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EXHIBIT 10.10
AGREEMENT OF PURCHASE AND SALE
(Carrot Creek/Tomahawk/
Manyberries/Elmsworth Areas)
BETWEEN
EQUATORIAL ENERGY INC.
("Vendor")
- AND -
GEOCAN ENERGY INC.
("Purchaser")
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DATED AS OF THE 1ST DAY OF MARCH, 2001
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AGREEMENT OF PURCHASE AND SALE
(CARROT CREEK/TOMAHAWK/
MANYBERRIES/ELMSWORTH AREAS)
THIS AGREEMENT made as of the 1st day of March, 2001.
BETWEEN:
EQUATORIAL ENERGY INC., a body corporate, having an office and
carrying on business in the City of Calgary, in the Province
of Alberta, ("VENDOR")
- and -
GEOCAN ENERGY INC., a body corporate, having an office and
carrying on business in the City of Calgary, in the Province
of Alberta, ("PURCHASER")
WHEREAS Vendor has agreed to sell and Purchaser has agreed to purchase
the Assets subject to and in accordance with the terms and conditions hereof;
NOW THEREFORE in consideration of the premises and mutual covenants and
warranties in this Agreement, the Parties covenant and agree as follows:
ARTICLE 1
INTERPRETATION
1.1 DEFINITIONS
In this Agreement, including the recitals and schedules to this
Agreement:
"ASSETS" means the Petroleum and Natural Gas Rights, the Tangibles and
the Miscellaneous Interests;
"BUSINESS DAY" means any day of the week except Saturday, Sunday or any
statutory holiday in Alberta;
"CERTIFICATE" means a written certification of a matter or matters of
fact which:
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(a) if required from a corporation, shall be made by an officer of
the corporation, on behalf of the corporation and not in any
personal capacity; and
(b) if required from a partnership, shall be made by the general
partner or, in the case of a corporate general partner, by an
officer of the corporation, on behalf of the corporation and
not in any personal capacity;
"CLOSING" means the closing of the purchase and sale herein provided
for;
"CLOSING DATE" means 10:00 a.m. on April 30th, 2001, or such other time
and date as may be agreed to in writing by the Parties, provided that
Vendor and Purchaser shall be deemed to have agreed in writing to
extend the Closing Date, as required, in order to comply with
Preferential Rights;
"DOLLAR" or "$" means a Canadian dollar;
"EFFECTIVE DATE" means 8:00 a.m. on March 1, 2001;
"PRODUCTION PURCHASE CONTRACTS" means the agreements set out in
Schedule "C";
"GST" means the goods and services tax as provided for in the Excise
Tax Act, R.S.C. 1985, c. E-15, as amended, or any successor or parallel
provincial or federal legislation that imposes a tax on the recipient
of goods or services supplied under this Agreement;
"INTERIM PERIOD" means that period from and including the Effective
Date, to and excluding the Closing Date; "LANDS" means the lands set
out in Schedule "A";
"LEASED SUBSTANCES" means all Petroleum Substances or rights to
Petroleum Substances which are granted, reserved or otherwise conferred
by or under the Title Documents;
"LOSSES" means, in respect of any matter, all claims, actions, demands,
proceedings, losses, damages, liabilities, deficiencies, costs,
penalties, fines and expenses (including, without limitation, all legal
and other professional fees and disbursements, interest, penalties and
amounts paid in settlement) arising directly or indirectly as a
consequence of such matter.
"MATERIAL TITLE DEFECT" means an actual or potential defect,
deficiency, discrepancy or adverse claim in or affecting the title of
the Vendor or its interests in and to any of the Assets which:
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(a) is made apparent from the inability of the Purchaser,
following a reasonable title review process, to confirm the
title of the Vendor or the extent to which interests of the
Vendor may be subject to encumbrances, with respect to any of
the Assets, as the title and interests are disclosed herein or
in Schedule "A"; and
(b) is or would be sufficiently material and adverse to the
enforcement or defence of title and interests or confirmation
of encumbrances that it would not be acceptable to a
knowledgeable, prudent purchaser buying similar oil and gas
properties, acting reasonably, and
(c) with respect to Rights of First Refusal, any Rights of First
Refusal that are not disclosed in Schedule "A" to the
Purchaser with respect to any of the Assets.
For the purposes of this definition, lack of evidence held by Vendor of
payment of delay rentals or royalties under leases shall not be deemed
to be a "Material Title Defect".
"MISCELLANEOUS INTERESTS" means, subject to the exclusions and
limitations provided in this definition, the interest of Vendor in all
property, assets and rights (other than the Petroleum and Natural Gas
Rights and Tangibles) pertaining or ancillary to either the Petroleum
and Natural Gas Rights or Tangibles to which Vendor is entitled
including, but not limited to, the following:
(a) contracts and agreements relating to the Petroleum and Natural
Gas Rights, or Tangibles including, without limitation,
Production Purchase Contracts, operating agreements,
processing agreements, transportation agreements;
(b) Surface Rights;
(c) Leased Substances produced from the Lands except those that
are beyond the wellhead at the Effective Date or sales
proceeds in respect of such Leased Substances if title has
passed to the purchaser thereof;
(d) the Xxxxx, including the wellbores and casing; and
(e) all records, books, files, data, documents, licenses, permits
or authorizations relating directly to the Petroleum and
Natural Gas Rights or Tangibles.
Notwithstanding the foregoing, unless otherwise agreed in writing by the
Parties, the Miscellaneous Interests shall not include agreements,
documents or data to the extent that: (i) they comprise the Vendor's tax
or financial records; (ii) they comprise the Vendor's economic
evaluations; (iii) they comprise the Vendor's geophysical data or
geological data; (iv) they pertain to the Vendor's proprietary technology
or interpretations; (v) they are
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owned or licensed by third parties with restrictions on their
disclosure by Vendor or they are otherwise confidential or privileged;
or (vi) they are referred to specifically as exclusions in Schedule
"A";
"OPERATOR" means Vendor in its capacity as operator of any of the
Assets as designated under agreements governing the ownership and
operation of the Assets;
"PARTY" means a legal entity which is bound by this Agreement;
"PERMITTED ENCUMBRANCES" means:
(a) any preferential rights of purchase, encumbrances, overriding
royalties, liens, adverse claims, reductions in interest and
other burdens set out in Schedule "A";
(b) agreements for the sale of Leased Substances, that are
terminable on 30 days notice or less (without penalty);
(c) easements, rights of way, road use agreements, crossing
agreements, servitudes and other similar rights in land
including, without limitation, rights of way and servitudes
for highways and other roads, railways, sewers, drains, gas
and oil pipelines, gas and water mains, electric light, power,
telephone, telegraph or cable television conduits, poles,
wires or cables;
(d) the right reserved to or vested in any governmental or other
public authority by the terms of any lease, licence,
franchise, grant or permit or by any statutory provision to
terminate any such lease, licence, franchise, grant or permit,
or to require annual or other periodic payments as a condition
of the continuance of them;
(e) rights of general application reserved to or vested in any
governmental authority to levy taxes on Leased Substances or
the income therefrom, and governmental requirements and
limitations of general applications as to production rates or
the operations of any property;
(f) the Production Purchase Contracts and any agreements or plans
relating to pooling or unitization which are binding on Vendor
as well as agreements respecting the processing, treating or
transmission of Leased Substances or the operation of Xxxxx by
contract field operators;
(g) liens incurred or created in the ordinary course of business
as security in favour of the person who is conducting the
development or operation of any of the
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Assets, for Vendor's proportionate share of the costs and
expenses thereof for which payment is not past due;
(h) the reservations, limitations, provisos and conditions in any
grants or transfers from the Crown of any of the Lands or
interests in them and statutory exceptions to title;
(i) liens for taxes, assessments or governmental charges that are
not due, or the validity of which is being contested in good
faith by Vendor (which latter liens are set forth in Schedule
"A");
(j) mechanics', builders' or materialmen's liens in respect of
services rendered or goods supplied for which payment is not
due;
(k) provisions for penalties and forfeitures under agreements as a
consequence of non-participation in operations, provided that
any such penalties or forfeitures which are operative as of
the Effective Date are identified in Schedule "A";
(l) any security held by any third party encumbering Vendor's
interest in and to the Assets or any part or portion thereof,
a discharge in respect of which Vendor delivers to Purchaser
on the Closing Date;
"PETROLEUM AND NATURAL GAS RIGHTS" means all rights to and in the Title
Documents and the Leased Substances, including without limitation the
interests set out in Schedule "A";
"PETROLEUM SUBSTANCES" means any of petroleum, natural gas and related
hydrocarbons, whether gaseous, liquid or solid, and whether
hydrocarbons or not (including, but not limited to, sulphur) that may
be produced in association with them;
"PRIME RATE" means an annual rate of interest equal to the annual rate
of interest announced from time to time of the main branch of the
Canadian Imperial Bank of Commerce in Calgary, Alberta, as a reference
rate then in effect for determining interest rates on Canadian dollar
commercial loans;
"PURCHASE PRICE" means the sum of money first set out in clause 2.2
hereof;
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"REGULATIONS" means all statutes, laws, orders, directives and
regulations in effect from time to time and made by governments or
governmental boards or agencies having jurisdiction over the Assets or
the Parties;
"SPECIFIC CONVEYANCES" means all conveyances, assignments, transfers,
novations and other documents or instruments that are required to
convey, assign and transfer the Assets to Purchaser and to novate
Purchaser in the place and stead of Vendor with respect to the Assets;
"SURFACE RIGHTS" means all rights to enter upon, use and occupy the
surface of the Lands or lands with which the Lands have been pooled or
unitized or any lands to be traversed in order to gain access to any of
the Lands, Tangibles or Xxxxx and any and all rights of egress and
ingress, licenses, leases and instruments, including rights of entry
orders to gain access to the Lands, Xxxxx and Tangibles;
"TANGIBLES" means the interests of the Vendor in and to all tangible
depreciable property and assets including, without limitation,
facilities located within or upon the lands, or off the lands, intended
to be used in producing, processing, gathering, treating, measuring,
making marketable, transporting, transmitting, delivering, feeding or
injecting Leased Substances or any of them or in connection with water
injection or removal operations that pertain to the Petroleum and
Natural Gas Rights, or are otherwise used or intended to be used in
exploiting the Petroleum and Natural Gas Rights;
"THIS AGREEMENT", "HEREIN", "HERETO", "HEREOF" and similar expressions
mean and refer to this Agreement of Purchase and Sale and any agreement
amending this Agreement of Purchase and Sale or any agreement or
instrument which is supplemental or ancillary to this Agreement of
Purchase and Sale;
"TITLE DOCUMENTS" means, collectively, any and all leases,
reservations, permits, licenses, unit agreements, assignments, trust
declarations, operating agreements, royalty agreements, gross
overriding royalty agreements, participation agreements, farm-in
agreements, sale and purchase agreements, pooling agreements and any
other documents and agreements granting, reserving or otherwise
conferring rights to: (i) explore for, drill for, produce, take, use or
market Petroleum Substances; (ii) share in production of Petroleum
Substances; (iii) share in the proceeds from, or measured or calculated
by reference to the value or quantity of, Petroleum Substances which
are produced; and (iv) rights to acquire any of the rights described in
items (i) to (iii) of this definition; including without limitation
those, if any, set out in Schedule "A", but only to the extent that the
foregoing items (i) through (iv) pertain to Petroleum Substances
within, upon or under the Lands or lands with which the Lands have been
pooled or unitized;
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"VENDOR'S COUNSEL" means Xxxxxxx Xxxxx LLP, Barristers and Solicitors;
and
"XXXXX" the xxxxx set out in Schedule "B".
