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EXHIBIT 10.14
717365 ALBERTA LTD.
SHARE PURCHASE AGREEMENT
THIS AGREEMENT dated this 31st day of October, 2000;
AMONG:
XXXXX XXXXX, an individual residing in Calgary, Alberta (the
"VENDOR")
- and -
GEOCAN ENERGY INC., a corporation with offices in Calgary,
Alberta (the "PURCHASER"),
WHEREAS the Vendor is the registered and beneficial owner of all the
issued and outstanding shares of the Company;
AND WHEREAS the Vendor has agreed to sell and transfer, and the
Purchaser has agreed to purchase and accept, on the terms and conditions herein
set forth, all the Vendor's right, title, estate and interest in and to the
Shares;
NOW THEREFORE THIS AGREEMENT WITNESSETH THAT, in consideration of the
premises and of the respective covenants and agreements of the Parties
hereinafter set forth, the Parties hereby covenant and agree with one another as
follows:
It is agreed as follows:
1. INTERPRETATION
1.1 DEFINITIONS
In this Agreement, including the recitals and the Schedules hereto:
"AGREEMENT" or "THIS AGREEMENT" means this share purchase agreement as
amended from time to time after the date hereof in the manner herein
provided; the terms "HEREIN", "HERETO", "HEREOF", "HEREUNDER", "HEREBY"
and similar terms mean and refer to this Agreement and not, unless a
particular provision is expressly stipulated, to any particular
provision.
"ASSETS" means the assets of the Company, including the Petroleum and
Natural Gas Rights, the Tangibles and the Miscellaneous Interests.
"BASIC PURCHASE PRICE" has the meaning ascribed thereto in Section
2.2(a).
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"BUSINESS DAY" means any day, other than a Saturday or Sunday, or a
statutory holiday in Calgary, Alberta.
"CLOSING" means the completion of the purchase and sale of the Shares
as contemplated by this Agreement.
"CLOSING DATE" means December 13, 2000, or such other date as the
Vendor and the Purchaser agree in writing.
"COMPANY" means 717365 Alberta Ltd., a corporation incorporated
pursuant to the laws of Alberta with offices in the City of Calgary.
"ENVIRONMENTAL DEFICIENCY" means any (i) ground water, surface water or
aquifer contamination, (ii) soil contamination, (iii) toxic or
hazardous substance emission, or (iv) corrosion or deterioration of
structures, equipment and other property, the occurrence or existence
of which could reasonably be expected to give rise to criminal,
quasi-criminal or civil liability on the part of the Vendor or a
transferee of the Assets, under presently subsisting Environmental Law.
"ENVIRONMENTAL LAW" means any federal, provincial or local statute,
regulation or rule, any judicial or administrative order or judgement
or written administrative request of any governmental or regulatory
body having jurisdiction, and any provision or condition of any permit,
license or other governmental operating authorization, applicable to
the Vendor or the Assets and relating to protection of the environment,
persons or the public welfare from actual or potential exposure (or the
effects of exposure) to any actual or potential release, discharge,
spill or emission (whether past or present) of, or regarding the
manufacture, processing, production, gathering, transportation, use,
treatment, storage or disposal of, any chemical, raw material,
pollutant, contaminant or toxic, corrosive or hazardous substance or
waste.
"FACILITIES" means the specified interest of the Company in all
facilities described in Schedule "A", Part II.
"FINANCIAL STATEMENTS" means the financial statements of the Company
attached hereto as Schedule "C" for the previous three years together
with unaudited interim financial statements for the period ending
September 30, 2000.
"GAAP" means Canadian generally accepted accounting principles from
time to time prescribed by the Canadian Institute of Chartered
Accountants, or any successor institute, applicable on a consistent
basis.
"GEOCAN SHARES" means 145,000 common shares of the Purchaser.
"LANDS" means the lands set forth and described in Schedule "A", Part
I, insofar as rights to the Petroleum Substances underlying those Lands
are granted by the Leases.
"LEASES" means, collectively, the leases, reservations, permits,
licenses, certificates of title or other documents of title set forth
and described in Schedule "A", Part I (or any
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replacement thereof, renewal or extension thereof or leases derived
therefrom) by virtue of which the holder thereof is entitled to drill
for, win, take, own and remove Petroleum Substances within, upon or
under all or any part of the Lands.
"MISCELLANEOUS INTERESTS" means the interests of the Company in and to
all property, assets and rights pertaining or ancillary to the
Petroleum and Natural Gas Rights, the Lands, the Leases and the
Tangibles (other than the Petroleum and Natural Gas Rights, the Lands,
the Leases and the Tangibles) and to which the Company is entitled at
the Closing Date including, but not in limitation of the generality of
the foregoing, such interests of the Company in:
(a) all contracts, agreements, documents, production sales
contracts, books and records relating to the interest of the
Company in the Petroleum and Natural Gas Rights, the Lands, or
the Tangibles, and any and all rights in relation thereto;
(b) all engineering and production data and information directly
related to the Petroleum and Natural Gas Rights and the
Tangibles which are in the custody of the Company or to which
it is entitled including, without limitation, all Proprietary
Technical Information;
(c) all subsisting rights to enter upon, use and occupy the
surface of the Lands or any lands which same have been pooled
or unitized or the sites of any Tangibles or any lands which
are used to gain access to any of the foregoing;
(d) existing Well bores and downhole casing; and
(e) all well, pipeline and other permits, licences and
authorizations relating to the Petroleum and Natural Gas
Rights, the Lands (or any lands with which the Lands have been
pooled or unitized) and the Tangibles.
"NOTIONAL TAX RETURN" means the pro forma Tax return of the Company,
including financial statements of the Company as at September 30, 2000,
attached as Schedule "D" for the period from the date of the Company's
last Tax return to the Reference Time.
"PARTIES" means the parties to this Agreement and their respective
successors and permitted assigns and "PARTY" means any one of them.
"PERMITTED ENCUMBRANCES" means:
(a) the encumbrances identified in Schedule "A", Part I;
(b) easements, rights of way, servitudes or other similar rights
in land including, without limiting the generality of the
foregoing, rights of way and servitudes for railways, roads,
sewers, drains, gas and oil pipelines, gas and water mains,
electric light, power, telephone, telegraph or cable
television conduits, poles, wires and cables;
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(c) the right reserved to or vested in any government or other
public authority to terminate any of the Leases or to require
annual or other periodic payments as a condition of the
continuance thereof;
(d) rights reserved to or vested in any municipality or
governmental, statutory or public authority to control or
regulate any of the Assets in any manner, and all applicable
laws, rules and orders of any governmental authority;
(e) the right reserved to or vested in any government or other
public authority to levy taxes on Petroleum Substances or the
income or revenue therefrom;
(f) governmental requirements as to production rates on the
operations of any property or otherwise affecting the value of
any property;
(g) undetermined or inchoate liens incurred or created as security
in favour of the person conducting the operation of any of the
Assets for the Company's proportion of the costs and expenses
of such operations which costs and expenses are not delinquent
as of the Closing Date;
(h) liens granted in the ordinary course of business to a public
utility, municipality or governmental authority in connection
with operations conducted with respect to the Assets;
(i) provisions for penalties and forfeitures under agreements as a
consequence of non-participation in operations;
(j) the reservations, limitations, provisos and conditions in any
original grants from the Crown of any of the Lands or
interests therein and statutory exceptions to title and the
terms and conditions of the Leases; and
(k) provisions in agreements and plans effecting pooling or
unitization.
"PERSON" means an individual, a partnership, a corporation, a trust, an
unincorporated organization, a union, a government or any department or
agency thereof and the heirs, executors, administrators or other legal
representatives of an individual.
"PETROLEUM AND NATURAL GAS RIGHTS" means the interests of the Company
in and to the Lands and the Leases as set forth in Schedule "A", Part
I.
"PETROLEUM SUBSTANCES" means petroleum, natural gas, related
hydrocarbons and any other substances, whether liquid, solid or
gaseous, produced in association with such petroleum, natural gas or
related hydrocarbons, insofar as rights to the same are granted by way
of the Leases.
"PLACE OF CLOSING" means the offices of Xxxxxx Xxxxxx Xxxxxxx LLP,
Calgary, Alberta or such other place as may be agreed upon in writing
by the Vendor and the Purchaser.
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"PRIME RATE" means the annual prime lending rate used from time to time
by Alberta Treasury Branches, Main Branch, Calgary, Alberta, for loans
made in Canada in Dollars to the bank's preferred commercial borrowers.
"PROPRIETARY TECHNICAL INFORMATION" means all surveyors' ground
elevation records (whether vertical or horizontal), shot point maps,
drillers' logs, shooters' records, observer reports and seismograph
records, seismograph magnetic tapes, stacked and migrated tapes,
monitor records, field records or tapes, record sections and processed
seismic sections obtained in or resulting from any seismograph survey
conducted on or near the Lands, and geological or geophysical studies
and further appraisals or interpretations of same conducted on or near
the Lands and owned by the Vendor or to which the Vendor is entitled
and, without limitation, such Proprietary Technical Information
includes any and all copies of such items whether in hard, digital,
magnetic, electronic or any other form.
"PURCHASE PRICE" has the meaning ascribed thereto in Section 2.2(c).
"REFERENCE TIME" means 12:01 a.m. (Mountain Time) at Calgary, Alberta,
on October 1, 2000.
"SECURITY INTEREST" means any mortgage, charge, pledge, lien, hypothec,
encumbrance, conditional sale, assignment by way of or in effect as
security, or security interest whatsoever.
"SHAREHOLDER DEBT" means any indebtedness, liability or obligation owed
by the Company to the Vendor or any Person affiliated with or related
to the Vendor.
"SHARES" means all of the issued and outstanding shares of the Company
on the Closing Date and includes any instruments or rights capable of
being converted into, exchanged, for or exercised for previously
unissued shares of any class of the Company or giving the holder the
right on the occurrence of any event or events, including on the
payment of money, whether or not such event or events have occurred, to
require delivery of previously unissued shares of any class to be
issued by the Company, and includes options, warrants, conversion or
exchange privileges and similar rights.
"TANGIBLES" means the interests of the Company in and to the
Facilities, and all other tangible depreciable property and assets
situate in, on or about the Lands or lands pooled or unitized
therewith, including the Xxxxx, used in connection therewith or with
production, gathering, processing, transmission, measurement or
treatment operations relating to the Petroleum and Natural Gas Rights.
"TAX" or "TAXES" means all income, capital, gross receipts, sales, use,
franchise, profits, property, customs duties, withholding, goods and
services, or other taxes, fees, assessments or charges of' any kind
whatsoever (including Alberta Energy Utility Board taxes and levies),
together with any interest and any penalties, additions to tax or
additional amounts imposed by any taxing authority.
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"XXXXX" means all of the xxxxx that are located on the Lands whether
producing, suspended, previously abandoned or used as water source,
injection, observation or disposal xxxxx.
"WORKING CAPITAL" means the aggregate of the Company's current assets
less the aggregate of the Company's current liabilities as at the
Reference Time as shown in the financial statements attached to the
Notional Tax Return, all of which shall be determined in accordance
with GAAP, subject to adjustment on the basis provided for in Schedule
"B".
1.2 SCHEDULES
The following are the Schedules annexed hereto and incorporated by
reference and deemed to be a part hereof:
Schedule "A" - Part I Lands and Leases; Part II
Facilities; Part III Xxxxx
Schedule "B" - Working Capital Adjustments;
Schedule "C" - Financial Statements;
Schedule "D" - Notional Tax Return
All Schedules hereto are by this reference incorporated into and are
part of this Agreement as fully as though contained in the body of this
Agreement; provided that wherever any provision of any Schedule to this
Agreement conflicts with any provision in the body of this Agreement,
the provisions of the body of this Agreement shall prevail. References
herein to a "Schedule" shall mean a reference to a Schedule to this
Agreement. References in any Schedule to "the Agreement" or "this
Agreement" shall mean a reference to this Agreement. References in any
Schedule to another Schedule shall mean a reference to a Schedule to
this Agreement.
1.3 VENDOR KNOWLEDGE
Where in this Agreement, or in any certificate or document delivered in
connection herewith or to effect any of the transactions contemplated
hereby, any statement, representation or warranty is made as to, or as
being based on, the knowledge, information or belief of the Vendor,
such knowledge, information or belief consists only of the actual
knowledge, information or belief of the Vendor as the case may be.
1.4 CURRENCY
References in this Agreement to "dollars" or "$" are to dollars of the
lawful money of Canada for the payment of public and private debts.
1.5 ACCOUNTING TERMS
All accounting terms not otherwise defined in this Agreement have the
meanings assigned to them in accordance with GAAP, and except as
otherwise expressly provided herein, all accounting or financial
calculations required or permitted under this Agreement shall be made
on the basis of GAAP applied on a consistent basis.
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1.6 MEANING NOT AFFECTED BY DIVISION, HEADINGS OR TABLE OF CONTENTS
The division of this Agreement and the provision of headings or a table
of contents for all or any thereof are for convenience of reference
only and shall not affect the meaning of this Agreement.
1.7 INVALIDITY OF PROVISIONS
If any of the 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.
2. PURCHASE AND SALE; CLOSING
2.1 SALE OF SHARES
Upon the terms and subject to the conditions of this Agreement, the
Purchaser will purchase the Shares from the Vendor and make payment
therefor to the Vendor and the Vendor will sell, assign and deliver the
Shares to the Purchaser upon receipt of payment therefor.
2.2 PURCHASE PRICE
In consideration of the sale, assignment and delivery by the Vendor of
the Shares the Purchaser shall pay to the Vendor the Purchase Price,
determined pursuant to this Section 2.2, such amount, subject to
subsequent adjustments herein provided for, to be paid on the Closing
Date in the manner provided for in Section 2.5.
(a) The Purchaser will pay or cause to be paid to the Vendor in
the aggregate $260,500 (the "BASIC PURCHASE PRICE"), subject
to adjustment and to the further payments as provided for in
this Section 2.2;
(b) The Basic Purchase Price shall be adjusted by an increase or
decrease as the case may be for the amount of Working Capital
as finally determined in accordance with Schedule "B"; and
(c) The Basic Purchase Price as adjusted pursuant to Section
2.2(b), is herein called the "PURCHASE PRICE".
2.3 TIME AND PLACE OF CLOSING
Upon the terms and conditions of this Agreement, the completion of the
transfer of the Shares by the Vendor to the Purchaser and the payment
by the Purchaser to the Vendor of the Purchase Price will take place at
the Place of Closing at 10:00 a.m. (Calgary time) on the Closing Date.
All adjustments contemplated by this Agreement shall be effective as of
the Reference Time.
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2.4 DELIVERIES BY THE VENDOR
On the Closing Date the Vendor will deliver or cause to be delivered to
the Purchaser, in form and content satisfactory to the Purchaser, the
following:
(a) certificates representing the Shares, accompanied by stock
transfer powers of attorney duly executed in blank or duly
executed instruments of transfer, and any other documents
necessary to transfer to the Purchaser good title to the
Shares;
(b) the resignations of all members of the board of directors of
the Company, and the resignations of all officers of the
Company together with general releases of the Company by each
of its directors and officers;
(c) original share books, share ledgers and minute books and
corporate seals of the Company as well as all tax records
(including tax returns, notices of assessment, reassessments
and tax correspondence), environmental, health and safety
files, Worker's Compensation files and other books and records
belonging to and relating to the business and operations of
the Company;
(d) the certificates referred to in Sections 2.6(a), (b) and (d)
dated the Closing Date duly signed on its behalf;
(e) a certified copy of a resolution of the Board of Directors of
the Company approving the transfer of the Shares by the Vendor
to the Purchaser;
(f) all other documents, instruments and writings reasonably
required to be delivered by the Vendor at the Closing Date
pursuant to this Agreement or otherwise required in connection
herewith;
(g) substantially all books, records, files (including lease,
contract, well and unit files), reports, studies, maps,
drawings, logs and other documentary materials of any nature
whatsoever pertaining to the Assets, including, without
limitation, all geological and engineering reports, records,
maps, drawings, logs and other data relating to the Lands; and
(h) a Certificate of Status for the Company issued under the laws
of the Province of Alberta.
2.5 DELIVERIES BY THE PURCHASER
On the Closing Date the Purchaser will deliver the following to the
Vendor:
(a) the cash portion of the Purchase Price in the amount of
$188,000 (subject to adjustment as contemplated in Section
2.2(b)) by a certified cheque, bank draft or such other means
as are agreed upon by the Vendor and the Purchaser to the
Vendor;
(b) the share portion of the Purchase Price by the issuance of the
GEOCAN Shares at an assigned value of $0.50 per share to the
Vendor;
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(c) the certificates referred to in Sections 2.7(a) and (b) dated
the Closing Date duly signed on its behalf; and
(d) all other documents, instruments and writings reasonably
required to be delivered by the Purchaser at the Closing Date
pursuant to this Agreement or otherwise required in connection
herewith.
2.6 CONDITIONS PRECEDENT TO THE OBLIGATIONS OF THE PURCHASER TO CLOSE
The obligation of the Purchaser to complete the transactions
contemplated hereby is subject to the fulfilment, on or prior to the
Closing Date, of the following conditions precedent, each of which is
for the exclusive benefit of the Purchaser and any one or more of which
may be expressly waived, in whole or in part, by the Purchaser:
(a) the representations and warranties of the Vendor contained in
Article 3 shall have been true on and as of the date made and
on and as of the Closing Date as if made then and a
certificate to that effect from the Vendor shall have been
delivered to the Purchaser;
(b) the Vendor shall have complied with or performed, in all
respects material to the Purchaser, all of its agreements and
covenants in this Agreement to be complied with or performed
by it at or prior to the Closing Date and a certificate to
that effect from the Vendor, with respect to itself and its
compliance and performance shall have been delivered to the
Purchaser;
(c) there shall be no rights of first refusal or other
restrictions on the transfer, sale or assignment of the Shares
or relating to change in control of the Company which have not
been complied with or waived prior to the Closing Date;
(d) there shall have been no material adverse change in the Assets
or the interests of the Company therein or the financial
condition of the Company between the Reference Time and the
Closing Date and a certificate from the Vendor to the effect
that the Vendor has no knowledge of any such material adverse
change shall have been delivered to the Purchaser;
(e) delivery of all documents by the Vendor as set forth in
Section 2.4;
(f) completion of the transactions contemplated herein shall not
violate any order or decree of any court or governmental body
of competent jurisdiction;
(g) all necessary steps and proceedings shall have been taken to
permit the Shares to be duly and regularly transferred to and
registered in the name of the Purchaser; and
(h) the Parties shall have obtained all necessary governmental and
regulatory approvals required to permit the transactions
herein to be completed.
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2.7 CONDITIONS PRECEDENT TO THE OBLIGATIONS OF THE VENDOR TO CLOSE
The obligation of the Vendor to complete the transactions contemplated
hereby is subject to the fulfilment, on or prior to the Closing Date,
of the following conditions precedent, each of which is for the
exclusive benefit of the Vendor and any one or more of which may be
waived, in whole or in part, by the Vendor:
(a) the representations and warranties of the Purchaser contained
in Article 4 shall have been true on and as of the date made
and, on and as of the Closing Date as if made then and a
certificate to that effect from a senior officer of the
Purchaser shall have been delivered to the Vendor;
(b) the Purchaser shall have complied with or performed, in all
respects material to the Vendor, all of its agreements and
covenants in this Agreement to be complied with or performed
by it at or prior to the Closing Date and a certificate to
that effect from a senior officer of the Purchaser shall have
been delivered to the Vendor; and
(c) payment or delivery, as applicable, by the Purchaser of the
Purchase Price payable pursuant to Sections 2.5(a) and (b) and
delivery of all documents by the Purchaser as set forth in
Section 2.5.
3. REPRESENTATIONS AND WARRANTIES OF THE VENDOR
The Vendor with respect to itself and the Shares or with respect to the
Company, as the context indicates, represents and warrants to the
Purchaser, as of the date hereof and as of the Closing Date:
3.1 ORGANIZATION
(a) Standing of the Company: The Company is and at the Closing
Date shall continue to be a corporation duly organized and
validly subsisting under the laws of its jurisdiction of
incorporation as a private company and has all requisite
corporate power and authority to own, lease and operate its
properties and the Assets and to carry on its business.
(b) No Subsidiaries: The Company does not have an interest (either
directly or indirectly) in any other Person, nor is the
Company a party to or bound by any agreement to acquire such
an interest.
(c) Constating Documents: The Purchaser has been provided true,
correct and complete copies of the constating documents and
by-laws, together with all amendments thereto, with respect to
or affecting the Company. No resolutions have been proposed or
passed to further amend the foregoing.
(d) Not a Public Company: The Company is not a "reporting issuer"
or otherwise subject to filing and reporting requirements
applicable to public companies under relevant securities
legislation.
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(e) Officers and Directors: Xxxxx Xxxxx is the President,
Secretary-Treasurer and the sole director of the Company. As
of the Closing Date the Company will have no employees and
will not have any employment, management or field operating
contracts that relate to the Assets for which the Company will
be responsible after the Closing Date.
3.2 CAPITALIZATION OF THE COMPANY; THE SHARES.
(a) Issued and Outstanding Shares: The authorized and presently
issued and outstanding share capital of the Company as at the
date hereof is as follows:
AUTHORIZED ISSUED AND OUTSTANDING
an unlimited number of Class "A" Xxxxx Xxxxx - 100 Class "A" Common
Common shares shares
an unlimited number of Class "B" Nil
Common shares
an unlimited number of Class "C" Nil
Common shares
(b) No Treasury Shares: No issued and outstanding Shares of the
Company are held in the Company's treasury.
(c) No Options: There are no outstanding options, calls or rights
of any kind relating to or providing for the purchase,
delivery or transfer of any presently issued and outstanding
Shares or other securities of the Company.
(d) No Additional Shares: There are no outstanding rights with
respect to the capital of the Company that would require the
Company to allot or issue any of the unissued Shares of the
Company or to create any additional class of Shares.
(e) No Shareholder Debt: There is no Shareholder Debt.
(f) No Shares in Other Companies: The Company does not and on the
Closing Date will not own, directly or indirectly, any shares
or securities convertible into shares of any other
corporation.
(g) Title to Shares: It is the beneficial owner of its Shares and
has good title to the same, free and clear of all Security
Interests, equities, claims, options or other encumbrances or
voting trusts, proxies or other interests of any nature
whatsoever except those in favour of the Purchaser.
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3.3 AUTHORITY; BINDING EFFECT
(a) Authority of the Vendor: It has all requisite power and
authority to execute and deliver this Agreement and to
consummate the transactions contemplated hereby.
(b) Binding Agreement: This Agreement constitutes or will
constitute at the time of execution and delivery a legal,
valid and binding obligation, enforceable against it in
accordance with its terms, subject to (i) the qualification
that such enforcement may be subject to bankruptcy,
insolvency, fraudulent preference, reorganization or other
laws affecting creditors' rights generally, and (ii) general
principles of equity (regardless of whether such
enforceability is considered in a proceeding at equity or
law).
3.4 NO CONFLICT
The execution, delivery and performance of this Agreement does not, and
the fulfilment and compliance with the terms and conditions and the
consummation of the transactions contemplated hereby, will not:
(a) conflict with any of, or require the consent or waiver of
rights of any Person under, the terms, conditions or
provisions of the respective constating documents of the
Company;
(b) violate any provision of, or require any consent,
authorization or approval under, any law or regulation or any
judicial, administrative or arbitration order, award,
judgment, writ, injunction or decree applicable to the Vendor
or the Company;
(c) conflict with, result in a breach of, constitute a default
under (whether with notice or the lapse of time or both), or
accelerate or permit the acceleration of the performance
required by, or require any consent, authorization or approval
under, any indenture, mortgage, lien, lease, agreement or
instrument to which the Vendor or the Company is a party or by
which any of them is bound or to which any of their respective
property is subject; or
(d) result in the creation of any Security Interest upon the
Shares or the Assets.
3.5 FINANCIAL STATEMENTS
The Financial Statements have been prepared, to the knowledge of the
Vendor, in accordance with GAAP applied on a consistent basis with
prior years and to the knowledge of the Vendor fairly represent the
assets, liabilities and financial position of the Company as at the
dates thereof. The Financial Statements contain or reflect all
adjustments and disclosures necessary in order to make such documents
not misleading.
