<PAGE>
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 8-K
CURRENT REPORT
PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
Date of Report (Date of earliest event reported): July 19, 1996
TERRITORIAL RESOURCES, INC.
(Exact name of registrant as specified in its charter)
COLORADO 0-9617 84-0821158
(State or other jurisdiction (Commission (IRS Employer
of incorporation) File Number) Identification No.)
450 SAM HOUSTON PARKWAY, #140, HOUSTON, TEXAS 77060
(Address of principal executive offices) (Zip Code)
Registrant's telephone number, including area code: (713) 447-3200
-------------------------------------
(Former name or former address, if changed since last report)
<PAGE>
TERRITORIAL RESOURCES, INC.
FORM 8-K
ITEM 1. CHANGES IN CONTROL OF REGISTRANT.
None.
ITEM 2. ACQUISITION OR DISPOSITION OF ASSETS.
None.
ITEM 3. BANKRUPTCY OR RECEIVERSHIP.
None.
ITEM 4. CHANGES IN REGISTRANT'S CERTIFYING ACCOUNTANT.
None.
ITEM 5. OTHER EVENTS.
On July 19, 1996, Territorial Resources, Inc. (the "Registrant" or
"Territorial") sold and issued to Asia Energy Ltd., a Canadian corporation
organized under the laws of the province of Alberta ("Asia Energy"), an
additional 1,918,750 shares (the "July 1996 Shares") of common stock, no par
value ("Territorial Common Stock"), of Territorial pursuant to a Subscription
Agreement (the "Subscription Agreement"), dated as of July 19, 1996, by and
between Asia Energy and Territorial. The purchase price for the July 1996
Shares consisted of (a) five (5) shares of SOCO Tamtsag Mongolia, Inc., a
Delaware close corporation ("SOTAMO"); (b) the termination and surrender of
a certain Option Agreement, dated as of March 31, 1996, as amended to date
(the "SOTAMO Option Agreement"), by and between Asia Energy and Territorial,
pursuant to which Asia Energy was granted a right to acquire from Territorial
certain of its shares of capital stock of SOTAMO, and (c) cash in the
approximate amount of US$259,078 (which cash was paid from the working
capital of Asia Energy). The Subscription Agreement also required
Territorial to pay or cause to be delivered to Asia Energy all amounts loaned
to, or advanced to or on behalf of, Territorial by Asia Energy on or before
July 19, 1996, which loaned and/or advanced amounts were equal to
approximately US$35,879 in the aggregate.
In addition, Territorial and Asia Energy entered into an Administrative
Services Agreement (the "Administrative Services Agreement"), dated as of
July 19, 1996, pursuant to which Territorial is required to provide
administrative services for the benefit of Asia Energy including among others
preparing and filing tax returns (provided, however, that Territorial is not
liable for the payment of any such taxes), preparation of certain written
Asia Energy
1
<PAGE>
shareholder communications and financial statements, the payment of charges
and other expenses relating to the operation of Asia Energy's business such
as rent, light and power rates, wages and insurance premiums (provided,
however, that Territorial is not responsible for any such costs or expenses
incurred without the written consent of Territorial), and the preparation of
certain other Asia Energy financial records and books. The term of the
Administrative Services Agreement is one year commencing on July 19, 1996,
and automatically continues thereafter from time to time unless earlier
terminated in accordance with its terms. The Administrative Services
Agreement may be terminated at any time by either party upon written notice,
and automatically terminates in the event Daniel A. Mercier ceases to be the
Chief Executive Office of Territorial. The aggregate liability of
Territorial under the Administrative Services Agreement is limited to
$300,000 (Canadian).
As previously reported, Asia Energy owned 5,300,000 shares of
Territorial Common Stock prior to the acquisition of the July 1996 Shares.
As a result, the aggregate number of shares of Territorial Common Stock owned
by Asia Energy as of the date hereof is 7,218,750, representing approximately
25.70% of the outstanding shares of Territorial Common Stock.
As also previously reported, Daniel A. Mercier, the President and a
Director of Asia Energy, became a Director of Territorial in 1996 and became
its Chairman of the Board and Chief Executive Officer on June 20, 1996. Mr.
Mercier, together with his wife, own approximately 9.0% of the outstanding
shares of capital stock of Asia Energy. In addition, Mr. Mercier's father
and siblings own approximately 5.7% and 4.0%, respectively, of the
outstanding shares of capital stock of Asia Energy. Mr. Mercier has
disclaimed beneficial ownership of the shares of Asia Energy owned by his
father and siblings, and the shares of Territorial Common Stock owned by Asia
Energy. On June 20, 1996, Mr. Mercier was granted an option from Territorial
to acquire 270,000 shares of Territorial Common Stock, at an exercise price
of US$0.30 per share, one-third of which vested immediately and one-third of
which vest on each of the second and third anniversary dates of such grant.
On June 20, 1996, Richard A. N. Bonnycastle, a Director and shareholder
of Asia Energy, became a Director of Territorial, and Douglas N. Baker, the
Vice President Finance of Asia Energy, became the Vice President Finance and
Chief Financial Officer of Territorial. Mr. Bonnycastle owns approximately
11.4% of the outstanding shares of capital stock of Asia Energy, and has
disclaimed beneficial ownership of the shares of Territorial Common Stock
owned by Asia Energy.
Mr. Baker's wife owns approximately 1.7% of the outstanding shares of
capital stock of Asia Energy. Mr. Baker has disclaimed beneficial ownership
of the shares of Territorial Common Stock owned by Asia Energy. On June 20,
1996, Mr. Baker was granted an option from Territorial to acquire 100,000
shares of Territorial Common Stock, at an exercise price of US$0.30 per
share, one-third of which vested immediately and one-third of which vest on
each of the second and third anniversary dates of such grant.
2
<PAGE>
ITEM 6. RESIGNATIONS OF REGISTRANT'S DIRECTORS.
None.
ITEM 7. FINANCIAL STATEMENTS AND EXHIBITS.
(a) Financial statements of business acquired. Not Applicable.
(b) Pro forma financial information. Not Applicable.
(c) Exhibits
Number Description
------ -----------
10.1 Subscription Agreement, dated as of July 19, 1996, by and
between Asia Energy Ltd. and Territorial Resources, Inc.
10.2 Administrative Services Agreement, dated as of July 19,
1996, by and between Asia Energy Ltd. and Territorial
Resources, Inc.
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the
registrant has duly caused this report to be signed on its behalf by the
undersigned hereunto duly authorized.
Date: July 31, 1996 TERRITORIAL RESOURCES, INC.
By: /s/ DANIEL A. MERCIER
-----------------------------------
Daniel A. Mercier
Chairman of the Board and
Chief Executive Officer
3
<PAGE>
TERRITORIAL RESOURCES, INC.
