EX-10.15 6 v022528_ex10-15.txt EXHIBIT 10.15 CANWEST PETROLEUM CORPORATION - and - WESTERN PETROCHEMICALS CORP. - and - NORTHERN LIGHTS PETROLEUM INC., TWIN MOUNTAIN ENERGY INC., PETROLEUM STRATEGIES INC., 101058020 SASKATCHEWAN LTD., 101058135 SASKATCHEWAN LTD., 0696772 BC LTD. AND 0696780 BC LTD. PURCHASE AND SALE AGREEMENT TABLE OF CONTENTS
Page No. ARTICLE I INTERPRETATION 1.1 Defined Terms...............................................................1 1.2 Best of Knowledge...........................................................3 1.3 Currency....................................................................3 1.4 Choice of Law and Attornment................................................3 1.5 Interpretation Not Affected by Headings or Party Drafting...................4 1.6 Number and Gender...........................................................4 1.7 Time of Essence.............................................................4 1.8 Inclusive Terminology.......................................................4 ARTICLE II PURCHASE AND SALE 2.1 Purchase and Sale...........................................................4 2.2 Purchase Price..............................................................4 ARTICLE III REPRESENTATIONS AND WARRANTIES 3.1 Representations and Warranties by the Vendors and WPC.......................5 3.2 Additional Representations and Warranties by the Vendors and WPC............6 3.3 Representations and Warranties by the Purchaser............................13 ARTICLE IV SURVIVAL AND LIMITATIONS OF REPRESENTATIONS AND WARRANTIES 4.1 Survival of Representations and Warranties by the Vendors..................15 4.2 Survival of Representations and Warranties by Purchaser....................15 ARTICLE V COVENANTS 5.1 Covenants by the Vendors...................................................16 5.2 Covenants by the Purchaser.................................................16 ARTICLE VI CONDITIONS 6.1 Conditions to the Obligations of the Purchaser.............................16 6.2 Waiver or Termination by Purchaser.........................................16 6.3 Conditions to the Obligations of the Vendors...............................16 6.4 Waiver or Termination by Vendors...........................................16 ARTICLE VII CLOSING 7.1 Closing Arrangements.......................................................16 7.2 Documents to be Delivered..................................................16 ARTICLE VIII INDEMNIFICATION 8.1 Indemnity by the Vendors...................................................16
8.2 Indemnity by the Purchaser.................................................16 8.3 Provisions Relating to Indemnity Claims....................................16 ARTICLE IX GENERAL PROVISIONS 9.1 Further Assurances.........................................................16 9.2 Remedies Cumulative........................................................16 9.3 Finder's Fees..............................................................16 9.4 Notices....................................................................16 9.5 Counterparts...............................................................16 9.6 Legal and Other Professional Fees..........................................16 9.7 Public Disclosures.........................................................16 9.8 Assignment.................................................................16 9.9 Entire Agreement...........................................................16 9.10 Successors and Assigns.....................................................16 9.11 Waiver.....................................................................16 9.12 Amendments.................................................................16 9.13 Survival...................................................................16 9.14 Severability...............................................................16
-2- PURCHASE AND SALE AGREEMENT THIS AGREEMENT is made effective as of the 5th day of December, 2003; AMONG: CANWEST PETROLEUM CORPORATION, a body corporate having an office in Vancouver, British Columbia (hereinafter the "Purchaser") AND: WESTERN PETROLCHEMICALS CORP., a body corporate having an office in Calgary, Alberta (hereinafter "WPC") AND: NORTHERN LIGHTS PETROLEUM INC., TWIN MOUNTAIN ENERGY INC., PETROLEUM STRATEGIES INC., 101058020 SASKATCHEWAN LTD., 101058135 SASKATCHEWAN LTD., 0696772 BC LTD. and 0696780 BC LTD., bodies incorporated or to be incorporated and having offices in Calgary, Alberta, Moose Jaw, Saskatchewan or Vancouver, British Columbia, as applicable; (hereinafter individually referred to as a "Vendor" and collectively referred to as the "Vendors") WHEREAS: A. The Vendors are the registered and beneficial owners of an aggregate of 21,702,925 of the issued and outstanding shares in the capital of WPC, representing 97.5284% of the total issued and outstanding shares of WPC; and B. The Purchaser wishes to acquire the Purchased Shares (as defined herein) from the Vendors, and the Vendors wish to sell the Purchased Shares to the Purchaser, on the terms and subject to the conditions set forth in this Agreement; NOW THEREFORE, in consideration of the respective covenants, agreements, representations, warranties and indemnities herein contained and other good and valuable consideration (the receipt and sufficiency of which are hereby acknowledged) the parties hereby covenant and agree as follows. ARTICLE I INTERPRETATION 1.1 Defined Terms Whenever used in this Agreement, unless there is something in the subject matter or context inconsistent therewith, the following words and terms will have the indicated meanings and grammatical variations of such words and terms will have corresponding meanings: (a) "Act" means the Business Corporations Act (Alberta), as in effect on the date hereof; (b) "AEPEA" has the meaning ascribed thereto in Section 3.2(n); (c) "arm's length" has the meaning ascribed thereto in the ITA; (d) "Audited Financial Statements" means the audited and unedited as provided by WPC to the Purchaser, financial statements of WPC; (e) "Business" means the business carried on by WPC, which has to date been restricted to holding a 100% interest in the Permits and to exploration and development activities with respect thereto; (f) "Business Day" means any day, other than a day that is a Saturday, a Sunday or a day on which banks in Calgary, Alberta or Vancouver, British Columbia are not generally open for business; (g) "CanWest Shares" means common shares in the capital of the Purchaser, as presently constituted; (h) "CEPA" has the meaning ascribed thereto in Section 3.2(n); (i) "Closing" has the meaning ascribed thereto in Section 7.1; (j) "Closing Date" means December 5, 2003 (k) "Closing Time" means 2:00 p.m. (Calgary time) on the Closing Date or such other time on the Closing Date as the parties may mutually agree upon; (l) "Contract" means any agreement, indenture, contract, lease, deed of trust, licence, option, instrument or other commitment, whether written or oral; (m) "EMPA" has the meaning ascribed thereto in Section 3.2(n); (n) "Encumbrances" means mortgages, charges, pledges, security interests, liens, encumbrances, actions, rights and claims, adverse interests, acquisition rights of third parties, demands and equities of any nature whatsoever or howsoever arising, and any rights or privileges capable of becoming any of the foregoing; (o) "Environmental Laws" has the meaning ascribed thereto in Section 3.2(n); (p) "Environmental Permits" has the meaning ascribed thereto in Section 3.2(n); (q) "generally accepted accounting principles" means the accounting principles prescribed, recommended or promulgated from time to time by the Canadian Institute of Chartered Accountants, as contained in the CICA Handbook, which are applicable as at the date on which any calculation made hereunder is to be effective or as at the date of any financial statements referred to herein, as the case may be, and in the absence of a specific recommendation contained in the CICA Handbook, such accounting principles as are generally accepted in practice; -2- (r) "Governmental Charges" has the meaning ascribed thereto in Section 3.2(l); (s) "Hazardous Substance" has the meaning ascribed thereto in Section 3.2(n); (t) "Indemnity Claim" has the meaning ascribed thereto in Section 8.3; (u) "ITA" means the Income Tax Act (Canada); (v) "Lands" means those lands as described in Schedule "A" hereto; (w) "Misrepresentation" has the meaning ascribed thereto in the Securities Act (Alberta); (x) "Permits" means those oilshale permits related to the Lands as described in Schedule "A" hereto; (y) "person" includes any individual, corporation, company, partnership, limited partnership, firm, joint venture, syndicate, association, trust, government, governmental agency or board or commission or authority; (z) "Purchase Price" has the meaning ascribed thereto in Section 2.2; (aa) "Purchased Shares" means all of the shares in the capital of WPC owned by the Vendors; (bb) "Release" has the meaning ascribed thereto in Section 3.2(n); and (cc) "Warranty Claim" means a claim made by either the Purchaser or the Vendors based on or with respect to the inaccuracy or non-performance or non-fulfillment or breach of any representation or warranty made by the other in this Agreement or in any document or certificate given in order to carry out the transaction provided for herein. 1.2 Best of Knowledge Any reference herein to "the best of the knowledge" of a party will be deemed to mean the actual knowledge of such party without special investigation. 1.3 Currency Unless otherwise indicated, all dollar amounts referred to in this Agreement are stated in lawful currency of the United States of America. 