Document:

eh1200342_ex1001.htm

EXHIBIT 10.1

 

 

 

ASSET PURCHASE AND SALE AGREEMENT

 

 

 

EAGLE'S NEST AREA, ALBERTA

 

 

 

BETWEEN

 

 

 

TOWNSHIP PETROLEUM CORP.

 

the Vendor

 

 

 

AND

 

 

 

FAMA CAPITAL LTD.

 

the Purchaser

 

January 30, 2012

 

 

  

  

  

 

 

	
TABLE OF CONTENTS

 

Page

	
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

	
12

	
4.1

	
Adjustments

	
12

	
4.2

	
Statement of Adjustments

	
13

	
ARTICLE 5 CLOSING

	
14

	
5.1

	
Closing

	
14

	
ARTICLE 6 INTERIM PROVISIONS

	
14

	
6.1

	
Assets to be Maintained

	
14

	
6.2

	
Restrictions on Conduct of Business

	
15

	
6.3

	
Following Closing

	
15

	
ARTICLE 7 ACCESS TO INFORMATION AND RECORDS

	
16

	
7.1

	
Technical and Operating Information

	
16

	
7.2

	
Access to Records

	
16

	
ARTICLE 8 THIRD PARTY CONSENTS

	
16

	
8.1

	
Consents

	
16

	8.2	Post-Closing Approvals and Consents	 17

 

 

  

  

  

 

Contents

(continued)

Page

	
ARTICLE 9 REPRESENTATIONS AND WARRANTIES

	
17

	
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

 

 

  

  

  

 

Contents

(continued)

Page

 

 

	
ARTICLE 16 GOVERNING LAW AND DISPUTE RESOLUTION

	
31

	
16.1

	
Governing Law

	
31

	
16.2

	
Resolution of Disputes

	
31

	
ARTICLE 17 NOTICES

	
31

	
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 30th day of January, 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 -

 

FAMA CAPITAL LTD., an Alberta corporation having an office and carrying on business in the City of Edmonton, 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)

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

 

	
  

	
(g)

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

 

	
  

	
(h)

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

 

	
  

	
(i)

	
"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.

 

	
  

	
(j)

	
"Closing Date" has the meaning provided in Section 5.1.

 

	
  

	
(k)

	
"Closing Payment" has the meaning provided in Section 3.4.

 

	
  

	
(l)

	
"Confidentiality Agreement" means the Confidentiality and Restricted Use Agreement dated January 13, 2012 between Oilsands Quest Inc. and the Purchaser.

 

	
  

	
(m)

	
"Conveyance Documents" means all conveyances, assignments, transfers, novations, notices of assignment, trust agreements and declarations, subleases, directions to pay

 

 

  

2

  

 

 

	
  

	
 

	
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.

 

	
  

	
(n)

	
"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".

 

	
  

	
(o)

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

 

	
  

	
(p)

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

 

	
  

	
(q)

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

 

	
  

	
(r)

	
"Effective Time" means 8:00 a.m., Calgary time, on January 4, 2012.

 

	
  

	
(s)

	
"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.

 

	
  

	
(t)

	
"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.

 

	
  

	
(u)

	
"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.

 

	
  

	
(v)

	
"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.

 

	
  

	
(w)

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

 

 

  

3

  

 

 

	
  

	
(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.

 

	
  

	
(x)

	
"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.

 

	
  

	
(y)

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

 

	
  

	
(z)

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

 

	
  

	
(aa)

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

 

	
  

	
(bb)

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

 

 

  

4

  

 

	
  

	
(cc)

	
"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).

 

	
  

	
(dd)

	
"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.

 

	
  

	
(ee)

	
"Indemnified Party" has the meaning provided in Section 13.4.

 

	
  

	
(ff)

	
"Indemnifying Party" has the meaning provided in Section 13.4.

 

	
  

	
(gg)

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

 

	
  

	
(hh)

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

 

	
  

	
(ii)

	
"Land Schedule" means Schedule "A".

 

	
  

	
(jj)

	
"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.

 

	
  

	
(kk)

	
"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.

 

	
  

	
(ll)

	
"Offer to Purchase" means the offer to purchase dated January 12, 2012 between the Purchaser and the Vendor.

 

	 	
(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;

 

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 

 

 

  

5

  

 

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

	
Part 1  

	
   - Lands and Leases

	
Part 2  

	
   - 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 Dollars ($7,000,000), 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)

	
The Purchaser previously paid to the Vendor an initial deposit of Fifty Thousand Dollars ($50,000).  The Purchaser shall pay to the Vendor, by certified cheque, bank draft or electronic transfer of funds, an additional deposit of Three Hundred and Fifty Thousand Dollars ($350,000) by no later than February 24, 2012 (the aggregate of such amounts, namely $400,000, shall be referred to hereinafter as 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.