1.2 SCHEDULES
The following schedules are attached to and form part of this
Agreement.
Schedule "A"- Title Documents, Lands, Petroleum and Natural Gas Rights, certain Permitted Encumbrances
Schedule "B"- Xxxxx, Outstanding AFE's
Schedule "C"- Production Purchase Contracts
Schedule "D"- General Conveyance
Schedule "E"- Form of Officer's Certificate
1.3 HEADINGS
The insertion of headings in this Agreement is for convenience of
reference only and shall not affect the construction or interpretation
of this Agreement.
1.4 INCLUDED WORDS AND GENDER
When the context reasonably permits, words suggesting the singular
shall be construed as the plural and vice versa and words suggesting
gender or gender neutrality shall be construed as suggesting the
masculine, feminine and neutral gender.
1.5 TIME
In this Agreement all times are Mountain Standard Time or Daylight
Saving Time, whichever is in effect pursuant to the Daylight Saving
Time Act (Alberta).
1.6 CONFLICTS
If there is any conflict or inconsistency between a provision of the
body of this Agreement and that of a schedule or a conveyance document,
the provision of the body of this Agreement shall prevail.
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ARTICLE 2
PURCHASE AND SALE
2.1 AGREEMENT OF PURCHASE AND SALE
Vendor hereby agrees to sell and Purchaser hereby agrees to purchase
from Vendor the entire right, title, estate and interest of Vendor in
and to the Assets, subject to the Permitted Encumbrances. If the
transactions contemplated by this Agreement is completed, risk
associated with the Assets shall pass to Purchaser as of the Effective
Date.
2.2 PURCHASE PRICE
(a) The consideration to be paid by Purchaser to Vendor for
Vendor's interest in and to the Assets shall be One Million
and Nine Thousand Dollars ($1,009,000.00) (the "Purchase
Price").
(b) Upon execution of this Agreement by the parties, Purchaser
shall pay to Vendor a deposit in the amount of Ten percent
(10%) of the total Purchase Price payable to the Vendor's
Counsel to be held by Vendor's Counsel in an interest bearing
trust account. If the deposit is not paid as required herein,
then this Agreement may be terminated by the Vendor in its
sole discretion and the parties shall have no further rights
or obligations to each other whatsoever, in connection with
this Agreement or the transactions contemplated hereby. In the
event that Closing does not occur for any reason other than
the failure by the Purchaser to comply with the terms of this
Agreement or the termination of this Agreement by the Vendor
for the Purchaser's breach of this Agreement, the Deposit and
interest earned thereon shall be immediately returned to the
Purchaser.
(c) At Closing, Purchaser shall pay to Vendor: (i) the Purchase
Price ii) less the adjustments, if any, resulting from clause
10.3, iii)less the deposit and accrued interest, iv) plus
accrued interest to the Closing Date on the Purchase Price in
accordance with clause 2.3 and any further adjustments
contemplated in Article 7.
(d) The parties shall jointly elect at Closing pursuant to Section
167 of the Excise Tax Act (Canada) to have the provisions
thereof applied to the subject transaction by completing the
GST Form 44 and the Purchaser undertakes to file such election
with the Canada Customs and Revenue Agency in a timely and
proper fashion. The Vendor's GST Number is 102994191 RC.
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2.3 INTEREST
At Closing, Purchaser shall pay to Vendor an amount equal to the
interest that would have accrued on the adjusted Purchase Price less
the Deposit at the Prime Rate plus One (1.0%) per cent, calculated
daily and not compounded, during the Interim Period.
2.4 FORM OF PAYMENT
All payments to be made at Closing shall be made by certified cheque or
bank draft.
2.5 ALLOCATION OF PURCHASE PRICE
The parties shall allocate the Purchase Price as follows:
(a) To Petroleum and Natural Gas Rights (70%) $ 706,300.00
(b) To Tangibles (30% less $1.00) $ 302,699.00
(c) To Miscellaneous Interests ($1.00) $ 1.00
TOTAL $ 1,009,000.00
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The Parties have taken into account Purchaser's assumption of
responsibility for the future abandonment, reclamation costs and
environmental responsibilities associated with the Assets and Vendor's
release of responsibility therefor when they determined the Purchase
Price.
2.6 SPECIFIC CONVEYANCES
Vendor shall prepare the Specific Conveyances at its cost, none of
which shall confer or impose upon a Party any greater right or
obligation than contemplated in this Agreement. All Specific
Conveyances that are prepared and circulated to Purchaser a reasonable
time prior to the Closing Date shall be executed and delivered by the
Parties at Closing. At Closing, Vendor shall deliver all Specific
Conveyances to Purchaser.
2.7 TITLE DOCUMENTS AND MISCELLANEOUS INTERESTS
Vendor shall deliver to Purchaser at Closing copies of the Title
Documents and any other agreements and documents to which the Assets
are subject and copies of contracts, agreements, records, books,
documents, licenses, reports and data comprising Miscellaneous
Interests which are now in the possession of Vendor or of which it
gains possession prior to Closing.
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ARTICLE 3
COMPLETION
3.1 CLOSING AND ADJUSTMENTS
(a) The closing shall take place at the offices of Vendor at 0000,
000 - 0xx Xxxxxx XX, Xxxxxxx, Xxxxxxx on the Closing Date.
(b) On the Closing Date, Vendor and Purchaser shall execute and
deliver the General Conveyance in the form attached hereto as
Schedule "C" subject to the parties completion of their
respective obligations contained herein, and to the extent
practicable, adjust and settle accounts pertaining to the
Assets in the manner contemplated by Article 7.
3.2 PURCHASER'S CONDITIONS PRECEDENT
The obligation of Purchaser to purchase Vendor's interest in and to the
Assets is subject to the following conditions precedent, which are for
the exclusive benefit of Purchaser and may be waived by Purchaser in
the manner herein provided for notice under clauses 11.1(a)(i) or (ii):
(a) from the date of this Agreement to the Closing Date, there
shall have been no material, adverse damage or change to the
Assets;
(b) the representations and warranties of Vendor shall be true and
correct in all material respects when made and as of the
Closing Date and a Certificate to that effect shall have been
delivered by Vendor to Purchaser at Closing; and
(c) all obligations of Vendor contained in this Agreement to be
performed prior to or at Closing shall have been timely
performed in all material respects and a Certificate to that
effect shall have been delivered by Vendor to Purchaser at
Closing.
(d) Vendor shall have delivered to Purchaser the General
Conveyance, the Specific conveyances, and all other documents
required to be delivered at Closing as specified herein.
(e) Vendor shall have delivered to Purchaser, at no cost to
Purchaser, registrable discharges of all security interests
affecting the Assets or "no interest" letters, acceptable to
Purchaser, with respect to
(f) Rights of First Refusal: All Rights of First Refusal will have
been exercised, been waived or lapsed by the effluxion of time
at or prior to the Closing Date.
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If any one or more of the preceding conditions precedent is not satisfied
or waived by Purchaser in the manner provided for herein for waiver at or
before the Closing, Purchaser may rescind this Agreement by written notice
to Vendor and, in such event, Purchaser and Vendor shall be released and
discharged from all obligations hereunder except as provided in clause
10.2.
