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EXHIBIT 10.7
AGREEMENT OF PURCHASE AND SALE
(XXXXXXX AREA, SASKATCHEWAN)
THIS AGREEMENT made this 12th day of January, 2000,
BETWEEN:
STRAIT ARROW HOLDINGS LTD. , a body corporate having an office in the
City of Calgary, in the Province of Alberta (hereinafter called the
"Vendor")
OF THE FIRST PART
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GEOCAN ENERGY INC. a body corporate having an office in the City of
Calgary, in the Province of Alberta (hereinafter called the
"Purchaser")
OF THE SECOND PART
WHEREAS the Vendor has agreed to sell the Assets to the Purchaser and the
Purchaser has agreed to purchase the Assets from the Vendor on the terms and
conditions set forth herein;
NOW THEREFORE in consideration of the premises and the mutual covenants and
warranties herein contained, the Parties agree as follows:
1. INTERPRETATION
1.1 Definitions
In this Agreement, including the recitals and the Schedules, the
following terms shall have the respective meanings hereby assigned to
them:
A. "AGREEMENT" means this document, together with the Schedules
attached hereto and made a part hereof.
B. "ASSETS" means the Petroleum and Natural Gas Rights, the
Tangibles and the Miscellaneous Interests.
C. "CLOSING" means the exchange of Conveyance Documents at the
Closing Date, as more particularly described in Clause 3.3,
the delivery by the Purchaser to the Vendor of the Purchase
Price, as described in Clause 2.3, and the transfer of the
Assets by the Vendor to the Purchaser.
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D. "CLOSING DATE" means 4:30 p.m., on January 20, 2000 or such
other time and date as may be agreed to by the Parties
pursuant to Clause 3.1 or Paragraph 8.2B(b).
E. "CONVEYANCE DOCUMENTS" means the documents described in
Paragraphs 3.3 A (a) and (b), which provide for the
assignment, transfer or other disposition of the Assets to the
Purchaser.
F. "EFFECTIVE DATE" means 8:00 a.m., on the first day of
December, 1999.
G. "LANDS" means the lands set forth and described in Schedule
"A", insofar as rights to the Petroleum Substances underlying
those lands are granted by the Leases.
H. "LEASES" means the collectively any and all leases, licences,
permits and other documents of title including without
limitation those set forth and described in Schedule "A", by
virtue of which the holder thereof is entitled to drill for,
win, take, own or remove the Petroleum Substances within, upon
or under the Lands or by virtue of which the holder thereof is
deemed to be entitled to a share of Petroleum Substances
removed from the Lands or any lands with which the Lands are
pooled or unitized and includes, if applicable, all renewals
and extensions of such documents and all documents issued in
substitution therefor.
I. "MISCELLANEOUS INTERESTS" means the entire interest of the
Vendor in and to all property, assets and rights pertaining to
the Petroleum and Natural Gas Rights and the Tangibles, other
than the Petroleum and Natural Gas Rights and the Tangibles,
to the extent such property, assets and rights pertain to the
Petroleum and Natural Gas Rights or the Tangibles, or any
rights relating thereto, including, without limitation of the
generality of the foregoing, the entire interest of the Vendor
in:
(a) all contracts, agreements and documents, to the
extent that they relate directly to the Petroleum and
Natural Gas Rights or the Tangibles;
(b) all subsisting rights to enter upon, use and occupy
the surface of any of the Lands, of any lands upon
which any Tangibles are located or of any lands to be
crossed in order to gain access to any of the Lands
or the Tangibles;
(c) the well bores and casing therein for all Xxxxx; and
(d) copies of geological and engineering records, files,
reports and data that, in the Vendor's reasonable
judgement, relate directly to the Petroleum and
Natural Gas Rights, any well thereon or the
Tangibles, excluding the Vendor's tax and financial
records and economic evaluations.
Unless otherwise agreed in writing by the Parties, however,
the Miscellaneous Interests shall not include agreements,
documents or data to the extent that: (i) they
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pertain to the Vendor's proprietary technology or
interpretations; (ii) they are owned or licensed by third
parties with restrictions on their deliverability or
disclosure by the Vendor to any assignee which is not an
affiliate of the Vendor.
J. "PARTY" means a person, partnership or corporation which is
bound by this Agreement.
K. "PERMITTED ENCUMBRANCES" means:
(a) any encumbrances, overriding royalties, net profits
interests and other burdens identified in Schedule
"A";
(b) the terms and conditions of the Leases, including,
without limitation, the requirement to pay any
rentals or royalties to the grantor thereof to
maintain the Leases in good standing;
(c) the right reserved to or vested in any grantor,
government or other public authority by the term of
any Lease or by the Regulations to terminate any
Lease;
(d) easements, rights of way, servitudes or other similar
rights in land, including, without in any way
limiting the generality of the foregoing, rights of
way and servitudes for highways, railways, sewers,
drains, gas and oil pipelines, gas and water mains,
electric light, power, telephone or cable television
conduits, poles, wires or cables;
(e) regulations pertaining to taxation on Petroleum
Substances or the income or revenue therefrom and
governmental restrictions on production rates from
xxxxx on the Lands or on operations being conducted
on the Lands or otherwise affecting the value of any
of the Assets;
(f) the Regulations and any rights reserved to or vested
in any municipality or governmental, statutory or
public authority to control or regulate any of the
Assets in any manner;
(g) undetermined or inchoate liens incurred or created as
security in favour of any person with respect to the
development or operation of any of the Assets, as
regards the Vendor's share of the costs and expenses
thereof;
(h) the reservations, limitations, provisos and
conditions in any grants or transfers from the Crown
of any of the Lands or interests therein, and
statutory exceptions to title;
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(i) provisions for penalties and forfeitures under
agreements as a consequence of nonparticipation in
operations, provided that any such penalties or
forfeitures which apply to the Assets as a result of
the Vendor's failure to participate in a particular
operation prior to the Effective Date shall be
identified in Schedule "A"; and
(j) liens granted in the ordinary course of business to a
public utility, municipality or governmental
authority with respect to operations pertaining to
any of the Assets.
L. "PETROLEUM AND NATURAL GAS RIGHTS" means the entire interest
of the Vendor in and to the Lands and, insofar as they pertain
to the Lands and the Leases.
M. "PETROLEUM SUBSTANCES" means petroleum, natural gas, sulphur
and every other mineral or substance, or any of them, the
right to explore for which, or an interest in which, is
granted pursuant to the Leases, insofar only as they pertain
to the Lands.
N. "PREPAID GAS OBLIGATIONS" means, with respect to production,
sale or related contracts pertaining to the Petroleum and
Natural Gas Rights, the obligations of the Vendor under "take
or pay" and similar provisions either to repay payments made
by the purchasers thereunder for Petroleum Substances not
taken by them or to deliver such gas or substances to such
purchasers without full payment therefor.
O. "PURCHASE PRICE" means the amount payable by the Purchaser to
the Vendor pursuant to Clause 2.2, as modified by the
reductions provided for herein.
P. "REGULATIONS" means all statutes, laws, rules, orders and
regulations in effect from time to time and made by
governments or governmental boards or agencies having
jurisdiction over the Assets.
Q. "SHARES" means 250,000 common shares of the Purchaser.
R. "TANGIBLES" means the entire interest of the Vendor, whether
leased or owned, in and to all tangible depreciable property,
real property and assets that are:
(a) located in or on or in the vicinity of the Lands (or
lands with which the same have been pooled or
unitized) and used, or intended for use, in
connection with production, processing, gathering,
storage, treatment or transportation operations
respecting the Lands, including, without limitation,
the well equipment, if any, relating to the Vendor's
xxxxx on the Lands; and
(b) any additional items, whether located on or off the
Lands, that are indicated in Schedule "A" to be
specifically included as Tangibles.
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S. "TITLE DEFECT" means a defect, deficiency or discrepancy in or
affecting the title of the Vendor in and to any of the Assets
which is sufficiently material and adverse to the enforcement
of title that it would not be acceptable to a knowledgeable,
prudent purchaser buying similar oil and gas properties,
acting reasonably.
T. "XXXXX" means the entire interest of Vendor in and to all
xxxxx located on the Lands or any lands pooled or unitized
therewith, including, without limitation, the xxxxx listed in
Schedule "A".
1.2 Schedules
The following Schedules are attached hereto and made part of this
Agreement:
(a) Schedule "A" - Land Schedule and Xxxxx
(b) Schedule "B" - General Conveyance;
(c) Schedule "C" - Certificate to be provided
pursuant to Article 10 with
respect to the truth of a Party's
representations and warranties.
