OPTION AGREEMENT
MEMORANDUM OF AGREEMENT made the 30th day of November, 1995,
BETWEEN:
CANADIAN CONQUEST EXPLORATION INC., a corporation duly incorporated
under and governed by the laws of the Province of Alberta and having
its head office in the City of Calgary, in the Province of Alberta
(hereinafter referred to as "Conquest")
OF THE FIRST PART,
- and -
XXXXXX X. XXXXXXX, an individual residing near the Town of Okotoks,
in the Province of Alberta (hereinafter referred to as "Mercier")
OF THE SECOND PART.
WHEREAS Conquest has, pursuant to a letter offer dated November 3, 1995
and accepted by Mercier on the same date, approved and authorized the
granting to Mercier of an irrevocable option, exercisable by Mercier at any
time prior to December 31, 1995, to purchase 5,300,000 common shares in the
capital of Territorial Resources, Inc. registered in the name of Conquest for
an aggregate cash consideration of $450,000 in Canadian funds;
NOW THEREFORE THIS AGREEMENT WITNESSETH THAT for and in consideration of
the mutual covenants and agreements herein contained and the sum of $1.00 now
paid by Mercier to Conquest (the receipt and sufficiency of which is hereby
acknowledged by Conquest), it is agreed by and between the parties hereto as
follows:
ARTICLE I
INTERPRETATION
1.1 Where used herein or in any amendments hereto, the following terms shall
have the following meanings respectively:
"agreement", "this agreement", "hereto", "herein", "hereby", "hereunder",
"hereof" and similar expressions refer to this agreement and not to any
particular Article, Section, subsection, clause, subdivision or other portion
hereof and include any and every amending agreement and agreement
supplemental or ancillary hereto;
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"Business Day" means any day excepting a Saturday, Sunday or statutory
holiday in the Province of Alberta;
"Exercise Price" shall have the meaning attributed thereto in Section 2.1;
"Expiry Date" shall have the meaning attributed thereto in Section 2.2;
"Option" shall have the meaning attributed thereto in Section 2.1;
"Territorial" means Territorial Resources, Inc., a corporation incorporated
and governed by the laws of the State of Colorado; and
"Territorial Shares" shall have the meaning attributed thereto in Section 2.1.
1.2 Words importing the singular number only shall include the plural, and
vice-versa, words importing the masculine gender shall include the feminine
gender and neuter gender, and vice-versa, and words importing persons shall
include a natural person, firm, trust, partnership, association, corporation,
joint venture or government (including any governmental board, agency or
instrumentality thereof).
1.3 The division of this agreement into Articles and Sections and the
insertion of recitals and Article headings are for convenience of reference
only and shall not affect the interpretation or construction of this
agreement. Unless something in the subject matter or context is inconsistent
therewith, references herein to Articles and Sections are to Articles and
Sections of and to this agreement.
1.4 Unless otherwise specified in this agreement, when calculating the
period of time within which or following which any act is to be done or step
taken pursuant to this agreement, the date which is the reference day in
calculating such period shall be excluded and the day upon which such act is
to be done or step taken shall be included. If the last day of such period
is not a Business Day, the period in question shall end on the next Business
Day.
1.5 In the event that any date on which any action is required to be taken
hereunder by any of the parties hereto is not a Business Day, such action
shall be required to be taken on the next succeeding day which is a Business
Day.
1.6 This agreement shall be construed and enforced in accordance with and
the rights of the parties hereto shall be governed by the laws of the
Province of Alberta and the laws of Canada applicable therein and the parties
do hereby irrevocably attorn to the jurisdiction of the Courts of the
Province of Alberta.
ARTICLE II
OPTION
2.1 Subject to the terms and conditions hereof, Conquest hereby grants to
Mercier the sole and exclusive option (the "Option") to purchase all, but not
less than all, of the 5,300,000 common shares in the capital of Territorial
registered in the name of Conquest (the "Territorial Shares") for an
aggregate cash consideration of $450,000 in lawful money of Canada (the
"Exercise Price") payable, subject as hereinafter provided, to Conquest.