1.4 Choice of Law and Attornment This Agreement, and each of the agreements, documents and instruments to be delivered at Closing under or in connection with this Agreement (to the extent no choice of law is specified therein), shall be governed by and construed in accordance with the laws of the Province of Alberta and the laws of Canada applicable therein. The parties agree that the courts of the Province of Alberta will have jurisdiction to determine all disputes and claims arising between the parties in respect of this Agreement (and such other agreements, documents and instruments) and the matters contemplated hereby (and thereby) and each of the parties hereby irrevocably attorns to the jurisdiction of such courts. -3- 1.5 Interpretation Not Affected by Headings or Party Drafting The division of this Agreement into articles, sections, paragraphs and clauses and the insertion of headings are for convenience of reference only and shall not affect the construction or interpretation of this Agreement. The terms "this Agreement", "hereof", "herein", "hereunder" and similar expressions refer to this Purchase and Sale Agreement and not to any particular article, section, paragraph, clause or other portion hereof and include any agreement or instrument supplementary or ancillary hereto. Unless otherwise indicated, any reference in this Agreement to an Article, Section, Recital, Paragraph or Clause refers to the specified Article, Section, Recital, Paragraph or Clause of this Agreement. The parties hereto acknowledge that their respective legal counsel have reviewed and participated in settling the terms of this Agreement, and the parties hereby agree that any rule of construction to the effect that any ambiguity is to be resolved against the drafting party shall not be applicable in the interpretation of this Agreement. 1.6 Number and Gender Whenever used in this Agreement, unless there is something in the subject matter or context inconsistent therewith: (a) words importing the singular number include the plural and vice versa; and (b) words importing the use of any gender shall include all genders. 1.7 Time of Essence Time shall be of the essence hereof. 1.8 Inclusive Terminology Whenever used in this Agreement, the words "includes" and "including" and similar terms of inclusion shall not, unless expressly modified by the words "only" or "solely", be construed as terms of limitation, but rather shall mean "includes but is not limited to" and "including but not limited to", so that references to included matters shall be regarded as illustrative without being either characterizing or exhaustive. ARTICLE II PURCHASE AND SALE 2.1 Purchase and Sale On the terms and subject to the fulfillment of the conditions set out herein, the Vendors will, at Closing, sell, assign and transfer the Purchased Shares to the Purchaser, free and clear of all Encumbrances and with all rights and benefits attaching thereto, and the Purchaser will purchase and accept the Purchased Shares from the Vendors and pay the Purchase Price to the Vendors in the manner contemplated by Section 2.2. 2.2 Purchase Price The total aggregate consideration (the "Purchase Price") payable by the Purchaser for all of the Purchased Shares will be TWO MILLION TWO HUNDRED NINE THOUSAND TWO HUNDRED EIGHTEEN DOLLARS SIXTY CENTS ($2,209,218.60), which Purchase Price shall be fully paid and satisfied by way of the issuance and delivery of 10,728,124 CanWest Shares to the Vendors on a pro rata basis, or on such other basis as the Vendors may in writing direct prior to the Closing, as follows: -4- CanWest Shares being issued pursuant to SEC Rule 144 as "restricted" shares effective on and as at the Closing Date, with the certificates representing such shares to be delivered upon the request of at the Closing or on such later date as may be agreed to by the Vendors in writing at any time after the Closing Date. The Purchaser agrees that it shall, immediately upon request and without further consideration, cooperate fully with the Vendors in having the Rule 144 legend removed from the subject share certificates when permitted by law. The Vendors acknowledge that the Purchaser is not responsible for the removal of trading restrictions applicable to the Vendors as a result of the Vendors (or any one of them) being deemed to be an affiliate of the Purchaser or control persons in respect of the Purchaser. Further, the Purchaser is not responsible for the removal of trading restrictions arising under the laws of Canada or any province thereof. ARTICLE III REPRESENTATIONS AND WARRANTIES 3.1 Representations and Warranties by the Vendors and WPC The Vendors and WPC hereby jointly and severally represent and warrant to the Purchaser as follows and acknowledge that, notwithstanding any independent searches or investigations that may be undertaken by or on behalf of the Purchaser, the Purchaser is relying upon the accuracy of each of such representations and warranties in connection with the execution and delivery of this Agreement and its purchase of the Purchased Shares hereunder. The representations and warranties of the Vendors are as follows: (a) the Purchased Shares are validly issued and outstanding as fully paid and non-assessable shares; (b) the Vendors are the legal and beneficial owners of, or duly authorized agents of the legal and beneficial owners of, the Purchased Shares and the Purchased Shares are free and clear of all Encumbrances; (c) there are a total of 22,252,925 issued and outstanding common shares in the capital of WPC, including the Purchased Shares; (d) the Vendors have good title and absolute authority to sell, assign and transfer the Purchased Shares to the Purchaser; (e) each of the Vendors has taken all necessary or desirable actions, steps and corporate and other proceedings to approve and authorize the transactions contemplated by this Agreement and each of the Vendors has the requisite corporate power and capacity to execute and deliver this Agreement, to perform its obligations hereunder and to complete the transactions provided for herein; (f) the execution and delivery of this Agreement by the Vendors and the performance by the Vendors of their obligations hereunder have been duly approved and authorized and this Agreement is a legal, valid and binding obligation of each of the Vendors, enforceable against them in accordance with its terms, subject to: -5- (i) bankruptcy, insolvency, moratorium, reorganization and other laws relating to or affecting the enforcement of creditors' rights generally; and (ii) the general principles of equity, including that equitable remedies such as the remedies of specific performance and injunctive relief, may only be granted in the discretion of a court; and (g) the Vendors are not non-residents of Canada within the meaning of Section 116 of the ITA. 3.2 Additional Representations and Warranties by the Vendors and WPC The Vendors and WPC also represent and warrant to the Purchaser as follows and acknowledge that, notwithstanding any independent searches or investigations that may be undertaken by or on behalf of the Purchaser, the Purchaser is relying upon the accuracy of each of such representations and warranties in connection with the execution and delivery of this Agreement and its purchase of the Purchased Shares hereunder: (a) No Other Purchase Agreement or Commitments. No person has any agreement, option, understanding or commitment (written or verbal), or any right or privilege (whether by law, pre-emptive or contractual) capable of becoming an agreement, option or commitment (including convertible securities, warrants or convertible obligations of any nature), for: (i) the purchase, subscription, allotment or issuance of, or conversion into, any unissued shares in the capital of WPC or any other securities of WPC; (ii) the purchase or acquisition by any other means of any of the Purchased Shares from the Vendors (other than the Purchaser); or (iii) the purchase or acquisition by any other means from WPC of any of their respective undertaking, property or assets, other than in the ordinary course of business; (b) Contractual and Regulatory Approvals. Neither of the Vendors nor WPC are under any obligation, contractual or otherwise, to request or obtain the consent of any person, and no permits, licenses, certifications, authorizations or approvals of, or notifications to, any federal, provincial, municipal or local government or governmental agency, board, commission or authority are required to be obtained by any of them: (i) in connection with the execution and delivery of this Agreement, the performance by them of their respective obligations hereunder or the completion of the transaction provided for herein; (ii) to avoid the loss of any permit, license, certification or other authorization; or (iii) in order that the authority, right and qualification of WPC to carry on business in the ordinary course and in the same manner as presently conducted remains in good standing and in full force and effect as of and following the Closing Date; -6- (c) Status and Licences. (i) WPC is a body corporate duly incorporated and validly existing in all respects under the laws of the Province of Alberta. WPC has all necessary corporate power and capacity to own its properties and assets and to carry on its business as it is now being conducted; (ii) WPC is duly licensed, registered and qualified to carry on its business as it is now being conducted, is up-to-date in the filing of all required corporate returns and other notices and filings and is otherwise in good standing in all respects, in each jurisdiction in which: (A) it owns or leases property; or (B) the nature or conduct of its business or any part thereof, or the nature of its properties or any part thereof, makes such qualification necessary or desirable to enable its business to be carried on as now conducted