Exhibit 2.1
AGREEMENT OF PURCHASE AND SALE
AMONG
PRIMEWEST ENERGY INC.
- AND -
PRIMEWEST OIL AND GAS CORP.
- AND -
ADDISON ENERGY INC.
Dated November 22, 2001
TABLE OF CONTENTS
1.00 INTERPRETATION......................................................................................1
1.01 Definitions.........................................................................................1
1.02 Schedules...........................................................................................6
1.03 References..........................................................................................6
1.04 Headings............................................................................................7
1.05 Singular/Plural.....................................................................................7
1.06 Use Of Canadian Funds...............................................................................7
1.07 Derivatives.........................................................................................7
1.08 Interpretation If Closing Does Not Occur............................................................7
1.09 Conflicts...........................................................................................7
2.00 PURCHASE AND SALE...................................................................................7
2.01 Agreement Of Purchase And Sale......................................................................7
2.02 Allocation Of Purchase Price........................................................................8
2.03 Amount In Lieu Of Interest..........................................................................8
2.04 Payment Of Purchase Price...........................................................................9
3.00 CLOSING............................................................................................10
3.01 Time and Place Of Closing..........................................................................10
3.02 Effective Date Of Transfer.........................................................................10
3.03 Deliveries At Closing..............................................................................11
3.04 Costs Of Registration..............................................................................12
4.00 ADJUSTMENTS........................................................................................12
4.01 Benefits And Obligations To Be Apportioned.........................................................12
4.02 Adjustments To Accounts............................................................................13
4.03 Right To Audit.....................................................................................13
5.00 MAINTENANCE OF BUSINESS............................................................................14
5.01 Assets To Be Maintained In Proper Manner...........................................................14
5.02 Material Commitments...............................................................................14
5.03 Vendor Deemed Agent Of Purchaser...................................................................16
5.04 Transfer of Licences...............................................................................16
6.00 REPRESENTATIONS AND WARRANTIES OF PARTIES..........................................................18
6.01 Vendor's Representations And Warranties............................................................18
6.02 Purchaser's Representations And Warranties.........................................................22
6.03 Survival Of Representations And Warranties.........................................................23
6.04 No Additional Representations Or Warranties By Vendor..............................................23
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6.05 No Merger..........................................................................................24
6.06 Awareness of Breach................................................................................24
7.00 THIRD PARTY RIGHTS AND CONSENTS....................................................................25
7.01 Consents Under Sales Agreements....................................................................25
7.02 Operatorship And Third Parties.....................................................................25
8.00 PURCHASER'S REVIEW.................................................................................25
8.01 Vendor To Provide Access...........................................................................25
8.02 Title Deficiencies.................................................................................25
8.03 Preferential Right of Purchase and Consent Rights..................................................26
8.04 Excluded Assets....................................................................................27
8.05 Value of the Assets................................................................................27
9.00 CONDITIONS TO CLOSING..............................................................................27
9.01 Required Consents..................................................................................27
9.02 Conditions For Benefit Of Purchaser................................................................28
9.03 Conditions For Benefit Of Vendor...................................................................29
9.04 Waiver Of Conditions...............................................................................30
9.05 Failure To Satisfy Conditions......................................................................30
10.00 CONFIDENTIALITY....................................................................................31
10.01 Purchaser's Obligation To Maintain Information Confidential........................................31
10.02 Consultants And Advisors Bound.....................................................................31
10.03 Confidentiality Agreement..........................................................................31
11.00 DEFAULT............................................................................................32
11.01 Remedies Of Injured Party..........................................................................32
11.02 Interest Accrues On Amounts Owing..................................................................32
12.00 LIABILITY AND INDEMNIFICATION......................................................................32
12.01 Responsibility of Vendor...........................................................................32
12.02 Responsibility Of Purchaser........................................................................33
12.03 Assets Acquired On "As Is" Basis...................................................................33
12.04 Limit On Responsibility............................................................................34
12.05 Assumption of Environmental Liabilities and Obligations............................................34
12.06 No Merger Of Legal Responsibilities................................................................35
12.07 Substitution And Subrogation.......................................................................35
12.08 Responsibility Extends To Legal Costs..............................................................35
12.09 No Consequential Damages...........................................................................35
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13.00 WAIVER.............................................................................................35
13.01 Waiver Must Be In Writing..........................................................................35
14.00 ASSIGNMENT.........................................................................................35
14.01 Assignments Before Closing.........................................................................35
14.02 Assignments By Purchaser After Closing.............................................................36
15.00 NOTICE.............................................................................................36
15.01 Service Of Notice..................................................................................36
15.02 Addresses For Notices..............................................................................36
15.03 Right To Change Address............................................................................37
16.00 PUBLIC ANNOUNCEMENTS...............................................................................37
16.01 Parties To Discuss Press Releases..................................................................37
16.02 Signs And Notification To Governmental Agencies....................................................37
17.00 MISCELLANEOUS PROVISIONS...........................................................................38
17.01 Further Assurances.................................................................................38
17.02 Governing Law......................................................................................38
17.03 Time...............................................................................................38
17.04 No Amendment Except In Writing.....................................................................38
17.05 Consequences Of Termination........................................................................38
17.06 Entire Agreement...................................................................................38
17.07 Enurement..........................................................................................39
SCHEDULES
Schedule "A" - Part I - Lands, Leases and Encumbrances
Part II - Preferential Rights
Part III - Tangibles, ▇▇▇▇▇ and Facilities
Part IV - Sale Agreements
Part V - Authorized Expenditures
Part VI - Law Suits and Claims
Part VII - Excluded Assets
Part VIII - Map of Areas
Schedule "B" - General Conveyance
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AGREEMENT OF PURCHASE AND SALE
Garrington, Garrington East and Westward Ho
THIS AGREEMENT made November 22, 2001
AMONG:
PRIMEWEST ENERGY INC., a corporation having an office in the City
of Calgary, in the Province of Alberta (hereinafter called "PW
Energy")
- and -
PRIMEWEST OIL AND GAS CORP., a corporation having an office in
the City of Calgary, in the Province of Alberta (hereinafter
called "PW Oil & Gas")
(PW Energy and PW Oil & Gas, collectively, are hereinafter called
the "Vendor")
- and -
ADDISON ENERGY INC., a corporation having an office in the City
of Calgary, in the Province of Alberta (hereinafter called the
"Purchaser")
WHEREAS the Vendor has agreed to sell the Assets to the Purchaser and the
Purchaser has agreed to purchase the Assets from the Vendor on the terms and
conditions set forth herein;
NOW THEREFORE in consideration of the premises and the mutual covenants
and warranties herein contained, the Parties agree as follows:
1.00 INTERPRETATION
1.01 DEFINITIONS
In this Agreement, including the recitals and the Schedules, the following
terms shall have the respective meanings hereby assigned to them:
(1) "Agreement" means this
Agreement of Purchase and Sale, together with
the Schedules attached hereto and made a part hereof.
(2) "Application" has the meaning given to it in Clause 5.04.
(3) "Assets" means the Petroleum and Natural Gas Rights, the Tangibles
and the Miscellaneous Interests, but specifically excludes the
Excluded Assets.
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(4) "Business Day" means any day of the week except a Saturday, a Sunday
or any statutory holiday in Alberta.
(5) "Closing" means the exchange of Conveyance Documents at the Closing
Date, as more particularly described in Clause 3.03, and the
delivery by the Purchaser to the Vendor of the Purchase Price, as
described in Subclause 2.04(2).
(6) "Closing Date" means 10:00 a.m. on December 18, 2001, or such
other time and date as may be agreed to by the Parties pursuant
to Clause 3.01.
(7) "Consent Right" has the meaning given to it in Subclause 8.03(2).
(8) "Conveyance Documents" means the documents described in Paragraphs
3.03(1)(a) and 3.03(1)(b), which provide for the assignment,
transfer or other disposition of the Assets to the Purchaser.
(9) "Defaulting Party" has the meaning given to it in Clause 11.01.
(10) "Deposit" means the payment set forth in Subclause 2.04(1).
(11) "Effective Date" means 8:00 a.m. on the earlier of the Closing
Date or December 31, 2001.
(12) "Excluded Assets" means those assets listed in Part VII of Schedule
"A".
(13) "Governmental Body" has the meaning given to it in Clause 5.04.
(14) "GST" means the goods and services tax established by and
administered pursuant to the EXCISE TAX ACT (Canada) and any other
federal or provincial service or sales tax that is payable as a
consequence of the sale of the Assets to the Purchaser as
contemplated by this Agreement.
(15) "Injured Party" has the meaning given to it in Clause 11.01.
(16) "Interest Rate" means the annual rate of interest which is
announced, from time to time, by Royal Bank of Canada as a reference
rate then in effect for determining interest rates on Canadian
dollar commercial loans in Canada (known as Royal Bank of Canada
Prime Rate).
(17) "Lands" means the lands set forth and described in Schedule "A", but
only to the extent of the Petroleum Substances within the zones
described in Schedule "A".
(18) "Leases" means the leases, licences, permits and other similar
documents of title set forth and described in Part I of Schedule
"A", by virtue of which
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the holder thereof is entitled to drill for, win, take, own or
remove the Petroleum Substances within, upon or under the Lands or
by virtue of which the holder thereof is or is deemed to be entitled
to a share of Petroleum Substances removed from the Lands or any
lands with which the Lands are pooled or unitized and includes, if
applicable, all renewals, amendments and extensions of such
documents and all documents issued in substitution therefor.
(19) "Miscellaneous Interests" means the entire interest of the Vendor in
and to all property, assets and rights with respect to the Assets,
other than the Petroleum and Natural Gas Rights and the Tangibles,
to the extent such property, assets and rights pertain exclusively
to the Petroleum and Natural Gas Rights or the Tangibles, or any
rights relating thereto, including, without limitation, the entire
interest of the Vendor in:
(a) all contracts, agreements and documents, to the extent that
they relate directly to the Petroleum and Natural Gas Rights
or the Tangibles, including agreements for the sale,
processing or transportation of Petroleum Substances;
(b) all subsisting rights to enter upon, use and occupy the
surface of any of the Lands, of any lands upon which any
Tangibles are located or of any lands to be crossed in order
to gain access to any of the Lands or the Tangibles;
(c) all well bores located on the Lands, except for abandoned
well bores for which the Vendor is the licensee at the
Effective Date; and
(d) copies of title opinions, engineering records, files, reports
and data, including, without limitation, seismic and other
geophysical data which the Vendor has the rights to share,
that, in the Vendor's reasonable judgement, relate directly to
the Petroleum and Natural Gas Rights, any well thereon or the
Tangibles, excluding the Vendor's tax and financial records
and economic evaluations.
