee’s right to earn any further interest
is terminated or surrendered. Thereafter Farmee and Farmor shall pay all
rentals and taxes on those Farmout Lands and Option Lands that Farmee
has earned an interest in proportionate to the working interests they
hold in such Farmout Lands and Option Lands.” |
19
SCHEDULE “C”
Attached to and made a part of a Farmout and Option Agreement dated January
21, 2005 between Xxxxx Oil
and Gas Company-Canada, Inc., Firefly Resources Ltd., Moraine Resources Ltd
and Xxxx Resources Ltd.
OPERATING PROCEDURE ELECTIONS
1990 CAPL OPERATING PROCEDURE
Clause 311 - Insurance: Alternate A __ B X
Clause 604 - Marketing Fee: Alternate A X_ B
___
(if 'B' is selected add specific options for petroleum, NG, NGL & sulphur)
Clause 903 - Less than All Parties Participate: Alternate A _ X_ B ___
Clause 1007 - Penalty Where Independent Well Results in
Production:
1007 (a) (iv) - Development Xxxxx 300%
1007
(a) (iv) - Exploratory Xxxxx 500%
Clause 1010 (a) iv - exception: 180 days
Clause 2202 - Addresses for Notices:
| Xxxxx Oil and Gas | Firefly Resources Ltd. | |
| Company-Canada, Inc. | 1400, 715 –5th Avenue SW | |
| 1400, 715 –5th Avenue SW | Calgary AB | |
| Xxxxxxx XX | X0X 0X0 | |
| X0X 0X0 | Attn: President | |
| Attn: Land Dept. | ||
| Moraine Resources Ltd. | Xxxx Resources Ltd. | |
| 1411, 715 – 5th Avenue SW | 5008 Varsity Drive NW | |
| Calgary, AB | Xxxxxxx XX | |
| X0X 0X0 | X0X 0X0 | |
| Attn: President | Attn: Land Dept. |
Clause 2401 - Right to Assign/Sell/Dispose: Alternate A _ X_ B ___
Clause 2404 - Recognition upon Assignment: deleted in its entirety and replaced with 1993 CAPL Assignment Procedure
1996 PASC ACCOUNTING PROCEDURE
Clause 105 - Operating Fund: 10%
Clause 110 - Approvals: 2 or more parties totalling 75%
20
Clause 112 - Expenditure Limitations: (a) excess of $25,000 (c) excess of $25,000
Clause 202(b) Employee Benefits: (b) exceed 22%
Clause 213 - Camp & Housing: shall not
Clause 216 - Warehouse Handling: 5%
Clause 302 - Overhead Rates:
| (a) | For each Exploration Project: | ||
| (1) | 5 % of the first $ 50,000; plus | ||
| (2) | 3 % of the next $100,000; plus | ||
| (3) | 1 % of cost exceeding the sum of (1) and (2) | ||
| (b) | For each Drilling Well: | ||
| (1) | 3 % of the first $ 50,000; plus | ||
| (2) | 2 % of the next $100,000; plus | ||
| (3) | 1 % of cost exceeding the sum of (1) and (2) | ||
| (c) | For each Initial Construction Project: | ||
| (1) | 5 % of the first $ 50,000; plus | ||
| (2) | 3 % of the next $100,000; plus | ||
| (3) | 1 % of cost exceeding the sum of (1) and (2) | ||
| (d) | For each Subsequent Construction Project: | ||
| (1) | 5% of the first $50,000; plus | ||
| (2) | 3% of the next $100,000; plus | ||
| (3) | 1% of the cost exceeding the sum of (1) and (2) | ||
| (e) | For Operation and Maintenance: | ||
| (1) | - _% of the cost; and | ||
| (2) | $250.00/producing well/month; | ||
| (3) | $____Flat rate per month. | ||
| Rates for e(2) and e(3) will not be adjusted each July | |||
Clause 406 - Dispositions: $25,000
21
SCHEDULE “D”
Attached to and made a part of a Farmout and Option Agreement dated January
21, 2005 between Xxxxx Oil
and Gas Company-Canada, Inc., Firefly Resources Ltd., Moraine Resources Ltd
and Xxxx Resources Ltd.