REGULATION S SECURITIES SUBSCRIPTION AGREEMENT
OFFERING
OF
1,918,750 SHARES
TO
ASIA ENERGY LTD.
UNTIL THE ANNIVERSARY DATE OF THE "CLOSING DATE" (AS DEFINED HEREIN) IN THE
CALENDAR YEAR 1997, THE SHARES OF COMMON STOCK THAT ARE THE SUBJECT OF THIS
SUBSCRIPTION AGREEMENT (SOMETIMES REFERRED TO HEREIN AS THE "SHARES" OR THE
"SECURITIES") MAY NOT BE SOLD TO OR FOR THE ACCOUNT OR BENEFIT OF A "US PERSON,"
AS DEFINED IN REGULATION S ("REGULATION S") PROMULGATED UNDER THE SECURITIES ACT
OF 1933 OF THE UNITED STATES OF AMERICA, AS AMENDED (THE "ACT"). THE SECURITIES
THAT ARE THE SUBJECT OF THIS SUBSCRIPTION AGREEMENT HAVE NOT BEEN REGISTERED
UNDER THE ACT (OR UNDER THE SECURITIES LAWS OF THE UNITED KINGDOM, FRANCE OR ANY
OTHER JURISDICTION), AND MAY NOT BE OFFERED OR SOLD IN THE UNITED STATES TO OR
FOR THE BENEFIT OR ACCOUNT OF A "US PERSON" UNLESS REGISTERED UNDER THE ACT (AND
APPLICABLE STATE SECURITIES LAWS) OR UNLESS AN EXEMPTION FROM SUCH REGISTRATION
IS AVAILABLE, NOR MAY THEY BE OFFERED OR SOLD IN THE UNITED KINGDOM, FRANCE OR
ANY OTHER JURISDICTION UNLESS APPROVED FOR SALE UNDER THE LAWS OF SUCH
JURISDICTION OR UNLESS AN EXEMPTION FROM SUCH APPROVAL IS AVAILABLE. IN THE
ABSENCE OF SUCH REGISTRATION OR APPROVAL, THE COMPANY SHALL REQUIRE AN OPINION
OF COUNSEL SATISFACTORY TO IT AS TO THE AVAILABILITY OF AN EXEMPTION FROM
REGISTRATION OR APPROVAL AS A CONDITION TO PERMITTING THE TRANSFER OF ANY SUCH
SECURITIES.
<PAGE>
REGULATION S SECURITIES SUBSCRIPTION AGREEMENT
This Regulation S Securities Subscription Agreement ("Agreement") is executed in
reliance upon the transactional exemption afforded by Regulation S (Regulation
"S") as promulgated by the Securities and Exchange Commission ("SEC"), under the
Securities Act of 1933 of the United States of America, as amended (the "Act").
This Agreement has been executed by ASIA ENERGY LTD., a Canadian corporation
formed under the laws of the Province of Alberta (the "Subscriber"), in
connection with the private placement of 1,918,750 shares (the "Shares" or the
"Securities") of common stock, no par value, of TERRITORIAL RESOURCES, INC., a
corporation formed under the laws of the State of Colorado in the United States
of America, whose principal place of business is 450 Sam Houston Parkway East,
Suite 140, Houston, Texas USA 77060 (the "Issuer").
FOR GOOD AND VALUABLE CONSIDERATION, the receipt and sufficiency of which are
hereby acknowledged, the Issuer and Subscriber hereby agree as follows:
1. DESCRIPTION OF THE SECURITIES. The Securities consist of 1,918,750
shares of common stock, no par value, of the Issuer. The Securities shall
entitle the Subscriber to all the rights of a stockholder of the Issuer with
respect to such Securities. The Shares will upon issuance be represented by one
or more certificates (the "Certificates").
2. AGREEMENT TO SUBSCRIBE; PURCHASE PRICE. The Subscriber hereby subscribes
for the entire 1,918,750 Shares. Such Shares shall be purchased for an
aggregate purchase price (the "Purchase Price") consisting of the following:
(a) Five (5) shares (the "SOTAMO Shares") of common stock, $.001 par
value per share, of SOCO TAMTSAG MONGOLIA, INC., a Delaware close corporation
("SOTAMO");
(b) Causing to be terminated and surrendered to the Issuer that
certain Option Agreement, dated as of March 31, 1996, as amended on or before
the date of the Closing Date (as defined below), by and between the Issuer and
Subscriber pursuant to which the Issuer granted a right in favor of Subscriber
to acquire from Issuer certain of its shares of capital stock of SOTAMO (as
amended on or before the date of the Closing, the "Option Agreement"); and
(c) All cash, whether in United States or Canadian Dollars or any
other currency, that is held in the accounts of or otherwise owned by Subscriber
as of the Closing Date (as defined herein), which cash shall be equal in value
(in addition to any amounts paid or redelivered to Subscriber pursuant to the
provisions of Paragraph 3(d) below) to not less than US$240,000.00 (the amount
of cash constituting a portion of the Purchase Price is referred to herein as
the "Cash Portion of the Purchase Price"), and which cash shall be delivered to
Issuer in United States Dollars, by wire transfer, pursuant to wire transfer
instructions delivered to Subscriber by Issuer not less than two business days
prior to the Closing Date.
<PAGE>
3. THE CLOSING; CLOSING TRANSACTIONS. The closing (the "Closing") of the
purchase and sale of the Shares shall take place at the principal executive
offices of the Issuer in Houston, Texas at 10:00 a.m. on July 19, 1996 (the
"Closing Date"), or such other date not later than August 19, 1996, as the
parties shall mutually agree. At the Closing:
(a) The Subscriber shall:
(i) cause to be delivered to the Issuer, within seven (7) days
after the Closing Date, a certificate or certificates representing the
five (5) SOTAMO Shares that were issued in the name of Subscriber,
together with blank stock powers with respect thereto executed by
Subscriber;
(ii) cause to be delivered to the Issuer the Shareholders'
Consent, substantially in the form of Exhibit A, attached hereto and made
a part hereof by each of the shareholders of SOTAMO (the "Shareholders'
Consent");
(iii) execute and deliver to the Issuer a document in form and
substance reasonably satisfactory to the Issuer evidencing the
termination of the Option Agreement; and
(iv) deliver to the Issuer the Cash Portion of the Purchase
Price as provided above.
(b) The Issuer will cause to be issued and delivered, within seven (7)
days after the Closing Date, to (and in the name of) the Subscriber one or more
Certificates representing the entire 1,918,750 Shares.
(c) Each of the Issuer and Subscriber shall execute and deliver to
each other that certain Administrative Services Agreement, a copy of which is
attached hereto as Exhibit B and made a part hereof (the "Administrative
Services Agreement").