Unless otherwise agreed in writing by the Parties, however, the
Miscellaneous Interests shall not include agreements, documents or
data to the extent that: (i) they pertain to the Vendor's
proprietary technology or interpretations; or (ii) they are owned or
licensed by third parties with restrictions on their deliverability
or disclosure by the Vendor to any assignee which is not an
affiliate of the Vendor.
(20) "Party" means a person, partnership or corporation which is bound by
this Agreement.
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(21) "Permitted Encumbrances" means:
(a) any encumbrances, overriding royalties, net profits interests
and other burdens identified under the title "Royalties" in
Part I of Schedule "A";
(b) the preferential rights of purchase or any similar
restriction applicable to any of the Assets, as identified
in Schedule "A";
(c) the terms and conditions of the Leases, and, to the extent
they do not reduce the Vendor's interests shown in Schedule
"A", any gross royalty trusts applicable to the grantor's
interest in any of the Leases;
(d) the right reserved to or vested in any grantor, government
or other public authority by the term of any Lease or by
the Regulations to terminate any Lease;
(e) easements, rights of way, servitudes or other similar rights
in land, including, without limitation, rights of way and
servitudes for highways, railways, sewers, drains, gas and oil
pipelines, gas and water mains, electric light, power,
telephone or cable television conduits, poles, wires or
cables;
(f) taxes on Petroleum Substances or the income or revenue
therefrom and governmental requirements pertaining to
production rates from ▇▇▇▇▇ on the Lands or operations being
conducted on the Lands or otherwise affecting the value of any
of the Assets;
(g) agreements for the sale of Petroleum Substances, provided that
any such agreement that is not terminable on thirty-one (31)
days' notice or less (without an early termination penalty or
other cost) is identified in Schedule "A";
(h) the Regulations and any rights reserved to or vested in any
municipality or governmental, statutory or public authority
to control or regulate any of the Assets in any manner;
(i) undetermined or inchoate liens incurred or created as security
in favour of any person with respect to the development or
operation of any of the Assets, as regards the Vendor's share
of the costs and expenses thereof, which costs and expenses
are not delinquent as of the Closing Date;
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(j) the reservations, limitations, provisos and conditions in any
grants or transfers from the Crown of any of the Lands or
interests therein, and statutory exceptions to title;
(k) agreements and plans relating to pooling or unitization
applicable to the Lands;
(l) provisions for penalties and forfeitures under agreements
as a consequence of non-participation in operations;
(m) the agreements respecting the processing, treating or
transmission of Petroleum Substances or the operation of
▇▇▇▇▇ by contract field operators; and
(n) liens granted in the ordinary course of business to a public
utility, municipality or governmental authority with respect
to operations pertaining to any of the Assets.
(22) "Petroleum and Natural Gas Rights" means the entire interest of the
Vendor in and to the Lands and, insofar as they pertain to the
Lands, the Leases.
(23) "Petroleum Substances" means petroleum, natural gas, sulphur and
every other mineral or substance, or any of them, the right to
explore for which, or an interest in which, is granted pursuant to
the Leases, insofar only as they pertain to the Lands.
(24) "Preferential Right" has the meaning given to it in Subclause
8.03(1).
(25) "Purchase Price" means the amount payable by the Purchaser to the
Vendor pursuant to Clause 2.02, as modified by the adjustments and
reductions provided for herein.
(26) "Refunded Amount" has the meaning given to it in Paragraph
2.04(1)(b).
(27) "Regulations" means all statutes, laws, rules, orders and
regulations in effect from time to time and made by governments or
governmental boards or agencies having jurisdiction over the Assets.
(28) "Security Deposit" has the meaning given to it in Clause 5.04.
(29) "Tangibles" means the entire interest of the Vendor in and to all
tangible depreciable property and assets that are:
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(a) located in or on the Lands or lands pooled or unitized
therewith and used, or intended for use, in connection with
production, processing, gathering, storage, treatment,
transportation or other operations respecting the Petroleum
and Natural Gas Rights, including, without limitation, the
well equipment, if any, and casing relating to the Vendor's
▇▇▇▇▇ on the Lands; and
(b) any additional items, whether located on or off the Lands,
that are indicated in Schedule "A" to be specifically included
as Tangibles.
(30) "Title Deficiency" means a defect, deficiency or discrepancy, other
than Permitted Encumbrances or as specifically disclosed in Schedule
"A", in or affecting the title of the Vendor in and to any portion
of the Assets, which is sufficiently material and adverse to the
enforcement of title, use or ownership of the Assets subject thereto
that it would not be acceptable to a knowledgeable, prudent
purchaser buying similar oil and gas properties, acting reasonably.
(31) "Vendor's Counsel" means Stikeman Elliott.
1.02 SCHEDULES
The following Schedules are attached hereto and made part of this
Agreement:
(1) Schedule "A", which includes:
Part I Lands, Leases and Encumbrances
Part II Preferential Rights
Part III Tangibles, ▇▇▇▇▇ and Facilities
Part IV Sale Agreements
Part V Authorized Expenditures
Part VI Law Suits and Claims
Part VII Excluded Assets
Part VIII Map of Areas
(2) Schedule "B" General Conveyance
1.03 REFERENCES
The references "hereunder", "herein" and "hereof" refer to the provisions
of this Agreement, and references to Articles, Clauses, Subclauses,
Paragraphs or Subparagraphs herein refer to Articles, Clauses, Subclauses,
Paragraphs or Subparagraphs of this Agreement. Any reference to time shall
refer to local time in Calgary, Alberta.
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1.04 HEADINGS
The headings of the Articles, Clauses, Schedules and any other headings,
captions or indices herein are inserted for convenience of reference only
and shall not be used in any way in construing or interpreting any
provision hereof.
1.05 SINGULAR/PLURAL
Whenever the singular or masculine or neuter is used in this Agreement or
in the Schedules, it shall be interpreted as meaning the plural or
feminine or body politic or corporate, and vice versa, as the context
requires.
1.06 USE OF CANADIAN FUNDS
All references to "dollars" or "$" herein shall refer to lawful currency
of Canada.
1.07 DERIVATIVES
Where a term is defined herein, a capitalized derivative of such term
shall have a corresponding meaning unless the context otherwise requires.
1.08 INTERPRETATION IF CLOSING DOES NOT OCCUR
In the event that Closing does not occur, each provision of this Agreement
which presumes that the Purchaser has acquired the Assets hereunder shall
be construed as having been contingent upon Closing having occurred.
1.09 CONFLICTS
In the event that there is any conflict or inconsistency between a
provision of the body of this Agreement and that of a Schedule or
Conveyance Document, the provision of the body of this Agreement shall
prevail. In the event that any term or condition of this Agreement
conflicts with a term or condition of a Lease or the Regulations, the term
or condition of such Lease or Regulations shall prevail, and this
Agreement shall be deemed to be amended to the extent required to
eliminate any such conflict.
2.00 PURCHASE AND SALE
2.01
AGREEMENT OF PURCHASE AND SALE
The Purchaser agrees to purchase the Assets from the Vendor and the Vendor
agrees to sell the Assets to the Purchaser on the terms and conditions set
forth herein. For greater certainty, it is the intention of the Parties
that the Assets shall include the entire interest of the Vendor in assets
located on or in the ▇▇▇▇▇▇▇▇▇▇,
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▇▇▇▇▇▇▇▇▇▇ East and Westward Ho areas, which areas are indicated on
the map attached hereto as Part VIII of Schedule "A", other than the
Excluded Assets, provided that the Assets shall not include any
interest of PrimeWest Royalty Corp. in assets located on or in such
areas.
2.02 ALLOCATION OF PURCHASE PRICE
Subject to the adjustments provided for in Article 4.00 and such other
reductions as may be made pursuant to Article 8.00, the monetary
consideration payable by the Purchaser to the Vendor for the Assets is
$53,625,000.00, and shall be allocated among the Assets as follows:
(1) To Petroleum and Natural Gas Rights $40,218,750.00
(2) To Tangibles* $13,406,249.00
(3) To Miscellaneous Interests $ 1.00
--------------
TOTAL $53,625,000.00
The Parties have taken into account the Purchaser's assumption of
responsibility for the future abandonment and reclamation costs associated
with the Assets and the Vendor's release of responsibility therefor when
they determined the Purchase Price.
*The Parties will make a joint election under section 167 of the EXCISE
TAX ACT so that GST will not be payable on the transfer of the Assets. The
Parties will both execute the relevant GST form (the "GST Form") for
Closing to effect that election. The Purchaser will file the GST Form with
its GST return for the reporting period in which Closing occurs. The
Purchaser will provide the Vendor with such supporting documentation as
the Vendor may reasonably request in order to confirm that such election
has been made and properly filed. The Purchaser will indemnify the Vendor
for any claims, liabilities, actions, proceedings, demands, losses, costs,
penalties, fines, damages and expenses which may be sustained or incurred
by the Vendor, its directors, officers, agents and employees with respect
to any failure of the Purchaser to file that election or any failure in
acceptance by applicable governmental authorities of that election.
2.03 AMOUNT IN LIEU OF INTEREST
At Closing, the Purchaser shall pay to the Vendor, in addition to the
Purchase Price, an amount equal to the interest, if any, which would have
accrued on the Purchase Price from, and including, the Effective Date to,
and including, the day prior to the day on which Closing occurs, at a rate
per annum equal to the Interest Rate, such interest accruing daily. The
amount allocated to the
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Petroleum and Natural Gas Rights referenced in Subclause 2.02(1) shall
be increased by an amount equal to any amount paid by the Purchaser to
the Vendor pursuant to this Clause 2.03.
