EXHIBIT 10.1
 
 
 
 
ASSET PURCHASE AND SALE AGREEMENT
 
 

EAGLE'S NEST AREA, ALBERTA
 
 

BETWEEN
 
 
 
TOWNSHIP PETROLEUM CORP.
 
the Vendor
 
 

 
AND
 
 
 
 
CAVALIER ENERGY INC.
 
the Purchaser
 

March 12, 2012

 
 
 
 
 

--------------------------------------------------------------------------------

 
 
Contents
 
Page
 
TABLE OF CONTENTS
 
 

ARTICLE 1 DEFINITIONS AND INTERPRETATION 1           1.1 
Definitions
1           1.2 
Interpretation
9           1.3 
Schedules
10           1.4  Interpretation if Closing Does Not Occur 10           1.5 
Knowledge or Awareness  10         ARTICLE 2 PURCHASE AND SALE 11           2.1 
Purchase and Sale 
11           2.2 
Transfer of Assets
11         ARTICLE 3 PURCHASE PRICE AND PAYMENT 11           3.1 Purchase Price
11           3.2  Allocation of the Purchase Price 11           3.3  Deposit 11
          3.4  Closing Payment 12           3.5  Taxes and Fees 12        
ARTICLE 4 ADJUSTMENTS 13           4.1  Adjustments 13           4.2  Statement
of Adjustments 13         ARTICLE 5 CLOSING 14           5.1 
Closing
14         ARTICLE 6 INTERIM PROVISIONS 15           6.1 
Assets to be Maintained
15           6.2 
Restrictions on Conduct of Business
15           6.3 
Following Closing
16         ARTICLE 7 ACCESS TO INFORMATION AND RECORDS 16           7.1
Access to Records
16         ARTICLE 8 THIRD PARTY CONSENTS 16           8.1 
Consents
16           8.2 
Post-Closing Approvals and Consents
17

 

ARTICLE 9 REPRESENTATIONS AND WARRANTIES 17        

 
 
 

--------------------------------------------------------------------------------

 
 
Contents
(continued)
 
Page
 
 

  9.1
Vendor's Representations and Warranties
17           9.2 
No Additional Representations and Warranties by the Vendor
19           9.3
Purchaser's Representations and Warranties
20           9.4
Enforcement of Representations and Warranties
21         ARTICLE 10 CONDITIONS PRECEDENT TO CLOSING 21           10.1
Vendor's Closing Conditions
21           10.2 
Purchaser's Closing Conditions
22         ARTICLE 11 CLOSING DELIVERIES  23           11.1 
Vendor Closing Deliveries
23           11.2 
Purchaser’s Closing Deliveries
23           11.3 
Deliveries
23         ARTICLE 12 CONVEYANCES AND TRANSFER  24           12.1 Conveyances 24
          12.2  License and Authorization Transfers 24         ARTICLE 13
LIABILITIES AND INDEMNITIES  25           13.1  Indemnities for Representations
and Warranties 25           13.2  General Indemnity 26           13.3 
Environmental Indemnity 26           13.4  Indemnification Procedure – Third
Party Claims 27           13.5  Limitations on Liability 28           13.6 No
Merger   29         ARTICLE 14 TERMINATION 29           14.1
Grounds for Termination
29           14.2 
Effect of Termination
29         ARTICLE 15 CONFIDENTIALITY, PUBLIC ANNOUNCEMENTS AND SIGNS  29      
    15.1  Confidentiality 29           15.2  Public Announcements 30          
15.3  Signs 30         ARTICLE 16 GOVERNING LAW AND DISPUTE RESOLUTION  31      
    16.1 
Governing Law
31

 

  16.2  Resolution of Disputes   31         ARTICLE 17 NOTICES   31        

 
 
 

--------------------------------------------------------------------------------

 
 
Contents
(continued)
 
Page
 
 

  17.1 Service of Notices  31         ARTICLE 18 PERSONAL INFORMATION  32      
    18.1  Personal Information  32         ARTICLE 19 ASSIGNMENT 33          
19.1
Assignment
33        
ARTICLE 20 MISCELLANEOUS
 33           20.1
Remedies Cumulative
 33           20.2 
Costs
 33           20.3  No Waiver 33           20.4  Entire Agreement  33          
20.5  Further Assurances 34           20.6  Time of the Essence 34          
20.7  Enurement  34           20.8  Severability 34           20.9  Counterpart
Execution 34

 
 
 
 
 
 
 
 
 
 
 
 

--------------------------------------------------------------------------------

 
 
ASSET PURCHASE AND SALE AGREEMENT
 
Eagle's Nest Area, Alberta
 
THIS AGREEMENT made as of the 12th day of March, 2012
 
BETWEEN:
 
TOWNSHIP PETROLEUM CORP., an Alberta corporation having an office and carrying
on business in the City of Calgary, in the Province of Alberta ("Vendor")
 
- and -
 
CAVALIER ENERGY INC., an Alberta corporation having an office and carrying on
business in the City of Calgary, in the Province of Alberta (the "Purchaser")
 
WHEREAS the Vendor wishes to sell the Assets to the Purchaser and the Purchaser
wishes to purchase the Assets from the Vendor, all upon and subject to the terms
and conditions set forth in this Agreement;
 
NOW THEREFORE THIS AGREEMENT WITNESSETH that in consideration of the premises,
mutual covenants, agreements and warranties in this Agreement, the Parties
covenant and agree as follows:
 
ARTICLE 1
DEFINITIONS AND INTERPRETATION
 
1.1  
Definitions

 
In this Agreement, including the recitals, this Section 1.1 and the Schedules
attached hereto, unless the context otherwise requires, or unless otherwise
defined herein, the following words and phrases shall have the following
meanings:
 

 
(a) 
"Abandonment and Reclamation Liabilities" means all past, present and future
obligations and liabilities to:

 
 
(i)
abandon the Wells and close, decommission, dismantle and remove all structures,
foundations, buildings, pipelines, equipment, tanks and other facilities and
Tangibles that are or were located in or on the Lands or lands used, previously
used or useful or intended for use in respect of or in connection with the
Lands; and

 
 
(ii)
restore, remediate and reclaim any surface and subsurface locations of the lands
on which the Wells, structures, foundations, buildings, pipelines, equipment,
tanks and other facilities described in Section 1.1(a)(i) are or were located
and all lands used to gain access to any of them;

 
all in accordance with generally accepted oil sands industry practices in the
province where the Assets are located and in compliance with all Applicable Laws
and the Title and Operating Documents.
 
 
 
 

--------------------------------------------------------------------------------

 
 

 
(b) 
"Affiliate" means, with respect to any Person, any other Person or group of
Persons acting in concert, directly or indirectly, that controls, is controlled
by or is under common control with such Person.  The term "control" as used in
the preceding sentence means the possession, directly or indirectly, of the
power to direct or cause the direction of the management or policies of a Person
whether through ownership of more than fifty percent (50%) of the voting
securities of such Person, by contract or otherwise.

 

 
(c) 
"Agreement" means this Asset Purchase and Sale Agreement including the recitals
hereto and the Schedules attached hereto.

 

 
(d) 
"Applicable Laws" means, in relation to any Person, asset, transaction, event or
circumstance:

 
 
(i)
statutes (including regulations enacted thereunder);

 
 
(ii)
judgments, decrees and orders of courts of competent jurisdiction;

 
 
(iii)
regulations, orders, ordinances and directives issued by Government Authorities;
and

 
 
(iv)
the terms and conditions of all permits, licenses, approvals and authorizations;

 
which are applicable to such Person, asset, transaction, event or circumstance.
 

 
(e) 
"Assets" means, collectively, the Oil Sands Rights, the Miscellaneous Interests
and the Tangibles, but expressly excludes the Excluded Assets.

 

 
(f) 
"Base Price"  has the meaning provided in Section3.1.

 

 
(g) 
"Bitumen" has the meaning ascribed to the term "crude bitumen" in the Mines and
Minerals Act (Alberta).

 

 
(h) 
"Business Day" means any day other than a Saturday, Sunday or statutory holiday
in Calgary, Alberta.

 

 
(i) 
"Claim" means any claim, demand, lawsuit, proceeding, arbitration or
governmental investigation, in each case, whether asserted, threatened, pending
or existing.

 

 
(j) 
"Closing" means the transfer of possession, beneficial ownership and risks of
the Assets from the Vendor to the Purchaser, the exchange of Conveyance
Documents and payment of the Purchase Price by the Purchaser to the Vendor, and
all other items and consideration required to be delivered on the Closing Date
pursuant hereto.

 

 
(k) 
"Closing Date" has the meaning provided in Section 5.1.

 

 
(l) 
"Closing Payment" has the meaning provided in Section 3.4.

 

 
(m) 
"Confidentiality Agreement" means the Confidentiality and Restricted Use
Agreement dated [XX] between Oilsands Quest Inc. and the Purchaser.

 
 
 
- 2 -

--------------------------------------------------------------------------------

 
 

 
(n) 
"Conveyance Documents" means all conveyances, assignments, transfers, novations,
notices of assignment, trust agreements and declarations, subleases, directions
to pay and other documents and instruments that are reasonably required
desirable in accordance with generally accepted oil and gas industry practice in
the province where the Assets are located, to convey, assign and transfer title
to the Assets held in the name of the Vendor or its Affiliates to the Purchaser
and to novate the Purchaser into the contracts, licenses, permits, approvals and
authorizations comprised in the Miscellaneous Interests in the place and stead
of the Vendor or its Affiliates insofar as such contracts, licenses, permits,
approvals and authorizations pertain to the Assets.

 

 
(o) 
"Court Approval" means the approval of the Transaction by the Court of Queen's
Bench of the Province of Alberta, substantially in the form of the order
attached hereto as Schedule "E".

 

 
(p) 
"Data Room Information" means all information provided to the Purchaser in
electronic form in relation to the Vendor, its Affiliates and/or the Assets.

 

 
(q) 
"Deposit" has the meaning provided in Section 3.3(a).

 

 
(r) 
"Dollar" and "$" mean a dollar of the lawful money of Canada.

 

 
(s) 
"Effective Time" means 8:00 a.m., Calgary time, on January 1, 2012.

 

 
(t) 
"Encumbrance" means all liens, charges, security interests, royalties, pledges,
options, net profit interests, rights of pre-emption, mortgages, adverse claims
and other encumbrances on ownership rights of any kind or character or
agreements to create the same.

 

 
(u) 
"Environment" means the components of the earth and includes ambient air, land,
surface and sub-surface strata, groundwater, surface water, all layers of the
atmosphere, all organic and inorganic matter and living organisms, and the
interacting natural systems that include such components, and any derivative
thereof shall have a corresponding meaning.

 

 
(v) 
"Environmental Law" means all Applicable Laws respecting the protection of, or
the control, remediation or reclamation of contamination or pollution of, the
Environment or any part thereof.

 

 
(w) 
"Environmental Liabilities" means all past, present and future obligations and
liabilities of whatsoever nature or kind arising from or relating to, directly
or indirectly:

 
 
(i)
Environmental Matters;

 
 
(ii)
past, present and future non-compliance with, violation of or liability under
Environmental Laws applicable to or otherwise involving the Assets; or

 
 
(iii)
Abandonment and Reclamation Liabilities,

 
whenever occurring or arising.
 
