PURCHASE AND SALE AGREEMENT
Eternal Energy Corp., with an
address at 0000 Xxxx Xxxx Xxxxxx, Xxxxx 000, Xxxxxxxxx, Xxxxxxxx 00000 ("Seller"), and Rover Resources, Inc., with an
address at Xxxxx 000, 0000 Xxxx 0xx Xxxxxx,
Xxxxxxxxx, Xxxxxxx Xxxxxxxx X0X 0X0 ("Buyer"), enter into this
Purchase and Sale Agreement ("Agreement") in consideration
of Seller's agreement to sell, and Buyer's agreement to buy, the assets
described in this Agreement pursuant to the terms and conditions hereinafter
provided:
1. Assets to
be Purchased: 100% of Seller's right, title, estate and
interest in and to: (a) its 10% working interest in the oil and gas leases
described in Schedule "A" ("Leases") together with 100% of
Seller's 10% working interest in the oil, gas and other minerals in place, all
rights in production therefrom and all contract rights derived from associated
agreements; and (b) all agreements, permits, licences, documents of title,
data, logs, reports, interpretations, evaluations, files and all other property,
assets and rights of every nature and kind in any way relating to the Leases
("Associated
Interests"). Seller's interest in the aforesaid Leases and
Associated Interests is hereafter collectively referred to as the "Assets".
2. Purchase
Price: Buyer will pay to Seller by wire transfer a total of
U.S. $1,000,000 as the purchase price for the Assets ("Purchase Price") to a U.S.
bank of Seller's choosing at the closing of the sale ("Closing").
3. Effective
Date: The effective date of the sale of the Assets will be
April 1, 2010 ("Effective
Date"). The parties acknowledge and agree that, upon Closing,
Buyer will assume and be responsible for 100% of all expenses and obligations
payable or owing in respect of the Assets subsequent to the Effective Date but
there will be no adjustment or accrual with respect to any expenses and
obligations paid or incurred by Seller prior to the Effective Date.
4. Closing: Closing
of the purchase of the Assets shall take place on the Closing Date (as defined
below) in Buyer's Vancouver offices concurrent with, and subject to, the closing
of the Royalty Sale as hereafter defined. Seller shall provide Buyer
with an industry standard assignment in respect of its interest in the Leases,
along with the original recorded Leases and a xxxx of sale if required, at
Closing and shall deliver to Buyer all of its lease and agreement files and
other records pertaining to the Assets as soon as commercially reasonable
following Closing. Each party shall also deliver such further documentation as
the other party may reasonably request to complete the transactions contemplated
hereby including, without limitation, officer's certificates in respect of each
party's representations and warranties and the Termination Agreement described
in Section 29 hereof. All documentation delivered at Closing shall be in form
and substance satisfactory to the parties, acting reasonably. The
closing date for the completion of these transactions shall be the later of the
following: (a) April 7, 2010; and (b) the third business
day following the date upon which the parties have received regulatory approval
for the transactions as contemplated in the Royalty Sale (as defined below) (the
"Closing
Date").
5. Pre-Closing
Operations: From and after the date of this Agreement and
through to and including the Closing Date, Seller shall maintain the Assets in
the ordinary course of business, consistent with past practice and applicable
law, and shall perform and comply with Seller's obligations under the Leases and
all other agreements affecting the Assets and shall not, without Buyer's prior
written consent, commence or consent to any operation in respect of the Assets,
remove or dispose of any Assets, amend any Lease or other agreement affecting
the Assets or grant any security interest in respect of the Assets.
6. Review
Period: Seller agrees that Buyer shall have until March 31,
2010 to conduct a search of the applicable records of Divide County, North
Dakota and any records in Seller's possession for the purpose of confirming
Seller's title to its interest in the Assets ("Review Period"). On
or before the end of the Review Period, Buyer shall advise Seller in writing if
in Buyer's sole opinion, acting reasonably, Seller's title to such interests is
sufficient and that it wishes to proceed with the subject purchase and
sale. Failure to provide Seller with such a notice prior to the
expiration of the Review Period will be deemed to be an irrevocable election by
Buyer to proceed.