2.04 PAYMENT OF PURCHASE PRICE
The Purchase Price shall be paid by certified cheque or bank draft by the
Purchaser as follows:
(1) The delivery to the Vendor's Counsel of $5,362,500 representing a
deposit (the "Deposit") towards the Purchase Price, payable upon
execution of this Agreement by the Purchaser. The Deposit shall be
held in trust by the Vendor's Counsel and dealt with as follows:
(a) if Closing occurs, the Deposit together with all interest
earned thereon shall be paid by the Vendor's Counsel to the
Vendor at Closing for the Vendor's own account absolutely and
shall be applied in partial satisfaction of the Purchase Price
payable by the Purchaser hereunder;
(b) if Closing does not occur due to a failure by the Purchaser
to comply with any of the terms and conditions set out in
Subclauses 9.03(1), 9.03(2), 9.03(3), 9.03(4) or 9.03(5) of
this Agreement, the Deposit together with all interest
earned thereon shall be forfeited to and paid by the
Vendor's Counsel to the Vendor for its own account
absolutely as a genuine pre-estimate by the Vendor and the
Purchaser of the liquidated damages, costs, losses and
expenses to be suffered and incurred by the Vendor as a
consequence of such failure by the Purchaser; provided
that, if any Preferential Rights have been exercised by
third parties, the amount to be paid by the Vendor's
Counsel to the Vendor pursuant to this Paragraph 2.04(1)(b)
shall be reduced by an amount (the "Refunded Amount") equal
to the product of:
(i) the Deposit together with all interest earned
thereon, multiplied by
(ii) the quotient of the aggregate value allocated to the
portion of the Assets subject to the exercised
Preferential Rights in accordance with Clause 8.05
divided by the Purchase Price (before any adjustments
with respect to Preferential Rights);
and the Vendor's Counsel shall pay the Refunded Amount to
the Purchaser; and
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(c) if Closing does not occur for any reason or circumstance other
than that described in Paragraph 2.04(1)(b), the Deposit
together with all interest earned thereon shall be paid by the
Vendor's Counsel to the Purchaser for the account of the
Purchaser absolutely;
provided that, in the event Closing does not occur, a Party entitled
to be paid the Deposit and interest earned thereon, or any portion
thereof, pursuant to this Subclause 2.04(1) shall issue a notice of
entitlement in writing to the Vendor or the Purchaser, as
applicable, and the Vendor's Counsel. The Vendor's Counsel shall pay
the Deposit and interest earned thereon as directed by such notice,
unless within two (2) Business Days of receipt thereof by the
Vendor's Counsel the Vendor or the Purchaser, as applicable, objects
to the payment by written notice to the Vendor's Counsel and the
Party giving the notice of entitlement. In the event the Vendor's
Counsel receives an objection notice within the specified time
period, receives conflicting notices from each of the Vendor and the
Purchaser or does not, within a reasonable time after it appears
Closing will not occur, receive a notice of entitlement from either
the Vendor or the Purchaser, the Vendor's Counsel shall pay the
Deposit and interest earned thereon into the Court of Queen's Bench
in Calgary, Alberta where the return or release of such monies will
be subject to the resolution between the Vendor and the Purchaser of
all matters relating thereto.
(2) The delivery to the Vendor at Closing of the Purchase Price, less
the Deposit together with all interest earned thereon, plus the
interest payable pursuant to Clause 2.03, subject to any adjustments
as provided in this Agreement.
3.00 CLOSING
3.01 TIME AND PLACE OF CLOSING
Unless otherwise agreed in writing by the Parties, Closing shall take
place at 10:00 a.m. Calgary time at the offices of the Vendor at 4700, ▇▇▇
- ▇▇▇ ▇▇▇▇▇▇ ▇.▇., ▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇ on the Closing Date.
3.02 EFFECTIVE DATE OF TRANSFER
The transfer and assignment of the Assets from the Vendor to the Purchaser
shall be effective as of the Effective Date, provided Closing occurs.
Possession of the Assets, however, shall not pass to the Purchaser until
immediately after Closing on the Closing Date, and the Vendor shall
maintain the Assets on behalf of the Purchaser between the Effective Date
and the Closing Date pursuant to the provisions of Article 5.00.
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3.03 DELIVERIES AT CLOSING
(1) At Closing, the Vendor shall deliver the following to the
Purchaser:
(a) a General Conveyance, in the form attached as Schedule "B",
which has been executed by the Vendor;
(b) the specific assignments, registerable transfers, novation
agreements, trust agreements or other instruments prepared
by the Vendor and required to convey the Vendor's interest
in the Assets to the Purchaser, or a reasonable undertaking
in respect thereof, provided that such documents shall not
require the Vendor to assume or incur any obligation, or to
provide any representation or warranty, beyond that
contained in this Agreement;
(c) copies of all waivers and exercises of Preferential Rights
obtained by the Vendor with respect to the sale of the
Assets to the Purchaser;
(d) the Vendor's records, files, reports and data pertaining to
the Assets, insofar as such delivery is permitted and
required hereunder, or a reasonable undertaking in respect
thereof, provided that, the Vendor may retain a photocopy
of any original materials delivered to the Purchaser
hereunder or, insofar as such materials relate directly to
other assets in which the Vendor retains an interest, the
Vendor may retain the original of those materials and
provide a photocopy of them to the Purchaser, at the
Vendor's expense;
(e) a copy of a no interest letter given by Canadian Imperial Bank
of Commerce ("CIBC") which confirms that the Assets are not
subject to the security interest in CIBC's favour against the
Vendor, or, if subject to such security interest, CIBC will
release and discharges the Assets from that security interest;
(f) a certificate dated as of the Closing Date executed by an
officer of the Vendor that, to the best of the knowledge of
such officer, the representations and warranties made in
Clause 6.01 are true and correct at and as of the Closing
Date;
(g) the GST Form, executed by the Vendor; and
(h) such other documents as may be specifically required
hereunder.
(2) At Closing, the Purchaser shall deliver the following to the
Vendor:
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(a) the Purchase Price, less the Deposit, in accordance with
Clause 2.04;
(b) a General Conveyance in the form attached as Schedule "B",
which has been executed by the Purchaser;
(c) a certificate dated as of the Closing Date executed by an
officer of the Purchaser that, to the best of the knowledge of
such officer, the representations and warranties made in
Clause 6.02 are true and correct at and as of the Closing
Date;
(d) the GST Form, executed by the Purchaser; and
(e) such other documents as may be specifically required
hereunder.
3.04 COSTS OF REGISTRATION
The Purchaser shall bear all costs incurred in registering any conveyances
of title to the Assets to it and all costs of preparing and registering
any further assurances required to convey the Assets to it. The Vendor
shall register all such conveyances promptly.
4.00 ADJUSTMENTS
4.01 BENEFITS AND OBLIGATIONS TO BE APPORTIONED
(1) All benefits and obligations of any kind and nature accruing,
payable, paid, received or receivable with respect to the Assets
(including, without limitation, maintenance, development, capital
and operating costs, advances, payments with respect to the
Permitted Encumbrances, proceeds from the sale of production,
accounts receivable and incentives accruing pursuant to the
Regulations) shall be apportioned, as of the Effective Date, between
the Vendor and the Purchaser in accordance with generally accepted
accounting principles, subject to the provisions of this Agreement.
All costs of whatever nature pertaining to work performed or goods
or services provided with respect to the Assets prior to the
Effective Date shall be borne by the Vendor, notwithstanding that
such costs may be payable in whole or in part after the Effective
Date.
(2) Notwithstanding the provisions of Subclause 4.01(1), all rentals and
all similar payments required to preserve any of the Leases and all
taxes (other than income taxes and taxes based on the volume of the
production of Petroleum Substances) levied with respect to the
Assets shall be apportioned between the Vendor and the Purchaser on
a per diem basis as
12
of the Effective Date, unless and to the extent that such
allocation is waived by the Vendor.
(3) Petroleum Substances which were produced, but not sold, as of the
Effective Date shall be credited to the Vendor.
(4) The Purchaser shall have the benefit of and pay to the Vendor the
amount of all abandonment deposits paid by the Vendor to any
governmental body in respect of the Assets and the Purchase Price
shall be increased by the amount of same.
4.02 ADJUSTMENTS TO ACCOUNTS
An interim accounting and adjustment shall be conducted for Closing, based
on the Vendor's and the Purchaser's good faith estimate of all adjustments
to be made for the transactions herein pursuant to this Article (which
adjustments shall include estimates for the necessary adjustments for the
month of December, 2001), and a final accounting and adjustment shall be
conducted within six (6) months following the Closing Date. Subject to
Clause 4.03 of this Agreement, the Parties shall not be obligated to make
any adjustments after such six (6) month period unless such adjustment has
been specifically requested, by notice, within such period or such
adjustment arises out of an audit conducted by third parties under
operating, unit or other joint venture agreements pertaining to the
Assets. All adjustments shall be settled by payment by the Party required
to make payment hereunder within fifteen (15) days of the Parties being
mutually satisfied as to the accuracy of the final adjustments and of the
determination of the amount owing.
4.03 RIGHT TO AUDIT
During the six (6) month period following the Closing Date, the Purchaser
may audit the books, records and accounts of the Vendor respecting the
Assets, for the purpose of effecting adjustments pursuant to this Article.
Such audit shall be conducted upon reasonable notice to the Vendor at the
Vendor's offices during the Vendor's normal business hours, and shall be
conducted at the sole expense of the Purchaser. Any claims of
discrepancies disclosed by such audit shall be made in writing to the
Vendor within one (1) months following the completion of such audit, and
the Vendor shall either settle the discrepancies by payment to the
Purchaser or respond in writing to any claims of discrepancies within
three (3) months of receipt of notice of such claims.
13
5.00 MAINTENANCE OF BUSINESS
5.01 ASSETS TO BE MAINTAINED IN PROPER MANNER
The Vendor shall continue to maintain the Assets in a proper and prudent
manner in accordance with good oil field practice, all agreements
applicable to the Assets and the Regulations until Closing. Until Closing,
the Vendor shall continue to pay when due all expenses and other amounts
payable in respect of the Assets and to comply with all of its obligations
with respect to the Assets. The Vendor shall maintain its insurance
respecting the Assets as exists on the date of this Agreement, if any,
during the period between the date of this Agreement and the Closing Date.
