EXHIBIT 10.1
ASSET PURCHASE AGREEMENT DATED ▇▇▇▇▇ ▇, ▇▇▇▇
▇▇▇▇▇ PURCHASE AGREEMENT
THIS AGREEMENT is dated effective March 8, 2007.
BETWEEN:
GREAT NORTHERN OILSANDS INC., of ▇▇▇-▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇▇,
▇▇▇▇▇▇▇▇▇, ▇▇ ▇▇▇ ▇▇▇
(the "BUYER")
AND:
PATCH ENERGY INC., of Suite # 300, 441 - 5th Avenue S.W.,
Calgary, AB T2P 2V1
(the "SELLER")
WHEREAS:
(A) The Seller is the owner, directly and indirectly, of the Purchased
Assets; and
(B) The Seller wishes to sell and Buyer wishes to purchase the Purchased
Assets.
NOW, THEREFORE THIS AGREEMENT WITNESSES THAT in consideration of the mutual
warranties, covenants and agreements contained in this Agreement and other good
and valuable consideration by each of the Seller and the Buyer, the receipt and
sufficiency of which is hereby acknowledged by each of them, the parties agree
as follows:
PART 1
INTERPRETATION
DEFINITIONS
1.1 In this Agreement, except as otherwise expressly provided or unless the
context otherwise requires:
(a) "AGREEMENT" means this asset purchase agreement as amended from
time to time together with all schedules attached hereto;
(b) "ASSETS" means the Petroleum and Natural Gas Rights, the
Tangibles and the Miscellaneous Interests;
-2-
(c) "BUSINESS DAY" means any day, other than a Saturday, Sunday or a
Canadian federal, Alberta or British Columbia statutory holiday;
(d) "CLOSING DATE" means March 8, 2007, or such other date as the
parties may agree;
(e) "CLOSING TIME" means 1:00 pm (Calgary time) on the Closing Date;
(f) "CONSENTS" means the consents and approvals that are reasonably
required in accordance with normal oil and gas industry
practices for the assignment to the Buyer of any contracts,
licences, leases or permits which are material to the use of the
Purchased Assets as presently used or operated and all consents,
authorizations and approvals required by any Governmental
Authority for the consummation of the transactions contemplated
by this Agreement;
(g) "DATA" means all records, data and information owned by Seller
including Seismic Data directly relating to the Petroleum and
Natural Gas Rights or the Tangibles, including well files, lease
files, agreement files and production records (including the
Title and Operating Documents);
(h) "EFFECTIVE TIME" means 1:00 p.m., Calgary time, on the 8th day
of March, 2007;
(i) "ENCUMBRANCE" means any mortgage, charge, pledge, hypothecation,
lien, security interest, right of possession, lease, licence,
assignment, option, claim, encumbrance or charge, whether or not
registered or registrable and whether or not consensual or
arising by law, statute or otherwise;
(j) "ENVIRONMENTAL LAW" includes any statute, regulation or rule of
any Governmental Authority relating to protection of the
environment that relates to the Purchased Assets;
(k) "EXCLUDED ASSETS" means the Excluded Petroleum and Natural Gas
Rights, the Excluded Tangibles and the Excluded Miscellaneous
Interests;
(l) "EXCLUDED DATA" means all records, data and information owned by
the Limited Partnership including Excluded Seismic Data directly
relating to the Excluded Petroleum and Natural Gas Rights or the
Excluded Tangibles, including well files, lease files, agreement
files and production records (including the Excluded Title and
Operating Documents);
(m) "EXCLUDED LANDS" means the Petroleum Substances within, under or
upon the lands described in the Excluded Land Schedule, subject
to the restrictions and exclusions set forth therein as to
Petroleum Substances and geological formations, and any other
interests in oil and gas properties legally or beneficially
owned by the Limited Partnership;
(n) "EXCLUDED LAND SCHEDULE" means Schedule "C";
-3-
(o) "EXCLUDED LEASES" means the leases, licenses, permits and
similar documents of title described in the Excluded Land
Schedule by virtue of which the holder thereof is entitled to
drill for, win, take, own or remove Petroleum Substances within,
upon or under the Excluded Lands and includes, if applicable,
all renewals and extensions of such documents and all documents
issued in substitution therefore;
(p) "EXCLUDED MISCELLANEOUS INTERESTS" means Limited Partnership's
interests in all property, assets, interests and rights (other
than the Excluded Petroleum and Natural Gas Rights and the
Excluded Tangibles) directly related to the Excluded Petroleum
and Natural Gas Rights or the Excluded Tangibles but only to the
extent such property, assets, interests and rights are directly
related to Excluded Petroleum and Natural Gas Rights or the
Excluded Tangibles, including without limitation any and all of
the following:
(i) contracts and agreements directly related to the
Excluded Petroleum and Natural Gas Rights or the
Excluded Tangibles including, without limitation, the
Excluded Title and Operating Documents;
(ii) the Excluded Surface Rights;
(iii) the Excluded Data; and
(iv) the Excluded ▇▇▇▇▇, including well bores and casing,
but specifically excludes (a) Petroleum Substances produced
prior to the Effective Time and (b) accounts receivable accruing
prior to the Effective Time;
(q) "EXCLUDED PETROLEUM AND NATURAL GAS RIGHTS" means (i) all of the
interest of Limited Partnership in the Excluded Leases (to the
extent they pertain to the Excluded Lands) including, without
limitation, the interests that are attributed to the Limited
Partnership in the Excluded Land Schedule, (ii) the fee simple
interests (if any) in mines and minerals in the Excluded Lands
attributed to the Limited Partnership in the Excluded Land
Schedule, and (iii) all of the interest of the Limited
Partnership (if any) in royalties, net profits interests and
similar interests including, without limitation, the interests
attributed to the Limited Partnership in the Excluded Land
Schedule;
(r) "EXCLUDED SEISMIC DATA" means seismic data owned by the Limited
Partnership, including surveyors' ground elevation records, shot
point maps, drillers' logs, shooters' records, seismograph
records, seismograph magnetic tapes, monitor records, field
records and record sections, excluding maps and interpretations
made therefrom;
(s) "EXCLUDED ASSETS SPECIFIC CONVEYANCES" means all conveyances,
assignments, transfers, novations and other documents or
instruments that are reasonably required or desirable, in
accordance with normal oil and gas industry practices, to
convey, assign and transfer the Excluded Assets to the Seller,
or its nominee, and
-4-
to novate the Seller, or its nominee, into the Excluded Title
and Operating Documents in the place and stead of the Limited
Partnership with respect to the Excluded Assets;
(t) "EXCLUDED SURFACE RIGHTS" means all rights to use or occupy the
surface of lands (including, but not limited to, the Excluded
Lands) which are used or held for use in connection with the
Excluded Petroleum and Natural Gas Rights or the Excluded
Tangibles, including rights to enter upon and occupy the surface
of Excluded Lands on which the Excluded Tangibles and the
Excluded ▇▇▇▇▇ are located and rights to use the surface of
lands to gain access thereto;
(u) "EXCLUDED TANGIBLES" means the interests of the Limited
Partnership that are directly related to the Excluded Petroleum
