MEMBERSHIP INTEREST PURCHASE AGREEMENT
MEMBERSHIP INTEREST PURCHASE AGREEMENT
AMONG
MAB RESOURCES HOLDINGS, LLC
AND
JM MAGNA HOLDINGS, LLC
AND
dated as of
April 17, 2017
TABLE OF CONTENTS
ARTICLE 1 PURCHASE AND SALE
1.1
Purchase and Sale
1.2
Purchase Price
1.3
Closing
1.4
Transfer Taxes
1.5
Withholding Taxes
ARTICLE 2 REPRESENTATIONS AND WARRANTIES OF SELLERS
2.1
Authority of Sellers; Enforceability
2.2
No Conflicts; Consents
2.3
Legal Proceedings
2.4
Operating History
2.5
Ownership of Membership Interests
2.6
Brokers
2.7
Securities Law Acknowledgements
2.8
Securities Law Representations
ARTICLE 3 REPRESENTATIONS AND WARRANTIES OF BUYER
3.1
Organization and Authority of Buyer; Enforceability
3.2
No Conflicts; Consents
3.3
Buyer’s Securities Law Acknowledgements
3.4
Brokers
3.5
Legal Proceedings
ARTICLE 4 CLOSING DELIVERIES
4.1
Sellers’ Deliveries
4.2
Buyer’s Deliveries
ARTICLE 5 INDEMNIFICATION
5.1
Survival of Representations and Covenants
5.2
Indemnification By Sellers
5.3
Indemnification By Buyer
5.4
Indemnification Procedures
5.5
Payments
5.6
Effect of Investigation
5.7
Cumulative Remedies
ARTICLE 6 MISCELLANEOUS
6.1
Expenses
6.2
Further Assurances
6.3
Notices
6.4
Headings
6.5
Severability
6.6
Entire Agreement
6.7
Successors and Assigns
6.8
No Third-Party Beneficiaries
6.9
Amendment and Modification
6.10
Waiver
6.11
Governing Law
6.12
Submission to Jurisdiction
6.13
Specific Performance
6.14
Counterparts
Exhibits:
Schedule A |
| Description of Contractual Rights |
| - | Canadian Investor Questionnaire |
- | United States Accreditor Investor Questionnaire |
MEMBERSHIP INTEREST PURCHASE AGREEMENT
THIS MEMBERSHIP INTEREST PURCHASE AGREEMENT (this “Agreement”), dated as of April 17, 2017, is entered into
AMONG:
MAB Resources Holdings, LLC (“MAB”), a limited liability company organized under the laws of the State of Nevada,
AND:
JM Magna Holdings, LLC (“JM Magna” and together with MAB, the “Sellers” and each of them a “Seller”), a limited liability company organized under the laws of the State of Nevada,
AND:
Fortem Resources Inc. (“Buyer”), a Nevada corporation
WHEREAS:
A.
MAB owns 50% of the outstanding membership interests (the “MAB Membership Interest”) of Rolling Rock Resources, LLC, a Nevada limited liability company (the “Company”);
B.
JM Magna owns 50% of the outstanding membership interests (the “JM Magna Membership Interest”) of the Company;
C.
The Company owns certain petroleum, natural gas and general rights as described on and attached to Schedule A of this Agreement (the “Contractual Rights”);
D.
MAB wishes to sell to Buyer, and Buyer wishes to purchase from MAB, the MAB Membership Interest, subject to the terms and conditions set forth herein; and
E.
JM Magna wishes to sell to Buyer, and Buyer wishes to purchase from JM Magna, the JM Magna Membership Interest, subject to the terms and conditions set forth herein;
NOW, THEREFORE, in consideration of the mutual covenants and agreements hereinafter set forth and for other good and valuable consideration, the receipt and sufficiency of which are hereby acknowledged, the parties hereto agree as follows:
1.1
Purchase and Sale
Subject to the terms and conditions set forth herein, at the Closing (as defined herein):
(a)
MAB shall sell to Buyer, and Buyer shall purchase from MAB, all of the MAB Membership Interest, free and clear of any mortgage, pledge, lien, charge, security interest, claim or other encumbrance (“Encumbrance”), for the consideration specified in Section .
(b)
JM Magna shall sell to Buyer, and Buyer shall purchase from JM Magna, all of the JM Magna Membership Interest, free and clear of any Encumbrance, for the consideration specified in Section .
1.2
Purchase Price
The aggregate purchase price for the MAB Membership Interest and the JM Magna Membership Interest (collectively, the “Membership Interests”) shall be US$40,100,000 which shall be payable by the Buyer to the Sellers on the Closing Date as follows:
(a)
the payment of US$100,000 (which the Sellers acknowledge has been paid by the Buyer on the Seller’s behalf to ROSC as a non-refundable deposit pursuant to the terms of the Asset Purchase Agreement, as such terms are defined below); and
(b)
the issuance of an aggregate of 20,000,000 common shares (the “Purchase Shares”) in the capital of Buyer at a deemed value of US$2.00 per Purchase Share, with 10,000,000 Purchase Shares issuable to MAB Resources and 10,000,000 Purchase Shares issuable to JM Magna (collectively, the “Closing Shares”).
1.3
Closing
The purchase, sale and transfer of the Membership Interests as contemplated by this Agreement, and the issuance of the Closing Shares (the “Closing”), shall take place at 12:00 p.m. on the date of this Agreement (the “Closing Date”) at the offices of Xxxxx Xxxxxx LLP, 900 – 000 Xxxx Xxxxxxx Xxxxxx, Xxxxxxxxx, X.X. X0X 0X0.
1.4
Transfer Taxes
Each Seller, individually as to itself and not on a joint and several basis, shall pay, and shall reimburse Buyer for, any sales, use or transfer taxes, documentary charges, recording fees or similar taxes, charges, fees or expenses, if any, that become due and payable as a result of the transactions contemplated by this Agreement.
1.5
Withholding Taxes
Buyer and the Company shall be entitled to deduct and withhold from the Purchase Price all taxes that Buyer and the Company may be required to deduct and withhold under any provision of tax law. All such withheld amounts shall be treated as delivered to Sellers hereunder, as their respective interest may appear.