5.02 MATERIAL COMMITMENTS
(1) From the date of delivery of this executed Agreement until the
Closing Date, the Vendor shall not, without the prior written
consent of the Purchaser:
(a) assume any obligation or commitment respecting the Assets
which does not exist at the date of delivery of this
executed Agreement, if the Vendor's share of the associated
expenditure is estimated to exceed $25,000.00, except:
(i) for amounts that the Vendor is committed to expend or
is deemed to authorize under any agreements with respect to
the Assets without its specific authorization or approval;
or (ii) to the extent that the Vendor reasonably determines
that those expenditures or actions are necessary for the
protection of life and property, provided that the Vendor
will promptly notify the Purchaser of any such expenditure
or actions;
(b) sell, transfer or otherwise dispose of any of the Assets,
except for: (i) sales of production of Petroleum Substances
reasonably made by the Vendor in the ordinary course of
business under sales arrangements permitted herein; or (ii) to
the extent required to comply with any Preferential Rights;
(c) surrender or abandon any of the Assets;
(d) amend any of the agreements with respect to the Assets (other
than for processing of assignments by third parties in the
ordinary course of business), terminate any of the agreements
with respect to the Assets, enter into any new agreements
respecting the Assets or
14
vote on any mail ballot or other similar notice issued under
the agreements with respect to the Assets;
(e) subject to Clause 5.01 and Paragraph 5.02(1)(a), propose or
initiate the exercise of any option arising as a result of
the ownership of the Assets (including bidding rights at
Crown sales, rights under area of mutual interest
provisions and any Preferential Rights) or propose or
initiate any operations with respect to the Assets that
have not been commenced or committed to by the Vendor as of
the date of this Agreement, if that exercise or option
would result in an obligation of the Purchaser after the
date of this Agreement or a material adverse effect on the
value of any of the Assets, except that the Vendor may
propose or initiate any operations on the Lands for, and
may propose or initiate, the exercise of any right or
option relative to, the preservation of any of the Leases
or Assets; or
(f) other than for Permitted Encumbrances, grant a security
interest or any encumbrance with respect to any of the Assets.
(2) Following the Closing, in any case where the Purchaser must be
novated into the operating agreement or agreements governing any of
the Assets, the following provisions shall apply with respect to
those Assets until the novation has occurred:
(a) the Vendor shall maintain the Assets (including the Leases)
on behalf of the Purchaser at the Purchaser's sole cost and
expense;
(b) the Vendor shall not initiate any operations in respect of
the Assets, except upon the written instruction of the
Purchaser or if the Vendor reasonably determines that it is
required for the protection of life or property, in which
case the Vendor may take such actions as it reasonably
determines are required without the written instruction of
the Purchaser and shall promptly notify the Purchaser of
such intention or actions and the Vendor's estimate of the
costs and expenses associated therewith; and
(c) the Vendor shall forthwith provide to the Purchaser all
authorizations for expenditure, notices, specific
information and other documents in respect of the Assets
which it receives and shall respond to such authorizations
for expenditure, notices, information and other documents
pursuant to the written instructions of the Purchaser, if
received on a timely basis, provided that the Vendor may
(but shall not be obliged to) refuse
15
to follow instructions which it reasonably believes to be
unlawful or in conflict with an applicable contract.
5.03 VENDOR DEEMED AGENT OF PURCHASER
(1) Insofar as the Vendor maintains the Assets and takes actions with
respect thereto on behalf of the Purchaser pursuant to this Article,
the Vendor shall be deemed to have been the agent of the Purchaser
hereunder. The Purchaser ratifies all actions taken by the Vendor or
refrained to be taken by the Vendor in accordance with the terms of
this Article 5.00 in such capacity during such period, with the
intention that all such actions shall be deemed to be those of the
Purchaser, except where the Vendor has taken actions in relation to
the Assets which constitute gross negligence or wilful misconduct.
(2) Insofar as the Vendor participates in either operations or the
exercise of rights or options as the agent of the Purchaser pursuant
to this Article, the Vendor may require the Purchaser to secure the
costs to be incurred by the Vendor on behalf of the Purchaser
pursuant to such election in such manner as may be reasonably
appropriate in the circumstances, provided that if Closing does not
occur, any payments made by the Purchaser to the Vendor in
accordance with Clause 5.01 and Subclause 5.02(1) shall be
reimbursed by the Vendor to the Purchaser.
(3) The Purchaser shall indemnify the Vendor and its directors,
officers, servants, agents or employees against all liabilities,
losses, costs (including reasonable legal costs on a
solicitor-client basis), claims or damages which the Vendor or its
directors, officers, servants, agents or employees may suffer or
incur as a result of maintaining the Assets as the agent of the
Purchaser pursuant to this Article, insofar as such liabilities,
losses, costs, claims or damages are not a direct result of the
gross negligence or wilful misconduct of the Vendor or its
directors, officers, servants, agents or employees. An action or
omission of the Vendor or its directors, officers, servants, agents
or employees shall not be regarded as gross negligence or wilful
misconduct, however, to the extent it was done or omitted to be done
in accordance with the instructions of or with the concurrence of
the Purchaser.
5.04 TRANSFER OF LICENCES
(1) The Vendor and the Purchaser shall execute at Closing and the Vendor
shall submit, within five (5) Business Days after Closing, all well
licence transfer applications (the "Application"), to the relevant
government or governmental board or agency ("Governmental Body")
with respect to the
16
sale of the Assets in accordance with the terms of this Agreement.
To the extent that the Governmental Body requires a security deposit
(the "Security Deposit") to be provided to it prior to approving the
Application, the Vendor shall provide to the Purchaser an estimate
of the Security Deposit and the Purchaser hereby agrees to pay that
Security Deposit, in the amount estimated by the Vendor or provided
in a notice from the Governmental Body, to, and maintain that
Security Deposit with, that Governmental Body in the manner that the
Governmental Body determines necessary. The Purchaser shall pay the
Security Deposit at the same time as the Application is submitted to
the Governmental Body, or immediately upon notification to the
Vendor and the Purchaser by the Governmental Body that such Security
Deposit is required as a precondition to approval of the
Application. If the Application and any Security Deposit are not
submitted at Closing, the Purchaser shall pay to its solicitor's
trust account at Closing an amount reasonably determined by the
Vendor to be the Security Deposit required with respect to the sale
of the Assets in accordance with the terms of this Agreement and
such amount shall be paid by the Purchaser's solicitor to the
Governmental Body upon written notice from the Vendor.
(2) In the event that a substantial portion of the Application is not
approved by the Governmental Body within a reasonable period of
time after Closing, this Agreement shall, at the option of either
the Vendor or the Purchaser, acting reasonably, be rescinded by
notice to the other Party, and the Purchaser shall, within five
(5) Business Days thereafter, reassign the Assets back to the
Vendor free and clear of any encumbrances, other than the
Permitted Encumbrances, and reimburse the Vendor for any related
net revenues received by the Purchaser prior to such reassignment
and the Vendor shall repay to the Purchaser the amount paid at
Closing, with interest, together with the amount of any related
third party expenditures made by the Purchaser on the Assets
prior to such date. The Purchaser shall also indemnify and hold
the Vendor and its directors, officers, servants, agents or
employees harmless from and against all liabilities, losses,
costs (including reasonable legal costs on a solicitor-client
basis), claims or damages which the Vendor or its directors,
officers, servants, agents or employees may suffer or incur as a
result of any act done by the Purchaser with respect to the
Assets from the Closing Date until such reasonable time as the
Assets are reassigned to the Vendor pursuant to this Subclause
5.04(2).
(3) In the event that anything less than a substantial portion of the
Application is not approved by the Governmental Body within a
reasonable period of time after Closing, this Agreement, insofar as
it
17
pertains to the Assets subject to that portion of the Application
that is not approved by the Governmental Body, shall, at the option
of the Vendor or Purchaser, acting reasonably, be rescinded and the
Purchaser shall, within five (5) Business Days thereafter, reassign
the Assets back to the Vendor free and clear of any encumbrances,
other than Permitted Encumbrances, and reimburse the Vendor for any
related net revenues received by the Purchaser prior to such
reassignment and the Vendor shall repay to the Purchaser the amount
paid at Closing, with interest, together with the amount of any
related third party expenditures made by the Purchaser on the Assets
prior to such date. The Purchaser shall also indemnify and hold the
Vendor and its directors, officers, servants, agents or employees
harmless from and against all liabilities, losses, costs (including
reasonable legal costs on a solicitor-client basis), claims or
damages which the Vendor or its directors, officers, servants,
agents or employees may suffer or incur as a result of any act done
by the Purchaser with respect to the Assets from the Closing Date
until such reasonable time as the Assets are reassigned to the
Vendor pursuant to this Subclause 5.04(3).
(4) For the purposes of the preceding Subclauses 5.04(2) and 5.04(3), a
substantial portion of the Application means at least fifty (50%)
percent of the submitted Application.