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3.6 LITIGATION
To the knowledge of the Vendor, there are no actions, suits or
proceedings pending or threatened against the Company, the Assets, the
Shares or the interest of the Vendor in the Shares and the Company is
not charged or threatened with a violation of any provision of any
federal, provincial or local law or regulation relating to any aspect
of its business.
3.7 ENVIRONMENTAL MATTERS
To the knowledge of the Vendor, the Company, the Assets and the use,
maintenance and operation of the Assets has been and is in material
compliance with all applicable statutes, regulations, bylaws, codes
(whether federal, provincial or municipal) including those relating to
Workmen's Compensation, product safety and product liability.
3.8 NO CONTRACTUAL DEFAULT
The Vendor is not aware of any material default by any party under any
material contract involving the Company, nor is the Vendor aware of any
facts or circumstances which would, with the giving of notice or the
lapse of time, give rise to a default by the Company under a material
contract.
3.9 NO BREACH OF ORDER
The Vendor is not aware of any material default by the Company under
any order, writ, injunction or decree of any court or governmental
authority having jurisdiction over the Company and which materially
adversely affects or relates to the Company.
3.10 TAXES
(a) Year End: The fiscal year end of the Company for income tax
purposes is April 30.
(b) Returns and Elections to be Filed: The Company has filed in a
timely manner or, on or prior to the Closing Date, will file
in a timely manner all returns (including the income tax
return for the last taxation year of the Company ending April
30), elections, declarations and reports and information
returns and statements required or advisable to be filed on or
prior to the Closing Date and such filings, in the reasonable
opinion of the Vendor, have not been materially inaccurate or
misleading.
(c) No Tax Waivers: The Company has not provided any waivers to
Canada Customs and Revenue Agency or any other taxing
authority for any reason.
(d) Tax Audits: There are no matters which are the subject of any
current discussions with or any agreement with the Canada
Customs and Revenue Agency relating to claims for additional
Taxes.
(e) Taxes Paid: The Company has paid all Taxes payable and has not
requested any extension of time within which to file or send
any return.
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(f) Tax Disputes: No deficiency for any Tax has been proposed,
asserted or assessed against the Company and there are no
outstanding Tax disputes, audits, proposed adjustments,
notices of objection or other appeals.
(g) Private Company: The Company is a "private corporation" and
the Vendor is a resident of Canada for the purposes of the
Income Tax Act (Canada).
(h) Tax Withholding: All Taxes and other assessments and levies
which the Company is required to withhold or collect have been
(and will be up to the Closing Date) duly withheld and
collected and paid over to the proper government authorities.
(i) Notional Tax Return: To the knowledge of the Vendor, the
Notional Tax Return has been properly prepared and sets forth
the Tax position of the Company as of the Reference Time.
3.11 ABSENCE OF CERTAIN CHANGES
(a) There has not been any material adverse change in the business
or financial condition of the Company since the date of the
most recently dated Financial Statements;
(b) There has not been any material damage, destruction or loss,
whether covered by insurance or not, which has had, or would
reasonably be expected to have, a material adverse effect on
the business or financial condition of the Company.
3.12 BOOKS AND RECORDS
The books and records of the Company have been maintained in accordance
with prudent business practice and the minute books of the Company
contain a complete and accurate record of all resolutions and other
corporate actions in lieu of resolutions of its shareholders, board of
directors and committees, all of which resolutions or actions have been
duly and regularly, passed or adopted.
3.13 PRODUCTION ASSETS, OPERATIONS AND LIABILITIES
(a) Title to Assets: The Vendor does not warrant the Company's
title to the Assets, but the Vendor does represent and warrant
that neither the Vendor nor the Company have done anything
whereby any of the Company's interest in and to the Assets may
be cancelled or determined, nor have they encumbered or
alienated the same, and the Assets shall be, at the Closing
Date, free and clear of all liens, encumbrances, adverse
claims, demands and royalties created by, through or under the
Company except for the Permitted Encumbrances. Except as
otherwise provided herein, the Vendor represents and warrants
that neither the Vendor nor the Company have received notice
of any material defect in the Company's title to the Assets
and, for the period of time that the Company has owned the
Assets, to the knowledge of the Vendor all relevant deposits,
rentals and royalties (including delay rentals and shut-in
royalties) have been paid within the applicable time limits
and all obligations and covenants required to keep the Leases
in full force and effect have been performed and observed.
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(b) No Orders: There are no outstanding material orders, notices
or similar requirements relating to the Company or the Assets
issued by any federal, provincial or municipal authority
including, without limitation, occupational health and safety
authorities and to the knowledge of the Vendor there are no
matters under discussion with any such authorities relating to
orders, notices or similar requirements.
(c) Production Penalties: To the knowledge of the Vendor, no Xxxxx
are subject to a production penalty of any kind, there are no
facts or circumstances which materially adversely affect the
production of Petroleum Substances in respect of the Petroleum
and Natural Gas Rights or the receipt, or entitlement, of the
Company to revenue attributable to the production thereof.
(d) Licences and Permits: The Company or its agent possesses valid
Well, pipeline and other permits, licences and authorizations
required to allow it to carry on its business.
(e) AFE's: There are no outstanding authorizations for expenditure
(AFE) or cash calls with respect to the Lands, including the
unexpended portion thereof and there are no outstanding
commitments by the Company to expend funds for its own account
where the Company's interest under the authorization for
expenditure or outstanding commitment would exceed $25,000.
(f) Severance Taxes: All ad valorem, property, production,
severance and similar taxes and assessments based on or
measured by the ownership by the Company of its Petroleum and
Natural Gas Rights or the production of Petroleum Substances
in respect of such Petroleum and Natural Gas Rights or the
receipt by, or the entitlement of, the Company of or to
revenue attributable to the production thereof at any time
prior to the Closing Date have or will have been properly paid
and discharged.
(g) Gas Balancing: The Company is not a party to or bound by any
gas balancing or similar agreements relating to its Assets and
there are no take or pay obligations where the Company would
be obligated to deliver gas without being paid therefor.
(h) Production Sales Agreements: The Company is not a party to any
production sales contracts having a term greater than one year
that is not cancellable by the Company on notice of 30 days or
less. The Company is not in default of any obligation under
any such contract.
(i) Transportation and Processing Agreements: There are no
transportation or processing agreements or arrangements under
which the Company or any party acting on its behalf is
obligated to transport or process Petroleum Substances
allocable to the Petroleum and Natural Gas Rights, except for
agreements terminable by the Company without penalty on notice
of 30 days or less.
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(j) Offset Obligations: None of the Lands have been or are now
subject to any offset obligation (including obligations to
drill xxxxx, surrender rights, or pay compensatory royalty)
which has not been satisfied.
(k) No Guarantees: The Company is not a party to or bound by any
agreement of guarantee, indemnification, assumption or
endorsement or any other like commitment of the obligations,
liabilities (contingent or otherwise) or indebtedness of any
Person.
(l) Reduction of Interest: Except as set out in Schedule "A", the
Assets are not subject to reduction by virtue of the
conversion or other alteration of the interest of any third
party under existing agreements created by, through or under
the Company.
(m) Revenue: The Company has not assigned or otherwise encumbered
the revenue from the production of Petroleum Substances from
the Assets.
(n) Compliance with Laws: To the Vendor's knowledge, all laws,
regulations and orders and all federal, provincial, municipal
or other government departments, commissions, or other
instrumentalities thereof having jurisdiction over and
material effect upon the Assets have been complied with in all
material respects.
(o) Environmental Information: To the Vendor's knowledge, the
Company has made available to the Purchaser all material
information within the Company's possession relevant to
Environmental Deficiencies pertaining to the Assets and has
not knowingly withheld any such information from the
Purchaser.
(p) Audits: To the Vendor's knowledge, no co-owner has given
written notice to the Company (or to any party holding legal
title to the Facilities on behalf of the Company), in
accordance with the agreements affected, that such co-owner
intends to audit the books, accounts and records of an
operator relating to the Facilities.
(q) Contributions: To the Vendor's knowledge, the Company has not
been given written notice by an operator of the Facilities, in
accordance with the agreements so affected, that it will be
required to make any contribution under an agreement affecting
any of the Facilities by reason of the failure of another
co-owner to pay its share of costs and expenses associated
with such Facility.
(r) Quiet Enjoyment: Subject to the Permitted Encumbrances, those
Title Deficiencies waived or deemed to be waived by the
Purchaser, and to the rents, covenants, conditions and
stipulations in the Leases and any agreements pertaining to
the Lands and on the lessee's or holder's part thereunder to
be paid, performed and observed, the Company may enter into
and upon, hold and enjoy the Leases for the residue of their
respective terms and all renewals or extensions thereof for
the Company's own use and benefit without any interruption of
or by the Vendor or any other Person whomsoever claiming or to
claim by, through or under the Vendor.
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3.14 LOANS TO EMPLOYEES, ETC.
The Company does not now have and will at the Closing Date not have any
indebtedness outstanding which is owed to or by present or former
directors, officers, shareholders (including the Vendor or any Persons
affiliated with or related to the Vendor) or employees or former
employees of the Company.
3.15 INDEBTEDNESS BY VENDOR
There was not at the Reference Time and there will not be prior to the
Closing Date any indebtedness, liability or obligation owed to the
Company to the Vendor or any Person affiliated with or related to the
Vendor.
3.16 SECURITY INTERESTS
Except for Permitted Encumbrances, none of the Assets is subject to any
Security Interest created by, through or under the Company or any of
its predecessor entities or the Vendor.
3.17 MATERIAL CONTRACTS
The Company is not a party to any material contract other than
contracts entered into in the ordinary course of business.
3.18 FINDERS FEES
Neither the Vendor nor the Company has incurred any liability,
contingent or otherwise, for brokers' or finders' fees in respect to
this transaction for which the Purchaser shall have any obligation or
liability.
3.19 LIMITATIONS
The Vendor makes no representation or warranty whatsoever except as and
to the extent expressly set forth in this Article 3. The Vendor
disclaims any liability and responsibility for any representation or
warranty which may have been made or alleged to have been made and
which is contained in any instrument or document relative hereto or to
the transactions herein provided for, or contained in any statement or
information made or communicated (orally or in writing) to Purchaser
including, without limitation of the generality of the foregoing, any
opinion, information or advice which may have been provided to
Purchaser by an officer, director, employee, agent, consultant or
representative of the Vendor or the Company. Without limiting the
generality of the foregoing, the Vendor makes no representations or
warranties or covenants as to:
(a) the Company's title in or to the Assets except as, and only to
the extent, set forth in Article 3;
(b) the amounts, quality, recoverability or deliverability of
reserves of Petroleum Substances attributable to the Lands;
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(c) the quality, fitness, condition or merchantability of all or
any of the Tangibles;
(d) any geological or other interpretations or economic
evaluations of the Assets;
(e) estimates of prices or future cash flows arising from the sale
of Petroleum Substances attributable to the Lands or estimates
of other revenues attributable to the Company or the Assets.
The Purchaser acknowledges that it has made its own independent
investigation, analysis, evaluation and verification of the Company and
its interests in the Assets, including the Purchaser's own estimate and
appraisal of the extent, value of the reserves of Petroleum Substances
attributable to the Lands and of the condition and capacity of the
Tangibles.
4. REPRESENTATIONS AND WARRANTIES OF THE PURCHASER
4.1 The Purchaser represents and warrants to the Vendor as set forth below:
(a) Standing of the Purchaser: The Purchaser is and at the Closing
Date shall continue to be a corporation duly organized and
validly subsisting under the laws of its jurisdiction of
incorporation and has all requisite corporate power and
authority to own, lease and operate its properties and assets
and to carry on its business.
(b) Authority of the Purchaser: The Purchaser has all requisite
corporate power and authority to acquire the Shares and to
execute and deliver this Agreement and to consummate the
transactions contemplated hereby.
(c) Binding Agreement: This Agreement constitutes or will
constitute at the time of execution and delivery a legal,
valid and binding obligation of the Purchaser enforceable
against the Purchaser in accordance with its respective terms,
subject to (i) the qualification that such enforcement may be
subject to bankruptcy, insolvency, fraudulent preference,
reorganization or other laws affecting creditors' rights
generally, and (ii) general principles of equity (regardless
of whether such enforceability is considered in a proceeding
at equity or law).
(d) Not a Non-Canadian: The Purchaser is not a "non-Canadian
person" within the meaning, and or the purposes of the
Investment Canada Act.
(e) Finders Fees: The Purchaser has not incurred any liability,
contingent or otherwise, for brokers' or finders' fees in
respect to this transaction for which the Vendor shall have
any obligation or liability.
(f) Listing: The GEOCAN Shares shall be issued pursuant to an
exemption from the prospectus requirements of the Securities
Act (Alberta) and upon issuance shall be duly listed for
trading on the Canadian Venture Exchange.
(g) No Encumbrances: The GEOCAN Shares when issued shall be fully
paid and clear of any liens, encumbrances or claims of any
kind, subject to the Articles and bylaws of the Purchaser.
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5. ADDITIONAL AGREEMENTS AND COVENANTS - VENDOR
The Vendor covenants and agrees with the Purchaser as follows:
5.1 CERTAIN CHANGES
Subject to Section 5.3, without first obtaining the written consent of
the Purchaser (which consent may not be unreasonably withheld), from
the Reference Time until the Closing Date, the Vendor will ensure that
the Company will not:
(a) make any material adverse change in the conduct of its
business and operations;
(b) amend, in any respect material to the Company, any contract or
agreement other than in the ordinary course of business;
(c) declare, set aside or pay any dividends, or make any
distributions in respect of its Shares or repurchase, redeem
or otherwise acquire any Shares, (ii) make any payments, by
way of bonuses, management fees, wages, salaries or otherwise
to the Vendor or any other Person, or (iii) incur, assume, pay
or otherwise become liable for any debts or charges to or for
the benefit of any Vendor or any Person affiliated with or
related to a Vendor;
(d) merge into or with or consolidate with any other corporation
or acquire all or substantially all of the business or assets
of any Person;
(e) make any changes to its constating documents or bylaws;
(f) purchase any securities of any Person;
(g) sell, lease or otherwise dispose of any of the Assets (the
extraction and sale of Petroleum Substances and the
consumption or other disposition of its assets and properties
in the ordinary course of business being excepted and
permitted) other than in the ordinary course of business;
(h) purchase, lease or otherwise acquire any Petroleum and Natural
Gas Rights or any interest in Petroleum Substances or real
property other than in the ordinary course of business;
(i) make any capital expenditures other than in the ordinary
course of business;
(j) amend, enter into or terminate any contracts material to the
Company other than in the ordinary course of business;
(k) initiate new operations, commit to drill any Well for its own
account, surrender Petroleum and Natural Gas Rights or abandon
any Xxxxx other than in the ordinary course of business;
(l) make any offer of employment to any Person; terminate, except
for cause, the employment of any Person; or increase the
salary or benefits payable to any Person.
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5.2 ACCESS
The Vendor will cause the Company to afford to the Purchaser and its
authorized representatives reasonable access from the date hereof until
the Closing Date, to the Company's properties, books and records and
will cause the Company to furnish to the Purchaser such additional
financial and operating data and other information as it may reasonably
request. The Vendor shall further cause the Company to co-operate with
the Purchaser in arranging any such meetings as the Purchaser may
reasonably request with shippers, suppliers or others who have or have
had a business relationship with the Company and auditors or any other
Persons engaged or previously engaged to provide services with respect
to the Company's affairs.
5.3 CONDUCT OF BUSINESS; BUSINESS ORGANIZATION
In the period from the date hereof until the Closing Date, the Vendor
shall cause the Company to conduct, in accordance with generally
accepted industry practices, such activities relative to the business
of the Company as can reasonably be regarded as being in the ordinary
course of business for the Company. The Company shall not conduct any
activities with respect to the Assets which cannot reasonably be
regarded as being in the ordinary course of business of the Company
without the prior written consent of the Purchaser (which consent may
not be unreasonably withheld), except as may be reasonably necessary to
protect, ensure life and safety or to preserve the Assets or title to
the Assets. If the Company desires to approve an A.F.E. as submitted by
an operator where the Company's share of the costs thereunder is
expected to exceed Twenty-five Thousand Dollars ($25,000.00), or
renegotiate, amend, vary or alter any material contract for the sale or
disposition of Petroleum Substances, the Vendor shall have the Company:
(a) notify the Purchaser of any such A.F.E. or any material
changes to any such contract or arrangement for the sale or
disposition of Petroleum Substances;
(b) permit the Purchaser to consult with the Company in respect of
such A.F.E. or change; and
(c) the Company shall be entitled to approve such A.F.E. or make
such change, notwithstanding the Purchaser's disagreement (if
any), if the Company is dealing at arm's length with the
remaining parties to the contract and, acting in good faith,
believes such approval or change is reasonable.
5.4 INSURANCE
The Vendor will or will cause the Company to maintain existing policies
of insurance and surety bonds in respect of the Assets of the Company.
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6. ADDITIONAL COVENANTS AND ACKNOWLEDGMENTS OF THE PARTIES
6.1 TAX MATTERS - POST CLOSING
The Parties acknowledge that the Purchaser will be responsible for all
of the Company's Taxes from and including the Reference Time forward
and the Vendor will be responsible for all of the Company's Taxes up to
the Reference Time. The Parties specifically agree in regard to Tax
matters that:
(a) The Purchaser shall cause to be prepared and filed on a timely
basis, all Tax returns for the Company for any period which
ends on or before the Closing Date and for which Tax returns
have not been filed as of such date.
(b) The Tax returns to be filed after the Closing Date for the
period ending on or before the Closing Date shall be prepared
in a manner consistent with the Notional Tax Return.
(c) The Vendor and the Purchaser shall co-operate fully with each
other and make available to each other in a timely fashion
such data and other information as may reasonably be required,
including providing access to employees and to financial and
other records of the Company for the preparation of any Tax
return of the Company for a taxation year ending on or before
the Closing Date, and the conduct of any disputes relating
thereto, and shall preserve such data and other information
until the expiration of any applicable limitation period under
any applicable law with respect to Taxes.
(d) If the Company receives any assessment, reassessment, notice
of proposed reassessment, notice of audit or any other Tax
notice regarding the period prior to the Closing Date, the
Purchaser shall cause the Company to notify the Vendor,
co-operate with them in responding to such notices and to take
such steps as the Vendor may reasonably request so as to avoid
any further or incremental Tax obligation on the part of the
Vendor.
6.2 PUBLIC ANNOUNCEMENTS
The Vendor and the Purchaser will consult with each other before they
issue any press releases or otherwise make any public statements with
respect to this Agreement or the transactions contemplated hereby and
not, except to the extent required by law or by obligations pursuant to
any listing agreement with any securities exchange on which any of the
shares or other securities of the Purchaser may be listed, issue or
make any such release or statement without the prior consent and joint
approval of the Vendor and the Purchaser.
6.3 FURTHER ASSURANCES
(a) Subject to the terms and conditions of this Agreement, the
Vendor and the Purchaser will use all reasonable efforts to
take, or cause to be taken, all action, and to do, or cause to
be done, all things necessary, proper or advisable under
applicable laws and regulations to obtain consents of all
Persons including all
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governmental authorities necessary to the consummation of the
sale by or to it (as applicable) of the Shares pursuant to
this Agreement, or to carry out all of their respective
obligations under this Agreement and to consummate the
transactions contemplated by this Agreement.
(b) From time to time after the Closing Date, without further
consideration, each Party will, at its own expense, execute
and deliver such documents to any other Party as such Party
may reasonably request in order to consummate the transactions
contemplated by this Agreement.
6.4 INSURANCE
At the Closing Date, the Purchaser will or will cause the Company to
procure and maintain any and all policies of insurance and surety bonds
as Purchaser or the Company, at its cost and expense, deems advisable.
All risk of loss with respect to the Company or its properties shall
pass to Purchaser on the Closing Date provided that after the Closing
Date the Vendor shall administer claims under any insurance policies
with respect to the Company or its properties, relating to or arising
out of events occurring prior to the Closing Date which the Vendor
agrees to assign to the Company as and if claims arise and notice
thereof is given to the Vendor and provide reasonable co-operation to
the Company with respect to making and prosecuting (at the Vendor's
expense) any claims which are not assignable.
6.5 CONFIDENTIALITY
(a) Prior to the Closing Date, and subsequent to the Closing Date
if the sale contemplated herein does not close, the Purchaser
shall consider as confidential, shall not communicate to
others and shall use its best efforts to prevent those within
its employ or control from communicating to others, all
information which the Purchaser receives from the Vendor or
the Company pursuant to this Agreement other than information
which:
(i) was in the possession of the Purchaser prior to its
receipt or acquisition hereunder;
(ii) at the time of disclosure, is in the public domain;
(iii) after disclosure, becomes part of the public domain
by publication or otherwise, through no act or
omission on the part of the Purchaser; or
(iv) is required to be disclosed pursuant to the
applicable legislation, regulations or rules or by
the direction of any court, tribunal or
administrative body having jurisdiction.
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7. INDEMNITIES AND EXTENT AND SURVIVAL OF REPRESENTATIONS, WARRANTIES,
COVENANTS AND AGREEMENTS
7.1 RESPONSIBILITY OF VENDOR
Subject to Sections 7.3 and 7.4, the Vendor shall:
(a) be liable to the Purchaser for all losses, costs, damages
(excluding consequential damages) and expenses whatsoever
which the Purchaser may suffer, sustain, pay or incur; and
(b) indemnify and save the Purchaser and its directors, officers,
servants, agents and employees harmless from and against all
claims, liabilities, actions, proceedings, demands, losses,
costs, damages (excluding consequential damages) and expenses
whatsoever which may be brought against or suffered by the
Purchaser, its directors, officers, servants, agents or
employees or which they may sustain, pay or incur,
as a direct result of any matter or thing arising out of, resulting
from, attributable to or connected with any misrepresentation or breach
of warranty made by the Vendor herein or in any document delivered in
connection herewith in respect of which a written notice specifying the
misrepresentation or breach is delivered by the Purchaser within the
survival period in accordance with Section 7.4 or the failure of the
Vendor to comply with, or the breach by the Vendor of, any of the
covenants or agreements to be performed by the Vendor in this Agreement
or in any document delivered concurrently herewith; or the obligation
on the Company or the Purchaser to pay any additional Taxes, interest
or penalties that may be assessed against the Company for any period of
time up to the Reference Time; provided however, nothing in this
Section 7.1, whether express or implied, shall be construed so as to
cause the Vendor to indemnify the Purchaser in connection with any
representation or warranty contained in Article 3 if and to the extent
that the Purchaser did not rely upon such representation or warranty.
7.2 RESPONSIBILITY OF PURCHASER
Subject to Sections 7.3 and 7.4, the Purchaser shall:
(a) be liable to the Vendor for all losses, costs, damages
(excluding consequential damages) and expenses whatsoever
which the Vendor may suffer, sustain, pay or incur, and
(b) indemnify and save the Vendor and his heirs harmless from and
against all claims, liabilities, actions, proceedings,
demands, losses, costs, damages (excluding consequential
damages) and expenses whatsoever which may be brought against
or suffered by the Vendor, or his heirs or which any of them
may sustain, pay or incur,
as a direct result of any matter or thing arising out of, resulting
from, attributable to or connected with: any misrepresentation or
breach of warranty made by the Purchaser herein or in any document
delivered in connection herewith in respect of which a written
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notice specifying the misrepresentation or breach is delivered by the
Vendor within the survival period in accordance with Section 7.4 or the
failure of the Purchaser to comply with, or the breach by the Purchaser
of, any of the covenants or agreements to be performed by the Purchaser
in this Agreement or in any document delivered concurrently herewith;
provided however, nothing in this Section 7.2, whether express or
implied, shall be construed so as to cause the Purchaser to indemnify
the Vendor in connection with any representation or warranty contained
in Article 4 if and to the extent that the Vendor did not rely upon
such representation and warranty.
7.3 PROCEDURE - INDEMNITIES
Any Party seeking indemnification hereunder shall give reasonably
prompt notice thereof to the Party from whom indemnification is sought.
The Party from whom indemnification is sought shall have the sole right
to conduct, settle or otherwise dispose of any legal action in respect
of which indemnification is sought in any manner it deems appropriate
without the consent of the other Party if but only if it has agreed
that the matters in the action are indemnified pursuant to this Article
7.