ARTICLE 2
REPRESENTATIONS AND WARRANTIES OF SELLERS
Each Seller represents and warrants to Buyer, individually as to itself and not jointly and severally, that the statements contained in this are true and correct as of the Closing Date. For purposes of this , “Seller’s knowledge,” “knowledge of Seller” and any similar phrases shall mean the actual or constructive knowledge of MAB and JM Magna, respectively, after due inquiry.
2.1
Authority of Sellers; Enforceability
Each of MAB and JM Magna has full power and authority to enter into this Agreement and the documents to be delivered hereunder, to carry out its obligations hereunder and to consummate the transactions contemplated hereby. This Agreement and the documents to be delivered hereunder have been duly executed and delivered by each of MAB and JM Magna, and (assuming due authorization, execution and delivery by Buyer) this Agreement and the documents to be delivered hereunder constitute legal, valid and binding obligations of MAB and JM Magna, enforceable against them in accordance with their respective terms.
2.2
No Conflicts; Consents
The execution, delivery and performance by MAB and JM Magna of this Agreement and the documents to be delivered hereunder, and the consummation of the transactions contemplated hereby, do not and will not:
(a)
violate, conflict with or constitute a default under the respective Articles of Organization of each Seller or other organizational documents of any of them;
(b)
violate or conflict with any judgment, order, decree, statute, law, ordinance, rule or regulation applicable to any of them;
(c)
conflict with, or result in (with or without notice or lapse of time or both) any violation of, or default under, or give rise to a right of termination, acceleration or modification of any obligation or loss of any benefit under any contract or other instrument to which any of them is a party; or
(d)
result in the creation or imposition of any Encumbrance on the Membership Interests or any of them.
Other than the consent of the respective member of each Seller, no consent, approval, waiver or authorization is required to be obtained by any of MAB and JM Magna or the Company from any person or entity (including any governmental authority) in connection with the execution, delivery and performance by Sellers of their obligations under this Agreement and the consummation of the transactions contemplated hereby and thereby.
2.3
Legal Proceedings
There is no claim, action, suit, proceeding or governmental investigation (“Action”) of any nature pending or, to Sellers’ knowledge, threatened against or by MAB and JM Magna:
(a)
relating to or affecting the Membership Interests; or
(b)
that challenges or seeks to prevent, enjoin or otherwise delay the transactions contemplated by this Agreement.
No event has occurred or circumstances exist that may give rise to, or serve as a basis for, any such Action.
2.4
Operating History
Except as contemplated herein and with respect to the Purchase and Sale Agreement dated effective March 1, 2017 between Rockies Standard Oil Company, LLC (“RSOC”) and the Company (the “Asset Purchase Agreement”), as amended, and the transactions contemplated therein, the Company is not a party to any agreement or undertaking, has never commenced operations or received or expended any money or other property and has no assets or liabilities, other than transaction costs incurred in connection with such agreements which will be paid on or prior to Closing. The Company is managed by a sole Manager, Xxxx X. Xxxxxx, who has managed the Company solely in his capacity as manager.
2.5
Ownership of Membership Interests
(a)
MAB is the sole legal, beneficial, record and equitable owner of the MAB Membership Interest, free and clear of all Encumbrances whatsoever.
(b)
JM Magna is the sole legal, beneficial, record and equitable owner of the JM Magna Membership Interest, free and clear of all Encumbrances whatsoever.
(c)
The Membership Interests constitute 100% of the issued and outstanding debt and/or equity securities of the Company.
(d)
The Membership Interests were issued in compliance with applicable laws. The Membership Interests were not issued in violation of the organizational documents of the Company or any other agreement, arrangement or commitment to which any of the Sellers or the Company is a party and are not subject to or in violation of any pre-emptive or similar rights of any Person.
(e)
Other than the organizational documents of the Company, there are no voting trusts, proxies or other agreements or understandings in effect with respect to the voting or transfer of any of the Membership Interests.
2.6
Brokers
No broker, finder or investment banker is entitled to any brokerage, finder’s or other fee or commission in connection with the transactions contemplated by this Agreement based upon arrangements made by or on behalf of the Sellers or any of them.
2.7
Securities Law Acknowledgements
Each of the Sellers acknowledges that:
(a)
none of the Purchase Shares have been or will be registered under the United States Securities Act of 1933, as amended, (the “1933 Act”), or under any securities or “blue sky” laws of any state of the United States, and, unless so registered, may not be offered or sold in the United States or, directly or indirectly, to any U.S. Person (as defined in Rule 902(k) of Regulation S, promulgated by the Securities and Exchange Commission under the 1933 Act (“Regulation S”)), except in accordance with the provisions of Regulation S, pursuant to an effective registration statement under the 1933 Act, or pursuant to an exemption from, or in a transaction not subject to, the registration requirements of the 1933 Act, and in each case only in accordance with applicable state, provincial and foreign securities laws;
(b)
Buyer has not undertaken, and will have no obligation, to register any of the Purchase Shares under the 1933 Act or any other applicable securities laws;
(c)
Buyer will refuse to register the transfer of any of the Purchase Shares to a U.S. Person not made pursuant to an effective registration statement under the 1933 Act or pursuant to an available exemption from the registration requirements of the 1933 Act and in each case in accordance with applicable laws;
(d)
there are risks associated with the purchase of the Purchase Shares, as more fully described in Buyer’s periodic disclosure filed on SEDAR and XXXXX and forming part of the public record;
(e)
the Sellers have each had a reasonable opportunity to ask questions of, and receive answers from, the Buyer in connection with the distribution of the Purchase Shares hereunder, and to obtain additional information, to the extent possessed or obtainable without unreasonable effort or expense, necessary to verify the accuracy of the information about the Buyer;
(f)
any resale of the Purchase Shares by any of the Sellers will be subject to resale restrictions contained in the securities laws applicable to the Buyer, each Seller (as applicable) and any proposed transferee and it is the responsibility of the Sellers to find out what those restrictions are and to comply with such restrictions before selling any of the Purchase Shares;
(g)
the Sellers have been advised to consult their own legal, tax and other advisors with respect to the merits and risks of an investment in the Purchase Shares and with respect to applicable resale restrictions, and each of them is solely responsible (and the Buyer is not in any way responsible) for compliance with:
(i)
any applicable laws of the jurisdiction in which they are formed or deemed resident in connection with the distribution of the Purchase Shares hereunder, and
(ii)
applicable resale restrictions;
(h)
the Sellers each consent to the placement of a legend or legends on any certificate or other document evidencing any of the Purchase Shares setting forth or referring to the restrictions on transferability and sale thereof contained in this Agreement, with such legend(s) to be substantially as follows:
THE HOLDER OF THIS SECURITY MUST NOT TRADE THE SECURITY IN OR FROM A JURISDICTION OF CANADA UNLESS THE CONDITIONS IN SECTION 13 OF MULTILATERAL INSTRUMENT 51-105, ISSUERS QUOTED IN THE U.S. OVER-THE-COUNTER MARKETS, ARE MET.