(d) The Issuer shall have paid or caused to be delivered to Subscriber
all amounts loaned to, or advanced to or on behalf of, Issuer by Subscriber on
or before the Closing Date, as well as any amounts that may be due Subscriber as
of the Closing Date in connection with the Administrative Services Agreement.
Such payment shall be paid in a manner that is mutually agreeable to the parties
hereto, which may, among other methods, include an offset from the Cash Portion
of the Purchase Price to be paid at the Closing.
The transactions contemplated hereby to occur at the Closing are sometimes
referred to herein as the "Closing Transactions."
4. SUBSCRIBER REPRESENTATIONS; ACCESS TO INFORMATION; INDEPENDENT
INVESTIGATION. Subscriber represents and warrants to, and covenants and agrees
with, the Issuer as follows:
2
<PAGE>
(a) CORPORATE AND OTHER AUTHORIZATION REPRESENTATIONS.
(i) Subscriber is a corporation duly incorporated, validly
existing and in good standing under the laws of the province of Alberta,
Canada.
(ii) The execution, delivery and performance by the Subscriber
of this Agreement and the consummation by it of the transactions
contemplated hereby are within the Subscriber's corporate powers and
authority, and have been duly authorized and approved by all necessary
corporate action, including without limitation any authorization or
approval required by its Board of Directors or shareholders, if any.
This Agreement and each of the other documents executed by Subscriber on
the date hereof have been duly executed by Subscriber and constitute the
valid and binding agreement of Subscriber, enforceable against Subscriber
in accordance with its respective terms, except as may be limited by
bankruptcy, insolvency, reorganization, fraudulent conveyance, moratorium
or other laws affecting the enforcement of creditors' rights in general,
as well as generally principles of equity (regardless of whether such
enforceability is considered in a proceeding in equity or at law). Each
of the other documents and agreements to be executed by Subscriber at or
before the Closing in connection herewith will be duly executed by
Subscriber and will constitute the valid and binding agreement of
Subscriber, enforceable against Subscriber in accordance with its
respective terms, except as may be limited by bankruptcy, insolvency,
reorganization, fraudulent conveyance, moratorium or other laws affecting
the enforcement of creditors' rights in general, as well as generally
principles of equity (regardless of whether such enforceability is
considered in a proceeding in equity or at law). As of the Closing, all
corporate action on the part of Subscriber required under applicable law
in order to consummate the Closing Transactions will have occurred.
(b) THE PURCHASE PRICE.
(i) Except for the required Shareholders' Consent (as defined
below), the execution and delivery of this Agreement does not constitute
and the consummation of the transactions contemplated hereby will not
conflict with or result in any violation of or default (with or without
notice or lapse of time, or both) under, or give rise to a right of
termination, cancellation or acceleration of any right or obligation or
to loss or a benefit under, any provision of Subscriber's Certificate of
Incorporation, Bylaws or similar governing instruments (collectively,
"Subscriber's Governing Documents") or any loan or credit agreement,
note, bond, mortgage, indenture, lease or other agreement, instrument,
permit, concession, franchise, license, judgment, order, decree, statute,
law, ordinance, rule or regulation applicable to Subscriber or any of its
properties or assets (including without limitation the assets
constituting the Purchase Price). Except for the required Shareholders'
Consent, no consent, approval, order or authorization of, or
registration, declaration or filing with, any court, administrative
agency or commission or other governmental authority or
3
<PAGE>
instrumentality, domestic or foreign, is required by or with respect
to Subscriber in connection with the execution and delivery of this
agreement by Subscriber or the consummation by it of the transactions
contemplated hereby. Notwithstanding anything in this clause (i) to
the contrary, the transfer of the SOTAMO Shares to the Issuer as
contemplated by this Agreement requires the execution and delivery of
the Shareholders' Consent (or a document similar in substance thereto)
by all the shareholders of SOTAMO. Subscriber hereby covenants and
agrees to use its best efforts to cause such Shareholders' Consent to
be secured and delivered at of before the Closing Date.
(ii) Subscriber owns all right, title and interest in and to
each of the SOTAMO Shares and the Option Agreement, free and clear of any
lien, claim, charge, pledge, security interest, hypothecation or other
claim or encumbrance (collectively, "Encumbrances" and individually an
"Encumbrance"), except as otherwise provided in that certain
Stockholders' Agreement, dated as of November 7, 1994, by and among
SOTAMO, SOCO International, Inc., PT. BIP Energimas and Corbin
Associates Limited (the "Stockholders' Agreement"). Upon the
consummation of the Closing Transactions, (A) Subscriber will have sold,
assigned, transferred, conveyed, and delivered to Issuer, and Issuer will
be the sole owner of all right, title and interest in and to the Cash
Portion of the Purchase Price and the SOTAMO Shares, free and clear of
all Encumbrances (other than the continuing obligations of the Issuer
under the Stockholders' Agreement with respect to the SOTAMO Shares), and
(B) the Option Agreement will have been terminated and be of no further
force or effect.
(iii) None of the information supplied or to be supplied by
Subscriber, insofar as it relates to Subscriber, any of the assets
constituting the Purchase Price or the Closing Transactions, contains any
untrue statement of a material fact or omits to state any material fact
required to be stated therein or necessary in order to make the
statements therein, in light of the circumstances under which they were
made, not misleading.
(c) CERTAIN SUBSCRIBER REPRESENTATIONS.
(i) Subscriber is not a "US Person" (whenever such term is used
herein, it shall have the meaning given such term in Regulation S, as
summarized on Exhibit C hereto).
(ii) At the time this purchase was originated, Subscriber was
outside the United States and is outside of the United States as of the
date of the execution and delivery of this Subscription Agreement.
(iii) Subscriber is purchasing the Securities for Subscriber's
own account for investment only and not with a view to the resale or
distribution and not
4
<PAGE>
on behalf of any US Person, and the resale of any of the Securities has
not been pre-arranged with a purchaser in the United States.
(iv) There have not been and there are currently no distributors
participating in the placement of the Securities.
(vi) Subscriber represents and warrants and hereby agrees that
no offers or sales of the Securities shall be made on or after the date
hereof, and prior to the anniversary date of the Closing Date in the
calendar year 1997 (the "Restricted Period"), in the United States, or to
or for the benefit of a "US Person"; the Securities may not be offered or
sold in the United States or to or for the benefit of a "US Person"
unless registered under the Act (and applicable state securities laws) or
unless an exemption from such registration is available, nor may they be
offered or sold in the United Kingdom, France or any other jurisdiction
unless approved for sale under the laws of such jurisdiction or unless an
exemption from such approval is available. Subscriber acknowledges and
understands that, in the absence of such registration or approval, the
Issuer shall require an opinion of counsel satisfactory to it as to the
availability of an exemption from registration or approval as a condition
to permitting the offers and/or sales of any of the Securities.