and Natural Gas Rights in all other tangible depreciable
property and assets used or intended to be used in producing,
processing, gathering, treating, storing, measuring or injecting
Petroleum Substances or any of them from the Excluded Lands or
lands pooled or unitized therewith or in connection with water
injection or removal operations that pertain to the Excluded
Petroleum and Natural Gas Rights, including, without limitation,
all Excluded ▇▇▇▇▇, gas plants, oil batteries, production
equipment, pipelines, pipeline connections, meters, dehydrators,
motors, compressors, treaters, dehydrators, scrubbers,
separators, pumps, tanks, boilers, inventory, and communication
equipment;
(v) "EXCLUDED TITLE AND OPERATING DOCUMENTS" means, to the extent
directly related to the Excluded Petroleum and Natural Gas
Rights or the Excluded Tangibles, (i) the Excluded Leases, (ii)
assignments, trust declarations, operating agreements, royalty
agreements, overriding royalty agreements, gross overriding
agreements, participation agreements, farm-in agreements, sale
and purchase agreements, pooling agreements, common stream
agreements, easements, surface leases and pipeline crossing
agreements, (iii) Sale, Processing and Transportation
Agreements; (iv) agreements for construction, ownership and
operation of gas plants, gas gathering systems and other
facilities, (v) permits, licenses and approvals, and (vi) other
agreements which relate to the Excluded Petroleum and Natural
Gas Rights or the Excluded Tangibles or the ownership, operation
or exploitation thereof;
(w) "EXCLUDED ▇▇▇▇▇" means all ▇▇▇▇▇ (including without limitation
producing, shut-in, suspended, capped, abandoned, injection and
disposal ▇▇▇▇▇) located on the Excluded Lands or Excluded Lands
pooled or unitized therewith;
(x) "HAZARDOUS MATERIALS" has the meaning given to it in the
relevant Environmental Law;
(y) "GOVERNMENTAL AUTHORITY" means, the government of Canada, the
government of an applicable Canadian province or territory and
each ministry, department, commission, board, bureau or other
agency of, or municipality, regional district or other local
governing body established by, any such government, or other
political
-5-
subdivision thereof, and includes any person exercising
executive, legislative, judicial, regulatory or administrative
functions of, or pertaining to, any such government;
(z) "GST" means the goods and services tax payable pursuant to the
GST Legislation;
(aa) "GST LEGISLATION" means the EXCISE TAX ACT, 1980 RSC, C. E-15,
as amended and the regulations thereunder;
(bb) "LANDS" means the Petroleum Substances within, under or upon the
lands described in the Land Schedule, subject to the
restrictions and exclusions set forth therein as to Petroleum
Substances and geological formations, and any other interests in
oil and gas properties legally or beneficially owned by Seller;
(cc) "LAND SCHEDULE" means Schedule "A";
(dd) "LEASES" means the leases, licenses, permits and similar
documents of title described in the Land Schedule by virtue of
which the holder thereof is entitled to drill for, win, take,
own or remove Petroleum Substances within, upon or under the
Lands and includes, if applicable, all renewals and extensions
of such documents and all documents issued in substitution
therefore;
(ee) "LIMITED PARTNERSHIP" mean the Patch Oilsands Limited
Partnership established and governed by the Limited Partnership
Agreement;
(ff) "LIMITED PARTNERSHIP AGREEMENT" means the Limited Partnership
Agreement dated for reference May 31, 2006 among the Seller, as
initial limited partner, Micron Enviro Systems Inc. and Habanero
Resources Inc. as limited partners and Patch Oilsands Ltd., as
general partner;
(gg) "MISCELLANEOUS INTERESTS" means Seller's interests in all
property, assets, interests and rights (other than the Petroleum
and Natural Gas Rights and the Tangibles) directly related to
the Petroleum and Natural Gas Rights or the Tangibles but only
to the extent such property, assets, interests and rights are
directly related to Petroleum and Natural Gas Rights or the
Tangibles, including without limitation any and all of the
following:
(i) contracts and agreements directly related to the
Petroleum and Natural Gas Rights or the Tangibles
including, without limitation, the Title and Operating
Documents;
(ii) the Surface Rights;
(iii) the Data; and
(iv) the ▇▇▇▇▇, including well bores and casing,
-6-
but specifically excludes (a) Petroleum Substances produced
prior to the Effective Time and (b) accounts receivable accruing
prior to the Effective Time;
(hh) "PARTIES" means the parties to this Agreement and "Party" means
any one of them;
(ii) "PERMITTED ENCUMBRANCES" means:
(i) liens for taxes, assessments and governmental charges
for which payment is not due;
(ii) liens incurred or created in the ordinary course of
business as security in favour of the person who is
conducting the development or operation of the property
to which such liens relate for Seller's proportionate
share of costs and expenses of such development or
operation for which payment is not due;
(iii) mechanics', builders' and materialmen's liens in respect
of services rendered or goods supplied for which payment
is not due;
(iv) easements, rights of way, servitudes and other similar
rights in land (including, without limitation, rights of
way and servitudes for roads; railways; sewers; drains;
gas and oil pipelines; gas and water mains and electric
light, power, telephone, telegraph and cable television
conduits, poles, wires and cables);
(v) the right reserved to or vested in any municipality or
government or other public authority by the terms of any
lease, license, franchise, grant or permit or by any
statutory provision, to terminate any such lease,
license, franchise, grant or permit or to require annual
or other periodic payments as a condition of the
continuance thereof;
(vi) rights of general application reserved to or vested in
any governmental authority to levy taxes on Petroleum
Substances or Excluded Petroleum Substances, as the case
may be, or any of them or the income therefrom, and
governmental requirements and limitations of general
application;
(vii) royalty burdens, liens, adverse claims, penalties,
reductions in interests and other encumbrances set out
(A) in the Land Schedule or the Excluded Land Schedule,
as the case may be, or (B) in the Title and Operating
Documents or the Excluded Title and Operating Documents,
as the case may be, to the extent that they would
constitute Permitted Encumbrances under section
1.1(hh)(i) to (vi) and (viii); and
(viii) the reservations, limitations, provisions and conditions
in any original grants from the Crown or freehold
lessors of any of the Lands or Excluded Lands, as the
case may be, or interests therein and statutory
exceptions to title;
-7-
(jj) "PETROLEUM AND NATURAL GAS RIGHTS" means (i) all of the interest
of Seller in the Leases (to the extent they pertain to the
Lands) including, without limitation, the interests that are
attributed to Seller in the Land Schedule, (ii) the fee simple
interests (if any) in mines and minerals in the Lands attributed
to Seller in the Land Schedule, and (iii) all of the interest of
