SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 6-K
REPORT OF FOREIGN PRIVATE ISSUER
PURSUANT TO RULE 13a - 16 OR 15d - 16 OF
THE SECURITIES EXCHANGE ACT OF 1934
For the month of August 2005
Assure Energy, Inc.
--------------------------------------------------------------------------------
(Registrant's name)
521 3rd Avenue, S.W., Suite 800
Calgary, Alberta T2P 3T3
Canada
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(Address of principal executive office)
Indicate by check mark whether the registrant files or will file annual reports
under cover of Form 20-F or Form 40F
Form 20-F |X| Form 40-F |_|
Indicate by check mark whether the registrant by furnishing the information
contained in this Form is also thereby furnishing the information to the
Commission pursuant to Rule 12g3-2(b) under the Securities Exchange Act of 1934.
Yes |_| No |X|
If "Yes" is marked, indicate below the file number assigned to the registrant in
connection with Rule 12g3-2(b):
TABLE OF CONTENTS
1. Press Release issued August 9, 2005 titled "GEOCAN Energy, Inc. and Assure
Energy, Inc. Announce Amendment of Plan of Arrangement, Mailing of
Information Circular, and Special Shareholder Meeting." The Press Release
was filed on SEDAR on August 9, 2005.
2. Notice of Special Meeting of Securityholders of Assure Energy, Inc. to be
held September 7, 2005; and Notice of Petition; and Information Circular as
filed on SEDAR on August 8, 2005.
3. Form of Proxy for the Special Meeting of Securityholders of Assure Energy,
Inc. to be held September 7, 2005 as filed on SEDAR on August 8, 2005.
4. Officer's Certificate dated August 8, 2005 respecting Special Meeting of
Securityholders of Assure Energy, Inc. to be held September 7, 2005 as
filed on SEDAR on August 8, 2005.
5. Amended and Restated Arrangement Agreement between GEOCAN Energy Inc. and
Assure Energy, Inc. dated July 8, 2005.
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 thereunto duly authorized.
Dated: August 12, 2005 ASSURE ENERGY, INC.
By: /s/ Harvey Lalach
--------------------------
Name: Harvey Lalach
Title: President
2
ITEM 1
------
PRESS RELEASE
GEOCAN ENERGY INC. AND ASSURE ENERGY, INC. ANNOUNCE AMENDMENT
OF PLAN OF ARRANGEMENT, MAILING OF INFORMATION CIRCULAR, AND
SPECIAL SHAREHOLDER MEETING
GEOCAN Energy Inc. Assure Energy, Inc.
Suite 1100 Suite 800
717-7th Avenue SW 521-3rd Avenue SW
Calgary, Alberta, Canada Calgary, Alberta, Canada
Telephone: (403) 261-3851 Telephone: (403) 266-4975
Fax: (402) 261-3834 Fax: (403) 262-9519
For Immediate Release August 9, 2005
CALGARY, ALBERTA August 9 /CNW/ - GEOCAN Energy Inc. ("GEOCAN"; TSX-GCA) and
Assure Energy, Inc. ("Assure"; OTCBB - ASURE.OB) jointly announce that they have
amended the previously announced Plan of Arrangement (the "Arrangement") whereby
all of the issued and outstanding shares of Assure will be acquired by GEOCAN in
exchange for GEOCAN common shares on the basis of 0.70 of a GEOCAN common share
for each common share of Assure.
The new Arrangement has the unanimous support of the Board of Directors of both
GEOCAN and Assure. Assure's Board of Directors has unanimously determined that
the arrangement is in the best interests of Assure and Assure's securityholders,
and unanimously recommends that its securityholders vote in favour of the
Arrangement. All directors and officers of Assure have signed lock up agreements
to vote all of their outstanding securities in favour of the Arrangement. The
completion of the Arrangement is subject to various conditions, including the
receipt of all required regulatory, securityholder and court approvals.