6.00 REPRESENTATIONS AND WARRANTIES OF PARTIES
6.01 VENDOR'S REPRESENTATIONS AND WARRANTIES
The Vendor represents and warrants to the Purchaser that:
(1) STANDING: The Vendor is a corporation validly subsisting and
registered under the laws of the Province of Alberta, and is
authorized to carry on business in the jurisdiction(s) where the
Lands are located;
(2) REQUISITE AUTHORITY: The Vendor has the requisite capacity,
power and authority to execute this Agreement and the Conveyance
Documents and to perform the obligations to which it thereby
becomes subject;
(3) NO CONFLICT: The execution and delivery of this Agreement and the
completion of the sale of the Assets in accordance with the terms of
this Agreement are not and will not be in violation or breach of, or
be in conflict with:
(a) any term or provision of the articles, by-laws or other
governing documents of the Vendor;
18
(b) any agreement, instrument, permit or authority to which the
Vendor is a party or by which the Vendor is bound; or
(c) the Regulations or any judicial order, award, judgment or
decree applicable to the Vendor or the Assets;
(4) EXECUTION AND ENFORCEABILITY: The Vendor has taken all actions
necessary to authorize the execution and delivery of this Agreement
and all other documents to be executed by it hereunder, and, as of
the Closing Date, the Vendor shall have taken all actions necessary
to authorize and complete the sale of the Assets in accordance with
the provisions of this Agreement. This Agreement has been validly
executed and delivered by the Vendor, and this Agreement and all
other documents executed and delivered on behalf of the Vendor
hereunder shall constitute valid and binding obligations of the
Vendor enforceable in accordance with their respective terms and
conditions;
(5) RESIDENCY FOR TAX PURPOSES: The Vendor is not a non-resident of
Canada within the meaning of the Income Tax Act (Canada);
(6) NO FINDERS' FEES: The Purchaser shall not have any
responsibility for any obligation or liability, contingent or
otherwise, for brokers' or finders' fees, if any, incurred by the
Vendor with respect to the transactions herein;
(7) LAWSUITS AND CLAIMS: There are no unsatisfied judgments, claims,
proceedings, actions, governmental investigations or lawsuits in
existence, or to the best of the information, knowledge and belief
of the Vendor, contemplated or threatened against or with respect to
the Assets or the interest of the Vendor therein other than as
described in Schedule "A";
(8) ENCUMBRANCES: The Vendor does not warrant its title to the Assets,
but does warrant that the interest of the Vendor in the Assets is
free and clear of any and all liens, mortgages, pledges, claims,
options, preferential rights of purchase, encumbrances, overriding
royalties, net profits interests or other burdens created by,
through or under the Vendor other than the Permitted Encumbrances;
(9) PAYMENT OF ROYALTIES AND TAXES: To the best information, knowledge
and belief of the Vendor, all Crown royalties and all ad valorem,
property, production, severance and similar taxes and assessments
based on, or measured by, the Vendor's ownership of the Assets, the
production of Petroleum Substances from the Lands or the receipt of
proceeds therefrom that are payable by the Vendor and which accrued
prior to the Effective Date, will have been properly and fully paid
and discharged in the
19
manner and at the time prescribed by the Crown Leases and the
Regulations;
(10) SALE AGREEMENTS: Except as identified in Schedule "A", the Petroleum
and Natural Gas Rights are not subject to any agreement for the sale
of Petroleum Substances therefrom which the Purchaser is required to
assume that requires the sale of more than thirty-one (31) days of
production (without an early termination penalty or other cost);
(11) ENVIRONMENTAL MATTERS: The Vendor is not aware of:
(a) and has not received any orders or directives under the
Regulations which relate to environmental matters and which
require any work, repairs, construction or capital
expenditures with respect to the Assets, where such orders
or directives have not been complied with in all material
respects or for which outstanding obligations exist
thereunder or which could prohibit the operation of the
Assets substantially in the manner in which they were
operated as of the date hereof;
(b) and has not received any demand or notice issued under the
Regulations with respect to the breach of any
environmental, health or safety law applicable to the
Assets, including, without limitation, any Regulations
respecting the release, use, storage, treatment,
transportation or disposition of environmental
contaminants, which demand or notice remains outstanding on
the Closing Date; and
(c) any particular existing circumstances which relates to
environmental matters that it reasonably believes to be
material and a reportable event under the Regulations;
except as have been specifically disclosed in writing by the Vendor
to the Purchaser prior to the Vendor's submission of this Agreement
to the Purchaser for the Purchaser's execution, or are general
industry obligations which apply to the Vendor's operations in
general and not to the Assets specifically;
(12) AUTHORIZED EXPENDITURES: There are no outstanding authorizations for
expenditure or outstanding financial commitments respecting the
Assets, pursuant to which expenditures are or may be required by the
Purchaser as a result of the acquisition of the Assets or in respect
of which any amount is outstanding, other than as a result of its
assumption of the
20
Permitted Encumbrances or as set out in Schedule "A" or as may be
authorized on behalf of the Purchaser hereunder;
(13) QUIET ENJOYMENT: Subject at all times to the Vendor's other
representations and warranties made pursuant to this Clause, the
Permitted Encumbrances and the satisfaction of the obligations
required to maintain the Leases in good standing by the applicable
lessees, the Purchaser may, from and after the Closing Date for the
residue of the term of the Leases, take possession of, hold and
utilize the Assets for Purchaser's own use and benefit without any
interruption by the Vendor or any other person claiming by, through
or under the Vendor;
(14) DISCLOSURE OF DOCUMENTS: All material documents and agreements
affecting the title to the Assets or production or revenue from the
Assets will have been made available by the Vendor to the Purchaser
by the Closing Date, with the exception of those contracts for the
sale of Petroleum Substances which have a term equal to or less than
thirty-one (31) days;
(15) ELIGIBILITY: The Vendor is eligible under the Regulations to
transfer the applicable licences and approvals for any
Vendor-operated Assets;
(16) ONGOING ACTIVITIES: In respect of activities related to the Assets
which are ongoing as at the Effective Date, the Vendor, where
operator, holds all necessary permits and licences required for the
completion of such activities, but may require further licences,
permits, approvals and similar rights and privileges to operate the
Assets after such completion is effected;
(17) ABANDONMENT AND RECLAMATION: To the best of the Vendor's
knowledge, where it has not operated the Assets, all abandonment
and reclamation operations have been conducted in accordance with
generally accepted oil and gas industry practice and material
compliance with all applicable Regulations;
(18) AREA OF MUTUAL INTEREST: To the best of the Vendor's knowledge,
the Assets are not subject to any area of mutual interest
obligations; and
(19) MATERIAL FACTS: The Vendor has disclosed to the Purchaser all facts
or circumstances of which it has knowledge which could reasonably be
expected to have a material adverse effect on the Assets; provided
that the Vendor shall be deemed to have disclosed to the Purchaser
all information contained within the following:
21
(a) all records, files, documents and other materials provided in
the data room located at the premises of Waterous Securities
Inc.;
(b) all records, files, documents and other materials made
available for review at the Vendor's premises;
(c) all documents and other materials which the Vendor has
provided, or caused to be provided, to the Purchaser at the
Purchaser's premises; or
(d) all written correspondence from the Vendor to the Purchaser.
6.02 PURCHASER'S REPRESENTATIONS AND WARRANTIES
The Purchaser represents and warrants to the Vendor that:
(1) STANDING: The Purchaser is a corporation validly subsisting
under the laws of its jurisdiction of incorporation, and duly
registered and authorized to carry on business in the
jurisdiction(s) in which the Lands are located;
(2) REQUISITE AUTHORITY: The Purchaser has the requisite capacity,
power and authority to execute this Agreement and the Conveyance
Documents and to perform the obligations to which it thereby
becomes subject;
(3) NO CONFLICT: The execution and delivery of this Agreement and
the completion of the purchase of the Assets in accordance with
the terms of this Agreement are not and will not be in violation
or breach of, or be in conflict with;
(a) any term or provision of the articles, by-laws or other
governing documents of the Purchaser; or
(b) the Regulations or any judicial order, award, judgment or
decree applicable to the Purchaser;
(4) EXECUTION AND ENFORCEABILITY: The Purchaser has taken all actions
necessary to authorize the execution and delivery of this Agreement
and all other documents to be executed by it hereunder, and, as of
the Closing Date, the Purchaser shall have taken all actions
necessary to authorize and complete the purchase of the Assets in
accordance with the provisions of this Agreement. This Agreement has
been validly executed and delivered by the Purchaser, and this
Agreement and all other documents executed and delivered on behalf
of the Purchaser hereunder shall constitute valid
22
and binding obligations of the Purchaser enforceable in accordance
with their respective terms and conditions;
(5) COMPLIANCE WITH LAWS: The Purchaser has made all payments to,
and is in compliance with all obligations imposed by,
Governmental Bodies as are necessary to permit the Purchaser to
complete the sale of the Assets in accordance with the terms of
this Agreement;
(6) RESIDENCY FOR TAX PURPOSES: The Purchaser is not a non-resident
of Canada within the meaning of the Income Tax Act (Canada);
(7) NO SALES COMMISSION: The Purchaser has not incurred any
obligation or liability, contingent or otherwise, for brokers' or
finders' fees with respect to the transactions herein for which
the Vendor shall have any responsibility;
(8) INVESTMENT CANADA ACT: The Purchaser shall comply with the
Investment Canada Act to the extent, if any, that it is
applicable to the transactions herein; and
(9) PURCHASER AS PRINCIPAL: The Purchaser is acquiring the Assets in
its capacity as a principal, and is not purchasing the Assets for
the purpose of resale or distribution to a third party.
6.03 SURVIVAL OF REPRESENTATIONS AND WARRANTIES
Each Party acknowledges that the other is intended to rely on the
representations and warranties made by such Party pursuant to Clauses 6.01
or 6.02, as the case may be. The representations and warranties in Clauses
6.01 and 6.02 shall be true on the Effective Date and on the Closing Date,
and such representations and warranties shall continue to be true or
complied with for a period of twelve (12) months following the Closing
Date, for the benefit of the Party for which such representations and
warranties were made. In the absence of fraud, no claim or action shall be
commenced with respect to a breach of any such representation or warranty,
unless, within such period, written notice specifying such breach in
reasonable detail has been provided to the Party which made such
representation or warranty.
6.04 NO ADDITIONAL REPRESENTATIONS OR WARRANTIES BY VENDOR
(1) The Vendor makes no representations or warranties to the Purchaser
in addition to those expressly enumerated in Clause 6.01. Except and
to the extent provided in Clause 6.01, the Vendor does not warrant
title to the Assets or make representations or warranties with
respect to: (i) the quantity, quality or recoverability of Petroleum
Substances respecting the
23
Lands; (ii) any estimates of the value of the Assets or the revenues
applicable to future production from the Lands; (iii) any
engineering, geological or other interpretations or economic
evaluations respecting the Assets; (iv) the rates of production of
Petroleum Substances from the Lands; (v) the quality, condition or
serviceability of the Assets; or (vi) the suitability of their use
for any purpose. Without restricting the generality of the
foregoing, the Purchaser acknowledges that it has made its own
independent investigation, analysis, evaluation and inspection of
the Vendor's interests in the Assets, including, without limitation,
a review of the Vendor's title thereto, and the state and condition
thereof and that it has relied, together with the Vendor's
representations and warranties set forth in Clause 6.01, on such
investigation, analysis, evaluation and inspection as to its
assessment of the condition, quantum and value of the Assets.