7. Liability:
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7.1
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Seller: Before
and after Closing, Seller shall remain liable for all liabilities and
obligations in respect of the Assets existing or that arise out of events
occurring prior to the Effective Date and Seller shall discharge and
satisfy such liabilities and obligations and indemnify Buyer from and
against any and all losses, damages, expenses (including reasonable legal
and other professional fees), liabilities (whether accrued, actual,
contingent, latent or otherwise), judgments, penalties, fines, claims,
lawsuits, causes of action, proceedings, investigations and demands or
other obligations of whatever nature or kind and all costs incurred in
investigating or pursuing any of the foregoing or any proceeding relating
to any of the foregoing ("Claims") associated
therewith.
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7.2
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Buyer: Upon
Closing, Buyer shall assume 100% of all liabilities and obligations in
respect of the Assets, including those arising under the Leases or any
other agreements listed in Schedule "A", arising or that arise out of
events occurring after the Effective Date and Buyer shall discharge and
satisfy such liabilities and obligations and indemnify Seller from and
against any and all Claims associated
therewith.
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7.3
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Intervening
Liabilities and Obligations: Notwithstanding the
foregoing, should any liability or obligation arise after the Effective
Date but prior to Closing which would materially affect the value of the
Assets, then Buyer shall have the option prior to Closing to terminate the
proposed purchase and sale by giving Seller written
notice.
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8. Representations
of Seller: Seller makes the following representations and
warranties to Buyer, all of which shall be true and accurate in all material
respects as of the Closing:
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8.1
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Organization and
Standing: Seller is a corporation duly organized,
validly existing and in good standing under the laws of the State of
Nevada.
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8.2
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Power and
Authority: Seller has all requisite power and authority
to carry on its business as presently conducted, to enter into this
Agreement and to perform its obligations hereunder and this Agreement has
been approved by all necessary corporate action on the part of
Seller. The consummation of this Agreement will not violate,
nor be in conflict with, (a) any provision of the governing documents
of Seller, (b) any agreements to which Seller is a party, or
(c) any judgment, decree, ordinance, law, regulation or permit. In
particular, the within sale and the proposed sale to Xxxxxx Oil
Corporation ("Xxxxxx") of Seller's
royalty interests in respect of Pebble Petroleum Inc.'s Saskatchewan
properties (the "Royalty
Sale") does not constitute a sale of substantially all of Seller's
assets and, consequently, Seller does not require the approval of its
shareholders to enter into this Agreement or to perform its obligations
hereunder.
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8.3
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Enforceability: This
Agreement and all other agreements and instruments executed in accordance
herewith shall constitute the valid and binding obligation of Seller
enforceable in accordance with their respective terms subject to
applicable bankruptcy, insolvency, fraudulent conveyance, reorganization
or similar laws affecting the rights of creditors generally and subject to
the general principles of equity.
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8.4
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Litigation: To
the best of Seller's knowledge, there is no claim, lawsuit, accident
investigation, arbitration or administrative proceeding pending or
threatened in any venue involving Seller or the Assets which would or
might have an adverse effect on the Assets or the ability of Seller to
consummate the transactions contemplated by this
Agreement.
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8.5
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Material
Agreements: All of the material agreements which relate
to or otherwise affect the Assets are listed in Schedule
"A".
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8.6
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Taxes
Paid: All taxes and assessments based upon or measured
by the ownership of the Assets which have become due and payable prior to
the Effective Date have been timely paid and any of the foregoing which
need to be paid prior to Closing will likewise be timely
paid.
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8.7
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Lease Burdens
Paid: All rentals and other financial burdens arising
under the Leases have been timely and properly paid and will continue to
be timely and properly paid up to
Closing.
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8.8
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Title: To
the best of Seller's knowledge, Seller is entitled to receive the working
and net revenue interests ("Working Interests" and
"Net Revenue
Interests") set forth in Schedule "A". Seller is
entitled to receive not less than the Net Revenue Interests for
hydrocarbons produced, saved and marketed from the
Leases. Seller's obligation to pay and bear costs and expenses
in respect of the Leases is not greater than the Working Interests and the
Working Interests and the Net Revenue Interests are not subject to
reduction (by reference to payout of a well or otherwise) or to change to
an interest of any other size or
nature.