WELL DATA REQUIREMENT SHEET
WELL NAME: __________________ LOCATION ________________________
| 1. | INFORMATION REQUIRED PRIOR TO DRILLING: PLEASE MAIL THE NOTICES TO: |
| Xxxxx
Oil and Gas Company-Canada, Inc. 1400, 000 – 0xx Xxxxxx XX Xxxxxxx, XX X0X 0X0 Attention: Xxxxx Xxxx, Manager |
Moraine Resources Ltd. 0000, 000 – 0xx Xxxxxx X.X. Xxxxxxx, XX X0X 0X0 Attention: Xxxxxxx (Xxxx) Xxxxxxxx, President |
| Firefly
Resources Ltd. 1400, 000 – 0xx Xxxxxx XX Xxxxxxx, XX X0X 0X0 Attention: Xxxxxxx Xxxxxx, President |
|
| # of Copies to each company | ||
| Required | ||
| Survey Plan | 1 | |
| Application for Well Licence | 1 | |
| Well Licence | 1 | |
| Drilling Program and Geological Prognosis | 1 |
| 2. | DAILY E-MAIL DAILY REPORTS TO: |
| Xxxxx
- Chuck Gusa xxxxx@xxxxxxx.xxx |
Moraine - Xxxxxxx (Xxxx) Xxxxxxxx xxxxxxxxxxxxxxx@xxxxx.xxx |
| Firefly - Xxxxxxx Xxxxxx xxxxxxx@xxxxxxx.xxx |
|
| 3. | INFORMATION REQUIRED DURING & AFTER DRILLING: PLEASE MAIL TO THE ABOVE ADDRESSES |
| # of Copies to each Company | ||
| Required | ||
| Daily Written Reports | 1 | |
| Logs: Field Prints | 1 | |
| Final Digits | 1 | |
| Core and Sample Descriptions | 1 | |
| Drill Stem Test Reports | 1 | |
| Core Analyses: Preliminary | 1 |
22
| Final | ||
| Oil, Water and Gas Analyses | 1 | |
| Abandonment Report (AEUB Forms) | 1 | |
| Well Status Reports(AEUB Forms) | 1 | |
| Pressure Surveys, Completion Reports | 1 | |
| Production Reports | 1 | |
| Access to Well Site Operations | Yes X No |
| 4. | FORMATION SAMPLES: ACCESS TO OPERATOR'S CUTTINGS |
| 5. | NOTICES REQUIRED: |
| 24 hours notice of intention to spud | |
| Immediate notice of oil or gas shows X Yes No | |
| 24 hours notice of intention to log, core or test | |
| 24 hours notice of completion or abandonment | |
| Please direct all notices to the attention of: | |
| Xxxxx Xxxx, Manager - Xxxxx Oil and Gas Company-Canada, Inc. | |
| Xxxxxxx Xxxxxx, President - Firefly Resources Ltd. | |
| Xxxxxxx (Xxxx) Xxxxxxxx, President – Moraine Resources Ltd. | |
| 6. | ADDITIONAL REQUIREMENTS AND REMARKS |
| Xxxxx Xxxx | Home Phone # (000) 000-0000 | |
| Cell # (000) 000-0000 | ||
| Office # (000) 000-0000 | ||
| E-Mail: xxxxx@xxxxxxx.xxx | ||
| Xxxxxxx Xxxxxx | Office # 237-8778 | |
| E-Mail: xxxxxxx@xxxxxxx.xxx | ||
| Xxxxxxx (Xxxx) Turnbul | Office # (000) 000-0000 | |
| E-Mail: xxxxxxxxxxxxxxx@xxxxx.xxx |
23
SCHEDULE “E”
Attached to and made a part of a Farmout and Option Agreement dated January
21, 2005 between Xxxxx Oil
and Gas Company-Canada, Inc., Firefly Resources Ltd., Moraine Resources Ltd
and Xxxx Resources Ltd.
TRUST AGREEMENT
THIS AGREEMENT made the ___ day of _______, 19_________
BETWEEN:
____________________, a body corporate, having an office at the City of Calgary, in the Province of Alberta
(“Trustee”)
-and-
____________________, a body corporate, having an office at the City of Calgary, in the Province of Alberta
(“Beneficiary”)
Trustee is the lessee under a lease (the “Lease”) granting to lessee certain petroleum or natural gas rights or both which may be found within, upon or under certain lands (the” Lands”). The Lease and Lands are described in Schedule “A” hereto.
