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EXHIBIT 10.3
AGREEMENT OF PURCHASE AND SALE
TIMBERWOLF PRODUCTION FUND #4 LIMITED PARTNERSHIP
- AND -
GEOCAN ENERGY INC.
(▇▇▇▇▇▇ CREEK AREA, ALBERTA)
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TABLE OF CONTENTS
PAGE
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ARTICLE I
INTERPRETATION
....................................................................1
1.1 DEFINITIONS...................................................1
1.2 INCORPORATION OF SCHEDULES....................................6
1.3 SCHEDULE REFERENCES...........................................7
1.4 HEADINGS......................................................7
1.5 GENDER........................................................7
1.6 REFERENCES....................................................7
ARTICLE II
SALE
....................................................................7
2.1 SALE..........................................................7
ARTICLE III
CONSIDERATION
....................................................................8
3.1 PRICE.........................................................8
3.2 MANNER OF PAYMENT.............................................8
3.3 ROLLOVER ELECTION.............................................8
3.4 ALLOCATION....................................................9
ARTICLE IV
INFORMATION AND DATA
....................................................................9
4.1 GENERALLY.....................................................9
ARTICLE V
ADJUSTMENTS
...................................................................10
5.1 OPERATIONS...................................................10
5.2 RENTALS......................................................10
5.3 INVENTORY....................................................10
5.4 ACCOUNTS RECEIVABLE..........................................11
5.5 GOODS AND SERVICES TAX.......................................11
5.6 ADJUSTMENT PROCEDURE.........................................12
ARTICLE VI
EFFECTIVE TIME
...................................................................12
6.1 EFFECTIVE TIME...............................................12
ARTICLE VII
CLOSING TIME AND PLACE
...................................................................12
7.1 PLACE........................................................12
7.2 TIME.........................................................12
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ARTICLE VIII
INTERIM PERIOD
...................................................................12
8.1 MAINTENANCE OF ASSETS........................................12
8.2 CONDUCT OF BUSINESS..........................................13
8.3 INTERIM AGENCY, LIABILITY AND INDEMNITY......................13
ARTICLE IX
TITLE RECORDS
...................................................................14
9.1 GENERALLY....................................................14
ARTICLE X
CONFIDENTIAL INFORMATION
...................................................................15
10.1 GENERALLY....................................................15
ARTICLE XI
CONSENTS AND APPROVALS
...................................................................15
11.1 GENERALLY....................................................15
11.2 PURCHASE RIGHTS..............................................16
11.3 ALLOCATION OF PURCHASE PRICE.................................16
ARTICLE XII
TITLE OBJECTIONS
...................................................................16
12.1 GENERALLY....................................................16
12.2 VALUE ALLOCATION.............................................17
12.3 RIGHTS OF FIRST REFUSAL......................................18
ARTICLE XIII
CONVEYANCES
...................................................................18
13.1 GENERALLY....................................................18
13.2 SUBORDINATE DOCUMENTS........................................18
ARTICLE XIV
VENDOR'S REPRESENTATIONS
...................................................................18
14.1 GENERALLY....................................................18
14.2 LIMITATION...................................................24
14.3 SUBROGATION..................................................25
ARTICLE XV
PURCHASER'S REPRESENTATIONS
...................................................................25
15.1 GENERALLY....................................................25
15.2 SUBROGATION..................................................27
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ARTICLE XVI
NO MERGER
..................................................................27
16.1 GENERALLY...................................................27
ARTICLE XVII
INDEMNITY RE: OPERATIONS
..................................................................27
17.1 GENERALLY...................................................27
17.2 SUBROGATION RE: THIRD PARTIES...............................28
17.3 ROYALTIES...................................................28
17.4 WELL ABANDONMENT AND RECLAMATION............................28
17.5 ENVIRONMENTAL DAMAGE........................................29
ARTICLE XVIII
BREACH
..................................................................29
18.1 SURVIVAL....................................................29
18.2 TIME LIMITATION.............................................29
ARTICLE XIX
VENDOR'S CLOSING CONDITIONS
..................................................................29
19.1 GENERALLY...................................................29
ARTICLE XX
PURCHASER'S CLOSING CONDITIONS
..................................................................31
20.1 GENERALLY...................................................31
ARTICLE XXI
COVENANTS RE: CLOSING
..................................................................32
21.1 GENERALLY...................................................32
ARTICLE XXII
TERMINATION
..................................................................32
22.1 GENERALLY...................................................32
ARTICLE XXIII
MISCELLANEOUS
..................................................................33
23.1 NO DUPLICATION OF REMEDIES..................................33
23.2 FURTHER ASSURANCES..........................................33
23.3 ASSIGNMENT..................................................33
23.4 REPORTING ISSUER STATUS.....................................33
23.5 SIGNS AND NOTIFICATIONS.....................................34
23.6 CONSTRUCTION AND ATTORNMENT.................................34
23.7 TIME........................................................34
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23.8 PUBLIC ANNOUNCEMENT.........................................35
23.9 PRIOR AGREEMENTS AND AMENDMENTS.............................35
23.10 ENUREMENT...................................................35
23.11 ADDRESSES...................................................35
23.12 COUNTERPART EXECUTION.......................................36
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AGREEMENT OF PURCHASE AND SALE
(▇▇▇▇▇▇ CREEK AREA, ALBERTA)
THIS AGREEMENT made as of the 11th day of September, 1998.
BETWEEN:
TIMBERWOLF PRODUCTION FUND #4 LIMITED PARTNERSHIP, an Alberta
limited partnership by its General Partner, TIMBERWOLF
RESOURCES LTD., a body corporate, having an office within the
City of Calgary, in the Province of Alberta, (hereinafter
called the "Vendor")
- and -
GEOCAN ENERGY INC., a body corporate, having an office within
the City of Calgary, in the Province of Alberta, (hereinafter
called the "Purchaser")
WITNESSETH THAT:
WHEREAS Vendor desires to sell and convey the Assets to
Purchaser and Purchaser desires to purchase and receive the Assets from Vendor,
in each case upon the terms and conditions herein set forth;
NOW THEREFORE in consideration of the premises hereto and of
the covenants, warranties, representations, agreements and payments herein set
forth and provided for, the Parties hereto covenant and agree as follows:
ARTICLE 1
INTERPRETATION
1.1 DEFINITIONS
In this Agreement (including the recitals hereto, this Article
and each Schedule) the words and phrases set forth below shall have the meanings
ascribed thereto below, namely:
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(a) "ADJUSTMENT PROCEDURE" means the provisions comprising
Schedule "D";
(b) "A.F.E." means an authority for expenditures, unit budget,
mail ballot or cash call or any other approval to conduct an
operation, create or incur a financial obligation or accept a
risk;
(c) "ASSETS" means the Petroleum and Natural Gas Rights, the
Tangibles and the Miscellaneous Interests;
(d) "CLOSING" means the transfer of the Assets by Vendor to
Purchaser (or unaffected Assets, if a closing occurs in
accordance with Clause 12.1) and the payment by Purchaser to
Vendor of the Purchase Price (or portion thereof, if paid in
accordance with Clause 12.1) and the completion of all matters
incidental thereto as herein provided for;
(e) "CLOSING TIME" means the time and day determined pursuant to
Clause 7.2;
(f) "CONVEYANCE" means an agreement (or agreements, if a closing
occurs in accordance with Clause 12.1) in the form or
substantially in the form of Schedule "C";
(g) "DOLLAR" or "$" means a dollar of the lawful money of Canada;
(h) "EFFECTIVE TIME" means 8:00 a.m., local time at Calgary,
Alberta, on the lst day of July, 1998;
(i) "FACILITIES" means the interest of Vendor in all facilities
described in Schedule "B";
(j) "GATHERING SYSTEM" means the gathering system described in
Schedule "B";
(k) "INFORMATION AND DATA" means the data, information and
documentation provided by Vendor to Purchaser in respect of
the Assets, whether pursuant to a solicitation of interest or
otherwise;
(l) "LAND SCHEDULE" means Schedule "A";
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(m) "MISCELLANEOUS INTERESTS": means the interest of Vendor
corresponding to the interests set forth in the Land Schedule
or Schedule "B", as the case may be in and to all property,
assets and rights, other than Petroleum and Natural Gas
Rights, the Said Lands, the Said Leases or the Tangibles
(excluding materials and supplies used or useful in connection
with the operations relating to the Petroleum and Natural Gas
Rights, the Said Lands, the Said Leases or the Tangibles, or
any interest therein, that is owned at the Closing Time by
Vendor where the costs thereof have not been charged to the
joint account of the owners of the Petroleum and Natural Gas
Rights by the operator thereof), and to which Vendor is
entitled at the Effective Time including, but not in
limitation of the generality of the foregoing, such interests