or to enable its properties and assets to be owned, leased and operated by it. WPC carries on business only in Alberta and Saskatchewan. WPC has not carried on business in any other provinces of Canada nor any jurisdiction outside of Canada; (d) Compliance with Constating Documents, Agreements and Laws. The completion of the transactions provided for herein, will not constitute or result in a violation or breach of or default under, or cause the acceleration of any obligations of WPC, under: (i) any provision of its articles, by-laws or other constating documents; (ii) the terms of any agreement (written or oral), indenture, instrument or understanding or any other obligation or restriction to which it is a party or by which it is bound; or (iii) any term or provision of any license, permit or similar authorization or any order of any court, governmental authority or regulatory body or any law or regulation of any jurisdiction applicable to it; (e) Corporate Records. The corporate records and minute books of WPC, all of which will be provided to the Purchaser prior to the Closing Date, are and will at the Closing Date be materially complete, accurate and up to date; (f) Shareholders' Agreements, etc. There are no shareholders' agreements, pooling agreements, voting trusts or other similar agreements with respect to the ownership or voting of any of the Purchased Shares. Further, the minority shareholders which will remain shareholders of WPC after Closing have no special or particular rights or claims as against WPC other than those available to shareholders of corporations generally under the Business Corporations Act (Alberta) or otherwise; -7- (g) Financial Statements. (i) The Audited Financial Statements have or will prior to the Closing Date have been prepared in accordance with generally accepted accounting principles applied on a consistent basis, are true, correct and complete in all material respects and present fairly the financial condition of WPC as at the dates thereof and results of its operations and cash flows for the periods to which such financial statements relate; (ii) The financial condition of WPC is now and at the Closing Date will be in substantially similar financial condition as is reflected in the Audited Financial Statements; (h) Liabilities. WPC has no liabilities (contingent or otherwise) of any kind whatsoever, and there is no basis for the assertion against WPC of any liabilities of any kind, other than: (i) liabilities disclosed, reflected or provided for in the Audited Financial Statements or otherwise disclosed to or known by the Purchaser, (ii) liabilities incurred since the date of the Audited Financial Statements that were incurred with the knowledge of the Purchaser and in the ordinary course of business; and (iii) other liabilities disclosed in this Agreement; (i) Long Term Indebtedness. Except as disclosed in this Agreement or the Audited Financial Statements, WPC has no bonds, debentures, mortgages, promissory notes or other indebtedness outstanding that matures more than one year after the date of the creation or issuance of the same, and neither corporation is under any obligation to create or issue any bonds, debentures, mortgages, promissory notes or other indebtedness maturing more than one year after the date of their creation or issuance; (j) Absence of Certain Changes or Events. Since the date of the Audited Financial Statements, WPC has not: (i) incurred any obligation or liability (fixed or contingent), except trade or business obligations incurred with the knowledge of the Purchaser and in the ordinary course of business; (ii) paid or satisfied any obligation or liability (fixed or contingent), except: (A) current liabilities reflected or provided for in the Audited Financial Statements or otherwise disclosed to or known by the Purchaser; (B) current liabilities incurred since the date of the Audited Financial Statements in the ordinary course of business; and (C) payments pursuant to obligations under loan agreements or other contracts or commitments described in this Agreement; -8- (iii) created any Encumbrance upon any of its properties or assets, except as described in this Agreement or otherwise disclosed to or known by the Purchaser, including the claim of Clifton Associates; (iv) sold, assigned, transferred, leased or otherwise disposed of any of its properties or assets, except in the ordinary course of business; (v) purchased, leased or otherwise acquired any properties or assets, except in the ordinary course of business; (vi) waived, cancelled or written-off any rights, claims, accounts receivable or any amounts payable to it, except in the ordinary course of business; (vii) entered into any transaction or contract, except in the ordinary course of business; (viii) terminated, discontinued, closed or disposed of any facility or business operation, except in the ordinary course of business; (ix) made any material change with respect to any method of management, operation or accounting in respect of the Business; (x) suffered any damage, destruction or loss (whether or not covered by insurance) that has materially adversely affected or could materially adversely affect the Business; (xi) made or incurred any material change in, or become aware of any event or condition that is likely to result in a material change in, the Business or its relationships with its customers, suppliers or employees; or (xii) authorized, agreed or otherwise become committed to do any of the foregoing. (k) Dividends and Distributions. Since incorporation, WPC has not declared or paid any dividend or made any other distribution in respect of any of its securities, or redeemed or purchased or otherwise acquired any of its securities, or reduced its authorized or issued capital, or agreed to any of the foregoing; (l) Tax Matters. (i) For purposes of this Agreement, the term "Governmental Charges" means and includes all taxes, customs duties, rates, levies, assessments, reassessments and other charges, together with all penalties, interest and fines with respect thereto, payable to any federal, provincial, municipal, local or other government or governmental agency, authority, board, bureau or commission, domestic or foreign; (ii) WPC has not yet duly prepared and filed all tax returns and other documents required to be filed by it in respect of all Governmental Charges, but does warrant that no amounts will be due and owing for activities attributable to WPC and taking place prior to Closing; -9- (iii) WPC has paid all Governmental Charges that were due and payable by it on or before the date hereof. WPC has no liability for Governmental Charges other than those provided for in the Unaudited Financial Statements and those arising in the ordinary course of business since the date of the Unaudited Financial Statements; (iv) Canadian federal and provincial income tax assessments have been issued to WPC covering all past periods up to and including its last fiscal year end. There are no actions, suits, proceedings, investigations, enquiries or claims made or now pending or, to the best of the knowledge of the Vendors, threatened against WPC in respect of Governmental Charges; (v) There are no agreements, waivers or other arrangements providing for any extension of time with respect to the filing of any tax return or other document or the payment of any Governmental Charges by WPC, or the period for any assessment or reassessment of Governmental Charges; (vi) WPC has withheld from each amount paid or credited to any person the amount of any Governmental Charges required to be withheld therefrom and has remitted such Governmental Charges to the proper tax or other receiving authorities within the time periods required under applicable law; and (vii) WPC is a Canadian-controlled private corporation, as defined in the ITA. (m) Litigation. Other than on behalf of creditors of WPC which have been disclosed to the Purchaser, there are no actions, suits or proceedings against, or, to the best of the knowledge of the Vendors, pending or threatened, by or against or affecting WPC, at law or in equity, or before or by any court or any federal, provincial, municipal or other governmental department, commission, board, bureau, agency or instrumentality, domestic or foreign. (n) Environmental Matters. (i) For the purposes of this Agreement, the following words and terms will have the indicated meanings: (A) "Environmental Laws" means all applicable statutes, regulations, ordinances, by-laws, interim directives, information letters, guidelines, standards and codes and all international treaties and agreements, now or hereafter in force or existence in Canada (whether federal, provincial or municipal) relating to the protection and preservation of the environment, occupational health and safety, product safety, product liability or Hazardous Substances, including, without limitation, the Environmental Protection and Enhancement Act (Alberta), as amended from time to time (the "AEPEA"), the Environmental Management and Protection Act (Saskatchewan), as amended from time to time (the "EMPA") and the Canadian Environmental Protection Act (1999) (Canada), as amended from time to time (the "CEPA"); -10- (B) "Environmental Permits" includes all orders, permits, certificates, approvals, consents, registrations and licenses issued by any competent authority under Environmental Laws; (C) "Hazardous Substance" means, collectively, any waste, hazardous substance, toxic substance, hazardous waste, oilfield waste, dangerous oilfield waste or dangerous goods as defined under any Environmental Laws or pollutant, or any other substance that, when released to the environment, is likely to cause, at some immediate or future time, material harm or degradation to the environment or material risk to human