1.3 References
The references "hereunder", "herein" and "hereof" refer to the
provisions of this Agreement, and references to Articles, Clauses,
Subclauses, Paragraphs or Subparagraphs herein refer to Articles,
Clauses, Subclauses, Paragraphs or Subparagraphs of this Agreement. Any
reference to time shall refer to Mountain Standard Time or Mountain
Daylight Savings Time during the respective intervals in which each is
in force.
1.4 Headings
The headings of the Articles, Clauses, Schedules and any other
headings, captions or indices herein are inserted for convenience of
reference only and shall not be used in any way in construing or
interpreting any provision hereof.
1.5 Singular/Plural
Whenever the singular or masculine or neuter is used in this Agreement
or in the Schedules, it shall be interpreted as meaning the plural or
feminine or body politic or corporate, and vice versa, as the context
requires.
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1.6 Use Of Canadian Funds
All references to "dollars" or "$" herein shall refer to lawful
currency of Canada.
1.7 Derivatives
Where a term is defined herein, a capitalized derivative of such term
shall have a corresponding meaning unless the context otherwise
requires.
1.8 Interpretation If Closing Does Not Occur
In the event that Closing does not occur, each provision of this
Agreement which presumes that the Purchaser has acquired the Assets
hereunder shall be construed as having been contingent upon Closing
having occurred.
1.9 Conflicts
If there is any conflict or inconsistency between a provision of the
body of this Agreement and that of a Schedule or a Conveyance Document,
the provision of the body of this Agreement shall prevail. If any term
or condition of this Agreement conflicts with a term or condition of a
Lease or the Regulations, the term or condition of such Lease or the
Regulations shall prevail, and this Agreement shall be deemed to be
amended to the extent required to eliminate any such conflict.
2. PURCHASE AND SALE
2.1 Agreement Of Purchase And Sale
The Purchaser agrees to purchase the Assets from the Vendor and the
Vendor agrees to sell the Assets to the Purchaser on the terms and
conditions set forth herein.
2.2 Allocation Of Purchase Price
The monetary consideration payable by the Purchaser to the Vendor for
the Assets is One Hundred and Eighty Thousand ($180,000) Dollars and
shall be allocated among the Assets as follows:
(a) To Petroleum and Natural Gas Rights $125,999.00
(b) To Tangibles $ 54,000.00
(c) To Miscellaneous Interests $ 1.00
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TOTAL: $180,000.00
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In determining the Purchase Price, the Parties have taken into account
the Purchaser's assumption of responsibility for the future abandonment
and reclamation costs associated with the Assets, as set forth in this
Agreement, and the Vendor's release of responsibility therefor.
2.3 Payment Of Purchase Price
The Purchase Price shall be paid by the Purchaser to the Vendor at
Closing, subject to any reductions as may be made pursuant to Article 7
and any adjustments provided for in Article 4. The Purchase Price shall
be paid at Closing as follows:
(a) $80,000.00 shall be paid by certified cheque or bank draft;
and
(b) the balance by the issuance to the Vendor of the Shares at an
assigned value of $0.40 per share.
2.4 GST
The Purchaser shall pay to the Vendor at Closing the seven percent (7%)
goods and services tax applicable to that portion of the Purchase Price
allocated to the Tangibles, in accordance with the Excise Tax Act
(Canada), being $3,780.00. The Vendor's GST Registration Number is and
the Purchaser's GST Registration Number is 871099040RT 0001.
3. CLOSING
3.1 Place Of Closing
Unless otherwise agreed in writing by the Parties, Closing shall take
place at the offices of Howard, Mackie, the solicitors for the
Purchaser, at 0000, 000 - 0xx Xxxxxx, X.X., Xxxxxxx, Xxxxxxx on the
Closing Date.
3.2 Effective Date Of Transfer
The transfer and assignment of the Assets from the Vendor to the
Purchaser shall be effective as of the Effective Date, provided Closing
occurs. Possession of the Assets, however, shall not pass to the
Purchaser until after Closing on the Closing Date, and the Vendor shall
maintain the Assets between the Effective Date and the Closing Date
pursuant to the provisions of Article 5.
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3.3 Deliveries At Closing
A. At Closing, the Vendor shall deliver the following to the
Purchaser:
(a) a General Conveyance, in the form attached as
Schedule "B", which has been executed by the Vendor;
(b) all specific assignments, registrable transfers,
novation agreements, trust agreements and other
instruments required to convey the Vendor's interest
in the Assets to the Purchaser;
(c) copies of all consents to disposition and waivers of
rights of first refusal obtained by the Vendor with
respect to the sale of the Assets to the Purchaser;
(d) originals of the Vendor's records, files, reports and
data pertaining to the Assets, insofar as such
delivery is permitted and required hereunder, unless
and to the extent that the Purchaser agrees to allow
the Vendor to deliver such records, files, reports
and data at a later date;
(e) the certificate required by Paragraph 10.2(d);
(f) registrable discharges in respect of any security
notices or caveats registered against the Assets or
any part or portion thereof, and no interest letters
in respect of any other security interests
encumbering Vendor's interest in and to the Assets of
any part or portion thereof; and
(g) such other documents as may be specifically required
hereunder or as may be reasonably requested by the
Purchaser upon reasonable notice to the Vendor.
B. At Closing, the Purchaser shall deliver the following to the
Vendor:
(a) the Purchase Price and the goods and services tax in
accordance with Clauses 2.3 and 2.4;
(b) a General Conveyance, in the form attached as
Schedule "B", which has been executed by the
Purchaser;
(c) the certificate required by Paragraph 10.3(c); and
(d) such other documents as may be specifically required
hereunder.
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3.4 Costs Of Registration
The Purchaser shall bear all costs incurred in registering any
conveyances of title to the Assets to it and all costs of preparing and
registering any further assurances required to convey the Assets to it.
The Purchaser shall register all such conveyances promptly after
Closing.
4. ADJUSTMENTS
4.1 Benefits And Obligations To Be Apportioned
A. All benefits and obligations of any kind and nature accruing,
payable, paid, received or receivable with respect to the
Assets (including, without limitation, maintenance,
development, capital and operating costs, advances, payments
with respect to the Permitted Encumbrances, proceeds from the
sale of production, accounts receivable and incentives
accruing pursuant to the Regulations) shall be apportioned, as
of the Effective Date, between the Vendor and the Purchaser in
accordance with generally accepted accounting principles,
subject to the provisions of this Agreement. All costs of
whatever nature pertaining to work performed or goods or
services provided with respect to the Assets prior to the
Effective Date shall be borne by the Vendor, notwithstanding
that such costs may be payable in whole or in part after the
Effective Date.
B. Notwithstanding the provisions of Subclause 4.1A, all surface
lease rentals and all similar rentals and payments required to
preserve any of the Leases, all taxes levied under the
Freehold Mineral Rights Tax Act (Alberta) and all other taxes,
including municipal taxes, (other than income taxes) levied
with respect to the Assets shall be apportioned between the
Vendor and the Purchaser on a per diem basis as of the
Effective Date.
C. Petroleum Substances which were produced, but not sold, as of
the Effective Date shall be credited to the Vendor.
4.2 Adjustments To Accounts
A. Prior to the Closing Date, the Purchaser shall deliver to the
Vendor a written interim statement of all adjustments and
payments to be made pursuant to this Agreement and an interim
accounting and adjustment shall be conducted for Closing,
based on the Vendor's and the Purchaser's good faith estimate
of all adjustments to be made for the transactions herein
pursuant to this Article, and a final accounting and
adjustment shall be conducted within one hundred and eighty
(180) days following the Closing Date. All adjustments shall
be settled by payment by the Party required to make payment
hereunder within fifteen (15) days of being notified of the
determination of the amount owing.
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B. During the one hundred and eighty (180) day period following
the Closing Date, the Purchaser may audit the books, records
and accounts of the Vendor respecting the Assets, for the
purpose of effecting adjustments pursuant to this Article.
Such audit shall be conducted upon reasonable notice to the
Vendor at the Vendor's offices during the Vendor's normal
business hours, and shall be conducted at the sole expense of
the Purchaser. Any claims of discrepancies disclosed by such
audit shall be made in writing to the Vendor within two (2)
months following the completion of such audit, and the Vendor
shall respond in writing to any claims of discrepancies within
one (1) month of the receipt of such claims. To the extent
that the Parties are unable to resolve any outstanding claims
of discrepancies disclosed by such audit within one (1) month
of the Vendor's response thereto, such audit exceptions shall
be resolved pursuant to Article 9.
