1
EXHIBIT 10.5
PURCHASE AND SALE AGREEMENT
THIS AGREEMENT dated as of the 1st day of May, 1999.
BETWEEN:
CABRE EXPLORATION LTD., a body corporate, with offices in the City of
Calgary, in the Province of Alberta (hereinafter referred to as
"Vendor")
- and -
NASTAN RESOURCES LTD. ("Nastan") AND GEOCAN ENERGY INC.
("GEOCAN") both bodies corporate, with offices in the City of Calgary,
in the Province of Alberta (hereinafter collectively referred to as
"Purchaser")
WHEREAS Vendor has agreed to sell to Purchaser and Purchaser has agreed
to purchase from Vendor the Assets on and subject to the terms and conditions of
this Agreement.
NOW THEREFORE THIS AGREEMENT WITNESSES THAT in consideration of the
mutual covenants and agreements set out, the Parties covenant and agree as
follows:
1 DEFINITIONS
1.1 DEFINITIONS. In this Agreement, the following terms have the following
respective meanings, unless the context otherwise requires:
(a) "ABANDONMENT AND RECLAMATION OBLIGATION" means the abandonment
of any Wells, Tangible Interests or Miscellaneous Interests
including, without limitation, any closing, decommissioning,
dismantling and removing of any tangible depreciable property,
Assets on the Lands, or lands pooled, unitized or adjacent
therewith, in connection with such abandonment, and restoring
the surface of the Lands, or lands pooled or unitized
therewith, all in compliance with laws, regulations, orders
and directives of governmental authorities having jurisdiction
with respect to the said abandonment or the said restoration
of the surface of lands;
(b) "AGREEMENT" means this document together with the recitals and
Schedules attached hereto:
(c) "ASSETS" means Vendor's entire interest in the Petroleum and
Natural Gas Rights, the Tangible Interests, and the
Miscellaneous Interests;
(d) "BUSINESS DAY" means a day other than a Saturday, Sunday or
any statutory holiday in Alberta:
(e) "CLOSING" means the exchange of Conveyance Documents between
Vendor and Purchaser on the Closing Date and the payment of
the Purchase Price and other amounts as contemplated in Clause
3.6;
1
2
(f) "CLOSING DATE" means 10:00 o'clock a.m. on the 31st day of
May, 1999 unless such date is amended by agreement in writing
by the Parties;
(g) "CONVEYANCE DOCUMENTS" MEANS THE DOCUMENTS DESCRIBED in Clause
4.3 required to complete the transfer and assignment of the
Assets;
(h) "DEPOSIT" means the payment set forth in Clause 3.6(a);
(i) "DOCUMENTS OF TITLE" means collectively any and all
certificates of title, leases, permits, licenses, unit
agreements, assignments, trust declarations, royalty
agreements, operating agreements or procedures, participation
agreements, farmin and farmout agreements, sale and purchase
agreements, pooling agreements and other agreements by virtue
of which Vendor is entitled to the Petroleum and Natural Gas
Rights;
(j) "DOLLARS" or "$" means Canadian dollars;
(k) "EFFECTIVE DATE" means 8:00 o'clock a.m. Calgary time on the
1st day of January, 1999;
(i) "ENCUMBRANCES" has the meaning ascribed thereto in Clause 1.1
(u)(xii);
(m) "ENVIRONMENTAL DAMAGE" means any one or more of the following:
i) ground water, surface water or aquifer contamination,
ii) soil contamination,
iii) corrosion or deterioration of structures, equipment,
fences, gathering lines or any other Tangible
Interests;
iv) emissions of toxic or hazardous substances, and
v) the effects of non-compliance with any environmental
law, regulation, order or directive of any
governmental authority having jurisdiction at the
relevant time;
(n) "FINAL ADJUSTMENT" means those further accounting and
adjustments, contemplated pursuant to Clause 3.8.1 of this
Agreement, to be made subsequent to the Closing Date;
(o) "GENERAL CONVEYANCE" means the document substantially in the
form of Schedule "C"; attached hereto and as required in
accordance with Clause 4.3;
(p) "INTERIM ADJUSTMENTS" means the interim accounting and
adjustments, contemplated pursuant to Clause 3.8.1 of this
Agreement, to be made on the Closing Date;
(q) "KNOWLEDGE", for purposes of Clauses 10.1 and 11.1, means
Vendor or Purchaser, as the case may be, shall be deemed to
actually know or have knowledge of a matter, circumstance or
thing when such matter, circumstance or thing has come to the
attention of:
2
3
i) an officer of such corporation (who as at the date
hereof and at the Closing Date is an officer of such
corporation); or
ii) based upon an examination of Vendor's records, which
examination has been conducted, an employee or
consultant of such corporation with responsibility
for matters to which the matter, circumstance or
thing relates (who as at the date hereof and at the
Closing Date is an employee or consultant of such
corporation with such responsibility),
under circumstances which a reasonable person would take
cognizance of the matter, circumstance or thing;
(r) "LANDS" means the lands in which Vendor is shown to have an
interest as set forth and described in Schedule "A", but only
insofar as rights to those lands are granted by the Documents
of Title;
(s) "MISCELLANEOUS INTERESTS" means the entire undivided right,
title, estate and interest of Vendor, at the Effective Date,
in and to all property, assets and rights, to the extent
pertaining to Petroleum and Natural Gas Rights or Tangible
Interests (excluding therefrom materials and supplies used in
connection with operations where the costs have not been
charged to the joint account of Persons having an interest
therein and also excluding Petroleum and Natural Gas Rights or
Tangible Interests), but including, without limitation to the
generality of the foregoing:
i) all Documents of Title and other agreements to the
extent relating to Petroleum and Natural Gas Rights
or Tangible Interests or any rights in relation
thereto, including, without limitation, royalty
agreements, joint operating agreements, gas
processing agreements, gas transmission agreements,
gas balancing agreements, common stream agreements,
natural gas transportation agreements and agreements
for the construction, ownership and operation of
facilities;
ii) all non-interpretive production and engineering
information which is not of a proprietary nature and
which relates directly to Petroleum and Natural Gas
Rights or Tangible Interests, that Vendor either has
in its custody or to which Vendor has access, but
excluding:
A. tax, legal and financial records;
B. economic evaluations; and,
C. engineering, geophysical and geological
information, to the extent it discloses
technology or information which is
proprietary to Vendor or information which
Vendor is contractually prohibited from
selling or disclosing to other Persons;
iii) all well-bores and casing associated with the Wells
situate within the Lands, or lands pooled or unitized
including well licences issued in connection with the
Wells;
iv) all rights of Vendor as seller under all agreements
for the sale of Petroleum Substances from the Lands
or lands pooled or unitized therewith (the "relevant
3
4
lands") having a term exceeding thirty-one (3]) days
but only to the extent such agreements are severable
if they contain more lands or zones than the relevant
Lands;
v) all subsisting rights to enter upon, use and occupy
the surface of any of the Lands, or to carry out
operations thereon or therein and any other lands
with which the Lands have been pooled or unitized or
on which Tangible Interests are situate, including
easements, right of way agreements and agreements for
road crossing rights;
(t) "PARTIES" means all parties to this Agreement, and "PARTY"
means any of them;
(u) "PERMITTED ENCUMBRANCES" means:
i) existing easements, rights of way, servitude's or
other similar rights in lands;
ii) the right reserved to or vested in any government or
other public authority by the terms of any statutory
provision, to terminate any Documents of Title or to
require annual or other periodic payments as a
condition of the continuance thereof;
iii) the right reserved to any governmental authority to
levy taxes on Petroleum Substances or the income or
revenue therefrom and governmental requirements as to
production rates on the operations of any property;
iv) 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,
and all applicable laws, rules and orders of any
governmental authority;
v) undetermined or inchoate liens incurred or created as
security in favour of the Person conducting the
operation of any of the Assets for Vendor's
proportion of the costs and expenses of such
operations;
vi) liens for taxes, assessments or governmental charges,
which are not due or which are not delinquent;
vii) mechanics', builders' or materialmen's liens in
respect of services rendered or goods supplied for
which payment is not at the time due;
viii) the reservations, limitations, provisos and
conditions in any original grants from the Crown of
any of the Lands or interests therein and statutory
exceptions to title;
ix) agreements and plans relating to pooling or
unitization;
x) liens granted in the ordinary course of business to a
public utility, municipality or governmental
authority in connection with operations conducted
with respect to the Assets;
4
5
xi) the terms and conditions of the Documents of Title,
provided that such terms and conditions do not create
additional royalty burdens which are not specifically
set forth in Schedule "A";
xii) such royalty burdens and other encumbrances as are
set forth in Schedule "A" under the heading of
"Encumbrances";
xiii) agreements for the sale of production from the
Petroleum and Natural Gas Rights;
xiv) trust obligations in the ordinary course of business;
provided that such trust obligations do not create
beneficial rights of ownership in and to the Assets;
(v) "PERSON" means any natural person, firm, corporation,
partnership, trustee, trust, unincorporated association,
government or government agency not a Party, and pronouns used
in connection therewith have a similar extended meaning;
(w) "PETROLEUM AND NATURAL GAS RIGHTS" means the entire undivided
right, title and interest of Vendor at the Effective Date, in
and to the Petroleum Substances in the Lands or any lands
pooled or unitized therewith and in and to any royalty rights
in the Lands, which interests are, including without
limitation, those interests set forth in Schedule "A":
(x) "PETROLEUM SUBSTANCES" means petroleum, natural gas and
related hydrocarbons and all other substances, whether liquid,
solid or gaseous and whether hydrocarbons or not, insofar as
the rights to such substances or the proceeds therefrom are
granted by the Documents of Title;
(y) "PRIME RATE" means the rate of interest per annum used by the
Canadian Imperial Bank of Commerce from time to time as the
reference rate in determining rates of interest payable on
Canadian dollar demand loans in Canada;
(z) "PURCHASE PRICE" means the sum referred to in Clause 3.1 less
reductions, if any, plus interest which shall have accrued on
such sum, all as calculated in Clause 3.1:
(aa) "RIGHTS OF FIRST REFUSAL" means a right of first refusal,
pre-emptive right of purchase or similar right whereby any
Person, other than Vendor, would have the right to acquire or
purchase all or a portion of the Assets as a consequence of
Vendor having agreed to sell the Assets to Purchaser in
accordance herewith;
(bb) "TAKE OR PAY AMOUNT" means an amount equal to the Take or Pay
payments outstanding at the Effective Date in respect of
production sales agreements attributable to the Assets;
(cc) "TANGIBLE INTERESTS" means the entire undivided interest of
Vendor at the Effective Date in and to all tangible
depreciable property and assets situated in, on or off the
Lands (or lands pooled or unitized therewith) and to the
extent that they are used or intended for use in connection
with producing, gathering, processing, treating, storing,
compressing or transporting Petroleum Substances produced from
the Lands, including, without limitation, all tangible
depreciable property and assets which form part of the Wells;
5
6
(dd) "WELLS" means all producing, suspended, shut-in or abandoned
wells and all water source or injection wells located within
or on the Lands or on any lands with which the Lands have been
pooled or unitized as set forth and described under the
heading "Wells" in Schedule "A".
1.2 DERIVATIVES. When a capitalized derivative of a term defined herein is used,
it shall have the corresponding meaning of the defined term, unless the context
otherwise requires.
1.3 INTERPRETATION. If Closing does not occur, each provision of this Agreement
which presumes Purchaser has acquired the Assets shall be construed as having
been contingent upon Closing having occurred.
1.4 RELATIONSHIP. The rights, duties, obligations and liabilities of each of
Nastan and GEOCAN hereunder shall be separate in accordance with and limited to
the respective interest of each under this Agreement, and not joint, nor
collective, nor joint and several, and each of the Purchasers shall hold their
interest in the Assets as tenants in common. Nothing contained in this Agreement
shall be construed to constitute either of the Purchasers as a partner of the
other or to make either jointly liable for the obligations of the other.
2. SCHEDULES
2.1 LIST OF SCHEDULES. The following are the Schedules attached to and made a
part of this Agreement:
Schedule "A" - Vendors Interest, Petroleum Substances, Lands, Wells and
Encumbrances
Schedule "B" - Officer's Certificates
Schedule "C" - General Conveyance
Schedule "D" - Tangible Interests, facilities and other miscellaneous
matters
Schedule "E" - Production Sales Contracts
Schedule "F" - Outstanding Authorities for Expenditure
2.2 CONFLICTS. In the event of any conflicts between the provisions of the body
of this Agreement and the Schedules, the provisions of the body of this
Agreement shall prevail. In the event of any conflicts between the provisions of
this Agreement and the Documents of Title, the provisions of the Documents of
Title shall prevail.
3. PURCHASE AND SALE
3.1 AGREEMENT OF PURCHASE AND SALE AND PURCHASE PRICE. In accordance with the
terms and conditions of this Agreement, Vendor agrees to sell to Purchaser and
Purchaser agrees to purchase from Vendor, the Assets in the following
proportions, namely:
Nastan 49.70%
GEOCAN 50.30%
Subject to Permitted Encumbrances, for the sum of Four Hundred Ten Thousand and
Six Hundred Dollars ($410,600.00), less reductions thereto, if any, pursuant to
Articles 5 and 6 plus an amount equal to the interest which would have accrued
on such sum, as so reduced, at the Prime Rate plus one (1%)
6
7
percent per annum from and including the Effective Date to and including the day
prior to the Closing Date, calculated daily and not compounded payable by each
of Nastan and GEOCAN, as as to their 49.70% and 50.30% respective interests
herein. The amount allocated to Petroleum and Natural Gas Rights in Clause 3.6
shall be increased by the additional amount paid by Purchaser to Vendor pursuant
to this Clause.
3.2 Obligation to Close. If Nastan or GEOCAN, as the case may be (herein the
"defaulting party") is obliged but is not ready, willing and able to complete
the purchase of the Assets in accordance with this Agreement, the other party
comprising the Purchaser hereunder shall nevertheless be obliged to complete the
said purchase in accordance with this Agreement as to all of the Assets, as if
such other Party was the only Party hereto as Purchaser. If any of the closing
conditions set forth in Clause 7.1 has not been complied with, and one of the
Parties comprising the Purchaser is prepared to waive such non-compliance but
the other Party comprising the Purchaser is not prepared to waive such
non-compliance, the first mentioned Party may at its election complete the
purchase contemplated herein in accordance with this Agreement as to all of the
Assets as if the first mentioned Party was the only Party hereto as Purchaser.
If this clause becomes operative, the Party comprising Purchaser which desires
to proceed to Closing shall advance and pay to the Vendor at Closing an amount
equal to the refunded portion of the Deposit, (if there is no defaulting party)
plus accrued interest thereon.
3.3 PURCHASED ASSETS ONLY. Unless specifically included in the definition of
Assets, all of the other property and assets of Vendor shall be excluded from
the purchase and sale provided for in this Agreement.
3.4 ENVIRONMENTAL MATTERS. In determining the Purchase Price, the Parties have
taken into consideration Purchaser's assumption of all Abandonment and
Reclamation Obligations and of all Environmental Damage associated with the
Assets, whether the same have arisen prior to or subsequent to the Effective
Date.
3.5 ALLOCATION OF PURCHASE PRICE. The Purchase Price shall be allocated among
the Assets in the following manner:
ASSETS
------
(a) Petroleum and Natural Gas Rights (80%) $328,479.00
(b) Tangible Interests (20%) $ 82,120.00
(c) Miscellaneous Interests $ 1.00
-----------
SUB-TOTAL $410,600.00
GST $ 5,748.40
-----------
TOTAL $416,348.40
3.6 PAYMENT OF PURCHASE PRICE. The Purchase Price adjusted for Interim
Adjustments shall be paid in full by Purchaser to Vendor by delivery of
certified cheque(s) or bank draft(s) as follows:
(a) the Vendor acknowledges the receipt of Forty One Thousand and
Sixty dollars ($41,060.00), from the Purchase representing the
Deposit toward the Purchase Price. If Vendor properly
terminates this Agreement pursuant to Article 7 because
a condition precedent set forth in Article 7 is not satisfied
and if such non-satisfaction is due to a failure of Purchaser
to perform its obligations under this Agreement, then the
Deposit together with any interest earned thereon shall be
retained by Vendor as a genuine
7
8
pre-estimate of the damages which the Parties have estimated
Vendor will suffer if the sale pursuant to this Agreement is
not completed. If Vendor or Purchaser otherwise properly
terminates this Agreement pursuant to its terms, the Deposit
together with any accrued interest shall be returned to
Purchaser, each as to 50% thereof. If the sale is concluded
pursuant to the terms of this Agreement, then the principal
amount of the Deposit, together with the interest earned
thereon, shall be paid to Vendor on the Closing Date as part
payment of the Purchase Price with the interest calculated at
Prime Rate plus one percent (1%) per annum; and
(b) the balance of the Purchase Price adjusted for Interim
Adjustments paid on the Closing Date at the place of Closing.
3.7 GOODS AND SERVICES TAX. Purchaser shall also remit to Vendor on the Closing
Date the Goods and Services Tax ("GST") applicable to the Assets. The GST
Registration number for Vendor is R100713833. If before the Closing Date there
is a change in that portion of the Purchase Price allocated to Miscellaneous
Interests, or Tangible Interests, which change is the result of any government
authority or the voluntary re-allocation by the Parties, then the resulting GST
amount shall be adjusted accordingly. If there is an increase in the GST,
Purchaser shall promptly remit to Vendor the amount of such increase together
with any interest and penalties associated therewith. If there is a decrease in
the GST, Vendor shall promptly remit to Purchaser the amount of such decrease.
3.8 ADJUSTMENTS ON AND SUBSEQUENT TO CLOSING DATE.
3.8.1 BASIS OF ADJUSTMENTS. All benefits and obligations of every kind and
nature payable or paid and received or receivable in respect of the Assets,
including without limitation, maintenance, development, operating and capital
costs and the proceeds for the sale of production, shall, except as otherwise
provided herein, be apportioned between Vendor and Purchaser as of the
Effective Date. Costs and expenses for work done, services provided and goods
and services supplied shall be deemed to accrue for the purposes of this Article
when the work is done and the goods or services are provided, regardless of when
such costs and expenses become payable.
(a) INTERIM ADJUSTMENTS.
At least five (5) days prior to the Closing Date, Vendor shall
provide to Purchaser an interim accounting and adjustment in
draft form, together with the information in support thereof,
for review and examination by Purchaser. This interim
accounting and adjustment shall be made by Vendor based upon
all revenues, royalties, operating costs and capital costs
accruing to Purchaser and received by the Vendor for the
period commencing after the Effective Date. All revenues
received by the Vendor, which were not accounted for as of
the Closing and which are due to the Purchaser, shall after
8
9
deducting any obligations or costs attributable to the
Purchaser, be paid to the Purchaser within thirty (30) days of
the receipt by Vendor.
(b) FINAL ADJUSTMENT.
Within twelve (12) months following the Effective Date a
further accounting shall be prepared by Vendor in regard to
all charges and credits to be adjusted between Vendor and
Purchaser. All revenues which are received or receivable by
Vendor from the Assets and which are due to Purchaser shall,
after deducting the obligations and costs for which Purchaser
is responsible, be paid to Purchaser either on the Closing if
they have been received on or before such Closing Date or
within thirty (30) days of receipt thereof, if they are
received after such Closing Date. Any monies received by
Vendor shall be received as agent for and on behalf of
Purchaser. The Vendor shall not be obligated to make any
further adjustments after the twelve (12) months unless a
specific request in writing is received within twelve (12)
months following the Closing Date identifying in reasonable
detail an adjustment required by this Agreement. The aforesaid
twelve (12) month time frame does not apply to sub-clauses (c)
and (d) hereof.
(c) CROWN ROYALTY ADJUSTMENT.
Notwithstanding Clause 3.8.1(b), accounting or adjustments
from Crown royalty audits or crown re-assessments relating to
the period prior to the Effective Date;
(i) for which audit queries or re-assessments are
outstanding as of the Closing Date; or
(ii) that occur after the Closing Date but no later than
forty-eight (48) months following the end of the
calendar year of Closing;
shall be made as they occur and payments for them shall be
made within thirty (30) days of each adjustment and shall be
made by Purchaser to Vendor, or vice versa, as the case may
be.
(d) ADJUSTMENTS RESULTING FROM AUDITS.
Notwithstanding Clause 3.8.1(b), accounting or adjustments
resulting from joint venture audits, or from thirteen month
adjustments for gas plant throughput and gas cost allowance
for the Assets, relating to the period prior to Effective
Date:
(i) for which audit queries or thirteenth month
adjustments are outstanding at Closing Date; or
9
10
(ii) with respect to joint venture audits that occur after
the Closing Date but no later than thirty (30) months
following the end of the calendar year of Closing; or
(iii) with respect to thirteen (13) month adjustments for
gas plant throughput and gas cost allowance, that
occur within four (4) years after the Closing Date,
unless Purchaser has provided written notice to the
Vendor within such four (4) year period, that an
adjustment is outstanding.
shall be made as they occur and payments for them shall be
made within thirty (30) days of each adjustment and shall be
made by Purchaser to Vendor, or vice versa, as the case may
be. Vendor may audit the records of Purchaser relating to such
accounting or adjustments for two (2) years from the date the
adjustment is made and accounting or adjustments resulting
from the audit shall be settled between Vendor and Purchaser
on an item-by-item basis as they occur.
(e) INTEREST.
If a Party fails to pay within the time period established for
the payment of any adjustment, interest shall accrue and be
payable on the unpaid amount of such adjustment at the Prime
Rate plus one (1%) percent per annum from the date such
adjustment is payable until paid.
3.8.2 RENTALS AND TAXES. Notwithstanding the provisions of Clause 3.8.1, rentals
and all similar payments made by Vendor to preserve the Documents of Title,
freehold mineral taxes and property taxes shall be apportioned as between Vendor
and Purchaser on a per diem basis as of the Effective Date, whether paid by
Vendor before or after the Effective Date if relating to the period after the
Effective Date, unless Vendor elects to waive such apportionment of all or any
portion of those payments which have been paid by Vendor and relate to the
period after the Effective Date. Purchaser shall include in its income the
proceeds and expenses related to Petroleum Substances produced on or after the
Effective Date and shall be responsible for the payment of all income tax
payable in respect thereto.
3.8.3 PRODUCTION. With the exception of sulphur, all Petroleum Substances in
inventory (i.e. which have been produced from the Lands and are in tanks or in
any other form of storage) and to which Vendor is entitled at the Effective Date
do not comprise part of the Assets and remain the property of Vendor. The
proceeds from the sale therefrom shall accrue and belong to Vendor. Sales of
Petroleum Substances shall be deemed to occur on a "first in, first out" basis.
Vendor shall reimburse Purchaser for any reasonable charges paid by Purchaser to
Persons for storage or sale of such inventory of Vendor, including costs of
transporting such inventory to the point of sale and royalties payable in
respect of such inventory, notwithstanding the provisions of Clause 3.8.1.
10
11
3.8.4 ACCOUNTS RECEIVABLE. Purchaser shall provide all reasonable assistance to
Vendor with respect to the collection from others of any accounts receivable of
Vendor which relate to the Assets and which accrued prior to the Effective Date.
3.8.5 CASH CALLS. In making adjustments pursuant to this Clause 3.8, Vendor
shall be entitled to a credit for all cash call advances, operating funds,
deposits and similar advances to operators of all or any of the Assets which
stand to the credit of Vendor at the Closing Date and which are assigned to
Purchaser at Closing.
3.8.6 ARBITRATION. If the Parties can not agree as to the adjustments referred
to in Clause 3.8.1(b) hereof, the matter may be referred to arbitration by
either Party for determination by one arbitrator in accordance with the
ARBITRATION ACT OF ALBERTA.
3.8.7 OVERHEAD. From the Effective Date to Closing Date, Cabre, where operator,
shall retain all overhead recoveries earned and the purchase adjustments shall
include:
i) Overhead chargeable, net to the assets acquired, pursuant to
governing agreements; and
ii) overhead of 10% on all expenses incurred by the operated
Assets (which are not included above), as well as on any
invoices paid by Vendor subsequent to Closing Date.
4. CLOSING AND CONVEYANCE DOCUMENTS
4.1 TRANSFER OF POSSESSION. Possession of the Assets will pass from Vendor to
Purchaser on the Closing Date and, for all other purposes, if Closing occurs,
the transfer and assignment of the Assets from Vendor to Purchaser will be
effective as of the Effective Date.
4.2 PLACE OF CLOSING. Unless otherwise agreed in writing by the Parties, Closing
shall take place at the offices of Vendor at 1400, 700-9th Avenue, SW Calgary,
Alberta, on the Closing Date.
4.3 CLOSING AND GENERAL CONVEYANCE DOCUMENTS. Vendor shall prepare, execute and
deliver to Purchaser and Purchaser shall execute and deliver to Vendor on the
Closing Date, a General Conveyance of the Assets in the form of Schedule "C"
hereto, and use its best efforts to provide such other assignments, novations,
transfers, trust agreements and documents, in registrable form to the extent
applicable, respecting the Assets, as may be reasonably required by the Party,
to complete the transfer of the Assets, provided no such document shall require
Vendor to assume or incur any obligation or provide any representation or
warranty beyond that contained in this Agreement. It shall not be necessary for
any assignment and novation agreement to have been executed prior to or at
Closing by parties thereto other than Vendor and Purchaser.
4.4 COST OF REGISTRATION. Purchaser shall bear all costs incurred in registering
all Conveyance Documents relating to the Assets and all costs of preparing and
registering any further Conveyance Documents Purchaser may reasonably require
following Closing, including any fees or penalties which
11
12
are levied, to the Purchaser or Vendor, due to the late or incorrect filing by
the Purchaser. Vendor shall bear all costs of registering discharges of security
interests registered against Vendor's interest in the Assets.
4.5 CIRCULATION OF CONVEYANCE DOCUMENTS. Purchaser shall be responsible for
promptly:
(b) registering all such conveyance documents relating to the
Assets;
(c) obtaining such novations from or giving notice to other
Persons in respect thereof; and
(d) providing written evidence to the Vendor of the execution of
such novations by Persons thereto or written evidence of the
forwarding of notice to other Persons where novations are not
required.
4.6 SUBORDINATION OF AUXILIARY DOCUMENTS. All documents executed by the Parties
and delivered pursuant to the provisions of this Article 4, or otherwise
pursuant to this Agreement, are subordinate to the provisions hereof and the
provisions hereof shall govern and prevail in the event of conflict.
4.7 REGISTRATION OF LEASES. Vendor, shall at the cost of Purchaser, submit for
registration all Crown lease transfers, within two (2) weeks of Closing and
provide to Vendor written evidence of such registration. Vendor shall register
at Purchaser's cost, in the name of GEOCAN, Well licence or pipeline transfers
and change of Well name applications and provide Purchaser with written evidence
of confirmation of such registration.
5. PURCHASER'S REVIEW AND TITLE DEFECTS
5.1 ACCESS FOR INVESTIGATION. Vendor shall allow Purchaser and its employees,
agents, legal counsel, accountants or other representatives, between the date of
this Agreement and the Closing Date, to have access during normal business hours
of Vendor to the premises of Vendor and at the location of the Assets in order
to inspect:
(a) all the books, accounts, and other production data of Vendor
relating to the operations of and revenues resulting from the
operation of the Assets in Vendor's possession;
(b) Documents of Title, material correspondence and technical
operating data of Vendor pertaining thereto; and
(c) the Tangible Interests;
12
13
to enable Purchaser to carry out its due diligence, subject always to
contractual restrictions imposed upon Vendor relating to disclosure. Provided
Closing occurs, Vendor shall deliver the information referred to in Clause
5.1(b) to Purchaser at Closing.
5.2 NOTICE OF THE TITLE DEFECTS. Purchaser shall undertake a title review of the
Assets. As soon as reasonably practicable after completion of its title review
and, in any event, no later than ten (10) Business Days prior to the Closing
Date, Purchaser shall give Vendor written notice of all defects and omissions
which, in the reasonable opinion of Purchaser, materially and adversely affect
the title of Vendor to the Assets and which Purchaser does not waive (all of
which are referred to as "Title Defects"). Title Defects do not include the
Permitted Encumbrances unless Purchaser is of the opinion the royalty burdens or
other encumbrances listed in Schedule "A" under the heading "Encumbrances", are
incorrectly described. Such notice shall include a description of each Title
Defect and the interest affected thereby and to the extent reasonably possible,
Purchaser's requirements for the rectification or curing thereof. Failure to
include any Title Defects in a written notice when required, shall be deemed to
be a waiver of such Title Defects.
5.3 CURING TITLE DEFECTS. Prior to the Closing Date, Vendor shall diligently
make reasonable efforts to cure or remove all Title Defects of which Purchaser
has notified Vendor.
5.4 FAILURE TO REMOVE TITLE DEFECTS. If any Title Defects are not cured or
removed at or before three (3) Business Days prior to the Closing Date,
Purchaser may elect on or before two (2) Business Days prior to the Closing Date
to:
(a) with the agreement of the Vendor, grant a further period of
time within which Vendor may cure or remove the uncured Title
Defects; or
(b) waive the uncured Title Defects and proceed with Closing; or
(c) not purchase at Closing those Assets affected by the uncured
Title Defects which Purchaser does not waive, in which event
the Purchase Price will be reduced by the amount of the values
determined in accordance with Clause 5.5 and Purchaser shall
proceed with Closing with respect to those Assets not affected
by Title Defects which Purchaser does not waive, or
(d) terminate this Agreement, if the portion of the Purchase Price
applicable to the Assets affected by the uncured Title Defects
which Purchaser does not waive exceeds 35% of the Purchase
Price, with values determined in accordance with Clause 5.5,
whereupon neither Vendor nor Purchaser shall have any further
obligation under this Agreement to each other except for those
specified in Article 3.6(a) and Article 9.
13
14
Failure by Purchaser to elect and give notice of election shall he deemed
conclusively to be an election to waive all Title Defects.
5.5 DETERMINATION OF TOTAL VALUE AMONG ASSETS FOR TITLE DEFECTS. If it is
necessary to allocate value to any particular portion of the Assets for the
purposes of Clause 5.4(c), 5.4(d) or Clause 6.3, the Parties shall allocate a
value they can agree upon, acting reasonably. Failing such agreement, then
within three (3) Business Days of notice being given by one Party to the other:
(a) each of them shall provide to the other, at the same time, a
written statement separately setting forth its proposed value
in respect of each of the affected Assets ("Affected Assets");
and
(b) each Party shall submit the determination of the value of the
Affected Assets to J.P. Hunter & Associates Ltd. (the
"Evaluator"), together with written instructions that:
i) the Evaluator, in accordance with good engineering
and evaluation practices, select a value for each of
the Affected Assets from and based only upon the
values submitted by the Parties; and
ii) such evaluation must be completed within five (5)
Business Days from the date of submission.
The fees and other costs to be paid to the Evaluator in respect to the services
performed by it shall be borne in equal shares between Vendor and Purchaser.
Notwithstanding other provision in this Agreement concerning the Closing Date,
if a value is to be determined by the Evaluator and the Evaluator's decision has
not been received by the Parties on or before two (2) Business Days prior to the
Closing Date, then the Closing Date shall be extended automatically to two (2)
Business Days after the Evaluator's decision has been given to the Parties.
Provided however, if a Party fails to provide a determination of value to the
Evaluator together with its written instructions as set out herein, then the
Evaluator shall select the other Party's determination of value and the
transaction shall proceed on the Closing Date.
5.6 CURED TITLE DEFECTS. Notwithstanding the reduction of the Purchase Price
pursuant to Clause 5.4(c), the Purchaser agrees that in the event Vendor is able
to cure or rectify a Title Defect with respect to any particular portion or
portions of the Assets (each a "Cured Asset") within a period of sixty (60) days
after the Closing Date, Purchaser shall purchase such Cured Asset from Vendor at
a date ninety (90) days from the Closing Date at the price by which the Purchase
Price was so adjusted. Purchaser has no obligation to purchase any such Cured
Asset where, in the opinion of Purchaser acting reasonably, the value of such
Cured Asset has declined or been diminished in the intervening period as a
result of new Title Defects or physical damage or loss of such Cured Asset.
14
15
6. RIGHTS OF FIRST REFUSAL
6.1 RIGHTS OF FIRST REFUSAL. The parties acknowledge that some of the Assets may
be subject to Rights of First Refusal or material consents. Purchaser may not
waive the existence or operation of any Right of First Refusal and shall provide
Vendor with its bona fide allocations of the portion of the Purchase Price
allocated to the Asset subject to a Right of First Refusal. Thereafter, Vendor
shall promptly serve all notices required by the applicable Right of First
Refusal utilizing Purchaser's allocations, if they are reasonable. Purchaser
shall, if requested by Vendor, provide access to such information, analysis and
calculations as may be necessary to justify such allocations. Each such notice
shall include particulars of this transaction and a request for a waiver of the
applicable Right of First Refusal.
6.2 EFFECTS OF RIGHTS OF FIRST REFUSAL. Notwithstanding anything to the
contrary, express or implied, Purchaser acknowledges and agrees that if any such
Rights of First Refusal are exercised by any other Person, then:
(a) the Assets subject thereto shall be excluded from this
Agreement, without any liability of either Party to the other,
and the Purchase Price shall be adjusted downward by the
aggregate amount by which such Assets are purchased by such
Persons pursuant to the agreements granting the Rights of
First Refusal;
(b) the Purchase Price shall be reallocated among the Petroleum
and Natural Gas Rights, Tangible Interests and Miscellaneous
Interests as required; and
(c) the items "Assets", "Lands", "Documents of Title",
"Miscellaneous Interests", "Petroleum and Natural Gas Rights"
and "Tangible Interests" shall be construed as meaning only
that portion of the subject matter of these terms with respect
to which Closing occurs.
6.3 RIGHT OF TERMINATION. In the event the value of the Assets subject to
exercised Rights of First Refusal or for which material consents have not been
received exceeds thirty-five (35%) percent of the Purchase Price, then Purchaser
may terminate this Agreement by written notice to Vendor. In such case, neither
Vendor nor Purchaser shall have any further obligation under this Agreement to
the other except for those specified in Article 3.6(a) and Article 9.
7. CLOSING CONDITIONS
7.1 PURCHASER'S CONDITIONS. The obligation of Purchaser to complete the purchase
of the Assets on
15
16
the Closing Date, shall be subject to the fulfilment of each of the following
conditions precedent by the times set forth below or if not stated, at, or prior
to, the Closing Date:
(a) MATERIAL COMPLIANCE OF REPRESENTATIONS AND WARRANTIES AND
OFFICER'S CERTIFICATE. All of the representations and
warranties of Vendor made in this Agreement shall be true and
correct in all respects as of the Closing Date, and Vendor
shall have delivered to Purchaser an officer's certificate in
the form of Schedule "B" and dated as of the Closing Date;
(b) MATERIAL COMPLIANCE BY VENDOR. Vendor shall have performed or
complied with, in all material respects, the terms and
conditions of this Agreement to the extent they are to be
performed at or prior to the Closing Date:
(c) DELIVERY OF CONVEYANCE DOCUMENTS. Vendor shall have executed
and delivered to Purchaser the Conveyance Documents;
(d) ENVIRONMENTAL MATTERS. On or before close of business on the
fifth Business Day prior to the Closing Date, Purchaser shall
have satisfied itself, acting reasonably, that no outstanding
material Environmental Damage is associated with the Assets.
Unless written notice of outstanding material Environmental
Damage is given by Purchaser to Vendor on or prior to the
third Business Day prior to the Closing Date, Purchaser shall
be deemed to have satisfied itself in respect of Environmental
Damage. Vendor shall not be required to conduct or pay for any
environmental audit, but, if Purchaser elects to conduct its
own environmental audit, it shall provide a copy of such
report, without charge, to Vendor;
(e) NO SUBSTANTIAL DAMAGE. From the Effective Date to the Closing
Date, no substantial physical damage, including Environmental
Damage shall have occurred to the Assets, which would have a
material adverse effect on the aggregate value of the Assets;
(f) NO SECURITY INTERESTS. Purchaser receiving registrable
discharges or letters of no interest from the respective
lender in respect of any and all security interests which are
registered against the Assets, or any part thereof, and which
are not to be assumed by Purchaser; and
(g) RIGHTS OF FIRST REFUSAL. No Rights of First Refusal relating
to the Assets shall remain in effect as of the Closing Date,
either having been exercised by the holder thereof or having
been waived by the holder thereof or having expired prior to
the Closing Date, after proper notice being given.
16
17
The foregoing conditions are inserted for the sole benefit of Purchaser. In the
event that any of the foregoing conditions are not fulfilled or met at or prior
to the Closing Date, Purchaser may terminate this Agreement by notice to Vendor,
and in that event Purchaser shall be released from all obligations, other than
those specified in Article 9, and unless Purchaser can show that the condition
or conditions, the non-performance thereof by Vendor has caused Purchaser to
terminate this Agreement, are or were reasonably capable of being performed or
caused to be performed by Vendor, then Vendor shall also be released from all
obligations except those specified in Article 9; provided that any condition may
be waived in writing, in whole or in part, by Purchaser without prejudice to its
right of termination in the event of non-fulfillment of any other condition or
conditions. After the Closing Date, Purchaser may not rescind or terminate this
Agreement and Purchaser's remedies, if any, shall be limited to damages:
7.2 VENDOR'S CONDITIONS. The obligation of Vendor to complete the sale of the
Assets on the Closing Date shall be subject to the fulfillment of each of the
following conditions precedent at or prior to the Closing Date:
(a) MATERIAL COMPLIANCE OF REPRESENTATIONS AND WARRANTIES AND
OFFICERS' CERTIFICATE. All of the representations and
warranties of Purchaser made in this Agreement shall be true
and correct in all respects as of the Closing Date, and
Purchaser shall have delivered to Vendor an officer's
certificate in the form of Schedule "B" and dated as of the
Closing Date;
(b) MATERIAL COMPLIANCE BY PURCHASER. Purchaser shall have
performed or complied with, in all material respects, the
terms and conditions of this Agreement to the extent they are
to be performed at or prior to the Closing Date;
(c) DELIVERY OF DOCUMENTS. Purchaser shall have executed and
delivered to Vendor at least one copy of the Conveyance
Documents;
(d) TENDER OF PURCHASE PRICE. Purchaser shall have tendered to
Vendor, in the form stipulated herein, the Purchase Price
together with an amount equal to the Interim Adjustments
payable to Vendor;
(e) RIGHTS OF FIRST REFUSAL. No Rights of First Refusal relating
to the Assets shall remain in effect as of the Closing Date,
either having been exercised by the holder thereof or having
been waived by the holder thereof or having expired at least
seven (7) days prior to the Closing Date, after proper notice
being given;
(f) OPERATORSHIP. Purchaser shall have provided Vendor with
written documentation to evidence that GEOCAN is an operator
of good standing with the Alberta Energy and
17
18
Utilities Board (EUB) and that the transfer of well licences
relating to this transaction will be accepted and registered
with the EUB.
The foregoing conditions are inserted for the sole benefit of Vendor. In the
event that any of the foregoing conditions are not fulfilled or met at or prior
to the Closing Date, Vendor may terminate this Agreement by notice to Purchaser,
and in that event Vendor shall be released from all obligations, except those
specified in Article 9, and unless Vendor can show that the condition or
conditions the non-performance thereof by Purchaser has caused Vendor to
terminate this Agreement, are or were reasonably capable of being performed or
caused to be performed by Purchaser, then Purchaser shall also be released from
all obligations except those specified in Article 9; provided that any condition
may be waived in whole or in part by Vendor without prejudice to its right of
termination in the event of non-fulfillment of any other conditions. After the
Closing Date, Vendor may not rescind or terminate this Agreement and Vendor's
remedies, if any, shall be limited to damages.
7.3 DILIGENCE WITH RESPECT TO CONDITIONS. Each Party shall proceed diligently,
honestly and in good faith and use reasonable efforts in order to satisfy its
respective conditions set forth in Article 7.