and:
THESE SECURITIES HAVE NOT BEEN REGISTERED WITH THE SECURITIES AND EXCHANGE COMMISSION OR THE SECURITIES COMMISSION OF ANY STATE AND HAVE BEEN ISSUED IN RELIANCE UPON AN EXEMPTION FROM REGISTRATION UNDER THE SECURITIES ACT OF 1933, AS AMENDED (THE “SECURITIES ACT”), AND, ACCORDINGLY, MAY NOT BE OFFERED OR SOLD EXCEPT PURSUANT TO AN EFFECTIVE REGISTRATION STATEMENT UNDER THE SECURITIES ACT OR PURSUANT TO AN AVAILABLE EXEMPTION FROM, OR IN A TRANSACTION NOT SUBJECT TO, THE REGISTRATION REQUIREMENTS OF THE SECURITIES ACT AND IN ACCORDANCE WITH APPLICABLE STATE SECURITIES LAWS.
(i)
the Buyer has advised the Sellers that the Buyer is relying on an exemption from the requirements to provide the Sellers with a prospectus and to sell the Purchase Shares through a person registered to sell securities under provincial securities laws and other applicable securities laws, and, as a consequence of acquiring the Purchase Shares pursuant to such exemption, certain protections, rights and remedies provided by applicable securities laws (including the various provincial securities acts), including statutory rights of rescission or damages, will not be available to the Sellers; and
(j)
no securities commission or similar regulatory authority has reviewed or passed on the merits of any of the Purchase Shares.
2.8
Securities Law Representations
Each of the Sellers, severally but not jointly, hereby represents and warrants that:
(a)
it is a U.S. Person, as that term is defined in Rule 902(k) of Regulation S; and
(b)
it is an “accredited investor”, as that term is defined in Rule 501 of Regulation D promulgated by the Securities and Exchange Commission under the 1933 Act and as that term is defined in Section 1.1 of National Instrument 45-106, Prospectus Exemptions, adopted by the Canadian securities regulators, and it has completed and submitted to the Buyer a Canadian Investor Questionnaire and a U.S. Accredited Investor Certificate, each in the form attached to this Agreement as and , respectively.
ARTICLE 3
REPRESENTATIONS AND WARRANTIES OF BUYER
Buyer represents and warrants to Sellers that the statements contained in this are true and correct as of the date hereof. For purposes of this , “Buyer’s knowledge,” “knowledge of Buyer” and any similar phrases shall mean the actual or constructive knowledge of any director or officer of Buyer, after due enquiry.
3.1
Organization and Authority of Buyer; Enforceability
Buyer is a corporation duly organized, validly existing and in good standing under the laws of the state of Nevada. Buyer has full corporate power and authority to enter into this Agreement and the documents to be delivered hereunder, to carry out its obligations hereunder and to consummate the transactions contemplated hereby. The execution, delivery and performance by Buyer of this Agreement and the documents to be delivered hereunder and the consummation of the transactions contemplated hereby have been duly authorized by all requisite corporate action on the part of Buyer. This Agreement and the documents to be delivered hereunder have been duly executed and delivered by Buyer, and (assuming due authorization, execution and delivery by Sellers) this Agreement and the documents to be delivered hereunder constitute legal, valid and binding obligations of Buyer enforceable against Buyer in accordance with their respective terms.
3.2
No Conflicts; Consents
The execution, delivery and performance by Buyer of this Agreement and the documents to be delivered hereunder, and the consummation of the transactions contemplated hereby, do not and will not:
(a)
violate or conflict with the articles of incorporation, by-laws or other organizational documents of Buyer; or
(b)
violate or conflict with any judgment, order, decree, statute, law, ordinance, rule or regulation applicable to Buyer.
Other than the consent by the board of directors of Buyer to this Agreement and the consummation of the transactions contemplated hereby, no consent, approval, waiver or authorization is required to be obtained by Buyer from any person or entity (including any governmental authority) in connection with the execution, delivery and performance by Buyer of this Agreement and the consummation of the transactions contemplated hereby.
3.3
Buyer’s Securities Law Acknowledgements
Buyer acknowledges that:
(a)
none of the Membership Interests have been or will be registered under the 1933 Act or under any securities or “blue sky” laws of any state of the United States, and, unless so registered, may not be offered or sold in the United States or, directly or indirectly, to any U.S. Person (as defined in Rule 902(k) of Regulation S, except in accordance with the provisions of Regulation S, pursuant to an effective registration statement under the 1933 Act, or pursuant to an exemption from, or in a transaction not subject to, the registration requirements of the 1933 Act, and in each case only in accordance with applicable state, provincial and foreign securities laws;
(b)
Sellers have not undertaken, and will have no obligation, to register any of the Membership Interests under the 1933 Act or any other applicable securities laws;
(c)
there are risks associated with the purchase of the Membership Interests;
(d)
Buyer is acquiring the Membership Interests for Buyer’s own account for investment only, and not as a nominee or agent and not with a view towards or for resale in connection with their distribution;
(e)
by reason of its, or of its management’s, business and financial experience, Buyer has the capacity to evaluate the merits and risks of its investment in the Membership Interests and to protect its own interests in connection with the transactions contemplated in this Agreement;
(f)
it is an “accredited investor”, as that term is defined in Rule 501 of Regulation D promulgated by the Securities and Exchange Commission under the 1933 Act and as that term is defined in Section 1.1 of National Instrument 45-106, Prospectus Exemptions, adopted by the Canadian securities regulators;
(g)
Buyer has had a reasonable opportunity to ask questions of, and receive answers from, the Sellers and the Company in connection with the distribution of the Membership Interests hereunder, and to obtain additional information, to the extent possessed or obtainable without unreasonable effort or expense, necessary to verify the accuracy of the information about the Company;
(h)
any resale of the Membership Interests by the Buyer will be subject to resale restrictions contained in the securities laws applicable to the Buyer, the Company and any proposed transferee and it is the responsibility of the Buyer to find out what those restrictions are and to comply with such restrictions before selling any of the Membership Interests;
(i)
the Buyer has been advised to consult the Buyer’s own legal, tax and other advisors with respect to the merits and risks of an investment in the Membership Interests and with respect to applicable resale restrictions, and it is solely responsible (and the Sellers are not in any way responsible) for compliance with applicable resale restrictions;
(j)
the Buyer consents to the placement of a legend or legends on any certificate or other document evidencing any of the Membership Interests setting forth or referring to the restrictions on transferability and sale thereof contained in this Agreement, with such legend(s) to be substantially as follows:
THESE SECURITIES HAVE NOT BEEN REGISTERED WITH THE SECURITIES AND EXCHANGE COMMISSION OR THE SECURITIES COMMISSION OF ANY STATE AND HAVE BEEN ISSUED IN RELIANCE UPON AN EXEMPTION FROM REGISTRATION UNDER THE SECURITIES ACT OF 1933, AS AMENDED (THE “SECURITIES ACT”), AND, ACCORDINGLY, MAY NOT BE OFFERED OR SOLD EXCEPT PURSUANT TO AN EFFECTIVE REGISTRATION STATEMENT UNDER THE SECURITIES ACT OR PURSUANT TO AN AVAILABLE EXEMPTION FROM, OR IN A TRANSACTION NOT SUBJECT TO, THE REGISTRATION REQUIREMENTS OF THE SECURITIES ACT AND IN ACCORDANCE WITH APPLICABLE STATE SECURITIES LAWS.