Seller (if any) in royalties, net profits interests and similar
interests including, without limitation, the interests
attributed to Seller in the Land Schedule;
(kk) "PETROLEUM SUBSTANCES" means crude oil, petroleum, natural gas,
natural gas liquids, coalbed methane and other related
hydrocarbons (except coal) and any and all other substances
(including sulphur), whether liquid, solid or gaseous and
whether hydrocarbons or not, produced in association therewith,
the rights to which are granted pursuant to the Leases or the
Excluded Leases, as the case may be;
(ll) "PURCHASE PRICE" means the purchase price for the Purchased
Assets as set out in Section 2.3;
(mm) "PURCHASED ASSETS" means the Purchased Securities and the
Assets;
(nn) "PURCHASED SECURITIES" means one (1) common share of Patch
Oilsands Ltd. and 1,470,000 Cash Units and 403,279 Share Units
of the Limited Partnership (as such terms are defined in the
Limited Partnership Agreement;
(oo) "SALE, PROCESSING AND TRANSPORTATION AGREEMENTS" means
agreements for the sale of Petroleum Substances produced from
the Lands or Excluded Lands, as the case may be, or lands pooled
or unitized therewith and agreements providing for the
gathering, transportation, compression, processing, treatment or
storage of Petroleum Substances produced from the Lands or
Excluded Lands, as the case may be, or lands pooled or unitized
therewith;
(pp) "SEISMIC DATA" means seismic data owned by the Seller, including
surveyors' ground elevation records, shot point maps, drillers'
logs, shooters' records, seismograph records, seismograph
magnetic tapes, monitor records, field records and record
sections, excluding maps and interpretations made therefrom;
(qq) "SPECIFIC CONVEYANCES" means all conveyances, assignments,
transfers, novations and other documents or instruments that are
reasonably required or desirable, in accordance with normal oil
and gas industry practices, to convey, assign and transfer the
Assets to Buyer, or its nominee, and to novate Buyer, or its
nominee, into the Title and Operating Documents in the place and
stead of Seller with respect to the Assets;
(rr) "SURFACE RIGHTS" means all rights to use or occupy the surface
of lands (including, but not limited to, the Lands) which are
used or held for use in connection with the Petroleum and
Natural Gas Rights or the Tangibles, including rights to enter
upon and occupy the surface of lands on which the Tangibles and
the ▇▇▇▇▇ are located and rights to use the surface of lands to
gain access thereto;
-8-
(ss) "TANGIBLES" means the interests of Seller that are directly
related to the Petroleum and Natural Gas Rights in all other
tangible depreciable property and assets used or intended to be
used in producing, processing, gathering, treating, storing,
measuring or injecting Petroleum Substances or any of them from
the Lands or lands pooled or unitized therewith or in connection
with water injection or removal operations that pertain to the
Petroleum and Natural Gas Rights, including, without limitation,
all ▇▇▇▇▇, gas plants, oil batteries, production equipment,
pipelines, pipeline connections, meters, dehydrators, motors,
compressors, treaters, dehydrators, scrubbers, separators,
pumps, tanks, boilers, inventory, and communication equipment;
(tt) "TITLE AND OPERATING DOCUMENTS" means, to the extent directly
related to the Petroleum and Natural Gas Rights or the
Tangibles, (i) the Leases, (ii) assignments, trust declarations,
operating agreements, royalty agreements, overriding royalty
agreements, gross overriding agreements, participation
agreements, farm-in agreements, sale and purchase agreements,
pooling agreements, common stream agreements, easements, surface
leases and pipeline crossing agreements, (iii) Sale, Processing
and Transportation Agreements; (iv) agreements for construction,
ownership and operation of gas plants, gas gathering systems and
other facilities, (v) permits, licenses and approvals, and (vi)
other agreements which relate to the Petroleum and Natural Gas
Rights or the Tangibles or the ownership, operation or
exploitation thereof
(uu) "▇▇▇▇▇" means all ▇▇▇▇▇ (including without limitation producing,
shut-in, suspended, capped, abandoned, injection and disposal
▇▇▇▇▇) located on the Lands or lands pooled or unitized
therewith.
PART 2
PURCHASE AND SALE
PURCHASE AND SALE
2.1 Upon the terms and subject to the conditions of this Agreement, the
Seller agrees to sell and convey to the Buyer, and the Buyer agrees to purchase
from the Seller, at the Closing Time, the Purchased Assets for the Purchase
Price.
2.2 Notwithstanding anything in this Agreement to the contrary, the
parties acknowledge and agree that this Agreement is not intended to transfer to
the Buyer the Excluded Assets and that the Purchase Price does not include any
consideration for the Excluded Assets; and in this regard the Buyer agrees to
execute and deliver all required documents and instruments of transfer or title
and do all things necessary to transfer back to the Seller the Excluded Assets,
and further acknowledges and agrees that as of and from the Closing Time until
such time as the transfer of the Excluded Assets from the Buyer to the Seller is
effective, the Buyer will hold the entire legal right, title and interest in and
to the Excluded Assets for the sole use, benefit, enjoyment and advantage of the
Seller.
-9-
PURCHASE PRICE
2.3 The purchase price (the "PURCHASE PRICE") for the Purchased Assets is
payable as follows:
(a) by payment of $100,000, by way of non-refundable deposit (which
the Parties acknowledge has been paid to the Seller as of the
date of this Agreement);
(b) by the issuance to the Seller on the Closing Date of 1,000,000
restricted common shares (the "SHARES") of the Buyer which the
Parties agree have an aggregate value of $2,100,000; and
(c) by payment of $800,000, by solicitors trust cheque or by wire
transfer of immediately available funds to the trust account of
the Seller's solicitors on the Closing Date.
SALES AND TRANSFER TAXES
2.4 The Purchase Price does not include GST. The Buyer shall pay all sales
and transfer taxes due or payable to any governmental authority incurred or to
be incurred in connection with the sale and transfer of the Purchased Assets by
the Seller to the Buyer hereunder.
ALLOCATION OF PURCHASE PRICE
2.5 The Purchase Price shall be allocated among the Purchased Assets as
follows:
(a) to Petroleum and Natural Gas Rights $ 2,160,000
(b) to Tangibles $ 539,999
(c) to Miscellaneous Interests $ 1.00
(d) to Purchased Securities $ 300,000
-----------
TOTAL $ 3,000,000
COSTS AND REVENUES TO BE APPORTIONED
2.6 (a) Except as otherwise provided in this Section 2.6 and subject
to all other provisions of this Agreement, the Parties will
adjust and apportion expenditures and revenues of every kind and
nature incurred, payable or paid in respect of the operation of
the Assets including operating, maintenance, development and
capital costs, proceeds from the sale of Petroleum Substances,
royalties, property taxes, gas cost allowance (or similar
allowances), prepayments and deposits, duties, taxes and
assessments (other than income taxes), as at the Effective Time.