8. MAINTENANCE OF ASSETS
8.1 LIMITATIONS ON VENDOR. From the Effective Date hereof until the Closing
Date, and after the Closing Date, until Purchaser is novated into any Documents
of Title governing the Assets and, to the extent the nature of Vendor's interest
permits and subject always to all terms and conditions of the Documents of
Title, Vendor:
(a) shall, to the extent it is operator of the Assets, maintain
and operate the Assets in a proper and prudent manner in
accordance with generally accepted oil and gas practices and
procedures, provided that Vendor shall have no responsibility
to maintain or obtain insurance with respect to the Assets
from and after Closing;
(b) shall not, without the prior written consent of Purchaser:
i) voluntarily assume or initiate any obligation, or
make any commitment with respect to the Assets, the
Vendor's share of which with respect to any single
item is estimated to exceed twenty-five thousand
Dollars ($25,000.00) or with respect to any project
or proposal, if Vendor's share of the cost of the
project or proposal is estimated to exceed
twenty-five thousand Dollars ($25,000.00);
ii) surrender or abandon any of the Assets;
18
19
iii) amend any Document of Title or enter into any new
agreement of a material nature, respecting the
Assets;
iv) sell any of the Assets, except sales of the
production of Petroleum Substances in the ordinary
course of business;
v) except for Permitted Encumbrances, encumber any of
the Assets; or
vi) exercise any Rights of First Refusal or area of
mutual interest option arising out of the Assets;
except Vendor may without the prior written consent of Purchaser exceed the
guidelines set forth in Clause 8.1(b) i), if reasonably required to protect life
or property in an emergency situation, to comply with laws or to preserve the
value of the Assets if proper and prudent and in accordance with generally
accepted oil and gas practices and procedures, in which case, Vendor shall
promptly notify Purchaser of such action and the estimated cost thereof.
8.2 LIMITATION ON PURCHASER. Until the Closing Date, Purchaser shall not be
entitled to propose to Vendor, or to cause Vendor to propose to others, the
conduct of any operations, or the exercise of any right or option in relation to
the Assets, except with the written consent of Vendor which may be withheld at
Vendor's sole discretion. Vendor shall give prompt notice of any proposal made
to it to Purchaser.
8.3 AFTER CLOSING. After Closing and until novation is completed with respect to
the applicable Documents of Title governing any particular Asset, the following
shall apply with respect to those Assets for which novation is not completed:
(a) Vendor shall promptly forward to Purchaser all information and
documents it receives from others with respect to such Assets;
(b) Vendor shall promptly remit to Purchaser, after having
received from others, all revenues (less expenses paid by
Vendor) which have accrued after the Effective Date in respect
of such Assets; and
(c) Vendor shall make such elections and respond to all notices
received in respect of such Assets in accordance with the
instructions of Purchaser, provided Vendor may, but shall not
be obliged to, follow instructions it reasonably believes to
be harmful or unlawful or in conflict with the applicable
agreement.
(d) In a timely manner, Purchaser shall provide Vendor with copies
of any information, etc., pertaining to Alberta gas cost
allowance which it has filed for the year ending December 31,
1999.
19
20
8.4 RATIFICATION OF VENDOR'S ACTIONS. From and after the Effective Date and
until Purchaser is novated into such Documents of Title, Vendor shall be deemed
to be agent of Purchaser and Purchaser ratifies all actions taken or lack of
action taken by Vendor in connection with the Assets on behalf of Purchaser in
accordance with the terms and provisions of this Agreement other than those
actions for which Vendor has been grossly negligent or where Vendor is guilty of
willful misconduct. Any act or omission of Vendor, its directors, agents or
employees, shall not be considered gross negligence or willful misconduct if
done or omitted in accordance with the instructions or written concurrence of
Purchaser.
8.5 PURCHASER LIABILITY AND INDEMNITY TO VENDOR. If Closing occurs, Purchaser
hereby agrees:
(a) to be liable to Vendor, its directors, agents and employees,
for all losses, costs, damages and expenses which Vendor, its
directors, agents or employees, may suffer, sustain, pay or
incur; and, in addition
(b) to indemnify and save harmless Vendor, its directors, agents
and employees, from and against all liabilities, losses, costs
(including legal costs on a solicitor/client basis), claims,
damages and expenses which may be brought against or suffered
by Vendor or its directors, agents or employees, in relation
to operations as a result of Vendor maintaining the Assets
from and after the Effective Date as agent for Purchaser
pursuant to this Article.8, provided such liability, loss,
cost (including legal costs on a solicitor/client basis),
claim, damage, or expense is not a direct result of the gross
negligence or willful misconduct of Vendor, its directors,
agents or employees. Any act or omission of Vendor, its
directors, agents or employees, shall not be considered gross
negligence or willful misconduct if done or omitted in
accordance with the instructions or concurrence of Purchaser.
9. CONFIDENTIALITY OF PURCHASER
9.1 CONFIDENTIALITY. Until the Closing Date, or in the event of termination of
this Agreement without consummation of the transactions contemplated herein,
Purchaser shall keep confidential all information respecting the Assets obtained
from Vendor. Such confidential information respecting the Assets shall be used
only for the purposes of this acquisition and disclosed only to those of its
employees, agents, legal counsel, accountants or other representatives on a
"need to know" basis. Upon Closing, Purchaser's rights to use or disclose such
information shall be subject only to confidentiality provisions contained in any
operating or other existing agreements that may apply thereto in respect of the
Assets. Any 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 Purchaser without the prior written consent of Vendor. The
20
21
restrictions on disclosure and use of information obtained in connection with
this Agreement shall not apply to information, to the extent it:
(a) is or becomes publicly available through no act or omission of
Purchaser or its employees, agents, consultants, advisors or
other representatives;
(b) is subsequently obtained lawfully from a Person who, after
reasonable inquiry, Purchaser does not know is bound to Vendor
to restrict the use or disclosure of such information;
(c) is already in Purchaser's possession at the time of
disclosure, without any restriction on its disclosure; or
(d) is required to be disclosed pursuant to the applicable
legislation, regulations, or rules or by the direction of any
court, tribunal or administrative body having jurisdiction.
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.
9.2 PURCHASER'S REPRESENTATIVES. If Purchaser employs consultants, advisors or
agents to assist in its review of the items listed in Clause 5.1, Purchaser
shall be responsible to Vendor for ensuring that such consultants, advisors and
agents comply with the restrictions on the use and disclosure of information set
forth in Clause 9.1 and Purchaser shall be liable to Vendor for all damages,
costs or expenses Vendor may suffer or incur as a result of any unauthorized use
or disclosure of such confidential information in contravention of this Clause
9.2 by such representatives of Purchaser.
9.3 RETURN OF CONFIDENTIAL INFORMATION. If Closing does not occur and this
Agreement is terminated, then all documents, working papers and other written
material obtained from Vendor in connection with this Agreement shall be
returned to Vendor forthwith. No copies of such information are to be retained
by Purchaser.
9.4 CONFIDENTIALITY AGREEMENT. The obligations of the Purchaser pursuant to this
Article are in addition to and not in substitution for the obligations of the
Purchaser under the certain confidentiality agreement made as of March 2, 1999
between the Vendor and Nastan with respect to information pertaining to the
Assets.
10. REPRESENTATIONS AND WARRANTIES OF VENDOR
10.1 REPRESENTATIONS AND WARRANTIES OF VENDOR. Vendor hereby represents and
warrants to Purchaser that:
(a) Standing. It is a corporation duly organized and validly
existing under the laws of its jurisdiction of incorporation
and in good standing under the laws of the jurisdiction in
which it is required to be registered in order to hold the
Assets;
21
22
(b) REQUISITE AUTHORITY. It has all necessary corporate power,
authority and capacity to enter into and execute this
Agreement, to sell the Assets and to perform its other
obligations under this Agreement;
(c) NO CONFLICTS. The execution and delivery of this Agreement and
the consummation of the transactions contemplated by this
Agreement will not violate, nor be in conflict with, its
charter, bylaws or similar constating documents of Vendor, or
any provision of any agreement or instrument of a material
nature to which it is a party or is bound, or any judgement,
decree, order, statute, rule or regulations applicable to it
and of which it is aware is in effect in Alberta, except
requirements of Documents of Title to obtain consents of other
Persons who are parties thereto to the sale of the Assets
pursuant hereto;
(d) EXECUTION AND ENFORCEABILITY OF DOCUMENTS. This Agreement has
been duly executed and delivered by it and all other documents
required hereunder to be executed and delivered by it at
Closing pursuant hereto shall be duly executed and delivered.
This Agreement does, and such documents will, constitute
legal, valid and binding obligations of it enforceable in
accordance with their respective terms, subject to the
qualification that their enforceability may be limited by
rules of equity and by insolvency, bankruptcy and other laws
of general application affecting the enforcement of creditors'
rights;
(e) FINDER'S FEES. It has not incurred any obligation or
liability, contingent or otherwise, for brokers' or finders'
fees in respect of this transaction for which Purchaser shall
have any obligation or liability;
(e) LAWSUITS. To its Knowledge, based upon an examination of its
records, no suit, action or other proceeding is in existence,
pending or threatened against or by it before any court or
governmental agency which would materially adversely affect,
Vendor's title to or ownership of the Assets or the value of
the Assets;
(f) CANADIAN RESIDENT. It is not a non-resident of Canada within
the meaning of the Income Tax Act (Canada);
(g) ENCUMBRANCES. The Assets will, to its Knowledge, at the
Closing Date, be free and clear of all liens, encumbrances and
adverse claims created by, through or under it except for the
Permitted Encumbrances, those Title Defects waived by
Purchaser and as otherwise out on Schedule "A" hereto;
22
23
(h) KNOWLEDGE OF DEFAULT. To its Knowledge, it has not received
notice of any material default under any Documents of Title
which default is continuing as of the Closing Date and where
such default would adversely impact upon the value of the
Assets or any part thereof or subject the Documents of Title
to cancellation or termination;
(i) PRODUCTION CONTRACTS. Except as set forth in Schedule "E",
there are no production sales agreements or arrangements under
which it, or any Person acting on its behalf, is obligated to
sell or deliver Petroleum Substances allocable to the
Petroleum and Natural Gas Rights to any Person, other than
contracts which are terminable on less than thirty-two (32)
days' notice:
(j) TAKE OR PAY AMOUNT. To its Knowledge, there are no Take or Pay
Amounts outstanding as of the Effective Date;
(k) REDUCTION OF INTEREST. Except for Permitted Encumbrances and
as disclosed in the Documents of Title, to its Knowledge, the
Petroleum and Natural Gas Rights are not subject to reduction
by virtue of the conversion or other alteration of the
interest of any Person under existing agreements created by,
through or under Vendor;
(l) GOOD STANDING UNDER AGREEMENTS. To its Knowledge, it is not in
breach in any material respect under any material agreements
and instruments having application to the Assets or any part
thereof to which it is a party or is bound;
(m) NET CARRIED INTERESTS. Except as disclosed in the Documents of
Title, to its Knowledge, there are no carried interests
whereby it is obligated to pay a share of the costs associated
with any of the Assets attributable to the interest of another
Person;
(n) PRODUCTION PENALTY. Except as disclosed in the Documents of
Title, to its Knowledge, the Wells related to the Lands are
not subject to a production penalty whereby the production
proceeds allocable to Vendor's interest are payable to a third
party until an amount calculated in respect of certain costs
and expenses paid by such third party are recovered by such
third party;
(o) QUIET ENJOYMENT. Subject to the other representations of
Vendor pursuant hereto and to the rents, covenants, conditions
and stipulations in the Documents of Title reserved and
contained on the lessee's or holder's part thereunder to be
paid, performed and observed, Purchaser may enter into and
upon and hold and enjoy the Assets for the residue of their
23
24
respective term thereof for its own use and benefit without
any lawful interruption of or by Vendor or any other Person
claiming by, through or under Vendor except pursuant to or in
respect of Permitted Encumbrances and those Title Defects
waived by Purchaser;
(p) PAYMENT OF TAXES. To its Knowledge, all ad valorem, property,
production, severance and similar taxes and assessments based
on or measured by the ownership of the Assets or the
production of Petroleum Substances from the Lands or the
receipt of proceeds therefrom payable by it to the Effective
Date have been paid and discharged;
(q) LAWS. To its Knowledge, it has not received notice of default
in any material respect of any decrees, statutes and
regulations of government authorities which relate to the
Assets, the default or failure of which would have a material
adverse effect on the value of the Assets or any part thereof;
(r) JUDGEMENTS AND LAWS. To its Knowledge, Vendor is not in
default of any judgement, order, writ, injunction or decree of
any court, government department, commission or other
administrative agency and it is, to its Knowledge,
substantially complying, in all material respects, with all
decrees, statutes and regulations of governmental authorities;
the default or failure of which by it would have an adverse
effect on the value of the Assets or any part thereof;
(s) ENVIRONMENTAL MATTERS. To its Knowledge, it has not received:
i) any orders or directives which relate to
environmental matters and which require any work,
repairs, construction or capital expenditures with
respect to the Assets;
ii) any demand or notice with respect to the breach of
any environmental law applicable to the Assets,
including, without limitation, any regulations
respecting the use, storage, treatment,
transportation or disposition of petroleum substances
or contaminants; or
iii) notice from the operator advising of operator's
non-compliance with any laws applicable to the Assets
including without limitation any regulations
respecting the use, storage, treatment,
transportation or disposition of petroleum substances
or contaminants;
iv) which orders, directives, demands or notices remain
outstanding as of the Closing Date;
24
25
(t) ENVIRONMENTAL CLAIMS. To its Knowledge, Vendor has not
received any notice of any claim by any third party (including
governmental authorities) of pollution or other Environmental
Damage arising from drilling, production or similar operations
on the Lands or lands pooled or unitized therein or of any
claim requesting that any action be taken to prevent pollution
or other Environmental Damage from drilling, production or
other operations on the Lands or lands pooled or unitized
therewith which notice or claim remains outstanding as of the
date hereof;
(u) OIL AND GAS FIELD PRACTICE. To its Knowledge, where Vendor was
the operator at the relevant time, the Wells related to the
Lands have, in all material respects, been drilled and if
completed, completed and if abandoned, abandoned in compliance
with all statutes, rules and regulations existing at the
relevant time;
(v) RIGHTS OF FIRST REFUSAL. To its Knowledge, no Rights of First
Refusal relating to the Assets shall remain in effect as of
the Closing Date, either having been waived or exercised by
the holder thereof or having expired after proper notice being
given;
(x) OUTSTANDING AFE'S. Other than as disclosed in Schedule "F",
there are no authorizations for expenditures approved by it
with respect to the Assets pursuant to which amounts in excess
of twenty-five thousand Dollars ($25,000.00) may become
payable after the date hereof and there are no outstanding
cash calls in excess of twenty-five thousand Dollars
($25,000.00) with respect to the Assets;
(y) DISCLOSURE OF DOCUMENTS. To its Knowledge, all documents and
agreements affecting the title to the Assets or production or
revenue from the Assets will have been made available by
Vendor to Purchaser by the Closing Date, with exception of
those contracts for the sale of Petroleum Substances which
have a term equal to or less than thirty-two (32) days; and
(z) ROYALTIES. All royalties payable by Vendor in respect of the
Petroleum and Natural Gas Rights have been properly paid as of
the Effective Date.
10.2 NO WARRANTY OF TITLE. Notwithstanding anything contained in this Article
10, Vendor does not warrant title to the Assets or purport to convey any better
title than it now has.
10.3 NO OTHER VENDOR WARRANTIES. Vendor makes no warranty whatsoever except as
and to the extent set forth in Clause 10.1. Without limiting the generality of
the foregoing, Vendor does not make any representation or warranty with respect
to:
(a) the quality, quantity or recoverability of the Petroleum
Substances within or under the Lands or any lands pooled or
unitized therewith;
25
26
(b) the value of the Assets or the future revenues applicable
thereto,
(c) any economic evaluations respecting the Assets, or
(d) the quality, condition, merchantability or serviceability of
all or any of the Tangible Interests, or their suitability for
any particular purpose
11. REPRESENTATIONS AND WARRANTIES OF PURCHASER
11.1 REPRESENTATIONS AND WARRANTIES OF PURCHASER. Purchaser hereby represents
and warrants to Vendor that:
(a) STANDING. It is a corporation duly organized and validly
existing under the laws of its jurisdiction of incorporation
and in good standing under the laws of the jurisdiction in
which it is required to be registered in order to hold the
Assets;
(b) REQUISITE AUTHORITY. It has all necessary corporate power,
authority and capacity to enter into this Agreement and to
purchase and pay for the Assets, on the terms described herein
and to perform its other obligations under this Agreement;
(c) NO CONFLICTS. The execution and delivery of this Agreement and
the consummation of the transactions contemplated by this
Agreement will not violate nor be in conflict with its
charter, bylaws or similar constating documents of it, or any
provision of any agreement or instrument to which it is a
party or is bound, or any judgement, decree, order, statute,
rule or regulation applicable to Purchaser in effect in
Alberta of which it is aware;
(d) EXECUTION AND ENFORCEABILITY OF DOCUMENTS. This Agreement has
been duly executed and delivered by it and all other documents
required hereunder to be executed and delivered by it at
Closing pursuant hereto shall be duly executed and delivered.
This Agreement does, and such documents will, constitute
legal, valid and binding obligations of it enforceable in
accordance with their respective terms, subject to the
qualification that their enforceability may be limited by
rules of equity and by insolvency, bankruptcy and other laws
of general application affecting the enforcement of creditors'
rights;
(e) FINDER'S FEES. It has not incurred any liability, contingent
or otherwise, for brokers' or finders' fees in respect of this
transaction for which Vendor shall have any obligation or
liability
26
27
(f) THE INVESTMENT CANADA ACT. Either it is not a "non-Canadian"
as such term is defined in The Investment Canada Act, or, if
it is such "non-Canadian", then either the transaction herein
is not notifiable or reviewable under such Act or such Party
will make application to satisfy the requirements of such Act
so that the transaction herein provided for may be completed
on the Closing Date without contravention of the Act;
(g) PURCHASER AS PRINCIPAL. It is acquiring the Assets in its
capacity as a principal;
(h) FINANCING CAPABILITY OF PURCHASER. It either now has or will
have at Closing sufficient funds to close the transactions
hereby contemplated upon the Closing Date;
(i) COMPETITION AND SECURITIES ACTS. It has complied with the
Competition Act (Canada) and the relevant Securities Acts to
the extent applicable to the transaction herein, and
(j) TRANSFER OF WELL LICENCES. To its Knowledge, Purchaser is not
in breach of any orders or directives of the Alberta Energy
Utilities Board ("AEUB"), nor is Purchaser aware of any other
matter, which would result in an undue delay or an inability
to register the transfer of well licences for the Wells in the
name of GEOCAN.
11.2 PURCHASER'S OWN EXAMINATION AND EVALUATION. Without detracting from
Purchaser's reliance on Vendor's representation and warranties in Clause 10.1,
Purchaser acknowledges that as of the Closing Date it will have made its own
independent investigation, analysis, evaluation and inspection of Vendor's
interest in the Assets, including a review of Vendor's title thereto and the
state and condition thereof, and will have relied on its own investigation,
analysis, evaluation and inspection as to its assessment of the condition,
quantum and value of the Assets and Vendor's title thereto.
11.3 OPERATORSHIP. Purchaser acknowledges that nothing in this Agreement shall
be construed to be an assurance by Vendor that GEOCAN will be able to serve as
operator of any of the Assets, whether or not such Assets are presently operated
by Vendor.
11.4 GAS COST ALLOWANCE. Vendor and Purchaser shall co-operate in the timely
preparation of gas cost allowance filings which may be required of the parties
from time to time. Purchaser agrees to do such reasonable things in a timely
manner, as Vendor may request, to provide to Vendor or to the Crown information
required by Vendor for such filings.
27
28
12. SURVIVAL OF REPRESENTATIONS AND WARRANTIES
12.1 DATES REPRESENTATIONS AND WARRANTIES APPLY. The representations and
warranties of the Parties set forth in Clauses 10.1 and 11.1 shall be true or
performed, as the case may be, as at the Effective Date and the Closing Date.
12.2 LIMITATION OF LIABILITY. The representations and warranties contained
herein shall survive the Closing Date, notwithstanding the Closing and delivery
of any covenants, representations and warranties in any other agreements prior
or subsequent thereto, and shall remain in full force and effect for the benefit
of Purchaser with respect to Clause 10.1 and for the benefit of Vendor with
respect to Clause 11.1, but no claim or action in respect of any breach of such
representation or warranty shall be made unless the Party making such claim or
bringing such action has given notice of such claim (including reasonable
particulars of the misrepresentations or breach) to the other within twelve (12)
months following the Closing Date. Notwithstanding any other provision of this
Agreement:
(a) a Party shall not be entitled to any payment from the other
Party for breach of any covenants, representations or
warranties referred to in Clauses 10.1 and 11.1 for
misrepresentation pursuant to this Agreement or for
indemnification pursuant to Clause 13.1, unless a claim(s) by
such Party exceeds in aggregate Two Thousand Five Hundred
Dollars ($2,500.00); and
(b) the maximum aggregate liability of Vendor to Purchaser for any
breaches of any covenants, representations or warranties
referred to in Clause 10.1, for misrepresentation pursuant to
this Agreement and in respect of any claims for indemnity
pursuant to Clause 13.1, shall not in any event exceed the
Purchase Price.
12.3 KNOWLEDGE BY PURCHASER. Purchaser shall have no remedy or cause of action
for a breach of representation or warranty for any circumstance, matter or thing
actually known to Purchaser, or any employee, agent, consultant or
representative thereof, as at the Closing Date.
12.4 NOT TRANSFERABLE. The representations and warranties set forth in Clauses
10.1 and 11.1 are made for the exclusive benefit of Purchaser and Vendor, as the
case may be, and are not transferable and may not be the subject of any rights
of subrogation in favour of any other Person.
13. INDEMNITY
13.1 INDEMNITY OF VENDOR. Subject to Clauses 12.2 and 13.4, Vendor shall
indemnify Purchaser and its directors, employees and agents from and against all
Losses which Purchaser, its directors, employees or agents, pays or pay to third
parties as a consequence of a breach, as of the Closing Date, of any
representations and warranties of Vendor contained in Clause 10.1 of this
Agreement, excepting any Losses, if and to the extent caused by the gross
negligence or wilful default of Purchaser, its successors, agents or assigns.
The indemnity granted by Vendor in this
28
29
Clause 13.1 is not a title warranty and does not provide an extension
of any representation or warranty contained in Clause 10.1 or any
additional remedy with regard to the breach by Vendor of any
representation or warranty. Furthermore, the indemnity of Vendor to
Purchaser granted pursuant to this Clause 13.1 shall only apply to
claims of indemnity made by Purchaser to Vendor by giving written
notice to Vendor within twelve (12) months following the Closing Date
and, in any event, the maximum aggregate liability and indemnity of
Vendor to Purchaser for Losses suffered by Purchaser pursuant hereto
and as a result of any breaches of any representations or warranties
shall not exceed the Purchase Price.
13.2 PURCHASER'S LIABILITY AND INDEMNITY TO VENDOR. If Closing occurs and in
addition to indemnity under Clause 8.5, Purchaser hereby agrees:
(a) to be liable to Vendor, its directors, agents and employees,
for all Losses which Vendor, its directors, agents or
employees, pay, suffer, sustain or incur, and, in addition;
(b) to indemnify and save harmless Vendor, its directors, agents
and employees, from and against all Losses which may be
brought against or suffered by Vendor, its directors, agents
or employees,
in relation to the Assets and arising out of or in connection with operations
which arise on or subsequent to the Effective Date, excepting any Losses if, and
to the extent, caused by the gross negligence or wilful default of Vendor or
its agents or arise as a result of a breach by Vendor of any of the terms of
this Agreement.
13.3 PURCHASER'S ASSUMPTION OF ENVIRONMENTAL DAMAGE AND ABANDONMENT AND
RECLAMATION OBLIGATION. Purchaser acknowledges that it has been given the
opportunity to inspect the Assets prior to Closing Date; that it is familiar
with the condition of the Assets, and that it is acquiring the Assets on an "as
is" basis. Upon the Effective Date, Purchaser assumes the entire responsibility
and liability for all Losses which Vendor may suffer, sustain or incur, and, in
addition shall indemnify and save harmless Vendor and its directors, employees
and agents from and against all Losses which may be brought against Vendor or
which Vendor, its directors, employees or agents, may suffer, sustain or incur
in connection with or as a result of each and every act or omission, matter or
thing related to the Assets done, omitted, occurring or accruing on, prior to or
subsequent to the Effective Date with respect to any Environmental Damage or any
Abandonment and Reclamation Obligation and without regard to how or who caused
such Losses, except, subject to the provisions of Clause 12.2 to the extent that
same relate to inaccuracies or failure of the representations and warranties set
forth in Clause 10.1.
13.4 LOSSES. For the purpose of this Article 13, "Losses" means losses, costs,
claims, damages, expenses and liabilities and includes, without limitation,
legal costs on a solicitor and client basis.
29
30
14. ONGOING COVENANTS OF PURCHASER
14.1 DOCUMENTS OF TITLE. On and after the Closing Date, Purchaser agrees with
Vendor it shall be bound by, observe and perform, as they become due, all
covenants, obligations and liabilities respecting the Assets, including, without
limitation, the performance of all obligations of Vendor under the Documents of
Title and other agreements respecting the Assets.
14.2 VENDOR'S ACCESS TO RECORDS. On and after the Closing Date, Purchaser hereby
agrees to allow Vendor, its employees, agents, legal counsel, accountants and
other representatives, to have access to the premises of Purchaser during normal
business hours of Purchaser in order to inspect and take copies of such
information delivered by Vendor to Purchaser in accordance with Clause 5.1, if
reasonably required by Vendor, in connection with any joint venture or Crown
audit, any potential or threatened legal or administrative proceeding by or
against Vendor in relation to the Assets, or to enable Vendor to comply with a
law or the requirement of any governmental authority. Nothing herein shall
prevent Vendor from making and retaining copies of any such documents at any
time. Vendor shall hold all information and documents confidential and that same
shall only be used by Vendor for the purpose specified by Vendor.
14.3 INITIATION OF AUDITS. On and after the Closing Date up until Final
Adjustments are made, Purchaser shall advise Vendor of the initiation and
results of any joint venture or Crown audit in relation to the Assets to the
extent it relates to any matters accruing prior to the Effective Date.
15. NO MERGER
15.1 NON-MERGER. The representations and warranties set forth in Clauses 10.1
and 11.1 and the indemnities set forth in Article 13 and the covenants in
Article 14 shall be deemed to apply to all assignments, transfers and other
Conveyance Documents and there shall not be any merger of any representation,
warranty, indemnity or covenant in such assignments, transfers or other
Conveyance Documents, notwithstanding any rule of law, equity or statute to the
contrary and all such rules are hereby waived.
16. NOTICE
16.1 METHOD OF NOTICE. Any notice, communication or other document (hereinafter
called "Notice") required or permitted to be given under this Agreement by one
Party to the other shall be in writing and shall be sufficiently given and
received if:
(a) personally served on the Person to whose attention the Notice
is to be addressed pursuant to Clause 16.2, at the time of
actual delivery, or, if delivered by hand to a responsible
30
31
Person at the address of the Party to which such Notice is
directed, two (2) hours following delivery to such Party;
provided that if such time of deemed receipt is not within the
normal business hours of the recipient Party, then such Notice
shall be deemed received at the next commencement of business
on a day that business is normally conducted by the recipient
Party;
(b) sent by telecopy (or by any other like method of telefacsimile
by which a written message may be sent) and directed to the
Person to whose attention the Notice is to be addressed
pursuant to Clause 16.2 at that Party's telecopier number set
forth below, and such Notice so given shall be deemed to have
been received by the recipient, if the time of transmission is
stated, two (2) hours following the time so stated; provided
that if such time of deemed receipt is not within the normal
business hours of the recipient Party, then such Notice shall
be deemed received at the next commencement of business on a
day that business is normally conducted by the recipient
Party; or
(c) mailed by first class registered post, postage prepaid, to the
other Party (such Notice so served shall be deemed to have
been received by the recipient Party on the fourth (4th)
Business Day of such recipient Party following the date of
mailing thereof); provided that in the event of an actual or
threatened postal strike or other labour disruption that may
affect the mail service, Notices shall not be mailed.
31
32
16.2 ADDRESS FOR NOTICE. The address for Notice for each of the Parties shall be
as follows:
VENDOR: PURCHASER:
Cabre Exploration Ltd. Nastan Resources Ltd.
P.O. Box 630, Station "M" Suite 2210, 800 - 5th Avenue SW
Calgary, Alberta Calgary, Alberta
T2P 2J3 T2P 3T6
Attention: Vice President, Attention: Land Manager
Land and Contracts Fax: (403) 508-1265
Fax: (403) 262-5908
and
GEOCAN Energy Inc.
800, 717 - 7th Avenue SW
Calgary, Alberta
T2P 3H3
Attention: Land Manager
Fax: (403) 261-3834
16.3 CHANGES ADDRESS FOR NOTICE. Any Party may, from time to time, change its
address for Notice by giving written notice to the other.
17. MISCELLANEOUS PROVISIONS
17.1 PUBLIC ANNOUNCEMENTS. No Party shall release any information concerning
this Agreement and the transaction herein provided for without the prior written
consent of Vendor, which will not be withheld unreasonably. Nothing contained
herein shall prevent any Party at any time from furnishing information to any
governmental agency or regulatory authority or to the public if required by
applicable law or if such Party considers it to be advisable in the
circumstances, provided that the Parties shall advise each other in advance of
any public statement which they propose to make regarding the said transaction.
Nothing herein contained shall prevent Vendor from furnishing information
relating to the said transaction or the identity of Purchaser in connection with
the procurement of the consent of other Persons or in sending notices concerning
any Right of First Refusal where required pursuant to any Documents of Title.
17.2 SIGNS AND NOTIFICATIONS. After Closing, Vendor may remove any signs which
indicate Vendor's ownership or operation of the Assets. It shall be the
responsibility of Purchaser, where necessary, to erect or install any signs that
may be required by governmental agencies indicating Purchaser to be the owner of
the Assets and to notify contractors, governmental agencies and any other Person
of Purchaser's interest in the Assets.
32
33
17.3 HEADINGS AND DESCRIPTIONS. The headings of all Articles, Clauses and
Subclauses are inserted for convenience of reference only and shall not affect
the construction or interpretation of this Agreement, or any provision thereof.
Use of words "Article", "Clause" or "Subclause" in this Agreement refers to an
Article, Clause or Subclause of this Agreement unless a contrary intention is
specifically stated.
17.4 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 or vice versa, as the context
requires.
17.5 CONFLICTS AND ENTIRE AGREEMENT. The provisions contained in all documents
and agreements collateral hereto shall at all times be read subject to the
provisions of this Agreement and, in the event of conflict between the
provisions contained in any documents or agreements collateral hereto and the
provisions of this Agreement, the provisions of this Agreement shall prevail
unless otherwise expressly provided herein.
17.6 WAIVER. Any waiver of any term or condition of this Agreement or consent to
any departure from this Agreement by one Party to the other shall be effective
only if in writing and only in the specific instance and for the specific
purpose for which it is given.
17.7 APPLICABLE LAW. This Agreement shall be construed and enforced in
accordance with the laws in effect in the Province of Alberta. Each Party
attorns to the jurisdiction of the courts of the Province of Alberta and all
courts of appeal therefrom.
17.8 ENTIRE AGREEMENT. This Agreement constitutes the entire agreement between
the Parties with respect to the transactions contemplated herein, contains all
of the representations and warranties of the respective Parties and supersedes
all prior agreements, documents, writing and verbal understandings between the
Parties with respect to the sale of the Assets.
17.9 AMENDMENTS. This Agreement may not be amended or modified in any respect,
except by written instrument executed by the Parties.
17.10 TIME OF THE ESSENCE. Time shall be of the essence of this Agreement and of
every part thereof.
17.11 FURTHER ASSURANCES. After Closing, the Parties shall do all things and
provide all assurances, as may be reasonably required to consummate the
transactions contemplated by this Agreement, and each Party shall provide those
further documents or instruments as may be reasonably required by the other
Parties to give effect to this Agreement and to carry out its provisions.
33
34
17.12 ASSIGNMENT. Prior to Closing, neither this Agreement nor any rights or
obligations under it shall be assignable by any Party without the prior written
consent of the other Parties. After the Closing Date, no assignment, transfer of
the Agreement of all or any portion of the Assets, by Purchaser shall relieve
Purchaser from the obligations to Vendor herein, unless Vendor otherwise agrees.
Subject thereto, this Agreement shall enure to the benefit of and be binding
upon the Parties, and their respective successors and permitted assigns.
17.13 COUNTERPART EXECUTION. This Agreement may be executed in counterpart and
all counterparts together shall form one binding Agreement.
IN WITNESS WHEREOF the parties have duly executed this Agreement as of
the date and year first above written.
VENDOR PURCHASER
CABRE EXPLORATION LTD. NASTAN RESOURCES LTD.
PER: /s/ R.G. JENSEN PER: /s/ [ILLEGIBLE]
------------------------------------ -------------------------------
R.G. Jensen - Vice President,
Land and Contracts
PER: /s/ J. DOUGLAS KAY PER:
------------------------------------ -------------------------------
J. Douglas Kay - President and
Chief Executive Officer
GEOCAN ENERGY INC.
PER: /s/ WAYNE WADLEY
-------------------------------
PER: /s/ [ILLEGIBLE]
-------------------------------
34
35
THIS IS SCHEDULE "A" TO AND FORMING PART OF A PURCHASE AND SALE AGREEMENT
BETWEEN CABRE EXPLORATION LTD., AS VENDOR, AND NASTAN RESOURCES LTD. AND GEOCAN
ENERGY INC. AS PURCHASER, MADE AS OF THE 1ST DAY OF MAY, 1999
- --------------------------------------------------------------------------------
LANDS AND PETROLEUM
SUBSTANCES VENDOR'S INTEREST ENCUMBRANCES
- ------------------- ----------------- ------------
SW Section 25-69-9W5M 43.75% -Crown SS
P&NG to base Beaverhill Lake
WELLS
4-25-69-9W5M
35
36
THIS IS SCHEDULE "B" TO AND FORMING PART OF A PURCHASE AND SALE AGREEMENT
BETWEEN CABRE EXPLORATION LTD., AS VENDOR, AND NASTAN RESOURCES LTD. AND GEOCAN
ENERGY INC. AS PURCHASER, MADE AS OF THE 1ST DAY OF MAY, 1999
- --------------------------------------------------------------------------------
VENDOR'S OFFICER'S CERTIFICATE
RE: Clause 7.1(a) of the Purchase and Sale Agreement ("Agreement") made
as of May 1, 1999 between Cabre Exploration Ltd., as Vendor, and Nastan
Resources Ltd. and GEOCAN Energy Inc., as Purchaser
Unless otherwise stated, the definitions provided for in the Agreement
are adopted in this Certificate.
I, J. Douglas Kay, President and Chief Executive Officer of Cabre
Exploration Ltd. (the "Company"), hereby certify that as of the date of
this Certificate:
(a) The covenants, representations and warranties of the Company
contained in Clause 10 of the Agreement are true and correct
in all material respects.
(b) This Certificate is made for and on behalf of the Company and
is binding upon it and the deponent herein is not and will not
incur any personal liability whatsoever with respect to it.
IN WITNESS WHEREOF I have executed this Certificate effective the 31
day of May, 1999.
Vendor
CABRE EXPLORATION LTD.
Per: /s/ J. DOUGLAS KAY
-----------------------------------
J. Douglas Kay - President and Chief
Executive Officer
36
37
SCHEDULE "B"
-2-
- --------------------------------------------------------------------------------
PURCHASER'S OFFICER'S CERTIFICATE
RE: Clause 7.2(a) of the Purchase and Sale Agreement ("Agreement") made
as of May 1, 1999 between Cabre Exploration Ltd., as Vendor, and Nastan
Resources Ltd. and GEOCAN Energy Inc., as Purchaser
Unless otherwise stated, the definitions provided for in the Agreement
are adopted in this Certificate.
I, __________________________, President of Nastan Resources Ltd. (the
"Purchaser"), hereby certify that as of the date of this Certificate:
(a) The covenants, representations and warranties of the Purchaser
contained in Clause 11 of the Agreement are true and correct
in all material respects.
(b) This Certificate is made for and on behalf of the Purchaser
and is binding upon it and the deponent herein is not and will
not incur any personal liability whatsoever with respect to
It.
IN WITNESS WHEREOF I have executed this Certificate effective the 31 day of
May, 1999.
Purchaser
NASTAN RESOURCES LTD.
Per: /s/ [ILLEGIBLE]
-----------------------------------
Title
37
38
SCHEDULE "B"
-3-
- --------------------------------------------------------------------------------
PURCHASER'S OFFICER'S CERTIFICATE
RE: Clause 7.2(a) of the Purchase and Sale Agreement ("Agreement") made
as of May 1, 1999 between Cabre Exploration Ltd., as Vendor, and Nastan
Resources Ltd. and GEOCAN Energy Inc., as Purchaser
Unless otherwise stated, the definitions provided for in the Agreement
are adopted in this Certificate.
I, Wayne Wadley President of GEOCAN ENERGY INC. (the "Purchaser"),
hereby certify that as of the date of this Certificate:
(a) The covenants, representations and warranties of the Purchaser
contained in Clause 11 of the Agreement are true and correct
in all material respects.
(b) This Certificate is made for and on behalf of the Purchaser
and is binding upon it and the deponent herein is not and will
not incur any personal liability whatsoever with respect to
It.
IN WITNESS WHEREOF I have executed this Certificate effective the 31st day of
May, 1999.
Purchaser
GEOCAN ENERGY INC.
Per: /s/ WAYNE WADLEY
-----------------------------------
Title
38
39
THIS IS SCHEDULE "C" TO AND FORMING PART OF A PURCHASE AND SALE AGREEMENT
BETWEEN CABRE EXPLORATION LTD. AS VENDOR, AND NASTAN RESOURCES LTD. AND GEOCAN
ENERGY INC., AS PURCHASER, MADE AS OF THE 1ST DAY OF MAY, 1999
- --------------------------------------------------------------------------------
CONVEYANCE
THIS INDENTURE AND AGREEMENT made as of the 1st day of May, 1999.
BETWEEN:
CABRE EXPLORATION LTD., a body corporate, having an office in
the City of Calgary, in the Province of Alberta, (hereinafter
called "Vendor")
OF THE FIRST PART
- AND -
NASTAN RESOURCES LTD. and GEOCAN ENERGY INC., both bodies
corporate, having offices in the City of Calgary, in the
Province of Alberta, (hereinafter called "Purchaser")
OF THE SECOND PART
WHEREAS Vendor has agreed, pursuant to a Purchase and Sale Agreement
dated as of the 1st day of May, 1999 (hereinafter called the "Sale Agreement"),
to convey to Purchaser all of its interest in and to the Assets, insofar as
those terms are defined therein.
NOW THEREFORE THIS AGREEMENT WITNESSETH that, for the consideration
provided in the Sale Agreement, the receipt and sufficiency of which is hereby
acknowledged by Vendor has agreed to sell and by these presents does bargain,
sell, assign, transfer and convey to Purchaser all of its right, title, interest
and property whatsoever in, to or arising out of the Assets, in the following
proportions:
Nastan 49.70%
GEOCAN 50.30%
To have and to hold for its own use and benefit on the terms herein provided.
IT IS FURTHER AGREED BETWEEN THE PARTIES AS FOLLOWS:
39
40
1. DEFINITIONS
In this Conveyance, the definitions set forth on the Sale Agreement
shall apply hereto.
2. TITLE
Purchaser hereby covenants and agrees with Vendor that nothing herein,
expressed or implied, shall operate to have effect as any warranty or
guarantee of title or covenant for title on the part of Vendor and that
the representations and warranties contained in the Sale Agreement
shall apply hereto for the period provided in the Sale Agreement.
3. EFFECTIVE DATE
Vendor and Purchaser agree that the effective date of this transaction
shall be 8:00 a.m. Calgary time on January 1, 1999.
4. ACCEPTANCE
Purchaser hereby accepts this Conveyance and in consideration thereof,
Purchaser hereby assumes and agrees to perform and be bound by all
terms and conditions of the contracts, agreements and documents
included in the Assets.
5. FURTHER ASSURANCES
Vendor and Purchaser will each from time to time, and at all times
hereafter, at the request and cost of the other, do and perform all
such acts and things, and execute all such assurances, deeds, documents
and writings with respect to the Assets as the other may reasonably
require in order to carry out the purposes of this Conveyance.
6. SALE AGREEMENT
The terms hereof shall be read in conjunction with the terms of the
Sale Agreement and subject thereto. In the event of any conflict
between the provisions of this Conveyance and the Sale Agreement, the
Sale Agreement shall prevail.
7. ENUREMENT
This conveyance shall extend to and be binding upon the parties hereto
and their successors and assigns.
40
41
8. COUNTERPART EXECUTION
This conveyance may be executed in counterpart and all counterparts
together shall form one binding Agreement.
IN WITNESS WHEREOF the parties hereto have executed this Conveyance by
their proper officers duly authorized in that behalf as of the effective date.
Vendor
CABRE EXPLORATION LTD.
Per: /s/ R.G. JENSEN
------------------------------------
R.G. Jensen - Vice President, Land and
Contracts
Per: /s/ J. DOUGLAS KAY
-----------------------------------
J. Douglas Kay - President and Chief
Executive Officer
Purchaser
NASTAN RESOURCES LTD.
Per: /s/ [ILLEGIBLE]
-----------------------------------
Per:
-----------------------------------
GEOCAN ENERGY INC.
Per: /s/ WAYNE WADLEY
-----------------------------------
Per:
-----------------------------------
41
42
THIS IS SCHEDULE "D" TO AND FORMING PART OF A PURCHASE AND SALE AGREEMENT
BETWEEN CABRE EXPLORATION LTD. AS VENDOR, AND NASTAN RESOURCES LTD. AND GEOCAN
ENERGY INC. AS PURCHASER, MADE AS OF THE 1ST DAY OF MAY, 1999
- --------------------------------------------------------------------------------
TANGIBLES, FACILITIES AND OTHER MISCELLANEOUS MATTERS
Description Vendor's Interest
API 160 PUMPJACK 43.75%
ARROW 66 PUMPJACK ENGINE
2,400 BARREL TANKS
42
43
THIS IS SCHEDULE "E" TO AND FORMING PART OF A PURCHASE AND SALE AGREEMENT
BETWEEN CABRE EXPLORATION LTD., AS VENDOR, AND NASTAN RESOURCES LTD. AND GEOCAN
ENERGY INC., AS PURCHASER, MADE AS OF TILE 1ST DAY OF MAY, 1999
- --------------------------------------------------------------------------------
PRODUCTION SALES AGREEMENTS
There are no production sales agreements or arrangements under which
Vendor, or any Person acting on its behalf, is obligated to sell or deliver
Petroleum Substances allocable to the Petroleum and Natural Gas Rights to any
Person which are not terminable on less than thirty-two (32) days' notice.
43
44
THIS IS SCHEDULE "F" TO AND FORMING PART OF A PURCHASE AND SALE AGREEMENT
BETWEEN CABRE EXPLORATION LTD., AS VENDOR, AND NASTAN RESOURCES LTD. AND GEOCAN
ENERGY INC., AS PURCHASER, MADE AS OF THE 1ST DAY OF MAY, 1999
- --------------------------------------------------------------------------------
OUTSTANDING AUTHORIZATIONS FOR EXPENDITURE
There are no outstanding authorizations for expenditure approved by
Vendor with respect to the Assets pursuant to which amounts in excess
of twenty-five thousand Dollars ($25,000.00) may become payable after
the date hereof.
44
45
PURCHASE AND SALE AGREEMENT
THIS AGREEMENT dated as of the 1st day of June, 1999.
BETWEEN:
PERMEZ PETROLEUMS LTD., a body corporate, with offices in the
City of Calgary, in the Province of Alberta (hereinafter
referred to as "Vendor")
- and -
NASTAN RESOURCES LTD. ("NASTAN") and GEOCAN ENERGY INC.
("GEOCAN") both bodies corporate, with offices in the City of
Calgary, in the Province of Alberta (hereinafter collectively
referred to as "Purchaser")
WHEREAS Vendor has agreed to sell to Purchaser and Purchaser has agreed
to purchase from Vendor the Assets on and subject to the terms and conditions of
this Agreement.
NOW THEREFORE THIS AGREEMENT WITNESSES THAT in consideration of the
mutual covenants and agreements set out, the Parties covenant and agree as
follows:
1. DEFINITIONS
1.1 DEFINITIONS
In this Agreement, the following terms have the following respective
meanings, unless the context otherwise requires:
(a) "ABANDONMENT AND RECLAMATION OBLIGATION" means the abandonment
of any Wells, Tangible Interests or Miscellaneous Interests
including, without limitation, any closing, decommissioning,
dismantling and removing of any tangible depreciable property,
Assets on the Lands, or lands pooled, unitized or adjacent
therewith, in connection with such abandonment, and restoring
the surface of the Lands, or lands pooled or unitized
therewith, all in compliance with laws, regulations, orders
and directives of governmental authorities having jurisdiction
with respect to the said abandonment or the said restoration
of the surface of lands;
(b) "AGREEMENT" means this document together with the recitals and
Schedules attached hereto;
(c) "ASSETS" means Vendor's entire interest in the Petroleum and
Natural Gas Rights, the Tangible Interests, and the
Miscellaneous Interests;
46
2
(d) "BUSINESS DAY" means a day other than a Saturday, Sunday or
any statutory holiday in Alberta;
(e) "CLOSING" means the exchange of Conveyance Documents between
Vendor and Purchaser on the Closing Date and the payment of
the Purchase Price and other amounts as contemplated in Clause
3.6;
(f) "CLOSING DATE" means 10:00 o'clock a.m., Calgary time, on the
25th day of June, 1999 unless such date is amended by
agreement in writing by the Parties;
(g) "CONVEYANCE DOCUMENTS" means the documents described in Clause
4.3 required to complete the transfer and assignment of the
Assets;
(h) "DOCUMENTS OF TITLE" means collectively any and all
certificates of title, leases, permits, licenses, unit
agreements, assignments, trust declarations, royalty
agreements, operating agreements or procedures, participation
agreements, farinin and farmout agreements, sale and purchase
agreements, pooling agreements and other agreements by virtue
of which Vendor is entitled to the Petroleum and Natural Gas
Rights;
(i) "DOLLARS" or "$" means Canadian dollars;
(j) "EFFECTIVE DATE" means 8:00 o'clock a.m. Calgary time on the
1st day of January, 1999;
(k) "ENCUMBRANCES" has the meaning ascribed thereto in Clause 1.1
(u)(xii);
(l) "ENVIRONMENTAL DAMAGE" means any one or more of the following:
(i) ground water, surface water or aquifer contamination,
(ii) soil contamination,
(iii) corrosion or deterioration of structures, equipment,
fences, gathering lines or any other Tangible
Interests;
(iv) emissions of toxic or hazardous substances, and
(v) the effects of non-compliance with any environmental
law, regulation, order or directive of any
governmental authority having jurisdiction at the
relevant time;
47
3
(m) "FINAL ADJUSTMENT" means those further accounting and
adjustments, contemplated pursuant to Clause 3.8.1 of this
Agreement, to be made subsequent to the Closing Date;
(n) "GENERAL CONVEYANCE" means the document substantially in the
form of Schedule "C" attached hereto and as required in
accordance with Clause 4.3;
(o) "INTERIM ADJUSTMENTS" means the interim accounting and
adjustments, contemplated pursuant to Clause 3.8.1 of this
Agreement, to be made on the Closing Date;
(p) "KNOWLEDGE", for purposes of Clauses 10.1 and 11.1, means
Vendor or Purchaser, as the case may be, shall be deemed to
actually know or have knowledge of a matter, circumstance or
thing when such matter, circumstance or thing has come to the
attention of:
(i) an officer of such corporation (who as at the date
hereof and at the Closing Date is an officer of such
corporation); or
(ii) an employee or consultant of such corporation with
responsibility for matters to which the matter,
circumstance or thing relates (who as at the date
hereof and at the Closing Date is an employee or
consultant of such corporation with such
responsibility),
based upon an examination of Vendor's records, which
examination has been conducted, under circumstances which a
reasonable person would take cognizance of the matter,
circumstance or thing;
(q) "LANDS" means the lands in which Vendor is shown to have an
interest as set forth and described in Schedule "A", but only
insofar as rights to those lands are granted by the Documents
of Title;
(r) "MISCELLANEOUS INTERESTS" means the entire undivided right,
title, estate and interest of Vendor, at the Effective Date,
in and to all property, assets and rights, to the extent
pertaining to Petroleum and Natural Gas Rights or Tangible
Interests (excluding therefrom materials and supplies used in
connection with operations where the costs have not been
charged to the joint account of Persons having an interest
therein and also excluding Petroleum and Natural Gas Rights or
Tangible Interests), but including, without limitation to the
generality of the foregoing:
(i) all Documents of Title and other agreements to the
extent relating to Petroleum and Natural Gas Rights
or Tangible Interests or any rights in relation
thereto, including, without limitation, royalty
agreements, joint operating agreements, gas
processing agreements, gas transmission
48
4
agreements, gas balancing agreements, common stream
agreements, natural gas transportation agreements and
agreements for the construction, ownership and operation of
facilities;
(ii) all non-interpretive production and engineering
information which is not of a proprietary nature and
which relates directly to Petroleum and Natural Gas
Rights or Tangible Interests, that Vendor either has
in its custody or to which Vendor has access, but
excluding:
A. tax, legal and financial records;
B. economic evaluations; and,
C. engineering, geophysical and geological
information, to the extent it discloses
technology or information which is
proprietary to Vendor or information which
Vendor is contractually prohibited from
selling or disclosing to other Persons;
(iii) all well-bores and casing associated with the Wells
situate within the Lands, or lands pooled or unitized
including well licences issued in connection with the
Wells;
(iv) all rights of Vendor as seller under all agreements
for the sale of Petroleum Substances from the Lands
or lands pooled or unitized therewith (the "relevant
lands") having a term exceeding thirty-one (3 1) days
but only to the extent such agreements are severable
if they contain more lands or zones than the relevant
Lands;
(v) all subsisting rights to enter upon, use and occupy
the surface of any of the Lands, or to carry out
operations thereon or therein and any other lands
with which the Lands have been pooled or unitized or
on which Tangible Interests are situate, including
easements, right of way agreements and agreements for
road crossing rights;
(s) "PARTIES" means all parties to this Agreement, and "PARTY"
means any of them;
(t) "PERMITTED ENCUMBRANCES" means:
(i) existing easements, rights of way, servitude's or
other similar rights in lands;
(ii) the right reserved to or vested in any government or
other public authority by the terms of any statutory
provision, to terminate any Documents of Title or to
require annual or other periodic payments as a
condition of the continuance thereof;
49
5
(iii) the right reserved to any governmental authority to
levy taxes on Petroleum Substances or the income or
revenue therefrom and governmental requirements as to
production rates on the operations of any property;
(iv) 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,
and all applicable laws, rules and orders of any
governmental authority;
(v) undetermined or inchoate liens incurred or created as
security in favour of the Person conducting the
operation of any of the Assets for Vendor's
proportion of the costs and expenses of such
operations;
(vi) liens for taxes, assessments or governmental charges,
which are not due or which are not delinquent;
(vii) mechanics', builders' or materialmen's liens in
respect of services rendered or goods supplied for
which payment is not at the time due;
(viii) the reservations, limitations, provisos and
conditions in any original grants from the Crown of
any of the Lands or interests therein and statutory
exceptions to title;
(ix) agreements and plans relating to pooling or
unitization;
(x) liens granted in the ordinary course of business to a
public utility, municipality or governmental
authority in connection with operations conducted
with respect to the Assets;
(xi) the terms and conditions of the Documents of Title,
provided that such terms and conditions do not create
additional royalty burdens which are not specifically
set forth in Schedule "A";
(xii) such royalty burdens and other encumbrances as are
set forth in Schedule "A" under the heading of
"Encumbrances";
(xiii) agreements for the sale of production from the
Petroleum and Natural Gas Rights;
(xiv) trust obligations in the ordinary course of business;
provided that such trust obligations do not create
beneficial rights of ownership in and to the Assets;
(u) "PERSON" means any natural person, firm, corporation,
partnership, trustee, trust, unincorporated association,
government or government agency not a Party, and pronouns used
in connection therewith have a similar extended meaning;
50
6
(v) "PETROLEUM AND NATURAL GAS RIGHTS" means the entire undivided
right, title and interest of Vendor at the Effective Date, in
and to the Petroleum Substances in the Lands or any lands
pooled or unitized therewith and in and to any royalty rights
in the Lands, which interests are, including without
limitation, those interests set forth in Schedule "A";
(w) "PETROLEUM SUBSTANCES" means petroleum, natural gas and
related hydrocarbons and all other substances, whether liquid,
solid or gaseous and whether hydrocarbons or not, insofar as
the rights to such substances or the proceeds therefrom are
granted by the Documents of Title;
(x) "PRIME RATE" means the rate of interest per annum used by the
Canadian Imperial Bank of Commerce from time to time as the
reference rate in determining rates of interest payable on
Canadian dollar demand loans in Canada;
(y) "PURCHASE PRICE" means the sum referred to in Clause 3.1 less
reductions, if any, plus interest which shall have accrued on
such sum, all as calculated in Clause 3.1;
(z) "RIGHTS OF FIRST REFUSAL" means a right of first refusal,
pre-emptive right of purchase or similar right whereby any
Person, other than Vendor, would have the right to acquire or
purchase all or a portion of the Assets as a consequence of
Vendor having agreed to sell the Assets to Purchaser in
accordance herewith;
(aa) "TAKE OR PAY AMOUNT" means an amount equal to the Take or Pay
payments outstanding at the Effective Date in respect of
production sales agreements attributable to the Assets;
(bb) "TANGIBLE INTERESTS" means the entire undivided interest of
Vendor at the Effective Date in and to all tangible
depreciable property and assets situated in, on or off the
Lands (or lands pooled or unitized therewith) and to the
extent that they are used or intended for use in connection
with producing, gathering, processing, treating, storing,
compressing or transporting Petroleum Substances produced from
the Lands, including, without limitation, all tangible
depreciable property and assets which form part of the Wells;
(cc) "WELLS" means all producing, suspended, shut-in or abandoned
wells and all water source or Injection wells located within
or on the Lands or on any lands with which the Lands have been
pooled or unitized as set forth and described under the
heading "Wells" in Schedule "A".
51
7
1.2 DERIVATIVES
When a capitalized derivative of a term defined herein is used, it
shall have the corresponding meaning of the defined term, unless the
context otherwise requires.
1.3 INTERPRETATION
If Closing does not occur, each provision of this Agreement which
presumes Purchaser has acquired the Assets shall be construed as having
been contingent upon Closing having occurred.
1.4 RELATIONSHIP
The rights, duties, obligations and liabilities of each of Nastan and
GEOCAN hereunder shall be separate in accordance with and limited to
the respective interest of each under this Agreement, and not joint,
nor collective, nor joint and several, and each of the Purchasers shall
hold their interest in the Assets as tenants in common. Nothing
contained in this Agreement shall be construed to constitute either of
the Purchasers as a partner of the other or to make either jointly
liable for the obligations of the other.
2. SCHEDULES
2.1 LIST OF SCHEDULES
The following are the Schedules attached to and made a part of this
Agreement:
Schedule "A" - Vendors Interest, Petroleum Substances, Lands, Wells and
Encumbrances
Schedule "B" - Officer's Certificates
Schedule "C" - General Conveyance
Schedule "D" - Tangible Interests, facilities and other miscellaneous
matters
Schedule "E" - Production Sales Contracts
Schedule "F" - Outstanding Authorities for Expenditure
2.2 CONFLICTS
In the event of any conflicts between the provisions of the body of
this Agreement and the Schedules, the provisions of the body of this
Agreement shall prevail. In the event of any conflicts between the
provisions of this Agreement and the Documents of Title, the provisions
of the Documents of Title shall prevail.
52
8
3. PURCHASE AND SALE
3.1 AGREEMENT OF PURCHASE AND SALE AND PURCHASE PRICE
In accordance with the terms and conditions of this Agreement, Vendor
agrees to sell to Purchaser and Purchaser agrees to purchase from
Vendor, the Assets in the following proportions, namely:
Nastan 50.30%
GEOCAN 49.70%
subject to Permitted Encumbrances, for the sum of Four Hundred Ten
Thousand and Six Hundred Dollars ($410,600.00), less reductions
thereto, if any, pursuant to Articles 5 and 6 plus an amount equal to
the interest which would have accrued on such sum, as so reduced, at
the Prime Rate plus one (1%) percent per annum from and including the
Effective Date to and including the day prior to the Closing Date,
calculated daily and not compounded payable by each of Nastan and
GEOCAN, as to their 50.30% and 49.70% respective interests herein. The
amount allocated to Petroleum and Natural Gas Rights in Clause 3.5
shall be increased by the additional amount paid by Purchaser to Vendor
pursuant to this Clause.
3.2 OBLIGATION TO CLOSE
If Nastan or GEOCAN, as the case may be (herein the "defaulting party")
is obliged but is not ready, willing and able to complete the purchase
of the Assets in accordance with this Agreement, the other party
comprising the Purchaser hereunder shall nevertheless be obliged to
complete the said purchase in accordance with this Agreement as to all
of the Assets, as if such other Party was the only Party hereto as
Purchaser. If any of the closing conditions set forth in Clause 7.1 has
not been complied with, and one of the Parties comprising the Purchaser
is prepared to waive such non-compliance but the other Party comprising
the Purchaser is not prepared to waive such non-compliance, the first
mentioned Party may at its election complete the purchase contemplated
herein in accordance with this Agreement as to all of the Assets as if
the first mentioned Party was the only Party hereto as Purchaser.
3.3 PURCHASED ASSETS ONLY
Unless specifically included in the definition of Assets, all of the
other property and assets of Vendor shall be excluded from the purchase
and sale provided for in this Agreement.
53
9
3.4 ENVIRONMENTAL MATTERS
In determining the Purchase Price, the Parties have taken into
consideration Purchaser's assumption of all Abandonment and Reclamation
Obligations and of all Environmental Damage associated with the Assets,
whether the same have arisen prior to or subsequent to the Effective
Date.
3.5 ALLOCATION OF PURCHASE PRICE
The Purchase Price shall be allocated among the Assets in the following
manner:
ASSETS
(a) Petroleum and Natural Gas Rights (80%) $ 328,479.00
(b) Tangible Interests (20%) $ 82,120.00
(c) Miscellaneous Interests $ 1.00
------------
SUB-TOTAL $ 410,600.00
GST $ 5,748.40
------------
TOTAL $ 416,348.40
3.6 PAYMENT OF PURCHASE PRICE
The Purchase Price adjusted for Interim Adjustments shall be paid in
full by Purchaser to Vendor by delivery of certified cheque(s) or bank
draft(s) on the Closing Date at the place of Closing.
3.7 GOODS AND SERVICES TAX
Purchaser shall also remit to Vendor on the Closing Date the Goods and
Services Tax ("GST") applicable to the Assets. The GST Registration
number for Vendor is . If before the Closing Date there is a change
in that portion of the Purchase Price allocated to Miscellaneous
Interests, or Tangible Interests, which change is the result of any
government authority or the voluntary re-allocation by the Parties,
then the resulting GST amount shall be adjusted accordingly. If there
is an increase in the GST, Purchaser shall promptly remit to Vendor the
amount of such increase together with any interest and penalties
associated therewith. If there is a decrease in the GST, Vendor shall
promptly remit to Purchaser the amount of such decrease.
3.8 ADJUSTMENTS ON AND SUBSEQUENT TO CLOSING DATE
3.8.1 BASIS OF ADJUSTMENTS
All benefits and obligations of every kind and nature payable or paid
and received or receivable in respect of the Assets, including without
limitation, maintenance,
54
10
development, operating and capital costs and the proceeds for the sale
of production, shall, except as otherwise provided herein, be
apportioned between Vendor and Purchaser as of the Effective Date.
Costs and expenses for work done, services provided and goods and
services supplied shall be deemed to accrue for the purposes of this
Article when the work is done and the goods or services are provided,
regardless of when such costs and expenses become payable.
(a) INTERIM ADJUSTMENTS
At least five (5) days prior to the Closing Date, Vendor shall
provide to Purchaser an interim accounting and adjustment in
draft form, together with the information in support thereof,
for review and examination by Purchaser. This interim
accounting and adjustment shall be made by Vendor based upon
all revenues, royalties, operating costs and capital costs
accruing to Purchaser and received by the Vendor for the
period commencing after the Effective Date. All revenues
received by the Vendor, which were not accounted for as of the
Closing and which are due to the Purchaser, shall after
deducting any obligations or costs attributable to the
Purchaser, be paid to the Purchaser within thirty (30) days of
the receipt by Vendor.
(b) FINAL ADJUSTMENT
Within twelve (12) months following the Effective Date a
further accounting shall be prepared by Vendor in regard to
all charges and credits to be adjusted between Vendor and
Purchaser. All revenues which are received or receivable by
Vendor from the Assets and which are due to Purchaser shall,
after deducting the obligations and costs for which Purchaser
is responsible, be paid to Purchaser either on the Closing if
they have been received on or before such Closing Date or
within thirty (30) days of receipt thereof, if they are
received after such Closing Date. Any monies received by
Vendor shall be received as agent for and on behalf of
Purchaser. The Vendor shall not be obligated to make any
further adjustments after the twelve (12) months unless a
specific request in writing is received within twelve (12)
months following the Closing Date identifying in reasonable
detail an adjustment required by this Agreement. The aforesaid
twelve (12) month time frame does not apply to sub-clauses (c)
and (d) hereof.
(c) CROWN ROYALTY ADJUSTMENT
Notwithstanding Clause 3.8.1(b), accounting or adjustments
from Crown royalty audits or crown re-assessments relating to
the period prior to the Effective Date:
(i) for which audit queries or re-assessments are
outstanding as of the Closing Date; or
55
11
(ii) that occur after the Closing Date but no later than
forty-eight (48) months following the end of the
calendar year of Closing;
shall be made as they occur and payments for them shall be
made within thirty (30) days of each adjustment and shall be
made by Purchaser to Vendor, or vice versa, as the case may
be.
(d) ADJUSTMENTS RESULTING FROM AUDITS
Notwithstanding Clause 3.8.1 (b), accounting or adjustments
resulting from joint venture audits, or from thirteen month
adjustments for gas plant throughput and gas cost allowance
for the Assets, relating to the period prior to Effective
Date:
(i) for which audit queries or thirteenth month
adjustments are outstanding at Closing Date; or
(ii) with respect to joint venture audits that occur after
the Closing Date but no later than thirty (30) months
following the end of the calendar year of Closing; or
(iii) with respect to thirteen (13) month adjustments for
gas plant throughput and gas cost allowance, that
occur within four (4) years after the Closing Date,
unless Purchaser has provided written notice to the
Vendor within such four (4) year period, that an
adjustment is outstanding.
shall be made as they occur and payments for them shall be
made within thirty (30) days of each adjustment and shall be
made by Purchaser to Vendor, or vice versa, as the case may
be. Vendor may audit the records of Purchaser relating to such
accounting or adjustments for two (2) years from the date the
adjustment is made and accounting or adjustments resulting
from the audit shall be settled between Vendor and Purchaser
on an item-by-item basis as they occur.
(e) INTEREST
If a Party fails to pay within the time period established for
the payment of any adjustment, interest shall accrue and be
payable on the unpaid amount of such adjustment at the Prime
Rate plus one (1%) percent per annum from the date such
adjustment is payable until paid.
3.8.2 RENTALS AND TAXES
Notwithstanding the provisions of Clause 3.8.1, rentals and all similar
payments made by Vendor to preserve the Documents of Title, freehold
mineral taxes and property taxes shall be apportioned as between Vendor
and Purchaser on a per diem basis as of the Effective
56
12
Date, whether paid by Vendor before or after the Effective Date if
relating to the period after the Effective Date, unless Vendor elects
to waive such apportionment of all or any portion of those payments
which have been paid by Vendor and relate to the period after the
Effective Date. Purchaser shall include in its income the proceeds and
expenses related to Petroleum Substances produced on or after the
Effective Date and shall be responsible for the payment of all income
tax payable in respect thereto.
3.8.3 PRODUCTION
With the exception of sulphur, all Petroleum Substances in inventory
(i.e. which have been produced from the Lands and are in tanks or in
any other form of storage) and to which Vendor is entitled at the
Effective Date do not comprise part of the Assets and remain the
property of Vendor. The proceeds from the sale therefrom shall accrue
and belong to Vendor. Sales of Petroleum Substances shall be deemed to
occur on a "first in, first out" basis. Vendor shall reimburse
Purchaser for any reasonable charges paid by Purchaser to Persons for
storage or sale of such inventory of Vendor, including costs of
transporting such inventory to the point of sale and royalties payable
in respect of such inventory, notwithstanding the provisions of Clause
3.8.1.
3.8.4 ACCOUNTS RECEIVABLE
Purchaser shall provide all reasonable assistance to Vendor with
respect to the collection from others of any accounts receivable of
Vendor which relate to the Assets and which accrued prior to the
Effective Date.
3.8.5 CASH CALLS
In making adjustments pursuant to this Clause 3.8, Vendor shall be
entitled to a credit for all cash call advances, operating funds,
deposits and similar advances to operators of all or any of the Assets
which stand to the credit of Vendor at the Closing Date and which are
assigned to Purchaser at Closing.
3.8.6 ARBITRATION
If the Parties can not agree as to the adjustments referred to in
Clause 3.8.1 (b) hereof, the matter may be referred to arbitration by
either Party for determination by one arbitrator in accordance with the
Arbitration Act of Alberta.
57
13
4. CLOSING AND CONVEYANCE DOCUMENTS
4.1 TRANSFER OF POSSESSION
Possession of the Assets will pass from Vendor to Purchaser on the
Closing Date and, for all other purposes, if Closing occurs, the
transfer and assignment of the Assets from Vendor to Purchaser will be
effective as of the Effective Date.
4.2 PLACE OF CLOSING
Unless otherwise agreed in writing by the Parties, Closing shall take
place at the offices of Howard, Mackie, the solicitors for the
Purchaser, at #1000, 400 Third Avenue SW Calgary, Alberta, on the
Closing Date.
4.3 CLOSING AND GENERAL CONVEYANCE DOCUMENTS
Vendor shall prepare, execute and deliver to Purchaser and Purchaser
shall execute and deliver to Vendor on the Closing Date, a General
Conveyance of the Assets in the form of Schedule "C" hereto, and use
its best efforts to provide such other assignments, novations,
transfers, trust agreements and documents, in registrable form to the
extent applicable, respecting the Assets, as may be reasonably required
by any Party, to complete the transfer of the Assets, provided no such
document shall require Vendor to assume or incur any obligation or
provide any representation or warranty beyond that contained in this
Agreement. It shall not be necessary for any assignment and novation
agreement to have been executed prior to or at Closing by parties
thereto other than Vendor and Purchaser.
4.4 COST OF REGISTRATION
Purchaser shall bear all costs incurred in registering all Conveyance
Documents relating to the Assets and all costs of preparing and
registering any further Conveyance Documents Purchaser may reasonably
require following Closing, including any fees or penalties which are
levied, to the Purchaser or Vendor, due to the late or incorrect filing
by the Purchaser. Vendor shall bear all costs of registering discharges
of security interests registered against Vendor's interest in the
Assets.
4.5 CIRCULATION OF CONVEYANCE DOCUMENTS
Purchaser shall be responsible for promptly:
(a) registering all such conveyance documents relating to the
Assets;
(b) obtaining such novations from or giving notice to other
Persons in respect thereof, and
58
14
(c) providing written evidence to the Vendor of the execution of
such novations by Persons thereto or written evidence of the
forwarding of notice to other Persons where novations are not
required.
4.6 SUBORDINATION OF AUXILIARY DOCUMENTS
All documents executed by the Parties and delivered pursuant to the
provisions of this Article 4, or otherwise pursuant to this Agreement,
are subordinate to the provisions hereof and the provisions hereof
shall govern and prevail in the event of conflict.
5. PURCHASER'S REVIEW AND TITLE DEFECTS
5.1 ACCESS FOR INVESTIGATION
Vendor shall allow Purchaser and its employees, agents, legal counsel,
accountants or other representatives, between the date of this
Agreement and the Closing Date, to have access during normal business
hours of Vendor to the premises of Vendor and at the location of the
Assets in order to inspect:
(a) all the books, accounts, and other production data of Vendor
relating to the operations of and revenues resulting from the
operation of the Assets in Vendor's possession;
(b) Documents of Title, material correspondence and technical
operating data of Vendor pertaining thereto; and
(c) the Tangible Interests;
to enable Purchaser to carry out its due diligence, subject always to
contractual restrictions imposed upon Vendor relating to disclosure.
Provided Closing occurs, Vendor shall deliver the information referred
to in Clause 5. l(b) to Purchaser at Closing.
5.2 NOTICE OF THE TITLE DEFECTS
Purchaser shall undertake a title review of the Assets. As soon as
reasonably practicable after completion of its title review and, in any
event, no later than seven (7) Business Days prior to the Closing Date,
Purchaser shall give Vendor written notice of all defects and omissions
which, in the reasonable opinion of Purchaser, materially and adversely
affect the title of Vendor to the Assets and which Purchaser does not
waive (all of which are referred to as "Title Defects"). Title Defects
do not include the Permitted Encumbrances unless Purchaser is of the
opinion the royalty burdens or other encumbrances listed in Schedule
"A" under the heading "Encumbrances", are incorrectly described. Such
notice shall include a description of each Title Defect and the
interest affected thereby and to the
59
15
extent reasonably possible, Purchaser's requirements for the
rectification or curing thereof. Failure to include any Title Defects
in a written notice when required, shall be deemed to be a waiver of
such Title Defects.
5.3 CURING TITLE DEFECTS
Prior to the Closing Date, Vendor shall diligently make reasonable
efforts to cure or remove all Title Defects of which Purchaser has
notified Vendor.
5.4 FAILURE TO REMOVE TITLE DEFECTS
If any Title Defects are not cured or removed at or before three (3)
Business Days prior to the Closing Date, Purchaser may elect on or
before two (2) Business Days prior to the Closing Date to:
(a) with the agreement of the Vendor, grant a further period of
time within which Vendor may cure or remove the uncured Title
Defects; or
(b) waive the uncured Title Defects and proceed with Closing; or
(c) not purchase at Closing those Assets affected by the uncured
Title Defects which Purchaser does not waive, in which event
the Purchase Price will be reduced by the amount of the values
determined in accordance with Clause 5.5 and Purchaser shall
proceed with Closing with respect to those Assets not affected
by Title Defects which Purchaser does not waive, or
(d) terminate this Agreement, if the portion of the Purchase Price
applicable to the Assets affected by the uncured Title Defects
which Purchaser does not waive exceeds 35% of the Purchase
Price, with values determined in accordance with Clause 5.5,
whereupon neither Vendor nor Purchaser shall have any further
obligation under this Agreement to each other except for those
specified in Clause 6.4 and Article 9.
Failure by Purchaser to elect and give notice of election shall be
deemed conclusively to be an election to waive all Title Defects.
5.5 DETERMINATION OF TOTAL VALUE AMONG ASSETS FOR TITLE DEFECTS
If it is necessary to allocate value to any particular portion of the
Assets for the purposes of Clause 5.4(c), 5.4(d) or Clause 6.3, the
Parties shall allocate a value they can agree upon, acting reasonably.
Failing such agreement, then within three (3) Business Days of notice
being given by one Party to the other:
60
16
(a) each of them shall provide to the other, at the same time, a
written statement separately setting forth its proposed value
in respect of each of the affected Assets ("Affected Assets");
and
(b) each Party shall submit the determination of the value of the
Affected Assets to J.P. Hunter & Associates Ltd. (the
"Evaluator"), together with written instructions that:
(i) the Evaluator, in accordance with good engineering
and evaluation practices, select a value for each of
the Affected Assets from and based only upon the
values submitted by the Parties; and
(ii) such evaluation must be completed within five (5)
Business Days from the date of submission.
The fees and other costs to be paid to the Evaluator in respect to the
services performed by it shall be borne in equal shares between Vendor
and Purchaser. Notwithstanding other provision in this Agreement
concerning the Closing Date, if a value is to be determined by the
Evaluator and the Evaluator's decision has not been received by the
Parties on or before two (2) Business Days prior to the Closing Date,
then the Closing Date shall be extended automatically to two (2)
Business Days after the Evaluator's decision has been given to the
Parties. Provided however, if a Party fails to provide a determination
of value to the Evaluator together with its written instructions as set
out herein, then the Evaluator shall select the other Party's
determination of value and the transaction shall proceed on the Closing
Date.
5.6 CURED TITLE DEFECTS
Notwithstanding the reduction of the Purchase Price pursuant to Clause
5.4(c), the Purchaser agrees that in the event Vendor is able to cure
or rectify a Title Defect with respect to any particular portion or
portions of the Assets (each a "Cured Asset") within a period of sixty
(60) days after the Closing Date, Purchaser shall purchase such Cured
Asset from Vendor at a date ninety (90) days from the Closing Date at
the price by which the Purchase Price was so adjusted. Purchaser has no
obligation to purchase any such Cured Asset where, in the opinion of
Purchaser acting reasonably, the value of such Cured Asset has declined
or been diminished in the intervening period as a result of new Title
Defects or physical damage or loss of such Cured Asset.
6. RIGHTS OF FIRST REFUSAL
6.1 RIGHTS OF FIRST REFUSAL
The Parties acknowledge that some of the Assets may be subject to
Rights of First Refusal or material consents. Purchaser may not waive
the existence or operation of any Right of First Refusal and shall
provide Vendor with its bona fide allocations of the portion of the
61
17
Purchase Price allocated to the Asset subject to a Right of First
Refusal. Thereafter, Vendor shall promptly serve all notices required
by the applicable Right of First Refusal utilizing Purchaser's
allocations, if they are reasonable. Purchaser shall, if requested by
Vendor, provide access to such information, analysis and calculations
as may be necessary to justify such allocations. Each such notice shall
include particulars of this transaction and a request for a waiver of
the applicable Right of First Refusal.
6.2 EFFECTS OF RIGHTS OF FIRST REFUSAL
Notwithstanding anything to the contrary, express or implied, Purchaser
acknowledges and agrees that if any such Rights of First Refusal are
exercised by any other Person, then:
(a) the Assets subject thereto shall be excluded from this
Agreement, without any liability of either Party to the other,
and the Purchase Price shall be adjusted downward by the
aggregate amount by which such Assets are purchased by such
Persons pursuant to the agreements granting the Rights of
First Refusal;
(b) the Purchase Price shall be reallocated among the Petroleum
and Natural Gas Rights, Tangible Interests and Miscellaneous
Interests as required; and
(c) the items "Assets", "Lands", "Documents of Title",
"Miscellaneous Interests", "Petroleum and Natural Gas Rights"
and "Tangible Interests" shall be construed as meaning only
that portion of the subject matter of these terms with respect
to which Closing occurs.
6.3 RIGHT OF TERMINATION
In the event the value of the Assets subject to exercised Rights of
First Refusal or for which material consents have not been received
exceeds thirty-five (35%) percent of the Purchase Price, then Purchaser
may terminate this Agreement by written notice to Vendor. In such case,
neither Vendor nor Purchaser shall have any further obligation under
this Agreement to the other except for those specified in Clause 6.4
and Article 9.
6.4 WAIVER
By its execution of this Agreement Vendor hereby waives its right of
first refusal, if any, under the Participation and Operating Agreement
dated February 25, 1987, with respect to the sale to Purchaser by each
of Cumulus Investments Ltd. and Merlin Resources Ltd. of their
interests in SW1/4 Section 25-69-9-W5M.
62
18
7. CLOSING CONDITIONS
7.1 PURCHASER'S CONDITIONS
The obligation of Purchaser to complete the purchase of the Assets on
the Closing Date, shall be subject to the fulfilment of each of the
following conditions precedent by the times set forth below or if not
stated, at, or prior to, the Closing Date:
(a) MATERIAL COMPLIANCE OF REPRESENTATIONS AND WARRANTIES AND
OFFICER'S CERTIFICATE. All of the representations and
warranties of Vendor made in this Agreement shall be true and
correct in all respects as of the Closing Date, and Vendor
shall have delivered to Purchaser an officer's certificate in
the form of Schedule "B" and dated as of the Closing Date;
(b) MATERIAL COMPLIANCE BY VENDOR. Vendor shall have performed or
complied with, in all material respects, the terms and
conditions of this Agreement to the extent they are to be
performed at or prior to the Closing Date;
(c) DELIVERY OF CONVEYANCE DOCUMENTS. Vendor shall have executed
and delivered to Purchaser the Conveyance Documents;
(d) ENVIRONMENTAL MATTERS. On or before close of business on the
fifth Business Day prior to the Closing Date, Purchaser shall
have satisfied itself, acting reasonably, that no outstanding
material Environmental Damage is associated with the Assets.
Unless written notice of outstanding material Environmental
Damage is given by Purchaser to Vendor on or prior to the
third Business Day prior to the Closing Date, Purchaser shall
be deemed to have satisfied itself in respect of Environmental
Damage. Vendor shall not be required to conduct or pay for any
environmental audit, but, if Purchaser elects to conduct its
own environmental audit, it shall provide a copy of such
report, without charge, to Vendor;
(e) NO SUBSTANTIAL DAMAGE. From the Effective Date to the Closing
Date, no substantial physical damage, including Environmental
Damage shall have occurred to the Assets, which would have a
material adverse effect on the aggregate value of the Assets;
(f) NO SECURITY INTERESTS. Purchaser receiving registrable
discharges or letters of no interest from the respective
lender in respect of any and all security interests which are
registered against the Assets, or any part thereof, and which
are not to be assumed by Purchaser; and
(g) RIGHTS OF FIRST REFUSAL. No Rights of First Refusal relating
to the Assets shall remain in effect as of the Closing Date,
either having been exercised by the holder
63
19
thereof or having been waived by the holder thereof or having expired
prior to the Closing Date, after proper notice being given.
The foregoing conditions are inserted for the sole benefit of
Purchaser. In the event that any of the foregoing conditions are not
fulfilled or met at or prior to the Closing Date, Purchaser may
terminate this Agreement by notice to Vendor, and in that event
Purchaser shall be released from all obligations, other than those
specified in Clause 6.4 and Article 9, and unless Purchaser can show
that the condition or conditions, the non-performance thereof by Vendor
has caused Purchaser to terminate this Agreement, are or were
reasonably capable of being performed or caused to be performed by
Vendor, then Vendor shall also be released from all obligations except
those specified in Clause 6.4 and Article 9; provided that any
condition may be waived in writing, in whole or in part, by Purchaser
without prejudice to its right of termination in the event of
non-fulfilment of any other condition or conditions. After the Closing
Date, Purchaser may not rescind or terminate this Agreement and
Purchaser's remedies, if any, shall be limited to damages.
7.2 VENDOR'S CONDITIONS
The obligation of Vendor to complete the sale of the Assets on the
Closing Date shall be subject to the fulfilment of each of the
following conditions precedent at or prior to the Closing Date:
(a) MATERIAL COMPLIANCE OF REPRESENTATIONS AND WARRANTIES AND
OFFICERS' CERTIFICATE. All of the representations and
warranties of Purchaser made in this Agreement shall be true
and correct in all respects as of the Closing Date, and
Purchaser shall have delivered to Vendor an officer's
certificate in the form of Schedule "B" and dated as of the
Closing Date;
(b) MATERIAL COMPLIANCE BY PURCHASER. Purchaser shall have
performed or complied with, in all material respects, the
terms and conditions of this Agreement to the extent they are
to be performed at or prior to the Closing Date;
(c) DELIVERY OF DOCUMENTS. Purchaser shall have executed and
delivered to Vendor at least one copy of the Conveyance
Documents;
(d) TENDER OF PURCHASE PRICE. Purchaser shall have tendered to
Vendor, in the form stipulated herein, the Purchase Price
together with an amount equal to the Interim Adjustments
payable to Vendor; and
(e) RIGHTS OF FIRST REFUSAL. No Rights of First Refusal relating
to the Assets shall remain in effect as of the Closing Date,
either having been exercised by the holder thereof or having
been waived by the holder thereof or having expired at least
seven (7) days prior to the Closing Date, after proper notice
being given.
64
20
The foregoing conditions are inserted for the sole benefit of Vendor.
In the event that any of the foregoing conditions are not fulfilled or
met at or prior to the Closing Date, Vendor may terminate this
Agreement by notice to Purchaser, and in that event Vendor shall be
released from all obligations, except those specified in Clause 6.4 and
Article 9, and unless Vendor can show that the condition or conditions
the non-performance thereof by Purchaser has caused Vendor to terminate
this Agreement, are or were reasonably capable of being performed or
caused to be performed by Purchaser, then Purchaser shall also be
released from all obligations except those specified in Clause 6.4 and
Article 9; provided that any condition may be waived in whole or in
part by Vendor without prejudice to its right of termination in the
event of non-fulfilment of any other conditions. After the Closing
Date, Vendor may not rescind or terminate this Agreement and Vendor's
remedies, if any, shall be limited to damages.
7.3 DILIGENCE WITH RESPECT TO CONDITIONS
Each Party shall proceed diligently, honestly and in good faith and use
reasonable efforts in order to satisfy its respective conditions set
forth in Article 7.
8. MAINTENANCE OF ASSETS
8.1 LIMITATIONS ON VENDOR
From the Effective Date hereof until the Closing Date, and after the
Closing Date, until Purchaser is novated into any Documents of Title
governing the Assets and, to the extent the nature of Vendor's interest
permits and subject always to all terms and conditions of the Documents
of Title, Vendor:
(a) shall, to the extent it is operator of the Assets, maintain
and operate the Assets in a proper and prudent manner in
accordance with generally accepted oil and gas practices and
procedures, provided that Vendor shall have no responsibility
to maintain or obtain insurance with respect to the Assets
from and after Closing;
(b) shall not, without the prior written consent of Purchaser:
(i) voluntarily assume or initiate any obligation, or
make any commitment with respect to the Assets, the
Vendor's share of which with respect to any single
item is estimated to exceed twenty-five thousand
Dollars ($25,000.00) or with respect to any project
or proposal, if Vendor's share of the cost of the
project or proposal is estimated to exceed
twenty-five thousand Dollars ($25,000.00);
(ii) surrender or abandon any of the Assets;
65
21
(iii) amend any Document of Title or enter into any new
agreement of a material nature, respecting the
Assets;
(iv) sell any of the Assets, except sales of the
production of Petroleum Substances in the ordinary
course of business;
(v) except for Permitted Encumbrances, encumber any of
the Assets; or
(vi) exercise any Rights of First Refusal or area of
mutual interest option arising out of the Assets;
except Vendor may without the prior written consent of Purchaser exceed
the guidelines set forth in Clause 8.1(b)(i), if reasonably required to
protect life or property in an emergency situation, to comply with laws
or to preserve the value of the Assets if proper and prudent and in
accordance with generally accepted oil and gas practices and
procedures, in which case, Vendor shall promptly notify Purchaser of
such action and the estimated cost thereof.
8.2 LIMITATION ON PURCHASER
Until the Closing Date, Purchaser shall not be entitled to propose to
Vendor, or to cause Vendor to propose to others, the conduct of any
operations, or the exercise of any right or option in relation to the
Assets, except with the written consent of Vendor which may be withheld
at Vendor's sole discretion. Vendor shall give prompt notice of any
proposal made to it to Purchaser.
8.3 AFTER CLOSING
After Closing and until novation is completed with respect to the
applicable Documents of Title governing any particular Asset, the
following shall apply with respect to those Assets for which novation
is not completed:
(a) Vendor shall promptly forward to Purchaser all information and
documents it receives from others with respect to such Assets;
(b) Vendor shall promptly remit to Purchaser, after having
received from others, all revenues (less expenses paid by
Vendor) which have accrued after the Effective Date in respect
of such Assets;
(c) Vendor shall make such elections and respond to all notices
received in respect of such Assets in accordance with the
instructions of Purchaser, provided Vendor may, but shall not
be obliged to, follow instructions it reasonably believes to
be harmful or unlawful or in conflict with the applicable
agreement; and
66
22
(d) In a timely manner, Purchaser shall provide Vendor with copies
of any information, etc., pertaining to Alberta gas cost
allowance which it has filed for the year ending December 31,
1999.
8.4 RATIFICATION OF VENDOR'S ACTIONS
From and after the Effective Date and until Purchaser is novated into
such Documents of Title, Vendor shall be deemed to be agent of
Purchaser and Purchaser ratifies all actions taken or lack of action
taken by Vendor in connection with the Assets on behalf of Purchaser in
accordance with the terms and provisions of this Agreement other than
those actions for which Vendor has been grossly negligent or where
Vendor is guilty of wilful misconduct. Any act or omission of Vendor,
its directors, agents or employees, shall not be considered gross
negligence or wilful misconduct if done or omitted in accordance with
the instructions or written concurrence of Purchaser.
8.5 PURCHASER LIABILITY AND INDEMNITY TO VENDOR
If Closing occurs, Purchaser hereby agrees:
(a) to be liable to Vendor, its directors, agents and employees,
for all losses, costs, damages and expenses which Vendor, its
directors, agents or employees, may suffer, sustain, pay or
incur; and, in addition
(b) to indemnify and save harmless Vendor, its directors, agents
and employees, from and against all liabilities, losses, costs
(including legal costs on a solicitor/client basis), claims,
damages and expenses which may be brought against or suffered
by Vendor or its directors, agents or employees, in relation
to operations as a result of Vendor maintaining the Assets
from and after the Effective Date as agent for Purchaser
pursuant to this Article 8, provided such liability, loss,
cost (including legal costs on a solicitor/client basis),
claim, damage, or expense is not a direct result of the gross
negligence or wilful misconduct of Vendor, its directors,
agents or employees. Any act or omission of Vendor, its
directors, agents or employees, shall not be considered gross
negligence or wilful misconduct if done or omitted in
accordance with the instructions or concurrence of Purchaser.
9. CONFIDENTIALITY OF PURCHASER
9.1 CONFIDENTIALITY
Until the Closing Date, or in the event of termination of this
Agreement without consummation of the transactions contemplated herein,
Purchaser shall keep confidential all information respecting the Assets
obtained from Vendor. Such confidential information respecting the
Assets shall be used only for the purposes of this acquisition and
disclosed only to those of its employees, agents, legal counsel,
accountants or other representatives
67
23
on a "need to know" basis. Upon Closing, Purchaser's rights to use or
disclose such information shall be subject only to confidentiality
provisions contained in any operating or other existing agreements that
may apply thereto in respect of the Assets. Any 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
Purchaser without the prior written consent of Vendor. The restrictions
on disclosure and use of information obtained in connection with this
Agreement shall not apply to information, to the extent it:
(a) is or becomes publicly available through no act or omission of
Purchaser or its employees, agents, consultants, advisors or
other representatives;
(b) is subsequently obtained lawfully from a Person who, after
reasonable inquiry, Purchaser does not know is bound to Vendor
to restrict the use or disclosure of such information;
(c) is already in Purchaser's possession at the time of
disclosure, without any restriction on its disclosure; or
(d) is required to be disclosed pursuant to the applicable
legislation, regulations, or rules or by the direction of any
court, tribunal or administrative body having jurisdiction.
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.
9.2 PURCHASER'S REPRESENTATIVES
If Purchaser employs consultants, advisors or agents to assist in its
review of the items listed in Clause 5.1, Purchaser shall be
responsible to Vendor for ensuring that such consultants, advisors and
agents comply with the restrictions on the use and disclosure of
information set forth in Clause 9.1 and Purchaser shall be liable to
Vendor for all damages, costs or expenses Vendor may suffer or incur as
a result of any unauthorized use or disclosure of such confidential
information in contravention of this Clause 9.2 by such representatives
of Purchaser.
9.3 RETURN OF CONFIDENTIAL INFORMATION
If Closing does not occur and this Agreement is terminated, then all
documents, working papers and other written material obtained from
Vendor in connection with this Agreement shall be returned to Vendor
forthwith. No copies of such information are to be retained by
Purchaser.
68
24
10. REPRESENTATIONS AND WARRANTIES OF VENDOR
10.1 REPRESENTATIONS AND WARRANTIES OF VENDOR
Vendor hereby represents and warrants to Purchaser that:
(a) STANDING. It is a corporation duly organized and validly
existing under the laws of its jurisdiction of incorporation
and in good standing under the laws of the jurisdiction in
which it is required to be registered in order to hold the
Assets;
(b) REQUISITE AUTHORITY. It has all necessary corporate power,
authority and capacity to enter into and execute this
Agreement, to sell the Assets and to perform its other
obligations under this Agreement;
(c) NO CONFLICTS. The execution and delivery of this Agreement and
the consummation of the transactions contemplated by this
Agreement will not violate, nor be in conflict with, its
charter, bylaws or similar constating documents of Vendor, or
any provision of any agreement or instrument of a material
nature to which it is a party or is bound, or any judgement,
decree, order, statute, rule or regulations applicable to it
and of which it is aware is in effect in Alberta, except
requirements of Documents of Title to obtain consents of other
Persons who are parties thereto to the sale of the Assets
pursuant hereto;
(d) EXECUTION AND ENFORCEABILITY OF DOCUMENTS. This Agreement has
been duly executed and delivered by it and all other documents
required hereunder to be executed and delivered by it at
Closing pursuant hereto shall be duly executed and delivered.
This Agreement does, and such documents will, constitute
legal, valid and binding obligations of it enforceable in
accordance with their respective terms, subject to the
qualification that their enforceability may be limited by
rules of equity and by insolvency, bankruptcy and other laws
of general application affecting the enforcement of creditors'
rights;
(e) FINDER'S FEES. It has not incurred any obligation or
liability, contingent or otherwise, for brokers' or finders'
fees in respect of this transaction for which Purchaser shall
have any obligation or liability;
(f) LAWSUITS. To its Knowledge, based upon an examination of its
records, no suit, action or other proceeding is in existence,
pending or threatened against or by it before any court or
governmental agency which would materially adversely affect,
Vendor's title to or ownership of the Assets or the value of
the Assets;
(g) CANADIAN RESIDENT. It is not a non-resident of Canada within
the meaning of the Income Tax Act (Canada);
69
25
(h) ENCUMBRANCES. The Assets will, to its Knowledge, at the
Closing Date, be free and clear of all liens, encumbrances and
adverse claims created by, through or under it except for the
Permitted Encumbrances, those Title Defects waived by
Purchaser and as otherwise set out on Schedule "A" hereto;
(i) KNOWLEDGE OF DEFAULT. To its Knowledge, it has not received
notice of any material default under any Documents of Title
which default is continuing as of the Closing Date and where
such default would adversely impact upon the value of the
Assets or any part thereof or subject the Documents of Title
to cancellation or termination;
(j) PRODUCTION CONTRACTS. Except as set forth in Schedule "E",
there are no production sales agreements or arrangements under
which it, or any Person acting on its behalf, is obligated to
sell or deliver Petroleum Substances allocable to the
Petroleum and Natural Gas Rights to any Person, other than
contracts which are terminable on less than thirty-two (32)
days' notice:
(k) TAKE OR PAY AMOUNT. To its Knowledge, there are no Take or Pay
Amounts outstanding as of the Effective Date;
(l) REDUCTION OF INTEREST. Except for Permitted Encumbrances and
as disclosed in the Documents of Title, to its Knowledge, the
Petroleum and Natural Gas Rights are not subject to reduction
by virtue of the conversion or other alteration of the
interest of any Person under existing agreements created by,
through or under Vendor;
(m) GOOD STANDING UNDER AGREEMENTS. To its Knowledge, it is not in
breach in any material respect under any material agreements
and instruments having application to the Assets or any part
thereof to which it is a party or is bound;
(n) NET CARRIED INTERESTS. Except as disclosed in the Documents of
Title, to its Knowledge, there are no carried interests
whereby it is obligated to pay a share of the costs associated
with any of the Assets attributable to the interest of another
Person;
(o) PRODUCTION PENALTY. Except as disclosed in the Documents of
Title, to its Knowledge, the Wells related to the Lands are
not subject to a production penalty whereby the production
proceeds allocable to Vendor's interest are payable to a third
party until an amount calculated in respect of certain costs
and expenses paid by such third party are recovered by such
third party;
(p) QUIET ENJOYMENT. Subject to the other representations of
Vendor pursuant hereto and to the rents, covenants, conditions
and stipulations in the Documents of Title reserved and
contained on the lessee's or holder's part thereunder to be
paid, performed and observed, Purchaser may enter into and
upon and hold and enjoy
70
26
the Assets for the residue of their respective term thereof
for its own use and benefit without any lawful interruption of
or by Vendor or any other Person claiming by, through or under
Vendor except pursuant to or in respect of Permitted
Encumbrances and those Title Defects waived by Purchaser;
(q) PAYMENT OF TAXES. To its Knowledge, all ad valorem, property,
production, severance and similar taxes and assessments based
on or measured by the ownership of the Assets or the
production of Petroleum Substances from the Lands or the
receipt of proceeds therefrom payable by it to the Effective
Date have been paid and discharged;
(r) LAWS. To its Knowledge, it has not received notice of default
in any material respect of any decrees, statutes and
regulations of government authorities which relate to the
Assets, the default or failure of which would have a material
adverse effect on the value of the Assets or any part thereof,
(s) JUDGEMENTS AND LAWS. To its Knowledge, Vendor is not in
default of any judgement, order, writ, injunction or decree of
any court, government department, commission or other
administrative agency and it is, to its Knowledge,
substantially complying, in all material respects, with all
decrees, statutes and regulations of governmental authorities,
the default or failure of which by it would have an adverse
effect on the value of the Assets or any part thereof,
(t) ENVIRONMENTAL MATTERS. To its Knowledge, it has not received:
(i) any orders or directives which relate to
environmental matters and which require any work,
repairs, construction or capital expenditures with
respect to the Assets;
(ii) any demand or notice with respect to the breach of
any environmental law applicable to the Assets,
including, without limitation, any regulations
respecting the use, storage, treatment,
transportation or disposition of petroleum substances
or contaminants; or
(iii) notice from the operator advising of operator's
non-compliance with any laws applicable to the Assets
including without limitation any regulations
respecting the use, storage, treatment,
transportation or disposition of petroleum substances
or contaminants;
which orders, directives, demands or notices remain outstanding as of
the Closing Date;
(u) ENVIRONMENTAL CLAIMS. To its Knowledge, Vendor has not
received any notice of any claim by any third party (including
governmental authorities) of pollution or other Environmental
Damage arising from drilling, production or similar operations
71
27
on the Lands or lands pooled or unitized therein or of any
claim requesting that any action be taken to prevent pollution
or other Environmental Damage from drilling, production or
other operations on the Lands or lands pooled or unitized
therewith which notice or claim remains outstanding as of the
date hereof,
(v) OIL AND GAS FIELD PRACTICE. To its Knowledge, the Wells
related to the Lands have, in all material respects, been
drilled and if completed, completed and if abandoned,
abandoned in compliance with all statutes, rules and
regulations existing at the relevant time;
(w) RIGHTS OF FIRST REFUSAL. To its Knowledge, no Rights of First
Refusal relating to the Assets shall remain in effect as of
the Closing Date, either having been waived or exercised by
the holder thereof or having expired after proper notice being
given;
(x) OUTSTANDING AFE'S. Other than as disclosed in Schedule "F",
there are no authorizations for expenditures approved by it
with respect to the Assets pursuant to which amounts in excess
of twenty -five thousand Dollars ($25,000.00) may become
payable after the date hereof and there are no outstanding
cash calls in excess of twenty-five thousand Dollars
($25,000.00) with respect to the Assets;
(y) DISCLOSURE OF DOCUMENTS. To its Knowledge, all documents and
agreements affecting the title to the Assets or production or
revenue from the Assets will have been made available by
Vendor to Purchaser by the Closing Date, with exception of
those contracts for the sale of Petroleum Substances which
have a term equal to or less than thirty-two (32) days; and
(z) ROYALTIES. All royalties payable by Vendor in respect of the
Petroleum and Natural Gas Rights have been properly paid as of
the Effective Date.
10.2 NO WARRANTY OF TITLE
Notwithstanding anything contained in this Article 10, Vendor does not
warrant title to the Assets or purport to convey any better title than
it now has.
10.3 NO OTHER VENDOR WARRANTIES
Vendor makes no warranty whatsoever except as and to the extent set
forth in Clause 10.1. Without limiting the generality of the foregoing,
Vendor does not make any representation or warranty with respect to:
(a) the quality, quantity or recoverability of the Petroleum
Substances within or under the Lands or any lands pooled or
unitized therewith;
(b) the value of the Assets or the future revenues applicable
thereto,
72
28
(c) any economic evaluations respecting the Assets, or
(d) the quality, condition, merchantability or serviceability of
all or any of the Tangible Interests, or their suitability for
any particular purpose.
11. REPRESENTATIONS AND WARRANTIES OF PURCHASER
11.1 REPRESENTATIONS AND WARRANTIES OF PURCHASER
Purchaser hereby represents and warrants to Vendor that:
(a) STANDING. It is a corporation duly organized and validly
existing under the laws of its jurisdiction of incorporation
and in good standing under the laws of the jurisdiction in
which it is required to be registered in order to hold the
Assets;
(b) REQUISITE AUTHORITY. It has all necessary corporate power,
authority and capacity to enter into this Agreement and to
purchase and pay for the Assets, on the terms described herein
and to perform its other obligations under this Agreement;
(c) NO CONFLICTS. The execution and delivery of this Agreement and
the consummation of the transactions contemplated by this
Agreement will not violate nor be in conflict with its
charter, bylaws or similar constating documents of it, or any
provision of any agreement or instrument to which it is a
party or is bound, or any judgement, decree, order, statute,
rule or regulation applicable to Purchaser in effect in
Alberta of which it Is aware;
(d) EXECUTION AND ENFORCEABILITY OF DOCUMENTS. This Agreement has
been duly executed and delivered by it and all other documents
required hereunder to be executed and delivered by it at
Closing pursuant hereto shall be duly executed and delivered.
This Agreement does, and such documents will, constitute
legal, valid and binding obligations of it enforceable in
accordance with their respective terms, subject to the
qualification that their enforceability may be limited by
rules of equity and by insolvency, bankruptcy and other laws
of general application affecting the enforcement of creditors'
rights;
(e) FINDER'S FEES. It has not incurred any liability, contingent
or otherwise, for brokers' or finders' fees in respect of this
transaction for which Vendor shall have any obligation or
liability;
(f) THE INVESTMENT CANADA ACT. Either it is not a "non-Canadian"
as such term is defined in The Investment Canada Act, or, if
it is such "non-Canadian", then either the transaction herein
is not notifiable or reviewable under such Act or such Party
will make application to satisfy the requirements of such Act
so that the transaction
73
29
herein provided for may be completed on the Closing Date
without contravention of the Act;
(g) PURCHASER AS PRINCIPAL. It is acquiring the Assets in its
capacity as a principal;
(h) FINANCING CAPABILITY OF PURCHASER. It either now has or will
have at Closing sufficient funds to close the transactions
hereby contemplated upon the Closing Date; and
(i) COMPETITION AND SECURITIES ACTS. It has complied with the
Competition Act (Canada) and the relevant Securities Acts to
the extent applicable to the transaction herein.
11.2 PURCHASER'S OWN EXAMINATION AND EVALUATION
Without detracting from Purchaser's reliance on Vendor's representation
and warranties in Clause 10.1, Purchaser acknowledges that as of the
Closing Date it will have made its own independent investigation,
analysis, evaluation and inspection of Vendor's interest in the Assets,
including a review of Vendor's title thereto and the state and
condition thereof, and will have relied on its own investigation,
analysis, evaluation and inspection as to its assessment of the
condition, quantum and value of the Assets and Vendor's title thereto.
11.3 GAS COST ALLOWANCE
Vendor and Purchaser shall co-operate in the timely preparation of gas
cost allowance filings which may be required of the Parties from time
to time. Purchaser agrees to do such reasonable things in a timely
manner, as Vendor may request, to provide to Vendor or to the Crown
information required by Vendor for such filings.
12. SURVIVAL OF REPRESENTATIONS AND WARRANTIES
12.1 DATES REPRESENTATIONS AND WARRANTIES APPLY
The representations and warranties of the Parties set forth in Clauses
10. 1 and 11. 1 shall be true or performed, as the case may be, as at
the Effective Date and the Closing Date.
12.2 LIMITATION OF LIABILITY.
The representations and warranties contained herein shall survive the
Closing Date, notwithstanding the Closing and delivery of any
covenants, representations and warranties in any other agreements prior
or subsequent thereto, and shall remain in full force and effect for
the benefit of Purchaser with respect to Clause 10.1 and for the
benefit of Vendor with respect to Clause 11.1, but no claim or action
in respect of any breach of such representation or warranty shall be
made unless the Party making such claim or bringing
74
30
such action has given notice of such claim (including reasonable
particulars of the misrepresentations or breach) to the other within
twelve (12) months following the Closing Date. Notwithstanding any
other provision of this Agreement:
(a) a Party shall not be entitled to any payment from the other
Party for breach of any covenants, representations or
warranties referred to in Clauses 10.1 and 11.1 for
misrepresentation pursuant to this Agreement or for
indemnification pursuant to Clause 13.1, unless a claim (s) by
such Party exceeds in aggregate Two Thousand Five Hundred
Dollars ($2,500.00); and
(b) the maximum aggregate liability of Vendor to Purchaser for any
breaches of any covenants, representations or warranties
referred to in Clause 10.1, for misrepresentation pursuant to
this Agreement and in respect of any claims for indemnity
pursuant to Clause 13.1, shall not in any event exceed the
Purchase Price.
12.3 KNOWLEDGE BY PURCHASER
Purchaser shall have no remedy or cause of action for a breach of
representation or warranty for any circumstance, matter or thing
actually known to Purchaser, or any employee, agent, consultant or
representative thereof, as at the Closing Date.
12.4 NOT TRANSFERABLE
The representations and warranties set forth in Clauses 10.1 and 11.1
are made for the exclusive benefit of Purchaser and Vendor, as the case
may be, and are not transferable and may not be the subject of any
rights of subrogation in favour of any other Person.
13. INDEMNITY
13.1 INDEMNITY OF VENDOR
Subject to Clauses 12.2 and 13.4, Vendor shall indemnify Purchaser and
its directors, employees and agents from and against all Losses which
Purchaser, its directors, employees or agents, pays or pay to third
parties as a consequence of a breach, as of the Closing Date, of any
representations and warranties of Vendor contained in Clause 10.1 of
this Agreement, excepting any Losses, if and to the extent caused by
the gross negligence or wilful default of Purchaser, its successors,
agents or assigns. The indemnity granted by Vendor in this Clause 13.1
is not a title warranty and does not provide an extension of any
representation or warranty contained in Clause 10.1 or any additional
remedy with regard to the breach by Vendor of any representation or
warranty. Furthermore, the indemnity of Vendor to Purchaser granted
pursuant to this Clause 13.1 shall only apply to claims of indemnity
made by Purchaser to Vendor by giving written notice to Vendor within
twelve (12) months following the Closing Date and, in any event,
75
31
the maximum aggregate liability and indemnity of Vendor to Purchaser
for Losses suffered by Purchaser pursuant hereto and as a result of any
breaches of any representations or warranties shall not exceed the
Purchase Price.
13.2 PURCHASER'S LIABILITY AND INDEMNITY TO VENDOR
If Closing occurs and in addition to indemnity under Clause 8.5,
Purchaser hereby agrees:
(a) to be liable to Vendor, its directors, agents and employees,
for all Losses which Vendor, its directors, agents or
employees, pay, suffer, sustain or incur, and, in addition;
(b) to indemnify and save harmless Vendor, its directors, agents
and employees, from and against all Losses which may be
brought against or suffered by Vendor, its directors, agents
or employees,
in relation to the Assets and arising out of or in connection with
operations which arise on or subsequent to the Effective Date,
excepting any Losses if, and to the extent, caused by the gross
negligence or wilful default of Vendor or its agents or arise as a
result of a breach by Vendor of any of the terms of this Agreement.
13.3 PURCHASER'S ASSUMPTION OF ENVIRONMENTAL DAMAGE AND ABANDONMENT AND
RECLAMATION OBLIGATION
Purchaser acknowledges that it has been given the opportunity to
inspect the Assets prior to Closing Date; that it is familiar with the
condition of the Assets, and that it is acquiring the Assets on an "as
is" basis. Upon the Effective Date, Purchaser assumes the entire
responsibility and liability for all Losses which Vendor may suffer,
sustain or incur, and, in addition shall indemnify and save harmless
Vendor and its directors, employees and agents from and against all
Losses which may be brought against Vendor or which Vendor, its
directors, employees or agents, may suffer, sustain or incur in
connection with or as a result of each and every act or omission,
matter or thing related to the Assets done, omitted, occurring or
accruing on, prior to or subsequent to the Effective Date with respect
to any Environmental Damage or anyAbandonment and Reclamation
Obligation and without regard to how or who caused such Losses, except,
subject to the provisions of Clause 12.2 to the extent that same relate
to inaccuracies or failure of the representations and warranties set
forth in Clause 10.1.
13.4 LOSSES
For the purpose of this Article 13, "Losses" means losses, costs,
claims, damages, expenses and liabilities and includes, without
limitation, legal costs on a solicitor and client basis.
76
32
14. ONGOING COVENANTS OF PURCHASER
14.1 DOCUMENTS OF TITLE
On and after the Closing Date, Purchaser agrees with Vendor it shall be
bound by, observe and perform, as they become due, all covenants,
obligations and liabilities respecting the Assets, including, without
limitation, the performance of all obligations of Vendor under the
Documents of Title and other agreements respecting the Assets.
14.2 VENDOR'S ACCESS TO RECORDS
On and after the Closing Date, Purchaser hereby agrees to allow Vendor,
its employees, agents, legal counsel, accountants and other
representatives, to have access to the premises of Purchaser during
normal business hours of Purchaser in order to inspect and take copies
of such information delivered by Vendor to Purchaser in accordance with
Clause 5.1, if reasonably required by Vendor, in connection with any
joint venture or Crown audit, any potential or threatened legal or
administrative proceeding by or against Vendor in relation to the
Assets, or to enable Vendor to comply with a law or the requirement of
any governmental authority. Nothing herein shall prevent Vendor from
making and retaining copies of any such documents at any time. Vendor
shall hold all information and documents confidential and that same
shall only be used by Vendor for the purpose specified by Vendor.
14.3 INITIATION OF AUDITS
On and after the Closing Date up until Final Adjustments are made,
Purchaser shall advise Vendor of the initiation and results of any
joint venture or Crown audit in relation to the Assets to the extent it
relates to any matters accruing prior to the Effective Date.
15. NO MERGER
15.1 NON-MERGER
The representations and warranties set forth in Clauses 10.1 and 11.1
and the indemnities set forth in Article 13 and the covenants in
Article 14 shall be deemed to apply to all assignments, transfers and
other Conveyance Documents and there shall not be any merger of any
representation, warranty, indemnity or covenant in such assignments,
transfers or other Conveyance Documents, notwithstanding any rule of
law, equity or statute to the contrary and all such rules are hereby
waived.
77
33
16. NOTICE
16.1 METHOD OF NOTICE
Any notice, communication or other document (hereinafter called
"Notice") required or permitted to be given under this Agreement by one
Party to the other shall be in writing and shall be sufficiently given
and received if:
(a) personally served on the Person to whose attention the Notice
is to be addressed pursuant to Clause 16.2, at the time of
actual delivery, or, if delivered by hand to a responsible
Person at the address of the Party to which such Notice is
directed, two (2) hours following delivery to such Party;
provided that if such time of deemed receipt is not within the
normal business hours of the recipient Party, then such Notice
shall be deemed received at the next commencement of business
on a day that business is normally conducted by the recipient
Party;
(b) sent by telecopy (or by any other like method of telefacsimile
by which a written message may be sent) and directed to the
Person to whose attention the Notice is to be addressed
pursuant to Clause 16.2 at that Party's telecopier number set
forth below, and such Notice so given shall be deemed to have
been received by the recipient, if the time of transmission is
stated, two (2) hours following the time so stated; provided
that If such time of deemed receipt is not within the normal
business hours of the recipient Party, then such Notice shall
be deemed received at the next commencement of business on a
day that business is normally conducted by the recipient
Party; or
(c) mailed by first class registered post, postage prepaid, to the
other Party (such Notice so served shall be deemed to have
been received by the recipient Party on the fourth (4th)
Business Day of such recipient Party following the date of
mailing thereof); provided that in the event of an actual or
threatened postal strike or other labour disruption that may
affect the mail service, Notices shall not be mailed.
16.2 ADDRESS FOR NOTICE
The address for Notice for each of the Parties shall be as follows:
VENDOR: PURCHASER:
Permez Petroleums Ltd. Nastan Resources Ltd.
4100, 400 - 3rd Avenue S.W. Suite 2210, 800 - 5th Avenue SW
Calgary, Alberta Calgary, Alberta
T2P 3V4 T2P 3T6
Attention: Land Manager Attention: Land Manager
Fax: (403) Fax: (403) 508-1265
78
34
and
GEOCAN Energy Inc.
800, 717 - 7th Avenue SW
Calgary, Alberta
T2P 3H3
Attention: Land Manager
Fax: (403) 261-3834
16.3 CHANGES ADDRESS FOR NOTICE
Any Party may, from time to time, change its address for Notice by
giving written notice to the other.
17. MISCELLANEOUS PROVISIONS
17.1 PUBLIC ANNOUNCEMENTS
No Party shall release any information concerning this Agreement and
the transaction herein provided for without the prior written consent
of Vendor, which will not be withheld unreasonably. Nothing contained
herein shall prevent any Party at any time from furnishing information
to any governmental agency or regulatory authority or to the public if
required by applicable law or if such Party considers it to be
advisable in the circumstances, provided that the Parties shall advise
each other in advance of any public statement which they propose to
make regarding the said transaction. Nothing herein contained shall
prevent Vendor from furnishing information relating to the said
transaction or the identity of Purchaser in connection with the
procurement of the consent of other Persons or in sending notices
concerning any Right of First Refusal where required pursuant to any
Documents of Title.
17.2 SIGNS AND NOTIFICATIONS
After Closing, Vendor may remove any signs which indicate Vendor's
ownership or operation of the Assets. It shall be the responsibility of
Purchaser, where necessary, to erect or install any signs that may be
required by governmental agencies indicating Purchaser to be the owner
of the Assets and to notify contractors, governmental agencies and any
other Person of Purchaser's interest in the Assets.
17.3 HEADINGS AND DESCRIPTIONS
The headings of all Articles, Clauses and Subclauses are inserted for
convenience of reference only and shall not affect the construction or
interpretation of this Agreement, or any provision thereof. Use of
words "Article", "Clause" or "Subclause" in this Agreement
79
35
refers to an Article, Clause or Subclause of this Agreement unless a
contrary intention is specifically stated.
17.4 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 or vice versa, as the context
requires.
17.5 CONFLICTS AND ENTIRE AGREEMENT
The provisions contained in all documents and agreements collateral
hereto shall at all times be read subject to the provisions of this
Agreement and, in the event of conflict between the provisions
contained in any documents or agreements collateral hereto and the
provisions of this Agreement, the provisions of this Agreement shall
prevail unless otherwise expressly provided herein.
17.6 WAIVER
Any waiver of any term or condition of this Agreement or consent to any
departure from this Agreement by one Party to the other shall be
effective only if in writing and only in the specific instance and for
the specific purpose for which it is given.
17.7 APPLICABLE LAW
This Agreement shall be construed and enforced in accordance with the
laws in effect in the Province of Alberta. Each Party attoms to the
jurisdiction of the courts of the Province of Alberta and all courts of
appeal therefrom.
17.8 ENTIRE AGREEMENT
This Agreement constitutes the entire agreement between the Parties
with respect to the transactions contemplated herein, contains all of
the representations and warranties of the respective Parties and
supersedes all prior agreements, documents, writing and verbal
understandings between the Parties with respect to the sale of the
Assets.
17.9 AMENDMENTS
This Agreement may not be amended or modified in any respect, except by
written instrument executed by the Parties.
17.10 TIME OF THE ESSENCE
Time shall be of the essence of this Agreement and of every part
thereof.
80
36
17.11 FURTHER ASSURANCES
After Closing, the Parties shall do all things and provide all
assurances, as may be reasonably required to consummate the
transactions contemplated by this Agreement, and each Party shall
provide those further documents or instruments as may be reasonably
required by the other Parties to give effect to this Agreement and to
carry out its provisions.
17.12 ASSIGNMENT
Prior to Closing, neither this Agreement nor any rights or obligations
under it shall be assignable by any Party without the prior written
consent of the other Parties. After the Closing Date, no assignment,
transfer of the Agreement of all or any portion of the Assets, by
Purchaser shall relieve Purchaser from the obligations to Vendor
herein, unless Vendor otherwise agrees. Subject thereto, this Agreement
shall enure to the benefit of and be binding upon the Parties, and
their respective successors and permitted assigns.
17.13 COUNTERPART EXECUTION
This Agreement may be executed in counterpart and all counterparts
together shall form one binding Agreement.
IN WITNESS WHEREOF the parties have duly executed this Agreement as of
the date and year first above 'written.
VENDOR PURCHASER
PERMEZ PETROLEUMS LTD. NASTAN RESOURCES LTD.
Per: Per:
--------------------------------- ----------------------------------
Per: Per:
-------------------------------- ----------------------------------
GEOCAN ENERGY INC.
Per:
----------------------------------
Per:
----------------------------------
81
THIS IS SCHEDULE "A" TO AND FORMING PART OF A PURCHASE AND SALE
AGREEMENT BETWEEN PERMEZ PETROLEUMS LTD., AS VENDOR, AND NASTAN
RESOURCES LTD. AND GEOCAN ENERGY INC. AS PURCHASER, MADE AS OF THE 1ST
DAY OF JUNE, 1999
LANDS AND PETROLEUM
SUBSTANCES VENDOR'S INTEREST ENCUMBRANCES
SW Section 25-69-9 W5M 43.75% -Crown SS
P&NG to base Beaverhill Lake
WELLS
4-25-69-9W5M
82
THIS IS SCHEDULE "B" TO AND FORMING PART OF A PURCHASE AND SALE
AGREEMENT BETWEEN PERMEZ PETROLEUMS LTD., AS VENDOR, AND NASTAN
RESOURCES LTD. AND GEOCAN ENERGY INC. AS PURCHASER, MADE AS OF THE IST
DAY OF JUNE, 1999
VENDOR'S OFFICER'S CERTIFICATE
RE: CLAUSE 7. 1 (a) OF THE PURCHASE AND SALE AGREEMENT
("AGREEMENT") MADE AS OF JUNE 1, 1999 BETWEEN PERMEZ
PETROLEUMS LTD., AS VENDOR, AND NASTAN RESOURCES LTD. AND
GEOCAN ENERGY INC., AS PURCHASER
Unless otherwise stated, the definitions provided for in the Agreement
are adopted in this Certificate.
I, , President of Permez Petroleums
Ltd. (the "Company"), hereby certify that as of the date of this
Certificate:
(a) The covenants, representations and warranties of the Company
contained in Clause 10 of the Agreement are true and correct
in all material respects.
(b) This Certificate is made for and on behalf of the Company and
is binding upon it and the deponent herein is not and will not
incur any personal liability whatsoever with respect to it.
IN WITNESS WHEREOF I have executed this Certificate effective the day
of , 1999.
Vendor
PERMEZ PETROLEUMS LTD.
Per: ------------------------------
83
2
SCHEDULE "B"
PURCHASER'S OFFICER'S CERTIFICATE
RE: CLAUSE 7.2(a) OF THE PURCHASE AND SALE AGREEMENT ("AGREEMENT")
MADE AS OF JUNE 1, 1999 BETWEEN PERMEZ PETROLEUMS LTD., AS
VENDOR, AND NASTAN RESOURCES LTD. AND GEOCAN ENERGY INC., AS
PURCHASER
Unless otherwise stated, the definitions provided for in the Agreement
are adopted in this Certificate.
I, , President of Nastan
Resources Ltd.(the "Purchaser"), hereby certify that as of the date of
this Certificate:
(a) The covenants, representations and warranties of the Purchaser
contained in Clause 11 of the Agreement are true and correct
in all material respects.
(b) This Certificate is made for and on behalf of the Purchaser
and is binding upon it and the deponent herein is not and will
not incur any personal liability whatsoever with respect to
it.
IN WITNESS WHEREOF I have executed this Certificate effective the day of ,1999.
Purchaser
NASTAN RESOURCES LTD.
Per: -----------------------------------------------
Title
84
3
SCHEDULE "B"
PURCHASER'S OFFICER'S CERTIFICATE
RE: CLAUSE 7.2(a) OF THE PURCHASE AND SALE AGREEMENT ("AGREEMENT")
MADE AS OF JUNE 1, 1999 BETWEEN PERMEZ PETROLEUMS LTD., AS
VENDOR, AND NASTAN RESOURCES LTD. AND GEOCAN ENERGY INC., AS
PURCHASER
Unless otherwise stated, the definitions provided for in the Agreement
are adopted in this Certificate.
I, , President of GEOCAN
ENERGY INC. (the "Purchaser"), hereby certify that as of the date of
this Certificate:
(a) The covenants, representations and warranties of the Purchaser
contained in Clause 11 of the Agreement are true and correct
in all material respects.
(b) This Certificate is made for and on behalf of the Purchaser
and is binding upon it and the deponent herein is not and will
not incur any personal liability whatsoever with respect to
it.
IN WITNESS WHEREOF I have executed this Certificate effective the day
of , 1999.
Purchaser
GEOCAN ENERGY INC.
Per: ------------------------------------------
Title
85
THIS IS SCHEDULE "C" TO AND FORMING PART OF A PURCHASE AND SALE
AGREEMENT BETWEEN PERMEZ PETROLEUMS LTD. AS VENDOR, AND NASTAN
RESOURCES LTD. AND GEOCAN ENERGY INC., AS PURCHASER, MADE AS OF THE IST
DAY OF JUNE, 1999
CONVEYANCE
THIS INDENTURE AND AGREEMENT made as of the 1st day of June, 1999.
BETWEEN:
PERMEZ PETROLEUMS LTD., a body corporate, having an office in
the City of Calgary, in the Province of Alberta, (hereinafter called
"Vendor")
OF THE FIRST PART
- and -
NASTAN RESOURCES LTD. AND GEOCAN ENERGY INC., both bodies corporate,
having offices in the City of Calgary, in the Province of Alberta,
(hereinafter called "Purchaser")
OF THE SECOND PART
WHEREAS Vendor has agreed, pursuant to a Purchase and Sale Agreement
dated as of the Ist day of June, 1999 (hereinafter called the "Sale Agreement"),
to convey to Purchaser all of its interest in and to the Assets, insofar as
those terms are defined therein.
NOW THEREFORE THIS AGREEMENT WITNESSETH that, for the consideration
provided in the Sale Agreement, the receipt and sufficiency of which is hereby
acknowledged by Vendor, Vendor has agreed to sell and by these presents does
bargain, sell, assign, transfer and convey to Purchaser all of its right, title,
interest and property whatsoever in, to or arising out of the Assets, in the
following proportions:
Nastan 50.30%
GEOCAN 49.70%
to have and to hold for its own use and benefit on the terms herein provided.
IT IS FURTHER AGREED BETWEEN THE PARTIES AS FOLLOWS:
86
2
1. DEFINITIONS
In this Conveyance, the definitions set forth on the Sale Agreement
shall apply hereto.
2. TITLE
Purchaser hereby covenants and agrees with Vendor that nothing herein,
expressed or implied, shall operate to have effect as any warranty or
guarantee of title or covenant for title on the part of Vendor and that
the representations and warranties contained in the Sale Agreement
shall apply hereto for the period provided in the Sale Agreement.
3. EFFECTIVE DATE
Vendor and Purchaser agree that the effective date of this transaction
shall be 8:00 a.m. Calgary time on January 1, 1999.
4. ACCEPTANCE
Purchaser hereby accepts this Conveyance and in consideration thereof,
Purchaser hereby assumes and agrees to perform and be bound by all
terms and conditions of the contracts, agreements and documents
included in the Assets.
5. FURTHER ASSURANCES
Vendor and Purchaser will each from time to time, and at all times
hereafter, at the request and cost of the other, do and perform all
such acts and things, and execute all such assurances, deeds, documents
and writings with respect to the Assets as the other may reasonably
require in order to carry out the purposes of this Conveyance.
6. SALE AGREEMENT
The terms hereof shall be read in conjunction with the terms of the
Sale Agreement and subject thereto. In the event of any conflict
between the provisions of this Conveyance and the Sale Agreement, the
Sale Agreement shall prevail.
7. ENUREMENT
This Conveyance shall extend to and be binding upon the parties hereto
and their successors and assigns.
8. COUNTERPART EXECUTION
This Conveyance may be executed in counterpart and all counterparts
together shall form one binding Agreement.
87
3
IN WITNESS WHEREOF the parties hereto have executed this Conveyance by their
proper officers duly authorized in that behalf as of the effective date.
Vendor
PERMEZ PETROLEUMS LTD.
Per: --------------------------------------------
Per: --------------------------------------------
Purchaser
NASTAN RESOURCES LTD.
Per: --------------------------------------------
Per: --------------------------------------------
GEOCAN ENERGY INC.