of Vendor in:
(i) all contracts, agreements, documents, production
sales contracts, books and records relating to the
Petroleum and Natural Gas Rights, the Said Lands, or
the Tangibles, and any and all rights in relation
thereto;
(ii) all engineering and production data and information
(excluding the Proprietary Seismic) related to the
Petroleum and Natural Gas Rights and the Tangibles in
the custody of Vendor or to which it is entitled,
excluding interpretive data, forecasts or reports;
(iii) all subsisting rights to enter upon, use and occupy
the surface above the Said Lands or any lands with
which same have been pooled or unitized or the sites
of any Tangibles or any lands which are used to gain
access to any of the foregoing; and
(iv) existing well bores and downhole casing;
(n) "PARTIES" means the parties to this Agreement and "PARTY"
means any one of them;
(o) "PERMITTED ENCUMBRANCES" means:
(i) the encumbrances identified in Schedule "A" under the
heading "Encumbrances";
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(ii) easements, rights of way, servitudes or other similar
rights in land including, without limiting the
generality of the foregoing, rights of way and
servitudes for railways, sewers, drains, gas and oil
pipelines, gas and water mains, electric light,
power, telephone, telegraph or cable television
conduits, poles, wires and tables;
(iii) the right reserved to or vested in any government or
other public authority by the term of any Said Lease
or by any statutory provision to terminate any Said
Leases or to require annual or other periodic
payments as a condition of the continuance thereof;
(iv) liens imposed by statute securing the payment of
taxes which are not due at the relevant time and
governmental requirements as to production rates on
the operations of any property or otherwise affecting
the value of any property;
(v) contracts for the sale of Petroleum Substances
comprising part of the Assets;
(vi) the terms and conditions of the Said Leases;
(vii) 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,
and all applicable laws, rules and orders of any
governmental authority;
(viii) undetermined or inchoate liens incurred or created as
security in favour of the person conducting the
operation of any of the Assets for Vendor's
proportion of the costs and expenses of such
operations which costs and expenses are not
delinquent as of the Closing Time;
(ix) the reservations, limitations, provisos and
conditions in any original grants from the Crown of
any of the Said Lands or interests therein and
statutory exceptions to title;
(x) agreements and plans relating to pooling or
unitization;
(xi) provisions for penalties and forfeitures under
agreements as a consequence of non-participation in
operations; and
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(xii) liens granted in the ordinary course of business
to a public utility, municipality or governmental
authority in connection with the operations conducted
with respect to the Assets;
(p) "PETROLEUM AND NATURAL GAS RIGHTS" means the interests of
Vendor set forth in the Land Schedule in and to the Said
Leases and the Said Lands;
(q) "PETROLEUM SUBSTANCES" means petroleum, natural gas, related
hydrocarbons and any other substances, whether liquid, solid
or gaseous, the rights to which accrue to the holder of the
rights to petroleum, natural gas or related hydrocarbons;
(r) "PLACE OF CLOSING" means the offices of Vendor;
(s) "PRIME RATE" means the prime lending rate used from time to
time by the Province of Alberta Treasury Branches, Main
Branch, Calgary, Alberta, for loans made in Canada in Canadian
Dollars to the bank's preferred commercial borrowers;
(t) "PROPRIETARY SEISMIC" means all surveyors' ground elevation
records, all shot point maps, all drillers' logs, all
shooters' records and all seismograph records, seismograph
magnetic tapes, monitor records, field records and record
sections obtained in any seismograph survey conducted on the
Said Lands or any geological or geophysical studies or further
appraisals of same conducted on the Said Lands and owned by
Vendor or to which Vendor is entitled;
(u) "SAID LANDS" means in respect of the lands described in the
Land Schedule, the Petroleum Substances within, upon or under
those lands, together with the right to explore for and
recover Petroleum Substances insofar only as they are granted
by the Said Leases;
(v) "SAID LEASES" means collectively the leases, reservations,
permits, licences, certificates of title or other documents of
title set forth and described in the Land Schedule (or any
replacement thereof, renewal thereof or leases derived
therefrom) by virtue of which the holder thereof is entitled
to drill for, win, take, own and remove the Petroleum
Substances within, upon or under all or any part of the Said
Lands;
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(w) "TAKE OR PAY OBLIGATIONS" means the outstanding obligations of
the Vendor arising in connection with payments made to Vendor,
or its predecessors in interest, under or in respect of gas
purchase contracts or other contracts for the sale of
Petroleum Substances, which payments were made in lieu of or
in consequence of the buyers under such contracts not taking
delivery of Petroleum Substances or in consideration of future
deliveries of Petroleum Substances;
(x) "TANGIBLES" means the Facilities and interests of Vendor
corresponding to the interests set forth in the Land Schedule
in and to all tangible depreciable property and assets situate
in, on or about the Said Lands, including the ▇▇▇▇▇,
appurtenant thereto or used in connection therewith or with
production, gathering, processing, transmission or treatment
operations or on the Said Lands or relative thereto or
appurtenant to or used in connection with all producing,
shut-in or injection ▇▇▇▇▇ located on the Said Lands and,
without limitation of the generality of the foregoing,
includes the interest of Vendor in the Facilities;
(y) "TITLE DEFECT" shall have the meaning ascribed thereto in
Clause 12.1 hereof; and
(z) "▇▇▇▇▇" means those ▇▇▇▇▇ described and listed in Schedule
"G".
1.2 INCORPORATION OF SCHEDULES
The following Schedules are attached to and incorporated as
part of this Agreement:
(a) Schedule "A" - Land Schedule;
(b) Schedule "B" - Facilities;
(c) Schedule "C" - Conveyance;
(d) Schedule "D" - Adjustment Procedure;
(e) Schedule "E" - Production Sales Contracts;
(f) Schedule "F" - Authorizations for Expenditures ("A.F.E.'s");
and
(g) Schedule "G" - ▇▇▇▇▇.
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1.3 SCHEDULE REFERENCES
Whenever any provision of any Schedule to this Agreement
conflicts with any provision in the body of this Agreement, the provisions of
the body of this Agreement shall prevail.
1.4 HEADINGS
The headings of articles and clauses herein and in the
Schedules are inserted for conveyance of reference only and shall not affect or
be considered in the construction or interpretation of the provisions hereof.
1.5 GENDER
In this Agreement, words importing persons include companies
and vice versa and words importing the masculine gender include the feminine and
neuter gender and vice versa.
1.6 REFERENCES
Except as otherwise provided for herein, "this Agreement",
"hereto", "herein", "hereof", "hereunder" and similar expressions refer to this
agreement and not to any particular section, subsection, paragraph,
subparagraph, clause, subclause, schedule or other portion thereof.
ARTICLE II
SALE
2.1 SALE
Vendor agrees to sell and convey the Assets to Purchaser and
Purchaser agrees to purchase and receive the Assets from Vendor, all in
accordance with and subject to the terms and conditions set forth in this
Agreement.
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ARTICLE III
CONSIDERATION
3.1 PRICE
The price to be paid by Purchaser to Vendor for the Assets
shall be, subject to adjustments as herein provided for, ONE MILLION AND THIRTY
THOUSAND ($1,030,000.00) DOLLARS (hereinafter called the "Purchase Price").
3.2 MANNER OF PAYMENT
The Purchase Price shall be paid as follows:
(a) $177,500 payable at the Place of Closing on the Closing Date
by certified cheque or bank draft;
(b) that issuance of a promissory note in the principal amount of
$177,500 with interest at the rate of Prime payable by
Purchaser to Vendor on January 15, 1999 or on such other date
as may be mutually agreed upon in writing by the Parties; and
(c) the balance by the issuance to Vendor on at the Place of
Closing on the Closing Date of 1,500,000 Class "A" common
shares (the "Shares") of Purchaser at an assigned value of
$0.45 per Share.
3.3 ROLLOVER ELECTION
The Parties hereby agree that the acquisition of the Assets
shall be under the provisions of Section 85(2) of the Income Tax Act (Canada),
R.S.C. 1995 5th Supplemental C-1 and the regulations thereunder, as amended (the
"Act") and covenant and agree to elect jointly under Section 85(2) of the Act,
in the prescribed form and within the prescribed time for the purposes of the
Act, with respect to the sale by Vendor to Purchaser of the Assets and shall
therein agree in respect of the Assets that the "agreed amount" for the purposes
of Section 85(2) of the Act shall be as follows:
(a) to Petroleum and Natural Gas Rights $ 314,999.00
(b) to Tangibles $ 309,000.00
(c) to Proprietary Seismic $ 11,000.00
(d) to Miscellaneous Interests $ 1.00
-------------
TOTAL: $ 635,000.00
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3.4 ALLOCATION
The Purchase Price shall be allocated among the Assets as
follows:
(a) to Petroleum and Natural Gas Rights: $ 709,999
(b) to Tangibles: $ 309,000
(c) Proprietary Seismic $ 11,000
(d) to Miscellaneous Interests: $ 1.00
-----------
TOTAL: $ 1,030,000
ARTICLE IV
INFORMATION AND DATA
4.1 GENERALLY
Vendor has made available to Purchaser the Information and
Data. Vendor does not make any representation, warranty or covenant, either
expressly or by implication herein or collateral hereto, with respect to the
Information and Data or any information therein or other contents thereof or any
other information provided to Purchaser relative to any of the Assets including,
without limitation, information in respect of the marketing and sale of
Petroleum Substances or transportation of such substances to the Purchaser
thereof. Purchaser acknowledges that it has made its own independent
investigation, analysis, evaluation and verification of Vendor's interests in
the Assets, including Purchaser's own estimate and appraisal of the extent and
value of the reserves of Petroleum Substances attributable to the Said Lands and
of the condition, suitability, composition and capacity of the Tangibles.