(2) Except with respect to the representations and warranties in Clause
6.01 or in the event of fraud, the Purchaser forever releases and
discharges the Vendor and its directors, officers, servants, agents
and employees from any claims and all liability to the Purchaser or
the Purchaser's assigns and successors, as a result of the use or
reliance upon advice, information or materials pertaining to the
Assets which was delivered or made available to the Purchaser by the
Vendor or its directors, officers, servants, agents or employees
prior to or pursuant to this Agreement, including, without
limitation, any evaluations, projections, reports and interpretative
or non-factual materials prepared by or for the Vendor, or otherwise
in the Vendor's possession.
6.05 NO MERGER
The representations and warranties in Clauses 6.01 and 6.02 shall be
deemed to apply to all assignments, conveyances, transfers and other
documents conveying any of the Assets from the Vendor to the Purchaser and
there shall not be any merger of any of such representations or warranties
in such assignments, conveyances, transfers or other documents,
notwithstanding any rule of law, equity or statute to the contrary, and
all such rules are hereby waived.
6.06 AWARENESS OF BREACH
The Purchaser hereby acknowledges and agrees that, as at the date hereof,
it is not aware of any matter the occurrence or existence of which would
result in a representation or warranty of the Vendor under this Agreement
being untrue.
24
7.00 THIRD PARTY RIGHTS AND CONSENTS
7.01 CONSENTS UNDER SALES AGREEMENTS
The Parties acknowledge that the consent to assignment from buyers under
production sales agreements included in the Assets may not be obtainable
until after Closing. The Parties shall cooperate in seeking such consents.
7.02 OPERATORSHIP AND THIRD PARTIES
Nothing in this Agreement shall be interpreted as any assurance by the
Vendor that the Purchaser will be able to serve as operator with respect
to any of the Assets in which interests are held by third parties, whether
or not such Assets are presently operated by the Vendor.
8.00 PURCHASER'S REVIEW
8.01 VENDOR TO PROVIDE ACCESS
The Vendor shall, subject to the Regulations and all contractual and
fiduciary obligations and limits:
(1) at the Vendor's office during normal business hours or at such other
time as the Parties agree to, acting reasonably, provide the
Purchaser and its nominees reasonable access to the Vendor's
records, files and documents directly relating to the Assets, for
the purpose of the Purchaser's review of the Assets and the Vendor's
title thereto, including, without limitation, the Leases and
applicable operating agreements, unit agreements, overriding royalty
agreements and production sale contracts; and
(2) provide the Purchaser and its nominees with a reasonable opportunity
to inspect the Assets at the Purchaser's sole cost, risk and
expense, insofar as the Vendor can reasonably provide such access to
the Assets.
8.02 TITLE DEFICIENCIES
The Purchaser shall from time to time but no later than 5:00 p.m. on
December 6, 2001, except as otherwise provided in Subclause 8.03(2) for
refused Consent Rights, give written notice to the Vendor describing in
reasonable detail all Title Deficiencies relating to the Assets which
adversely affect the title and which the Purchaser requires to have
remedied. The Vendor shall use reasonable efforts to promptly remedy the
Title Deficiencies specified by the Purchaser and notify the Purchaser of
same five (5) Business Days prior to the Closing Date and the Purchaser
shall notify the Vendor within two (2) Business Days after the Vendor has
provided such remedies to the Purchaser if the Title Deficiencies are not
25
remedied to the Purchaser's satisfaction. If all Title Deficiencies are
not remedied to the Purchaser's satisfaction, acting reasonably, prior to
5:00 p.m. on the third (3rd) Business Day before the Closing Date, the
Purchaser shall elect by written notice prior to 5:00 p.m. on the second
(2nd) Business Day before the Closing Date:
(1) with the agreement of the Vendor, to grant a further period of time
within which the Vendor may remedy the uncured Title Deficiencies,
to the Purchaser's satisfaction, acting reasonably, or
(2) subject to Clause 8.03, to waive the unremedied Title Deficiencies
and proceed with the completion of the transaction contemplated by
this Agreement, or
(3) to terminate this Agreement, and Clause 17.05 shall apply.
8.03 PREFERENTIAL RIGHT OF PURCHASE AND CONSENT RIGHTS
(1) Each preferential right of purchase requiring the procurement of a
waiver from a third party prior to disposition of any of the Assets
("Preferential Right") shall not constitute a Title Deficiency. If
any portion of the Assets is subject to a Preferential Right made
effective as a result of this Agreement, then the Vendor shall, upon
execution of this Agreement and after consultation with the
Purchaser, promptly serve all notices required under the
Preferential Right. If a Preferential Right remains outstanding on
the Closing Date, closing in respect of the Assets subject to the
unexercised outstanding Preferential Right shall be postponed to the
date which is the fifth (5th) Business Day following the waiver or
lapse of the Preferential Right, and Closing in respect of that
portion of the Assets not subject to Preferential Rights or in
respect of which Preferential Rights have been waived or lapsed
shall proceed on the Closing Date. If a Preferential Right is
exercised, that portion of the Assets subject to the exercised
Preferential Right shall be excluded from this Agreement in
accordance with Clause 8.04. The Purchaser may not waive the
existence or operation of any Preferential Right.
(2) If any of the Assets are subject to a right or restriction other
than a Preferential Right but requiring the procurement of a consent
from a third party prior to the disposition of the Assets ("Consent
Right") to the Purchaser, the Vendor shall, upon execution of this
Agreement, serve all notices and request all consents required to
permit the conveyance of the Assets to the Purchaser without
contravening any Consent Right. Failure by the Vendor to obtain
consents for all Consent Rights on or prior to Closing Date, except
for Consent Rights for which consent is refused, shall
26
not constitute grounds for failing to complete the sale and
purchase of the Assets, shall not constitute a Title Deficiency
and shall not constitute a breach of any of the Vendor's
representations and warranties. The Vendor shall give written
notice to the Purchaser of all Consent Rights for which consents
are either granted or refused. If any third party notifies the
Vendor that it refuses to give the consent required by the
Consent Right, the refusal may at the Purchaser's option be
treated as a Title Deficiency under Clause 8.02. If the
Purchaser chooses that option under Clause 8.02, notice of that
Title Deficiency shall be given by the Purchaser to the Vendor
no later than two (2) Business Days after the Vendor has
notified the Purchaser of the refusal, otherwise it shall not
constitute a Title Deficiency.
8.04 EXCLUDED ASSETS
If a portion of the Assets is excluded pursuant to the provisions of
Subclause 8.03(1), then:
(a) the definitions "Assets", "Petroleum and Natural Gas Rights",
"Miscellaneous Interests" and "Tangibles" shall in this
Agreement and related documents be construed as referencing
the non-excluded portion of those definitions, and
(b) the Purchase Price shall be reduced by the portion of the
aggregate value allocated, pursuant to Clause 8.05, to the
portion of the Assets excluded under this Agreement.
8.05 VALUE OF THE ASSETS
The Purchaser, acting reasonably and in good faith and after consultation
with the Vendor, shall allocate a value, in writing, for each of the
parcels comprising the Assets that are subject to Preferential Rights. The
Purchaser hereby indemnifies and saves the Vendor harmless from and
against all claims, liabilities, actions, proceedings and costs (including
costs on a solicitor and client basis) which may be brought against or
suffered by the Vendor arising through or attributable to the Purchaser's
allocation of the Purchase Price to those Assets subject to Preferential
Rights.
9.00 CONDITIONS TO CLOSING
9.01 REQUIRED CONSENTS
The Purchaser and the Vendor shall each use their best efforts to obtain
all approvals required under the Regulations and any and all consents of
third
27
parties required. The Parties acknowledge that the acquisition of
consents which would not have a material adverse effect on the Assets
shall not be a condition precedent to Closing.
9.02 CONDITIONS FOR BENEFIT OF PURCHASER
The obligation of the Purchaser to complete the purchase hereunder is
subject to the following conditions precedent:
(1) MATERIAL COMPLIANCE BY VENDOR: The Vendor shall have performed
or complied in all material respects with each of the terms,
covenants and conditions of this Agreement to be performed or
complied with by the Vendor at or prior to the Closing Date;
(2) NO SUBSTANTIAL DAMAGE: There shall have been no damage to or
alteration of any of the Assets between the date of this Agreement
and the Effective Date, whichever is earlier, and the Closing Date
which, in the Purchaser's reasonable opinion, would materially and
adversely affect the value of the Assets, except and to the extent
approved in writing by the Purchaser, provided that a change in the
prices at which Petroleum Substances may be sold in no event shall
be regarded as material damage to or an alteration of the Assets;
(3) DELIVERY OF CONVEYANCE DOCUMENTS: The Vendor shall have delivered to
the Purchaser those of the Conveyance Documents described in
Paragraph 3.03(1)(a) executed by the Vendor and those other
documents and materials described in Paragraphs 3.03(1)(b) and
3.03(1)(d) which are to be provided to the Purchaser at Closing,
provided that in respect of those other documents and materials
described in Paragraphs 3.03(1)(b) and 3.03(1)(d), the Vendor shall
be entitled to deliver at Closing a reasonable undertaking, provided
documents and materials relating to surface leases and related
matters shall be made within forty-five (45) days of Closing;
(4) REPRESENTATIONS AND WARRANTIES: All representations and
warranties of the Vendor contained in this Agreement shall be
true in all material respects at and as of the Effective Date and
the Closing Date and the Vendor shall provide a certificate
confirming same as contemplated in Paragraph 3.03(1)(f);
(5) OTHER CLOSING DELIVERIES: The Vendor shall have delivered to the
Purchaser the documents contemplated in Paragraphs 3.03(1)(c),
3.03(1)(e) and 3.03(1)(g) of the Agreement; and
28
(6) COMPETITION ACT: If the Vendor and the Purchaser determine that the
transaction contemplated by this Agreement is subject to Part IX of
the COMPETITION ACT (Canada) then: (i) the Vendor and the Purchaser
shall each have filed all notices and information required under
Part IX of the COMPETITION ACT (Canada) and the applicable waiting
period shall have expired; or (ii) the Parties shall have received
an Advance Ruling Certificate ("ARC") pursuant to Section 102 of the
COMPETITION ACT (Canada) stating that the Commissioner of
Competition (the "Commissioner") is satisfied that he would not have
sufficient grounds on which to apply for an order in respect of the
transaction contemplated by the Agreement; or (iii) the Commissioner
or a person authorized by the Commissioner shall have waived the
obligation under Part IX of the COMPETITION ACT (Canada) to notify
the Commissioner and supply information because substantially
similar information has been previously supplied in relation to a
request for an ARC and the Commissioner shall have confirmed in
writing that his review of the transaction contemplated in the
Agreement is completed and that he has no immediate grounds on which
to apply for an order under Section 92 of the COMPETITION ACT
(Canada).