(b) The Seller is entitled to the revenues and benefits from the
ownership and operation of the Assets accrued prior to the
Effective Time and is responsible for
-10-
and will pay for the expenditures pertaining to the ownership,
operation and development of the Assets incurred prior to the
Effective Time.
(c) The Buyer is entitled to the revenues and benefits from the
ownership and operation of the Assets accrued from and after the
Effective Time and is responsible for and will pay for the
expenditures pertaining to the ownership, operation and
development of the Assets incurred from and after the Effective
Time.
(d) All statements prepared under this Section 2.6 will be prepared
as contemplated herein and in accordance with generally accepted
accounting principles applying the accrual method.
(e) Two Business Days prior to the Closing Date, the Seller shall
deliver to the Buyer a written interim statement of adjustments
under this Agreement and the Seller will make available to
representatives of the Buyer all information necessary for the
Buyer to confirm the calculations in the statement. The Parties
will cooperate in settling the adjustments and payment to be
made on an interim basis and the amount so agreed will be
employed for the purposes of the Closing and completion of the
transactions contemplated by this Agreement. For the purposes of
the interim statement of adjustments, there shall be an accrual
of net operating revenue from the Assets.
(f) By June 30, 2007, the Parties will have cooperated and prepared
a final statement of all adjustments and payments to be made
pursuant to this Agreement. Upon agreement as to all adjustments
and payments to be made, the net amount will be remitted by the
Party who in the net result is obliged to make payment and in
the event Buyer is entitled to an adjustment in its favour, such
amount shall be set-off from any amount paid to Seller under
Section 2.3. No further adjustment shall be permitted or
effected after June 30, 2007, subject to 2.6(h) and (i);
(g) Notwithstanding the preceding subclause, each Party will have
the right, following the Closing Date until June 30, 2007, to
examine, copy and audit the records of the other Parties
relative to the Assets for the purpose of effecting or verifying
adjustments required under this Section. The auditing Party
will, upon reasonable notice, conduct that audit at its sole
expense during normal business hours at the offices of the
audited Party or at such other premises where those records are
maintained. Any claims of discrepancies disclosed by that audit
will be made in writing to the audited Party as soon as
reasonably practicable. That Party will respond in writing to
any such claims as soon as reasonably practicable. The Parties
will use good faith efforts to resolve any outstanding claims of
discrepancies by June 30, 2007.
(h) If the Parties cannot resolve any outstanding claims of
discrepancies by June 30, 2007 pursuant to section 2.6(g), the
matter may be referred to binding arbitration by either Party
under the provisions of the ARBITRATION ACT (Alberta) provided
notice of such claim must be given by the claiming Party to the
other Party on or
-11-
before June 30, 2007. Nothing in this section 2.6 shall be
construed as permitting an adjustment resulting from a re-
assessment of the value of the Assets. No net adjustment(s)
for the benefit of Buyer shall exceed in the aggregate the
Purchase Price, and the Seller shall have no liability pursuant
to this section 2.6 in excess of the Purchase Price.
(i) Notwithstanding section 2.6, the Parties acknowledge that any
net benefits to Seller resulting from all joint venture and
other audits commenced by Seller or its agents before June 30,
2007 respecting periods prior to the Effective Time shall be
credited to Seller (and paid in conjunction with the remittance
of any funds pursuant to Section 2.3) if such benefits have
either been received by Buyer on behalf of Seller prior to June
30, 2007, or the payor of such amount has confirmed in writing
to each of Seller and Buyer by June 30, 2007 that the amount is
owing and that it will be paid to Buyer as soon as reasonably
practicable.
(j) All payments made after the Effective Time are to be paid within
fifteen (15) days after the amount is determined and, if not
paid within the fifteen (15) days, will thereafter bear interest
until paid at a rate of interest equal to the Prime Rate plus
one (1%) percent compounded annually.
(k) All freehold mineral taxes, surface and mineral lease rentals
and any similar payments made by the Seller to preserve any of
the Leases or any Surface Rights shall be apportioned between
the Seller and the Buyer as at the Effective Time.
PART 3
CONDITIONS AND RISK OF LOSS
CONDITIONS FOR THE BENEFIT OF THE BUYER
3.1 The obligation of the Buyer to purchase the Purchased Assets pursuant
to this Agreement at or before the Closing Time is subject to the fulfilment, at
or before the Closing Time, of each of the following conditions which may be
waived by the Buyer:
(a) the Seller will have performed and complied in all material
respects with all of its covenants and obligations to be
performed and complied with by it pursuant to this Agreement at
or before the Closing Time;
(b) no material loss, damage or destruction to the Purchased Assets
that are material to their use as oil and gas properties has
occurred prior to the Closing Date (other than a change due to
changes in general economic conditions (including commodity
prices) applicable to corporations conducting business similar
to that of Seller) except as have been previously disclosed to
Buyer prior to the date hereof; and
(c) the representations and warranties of the Seller set out in
Section 4.1 of this Agreement will be true and correct in all
material respects on and as of the Closing Time with the same
effect as though such representations and warranties had been
made at and as of such time except:
-12-
(i) insofar as such representations and warranties are given
as of a particular date or for a particular period and
relate solely to such date or period,
(ii) to the extent any such representations and warranties
have been waived by the Buyer or affected by the
transactions contemplated hereby, and
(iii) for matters that could not reasonably be expected to
have a material adverse effect.
TERMINATION OR WAIVER OF CONDITIONS BY THE BUYER
3.2 If any of the conditions set forth in Section 3.1 are not fulfilled or
waived by Buyer on or before the applicable date or time set out therein, the
Buyer may terminate this Agreement by notice to the Seller and in such event the
Buyer will be released from all further obligations hereunder. Any such
conditions may be waived in whole or in part by the Buyer without prejudice to
any of its rights under this Agreement.
CONDITIONS FOR THE BENEFIT OF THE SELLER
3.3 The obligation of the Seller to sell the Purchased Assets pursuant to
this Agreement is subject to the fulfilment, at or before the Closing Time, of
each of the following conditions which may be waived by the Seller:
(a) the Buyer will have performed and complied in all material
respects with all of its covenants and obligations to be
performed and complied with by it pursuant to this Agreement at
or before the Closing Time;
(b) the representations and warranties of the Buyer set out in this
Agreement will be true and correct in all material respects on
and as of the Closing Time with the same effect as though such
representations and warranties had been made at and as of such
time except:
(i) insofar as such representations and warranties are given
as of a particular date or for a particular period and
relate solely to such date or period,
(ii) to the extent any such representations and warranties
have been waived by the Seller or affected by the
transactions contemplated hereby, and
(iii) for matters that could not reasonably be expected to
have a material adverse effect; and
(c) all amounts to be paid or documents to be delivered by the Buyer
and Excluded Assets Specific Conveyances to transfer the
Excluded Assets by the Limited Partnership to Seller at Closing
Time pursuant hereto shall have been paid or delivered, as the
case may be, to Seller by Buyer and the Limited Partnership at
the time and in the form stipulated in this Agreement provided
that it is acknowledged that the Excluded Assets will be
transferred on the basis that the Seller shall hold same in
trust for Habanero Resources Inc. as to a 20.833%
-13-
interest in the Excluded Assets and Micron Enviro Systems Inc.
as to a 4.1667% interest in the Excluded Assets.