health, but specifically excludes those substances naturally occurring on or about the Lands; and (D) "Release" means any release, spill, leak, emission, discharge, leach, dumping, escape or other disposal that is or has been made in contravention of any Environmental Laws; (ii) To the actual knowledge WPC after reasonable investigation, and to the actual knowledge of the Vendors, without investigation, the operation of the Business, the property and assets owned or used by WPC and the use, maintenance and operation thereof has been and is in compliance with all Environmental Laws. To the actual knowledge of WPC, after reasonable investigation, and to the actual knowledge of the Vendors, without investigation, WPC has complied with all reporting and monitoring requirements under all Environmental Laws. None of WPC or the Vendors has received any notice of any non-compliance with any Environmental Laws, and WPC has not been prosecuted or convicted of an offence for non-compliance with any Environmental Laws or been fined or otherwise sentenced or settled such prosecution short of conviction. WPC has not received any claim or demand from any person or authority regarding breach or alleged breach of any Environmental Laws or costs of clean up of any hazardous substance or notice of any such claim or demand and there are no grounds on which any such claim or demand could be made with any reasonable likelihood of success; (iii) To the actual knowledge WPC, after reasonable investigation, and to the actual knowledge of the Vendors, without investigation, no Environmental Permits are necessary to conduct the Business to date in accordance with applicable laws and to own its properties and assets and the operation of such Business, the properties and assets owned by WPC have been and are in compliance with all Environmental Permits; (iv) To the actual knowledge of WPC, and to the actual knowledge of the Vendors, without investigation, there are no Hazardous Substances located on any of the properties or assets owned or used by, or previously owned or used by WPC, and no Release of any Hazardous Substances has occurred on or from such properties and assets or has resulted from the operation of the Business or the conduct of any other activities of WPC. WPC has not used any of their respective properties or assets to produce, generate, store, handle, transport or dispose of any Hazardous Substances; -11- (v) To the actual knowledge WPC, and to the actual knowledge of the Vendors, without investigation, there are no underground or surface storage tanks or urea formaldehyde foam insulation, asbestos, polychlorinated biphenyls (PCBs) or radioactive substances located on or in any of the properties or assets owned or used by WPC. WPC has not conducted or caused to be conducted an environmental audit, assessment or study of any of its properties or assets used in the conduct of the Business; (o) Title to Assets. WPC is the legal and beneficial owner of, and has good and marketable title to, all of its properties and assets, including, without limitation, the properties and assets reflected in the Unaudited Financial Statements and all properties and assets acquired by WPC since the date of the Unaudited Financial Statements, free and clear of all Encumbrances, except for: (i) the Encumbrances disclosed or reflected in the Unaudited Financial Statements; and (ii) liens for taxes not yet due and payable; and (iii) with respect to the Permits, the Vendors do not warranty title but do represent and warrant that, to the best of the Vendors knowledge, information and belief, after due investigation, WPC has not disposed of any interest in or to the Permits and accordingly WPC beneficially holds a 100% working interest in and to the Permits; (p) Subsidiaries and Other Interests. WPC has no subsidiaries and owns no securities issued by, or any equity or other ownership interest in, any person; (q) Partnerships or Joint Ventures. Other than as previously disclosed to the Purchaser, WPC is not a partner or participant in any partnership, joint venture, profit-sharing arrangement or other similar association of any kind, or a party to any agreement under which it agrees to carry on any part of a business or any other activity in such manner or by which it agrees to share any revenue, profit or expenses with any other person; (r) Restrictions on Doing Business. WPC is not a party to or bound by any agreement that would restrict or limit its right to carry on any business or activity or to solicit business from any person or in any geographical area or otherwise to conduct the Business as it may determine or desire. WPC is not subject to any legislation or any judgment, order or requirement of any court or governmental authority that is not of general application to persons carrying on a business similar to the Business. To the best of the knowledge of the Vendors, there are no facts or circumstances that could materially adversely affect the ability of WPC to continue to operate the Business as presently conducted by it following the completion of the transactions contemplated by this Agreement; (s) Outstanding Agreements. WPC is not a party to or bound by any outstanding or executory contract, except for contracts described or referred to in this Agreement and contracts made in the ordinary course of business; (t) Good Standing of Agreements. WPC is not in default or breach of any of its obligations under any one or more of the contracts to which it is a party or by which it is bound and there exists no state of facts that, after notice or lapse of time or both, would constitute such a default or breach. All such contracts are now in good standing and in full force and effect without amendment thereto; WPC is entitled to all benefits thereunder and, to the best of the knowledge of the Vendors, the other parties to such contracts are not in default or breach of any of their obligations thereunder. There are no contracts under which the rights of WPC (or the performance by WPC) are dependent upon or supported by the guarantee of or any security provided by any other person. To the best of the knowledge of the Vendors and WPC, the other parties to all contracts to which WPC is a party have the capacity to perform all of their respective obligations under such contracts; -12- (u) Employment Agreements. WPC is not a party to any written or oral employment, service or consulting agreement, except for oral employment agreements that are of indefinite term and without any special arrangements or commitments with respect to the continuation of employment or payment of any particular amount upon termination of employment or engagement; (v) Compliance with Laws. WPC is not in violation of any federal, provincial, municipal or other law, regulation or order of any government or governmental or regulatory authority, domestic or foreign. 3.3 Representations and Warranties by the Purchaser The Purchaser hereby represents and warrants to the Vendors as follows and acknowledges that the Vendors are relying upon the accuracy of each of such representations and warranties in connection with the sale, assignment and transfer of the Purchased Shares by the Vendors to the Purchaser hereunder. The Purchaser's representations and warranties are as follows: (a) Corporate Authority and Binding Obligation. The Purchaser is a corporation duly incorporated and validly subsisting under the laws of Colorado. The Purchaser has the corporate power and capacity to enter into this Agreement and to purchase the Purchased Shares from the Vendors in the manner provided for herein and to perform all of the Purchaser's obligations under this Agreement. The Purchaser and its board of directors has or will have taken all necessary or desirable actions, steps and corporate and other proceedings to approve or authorize, validly and effectively, the entering into and the execution, delivery and performance of, this Agreement and the purchase of the Purchased Shares from the Vendors. This Agreement is a legal, valid and binding obligation of the Purchaser, enforceable against it in accordance with its terms, subject to: (i) bankruptcy, insolvency, moratorium, reorganization and other laws relating to or affecting the enforcement of creditors' rights generally; and (ii) the general principles of equity, including that equitable remedies, such as the remedies of specific performance and injunctive relief, may only be granted in the discretion of a court; (b) Compliance with Constating Documents, Agreements and Laws. The execution, delivery and performance of this Agreement and each of the other agreements contemplated or referred to herein by the Purchaser and the completion of the transaction provided for herein, will not constitute or result in a violation or breach of or default under: -13- (i) any term or provision of any of the articles, by-laws or other constating documents of the Purchaser; (ii) the terms of any contract to which the Purchaser is a party or by which it is bound; or (iii) subject to obtaining applicable regulatory consents, any term or provision of any licenses or registrations of the Purchaser or any order of any court, governmental authority or regulatory body or any applicable law or regulation of any jurisdiction; (c) Conduct of Business. The Purchaser is (prior to giving effect to the transactions provided for in this Agreement) conducting its business in all material respects in compliance with all applicable laws, rules and regulations in the jurisdictions in which its business is carried on; (d) Litigation. There are no actions, proceedings or investigations pending or, to the best of the knowledge of the Purchaser, threatened by or against or affecting the Purchaser, at law or in equity, or before or by any federal, provincial, municipal or other