9.03 CONDITIONS FOR BENEFIT OF VENDOR
The obligation of the Vendor to complete the sale hereunder is subject to
the following conditions precedent:
(1) MATERIAL COMPLIANCE BY PURCHASER: The Purchaser shall have
performed or complied in all material respects with each of the
terms, covenants and conditions of this Agreement to be performed
or complied with by the Purchaser at or prior to the Closing Date;
(2) PAYMENT OF PURCHASE PRICE: The Purchaser shall have tendered to
the Vendor the Purchase Price in the manner provided for in
Clause 2.04, subject to any adjustments provided for in Article
4.00 and any other adjustment expressly provided for herein;
(3) DELIVERY OF CONVEYANCE DOCUMENTS: The Purchaser shall have
delivered to the Vendor at least one copy of the Conveyance
Documents described in Paragraph 3.03(2)(b) executed by the
Purchaser;
(4) REPRESENTATIONS AND WARRANTIES: All representations and
warranties of the Purchaser contained in this Agreement shall be
true in all material respects at and as of the Effective Date and
the Closing Date and the Purchaser shall provide a certificate
confirming same as contemplated in Paragraph 3.03(2)(c);
29
(5) OTHER CLOSING DELIVERIES: The Purchaser shall have delivered to
the Vendor the document contemplated in Paragraph 3.03(2)(d) of
the Agreement;
(6) COMPETITION ACT: If the Vendor and the Purchaser determine that the
transaction contemplated by this Agreement is subject to Part IX of
the COMPETITION ACT (Canada) then: (i) the Vendor and the Purchaser
shall each have filed all notices and information required under
Part IX of the COMPETITION ACT (Canada) and the applicable waiting
period shall have expired; or (ii) the Parties shall have received
an Advance Ruling Certificate ("ARC") pursuant to Section 102 of the
COMPETITION ACT (Canada) stating that the Commissioner of
Competition (the "Commissioner") is satisfied that he would not have
sufficient grounds on which to apply for an order in respect of the
transaction contemplated by the Agreement; or (iii) the Commissioner
or a person authorized by the Commissioner shall have waived the
obligation under Part IX of the COMPETITION ACT (Canada) to notify
the Commissioner and supply information because substantially
similar information has been previously supplied in relation to a
request for an ARC and the Commissioner shall have confirmed in
writing that his review of the transaction contemplated in the
Agreement is completed and that he has no immediate grounds on which
to apply for an order under Section 92 of the COMPETITION ACT
(Canada); and
(7) BOARD APPROVAL: On or before November 23, 2001, the Vendor shall
have received approval from its Board of Directors to complete
the transaction contemplated herein.
9.04 WAIVER OF CONDITIONS
The conditions in Clauses 9.02 and 9.03 are for the sole benefit of the
Purchaser and the Vendor respectively. The Party for the benefit of which
such conditions have been included may waive any of them, in whole or in
part, by written notice to the other Party.
9.05 FAILURE TO SATISFY CONDITIONS
In the event any of the conditions in Clauses 9.02 or 9.03 has not been
satisfied at or before the earlier of the Closing Date or the date for
satisfaction of the condition specified therein and such condition has not
been waived by the Party for the benefit of which such condition has been
included on or before such date, such Party may terminate this Agreement
by written notice to the other Party.
30
10.00 CONFIDENTIALITY
10.01 PURCHASER'S OBLIGATION TO MAINTAIN INFORMATION CONFIDENTIAL
Information respecting the Assets shall be retained in confidence and used
only for the purposes of this acquisition, provided that upon Closing, the
Purchaser's rights to use or disclose such information shall be subject to
any operating, unit or other agreements that may apply thereto. Any
additional information obtained as a result of such access which does not
relate to the Assets shall continue to be treated as confidential and
shall not be used by the Purchaser without the prior written consent of
the Vendor. However, the restrictions on disclosure and use of information
in this Agreement shall not apply to information to the extent it:
(1) is or becomes publicly available through no act or omission of
the Purchaser or its consultants or advisors;
(2) is subsequently obtained lawfully from a third party, which, after
reasonable inquiry, the Purchaser does not know to be bound to the
Vendor to restrict the use or disclosure of such information; or
(3) is already in the Purchaser's possession at the time of
disclosure, without restriction on disclosure.
However, specific items of information shall not be considered to be in
the public domain merely because more general information respecting the
Assets is in the public domain.
10.02 CONSULTANTS AND ADVISORS BOUND
If the Purchaser employs consultants, advisors or agents to assist in its
review of the Assets pursuant to Article 8.00, the Purchaser shall be
responsible to the Vendor for ensuring that such consultants, advisors and
agents comply with the restrictions on the use and disclosure of
information set forth in Clause 10.01.
10.03 CONFIDENTIALITY AGREEMENT
The obligations of the Purchaser pursuant to this Article are in addition
to and not in substitution for the obligations of the Purchaser under any
confidentiality agreement made between the Vendor or its agent and the
Purchaser with respect to information pertaining to the Assets.
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11.00 DEFAULT
11.01 REMEDIES OF INJURED PARTY
If a Party (hereinafter referred to as the "Defaulting Party") fails to
comply with any of the terms and conditions of this Agreement such that
Closing does not occur, the other Party (hereinafter referred to as the
"Injured Party") shall treat the Agreement as terminated by reason of the
non-fulfilment of the obligations of the Defaulting Party. To the extent
the Purchaser is the Defaulting Party, the Injured Party shall be entitled
only to the remedy set forth in Paragraph 2.04(1)(b) and to the extent the
Vendor is the Defaulting Party, the Injured Party shall have the right to
the return of the Deposit and interest earned thereon and to those
remedies available to it at law or equity with respect to such default.
11.02 INTEREST ACCRUES ON AMOUNTS OWING
Any amount owing to a Party by the other Party pursuant to any provision
of this Agreement after Closing and remaining unpaid shall bear compound
interest, as computed monthly, from the day such amount was due to be paid
until the day such amount was paid, at the rate of two (2%) percent per
annum above the Interest Rate, regardless of whether such Party has given
the other Party prior notice of the accrual of interest hereunder.
12.00 LIABILITY AND INDEMNIFICATION
12.01 RESPONSIBILITY OF VENDOR
Subject to Clauses 12.04 and 12.05 and provided that Closing has occurred,
the Vendor shall:
(1) be liable to the Purchaser for all losses, costs, damages and
expenses whatsoever which the Purchaser may suffer, sustain, pay
or incur; and
(2) indemnify and save the Purchaser and its directors, officers,
servants, agents and employees harmless from and against all claims,
liabilities, actions, proceedings, demands, losses, costs, damages
and expenses whatsoever which may be brought against or suffered by
the Purchaser, its directors, officers, servants, agents or
employees or which they may sustain, pay or incur;
as a direct result of any matter or thing arising out of, resulting from,
attributable to or connected with the Assets and occurring or accruing
prior to the Effective Date, except any losses, costs, damages, expenses,
claims, liabilities, actions, proceedings and demands to the extent that
the same either are reimbursed (or
32
reimbursable) by insurance maintained by the Purchaser or are caused by
the gross negligence or wilful misconduct of the Purchaser, its
directors, officers, servants, agents, employees or assigns. The
responsibility prescribed by this Clause, however, does not provide
either an extension of any representation or warranty contained in
Clause 6.01 or an additional remedy for the Vendor's breach of such a
representation or warranty. No claim or action may be commenced by the
Purchaser under this Clause, unless, within two (2) years following the
Closing Date, written notice describing the claim in reasonable detail
has been provided to the Vendor, and the Purchaser hereby waives any
rights it may have at law or otherwise to commence such a claim or
action after that period.
12.02 RESPONSIBILITY OF PURCHASER
Subject to Clause 12.05 and provided that Closing has occurred, the
Purchaser shall:
(1) be liable to the Vendor for all losses, costs, damages and
expenses whatsoever which the Vendor may suffer, sustain, pay or
incur; and
(2) indemnify and save the Vendor and its directors, officers,
servants, agents and employees harmless from and against all
claims, liabilities, actions, proceedings, demands, losses,
costs, damages and expenses whatsoever which may be brought
against or suffered by the Vendor, its directors, officers,
servants, agents or employees or which they may sustain, pay or
incur;
as a direct result of any matter or thing arising out of, resulting from,
attributable to or connected with the Assets and occurring or accruing on
or subsequent to the Effective Date, except any losses, costs, damages,
expenses, claims, liabilities, actions, proceedings and demands to the
extent that the same either are reimbursed (or reimbursable) by insurance
maintained by the Vendor or are caused by the gross negligence or wilful
misconduct of the Vendor, its directors, officers, servants, agents,
employees or assigns. The responsibility prescribed in this Clause,
however, does not provide either an extension of any representation and
warranty contained in Clause 6.02 or an additional remedy for the
Purchaser's breach of such a representation or warranty.
12.03 ASSETS ACQUIRED ON "AS IS" BASIS
Notwithstanding the foregoing provisions of this Article, the Purchaser
acknowledges that it is acquiring the Assets on an "as is" basis, as of
the Effective Date. The Purchaser acknowledges that it is familiar with
the condition of the Assets, including the past and present use of the
Lands and the Tangibles, that
33
the Vendor has provided the Purchaser with a reasonable opportunity to
inspect the Assets at the sole cost, risk and expense of the Purchaser
(insofar as the Vendor could reasonably provide such access) and that
the Purchaser is not relying upon any representation or warranty of the
Vendor as to the condition, environmental or otherwise, of the Assets,
except as are specifically made pursuant to Clause 6.01.