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8.9
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Validity of
Leases: Seller has not received any notices of default
in respect of the Leases or any other agreements related to the Assets
and, to the best of Seller's knowledge, the foregoing Leases and
agreements are in full force and
effect.
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8.10
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No Consents or Rights
of First Refusal: There are no consents required or
rights of first refusal or similar rights triggered as a result of the
contemplated sale of the Assets other than Buyer's consent as provided in
the Existing JOA (as defined
below).
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8.11
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Compliance with
Laws: To the best of Seller's knowledge, all laws,
rules, regulations, ordinances and orders of all local, state and federal
governmental bodies having jurisdiction over the Assets have been complied
with.
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8.12
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No Proposals or
Commitments: To the best of the Seller's knowledge, no
proposals or commitments exist that would obligate Buyer to make
expenditures after the Effective Date other than routine expenses incurred
in the normal operation of the
Assets.
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8.13
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Environmental: To
the best of Seller's knowledge, no physical operations have been conducted
to date in respect of the Assets and, consequently, there are no
environmental violations or compliance orders affecting the
Assets.
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8.14
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Contracts: There
are no gas contracts, gas balancing or similar arrangements, agreements
for the transportation, processing or disposal of hydrocarbons, joint
operating agreements (other than the existing joint operating agreement
between Buyer and Seller in respect of the Leases dated for reference
October 26, 2006 and referred to herein as the "Existing JOA") or
contract operating agreements affecting the
Assets.
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8.15
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No Areas of Mutual
Interest: None of the Leases is subject to an agreement which
provides for an area of mutual interest other than the area of mutual
interest reflected in the Existing JOA, the foregoing area of mutual
interest to be terminated at Closing as contemplated by Section 28
hereof.
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8.16
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Full
Disclosure: To the best of Seller's knowledge, none of
the above representations and warranties fails to state a material fact
necessary to make the statements contained therein not
misleading.
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9. Representations
of Buyer: Buyer makes the following representations and
warranties to Seller, all of which shall be true and accurate in all material
respects as of the Closing:
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9.1
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Organization and
Standing: Buyer is a corporation duly organized and
validly existing under the laws of the State of Nevada and is authorized
to conduct business in the State of North
Dakota.
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9.2
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Power and
Authority: Buyer has all requisite power and authority
to carry on its business as presently conducted, to enter into this
Agreement and to perform its obligations hereunder and this Agreement has
been approved by all necessary corporate action on the part of
Buyer. The consummation of this Agreement will not violate, nor
be in conflict with, (a) any provision of the governing documents of
Buyer, (b) any agreements to which Buyer is a party, or (c) any
judgment, decree, ordinance, law, regulation or
permit.
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9.3
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Enforceability: This
Agreement and all other agreements and instruments executed in accordance
herewith shall constitute the valid and binding obligation of Buyer
enforceable in accordance with their respective terms subject to
applicable bankruptcy, insolvency, fraudulent conveyance, reorganization
or similar laws affecting the rights of creditors generally and subject to
the general principles of equity.
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10. Conditions
of Closing: In addition to any other conditions set out in
this Agreement, the obligations of the parties to close the subject transactions
shall be subject to satisfaction of the following conditions which may be waived
by notice in writing:
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10.1
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Compliance with
Agreement: Each party shall have delivered all documents
required to be delivered by it and otherwise complied with the terms of
this Agreement in all material
respects.
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10.2
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Representations and
Warranties: The representations and warranties of each
party shall be true and accurate in all material respects on and as of
Closing.
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10.3
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No Material Adverse
Change: Prior to Closing, no material adverse change in
the Assets or the business conducted in relation thereto shall have
occurred, whether by casualty or
otherwise.
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10.4
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Concurrent Closing of
Royalty Sale: Xxxxxx and Seller shall concurrently close
the Royalty Sale.
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11. Casualty: The
risk of loss due to fire or other casualty or condemnation shall be with Seller
at all times prior to the Effective Date and shall be borne 100% by Buyer
thereafter. If any material portion of the Assets shall be damaged, destroyed or
condemned prior to the Effective Date (or if condemnation is threatened), Seller
and Buyer shall each have the right to terminate this Agreement at or prior to
Closing without further obligation to the non-terminating party.