TERMINATION OR WAIVER OF CONDITIONS BY THE SELLER
3.4 If any of the conditions set forth in Section 3.3 are not fulfilled on
or before the applicable date set out therein, the Seller may terminate this
Agreement by notice to the Buyer and in such event the Seller will be released
from all further obligations hereunder. Any such conditions may be waived in
whole or in part by the Seller without prejudice to any of its rights under this
Agreement.
RISK OF LOSS
3.5 Until the Closing Time, the Purchased Assets will remain at the risk
of the Seller. If any destruction or damage to the Purchased Assets occurs on or
before the Closing Time, the Seller will forthwith give notice thereof to the
Buyer and the Buyer will have the option, exercisable by notice given within
five Business Days after the Seller gives the notice of such destruction or
damage:
(a) to reduce the Purchase Price by an amount equal to the cost of
repair of the assets so damaged or destroyed and to complete the
purchase of the Purchased Assets;
(b) to reduce the Purchase Price by an amount equal to the
deductible amount under the applicable policies of insurance, in
which event all proceeds of insurance or compensation for
destruction or damage of such assets will be payable to the
Buyer and all right and claim of the Seller to any such amounts
not paid by the Closing Date will be assigned to the Buyer; or
(c) to terminate this Agreement and not complete the transactions
contemplated by this Agreement if, in the reasonable opinion of
the Buyer, such destruction or damage involves Purchased Assets
with a value in excess of 50% of the Purchase Price and in such
event the Seller and the Buyer will be released from all further
obligations hereunder.
If the Buyer elects to reduce the Purchase Price pursuant to this section, the
Seller and the Buyer will at the Closing Time determine the amount of the
reduction to the extent that it is then determinable and will undertake to
adjust such amount as soon as reasonably practical after the Closing Date, if
necessary.
PART 4
REPRESENTATIONS, WARRANTIES AND COVENANTS
REPRESENTATIONS AND WARRANTIES OF THE SELLER
4.1 In order to induce the Buyer to enter into and to consummate the
transactions contemplated by this Agreement, the Seller represents and warrants
to the Buyer the statements contained in Part 1 of Schedule B as representations
and warranties that are true, accurate and
-14-
complete as at the date of execution and delivery of this Agreement and, as
at the Closing Time, as if such representations and warranties were made at each
such time.
REPRESENTATIONS AND WARRANTIES OF THE BUYER
4.2 In order to induce the Seller to enter into and to consummate the
transactions contemplated by this Agreement, the Buyer represents and warrants
to the Seller the statements contained in Part 2 of Schedule B as
representations and warranties that are true, accurate and complete as at the
date of execution and delivery of this Agreement and, as at the Closing Time, as
if such representations and warranties were made at each such time.
COVENANTS OF THE SELLER
4.3 The Seller covenants and agrees with the Buyer that:
(a) at or before the time required for delivery, it will duly
execute and deliver or arrange to have duly executed and
delivered all documents and instruments to be delivered by it
pursuant to this Agreement;
(b) it will use all reasonable efforts to obtain the Specific
Conveyances, and will deliver to the Buyer copies of the
Specific Conveyances forthwith after receipt thereof;
(c) between the date hereof and the Closing Time, it will
(i) maintain and preserve its interest in the Purchased
Assets in good standing,
(ii) maintain in force all policies of insurance relating to
the Purchased Assets in effect on the date of this
Agreement,
(iii) make all necessary filings and payments with
governmental and taxation authorities in connection with
the Purchased Assets in a timely manner,
(d) between the date hereof and the Closing Time, it will not,
without the prior consent of the Buyer, sell, transfer or
otherwise dispose of any of the Purchased Assets;
(e) it will promptly advise the Buyer of the occurrence of any
circumstance of which the Seller becomes aware which materially
adversely affects, or with the giving of notice or lapse of time
or otherwise could materially adversely affect, the ability of
the Seller to complete the transactions contemplated in this
Agreement; and
(f) as soon it has determined that a state of facts exists which
could reasonably and materially be expected to result in
(i) a representation or warranty referred to in Section 4.1
being untrue, inaccurate or incomplete, or
-15-
(ii) the non-fulfilment of any of the conditions set out in
Section 3.1,
it will notify the Buyer in writing of such state of facts.
COVENANTS OF THE BUYER
4.4 The Buyer covenants and agrees with the Seller that
(a) at or before the time required for delivery, it will duly
execute and deliver or arrange to have duly executed and
delivered all documents and instruments to be delivered by it
pursuant to this Agreement,
(b) it will use all reasonable efforts to assist the Buyer in
obtaining the Consents, and will deliver to the Buyer copies of
the Consents forthwith after receipt thereof,
(c) it will promptly advise the Seller of the occurrence of any
circumstance of which the Buyer becomes aware which materially
adversely affects, or with the giving of notice or lapse of time
or otherwise could materially adversely affect, the ability of
the Buyer to complete the transactions contemplated in this
Agreement, and
(d) as soon as it has determined that a state of facts exists which
could reasonably be expected to result in
(i) a representation or warranty referred to in Section 4.2
being untrue, inaccurate or incomplete, or
(ii) the non-fulfilment of any of the conditions set out in
Section 3.3
it will notify the Seller in writing of such state of facts; and
(e) to change the name of the Limited Partnership and Patch Oilsands
Ltd. to remove any reference to "Patch" within 30 days of the
Closing Date.
SURVIVAL OF COVENANTS, REPRESENTATIONS AND WARRANTIES
4.5 The covenants, representations and warranties contained herein,
including but not limited to those in Schedule B, or in certificates or
documents delivered pursuant to or in connection with the transactions herein
contemplated will survive the Closing Date for a period of one year.
PART 5
CLOSING
TIME AND PLACE OF CLOSING
5.1 The Closing will take place
-16-
(a) at the offices of ▇▇▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇▇▇ LLP at ▇▇▇▇ ▇▇▇▇▇▇▇▇
▇▇▇▇▇, ▇▇▇ - ▇▇▇ ▇▇▇▇▇▇ ▇.▇., ▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇, ▇▇▇ ▇▇▇ at the
Closing Time on the Closing Date; or
(b) at such other place, date or time as the parties agree.
