EXHIBIT 10(g)
▇▇▇▇▇▇▇▇▇ L.L.C. PURCHASE AGREEMENT
THIS AGREEMENT dated for reference the 26th day of July, 1996
BETWEEN:
▇▇▇▇ ▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇,
AND:
FRANCISCO ▇▇▇▇▇▇ ▇▇▇▇▇ CALLE,
AND:
▇▇▇▇▇▇ ▇▇▇▇▇,
AND:
FAR RIVER CORPORATION,
AND:
▇▇▇▇▇▇▇▇ ▇▇▇▇ ▇▇ ▇▇▇▇▇▇,
AND:
SOUTHAMERICAN HOLDING, CORP.,
AND:
ENCHANTED INTERNATIONAL INC.,
AND:
NAKURU HOLDINGS, INC.,
AND:
▇▇▇▇▇▇▇▇ ▇▇▇▇-▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇,
AND:
▇▇▇▇▇▇, ▇.▇.,
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AND:
SHARMOR, INC.,
AND:
▇▇▇▇▇▇▇▇ ▇▇▇▇,
AND: THE GHK CORPORATION
(all of the above hereinafter collectively called the "Vendors")
AND:
▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇, III
(hereinafter called "▇▇▇▇▇▇")
AND:
SEVEN SEAS PETROLEUM INC., a company incorporated under the laws of
the Province of British Columbia with registered offices at 800 -
▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇, ▇▇▇
▇▇▇
(hereinafter called "SSPI")
AND:
SEVEN SEAS PETROLEUM HOLDINGS INC., a company incorporated under the
laws of the Cayman Islands and having a business address of ▇▇▇▇
▇▇▇▇ ▇▇▇ ▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇, ▇▇▇▇▇▇▇, ▇▇▇▇▇, ▇▇▇▇▇, in the United
States of America
(hereinafter called "SSPH")
AND:
SEVEN SEAS PETROLEUM COLOMBIA INC., a company incorporated under the
laws of the Cayman Islands, and having a business address of ▇▇▇▇
▇▇▇▇ ▇▇▇ ▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇, ▇▇▇▇▇▇▇, ▇▇▇▇▇, ▇▇▇▇▇, in the United
States of America
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(hereinafter called "SSPC")
WITNESSES THAT WHEREAS:
A. The Vendors are the registered and beneficial owners of the following
Vendors' Interests in the Company;
====================================================================
PERCENTAGE INTEREST IN THE
NAME COMPANY
====================================================================
▇▇▇▇ ▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇ 1.7650
--------------------------------------------------------------------
Francisco ▇▇▇▇▇▇ ▇▇▇▇▇ Calle 3.0987
--------------------------------------------------------------------
▇▇▇▇▇▇ ▇▇▇▇▇ 6.5228
--------------------------------------------------------------------
Far River Corporation 6.5228
--------------------------------------------------------------------
▇▇▇▇▇▇▇▇ ▇▇▇▇ ▇▇ ▇▇▇▇▇▇ 5.0110
--------------------------------------------------------------------
Southamerican Holding, Corp. 2.4710
--------------------------------------------------------------------
Enchanted International Inc. 6.5228
--------------------------------------------------------------------
Nakuru Holdings, Inc. 6.5228
--------------------------------------------------------------------
▇▇▇▇▇▇▇▇ ▇▇▇▇-▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇ 2.3927
--------------------------------------------------------------------
▇▇▇▇▇▇, ▇.▇. 1.7650
--------------------------------------------------------------------
Sharmor, Inc. 6.5228
--------------------------------------------------------------------
▇▇▇▇▇▇▇▇ ▇▇▇▇ 2.3927
--------------------------------------------------------------------
The GHK Corporation 50.0000
====================================================================
which collectively form the entire membership interest in the Company;
B. The Vendors have agreed to sell and SSPI has agreed to purchase the Vendors'
Interests on the terms and conditions detailed herein.
THEREFORE in consideration of the premises and the mutual covenants and
agreements herein set forth, the parties hereto covenant and agree each with the
other as follows:
1. INTERPRETATION
1.1 In this Agreement, including the schedules hereto, except as
otherwise expressly provided:
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(a) "Agreement" means this agreement, including the preamble and the
Schedules hereto, as it may from time to time be supplemented or
amended;
(b) "Association Contracts" means the association contracts between the
Company and Empress Colombiana de Petroles S.A. respecting the
Properties;
(c) "Cimarrona" means Cimarrona Limited Liability Company;
(d) "Cimarrona Agreement" means the agreement of even date between
certain members of Cimarrona on the one hand and SSPI and SSPC on
the other hand respecting the acquisition of a 62.963% membership
interest in Cimarrona;
(e) "Closing" means the completion of the transactions contemplated in
this Agreement in accordance with its terms;
(f) "Closing Certificate" means a closing certificate executed by, or on
behalf of, INTER ALIA, the parties to this Agreement;
(g) "Closing Date" means the date of the closing of the transactions
contemplated herein;
(h) the "Company" means ▇▇▇▇▇▇▇▇▇ Limited Liability Company;
(i) "Escrow Agreement" means the escrow agreement in the form attached
as Schedule "A" hereto;
(j) "Final Prospectus" means a final prospectus of SSPI which qualifies
INTER ALIA the exchange of the SSPI Special Warrants for the SSPI
Shares;
(k) "Financial Statements" mean the financial statements of the Company
attached as Schedule "J" hereto;
(l) "GHK Agreement" means the agreement of even date between, inter
alia, SSPI and ▇▇▇▇▇▇ providing for the purchase of all of the
shares of GHK Colombia;
(m) "GHK Colombia" means GHK Company Colombia;
(n) "Indenture" means the special warrant indenture between SSPI and
Montreal Trust in the form attached as Schedule "B" hereto;
- 5 -
(o) "JOA" means that joint operating agreement dated August 1, 1994
respecting the operatorship of the Properties;
(p) "Liens" means all liens, mortgages, debentures, charges,
hypothecations, pledges or other security interests or encumbrances
of whatever kind;
(q) "Management Contract" means that management contract of even date
between, INTER ALIA, SSPI and GHK Company LLC;
(r) "Material Adverse Effect" means an adverse effect that is, or would
be, singly or in the aggregate material;
(s) "Montreal Trust" means the Montreal Trust Company of Canada;
(t) "1933 Act" means the SECURITIES ACT OF 1933 (United States) as
amended;
(u) "Preliminary Prospectus" means a preliminary prospectus of SSPI
which qualifies the exchange of the SSPI Special Warrants for the
SSPI Shares;
(v) "Properties" means the Dindal and Rio Seco areas located in the
Upper ▇▇▇▇▇▇▇▇▇ Basin of Colombia described in the Association
Contracts;
(w) "Public Record" means, in respect of SSPI, the financial statements,
offering memoranda, material change reports, information circulars
and press releases and all other documents and information filed or
required to be filed with the Ontario Securities Commission or the
Alberta Securities Commission on or during the 12 months preceding
the date of this Agreement;
(x) "Registration Rights Agreement" means that registration rights
agreement between, INTER ALIA, SSPI and the Vendors, in the form
attached as Schedule "K" hereto;
(y) "SSPI Financial Statements" means the audited, consolidated
financial statements of SSPI as at and for the year ended December
31, 1995 and the unaudited, consolidated financial statements of
SSPI for the six month period ended June 30, 1996;
(z) "SSPI Special Warrants" means a total of 4,469,028 special warrants
of SSPI to be issued to the Vendors in accordance with the terms of
the Indenture;
(aa) "SSPI Shares" means the common shares of SSPI to be issued upon
exercise of the SSPI Special Warrants;
- 6 -
(ab) "U.S. Person" has the meaning as set out in Regulation S under the
1933 Act;
(ac) "Vendor's Interest" means the membership interests of each of the
Vendors in the Company and "Vendors' Interests" means collectively
the membership interests of all the Vendors in the Company as set
out in recital A hereto;
(ad) "Voting Support Agreement" means the shareholders voting support
agreement in the form attached as Schedule "C" hereto;
(ae) all references in this Agreement to a designated "Section" or other
subdivision or to a Schedule are to the designated Section or other
subdivision of, or Schedule to, this Agreement;
(af) the words "herein", "hereof" and "hereunder" and other words of
similar import refer to this Agreement as a whole and not to any
particular Section or other subdivision or Schedule;
(ag) the headings are for convenience only and do not form a part of this
Agreement and are not intended to interpret, define, or limit the
scope, extent or intent of this Agreement or any provision hereof;
(ah) the singular of any term includes the plural, and vice versa; the
use of any term is equally applicable to any gender and, where
applicable, a body corporate; the word "or" is not exclusive and the
word "including" is not limiting (whether or not non-limiting
language, such as "without limitation" or "but not limited to" or
words of similar import, is used with reference thereto);
(ai) in respect of the Company, any accounting term not otherwise defined
has the meanings assigned to it in accordance with United States tax
basis accounting practices;
(aj) in respect of SSPI, any accounting term not otherwise defined has
the meaning assigned to it in accordance with Canadian generally
accepted accounting principles;
(ak) where any representation or warranty is made "to the knowledge of"
any party, such party will not be liable for a misrepresentation or
breach of warranty by reason of the fact, state of facts, or
circumstance in respect of which the representation or warranty is
given being untrue if such party proves it did not have actual
knowledge thereof; and
- 7 -
(al) where any representation or warranty references disclosure to any of
SSPI, SSPC or SSPH, disclosure to one is deemed to be disclosure to
all.