C. Notwithstanding the preceding Subclauses of this Clause and
Clause 13.1, any adjustments established by an audit conducted
pursuant to the Regulations or the provisions of the Leases
with respect to the payment of royalties shall be made at the
time such adjustment is established, with payment being made
by the Party required to make payment hereunder within fifteen
(15) days of being notified of the determination of the amount
owing.
5. MAINTENANCE OF BUSINESS
5.1 Assets To Be Maintained In Proper Manner
The Vendor shall continue to maintain the Assets in a proper and
prudent manner in accordance with good oil field practice and the
Regulations until Closing. The Vendor shall maintain insurance
respecting the Assets during the period between the Effective Date and
the Closing Date.
5.2 Material Commitments
A. Until Closing, the Vendor shall not, without the prior written
consent of the Purchaser:
(a) voluntarily assume any obligation or commitment with
respect to the Assets, where the Vendor's share of
the expenditure associated with such obligation or
commitment is estimated to exceed $25,000.00;
(b) surrender or abandon any of the Assets;
(c) amend or terminate the Leases or any agreement to
which the Assets are subject or enter into any new
agreement or commitment respecting the Assets;
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(d) propose or initiate the exercise of any right
(including bidding rights at Crown sales, rights
under area of mutual interest provisions and rights
of first refusal) or option relative to, or arising
as a result of the ownership of the Assets, or
propose or initiate any operations on the Lands which
have not been commenced or committed to by the Vendor
as of the earlier of the date of this Agreement or
the Effective Date, if such exercise or option would
result in either an obligation of the Purchaser
hereunder after the Effective Date or a material
adverse effect on the value of any of the Assets;
(e) sell, transfer or otherwise dispose of the Assets, or
any of them, subject to the provisions of Clause
15.1; or
(f) grant a security interest or any encumbrance with
respect to any of the Assets.
However, the Vendor may assume such obligations or commitments
and propose or initiate such operations or exercise any such
right or option without the prior consent of the Purchaser, if
the Vendor reasonably determines that such expenditures or
actions are necessary for the protection of life or property,
in which case the Vendor shall promptly notify the Purchaser
of such intention or actions and the Vendor's estimate of the
costs and expenses associated therewith.
B. If an operation or the exercise of any right or option
respecting the Assets is proposed in circumstances in which
such operation or the exercise of such right or option would
result in an obligation of the Purchaser pursuant to Subclause
5.2 A, the following Paragraphs shall apply to such operation
or the exercise of such right or option (hereinafter referred
to as "the Proposal"):
(a) the Vendor shall promptly give notice of the Proposal
to the Purchaser, including with such notice the
particulars of such Proposal in reasonable detail;
(b) the Purchaser shall, not later than twenty-four (24)
hours prior to the time the Vendor is required to
make its election with respect to the Proposal,
advise the Vendor, by notice, whether it wishes the
Vendor to exercise its rights with respect to the
Proposal on behalf of the Purchaser, provided that
failure of the Purchaser to make such election within
such period shall be deemed to be an election by the
Purchaser to participate in the Proposal;
(c) the Vendor shall make the election authorized by the
Purchaser with respect to the Proposal within the
period during which the Vendor may respond to the
Proposal; and
(d) the election by the Purchaser not to participate in
any Proposal required to preserve the existence of
any of the Assets shall not entitle the Purchaser to
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any reduction of the Purchase Price in the event that
the Vendor's interest therein is terminated as a
result of such election, and such termination shall
not constitute a failure of the Vendor's
representations and warranties pertaining to such
Assets, notwithstanding Clause 6.3.
5.3 Maintenance Of Assets Until Novations Completed
Following Closing and to the extent that the Purchaser must be novated
into operating agreements or other agreements governing any of the
Assets, the following provisions shall apply with respect to such
Assets from the Effective Date until the novation has been effected:
(a) the Vendor shall not initiate any operation with respect to
the Assets, except upon the written instruction of the
Purchaser or if the Vendor reasonably determines that it is
required for the protection of life or property, in which case
the Vendor may take such actions as it reasonably determines
are required without the written instruction of the Purchaser
and shall promptly notify the Purchaser of such intention or
actions and the Vendor's estimate of the costs and expenses
associated therewith;
(b) the Vendor shall forthwith provide to the Purchaser all
authorizations for expenditure, notices, specific information
and other documents the Vendor receives with respect to the
Assets, and shall respond to such authorizations for
expenditure, notices, information and other documents pursuant
to the written instruction of the Purchaser, if received on a
timely basis, provided that the Vendor may (but shall not be
obligated to) refuse to follow instructions which it
reasonably believes to be unlawful, unethical or in conflict
with an applicable contract; and
(c) the Vendor shall forthwith deliver to the Purchaser all
revenues, proceeds and other benefits received by the Vendor
with respect to the Assets, less the share of the applicable
lessor royalties, operating costs, treating, processing and
transportation expenses and those other costs and expenses
directly associated with the Assets and the production of
Petroleum Substances, provided that the Vendor shall not be
permitted to deduct from such revenues, proceeds and other
benefits any other costs and expenses it incurs as a result of
such delivery to the Purchaser.
5.4 Vendor Deemed Agent Of Purchaser
A. Insofar as the Vendor maintains the Assets and takes actions
with respect thereto on behalf of the Purchaser pursuant to
this Article, the Vendor shall be deemed to have been the
agent of the Purchaser hereunder. The Purchaser ratifies all
actions taken by the Vendor or refrained to be taken by the
Vendor pursuant to the terms of this Article 5. in such
capacity during such period, with the intention that all such
actions shall be deemed to be those of the Purchaser. To the
extent that any losses, claims, damages or demands are
suffered or incurred by the Vendor or the Purchaser, and
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which accrue to the Assets or ownership of the Assets during
the period of time between the Effective Date and the Closing
Date, are reimbursable by the insurance maintained by the
Vendor during such time period, Vendor shall make a claim for
such proceeds and the Party subject to or suffering from such
losses, claims, damages or demands shall be reimbursed by such
insurance proceeds.
B. Insofar as the Vendor participates in either operations or the
exercise of rights or options as the agent of the Purchaser
pursuant to this Article, the Vendor may require the Purchaser
to secure the costs to be incurred by the Vendor on behalf of
the Purchaser pursuant to such election in such manner as may
be reasonably appropriate in the circumstances.
C. The Purchaser shall indemnify the Vendor and its directors,
officers, servants, agents or employees against all
liabilities, losses, costs (including legal costs on a
solicitor-client basis), claims or damages which the Vendor or
its directors, officers, servants, agents or employees may
suffer or incur as a result of maintaining the Assets as the
agent of the Purchaser pursuant to this Article, insofar as
such liabilities, losses, costs, claims or damages are not a
direct result of the gross negligence or wilful misconduct of
the Vendor or its directors, officers, servants, agents or
employees. An action or omission of the Vendor or its
directors, officers, servants, agents or employees shall not
be regarded as gross negligence or wilful misconduct, however,
to the extent it was done or omitted to be done in accordance
with the instructions of or with the concurrence of the
Purchaser.
5.5 Restriction On Purchaser's Proposal Of Operations
Prior to Closing and except to the extent provided in this Article or
permitted under an operating agreement, unit agreement or other
agreement to which the Purchaser is a party as of the Effective Date,
the Purchaser shall not, without the written consent of the Vendor,
propose to the Vendor, or request the Vendor to propose to others, the
conduct of any operations on the Lands or the exercise of any right or
option respecting the Assets.