12.04 LIMIT ON RESPONSIBILITY
Except in the case of fraud by the Vendor, in no event shall the total of
the liabilities and indemnities of the Vendor under this Agreement,
including, without limitation, any claims relating to its representations
and warranties, exceed the Purchase Price.
12.05 ASSUMPTION OF ENVIRONMENTAL LIABILITIES AND OBLIGATIONS
Provided that Closing has occurred, the Purchaser agrees that, as of the
Effective Date, it shall:
(1) be solely liable and responsible for any and all losses, costs,
damages and expenses which the Vendor may suffer, sustain, pay or
incur; and
(2) indemnify and save the Vendor and its directors, officers, servants,
agents and employees harmless from any and all claims, liabilities,
actions, proceedings, demands, losses, costs, damages and expenses
whatsoever which may be brought against or suffered by the Vendor,
its directors, officers, servants, agents or employees or which they
may sustain, pay or incur;
as a direct result of any matter or thing arising out of, resulting from,
attributable to or connected with, whether occurring before or after the
Effective Date, any environmental liabilities or obligations pertaining to
the acquired Assets, or any of them, including, without limitation, damage
from or removal of hazardous or toxic substances, clean-up, well
abandonment and reclamation. Nothing in this Clause shall operate either
to limit any representation or warranty made by the Vendor pursuant to
Clause 6.01 or to affect the Purchaser's right to make a claim against the
Vendor for the breach of such representation or warranty. Once Closing has
occurred, except for liabilities associated with the Excluded Assets, the
Purchaser shall be solely responsible for all environmental liabilities
and obligations respecting the Lands, the abandonment of all ▇▇▇▇▇ on the
Lands and the reclamation of the Lands, and hereby releases the Vendor
from any claims the Purchaser may have against the Vendor with respect to
all such liabilities and responsibilities.
34
12.06 NO MERGER OF LEGAL RESPONSIBILITIES
The liabilities and indemnities created in this Article shall be deemed to
apply to, and shall not merge in, all assignments, transfers, conveyances,
novations, trust agreements and other documents conveying any of the
Assets from the Vendor to the Purchaser, notwithstanding the terms of such
assignments, transfers, conveyances, novations and other documents, the
Regulations or any rule of law or equity to the contrary, and all such
rules are hereby waived.
12.07 SUBSTITUTION AND SUBROGATION
Insofar as is possible, each Party shall have full rights of substitution
and subrogation in and to all covenants, representations and warranties by
others previously given or made in respect of the Assets or any of them.
12.08 RESPONSIBILITY EXTENDS TO LEGAL COSTS
Notwithstanding any provision to the contrary contained in this Article,
references to costs in the liability and indemnification obligations
prescribed by Clauses 12.01, 12.02 and 12.05 shall be deemed to include
reasonable legal costs on a solicitor-client basis.
12.09 NO CONSEQUENTIAL DAMAGES
No claim for indemnification may be made by either Party in respect of
incidental or consequential losses, including, without limitation,
indirect damages, loss of profits and economic losses.
13.00 WAIVER
13.01 WAIVER MUST BE IN WRITING
No waiver by any Party of any breach (whether actual or anticipated) of
any of the terms, conditions, representations or warranties contained
herein shall take effect or be binding upon that Party unless the waiver
is expressed in writing under the authority of that Party. Any waiver so
given shall extend only to the particular breach so waived and shall not
limit or affect any rights with respect to any other or future breach.
14.00 ASSIGNMENT
14.01 ASSIGNMENTS BEFORE CLOSING
Prior to Closing, neither Party may assign its interest in or under this
Agreement or to the Assets without the prior written consent of the other
Party.
35
14.02 ASSIGNMENTS BY PURCHASER AFTER CLOSING
No assignment, transfer or other disposition of this Agreement or all or
any portion of the Assets by the Purchaser after Closing shall relieve the
Purchaser from its obligations to the Vendor herein. The Vendor shall have
the option to claim payment or performance of such obligations from the
Purchaser or the assignee or transferee, and to bring proceedings in the
event of default against either or all of them, provided that nothing
herein shall entitle the Vendor to receive duplicate payment or
performance of the same obligation.
15.00 NOTICE
15.01 SERVICE OF NOTICE
Notwithstanding anything to the contrary contained herein, all notices
required or permitted hereunder shall be in writing. Any notice to be
given hereunder shall be deemed to be served properly if served in any of
the following modes:
(1) personally, by delivering the notice to the Party on which it is to
be served at that Party's address for service. Personally served
notices shall be deemed to be received by the addressee when
actually delivered as aforesaid, provided that such delivery shall
be during normal business hours on any Business Day. If a notice is
not delivered on such a Business Day or is delivered after the
addressee's normal business hours, such notice shall be deemed to
have been received by such Party at the commencement of the
addressee's first Business Day next following the time of the
delivery; or
(2) by fax directed to the Party on which it is to be served at that
Party's address for service. A notice so served shall be deemed to
be received by the addressee when actually received by it, if
received within normal business hours on any Business Day or at the
commencement of the next ensuing Business Day following transmission
if such notice is not received during such normal business hours.
15.02 ADDRESSES FOR NOTICES
The address for service of notices hereunder of each of the Parties shall
be as follows:
VENDOR: PrimeWest Energy Inc.
▇▇▇▇, ▇▇▇ - ▇▇▇ ▇▇▇▇▇▇ ▇.▇.
▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇ ▇▇▇ ▇▇▇
ATTENTION: Land Manager
Fax: (▇▇▇) ▇▇▇-▇▇▇▇
36
with a copy to: PrimeWest Energy Inc.
▇.▇. ▇▇▇ ▇▇▇▇▇
▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇ ▇▇▇ ▇▇▇
ATTENTION: Land Manager
PURCHASER: Addison Energy Inc.
▇▇▇▇▇ ▇▇▇, ▇▇▇ - ▇▇▇ ▇▇▇▇▇▇, ▇.▇.
▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇ ▇▇▇ ▇▇▇
ATTENTION: Land Manager
Fax: (▇▇▇) ▇▇▇-▇▇▇▇
Phone: (▇▇▇) ▇▇▇-▇▇▇▇
15.03 RIGHT TO CHANGE ADDRESS
A Party may change its address for service by notice to the other Party,
and such changed address for service thereafter shall be effective for all
purposes of this Agreement.
16.00 PUBLIC ANNOUNCEMENTS
16.01 PARTIES TO DISCUSS PRESS RELEASES
The Parties shall cooperate with each other in relaying to third parties
information concerning this Agreement and the transactions contemplated
herein, and shall discuss drafts of all press releases and other releases
of information for dissemination to the public pertaining hereto. However,
nothing in this Clause shall prevent a Party from furnishing any
information to any governmental agency or regulatory authority or to the
public, insofar only as is required by the Regulations or securities laws
applicable to such Party, provided that a Party which proposes to make
such a public disclosure shall, to the extent reasonably possible, provide
the other Party with a draft of such statement a sufficient time prior to
its release to enable such other Party to review such draft and advise
that Party of any comments it may have with respect thereto.
16.02 SIGNS AND NOTIFICATION TO GOVERNMENTAL AGENCIES
Following Closing, the Vendor may remove any signs which indicate the
Vendor's ownership or operation of the Assets. If the Purchaser will be
the operator of the Assets, it shall be the responsibility of the
Purchaser to erect or install any signs required by the Regulations. In
addition, the Purchaser shall be responsible for advising governmental
agencies, contractors, suppliers and other affected third parties of the
Purchaser's interest in the Assets.
37
17.00 MISCELLANEOUS PROVISIONS
17.01 FURTHER ASSURANCES
At the Closing Date and thereafter as may be necessary, the Parties shall
execute, acknowledge and deliver such instruments and take such other
actions as may be reasonably necessary to fulfil their respective
obligations under this Agreement. The Vendor shall cooperate with the
Purchaser as reasonably required to secure execution by third parties of
the documents referred to in Paragraph 3.03(1)(b).
17.02 GOVERNING LAW
This Agreement shall be subject to and be interpreted, construed and
enforced in accordance with the laws in effect in the Province of Alberta.
Each Party accepts the jurisdiction of the courts of the Province of
Alberta and all courts of appeal therefrom.
17.03 TIME
Time shall be of the essence in this Agreement.
17.04 NO AMENDMENT EXCEPT IN WRITING
Subject to Clause 15.03, this Agreement may be amended only by written
instrument executed by the Vendor and the Purchaser.
17.05 CONSEQUENCES OF TERMINATION
If this Agreement is terminated in accordance with its terms prior to
Closing, then except for the provisions of Article 10.00 and the
covenants, warranties, representations or other obligations breached prior
to the time at which such termination occurs, the Parties shall be
released from all of their obligations under this Agreement. If this
Agreement is so terminated, the Purchaser shall promptly return to the
Vendor all materials delivered to the Purchaser by the Vendor hereunder,
together with all copies of them that may have been made by or for the
Purchaser.
17.06 ENTIRE AGREEMENT
This Agreement and the agreement identified in Schedule "B" hereto state
the entire agreement between the Parties and supersedes all other agreements,
documents, writings and verbal understandings among the Parties with respect to
the subject matter hereof, including, without limitation, the Letter Agreement
between PW Energy and the Purchaser dated November 9, 2001.
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17.07 ENUREMENT
This Agreement shall be binding upon and enure to the benefit of the
Parties and their respective successors and permitted assigns.
IN WITNESS WHEREOF the Parties have duly executed this Agreement.
PRIMEWEST ENERGY INC.
Per: /s/ ▇▇▇ ▇. ▇▇▇▇▇▇▇
---------------------------------------------
Name: ▇▇▇ ▇. ▇▇▇▇▇▇▇
Title: Vice President, Business Development
PRIMEWEST OIL AND GAS CORP.
Per: /s/ ▇▇▇ ▇. ▇▇▇▇▇▇▇
---------------------------------------------
Name: ▇▇▇ ▇. ▇▇▇▇▇▇▇
Title: Vice President, Business Development
ADDISON ENERGY INC.
Per: /s/ ▇▇▇▇▇ ▇▇▇▇▇
---------------------------------------------
Name: ▇▇▇▇▇ ▇▇▇▇▇
Title: Vice President, Corporate Development
39