1.2 The following are the Schedules to this Agreement:
SCHEDULE DESCRIPTION
-------- -----------
A Escrow Agreement
B Special Warrant Indenture
C Voting Support Agreement
D Outstanding Indebtedness
E Managers of the Company
F Limited Liability Company Agreement
G Surviving Contracts
H Costs Allocation
I U.S. Securities Law Questionnaire
J Financial Statements
K Registration Rights Agreement
2. PURCHASE AND SALE
2.1 Subject to the terms and conditions of this Agreement, each of the Vendors
hereby sells and assigns to SSPI, and SSPI hereby purchases from each of the
Vendors his, her or its Vendor's Interest free and clear of any Liens.
2.2 SSPI hereby directs each Vendor to transfer his, her or its Vendor's
Interest to and into the name of SSPC as to 50% of such Vendor's Interest and to
and into the name of SSPH as to 50% of such Vendor's Interest and each of SSPI
and SSPH hereby acknowledges its entitlement to and receipt of such Vendor's
Interest from each Vendor.
2.3 The Purchase Price payable by SSPI for each Vendor's Interest shall be the
SSPI Special Warrants which are hereby issued and tendered to the Vendors in the
following amounts:
====================================================================
NUMBER OF SPECIAL WARRANTS
NAME OF SSPI
====================================================================
--------------------------------------------------------------------
▇▇▇▇ ▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇ 78,879
--------------------------------------------------------------------
Francisco ▇▇▇▇▇▇ ▇▇▇▇▇ Calle 138,479
--------------------------------------------------------------------
▇▇▇▇▇▇ ▇▇▇▇▇ 291,505
--------------------------------------------------------------------
Far River Corporation 291,505
--------------------------------------------------------------------
▇▇▇▇▇▇▇▇ ▇▇▇▇ ▇▇ ▇▇▇▇▇▇ 156,464
--------------------------------------------------------------------
- 8 -
--------------------------------------------------------------------
Southamerican Holding, Corp. 110,430
--------------------------------------------------------------------
Enchanted International Inc. 291,505
--------------------------------------------------------------------
Nakuru Holdings, Inc. 291,505
--------------------------------------------------------------------
▇▇▇▇▇▇▇▇ ▇▇▇▇-▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇ 106,929
--------------------------------------------------------------------
▇▇▇▇▇▇, ▇.▇. 78,879
--------------------------------------------------------------------
Sharmor, Inc. 291,505
--------------------------------------------------------------------
▇▇▇▇▇▇▇▇ ▇▇▇▇ 106,929
--------------------------------------------------------------------
The GHK Corporation 2,234,514
====================================================================
2.4 Each Vendor hereby directs the SSPI Special Warrants issued and tendered to
him, her or it to be delivered to ▇▇▇▇▇▇ on his, her or its behalf and ▇▇▇▇▇▇
hereby acknowledges receipt of same.
3. ▇▇▇▇▇▇'▇ WARRANTIES AND REPRESENTATIONS
3.1 ▇▇▇▇▇▇ warrants and represents to SSPI, with the intent that SSPI will rely
thereon in entering into this Agreement and concluding the purchase and sale
contemplated herein, that he is the duly authorized agent and duly appointed
attorney of each of the Vendors with full power and authority on their behalf to
execute this Agreement and to execute all such other documents and do all such
other acts and things on behalf of the Vendors and each of them as is necessary
to give full force and effect to this Agreement.
4. AGENT AND ATTORNEY'S WARRANTIES AND REPRESENTATIONS
4.1 Each of the Vendors severally warrants and represents to SSPI, with the
intent that SSPI will rely thereon in entering into this Agreement and in
concluding the purchase and sale contemplated herein, that:
(a) such Vendor is the registered holder and beneficial owner of the
Vendor's Interest set opposite the Vendor's name in recital "A"
herein, free and clear of all Liens, and the Vendor has no interest,
legal or beneficial, direct or indirect, in any shares of, or the
assets or business of, the Company other than such Vendor's Interest
as set out in recital "A", and in the case of The GHK Corporation,
also other than the Management Contract and any interest arising
from ▇▇▇▇▇▇'▇ ownership interest in GHK Colombia;
- 9 -
(b) such Vendor has good and sufficient right and authority to enter
into this Agreement on the terms and conditions herein set forth and
to transfer the legal and beneficial title and ownership of the
Vendor's Interest as set out in recital "A" to SSPC and SSPH;
(c) the Vendor either:
(i) is not a U.S. Person and is not acquiring the securities
offered hereby for the account or benefit of a U.S. Person; or
(ii) is a U.S. Person and has completed the questionnaire attached
as Schedule "I" hereto and in which case the Vendor represents
and warrants to the Purchaser as to the accuracy of all
matters set out therein;
(d) the Vendor is aware that neither SSPI Special Warrants nor the SSPI
Shares have been registered under the 1933 Act and may not be
offered or sold in the United States unless registered under the
1933 Act and the securities laws of all applicable states of the
United States unless an exemption from such registration
requirements is available or registration is not required pursuant
to Regulation S under the 1933 Act or registration is otherwise not
required under the 1933 Act and that SSPI has no obligation or
present intention of filing a registration statement under the 1933
Act in respect of the SSPI Special Warrants or the SSPI Shares;
(e) if the Vendor is not a U.S. Person, the Vendor is further aware
that:
(i) no offers in respect of the SSPI Special Warrants were made by
any person to the Vendor while the Vendor was in the United
States;
(ii) the Vendor was outside the United States at the time of
execution and delivery of this Agreement;
(iii) the certificates representing the SSPI Special Warrants will
bear a legend stating that such securities have not been
registered under the 1933 Act or the securities laws of any
state of the United States and the SSPI Special Warrants may
not be exercised in the United States or by or on behalf of a
U.S. Person unless registered under the 1933 Act and the
securities laws of all applicable states of the United States
or an exemption from such registration requirements is
available; and
(iv) any person who exercises a SSPI Special Warrant will be
required to provide to SSPI:
- 10 -
(1) written certification that it is not a U.S. Person and
the SSPI Special Warrant is not being exercised within
the United States or on behalf of a U.S. Person; or
(2) a written opinion of counsel to the effect that the SSPI
Special Warrants and the SSPI Shares underlying such
securities have been registered under the 1933 Act and
applicable state securities laws or are exempt from
registration thereunder.
