1048136 ALBERTA LTD. c/o 1800, 999 West Hastings Street Vancouver, British Columbia Canada V6C 2W2
1048136 ALBERTA LTD.
c/o 1800, 000 Xxxx Xxxxxxxx Xxxxxx
Xxxxxxxxx, Xxxxxxx Xxxxxxxx
Xxxxxx X0X 0X0
June 1, 2005
Cascade Energy, Inc.
0000 Xxxxxx Xxxx.
Xxxxx 000
Xxxxxx, XX 00000
Attention: Xx. Xxx Xxxxx, President
Dear Sir:
| Re: | Farmout Proposal – Empress Prospect, Province of Alberta |
This Agreement outlines the terms upon which 1048136 Alberta Ltd. (“1048136”) will assign and grant to Cascade Energy, Inc. a farmin opportunity on certain lands known as the “Empress Prospect”, located in the Province of Alberta.
Pursuant to an agreement (the “Acadia Farmout and Option Agreement") dated the 21st day of January, 2005, between Xxxxx Oil & Gas Company-Canada Inc., Firefly Resources Ltd. and Moraine Resources Ltd. (collectively referred to herein as the “Original Farmor”) and Xxxx Resources Ltd. (“Xxxx”), Xxxx can earn an interest in certain title documents and the lands associated therewith (all as more particularly described in Schedule “A” of the Acadia Farmout and Option Agreement) by performing the obligations contained in the Acadia Farmout and Option Agreement.
Pursuant to a subsequent agreement (the “Xxxx Participation Agreement") dated the 28th day of January, 2005, between Xxxx and 1048136 Alberta Ltd. (“1048136”), 1048136 can earn 100% of the interests that Xxxx can otherwise earn under the Acadia Farmout and Option Agreement (subject to the royalty reserved unto Xxxx by the Xxxx Participation Agreement) by performing the obligations contained in the Xxxx Participation Agreement. A true copy of the Xxxx Participation Agreement (which has a true copy of the Acadia Farmout and Option Agreement attached thereto as a schedule) is attached hereto as Appendix “A”.
Subject to compliance with the terms and conditions hereof, 1048136 will grant to Cascade Energy, Inc (“Cascade”) the right to a earn 49% of the interests that 1048136 can otherwise earn under the Xxxx Participation Agreement in those lands referred to and defined in the Acadia Farmout and Option Agreement as the “Option Lands”.
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1. Interpretation
| (a) | The headings of the clauses of this Agreement are
inserted for convenience of reference only and shall not affect the meaning
or construction thereof. |
|
| (b) | The terms and expressions used herein shall have
the same meanings as are ascribed to such terms and expressions in the
Xxxx Participation Agreement and the Acadia Farmout and Option Agreement,
as the case may be. |
|
| (c) | Wherever the plural or masculine or neuter is used
the same shall be construed as meaning singular or feminine or body politic
or corporate, or vice versa as the context so requires. |
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2. Appointment of Operator
0000000 is appointed Operator, as between 0000000 and Cascade, with respect to all operations conducted hereunder.
3. Acadia Farmout and Option Agreement/Xxxx Participation Agreement
Except as modified by the terms of this Agreement, the terms and conditions of the Acadia Farmout and Option Agreement and Xxxx Participation Agreement, as applicable, shall control the operation of the parties and shall be deemed to be incorporated herein by reference.
4. Trust Conditions and Term
1048136 agrees that, to the extent that the assignment to Cascade of a portion of 1048136’s rights and obligations respecting the Option Lands under the Xxxx Participation Agreement is not formally recognized and recorded by Xxxx or the Original Farmor, as the case may be, 1048136 shall hold Cascade’s interests in the Xxxx Participation Agreement, Acadia Farmout and Option Agreement, and Option Lands, as the case may be, in trust for Cascade and shall ensure that all performance by Cascade under the terms of this Agreement, as assignee of the obligations of 1048136 under the Xxxx Participation Agreement, is noted, recorded and properly credited. If requested by Cascade, 1048136 agrees to record this trust in writing pursuant to a trust agreement (in a form similar to the form attached to the Acadia Farmout and Option Agreement as Schedule “E”, amended as applicable to reflect the interests of Cascade in the Option Lands, as they exist from time to time) until such time as the interests of Cascade in the Option Lands, may be formally recorded.
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5. Participating Interest
Cascade shall drill a minimum of one (1) and up to three (3) gas xxxxx (collectively the “Earning Xxxxx”) on the Option Lands (one well per section) as follows:
| i) | Cascade shall spud the initial Earning Well on the
section of its choice not later than 60-days after the full execution
of this Agreement (as noted on the execution page hereof); and |
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| ii) | if it so elects Cascade shall drill up to two (2)
additional Earning Xxxxx on the Option Lands (one per remaining section
of Option Lands), in accordance with the timing of elections and drilling
commencement set forth in paragraph 6 of the Acadia Farmout and Option
Agreement, |
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in order to earn 49% of the interests that 1048136 may earn in each section where Cascade has drilled an Earning Well.