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2.2 The Option shall be irrevocable and may be exercised at any time prior
to 4:30 o'clock in the afternoon (Calgary time) on December 31, 1995 (the
"Expiry Date") by Mercier giving written notice to Conquest in accordance
with Section 6.1.
2.3 The Option is expressly subject to, and conditional upon, the completion
of the acquisition by Brooke Capital Corporation, on behalf of Brooke Energy
Fund, Citibank Canada and Eos Partners, L.P. on or before the Expiry Date of
an aggregate of 9,250,000 common shares in the capital of Conquest at a price
of $0.65 each to be issued by way of private placement for an aggregate cash
consideration of $6,012,500.
2.4 The Option shall expire at 4:30 o'clock in the afternoon (Calgary time)
on the Expiry Date and terminate and be of no further force and effect
whatsoever.
ARTICLE III
REPRESENTATIONS AND WARRANTIES
Conquest represents and warrants as follows to Mercier and acknowledges
and confirms that Mercier is relying on such representations and warranties
in connection with the grant of the Option and the purchase by Mercier of the
Territorial Shares upon exercise of the Option:
3.1 Conquest has the corporate power and capacity to enter into and has
taken all necessary corporate action to authorize the execution, delivery and
performance of this agreement and the transactions contemplated herein. This
agreement, when duly executed and delivered by Conquest, will be valid and
binding obligation of Conquest enforceable against it in accordance with its
terms, subject only to the effect of any applicable bankruptcy and other laws
of general application affecting the enforcement of creditors' rights and the
effect of general principles of equity.
3.2 Conquest owns beneficially and of record the Territorial Shares and,
subject only to this agreement, the Territorial Shares are free and clear of
all mortgages, liens, charges, security interests, adverse claims, pledges,
encumbrances and demands whatsoever.
3.3 Except for this agreement, no person, firm or corporation has any
written or oral agreement, option, understanding or commitment, or any right
or privilege (whether by law, pre-emptive or contractual) capable of becoming
an agreement or option for the purchase of any of the Territorial Shares.
3.4 No authorization, consent or approval from, or filing, registration,
declaration or qualification with, or before, or giving notice to, any person
is required to be obtained, given or made for the execution and delivery by
Conquest of this agreement, the performance of the terms hereof or the
consummation of the transactions contemplated hereby except for those which
have been duly and unconditionally obtained and are in full force and effect.
3.5 Conquest is granting the Option and selling the Territorial Shares owned
by it pursuant to exemptions from prospectus and securities registration
requirements available under applicable securities legislation and shall
deliver to Mercier such further particulars of the exemptions and Conquest's
qualification thereunder as Mercier may reasonably request.
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3.6 The entering into of this agreement by Conquest and the transactions
contemplated hereby will not result in the violation of any of the terms and
provisions of the constating documents or by-laws of Conquest or of any
indenture or other agreement, written or oral, to which Conquest may be a
party or by which it is bound or of any law or regulation applicable to
Conquest.
Mercier represents and warrants as follows to Conquest and acknowledges
and confirms that Conquest is relying on such representations and warranties
in connection with the grant of the Options.
3.7 Mercier has disclosed to Conquest all material information known to him
respecting Territorial and the valuation of the Territorial Shares.
ARTICLE IV
CLOSING
4.1 The Closing of the sale of the Territorial Shares shall take place on or
before the fifth Business Day following the day upon which the Option is
exercised. The closing shall take place at 10:00 o'clock in the morning at
the offices of Conquest or as may be otherwise agreed by Conquest and Mercier.
4.2 In the event of and upon exercise of the Option, Conquest shall at its
own expense prepare and execute all documents and take all such steps and
proceedings as are reasonably necessary to enable Conquest to vest a good and
marketable title in Mercier to the Territorial Shares, free and clear of all
mortgages, liens, charges, security interests, adverse claims, pledges,
encumbrances and demands whatsoever.
