Contract
Exhibit 10.7
AGREEMENT
OF PURCHASE AND SALE
TABLE
OF CONTENTS
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1.00
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INTERPRETATION
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1
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1.01
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DEFINITIONS
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1
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1.02
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SCHEDULES
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5
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1.03
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REFERENCES
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6
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1.04
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HEADINGS
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6
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1.05
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SINGULAR/PLURAL
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6
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1.06
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USE
OF FUNDS
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6
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1.07
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DERIVATIVES
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6
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1.08
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INTERPRETATION
IF CLOSING DOES NOT OCCUR
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6
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1.09
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CONFLICTS
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6
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1.10
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RESPONSIBILITY
EXTENDS TO LEGAL COSTS
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7
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1.11
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KNOWLEDGE
OR AWARENESS
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7
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2.00
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PURCHASE
AND SALE
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7
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2.01
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AGREEMENT
OF PURCHASE AND SALE
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7
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2.02
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PAYMENT
OF PURCHASE PRICE
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7
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2.03
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GST
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8
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2.04
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DEPOSIT
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8 |
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3.00
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CLOSING
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8
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3.01
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PLACE
OF CLOSING
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8
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3.02
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REQUIRED
APPROVALS
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9
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3.03
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SPECIFIC
CONVEYANCES
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9
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4.00
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ADJUSTMENTS
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9
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4.01
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BENEFITS
AND OBLIGATIONS TO BE APPORTIONED
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9
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4.02
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ADJUSTMENTS
TO ACCOUNTS
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9
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5.00
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INTERIM
PROVISIONS
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10
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5.01
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ASSETS
TO BE MAINTAINED IN PROPER MANNER
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10
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5.02
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VENDOR
AS AGENT
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10
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5.03
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RESTRICTIONS
ON CONDUCT OF BUSINESS
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11
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5.04
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OBLIGATIONS
OF THE PURCHASER
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11
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6.00
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REPRESENTATIONS
AND WARRANTIES OF PARTIES
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12
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6.01
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THUNDER'S
REPRESENTATIONS AND WARRANTIES
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12
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6.02
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CIMA’S
REPRESENTATIONS AND WARRANTIES
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15
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6.03
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PURCHASER'S
REPRESENTATIONS AND WARRANTIES
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18
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6.04
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SURVIVAL
OF REPRESENTATIONS AND WARRANTIES
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19
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6.05
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NO
ADDITIONAL REPRESENTATIONS OR WARRANTIES BY VENDOR
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19
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7.00
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THIRD
PARTY RIGHTS AND CONSENTS
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20
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7.01
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PREFERENTIAL
RIGHTS OF PURCHASE AND CONSENTS
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20
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8.00
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PURCHASER'S
INSPECTION OF ASSETS
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20
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8.01
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VENDORS
TO PROVIDE ACCESS
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20
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9.00
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ARBITRATION
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20
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9.01
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REFERENCE
TO ARBITRATION
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20
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9.02
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PROCEEDINGS
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21
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10.00
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CONDITIONS
TO CLOSING
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21
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10.01
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REQUIRED
CONSENTS
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21
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10.02
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CONDITIONS
FOR BENEFIT OF PURCHASER
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21
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10.03
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CONDITIONS
FOR BENEFIT OF VENDORS
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22
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10.04
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WAIVER
OF CONDITIONS
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23
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10.05
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FAILURE
TO SATISFY CONDITIONS
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23
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11.00
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CONFIDENTIALITY
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23
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11.01
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OBLIGATION
TO MAINTAIN INFORMATION CONFIDENTIAL
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23
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11.02
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CONSULTANTS
AND ADVISORS BOUND
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24
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12.00
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INDEMNITIES
FOR REPRESENTATIONS AND WARRANTIES
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24
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12.01
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VENDOR’S
INDEMNITIES FOR REPRESENTATIONS AND WARRANTIES
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24
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12.02
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PURCHASER’S
INDEMNITIES FOR REPRESENTATIONS AND WARRANTIES
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24
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12.03
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TIME
LIMITATION
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24
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13.00
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PURCHASER’S
INDEMNITIES
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24
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13.01
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PURCHASER
GENERAL INDEMNITY
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24
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13.02
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VENDOR
GENERAL INDEMNITY
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25
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13.03
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ENVIRONMENTAL
INDEMNITY
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25
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13.04
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NO
MERGER OF LEGAL RESPONSIBILITIES
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26
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14.00
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WAIVER
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26
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14.01
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WAIVER
MUST BE IN WRITING
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26
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15.00
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ASSIGNMENT
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27
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15.01
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ASSIGNMENTS
BEFORE CLOSING
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27
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16.00
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NOTICE
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27
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16.01
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SERVICE
OF NOTICE
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27
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16.02
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ADDRESSES
FOR NOTICES
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27
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16.03
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RIGHT
TO CHANGE ADDRESS
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28
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17.00
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POST
CLOSING ADMINISTRATION
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28
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17.01
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REGISTRATION
OF DOCUMENTS
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28
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17.02
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COORDINATION
OF ADMINISTRATIVE MATTERS
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28
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17.03
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VENDORS’
ACCESS TO DOCUMENTS
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29
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18.00
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MISCELLANEOUS
PROVISIONS
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29
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18.01
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FURTHER
ASSURANCES
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29
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18.02
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GOVERNING
LAW
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29
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18.03
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TIME
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29
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18.04
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NO
AMENDMENT EXCEPT IN WRITING
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29
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18.05
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CONSEQUENCES
OF TERMINATION
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29
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18.06
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SUPERSEDES
EARLIER AGREEMENTS
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30
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18.07
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ENUREMENT
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30
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SCHEDULES
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Schedule
“A”:
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Schedule
“A”, which includes: Part I - Lands, Leases and Encumbrances (including
preferential purchase rights and penalties); Part II –
Production Sales Contracts; Part III- Facilities; Gas Gathering
Lines,
Pipelines, Facility, Processing, Treating, Transportation and Contract
Operating Agreements; Part IV- Xxxxx; Part V- Authorizations
for Expenditure; Part VI- Areas of Mutual Interest; Part
VII-Default Notices, Claims, Lawsuits & Offset Drilling
Notices;
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Schedule
“B”:
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General
Conveyance for Canadian Assets
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Schedule
“C”:
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General
Conveyance for U.S. Assets
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Schedule
“D”:
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Specific
Conveyances for U.S. Assets
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AGREEMENT
OF PURCHASE AND SALE
THIS
AGREEMENT made this 28th
day of September,
2007.
BETWEEN:
THUNDER
RIVER ENERGY INC. (“Thunder”), a body corporate,
registered to carry on business in the Province of Alberta and CIMA
HOLDINGS INC. (“CIMA”), a New Mexico corporation (Thunder and CIMA
hereinafter collectively called the “Vendors”)
-
and
-
KODIAK
ENERGY, INC., a body corporate formed under the laws of Delaware and
having an office in the City of Calgary, in the Province of Alberta (hereinafter
called the “Purchaser”)
WHEREAS
the Vendors have agreed to sell the Assets to the Purchaser and the Purchaser
has agreed to purchase the Assets from the Vendors on the terms and conditions
set forth herein;
NOW
THEREFORE in consideration of the premises and the mutual covenants and
warranties herein contained, the Parties agree as follows:
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1.00
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INTERPRETATION
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1.01
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Definitions
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In
this
Agreement, including the recitals and the Schedules, the following terms
shall
have the respective meanings hereby assigned to them:
“Agreement”
means this document, together with the Schedules attached hereto and made
a part
hereof.
“Assets”
means Petroleum and Natural Gas Rights, the Tangibles and the Miscellaneous
Interests.
“Business
Day” means any day other than a Saturday, Sunday or a statutory holiday
in Alberta or New Mexico.
“Closing”
means the exchange of Conveyance Documents on the Closing Date,
the
delivery by the Purchaser to the Vendors of the Purchase Price, and the transfer
of the Assets by the Vendor to the Purchaser.
“CIMA
Assets” means the portion of the Assets located in the United States of
America.
“Closing
Date” means 7:00 a.m. on September 28, 2007, or such other time and
date as may be agreed to by the Parties.
“Conveyance
Documents” means, collectively, the documents which provide for the
assignment, transfer or other disposition of the Assets to the Purchaser
including those in Schedule “B” and “C”.
“Effective
Time” means 4:00 p.m. (Calgary time) on July 11, 2007.
“EL-413” means
exploration licence 413 issued under the Law of Canada.
“Facilities”
means the facilities set forth in Part IV of Schedule “A”.
“GST”
means tax payable pursuant to the Excise Tax Act (Canada) and in
accordance with Subclause 2.03 hereof.
“Lands”
means the lands set forth and described in Schedule ”A”, insofar as rights
to the Petroleum Substances underlying those lands are granted by the
Leases.
“Leases”
means the leases, licences, permits, reservations, interests and other documents
of title set forth and described in Schedule “A”, by virtue of which the holder
thereof is entitled to explore for, drill for, win, take, own or remove
Petroleum Substances within, upon or under the Lands or by virtue of which
the
holder thereof is deemed to be entitled to a share of Petroleum Substances
removed from the Lands or share in the proceeds generated by, or to receive
payments calculated by reference to the quantity or value of such production,
and includes, if applicable, all renewals, extensions of and amendments to
such
documents and all documents issued in substitution therefor.
“Miscellaneous
Interests” means the Vendors’ entire right, title and interest in and
to all property, assets and rights, other than the Petroleum and Natural
Gas
Rights and the Tangibles, to the extent such property, assets and rights
pertain
to the Petroleum and Natural Gas Rights or the Tangibles, or any rights relating
thereto, including, without restricting the generality of the foregoing,
the
Vendors’ entire interest in:
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(a)
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the
Title and Operating Documents;
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(b)
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the
Surface Rights;
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(c)
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the
wellbores and casing of all Xxxxx;
and
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(d)
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copies
of the geological, engineering, seismic, Facilities records and
other
records, files, reports data, correspondence and documents that
relate
directly to the Assets.
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“Parties” means
the parties to this Agreement, and “Party” means the Purchaser
or one of the Vendors.