Assure also announces that pursuant to an interim order of the Court of Queen's
Bench of Alberta dated August 5, 2005, a special meeting (the "Meeting") of the
holders of Assure securities will be held at 10:00 a.m. (Calgary time) on
September 7, 2005 at the offices of Bennett Jones LLP, 4500, 855-2nd Street
S.W., Calgary, Alberta, for the purposes of considering and voting upon the
Arrangement. To become effective, the Arrangement will require approval of not
less than 66 2/3% of the votes cast. The Assure Board of Directors has agreed
that it will not solicit or initiate discussion or negotiations involving any
third party for any business combination involving Assure. GEOCAN has agreed to
pay Assure a non-completion fee of CDN$1 million, and Assure has agreed to pay
GEOCAN a non-completion fee of CDN$1.5 million, under certain circumstances.
Assure also announces that it has mailed an information circular to Assure
securityholders in connection with the Arrangement.
1
GEOCAN and Assure are Calgary, Alberta, Canada based crude oil and natural gas
exploration, development, and production companies.
This transaction is subject to all required securityholder and court approvals
and to all regulatory approvals, including approval by the TSX.
FOR FURTHER INFORMATION PLEASE CONTACT:
Assure Energy, Inc.
Harvey Lalach
President and Chief Executive Officer
(403) 266-4975
Email: hlalach@assure-energy.com
Website: www.assure-energy.com
OR
GEOCAN Energy Inc.
Wayne Wadley
Chief Executive Officer
(403) 261-3851
Email: wwadley@geocan.com
Website: www.geocan.com
2
ITEM 2
------
Notice of Special Meeting of Securityholders of Assure Energy, Inc.
to be held September 7??2005
- and -
Notice of Petition
- and -
Information Circular
With respect to a Proposed Plan of Arrangement involving
[GEOCAN ENERGY Inc.]
and
ASSURE ENERGY INC.
August 5, 2005
TABLE OF CONTENTS
NOTICE OF SPECIAL MEETING OF ASSURE SECURITYHOLDERS.............................................................iii
NOTICE OF PETITION................................................................................................v
INFORMATION CIRCULAR..............................................................................................1
SUMMARY OF INFORMATION CIRCULAR..................................................................................10
Interests and Intentions of Directors, Officers, Insiders and Significant Securityholders in Matters to be
Acted Upon....................................................................................................14
Expenses of The Arrangement...................................................................................15
PART I - GENERAL PROXY MATTERS...................................................................................19
Purpose of Solicitation.......................................................................................19
Solicitation and Revocation of Proxies........................................................................19
Voting Shares and Principal Holders Thereof...................................................................20
Advice to Beneficial Holders of Assure Shares.................................................................20
Voting of Proxies.............................................................................................21
PART II - THE ARRANGEMENT........................................................................................21
Background to the Arrangement.................................................................................21
Description of the Arrangement................................................................................22
Benefits of the Arrangement...................................................................................22
Effect of the Arrangement.....................................................................................23
The Arrangement Agreement.....................................................................................24
Procedure for the Arrangement to Become Effective.............................................................34
Timing........................................................................................................35
Fairness Opinion..............................................................................................36
Recommendation of the Assure Board............................................................................36
Interests and Intentions of Directors, Officers, Insiders and Significant Securityholders in Matters to be
Acted Upon....................................................................................................37
Expenses of The Arrangement...................................................................................37
Exchange and Issuance of Share Certificates...................................................................37
Stock Exchange Listings.......................................................................................38
Certain Canadian Federal Income Tax Considerations............................................................38
Residents of Canada...........................................................................................39
Non-Resident Assure Shareholders..............................................................................40
Right of Dissent..............................................................................................40
Other Matters.................................................................................................42
PART III - INFORMATION RELATING TO GEOCAN, POST-ARRANGEMENT......................................................44
Selected Financial Information................................................................................44
Risk Factors..................................................................................................46
Directors and Officers of GEOCAN..............................................................................48
Pro-forma Combined Capitalization.............................................................................49
Principal Holders of Securities...............................................................................49
Auditors, Transfer Agent and Registrar........................................................................49
PART IV - CONSENTS...............................................................................................50
APPENDIX A - Arrangement Resolution
APPENDIX B - Arrangement Agreement
APPENDIX C - Interim Order
APPENDIX D - Information Concerning GEOCAN Energy Inc.