Per: --------------------------------------------
Per: --------------------------------------------
88
THIS IS SCHEDULE "D" TO AND FORMING PART OF A PURCHASE AND SALE AGREEMENT
BETWEEN PERMEZ PETROLEUMS LTD. AS VENDOR, AND NASTAN RESOURCES LTD. AND GEOCAN
ENERGY INC. AS PURCHASER, MADE AS OF THE IST DAY OF JUNE, 1999
TANGIBLES, FACILITIES AND OTHER MISCELLANEOUS MATTERS
Description Vendor's Interest
API 160 Pumpjack 43.75%
Arrow 66 Pumpjack engine
2, 400 Barrel Tanks
89
THIS IS SCHEDULE "E" TO AND FORMING PART OF A PURCHASE AND SALE
AGREEMENT BETWEEN PERMEZ PETROLEUMS LTD., AS VENDOR, AND NASTAN
RESOURCES LTD. AND GEOCAN ENERGY INC., AS PURCHASER, MADE AS OF THE 1ST
DAY OF JUNE, 1999
PRODUCTION SALES AGREEMENTS
There are no production sales agreements or arrangements under which
Vendor, or any Person acting on its behalf, is obligated to sell or deliver
Petroleum Substances allocable to the Petroleum and Natural Gas Rights to any
Person which are not terminable on less than thirty-two (32) days' notice.
90
THIS IS SCHEDULE "F" TO AND FORMING PART OF A PURCHASE AND SALE AGREEMENT
BETWEEN PERMEZ PETROLEUMS LTD., AS VENDOR, AND NASTAN RESOURCES LTD.
AND GEOCAN ENERGY INC., AS PURCHASER, MADE AS OF THE IST DAY OF JUNE, 1999
OUTSTANDING AUTHORIZATIONS FOR EXPENDITURE
There are no outstanding authorizations for expenditure approved by Vendor with
respect to the Assets pursuant to which amounts in excess of twenty-five
thousand Dollars ($25,000.00) may become payable after the date hereof.
91
PURCHASE AND SALE AGREEMENT
THIS AGREEMENT dated as of the 1st day of June, 1999.
BETWEEN:
MERLIN RESOURCES LTD., a body corporate, with offices in the
City of Toronto, in the Province of Ontario (hereinafter
referred to as "Vendor")
- and -
NASTAN RESOURCES LTD. ("NASTAN") and GEOCAN ENERGY INC.
("GEOCAN") both bodies corporate, with offices in the City of
Calgary, in the Province of Alberta (hereinafter collectively
referred to as "Purchaser")
WHEREAS Vendor has agreed to sell to Purchaser and Purchaser has agreed
to purchase from Vendor the Assets on and subject to the terms and conditions of
this Agreement.
NOW THEREFORE THIS AGREEMENT WITNESSES THAT in consideration of the
mutual covenants and agreements set out, the Parties covenant and agree as
follows:
1. DEFINITIONS
1.1 DEFINITIONS
In this Agreement, the following terms have the following respective
meanings, unless the context otherwise requires:
(a) "ABANDONMENT AND RECLAMATION OBLIGATION" means the abandonment
of any Wells, Tangible Interests or Miscellaneous Interests
including, without limitation, any closing, decommissioning,
dismantling and removing of any tangible depreciable property,
Assets on the Lands, or lands pooled, unitized or adjacent
therewith, in connection with such abandonment, and restoring
the surface of the Lands, or lands pooled or unitized
therewith, all in compliance with laws, regulations, orders
and directives of governmental authorities having jurisdiction
with respect to the said abandonment or the said restoration
of the surface of lands;
(b) "AGREEMENT" means this document together with the recitals and
Schedules attached hereto;
(c) "ASSETS" means Vendor's entire interest in the Petroleum and
Natural Gas Rights, the Tangible Interests, and the
Miscellaneous Interests;
92
2
(d) "BUSINESS DAY" means a day other than a Saturday, Sunday or
any statutory holiday in Alberta;
(e) "CLOSING" means the exchange of Conveyance Documents between
Vendor and Purchaser on the Closing Date and the payment of
the Purchase Price and other amounts as contemplated in Clause
3.6;
(f) "CLOSING DATE" means 10:00 o'clock a.m., Calgary time, on the
25th day of June, 1999 unless such date is amended by
agreement in writing by the Parties;
(g) "CONVEYANCE DOCUMENTS" means the documents described in Clause
4.3 required to complete the transfer and assignment of the
Assets;
(h) "DOCUMENTS OF TITLE" means collectively any and all
certificates of title, leases, permits, licenses, unit
agreements, assignments, trust declarations, royalty
agreements, operating agreements or procedures, participation
agreements, farinin and farmout agreements, sale and purchase
agreements, pooling agreements and other agreements by virtue
of which Vendor is entitled to the Petroleum and Natural Gas
Rights;
(i) "DOLLARS" or "$" means Canadian dollars;
(j) "EFFECTIVE DATE" means 8:00 o'clock a.m. Calgary time on the
1st day of January, 1999;
(k) "ENCUMBRANCES" has the meaning ascribed thereto in Clause 1.1
(u)(xii);
(l) "ENVIRONMENTAL DAMAGE" means any one or more of the following:
(i) ground water, surface water or aquifer contamination,
(ii) soil contamination,
(iii) corrosion or deterioration of structures, equipment,
fences, gathering lines or any other Tangible
Interests;
(iv) emissions of toxic or hazardous substances, and
(v) the effects of non-compliance with any environmental
law, regulation, order or directive of any
governmental authority having jurisdiction at the
relevant time;
93
3
(m) "FINAL ADJUSTMENT" means those further accounting and
adjustments, contemplated pursuant to Clause 3.8.1 of this
Agreement, to be made subsequent to the Closing Date;
(n) "GENERAL CONVEYANCE" means the document substantially in the
form of Schedule "C" attached hereto and as required in
accordance with Clause 4.3;
(o) "INTERIM ADJUSTMENTS" means the interim accounting and
adjustments, contemplated pursuant to Clause 3.8.1 of this
Agreement, to be made on the Closing Date;
(p) "KNOWLEDGE", for purposes of Clauses 10.1 and 11.1, means
Vendor or Purchaser, as the case may be, shall be deemed to
actually know or have knowledge of a matter, circumstance or
thing when such matter, circumstance or thing has come to the
attention of:
(i) an officer of such corporation (who as at the date
hereof and at the Closing Date is an officer of such
corporation); or
(ii) an employee or consultant of such corporation with
responsibility for matters to which the matter,
circumstance or thing relates (who as at the date
hereof and at the Closing Date is an employee or
consultant of such corporation with such
responsibility),
based upon an examination of Vendor's records, which
examination has been conducted, under circumstances which a
reasonable person would take cognizance of the matter,
circumstance or thing;
(q) "LANDS" means the lands in which Vendor is shown to have an
interest as set forth and described in Schedule "A", but only
insofar as rights to those lands are granted by the Documents
of Title;
(r) "MISCELLANEOUS INTERESTS" means the entire undivided right,
title, estate and interest of Vendor, at the Effective Date,
in and to all property, assets and rights, to the extent
pertaining to Petroleum and Natural Gas Rights or Tangible
Interests (excluding therefrom materials and supplies used in
connection with operations where the costs have not been
charged to the joint account of Persons having an interest
therein and also excluding Petroleum and Natural Gas Rights or
Tangible Interests), but including, without limitation to the
generality of the foregoing:
(i) all Documents of Title and other agreements to the
extent relating to Petroleum and Natural Gas Rights
or Tangible Interests or any rights in relation
thereto, including, without limitation, royalty
agreements, joint operating agreements, gas
processing agreements, gas transmission
94
4
agreements, gas balancing agreements, common stream
agreements, natural gas transportation agreements and
agreements for the construction, ownership and
operation of facilities;
(ii) all non-interpretive production and engineering
information which is not of a proprietary nature and
which relates directly to Petroleum and Natural Gas
Rights or Tangible Interests, that Vendor either has
in its custody or to which Vendor has access, but
excluding:
A. tax, legal and financial records;
B. economic evaluations; and,
C. engineering, geophysical and geological
information, to the extent it discloses
technology or information which is
proprietary to Vendor or information which
Vendor is contractually prohibited from
selling or disclosing to other Persons;
(iii) all well-bores and casing associated with the Wells
situate within the Lands, or lands pooled or unitized
including well licences issued in connection with the
Wells;
(iv) all rights of Vendor as seller under all agreements
for the sale of Petroleum Substances from the Lands
or lands pooled or unitized therewith (the "relevant
lands") having a term exceeding thirty-one (3 1) days
but only to the extent such agreements are severable
if they contain more lands or zones than the relevant
Lands;
(v) all subsisting rights to enter upon, use and occupy
the surface of any of the Lands, or to carry out
operations thereon or therein and any other lands
with which the Lands have been pooled or unitized or
on which Tangible Interests are situate, including
easements, right of way agreements and agreements for
road crossing rights;
(s) "PARTIES" means all parties to this Agreement, and "PARTY"
means any of them;
(t) "PERMITTED ENCUMBRANCES" means:
(i) existing easements, rights of way, servitude's or
other similar rights in lands;
(ii) the right reserved to or vested in any government or
other public authority by the terms of any statutory
provision, to terminate any Documents of Title or to
require annual or other periodic payments as a
condition of the continuance thereof;
95
5
(iii) the right reserved to any governmental authority to
levy taxes on Petroleum Substances or the income or
revenue therefrom and governmental requirements as to
production rates on the operations of any property;
(iv) 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,
and all applicable laws, rules and orders of any
governmental authority;
(v) undetermined or inchoate liens incurred or created as
security in favour of the Person conducting the
operation of any of the Assets for Vendor's
proportion of the costs and expenses of such
operations;
(vi) liens for taxes, assessments or governmental charges,
which are not due or which are not delinquent;
(vii) mechanics', builders' or materialmen's liens in
respect of services rendered or goods supplied for
which payment is not at the time due;
(viii) the reservations, limitations, provisos and
conditions in any original grants from the Crown of
any of the Lands or interests therein and statutory
exceptions to title;
(ix) agreements and plans relating to pooling or
unitization;
(x) liens granted in the ordinary course of business to a
public utility, municipality or governmental
authority in connection with operations conducted
with respect to the Assets;
(xi) the terms and conditions of the Documents of Title,
provided that such terms and conditions do not create
additional royalty burdens which are not specifically
set forth in Schedule "A";
(xii) such royalty burdens and other encumbrances as are
set forth in Schedule "A" under the heading of
"Encumbrances";
(xiii) agreements for the sale of production from the
Petroleum and Natural Gas Rights;
(xiv) trust obligations in the ordinary course of business;
provided that such trust obligations do not create
beneficial rights of ownership in and to the Assets;
(u) "PERSON" means any natural person, firm, corporation,
partnership, trustee, trust, unincorporated association,
government or government agency not a Party, and pronouns used
in connection therewith have a similar extended meaning;
96
6
(v) "PETROLEUM AND NATURAL GAS RIGHTS" means the entire undivided
right, title and interest of Vendor at the Effective Date, in
and to the Petroleum Substances in the Lands or any lands
pooled or unitized therewith and in and to any royalty rights
in the Lands, which interests are, including without
limitation, those interests set forth in Schedule "A";
(w) "PETROLEUM SUBSTANCES" means petroleum, natural gas and
related hydrocarbons and all other substances, whether liquid,
solid or gaseous and whether hydrocarbons or not, insofar as
the rights to such substances or the proceeds therefrom are
granted by the Documents of Title;
(x) "PRIME RATE" means the rate of interest per annum used by the
Canadian Imperial Bank of Commerce from time to time as the
reference rate in determining rates of interest payable on
Canadian dollar demand loans in Canada;
(y) "PURCHASE PRICE" means the sum referred to in Clause 3.1 less
reductions, if any, plus interest which shall have accrued on
such sum, all as calculated in Clause 3.1;
(z) "RIGHTS OF FIRST REFUSAL" means a right of first refusal,
pre-emptive right of purchase or similar right whereby any
Person, other than Vendor, would have the right to acquire or
purchase all or a portion of the Assets as a consequence of
Vendor having agreed to sell the Assets to Purchaser in
accordance herewith;
(aa) "TAKE OR PAY AMOUNT" means an amount equal to the Take or Pay
payments outstanding at the Effective Date in respect of
production sales agreements attributable to the Assets;
(bb) "TANGIBLE INTERESTS" means the entire undivided interest of
Vendor at the Effective Date in and to all tangible
depreciable property and assets situated in, on or off the
Lands (or lands pooled or unitized therewith) and to the
extent that they are used or intended for use in connection
with producing, gathering, processing, treating, storing,
compressing or transporting Petroleum Substances produced from
the Lands, including, without limitation, all tangible
depreciable property and assets which form part of the Wells;
(cc) "WELLS" means all producing, suspended, shut-in or abandoned
wells and all water source or Injection wells located within
or on the Lands or on any lands with which the Lands have been
pooled or unitized as set forth and described under the
heading "Wells" in Schedule "A".
97
7
1.2 DERIVATIVES
When a capitalized derivative of a term defined herein is used, it
shall have the corresponding meaning of the defined term, unless the
context otherwise requires.
1.3 INTERPRETATION
If Closing does not occur, each provision of this Agreement which
presumes Purchaser has acquired the Assets shall be construed as having
been contingent upon Closing having occurred.
1.4 RELATIONSHIP
The rights, duties, obligations and liabilities of each of Nastan and
GEOCAN hereunder shall be separate in accordance with and limited to
the respective interest of each under this Agreement, and not joint,
nor collective, nor joint and several, and each of the Purchasers shall
hold their interest in the Assets as tenants in common. Nothing
contained in this Agreement shall be construed to constitute either of
the Purchasers as a partner of the other or to make either jointly
liable for the obligations of the other.
2. SCHEDULES
2.1 LIST OF SCHEDULES
The following are the Schedules attached to and made a part of this
Agreement:
Schedule "A" - Vendors Interest, Petroleum Substances, Lands, Wells and
Encumbrances
Schedule "B" - Officer's Certificates
Schedule "C" - General Conveyance
Schedule "D" - Tangible Interests, facilities and other miscellaneous
matters
Schedule "E" - Production Sales Contracts
Schedule "F" - Outstanding Authorities for Expenditure
2.2 CONFLICTS
In the event of any conflicts between the provisions of the body of
this Agreement and the Schedules, the provisions of the body of this
Agreement shall prevail. In the event of any conflicts between the
provisions of this Agreement and the Documents of Title, the provisions
of the Documents of Title shall prevail.
98
8
3. PURCHASE AND SALE
3.1 AGREEMENT OF PURCHASE AND SALE AND PURCHASE PRICE
In accordance with the terms and conditions of this Agreement, Vendor
agrees to sell to Purchaser and Purchaser agrees to purchase from
Vendor, the Assets in the following proportions, namely:
Nastan 50%
GEOCAN 50%
subject to Permitted Encumbrances, for the sum of Forty-Six Thousand
Nine Hundred and Twenty-Five Dollars and Seventy-One Cents
($46,925.71), less reductions thereto, if any, pursuant to Articles 5
and 6 plus an amount equal to the interest which would have accrued on
such sum, as so reduced, at the Prime Rate plus one (1%) percent per
annum from and including the Effective Date to and including the day
prior to the Closing Date, calculated daily and not compounded payable
by each of Nastan and GEOCAN, each as to a 50% interest herein. The
amount allocated to Petroleum and Natural Gas Rights in Clause 3.5
shall be increased by the additional amount paid by Purchaser to Vendor
pursuant to this Clause.
3.2 OBLIGATION TO CLOSE
If Nastan or GEOCAN, as the case may be (herein the "defaulting party")
is obliged but is not ready, willing and able to complete the purchase
of the Assets in accordance with this Agreement, the other party
comprising the Purchaser hereunder shall nevertheless be obliged to
complete the said purchase in accordance with this Agreement as to all
of the Assets, as if such other Party was the only Party hereto as
Purchaser. If any of the closing conditions set forth in Clause 7.1 has
not been complied with, and one of the Parties comprising the Purchaser
is prepared to waive such non-compliance but the other Party comprising
the Purchaser is not prepared to waive such non-compliance, the first
mentioned Party may at its election complete the purchase contemplated
herein in accordance with this Agreement as to all of the Assets as if
the first mentioned Party was the only Party hereto as Purchaser.
3.3 PURCHASED ASSETS ONLY
Unless specifically included in the definition of Assets, all of the
other property and assets of Vendor shall be excluded from the purchase
and sale provided for in this Agreement.
99
9
3.4 ENVIRONMENTAL MATTERS
In determining the Purchase Price, the Parties have taken into
consideration Purchaser's assumption of all Abandonment and Reclamation
Obligations and of all Environmental Damage associated with the Assets,
whether the same have arisen prior to or subsequent to the Effective
Date.
3.5 ALLOCATION OF PURCHASE PRICE
The Purchase Price shall be allocated among the Assets in the following
manner:
ASSETS
(a) Petroleum and Natural Gas Rights (80%) $ 37,539.57
(b) Tangible Interests (20%) $ 9,385.14
(c) Miscellaneous Interests $ 1.00
-------------
SUB-TOTAL $ 46,925.71
GST $ 656.96
------------
TOTAL $ 47,582.67
3.6 PAYMENT OF PURCHASE PRICE
The Purchase Price adjusted for Interim Adjustments shall be paid in
full by Purchaser to Vendor by delivery of certified cheque(s) or bank
draft(s) on the Closing Date at the place of Closing.
3.7 GOODS AND SERVICES TAX
Purchaser shall also remit to Vendor on the Closing Date the Goods and
Services Tax ("GST") applicable to the Assets. The GST Registration
number for Vendor is _______ . If before the Closing Date there is a
change in that portion of the Purchase Price allocated to Miscellaneous
Interests, or Tangible Interests, which change is the result of any
government authority or the voluntary re-allocation by the Parties,
then the resulting GST amount shall be adjusted accordingly. If there
is an increase in the GST, Purchaser shall promptly remit to Vendor the
amount of such increase together with any interest and penalties
associated therewith. If there is a decrease in the GST, Vendor shall
promptly remit to Purchaser the amount of such decrease.
3.8 ADJUSTMENTS ON AND SUBSEQUENT TO CLOSING DATE
3.8.1 BASIS OF ADJUSTMENTS
All benefits and obligations of every kind and nature payable or paid
and received or receivable in respect of the Assets, including without
limitation, maintenance,
100
10
development, operating and capital costs and the proceeds for the sale
of production, shall, except as otherwise provided herein, be
apportioned between Vendor and Purchaser as of the Effective Date.
Costs and expenses for work done, services provided and goods and
services supplied shall be deemed to accrue for the purposes of this
Article when the work is done and the goods or services are provided,
regardless of when such costs and expenses become payable.
(a) INTERIM ADJUSTMENTS
At least five (5) days prior to the Closing Date, Vendor shall
provide to Purchaser an interim accounting and adjustment in
draft form, together with the information in support thereof,
for review and examination by Purchaser. This interim
accounting and adjustment shall be made by Vendor based upon
all revenues, royalties, operating costs and capital costs
accruing to Purchaser and received by the Vendor for the
period commencing after the Effective Date. All revenues
received by the Vendor, which were not accounted for as of the
Closing and which are due to the Purchaser, shall after
deducting any obligations or costs attributable to the
Purchaser, be paid to the Purchaser within thirty (30) days of
the receipt by Vendor.
(b) FINAL ADJUSTMENT
Within twelve (12) months following the Effective Date a
further accounting shall be prepared by Vendor in regard to
all charges and credits to be adjusted between Vendor and
Purchaser. All revenues which are received or receivable by
Vendor from the Assets and which are due to Purchaser shall,
after deducting the obligations and costs for which Purchaser
is responsible, be paid to Purchaser either on the Closing if
they have been received on or before such Closing Date or
within thirty (30) days of receipt thereof, if they are
received after such Closing Date. Any monies received by
Vendor shall be received as agent for and on behalf of
Purchaser. The Vendor shall not be obligated to make any
further adjustments after the twelve (12) months unless a
specific request in writing is received within twelve (12)
months following the Closing Date identifying in reasonable
detail an adjustment required by this Agreement. The aforesaid
twelve (12) month time frame does not apply to sub-clauses (c)
and (d) hereof.
(c) CROWN ROYALTY ADJUSTMENT
Notwithstanding Clause 3.8.1(b), accounting or adjustments
from Crown royalty audits or crown re-assessments relating to
the period prior to the Effective Date:
(i) for which audit queries or re-assessments are
outstanding as of the Closing Date; or
101
11
(ii) that occur after the Closing Date but no later than
forty-eight (48) months following the end of the
calendar year of Closing;
shall be made as they occur and payments for them shall be
made within thirty (30) days of each adjustment and shall be
made by Purchaser to Vendor, or vice versa, as the case may
be.
(d) ADJUSTMENTS RESULTING FROM AUDITS
Notwithstanding Clause 3.8.1 (b), accounting or adjustments
resulting from joint venture audits, or from thirteen month
adjustments for gas plant throughput and gas cost allowance
for the Assets, relating to the period prior to Effective
Date:
(i) for which audit queries or thirteenth month
adjustments are outstanding at Closing Date; or
(ii) with respect to joint venture audits that occur after
the Closing Date but no later than thirty (30) months
following the end of the calendar year of Closing; or
(iii) with respect to thirteen (13) month adjustments for
gas plant throughput and gas cost allowance, that
occur within four (4) years after the Closing Date,
unless Purchaser has provided written notice to the
Vendor within such four (4) year period, that an
adjustment is outstanding.
shall be made as they occur and payments for them shall be
made within thirty (30) days of each adjustment and shall be
made by Purchaser to Vendor, or vice versa,
as the case may be. Vendor may audit the records of Purchaser
relating to such accounting or adjustments for two (2) years
from the date the adjustment is made and accounting or
adjustments resulting from the audit shall be settled between
Vendor and Purchaser on an item-by-item basis as they occur.
(e) INTEREST
If a Party fails to pay within the time period established for
the payment of any adjustment, interest shall accrue and be
payable on the unpaid amount of such adjustment at the Prime
Rate plus one (1%) percent per annum from the date such
adjustment is payable until paid.
3.8.2 RENTALS AND TAXES
Notwithstanding the provisions of Clause 3.8.1, rentals and all similar
payments made by Vendor to preserve the Documents of Title, freehold
mineral taxes and property taxes shall be apportioned as between Vendor
and Purchaser on a per diem basis as of the Effective
102
12
Date, whether paid by Vendor before or after the Effective Date if
relating to the period after the Effective Date, unless Vendor elects
to waive such apportionment of all or any portion of those payments
which have been paid by Vendor and relate to the period after the
Effective Date. Purchaser shall include in its income the proceeds and
expenses related to Petroleum Substances produced on or after the
Effective Date and shall be responsible for the payment of all income
tax payable in respect thereto.
3.8.3 PRODUCTION
With the exception of sulphur, all Petroleum Substances in inventory
(i.e. which have been produced from the Lands and are in tanks or in
any other form of storage) and to which Vendor is entitled at the
Effective Date do not comprise part of the Assets and remain the
property of Vendor. The proceeds from the sale therefrom shall accrue
and belong to Vendor. Sales of Petroleum Substances shall be deemed to
occur on a "first in, first out" basis. Vendor shall reimburse
Purchaser for any reasonable charges paid by Purchaser to Persons for
storage or sale of such inventory of Vendor, including costs of
transporting such inventory to the point of sale and royalties payable
in respect of such inventory, notwithstanding the provisions of Clause
3.8.1.
3.8.4 ACCOUNTS RECEIVABLE
Purchaser shall provide all reasonable assistance to Vendor with
respect to the collection from others of any accounts receivable of
Vendor which relate to the Assets and which accrued prior to the
Effective Date.
3.8.5 CASH CALLS
In making adjustments pursuant to this Clause 3.8, Vendor shall be
entitled to a credit for all cash call advances, operating funds,
deposits and similar advances to operators of all or any of the Assets
which stand to the credit of Vendor at the Closing Date and which are
assigned to Purchaser at Closing.
3.8.6 ARBITRATION
If the Parties can not agree as to the adjustments referred to in
Clause 3.8.1 (b) hereof, the matter may be referred to arbitration by
either Party for determination by one arbitrator in accordance with the
Arbitration Act of Alberta.
103
13
4. CLOSING AND CONVEYANCE DOCUMENTS
4.1 TRANSFER OF POSSESSION
Possession of the Assets will pass from Vendor to Purchaser on the
Closing Date and, for all other purposes, if Closing occurs, the
transfer and assignment of the Assets from Vendor to Purchaser will be
effective as of the Effective Date.
4.2 PLACE OF CLOSING
Unless otherwise agreed in writing by the Parties, Closing shall take
place at the offices of Howard, Mackie, the solicitors for the
Purchaser, #1000, 400 Third Avenue SW Calgary, Alberta, on the Closing
Date.
4.3 CLOSING AND GENERAL CONVEYANCE DOCUMENTS
Vendor shall prepare, execute and deliver to Purchaser and Purchaser
shall execute and deliver to Vendor on the Closing Date, a General
Conveyance of the Assets in the form of Schedule "C" hereto, and use
its best efforts to provide such other assignments, novations,
transfers, trust agreements and documents, in registrable form to the
extent applicable, respecting the Assets, as may be reasonably required
by any Party, to complete the transfer of the Assets, provided no such
document shall require Vendor to assume or incur any obligation or
provide any representation or warranty beyond that contained in this
Agreement. It shall not be necessary for any assignment and novation
agreement to have been executed prior to or at Closing by parties
thereto other than Vendor and Purchaser.
4.4 COST OF REGISTRATION
Purchaser shall bear all costs incurred in registering all Conveyance
Documents relating to the Assets and all costs of preparing and
registering any further Conveyance Documents Purchaser may reasonably
require following Closing, including any fees or penalties which are
levied, to the Purchaser or Vendor, due to the late or incorrect filing
by the Purchaser. Vendor shall bear all costs of registering discharges
of security interests registered against Vendor's interest in the
Assets.
4.5 CIRCULATION OF CONVEYANCE DOCUMENTS
Purchaser shall be responsible for promptly:
(a) registering all such conveyance documents relating to the
Assets;
(b) obtaining such novations from or giving notice to other Persons
in respect thereof, and
104
14
(c) providing written evidence to the Vendor of the execution of
such novations by Persons thereto or written evidence of the
forwarding of notice to other Persons where novations are not
required.
4.6 SUBORDINATION OF AUXILIARY DOCUMENTS
All documents executed by the Parties and delivered pursuant to the
provisions of this Article 4, or otherwise pursuant to this Agreement,
are subordinate to the provisions hereof and the provisions hereof
shall govern and prevail in the event of conflict.
5. PURCHASER'S REVIEW AND TITLE DEFECTS
5.1 ACCESS FOR INVESTIGATION
Vendor shall allow Purchaser and its employees, agents, legal counsel,
accountants or other representatives, between the date of this
Agreement and the Closing Date, to have access during normal business
hours of Vendor to the premises of Vendor and at the location of the
Assets in order to inspect:
(a) all the books, accounts, and other production data of Vendor
relating to the operations of and revenues resulting from the
operation of the Assets in Vendor's possession;
(b) Documents of Title, material correspondence and technical
operating data of Vendor pertaining thereto; and
(c) the Tangible Interests;
to enable Purchaser to carry out its due diligence, subject always to
contractual restrictions imposed upon Vendor relating to disclosure.
Provided Closing occurs, Vendor shall deliver the information referred
to in Clause 5. l(b) to Purchaser at Closing.
5.2 NOTICE OF THE TITLE DEFECTS
Purchaser shall undertake a title review of the Assets. As soon as
reasonably practicable after completion of its title review and, in any
event, no later than ten (10) Business Days prior to the Closing Date,
Purchaser shall give Vendor written notice of all defects and omissions
which, in the reasonable opinion of Purchaser, materially and adversely
affect the title of Vendor to the Assets and which Purchaser does not
waive (all of which are referred to as "Title Defects"). Title Defects
do not include the Permitted Encumbrances unless Purchaser is of the
opinion the royalty burdens or other encumbrances listed in Schedule
"A" under the heading "Encumbrances", are incorrectly described. Such
notice shall include a description of each Title Defect and the
interest affected thereby and to the
105
15
extent reasonably possible, Purchaser's requirements for the
rectification or curing thereof. Failure to include any Title Defects
in a written notice when required, shall be deemed to be a waiver of
such Title Defects.
5.3 CURING TITLE DEFECTS
Prior to the Closing Date, Vendor shall diligently make reasonable
efforts to cure or remove all Title Defects of which Purchaser has
notified Vendor.
5.4 FAILURE TO REMOVE TITLE DEFECTS
If any Title Defects are not cured or removed at or before three (3)
Business Days prior to the Closing Date, Purchaser may elect on or
before two (2) Business Days prior to the Closing Date to:
(a) with the agreement of the Vendor, grant a further period of
time within which Vendor may cure or remove the uncured Title
Defects; or
(b) waive the uncured Title Defects and proceed with Closing; or
(c) not purchase at Closing those Assets affected by the uncured
Title Defects which Purchaser does not waive, in which event
the Purchase Price will be reduced by the amount of the values
determined in accordance with Clause 5.5 and Purchaser shall
proceed with Closing with respect to those Assets not affected
by Title Defects which Purchaser does not waive, or
(d) terminate this Agreement, if the portion of the Purchase Price
applicable to the Assets affected by the uncured Title Defects
which Purchaser does not waive exceeds 35% of the Purchase
Price, with values determined in accordance with Clause 5.5,
whereupon neither Vendor nor Purchaser shall have any further
obligation under this Agreement to each other except for those
specified in Clause 6.4 and Article 9.
Failure by Purchaser to elect and give notice of election shall be
deemed conclusively to be an election to waive all Title Defects.
5.5 DETERMINATION OF TOTAL VALUE AMONG ASSETS FOR TITLE DEFECTS
If it is necessary to allocate value to any particular portion of the
Assets for the purposes of Clause 5.4(c), 5.4(d) or Clause 6.3, the
Parties shall allocate a value they can agree upon, acting reasonably.
Failing such agreement, then within three (3) Business Days of notice
being given by one Party to the other:
106
16
(a) each of them shall provide to the other, at the same time, a
written statement separately setting forth its proposed value
in respect of each of the affected Assets ("Affected Assets");
and
(b) each Party shall submit the determination of the value of the
Affected Assets to J.P. Hunter & Associates Ltd. (the
"Evaluator"), together with written instructions that:
(i) the Evaluator, in accordance with good engineering
and evaluation practices, select a value for each of
the Affected Assets from and based only upon the
values submitted by the Parties; and
(ii) such evaluation must be completed within five (5)
Business Days from the date of submission.
The fees and other costs to be paid to the Evaluator in respect to the
services performed by it shall be borne in equal shares between Vendor
and Purchaser. Notwithstanding other provision in this Agreement
concerning the Closing Date, if a value is to be determined by the
Evaluator and the Evaluator's decision has not been received by the
Parties on or before two (2) Business Days prior to the Closing Date,
then the Closing Date shall be extended automatically to two (2)
Business Days after the Evaluator's decision has been given to the
Parties. Provided however, if a Party fails to provide a determination
of value to the Evaluator together with its written instructions as set
out herein, then the Evaluator shall select the other Party's
determination of value and the transaction shall proceed on the Closing
Date.
5.6 CURED TITLE DEFECTS
Notwithstanding the reduction of the Purchase Price pursuant to Clause
5.4(c), the Purchaser agrees that in the event Vendor is able to cure
or rectify a Title Defect with respect to any particular portion or
portions of the Assets (each a "Cured Asset") within a period of sixty
(60) days after the Closing Date, Purchaser shall purchase such Cured
Asset from Vendor at a date ninety (90) days from the Closing Date at
the price by which the Purchase Price was so adjusted. Purchaser has no
obligation to purchase any such Cured Asset where, in the opinion of
Purchaser acting reasonably, the value of such Cured Asset has declined
or been diminished in the intervening period as a result of new Title
Defects or physical damage or loss of such Cured Asset.
6. RIGHTS OF FIRST REFUSAL
6.1 RIGHTS OF FIRST REFUSAL
The Parties acknowledge that some of the Assets may be subject to
Rights of First Refusal or material consents. Purchaser may not waive
the existence or operation of any Right of First Refusal and shall
provide Vendor with its bona fide allocations of the portion of the
107
17
Purchase Price allocated to the Asset subject to a Right of First
Refusal. Thereafter, Vendor shall promptly serve all notices required
by the applicable Right of First Refusal utilizing Purchaser's
allocations, if they are reasonable. Purchaser shall, if requested by
Vendor, provide access to such information, analysis and calculations
as may be necessary to justify such allocations. Each such notice shall
include particulars of this transaction and a request for a waiver of
the applicable Right of First Refusal.
6.2 EFFECTS OF RIGHTS OF FIRST REFUSAL
Notwithstanding anything to the contrary, express or implied, Purchaser
acknowledges and agrees that if any such Rights of First Refusal are
exercised by any other Person, then:
(a) the Assets subject thereto shall be excluded from this
Agreement, without any liability of either Party to the other,
and the Purchase Price shall be adjusted downward by the
aggregate amount by which such Assets are purchased by such
Persons pursuant to the agreements granting the Rights of
First Refusal;
(b) the Purchase Price shall be reallocated among the Petroleum
and Natural Gas Rights, Tangible Interests and Miscellaneous
Interests as required; and
(c) the items "Assets", "Lands", "Documents of Title",
"Miscellaneous Interests", "Petroleum and Natural Gas Rights"
and "Tangible Interests" shall be construed as meaning only
that portion of the subject matter of these terms with respect
to which Closing occurs.
6.3 RIGHT OF TERMINATION
In the event the value of the Assets subject to exercised Rights of
First Refusal or for which material consents have not been received
exceeds thirty-five (35%) percent of the Purchase Price, then Purchaser
may terminate this Agreement by written notice to Vendor. In such case,
neither Vendor nor Purchaser shall have any further obligation under
this Agreement to the other except for those specified in Clause 6.4
and Article 9.
6.4 WAIVER
By its execution of this Agreement Vendor hereby waives its right of
first refusal, if any, under the Participation and Operating Agreement
dated February 25, 1987, with respect to the sale to Purchaser by each
of Permez Petroleums Ltd. and Cumulus Investments Ltd. of their
interests in SW1/4 25-69-9-W5M.
108
18
7. CLOSING CONDITIONS
7.1 PURCHASER'S CONDITIONS
The obligation of Purchaser to complete the purchase of the Assets on
the Closing Date, shall be subject to the fulfilment of each of the
following conditions precedent by the times set forth below or if not
stated, at, or prior to, the Closing Date:
(a) MATERIAL COMPLIANCE OF REPRESENTATIONS AND WARRANTIES AND
OFFICER'S CERTIFICATE. All of the representations and
warranties of Vendor made in this Agreement shall be true and
correct in all respects as of the Closing Date, and Vendor
shall have delivered to Purchaser an officer's certificate in
the form of Schedule "B" and dated as of the Closing Date;
(b) MATERIAL COMPLIANCE BY VENDOR. Vendor shall have performed or
complied with, in all material respects, the terms and
conditions of this Agreement to the extent they are to be
performed at or prior to the Closing Date;
(c) DELIVERY OF CONVEYANCE DOCUMENTS. Vendor shall have executed
and delivered to Purchaser the Conveyance Documents;
(d) ENVIRONMENTAL MATTERS. On or before close of business on the
fifth Business Day prior to the Closing Date, Purchaser shall
have satisfied itself, acting reasonably, that no outstanding
material Environmental Damage is associated with the Assets.
Unless written notice of outstanding material Environmental
Damage is given by Purchaser to Vendor on or prior to the
third Business Day prior to the Closing Date, Purchaser shall
be deemed to have satisfied itself in respect of Environmental
Damage. Vendor shall not be required to conduct or pay for any
environmental audit, but, if Purchaser elects to conduct its
own environmental audit, it shall provide a copy of such
report, without charge, to Vendor;
(e) NO SUBSTANTIAL DAMAGE. From the Effective Date to the Closing
Date, no substantial physical damage, including Environmental
Damage shall have occurred to the Assets, which would have a
material adverse effect on the aggregate value of the Assets;
(f) NO SECURITY INTERESTS. Purchaser receiving registrable
discharges or letters of no interest from the respective
lender in respect of any and all security interests which are
registered against the Assets, or any part thereof, and which
are not to be assumed by Purchaser; and
(g) RIGHTS OF FIRST REFUSAL. No Rights of First Refusal relating
to the Assets shall remain in effect as of the Closing Date,
either having been exercised by the holder
109
19
thereof or having been waived by the holder thereof or having
expired prior to the Closing Date, after proper notice being
given.
The foregoing conditions are inserted for the sole benefit of
Purchaser. In the event that any of the foregoing conditions are not
fulfilled or met at or prior to the Closing Date, Purchaser may
terminate this Agreement by notice to Vendor, and in that event
Purchaser shall be released from all obligations, other than those
specified in Clause 6.4 and Article 9, and unless Purchaser can show
that the condition or conditions, the non-performance thereof by Vendor
has caused Purchaser to terminate this Agreement, are or were
reasonably capable of being performed or caused to be performed by
Vendor, then Vendor shall also be released from all obligations except
those specified in Clause 6.4 and Article 9; provided that any
condition may be waived in writing, in whole or in part, by Purchaser
without prejudice to its right of termination in the event of
non-fulfilment of any other condition or conditions. After the Closing
Date, Purchaser may not rescind or terminate this Agreement and
Purchaser's remedies, if any, shall be limited to damages.
7.2 VENDOR'S CONDITIONS
The obligation of Vendor to complete the sale of the Assets on the
Closing Date shall be subject to the fulfilment of each of the
following conditions precedent at or prior to the Closing Date:
(a) MATERIAL COMPLIANCE OF REPRESENTATIONS AND WARRANTIES AND
OFFICERS' CERTIFICATE. All of the representations and
warranties of Purchaser made in this Agreement shall be true
and correct in all respects as of the Closing Date, and
Purchaser shall have delivered to Vendor an officer's
certificate in the form of Schedule "B" and dated as of the
Closing Date;
(b) MATERIAL COMPLIANCE BY PURCHASER. Purchaser shall have
performed or complied with, in all material respects, the
terms and conditions of this Agreement to the extent they are
to be performed at or prior to the Closing Date;
(c) DELIVERY OF DOCUMENTS. Purchaser shall have executed and
delivered to Vendor at least one copy of the Conveyance
Documents;
(d) TENDER OF PURCHASE PRICE. Purchaser shall have tendered to
Vendor, in the form stipulated herein, the Purchase Price
together with an amount equal to the Interim Adjustments
payable to Vendor; and
(e) RIGHTS OF FIRST REFUSAL. No Rights of First Refusal relating
to the Assets shall remain in effect as of the Closing Date,
either having been exercised by the holder thereof or having
been waived by the holder thereof or having expired at least
seven (7) days prior to the Closing Date, after proper notice
being given.
110
20
The foregoing conditions are inserted for the sole benefit of Vendor.
In the event that any of the foregoing conditions are not fulfilled or
met at or prior to the Closing Date, Vendor may terminate this
Agreement by notice to Purchaser, and in that event Vendor shall be
released from all obligations, except those specified in Clause 6.4 and
Article 9, and unless Vendor can show that the condition or conditions
the non-performance thereof by Purchaser has caused Vendor to terminate
this Agreement, are or were reasonably capable of being performed or
caused to be performed by Purchaser, then Purchaser shall also be
released from all obligations except those specified in Clause 6.4 and
Article 9; provided that any condition may be waived in whole or in
part by Vendor without prejudice to its right of termination in the
event of non-fulfilment of any other conditions. After the Closing
Date, Vendor may not rescind or terminate this Agreement and Vendor's
remedies, if any, shall be limited to damages.
7.3 DILIGENCE WITH RESPECT TO CONDITIONS
Each Party shall proceed diligently, honestly and in good faith and use
reasonable efforts in order to satisfy its respective conditions set
forth in Article 7.
8. MAINTENANCE OF ASSETS
8.1 LIMITATIONS ON VENDOR
From the Effective Date hereof until the Closing Date, and after the
Closing Date, until Purchaser is novated into any Documents of Title
governing the Assets and, to the extent the nature of Vendor's interest
permits and subject always to all terms and conditions of the Documents
of Title, Vendor:
(a) shall, to the extent it is operator of the Assets, maintain
and operate the Assets in a proper and prudent manner in
accordance with generally accepted oil and gas practices and
procedures, provided that Vendor shall have no responsibility
to maintain or obtain insurance with respect to the Assets
from and after Closing;
(b) shall not, without the prior written consent of Purchaser:
(i) voluntarily assume or initiate any obligation, or
make any commitment with respect to the Assets, the
Vendor's share of which with respect to any single
item is estimated to exceed twenty-five thousand
Dollars ($25,000.00) or with respect to any project
or proposal, if Vendor's share of the cost of the
project or proposal is estimated to exceed
twenty-five thousand Dollars ($25,000.00);
(ii) surrender or abandon any of the Assets;
111
21
(iii) amend any Document of Title or enter into any new
agreement of a material nature, respecting the
Assets;
(iv) sell any of the Assets, except sales of the
production of Petroleum Substances in the ordinary
course of business;
(v) except for Permitted Encumbrances, encumber any of
the Assets; or
(vi) exercise any Rights of First Refusal or area of
mutual interest option arising out of the Assets;
except Vendor may without the prior written consent of Purchaser exceed
the guidelines set forth in Clause 8.1(b)(i), if reasonably required to
protect life or property in an emergency situation, to comply with laws
or to preserve the value of the Assets if proper and prudent and in
accordance with generally accepted oil and gas practices and
procedures, in which case, Vendor shall promptly notify Purchaser of
such action and the estimated cost thereof.
8.2 LIMITATION ON PURCHASER
Until the Closing Date, Purchaser shall not be entitled to propose to
Vendor, or to cause Vendor to propose to others, the conduct of any
operations, or the exercise of any right or option in relation to the
Assets, except with the written consent of Vendor which may be withheld
at Vendor's sole discretion. Vendor shall give prompt notice of any
proposal made to it to Purchaser.
8.3 AFTER CLOSING
After Closing and until novation is completed with respect to the
applicable Documents of Title governing any particular Asset, the
following shall apply with respect to those Assets for which novation
is not completed:
(a) Vendor shall promptly forward to Purchaser all information and
documents it receives from others with respect to such Assets;
(b) Vendor shall promptly remit to Purchaser, after having
received from others, all revenues (less expenses paid by
Vendor) which have accrued after the Effective Date in respect
of such Assets;
(c) Vendor shall make such elections and respond to all notices
received in respect of such Assets in accordance with the
instructions of Purchaser, provided Vendor may, but shall not
be obliged to, follow instructions it reasonably believes to
be harmful or unlawful or in conflict with the applicable
agreement; and
112
22
(d) In a timely manner, Purchaser shall provide Vendor with copies
of any information, etc., pertaining to Alberta gas cost
allowance which it has filed for the year ending December 31,
1999.
8.4 RATIFICATION OF VENDOR'S ACTIONS
From and after the Effective Date and until Purchaser is novated into
such Documents of Title, Vendor shall be deemed to be agent of
Purchaser and Purchaser ratifies all actions taken or lack of action
taken by Vendor in connection with the Assets on behalf of Purchaser in
accordance with the terms and provisions of this Agreement other than
those actions for which Vendor has been grossly negligent or where
Vendor is guilty of wilful misconduct. Any act or omission of Vendor,
its directors, agents or employees, shall not be considered gross
negligence or wilful misconduct if done or omitted in accordance with
the instructions or written concurrence of Purchaser.
8.5 PURCHASER LIABILITY AND INDEMNITY TO VENDOR
If Closing occurs, Purchaser hereby agrees:
(a) to be liable to Vendor, its directors, agents and employees,
for all losses, costs, damages and expenses which Vendor, its
directors, agents or employees, may suffer, sustain, pay or
incur; and, in addition
(b) to indemnify and save harmless Vendor, its directors, agents
and employees, from and against all liabilities, losses, costs
(including legal costs on a solicitor/client basis), claims,
damages and expenses which may be brought against or suffered
by Vendor or its directors, agents or employees, in relation
to operations as a result of Vendor maintaining the Assets
from and after the Effective Date as agent for Purchaser
pursuant to this Article 8, provided such liability, loss,
cost (including legal costs on a solicitor/client basis),
claim, damage, or expense is not a direct result of the gross
negligence or wilful misconduct of Vendor, its directors,
agents or employees. Any act or omission of Vendor, its
directors, agents or employees, shall not be considered gross
negligence or wilful misconduct if done or omitted in
accordance with the instructions or concurrence of Purchaser.
9. CONFIDENTIALITY OF PURCHASER
9.1 CONFIDENTIALITY
Until the Closing Date, or in the event of termination of this
Agreement without consummation of the transactions contemplated herein,
Purchaser shall keep confidential all information respecting the Assets
obtained from Vendor. Such confidential information respecting the
Assets shall be used only for the purposes of this acquisition and
disclosed only to those of its employees, agents, legal counsel,
accountants or other representatives
113
23
on a "need to know" basis. Upon Closing, Purchaser's rights to use or
disclose such information shall be subject only to confidentiality
provisions contained in any operating or other existing agreements that
may apply thereto in respect of the Assets. Any 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
Purchaser without the prior written consent of Vendor. The restrictions
on disclosure and use of information obtained in connection with this
Agreement shall not apply to information, to the extent it:
(a) is or becomes publicly available through no act or omission of
Purchaser or its employees, agents, consultants, advisors or
other representatives;
(b) is subsequently obtained lawfully from a Person who, after
reasonable inquiry, Purchaser does not know is bound to Vendor
to restrict the use or disclosure of such information;
(c) is already in Purchaser's possession at the time of
disclosure, without any restriction on its disclosure; or
(d) is required to be disclosed pursuant to the applicable
legislation, regulations, or rules or by the direction of any
court, tribunal or administrative body having jurisdiction.
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.
9.2 PURCHASER'S REPRESENTATIVES
If Purchaser employs consultants, advisors or agents to assist in its
review of the items listed in Clause 5.1, Purchaser shall be
responsible to Vendor for ensuring that such consultants, advisors and
agents comply with the restrictions on the use and disclosure of
information set forth in Clause 9.1 and Purchaser shall be liable to
Vendor for all damages, costs or expenses Vendor may suffer or incur as
a result of any unauthorized use or disclosure of such confidential
information in contravention of this Clause 9.2 by such representatives
of Purchaser.
9.3 RETURN OF CONFIDENTIAL INFORMATION
If Closing does not occur and this Agreement is terminated, then all
documents, working papers and other written material obtained from
Vendor in connection with this Agreement shall be returned to Vendor
forthwith. No copies of such information are to be retained by
Purchaser.
114
24
10. REPRESENTATIONS AND WARRANTIES OF VENDOR
10.1 REPRESENTATIONS AND WARRANTIES OF VENDOR
Vendor hereby represents and warrants to Purchaser that:
(a) STANDING. It is a corporation duly organized and validly
existing under the laws of its jurisdiction of incorporation
and in good standing under the laws of the jurisdiction in
which it is required to be registered in order to hold the
Assets;
(b) REQUISITE AUTHORITY. It has all necessary corporate power,
authority and capacity to enter into and execute this
Agreement, to sell the Assets and to perform its other
obligations under this Agreement;
(c) NO CONFLICTS. The execution and delivery of this Agreement and
the consummation of the transactions contemplated by this
Agreement will not violate, nor be in conflict with, its
charter, bylaws or similar constating documents of Vendor, or
any provision of any agreement or instrument of a material
nature to which it is a party or is bound, or any judgement,
decree, order, statute, rule or regulations applicable to it
and of which it is aware is in effect in Alberta, except
requirements of Documents of Title to obtain consents of other
Persons who are parties thereto to the sale of the Assets
pursuant hereto;
(d) EXECUTION AND ENFORCEABILITY OF DOCUMENTS. This Agreement has
been duly executed and delivered by it and all other documents
required hereunder to be executed and delivered by it at
Closing pursuant hereto shall be duly executed and delivered.
This Agreement does, and such documents will, constitute
legal, valid and binding obligations of it enforceable in
accordance with their respective terms, subject to the
qualification that their enforceability may be limited by
rules of equity and by insolvency, bankruptcy and other laws
of general application affecting the enforcement of creditors'
rights;
(e) FINDER'S FEES. It has not incurred any obligation or
liability, contingent or otherwise, for brokers' or finders'
fees in respect of this transaction for which Purchaser shall
have any obligation or liability;
(f) LAWSUITS. To its Knowledge, based upon an examination of its
records, no suit, action or other proceeding is in existence,
pending or threatened against or by it before any court or
governmental agency which would materially adversely affect,
Vendor's title to or ownership of the Assets or the value of
the Assets;
(g) CANADIAN RESIDENT. It is not a non-resident of Canada within
the meaning of the Income Tax Act (Canada);
115
25
(h) ENCUMBRANCES. The Assets will, to its Knowledge, at the
Closing Date, be free and clear of all liens, encumbrances and
adverse claims created by, through or under it except for the
Permitted Encumbrances, those Title Defects waived by
Purchaser and as otherwise set out on Schedule "A" hereto;
(i) KNOWLEDGE OF DEFAULT. To its Knowledge, it has not received
notice of any material default under any Documents of Title
which default is continuing as of the Closing Date and where
such default would adversely impact upon the value of the
Assets or any part thereof or subject the Documents of Title
to cancellation or termination;
(j) PRODUCTION CONTRACTS. Except as set forth in Schedule "E",
there are no production sales agreements or arrangements under
which it, or any Person acting on its behalf, is obligated to
sell or deliver Petroleum Substances allocable to the
Petroleum and Natural Gas Rights to any Person, other than
contracts which are terminable on less than thirty-two (32)
days' notice:
(k) TAKE OR PAY AMOUNT. To its Knowledge, there are no Take or Pay
Amounts outstanding as of the Effective Date;
(l) REDUCTION OF INTEREST. Except for Permitted Encumbrances and
as disclosed in the Documents of Title, to its Knowledge, the
Petroleum and Natural Gas Rights are not subject to reduction
by virtue of the conversion or other alteration of the
interest of any Person under existing agreements created by,
through or under Vendor;
(m) GOOD STANDING UNDER AGREEMENTS. To its Knowledge, it is not in
breach in any material respect under any material agreements
and instruments having application to the Assets or any part
thereof to which it is a party or is bound;
(n) NET CARRIED INTERESTS. Except as disclosed in the Documents of
Title, to its Knowledge, there are no carried interests
whereby it is obligated to pay a share of the costs associated
with any of the Assets attributable to the interest of another
Person;
(o) PRODUCTION PENALTY. Except as disclosed in the Documents of
Title, to its Knowledge, the Wells related to the Lands are
not subject to a production penalty whereby the production
proceeds allocable to Vendor's interest are payable to a third
party until an amount calculated in respect of certain costs
and expenses paid by such third party are recovered by such
third party;
(p) QUIET ENJOYMENT. Subject to the other representations of
Vendor pursuant hereto and to the rents, covenants, conditions
and stipulations in the Documents of Title reserved and
contained on the lessee's or holder's part thereunder to be
paid, performed and observed, Purchaser may enter into and
upon and hold and enjoy
116
26
the Assets for the residue of their respective term thereof
for its own use and benefit without any lawful interruption of
or by Vendor or any other Person claiming by, through or under
Vendor except pursuant to or in respect of Permitted
Encumbrances and those Title Defects waived by Purchaser;
(q) PAYMENT OF TAXES. To its Knowledge, all ad valorem, property,
production, severance and similar taxes and assessments based
on or measured by the ownership of the Assets or the
production of Petroleum Substances from the Lands or the
receipt of proceeds therefrom payable by it to the Effective
Date have been paid and discharged;
(r) LAWS. To its Knowledge, it has not received notice of default
in any material respect of any decrees, statutes and
regulations of government authorities which relate to the
Assets, the default or failure of which would have a material
adverse effect on the value of the Assets or any part thereof,
(s) JUDGEMENTS AND LAWS. To its Knowledge, Vendor is not in
default of any judgement, order, writ, injunction or decree of
any court, government department, commission or other
administrative agency and it is, to its Knowledge,
substantially complying, in all material respects, with all
decrees, statutes and regulations of governmental authorities,
the default or failure of which by it would have an adverse
effect on the value of the Assets or any part thereof,
(t) ENVIRONMENTAL MATTERS. To its Knowledge, it has not received:
(i) any orders or directives which relate to
environmental matters and which require any work,
repairs, construction or capital expenditures with
respect to the Assets;
(ii) any demand or notice with respect to the breach of
any environmental law applicable to the Assets,
including, without limitation, any regulations
respecting the use, storage, treatment,
transportation or disposition of petroleum substances
or contaminants; or
(iii) notice from the operator advising of operator's
non-compliance with any laws applicable to the Assets
including without limitation any regulations
respecting the use, storage, treatment,
transportation or disposition of petroleum substances
or contaminants;
which orders, directives, demands or notices remain outstanding as of
the Closing Date;
(u) ENVIRONMENTAL CLAIMS. To its Knowledge, Vendor has not
received any notice of any claim by any third party (including
governmental authorities) of pollution or other Environmental
Damage arising from drilling, production or similar operations
117
27
on the Lands or lands pooled or unitized therein or of any
claim requesting that any action be taken to prevent pollution
or other Environmental Damage from drilling, production or
other operations on the Lands or lands pooled or unitized
therewith which notice or claim remains outstanding as of the
date hereof,
(v) OIL AND GAS FIELD PRACTICE. To its Knowledge, the Wells
related to the Lands have, in all material respects, been
drilled and if completed, completed and if abandoned,
abandoned in compliance with all statutes, rules and
regulations existing at the relevant time;
(w) RIGHTS OF FIRST REFUSAL. To its Knowledge, no Rights of First
Refusal relating to the Assets shall remain in effect as of
the Closing Date, either having been waived or exercised by
the holder thereof or having expired after proper notice being
given;
(x) OUTSTANDING AFE'S. Other than as disclosed in Schedule "F",
there are no authorizations for expenditures approved by it
with respect to the Assets pursuant to which amounts in excess
of twenty -five thousand Dollars ($25,000.00) may become
payable after the date hereof and there are no outstanding
cash calls in excess of twenty-five thousand Dollars
($25,000.00) with respect to the Assets;
(y) DISCLOSURE OF DOCUMENTS. To its Knowledge, all documents and
agreements affecting the title to the Assets or production or
revenue from the Assets will have been made available by
Vendor to Purchaser by the Closing Date, with exception of
those contracts for the sale of Petroleum Substances which
have a term equal to or less than thirty-two (32) days; and
(z) ROYALTIES. All royalties payable by Vendor in respect of the
Petroleum and Natural Gas Rights have been properly paid as of
the Effective Date.
10.2 NO WARRANTY OF TITLE
Notwithstanding anything contained in this Article 10, Vendor does not
warrant title to the Assets or purport to convey any better title than
it now has.
10.3 NO OTHER VENDOR WARRANTIES
Vendor makes no warranty whatsoever except as and to the extent set
forth in Clause 10.1. Without limiting the generality of the foregoing,
Vendor does not make any representation or warranty with respect to:
(a) the quality, quantity or recoverability of the Petroleum
Substances within or under the Lands or any lands pooled or
unitized therewith;
(b) the value of the Assets or the future revenues applicable
thereto,
118
28
(c) any economic evaluations respecting the Assets, or
(d) the quality, condition, merchantability or serviceability of
all or any of the Tangible Interests, or their suitability for
any particular purpose.
11. REPRESENTATIONS AND WARRANTIES OF PURCHASER
11.1 REPRESENTATIONS AND WARRANTIES OF PURCHASER
Purchaser hereby represents and warrants to Vendor that:
(a) STANDING. It is a corporation duly organized and validly
existing under the laws of its jurisdiction of incorporation
and in good standing under the laws of the jurisdiction in
which it is required to be registered in order to hold the
Assets;
(b) REQUISITE AUTHORITY. It has all necessary corporate power,
authority and capacity to enter into this Agreement and to
purchase and pay for the Assets, on the terms described herein
and to perform its other obligations under this Agreement;
(c) NO CONFLICTS. The execution and delivery of this Agreement and
the consummation of the transactions contemplated by this
Agreement will not violate nor be in conflict with its
charter, bylaws or similar constating documents of it, or any
provision of any agreement or instrument to which it is a
party or is bound, or any judgement, decree, order, statute,
rule or regulation applicable to Purchaser in effect in
Alberta of which it Is aware;
(d) EXECUTION AND ENFORCEABILITY OF DOCUMENTS. This Agreement has
been duly executed and delivered by it and all other documents
required hereunder to be executed and delivered by it at
Closing pursuant hereto shall be duly executed and delivered.
This Agreement does, and such documents will, constitute
legal, valid and binding obligations of it enforceable in
accordance with their respective terms, subject to the
qualification that their enforceability may be limited by
rules of equity and by insolvency, bankruptcy and other laws
of general application affecting the enforcement of creditors'
rights;
(e) FINDER'S FEES. It has not incurred any liability, contingent
or otherwise, for brokers' or finders' fees in respect of this
transaction for which Vendor shall have any obligation or
liability;
(f) THE INVESTMENT CANADA ACT. Either it is not a "non-Canadian"
as such term is defined in The Investment Canada Act, or, if
it is such "non-Canadian", then either the transaction herein
is not notifiable or reviewable under such Act or such Party
will make application to satisfy the requirements of such Act
so that the transaction
119
29
herein provided for may be completed on the Closing Date
without contravention of the Act;
(g) PURCHASER AS PRINCIPAL. It is acquiring the Assets in its
capacity as a principal;
(h) FINANCING CAPABILITY OF PURCHASER. It either now has or will
have at Closing sufficient funds to close the transactions
hereby contemplated upon the Closing Date; and
(i) COMPETITION AND SECURITIES ACTS. It has complied with the
Competition Act (Canada) and the relevant Securities Acts to
the extent applicable to the transaction herein.
11.2 PURCHASER'S OWN EXAMINATION AND EVALUATION
Without detracting from Purchaser's reliance on Vendor's representation
and warranties in Clause 10.1, Purchaser acknowledges that as of the
Closing Date it will have made its own independent investigation,
analysis, evaluation and inspection of Vendor's interest in the Assets,
including a review of Vendor's title thereto and the state and
condition thereof, and will have relied on its own investigation,
analysis, evaluation and inspection as to its assessment of the
condition, quantum and value of the Assets and Vendor's title thereto.
11.3 GAS COST ALLOWANCE
Vendor and Purchaser shall co-operate in the timely preparation of gas
cost allowance filings which may be required of the Parties from time
to time. Purchaser agrees to do such reasonable things in a timely
manner, as Vendor may request, to provide to Vendor or to the Crown
information required by Vendor for such filings.
12. SURVIVAL OF REPRESENTATIONS AND WARRANTIES
12.1 DATES REPRESENTATIONS AND WARRANTIES APPLY
The representations and warranties of the Parties set forth in Clauses
10.1 and 11.1 shall be true or performed, as the case may be, as at
the Effective Date and the Closing Date.
12.2 LIMITATION OF LIABILITY.
The representations and warranties contained herein shall survive the
Closing Date, notwithstanding the Closing and delivery of any
covenants, representations and warranties in any other agreements prior
or subsequent thereto, and shall remain in full force and effect for
the benefit of Purchaser with respect to Clause 10.1 and for the
benefit of Vendor with respect to Clause 11.1, but no claim or action
in respect of any breach of such representation or warranty shall be
made unless the Party making such claim or bringing
120
30
such action has given notice of such claim (including reasonable
particulars of the misrepresentations or breach) to the other within
twelve (12) months following the Closing Date. Notwithstanding any
other provision of this Agreement:
(a) a Party shall not be entitled to any payment from the other
Party for breach of any covenants, representations or
warranties referred to in Clauses 10.1 and 11.1 for
misrepresentation pursuant to this Agreement or for
indemnification pursuant to Clause 13.1, unless a claim (s) by
such Party exceeds in aggregate Two Thousand Five Hundred
Dollars ($2,500.00); and
(b) the maximum aggregate liability of Vendor to Purchaser for any
breaches of any covenants, representations or warranties
referred to in Clause 10.1, for misrepresentation pursuant to
this Agreement and in respect of any claims for indemnity
pursuant to Clause 13.1, shall not in any event exceed the
Purchase Price.
12.3 KNOWLEDGE BY PURCHASER
Purchaser shall have no remedy or cause of action for a breach of
representation or warranty for any circumstance, matter or thing
actually known to Purchaser, or any employee, agent, consultant or
representative thereof, as at the Closing Date.
12.4 NOT TRANSFERABLE
The representations and warranties set forth in Clauses 10.1 and 11.1
are made for the exclusive benefit of Purchaser and Vendor, as the case
may be, and are not transferable and may not be the subject of any
rights of subrogation in favour of any other Person.
13. INDEMNITY
13.1 INDEMNITY OF VENDOR
Subject to Clauses 12.2 and 13.4, Vendor shall indemnify Purchaser and
its directors, employees and agents from and against all Losses which
Purchaser, its directors, employees or agents, pays or pay to third
parties as a consequence of a breach, as of the Closing Date, of any
representations and warranties of Vendor contained in Clause 10.1 of
this Agreement, excepting any Losses, if and to the extent caused by
the gross negligence or wilful default of Purchaser, its successors,
agents or assigns. The indemnity granted by Vendor in this Clause 13.1
is not a title warranty and does not provide an extension of any
representation or warranty contained in Clause 10.1 or any additional
remedy with regard to the breach by Vendor of any representation or
warranty. Furthermore, the indemnity of Vendor to Purchaser granted
pursuant to this Clause 13.1 shall only apply to claims of indemnity
made by Purchaser to Vendor by giving written notice to Vendor within
twelve (12) months following the Closing Date and, in any event,
121
31
the maximum aggregate liability and indemnity of Vendor to Purchaser
for Losses suffered by Purchaser pursuant hereto and as a result of any
breaches of any representations or warranties shall not exceed the
Purchase Price.
13.2 PURCHASER'S LIABILITY AND INDEMNITY TO VENDOR
If Closing occurs and in addition to indemnity under Clause 8.5,
Purchaser hereby agrees:
(a) to be liable to Vendor, its directors, agents and employees,
for all Losses which Vendor, its directors, agents or
employees, pay, suffer, sustain or incur, and, in addition;
(b) to indemnify and save harmless Vendor, its directors, agents
and employees, from and against all Losses which may be
brought against or suffered by Vendor, its directors, agents
or employees,
in relation to the Assets and arising out of or in connection with
operations which arise on or subsequent to the Effective Date,
excepting any Losses if, and to the extent, caused by the gross
negligence or wilful default of Vendor or its agents or arise as a
result of a breach by Vendor of any of the terms of this Agreement.
13.3 PURCHASER'S ASSUMPTION OF ENVIRONMENTAL DAMAGE AND ABANDONMENT AND
RECLAMATION OBLIGATION
Purchaser acknowledges that it has been given the opportunity to
inspect the Assets prior to Closing Date; that it is familiar with the
condition of the Assets, and that it is acquiring the Assets on an "as
is" basis. Upon the Effective Date, Purchaser assumes the entire
responsibility and liability for all Losses which Vendor may suffer,
sustain or incur, and, in addition shall indemnify and save harmless
Vendor and its directors, employees and agents from and against all
Losses which may be brought against Vendor or which Vendor, its
directors, employees or agents, may suffer, sustain or incur in
connection with or as a result of each and every act or omission,
matter or thing related to the Assets done, omitted, occurring or
accruing on, prior to or subsequent to the Effective Date with respect
to any Environmental Damage or anyAbandonment and Reclamation
Obligation and without regard to how or who caused such Losses, except,
subject to the provisions of Clause 12.2 to the extent that same relate
to inaccuracies or failure of the representations and warranties set
forth in Clause 10.1.
13.4 LOSSES
For the purpose of this Article 13, "Losses" means losses, costs,
claims, damages, expenses and liabilities and includes, without
limitation, legal costs on a solicitor and client basis.
122
32
14. ONGOING COVENANTS OF PURCHASER
14.1 DOCUMENTS OF TITLE
On and after the Closing Date, Purchaser agrees with Vendor it shall be
bound by, observe and perform, as they become due, all covenants,
obligations and liabilities respecting the Assets, including, without
limitation, the performance of all obligations of Vendor under the
Documents of Title and other agreements respecting the Assets.
14.2 VENDOR'S ACCESS TO RECORDS
On and after the Closing Date, Purchaser hereby agrees to allow Vendor,
its employees, agents, legal counsel, accountants and other
representatives, to have access to the premises of Purchaser during
normal business hours of Purchaser in order to inspect and take copies
of such information delivered by Vendor to Purchaser in accordance with
Clause 5.1, if reasonably required by Vendor, in connection with any
joint venture or Crown audit, any potential or threatened legal or
administrative proceeding by or against Vendor in relation to the
Assets, or to enable Vendor to comply with a law or the requirement of
any governmental authority. Nothing herein shall prevent Vendor from
making and retaining copies of any such documents at any time. Vendor
shall hold all information and documents confidential and that same
shall only be used by Vendor for the purpose specified by Vendor.
14.3 INITIATION OF AUDITS
On and after the Closing Date up until Final Adjustments are made,
Purchaser shall advise Vendor of the initiation and results of any
joint venture or Crown audit in relation to the Assets to the extent it
relates to any matters accruing prior to the Effective Date.
15. NO MERGER
15.1 NON-MERGER
The representations and warranties set forth in Clauses 10.1 and 11.1
and the indemnities set forth in Article 13 and the covenants in
Article 14 shall be deemed to apply to all assignments, transfers and
other Conveyance Documents and there shall not be any merger of any
representation, warranty, indemnity or covenant in such assignments,
transfers or other Conveyance Documents, notwithstanding any rule of
law, equity or statute to the contrary and all such rules are hereby
waived.
123
33
16. NOTICE
16.1 METHOD OF NOTICE
Any notice, communication or other document (hereinafter called
"Notice") required or permitted to be given under this Agreement by one
Party to the other shall be in writing and shall be sufficiently given
and received if:
(a) personally served on the Person to whose attention the Notice
is to be addressed pursuant to Clause 16.2, at the time of
actual delivery, or, if delivered by hand to a responsible
Person at the address of the Party to which such Notice is
directed, two (2) hours following delivery to such Party;
provided that if such time of deemed receipt is not within the
normal business hours of the recipient Party, then such Notice
shall be deemed received at the next commencement of business
on a day that business is normally conducted by the recipient
Party;
(b) sent by telecopy (or by any other like method of telefacsimile
by which a written message may be sent) and directed to the
Person to whose attention the Notice is to be addressed
pursuant to Clause 16.2 at that Party's telecopier number set
forth below, and such Notice so given shall be deemed to have
been received by the recipient, if the time of transmission is
stated, two (2) hours following the time so stated; provided
that If such time of deemed receipt is not within the normal
business hours of the recipient Party, then such Notice shall
be deemed received at the next commencement of business on a
day that business is normally conducted by the recipient
Party; or
(c) mailed by first class registered post, postage prepaid, to the
other Party (such Notice so served shall be deemed to have
been received by the recipient Party on the fourth (4th)
Business Day of such recipient Party following the date of
mailing thereof); provided that in the event of an actual or
threatened postal strike or other labour disruption that may
affect the mail service, Notices shall not be mailed.
16.2 ADDRESS FOR NOTICE
The address for Notice for each of the Parties shall be as follows:
VENDOR: PURCHASER:
Merlin Resources Ltd. Nastan Resources Ltd.
1600, 155 University Avenue Suite 2210, 800 - 5th Avenue SW
Toronto, Ontario Calgary, Alberta
M5H 3B6 T2P 3T6
Attention: Land Manager Attention: Land Manager
Fax: (416) Fax: (403) 508-1265
124
34
and
GEOCAN Energy Inc.
800, 717 - 7th Avenue SW
Calgary, Alberta
T2P 3H3
Attention: Land Manager
Fax: (403) 261-3834
16.3 CHANGES ADDRESS FOR NOTICE
Any Party may, from time to time, change its address for Notice by
giving written notice to the other.
17. MISCELLANEOUS PROVISIONS
17.1 PUBLIC ANNOUNCEMENTS
No Party shall release any information concerning this Agreement and
the transaction herein provided for without the prior written consent
of Vendor, which will not be withheld unreasonably. Nothing contained
herein shall prevent any Party at any time from furnishing information
to any governmental agency or regulatory authority or to the public if
required by applicable law or if such Party considers it to be
advisable in the circumstances, provided that the Parties shall advise
each other in advance of any public statement which they propose to
make regarding the said transaction. Nothing herein contained shall
prevent Vendor from furnishing information relating to the said
transaction or the identity of Purchaser in connection with the
procurement of the consent of other Persons or in sending notices
concerning any Right of First Refusal where required pursuant to any
Documents of Title.
17.2 SIGNS AND NOTIFICATIONS
After Closing, Vendor may remove any signs which indicate Vendor's
ownership or operation of the Assets. It shall be the responsibility of
Purchaser, where necessary, to erect or install any signs that may be
required by governmental agencies indicating Purchaser to be the owner
of the Assets and to notify contractors, governmental agencies and any
other Person of Purchaser's interest in the Assets.
17.3 HEADINGS AND DESCRIPTIONS
The headings of all Articles, Clauses and Subclauses are inserted for
convenience of reference only and shall not affect the construction or
interpretation of this Agreement, or any provision thereof. Use of
words "Article", "Clause" or "Subclause" in this Agreement
125
35
refers to an Article, Clause or Subclause of this Agreement unless a
contrary intention is specifically stated.
17.4 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 or vice versa, as the context
requires.
17.5 CONFLICTS AND ENTIRE AGREEMENT
The provisions contained in all documents and agreements collateral
hereto shall at all times be read subject to the provisions of this
Agreement and, in the event of conflict between the provisions
contained in any documents or agreements collateral hereto and the
provisions of this Agreement, the provisions of this Agreement shall
prevail unless otherwise expressly provided herein.
17.6 WAIVER
Any waiver of any term or condition of this Agreement or consent to any
departure from this Agreement by one Party to the other shall be
effective only if in writing and only in the specific instance and for
the specific purpose for which it is given.
17.7 APPLICABLE LAW
This Agreement shall be construed and enforced in accordance with the
laws in effect in the Province of Alberta. Each Party attoms to the
jurisdiction of the courts of the Province of Alberta and all courts of
appeal therefrom.
17.8 ENTIRE AGREEMENT
This Agreement constitutes the entire agreement between the Parties
with respect to the transactions contemplated herein, contains all of
the representations and warranties of the respective Parties and
supersedes all prior agreements, documents, writing and verbal
understandings between the Parties with respect to the sale of the
Assets.
17.9 AMENDMENTS
This Agreement may not be amended or modified in any respect, except by
written instrument executed by the Parties.
17.10 TIME OF THE ESSENCE
Time shall be of the essence of this Agreement and of every part
thereof.
126
36
17.11 FURTHER ASSURANCES
After Closing, the Parties shall do all things and provide all
assurances, as may be reasonably required to consummate the
transactions contemplated by this Agreement, and each Party shall
provide those further documents or instruments as may be reasonably
required by the other Parties to give effect to this Agreement and to
carry out its provisions.
17.12 ASSIGNMENT
Prior to Closing, neither this Agreement nor any rights or obligations
under it shall be assignable by any Party without the prior written
consent of the other Parties. After the Closing Date, no assignment,
transfer of the Agreement of all or any portion of the Assets, by
Purchaser shall relieve Purchaser from the obligations to Vendor
herein, unless Vendor otherwise agrees. Subject thereto, this Agreement
shall enure -to the benefit of and be binding upon the Parties, and
their respective successors and permitted assigns.
17.13 COUNTERPART EXECUTION
This Agreement may be executed in counterpart and all counterparts
together shall form one binding Agreement.
IN WITNESS WHEREOF the parties have duly executed this Agreement as of
the date and year first above 'written.
VENDOR PURCHASER
MERLIN RESOURCES LTD. NASTAN RESOURCES LTD.
Per: Per:
-------------------------- --------------------------
Per: Per:
-------------------------- --------------------------
GEOCAN ENERGY INC.
Per:
--------------------------
Per:
--------------------------
127
THIS IS SCHEDULE "A" TO AND FORMING PART OF A PURCHASE AND SALE
AGREEMENT BETWEEN MERLIN RESOURCES LTD., AS VENDOR, AND NASTAN
RESOURCES LTD. AND GEOCAN ENERGY INC. AS PURCHASER, MADE AS OF THE 1ST
DAY OF JUNE, 1999
LANDS AND PETROLEUM
SUBSTANCES VENDOR'S INTEREST ENCUMBRANCES
- -------------------- ----------------- ------------
SW Section 25-69-9 W5M 5.0% -Crown SS
P&NG to base Beaverhill Lake
WELLS
4-25-69-9W5M
128
THIS IS SCHEDULE "B" TO AND FORMING PART OF A PURCHASE AND SALE
AGREEMENT BETWEEN MERLIN RESOURCES LTD., AS VENDOR, AND NASTAN
RESOURCES LTD. AND GEOCAN ENERGY INC. AS PURCHASER, MADE AS OF THE IST
DAY OF JUNE, 1999
VENDOR'S OFFICER'S CERTIFICATE
RE: CLAUSE 7.1(a) OF THE PURCHASE AND SALE AGREEMENT
("AGREEMENT") MADE AS OF JUNE 1, 1999 BETWEEN MERLIN RESOURCES
LTD., AS VENDOR, AND NASTAN RESOURCES LTD. AND GEOCAN ENERGY
INC., AS PURCHASER
Unless otherwise stated, the definitions provided for in the Agreement
are adopted in this Certificate.
I,________ , President of Merlin Resources Ltd. (the "Company"), hereby
certify that as of the date of this Certificate:
(a) The covenants, representations and warranties of the Company
contained in Clause 10 of the Agreement are true and correct
in all material respects.
(b) This Certificate is made for and on behalf of the Company and
is binding upon it and the deponent herein is not and will not
incur any personal liability whatsoever with respect to it.
IN WITNESS WHEREOF I have executed this Certificate effective the ___ day
of ____________________ , 1999.
Vendor
MERLIN RESOURCES LTD.
Per: ____________________________
129
2
SCHEDULE "B"
PURCHASER'S OFFICER'S CERTIFICATE
RE: CLAUSE 7.2(a) OF THE PURCHASE AND SALE AGREEMENT ("AGREEMENT")
MADE AS OF JUNE 1, 1999 BETWEEN MERLIN RESOURCES LTD., AS
VENDOR, AND NASTAN RESOURCES LTD. AND GEOCAN ENERGY INC., AS
PURCHASER
Unless otherwise stated, the definitions provided for in the Agreement
are adopted in this Certificate.
I,_______________, President of Nastan Resources Ltd.(the "Purchaser"),
hereby certify that as of the date of this Certificate:
(a) The covenants, representations and warranties of the Purchaser
contained in Clause 11 of the Agreement are true and correct
in all material respects.
(b) This Certificate is made for and on behalf of the Purchaser
and is binding upon it and the deponent herein is not and will
not incur any personal liability whatsoever with respect to
it.
IN WITNESS WHEREOF I have executed this Certificate effective the ________ day
of ___________________,1999.
Purchaser
NASTAN RESOURCES LTD.
Per:______________________________
Title
130
SCHEDULE "B"
PURCHASER'S OFFICER'S CERTIFICATE
RE: CLAUSE 7.2(a) OF THE PURCHASE AND SALE AGREEMENT ("AGREEMENT")
MADE AS OF JUNE 1, 1999 BETWEEN MERLIN RESOURCES LTD., AS
VENDOR, AND NASTAN RESOURCES LTD. AND GEOCAN ENERGY INC., AS
PURCHASER
Unless otherwise stated, the definitions provided for in the Agreement
are adopted in this Certificate.
I, , President of GEOCAN ENERGY INC. (the "Purchaser"), hereby
certify that as of the date of this Certificate:
(a) The covenants, representations and warranties of the Purchaser
contained in Clause 11 of the Agreement are true and correct
in all material respects.
(b) This Certificate is made for and on behalf of the Purchaser
and is binding upon it and the deponent herein is not and will
not incur any personal liability whatsoever with respect to
it.
IN WITNESS WHEREOF I have executed this Certificate effective the ______ day
of __________________, 1999.
Purchaser
GEOCAN ENERGY INC.
Per:____________________________________
Title
131
THIS IS SCHEDULE "C" TO AND FORMING PART OF A PURCHASE AND SALE AGREEMENT
BETWEEN MERLIN RESOURCES LTD. AS VENDOR, AND NASTAN RESOURCES LTD. AND GEOCAN
ENERGY INC., AS PURCHASER, MADE AS OF THE IST DAY OF JUNE, 1999
CONVEYANCE
THIS INDENTURE AND AGREEMENT made as of the 1st day of June, 1999.
BETWEEN:
MERLIN RESOURCES LTD., a body corporate, having an office in
the City of Toronto, in the Province of Ontario, (hereinafter
called "Vendor")
OF THE FIRST PART
- and -
NASTAN RESOURCES LTD. AND GEOCAN ENERGY INC., both bodies
corporate, having offices in the City of Calgary, in the
Province of Alberta, (hereinafter called "Purchaser")
OF THE SECOND PART
WHEREAS Vendor has agreed, pursuant to a Purchase and Sale Agreement
dated as of the Ist day of June, 1999 (hereinafter called the "Sale Agreement"),
to convey to Purchaser all of its interest in and to the Assets, insofar as
those terms are defined therein.
NOW THEREFORE THIS AGREEMENT WITNESSETH that, for the consideration
provided in the Sale Agreement, the receipt and sufficiency of which is hereby
acknowledged by Vendor, Vendor has agreed to sell and by these presents does
bargain, sell, assign, transfer and convey to Purchaser all of its right, title,
interest and property whatsoever in, to or arising out of the Assets, in the
following proportions:
Nastan 50%
GEOCAN 50%
to have and to hold for its own use and benefit on the terms herein provided.
IT IS FURTHER AGREED BETWEEN THE PARTIES AS FOLLOWS:
132
2
1. DEFINITIONS
In this Conveyance, the definitions set forth on the Sale Agreement
shall apply hereto.
2. TITLE
Purchaser hereby covenants and agrees with Vendor that nothing herein,
expressed or implied, shall operate to have effect as any warranty or
guarantee of title or covenant for title on the part of Vendor and that
the representations and warranties contained in the Sale Agreement
shall apply hereto for the period provided in the Sale Agreement.
3. EFFECTIVE DATE
Vendor and Purchaser agree that the effective date of this transaction
shall be 8:00 a.m. Calgary time on January 1, 1999.
4. ACCEPTANCE
Purchaser hereby accepts this Conveyance and in consideration thereof,
Purchaser hereby assumes and agrees to perform and be bound by all
terms and conditions of the contracts, agreements and documents
included in the Assets.
5. FURTHER ASSURANCES
Vendor and Purchaser will each from time to time, and at all times
hereafter, at the request and cost of the other, do and perform all
such acts and things, and execute all such assurances, deeds, documents
and writings with respect to the Assets as the other may reasonably
require in order to carry out the purposes of this Conveyance.
6. SALE AGREEMENT
The terms hereof shall be read in conjunction with the terms of the
Sale Agreement and subject thereto. In the event of any conflict
between the provisions of this Conveyance and the Sale Agreement, the
Sale Agreement shall prevail.
7. ENUREMENT
This Conveyance shall extend to and be binding upon the parties hereto
and their successors and assigns.
8. COUNTERPART EXECUTION
This Conveyance may be executed in counterpart and all counterparts
together shall form one binding Agreement.
133
3
IN WITNESS WHEREOF the parties hereto have executed this Conveyance by their
proper officers duly authorized in that behalf as of the effective date.
Vendor
MERLIN RESOURCES LTD.
Per:
--------------------------------------------
Per:
--------------------------------------------
Purchaser
NASTAN RESOURCES LTD.
Per:
--------------------------------------------
Per:
--------------------------------------------
GEOCAN ENERGY INC.
Per:
--------------------------------------------
Per:
--------------------------------------------
134
THIS IS SCHEDULE "D" TO AND FORMING PART OF A PURCHASE AND SALE AGREEMENT
BETWEEN MERLIN RESOURCES LTD. AS VENDOR, AND NASTAN RESOURCES LTD. AND GEOCAN
ENERGY INC. AS PURCHASER, MADE AS OF THE IST DAY OF JUNE, 1999
TANGIBLES, FACILITIES AND OTHER MISCELLANEOUS MATTERS
Description Vendor's Interest
API 160 Pumpjack 5.0%
Arrow 66 Pumpjack engine
2, 400 Barrel Tanks
135
THIS IS SCHEDULE "E" TO AND FORMING PART OF A PURCHASE AND SALE AGREEMENT
BETWEEN MERLIN RESOURCES LTD., AS VENDOR, AND NASTAN RESOURCES LTD. AND GEOCAN
ENERGY INC., AS PURCHASER, MADE AS OF THE 1ST DAY OF JUNE, 1999
PRODUCTION SALES AGREEMENTS
There are no production sales agreements or arrangements under which
Vendor, or any Person acting on its behalf, is obligated to sell or deliver
Petroleum Substances allocable to the Petroleum and Natural Gas Rights to any
Person which are not terminable on less than thirty-two (32) days' notice.
136
THIS IS SCHEDULE "F" TO AND FORMING PART OF A PURCHASE AND SALE AGREEMENT
BETWEEN MERLIN RESOURCES LTD., AS VENDOR, AND NASTAN RESOURCES LTD. AND
GEOCAN ENERGY INC., AS PURCHASER, MADE AS OF THE IST DAY OF JUNE, 1999
OUTSTANDING AUTHORIZATIONS FOR EXPENDITURE
There are no outstanding authorizations for expenditure approved by Vendor with
respect to the Assets pursuant to which amounts in excess of twenty-five
thousand Dollars ($25,000.00) may become payable after the date hereof.
137
PURCHASE AND SALE AGREEMENT
THIS AGREEMENT dated as of the 1st day of June, 1999.
BETWEEN:
CUMULUS INVESTMENTS LTD., a body corporate, with offices in
the City of Calgary, in the Province of Alberta (hereinafter
referred to as "Vendor") - and -
NASTAN RESOURCES LTD. ("NASTAN") and GEOCAN ENERGY INC.
("GEOCAN") both bodies corporate, with offices in the City of
Calgary, in the Province of Alberta (hereinafter collectively
referred to as "Purchaser")
WHEREAS Vendor has agreed to sell to Purchaser and Purchaser has agreed
to purchase from Vendor the Assets on and subject to the terms and conditions of
this Agreement.
NOW THEREFORE THIS AGREEMENT WITNESSES THAT in consideration of the
mutual covenants and agreements set out, the Parties covenant and agree as
follows:
1. DEFINITIONS
1.1 DEFINITIONS
In this Agreement, the following terms have the following respective
meanings, unless the context otherwise requires:
(a) "ABANDONMENT AND RECLAMATION OBLIGATION" means the abandonment
of any Wells, Tangible Interests or Miscellaneous Interests
including, without limitation, any closing, decommissioning,
dismantling and removing of any tangible depreciable property,
Assets on the Lands, or lands pooled, unitized or adjacent
therewith, in connection with such abandonment, and restoring
the surface of the Lands, or lands pooled or unitized
therewith, all in compliance with laws, regulations, orders
and directives of governmental authorities having jurisdiction
with respect to the said abandonment or the said restoration
of the surface of lands;
(b) "AGREEMENT" means this document together with the recitals and
Schedules attached hereto;
(c) "ASSETS" means Vendor's entire interest in the Petroleum and
Natural Gas Rights, the Tangible Interests, and the
Miscellaneous Interests;
138
2
(d) "BUSINESS DAY" means a day other than a Saturday, Sunday or
any statutory holiday in Alberta;
(e) "CLOSING" means the exchange of Conveyance Documents between
Vendor and Purchaser on the Closing Date and the payment of
the Purchase Price and other amounts as contemplated in Clause
3.6;
(f) "CLOSING DATE" means 10:00 o'clock a.m., Calgary time, on the
25th day of June, 1999 unless such date is amended by
agreement in writing by the Parties;
(g) "CONVEYANCE DOCUMENTS" means the documents described in Clause
4.3 required to complete the transfer and assignment of the
Assets;
(h) "DOCUMENTS OF TITLE" means collectively any and all
certificates of title, leases, permits, licenses, unit
agreements, assignments, trust declarations, royalty
agreements, operating agreements or procedures, participation
agreements, farinin and farmout agreements, sale and purchase
agreements, pooling agreements and other agreements by virtue
of which Vendor is entitled to the Petroleum and Natural Gas
Rights;
(i) "DOLLARS" or "$" means Canadian dollars;
(j) "EFFECTIVE DATE" means 8:00 o'clock a.m. Calgary time on the
1st day of January, 1999;
(k) "ENCUMBRANCES" has the meaning ascribed thereto in Clause 1.1
(u)(xii);
(l) "ENVIRONMENTAL DAMAGE" means any one or more of the following:
(i) ground water, surface water or aquifer contamination,
(ii) soil contamination,
(iii) corrosion or deterioration of structures, equipment,
fences, gathering lines or any other Tangible
Interests;
(iv) emissions of toxic or hazardous substances, and
(v) the effects of non-compliance with any environmental
law, regulation, order or directive of any
governmental authority having jurisdiction at the
relevant time;
139
3
(m) "FINAL ADJUSTMENT" means those further accounting and
adjustments, contemplated pursuant to Clause 3.8.1 of this
Agreement, to be made subsequent to the Closing Date;
(n) "GENERAL CONVEYANCE" means the document substantially in the
form of Schedule "C" attached hereto and as required in
accordance with Clause 4.3;
(o) "INTERIM ADJUSTMENTS" means the interim accounting and
adjustments, contemplated pursuant to Clause 3.8.1 of this
Agreement, to be made on the Closing Date;
(p) "KNOWLEDGE", for purposes of Clauses 10.1 and 11.1, means
Vendor or Purchaser, as the case may be, shall be deemed to
actually know or have knowledge of a matter, circumstance or
thing when such matter, circumstance or thing has come to the
attention of:
(i) an officer of such corporation (who as at the date
hereof and at the Closing Date is an officer of such
corporation); or
(ii) an employee or consultant of such corporation with
responsibility for matters to which the matter,
circumstance or thing relates (who as at the date
hereof and at the Closing Date is an employee or
consultant of such corporation with such
responsibility),
based upon an examination of Vendor's records, which
examination has been conducted, under circumstances which a
reasonable person would take cognizance of the matter,
circumstance or thing;
(q) "LANDS" means the lands in which Vendor is shown to have an
interest as set forth and described in Schedule "A", but only
insofar as rights to those lands are granted by the Documents
of Title;
(r) "MISCELLANEOUS INTERESTS" means the entire undivided right,
title, estate and interest of Vendor, at the Effective Date,
in and to all property, assets and rights, to the extent
pertaining to Petroleum and Natural Gas Rights or Tangible
Interests (excluding therefrom materials and supplies used in
connection with operations where the costs have not been
charged to the joint account of Persons having an interest
therein and also excluding Petroleum and Natural Gas Rights or
Tangible Interests), but including, without limitation to the
generality of the foregoing:
(i) all Documents of Title and other agreements to the
extent relating to Petroleum and Natural Gas Rights
or Tangible Interests or any rights in relation
thereto, including, without limitation, royalty
agreements, joint operating agreements, gas
processing agreements, gas transmission
140
4
agreements, gas balancing agreements, common stream
agreements, natural gas transportation agreements and
agreements for the construction, ownership and
operation of facilities;
(ii) all non-interpretive production and engineering
information which is not of a proprietary nature and
which relates directly to Petroleum and Natural Gas
Rights or Tangible Interests, that Vendor either has
in its custody or to which Vendor has access, but
excluding:
A. tax, legal and financial records;
B. economic evaluations; and,
C. engineering, geophysical and geological
information, to the extent it discloses
technology or information which is
proprietary to Vendor or information which
Vendor is contractually prohibited from
selling or disclosing to other Persons;
(iii) all well-bores and casing associated with the Wells
situate within the Lands, or lands pooled or unitized
including well licences issued in connection with the
Wells;
(iv) all rights of Vendor as seller under all agreements
for the sale of Petroleum Substances from the Lands
or lands pooled or unitized therewith (the "relevant
lands") having a term exceeding thirty-one (3 1) days
but only to the extent such agreements are severable
if they contain more lands or zones than the relevant
Lands;
(v) all subsisting rights to enter upon, use and occupy
the surface of any of the Lands, or to carry out
operations thereon or therein and any other lands
with which the Lands have been pooled or unitized or
on which Tangible Interests are situate, including
easements, right of way agreements and agreements for
road crossing rights;
(s) "PARTIES" means all parties to this Agreement, and "PARTY"
means any of them;
(t) "PERMITTED ENCUMBRANCES" means:
(i) existing easements, rights of way, servitude's or
other similar rights in lands;
(ii) the right reserved to or vested in any government or
other public authority by the terms of any statutory
provision, to terminate any Documents of Title or to
require annual or other periodic payments as a
condition of the continuance thereof;
141
5
(iii) the right reserved to any governmental authority to
levy taxes on Petroleum Substances or the income or
revenue therefrom and governmental requirements as to
production rates on the operations of any property;
(iv) 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,
and all applicable laws, rules and orders of any
governmental authority;
(v) undetermined or inchoate liens incurred or created as
security in favour of the Person conducting the
operation of any of the Assets for Vendor's
proportion of the costs and expenses of such
operations;
(vi) liens for taxes, assessments or governmental charges,
which are not due or which are not delinquent;
(vii) mechanics', builders' or materialmen's liens in
respect of services rendered or goods supplied for
which payment is not at the time due;
(viii) the reservations, limitations, provisos and
conditions in any original grants from the Crown of
any of the Lands or interests therein and statutory
exceptions to title;
(ix) agreements and plans relating to pooling or
unitization;
(x) liens granted in the ordinary course of business to a
public utility, municipality or governmental
authority in connection with operations conducted
with respect to the Assets;
(xi) the terms and conditions of the Documents of Title,
provided that such terms and conditions do not create
additional royalty burdens which are not specifically
set forth in Schedule "A";
(xii) such royalty burdens and other encumbrances as are
set forth in Schedule "A" under the heading of
"Encumbrances";
(xiii) agreements for the sale of production from the
Petroleum and Natural Gas Rights;
(xiv) trust obligations in the ordinary course of business;
provided that such trust obligations do not create
beneficial rights of ownership in and to the Assets;
(u) "PERSON" means any natural person, firm, corporation,
partnership, trustee, trust, unincorporated association,
government or government agency not a Party, and pronouns used
in connection therewith have a similar extended meaning;
142
6
(v) "PETROLEUM AND NATURAL GAS RIGHTS" means the entire undivided
right, title and interest of Vendor at the Effective Date, in
and to the Petroleum Substances in the Lands or any lands
pooled or unitized therewith and in and to any royalty rights
in the Lands, which interests are, including without
limitation, those interests set forth in Schedule "A";
(w) "PETROLEUM SUBSTANCES" means petroleum, natural gas and
related hydrocarbons and all other substances, whether liquid,
solid or gaseous and whether hydrocarbons or not, insofar as
the rights to such substances or the proceeds therefrom are
granted by the Documents of Title;
(x) "PRIME RATE" means the rate of interest per annum used by the
Canadian Imperial Bank of Commerce from time to time as the
reference rate in determining rates of interest payable on
Canadian dollar demand loans in Canada;
(y) "PURCHASE PRICE" means the sum referred to in Clause 3.1 less
reductions, if any, plus interest which shall have accrued on
such sum, all as calculated in Clause 3.1;
(z) "RIGHTS OF FIRST REFUSAL" means a right of first refusal,
pre-emptive right of purchase or similar right whereby any
Person, other than Vendor, would have the right to acquire or
purchase all or a portion of the Assets as a consequence of
Vendor having agreed to sell the Assets to Purchaser in
accordance herewith;
(aa) "TAKE OR PAY AMOUNT" means an amount equal to the Take or Pay
payments outstanding at the Effective Date in respect of
production sales agreements attributable to the Assets;
(bb) "TANGIBLE INTERESTS" means the entire undivided interest of
Vendor at the Effective Date in and to all tangible
depreciable property and assets situated in, on or off the
Lands (or lands pooled or unitized therewith) and to the
extent that they are used or intended for use in connection
with producing, gathering, processing, treating, storing,
compressing or transporting Petroleum Substances produced from
the Lands, including, without limitation, all tangible
depreciable property and assets which form part of the Wells;
(cc) "WELLS" means all producing, suspended, shut-in or abandoned
wells and all water source or Injection wells located within
or on the Lands or on any lands with which the Lands have been
pooled or unitized as set forth and described under the
heading "Wells" in Schedule "A".
143
7
1.2 DERIVATIVES
When a capitalized derivative of a term defined herein is used, it
shall have the corresponding meaning of the defined term, unless the
context otherwise requires.
1.3 INTERPRETATION
If Closing does not occur, each provision of this Agreement which
presumes Purchaser has acquired the Assets shall be construed as having
been contingent upon Closing having occurred.
1.4 RELATIONSHIP
The rights, duties, obligations and liabilities of each of Nastan and
GEOCAN hereunder shall be separate in accordance with and limited to
the respective interest of each under this Agreement, and not joint,
nor collective, nor joint and several, and each of the Purchasers shall
hold their interest in the Assets as tenants in common. Nothing
contained in this Agreement shall be construed to constitute either of
the Purchasers as a partner of the other or to make either jointly
liable for the obligations of the other.
2. SCHEDULES
2.1 LIST OF SCHEDULES
The following are the Schedules attached to and made a part of this
Agreement:
Schedule "A" - Vendors Interest, Petroleum Substances, Lands, Wells and
Encumbrances
Schedule "B" - Officer's Certificates
Schedule "C" - General Conveyance
Schedule "D" - Tangible Interests, facilities and other miscellaneous
matters
Schedule "E" - Production Sales Contracts
Schedule "F" - Outstanding Authorities for Expenditure
2.2 CONFLICTS
In the event of any conflicts between the provisions of the body of
this Agreement and the Schedules, the provisions of the body of this
Agreement shall prevail. In the event of any conflicts between the
provisions of this Agreement and the Documents of Title, the provisions
of the Documents of Title shall prevail.
144
8
3. PURCHASE AND SALE
3.1 AGREEMENT OF PURCHASE AND SALE AND PURCHASE PRICE
In accordance with the terms and conditions of this Agreement, Vendor
agrees to sell to Purchaser and Purchaser agrees to purchase from
Vendor, the Assets in the following proportions, namely:
Nastan 50%
GEOCAN 50%
subject to Permitted Encumbrances, for the sum of Seventy Thousand
Three Hundred and Thirty-Eight Dollars and Fifty-Seven Cents
($70,338.57), less reductions thereto, if any, pursuant to Articles 5
and 6 plus an amount equal to the interest which would have accrued on
such sum, as so reduced, at the Prime Rate plus one (1%) percent per
annum from and including the Effective Date to and including the day
prior to the Closing Date, calculated daily and not compounded payable
by each of Nastan and GEOCAN, each as to a 50% interest herein. The
amount allocated to Petroleum and Natural Gas Rights in Clause 3.5
shall be increased by the additional amount paid by Purchaser to Vendor
pursuant to this Clause.
3.2 OBLIGATION TO CLOSE
If Nastan or GEOCAN, as the case may be (herein the "defaulting party")
is obliged but is not ready, willing and able to complete the purchase
of the Assets in accordance with this Agreement, the other party
comprising the Purchaser hereunder shall nevertheless be obliged to
complete the said purchase in accordance with this Agreement as to all
of the Assets, as if such other Party was the only Party hereto as
Purchaser. If any of the closing conditions set forth in Clause 7.1 has
not been complied with, and one of the Parties comprising the Purchaser
is prepared to waive such non-compliance but the other Party comprising
the Purchaser is not prepared to waive such non-compliance, the first
mentioned Party may at its election complete the purchase contemplated
herein in accordance with this Agreement as to all of the Assets as if
the first mentioned Party was the only Party hereto as Purchaser.
3.3 PURCHASED ASSETS ONLY
Unless specifically included in the definition of Assets, all of the
other property and assets of Vendor shall be excluded from the purchase
and sale provided for in this Agreement.
145
9
3.4 ENVIRONMENTAL MATTERS
In determining the Purchase Price, the Parties have taken into
consideration Purchaser's assumption of all Abandonment and Reclamation
Obligations and of all Environmental Damage associated with the Assets,
whether the same have arisen prior to or subsequent to the Effective
Date.
3.5 ALLOCATION OF PURCHASE PRICE
The Purchase Price shall be allocated among the Assets in the following
manner:
ASSETS
(a) Petroleum and Natural Gas Rights (80%) $56,269.86
(b) Tangible Interests (20%) $14,067.71
(c) Miscellaneous Interests $ 1.00
----------
SUB-TOTAL $70,338.57
GST $ 984.74
----------
TOTAL $71,323.31
3.6 PAYMENT OF PURCHASE PRICE
The Purchase Price adjusted for Interim Adjustments shall be paid in
full by Purchaser to Vendor by delivery of certified cheque(s) or bank
draft(s) on the Closing Date at the place of Closing.
3.7 GOODS AND SERVICES TAX
Purchaser shall also remit to Vendor on the Closing Date the Goods and
Services Tax ("GST") applicable to the Assets. The GST Registration
number for Vendor is . If before the Closing Date there is a
change in that portion of the Purchase Price allocated to Miscellaneous
Interests, or Tangible Interests, which change is the result of any
government authority or the voluntary re-allocation by the Parties,
then the resulting GST amount shall be adjusted accordingly. If there
is an increase in the GST, Purchaser shall promptly remit to Vendor the
amount of such increase together with any interest and penalties
associated therewith. If there is a decrease in the GST, Vendor shall
promptly remit to Purchaser the amount of such decrease.
3.8 ADJUSTMENTS ON AND SUBSEQUENT TO CLOSING DATE
3.8.1 BASIS OF ADJUSTMENTS
All benefits and obligations of every kind and nature payable or paid
and received or receivable in respect of the Assets, including without
limitation, maintenance,
146
10
development, operating and capital costs and the proceeds for the sale
of production, shall, except as otherwise provided herein, be
apportioned between Vendor and Purchaser as of the Effective Date.
Costs and expenses for work done, services provided and goods and
services supplied shall be deemed to accrue for the purposes of this
Article when the work is done and the goods or services are provided,
regardless of when such costs and expenses become payable.
(a) INTERIM ADJUSTMENTS
At least five (5) days prior to the Closing Date, Vendor shall
provide to Purchaser an interim accounting and adjustment in
draft form, together with the information in support thereof,
for review and examination by Purchaser. This interim
accounting and adjustment shall be made by Vendor based upon
all revenues, royalties, operating costs and capital costs
accruing to Purchaser and received by the Vendor for the
period commencing after the Effective Date. All revenues
received by the Vendor, which were not accounted for as of the
Closing and which are due to the Purchaser, shall after
deducting any obligations or costs attributable to the
Purchaser, be paid to the Purchaser within thirty (30) days of
the receipt by Vendor.
(b) FINAL ADJUSTMENT
Within twelve (12) months following the Effective Date a
further accounting shall be prepared by Vendor in regard to
all charges and credits to be adjusted between Vendor and
Purchaser. All revenues which are received or receivable by
Vendor from the Assets and which are due to Purchaser shall,
after deducting the obligations and costs for which Purchaser
is responsible, be paid to Purchaser either on the Closing if
they have been received on or before such Closing Date or
within thirty (30) days of receipt thereof, if they are
received after such Closing Date. Any monies received by
Vendor shall be received as agent for and on behalf of
Purchaser. The Vendor shall not be obligated to make any
further adjustments after the twelve (12) months unless a
specific request in writing is received within twelve (12)
months following the Closing Date identifying in reasonable
detail an adjustment required by this Agreement. The aforesaid
twelve (12) month time frame does not apply to sub-clauses (c)
and (d) hereof.
(c) CROWN ROYALTY ADJUSTMENT
Notwithstanding Clause 3.8.1(b), accounting or adjustments
from Crown royalty audits or crown re-assessments relating to
the period prior to the Effective Date:
(i) for which audit queries or re-assessments are
outstanding as of the Closing Date; or
147
11
(ii) that occur after the Closing Date but no later than
forty-eight (48) months following the end of the
calendar year of Closing;
shall be made as they occur and payments for them shall be
made within thirty (30) days of each adjustment and shall be
made by Purchaser to Vendor, or vice versa, as the case may
be.
(d) ADJUSTMENTS RESULTING FROM AUDITS
Notwithstanding Clause 3.8.1 (b), accounting or adjustments
resulting from joint venture audits, or from thirteen month
adjustments for gas plant throughput and gas cost allowance
for the Assets, relating to the period prior to Effective
Date:
(i) for which audit queries or thirteenth month
adjustments are outstanding at Closing Date; or
(ii) with respect to joint venture audits that occur after
the Closing Date but no later than thirty (30) months
following the end of the calendar year of Closing; or
(iii) with respect to thirteen (13) month adjustments for
gas plant throughput and gas cost allowance, that
occur within four (4) years after the Closing Date,
unless Purchaser has provided written notice to the
Vendor within such four (4) year period, that an
adjustment is outstanding.
shall be made as they occur and payments for them shall be
made within thirty (30) days of each adjustment and shall be
made by Purchaser to Vendor, or vice versa, as the case may
be. Vendor may audit the records of Purchaser relating to such
accounting or adjustments for two (2) years from the date the
adjustment is made and accounting or adjustments resulting
from the audit shall be settled between Vendor and Purchaser
on an item-by-item basis as they occur.
(e) INTEREST
If a Party fails to pay within the time period established for
the payment of any adjustment, interest shall accrue and be
payable on the unpaid amount of such adjustment at the Prime
Rate plus one (1%) percent per annum from the date such
adjustment is payable until paid.
3.8.2 RENTALS AND TAXES
Notwithstanding the provisions of Clause 3.8.1, rentals and all similar
payments made by Vendor to preserve the Documents of Title, freehold
mineral taxes and property taxes shall be apportioned as between Vendor
and Purchaser on a per diem basis as of the Effective
148
12
Date, whether paid by Vendor before or after the Effective Date if
relating to the period after the Effective Date, unless Vendor elects
to waive such apportionment of all or any portion of those payments
which have been paid by Vendor and relate to the period after the
Effective Date. Purchaser shall include in its income the proceeds and
expenses related to Petroleum Substances produced on or after the
Effective Date and shall be responsible for the payment of all income
tax payable in respect thereto.
3.8.3 PRODUCTION
With the exception of sulphur, all Petroleum Substances in inventory
(i.e. which have been produced from the Lands and are in tanks or in
any other form of storage) and to which Vendor is entitled at the
Effective Date do not comprise part of the Assets and remain the
property of Vendor. The proceeds from the sale therefrom shall accrue
and belong to Vendor. Sales of Petroleum Substances shall be deemed to
occur on a "first in, first out" basis. Vendor shall reimburse
Purchaser for any reasonable charges paid by Purchaser to Persons for
storage or sale of such inventory of Vendor, including costs of
transporting such inventory to the point of sale and royalties payable
in respect of such inventory, notwithstanding the provisions of Clause
3.8.1.
3.8.4 ACCOUNTS RECEIVABLE
Purchaser shall provide all reasonable assistance to Vendor with
respect to the collection from others of any accounts receivable of
Vendor which relate to the Assets and which accrued prior to the
Effective Date.
3.8.5 CASH CALLS
In making adjustments pursuant to this Clause 3.8, Vendor shall be
entitled to a credit for all cash call advances, operating funds,
deposits and similar advances to operators of all or any of the Assets
which stand to the credit of Vendor at the Closing Date and which are
assigned to Purchaser at Closing.
3.8.6 ARBITRATION
If the Parties can not agree as to the adjustments referred to in
Clause 3.8.1 (b) hereof, the matter may be referred to arbitration by
either Party for determination by one arbitrator in accordance with the
Arbitration Act of Alberta.
149
13
4. CLOSING AND CONVEYANCE DOCUMENTS
4.1 TRANSFER OF POSSESSION
Possession of the Assets will pass from Vendor to Purchaser on the
Closing Date and, for all other purposes, if Closing occurs, the
transfer and assignment of the Assets from Vendor to Purchaser will be
effective as of the Effective Date.
4.2 PLACE OF CLOSING
Unless otherwise agreed in writing by the Parties, Closing shall take
place at the offices of Howard, Mackie, the solicitors for the
Purchaser, #1000, 400 Third Avenue SW Calgary, Alberta, on the Closing
Date.
4.3 CLOSING AND GENERAL CONVEYANCE DOCUMENTS
Vendor shall prepare, execute and deliver to Purchaser and Purchaser
shall execute and deliver to Vendor on the Closing Date, a General
Conveyance of the Assets in the form of Schedule "C" hereto, and use
its best efforts to provide such other assignments, novations,
transfers, trust agreements and documents, in registrable form to the
extent applicable, respecting the Assets, as may be reasonably required
by any Party, to complete the transfer of the Assets, provided no such
document shall require Vendor to assume or incur any obligation or
provide any representation or warranty beyond that contained in this
Agreement. It shall not be necessary for any assignment and novation
agreement to have been executed prior to or at Closing by parties
thereto other than Vendor and Purchaser.
4.4 COST OF REGISTRATION
Purchaser shall bear all costs incurred in registering all Conveyance
Documents relating to the Assets and all costs of preparing and
registering any further Conveyance Documents Purchaser may reasonably
require following Closing, including any fees or penalties which are
levied, to the Purchaser or Vendor, due to the late or incorrect filing
by the Purchaser. Vendor shall bear all costs of registering discharges
of security interests registered against Vendor's interest in the
Assets.
4.5 CIRCULATION OF CONVEYANCE DOCUMENTS
Purchaser shall be responsible for promptly:
(a) registering all such conveyance documents relating to the
Assets;
(b) obtaining such novations from or giving notice to other
Persons in respect thereof, and
150
14
(c) providing written evidence to the Vendor of the execution of
such novations by Persons thereto or written evidence of the
forwarding of notice to other Persons where novations are not
required.
4.6 SUBORDINATION OF AUXILIARY DOCUMENTS
All documents executed by the Parties and delivered pursuant to the
provisions of this Article 4, or otherwise pursuant to this Agreement,
are subordinate to the provisions hereof and the provisions hereof
shall govern and prevail in the event of conflict.
5. PURCHASER'S REVIEW AND TITLE DEFECTS
5.1 ACCESS FOR INVESTIGATION
Vendor shall allow Purchaser and its employees, agents, legal counsel,
accountants or other representatives, between the date of this
Agreement and the Closing Date, to have access during normal business
hours of Vendor to the premises of Vendor and at the location of the
Assets in order to inspect:
(a) all the books, accounts, and other production data of Vendor
relating to the operations of and revenues resulting from the
operation of the Assets in Vendor's possession;
(b) Documents of Title, material correspondence and technical
operating data of Vendor pertaining thereto; and
(c) the Tangible Interests;
to enable Purchaser to carry out its due diligence, subject always to
contractual restrictions imposed upon Vendor relating to disclosure.
Provided Closing occurs, Vendor shall deliver the information referred
to in Clause 5. l(b) to Purchaser at Closing.
5.2 NOTICE OF THE TITLE DEFECTS
Purchaser shall undertake a title review of the Assets. As soon as
reasonably practicable after completion of its title review and, in any
event, no later than seven (7) Business Days prior to the Closing Date,
Purchaser shall give Vendor written notice of all defects and omissions
which, in the reasonable opinion of Purchaser, materially and adversely
affect the title of Vendor to the Assets and which Purchaser does not
waive (all of which are referred to as "Title Defects"). Title Defects
do not include the Permitted Encumbrances unless Purchaser is of the
opinion the royalty burdens or other encumbrances listed in Schedule
"A" under the heading "Encumbrances", are incorrectly described. Such
notice shall include a description of each Title Defect and the
interest affected thereby and to the
151
15
extent reasonably possible, Purchaser's requirements for the
rectification or curing thereof. Failure to include any Title Defects
in a written notice when required, shall be deemed to be a waiver of
such Title Defects.
5.3 CURING TITLE DEFECTS
Prior to the Closing Date, Vendor shall diligently make reasonable
efforts to cure or remove all Title Defects of which Purchaser has
notified Vendor.
5.4 FAILURE TO REMOVE TITLE DEFECTS
If any Title Defects are not cured or removed at or before three (3)
Business Days prior to the Closing Date, Purchaser may elect on or
before two (2) Business Days prior to the Closing Date to:
(a) with the agreement of the Vendor, grant a further period of
time within which Vendor may cure or remove the uncured Title
Defects; or
(b) waive the uncured Title Defects and proceed with Closing; or
(c) not purchase at Closing those Assets affected by the uncured
Title Defects which Purchaser does not waive, in which event
the Purchase Price will be reduced by the amount of the values
determined in accordance with Clause 5.5 and Purchaser shall
proceed with Closing with respect to those Assets not affected
by Title Defects which Purchaser does not waive, or
(d) terminate this Agreement, if the portion of the Purchase Price
applicable to the Assets affected by the uncured Title Defects
which Purchaser does not waive exceeds 35% of the Purchase
Price, with values determined in accordance with Clause 5.5,
whereupon neither Vendor nor Purchaser shall have any further
obligation under this Agreement to each other except for those
specified in Clause 6.4 and Article 9.
Failure by Purchaser to elect and give notice of election shall be
deemed conclusively to be an election to waive all Title Defects.
5.5 DETERMINATION OF TOTAL VALUE AMONG ASSETS FOR TITLE DEFECTS
If it is necessary to allocate value to any particular portion of the
Assets for the purposes of Clause 5.4(c), 5.4(d) or Clause 6.3, the
Parties shall allocate a value they can agree upon, acting reasonably.
Failing such agreement, then within three (3) Business Days of notice
being given by one Party to the other:
152
16
(a) each of them shall provide to the other, at the same time, a
written statement separately setting forth its proposed value
in respect of each of the affected Assets ("Affected Assets");
and
(b) each Party shall submit the determination of the value of the
Affected Assets to J.P. Hunter & Associates Ltd. (the
"Evaluator"), together with written instructions that:
(i) the Evaluator, in accordance with good engineering
and evaluation practices, select a value for each of
the Affected Assets from and based only upon the
values submitted by the Parties; and
(ii) such evaluation must be completed within five (5)
Business Days from the date of submission.
The fees and other costs to be paid to the Evaluator in respect to the
services performed by it shall be borne in equal shares between Vendor
and Purchaser. Notwithstanding other provision in this Agreement
concerning the Closing Date, if a value is to be determined by the
Evaluator and the Evaluator's decision has not been received by the
Parties on or before two (2) Business Days prior to the Closing Date,
then the Closing Date shall be extended automatically to two (2)
Business Days after the Evaluator's decision has been given to the
Parties. Provided however, if a Party fails to provide a determination
of value to the Evaluator together with its written instructions as set
out herein, then the Evaluator shall select the other Party's
determination of value and the transaction shall proceed on the Closing
Date.
5.6 CURED TITLE DEFECTS
Notwithstanding the reduction of the Purchase Price pursuant to Clause
5.4(c), the Purchaser agrees that in the event Vendor is able to cure
or rectify a Title Defect with respect to any particular portion or
portions of the Assets (each a "Cured Asset") within a period of sixty
(60) days after the Closing Date, Purchaser shall purchase such Cured
Asset from Vendor at a date ninety (90) days from the Closing Date at
the price by which the Purchase Price was so adjusted. Purchaser has no
obligation to purchase any such Cured Asset where, in the opinion of
Purchaser acting reasonably, the value of such Cured Asset has declined
or been diminished in the intervening period as a result of new Title
Defects or physical damage or loss of such Cured Asset.
6. RIGHTS OF FIRST REFUSAL
6.1 RIGHTS OF FIRST REFUSAL
The Parties acknowledge that some of the Assets may be subject to
Rights of First Refusal or material consents. Purchaser may not waive
the existence or operation of any Right of First Refusal and shall
provide Vendor with its bona fide allocations of the portion of the
153
17
Purchase Price allocated to the Asset subject to a Right of First
Refusal. Thereafter, Vendor shall promptly serve all notices required
by the applicable Right of First Refusal utilizing Purchaser's
allocations, if they are reasonable. Purchaser shall, if requested by
Vendor, provide access to such information, analysis and calculations
as may be necessary to justify such allocations. Each such notice shall
include particulars of this transaction and a request for a waiver of
the applicable Right of First Refusal.
6.2 EFFECTS OF RIGHTS OF FIRST REFUSAL
Notwithstanding anything to the contrary, express or implied, Purchaser
acknowledges and agrees that if any such Rights of First Refusal are
exercised by any other Person, then:
(a) the Assets subject thereto shall be excluded from this
Agreement, without any liability of either Party to the other,
and the Purchase Price shall be adjusted downward by the
aggregate amount by which such Assets are purchased by such
Persons pursuant to the agreements granting the Rights of
First Refusal;
(b) the Purchase Price shall be reallocated among the Petroleum
and Natural Gas Rights, Tangible Interests and Miscellaneous
Interests as required; and
(c) the items "Assets", "Lands", "Documents of Title",
"Miscellaneous Interests", "Petroleum and Natural Gas Rights"
and "Tangible Interests" shall be construed as meaning only
that portion of the subject matter of these terms with respect
to which Closing occurs.
6.3 RIGHT OF TERMINATION
In the event the value of the Assets subject to exercised Rights of
First Refusal or for which material consents have not been received
exceeds thirty-five (35%) percent of the Purchase Price, then Purchaser
may terminate this Agreement by written notice to Vendor. In such case,
neither Vendor nor Purchaser shall have any further obligation under
this Agreement to the other except for those specified in Clause 6.4
and Article 9.
6.4 WAIVER
By its execution of this Agreement Vendor hereby waivers its right of
first refusal, if any, under the Participation and Operating Agreement
dated February 25, 1987, with respect to the sale to Purchaser by each
of Permez Petroleums Ltd. and Merlin Resources Ltd. of their interests
in SW1/4 Section 25-69-9-W5M.
154
18
7. CLOSING CONDITIONS
7.1 PURCHASER'S CONDITIONS
The obligation of Purchaser to complete the purchase of the Assets on
the Closing Date, shall be subject to the fulfilment of each of the
following conditions precedent by the times set forth below or if not
stated, at, or prior to, the Closing Date:
(a) MATERIAL COMPLIANCE OF REPRESENTATIONS AND WARRANTIES AND
OFFICER'S CERTIFICATE. All of the representations and
warranties of Vendor made in this Agreement shall be true and
correct in all respects as of the Closing Date, and Vendor
shall have delivered to Purchaser an officer's certificate in
the form of Schedule "B" and dated as of the Closing Date;
(b) MATERIAL COMPLIANCE BY VENDOR. Vendor shall have performed or
complied with, in all material respects, the terms and
conditions of this Agreement to the extent they are to be
performed at or prior to the Closing Date;
(c) DELIVERY OF CONVEYANCE DOCUMENTS. Vendor shall have executed
and delivered to Purchaser the Conveyance Documents;
(d) ENVIRONMENTAL MATTERS. On or before close of business on the
fifth Business Day prior to the Closing Date, Purchaser shall
have satisfied itself, acting reasonably, that no outstanding
material Environmental Damage is associated with the Assets.
Unless written notice of outstanding material Environmental
Damage is given by Purchaser to Vendor on or prior to the
third Business Day prior to the Closing Date, Purchaser shall
be deemed to have satisfied itself in respect of Environmental
Damage. Vendor shall not be required to conduct or pay for any
environmental audit, but, if Purchaser elects to conduct its
own environmental audit, it shall provide a copy of such
report, without charge, to Vendor;
(e) NO SUBSTANTIAL DAMAGE. From the Effective Date to the Closing
Date, no substantial physical damage, including Environmental
Damage shall have occurred to the Assets, which would have a
material adverse effect on the aggregate value of the Assets;
(f) NO SECURITY INTERESTS. Purchaser receiving registrable
discharges or letters of no interest from the respective
lender in respect of any and all security interests which are
registered against the Assets, or any part thereof, and which
are not to be assumed by Purchaser; and
(g) RIGHTS OF FIRST REFUSAL. No Rights of First Refusal relating
to the Assets shall remain in effect as of the Closing Date,
either having been exercised by the holder
155
19
thereof or having been waived by the holder thereof or having
expired prior to the Closing Date, after proper notice being
given.
The foregoing conditions are inserted for the sole benefit of
Purchaser. In the event that any of the foregoing conditions are not
fulfilled or met at or prior to the Closing Date, Purchaser may
terminate this Agreement by notice to Vendor, and in that event
Purchaser shall be released from all obligations, other than those
specified in Clause 6.4 and Article 9, and unless Purchaser can show
that the condition or conditions, the non-performance thereof by Vendor
has caused Purchaser to terminate this Agreement, are or were
reasonably capable of being performed or caused to be performed by
Vendor, then Vendor shall also be released from all obligations except
those specified in Clause 6.4 and Article 9; provided that any
condition may be waived in writing, in whole or in part, by Purchaser
without prejudice to its right of termination in the event of
non-fulfilment of any other condition or conditions. After the Closing
Date, Purchaser may not rescind or terminate this Agreement and
Purchaser's remedies, if any, shall be limited to damages.
7.2 VENDOR'S CONDITIONS
The obligation of Vendor to complete the sale of the Assets on the
Closing Date shall be subject to the fulfilment of each of the
following conditions precedent at or prior to the Closing Date:
(a) MATERIAL COMPLIANCE OF REPRESENTATIONS AND WARRANTIES AND
OFFICERS' CERTIFICATE. All of the representations and
warranties of Purchaser made in this Agreement shall be true
and correct in all respects as of the Closing Date, and
Purchaser shall have delivered to Vendor an officer's
certificate in the form of Schedule "B" and dated as of the
Closing Date;
(b) MATERIAL COMPLIANCE BY PURCHASER. Purchaser shall have
performed or complied with, in all Material respects, the
terms and conditions of this Agreement to the extent they are
to be performed at or prior to the Closing Date;
(c) DELIVERY OF DOCUMENTS. Purchaser shall have executed and
delivered to Vendor at least one copy of the Conveyance
Documents;
(d) TENDER OF PURCHASE PRICE. Purchaser shall have tendered to
Vendor, in the form stipulated herein, the Purchase Price
together with an amount equal to the Interim Adjustments
payable to Vendor; and
(e) RIGHTS OF FIRST REFUSAL. No Rights of First Refusal relating
to the Assets shall remain in effect as of the Closing Date,
either having been exercised by the holder thereof or having
been waived by the holder thereof or having expired at least
seven (7) days prior to the Closing Date, after proper notice
being given.
156
20
The foregoing conditions are inserted for the sole benefit of Vendor.
In the event that any of the foregoing conditions are not fulfilled or
met at or prior to the Closing Date, Vendor may terminate this
Agreement by notice to Purchaser, and in that event Vendor shall be
released from all obligations, except those specified in Clause 6.4 and
Article 9, and unless Vendor can show that the condition or conditions
the non-performance thereof by Purchaser has caused Vendor to terminate
this Agreement, are or were reasonably capable of being performed or
caused to be performed by Purchaser, then Purchaser shall also be
released from all obligations except those specified in Clause 6.4 and
Article 9; provided that any condition may be waived in whole or in
part by Vendor without prejudice to its right of termination in the
event of non-fulfilment of any other conditions. After the Closing
Date, Vendor may not rescind or terminate this Agreement and Vendor's
remedies, if any, shall be limited to damages.
7.3 DILIGENCE WITH RESPECT TO CONDITIONS
Each Party shall proceed diligently, honestly and in good faith and use
reasonable efforts in order to satisfy its respective conditions set
forth in Article 7.
8. MAINTENANCE OF ASSETS
8.1 LIMITATIONS ON VENDOR
From the Effective Date hereof until the Closing Date, and after the
Closing Date, until Purchaser is novated into any Documents of Title
governing the Assets and, to the extent the nature of Vendor's interest
permits and subject always to all terms and conditions of the Documents
of Title, Vendor:
(a) shall, to the extent it is operator of the Assets, maintain
and operate the Assets in a proper and prudent manner in
accordance with generally accepted oil and gas practices and
procedures, provided that Vendor shall have no responsibility
to maintain or obtain insurance with respect to the Assets
from and after Closing;
(b) shall not, without the prior written consent of Purchaser:
(i) voluntarily assume or initiate any obligation, or
make any commitment with respect to the Assets, the
Vendor's share of which with respect to any single
item is estimated to exceed twenty-five thousand
Dollars ($25,000.00) or with respect to any project
or proposal, if Vendor's share of the cost of the
project or proposal is estimated to exceed
twenty-five thousand Dollars ($25,000.00);
(ii) surrender or abandon any of the Assets;
157
21
(iii) amend any Document of Title or enter into any new
agreement of a material nature, respecting the
Assets;
(iv) sell any of the Assets, except sales of the
production of Petroleum Substances in the ordinary
course of business;
(v) except for Permitted Encumbrances, encumber any of
the Assets; or
(vi) exercise any Rights of First Refusal or area of
mutual interest option arising out of the Assets;
except Vendor may without the prior written consent of Purchaser exceed
the guidelines set forth in Clause 8.1(b)(i), if reasonably required to
protect life or property in an emergency situation, to comply with laws
or to preserve the value of the Assets if proper and prudent and in
accordance with generally accepted oil and gas practices and
procedures, in which case, Vendor shall promptly notify Purchaser of
such action and the estimated cost thereof.