 
 
 
- 3 -

--------------------------------------------------------------------------------

 
 

 
(x) 
"Environmental Matters" means any activity, event or circumstance in respect of
or relating to:

 
 
(i)
the storage, use, holding, collection, accumulation, assessment, generation,
manufacture, construction, processing, treatment, stabilization, disposition,
handling, transportation or Release of Hazardous Substances;

 
 
(ii)
the protection of the Environment; or

 
 
(iii)
pollution, reclamation, remediation or restoration of the Environment;

 
in each case, relating to the Lands or the Assets or that has or have arisen or
hereafter arise from or in respect of past, present or future Operations,
activities or omissions in or on the Lands or in respect of or otherwise
involving the Assets, including obligations to compensate Third Parties for
Losses and Liabilities.
 

 
(y) 
"Excluded Assets" means:

 
 
(i)
geological and geophysical interpretations related to the Assets;

 
 
(ii)
all other interpretations, evaluations, valuations, forecasts, analyses and
similar items relating to the Assets, including any economic valuations or
reserve forecasts prepared or acquired by or on behalf of the Vendor or its
Affiliates or a Third Party with respect to the Assets or the Transaction;

 
 
(iii)
any computer software, computer networks and other technology systems;

 
 
(iv)
advances and deposits to operators, Government Authorities or other Persons
prior to the Effective Time to secure obligations or as prepayment of costs or
expenses;

 
 
(v)
legal and title opinions;

 
 
(vi)
documents prepared by or on behalf of the Vendor in contemplation of litigation
and any other documents within the possession of the Vendor which are subject to
solicitor-client privilege under the laws of the Province of Alberta or any
other jurisdiction; and

 
 
(vii)
records, policies, manuals and other proprietary, confidential business or
technical information not used exclusively in the operation of the Assets.

 

 
(z) 
"Final Statement of Adjustments" has the meaning provided in Section 4.2(a).

 

 
(aa) 
"GAAP" means generally accepted accounting principles and practices in Canada.

 

 
(bb) 
"General Conveyance" means the general conveyance in the form attached as
Schedule "C".

 

 
(cc) 
"Government Authority" means any federal, national, provincial, territorial,
municipal or other government, any political subdivision thereof, and any
ministry, sub-ministry, agency or sub-agency, court, board, bureau, office, or
department, including any

 
 
 
 
- 4 -

--------------------------------------------------------------------------------

 
 
government-owned entity, having jurisdiction over a Party, the Assets or the
Transaction.
 

 
(dd) 
"GST" means the goods and services tax required to be paid pursuant to the
Excise Tax Act (Canada) and in accordance with Section 3.5(a).

 

 
(ee) 
"Hazardous Substances" means hazardous or toxic substances, hazardous wastes,
radioactive substances, asbestos, dangerous goods and Petroleum Substances,
including any and all substances and wastes regulated under Environmental Law.

 

 
(ff) 
"Indemnified Party" has the meaning provided in Section 13.4.

 

 
(gg) 
"Indemnifying Party" has the meaning provided in Section 13.4.

 

 
(hh) 
"Insider" has the meaning given to that term in the Securities Act (Alberta).

 

 
(ii) 
"Interim Statement of Adjustments" has the meaning provided in Section 4.2(a).

 

 
(jj) 
"Land Schedule" means Schedule "A".

 

 
(kk) 
"Lands" means the entire interest of Vendor as of the Effective Time in and to
the lands set forth and described in the Land Schedule, and includes (i) unless
the context otherwise requires, the surface of such lands and (ii) the Bitumen
within, upon or under such lands, together with the rights to drill for, explore
for, win, take, own or remove same, insofar as the same are granted by the
Leases to such lands.

 

 
(ll) 
"Leases" means the leases, reservations, permits, licenses or other documents of
title set forth and described in the Land Schedule by virtue of which the holder
thereof is entitled to drill for, explore for, mine, win, take, own or remove
Bitumen underlying the Lands, and includes, if applicable, all renewals and
extensions of such documents and all documents issued in substitution therefor.

 

 
(mm) 
"Losses and Liabilities" means, in respect of a Party and in relation to a
matter, any and all:

 
 
(i)
losses, costs, damages, expenses and charges (including all penalties,
assessments and fines) which such Party suffers, sustains, pays or incurs,
directly or indirectly, in connection with such matter and includes costs of
legal counsel (on a full indemnity basis) and other professional advisors and
reasonable costs of investigating and defending Claims arising from the matter,
regardless of whether such Claims are sustained and includes taxes payable on
any settlement payment or damage award in respect of such matter; and

 
 
(ii)
liabilities and obligations (whether under common law, in equity, under
Applicable Law or otherwise; whether tortious, contractual, vicarious, statutory
or otherwise; whether absolute or contingent; and whether based on fault, strict
liability or otherwise) which such Party suffers, sustains, pays or incurs as a
result of or in connection with such matter;

 
 
 
 
 
 
 
- 5 -

--------------------------------------------------------------------------------

 
 
but excluding indirect, incidental, consequential, exemplary, special or
punitive losses or damages or loss of profits suffered, sustained, paid or
incurred by such Party, but including any such indirect, incidental,
consequential, exemplary, special or punitive losses or damages or loss of
profits suffered, sustained, paid or incurred by a Third Party entitled to
recovery or indemnification from a Party.
 

 
(nn) 
"Miscellaneous Interests" means all of the right, title, interest and estate of
the Vendor in and to all property, assets and rights, whether contingent or
absolute, legal or beneficial, present or future, vested or not (other than the
Oil Sands Rights, the Tangibles, and the Excluded Assets), to the extent
relating to the Oil Sands Rights, the Lands or the Tangibles, and to which the
Vendor is entitled at the Effective Time, including the following property,
rights and assets:

 
 
(i)
all contracts, agreements, books, records, files, maps and documents to the
extent that they relate to the Oil Sands Rights, the Lands or the Tangibles,
including the Title and Operating Documents and any rights of the Vendor in
relation thereto;

 
 
(ii)
the Surface Interests;

 
 
(iii)
geological, geochemical and mineralogical data, reports and findings and archive
samples, and all core or liquid samples and cuttings;

 
 
(iv)
seismic data, to the extent relating solely and directly to the Lands;

 
 
(v)
all engineering information, to the extent relating solely and directly to the
Oil Sands Rights, the Lands, and the Tangibles which the Vendor either has in
its custody or to which the Vendor has access, excluding any such information
which is subject to confidentiality restrictions;

 
 
(vi)
all permits, licenses, approvals and other authorizations, crossing privileges
and other subsisting rights to carry out operations on the Lands and any lands
upon which the Tangibles are located, including well and pipeline licenses and
other permits and authorizations relating to the Oil Sands Rights or the
Tangibles; and

 
 
(vii)
the Wells, including the entire wellbores and casings;

 
but specifically excluding the Excluded Assets.
 

 
(oo) 
"Oil Sands Rights" means all of the right, title, estate and interest, whether
absolute or contingent, legal or beneficial, present or future, vested or not,
and whether or not an "interest in land", of the Vendor in and to the Lands and
the Leases, subject in all events to the Permitted Encumbrances.

 

 
(pp) 
"Operations" means any and all work, activities and operations of any kind
whatsoever conducted on or with respect to the Assets.

 

 
(qq) 
"Party" means the Vendor or the Purchaser, and "Parties" means the Vendor and
the Purchaser.

 

 
(rr) 
"Permitted Encumbrances" means, as of a particular time, any of the following:

 
 
 
 
 
- 6 -

--------------------------------------------------------------------------------

 
 
 
(i)
liens for taxes, assessments and governmental charges which are not due or
delinquent at such time or, if due, the validity of which is being diligently
contested in good faith by or on behalf of the Vendor;

 
 
(ii)
undetermined or inchoate liens incurred or created in the ordinary course of
business or liens created as security in favour of the Person who is conducting
the development or operation of the Assets or property to which such liens
relate for the Vendor's proportionate share of the costs and expenses of such
development or operation which are not due or delinquent or are being contested
in good faith by on behalf of the Vendor;

 
 
(iii)
mechanics', builders' and materialmen's liens in respect of services rendered or
goods supplied for which payment is not at the time due or the validity of which
is being diligently contested in good faith by or on behalf of the Vendor;

 
 
(iv)
easements, rights of way, servitudes, permits, licenses and other similar rights
in land, including rights of way and servitudes for highways and other roads,
railways, sewers, drains, gas and oil pipelines, gas and water mains, electric
light, power, telephone, telegraph and cable television conduits, poles, wires
and cables;

 
 
(v)
the right reserved to or vested in any Government Authority by the terms of any
Title and Operating Document, lease, license, franchise, grant or permit or by
any Applicable Law, to terminate any such Title and Operating Document, lease,
license, franchise, grant or permit or to require annual or other periodic
payments as a condition of the continuance thereof;

 
 
(vi)
the right reserved to or vested in any Government Authority to levy taxes on
Petroleum Substances or the income or revenue attributable thereto and
governmental requirements and limitations of general application;

 
 
(vii)
rights reserved to or vested in any Government Authority to control or regulate
any of the Assets in any manner;

 
 
(viii)
liens granted in the ordinary course of business to a public utility or
Government Authority in connection with operations on or in respect of the
Lands;

 
 
(ix)
the express or implied reservations, limitations, provisos and conditions in any
original grants from the Crown of any of the Lands or interests therein and
statutory exceptions to title;

 
 
(x)
all royalty burdens, liens, adverse claims, penalties, conversions and other
Encumbrances identified in the Land Schedule;

 
 
(xi)
the terms and conditions of the Leases and the Title and Operating Documents;
and

 
 
(xii)
any other circumstance, matter or thing disclosed in any Schedule hereto;

 
provided that the following items must be identified in a Schedule to qualify as
a Permitted Encumbrance:  (A) any overriding royalty, net profits or other
similar
 
 
 
- 7 -

--------------------------------------------------------------------------------

 
 
encumbrance applicable to the Oil Sands Rights for which Purchaser will assume
the obligation for payment; (B) any existing potential alteration of the
Vendor's interests in the Assets because of a payout conversion or farmin,
farmout or other similar agreement; and (C) any security interest which would
not be a Permitted Encumbrance under the proceeding paragraphs of this
definition.
 

 
(ss) 
"Person" means any individual, corporation, limited or unlimited liability
company, joint venture, partnership (limited or general), trust, trustee,
executor, Government Authority or other entity.

 

 
(tt) 
"Petroleum Substances" means any of crude oil, Bitumen and products derived
therefrom, synthetic crude oil, petroleum, natural gas, natural gas liquids, and
any and all other substances related to or produced in conjunction with any of
the foregoing, whether liquid, solid or gaseous, and whether hydrocarbons or
not, including sulphur and hydrogen sulphide.

 

 
(uu) 
"Place of Closing" means the offices of Norton Rose Canada LLP at 3700, 400-3rd
Avenue S.W., Calgary, Alberta, or as otherwise agreed to in writing by the
Parties.

 

 
(vv) 
"Prime Rate" means the rate of interest (expressed as a rate per annum) used by
the main branch Royal Bank of Canada in Calgary, Alberta from time to time as
the reference rate used in determining the rates of interest payable on Canadian
dollar commercial demand loans made by such bank in Canada and which is
announced by such bank, from time to time, as its "prime rate".

 

 
(ww) 
"Purchase Price" has the meaning given in Section 3.1.

 

 
(xx) 
"Purchaser Entity" means the Purchaser and its Representatives, and each of
their respective successors and assigns.

 

 
(yy) 
"Release" means any release, spill, emission, leaking, pumping, injection,
deposit, disposal, discharge, dispersal, leaching or migration of a Hazardous
Substance into or through the Environment or into or out of any lands, including
the movement of a Hazardous Substance through or in any part of the Environment.

 

 
(zz) 
"Representatives" means, with respect to any Party, its Affiliates, and the
respective directors, officers, servants, agents, advisors, employees,
consultants and representatives of that Party and its Affiliates.