no securities commission or similar regulatory authority has reviewed or passed on the merits of any of the Membership Interests.
3.4
Brokers
No broker, finder or investment banker is entitled to any brokerage, finder’s or other fee or commission in connection with the transactions contemplated by this Agreement based upon arrangements made by or on behalf of Buyer.
3.5
Legal Proceedings
There is no Action pending or, to Buyer’s knowledge, threatened against or by Buyer or any affiliate of Buyer that challenges or seeks to prevent, enjoin or otherwise delay the transactions contemplated by this Agreement. No event has occurred or circumstances exist that may give rise or serve as a basis for any such Action.
3.6
Limited Due Diligence on the Company’s Assets
Buyer acknowledges, agrees and accepts that the Company is performing a limited due diligence on the assets and interests that may be acquired by the Company under the Asset Purchase Agreement, and that such due diligence review is not completed as of the date of execution of this Agreement. Specifically, the Company will only review (i) the unit and lease files related to the “Federal Units” (as such term is defined in the Asset Purchase Agreement) that are maintained by and in the possession of ROSC, (ii) the well files that are maintained by and in the possession of ROSC, only for the currently producing or shut in xxxxx located within the “Federal Units,” and (iii) in the sole discretion of the Company, certain publically recorded or filed instruments in applicable county filing offices or the applicable state office of the United States Bureau of Land Management, in either case only related to interests within the “Federal Units.” In the event the Company acquires assets under the Asset Purchase Agreement, it shall acquire such assets on an “as is, where is” basis without any warranty of any kind except for a special warranty of title from ROSC pursuant to the terms of the Asset Purchase Agreement.
3.7
Conditional Acquisition of Assets
Buyer acknowledges, agrees and accepts that the acquisition of the assets and interests by the Company under the Asset Purchase Agreement is conditional in the sole discretion of the Company, including but not limited to the Company’s election to terminate the Asset Purchase Agreement on or before April 17, 2017 due to the assertion by the Company of one or more “Title Defects” (as such term is defined in the Asset Purchase Agreement). Buyer has received a complete copy of the Asset Purchase Agreement and has reviewed it and understands its terms.
ARTICLE 4
CLOSING DELIVERIES AND CONDITION
4.1
Sellers’ Deliveries
At the Closing, Sellers shall deliver to Buyer the following:
(a)
Written consent from the sole member of MAB authorizing the transfer of the MAB Membership Interest to Buyer.
(b)
Written consent from the sole member of JM Magna authorizing the transfer of the JM Magna Membership Interest to Buyer.
(c)
Written consent from all of the members of the Company authorizing the transfer of the Membership Interests to Buyer.
(d)
An Assignment of Membership Interest from each of MAB and JM Magna transferring all of the Membership Interests to Buyer.
(e)
A Canadian Accredited Investor Questionnaire in the form attached hereto as from each Seller.
(f)
A U.S. Accredited Investor Certificate in the form attached hereto as from each Seller.
(g)
A revised Members’ Schedule reflecting the Buyer’s purchase of the Membership Interests and ownership interest in the Company.
4.2
Buyer’s Deliveries
At the Closing, Buyer shall deliver the following to Sellers:
(a)
A Share Certificate representing 10,000,000 Purchase Shares registered to MAB.
(b)
A Share Certificate representing 10,000,000 Purchase Shares registered to JM Magna.
(c)
A certificate of the Secretary of Buyer certifying as to the resolutions of the board of directors of Buyer, duly adopted and in effect, which authorizes the execution, delivery and performance of this Agreement and the transactions contemplated hereby.
4.3
Mutual Condition to Closing
Sellers and Buyer may rescind the transactions under this Agreement upon mutual agreement in the event that the Company elects to terminate the Asset Purchase Agreement on or before April 17, 2017 due to the assertion by the Company of one or more “Title Defects” (as such term is defined in the Asset Purchase Agreement). In the event the Company elects such termination and the Sellers and Buyer have made certain closing deliveries pursuant to Sections 4.1 and 4.2 above, such closing deliverables shall be returned to the providing party and any Closing under this Agreement shall be deemed not to have occurred.
5.1
Survival of Representations and Covenants
All representations, warranties, covenants and agreements contained herein and all related rights to indemnification shall survive the Closing for a period of two years, except that the representations and warranties in Section 2.1, 2.2, 3.1 and 3.2 shall survive the Closing indefinitely.
5.2
Indemnification By Sellers
Subject to the survival period stated in Section 5.1, each Seller shall, on an individual basis and not on a joint and several basis, defend, indemnify and hold harmless Buyer, its affiliates (including the Company from and after the Closing Date) and their respective stockholders, directors, officers and employees from and against all claims, judgments, damages, liabilities, settlements, losses, costs and expenses, including attorneys’ fees and disbursements (a “Loss”), arising from or relating to:
(a)
any inaccuracy in or breach of any of the representations or warranties of such Seller contained in this Agreement or any document to be delivered hereunder; or
(b)
any breach or non-fulfillment of any covenant, agreement or obligation to be performed by such Seller pursuant to this Agreement or any document to be delivered hereunder.