3.3 VENDOR'S CONDITIONS PRECEDENT
The obligation of Vendor to sell its interest in and to the Assets is
subject to the following conditions precedent, which are for the
exclusive benefit of the Vendor and may be waived by Vendor in the
manner herein provided for notice under clauses 11.1(a)(i) or (ii):
(a) all amounts to be paid by Purchaser to Vendor at Closing shall
have been paid by Purchaser in the manner stipulated in this
Agreement;
(b) the representations and warranties of Purchaser shall be true
and correct in all material respects when made and as of the
Closing Date and a Certificate to that effect shall have been
delivered by Purchaser to Vendor at Closing; and
(c) all obligations of Purchaser contained in this Agreement to be
performed prior to or at Closing shall have been timely
performed in all material respects and a Certificate to that
effect shall have been delivered by Purchaser to Vendor at
Closing.
If any one or more of the foregoing conditions precedent has or have
not been complied with or waived by Vendor in the manner provided for
herein for waiver, at or before Closing, Vendor may, in addition to any
other remedies which it may have available to it, rescind this
Agreement by written notice to Purchaser and, in such event, Purchaser
and Vendor shall be released and discharged from all obligations
hereunder except as provided in clause 10.2.
3.4 EFFORTS TO FULFIL CONDITIONS PRECEDENT
Purchaser and Vendor shall proceed diligently and in good faith and use
all reasonable efforts to fulfil and assist in the fulfilment of the
conditions precedent. If there is a condition precedent that is to be
met prior to or at the Closing Date, and if, by the time the condition
precedent is to be met the Party for whose benefit the condition
precedent exists fails to notify the other Party if the condition
precedent has not been met, the condition precedent shall be deemed
conclusively to have been met.
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ARTICLE 4
REPRESENTATIONS AND WARRANTIES
4.1 VENDOR'S REPRESENTATIONS
Purchaser acknowledges that it is purchasing Vendor's interest in and
to the Assets on an "as is, where is" basis, without representation or
warranty and without reliance on any information provided to or on
behalf of Purchaser by Vendor, except for the following representations
and warranties, which are made (unless otherwise indicated below in
writing) as of the Effective Date and the Closing Date by the Vendor to
the Purchaser:
(a) Standing: it is a corporation duly incorporated and validly
existing under the laws of its jurisdiction of incorporation
and is authorized to carry on business in all jurisdictions in
which the Assets are located;
(b) Requisite Authority: it has the corporate capacity, power and
authority to execute and deliver this Agreement, to sell the
Assets on the terms set out in this Agreement and to perform
its obligations under this Agreement;
(c) No Conflict: the execution and delivery of this Agreement and
the completion of the sale of the Assets in accordance with
the terms of this Agreement do not and will not violate or
conflict with any provision of:
(i) the charter, bylaws or equivalent governing documents
relating to it or any Regulations applicable to it;
or
(ii) any agreement or instrument to which it is a party or
by which it is bound and of which it has knowledge or
any judgment, decree or order applicable to it;
(d) Execution and Enforceability: subject to the conditions set
forth in this Agreement, as at the date hereof and the Closing
Date, this Agreement and all documents executed and delivered
pursuant to this Agreement are and will be duly authorized,
executed and delivered by it and are legal, valid and binding
obligations of it enforceable against it in accordance with
their terms except to the extent limited by bankruptcy,
insolvency, liquidation, reorganization, moratorium or other
laws of general application affecting creditors' rights
generally or by general equitable principles;
(e) Authorizations: subject to the conditions set forth in this
Agreement, no authorization or approval or other action by, or
notice to or filing with, any governmental authority or
regulatory body exercising jurisdiction over the Assets is
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required for the due execution, delivery and performance by it
of this Agreement, other than authorizations, approvals or
exemptions previously obtained and currently in force or
regulatory consents or approvals to the transfer of well and
pipeline licences and permits and other similar licences and
permits available only after the Closing Date in the ordinary
course;
(f) Encumbrances, No Cancellation or Reduction: other than
Permitted Encumbrances, (i) Vendor has not alienated or
encumbered the Assets or any part or portion thereof, (ii)
Vendor has not committed and is not aware of there having been
committed any act or omission whereby the interest of the
Vendor in and to the Assets or any part or portion thereof may
be cancelled or determined, (iii) the Assets are now free and
clear of all liens, royalties, conversions, rights and other
claims of third parties created by, through or under Vendor or
of which Vendor has knowledge, and (iv) the interests of the
Vendor in the Assets are not subject to reduction by reference
to payout of a well or change to an interest of any other size
or nature whatsoever by virtue of any right or interest
granted by, through or under the Vendor or of which the Vendor
is otherwise actually aware of, except for such rights and
interests identified in Schedule "A";
(g) Adverse Claims: Vendor has not received notice from any third
party claiming an interest in and to the Assets adverse to the
interest of Vendor, other than Permitted Encumbrances, and
Vendor has no reason to believe that any such claim may be
made;
(h) Authorized Expenditures: in respect of the Assets, except
those described on Schedule "B", there are no financial
commitments of Vendor which are due as of the Effective Date
or which may become due by virtue of matters occurring or
arising prior to the Effective Date, other than usual
operating expenses incurred in the ordinary course of
operations or to which Purchaser has rendered its consent for
which Purchaser shall assume responsibility;
(i) No Default Notices: it has not received any notice of default
under any Title Document or Regulation pertaining to the
Assets, which default has not been rectified or waived as of
the date of this Agreement;
(j) Lawsuits and Claims: to the best of its knowledge, no suit,
action or other proceeding before any court or governmental
agency has been commenced or threatened against Vendor which
might result in impairment or loss of the interest of the
Vendor in and to the Assets or which might otherwise adversely
affect the Assets;
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(k) Payment of Royalties and Taxes: in respect of those portions
of the Assets where Vendor is Operator and, in respect of
other portions of the Assets to the best of its knowledge, 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
Assets, or the receipt of proceeds from them, and all
royalties and rentals accruing prior to Effective Date, that
are payable by it will be or will have been properly paid and
discharged;
(l) Residency For Tax Purposes: it is not a non-resident of Canada
within the meaning of section 116 of the Income Tax Act
(Canada) and the interest of Vendor in and to the Assets does
not constitute all or substantially all of the property of the
Vendor;
(m) Take or Pay Obligations: there are no take or pay obligations
relating to the Assets;
(n) Tangibles: (i) the Tangibles are free and clear of all liens,
encumbrances and adverse claims or other interests created by,
through or under Vendor, except for the Permitted
Encumbrances, (ii) to the best of its knowledge where Vendor
is not the Operator thereof, and where it is the Operator
thereof, the Tangibles have been maintained and operated in
accordance with usual oilfield practice, are in good and
operable condition, reasonable wear and tear excluded, and
(iii) none of the Tangibles are leased or rented or subject to
a title retention agreement;
(o) Broker's Fees: Vendor has not incurred any obligation or
liability, contingent or otherwise, for broker's or finder's
fees in respect of this Agreement or the transaction to be
effected by it for which Purchaser shall have any liability or
obligation;
(p) Operations: in respect of those portions of the Assets where
Vendor is Operator and, in respect of other portions of the
Assets to the best of its knowledge, the Assets have been
managed and operated in accordance with usual oilfield
practice and in accordance with the Regulations;
(q) Environmental Matters: Vendor:
(i) is not aware of and has not received any written
orders or directions under the Regulations relating
to environmental matters or abandonment and
reclamation obligations requiring any work, repairs,
construction or
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capital expenditures with respect to the Assets,
which order or direction has not been complied with
in all material respects by the Closing Date; and
(ii) it is not aware of and has not received any written
demand or notice under the Regulations from any third
party or regulatory body relating to the breach of
any environmental, health or safety law applicable to
the Assets, including any law relating to the use,
storage, treatment, shipping or disposition of
environmental contaminants, which demand or notice
remains outstanding on the Closing Date;
(iii) is not aware of any particular circumstance that it
reasonably believes to be a material and reportable
event under the Regulations.
(r) Production Purchase Contracts: except for the Production
Purchase Contracts; (i) it is not obligated to sell or deliver
Petroleum Substances produced from the Lands to any person
pursuant to agreements which cannot be terminated on 30 days'
notice or less and it has not assigned or in any way
restricted its right to receive the proceeds from the sale of
Petroleum Substances produced from the Lands nor are the
Leased Substances dedicated or reserved under contracts or
arrangements for the sale of Petroleum Substances, except
where Permitted Encumbrances would apply; and (ii) there are
no gas balancing or similar agreements pertaining to the
Leased Substances or any of them or agreements for the
transportation or disposal of the Leased Substances or any of
them or substances produced in connection with the Leased
Substances or any of them or agreements for the contract
operation by a third party of the Assets or any of them.
(s) Abandonment of Xxxxx: in respect of those portions of the
Assets where Vendor is Operator and in respect of other
portions of the Assets to the best of Vendor's knowledge, all
Xxxxx located on the Lands or lands with which the Lands have
been pooled or unitized which have been abandoned have been
properly plugged and abandoned and the wellsite therefore
properly restored in accordance with good oilfield practice
and in material compliance with the Regulations;
(t) Surface Rights Vendor has obtained or acquired or holds all
necessary Surface Rights for legal and authorized access to
the Lands (or lands with which the Lands have been pooled or
unitized), Xxxxx and Tangibles, is not in material default
under any such Surface Rights nor has received notice from any
person as to default thereunder;
(u) Quiet Enjoyment Subject at all times to Vendor's other
representations and warranties made pursuant to this clause,
the Permitted Encumbrances and any
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agreements pertaining to the Assets and on the lessee's or
holder's part to be paid, performed or observed, the Purchaser
may enter into and upon, hold and enjoy the Assets for the
residue of their respective terms for Purchaser's own use and
benefit without any lawful interruption of or by the Vendor or
any person claiming by, through or under the Vendor.