4.2 Subject to Section 12.2 hereof, each of the Vendors severally warrants and
represents as follows with the intent that SSPI will rely thereon in entering
into this Agreement and in concluding the purchase and sale contemplated herein
that:
(a) the Vendors' Interests, taken together represent the entire
ownership interest in the Company;
(b) with the exception of this Agreement, no party has any agreement,
consensual or arising by law, present or future, contingent or
absolute, or capable of becoming an agreement:
(i) to require the Company to admit such party as a member of the
Company; or
(ii) to require the Company to convert or exchange any securities
into or for a membership interest in the Company; or
(iii) to purchase or otherwise acquire any membership interest in
the Company;
(c) the Vendor does not have any specific information relating to the
Company which is not generally known and which, to the knowledge of
the Vendor, has not been disclosed to SSPI and which if known could
reasonably be expected to have a Material Adverse Effect on the
value of the Company;
(d) the Company is duly formed, validly existing and in good standing
under the laws of the State of Oklahoma;
(e) to the Vendor's knowledge, the limited liability company agreement
of the Company dated December 8, 1993, as amended, attached as
Schedule "F" hereto remains in full force and effect and has not
been amended or modified;
(f) to the Vendor's knowledge, the managers of the Company are as
described in Schedule "E" and there are no officers of the Company;
- 11 -
(g) to the Vendor's knowledge, the Company is duly registered to carry
on business in all jurisdictions in which the Company carries on
business except where the failure to so register would not have a
Material Adverse Effect on the Company;
(h) to the Vendor's knowledge, the Company has the power, authority and
capacity to carry on its business as presently conducted by it;
(i) the Company holds a 9.776% participating interest under the
Association Contracts free and clear of all Liens and has no other
material assets;
(j) the Company carries on no business other than holding the 9.776%
participating interest under the Association Contracts;
(k) to the Vendor's knowledge, the Company holds all licences and
permits required for the conduct in the ordinary course of its
business as presently conducted by it and all such licences and
permits are in good standing and the conduct and uses of the same by
the Company are in compliance with all laws, and other restrictions,
rules, regulations and ordinances applicable to the Company and its
business, save and except for breaches which do not have a Material
Adverse Effect on the Company or its business as presently
conducted; and with the exception that no representation and
warranty is given with respect to any permit, license, consent,
contracts or authority granted under or in connection with the
associaton contracts.
(l) the making of this Agreement and the completion of the transactions
contemplated hereby and the performance of and compliance with the
terms hereof will not:
(i) conflict with or result in a breach of or violate any of the
terms, conditions, or provisions of the constating documents
of the Company;
(ii) to the Vendor's knowledge, conflict with or result in a breach
of or violate any of the terms, conditions or provisions of
any law, judgment, order, injunction, decree, regulation or
ruling of any court or governmental authority, domestic or
foreign, to which the Company or the Vendor is subject or
constitute or result in a default under any agreement,
contract or commitment to which the Company or the Vendor is a
party with the exception that no such representation and
warranty is given with respect to any permit, licence,
consent, contracts or authority granted under or in connection
with the Association Contracts;
- 12 -
(iii) to the Vendor's knowledge, give to any person any remedy,
cause of action, right of termination, cancellation or
acceleration in or with respect to any understanding,
agreement, contract, or commitment, written, oral or implied,
to which the Company is a party with the written exception
that no such representation and warranty is made with respect
to the Association Contracts;
(iv) to the Vendor's knowledge, give to any government or
governmental authority including any governmental department,
commission, bureau, board, or administrative agency any right
of termination, cancellation, or suspension of, or constitute
a breach of or result in a default under any permit, license,
control, or authority issued to the Company and which is
necessary or desirable in connection with the conduct and
operation of the businesses currently conducted by the Company
with the exception that no such representation and warranty is
given with respect to any permit, license, contract or
authority granted under or in connection with the Association
Contracts;
(v) to the Vendor's knowledge, constitute a default by the Company
or an event which, with the giving of notice or lapse of time
or both, might constitute an event of default or
non-observance under any agreement, contract, indenture or
other instrument relating to any indebtedness of any of the
Company which would give any party the right to accelerate the
maturity for the payment of any amount payable under that
agreement, contract, indenture, or other instrument with the
exception that no such representation and warranty is given
with respect to any permit, licence, contract or authority
granted under or in connection with the Association Contracts;
so as to have a Material Adverse Effect on the Company;
(m) the Financial Statements were prepared on a cash basis in accordance
with U.S. tax regulations applied on a basis consistent with prior
years and are true and correct in every material respect;
(n) to the Vendor's knowledge, there is no indebtedness of the Company,
including to the Vendor, which is not disclosed or reflected in the
Company's Financial Statements other than as detailed in Schedule
"D";
(o) to the Vendor's knowledge, the Company has been assessed for income
tax for all years to and including the most recent fiscal year end
of the Company to which the Financial Statements are made up, and
the Company has withheld and remitted to all applicable tax
collecting authorities
- 13 -
all amounts required to be remitted to all tax collecting
authorities respecting payments to employees or to non-residents, or
otherwise and has paid all instalments of corporate taxes due and
payable as of the date hereof;
(p) to the Vendor's knowledge, all tax returns and reports of the
Company required by law to be filed prior to the date hereof
including all income tax returns and all other corporate tax returns
required to be filed with any governmental taxing authority or board
have been filed and are true, complete and correct, and all taxes
and other government charges including all income, excise, sales,
business and property taxes and other rates, charges, assessment,
levies, duties, taxes, contributions, fees and licenses required to
be paid have been paid, and if not required to be paid as at the
date hereof, have been accrued in the Financial Statements;
(q) to the Vendor's knowledge, adequate provision has been made for
taxes payable by the Company which are not yet due and payable and
there are no agreements, waivers or other arrangements providing for
an extension of time with respect to the assessment or re-assessment
of any tax return by any taxing authority or for the filing of any
tax return by or payment of any tax, governmental charge or
deficiency by the Company, and to the knowledge of the Vendor, there
are no contingent tax liabilities or any grounds which would prompt
a re-assessment;
(r) to the Vendor's knowledge, no authorization, approval, order,
license, permit or consent of any governmental authority, regulatory
body or court, and no registration, declaration or filing by the
Vendor or the Company with any such governmental authority,
regulatory body or court remains outstanding in order for the Vendor
to complete the within purchase and sale, to duly perform and
observe the terms and provisions of this Agreement, and to render
this Agreement legal, valid, binding and enforceable in accordance
with its terms with the exception that no representation and
warranty is given as to any authorizations, approvals, order,
licenses, permits or consents required under the terms of the
Association Contracts;
(s) (i) to the Vendor's knowledge, the business of the Company as
currently carried on by it complies with all applicable laws,
judgments, decrees, orders, injunctions, rules, statutes and
regulations of all courts, arbitrators or governmental
authorities, including all environmental, health and safety
statutes and regulations except where the failure to comply
would not have a Material Adverse Effect on the Company;
(ii) to the Vendor's knowledge, the Company' business, assets or
properties are not subject to any judicial or administrative
- 14 -
proceeding alleging the violation of any applicable
environmental, health or safety law, judgment, decree, order,
injunction, rule, statute or regulation except where such
proceeding would not have a Material Adverse Effect on the
Company;
(t) to the Vendor's knowledge, since the date of the Company's most
recent Financial Statements there has not been any occurrence or
event which has had, or might reasonably be expected to have, a
Material Adverse Effect on the business of the Company as currently
carried on or the results of its operations;
(u) to the Vendor's knowledge, other than as disclosed in Schedule "G"
hereto, the Company does not have any material contract, agreement,
undertaking or arrangement, whether oral, written or implied, which
cannot be terminated on not more than one month's notice and the
Company does not have any outstanding material agreements, contracts
or commitments (whether written or oral) whatsoever relating to or
affecting the conduct of its business as currently carried on or any
of its assets or for the purchase, sale or lease of its assets with
the exception of this Agreement;
(v) there are no actions, suits, judgments, investigations or
proceedings outstanding or pending or to the knowledge of the Vendor
threatened against or affecting the Company at law or in equity or
before or by any court or federal, state, municipal or other
governmental authority, department, commission, board, tribunal,
bureau or agency and the Company is not a party to or threatened
with any litigation which in either case would have a Material
Adverse Effect on the Company;
(w) [ intentionally left black]
(x) the Company has not guaranteed, or agreed to guarantee, any
indebtedness or other obligation of any party except in the ordinary
course of its business, and except as described in the Financial
Statements or under the Association Contracts;
(y) the Company has no employees;
(z) since the date of the most recent Financial Statements:
(i) no dividends of any kind or other distribution on any
membership interest in the Company has been declared or paid
by the Company;
(ii) except as required under the Association Contracts, no single
capital expenditure or commitment therefor has been made by
the Company other than as previously disclosed in writing to
SSPI; and
- 15 -
(iii) the Company has not increased the pay of or paid or agreed to
pay any pension, bonus, share of profits or other similar
benefit to or for the benefit of any agent of the Company,
except increases in the normal course of business.
