SETTLEMENT AGREEMENT This agreement (the "Settlement Agreement") is dated and made effective as of the 2nd day of February, 2010 (the "Effective Date"),
Exhibit 10.89
This
agreement (the "Settlement Agreement") is dated and made effective
as of the
2nd day of February, 2010 (the "Effective Date"),
BETWEEN:
("Surge")
- and
-
1350826 ALBERTA
LTD. (formerly known
as
Surge Global Energy (Canada) Ltd. and Signet Energy Inc.)
("1350826")
- and
-
ANDORA
ENERGY CORPORATION
("Andora")
WHEREAS:
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A.
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Pursuant
to a release and indemnification agreement dated November 15, 2005
between Surge
and 1350826 (then known as Surge Global Energy (Canada) Ltd.), (the
"Indemnification Agreement"), Surge
agreed
to indemnify and save 1350826 (then known
as Surge Global Energy (Canada) Ltd.) harmless of and from any
Damages (as defined
in the Indemnification Agreement) incurred in respect of, among
other things, claims by Dynamo Energy
Corporation;
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B.
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As security
for the
indemnification obligations of Surge pursuant to the Indemnification
Agreement, Surge and
1350826 (then known as Surge Global Energy (Canada) Ltd.) entered into an escrow agreement (the "Escrow Agreement") with Valiant Trust
Company
dated November 15, 2005 pursuant to which Surge deposited 6,300,000
common shares of
Surge Global Energy (Canada) Ltd. into escrow to satisfy the amount
of any Claim
(as
defined in the escrow agreement) that 1350826 (then known as Surge Global Energy (Canada) Ltd.)
became entitled to recover from Surge pursuant to the Escrow
Agreement;
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C.
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On
November 16, 2005, Surge Global Energy (Canada) Ltd. changed its
name to Signet Energy Inc.
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D.
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Pursuant
to
an arrangement agreement dated August 15,
2007 among Pan Orient Energy Corp., Andora, Signer Energy Inc., 1337686
Alberta Ltd. and Valiant Trust Company and a plan of arrangement
(the "Plan of Arrangement") in
respect thereof approved by the shareholders of Signet Energy Inc. and the
Court of Queen's Bench (Alberta) (the "Arrangement"), Signet Energy Inc. and
1337686 Alberta Ltd. were amalgamated to form 1350826 and all of the
outstanding common shares of Signet Energy inc. were exchanged for common
shares of Andora on the basis of approximately 0.296895 common shares of
Andora for each common share of Signet Energy
Inc.;
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E.
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Pursuant
to the Arrangement, 1,500,000 of the common shares of Andora (the "2007 Escrowed Shares") issued in exchange
for common shares of Signet Energy Inc. were placed into escrow with
Valiant Trust Company to be held in accordance with the terms and
conditions of the Plan of
Arrangement;
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F.
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In
connection with the Arrangement, the 6,300,000 common shares of Surge
Global Energy (Canada) Ltd. held in escrow pursuant to the Escrow
Agreement were exchanged for 1,870,439 common shares of Andora (the "2005 Escrowed Shares"), which shares
remained subject to the terms and conditions of the Escrow
Agreement;
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G.
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Dynamo
Energy Corporation filed a claim (the "California Claim") against Surge, Signet
Energy Inc. and others in the Superior Court of California, County of San
Diego, however, it was subsequently determined that the
California court did not have
jurisdiction;
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H.
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Following
the decision of the California court, Dynamo Energy Corporation filed a
claim (the "Alberta Claim" and,
together with the California Claim, the "Dynamo Claims") against Surge, Signet
Energy Inc., Andora, 1237686 Alberta Ltd., 1350826, Xxxxx Xxxxx and X.X.
Xxxxx Xxxxxxx in the Court of Queen's Bench (Alberta), which claim now
stands dismissed as a result of the failure of Dynamo Energy Corporation
to pay security for costs pursuant to an order of the Court of Queen's
Bench (Alberta) dated June 29,
2009;
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I.
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1350826
and Andora have incurred certain legal expenses (the "Indemnified Expenses") to the date of
this settlement Agreement in connection with the Dynamo Claim for which
Surge is obligated to indemnify and save harmless 1350826 and Andora
pursuant to the Indemnification
Agreement;
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J.
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Surge,
1350826 and Andora have agreed to settle the Indemnified Expenses (the
"Settlement") and wish to formally
set out herein the terms of the Settlement and such further terms as may
be necessary in order to give effect
thereto:
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NOW THEREFORE, for good and valuable
consideration, the receipt and existence of which is hereby acknowledged, Surge,
1350826 and Andora covenant and agree with each either as follows:
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1.
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SETTLEMENT
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1.1
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Surge,
1350826 and Andora hereby acknowledge and agree that the. amount of the
Indemnified Expenses shall be CDN
$600,000.
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1.2
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The
Indemnified Expenses shall be settled in full by the release from escrow
and delivery of 375,000 of the 2005 Escrowed Shares to Andora for
cancellation.
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1.3
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Following
the release from escrow and delivery of 375,000 of the 2005 Escrowed
Shares to Andora,the
remaining 2005 Escrowed Shares shall be released from escrow and delivered
to, or to the direction of, Surge and the Escrow Agreement shall be
terminated in accordance with its
terms.
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1.4
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Each of Surge, 1350826 and Andora
shall execute and deliver to Valiant Trust Company a release notice, substantially
in the form of the release notice attached as Schedule A hereto, authorizing and directing
Valiant Trust Company to release the 2005 Escrowed Shares as described in
paragraphs 1.2 and 1.3 of
this Settlement Agreement.