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ARTICLE V
ADJUSTMENTS
5.1 OPERATIONS
All benefits and obligations of every kind and nature relating
to operations conducted with respect to the production of Petroleum Substances
from the Said Lands and sale thereof accruing to or in respect of the Assets, or
that are attributable to or otherwise affect the Assets, including capital
expenditures arising out of A.F.E.'s approved by Vendor prior to Closing,
maintenance costs, development costs and operating costs and the proceeds from
the sale of production, shall be apportioned between Vendor and Purchaser as of
the Effective Time. All costs incurred in connection with work performed or
goods or services provided in respect of the Assets shall be deemed to have
accrued as of the date the work was performed or the goods or services were
delivered to the Said Lands, regardless of the time such costs become payable.
Advances made by Vendor to operators relative to operations on the Said Lands
prior to the Effective Time in excess of the costs of such operations shall be
adjusted pursuant to this Article in favour of Vendor. Deposits made by Vendor
relative to operations on the Said Lands shall either be returned to Vendor and
replaced by Purchaser or adjusted pursuant to this Article.
5.2 RENTALS
Surface lease rentals, mineral lease rentals, municipal taxes
and any similar payments made by or on behalf of Vendor to preserve any of the
Said Leases or any surface leases or any of the Assets shall be apportioned
between Vendor and Purchaser as of the Effective Time. After Closing, all
rentals and similar payments required to preserve any of the Said Leases which
relate to the Said Lands or any surface leases shall be paid by Purchaser.
5.3 INVENTORY
All Petroleum Substances produced prior to the Effective Time
and beyond the wellhead do not comprise part of the Assets and shall remain the
property of Vendor and the proceeds from the sale thereof whether prior to or
after the Effective Time shall accrue and belong to Vendor. Vendor shall
reimburse Purchaser for any reasonable charges paid by Purchaser for storage of
such inventory by Vendor. If, on the date of the final statement of adjustments,
such substances have not been sold, the Parties may agree upon an
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appropriate payment to be made to compensate Vendor for the assignment of the
remaining inventory to Purchaser.
5.4 ACCOUNTS RECEIVABLE
Purchaser shall provide all reasonable assistance to Vendor
with respect to the collection from others of any receivable by Vendor which
relate to the Assets and which accrued prior to the Effective Date.
5.5 GOODS AND SERVICES TAX
The Parties acknowledge that the Purchase Price does not
include any goods and services tax ("GST") that may be payable by Purchaser
pursuant to the Excise Tax Act (Canada)(the "Act") in respect of the purchase of
the Assets by Purchaser, but they also acknowledge that GST should not be
payable in respect of such purchase by virtue of the provisions of Section
167(1) of the Act. In connection therewith:
i. Purchaser is now, and will until the completion of the Closing
continue to be, a registrant under the Act;
ii. Vendor is now, and will until the completion of the Closing
continue to be, a registrant under the Act;
iii. Vendor and Purchaser shall, at Closing, prepare and jointly
execute the election prescribed under Section 167(1) of the
Act, and upon completion of the Closing Purchaser shall file
such election in the manner and within the time prescribed
therefor; and
iv. Purchaser shall, in the event of an assessment by Revenue
Canada denying the use of Section 167(1) of the Act, reimburse
Vendor for any and all GST, interest and penalties assessed in
respect of the purchase of the Assets.
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5.6 ADJUSTMENT PROCEDURE
All adjustments provided for in this Agreement shall be
effected pursuant to the Adjustment Procedure as set forth and described in
Schedule "D" attached hereto.
ARTICLE VI
EFFECTIVE TIME
6.1 EFFECTIVE TIME
The transfer and assignment of the Assets from Vendor to
Purchaser shall be effective as of the Effective Time.
ARTICLE VII
CLOSING TIME AND PLACE
7.1 PLACE
Closing shall take place at the Place of Closing.
7.2 TIME
Closing shall take place at 2:00 p.m. on the 29th day of
October, 1998, or at such other time or upon such other day as may be agreed by
Purchaser and Vendor.
ARTICLE VIII
INTERIM PERIOD
8.1 MAINTENANCE OF ASSETS
From the Effective Time until Closing, Vendor shall, to the
extent that the nature of its interests permits, and subject to all agreements
applicable to the Assets:
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(a) maintain the Assets in a proper and prudent manner in
accordance with generally accepted oil and gas industry
practices;
(b) pay or cause to be paid all costs and expenses relating to the
Assets; and
(c) perform and comply with all covenants and conditions contained
in the Said Leases and all other agreements relating to the
Assets.
8.2 CONDUCT OF BUSINESS
In the period from the Effective Time until the Closing Time,
Vendor shall conduct or cause to be conducted, in accordance with generally
accepted industry practices, such activities relative to the Assets as can
reasonably be regarded as being in the ordinary course of business for Vendor.
Vendor shall not conduct any activities with respect to the Assets which cannot
reasonably be regarded as being in the ordinary course of business of Vendor
without the prior written consent of Purchaser. It is agreed that where Vendor
desires to approve an A.F.E. as submitted by an operator where Vendor's share of
the costs thereunder is expected to exceed Twenty-Five Thousand ($25,000.00)
Dollars or renegotiate, amend, vary or alter any contract for the sale of
Petroleum Substances, Vendor shall:
(a) notify Purchaser of any such A.F.E. or any material changes to
any such contract for the sale of Petroleum Substances;
(b) permit Purchaser to consult with Vendor in respect of such
A.F.E. or changes; and
(c) be entitled to approve such A.F.E. or make any of the changes,
notwithstanding Purchaser's disagreement (if any), if Vendor
is dealing at arm's length with the remaining parties to the
contract and, acting in good faith, believes such approval or
changes are reasonable.
8.3 INTERIM AGENCY, LIABILITY AND INDEMNITY
Upon Closing of the transaction, Vendor shall be deemed, for
the period from the Effective Time to Closing, to have been the agent of
Purchaser with respect to all operations and other activities with respect to
the Assets and Purchaser ratifies, adopts and confirms all actions relative to
the Assets which Vendor
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takes or refrains from taking, in accordance with this Article, as agent for
Purchaser with the intent and purpose that all actions relative to the Assets
taken or refrained from being taken by Vendor during this period shall be deemed
for all purposes as having been taken or refrained from being taken by
Purchaser. In the event that, upon Closing, Purchaser does not become recognized
as a party to any agreement relative to the Petroleum and Natural Gas Rights,
then Vendor shall serve as Purchaser's agent with respect to such agreement
until Purchaser is recognized as a party thereto, taking or refraining from
taking only such actions with respect to such agreement as Purchaser shall
direct in writing. Purchaser shall:
(a) be liable to Vendor for all damages, losses, expenses and
claims; and, in addition,
(b) indemnify and hold Vendor harmless against all damages,
losses, expenses and claims;
incurred by Vendor as a result of Vendor acting as the agent of Purchaser
pursuant to this Article including, without limitation, any and all third party
costs incurred by Vendor, Vendor's cost of insurance attributable to such
activities and any claims of third parties.
ARTICLE IX
TITLE RECORDS
9.1 GENERALLY
Vendor shall, during the period following the date upon which
this Agreement is executed by all Parties hereto until the Closing Time, make
such of the Said Leases, agreements and other documents and correspondence,
including title and unit opinions, affecting the title of the Vendor to the
Assets as are in the possession of Vendor, or to which Vendor has access,
available to Purchaser and its authorized representatives at the offices of
Vendor for such inspection as Purchaser requires, and Vendor will deliver copies
of such records to Purchaser promptly after Closing.
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ARTICLE X
CONFIDENTIAL INFORMATION
10.1 GENERALLY
Purchaser shall consider as confidential, shall not
communicate to others and shall use its best efforts to prevent those within its
employ or control from communicating to others prior to the Closing Time and, in
the event only that the transaction contemplated by this Agreement does not
close for any reason whatsoever, subsequent to the Closing Time, all information
which Purchaser receives from Vendor pursuant to this Agreement other than
information which:
(a) was in the possession of Purchaser prior to its receipt or
acquisition from Vendor;
(b) at the time of disclosure, is in the public domain;
(c) after disclosure, becomes part of the public domain by
publication or otherwise, through no act or omission on the
part of Purchaser; or
(d) is required to be disclosed pursuant to the applicable
legislation, regulations or rules or by the direction of any
court, tribunal or administrative body having jurisdiction.
ARTICLE XI
CONSENTS AND APPROVALS
11.1 GENERALLY
Prior to Closing, each of the Parties hereto shall use all
reasonable efforts to obtain and deliver to the other Party hereto all necessary
consents, permissions and approvals by shareholders, limited partners, third
parties and governmental and regulatory authorities applicable to it in
connection with the transaction herein provided for, including, without
restricting the generality of the foregoing, those notices specified in Clause
11.2 herein. Vendor agrees to provide reasonable assistance to Purchaser, at
Purchaser's cost and expense, required in connection with such application.