5. SSPI'S WARRANTIES AND REPRESENTATIONS
5.1 SSPI warrants and represents to the Vendors, with the intent that the
Vendors will rely thereon in entering into this Agreement and in concluding the
purchase and sale contemplated herein, that on the date hereof:
(a) SSPI has been duly and validly incorporated and is a validly
existing corporation in good standing under the laws of the Province
of British Columbia, with all necessary power, authority and
capacity to own its property and assets and carry on its business as
presently carried on by it and to complete the transactions provided
for herein;
(b) SSPI is a reporting issuer in good standing under the securities
laws of Ontario and Alberta and, since March 31, 1996, no material
change relating to SSPI has occurred with respect to which the
requisite material change report has not been filed under the
applicable securities laws in Ontario and Alberta and no such
disclosure has been made on a confidential basis;
(c) SSPI is not a reporting issuer under the securities laws of any
other province, state, country or other jurisdiction;
(d) SSPI has full corporate power and authority to issue the SSPI
Special Warrants and the SSPI Shares upon the conversion of the SSPI
Special Warrants; the SSPI Special Warrants have been duly and
validly created, authorized, allotted and issued, the SSPI Shares
issuable upon conversion of the SSPI Special Warrants have been duly
and validly authorized, allotted and reserved for issuance upon such
conversion and will, upon conversion in accordance with the terms of
the Indenture, be duly and validly issued as fully paid and
non-assessable shares;
(e) the authorized capital of SSPI consists of 100,000,000 common shares
without par value and 10,000,000 Class "A" preferred shares without
par value of which 12,995,463 common shares (and no Class "A"
preferred shares with the exception of the Class "A" preferred
shares to be issued under the GHK Agreement) are issued and
outstanding as at the date hereof; a further 1,085,000 shares are
reserved for issuance pursuant to the exercise of incentive stock
options; and a further 3,000,000 shares are reserved for issuance
pursuant to the exercise of special warrants previously
- 16 -
issued by way of a private placement; as a result of which the total
issued and outstanding share capital of SSPI on a fully diluted
basis is 17,500,463;
(f) all alterations to the constating documents of SSPI since its
incorporation has been duly approved by the shareholders of SSPI and
registered with the appropriate authorities;
(g) SSPI is duly registered to carry on business in all jurisdictions in
which it carries on business except where the failure to register
would not have a Material Adverse Effect on the condition (financial
or otherwise) business, properties, prospects or net worth of SSPI;
(h) SSPI has full corporate power and authority to enter into this
Agreement and the Indenture and to perform its obligations set out
herein and therein, and the Agreement and the Indenture have been
duly authorized, executed and delivered by SSPI and constitute a
legal, valid and binding obligation of SSPI enforceable in
accordance with their terms;
(i) SSPI has the power, authority and capacity to carry on its business
as presently conducted by it;
(j) SSPI is not in default or breach of, and the execution and delivery
of this Agreement or the Indenture by SSPI and the performance of
the transactions contemplated thereby will not result in a breach
of, and do not create a state of facts which, after notice or lapse
of time or both, will result in a breach of, and do not and will not
conflict with, any of the terms, conditions or provisions of the
constating documents, resolutions or by-laws of SSPI;
(k) SSPI holds all licenses and permits required for the conduct in the
ordinary course of its business as presently conducted by it and all
such licenses and permits are in good standing and the conduct and
uses of the same by it are in compliance with all laws and other
restrictions, rules, regulations and ordinances applicable to it and
its business, save and except for breaches which do not have a
Material Adverse Effect on SSPI, or its business as currently
conducted, and neither the execution and delivery of this Agreement
or the Indenture nor the completion of the purchase and sale hereby
will give any person the right to terminate the said licenses or
permits or affect such compliance;
(l) SSPI has the right, power and authority to direct the transfer of
the Vendors' Interests to SSPC and SSPH and those companies have the
right,power and authority to receive same, and neither such
direction nor reception of the Vendors' Interests gives rise to any
liability under taxation or other laws;
- 17 -
(m) SSPI has obtained all consents and approvals required to complete
the transactions contemplated herein in accordance with the terms
and conditions hereof;
(n) the making of this Agreement and the Indenture and the completion of
the transactions contemplated hereby and thereby and the performance
of and compliance with the terms hereof and thereof do not and will
not:
(i) conflict with or result in a breach of or violate any of the
terms, conditions or provisions of any law, judgment, order,
injunction, decree, regulation or ruling of any court or
governmental authority, domestic or foreign, to which SSPI is
subject;
(ii) give to any person any right, remedy, cause of action, right
of termination, cancellation or acceleration in or with
respect to any understanding, agreement, contract, or
commitment, written, oral or implied to which SSPI or any
predecessor or shareholder thereof is or was a party;
(iii) give to any government or governmental authority including any
governmental department, commission, bureau, board, or
administrative agency any right of termination, cancellation,
or suspension of, or constitute a breach of or result in a
default under any permit, license, control, or authority
issued to SSPI and which is necessary or desirable in
connection with the conduct and operation of the business
currently conducted by SSPI;
(iv) constitute a default by SSPI or an event which, with the
giving of notice or lapse of time or both, might constitute an
event of default or non-observance under any agreement,
contract, indenture or other instrument relating to any
indebtedness of SSPI which would give any person the right to
accelerate the maturity for the payment of any amount payable
under that agreement, contract, indenture, or other
instrument;
such that there would be a Material Adverse Effect on it;
(o) SSPI and its subsidiaries are the beneficial owners of or have the
right to acquire the interests in the properties, business and
assets referred to in the Public Record, which interests in the
properties, business and assets represent all interests of SSPI and
its subsidiaries in any properties, business or assets and any and
all agreements pursuant to which SSPI or its subsidiaries hold or
will hold any such interest in property, business or assets are in
good standing in all material respects according to their terms, and
the properties are in good standing in all material respects under
the
- 18 -
applicable statues and regulations of the jurisdictions in which
they are situated;
(p) the Public Record is in all material respects accurate and omits no
facts, the omission of which makes the Public Record, or any
particulars therein, misleading or incorrect, as at the date they
were made;
(q) SSPI is not party to and has not granted and no person has any
agreement, warrant, option, right or privilege, consensual or
arising by law, present or future, contingent or absolute, capable
of becoming an agreement, warrant, option, right or privilege for
the creation, purchase, acquisition, subscription, issuance or
allotment of any shares of SSPI or securities convertible into or
exchangeable for shares of SSPI or to convert or exchange any
securities into or for shares of SSPI, or to require SSPI to
purchase, redeem or otherwise acquire any of the issued and