government department, commission, board or agency, domestic or foreign, that in any way materially adversely affects the Purchaser or the condition (financial or other) of the Purchaser or which affects or may materially affect the capacity of the Purchaser to complete the transaction provided for in this Agreement; (e) Shares Properly Issued Upon the issuance of the CanWest Shares to the Vendors, such shares will be outstanding as duly authorized, issued, fully paid and non-assessable shares in the capital of the Purchaser and will in due course be posted for trading on the OTC Bulletin Board (the "OTCBB") or such other stock exchange or quotation system on which the common shares of the Purchaser may from time to time be posted for trading. The shares will be issued in reliance upon the "exempt takeover bid" provisions of the applicable securities legislation, and the Vendors acknowledge that the CanWest shares may be subject to an indefinite hold period under Canadian securities laws; (f) Securities Laws and Regulations The Purchaser is not in default under any securities laws and regulations applicable to the Purchaser; (g) Stock Exchange Matters The outstanding common shares of the Purchaser are listed and posted for trading on the OTCBB and are not currently suspended from trading or subject to any cease trade order or similar prohibition imposed by any regulatory body or authority having jurisdiction over the affairs of the Purchaser; (h) Corporate Records The corporate records and minute books of the Purchaser contain complete and accurate minutes of all meetings of the directors and shareholders of the Purchaser held since the incorporation of the Purchaser, all such meetings were duly called and held, and the register of directors of the Purchaser is complete and accurate in all material respects; (i) Public Records All public documentation filed by the Purchaser with the Securities and Exchange Commission and the OTCBB, and that available on the website of the Purchaser contain no material misrepresentations with respect to the Purchaser, its business, affairs and financial condition. The books of account and other records of the Purchaser of a financial or an accounting nature which form part of the public record of the Purchaser reflect accurately the financial position and status of the Purchaser. -14- ARTICLE IV SURVIVAL AND LIMITATIONS OF REPRESENTATIONS AND WARRANTIES 4.1 Survival of Representations and Warranties by the Vendors The representations and warranties made by the Vendors in this Agreement, or in any document or certificate given in order to carry out the transaction provided for herein, will survive Closing and the purchase and sale of the Purchased Shares and, notwithstanding such Closing or any investigation made by or on behalf of the Purchaser or any other person or any knowledge of the Purchaser or any other person, shall continue in full force and effect for the benefit of the Purchaser, subject to the following provisions: (a) except as provided in (b) and (c) of this Section, no Warranty Claim may be made or brought by the Purchaser after the date which is one year following the Closing Date; (b) notwithstanding anything else contained in this Agreement or elsewhere, each of the parties comprising the Vendors shall only be liable for breaches of representations and warranties relating to the Vendor in question and, (c) any Warranty Claim which is based upon or relates to the tax liability of WPC for a particular taxation year may be made or brought by the Purchaser 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 (or, in the case of any such assessment or reassessment, until the issues in dispute have been fully resolved) assuming that WPC and the Purchaser do not file any waiver or similar document extending such period as otherwise determined; and (d) any Warranty Claim which is based upon or relates to title to the Purchased Shares or which is based upon intentional misrepresentation or fraud by the Vendors may be made or brought by the Purchaser at any time for the maximum period permitted by law. After the expiration of the period of time referred to in (a) of this Section, the Vendors will be released from all obligations and liabilities in respect of the representations and warranties made by the Vendors in this Agreement, or in any document or certificate given in order to carry out the transaction provided for herein, except with respect to any Warranty Claims made by the Purchaser in writing and in good faith (with particulars as to the nature of the Warranty Claim, to the extent then known) prior to the expiration of such period and subject to the rights of the Purchaser to make any claim permitted by (b) and (c) of this Section. 4.2 Survival of Representations and Warranties by Purchaser The representations and warranties made by the Purchaser in this Agreement, or in any document or certificate given in order to carry out the transaction provided for herein, will survive Closing and the purchase and sale of the Purchased Shares and, notwithstanding such Closing or any investigation made by or on behalf of the Vendors or any other person or any knowledge of the Vendors or any other person, shall continue in full force and effect for the benefit of the Vendors, subject to the following provisions: -15- (a) except as provided in (b) and (c) of this Section, no Warranty Claim may be made or brought by the Vendors after the date which is one year following the Closing Date; (b) any Warranty Claim which is based upon or relates to the tax liability of the Purchaser for a particular taxation year may be made or brought by the Vendors 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 (or, in the case of any such assessment or reassessment, until the issues in dispute have been fully resolved) assuming that the Purchaser does not file any waiver or similar document extending such period as otherwise determined; and (c) any Warranty Claim which is based upon or relates to intentional misrepresentation or fraud by the Purchaser may be made or brought by the Purchaser at any time for the maximum period permitted by law. After the expiration of the period of time referred to in (a) of this Section, the Purchaser will be released from all obligations and liabilities in respect of the representations and warranties made by the Purchaser in this Agreement, or in any document or certificate given in order to carry out the transaction provided for herein, except with respect to any Warranty Claims made by the Vendors in writing and in good faith (with particulars as to the nature of the Warranty Claim, to the extent then known) prior to the expiration of such period and subject to the rights of the Vendors to make any claim permitted by (b) and or (c) of this Section. ARTICLE V COVENANTS 5.1 Covenants by the Vendors The Vendors covenant to and with the Purchaser as follows: (a) Satisfaction of Conditions Etc.: Each of the Vendors will take all actions within its control to ensure that the representations and warranties in Sections 3.1 and 3.2 remain true and correct in all material respects at the Closing Time. (b) Transfer of Purchased Shares. At or before the Closing Time, the Vendors shall cause all necessary steps and proceedings to be taken in order to permit the Purchased Shares to be duly and regularly transferred to the Purchaser. (c) Due Diligence. In order to enable the Purchaser to complete its proper due diligence, the Vendors shall give to the Purchaser and its counsel, accountants and other representatives access during normal business hours to the facilities, assets and personnel of the Business, shall furnish to the Purchaser and such representatives all such additional documents (the identification of which shall be certified by an officer of the Vendor furnishing the same, if requested), financial information and other information with respect to any of the Business or the assets as the Purchaser may from time to time reasonably request. The Vendors agree that no investigation by the Purchaser or its representatives shall affect or limit the scope of the Vendors' representations and warranties herein or limit the Vendors' liability for any breach of such representations and warranties; provided, however, that the Purchaser shall promptly disclose to the Vendors any breaches of the Vendors' representations and warranties that come to the attention of the Purchaser during the Purchaser's due diligence review; -16- (d) Audit. The Vendors shall cooperate with, and provide all reasonable assistance to, the Purchaser with respect to any audits of prior fiscal periods of WPC that may be required after the Closing Date in order to permit the Purchaser to comply with requests from regulatory authorities; provided, however, that any such audits shall be at the expense of the Purchaser. (e) Post Closing Tax Matters. The Purchaser shall be entitled (and the Vendors shall permit the Purchaser) to prepare and file or cause to be prepared and filed all tax returns for WPC and AOC for all periods ending on or prior to the Closing Date (to the extent not filed prior to Closing). The Vendors shall cooperate fully, and to the extent reasonably requested by the Purchaser, in connection with the preparation and filing of any such tax returns and any audit, litigation or other proceeding with respect to Governmental Charges in connection with all tax returns or filing periods ending on or before the Closing Date. (f) Shareholders' Loan. The Vendors will arrange for the shareholder's loan from Todd Montgomery to WPC (and security in respect thereof) to be transferred and assigned to or to the order of the Purchaser at Closing. 