PARTICIPATION AGREEMENT
Xxxxxx Xxxxxx Island, Canada November 22, 2002
BETWEEN:
XXXXXXX INTERNATIONAL RESOURCES INC., a body
corporate, having an office at the City of Calgary, in the
Province of Alberta,
(hereinafter called "Xxxxxxx")
OF THE FIRST PART AND
AMERICAN MANOR ENTERPRISES INC., a body corporate,
having an office at the City of Halifax, in the Province of Nova Scotia,
(hereinafter called "Manor ")
OF THE SECOND PART
AND:
WHEREAS pursuant to a Joint Operating Agreement (hereinafter referred to as
the "Operating Procedure") dated the 22nd day of October, 2001, and attached
hereto as Appendix " A" and made between Rally Energy Corp., Osprey Energy
Limited, CMB Energy Corp., and Xxxxxxx lnternational Resources Inc.. Rally
Energy Corp. as operator will drill a minimum of 2 xxxxx on Oil and Gas Permit
No. 96-06. ( hereinafter referred to as the "Test Xxxxx").
AND WHEREAS Manor desires to participate with Xxxxxxx in drilling the Test
J Xxxxx to earn an undivided 5% working interest in the Test Xxxxx, the Title
Documents and the Joint Lands.
NOW THEREFORE THIS AGREEMENT WITNESSETH that in consideration of the
premises and of the covenants and agreements of the parties as hereinafter set
forth, the parties do hereby covenant and agree as follows:
1. DEFINITIONS AND INTERPRETATIONS
In this Agreement, unless the context otherwise requires, the definitions
contained ill the Operating Procedure shall apply hereto.'
2. TITLE
It is expressly agreed and understood notwithstanding anything else herein
contained or implied, that Xxxxxxx in and by this Agreement does not convey any
better or greater right, title or interest in and to the Lands that which
Xxxxxxx now has.
3. DATE OF THIS AGREEMENT
This Agreement formalizes the Agreement reached between Xxxxxxx and Manor
on November 22, 2002 (the date of this Agreement). The parties agree that this
Agreement shall govern this relationship from that date and have evidenced that
Agreement by their execution of this Agreement.
4. APPOINTMENT OF OPERATOR
Xxxxxxx is appointed as Operator with respect to all operations conducted
hereunder and is authorized to deal with the Rally on behalf of Manor in respect
of all matters arising out of the drilling of the Test Xxxxx. Xxxxxxx will use
reasonable efforts to have Manor assigned into the Operating Procedure. If
Xxxxxxx is unable to have Manor assigned into the Operating Procedure, Xxxxxxx
shall hold Manor's earned interest in trust for Manor.
5. OPERATIONS
It is the express intent of Xxxxxxx and Manor that the terms of the
Operating Procedure, attached hereto, shall apply, mutatis mutandis, with
respect to all operations pursuant to the Operating Procedure, as if such
operations were for the joint account under the Operating Procedure and Manor
having all the rights, benefits and obligations of a Joint Operator.
6. TERM
This Agreement shall remain in effect between Xxxxxxx and Manor until such
time as the Lands subject to this Agreement have been drilled and Manor has
earned its interest or terminated.
7. PARTICIPATING AND EARNING INTERESTS
Except as otherwise provided, Manor shall:
a) Participate with Xxxxxxx in the drilling, completing and or
abandonment of the first two (2) Test Xxxxx drilled on Oil and Gas
Permit 96-06 by paying Shannon's 25% Working Interest share of the
cost of drilling, completing and or abandoning the first two (2) Test
Xxxxx.
b) Earn up to a maximum of a five (5%) percent working interest in Oil
and Gas Permit 96-06 at a rate of one (1 %) percent working interest
for every Sixty thousand ($60,000.00) dollars Canadian spent in the
drilling, completing and or abandoning the Test Xxxxx to a maximum of
Three Hundred Thousand ($300,000.00) dollars Canadian.
c) Not withstanding the above, should Shannon's share of drilling
completing and or abandoning the Test Xxxxx not reach the Maximum of
Three Hundred Thousand ($300,000.00) dollars, Manor shall continue to
pay for Shannon's 25% share of any additional exploratory to be
conducted on Oil and Gas Permit 96-06 until the maximum amount of
$300,000.00 is reached.