7.4 SURVIVAL
Notwithstanding the completion of the transaction contemplated by this
Agreement or any investigation made by or on behalf of any party
hereto, the representations, warranties, covenants, agreements and
indemnities of the Vendor and the Purchaser contained in this Agreement
and contained in any document or certificate given pursuant to this
Agreement shall survive the closing and continue in full force and
effect for a period of two years (and for a period of four years in
respect of the indemnity for Taxes set out in Section 7.1). No claims
with respect to representations, warranties, covenants, agreements and
indemnities of the Vendor and Purchaser contained in this Agreement or
in any document or certificate given pursuant to the provisions hereof
shall be made by any party unless notice in writing thereof has been
given by the party making the claim to the other party within two years
or four years, as applicable, of the Closing Date. Notwithstanding
anything contained in this Agreement, Purchaser shall have no remedy or
cause of action for a breach of any representation or warranty in
regard to any circumstance, matter or thing actually known to the
Purchaser or any employee, agent, consultant or representative thereof,
as at the Closing Date.
8. MISCELLANEOUS
8.1 FURTHER ASSURANCES
The Vendor and the Purchaser shall from time to time execute and
deliver all such further documents and instruments and do all acts and
things as the other Party may, either before or after the Closing Date,
reasonably require to effectively carry out or better evidence or
perfect the full intent and meaning of this Agreement.
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8.2 TIME OF THE ESSENCE
Time shall be of the essence of this Agreement.
8.3 FEES
Each of the Parties hereto shall pay their respective legal and
accounting costs and expenses incurred in connection with the
preparation, execution and delivery of this Agreement and all documents
and instruments executed pursuant hereto and any other costs and
expenses whatsoever and howsoever incurred. Any legal, accounting and
brokerage fees, costs and expenses incurred by the Company prior to
Closing in connection with this transaction shall be the responsibility
of and be paid by the Vendor.
8.4 BENEFIT OF THE AGREEMENT
This Agreement shall enure to the benefit of and be binding to the
respective heirs, executors, administrators, successors and permitted
assigns of the Parties hereto.
8.5 ENTIRE AGREEMENT
This Agreement constitutes the entire agreement between the Parties
with respect to the subject matter hereof and cancels and supersedes
any prior understandings and agreements between the Parties hereto with
respect thereto. There are no representations, warranties, terms,
conditions, undertakings or collateral agreements, express, implied or
statutory, between the Parties other than as expressly set forth in
this Agreement.
8.6 AMENDMENTS AND WAIVER
No modification of or amendment to this Agreement shall be valid or
binding unless set forth in writing and duly executed by all of the
Parties hereto and no waiver of any breach of any term or provision of
this Agreement shall be effective or binding unless made in writing and
signed by the party purporting to give the same and, unless otherwise
provided, shall be limited to the specific breach waived.
8.7 ASSIGNMENT
This Agreement may not be assigned by any of the Parties hereto without
the written consent of all other Parties.
8.8 NOTICES
Any demand, notice or other communication to be given in connection
with this Agreement shall be given in writing and shall be given by
personal delivery, by registered mail or by electronic means of
communication addressed to the recipient as follows:
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To the Vendor:
000 - 00xx Xxxxxx X.X.
Xxxxxxx, Xxxxxxx X0X OP7
Attention: Xxxxx Xxxxx
Facsimile: (000) 000-0000
To the Purchaser:
000, 000 - 0xx Xxxxxx X.X.
Xxxxxxx, Xxxxxxx X0X 0X0
Attention: Xxxxx Xxxxxx, President
Facsimile: (000) 000-0000
or to such other address, individual or electronic communication number
as may be designated by notice given by any party to the others. Any
demand, notice or other communication given by personal delivery shall
be conclusively deemed to have been given on the day of actual delivery
thereof if a Business Day and if not on the next following Business Day
and, if given by registered mail, on the twelfth Business Day following
the deposit thereof in the mail and, if given by electronic
communication, on the day of transmittal thereof if given during the
normal business hours of the recipient and on the Business Day during
which such normal business hours next occur if not given during such
hours on any day. If the Party giving any demand, notice or other
communication knows or ought reasonably to know of any difficulties
with the postal system which might affect the delivery of mail, any
such demand, notice or other communication shall not be mailed but
shall be given by personal delivery or by electronic transmission.
8.9 GOVERNING LAW
This Agreement shall in all respects be governed by, and construed in
accordance with, the laws of the Province of Alberta, including all
matters of construction, validity and performance. The Vendor and
Purchaser hereby consent and irrevocably attorn to the jurisdiction of
the courts of the Province of Alberta for all disputes relating to the
construction, interpretation, enforcement and performance of this
Agreement, hereby waiving all defences based on venue or convenience of
forum or service of process outside of such jurisdiction.
8.10 EXECUTION
This Agreement may be executed in one or more counterparts, each of
which shall be deemed an original but all of which together shall
constitute one and the same instrument. The Parties shall be entitled
to rely on delivery of an executed facsimile copy of this Agreement and
such facsimile copy shall be legally effective to create a valid and
binding agreement between the Parties hereto.
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8.11 INTERIM PERIOD
Notwithstanding that the within purchase and sale transaction will be
closed and completed on a date following the Reference Time, the
Parties acknowledge and agree that as between the Parties such
transaction is being treated as taking effect as of the Reference Time,
such that the Purchaser will receive the benefit of the Shares as of
the Reference Time and that from and after the Reference Time and as
between the Parties (upon the execution hereof) the Purchaser will be
treated as the beneficial owner of the Shares, and the Company is
entitled to all income and profits derived from or in connection with
the Assets from and after the Reference Time. The Vendor hereby
acknowledges that upon execution hereof it has held the Shares as bare
trustee only for and on behalf of the Purchaser and shall account to
the Purchaser in respect thereof pursuant to the terms of this
Agreement.
IN WITNESS WHEREOF, the parties have executed this Agreement as of the
date first written above.
Vendor:
------------------------------------ --------------------------------
Witness XXXXX XXXXX
GEOCAN ENERGY INC.
Per:
----------------------------
Per:
----------------------------
28
28
SCHEDULE "A"
attached to and forming part of a Share Purchase
Agreement made as of the 31st day of October, 2000
between Xxxxx Xxxxx, as Vendor
and GEOCAN Energy Inc., as Purchaser
PART I
LANDS AND LEASES
COMPANY'S
LEASE LANDS WORKING INTEREST ENCUMBRANCES
----------------------- ------------------- -------------------- ---------------------------
XXXX
Alberta Crown PNG SW1/416-45-1-W4M 15% (a) Crown Royalty; and
Lease No. 0485110052 from base Viking to (b) 3% Gross Overriding
base Mannville Royalty
STAPLEHURST
Alberta Crown PNG NE1/424-50-1-W4M 12.5% Before (a) Crown Royalty; and
Lease No. 0497100414 to basement Payout (b) Convertible
8.125% After Overriding Royalty of
Payout 1/150 bbls/month (min.
5%, max. 15%)
Alberta Crown PNG Lsds 13 and 14-50- 12.5% Before (a) Crown Royalty; and
Lease No. 0497100415 1-W4M to basement Payout (b) Convertible Overriding
8.125% After Royalty of 1/150
Payout bbls/month (min. 5%,
max. 15%)
29
SCHEDULE "A"
attached to and forming part of a Share Purchase
Agreement made as of the 31st day of October, 2000
between Xxxxx Xxxxx, as Vendor
and GEOCAN Energy Inc., as Purchaser
================================================================================
PART II
FACILITIES
Nil.
30
SCHEDULE "A"
attached to and forming part of a Share Purchase
Agreement made as of the 31st day of October, 2000
between Xxxxx Xxxxx, as Vendor
and GEOCAN Energy Inc., as Purchaser
================================================================================
PART III
XXXXX
TCRL Xxxx 102/03-16-045-01-W4M
Timberwolf et al 10C Xxxxx 10-24-50-1-W4M
Timberwolf et xx Xxxxx 14-24-50-1-W4M
Timberwolf et al 15A Xxxxx 15-24-50-1-W4M
31
SCHEDULE "B"
attached to and forming part of a Share Purchase
Agreement made as of the 31st day of October, 2000
between Xxxxx Xxxxx, as Vendor
and GEOCAN Energy Inc., as Purchaser
================================================================================
WORKING CAPITAL ADJUSTMENTS
2.2.1 PURCHASE PRICE ADJUSTMENT: The Basic Purchase Price shall be
increased or decreased, as the case may be, by the amount of the
value of Working Capital as at the Reference Time as finally
determined in accordance with this Schedule "B", including as a
current liability, the amount of any Tax payable as determined in
the Notional Tax Return.
2.2.2 ESTIMATED WORKING CAPITAL: Three (3) Business Days prior to the
Closing Date, the Vendor shall, at the Vendor's cost and expense,
prepare a trial balance for the Company, estimating the Working
Capital as at the Reference Time (the "Estimated Working
Capital"). For purposes of closing, the Basic Purchase Price
shall be increased or decreased, as the case may be, on the basis
contemplated in Section 2.2.1 utilizing the Estimated Working
Capital.
2.2.3 WORKING CAPITAL REPORT: As soon as is practicable following the
Closing Date, the Purchaser shall cause the Company to obtain all
documentation necessary to complete preparation of the Company's
financial statements as at the Closing Date. Forthwith thereupon,
the Vendor shall, on behalf of the Company, at the Vendor's cost
and expense, prepare a final statement of Working Capital as at
the Reference Time (the "Working Capital Report") as well as the
Company's financial statements as at the Closing Date and to
report thereon to the Purchaser as soon as practicable, and in
any event not later than 30 days following the Closing Date. The
Purchaser shall be entitled, at its sole cost and expense, to
review and have its accountants and its employees review the
working papers prepared by the Vendor for the Working Capital
Report and to comment thereon as the Purchaser deems appropriate.
Any dispute arising between the Vendor and the Purchaser as to
the determination of Working Capital set forth in the Working
Capital Report or the Notional Tax Return shall be settled by
arbitration in accordance with the provisions of Section 2.2.7.
2.2.4 PAYMENTS. Upon receipt of the Working Capital Report and the
determination of Working Capital thereunder:
(a) if Working Capital exceeds Estimated Working
Capital, then the Purchaser shall, within 10 days
of completion of the Working Capital Report, pay
an amount equal to the difference between such
amounts to Vendor together with interest on the
amount of such difference calculated at the Prime
Rate plus one percent (1%) from and including the
Closing Date to and including the day prior to the
date of payment; and
32
2
(b) if Working Capital is less than Estimated Working
Capital, then the Vendor shall within 10 days of
completion of the Working Capital Report, pay an
amount equal to the difference between such
amounts to the Purchaser, together with interest
on the amount of such difference calculated at the
Prime Rate plus one percent (1%) from and
including the Closing Date to and including the
day prior to the date of payment.
2.2.5 FURTHER ACCOUNTING AND ADJUSTMENTS. The Parties foresee that
certain adjustments with respect to Working Capital may be
necessary from time to time after the 30-day period referred to
in Section 2.2.3, including, but not limited to:
(a) any amounts which are to be paid to the Company or
the Purchaser at any time after the Closing Date
out of or in any way relating to royalty
calculations in respect of the Petroleum and
Natural Gas Rights;
(b) matters relating to Company's Taxes for any
taxation period or deemed taxation period ending
on or before Reference Time; and
(c) any matters which the Purchaser or the Vendor have
given notice to the other within the said 30-day
period.
Each of the Parties agrees to co-operate fully in calculating and
confirming the amount of any payment that may be necessary as a
result of such adjustments and agrees to make payment in such
event. In this respect, any adjustments to Working Capital
occurring more than 30 days after Closing Date shall be made as
they occur and payment shall, in accordance with Section 2.2.4,
be made with respect thereto within 15 days of each such
adjustment being determined and notice thereof being given by one
Party to the other Party. Any amount of interest and penalties
payable by or to Third Parties, in respect of any adjustments
under this paragraph, shall also be adjusted between the Vendor
and the Purchaser as they occur and payment made within such
15-day period. Interest on the amount of such adjustment
(including amounts, if any, for interest and penalties)
calculated at the Prime Rate plus one percent (1%) from and
including the date one Party receives notice of the adjustment
from the other Party to and including the day prior to the date
of payment, shall be payable to the Party entitled to the
adjustments. No adjustment shall be made to Working Capital
pursuant to this Schedule after one year following the Closing
Date (four years following the Closing Date for Taxes), except
where a Party shall have given written notice of its claim, with
reasonable particulars, to the other prior to the expiry of such
one year period, objecting to the determination of Working
Capital, which notice shall also include the reasons for the
objection. Any dispute arising between Vendor and Purchaser as to
adjustments shall be settled by arbitration in accordance with
the provisions of Section 2.2.7.
2.2.6 Adjustment Principles: For greater certainty, the following
principles shall be employed in any determination of Working
Capital or any adjustment required thereto in accordance with
this Schedule:
(a) Subject to other provisions of this Section 2.2.6,
all benefits, income, costs and expenses of every
kind and nature relating to the Assets, including,
33
3
without limitation, maintenance, capital and
operating costs, processing fees, lease rentals
and the proceeds from the sale of production,
shall be determined as of the Reference Time on an
accrual basis (and in respect of Taxes as set
forth in the Notional Tax Return, as of the
Reference Time) and, without limiting the
generality of the foregoing:
(a) adjustments for costs or work performed and goods
supplied in connection with the operation and
development of the Assets shall be made on the
basis of the date upon which the work was
performed or the goods were supplied;
(b) adjustments for revenues from the sale of
production shall be made on the basis of the date
of production; and
(c) adjustments for royalty payments and expenses
relating to or from the sale of production shall
be made on the basis of the date of production.
(b) The Basic Purchase Price shall be adjusted upwards
by an amount equal to the market value of
Petroleum Substances attributable to the Assets
which Petroleum Substances have been sold prior to
the Reference Time and for which the Company has
not received full payment, plus an amount equal to
the market value of Petroleum Substances
attributable to the Assets which Petroleum
Substances have been produced but not sold prior
to the Reference Time.
(c) The Vendor and the Purchaser, at its own cost, and
its authorized representatives, shall have the
right exercisable upon 15 days' written notice to
the other, to examine, copy and audit the records
of the other and the Company that are relevant to
effecting the adjustments pursuant to this
Schedule. The rights hereunder shall survive for
all matters for a period of two years from the
Closing Date and for Tax matters a period of four
years from the Closing Date.
2.2.7 ARBITRATION. If the Parties fail to reach agreement as to the
calculation or determination of Working Capital or the Notional
Tax Return pursuant to this Schedule, or otherwise as provided in
the Agreement, the matter in dispute shall be resolved by a
single arbitrator pursuant to the provisions of The Arbitration
Act (R.S.A.). In making a determination as to the amount of the
proposed adjustments to the Basic Purchase Price, the Working
Capital or the Notional Tax Return, the arbitrator shall hear
submissions from one individual as representative of the Vendors
(as a group) and the Purchaser, respectively, as to their
respective determinations of the proposed Basic Purchase Price
adjustment, the Working Capital or the Notional Tax Return and
then the arbitrator shall choose either the determination of the
proposed Basic Purchase Price adjustment, the Working Capital or
the Notional Tax Return by the Vendors or the determination of
the proposed Basic Purchase Price adjustment, the Working Capital
or the Notional Tax Return by the Purchaser. The arbitrator shall
have access to the working papers prepared by each of the Vendors
and the Purchaser relating to their respective determinations of
Working Capital and the Notional Tax Return. Any
34
4
decision of the arbitrator pursuant to this Agreement shall be
final and binding on the Parties and shall not be subject to
review. All costs of the arbitration shall be borne by the
Vendors as to one-half and the Purchaser as to one-half.
35
SCHEDULE "C"
attached to and forming part of a Share Purchase
Agreement made as of the 24th day of October, 2000
between Xxxxx Xxxxx, as Vendor
and GEOCAN Energy Inc., as Purchaser
================================================================================
FINANCIAL STATEMENTS
36
SCHEDULE "D"
attached to and forming part of a Share Purchase
Agreement made as of the 24th day of October, 2000
between Xxxxx Xxxxx, as Vendor
and GEOCAN Energy Inc., as Purchaser
================================================================================
NOTIONAL TAX RETURN
37
742521 ALBERTA INC.
SHARE PURCHASE AGREEMENT
THIS AGREEMENT dated this 31st day of October, 2000;
AMONG:
XXXXXXX XXXXXX ("X. XXXXXX"), XXXXX XXXXXX ("X. XXXXXX"), and
XXXXXXX XXXXXX ("XXXXXX XX."), individuals residing in
Calgary, Alberta (collectively, the "VENDOR")
- and -
GEOCAN ENERGY INC., a corporation with offices in Calgary,
Alberta (the "PURCHASER"),
WHEREAS the Vendor is the registered and beneficial owner of all the
issued and outstanding shares of the Company;
AND WHEREAS the Vendor has agreed to sell and transfer, and the
Purchaser has agreed to purchase and accept, on the terms and conditions herein
set forth, all the Vendor's right, title, estate and interest in and to the
Shares;
NOW THEREFORE THIS AGREEMENT WITNESSETH THAT, in consideration of the
premises and of the respective covenants and agreements of the Parties
hereinafter set forth, the Parties hereby covenant and agree with one another as
follows:
It is agreed as follows:
1. INTERPRETATION
1.1 DEFINITIONS
In this Agreement, including the recitals and the Schedules hereto:
"AGREEMENT" or "THIS AGREEMENT" means this share purchase agreement as
amended from time to time after the date hereof in the manner herein
provided; the terms "HEREIN", "HERETO", "HEREOF", "HEREUNDER", "HEREBY"
and similar terms mean and refer to this Agreement and not, unless a
particular provision is expressly stipulated, to any particular
provision.
"ASSETS" means the assets of the Company, including the Petroleum and
Natural Gas Rights, the Tangibles and the Miscellaneous Interests.
"BASIC PURCHASE PRICE" has the meaning ascribed thereto in Section
2.2(a).
38
2
"BUSINESS DAY" means any day, other than a Saturday or Sunday, or a
statutory holiday in Calgary, Alberta.
"CLOSING" means the completion of the purchase and sale of the Shares
as contemplated by this Agreement.
"CLOSING DATE" means December 13, 2000, or such other date as the
Vendor and the Purchaser agree in writing.
"COMPANY" means 742521 Alberta Inc., a corporation incorporated
pursuant to the laws of Alberta with offices in the City of Calgary.
"ENVIRONMENTAL DEFICIENCY" means any (i) ground water, surface water or
aquifer contamination, (ii) soil contamination, (iii) toxic or
hazardous substance emission, or (iv) corrosion or deterioration of
structures, equipment and other property, the occurrence or existence
of which could reasonably be expected to give rise to criminal,
quasi-criminal or civil liability on the part of the Vendor or a
transferee of the Assets, under presently subsisting Environmental Law.
"ENVIRONMENTAL LAW" means any federal, provincial or local statute,
regulation or rule, any judicial or administrative order or judgement
or written administrative request of any governmental or regulatory
body having jurisdiction, and any provision or condition of any permit,
license or other governmental operating authorization, applicable to
the Vendor or the Assets and relating to protection of the environment,
persons or the public welfare from actual or potential exposure (or the
effects of exposure) to any actual or potential release, discharge,
spill or emission (whether past or present) of, or regarding the
manufacture, processing, production, gathering, transportation, use,
treatment, storage or disposal of, any chemical, raw material,
pollutant, contaminant or toxic, corrosive or hazardous substance or
waste.
"FACILITIES" means the specified interest of the Company in all
facilities described in Schedule "A", Part II.
"FINANCIAL STATEMENTS" means the financial statements of the Company
attached hereto as Schedule "C" for the previous one year together with
unaudited interim financial statements for the period ending , 2000.
"GAAP" means Canadian generally accepted accounting principles from
time to time prescribed by the Canadian Institute of Chartered
Accountants, or any successor institute, applicable on a consistent
basis.
"GEOCAN SHARES" means 52,000 common shares of the Purchaser.
"LANDS" means the lands set forth and described in Schedule "A", Part
I, insofar as rights to the Petroleum Substances underlying those Lands
are granted by the Leases.
"LEASES" means, collectively, the leases, reservations, permits,
licenses, certificates of title or other documents of title set forth
and described in Schedule "A", Part I (or any
39
3
replacement thereof, renewal or extension thereof or leases derived
therefrom) by virtue of which the holder thereof is entitled to drill
for, win, take, own and remove Petroleum Substances within, upon or
under all or any part of the Lands.
"MISCELLANEOUS INTERESTS" means the interests of the Company in and to
all property, assets and rights pertaining or ancillary to the
Petroleum and Natural Gas Rights, the Lands, the Leases and the
Tangibles (other than the Petroleum and Natural Gas Rights, the Lands,
the Leases and the Tangibles) and to which the Company is entitled at
the Closing Date including, but not in limitation of the generality of
the foregoing, such interests of the Company in:
(a) all contracts, agreements, documents, production sales
contracts, books and records relating to the interest of the
Company in the Petroleum and Natural Gas Rights, the Lands, or
the Tangibles, and any and all rights in relation thereto;
(b) all engineering and production data and information directly
related to the Petroleum and Natural Gas Rights and the
Tangibles which are in the custody of the Company or to which
it is entitled including, without limitation, all Proprietary
Technical Information;
(c) all subsisting rights to enter upon, use and occupy the
surface of the Lands or any lands which same have been pooled
or unitized or the sites of any Tangibles or any lands which
are used to gain access to any of the foregoing;
(d) existing Well bores and downhole casing; and
(e) all well, pipeline and other permits, licences and
authorizations relating to the Petroleum and Natural Gas
Rights, the Lands (or any lands with which the Lands have been
pooled or unitized) and the Tangibles.
"NOTIONAL TAX RETURN" means the pro forma Tax return of the Company,
including financial statements of the Company as at October 15, 2000,
attached as Schedule "D" for the period from the date of the Company's
last Tax return to the Reference Time.
"PARTIES" means the parties to this Agreement and their respective
successors and permitted assigns and "PARTY" means any one of them.
"PERMITTED ENCUMBRANCES" means:
(a) the encumbrances identified in Schedule "A", Part I;
(b) easements, rights of way, servitudes or other similar rights
in land including, without limiting the generality of the
foregoing, rights of way and servitudes for railways, roads,
sewers, drains, gas and oil pipelines, gas and water mains,
electric light, power, telephone, telegraph or cable
television conduits, poles, wires and cables;
40
4
(c) the right reserved to or vested in any government or other
public authority to terminate any of the Leases or to require
annual or other periodic payments as a condition of the
continuance thereof;
(d) rights reserved to or vested in any municipality or
governmental, statutory or public authority to control or
regulate any of the Assets in any manner, and all applicable
laws, rules and orders of any governmental authority;
(e) the right reserved to or vested in any government or other
public authority to levy taxes on Petroleum Substances or the
income or revenue therefrom;
(f) governmental requirements as to production rates on the
operations of any property or otherwise affecting the value of
any property;
(g) undetermined or inchoate liens incurred or created as security
in favour of the person conducting the operation of any of the
Assets for the Company's proportion of the costs and expenses
of such operations which costs and expenses are not delinquent
as of the Closing Date;
(h) liens granted in the ordinary course of business to a public
utility, municipality or governmental authority in connection
with operations conducted with respect to the Assets;
(i) provisions for penalties and forfeitures under agreements as a
consequence of non-participation in operations;
(j) the reservations, limitations, provisos and conditions in any
original grants from the Crown of any of the Lands or
interests therein and statutory exceptions to title and the
terms and conditions of the Leases; and
(k) provisions in agreements and plans effecting pooling or
unitization.
"PERSON" means an individual, a partnership, a corporation, a trust, an
unincorporated organization, a union, a government or any department or
agency thereof and the heirs, executors, administrators or other legal
representatives of an individual.
"PETROLEUM AND NATURAL GAS RIGHTS" means the interests of the Company
in and to the Lands and the Leases as set forth in Schedule "A", Part
I.
"PETROLEUM SUBSTANCES" means petroleum, natural gas, related
hydrocarbons and any other substances, whether liquid, solid or
gaseous, produced in association with such petroleum, natural gas or
related hydrocarbons, insofar as rights to the same are granted by way
of the Leases.
"PLACE OF CLOSING" means the offices of Xxxxxx Xxxxxx Xxxxxxx LLP,
Calgary, Alberta or such other place as may be agreed upon in writing
by the Vendor and the Purchaser.