“Permitted
Encumbrances” means:
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(a)
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any
rents, royalties, production payments, net carried interests, net
profit
interests, reduction in interests, or other similar interests,
rights,
encumbrances, burdens or obligations described in Schedule ”A”
;
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(b)
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any
preferential rights of purchase, right of first refusal or any
similar
restriction applicable to any of the Assets, as identified in
Schedule ”A”;
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(c)
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the
terms and conditions of the Leases, including, without limitation,
the
requirement to pay any rentals or royalties to the grantor thereof
to
maintain the Leases in good
standing;
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(d)
|
the
right reserved to or vested in any grantor, government or other
public
authority by the term of any Lease or by the Regulations to terminate
any
Lease;
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-
2 -
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(e)
|
easements,
rights of way, servitudes or other similar rights in land, including,
without in any way limiting the generality of the foregoing, rights
of way
and servitudes for highways, railways, sewers, drains, gas and
oil
pipelines, gas and water mains, electric light, power, telephone
or cable
television conduits, poles, wires or
cables;
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(f)
|
rights
of general application reserved to or vested in any governmental
authority
to levy taxes on Petroleum Substances or the income or revenue
therefrom
and governmental restrictions on production rates from the Xxxxx
or on
operations being conducted on the Lands or otherwise affecting
the value
of any of the Assets;
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(g)
|
agreements
for the sale of Petroleum Substances, which are terminable on thirty
(30)
days' notice or less (without an early termination penalty or other
cost)
or which are set forth in
Schedule ”A”;
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(h)
|
the
Regulations and any 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;
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(i)
|
undetermined
or inchoate liens incurred or created as security in favour of
any person
with respect to the development or operation of any of the Assets,
as
regards a Vendor's share of the costs and expenses thereof, which
costs
and expenses are not due or delinquent as of the Closing
Date;
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(j)
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the
reservations, limitations, provisos and conditions in any grants
or
transfers from the Crown, United States government or State of
New Mexico
of any of the Lands or interests therein, and statutory exceptions
to
title;
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(k)
|
the
terms and conditions of all agreements which relate to the Assets,
including but not limited to earning, ownership, operating, pooling
and
unitization agreements (other than those described in paragraph
(b)
above), except to the extent the foregoing create any Security
Interests,
burden, royalty, production payment, net carried interest, liens,
charges,
net profits interest or other similar interest, right, encumbrance,
obligation or liability which is not otherwise described in
Schedule ”A” or elsewhere in this
definition;
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(l)
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the
agreements identified in Schedule ”A” respecting the processing,
treating or transmission of Petroleum Substances or the operation
of Xxxxx
by contract field operators;
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(m)
|
penalties
which are disclosed in Schedule ”A” and which have arisen under
operating procedures or similar agreements as a consequence of
elections
by either or the Vendors not to participate in operations on the
Lands to
which the penalty applies;
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(n)
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liens
granted in the ordinary course of business to a public utility,
municipality or governmental authority with respect to operations
pertaining to any of the Assets;
and
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(o)
|
mechanics',
builders' or materialman's liens in respect of services rendered
or goods
supplied, but only insofar as such liens relate to goods or services
for
which payment is not due, or the validity of which is being diligently
contested by or on behalf of either of the
Vendor.
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-
3 -
“Petroleum
and Natural Gas Rights” means the entire right, title and interest of
the Vendors described in Schedule ”A” in respect of the Leases to the
extent that they apply to the Lands, including any existing contractual right
of
either of the Vendors to earn an interest under a farm-in or similar
arrangement, and any overriding royalty or net profits interests accruing
to
either of the Vendors;
“Petroleum
Substances” means petroleum, natural gas and related hydrocarbons,
sulphur, CO2,
coalbed natural gas and every other mineral or substance, or any of them,
whether gaseous, liquid or solid and whether hydrocarbons or not and includes
helium;
“Prepaid
Gas Obligations” means, with respect to production, sale or related
contracts pertaining to the Petroleum and Natural Gas Rights, the obligations
of
the Vendors under “take or pay” and similar provisions either to repay payments
made by the purchasers thereunder for Petroleum Substances not taken by them
or
to deliver such gas or substances to such purchasers without full payment
therefor.
“Purchase
Price” means the amount payable by the Purchaser to the Vendors
pursuant to Clause 2.02 as modified by the adjustments and reductions
provided for herein.
“Prime
Rate” means the per annum rate designated as the prime rate for
Canadian dollar commercial loans by the main Calgary branch of the Royal
Bank of
Canada, with any change to that rate being effective under this Agreement
on the
same day as it is made effective by the Royal Bank of Canada.
“Regulations”
means all statutes, laws, rules, orders and regulations in effect from time
to
time and made by governments or governmental boards or agencies having
jurisdiction over the Assets or any part thereof.
“Security
Interests” means any assignment, security, general security agreement,
deed of trust, debenture, land charge, mortgage, charge, pledge, negative
pledge, lien or other security interest whatsoever or howsoever created,
which
encumbers the title of either of the Vendors in and to any or all of the
Assets
or the proceeds to be received under this Agreement.
“Specific
Conveyances” means all conveyances, assignments, transfers, novations,
trust agreements and other documents and instruments that are reasonably
required or desirable to convey, assign and transfer the Assets to the Purchaser
and to novate the Purchaser in the place and stead of the Vendors with respect
to the Assets;
“Surface
Rights” means all rights to enter upon, use and occupy the surface of
the Lands or any lands with which the Lands have been pooled or unitized
or any
lands upon which any Tangibles are located or of any lands to be crossed
in
order to gain access to any of the Lands or the Tangibles;
“Tangibles”
means the Vendors’ entire right, title and interest, whether leased or
owned, in and to all tangible depreciable property and assets that
are:
|
(a)
|
the
Facilities;
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(b)
|
all
gas gathering lines and oil flow lines related to any of the
Xxxxx;
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(c)
|
located
in, on or about the Lands used or intended for use, in connection
with the
exploration, development, injection, production, processing, gathering,
storage, treatment, transportation of the Petroleum Substances
produced
from the Petroleum and Natural Gas Rights and the Lands or the
operations
thereon or relative thereto, including, without limitation, well
equipment, if any, relating to the
Xxxxx;
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-
4 -
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(d)
|
all
field inventory used or intended to be used in connection with
the assets
in existence as at the Effective Date which is not otherwise consumed
by
the Vendors in the ordinary course of operating the Assets;
and
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(e)
|
any
additional items, whether located on or off the Lands, that are
indicated
in Schedule “A” to be specifically included as
Tangibles.
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“Thunder
Assets” means the portion of the Assets located in Canada.
“Title
and Operating Documents” means, to the extent directly related to the
Petroleum and Natural Gas Rights and the Tangibles, or either of
them:
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(a)
|
the
Leases;
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(b)
|
agreements
affecting the Vendors’ interests in the Petroleum and Natural Gas Rights,
including, without limitation, operating agreements, royalty agreements,
farm-out or farm-in agreements, option agreements, participation
agreements, pooling agreements, sale and purchase agreements and
asset
exchange agreements;
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(c)
|
agreements
pertaining to the Surface Rights;
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(d)
|
agreements
for the construction, ownership and operation of gas plants, gas
gathering
systems and other Tangibles;
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(e)
|
service
agreements for the treating, gathering, storage, transportation
or
processing of Petroleum Substances or other third party Petroleum
Substances, the injection or subsurface disposal of substances,
the use of
wellbores or the operation of any Xxxxx or Tangibles by a third
party;
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(f)
|
any
approvals, authorizations or licenses required under the Regulations
for
the conduct of operations with respect to the Assets, including,
without
limitation, well and pipeline licences;
and
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(g)
|
all
other documents that relate to the ownership, operation or exploitation
of
the Petroleum Substances or
Tangibles.
|
“Title
Defect” means a defect, deficiency or discrepancy in or affecting the
title of the Vendors in and to any of the Assets, other than specifically
disclosed herein or in Schedule ”A”, which is sufficiently material and
adverse to the enforcement of title that it would not be acceptable to a
prudent
purchaser buying similar oil and gas properties, acting reasonably and excluding
Permitted Encumbrances.
“Xxxxx”
means all producing, shut-in, water source, disposal, injection, suspended
and
similar xxxxx located upon or having bottom hole coordinates lying under
the
Lands or otherwise directly relating to Vendor’s operations and to the Petroleum
Substances thereto which are set forth in Schedule ”A”.
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1.02
|
Schedules
|
The
following Schedules are attached hereto and made part of this
Agreement:
-
5 -
|
|
(a)
|
Schedule ”A”,
which includes: Part I - Lands, Leases and Encumbrances ( including
preferential purchase rights and penalties); Part II –
Production Sales Contracts; Part III- Facilities; Gas Gathering
Lines, Pipelines, Facility, Processing, Treating, Transportation
and
Contract Operating Agreements; Part IV- Xxxxx; Part
V- Authorizations for Expenditure; Part VI- Areas of
Mutual Interest; Part VII-Default Notices, Claims, Lawsuits & Offset
Drilling Notices;
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(b)
|
Schedule ”B”,
which is the form of general conveyance;
and
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(c)
|
Schedule
“C”, which are the conveyances for CIMA
Assets.
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1.03
|
References
|
The
references “hereunder”, “herein” and “hereof” refer to the provisions of this
Agreement, and references to Articles, Clauses, Subclauses, Paragraphs or
Subparagraphs herein refer to Articles, Clauses, Subclauses, Paragraphs or
Subparagraphs of this Agreement. Any reference to time shall refer to
the time in Xxxxxxx, Xxxxxxx, Xxxxxx during the respective intervals in which
each is in force.
|
1.04
|
Headings
|
The
headings of the Articles, Clauses, Subclauses, Schedules and any other headings,
captions or indices herein are inserted for convenience of reference only
and
shall not be used in any way in construing or interpreting any provision
hereof.
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1.05
|
Singular/Plural
|
Whenever
the singular or masculine or neuter is used in this Agreement or in the
Schedules, it shall be interpreted as meaning the plural or feminine or body
politic or corporate, and vice versa, as the context requires.
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1.06
|
Use
Of Funds
|
All
references to “dollars” or “$” herein shall refer to lawful currency of the
United Sates of America.
|
1.07
|
Derivatives
|
Where
a
term is defined herein, a capitalized derivative of such term shall have
a
corresponding meaning unless the context otherwise requires.
|
1.08
|
Interpretation
If Closing Does Not
Occur
|
In
the
event that Closing does not occur, each provision of this Agreement which
presumes that the Purchaser has acquired the Assets hereunder shall be construed
as having been contingent upon Closing having occurred.
|
1.09
|
Conflicts
|
If
there
is any conflict or inconsistency between a provision of the body of this
Agreement and that of a Schedule or a Conveyance Document, the provision
of the
body of this Agreement shall prevail. If any term or condition of
this Agreement conflicts with a term or condition of a Lease or the Regulations,
the term or condition of such Lease or the Regulations shall prevail, and
this
Agreement shall be deemed to be amended to the extent required to eliminate
any
such conflict.
