DILUTION AGREEMENT
THIS
AGREEMENT made
this
22nd
day of
December, A.D., 2006.
BETWEEN:
COUNTY
LINE ENERGY
CORP., a
body
corporate, having an office in the City of Calgary in the Province of Alberta,
(hereinafter called "the Grantor")
PARTY
OF THE FIRST PART
-
and
-
NUANCE
EXPLORATION LTD., a
body
corporate, having an office in the City of Vancouver in the Province of British
Columbia, (hereinafter called "the Participant")
PARTY
OF THE SECOND PART
WHEREAS,
pursuant
to an Agreement (hereinafter referred to as "the Participation Agreement")
dated
the 21st
day of
December, A.D., 2006, and made between the Participant and the Grantor, it
is
provided that the Participant by performing certain obligations in the
Participation Agreement contained, will become entitled to earn an interest
in
certain lands therein contained, all as more particularly described in the
Participation Agreement (a copy of the Participation Agreement is attached
hereto as Schedule "A"); and,
WHEREAS
each
of
the Grantor and the Participant in the Participation Agreement desires
to by assuming a share of the obligations therein contained and earning a share
of the
interest to be earned thereunder in relation to the amount of monies in Costs
that each
Party to
this Agreement advances under the obligations.
NOW
THEREFORE THIS AGREEMENT WITNESSETH that
in
consideration of the premises and of the covenants and agreements of the Parties
as hereinafter set forth, the Parties do hereby covenant and agree as
follows:
1.
INTERPRETATION
| (a) |
The
headings of the clauses of this Agreement are inserted for convenience
of
reference only and shall not affect the meaning or construction
thereof
|
| (b) |
The
terms and expressions used herein shall have the same meanings as
are
ascribed to such terms and expressions under the Farrnout
Agreement.
|
| (c) | Wherever the plural or masculinie or neuter is used the same shall be construed as meaning singular, or feminine, or body politic or corporate, or vice versa as the context so requires. |
2.
DILUTION
2.1
The
respective Interests of the Parties shall be subject to variation from time
to
1
a) subject
to Section 2.2, of the election by a Party not to participate in Land Costs
and/or Authorizations for Expenditure (together the "Costs") or;
b) subject
to Section 2.2, of the election by a Party to pay less than its proportionate
share of Costs.
2.2
Upon
the happening of any of the events set forth in subsection 2.1(a)-(b), inclusive
hereof, each Party's Interest shall be varied to equal the product obtained
by
multiplying 100% by a fraction of which the numerator shall be the amount of
Costs paid by such Party and of which and the denominator shall be the total
amount of Costs paid by both Parties. For the purposes of this section, the
amount of Costs paid by a Party shall include the amount of Costs deemed to
have
been paid by that Party as set forth in Section 2.1.
2.3
In
the event that a Party's Interest is reduced to five (5%) percent or less by
the
operation
of Section 2.2 hereof, such Party shall forthwith relinquish its Interest
and shall
transfer such Interest to the other Party hereto in proportionate shares and
shall
receive
as consideration therefor a payment in the amount of Ten Thousand Dollars
($10,000). In the event of such relinquishment, such Party shall have no further
right to participate in any Programs and shall have no further Interest in
the
Property.
2.4
A
Party which forfeits or reduces its Interest in the Property pursuant to Section
2.1 shall have the rights to redeem its position if the actual Costs expended
is
less costly by at least 25% than the budget as set out in the Costs to which
the
Party had not agreed, otherwise the forfeiture is final. The Operator shall
not
later than thirty (30)
days
after completion of an Costs expenditure, provide a complete statement
of
expenditures incurred to date. Within five (5) days of receipt of the foregoing
statement, the forfeiting Party shall inform the other Party of its wish to
redeem its Interest. A Party redeeming its Interest shall pay the Costs it
would
have paid had it participated in the Costs, plus and amount of 5% of the
aforesaid Costs had it participated in the Costs. Payment shall be made by
the
redeeming Party to the other Party within five (5) days of providing notice
of
such redemption.
3. FURTHER
ASSURANCE
Each
of
the Parties shall at all times do all such further acts and deliver all such
further deeds and documents as shall be reasonably required in order to fully
perform and carry out the terms of this Agreement.
4. ADDRESSES
FOR SERVICE
All
notices, reports and other correspondence required or given under the terms
of
this
Agreement shall be deemed to have been properly served if delivered or sent
by
registered prepaid mail to the following addresses:
County
Line Energy Corp.
2
#0000,
000 - 00xx Xxxxxx X.X. Xxxxxxx, Xxxxxxx X0X 0X0
Nuance
Exploration Ltd. 000,
0000
Xxxxxxxxx Xx. Xxxxxxxxx X.X. X0X 0X0
Any
Party
may from time to time change its address for service hereunder by written
notice to the other Parties. Any notice may be served by personal delivery
or
by
mailing the same by registered post, postage prepaid, in a properly addressed
envelope addressed to the Party to whom the notice is to be given at its address
for service hereunder, and shall be deemed to be received forty-eight (48)
hours
after the mailing thereof in Canada, Saturdays, Sundays and statutory holidays
excepted. Any notice may also be served by prepaid telegram addressed to the
Party to whom such notice is to be given at such Party's stated address for
service and any such notice so served shall be deemed to be given to and
received by the addressee eighteen (18) hours after the time of delivery to
the
telegraph office, Saturdays, Sundays and statutory holidays excepted. Any notice
may also be given by telephone followed immediately by letter or telegram,
and
any notice so given shall be deemed to have been received as of the date and
time of the telephoned notice.
5. SUCCESSORS
AND ASSIGNS
This
Agreement shall enure to the benefit of and be binding on the Parties hereto
and
their respective successors and permitted assigns. An assignment made by any
Party hereunder shall be made pursuant to all of the terms and conditions of
the
1993
CAPL
Assignment Procedure which shall be deemed to be incorporated herein
in its
entirety.
6. PROPER
LAW
This
Agreement and the relationship between the Parties shall be construed and
determined according to the laws of the Province of Alberta and the courts
having exclusive original jurisdiction with respect to any matter or thing
arising directly or indirectly relating to this Agreement shall be the courts
of
the Province of Alberta.
7. SUPERSESSION
This
Agreement supersedes and replaces all other agreements, documents, writings
and
verbal understandings between the Parties with respect to the subject matter
of
this Agreement.
8. LIMITATIONS
ACT
The
two-year period for seeking a remedial order under section 3(1)(a) of
the
3
Limitations
Act, S.A.
2000
C. L-I2, as amended, for any claim ( as defined in that Act) arising in
connection with this Agreement and any of the Schedules attached hereto is
extended:
| (a) |
for
claims disclosed by an audit, two (2) years after the time this Agreement
permitted that audit to be performed;
or
|
| (b) | for all other claims, four (4) years. |
This
Agreement may be executed in counterpart.
IN
WITNESS WHEREOF the
Parties hereto have caused this Agreement to be executed as of the day and
year
first above written.
| County Line Energy Corp. | Nuance Exploration Ltd. |
|
/s/ Xxxxx Xxxxxxx
President
|
/s/ Xxxxx X. Xxxxxx
President
|
SCHEDULE
"A"
This
is
Schedule "A" attached to and forming part of a Participation
Agreement
0
(Xxxxxxx
00 Xxxxxxxx, Xxxxxxx) dated as of the 12th
day of
December, A.D., 2006. between County Line Energy Corp. and Nuance Exploration
Ltd.
"Farmout
Agreement" means the following document attached hereto
i. Term
Sheet Agreement dated December 1, 2006 between Grantor and BMW
Energy
Inc.