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11.2 PURCHASE RIGHTS
If any of the Assets are subject to a preferential right of
purchase, right of first refusal or similar restriction made effective by virtue
of this Agreement, then Vendor shall promptly serve all notices as are required
under the preferential right of purchase, right of first refusal or similar
right provisions. Each such notice shall include a request for a waiver of the
right to purchase any of the Assets and shall specify that portion of the
Purchase Price which Purchaser attributes to the particular Asset or portion
thereof to which the preferential right of purchase, right of first refusal or
similar restriction applies.
11.3 ALLOCATION OF PURCHASE PRICE
Purchaser shall forthwith upon execution of this Agreement and
from time to time thereafter as requested by Vendor, provide to Vendor a
reasonable and bona fide allocation of the Purchase Price to any particular
portion of the Assets; including, without limitation, any of the Said Leases,
Said Lands or the Tangibles to which a preferential right of purchase, right of
first refusal or similar restriction applies.
ARTICLE XII
TITLE OBJECTIONS
12.1 GENERALLY
From time to time, in any event no later than the close of
business on October 9, 1998, Purchaser shall give Vendor written notice of all
defects of which Purchaser is aware (other than any matters specified in the
Land Schedule) which materially and adversely affect the title of Vendor to the
Assets and which Purchaser does not waive (all of which are herein referred to
as "Title Defects"). Prior to the Closing Time, Vendor shall diligently make all
reasonable efforts to cure or remove all Title Defects. If all Title Defects are
not cured or removed at or before the Closing Time, Purchaser may elect at or
before Closing Time to:
(a) with the agreement of Vendor, grant a further period of time
within which Vendor may cure or remove the uncured Title
Defects; or
(b) subject to Clause 12.3, waive the uncured Title Defects and
proceed with Closing; or
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(c) proceed with the Closing of the sale of the Assets which are
not affected by Title Defects, which Closing shall be
completed at the Closing Time in accordance with this
Agreement and the portion of the Purchase Price payable for
such portion of the Assets shall be paid by Purchaser to
Vendor at the Closing Time. Vendor shall make all reasonable
efforts or cure or remove the remaining Title Defects within
two (2) months following the Closing Time. Vendor shall give
written notice to Purchaser within this period identifying
each of the Assets which Vendor has cured or removed Title
Defects from, if any. Purchaser shall give written notice to
Vendor identifying each Asset in respect of which Title
Defects have been waived by Purchaser, cured or removed to the
reasonable satisfaction of Purchaser within three (3) days
after receipt of Vendor's notice and the Closing of the sale
of the cured Assets shall occur on the second normal business
day after receipt by Vendor of Purchaser's notice. At such
time, Purchaser shall pay to Vendor the portion of the
Purchase Price equal to the value of the cured Assets. If
Vendor is unable to cure or remove any of the remaining Title
Defects within two (2) months of the Closing Time, Vendor and
Purchaser shall be released from all obligations hereunder to
buy and sell any such portion of the Assets that are still
subject to the remaining Title Defects or Purchaser may waive
the remaining Title Defects and proceed with the closing of
the sale of the remaining Assets. Failure by Purchaser to make
such election at or before Closing Time shall be irrefutably
and conclusively deemed to be an election to waive all uncured
Title Defects. In the event that the value, determined
pursuant to Clause 12.2, of those Assets affected with Title
Defects which Purchaser does not waive, equals or exceeds an
amount equal to Five Percent (5%) of the Purchase Price,
either Purchaser or Vendor may, by notice to the other party,
declare this Agreement rescinded and of no effect, whereupon
both Parties shall take all actions and steps necessary to
return the Parties to the position that they would have been
in with respect to the ownership of the Assets as if this
Agreement had not been entered into.
12.2 VALUE ALLOCATION
If it is necessary to allocate a value for the purposes of
Clause 12.1 to any particular portion of the Assets, the Parties shall allocate
values as can be agreed upon, acting reasonably, and having due regard for the
proportion of value placed upon that portion of the Assets by recent independent
engineering reports which may have been prepared for the purpose of the sale
contemplated herein.
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12.3 RIGHTS OF FIRST REFUSAL
Each preferential right of purchase, right of first refusal
and similar right applicable to the Assets shall constitute a Title Defect for
the purpose of Clause 12.1 until such right is waived or exercised by the holder
thereof, lapses or is extinguished. Purchaser may not waive as a Title Defect
the existence or operation of any preferential right of purchase, right of first
refusal or similar right to purchase any of the Assets. In the event that a
preferential right of purchase, right of first refusal or similar right is
exercised, the value allocated to the portion of the Assets subject to the
exercised right shall be deducted from the Purchase Price to be paid pursuant to
Clause 3.1.
ARTICLE XIII
CONVEYANCES
13.1 GENERALLY
At Closing and thereafter, the Vendor shall execute and
deliver to Purchaser such transfers, assignments, conveyances (including the
Conveyance), novations, notices and other documents with respect to the Assets
as may have been prepared by Vendor and as may be reasonably required by
Purchaser. Vendor shall co-operate with Purchaser's efforts to secure execution
of such documents by the parties thereto other than Vendor and Purchaser.
13.2 SUBORDINATE DOCUMENTS
All documents executed and delivered pursuant to the
provisions of this Article or otherwise pursuant to this Agreement are
subordinate to the provisions of this Agreement and the provisions of this
Agreement shall govern and prevail in the event of a conflict between the
provisions of any such document and the provisions of this Agreement.
ARTICLE XIV
VENDOR'S REPRESENTATIONS
14.1 GENERALLY
Vendor hereby represents, warrants and covenants to and with
Purchaser that:
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(a) Corporate Standing
Vendor is, and at the Closing Time shall continue to be a
limited partnership duly formed under the laws of the Province
of Alberta and Timberwolf Resources Ltd., the General Partner
of the Vendor, is a corporation duly organized, validly
existing and in good standing under the laws of the Province
of Alberta;
(b) Requisite Authority
Vendor has all requisite corporate power and authority to
enter into this Agreement and to perform the obligations of
Vendor under this Agreement;
(c) No Conflicts
The consummation by Vendor of the transaction contemplated
herein will not violate, nor be in conflict with, any
provision of any agreement or instrument to which Vendor is a
party or by which Vendor is bound or any judgment, decree,
order, law, statute, rule or regulation applicable to Vendor;
(d) Title
Although Vendor does not warrant title to the Assets, it does
represent, warrant and covenant that Vendor has done no act or
thing whereby the Assets may be cancelled or determined and
that the Assets are now, and will be at the Closing Time and
the Effective Time, free and clear of all liens, charges,
encumbrances and adverse claims created by, through or under
Vendor, except such thereof as are Permitted Encumbrances.