5.3
Indemnification By Buyer
Subject to the survival period stated in Section 5.1, Buyer shall defend, indemnify and hold harmless Sellers, their respective affiliates and their respective members, directors, officers and employees from and against all Losses arising from or relating to:
(a)
any inaccuracy in or breach of any of the representations or warranties of Buyer contained in this Agreement or any document to be delivered hereunder; or
(b)
any breach or non-fulfillment of any covenant, agreement or obligation to be performed by Buyer pursuant to this Agreement or any document to be delivered hereunder.
5.4
Indemnification Procedures
Whenever any claim shall arise for indemnification hereunder, the party entitled to indemnification (the “Indemnified Party”) shall promptly provide written notice of such claim to the other party (the “Indemnifying Party”). In connection with any claim giving rise to indemnity hereunder resulting from or arising out of any Action by a person or entity who is not a party to this Agreement, the Indemnifying Party, at its sole cost and expense and upon written notice to the Indemnified Party, may assume the defense of any such Action with counsel reasonably satisfactory to the Indemnified Party. The Indemnified Party shall be entitled to participate in the defense of any such Action, with its counsel and at its own cost and expense. If the Indemnifying Party does not assume the defense of any such Action, the Indemnified Party may, but shall not be obligated to, defend against such Action in such manner as it may deem appropriate, including, but not limited to, settling such Action, after giving notice of it to the Indemnifying Party, on such terms as the Indemnified Party may deem appropriate and no action taken by the Indemnified Party in accordance with such defense and settlement shall relieve the Indemnifying Party of its indemnification obligations herein provided with respect to any damages resulting therefrom. The Indemnifying Party shall not settle any Action without the Indemnified Party’s prior written consent (which consent shall not be unreasonably withheld or delayed).
5.5
Payments
Once a Loss is agreed to by the Indemnifying Party or finally adjudicated to be payable pursuant to this , the Indemnifying Party shall satisfy its obligations within 15 Business Days of such final, non-appealable adjudication by wire transfer of immediately available funds. The parties hereto agree that should an Indemnifying Party not make full payment of any such obligations within such 15 Business Day period, any amount payable shall accrue interest from and including the date of agreement of the Indemnifying Party or final, non-appealable adjudication to but excluding the date such payment has been made at a rate per annum equal to the then prevailing prime lending rate of interest charged by Toronto-Dominion Bank to commercial customers in the City of Vancouver, British Columbia. Such interest shall be calculated daily on the basis of a 365 day year and the actual number of days elapsed, without compounding.
5.6
Effect of Investigation
Buyer’s right to indemnification or other remedy based on the representations, warranties, covenants and agreements of Sellers contained herein will not be affected by any investigation conducted by Buyer with respect to, or any knowledge acquired by Buyer at any time, with respect to the accuracy or inaccuracy of or compliance with, any such representation, warranty, covenant or agreement.
5.7
Cumulative Remedies
The rights and remedies provided in this are cumulative and are in addition to and not in substitution for any other rights and remedies available at law or in equity or otherwise.
6.1
Expenses
All costs and expenses incurred in connection with this Agreement and the transactions contemplated hereby shall be paid by the party incurring such costs and expenses.
6.2
Further Assurances
Following the Closing, each of the parties hereto shall, and shall cause their respective affiliates to, execute and deliver such additional documents, instruments, conveyances and assurances and take such further actions as may be reasonably required to carry out the provisions hereof and give effect to the transactions contemplated by this Agreement.
6.3
Notices
All notices, requests, consents, claims, demands, waivers and other communications hereunder shall be in writing and shall be deemed to have been given:
(a)
when delivered by hand (with written confirmation of receipt);
(b)
when received by the addressee if sent by a nationally recognized overnight courier (receipt requested); or
(c)
on the date sent by facsimile or e-mail of a PDF document (with confirmation of transmission) if sent during normal business hours of the recipient, and on the next Business Day if sent after normal business hours of the recipient.
Such communications must be sent to the respective parties at the following addresses (or at such other address for a party as shall be specified in a notice given in accordance with this Section ):
(d)
If to MAB Resources Holdings, LLC:
0000 Xxxxx Xxxxxx Xxxxx #0000
Xxxxxx, XX 00000
Attention:
Xxxx X. Xxxxxx
Email:
(e)
If to JM Magna Holdings, LLC:
000 Xxxxxx Xxxxx
Xxxxx, Xxxxxxx
Xxxxxx X0X 0X0
Attention:
Xxxxx Xxxx
Email:
(f)
If to Buyer:
Fortem Resources Inc.
000 0xx Xxxxxx X.X., Xxxxx 000
Xxxxxxx, XX X0X 0X0
Attention: Xxxxxxx Xxxxxxx
E-mail:
6.4
Headings
The headings in this Agreement are for reference only and shall not affect the interpretation of this Agreement.
6.5
Severability
If any term or provision of this Agreement is invalid, illegal or unenforceable in any jurisdiction, such invalidity, illegality or unenforceability shall not affect any other term or provision of this Agreement or invalidate or render unenforceable such term or provision in any other jurisdiction.
6.6
Entire Agreement
This Agreement and the documents to be delivered hereunder constitute the sole and entire agreement of the parties to this Agreement with respect to the subject matter contained herein, and supersede all prior and contemporaneous understandings and agreements, both written and oral, with respect to such subject matter. In the event of any inconsistency between the statements in the body of this Agreement and those in documents to be delivered hereunder, the statements in the body of this Agreement will control.
6.7
Successors and Assigns
This Agreement shall be binding upon and shall inure to the benefit of the parties hereto and their respective successors and permitted assigns. Neither party may assign its rights or obligations hereunder without the prior written consent of the other party, which consent shall not be unreasonably withheld or delayed. No assignment shall relieve the assigning party of any of its obligations hereunder.
6.8
No Third-Party Beneficiaries
Except as provided in , this Agreement is for the sole benefit of the parties hereto and their respective successors and permitted assigns and nothing herein, express or implied, is intended to or shall confer upon any other Person or entity any legal or equitable right, benefit or remedy of any nature whatsoever under or by reason of this Agreement.