APPENDIX E - Information Concerning Assure Energy, Inc.
APPENDIX F - Pro-forma Combined Financial Statements
APPENDIX G - Section 191 of ABCA
APPENDIX H - Fairness Opinion of Haywood Securities Inc.
ASSURE ENERGY INC.
August 5, 2005
TO: Holders (the "Assure Securityholders") of common shares ("Assure Shares"),
preferred shares ("Assure Preferred Shares") and warrants to purchase
Assure Shares ("Assure Warrants") of Assure Energy, Inc. ("Assure").
You are invited to attend a special meeting (the "Meeting") of Assure
Securityholders to be held at the offices of Bennett Jones LLP, 4500, 855-2nd
Street S.W., Calgary, Alberta at 10:00 a.m. on Wednesday, September 7, 2005 for
the purposes set forth in the accompanying Notice of Special Meeting of Assure
Securityholders. Capitalized terms not defined herein shall have the meaning
ascribed thereto in the information circular attached hereto.
At the Meeting, Assure Securityholders will be asked to consider and vote upon
an arrangement (the "Arrangement") under the provisions of the Business
Corporations Act (Alberta) (the "ABCA") involving Assure, Assure Securityholders
and GEOCAN Energy Inc. ("GEOCAN"). Pursuant to the Arrangement, the following
transactions will occur in the following order:
(1) all of the issued and outstanding Assure Shares, Assure Preferred Shares
and Assure Warrants held by Dissenting Securityholders as of the Effective
Time shall be deemed to have been transferred to Assure and cancelled and
shall cease to be issued and outstanding and, as of the Effective Time,
such Dissenting Securityholders shall cease to have any rights as Assure
Securityholders, other than the right to be paid the fair value of their
Assure Shares, Assure Preferred Shares or Assure Warrants, as the case may
be, and the names of such Dissenting Securityholders shall be removed from
the register of holders of Assure Shares, Assure Preferred Shares and
Assure Warrants, as applicable; and
(2) all of the issued and outstanding Assure Shares beneficially owned by
Assure Shareholders at the Effective Time shall be transferred to GEOCAN,
solely in exchange for the issue by GEOCAN, to such Assure Shareholders in
respect of such Assure Shares, of fully paid and non-assessable common
shares of GEOCAN ("GEOCAN Shares") on the basis of 0.7 of a GEOCAN Share
for each Assure Share.
No fractional GEOCAN Shares will be issued. In the event that the conversions
contemplated by the Arrangement would result in an Assure Shareholder being
entitled to a fractional GEOCAN Share, the number of GEOCAN Shares to be issued
to each such former Assure Shareholder will be rounded up to the next whole
number of GEOCAN Shares. In calculating such fractional interests, all Assure
Shares held by a registered Assure Shareholder prior to the Effective Time will
be aggregated.
For the Arrangement to proceed, it must be approved by at least 66 2/3% of all
of the votes cast by holders of Assure Shares, Assure Preferred Shares and
Assure Warrants, voting together as a class, present in person or by proxy, at
the Meeting, such that (i) each Assure Shareholder shall be entitled to one vote
for each Assure Share held, (ii) each Assure Preferred Shareholder shall be
entitled to one vote for each Assure Preferred Share held, and (iii) each Assure
Warrantholder shall be entitled to one vote for each Assure Share such holder
would be entitled to receive upon the exercise of such Assure Warrants. If such
approval is obtained and if other conditions to the Arrangement becoming
effective are satisfied or waived, it is expected that the Arrangement will be
completed on or about the date of the Meeting.