outstanding shares in its capital except as disclosed in the Public
Record or as contemplated hereunder;
(r) no judgments, investigations, actions, suits, inquiries or
proceedings are outstanding or pending or, to the knowledge of SSPI,
are contemplated or threatened to which SSPI or its subsidiaries is
a party or to which the property of SSPI or its subsidiaries is
subject at law or in equity that would have a Material Adverse
Effect on the business, operations, condition (financial or
otherwise) of SSPI and its subsidiaries, on a consolidated basis;
(s) the SSPI Financial Statements were prepared in accordance with
Canadian general accepted accounting principles applied on a basis
consistent with prior years (in respect of any predecessors of SSPI)
and are true and correct in every material respect and present
fairly and accurately the financial condition and position of SSPI
and it subsidiaries as at the dates set out therein and the results
of its operations and the changes in its financial position for the
periods then ended, in accordance with Canadian generally accepted
accounting principles;
(t) except as disclosed in the Public Record, there has not been any
material change in the assets, liabilities or obligations (absolute,
accrued, contingent or otherwise) of SSPI and its subsidiaries, on a
consolidated basis, as set forth in the SSPI Financial Statements
and there has not been any material adverse change in the business,
operations or condition (financial or otherwise) or results of the
operations of SSPI and its subsidiaries, on a consolidated basis,
since June 30, 1996 and since that date there have been no material
facts, transactions, events or occurrences which could have a
Material Adverse Effect on the business of SSPI and its
subsidiaries, on a consolidated basis;
- 19 -
(u) none of SSPI's or any of its subsidiaries' businesses, assets or
properties are subject to any judicial or administrative proceeding
alleging the violation of any applicable environmental, health or
safety law, judgment, decree, order, injunction, rule, statute or
regulation except where such violation would not have a Material
Adverse Effect on SSPI or its subsidiaries;
(v) except as disclosed in Schedule "G", neither SSPI nor any of its
subsidiaries has any material contract, agreement, undertaking or
arrangement, whether oral, written or implied, which cannot be
terminated on not more than one month's notice and neither SSPI nor
any of its subsidiaries has any outstanding material agreements,
contracts or commitments (whether written or oral) whatsoever
relating to or affecting the conduct of their businesses as
currently carried on or any of their assets or for the purchase,
sale or lease of any of their assets with the exception of this
Agreement;
(w) each of SSPI and its subsidiaries has been assessed for income tax
for all years to and including the fiscal year of each of SSPI and
its subsidiaries ended on December 31, 1995, and each of SSPI and
its subsidiaries has withheld and remitted to all applicable tax
collecting authorities all amounts required to be remitted to all
tax collecting authorities respecting payments to employees or to
non-residents, or otherwise and has paid all instalments or
corporate taxes due and payable as of the date hereof;
(x) all tax returns and reports of each of SSPI and its subsidiaries
required by law to be filed prior to the date hereof including all
income tax returns and all other corporate tax returns required to
be filed with any governmental taxing authority or board have been
filed and are true, complete and correct, and all taxes and other
government charges including all income, excise, sales, business and
property taxes and other rates, charges, assessment, levies, duties
taxes, contributions, fees, licenses, interest and penalties
required to be paid have been paid, and if not required to be paid
as at the date hereof, have been accrued in the SSPI Financial
Statements;
(y) adequate provision has been made for taxes payable by each of SSPI
and its subsidiaries which are not yet due and payable and there are
no agreements, waivers or other arrangements providing for an
extension of time with respect to the assessment or reassessment of
any taxing authority or board or the filing of any tax return by or
payment of any tax, governmental charge or deficiency by any of SSPI
or its subsidiaries, and there are no contingent tax liabilities or
any grounds which would prompt a re-assessment, including aggressive
treatment of income and expenses in filing earlier tax returns;
- 20 -
(z) no authorization, approval, order, license, permit or consent of any
governmental authority, regulatory body or court, and no
registration, declaration or filing by SSPI with any such
governmental authority, regulatory body or court is required in
order for SSPI to complete the within purchase and sale, to duly
perform and observe the terms and provisions of this Agreement and
to render this Agreement legal, valid, binding and enforceable in
accordance with its terms;
(aa) SSPI has not guaranteed or agreed to guarantee any indebtedness or
other obligation of any party except as described in the SSPI
Financial Statements;
(ab) no order ceasing or suspending trading in securities of SSPI or
prohibiting the sale of securities by SSPI has been issued and no
proceedings for this purpose have been instituted, are pending,
contemplated or threatened;
(ac) SSPI has not, directly or indirectly, declared or paid any dividend
or declared or made any other distribution on any of its shares or
securities of any class, or, directly or indirectly, redeemed,
purchased or otherwise acquired any of its shares or securities or
agreed to do any of the foregoing;
(ad) since June 30, 1996, there has not been any occurrence or event
which has had, or might reasonably be expected to have, a Material
Adverse Effect on the business of SSPI as currently carried on or
the results of its operations;
(ae) SSPI has not increased the pay of or paid or agreed to pay any
pension, bonus, share of profits or other similar benefit of any
individual named on the "Summary Compensation Table" in the
Management Information
Circular of SSPI as at May 8, 1996;
(af) since June 30, 1996, no single capital expenditure or commitment
therefor has been made by SSPI other than as previously disclosed in
writing to the Vendor;
(ag) there is not, in the constating documents or by-laws of SSPI or in
any agreement, mortgage, note, debenture, indenture or other
instrument or document to which SSPI is a party, any restriction
upon or impediment to the declaration or payment of dividends by the
directors of SSPI or the payment of dividends by SSPI to the holders
of its common shares;
(ah) SSPI is not:
(i) in breach of any of the terms, covenants, conditions or
provisions of, is in default under, or has done or omitted to
do anything which,
- 21 -
with the giving of notice or lapse of time or both, would
constitute a breach of or a default under any contract to
which it is a party;
(ii) in violation of nor are any present uses by SSPI of any of its
assets in violation of or contravention of any applicable law,
statute, order, rule or regulation;
(iii) in breach or default under any judgment, injunction or other
order or aware of any judicial, administration, governmental,
or other authority or arbitrator by which SSPI is bound or to
which SSPI or any of its assets are subject except where such
breach or violation would not have a Material Adverse Effect;
(ai) Montreal Trust Company at its office in Calgary, Alberta has been
duly appointed as the transfer agent and registrar for all of the
outstanding common shares of SSPI;
(aj) each of the material contracts referred to in the Public Record to
which SSPI or its subsidiaries is a party has been duly authorized,
executed and delivered by the parties thereto and is a legal, valid
and binding obligation of the parties thereto enforceable in
accordance with their respective terms; and
(ak) SSPI is not a non-resident of Canada for the purposes of section 116
of the INCOME TAX ACT (Canada).