 

 
(aaa) 
"Right of First Refusal" or "ROFR" means a right of first refusal, pre-emptive
right of purchase or similar right whereby any Third Party has the right to
acquire or purchase any of the Assets as a consequence of the Parties entering
into this Agreement or the Transaction.

 

 
(bbb) 
"Surface Interests" means all right, title, interest and estate of the Vendor to
enter upon, use, occupy and enjoy the surface of the Lands and any lands upon
which the Wells or the Tangibles are located and any lands used to gain access
thereto, in each case, for purposes related to the use or ownership of the Oil
Sands Rights, the Tangibles or the Wells or Operations, whether the same are
held by right of way, or otherwise.

 
 
 
 
 
- 8 -

--------------------------------------------------------------------------------

 
 

 
(ccc) 
"Tangibles" means, collectively, all right, title, interest and estate of the
Vendor, whether absolute or contingent, legal or beneficial, present or future,
vested or not, in and to the tangible depreciable property and assets located
within or upon the Lands and which are used or are intended to be used to
produce, process, gather, treat, measure, or make marketable Petroleum
Substances or in connection with water, condensate, injection or removal
operations that pertain to the Oil Sands Rights.

 

 
(ddd) 
"Third Party" means any Person other than the Parties or their Representatives.

 

 
(eee) 
"Third Party Claim" has the meaning specified in Section 13.4.

 

 
(fff) 
"Title and Operating Documents" means all agreements, contracts, instruments and
other documents that govern the ownership, operation or use of the Assets or
relate to Permitted Encumbrances, including (i) the Leases and other agreements
and instruments pursuant to which the Oil Sands Rights were issued, granted or
created, (ii) permits, licenses, approvals and authorizations, (iii) operating
agreements, unit agreements, production allocation agreements, trust
declarations, participation agreements, joint venture agreements, farmin
agreements, farmout agreements and royalty agreements, (iv) agreements that
create or relate to Surface Interests, (v) agreements for the construction,
ownership and/or operation of the Tangibles, (vi) trust declarations and other
documents and instruments that evidence the Vendor's interests in the Assets;
and (vii) trust declarations pursuant to which the Vendor holds interests in the
Lands in trust for other Persons.

 

 
(ggg) 
"Transaction" means the transaction for the purchase and sale of the Assets as
contemplated by this Agreement.

 

 
(hhh) 
"Vendor Entity" means the Vendor and its Representatives, and each of their
respective successors and assigns.

 

 
(iii) 
"Wells" means all wells located on the Lands, including all producing, shut-in,
abandoned, suspended, capped, water source, service, observation, delineation,
injection and disposal wells, and includes any well set out in Part 2 of
Schedule "A".

 
1.2  
Interpretation

 
The following rules of construction shall apply to this Agreement unless the
context otherwise requires:
 

 
(a) 
the headings in this Agreement are inserted for convenience of reference only
and shall not affect the meaning, interpretation or construction of this
Agreement.

 

 
(b) 
all documents executed and delivered pursuant to the provisions of this
Agreement are subordinate to the provisions hereof and the provisions hereof
shall govern and prevail in the event of a conflict.

 

 
(c) 
any reference to a statute shall include and shall be deemed to be a reference
to such statute and to the regulations made pursuant thereto, and all amendments
made thereto and in force at the date hereof.

 
 
 
 
- 9 -

--------------------------------------------------------------------------------

 
 

 
(d) 
whenever the singular or masculine or neuter is used in this Agreement, the same
shall be construed as meaning plural or feminine or referring to a body politic
or corporate, and vice versa, as the context requires.

 

 
(e) 
the words "hereto", "herein", "hereof", "hereby", "hereunder" and similar
expressions refer to this Agreement and not to any particular provision of this
Agreement.

 

 
(f) 
reference to any Article, Section or Schedule means an Article, Section or
Schedule of this Agreement unless otherwise specified.

 

 
(g) 
if any provision of a Schedule hereto conflicts with or is at variance with any
provision in the body of this Agreement, the provisions in the body of this
Agreement shall prevail to the extent of the conflict.

 

 
(h) 
"include" and derivatives thereof shall be read as if followed by the phrase
"without limitation".

 
1.3  
Schedules

 
The following schedules are attached to and form part of this Agreement:
 

 
Schedule"A" 
- Land Schedule

 
Part1 
- Lands and Leases

 
Part2 
- Wells

 
Schedule"B" 
- Form of General Conveyance

 
Schedule"C" 
- Form of Vendor's Officer's Certificate

 
Schedule"D" 
- Form of Purchaser's Officer's Certificate

 
Schedule"E" 
- Form of Court Approval

1.4  
Interpretation if Closing Does Not Occur

 
If Closing does not occur, each provision of this Agreement which presumes that
the Purchaser has acquired the Assets shall be construed as having been
contingent upon Closing having occurred.
 
1.5  
Knowledge or Awareness

 
References to a Party's knowledge or awareness and similar references contained
in Sections 9.1 and 9.3 mean the actual knowledge or awareness, as the case may
be, of the officers of such Party who are primarily responsible for the matters
in question, and does not include knowledge and awareness of any other Person or
any other Person or any constructive or imputed knowledge.  A Party shall not
have any obligation to make inquiry of any Person or the files and records of
any Person or of any Government Authority in connection with any representations
and warranties contained herein that are made to its knowledge, information,
belief or awareness.
 
 
 
 
 
- 10 -

--------------------------------------------------------------------------------

 
 
ARTICLE 2
PURCHASE AND SALE
 
2.1  
Purchase and Sale

 
Subject to the terms and conditions of this Agreement, the Vendor hereby agrees
to sell, assign, transfer, convey and set over to the Purchaser, and the
Purchaser agrees to purchase and accept the Assets from the Vendor at and for
the Purchase Price.
 
2.2  
Transfer of Assets

 
Provided that Closing occurs, and subject to the terms and conditions of this
Agreement, possession, risk and beneficial ownership of the Assets shall
transfer from the Vendor to the Purchaser on the Closing Date.
 
ARTICLE 3
PURCHASE PRICE AND PAYMENT
 
3.1  
Purchase Price

 
The purchase price to be paid by the Purchaser to the Vendor for the Assets
shall be Seven Million Five Thousand Dollars ($7,005,000) (the "Base Price"),
subject to adjustment only as set forth in Section 4.1 (the "Purchase Price").
 
3.2  
Allocation of the Purchase Price

 
The Purchase Price shall be allocated among the Assets as follows:
 

  (a) to the Miscellaneous Interest  $10.00            (b)  to the Tangibles   
$10.00            (c) Oil Sands Rights   Balance of Purchase Price 

                 
3.3  
Deposit

 

 
(a) 
On the date hereof the Purchaser shall pay to the Vendor a deposit equal to ten
percent (10%) of the Base Price, by certified cheque, bank draft or electronic
transfer of funds (the "Deposit").  The Deposit received by the Vendor pursuant
to this Section 3.3(a) shall be held in trust by the Vendor and shall be
releasable in accordance with this Agreement.

 

 
(b) 
If Closing occurs in accordance with the terms and conditions of this Agreement,
the Deposit received by the Vendor shall be retained by the Vendor and credited
against the Purchase Price, in partial satisfaction of the Purchaser's
obligation to pay the Purchase Price at Closing.

 

 
(c) 
If Closing does not occur:

 
 
(i)
due to a material breach of this Agreement by the Vendor or a failure of the
conditions precedent set forth in Section 10.2 of this Agreement to be satisfied

 
 
 
 
- 11 -

--------------------------------------------------------------------------------

 
 
or waived in accordance with the terms of this Agreement or failure to obtain
court approval, the deposit received by the Vendor shall be returned by the
Vendor to the Purchaser, this Agreement shall thereupon terminate, and each
Party shall be released from all obligations and liabilities under or in
connection with this Agreement; or
 
 
(ii)
for any reason other than a material breach of this Agreement by the Vendor or a
failure of the conditions precedent set forth in Section 10.2 of this Agreement
to be satisfied or waived in accordance with the terms of this Agreement or
failure to obtain court approval, the Vendor shall be entitled to the Deposit,
the Deposit shall be forfeited to the Vendor, and the Vendor shall be entitled
to terminate this Agreement and each party shall be released from all
obligations and liabilities under or in connection with the Agreement. For
greater certainty, the Vendor’s right to retain the Deposit shall be its sole
and exclusive remedy against the Purchaser in the event that Closing does not
occur for any reason other than a material breach of this Agreement by the
Vendor or a failure  of the conditions precedent set forth in Section 10.2 of
this Agreement to be satisfied or waived in accordance with the terms of this
Agreement or failure to obtain court approval, and the Vendor shall have no
other rights, remedies or claims against the Purchaser.

 
3.4  
Closing Payment

 
The Purchaser shall pay to the Vendor at Closing, by certified cheque, bank
draft or electronic wire transfer, the adjusted Purchase Price as set forth in
the Interim Statement of Adjustments, less the Deposit previously received by
the Vendor, and plus any taxes and fees (including GST) payable under Section
3.5 (the "Closing Payment").
 
3.5  
Taxes and Fees

 

 
(a) 
The Purchase Price does not include GST.  At Closing, the Purchaser shall pay to
the Vendor an amount equal to the statutory rate of GST on the portion of the
Purchase Price allocated to Tangibles and Miscellaneous Interests pursuant to
Section 3.2 and on the amount attributable to any other Assets or expenses to
which GST may apply.  The Purchaser shall be liable for the payment and
remittance of any additional amount of GST payable in respect of the purchase of
the Assets pursuant hereto, including any interest, penalties, or any other
costs payable in respect of such additional GST, and shall indemnify and save
harmless the Vendor in respect thereof.  The GST Registration Number of the
Vendor is 838596740.  The GST Registration Number of the Purchaser is 85132
8864-RT0001.

 

 
(b) 
The Purchaser shall also be liable for and shall pay any and all land transfer
taxes, federal or provincial sales taxes and all other taxes, duties or other
similar charges properly payable upon and in connection with the conveyance and
transfer of the Assets by the Vendor to the Purchaser and the Purchaser shall be
responsible for all recording charges and registration fees payable in
connection therewith.

 
 
 
 
 
 
 
- 12 -

--------------------------------------------------------------------------------

 
 
ARTICLE 4
ADJUSTMENTS
 
4.1  
Adjustments

 

 
(a) 
All costs and revenues accruing, payable, paid, received or receivable in
respect of the Assets, including rentals, maintenance, development, capital and
operating costs, advances, and payments with respect to Permitted Encumbrances
shall, subject to the provisions of this Agreement, be apportioned on an accrual
basis between the Vendor and the Purchaser as of the Effective Time, on and
subject to the following:

 
 
(i)
except as otherwise provided in this Section 4.1, costs and revenues shall
accrue in accordance with GAAP;

 
 
(ii)
all such costs and revenues accruing up to the Effective Time shall be for the
Vendor's account and all costs and revenues accruing after the Effective Time
shall be for the Purchaser's account;

 
 
(iii)
all costs of whatever nature pertaining to work performed or goods or services
provided with respect to the Assets prior to the Effective Time shall be borne
by the Vendor, notwithstanding that such costs may be payable in whole or in
part after the Effective Time and all costs of whatever nature pertaining to
work performed or goods or services provided with respect to the Assets after
the Effective Time shall be borne by the Purchaser;

 
 
(iv)
all rentals, property taxes and other periodic payments (other than income
taxes) shall be apportioned between the Vendor and the Purchaser on a per diem
basis as of the Effective Time; and

 
 
(v)
there shall not be any adjustment on account of income taxes.

 

 
(b) 
The effective time for income tax purposes shall be the Effective Time.