 

 

  

11

  

 

 

	
  

	
(c)

	
If Closing does not occur:

 

	
  

	
(i)

	
due to a material breach of this Agreement by the Vendor, 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, 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.

 

	
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 835165614.

 

	
  

	
(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.

 

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:

 

 

  

12

  

 

	
  

	
(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 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 

 

 

  

13

  

 

 

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 the later of:

 

	
  

	
(a)

	
the Business Day following the day Court Approval is obtained; or

 

	
  

	
(b)

	
on such other Business Day as the Parties may agree in writing,

 

(the "Closing Date"), provided that 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).

 

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;

 

 

  

14

  

 

	
  

	
(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.

 

	
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;

 

 

  

15

  

 

	
  

	
(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

	
Technical and Operating Information

 

The Vendor shall, upon request and subject to contractual restrictions relating to disclosure, make available all technical data relating to the Assets (including drilling reports, well files and production records, but excluding data and information which are subject to confidentiality restrictions prohibiting their disclosure) as are in the possession of the Vendor for such inspection as the Purchaser reasonably requires in connection herewith.

 

	
7.2

	
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, 13.2, 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;

 

	
  

	
(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 (including due diligence conducted under or in connection with the Offer to Purchase); 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:             President and Chief Executive Officer

Fax:                       (403) 263-9812

 

 

  

31

  

 

With a copy to:

 

Norton Rose Canada LLP

3700, 400-3rd Avenue SW

Calgary, AB T2P 4H2

 

Attention:             Wayne Fedun

Fax:                       (403) 264-5973

 

the Purchaser:

 

Fama Capital Ltd.

Suite 1150, Manulife Place

10180-101 Street

Edmonton, AB  T5J 3S4

 

Attention:             Steven R. Krueger

Fax:                       (604) 998-8812

 

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, including the Offer to Purchase, 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.

 

	 	 	 	 	 	 
	Per:	
/s/ Garth Wong

	 	Per:	
/s/ Steven R. Krueger

	 
	Name:	Garth Wong	 	Name:	Steven R. Krueger	 
	Title: 	President & CEO	 	Title:	Chairman	 

 

 

	 	 	 	 	 	 
	 	
 

	 	Per:	
/s/ A. Fassmann

	 
	 	 	 	Name:	A. Fassmann	 
	 	 	 	Title:	Director	 

 

 

 

  

35

  

 

 

SCHEDULE "A"

LAND SCHEDULE

 

Attached to and made part of that Asset Purchase and Sale Agreement dated January 30, 2012.

 

Part 1 – Lands, Leases and Permits

 

 

  

  

  

 

Part 2 – Wells

 

 

  

2

  

 

SCHEDULE "B"

GENERAL CONVEYANCE

 

Attached to and made part of that Asset Purchase and Sale Agreement dated January 30, 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 -

 

FAMA CAPITAL LTD., 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 30th day of January, 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.	 	FAMA CAPITAL LTD.	 
	 	 	 	 	 	 
	 	 	 	 	 	 
	Per:	 	 	Per:	
 

	 
	Name:  	 	Name:  	 
	Title:    	 	Title:    	 

 

 

	 	 	 	 	 	 
	Per:	
 

	 	Per:	 	 
	Name:	 	Name:   	 
	Title: 	 	Title:     	 

 

 

 

 

  

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SCHEDULE "C"

VENDOR'S OFFICER'S CERTIFICATE

 

Attached to and made part of that Asset Purchase and Sale Agreement dated January 30, 2012.

 

VENDOR'S OFFICER'S CERTIFICATE

 

	
Re:

	
Section 10.2(a) of the Asset Purchase and Sale Agreement ("Agreement") dated the 30th day of January, 2012 between Township Petroleum Corp. as the Vendor and Fama Capital Ltd. 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 January 30, 2012.

 

PURCHASER'S OFFICER'S CERTIFICATE

 

	
Re:

	
Section 10.1(a) of the Asset Purchase and Sale Agreement ("Agreement") dated the 30th day of January, 2012 between Township Petroleum Corp. as the Vendor and Fama Capital Ltd. as the Purchaser.

 

Unless otherwise stated, the definitions provided for in the Agreement are adopted in this Certificate.

 

I, Steven R. Krueger, chairman of the board of Fama Capital Ltd. 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.

 

 

	 	 	 
	 	 	 
	
 

	Steven R. Krueger, Chairman	 
	 	 	 	 

 

 

  

  

  

 

SCHEDULE "E"

FORM OF COURT ORDER

 

Attached to and made part of that Asset Purchase and Sale Agreement dated January 30, 2012.exhibit101.htm

 

Exhibit 10.1

Lexmark International, Inc.

Stock Incentive Plan

20XX-20XX Performance-Based Restricted Stock Unit Award Notice

This Award Notice evidences the award of performance-based restricted stock units (each, a “Performance RSU” or collectively, the “Performance RSUs”) that have been granted to you, [NAME], by Lexmark International, Inc., a Delaware corporation (the “Company”), subject to and conditioned upon your agreement to the terms of the attached Performance-Based Restricted Stock Unit Award Agreement (the “Agreement”).  The Performance RSUs and any associated Dividend Equivalent Units (“DEUs”) are granted under the Lexmark International, Inc. Stock Incentive Plan (the “Plan”), and represent the Company’s unfunded and unsecured promise to issue shares of the Company’s Common Stock at a future date, subject to the terms of this Award Notice, the Agreement and the Plan.

The number of Performance RSUs awarded to you, the performance measure to earn Performance RSUs, and the vesting schedule for earned Performance RSUs are specified below.  This Award Notice constitutes part of, and is subject to the terms and provisions of, the Agreement and the Plan, which are incorporated by reference herein.  Capitalized terms used but not defined in this Award Notice shall have the meanings set forth in the Agreement or in the Plan.

	
Grant Date:

 

	
[Date]

	
Performance Period:

	
January 1, 20XX to December 31, 20XX

	  	  
	
Performance Measure:

	
Return on Invested Capital (“ROIC”) during the Performance Period measured against the ROIC of the companies in the S&P 500 Technology Index

 

ROIC = Earnings Before Interest and Taxes (EBIT) x (1 – Tax Rate) / (Average Interest Bearing Debt + Average Stockholders’ Equity)

 

	
Number of Performance RSUs at Target:

	
[      #     ], subject to adjustment as provided under Section 5.4 of the Plan.

 

	
ROIC Percentile Rank within the S&P 500 

Technology Index:

 

	
Less 

than

 25th

	
25th

	
40th

	
50th

	
60th

	
70th

	
80th

	
90th or 

greater

	
Performance RSUs Earned as a % of Target:

	
0%

	
25%

	
50%

	
100%

	
125%

	
150%

	
175%

	
200%

	
*Notwithstanding the foregoing, if the Company’s ROIC is negative for the Performance Period, no Performance RSUs shall be earned.

	
Determination of Earned 

Performance RSUs:

	
As soon as practicable after the end of the Performance Period, the Compensation and Pension Committee (the “Committee”) intends to review and approve the Company’s business results and certify the level of achievement of the Performance Measure. Performance RSUs will be earned if, and to the extent, the Performance Measure has been achieved. The Committee may use its sole discretion to determine whether the number of earned Performance RSUs shall be reduced, based on any factors it may deem appropriate.

 

	
Vesting Schedule for 

Earned Performance 

RSUs:

	
Subject to the provisions of the Agreement and the Plan, you must remain continuously employed by the Company or one of its Subsidiaries through [DATE] (the “Vesting Date”), to earn Performance RSUs. If you have a termination of employment during the Performance Period for any reason, other than your death, Disability or Retirement, you shall forfeit the Performance RSUs.

 

If you have a termination of employment during the Performance Period due to your death, Disability or Retirement, you (or, in the event of your death, 

 

 

 

 

 

 

 

  

  

  

 

 

	
 

	

 

your beneficiary) shall be entitled to a pro-rata portion of the Performance RSUs that are earned based on the achievement of the Performance Measure as of the end of the Performance Period, based on the number of complete months of service performed during the Performance Period prior to the termination of employment due to death, Disability or Retirement divided by 36.  Any earned Performance RSUs shall be paid on the Settlement Date.

 

	
Settlement Date:

	
For each earned Performance RSU and any associated DEU, settlement (i.e., one share of the Company’s Common Stock will be issued for each vested earned Performance RSU and any associated DEU) will occur on (i) [DATE] (the “Settlement Date”) , or (ii) on such other date as set forth in this Award Notice, the Agreement, or the Plan.

 

	
Acceleration Events:

	
If a Change in Control occurs during the Performance Period, you shall be entitled to a pro-rata portion of the Performance RSUs that will be deemed earned based on the greater of Target or actual achievement of the Performance Measure as of the date of the Change in Control, based on the number of complete months of service performed during the Performance Period prior to the Change in Control divided by 36.  Any earned Performance RSUs shall become 100% vested and settled as of the date of the Change in Control.

 

	
Forfeiture of Award:

	
By accepting the award of Performance RSUs, you acknowledge that this award has been granted to you as an incentive to remain employed by the Company or one of its Subsidiaries, and that if you violate the provisions set forth in Section 1(d) of the Agreement or the Executive Compensation Recovery Policy, you (i) shall forfeit any unsettled earned or unearned Performance RSUs and any associated DEUs and (ii) shall be required to immediately repay to the Company, an amount equal to the value realized from the settlement of any earned Performance RSUs and any associated DEUs during the period set forth in Section 1(d) of the Agreement or the Recovery Period set forth in the Executive Compensation Recovery Policy, as applicable.

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PERFORMANCE-BASED RESTRICTED STOCK UNIT

AWARD AGREEMENT

pursuant to

LEXMARK INTERNATIONAL, INC.

STOCK INCENTIVE PLAN

This PERFORMANCE-BASED RESTRICTED STOCK UNIT AWARD AGREEMENT (the "Agreement") between Lexmark International, Inc., a Delaware corporation (the "Company"), and the person specified on the signature page hereof (the “Grantee”) is entered into as of the Grant Date specified on the attached Performance-Based Restricted Stock Unit Award Notice (the “Award Notice”) pursuant to the Lexmark International, Inc. Stock Incentive Plan, as the same may be amended from time to time (the "Plan").  Capitalized terms used and not defined herein shall have the meanings assigned to such terms in the Plan or in the Award Notice, as applicable.

WHEREAS, the Committee has determined that it would be to the advantage and in the interest of the Company to grant performance-based restricted stock units to the Grantee as an inducement to the Grantee to remain in the service of the Company and the Subsidiaries and as an incentive to the Grantee to devote his or her best efforts and dedication to the performance of such services and to maximize shareholder value; and

WHEREAS, the Grantee desires to accept from the Company the grant of the performance-based restricted stock units, as set forth in the Award Notice, subject to the terms and conditions of this Agreement, the Award Notice and the Plan.

 

 

NOW, THEREFORE, in consideration of the premises and subject to the terms and conditions set forth in this Agreement, the Award Notice and the Plan, the parties hereto hereby covenant and agree as follows:

	
  

	
1.

	
Performance-Based Restricted Stock Unit Award.

 

	
(a)  

	
Performance-Based Restricted Stock Unit Award.  The Company hereby grants to the Grantee, effective as of the Grant Date, a target number of performance-based restricted stock units, as set forth in the Award Notice, each representing the Grantee's right to receive one share of Common Stock, subject to the achievement of the Performance Measure(s), at the time or times provided for in the Award Notice, and subject to the terms and conditions set forth in this Agreement, the Award Notice and the Plan (the "Performance RSUs”).

	
  (b)

	
Stock Incentive Plan.  This Agreement is subject in all respects to the terms of the Plan, all of which terms are made a part of and incorporated in this Agreement by reference.  In the event of any conflict between the terms of this Agreement and the terms of the Plan, the terms of the Plan shall control.  The Grantee hereby acknowledges receipt of a copy of the Plan, either with this Performance RSU Award Agreement or a prior Incentive Award made under the Plan, and agrees to comply with and be bound by all of the terms and conditions thereof.  Copies of the Plan may also be obtained from the Vice President of Human Resources, at any time.

 

	
(c)  

	
Establishment of Account.  No shares of Common Stock will be issued on the Grant Date of the Performance RSUs and the Company shall not be required to set aside a fund for the settlement of any such Performance RSUs.  The Company will establish a separate bookkeeping account for the Grantee and will record in such account the number of Performance RSUs awarded to the Grantee, and, to the extent applicable, the number of Performance RSUs earned by the Grantee, if any, after the Performance Period has

 

 

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ended, and the number of Dividend Equivalent Units as provided for in Section 4(b) hereof.

	
      (d)  