5.2 Covenants by the Purchaser The Vendors covenant to and with the Purchaser as follows: (a) Satisfaction of Conditions Etc. The Purchaser covenants to and with the Vendors that the Purchaser will take all actions within its control to ensure that the representations and warranties in Section 3.3 remain true and correct in all material respects at the Closing Time. (b) Payment of Liabilities. Concurrent with the Closing of the within transaction, CanWest has agreed to assume and settle the outstanding indebtedness of WPC to a maximum aggregate amount of $1,300,000. CanWest covenants to negotiate in good faith with creditors of WPC, and will attempt to settle all legitimate claims, whether or not such claims are legally enforceable, by June 30, 2005. CanWest will settle such debts in accordance with reasonable directions to be given by Todd Montgomery. The accounts due to Collins Barrow LLP Brent Walter, solicitor for WPC, copies of which shall be provided to the Purchaser prior to Closing, shall be entirely paid at Closing by way of certified cheque, solicitors' trust cheque to a maximum aggregate amount of $50,000. (c) Trading Restrictions on CanWest Shares. The Purchaser covenants to use its reasonable best efforts to remove all trading restrictions applicable to the CanWest Shares issued to the Vendors hereunder in accordance with the provisions of subsections 2.2(a) and 2.2(b) hereof. -17- ARTICLE VI CONDITIONS 6.1 Conditions to the Obligations of the Purchaser Notwithstanding anything herein contained, the obligation of the Purchaser to complete the transactions provided for in this Agreement will be subject to the fulfillment of each of the following conditions at or prior to the Closing Time, and the Vendors covenant to use their best efforts to ensure that such conditions are fulfilled. (a) Accuracy of Representations and Warranties and Performance of Covenants. The representations and warranties of the Vendors contained in this Agreement shall be true and accurate on the date hereof and at the Closing Time with the same force and effect as though such representations and warranties had been made as of the Closing Time. In addition, the Vendors shall have complied with all covenants and agreements herein agreed to be performed or caused to be performed by it at or prior to the Closing Time; (b) Material Adverse Change. As of the Closing Date, there shall have been no change in the Business (as reflected in the Unaudited Financial Statements), howsoever arising, except changes that have occurred in the ordinary course of business and that, individually or in the aggregate, have not affected (and are not reasonably expected to affect) the Business in any material adverse way; (c) No Restraining Proceedings. No order, decision or ruling of any court, tribunal or regulatory authority having jurisdiction shall have been made, and no action or proceeding shall be pending or threatened that, in the reasonable opinion of the Purchaser, is likely to result in an order, decision or ruling: (i) to disallow, enjoin, prohibit or impose any limitations or conditions on the purchase and sale of the Purchased Shares contemplated hereby or the right of the Purchaser to own the Purchased Shares and enjoy all rights of ownership therein; or (ii) to impose any limitations or conditions that may have an adverse effect on the Business; (d) Consents. All consents required to be obtained in order to carry out the transactions provided for herein in compliance with all laws and agreements binding upon the parties hereto shall have been obtained and all necessary regulatory approvals shall have been obtained in a form and on terms, if any, acceptable to the Purchaser; (e) Satisfactory Due Diligence. The Purchaser, acting reasonably, shall be satisfied with the results of its due diligence review of the Business and the assets of WPC; (f) Documents. The Vendors shall have executed and delivered to the Purchaser the documents set forth in Section 7.2(a), in form and substance reasonably satisfactory to the Purchaser; -18- (g) Transfer of Purchased Shares. All necessary steps and proceedings shall have been taken to permit the Purchased Shares to be duly and regularly transferred to and registered in the name of the Purchaser; (h) Legal Matters. All actions, proceedings, instruments and documents required to implement this Agreement, or instrumental thereto, and all legal matters relating to the purchase of the Purchased Shares, shall have been approved as to form and legality by Purchaser's counsel, acting reasonably; and (i) Encumbrances. All Encumbrances on assets of WPC shall have been discharged or other arrangements satisfactory to the Purchaser shall have been made. Without limiting the generality of the foregoing, Todd Montgomery and Philadelphia Capital Corp. will assign at Closing any and all shareholders' loans owed by WPC, and all security therefore, to the Purchaser. 6.2 Waiver or Termination by Purchaser The conditions contained in Section 6.1 are inserted for the exclusive benefit of the Purchaser and may be waived in whole or in part by the Purchaser at any time. The Vendors acknowledge that the waiver by the Purchaser of any condition or any part of any condition shall constitute a waiver only of such condition or such part of such condition, as the case may be, and shall not constitute a waiver of any covenant, agreement, representation or warranty made by the Vendors herein that corresponds or is related to such condition or such part of such condition, as the case may be. If any of the conditions contained in Section 6.1 is not fulfilled or complied with as herein provided, the Purchaser may, at its option, terminate the Purchaser's obligations under this Agreement by notice in writing to the Vendors and in such event the Purchaser shall be released from all obligations hereunder and, unless the condition or conditions that have not been fulfilled are reasonably capable of being fulfilled or caused to be fulfilled by the Vendors, then the Vendors shall also be released from all obligations hereunder. 6.3 Conditions to the Obligations of the Vendors Notwithstanding anything herein contained, the obligation of the Vendors to complete the transactions provided for herein will be subject to the fulfillment of all of the following conditions at or prior to the Closing Time, and the Purchaser will use its best efforts to ensure that such conditions are fulfilled. (a) Accuracy of Representations and Warranties and Performance of Covenants. The representations and warranties of the Purchaser contained in this Agreement will be true and accurate on the date hereof and at the Closing Time with the same force and effect as though such representations and warranties had been made as of the Closing Time. In addition, the Purchaser shall have complied with all covenants and agreements herein agreed to be performed or caused to be performed by it at or prior to the Closing Time; (b) No Restraining Proceedings. No order, decision or ruling of any court, tribunal or regulatory authority having jurisdiction shall have been made, and no action or proceeding shall be pending or threatened that, in the reasonable opinion of the Vendors, is likely to result in an order, decision or ruling, to disallow, enjoin or prohibit the purchase and sale of the Purchased Shares contemplated hereby; -19- (c) Consents. All consents required to be obtained in order to carry out the transactions provided for in compliance with all laws and agreements binding upon the parties hereto shall have been obtained; and (d) No Material Changes. As at the Closing Date, there shall be no material adverse changes in the business, affairs or financial condition of the Purchaser, except as may result from the transactions provided for in this Agreement. 6.4 Waiver or Termination by Vendors The conditions contained in Section 6.3 are inserted for the exclusive benefit of the Vendors and may be waived in whole or in part by the Vendors at any time. The Purchaser acknowledges that the waiver by the Vendors of any condition or any part of any condition shall constitute a waiver only of such condition or such part of such condition, as the case may be, and shall not constitute a waiver of any covenant, agreement, representation or warranty made by the Purchaser herein that corresponds or is related to such condition or such part of such condition, as the case may be. If any of the conditions contained in Section 6.3 is not fulfilled or complied with as herein provided, the Vendors may at their option, terminate the Vendors' obligations under this Agreement by notice in writing to the Purchaser and in such event the Vendors shall be released from all obligations hereunder and, unless the condition or conditions that have not been fulfilled are reasonably capable of being fulfilled or caused to be fulfilled by the Purchaser, then the Purchaser shall also be released from all obligations hereunder. ARTICLE VII CLOSING 7.1 Closing Arrangements Subject to fulfillment of the conditions set out herein, closing of the transaction provided for herein shall occur at the Closing Time, at the offices of ProVenture Law LLP, Suite 2, Mount Royal Village, 880-16th Avenue S.W., Calgary, Alberta, T2R 1J9, or at such other place as the parties may agree in writing (the "Closing"). 