-
6 -
|
1.10
|
Responsibility
Extends to Legal Costs
|
References
to costs in the liability and indemnification obligations prescribed in this
Agreement shall be deemed to include reasonable legal costs on a solicitor
and
his own client basis or attorney costs.
|
1.11
|
Knowledge
or Awareness
|
Where
a
representation or warranty in this Agreement is made on the basis of the
knowledge or awareness of a Vendor, such knowledge or awareness consists
of the
actual knowledge or awareness of the current officers and supervisory employees
of that Vendor which are primarily responsible for the matters in question
in
the course of their normal duties.
|
2.00
|
PURCHASE
AND SALE
|
|
2.01
|
Agreement
of Purchase and Sale
|
The
Purchaser agrees to purchase the Assets from the Vendors and the Vendors
agree
to sell the Assets to the Purchaser on the terms and conditions set forth
herein.
|
|
(a)
|
The
Purchase Price payable for the Assets is up to Twenty-Seven Million
Dollars ($27,000,000.00).
|
|
|
(b)
|
In
determining the Purchase Price, the Parties have taken into account
the
Purchaser's assumption of responsibility, if any, for any future
plugging,
abandonment and reclamation costs associated with the Assets, as
set forth
in this Agreement and the Vendors’ release of responsibility
therefor.
|
|
2.02
|
Payment
of Purchase Price
|
The
Purchase Price shall be paid as follows:
|
|
(a)
|
by
payment of a $100,000 deposit (receipt whereof is hereby acknowledged
by
the Vendors);
|
|
|
(b)
|
by
payment of $900,000 by way of bank draft or certified cheque to
Thunder
and the issuance of Seven Million (7,000,000) shares of the Purchaser
to
Thunder on Closing;
|
|
|
(c)
|
by
way of the issuance by the Purchaser of shares from treasury as
follows:
|
|
|
(i)
|
2
million shares on the earlier of June 30, 2008 and the date of
completion
of the Purchasers seismic program on
EL-413;
|
|
|
(ii)
|
1
million further shares on the earlier of March 30, 2009 and date
of the
spudding of a well on EL-413 with a proposed total depth of 1,500
meters;
|
|
|
(iii)
|
1.5
million further shares on the spudding of a well on EL-413 with
a proposed
total depth of 2,500 meters or greater;
and
|
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7 -
|
|
(iv)
|
1.5
million further shares within ten (10) Business Days of the conversion
of
any part of EL-413 to a Significant Discovery
License.
|
It
is
acknowledged that the actions described in (ii), (iii) or (iv) above will
only
occur if the Purchaser is satisfied that the actions are justified and should
be
undertaken. Therefore it is agreed that if those actions are not
taken the Purchaser shall reconvey EL-413 to Thunder provided that:
|
|
(v)
|
the
Purchaser shall have earned an undivided 6.25% working interest
in 200,000
acres of EL-413 if it satisfies (c)(i) above,
or
|
|
|
(vi)
|
the
Purchaser shall have earned an additional undivided 12.50% working
interest in 200,000 acres of EL-413 if it satisfies (c)(ii) above,
or
|
|
|
(vii)
|
the
Purchaser shall have earned an additional undivided 25.00% working
interest in 200,000 acres of EL-413 if it satisfies (c)(iii)
above.
|
If
all of
the actions described in (c) above are satisfied then the Purchaser shall
issue
at least 100,000 further shares to Thunder if an engineering report prepared
in
accordance with industry standards from a qualified, experienced professional
engineering firm shows that there are at least 100 million barrels of possible
commercial reserves of Petroleum Substances in place under EL-413. If
such reports shows there are more than 100 million barrels of possible
commercial reserves of Petroleum Substances in place under EL-413 then the
Purchaser shall make a further payment of up to a maximum of Four Million
Nine
Hundred Thousand (4,900,000) shares with the Vendors being issued 100,000
shares
for each 10 million barrels of possible commercial reserves of Petroleum
Substances in place under EL-413. For the purpose of all calculations
in this Aricle 2.00 each share of the Purchaser issued as part of the Purchase
Price shall have a deemed value of $2.00. The class of shares issued
shall be that class of shares of the Purchaser which are trading.
|
2.03
|
GST
|
The
Purchaser shall remit to Thunder at Closing the six percent (6%) GST applicable
to that portion of the Purchase Price allocated to the Tangibles forming
part of
the Thunder Assets in accordance with the Excise Tax Act
(Canada). The Vendor undertakes to remit the GST to the appropriate
governmental authority in accordance with the Excise Tax Act
(Canada).
The
Parties acknowledge and agree that seismic being purchased by the Purchaer
has
been valued at $416,000.00, and GST is payable thereon.
|
2.04
|
DEPOSIT
|
If
the
transactions described in this Agreement do not close for any reason other
then
a default by the Purchaser then the deposit and any interest earned thereon
shall be promptly returned to the Purchaser. Otherwise if the
transactions do not close the deposit and any interest earned thereon shall
be
forfeited to the Vendors as liquidated damages.
|
3.00
|
CLOSING
|
|
3.01
|
Place
of Closing
|
Unless
otherwise agreed in writing by the Parties, Closing shall take place at the
offices of the Purchaser on the Closing Date.
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8 -
|
3.02
|
Required
Approvals
|
In
accordance with Clause 10.01,
it is a condition precedent to Closing that any and all approvals and consents
required under the Regulations shall have been obtained or that such approval
or
consent shall have been waived in writing or otherwise lapsed or, as agreed
in
writing between the Parties, shall be obtained subsequent to
Closing.
|
3.03
|
Specific
Conveyances
|
|
|
(a)
|
The
Vendors and the Purchaser shall cooperate in the preparation of
the
Specific Conveyances so that all Specific Conveyances can be executed
and
delivered at Closing.
|
|
|
(b)
|
The
costs of preparation of the Specific Conveyances, are to be borne
by the
Vendors and the costs of registration, filing and/or recording
of the
Specific Conveyances are to be borne by the
Purchaser.
|
|
4.00
|
ADJUSTMENTS
|
|
4.01
|
Benefits
and Obligations to be
Apportioned
|
|
|
(a)
|
All
benefits and obligations of any kind and nature accruing, payable,
paid,
received or receivable with respect to the Assets (including, without
limitation, maintenance, development, capital and operating costs,
advances, payments with respect to the Permitted Encumbrances,
proceeds
from the sale of production, accounts receivable and incentives
accruing
pursuant to the Regulations) shall be apportioned, as of the Effective
Time, between the Vendors and the Purchaser in accordance with
generally
accepted accounting principles, subject to the provisions of this
Agreement. All such benefits and obligations which relate to
any matter or time period occurring before the Effective Time shall
be for
the Vendors’ account and all those benefits and obligations which relate
to any matter or time period occurring after the Effective Time
shall be
for the Purchaser's account. All costs of whatever nature
pertaining to work performed or goods or services provided with
respect to
the Assets prior to the Effective Time shall be borne by the Vendors,
notwithstanding that such costs may be payable in whole or in part
after
the Effective Time.
|
|
|
(b)
|
All
rentals and all similar payments required to preserve any of the
Leases
and all taxes (other than income taxes and taxes based on the volume
of
the production of Petroleum Substances) levied with respect to
the Assets
shall be apportioned between the Vendors and the Purchaser on a
per diem
basis as of the Effective Time, unless and to the extent that such
apportionment in favour of the Vendors is waived by the
Vendors.
|
|
|
(c)
|
Petroleum
Substances which were produced, but not sold, as of the Effective
Time
shall be credited to the Vendors.
|
|
4.02
|
Adjustments
to Accounts
|
|
|
(a)
|
An
interim accounting and adjustment will be conducted for Closing,
based on
the Vendors’ good faith estimate of all adjustments to be made for the
transactions herein pursuant to this Article. Such interim
accounting and adjustment shall be delivered to the Purchaser for
its
review and comment at least two (2) Business Days prior to Closing,
together with all applicable back-up information related
thereto. A final accounting and adjustment (“Final
Statement”) shall be conducted within ninety (90) days of the
Closing Date. Subject to Subclauses (b) and (c) of this
Clause, the Parties shall not be obligated to make any adjustments
after
such ninety (90) day period (excluding any amount owing to a Party
by the
other Party pursuant to a Final Statement) unless such adjustment
has been
specifically requested, by notice, within such period. All
adjustments shall be settled by payment by the Party required to
make
payment hereunder within thirty (30) days of being notified of
the
determination of the amount owing.
|
-
9 -
|
|
(b)
|
The
Purchaser may audit the books, records and accounts of the Vendors
respecting the Assets for the purpose of effecting adjustments
pursuant to
this Article. Such audit shall be conducted upon reasonable
notice to the Vendors at the Vendors’ offices during the Vendors’ normal
business hours, and shall be conducted at the sole expense of the
Purchaser. Any claims of discrepancies disclosed by such audit
which relate to the Final Statement shall be made in writing to
the
Vendors within two (2) months following the receipt by
Purchaser of the Final Statement, and the Vendors shall respond
in writing
to any claims of discrepancies within two (2) months of the receipt
of
such claims. To the extent that the Parties are unable to
resolve any outstanding claims of discrepancies disclosed by such
audit
within two (2) months of the Vendors’ response thereto, such audit
exceptions shall be resolved pursuant to
Article 9.00.
|
|
|
(c)
|
Notwithstanding
the preceding Subclauses of this Clause, any adjustments resulting
from
joint venture audits, Crown, New Mexico or United States Federal
or other
royalty audits or Crown, New Mexico or United States Federal royalty
invoices relating to the Assets and established by an audit conducted
pursuant to the Regulations, the Leases or any joint venture or
other
agreements to which the Assets are subject shall be made within
the period
set out in the applicable audit provisions, with payment being
made by the
Party required to make payment hereunder in accordance with the
Effective
Time within thirty (30) days of being notified of the determination
of the
amount owing.
|
|
|
(d)
|
Any
amount owing to a Party by the other Party pursuant to any provision
of
this Agreement after Closing and remaining unpaid shall bear compound
interest, as computed monthly, from the day such amount is due
to be paid
until the day such amount was paid, at the Prime Rate plus 2% per
annum,
regardless of whether such Party has given the other Party prior
notice of
the accrual of interest hereunder.
|
|
5.00
|
INTERIM
PROVISIONS
|
|
5.01
|
Assets
to be Maintained in Proper
Manner
|
Prior
to
Closing, the Assets shall be and remain at the risk of the Vendors in respect
of
any material damage or destruction to the Assets. For purposes of
this provision, the phrase “damage or destruction” shall not include the effect
of any change of pricing of Petroleum Substances produced or the effect of
changes to any of the items described in Section 6.05(a), (b) and
(d). Legal title, ownership and possession of the Assets shall not
pass to the Purchaser until Closing.
|
5.02
|
Vendor
as Agent
|
If
Closing occurs, insofar as the Vendors maintain the Assets and take actions
with
respect thereto on behalf of the Purchaser in accordance with this
Article 5.00, at Closing the Vendors shall be deemed to have been the agent
of the Purchaser hereunder. The Purchaser ratifies all actions which
the Vendors took or refrained from taking in accordance with the terms of
this
Article 5.00, with the intention that all such actions shall be those of
the Purchaser.