If the requisite shareholder and regulatory approvals are obtained, an order of
the Court of Queen's Bench of Alberta approving the Arrangement will be sought
following the Meeting.
The Assure Board recommends that you vote in favour of the Arrangement.
The accompanying Information Circular provides a detailed description of the
Arrangement, Assure, GEOCAN and the matters to come before the Meeting. Please
give this material your careful consideration, and, if you require assistance,
consult your financial, income tax or other professional advisor.
To be represented at the Meeting, you must either attend the Meeting in person
or complete and sign the enclosed Form of Proxy and forward it so as to reach,
or be deposited with, Continental Stock Transfer & Trust Company
("Continental"), 17 Battery Place, New York, NY 10004, not later than
twenty-four hours (excluding Saturdays, Sundays and statutory holidays) prior to
the time fixed for the Meeting or any adjournment thereof. An envelope addressed
to Continental is enclosed for your convenience.
Yours very truly,
--------------------------------------
(signed) "Harvey Lalach"
President and Chief Executive Officer
Assure Energy, Inc.
ASSURE ENERGY, INC.
NOTICE OF SPECIAL MEETING OF ASSURE SECURITYHOLDERS
TO BE HELD WEDNESDAY, SEPTEMBER 7, 2005
NOTICE IS HEREBY GIVEN that, pursuant to an order (the "Interim Order") of
the Court of Queen's Bench of Alberta dated August 5, 2005, a special meeting
(the "Meeting") of the holders ("Assure Securityholders") of common shares
("Assure Shares"), preferred shares ("Assure Preferred Shares") and warrants to
purchase Assure Shares ("Assure Warrants") of Assure Energy, Inc. ("Assure")
will be held at the offices of Bennett Jones LLP, 4500, 855 - 2nd Street S.W.,
Calgary, Alberta at 10:00 a.m. on Wednesday, September 7, 2005 for the following
purposes:
(a) to consider, and if thought advisable, to pass, with or without
variation, a special resolution (the "Arrangement Resolution"), the
full text of which is set forth as Appendix A to the accompanying
Information Circular, approving an arrangement under Section 193 of
the Business Corporations Act (Alberta) ("ABCA") involving Assure,
the Assure Securityholders and GEOCAN Energy Inc. ("GEOCAN") (the
"Arrangement"); and
(b) to transact such other business as may properly come before the
Meeting, or any adjournment or postponement thereof.
Specific details of the matters proposed to be put before the Meeting are
set forth in the accompanying Information Circular and appendices thereto.
The Board of Directors of Assure has fixed August 2, 2005 as the record
date for the determination of Assure Securityholders entitled to receive notice
of the Meeting. Only Assure Securityholders of record at the close of business
on the record date will be entitled to notice of, and to vote at, the Meeting or
any adjournment thereof, except that a transferee of Assure Shares or Assure
Preferred Shares after such record date may, not later than 10 days before the
Meeting, establish the right to vote by providing evidence of ownership of such
Assure Shares or Assure Preferred Shares and requesting that the transferee's
name be placed on the voting list in place of the transferor.
If you are a registered holder of Assure Shares, Assure Preferred Shares
or Assure Warrants and are unable to attend the Meeting or any adjournment
thereof in person, please complete, sign and mail the enclosed Form of Proxy to
Continental Stock Transfer & Trust Company, 17 Battery Place, New York, NY
10004, not later than twenty-four hours (excluding Saturdays, Sundays and
statutory holidays) prior to the time of the Meeting or any adjournment thereof.
If you are an unregistered Assure Securityholder and receive these
materials through your broker or through another intermediary, please complete
and return the Form of Proxy provided to you in accordance with the instructions
provided in the materials provided by such broker or other intermediary.