(e) Quiet Enjoyment
Subject to the rents, covenants, conditions and stipulations
in the Said Leases and any agreements pertaining to the Assets
and on the lessee's or holder's part thereunder to be paid,
performed and observed, Purchaser may enter into and upon,
hold and enjoy the Assets for the residue of their respective
terms and all renewals or extensions thereof for Purchaser's
own use and benefit without any interruption of or by Vendor
or any other person whomsoever
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claiming or to claim by, through or under Vendor, and Vendor
binds itself to warrant and defend all and singular the Assets
against all persons whomsoever claiming or to claim the same
or any part thereof or any interest therein by, through or
under Vendor;
(f) Execution and Enforceability of Documents
This Agreement has been duly executed and delivered by Vendor
and all other documents (including the Conveyance) executed
and delivered by Vendor pursuant hereto shall have been duly
executed and delivered by Vendor. This Agreement does, and
such documents (including the Conveyance) will, constitute
legal, valid and binding obligations of Vendor enforceable in
accordance with their respective terms, subject to bankruptcy,
insolvency, preference, reorganization, moratorium and other
similar laws affecting creditor's rights generally and the
discretion of courts with respect to equitable or
discretionary remedies and defences;
(g) Finders' Fees or Consulting Fees
Vendor has not incurred any obligation or liability,
contingent or otherwise, for brokers', consulting, legal or
finders' fees in respect of this transaction for which
Purchaser shall have any obligation or liability;
(h) No Lawsuits or Claims
To the best of Vendor's information, there are no claims,
proceedings, actions or lawsuits in existence, threatened or
asserted against or with respect to the Assets or the
interests of Vendor therein which would have material adverse
effect on the Assets or the value thereof;
(i) Good Standing Under Agreements
To the best of Vendor's information, Vendor is in good
standing under all material agreements and instruments having
application to the Assets to which Vendor is a party or is
bound;
(j) Tax Resident
Vendor is not a non-resident of Canada within the meaning of
Section 116 of the Income Tax Act (Canada);
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(k) Taxes
All ad valorem, property, production, severance and similar
taxes and assessments based on or measured by the ownership of
the Assets or the production of Petroleum Substances from the
Lands or the receipt of proceeds therefrom payable by it to
the Closing Time and for all prior years have been properly
paid and discharged or will be paid by Vendor;
(l) Outstanding A.F.E.'s
Other than as set forth in Schedule "F", there are no A.F.E.'s
approved by Vendor with respect to the Assets for which Vendor
has not been completely billed as at the date hereof and there
are no outstanding cash calls with respect to the Assets and
Schedule "F" hereto sets forth the amount not yet billed
pursuant to each such A.F.E. and the amount of each
outstanding cash call;
(m) Good Oil and Gas Field Practice
To the best of Vendor's information, the ▇▇▇▇▇ have been
drilled and, if completed, completed and operated in
accordance with good oil and gas industry practices and in
compliance with all applicable rules and regulations;
(n) Independent Operations Penalties
The interests of Vendor in the ▇▇▇▇▇ are not presently subject
to independent operations penalties due to the failure of
Vendor to participate in an independent operation, except as
disclosed in Schedule "A" hereto;
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(o) Reduction of Interest
Except as otherwise expressly noted in Schedule "A" hereto,
the Assets are not subject to reduction by virtue of the
conversion or other alteration of the interest of any third
party under existing agreements created by, through or under
Vendor;
(p) Production Sales Contracts
There are no production sales agreements under which Vendor,
or any party acting on its behalf, is obligated to sell or
deliver to any party, any Petroleum Substances allocable to
the Petroleum and Natural Gas Rights, except for agreements
terminable by the seller without penalty on less than ninety
(90) days' notice or agreements which are disclosed in
Schedule "E" hereto;
(q) Take or Pay
The Assets and Petroleum Substances produced therefrom are not
subject to Take or Pay Obligations;
(r) Offset ▇▇▇▇▇
To the best of Vendor's information, there are not in
existence any obligations arising under any of the Said Leases
or otherwise with respect to the Said Lands to drill thereon a
well located in a spacing unit offsetting any other well,
whether or not that other well is located on the Said Lands;
(s) Tangibles
To the best of Vendor's information, the Tangibles have been
constructed, installed, maintained and operated in accordance
with good oil and gas industry practices and in compliance
with all applicable rules and regulations and the Facilities
are owned by Vendor;
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(t) Compliance
To the best of Vendor's information, Vendor has been and is in
material compliance with all laws, regulations and orders
relating to the Assets and Vendor has not received notice of
non-compliance and does not know of any facts which could give
rise to a notice of non- compliance with any such laws,
regulations or orders which would have a material adverse
effect on the Assets;
(u) Well Abandonment
Vendor has not expressly authorized any abandonment of any
Well which abandonment has not been completed and Vendor is
not presently required by good oilfield practice to abandon
any Well and there are no abandoned ▇▇▇▇▇ in respect of which
reclamation certificates have not been obtained;
(v) Disclosure
To the best of Vendor's information, Vendor has made available
to Purchaser all documents, data and information in its
possession or control pertaining to the Assets relevant to
Purchaser's investigation, analysis and evaluation of the
Assets. To the best of Vendor's information, Vendor has not
withheld from Purchaser any documents, data or information
reasonably required that would make the documents, data and
information made available to Purchaser misleading;
(w) Preferential Rights
No person, firm or corporation has any preferential right of
purchase to acquire any interest in the Assets.
(x) Delay Rentals
To the best of Vendor's information, Vendor has paid or caused
to be paid within applicable time limits all relevant
deposits, rentals and royalties and has performed and observed
or caused to be performed and observed all obligations and
covenants required to keep the Said
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Leases and all documents of title respecting the Said Lands
and any of them in full force and effect; and
(y) Environmental Matters
Vendor is not aware of and has not received:
(i) any orders or directions from any governmental or
regulatory authority which relate to environmental
matters and which require any work, repairs,
construction or capital expenditures with respect to
the Assets, where such orders or directions have not
been complied with in all material respects; and
(ii) any demand or notice issued by any governmental or
regulatory authority with respect to the breach of
any environmental, health or safety law applicable to
the Assets, including without limitation, respecting
the use, storage, treatment, transportation or
disposition of environmental contaminants, which
demand or notice remains outstanding at the Closing
Time;
except as have been specifically disclosed by Vendor by notice
to Purchaser and Vendor has made available to Purchaser all
information within Vendor's possession, and has not knowingly
withheld any such information from Purchaser relevant to any
environmental damage or contamination or other environmental
problems pertaining to the Assets.
14.2 Limitation
Vendor makes no representation or warranty whatsoever except
as and to the extent expressly set forth in Clause 14.1. Vendor disclaims any
liability and responsibility for any representation or warranty which may have
been made or alleged to have been made and which are contained in any instrument
or document relative hereto or the transactions herein provided for, or
contained in any statement or information made or communicated (orally or in
writing) to Purchaser including, without limitation of the generality of the
foregoing, any opinion, information or advice which may have been provided to
Purchaser by any officer, shareholder, director, employee, agent, consultant or
representative of Vendor. Without limiting the generality of the foregoing,
Vendor makes no representations or warranties or covenants as to:
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(a) its title in or to the Assets except as, and only to the
extent, set forth in Subclause 14.1(d);
(b) the amounts, quality, recoverability or deliverability of
reserves of Petroleum Substances attributable to the Said
Lands;
(c) the quality, fitness, condition or merchantability of all or
any of the Tangibles;
(d) any geological or other interpretations or economic
evaluations of the Assets; and
(e) estimates of prices or future cash flows arising from the sale
of reserves of Petroleum Substances attributable to the Said
Lands or estimates of other revenues attributable to the
Assets or the availability or continued availability of
transportation to sell such Petroleum Substances.
14.3 SUBROGATION
The representations, warranties and covenants of Vendor
contained in this Agreement or made or given pursuant or collateral hereto are
made for the exclusive benefit of Purchaser and are not transferable by
Purchaser and may not be made the subject of any right of subrogation by
Purchaser in favour of any other entity.
ARTICLE XV
PURCHASER'S REPRESENTATIONS
15.1 GENERALLY
Purchaser hereby represents, warrants and covenants to and
with Vendor that:
(a) Corporate Standing
Purchaser is, and at the Closing Time shall continue to be, a
company duly organized, validly existing and in good standing
under the laws of the Province of Alberta;
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(b) Requisite Authority
Purchaser has all requisite corporate power and authority to
enter into this Agreement and to purchase and pay for the
Assets on the terms described herein and to perform the other
obligations of Purchaser under this Agreement;
(c) No Conflicts
The consummation by Purchaser of the transactions contemplated
by this Agreement will not violate, nor be in conflict with,
the provisions of any agreement or instrument to which
Purchaser is a party or by which Purchaser is bound, or any
judgment, decree, order, law, statute, rule or regulation
applicable to Purchaser;
(d) Execution and Enforceability of Documents
This Agreement has been duly executed and delivered by
Purchaser and all documents required hereunder to be executed
and delivered by Purchaser shall have been duly executed and
delivered. This Agreement does, and such documents will,
constitute legal, valid and binding obligations of Purchaser
enforceable in accordance with their respective terms, subject
to bankruptcy, insolvency, preference, reorganization,
moratorium and other similar laws affecting creditor's rights
generally and the discretion of courts with respect to
equitable or discretionary remedies and defences;
(e) Finder's Fees of Consulting Fees
Purchaser has not incurred any liability, contingent or
otherwise, for brokers', consulting, legal or finders' fees in
respect of this transaction for which Vendor shall have any
obligation or liability;
(f) Investment Canada
Purchaser is not a non-Canadian within the meaning and for the
purposes of the Investment Canada Act; and
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(g) Good Standing
Purchaser is a reporting issuer in the Province of Alberta in
good standing, its Class "A" common shares are listed for
trading on the Alberta Stock Exchange, Purchaser is not
subject to any cease trade order, whether interim or final and
to the best of Purchaser's information, Purchaser is not in
default of the requirements of the Alberta Stock Exchange or
the Alberta Securities Commission.
15.2 SUBROGATION
The representations, warranties and covenants of Purchaser
contained in this Agreement or made or given pursuant to collateral hereto are
made for the exclusive benefit of Vendor and are not transferable by Vendor and
may not be made the subject of any right of subrogation by Vendor in favour of
any other entity.
ARTICLE XVI
NO MERGER
16.1 GENERALLY
The covenants, representations and warranties set forth in
Clauses 14.1 and 15.1 shall be deemed to apply to all assignments, conveyances,
transfers and documents conveying any of the Assets from Vendor to Purchaser and
there shall not be any merger of any covenants, representations and warranties
in such assignments, transfers or documents notwithstanding any rule of law,
equity or statute to the contrary and all such rules are hereby waived.
ARTICLE XVII
INDEMNITY RE: OPERATIONS
17.1 GENERALLY
Subject to the provisions of Article VIII and except as
otherwise expressly provided for herein, Vendor shall continue to remain liable
for and, in addition, shall indemnify Purchaser from and against any
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liability, loss, costs, penalties, fines, court costs, legal (on a solicitor and
client basis), accountant, and other professional expenses, claims or damages
arising out of or pertaining to operations conducted by Vendor with respect to
the Assets and accruing prior to the Effective Time and Purchaser shall be
liable to Vendor and, in addition, shall indemnify Vendor from and against any
liability, loss, costs, penalties, fines, court costs, legal (on a solicitor and
client basis), accountant, and other professional expenses, claims or damages
arising out of or pertaining to operations conducted by Purchaser with respect
to the Assets from and subsequent to the Effective Time; excepting in each case
any liability, loss, costs, claims or damages to the extent that the same are
reimbursed by insurance or caused by the negligence of the other Party hereto.