41
5
"PRIME RATE" means the annual prime lending rate used from time to time
by Alberta Treasury Branches, Main Branch, Calgary, Alberta, for loans
made in Canada in Dollars to the bank's preferred commercial borrowers.
"PROPRIETARY TECHNICAL INFORMATION" means all surveyors' ground
elevation records (whether vertical or horizontal), shot point maps,
drillers' logs, shooters' records, observer reports and seismograph
records, seismograph magnetic tapes, stacked and migrated tapes,
monitor records, field records or tapes, record sections and processed
seismic sections obtained in or resulting from any seismograph survey
conducted on or near the Lands, and geological or geophysical studies
and further appraisals or interpretations of same conducted on or near
the Lands and owned by the Vendor or to which the Vendor is entitled
and, without limitation, such Proprietary Technical Information
includes any and all copies of such items whether in hard, digital,
magnetic, electronic or any other form.
"PURCHASE PRICE" has the meaning ascribed thereto in Section 2.2(c).
"REFERENCE TIME" means 12:01 a.m. (Mountain Time) at Calgary, Alberta,
on October 1, 2000.
"SECURITY INTEREST" means any mortgage, charge, pledge, lien, hypothec,
encumbrance, conditional sale, assignment by way of or in effect as
security, or security interest whatsoever.
"SHAREHOLDER DEBT" means any indebtedness, liability or obligation owed
by the Company to the Vendor or any Person affiliated with or related
to the Vendor.
"SHARES" means all of the issued and outstanding shares of the Company
on the Closing Date and includes any instruments or rights capable of
being converted into, exchanged, for or exercised for previously
unissued shares of any class of the Company or giving the holder the
right on the occurrence of any event or events, including on the
payment of money, whether or not such event or events have occurred, to
require delivery of previously unissued shares of any class to be
issued by the Company, and includes options, warrants, conversion or
exchange privileges and similar rights.
"TANGIBLES" means the interests of the Company in and to the
Facilities, and all other tangible depreciable property and assets
situate in, on or about the Lands or lands pooled or unitized
therewith, including the Xxxxx, used in connection therewith or with
production, gathering, processing, transmission, measurement or
treatment operations relating to the Petroleum and Natural Gas Rights.
"TAX" or "TAXES" means all income, capital, gross receipts, sales, use,
franchise, profits, property, customs duties, withholding, goods and
services, or other taxes, fees, assessments or charges of' any kind
whatsoever (including Alberta Energy Utility Board taxes and levies),
together with any interest and any penalties, additions to tax or
additional amounts imposed by any taxing authority.
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6
"XXXXX" means all of the xxxxx that are located on the Lands whether
producing, suspended, previously abandoned or used as water source,
injection, observation or disposal xxxxx.
"WORKING CAPITAL" means the aggregate of the Company's current assets
less the aggregate of the Company's current liabilities as at the
Reference Time as shown in the financial statements attached to the
Notional Tax Return, all of which shall be determined in accordance
with GAAP, subject to adjustment on the basis provided for in Schedule
"B".
1.2 SCHEDULES
The following are the Schedules annexed hereto and incorporated by
reference and deemed to be a part hereof:
Schedule "A" - Part I Lands and Leases; Part II Facilities; Part III Xxxxx
Schedule "B" - Working Capital Adjustments;
Schedule "C" - Financial Statements;
Schedule "D" - Notional Tax Return
All Schedules hereto are by this reference incorporated into and are
part of this Agreement as fully as though contained in the body of this
Agreement; provided that wherever any provision of any Schedule to this
Agreement conflicts with any provision in the body of this Agreement,
the provisions of the body of this Agreement shall prevail. References
herein to a "Schedule" shall mean a reference to a Schedule to this
Agreement. References in any Schedule to "the Agreement" or "this
Agreement" shall mean a reference to this Agreement. References in any
Schedule to another Schedule shall mean a reference to a Schedule to
this Agreement.
1.3 VENDOR KNOWLEDGE
Where in this Agreement, or in any certificate or document delivered in
connection herewith or to effect any of the transactions contemplated
hereby, any statement, representation or warranty is made as to, or as
being based on, the knowledge, information or belief of the Vendor,
such knowledge, information or belief consists only of the actual
knowledge, information or belief of the Vendor as the case may be.
1.4 CURRENCY
References in this Agreement to "dollars" or "$" are to dollars of the
lawful money of Canada for the payment of public and private debts.
1.5 ACCOUNTING TERMS
All accounting terms not otherwise defined in this Agreement have the
meanings assigned to them in accordance with GAAP, and except as
otherwise expressly provided herein, all accounting or financial
calculations required or permitted under this Agreement shall be made
on the basis of GAAP applied on a consistent basis.
43
7
1.6 MEANING NOT AFFECTED BY DIVISION, HEADINGS OR TABLE OF CONTENTS
The division of this Agreement and the provision of headings or a table
of contents for all or any thereof are for convenience of reference
only and shall not affect the meaning of this Agreement.
1.7 INVALIDITY OF PROVISIONS
If any of the 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.
2. PURCHASE AND SALE; CLOSING
2.1 SALE OF SHARES
Upon the terms and subject to the conditions of this Agreement, the
Purchaser will purchase the Shares from the Vendor and make payment
therefor to the Vendor and the Vendor will sell, assign and deliver the
Shares to the Purchaser upon receipt of payment therefor.
2.2 PURCHASE PRICE
In consideration of the sale, assignment and delivery by the Vendor of
the Shares the Purchaser shall pay to the Vendor the Purchase Price,
determined pursuant to this Section 2.2, such amount, subject to
subsequent adjustments herein provided for, to be paid on the Closing
Date in the manner provided for in Section 2.5.
(a) The Purchaser will pay or cause to be paid to the Vendor in
the aggregate $90,000 (the "BASIC PURCHASE PRICE"), subject to
adjustment and to the further payments as provided for in this
Section 2.2;
(b) The Basic Purchase Price shall be adjusted by an increase or
decrease as the case may be for the amount of Working Capital
as finally determined in accordance with Schedule "B"; and
(c) The Basic Purchase Price as adjusted pursuant to Section
2.2(b), is herein called the "PURCHASE PRICE".
2.3 TIME AND PLACE OF CLOSING
Upon the terms and conditions of this Agreement, the completion of the
transfer of the Shares by the Vendor to the Purchaser and the payment
by the Purchaser to the Vendor of the Purchase Price will take place at
the Place of Closing at 10:00 a.m. (Calgary time) on the Closing Date.
All adjustments contemplated by this Agreement shall be effective as of
the Reference Time.
44
8
2.4 DELIVERIES BY THE VENDOR
On the Closing Date the Vendor will deliver or cause to be delivered to
the Purchaser, in form and content satisfactory to the Purchaser, the
following:
(a) certificates representing the Shares, accompanied by stock
transfer powers of attorney duly executed in blank or duly
executed instruments of transfer, and any other documents
necessary to transfer to the Purchaser good title to the
Shares;
(b) the resignations of all members of the board of directors of
the Company, and the resignations of all officers of the
Company together with general releases of the Company by each
of its directors and officers;
(c) original share books, share ledgers and minute books and
corporate seals of the Company as well as all tax records
(including tax returns, notices of assessment, reassessments
and tax correspondence), environmental, health and safety
files, Worker's Compensation files and other books and records
belonging to and relating to the business and operations of
the Company;
(d) the certificates referred to in Sections 2.6(a), (b) and (d)
dated the Closing Date duly signed on its behalf;
(e) a certified copy of a resolution of the Board of Directors of
the Company approving the transfer of the Shares by the Vendor
to the Purchaser;
(f) all other documents, instruments and writings reasonably
required to be delivered by the Vendor at the Closing Date
pursuant to this Agreement or otherwise required in connection
herewith;
(g) substantially all books, records, files (including lease,
contract, well and unit files), reports, studies, maps,
drawings, logs and other documentary materials of any nature
whatsoever pertaining to the Assets, including, without
limitation, all geological and engineering reports, records,
maps, drawings, logs and other data relating to the Lands; and
(h) a Certificate of Status for the Company issued under the laws
of the Province of Alberta.
2.5 DELIVERIES BY THE PURCHASER
On the Closing Date the Purchaser will deliver the following to the
Vendor:
(a) the cash portion of the Purchase Price in the amount of
$64,000 (subject to adjustment as contemplated in Section
2.2(b)) by a certified cheque, bank draft or such other means
as are agreed upon by the Vendor and the Purchaser to the
Vendor in the following percentages:
X. Xxxxxx, in respect of 15.57 Shares 21.88%, being $14,000
X. Xxxxxx, in respect of 45 Shares 64.06%, being $41,000
Xxxxxx Xx., in respect of 10 Shares 14.06%, being $9,000
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9
(b) the share portion of the Purchase Price by the issuance of the
GEOCAN Shares at an assigned value of $0.50 per share to the
Vendor as follows:
X. Xxxxxx, in respect of 29.43 Shares all of the GEOCAN Shares
(c) the certificates referred to in Sections 2.7(a) and (b) dated
the Closing Date duly signed on its behalf; and
(d) all other documents, instruments and writings reasonably
required to be delivered by the Purchaser at the Closing Date
pursuant to this Agreement or otherwise required in connection
herewith.
2.6 CONDITIONS PRECEDENT TO THE OBLIGATIONS OF THE PURCHASER TO CLOSE
The obligation of the Purchaser to complete the transactions
contemplated hereby is subject to the fulfilment, on or prior to the
Closing Date, of the following conditions precedent, each of which is
for the exclusive benefit of the Purchaser and any one or more of which
may be expressly waived, in whole or in part, by the Purchaser:
(a) the representations and warranties of the Vendor contained in
Article 3 shall have been true on and as of the date made and
on and as of the Closing Date as if made then and a
certificate to that effect from the Vendor shall have been
delivered to the Purchaser;
(b) the Vendor shall have complied with or performed, in all
respects material to the Purchaser, all of its agreements and
covenants in this Agreement to be complied with or performed
by it at or prior to the Closing Date and a certificate to
that effect from the Vendor, with respect to itself and its
compliance and performance shall have been delivered to the
Purchaser;
(c) there shall be no rights of first refusal or other
restrictions on the transfer, sale or assignment of the Shares
or relating to change in control of the Company which have not
been complied with or waived prior to the Closing Date;
(d) there shall have been no material adverse change in the Assets
or the interests of the Company therein or the financial
condition of the Company between the Reference Time and the
Closing Date and a certificate from the Vendor to the effect
that the Vendor has no knowledge of any such material adverse
change shall have been delivered to the Purchaser;
(e) delivery of all documents by the Vendor as set forth in
Section 2.4;
(f) completion of the transactions contemplated herein shall not
violate any order or decree of any court or governmental body
of competent jurisdiction;
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(g) all necessary steps and proceedings shall have been taken to
permit the Shares to be duly and regularly transferred to and
registered in the name of the Purchaser; and
(h) the Parties shall have obtained all necessary governmental and
regulatory approvals required to permit the transactions
herein to be completed.
2.7 CONDITIONS PRECEDENT TO THE OBLIGATIONS OF THE VENDOR TO CLOSE
The obligation of the Vendor to complete the transactions contemplated
hereby is subject to the fulfilment, on or prior to the Closing Date,
of the following conditions precedent, each of which is for the
exclusive benefit of the Vendor and any one or more of which may be
waived, in whole or in part, by the Vendor:
(a) the representations and warranties of the Purchaser contained
in Article 4 shall have been true on and as of the date made
and, on and as of the Closing Date as if made then and a
certificate to that effect from a senior officer of the
Purchaser shall have been delivered to the Vendor;
(b) the Purchaser shall have complied with or performed, in all
respects material to the Vendor, all of its agreements and
covenants in this Agreement to be complied with or performed
by it at or prior to the Closing Date and a certificate to
that effect from a senior officer of the Purchaser shall have
been delivered to the Vendor; and
(c) payment or delivery, as applicable, by the Purchaser of the
Purchase Price payable pursuant to Sections 2.5(a) and (b) and
delivery of all documents by the Purchaser as set forth in
Section 2.5.
3. REPRESENTATIONS AND WARRANTIES OF THE VENDOR
The Vendor with respect to itself and the Shares or with respect to the
Company, as the context indicates, represents and warrants to the
Purchaser, as of the date hereof and as of the Closing Date:
3.1 ORGANIZATION
(a) Standing of the Company: The Company is and at the Closing
Date shall continue to be a corporation duly organized and
validly subsisting under the laws of its jurisdiction of
incorporation as a private company and has all requisite
corporate power and authority to own, lease and operate its
properties and the Assets and to carry on its business.
(b) No Subsidiaries: The Company does not have an interest (either
directly or indirectly) in any other Person, nor is the
Company a party to or bound by any agreement to acquire such
an interest.
(c) Constating Documents: The Purchaser has been provided true,
correct and complete copies of the constating documents and
by-laws, together with all
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amendments thereto, with respect to or affecting the Company.
No resolutions have been proposed or passed to further amend
the foregoing.
(d) Not a Public Company: The Company is not a "reporting issuer"
or otherwise subject to filing and reporting requirements
applicable to public companies under relevant securities
legislation.
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(e) Officers and Directors: X. Xxxxxx is the President and a
director of the Company and X. Xxxxxx is a director of the
Company. As of the Closing Date the Company will have no
employees and will not have any employment, management or
field operating contracts that relate to the Assets for which
the Company will be responsible after the Closing Date.
3.2 CAPITALIZATION OF THE COMPANY; THE SHARES.
(a) Issued and Outstanding Shares: The authorized and presently
issued and outstanding share capital of the Company as at the
date hereof is as follows:
AUTHORIZED ISSUED AND OUTSTANDING
---------- ----------------------
unlimited Class "A" Voting Common Shares X. Xxxxxx - 45 Class "A"
unlimited Class "B" Voting Common Shares X. Xxxxxx - 45 Class "B"
unlimited Class "C" Non-Voting Common Shares Xxxxxx Xx. - 10 Class "C"
unlimited Class "D" Non-Voting Common Shares Nil
unlimited Class "E" Non-Voting Preferred Shares Nil
(b) No Treasury Shares: No issued and outstanding Shares of the
Company are held in the Company's treasury.
(c) No Options: There are no outstanding options, calls or rights
of any kind relating to or providing for the purchase,
delivery or transfer of any presently issued and outstanding
Shares or other securities of the Company.
(d) No Additional Shares: There are no outstanding rights with
respect to the capital of the Company that would require the
Company to allot or issue any of the unissued Shares of the
Company or to create any additional class of Shares.
(e) No Shareholder Debt: There is no Shareholder Debt.
(f) No Shares in Other Companies: The Company does not and on the
Closing Date will not own, directly or indirectly, any shares
or securities convertible into shares of any other
corporation.
(g) Title to Shares: It is the beneficial owner of its Shares and
has good title to the same, free and clear of all Security
Interests, equities, claims, options or other encumbrances or
voting trusts, proxies or other interests of any nature
whatsoever except those in favour of the Purchaser.
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3.3 AUTHORITY; BINDING EFFECT
(a) Authority of the Vendor: It has all requisite power and
authority to execute and deliver this Agreement and to
consummate the transactions contemplated hereby.
(b) Binding Agreement: This Agreement constitutes or will
constitute at the time of execution and delivery a legal,
valid and binding obligation, enforceable against it in
accordance with its terms, subject to (i) the qualification
that such enforcement may be subject to bankruptcy,
insolvency, fraudulent preference, reorganization or other
laws affecting creditors' rights generally, and (ii) general
principles of equity (regardless of whether such
enforceability is considered in a proceeding at equity or
law).
3.4 NO CONFLICT
The execution, delivery and performance of this Agreement does not, and
the fulfilment and compliance with the terms and conditions and the
consummation of the transactions contemplated hereby, will not:
(a) conflict with any of, or require the consent or waiver of
rights of any Person under, the terms, conditions or
provisions of the respective constating documents of the
Company;
(b) violate any provision of, or require any consent,
authorization or approval under, any law or regulation or any
judicial, administrative or arbitration order, award,
judgment, writ, injunction or decree applicable to the Vendor
or the Company;
(c) conflict with, result in a breach of, constitute a default
under (whether with notice or the lapse of time or both), or
accelerate or permit the acceleration of the performance
required by, or require any consent, authorization or approval
under, any indenture, mortgage, lien, lease, agreement or
instrument to which the Vendor or the Company is a party or by
which any of them is bound or to which any of their respective
property is subject; or
(d) result in the creation of any Security Interest upon the
Shares or the Assets.
3.5 FINANCIAL STATEMENTS
The Financial Statements have been prepared, to the knowledge of the
Vendor, in accordance with GAAP applied on a consistent basis with
prior years and to the knowledge of the Vendor fairly represent the
assets, liabilities and financial position of the Company as at the
dates thereof. The Financial Statements contain or reflect all
adjustments and disclosures necessary in order to make such documents
not misleading.
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3.6 LITIGATION
To the knowledge of the Vendor, there are no actions, suits or
proceedings pending or threatened against the Company, the Assets, the
Shares or the interest of the Vendor in the Shares and the Company is
not charged or threatened with a violation of any provision of any
federal, provincial or local law or regulation relating to any aspect
of its business.
3.7 ENVIRONMENTAL MATTERS
To the knowledge of the Vendor, the Company, the Assets and the use,
maintenance and operation of the Assets has been and is in material
compliance with all applicable statutes, regulations, bylaws, codes
(whether federal, provincial or municipal) including those relating to
Workmen's Compensation, product safety and product liability.
3.8 NO CONTRACTUAL DEFAULT
The Vendor is not aware of any material default by any party under any
material contract involving the Company, nor is the Vendor aware of any
facts or circumstances which would, with the giving of notice or the
lapse of time, give rise to a default by the Company under a material
contract.
3.9 NO BREACH OF ORDER
The Vendor is not aware of any material default by the Company under
any order, writ, injunction or decree of any court or governmental
authority having jurisdiction over the Company and which materially
adversely affects or relates to the Company.
3.10 TAXES
(a) Year End: The fiscal year end of the Company for income tax
purposes is April 30.
(b) Returns and Elections to be Filed: The Company has filed in a
timely manner or, on or prior to the Closing Date, will file
in a timely manner all returns (including the income tax
return for the last taxation year of the Company ending April
30), elections, declarations and reports and information
returns and statements required or advisable to be filed on or
prior to the Closing Date and such filings, in the reasonable
opinion of the Vendor, have not been materially inaccurate or
misleading.
(c) No Tax Waivers: The Company has not provided any waivers to
Canada Customs and Revenue Agency or any other taxing
authority for any reason.
(d) Tax Audits: There are no matters which are the subject of any
current discussions with or any agreement with the Canada
Customs and Revenue Agency relating to claims for additional
Taxes.
(e) Taxes Paid: The Company has paid all Taxes payable and has not
requested any extension of time within which to file or send
any return.
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(f) Tax Disputes: No deficiency for any Tax has been proposed,
asserted or assessed against the Company and there are no
outstanding Tax disputes, audits, proposed adjustments,
notices of objection or other appeals.
(g) Private Company: The Company is a "private corporation" and
the Vendor is a resident of Canada for the purposes of the
Income Tax Act (Canada).
(h) Tax Withholding: All Taxes and other assessments and levies
which the Company is required to withhold or collect have been
(and will be up to the Closing Date) duly withheld and
collected and paid over to the proper government authorities.
(i) Notional Tax Return: To the knowledge of the Vendor, the
Notional Tax Return has been properly prepared and sets forth
the Tax position of the Company as of the Reference Time.
3.11 ABSENCE OF CERTAIN CHANGES
(a) There has not been any material adverse change in the business
or financial condition of the Company since the date of the
most recently dated Financial Statements;
(b) There has not been any material damage, destruction or loss,
whether covered by insurance or not, which has had, or would
reasonably be expected to have, a material adverse effect on
the business or financial condition of the Company.
3.12 BOOKS AND RECORDS
The books and records of the Company have been maintained in accordance
with prudent business practice and the minute books of the Company
contain a complete and accurate record of all resolutions and other
corporate actions in lieu of resolutions of its shareholders, board of
directors and committees, all of which resolutions or actions have been
duly and regularly, passed or adopted.
3.13 PRODUCTION ASSETS, OPERATIONS AND LIABILITIES
(a) Title to Assets: The Vendor does not warrant the Company's
title to the Assets, but the Vendor does represent and warrant
that neither the Vendor nor the Company have done anything
whereby any of the Company's interest in and to the Assets may
be cancelled or determined, nor have they encumbered or
alienated the same, and the Assets shall be, at the Closing
Date, free and clear of all liens, encumbrances, adverse
claims, demands and royalties created by, through or under the
Company except for the Permitted Encumbrances. Except as
otherwise provided herein, the Vendor represents and warrants
that neither the Vendor nor the Company have received notice
of any material defect in the Company's title to the Assets
and, for the period of time that the Company has owned the
Assets, to the knowledge of the Vendor all relevant deposits,
rentals and royalties (including delay rentals and shut-in
royalties) have been paid within the applicable time limits
and all obligations and covenants required to keep the Leases
in full force and effect have been performed and observed.
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(b) No Orders: There are no outstanding material orders, notices
or similar requirements relating to the Company or the Assets
issued by any federal, provincial or municipal authority
including, without limitation, occupational health and safety
authorities and to the knowledge of the Vendor there are no
matters under discussion with any such authorities relating to
orders, notices or similar requirements.
(c) Production Penalties: To the knowledge of the Vendor, no Xxxxx
are subject to a production penalty of any kind, there are no
facts or circumstances which materially adversely affect the
production of Petroleum Substances in respect of the Petroleum
and Natural Gas Rights or the receipt, or entitlement, of the
Company to revenue attributable to the production thereof.
(d) Licences and Permits: The Company or its agent possesses valid
Well, pipeline and other permits, licences and authorizations
required to allow it to carry on its business.
(e) AFE's: There are no outstanding authorizations for expenditure
(AFE) or cash calls with respect to the Lands, including the
unexpended portion thereof and there are no outstanding
commitments by the Company to expend funds for its own account
where the Company's interest under the authorization for
expenditure or outstanding commitment would exceed $25,000.
(f) Severance Taxes: All ad valorem, property, production,
severance and similar taxes and assessments based on or
measured by the ownership by the Company of its Petroleum and
Natural Gas Rights or the production of Petroleum Substances
in respect of such Petroleum and Natural Gas Rights or the
receipt by, or the entitlement of, the Company of or to
revenue attributable to the production thereof at any time
prior to the Closing Date have or will have been properly paid
and discharged.
(g) Gas Balancing: The Company is not a party to or bound by any
gas balancing or similar agreements relating to its Assets and
there are no take or pay obligations where the Company would
be obligated to deliver gas without being paid therefor.
(h) Production Sales Agreements: The Company is not a party to any
production sales contracts having a term greater than one year
that is not cancellable by the Company on notice of 30 days or
less. The Company is not in default of any obligation under
any such contract.
(i) Transportation and Processing Agreements: There are no
transportation or processing agreements or arrangements under
which the Company or any party acting on its behalf is
obligated to transport or process Petroleum Substances
allocable to the Petroleum and Natural Gas Rights, except for
agreements terminable by the Company without penalty on notice
of 30 days or less.
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(j) Offset Obligations: None of the Lands have been or are now
subject to any offset obligation (including obligations to
drill xxxxx, surrender rights, or pay compensatory royalty)
which has not been satisfied.
(k) No Guarantees: The Company is not a party to or bound by any
agreement of guarantee, indemnification, assumption or
endorsement or any other like commitment of the obligations,
liabilities (contingent or otherwise) or indebtedness of any
Person.
(l) Reduction of Interest: Except as set out in Schedule "A", the
Assets are not subject to reduction by virtue of the
conversion or other alteration of the interest of any third
party under existing agreements created by, through or under
the Company.
(m) Revenue: The Company has not assigned or otherwise encumbered
the revenue from the production of Petroleum Substances from
the Assets.
(n) Compliance with Laws: To the Vendor's knowledge, all laws,
regulations and orders and all federal, provincial, municipal
or other government departments, commissions, or other
instrumentalities thereof having jurisdiction over and
material effect upon the Assets have been complied with in all
material respects.
(o) Environmental Information: To the Vendor's knowledge, the
Company has made available to the Purchaser all material
information within the Company's possession relevant to
Environmental Deficiencies pertaining to the Assets and has
not knowingly withheld any such information from the
Purchaser.