6. COVENANTS OF THE VENDORS
6.1 Each of the Vendors shall:
(a) duly and punctually perform all the obligations to be performed by
him, her or it under this Agreement; and
(b) execute all such documents and do all such things as shall be
reasonably necessary to give full effect to this Agreement.
7.1 SSPI shall:
(a) use its best efforts to file the Preliminary Prospectus within two
weeks of the Closing Date and to obtain a receipt for the Final
Prospectus by September 30, 1996;
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(b) use its best efforts to obtain a listing of SSPI's common shares on
a stock exchange recognized under the INCOME TAX ACT (Canada) by
September 30, 1996;
(c) ensure that at the respective times of filing and at all times
subsequent to the filing thereof during the distribution of the SSPI
Shares, the Preliminary Prospectus and the Final Prospectus will
fully comply with the requirements of applicable securities
legislation;
(d) duly and punctually perform all the obligations to be performed by
it under this Agreement, and cause SSPI to duly and punctually
perform all the obligations to be performed by it under this
Agreement;
(e) execute all such documents and shall do all such things as shall be
reasonably necessary to give full effect to this Agreement;
8. NON-MERGER
8.1 The representations, warranties, covenants and agreements of the Vendors
contained herein and those contained in the documents and instruments delivered
pursuant hereto will survive the Closing Date for a period of one year from the
date hereof, and notwithstanding the completion of the transactions herein
contemplated, the waiver of any condition contained herein (unless such waiver
expressly releases the Vendors of such representation, warranty, covenant or
agreement), or any investigation by SSPI, the same will remain in full force and
effect during that period.
8.2 The representations, warranties, covenants and agreements of SSPI contained
herein and those contained in the documents and instruments delivered pursuant
hereto will survive the Closing Date for a period of one year, and
notwithstanding the completion of the transactions herein contemplated, the
waiver of any condition contained herein (unless such waiver expressly releases
SSPI of such representation, warranty, covenant or agreement), or any
investigation by the Vendor, the same will remain in full force and effect
during that period.
9. CONDITIONS PRECEDENT
9.1 The obligations of SSPI to consummate the transactions herein contemplated
are subject to the fulfilment of each of the following conditions at the times
stipulated:
(a) the representations and warranties of ▇▇▇▇▇▇ contained in Section 3
and the representations and warranties of the Vendors contained in
Section 4 herein are true and correct in all respects;
(b) all covenants, agreements and obligations hereunder on the part of
the Vendors to be performed or complied with at or prior to the
Closing, including the Vendors' obligations to deliver the documents
and instruments
- 23 -
herein provided for, shall have been performed and complied with at
and as of the Closing;
(c) all contracts, other than as detailed in Schedule "G", shall have
been terminated without further obligation to the Company;
(d) the Vendors shall have entered into the Escrow Agreement and shall
have executed all such other documents as may be required by the
Ontario Securities Commission providing for restrictions on the
resale of the SSPI Special Warrants and the SSPI Shares; and
(e) the Cimarrona Agreement and the GHK Agreement shall have been
executed by all parties thereto, and all conditions precedent to the
consummation of the transactions contemplated therein for the
benefit of SSPI shall have been satisfied or waived.
9.2 The conditions set forth in Section 9.1 are for the exclusive benefit of
SSPI and may be waived by SSPI in writing in whole or in part at any time.
9.3 The obligations of the Vendors to consummate the transactions herein
contemplated are subject to the fulfilment of each of the following conditions:
(a) the representations and warranties of SSPI contained herein are true
and correct in all material respects; and
(b) all covenants, agreements and obligations hereunder on the part of
SSPI to be performed or complied with at or prior to the Closing,
including SSPI's obligations to deliver the documents and
instruments herein provided for, shall have been performed and
complied with as at the Closing;
(c) the terms of any escrow restrictions imposed by the Ontario
Securities Commission with respect to the resale of the SSPI Special
Warrants and the SSPI Shares shall be acceptable to the Vendors;
(d) SSPI shall have executed the Management Contract, the Registration
Rights Agreement, the GHK Agreement and the Cimarrona Agreement.
9.4 The conditions set forth in Section 9.3 are for the exclusive benefit of the
Vendors and may be waived by the Vendors in whole or in part at any time.
9.5 The obligations of the Vendors and SSPI to complete and give effect to the
transactions herein contemplated are further subject to the due execution of the
Closing Certificate by or on behalf of all parties whose execution is provided
for therein.
- 24 -
10. TRANSACTIONS OF THE VENDORS AT THE CLOSING
10.1 At the Closing, the Vendors will execute and deliver or cause to be
executed and delivered all documents, instruments, resolutions and certificates
as are necessary to effectively transfer the Vendors' Interests to SSPC and
SSPH, free and clear of all Liens, including:
(a) such documents and consents as are required under the Limited
Liability Company agreement to effect the transfers of the Vendors'
Interests;
(b) documents as are required to evidence the admission of SSPC and SSPH
as members of the Company;
(c) resignations in writing of all the managers of the Company;
(d) all records and books of account of the Company;
(e) the Escrow Agreement duly executed by each of the Vendors together
with duly executed copies of such other documents as may be required
under Section 9.1(d) of this Agreement;
(f) a closing Warranty and Certificate from each of the Vendors
confirming that the conditions to be satisfied by the Vendors unless
waived, set out in Section 9.1 and this Section 10.1 have been
satisfied at the Closing;
(g) a legal opinion from counsel to the Company addressed to SSPI in
form satisfactory to SSPI; and
(h) all such other documents and instruments as SSPI may reasonably
require including but not limited to all accounting information,
vouchers, receipts, accounting entries and diaries of the Company.
11. TRANSACTIONS OF SSPI AT THE CLOSING
11.1 At the Closing, SSPI will deliver or cause to be executed and delivered all
documents, instruments, resolutions and share certificates as are necessary to
effectively transfer the SSPI Special Warrants to the Vendors, free and clear of
all Liens, including:
(a) certified copies of resolutions of the directors of SSPI authorizing
the entering into of this Agreement and the carrying out of the
transactions contemplated herein and certified copies of resolutions
of the directors of SSPI authorizing the issuance of SSPI Special
Warrants and the SSPI Shares;
(b) duly issued special warrant certificates representing the SSPI
Special Warrants in the names of the Vendors as provided in Section
2.3 hereof;
- 25 -
(c) a Closing Warranty and Certificate from SSPI confirming that the
conditions to be satisfied by SSPI, unless waived, set out in
Section 9.3 have been satisfied at the Closing;
(d) a legal opinion from counsel to SSPI, SSPC and SSPH addressed to the
Vendors and in form satisfactory to the Vendors;
(e) the Management Contract duly executed by SSPI;
(f) the Registration Rights Agreement duly executed by SSPI; and
(g) all such other documents and instruments as the Vendor may
reasonably require with respect to SSPI, including but not limited
to:
(i) a draft form of the Preliminary Prospectus;
(ii) a letter from counsel to SSPI advising of the status of SSPI's
application to list its common shares on the Alberta Stock
Exchange; and
(iii) a letter from SSPI and Yorkton Securities Inc. discussing the
plans of Yorkton Securities Inc. to carry out a private
placement for SSPI.