12. Survival: The
representations and covenants of Buyer and Seller shall survive Closing for a
period of 12 months and shall be deemed to apply to all agreements and
instruments executed in accordance herewith, it being the express intention of
the parties that there shall not be any merger of the aforesaid representations
and covenants notwithstanding any rule of law, equity of statute to the
contrary, all such rules being waived. Each of Buyer and Seller shall indemnify
the other from and against all Claims arising within the aforesaid survival
period which are occasioned by reason of a representation being untrue or
inaccurate.
13. No
Consequential Damages: No party shall be liable to the other hereunder
for indirect, consequential, special or punitive damages including, without
limitation, loss of future revenue, income or profits, diminution of value or
loss of business reputation or opportunity.
14. Press
Releases: The parties each acknowledge that the other is a
publicly traded entity and that each shall be required to issue a press release
concerning this Agreement and the transactions contemplated
hereunder. Nothing herein shall prevent a party from furnishing any
information to any governmental agency or regulatory authority or to the public
insofar and to the extent such disclosure is required by applicable law
(including, without limitation, securities laws or the rules or regulations of
any stock exchange applicable to such party), provided that a party which
proposes to make such a public disclosure shall, to the extent reasonably
possible, provide the other party with a
draft of such statement in sufficient time prior to its release to enable such
other party to review such draft and advise the disclosing party of any comments
it may have with respect thereto.
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15. Amendment: This
Agreement may only be amended by a formal written instrument executed by proper
signing officers for the parties.
16. Waiver: The
parties acknowledge and agree that any waiver of the provisions of this
Agreement shall only be binding upon the waiving party if evidenced in writing
and signed on behalf of the waiving party; any such waiver shall apply only to
the particular breach, default, obligation or provision specifically identified
and waived and not to any other breaches, defaults, obligations or provisions,
whether or not similar; any such waiver shall not constitute a continuing waiver
unless expressly stated; and any delay or omission on the part of a party in
exercising any right or power under this Agreement shall not impair the ability
of such party to exercise such right or power or be considered to be a waiver
of, or acquiescence to, any breach or default.
17. Notices: Any
notices which may be required to be given under the terms of this Agreement
shall be in writing and shall be considered duly delivered if personally
delivered or sent by facsimile to the addresses of the parties as set out
below:
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If to
Buyer:
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If to
Seller:
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Rover
Resources, Inc.
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Xxxxx
000, 0000 Xxxx 0xx
Xxxxxx
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2549
West Main Street, Suite 202
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Vancouver,
British Columbia
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Xxxxxxxxx,
Xxxxxxxx
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X0X
0X0
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80120
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Facsimile:
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604.639.4458
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Facsimile:
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303.798.5767
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Attn:
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Xxxxx
Xxxxxxx
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Attn:
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Xxxx
Xxxxx
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President
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Chief
Executive Officer
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18. Non-Assignable:
This Agreement is not assignable by either party.
19. Inurement: This
Agreement shall be binding upon and inure to the benefit of the parties and
their respective successors, receivers, receiver-managers and
trustees.
20. Headings: The
headings utilized in this Agreement are inserted for convenience of reference
only and shall not affect the construction of the provisions
hereof.
21. Gender
and Number: This Agreement shall be read with all changes in
gender and number as may be required by the context.
22. Conflict: Wherever
any provision, whether express or implied, of any schedule conflicts or is at
variance with any provision of the main body of this Agreement, the provision in
the main body shall prevail. Wherever any provision, whether express or implied,
of this Agreement conflicts or is at variance with any documentation issued in
furtherance thereof, the provision of this Agreement shall prevail.
23. Weekend
or Holiday Dates: If any date for the payment of monies or the
fulfillment of an obligation or any other stipulated deadline falls on a
Saturday, Sunday or statutory holiday, such date will be postponed to the next
following business day unless the parties expressly agree to the
contrary.