6. REPRESENTATIONS AND WARRANTIES OF PARTIES
6.1 Vendor's Representations And Warranties
The Vendor represents and warrants to the Purchaser that:
(a) Standing: The Vendor is a corporation, duly organized, valid
and subsisting and incorporated under the laws of the Province
of Alberta, and is authorized to carry on business in the
jurisdiction where the Lands are located;
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(b) Requisite Authority: The Vendor has the requisite capacity,
power and authority to execute this Agreement and the
Conveyance Documents and to perform the obligations to which
it thereby becomes subject;
(c) No Conflict: The execution and delivery of this Agreement and
the completion of the sale of the Assets in accordance with
the terms of this Agreement are not and will not be in
violation or breach of, or be in conflict with:
(i) any term or provision of the charter, by-laws or
other governing documents of the Vendor;
(ii) any agreement, instrument, permit or authority to
which the Vendor is a party or by which the Vendor is
bound; or
(iii) the Regulations or any judicial order, award,
judgement or decree applicable to the Vendor or the
Assets;
(d) Execution And Enforceability: The Vendor has taken all actions
necessary to authorize the execution and delivery of this
Agreement, and, as of the Closing Date, the Vendor shall have
taken all actions necessary to authorize and complete the sale
of the Assets in accordance with the provisions of this
Agreement. This Agreement has been validly executed and
delivered by the Vendor, and this Agreement and all other
documents executed and delivered on behalf of the Vendor
hereunder shall constitute valid and binding obligations of
the Vendor enforceable in accordance with their respective
terms and conditions;
(e) Residency For Tax Purposes: The Vendor is not a non-resident
of Canada within the meaning of the Income Tax Act (Canada);
(f) No Finders' Fees: The Purchaser shall not have any
responsibility for any obligation or liability, contingent or
otherwise, for brokers' or finders' fees, if any, incurred by
the Vendor with respect to the transactions herein;
(g) Lawsuits And Claims: To the best of the information, knowledge
and belief of the Vendor, there are no unsatisfied judgments,
claims, proceedings, actions, governmental investigations or
lawsuits in existence, contemplated or threatened against or
with respect to the Assets or the interest of the Vendor
therein, and there exists no particular circumstance which the
Vendor reasonably believes will give rise to such a claim,
proceeding, action, governmental investigation or lawsuit;
(h) Compliance With Leases And Agreements: To the best of the
information, knowledge and belief of the Vendor, no act or
omission has occurred whereby the Vendor is, or would be, in
default under the terms of the Regulations, any Lease or
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any agreement pertaining to the Assets, where such a default
would impact materially and adversely upon the Assets, or any
of them;
(i) No Default Notices: Except as has been specifically identified
in Schedule "A", the Vendor has not received any notice of
default under the Leases or any notice alleging its default
under any agreement pertaining to any of the Assets, which
default has not been rectified as of the date of this
Agreement;
(j) Payment Of Royalties And Taxes: To the best of the
information, knowledge and belief of the Vendor, all royalties
and all ad valorem, property, production, severance and
similar taxes and assessments based on, or measured by, the
Vendor's ownership of the Assets, the production of Petroleum
Substances from the Lands or the receipt of proceeds therefrom
that are payable by the Vendor and which accrued prior to the
Effective Date have been properly and fully paid and
discharged in the manner and at the time prescribed by the
Leases and the Regulations;
(k) Encumbrances: The Vendor does not warrant its title to the
Assets, but does warrant that the interest of the Vendor in
the Assets is free and clear of any and all liens, mortgages,
pledges, claims, options, encumbrances, overriding royalties,
net profits interests or other burdens created by, through or
under the Vendor other than the Permitted Encumbrances and for
those for which discharges or releases are to be provided at
Closing;
(l) No Reduction: The interests of the Vendor in the Assets are
not subject to reduction by payout of a well or otherwise, or
subject to modification in size or nature by virtue of any
right or interest granted by, through or under the Vendor
except for the Permitted Encumbrances and any such rights and
interests identified in Schedule "A";
(m) Sale Agreements: Except as identified in Schedule "A", the
Petroleum and Natural Gas Rights are not subject to any
Prepaid Gas Obligations, any gas balancing agreements or any
agreements for the sale of Petroleum Substances which are not
terminable on thirty (30) days' notice (without an early
termination penalty or other cost);
(n) Environmental Matters: The Vendor is not aware of and has not
received:
(i) any orders or directives under the Regulations which
relate to environmental matters and which require any
work, repairs, construction or capital expenditures
with respect to the Assets, where such orders or
directives have not been complied with in all
material respects; or
(ii) any demand or notice issued under the Regulations
with respect to the breach of any environmental,
health or safety law applicable to the Assets,
including, without limitation, any Regulations
respecting the use, storage, treatment,
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transportation or disposition of environmental
contaminants, which demand or notice remains
outstanding on the Closing Date;
except as have been specifically disclosed by the Vendor, by
notice to the Purchaser prior to the Vendor's submission of
this Agreement to the Purchaser for the Purchaser's execution;
(o) Condition Of Xxxxx: To the best of the information, knowledge
and belief of the Vendor, each well located on the Lands,
whether producing, shut-in, injection, disposal or otherwise,
has been drilled and, if completed, completed and operated in
accordance with good oil and gas field practices and the
material requirements of the Regulations;
(p) Abandonment Of Xxxxx: To the best of the information,
knowledge and belief of the Vendor, each well located on the
Lands which has been abandoned has been plugged and abandoned,
and the wellsite therefor properly restored, in accordance
with good oil and gas field practices and the material
requirements of the Regulations;
(q) Condition Of Tangibles: To the best of the information,
knowledge and belief of the Vendor, the Tangibles have been
constructed, installed, maintained and operated in accordance
with generally accepted engineering practices, good oil and
gas field practices and the material requirements of the
Regulations;
(r) Authorized Expenditures: To the best of the knowledge,
information and belief of the Vendor, there are no outstanding
authorizations for expenditure or outstanding financial
commitments respecting the Assets, pursuant to which
expenditures are or may be required by the Purchaser as a
result of the acquisition of the Assets or in respect of which
any amount is outstanding, other than as specifically
disclosed in Part IV of Schedule "A" or as may be authorized
on behalf of the Purchaser hereunder;
(s) Regulatory Production Penalties And Allowables: Except as
specifically identified in Schedule "A", to the best of the
information, knowledge and belief of the Vendor:
(i) each Well located on the Lands which has been drilled
for the purpose of producing Petroleum Substances
therefrom has been drilled at a location for which an
off target production penalty is not applicable under
the Regulations; and
(ii) none of the Xxxxx located on the Lands have been
produced in excess of applicable production
allowables imposed by the Regulations and there is no
pending change in such production allowable, other
than as may generally be applicable pursuant to a
change in the Regulations; and
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(t) No Removal of Tangibles: No tangible depreciable property and
assets which are used, were used or are intended to be used in
producing, processing, gathering, treating, measuring, making
marketable or injecting the Petroleum Substances or any of
them or in connection with water injection or removal
operations that pertain to the Petroleum and Natural Gas
Rights, has been removed from its location since December 1,
1999, nor has Vendor alienated or encumbered any such tangible
depreciable property and assets since such date.
6.2 Purchaser's Representations And Warranties
The Purchaser represents and warrants to the Vendor that:
(a) Standing: The Purchaser is a corporation, duly organized,
valid and subsisting under the laws of its jurisdiction of
incorporation, and duly registered and authorized to carry on
business in the jurisdiction in which the Lands are located;
(b) Requisite Authority: The Purchaser has the requisite capacity,
power and authority to execute this Agreement and the
Conveyance Documents and to perform the obligations to which
it thereby becomes subject;
(c) No Conflict: The execution and delivery of this Agreement and
the completion of the purchase of the Assets in accordance
with the terms of this Agreement are not and will not be in
violation or breach of, or be in conflict with:
(i) any term or provision of the charter, by-laws or
other governing documents of the Purchaser; or
(ii) the Regulations or any judicial order, award,
judgement or decree applicable to the Purchaser;
(d) Execution And Enforceability: The Purchaser has taken all
actions necessary to authorize the execution and delivery of
this Agreement and, as of the Closing Date, the Purchaser
shall have taken all actions necessary to authorize and
complete the purchase of the Assets in accordance with the
provisions of this Agreement. This Agreement has been validly
executed and delivered by the Purchaser, and this Agreement
and all other documents executed and delivered on behalf of
the Purchaser hereunder shall constitute valid and binding
obligations of the Purchaser enforceable in accordance with
their respective terms and conditions;
(e) Residency For Tax Purposes: The Purchaser is not a
non-resident of Canada within the meaning of the Income Tax
Act (Canada);
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(f) No Sales Commission: The Purchaser has not incurred any
obligation or liability, contingent or otherwise, for brokers'
or finders' fees with respect to the transactions herein for
which the Vendor shall have any responsibility; and
(g) Shares: Upon Closing, the Shares will have been validly issued
as fully paid and non- assessable shares in the capital of the
Purchaser.
6.3 Survival Of Representations And Warranties
Each Party acknowledges that the other may rely on the representations
and warranties made by such Party pursuant to Clause 6.1 or 6.2, as the
case may be. Subject to Paragraph 5.2B(d), the representations and
warranties in Clauses 6.1 and 6.2 shall be true on the Effective Date
and on the Closing Date, and such representations and warranties shall
continue in full force and effect and shall survive the Closing Date
for a period of one (1) year, for the benefit of the Party for which
such representations and warranties were made. In the absence of fraud,
however, no claim or action shall be commenced with respect to a breach
of any such representation or warranty, unless, within such period,
written notice specifying such breach in reasonable detail has been
provided to the Party which made such representation or warranty.