(v) Regulatory Production Allowables: To the Vendor's knowledge,
no notice has been received under the Regulations that a well
has produced in excess of regulatory production allowables,
and there is no pending change in those production allowables,
other than as may generally be applicable under the
Regulations.
4.2 LIMITATION
(a) Vendor makes no representations or warranties with respect to
the Assets, except as contained in clause 4.1. Except to the
extent provided in Clause 4.1, Vendor disclaims any liability
or responsibility for any representation or warranty that may
have been made or alleged to have been made and contained in
any document or statement made or communicated to Purchaser
including, but not limited to, any opinion, information or
advice provided to Purchaser by any shareholder, director,
officer, employee, agent, consultant or representative of
Vendor in respect of:
(i) the quantity, quality or recoverability of Petroleum
Substances within or under the Lands;
(ii) estimates of prices or future cash flows arising from
the sale of Petroleum Substances produced from the
Lands or estimates of other revenues attributable to
the Assets or the availability or continued
availability of transportation to sell those
Petroleum Substances;
(iii) any engineering, geological or other interpretations
or economic evaluations respecting the Assets; and
(iv) the quality, condition, fitness or suitability for
purpose or merchantability of any of the Assets.
(b) Purchaser acknowledges it has made, and will continue prior to
Closing Date to make, its own independent examination,
investigation, analysis, evaluation and verification of the
Assets, including Purchaser's own estimate and appraisal of
the extent and value of the Petroleum Substances attributable
to the Lands and it has relied solely on same as to its
assessment of the condition (environmental or otherwise),
quantum and value of the Assets;
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(c) Except with respect to the representations and warranties in
clause 4.1, Purchaser forever releases and discharges Vendor
and its directors, officers, servants, agents and employees
from any claims and all liability to Purchaser or Purchaser's
assigns and successors, as a result of the use or reliance
upon advice, information or materials pertaining to the Assets
which was delivered or made available to Purchaser by Vendor
or its directors, officers, servants, agents or employees
prior to or pursuant to this Agreement, including, without
limitation, any evaluations, projections, reports and
interpretive or non-factual materials prepared by or for
Vendor, or otherwise in Vendor's possession.
4.3 PURCHASER'S REPRESENTATIONS
Purchaser makes the following representations and warranties to Vendor,
which are made (unless otherwise indicated below in writing) as of the
Effective Date and the Closing Date :
(a) Standing: it is a corporation duly incorporated under the laws
of its jurisdiction of formation and is authorized to carry on
business in all jurisdictions in which the Assets are located;
(b) Requisite Authority: it has the capacity, power and authority
to execute and deliver this Agreement and to purchase and pay
for the Assets the terms set out in this Agreement and to
perform its other obligations under this Agreement;
(c) No Conflict: the execution and delivery of this Agreement and
the completion of the purchase of the Assets in accordance
with the terms of this Agreement do not and will not violate
or conflict with any provision of:
(i) the charter, bylaws or equivalent governing documents
relating to it or any Regulations applicable to it;
or
(ii) any agreement or instrument to which it is a party or
by which it is bound and of which it has knowledge or
any judgment, decree or order applicable to it;
(d) Execution and Enforceability: subject to the conditions set
forth in this Agreement, as at the date hereof and the Closing
Date, this Agreement and all documents executed and delivered
pursuant to this Agreement are and will be duly authorized,
executed and delivered by it and are legal, valid and binding
obligations of it enforceable against it in accordance with
their terms except to the extent limited by bankruptcy,
insolvency, liquidation, reorganization, moratorium or other
laws of
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general application affecting creditors' rights generally or
by general equitable principles;
(e) Investment Canada Act: it is not a "non-Canadian" for the
purposes of the Investment Canada Act (Canada);
(f) Authorizations: subject to the conditions set forth in this
Agreement, no authorization or approval or other action by, or
notice to or filing with, any governmental authority or
regulatory body exercising jurisdiction over the Assets is
required for the due execution, delivery and performance by it
of this Agreement, other than authorizations, approvals or
exemptions previously obtained and currently in force or
regulatory consents or approvals to the transfer of well
licences and other similar licences and permits available only
after the Closing Date in the ordinary course; and
(g) Purchaser as Principal: it is acquiring the Assets in its
capacity as a principal and is not purchasing the Assets as
agent for a third party or for the purpose of resale or
distribution to a third party immediately following the
closing of this transaction.
4.4 ENFORCEMENT LIMITATION
(a) The representations and warranties set forth in clause 4.1
shall survive the Closing; however, Purchaser may not enforce
any claim for breach of a representation and warranty
contained in clause 4.1 unless it has given Vendor notice of
the claim within 12 months from the Closing Date, including
particulars of the representation and warranty alleged to have
been breached.
(b) The representations and warranties set forth in clause 4.3
shall survive the Closing; however, Vendor may not enforce any
claim for breach of a representation and warranty contained in
clause 4.3 unless it has given Purchaser notice of the claim
within 12 months from the Closing Date, including particulars
of the representation and warranty alleged to have been
breached.
ARTICLE 5
INDEMNITIES FOR
REPRESENTATIONS & WARRANTIES
5.1 VENDOR'S INDEMNITIES FOR REPRESENTATIONS AND WARRANTIES
Vendor shall be liable to Purchaser for and shall, in addition,
indemnify and hold harmless the Purchaser from and against, all Losses
suffered, sustained, paid or incurred by Purchaser as a result of
Vendor's breech of the representations and warranties contained in
section 4.1.
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5.2 LIMITATION
In no event shall the total of Vendor's liabilities and indemnities
hereunder exceed the Purchase Price.
5.3 PURCHASER'S INDEMNITIES FOR REPRESENTATIONS AND WARRANTIES
Purchaser shall be liable to Vendor for and shall, in addition,
indemnify and hold harmless the Vendor from and against, all Losses
suffered, sustained, paid or incurred by Vendor as a result of
Purchaser's breech of the representations and warranties contained in
section 4.3 been accurate and truthful, provided however that nothing
in this section 5.3 shall be construed so as to cause Purchaser to be
liable to or indemnify Vendor in connection with any representation or
warranty contained in section 4.3 if and to the extent that Vendor did
not rely upon such representation or warranty.
5.4 TIME LIMITATION
No claim under this Article 5 shall be made or be enforceable by a
party unless written notice of such claim, with reasonable particulars,
is given by such party to the party against whom the claim is made
within a period of 12 months from the Closing Date.
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ARTICLE 6
PURCHASER'S INDEMNITIES
6.1 GENERAL INDEMNITY
Purchaser shall:
(a) be liable to Vendor for all Losses, (including legal costs on
a solicitor/client basis) whatsoever which Vendor may suffer,
sustain, pay or incur; and, in addition
(b) indemnify and save Vendor and its directors, officers,
servants, agents and employees harmless from and against all
Losses (including legal costs on a solicitor/client basis)
whatsoever which may be brought against or suffered by Vendor
or its directors, officers, servants, agents or employees or
which it may suffer, sustain, pay or incur;
by reason of any matter or thing arising out of, resulting from,
attributable to or connected with the Assets and occurring or accruing
on or after the Effective Date, except any Losses to the extent that
the same are caused by the gross negligence or wilful or wanton
misconduct of Vendor or are caused by a breech of the Vendor's
representations and warranties contained in Section 4.1. The
responsibility prescribed by this clause, however, does not provide an
extension of any representation or warranty under Section 4.1 or any
additional remedy for the Purchaser's breech thereof..
6.2 ABANDONMENT AND RECLAMATION
Subject to the representations and warranties of Vendor contained in
clause 4.1 hereof, Purchaser shall see to the timely performance of all
abandonment and reclamation obligations pertaining to the Assets which
in the absence of this Agreement would be the responsibility of Vendor.
Purchaser shall be liable to Vendor and shall, in addition, indemnify
Vendor from and against all Losses suffered, sustained, paid or
incurred by Vendor should Purchaser fail to timely perform such
obligations, subject to Vendor's representations and warranties in
clause 4.1.