 

 
(c) 
Notwithstanding the foregoing, the Vendor shall not be required to provide a
credit at Closing for any benefits accruing to the Purchaser after the Effective
Time but not actually received by the Vendor at least three (3) Business Days
prior to the Closing, but shall include all such amounts in the Final Statement
of Adjustments.

 

 
(d) 
Surplus items such as tubing and casing stored on the Lands and which are not
charged to the joint account with respect to that portion of the Land affected,
or are owned entirely by the Vendor and are not related to or intended for use
in connection with the Lands do not comprise part of the Assets and shall be
removed by the Vendor as soon as practicable, but in any event, prior to
Closing.

 

 
(e) 
All adjustments to be made pursuant to this Section 4.1 shall be allocated to
the Oil Sands Rights.

 
4.2  
Statement of Adjustments

 

 
(a) 
The Vendor shall carry out an interim accounting and adjustment and prepare and
deliver to the Purchaser at least three (3) Business Days prior to the Closing
Date a

 
 
 
 
- 13 -

--------------------------------------------------------------------------------

 
 
statement setting forth the Vendor's good faith estimate of all adjustments to
be made for the Transaction (the "Interim Statement of Adjustments").
 
The Vendor shall carry out a final accounting and adjustment and prepare and
deliver to the Purchaser a statement setting forth all adjustments to be made
for the Transaction no later than three (3) months following the Closing Date
(the "Final Statement of Adjustments"). No Party shall be obligated to make any
further adjustments after the Final Statement of Adjustments is finalized unless
arising from a specific request in writing is made by a Party within three (3)
months following the Closing Date identifying in reasonable detail an adjustment
required by this Agreement, provided that an adjustment shall not be made unless
such individual adjustment exceeds Ten Thousand Dollars ($10,000.00).
 

 
(b) 
All adjustments shall be settled by the prompt payment by any Party obliged to
make payment pursuant to this Agreement.  Interest at the Prime Rate plus two
percent (2%) per annum shall be paid on any adjustment which remains unpaid by
one Party to the other Party thirty (30) days after receipt of the notice that
adjustment is to be paid from such thirtieth day to the date of payment.

 

 
(c) 
The Purchaser shall have the right at any time during the three (3) month period
following the Closing Date, upon thirty (30) days prior written notice to the
Vendor, during the Vendor's normal business hours and at the Purchaser's sole
cost, to examine, copy and audit the accounting and financial books, records and
accounts of the Vendor relating to the Assets for the purpose of effecting
adjustments pursuant to and within the time provided for in this Section
4.1.  Vendor shall cooperate with the Purchaser so as to facilitate the
scheduling of such audit.

 

 
(d) 
Nothing in this Agreement shall restrict or otherwise interfere with the audit
rights which the Vendor may have under any of the agreements pertaining to the
Assets for the period prior to the Effective Time, it being the intention of the
Parties that any adjustments occurring as a result of the exercise of such audit
rights by the Vendor shall be for the account of the Vendor.  For the purposes
hereof, the expression "audit rights" shall include the right to initiate an
audit or to participate in or receive the benefits from such an audit.

 
ARTICLE 5
CLOSING
 
5.1  
Closing

 
The Closing of the Transaction shall take place at the Place of Closing or such
other place as the Parties may agree on March 23, 2012 or such other day as the
Parties may agree in writing (the "Closing Date").  If the Closing has not
occurred by March 23, 2012 each Party shall have the right of termination as
provided for in Section 14.1(c).
 
 
 
 
 
 
- 14 -

--------------------------------------------------------------------------------

 
 
ARTICLE 6
INTERIM PROVISIONS
 
6.1  
Assets to be Maintained

 
Until the Closing Date, the Vendor shall, subject to the Title and Operating
Documents:
 

 
(a) 
cause the Assets to be maintained in a proper and prudent manner in accordance
with generally accepted oil sands industry practices;

 

 
(b) 
pay or cause to be paid all costs and expenses relating to the Assets which
become due prior to the Closing Date; and

 

 
(c) 
perform and comply in all material respects with the covenants and conditions
contained in the Title and Operating Documents to be performed or complied with
by the Vendor prior to Closing.

 
6.2  
Restrictions on Conduct of Business

 
The Vendor shall not, between the date of this Agreement and the Closing Date,
without the written consent of the Purchaser, which consent will not be
unreasonably withheld, conditioned or delayed:
 

 
(a) 
make any commitment or propose, initiate or authorize any capital expenditure
out of the ordinary course of business with respect to the Assets, of which the
Vendor's share is in excess of Twenty-Five Thousand Dollars ($25,000.00), except
as may be reasonably necessary to protect or ensure life and safety or to
preserve the Assets or title to the Assets (including Lease rental payments) or
in respect of amounts which the Vendor may be committed to expend or be deemed
to authorize for expenditure without its consent;

 

 
(b) 
surrender or abandon any of the Assets;

 

 
(c) 
other than in the ordinary course of business, materially amend or terminate any
agreement or instrument relating to the Assets or enter into any new agreement
or commitment relating to the Assets, except as may be reasonably necessary to
protect or ensure life and safety or to preserve the Assets or title to the
Assets;

 

 
(d) 
sell, encumber or otherwise dispose of any of the Assets or any interest therein
except the sale of materials and supplies no longer required in connection with
the Assets, provided however that the Vendor shall be entitled to encumber the
Assets with any mortgage, charge and/or security interest that may be required
in connection with financings it may enter into prior to Closing on the basis
that each applicable lender agrees to provide an executed no interest letter
addressed to the Purchaser at Closing confirming the Assets can be conveyed to
the Purchaser pursuant to this Agreement free and clear of such mortgages,
charges and security interests; or

 

 
(e) 
exercise any right (including any bidding rights at Crown sales or Right of
First Refusal) or option of the Vendor relative to or arising as a result of the
ownership of the Assets.

 
 
 
 
 
- 15 -

--------------------------------------------------------------------------------

 
 
6.3  
Following Closing

 

 
(a) 
Following Closing, Vendor shall hold title to the Assets in trust for Purchaser,
as bare legal trustee, until all necessary notifications, registrations and
other steps required to transfer such title to Purchaser have been completed
and, in furtherance thereof:

 
 
(i)
the Vendor shall forward all statements, notices and other information received
by it pursuant to such Title and Operating Document that pertain to the Assets
to Purchaser promptly following its receipt thereof;

 
 
(ii)
the Vendor shall forward to other parties to the Title and Operating Documents
such notices and elections pursuant to such Title and Operating Documents
pertaining to the Assets as Purchaser may reasonably request; and

 
provided that the Vendor shall not be required to initiate Operations in
relation to the Assets.
 

 
(b) 
Purchaser shall indemnify and save harmless the Vendor from and against all of
its respective Losses and Liabilities arising as a consequence of the provisions
of this Section 6.4, except to the extent caused by the gross negligence or
wilful misconduct of the Vendor or its servants, agents or employees.  Acts or
omissions taken by the Vendor or its servants or agents on the instructions of,
or with the approval or concurrence of, Purchaser shall not constitute gross
negligence or wilful misconduct.

 
ARTICLE 7
ACCESS TO INFORMATION AND RECORDS
 
7.1  
Access to Records

 
The Vendor may, at its sole expense, for a period of six (6) years after
Closing, obtain from the Purchaser copies or photocopies of any Title and
Operating Documents, correspondence, documents or reports which were delivered
to the Purchaser at Closing and which the Vendor requires to the extent the
Purchaser is in possession or control thereof.
 

ARTICLE 8
THIRD PARTY CONSENTS
 
8.1  
Consents

 
The Vendor shall, forthwith upon execution of this Agreement, use commercially
reasonable efforts to:
 

 
(a) 
identify and request in writing all necessary consents, permissions and
approvals by Third Parties and Government Authorities in connection with the
Transaction customarily obtained by a vendor prior to Closing (the "Vendor
Consents"); and

 

 
(b) 
give written notice to all Third Parties and Government Authorities in
sufficient time to allow any Vendor Consents having an expiry period to expire
(if not refused) prior to the Closing Date.

 
 
 
- 16 -

--------------------------------------------------------------------------------

 
 
8.2  
Post-Closing Approvals and Consents

 
The Parties agree that if certain approvals or consents required from Third
Parties and Government Authorities to complete the conveyance of the Assets,
including assignment of the licenses, permits or Leases, cannot be obtained
until after Closing, the Parties shall co-operate in seeking any such approvals
or consents forthwith after Closing.
 
ARTICLE 9
REPRESENTATIONS AND WARRANTIES
 
9.1  
Vendor's Representations and Warranties

 
Except to the extent otherwise disclosed in the Data Room Information, to the
Purchaser in writing prior to the date of this Agreement, or in any Schedule to
this Agreement, the Vendor hereby represents and warrants to the Purchaser that:
 

 
(a) 
Standing:  it is and at the Closing Date shall continue to be a valid and
subsisting corporation, under the laws of its jurisdiction of incorporation and
is authorized to carry out business in the jurisdiction where the Assets are
located;

 

 
(b) 
Requisite Authority:  except for the Court Approval, it has taken all action and
has full power and authority to enter into this Agreement and the other
documents and agreements executed and delivered hereunder, and it has taken all
necessary action to consummate the Transaction and to perform its obligations
hereunder and the other documents and agreements executed and delivered
hereunder;

 

 
(c) 
Execution and Enforceability:  provided that the Court Approval is obtained,
this Agreement has been, and all documents and agreements to be executed and
delivered by it at Closing pursuant hereto shall be, duly executed and delivered
by it, and upon execution by it and the Purchaser, this Agreement constitutes,
and all documents and agreements required to be executed and delivered by it at
Closing will constitute, legal, valid and binding obligations of it enforceable
against it in accordance with their respective terms, subject to bankruptcy,
insolvency, preference, reorganization, moratorium and other similar laws
affecting creditor's rights generally and the discretionary nature of equitable
remedies and defences;

 

 
(d) 
No Further Authorization Required:  to its knowledge after due inquiry, and
provided that Court Approval is obtained, no authorization or approval or other
action by, and no notice to or filing with, any Governmental Authority
exercising jurisdiction over the Assets is required by it or on its behalf for
the due execution and delivery of this Agreement;

 

 
(e) 
No Conflicts:  provided the Court Approval is obtained, the consummation of the
Transaction will not constitute or result in a material violation, breach or
default by it under any provision of any agreement or instrument to which it is
a party or by which it is bound or any judgment, law, decree, order or ruling
applicable to it, except requirements of Title and Operating Documents to obtain
consents of Third Parties to the sale of the Assets pursuant hereto;

 
 
 
 
 
- 17 -

--------------------------------------------------------------------------------

 
 

 
(f) 
Finder's Fee:  it has not incurred any obligation or liability, contingent or
otherwise, for brokers' or finders' fees in respect of the Transaction for which
the Purchaser shall have any obligation or liability;

 

 
(g) 
Canadian Resident:  it is not a non-resident of Canada for the purposes of the
Income Tax Act (Canada);

 

 
(h) 
No Notice of Default:  it has not received written notice of any default under
any agreement, statute, rule, regulation, order, judgment, declaration or by-law
which might reasonably be expected to result in material impairment or loss of
the interest of the Vendor in and to the Assets;

 

 
(i) 
Title:  it does not agree to give any greater interest or title in the Assets to
the Purchaser than that which it has, but it does represent and warrant that:

 
 
(i)
it has done no act or thing whereby its title to any Assets may be cancelled or
terminated; and

 
 
(ii)
except for Permitted Encumbrances, its interest in the Assets will at the
Closing Date be free and clear of all Encumbrances created by, through or under
it;

 

 
(j) 
Compliance with Title and Operating Agreements: to its knowledge, it has not
done any act nor omitted to do anything whereby it is, or would be, in default
of a term of any of the Title and Operating Documents which would reasonably be
expected to have a material adverse effect on the Assets;

 

 
(k) 
Taxes:  all ad valorem, property, severance and similar taxes and assessments,
based on or measured by the ownership of the Assets payable by it prior to the
date hereof have been paid and discharged;

 

 
(l) 
No Lawsuits or Claims:  it has not received written notice of any Claims in
existence or pending against it with respect to the Assets nor, to its
knowledge, is there any Claim contemplated or threatened against or with respect
to the Assets or the interests of the Vendor therein which is reasonably likely
to have a material adverse effect on the Assets;

 

 
(m) 
ROFRs:  the Assets are not subject to any ROFRs by virtue of the Transaction;

 

 
(n) 
Outstanding AFEs:  there are no authorizations for expenditures (excluding for
greater certainty Lease rental payments) issued or approved by it with respect
to the Assets under which amounts may become payable after the Effective Time
under which its share will be greater than Twenty-Five Thousand Dollars
($25,000.00) and there are no outstanding cash calls with respect to the Assets,
under which its share will be greater than Twenty-Five Thousand Dollars
($25,000.00); and

 

 
(o) 
Environmental:  it has not received:

 
 
(i)
any written orders or directives that relate to Environmental Matters and that
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

 
 
 
 
 
 
- 18 -

--------------------------------------------------------------------------------

 
 
 
(ii)
any written demand or notice issued by any Governmental Authority with respect
to the breach of any environmental, health or safety law applicable to the
Assets, including respecting the use, storage, treatment, transportation or
disposition of environmental contaminants, which demand or notice remains
outstanding on the date hereof.