12. INDEMNITY
12.1 Subject to Section 12.2 herein, each of the Vendors will indemnify and hold
harmless SSPI from and against:
(a) any and all losses, damages or deficiencies resulting from any
misrepresentation, breach of warranty or non-fulfilment of any
covenant on the part of such Vendor under this Agreement or from any
misrepresentation in or omission from any certificate or other
instrument furnished or to be furnished to SSPI hereunder;
(b) any and all actions, suits, proceedings, demands, assessments,
judgments, costs and legal and other expenses incidental to any of
the foregoing; and
and if any action or claim shall be asserted against SSPI in respect of which
indemnity may be sought hereunder, SSPI shall promptly notify the appropriate
Vendors, as the case may be, in writing and the appropriate Vendors, as the case
may be, shall assume the defence thereof at their expense through legal counsel
acceptable to SSPI. No party shall effect a settlement of such action or claim
without the written consent of the other party, such consent not to be
unreasonably withheld or delayed.
- 26 -
12.2 The maximum extent of the liability of each of the Vendors for all claims
individually or in the aggregate under Section 12.1 herein (with the exception
of liability arising directly or indirectly by reason of a misrepresentation or
breach of warranty as it relates to the representations and warranties contained
in Section 4.1) shall be limited in the aggregate to the market value, as at the
date of a claim for indemnity, or the SSPI Special Warrants or SSPI shares of
such Vendor, as the case may be, acquired pursuant to this Agreement and then
held subject to the Escrow Agreement as at such date, and the Vendors shall have
no further personal liability to SSPI in this regard.
12.3 In circumstances where more than one Vendor is liable under Section 12.1 as
a result of a misrepresentation or breach of warranty contained in Section 4.2,
the liability of such Vendors shall be apportioned such that each Vendor who is
liable bears that portion of the entire liability, limited in the aggregate as
stated in Section 12.2, as is equal to the percentage of the SSPI Special
Warrants acquired by such Vendor pursuant to this Agreement in relation to the
total number of Special Warrants acquired by all the Vendors who are liable.
12.4 Subject to the maximum limit on liability in Section 12.2, each Vendor can
satisfy any liability referred to in Section 12.2 and Section 12.3 herein by
either paying the amount thereof to SSPI or surrendering or causing to be
surrendered to SSPI such of the Vendor's SSPI Special Warrants or SSPI Shares or
the rights thereto then held subject to the Escrow Agreement as at the date of
receipt of a claim for indemnity as have a market value equal to the amount of
the liability.
12.5 In circumstances where a Vendor is liable under Section 12.1 in respect of
a misrepresentation or breach of warranty as it relates to a representation or
warranty contained in Section 4.1, SSPI agrees that it shall first exhaust
recourse against the SSPI Special Warrants or SSPI Shares of such Vendor, as the
case may be, then held subject to the Escrow Agreement, to satisfy such
liability in which case the provisions of Section 12.4 apply mutatis mutandis,
and SSPI will only further seek recourse against such Vendor generally in
circumstances where the market value of such SSPI Special Warrants or SSPI
Shares, as the case may be, is not sufficient to satisfy such liability under
Section 12.1.
12.6 For the purposes of Section 12.2 and Section 12.4 herein the "market value"
of the SSPI Special Warrants or SSPI shares or the rights thereto shall be
deemed to be equal to the weighted average of the closing prices at which SSPI's
common shares have traded on the Alberta Stock Exchange or, if such shares are
not then listed on the Alberta Stock Exchange, on such stock exchange or
electronic trading facility on which the shares then trade as may be selected by
the board of directors of SSPI, during the 20 most recent trading days ending on
the trading day immediately prior to the date of a claim for indemnity.
12.7 The provisions of Section 12 apply mutatis mutandis to ▇▇▇▇▇▇ with respect
to any misrepresentation or breach of warranty on the part of ▇▇▇▇▇▇ under this
Agreement.
12.8 SSPI will indemnify and hold harmless the Vendors from and against:
- 27 -
(a) any and all losses, damages or deficiencies resulting from any
misrepresentation, breach of warranty or non-fulfilment of any
covenant on the part of SSPI under this Agreement or from any
misrepresentation in or omission from any certificate or other
instrument furnished or to be furnished to the Vendors hereunder;
and
(b) any and all actions, suits, proceedings, demands, assessments,
judgments, costs and legal and other expenses incidental to any of
the foregoing;
and if any action or claim shall be asserted against the Vendors in respect of
which indemnity may be sought hereunder, the Vendors shall notify SSPI in
writing and SSPI shall assume the defence thereof at its expense through legal
counsel acceptable to the Vendors. No party shall effect a settlement of such
action or claim without the written consent of the other party, such consent not
to be unreasonably withheld or delayed.
12.9 SSPI shall bear the costs relating to the test procedures in respect of the
El Segundo No. 1 well as detailed in Schedule "J". To the extent such costs
exceed the amounts set forth in Schedule "J", the Vendors, together with the
vendors under the Cimarrona Agreement and the GHK Agreement, shall reimburse
SSPI for the excess pursuant to Section 12.10 hereof.
12.10 If the costs relating to the test procedures in respect of El Segundo No.
1 well exceed the amounts set forth in schedule "J", GHK Company Columbia shall
submit invoices to the Manager (as defined in the Management Contract), SSPI,
and the Vendors in respect of such excess amounts within 90 days of the date
hereof. Once satisfied that such invoices accurately reflect actual costs
incurred in respect of the test procedures, the Vendors shall within 30 days
after such 90-day period pay to the Manager, and direct the Manager to pay to
SSPI, a portion of such costs equivalent to their pro rata share of the
aggregate number of warrants and preference shares in SSPI issued to the Vendors
under this Agreement and the vendors under Cimarrona Agreement and the GHK
Agreement.
12.11 The Vendors shall be entitled to a portion, equivalent to their pro rata
share of the aggregate number of warrants and preference shares in SSPI issued
to the Vendors under this Agreement and the vendors under the Cimarrona
Agreement and the GHK Agreement, of any revenues generated by the production or
sale of oil produced from the el Segundo No. 1 well prior to the Closing. The
Vendors shall be entitled to require from GHK Company Columbia an accounting of
any such revenues within 90 days of the date hereof and SSPI shall within 30
days after such 90-day period pay to the Vendors the portion of such proceeds
set forth in this Section 12.11.
13. ISSUANCE OF SSPI SHARES
13.1 The Vendors hereby irrevocably direct SSPI to deliver such of the SSPI
shares as are issuable upon the exercise of the SSPI Special Warrants held by
Montreal Trust under the terms of the Escrow Agreement to Montreal Trust to be
held under the terms of the Escrow Agreement.
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14. COUNTERPARTS
14.1 This Agreement may be executed in any number of facsimile counterparts,
each of which shall be deemed to be an original and all of which together shall
be deemed to be one and the same document.
15. TIME OF THE ESSENCE
15.1 Time is of the essence of this Agreement.
16. ENTIRE AGREEMENT
16.1 This Agreement, together with the agreements and documents provided for
herein, contains the entire agreement between the parties hereto in respect of
the purchase and sale of the Vendors' Interests and there are no warranties,
representations, terms, conditions or collateral agreements, express or implied,
other than expressly set forth or provided for in this Agreement.
17. FURTHER ASSURANCES
17.1 The parties will execute and deliver such further documents and instruments
and do all such acts and things as may be reasonably necessary or requisite to
carry out the full intent and meaning of this Agreement and to effect the
transactions contemplated by this Agreement, and the parties will cooperate in
respect of any requirement to file an application with Investment Canada.
18. SUCCESSORS AND ASSIGNS
18.1 This Agreement will enure to the benefit of and be binding upon the parties
hereto and their respective heirs, executors, administrators, successors and
permitted assigns.