6.9
Amendment and Modification
This Agreement may only be amended, modified or supplemented by an agreement in writing signed by each party hereto.
6.10
Waiver
No waiver by any party of any of the provisions hereof shall be effective unless explicitly set forth in writing and signed by the party so waiving. No waiver by any party shall operate or be construed as a waiver in respect of any failure, breach or default not expressly identified by such written waiver, whether of a similar or different character, and whether occurring before or after that waiver. No failure to exercise, or delay in exercising, any right, remedy, power or privilege arising from this Agreement shall operate or be construed as a waiver thereof; nor shall any single or partial exercise of any right, remedy, power or privilege hereunder preclude any other or further exercise thereof or the exercise of any other right, remedy, power or privilege.
6.11
Governing Law
This Agreement shall be governed by and construed in accordance with the internal laws of the State of Utah and the federal laws of the United States of America applicable therein without giving effect to any choice or conflict of law provision or rule (whether of the State of Utah or any other jurisdiction).
6.12
Submission to Jurisdiction
Any legal suit, action or proceeding arising out of or based upon this Agreement or the transactions contemplated hereby may be instituted in the courts of the State of Utah located in the city of Salt Lake City, and each party irrevocably submits to the exclusive jurisdiction of such courts in any such suit, action or proceeding.
6.13
Specific Performance
The parties agree that irreparable damage would occur if any provision of this Agreement were not performed in accordance with the terms hereof and that the parties shall be entitled to specific performance of the terms hereof, in addition to any other remedy to which they are entitled at law or in equity.
6.14
Counterparts
This Agreement may be executed in counterparts, each of which shall be deemed an original, but all of which together shall be deemed to be one and the same agreement. A signed copy of this Agreement delivered by facsimile, e-mail or other means of electronic transmission shall be deemed to have the same legal effect as delivery of an original signed copy of this Agreement.
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IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be executed as of the date first written above by their respective officers thereunto duly authorized.
/s/ Xxxxxxx Xxxxxxx
Authorized Signatory
Name:
Xxxxxxx Xxxxxxx
Title: Chief Executive Officer
MAB RESOURCES HOLDINGS, LLC
Per:
/s/ Xxxx X. Xxxxxx
Authorized Signatory
Name: Xxxx X. Xxxxxx
Title:
Managing Member
JM MAGNA HOLDINGS, LLC
Per:
/s/ Xxxxx Xxxx
Authorized Signatory
Name:
Xxxxx Xxxx
Title:
Managing Member
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Schedule A – Contractual Rights
Contractual Rights
Company holds certain rights pursuant to a Purchase and Sale Agreement dated effective March 1, 2017 (the “Agreement”) between the Company and Rockies Standard Oil Company, LLC, as amended, all of which rights are qualified in their entirety by the terms of the Agreement, as attached hereto.
[Copy of the Agreement attached]
Exhibit A
CANADIAN INVESTOR QUESTIONNAIRE
(ALBERTA, BRITISH COLUMBIA, MANITOBA, NEWFOUNDLAND AND LABRADOR, NEW BRUNSWICK,
NOVA SCOTIA, ONTARIO, XXXXXX XXXXXX ISLAND, QUEBEC, AND SASKATCHEWAN)
TO: | Fortem Resources Inc. (the “Issuer”) |
RE: | Acquisition of Common Shares (the “Purchase Shares”) of the Issuer |
Capitalized terms used in this Canadian Questionnaire (this “Questionnaire”) and not specifically defined have the meaning ascribed to them in the Membership Interest Purchase Agreement between the undersigned (the “Seller”) and the Issuer to which this is attached.
In connection with the acquisition by the Seller of the Purchase Shares, the Seller hereby represents, warrants and certifies to the Issuer that the Seller:
(i)
is acquiring the Purchase Shares as principal; and
(ii)
(A)
is resident in or is subject to the laws of one of the following (check one):
o Alberta | o New Brunswick | o Xxxxxx Xxxxxx Island |
o British Columbia | o Nova Scotia | o Quebec |
o Manitoba | o Ontario | o Saskatchewan |
o Newfoundland and Labrador | o Yukon | |
o Northwest Territories | ||
o United States: _________________________ (List State of Residence) | ||
or
(B)
o is resident in a country other than Canada or the United States.
In connection with the acquisition of the Purchase Shares, the Seller hereby represents, warrants, covenants and certifies that the Seller meets one or more of the following criteria:
I. SELLER ACQUIRING UNDER THE “ACCREDITED INVESTOR” EXEMPTION | |||
| the Seller is not a trust company or trust company registered under the laws of Xxxxxx Xxxxxx Island that is not registered or authorized under the Trust and Loan Companies Act (Canada) or under comparable legislation in another jurisdiction of Canada, | ||
| the Seller is an “accredited investor” within the meaning of NI 45-106, by virtue of satisfying the indicated criterion below (YOU MUST INITIAL OR PLACE A CHECK-XXXX ON THE APPROPRIATE LINE(S)) (see certain guidance with respect to accredited investors that starts on page 9, below) | ||
| o | (i) | except in Ontario, a person registered under the securities legislation of a jurisdiction of Canada as an adviser or dealer, |
| o | (ii) | an individual registered under the securities legislation of a jurisdiction of Canada as a representative of a person referred to in paragraph (ix), |
| o | (iii) | an individual formerly registered under the securities legislation of a jurisdiction of Canada, other than an individual formerly registered solely as a representative of a limited market dealer under one or both of the Securities Act (Ontario) or the Securities Act (Newfoundland and Labrador), |
| o | (iv) | an individual who, either alone or with a spouse, beneficially owns financial assets having an aggregate realizable value that, before taxes but net of any related liabilities, exceeds $1,000,000, |
| o | (v) | an individual who beneficially owns financial assets having an aggregate realizable value that, before taxes but net of any related liabilities, exceeds $5,000,000, |
| o | (vi) | an individual whose net income before taxes exceeded $200,000 in each of the 2 most recent calendar years or whose net income before taxes combined with that of a spouse exceeded $300,000 in each of the 2 most recent calendar years and who, in either case, reasonably expects to exceed that net income level in the current calendar year, |
| o | (vii) | an individual who, either alone or with a spouse, has net assets of at least $5,000,000, |