Such indemnities shall be deemed to apply to all assignments, transfers,
conveyances, novations and other documents conveying the Assets to Purchaser.
17.2 SUBROGATION RE: THIRD PARTIES
Each party shall have the full right of substitution and
subrogation in and to all covenants and warranties by others heretofore given in
respect of the Assets or any part thereof.
17.3 ROYALTIES
Purchaser shall honour and observe all the rights and
obligations attaching to and shall pay all royalties and other encumbrances set
forth in the Land Schedule due with respect to the production of Petroleum
Substances attributable to the Assets from and after the Effective Time, and
Purchaser shall be liable to Vendor and, in addition, shall indemnify Vendor
from any claim with respect to non-observance or non-payment of such
obligations.
17.4 WELL ABANDONMENT AND RECLAMATION
At Closing, Purchaser assumes liability for all well
abandonment and reclamation costs attributable to the Assets and Purchaser shall
be liable to Vendor and, in addition, shall indemnify Vendor from and against
any liability, loss, costs, penalties, fines, court costs, legal (on a solicitor
and client basis), accountant and other professional expenses, claims or
damages, including consequential damages arising out of or relating to such well
abandonment and reclamation or the failure by Purchaser to carry out such well
abandonment and reclamation.
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17.5 ENVIRONMENTAL DAMAGE
At Closing, Purchaser assumes liability for all environmental
damage attributable to the Assets and Purchaser shall be liable to Vendor and,
in addition, shall indemnify Vendor from and against
any liability, loss, costs, penalties, fines, court costs, legal (on a solicitor
and client basis), accountant and other professional expenses, claims or
damages, including consequential damages, arising out of or relating to
environmental damage attributable to the Assets.
ARTICLE XVIII
BREACH
18.1 SURVIVAL
Notwithstanding anything to the contrary herein expressed or
implied and notwithstanding the Closing and deliveries of covenants,
representations and warranties in any other agreements or documents at Closing
or prior or subsequent thereto or investigations by the Parties or their
counsel, the covenants, representations and warranties set forth in Clauses 14.1
and 15.1 shall survive Closing for the benefit of the Parties.
18.2 TIME LIMITATION
No claim for breach of the covenants, representations and
warranties set forth in this Agreement or for misrepresentation herein or
pursuant or with respect hereto or for indemnification of Purchaser pursuant
hereto shall be made or be enforceable, whether by legal proceedings or
otherwise howsoever, unless written notice of the claim setting out reasonable
details of the full particulars of the claim is given by the claimant to the
other Party within eighteen (18) months of the Closing Time.
ARTICLE XIX
VENDOR'S CLOSING CONDITIONS
19.1 GENERALLY
The obligation of Vendor to complete the sale of the Assets to
Purchaser pursuant to this Agreement is subject to the satisfaction at or prior
to the Closing Time of the following conditions precedent:
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(a) Representations True
All representations and warranties of Purchaser contained in
this Agreement shall be true in all material respects at and
as of the Effective Time and the Closing Time and Purchaser
shall have performed and satisfied all agreements required by
this Agreement to be performed and satisfied by Purchaser at
or prior to the Closing Time.
(b) Payment
Purchaser shall have tendered to Vendor the cash portion of
the Purchase Price, a promissory note for the balance of the
cash portion of the Purchase Price payable by Purchaser to
Vendor pursuant hereto and the Shares at the Closing Time;
(c) Conveyance
Purchaser shall have executed and delivered the Conveyance;
and
(d) Opinion of Vendor's Solicitors
Vendor's solicitors shall be satisfied that all corporate and
regulatory requirements applicable to Purchaser and the
enforceability of this Agreement and the Conveyance have been
obtained.
The foregoing conditions shall be for the benefit of Vendor and may, without
prejudice to any of the rights of Vendor hereunder (including reliance upon or
enforcement of the representations, warranties or covenants which are preserved
dealing with or similar to the condition waived), be waived by Vendor in
writing, in whole or in part, at any time. In case any of the conditions
precedent shall not be complied with, or waived by Vendor, at or before the
Closing Time, Vendor may rescind or terminate this Agreement by written notice
to Purchaser.
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ARTICLE XX
PURCHASER'S CLOSING CONDITIONS
20.1 GENERALLY
The obligation of Purchaser to complete the purchase of the
Assets from Vendor pursuant to this Agreement is subject to the satisfaction at
or prior to the Closing Time of the following conditions precedent:
(a) Representations True
All representations and warranties of Vendor contained in this
Agreement shall be true in all material respects at and as of
the Effective Time and the Closing Time and Vendor shall have
performed and satisfied all agreements required by this
Agreement to be performed and satisfied all agreements
required by this Agreement to be performed and satisfied by
Vendor at or prior to the Closing Time;
(b) Conveyance
Vendor shall have executed and delivered the Conveyance.
(c) Opinion of Purchaser's Solicitors
Purchaser's solicitors shall be satisfied that all corporate
and regulatory requirements applicable to Vendor and the
enforceability of this Agreement and the Conveyance have been
obtained;
(d) Waiver of Preferential Rights
Vendor shall have delivered to Purchaser evidence reasonably
satisfactory to Purchaser that all preferential rights of
purchase have lapsed, been waived or duly exercised; and
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(e) Material Adverse Change
Purchaser shall be satisfied that there has not been a
material adverse change in the physical condition of the
Assets from the Effective Time to the Closing Time which
Purchaser agrees shall exclude any material adverse changes in
the Assets due to changes in the prices at which Petroleum
Substances may be sold.
The foregoing conditions shall be for the benefit of Purchaser and may, without
prejudice to any of the rights of Purchaser hereunder (including reliance upon
or enforcement of warranties or covenants which are preserved dealing with or
similar to the condition or conditions waived), be waived by Purchaser in
writing, in whole or in part, at any time, provided Purchaser may not waive the
existence and operation of any preferential right to purchase any of the Assets.
In case any of the conditions precedent shall not be complied with, or waived by
Purchaser, at or before the Closing Time, Purchaser may rescind and terminate
this Agreement by written notice to Vendor.
ARTICLE XXI
COVENANTS RE: CLOSING
21.1 GENERALLY
Each of the Parties covenants and agrees with the other Party
to use all reasonable efforts until Closing, to take or refrain from taking all
actions with the intent that the Closing conditions herein shall be satisfied,
the representations and warranties herein made by it shall be true and correct,
and all covenants and agreements herein made by it shall have been performed.
ARTICLE XXII
TERMINATION
22.1 GENERALLY
In the event that this Agreement is terminated pursuant to any
of the provisions hereto, each Party hereto shall be released from all
obligations hereunder and each Party shall take all reasonable action to return
each of the other Parties hereto to the position relative to the Assets which
such Party occupied prior
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to the execution hereof, it being understood that Vendor and Purchaser will each
bear all costs incurred by it prior to such termination. Any termination as
aforesaid shall be without liability of any Party to any other Party or to any
of such other Party's shareholders, directors, officers, employees, agents,
consultants or representatives.
ARTICLE XXIII
MISCELLANEOUS
23.1 NO DUPLICATION OF REMEDIES
A Party shall not be liable to the other Party except as
provided for herein, for any misrepresentation herein, pursuant hereto or with
respect hereof or for breach of any warranty or covenant herein in the event
that, with respect to the subject of the misrepresentation or breach of warranty
or covenant, provision is made herein for indemnity by one Party to the other
Party or for adjustment by one Party in favour of the other Party or for another
specific right or remedy.
23.2 FURTHER ASSURANCES
At Closing and thereafter as may be necessary or desirable,
and without further consideration, the Parties shall execute, acknowledge and
deliver such other documents and shall take or refrain from taking such action
as may be necessary to carry out their respective obligations under this
Agreement.
23.3 ASSIGNMENT
Prior to Closing, Purchaser shall not assign all or any part
of this Agreement or any of the rights or obligations of Purchaser under this
Agreement, without the prior written consent of Vendor, which consent may be
arbitrarily withheld by Vendor.
23.4 REPORTING ISSUER STATUS
Purchaser shall use reasonable efforts to maintain its status
as a reporting issuer not in default of the requirements of the Securities Act
(Alberta) or of the Alberta Stock Exchange for a period of one (1) year from
Closing.
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23.5 SIGNS AND NOTIFICATIONS
After Closing, Vendor may remove any signs which indicate
Vendor's ownership or operation of the Assets. It shall be the responsibility of
Purchaser, where necessary, to erect or install any signs that may be required
by governmental agencies indicating Purchaser to be the operator of the Assets
and to notify other working interest owners, gas, suppliers, contractors,
governmental agencies and any other third party of Purchaser's interest in the
Assets.
23.6 CONSTRUCTION AND ATTORNMENT
This Agreement shall, in all respects, 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.
23.7 TIME
Time shall be of the essence of this Agreement.