(p) Audits: To the Vendor's knowledge, no co-owner has given
written notice to the Company (or to any party holding legal
title to the Facilities on behalf of the Company), in
accordance with the agreements affected, that such co-owner
intends to audit the books, accounts and records of an
operator relating to the Facilities.
(q) Contributions: To the Vendor's knowledge, the Company has not
been given written notice by an operator of the Facilities, in
accordance with the agreements so affected, that it will be
required to make any contribution under an agreement affecting
any of the Facilities by reason of the failure of another
co-owner to pay its share of costs and expenses associated
with such Facility.
(r) Quiet Enjoyment: Subject to the Permitted Encumbrances, those
Title Deficiencies waived or deemed to be waived by the
Purchaser, and to the rents, covenants, conditions and
stipulations in the Leases and any agreements pertaining to
the Lands and on the lessee's or holder's part thereunder to
be paid, performed and observed, the Company may enter into
and upon, hold and enjoy the Leases for the residue of their
respective terms and all renewals or extensions thereof for
the Company's own use and benefit without any interruption of
or by the Vendor or any other Person whomsoever claiming or to
claim by, through or under the Vendor.
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3.14 LOANS TO EMPLOYEES, ETC.
The Company does not now have and will at the Closing Date not have any
indebtedness outstanding which is owed to or by present or former
directors, officers, shareholders (including the Vendor or any Persons
affiliated with or related to the Vendor) or employees or former
employees of the Company.
3.15 INDEBTEDNESS BY VENDOR
There was not at the Reference Time and there will not be prior to the
Closing Date any indebtedness, liability or obligation owed to the
Company to the Vendor or any Person affiliated with or related to the
Vendor.
3.16 SECURITY INTERESTS
Except for Permitted Encumbrances, none of the Assets is subject to any
Security Interest created by, through or under the Company or any of
its predecessor entities or the Vendor.
3.17 MATERIAL CONTRACTS
The Company is not a party to any material contract other than
contracts entered into in the ordinary course of business.
3.18 FINDERS FEES
Neither the Vendor nor the Company has incurred any liability,
contingent or otherwise, for brokers' or finders' fees in respect to
this transaction for which the Purchaser shall have any obligation or
liability.
3.19 LIMITATIONS
The Vendor makes no representation or warranty whatsoever except as and
to the extent expressly set forth in this Article 3. The Vendor
disclaims any liability and responsibility for any representation or
warranty which may have been made or alleged to have been made and
which is contained in any instrument or document relative hereto or to
the transactions herein provided for, or contained in any statement or
information made or communicated (orally or in writing) to Purchaser
including, without limitation of the generality of the foregoing, any
opinion, information or advice which may have been provided to
Purchaser by an officer, director, employee, agent, consultant or
representative of the Vendor or the Company. Without limiting the
generality of the foregoing, the Vendor makes no representations or
warranties or covenants as to:
(a) the Company's title in or to the Assets except as, and only to
the extent, set forth in Article 3;
(b) the amounts, quality, recoverability or deliverability of
reserves of Petroleum Substances attributable to the Lands;
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(c) the quality, fitness, condition or merchantability of all or
any of the Tangibles;
(d) any geological or other interpretations or economic
evaluations of the Assets;
(e) estimates of prices or future cash flows arising from the sale
of Petroleum Substances attributable to the Lands or estimates
of other revenues attributable to the Company or the Assets.
The Purchaser acknowledges that it has made its own independent
investigation, analysis, evaluation and verification of the Company and
its interests in the Assets, including the Purchaser's own estimate and
appraisal of the extent, value of the reserves of Petroleum Substances
attributable to the Lands and of the condition and capacity of the
Tangibles.
4. REPRESENTATIONS AND WARRANTIES OF THE PURCHASER
4.1 The Purchaser represents and warrants to the Vendor as set forth below:
(a) Standing of the Purchaser: The Purchaser is and at the Closing
Date shall continue to be a corporation duly organized and
validly subsisting under the laws of its jurisdiction of
incorporation and has all requisite corporate power and
authority to own, lease and operate its properties and assets
and to carry on its business.
(b) Authority of the Purchaser: The Purchaser has all requisite
corporate power and authority to acquire the Shares and to
execute and deliver this Agreement and to consummate the
transactions contemplated hereby.
(c) Binding Agreement: This Agreement constitutes or will
constitute at the time of execution and delivery a legal,
valid and binding obligation of the Purchaser enforceable
against the Purchaser in accordance with its respective terms,
subject to (i) the qualification that such enforcement may be
subject to bankruptcy, insolvency, fraudulent preference,
reorganization or other laws affecting creditors' rights
generally, and (ii) general principles of equity (regardless
of whether such enforceability is considered in a proceeding
at equity or law).
(d) Not a Non-Canadian: The Purchaser is not a "non-Canadian
person" within the meaning, and or the purposes of the
Investment Canada Act.
(e) Finders Fees: The Purchaser has not incurred any liability,
contingent or otherwise, for brokers' or finders' fees in
respect to this transaction for which the Vendor shall have
any obligation or liability.
(f) Listing: The GEOCAN Shares shall be issued pursuant to an
exemption from the prospectus requirements of the Securities
Act (Alberta) and upon issuance shall be duly listed for
trading on the Canadian Venture Exchange.
(g) No Encumbrances: The GEOCAN Shares when issued shall be fully
paid and clear of any liens, encumbrances or claims of any
kind, subject to the Articles and bylaws of the Purchaser.
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5. ADDITIONAL AGREEMENTS AND COVENANTS - VENDOR
The Vendor covenants and agrees with the Purchaser as follows:
5.1 CERTAIN CHANGES
Subject to Section 5.3, without first obtaining the written consent of
the Purchaser (which consent may not be unreasonably withheld), from
the Reference Time until the Closing Date, the Vendor will ensure that
the Company will not:
(a) make any material adverse change in the conduct of its
business and operations;
(b) amend, in any respect material to the Company, any contract or
agreement other than in the ordinary course of business;
(c) declare, set aside or pay any dividends, or make any
distributions in respect of its Shares or repurchase, redeem
or otherwise acquire any Shares, (ii) make any payments, by
way of bonuses, management fees, wages, salaries or otherwise
to the Vendor or any other Person, or (iii) incur, assume, pay
or otherwise become liable for any debts or charges to or for
the benefit of any Vendor or any Person affiliated with or
related to a Vendor;
(d) merge into or with or consolidate with any other corporation
or acquire all or substantially all of the business or assets
of any Person;
(e) make any changes to its constating documents or bylaws;
(f) purchase any securities of any Person;
(g) sell, lease or otherwise dispose of any of the Assets (the
extraction and sale of Petroleum Substances and the
consumption or other disposition of its assets and properties
in the ordinary course of business being excepted and
permitted) other than in the ordinary course of business;
(h) purchase, lease or otherwise acquire any Petroleum and Natural
Gas Rights or any interest in Petroleum Substances or real
property other than in the ordinary course of business;
(i) make any capital expenditures other than in the ordinary
course of business;
(j) amend, enter into or terminate any contracts material to the
Company other than in the ordinary course of business;
(k) initiate new operations, commit to drill any Well for its own
account, surrender Petroleum and Natural Gas Rights or abandon
any Xxxxx other than in the ordinary course of business;
(l) make any offer of employment to any Person; terminate, except
for cause, the employment of any Person; or increase the
salary or benefits payable to any Person.
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5.2 ACCESS
The Vendor will cause the Company to afford to the Purchaser and its
authorized representatives reasonable access from the date hereof until
the Closing Date, to the Company's properties, books and records and
will cause the Company to furnish to the Purchaser such additional
financial and operating data and other information as it may reasonably
request. The Vendor shall further cause the Company to co-operate with
the Purchaser in arranging any such meetings as the Purchaser may
reasonably request with shippers, suppliers or others who have or have
had a business relationship with the Company and auditors or any other
Persons engaged or previously engaged to provide services with respect
to the Company's affairs.
5.3 CONDUCT OF BUSINESS; BUSINESS ORGANIZATION
In the period from the date hereof until the Closing Date, the Vendor
shall cause the Company to conduct, in accordance with generally
accepted industry practices, such activities relative to the business
of the Company as can reasonably be regarded as being in the ordinary
course of business for the Company. The Company shall not conduct any
activities with respect to the Assets which cannot reasonably be
regarded as being in the ordinary course of business of the Company
without the prior written consent of the Purchaser (which consent may
not be unreasonably withheld), except as may be reasonably necessary to
protect, ensure life and safety or to preserve the Assets or title to
the Assets. If the Company desires to approve an A.F.E. as submitted by
an operator where the Company's share of the costs thereunder is
expected to exceed Twenty-five Thousand Dollars ($25,000.00), or
renegotiate, amend, vary or alter any material contract for the sale or
disposition of Petroleum Substances, the Vendor shall have the Company:
(a) notify the Purchaser of any such A.F.E. or any material
changes to any such contract or arrangement for the sale or
disposition of Petroleum Substances;
(b) permit the Purchaser to consult with the Company in respect of
such A.F.E. or change; and
(c) the Company shall be entitled to approve such A.F.E. or make
such change, notwithstanding the Purchaser's disagreement (if
any), if the Company is dealing at arm's length with the
remaining parties to the contract and, acting in good faith,
believes such approval or change is reasonable.
5.4 INSURANCE
The Vendor will or will cause the Company to maintain existing policies
of insurance and surety bonds in respect of the Assets of the Company.
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6. ADDITIONAL COVENANTS AND ACKNOWLEDGMENTS OF THE PARTIES
6.1 TAX MATTERS - POST CLOSING
The Parties acknowledge that the Purchaser will be responsible for all
of the Company's Taxes from and including the Reference Time forward
and the Vendor will be responsible for all of the Company's Taxes up to
the Reference Time. The Parties specifically agree in regard to Tax
matters that:
(a) The Purchaser shall cause to be prepared and filed on a timely
basis, all Tax returns for the Company for any period which
ends on or before the Closing Date and for which Tax returns
have not been filed as of such date.
(b) The Tax returns to be filed after the Closing Date for the
period ending on or before the Closing Date shall be prepared
in a manner consistent with the Notional Tax Return.
(c) The Vendor and the Purchaser shall co-operate fully with each
other and make available to each other in a timely fashion
such data and other information as may reasonably be required,
including providing access to employees and to financial and
other records of the Company for the preparation of any Tax
return of the Company for a taxation year ending on or before
the Closing Date, and the conduct of any disputes relating
thereto, and shall preserve such data and other information
until the expiration of any applicable limitation period under
any applicable law with respect to Taxes.
(d) If the Company receives any assessment, reassessment, notice
of proposed reassessment, notice of audit or any other Tax
notice regarding the period prior to the Closing Date, the
Purchaser shall cause the Company to notify the Vendor,
co-operate with them in responding to such notices and to take
such steps as the Vendor may reasonably request so as to avoid
any further or incremental Tax obligation on the part of the
Vendor.
6.2 PUBLIC ANNOUNCEMENTS
The Vendor and the Purchaser will consult with each other before they
issue any press releases or otherwise make any public statements with
respect to this Agreement or the transactions contemplated hereby and
not, except to the extent required by law or by obligations pursuant to
any listing agreement with any securities exchange on which any of the
shares or other securities of the Purchaser may be listed, issue or
make any such release or statement without the prior consent and joint
approval of the Vendor and the Purchaser.
6.3 FURTHER ASSURANCES
(a) Subject to the terms and conditions of this Agreement, the
Vendor and the Purchaser will use all reasonable efforts to
take, or cause to be taken, all action, and to do, or cause to
be done, all things necessary, proper or advisable under
applicable laws and regulations to obtain consents of all
Persons including all
59
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governmental authorities necessary to the consummation of the
sale by or to it (as applicable) of the Shares pursuant to
this Agreement, or to carry out all of their respective
obligations under this Agreement and to consummate the
transactions contemplated by this Agreement.
(b) From time to time after the Closing Date, without further
consideration, each Party will, at its own expense, execute
and deliver such documents to any other Party as such Party
may reasonably request in order to consummate the transactions
contemplated by this Agreement.
6.4 INSURANCE
At the Closing Date, the Purchaser will or will cause the Company to
procure and maintain any and all policies of insurance and surety bonds
as Purchaser or the Company, at its cost and expense, deems advisable.
All risk of loss with respect to the Company or its properties shall
pass to Purchaser on the Closing Date provided that after the Closing
Date the Vendor shall administer claims under any insurance policies
with respect to the Company or its properties, relating to or arising
out of events occurring prior to the Closing Date which the Vendor
agrees to assign to the Company as and if claims arise and notice
thereof is given to the Vendor and provide reasonable co-operation to
the Company with respect to making and prosecuting (at the Vendor's
expense) any claims which are not assignable.
6.5 CONFIDENTIALITY
(a) Prior to the Closing Date, and subsequent to the Closing Date
if the sale contemplated herein does not close, the Purchaser
shall consider as confidential, shall not communicate to
others and shall use its best efforts to prevent those within
its employ or control from communicating to others, all
information which the Purchaser receives from the Vendor or
the Company pursuant to this Agreement other than information
which:
(i) was in the possession of the Purchaser prior to its
receipt or acquisition hereunder;
(ii) at the time of disclosure, is in the public domain;
(iii) after disclosure, becomes part of the public domain
by publication or otherwise, through no act or
omission on the part of the Purchaser; or
(iv) is required to be disclosed pursuant to the
applicable legislation, regulations or rules or by
the direction of any court, tribunal or
administrative body having jurisdiction.
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7. INDEMNITIES AND EXTENT AND SURVIVAL OF REPRESENTATIONS, WARRANTIES,
COVENANTS AND AGREEMENTS
7.1 RESPONSIBILITY OF VENDOR
Subject to Sections 7.3 and 7.4, the Vendor shall:
(a) be liable to the Purchaser for all losses, costs, damages
(excluding consequential damages) and expenses whatsoever
which the Purchaser may suffer, sustain, pay or incur; and
(b) indemnify and save the Purchaser and its directors, officers,
servants, agents and employees harmless from and against all
claims, liabilities, actions, proceedings, demands, losses,
costs, damages (excluding consequential damages) and expenses
whatsoever which may be brought against or suffered by the
Purchaser, its directors, officers, servants, agents or
employees or which they may sustain, pay or incur,
as a direct result of any matter or thing arising out of, resulting
from, attributable to or connected with any misrepresentation or breach
of warranty made by the Vendor herein or in any document delivered in
connection herewith in respect of which a written notice specifying the
misrepresentation or breach is delivered by the Purchaser within the
survival period in accordance with Section 7.4 or the failure of the
Vendor to comply with, or the breach by the Vendor of, any of the
covenants or agreements to be performed by the Vendor in this Agreement
or in any document delivered concurrently herewith; or the obligation
on the Company or the Purchaser to pay any additional Taxes, interest
or penalties that may be assessed against the Company for any period of
time up to the Reference Time; provided however, nothing in this
Section 7.1, whether express or implied, shall be construed so as to
cause the Vendor to indemnify the Purchaser in connection with any
representation or warranty contained in Article 3 if and to the extent
that the Purchaser did not rely upon such representation or warranty.
7.2 RESPONSIBILITY OF PURCHASER
Subject to Sections 7.3 and 7.4, the Purchaser shall:
(a) be liable to the Vendor for all losses, costs, damages
(excluding consequential damages) and expenses whatsoever
which the Vendor may suffer, sustain, pay or incur, and
(b) indemnify and save the Vendor and his heirs harmless from and
against all claims, liabilities, actions, proceedings,
demands, losses, costs, damages (excluding consequential
damages) and expenses whatsoever which may be brought against
or suffered by the Vendor, or his heirs or which any of them
may sustain, pay or incur,
as a direct result of any matter or thing arising out of, resulting
from, attributable to or connected with: any misrepresentation or
breach of warranty made by the Purchaser herein or in any document
delivered in connection herewith in respect of which a written
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notice specifying the misrepresentation or breach is delivered by the
Vendor within the survival period in accordance with Section 7.4 or the
failure of the Purchaser to comply with, or the breach by the Purchaser
of, any of the covenants or agreements to be performed by the Purchaser
in this Agreement or in any document delivered concurrently herewith;
provided however, nothing in this Section 7.2, whether express or
implied, shall be construed so as to cause the Purchaser to indemnify
the Vendor in connection with any representation or warranty contained
in Article 4 if and to the extent that the Vendor did not rely upon
such representation and warranty.
7.3 PROCEDURE - INDEMNITIES
Any Party seeking indemnification hereunder shall give reasonably
prompt notice thereof to the Party from whom indemnification is sought.
The Party from whom indemnification is sought shall have the sole right
to conduct, settle or otherwise dispose of any legal action in respect
of which indemnification is sought in any manner it deems appropriate
without the consent of the other Party if but only if it has agreed
that the matters in the action are indemnified pursuant to this Article
7.
7.4 SURVIVAL
Notwithstanding the completion of the transaction contemplated by this
Agreement or any investigation made by or on behalf of any party
hereto, the representations, warranties, covenants, agreements and
indemnities of the Vendor and the Purchaser contained in this Agreement
and contained in any document or certificate given pursuant to this
Agreement shall survive the closing and continue in full force and
effect for a period of two years (and for a period of four years in
respect of the indemnity for Taxes set out in Section 7.1). No claims
with respect to representations, warranties, covenants, agreements and
indemnities of the Vendor and Purchaser contained in this Agreement or
in any document or certificate given pursuant to the provisions hereof
shall be made by any party unless notice in writing thereof has been
given by the party making the claim to the other party within two years
or four years, as applicable, of the Closing Date. Notwithstanding
anything contained in this Agreement, Purchaser shall have no remedy or
cause of action for a breach of any representation or warranty in
regard to any circumstance, matter or thing actually known to the
Purchaser or any employee, agent, consultant or representative thereof,
as at the Closing Date.
8. MISCELLANEOUS
8.1 FURTHER ASSURANCES
The Vendor and the Purchaser shall from time to time execute and
deliver all such further documents and instruments and do all acts and
things as the other Party may, either before or after the Closing Date,
reasonably require to effectively carry out or better evidence or
perfect the full intent and meaning of this Agreement.
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8.2 TIME OF THE ESSENCE
Time shall be of the essence of this Agreement.
8.3 FEES
Each of the Parties hereto shall pay their respective legal and
accounting costs and expenses incurred in connection with the
preparation, execution and delivery of this Agreement and all documents
and instruments executed pursuant hereto and any other costs and
expenses whatsoever and howsoever incurred. Any legal, accounting and
brokerage fees, costs and expenses incurred by the Company prior to
Closing in connection with this transaction shall be the responsibility
of and be paid by the Vendor.
8.4 BENEFIT OF THE AGREEMENT
This Agreement shall enure to the benefit of and be binding to the
respective heirs, executors, administrators, successors and permitted
assigns of the Parties hereto.
8.5 ENTIRE AGREEMENT
This Agreement constitutes the entire agreement between the Parties
with respect to the subject matter hereof and cancels and supersedes
any prior understandings and agreements between the Parties hereto with
respect thereto. There are no representations, warranties, terms,
conditions, undertakings or collateral agreements, express, implied or
statutory, between the Parties other than as expressly set forth in
this Agreement.
8.6 AMENDMENTS AND WAIVER
No modification of or amendment to this Agreement shall be valid or
binding unless set forth in writing and duly executed by all of the
Parties hereto and no waiver of any breach of any term or provision of
this Agreement shall be effective or binding unless made in writing and
signed by the party purporting to give the same and, unless otherwise
provided, shall be limited to the specific breach waived.
8.7 ASSIGNMENT
This Agreement may not be assigned by any of the Parties hereto without
the written consent of all other Parties.
8.8 NOTICES
Any demand, notice or other communication to be given in connection
with this Agreement shall be given in writing and shall be given by
personal delivery, by registered mail or by electronic means of
communication addressed to the recipient as follows:
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To the Vendor:
00 Xxxx Xxxx Xxxxx X.X.
Xxxxxxx, Xxxxxxx X0X 0X0
Attention: Xxxxxxx Xxxxxx
Facsimile: (000) 000-0000
To the Purchaser:
000, 000 - 0xx Xxxxxx X.X.
Xxxxxxx, Xxxxxxx X0X 0X0
Attention: Xxxxx Xxxxxx, President
Facsimile: (000) 000-0000
or to such other address, individual or electronic communication number
as may be designated by notice given by any party to the others. Any
demand, notice or other communication given by personal delivery shall
be conclusively deemed to have been given on the day of actual delivery
thereof if a Business Day and if not on the next following Business Day
and, if given by registered mail, on the twelfth Business Day following
the deposit thereof in the mail and, if given by electronic
communication, on the day of transmittal thereof if given during the
normal business hours of the recipient and on the Business Day during
which such normal business hours next occur if not given during such
hours on any day. If the Party giving any demand, notice or other
communication knows or ought reasonably to know of any difficulties
with the postal system which might affect the delivery of mail, any
such demand, notice or other communication shall not be mailed but
shall be given by personal delivery or by electronic transmission.
8.9 GOVERNING LAW
This Agreement shall in all respects be governed by, and construed in
accordance with, the laws of the Province of Alberta, including all
matters of construction, validity and performance. The Vendor and
Purchaser hereby consent and irrevocably attorn to the jurisdiction of
the courts of the Province of Alberta for all disputes relating to the
construction, interpretation, enforcement and performance of this
Agreement, hereby waiving all defences based on venue or convenience of
forum or service of process outside of such jurisdiction.
8.10 EXECUTION
This Agreement may be executed in one or more counterparts, each of
which shall be deemed an original but all of which together shall
constitute one and the same instrument. The Parties shall be entitled
to rely on delivery of an executed facsimile copy of this Agreement and
such facsimile copy shall be legally effective to create a valid and
binding agreement between the Parties hereto.
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8.11 INTERIM PERIOD
Notwithstanding that the within purchase and sale transaction will be
closed and completed on a date following the Reference Time, the
Parties acknowledge and agree that as between the Parties such
transaction is being treated as taking effect as of the Reference Time,
such that the Purchaser will receive the benefit of the Shares as of
the Reference Time and that from and after the Reference Time and as
between the Parties (upon the execution hereof) the Purchaser will be
treated as the beneficial owner of the Shares, and the Company is
entitled to all income and profits derived from or in connection with
the Assets from and after the Reference Time. The Vendor hereby
acknowledges that upon execution hereof it has held the Shares as bare
trustee only for and on behalf of the Purchaser and shall account to
the Purchaser in respect thereof pursuant to the terms of this
Agreement.
IN WITNESS WHEREOF, the parties have executed this Agreement as of the
date first written above.
Vendor:
----------------------------- ------------------------------------
Witness XXXXXXX XXXXXX
----------------------------- ------------------------------------
Witness XXXXX XXXXXX
----------------------------- ------------------------------------
Witness XXXXXXX XXXXXX, on behalf of Xxxxxxx
Xxxxxx, a minor
GEOCAN ENERGY INC.
Per:
-------------------------------
Per:
-------------------------------
65
SCHEDULE "A"
attached to and forming part of a Share Purchase
Agreement made as of the 31st day of October, 2000
among Xxxxxxx Xxxxxx, Xxxxx Xxxxxx, and Xxxxxxx Xxxxxx, as Vendor
and GEOCAN Energy Inc., as Purchaser
================================================================================
PART I
LANDS AND LEASES
COMPANY'S
LEASE LANDS WORKING INTEREST ENCUMBRANCES
--------------------- -------------------- ------------------------ ----------------------------------
STAPLEHURST
Alberta Crown PNG NE1/424-50-1-W4M 6% (a) Crown Royalty; and
Lease No. 0497100414 to basement (b) Overriding Royalty
of 1/150 bbls/month
(min. 5%, max.
15%)
Alberta Crown PNG Lsds 13 and 14-50- 6% (a) Crown Royalty; and
Lease No. 0497100415 1-W4M to basement (b) Overriding Royalty
of 1/150 bbls/month
(min. 5%, max.
15%)
66
SCHEDULE "A"
attached to and forming part of a Share Purchase
Agreement made as of the 31st day of October, 2000
among Xxxxxxx Xxxxxx, Xxxxx Xxxxxx and Xxxxxxx Xxxxxx, as Vendor
and GEOCAN Energy Inc., as Purchaser
================================================================================
PART II
FACILITIES
Nil.