| o | (viii) | a person, other than an individual or investment fund, that has net assets of at least $5,000,000 as shown on its most recently prepared financial statements and that has not been created or used solely to purchase or hold securities as an accredited investor as defined in this paragraph (viii), |
| o | (ix) | an investment fund that distributes or has distributed its securities only to (i) a person that is or was an accredited investor at the time of the distribution, (ii) a person that acquires or acquired securities in the circumstances referred to in sections 2.10 [Minimum amount investment] of NI 45-106, or 2.19 [Additional investment in investment funds] of NI 45-106, or (iii) a person described in paragraph (i) or (ii) that acquires or acquired securities under section 2.18 [Investment fund reinvestment] of NI 45-106, |
| o | (x) | an investment fund that distributes or has distributed securities under a prospectus in a jurisdiction of Canada for which the regulator or, in Québec, the securities regulatory authority, has issued a receipt, |
| o | (xi) | a trust company or trust corporation registered or authorized to carry on business under the Trust and Loan Companies Act (Canada) or under comparable legislation in a jurisdiction of Canada or a foreign jurisdiction, acting on behalf of a fully managed account managed by the trust company or trust corporation, as the case may be, |
| o | (xii) | a person acting on behalf of a fully managed account managed by that person, if that person is registered or authorized to carry on business as an adviser or the equivalent under the securities legislation of a jurisdiction of Canada or a foreign jurisdiction, |
| o | (xiii) | a registered charity under the Income Tax Act (Canada) that, in regard to the trade, has obtained advice from an eligibility adviser or an adviser registered under the securities legislation of the jurisdiction of the registered charity to give advice on the securities being traded, |
| o | (xiv) | an entity organized in a foreign jurisdiction that is analogous to the entity referred to in paragraph (i) in form and function, |
| o | (xv) | a person in respect of which all of the owners of interests, direct, indirect or beneficial, except the voting securities required by law to be owned by directors, are persons that are accredited investors, and |
Guidance On Accredited Investor Exemptions for Corporations, Trusts and Other Entities
Accredited investors that are corporations, trusts or other entities include:
(a)
a corporation, trust or other entity, other than an investment fund, that has net assets (please see the guidance below regarding calculating net assets) of at least $5,000,000 as shown on its most recently prepared financial statements in accordance with applicable generally accepted accounting principles and that has not been created or used solely to purchase or hold securities as an accredited investor;
(b)
a corporation, trust or other entity in respect of which all of the owners of interests, direct, indirect or beneficial, except the voting securities required by law to be owned by directors, are persons that are accredited investors; and
(c)
a trust established by an accredited investor for the benefit of the accredited investor’s family members of which a majority of the trustees are accredited investors and all of the beneficiaries are the accredited investor’s spouse, a former spouse of the accredited investor or a parent, grandparent, brother, sister, child or grandchild of that accredited investor, of that accredited investor’s spouse or of that accredited investor’s former spouse.
Net Assets
For the purposes of Section (a) above, “net assets” means all of the subscriber’s total assets minus all of the subscriber’s total liabilities. The minimum net asset threshold of $5,000,000 specified in Section (a) above must be shown on the entity’s most recently prepared financial statements. The financial statements must be prepared in accordance with applicable generally accepted accounting principles.
The Seller agrees that the above representations and warranties will be true and correct both as of the execution of this Questionnaire and as of the Closing and acknowledges that they will survive the completion of the acquisition of the Purchase Shares.
The Seller acknowledges that the foregoing representations and warranties are made by the Seller with the intent that they be relied upon in determining the suitability of the Seller to acquire the Purchase Shares and that this Questionnaire is incorporated into and forms part of the Agreement and the undersigned undertakes to immediately notify the Issuer of any change in any statement or other information relating to the Seller set forth herein which takes place prior to the closing time of the acquisition of the Purchase Shares.
The Seller undertakes to immediately notify the Issuer of any change in any statement or other information relating to the Seller set forth in the Agreement or in this Questionnaire which takes place prior to the Closing.
By completing this Questionnaire, the Seller authorizes the indirect collection of this information by each applicable regulatory authority or regulator and acknowledges that such information is made available to the public under applicable laws.
DATED as of day of , 2017.
By:
Signature of Authorized Signatory of Seller
Print Name and Title of Authorized Signatory of Seller
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Exhibit B
TO MEMBERSHIP INTEREST PURCHASE AGREEMENT
UNITED STATES ACCREDITED INVESTOR QUESTIONNAIRE
Capitalized terms used in this U.S. Questionnaire (this “Questionnaire”) and not specifically defined have the meaning ascribed to them in the Membership Interest Purchase Agreement between the undersigned (the “Seller”) and Fortem Resources Inc. (the “Issuer”) to which this is attached.
This Questionnaire applies only to persons that are U.S. Purchasers. A “U.S. Purchaser” is: (a) any U.S. Person, (b) any person acquiring the Purchase Shares on behalf of any U.S. Person, (c) any person that receives or received an offer of the Purchase Shares while in the United States, or (d) any person that is in the United States at the time the Seller’s buy order was made or this Agreement was executed or delivered.
The Seller understands and agrees that none of the Purchase Shares have been or will be registered under the 1933 Act, or applicable state, provincial or foreign securities laws, and the Purchase Shares are being offered and sold to the Seller in reliance upon the exemption provided in Section 4(2) of the 1933 Act and Rule 506 of Regulation D under the 1933 Act for non-public offerings. The Purchase Shares are being offered and sold within the United States only to “accredited investors” as defined in Rule 501(a) of Regulation D. The Purchase Shares offered hereby are not transferable except in accordance with the restrictions described herein.