6.4 No Merger
The representations and warranties in Clauses 6.1 and 6.2 shall be
deemed to apply to all assignments, conveyances, transfers and other
documents conveying any of the Assets from the Vendor to the Purchaser.
There shall not be any merger of any of such representations or
warranties in such assignments, conveyances, transfers or other
documents, notwithstanding any rule of law, equity or statute to the
contrary, and all such rules are hereby waived.
6.5 No Additional Representations Or Warranties By Vendor
The Vendor makes no representations or warranties to the Purchaser in
addition to those expressly enumerated in Clause 6.1. Except and to the
extent provided in Clause 6.1, the Vendor does not warrant title to the
Assets or make representations or warranties with respect to: (i) the
quantity, quality or recoverability of Petroleum Substances respecting
the Lands; (ii) any estimates of the value of the Assets or the
revenues applicable to future production from the Lands; (iii) any
engineering, geological or other interpretations or economic
evaluations respecting the Assets; (iv) the rates of production of
Petroleum Substances from the Lands; (v) the quality, condition or
serviceability of the Assets; or (vi) the suitability of their use for
any purpose. Without restricting the generality of the foregoing, but
subject always to Clause 6.3, the Purchaser acknowledges that it has
made its own independent investigation, analysis, evaluation and
inspection of the Vendor's interests in the Assets and the state and
condition thereof and that it has relied solely on such investigation,
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analysis, evaluation and inspection as to its assessment of the
condition, quantum and value of the Assets.
7. THIRD PARTY RIGHTS AND CONSENTS
7.1 Preferential Right Of Purchase
A. If any of the Assets are subject to a preferential right of
purchase or similar restriction, or if the disposition herein
requires the consent of any third party, the Vendor shall
promptly serve all notices, in a form that is acceptable to
Purchaser, as are required under such preferential purchase or
consent provision. Unless otherwise agreed by the Purchaser,
each such notice shall include a request for a waiver of any
preferential or similar right to purchase any of the Assets
and for the granting of any consent that may be required.
B. The Purchaser shall provide to the Vendor the value placed by
the Purchaser, for the purposes of this purchase, on any of
the Assets with respect to which the Vendor is required to
give notice pursuant to this Clause.
C. If the holder of any preferential right to purchase any of the
Assets exercises such right, or a third party required to give
a necessary consent refuses to give such consent, such right
or refusal or consent, as the case may be, shall be considered
a Title Defect for the purposes of Subclause 8.2B.
8. PURCHASER'S REVIEW
8.1 Vendor To Provide Access
The Vendor shall:
(a) provide the Purchaser and its nominees reasonable access to
the Vendor's records, files and documents directly relating to
the Assets, for the purpose of the Purchaser's review of the
Assets and the Vendor's title thereto, including, without
limitation, the Leases and applicable operating agreements,
unit agreements, overriding royalty agreements and production
sale contracts; and
(b) provide the Purchaser and its nominees with a reasonable
opportunity to inspect the Assets at the Purchaser's sole
cost, risk and expense, insofar as the Vendor can reasonably
provide such access to the Assets.
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8.2 Title Defects
A. The Purchaser shall conduct its review of the Vendor's title
to the Assets with reasonable diligence. Not later than three
(3) days prior to the Closing Date, the Purchaser shall give
the Vendor written notice of the Title Defects which the
Purchaser does not waive. Such notice shall include a
description of each Title Defect and the interests affected
thereby, the Purchaser's requirements for the rectification
thereof, the value allocated by Purchaser acting reasonably to
each affected interest and the amount, in Purchaser's opinion,
acting reasonably, by which the value of each affected
interest has been reduced by the defect or omission. The
Vendor shall thereupon diligently make reasonable efforts to
cure such Title Defects not later than one (1) day prior to
the Closing Date. Failure to include a defect or omission in a
written notice shall be deemed to be a waiver of such defect
or omission for the purposes of this Article 8.
B. Insofar as the Title Defects described in the Purchaser's
notice have not been cured to the Purchaser's reasonable
satisfaction, but subject to clause 10.4 with respect to prior
third party rights and required consents, the Purchaser may
elect at or before the Closing Date by written notice to the
Vendor, to do one of the following:
(a) delay the Closing Date to such later date as is
agreed between the Parties, so as to provide the
Vendor with additional time to cure the remaining
Title Defects;
(b) waive such uncured Title Defects and proceed with
Closing; or
(c) where the cumulative amount by which the value of the
affected interests has been reduced is, in
Purchaser's opinion acting reasonably, 5% or more of
the Purchase Price, in addition to the elections set
out in Subclause 8.2 B(a) and (b), Vendor or
Purchaser may terminate this Agreement upon written
notice to the other, and the Parties shall have no
further obligation to each other hereunder, except
for obligations arising pursuant to Article 11.
However, failure of the Purchaser to make an election at or
before the Closing Date pursuant to Subclause 8.2B shall be
deemed to be an election by the Purchaser pursuant to
Paragraph (b) of this Subclause.
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9. ARBITRATION
[THIS ARTICLE HAS BEEN INTENTIONALLY DELETED]
10. CONDITIONS TO CLOSING
10.1 Required Consents
It is a condition precedent to Closing that any and all approvals
required under the Regulations and any and all consents of third
parties required to permit the transactions to be completed shall have
been obtained or that such approval or consent requirement shall have
been waived or otherwise lapsed. Each of the Parties shall use all
reasonable efforts to obtain any such consents. Notwithstanding the
foregoing, the Parties acknowledge that the consent of buyers under
production sale agreements may not be obtainable until after Closing
and that the acquisition of such consents shall not be a condition
precedent to Closing.
10.2 Conditions For Benefit Of Purchaser
The obligation of the Purchaser to complete the purchase hereunder is
subject to the following conditions precedent:
(a) No Substantial Damage: The Purchaser shall have been
satisfied, acting reasonably that no damage (including
environmental damage) to or alteration of any of the Assets
shall have occurred between the Effective Date and the Closing
Date which, in the Purchaser's reasonable opinion, would
materially and adversely affect the value of the Assets;
(b) Availability Of Documents: The Vendor shall have provided the
nominees of the Purchaser with reasonable access to the
Vendor's records and documents pertaining to the Assets
pursuant to Article 8., in order to confirm the Vendor's title
to the Assets;
(c) Material Compliance By Vendor: The Vendor shall have performed
or complied in all material respects with each of the terms,
covenants and conditions of this Agreement to be performed or
complied with by the Vendor at or prior to the Closing Date;
(d) Certificate That Representations Are Correct: Each of the
covenants, representations and warranties contained in Clause
6.1 was, as of the Effective Date, and is, as of the Closing
Date, true and correct in all material respects, except for
those changes thereto which necessarily arise as a consequence
of the operation of the provisions of this Agreement, as
specifically provided herein and a certificate of a senior
officer of the Vendor, in the form of Schedule "C" dated as of
the Closing Date to that effect shall be delivered at Closing;
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(e) Delivery Of Conveyance Documents: The Vendor shall have
delivered to the Purchaser one copy of the General Conveyance
described in Paragraph 3.3A(a) executed by the Vendor and
those other documents and materials described in Paragraphs
3.3 A which are to be provided to the Purchaser at Closing;
(f) Title: The Purchaser shall be satisfied on the Closing Date
that the Vendor holds the interests in the Assets as described
in Schedule "A"; and
(g) Regulatory Approval: The Purchaser has obtained all regulatory
approvals required in connection with the issuance of the
Shares.
10.3 Conditions For Benefit Of Vendor
The obligation of the Vendor to complete the sale hereunder is subject
to the following conditions precedent:
(a) Material Compliance By Purchaser: The Purchaser shall have
performed or complied in all material respects with each of
the terms, covenants and conditions of this Agreement to be
performed or complied with by the Purchaser at or prior to the
Closing Date;
(b) Payment Of Purchase Price: The Purchaser shall have tendered
to the Vendor the Purchase Price and the applicable goods and
services tax in the manner provided for in Clauses 2.3 and
2.4, subject to any adjustments provided for in Article 4. and
any alteration expressly provided for herein;
(c) Certificate That Representations Are Correct: Each of the
covenants, representations and warranties contained in Clause
6.2 was, as of the Effective Date, and is, as of the Closing
Date, true and correct in all material respects; and a
certificate of a senior officer of the Purchaser, in the form
of Schedule "C" dated as of the Closing Date to that effect
shall be delivered at Closing; and
(d) Delivery Of Documents: The Purchaser shall have executed and
delivered to the Vendor one copy of the General Conveyance
described in Paragraph 3.3B(b) and those other documents which
are to be provided by the Purchaser pursuant to Paragraph 3.3
B at Closing.