67
SCHEDULE "A"
attached to and forming part of a Share Purchase
Agreement made as of the 31st day of October, 2000
among Xxxxxxx Xxxxxx, Xxxxx Xxxxxx and Xxxxxxx Xxxxxx, as Vendor
and GEOCAN Energy Inc., as Purchaser
================================================================================
PART III
XXXXX
Timberwolf et al 10C Xxxxx 10-24-50-1-W4M
Timberwolf et xx Xxxxx 14-24-50-1-W4M
Timberwolf et al 15A Xxxxx 15-24-50-1-W4M
68
SCHEDULE "B"
attached to and forming part of a Share Purchase
Agreement made as of the 31st day of October, 2000
among Xxxxxxx Xxxxxx, Xxxxx Xxxxxx and Xxxxxxx Xxxxxx, as Vendor
and GEOCAN Energy Inc., as Purchaser
================================================================================
WORKING CAPITAL ADJUSTMENTS
2.2.1 PURCHASE PRICE ADJUSTMENT: The Basic Purchase Price shall be
increased or decreased, as the case may be, by the amount of the
value of Working Capital as at the Reference Time as finally
determined in accordance with this Schedule "B", including as a
current liability, the amount of any Tax payable as determined in the
Notional Tax Return.
2.2.2 ESTIMATED WORKING CAPITAL: Three (3) Business Days prior to the
Closing Date, the Vendor shall, at the Vendor's cost and expense,
prepare a trial balance for the Company, estimating the Working
Capital as at the Reference Time (the "Estimated Working Capital").
For purposes of closing, the Basic Purchase Price shall be increased
or decreased, as the case may be, on the basis contemplated in
Section 2.2.1 utilizing the Estimated Working Capital.
2.2.3 WORKING CAPITAL REPORT: As soon as is practicable following the
Closing Date, the Purchaser shall cause the Company to obtain all
documentation necessary to complete preparation of the Company's
financial statements as at the Closing Date. Forthwith thereupon, the
Vendor shall, on behalf of the Company, at the Vendor's cost and
expense, prepare a final statement of Working Capital as at the
Reference Time (the "Working Capital Report") as well as the
Company's financial statements as at the Closing Date and to report
thereon to the Purchaser as soon as practicable, and in any event not
later than 30 days following the Closing Date. The Purchaser shall be
entitled, at its sole cost and expense, to review and have its
accountants and its employees review the working papers prepared by
the Vendor for the Working Capital Report and to comment thereon as
the Purchaser deems appropriate. Any dispute arising between the
Vendor and the Purchaser as to the determination of Working Capital
set forth in the Working Capital Report or the Notional Tax Return
shall be settled by arbitration in accordance with the provisions of
Section 2.2.7.
2.2.4 PAYMENTS. Upon receipt of the Working Capital Report and the
determination of Working Capital thereunder:
(a) if Working Capital exceeds Estimated Working Capital,
then the Purchaser shall, within 10 days of
completion of the Working Capital Report, pay an
amount equal to the difference between such amounts
to Vendor together with interest on the amount of
such difference calculated at the Prime Rate plus one
percent (1%) from and including the Closing Date to
and including the day prior to the date of payment;
and
69
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(b) if Working Capital is less than Estimated Working
Capital, then the Vendor shall within 10 days of
completion of the Working Capital Report, pay an
amount equal to the difference between such amounts
to the Purchaser, together with interest on the
amount of such difference calculated at the Prime
Rate plus one percent (1%) from and including the
Closing Date to and including the day prior to the
date of payment.
2.2.5 FURTHER ACCOUNTING AND ADJUSTMENTS. The Parties foresee that certain
adjustments with respect to Working Capital may be necessary from
time to time after the 30-day period referred to in Section 2.2.3,
including, but not limited to:
(a) any amounts which are to be paid to the Company or
the Purchaser at any time after the Closing Date out
of or in any way relating to royalty calculations in
respect of the Petroleum and Natural Gas Rights;
(b) matters relating to Company's Taxes for any taxation
period or deemed taxation period ending on or before
Reference Time; and
(c) any matters which the Purchaser or the Vendor have
given notice to the other within the said 30-day
period.
Each of the Parties agrees to co-operate fully in calculating and
confirming the amount of any payment that may be necessary as a
result of such adjustments and agrees to make payment in such event.
In this respect, any adjustments to Working Capital occurring more
than 30 days after Closing Date shall be made as they occur and
payment shall, in accordance with Section 2.2.4, be made with respect
thereto within 15 days of each such adjustment being determined and
notice thereof being given by one Party to the other Party. Any
amount of interest and penalties payable by or to Third Parties, in
respect of any adjustments under this paragraph, shall also be
adjusted between the Vendor and the Purchaser as they occur and
payment made within such 15-day period. Interest on the amount of
such adjustment (including amounts, if any, for interest and
penalties) calculated at the Prime Rate plus one percent (1%) from
and including the date one Party receives notice of the adjustment
from the other Party to and including the day prior to the date of
payment, shall be payable to the Party entitled to the adjustments.
No adjustment shall be made to Working Capital pursuant to this
Schedule after one year following the Closing Date (four years
following the Closing Date for Taxes), except where a Party shall
have given written notice of its claim, with reasonable particulars,
to the other prior to the expiry of such one year period, objecting
to the determination of Working Capital, which notice shall also
include the reasons for the objection. Any dispute arising between
Vendor and Purchaser as to adjustments shall be settled by
arbitration in accordance with the provisions of Section 2.2.7.
2.2.6 Adjustment Principles: For greater certainty, the following
principles shall be employed in any determination of Working Capital
or any adjustment required thereto in accordance with this Schedule:
(a) Subject to other provisions of this Section 2.2.6,
all benefits, income, costs and expenses of every
kind and nature relating to the Assets, including,
70
3
without limitation, maintenance, capital and
operating costs, processing fees, lease rentals and
the proceeds from the sale of production, shall be
determined as of the Reference Time on an accrual
basis (and in respect of Taxes as set forth in the
Notional Tax Return, as of the Reference Time) and,
without limiting the generality of the foregoing:
(a) adjustments for costs or work performed and
goods supplied in connection with the
operation and development of the Assets
shall be made on the basis of the date upon
which the work was performed or the goods
were supplied;
(b) adjustments for revenues from the sale of
production shall be made on the basis of the
date of production; and
(c) adjustments for royalty payments and
expenses relating to or from the sale of
production shall be made on the basis of the
date of production.
(b) The Basic Purchase Price shall be adjusted upwards
by an amount equal to the market value of Petroleum
Substances attributable to the Assets which
Petroleum Substances have been sold prior to the
Reference Time and for which the Company has not
received full payment, plus an amount equal to the
market value of Petroleum Substances attributable
to the Assets which Petroleum Substances have been
produced but not sold prior to the Reference Time.
(c) The Vendor and the Purchaser, at its own cost, and
its authorized representatives, shall have the
right exercisable upon 15 days' written notice to
the other, to examine, copy and audit the records
of the other and the Company that are relevant to
effecting the adjustments pursuant to this
Schedule. The rights hereunder shall survive for
all matters for a period of two years from the
Closing Date and for Tax matters a period of four
years from the Closing Date.
2.2.7 ARBITRATION. If the Parties fail to reach agreement as to the
calculation or determination of Working Capital or the Notional Tax
Return pursuant to this Schedule, or otherwise as provided in the
Agreement, the matter in dispute shall be resolved by a single
arbitrator pursuant to the provisions of The Arbitration Act
(R.S.A.). In making a determination as to the amount of the proposed
adjustments to the Basic Purchase Price, the Working Capital or the
Notional Tax Return, the arbitrator shall hear submissions from one
individual as representative of the Vendors (as a group) and the
Purchaser, respectively, as to their respective determinations of the
proposed Basic Purchase Price adjustment, the Working Capital or the
Notional Tax Return and then the arbitrator shall choose either the
determination of the proposed Basic Purchase Price adjustment, the
Working Capital or the Notional Tax Return by the Vendors or the
determination of the proposed Basic Purchase Price adjustment, the
Working Capital or the Notional Tax Return by the Purchaser. The
arbitrator shall have access to the working papers prepared by each
of the Vendors and the Purchaser relating to their respective
determinations of Working Capital and the Notional Tax Return. Any
71
4
decision of the arbitrator pursuant to this Agreement shall be final
and binding on the Parties and shall not be subject to review. All
costs of the arbitration shall be borne by the Vendors as to one-half
and the Purchaser as to one-half.
72
4
SCHEDULE "C"
attached to and forming part of a Share Purchase
Agreement made as of the 31st day of October, 2000
among Xxxxxxx Xxxxxx, Xxxxx Xxxxxx and Xxxxxxx Xxxxxx, as Vendor
and GEOCAN Energy Inc., as Purchaser
================================================================================
FINANCIAL STATEMENTS
73
SCHEDULE "D"
attached to and forming part of a Share Purchase
Agreement made as of the 31st day of October, 2000
among Xxxxxxx Xxxxxx, Xxxxx Xxxxxx and Xxxxxxx Xxxxxx, as Vendor
and GEOCAN Energy Inc., as Purchaser
================================================================================
NOTIONAL TAX RETURN
74
TRI-TECH RESOURCES LTD.
SHARE PURCHASE AGREEMENT
THIS AGREEMENT dated this 1st day of October, 2000;
AMONG:
XXXXX XXXXXX, an individual residing in Calgary, Alberta (the
"VENDOR")
- and -
GEOCAN ENERGY INC., a corporation with offices in Calgary,
Alberta (the "PURCHASER"),
WHEREAS the Vendor is the registered and beneficial owner of all the
issued and outstanding shares of the Company;
AND WHEREAS the Vendor has agreed to sell and transfer, and the Purchaser
has agreed to purchase and accept, on the terms and conditions herein set forth,
all the Vendor's right, title, estate and interest in and to the Shares;
NOW THEREFORE THIS AGREEMENT WITNESSETH THAT, in consideration of the
premises and of the respective covenants and agreements of the Parties
hereinafter set forth, the Parties hereby covenant and agree with one another as
follows:
It is agreed as follows:
1. INTERPRETATION
1.1 DEFINITIONS
In this Agreement, including the recitals and the Schedules hereto:
"AGREEMENT" or "THIS AGREEMENT" means this share purchase agreement as
amended from time to time after the date hereof in the manner herein
provided; the terms "HEREIN", "HERETO", "HEREOF", "HEREUNDER", "HEREBY"
and similar terms mean and refer to this Agreement and not, unless a
particular provision is expressly stipulated, to any particular provision.
"ASSETS" means the assets of the Company, including the Petroleum and
Natural Gas Rights, the Tangibles and the Miscellaneous Interests.
"BASIC PURCHASE PRICE" has the meaning ascribed thereto in Section 2.2(a).
"BUSINESS DAY" means any day, other than a Saturday or Sunday, or a
statutory holiday in Calgary, Alberta.
75
2
"CLOSING" means the completion of the purchase and sale of the Shares as
contemplated by this Agreement.
"CLOSING DATE" means October 1, 2000, or such other date as the Vendor and
the Purchaser agree in writing.
"COMPANY" means Tri-Tech Resources Ltd., a corporation incorporated
pursuant to the laws of Alberta with offices in the City of Calgary.
"ENVIRONMENTAL DEFICIENCY" means any (i) ground water, surface water or
aquifer contamination, (ii) soil contamination, (iii) toxic or hazardous
substance emission, or (iv) corrosion or deterioration of structures,
equipment and other property, the occurrence or existence of which could
reasonably be expected to give rise to criminal, quasi-criminal or civil
liability on the part of the Vendor or a transferee of the Assets, under
presently subsisting Environmental Law.
"ENVIRONMENTAL LAW" means any federal, provincial or local statute,
regulation or rule, any judicial or administrative order or judgement or
written administrative request of any governmental or regulatory body
having jurisdiction, and any provision or condition of any permit, license
or other governmental operating authorization, applicable to the Vendor or
the Assets and relating to protection of the environment, persons or the
public welfare from actual or potential exposure (or the effects of
exposure) to any actual or potential release, discharge, spill or emission
(whether past or present) of, or regarding the manufacture, processing,
production, gathering, transportation, use, treatment, storage or disposal
of, any chemical, raw material, pollutant, contaminant or toxic, corrosive
or hazardous substance or waste.
"FACILITIES" means the specified interest of the Company in all facilities
described in Schedule "A", Part II.
"FINANCIAL STATEMENTS" means the financial statements of the Company
attached hereto as Schedule "C" for the previous one year together with
unaudited interim financial statements for the period ending September 30,
2000.
"GAAP" means Canadian generally accepted accounting principles from time
to time prescribed by the Canadian Institute of Chartered Accountants, or
any successor institute, applicable on a consistent basis.
"GEOCAN SHARES" means 120,000 common shares of the Purchaser.
"LANDS" means the lands set forth and described in Schedule "A", Part I,
insofar as rights to the Petroleum Substances underlying those Lands are
granted by the Leases.
"LEASES" means, collectively, the leases, reservations, permits, licenses,
certificates of title or other documents of title set forth and described
in Schedule "A", Part I (or any replacement thereof, renewal or extension
thereof or leases derived therefrom) by virtue of which the holder thereof
is entitled to drill for, win, take, own and remove Petroleum Substances
within, upon or under all or any part of the Lands.
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3
"MISCELLANEOUS INTERESTS" means the interests of the Company in and to all
property, assets and rights pertaining or ancillary to the Petroleum and
Natural Gas Rights, the Lands, the Leases and the Tangibles (other than
the Petroleum and Natural Gas Rights, the Lands, the Leases and the
Tangibles) and to which the Company is entitled at the Closing Date
including, but not in limitation of the generality of the foregoing, such
interests of the Company in:
(a) all contracts, agreements, documents, production sales contracts,
books and records relating to the interest of the Company in the
Petroleum and Natural Gas Rights, the Lands, or the Tangibles, and
any and all rights in relation thereto;
(b) all engineering and production data and information directly related
to the Petroleum and Natural Gas Rights and the Tangibles which are
in the custody of the Company or to which it is entitled including,
without limitation, all Proprietary Technical Information;
(c) all subsisting rights to enter upon, use and occupy the surface of
the Lands or any lands which same have been pooled or unitized or
the sites of any Tangibles or any lands which are used to gain
access to any of the foregoing;
(d) existing Well bores and downhole casing; and
(e) all well, pipeline and other permits, licences and authorizations
relating to the Petroleum and Natural Gas Rights, the Lands (or any
lands with which the Lands have been pooled or unitized) and the
Tangibles.
"NOTIONAL TAX RETURN" means the pro forma Tax return of the Company,
including financial statements of the Company as at September 30, 2000,
attached as Schedule "D" for the period from the date of the Company's
last Tax return to the Reference Time.
"PARTIES" means the parties to this Agreement and their respective
successors and permitted assigns and "PARTY" means any one of them.
"PERMITTED ENCUMBRANCES" means:
(a) the encumbrances identified in Schedule "A", Part I;
(b) easements, rights of way, servitudes or other similar rights in land
including, without limiting the generality of the foregoing, rights
of way and servitudes for railways, roads, sewers, drains, gas and
oil pipelines, gas and water mains, electric light, power,
telephone, telegraph or cable television conduits, poles, wires and
cables;
(c) the right reserved to or vested in any government or other public
authority to terminate any of the Leases or to require annual or
other periodic payments as a condition of the continuance thereof;
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(d) rights reserved to or vested in any municipality or governmental,
statutory or public authority to control or regulate any of the
Assets in any manner, and all applicable laws, rules and orders of
any governmental authority;
(e) the right reserved to or vested in any government or other public
authority to levy taxes on Petroleum Substances or the income or
revenue therefrom;
(f) governmental requirements as to production rates on the operations
of any property or otherwise affecting the value of any property;
(g) undetermined or inchoate liens incurred or created as security in
favour of the person conducting the operation of any of the Assets
for the Company's proportion of the costs and expenses of such
operations which costs and expenses are not delinquent as of the
Closing Date;
(h) liens granted in the ordinary course of business to a public
utility, municipality or governmental authority in connection with
operations conducted with respect to the Assets;
(i) provisions for penalties and forfeitures under agreements as a
consequence of non-participation in operations;
(j) the reservations, limitations, provisos and conditions in any
original grants from the Crown of any of the Lands or interests
therein and statutory exceptions to title and the terms and
conditions of the Leases; and
(k) provisions in agreements and plans effecting pooling or unitization.
"PERSON" means an individual, a partnership, a corporation, a trust, an
unincorporated organization, a union, a government or any department or
agency thereof and the heirs, executors, administrators or other legal
representatives of an individual.
"PETROLEUM AND NATURAL GAS RIGHTS" means the interests of the Company in
and to the Lands and the Leases as set forth in Schedule "A", Part I.
"PETROLEUM SUBSTANCES" means petroleum, natural gas, related hydrocarbons
and any other substances, whether liquid, solid or gaseous, produced in
association with such petroleum, natural gas or related hydrocarbons,
insofar as rights to the same are granted by way of the Leases.
"PLACE OF CLOSING" means the offices of Xxxxxx Xxxxxx Xxxxxxx LLP,
Calgary, Alberta or such other place as may be agreed upon in writing by
the Vendor and the Purchaser.
"PRIME RATE" means the annual prime lending rate used from time to time by
Alberta Treasury Branches, Main Branch, Calgary, Alberta, for loans made
in Canada in Dollars to the bank's preferred commercial borrowers.
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"PROPRIETARY TECHNICAL INFORMATION" means all surveyors' ground elevation
records (whether vertical or horizontal), shot point maps, drillers' logs,
shooters' records, observer reports and seismograph records, seismograph
magnetic tapes, stacked and migrated tapes, monitor records, field records
or tapes, record sections and processed seismic sections obtained in or
resulting from any seismograph survey conducted on or near the Lands, and
geological or geophysical studies and further appraisals or
interpretations of same conducted on or near the Lands and owned by the
Vendor or to which the Vendor is entitled and, without limitation, such
Proprietary Technical Information includes any and all copies of such
items whether in hard, digital, magnetic, electronic or any other form.
"PURCHASE PRICE" has the meaning ascribed thereto in Section 2.2(c).
"REFERENCE TIME" means 12:01 a.m. (Mountain Time) at Calgary, Alberta, on
October 1, 2000.
"SECURITY INTEREST" means any mortgage, charge, pledge, lien, hypothec,
encumbrance, conditional sale, assignment by way of or in effect as
security, or security interest whatsoever.
"SHAREHOLDER DEBT" means any indebtedness, liability or obligation owed by
the Company to the Vendor or any Person affiliated with or related to the
Vendor.
"SHARES" means all of the issued and outstanding shares of the Company on
the Closing Date and includes any instruments or rights capable of being
converted into, exchanged, for or exercised for previously unissued shares
of any class of the Company or giving the holder the right on the
occurrence of any event or events, including on the payment of money,
whether or not such event or events have occurred, to require delivery of
previously unissued shares of any class to be issued by the Company, and
includes options, warrants, conversion or exchange privileges and similar
rights.
"TANGIBLES" means the interests of the Company in and to the Facilities,
and all other tangible depreciable property and assets situate in, on or
about the Lands or lands pooled or unitized therewith, including the
Xxxxx, used in connection therewith or with production, gathering,
processing, transmission, measurement or treatment operations relating to
the Petroleum and Natural Gas Rights.
"TAX" or "TAXES" means all income, capital, gross receipts, sales, use,
franchise, profits, property, customs duties, withholding, goods and
services, or other taxes, fees, assessments or charges of' any kind
whatsoever (including Alberta Energy Utility Board taxes and levies),
together with any interest and any penalties, additions to tax or
additional amounts imposed by any taxing authority.
"XXXXX" means all of the xxxxx that are located on the Lands whether
producing, suspended, previously abandoned or used as water source,
injection, observation or disposal xxxxx.
"WORKING CAPITAL" means the aggregate of the Company's current assets less
the aggregate of the Company's current liabilities as at the Reference
Time as shown in the
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financial statements attached to the Notional Tax Return, all of which
shall be determined in accordance with GAAP, subject to adjustment on the
basis provided for in Schedule "B".
1.2 SCHEDULES
The following are the Schedules annexed hereto and incorporated by
reference and deemed to be a part hereof:
Schedule "A" - Part I Lands and Leases; Part II Facilities; Part III
Xxxxx
Schedule "B" - Working Capital Adjustments;
Schedule "C" - Financial Statements;
Schedule "D" - Notional Tax Return
All Schedules hereto are by this reference incorporated into and are part
of this Agreement as fully as though contained in the body of this
Agreement; provided that wherever any provision of any Schedule to this
Agreement conflicts with any provision in the body of this Agreement, the
provisions of the body of this Agreement shall prevail. References herein
to a "Schedule" shall mean a reference to a Schedule to this Agreement.
References in any Schedule to "the Agreement" or "this Agreement" shall
mean a reference to this Agreement. References in any Schedule to another
Schedule shall mean a reference to a Schedule to this Agreement.
1.3 VENDOR KNOWLEDGE
Where in this Agreement, or in any certificate or document delivered in
connection herewith or to effect any of the transactions contemplated
hereby, any statement, representation or warranty is made as to, or as
being based on, the knowledge, information or belief of the Vendor, such
knowledge, information or belief consists only of the actual knowledge,
information or belief of the Vendor as the case may be.
1.4 CURRENCY
References in this Agreement to "dollars" or "$" are to dollars of the
lawful money of Canada for the payment of public and private debts.
1.5 ACCOUNTING TERMS
All accounting terms not otherwise defined in this Agreement have the
meanings assigned to them in accordance with GAAP, and except as otherwise
expressly provided herein, all accounting or financial calculations
required or permitted under this Agreement shall be made on the basis of
GAAP applied on a consistent basis.
1.6 MEANING NOT AFFECTED BY DIVISION, HEADINGS OR TABLE OF CONTENTS
The division of this Agreement and the provision of headings or a table of
contents for all or any thereof are for convenience of reference only and
shall not affect the meaning of this Agreement.
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1.7 INVALIDITY OF PROVISIONS
If any of the 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.
2. PURCHASE AND SALE; CLOSING
2.1 SALE OF SHARES
Upon the terms and subject to the conditions of this Agreement, the
Purchaser will purchase the Shares from the Vendor and make payment
therefor to the Vendor and the Vendor will sell, assign and deliver the
Shares to the Purchaser upon receipt of payment therefor.
2.2 PURCHASE PRICE
In consideration of the sale, assignment and delivery by the Vendor of the
Shares the Purchaser shall pay to the Vendor the Purchase Price,
determined pursuant to this Section 2.2, such amount, subject to
subsequent adjustments herein provided for, to be paid on the Closing Date
in the manner provided for in Section 2.5.
(a) The Purchaser will pay or cause to be paid to the Vendor in the
aggregate $210,000 (the "BASIC PURCHASE PRICE"), subject to
adjustment and to the further payments as provided for in this
Section 2.2;
(b) The Basic Purchase Price shall be adjusted by an increase or
decrease as the case may be for the amount of Working Capital as
finally determined in accordance with Schedule "B"; and
(c) The Basic Purchase Price as adjusted pursuant to Section 2.2(b), is
herein called the "PURCHASE PRICE".
2.3 TIME AND PLACE OF CLOSING
Upon the terms and conditions of this Agreement, the completion of the
transfer of the Shares by the Vendor to the Purchaser and the payment by
the Purchaser to the Vendor of the Purchase Price will take place at the
Place of Closing at 10:00 a.m. (Calgary time) on the Closing Date. All
adjustments contemplated by this Agreement shall be effective as of the
Reference Time.
2.4 DELIVERIES BY THE VENDOR
On the Closing Date the Vendor will deliver or cause to be delivered to
the Purchaser, in form and content satisfactory to the Purchaser, the
following:
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(a) certificates representing the Shares, accompanied by stock transfer
powers of attorney duly executed in blank or duly executed
instruments of transfer, and any other documents necessary to
transfer to the Purchaser good title to the Shares;
(b) the resignations of all members of the board of directors of the
Company, and the resignations of all officers of the Company
together with general releases of the Company by each of its
directors and officers;
(c) original share books, share ledgers and minute books and corporate
seals of the Company as well as all tax records (including tax
returns, notices of assessment, reassessments and tax
correspondence), environmental, health and safety files, Worker's
Compensation files and other books and records belonging to and
relating to the business and operations of the Company;
(d) the certificates referred to in Sections 2.6(a), (b) and (d) dated
the Closing Date duly signed on its behalf;
(e) a certified copy of a resolution of the Board of Directors of the
Company approving the transfer of the Shares by the Vendor to the
Purchaser;
(f) all other documents, instruments and writings reasonably required to
be delivered by the Vendor at the Closing Date pursuant to this
Agreement or otherwise required in connection herewith;
(g) substantially all books, records, files (including lease, contract,
well and unit files), reports, studies, maps, drawings, logs and
other documentary materials of any nature whatsoever pertaining to
the Assets, including, without limitation, all geological and
engineering reports, records, maps, drawings, logs and other data
relating to the Lands; and
(h) a Certificate of Status for the Company issued under the laws of the
Province of Alberta.