Subscriber represents and warrants that it is not a resident of the
United Kingdom and has not received this Subscription Agreement in the
United Kingdom, unless Subscriber is a person who falls within Article
9(3) of the Financial Services Act 1986 (Investment Advertisements)
(Exemptions) Order 1988 (as for the time being in force), including
authorized persons under the Financial Services Act 1986 and qualifying
corporate and institutional investors.
(vii) Subscriber acknowledges that the purchase of the Securities
involves a high degree of risk and further acknowledges that it can bear
the economic risk of the purchase of the Securities, including the total
loss of its investment.
(viii) Subscriber understands that the Securities are being
offered and sold to it in reliance on specific exemptions from the
registration and approval requirements of United States federal and state
securities laws and the securities laws of certain other countries and
that the Issuer is relying upon the truth and accuracy of the
representations, warranties, agreements, acknowledgments and
understandings of Subscriber set forth herein in order to determine the
applicability of such exemptions and the suitability of Subscriber to
acquire the Securities.
(ix) Subscriber is sufficiently experienced in financial and
business matters to be capable of evaluating the merits and risks of its
investments, and to make an informed decision relating thereto.
(x) Neither Subscriber nor any party acting directly or
indirectly on behalf of Subscriber (a) has a short position in, has
otherwise effected a short position
5
<PAGE>
in, or has engaged in any type of "hedging" transaction with respect
to, any of the Securities, nor (b) will, on or before the expiration
of the Restricted Period, or any longer period during which the resale
of any of the Securities is restricted, have a short position in, or
otherwise effect a short sale or engage in any type of "hedging"
transaction with respect to, any of the Securities.
(xi) In evaluating its investment, Subscriber has consulted
Subscriber's own investment and/or legal and/or tax advisors.
(xii) Subscriber acknowledges that in the view of the SEC the
statutory basis for the exemption claimed for this transaction would not
be present if the offering of Securities, although in technical
compliance with Regulation S, is part of a plan or scheme to evade the
registration provisions of the Act. Subscriber is acquiring the
Securities for investment purposes and has no present intention to sell
the Securities (or any portion thereof) in the United States or to a "US
Person" or for the account or benefit of a "US Person" either now or
promptly after the expiration of the Restricted Period.
(xiii) Subscriber is not currently and does not currently
intend to become an underwriter of, or dealer in, the Securities or any
portion thereof, and Subscriber is not participating, pursuant to a
contractual agreement, in the distribution of the Securities or any
portion thereof. If Subscriber is purchasing the Securities subscribed
for hereby in representative or fiduciary capacity, the representations
and warranties in this Subscription Agreement shall be deemed to have
been made on behalf of the person or persons for whom Subscriber is so
purchasing as well as on behalf of Subscriber. The foregoing
representations and warranties are true and accurate as of the date
hereof, shall be true and accurate as of the date of the acceptance by
the Issuer of Subscriber's subscription, and shall survive thereafter.
If Subscriber has knowledge, prior to the acceptance of its Subscription
Agreement by the Issuer, that any such representations and warranties
shall not be true and accurate in any respect, the Subscriber, prior to
such acceptance, will give written notice of such fact to the Issuer
specifying which representations and warranties are not true and accurate
and the reasons therefor. Subscriber agrees to indemnify, defend and
hold harmless the Issuer and its officers, directors and affiliates from
and against all damages, losses, costs and expenses (including reasonable
attorneys' fees) which they may incur by reason of the failure of
Subscriber to fulfill any of the terms or conditions of this Subscription
Agreement, or by reason of any breach of the representations and
warranties made by Subscriber herein, or in any document provided by the
undersigned to the Issuer. Subscriber further agrees to indemnify,
defend and hold harmless the Issuer and its officers, directors and
affiliates from and against all damages, losses, costs and expenses
(including reasonable attorneys' fees) which they may incur from the
disposition of the Securities held by Subscriber or any interest therein
in violation of the provisions of Paragraph 6 hereof.
6
<PAGE>
(d) CURRENT PUBLIC INFORMATION. Subscriber acknowledges that
Subscriber has been furnished with or has acquired copies of the Issuer's Annual
Report on Form 10-K for the year ended March 31, 1996.
(e) INDEPENDENT INVESTIGATION; ACCESS. Subscriber acknowledges that,
in making the decision to purchase the Securities subscribed from, Subscriber
has relied upon independent investigations made by both Subscriber and its
"purchaser representatives," if any, who have, prior to any sale to it, been
given access and the opportunity to examine all material books and records of
the Issuer, all material contracts and documents relating to this offering and
an opportunity to ask questions of, and to receive answers from Issuer or any
person acting on its behalf concerning the terms and conditions of this
offering. Subscriber and its advisors, if any, have been furnished with access
to all publicly available materials relating to the business, finances and
operations of the Issuer and materials relating to the offer and sale of the
Securities which have been requested. Subscriber and its advisors, if any, have
received complete and satisfactory answers to any such inquiries.
(f) NO GOVERNMENT RECOMMENDATION OR APPROVAL. Subscriber understands
that no United States or Canadian federal, provincial, state, local or other
agency, authority or instrumentality has made or will make any finding or
determination relating to the fairness for public investment in the Securities,
or has passed on or made, or will pass on or make, any recommendation or
endorsement of the Securities.
(g) ENTITY PURCHASER. The person executing this Subscription
Agreement on Subscriber's behalf represents and warrants that:
(i) He or she has made due inquiry to determine the
truthfulness of the representations and warranties made pursuant to this
Subscription Agreement; and
(ii) He or she is duly authorized to make this investment and to
enter into and execute this Subscription Agreement on behalf of such
entity.
(h) EXEMPTION; RELIANCE ON REPRESENTATIONS. Subscriber understands
that the offer and sale of the Securities is not being registered under the Act,
and that the Issuer is relying on the representations and warranties of the
Subscriber in connection with its determination not to cause the Securities or
any part thereof to be registered under the Act.
5. REPRESENTATIONS AND WARRANTIES OF ISSUER. Issuer represents and warrants
to, and covenants and agrees with, the Subscriber as follows:
(a) CORPORATE REPRESENTATIONS. Issuer is a corporation duly
incorporated, validly existing and in good standing under the laws of the State
of Colorado in the United States of America. Issuer is duly qualified to do
business as a foreign corporation and is in good standing in Texas.