6.3 ASSETS ACQUIRED ON "AS IS" BASIS
Notwithstanding the foregoing provisions of this clause, but subject to
the representations and warranties of Vendor contained in clause 4.1
(q), it is understood and agreed that Purchaser is acquiring the Assets
on an "as is, where is" basis as of the Effective Date. Purchaser
agrees that it is familiar with the condition and use of the Assets and
the xxxxx located on the Lands (or lands with which the Lands have been
pooled or unitized), that
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Vendor has provided Purchaser with a reasonable opportunity to inspect
the Assets and the Lands (or lands with which the Lands have been
pooled or unitized) at the sole cost, risk and expense of Purchaser
(insofar as Vendor could reasonably provide such access) and that it is
not relying upon any representation or warranty from Vendor as to the
condition, environmental or otherwise, of the Assets except as is
specifically made pursuant to clause 4.1 (q). Purchaser further agrees
that on and after the Effective Date it shall:
(i) be solely liable and responsible for any and all Losses
(including legal costs on a solicitor/client basis) whatsoever
which Vendor may suffer, sustain, pay or incur; and, in
addition
(ii) indemnify and save Vendor and its directors, officers,
servants, agents and employees harmless from and against any
and all Losses (including legal costs on a solicitor/client
basis) whatsoever which may be brought against or suffered by
Vendor or its directors, officers, servants, agents or
employees or which it may suffer, sustain, pay or incur;
by reason of any matter or thing arising out of, resulting from,
attributable to or connected with any environmental damage or
contamination or other environmental problems pertaining to the Assets
or to any well located on the Lands, or any of them, whether occurring
or accruing before, on or after the Effective Date including, without
limitation, surface, underground, air, ground water or surface water
contamination, damage from or removal of hazardous or toxic substances,
spills of any nature whatsoever, clean-up, plugging, well abandonment
and reclamation or failure to perform any or all of the foregoing and
the breach of applicable Regulations in effect at any time. Purchaser
hereby releases Vendor from any claims Purchaser may have against
Vendor and, in addition, Purchaser hereby waives any rights it may have
to name Vendor as a third party to any action commenced against
Purchaser with respect to all such liabilities and responsibilities,
except for any claims which Purchaser may have for the breach of a
representation or warranty made by Vendor pursuant to clause 4.1.
6.4 APPLICATION TO OTHER DOCUMENTATION
The liabilities and indemnities contained in Article 6 shall be deemed
to apply to, and shall not merge in, any conveyances, transfers,
assignments, novation agreements and other documents or instruments
conveying the Assets to Purchaser or otherwise provided with respect to
the transactions herein, despite the actual terms of such agreements,
notwithstanding any rule of law, equity or statute to the contrary, and
all such rules are hereby waived. Any claim by a Party must be made by
notice to the other Party and include particulars of the claim and of
the facts giving rise to it.
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6.5 SUBSTITUTION AND SUBROGATION
On a best efforts basis, Vendor shall convey the Assets to Purchaser,
with, to the extent it is able, full right of substitution and
subrogation of Purchaser in the position of Vendor with respect to the
benefit of all covenants and warranties previously given by others for
the Assets or any part of them.
ARTICLE 7
OPERATING ADJUSTMENTS
7.1 ADJUSTMENTS
(a) Five (5) Business Days before the Closing Date, Vendor shall
prepare and submit to Purchaser an interim statement of
adjustments effective as of the Effective Date for approval by
Purchaser. At Closing Date the Parties shall, to the extent
practicable, adjust and settle accounts pertaining to the
Assets. The Purchase Price shall be adjusted to reflect the
adjustments and settlements shown on the interim statement of
adjustments.
(b) All benefits and obligations of any kind and nature accruing
payable, paid, received or receivable with respect to the
Assets, prior to the Effective Date, including without
limitation operating costs, capital costs, lease rentals,
royalty obligations, GST and the proceeds from the sale of
production from the Lands that is beyond the wellhead prior to
the Effective Date are for Vendor's account.
(c) All benefits and obligations of any kind and nature accruing
payable, paid, received or receivable with respect to the
Assets on and after the Effective Date, including without
limitation operating costs, capital costs, lease rentals,
royalty obligations, GST and the proceeds from the sale of
production from the Lands that is beyond the wellhead on and
after the Effective Date are for Purchaser's account
(d) The following provisions will apply to the apportionment of
the revenues, costs, expenses and other relevant charges
referred to in subclauses (b) and (c):
(i) all prepaid rentals and similar payments required to
preserve any of the Title Documents, whether paid
before or after the Effective Date for the Assets,
shall be apportioned between Vendor and Purchaser on
a per diem basis as of the Effective Date, unless and
to the extent that such allocation is waived by
Vendor;
(ii) operating, capital cost advances and similar
prepayments made by Vendor for the Assets prior to
Closing Date and relating to benefits accruing after
the Effective Date are the responsibility of
Purchaser and an amount equal to such prepayments
shall be credited to Vendor at Closing Date;
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(iii) there will be no adjustments for Alberta Royalty Tax
Credits; and
(iv) Purchaser will be credited with an amount equal to:
A) the proceeds from the sale of production from the Lands or
lands with which the Lands have been pooled or unitized for
the Interim Period; less
B) all royalties (net of gas cost allowances) and operating
expenses (excluding transporting and marketing fees),for the
Interim Period; less
C) field office overhead pertaining to the Assets for the
Interim Period; plus
D) interest calculated on the amount in (A) less the sum of the
amounts in (B), and (C) for the Interim Period at a rate of
Prime plus one percent (1.0%) per annum
(e) Within the 90 day period following the Closing Date, the
Vendor will prepare on the basis of information available at
the time and with input from the Purchaser, a written final
statement of all adjustments and payments to be made under
this Agreement.
(f) Notwithstanding the foregoing provisions, the Purchaser shall
have the right, for a one (1) year period following the
Closing Date, to audit the books, records and accounts of the
Vendor respecting the Assets, for the purpose of affecting
adjustments pursuant to this Article. Such audit shall be
conducted upon reasonable notice to the Vendor at the Vendor's
offices during the Vendor's normal business hours, and shall
be conducted at the sole expense of the Purchaser. Any claims
or discrepancies disclosed by such audit shall be made in
writing to the Vendor within two (2) months following the
completion of such audit, and the Vendor shall respond in
writing to any claims of discrepancies within six (6) months
of the receipt of such claims. To the extent that the Parties
are unable to resolve any outstanding claims of discrepancies
disclosed by such audit within two (2) months of the Vendor's
response thereto such matter will be resolved pursuant to
Article 11 hereto.
(g) All adjustments shall be settled by payment by the Party
required to make payment hereunder within 30 days of being
given notice of the determination of the amount owing, failing
which interest shall accrue from the expiry of the 30 day
period on such outstanding amounts at the rate of 1% per annum
above the Prime Rate regardless of whether such Party has been
given prior notice of the accrual of interest hereunder.
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(h) Vendor shall make payment of all rentals and royalties
required under the Title Documents for the three (3) month
period following the Closing Date, which payments shall be for
Purchaser's account (provided such payments accrue to the
period on or after the Effective Date) and shall be included
in the Interim Statement of Adjustments under Article 7
hereof.
(i) Nothwithstanding subclause (f) hereto, further adjustments on
the basis indicate in this Article, will be made as in the
following circumstances:
(1) adjustments pursuant to joint venture audits or
adjustments by the operator of the Assets conducted
within 36 months after the Closing Date provided a
notice requesting adjustments pursuant to such audits
or adjustments shall be forwarded by a Party to the
other Party within 30 days of receipt of the final
report from which that adjustment arises from.
(2) adjustments relating to an audit conducted pursuant
to the Regulations or the provisions of the Leases
with respect to the payment of royalties conducted
within five years following the Closing Date provided
a notice requesting adjustments pursuant to such
audits or adjustments shall be forwarded by a Party
to the other Party within 30 days of receipt of the
final report from which that adjustment arises from.
(j) Subject to Article 11 and the timing restrictions in this
Article 7, the Parties agree that the period for seeking a
remedial order under Section 3(1)(a) of the Limitations Act
(Alberta) is extended from two (2) years to four (4) years for
all claims that may arise under this Article 7 respecting
adjustments and audits
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ARTICLE 8
MAINTENANCE OF ASSETS
8.1 POST-COMPLETION ADMINISTRATION
Following Closing until Purchaser becomes the recognized holder of the
Assets in the place of Vendor, the provisions of clause 8.2 shall apply
to the Assets and Vendor shall, to the extent its interest permits and,
subject to the Title Documents and other agreements to which the Assets
are subject:
(a) within thirty days of Vendor's receipt, deliver to Purchaser
all revenues, proceeds and other benefits received by Vendor
for the Assets after deduction of any amounts owing by
Purchaser to Vendor with respect to the Assets; and
(c) in a timely manner deliver to Purchaser all third party
notices and communications received by Vendor for the Assets;
and
(d) in a timely manner deliver to third parties all notices and
communications as Purchaser may reasonably request and all
monies and other items Purchaser reasonably provides for the
Assets;
(e) as agent of Purchaser, do and perform all acts and things, and
execute and deliver all agreements, notices and other
documents and instruments, that Purchaser reasonably requests
for the purpose of facilitating the exercise of rights
incidental to the ownership of the Assets.
8.2 AGENCY
From the execution hereof until the date that Purchaser becomes the
recognized holder of the Assets in place of Vendor, Vendor shall, using
usual oil field practices, as agent of Purchaser, do and perform all
acts and things, and execute and deliver all agreements, notices and
other documents and instruments, that Purchaser reasonably requests,
using usual oil field practices, for the purpose of maintaining and
operating the Assets. All instructions from Purchaser hereunder which
require a capital expenditure in excess of $10,000 shall be in writing.
8.3 INDEMNITY
Vendor shall not be liable to Purchaser for any loss or damage suffered
by Purchaser in connection with the arrangement established by clauses
8.1 and 8.2, except to the extent that the loss or damage is caused by
Vendor's gross negligence or its wilful misconduct.
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Purchaser shall indemnify and save Vendor and its directors, officers,
servants, agents and employees harmless from and against any Losses
(including legal costs on a solicitor/client basis) which may be
brought against or suffered by any of them arising out of the
performance by Vendor of its obligations under clauses 8.1 or 8.2. An
action or omission of Vendor or its directors, officers, servants,
agents or employees shall not be regarded as gross negligence or wilful
misconduct to the extent it was done or omitted to be done in
accordance with the instructions of or with the concurrence of
Purchaser. Nothing in clauses 8.1 or 8.2 shall be construed as
extending or restricting or limiting in any manner any of the other
representations, warranties or other obligations of the parties under
this Agreement.