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10 -
|
5.03
|
Restrictions
on Conduct of Business
|
Prior
to
Closing, the Vendors shall not, without the prior written consent of the
Purchaser:
|
|
(a)
|
voluntarily
assume any new obligation or new commitment with respect to the
Assets,
where the Vendors’ share of the expenditure associated with such
obligation or commitment is estimated to exceed One Thousand Dollars
($1,000.00);
|
|
|
(b)
|
surrender
or abandon any of the Assets;
|
|
|
(c)
|
amend
or terminate any agreement or enter into any new agreement respecting
the
Assets;
|
|
|
(d)
|
propose
any operation with respect to the Assets or initiate the exercise
of any
right arising as a result of the ownership of the
Assets;
|
|
|
(e)
|
sell,
transfer or otherwise dispose of the Assets, or any of them, except
as may
be required by the Vendors to comply with its obligations respecting
any
preferential rights, as provided in Clause 7.01;
or
|
|
|
(f)
|
grant
a Security Interest or any encumbrance with respect to any of the
Assets.
|
However,
the Vendors may assume such obligations or commitments and propose or initiate
such operations or exercise any such right or option without the prior consent
of the Purchaser, if the Vendors reasonably determine that such expenditures
or
actions are necessary for the protection of life or property, in which case
the
Vendors shall promptly notify the Purchaser of such intention or actions
and the
Vendors’ estimate of the costs and expenses associated therewith.
|
5.04
|
Obligations
of the Purchaser
|
Subject
to Clause 5.03,
if an operation or the exercise of any right or option respecting the Assets
is
proposed in circumstances in which such operation or the exercise of such
right
or option would result in an obligation of the Purchaser, the following
Paragraphs shall apply to such operation or the exercise of such right or
option
(hereinafter referred to as the “Proposal”):
|
|
(a)
|
the
Vendors shall promptly give notice of the Proposal to the Purchaser,
including with such notice the particulars of such Proposal in
reasonable
detail;
|
|
|
(b)
|
the
Purchaser shall, not later than twenty-four (24) hours prior to the
time the Vendors are required to make an election with respect
to the
Proposal, advise the Vendors, by notice, whether it wishes the
Vendors to
exercise its rights with respect to the Proposal on behalf of the
Purchaser, provided that failure of the Purchaser to make such
election
within such period shall be deemed to be an election by the Purchaser
to
participate in the Proposal;
|
|
|
(c)
|
the
Vendors shall make the election authorized by the Purchaser with
respect
to the Proposal within the period during which the Vendors may
respond to
the Proposal; and
|
-
11 -
the
election by the Purchaser not to participate in any Proposal required to
preserve the existence of any of the Assets shall not entitle the Purchaser
to
any reduction of the Purchase Price in the event that the Vendors’ interest
therein is terminated as a result of such election, and such termination
shall
not constitute a failure of the Vendors’ representations and warranties
pertaining to such Assets.
|
6.00
|
REPRESENTATIONS
AND WARRANTIES OF
PARTIES
|
|
6.01
|
Thunder's
Representations and
Warranties
|
Thunder
represents and warrants to the Purchaser that:
|
|
(a)
|
Standing: Thunder
is a corporation, duly organized, valid and subsisting, and authorized
to
carry on business in the Province of Alberta and the Northwest
Territories;
|
|
|
(b)
|
Requisite
Authority: Thunder has the requisite capacity, power and authority to
execute this Agreement and the Conveyance Documents and to perform
the
obligations to which it thereby becomes
subject;
|
|
|
(c)
|
No
Conflict: The execution and delivery of this Agreement and the
completion of the sale of the Assets in accordance with the terms
of this
Agreement are not and will not be in violation or breach of, or
be in
conflict with:
|
|
|
(i)
|
any
term or provision of the constating or other governing documents
of
Thunder;
|
|
|
(ii)
|
any
agreement, instrument, permit or authority to which Thunder is
a party or
by which Thunder is bound; or
|
|
|
(iii)
|
the
Regulations or any judicial order, award, judgement or decree applicable
to Thunder or the Assets;
|
|
|
(d)
|
Execution
and Enforceability: Thunder has taken all actions necessary to
authorize the execution and delivery of this Agreement, and, as
of the
Closing Date, Thunder shall have taken all actions necessary to
authorize
and complete the sale of the Assets in accordance with the provisions
of
this Agreement. This Agreement has been validly executed and
delivered by Thunder, and this Agreement and all other documents
executed
and delivered on behalf of Thunder hereunder shall constitute legal,
valid
and binding obligations of Thunder enforceable in accordance with
their
respective terms and conditions;
|
|
|
(e)
|
Residency
for Tax Purposes: Thunder is not a non-resident of Canada within the
meaning of the Income Tax Act
(Canada);
|
|
|
(f)
|
No
Finders' Fees: The Purchaser shall not have any responsibility for any
obligation or liability, contingent or otherwise, for brokers'
or finders'
fees, if any, incurred by Thunder with respect to the transactions
herein;
|
|
|
(g)
|
Lawsuits
and Claims: Except as specifically identified in Schedule ”A”,
there are no unsatisfied judgements, claims, proceedings, actions,
governmental investigations or lawsuits in existence, or to the
best of
the knowledge of Thunder, contemplated or threatened against or
with
respect to the Assets, and there exists no particular circumstance
which
Thunder reasonably believes will give rise to such a claim, proceeding,
action, governmental investigation or lawsuit and no matter described
in
Schedule “A” will affect title to the Assets or the Purchaser’s enjoyment
thereof;
|
-
12 -
|
|
(h)
|
Compliance
with Leases and Agreements: No act or omission has occurred whereby
Thunder is, or would be, in default under the terms of the Regulations,
any Lease or any agreement pertaining to the Thunder Assets, where
such a
default would impact materially and adversely upon the Assets,
or any of
them and to the best of the knowledge of Thunder, no third party
is in
default under the terms of any Lease of any agreement pertaining
to the
Thunder Assets, where such a default would impact materially and
adversely
upon the Thunder Assets;
|
|
|
(i)
|
No
Default Notices: Thunder has not received any notice of
default under the Leases or any notice alleging its default under
any
agreement pertaining to any of the Assets, which default has not
been
rectified as of the date of this Agreement or to the best knowledge
of
Thunder, there exists no particular circumstance which Thunder
reasonably
believes will give rise to such a
notice;
|
|
|
(j)
|
Payment
of Royalties and Taxes: To the best of the knowledge of the
Vendor, all royalties and all ad valorem, property, production,
severance
and similar taxes and assessments based on, or measured by, its
ownership
of the Assets, the production of Petroleum Substances from the
Lands or
the receipt of proceeds therefrom that are payable by Thunder and
which
accrued prior to the Effective Time have been or will be properly
and
fully paid and discharged in the manner and at the time prescribed
by the
Leases and the Regulations;
|
|
|
(k)
|
Encumbrances:
Thunder does not warrant its title to the Thunder Assets, but does
warrant
that it’s interest in the Thunder Assets is free and clear of any and all
liens, Security Interests, mortgages, pledges, claims, options,
encumbrances, rights of first refusal, preferential rights, overriding
royalties, net profits interests or other similar interests or
burdens
created by, through or under Thunder or of which Thunder has knowledge,
other than the Permitted
Encumbrances;
|
|
|
(l)
|
Agreements: The
Agreements disclosed in Schedule A” comprise all agreements for the
sale of Petroleum Substances produced from the Thunder Assets not
terminable on 30 days without penalty, all gas balancing agreements
affecting the Thunder Assets, and all of the material agreements
described
in paragraphs (c), (d), (e) and (f) in the definition of “Title and
Operating Documents”;
|
|
|
(m)
|
Meeting
of Shareholders: The Special Meeting of Shareholders of Thunder at
which the sale of the Thunder Assets to the Purchaser was approved
was
properly called and properly held and all resolutions passed at
such
meeting were validly passed in accordance with applicable
law;
|
|
|
(n)
|
Sale
of Petroleum Substances: No purchaser or seller of Petroleum
Substances has refused to remit to the Vendor proceeds from the
sale
thereof and the Petroleum and Natural Gas Rights are not subject
to any
Prepaid Gas Obligations;
|
|
|
(o)
|
Environmental
Matters: Except as specifically identified in Schedule ”A”,
Thunder is not aware of:
|
-
13 -
|
|
(i)
|
and
has not received any orders or directives pursuant to the Regulations
which relate to environmental matters and which require any work,
repairs,
construction or capital expenditures with respect to the Assets,
where
such orders or directives have not been complied with in all material
respects or to the best knowledge of Thunder, there exists no particular
circumstance which Thunder reasonably believes will give rise to
any such
order, directive, demand or notice;
or
|
|
|
(ii)
|
and
has not received any demand or notice issued pursuant to the Regulations
with respect to any spill or the breach of any environmental, health
or
safety law applicable to any of the Assets, including, without
limitation,
any Regulations respecting the use, storage, treatment, transportation
or
disposition of environmental contaminants, which demand or notice
remains
outstanding as of the date hereof or to the best knowledge of Thunder,
there exists no particular circumstance which Thunder reasonably
believes
will give rise to any such order, directive, demand or
notice;
|
|
|
(p)
|
Authorized
Expenditures: Except for the usual operating expenses incurred in
normal operations, there are no outstanding authorizations for
expenditure
or outstanding financial commitments respecting the Thunder Assets,
pursuant to which expenditures are or may be required by the Purchaser
or
in respect of which any amount is outstanding, other than those
set forth
in Schedule ”A” or as may be authorized on behalf of the Purchaser in
accordance herewith;
|
|
|
(q)
|
Area
of Mutual Interest: None of the Lands are subject to an agreement
which provides for an area of mutual interest, except as specifically
identified in Schedule ”A”;
|
|
|
(r)
|
Assets
Comprise Substantially All of Vendor’s Assets: The Thunder Assets do
comprise all or substantially all of Thunder’s
assets;
|
|
|
(s)
|
Full
Access: Except as otherwise provided in this Agreement,
Thunder has made available to the Purchaser all material information
within its possession and control pertaining to or affecting the
Assets
(other than economic evaluations or other proprietary evaluations
to which
the Purchaser is not entitled access hereunder and other than trade
seismic, geological interpretations and financial records), insofar
as
such documents and information are known to Thunder, and it has
not
withheld from the Purchaser any material documents or information
reasonably required to make not misleading those documents and
information
made available by Thunder to the
Purchaser;
|
|
|
(t)
|
Investors: The
Vendors represent that each of them is a sophisticated investor
and has
the knowledge and intellectual skill to evaluate an investment
in the
Purchaser. Each of the Vendors represent that they were not
established for the purpose of obtaining an investment in the Purchaser
or
any similar company. The Vendors represent that they have sufficient
other
assets than the consideration securities to meet their operational
and
other ordinary expenses and do not need the value of the consideration
shares for any purpose now or in the future. The consideration
securities
to be acquired by each of the Vendors will be acquired for investment
for
such Vendor's own account and not with a view for the resale or
distribution of any part thereof. Each Vendor agrees that it
will not resell any of the securities received under this Agreement
except
in compliance with the United States and state securities laws,
including
pursuant to a registration under the Securities Act of 1933 or
pursuant to
an available exemption from registration and agrees not to engage
in
hedging transactions with regard to such securities unless in compliance
with the Securities Act. The Vendors agree that have not and will
not take
any action to have the consideration securities transferred into
bearer
form, regardless if the law of any state permits securities to
be held in
bearer form;
|
-
14 -
|
|
(u)
|
Legend: Each
of the Vendors understands that it will acquire securities under
this
Agreement that are characterized as "restricted securities" under
the
United States federal securities laws. It is understood that the
certificates evidencing the consideration securities may bear the
legend
set forth below in this section. The Vendors hereby consent to
the
inclusion of such legend on certificates of securities they receive
hereunder and for the placement of stop orders against the transfer
of
such securities, which may be enforced by the Company by instruction
to
its transfer agent or recourse to appropriate judicial authorities
to
prevent the registration of any transfer not in accordance with
the
provisions of this Agreement and the legend set forth
below:
|
"THE
SECURITIES REPRESENTED BY THIS CERTIFICATE HAVE NOT BEEN REGISTERED UNDER
THE
SECURITIES ACT OF 1933, AS AMENDED (THE "ACT"). THE SECURITIES REPRESENTED
HEREBY MAY NOT BE SOLD, TRANSFERRED, OR OTHERWISE DISPOSED OF IN THE ABSENCE
OF
AN EFFECTIVE REGISTRATION STATEMENT UNDER THE ACT OR AN OPINION OF COUNSEL,
REASONABLY ACCEPTABLE TO COUNSEL FOR THE COMPANY TO THE EFFECT THAT THE PROPOSED
SALE, TRANSFER, OR DISPOSITION MAY BE EFFECTUATED WITHOUT REGISTRATION UNDER
THE
ACT AND SUCH SALE, TRANSFER OR DISPOSITION IS IN COMPLIANCE WITH REGULATION
S
PROMULGATED UNDER THE ACT, TO THE EXTENT THEN APPLICABLE”; AND
|
|
(v)
|
Statements: No
representation or warranty by any Vendor contained in this Agreement
and
no information contained in any Schedule or other instrument furnished
or
to be furnished to the Purchaser pursuant to this Agreement or
in
connection with the transactions contemplated hereby contains or
will
contain any untrue statement of a material fact or omits or will
omit to
state a material fact necessary in order to make the statements
contained
therein not misleading.