4.3 At closing:
(a) Mercier shall pay the Exercise Price to Conquest or as it may direct
by way of certified cheque or bank draft;
(b) Conquest shall deliver the share certificates for the Territorial
Shares to Mercier duly endorsed in blank for transfer, together
with such other conveyancing documentation in connection with the
sale of Territorial Shares by Conquest as Mercier may reasonably
require; and
(c) Conquest shall deliver to Mercier its certificate under its corporate
seal duly executed by its President that the representations and
warranties of Conquest contained in this agreement are true and
correct at the time of closing on the closing date with the same
force and effect as if such covenants, representations and warranties
were made at and as of such time.
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ARTICLE V
SURVIVAL OF REPRESENTATIONS AND WARRANTIES
5.1 The representations and warranties of Conquest contained in this
agreement and contained in any document or certificate given pursuant hereto
shall survive the exercise of the Option herein provided for and,
notwithstanding such exercise or any investigation made by or on behalf of
Mercier, shall continue in full force and effect for the benefit of Mercier.
ARTICLE VI
GENERAL
6.1 Any notice or other instrument required or permitted to be given
hereunder shall be in writing and may be given by mailing (postage prepaid)
or delivering the same addressed:
(a) to Conquest at:
Canadian Conquest Exploration Inc.
0000, 000 - 0xx Xxxxxx X.X.
Xxxxxxx, Xxxxxxx
X0X 0X0
Attention: President
Telephone: (000) 000-0000
Telecopy: (000) 000-0000
(b) to Mercier at:
Xxxxxx X. Xxxxxxx
XX #0
Xxxxxxx, Xxxxxxx
X0X 0X0
Telephone: (000) 000-0000
Any notice, direction or other instrument aforesaid if delivered shall
be deemed to have been given or made on the date on which it was delivered or
if mailed shall be deemed to have been given or made on the fifth Business
Day following the date on which it was mailed.
Conquest or Mercier may change their address for service from time to
time by notice given in accordance with the foregoing.
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6.2 Time shall be of the essence of this agreement.
6.3 This agreement may be executed in one or more counterparts, each of
which when so executed shall constitute an original and both of which
together shall constitute one and the same agreement.
6.4 This agreement constitutes the entire agreement between the parties
hereto. The letter dated November 3, 1995 from Conquest and accepted by
Mercier on the same date is hereby terminated and shall be of no further
force and effect as between the parties. This agreement may not be amended
or modified in any respect except by written instrument signed by the parties
hereto.
6.5 This agreement shall enure to the benefit of and be binding upon the
parties hereto, the heirs, executors, administrators and assigns of Mercier
and the successors and assigns of Conquest, but shall not be assignable by
either of the parties hereto without the written consent of the other party
hereto. Notwithstanding the foregoing, the rights of Mercier hereunder and
the benefit of this agreement are assignable to any corporation which is an
associate (as such term is defined in the Securities Act (Alberta)) of
Mercier provided that upon such assignment such corporation shall be novated
into this Agreement and all its provisions shall enure to the benefit of and
be obligatory upon such corporation and Mercier shall, to the extent of such
assignment, be released and discharged from all obligations and liabilities
hereunder. Mercier shall deliver to the Corporation such documents as it may
reasonably require to substantiate such assignee's status as an associate of
Mercier.
6.6 In the event of the exercise of the Option by Mercier, Conquest will
from time to time on and after the closing date referred to in section 5.1
execute and deliver at its cost all such other and additional instruments,
notices and other documents and shall do such other acts and things as may be
reasonably requested by Mercier to fully effect the transfer of the
Territorial Shares to Mercier and otherwise to assure the carrying out of the
intent and purpose of this agreement.
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6.7 It is understood and agreed that in executing this agreement, Mercier
assumes no responsibility, obligation or liability to exercise the Option or
purchase the Territorial Shares and in the event Mercier shall fail to give
the notice referred to in section 2.2, this agreement shall at the Expiry
Date be and become absolutely null, void and of no effect and the parties
hereto shall be released from all obligations contracted hereunder to the
same extent as if this agreement had not been executed.
IN WITNESS WHEREOF this agreement has been executed by the parties
hereto as of the date and year first above written.
CANADIAN CONQUEST
EXPLORATION INC.
Per:
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Per:
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SIGNED, SEALED AND DELIVERED )
in the presence of: )
)
)
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Witness ) XXXXXX X. XXXXXXX