 
9.2  
No Additional Representations and Warranties by the Vendor

 

 
(a) 
The Vendor makes no representations or warranties except as expressly set forth
in Section 9.1 and in particular, and without limiting the generality of the
foregoing, the Vendor disclaims and shall not be liable for any representation
or warranty which may have been made or alleged to be made in any instrument or
document relative hereto, or in any statement or information made or
communicated to the Purchaser in any manner including any opinion, information,
or advice which may have been provided to the Purchaser by the Vendor or its
Representatives in connection with the Assets or in relation to the
Transaction.  For greater certainty, the Vendor does not make any representation
or warranty, express or implied, with respect to:

 
 
(i)
the Data Room Information or any other data or information supplied by the
Vendor or any of its Representatives in connection with the Assets;

 
 
(ii)
the quality, quantity or recoverability of Petroleum Substances within or under
the Lands;

 
 
(iii)
the value of the Assets or the future cash therefrom;

 
 
(iv)
the quality, condition, fitness, suitability, serviceability or merchantability
of the Tangibles; or

 
 
(v)
the title of the Vendor to the Assets except as expressly set forth in Section
9.1.

 
The Purchaser acknowledges and confirms that it is relying on its own
investigations concerning the Assets and it has not relied on advice from the
Vendor or any of its Representatives with respect to the matters specifically
enumerated in the immediately preceding paragraphs in connection with the
purchase of the Assets pursuant hereto.  The Purchaser further acknowledges and
agrees that it is acquiring the Assets on an "as is" basis.  The Purchaser
acknowledges and agrees that it is familiar with the condition of the Assets,
including the past and present use of the Lands and the Tangibles, that 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 expressly contained in
Section 9.1 of this Agreement.
 

 
(b) 
Except for its express rights under this Agreement, the Purchaser hereby waives
all rights and remedies (whether now existing or hereinafter arising and
including all common law, tort, contractual and statutory rights and remedies)
against the Vendor or Vendor Entity in respect of the Assets or the Transaction
or any representations or statements made or information or data furnished to
the Purchaser or its

 
 
 
 
 
 
 
- 19 -

--------------------------------------------------------------------------------

 
 
Representatives in connection herewith (whether made or furnished orally or by
electronic, faxed, written or other means).
 
9.3  
Purchaser's Representations and Warranties

 
The Purchaser hereby represents and warrants to the Vendor that:
 

 
(a) 
Standing:  it is and at the Closing Date shall continue to be a valid and
subsisting corporation under the laws of its jurisdiction of registration and is
authorized to carry out business in the jurisdiction where the Assets are
located;

 

 
(b) 
Requisite Authority:  except for the Court Approval, it has taken all action and
has full power and authority to enter into this Agreement and the other
documents and agreements executed and delivered hereunder and it has taken all
necessary action to consummate the Transaction and to perform its obligations
hereunder and the other documents and agreements executed and delivered
hereunder;

 

 
(c) 
Execution and Enforceability:  provided the Court Approval is obtained, this
Agreement has been, and all documents and agreements to be executed and
delivered by it at Closing pursuant to this Agreement shall be, duly executed
and delivered by it, and upon execution by the Vendor and it, this Agreement
constitutes, and all documents and agreements required to be executed and
delivered by it at Closing will constitute, legal, valid and binding obligations
of it enforceable against it in accordance with their respective terms, subject
to bankruptcy, insolvency, preference, reorganization, moratorium and other
similar laws affecting creditor's rights generally and the discretionary nature
of equitable remedies and defences;

 

 
(d) 
No Further Authorization Required: to its knowledge after due inquiry, and
provided that Court Approval is obtained, no authorization or approval or other
action by, and no notice to or filing with, any Governmental Authority
exercising jurisdiction over the Assets is required by it or on its behalf for
the due execution and delivery of this Agreement;

 

 
(e) 
No Conflicts: provided the Court Approval is obtained, the consummation of the
Transaction will not constitute or result in a material violation, breach or
default by it under any provision of any agreement or instrument to which it is
a party or by which it is bound or any judgment, law, decree, order or ruling
applicable to it;

 

 
(f) 
Finder's Fee:  it has not incurred any obligation or liability, contingent or
otherwise, for broker's or finder's fees in respect of the Transaction for which
the Vendor shall have any obligation or liability;

 

 
(g) 
No Lawsuits or Claims:  it has not received notice of any Claims in existence,
contemplated, pending or threatened against it seeking to prevent the
consummation of the Transaction;

 

 
(h) 
Purchaser as Principal:  it 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;

 
 
 
 
 
 
- 20 -

--------------------------------------------------------------------------------

 
 

 
(i) 
Availability of Funds:  it has sufficient funds available to it to enable it to
pay in full the Purchase Price to the Vendor as herein provided and otherwise to
fully perform its obligations under this Agreement; and

 

 
(j) 
Insiders:  to the Purchaser's knowledge, having made due enquiry, no Insider of
the Purchaser is also an Insider of the Vendor.

 
9.4  
Enforcement of Representations and Warranties

 

 
(a) 
Notwithstanding anything to the contrary herein expressed or implied and,
notwithstanding the Closing or deliveries of covenants and/or representations
and warranties in any other agreements at Closing or prior or subsequent
thereto, the representations and warranties set forth in Sections 9.1 and 9.3
hereof shall survive Closing for the benefit of the Purchaser and the Vendor
respectively, provided that no Claim in respect of such representations and
warranties shall be made or be enforceable unless written notice of such Claim
is given by the claimant to the other Parties within twelve (12) months of the
Closing Date.  Effective on the expiry of such twelve (12) month period, each
Party hereby releases and forever discharges the other Parties from any breach
of any representations and warranties set forth in Sections 9.1 and 9.3 hereof
except in respect of those Claims in which notice has been given in accordance
with this Section 9.4.  No Claim shall be made by a Party in respect of the
representations and warranties in this Agreement made by the other Parties
except pursuant to and in accordance with this Section 9.4.

 

 
(b) 
There shall not be any merger of any covenant, representation or warranty in any
assignment, conveyance, transfer or document delivered pursuant hereto
notwithstanding any rule of law, equity or statute to the contrary and all such
rules are hereby waived.

 

 
(c) 
The representations and warranties of the Vendor and the Purchaser made herein
or pursuant hereto are made for the exclusive benefit of the Purchaser or the
Vendor, as the case may be, and are not transferable and may not be made the
subject of any right of subrogation in favour of any other Person.

 
ARTICLE 10
CONDITIONS PRECEDENT TO CLOSING
 
10.1  
Vendor's Closing Conditions

 
The obligation of the Vendor to complete the sale of the Assets pursuant to this
Agreement is subject to the satisfaction at or prior to the Closing Date of the
following conditions precedent:
 

 
(a) 
Representations and Warranties True:  all representations and warranties of the
Purchaser contained in this Agreement shall be true in all material respects on
the Closing Date, and the Vendor shall have received a certificate from an
officer of the Purchaser substantially in the form attached hereto as Schedule
"D" dated as of the Closing Date;

 
 
 
 
 
- 21 -

--------------------------------------------------------------------------------

 
 

 
(b) 
Purchaser's Obligations:  the Purchaser shall have, in all material respects,
timely performed and satisfied all obligations required by this Agreement to be
performed and satisfied by the Purchaser on or prior to the Closing Date;

 

 
(c) 
Payment:  the Purchaser shall have tendered the Closing Payment to the Vendor in
the manner provided in this Agreement;

 

 
(d) 
Conveyance Documents:  the Purchaser shall have executed and delivered to the
Vendor all Conveyance Documents required under Section 12.1(a) and the General
Conveyance;

 

 
(e) 
Restrictions:  all necessary governmental and other regulatory approvals to the
sale of the Assets that are required prior to Closing shall have been obtained
without conditions; and

 

 
(f) 
Court Approval:  the Court Approval shall have been obtained.

 
The foregoing conditions shall be for the benefit of the Vendor and may, without
prejudice to any of the rights of the Vendor hereunder (excluding reliance on or
enforcement of any representations, warranties or covenants dealing with the
subject of or similar to the condition waived), be waived by it in writing, in
whole or in part, at any time, provided that the Vendor is not entitled to waive
the Court Approval condition contained in Section 10.1(f).  The Vendor shall
proceed diligently and in good faith and use all reasonable efforts to fulfill
and assist in the fulfillment of the foregoing conditions.  In case any of the
said conditions shall not be complied with, or waived by the Vendor, at or
before the Closing Date, the Vendor may terminate this Agreement by written
notice to the Purchaser.
 
10.2  
Purchaser's Closing Conditions

 
The obligation of the Purchaser to complete the purchase of the Assets pursuant
to this Agreement is subject to the satisfaction, at or prior to the Closing
Date, of the following conditions precedent:
 

 
(a) 
Representations and Warranties True:  all representations and warranties of the
Vendor contained in this Agreement shall be true in all material respects on the
Closing Date, and the Purchaser shall have received a certificate from an
officer of the Vendor substantially in the form attached hereto as Schedule "C"
dated as of the Closing Date;

 

 
(b) 
Vendor's Obligations:  the Vendor shall have, in all material respects, timely
performed and satisfied all obligations required by this Agreement to be
performed and satisfied by the Vendor on or prior to the Closing Date;

 

 
(c) 
Conveyance Documents: the Vendor shall have executed and delivered to the
Purchaser all Conveyance Documents required under Section 12.1(a) and the
General Conveyance;

 

 
(d) 
Restrictions: all necessary governmental and other regulatory approvals to the
sale of the Assets that are required prior to Closing shall have been obtained
without conditions; and

 

 
(e) 
Court Approval: the Court Approval shall have been obtained.

