EXHIBIT 10.16
ASSET SALE AGREEMENT
THIS AGREEMENT dated the 23rd day of February, 2005
BETWEEN:
RALLY ENERGY CORP., a body corporate incorporated under the laws of the
Province of Ontario, having offices at Calgary, Alberta
(hereinafter called the "Vendor")
- and -
▇▇▇▇▇▇▇ INTERNATIONAL RESOURCES INC., a body corporate incorporated under
the laws of the State of Nevada, having offices at Calgary, Alberta
(hereinafter called the "Purchaser").
WHEREAS the Vendor is the legal and beneficial owner of the Assets and
wishes to sell to the Purchaser, and the Purchaser wishes to purchase from the
Vendor, such Assets in accordance with the provisions of this Agreement;
AND WHEREAS the Parties wish to document the arrangement they have reached
with respect to the foregoing.
NOW THEREFORE in consideration of the premises and the mutual agreements
set out in this Agreement, the Parties intend to be legally bound and hereby
agree as follows:
Article 1
INTERPRETATION
1.1 Definitions
In this Agreement, including the recitals and any Schedule attached hereto,
unless otherwise stated or unless the context otherwise requires:
(a) "Abandonment and Reclamation Obligations" means all obligations
respecting the abandonment or plugging of any ▇▇▇▇▇ and the
abandonment of any other Tangibles (including, without limitation, any
associated closing, decommissioning, dismantling and removal of any
foundations, structures or equipment in connection with such
abandonment) and the restoration and reclamation of the surface or
subsurface of any part of the Assets, all in compliance with
Applicable Laws;
(b) "Agreement" means this agreement and all schedules attached hereto
together with all instruments supplemental hereto or in amendment or
confirmation hereof;
(c) "Applicable Laws" means all applicable statutes, laws (including
common law), regulations, by-laws, rules, judicial or arbitral or
ministerial or departmental or regulatory judgments, orders,
decisions, rulings or awards, binding on or affecting the Person
referred to in the context in which that word is used and "Applicable
Law" means any one of them;
(d) "Assets" means the Vendor's entire interest (including all of its
right, title, estate and interest) in and to the Petroleum and Natural
Gas Rights, the Leases, the Tangibles, the Geological Information and
the Miscellaneous Interests;
(e) "Benefits and Obligations" means all income, expenses and other
monetary benefits and obligations of every kind and nature accruing,
paid, payable, received or receivable in respect of the Assets
including, without limitation, maintenance, development, capital and
operating costs and production sales proceeds, but specifically
excluding income taxes and Environmental Liabilities;
(f) "Business Day" means any day other than a Saturday, Sunday or
statutory holiday in the Province of Alberta;
(g) "Certificate" means the written certification of a matter or matters
of fact which, if required from a corporation, shall be made by a duly
authorized officer of the corporation on behalf of the corporation and
without personal liability being assumed by such officer;
(h) "Closing" means the conveyance of the Assets by the Vendor to the
Purchaser, the payment of the consideration contemplated in Article 2
of this Agreement and the completion of all other matters incidental
thereto which are contemplated in this Agreement to be completed as at
the Closing Time;
(i) "Closing Date" means the date on which the Vendor receives payment in
full of the outstanding Promissory Notes or such other later date as
the parties may mutually agree;
(j) "Closing Place" means the offices of the Purchaser's Solicitors
located at ▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇ - ▇▇▇ ▇▇▇▇▇▇ ▇.▇., ▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇;
(k) "Closing Time" means 10:00 a.m. on the Closing Date or such earlier or
later time as may be agreed to by the Parties;
(l) "Common Shares" means the common shares in the capital of ▇▇▇▇▇▇▇
International Resources Inc.;
(m) "Consents" means all such consents, waivers, approvals, orders and
authorizations (or registrations, declarations, filings or recordings
with any Government Entities) as may be required on the Vendor's part
with respect to the execution of this Agreement, the Closing or the
performance of any terms and conditions contained in this Agreement;
(n) "Conveyance" means a general conveyance in the form attached hereto as
Schedule "D";
(o) "Counsel" means any barrister, solicitor or attorney or firm thereof
retained by the Vendor or Purchaser as the case may be;
(p) "Court" means the Court of Queen's Bench of the Province of Alberta;
(q) "Effective Time" has the meaning given to it in Section 2.2;
(r) "Environment" means:
(i) air, land or water;
(ii) plant and animal life, including humans;
(iii) any building, structure, machine, other device or tangible
personal or real property; and
(iv) any part or combination of the foregoing and the
interrelationships between or among any two or more of them;
(s) "Environmental Liabilities" means:
(i) all liabilities and obligations related to or arising from any
breach of environmental laws which results in impairment or
damage to the Environment and is caused by the Assets or
operations (or lack thereof) in relation thereto;
(ii) any Abandonment and Reclamation Obligations; and
(iii) all liabilities and obligations related to or arising from,
directly or indirectly, any Release.
(t) "Exchange" means the NASD OTC Bulletin Board;
(u) "GAAP" means generally accepted accounting principles and procedures
adopted from time to time by the Canadian Institute of Chartered
Accountants consistently applied;
(v) "General Conveyance" means a conveyance substantially in the form of
the Conveyance attached as Schedule "D" to this Agreement;
(w) "Geological Information" means, subject to any applicable
confidentiality obligations of the Vendor, all seismic, geological,
geophysical, aeromag and engineering reports and maps, including
reports and interpretations prepared by or on behalf of the Vendor
relating to the information contained in such reports and maps,
relating to or pertinent to the Petroleum and Natural Gas Rights, the
production therefrom or operations therein;
(x) "GOR" means the gross overriding royalty of 2% granted by the Vendor
in favour of Scimitar Hydrocarbons Corporation on December 13, 2004 on
the working interests being conveyed pursuant to this Agreement, which
working interests are specifically set out in Schedule "A";
(y) "Government Entity" means any court or tribunal in any jurisdiction or
any federal, provincial, municipal or other government body, agency,
authority, department, commission, board or instrumentality;
(z) "GST" means the goods and services tax exigible pursuant to the Excise
Tax Act (Canada) with respect to the subject transaction;
(aa) "Interim Period" means the period from and after the date hereof up to
the Closing Time;
(bb) "Lands" means the lands set forth and described in Schedule "A" and
any other lands with which such lands have been unitized, pooled or
otherwise combined and includes the Petroleum Substances within, upon
or under such lands to the extent noted in Schedule "A" together with
the right to explore for, drill for, win, take, remove, recover and
own the same, the right to share in the production of such Petroleum
Substances and the right to share in the proceeds generated by, or the
right to receive payments calculated by reference to the quantity or
value of, such production insofar as and to the extent that such
Petroleum Substances and rights are granted by the Leases;
(cc) "Leases" means collectively the leases, reservations, permits,
licenses or other documents of title by virtue of which the Vendor is
entitled to drill for, win, take, own or remove petroleum, natural gas
or related hydrocarbons, underlying any part of the Lands, including
the Permits;
(dd) "Losses" means, in respect of any matter, any and all claims, demands,
actions, proceedings, causes of action, losses, damages, liabilities,
deficiencies, interest, penalties, fines, and amounts paid in
settlement, costs and expenses of every nature and kind whatsoever
(including, without limitation, all legal fees rendered on a solicitor
and his own client basis and other professional fees and
disbursements) arising directly or indirectly as a consequence of such
matter;
(ee) "Miscellaneous Interests" means all real and personal property, assets
and rights of every nature and kind pertaining to the Petroleum and
Natural Gas Rights, the Leases, the Geological Information and the
Tangibles (other than the Petroleum and Natural Gas Rights, Leases,
Geological Information and the Tangibles per se) including, without
limitation, the following:
(i) all contracts and other documents pertaining to the Petroleum and
Natural Gas Rights, the Leases, the Geological Information and
the Tangibles;
(ii) all files and other records (excluding financial records)
pertaining to the Petroleum and Natural Gas Rights, the Leases,
the Geological Information and the Tangibles;
(iii) all subsisting rights of the Vendor to enter upon, use and
occupy the surface of any of the Lands or any of the lands with
which the Lands have been pooled or unitized or any lands upon
which the Tangibles are located or any lands to be crossed in
order to gain access to any of the Lands or the Tangibles or to
carry out operations on the Lands;
(iv) all subsisting rights to perform operations relating to the
Assets, including without limitation all easements, ▇▇▇▇▇,
pipeline or other Permits, licenses and authorizations;
(v) all geological and engineering data and other information;
(vi) all subsisting rights to enter upon, use and occupy the surface
of any related lands; and
(vii) the wellbores and casing for the ▇▇▇▇▇,
provided that unless otherwise agreed to in writing by the Parties, the
Miscellaneous Interests shall not include agreements, documents or data to the
extent that they are owned or licensed by third parties with restrictions on
their deliverability or disclosure by the Seller or any assignee;
(ff) "Parties" means the parties to this Agreement and "Party" means any
one of them;
(gg) "Permit 04-01" means oil and natural gas Permit 04-01 issued by the
Province of ▇▇▇▇▇▇ ▇▇▇▇▇▇ Island to the Vendor dated August 20, 2004;
(hh) "Permit 04-04" means oil and natural gas Permit 04-04 issued by the
Province of ▇▇▇▇▇▇ ▇▇▇▇▇▇ Island to the Vendor dated August 20, 2004;
(ii) "Permit 02-01" means oil and natural gas Permit 02-01 issued by the
Province of ▇▇▇▇▇▇ ▇▇▇▇▇▇ Island to the Vendor dated August 4, 2004;
(jj) "Permits" means, to the extent that same may exist, all permits,
licenses, approvals, orders, surface leases, crossing agreements, road
crossing approvals, pipeline licenses and any required authorizations,
including but without limitation, authorizations issued by any
government or agency thereof, and required for the continued operation
of the Petroleum and Natural Gas Rights, Leases and Tangibles,
including Permit 04-01, Permit 04-04 and Permit 02-01;
(kk) "Permitted Encumbrances" means:
(i) Easements: Easements, rights of way, servitudes or other similar
rights in land including, without limitation, rights of way and
servitudes for highways and other roads, railways, sewers,
drains, gas and oil pipelines, gas and water mains, electric
light, power, telephone, telegraph or cable television conduits,
poles, wires and cables;
(ii) Governmental Right to Terminate: The right reserved to or vested
in any Government Entity or other public authority by the terms
of any instrument or statutory provision to terminate any of the
Leases or to require annual or other periodic payments as a
condition to the continuance thereof;
(iii) Taxes and Production Rates: The power of any Government Entity
or other public authority to levy taxes on the Assets or the
income or revenue therefrom and governmental requirements as to
production rates on the operation of any property or otherwise
affecting the value of any property;
(iv) Agreement Terms and Conditions: The terms and conditions of the
Leases and any other agreements relating to the Assets
(including, without limitation, any agreements relating to
pooling or unitization);
(v) Governmental Controls and Regulations: 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;
(vi) Governmental Liens: Undetermined or inchoate liens incurred or
granted in the ordinary course of business to a public utility,
municipality or Government Entity in connection with operations
conducted with respect to the Assets;
(vii) Non-Governmental Liens: Undetermined or inchoate liens incurred
or created as security in favour of persons conducting operations
in relation to the Assets for the Vendor's share of the costs and
expenses associated with such operations including, without
limitation, undetermined or inchoate mechanics', builders' and
materialmen's liens in respect of services rendered or goods
supplied;
(viii) Crown Reservations: The reservations, limitations, provisos and
conditions contained in any original grants from the Crown of any
of the Lands or interests therein and statutory exceptions to
title;
(ix) Penalties and Forfeitures: Provisions for penalties and
forfeitures under agreements as a consequence of
non-participation in operations;
(x) Royalties: The GOR and all crown royalties payable under the
Permits; and
(xi) any other encumbrance, burden, circumstance, matter or thing
disclosed in any Schedule hereto;
(ll) "Person" means any individual, corporation, body corporate,
partnership, joint venture, association, trust, Government Entity, or
other legal entity;
(mm) "Petroleum and Natural Gas Rights" means the Vendor's working and
royalty interests in and to the Lands and the Leases, including all
petroleum, natural gas and hydrocarbons within, upon or under such
lands, as such interests are set forth in Schedule "A" attached
hereto;
(nn) "Petroleum Substances" means petroleum, natural gas and related
hydrocarbons and any other substances, whether gaseous, liquid or
solid and whether hydrocarbons or not, associated therewith which are
granted under and by virtue of the Leases insofar only as they pertain
to the Lands;
(oo) "Promissory Notes" means collectively the promissory note from the
Purchaser in favour of the Vendor dated September 23, 2004 in an
aggregate principal amount of $168,561.74 and the promissory note from
the Purchaser in favour of the Vendor dated September 23, 2004 in an
aggregate principal amount of $71,145.57;
(pp) "Purchase Price" means the purchase price for the Assets as set forth
in Article 2 of this Agreement;
(qq) "Purchaser's Representations and Warranties" means the Purchaser's
representations and warranties as set forth in Article 5;
(rr) "Purchaser's Solicitor" means ▇▇▇▇▇ & Company;
(ss) "Release" means any unauthorized release, spill, emission, leaking,
pumping, injection, deposit, disposal, discharge, dispersal, leaching
or migration into the Environment or into or out of any of the Assets;
(tt) "Releases and Discharges" means all such general and specific releases
and discharges, in registerable form where applicable, as may be
required with respect to any mortgages, liens, charges, pledges, or
other similar financial encumbrances affecting the Assets;
(uu) "Representations and Warranties" means all or any of the Vendor's
Representations and Warranties and the Purchaser's Representations and
Warranties;
(vv) "Rights of First Refusal" means rights of first refusal, pre-emptive
rights of purchase or similar rights whereby a third party has the
right to acquire or purchase all or any of the Assets as a consequence
of the Vendor having agreed to sell and convey the Assets to the
Purchaser;
(ww) "Securities" means the Common Shares and the Warrants delivered in
satisfaction of the Purchase Price and the Common Shares issuable upon
the exercise of the Warrants;
(xx) "September Agreement" means the agreement dated September 23, 2004
between the Vendor and the Purchaser, whereby the Vendor agreed to
assign, transfer and convey to the Purchaser an undivided 20% working
interest in Permit 04-01 and Permit 04-04 and the Purchaser agreed to
assume certain abandonment costs and liabilities in exchange for the
Promissory Notes;
(yy) "Specific Conveyances" means all such further and specific conveyances
and other documentation as may be required in addition to the General
Conveyance in order to convey the Assets to, or otherwise vest legal
(to the extent the Vendor has legal title) and beneficial title
thereto in, the Purchaser;
(zz) "Tangibles" means all tangible depreciable property and assets situate
in, on or about the Lands, appurtenant thereto or used or intended for
use in connection therewith or with the production, processing,
transmission or treatment of Petroleum Substances, or operations
thereon or relative thereto or appurtenant to or used in connection
with all producing or shut-in ▇▇▇▇▇ located on the Lands or lands with
which the Lands have been pooled or unitized including the oil and/or
natural gas producing or shut-in ▇▇▇▇▇ or a water source or injection
▇▇▇▇▇;
(aaa) "Title Defect" means any defect or deficiency in the title of the
Vendor in and to any of the Petroleum and Natural Gas Rights that
could, on a reasonable assessment thereof, cause a reasonable buyer to
refuse to purchase such rights, but notwithstanding anything to the
contrary herein, specifically excludes:
(i) any builders' liens or other financial encumbrance created by,
through or under the Vendor;
(ii) the Permitted Encumbrances;
(iii) any Lands which have expired or been terminated between the date
hereof and the Time of Closing;
(iv) any missing or unsigned documents in the chain of the Vendor's
title to the Assets where:
A. such document is not reasonably required to confirm the
creation, establishment or maintenance of such title or the
current status of title can be confirmed with reasonable
certainty independently through search of public records;
B. such document represents a reduction of the Vendor's
interest therein to Lands reflected in Schedule "A"; or
C. the Vendor or its predecessor's interest in the Assets being
a beneficial interest rather than a legal interest;
(bbb) "U.S. Securities Act" means the United States Securities Act of 1933;
(ccc) "Vendor's Representations and Warranties" means the Vendor's
representations and warranties as set forth in Article 5;
(ddd) "Vendor's Solicitor" means ▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇ LLP;
(eee) "Warrants" means the Common Share purchase warrants in ▇▇▇▇▇▇▇
International Resources Inc., with each Warrant entitling the holder
thereof to acquire one (1) Common Share at an exercise price of $0.85
USD per share for a period of twelve (12) months from the date of
issuance;
(fff) "▇▇▇▇▇" means all producing, suspended, shut-in, abandoned, water
source, observation, disposal, storage, injection or other ▇▇▇▇▇
located upon or bottoming under the Lands or otherwise directly
relating to the Vendor's operations in relation thereto and includes,
without limitation, the ▇▇▇▇▇ drilled by the Vendor described in
Schedule "B";
(ggg) "USD" means United States dollars; and
(hhh) "2003 Private Placement" means the private placement completed by the
Purchaser on or about October 31, 2003 pursuant to which the Purchaser
distributed to seven (7) qualified investors 4,000,000 units at a
price of $0.25 per unit, each unit consisting of one Common Share of
the Purchaser and one Common Share purchase warrant entitling the
holder thereof to acquire an additional common share of the Purchaser
at a price of $0.40 each until September 30, 2004.
1.2 Incorporation of Schedules
The following schedules are attached hereto, form a part hereof and are
incorporated herein as fully as though contained in the main body of this
Agreement:
Schedule "A" - Legal Description of Lands
Schedule "B" - ▇▇▇▇▇
Schedule "C" - Leased Assets
Schedule "D" - General Conveyance
Schedule "E" - Registration Rights Agreement
Wherever any provisions of any Schedule to this Agreement conflicts with any
provisions of the body of this Agreement, the provisions of the body of this
Agreement shall prevail. References herein to a Schedule shall be a reference to
a Schedule to this Agreement. References in any Schedule to this Agreement shall
mean a reference to this Agreement. Reference in any Schedule to another
Schedule shall mean a reference to a Schedule to this Agreement.
1.3 Article, Clause, Subclause, Paragraph and Subparagraph References
A reference in the main body of this Agreement or in any Schedule to an article,
clause, subclause, section, subsection, paragraph or subparagraph shall be a
reference to an article, clause, subclause, section, subsection, paragraph or
subparagraph within the main body of this Agreement or such Schedule, as
applicable.
1.4 Statutory References
A reference in the main body of this Agreement or in any Schedule to a statute
shall include and shall be deemed to be a reference to both the statute and all
associated regulations, all amendments made thereto and in force from time to
time and any statute or regulation that may be passed which has the effect of
supplementing or superseding the aforesaid statute or regulations.
1.5 Construction
Except as otherwise provided for herein, "this Agreement", "hereto", "hereof",
"hereby", "hereunder", "herein" and similar expressions refer to this Agreement
as a whole, including all Schedules attached hereto, and not to any particular
article, clause, subclause, section, subsection, paragraph, subparagraph or
other portion hereof.
1.6 Headings
The headings of articles, clauses, subclauses, sections, subsections, paragraphs
and subparagraphs in this Agreement are inserted for convenience of reference
only and shall not affect the construction of the provisions thereof.
1.7 Gender and Number
This Agreement shall be read with all changes in gender and number as may be
required by the context.
1.8 Knowledge and Awareness
Where in this Agreement a representation or warranty is made on the basis of a
Party's knowledge or awareness, such knowledge or awareness consists only of the
actual knowledge or awareness of the current officers of such Party directly
responsible for the matter in question and does not include the knowledge or
awareness of any other person.
1.9 Currency and Mode of Payment
Except to the extent indicated otherwise, all dollar amounts referenced in this
Agreement are expressed in Canadian dollars and, except as otherwise
specifically provided, all payments to be made hereunder are to be made by way
of certified cheque or bank draft issued by a Canadian chartered bank or other
such transfer of immediately available funds as may be acceptable to the Vendor.
ARTICLE 2
PURCHASE AND SALE, PAYMENT, GST AND ALLOCATION
2.1 Purchase and Sale of the Assets
Subject to the terms and conditions of this Agreement and on the basis of and in
reliance upon the representations, warranties, covenants and agreements set
forth herein, the Vendor agrees to sell, assign, transfer and convey to the
Purchaser and the Purchaser agrees to purchase from the Vendor the Assets to
have and to hold the same absolutely, together with all benefits and advantage
to be delivered therefrom, subject to the respective terms and conditions of the
Leases.
2.2 Transfer and Assignment
The purchase and sale as contemplated in Section 2.1 shall be effective as of
the Closing Date. Possession and beneficial ownership of, and risk of loss and
title to, the Assets on an as is basis shall pass from the Vendor to the
Purchaser on and be effective as at the Closing Time (the "Effective Time").
2.3 Purchase Price
The Purchase Price for the Assets shall be $1,230,000.00, payable on the Closing
Date by the Purchaser to the Vendor. The Purchase Price shall be satisfied in
full by the Purchaser issuing and delivering the following:
(a) the issuance of 2,500,000 Common Shares having a deemed value of U.S.
$0.40 per share, which Common Shares shall be eligible for trading on
the Exchange upon the effectiveness of one or more registration
statements covering such Common Shares; and
(b) the issuance of 500,000 Warrants.
2.4 GST
The Purchaser shall remit to the Vendor on Closing a cheque in the amount of
$700.00 dollars representing the Goods and Services Tax applicable to that
portion of the Purchase Price allocated to the Tangibles in accordance with the
Excise Tax Act (Canada).
2.5 Allocation
The Purchase Price shall, in the first instance, be allocated among the Assets
as follows:
Petroleum and Natural Gas Rights $1,051,437.26
Geological Information $168,561.74
Tangibles $10,000.00
Miscellaneous Interests ($1.00)
-------------
Total: $1,230,000.00
The Parties agree that any further allocation or breakdown of the Purchase Price
to or among specific Assets for the purposes of the Income Tax Act (Canada)
shall be carried out on a proportionate basis having regard to their relative
fair market values as at the Effective Time and as determined by the Parties
acting reasonably.
2.6 Extension of Promissory Notes
Notwithstanding the terms and provisions set out in the Promissory Notes, the
Vendor hereby agrees that the payment date under the Promissory Notes is hereby
extended to the date that is the earlier of the Closing Date or February 23,
2005. Furthermore, the Vendor agrees that it will not commence any enforcement
action against the Purchaser to realize on the Promissory Notes until after
February 23, 2005.
ARTICLE 3
CLOSING TIME AND INTERIM PERIOD
3.1 Closing Time
If Closing occurs, the transfer and conveyance of the Assets shall be effective
as of the Effective Time. Possession of the Assets shall not pass to the
Purchaser until the Closing Time, and the Vendor shall maintain the Assets on
behalf of the Purchaser during the Interim Period pursuant to the provisions of
Section 3.2 hereof.
3.2 Interim Period
(a) Maintenance of Assets: During the Interim Period, the Vendor (to the
extent the nature of its interest permits and subject to the terms of
all agreements applicable to the Assets and the Vendor) shall:
(i) Maintain Assets: Physically maintain the Assets in a proper and
prudent manner in accordance with generally accepted oil and gas
industry practices; and
(ii) Perform Leases and Other Agreements: Perform and comply with all
covenants and conditions contained in the Leases and all other
agreements relating to the Assets.
(b) Conduct of Business: During the Interim Period, the Vendor shall not,
without the prior written consent of the Purchaser:
(i) Assume New Obligations or Commitments: Enter into any new
agreement or commitment other than in the ordinary course of
business, with respect to the Assets;
(ii) Surrender or Abandon Assets: Surrender or abandon any of the
Assets including any abandonment of ▇▇▇▇▇ located on the Lands,
or release or abandon any portion of the Leases except in
compliance with any abandonment or reclamation orders or
directions as may be issued by a Government Entity in respect of
any of the Assets and which is applicable to a period up to and
including the Closing Date;
(iii) Amend, Terminate or Negotiate Agreements: Amend or terminate any
material agreement or enter into any new agreement adversely
affecting the Assets;
(iv) Dispose of Assets: Sell, transfer, encumber or otherwise dispose
of any of the Assets, or any part thereof other than to the
extent required to comply with any Rights of First Refusal; or
(v) Grant Encumbrances: Grant a security interest or any other
encumbrance with respect to any of the Assets.
3.3 No Action
During the Interim Period, the Purchaser shall not (unless it has the prior
written consent of the Vendor or the Court) propose to the Vendor, or request
that the Vendor propose to others, the conduct of any operations or the exercise
of any option respecting the Assets.
During the Interim Period, the Vendor shall not directly or indirectly, solicit
or encourage any inquiries or proposals, or enter into any discussions or
negotiations with any third party for the purchase and sale of the Assets nor
accept any offers to sell the Assets in respect thereof.
ARTICLE 4
CLOSING
4.1 Time and Location
Closing shall take place at the Closing Place at the Closing Time. The parties
agree that the Closing shall only occur upon the Vendor receiving payment in
full of the outstanding Promissory Notes. Unless an extension of time is granted
by the Vendor to the Purchaser, if payment of the Promissory Notes has not
occurred on or before February 23, 2005, then this Agreement shall be deemed to
have been terminated provided, however, that any such termination shall not
reduce or affect the Purchaser's obligations under the Promissory Notes.
4.2 Vendor Documentation
The Vendor shall cause the following documents (fully authorized and executed,
where applicable, by all appropriate Parties except the Purchaser) to be
delivered to the Purchaser at Closing:
(a) Officer's Certificate: A certificate of an officer of the Vendor
stating that all the Vendor's Representations and Warranties set forth
hereto are true and correct as at the Closing Date;
(b) Directors' Resolution: A certified copy of a resolution of the
Vendor's Board of Directors authorizing the execution and delivery of
this Agreement and the completion of the sale of the Assets in
accordance with the provisions of this Agreement;
(c) Written Consents or Approvals: Documentation in form and substance
satisfactory to the Purchaser, acting reasonably, of any Government
Entity having jurisdiction in connection with the subject transactions
contemplated herein;
(d) Assignments, Transfers, etc: All specific assignments, registerable
transfers, novation agreements, trust agreements and other instruments
which may be required to convey the Vendor's interest in the Assets to
the Purchaser, unless and to the extent that the Purchaser allows the
Vendor to deliver such documents to the Purchaser at a later date, and
the Purchaser hereby agrees to act reasonably in connection with any
such request from the Vendor;
(e) General Conveyance: A General Conveyance, in the form attached as
Schedule "D", duly executed by the Vendor;
(f) Registration Rights Agreement: A Registration Rights Agreement, in the
form attached hereto as Schedule "E", duly executed by the Vendor;
(g) Originals: Originals of the Vendor's records, files (not including
financial records), reports and data pertaining to the Assets, insofar
as such delivery is permitted and required hereunder, unless and to
the extent that the Purchaser agrees to allow the Vendor to deliver
such records, files, reports and data at a later date, and the
Purchaser hereby agrees to act reasonably in connection with any such
request from the Vendor;
(h) Receipts: Receipts in favour of the Purchaser acknowledging the
consideration contemplated in Section 2.3; and
(i) such other documents as may be specifically required hereunder or as
may be reasonably requested by the Purchaser upon reasonable notice to
the Vendor.
4.3 Purchaser Documentation
The Purchaser shall cause the following documents (fully authorized and
executed, where applicable, by all appropriate Parties except the Vendor) to be
delivered to the Vendor at or prior to Closing:
(a) Share Certificates: Share certificate(s) representing 2,500,000 Common
Shares;
(b) Warrant Certificates: Warrant certificate(s) representing 500,000
Warrants;
(c) Acknowledgement of the GOR: A duly executed acknowledgement of the
existence of the GOR and assignment thereof by Scimitar Hydrocarbons
Corporation to Grand Bow Petroleum Limited;
(d) Officer's Certificate: A certificate of an officer of the Purchaser
certifying that the Purchaser's Representations and Warranties are
true in all material respects at the Closing Time;
(e) Directors' Resolution: A certified copy of a resolution of the Board
of Directors of the Purchaser authorizing the execution and delivery
of this Agreement and the completion of the purchase of the Assets in
accordance with the provisions of this Agreement, and authorizing the
issuance of Common Shares and Warrants to the Vendor;
(f) Written Consents or Approvals: Documentation in form and substance
satisfactory to the Vendor, acting reasonably, of any Government
Entity having jurisdiction in connection with the subject transactions
contemplated herein;
(g) General Conveyance: A General Conveyance, in the form attached as
Schedule "D", duly executed by the Purchaser;
(h) Registration Rights Agreement: A Registration Rights Agreement, in the
form attached hereto as Schedule "E", duly executed by the Purchaser;
(i) Cheque: A cheque in the full amount of the Goods and Services Tax
applicable to that portion of the Purchase Price allocated to the
Tangibles as set forth in Section 2.5 hereof, made payable to the
Vendor;
(j) 2003 Private Placement Waivers: A certified list of the seven (7)
investors under the 2003 Private Placement and executed waivers from
investors under the 2003 Private Placement, holding at least 75% of
the securities purchased under the 2003 Private Placement, waiving the
failure of the Purchaser to file a registration statement by October
31, 2003 as required by the terms of the 2003 Private Placement; and
(k) such other documents as may be specifically required hereunder or as
may be reasonably requested by the Vendor upon reasonable notice to
the Purchaser.
4.4 Vendor's Closing Conditions
The Vendor's obligation to complete the transactions contemplated herein is
subject to the satisfaction at or prior to the Closing Time of the following
conditions precedent:
(a) Purchaser's Representations and Warranties are True: All of the
Purchaser's Representations and Warranties shall be true and correct
in all material respects at and as of the Closing Time and the
Purchaser shall furnish a Certificate dated on the Closing Date,
stating that the representations and warranties contained in Article 5
hereof, are true and correct in all respects as at the Closing Time;
(b) Performance by Purchaser: The Purchaser shall have performed and
satisfied all covenants required herein to be performed and satisfied
by it at or prior to the Closing Time in all material respects;
(c) Legal Proceedings: There shall be no legal proceedings initiated
against the Purchaser or initiated or threatened by a third party
against the Purchaser of which the Purchaser is actually aware, in
connection with the Common Shares or Warrants or any portion thereof;
(d) Payment of Promissory Notes: The Purchaser shall have fully paid to
the Vendor all amounts to the Vendor pursuant to the Promissory Notes;
and
(e) Delivery of Documents: The Purchaser shall deliver to the Vendor all
documents and materials satisfying the requirements of and set out in
Section 4.3.
4.5 Waiver
The conditions precedent as set forth in Section 4.4 hereof shall be for the
benefit of the Vendor, and may, without prejudice to any of the rights of the
Vendor hereunder, be waived by it in writing, in whole or in part, at any time,
at or before the Closing Date or such other date as hereinbefore set forth. In
the event that the conditions precedent as set forth in Section 4.4 hereof shall
not be complied with, or waived by the Vendor at or before the Closing Date or
such other date as hereinbefore set forth, the Vendor may terminate this
Agreement by written notice to the Purchaser and, in such event, the Purchaser
and the Vendor shall be released from all other obligations hereunder.
4.6 Purchaser's Closing Conditions
The Purchaser's obligation to complete the transactions contemplated herein is
subject to the satisfaction at or prior to the Closing Time of the following
conditions precedent:
(a) Vendor's Representations and Warranties are True: All of the Vendor's
Representations and Warranties shall be true and correct in all
material respects at and as of the Closing Time and the Vendor shall
furnish a Certificate dated on the Closing Date, stating that the
Representations and Warranties contained in Article 5 hereof, are true
and correct in all respects as at the Closing Time;
(b) Alterations to the Assets: No substantial damage to or alteration in
the Assets, or any part of portion thereof, save as shall have been
approved in writing by the Purchaser, shall have occurred between the
date of this Agreement and the Closing Date which, in the Purchaser's
opinion, acting reasonably, would materially effect the value of the
Assets;
(c) Free & Clear Title: The Assets shall be free of any and all
encumbrances, liens, charges, and demands of whatsoever nature save
and except lessor royalties, the Permitted Encumbrances and other
encumbrances acceptable to the Purchaser, acting reasonably;
(d) Discharges and Releases: The Vendor shall deliver or cause to be
delivered to the Purchaser discharges or releases, in registerable
form to the extent registration is possible, satisfactory to the
Purchaser's Counsel, acting reasonably, of or relative to all
undertakings, assignments and security granted by the Vendor, or
otherwise howsoever secured with respect to the Assets provided that a
"no interest" letter from the Vendor's bankers holding any such
undertakings or security shall suffice with respect thereto;
(e) Legal Proceedings: There shall be no legal proceedings initiated
against the Vendor or initiated or threatened by a third party against
the Vendor of which the Vendor is actually aware, in connection with
the Assets or any part or portion thereof;
(f) Contractual Commitments: Between the date of this Agreement and the
Closing Date, no agreement or commitment shall have been entered into
by the Vendor pertaining to the Assets and no variations of existing
commitments or transactions pertaining to the Assets, or any portion
thereof, shall have been made or effected by the Vendor, other than
those entered into in the ordinary course of business pursuant to
Section 3.2(b)(i) hereof, except with the prior written consent of the
Purchaser or as otherwise contemplated in this Agreement hereof; and
(g) Delivery of Documents: The Vendor shall deliver to the Purchaser all
documents and materials satisfying the requirements of Section 4.2
hereof.
4.7 Waiver
The conditions precedent as set forth in Section 4.6 hereof shall be for the
benefit of the Purchaser, and may, without prejudice to any of the rights of the
Purchaser hereunder, be waived by it in writing, in whole or in part, at any
time, at or before the Closing Date or such other date as hereinbefore set
forth. In the event that the conditions precedent as set forth in Section 4.6
hereof shall not be complied with, or waived by the Purchaser at or before the
Closing Date or such other date as hereinbefore set forth, the Purchaser may
terminate this Agreement by written notice to the Vendor and, in such event, the
Purchaser and the Vendor shall be released from all other obligations hereunder.
4.8 Commercially Reasonable Efforts
All Parties hereto covenant and agree with the other Party to use all reasonable
efforts until the Closing Date to take or refrain from taking any actions with
the intent that the conditions precedent as set forth in Sections 4.4 and 4.6
above shall be satisfied.
4.9 Termination
In the event this Agreement is terminated as a result of the conditions
precedent in Sections 4.4 and 4.6 hereof not being satisfied, all Parties hereto
shall be released from all obligations hereunder and shall have no further
recourse against the other and each Party hereto shall take all reasonable
actions to return the other Parties to the position relative to the Assets which
such Party occupied prior to the execution hereof.
4.10 Post-Closing Matters
If Closing occurs, the Vendor undertakes to promptly attend to the registration
or circulation to all relevant third parties of all documentation contemplated
herein to be registered, circulated or executed on a post-closing basis
(including, without limitation, the Releases and Discharges and Specific
Conveyances, such as well transfers) and will, if requested, provide the
Purchaser with written monthly reports concerning the registration, circulation
or execution status of all such documentation, together with any supporting
material that the Purchaser may reasonably request.
4.11 Conditions Subsequent
The purchase and sale of the Assets shall be subject to the following conditions
subsequent, which the Parties hereby undertake to complete as soon as reasonably
possible following the Closing Date and upon the Promissory Notes being paid in
full:
(a) subject to the Purchaser providing the necessary corporate bonds or
other indemnities as required by any applicable Governmental Entity,
the Vendor shall, at its sole cost, execute and file all necessary
documentation to properly effect the transfer of the working interests
being conveyed by this Agreement to the Purchaser, including without
limitation, all necessary filings with applicable governmental bodies;
(b) subject to the Purchaser providing the necessary corporate bonds or
other indemnities as required by any applicable Governmental Entity,
the Vendor shall, at its sole cost, execute and file all necessary
documentation to properly effect the transfer of the interests being
conveyed by the September Agreement to the Purchaser, including
without limitation, all necessary filings with applicable governmental
bodies;
(c) the Purchaser shall fully perform and comply with its obligations
pursuant to the Registration Rights Agreement; and
(d) within ninety (90) days following the Closing Date, the Purchaser
shall, at its sole cost, file, in accordance with applicable
securities laws, and diligently pursue an application with the
securities regulatory authorities for the Purchaser to become a
"reporting issuer" in at least one jurisdiction in Canada, and in the
event that such application is unsuccessful, the Purchaser will use
commercially reasonable efforts to make such exemption applications as
may be necessary in order to allow the Vendor to sell the Securities
free of any resale restrictions under applicable Canadian securities
legislation. The Purchaser shall permit the Vendor and the Vendor's
Solicitor to review and comment on all applications made pursuant to
this Section 4.11(d).
ARTICLE 5
REPRESENTATIONS AND WARRANTIES
5.1 Vendor
The Vendor hereby represents and warrants to the Purchaser as of the date hereof
and acknowledges that the Purchaser is relying on same in connection with the
transaction contemplated by this Agreement, as follows:
(a) Standing: It is duly organized, validly existing and in good standing
under the laws of its jurisdiction of incorporation and duly
registered and in good standing under the laws of each jurisdiction in
which the Assets are located;
(b) Requisite Authority: The Vendor has good right, full power and
absolute authority to bargain, sell, transfer and assign the Assets
for the purposes and in the manner contemplated by this Agreement and
the consummation of the transactions contemplated herein have been
duly authorized by all necessary corporate action on its part;
(c) No Conflicts: The execution and delivery of this Agreement and each
and every agreement and instrument to be executed and delivered
hereunder and the consummation of the transactions contemplated herein
will not violate, nor be in conflict with any judgment, decree, law,
order, statute, rule or regulation applicable to it or by which it is
bound or its constating documents, bylaws or other governing
documents;
(d) Execution and Enforceability: This Agreement has been duly executed
and delivered by it, all other agreements and documents required
thereunder to be executed and delivered by it will be duly executed
and delivered by it and this Agreement does, and such other agreements
and documents will, constitute legal, valid and binding obligations
enforceable against it in accordance with their respective terms
subject to the qualifications that such enforceability may be limited
by bankruptcy, insolvency, liquidation, reorganization or other laws
of general application relating to or affecting creditors' rights and
that equitable remedies are discretionary and may not be ordered;
(e) No Proceedings or Investigations: The Vendor is not a party to any
action, suit or other legal, administrative or arbitration proceeding
or government investigation, actual or threatened, which has or could
have a material adverse affect on the Assets or the subject
transaction and, to the best of its knowledge, information and belief,
there is no particular circumstance, matter or thing which could
reasonably be anticipated to give rise to any such action, suit or
other legal, administrative or arbitration proceeding or government
investigation;
(f) Material Default: The Vendor has not received notice of any material
default under any agreement affecting the Assets;
(g) Warrant Title: The Vendor does not warrant title to the Lands or
Leases but does represent and warrant that it has not encumbered or
alienated the Lands or Leases or any interest therein except for the
Permitted Encumbrances and, at the Closing Date, the Assets will be
free and clear of all liens, mortgages, pledges, encumbrances, adverse
claims, demands and royalties created by, through or under the Vendor,
except the Permitted Encumbrances;
(h) Use and Benefit: Subject to the rents, covenants, conditions and
stipulations in the Leases reserved and contained and on the lessee's
or holder's part thereunder to be paid, performed and observed, the
Purchaser may enter into and upon, and hold and enjoy the Assets for
the residue of their respective terms and all renewals or extensions
thereof for its own use and benefit without any lawful interruption of
or by the Vendor or any other person whomsoever claiming or to claim
by, through or under the Vendor;
(i) Authorization for Expenditures: Except as may be specifically set
forth in this Agreement or otherwise disclosed to the Purchaser in
writing, the Vendor has not received or prepared any authorizations
for expenditures pursuant to which expenditures are or may be made,
nor any other financial commitments which are now outstanding or due,
or hereafter may become due in respect of the Assets or operations in
respect thereof for which the Purchaser shall become liable to pay;
(j) Reduction in Value: The Assets are not subject to reduction by virtue
of the conversion or other alteration of the interest of any third
party under existing agreements pertaining to the Assets, except as
may be specifically set forth in this Agreement;
(k) Taxes and Assessment: 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
and/or receipt of proceeds therefrom payable to the Closing Date and
all prior years have been properly paid;
(l) Compliance: In respect of that portion of the Assets which the Vendor
operates, all laws, regulations and orders of all Government Entities
having jurisdiction over the Assets have been materially complied with
by the Vendor and the Vendor has not received notice of and is
otherwise not aware of any material default or material non-compliance
of any law, regulation or order of any governmental agency having
jurisdiction over the Assets, and in respect of that portion of the
Assets which the Vendor does not operate, to the best of the
knowledge, information and belief of the Vendor, all laws, regulations
and orders of all Government Entities having jurisdiction over the
Assets have been materially complied with;
(m) Full Disclosure: The Vendor has made available to the Purchaser all
material information within the Vendor's possession, and has not
knowingly withheld any such information from the Purchaser, relevant
to environmental damage or contamination or other environmental
problems pertaining to the Assets;
(n) ▇▇▇▇▇: To the best of the knowledge, information and belief of the
Vendor, each well has been drilled and, if completed, it has been
completed, operated and produced in accordance with good oil and gas
field practices and in compliance with all applicable rules and
regulations;
(o) Production Penalty: The Vendor has not received notice that the ▇▇▇▇▇
are subject to a production penalty of any nature;
(p) Abandonment of ▇▇▇▇▇: The Vendor has not agreed to abandon any ▇▇▇▇▇
which at the Closing Date were not abandoned at a cost for which the
Vendor is or the Purchaser may be liable in association with the
abandonment of such Well;
(q) No Production: There has been no production of Petroleum Substances
from the ▇▇▇▇▇ on the Lands during the term of the Permits;
(r) No Rights of First Refusal: The Vendor has not granted any Rights of
First Refusal or other pre-emptive rights relating to the Assets;
(s) Rental Fees: All rental fees as set out in the Permits have been paid
to the Crown with respect to the Lands and all filings in respect of
such rental fees have been properly made in accordance with applicable
legislation or agreement
(t) Royalties: In respect of the Lands which the Vendor does not operate,
to the best of the knowledge, information and belief of the Vendor,
all royalties have been paid to the Crown, lessors and other holders
of royalties and similar interests with respect to all production or
sale of Petroleum Substances from the Lands and will be paid until the
Closing Date and all filings in respect of such royalties have been
properly made in accordance with applicable legislation or agreement;
(u) Tangibles: In respect of that portion of the Assets which the Vendor
does not operate, to the best of the knowledge, information and belief
of the Vendor, the Tangibles are in good and operable conditions and
are satisfactory for their intended use, in accordance with good oil
and natural gas field practices;
(v) No Facilities: There are no production, gathering, processing,
treating, transportation or storage facilities on the Lands;
(w) Proceeds: The Vendor has not assigned or in any way restricted its
rights to receive the proceeds from the sale of Petroleum Substances
produced from the Assets;
(x) Employment: The Vendor is not a party to any contract of employment
which would require the Purchaser to employ personnel previously in
the employment of the Vendor relating to the Assets;
(y) Operating or Service Agreements: To the best of the knowledge,
information and belief of the Vendor there are no operating or service
agreements outside of the ordinary course of business affecting or
pertaining to the operation and servicing of the Assets pursuant to
which the Purchaser may become liable;
(z) Environmental Liability: To the best of the knowledge, information and
belief of the Vendor, there are no claims relating to the Lands for
loss, liability or damages arising from Environmental Liabilities;
(aa) Tax Residency: The Vendor is not a non-resident of Canada within the
meaning and for the purposes of the Income Tax Act (Canada);
(bb) Bonds and Indemnities: The only bonds or indemnities granted by the
Vendor in connection with the Assets, as required by any applicable
Governmental Entity is as follows:
(i) a promissory note dated August 17, 2004 in the amount of
$80,966.25 to the Province of ▇▇▇▇▇▇ ▇▇▇▇▇▇ Island that will
become payable if the work commitments are not met pursuant to
Permit 04-04;
(ii) a promissory note dated August 17, 2004 in the amount of
$107,548.00 to the Province of ▇▇▇▇▇▇ ▇▇▇▇▇▇ Island that will
become payable if the work commitments are not met pursuant to
Permit 04-01;
(iii) a promissory note dated July 9, 2002 in the amount of $31,000.00
to the Province of ▇▇▇▇▇▇ ▇▇▇▇▇▇ Island that will become payable
if the work commitments are not met pursuant to Permit 02-01; and
(iv) a promissory note dated June 18, 2003 in the amount of $57,299.00
to the Province of ▇▇▇▇▇▇ ▇▇▇▇▇▇ Island with respect to the
abandonment and reclamation of the Seaview No. 1 well;
(cc) Violation of Laws: To the best of the knowledge, information and
belief of the Vendor, the entering into of this Agreement by the
Vendor and the completion by the Vendor of the purchase of the Assets
pursuant hereto will not result in the violation of any law of the
Province of Alberta or the laws of Canada applicable therein.
5.2 Purchaser's Representations and Warranties
The Purchaser hereby represents and warrants to the Vendor as of the date hereof
and acknowledges that the Vendor is relying on same in connection with the
transaction contemplated by this Agreement, as follows:
(a) Standing: The Purchaser is duly organized, validly existing and in
good standing under the laws of its jurisdiction of incorporation, and
is extra-provincially registered and in good standing in each province
where the Assets are located;
(b) Requisite Authority: The Purchaser has all requisite capacity, power
and authority to enter into this Agreement and the Registration Rights
Agreement and to perform its obligations under each such agreement and
the execution and delivery of this Agreement and the Registration
Rights Agreement and the consummation of the transactions contemplated
under each such agreement including, without limitation, the issuance
of the securities as described in Section 2.3 hereof, have been duly
authorized by all necessary corporate action required on the part of
the Purchaser;
(c) No Conflicts: The execution and delivery of this Agreement and each
and every agreement and instrument to be executed and delivered
thereunder including, without limitation, the Registration Rights
Agreement and the consummation of the transactions contemplated herein
and therein will not violate, nor be in conflict with, the performance
of the provisions of any agreement, instrument, permit or authority to
which the Purchaser is a party or by which the Purchaser is bound, any
judgment, decree, law, order, statute, rule or regulation applicable
to the Purchaser or by which the Purchaser is bound or the Purchaser's
constating documents, bylaws or other governing documents;
(d) Execution and Enforceability: This Agreement has been duly executed
and delivered by the Purchaser, all other agreements and documents
required thereunder to be executed and delivered by the Purchaser will
be duly executed and delivered by it and this Agreement does, and such
other agreements and documents will, constitute legal, valid and
binding obligations enforceable against the Purchaser in accordance
with their respective terms subject to the qualifications that such
enforceability may be limited by bankruptcy, insolvency, liquidation,
reorganization or other laws of general application relating to or
affecting creditors' rights and that equitable remedies are
discretionary and may not be ordered;
(e) No Proceedings or Investigations: The Purchaser is not party to any
action, suit or other legal, administrative or arbitration proceeding
or government investigation, actual or threatened, which has or could
have a material adverse affect on its assets or the value of the
Common Shares or the subject transaction and, to the best of its
knowledge, there is no particular circumstance, matter or thing which
could reasonably be anticipated to give rise to any such action, suit
or other legal, administrative or arbitration proceeding or government
investigation;
(f) Share Capital: The authorized capital of the Purchaser consists of
200,000,000 Common Shares having a par value of $0.001 per share, of
which 26,145,000 Common Shares are currently issued and outstanding as
fully paid and non-assessable;
(g) Options: No individual, firm, corporation or other person holds any
securities convertible into Common Shares or has any agreement,
warrant, option, right or privilege capable of becoming an agreement,
warrant, option or right for the purchase of any Common Shares other
than the 3,250,000 Common Share purchase warrants that are outstanding
and the 3,025,000 options to purchase Common Shares that are
outstanding;
(h) Minute Book: The minute book materials of the Purchaser provided to
the Vendor's Solicitor contain the constating documents of the
Purchaser, or accurate copies thereof, and contain the minutes of all
meetings and all resolutions of the directors and shareholders of the
Purchaser;
(i) Issuance of Common Shares: The issuance of the 2,500,000 Common Shares
has been duly and validly authorized by all requisite corporate action
on the part of the Purchaser and all requisite regulatory approvals
for the issuance of such Common Shares will be obtained prior to
Closing;
(j) Issuance of Warrants: The issuance of the 500,000 Warrants and the
500,000 Common Shares issuable upon exercise of the Warrants has been
duly and validly authorized by all requisite corporate action on the
part of the Purchaser and all requisite regulatory approvals for the
issuance of the 500,000 Warrants and the 500,000 Common Shares
issuable upon exercise of the Warrants will be obtained prior to
Closing;
(k) Prior Registration Rights: Other than pursuant to the Registration
Rights Agreement attached hereto as Schedule "E", the only other
registration rights granted by the Purchaser are contained in the
subscription agreements entered into by the Purchaser with certain
subscribers in connection with the 2003 Private Placement (a true copy
of which has been provided to the Vendor and Vendor's Solicitor) and
such other registration rights do not adversely affect the
registration rights of the Vendor pursuant to the Registration Rights
Agreement attached hereto as Schedule "E"; and
(l) Violation of Laws: To the best of the knowledge, information and
belief of the Purchaser, the entering into of this Agreement by the
Purchaser and the completion by the Purchaser of the purchase of the
Assets pursuant hereto will not result in the violation of any law of
its jurisdiction of incorporation, the Province of Alberta or the laws
of Canada applicable therein.
5.3 Non-Transferable
The Representations and Warranties made by each Party are made for the exclusive
benefit of the other Party, are not transferable and shall not be the subject of
any rights of subrogation granted in favour of any other person.
5.4 Disclaimers
Neither Party makes any representations of warranties whatsoever except, and to
the extent, of the Vendor's Representations and Warranties or the Purchaser's
Representations and Warranties, as the case may be, and each Party disclaims,
and shall not be liable for, any representation or warranty which may have been
made or alleged to have been made prior to the date hereof in any document or
instrument relative hereto or in any statement or information made or
communicated in any manner including, without limitation, any opinion,
information or advice which may have been provided to the Purchaser by the
Vendor, any of its affiliates or any director, officer, employee, shareholder,
agent, consultant or other representative of the Vendor or any such affiliates.
In particular, the Vendor makes no representations or warranties whatsoever with
respect to:
(a) Title: Its title to the Assets;
(b) Reserves: The amount, quality, recoverability or deliverability of
reserves of Petroleum Substances attributable to the Lands;
(c) Quality, Fitness, Condition or Merchantability: The quality, fitness,
condition or merchantability of the Assets;
(d) Interpretations and Evaluations: Any engineering, geological or other
interpretations or evaluations respecting the Assets; and
(e) Value, Production Rates, Revenue Estimates and Transportation: The
value of the Assets, production rates, estimates of prices or future
cash flows arising from the sale of reserves of Petroleum Substances
attributable to the lands or other revenues attributable to the Assets
or the availability (or continued availability) of transportation to
sell such Petroleum Substances.
The Purchaser acknowledges and agrees that the Vendor is selling, and that the
Purchaser is acquiring, the Assets on an "as is, where is" basis in such a state
as they shall exist at the Closing Time. The Purchaser has made and will make
prior to the Closing Time its own independent investigations, analyses,
evaluations and inspections with respect to the Assets and the state and
condition thereof and has and will rely solely on such investigations, analyses,
evaluations and inspections in assessing the condition, quantum and value of
such Assets and the Purchaser shall not have any claim or action against the
Vendor in respect of the location, state or condition of all or any of the
Assets or the suitability or fitness of such Assets for the Purchaser's intended
use or purpose.
5.5 No Merger
The foregoing Representations and Warranties shall either be set forth in or, if
not, shall be deemed to apply to, all assignments, transfers, conveyances,
novations or other documents conveying the Assets hereunder, and there shall not
be any merger of any covenant, representation or warranty in such assignments,
transfers, conveyances, or documents, any rule of law, equity or statute to the
contrary notwithstanding.
5.6 Limitation
Notwithstanding anything to the contrary herein expressed or implied and in the
absence of fraud, no claim in respect of the Representations and Warranties
shall be made or be enforceable whether by legal proceedings or otherwise
howsoever unless written notice of such claim is given by the claimant to the
other party within the period of two (2) years from the Closing Date.
ARTICLE 6
CONFIDENTIALITY
6.1 Confidentiality
All information related to the transactions contemplated herein shall be treated
as confidential, including this Agreement and each and every agreement to be
entered into hereunder and all terms and provisions hereof and thereof and the
intent to proceed with the transactions contemplated hereby, except for
disclosure to their respective representatives who have a need to know (and who
agree to observe this confidentiality obligation) and except as required by law,
regulation or legal process or in order to obtain the requisite consents and
approvals for the transactions. For a period of 60 days from the Closing Date,
the parties agree to consult with each other prior to making any disclosure or
announcement of or pertaining to this Agreement and any such disclosure shall be
satisfactory to both parties.
ARTICLE 7
SECURITIES LAW MATTERS
7.1 Provided the Vendor's representation and warranty in Section 7.2 is true
and correct, the Purchaser represents and warrants to the Vendor that, in
the Province of Alberta, the issuance and distribution of the Securities to
the Vendor will be exempt for the registration and prospectus requirements
of the Securities Act (Alberta). The Vendor acknowledges and agrees that
the Securities will be subject to the resale restrictions prescribed by
Section 2.5 of Multilateral Instrument 45-102. The Purchaser also
represents and warrants to the Vendor, in part in reliance on the
representations, warranties and agreements made by the Vendor in Section
7.3, that the offer and sale of the Securities will be exempt from the
registration requirements of the U.S. Securities Act by reason of the
exemption contained in Section 4(2) thereof.
7.2 The Vendor represents and warrants to the Purchaser that the Vendor is a
resident in the Province of Alberta and is an "accredited investor" within
the meaning of Multilateral Instrument 45-103 and acknowledges that the
Purchaser is relying on such representations and warranties in connection
with the issuance of the Securities.
7.3 The Vendor represents, warrants and agrees that:
(a) it is an "accredited investor" as defined in Rule 501(a)(3) of
Regulation D under the U.S. Securities Act because it is a corporation
not formed for the purpose of acquiring the Securities and has total
assets in excess of U.S. $5,000,000;
(b) it is acquiring the Securities for its own account and not with a view
to the distribution thereof in violation of the registration
requirements of the U.S. Securities Act;
(c) the Securities will be "restricted securities" as defined in Rule
144(a) under the Securities Act and may not be offered, resold or
otherwise transferred except: (a) to the Purchaser; (ii) pursuant to
an effective registration statement under the U.S. Securities Act;
(iii) outside the United States pursuant to Regulation S under the
U.S. Securities Act or (iv) pursuant to an exemption from registration
under the U.S. Securities Act, provided that prior to any transfer
pursuant to the foregoing clause (iv), the Vendor shall have furnished
to the Purchaser a written opinion of counsel to the effect that such
transfer may be effected without registration under the U.S.
Securities Act and any applicable state securities laws; and
(d) the Vendor agrees that the certificates for the Securities may have
endorsed thereon a legend to reflect the foregoing restrictions on
transfer and that appropriate stop transfer orders may be lodged with
the transfer agent for the Securities in implementation thereof.
ARTICLE 8
MISCELLANEOUS
8.1 Termination
The Parties agree that, unless an extension of time is granted by the Vendor to
the Purchaser, in the event that the Promissory Notes are not paid in full by
February 23, 2005, this Agreement shall terminate and be of no further force or
effect provided, however, that any such termination shall not reduce or affect
the Purchaser's obligations under the Promissory Notes.
8.2 Prior to Closing Access
The Vendor shall provide the Purchaser and its duly appointed representatives
with reasonable access to the Assets and all corresponding books, records, files
and title documents in the possession of the Vendor or to which the Vendor has
access to, prior to the Closing Date, in order that the Purchaser may satisfy
itself as to the title of the Assets and all matters related to operations
thereof and to otherwise determine the accuracy of the matters set forth herein.
The Purchaser shall provide the Vendor and its duly appointed representatives
with reasonable access to the minute books and other records of the Purchaser
prior to the Closing Date in order that the Vendor may satisfy itself as to all
matters related to the Securities and to otherwise determine the accuracy of the
matters set forth herein.
8.3 Public Announcements
Prior to the Closing Time, each of the Parties shall cooperate with the other in
relaying information concerning this Agreement and the transactions herein
provided for and shall furnish to, discuss with and obtain written approval from
the other Party for all press and other releases prior to publication, which
approval may be reasonably withheld; provided, however, that nothing contained
herein shall prevent either Party, at any time, from furnishing any information
to any governmental agency or regulatory authority or to the public if, but only
to the extent, required by Applicable Law.
8.4 Operatorship
The Purchaser acknowledges that the Vendor, to the extent it operates any of the
Assets, is unable to unilaterally assign operatorship of those Assets. The
Vendor does, however, undertake on a commercially reasonable basis to assist the
Purchaser in its efforts should it wish to succeed the Vendor as operator of any
such Assets.
8.5 Signs and Notifications
Following Closing, the Vendor may remove any signs that indicate the Vendor's
ownership or operation of the Assets. It will be the Purchaser's responsibility,
where necessary, to erect or install any signs that may be required to indicate
the Purchaser's ownership or operation of the Assets and to notify suppliers,
contractors, Governmental Entities and other affected third Parties of the
Purchaser's interest in the Assets.
8.6 Post-Closing Administration
After Closing, until the Purchaser becomes the recognized successor to the
Vendor's current interest in a particular Asset, the following provisions shall
apply:
(a) Possession: If requested by the Purchaser, the Vendor shall hold the
Assets on behalf of the Purchaser;
(b) Trust Account: If requested by the Purchaser, the Vendor shall open a
trust account separate and apart from its other accounts, and all
revenues, proceeds and other benefits in respect of the Assets, and
any advances for costs, expenses or capital expenditures in respect of
the Assets, shall be paid into such trust account. All monies from
time to time held in such account related to the Assets shall be for
the account of the Purchaser;
(c) Benefits: The Vendor shall promptly account to the Purchaser for all
revenues, proceeds and other benefits received in respect of such
Assets after deducting any amounts owed by the Purchaser in respect
thereof;
(d) Third Party Communications: The Vendor shall deliver to the Purchaser
all third party notices or other communications received in respect of
such Assets (including, without limitation, statements of operations,
third party invoices, cash calls and other ▇▇▇▇▇▇▇▇) in a timely
manner;
(e) Response by Purchaser: The Purchaser agrees to promptly respond to the
Vendor in writing in respect of all third party notices or other
communications provided by the Vendor to the Purchaser pursuant to
Section 7.6(d) above, such that the Vendor may respond on the
Purchaser's behalf to all such third party notices and communications
prior to the expiry thereof. Subject to the expenditures referred to
in Sections 8.6(f)(i)A and B which the Vendor is permitted to make, if
the Purchaser fails to provide the Vendor with written notice as
aforesaid, the Purchaser shall be deemed to have elected not to
participate in an operation or shall be deemed to have waived a Right
of First Refusal, as the case may be;
(f) Operations: The Vendor (to the extent the nature of its interest
permits) shall maintain such Assets in a proper and prudent manner in
accordance with the operating practices and agreements currently in
place. The Vendor shall not, without the prior approval of the
Purchaser:
(i) Expenditures: Authorize or incur expenditures other than:
A. usual operating expenditures incurred or allocable to the
Assets pursuant to existing operating agreements with arm's
length third parties;
B. expenditures which the operator of the Assets deems
necessary to protect life, property, income or the
Environment;
(ii) Operations: Propose or initiate any operations in respect of the
Assets;
(iii) Surrender or Abandon Assets: Surrender or abandon any of the
Assets; or
(iv) Amend, Terminate or Negotiate Agreements: Amend or terminate any
material agreement or enter into any new agreement adversely
affecting the Assets;
(g) Reimbursement and Indemnification: The Purchaser shall:
(i) Advance of Funds: If requested by the Vendor, deposit in the
trust account referred to in Section 8.6(b) above sufficient
funds to enable the Vendor to pay on the Purchaser's behalf all
third party costs, expenses and all surface and mineral rentals
which become due within two (2) months of Closing. To the extent
that the Vendor pays any amounts on behalf of the Purchaser prior
to an advance being made by the Purchaser, the Purchaser shall
reimburse the Vendor therefor within fifteen (15) days of being
provided with an invoice and, if not paid within such fifteen
(15) day period, each such invoice will thereafter bear interest
until paid at the prime lending rate of the Vendor's bankers
calculated daily and not compounded; and
(ii) Indemnification: Forthwith indemnify and save the Vendor
(including its directors, officers and employees) harmless from
and against any and all direct or indirect obligations,
liabilities, losses, costs, expenses, penalties, fines, claims,
actions or damages of any kind or nature whatsoever (including,
without limitation, court costs, legal costs on a solicitor and
his own client basis and accounting and other professional
expenses) it may suffer or incur as a result of actions taken, or
omitted to be taken, in the performance of its duties and
responsibilities pursuant to this Section 8.6, unless and to the
extent the same are attributable to gross negligence or wilful or
wanton misconduct; provided, however, no act or omission will be
regarded as gross negligence or wilful or wanton misconduct if it
was done or omitted to be done in accordance with the
instructions, or with the concurrence, of the Purchaser; and
(h) No Claim against the Vendor: The Purchaser shall have no claim against
the Vendor to the extent that the Purchaser's failure to give the
Vendor written notice as required under Section 8.6(d) results in the
non-exercise of a Right of First Refusal, or the non-participation in
an operation, including without limitation any claim that the
non-participation caused the Vendor's interest in the Assets to be
terminated or otherwise subject to penalty.
8.7 Indemnity
If Closing occurs, the Purchaser shall indemnify the Vendor, its Affiliates and
their respective officers, directors, employees, agents and consultants, and any
successors or permitted assignees or legal personal representatives of the
foregoing (collectively, the "Vendor Indemnified Parties") from and against, and
the Purchaser shall hold each Vendor Indemnified Party harmless from and
against, all losses, expenses (including legal fees on a full indemnity basis)
and damages, excluding indirect, punitive, exemplary or consequential damages
(collectively, the "Vendor Indemnified Losses"), sustained or incurred by any
Vendor Indemnified Party resulting from or in connection with all abandonment or
environmental claims, actions, liabilities and losses pertaining to or in
respect of the Assets, without regard to when the same accrued or occurred,
unless such Vendor Indemnified Losses arise in consequence of a
misrepresentation or breach of warranty by the Vendor herein, provided that the
maximum aggregate of all Vendor Indemnified Losses for which the Vendor
Indemnified Parties shall be entitled to seek indemnification hereunder shall
not exceed the Purchase Price. 8.8 Tax Treatment
Except as provided in this Agreement, no Party makes any representations,
regarding the tax consequences of the transaction contemplated by this
Agreement. The Parties each acknowledge that they have been advised of the tax
consequences of the transactions contemplated by this Agreement by their own tax
advisors, and that they are relying on their tax advisors in determining their
respective tax consequences in connection with the transactions contemplated in
this Agreement.
8.9 Further Assurances
The Vendor will from time to time, on and after the Closing Date, at the request
and expense of the Purchaser, execute and deliver all such other additional
instruments, notices, releases, assurances and other documents and shall do all
such other acts and things as may be reasonably necessary to more fully assure
the conveyance of the Assets to the Purchaser, and insofar as is possible, with
full substitution and subrogation of the Purchaser in and to all covenants and
warranties by others therefore given or made in respect of the Assets.
8.10 Assignment
The Parties hereto specifically reserve the right to assign their rights and
obligations hereunder, upon providing prior written notice to the other party,
provided that no such assignment shall relieve the obligation of the party to
fulfill all of the terms, conditions and obligations herein set forth on the
part of the party.
8.11 Governing Law
This Agreement shall, in all respects, be subject to and 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 for such purposes.
8.12 Invalidity of Provisions
If any provision of this Agreement or the application thereof to any person or
circumstance shall to any extent be held invalid, illegal or unenforceable by a
court of competent jurisdiction, the remainder of this Agreement, the
application of such provision to persons or circumstances other than those to
which it is held invalid, illegal or unenforceable or the validity, legality or
enforceability of such provision in any other jurisdiction shall not in any way
be affected or impaired thereby and such provision shall be severable from this
Agreement to the extent of such invalidity, illegality or unenforceability.
8.13 Entire Agreement and Amendment
This Agreement supersedes and replaces any and all prior agreements,
understandings, negotiations and discussions, whether written or verbal, between
the Parties concerning the transactions contemplated therein and states and
comprises the entire agreement between the Parties in relation thereto and may
only be amended by a formal written instrument executed by proper signing
officers for both Parties.
8.14 No Waiver
No waiver by a Party or any breach of any of the provisions of this Agreement to
any other Party shall take effect or be binding upon the waiving Party unless in
writing and signed by such Party. Unless otherwise provided therein, such waiver
shall not limit or affect the rights of the Party with respect to any such
breach.
8.15 No Release
Except where as otherwise provided, any assignment of this Agreement or any
obligation under this Agreement shall not release a Party hereto from the full
obligations hereunder, without the prior written consent of the other Party.
8.16 Time of the Essence
Time shall be of the essence in this Agreement.
8.17 Further Assurances
Each Party, without further consideration, shall in a timely fashion do or
perform or cause to be done or performed all such further and other acts and
things, execute, acknowledge and deliver or cause to be executed, acknowledged
and delivered all such further and other instruments, deeds and other writings
and generally shall take or cause to be taken all such further and other actions
as may be reasonably necessary or desirable to carry out its obligations
hereunder or to ensure and give full force and effect to the provisions and
intent, purpose and meaning of this Agreement.
8.18 Enurement
This Agreement shall be binding upon and enure to the benefit of the Parties and
their respective successors and permitted assigns.
8.19 Costs
Except as otherwise provided, each Party shall bear and be responsible for all
other costs and expenses incurred by it in negotiating and preparing this
Agreement, any deeds, documents and other writings delivered in conjunction with
or in furtherance hereof and in otherwise performing the transactions
contemplated herein. Such costs include all their respective legal, accounting,
brokerage, consulting fees and/or finders' fees incurred in connection with the
subject transactions.
8.20 Notices
The initial addresses of the Parties for Delivery of Documents or any other
writings required, permitted or desired hereunder shall be as follows:
(a) to the Vendor:
Rally Energy Corp.
▇▇▇▇, ▇▇▇-▇▇▇ ▇▇▇▇▇▇ ▇.▇.
▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇
▇▇▇ ▇▇▇
Attention: ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇, Vice President, Negotiations
& Contracts
Fax: (▇▇▇) ▇▇▇-▇▇▇▇
(b) to the Purchaser:
▇▇▇▇▇▇▇ International Resources Inc.
▇▇▇▇, ▇▇▇-▇▇▇ ▇▇▇▇▇▇ ▇.▇.
▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇
▇▇▇ ▇▇▇
Attention: ▇▇▇▇▇ ▇▇▇▇▇, President & CEO
Fax: (▇▇▇) ▇▇▇-▇▇▇▇
Any such notice or other writing may be served by personal service, by mailing
the same by prepaid post in a properly addressed envelope addressed to the
intended addressee at its address for service hereunder or by fax to the number
hereunder. Any notice given by personal service shall be deemed to be given on
the date of such service if delivered during the regular business hours of the
recipient or, if delivered outside such regular business hours, the next
Business Day. Any notice given by mail shall be deemed to be given to and
received by the addressee on the third Business Day (except days upon which the
postal service in Canada is interrupted) after the mailing thereof. Any notice
given by fax with appropriate answerback acknowledged shall be deemed to be
given to and received by the addressee on the date of transmission if such
transmission is completed during the regular business hours of the recipient or,
if transmitted outside such regular business hours, the next Business Day after
the successful transmission thereof. In the event the postal service in Canada
is, or is threatened to be, interrupted, all notices and other writings shall be
served by personal service or fax.
Either Party may from time to time change its address for service herein by
giving written notice to the other Party in the manner herein provided.
Any elections or notices to be made or served pursuant to this Agreement shall
be made in writing and served in the manner outlined above.
8.21 Counterpart and Facsimile Execution
This Agreement may be executed in any number of counterparts and any Party
hereto may execute any such counterpart, each of which when executed and
delivered shall be deemed to be an original and all of which counterparts taken
together shall constitute but one and the same instrument. This Agreement shall
become binding when one or more counterparts taken together shall have been
executed and delivered by the Parties. It shall not be necessary in making proof
of this Agreement or any counterpart hereof to produce or account for any of the
other counterparts. Execution and delivery of counterparts of this Agreement by
telecopier by any Party shall be binding on all Parties to this Agreement.
IN WITNESS WHEREOF the Parties have executed this Agreement as of the date and
year above first written.
RALLY ENERGY CORP.
Per: /s/ ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇
-----------------------------------------
▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇
Vice President, Negotiations & Contracts
Per: /s/ ▇▇▇▇ ▇▇▇▇
------------------------------------------
▇▇▇▇ ▇▇▇▇
Vice President, Finance and
Chief Financial Officer
▇▇▇▇▇▇▇ INTERNATIONAL
RESOURCES INC.
Per: /s/ ▇▇▇▇▇ ▇▇▇▇▇
------------------------------------------
▇▇▇▇▇ ▇▇▇▇▇
President & Chief Executive Officer
SCHEDULE "A" ATTACHED TO AN ASSET SALE AGREEMENT DATED FEBRUARY
23, 2005 MADE BETWEEN RALLY ENERGY CORP., AS VENDOR, AND
▇▇▇▇▇▇▇ INTERNATIONAL RESOURCES INC., AS PURCHASER
LEGAL DESCRIPTION OF LANDS
--------------------------
------------------------------- ----------------------------------------- ------------------ -------------------------
PEI Ministry of Environment, Vendor's Undivided
Energy and Forestry Lands Zones Working Interest *
Permit No.
------------------------------- ----------------------------------------- ------------------ -------------------------
04-01 Sections 6-10, 16-20, 26-30, 36-40, All 72%
46-50, 56-60, 66-70, 76-80, 86-90,
96-100 of Grid Area N. Lat. ▇▇-▇▇ ▇.
▇▇▇▇ ▇▇-▇▇, and all Sections of Grid
Area N. Lat. 46-30 W. Long. 63-30 and
Sections 1-5, 11-15, 21-25, 31-35,
41-45, 51-55, 61-65, 71-75, 81-85,
91-95 of Grid Area N. Lat. 46-40 W.
Long. 63-30
------------------------------- ----------------------------------------- ------------------ -------------------------
04-04 All sections of Grid Area N. Lat. 46-20 All 72%
W. Long. 63-00, and Sections 6-1-,
16-20, 26-30, 36-40, 46-50, 56-60,
66-70, 76-80, 86-90, 96-100 of Grid
Area N. Lat. 46-20 W. Long. 63-00
------------------------------- ----------------------------------------- ------------------ -------------------------
▇▇-▇▇ ▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇ ▇▇ ▇▇▇▇ ▇▇▇▇ ▇. Lat. All 92%
46-40 W. Long. 64-00 and the east half
of Grid Area N. Lat. 46-30 W. Long.
64-00
------------------------------- ----------------------------------------- ------------------ -------------------------
* Subject to the GOR
SCHEDULE "B" ATTACHED TO AN ASSET SALE AGREEMENT DATED FEBRUARY
23, 2005 MADE BETWEEN RALLY ENERGY CORP., AS VENDOR, AND
▇▇▇▇▇▇▇ INTERNATIONAL RESOURCES INC., AS PURCHASER
▇▇▇▇▇
1. ▇▇▇▇▇▇▇▇▇ ▇▇▇▇ #▇ located nine kilometres northeast of Kensington, P.E.I. on
Permit 96-06 (drilled and abandoned).
2. Seaview #1 located 18 kilometres north of Kensington, P.E.I. (cased).
SCHEDULE "C" ATTACHED TO AN ASSET SALE AGREEMENT DATED FEBRUARY
23, 2005 MADE BETWEEN RALLY ENERGY CORP., AS VENDOR, AND
▇▇▇▇▇▇▇ INTERNATIONAL RESOURCES INC., AS PURCHASER
Leased Assets
1. Surface lease with respect to Seaview #1 well by way of Indenture of Lease
dated May 28, 2003 between ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇▇▇▇ and
Rally Energy Corp.
SCHEDULE "D" ATTACHED TO AN ASSET SALE AGREEMENT DATED FEBRUARY
23, 2005 MADE BETWEEN RALLY ENERGY CORP., AS VENDOR, AND
▇▇▇▇▇▇▇ INTERNATIONAL RESOURCES INC., AS PURCHASER
THIS GENERAL CONVEYANCE dated the 23rd day of February, 2005.
BETWEEN:
RALLY ENERGY CORP., a body corporate incorporated under the laws of
the Province of Ontario, having offices at Calgary, Alberta
(hereinafter called the "Vendor")
- and -
▇▇▇▇▇▇▇ INTERNATIONAL RESOURCES INC., a body corporate incorporated
under the laws of the State of Nevada, having offices at Calgary,
Alberta
(hereinafter called the "Purchaser")
WHEREAS the Vendor has agreed to convey, and the Purchaser has agreed to
accept, the Assets.
NOW THEREFORE in consideration of the premises and the mutual agreements
set out in this Agreement, the Parties agree as follows:
1. Definitions
In this Conveyance the following words and phrases shall have the meanings
ascribed thereto below, namely:
"Asset Sale Agreement" means that certain Asset Sale Agreement made as of
February 23, 2005 between the Vendor and the Purchaser' and
"Conveyance" means this conveyance together with all instruments supplemental
hereto or in amendment or confirmation hereof.
In addition, the definitions in the Asset Sale Agreement are incorporated herein
by this reference.
2. Headings
The headings of clauses herein are inserted for convenience of reference only
and shall not affect or be considered to affect the construction of the
provisions hereof.
3. Subordinate Document
This Conveyance is executed and delivered by the Parties pursuant to the Asset
Sale Agreement, and the provisions of the Asset Sale Agreement shall prevail and
govern in the event of a conflict or variance between the two instruments.
4. Governing Law
This Conveyance shall, in all respects, be subject to and be construed and
enforced in accordance with the laws in effect in the Province of Alberta and
each Party attorns to the jurisdiction of the courts of the Province of Alberta
and all courts of appeal therefrom for such purposes.
5. Conveyance
The Vendor assigns, transfers, conveys and sets over to the Purchaser the Assets
to have and to hold the same, together with all benefit and advantage to be
derived therefrom, absolutely and the Purchaser, in turn, accepts the Assets
from the Vendor on the aforesaid terms.
6. Closing Time
This Conveyance shall be effective as of the Closing Time.
7. Further Assurances
Each Party, without further consideration, shall in a timely fashion do or
perform or cause to be done or performed all such further and other acts and
things, execute, acknowledge and deliver or cause to be executed, acknowledged
and delivered all such further and other instruments, deeds and other writings
and generally shall take or cause to be taken all such further and other actions
as may be reasonably necessary or desirable to carry out its obligations
hereunder or to ensure and give full force and effect to the provisions and
intent, purpose and meaning of this Conveyance.
8. Enurement
This Conveyance shall be binding upon and shall enure to the benefit of the
Parties and their respective successors, receivers, receiver-managers, trustees
and permitted assigns.
9. Counterpart and Facsimile Execution
This Conveyance may be executed in one or more counterparts, each of which shall
be considered an original but all of which together shall constitute one and the
same instrument. In addition, facsimile copies of executed counterparts shall be
conclusively regarded for all purposes as originally executed counterparts
pending the delivery of the originals.
IN WITNESS WHEREOF the Parties have executed this Agreement as of the
date and year above first written.
RALLY ENERGY CORP.
Per: /s/ ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇
-----------------------------------------
▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇
Vice President, Negotiations & Contracts
▇▇▇▇▇▇▇ INTERNATIONAL
RESOURCES INC.
Per: /s/ ▇▇▇▇▇ ▇▇▇▇▇
------------------------------------------
▇▇▇▇▇ ▇▇▇▇▇
President & Chief Executive Officer
SCHEDULE "E" ATTACHED TO AN ASSET SALE AGREEMENT DATED FEBRUARY 23,
2005 MADE BETWEEN RALLY ENERGY CORP., AS VENDOR, AND ▇▇▇▇▇▇▇
INTERNATIONAL RESOURCES INC., AS PURCHASER