7
<PAGE>
(b) AUTHORIZATION. The execution, delivery and performance by the
Issuer of this Agreement and the consummation by it of the transactions
contemplated hereby are within the Issuer's corporate powers and authority, and
have been duly authorized and approved by all necessary corporate action,
including without limitation any authorization or approval required by its Board
of Directors or shareholders, if any. This Agreement and each of the other
documents executed by Issuer on the date hereof have been duly executed by
Issuer and constitute the valid and binding agreement of Issuer, enforceable
against Issuer in accordance with its respective terms, except as may be limited
by bankruptcy, insolvency, reorganization, fraudulent conveyance, moratorium or
other laws affecting the enforcement of creditors' rights in general, as well as
generally principles of equity (regardless of whether such enforceability is
considered in a proceeding in equity or at law). Each of the other documents
and agreements to be executed by Issuer at or before the Closing in connection
herewith will be duly executed by Issuer and will constitute the valid and
binding agreement of Issuer, enforceable against Issuer in accordance with its
respective terms, except as may be limited by bankruptcy, insolvency,
reorganization, fraudulent conveyance, moratorium or other laws affecting the
enforcement of creditors' rights in general, as well as generally principles of
equity (regardless of whether such enforceability is considered in a proceeding
in equity or at law). As of the Closing, all corporate action on the part of
Issuer required under applicable law in order to consummate the Closing
Transactions will have occurred.
(c) AUTHORIZED CAPITAL STOCK; ETC. The authorized capital stock of
the Issuer consists solely of 30,000,000 shares of common stock, no par value,
of which 26,166,104.46 shares (not including the Shares to be issued at the
Closing) are duly authorized, validly issued, fully paid and nonassessable.
There are currently outstanding warrants and/or options to acquire not more than
an additional 1,105,000 shares of common stock, no par value, of the Company.
There are no other outstanding subscriptions, options, warrants, convertible
securities, calls, commitments, agreements or rights (contingent or otherwise)
of any character to purchase or otherwise acquire from the Issuer any shares of,
or any securities convertible into, the capital stock of the Issuer. There are
no preemptive rights with respect to the issuance of the outstanding shares of
capital stock of the Issuer or any other capital shares of the Issuer, and the
Shares are not subject to any such preemptive or other similar rights.
(d) THE SHARES. Upon the issuance of the Shares at the Closing and
the payment of the Purchase Price therefor at the Closing, (i) such Shares will
represent 1,918,750 shares of the common stock, no par value, of the Issuer, and
such Shares will be duly authorized, validly issued, fully paid and non-
assessable, and (ii) the Subscriber will be the holder of all record and
beneficial interest in such Shares, free and clear of any Encumbrance (other
than any of the same that may be imposed thereon by the Subscriber or any party
claiming through it).
(e) THE AGREEMENT; ETC. The execution and delivery of this Agreement
does not constitute and the consummation of the transactions contemplated hereby
will not conflict with or result in any violation of or default (with or without
notice or lapse of time, or both) under, or give rise to a right of termination,
cancellation or acceleration of any right or obligation or to loss or a benefit
under, any provision of Issuer's Articles of Incorporation,
8
<PAGE>
Bylaws or similar governing instruments (collectively, "Issuer's Governing
Documents") or any loan or credit agreement, note, bond, mortgage, indenture,
lease or other agreement, instrument, permit, concession, franchise, license,
judgment, order, decree, statute, law, ordinance, rule or regulation
applicable to Issuer or any of its properties or assets. No consent,
approval, order or authorization of, or registration, declaration or filing
with, any court, administrative agency or commission or other governmental
authority or instrumentality, domestic or foreign, is required by or with
respect to Issuer in connection with the execution and delivery of this
agreement by Issuer or the consummation by it of the transactions
contemplated hereby.
(f) INFORMATION. None of the information supplied or to be supplied
by Subscriber, insofar as it relates to Issuer, the Shares or the Closing
Transactions, contains any untrue statement of a material fact or omits to state
any material fact required to be stated therein or necessary in order to make
the statements therein, in light of the circumstances under which they were
made, not misleading.
6. RESTRICTIONS ON TRANSFERABILITY; RESTRICTIVE LEGENDS. None of the
Securities shall be transferable except in accordance with the provisions of
this Paragraph.
(a) RESTRICTIONS ON TRANSFER, INDEMNIFICATION. UNTIL THE
ANNIVERSARY DATE OF THE CLOSING DATE IN THE CALENDAR YEAR 1997, THE SHARES OF
COMMON STOCK THAT ARE THE SUBJECT OF THIS SUBSCRIPTION AGREEMENT (SOMETIMES
REFERRED TO AS THE "SHARES" OR THE "SECURITIES") MAY NOT BE SOLD TO OR FOR THE
ACCOUNT OR BENEFIT OF A "US PERSON," AS DEFINED IN REGULATION S ("REGULATION S")
PROMULGATED UNDER THE SECURITIES ACT OF 1933 OF THE UNITED STATES OF AMERICA, AS
AMENDED (THE "ACT"). THE SECURITIES THAT ARE THE SUBJECT OF THIS SUBSCRIPTION
AGREEMENT HAVE NOT BEEN REGISTERED UNDER THE ACT (OR UNDER THE SECURITIES LAWS
OF THE UNITED KINGDOM, FRANCE OR ANY OTHER JURISDICTION), AND MAY NOT BE OFFERED
OR SOLD IN THE UNITED STATES TO OR FOR THE BENEFIT OR ACCOUNT OF A "US PERSON"
UNLESS REGISTERED UNDER THE ACT (AND APPLICABLE STATE SECURITIES LAWS) OR UNLESS
AN EXEMPTION FROM SUCH REGISTRATION IS AVAILABLE, NOR MAY THEY BE OFFERED OR
SOLD IN THE UNITED KINGDOM, FRANCE OR ANY OTHER JURISDICTION UNLESS APPROVED FOR
SALE UNDER THE LAWS OF SUCH JURISDICTION OR UNLESS AN EXEMPTION FROM SUCH
APPROVAL IS AVAILABLE. IN THE ABSENCE OF SUCH REGISTRATION OR APPROVAL, THE
COMPANY SHALL REQUIRE AN OPINION OF COUNSEL SATISFACTORY TO IT AS TO THE
AVAILABILITY OF AN EXEMPTION FROM REGISTRATION OR APPROVAL AS A CONDITION TO
PERMITTING THE TRANSFER OF ANY SUCH SECURITIES.