The Vendor may retain or subsequently obtain from Purchaser copies or
photocopies of any of the documents included in the Miscellaneous
Interests that it considers necessary to enable it to comply with any
laws or the requirements of any authority.
8.4 CONSENT OF PURCHASER
Notwithstanding clause 8.1, Vendor shall not, without the written
consent of Purchaser, which consent shall not be unreasonably withheld
by Purchaser and which, if provided, shall be provided in a timely
manner:
(a) make any commitment or propose, initiate or authorize any
capital expenditure with respect to the Assets of which
Vendor's share is in excess of $10,000.00, except in case of
an emergency or in respect of amounts which Vendor may be
committed to expend or be deemed to authorize for expenditure
without its consent;
(b) surrender or abandon any of the Assets;
(c) amend or terminate any Title Document or any other agreement
or document to which the Assets are subject, or enter into any
new agreement or commitment relating to the Assets; or
(d) sell, encumber or otherwise dispose of any of the Assets or
any part or portion thereof excepting sales of the Leased
Substances or any of them in the normal course of business.
Notwithstanding the foregoing, Vendor may assume such obligations or
commitments and propose or initiate such operations or the exercise of
any such right or option without the prior consent of Purchaser, if
Vendor reasonably determines that such expenditures or actions are
necessary for the protection of life, property, or income, in which
case Vendor shall promptly notify Purchaser of such intentions or
actions and Vendor's estimate of the costs and expenses associated
therewith.
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ARTICLE 9
PRE-CLOSING INFORMATION
9.1 TITLE EXAMINATION
At all reasonable times from the date hereof until the Closing Date,
Vendor shall, if and as requested by Purchaser, make available to
Purchaser and Purchaser's Counsel in Vendor's offices in Calgary all
information pertaining to the Assets, and any title opinions regarding
the Assets, which Vendor has possession or to which it has access,
subject to any applicable confidentiality agreements, all of the Title
Documents and any other agreements and documents to which the Assets
are subject, subject to the limitations contained in Miscellaneous
Interests.
9.2 ACCESS TO THE ASSETS
At Purchaser's cost, risk and expense and upon reasonable notice,
Vendor shall permit Purchaser physical access to the Assets to the
extent Vendor has or can reasonably obtain access.
ARTICLE 10
TITLE DEFECTS AND RIGHTS OF FIRST REFUSAL
10.1 NOTICE OF MATERIAL TITLE DEFECTS
From time to time, as soon as reasonably practicable after
determination, and in any event no later than 7 Business Days before
the Closing Date, Purchaser shall notify Vendor in writing of Material
Title Defects. Such notice shall include a description of each Material
Title Defect and the interests affected thereby, the value allocated by
Purchaser acting reasonably to each affected interest and the amount,
in Purchaser's opinion acting reasonably, by which the value of each
affected interest has been reduced by the Material Title Defect.
Failure to include a Material Title Defect in a written notice shall be
deemed to be a waiver of such Material Title Defect for the purposes of
this section.
10.2 RECTIFICATION BY VENDOR
Prior to the Closing Date, Vendor shall use all reasonable efforts to
cure or rectify the Material Title Defects which Purchaser gives notice
of pursuant to clause 10.1. If any such Material Title Defects are not
cured or removed at or prior to the Closing Date:
(a) where the cumulative amount by which the value of the affected
interests has been reduced is, less than 5% of the Purchase
Price (as set out in clause 2.2), Purchaser
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shall complete the purchase of Vendor's interest in and to the
Assets without adjustment of the Purchase Price on account of
such Material Title Defects;
(b) where the cumulative amount by which the value of the affected
interests has been reduced is, in Purchaser's opinion acting
reasonably, 5% or more of the Purchase Price (as set out in
clause 2.2):
(i) the Parties may delay Closing to a mutually agreeable
time and date which in no event shall be later than
30 days after the Closing Date, in which case:
(A) Vendor shall make further attempts to cure
or remove the uncured Material Title
Defects; and
(B) when such mutually agreeable time and date
arrives, the elections pursuant to this
subsection 10.2(b) shall once again be made;
or
(ii) Purchaser may waive the uncured Material Title
Defects, in which case all of Vendor's interest in
and to the Assets shall be purchased by Purchaser
without an adjustment to the Purchase Price; or
(iii) Purchaser may purchase Vendor's interest in and to
the Assets including Vendor's interest in and to the
Assets that are affected by the uncured Material
Title Defects, in which case the Purchase Price shall
be adjusted by the value mutually agreed upon by the
Vendor and the Purchaser for each affected interest,
acting reasonably, provided that in reaching this
decision, the Parties shall take into account the
probability of the Material Title Defect actually
materializing having regard to the particular
circumstances;
(c) where the cumulative amount by which the value of the
interests affected by the Material Title Defects has been
reduced is, in Purchaser's opinion acting reasonably, 20% or
more of the Purchase Price (as set out in clause 2.2), in
addition to the elections set out in subsection 10.2(b),
either Vendor or Purchaser may terminate this Agreement upon
written notice to the other Party, in which case the Parties
shall have no further obligation to each other hereunder,
except for obligations arising pursuant to clause 10.2.
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10.3 RIGHTS OF FIRST REFUSAL
(a) If all or any portion of the Assets is subject to Rights of
First Refusal, then Vendor shall, upon receipt of Purchaser's
bona fide allocations of value, promptly serve all notices as
are required under the applicable Rights of First Refusal
provisions.
(b) If any of such Rights of First Refusal is exercised, Purchaser
shall purchase that portion of the Assets which are not
subject to such Rights of First Refusal that have been
exercised. In such event, the Purchase Price shall be adjusted
downward according to the amounts allocated to such of the
Assets which are subject to Rights of First Refusal which have
been exercised as determined pursuant to clause 3.3 (a) and
the sale of the balance of the Assets to Purchaser
contemplated hereby shall be completed on the Closing Date and
all reference herein to Assets shall be deemed to refer only
to the balance of the Assets. Provided if a Right of First
Refusal is considered a Material Title Defect in accordance
with subclause 1.1 and if such Right of First Refusal is
exercised then the value of such Right of first Refusal shall
be included in the calculation of the thresholds described in
Clause 10.2 hereto.
ARTICLE 11
DISPUTE RESOLUTION
11.1 DISPUTES INITIALLY REFERRED TO MEDIATION
The Parties will attempt to resolve any dispute arising hereunder
through consultation and negotiation in good faith. If those attempts
fail, a Party may, by notice to the other Party at any time during
those negotiations, request the other Party to attempt to resolve that
dispute through mediation, including with that notice sufficient detail
to enable the other Party to understand the issues that remain in
dispute. The Parties will attempt to agree on the selection of the
mediator within 5 Business Days of receipt of that notice, unless a
Party give notice to the other Party within that period that it is not
prepared to proceed with mediation respecting that dispute. If the
Parties are proceeding with a mediation and are unable to select a
mediator within that period, either Party may thereafter deliver a
written request to The Canadian Foundation for Dispute Resolution to
attempt to select, within 2 Business Days of the receipt of that
request, a mediator, qualified by education and experience to resolve
that dispute, and the parties agree that the person so selected will be
the mediator for the dispute. Unless otherwise agreed, the Parties will
commence a mediation within 15 Business Days of the selection of the
mediator, and the mediation process will continue until the dispute is
resolved, a Party serves notice to the other Party that it wishes to
terminate the mediation or the mediator makes a written determination
that the dispute cannot be resolved through mediation, whichever first
occurs. The Parties will each bear their own costs associated with a
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mediation, but will share the common costs of a mediation equally,
including, without limitation, the cost of the mediator.
11.2 ARBITRATION PROCEEDINGS
A Party that wishes to pursue further proceedings after a failed or
terminated mediation under Clause 11.1 must refer the dispute to
binding arbitration for final resolution if the dispute pertains to (i)
adjustments under Article 7; ii) the value or allocation to be use in a
Right of First Refusal notice or iii) the value of Assets for which
Title Defects remain uncured under Clause 10.2. Any such arbitration,
and any other arbitration the Parties may agree to conduct hereunder,
will be conducted under the Commercial Arbitration Rules of the
Canadian Foundation for Dispute Resolution. Except as otherwise
provided in this Clause, a Party may commence a court action with
respect to any other dispute after a failed or terminated mediation.
11.3 LIMITATION PERIODS AND INTERIM RELIEF
All limitation periods respecting the commencement of an action will be
stayed during the period that the Parties are attempting to resolve a
dispute under Clause 11.1 or 11.2. A Party may, at any time it believes
it necessary to prtect its interest during that period, seek interim or
provisional relief, in the form of a temporary restraining order,
preliminary injunction or other interim equitable relief concerning a
dispute under this Agreement, notwithstanding anything to the contrary
in this Article.
ARTICLE 12
GENERAL
12.1 NOTICES
(a) All notices, waivers and other communications permitted or
required hereunder shall be in writing and shall be delivered
as follows:
(i) by personal service on a party at the address of such
party set out below, in which case the item so served
shall be deemed to have been received by that party
when personally served;
(ii) by facsimile transmission to a party to the fax
number of such party set out below, in which case the
item so transmitted shall be deemed to have been
received by that party when transmitted;
30
32
(iii) except in the event of an actual or threatened postal
strike or other labour disruption that may affect
mail service, by mailing first class registered post,
postage prepaid, to a party at the address of such
party set out below, in which case the item so mailed
shall be deemed to have been received by that party
on the 3rd Business Day following the date of
mailing.