2.5 DELIVERIES BY THE PURCHASER
On the Closing Date the Purchaser will deliver the following to the
Vendor:
(a) the cash portion of the Purchase Price in the amount of $150,000
(subject to adjustment as contemplated in Section 2.2(b)) by a
certified cheque, bank draft or such other means as are agreed upon
by the Vendor and the Purchaser to the Vendor;
(b) the share portion of the Purchase Price by the issuance of the
GEOCAN Shares at an assigned value of $0.50 per share to the Vendor;
(c) the certificates referred to in Sections 2.7(a) and (b) dated the
Closing Date duly signed on its behalf; and
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(d) all other documents, instruments and writings reasonably required to
be delivered by the Purchaser at the Closing Date pursuant to this
Agreement or otherwise required in connection herewith.
2.6 CONDITIONS PRECEDENT TO THE OBLIGATIONS OF THE PURCHASER TO CLOSE
The obligation of the Purchaser to complete the transactions contemplated
hereby is subject to the fulfilment, on or prior to the Closing Date, of
the following conditions precedent, each of which is for the exclusive
benefit of the Purchaser and any one or more of which may be expressly
waived, in whole or in part, by the Purchaser:
(a) the representations and warranties of the Vendor contained in
Article 3 shall have been true on and as of the date made and on and
as of the Closing Date as if made then and a certificate to that
effect from the Vendor shall have been delivered to the Purchaser;
(b) the Vendor shall have complied with or performed, in all respects
material to the Purchaser, all of its agreements and covenants in
this Agreement to be complied with or performed by it at or prior to
the Closing Date and a certificate to that effect from the Vendor,
with respect to itself and its compliance and performance shall have
been delivered to the Purchaser;
(c) there shall be no rights of first refusal or other restrictions on
the transfer, sale or assignment of the Shares or relating to change
in control of the Company which have not been complied with or
waived prior to the Closing Date;
(d) there shall have been no material adverse change in the Assets or
the interests of the Company therein or the financial condition of
the Company between the Reference Time and the Closing Date and a
certificate from the Vendor to the effect that the Vendor has no
knowledge of any such material adverse change shall have been
delivered to the Purchaser;
(e) delivery of all documents by the Vendor as set forth in Section 2.4;
(f) completion of the transactions contemplated herein shall not violate
any order or decree of any court or governmental body of competent
jurisdiction;
(g) all necessary steps and proceedings shall have been taken to permit
the Shares to be duly and regularly transferred to and registered in
the name of the Purchaser; and
(h) the Parties shall have obtained all necessary governmental and
regulatory approvals required to permit the transactions herein to
be completed.
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2.7 CONDITIONS PRECEDENT TO THE OBLIGATIONS OF THE VENDOR TO CLOSE
The obligation of the Vendor to complete the transactions contemplated
hereby is subject to the fulfillment, on or prior to the Closing Date, of
the following conditions precedent, each of which is for the exclusive
benefit of the Vendor and any one or more of which may be waived, in whole
or in part, by the Vendor:
(a) the representations and warranties of the Purchaser contained in
Article 4 shall have been true on and as of the date made and, on
and as of the Closing Date as if made then and a certificate to that
effect from a senior officer of the Purchaser shall have been
delivered to the Vendor;
(b) the Purchaser shall have complied with or performed, in all respects
material to the Vendor, all of its agreements and covenants in this
Agreement to be complied with or performed by it at or prior to the
Closing Date and a certificate to that effect from a senior officer
of the Purchaser shall have been delivered to the Vendor; and
(c) payment or delivery, as applicable, by the Purchaser of the Purchase
Price payable pursuant to Sections 2.5(a) and (b) and delivery of
all documents by the Purchaser as set forth in Section 2.5.
3. REPRESENTATIONS AND WARRANTIES OF THE VENDOR
The Vendor with respect to itself and the Shares or with respect to the
Company, as the context indicates, represents and warrants to the
Purchaser, as of the date hereof and as of the Closing Date:
3.1 ORGANIZATION
(a) Standing of the Company: The Company is and at the Closing Date
shall continue to be a corporation duly organized and validly
subsisting under the laws of its jurisdiction of incorporation as a
private company and has all requisite corporate power and authority
to own, lease and operate its properties and the Assets and to carry
on its business.
(b) No Subsidiaries: The Company does not have an interest (either
directly or indirectly) in any other Person, nor is the Company a
party to or bound by any agreement to acquire such an interest.
(c) Constating Documents: The Purchaser has been provided true, correct
and complete copies of the constating documents and by-laws,
together with all amendments thereto, with respect to or affecting
the Company. No resolutions have been proposed or passed to further
amend the foregoing.
(d) Not a Public Company: The Company is not a "reporting issuer" or
otherwise subject to filing and reporting requirements applicable to
public companies under relevant securities legislation.
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(e) Officers and Directors: Xxxxx XxXxxx is the President,
Secretary-Treasurer and the sole director of the Company. As of the
Closing Date the Company will have no employees and will not have
any employment, management or field operating contracts that relate
to the Assets for which the Company will be responsible after the
Closing Date.
3.2 CAPITALIZATION OF THE COMPANY; THE SHARES.
(a) Issued and Outstanding Shares: The authorized and presently issued
and outstanding share capital of the Company as at the date hereof
is as follows:
AUTHORIZED ISSUED AND OUTSTANDING
---------- ----------------------
10,000 Class "A" Common shares Xxxxx XxXxxx - 10,000 Class "A"
Common shares
(b) No Treasury Shares: No issued and outstanding Shares of the Company
are held in the Company's treasury.
(c) No Options: There are no outstanding options, calls or rights of any
kind relating to or providing for the purchase, delivery or transfer
of any presently issued and outstanding Shares or other securities
of the Company.
(d) No Additional Shares: There are no outstanding rights with respect
to the capital of the Company that would require the Company to
allot or issue any of the unissued Shares of the Company or to
create any additional class of Shares.
(e) No Shareholder Debt: There is no Shareholder Debt.
(f) No Shares in Other Companies: The Company does not and on the
Closing Date will not own, directly or indirectly, any shares or
securities convertible into shares of any other corporation.
(g) Title to Shares: It is the beneficial owner of its Shares and has
good title to the same, free and clear of all Security Interests,
equities, claims, options or other encumbrances or voting trusts,
proxies or other interests of any nature whatsoever except those in
favour of the Purchaser.
3.3 AUTHORITY; BINDING EFFECT
(a) Authority of the Vendor: It has all requisite power and authority to
execute and deliver this Agreement and to consummate the
transactions contemplated hereby.
(b) Binding Agreement: This Agreement constitutes or will constitute at
the time of execution and delivery a legal, valid and binding
obligation, enforceable against it in accordance with its terms,
subject to (i) the qualification that such enforcement
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may be subject to bankruptcy, insolvency, fraudulent preference,
reorganization or other laws affecting creditors' rights generally,
and (ii) general principles of equity (regardless of whether such
enforceability is considered in a proceeding at equity or law).
3.4 NO CONFLICT
The execution, delivery and performance of this Agreement does not, and
the fulfilment and compliance with the terms and conditions and the
consummation of the transactions contemplated hereby, will not:
(a) conflict with any of, or require the consent or waiver of rights of
any Person under, the terms, conditions or provisions of the
respective constating documents of the Company;
(b) violate any provision of, or require any consent, authorization or
approval under, any law or regulation or any judicial,
administrative or arbitration order, award, judgment, writ,
injunction or decree applicable to the Vendor or the Company;
(c) conflict with, result in a breach of, constitute a default under
(whether with notice or the lapse of time or both), or accelerate or
permit the acceleration of the performance required by, or require
any consent, authorization or approval under, any indenture,
mortgage, lien, lease, agreement or instrument to which the Vendor
or the Company is a party or by which any of them is bound or to
which any of their respective property is subject; or
(d) result in the creation of any Security Interest upon the Shares or
the Assets.
3.5 FINANCIAL STATEMENTS
The Financial Statements have been prepared, to the knowledge of the
Vendor, in accordance with GAAP applied on a consistent basis with prior
years and to the knowledge of the Vendor fairly represent the assets,
liabilities and financial position of the Company as at the dates thereof.
The Financial Statements contain or reflect all adjustments and
disclosures necessary in order to make such documents not misleading.
3.6 LITIGATION
To the knowledge of the Vendor, there are no actions, suits or proceedings
pending or threatened against the Company, the Assets, the Shares or the
interest of the Vendor in the Shares and the Company is not charged or
threatened with a violation of any provision of any federal, provincial or
local law or regulation relating to any aspect of its business.
3.7 ENVIRONMENTAL MATTERS
To the knowledge of the Vendor, the Company, the Assets and the use,
maintenance and operation of the Assets has been and is in material
compliance with all applicable statutes, regulations, bylaws, codes
(whether federal, provincial or municipal) including those relating to
Workmen's Compensation, product safety and product liability.
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3.8 NO CONTRACTUAL DEFAULT
The Vendor is not aware of any material default by any party under any
material contract involving the Company, nor is the Vendor aware of any
facts or circumstances which would, with the giving of notice or the lapse
of time, give rise to a default by the Company under a material contract.
3.9 NO BREACH OF ORDER
The Vendor is not aware of any material default by the Company under any
order, writ, injunction or decree of any court or governmental authority
having jurisdiction over the Company and which materially adversely
affects or relates to the Company.
3.10 TAXES
(a) Year End: The fiscal year end of the Company for income tax purposes
is -.
(b) Returns and Elections to be Filed: The Company has filed in a timely
manner or, on or prior to the Closing Date, will file in a timely
manner all returns (including the income tax return for the last
taxation year of the Company ending -), elections, declarations and
reports and information returns and statements required or advisable
to be filed on or prior to the Closing Date and such filings, in the
reasonable opinion of the Vendor, have not been materially
inaccurate or misleading.
(c) No Tax Waivers: The Company has not provided any waivers to Canada
Customs and Revenue Agency or any other taxing authority for any
reason.
(d) Tax Audits: There are no matters which are the subject of any
current discussions with or any agreement with the Canada Customs
and Revenue Agency relating to claims for additional Taxes.
(e) Taxes Paid: The Company has paid all Taxes payable and has not
requested any extension of time within which to file or send any
return.
(f) Tax Disputes: No deficiency for any Tax has been proposed, asserted
or assessed against the Company and there are no outstanding Tax
disputes, audits, proposed adjustments, notices of objection or
other appeals.
(g) Private Company: The Company is a "private corporation" and the
Vendor is a resident of Canada for the purposes of the Income Tax
Act (Canada).
(h) Tax Withholding: All Taxes and other assessments and levies which
the Company is required to withhold or collect have been (and will
be up to the Closing Date) duly withheld and collected and paid over
to the proper government authorities.
(i) Notional Tax Return: To the knowledge of the Vendor, the Notional
Tax Return has been properly prepared and sets forth the Tax
position of the Company as of the Reference Time.
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3.11 ABSENCE OF CERTAIN CHANGES
(a) There has not been any material adverse change in the business or
financial condition of the Company since the date of the most
recently dated Financial Statements;
(b) There has not been any material damage, destruction or loss, whether
covered by insurance or not, which has had, or would reasonably be
expected to have, a material adverse effect on the business or
financial condition of the Company.
3.12 BOOKS AND RECORDS
The books and records of the Company have been maintained in accordance
with prudent business practice and the minute books of the Company contain
a complete and accurate record of all resolutions and other corporate
actions in lieu of resolutions of its shareholders, board of directors and
committees, all of which resolutions or actions have been duly and
regularly, passed or adopted.
3.13 PRODUCTION ASSETS, OPERATIONS AND LIABILITIES
(a) Title to Assets: The Vendor does not warrant the Company's title to
the Assets, but the Vendor does represent and warrant that neither
the Vendor nor the Company have done anything whereby any of the
Company's interest in and to the Assets may be cancelled or
determined, nor have they encumbered or alienated the same, and the
Assets shall be, at the Closing Date, free and clear of all liens,
encumbrances, adverse claims, demands and royalties created by,
through or under the Company except for the Permitted Encumbrances.
Except as otherwise provided herein, the Vendor represents and
warrants that neither the Vendor nor the Company have received
notice of any material defect in the Company's title to the Assets
and, for the period of time that the Company has owned the Assets,
to the knowledge of the Vendor all relevant deposits, rentals and
royalties (including delay rentals and shut-in royalties) have been
paid within the applicable time limits and all obligations and
covenants required to keep the Leases in full force and effect have
been performed and observed.
(b) No Orders: There are no outstanding material orders, notices or
similar requirements relating to the Company or the Assets issued by
any federal, provincial or municipal authority including, without
limitation, occupational health and safety authorities and to the
knowledge of the Vendor there are no matters under discussion with
any such authorities relating to orders, notices or similar
requirements.
(c) Production Penalties: To the knowledge of the Vendor, no Xxxxx are
subject to a production penalty of any kind, there are no facts or
circumstances which materially adversely affect the production of
Petroleum Substances in respect of the Petroleum and Natural Gas
Rights or the receipt, or entitlement, of the Company to revenue
attributable to the production thereof.
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(d) Licences and Permits: The Company or its agent possesses valid Well,
pipeline and other permits, licences and authorizations required to
allow it to carry on its business.
(e) AFE's: There are no outstanding authorizations for expenditure (AFE)
or cash calls with respect to the Lands, including the unexpended
portion thereof and there are no outstanding commitments by the
Company to expend funds for its own account where the Company's
interest under the authorization for expenditure or outstanding
commitment would exceed $25,000.
(f) Severance Taxes: All ad valorem, property, production, severance and
similar taxes and assessments based on or measured by the ownership
by the Company of its Petroleum and Natural Gas Rights or the
production of Petroleum Substances in respect of such Petroleum and
Natural Gas Rights or the receipt by, or the entitlement of, the
Company of or to revenue attributable to the production thereof at
any time prior to the Closing Date have or will have been properly
paid and discharged.
(g) Gas Balancing: The Company is not a party to or bound by any gas
balancing or similar agreements relating to its Assets and there are
no take or pay obligations where the Company would be obligated to
deliver gas without being paid therefor.
(h) Production Sales Agreements: The Company is not a party to any
production sales contracts having a term greater than one year that
is not cancellable by the Company on notice of 30 days or less. The
Company is not in default of any obligation under any such contract.
(i) Transportation and Processing Agreements: There are no
transportation or processing agreements or arrangements under which
the Company or any party acting on its behalf is obligated to
transport or process Petroleum Substances allocable to the Petroleum
and Natural Gas Rights, except for agreements terminable by the
Company without penalty on notice of 30 days or less.
(j) Offset Obligations: None of the Lands have been or are now subject
to any offset obligation (including obligations to drill xxxxx,
surrender rights, or pay compensatory royalty) which has not been
satisfied.
(k) No Guarantees: The Company is not a party to or bound by any
agreement of guarantee, indemnification, assumption or endorsement
or any other like commitment of the obligations, liabilities
(contingent or otherwise) or indebtedness of any Person.
(l) Reduction of Interest: Except as set out in Schedule "A", the Assets
are not subject to reduction by virtue of the conversion or other
alteration of the interest of any third party under existing
agreements created by, through or under the Company.
(m) Revenue: The Company has not assigned or otherwise encumbered the
revenue from the production of Petroleum Substances from the Assets.
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(n) Compliance with Laws: To the Vendor's knowledge, all laws,
regulations and orders and all federal, provincial, municipal or
other government departments, commissions, or other
instrumentalities thereof having jurisdiction over and material
effect upon the Assets have been complied with in all material
respects.
(o) Environmental Information: To the Vendor's knowledge, the Company
has made available to the Purchaser all material information within
the Company's possession relevant to Environmental Deficiencies
pertaining to the Assets and has not knowingly withheld any such
information from the Purchaser.
(p) Audits: To the Vendor's knowledge, no co-owner has given written
notice to the Company (or to any party holding legal title to the
Facilities on behalf of the Company), in accordance with the
agreements affected, that such co-owner intends to audit the books,
accounts and records of an operator relating to the Facilities.
(q) Contributions: To the Vendor's knowledge, the Company has not been
given written notice by an operator of the Facilities, in accordance
with the agreements so affected, that it will be required to make
any contribution under an agreement affecting any of the Facilities
by reason of the failure of another co-owner to pay its share of
costs and expenses associated with such Facility.
(r) Quiet Enjoyment: Subject to the Permitted Encumbrances, those Title
Deficiencies waived or deemed to be waived by the Purchaser, and to
the rents, covenants, conditions and stipulations in the Leases and
any agreements pertaining to the Lands and on the lessee's or
holder's part thereunder to be paid, performed and observed, the
Company may enter into and upon, hold and enjoy the Leases for the
residue of their respective terms and all renewals or extensions
thereof for the Company's own use and benefit without any
interruption of or by the Vendor or any other Person whomsoever
claiming or to claim by, through or under the Vendor.
3.14 LOANS TO EMPLOYEES, ETC.
The Company does not now have and will at the Closing Date not have any
indebtedness outstanding which is owed to or by present or former
directors, officers, shareholders (including the Vendor or any Persons
affiliated with or related to the Vendor) or employees or former employees
of the Company.
3.15 INDEBTEDNESS BY VENDOR
There was not at the Reference Time and there will not be prior to the
Closing Date any indebtedness, liability or obligation owed to the Company
to the Vendor or any Person affiliated with or related to the Vendor.
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3.16 SECURITY INTERESTS
Except for Permitted Encumbrances, none of the Assets is subject to any
Security Interest created by, through or under the Company or any of its
predecessor entities or the Vendor.
3.17 MATERIAL CONTRACTS
The Company is not a party to any material contract other than contracts
entered into in the ordinary course of business.
3.18 FINDERS FEES
Neither the Vendor nor the Company has incurred any liability, contingent
or otherwise, for brokers' or finders' fees in respect to this transaction
for which the Purchaser shall have any obligation or liability.
3.19 LIMITATIONS
The Vendor makes no representation or warranty whatsoever except as and to
the extent expressly set forth in this Article 3. The Vendor disclaims any
liability and responsibility for any representation or warranty which may
have been made or alleged to have been made and which is contained in any
instrument or document relative hereto or to the transactions herein
provided for, or contained in any statement or information made or
communicated (orally or in writing) to Purchaser including, without
limitation of the generality of the foregoing, any opinion, information or
advice which may have been provided to Purchaser by an officer, director,
employee, agent, consultant or representative of the Vendor or the
Company. Without limiting the generality of the foregoing, the Vendor
makes no representations or warranties or covenants as to:
(a) the Company's title in or to the Assets except as, and only to the
extent, set forth in Article 3;
(b) the amounts, quality, recoverability or deliverability of reserves
of Petroleum Substances attributable to the Lands;
(c) the quality, fitness, condition or merchantability of all or any of
the Tangibles;
(d) any geological or other interpretations or economic evaluations of
the Assets;
(e) estimates of prices or future cash flows arising from the sale of
Petroleum Substances attributable to the Lands or estimates of other
revenues attributable to the Company or the Assets.
The Purchaser acknowledges that it has made its own independent
investigation, analysis, evaluation and verification of the Company and
its interests in the Assets, including the Purchaser's own estimate and
appraisal of the extent, value of the reserves of Petroleum Substances
attributable to the Lands and of the condition and capacity of the
Tangibles.
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4. REPRESENTATIONS AND WARRANTIES OF THE PURCHASER
4.1 The Purchaser represents and warrants to the Vendor as set forth below:
(a) Standing of the Purchaser: The Purchaser is and at the Closing Date
shall continue to be a corporation duly organized and validly
subsisting under the laws of its jurisdiction of incorporation and
has all requisite corporate power and authority to own, lease and
operate its properties and assets and to carry on its business.
(b) Authority of the Purchaser: The Purchaser has all requisite
corporate power and authority to acquire the Shares and to execute
and deliver this Agreement and to consummate the transactions
contemplated hereby.
(c) Binding Agreement: This Agreement constitutes or will constitute at
the time of execution and delivery a legal, valid and binding
obligation of the Purchaser enforceable against the Purchaser in
accordance with its respective terms, subject to (i) the
qualification that such enforcement may be subject to bankruptcy,
insolvency, fraudulent preference, reorganization or other laws
affecting creditors' rights generally, and (ii) general principles
of equity (regardless of whether such enforceability is considered
in a proceeding at equity or law).
(d) Not a Non-Canadian: The Purchaser is not a "non-Canadian person"
within the meaning, and or the purposes of the Investment Canada
Act.
(e) Finders Fees: The Purchaser has not incurred any liability,
contingent or otherwise, for brokers' or finders' fees in respect to
this transaction for which the Vendor shall have any obligation or
liability.
(f) Listing: The GEOCAN Shares shall be issued pursuant to an exemption
from the prospectus requirements of the Securities Act (Alberta) and
upon issuance shall be duly listed for trading on the Canadian
Venture Exchange.
(g) No Encumbrances: The GEOCAN Shares when issued shall be fully paid
and clear of any liens, encumbrances or claims of any kind, subject
to the Articles and bylaws of the Purchaser.
5. ADDITIONAL AGREEMENTS AND COVENANTS - VENDOR
The Vendor covenants and agrees with the Purchaser as follows:
5.1 CERTAIN CHANGES
Subject to Section 5.3, without first obtaining the written consent of the
Purchaser (which consent may not be unreasonably withheld), from the
Reference Time until the Closing Date, the Vendor will ensure that the
Company will not:
(a) make any material adverse change in the conduct of its business and
operations;
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(b) amend, in any respect material to the Company, any contract or
agreement other than in the ordinary course of business;
(c) declare, set aside or pay any dividends, or make any distributions
in respect of its Shares or repurchase, redeem or otherwise acquire
any Shares, (ii) make any payments, by way of bonuses, management
fees, wages, salaries or otherwise to the Vendor or any other
Person, or (iii) incur, assume, pay or otherwise become liable for
any debts or charges to or for the benefit of any Vendor or any
Person affiliated with or related to a Vendor;
(d) merge into or with or consolidate with any other corporation or
acquire all or substantially all of the business or assets of any
Person;
(e) make any changes to its constating documents or bylaws;
(f) purchase any securities of any Person;
(g) sell, lease or otherwise dispose of any of the Assets (the
extraction and sale of Petroleum Substances and the consumption or
other disposition of its assets and properties in the ordinary
course of business being excepted and permitted) other than in the
ordinary course of business;
(h) purchase, lease or otherwise acquire any Petroleum and Natural Gas
Rights or any interest in Petroleum Substances or real property
other than in the ordinary course of business;
(i) make any capital expenditures other than in the ordinary course of
business;
(j) amend, enter into or terminate any contracts material to the Company
other than in the ordinary course of business;
(k) initiate new operations, commit to drill any Well for its own
account, surrender Petroleum and Natural Gas Rights or abandon any
Xxxxx other than in the ordinary course of business;
(l) make any offer of employment to any Person; terminate, except for
cause, the employment of any Person; or increase the salary or
benefits payable to any Person.
5.2 ACCESS
The Vendor will cause the Company to afford to the Purchaser and its
authorized representatives reasonable access from the date hereof until
the Closing Date, to the Company's properties, books and records and will
cause the Company to furnish to the Purchaser such additional financial
and operating data and other information as it may reasonably request. The
Vendor shall further cause the Company to co-operate with the Purchaser in
arranging any such meetings as the Purchaser may reasonably request with
shippers, suppliers or others who have or have had a business relationship
with the Company and auditors or any other Persons engaged or previously
engaged to provide services with respect to the Company's affairs.