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23.8 PUBLIC ANNOUNCEMENT
Each of the Parties shall cooperate with the other in relaying
information concerning this Agreement and the transactions herein provided for,
and shall furnish to, discuss with, and obtain written approval from the other
Party of drafts of all press and other releases prior to publication, which
approval may be reasonably withheld; provided that nothing contained herein
shall prevent either Party, at any time, from furnishing any information to any
governmental agency or regulatory authority or to the public if required by
applicable law.
23.9 PRIOR AGREEMENTS AND AMENDMENTS
This Agreement states and comprises the entire agreements
between the Parties and shall supersede and replace any and all prior agreements
between the Parties relating to the sale and purchase of the Assets and may be
amended only by written instrument signed by all Parties.
23.10 ENUREMENT
This Agreement shall be binding upon and shall enure to the
benefit of the Parties and their respective successors, receivers,
receiver-managers, trustees and permitted assigns, as set out herein.
23.11 ADDRESSES
The address for notices of each of the Parties shall be as
follows:
PURCHASER: GEOCAN ENERGY INC.
▇▇▇▇▇▇▇ ▇▇▇▇▇
▇▇▇▇▇ ▇▇▇, ▇▇▇ - ▇▇▇ ▇▇▇▇▇▇ ▇.▇.
▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇
▇▇▇ ▇▇▇
Attention: ▇▇. ▇▇▇▇▇▇▇ ▇▇▇▇▇▇
Telephone: (▇▇▇) ▇▇▇-▇▇▇▇
Facsimile: (▇▇▇) ▇▇▇-▇▇▇▇
41
- 36 -
VENDOR: TIMBERWOLF PRODUCTION FUND #4
LIMITED PARTNERSHIP
Elveden House
Suite 800, 717 - 7th Avenue S.W.
Calgary, Alberta
T2P 0Z3
Attention: ▇▇. ▇▇▇▇▇ ▇▇▇▇▇▇
Telephone: (▇▇▇) ▇▇▇-▇▇▇▇
Facsimile: (▇▇▇) ▇▇▇-▇▇▇▇
Either of the Parties may from time to time change its address for service
herein by giving written notice to the other Party. Any notice may be served by
personal service upon a Party or by instantaneous electronic means to the number
for notice hereunder. Any notice given by service upon a Party and any notice
given by instantaneous electronic means shall be deemed to be given to and
received by the addressee on the day (except Saturdays, Sundays, and statutory
holidays) of service or after the sending thereof with appropriate answerback
acknowledgment.
23.12 COUNTERPART EXECUTION
This Agreement may be executed in as many counterparts as are
necessary and, when a counterpart has been executed by each Party, all
counterparts together shall constitute one (1) agreement.
IN WITNESS WHEREOF the Parties hereto have executed this
Agreement as of the date first above written.
TIMBERWOLF PRODUCTION FUND #4 LIMITED
PARTNERSHIP, by its general partner,
TIMBERWOLF RESOURCES LTD.
Per:
------------------------------------
Per:
------------------------------------
GEOCAN ENERGY INC.
Per:
------------------------------------
Per:
------------------------------------
42
SCHEDULE "A"
attached to and forming part of an Agreement of Purchase and
Sale made as of this 11th day of September, 1998 between
Timberwolf Production Fund #4 Limited Partnership, as Vendor,
and Geocan Energy Inc., as Purchaser.
================================================================================
LAND SCHEDULE
WORKING
SAID LANDS INTEREST % SAID LEASES ENCUMBRANCES
---------- ---------- ----------- ------------
061-12-5 E34 10.0000% 117793 ACR 15% ▇▇▇▇
061-12-5 W34 10.0000% 121795 ACR 15% ▇▇▇▇
061-11-5 W07 10.0000% 126245 ACR 15% ▇▇▇▇
061-11-5 S18 10.0000% ACR 15% ▇▇▇▇
061-12-5 S13 10.0000% ACR 15% ▇▇▇▇
061-11-5 S03 0.25000% 0587090203 ACR
061-11-4 N03 0.25000% ▇▇▇▇▇▇▇▇▇▇ ACR
061-11-5 E07 10.0000% 0595060094 ACR
061-11-5 N18 10.0000% 0595060095 ACR
061-12-5 N13 10.0000% 0595060096 ACR
062-12-5 N21 10.0000% 0595060097 ACR
061-11-5 05, 06, 08 10.0000% 0595090507 ACR
061-12-5 S01 10.0000% 0595090509 ACR
062-12-5 N20 10.0000% 0595090518 ▇▇▇
▇▇▇-▇▇-▇ ▇ & ▇▇ ▇▇ 10.0000% ▇▇▇▇▇▇▇▇▇▇ ACR
061-12-5 02, 03 10.0000% 0596030190 ACR
"ACR" means Alberta Crown Royalty
43
SCHEDULE "B"
attached to and forming part of an Agreement of Purchase and
Sale made as of this 11th day of September, 1998 between
Timberwolf Production Fund #4 Limited Partnership, as Vendor,
and Geocan Energy Inc., as Purchaser.
================================================================================
The Vendor's working interests for the ▇▇▇▇▇ listed in Schedule "G", which,
without limiting the generality hereof, includes all associated Well equipment,
all surface or downhole well equipment, wellbore or casing associated with each
Well.
Gathering System and Surface Facilities
(a) Danoil ▇▇▇▇▇▇ Creek East Gathering System
WI - 10.00%
(b) ▇▇▇▇▇▇ Creek East Sour Gas Processing Facility
WI - 0.1832%
"WI" means working interest
44
SCHEDULE "C"
attached to and forming part of an Agreement of Purchase and
Sale made as of this 11th day of September, 1998 between
Timberwolf Production Fund #4 Limited Partnership, as Vendor,
and Geocan Energy Inc., as Purchaser.
▇▇▇▇▇▇▇▇▇▇▇▇▇▇▇▇▇▇▇▇▇▇▇▇▇▇▇▇▇▇▇▇▇▇▇▇▇▇▇▇▇▇▇▇▇▇▇▇▇▇▇▇▇▇▇▇▇▇▇▇▇▇▇▇▇▇▇▇▇▇▇▇▇▇▇▇▇▇▇▇
▇▇▇▇▇▇▇▇▇▇
(▇▇▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇, ▇▇▇▇▇▇▇)
THIS CONVEYANCE dated the ___ day of October, 1998
BETWEEN:
TIMBERWOLF PRODUCTION FUND #4 LIMITED PARTNERSHIP, an
Alberta limited partnership by its General Partner,
TIMBERWOLF RESOURCES LTD., a body corporate, having an office
in the City of Calgary, in the Province of Alberta.
(hereinafter called "Vendor")
- and -
GEOCAN ENERGY INC., a body corporate, having an office in the
City of Calgary, in the Province of Alberta,
(hereinafter called "Purchaser").
WITNESSES THAT:
WHEREAS Vendor has agreed to sell and assign to Purchaser and
Purchaser has agreed to purchase and acquire from Vendor, the Assets;
NOW THEREFORE for the consideration provided in the Agreement
of Purchase and Sale and in consideration of the premises hereto and the
covenants and agreements hereinafter set forth and contained, the Parties hereto
covenant and agree as follows:
ARTICLE 1
1. In this Conveyance, including the premises hereto and this Article, the
definitions set forth in the Agreement of Purchase and Sale are adopted herein
by reference and, in addition:
"Agreement of Purchase and Sale" means that certain Agreement
between Vendor and Purchaser dated the 11th day of September,
1998, pursuant to which Vendor has agreed to sell and assign
to Purchaser, and Purchaser has agreed to purchase and acquire
from Vendor, the Assets (as defined in the Agreement of
Purchase and Sale).
45
2
ARTICLE 2
CONVEYANCE
2. Vendor, pursuant to and for the consideration provided for in the Agreement
of Purchase and Sale, the receipt and sufficiency of such consideration being
hereby acknowledged by Vendor, hereby sells, assigns, transfers, conveys and
sets over to Purchaser its entire right, title, estate and interest in and to
the Assets, to have and to hold the same, together with all benefit and
advantage to be derived therefrom.
ARTICLE 3
EFFECTIVE TIME
3. This Conveyance shall be effective as of the 1st day of July, 1998.
ARTICLE 4
CONDITIONS
4. All conditions required by the Agreement of Purchase and Sale to be satisfied
at or prior to the Closing Date have been satisfied or, if not satisfied, have
been waived by Vendor and Purchaser.
ARTICLE 5
ENUREMENT
5. This Conveyance shall be binding upon and shall enure to the benefit of each
of the Parties hereto and their respective successors and assigns.
ARTICLE 6
SUBORDINATE DOCUMENT
6. The parties hereto acknowledge that except as herein otherwise provided, all
of the provisions of the Agreement of Purchase and Sale shall apply and are
hereby incorporated by reference in so far as they relate to the Assets.
ARTICLE 7
FURTHER ASSURANCES
7. Each Party hereto will, from time to time and at all times hereafter at the
request of the other Party, but without further consideration, do all such
further acts and execute and deliver all such further documents as shall be
reasonably required in order to fully perform and carry out the terms hereof and
to more effectively vest in Purchaser the Assets.