A party may from time to time change its address for service or its fax
number or both by giving written notice of such change to the other
party.
(b) For the purposes of this clause 12.1, the address for service
of the Parties shall be as follows:
VENDOR: Equatorial Energy Inc.
0000, 000 - 0xx Xxxxxx XX
Xxxxxxx, XX X0X 0X0
Attention: Land Manager
Telephone: (000) 000-0000
Facsimile: (000) 000-0000
PURCHASER: Geocan Energy Inc.
000, 000- 0xx Xxxxxx XX
Xxxxxxx, XX X0X 0X0
Attention: Land Manager
Telephone: (000) 000-0000
Facsimile: (000) 000-0000
12.2 ENUREMENT
A Party may not assign its interest in this Agreement without the prior
written consent of the other Party, which consent will not be
unreasonable withheld. This Agreement enures to the benefit of and is
binding upon the Parties and their respective successors and permitted
assigns.
12.3 TIME OF ESSENCE
Time is of the essence in this Agreement.
31
33
12.4 GOVERNING LAW
This Agreement shall in all respects be governed by, interpreted and
construed in accordance with the laws of the Province of Alberta and
the laws of Canada applicable therein and shall in every regard be
treated as a contract made in the Province of Alberta. The Parties
irrevocably attorn to the jurisdiction of the courts of the Province of
Alberta and courts of appeal therefrom in respect of all matters
arising out of this Agreement.
12.5 FURTHER ASSURANCES
Each Party will, from time to time and at all times after Closing,
without further consideration, do such further acts and deliver all
such further assurances, deeds and documents as shall be reasonably
required in order to fully perform and carry out the terms of this
Agreement.
12.6 OPERATORSHIP
Purchaser acknowledges that Vendor is unable to assign to Purchaser
operatorship of the Assets, if any, operated by Vendor and in respect
of which Vendor does not have a 100% working interest. Vendor shall,
however, use reasonable best efforts to assist Purchaser in its attempt
to obtain operatorship.
12.7 WAIVER
A waiver by either Party is not effective unless in writing and a
waiver affects only the matter and its occurrence specifically
identified in the writing granting the waiver and does not extend to
any other matter or occurrence.
12.8 NO-MERGER
The covenants, representations, warranties and indemnities contained in
this Agreement shall be deemed to be restated in any and all
assignments, conveyances, transfers and other documents conveying the
interests of Vendor in and to the Assets to Purchaser, subject to any
and all time and other limitations contained in this Agreement. There
shall not be any merger of any covenant, representation, warranty or
indemnity in such assignments, conveyances, transfers and other
documents notwithstanding any rule of law, equity or statute to the
contrary and such rules are hereby waived.
12.9 NO AMENDMENT EXCEPT IN WRITING
No amendment shall be made to this Agreement unless in writing,
executed by the Parties.
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34
12.10 SUPERSEDES PRIOR AGREEMENTS
This Agreement supersedes all other agreements (verbal or written)
between the Parties with respect to the purchase and sale of the
Assets, including without limitation the Offer to Purchase between the
Parties dated March 12, 2001 which the Parties agree is hereby
terminated and of no further force or effect and expresses the entire
agreement of the Parties with respect to the transactions contained
herein.
11.11 COUNTERPART
This Agreement may be executed in as many counterparts as are necessary
and all executed counterparts together shall constitute one agreement.
11.12 INVALIDITY
In case any provisions of this Agreement should be invalid, illegal or
unenforceable in any respect, the validity, legality or enforceability
of the remaining provisions contained herein shall not in any way be
affected or impaired thereby.
IN WITNESS WHEREOF the Parties have duly executed this Agreement as of the date
first above written.
EQUATORIAL ENERGY INC.
Per:
-------------------------------
Xxxxx Xxxx, Vice President, Land
and Business Development
GEOCAN ENERGY INC.
Per:
-------------------------------
Per:
-------------------------------
Execution page to an Agreement of Purchase and Sale effective
March 1, 2001 between Equatorial Energy Inc., as Vendor, and
Geocan Energy Inc., as Purchaser.
33
35
SCHEDULE "A"
ATTACHED TO AN AGREEMENT OF PURCHASE AND SALE EFFECTIVE MARCH 1, 2001
BETWEEN EQUATORIAL ENERGY INC., AS VENDOR, AND GEOCAN ENERGY INC., AS PURCHASER
TITLE DOCUMENTS, LANDS, PETROLEUM AND NATURAL GAS RIGHTS,
CERTAIN PERMITTED ENCUMBRANCES
1
36
SCHEDULE "B"
ATTACHED TO AN AGREEMENT OF PURCHASE AND SALE EFFECTIVE MARCH 1, 2001
BETWEEN EQUATORIAL ENERGY INC., AS VENDOR, AND GEOCAN ENERGY INC., AS PURCHASER
XXXXX
NAME LOCATION
As Attached
AFE'S
NONE
37
SCHEDULE "C"
ATTACHED TO AN AGREEMENT OF PURCHASE AND SALE EFFECTIVE MARCH 1, 2001
BETWEEN EQUATORIAL ENERGY INC., AS VENDOR, AND GEOCAN ENERGY INC., AS PURCHASER
PRODUCTION PURCHASE CONTRACTS
NONE
38
SCHEDULE "D"
ATTACHED TO AN AGREEMENT OF PURCHASE AND SALE EFFECTIVE MARCH 1, 2001
BETWEEN EQUATORIAL ENERGY INC., AS VENDOR, AND GEOCAN ENERGY INC., AS PURCHASER
GENERAL CONVEYANCE
(________ Area)
THIS GENERAL CONVEYANCE made as of the ____ day of ____________, 2001.
BETWEEN:
[COMPANY NAME], a body corporate, having offices in Calgary,
Alberta ("Vendor")
- and -
[COMPANY NAME], a body corporate, having offices in Calgary,
Alberta ("Purchaser")
WHEREAS Vendor and Purchaser have entered into an Agreement of Purchase
and Sale effective _______________ (the "Agreement");
AND WHEREAS pursuant to the Agreement, Vendor has agreed to sell and
convey to Purchaser and Purchaser has agreed to purchase and accept from Vendor
the Assets;
AND WHEREAS all of the conditions precedent to the obligations of the
parties hereto to close the Agreement have been fulfilled or waived in
compliance with the Agreement;
NOW THEREFORE for the consideration provided for in the Agreement and
in consideration of the premises hereto and the covenants and agreements
hereinafter set forth, the Parties agree as follows:
1. CONVEYANCE
Vendor hereby sells, assigns, transfers, conveys and sets over to
Purchaser and Purchaser hereby purchases from Vendor all of Vendor's
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, absolutely, subject to the terms of the Agreement.
1
39
2. COVENANTS
The covenants, representations, warranties and indemnities in the
Agreement are incorporated herein as fully and effectively as if they
were set out herein and there shall not be any merger of any covenant,
representation, warranty or indemnity contained in the Agreement by the
execution and the delivery hereof, any rule of law, equity or statute
notwithstanding.
3. SUBORDINATE DOCUMENT
This General Conveyance is executed and delivered by the Parties
pursuant to the Agreement for the purposes of the provisions of the
Agreement and the terms and conditions hereof shall be read in
conjunction with the terms of the Agreement. The provisions of the
Agreement shall prevail if there is a conflict between the provisions
of the Agreement and this General Conveyance.
4. SUBSTITUTION
The assignment and conveyance effected by this Agreement is made with
full right of substitution of Purchaser in and to all covenants,
representations, warranties and indemnities by others for the benefit
of Vendor heretofore given or made in respect of the Assets or any part
thereof.
5. ENUREMENT
This General Conveyance enures to the benefit of and is binding upon
the Parties and their respective successors and permitted assigns.
6. FURTHER ASSURANCES
Each Party shall, after the date of this General Conveyance, at the
request of the other Party and without further consideration, do all
further acts and execute and deliver all further documents which are
reasonably required to perform and carry out the terms of this General
Conveyance.
7. INTERPRETATION
This Agreement shall in all respects be subject to and interpreted,
construed and enforced in accordance with and under the laws of the
Province of Alberta and shall in every regard be treated as a contract
made in the Province of Alberta. The parties hereto irrevocably attorn
and submit to the jurisdiction of the courts of the Province of Alberta
in respect of all matters arising out of or in connection with this
Agreement.
2
40
8. DEFINED TERMS
Capitalized terms used herein shall have the respective meanings
ascribed thereto in the Agreement, unless otherwise defined herein.
9. COUNTERPART
This General Conveyance may be executed in as many counterparts as are
necessary and all executed counterparts together shall constitute one
agreement.
IN WITNESS WHEREOF the Parties have duly executed this General
Conveyance.
[COMPANY NAME]
PER:
----------------------------------------
[COMPANY NAME]
PER:
----------------------------------------
PER:
----------------------------------------
Execution page to a General Conveyance dated the ____ day of ____________, 2001
between ____________________, as Vendor, and _________________________, as
Purchaser.