10.4 Waiver Of Conditions
The conditions in Clauses 10.2 and 10.3 are for the sole benefit of the
Purchaser and the Vendor respectively. The Party for the benefit of
which such conditions have been included may waive any of them, in
whole or in part, by written notice to the other Party, without
prejudice to any of the rights of the Party waiving such condition,
including, without limitation, reliance on or enforcement of the
representations, warranties or covenants which
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are preserved and pertain to conditions similar to the condition so
waived. However, the Purchaser may not waive the existence and
operation of any preferential right of a third party to purchase any of
the Assets or, without the concurrence of the Vendor, any required
consent of a third party to the Vendor's disposition of any of the
Assets.
10.5 Failure To Satisfy Conditions
In the event any of the conditions in Clauses 10.2 or 10.3 has not been
satisfied at or before the Closing Date (or, in respect of the
condition in Subclause 10.2(a), by no later than ten (10) days prior to
the Closing Date) and such condition has not been waived by the Party
for the benefit of which such condition has been included, such Party
may terminate this Agreement by written notice to the other Party.
However, a Party may not terminate this Agreement in such manner after
Closing, and its remedies thereafter, if any, with respect to the
failure to satisfy such condition shall be limited to damages.
10.6 Parties To Exercise Diligence With Respect To Conditions
Each Party shall proceed diligently, honestly and in good faith and use
all reasonable efforts with respect to all matters within its control
to satisfy the conditions referred to in Clauses 10.1, 10.2 and 10.3.
11. CONFIDENTIALITY
11.1 Purchaser's Obligation To Maintain Information Confidential
Information respecting the Assets shall be retained in confidence and
used only for the purposes of this acquisition and shall not be
disclosed, used, dealt with or exploited by Purchaser for any other
purpose, provided that upon Closing, the Purchaser's rights to use or
disclose such information shall be subject only to any operating, unit
or other agreements that may apply thereto. Any additional information
obtained as a result of such access which does not relate to the Assets
shall continue to be treated as confidential and shall not be
disclosed, used, dealt with or exploited by the Purchaser without the
prior written consent of the Vendor. However, the restrictions on
disclosure and use of information in this Agreement shall not apply to
information to the extent it:
(a) is or becomes publicly available through no act or omission of
the Purchaser or its consultants or advisors;
(b) is subsequently obtained lawfully from a third party, which,
after reasonable inquiry, the Purchaser does not know to be
bound to the Vendor to restrict the use or disclosure of such
information; or
(c) is already in the Purchaser's possession at the time of
disclosure, without restriction on disclosure.
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However, specific items of information shall not be considered to be in
the public domain merely because more general information respecting
the Assets is in the public domain.
11.2 Consultants And Advisors Bound
If the Purchaser employs consultants, advisors or agents to assist in
its review of the Assets pursuant to Article 8, the Purchaser shall be
responsible to the Vendor for ensuring that such consultants, advisors
and agents comply with the restrictions on the use and disclosure of
information set forth in Clause 11.1.
12. DEFAULT
12.1 Remedies Of Injured Party
If a Party (hereinafter referred to as "the Defaulting Party") fails to
comply with any of the terms and conditions of this Agreement such that
Closing does not occur, the other Party (hereinafter referred to as
"the Injured Party") may, by notice to the Defaulting Party, elect to:
(a) treat this Agreement as terminated by reason of the
non-fulfilment of the Defaulting Party's obligations and, if
the Injured Party so decides, pursue a claim for damages
which, in the event that the Injured Party is the Vendor,
shall be limited to the Deposit; or
(b) continue to treat the Agreement as binding and enforceable,
pending resolution of the default by agreement of the Parties
or by a court of competent jurisdiction.
However, the Injured Party shall be deemed to be treating the Agreement
as binding and enforceable, unless and until it specifically elects in
writing to pursue the alternative in Paragraph (a) of this Clause.
12.2 Interest Accrues On Amounts Owing
Any amount owing to a Party by the other Party pursuant to any
provision of this Agreement after Closing and remaining unpaid shall
bear compound interest, as computed monthly, from the day such amount
was due to be paid until the day such amount was paid, at the rate of
one (1%) percent per annum above the rate designated as the prime rate
for Canadian dollar commercial loans by the main branch in Calgary of
the Alberta Treasury Branches, regardless of whether such Party has
given the other Party prior notice of the accrual of interest
hereunder.
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13. LIABILITY AND INDEMNIFICATION
13.1 Responsibility Of Vendor
Subject to Clause 13.4 and provided that Closing has occurred, the
Vendor shall:
(a) be liable to the Purchaser for all losses, costs, damages and
expenses whatsoever which the Purchaser may suffer, sustain,
pay or incur; and
(b) indemnify and save the Purchaser and its directors, officers,
servants, agents and employees harmless from and against all
claims, liabilities, actions, proceedings, demands, losses,
costs, damages and expenses whatsoever which may be brought
against or suffered by the Purchaser, its directors, officers,
servants, agents or employees or which they may sustain, pay
or incur;
as a direct result of any matter or thing arising out of, resulting
from, attributable to or connected with the Assets and occurring or
accruing prior to the Effective Date, except any losses, costs,
damages, expenses, claims, liabilities, actions, proceedings and
demands to the extent that the same either are reimbursable by
insurance maintained by the Purchaser or are caused by the gross
negligence or wilful misconduct of the Purchaser, its directors,
officers, servants, agents, employees or assigns. The indemnity granted
by the Vendor herein, however, is not a title warranty and does not
provide either an extension of any representation or warranty contained
in Clause 6.1 or an additional remedy with respect to the Vendor's
breach of such a representation or warranty. Notwithstanding any
provision herein, the liability of the Vendor and the indemnity hereby
granted by the Vendor to the Purchaser shall only apply with respect to
claims made within one (1) year following the Closing Date.
13.2 Responsibility Of Purchaser
Provided that Closing has occurred, the Purchaser shall:
(a) be liable to the Vendor for all losses, costs, damages and
expenses whatsoever which the Vendor may suffer, sustain, pay
or incur; and
(b) indemnify and save the Vendor and its directors, officers,
servants, agents and employees harmless from and against all
claims, liabilities, actions, proceedings, demands, losses,
costs, damages and expenses whatsoever which may be brought
against or suffered by the Vendor, its directors, officers,
servants, agents or employees or which they may sustain, pay
or incur;
as a direct result of any matter or thing arising out of, resulting
from, attributable to or connected with the Assets and occurring or
accruing subsequent to the Effective Date, except any losses, costs,
damages, expense, claims, liabilities, actions, proceedings and demands
to the extent that the same either are reimbursed (or reimbursable) by
insurance maintained by the Vendor or are caused by the gross
negligence or wilful misconduct of
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the Vendor, its directors, officers, servants, agents, employees or
assigns. The responsibility prescribed by this Clause, however, does
not provide either an extension of any representation or warranty
contained in Clause 6.2 or an additional remedy for the Purchaser's
breach of such a representation or warranty.