Pursuant to the Interim Order, registered Assure Securityholders have been
granted the right to dissent in respect of the Arrangement Resolution and, if
the Arrangement becomes effective, to be paid the fair value of their securities
in accordance with the provisions of Section 191 of the ABCA, as modified by the
Interim Order. To exercise such right, Assure must receive from the Dissenting
Securityholder (as defined in the Information Circular) a written objection to
the Arrangement Resolution delivered to Assure Energy, Inc. c/o Bennett Jones
LLP, 4500 Bankers Hall East, 855 - 2nd Street S.W., Calgary, Alberta, T2P 4K7,
Attention: Mr. Ken Lenz at least two Business Days before the Meeting, and the
Dissenting Securityholder must have otherwise complied with the provisions of
Section 191 of the ABCA, as modified by the Interim Order. The right to dissent
is described in detail in the Information Circular. The texts of the Interim
Order and Section 191 of the ABCA are set forth in Appendices C and G,
respectively, to the Information Circular. Failure to strictly comply with the
requirements set forth in Section 191 of the ABCA, as modified by the Interim
Order, may result in the loss of any right of dissent.
DATED at the City of Calgary, in the Province of Alberta, this 5th day of
August, 2005.
By Order of the Board of Directors and by
Order of the Court of Queen's Bench of Alberta
--------------------------------------
(signed) "Harvey Lalach"
President and Chief Executive Officer
Assure Energy, Inc.
{00078414.1 / 0541-005}- vi -
IN THE COURT OF QUEEN'S BENCH OF ALBERTA
JUDICIAL DISTRICT OF CALGARY
IN THE MATTER OF SECTION 193 OF THE BUSINESS CORPORATIONS ACT (ALBERTA),
R.S.A. 2000, c.B-9, AS AMENDED
AND IN THE MATTER OF AN ARRANGEMENT PROPOSED BY ASSURE ENERGY, INC.
INVOLVING ASSURE ENERGY, INC., ITS SECURITYHOLDERS AND GEOCAN ENERGY INC.
NOTICE OF PETITION
NOTICE IS HEREBY GIVEN that a Petition (the "Petition") has been filed with the
Court of Queen's Bench of Alberta, Judicial District of Calgary (the "Court"),
on behalf of Assure Energy, Inc. ("Assure") with respect to a proposed
Arrangement (the "Arrangement") under Section 193 of the Business Corporations
Act, R.S.A. 2000 c.B-9, as amended (the "ABCA"), involving Assure and the
holders of common shares, preferred shares and warrants to purchase common
shares (collectively, the "Assure Securityholders"), which Arrangement is
described in greater detail in the Information Circular dated August 5, 2005
accompanying this Notice of Petition. At the hearing of the Petition, Assure
intends to seek:
(a) an order approving the Arrangement pursuant to the provisions
of Section 193 of the ABCA;
(b) a declaration that the terms and conditions of the Arrangement, and
the procedures relating thereto, are fair to the persons affected,
or alternatively, that the Arrangement is approved after considering
these matters;
(c) a declaration that the Arrangement will, upon filing of Articles of
Arrangement under the ABCA, be effective in accordance with its
terms; and
(d) such other and further orders, declarations and directions as the
Court may deem just.
AND NOTICE IS FURTHER GIVEN that the Petition is directed to be heard before the
Court of Queen's Bench of Alberta at the Court House, 611 - 4th Street S.W.,
Calgary, Alberta, Canada, on Wednesday, September 7, 2005 at 1:15 p.m. (Calgary
time) or as soon thereafter as counsel may be heard. Any Assure Securityholders
or other interested party desiring to support or oppose the Petition may appear
at the time of the hearing in person or by counsel for that purpose provided
such Assure Securityholders or other interested party files with the Court and
serves upon Assure, on or before 4:00 p.m. (Calgary time) on Thursday, September
1, 2005, a Notice of Intention to Appear setting out such Assure Securityholders
or interested party's address for service and indicating whether such Assure
Securityholders or interested party intends to support or oppose the Petition or
make submissions, together with any evidence or materials which are to be
presented to the Court. Service on Assure is to be effected by delivery to its
solicitors at the address set forth below.