 
The foregoing conditions shall be for the benefit of the Purchaser and may,
without prejudice to any of the rights of the Purchaser hereunder (excluding
reliance on or enforcement of any representations,
 
 
 
 
- 22 -

--------------------------------------------------------------------------------

 
 
warranties or covenants dealing with the subject of or similar to the condition
waived), be waived by it by notice to the Vendor in writing, in whole or in
part, at any time, provided that the Purchaser is not entitled to waive the
Court Approval condition contained in Section 10.2(e).  The Purchaser shall
proceed diligently and in good faith and use all reasonable efforts to fulfill
and assist in the fulfillment of the foregoing conditions.  In case any of the
said conditions shall not be complied with, or waived by the Purchaser, at or
before the Closing Date, the Purchaser may terminate this Agreement by written
notice to the Vendor.
 
ARTICLE 11
CLOSING DELIVERIES
 
11.1  
Vendor Closing Deliveries

 
At Closing, the Vendor shall table the following:
 

 
(a) 
a copy of the Interim Statement of Adjustments;

 

 
(b) 
a certified copy of the resolutions of the Vendor's board of directors approving
the Transaction;

 

 
(c) 
a certificate of a senior officer of the Vendor substantially in the form
attached hereto as Schedule "C" dated as of the Closing Date;

 

 
(d) 
a receipt for the Closing Payment;

 

 
(e) 
the General Conveyance, fully executed by the Vendor; and

 

 
(f) 
the Conveyance Documents, to the extent prepared on or by the Closing Date in
accordance with Section 12.1(a).

 
11.2  
Purchaser’s Closing Deliveries

 
At Closing, Purchaser shall table the following:
 

 
(a) 
the Closing Payment;

 

 
(b) 
a certificate of a senior officer of Purchaser substantially in the form
attached hereto as Schedule "D" dated as of the Closing Date; and

 

 
(c) 
the General Conveyance, fully executed by Purchaser.

 
11.3  
Deliveries

 
Vendor shall deliver or cause to be delivered to Purchaser within a reasonable
period of time following Closing, the original copies of the Title and Operating
Documents and any other agreements and documents in its possession related to
the Assets and the original copies of contracts, agreements, records, books,
documents, licenses, reports and data included in the Miscellaneous Interests
which are now in the possession of Vendor.  Notwithstanding the foregoing, if
and to the extent such contracts, agreements, records, books, documents,
licenses, reports and data also pertain to interests other than the Assets, at
Vendor's expense, photocopies or other copies may be provided to Purchaser in
lieu of original copies.
 
 
 
 
- 23 -

--------------------------------------------------------------------------------

 
 
ARTICLE 12
CONVEYANCES AND TRANSFER
 
12.1  
Conveyances

 

 
(a) 
The Vendor shall provide at the Closing Date those Conveyance Documents required
to acquire the Vendor's interest in any Assets purchased herein, but no such
documents shall require the Vendor to assume or incur any obligation, or to
provide any representation or warranty, beyond that contained in this
Agreement.  The Vendor shall not be required to have such documents signed by
Third Parties at or before the Closing Date but shall cooperate with the
Purchaser as reasonably required to secure execution of such documents by such
Third Parties thereafter.  The Purchaser shall execute and promptly return to
the Vendor at least one copy of each such document and shall use all reasonable
efforts to obtain timely execution and return of such documents by Third Parties
wherever required.  The Parties agree that certain assignments may be in the
form of electronic transfers including Alberta Energy Resources and Conservation
Board well license transfers and agree that reasonable efforts shall be made to
ensure such assignments will be completed on the Closing Date.

 

 
(b) 
The Vendor shall promptly register in the applicable registry all registrable
transfers and conveyances of its interests in the Assets and the Vendor shall
make application to all applicable Government Authorities to change the recorded
name of all Wells and Tangibles forming part of the Assets.  All costs incurred
in registering any transfers and conveyances inclusive of well license
transfers, and all costs of registering any further assurances required to
convey the Assets, shall be borne by the Purchaser.

 
12.2  
License and Authorization Transfers

 

 
(a) 
At least five (5) Business Days prior to the Closing Date, the Purchaser shall
communicate with the relevant Government Authority to determine all conditions
and deposits which the relevant Government Authority will require in order for
the relevant Government Authority to approve the transfer by the Vendor to the
Purchaser of any and all licenses and authorizations for the Wells and any
Tangibles licensed to the Vendor, and shall advise the Vendor in writing of such
conditions and required deposits.  In such case, forthwith after Closing, the
Purchaser shall satisfy the deposit requirements of the relevant Government
Authority in order to approve any of those license and authorization transfers
to the Purchaser. The Purchaser further covenants to comply with all conditions
imposed by the relevant Government Authority in respect of such transfers.

 

 
(b) 
Within five (5) Business Days following Closing, the Vendor shall prepare and
electronically submit an application to the relevant Government Authority for
the transfer of any Wells and any Tangibles held in the name of the Vendor and
the Purchaser shall promptly execute and return such applications to such Vendor
for registration in accordance with Section 12.1(b).

 

 
(c) 
Should the relevant Government Authority deny any license transfer because of
misdescription or other minor deficiencies in the application, the Vendor shall,
within two (2) Business Days, correct the application and amend and re-submit an
application

 
 
 
 
- 24 -

--------------------------------------------------------------------------------

 
 
for the license transfers and the Purchaser shall electronically ratify and sign
such application.
 

 
(d) 
After Closing, whether or not the Purchaser requested prior determination of the
relevant Government Authority transfer conditions under Section 12.2, if for any
reason the relevant Government Authority requires a Party to make a deposit in
order to approve the license or authorization transfer, such Party shall and
covenants to immediately make such deposit.

 

 
(e) 
If the required Party fails to make a deposit it is required to make under
Section 12.2(d) within ten (10) days of such Party's receipt of notification
from the relevant Government Authority that such deposit is required, the other
Party shall have the right, but not the obligation, to make such deposit.  In
such event, the required Party shall reimburse such other Party for the amount
of such deposit plus interest thereon at the Prime Rate plus two percent (2%)
per annum from the date such other Party paid the deposit until such
reimbursement is made.  In addition to all other rights to enforce such
reimbursement otherwise available to the Party making payment as set out above,
it shall have the right to set-off the amount of such reimbursement (including
interest) against other monies due to the required Party.

 

 
(f) 
Each Party hereby appoints the other Party as its agent with regard to the
payment referred to in Section 12.2(e), it being agreed however that the
appointed Party shall not have any obligation to make such security deposits on
behalf of the appointing Party.

 
ARTICLE 13
LIABILITIES AND INDEMNITIES
 
13.1  
Indemnities for Representations and Warranties

 

 
(a) 
Subject to Sections 9.4, 13.4 and 13.5, the Vendor shall:

 
 
(i)
be liable to the Purchaser for; and

 
 
(ii)
as a separate covenant, indemnify, defend and hold the Purchaser and its
Representatives harmless from and against;

 
all Losses and Liabilities incurred or suffered by the Purchaser or its
Representatives to the extent arising out of, relating to, or resulting from any
breach of any of the Vendor's representations or warranties made in this
Agreement; except to the extent any such Losses and Liabilities are caused or
contributed to, in whole or in part, by the negligence (whether sole, joint or
concurrent), strict liability or other legal fault of any Purchaser Entity.  The
Vendor's indemnity obligations set forth in this Section 13.1(a) shall survive
the Closing in accordance with the provisions of Section 9.4.
 

 
(b) 
Subject to Sections 9.4, 13.4 and 13.5, the Purchaser shall:

 
 
(i)
be liable to the Vendor for, and

 
 
(ii)
as a separate covenant, indemnify, defend and hold the Vendor and its
Representatives harmless from and against;

 
 
 
 
- 25 -

--------------------------------------------------------------------------------

 
 
all Losses and Liabilities incurred or suffered by the Vendors or its
Representatives to the extent arising out of, relating to, or resulting from any
breach of any of the Purchaser's representations or warranties made in this
Agreement; except to the extent such Losses and Liabilities are caused or
contributed to, in whole or in part, by the negligence (whether sole, joint or
concurrent), strict liability or other legal fault of any Vendor Entity.  The
Purchaser's indemnity obligations set forth in this Section 13.1(b) shall
survive the Closing in accordance with the provisions of Section 9.4.
 
13.2  
General Indemnity

 
If Closing occurs the Purchaser shall:
 

 
(a) 
be liable to the Vendor for; and

 

 
(b) 
as a separate covenant, indemnify Vendor and each other Vendor Entity from and
against;

 
all Losses and Liabilities suffered, sustained, paid or incurred by any of them
to the extent arising or accruing on or after the Effective Time and which
relate to the Assets, including all Losses and Liabilities attributable to the
operation, ownership, use, construction or maintenance of the Assets arising or
accruing on or after the Effective Time.  The Purchaser's indemnity obligation
set forth in this Section 13.2 shall survive the Closing Date indefinitely.
 
13.3  
Environmental Indemnity

 

 
(a) 
The Purchaser acknowledges that it:

 
 
(i)
is familiar with the condition of the Assets, including the past and present use
of the Assets, and it is not aware of any Environmental Liabilities currently
pertaining to the Assets;

 
 
(ii)
has been provided with the right and the opportunity to conduct due diligence
investigations with respect to existing or potential Environmental Liabilities
pertaining to the Assets; and

 
 
(iii)
is not relying upon any representation or warranty of the Vendor as to the
condition, environmental or otherwise, of the Assets, except for the
environmental representation and warranty expressly made by the Vendor pursuant
to Section 9.1(o).

 

 
(b) 
The Purchaser agrees that once Closing has occurred the Vendor shall have no
liability whatsoever for any Environmental Liabilities except, subject to the
limitations set out in Section 13.5, to the extent related to a breach of the
representation and warranty made by the Vendor in Section 9.1(o).  In this
regard, once Closing has occurred, the Purchaser:

 
 
(i)
shall be solely liable and responsible for all of the Vendor's Losses and
Liabilities; and

 
 
(ii)
as a separate covenant shall indemnify and save the Vendor and each other Vendor
Entity harmless from and against all Losses and Liabilities that may be

 
 
 
 
- 26 -

--------------------------------------------------------------------------------

 
 
brought against or which they or any one of them may suffer, sustain, pay or
incur;
 
as a result of any act, omission, matter or thing related to any Environmental
Liabilities arising, however and whenever arising or occurring, and the
Purchaser shall assume, perform, pay and discharge all Environmental
Liabilities.  This liability and indemnity shall apply without limit and without
regard to cause or causes, including the negligence, whether sole, concurrent,
gross, active, passive, primary or secondary, or the wilful or wanton misconduct
of the Vendor or the Purchaser or any other Person or otherwise. The Purchaser
acknowledges and agrees that it shall not be entitled to any rights or remedies
as against the Vendor or any Vendor Entity under the common law or statute
pertaining to any Environmental Liabilities, including the right to name the
Vendor or any Vendor Entity as a 'third party' to any action commenced by any
Person against the Purchaser.  The Purchaser's indemnity obligation set forth in
this Section 13.3(b) shall survive the Closing Date indefinitely.
 