7.2 Documents to be Delivered At or before the Closing Time, the Vendors shall execute, or cause to be executed, and shall deliver, or cause to be delivered, to the Purchaser, all agreements, instruments, notices, certificates and other documents that are to be delivered by the Vendors pursuant to this Agreement, in form reasonably satisfactory to the Purchaser and the Purchaser shall execute, or cause to be executed, and shall deliver, or cause to be delivered, to the Vendors, in form reasonably satisfactory to the Vendors all share certificates and all agreements, instruments, notices, certificates and other documents and instruments that the Purchaser is to deliver or cause to be delivered pursuant to this Agreement, including the following: (a) Vendors' Documents: (i) all share certificates representing the Purchased Shares, duly endorsed for transfer to the Purchaser or to such nominee of the Purchaser as the Purchaser may direct; (ii) duly issued share certificate(s) representing the Purchased Shares, in the name of the Purchaser or in the name of such nominee as the Purchaser may direct; -20- (iii) duly executed resignations of each person who is a director or officer of WPC, to the extent specified by the Purchaser; (iv) all consents, waivers, releases and authorizations required to enable the transfer of the Purchased Shares to the Purchaser; (v) a certified copy of such resolutions of the directors of each of the Vendors as may be required in order to authorize the execution, delivery and performance of this Agreement; (vi) all corporate records, minute books, accounting records and other documents, agreements or records of or pertaining to WPC; (vii) the corporate seal, if any, of WPC; and (viii) all such other documents and instruments as the Purchaser may reasonably require. (b) Purchaser's Documents: (i) If requested by the Vendors prior to the Closing Date, share certificates representing the CanWest Shares to be issued as provided for in subsections 2.2(a) and 2.2(b) hereof, If the Vendors do not request the subject certificates prior to the Closing Date, the Purchaser convents to deliver such certificates, without further compensation, upon receipt of the Vendors written request for same; (ii) a certified copy of such resolutions of the directors of the Purchaser as may be required in order to authorize the execution, delivery and performance of this Agreement; (iii) certified cheque, solicitors trust cheque or undertaking to pay in the amount of $50,000 made payable to "ProVenture Law LLP, in trust", which funds will be used by the Vendors to fully pay and discharge any and all liabilities of WPC to Collins Barrow LLP Chartered Accountants and to ProVenture Law LLP, Barristers and Solicitors, for professional services rendered to the Closing Date; and (iv) all such other documents and instruments as the Vendors may reasonably require. ARTICLE VIII INDEMNIFICATION 8.1 Indemnity by the Vendors (a) Subject to Section 8.3, the Vendors hereby agree to severally indemnify and save the Purchaser harmless from and against any claims, demands, actions, causes of action, damages, losses, deficiencies, costs, liabilities and expenses that may be made or brought against the Purchaser or that the Purchaser may suffer or incur as a result of, in respect of or arising out of: -21- (i) any non-performance or non-fulfillment of any covenant or agreement of the Vendors contained in this Agreement or in any document delivered by the Vendors in order to carry out the transaction provided for herein; (ii) any misrepresentation, inaccuracy, incorrectness or breach of any representation or warranty made by the Vendors in this Agreement or in any document or certificate given in order to carry out the transaction provided for herein; and (iii) all costs and expenses including, without limitation, legal fees on a solicitor-and-his own client basis, incidental to or in respect of the foregoing. (b) The obligations of indemnification by the Vendors pursuant to paragraph (a) of this Section will be: (i) subject to the limitations referred to in Section 4.1 with respect to (i) the survival of the representations and warranties by the Vendors; (ii) the fact that the representations and warranties of the Vendors are several and not joint and several, and that each Vendor is legally responsible only for and to the extent that breaches of representations and warranties, if any, are attributable to the particular Vendor in question; and (iii) the aggregate liability attributable to each Vendor for breaches of any terms of this Agreement be capped at an amount equal to the pro rata cash proceeds from the sale of the Purchased Shares attributable to the Vendor in question; and (ii) subject to Section 8.3. 8.2 Indemnity by the Purchaser (a) Subject to Section 8.3, the Purchaser hereby agrees to indemnify and save the Vendors harmless from and against any claims, demands, actions, causes of action, damages, losses, deficiencies, costs, liabilities and expenses that may be made or brought against the Vendors or which the Vendors may suffer or incur as a result of, in respect of or arising out of: (i) any non-performance or non-fulfillment of any covenant or agreement of the Purchaser contained in this Agreement or in any document delivered by the Purchaser in order to carry out the transaction provided for herein; (ii) any misrepresentation, inaccuracy, incorrectness or breach of any representation or warranty made by the Purchaser in this Agreement or in any document or certificate given in order to carry out the transaction provided for herein; and (iii) all costs and expenses including, without limitation, legal fees on a solicitor-and-his own client basis, incidental to or in respect of the foregoing. -22- (b) The obligations of indemnification by the Purchaser pursuant to paragraph (a) of this Section will be: (i) subject to the limitations referred to in Section 4.2 with respect to the survival of the representations and warranties by the Purchaser; and (ii) subject to Section 8.3. 8.3 Provisions Relating to Indemnity Claims The following provisions will apply to any claim by the Purchaser for indemnification by the Vendors pursuant to this Agreement and to any claim by the Vendors for indemnification by the Purchaser pursuant to this Agreement (hereinafter, in this Section 8.3, the party making a claim for indemnification will be referred to as the "Indemnified Party" and the party against whom the claim for indemnification is made will be referred to as the "Indemnifying Party". Any such claim for indemnity will be referred to as the "Indemnity Claim"). (a) Promptly after becoming aware of any matter that may give rise to an Indemnity Claim, the Indemnified Party will provide to the Indemnifying Party written notice of the Indemnity Claim specifying (to the extent that information is available) the factual basis for the Indemnity Claim and the amount of the Indemnity Claim or, if an amount is not then determinable, an estimate of the amount of the Indemnity Claim, if an estimate is feasible in the circumstances, provided, however, that no delay on the part of the Indemnified Party in notifying the Indemnifying Party will relieve the Indemnifying Party from its obligation to indemnify the Indemnified Party unless (and only to the extent) that the Indemnifying Party is prejudiced by such delay. (b) If an Indemnity Claim relates to an alleged liability to any other person (hereinafter, in this Section 8.3, called a "Third Party Liability"), including without limitation any governmental or regulatory body or any taxing authority, which is of such a nature that the Indemnified Party is required by applicable law to make a payment to a third party before the relevant procedure for challenging the existence or quantum of the alleged liability can be implemented or completed, then the Indemnified Party may, notwithstanding Sections 8.3(c) and 8.3(d), make such payment and forthwith demand reimbursement for such payment from the Indemnifying Party; provided that, if the alleged liability to the third party as finally determined upon completion of settlement negotiations or related legal proceedings is less than the amount that is so paid by the Indemnifying Party, then the Indemnified Party will, forthwith following such final determination and receipt of the overpaid amount from the third party, pay to the Indemnifying Party the amount by which the amount of the liability, as finally determined, is less than the amount that was so paid by the Indemnifying Party. (c) The Indemnified Party will not negotiate, settle, compromise or pay (except in the case of payment of a judgment) any Third Party Liability in respect of which it has or proposes to assert an Indemnity Claim, except with the prior consent of the Indemnifying Party (which consent shall not be unreasonably withheld or delayed), unless there is a reasonable possibility that such Third Party Liability may materially and adversely affect the Indemnified Party (whether directly or indirectly), in which case the Indemnified Party will have the right, after notifying the Indemnifying Party, to negotiate, settle, compromise or pay such Third Party Liability without prejudice to its rights of indemnification hereunder. -23- (d) With respect to any Third Party Liability, provided the Indemnifying Party: (i) admits the Indemnified Party's right to indemnification for the amount of such Third Party Liability that may at any time be determined or settled within 10 days of receipt of notice of the Third Party Liability from the Indemnified Party; (ii) provides the Indemnified Party with evidence reasonably satisfactory to the Indemnified Party that the Indemnifying Party will have the financial resources to defend Third Party Liability and fulfill its indemnification obligations hereunder; and (iii) conducts the defense of the Third Party Liability actively and diligently and provided further that: (iv) the action or other proceeding respecting prosecution of the Third Party Liability involves only a claim for money damages and not a claim for equitable relief; and (v) settlement of, or an adverse judgment with respect to the Third Party Liability is not, in the good faith judgment of the Indemnified Party, likely to establish a precedential custom or practice materially adverse to the continuing business interests of the Indemnified Party, then in any legal, administrative or other proceedings in connection