|
|
6.02
|
CIMA’s
Representations and
Warranties
|
CIMA
represents and warrants to the Purchaser that:
|
|
(a)
|
Standing: CIMA
is a corporation, duly organized, valid and subsisting, and authorized
to
carry on business in the State of New
Mexico;
|
|
|
(b)
|
Requisite
Authority: CIMA has the requisite capacity, power and authority to
execute this Agreement and the Conveyance Documents and to perform
the
obligations to which it thereby becomes
subject;
|
|
|
(c)
|
No
Conflict: The execution and delivery of this Agreement and the
completion of the sale of the CIMA Assets in accordance with the
terms of
this Agreement are not and will not be in violation or breach of,
or be in
conflict with:
|
|
|
(i)
|
any
term or provision of the constating or other governing documents
of
CIMA;
|
-
15 -
|
|
(ii)
|
any
agreement, instrument, permit or authority to which CIMA is a party
or by
which CIMA is bound; or
|
|
|
(iii)
|
the
Regulations or any judicial order, award, judgement or decree applicable
to CIMA or the Assets;
|
|
|
(d)
|
Execution
and Enforceability: CIMA has taken all actions necessary to authorize
the execution and delivery of this Agreement, and, as of the Closing
Date,
CIMA shall have taken all actions necessary to authorize and complete
the
sale of the Assets in accordance with the provisions of this
Agreement. This Agreement has been validly executed and
delivered by CIMA, and this Agreement and all other documents executed
and
delivered on behalf of CIMA hereunder shall constitute legal, valid
and
binding obligations of CIMA enforceable in accordance with their
respective terms and conditions;
|
|
|
(e)
|
Residency
for Tax Purposes: CIMA is a resident of the United States of America
for tax purposes;
|
|
|
(f)
|
No
Finders' Fees: The Purchaser shall not have any responsibility for any
obligation or liability, contingent or otherwise, for brokers'
or finders'
fees, if any, incurred by CIMA with respect to the transactions
herein;
|
|
|
(g)
|
Lawsuits
and Claims: Except as specifically identified in Schedule ”A”,
there are no unsatisfied judgements, claims, proceedings, actions,
governmental investigations or lawsuits in existence, or to the
best of
the knowledge of CIMA, contemplated or threatened against or with
respect
to the CIMA Assets, and there exists no particular circumstance
which CIMA
reasonably believes will give rise to such a claim, proceeding,
action,
governmental investigation or
lawsuit;
|
|
|
(h)
|
Compliance
with Leases and Agreements: No act or omission has occurred whereby
CIMA is, or would be, in default under the terms of the Regulations,
any
Lease or any agreement pertaining to the CIMA Assets, where such
a default
would impact materially and adversely upon the CIMA Assets, or
any of them
and to the best of the knowledge of CIMA, no third party is in
default
under the terms of any Lease of any agreement pertaining to the
CIMA
Assets, where such a default would impact materially and adversely
upon
the CIMA Assets;
|
|
|
(i)
|
No
Default Notices: CIMA has not received any notice of
default under the Leases or any notice alleging its default under
any
agreement pertaining to any of the CIMA Assets, which default has
not been
rectified as of the date of this Agreement or to the best knowledge
of
CIMA, there exists no particular circumstance which the Vendor
reasonably
believes will give rise to such a
notice;
|
|
|
(j)
|
Payment
of Royalties and Taxes: To the best of the knowledge of
CIMA, all royalties and all ad valorem, property, production, severance
and similar taxes and assessments based on, or measured by, its
ownership
of the CIMA Assets, the production of Petroleum Substances from
the Lands
or the receipt of proceeds therefrom that are payable by CIMA and
which
accrued prior to the Effective Time have been or will be properly
and
fully paid and discharged in the manner and at the time prescribed
by the
Leases and the Regulations;
|
-
16 -
|
|
(k)
|
Encumbrances:
CIMA does not warrant its title to the CIMA Assets, but does warrant
that
it’s interest in the CIMA Assets is free and clear of any and all
liens,
Security Interests, mortgages, pledges, claims, options, encumbrances,
rights of first refusal, preferential rights, overriding royalties,
net
profits interests or other similar interests or burdens created
by,
through or under CIMA or of which CIMA has knowledge, other than
the
Permitted Encumbrances;
|
|
|
(l)
|
Agreements: The
Agreements disclosed in Schedule A” comprise all agreements for the
sale of Petroleum Substances produced from the CIMA Assets not
terminable
on 30 days without penalty, all gas balancing agreements affecting
the
CIMA Assets, and all of the material agreements described in paragraphs
(c), (d), (e) and (f) in the definition of “Title and Operating
Documents”;
|
|
|
(m)
|
Meeting
of Shareholders: The Meeting of Shareholders of CIMA at which the sale
of the CIMA Assets to the Purchaser was approved was properly called
and
properly held and all resolutions passed at such meeting were validly
passed in accordance with applicable
law.
|
|
|
(n)
|
Sale
of Petroleum Substances: No purchaser or seller of Petroleum
Substances has refused to remit to CIMA proceeds from the sale
thereof and
the Petroleum and Natural Gas Rights are not subject to any Prepaid
Gas
Obligations;
|
|
|
(o)
|
Environmental
Matters: Except as specifically identified in Schedule ”A”, CIMA
is not aware of:
|
|
|
(i)
|
and
has not received any orders or directives pursuant to the Regulations
which relate to environmental matters and which require any work,
repairs,
construction or capital expenditures with respect to the CIMA Assets,
where such orders or directives have not been complied with in
all
material respects or to the best knowledge of CIMA, there exists
no
particular circumstance which CIMA reasonably believes will give
rise to
any such order, directive, demand or notice;
or
|
|
|
(ii)
|
and
has not received any demand or notice issued pursuant to the Regulations
with respect to any spill or the breach of any environmental, health
or
safety law applicable to any of the CIMA Assets, including, without
limitation, any Regulations respecting the use, storage, treatment,
transportation or disposition of environmental contaminants, which
demand
or notice remains outstanding as of the date hereof or to the best
knowledge of CIMA, there exists no particular circumstance which
CIMA
reasonably believes will give rise to any such order, directive,
demand or
notice;
|
|
|
(p)
|
Authorized
Expenditures: Except for the usual operating expenses incurred in
normal operations, there are no outstanding authorizations for
expenditure
or outstanding financial commitments respecting the CIMA Assets,
pursuant
to which expenditures are or may be required by the Purchaser or
in
respect of which any amount is outstanding, other than those set
forth in
Schedule ”A” or as may be authorized on behalf of the Purchaser in
accordance herewith;
|
|
|
(q)
|
Area
of Mutual Interest: None of the Lands are subject to an agreement
which provides for an area of mutual interest, except as specifically
identified in Schedule ”A”;
|
-
17 -
|
|
(r)
|
CIMA
Assets Comprise Substantially All of CIMA’s Assets: The CIMA Assets do
comprise all or substantially all of CIMA’s CIMA
Assets;
|
|
|
(s)
|
Full
Access: Except as otherwise provided in this Agreement,
CIMA has made available to the Purchaser all material information
within
its possession and control pertaining to or affecting the CIMA
Assets
(other than economic evaluations or other proprietary evaluations
to which
the Purchaser is not entitled access hereunder and other than trade
seismic, geological interpretations and financial records), insofar
as
such documents and information are known to CIMA, and it has not
withheld
from the Purchaser any material documents or information reasonably
required to make not misleading those documents and information
made
available by CIMA to the Purchaser;
and
|
|
|
(t)
|
Burdens
on Production: No Lease is subject to royalty, overriding
royalty, production payments and other burdens on production to
an extent
greater than 17.5% and CIMA has not created, conveyed, assigned,
granted,
or transferred overriding royalty interests, production payments,
or other
burdens on production burdening any Lease, save and except the
following
which may pertain to one or more
Lease:
|
|
Grizzly
Land & Permit Service, Inc.
|
.5%
|
|
|
Canadian
Wildcat Corporation
|
1.0%
|
|
|
Xxxxxxx
Xxxxxxxx
|
2.0%
|
|
|
Xxxx
Xxxxxxx Xxxxxxxxxx
|
1.0%
|
|
|
Xxxxxx
Xxxxx
|
.5%
|
|
|
Total
|
5.0%
|
The
overriding royalty interests shall be subject to pooling for purposes of
forming
a standard proration or spacing unit fixed by law for the pool or area in
which
the land is situated, plus a tolerance of 10%. In addition, all
burdens shall be subject to proportionate reduction in the event Vendor’s
interest in a Lease is less than the entire leasehold estate or the Lease
covers
less than the entire oil and gas mineral estate.
|
6.03
|
Purchaser's
Representations and
Warranties
|
The
Purchaser represents and warrants to the Vendors that:
|
|
(a)
|
Standing:
The Purchaser is a corporation duly organized, valid and subsisting
under
the laws of its jurisdiction of
incorporation;
|
|
|
(b)
|
Requisite
Authority: The Purchaser has the requisite capacity, power and
authority to execute this Agreement and the Conveyance Documents
and to
perform the obligations to which it thereby becomes subject, and
delivery
and performance of this Agreement has been duly and validly authorized
by
any and all requisite corporate, shareholders’ and directors’ actions and
will not result in any violation of, be in conflict with or constitute
a
default under any articles, charter, bylaw or other governing document
to
which the Purchaser is bound;
|
|
|
(c)
|
No
Conflict: The execution and delivery of this Agreement and the
completion of the purchase of the Assets in accordance with the
terms of
this Agreement are not and will not be in violation or breach of,
or be in
conflict with the Regulations or any judicial order, award, judgement
or
decree applicable to the Purchaser;
|
-
18 -
|
|
(d)
|
Execution
and Enforceability: The Purchaser has taken all actions necessary to
authorize the execution and delivery of this Agreement and, as
of the
Closing Date, the Purchaser shall have taken all actions necessary
to
authorize and complete the purchase of the Assets in accordance
with the
provisions of this Agreement. This Agreement has been validly
executed and delivered by the Purchaser, and this Agreement and
all other
documents executed and delivered on behalf of the Purchaser hereunder
shall constitute valid and binding obligations of the Purchaser
enforceable in accordance with their respective terms and
conditions;
|
|
|
(e)
|
No
Sales Commission: The Purchaser has not incurred any obligation or
liability, contingent or otherwise, for brokers' or finders' fees
with
respect to the transactions herein for which the Vendors shall
have any
responsibility; and
|
|
|
(f)
|
Transfers
of Licences, Permits and Authorizations: The Purchaser is
not aware of anything that would prohibit the Purchaser from obtaining
or
holding any well licences, authorizations or other permits or licences
related to the Assets with the relevant governmental
authorities.
|
|
6.04
|
Survival
of Representations and
Warranties
|
Each
Party acknowledges that the other may rely on the representations and warranties
made by such Party pursuant to Clauses 6.01,
6.02
or 6.03,
as the case may be. The representations and warranties in to
Clauses 6.01,
6.02
or 6.03
shall be true at the time of Closing, and such representations and warranties
shall continue in full force and effect and shall survive the Closing for
a
period of two (2) years from the Closing, for the benefit of the Party for
which
such representations and warranties were made. In the absence of
fraud, however, no claim or action shall be commenced with respect to a breach
of any such representation or warranty, unless, within such period, written
notice specifying such breach in reasonable detail has been provided to the
Party which made such representation or warranty.
|
6.05
|
No
Additional Representations or Warranties by
Vendor
|
The
Vendors makes no representation or warranties to the Purchaser in addition
to
those expressly enumerated in Clauses 6.01 and 6.02. Except
and to the extent provided in Clauses 6.01 and 6.02,
the Vendors do not warrant title to the Assets or make representations or
warranties with respect to:
|
|
(a)
|
the
quantity, quality or recoverability of Petroleum Substances respecting
the
Lands;
|
|
|
(b)
|
any
estimates of the value of the Assets or the revenues applicable
to future
production from the Lands;
|
|
|
(c)
|
any
engineering, geological or other interpretations or economic evaluations
respecting the Assets;
|
|
|
(d)
|
the
rates of production of Petroleum Substances from the Lands;
or
|
|
|
(e)
|
any
environmental matters relating to the
Assets.
|
The
Purchaser acknowledges that it has made its own independent investigation,
analysis, evaluation, verification and inspection of the Vendors’ interests in
the Assets and the state and condition thereof and that it has relied solely
on
such investigation, analysis, evaluation, verification and inspection as
to its
assessment of the condition (environmental or otherwise), quantum and value
of
the Assets.
-
19 -
|
7.00
|
THIRD
PARTY RIGHTS AND
CONSENTS
|
|
7.01
|
Preferential
Rights Of Purchase and
Consents
|
|
|
(a)
|
If
any of the Assets are subject to a preferential right of purchase
or
similar restriction, or if the disposition herein requires the
consent of
any third party, the relevant Vendor shall promptly serve all notices
as
are required under such preferential purchase or consent
provision. Each such notice shall include a request for a
waiver of any preferential or similar right to purchase any of
the Assets
and for the granting of any consent that may be
required.
|
|
|
(b)
|
The
Purchaser, as soon as possible after signing this Agreement, acting
reasonably and in good faith, shall provide to the relevant Vendor
the
value placed by the Purchaser on any of the Assets with respect
to which
the such Vendor is required to specify a value in a notice served
pursuant
to this Clause. The Vendors shall not be obligated to use such
a value where, in their opinion, acting reasonably, the value is
unreasonable. If the Vendor makes such a determination, the
Vendors and Purchaser shall consult with each other with respect
to the
value to be included in the subject
notice.
|
|
|
(c)
|
If
the holder of any preferential right to purchase any of the Assets
exercises such right, the Purchaser may elect not to proceed with
the
transaction contemplated herein.
|
|
8.00
|
PURCHASER'S
INSPECTION OF ASSETS
|
|
8.01
|
Vendors
to Provide Access
|
|
|
(a)
|
The
Vendors shall, subject to the Regulations and all contractual and
fiduciary obligations and limits, at the Vendors’ office during normal
business hours, provide the Purchaser and its nominees reasonable
access
to the Vendors’ records, files and documents directly relating to the
Assets, for the purpose of the Purchaser's review of Vendor's title
thereto, including, without limitation, the Leases and applicable
operating agreements, unit agreements, overriding royalty agreements
and
production sale contracts; and
|
|
|
(b)
|
Prior
to signing this Agreement, Purchaser and its nominees acknowledge
they
have been provided by Vendors with a reasonable opportunity to
inspect the
field Assets at Purchaser's sole cost, risk and expense, insofar
as the
Vendors could reasonably provide access to such field
Assets.
|
|
9.00
|
ARBITRATION
|
|
9.01
|
Reference
to Arbitration
|
|
|
(a)
|
Insofar
as the Parties are unable to agree on any matter which expressly
may be
referred to arbitration hereunder, either Party may serve the other
Party
written notice that it wishes such matter referred to
arbitration.
|
-
20 -
|
|
(b)
|
The
Parties shall meet within seven (7) days of the receipt of a notice
issued
pursuant to Subclause 9.01(a), to attempt to agree on a single
arbitrator qualified by experience, education and training, to
determine
such matter. If the Parties are unable to agree on the
selection of the arbitrator, the Party which issued such notice
shall
forthwith make application to a judge of the Court of Queen's Bench
of the
Province of Alberta pursuant to the Arbitration Act of the Province
of
Alberta (“Arbitration Act”) for the appointment of a single arbitrator,
and failing such action on the part of the Party which issued such
notice,
the other Party may make such
application.
|
|
9.02
|
Proceedings
|
|
|
(a)
|
The
arbitrator selected pursuant to Clause 9.01(a) shall proceed as soon
as is practicable to hear and determine the matter in dispute,
and shall
be directed to provide a written decision respecting such matter
within
forty-five (45) days of appointment. The Parties shall provide
such assistance and information as may be reasonably necessary
to enable
the arbitrator to determine such
matter.
|
|
|
(b)
|
Except
to the extent modified in this Article, the arbitrator shall conduct
any
arbitration hereunder pursuant to the provisions of the Arbitration
Act.
|
|
10.00
|
CONDITIONS
TO CLOSING
|
|
10.01
|
Required
Consents
|
|
|
(a)
|
It
is a condition precedent to Closing for the benefit of both the
Vendors
and the Purchaser that any and all approvals required under the
Regulations and any and all consents of third parties required
pursuant to
Article 7.00 to permit the transactions to be completed shall have
been
obtained or that such approval or consent requirement shall have
been
waived in writing or otherwise lapsed. Each of the Parties
shall use all reasonable efforts to obtain any such
consents.
|
|
|
(b)
|
The
Parties shall co-operate in seeking, any approvals or consents
required
from regulatory or governmental authorities, including without
limitation,
well licences, facilities, pipelines, mineral licences, permits
or Leases
which are to be obtained after
Closing.
|
|
10.02
|
Conditions
for Benefit of
Purchaser
|
The
obligation of the Purchaser to complete the purchase hereunder is subject
to the
following conditions precedent:
|
|
(a)
|
No
Substantial Damage: There shall have been no damage to or
alteration of any of the Assets between the Effective Time and
the Closing
Date which, in the Purchaser's reasonable opinion, would materially
and
adversely affect the value of the Assets, except and to the extent
approved in writing by the Purchaser, provided that a change in
the prices
at which Petroleum Substances may be sold in no event shall be
regarded as
material damage to or an alteration of the
Assets;
|
|
|
(b)
|
Availability
of Documents: The Vendors shall have provided the nominees
of the Purchaser with reasonable access to the Vendors’ records and
documents pertaining to the Assets, in order to confirm the Vendors’ title
to the Assets;
|
-
21 -
|
|
(c)
|
Material
Compliance by Vendors: The Vendors shall have performed or
complied in all material respects with each of the terms, covenants
and
conditions of this Agreement to be performed or complied with by
the
Vendors at or prior to the Closing
Date;
|
|
|
(d)
|
Representations
are Correct: The representations and warranties of each of
the Vendors contained in Clauses 6.01 and 6.02
is true and correct in all material respects as of the Closing
Date;
|
|
|
(e)
|
Delivery
of Conveyance Documents: The Vendors shall have delivered
the following to the Purchaser:
|
|
|
(i)
|
conveyances,
in the forms attached as Schedule ”B” and “C”, which have been
executed by the Vendors;
|
|
|
(ii)
|
the
Specific Conveyances, all specific assignments, registerable transfers,
novation agreements, notices of assignment, trust agreements and
other
instruments required to convey the Vendors’ interest in the Assets to the
Purchaser, unless and to the extent that the Purchaser allows the
Vendors
to deliver such documents to the Purchaser at a later date, provided
that
such documents shall not require the Vendors to assume or incur
any
obligation, or to provide any representation or warranty, beyond
that
contained in this Agreement;
|
|
|
(iii)
|
copies
of all consents to disposition and waivers of preferential rights
of
purchase, rights of first refusal or any similar restriction obtained
by
the Vendors with respect to the sale of the Assets to the
Purchaser;
|
|
|
(iv)
|
originals
of the Vendors’ records (or, if unavailable, photocopies of records),
files, reports and data pertaining to the Assets, insofar as such
delivery
is permitted and required hereunder, unless and to the extent that
the
Purchaser agrees to allow the Vendors to deliver such records,
files,
reports and data at a later date;
and
|
|
|
(v)
|
such
other documents as may be specifically required hereunder or as
may be
reasonably requested by the Purchaser upon reasonable notice to
the
Vendors;
|
|
|
(f)
|
Title: Purchaser
shall have received opinions, satisfactory to it, as to the title
to the
Assets;
|
|
|
(g)
|
Royalties: CIMA
shall have rectified all filing and description errors in connection
with
any interest of any nature affecting the CIMA Assets to the satisfaction
of the Purchaser and at the sole cost of CIMA;
and
|
|
|
(h)
|
Legal
Opinion: Legal opinions shall have been provided to the
Purchaser, satisfactory to it and its solicitor, respecting the
enforceability of this Agreement and the General Conveyance against
Thunder and the validity of the Special Shareholder Meeting held
by
Thunder to approve the transaction described in this
Agreement.
|
|
10.03
|
Conditions
for Benefit of
Vendors
|
The
obligation of the Vendors to complete the sale hereunder is subject to the
following conditions precedent:
-
22 -
|
|
(a)
|
Material
Compliance by Purchaser: The Purchaser shall have performed or
complied in all material respects with each of the terms, covenants
and
conditions of this Agreement to be performed or complied with by
the
Purchaser at or prior to the Closing
Date;
|
|
|
(b)
|
Payment
of Purchase Price: The Purchaser shall have tendered to the Vendor the
Purchase Price and the applicable GST in the manner provided for
in
Clause Error!
Reference source not found., subject
to any adjustments
provided for in Article 4 and any alteration expressly provided for
herein;
|
|
|
(c)
|
Representations
are Correct: Each of the representations and warranties of the
Purchaser contained in Clause 6.03
is true and correct in all material respects as of the Closing
Date;
and
|
|
|
(d)
|
Delivery
of Documents: The Purchaser shall have executed and
delivered to the Vendors one copy of the conveyance in the form
attached
as Schedules ”B” and “C” and such other documents as may be
specifically required hereunder.
|
|
10.04
|
Waiver
of Conditions
|
The
conditions in Clauses 10.02 and 10.03 are for the sole benefit of the
Purchaser and the Vendors respectively. The Party for the benefit of
which such conditions have been included may waive any of them, in whole
or in
part, by written notice to the other Party, without prejudice to any of the
rights of the Party waiving such condition, including, without limitation,
reliance on or enforcement of the representations, warranties or covenants
which
are preserved and pertain to conditions similar to the condition so
waived. However, the Purchaser may not waive the existence and
operation of any preferential right of a third party to purchaser any of
the
Assets or, without the concurrence of the Vendors, any required consent of
a
third party to the Vendor’s disposition of any of the Assets.
|
10.05
|
Failure
to Satisfy Conditions
|
In
the
event any of the conditions in Clauses 10.02 or 10.03 have not been
satisfied at or before the Closing Date and such condition has not been waived
by the Party for the benefit of which such condition has been included, such
Party may terminate this Agreement by written notice to the other Party
specifying the reason for termination, provided that except as otherwise
provided in this Agreement, any such termination shall not affect any rights
or
claims such Party may have against any other Party for breach of such other
Party's representations or obligations under this Agreement. A Party
may not terminate this Agreement in such manner after Closing, and its remedies
thereafter, if any, with respect to the failure to satisfy such conditions
shall
be limited to damages. A termination under this provision does not
affect the rights of the Parties with respect to the deposit as provided
in
section 2.04.
|
11.00
|
CONFIDENTIALITY
|
|
11.01
|
Obligation
to Maintain Information
Confidential
|
Information
respecting the Assets shall be retained in confidence and used only for the
purposes of this acquisition, provided that upon Closing, the Purchaser's
rights
to use or disclose such information shall be subject only to any operating,
unit
or other agreements that may apply thereto. Any additional
information obtained as a result of such access which does not relate to
the
Assets shall continue to be treated as confidential and shall not be used
by the
Purchaser without the prior written consent of the Vendors. After
Closing, the Vendors agree that all information respecting the Assets shall
be
retained in confidence. However, the restrictions on disclosure and
use of information in this Agreement shall not apply to information to the
extent it:
-
23 -
|
|
(a)
|
is
or becomes publicly available through no act or omission of the
Vendors or
Purchaser, as the case may be, or its respective consultants or
advisors;
|
|
|
(b)
|
is
obtained lawfully from a third party, where the Vendors or Purchaser,
as
the case may be, has made reasonable efforts to determine that
such third
party is not a party to or bound by any confidentiality agreement
with the
Vendors; or
|
|
|
(c)
|
in
the case of the Purchaser, is already in the Purchaser's possession
at the
time of disclosure, without restriction on
disclosure.
|
However,
specific items of information shall not be considered to be in the public
domain
merely because more general information respecting the Assets is in the public
domain.
|
11.02
|
Consultants
and Advisors Bound
|
If
the
Purchaser employs consultants, advisors or agents to assist in its review
of the
Assets pursuant to Article 8.00 the Purchaser shall be responsible to the
Vendors for ensuring that such consultants, advisors and agents comply with
the
restrictions on the use and disclosure of information set forth in
Clause 11.01.
|
12.00
|
INDEMNITIES
FOR REPRESENTATIONS AND
WARRANTIES
|
|
12.01
|
Vendor’s
Indemnities for Representations and
Warranties
|
From
and
after Closing, the Vendors shall be liable to the Purchaser and be responsible
for and shall, in addition, indemnify, release and save the Purchaser harmless
from and against all losses, costs, claims, damages, expenses and liabilities
which the Purchaser may suffer, sustain, pay or incur resulting from, arising
out of, attributable to or connected with any breach of any representation
or
warranty made by the Vendors under Clauses 6.01 or 6.02.
|
12.02
|
Purchaser’s
Indemnities for Representations and
Warranties
|
From
and
after Closing, the Purchaser shall be liable to the Vendors and be responsible
for and shall, in addition, indemnify, release and save the Vendors harmless
from and against, all losses, costs, claims, damages, expenses and liabilities
which the Vendors may suffer, sustain, pay or incur resulting from, arising
out
of, attributable to or connected with any breach of any representation or
warranty made by the Purchaser under Clause 6.03.
|
12.03
|
Time
Limitation
|
No
claim
under this Article 12.00 shall be made or be enforceable by a Party unless
written notice of such claim, with reasonable particulars, is given by such
Party to the Party against whom the claim is made within a period of two
(2)
years from Closing.
|
13.00
|
PURCHASER’S
INDEMNITIES
|
|
13.01
|
Purchaser
General Indemnity
|
Provided
that Closing has occurred, the Purchaser shall:
-
24 -
|
|
(a)
|
be
liable to the Vendors for all losses, costs, damages and expenses
whatsoever which the Vendors may suffer, sustain, pay or incur;
and
|
|
|
(b)
|
indemnify,
defend and save the Vendors and their directors, officers, servants,
agents, consultants and employees harmless from and against all
claims,
liabilities, actions, proceedings, demands, losses, costs, damages
and
expenses whatsoever which may be brought against or suffered by
the
Vendors, their directors, officers, servants, agents, consultants
or
employees or which they may sustain, pay or
incur;
|
as
a result of any matter or thing arising out of, resulting from, attributable
to
or connected with the Assets and occurring or accruing subsequent to the
Effective Time, except any losses, costs, damages, expense, claims, liabilities,
actions, proceedings and demands to the extent that the same are caused by
the
gross negligence or wilful misconduct of the Vendors, their directors, officers,
servants, agents, consultants, employees or assigns, and excluding any claims,
liability, actions, proceedings or demands brought or filed after the Effective
Time and pertaining to events that occurred before the Effective
Time. The responsibility prescribed by this Clause, however, does not
provide either an extension of any representation or warranty contained in
Clause 6.03 or an additional remedy for the Purchaser's breach of such a
representation or warranty. No claim may be brought pursuant to this
Clause 13.01 unless written notification thereof is given to Vendors within
two
(2) years following the Closing.
|
13.02
|
Vendor
General Indemnity
|
Provided
that Closing has occurred, the Vendors shall, jointly and
severally:
|
|
(a)
|
be
liable to the Purchaser for all losses, costs, damages and expenses
whatsoever which the Purchaser may suffer, sustain, pay or incur;
and
|
|
|
(b)
|
indemnify,
defend and save the Purchaser and its directors, officers, servants,
agents, consultants, employees or assigns harmless from and against
all
claims, liabilities, actions, proceedings, demands, losses, costs,
damages
and expenses whatsoever which may be brought against or suffered
by the
Purchaser, its directors, officers, servants, agents, consultants,
employees or assigns or which they may sustain, pay or
incur;
|
as
a
result of any matter or thing arising out of, resulting from, attributable
to or
connected with the Assets and occurring or accruing on or before the Effective
Time, except any losses, costs, damages, expense, claims, liabilities, actions,
proceedings and demands to the extent that the same are caused by the gross
negligence or wilful misconduct of the Purchaser, its directors, officers,
servants, agents, consultants, employees or assigns. The
responsibility prescribed by this Clause, however, does not provide either
an
extension of any representation or warranty contained in Clauses 6.01 or
6.02
or an additional remedy for the Vendors’ breach of such a representation or
warranty. No claim may be brought pursuant to this Clause 13.02
unless written notification thereof is given to Vendors within two (2) years
following the Closing.
|
13.03
|
Environmental
Indemnity
|
The
Purchaser acknowledges that with respect to the environmental condition of
the
Assets, it is acquiring the Assets on an “as is” basis, subject only to the
representations and warranties set forth in Clause 6.01.
-
25 -
The
Purchaser acknowledges that it is familiar with the condition of the Assets,
including the past and present use of the Lands and the Tangibles, that the
Vendor has provided the Purchaser with a reasonable opportunity to inspect
the
Assets at the sole cost, risk and expense of the Purchaser (insofar as the
Vendor could reasonably provide access) and the Purchaser is not relying
upon
any representation or warranty of the Vendor as to the condition, environmental
or otherwise, of the Assets, except as is specifically made pursuant to
Clauses 6.01 and 6.02.
Provided
that Closing has occurred, the Purchaser shall:
|
|
(a)
|
be
solely liable and responsible for any and all losses, costs, damages
and
expenses which the Vendors may suffer, sustain, pay or incur;
and
|
|
|
(b)
|
indemnify,
defend and save the Vendors and each of its directors, officers,
servants,
agents, consultants and employees harmless from any and all claims,
liabilities, actions, proceedings, demands, losses, costs, damages
and
expenses whatsoever which may be brought against or suffered by
the
Vendors, their directors, officers, servants, agents, consultants
or
employees or which they may sustain, pay or
incur;
|
as
a
direct result of any environmental liabilities regardless of the date from
which
they may have accrued, including without limitation, the abandonment of all
Xxxxx and the reclamation of the surface lands pertaining to the Lands, except
in each case for environmental liabilities and liabilities to Purchaser which
constitute or result from a breach of the representations and warranties
made by
the Vendors in Clauses 6.01 and 6.02.
This
liability and indemnity, pursuant to section 13.03, shall apply without
limit and without regard to cause or causes, including without limitation,
the
negligence of the Parties or any other person.
Notwithstanding
any other provision of this Agreement, Purchaser shall have no responsibility
or
liability for the abandonment of xxxxx which are not included in the
Xxxxx.
|
13.04
|
No
Merger of Legal
Responsibilities
|
The
representations, warranties, liabilities and indemnities created in this
Agreement shall be deemed to apply to, and shall not merge in, all assignments,
transfers, conveyances, novations, trust agreements and other documents
conveying any of the Assets from the Vendors to the Purchaser, notwithstanding
the terms of such assignments, transfers, conveyances, novations and other
documents, the Regulations or any rule of law or equity to the contrary,
and all
such rules are hereby waived.
|
14.00
|
WAIVER
|
|
14.01
|
Waiver
Must be in Writing
|
No
waiver
by any Party of any breach (whether actual or anticipated) of any of the
terms,
conditions, representations or warranties contained herein shall take effect
or
be binding upon that Party unless the waiver is expressed in writing under
the
authority of that Party. Any waiver so given shall extend only to the
particular breach so waived and shall not limit or affect any rights with
respect to any other or future breach.
-
26 -
|
15.00
|
ASSIGNMENT
|
|
15.01
|
Assignments
Before Closing
|
Prior
to
Closing, neither Party may assign its interest in or under this Agreement
or to
the Assets without the prior written consent of the other Party, except as
may
be required by the Vendor to comply with its obligations respecting any
preferential rights, as provided in Article 7.00.
|
16.00
|
NOTICE
|
|
16.01
|
Service
of Notice
|
Notwithstanding
anything to the contrary contained herein, all notices required or permitted
hereunder shall be in writing. Any notice to be given hereunder shall
be deemed to be served properly if served in any of the following
modes:
|
|
(a)
|
personally,
by delivering the notice to the Party on which it is to be served
at that
Party's address for service. Personally served notices shall be
deemed to be received by the addressee when actually delivered
as
aforesaid, provided that such delivery shall be during normal business
hours on any Business Day in Alberta. If a notice is not
delivered on such a day or is delivered after the addressee's normal
business hours, such notice shall be deemed to have been received
by such
Party at the commencement of the addressee's first Business Day
next
following the time of the delivery;
or
|
|
|
(b)
|
by
fax (or by any other like method by which a written message may
be sent)
directed to the Party on which it is to be served at that Party's
address
for service. A notice so served shall be deemed to be received
by the addressee when actually received by it, if received within
normal
business hours on any Business Day in Alberta or at the commencement
of
the next ensuing Business Day following transmission if such notice
is not
received during such normal business
hours.
|
|
16.02
|
Addresses
for Notices
|
The
address for service of notices hereunder of each of the Parties shall be
as
follows:
|
|
Vendors:
|
Thunder
River Energy Inc.
|
X.X.
Xxx
000, Xxxxxxx X
Xxxxxxx,
Xxxxxxx
X0X
0X0
|
|
Attention:
|
President
|
|
|
With
a copy to:
|
XxXxxx
& Company LLP
|
Gulf
Canada Square, Suite 000
000
-
0xx Xxxxxx
X.X.
Xxxxxxx,
XX X0X 0X0
|
|
Attention:
|
R.
Xxxxxx Xxxxxx
|
-
27 -
|
|
Purchaser:
|
Xxxxx
000, 000 0 Xxx. XX
Xxxxxxx,
Xxxxxxx
X0X
0X0
Attention:
President
Fax:
(000) 000-0000
|
16.03
|
Right
to Change Address
|
A
Party
may change its address for service by notice to the other Party, and such
changed address for service thereafter shall be effective for all purposes
of
this Agreement.
|
17.00
|
POST
CLOSING ADMINISTRATION
|
|
17.01
|
Registration
of Documents
|
The
Purchaser shall register promptly after Closing all Specific Conveyances
and any
other documents which require registration. The Purchaser shall be
responsible for registration of any document contemplated in this section
and
any fees related to such registrations. After Closing, Purchaser
shall bear all costs of preparing and registering any further assurances
required to convey title to the Assets.
|
17.02
|
Coordination
of Administrative
Matters
|
|
|
(a)
|
After
Closing, until the Purchaser becomes the recognized holder of the
Assets
in the place of the Vendors, the Vendors shall, to the extent that
the
Purchaser is not recognized:
|
|
|
(i)
|
receive
and hold in trust all proceeds, benefits and advantages accruing
from the
Assets for the benefit, use and ownership of the Purchaser, with
entitlement to commingle any of them with its own or any other
assets;
|
|
|
(ii)
|
in
a timely manner deliver to the Purchaser all revenues, proceeds
and other
benefits received by the Vendors for the
Assets;
|
|
|
(iii)
|
in
a timely manner deliver to the Purchaser all third party notices
and
communications received by the Vendors for the
Assets;
|
|
|
(iv)
|
in
a timely manner deliver to third parties all notices and communications
as
the Purchaser may reasonably request and all monies and other items
the
Purchaser reasonably provides for the Assets;
and
|
|
|
(v)
|
as
agent of the Purchaser, do and perform all acts and things, and
execute
and deliver all agreements, notices and other documents and instruments,
that the Purchaser reasonably requests for the purpose of facilitating
the
exercise of rights incidental to the ownership of the
Assets.
|
-
28 -
|
|
(b)
|
The
Vendors shall not be liable to the Purchaser for any loss or damage
suffered by the Purchaser in connection with the arrangements established
by the Purchaser in connection with the arrangement established
by
Subclause 17.02(a),
except to the extent that the loss or damage is caused
by
the Vendors’ gross negligence or its wilful
misconduct.
|
|
17.03
|
Vendors’
Access to Documents
|
The
Vendors may retain or subsequently obtain from the Purchaser copies or
photocopies of any of the documents comprised in Miscellaneous Interests
necessary to enable them to comply with any Regulations or the requirements
of
any authority or to conduct audits relating to the period prior to the Effective
Time.
|
18.00
|
MISCELLANEOUS
PROVISIONS
|
|
18.01
|
Further
Assurances
|
At
the
Closing Date and thereafter as may be necessary, the Parties shall execute,
acknowledge and deliver such instruments and take such other actions as may
be
reasonably necessary to fulfil their respective obligations under this
Agreement. The Vendors shall cooperate with the Purchaser as
reasonably required to secure execution by third parties of the documents
referred to in Subclause 10.02(e).
|
18.02
|
Governing
Law
|
This
Agreement shall be subject to and be interpreted, construed and enforced
in
accordance with the laws in effect in the Province of Alberta and, where
applicable in relation to CIMA Assets, the laws of the State of New
Mexico.
|
18.03
|
Time
|
Time
shall be of the essence in this Agreement.
|
18.04
|
No
Amendment Except in
Writing
|
This
Agreement may be amended only by written instrument executed by the Vendors
and
the Purchaser.
|
18.05
|
Consequences
of Termination
|
If
this
Agreement is terminated in accordance with its terms prior to Closing, then
except for the provisions of Article 11.00 and the covenants, warranties,
representations or other obligations breached prior to the time at which
such
termination occurs, the Parties shall be released from all of their obligations
under this Agreement. If this Agreement is so terminated, the
Purchaser shall promptly return to the Vendors all materials delivered to
the
Purchaser by the Vendors hereunder, together with all copies of them that
may
have been made by or for the Purchaser and the Vendors shall return the
deposit.
-
29 -
|
18.06
|
Supersedes
Earlier Agreements
|
This
Agreement supersedes all other agreements between the Parties with respect
to
the Assets and expresses the entire agreement of the Parties with respect
to the
transactions contained herein and any prior agreements between the Parties
regarding the transaction contemplated herein are hereby
terminated.
|
18.07
|
Enurement
|
This
Agreement shall be binding upon and enure to the benefit of the Parties and
their respective successors and permitted assigns.
IN
WITNESS WHEREOF the Parties have duly executed this
Agreement.
|
THUNDER
RIVER ENERGY INC.
|
|
|
Per: ___________________________________
|
|
|
Per: ___________________________________
|
|
|
CIMA
HOLDINGS INC.
|
|
|
Per: ___________________________________
|
|
|
Per: ___________________________________
|
|
|
Per: ___________________________________
|
|
|
Per: ___________________________________
|
-
30 -
SCHEDULE
“A”
Lands,
Leases and Encumbrances (including penalties and preferential
rights)
SCHEDULE
“A”
PART
II
Production
Sales Contracts
SCHEDULE
“A”
PART
III
Facilities,
Gas Gathering Lines, Pipelines, Facility, Processing, Treating, Transportation
and Contract Operating Agreements
SCHEDULE
“A”
PART
IV
N/A
SCHEDULE
“A”
PART
V
Authorizations
for Expenditure
None
SCHEDULE
“A”
PART
VI
Areas
of Mutual Interest
None
SCHEDULE
“A”
PART
VII
Default
Notices, Claims, Lawsuits & Offset Drilling Notice
SCHEDULE
“B”
GENERAL
CONVEYANCE
This
Conveyance made this 28th day of
September,
2007.
BETWEEN:
THUNDER
RIVER ENERGY INC., a body corporate, registered
to carry on business in the Province of Alberta and having an office in the
City
of Calgary, in the Province of Alberta (hereinafter called the
“Vendor”)
-
and
-
KODIAK
ENERGY, INC., a body corporate having an office in the City of Calgary,
in the Province of Alberta (hereinafter called the
“Purchaser”)
WHEREAS
the Vendor has agreed to sell and convey the Vendor's entire right, title,
estate and interest in the Assets to the Purchaser and the Purchaser has
agreed
to purchase and accept all of the Vendor's right, title, estate and interest
in
and to the Assets;
THE
PARTIES AGREE AS FOLLOWS:
|
1.
|
Definitions
|
In
this
Conveyance, including the recitals, “Agreement” means the Agreement of Purchase
and Sale dated the 28th day of
September,
2007, between the Vendor, CIMA Holdings Inc. and the Purchaser. In
addition, the definitions provided for in the Agreement are adopted in this
Conveyance.
|
2.
|
Conveyance
|
The
Vendor, for the consideration provided for in the Agreement, the receipt
and
sufficiency of which is acknowledged by the Vendor, sells, assigns, transfers
and conveys the Vendor's interest in the Assets to the Purchaser, and the
Purchaser purchases and accepts such interest from the Vendor, TO HAVE AND
TO
HOLD the same absolutely, subject to the terms of the Agreement, the Permitted
Encumbrances and compliance with the terms of the Leases.
|
3.
|
Effective
Time
|
This
Conveyance is effective as of the Effective Time.
|
4.
|
Subordinate
Document
|
This
Conveyance is executed and delivered by the Parties pursuant to the Agreement
for the purposes of the provisions of the Agreement, and the terms hereof
shall
be read in conjunction with the terms of the Agreement. The Agreement
shall prevail if there is a conflict between the provisions of the Agreement
and
this Conveyance.
|
5.
|
Enurement
|
This
Conveyance enures to the benefit of and is binding upon the Parties and their
respective successors and permitted assigns.
|
6.
|
Further
Assurances
|
Each
Party shall, after the date of this Conveyance, at the request of the other
Party and without further consideration, do all further acts and execute
and
deliver all further documents which are reasonably required to perform and
carry
out the terms of this Conveyance.
IN
WITNESS WHEREOF the Parties have duly executed this Conveyance.
|
THUNDER
RIVER ENERGY INC.
|
|
|
Per: __________________________________
|
|
|
Per: __________________________________
|
|
|
Per: __________________________________
|
|
|
Per: __________________________________
|
2
SCHEDULE
“C”
GENERAL
CONVEYANCE
This
Conveyance made this 28th day of
September,
2007.
BETWEEN:
CIMA
HOLDINGS INC., a body corporate, incorporated in
the State of New Mexico, United States of America (hereinafter called the
“Vendor”)
-
and
-
KODIAK
ENERGY, INC., a body corporate having an office in the City of Calgary,
in the Province of Alberta (hereinafter called the
“Purchaser”)
WHEREAS
the Vendor has agreed to sell and convey the Vendor's entire right, title,
estate and interest in the Assets to the Purchaser and the Purchaser has
agreed
to purchase and accept all of the Vendor's right, title, estate and interest
in
and to the Assets;
THE
PARTIES AGREE AS FOLLOWS:
|
7.
|
Definitions
|
In
this
Conveyance, including the recitals, “Agreement” means the Agreement of Purchase
and Sale dated the 28th day of
September
2007, between the Vendor, Thunder River Energy Inc. and the
Purchaser. In addition, the definitions provided for in the Agreement
are adopted in this Conveyance.
|
8.
|
Conveyance
|
The
Vendor, for the consideration provided for in the Agreement, the receipt
and
sufficiency of which is acknowledged by the Vendor, sells, assigns, transfers
and conveys the Vendor's interest in the Assets to the Purchaser, and the
Purchaser purchases and accepts such interest from the Vendor, TO HAVE AND
TO
HOLD the same absolutely, subject to the terms of the Agreement, the Permitted
Encumbrances and compliance with the terms of the Leases.
|
9.
|
Effective
Time
|
This
Conveyance is effective as of the Effective Time.
|
10.
|
Subordinate
Document
|
This
Conveyance is executed and delivered by the Parties pursuant to the Agreement
for the purposes of the provisions of the Agreement, and the terms hereof
shall
be read in conjunction with the terms of the Agreement. The Agreement
shall prevail if there is a conflict between the provisions of the Agreement
and
this Conveyance.
|
11.
|
Enurement
|
This
Conveyance enures to the benefit of and is binding upon the Parties and their
respective successors and permitted assigns.
|
12.
|
Further
Assurances
|
Each
Party shall, after the date of this Conveyance, at the request of the other
Party and without further consideration, do all further acts and execute
and
deliver all further documents which are reasonably required to perform and
carry
out the terms of this Conveyance.
IN
WITNESS WHEREOF the Parties have duly executed this Conveyance.
|
CIMA
HOLDINGS INC.
|
|
|
Per: ___________________________________
|
|
|
Per: ___________________________________
|
|
|
Per: ___________________________________
|
|
|
__________________________________
|
2
SCHEDULE
“D”
SPECIFIC
COVENYANCES FOR U.S. ASSETS