d) Payment of the 25% shall be by payment within five (5) working days of
execution of this Agreement of the cash call attached hereto as
Exhibit "B" in the amount of One Hundred and Eighty ($180,000.00)
dollars Canadian and the balance of One Hundred and Twenty Thousand
($120,000.00) dollars Canadian to be paid within ten (10) working days
of receipt by Xxxxxxx of first cash call ($180,000.00)
e) Failure to pay the $180,000.00 cash call within the 5 day period will
automatically terminate this agreement and Manor shall forfeit its
right to earn an interest herein.
f) Failure to pay the second cash call of $120,000.00 within the 10 day
period shall automatically terminate the right of Manor to earn the
additional two (2%) working interest.
g) Upon earning its 5% working interest or portions thereof pursuant to
this Agreement Manor shall bear its working interest share of all
future operations to be conducted on Oil and Gas Permit No. 96-06.
For Clarity only:
Pay: Earn in Test Xxxxx and Joint Lands
----
Manor: 25% (Max $300,000.00) 5.0%
Xxxxxxx: 0% 20.0%
8. NOTICE
As between the parties any periods of notice specified in the Operating
Procedure shall be lengthened or shortened by one-half as the case may be, in
order to enable the parties to comply with the provisions of the Operating
Procedure.
9. FURTHER ASSURANCES
Each of the parties shall at all times do all such further acts and deliver
all such further deeds and documents as shall be reasonably required in order to
fully perform and carry out the terms of this Agreement.
10. OTHER ENCUMBRANCES
Except as hereinafter provided, if the interest of any party in the Joint
Lands is or are, now or hereafter shall become encumbered by any royalty,
production payment or other charge of a similar nature, other than the royalties
set forth under the terms of the Title Documents covering such lands, such
royalty, production payment or other charge shall be charged to and paid
entirely by the party whose interest is or becomes thus encumbered.
11. ASSIGNMENT
Manor may not assign a portion of its interest in this Agreement to a third
party prior to earning or during earning without the prior written consent of
Xxxxxxx.
12. ADDRESSES FOR SERVICE
All notice, reports and other correspondence required or given under the
terms of this Agreement shall be deemed to have been properly served if
delivered to the following addresses:
Xxxxxxx International Resources Inc. American Manor Enterprises Inc.
Xxxxx 0000, 000 0xx Xxxxxx XX 00 Xxxxxx Xxxxxx Xxxx #000
Xxxxxxx, Xxxxxxx Dartmouth, Nova Scotia
T2P 2V6 X0X 0X0
Attention: Xxxxx Xxxxx Attention: Xxxx XxxXxxxxxx
13. MISCELLANEOUS
13.01 The Appendices and Schedules attached hereto are incorporated unto and
fonIl a part of this Agreement. In the case of any inconsistencies between the
body of this Agreement and the Appendices and Schedules, the body of this
Agreement shall in each and every instance prevail.
13.02 This Agreement shall enure to the benefit of and be binding on the parties
hereto and their respective successors and permitted assigns and upon the heirs,
executors, administrators and assigns of natural persons who are or become
parties hereto.
13.03 This Agreement and the relationship between the parties shall be construed
and determined according to the laws of the Province of Alberta and the courts
of the Province of Alberta shall have exclusive original jurisdiction with
respect to any matter or thing arising directly or indirectly relating to this
Agreement and each party by its execution of this Agreement does hereby attorn
to the jurisdiction of the said courts.
13.04 This Agreement may be executed in counterpart and when each party has
executed a counterpart, all counterparts together shall constitute one
agreement.
13.05 The headings of clauses of this Agreement are inserted for convenience of
reference only and shall not affect the meaning or construction thereof.
13.06 Whenever the plural or masculine or neuter is used in this Agreement, the
same shall be construed as meaning singular or feminine or body politic or
corporate and vice versa where the context so requires.
13.07 This Agreement supercedes all other agreements, documents, writings and
verbal understandings among the parties relating to the Lands.
IN WITNESS WHEREOF the parties hereto have caused this Agreement to be executed
as of the day and year first above written.
XXXXXXX INTERNATIONAL RESOURCES INC
Per: /s/ Xxxxx Xxxxx
----------------------------
President & CEO
AMERICAN MANOR ENTERPRISES INC.
Per: /s/ Xxxx McacPherson
-----------------------------------
Appendix" A"
To an Agreement dated November 22, 2002 between Xxxxxxx International
Resources Inc. and American Manor Enterprises Inc.
JOINT OPERATING AGREEMENT