19. NOTICE
19.1 Any notice required or permitted to be given under this Agreement will be
validly given if in writing and delivered or sent by pre-paid registered mail,
to the following addresses:
(a) If to the Vendors:
c/o ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇ III
▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇, #▇▇▇
▇▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇▇
▇.▇.▇.
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(b) If to SSPI, SSPC or SSPH:
SEVEN SEAS PETROLEUM INC.
Suite 960 - ▇▇▇▇ ▇▇▇▇ ▇▇▇ ▇▇▇▇▇▇▇▇▇
▇▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇▇
▇.▇.▇.
Attention: ▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇
or to such other address as any Party may specify by notice in writing to the
other.
19.2 Any notice delivered on a business day will be deemed conclusively to have
been effectively given on the date notice was delivered.
19.3 Any notice sent by prepaid registered mail will be deemed conclusively to
have been effectively given on the third business day after posting; but if at
the time of posting or between the time of posting and the third business day
thereafter there is a strike, lockout or other labour disturbance affecting
postal service, then the notice will not be effectively given until actually
delivered.
20. VENDORS' NOMINEES
20.1 The Vendors or any of them may, without SSPI's consent, elect to nominate a
company or other legal entity, including a company which may be hereafter
incorporated, to be the recipient of all or any part of the SSPI Special
Warrants which are to be issued by SSPI and to which the Vendor shall be
entitled pursuant to Section 2.3 herein. Such nomination will not take effect
until communication thereof to SSPI, or to SSPI's solicitors. Once such
communication has been made, the nominee elected by such Vendor will be deemed
to be such Vendor hereunder for purposes of receiving the applicable SSPI
Special Warrants and for all purposes after the Closing Date, but the Vendor
will in no way be released from its representations, warranties and obligations
hereunder despite the election or appointment of a nominee.
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21. PROPER LAW
21.1 This Agreement will be governed by and construed in accordance with the
laws of the Province of British Columbia and the laws of Canada applicable
therein and the parties will attorn to the Courts thereof.
IN WITNESS WHEREOF the parties have caused this Agreement to be executed and
delivered this 26th day of July, 1996.
SIGNED, SEALED AND DELIVERED by )
▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇, III in the presence of: )
)
-------------------------------------- )
Signature )
-------------------------------------- ) -------------------------------
Print Name ) ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇, III
-------------------------------------- )
Address )
-------------------------------------- )
)
-------------------------------------- )
Occupation )
SIGNED, SEALED AND DELIVERED on behalf )
of ▇▇▇▇ ▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇ by )
his lawful attorney )
▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇, III in the presence of: )
)
-------------------------------------- ) -------------------------------
Signature ) ▇▇▇▇ ▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇
-------------------------------------- ) ▇▇▇▇▇▇▇, by his attorney
Print Name ) ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇, III
-------------------------------------- )
Address )
-------------------------------------- )
)
-------------------------------------- )
Occupation )
- 31 -
SIGNED, SEALED AND DELIVERED on behalf )
of FRANCISCO ▇▇▇▇▇▇ ▇▇▇▇▇ CALLE by )
his lawful attorney )
▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇, III in the presence of: )
)
-------------------------------------- ) -------------------------------
Signature ) FRANCISCO ▇▇▇▇▇▇ ▇▇▇▇▇
-------------------------------------- ) CALLE, by his attorney
Print Name ) ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇, III
-------------------------------------- )
Address )
-------------------------------------- )
)
-------------------------------------- )
Occupation )
SIGNED, SEALED AND DELIVERED on behalf )
of ▇▇▇▇▇▇ ▇▇▇▇▇ by his lawful attorney )
▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇, III in the presence of: )
)
-------------------------------------- )
Signature ) -------------------------------
-------------------------------------- ) ▇▇▇▇▇▇ ▇▇▇▇▇, by his attorney
Print Name ) ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇, III
-------------------------------------- )
Address )
-------------------------------------- )
)
-------------------------------------- )
Occupation )
FAR RIVER CORPORATION by its lawful
attorney ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇, III
Per: _________________________________
Authorized Signatory
- 32 -
SIGNED, SEALED AND DELIVERED on behalf )
of ▇▇▇▇▇▇▇▇ ▇▇▇▇ ▇▇ ▇▇▇▇▇▇ by her )
lawful attorney ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇, III )
in the presence of: )
)
-------------------------------------- ) -------------------------------
Signature ) ▇▇▇▇▇▇▇▇ ▇▇▇▇ ▇▇ ▇▇▇▇▇▇, by
-------------------------------------- ) her attorney ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇, III
Print Name )
-------------------------------------- )
Address )
-------------------------------------- )
)
-------------------------------------- )
Occupation )
SOUTHAMERICAN HOLDING, CORP. by
its lawful attorney ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇, III
Per: _________________________________
Authorized Signatory
ENCHANTED INTERNATIONAL INC. by
its lawful attorney ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇, III
Per: _________________________________
Authorized Signatory
NAKURU HOLDINGS, INC. by its lawful
attorney ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇, III
Per: _________________________________
Authorized Signatory
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SIGNED, SEALED AND DELIVERED on behalf )
of ▇▇▇▇▇▇▇▇ ▇▇▇▇-▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇ by )
his lawful attorney )
▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇, III in the presence of:)
)
-------------------------------------- ) -------------------------------
Signature ) ▇▇▇▇▇▇▇▇ ▇▇▇▇-▇▇▇▇▇▇▇▇
-------------------------------------- ) ▇▇▇▇▇▇, by his attorney
Print Name ) ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇, III
-------------------------------------- )
Address )
-------------------------------------- )
)
-------------------------------------- )
Occupation
▇▇▇▇▇▇, ▇.▇. by its lawful attorney ▇▇▇▇▇▇
▇. ▇▇▇▇▇▇, III
Per: _________________________________
Authorized Signatory
SHARMOR, INC. by its lawful attorney
▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇, III
Per: _________________________________
Authorized Signatory
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SIGNED, SEALED AND DELIVERED on )
behalf of ▇▇▇▇▇▇▇▇ ▇▇▇▇ by his )
lawful attorney ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇, III )
in the presence of: )
)
-------------------------------------- ) -------------------------------
Signature ) ▇▇▇▇▇▇▇▇ ▇▇▇▇, by his attorney
-------------------------------------- ) ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇, III
Print Name )
-------------------------------------- )
Address )
-------------------------------------- )
)
-------------------------------------- )
Occupation )
THE GHK CORPORATION
Per: _________________________________
Authorized Signatory
SEVEN SEAS PETROLEUM INC.
Per: _________________________________
Authorized Signatory
SEVEN SEAS PETROLEUM COLOMBIA
INC.
Per: _________________________________
Authorized Signatory
SEVEN SEAS PETROLEUM HOLDINGS
INC.
Per: _________________________________
Authorized Signatory
- 35 -
This is page 35 of an Agreement dated the 26th day of July, 1996 between ▇▇▇▇
▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇ Calle, ▇▇▇▇▇▇ ▇▇▇▇▇, Far River
Corporation, ▇▇▇▇▇▇▇▇ ▇▇▇▇ ▇▇ ▇▇▇▇▇▇, Southamerican Holding, Corp., Enchanted
International Inc., Nakuru Holdings, Inc., ▇▇▇▇▇▇▇▇ ▇▇▇▇-▇▇▇▇▇▇▇▇ Osorio,
Moraga, S.A., Sharmor, Inc., ▇▇▇▇▇▇▇▇ ▇▇▇▇, ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇, III, The GHK
Corporation Seven Seas Petroleum Colombia Inc., Seven Seas Petroleum Inc. and
Seven Seas Petroleum Holdings Inc.