13.4  
Indemnification Procedure – Third Party Claims

 
The following procedures shall be applicable to any Claim (a "Third Party
Claim") made against a Party (the "Indemnified Party") by a Person other than
such Indemnified Party or any of its Representatives for which it is entitled to
indemnification pursuant to this Agreement from the other Party (the
"Indemnifying Party"):
 

 
(a) 
upon the Third Party Claim being made or commenced against the Indemnified
Party, the Indemnified Party shall promptly provide written notice thereof to
the Indemnifying Party.  The notice shall describe the Third Party Claim in
reasonable detail and indicate the estimated amount, if practicable, of the
indemnified Losses and Liabilities that have been or may be sustained by the
Indemnified Party in respect thereof.  If the Indemnified Party does not give
prompt notice to the Indemnifying Party as aforesaid, then such failure shall
only lessen or limit the Indemnified Party's rights to indemnity hereunder to
the extent that the defence of the Third Party Claim was prejudiced by such lack
of prompt notice;

 

 
(b) 
if the Indemnifying Party acknowledges to the Indemnified Party in writing that
the Indemnifying Party is responsible to indemnify the Indemnified Party in
respect of the Third Party Claim pursuant hereto, the Indemnifying Party shall
have the right to do either or both of the following:

 
 
(i)
assume carriage of the defence of the Third Party Claim using legal counsel of
its choice and at its sole cost; and

 
 
(ii)
settle the Third Party Claim provided the Indemnifying Party pays the full
monetary amount of the settlement and the settlement does not impose any
unreasonable restrictions or obligations on the Indemnified Party;

 

 
(c) 
notwithstanding the assumption by the Indemnifying Party of the defence of the
Claim, if the defendants in any such Claim shall include both the Indemnifying
Party and the Indemnified Party, and the Indemnified Party shall have reasonably
concluded that counsel selected by the Indemnifying Party has a conflict of
interest because of the availability of, or decision by either the Indemnifying
Party or the Indemnified Party to

 
 
 
 
- 27 -

--------------------------------------------------------------------------------

 
 
put forward, different or additional defences to the Indemnifying Party and the
Indemnified Party, the Indemnified Party shall have the right to select separate
counsel to participate in the defence of the Claim on its behalf, at the expense
of the Indemnifying Party;
 

 
(d) 
each Party shall cooperate with the other Parties in the defence of the Third
Party Claim, including making available to the other Party, its directors,
officers, employees and consultants whose assistance, testimony or presence is
of material assistance in evaluating and defending the Third Party Claim;

 

 
(e) 
the Indemnified Party shall not enter into any settlement, consent order or
other compromise with respect to the Third Party Claim without the prior written
consent of the Indemnifying Party (which consent shall not be unreasonably
withheld, delayed or conditioned) unless the Indemnified Party waives its rights
to indemnification in respect of the Third Party Claim;

 

 
(f) 
upon payment of the Third Party Claim, the Indemnifying Party shall be
subrogated to all Claims the Indemnified Party may have relating thereto.  The
Indemnified Party shall give such further assurances and cooperate with the
Indemnifying Party to permit the Indemnifying Party to pursue such subrogated
Claims as reasonably requested by it; and

 

 
(g) 
if the Indemnifying Party has paid an amount pursuant to the indemnification
obligations herein and the Indemnified Party shall subsequently be reimbursed
from any other source in respect of the Third Party Claim, the Indemnified Party
shall promptly pay the amount of the reimbursement (including interest actually
received) to the Indemnifying Party, net of taxes required to be paid by the
Indemnified Party as a result of such payment and plus any taxes saved or
recovered by the Indemnified Party as a result of such payment.

 
13.5  
Limitations on Liability

 

 
(a) 
Notwithstanding anything herein to the contrary, no indemnified Person shall be
entitled to seek indemnification from a Party hereunder pursuant to Section 13.1
unless such indemnified Person notifies such Party in writing of such Losses and
Liabilities within the twelve (12) month period specified in Section 9.4.  The
Parties acknowledge and agree that such obligation to provide written notice
within twelve (12) months from the Closing Date and in a manner specified under
this Agreement is intended by the Parties as a limitation of liability that
represents a fair and equitable allocation of the risks and liabilities that
each Party has agreed to assume in connection with the subject matter hereof and
is not an agreement within the provision of subsection 7(2) of the Limitations
Act (Alberta).

 

 
(b) 
Notwithstanding anything herein to the contrary, the indemnification obligations
of the Vendor under this Agreement are subject to the following restrictions:

 
 
(i)
no individual Claim of an indemnified Person may be made against the Vendor for
any Claim or Losses and Liabilities hereunder unless such Claim or Losses and
Liabilities exceed an amount equal to Twenty Five Thousand Dollars
($25,000).  Furthermore, the Vendor shall not have any liability for any
indemnification pursuant to this Agreement unless and until the aggregate amount
of the

 
 
 
 
 
- 28 -

--------------------------------------------------------------------------------

 
 
 
 
liability for all Claims or Losses and Liabilities to indemnified Persons
hereunder exceeds Two Hundred Fifty Thousand Dollars ($250,000), at which point
only those Losses and Liabilities in excess of such amount shall be recoverable
from the Vendor.  For the avoidance of doubt, the adjustments to the Purchase
Price pursuant to Section 4.1 and any payments in respect thereof shall not be
limited by this Section 13.5; and

 
 
(ii)
the Vendor's indemnification obligations under this Agreement shall be limited
to an aggregate maximum amount equal to the Purchase Price.

 
13.6  
No Merger

 
There shall not be any merger of any liability or indemnity hereunder in any
assignment, conveyance, transfer or document delivered pursuant hereto
notwithstanding any rule of law, equity or statute to the contrary and all such
rules are hereby waived.
 
ARTICLE 14
TERMINATION
 
14.1  
Grounds for Termination

 
This Agreement may be terminated at any time prior to Closing:
 

 
(a) 
by mutual written agreement of the Vendor and the Purchaser;

 

 
(b) 
by either the Vendor or the Purchaser pursuant to the provisions of Article 10;
or

 

 
(c) 
by either the Vendor or the Purchaser if Closing has not occurred on or before
March 23, 2012; or

 

 
(d) 
in accordance with Section 3.3.

 
14.2  
Effect of Termination

 
If this Agreement is terminated by the Vendor or the Purchaser as permitted
under Section 14.1, Article 13, Article 15 and Section 20.2 shall remain in full
force and effect following any such permitted termination, and the Deposit shall
be governed by Section 3.3.
 
ARTICLE 15
CONFIDENTIALITY, PUBLIC ANNOUNCEMENTS AND SIGNS
 
15.1  
Confidentiality

 
Each Party agrees to keep in strict confidence:
 

 
(a) 
subject to Section 15.2, all information regarding the terms of this Agreement;
and

 

 
(b) 
any information exchanged or received in connection with:

 
 
 
- 29 -

--------------------------------------------------------------------------------

 
 
 
 
(i)
the performance of due diligence by the Purchaser prior to or after the date
hereof; or

 
 
(ii)
negotiation or drafting of this Agreement,

 
provided that a Party shall be entitled to disclose all information as may be
required or desirable in connection with obtaining the Court Approval. If this
Agreement is terminated, each Party upon request will promptly return to the
other Party all documents, contracts, records, or other information received by
it that disclose or embody confidential information of the other Party.
 
In addition to the foregoing, the Purchaser shall continue to be bound by the
Confidentiality Agreement in accordance with the terms thereof.
 
15.2  
Public Announcements

 

 
(a) 
If a Party intends to issue a press release or other public disclosure of this
Agreement, the terms hereof or the transactions contemplated herein, the
disclosing Party shall provide the other Parties with an advance copy of any
such press release or other public disclosure with sufficient time to enable the
other Parties to review such press release or other public disclosure and advise
of any comments they may have with respect thereto.

 

 
(b) 
Notwithstanding Section 15.1 or 15.2(a), a Party may release or provide
information about the Transaction insofar as is required by Applicable Laws
(including as may be required to obtain Court Approval) or stock exchange
requirements applicable to the disclosing Party or its Affiliates; provided that
such disclosing Party shall make reasonable commercial efforts to provide the
other Parties with the details of the nature and substance of such required
disclosure as soon as practicable and in any event prior to such disclosure. A
Party may provide information about the Transaction to a bank or other financial
institution to obtain financing or any required consent of the bank or other
financial lender of such Party or any of its Affiliates. A Party may also
disclose such information pertaining to this Agreement, including the identity
of the Parties, insofar as is required to enable such Party to fulfil its
obligations under this Agreement, including obtaining any approvals or consents
to the Transaction required from Governmental Authorities (including Court
Approval) or Third Parties.

 
15.3  
Signs

 
Within sixty (60) days following the Closing Date, the Purchaser shall remove
the names of the Vendor and its Affiliates and predecessors from all signs
located at or near the Wells or any Tangibles.  If the Purchaser fails to comply
with the foregoing, the Vendor shall have the right, at its discretion, to
remove its name as aforesaid and the Purchaser shall be responsible for and
shall reimburse such Vendor for all reasonable costs incurred by such Vendor in
so doing.
 
 
- 30 -

--------------------------------------------------------------------------------

 
 
ARTICLE 16
GOVERNING LAW AND DISPUTE RESOLUTION
 
16.1  
Governing Law

 
This Agreement shall, in all respects, be subject to and be interpreted,
construed and enforced in accordance with the laws in effect in the Province of
Alberta and to the laws of Canada applicable therein.
 
16.2  
Resolution of Disputes

 

 
(a) 
All Claims and disputes among the Parties arising in relation to this Agreement
(including disputes over the interpretation or enforceability of any provision
of this Agreement) shall be resolved through negotiation of the Parties, in good
faith.  If after thirty (30) days of attempting to resolve the dispute through
negotiation the Parties are unable to resolve the dispute, either Party may
refer the matter to the court of competent jurisdiction in the Court of Queen's
Bench in the Province of Alberta.

 

 
(b) 
Each Party hereby irrevocably and unconditionally submits, for itself and its
property, to the exclusive jurisdiction of the court of competent jurisdiction
in the Province of Alberta and any appellate court thereof, and waives any
defences it might have regarding jurisdiction in any action or proceeding
arising out of or relating to this Agreement or any ancillary agreement to which
it is a Party, or for recognition or enforcement of any judgment in respect
thereof, and each Party hereto hereby irrevocably and unconditionally agrees
that all Claims in respect of any such action or proceeding may be heard and
determined in any courts in the Province of Alberta.

 

 
(c) 
Each Party hereby irrevocably and unconditionally waives, to the fullest extent
it may legally and effectively do so, any objection that it may now or hereafter
have to the laying of venue of any action or proceeding arising out of or
relating to this Agreement or any ancillary agreement to which it is a party in
any court of competent jurisdiction in the Province of Alberta.  Each of the
Parties hereto hereby irrevocably waives, to the fullest extent permitted by
Applicable Law, the defence of an inconvenient forum to the maintenance of such
action or proceeding in any such court.

 
ARTICLE 17
NOTICES
 
17.1  
Service of Notices

 
The addresses for service of the Parties shall be as follows:
 
the Vendor:
 
Township Petroleum Corp.
Suite 800, 1333 - 8th Street S.W.
Calgary, Alberta  T2R 1M6
 

 
Attention: 
Fax:
President and Chief Executive Officer
(403) 263-9812

                    

 
- 31 -

--------------------------------------------------------------------------------

 
 
                  
With a copy to:
 
Norton Rose Canada LLP
3700, 400-3rd Avenue SW
Calgary, AB T2P 4H2
 

 
Attention: 
Fax:
Wayne Fedun
(403) 264-5973

                  
the Purchaser:
 
Cavalier Energy Inc.
2500 Bow Valley Sq. 3
255-5 Ave. SW
Calgary, Alberta T2P 3G6
 

 
Attention: 
Fax:
President and Chief Executive Officer
403-268-3987

                                
Any of the Parties may from time to time change its address for service herein
by giving written notice to the other.  Any notice may be served by personal
service upon the above person specified by a Party, or if no person is
specified, upon any officer of a Party, by mailing the same by prepaid post in a
properly addressed envelope addressed to the Party at its respective address for
service hereunder, or by facsimile to the fax number for such Party specified
hereunder.  Any notice personally served upon an officer or the person specified
by a Party, as the case may be, shall be deemed to be given on the date of such
service, any notice served by mail shall be deemed to be given to and received
by the addressee on the fourth Business Day, after the mailing thereof and any
notice given by facsimile shall be deemed to be given and received on the day
when it is sent, if it is sent during normal business hours (8:00 a.m. to 4:00
p.m.) and, otherwise, on the next following normal Business Day.  No notices
shall be served by mail during times of interruption or threat of interruption
of mail service due to strikes, lock-outs or other causes.
 