(b) The Certificates representing the Shares will be issued subject to
a restrictive legend substantially as follows:
9
<PAGE>
"UNTIL [INSERT THE DATE THAT IS THE ANNIVERSARY DATE OF THE CLOSING DATE
IN THE CALENDAR YEAR 1997], THE SECURITIES REPRESENTED BY THIS
CERTIFICATE (THE "SHARES") MAY NOT BE SOLD TO OR FOR THE ACCOUNT OR
BENEFIT OF A "US PERSON," AS DEFINED IN REGULATION S PROMULGATED UNDER
THE SECURITIES ACT OF 1933 OF THE UNITED STATES OF AMERICA, AS AMENDED
(THE "ACT"). THE SHARES HAVE NOT BEEN REGISTERED UNDER THE ACT (OR UNDER
THE SECURITIES LAWS OF ANY STATE OF THE UNITED STATES) OR APPROVED FOR
SALE UNDER THE SECURITIES LAWS OF THE UNITED KINGDOM, FRANCE OR ANY OTHER
JURISDICTIONS AND MAY NOT BE OFFERED OR SOLD IN THE UNITED STATES TO OR
FOR THE BENEFIT OR ACCOUNT OF A "US PERSON" UNLESS REGISTERED UNDER THE
ACT (AND APPLICABLE STATE SECURITIES LAWS) OR UNLESS AN EXEMPTION FROM
SUCH REGISTRATION IS AVAILABLE, NOR MAY THEY BE OFFERED OR SOLD IN THE
UNITED KINGDOM, FRANCE OR ANY OTHER JURISDICTION UNLESS APPROVED FOR SALE
UNDER THE LAWS OF SUCH JURISDICTION OR UNLESS AN EXEMPTION FROM SUCH
APPROVAL IS AVAILABLE. IN THE ABSENCE OF SUCH REGISTRATION OR APPROVAL,
THE COMPANY SHALL REQUIRE AN OPINION OF COUNSEL SATISFACTORY TO IT AS TO
THE AVAILABILITY OF AN EXEMPTION FROM REGISTRATION OR APPROVAL OF SALE AS
A CONDITION TO PERMITTING THE TRANSFER OF THE SHARES."
(c) NOTICE OF PROPOSED TRANSFERS. Prior to any transfer, offer to
transfer or attempted transfer of the Securities or any portion thereof,
Subscriber shall give written notice to the Issuer of such intention to effect
such transfer. Each such notice shall (x) describe the manner and circumstances
of the proposed transfer in sufficient detail, and shall contain an undertaking
by the person giving such notice to furnish such other information as may be
required, to enable counsel to render the opinion referred to below and (y)
designate the counsel for the person giving such advice, such counsel to be
satisfactory to the Issuer. The person giving such advice shall submit a copy
thereof to the counsel designated in such notice and the following provisions
shall apply.
(i) If, in the opinion of counsel to Subscriber, a copy of
which opinion shall have been delivered to the Issuer, the proposed
transfer of the Securities may be effected pursuant to the terms of the
Subscription Agreement and without registration of such Securities under
the Act (and applicable state securities laws) or approval for sale under
the securities laws of the United Kingdom, France or any other
jurisdiction, as applicable, the Issuer shall, as promptly as
practicable, so notify Subscriber, as the case may be, and Subscriber
shall thereupon be entitled to transfer such security in accordance with
the terms of the notice delivered by Subscriber to the Issuer. Each
certificate or other document evidencing the Securities thus to be
transferred (and each certificate or other document evidencing any
untransferred balance of the Securities evidenced by such certificate or
other document) shall bear
10
<PAGE>
the restrictive legends referred to above, unless in the opinion of
such counsel such legend is not required in order to ensure compliance
with the Act (and applicable state securities laws) or with the
securities laws of the United Kingdom, France or any other
jurisdiction as applicable.
(ii) If, in the opinion of such counsel, the proposed transfer
of the Securities may not be effected without registration under the Act
(and applicable state securities laws) or approval for sale under the
securities laws of the United Kingdom, France or any other jurisdiction,
as applicable, the Issuer shall, as promptly as practicable, so notify
Subscriber. However, the Issuer shall have no obligation to register
such securities under the Act (and applicable state securities laws) or
obtain approval for sale under the securities laws of the United Kingdom,
France of any other jurisdiction as applicable, except as otherwise
provided in this Subscription Agreement. Subscriber giving the notice
under this Subparagraph shall not be entitled to transfer any of the
Securities until receipt of notice from the Issuer under Paragraph (i) of
this Subparagraph or registration of such Securities under the Act (and
applicable state securities laws) has become effective or approval for
sale under the securities laws of the United Kingdom, France or any other
jurisdiction, as applicable, has been obtained.
(d) REMOVAL OF LEGEND. The Issuer shall, at the request of
Subscriber, exchange the certificates or other documents evidencing the
Securities for similar certificates or documents not bearing the restrictive
legend required by the provisions of this Subscription Agreement if, in the
opinion of counsel to the Issuer, such restrictive legend is no longer
necessary.
7. CONDITIONS TO CLOSING.
(a) CONDITIONS TO ISSUER'S OBLIGATIONS. It shall be a condition to
the obligations to Issuer to consummate the Closing Transactions that, on or
before the Closing Date:
(i) The Shareholders' Consent shall have been executed and delivered
by each of the shareholders of SOTAMO; and
(ii) The Option Agreement shall not have been exercised, except as the
same shall have been exercised before the date of this Agreement (and Subscriber
hereby covenants and agrees that it shall not further exercise its rights, or
permit any other party to exercise any of the rights, under the Option
Agreement.
(iii) Subscriber shall have fulfilled and complied with, in a timely
manner and in all material respects, all of its covenants, agreements and
obligations under this Agreement to be fulfilled or complied with by it on or
before the Closing Date.
11
<PAGE>
(b) CONDITIONS TO SUBSCRIBER'S OBLIGATIONS. It shall be a condition
to the obligations to Subscriber to consummate the Closing Transactions that, on
or before the Closing Date:
(i) After the date hereof, there shall not have been any material
adverse change in the financial condition or business prospects, taken as a
whole, of the Issuer.
(ii) The Issuer shall have fulfilled and complied with, in a timely
manner and in all material respects, all of its covenants, agreements and
obligations under this Agreement to be fulfilled or complied with by it on or
before the Closing Date.
8. MISCELLANEOUS.
(a) GOVERNING LAW. This Subscription Agreement shall be governed by
and interpreted in accordance with the rules of the laws of the state of
Colorado in the United States of America.
(b) COUNTERPART SIGNATURES. This Subscription Agreement may be
executed in one or more counterparts each of which shall constitute an original
and both of which together shall constitute one and the same instrument
effective as of the date first below written.
(c) ENTIRE AGREEMENT. This Subscription Agreement constitutes the
entire agreement among the parties hereof with respect to the subject matter
hereof and supersedes any and all prior or contemporaneous representations,
warranties, agreements and understandings in connection therewith. This
Subscription Agreement may be amended only by a writing executed by all parties
hereto.
Dated the 19th day of the month of July, 1996.
"SUBSCRIBER" ASIA ENERGY LTD.
By: /s/
-----------------------------------
Name:
-----------------------------
As Its Authorized:
----------------
"ISSUER" TERRITORIAL RESOURCES, INC.