Trustee and Beneficiary are parties to an agreement (the “Agreement") described in Schedule “A” hereto whereby Beneficiary is entitled to certain interests in the Lease and Trustee agrees to hold the interest (the “Trust Interest”) of the Beneficiary in the Lease in trust on the terms and conditions set out below.
In consideration of the mutual promises, covenants and conditions and in consideration of the sum of $10.00, receipt of which is hereby acknowledged, the parties agree as follows:
| 1. | The effective date of this Declaration
is the date first written above. |
|
| 2. | Trustee hereby acknowledges and agrees
that from the date of this agreement and for the balance of the unexpired
term of the Lease and subject to the Agreement and this agreement; |
|
(a) |
it holds the Trust Interest in trust for Beneficiary;
|
|
(b) |
all benefit accruing to the Trust Interest, if and
when received by Trustee, shall be held by Trustee, its successors and
assigns, for the benefit of Beneficiary; and |
|
24
(c) |
it will not transfer, encumber, or in any other way
dispose of the Trust Interest except with the written consent of Beneficiary
or with the prior written consent of Beneficiary, which consent shall
not be unreasonably withheld, PROVIDED HOWEVER, Trustee may dispose of
the Trust Interest without Beneficiary’s consent if Trustee disposes
of all its beneficial interest in the Lease and the party acquiring such
interest agrees, in writing, to hold the Trust Interest in trust for Beneficiary
and be bound by the terms of this Agreement in respect thereto. |
|
| 3. | Trustee does not purport to hold in trust
and does not warrant to Beneficiary any better title to the Trust Interest
than it has now or is entitled to receive. |
|
| 4. | Where applicable, Trustee shall use its
reasonable efforts, notwithstanding any restrictions on assignment contained
in the Lease, to have the operator under the applicable operating agreement
recognize and deal directly with Beneficiary. |
|
| 5. | (a) |
Beneficiary shall forthwith upon being
invoiced by Trustee reimburse Trustee for the annual rental payments under
the Lease, provided that all invoices delivered by Trustee to Beneficiary
are in respect of annual rental payments that are payable or have been
paid by Trustee. |
(b) |
Trustee shall use its reasonable efforts to keep
Beneficiary apprised of all notices, operations and other matters insofar
as they relate to the Trust Interest. |
|
| 6. | When requested to do so by Beneficiary
Trustee shall, subject to all applicable laws and all applicable agreements,
assign the Trust Interest to an assignee specified by Beneficiary or execute
a further trust agreement(s) in favor of such assignee as Beneficiary
may designate in writing. |
|
| 7. | (a) |
Trustee shall not be liable to Beneficiary for any
loss or damage arising from any act or omission of Trustee so long as
Trustee acts in good faith and performs its obligations diligently and
in a timely manner in maintaining the Trust Interest, including, but not
limited to, making all payments required to maintain the Lease in good
standing and registering or transferring caveats necessary to protect
Trustee’s and Beneficiary’s interest in the Lease. |
(b) |
Beneficiary hereby agrees to indemnify Trustee against
all actions, claims, suits, costs, demands, losses, damages and expenses
of any nature that may be brought against or suffered by Trustee or which
Trustee may sustain, pay or incur by reason of any matter or thing whether
directly or indirectly arising out of or in any way attributable to Trustee
holding the Trust Interest in trust pursuant to this agreement except
where caused by Trustee’s gross negligence or wilful misconduct.
|
|
| 8. | Each party shall without further consideration
do all such further acts and execute and deliver all such further documents
reasonably required to fully perform the terms of this agreement. |
|
| 9. | This agreement shall enure to the benefit
of and is binding upon the parties hereto and their respective successors
and assigns. |
|
| 10. | If a term of this agreement conflicts with
a term of the Agreement the term of the Agreement shall prevail and this
agreement shall be deemed to be amended accordingly. |
|
25
IN WITNESS of the foregoing the parties have executed and delivered this agreement as of the date first written above.
| TRUSTEE: | ||
| Per: | ||
| Print Name/Title: | ||
| Print Name/Title: | ||
| BENEFICIARY: | ||
| Per: | ||
| Print Name/Title: | ||
EXECUTION PAGE TO TRUST AGREEMENT DATED THE ___ DAY OF ______19__ , BETWEEN _______________________________________ AND ___________________________________.
This is Schedule “A” attached to and forming part
of the Trust Agreement
between ____________________ and ____________________dated ________, 19 ____.
the Lease:
the “Agreement”
the Lands:
the Trust Interest:
