Attached files
SHARE EXCHANGE AGREEMENT
dated the 17th day of November, 2011
AMONG
The Persons Listed on
SCHEDULE "A"
- AND -
1629518 ALBERTA LTD.
- AND -
AUSTRALIAN-CANADIAN OIL ROYALTIES LTD.
ARTICLE 1
DEFINITIONS AND INTERPRETATION........................................1
Definitions...................................................1
Interpretation................................................5
ARTICLE 2
SHARE EXCHANGE........................................................6
Purchase and Sale.............................................6
Purchase Consideration........................................6
Resale Restrictions...........................................7
ARTICLE 3
REPRESENTATIONS AND WARRANTIES OF NEWCO...............................7
Organization and Existence....................................7
Authorized Capital............................................7
Subsidiaries..................................................8
Information...................................................8
Authorization and Consents....................................8
No Other Agreement to Purchase................................8
Agreements or Restrictions on Transfer of Shares..............8
Shareholder Loans.............................................8
Absence of Certain Changes....................................9
Indebtedness and Liens.......................................10
Indebtedness to Directors, Officers and Others...............10
Taxes........................................................10
Material Contracts...........................................11
Necessary Licenses and Permits...............................11
Compliance with Law..........................................11
Employees....................................................11
Litigation...................................................12
No Material Adverse Change...................................12
Employee Benefit Plans.......................................12
Insurance....................................................12
Location of Office...........................................12
Company Documents, Books and Records.........................13
No Limitations...............................................13
Reporting Issuer Status......................................13
Regulatory Compliance........................................13
Non-Arm's Length Transactions................................13
Environmental Laws...........................................13
Enforceability...............................................14
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ARTICLE 4
REPRESENTATIONS AND WARRANTIES OF NEWCO SECURITYHOLDERS..............14
Capacity.....................................................14
Execution and Delivery.......................................14
No Violation.................................................14
Securities Laws..............................................15
Ownership....................................................15
ARTICLE 5
REPRESENTATIONS AND WARRANTIES OF ACOR...............................15
Organization and Existence...................................15
Authorization................................................16
Consents.....................................................16
Authorized Capital...........................................16
No Material Adverse Change...................................16
Reporting Issuer Status......................................17
OTCBB Listing................................................17
Reports and ACOR Financial Statements........................17
Absence of Certain Changes...................................17
Corporate Documents, Books and Records.......................19
Information..................................................19
No Other Agreement to Purchase...............................19
Shareholder Loans............................................19
Indebtedness and Liens.......................................19
Indebtedness to Directors, Officers and Others...............19
Taxes........................................................20
Material Contracts...........................................20
Title to Property............................................20
Intangible Property..........................................21
Necessary Licenses and Permits...............................21
Compliance with Law..........................................21
Employees....................................................21
Litigation...................................................22
Employee Benefit Plans.......................................22
Insurance....................................................22
Location of Office...........................................22
No Limitations...............................................23
Regulatory Compliance........................................23
Non-Arm's Length Transactions................................23
Environmental Laws...........................................23
Enforceability...............................................23
ARTICLE 6
SURVIVAL OF REPRESENTATIONS AND WARRANTIES...........................23
Survival of Representations and Warranties...................23
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ARTICLE 7
COVENANTS OF THE NEWCO SECURITYHOLDERS...............................24
Covenants of the Newco Securityholders.......................24
Delivery of Share Certificates......................24
Filing of Reports...................................25
Representations and Warranties......................25
Conditions..........................................25
Covenants of Newco...........................................28
Representations and Warranties......................28
Conditions..........................................28
Additional Deliveries by Newco at Closing...........28
ARTICLE 8
COVENANTS OF ACOR....................................................29
Covenants of ACOR............................................29
Necessary Consents..................................29
Approval of Financing..............................29
Conditions..........................................29
Status and Filings..................................29
Directors...........................................29
Listing.............................................32
Representations and Warranties......................32
Additional Deliveries by ACOR at Closing............32
ARTICLE 9
MUTUAL COVENANTS.....................................................33
Preparation of Filings..............................33
Notice of Material Change...........................33
Consummation of the Transaction and the Acquisition.34
Other Filings.......................................34
Additional Agreements...............................34
ARTICLE 10
INDEMNIFICATION......................................................34
Indemnification by ACOR......................................34
Indemnification by Newco.....................................35
Indemnification by The Newco Securityholders.................35
Limitation on Indemnification................................35
Procedure for Indemnification................................35
ARTICLE 11
CONDITIONS PRECEDENT.................................................36
Mutual Conditions Precedent..................................36
Condition Precedent for the Benefit of Newco and the
Newco Securityholders.................................37
Condition Precedent for the Benefit of ACOR..................37
ARTICLE 12
CLOSING..............................................................38
Time of Closing..............................................38
Closing Procedures...........................................38
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ARTICLE 13
TERMINATION..........................................................38
Termination Rights...........................................38
Effect of Termination........................................38
ARTICLE 14
EXPENSES.............................................................39
Professional Fees............................................39
ARTICLE 15
GENERAL..............................................................39
Public Announcement..........................................39
Independent Legal Advice.....................................39
Standstill...................................................39
Entire Agreement.............................................39
Further Assurances...........................................40
Commercially Reasonable Efforts..............................40
Severability.................................................40
Applicable Law...............................................40
Governing Language...........................................40
Attornment...................................................40
Successors and Assigns.......................................41
Time of Essence..............................................41
Notices......................................................41
Waiver.......................................................42
Amendments...................................................42
Remedies Cumulative..........................................42
Notice of Untrue Covenants, Representation or Warrant........42
Counterparts.................................................43
SCHEDULES
Schedule "A" 1629518 Alberta Ltd. Shares
Schedule "B" ACOR Warrants
Schedule "C" Warrant Certificate
Schedule 5.2 Organization and Existence
Schedule 5.6 Authorized Share Capital
Schedule 5.8 No Material Adverse Change and Absence of Certain Changes and
Indebtedness and Liens Schedule 5.14(g) Capital Expenditure Requirements
Schedule 5.18 Shareholder Loans
Schedule 5.20 Indebtedness to Directors, Officers and Others
Schedule 5.23 Title to Property
Schedule 5.27 Necessary Licenses and Permits
Schedule 5.31 Litigation
Schedule 5.37 Non-Arm's Length Transactions
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SHARE EXCHANGE AGREEMENT
THIS AGREEMENT is dated as of the 17th day of November, 2011.
AMONG:
NEWCO SECURITYHOLDERS (the Persons Listed on Schedule "A")
(Each, individually a "NEWCO SECURITYHOLDER" and collectively, the
"NEWCO SECURITYHOLDERS")
AND:
1629518 ALBERTA LTD., a corporation incorporated under the laws of
the Province of Alberta ("NEWCO")
AND:
AUSTRALIAN-CANADIAN OIL ROYALTIES LTD., a corporation incorporated
under the laws of the Province of British Columbia and listed on
the OTC Bulletin Board ("ACOR")
WHEREAS:
A. The Newco Securityholders will be the registered and beneficial owners of all
the issued and outstanding shares of Newco (the "NEWCO SHARES") as of the
Closing Date;
B. ACOR is a publicly-traded company trading on the OTC Bulletin Board (the
"OTCBB"); and
C. ACOR and the Newco Securityholders wish to exchange shares on a one for one
basis and on the terms and conditions herein contained.
NOW THEREFORE THIS AGREEMENT WITNESSETH that in consideration of the mutual
covenants and agreements herein contained and of other good and valuable
consideration, the receipt and sufficiency of which is hereby acknowledged, the
parties hereto hereby agree as follows:
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ARTICLE 1
DEFINITIONS AND INTERPRETATION
DEFINITIONS
1.1 In this Agreement, the following terms have the meanings ascribed thereto as
follows:
(a) "ACOR ASSETS" means all assets owned by ACOR;
(b) "ACOR FINANCIAL STATEMENTS" means the audited financial statements for
the fiscal year ended December 31, 2010, and the unaudited financial
statements for the interim period ended September 30, 2011, including
the notes thereto and, as applicable, the report of ACOR's auditors
thereon;
(c) "ACOR SHARES" means common shares in the capital of ACOR, as
constituted from time to time;
(d) "ACOR WARRANTS" means the performance warrants in substantially the
form set forth in Schedule "C" hereto which will be issued to the
persons set forth in Schedule "B" hereto in the amounts set forth
therein concurrently with completion of the share exchange
contemplated herein, or at such other time and to such persons as may
be agreed to by Newco and ACOR;
(e) "ACOR WARRANT CERTIFICATE" means the warrant certificate substantially
in the form attached hereto as Schedule "C";
(f) "ACQUISITION" means the proposed asset purchase by Chelsea Oil
Australia Pty Ltd. pursuant to the terms and conditions of the
Purchase Agreement;
(g) "ACQUIRED ASSETS" means those petroleum and natural gas properties and
related assets located in Australia to be acquired by Chelsea Oil
Australia Pty Ltd pursuant to the Purchase Agreement;
(h) "AGREEMENT" means this definitive Share Exchange Agreement, as the
same may be amended, supplemented or otherwise modified from time to
time in accordance with the terms hereof;
(i) "AUTHORIZATION" means, with respect to any Person, any order, permit,
approval, waiver, license or similar authorization of any Governmental
Entity having jurisdiction;
(j) "BUSINESS DAY" means any day, other than a Saturday, Sunday or
statutory holiday in Calgary, Alberta, Canada and Cisco, Texas, USA;
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(k) "CLAIMS" means any suit, action, dispute, civil or criminal
litigation, claim, arbitration or legal, administrative or other
proceeding or governmental investigation, including appeals and
applications for review;
(l) "CLOSING" means the completion of the transactions contemplated
herein;
(m) "CLOSING DATE" means the date on which "Closing" (as such term is
defined in the Purchase Agreement) occurs under the Purchase
Agreement, or such other date as may be agreed upon in writing by
Newco and ACOR;
(n) "EDGAR" means the Electronic Data Gathering, Analysis, and Retrieval
System;
(o) "ENVIRONMENTAL LAWS" means all Laws relating to the environment or
occupational health and safety or the release of hazardous materials;
(p) "FINANCING" means the non-brokered private placement by ACOR and
Newco, or either of them, of up to 6,000,000 subscription receipts at
US$0.35 per subscription receipt, being exchangeable for up to
6,000,000 ACOR Shares (on the basis of one subscription receipt for
one ACOR Share, subject to adjustment in certain circumstances) upon
the satisfaction of all conditions precedent provided for in this
Agreement for aggregate gross proceeds of up to US$2,100,000;
(q) "GOVERNMENTAL ENTITY" means any government, parliament, legislature,
regulatory authority, governmental department, agency, commission,
board, tribunal, crown corporation, court (federal, provincial or
local) or other law, rule or regulation-making entity having
jurisdiction or exercising executive, legislative, judicial,
regulatory or administrative powers on behalf of any federation or
nation, or any province, territory, state or other subdivision thereof
or any municipality, district or other subdivision thereof;
(r) "INTELLECTUAL PROPERTY" means all (i) trademarks, service marks, trade
names and other indications of origin including all goodwill
associated with all of the foregoing, and all applications,
registrations and renewals in connection with all of the foregoing, in
any jurisdiction; (ii) inventions, discoveries and ideas (whether
patentable or unpatentable and whether or not reduced to practice),
and all patents, applications for patents; (iii) trade secrets,
know-how, confidential information, and other proprietary rights and
information; (iv) copyrights and works of authorship, whether
copyrightable or not, and all applications, registrations and renewals
in connection therewith, in any jurisdiction; Internet domain names;
(vi) computer technology, equipment, devices, systems, hardware,
software and databases; and (vii) other similar intellectual property
or proprietary rights;
(s) "LAWS" means all statutes, codes, ordinance, regulations, statutory
rules, published policies, published guidelines and terms and
conditions of any order, grant of approval, permission, authority or
license of any Governmental Entity, and the term "applicable" with
respect to such Laws, and in the context that refers to one or more
Persons, means that such Laws apply to such Person or Persons or its
or their business, undertaking, property or securities and emanate
from a Governmental Entity having jurisdiction over the Person or
Persons or its or their business, undertaking, property or securities
(all references herein to a specific statute being deemed to include
all applicable rules, regulations, rulings, orders and forms made or
promulgated under such statute and the published policies and
published guidelines of the Governmental Entity administering such
statute) and shall include the published rules and policies of the
OTCBB;
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(t) "LIEN" means any mortgage, charge, pledge, hypothecation, security
interest, assignment, lien (statutory or otherwise), charge, title
retention agreement or arrangement, restrictive covenant or other
encumbrance of any nature or any other arrangement or condition,
which, in substance, secures payment, or performance of an obligation;
(u) "MATERIAL ADVERSE EFFECT" means, when used in connection with ACOR or
Newco, as applicable, any event, condition or change which
individually or in the aggregate constitutes, or could reasonably be
expected to have, a material adverse effect on their respective
business assets, liabilities, condition (financial or otherwise) or
results of operations taken as a whole on a consolidated basis;
provided, however, that the determination of whether a material
adverse effect has occurred shall be made ignoring any event, change,
fact or effect resulting from: (i) any change in U.S. GAAP, or Laws or
interpretation thereof; (ii) any generally applicable change or
development in economic, regulatory, business or financial market
conditions; (iii) any acts of terrorism or war; (iv) the execution or
announcement of this Agreement; (v) in respect of ACOR, any breach of
this Agreement by Newco or the Newco Securityholders; and (vi) in
respect of Newco, any breach of this Agreement by ACOR, provided,
however, that with respect to paragraphs (i), (ii) and (iii), such
matter does not have a disproportionate effect on ACOR or Newco, as
applicable, relative to other comparable companies or entities
operating in the industry in which the party operates;
(v) "MATERIAL CONTRACTS" means all contracts or other obligations or
rights (and all amendments, modifications and supplements thereto to
which any Party or any of its Subsidiaries is a party affecting the
obligations of any party thereunder) to which a Party or its
Subsidiaries is a party or by which any of their respective properties
or assets are bound that are material to the business, properties or
assets of a Party or its Subsidiaries taken as a whole;
(w) "MATERIAL FACT" has the meaning ascribed thereto in the Securities
Act;
(x) "MISREPRESENTATION" has the meaning ascribed thereto in the Securities
Act;
(y) "NEWCO ASSETS" means all assets owned by Newco;
(z) "NEWCO SHARES" means common shares in the capital of Newco, as
constituted from time to time;
(aa) "NEWCO SECURITYHOLDERS" means the securityholders of Newco as listed
on Schedule "A";
(bb) ORDINARY COURSE" means, with respect to an action taken by a Person,
that such action is consistent with the past practices of the Person
and is taken in the ordinary course of the normal day to day
operations of the Person;
(cc) "OTCBB" means, the OTC Bulletin Board maintained by FINRA;
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(dd) "PARTY" means a party to this Agreement and "Parties" means all
parties to this Agreement;
(ee) "PERMITS" means in respect of a Party, all permits, licenses,
variances, exemptions, orders and approvals of all Governmental
Entities necessary for the lawful conduct of the respective businesses
of the Party or any of its Subsidiaries;
(ff) "PERMITTED LIENS" means Liens for current Taxes or other governmental
charges not yet due and payable or delinquent, the amount or validity
of which is being contested in good faith by appropriate proceedings
or which may thereafter be paid without penalty or such imperfections
of title, easements, encumbrances and mortgages or other Liens, if
any, as are not material (alone or in the aggregate) in character,
amount or extent and do not materially detract from the value, or
materially interfere with the present use, of any property subject
thereto or affected thereby;
(gg) "PERSON" means and includes an individual, firm, sole proprietorship,
partnership, joint venture, venture capital or hedge fund,
association, unincorporated association, unincorporated syndicate,
unincorporated organization, estate, group, trust, body corporate
(including a limited liability company and an unlimited liability
company), a trustee, executor, administrator or other legal
representative, Governmental Entity, syndicate or other entity,
whether or not having legal status;
(hh) "PUBLIC RECORD" means all information filed by or on behalf of ACOR
with the SEC and accessible on EDGAR, including without limitation,
the ACOR Financial Statements and any other information filed with any
Governmental Entity in compliance, or intended compliance, with any
applicable securities laws;
(ii) "PURCHASE AGREEMENT" means the purchase and sale agreement between
ACOR, Chelsea Oil Australia Pty Ltd, Brisbane Petroleum Ltd. and
Delbaere Associates Pty. Limited dated November 17th, 2011;
(jj) "REGULATORY APPROVALS" means those sanctions, rulings, consents,
orders, exemptions, permits and other approvals (including the lapse,
without objection, of a prescribed time under a statute or regulation
that permits a transaction to be implemented if a prescribed time
lapses following the giving of notice without an objection being made)
of any applicable Governmental Entity;
(kk) "SEC" means the United States Securities and Exchange Commission;
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(ll) "SECURITIES ACT" means the Securities Act (Alberta) and all blanket
rulings, policy statements, orders, rules and notices of the Alberta
Securities Commission;
(mm) "SECURITIES AUTHORITIES" means the Financial Industry Regulatory
Authority, Inc. ("FINRA") and any applicable securities commissions or
similar regulatory authorities in Canada or the United States and each
of the provinces and territories thereof;
(nn) "SUBSIDIARY" means, with respect to a specified body corporate, a body
corporate of which more than 50% of the outstanding shares ordinarily
entitled to elect a majority of the directors thereof, whether or not
shares of any other class or classes shall or might be entitled to
vote upon the happening of any event or contingency, are at the time
owned, directly or indirectly, by such specified body corporate, and
includes a body corporate in like relation to a subsidiary;
(oo) "TAX ACT" means the Income Tax Act (Canada), together with any and all
regulations promulgated thereunder, as amended from time to time;
(pp) "TAXES" means all present and future taxes, levies, imposts, duties,
deductions, withholdings, assessments, fees or other charges imposed
by any Governmental Entity in the nature of a tax, including any
interest, additions to tax and penalties applicable thereto;
(qq) "U.S. GAAP" means generally accepted accounting principles in Canada
as in effect from time to time, consistently applied; and
(rr) "VENDOR" means collectively, Brisbane Petroleum Ltd and Delbaere
Associates Pty. Limited.
INTERPRETATION
1.2 For the purposes of this Agreement, except as otherwise expressly provided:
(a) a reference to an Article is to an Article of this Agreement, and a
reference to a Section followed by a number or some combination of
numbers and letters refers to the section, subsection, paragraph,
subparagraph, clause or subclause of this Agreement so designated;
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(b) the captions, Section numbers and Article numbers appearing in this
Agreement are inserted for convenience of reference only and shall in
no way define, limit, construe or describe the scope or intent of this
Agreement nor in any way affect this Agreement;
(c) the word "including", when following any general statement or term, is
not to be construed as limiting the general statement or term to the
specific items or matters set forth or to similar items or matters,
but rather as permitting the general statement or term to refer to all
other items or matters that could reasonably fall within its broadest
possible scope;
(d) if any date on which any action is required to be taken hereunder by
any of the parties is not a Business Day, such action shall be
required to be taken on the next succeeding day which is a Business
Day;
(e) a reference to a statute includes all regulations made thereunder, all
amendments to the statute or regulation in force from time to time,
and every statute or regulation that supplements or supersedes such
statute or regulation;
(f) words importing the masculine gender include the feminine or neuter,
words in the singular include the plural, a word importing a corporate
entity includes an individual, and vice versa;
(g) all dollars amounts, unless otherwise specified, are in Canadian
dollars; and
(h) where any matter is stated to be "to the knowledge" or "to the best of
the knowledge" of ACOR or Newco or words to like effect in this
Agreement, it shall mean the actual knowledge of any of the senior
officers of ACOR or Newco after due inquiry.
ARTICLE 2
SHARE EXCHANGE
PURCHASE AND SALE
2.1 Subject to the terms and conditions hereof and in reliance on the
representations and warranties set forth or referred to herein, at the
Closing Date each of the Newco Securityholders severally agrees to
exchange, transfer and assign all Newco Shares he or it owns or will own at
the Closing Date (being the number set out opposite his or its name in the
attached Schedule "A") to ACOR in consideration of ACOR's issuance to such
Newco Securityholder of an equal number of ACOR Shares set out opposite his
or its name in the said Schedule "A".
PURCHASE CONSIDERATION
2.2 The exchange, transfer and assignment of Newco Shares for ACOR Shares shall
proceed on the basis of one (1) ACOR Share for each one (1) Newco Share.
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RESALE RESTRICTIONS
2.3 The ACOR Shares will be issued in accordance with applicable Canadian
securities Laws and will be subject to an indefinite hold period in Canada.
Each of the Newco Securityholders hereby represents and warrants to ACOR
that he or it is an "accredited investor" within the meaning of National
Instrument 45-106 - Prospectus and Registration Exemptions or in Section
2(a)(15) the Securities Act of 1933, as amended, as applicable. The ACOR
Shares will contain the following legend, and such other legends as may be
required by applicable securities Laws.
"UNLESS PERMITTED UNDER SECURITIES LEGISLATION, THE HOLDER OF THIS SECURITY
MUST NOT TRADE THE SECURITY BEFORE THE DATE THAT IS 4 MONTHS AND A DAY
AFTER THE LATER OF (I) [INSERT DISTRIBUTION DATE], AND (II) THE DATE
AUSTRALIAN-CANADIAN OIL ROYALTIES LTD. BECAME A REPORTING ISSUER IN ANY
PROVINCE OR TERRITORY."
ARTICLE 3
REPRESENTATIONS AND WARRANTIES OF NEWCO
3.1 In order to induce ACOR to enter into this Agreement and to consummate the
transactions contemplated by this Agreement, Newco and the Newco
Securityholders hereby jointly and severally represent and warrant as
follows to and in favour of ACOR and acknowledge that ACOR is relying upon
such representations and warranties in connection with the transactions
contemplated by this Agreement:
ORGANIZATION AND EXISTENCE
3.2 Newco is a company duly formed and organized and existing under the laws of
Alberta and has the power to own its properties and to carry on its
business as now conducted and currently proposed to be conducted and has
made all necessary filings under all applicable company, securities and
taxation laws or any other Laws to which Newco is subject, except where the
failure to make such filing would not have a Material Adverse Effect on
Newco. Newco is not in violation of its articles or by-laws, except where
such violation would not have a Material Adverse Effect on Newco. Newco is
in good standing under the company or other laws of each province or other
jurisdiction in which it carries on business, except where the failure to
have such standing would not have a Material Adverse Effect on Newco. No
proceedings have been instituted or are pending for the dissolution or
liquidation of Newco.
AUTHORIZED CAPITAL
3.3 The authorized capital of Newco consists of an unlimited number of Newco
Shares.
3.4 13,278,571 Newco Shares have been duly authorized and validly issued and
outstanding as fully paid and non-assessable Newco Shares. None of the
Newco Shares have been issued in violation of any Laws, Newco's articles or
by-laws or any agreement to which Newco is a party or by which it is bound.
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3.5 Each Newco Securityholder has contributed to the capital of Newco the
amount of cash or other property set forth opposite his name in the share
register contained in the minute book of Newco in consideration for the
Newco Shares representing his respective interest in Newco as set forth in
the share register contained in the minute book of Newco.
SUBSIDIARIES
3.6 Newco has no Subsidiaries or any other material investments in any other
Person.
INFORMATION
3.7 All data and information relating to Newco provided by Newco, at the
request of ACOR and its agents and representatives, to ACOR and its agents
and representatives in connection with the transactions contemplated by
this Agreement was and at the Closing Date will be complete and true and
correct in all material respects.
AUTHORIZATION AND CONSENTS
3.8 Newco has the capacity right, authority and power to enter into this
Agreement and each agreement, document and instrument to be executed and
delivered by Newco pursuant to this Agreement and to carry out the
Acquisition and other transactions contemplated hereby or thereby. The
execution, delivery and performance by Newco of this Agreement and each
such other agreement, document and instrument contemplated herein and
therein have been duly authorized by all necessary action of Newco and no
other action on the part of Newco is required in connection therewith. The
execution, delivery and performance by Newco of this Agreement and each
such other agreement, document and instrument contemplated herein and
therein does not and will not require the authorization approval or consent
of, or any filing with any Governmental Entity or any other Person, and the
execution, delivery and performance by Newco of this Agreement and each
such other agreement, document and instrument contemplated herein and
therein, does not and will not result in: (a) a breach of or conflict with
the articles or by-laws of Newco; (b) a breach of or a conflict with any
Laws applicable to Newco; (c) a breach of, constitute a default under,
accelerate any obligation under, or give rise to a right of termination of
any indenture, agreement, contract, instrument, Lien, lease, permit,
authorization, order, writ, judgment, injunction, decree, determination or
arbitration award to which Newco is a party or by which the property of
Newco is bound or affected; (d) result in the creation or imposition of any
Lien on any equity interest in Newco; (e) result in the dissolution or
winding-up of Newco; or (f) the issuance of any additional securities
pursuant to preemptive or similar rights.
NO OTHER AGREEMENT TO PURCHASE
3.9 There are no agreements, options, warrants, rights of conversion or other
rights binding upon or which at any time in the future may become binding
upon Newco to issue any equity securities or any securities convertible or
exchangeable, directly or indirectly, into any equity securities of Newco.
AGREEMENTS OR RESTRICTIONS ON TRANSFER OF SHARES
3.10 To the knowledge of Newco, there are no agreements or restrictions which in
any way limit or restrict the transfer to ACOR of any of the Newco Shares
and there are no shareholders agreements, pooling agreements, voting trusts
or other agreements or understandings with respect to the voting of Newco
Shares or any of them.
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SHAREHOLDER LOANS
3.11 There are no loans or other liabilities of Newco to the Newco
Securityholders or to any previous Newco Securityholders.
ABSENCE OF CERTAIN CHANGES
3.12 Newco has not and will not (except as disclosed in this Agreement):
(a) issued, sold, pledged, hypothecated, leased, disposed of or encumbered
any Newco Shares or other securities or any right, option or warrant
with respect thereto;
(b) amended or proposed to amend its articles or by-laws;
(c) split, combined or reclassified any of its securities or declared or
made any dividend or other distribution;
(d) suffered any material loss relating to litigation or been threatened
with litigation;
(e) suffered any adverse change in employee relations which has or is
reasonably likely to have a Material Adverse Effect on Newco, or
entered into or amended any employment or service contracts with any
officer or senior management employee, created or amended any employee
benefit plan, made any increases in the base compensation, bonuses,
paid vacation time allowed or fringe benefits for any, officer,
employee or consultant, other than in the Ordinary Course;
(f) suffered damage, destruction or other casualty, loss, or forfeiture
of, any property or assets, whether or not covered by insurance, which
would have a Material Adverse Effect on Newco;
(g) made any capital expenditures, additions or improvements or
commitments for the same, except those which do not exceed $10,000 per
month;
(h) other than in the Ordinary Course: (i) entered into any contract,
commitment or agreement under which it has outstanding Indebtedness
for borrowed money or for the deferred purchase price of property; or
(ii) made any loan or advance to any Person;
(i) acquired or agreed to acquire (by tender offer, exchange offer,
merger, amalgamation, acquisition of shares or assets or otherwise)
any Person, corporation, partnership, joint venture or other business
organization or division or acquired or agreed to acquire any material
assets;
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(j) entered into any material contracts regarding its business operations,
including joint ventures, partnership or arrangements;
(k) acquired or agreed to acquire (by tender offer, exchange offer,
merger, amalgamation, acquisition of shares or assets or otherwise)
any Person, corporation, limited liability company, partnership, joint
venture or other business organization or division or acquired or
agreed to acquire any material assets;
(l) created any securities option or bonus plan, paid any bonuses,
deferred or otherwise, or deferred any compensation to any of its
officers or employees other than such payments made in the Ordinary
Course;
(m) made any material change in accounting procedures or practices;
(n) other than in the Ordinary Course, mortgaged, hypothecated or pledged
any of the Newco Assets, or subjected them to any Lien, except a
Permitted Lien;
(o) disposed of or permitted to lapse any rights to the use of any
Intellectual Property material to Newco, if such action or omission
would have a Material Adverse Effect on Newco;
(p) entered into any material contracts regarding its business operations,
including joint ventures, partnerships or other arrangements;
(q) sold, leased, subleased or transferred any of the Newco Assets;
(r) entered into any agreement or arrangement granting any rights to
purchase, lease, sublease, assign or transfer any of the Newco Assets
or requiring the consent of any Person to the transfer, assignment or
lease of any such Newco Assets or rights which would have a Material
Adverse Effect on Newco;
(s) cancelled, waived or compromised any debts or claims, including
accounts payable to and receivable from its Affiliates;
(t) failed to pay or satisfy when due any liability of Newco where the
failure to do so would have a Material Adverse Effect on Newco;
(u) disposed or permitted to lapse any Intellectual Property material to
Newco or disclosed to any Person any Intellectual Property material to
Newco not theretofore a matter of public knowledge, except where such
disclosure was made to a recipient who is subject to an obligation of
confidentiality; or
11
(v) entered into any agreement, arrangement or understanding to do any of
the foregoing.
INDEBTEDNESS AND LIENS
3.13 Other than in the Ordinary Course, Newco has not incurred any: (i)
Indebtedness; or (ii) Liens upon any of the Newco Assets, other than
Permitted Liens.
INDEBTEDNESS TO DIRECTORS, OFFICERS AND OTHERS
3.14 Newco is not indebted to any director, officer, employee or consultant of
Newco, except for amounts due as normal compensation or reimbursement of
ordinary business expenses.
TAXES
3.15 All returns, declarations, reports, estimates, statements, schedules or
other information or documents with respect to Taxes (collectively, "TAX
RETURNS") required to be filed by or with respect to Newco have been filed
within the prescribed time, with the appropriate tax authorities and all
such Tax Returns are true, correct, and complete in all material respects.
No Tax Return of Newco is being audited by the relevant taxing authority,
and there are no outstanding waivers, objections, extensions, or comparable
consents regarding the application of the statute of limitations or period
of reassessment with respect to any Taxes or Tax Returns that have been
given or made by Newco (including the time for filing of Tax Returns or
paying Taxes) and Newco has no pending requests for any such waivers,
extensions, or comparable consents. Newco has not received a ruling from
any taxing authority or signed an agreement with any taxing authority that
could reasonably be expected to have a Material Adverse Effect on Newco.
Newco does not owe any Taxes to the federal government of Canada, a
provincial government, a municipal government or any other governmental
authority.
MATERIAL CONTRACTS
3.16 Other than as set out herein, there are no material contracts, agreements,
leases or commitments entered into by Newco which are in writing or have
been orally agreed to by Newco and which are still in effect.
3.17 All contracts, agreements, leases and commitments set out herein are valid,
binding and in full force and effect as to Newco, and the other parties
thereto (to Newco's knowledge) and Newco, are not in breach or violation
of, or default under, the terms of any such contract, agreement, plan,
lease or commitment, except where such breach, violation or default would
not have a Material Adverse Effect on Newco, and no event has occurred
which constitutes or, with the lapse of time or the giving of notice, or
both, would constitute, such a breach, violation or default by Newco or, to
Newco's knowledge, the other parties thereto.
12
NECESSARY LICENSES AND PERMITS
3.18 Newco has all necessary and required licenses, permits, consents,
concessions and other authorizations of governmental, regulatory or
administrative agencies or authorities, whether foreign, federal,
provincial, state or local, required to own and lease its properties and
assets and to conduct its business as now conducted, except where the
failure to hold the foregoing would not have a Material Adverse Effect on
Newco. Newco is not in default, nor has it received any notice of any claim
of default, with respect to any such license, permit, consent, concession
or authorization. No registrations, filings, applications, notices,
transfers, consents, approvals, audits, qualifications, waivers or other
action of any kind are required by virtue of the execution and delivery of
this Agreement, or of the consummation of the transactions contemplated
hereby: (a) to avoid the loss of any license, permit, consent, concession
or other authorization or any asset, property or right pursuant to the
terms thereof, or the violation or breach of any Law applicable thereto, or
(b) to enable Newco to hold and enjoy the same immediately after the
Closing Date in the conduct of its business as conducted prior to the
Closing Date.
COMPLIANCE WITH LAW
3.19 Newco is not in default under, or in violation of, and has not violated
(and failed to cure) any Law including, without limitation, laws relating
to the issuance or sale of securities, the environment and occupational
health and safety privacy and intellectual property, or any licenses,
franchises, permits, authorizations or concessions granted by, or any
judgment, decree, writ, injunction or order of, any governmental or
regulatory authority, applicable to its business or any of its properties
or assets, except where such default or violation would not have a Material
Adverse Effect on Newco. Newco has not received any notification alleging
any violations of any of the foregoing with respect to which adequate
corrective action has not been taken.
EMPLOYEES
3.20 Newco does not have any employees or independent contractors and there are
no agreements, written or oral, between Newco and any other party relating
to payment, remuneration or compensation for work performed or services
provided or payment relating to a change of control or other event in
respect of Newco. Newco is in compliance with all applicable Laws
respecting labour, employment, fair employment practices, work place safety
and health, terms and conditions of employment, and wages and hours. There
are no charges of employment discrimination or unfair labour practices
pending or threatened and to the knowledge of Newco, there exists no valid
basis for any such claim. There are no pending claims, complaints or
charges that have been filed against Newco under any labour or employment
laws or dispute resolution procedure (including, but not limited to, any
arbitration or similar proceedings) of which Newco has received written
notice. Newco has not received any written notice indicating that any of
its employment policies or practices is currently being audited or
investigated by any federal, provincial, state or local government agency.
13
LITIGATION
3.21 There are no actions, suits, proceedings or inquiries in existence or, to
the knowledge of Newco, pending or threatened against or affecting Newco at
law or in equity or before or by any federal, provincial, municipal or
other governmental department, commission, board, bureau or agency which
may in any way materially adversely affects, or in any way may materially
adversely affect, the business, operations, capital, properties, assets,
liabilities (absolute, accrued, contingent or otherwise), condition
(financial or otherwise) or results of operations of Newco or its
properties or assets or which affects or may affect the transactions
contemplated hereby or to duly observe and perform any of its covenants or
obligations contained herein and Newco is not aware of any existing ground
on which such action, suit, proceeding or inquiry might by commenced with
any reasonable likelihood of success.
NO MATERIAL ADVERSE CHANGE
3.22 No change has occurred in the business, operations, results of operations,
assets, capitalization or condition (financial or otherwise) of Newco,
whether or not in the ordinary course of business, whether separately or in
the aggregate with other occurrences or developments, and whether insured
against or not, which could reasonably be expected to have a Material
Adverse Effect on Newco.
EMPLOYEE BENEFIT PLANS
3.23 Newco does not have any employee benefit plans (or any plan which may be in
any way regarded as an employee benefit plan) of any nature whatsoever nor
has it ever had any such plans.
INSURANCE
3.24 Newco does not have (nor has it ever had) any insurance of any nature
whatsoever relating to it or its directors or officers or otherwise.
LOCATION OF OFFICE
3.25 Newco's head office is located at Suite 800, 400-3rd Avenue S.W., Calgary,
AB, T2P 4H2, and, aside from its counsel's office, such address is the
only location where its company books and records are located.
COMPANY DOCUMENTS, BOOKS AND RECORDS
3.26 Complete and correct copies of the articles, and of all amendments thereto,
of Newco have been previously delivered to ACOR. The corporate records of
Newco provided to ACOR contain complete and accurate records in all
material respects of all meetings and consents in lieu of meetings of the
Newco directors (and its committees) and Newco Securityholders since the
formation of Newco, and of all actions, decisions and consents thereof.
Except as reflected in such corporate records, there are no material
minutes of meetings or consents in lieu of meetings of the Newco directors
and Newco Securityholders or actions, decisions or consents thereof.
14
NO LIMITATIONS
3.27 There is no non-competition, exclusivity or other similar agreement,
commitment or understanding in place, whether written or oral, to which
Newco is a party or is otherwise bound that would now or hereafter, in any
way limit the business, use of assets or operations of Newco.
REPORTING ISSUER STATUS
3.28 Newco is not a "reporting issuer" (or the equivalent status) in any
province or territory of Canada and there is not a published market in
respect of any of its securities. No order has been issued ceasing or
suspending trading or prohibiting the issue of any securities of Newco and
no such proceedings are pending, or to the knowledge of Newco, threatened.
REGULATORY COMPLIANCE
3.29 Newco is in compliance with all regulatory orders, directives and decisions
that have application to Newco except where such non-compliance would not
have a Material Adverse Effect on Newco and Newco has not received notice
from any governmental or regulatory authority that Newco is not in
compliance with any such regulatory orders, directives or decisions.
NON-ARM'S LENGTH TRANSACTIONS
(a) Newco has not made any payment or loan to, or borrowed any monies from
or is otherwise indebted to any officer, employee, Newco Shareholder,
Newco director or any other Person with whom Newco is not dealing at
arm's length (within the meaning of the Income Tax Act) or any
Affiliate of any of the foregoing; and
(b) Newco is not a party to any contract or agreement with any officer,
employee, Newco Shareholder, Newco director or any other Person with
whom Newco is not dealing at arm's length (within the meaning of the
Income Tax Act) or any Affiliate of any of the foregoing.
ENVIRONMENTAL LAWS
3.30 Newco does not have liability under, nor has Newco ever violated, any
Environmental Law. Newco does not have any property owned, operated,
leased, or used by it that has ever been the subject of a violation of any
Environmental Law. All facilities and operations of Newco and its
Subsidiaries are presently in compliance with all applicable Environmental
Laws.
ENFORCEABILITY
3.31 The execution and delivery by Newco of this Agreement and any other
agreement contemplated by this Agreement will result in legally binding
obligations of Newco enforceable against Newco in accordance with the
respective terms and provisions hereof and thereof subject, however, to
limitations with respect to enforcement imposed by Law in connection with
bankruptcy or similar proceedings and to the extent that equitable remedies
such as specific performance and injunction are in the discretion of the
court from which they are sought.
15
ARTICLE 4
REPRESENTATIONS AND WARRANTIES OF NEWCO SECURITYHOLDERS
4.1 Each of the Newco Securityholders severally (and not jointly or jointly and
severally) represents and warrants, but only as to himself or itself, to
ACOR as follows:
CAPACITY
4.2 Each Newco Securityholder has the capacity to own the Newco Shares owned by
him or it, to enter into this Agreement and to perform his or its
obligations under this Agreement.
EXECUTION AND DELIVERY
4.3 This Agreement and any other agreement contemplated by this Agreement has
been duly authorized (if the Newco Securityholder is not an individual),
executed and delivered by each Newco Securityholder and will result in
legally binding obligations of such Newco Securityholder enforceable
against such Newco Securityholder in accordance with the respective terms
and provisions hereof and thereof subject, however, to approval by
shareholders of the Newco Securityholders, as applicable, and to
limitations with respect to enforcement imposed by Law in connection with
bankruptcy or similar proceedings and to the extent that equitable remedies
such as specific performance and injunction are in the discretion of the
court from which they are sought.
NO VIOLATION
4.4 The execution and delivery of this Agreement, the transfer of the Newco
Shares and the performance, observance or compliance with the terms of this
Agreement by such Newco Securityholder will not violate, constitute a
default under, conflict with, or give rise to any requirement for a waiver
or consent under:
(a) the articles and by-laws of such Newco Securityholder (if the Newco
Securityholder is not an individual);
(b) any provision of any agreement, instrument or other obligation to
which such Newco Securityholder is a party or by which such Newco
Securityholder is bound; or
(c) any Laws applicable to such Newco Shareholder.
SECURITIES LAWS
4.5 With respect to Newco Securityholders not residing in Canada or the United
States, the Newco Securityholder is knowledgeable of, or has been
independently advised as to, the applicable securities Laws of its
jurisdiction of residence or the securities Laws otherwise applicable to
the Newco Shareholder, and:
(a) is receiving the ACOR Shares to be issued to him or it pursuant to
this Agreement pursuant to exemptions from the prospectus and
registration requirements under the securities Laws applicable to the
Newco Securityholder or, if such is not applicable, the Newco
Securityholder is permitted to receive such ACOR Shares under the
securities Laws applicable to the Newco Securityholder without the
need to rely on an exemption;
(b) the securities Laws applicable to the Newco Securityholder do not
require ACOR to file a prospectus or similar disclosure document or to
register the ACOR Shares to be issued to him or it pursuant to this
Agreement or to make any filings or seek any approvals of any kind
whatsoever from any regulatory authority of any kind whatsoever; and
(c) the delivery of this Agreement and the issuance of the ACOR Shares to
be issued to the him or it pursuant to this Agreement comply with all
Laws applicable to the Newco Securityholder and will not cause ACOR to
become subject to or required to comply with any disclosure,
prospectus or other reporting requirements under any such applicable
Laws.
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OWNERSHIP
4.6 Each Newco Securityholder is, or on the Closing Date will be, the
registered and beneficial owner of the Newco Shares set out beside his, her
or its name in Schedule "A", free and clear of any Liens. Upon the
completion of the Closing, except for the rights of ACOR pursuant to this
Agreement with respect to the Newco Shares, there will be no outstanding
options, calls, preemptive or other rights of any kind binding on any Newco
Securityholder relating to or providing for the purchase, delivery or
transfer of any of his or its Newco Shares.
ARTICLE 5
REPRESENTATIONS AND WARRANTIES OF ACOR
5.1 ACOR hereby represents and warrants as follows to and in favour of Newco
and the Newco Securityholders and ACOR acknowledges that Newco and the
Newco Securityholders are relying upon such representations and warranties
in connection with the transactions contemplated by this Agreement.
ORGANIZATION AND EXISTENCE
5.2 ACOR is a corporation duly incorporated, organized and validly existing
under the laws of the Province of British Columbia and has the corporate
power to own its properties and to carry on its business as now conducted
and currently proposed to be conducted and has made all necessary filings
under all applicable corporate, securities and taxation laws or any other
Laws to which ACOR is subject, except where the failure to make such filing
would not have a Material Adverse Effect on ACOR. ACOR is in good standing
under the Business Corporations Act (British Columbia). ACOR is not in
violation of its articles or by-laws. ACOR does not have any Subsidiaries
other than Cooper-Eromanga Oil, Inc. No proceedings have been instituted or
are pending for the dissolution or liquidation of ACOR.
AUTHORIZATION
5.3 The execution, delivery and performance by ACOR of this Agreement and the
Purchase Agreement and the applicable agreements in relation to the
Financing: (i) are within its capacity, corporate power and authority; (ii)
have been, or will be duly authorized by all necessary corporate
proceedings; and (iii) do not and will not conflict with or result in any
breach of any provision of, or the creation of any Lien upon any of the
ACOR Assets pursuant to the articles or by-laws of ACOR, any Laws
applicable to ACOR or any indenture, lease, agreement, contract, instrument
or Lien, to which ACOR is a party or by which the property of ACOR may be
bound or affected.
5.4 The ACOR Shares, when delivered to the Newco Securityholders in accordance
with the terms of this Agreement or exercised in accordance with the terms
of the ACOR Warrants, will be validly issued and outstanding as fully paid
and non-assessable ACOR Shares.
CONSENTS
5.5 The execution, delivery and performance by ACOR of this Agreement and the
applicable agreements in relation to the Financing does not and will not
require the authorization, approval or consent of, or any filing with, any
governmental authority or agency or any other Person.
17
AUTHORIZED CAPITAL
5.6 The authorized capital of ACOR consists of 50,000,000 ACOR Shares and
50,000,000 preferred shares. The issued and outstanding ACOR Shares are set
forth on Schedule 5.6 attached hereto and shall constitute 51% of the
issued and outstanding shares giving effect to the completion of this
Agreement and the Acquisition, however prior to the Financing. Nil
preferred shares are issued and outstanding as at the date hereof. ACOR may
issue up to an additional 5,000,000 ACOR Shares pursuant to the exercise of
the ACOR Warrants. In addition, ACOR may issue additional ACOR Shares or
securities convertible into ACOR Shares pursuant to the Financing as
contemplated hereunder.
5.7 The ACOR Shares issued and outstanding as of the date hereof have been, and
the ACOR Shares issuable on the Closing Date will be, duly authorized and
validly issued and outstanding as fully paid and non-assessable shares. The
ACOR Warrants will on the Closing Date be duly authorized and will be
issued as fully paid securities of ACOR. None of the ACOR Shares, ACOR
Warrants or any existing options and warrants have been issued in violation
of any Laws, the policies of FINRA or the OTCBB, ACOR's articles or by-laws
or any agreement to which ACOR is a party or by which it is bound.
NO MATERIAL ADVERSE CHANGE
5.8 Except with respect to changes in prices of oil and gas and as noted in
Schedule 5.8 attached hereto, there has not been any material change in the
capital, assets, liabilities or obligations (absolute, accrued, contingent
or otherwise) of ACOR from the position set forth in the ACOR Financial
Statements that has not otherwise been disclosed in the Public Record and
there has not been any adverse material change in the business, operations,
capital, properties, assets, liabilities (absolute, accrued, contingent or
otherwise), condition (financial or otherwise) or results of operations of
ACOR since September 30, 2011; and since that date there have been no
material facts, transactions, events or occurrences which could materially
adversely affect the business, operations, capital, properties, assets,
liabilities (absolute, accrued, contingent or otherwise), condition
(financial or otherwise) or results of operations of ACOR.
REPORTING ISSUER STATUS
5.9 ACOR is not a "reporting issuer" under the securities legislation of any
provinces or territories of Canada.
OTCBB LISTING
5.10 The ACOR Shares are quoted on the OTCBB. All continuous and timely
disclosure documents, reports, forms, filings and fees required to be made
and paid by ACOR pursuant to the applicable securities Laws have been made
and paid in accordance with the applicable securities Laws, the information
and statements set forth in the Public Record were true, correct, and
complete in all material respects and did not contain any
misrepresentation, as of the date of such information or statement, and
were prepared in accordance with and complied with applicable securities
Laws.
18
REPORTS AND ACOR FINANCIAL STATEMENTS
5.11 ACOR has delivered to Newco and filed with the SEC on EDGAR true and
complete copies of the audited financial statements of ACOR for the two
years ended December 31, 2009 and 2010 and unaudited financial statements
of ACOR as at and for the interim period ended September 30, 2011.
5.12 The ACOR Financial Statements were prepared in accordance with U.S.
GAAP,each of the balance sheets included in the ACOR Financial Statements
fairly presents the financial condition of ACOR as at the close of business
on the date thereof, and each of the statements of loss and deficit and
statements of cash flows included in the ACOR Financial Statements fairly
presents the results of operations of ACOR for the fiscal period then
ended.
5.13 There were no liabilities, contingent, contractual or otherwise, of ACOR as
at the balance sheet date of the respective ACOR Financial Statements,
other than those disclosed in the ACOR Financial Statements and the notes
thereto.
ABSENCE OF CERTAIN CHANGES
5.14 Except as disclosed in the Public Record or in Schedule 5.8 attached
hereto, ACOR has not ( and will not as of the Closing Date, except in the
Ordinary Course and as disclosed in this Agreement, Schedule 5.14 attached
hereto and pursuant to the Financing and the Acquisition):
(a) issued, sold, pledged, hypothecated, leased, disposed of or encumbered
any ACOR Shares or other ACOR securities or any right, option or
warrant with respect thereto;
(b) amended or proposed to amend its articles or by-laws;
(c) split, combined or reclassified any of its securities or declared or
made any dividend or other distribution;
(d) suffered any material loss relating to litigation or been threatened
with litigation;
(e) suffered any adverse change in employee relations which has or is
reasonably likely to have a Material Adverse Effect on ACOR, or
entered into or amended any employment contracts with any director,
officer or senior management employee, created or amended any employee
benefit plan, made any increases in the base compensation, bonuses,
paid vacation time allowed or fringe benefits for any officer,
employee or consultant, other than in the Ordinary Course;
19
(f) suffered damage, destruction or other casualty, loss, or forfeiture
of, any property or assets, whether or not covered by insurance, which
would have a Material Adverse Effect on ACOR;
(g) made any capital expenditures, additions or improvements or
commitments for the same, except those which do not exceed $10,000 per
month;
(h) other than in the Ordinary Course: (i) entered into any contract,
commitment or agreement under which it has outstanding Indebtedness
for borrowed money or for the deferred purchase price of property; or
(ii) made any loan or advance to any Person;
(i) acquired or agreed to acquire (by tender offer, exchange offer,
merger, amalgamation, acquisition of shares or assets or otherwise)
any Person, corporation, partnership, joint venture or other business
organization or division or acquired or agreed to acquire any material
assets;
(j) entered into any material contracts regarding its business operations,
including joint ventures, partnerships or other arrangements;
(k) created any securities option or bonus plan, paid any bonuses,
deferred or otherwise, or deferred any compensation to any of its
directors or officers other than such payments made in the Ordinary
Course;
(l) made any material change in accounting procedures or practices;
(m) other than in the Ordinary Course, mortgaged, hypothecated or pledged
any of the ACOR Assets, or subjected them to any Lien except a
Permitted Lien;
(n) disposed of or permitted to lapse any rights to the use of any
Intellectual Property material to ACOR, if such action or omission
would have a Material Adverse Effect on ACOR;
(o) entered into any other material transaction, or any amendment of any
contract, lease, agreement or license which is material to its
business;
(p) sold, leased, subleased, assigned or transferred any of the ACOR
Assets;
(q) entered into any agreement or arrangement granting any rights to
purchase, lease, sublease, assign or transfer any of the ACOR Assets
or requiring the consent of any Person to the transfer, assignment or
lease of any such ACOR Assets or rights which would have a Material
Adverse Effect on ACOR;
(r) cancelled, waived or compromised any debts or claims, including
accounts payable to and receivable from its Affiliates;
20
(s) failed to pay or satisfy when due any liability of ACOR where such
failure would have a Material Adverse Effect on ACOR;
(t) disposed or permitted to lapse any Intellectual Property material to
ACOR or disclosed to any Person any Intellectual Property material to
ACOR not theretofore a matter of public knowledge, except where such
disclosure was made to a recipient who is subject to an obligation of
confidentiality; or
(u) entered into any agreement, arrangement or understanding to do any of
the foregoing.
CORPORATE DOCUMENTS, BOOKS AND RECORDS
5.15 Complete and correct copies of the articles and by-laws, and of all
amendments thereto, of ACOR have been previously delivered to Newco. The
minute book of ACOR contains complete and accurate records in all material
respects of meetings and consents in lieu of meetings of the board of
directors (and its committees) and shareholders of ACOR for all material
transactions and for this transaction, the Financing and the Acquisition.
Except as reflected in such minute book, there are no minutes of meetings
or consents in lieu of meetings of the board of directors (or its
committees) or of the shareholders of ACOR.
INFORMATION
5.16 All data and information provided by ACOR, at the request of Newco and its
agents and representatives, to Newco and/or the Newco Securityholders and
its agents and representatives in connection with the transactions
contemplated by this Agreement, the Acquisition and the Financing was and
is complete and true and correct in all material respects.
NO OTHER AGREEMENT TO PURCHASE
5.17 Other than as set out herein and pursuant to the Financing and the
Acquisition, there are no agreements, options, warrants, rights of
conversion or other rights binding upon or which at any time in the future
may become binding upon ACOR to issue any shares or any securities
convertible or exchangeable, directly or indirectly, into any ACOR Shares.
There are no shareholders' agreements, pooling agreements, voting trusts,
preemptive rights, or other agreements or understandings with respect to
the voting of ACOR Shares, or any of them.
SHAREHOLDER LOANS
5.18 Except as set forth on Schedule 5.18 attached hereto and pursuant to the
Purchase Agreement, there are no loans or other liabilities of ACOR to any
shareholder or to any previous shareholder of ACOR.
21
INDEBTEDNESS AND LIENS
5.19 Other than in the Ordinary Course or as noted in Schedule 5.8 attached
hereto, ACOR has not incurred any: (i) Indebtedness; or (ii) Liens upon any
of the ACOR Assets.
INDEBTEDNESS TO DIRECTORS, OFFICERS AND OTHERS
5.20 Except as set forth on Schedule 5.20 attached hereto, ACOR is not indebted
to any director, officer, employee or consultant of ACOR.
TAXES
5.21 All Tax Returns required to be filed by or with respect to ACOR have been
filed within the prescribed time, with the appropriate tax authorities and
all such Tax Returns are true, correct, and complete in all material
respects. No Tax Return of ACOR is being audited by the relevant taxing
authority, and there are no outstanding waivers, objections, extensions, or
comparable consents regarding the application of the statute of limitations
or period of reassessment with respect to any Taxes or Tax Returns that
have been given or made by ACOR (including the time for filing of Tax
Returns or paying Taxes) and ACOR has no pending requests for any such
waivers, extensions, or comparable consents. ACOR has not received a ruling
from any taxing authority or signed an agreement with any taxing authority
that could reasonably be expected to have a Material Adverse Effect on
ACOR. ACOR does not owe any Taxes to the federal government, a provincial
government, a municipal government or any other governmental authority.
MATERIAL CONTRACTS
5.22 All material contracts required to be disclosed by ACOR pursuant to
applicable securities Laws have been disclosed, and are valid, binding and
in full force and effect as to ACOR, and ACOR is not in breach or violation
of, or default under, the terms of any such agreements, except where such
breach, violation or default would not have a Material Adverse Effect on
ACOR, and no event has occurred which constitutes or, with the lapse of
time or the giving of notice, or both, would constitute, such a breach,
violation or default by ACOR.
TITLE TO PROPERTY
5.23 Except as set forth on Schedule 5.23 attached hereto, ACOR does not own any
real property.
5.24 Except as set forth on Schedule 5.8 and Schedule 5.27 attached hereto, the
ACOR Assets are owned legally and beneficially by ACOR with good and
marketable title thereto, free and clear of all Liens whether contingent or
absolute, except as disclosed in the ACOR Financial Statements or as
provided for herein. ACOR is the sole and unconditional owner of, and has
good and marketable title to, the ACOR Assets. ACOR does not have reason to
believe that ACOR does not have title to or the right to produce and sell
its petroleum, natural gas and related hydrocarbons (for the purpose of
this clause, the foregoing are referred to as the "INTEREST") and
represents and warrants that the Interest is free and clear of adverse
claims created by, through or under ACOR except for oil and gas industry
standard "permitted encumbrances", or those arising in the Ordinary Course,
and that, to its knowledge, ACOR holds its Interest under valid and
subsisting leases, licenses, permits, concessions, concession agreements,
contracts, subleases, reservations or other agreements except where the
failure to so hold its Interest would not have a Material Adverse Effect on
ACOR.
22
5.25 Except as set forth on Schedule 5.27 attached hereto, ACOR is not aware of
any defects, failures or impairments in the title of ACOR to the crude oil,
natural gas liquids and natural gas properties, whether or not an action,
suit, proceeding or inquiry is pending or threatened or whether or not
discovered by any third party, which in aggregate could have a material
adverse effect on: (a) the quantity and pre-tax present worth values of
crude oil, natural gas liquids and natural gas reserves of ACOR; (b) the
current production volumes of ACOR; or (c) the current cash flow of ACOR.
5.26 To the knowledge of ACOR, no event has occurred or condition exists which
is reasonably likely to prevent the Acquisition from being completed prior
to the date set forth in the Purchase Agreement.
INTANGIBLE PROPERTY
5.27 ACOR does not own any Intellectual Property and no Intellectual Property is
required to conduct the business of ACOR as presently conducted or as
contemplated to be conducted in the future.
NECESSARY LICENSES AND PERMITS
5.28 Except as set forth on Schedule 5.27 attached hereto, ACOR has all
necessary and required licenses, permits, consents, concessions and other
authorizations of governmental, regulatory or administrative agencies or
authorities, whether foreign, federal, provincial, or local, required to
own and lease its properties and assets and to conduct its business as now
conducted, except where the failure to hold the foregoing would not have a
Material Adverse Effect on ACOR. ACOR is not in default, nor has it
received any notice of any claim or default with respect to any such
license, permit, consent, concession or authorization. No registrations,
filings, applications, notices, transfers, consents, approvals, audits,
qualifications, waivers or other action of any kind is required by virtue
of the execution and delivery of this Agreement or the Purchase Agreement,
or of the consummation of the transactions contemplated hereby: (a) to
avoid the loss of any license, permit, consent, concession or other
authorization or any asset, property or right pursuant to the terms
thereof, or the violation or breach of any Law applicable thereto, or (b)
to enable ACOR to hold and enjoy the same immediately after the Closing
Date in the conduct of its business as conducted prior to the Closing Date.
COMPLIANCE WITH LAW
5.29 ACOR is not in default under, or in violation of, and has not violated (and
failed to cure) any Law including, without limitation, laws relating to the
issuance or sale of securities, privacy and intellectual property, or any
licenses, franchises, permits, authorizations or concessions granted by, or
any judgment, decree, writ, injunction or order of, any governmental or
regulatory authority, applicable to its business or any of its properties
or assets, except where such default or violation would not have a Material
Adverse Effect on ACOR. ACOR has not received any notification alleging any
material violations of any of the foregoing with respect to which adequate
corrective action has not been taken.
23
EMPLOYEES
5.30 ACOR has provided Newco with a correct and complete list (the "EMPLOYMENT
INFORMATION") of:
(a) each employee, director, independent contractor, consultant and agent
of ACOR who currently provides services to the administration,
operation, maintenance and management of ACOR, whether actively at
work or not, their salaries, wage rates, commissions and consulting
fees, bonus arrangements, benefits, positions, ages, status as
full-time or part-time employees, location of employment and length of
service;
(b) any arrangement or practice of ACOR regarding redundancy or severance
payments, whether contractual, customary or discretionary, above the
statutory payment;
(c) each written employment practice or policy operated in relation to any
of the employees or any group of them, whether contractual, customary
or discretionary; and
(d) any collective bargaining agreement, labour contract, letter of
understanding, letter of intent, voluntary recognition agreement or
legally binding commitment or written communication to any labour
union, trade union or employee organization or group which may qualify
as a trade union in respect of or affecting Employees or independent
contractors.
5.31 Except as disclosed to Newco, there are no agreements, written or oral,
between ACOR and any other party relating to payment, remuneration or
compensation for work performed or services provided or payment relating to
a change of control or other event in respect of ACOR. ACOR is in
compliance with all applicable Laws respecting labour, employment, fair
employment practices, work place safety and health, terms and conditions of
employment, and wages and hours. There are no charges of employment
discrimination or unfair labour practices pending or threatened and to the
knowledge of ACOR, there exists no valid basis for any such claim. There
are no pending claims, complaints or charges that have been filed against
ACOR under any labour or employment laws or dispute resolution procedure
(including, but not limited to, any arbitration or similar proceedings) of
which ACOR has received written notice. ACOR has not received any written
notice indicating that any of its employment policies or practices is
currently being audited or investigated by any federal, provincial, state
or local government agency.
24
LITIGATION
5.32 Except as set forth on Schedule 5.31 attached hereto, there are no actions,
suits, proceedings or inquiries in existence or, to the knowledge of ACOR,
pending or threatened against or affecting ACOR at law or in equity or
before or by any federal, provincial, municipal or other governmental
department, commission, board, bureau or agency which may in any way
materially adversely affects, or in any way may materially adversely
affect, the business, operations, capital, properties, assets, liabilities
(absolute, accrued, contingent or otherwise), condition (financial or
otherwise) or results of operations of ACOR or its properties or assets or
which affects or may affect the transactions contemplated hereby or
pursuant to the Acquisition or the Financing or to duly observe and perform
any of its covenants or obligations contained herein or in the agreements
relating to the Acquisition or the Financing and ACOR is not aware of any
existing ground on which such action, suit, proceeding or inquiry might by
commenced with any reasonable likelihood of success.
EMPLOYEE BENEFIT PLANS
5.33 ACOR does not have any employee benefit plans (or any plan which may be in
any way regarded as an employee benefit plan) of any nature whatsoever nor
has it ever had any such plans.
INSURANCE
5.34 ACOR does not maintain policies of insurance as of the date hereof.
LOCATION OF OFFICE
5.35 ACOR's head office is located at 1301 Avenue M, Cisco, Texas 76437 and such
address is the only location where its corporate books and records are
located.
NO LIMITATIONS
5.36 There is no non-competition, exclusivity or other similar agreement,
commitment or understanding in place, whether written or oral, to which
ACOR is a party or is otherwise bound that would now or hereafter, in any
way limit the business, use of assets or operations of ACOR.
REGULATORY COMPLIANCE
5.37 ACOR is in compliance with all regulatory orders, directives and decisions
that have application to ACOR except where such non-compliance would not
have a Material Adverse Effect on ACOR and ACOR has not received notice
from any governmental or regulatory authority that ACOR is not in
compliance with any such regulatory orders, directives or decisions.
NON-ARM'S LENGTH TRANSACTIONS
5.38 Except as set forth on Schedule 5.37 attached hereto, ACOR has not made any
payment or loan to, or has borrowed any monies from or is otherwise
indebted to, any officer, director, employee, shareholder or any other
Person with whom ACOR is not dealing at arm's length (within the meaning of
the Income Tax Act) or any Affiliate of any of the foregoing; and
5.39 Except as set forth on Schedule 5.37 attached hereto, ACOR is not a party
to any contract or agreement with any officer, director, employee,
shareholder or any other Person with whom ACOR is not dealing at arm's
length (within the meaning of the Income Tax Act) or any Affiliate of any
of the foregoing, except for the ACOR Stock Option Agreements.
25
ENVIRONMENTAL LAWS
5.40 To the best of its knowledge, ACOR does not have liability under, nor has
ACOR ever violated, any Environmental Law. ACOR does not have any property
owned, operated, leased, or used by it that has been the subject of a
violation of any Environmental Law since 1997. All facilities and
operations of ACOR and its Subsidiaries are presently in compliance with
all applicable Environmental Laws.
ENFORCEABILITY
5.41 The execution and delivery by ACOR of this Agreement and any other
agreement contemplated by this Agreement will result in legally binding
obligations of ACOR enforceable against ACOR in accordance with the
respective terms and provisions hereof and thereof subject, however, to
limitations with respect to enforcement imposed by Law in connection with
bankruptcy or similar proceedings and to the extent that equitable remedies
such as specific performance and injunction are in the discretion of the
court from which they are sought
ARTICLE 6
SURVIVAL OF REPRESENTATIONS AND WARRANTIES
SURVIVAL OF REPRESENTATIONS AND WARRANTIES
6.1 The representations and warranties made by the Parties and contained in
this Agreement shall continue in full force and effect for the benefit of
the respective Party or Parties, as applicable, subject to the following:
(a) except as provided in paragraphs (b) and (c) below, ACOR, Newco and
the Newco Securityholders may make or bring any claim for a period of
two (2) years after the Closing Date;
(b) any claim which is based upon or relates to the tax liability of Newco
or ACOR for a particular taxation year may be made or brought at any
time prior to the expiration of the period (if any) during which an
assessment, reassessment or other form of recognized document
assessing liability for tax, interest or penalties in respect of such
taxation year under applicable tax legislation could be issued,
assuming that a waiver or similar document extending such period has
not been filed; and
(c) any claim which is based upon or relates to the title to Newco Shares
in connection with this Agreement or which is based upon an
intentional misrepresentation or fraud by Newco or Newco
Securityholders may be brought at any time.
After the expiration of the period of time referred to in paragraph
(a), ACOR, Newco and the Newco Securityholders will be released from
any and all obligations and liabilities in respect of the
representations and warranties made by each of them and contained in
this Agreement or in any document or certificate given in order to
carry out the transactions contemplated hereby, except with respect to
any claims made by any of the Parties in writing prior to the
expiration of such period and subject to the rights of each of the
Parties to make any claim permitted by paragraphs (b) and (c).
26
ARTICLE 7
COVENANTS OF THE NEWCO SECURITYHOLDERS
COVENANTS OF THE NEWCO SECURITYHOLDERS
7.1 Each of the Newco Securityholders hereby severally covenants and agrees
with ACOR as follows:
Delivery of Share Certificates
(a) The Newco Securityholders are entitled to receive ACOR Shares in
exchange for such Newco Shareholder's Newco Shares as set out in
Schedule "A", and shall on the Closing Date surrender the certificate
or certificates (or other reasonably acceptable evidence) representing
the Newco Shares held by it to ACOR and in return, shall be entitled
to receive a certificate representing ACOR Shares on the basis set out
herein. Until such surrender and exchange, the register of
shareholder(s) of Newco shall be evidence of the right for the Newco
Securityholders to be registered as holders of ACOR Shares; and
(b) The Newco Securityholder shall transfer and deliver to ACOR on the
Closing Date, certificates representing the Newco Shares set out
opposite his or its name in the attached Schedule "A" duly endorsed in
blank for transfer or accompanied by a duly executed power of attorney
for transfer in blank.
Filing of Reports
(c) The Newco Securityholders consents to, and will assist ACOR with, the
filing by ACOR from time to time of any reports or other documents
required by any Securities Authorities with respect to its receipt of
ACOR Shares pursuant to this Agreement.
Representations and Warranties
(d) From the date hereof until the termination of this Agreement, the
Newco Securityholders shall not take any action, or fail to take any
action, which would or may reasonably be expected to result in the
representations and warranties set out in Article 4 being untrue in
any material respect at any time prior to the Closing Date or
termination of this Agreement, whichever is first.
Conditions
(e) The Newco Securityholders will use their commercially reasonable
efforts to ensure compliance with all applicable conditions set forth
in Article 11.
7.2 From the date of this Agreement until the Closing Date, the Newco
Securityholders will use their commercially reasonable efforts to cause
Newco to conduct its business as carried on as of the date hereof in the
Ordinary Course. Without limiting the generality of the foregoing, during
the period starting on the date of this Agreement and ending on the Closing
Date:
27
(a) The Newco Securityholders shall ensure that:
(i) Newco shall:
(A) carry on its respective business in the Ordinary Course and in a
manner consistent with industry practice,
(B) use commercially reasonable efforts to preserve intact its
present business organization and material rights, to keep
available the services of its current officers and employees and
to preserve its relationships with customers, suppliers and
others having business dealings with them, and
(C) maintain and keep its material properties and assets in as good
repair and condition as at the date hereof, subject to ordinary
wear and tear, all to the end that its goodwill and ongoing
businesses shall not be impaired in any material respect at the
Closing Date;
(ii) Newco shall not, without prior written consent of ACOR (such consent
not to be unreasonably withheld):
(A) issue or modify any equity or debt securities or rights to
acquire securities;
(B) incur any debt, other than in the Ordinary Course of business
consistent with past practice;
(C) declare or pay any dividends or distribute any of its properties
or assets to the Newco Securityholders;
(D) enter into any material contract, other than in the Ordinary
Course of business consistent with past practice;
(E) alter or amend its articles or by-laws;
(F) engage in any business enterprise or other activity different
from that carried on as of the date hereof;
(G) sell, pledge, lease, dispose of, grant any interest in, encumber
or agree to sell, pledge, lease, dispose of, grant any interest
in or encumber any material portion of its assets;
(H) declare or pay any dividends on, make other distributions or
return capital in respect of any of its capital stock or any
other equity interests;
(I) reduce its stated capital;
(J) split, combine or reclassify any of its capital stock or issue or
authorize or propose the issuance or distribution of any other
securities in respect or in lieu of or in substitution for,
shares of its capital stock;
(K) issue, sell, reserve or set aside any shares of its capital stock
or any securities or obligations convertible into, exercisable or
exchangeable for, or any rights, warrants, calls, subscriptions
or options to acquire, shares of its capital stock, or any of its
material assets;
28
(L) dispose of or encumber, repurchase, redeem or otherwise acquire,
(1) any shares of its capital stock or any securities or
obligations convertible into, exercisable or exchangeable for, or
any rights, warrants, calls, subscriptions or options to acquire,
shares of its capital stock, or (2) any of its material assets;
(M) except as permitted pursuant to paragraph (D) above, enter into
or announce any agreement or arrangement with respect to the
sale, voting, registration or repurchase of any shares of its
capital stock or any security convertible into or exchangeable
for such shares or any of its material assets;
(iii) Newco shall not:
(A) (1) incur, assume or prepay any long term or short term debt or
issue any debt securities, except in the Ordinary Course; (2)
assume, guarantee, endorse or otherwise become liable or
responsible (whether directly, contingently or otherwise) for the
obligations of any other Person; (3) make any loans, advances or
capital contributions to, or investments in, any other Person;
and (4) pledge or otherwise encumber shares of its capital stock
or Newco;
(B) enter into any material operating lease or create any mortgages,
security interests, Liens or other encumbrances on its property;
(iv) Newco shall not:
(A) increase or modify the amount of (or accelerate the payment or
vesting of) any benefit or amount payable under, any contract,
agreement, commitment, arrangement, plan or policy providing for
compensation or benefits to any former or present director or
officer of Newco;
(B) increase or modify (or enter into any contract or arrangement to
increase or modify) the compensation or benefits, or otherwise to
extend, expand or enhance the engagement or any related rights,
of any former or present director, officer or consultant of
Newco; or
(C) adopt, establish, enter into or implement or amend any employee
benefit plan, policy, severance or termination agreement
providing for any form of benefits or other compensation to any
former, present or future director, officer or employee of Newco
or amend any policy, severance or termination agreement;
29
(v) Newco shall not pay, discharge, satisfy, compromise or settle any
material claims, liabilities or obligations prior to the same being
due;
(vi) Newco shall not reorganize, amalgamate or merge with any other Person;
(vii) except as required by applicable Laws, Newco shall not enter into,
terminate or waive any provision of, exercise any material option or
relinquish any material contractual rights under, or modify or request
to modify in any material respect any material contract, agreement,
guarantee, lease commitment or arrangement or enter into any contract
that would be a material contract if entered into as of the date
hereof, in either case other than in the Ordinary Course;
(viii) Newco shall not revalue in any material respect any of its assets;
(ix) Newco shall not make any changes to the existing accounting practices,
methods and principles relating to such party;
(x) Newco shall not make or rescind any material tax election;
(xi) Newco shall not make any capital expenditure, other than capital
expenditures that are made in the Ordinary Course or which are in
accordance with its existing budgets provided to ACOR prior to the
date hereof;
(xii) Newco shall not waive, release, assign, settle or compromise any
pending or threatened suit, action or claim against it or any other
rights, claims or litigation material to it;
(xiii) Newco shall not: (A) enter into any confidentiality or standstill
agreement; or
(B) amend or release any third party from its obligations or grant
any consent under, any confidentiality or standstill provision or
fail to fully enforce any such provision;
(xiv) Newco shall not take or fail to take any action which would render,
or that would be reasonably expected to render, any of Newco's
representations or warranties hereunder to be untrue or would be
reasonably expected to prevent or materially impede, interfere with or
delay the transaction contemplated by this Agreement; and
(xv) Newco shall not agree in writing or otherwise to take any of the
actions as described above in clauses (ii) through (xiv).
30
COVENANTS OF NEWCO
7.3 Newco hereby covenants and agrees with ACOR as follows:
Representations and Warranties
(a) From the date hereof until the termination of this Agreement, Newco
shall not take any action, or fail to take any action, which would or
may reasonably be expected to result in the representations and
warranties set out in Article 3 being untrue in any material respect
at any time prior to the Closing Date or termination of this
Agreement, whichever is first.
Conditions
(b) Newco will use its commercially reasonable efforts to ensure
compliance with all applicable conditions set forth in Article 11.
Additional Deliveries by Newco at Closing
(c) In addition to all other documents required hereunder to be delivered
by Newco to ACOR to complete the transactions contemplated herein,
Newco shall deliver to ACOR at Closing:
(i) a certificate of good standing of Newco;
(ii) a certified copy of the updated register of members showing the
transfer of the Newco Shares to ACOR together with the cancelled
certificates for all Newco Shares by each Newco Securityholder in
blank together with a duly executed power of attorney for
transfer;
(iii) a certificate of incumbency in respect of the Newco;
(iv) a certified copy of the resolutions passed by the board of
directors of Newco approving this Agreement as well as the
consummation of the transactions contemplated hereby; and
(v) a certified copy of the resolutions passed by the board of
directors of Newco approving the Acquisition as well as the
consummation of the transactions contemplated thereby.
31
ARTICLE 8
COVENANTS OF ACOR
COVENANTS OF ACOR
8.1 ACOR hereby covenants and agrees with Newco as follows:
Necessary Consents
(a) ACOR shall use its commercially reasonable best efforts to obtain
from its directors, shareholders and all appropriate Governmental
Entities such approvals, Permits or consents as are required (if
any) to complete the transactions contemplated herein, including
in respect of the Acquisition.
Approval of Financing
(b) ACOR shall use its reasonable efforts to obtain the Regulatory
Approvals (if any) of the Securities Authorities for the
securities issued hereunder and the Financing.
Conditions
(c) ACOR will use its commercially reasonable efforts to ensure
compliance with all applicable conditions set forth in Article
11.
Status and Filings
(d) ACOR will maintain its corporate status and comply with all
applicable corporate and securities Laws and requirements
(including any applicable filing requirements) prior to Closing.
Directors
(e) ACOR shall take all required action to appoint each of Jesse
Meidl and William Petrie to the board of directors of ACOR at the
Closing. The directors shall hold office until the next meeting
of the ACOR Shareholders or until their successors are elected or
appointed in accordance with the provisions of ACOR's by-laws.
8.2 From the date of this Agreement until the Closing Date, ACOR will use its
commercially reasonable efforts to conduct its business as carried on as
of the date hereof in the Ordinary Course. Without limiting the generality
of the foregoing and except as provided for in this Agreement and the
Purchase Agreement, during the period starting on the date of this
Agreement and ending on the Closing Date:
32
(a) ACOR shall:
(i) carry on its respective business in the Ordinary Course and
in a manner consistent with industry practice;
(ii) use commercially reasonable efforts to preserve intact its
present business organization and material rights, to keep
available the services of its current officers and employees
and to preserve its relationships with customers, suppliers
and others having business dealings with them; and
(iii) maintain and keep its material properties and assets in as
good repair and condition as at the date hereof, subject to
ordinary wear and tear, all to the end that its goodwill and
ongoing businesses shall not be impaired in any material
respect at the Closing Date.
(b) ACOR shall not, without prior written consent of Newco (such
consent not to be unreasonably withheld) and other than as
contemplated herein, in the Purchase Agreement or on Schedule
8.2(b) attached hereto:
(i) issue or modify any equity or debt securities or rights to
acquire securities;
(ii) incur any debt, other than in the Ordinary Course consistent
with past practice;
(iii) declare or pay any dividends or distribute any of its
properties or assets to the shareholders of ACOR;
(iv) enter into any material contract, other than in the Ordinary
Course consistent with past practice;
(v) alter or amend its articles or by-laws;
(vi) engage in any business enterprise or other activity
different from that carried on as of the date hereof;
(vii) sell, pledge, lease, dispose of, grant any interest in,
encumber or agree to sell, pledge, lease, dispose of, grant
any interest in or encumber any material portion of its
assets;
(viii) declare or pay any dividends on, make other distributions
or return capital in respect of any of its capital stock or
any other equity interests;
(ix) reduce its stated capital;
(x) split, combine or reclassify any of its capital stock or
issue or authorize or propose the issuance or distribution
of any other securities in respect or in lieu of or in
substitution for, shares of its capital stock;
33
(xi) issue, sell, reserve or set aside any shares of its capital
stock or any securities or obligations convertible into,
exercisable or exchangeable for, or any rights, warrants,
calls, subscriptions or options to acquire, shares of its
capital stock, or any of its material assets;
(xii) dispose of or encumber, repurchase, redeem or otherwise
acquire, (1) any shares of its capital stock or any
securities or obligations convertible into, exercisable or
exchangeable for, or any rights, warrants, calls,
subscriptions or options to acquire, shares of its capital
stock, or (2) any of its material assets;
(xiii) except as permitted pursuant to paragraph (D) above, enter
into or announce any agreement or arrangement with respect
to the sale, voting, registration or repurchase of any
shares of its capital stock or any security convertible into
or exchangeable for such shares or any of its material
assets;
(c) ACOR shall not:
(i) (1) incur, assume or prepay any long term or short term debt
or issue any debt securities, except in the Ordinary Course;
(2) assume, guarantee, endorse or otherwise become liable or
responsible (whether directly, contingently or otherwise)
for the obligations of any other Person; (3) make any loans,
advances or capital contributions to, or investments in, any
other Person; and (4) pledge or otherwise encumber shares of
its capital stock or Newco;
(ii) enter into any material operating lease or create any
mortgages, security interests, Liens or other encumbrances
on its property;
(d) ACOR shall not:
(i) increase or modify the amount of (or accelerate the payment
or vesting of) any benefit or amount payable under, any
contract, agreement, commitment, arrangement, plan or policy
providing for compensation or benefits to any former or
present director or officer of ACOR;
(ii) increase or modify (or enter into any contract or
arrangement to increase or modify) the compensation or
benefits, or otherwise to extend, expand or enhance the
engagement or any related rights, of any former or present
director, officer or consultant of ACOR; or
(iii) adopt, establish, enter into or implement or amend any
employee benefit plan, policy, severance or termination
agreement providing for any form of benefits or other
compensation to any former, present or future director,
officer or employee of ACOR or amend any policy, severance
or termination agreement;
34
(e) ACOR shall not pay, discharge, satisfy, compromise or settle any
material claims, liabilities or obligations prior to the same
being due;
(i) ACOR shall not reorganize, amalgamate or merge with any
other Person; (ii) except as required by applicable Laws,
ACOR shall not enter into, terminate or waive any provision
of, exercise any material option or relinquish any material
contractual rights under, or modify or request to modify in
any material respect any material contract, agreement,
guarantee, lease commitment or arrangement or enter into any
contract that would be a material contract if entered into
as of the date hereof, in either case other than in the
Ordinary Course;
(iii) ACOR shall not revalue in any material respect any of its
assets;
(iv) ACOR shall not make any changes to the existing accounting
practices, methods and principles relating to such party;
(v) ACOR shall not make or rescind any material tax election;
(vi) ACOR shall not make any capital expenditure, other than
capital expenditures that are made in the Ordinary Course or
which are in accordance with its existing budgets provided
to Newco prior to the date hereof;
(vii) ACOR shall not waive, release, assign, settle or compromise
any pending or threatened suit, action or claim against it
or any other rights, claims or litigation material to it;
(viii) ACOR shall not:
(A) enter into any confidentiality or standstill agreement;
or
(B) amend or release any third party from its obligations or
grant any consent under, any confidentiality or standstill
provision or fail to fully enforce any such provision;
(ix) ACOR shall not take or fail to take any action which would
render, or that would be reasonably expected to render, any
of ACOR's representations or warranties hereunder to be
untrue or would be reasonably expected to prevent or
materially impede, interfere with or delay the transaction
contemplated by this Agreement; and
(x) ACOR shall not agree in writing or otherwise to take any of
the actions as described above in clauses (ii) through (ix).
35
Listing
8.3 ACOR shall use its commercially reasonable efforts to have the issuance of
all the ACOR Shares issuable pursuant to this Agreement the Purchase
Agreement, or as a consequence of the Financing and the ACOR Warrants
accepted by the OTCBB. In that regard, ACOR shall provide Newco with all
communications sent to or received from FINRA or the OTCBB or any
Securities Authorities in connection with this Agreement and the Financing.
Representations and Warranties
8.4 ACOR covenants and agrees that from the date hereof until the termination
of this Agreement, ACOR shall not take any action, or fail to take any
action, which would or may reasonably be expected to result in the
representations and warranties set out in Article 5 being untrue in any
material respect at any time prior to the Closing Date or termination of
this Agreement, whichever is first.
Additional Deliveries by ACOR at Closing
8.5 In addition to all other documents required hereunder to be delivered by
ACOR to Newco to complete the Acquisition and the Financing, ACOR shall
deliver to Newco at Closing:
(a) a certificate of status of ACOR;
(b) certificate of incumbency in respect of ACOR; and
(c) a certified copy of the resolutions passed by the board of directors
of ACOR approving this Agreement as well as the consummation of the
transactions contemplated hereby and the Financing.
ARTICLE 9 MUTUAL COVENANTS
9.1 Each of the Parties covenants and agree that it shall:
Preparation of Filings
(a) ACOR and Newco shall cooperate in the preparation of all applications
for all approvals and the preparation of any other documents and
taking of all actions reasonably deemed by ACOR and Newco, as the case
may be, to be necessary to discharge their respective obligations
under applicable Laws in connection with each step of the Acquisition
and the Financing and all other matters contemplated in this
Agreement. In this regard:
(i) each of ACOR and Newco shall furnish to the other all such
information concerning it and its shareholders, as may be
required to effect the transaction contemplated in this
Agreement; and
(ii) each of ACOR and Newco covenants that no information furnished by
it in connection with such actions or otherwise in connection
with the consummation of the transaction contemplated in this
Agreement will, to the best of its knowledge, contain any untrue
statement of a material fact or omit to state a material fact
required to be stated in any such document or necessary in order
to make any information so furnished for use in any such document
not misleading in the light of the circumstances in which it is
furnished or to be used;
36
Notice of Material Change
(b) From the date hereof until the earlier of the Closing Date or the
termination of this Agreement, each Party shall promptly notify the
other Party in writing of:
(i) any material change (actual, anticipated, contemplated or, to the
best of the knowledge of such Party threatened, financial or
otherwise) in the business, affairs, operations, assets,
liabilities (contingent or otherwise) or capital of such Party
taken as whole;
(ii) any change in the facts relating to any applicable representation
or warranty set out in Article 3, 4 or 5 hereof, as applicable,
which change is or may be of such a nature as to render any such
representation or warranty misleading or untrue in a material
respect; or
(iii) any material fact which arises and which would have been
required to be stated herein had the fact arisen on or prior to
the date of this Agreement.
Each of ACOR and Newco shall in good faith discuss with the other any
change in circumstances (actual, anticipated, contemplated or
threatened, financial or otherwise) which is of such a nature that
there may be a reasonable question as to whether notice need be given
to the other pursuant to this Section 9.1(b).
Consummation of the Transaction and the Acquisition
(c) Use all commercially reasonable efforts to consummate the transactions
contemplated in this Agreement including the Financing and the
Acquisition.
Other Filings
(d) The Parties shall, as promptly as practicable hereafter, prepare and
file all filings required under any securities Laws, the rules and
policies of FINRA and the OTCBB or any other applicable Laws relating
to the transaction contemplated in this Agreement.
37
Additional Agreements
(e) Subject to the terms and conditions of this Agreement and subject to
fiduciary obligations under applicable Laws, each of the Parties
hereto agrees to use all commercially reasonable efforts to take, or
cause to be taken, all action and to do, or cause to be done, all
things necessary, proper or advisable to consummate and make effective
as promptly as practicable, the transactions contemplated by this
Agreement, the Purchase Agreement and the Financing and to cooperate
with each other in connection with the foregoing, including, as
applicable, using commercially reasonable efforts:
(i) to obtain all necessary waivers, consents and approvals from
other parties to material agreements, leases and other contracts
or agreements;
(ii) to defend all lawsuits or other legal proceedings challenging
this Agreement, the Purchase Agreement or the consummation of the
Financing contemplated hereby;
(iii) to cause to be lifted or rescinded any injunction or restraining
order or other order adversely affecting the ability of the
Parties to consummate the transactions contemplated by this
Agreement, the Purchase Agreement and the Financing contemplated
hereby; and
(iv) to effect all necessary registrations and other filings and
submissions of information requested by Governmental Authorities.
ARTICLE 10
INDEMNIFICATION
INDEMNIFICATION BY ACOR
10.1 Subject to Section 10.4, ACOR hereby covenants and agrees with Newco and
the Newco Securityholders to indemnify and save harmless Newco and the
Newco Securityholders from and against any claims which may be made or
brought against such Party or which such Party may suffer or incur as a
result of, or arising out of any non-fulfillment of any covenant or
agreement on the part of ACOR under this Agreement or any incorrectness in
or breach of any representation or warranty of ACOR contained in this
Agreement.
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INDEMNIFICATION BY NEWCO
10.2 Subject to Section 10.4, Newco hereby covenants and agrees with ACOR to
indemnify and save harmless ACOR from and against any claims which may be
made or brought against it or which it may suffer or incur as a result of,
or arising out of non-fulfillment of any covenant or agreement on the part
of Newco under this Agreement or any incorrectness in or breach of any
representation or warranty of Newco contained in this Agreement.
INDEMNIFICATION BY THE NEWCO SECURITYHOLDERS
10.3 Subject to Section 10.4, the Newco Securityholders hereby covenant and
agree on a several basis with ACOR to indemnify and save harmless ACOR from
and against any claims which may be made or brought against it or which it
may suffer or incur as a result of, or arising out of non-fulfillment of
any covenant or agreement on the part of such Newco Securityholder under
this Agreement, and the Newco Securityholders covenant and agree with ACOR
to indemnify and save harmless ACOR from and against any claims which may
be made or brought against it or which it may suffer or incur as a result
of, or arising out of non-fulfillment of any incorrectness in or breach of
any representation or warranty of Newco contained in this Agreement.
LIMITATION ON INDEMNIFICATION
10.4 The indemnification obligations of each of the Parties pursuant to Section
10.1, Section 10.2 and Section 10.3 shall be subject to the following:
(a) the applicable limitation mentioned in Article 6 respecting the
survival of the representations and warranties; and
(b) an Indemnifying Party shall not be required to indemnify an
Indemnified Party until the aggregate claims sustained by that
Indemnified Party exceeds a value of $10,000, in which case, the
Indemnifying Party shall be obligated to the Indemnified Party for all
claims.
PROCEDURE FOR INDEMNIFICATION
10.5 The Party or other indemnified person making a claim for indemnification
under this Article is referred to as the "Indemnified Party" and the Party
providing indemnification is referred to as the "Indemnifying Party" for
the purposes of this Article. The following provisions shall apply to any
Claims for which an Indemnifying Party may be obligated to indemnify an
Indemnified Party pursuant to this Agreement:
(a) upon receipt from a third party by the Indemnified Party of notice of
a claim or the Indemnified Party becoming aware of a claim in respect
of which the Indemnified Party proposes to demand indemnification from
the Indemnifying Party, the Indemnified Party shall give notice to
that effect to the Indemnifying Party with reasonable promptness,
provided that failure to give such notice shall not relieve the
Indemnifying Party from any liability it may have to the Indemnified
Party except to the extent that the Indemnifying Party is prejudiced
thereby;
(b) in the case of Claims arising from third parties, the Indemnifying
Party shall have the right by notice to the Indemnified Party not
later than fifteen (15) days after receipt of the notice described in
paragraph (a) above to assume the control of the defence, compromise
or settlement of the claims, provided that such assumption shall, by
its terms, be without costs to the Indemnified Party and the
Indemnifying Party shall at the Indemnified Party's request furnish it
with reasonable security against any costs or other liabilities to
which it may be or become exposed by reason of such defence,
compromise or settlement;
(c) upon the assumption of control by the Indemnifying Party as aforesaid,
the Indemnifying Party shall diligently proceed with the defence,
compromise or settlement of the claims at its sole expense, including
employment of counsel reasonably satisfactory to the Indemnified Party
and, in connection therewith, the Indemnified Party shall cooperate
fully, but at the expense of the Indemnifying Party, to make available
to the Indemnifying Party all pertinent information and witnesses
under the Indemnified Party's control, make such assignments and take
such other steps as in the opinion of counsel for the Indemnifying
Party are necessary to enable the Indemnifying Party to conduct such
defence; provided always that the Indemnified Party shall be entitled
to reasonable security from the Indemnifying Party for any expense,
costs or other liabilities to which it may be or may become exposed by
reason of such cooperation;
39
(d) the final determination of any such claims arising from third parties,
including all related costs and expenses, will be binding and
conclusive upon the Parties as to the validity or invalidity, as the
case may be, of such claims against the Indemnifying Party hereunder;
and
(e) should the Indemnifying Party fail to give notice to the Indemnified
Party as provided in paragraph (b) above, the Indemnified Party shall
be entitled to make such settlement of the claims as in its sole
discretion may appear reasonably advisable, and such settlement or any
other final determination of the claims shall be binding upon the
Indemnifying Party.
ARTICLE 11
CONDITIONS PRECEDENT
MUTUAL CONDITIONS PRECEDENT
11.1 The transactions contemplated herein are subject to the following
conditions to be fulfilled or performed on or prior to the Closing Date,
which conditions are for the mutual benefit of ACOR, the Newco
Securityholders and Newco and may be waived by ACOR and Newco, jointly, in
writing:
(a) the receipt of all necessary Regulatory Approvals, corporate and third
party approvals and compliance with all applicable Laws, regulatory
requirements and conditions;
(b) the maintenance of ACOR's listing on the OTCBB;
(c) the confirmation of the representations and warranties of each Party
to this Agreement as set out in such Agreement;
(d) the absence of any Material Adverse Effect on the financial and
operational condition or the assets of each of ACOR and Newco;
(e) all conditions precedent to the Acquisition set forth in the Purchase
Agreement shall have been satisfied or waived (provided any waiver by
ACOR or Chelsea Oil Australia Pty Ltd shall have been consented to in
writing by Newco, acting reasonably) and the Acquisition shall have
been completed;
(f) the completion of the Financing for minimum gross proceeds of not less
than US$1,000,000, of which Ely Sakhai has the right to invest up to
US$500,000;
(g) original share certificate(s) representing the Newco Shares, set out
opposite his or its name in the attached Schedule "A", duly endorsed
in blank for transfer or accompanied by a duly executed power of
attorney for transfer in blank;
40
(h) the delivery of standard completion documentation including, but not
limited to, officer's certificates, and certificates of good standing
as the Parties shall mutually agree, acting reasonably;
(i) no legal action or proceedings shall be pending or threatened by any
Person against ACOR or Newco in any jurisdiction and no order or
notice will have been issued or delivered by any Governmental Entity
or Securities Authority seeking to enjoin or prohibit on a temporary
or permanent basis as of the transactions contemplated in this
Agreement (including but not limited to the Acquisition or the
Financing) or imposing temporary or permanent terms or conditions on
such transactions.
CONDITION PRECEDENT FOR THE BENEFIT OF NEWCO AND THE NEWCO SECURITYHOLDERS
11.2 The transactions contemplated herein are subject to the following
conditions to be fulfilled or performed on or prior to the Closing Date,
which conditions are for the exclusive benefit of Newco and the Newco
Securityholders and may be waived in writing, in whole or in part, by Newco
in its sole discretion:
(a) there will be no material actions, suits or proceedings, whether or
not purportedly on behalf of ACOR, outstanding or, to the best of the
management of ACOR's knowledge, pending or threatened by or against
ACOR at law or in equity or before or by any federal, provincial,
municipal or other governmental department, commission, bureau, agency
or instrumentality;
(b) the issuance of the ACOR Warrants as set out in Schedule "B" to this
Agreement;
(c) the issuance of a renewal of the Authority to Prospect for a new
four-year term in respect of ATP 582 from the applicable Queensland
regulatory authorities and in accordance with the work program
described in Schedule 5.14(g), in form and substance satisfactory to
Newco, acting reasonably; and
(d) delivery of original share certificates representing the ACOR Shares
to be issued as fully paid and non-assessable to the Newco
Securityholders as provided in Schedule "A" hereto and bearing the
appropriate restrictive legends.
CONDITION PRECEDENT FOR THE BENEFIT OF ACOR
11.3 The transactions contemplated herein, which include the Acquisition and the
Financing, are subject to the following conditions to be fulfilled or
performed on or prior to the Closing Date, which conditions are for the
exclusive benefit of ACOR and may be waived in writing, in whole or in
part, by ACOR in its sole discretion:
41
(a) there will be no material actions, suits or proceedings, whether or
not purportedly on behalf of Newco, outstanding or, to the best of the
management of Newco's knowledge, pending or threatened by or against
Newco or the Newco Securityholders at law or in equity or before or by
any federal, provincial, municipal or other governmental department,
commission, bureau, agency or instrumentality; and
(b) delivery of certificates by the Newco Securityholders representing the
Newco Shares set out opposite his or its name in the attached Schedule
"A" duly endorsed in blank for transfer or accompanied by a duly
executed power of attorney for transfer in blank.
ARTICLE 12
CLOSING
TIME OF CLOSING
12.1 The Closing of the transactions contemplated herein shall be completed at
the offices of Torys LLP, Calgary, Alberta, at a time to be mutually agreed
by the Parties on the Closing Date.
CLOSING PROCEDURES
12.2 Subject to satisfaction or waiver by the relevant Party of the conditions
of Closing, at Closing, the Newco Securityholder shall transfer and deliver
to ACOR on the Closing Date, certificates representing the Newco Shares set
out opposite his or its name in the attached Schedule "A" duly endorsed in
blank for transfer or accompanied by a duly executed power of attorney for
transfer in blank in exchange for certificates representing the ACOR Shares
set out opposite his or its name in the attached Schedule "A".
ARTICLE 13 TERMINATION
TERMINATION RIGHTS
13.1 This Agreement may, by notice in writing given prior to or on the Closing
Date, be terminated:
(a) by mutual consent of ACOR and Newco; or
(b) by either ACOR or Newco if any of the conditions set forth herein for
its benefit has not been fulfilled or waived at or prior to Closing
Date, or such other date as may be agreed by ACOR and Newco.
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EFFECT OF TERMINATION
13.2 Each Party's right of termination under this Article 13 is in addition to
any other rights it may have under this Agreement or otherwise, and the
exercise of a right of termination will not be an election of remedies.
Nothing in Article 13 shall limit or affect any other rights or causes of
action the Parties may have with respect to the representations,
warranties, covenants and indemnities in its favour contained in this
Agreement.
ARTICLE 14
EXPENSES
PROFESSIONAL FEES
14.1 All out-of-pocket cost and expenses incurred by each Party, including
legal, accounting and financial advisor expenses shall be paid by each
Party respectively.
ARTICLE 15
GENERAL
PUBLIC ANNOUNCEMENT
15.1 Immediately after the execution of this Agreement, Newco and ACOR shall
issue a joint public announcement, announcing the entering into of this
Agreement, which announcement shall address all matters required by the
policies of FINRA and the OTCBB and applicable Laws and shall be in form
and substance acceptable to each of them, acting in a commercially
reasonable manner. ACOR and Newco shall receive the prior consent, not to
be unreasonably withheld, of the other Party prior to issuing or permitting
any director, officer, employee or agent to issue, any press release or
other written statement with respect to this Agreement or the transactions
contemplated hereby. Notwithstanding the foregoing, if either ACOR or Newco
is required by law or administrative regulation to make any disclosure
relating to the transactions contemplated herein, such disclosure may be
made, but that Party will use reasonable commercial efforts to consult with
the other Party as to the wording of such disclosure prior to its being
made.
INDEPENDENT LEGAL ADVICE
15.2 Each of the Parties acknowledges having been encouraged to seek and has had
the opportunity to obtain independent legal advice with respect to the
terms of this Agreement.
STANDSTILL
15.3 From the date hereof and until the earlier of the Closing Date or the
termination of this Agreement, neither Newco nor ACOR will, directly or
indirectly, initiate, discuss or negotiate with any other corporation, firm
or person, or entertain, solicit or consider any inquiries or proposals
relating to any possible business combination, disposition of all or
substantially all of ACOR's or Newco's assets, or shares or other equity
interests or furnish to any such entity or person any information in
connection therewith, except in connection with the transactions
contemplated in this Agreement.
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ENTIRE AGREEMENT
15.4 This Agreement constitutes the entire agreement among the Parties hereto
and supersedes all prior agreements, letters of intent, representations,
warranties, statements, promises, information, arrangements and
understandings, whether oral or written, express or implied, with respect
to the subject matter hereof. None of the Parties hereto shall be bound or
charged with any oral or written agreements, representations, warranties,
statements, promises, information, arrangements or understandings not
specifically set forth in this Agreement or in the schedules, documents and
instruments to be delivered on the Closing Date pursuant to this Agreement.
The Parties hereto further acknowledge and agree that, in entering into
this Agreement and in delivering the schedules, documents and instruments
to be delivered on the Closing Date, they have not in any way relied, and
will not in any way rely, upon any oral or written agreements,
representations, warranties, statements, promises, information,
arrangements or understandings, express or implied, not specifically set
forth in this Agreement or in such schedules, documents or instruments.
FURTHER ASSURANCES
15.5 Each of the Parties hereto will from time to time after the Closing Date at
the other's request and without further consideration, execute and deliver
such other instruments of transfer, conveyance and assignment and take such
further action as the other may reasonably require to give effect to any
matter provided for herein.
COMMERCIALLY REASONABLE EFFORTS
15.6 For purposes of this Agreement, the obligation to use "commercially
reasonable efforts" to obtain waivers, consents and approvals to loan
agreements, leases and other contracts shall not include any obligation to
agree to a materially adverse modification of the terms of such documents
or to prepay or incur additional material obligations to such other
parties.
SEVERABILITY
15.7 In the event that any provision or part of this Agreement is determined by
any court or other judicial or administrative body to be illegal, null,
void, invalid or unenforceable, that provision shall be severed to the
extent that it is so declared and the other provisions of this Agreement
shall continue in full force and effect.
APPLICABLE LAW
15.8 This Agreement shall be governed by and construed in accordance with the
laws of the Province of Alberta and the federal laws of Canada applicable
therein.
GOVERNING LANGUAGE
15.9 This Agreement is drawn up in the English language. This Agreement may be
translated into any language other than English provided however that the
English text shall in any event prevail.
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ATTORNMENT
15.10 The Parties hereby irrevocably and unconditionally consent to and submit
to the non-exclusive jurisdiction of the courts of the Province of Alberta
for any actions, suits or proceedings arising out of or relating to this
Agreement or the matters contemplated hereby. The Parties hereby
irrevocably and unconditionally waive any objection to the laying of venue
of any action, suit or proceeding arising out of this Agreement or the
matters contemplated hereby in the courts of the Province of Alberta and
hereby further irrevocably and unconditionally waive and agree not to plead
or claim in any such applicable courts, as the case may be, that any such
action, suit or proceeding so brought has been brought in an inconvenient
forum.
SUCCESSORS AND ASSIGNS
15.11 This Agreement shall accrue to the benefit of and be binding upon each of
the Parties hereto and their respective heirs, executors, administrators
and assigns, provided that this Agreement shall not be assigned or
transferred by any one of the Parties without the prior written consent of
the other Party.
TIME OF ESSENCE
15.12 Time shall be of the essence hereof.
NOTICES
15.13 Any notice required or permitted to be given hereunder shall be in writing
and shall be effectively given if (i) delivered personally, (ii) sent
prepaid courier service or mail, or (iii) sent prepaid by facsimile
transmission or other similar means of electronic communication (confirmed
on the same or following day by prepaid mail) addressed as follows:
45
in the case of notice to ACOR:
Australian-Canadian Oil Royalties Ltd.
1301 Avenue M
Cisco, Texas 76437
Attention: Robert Kamon
Telephone: (254) 442-2638
Facsimile: (254) 442-3843
Email: acor@classicnet.net
With a copy to:
Davidoff Malito & Hutcher LLP
605 Third Avenue, 34th Floor
New York, NY 10158
Attention: Malcolm S. Taub, Esq.
Telephone: (646) 428-3283
Facsimile: (212) 286-1884
Email: mst@dmlegal.com
in the case of notice to Newco and/or to the
Newco Securityholders:
1629518 Alberta Ltd.
c/o Torys LLP
Suite 800, 400-3rd Avenue S.W.
Calgary, Alberta T2P 4H2
Attention: Janan Paskaran
Telephone: (403) 776-3728
Facsimile: (403) 776-3800
Email: jpaskaran@torys.com
Any notice, designation, communication, request, demand or other
document given or sent or delivered as aforesaid shall:
(a) if delivered as aforesaid, be deemed to have been given, sent,
delivered and received on the date of delivery;
(b) if sent by mail as aforesaid, be deemed to have been given, sent,
delivered and received (but not actually received) on the fourth
Business Day following the date of mailing, unless at any time between
the date of mailing and the fourth Business Day thereafter there is a
discontinuance or interruption of regular postal service, whether due
to strike or lockout or work slowdown, affecting postal service at the
point of dispatch or delivery or any intermediate point, in which case
the same shall be deemed to have been given, sent, delivered and
received in the ordinary course of the mail, allowing for such
discontinuance or interruption of regular postal service; and
(c) if sent by facsimile machine, be deemed to have been given, sent,
delivered and received on the date the sender receives the facsimile
machine answer back confirming receipt by the recipient.
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WAIVER
15.14 Any Party hereto which is entitled to the benefits of this Agreement may,
and has the right to, unless otherwise provided, waive any term or
condition hereof at any time on or prior to the Closing Date, provided
however that such waiver shall be evidenced by written instrument duly
executed on behalf of such Party.
AMENDMENTS
15.15 No amendment, modification or supplement to this Agreement shall be
effective unless provided in writing and signed by all the Parties hereto
and approved by all necessary governmental regulatory authorities.
REMEDIES CUMULATIVE
15.16 The rights and remedies of the Parties under this Agreement are cumulative
and in addition to and not in substitution for any rights or remedies
provided by law. Any single or partial exercise by any Party hereto of any
right or remedy for default or breach of any term, covenant or condition of
this Agreement does not waive, alter, affect or prejudice any other right
or remedy to which such Party may be lawfully entitled for the same default
or breach.
NOTICE OF UNTRUE COVENANTS, REPRESENTATION OR WARRANT
15.17 The Newco Securityholders and Newco shall promptly notify ACOR, and ACOR
shall promptly notify the Newco Securityholders and Newco, upon any
covenant, representation or warranty made by it contained in this Agreement
becoming untrue or incorrect during the period beginning on the date of
this Agreement and ending on the Closing Date. Any such notification shall
set out particulars of the untrue or incorrect covenant, representation or
warranty and details of any actions being taken by the Newco
Securityholders and Newco or ACOR, as the case may be, to rectify that
state of affairs.
COUNTERPARTS
15.18 This Agreement may be executed in several counterparts (by original or
facsimile signature), each of which when so executed shall be deemed to be
an original and each of such counterparts, if executed by each of the
Parties, shall constitute a valid and enforceable agreement among the
Parties.
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IN WITNESS WHEREOF this Share Exchange Agreement has been executed by the
Parties hereto as of the date first above written.
1629518 ALBERTA LTD.
AUSTRALIAN-CANADIAN OIL ROYALTIES LTD.
By: /s/ Andre Sakhai By: /s/ Janan Paskaran
----------------------------- -------------------------------
Name: Andre Sakhai Name: Janan Paskaran
Title: President Title: Corporate Secretary
/s/ /s/ William Petrie, Sr.
--------------------------------------- --------------------------------------
Witness WILLIAM PETRIE, SR.
/s/ /s/ William Petrie, Sr.
--------------------------------------- --------------------------------------
Witness WILLIAM PETRIE, JR.
/s/ /s/ Jesse Meidl
--------------------------------------- --------------------------------------
Witness JESSE MEIDL
/s/ /s/ Dave Meidl
--------------------------------------- --------------------------------------
Witness DAVE MEIDL
/s/ /s/ Ian Blades
--------------------------------------- --------------------------------------
Witness IAN BLADES
/s/ /s/ Janan Paskaran
--------------------------------------- --------------------------------------
Witness JANAN PASKARAN
48