ARTICLE 8
MISCELLANEOUS
8.1 This Conveyance shall be governed by and shall be construed in accordance
with the laws of the Province of Alberta, and the Courts of the Province of
Alberta shall have exclusive jurisdiction with respect to all legal proceedings
arising out of this Conveyance.
46
3
8.2 The Article headings contained in this Conveyance have been inserted for
convenience of reference only and form no part of this Conveyance and shall not
in any way affect the meaning or interpretation of this Conveyance.
IN WITNESS WHEREOF the Parties have hereunto executed and
delivered this Agreement as of the day and year first above written.
TIMBERWOLF PRODUCTION FUND #4 LIMITED
PARTNERSHIP, by its General Partner,
TIMBERWOLF RESOURCES LTD.,
Per:
------------------------------------
Per:
------------------------------------
GEOCAN ENERGY INC.
Per:
------------------------------------
Per:
------------------------------------
47
SCHEDULE "D"
attached to and forming part of an Agreement of Purchase and
Sale made as of this 11th day of September, 1998 between
Timberwolf Production Fund #4 Limited Partnership, as Vendor,
and Geocan Energy Inc., as Purchaser.
================================================================================
ADJUSTMENT PROCEDURE
ADJUSTMENT DETAILS
Subject to the provisions of the Agreement of Purchase and
Sale which this Schedule "D" is attached to and made a part of, the following
Adjustment Procedure shall apply:
1. FOR CLOSING
On or before the forty-fifth day after the Closing Time, or as
otherwise agreed by the Parties, Vendor shall deliver to Purchaser a written
interim statement of all adjustments and payments to be made pursuant to the
provisions of this Agreement and shall make available to representatives of
Purchaser all information necessary for such representatives to understand and
confirm the calculations in such statement. Vendor and Purchaser shall cooperate
in settling and agreeing to the amounts of the adjustments and payments to be
made pursuant to the provisions hereof on an interim basis.
2. POST CLOSING
Within the one hundred and twenty (120) day period following
the Closing Time, Vendor and Purchaser shall cause their representatives to
cooperate in preparing, on the basis of information available within such
period, a final statement of all adjustments and payments to be made pursuant to
the provisions of this Agreement and upon agreement as to the amounts of all
such adjustments and payments to be made pursuant to this Agreement, the net
amount thereof shall be remitted by the party to this Agreement who, in the net
result, is obliged to make payment.
3. DELAYED MATTERS
The Parties to this Agreement foresee that certain adjustments
will be necessary from time to time after the period referred to in Clause 2 of
this Adjustment Procedure and each of the Parties hereto agrees to co-operate in
calculating and confirming the amount of any payment as may be necessary as a
result thereof and agrees to make payment in the event of becoming obliged
thereby to make payment.
4. LIMITATION
Notwithstanding the provisions of Clauses 1, 2, and 3 of this
Adjustment Procedure, no adjustments shall be made pursuant to the provisions of
this Adjustment Procedure pertaining to any matter with respect to which a Party
hereto has not given to the other Party hereto a written notice requesting an
adjustment within the two (2) year period following Closing.
48
2
5. PAYMENT
(a) Following Closing:
(i) revenues received by Vendor, if any, net of
applicable actual (or estimated) expenses shall be
paid by Vendor to Purchaser within fifteen (15) days
of receipt of such net revenues by Vendor; and
(ii) actual expenses paid by Vendor which exceed the
revenues received by Vendor shall be paid by
Purchaser to Vendor within fifteen (15) days of
receipt of notification by Vendor to Purchaser of the
amount of such net excess expenses.
The net amount of either revenues or expenses shall be
remitted by the party to this agreement who, in the net result, is obliged to
make such payment. If such payment is not made by Vendor or Purchaser within the
times set forth in Subclause 5(a)(i) or (ii) above, whichever is applicable,
then the interest rate shall be the Prime Rate plus Two Percent (2%) for the
period subsequent to the final statement of adjustments.
6. AUDIT
Purchaser shall have the right, exercisable within the period
referred to in Clause 4 of this Adjustment Procedure, upon fifteen (15) days'
prior written notice, to examine copy, and audit, at the sole expense of
Purchaser, the records of Vendor relative to the Assets for the purposes of
effecting adjustments pursuant to this Agreement.
7. ARBITRATION
Any controversy arising under or out of this Adjustment
Procedure may be submitted to arbitration by either Vendor or Purchaser by
written notice to the other Party and the following principles shall apply to
any and each such arbitration:
(a) Appointment of Arbitrator(s):
Upon written demand of either Vendor or Purchaser,
representatives of Purchaser and Vendor shall meet and attempt
to appoint a single arbitrator. In the event that such
representatives are unable to agree on a single arbitrator,
then upon written demand by either Vendor or Purchaser, each
shall, within ten (10) days of such demand, name an arbitrator
and the two (2) arbitrators so named shall promptly thereafter
choose a third. If either Vendor or Purchaser shall fail to
name an arbitrator within ten (10) days from such demand, then
the second arbitrator shall be appointed by any Justice of the
Court of Queen's Bench of Alberta. If the two (2) arbitrators
shall fail within ten (10) days from their appointment to
agree upon and appoint the third arbitrator, then such third
arbitrator shall be appointed by any Justice of the Court of
Queen's Bench of Alberta.
49
3
(b) Qualification of Arbitrator(s):
The arbitrator or arbitrators selected to act hereunder shall
be qualified by education, experience and training to pass
upon the particular question or questions in dispute.
(c) Proceedings:
The arbitrator or arbitrators chosen shall proceed immediately
to hear and determine the question or questions in dispute.
The decision of the single arbitrator shall be made within
forty-five (45) days after his or her appointment, subject to
any reasonable delay due to unforeseen circumstances. Where
there are three (3) arbitrators, the decision of the
arbitrators, or a majority of them, shall be made within
forty-five (45) days after the appointment of the third
arbitrator, subject to any reasonable delay due to unforeseen
circumstances. In the event the single arbitrator or the
arbitrators, or a majority of them, fail to make a decision
within the period herein prescribed, then either party thereto
may elect to have a new single arbitrator or arbitrators
chosen in the manner herein prescribed, as if none had
previously been selected.
(d) Decision:
The decision of the single arbitrator or the decision of the
arbitrators, or a majority of them, shall be drawn up in
writing and signed by the single arbitrator or by the
arbitrators, or a majority of them, and shall be final and
binding upon the Parties hereto as to any question or
questions so submitted to arbitration, and the Parties hereto
shall be bound by such decision and bound to perform the terms
and conditions thereof.
(e) Compensation:
The liability between the Parties hereto for the payment of
the compensation and expenses of the single arbitrator or the
arbitrators shall be determined by the arbitrator or
arbitrators, as the case may be.
(f) Governing Law:
Arbitration pursuant hereto shall be governed in all respects
not addressed herein by the provisions of The Arbitration Act
(Alberta) and the regulations thereunder.
50
SCHEDULE "E"
attached to and forming part of an Agreement of Purchase and
Sale made as of this 11th day of September, 1998 between
Timberwolf Production Fund #4 Limited Partnership, as Vendor,
and Geocan Energy Inc., as Purchaser.
================================================================================
PRODUCTION SALES CONTRACTS
Progas netback price amending agreement dated November 1, 1997.
51
SCHEDULE "F"
attached to and forming part of an Agreement of Purchase and
Sale made as of this 11th day of September, 1998 between
Timberwolf Production Fund #4 Limited Partnership, as Vendor,
and Geocan Energy Inc., as Purchaser.
================================================================================
AUTHORIZATIONS FOR EXPENDITURES ("A.F.E.'S")
AFE NO. AMOUNT
------- ------
AFE #85005 $ 4,500.00
AFE #85003 $ 9,525.00
AFE #82003 $15,216.70
----------
Total: $29,241.70
52
SCHEDULE "G"
attached to and forming part of an Agreement of Purchase and
Sale made as of this 11th day of September, 1998 between
Timberwolf Production Fund #4 Limited Partnership, as Vendor,
and Geocan Energy Inc., as Purchaser.
================================================================================
▇▇▇▇▇*
53
Unique Well Identifier Well Name License No.
---------------------- --------- -----------
00/1-3-61-11 W5/0 Bankeno Whitecourt 131708
00/12-7-61-11 W5/2 Danoil et ▇▇ ▇▇▇▇▇▇ 179118
00/6-18-61-11 W5/2 Danoil et ▇▇ ▇▇▇▇▇▇ 198390
00/3-13-61-12 W5/0 Danoil et ▇▇ ▇▇▇▇▇▇ 191112
00/7-8-63-11 W5/0 Danoil ▇▇▇▇ Creek 214 720
00/13-5-61-11 W5/0 Danoil Whitecourt 184 162
00/8-34-61-12 W5/0 Danoil et ▇▇ ▇▇▇▇▇▇ N. 183 231
00/▇▇-▇▇-▇▇-▇▇ W5/0 Danoil et ▇▇ ▇▇▇▇▇▇ 188 642
o Includes all surface and downhole equipment, well bore and well casing
associated with each such Well.