AND NOTICE IS FURTHER GIVEN that, at the hearing and subject to the foregoing,
Assure Securityholders and any other interested persons will be entitled to make
representations as to, and the Court will be requested to consider, the fairness
of the Arrangement. If you do not file a Notice of Intention to Appear and
attend, either in person or by counsel, at that time, the Court may approve or
refuse to approve the Arrangement as presented, or may approve it subject to
such terms and conditions as the Court may deem fit, without any further notice.
In the event the hearing is adjourned, only those persons who have filed and
served a Notice of Appearance shall be served with notice of the adjourned date.
- V -
AND NOTICE IS FURTHER GIVEN that the Court, by an Interim Order dated August 5,
2005, has given directions as to the calling and holding of a special meeting of
the Assure Securityholders for the purpose of such Assure Securityholders voting
upon a special resolution to approve the Arrangement and, in particular, has
directed that such registered Assure Securityholders shall have the right to
dissent under the provisions of Section 191 of the ABCA, as amended by, and upon
compliance with, the terms of the Interim Order.
AND NOTICE IS FURTHER GIVEN that the Final Order approving the Arrangement will,
if made, serve as the basis for an exemption, pursuant to Section 3(a)(10) of
the United States Securities Act of 1933, as amended, from the registration
requirements thereof with respect to the issuance of securities to Assure
Securityholders resident in the United States.
AND FURTHER NOTICE IS GIVEN that a copy of the said Petition and other documents
in the proceedings will be furnished to any Assure Securityholders or other
interested party requesting the same by the under mentioned solicitors for
Assure upon written request delivered to such solicitors as follows:
Bennett Jones LLP
Barristers & Solicitors
4500 Bankers Hall East
855 - 2nd Street S.W.
Calgary, Alberta, T2P 4K7
Attention: Mr. Ken Lenz
Facsimile: (403) 265-7219
Further notice of the steps in these proceedings will only be given to those who
have filed a Notice of Intention to Appear.
DATED at the City of Calgary, in the Province of Alberta, this 5th day of
August, 2005.
BY ORDER OF THE BOARD OF
DIRECTORS
--------------------------------------
(signed) "Harvey Lalach"
President and Chief Executive Officer
Assure Energy, Inc.
ASSURE ENERGY, INC.
INFORMATION CIRCULAR
Special Meeting of Securityholders of Assure Energy, Inc.
to be held on Wednesday, September 7, 2005
INTRODUCTION
This Information Circular is furnished in connection with the solicitation of
proxies by and on behalf of the management of Assure Energy, Inc. for use at the
Meeting and any adjournments thereof. No Person has been authorized to give any
information or make any representation in connection with the Arrangement or
other matters to be considered at the Meeting other than those contained in this
Information Circular and, if given or made, any such information or
representation must not be relied upon as having been authorized. This
Information Circular does not constitute an offer to sell securities, a
solicitation of an offer to purchase securities or the solicitation of a proxy
by any Person in any jurisdiction in which such an offer or solicitation is not
authorized or in which the Person making such offer or solicitation is not
qualified to do so or to any Person to whom it is unlawful to make such an offer
or solicitation of an offer or proxy solicitation. Neither delivery of this
Information Circular nor any distribution of the securities referred to in this
Information Circular shall, under any circumstance, create an implication that
there has been no change in the information set forth therein since the date of
this Information Circular.
All summaries of, and reference to, the Arrangement in this Information Circular
are qualified in their entirety by reference to the complete text of the
Arrangement Agreement and the Plan of Arrangement, copies of which are attached
as Appendix B and Exhibit 1 to Appendix B respectively, to this Information
Circular. You are urged to carefully read the full text of the Arrangement
Agreement and the Plan of Arrangement.
All capitalized terms in this Information Circular but not otherwise defined
herein have the meanings set forth under "Glossary of Terms". Information
contained in this Information Circular is given as of August 5, 2005 unless
otherwise specifically stated.