By: /s/
-----------------------------------
Name:
-----------------------------
As Its Authorized:
----------------
12
<PAGE>
EXHIBIT A Form of Shareholders' Consent
EXHIBIT B Form of Administrative Services Agreement
EXHIBIT C Definition of "US Person" under Regulation S
13
<PAGE>
EXHIBIT C TO SUBSCRIPTION AGREEMENT
DEFINITION OF A "US PERSON"
UNDER REGULATION S PROMULGATED UNDER THE SECURITIES ACT OF 1933 OF THE UNITED
STATES OF AMERICA, AS AMENDED
A "US Person" is any of the following:
I. Any natural person resident in the United States of America, its
territories and possessions, any State of the United States of America,
and the District of Columbia (the "United States");
II. Any partnership or corporation organized or incorporated under the laws
of the United States;
III. Any estate of which any executor or administrator is a US Person;
IV. Any trust of which any trustee is a US Person;
V. Any agency or branch of a foreign entity located in the United States;
VI. Any non-discretionary account or similar account (other than an estate or
trust) held by a dealer or other fiduciary for the benefit or account of
a US Person;
VII. Any discretionary account or similar account (other than an estate or
trust) held by a dealer or other fiduciary organized, incorporated, or
(if an individual) resident in the United States; and
VIII. Any partnership or corporation if (A) organized or incorporated under the
laws of any foreign jurisdiction; and (B) formed by a US Person
principally for the purpose of investing in securities not registered
under the Securities Act of 1933 of the United States, as amended (the
"Act"), unless it is organized or incorporated, or owned, by accredited
investors (as defined in Rule 501(a) of Regulation D promulgated under
the Act) who are not natural persons, estates or trusts.
Notwithstanding the above, the following are NOT US Persons:
IX. Any discretionary account or similar account (other than an estate or
trust) held for the benefit or account of a non-US Person by a dealer or
other professional fiduciary organized, incorporated, or (if any
individual) resident in the United States;
14
<PAGE>
X. Any estate of which any professional fiduciary acting as executor or
administrator is a US Person if an executor or administrator of the
estate who is not a US Person has sole or shared investment discretion
with respect to the assets of the estate, and the estate is governed by
foreign law;
XI. Any trust of which any professional fiduciary acting as a trustee is a US
Person, if a trustee who is not a US Person has sole or shared investment
discretion with respect to the trust assets, and no beneficiary of the
trust (and no settler if the trust is revocable) is a US Person;
XII. An employee benefit plan established and administered in accordance with
the law of a country other than the United States and with the customary
practices and documentation of such country;
XIII. Any agency or branch of a US Person located outside the United States if
the agency or branch operates for valid business reasons; and the agency
or branch is engaged in the business of insurance or banking and is
subject to substantive insurance or banking regulation, respectively, in
the jurisdiction where located; or
XIV. The International Monetary Fund, the International Bank for
Reconstruction and Development, the Inter-American Development Bank, the
Asian Development Bank, the African Development Bank, the United Nations,
and their agencies, affiliates and pension plans, and any other similar
international organizations, their agencies, affiliates and pension
plans.
15
<PAGE>
ADMINISTRATIVE SERVICES AGREEMENT
THIS AGREEMENT made as of the 19th day of July, 1996,
BETWEEN:
ASIA ENERGY LTD., a corporation incorporated under the laws
of the Province of Alberta, having its principal office in
the City of Calgary, in the Province of Alberta (hereinafter
referred to as "Asia Energy")
OF THE FIRST PART,
- and -
TERRITORIAL RESOURCES, INC., a corporation duly incorporated
under the laws of the State of Colorado, having its
principal office in the City of Houston, in the State of
Texas, (hereinafter referred to as "Territorial")
OF THE SECOND PART.
WHEREAS Territorial has agreed to provide administrative services to Asia
Energy at the sole cost and expense of Territorial;
NOW THEREFORE THIS AGREEMENT WITNESSETH THAT in consideration of the
premises and of the respective covenants and agreements hereinafter contained
and for other good and valuable consideration, the receipt and sufficiency of
which are hereby acknowledged, the parties hereto agree as follows:
1. SERVICES
Subject to the terms and conditions of this Agreement, Territorial shall,
at its sole cost and expense, provide to Asia Energy those services more
particularly described in Schedule A attached hereto and incorporated by
reference herein and any other services ancillary or reasonably related thereto.
Asia Energy hereby authorizes Territorial to take any and all actions and to
exercise any and all rights in the name of and on behalf of Asia Energy as are
reasonably necessary or related to the performance of Territorial's obligations
under this Agreement. The maximum aggregate amount of liability that
Territorial shall be liable for under the terms of this Agreement shall be
$300,000 in Canadian funds. Notwithstanding any provision of this Agreement
(including Schedule A hereto) to the contrary, Territorial shall not be
responsible for the payment or performance of any obligation, liability or other
cost or expense incurred by Asia Energy as a result of any contract or agreement
entered into by Asia Energy, or any action of Asia Energy taken, without the
written consent thereto of Territorial. Nothing in this Agreement shall require
Territorial to offer any business or other opportunities to Asia Energy or to
disclose any confidential information of Territorial to Asia Energy.
<PAGE>
-2-
1. TERM
The term of this Agreement shall be one (1) year commencing on the date
hereof and thereafter shall continue in full force and effect from year to year
subject to earlier termination as provided in Section 3 below.
1. TERMINATION
Either party may terminate this Agreement at any time by giving notice in
writing to the other party. Such termination shall be effective immediately.
Unless the parties hereto agree otherwise, this Agreement shall be automatically
terminated in the event that Daniel A. Mercier ceases to be the Chief Executive
Officer of Territorial for any reason whatsoever.
1. EFFECT OF TERMINATION
Upon termination of this Agreement pursuant to Section 3, no party shall
have any further obligation to the other party under this Agreement except that
Territorial shall be required to promptly deliver to Asia Energy copies of all
records, documents and books of account maintained under the terms of this
Agreement and all other documents and materials relating thereto which are in
the possession or control of Territorial. Notwithstanding the foregoing
covenant by Territorial, Territorial shall be entitled to maintain one copy of
all such records, documents and books of account subject to any confidentiality
provisions contained therein. Notwithstanding any termination of this
Agreement, the provisions of Sections 5 and 6 and any other provisions of this
Agreement necessary to give efficiency thereto shall continue in full force and
effect following any such termination.
1. MUTUAL INDEMNIFICATION
Each party shall indemnify and hold harmless the other party and its
officers, directors, employees, agents and subcontractors from and against any
and all losses, damages, penalties, costs and expenses (including reasonable
legal and accounting fees and expenses) of whatsoever kind and nature incurred
by, borne by or asserted against any of such indemnified parties in any way
relating to, arising out of or resulting from the breach or the failure of
performance by the indemnifying party of any of the covenants, promises or
agreements that it is to perform under this Agreement, unless caused by the
gross negligence or wilful misconduct of any such indemnified party.