8.2 LIMITATION ON PURCHASER
Until the Closing Date, Purchaser shall not be entitled to propose to
Vendor, or to cause Vendor to propose to others, the conduct of any
operations, or the exercise of any right or option in relation to the
Assets, except with the written consent of Vendor which may be withheld
at Vendor's sole discretion. Vendor shall give prompt notice of any
proposal made to it to Purchaser.
8.3 AFTER CLOSING
After Closing and until novation is completed with respect to the
applicable Documents of Title governing any particular Asset, the
following shall apply with respect to those Assets for which novation
is not completed:
(a) Vendor shall promptly forward to Purchaser all information and
documents it receives from others with respect to such Assets;
(b) Vendor shall promptly remit to Purchaser, after having
received from others, all revenues (less expenses paid by
Vendor) which have accrued after the Effective Date in respect
of such Assets;
(c) Vendor shall make such elections and respond to all notices
received in respect of such Assets in accordance with the
instructions of Purchaser, provided Vendor may, but shall not
be obliged to, follow instructions it reasonably believes to
be harmful or unlawful or in conflict with the applicable
agreement; and
158
22
(d) In a timely manner, Purchaser shall provide Vendor with copies
of any information, etc., pertaining to Alberta gas cost
allowance which it has filed for the year ending December 31,
1999.
8.4 RATIFICATION OF VENDOR'S ACTIONS
From and after the Effective Date and until Purchaser is novated into
such Documents of Title, Vendor shall be deemed to be agent of
Purchaser and Purchaser ratifies all actions taken or lack of action
taken by Vendor in connection with the Assets on behalf of Purchaser in
accordance with the terms and provisions of this Agreement other than
those actions for which Vendor has been grossly negligent or where
Vendor is guilty of wilful misconduct. Any act or omission of Vendor,
its directors, agents or employees, shall not be considered gross
negligence or wilful misconduct if done or omitted in accordance with
the instructions or written concurrence of Purchaser.
8.5 PURCHASER LIABILITY AND INDEMNITY TO VENDOR
If Closing occurs, Purchaser hereby agrees:
(a) to be liable to Vendor, its directors, agents and employees,
for all losses, costs, damages and expenses which Vendor, its
directors, agents or employees, may suffer, sustain, pay or
incur; and, in addition
(b) to indemnify and save harmless Vendor, its directors, agents
and employees, from and against all liabilities, losses, costs
(including legal costs on a solicitor/client basis), claims,
damages and expenses which may be brought against or suffered
by Vendor or its directors, agents or employees, in relation
to operations as a result of Vendor maintaining the Assets
from and after the Effective Date as agent for Purchaser
pursuant to this Article 8, provided such liability, loss,
cost (including legal costs on a solicitor/client basis),
claim, damage, or expense is not a direct result of the gross
negligence or wilful misconduct of Vendor, its directors,
agents or employees. Any act or omission of Vendor, its
directors, agents or employees, shall not be considered gross
negligence or wilful misconduct if done or omitted in
accordance with the instructions or concurrence of Purchaser.
9. CONFIDENTIALITY OF PURCHASER
9.1 CONFIDENTIALITY
Until the Closing Date, or in the event of termination of this
Agreement without consummation of the transactions contemplated herein,
Purchaser shall keep confidential all information respecting the Assets
obtained from Vendor. Such confidential information respecting the
Assets shall be used only for the purposes of this acquisition and
disclosed only to those of its employees, agents, legal counsel,
accountants or other representatives
159
23
on a "need to know" basis. Upon Closing, Purchaser's rights to use or
disclose such information shall be subject only to confidentiality
provisions contained in any operating or other existing agreements that
may apply thereto in respect of the Assets. Any 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
Purchaser without the prior written consent of Vendor. The restrictions
on disclosure and use of information obtained in connection with this
Agreement shall not apply to information, to the extent it:
(a) is or becomes publicly available through no act or omission of
Purchaser or its employees, agents, consultants, advisors or
other representatives;
(b) is subsequently obtained lawfully from a Person who, after
reasonable inquiry, Purchaser does not know is bound to Vendor
to restrict the use or disclosure of such information;
(c) is already in Purchaser's possession at the time of
disclosure, without any restriction on its disclosure; or
(d) is required to be disclosed pursuant to the applicable
legislation, regulations, or rules or by the direction of any
court, tribunal or administrative body having jurisdiction.
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.
9.2 PURCHASER'S REPRESENTATIVES
If Purchaser employs consultants, advisors or agents to assist in its
review of the items listed in Clause 5.1, Purchaser shall be
responsible to Vendor for ensuring that such consultants, advisors and
agents comply with the restrictions on the use and disclosure of
information set forth in Clause 9.1 and Purchaser shall be liable to
Vendor for all damages, costs or expenses Vendor may suffer or incur as
a result of any unauthorized use or disclosure of such confidential
information in contravention of this Clause 9.2 by such representatives
of Purchaser.
9.3 RETURN OF CONFIDENTIAL INFORMATION
If Closing does not occur and this Agreement is terminated, then all
documents, working papers and other written material obtained from
Vendor in connection with this Agreement shall be returned to Vendor
forthwith. No copies of such information are to be retained by
Purchaser.
160
24
10. REPRESENTATIONS AND WARRANTIES OF VENDOR
10.1 REPRESENTATIONS AND WARRANTIES OF VENDOR
Vendor hereby represents and warrants to Purchaser that:
(a) STANDING. It is a corporation duly organized and validly
existing under the laws of its jurisdiction of incorporation
and in good standing under the laws of the jurisdiction in
which it is required to be registered in order to hold the
Assets;
(b) REQUISITE AUTHORITY. It has all necessary corporate power,
authority and capacity to enter into and execute this
Agreement, to sell the Assets and to perform its other
obligations under this Agreement;
(c) NO CONFLICTS. The execution and delivery of this Agreement and
the consummation of the transactions contemplated by this
Agreement will not violate, nor be in conflict with, its
charter, bylaws or similar constating documents of Vendor, or
any provision of any agreement or instrument of a material
nature to which it is a party or is bound, or any judgement,
decree, order, statute, rule or regulations applicable to it
and of which it is aware is in effect in Alberta, except
requirements of Documents of Title to obtain consents of other
Persons who are parties thereto to the sale of the Assets
pursuant hereto;
(d) EXECUTION AND ENFORCEABILITY OF DOCUMENTS. This Agreement has
been duly executed and delivered by it and all other documents
required hereunder to be executed and delivered by it at
Closing pursuant hereto shall be duly executed and delivered.
This Agreement does, and such documents will, constitute
legal, valid and binding obligations of it enforceable in
accordance with their respective terms, subject to the
qualification that their enforceability may be limited by
rules of equity and by insolvency, bankruptcy and other laws
of general application affecting the enforcement of creditors'
rights;
(e) FINDER'S FEES. It has not incurred any obligation or
liability, contingent or otherwise, for brokers' or finders'
fees in respect of this transaction for which Purchaser shall
have any obligation or liability;
(f) LAWSUITS. To its Knowledge, based upon an examination of its
records, no suit, action or other proceeding is in existence,
pending or threatened against or by it before any court or
governmental agency which would materially adversely affect,
Vendor's title to or ownership of the Assets or the value of
the Assets;
(g) CANADIAN RESIDENT. It is not a non-resident of Canada within
the meaning of the Income Tax Act (Canada);
161
25
(h) ENCUMBRANCES. The Assets will, to its Knowledge, at the
Closing Date, be free and clear of all liens, encumbrances and
adverse claims created by, through or under it except for the
Permitted Encumbrances, those Title Defects waived by
Purchaser and as otherwise set out on Schedule "A" hereto;
(i) KNOWLEDGE OF DEFAULT. To its Knowledge, it has not received
notice of any material default under any Documents of Title
which default is continuing as of the Closing Date and where
such default would adversely impact upon the value of the
Assets or any part thereof or subject the Documents of Title
to cancellation or termination;
(j) PRODUCTION CONTRACTS. Except as set forth in Schedule "E",
there are no production sales agreements or arrangements under
which it, or any Person acting on its behalf, is obligated to
sell or deliver Petroleum Substances allocable to the
Petroleum and Natural Gas Rights to any Person, other than
contracts which are terminable on less than thirty-two (32)
days' notice:
(k) TAKE OR PAY AMOUNT. To its Knowledge, there are no Take or Pay
Amounts outstanding as of the Effective Date;
(l) REDUCTION OF INTEREST. Except for Permitted Encumbrances and
as disclosed in the Documents of Title, to its Knowledge, the
Petroleum and Natural Gas Rights are not subject to reduction
by virtue of the conversion or other alteration of the
interest of any Person under existing agreements created by,
through or under Vendor;
(m) GOOD STANDING UNDER AGREEMENTS. To its Knowledge, it is not in
breach in any material respect under any material agreements
and instruments having application to the Assets or any part
thereof to which it is a party or is bound;
(n) NET CARRIED INTERESTS. Except as disclosed in the Documents of
Title, to its Knowledge, there are no carried interests
whereby it is obligated to pay a share of the costs associated
with any of the Assets attributable to the interest of another
Person;
(o) PRODUCTION PENALTY. Except as disclosed in the Documents of
Title, to its Knowledge, the Wells related to the Lands are
not subject to a production penalty whereby the production
proceeds allocable to Vendor's interest are payable to a third
party until an amount calculated in respect of certain costs
and expenses paid by such third party are recovered by such
third party;
(p) QUIET ENJOYMENT. Subject to the other representations of
Vendor pursuant hereto and to the rents, covenants, conditions
and stipulations in the Documents of Title reserved and
contained on the lessee's or holder's part thereunder to be
paid, performed and observed, Purchaser may enter into and
upon and hold and enjoy
162
26
the Assets for the residue of their respective term thereof
for its own use and benefit without any lawful interruption of
or by Vendor or any other Person claiming by, through or under
Vendor except pursuant to or in respect of Permitted
Encumbrances and those Title Defects waived by Purchaser;
(q) PAYMENT OF TAXES. To its Knowledge, all ad valorem, property,
production, severance and similar taxes and assessments based
on or measured by the ownership of the Assets or the
production of Petroleum Substances from the Lands or the
receipt of proceeds therefrom payable by it to the Effective
Date have been paid and discharged;
(r) LAWS. To its Knowledge, it has not received notice of default
in any material respect of any decrees, statutes and
regulations of government authorities which relate to the
Assets, the default or failure of which would have a material
adverse effect on the value of the Assets or any part thereof,
(s) JUDGEMENTS AND LAWS. To its Knowledge, Vendor is not in
default of any judgement, order, writ, injunction or decree of
any court, government department, commission or other
administrative agency and it is, to its Knowledge,
substantially complying, in all material respects, with all
decrees, statutes and regulations of governmental authorities,
the default or failure of which by it would have an adverse
effect on the value of the Assets or any part thereof,
(t) ENVIRONMENTAL MATTERS. To its Knowledge, it has not received:
(i) any orders or directives which relate to
environmental matters and which require any work,
repairs, construction or capital expenditures with
respect to the Assets;
(ii) any demand or notice with respect to the breach of
any environmental law applicable to the Assets,
including, without limitation, any regulations
respecting the use, storage, treatment,
transportation or disposition of petroleum substances
or contaminants; or
(iii) notice from the operator advising of operator's
non-compliance with any laws applicable to the Assets
including without limitation any regulations
respecting the use, storage, treatment,
transportation or disposition of petroleum substances
or contaminants;
which orders, directives, demands or notices remain outstanding as of
the Closing Date;
(u) ENVIRONMENTAL CLAIMS. To its Knowledge, Vendor has not
received any notice of any claim by any third party (including
governmental authorities) of pollution or other Environmental
Damage arising from drilling, production or similar operations
163
27
on the Lands or lands pooled or unitized therein or of any
claim requesting that any action be taken to prevent pollution
or other Environmental Damage from drilling, production or
other operations on the Lands or lands pooled or unitized
therewith which notice or claim remains outstanding as of the
date hereof,
(v) OIL AND GAS FIELD PRACTICE. To its Knowledge, the Wells
related to the Lands have, in all material respects, been
drilled and if completed, completed and if abandoned,
abandoned in compliance with all statutes, rules and
regulations existing at the relevant time;
(w) RIGHTS OF FIRST REFUSAL. To its Knowledge, no Rights of First
Refusal relating to the Assets shall remain in effect as of
the Closing Date, either having been waived or exercised by
the holder thereof or having expired after proper notice being
given;
(x) OUTSTANDING AFE'S. Other than as disclosed in Schedule "F",
there are no authorizations for expenditures approved by it
with respect to the Assets pursuant to which amounts in excess
of twenty -five thousand Dollars ($25,000.00) may become
payable after the date hereof and there are no outstanding
cash calls in excess of twenty-five thousand Dollars
($25,000.00) with respect to the Assets;
(y) DISCLOSURE OF DOCUMENTS. To its Knowledge, all documents and
agreements affecting the title to the Assets or production or
revenue from the Assets will have been made available by
Vendor to Purchaser by the Closing Date, with exception of
those contracts for the sale of Petroleum Substances which
have a term equal to or less than thirty-two (32) days; and
(z) ROYALTIES. All royalties payable by Vendor in respect of the
Petroleum and Natural Gas Rights have been properly paid as of
the Effective Date.
10.2 NO WARRANTY OF TITLE
Notwithstanding anything contained in this Article 10, Vendor does not
warrant title to the Assets or purport to convey any better title than
it now has.
10.3 NO OTHER VENDOR WARRANTIES
Vendor makes no warranty whatsoever except as and to the extent set
forth in Clause 10.1. Without limiting the generality of the foregoing,
Vendor does not make any representation or warranty with respect to:
(a) the quality, quantity or recoverability of the Petroleum
Substances within or under the Lands or any lands pooled or
unitized therewith;
(b) the value of the Assets or the future revenues applicable
thereto,
164
28
(c) any economic evaluations respecting the Assets, or
(d) the quality, condition, merchantability or serviceability of
all or any of the Tangible Interests, or their suitability for
any particular purpose.
11. REPRESENTATIONS AND WARRANTIES OF PURCHASER
11.1 REPRESENTATIONS AND WARRANTIES OF PURCHASER
Purchaser hereby represents and warrants to Vendor that:
(a) STANDING. It is a corporation duly organized and validly
existing under the laws of its jurisdiction of incorporation
and in good standing under the laws of the jurisdiction in
which it is required to be registered in order to hold the
Assets;
(b) REQUISITE AUTHORITY. It has all necessary corporate power,
authority and capacity to enter into this Agreement and to
purchase and pay for the Assets, on the terms described herein
and to perform its other obligations under this Agreement;
(c) NO CONFLICTS. The execution and delivery of this Agreement and
the consummation of the transactions contemplated by this
Agreement will not violate nor be in conflict with its
charter, bylaws or similar constating documents of it, or any
provision of any agreement or instrument to which it is a
party or is bound, or any judgement, decree, order, statute,
rule or regulation applicable to Purchaser in effect in
Alberta of which it Is aware;
(d) EXECUTION AND ENFORCEABILITY OF DOCUMENTS. This Agreement has
been duly executed and delivered by it and all other documents
required hereunder to be executed and delivered by it at
Closing pursuant hereto shall be duly executed and delivered.
This Agreement does, and such documents will, constitute
legal, valid and binding obligations of it enforceable in
accordance with their respective terms, subject to the
qualification that their enforceability may be limited by
rules of equity and by insolvency, bankruptcy and other laws
of general application affecting the enforcement of creditors'
rights;
(e) FINDER'S FEES. It has not incurred any liability, contingent
or otherwise, for brokers' or finders' fees in respect of this
transaction for which Vendor shall have any obligation or
liability;
(f) THE INVESTMENT CANADA ACT. Either it is not a "non-Canadian"
as such term is defined in The Investment Canada Act, or, if
it is such "non-Canadian", then either the transaction herein
is not notifiable or reviewable under such Act or such Party
will make application to satisfy the requirements of such Act
so that the transaction
165
29
herein provided for may be completed on the Closing Date
without contravention of the Act;
(g) PURCHASER AS PRINCIPAL. It is acquiring the Assets in its
capacity as a principal;
(h) FINANCING CAPABILITY OF PURCHASER. It either now has or will
have at Closing sufficient funds to close the transactions
hereby contemplated upon the Closing Date; and
(i) COMPETITION AND SECURITIES ACTS. It has complied with the
Competition Act (Canada) and the relevant Securities Acts to
the extent applicable to the transaction herein.
11.2 PURCHASER'S OWN EXAMINATION AND EVALUATION
Without detracting from Purchaser's reliance on Vendor's representation
and warranties in Clause 10.1, Purchaser acknowledges that as of the
Closing Date it will have made its own independent investigation,
analysis, evaluation and inspection of Vendor's interest in the Assets,
including a review of Vendor's title thereto and the state and
condition thereof, and will have relied on its own investigation,
analysis, evaluation and inspection as to its assessment of the
condition, quantum and value of the Assets and Vendor's title thereto.
11.3 GAS COST ALLOWANCE
Vendor and Purchaser shall co-operate in the timely preparation of gas
cost allowance filings which may be required of the Parties from time
to time. Purchaser agrees to do such reasonable things in a timely
manner, as Vendor may request, to provide to Vendor or to the Crown
information required by Vendor for such filings.
12. SURVIVAL OF REPRESENTATIONS AND WARRANTIES
12.1 DATES REPRESENTATIONS AND WARRANTIES APPLY
The representations and warranties of the Parties set forth in Clauses
10. 1 and 11. 1 shall be true or performed, as the case may be, as at
the Effective Date and the Closing Date.
12.2 LIMITATION OF LIABILITY.
The representations and warranties contained herein shall survive the
Closing Date, notwithstanding the Closing and delivery of any
covenants, representations and warranties in any other agreements prior
or subsequent thereto, and shall remain in full force and effect for
the benefit of Purchaser with respect to Clause 10.1 and for the
benefit of Vendor with respect to Clause 11.1, but no claim or action
in respect of any breach of such representation or warranty shall be
made unless the Party making such claim or bringing
166
30
such action has given notice of such claim (including reasonable
particulars of the misrepresentations or breach) to the other within
twelve (12) months following the Closing Date. Notwithstanding any
other provision of this Agreement:
(a) a Party shall not be entitled to any payment from the other
Party for breach of any covenants, representations or
warranties referred to in Clauses 10.1 and 11.1 for
misrepresentation pursuant to this Agreement or for
indemnification pursuant to Clause 13.1, unless a claim (s) by
such Party exceeds in aggregate Two Thousand Five Hundred
Dollars ($2,500.00); and
(b) the maximum aggregate liability of Vendor to Purchaser for any
breaches of any covenants, representations or warranties
referred to in Clause 10.1, for misrepresentation pursuant to
this Agreement and in respect of any claims for indemnity
pursuant to Clause 13.1, shall not in any event exceed the
Purchase Price.
12.3 KNOWLEDGE BY PURCHASER
Purchaser shall have no remedy or cause of action for a breach of
representation or warranty for any circumstance, matter or thing
actually known to Purchaser, or any employee, agent, consultant or
representative thereof, as at the Closing Date.
12.4 NOT TRANSFERABLE
The representations and warranties set forth in Clauses 10.1 and 11.1
are made for the exclusive benefit of Purchaser and Vendor, as the case
may be, and are not transferable and may not be the subject of any
rights of subrogation in favour of any other Person.
13. INDEMNITY
13.1 INDEMNITY OF VENDOR
Subject to Clauses 12.2 and 13.4, Vendor shall indemnify Purchaser and
its directors, employees and agents from and against all Losses which
Purchaser, its directors, employees or agents, pays or pay to third
parties as a consequence of a breach, as of the Closing Date, of any
representations and warranties of Vendor contained in Clause 10.1 of
this Agreement, excepting any Losses, if and to the extent caused by
the gross negligence or wilful default of Purchaser, its successors,
agents or assigns. The indemnity granted by Vendor in this Clause 13.1
is not a title warranty and does not provide an extension of any
representation or warranty contained in Clause 10.1 or any additional
remedy with regard to the breach by Vendor of any representation or
warranty. Furthermore, the indemnity of Vendor to Purchaser granted
pursuant to this Clause 13.1 shall only apply to claims of indemnity
made by Purchaser to Vendor by giving written notice to Vendor within
twelve (12) months following the Closing Date and, in any event,
167
31
the maximum aggregate liability and indemnity of Vendor to Purchaser
for Losses suffered by Purchaser pursuant hereto and as a result of any
breaches of any representations or warranties shall not exceed the
Purchase Price.
13.2 PURCHASER'S LIABILITY AND INDEMNITY TO VENDOR
If Closing occurs and in addition to indemnity under Clause 8.5,
Purchaser hereby agrees:
(a) to be liable to Vendor, its directors, agents and employees,
for all Losses which Vendor, its directors, agents or
employees, pay, suffer, sustain or incur, and, in addition;
(b) to indemnify and save harmless Vendor, its directors, agents
and employees, from and against all Losses which may be
brought against or suffered by Vendor, its directors, agents
or employees,
in relation to the Assets and arising out of or in connection with
operations which arise on or subsequent to the Effective Date,
excepting any Losses if, and to the extent, caused by the gross
negligence or wilful default of Vendor or its agents or arise as a
result of a breach by Vendor of any of the terms of this Agreement.
13.3 PURCHASER'S ASSUMPTION OF ENVIRONMENTAL DAMAGE AND ABANDONMENT AND
RECLAMATION OBLIGATION
Purchaser acknowledges that it has been given the opportunity to
inspect the Assets prior to Closing Date; that it is familiar with the
condition of the Assets, and that it is acquiring the Assets on an "as
is" basis. Upon the Effective Date, Purchaser assumes the entire
responsibility and liability for all Losses which Vendor may suffer,
sustain or incur, and, in addition shall indemnify and save harmless
Vendor and its directors, employees and agents from and against all
Losses which may be brought against Vendor or which Vendor, its
directors, employees or agents, may suffer, sustain or incur in
connection with or as a result of each and every act or omission,
matter or thing related to the Assets done, omitted, occurring or
accruing on, prior to or subsequent to the Effective Date with respect
to any Environmental Damage or any Abandonment and Reclamation
Obligation and without regard to how or who caused such Losses, except,
subject to the provisions of Clause 12.2 to the extent that same relate
to inaccuracies or failure of the representations and warranties set
forth in Clause 10.1.
13.4 LOSSES
For the purpose of this Article 13, "Losses" means losses, costs,
claims, damages, expenses and liabilities and includes, without
limitation, legal costs on a solicitor and client basis.
168
32
14. ONGOING COVENANTS OF PURCHASER
14.1 DOCUMENTS OF TITLE
On and after the Closing Date, Purchaser agrees with Vendor it shall be
bound by, observe and perform, as they become due, all covenants,
obligations and liabilities respecting the Assets, including, without
limitation, the performance of all obligations of Vendor under the
Documents of Title and other agreements respecting the Assets.
14.2 VENDOR'S ACCESS TO RECORDS
On and after the Closing Date, Purchaser hereby agrees to allow Vendor,
its employees, agents, legal counsel, accountants and other
representatives, to have access to the premises of Purchaser during
normal business hours of Purchaser in order to inspect and take copies
of such information delivered by Vendor to Purchaser in accordance with
Clause 5.1, if reasonably required by Vendor, in connection with any
joint venture or Crown audit, any potential or threatened legal or
administrative proceeding by or against Vendor in relation to the
Assets, or to enable Vendor to comply with a law or the requirement of
any governmental authority. Nothing herein shall prevent Vendor from
making and retaining copies of any such documents at any time. Vendor
shall hold all information and documents confidential and that same
shall only be used by Vendor for the purpose specified by Vendor.
14.3 INITIATION OF AUDITS
On and after the Closing Date up until Final Adjustments are made,
Purchaser shall advise Vendor of the initiation and results of any
joint venture or Crown audit in relation to the Assets to the extent it
relates to any matters accruing prior to the Effective Date.
15. NO MERGER
15.1 NON-MERGER
The representations and warranties set forth in Clauses 10.1 and 11.1
and the indemnities set forth in Article 13 and the covenants in
Article 14 shall be deemed to apply to all assignments, transfers and
other Conveyance Documents and there shall not be any merger of any
representation, warranty, indemnity or covenant in such assignments,
transfers or other Conveyance Documents, notwithstanding any rule of
law, equity or statute to the contrary and all such rules are hereby
waived.
169
33
16. NOTICE
16.1 METHOD OF NOTICE
Any notice, communication or other document (hereinafter called
"Notice") required or permitted to be given under this Agreement by one
Party to the other shall be in writing and shall be sufficiently given
and received if:
(a) personally served on the Person to whose attention the Notice
is to be addressed pursuant to Clause 16.2, at the time of
actual delivery, or, if delivered by hand to a responsible
Person at the address of the Party to which such Notice is
directed, two (2) hours following delivery to such Party;
provided that if such time of deemed receipt is not within the
normal business hours of the recipient Party, then such Notice
shall be deemed received at the next commencement of business
on a day that business is normally conducted by the recipient
Party;
(b) sent by telecopy (or by any other like method of telefacsimile
by which a written message may be sent) and directed to the
Person to whose attention the Notice is to be addressed
pursuant to Clause 16.2 at that Party's telecopier number set
forth below, and such Notice so given shall be deemed to have
been received by the recipient, if the time of transmission is
stated, two (2) hours following the time so stated; provided
that If such time of deemed receipt is not within the normal
business hours of the recipient Party, then such Notice shall
be deemed received at the next commencement of business on a
day that business is normally conducted by the recipient
Party; or
(c) mailed by first class registered post, postage prepaid, to the
other Party (such Notice so served shall be deemed to have
been received by the recipient Party on the fourth (4th)
Business Day of such recipient Party following the date of
mailing thereof); provided that in the event of an actual or
threatened postal strike or other labour disruption that may
affect the mail service, Notices shall not be mailed.
16.2 ADDRESS FOR NOTICE
The address for Notice for each of the Parties shall be as follows:
VENDOR: PURCHASER:
Cumulus Investments Ltd. Nastan Resources Ltd.
1023 - 32nd Avenue S.W. Suite 2210, 800 - 5th Avenue SW
Calgary, Alberta Calgary, Alberta
T2T 1V5 T2P 3T6
Attention: Land Manager Attention: Land Manager
Fax: (403) Fax: (403) 508-1265
170
34
and
GEOCAN Energy Inc.
800, 717 - 7th Avenue SW
Calgary, Alberta
T2P 3H3
Attention: Land Manager
Fax: (403) 261-3834
16.3 CHANGES ADDRESS FOR NOTICE
Any Party may, from time to time, change its address for Notice by
giving written notice to the other.
17. MISCELLANEOUS PROVISIONS
17.1 PUBLIC ANNOUNCEMENTS
No Party shall release any information concerning this Agreement and
the transaction herein provided for without the prior written consent
of Vendor, which will not be withheld unreasonably. Nothing contained
herein shall prevent any Party at any time from furnishing information
to any governmental agency or regulatory authority or to the public if
required by applicable law or if such Party considers it to be
advisable in the circumstances, provided that the Parties shall advise
each other in advance of any public statement which they propose to
make regarding the said transaction. Nothing herein contained shall
prevent Vendor from furnishing information relating to the said
transaction or the identity of Purchaser in connection with the
procurement of the consent of other Persons or in sending notices
concerning any Right of First Refusal where required pursuant to any
Documents of Title.
17.2 SIGNS AND NOTIFICATIONS
After Closing, Vendor may remove any signs which indicate Vendor's
ownership or operation of the Assets. It shall be the responsibility of
Purchaser, where necessary, to erect or install any signs that may be
required by governmental agencies indicating Purchaser to be the owner
of the Assets and to notify contractors, governmental agencies and any
other Person of Purchaser's interest in the Assets.
17.3 HEADINGS AND DESCRIPTIONS
The headings of all Articles, Clauses and Subclauses are inserted for
convenience of reference only and shall not affect the construction or
interpretation of this Agreement, or any provision thereof. Use of
words "Article", "Clause" or "Subclause" in this Agreement
171
35
refers to an Article, Clause or Subclause of this Agreement unless a
contrary intention is specifically stated.
17.4 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 or vice versa, as the context
requires.
17.5 CONFLICTS AND ENTIRE AGREEMENT
The provisions contained in all documents and agreements collateral
hereto shall at all times be read subject to the provisions of this
Agreement and, in the event of conflict between the provisions
contained in any documents or agreements collateral hereto and the
provisions of this Agreement, the provisions of this Agreement shall
prevail unless otherwise expressly provided herein.
17.6 WAIVER
Any waiver of any term or condition of this Agreement or consent to any
departure from this Agreement by one Party to the other shall be
effective only if in writing and only in the specific instance and for
the specific purpose for which it is given.
17.7 APPLICABLE LAW
This Agreement shall be construed and enforced in accordance with the
laws in effect in the Province of Alberta. Each Party attoms to the
jurisdiction of the courts of the Province of Alberta and all courts of
appeal therefrom.
17.8 ENTIRE AGREEMENT
This Agreement constitutes the entire agreement between the Parties
with respect to the transactions contemplated herein, contains all of
the representations and warranties of the respective Parties and
supersedes all prior agreements, documents, writing and verbal
understandings between the Parties with respect to the sale of the
Assets.
17.9 AMENDMENTS
This Agreement may not be amended or modified in any respect, except by
written instrument executed by the Parties.
17.10 TIME OF THE ESSENCE
Time shall be of the essence of this Agreement and of every part
thereof.
172
36
17.11 FURTHER ASSURANCES
After Closing, the Parties shall do all things and provide all
assurances, as may be reasonably required to consummate the
transactions contemplated by this Agreement, and each Party shall
provide those further documents or instruments as may be reasonably
required by the other Parties to give effect to this Agreement and to
carry out its provisions.
17.12 ASSIGNMENT
Prior to Closing, neither this Agreement nor any rights or obligations
under it shall be assignable by any Party without the prior written
consent of the other Parties. After the Closing Date, no assignment,
transfer of the Agreement of all or any portion of the Assets, by
Purchaser shall relieve Purchaser from the obligations to Vendor
herein, unless Vendor otherwise agrees. Subject thereto, this Agreement
shall enure -to the benefit of and be binding upon the Parties, and
their respective successors and permitted assigns.
17.13 COUNTERPART EXECUTION
This Agreement may be executed in counterpart and all counterparts
together shall form one binding Agreement.
IN WITNESS WHEREOF the parties have duly executed this Agreement as of
the date and year first above written.
VENDOR PURCHASER
CUMULUS INVESTMENTS LTD. NASTAN RESOURCES LTD.
Per: Per:
------------------------------ ------------------------------------
Per: Per:
------------------------------ ------------------------------------
GEOCAN ENERGY INC.
Per:
------------------------------------
Per:
------------------------------------
173
THIS IS SCHEDULE "A" TO AND FORMING PART OF A PURCHASE AND SALE AGREEMENT
BETWEEN CUMULUS INVESTMENTS LTD., AS VENDOR, AND NASTAN RESOURCES LTD. AND
GEOCAN ENERGY INC. AS PURCHASER, MADE AS OF THE 1ST DAY OF JUNE, 1999
- --------------------------------------------------------------------------------
LANDS AND PETROLEUM
SUBSTANCES VENDOR'S INTEREST ENCUMBRANCES
SW Section 25-69-9 W5M 7.5% -Crown SS
P&NG to base Beaverhill Lake
WELLS
4-25-69-9W5M
174
THIS IS SCHEDULE "B" TO AND FORMING PART OF A PURCHASE AND SALE AGREEMENT
BETWEEN CUMULUS INVESTMENTS LTD., AS VENDOR, AND NASTAN RESOURCES LTD. AND
GEOCAN ENERGY INC. AS PURCHASER, MADE AS OF THE IST DAY OF JUNE, 1999
- --------------------------------------------------------------------------------
VENDOR'S OFFICER'S CERTIFICATE
RE: CLAUSE 7.1(a) OF THE PURCHASE AND SALE AGREEMENT
("AGREEMENT") MADE AS OF JUNE 1, 1999 BETWEEN CUMULUS
INVESTMENTS LTD., AS VENDOR, AND NASTAN RESOURCES LTD. AND
GEOCAN ENERGY INC., AS PURCHASER
Unless otherwise stated, the definitions provided for in the Agreement
are adopted in this Certificate.
I, Dick Schull, President of Cumulus Investments Ltd. (the "Company"),
hereby certify that as of the date of this Certificate:
(a) The covenants, representations and warranties of the Company
contained in Clause 10 of the Agreement are true and correct
in all material respects.
(b) This Certificate is made for and on behalf of the Company and
is binding upon it and the deponent herein is not and will not
incur any personal liability whatsoever with respect to it.
IN WITNESS WHEREOF I have executed this Certificate effective the _____ day of
________________, 1999.
Vendor
CUMULUS INVESTMENTS LTD.
Per:
--------------------------------
175
2
SCHEDULE "B"
PURCHASER'S OFFICER'S CERTIFICATE
RE: CLAUSE 7.2(a) OF THE PURCHASE AND SALE AGREEMENT ("AGREEMENT")
MADE AS OF JUNE 1, 1999 BETWEEN CUMULUS INVESTMENTS LTD., AS
VENDOR, AND NASTAN RESOURCES LTD. AND GEOCAN ENERGY INC., AS
PURCHASER
Unless otherwise stated, the definitions provided for in the Agreement
are adopted in this Certificate.
I, Neil Stanley, President of Nastan Resources Ltd.(the "Purchaser"),
hereby certify that as of the date of this Certificate:
(a) The covenants, representations and warranties of the Purchaser
contained in Clause 11 of the Agreement are true and correct
in all material respects.
(b) This Certificate is made for and on behalf of the Purchaser
and is binding upon it and the deponent herein is not and will
not incur any personal liability whatsoever with respect to
it.
IN WITNESS WHEREOF I have executed this Certificate effective the ______ day of
_______________________,1999.
Purchaser
NASTAN RESOURCES LTD.
Per:
-----------------------------------
Title
176
3
SCHEDULE "B"
PURCHASER'S OFFICER'S CERTIFICATE
RE: CLAUSE 7.2(a) OF THE PURCHASE AND SALE AGREEMENT ("AGREEMENT")
MADE AS OF JUNE 1, 1999 BETWEEN CUMULUS INVESTMENTS LTD., AS
VENDOR, AND NASTAN RESOURCES LTD. AND GEOCAN ENERGY INC., AS
PURCHASER
Unless otherwise stated, the definitions provided for in the Agreement
are adopted in this Certificate.
I, Wayne Wadley, President of GEOCAN ENERGY INC. (the "Purchaser"),
hereby certify that as of the date of this Certificate:
(a) The covenants, representations and warranties of the Purchaser
contained in Clause 11 of the Agreement are true and correct
in all material respects.
(b) This Certificate is made for and on behalf of the Purchaser
and is binding upon it and the deponent herein is not and will
not incur any personal liability whatsoever with respect to
it.
IN WITNESS WHEREOF I have executed this Certificate effective the _________ day
of __________________, 1999.
Purchaser
GEOCAN ENERGY INC.
Per:
-------------------------------------
Title
177
THIS IS SCHEDULE "C" TO AND FORMING PART OF A PURCHASE AND SALE AGREEMENT
BETWEEN CUMULUS INVESTMENTS LTD. AS VENDOR, AND NASTAN RESOURCES LTD. AND GEOCAN
ENERGY INC., AS PURCHASER, MADE AS OF THE IST DAY OF JUNE, 1999
- --------------------------------------------------------------------------------
CONVEYANCE
THIS INDENTURE AND AGREEMENT made as of the 1st day of June, 1999.
BETWEEN:
CUMULUS INVESTMENTS LTD., a body corporate, having an office
in the City of Calgary, in the Province of Alberta,
(hereinafter called "Vendor")
OF THE FIRST PART
- and -
NASTAN RESOURCES LTD. AND GEOCAN ENERGY INC., both bodies
corporate, having offices in the City of Calgary, in the
Province of Alberta, (hereinafter called "Purchaser")
OF THE SECOND PART
WHEREAS Vendor has agreed, pursuant to a Purchase and Sale Agreement
dated as of the Ist day of June, 1999 (hereinafter called the "Sale Agreement"),
to convey to Purchaser all of its interest in and to the Assets, insofar as
those terms are defined therein.
NOW THEREFORE THIS AGREEMENT WITNESSETH that, for the consideration
provided in the Sale Agreement, the receipt and sufficiency of which is hereby
acknowledged by Vendor, Vendor has agreed to sell and by these presents does
bargain, sell, assign, transfer and convey to Purchaser all of its right, title,
interest and property whatsoever in, to or arising out of the Assets, in the
following proportions:
Nastan 50%
GEOCAN 50%
to have and to hold for its own use and benefit on the terms herein provided.
IT IS FURTHER AGREED BETWEEN THE PARTIES AS FOLLOWS:
178
2
1. DEFINITIONS
In this Conveyance, the definitions set forth on the Sale Agreement
shall apply hereto.
2. TITLE
Purchaser hereby covenants and agrees with Vendor that nothing herein,
expressed or implied, shall operate to have effect as any warranty or
guarantee of title or covenant for title on the part of Vendor and that
the representations and warranties contained in the Sale Agreement
shall apply hereto for the period provided in the Sale Agreement.
3. EFFECTIVE DATE
Vendor and Purchaser agree that the effective date of this transaction
shall be 8:00 a.m. Calgary time on January 1, 1999.
4. ACCEPTANCE
Purchaser hereby accepts this Conveyance and in consideration thereof,
Purchaser hereby assumes and agrees to perform and be bound by all
terms and conditions of the contracts, agreements and documents
included in the Assets.
5. FURTHER ASSURANCES
Vendor and Purchaser will each from time to time, and at all times
hereafter, at the request and cost of the other, do and perform all
such acts and things, and execute all such assurances, deeds, documents
and writings with respect to the Assets as the other may reasonably
require in order to carry out the purposes of this Conveyance.
6. SALE AGREEMENT
The terms hereof shall be read in conjunction with the terms of the
Sale Agreement and subject thereto. In the event of any conflict
between the provisions of this Conveyance and the Sale Agreement, the
Sale Agreement shall prevail.
7. ENUREMENT
This Conveyance shall extend to and be binding upon the parties hereto
and their successors and assigns.
8. COUNTERPART EXECUTION
This Conveyance may be executed in counterpart and all counterparts
together shall form one binding Agreement.
179
3
IN WITNESS WHEREOF the parties hereto have executed this Conveyance by their
proper officers duly authorized in that behalf as of the effective date.
Vendor
CUMULUS INVESTMENTS LTD.
Per:
---------------------------------------
Per:
---------------------------------------
Purchaser
NASTAN RESOURCES LTD.
Per:
---------------------------------------
Per:
---------------------------------------
GEOCAN ENERGY INC.
Per:
---------------------------------------
Per:
---------------------------------------
180
THIS IS SCHEDULE "D" TO AND FORMING PART OF A PURCHASE AND SALE AGREEMENT
BETWEEN CUMULUS INVESTMENTS LTD. AS VENDOR, AND NASTAN RESOURCES LTD. AND GEOCAN
ENERGY INC. AS PURCHASER, MADE AS OF THE IST DAY OF JUNE, 1999
- --------------------------------------------------------------------------------
TANGIBLES, FACILITIES AND OTHER MISCELLANEOUS MATTERS
Description Vendor's Interest
API 160 Pumpjack 7.5%
Arrow 66 Pumpjack engine
2, 400 Barrel Tanks
181
THIS IS SCHEDULE "E" TO AND FORMING PART OF A PURCHASE AND SALE AGREEMENT
BETWEEN CUMULUS INVESTMENTS LTD., AS VENDOR, AND NASTAN RESOURCES LTD. AND
GEOCAN ENERGY INC., AS PURCHASER, MADE AS OF THE 1ST DAY OF JUNE, 1999
- --------------------------------------------------------------------------------
PRODUCTION SALES AGREEMENTS
There are no production sales agreements or arrangements under which
Vendor, or any Person acting on its behalf, is obligated to sell or deliver
Petroleum Substances allocable to the Petroleum and Natural Gas Rights to any
Person which are not terminable on less than thirty-two (32) days' notice.
182
THIS IS SCHEDULE "F" TO AND FORMING PART OF A PURCHASE AND SALE AGREEMENT
BETWEEN CUMULUS INVESTMENTS LTD., AS VENDOR, AND NASTAN RESOURCES LTD. AND
GEOCAN ENERGY INC., AS PURCHASER, MADE AS OF THE IST DAY OF JUNE, 1999
- --------------------------------------------------------------------------------
OUTSTANDING AUTHORIZATIONS FOR EXPENDITURE
There are no outstanding authorizations for expenditure approved by Vendor with
respect to the Assets pursuant to which amounts in excess of twenty-five
thousand Dollars ($25,000.00) may become payable after the date hereof.