	
Forfeiture.  In accepting this grant of Performance RSUs, the Grantee acknowledges that the Performance RSUs have been granted as an incentive to the Grantee to remain employed by the Company or any Subsidiary and to exert his or her best efforts to enhance the value of the Company or any Subsidiary over the long-term.  Accordingly, the Grantee agrees that if he or she (i) within 12 months following termination of employment with the Company or any Subsidiary, accepts employment with a competitor of the Company or any Subsidiary or otherwise engages in competition with the Company or any Subsidiary, (ii) within 36 months following termination of employment with the Company or any Subsidiary, directly or indirectly, disrupts, damages, interferes or otherwise acts against the interests of the Company or any Subsidiary, including, but not limited to, recruiting, soliciting or employing, or encouraging or assisting his or her new employer or any other person or entity to recruit, solicit or employ, any employee of the Company or any Subsidiary without the Company’s prior written consent, which may be withheld in its sole discretion, (iii) within 36 months following termination of employment with the Company, or any Subsidiary, disparages, criticizes, or otherwise makes any derogatory statements regarding the Company or any Subsidiary or their directors, officers or employees, or (iv) discloses or otherwise misuses confidential information or material of the Company or any Subsidiary, each of these constituting a harmful action, then any unsettled earned or unearned Performance RSUs and any associated DEUs shall be canceled immediately (unless canceled earlier by operation of another term of this Agreement) and the Grantee shall immediately repay to the Company an amount equal to the value of the earned and settled Performance RSUs and any associated DEUs (represented by the closing market price on the applicable Vesting Dates (as set forth in the Award Notice) multiplied by the number of earned Performance RSUs and any associated DEUs vested on such Vesting Dates, without regard to any subsequent market price decrease or increase) realized by the Grantee from the vesting of any earned Performance RSUs and any associated DEUs within 18 months preceding the earlier of (w) the commitment of any such harmful action and (x) the Grantee's termination of employment with the Company and its Subsidiaries; and through the later of (y) 18 months following the commitment of any such harmful action and (z) such period as it takes the Company to discover such harmful action.  In addition, the Grantee acknowledges that, if he or she is a “Covered Employee” subject to the Company’s Executive Compensation Recovery Policy (the “Recovery Policy”) and engages in “Prohibited Activity,” that the unsettled earned or unearned Performance RSUs and any associated DEUs shall be canceled immediately and the Grantee shall immediately repay the “Equity Gains” realized by the Grantee during the “Recovery Period,” as such terms are defined in the Recovery Policy.  The Grantee agrees that the Company or any of its Subsidiaries has the right to deduct from any amounts the Company or any of its Subsidiaries may owe the Grantee from time to time (including amounts owed to the Grantee as wages or other compensation, fringe benefits or vacation pay, as well as any other amounts owed to the Grantee by the Company or any of its Subsidiaries), the amounts the Grantee owes the Company or any of its Subsidiaries.  The Committee shall have the right, in its sole discretion, not to enforce the provisions of this paragraph with respect to the Grantee.

Grantee agrees to be fully liable for any breach of this above described covenant, promise and agreement.  Grantee agrees to reimburse the Company for all costs and expenses, including attorneys’ fees, incurred by the Company in enforcing the obligations of Grantee.  This entire provision shall survive the termination of the Agreement and, in no manner, shall the remedies described herein be considered as the Company’s exclusive or entire remedy for Grantee’s breach, non-compliance or violation of any other agreement that Grantee may have entered into with the Company.

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2.      Earning Performance RSUs. As soon as practicable after the end of the Performance Period, as set forth in the Award Notice, the Committee shall review and approve the Company’s business results and certify the level of achievement of the Performance Measure(s), as set forth in the Award Notice.  Provided the Grantee is employed on the last day of the Performance Period, and to the extent that the Performance Measure(s) have been achieved, a number of Performance RSUs will be deemed earned based on the level of attainment of each Performance Measure.  Settlement of the earned Performance RSUs is subject to the Grantee’s continued employment through the Vesting Dates, as set forth in Section 3(a).  The Committee may use its sole discretion to determine whether the number of earned Performance RSUs shall be reduced, based on any factors it may deem appropriate.  If a Change in Control occurs during the Performance Period, a pro-rata portion of the Performance RSUs will be deemed earned based on the greater of Target, as set forth in the Award Notice, or the actual achievement of the Performance Measure(s) as of the effective date of the Change in Control.

3.      Vesting of Earned Performance RSUs.

	
(a)  

	
Vesting.  The earned Performance RSUs and any associated DEUs shall become vested in such amounts and on such Vesting Dates as set forth in the Award Notice, subject to the Grantee’s continuous employment with the Company or a Subsidiary from the Grant Date to the applicable Vesting Date.  To the extent vesting would result in the settlement of a fractional number of earned Performance RSUs or DEUs, the number shall be rounded to a whole number, but shall not exceed the total number of earned Performance RSUs or associated DEUs, as determined by the Committee.

	
  

	
(b)  Acceleration.  The Committee may, in its discretion, accelerate the vesting of all or any portion of the Performance RSUs and any associated DEUs or waive any conditions to the vesting of such Performance RSUs and any associated DEUs.

	
  

	
(c) Termination of Employment during the Performance Period.  In the event of the Grantee's termination of employment with the Company and its Subsidiaries for any reason, other than death, Disability or Retirement during the Performance Period, the Grantee shall immediately forfeit all rights with respect to the Performance RSUs.  In the event of the Grantee’s termination of employment during the Performance Period due to the Grantee’s death, Disability or Retirement, the Grantee (or, in the event of the Grantee’s death, the Grantee’s beneficiary) shall become vested in a pro-rata portion of the Performance RSUs that are earned based on the achievement of the Performance Measure(s) as of the end of the Performance Period, based on the number of complete months of service performed during the Performance Period prior to the termination of employment due to death, Disability or Retirement divided by 36.

	
  

	
4.

	
Settlement of Performance RSUs.

	
  

	
(a)  Settlement.  On, or as soon as reasonably practicable after, a Vesting Date, or such other date as set forth in the Award Notice or this Agreement, subject to Section 5 hereof, the Company shall direct its stock transfer agent to make (or to cause to be made) an appropriate book entry in the Company's stock transfer books and records reflecting the transfer to the Grantee, and the Grantee's ownership, of one share of Common Stock for each earned Performance RSU and any associated DEU that has vested and is scheduled to become settled on such Vesting Date.  Upon the Grantee's request, subject to Section 5 hereof, the Company shall deliver to the Grantee a stock certificate registered in the Grantee's name and representing such number of shares of Common Stock free and clear of all restrictions except any that may be imposed by law.   No payment will be required to be made by the Grantee upon the delivery of such shares of Common Stock, except as otherwise provided in Section 5 of the Agreement.

 

 

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(b) Dividend Equivalent Units.  Unless otherwise determined by the Committee, during the period following the Performance Period and prior to a Vesting Date, the Company will credit to the bookkeeping account of the Grantee a number of units in an amount equal to (i) the dividend amount per share of Common Stock multiplied by the number of earned Performance RSUs outstanding under this Agreement as of the dividend record date, divided by (ii) the closing price of Common Stock on the dividend payment date, rounded down to the nearest whole share ("Dividend Equivalent Units" or “DEUs”).  Dividend Equivalent Units in respect of earned Performance RSUs that shall have become vested on the applicable Vesting Date shall be payable to the Grantee on such Vesting Date in accordance with Section 4(a).

	
  

	
(c) Restrictions on Sale upon Public Offering.  The Grantee hereby agrees that, notwithstanding the vesting of the earned Performance RSUs and any associated DEUs pursuant to Section 3(a) of this Agreement or the transfer of the shares of Common Stock covered thereby to the Grantee pursuant to Section 4(a) hereof, the Grantee will not effect any public sale or distribution of any of such shares of Common Stock during the 20-day period prior to and the 180-day period following the effective date of any registration statement hereinafter filed by the Company under the Securities Act of 1933, as amended, with respect to any underwritten public offering of any shares of the Company's capital stock (other than as part of such underwritten public offering).

	
  

	
5.

	
Tax Withholding.  The delivery of any directions to the Company's stock transfer agent or any certificates for shares of Common Stock pursuant to Section 4 shall not be made unless and until the Grantee, or, if applicable, the Grantee's beneficiary or estate, has made appropriate arrangements for the payment to the Company of an amount sufficient to satisfy any applicable U.S. federal, state and local and non-U.S. tax withholding or other tax requirements, as determined by the Company.  To satisfy the Grantee's applicable withholding and other tax requirements, the Company may, in its sole discretion, (i) withhold a number of shares of Common Stock having an aggregate Fair Market Value on the Vesting Date equal to the applicable amount of such withholding and other tax requirements or (ii) require the Grantee to sell a number of shares of Common Stock having at least a value sufficient to meet the applicable amount of such withholding and other tax requirements to account for rounding and market fluctuations, subject to any rules adopted by the Committee or required to ensure compliance with applicable law, including, but not limited to, Section 16 of the Securities Exchange Act of 1934, as amended.  Shares required to be sold to satisfy the Grantee’s applicable withholding and other tax requirements may be sold as part of a block trade with the Grantee receiving an average price.  Any cash payment made pursuant to Section 4 shall be made net of any amounts required to be withheld or paid with respect thereto (and with respect to any shares of Common Stock delivered contemporaneously therewith) under any applicable U.S. federal, state and local and non-U.S. tax withholding and other tax requirements.

	
  

	
6.

	
Transferability.  Unless otherwise provided in accordance with the provisions of the Plan, the Performance RSUs and any associated DEUs may not be sold, transferred, pledged, assigned or otherwise alienated or hypothecated by the Grantee, other than by will or the laws of descent and distribution.  The term "Grantee" as used in this Agreement shall include any permitted transferee of the Performance RSUs and any associated DEUs.

	
  

	
7.

	
Adjustment in Capitalization.

	
  

	
(a)  The aggregate number of shares of Common Stock covered by the Performance RSUs and any associated DEUs granted hereunder shall be proportionately adjusted to reflect, as deemed equitable and appropriate by the Committee, an Adjustment Event.

	
  

	
(b)  Any shares of stock (whether Common Stock, shares of stock into which shares of Common Stock are converted or for which shares of Common Stock are exchanged or

 

 

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shares of stock distributed with respect to Common Stock) or cash or other property received or credited to the account of the Grantee with respect to the Performance RSUs and any associated DEUs as a result of any Adjustment Event, any distribution of property or any merger, consolidation, reorganization, liquidation, dissolution or other similar transaction shall, except as otherwise provided by the Committee, be subject to the same terms and conditions, including restrictions on transfer, as are applicable to the Performance RSUs and any associated DEUs with respect to which such shares, cash or other property is received or so credited and stock certificate(s), if any, representing or evidencing any shares of stock or other property so received shall be legended as appropriate.

	
  

	
8.

	
Preemption by Applicable Laws and Regulations.  Notwithstanding anything in the Plan or this Agreement to the contrary, the issuance of shares of Common Stock hereunder shall be subject to compliance with all applicable U.S. federal, state and non-U.S. securities laws.  Without limiting the foregoing, if any law, regulation or requirement of any governmental authority having jurisdiction shall require either the Company or the Grantee (or the Grantee's beneficiary or estate) to take any action in connection with the issuance of any shares of Common Stock hereunder, the issuance of such shares shall be deferred until such action shall have been taken to the satisfaction of the Company.

	
  

	
9.

	
Interpretation; Construction.  All of the powers and authority conferred upon the Committee pursuant to any term of the Plan or the Agreement shall be exercised by the Committee, in its sole discretion.  All determinations, interpretations or other actions made or taken by the Committee pursuant to the provisions of the Plan or the Agreement shall be final, binding and conclusive for all purposes and upon all persons and, in the event of any judicial review thereof, shall be overturned only if arbitrary and capricious.  The Committee may consult with legal counsel, who may be counsel to the Company or any Subsidiary, and shall not incur any liability for any action taken in good faith in reliance upon the advice of counsel.

	
  

	
10.

	
Amendment.  The Committee shall have the right, in its sole discretion, to alter or amend this Agreement, from time to time, as provided in the Plan in any manner for the purpose of promoting the objectives of the Plan, provided that no such amendment shall impair the Grantee's rights under this Agreement without the Grantee's consent.  Subject to the preceding sentence, any alteration or amendment of this Agreement by the Committee shall, upon adoption thereof by the Committee, become and be binding and conclusive on all persons affected thereby without requirement for consent or other action with respect thereto by any such person.  Notwithstanding any other provision of this Agreement or the Plan to the contrary, the Committee may, in its sole and absolute discretion and without the consent of the Grantee, amend this Agreement, to take effect retroactively or otherwise, as it may deem necessary or advisable for the purpose of conforming the Agreement to any present or future law, regulation or rule applicable to this Agreement or the Plan.  The Company shall give written notice to the Grantee of any such alteration or amendment of this Agreement as promptly as practicable after the adoption thereof.  This Agreement may also be amended by a writing signed by both the Company and the Grantee.

	
  

	
11.

	
No Rights as a Stockholder.  The Grantee shall have no rights as a stockholder with respect to the Performance RSUs and any associated DEUs prior to the date as of which the shares of Common Stock covered thereby are transferred to the Grantee in accordance with Section 4(a) hereof.

	
  

	
12.   No Guarantee of Employment or Future Incentive Awards. Nothing in the Plan or this Agreement shall be deemed to:

	
  

	
(a)

	
interfere with or limit in any way the right of the Company or any Subsidiary to terminate Grantee’s employment at any time and for any reason, with or without cause;

 

 

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(b)

	
confer upon Grantee any right to continue in the employ of the Company or any Subsidiary; and

	
  

	
(c)

	
provide Grantee the right to receive any Incentive Awards under the Plan in the future or any other benefits the Company may provide to some or all of its employees.

	
  

	
13.

	
Miscellaneous.

	
  

	
(a)  Notices.  All notices and other communications required or permitted to be given under this Agreement shall be in writing and shall be deemed to have been given if delivered personally or sent by certified or express mail, return receipt requested, postage prepaid, or by any recognized international equivalent of such delivery, to the Company or the Grantee, as the case may be, at the following addresses or to such other address as the Company or the Grantee, as the case may be, shall specify by notice to the others delivered in accordance with this Section 13(a):

	
  

	
(i)

	
if to the Company, to it at:

	
  

	
One Lexmark Centre Drive

	
  

	
740 West New Circle Road

	
  

	
Lexington, KY  40550

	
  

	
Attention:  Secretary

	
  

	
(ii)

	
if to the Grantee, to the Grantee at the address set forth on the signature page hereof.

All such notices and communications shall be deemed to have been received on the date of delivery or on the third business day after the mailing thereof.

	
  

	
(b)  Binding Effect; Benefits.  This Agreement shall be binding upon and inure to the benefit of the parties to this Agreement and their respective successors and assigns.  Nothing in this Agreement, express or implied, is intended or shall be construed to give any person other than the parties to this Agreement or their respective successors or assigns any legal or equitable right, remedy or claim under or in respect of any agreement or any provision contained herein.

	
  

	
(c)  Waiver.  Any party hereto may by written notice to the other party (i) extend the time for the performance of any of the obligations or other actions of the other party under this Agreement, (ii) waive compliance with any of the conditions or covenants of the other party contained in this Agreement and (iii) waive or modify performance of any of the obligations of the other party under this Agreement.  Except as provided in the preceding sentence, no action taken pursuant to this Agreement, including, without limitation, any investigation by or on behalf of any party, shall be deemed to constitute a waiver by the party taking such action of compliance with any representations, warranties, covenants or agreements contained herein.  The waiver by any party hereto of a breach of any provision of this Agreement shall not operate or be construed as a waiver of any preceding or succeeding breach and no failure by a party to exercise any right or privilege hereunder shall be deemed a waiver of such party's rights or privileges hereunder or shall be deemed a waiver of such party's rights to exercise the same at any subsequent time or times hereunder.

	
  

	
(d)  Assignability.  Neither this Agreement nor any right, remedy, obligation or liability arising hereunder or by reason hereof shall be assignable by the Company or the Grantee without the prior written consent of the other party.

 

 

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(e)  Applicable Law.  This Agreement shall be governed by and construed in accordance with the laws of the State of Delaware, regardless of the law that might be applied under principles of conflict of laws and excluding any conflict or choice of law rule or principle that may otherwise refer construction or interpretation of the Plan or this Agreement to the substantive law of another jurisdiction.

	
  

	
(f)  Jurisdiction.  The Grantee hereby irrevocably and unconditionally submits to the jurisdiction and venue of the state courts of the Commonwealth of Kentucky and of the United States District Court of the Eastern District of Kentucky located in Fayette County, Kentucky, and any appellate court from any thereof, in any action or proceeding arising out of or relating to this Agreement, or for recognition or enforcement of any judgment, and each of the parties hereby irrevocably agree that all claims in respect of any such action or proceeding may be heard and determined in such Kentucky state or United States federal courts located in such jurisdiction.  Each of the parties hereto agrees that a final judgment in any such action or proceeding shall be conclusive and may be enforced in other jurisdictions by suit on the judgment or in any other manner provided by law.  The parties hereby irrevocably waive, to the fullest extent permitted by applicable law, any objection which they may now or hereafter have to the laying of venue of any such proceeding brought in such a court and any claim that any such proceeding brought in such a court has been brought in an inconvenient forum.  Grantee further agrees that any action related to, or arising out of, this Agreement shall only be brought by Grantee exclusively in the federal and state courts located in Fayette County, Kentucky.  Nothing in this Agreement shall affect any right that the Company may otherwise have to bring any action or proceeding relating to this Agreement in the courts of any jurisdiction.

	
  

	
(g) Severability.  If any provision of this Agreement or the Plan shall be held invalid or unenforceable, such invalidity or unenforceability shall not affect any other provisions of this Agreement or the Plan, and the Agreement and the Plan shall be construed and enforced as if such provision had not been included.

	
  

	
(h) Survival.  Any provision of this Agreement which contemplates performance or observance subsequent to any termination or expiration of this Agreement shall survive any termination or expiration of this Agreement and continue in full force and effect.

	
  

	
(i)  Internal Revenue Code Section 409A.  It is intended that the settlement of the Performance RSUs and any associated DEUs shall constitute a “short-term deferral” for purposes of Section 409A of the Code and the Treasury Department regulations and other interpretive guidance issued thereunder, or as otherwise exempt from the provisions of Section 409A of the Code. To the extent any portion of the settlement of the Performance RSUs and any associated DEUs cannot be so characterized, this Agreement shall be interpreted and construed in compliance with Section 409A of the Code and Treasury Department regulations and other interpretive guidance issued thereunder, including the restriction that payments made to a “specified employee” (within the meaning of Section 409A of the Code) on account of a termination of employment shall be delayed for six months and one day from the date of termination.

	
(j)  

	
Section and Other Headings, Etc.  The section and other headings contained in this Agreement are for reference purposes only and shall not affect the meaning or interpretation of this Agreement.

	
(k)  

	
Counterparts.  This Agreement may be executed in any number of counterparts, each of which shall be deemed to be an original and all of which together shall constitute one and the same instrument.

*           *           *           *           *

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IN WITNESS WHEREOF, the Company and the Grantee have executed this Agreement, effective as of the Grant Date.

LEXMARK INTERNATIONAL, INC.

By:  ______________________________________                                                              

Jeri L. Isbell

Vice President of Human Resources

GRANTEE:

By:    _____________________________________                                                            

(Sign Here)

Address of the Grantee:

 

_________________________________________

 

 

_________________________________________

Designation of Beneficiary

In the event of my death, I hereby designate the following person(s), as my beneficiary, to receive any unsettled earned Performance RSUs and any associated DEUs that become vested upon my death pursuant to this Agreement.  I acknowledge that if I fail to designate a beneficiary, below, that any unsettled earned Performance RSUs and any associated DEUs that become vested upon my death shall be paid to my estate.

 

 

________________________________________

Beneficiary Name

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