ARTICLE 18
PERSONAL INFORMATION
 
18.1  
Personal Information

 
The Purchaser covenants and agrees to use and disclose any personal information
contained in any of the books, records or files transferred to the Purchaser or
otherwise obtained the Purchaser in connection with the Transaction only for
those purposes for which it was initially collected from or in respect of the
individual to which such information relates or as otherwise permitted or
authorized by Applicable Law.  The Purchaser's obligations set forth in this
Section 18.1 shall survive the Closing Date indefinitely.
 
 
 
 
- 32 -

--------------------------------------------------------------------------------

 
 
ARTICLE 19
ASSIGNMENT
 
19.1  
Assignment

 

 
(a) 
Prior to the 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,
which consent may be withheld in such other Party's discretion.

 

 
(b) 
No assignment, transfer, or other disposition of this Agreement or the Assets or
any portion of the Assets shall relieve the Purchaser from its obligations to
the Vendor herein.  The Vendor shall have the option to claim performance or
payment of the 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
performance or payment of the same obligation.

 
ARTICLE 20
MISCELLANEOUS
 
20.1  
Remedies Cumulative

 
No failure on the part of any Party to exercise any right or remedy will operate
as a waiver thereof.  A Party will not be precluded from exercising any right
available to it at law, equity or by statute because of its exercise of any
single or partial right, and a Party may exercise any such remedies
independently or in combination.
 
20.2  
Costs

 
Except as otherwise specified in this Agreement, each Party shall pay its
respective costs incurred in connection with the preparation, negotiation and
execution of this Agreement and the consummation of the Transaction.
 
20.3  
No Waiver

 
No waiver by any Party of any breach of any of the terms, conditions,
representations or warranties in this Agreement shall take effect or be binding
upon that Party unless the waiver is expressed in writing under the authority of
that Party and 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.
 
20.4  
Entire Agreement

 
This Agreement constitutes the entire agreement between the Parties with respect
to the subject matter hereof, and the Parties agree and confirm that this
Agreement cancels and supersedes any prior understandings and agreements between
the Parties hereto with respect to the subject matter hereof, but expressly
excluding the Confidentiality Agreement which shall continue to apply in
accordance with its terms.  No modification of or amendment to this Agreement
shall be valid or binding unless set forth in writing and duly executed by the
Parties.
 
 
- 33 -

--------------------------------------------------------------------------------

 
 
 
20.5  
Further Assurances

 
From time to time, as and when reasonably requested by the other Party, a Party
shall execute and deliver or cause to be executed and delivered all such
documents and instruments and shall take or cause to be taken all such further
or other actions to implement or give effect to the Transaction, provided such
documents, instruments or actions are consistent with the provisions of this
Agreement.  All such further documents, instruments or actions shall be
delivered or taken at no additional consideration other than reimbursement of
any expenses reasonably incurred by the Party providing such further documents
or instruments or performing such further acts, by the Party at whose request
such documents or instruments were delivered or acts performed.
 
20.6  
Time of the Essence

 
Time shall be of the essence in this Agreement.
 
20.7  
Enurement

 
This Agreement shall be binding upon and shall enure to the benefit of the
Parties and their respective heirs, executors, successors and permitted assigns.
 
20.8  
Severability

 
In the case any of the provisions of this Agreement should be invalid, illegal
or unenforceable in any respect, the validity, legality or enforceability of the
remaining provisions contained herein shall not in any way be affected or
impaired thereby.
 
20.9  
Counterpart Execution

 
This Agreement may be executed in counterpart and all executed counterparts
together shall constitute one agreement.  This Agreement shall not be binding
upon any Party unless and until executed by all Parties.
 
[signature page follows]
 
 
 
 
 
 
- 34 -

--------------------------------------------------------------------------------

 
 
IN WITNESS WHEREOF the Parties have executed this Agreement as of the date first
above written.
 
 
TOWNSHIP PETROLEUM CORP.
 
 
   
CAVALIER ENERGY INC.
 
 
 
  Per:   
/s/ Garth Wong
    Per: 
/s/ William J.F. Roach
 
Name:
GARTH WONG    
Name:
WILLIAM J.F. ROACH
 
Title:
PRESIDENT AND CEO
   
Title:
PRESIDENT AND CHIEF EXECUTIVE OFFICER
 

 
 
 

Per:   
 
    Per: 
/s/ E. Mitchell Shier
 
Name:
 
   
Name:
E. MITCHELL SHIER
 
Title:
 
   
Title:
CORPORATE SECRETARY
 

 
 
 
 
 
 
 
 
 
 
 
 
 
- 35 -

--------------------------------------------------------------------------------

 
 
SCHEDULE "A"
LAND SCHEDULE
 
Attached to and made part of that Asset Purchase and Sale Agreement dated March
12, 2012.
 
Part 1 – Lands, Leases and Permits

Lease No. 7405080355
43-13-101; Sections 1-36
Oils Sands in all zones below the top of the Viking Formation to the base of
Woodbend grp
 
 
 
 
 
 
 
 
 
 
 
 
 

--------------------------------------------------------------------------------

 
 
Part 2 – Wells

NIL
 
 
 
 
 
 
 
 
 
 
 
 
 
 
- 2 -

--------------------------------------------------------------------------------

 
 
SCHEDULE "B"
GENERAL CONVEYANCE
 
Attached to and made part of that Asset Purchase and Sale Agreement dated March
[XX], 2012.
 

 
GENERAL CONVEYANCE
 
This General Conveyance made this ___ day of ___________, 2012
 
AMONG:
 
TOWNSHIP PETROLEUM CORP., a corporation having an office and carrying on
business in the City of Calgary, in the Province of Alberta ("Vendor")
 
- and -
 
CAVALIER ENERGY INC., a corporation having an office and carrying on business in
the City of Edmonton, in the Province of Alberta (the "Purchaser")
 
WHEREAS the Vendor has agreed to sell and convey the Vendor's entire right,
title, estate and interest in the Assets to the Purchaser and the Purchaser has
agreed to purchase and accept all of the Vendor's rights, title, estate and
interest in and to the Assets;
 
THE PARTIES AGREE AS FOLLOWS:
 
1.  
Definitions

 
In this Conveyance, including the recitals, "Agreement" means the Asset Purchase
and Sale Agreement dated the 12th day of March, 2012, between the Vendor and the
Purchaser and, in addition, the definitions provided for in the Agreement are
adopted in this Conveyance.
 
2.  
Conveyance

 
The Vendor, for the consideration provided for in the Agreement, the receipt and
sufficiency of which is acknowledged by the Vendor, hereby sells, assigns,
transfers and conveys the Vendor's interests in the Assets to the Purchaser, and
the Purchaser purchases and accepts such interests from the Vendor, TO HAVE AND
TO HOLD the same absolutely, subject to the terms of the Agreement.
 
3.  
Effective Time

 
This Conveyance is effective as of the Closing Date.
 
4.  
Subordinate Document

 
This General Conveyance is executed and delivered by the Parties pursuant to the
Agreement for the purposes of the provisions of the Agreement, and the terms
hereof shall be read in conjunction with the terms of the Agreement.  If there
is a conflict between the provisions of
 
 
 
 

--------------------------------------------------------------------------------

 
 
the Agreement and this General Conveyance, the provisions of the Agreement shall
prevail to the extent of the conflict.
 
5.  
Enurement

 
This General Conveyance enures to the benefit of and is binding upon the Parties
and their respective successors and permitted assigns.
 
6.  
Further Assurances

 
Each Party shall, after the date of this General Conveyance, at the request of
the other Party and without further consideration, do all further acts and
execute and deliver all further documents which are reasonably required to
perform and carry out the terms of this General Conveyance.
 
IN WITNESS WHEREOF the Parties have duly executed this General Conveyance.
 
 
TOWNSHIP PETROLEUM CORP.
 
 
   
CAVALIER ENERGY INC.
 
 
 
  Per:   
 
    Per: 
 
 
Name:
 
   
Name:
WILLIAM J.F. ROACH
 
Title:
 
   
Title:
PRESIDENT AND CHIEF EXECUTIVE OFFICER
 

 
 
 

Per:   
 
    Per: 
 
 
Name:
 
   
Name:
E. MITCHELL SHIER
 
Title:
 
   
Title:
CORPORATE SECRETARY
 

 
 
 
 
 
 
 
 
 
- 2 -

--------------------------------------------------------------------------------

 
 
SCHEDULE "C"
VENDOR'S OFFICER'S CERTIFICATE
 
Attached to and made part of that Asset Purchase and Sale Agreement dated March
12th, 2012.
 
VENDOR'S OFFICER'S CERTIFICATE
 
Re:
Section 10.2(a) of the Asset Purchase and Sale Agreement ("Agreement") dated the
12th day of March, 2012 between Township Petroleum Corp. as the Vendor and [XX]
as the Purchaser.

 
Unless otherwise stated, the definitions provided for in the Agreement are
adopted in this Certificate.
 
I, [Name], [Title],  hereby certify that:
 
1.  
Each of the representations and warranties of the Vendor contained in Section
9.1 of the Agreement is true and correct in all material respects as of the
Closing Date.

 
2.  
All Closing conditions for the benefit of the Vendor, pursuant to Section 10.1
of the Agreement, have been satisfied or waived.

 
3.  
This Certificate is made for and on behalf of the Vendor and is binding upon it,
and I am not incurring and will not incur any personal liability whatsoever with
respect to it.

 
4.  
This Certificate is made with full knowledge that the Purchaser is relying on
the same for the Closing of the Transaction.

 
IN WITNESS WHEREOF I have executed this Certificate the ____ day of
______________, 2012.
 
 

       
[Name], [Title]
 

 
 
 
 
 
 
 
 

--------------------------------------------------------------------------------

 
 
SCHEDULE "D"
PURCHASER'S OFFICER'S CERTIFICATE
 
Attached to and made part of that Asset Purchase and Sale Agreement dated March
12th, 2012.
 
PURCHASER'S OFFICER'S CERTIFICATE
 
Re:
Section 10.1(a) of the Asset Purchase and Sale Agreement ("Agreement") dated the
12th day of March, 2012 between Township Petroleum Corp. as the Vendor and
Cavalier Energy Inc. as the Purchaser.

 
Unless otherwise stated, the definitions provided for in the Agreement are
adopted in this Certificate.
 
I, [XX], [XX] of Cavalier Energy Inc. hereby certify that:
 
1.  
Each of the representations and warranties of the Purchaser contained in Section
9.3 of the Agreement is true and correct in all material respects as of the
Closing Date.

 
2.  
All Closing conditions for the benefit of the Purchaser, pursuant to Section
10.2 of the Agreement, have been satisfied or waived.

 
3.  
This Certificate is made for and on behalf of the Purchaser and is binding upon
it, and I am not incurring and will not incur any personal liability whatsoever
with respect to it.

 
4.  
This Certificate is made with full knowledge that the Vendor is relying on the
same for the Closing of the Transaction.

 
IN WITNESS WHEREOF I have executed this Certificate the ____ day of
______________, 2011.
 
 

       
[XX]
 

 
 
 
 
 
 
 
 
 
 
 

--------------------------------------------------------------------------------

 
 
SCHEDULE "E"
FORM OF COURT ORDER
 
Attached to and made part of that Asset Purchase and Sale Agreement dated March
12th, 2012.
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 

--------------------------------------------------------------------------------