13.3 Assets Acquired On "As Is" Basis
Notwithstanding the foregoing provisions of this Article, the Purchaser
acknowledges that it is acquiring the Assets on an "as is" basis, as of
the Effective Date. The Purchaser acknowledges that it is familiar with
the condition of the Assets, including the past and present use of the
Lands and the Tangibles, that the Vendor has provided the Purchaser
with a reasonable opportunity to inspect the Assets at the sole cost,
risk and expense of the Purchaser (insofar as the Vendor could
reasonably provide such access) and that the Purchaser is not relying
upon any representation or warranty of the Vendor as to the condition,
environmental or otherwise, of the Assets, except as is specifically
made pursuant to Clause 6.1. Provided that Closing has occurred, the
Purchaser further agrees that, as of the Effective Date, it shall:
(a) be solely liable and responsible for any and all losses,
costs, damages and expenses which the Vendor may suffer,
sustain, pay or incur; and
(b) indemnify and save the Vendor and its directors, officers,
servants, agents and employees harmless from any and all
claims, liabilities, actions, proceedings, demands, losses,
costs, damages and expenses whatsoever which may be brought
against or suffered by the Vendor, its directors, officers,
servants, agents or employees or which they may sustain, pay
or incur;
as a direct result of any matter or thing arising out of, resulting
from, attributable to or connected with acts or omissions pertaining to
environmental damage or contamination or other environmental problems
pertaining to the Assets, however or by whomever the same occurred,
whether such claims, demands, losses, costs, risks or expenses arose
prior or subsequent to the Effective Date including any matters
relating to:
(a) surface, underground, air, groundwater or surface
contamination,
(b) the abandonment or plugging of any Xxxxx,
(c) the restoration or reclamation of any part of the Assets,
(d) the breach of applicable government rules and regulations, as
the same relate to the environment, in effect at any time, or
(e) the removal of or failure to remove any foundations, structure
or equipment from the Lands
Once Closing has occurred, the Purchaser shall be solely responsible
for all of the foregoing environmental liabilities respecting the
Lands, the abandonment of all xxxxx on the Lands and
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the reclamation of the Lands as between the Vendor and the Purchaser,
and hereby releases the Vendor from any claims the Purchaser may have
against the Vendor with respect to all such liabilities and
responsibilities, except for any claims which the Purchaser may have
for fraud or the breach of a representation or warranty made by the
Vendor pursuant to Clause 6.1.
13.5 No Merger Of Legal Responsibilities
The liabilities and indemnities created in this Article shall be deemed
to apply to, and shall not merge in, all assignments, transfers,
conveyances, novations, trust agreements and other documents conveying
any of the Assets from the Vendor to the Purchaser, notwithstanding the
terms of such assignments, transfers, conveyances, novations and other
documents, the Regulations or any rule of law or equity to the
contrary, and all such rules are hereby waived.
13.6 Substitution And Subrogation
Insofar as is possible, each Party shall have full rights of
substitution and subrogation in and to all covenants, representations
and warranties by others previously given or made in respect of the
Assets or any of them.
13.7 Responsibility Extends To Legal Costs
Notwithstanding any provision to the contrary contained in this
Article, references to costs in the liability and indemnification
obligations prescribed by Clauses 13.1, 13.2 and 13.3 shall be deemed
to include reasonable legal costs on a solicitor-client basis.
14. WAIVER
14.1 Waiver Must Be In Writing
No waiver by any Party of any breach (whether actual or anticipated) of
any of the terms, conditions, representations or warranties contained
herein shall take effect or be binding upon that Party unless the
waiver is expressed in writing under the authority of that Party. Any
waiver so given shall extend only to the particular breach so waived
and shall not limit or affect any rights with respect to any other or
future breach.
15. ASSIGNMENT
15.1 Assignments Before Closing
Prior to Closing, neither Party may assign its interest in or under
this Agreement or to the Assets without the prior written consent of
the other Party, except as may be required by the Vendor to comply with
its obligations respecting any preferential rights, as provided in
Article 7.
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15.2 Assignments By Purchaser After Closing
No assignment, transfer or other disposition of this Agreement or all
or any portion of the Assets by the Purchaser after Closing shall
relieve the Purchaser from its obligations to the Vendor herein. The
Vendor shall have the option to claim payment or performance of such
obligations from the Purchaser or the assignee or transferee, and to
bring proceedings in the event of default against either or all of
them, provided that nothing herein shall entitle the Vendor to receive
duplicate payment or performance of the same obligation.
16. NOTICE
16.1 Service Of Notice
Notwithstanding anything to the contrary contained herein, all notices
required or permitted hereunder shall be in writing. Any notice to be
given hereunder shall be deemed to be served properly if served in 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.
Personally served notices shall be deemed to be received by
the addressee when actually delivered as aforesaid, provided
that such delivery shall be during normal business hours on
any day other than a Saturday, Sunday or statutory holiday in
Alberta. If a notice is not delivered on such a day or is
delivered after the addressee's normal business hours, such
notice shall be deemed to have been received by such Party at
the commencement of the addressee's first business day next
following the time of the delivery;
(b) by telecopier or telex (or by any other like method by which a
written message may be sent) directed to the Party on which it
is to be served at that Party's address for service. A notice
so served shall be deemed to be received by the addressee when
actually received by it, if received within normal business
hours on any day other than a Saturday, Sunday or statutory
holiday in Alberta or at the commencement of the next ensuing
business day following transmission if such notice is not
received during such normal business hours; 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.
29
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16.2 Addresses For Notices
The address for service of notices hereunder of each of the Parties
shall be as follows:
VENDOR: STRAIT ARROW HOLDINGS LTD.
00 Xxxxxxxx Xxxx
Xxxxxxx, Xxxxxxx
Telephone: (000) 000-0000
PURCHASER: GEOCAN ENERGY INC.
Xxxxx 000, 000 0xx Xxxxxx X.X.
Xxxxxxx, Xxxxxxx X0X 0X0
ATTENTION: President
Telephone : (000) 000-0000
FAX : (000) 000-0000
16.3 Right To Change Address
A Party may change its address for service by notice to the other
Party, and such changed address for service thereafter shall be
effective for all purposes of this Agreement.
17. PUBLIC ANNOUNCEMENTS
17.1 Approval Required for Press Releases
A. The Parties shall cooperate with each other in relaying to
third parties information concerning this Agreement and shall
receive written approval from the other Party of all press
releases and other releases of information prior to
publication which approval may not be unreasonably withheld.
However, nothing in this Clause shall prevent a Party from
furnishing any information to any governmental agency or
regulatory authority or to the public, insofar only as is
required by the Regulations or securities laws applicable to
such Party, provided that a Party which proposes to make such
a public disclosure shall, to the extent reasonably possible,
provide the other Party with a draft of such statement a
sufficient time prior to its release to enable such other
Party to review such draft and advise that Party of any
comments it may have with respect thereto.
B. Notwithstanding Subclause 17.1A, the Vendor shall be permitted
to disclose information pertaining to this Agreement and the
identity of the Purchaser, to the extent required to enable
the Vendor to fulfil its obligations pertaining to
preferential rights of purchase and other third party rights,
in accordance with Article 7.
30
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17.2 Signs And Notification To Governmental Agencies
Following Closing, the Vendor may remove any signs which indicate the
Vendor's ownership or operation of the Assets. If the Purchaser will be
the operator of the Assets, it shall be the responsibility of the
Purchaser to erect or install any signs required by governmental
agencies which pertain to the Assets. In addition, the Purchaser shall
be responsible for advising governmental agencies, contractors,
suppliers and other affected third parties of the Purchaser's interest
in the Assets, subject to Article 7 and Clause 10.1.
18. MISCELLANEOUS PROVISIONS
18.1 Further Assurances
At the Closing Date and thereafter as may be necessary, the Parties
shall execute, acknowledge and deliver such instruments and take such
other actions as may be reasonably necessary to fulfil their respective
obligations under this Agreement. The Vendor shall cooperate with the
Purchaser as reasonably required to secure execution by third parties
of the documents referred to in Paragraphs 3.3A (b) and (c).
18.2 Governing Law
This Agreement shall be subject to and be interpreted, construed and
enforced in accordance with the laws in effect in the Province of
Alberta. Each Party accepts the jurisdiction of the courts of the
Province of Alberta and all courts of appeal therefrom.
18.3 Time
Time shall be of the essence in this Agreement
18.4 No Amendment Except In Writing
Subject to Clause 16.3, this Agreement may be amended only by written
instrument executed by the Vendor and the Purchaser.
18.5 Consequences Of Termination
If this Agreement is terminated in accordance with its terms prior to
Closing, then except for the provisions of Articles 11 and 12 and the
covenants, warranties, representations or other obligations breached
prior to the time at which such termination occurs, the Parties shall
be released from all of their obligations under this Agreement. If this
Agreement is so terminated, the Purchaser shall promptly return to the
Vendor all materials delivered to the Purchaser by the Vendor
hereunder, together with all copies of them that may have been made by
or for the Purchaser.
31
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18.6 Supersedes Earlier Agreements
This Agreement supersedes all other agreements between the Parties with
respect to the Assets and expresses the entire agreement of the Parties
with respect to the transactions contained herein.
18.7 Enurement
Subject to the provisions of Article 15, this Agreement shall be
binding upon and enure to the benefit of the Parties and their
respective successors and permitted assigns.
IN WITNESS WHEREOF the Parties have duly executed this Agreement.
STRAIT ARROW HOLDINGS LTD. GEOCAN ENERGY INC.