INFORMATION FOR UNITED STATES SHAREHOLDERS
Assure Securityholders in the United States should be aware that such
requirements are different from those of the United States applicable to
registration statements under the U.S. Securities Act and proxy statements under
the U.S. Exchange Act. The financial statements for Assure and certain pro-forma
and historical financial information included herein have been prepared in
accordance with Canadian generally accepted accounting principles, which differ
from United States generally accepted accounting principles in certain material
respects, and thus are not comparable in all respects to financial statements
and pro-forma and historical financial information of United States companies.
Likewise, information concerning oil and gas properties, reserves and operations
of GEOCAN and Assure has been prepared in accordance with Canadian disclosure
standards and is not comparable in all respects to similar information for
United States companies.
The GEOCAN Shares to be issued pursuant to the Arrangement have not been and
will not be registered under the U.S. Securities Act and are being issued in
reliance on the exemption from registration set forth in Section 3(a)(l0)
thereof. The U.S. Securities Act imposes limitations on the resale of GEOCAN
Shares issued pursuant to the Arrangement to persons who were "affiliates" of
GEOCAN or Assure before the Arrangement or of GEOCAN after the Arrangement. See
"Part II -- The Arrangement -- Other Matters -- Resale of GEOCAN Shares --
United States" in this Information Circular.
- 1 -
Assure Securityholders should be aware that the Arrangement and the ownership of
securities of GEOCAN and Assure may have material tax consequences in the United
States that are not described in this Information Circular which may include,
without limitation, the possibility that the Arrangement is a taxable
transaction, in whole or in part, for United States federal income tax purposes,
and the possibility that either Assure or GEOCAN may be classified as a passive
foreign investment company, which classification would subject holders to
special, generally adverse tax consequences.
Assure Securityholders resident in the United States are advised to consult
their own tax advisors to determine the particular tax consequences to them of
the Arrangement in light of their particular situation, as well as any tax
consequences that may arise under the laws of any other relevant foreign, state,
local, or other taxing jurisdiction.
Enforcement by Assure Securityholders of civil liabilities under United States
securities laws may be affected adversely by the fact that GEOCAN and Assure are
organized under the laws of a jurisdiction outside the United States, that
some or all of their officers and directors are residents of countries other
than the
United States, that some of the experts named in this Information Circular are
residents of countries other than the United States, and that all or a
substantial portion of the assets of GEOCAN and Assure and such persons may be
located outside the United States.
The GEOCAN Shares to be issued in connection with the Arrangement have not been
approved or disapproved by the SEC or securities regulatory authorities of any
state of the United States, nor has the SEC or the securities regulatory
authorities of any state of the United States passed on the adequacy or accuracy
of this Information Circular. Any representation to the contrary is a criminal
offence.
- 2 -
GLOSSARY OF TERMS
Unless the context indicates otherwise, the following terms shall have the
meanings set out below when used in this Information Circular, including the
Summary and in Appendix E. Terms and abbreviations used in the other Appendices
to this Information Circular are defined separately and the terms and
abbreviations defined below are not used therein, except where otherwise
indicated.
"ABCA" means the Business Corporations Act (Alberta), R.S.A. 2000, c. B-9,
as amended, including the regulations promulgated thereunder.
"ADP" means ADP Investor Communications Services.
"Agreement Date" means the effective date of the Arrangement Agreement,
being July 8, 2005.
"Arrangement" means the arrangement under the provisions of Section 193 of
the ABCA, as set out in the Plan of Arrangement.
"Arrangement Agreement" means the amended and restated arrangement
agreement effective as of the Agreement Date between Assure and GEOCAN, pursuant
to which Assure and GEOCAN have proposed to implement the Arrangement, a copy of
which is annexed as Appendix B to this Information Circular, including any
amendments thereto.
"Arrangement Resolution" means the special resolutions approving the
Arrangement to be presented to and considered by the Assure Securityholders at
the Meeting, the full text of which are set forth in Appendix A to this
Information Circular.