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24. Governing
Law/Courts: This Agreement shall, in all respects, be subject
to, interpreted, construed and enforced in accordance with and under the laws of
the State of Colorado and shall, in every regard, be treated as a contract made
in the State of Colorado. To the extent that the location of the
Leases in the State of North Dakota requires the application of the laws in
force in the State of North Dakota, such laws shall be adduced as evidence in
the Colorado courts having jurisdiction in respect of a dispute arising
hereunder.
25. Invalidity
of Provisions: If any provision of this Agreement or the
application thereof to any party or circumstance shall to any extent be held
invalid, illegal or unenforceable by a court of competent jurisdiction, the
remainder of this Agreement, the application of such provision to parties or
circumstances other than those to which it is held invalid, illegal or
unenforceable or the validity, legality or enforceability of such provision in
any other jurisdiction shall not in any way be affected or impaired thereby and
such provision shall be severable from this Agreement to the extent of such
invalidity, illegality or unenforceability.
26. Negotiated
Transaction: The parties have participated jointly in the
negotiation and drafting of this Agreement and, in the event an ambiguity or
question of intent or interpretation arises, this Agreement shall be construed
as jointly drafted by the parties and no presumption or burden of proof shall
arise favouring or disfavouring any party by virtue of the authorship of any
provision of this Agreement.
27. Further
Assurances, Intent: It is Seller's intent to convey to Buyer
100% of Seller's right, title, estate and interest in the Assets, legal,
beneficial or equitable. In this regard, Seller agrees to execute and deliver to
Buyer all such instruments, conveyances and other documents and do such other
acts not inconsistent with the terms of this Agreement as may be necessary or
advisable to carry out Seller's intent as stated herein.
28. Amendment
of the Existing JOA: On Closing, the
parties shall enter into an agreement amending the Existing JOA by replacing
Exhibit “A” and Exhibit “A-4” attached to and forming part of the Existing JOA
with the new exhibits attached to this Agreement and marked as Exhibit “A”
and Exhibit “A-4” minus the Leases (the foregoing to set out the legal
descriptions and other information respecting the lands which will be subject to
the Existing JOA post-Closing). Upon execution and delivery of the
agreement amending the Existing JOA, Exhibit “A” and Exhibit “A-4” attached
hereto (minus the Leases) shall replace and supersede the original Exhibits “A”
and “A-4” attached to the Existing JOA and there shall be no further area of
mutual interest as originally provided in the Existing JOA.
29. Termination
of the Letter Agreement dated October 26, 2006: As a condition
to Closing, the parties agree to execute and deliver a termination agreement
("Termination
Agreement") in respect of the Letter Agreement dated October 26, 2006
among Seller, Buyer, 0770890 B.C. Ltd. (now Pebble Petroleum Inc. by name
change), Fairway Exploration LLC and Prospector Oil, Inc.
30. Complete
Agreement: This Agreement constitutes the complete agreement
between the parties regarding the purchase and sale of the Assets and shall
supercede all prior agreements between the parties in relation thereto, whether
written or oral. In addition, Seller acknowledges and agrees that this Agreement
and the agreement providing for the Royalty Sale supercede and replace that
certain Letter Agreement dated November 25, 2009 between Xxxxxx and Seller, and
the Lock Up Agreements executed in conjunction therewith by the officers and
directors of Seller pursuant to which Buyer was going to acquire all of the
issued and outstanding shares of common stock of Seller.
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31. Counterpart
Execution/Delivery: This Agreement may be executed in one or
more counterparts, each of which shall be considered an original but all of
which together shall constitute one and the same instrument. In addition,
facsimile or scanned email copies of executed counterparts shall be conclusively
regarded for all purposes as originally executed counterparts pending the
delivery of the originals.
This Purchase and Sale Agreement
executed this 26th day of March,
2010.
| SELLER: | BUYER: | |||
| Eternal Energy Corp. | Rover Resources, Inc. | |||
| Per: | /s/ Xxxxxxx X. Xxxxx | Per: | /s/ Xxxxxx X. Xxxxxxx | |
| Xxxxxxx X. Xxxxx | Xxxxxx X. Xxxxxxx | |||
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Chief
Executive Officer
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President
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