with the matters forming the basis of the Third Party Liability, the following procedures will apply: (i) except as contemplated by Paragraph 8.3(d)(iii), the Indemnifying Party will have the right to assume carriage of any related legal, administrative or other proceedings through counsel of its choice reasonably satisfactory to the Indemnified Party, but the Indemnified Party will have the right and will be given the opportunity to participate in the defence of the Third Party Liability, to consult with the Indemnifying Party in the settlement of the Third Party Liability and the conduct of related legal, administrative and other proceedings (including consultation with counsel); (ii) the Indemnifying Party will co-operate with the Indemnified Party in relation to the Third Party Liability, will keep the Indemnified Party fully advised with respect thereto, will provide the Indemnified Party with copies of all relevant documentation as it becomes available, will provide the Indemnified Party with access to all records and files relating to the defence of the Third Party Liability and will meet with representatives of the Indemnified Party at all reasonable times to discuss the Third Party Liability; and (iii) notwithstanding Paragraphs 8.3(d)(i) and (ii), the Indemnifying Party will not settle the Third Party Liability or conduct any legal, administrative or other proceedings in any manner that could, in the reasonable opinion of the Indemnified Party have a material adverse affect on the Indemnified Party, except with the prior written consent of the Indemnified Party. (e) If, with respect to any Third Party Liability, any of the conditions set forth in the opening sentence of Section 8.3(d) is or becomes unsatisfied, or in the event that the Indemnifying Party does not act to diligently defend against such Third Party Liability or declines to assume carriage of the applicable legal, administrational or other proceedings, then the following provisions will apply: (i) the Indemnified Party, at its discretion, may assume carriage of the settlement or of any legal, administrative or other proceedings relating to the Third Party Liability and may defend or settle the Third Party Liability on such terms as the Indemnified Party, acting in good faith, considers advisable; and -24- (ii) any cost, lost, damage or expense incurred or suffered by the Indemnified Party in the settlement of such Third Party Liability or the conduct of any legal, administrative or other proceedings will be added to the amount of the Indemnity Claim. ARTICLE IX GENERAL PROVISIONS 9.1 Further Assurances Each of the Vendors and the Purchaser hereby covenants and agrees that at any time and from time to time after the date hereof it will, at its expense and upon the request of the other, do, execute, acknowledge and deliver or cause to be done, executed, acknowledged and delivered all such further acts, deeds, assignments, transfers, conveyances and assurances as may be required for the better carrying out and performance of all the terms of this Agreement. 9.2 Remedies Cumulative The rights and remedies of the parties under this Agreement are cumulative and in addition and without prejudice 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, representation, warranty or condition of this Agreement does not waive, alter, affect or prejudice any other right or remedy to which such party may be entitled, at law or in equity, for the same default or breach. 9.3 Finder's Fees No finder's fees are payable by either party in connection with this transaction. 9.4 Notices (a) Any notice, designation, communication, request, demand or other document, required or permitted to be given or sent or delivered hereunder to any party hereto shall be in writing and shall be sufficiently given or sent or delivered if it is (i) delivered personally to an officer or director of such party; (ii) sent to the party entitled to receive it by registered mail, postage prepaid, mailed in Canada; or (iii) sent by facsimile. (b) Notices shall be sent to the following addresses or facsimile numbers: (i) in the case of the Vendors at: C/O Phillips Sevalrud LLP Suite 900, 521 - 3rd Avenue SW Calgary, Alberta T2P 3T3 Attention: Brent Walter Facsimile: (403) 264-6654 -25- (ii) in the case of the Purchaser at: Suite 420, 475 Howe Street Vancouver, BC V6C 2B3 Attention: President Facsimile: (604) 606-7980 or to such other address or facsimile number as the party entitled to or receiving such notice, designation, communication, request, demand or other document shall, by a notice given in accordance with this Section, have communicated to the party giving or sending or delivering such notice, designation, communication, request, demand or other document. (c) Any notice, designation, communication, request, demand or other document given or sent or delivered as aforesaid shall (i) if delivered as aforesaid, be deemed to have been given, sent, delivered and received on the date of delivery; (ii) if sent by mail as aforesaid, be deemed to have been given, sent, delivered and 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 mails, allowing for such discontinuance or interruption of regular postal service; and (iii) if sent by facsimile, be deemed to have been given, sent, delivered and received on the date the sender receives the confirmation of transmission. 9.5 Counterparts This Agreement may be executed in several counterparts, including by way of facsimile transmission, each of which, when so executed, shall be deemed to be an original and such counterparts together shall constitute one and the same agreement. 9.6 Legal and Other Professional Fees Subject to subsection 7.2(b)(iii), each of the Purchaser and the Vendors agrees that it shall be responsible for and will pay all costs incurred by it in connection with all matters relating to this Agreement, including without limitation all legal, accounting, tax and financial advisory fees. 9.7 Public Disclosures Except as may be required by law, no public disclosure of the transaction provided for herein will be made by any party without consent and approval of the other parties. The parties agree to cooperate in connection with all publicity and press releases relating to the transaction provided for in this Agreement. Specifically, the Purchaser agrees that any press releases proposed to be issued prior to the Closing Date shall require the approval of the Vendors, such approval not to be unreasonably withheld. -26- 9.8 Assignment Neither the Purchaser nor the Vendors may assign, transfer or otherwise dispose of all or any part of its rights or obligations hereunder without the prior written consent of the other parties, provided that the Purchaser shall be entitled to transfer all of its rights and obligations hereunder to an affiliate of the Purchaser (as defined in the Act) without the prior written consent of the other parties hereto. 9.9 Entire Agreement This Agreement constitutes the entire agreement between the parties hereto and supersedes all prior agreements, representations, warranties, statements, promises, information, arrangements and understandings, whether oral or written, express or implied, with respect to the subject matter hereof, including, without limitation, the Agreement in Principal. 9.10 Successors and Assigns This Agreement shall be binding upon and enure to the benefit of the parties hereto and their respective successors and permitted assigns. 9.11 Waiver Any party hereto that is entitled to the benefits of this Agreement may, and has the right to, waive any provision or condition hereof at any time on or prior to the Closing Time; provided however, that such waiver shall be evidenced by written instrument duly executed and delivered on behalf of such party. 9.12 Amendments No modification of or amendment to this Agreement may be made unless agreed to by the parties in writing. 9.13 Survival The parties hereby agree that the provisions of this Agreement shall survive the completion of the transaction provided for herein and that none of such provisions shall merge on Closing or the transfer of the Purchased Shares to the Purchaser. -27- 9.14 Severability If any provision of this Agreement is illegal, invalid or unenforceable in whole or in part, such illegality, invalidity or unenforceability shall not affect the legality, validity or enforceability of the remainder hereof. Any provision of this Agreement that is held to be illegal, invalid or unenforceable in any jurisdiction shall be illegal, invalid or unenforceable in that jurisdiction without affecting any other provision hereof in that jurisdiction or the legality, validity or enforceability of the provision in any other jurisdiction, and to this end the provisions hereof are declared to be severable. IN WITNESS WHEREOF, the parties hereto have duly executed this Agreement as of the date first written above. CANWEST PETROLEUM CORPORATION WESTERN PETROCHEMICALS CORP. Per: Per: --------------------------------- --------------------------------- Per: Per: --------------------------------- --------------------------------- NORTHERN LIGHTS PETROLEUM INC. TWIN MOUNTAIN ENERGY INC. Per: Per: --------------------------------- --------------------------------- Per: Per: --------------------------------- --------------------------------- PETROLEUM STRATEGIES INC. 101058020 SASKATCHEWAN LTD. Per: Per: --------------------------------- --------------------------------- Per: Per: --------------------------------- --------------------------------- 101058135 SASKATCHEWAN LTD. 0696772 BC LTD. Per: Per: --------------------------------- --------------------------------- Per: Per: --------------------------------- --------------------------------- 0696780 BC LTD. Per: --------------------------------- Per: --------------------------------- -28-