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5.3 CONDUCT OF BUSINESS; BUSINESS ORGANIZATION
In the period from the date hereof until the Closing Date, the Vendor
shall cause the Company to conduct, in accordance with generally accepted
industry practices, such activities relative to the business of the
Company as can reasonably be regarded as being in the ordinary course of
business for the Company. The Company shall not conduct any activities
with respect to the Assets which cannot reasonably be regarded as being in
the ordinary course of business of the Company without the prior written
consent of the Purchaser (which consent may not be unreasonably withheld),
except as may be reasonably necessary to protect, ensure life and safety
or to preserve the Assets or title to the Assets. If the Company desires
to approve an A.F.E. as submitted by an operator where the Company's share
of the costs thereunder is expected to exceed Twenty-five Thousand Dollars
($25,000.00), or renegotiate, amend, vary or alter any material contract
for the sale or disposition of Petroleum Substances, the Vendor shall have
the Company:
(a) notify the Purchaser of any such A.F.E. or any material changes to
any such contract or arrangement for the sale or disposition of
Petroleum Substances;
(b) permit the Purchaser to consult with the Company in respect of such
A.F.E. or change; and
(c) the Company shall be entitled to approve such A.F.E. or make such
change, notwithstanding the Purchaser's disagreement (if any), if
the Company is dealing at arm's length with the remaining parties to
the contract and, acting in good faith, believes such approval or
change is reasonable.
5.4 INSURANCE
The Vendor will or will cause the Company to maintain existing policies of
insurance and surety bonds in respect of the Assets of the Company.
6. ADDITIONAL COVENANTS AND ACKNOWLEDGMENTS OF THE PARTIES
6.1 TAX MATTERS - POST CLOSING
The Parties acknowledge that the Purchaser will be responsible for all of
the Company's Taxes from and including the Reference Time forward and the
Vendor will be responsible for all of the Company's Taxes up to the
Reference Time. The Parties specifically agree in regard to Tax matters
that:
(a) The Purchaser shall cause to be prepared and filed on a timely
basis, all Tax returns for the Company for any period which ends on
or before the Closing Date and for which Tax returns have not been
filed as of such date.
(b) The Tax returns to be filed after the Closing Date for the period
ending on or before the Closing Date shall be prepared in a manner
consistent with the Notional Tax Return.
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(c) The Vendor and the Purchaser shall co-operate fully with each other
and make available to each other in a timely fashion such data and
other information as may reasonably be required, including providing
access to employees and to financial and other records of the
Company for the preparation of any Tax return of the Company for a
taxation year ending on or before the Closing Date, and the conduct
of any disputes relating thereto, and shall preserve such data and
other information until the expiration of any applicable limitation
period under any applicable law with respect to Taxes.
(d) If the Company receives any assessment, reassessment, notice of
proposed reassessment, notice of audit or any other Tax notice
regarding the period prior to the Closing Date, the Purchaser shall
cause the Company to notify the Vendor, co-operate with them in
responding to such notices and to take such steps as the Vendor may
reasonably request so as to avoid any further or incremental Tax
obligation on the part of the Vendor.
6.2 PUBLIC ANNOUNCEMENTS
The Vendor and the Purchaser will consult with each other before they
issue any press releases or otherwise make any public statements with
respect to this Agreement or the transactions contemplated hereby and not,
except to the extent required by law or by obligations pursuant to any
listing agreement with any securities exchange on which any of the shares
or other securities of the Purchaser may be listed, issue or make any such
release or statement without the prior consent and joint approval of the
Vendor and the Purchaser.
6.3 FURTHER ASSURANCES
(a) Subject to the terms and conditions of this Agreement, the Vendor
and the Purchaser will use all reasonable efforts to take, or cause
to be taken, all action, and to do, or cause to be done, all things
necessary, proper or advisable under applicable laws and regulations
to obtain consents of all Persons including all governmental
authorities necessary to the consummation of the sale by or to it
(as applicable) of the Shares pursuant to this Agreement, or to
carry out all of their respective obligations under this Agreement
and to consummate the transactions contemplated by this Agreement.
(b) From time to time after the Closing Date, without further
consideration, each Party will, at its own expense, execute and
deliver such documents to any other Party as such Party may
reasonably request in order to consummate the transactions
contemplated by this Agreement.
6.4 INSURANCE
At the Closing Date, the Purchaser will or will cause the Company to
procure and maintain any and all policies of insurance and surety bonds as
Purchaser or the Company, at its cost and expense, deems advisable. All
risk of loss with respect to the Company or its properties shall pass to
Purchaser on the Closing Date provided that after the Closing Date the
Vendor shall administer claims under any insurance policies with respect
to the
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Company or its properties, relating to or arising out of events occurring
prior to the Closing Date which the Vendor agrees to assign to the Company
as and if claims arise and notice thereof is given to the Vendor and
provide reasonable co-operation to the Company with respect to making and
prosecuting (at the Vendor's expense) any claims which are not assignable.
6.5 CONFIDENTIALITY
(a) Prior to the Closing Date, and subsequent to the Closing Date if the
sale contemplated herein does not close, the Purchaser shall
consider as confidential, shall not communicate to others and shall
use its best efforts to prevent those within its employ or control
from communicating to others, all information which the Purchaser
receives from the Vendor or the Company pursuant to this Agreement
other than information which:
(i) was in the possession of the Purchaser prior to its receipt or
acquisition hereunder;
(ii) at the time of disclosure, is in the public domain;
(iii) after disclosure, becomes part of the public domain by
publication or otherwise, through no act or omission on the
part of the Purchaser; or
(iv) is required to be disclosed pursuant to the applicable
legislation, regulations or rules or by the direction of any
court, tribunal or administrative body having jurisdiction.
7. INDEMNITIES AND EXTENT AND SURVIVAL OF REPRESENTATIONS, WARRANTIES,
COVENANTS AND AGREEMENTS
7.1 RESPONSIBILITY OF VENDOR
Subject to Sections 7.3 and 7.4, the Vendor shall:
(a) be liable to the Purchaser for all losses, costs, damages (excluding
consequential damages) and expenses whatsoever which the Purchaser
may suffer, sustain, pay or incur; and
(b) indemnify and save the Purchaser and its directors, officers,
servants, agents and employees harmless from and against all claims,
liabilities, actions, proceedings, demands, losses, costs, damages
(excluding consequential damages) and expenses whatsoever which may
be brought against or suffered by the Purchaser, its directors,
officers, servants, agents or employees or which they may sustain,
pay or incur,
as a direct result of any matter or thing arising out of, resulting from,
attributable to or connected with any misrepresentation or breach of
warranty made by the Vendor herein or in any document delivered in
connection herewith in respect of which a written notice specifying the
misrepresentation or breach is delivered by the Purchaser within the
survival
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period in accordance with Section 7.4 or the failure of the Vendor to
comply with, or the breach by the Vendor of, any of the covenants or
agreements to be performed by the Vendor in this Agreement or in any
document delivered concurrently herewith; or the obligation on the Company
or the Purchaser to pay any additional Taxes, interest or penalties that
may be assessed against the Company for any period of time up to the
Reference Time; provided however, nothing in this Section 7.1, whether
express or implied, shall be construed so as to cause the Vendor to
indemnify the Purchaser in connection with any representation or warranty
contained in Article 3 if and to the extent that the Purchaser did not
rely upon such representation or warranty.
7.2 RESPONSIBILITY OF PURCHASER
Subject to Sections 7.3 and 7.4, the Purchaser shall:
(a) be liable to the Vendor for all losses, costs, damages (excluding
consequential damages) and expenses whatsoever which the Vendor may
suffer, sustain, pay or incur, and
(b) indemnify and save the Vendor and his heirs harmless from and
against all claims, liabilities, actions, proceedings, demands,
losses, costs, damages (excluding consequential damages) and
expenses whatsoever which may be brought against or suffered by the
Vendor, or his heirs or which any of them may sustain, pay or incur,
as a direct result of any matter or thing arising out of, resulting from,
attributable to or connected with: any misrepresentation or breach of
warranty made by the Purchaser herein or in any document delivered in
connection herewith in respect of which a written notice specifying the
misrepresentation or breach is delivered by the Vendor within the survival
period in accordance with Section 7.4 or the failure of the Purchaser to
comply with, or the breach by the Purchaser of, any of the covenants or
agreements to be performed by the Purchaser in this Agreement or in any
document delivered concurrently herewith; provided however, nothing in
this Section 7.2, whether express or implied, shall be construed so as to
cause the Purchaser to indemnify the Vendor in connection with any
representation or warranty contained in Article 4 if and to the extent
that the Vendor did not rely upon such representation and warranty.
7.3 PROCEDURE - INDEMNITIES
Any Party seeking indemnification hereunder shall give reasonably prompt
notice thereof to the Party from whom indemnification is sought. The Party
from whom indemnification is sought shall have the sole right to conduct,
settle or otherwise dispose of any legal action in respect of which
indemnification is sought in any manner it deems appropriate without the
consent of the other Party if but only if it has agreed that the matters
in the action are indemnified pursuant to this Article 7.
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7.4 SURVIVAL
Notwithstanding the completion of the transaction contemplated by this
Agreement or any investigation made by or on behalf of any party hereto,
the representations, warranties, covenants, agreements and indemnities of
the Vendor and the Purchaser contained in this Agreement and contained in
any document or certificate given pursuant to this Agreement shall survive
the closing and continue in full force and effect for a period of two
years (and for a period of four years in respect of the indemnity for
Taxes set out in Section 7.1). No claims with respect to representations,
warranties, covenants, agreements and indemnities of the Vendor and
Purchaser contained in this Agreement or in any document or certificate
given pursuant to the provisions hereof shall be made by any party unless
notice in writing thereof has been given by the party making the claim to
the other party within two years or four years, as applicable, of the
Closing Date. Notwithstanding anything contained in this Agreement,
Purchaser shall have no remedy or cause of action for a breach of any
representation or warranty in regard to any circumstance, matter or thing
actually known to the Purchaser or any employee, agent, consultant or
representative thereof, as at the Closing Date.
8. MISCELLANEOUS
8.1 FURTHER ASSURANCES
The Vendor and the Purchaser shall from time to time execute and deliver
all such further documents and instruments and do all acts and things as
the other Party may, either before or after the Closing Date, reasonably
require to effectively carry out or better evidence or perfect the full
intent and meaning of this Agreement.
8.2 TIME OF THE ESSENCE
Time shall be of the essence of this Agreement.
8.3 FEES
Each of the Parties hereto shall pay their respective legal and accounting
costs and expenses incurred in connection with the preparation, execution
and delivery of this Agreement and all documents and instruments executed
pursuant hereto and any other costs and expenses whatsoever and howsoever
incurred. Any legal, accounting and brokerage fees, costs and expenses
incurred by the Company prior to Closing in connection with this
transaction shall be the responsibility of and be paid by the Vendor.
8.4 BENEFIT OF THE AGREEMENT
This Agreement shall enure to the benefit of and be binding to the
respective heirs, executors, administrators, successors and permitted
assigns of the Parties hereto.
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8.5 ENTIRE AGREEMENT
This Agreement constitutes the entire agreement between the Parties with
respect to the subject matter hereof and cancels and supersedes any prior
understandings and agreements between the Parties hereto with respect
thereto. There are no representations, warranties, terms, conditions,
undertakings or collateral agreements, express, implied or statutory,
between the Parties other than as expressly set forth in this Agreement.
8.6 AMENDMENTS AND WAIVER
No modification of or amendment to this Agreement shall be valid or
binding unless set forth in writing and duly executed by all of the
Parties hereto and no waiver of any breach of any term or provision of
this Agreement shall be effective or binding unless made in writing and
signed by the party purporting to give the same and, unless otherwise
provided, shall be limited to the specific breach waived.
8.7 ASSIGNMENT
This Agreement may not be assigned by any of the Parties hereto without
the written consent of all other Parties.
8.8 NOTICES
Any demand, notice or other communication to be given in connection with
this Agreement shall be given in writing and shall be given by personal
delivery, by registered mail or by electronic means of communication
addressed to the recipient as follows:
To the Vendor:
000 Xxxxxxxxxx Xxxxxxxx X.X.
Xxxxxxx, Xxxxxxx X0X 0X0
Attention: Xxxxx XxXxxx
Facsimile: (000) 000-0000
To the Purchaser:
000, 000 - 0xx Xxxxxx X.X.
Xxxxxxx, Xxxxxxx X0X 0X0
Attention: Xxxxx Xxxxxx, President
Facsimile: (000) 000-0000
or to such other address, individual or electronic communication number as
may be designated by notice given by any party to the others. Any demand,
notice or other communication given by personal delivery shall be
conclusively deemed to have been given on the day of actual delivery
thereof if a Business Day and if not on the next following Business Day
and, if given by registered mail, on the twelfth Business Day following
the deposit thereof in the mail and, if given by electronic communication,
on the
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day of transmittal thereof if given during the normal business hours of
the recipient and on the Business Day during which such normal business
hours next occur if not given during such hours on any day. If the Party
giving any demand, notice or other communication knows or ought reasonably
to know of any difficulties with the postal system which might affect the
delivery of mail, any such demand, notice or other communication shall not
be mailed but shall be given by personal delivery or by electronic
transmission.
8.9 GOVERNING LAW
This Agreement shall in all respects be governed by, and construed in
accordance with, the laws of the Province of Alberta, including all
matters of construction, validity and performance. The Vendor and
Purchaser hereby consent and irrevocably attorn to the jurisdiction of the
courts of the Province of Alberta for all disputes relating to the
construction, interpretation, enforcement and performance of this
Agreement, hereby waiving all defences based on venue or convenience of
forum or service of process outside of such jurisdiction.
8.10 EXECUTION
This Agreement may be executed in one or more counterparts, each of which
shall be deemed an original but all of which together shall constitute one
and the same instrument. The Parties shall be entitled to rely on delivery
of an executed facsimile copy of this Agreement and such facsimile copy
shall be legally effective to create a valid and binding agreement between
the Parties hereto.
8.11 INTERIM PERIOD
Notwithstanding that the within purchase and sale transaction will be
closed and completed on a date following the Reference Time, the Parties
acknowledge and agree that as between the Parties such transaction is
being treated as taking effect as of the Reference Time, such that the
Purchaser will receive the benefit of the Shares as of the Reference Time
and that from and after the Reference Time and as between the Parties
(upon the execution hereof) the Purchaser will be treated as the
beneficial owner of the Shares, and the Company is entitled to all income
and profits derived from or in connection with the Assets from and after
the Reference Time. The Vendor hereby acknowledges that upon execution
hereof it has held the Shares as bare trustee only for and on behalf of
the Purchaser and shall account to the Purchaser in respect thereof
pursuant to the terms of this Agreement.
IN WITNESS WHEREOF, the parties have executed this Agreement as of the
date first written above.
Vendor:
______________________________ _____________________________________
Witness XXXXX XXXXXX
100
GEOCAN ENERGY INC.
Per:_________________________________
Per:_________________________________
SCHEDULE "A"
attached to and forming part of a Share Purchase
Agreement made as of the 1st day of October, 2000
between Xxxxx XxXxxx, as Vendor
and GEOCAN Energy Inc., as Purchaser
================================================================================
PART I
LANDS AND LEASES
COMPANY'S
LEASE LANDS WORKING INTEREST ENCUMBRANCES
----- ----- ---------------- ------------
DEVA
Alberta Crown PNG SW 1/4 16-45-1-W4M 10% (a) Crown Royalty; and
Lease No. 0485110052 from base Viking to (b) 5% Gross Overriding
base Mannville Royalty
STAPLEHURST
Alberta Crown PNG NE 1/4 24-50-1-W4M 12.5% Before (a) Crown Royalty; and
Lease No. 0497100414 to basement Payout (b) Convertible (5% - 15%)
8.125% After Overriding Royalty
Payout
101
SCHEDULE "A"
attached to and forming part of a Share Purchase
Agreement made as of the 1st day of October, 2000
between Xxxxx XxXxxx, as Vendor
and GEOCAN Energy Inc., as Purchaser
================================================================================
PART II
FACILITIES
102
SCHEDULE "A"
attached to and forming part of a Share Purchase
Agreement made as of the 1st day of October, 2000
between Xxxxx XxXxxx, as Vendor
and GEOCAN Energy Inc., as Purchaser
================================================================================
PART III
XXXXX
TCRL Deva 102/03-16-045-01 W4M
Timberwolf/Lloydminster 14A-24-50-1 W4M
103
SCHEDULE "B"
attached to and forming part of a Share Purchase
Agreement made as of the 1st day of October, 2000
between Xxxxx XxXxxx, as Vendor
and GEOCAN Energy Inc., as Purchaser
================================================================================
WORKING CAPITAL ADJUSTMENTS
2.2.1 PURCHASE PRICE ADJUSTMENT: The Basic Purchase Price shall be increased
or decreased, as the case may be, by the amount of the value of Working
Capital as at the Reference Time as finally determined in accordance
with this Schedule "B", including as a current liability, the amount of
any Tax payable as determined in the Notional Tax Return.
2.2.2 ESTIMATED WORKING CAPITAL: Three (3) Business Days prior to the Closing
Date, the Vendor shall, at the Vendor's cost and expense, prepare a
trial balance for the Company, estimating the Working Capital as at the
Reference Time (the "Estimated Working Capital"). For purposes of
closing, the Basic Purchase Price shall be increased or decreased, as
the case may be, on the basis contemplated in Section 2.2.1 utilizing
the Estimated Working Capital.
2.2.3 WORKING CAPITAL REPORT: As soon as is practicable following the Closing
Date, the Purchaser shall cause the Company to obtain all documentation
necessary to complete preparation of the Company's financial statements
as at the Closing Date. Forthwith thereupon, the Vendor shall, on
behalf of the Company, at the Vendor's cost and expense, prepare a
final statement of Working Capital as at the Reference Time (the
"Working Capital Report") as well as the Company's financial statements
as at the Closing Date and to report thereon to the Purchaser as soon
as practicable, and in any event not later than 30 days following the
Closing Date. The Purchaser shall be entitled, at its sole cost and
expense, to review and have its accountants and its employees review
the working papers prepared by the Vendor for the Working Capital
Report and to comment thereon as the Purchaser deems appropriate. Any
dispute arising between the Vendor and the Purchaser as to the
determination of Working Capital set forth in the Working Capital
Report or the Notional Tax Return shall be settled by arbitration in
accordance with the provisions of Section 2.2.7.
2.2.4 PAYMENTS. Upon receipt of the Working Capital Report and the
determination of Working Capital thereunder:
(a) if Working Capital exceeds Estimated Working Capital, then the
Purchaser shall, within 10 days of completion of the Working
Capital Report, pay an amount equal to the difference between such
amounts to Vendor together with interest on the amount of such
difference calculated at the Prime Rate plus one percent (1%) from
and including the Closing Date to and including the day prior to
the date of payment; and
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(b) if Working Capital is less than Estimated Working Capital, then
the Vendor shall within 10 days of completion of the Working
Capital Report, pay an amount equal to the difference between such
amounts to the Purchaser, together with interest on the amount of
such difference calculated at the Prime Rate plus one percent (1%)
from and including the Closing Date to and including the day prior
to the date of payment.
2.2.5 FURTHER ACCOUNTING AND ADJUSTMENTS. The Parties foresee that certain
adjustments with respect to Working Capital may be necessary from time
to time after the 30-day period referred to in Section 2.2.3, including,
but not limited to:
(a) any amounts which are to be paid to the Company or the Purchaser
at any time after the Closing Date out of or in any way relating
to royalty calculations in respect of the Petroleum and Natural
Gas Rights;
(b) matters relating to Company's Taxes for any taxation period or
deemed taxation period ending on or before Reference Time; and
(c) any matters which the Purchaser or the Vendor have given notice to
the other within the said 30-day period.
Each of the Parties agrees to co-operate fully in calculating and
confirming the amount of any payment that may be necessary as a result
of such adjustments and agrees to make payment in such event. In this
respect, any adjustments to Working Capital occurring more than 30 days
after Closing Date shall be made as they occur and payment shall, in
accordance with Section 2.2.4, be made with respect thereto within 15
days of each such adjustment being determined and notice thereof being
given by one Party to the other Party. Any amount of interest and
penalties payable by or to Third Parties, in respect of any adjustments
under this paragraph, shall also be adjusted between the Vendor and the
Purchaser as they occur and payment made within such 15-day period.
Interest on the amount of such adjustment (including amounts, if any,
for interest and penalties) calculated at the Prime Rate plus one
percent (1%) from and including the date one Party receives notice of
the adjustment from the other Party to and including the day prior to
the date of payment, shall be payable to the Party entitled to the
adjustments. No adjustment shall be made to Working Capital pursuant to
this Schedule after one year following the Closing Date (four years
following the Closing Date for Taxes), except where a Party shall have
given written notice of its claim, with reasonable particulars, to the
other prior to the expiry of such one year period, objecting to the
determination of Working Capital, which notice shall also include the
reasons for the objection. Any dispute arising between Vendor and
Purchaser as to adjustments shall be settled by arbitration in
accordance with the provisions of Section 2.2.7.
2.2.6 Adjustment Principles: For greater certainty, the following principles
shall be employed in any determination of Working Capital or any
adjustment required thereto in accordance with this Schedule:
(a) Subject to other provisions of this Section 2.2.6, all benefits,
income, costs and expenses of every kind and nature relating to
the Assets, including, without
105
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limitation, maintenance, capital and operating costs,
processing fees, lease rentals and the proceeds from the sale
of production, shall be determined as of the Reference Time on
an accrual basis (and in respect of Taxes as set forth in the
Notional Tax Return, as of the Reference Time) and, without
limiting the generality of the foregoing:
(i) adjustments for costs or work performed and goods supplied
in connection with the operation and development of the
Assets shall be made on the basis of the date upon which the
work was performed or the goods were supplied;
(ii) adjustments for revenues from the sale of production shall
be made on the basis of the date of production; and
(iii) adjustments for royalty payments and expenses relating to or
from the sale of production shall be made on the basis of
the date of production.
(b) The Basic Purchase Price shall be adjusted upwards by an amount
equal to the market value of Petroleum Substances attributable to
the Assets which Petroleum Substances have been sold prior to the
Reference Time and for which the Company has not received full
payment, plus an amount equal to the market value of Petroleum
Substances attributable to the Assets which Petroleum Substances
have been produced but not sold prior to the Reference Time.
(c) The Vendor and the Purchaser, at its own cost, and its authorized
representatives, shall have the right exercisable upon 15 days'
written notice to the other, to examine, copy and audit the
records of the other and the Company that are relevant to
effecting the adjustments pursuant to this Schedule. The rights
hereunder shall survive for all matters for a period of two years
from the Closing Date and for Tax matters a period of four years
from the Closing Date.
2.2.7 ARBITRATION. If the Parties fail to reach agreement as to the
calculation or determination of Working Capital or the Notional Tax
Return pursuant to this Schedule, or otherwise as provided in the
Agreement, the matter in dispute shall be resolved by a single
arbitrator pursuant to the provisions of The Arbitration Act (R.S.A.).
In making a determination as to the amount of the proposed adjustments
to the Basic Purchase Price, the Working Capital or the Notional Tax
Return, the arbitrator shall hear submissions from one individual as
representative of the Vendors (as a group) and the Purchaser,
respectively, as to their respective determinations of the proposed
Basic Purchase Price adjustment, the Working Capital or the Notional
Tax Return and then the arbitrator shall choose either the
determination of the proposed Basic Purchase Price adjustment, the
Working Capital or the Notional Tax Return by the Vendors or the
determination of the proposed Basic Purchase Price adjustment, the
Working Capital or the Notional Tax Return by the Purchaser. The
arbitrator shall have access to the working papers prepared by each of
the Vendors and the Purchaser relating to their respective
determinations of Working Capital and the Notional Tax Return. Any
decision of the arbitrator pursuant to this Agreement shall be final
and binding on the Parties and shall not be subject to review. All
costs of the arbitration shall be borne by the Vendors as to one-half
and the Purchaser as to one-half.
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SCHEDULE "C"
attached to and forming part of a Share Purchase
Agreement made as of the 1st day of October, 2000
between Xxxxx XxXxxx, as Vendor
and GEOCAN Energy Inc., as Purchaser
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FINANCIAL STATEMENTS
107
SCHEDULE "D"
attached to and forming part of a Share Purchase
Agreement made as of the 1st day of October, 2000
between Xxxxx XxXxxx, as Vendor
and GEOCAN Energy Inc., as Purchaser
================================================================================
NOTIONAL TAX RETURN