1. CONFIDENTIALITY
(a) All information that Territorial receives or generates as a result of
or in connection with the services rendered to Asia Energy under this Agreement
is the exclusive property of Asia Energy, shall be kept secret, shall be treated
as proprietary to Asia Energy and may not be shared with or traded to third
parties without the prior written consent of Asia Energy. Territorial shall use
the same standard of care in preserving the confidentiality of such information
as the standard of care which is or should be used by Territorial in protecting
its own proprietary confidential information which is of a similar nature or
importance. The restriction set forth in this paragraph shall not apply to any
part of the confidential information
<PAGE>
-3-
of Asia Energy (i) which is, at the time of disclosure by Territorial, a part
of the public domain through no violation of this Agreement, (ii) which, as
confirmed by written records, is hereafter lawfully acquired by Territorial
through a third party under no obligation of confidence to Asia Energy, or
(iii) the disclosure of which is consented to by Asia Energy in writing prior
to such disclosure.
(b) If Territorial is requested or required (by oral question,
interrogatory, request for information or documents, subpoena, civil
investigative demand or similar process) to disclose confidential information of
Asia Energy, Territorial shall promptly notify Asia Energy of such request or
requirement to allow Asia Energy to seek an appropriate protective order or
waive compliance with the provisions with this Agreement. If, in the absence of
a protective order or a receipt of a waiver hereunder, Territorial is legally
compelled to disclose the confidential information of Asia Energy or else stand
liable for contempt or suffer censure or significant penalty, Territorial may
disclose to the party compelling disclosure only such of the confidential
information as is required by such party compelling disclosure to the extent of
the legal compulsion. Territorial will exercise its best efforts to obtain a
protective order or other reliable assurance that confidential treatment will be
afforded the confidential information of Asia Energy.
1. MAINTENANCE OF RECORDS
Territorial shall retain all books, accounts, invoices, statements and
records relating to the services provided under this Agreement for a period of
six years after the end of the calendar year to which the records relate. Upon
reasonable notice to Territorial, Asia Energy may have access to the records for
the purposes of an audit to be conducted at its own expense and, for the purpose
of the audit, Asia Energy may examine the records and make copies of them at its
own expense.
1. ACCESS TO RECORDS
Upon reasonable request by Territorial, Asia Energy shall promptly forward
to Territorial such information as Territorial may require and Asia Energy shall
also allow Territorial and its representatives and employees reasonable access
to Asia Energy's premises and records, documents and books of account in order
to enable Territorial to perform its obligations hereunder.
1. COOPERATION AND GOOD FAITH
Each party agrees to cooperate with the other party hereto in the
performance of and to use good faith efforts to comply with their respective
covenants and obligations hereunder.
1. NOTICE
(c) Notices, reports and other communications required or permitted by
this Agreement to be given or sent by one party to the other, except where
herein otherwise provided, shall be in writing and shall be delivered by hand,
or mailed by prepaid registered post or transmitted by telecommunications to the
addressee as follows:
<PAGE>
-4-
ASIA ENERGY LTD.
950, 333 - 5th Avenue S.W.
Calgary, Alberta
T2P 3B6
ATTENTION: MR. DANIEL A. MERCIER
Facsimile No.: (403) 233-7354
TERRITORIAL RESOURCES, INC.
1300 Main Street, Suite 1840
Houston, Texas 77002
U.S.A.
ATTENTION: MR. WILLIAM C. PENTTILA
Facsimile No.: (713) 658-0539
Either party may by notice to the other party change its address.
(d) If a notice is mailed by prepaid registered post in Alberta or Texas,
it shall be conclusively deemed to have been received by the addressee on the
seventh business day following the mailing thereof. If a notice is transmitted
by telecommunication, it shall be conclusively deemed to have been received by
the addressee on the business day next following such transmittal. In this
paragraph, "business day" means any day when the usual complement of the
addressee is present for the conduct of regular business at its address for
service. If a notice is delivered, it shall be conclusively deemed to have been
received by the addressee upon receipt thereof.
1. ENUREMENT
This Agreement shall enure to the benefit of and be binding upon the
parties and their respective successors and assigns.
1. GOVERNING LAW
This Agreement shall be construed and enforced and the rights of the
parties hereto shall be governed in accordance with the laws of the Province of
Alberta and the laws of Canada applicable therein and the parties hereto do
hereby irrevocable attorn to the jurisdiction of the Courts of the Province of
Alberta.
1. ASSIGNMENT
Neither party may assign this Agreement, by operation of law or otherwise,
without the prior written consent of the other party.
1. FURTHER ASSURANCES
<PAGE>
-5-
The parties shall carry out such further acts and things and shall execute
such further documents as may reasonably be required to carry out the true
intent and meaning of this Agreement.
1. INDEPENDENT CONTRACTOR
The parties hereto expressly acknowledge that the relationship between the
parties created as a result of this Agreement is one of independent contractor,
and no other relationship.
1. WAIVER
A waiver by or on behalf of a party of any provision or any breach of this
Agreement is not binding upon it unless the waiver is expressed in writing and
is duly executed by that party or is signed by its authorized representative;
and a waiver does not operate as a waiver of a future breach, whether the future
breach is of a like or of a different character.
1. EXECUTION BY COUNTERPARTS
This Agreement may be executed in one or more counterparts, each of which
when so executed shall constitute an original and all of which together shall
constitute one and the same agreement.
IN WITNESS WHEREOF the parties have hereto have caused this Agreement to be
duly executed and delivered by their proper and duly authorized officers as of
the date and year first above written.
ASIA ENERGY LTD.
Per:
---------------------------------
Per:
---------------------------------
TERRITORIAL RESOURCES, INC.
Per:
---------------------------------
Per:
---------------------------------
<PAGE>
SCHEDULE A
This is Schedule A attached to and forming part of the Administrative Services
Agreement made as of the 19th day of July, 1996 among Asia Energy Ltd. and
Territorial Resources, Inc.
- ------------------------------------------------------------------------------
1. Coordinate and ensure the timely preparation and filing of all tax returns
required to be filed by Asia Energy provided, however, Territorial shall
not be liable for the payment when due of any assessments or reassessments
or any other taxes or governmental charges payable by Asia Energy.
2. Prepare and circulate any written communications to shareholders which may
be reasonably required including, without limiting the generality of the
foregoing, financial statements.
3. Except as provided in item 1 above, cause Asia Energy to pay all charges
and other expenses relating to the operation of its business including,
without limiting the generality of the foregoing, rent, light and power
rates, wages and insurance premiums as they become due and any other
operation expenses.
4. Maintain all permits, licenses and registrations required to maintain the
existence of Asia Energy.
5. Undertake all required communications with governmental authorities.
6. Establish and maintain proper financial records and books of account
respecting the operations and business of Asia Energy and provide full
accounting services with respect to Asia Energy's business.