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1.5
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Following
the release and delivery of the 2005 Escrowed Shares to Andora pursuant to
paragraph 1.2 of this Settlement Agreement, Surge shall have no further liability
to 1350826 or Andora for
the Indemnified Expenses; provided however that
Surge shall indemnify and save
harmless 1350826 and Andora and each of their respective shareholders,
current and former directors, officers, employees, agents and
representatives (collectively, the "Indemnified Persons") from and against
any loss, liability, claim, damage or expense (including legal expenses)
suffered by, imposed upon or asserted against any of the Indemnified
Persons after the Effective Date as a result of, in respect of, connected
with, or arising our of under, or pursuant to the Dynamo Claim. The indemnity contained in
this paragraph 1.5 shall survive the Settlement and continue in
full force and effect until August 29,
2011.
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1.6
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Following
the release and delivery of the 2005 Escrowed Shares to Andora pursuant to
paragraph 1.2 of this Settlement Agreement, Andora shall
deliver a release
notice to Valiant Trust Company in accordance with the terms and
conditions of the
Plan of Arrangement
instructing Valiant Trust Company to release the 2007 Escrowed
Shares to the registered holders thereof in accordance with the terms and
conditions of the Plan
of Arrangement.
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1.7
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This
Settlement Agreement shall not prejudice Surge's rights to tax the legal
fees of Xxxxxxx Xxxxx LLP in connection with their defense of the Dynamo
Claim; provided however that neither 1350826 nor Andora shall have any
obligation to
participate in, assist with or otherwise cooperate with Surge in
respect of such taxation.
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2.
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GENERAL
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2.1
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The recitals to this Settlement
Agreement are hereby incorporated and form part of the agreement between the parties,
with the same force and effect as if contained in the body of the Settlement
Agreement
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2.2
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This Settlement Agreement
shall entire to the benefit of and be binding upon the
respective
successors and assigns of the parties
hereto.
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2.3
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Each
of the parties hereto agrees to execute and deliver, from time to time,
without further consideration, such further or other deeds or documents
and to do such other acts and things as may reasonably be required to give
full force and effect to the terms of this Settlement
Agreement.
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2.4
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This
Settlement Agreement shall be governed in accordance with the laws of the
Province of Alberta and the parties do hereby irrevocably submit and
attorn to the jurisdiction of the Courts of the Province of
Alberta for all matters related to this Settlement Agreement,
including its validity and
interpretation.
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2.5
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Time
shall be and remain of the essence of this Settlement
Agreement.
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2.6
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This
Settlement Agreement may be executed
in any number of counterparts, each of which shall be deemed to be an
original, and all of which taken together shall be deemed to constitute
one and the same instrument, and it shall not be necessary in making proof
of this Settlement Agreement to produce or account for
more than one full set of
counterparts.
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2.7
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Transmittal of a party's originally executed
execution page of This Settlement Agreement to the other party may be
by facsimile or PDF, in
which case such execution shall be deemed to be the same as if an original
thereof were delivered in
lieu.
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2.8
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This
Settlement Agreement constitutes the entire agreement between the parties
related to its subject matter and, except as herein stated and in any
of the instruments
and documents that may be executed and delivered pursuant hereto,
contains all of the representations, undertakings, and agreements of the
respective parties concerning the subject matter hereof.
There are no verbal representations, undertaking or
agreements between the parties of any kind related to the subject
matter hereof except those contained
herein.
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IN
WITNESS WHEREOF the parties have properly executed this Settlement Agreement
with full authority on behalf of the signatories to do so.
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Per:
/s/ E. Xxxxx
Xxxxxxx
CEO
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1350826
ALBERTA LTD.
Per: /s/ Xxxx
Xxxx
ANDORA
ENERGY CORPORATION
Per: /s/ Xxxx
Xxxx
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SCHEDULE
A
Release
Notice
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To:
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Valiant
Trust Company
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Reference
is made to the escrow agreement (the "Escrow
Agreement") dated November 15, 2005 among Valiant Trust Company (the "Escrow Agent"), 1350826 Alberta Ltd.
(then known as Surge Global Energy (Canada), Ltd.) and Surge Global Energy Inc.
In accordance with the terms of the Escrow Agreement, each of the undersigned hereby
irrevocably authorize and direct the Escrow Agent to release the Escrowed
Shares, consisting of an aggregate of 1,870,439 common shares of Andora Energy
Corporation, as set forth below:
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1.
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release
and deliver 375,000
of the Escrowed Shares to Andora Energy Corporation for
cancellation; and
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2.
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release
and deliver the remainder of the Escrowed Shares to Surge Global Energy
Inc.
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Upon
release and delivery of the Escrowed Shares as aforesaid, the Escrow Agreement
will terminate in accordance with its terms.
All
capitalized terms used, but not otherwise defined, herein shall have the
respective meanings ascribed thereto in the Escrow Agreement.
This
Release Notice may be executed in counterpart, each of which when so executed
shall be deemed to be an
original, and such counterparts shall constitute one and the
same instrument and, notwithstanding their date of execution, shall be
deemed to bear date as of the date of this Release Notice. This Release Notice
shall be considered properly executed by a party if executed by that party and
transmitted by facsimile or transmitted electronically in either Tagged Image
Format Files (TIFF) or
Portable Document Format (PDF).
DATED as
of the day of February, 2010.
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1350826
ALBERTA LTD.
Per: /s/ Xxxx
Xxxx
ANDORA
ENERGY CORPORATION
Per: /s/ Xxxx
Xxxx
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