DELIVERIES OF THE SELLER
5.2 The Seller shall deliver at or before Closing:
(a) directors' resolutions of Patch Oilsands Ltd. authorizing the
transfer of all the issued and outstanding shares of Patch
Oilsands Ltd. from the Seller to the Buyer;
(b) share certificate(s) representing all the issued and outstanding
shares of Patch Oilsands Ltd., signed off for transfer from the
Seller to the Buyer;
(c) a share certificate representing all the issued and outstanding
shares of Patch Oilsands Ltd., registered in the name of the
Buyer;
(d) resignations of all the directors and officers of Patch Oilsands
Ltd.;
(e) written consent of Patch Oilsands Ltd. to the transfer of the
Purchased Securities from the Seller to the Buyer;
(f) certificates registered in the name of the Buyer representing
the Purchased Securities;
(g) all Specific Conveyance documents as the Buyer's solicitors
shall reasonably require;
(h) a "bring-down certificate" signed by a senior officer of the
Seller confirming as of the Closing Time the satisfaction of the
conditions to closing for the benefit of the Buyer under Section
3.1; and
(i) all documentation related to the Purchased Assets in the
possession or within the control of the Seller, including
without limitation all scientific and technical data.
DELIVERIES OF THE BUYER
5.3 The Buyer shall deliver at or before the Closing Time:
(a) a certificate or certificates registered to or to the direction
of the Seller representing 1,000,000 restricted shares in the
capital stock of the Buyer;
(b) $800,000 by solicitor's trust cheque or by wire transfer of
immediately available funds to the trust account of the Buyer's
solicitor;
-17-
(c) a "bring-down certificate" signed by a senior officer of the
Buyer confirming as of the Closing Time the satisfaction of the
conditions to closing for the benefit of the Seller under
Section 3.3;
(d) a certified copy of resolutions of the board of directors of the
Buyer authorizing the execution and delivery of this Agreement,
the issuance of shares set out in Section 5.3(a) and the
completion of the purchase of the Purchased Assets and all other
transactions herein; and
(e) Excluded Assets Specific Conveyances relating to the Excluded
Assets as Selling solicitors shall reasonably require.
PART 6
GENERAL
AMENDMENT OR TERMINATION
6.1 Except as otherwise expressly provided herein, this Agreement may not
be amended or terminated except by an instrument in writing executed by the
parties.
ENTIRE AGREEMENT
6.2 The provisions of this Agreement constitute the entire agreement
between the Seller and the Buyer and supersede all previous expectations,
understandings, communications, representations and agreements between the
parties.
NOTICES
6.3 Every notice, request, demand, direction or other communication (each a
"NOTICE") required or permitted to be given pursuant to this Agreement by either
party to the other will be deemed to be well and sufficiently given if in
writing and delivered by hand or transmitted by facsimile as follows:
(a) if to the Buyer at:
▇▇▇-▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇▇▇▇▇, ▇▇ ▇▇▇ ▇▇▇
Attention: ▇▇▇▇▇ ▇▇▇▇
Facsimile: 604.688.1817
-18-
With a copy to:
Lang ▇▇▇▇▇▇▇▇ LLP
▇▇▇▇-▇▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇▇▇
▇.▇. ▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇
▇▇▇ ▇▇▇
Attention: ▇▇▇▇▇ ▇▇▇▇▇
Facsimile: 604.691.7356
(b) if to the Seller at:
Suite # 300, 441 - 5th Avenue S.W.
▇▇▇▇▇▇▇, ▇▇ ▇▇▇ ▇▇▇
Attention: ▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇
Facsimile: 403.441.4395
with a copy to:
▇▇▇▇▇▇ ▇▇▇▇▇▇ Gervais LLP
▇▇▇▇ ▇▇▇▇▇▇▇▇ ▇▇▇▇▇
▇▇▇▇ - ▇▇▇ ▇▇▇▇▇▇ ▇.▇.
▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇ ▇▇▇ ▇▇▇
Attention: ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇
Facsimile: (▇▇▇) ▇▇▇-▇▇▇▇
or to such other address or transmission receiving station as is specified by
the particular party by Notice to the other.
DEEMED RECEIPT
6.4 Any Notice delivered or sent as aforesaid will be deemed conclusively
to have been effectively given and received on the day such Notice was delivered
or sent as aforesaid if it was delivered or sent on a day that was a Business
Day or on the next day that is a Business Day if it was delivered or sent on a
day that was not a Business Day.
COSTS AND EXPENSES
6.5 Except as expressly set forth herein, each party hereto will be
responsible for its own costs and expenses, including legal and accounting
costs, in connection with the transactions contemplated herein.
-19-
CUMULATIVE REMEDIES
6.6 The rights of the parties provided in this Agreement are cumulative and no
exercise or enforcement by the parties of any right or remedy under this
Agreement will preclude the exercise or enforcement by the parties of any other
right or remedy under this Agreement or otherwise available to the parties at
law or in equity.
TIME
6.7 Time is of the essence in this Agreement.
FURTHER ASSURANCES
6.8 Each party to this Agreement will use all reasonable efforts to give
full effect to the transactions contemplated herein, and will execute and
deliver all such further documents and instruments and do all such further acts
and things as the other party reasonably requests to evidence, carry out and
give full effect to the terms, conditions, intent and meaning of this Agreement.
ENUREMENT
6.9 This Agreement will enure to the benefit of and be binding on the
respective successors and assigns of each party hereto.
GOVERNING LAW
6.10 This Agreement is and will be deemed to have been made in British
Columbia, and for all purposes will be governed exclusively by and construed and
enforced in accordance with the laws prevailing in British Columbia.
ARBITRATION
6.11 A dispute between the parties as to the interpretation of this
Agreement or as to a matter to be agreed under this Agreement, or otherwise
arising under this Agreement, will be submitted for determination by a single
arbitrator appointed and acting pursuant to the COMMERCIAL ARBITRATION ACT
(British Columbia).
CURRENCY
6.12 All currency references herein shall refer to Canadian dollars.
KNOWLEDGE
6.13 Where in this Agreement a Party makes a representation or warranty on
the basis of knowledge or awareness of such Party, such knowledge or awareness
consists only of the actual knowledge or awareness of the officers of such Party
without further inquiry.
-19-
COUNTERPARTS
6.14 This Agreement may be executed in any number of counterparts and
delivered, in original form or by electronic facsimile, each of which will
together, for all purposes, constitute one and the same instrument as if the
parties had executed the same document, and all counterparts will be construed
together and constitute one and the same instrument.
IN WITNESS WHEREOF this Agreement has been executed by the parties on the day
and year first above written.
GREAT NORTHERN OIL SANDS INC.
Per: /s/ ▇▇▇▇▇ ▇▇▇▇
--------------------------------------------
Authorized Signatory
PATCH ENERGY INC.