6. Grants and Credits
Any credits or grants allowed under any acts, rules, regulations or other laws of the Province of Alberta and/or Canada shall be shared by the parties hereto, as to 49% of such credits or grants to Cascade, and 51% to 1048136.
7. Assignment by Cascade
Cascade shall not assign its rights under this Agreement in whole or in part without first obtaining the written consent of 1048136. Notwithstanding any assignment by the Cascade, 1048136 will remain entitled to look to Cascade for performance of any duties and obligations required to be carried out by it under this Agreement, unless otherwise agreed to in writing by 1048136.
8. Other Encumbrances
If the interest of either party in the Option Lands shall hereafter become encumbered by any royalty, production payment or other charge of a similar nature, other than the royalties as set forth under the Acadia Farmout and Option Agreement or Xxxx Participation Agreement, such royalty, production payment or other charge shall be charged to and paid entirely by the party whose interest is or becomes thus encumbered.
9. Warranty of Title
1048136 makes no representation or warranties as to the status of title to the Farmout Lands and Option Lands and such title must be independently verified by Cascade.
During the term of this Agreement, no party shall do or cause to be done any act nor make or cause to be made any omission whereby the Option Lands become encumbered
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in such a way as to adversely affect the interests of the other parties, or become subject to termination or forfeiture.
10. No Partnership
The rights, duties, obligations and liabilities of the parties shall be several and not joint or collective, it being the parties' express purpose and intention that nothing herein shall be construed as creating a partnership of any kind or imposing upon any party hereto any partnership duty, obligation or liability to the other party other than as specifically set forth herein.
11. Notice Periods
The parties will endeavor on a bona-fide basis to meet at least ten (10) days prior to the date when either any election must be made or any notice must be made pursuant to the underlying agreements, for the purposes of discussing such election or notice in order to enable 1048136, as required, on behalf of the parties, to comply with the provisions of the Xxxx Participation Agreement and Xxxx to comply with the provisions of the Acadia Farmout and Option Agreement, as the case may be.
12. Further Assurance
Each of the parties shall at all times do all such further acts and deliver all such further deeds and documents as shall be reasonably required in order to fully perform and carry out the terms of this Agreement.
13. Notice
Notwithstanding anything to the contrary contained herein, all notices required or permitted hereunder shall be in writing. Any notice to be given hereunder shall be deemed to be served properly if served in any of the following modes:
| a) | personally, by delivering the notice to the party
on which it is to be served at that Party's address for service; or |
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| b) | by telecopy or telex (or by any other like method
by which a written message may be sent) directed to the party on which
it is to be served at that party's address for service. A notice so served
shall be deemed to be received by the addressee when actually received
by it, if received within normal business hours on any day other than
a Saturday, Sunday or statutory holiday in British Columbia or at the
commencement of the next ensuing business day following transmission if
such notice is not received during such normal business hours; or |
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| c) | by mailing it first class (air mail if to or from
a location outside of Canada) registered post, postage prepaid, directed
to the party on which it is to be |
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served at that party's address for service. Notices so served shall be deemed to be received by the addressee at noon, local time, on the earlier of the actual date of receipt or the fourth day (excluding Saturdays, Sundays and statutory holidays in British Columbia) following the mailing thereof. However, if postal service is (or is reasonably anticipated to be) interrupted or operating with unusual delay, notice shall not be served by such means during such interruption or period of delay.
14. Address for Service
The address for service of notices hereunder of each of the parties shall be as follows:
| 1048136: | x/x Xxxxxx & Xxxxxxx | |
| Xxxxx 0000, 000 Xxxx Xxxxxxxx Xxxxxx | ||
| Xxxxxxxxx, X.X. X0X 0X0 | ||
| Facsimile: (000) 000-0000 | ||
| Cascade: | 0000 Xxxxxx Xxxx. | |
| Xxxxx 000 | ||
| Xxxxxx, XX 00000 | ||
| Xxx Xxxxx, President | ||
| Facsimile: (000) 000-0000 | ||
A party may change its address for service by notice to the other party, and such changed address for service thereafter shall be effective for all purposes of this Agreement.
15. Insurance
Cascade shall carry insurance with a reputable insurance company in the manner and in the amounts set out in the Operating Procedure.
16. Successors and Assigns
This Agreement shall enure to the benefit of and be binding upon the parties hereto and their respective successors and permitted assigns.
17. Proper Law
This Agreement and the relationship between the parties shall be construed and determined according to the laws of the Province of British Columbia, and the courts having original jurisdiction with respect to any matter or thing arising directly or indirectly relating to this Agreement shall be the courts of the Province of British Columbia.
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18. Supercession
This Agreement supercedes and replaces all other agreements, documents, writings and verbal understandings between the parties with respect to the subject matter of this Agreement.
19. Counterparts
This Agreement may be executed in counterparts and by facsimile.
IN WITNESS WHEREOF each of the parties hereto has caused this Agreement to be executed as of the day and year first noted below.
| 1048136 ALBERTA LTD. | CASCADE ENERGY. INC. |
| per: Xxxxx Xxxxxxxx | per: Xxx Xxxxx |
| per: _______________ | per: _______________ |
| June 1, 2005 | June 1, 2005 |