3
41
Page 1 of Schedule E
SCHEDULE "E"
ATTACHED TO AN AGREEMENT OF PURCHASE AND SALE EFFECTIVE MARCH 1, 2001
BETWEEN EQUATORIAL ENERGY INC., AS VENDOR, AND GEOCAN ENERGY INC., AS PURCHASER
OFFICER'S CERTIFICATE
RE: Article 4 of the Agreement of Purchase and Sale dated ____________________
between ____________________, as Vendor and ______________________, as Purchaser
("Agreement").
Unless Otherwise stated, the definitions provided for in the Agreement
are adopted in this Certificate.
I, (name), (position) of (name of party) ("Vendor" or "Purchaser")
hereby certify for and on behalf of _______________ that:
1. the representations and warranties of _______________ contained in
Article 4 of the Agreement were true and correct in all material
respects when made and are true and correct in all material respects as
of the date hereof.
2. all obligations of _______________ contained in the Agreement to be
performed prior to closing have been performed in all material
respects.
3. this Certificate is made for and on behalf of _______________ and is
binding upon it, and the deponent herein is not and will not incur any
personal liability whatsoever with respect to it.
IN WITNESS WHEREOF, the undersigned has executed this Certificate the ___ day of
________, 200_.
[COMPANY NAME]
PER:
----------------------------------------
(name/title)
2
42
Page 2 of Schedule E
OFFICER'S CERTIFICATE
RE: Article 4 of the Agreement of Purchase and Sale dated ____________________
between ____________________, as Vendor and ______________________, as Purchaser
("Agreement").
Unless Otherwise stated, the definitions provided for in the Agreement
are adopted in this Certificate.
I, (name), (position) of (name of party) ("Vendor" or "Purchaser")
hereby certify for and on behalf of _______________ that:
1. the representations and warranties of _______________ contained in
Article 4 of the Agreement were true and correct in all material
respects when made and are true and correct in all material respects as
of the date hereof.
2. all obligations of _______________ contained in the Agreement to be
performed prior to closing have been performed in all material
respects.
3. this Certificate is made for and on behalf of _______________ and is
binding upon it, and the deponent herein is not and will not incur any
personal liability whatsoever with respect to it.
IN WITNESS WHEREOF, the undersigned has executed this Certificate the ___ day of
________, 200_.
------------------------
Per:
-------------------------------
-------------------------------
(print name and title)
2
00
XXXXXXXX XXXXXXXXX
(XXXXXXX/XXXXXXXX XXXX)
THIS AMENDING AGREEMENT made as of the 17th day of April, 2001.
BETWEEN:
EQUATORIAL ENERGY INC., a body corporate, having an office and
carrying on business in the City of Calgary, in the Province
of Alberta ("Vendor")
- and -
GEOCAN ENERGY INC., a body corporate, having an office and
carrying on business in the City of Calgary, in the Province
of Alberta ("Purchaser")
WHEREAS Vendor and Purchaser are parties to an Agreement of Purchase
and Sale (Pembina/Tomahawk Area) made as of the 1st day of March, 2001 (the
"Agreement");
AND WHEREAS Vendor and Purchaser have agreed to make the following
amendments to the Agreement;
NOW THEREFORE in consideration of the premises and mutual covenants and
warranties in this Amending Agreement, the Parties covenant and agree as
follows:
1. Except as otherwise stated in this Amending Agreement, words and
phrases defined in the Agreement shall have the same meaning herein as
in the Agreement.
2. Clause 2.2(a) of the Agreement is hereby amended by deleting therefrom
"One Million and Nine Thousand Dollars ($1,009,000.00)" and by adding
the following in its place:
"Eight Hundred and Ninety-Nine Thousand Dollars ($899,000.00)"
44
2
3. Clause 2.5 of the Agreement is hereby amended by deleting therefrom the
following:
" $ 706,300.00
$ 302,699.00
$ 1.00
TOTAL: $ 1,009,000.00"
==============
and by adding the following in its place:
" $ 629,300.00
$ 269,699.00
$ 1.00
TOTAL: $ 899,000.00"
==============
4. Clause 3.2 of the Agreement is amended by adding thereto, after
sub-clause (f) thereof, the following:
"(g) Vendor shall have executed and delivered to and in favour of
Purchaser a quit claim and release, substantially in the form
of Schedule "F", and Vendor shall have paid to Purchaser, by
way of certified cheque, the sum of Fifty-Five Thousand
Dollars ($55,000.00) together with applicable GST thereon, in
connection therewith."
5. Clause 3.3 of the Agreement is amended by adding thereto, after
sub-clause (c) thereof, the following:
"(d) Purchaser shall have executed and delivered to and in favour
of Vendor a quit claim and release, substantially in the form
of Schedule "F"
6. Schedule "A" to the Agreement is amended by deleting therefrom all
references to Xxx 00, Xxx 0, X0X: Sections 4, 5 and 8.
7. Clause 1.2 of the Agreement is hereby amended by adding to the end
thereof the following:
"Schedule "F" - Quit Claim and Release"
45
3
and the Agreement is further amended by adding thereto as Schedule "F"
the form of quit claim and release set forth in Schedule "A" to this
Amending Agreement.
8. The amendments provided for herein shall be effective as of the 1st day
of March, 2001.
9. In all other respects, the provisions of the Agreement are hereby
confirmed.
IN WITNESS WHEREOF the Parties have duly executed this Amending
Agreement as of the date first above written.
EQUATORIAL ENERGY INC.
Per:
---------------------------------------------
GEOCAN ENERGY INC.
Per:
---------------------------------------------
Per:
---------------------------------------------
46
SCHEDULE "A"
TO
AMENDING AGREEMENT MADE AS OF
THE 17TH DAY OF APRIL, 2001
47
3 SCHEDULE "F"
ATTACHED TO AN AGREEMENT OF PURCHASE AND SALE EFFECTIVE MARCH 1, 2001
BETWEEN EQUATORIAL ENERGY INC., AS VENDOR, AND GEOCAN ENERGY INC., AS PURCHASER
QUIT CLAIM AND RELEASE
THIS AGREEMENT made as of the ____________ day of April, 2001.
BETWEEN:
GEOCAN ENERGY INC., a body corporate, having an office in the
City of Calgary, in the Province of Alberta
(hereinafter referred to as the "Grantor")
- and -
EQUATORIAL ENERGY INC., a body corporate, having an office in
the City of Calgary, in the Province of Alberta
(hereinafter referred to as the "Grantee")
WHEREAS Grantor holds an interest in the said lands and leases
described and set forth on Schedule "A" attached hereto;
AND WHEREAS the Grantor has agreed to release and quit claim unto the
Grantee its said interest in the lands, agreements, documents of title and the
xxxxx and equipment appurtenant hereto, on the terms and conditions hereinafter
set forth;
NOW THEREFORE in consideration of the premises hereto, and the
agreement hereinafter set forth and contained, the parties hereto agree as
follows:
1. (a) "said interest" means the interest held by the Grantor which
is set forth and described in Schedule "A" attached hereto.
(b) "said lands" means the lands set forth and described in
Schedule "A" attached hereto.
48
2
2. CONVEYANCE
The Grantor, in consideration of the sum of FIFTY-FIVE THOUSAND DOLLARS
($55,000.00) and other valuable consideration now paid by the Grantee to the
Grantor (receipt of which is hereby acknowledged), does hereby assign, transfer,
grant, release and quit claim unto the Grantee, without warranty of the title
all of the Grantor's right, title, claim and demand whatsoever, both at law and
in equity or otherwise howsoever, and whether in possession or expectancy of, in
and to the said interest and the said lands and unto the use of the Grantee, and
the Grantor hereby acknowledges that it has no further interest whatsoever
therein and thereto.
3. FURTHER ACTS
The Grantor hereby covenants and agrees with the Grantee that it will
do such further acts and execute all such further assurances as may be required
to give effect to this Agreement.
4. MUTUAL RELEASE
Each of the Grantor and the Grantee hereby releases the other from and
against any matter, all claims, demands, proceedings, losses, damages,
liabilities, deficiencies, costs, penalties, fines and expenses arising directly
or indirectly out of any matter of thing relating to the said interest and the
said lands.
5. MISCELLANEOUS
The Schedule "A" attached hereto is incorporated herein by reference as
fully as through contained in the body hereof. Whenever any term or condition,
expressed or implied, of such Schedule "A" conflicts or is at variance with any
term or condition of this Agreement, such term or condition of this Agreement
shall prevail.
49
3
6. EFFECTIVE DATE
The effective date of this agreement shall be March 1, 2001.
IN WITNESS WHEREOF the parties hereto have caused this agreement to be
executed under corporate seal by their respective officers as of the first day
and year above written.
GEOCAN ENERGY INC. EQUATORIAL ENERGY INC.
Per: Per:
------------------------------------ --------------------------------
Per: Per:
------------------------------------ --------------------------------
50
THIS IS SCHEDULE "A" TO A QUIT CLAIM AND RELEASE DATED APRIL ________, 2001
BETWEEN GEOCAN
ENERGY INC. AND EQUATORIAL ENERGY INC.
LEASES LANDS RIGHTS INTEREST ENCUMBRANCES
------ ----- ------ -------- ------------
Alberta Crown 38-07-W4M from All P&NG from 18.75% Alberta Crown
P&NG Lease No. the base of Lsds base of Viking to Royalty
0488110342 14, 15, 16 of base of Mannville
Section 29 Group
Alberta Crown 38-07-W4M All P&NG from 18.75% Alberta Crown
P&NG Lease No. S1/2and NW1/432 base of Viking to Royalty
0488110346 base of Mannville
Group