Per: Per:
---------------------------------- -------------------------------
Per: Per:
---------------------------------- -------------------------------
32
THIS IS SCHEDULE "A" TO AN AGREEMENT OF
PURCHASE AND SALE DATED JANUARY 12, 0000
XXXXXXX XXXXXX XXXXX HOLDINGS LTD., AS
VENDOR, AND GEOCAN ENERGY INC., AS
PURCHASER
LAND SCHEDULE
WORKING
INTEREST/
ROYALTY
LANDS: P & NG RIGHTS: INTEREST: ENCUMBRANCES: HECTARES:
------ -------------- --------- ------------- ---------
007-08W2M; N1/2 Freehold P & NG Lease dated 24.75% W.I. for 12.5% LOR plus S/S GOR 128
Sec 7 Sept 17, 1968 (50% in all P&NG NW 7 of 1/150 (2.5%-7.5%) on
for NW) (50% in NE7) 12.375% W.I. for NE 50% production from NW7
payable to Canadian
Occidental Ltd.
007-08W2M; NW Freehold P & NG Lease dated 24.75% W.I. 12.5% LOR to Crown on 64
Xxx 0 Xxxxx 0, 0000, Xxxxx acquired 50% production plus S/S
(50% undivided interest to 2770 GOR of 1/150 (5-15%)
ft. below mean sea level) payable to Talisman Energy
based on 50% production
007-08W2M; NW Freehold P & NG Lease dated 24.75% W.I. 12.5% LOR plus S/S GOR 64
Sec 7 March 1, 1972 (50% undivided of 1/150 (5-15%) payable to
interest below 2770 ft. below Talisman Energy based on
mean sea level) 50% production
007-08W2M; NW P&NG to Base Souris Valley 24.75% X.X. Xxxxx XX 00
Xxx 00 Beds Crown Lease No. PN
22,784 (Frobisher-Xxxxx)
007-08W2M; NW 12.5% GOR 1/150 (5-15%) 24.75% GOR 64
Sec 18
007-08W2M; LSD 4 P&NG to Base Souris Valley 24.75% X.X. Xxxxx XX
Xxx 00 Xxxx Xxxxx Lease No. PN
12,439
007-08W2M; LSD's 12.5% GOR 1/150 (5-15%) 24.75% GOR 00
0 & 0 XX Xxx 00
000-00X0X; LSD's P&NG to Base Souris Valley 24.75% X.X. Xxxxx XX
0, 0 & 0 Xxx 00 Beds Crown Lease No. PN
12,439
007-09W2M; LSD 10 All P & NG Crown Lease No. PN 24.75% W.I. Crown SS plus S/S GOR of 64
Sec 12 9018 1/150 (5-15%) on 50%
production payable to
Franco Nevada
007-09W2M; LSD 10 Non-convertible 5% GOR 24.75% 64
Sec 12
007-09W2M; LSD 9 All P & NG Crown Lease No. PN 24.75 W.I. Crown SS plus S/S GOR of 00
00 & 00 Xxx 00 9018 1/150 (5-15%) on 50%
production payable to
Franco Nevada
007-09W2M; LSD's All P & NG Crown Lease No. PN 24.75% X.X. Xxxxx XX 00
0 & 0, Xxx 12 12,533
007-09W2M; SE Sec Freehold P & NG Lease dated 24.75% W.I. 12.5% XXX 00
00 Xxx 00, 0000
00
- 0 -
XXXXX: WORKING INTEREST (%)
-----
155725 et xx Xxxxxxx 41/13-7-007-087W2/0 24.75
Tappit Xxxxxxx 01/04-18-007-08W2/0 24.75
155725 et xx Xxxxxxx 01/05-18-007-08W2/0 24.75
Tappit Xxxxxxx 2HZ 4D9-13-4B6-1891/06-18-007-08W2/0 24.75
155725 et xx Xxxxxxx 31/09-12-007-09W2/0 24.75
Tappit Xxxxxxx 01/10-12-007-09W2/0 24.75
Hamoll Ensign Xxxx Xxxxxx 01/11-12-007-09/02 24.75
155725 et xx Xxxxxxx 11/01-13-007-09W2/0 24.75
155725 et xx Xxxxxxx 01/03-12-007-09W2/0 24.75
FACILITIES:
11-12-007-09W2M battery and water injection facility 24.75
34
- 1 -
THIS IS SCHEDULE "B" TO AN AGREEMENT OF PURCHASE AND SALE
DATED JANUARY 12, 0000 XXXXXXX XXXXXX XXXXX HOLDINGS
LTD., AS VENDOR, AND GEOCAN ENERGY INC., AS PURCHASER
GENERAL CONVEYANCE
This Conveyance made this ____________ day of ______________________ , 19____.
BETWEEN:
STRAIT ARROW HOLDINGS LTD., a body corporate, having an office in the
City of Calgary, in the Province of Alberta (hereinafter called the
"Vendor")
- and -
GEOCAN ENERGY INC., a body corporate, having an office in the City of
Calgary, in the Province of Alberta (hereinafter called the
"Purchaser")
WHEREAS the Vendor has agreed to sell and convey the Vendor's entire
right, title, estate and interest in the Assets to the Purchaser and the
Purchaser has agreed to purchase and accept all of the Vendor's right, title,
estate and interest in and to the Assets;
THE PARTIES AGREE AS FOLLOWS:
1. Definitions
In this Conveyance, including the recitals, "Agreement" means the
Agreement of Purchase and Sale dated the 12th day of January, 2000
between the Vendor and the Purchaser. In addition, the definitions
provided for in the Agreement are adopted in this Conveyance.
2. Conveyance
The Vendor, for the consideration provided for in the Agreement, the
receipt and sufficiency of which is acknowledged by the Vendor, sells,
assigns, transfers and conveys the Vendor's entire right, title, estate
and interest in the Assets to the Purchaser, and the Purchaser
purchases and accepts such interests from the Vendor, TO HAVE AND TO
HOLD the same absolutely, subject to the terms of the Agreement, the
Permitted Encumbrances and compliance with the terms of the Leases.
3. Effective Time
This Conveyance is effective as of the Effective Date.
4. Subordinate Document
35
- 2 -
This Conveyance is executed and delivered by the Parties pursuant to
the Agreement for the purposes of the provisions of the Agreement, and
the terms hereof shall be read in conjunction with the terms of the
Agreement. The Agreement shall prevail if there is a conflict between
the provisions of the Agreement and this Conveyance.
5. Enurement
This Conveyance enures to the benefit of and is binding upon the
Parties and their respective successors and permitted assigns.
6. Further Assurances
Each Party shall, after the date of this Conveyance, at the request of
the other Party and without further consideration, do all further acts
and execute and deliver all further documents which are reasonably
required to perform and carry out the terms of this Conveyance.
IN WITNESS WHEREOF the Parties have duly executed this Conveyance.
STRAIT ARROW HOLDINGS LTD. GEOCAN ENERGY INC.
Per: Per:
---------------------------------- -------------------------------
Per: Per:
---------------------------------- -------------------------------
36
THIS IS SCHEDULE "C" TO AN AGREEMENT OF PURCHASE AND SALE
DATED JANUARY 12, 0000 XXXXXXX XXXXXX XXXXX HOLDINGS
LTD., AS VENDOR, AND GEOCAN ENERGY INC., AS PURCHASER
(VENDOR'S/PURCHASER'S) OFFICER'S CERTIFICATE
(REPRESENTATIONS ARE TRUE)
RE: Article 6 of the Agreement of Purchase and Sale ("Agreement") dated January
12, 2000 between STRAIT ARROW HOLDINGS LTD. , as Vendor, and GEOCAN ENERGY INC.,
as Purchaser.
Unless otherwise stated, the definitions provided for in the Agreement
are adopted in this Certificate.
I, (name), (position) of (name of party) ("the Vendor" or "the
Purchaser") hereby certify that as of the date of this Certificate:
1. Each of the covenants, representations and warranties of the
(Vendor/Purchaser) contained in Article 6 of the Agreement was true and correct
in all material respects as of the Effective Date and is true and correct in all
material respects as of the Closing Date.
2. This Certificate is made for and on behalf of the (Vendor/Purchaser)
and is binding upon it, and I am not incurring and will not incur any personal
liability whatsoever with respect to it.
3. This Certificate is made with full knowledge that the
(Vendor/Purchaser) is relying on the same for the Closing of the transactions
contemplated by the Agreement.
IN WITNESS WHEREOF I have executed this Certificate effective the day of
January, 2000.
-------------------------------
(NAME OF VENDOR/PURCHASER)
