CORPORATION AS PRESENTLY OPERATED;
(OO)
ALTHOUGH IT DOES NOT WARRANT TITLE, THE
CORPORATION DOES NOT HAVE REASON TO BELIEVE THAT THE CORPORATION DOES NOT HAVE
TITLE TO OR THE RIGHT TO PRODUCE AND SELL ITS PETROLEUM, NATURAL GAS AND RELATED
HYDROCARBONS (FOR THE PURPOSE OF THIS CLAUSE, THE FOREGOING ARE REFERRED TO AS
THE "INTEREST") AND DOES REPRESENT AND WARRANT THAT THE INTEREST IS FREE AND
CLEAR OF ADVERSE CLAIMS CREATED BY, THROUGH OR UNDER THE CORPORATION EXCEPT
PURSUANT TO THOSE ARISING IN THE ORDINARY COURSE OF BUSINESS AND THOSE OF FIRST
NATION GROUPS ASSERTING TRADITIONAL LAND CLAIMS OVER A BROAD PORTION OF THE
PROVINCE OF ALBERTA WHICH MAY INCLUDE THE AREA OF THE SAWN LAKE PROJECT, AND
THAT, TO ITS KNOWLEDGE, THE CORPORATION HOLDS ITS INTEREST UNDER VALID AND
SUBSISTING LEASES, LICENSES, PERMITS, CONCESSIONS, CONCESSION AGREEMENTS,
CONTRACTS, SUBLEASES, RESERVATIONS OR OTHER AGREEMENTS EXCEPT WHERE THE FAILURE
TO SO HOLD ITS INTEREST WOULD NOT HAVE A MATERIAL ADVERSE EFFECT ON THE
CORPORATION;
(PP)
TO THE BEST OF THE KNOWLEDGE OF MANAGEMENT OF THE
CORPORATION, THE CORPORATION DOES NOT HAVE ANY REASON TO BELIEVE THAT THE
REPRESENTATIONS AND WARRANTIES OF SURGE U.S., DEEP WELL, NORTHERN AND DEEP ALTA,
RESPECTIVELY, IN THE FARMOUT AGREEMENT AND FARMOUT ACKNOWLEDGEMENT AGREEMENT ARE
NOT TRUE AND CORRECT AS OF THE DATE HEREOF OR THAT SURGE
16
U.S., DEEP WELL, NORTHERN OR DEEP ALTA, RESPECTIVELY, IS IN BREACH OF ANY
COVENANTS IN THE FARMOUT AGREEMENT OR FARMOUT ACKNOWLEDGEMENT AGREEMENT, EXCEPT
SUCH AS WOULD NOT HAVE A MATERIAL ADVERSE EFFECT ON THE BUSINESS, OPERATIONS,
CAPITAL, PROPERTIES, ASSETS, LIABILITIES (ABSOLUTE, ACCRUED, CONTINGENT OR
OTHERWISE) OR RESULTS OF OPERATIONS OF THE CORPORATION;
(QQ)
OTHER THAN OIL AND GAS INDUSTRY STANDARD
"PERMITTED ENCUMBRANCES", THE CORPORATION IS NOT AWARE OF ANY DEFECTS, FAILURES
OR IMPAIRMENTS IN THE TITLE OF DEEP WELL, NORTHERN OR DEEP ALTA IN THE FARMOUT
LANDS, WHETHER OR NOT AN ACTION, SUIT, PROCEEDING OR INQUIRY IS PENDING OR
THREATENED OR WHETHER OR NOT DISCOVERED BY ANY THIRD PARTY WHICH IN AGGREGATE
COULD HAVE A MATERIAL ADVERSE EFFECT ON: (A) THE QUANTITY AND PRE-TAX PRESENT
WORTH VALUES OF THE FARMOUT LANDS; (B) THE FUTURE PRODUCTION VOLUMES DERIVED
FROM THE FARMOUT LANDS; OR (C) THE FUTURE CASH FLOW OF THE FARMOUT LANDS;
(RR)
THE CORPORATION IS INSURED BY INSURERS OF
RECOGNIZED FINANCIAL RESPONSIBILITY AGAINST SUCH LOSSES AND RISKS AND IN SUCH
AMOUNTS THAT ARE CUSTOMARY IN THE BUSINESS IN WHICH IT IS ENGAGED; TO THE BEST
OF THE CORPORATION'S KNOWLEDGE, ALL POLICIES OF INSURANCE AND FIDELITY OR SURETY
BONDS INSURING THE CORPORATION OR ITS BUSINESS, ASSETS, EMPLOYEES, OFFICERS AND
DIRECTORS ARE IN FULL FORCE AND EFFECT, THE CORPORATION IS IN COMPLIANCE WITH
THE TERMS OF SUCH POLICIES AND INSTRUMENTS IN ALL MATERIAL RESPECTS AND THERE
ARE NO MATERIAL CLAIMS BY THE CORPORATION UNDER ANY SUCH POLICY OR INSTRUMENT AS
TO WHICH ANY INSURANCE COMPANY IS DENYING LIABILITY OR DEFENDING UNDER A
RESERVATION OF RIGHTS CLAUSE; THE CORPORATION HAS NO REASON TO BELIEVE THAT IT
WILL NOT BE ABLE TO RENEW