Per: /s/ ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇
--------------------------------------------
Authorized Signatory
SCHEDULE A
PART 1
DESCRIPTION OF ASSETS
PART I - LANDS, LEASES, INTEREST AND ENCUMBRANCES
====================================================================================================================================
LEASE DESCRIPTION LAND DESCRIPTION VENDOR'S INTEREST ENCUMBRANCES
------------------------------------------------------------------------------------------------------------------------------------
Alberta Crown PNG Lease # N 22, 12-5 W4M 20% Crown Royalty & 0.5% GOR payable to
0403050008 PNG below base Med. Hat to base Covenant Resources Ltd.
Mannville
------------------------------------------------------------------------------------------------------------------------------------
Alberta Crown PNG Lease # SW & Lsds 11 & 12 of 26, 12-5 W4M 20% Crown Royalty & 0.5% GOR payable to
0403030044 Petroleum to base Mannville Covenant Resources Ltd.
------------------------------------------------------------------------------------------------------------------------------------
B.C. Crown PNG Lease # 57548 Sec. 36, 80-18 W6M 20% ▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇▇
▇▇▇. ▇ & ▇, ▇▇-▇▇ ▇▇▇ 12.5% APO SSGOR 1/23.8365 (5 - 12%) on oil and
PNG to base Artex-Halfway-Doig 12% on all other substances payable BPO
to Terra Energy Corp.
------------------------------------------------------------------------------------------------------------------------------------
B.C. Crown Drilling Licence # Sec. 25, 80-18 W6M 20% BPO Crown Royalty
57744 PNG to top Montney, excluding Basal 12% APO SSGOR 1/23.8365 (5 - 12%) on oil and
Lag 12% on all other substances payable BPO
to Terra Energy Corp.
------------------------------------------------------------------------------------------------------------------------------------
Portion of Freehold P&NG Lease Lsd's 2, 3, 4, 6, 7, 8 & NE 13, 12.5% 17.5% Freehold LOR payable to Prairie
dated May 16, 1980 33-24 W3M Royalty Trust
PNG to base Viking
------------------------------------------------------------------------------------------------------------------------------------
Portions of two Freehold P&NG NW 13 & Lsd's 2, 3, 4, 9 & 16 of 9% 17.5% Freehold LOR payable to Prairie
Leases dated May 16, 1980 23, 33-24 W3M Royalty Trust
PNG to base Viking
------------------------------------------------------------------------------------------------------------------------------------
Alberta Crown PNG Lease # Lsd 3 of 28, 49-2 W4M 60% Crown Royalty
040509007 All PNG 1% GOR payable to ▇▇▇▇▇ ▇. ▇▇▇▇▇▇
------------------------------------------------------------------------------------------------------------------------------------
Alberta Crown PNG Lease # Lsd 4 of 28, 49-2 W4M 100% BPO Crown Royalty
040509007 All PNG 60% APO 1% GOR payable to ▇▇▇▇▇ ▇. ▇▇▇▇▇▇
SSGOR 1/23.8365 (5 - 15%) on oil and
15% on all other substances payable BPO
to Bounty Developments Ltd.
------------------------------------------------------------------------------------------------------------------------------------
-2-
====================================================================================================================================
LEASE DESCRIPTION LAND DESCRIPTION VENDOR'S INTEREST ENCUMBRANCES
------------------------------------------------------------------------------------------------------------------------------------
Worsley ▇▇▇ ▇▇, ▇▇▇ ▇▇▇ ▇▇▇ ▇% ▇▇▇ ▇▇▇▇▇▇
1% ▇▇▇▇▇ Resources
------------------------------------------------------------------------------------------------------------------------------------
▇▇▇▇▇ ▇▇▇ ▇▇ ▇▇▇ ▇▇▇ ▇▇▇ ▇% ▇▇▇ ▇▇▇▇▇▇
1% ▇▇▇▇▇ Resources
====================================================================================================================================
-3-
PART II - ▇▇▇▇▇
00/14-22-012-5W4/0
3-36-080-18W6
7-08-081-17W6
141/02-13-033-24W3/00
101/03-13-033-24W3/00
131/04-13-033-24W3/00
101/06-13-033-24W3/00
101/07-13-033-24W3/00
111/08-13-033-24W3/00
101/09-13-033-24W3/00
101/10-13-033-24W3/00
101/11-13-033-24W3/00
101/12-13-033-24W3/00
101/13-13-033-24W3/00
101/14-13-033-24W3/00
101/15-13-033-24W3/00
141/16-13-033-24W3/00
141/02-23-033-24W3/00
101/03-23-033-24W3/00
101/04-23-033-24W3/00
141/09-23-033-24W3/00
141/16-23-033-24W3/00
02/03-28-049-02W4/0
02/04-28-049-02W4/0
SCHEDULE B
PART 1
REPRESENTATIONS AND WARRANTIES
OF THE SELLER
SELLER STATUS
1.1 The Seller has been duly formed and validly exists as a corporation in
good standing under the laws of Canada.
RESIDENCY
1.2 The Seller is not a non-resident of Canada for the purposes of the
INCOME TAX ACT (Canada).
CORPORATE POWER AND CAPACITY OF THE SELLER
1.3 The Seller has the corporate power and corporate capacity:
(a) to own the Purchased Assets; and
(b) to enter into this Agreement and to perform its obligations
hereunder.
SOLVENCY OF THE SELLER
1.4 The Seller is not insolvent nor has it committed an act of bankruptcy,
proposed a compromise or arrangement to its creditors generally, had any
petition in bankruptcy filed against it, made a voluntary assignment in
bankruptcy or taken any proceeding to be declared bankrupt, to liquidate its
assets or to be dissolved.
ENFORCEABILITY
1.5 The execution and delivery by the Seller of this Agreement and all
other agreements and instruments to be executed and delivered by it pursuant to
this Agreement, and the performance of the Seller's obligations hereunder and
thereunder, are legal, valid and binding obligations on the Seller and are
enforceable against the Seller in accordance with their terms, except to the
extent that:
(a) the availability of equitable remedies is subject to the
discretion of applicable judicial authority; and
(b) enforceability may be limited by bankruptcy, insolvency,
reorganization, arrangement, moratorium or other similar laws
relating to the rights of creditors generally.
-2-
CONSENTS
1.6 No authorization or approval or other action by, and no notice to or
filing with, any governmental authority or regulatory body exercising
jurisdiction over the Purchased Assets or Seller is required for the due
execution, delivery and performance by Seller of this Agreement, other than
authorizations, approvals or exemptions previously obtained and currently in
force.
NO VIOLATION
1.7 The execution and delivery of this Agreement by the Seller and the
consummation of the transactions herein provided for will not:
(a) result in the breach or violation of any, or constitute a
default under or an event that, with the giving of notice or
lapse of time or both, would constitute an event of default
under, or conflict with or cause acceleration of, any obligation
of the Seller under
(i) any contract, consent or approval to which the Seller is
a party or by which the Seller is bound,
(ii) any provision of the constating documents, by-laws or
resolutions of the board of directors (or any committee
thereof) or shareholder of the Seller,
(iii) any judgment, decree, order or award of any court,
Governmental Authority or arbitrator having jurisdiction
over the Seller or the Purchased Assets, or
(iv) any applicable law, statute, ordinance, regulation or
rule; or
(b) result in the creation or imposition of any Encumbrance (other
than a Permitted Encumbrance) on any Purchased Asset.