The Seller represents, warrants, covenants and certifies (which representations, warranties, covenants and certifications will survive the Closing) to the Issuer (and acknowledges that the Issuer is relying thereon) that:
1.
it is not resident in Canada;
2.
it has such knowledge and experience in financial and business matters as to be capable of evaluating the merits and risks of an investment in the Purchase Shares and it is able to bear the economic risk of loss of its entire investment;
3.
the Issuer has provided to it the opportunity to ask questions and receive answers concerning the terms and conditions of the sale of the Purchase Shares and it has had access to such information concerning the Issuer as it has considered necessary or appropriate in connection with its investment decision to acquire the Purchase Shares;
4.
it is acquiring the Purchase Shares for its own account, for investment purposes only and not with a view to any resale, distribution or other disposition of the Purchase Shares in violation of the United States securities laws;
5.
it (i) has adequate net worth and means of providing for its current financial needs and possible personal contingencies, (ii) has no need for liquidity in this investment, and (iii) is able to bear the economic risks of an investment in the Securities for an indefinite period of time;
6.
if the Seller is an individual (that is, a natural person and not a corporation, partnership, trust or other entity), then it satisfies one or more of the categories indicated below (please place an “X” on the appropriate lines):
___________ | a natural person whose individual net worth, or joint net worth with that person’s spouse, exceeds US$1,000,000. For purposes of this category, “net worth” means the excess of total assets at fair market value (including personal and real property, but excluding the estimated fair market value of a person’s primary home) over total liabilities. Total liabilities excludes any mortgage on the primary home in an amount of up to the home’s estimated fair market value as long as the mortgage was incurred more than 60 days before the Purchase Shares are purchased, but includes (i) any mortgage amount in excess of the home’s fair market value and (ii) any mortgage amount that was borrowed during the 60 day period before the Closing Date for the purpose of investing in the Purchase Shares, |
___________ | a natural person who had an individual income in excess of US$200,000 in each of the two most recent years, or joint income with their spouse in excess of US$300,000 in each of those years and has a reasonable expectation of reaching the same income level in the current year, or |
___________ | a director or executive officer of the Issuer; |
7.
if the Seller is a corporation, partnership, trust or other entity), then it satisfies one or more of the categories indicated below (please place an “X” on the appropriate lines):
___________ | an organization described in Section 501(c)(3) of the United States Internal Revenue Code, a corporation, a Massachusetts or similar business trust or partnership, not formed for the specific purpose of acquiring the Purchase Shares, with total assets in excess of US$5,000,000, |
___________ | a “bank” as defined under Section (3)(a)(2) of the 1933 Act or savings and loan association or other institution as defined in Section 3(a)(5)(A) of the 1933 Act acting in its individual or fiduciary capacity; a broker dealer registered pursuant to Section 15 of the Securities Exchange Act of 0000 (Xxxxxx Xxxxxx); an insurance company as defined in Section 2(13) of the 1933 Act; an investment company registered under the Investment Company Act of 1940 (United States) or a business development company as defined in Section 2(a)(48) of such Act; a Small Business Investment Company licensed by the U.S. Small Business Administration under Section 301(c) or (d) of the Small Business Investment Act of 0000 (Xxxxxx Xxxxxx); a plan with total assets in excess of US$5,000,000 established and maintained by a state, a political subdivision thereof, or an agency or instrumentality of a state or a political subdivision thereof, for the benefit of its employees; an employee benefit plan within the meaning of the Employee Retirement Income Security Act of 1974 (United States) whose investment decisions are made by a plan fiduciary, as defined in Section 3(21) of such Act, which is either a bank, savings and loan association, insurance company or registered investment adviser, or if the employee benefit plan has total assets in excess of US$5,000,000, or, if a self-directed plan, whose investment decisions are made solely by persons that are accredited investors, |
___________ | a private business development company as defined in Section 202(a)(22) of the Investment Xxxxxxxx Xxx xx 0000 (Xxxxxx Xxxxxx), |
___________ | a trust with total assets in excess of US$5,000,000, not formed for the specific purpose of acquiring the Securities, whose purchase is directed by a sophisticated person as described in Rule 506(b)(2)(ii) under the 1933 Act, or |
___________ | an entity in which all of the equity owners satisfy the requirements of one or more of the categories set forth in Section 6 of this Questionnaire; |
8.
it has not purchased the Purchase Shares as a result of any form of general solicitation or general advertising, including advertisements, articles, notices or other communications published in any newspaper, magazine or similar media or broadcast over radio, internet, television or other form of telecommunications, or any seminar or meeting whose attendees have been invited by general solicitation or general advertising;
9.
if the Seller decides to offer, sell or otherwise transfer any of the Purchase Shares, it will not offer, sell or otherwise transfer any of such Purchase Shares, directly or indirectly, unless:
(a)
the sale is to the Issuer,
(b)
the sale is made outside the United States in a transaction meeting the requirements of Rule 904 of Regulation S under the 1933 Act and in compliance with applicable local laws and regulations in which such sale is made;
(c)
the sale is made pursuant to the exemption from the registration requirements under the 1933 Act provided by Rule 144 thereunder and in accordance with any applicable state securities or “blue sky” laws, or
(d)
the Purchase Shares are sold in a transaction that does not require registration under the 1933 Act or any applicable state laws and regulations governing the offer and sale of securities, and
(e)
it has, prior to such sale pursuant to subsection (c) or (d), furnished to the Issuer an opinion of counsel of recognized standing reasonably satisfactory to the Issuer, to such effect;
10.
it understands and acknowledges that, upon the issuance thereof, and until such time as the same is no longer required under the applicable requirements of the 1933 Act or applicable U.S. state laws and regulations, the certificates representing the Purchase Shares, and all securities issued in exchange therefor or in substitution thereof, will bear, in addition such legends as are required by applicable securities laws.
11.
it understands and agrees that there may be material tax consequences to the Seller of an acquisition or disposition of the Purchase Shares. The Issuer gives no opinion and makes no representation with respect to the tax consequences to the Seller under United States, state, local or foreign tax law of the Seller’s acquisition or disposition of the Purchase Shares. In particular, no determination has been made whether the Issuer will be a “passive Foreign investment company” (“PFIC”) within the meaning of Section 1291 of the United States Internal Revenue Code;
12.
it consents to the Issuer making a notation on its records or giving instructions to any transfer agent of the Issuer in order to implement the restrictions on transfer set forth and described in this Questionnaire and the Membership Interest Purchase Agreement;
13.
it is resident in the United States of America, its territories and possessions or any state of the United States or the District of Columbia (collectively the “United States”), is a “U.S. Person” as such term is defined in Regulation S or was in the United States at the time the Purchase Shares were offered or the Membership Interest Purchase Agreement was executed; and
14.
it understands that the Issuer has no obligation to register any of the Purchase Shares or to take action so as to permit sales pursuant to the 1933 Act (including Rule 144 thereunder).
The Seller undertakes to notify the Issuer immediately of any change in any representation, warranty or other information relating to the Seller set forth herein which takes place prior to the closing time of the acquisition of the Purchase Shares.
Dated , 2017.
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| Signature of Authorized Signatory |
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| Name of Seller (please print) |
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| Name of Authorized Signatory (please print) |