PATCH OILSANDS LTD.; PATCH OILSANDS LIMITED PARTNERSHIP
1.8 The shares of Patch Oilsands Ltd. forming part of the Purchased Assets
represent 100% of the issued and outstanding shares of Patch Oilsands Ltd.
1.9 To the best of the Seller's knowledge, the 1,470,000 Cash Units and
403,279 Share Units in the Limited Partnership forming part of the Purchased
Assets represent 75% of the issued and outstanding units of the Limited
Partnership and constitute the Seller's entire beneficial interest in the
Limited Partnership.
TITLE TO PURCHASED ASSETS
1.10 Except for the Permitted Encumbrances, the Purchased Assets are free
and clear of all liens, mortgages, royalties, encumbrances and adverse claims
created by, through or under Seller; and, except as expressly set forth
elsewhere in this Agreement, Seller does not otherwise
-3-
make any representation, warranty or covenant as to title to or the encumbrances
or burdens affecting the Purchased Assets.
RIGHTS TO PURCHASE
1.11 Except as disclosed in this Agreement, no person has any right,
agreement, or option, present or future, contingent or absolute, for the
purchase of any of the Purchased Assets as a Consequence of Seller having agreed
to sell the Purchased Assets to Buyer in accordance herewith.
CLAIMS
1.12 There are no actions, claims, suits, judgments, litigation, orders,
investigations or proceedings outstanding or, to the best of the Seller's
knowledge, pending or threatened by or against or concerning the Seller in any
court or before or by any Governmental Authority, or before any arbitrator of
any kind that could reasonably be expected to materially adversely affect the
Seller's ability to perform its obligations pursuant to this Agreement.
GST REGISTRATION NUMBER
1.13 The Seller's GST registration number is 86566 9717 RT0001.
ABILITY TO COMPLETE
1.14 To the best of the knowledge of Seller, there is no fact or
circumstance which adversely affects Seller's ability to complete the
transactions contemplated in this Agreement and neither this Agreement nor any
other document or certificate furnished to Buyer by Seller in connection with
the within contemplated transaction contains any untrue, misleading or
incomplete statement of fact.
COMPLIANCE WITH LAWS
1.15 To the best of the knowledge of the Seller, the Seller has complied
with and is in compliance with all laws, rules and regulations applicable to its
business, except where failure to do so would not have a material adverse effect
on the Assets, and the Seller is not in breach, and has not received any
notification alleging that it is in breach, of any such laws, rules or
regulations applicable to its business, except where failure to do so would not
have a material adverse effect on the Assets.
PART 2
REPRESENTATIONS AND WARRANTIES
OF THE BUYER
BUYER STATUS
2.1 The Buyer has been duly incorporated and validly exists as a corporation
in good standing under the laws of Nevada;
-4-
CORPORATE POWER AND CAPACITY OF THE BUYER
2.2 The Buyer has the corporate power and corporate capacity to enter into
this Agreement and to perform its obligations hereunder.
ENFORCEABILITY
2.3 The execution and delivery by the Buyer of this Agreement and all other
agreements and instruments to be executed and delivered by it pursuant to this
Agreement, and the performance of the Buyer's obligations hereunder and
thereunder, are legal, valid and binding obligations on the Buyer and are
enforceable against the Buyer in accordance with their terms, except to the
extent that:
(a) the availability of equitable remedies is subject to the
discretion of applicable judicial authority, and
(b) enforceability may be limited by bankruptcy, insolvency,
reorganization, arrangement, moratorium or other similar laws
relating to the rights of creditors generally.
CONSENTS
2.4 If the Consents have been received by the Seller or the Buyer, no
authorization, approval, order, licence, permit or consent of any Person, and no
registration, declaration or filing by the Buyer with any Person is required in
order for the Buyer to:
(a) incur its obligations pursuant to this Agreement,
(b) execute and deliver this Agreement and all other documents and
instruments to be delivered by it pursuant to this Agreement,
(c) duly perform and observe the terms and provisions of this
Agreement and any other agreements or instruments to be entered
into pursuant to this Agreement, and
(d) render this Agreement legal, valid, binding and enforceable on
it.
NO VIOLATION
2.5 If the Consents have been received by the Seller or the Buyer, the
execution and delivery of this Agreement by the Buyer and the consummation of
the transactions herein provided for will not:
(a) result in the breach or violation of any, or constitute a
default under or an event that, with the giving of notice or
lapse of time or both, would constitute an event of default
under, or conflict with or cause acceleration of, any obligation
of the Buyer under
-5-
(i) any Contract, consent or approval to which the Buyer is
a party or by which the Buyer is bound,
(ii) any provision of the constating documents, by-laws or
resolutions of the board of directors (or any committee
thereof) or shareholders of the Buyer,
(iii) any judgment, decree, order or award of any court,
Governmental Authority or arbitrator having jurisdiction
over the Buyer, or
(iv) any applicable law, statute, ordinance, regulation or
rule.
ABILITY TO COMPLETE
2.6 To the best of the knowledge of the Buyer, there is no fact or
circumstance which adversely affects the Buyer 's ability to complete the
transactions contemplated in this Agreement and neither this Agreement nor any
other document or certificate furnished to the Seller by the Buyer in connection
with the within contemplated transaction contains any untrue, misleading or
incomplete statement of fact.
GST REGISTRATION NUMBER
2.7 The Buyer's GST registration number is 83122 7723 RT 0001.
GREAT NORTHERN OILSANDS INC.
2.8 The shares issued to the Seller pursuant hereto shall be duly and
validly issued and be fully paid and non-assessable shares of common stock in
the share capital of the Buyer provided that it is acknowledged that such shares
are restricted from transfer under applicable securities laws and there is no
obligation on the Buyer to take any step to address such restrictions. The
authorized capital of the Buyer consists of 5,000,000,000 shares of common stock
in the share capital of the Buyer, of which 54,273,814 shares are currently
issued and outstanding.
SCHEDULE C
EXCLUDED ASSETS
LEISMER AREA, ALBERTA
PART I - LANDS, LEASES, INTEREST AND ENCUMBRANCES
====================================================================================================================================
LEASE DESCRIPTION LAND DESCRIPTION VENDOR'S INTEREST ENCUMBRANCES
------------------------------------------------------------------------------------------------------------------------------------
Crown Oil ▇▇▇▇▇ ▇▇▇▇▇ # ▇ ▇▇, ▇▇-▇ ▇▇▇ 80% Crown Royalty
7406020414 Oil Sands below top Viking to 5% non-convertible GOR payable to
base Woodbend Bounty Developments Ltd.
1% non-convertible GOR payable to
▇▇▇▇▇ Developments Inc.
====================================================================================================================================
PART II - ▇▇▇▇▇
▇▇/06-19-077-09W4/0