"Articles of Arrangement" means one or more articles of arrangement in
respect of the Arrangement required under subsection 193(10) of the ABCA to be
filed with the Registrar after the Final Order is made so as to give effect to
the Arrangement.
"Assure" means Assure Energy, Inc., a body corporate amalgamated under the
ABCA.
"Assure Acquisition Proposal" means the making of any proposal to Assure
or its shareholders from any person (other than GEOCAN) which constitutes, or
may reasonably be expected to lead to (in either case whether in one transaction
or a series of transactions): (i) an acquisition of 20% or more of the
outstanding voting shares of Assure; (ii) any acquisition of any material
portion of the assets of Assure or an Assure Subsidiary; (iii) an amalgamation,
arrangement, merger, or consolidation of any of Assure or an Assure Subsidiary;
or (iv) any take-over bid, issuer bid, exchange offer, recapitalization,
liquidation, dissolution, reorganization into a royalty trust or income fund or
similar transaction involving Assure or any other transaction, the consummation
of which would or could reasonably be expected to impede, interfere with,
prevent or delay the Arrangement or which would or could reasonably be expected
to materially reduce the benefits of the Arrangement to GEOCAN.
"Assure Board" means the Board of Directors of Assure.
"Assure Break Fee" means the sum of $1,000,000.
"Assure Engineer's Report" means the evaluation report effective December
31, 2004 prepared by Sproule in respect of the crude oil, natural gas and
natural gas products reserves of Assure. "Assure Financial Statements" means the
unaudited financial statements of Assure for the three month period ended March
31, 2005 and the audited financial statements of Assure for the years ended
December 31, 2004, 2003 and 2002.
"Assure Preferred Shares" means the preferred shares in the capital of
Assure.
- 3 -
"Assure Preferred Shareholders" means the holders of Assure Preferred
Shares.
"Assure Preferred Share Waiver" means a waiver, in form and substance
satisfactory to GEOCAN, acting reasonably, provided by all holders of Assure
Preferred Shares, waiving, for the period expiring December 31, 2005, any right
to exercise a conversion right attached to such shares whereby they may be
converted into Assure Shares.
"Assure Proposed Agreement" has the meaning ascribed thereto in "Part II -
The Arrangement - The Arrangement Agreement - Non-Solicitation and Superior
Proposals."
"Assure Securities" means the Assure Shares, Assure Preferred Shares and
Assure Warrants.
"Assure Securityholders" means the holders from time to time of Assure
Shares, Assure Preferred Shares and Assure Warrants.
"Assure Shareholder Loan Mandatory Repayment" means the pro rata repayment
of loans made by certain shareholders of Assure to Assure in the aggregate
amount of $1,500,000.
"Assure Shares" means the common shares in the capital of Assure.
"Assure Shareholders" means the holders of Assure Shares.
"Assure Subsidiaries" means Assure Oil & Gas Corp. and Westerra 2000 Inc.
"Assure Warrants" means, collectively, all outstanding warrants of Assure
entitling the holders to acquire Assure Shares on the basis set forth in the
certificates issued in respect of such warrants.
"Assure Warrantholders" means the holders of Assure Warrants.
"Beneficial Holders" means Assure Securityholders who do not hold Assure
Securities in their own names.
"Business Day" means a day on which banks are generally open for the
transaction of commercial business in Calgary, Alberta, but does not in any
event include a Saturday, a Sunday or a statutory holiday under applicable Law.
"Confidentiality Agreement" means the confidentiality agreement between
GEOCAN and Assure dated May 10, 2005.
"Continental" means Continental Stock Transfer & Trust Company.
"Court" means the Court of Queen's Bench of Alberta.
"Default Notice" has the meaning ascribed thereto in "Part II - The
Arrangement - The Arrangement Agreement - Termination of the Arrangement
Agreement".
"Depositary" means Continental, at its offices as set forth in the Letter
of Transmittal.
"Dissent Rights" means the right of dissent available to Assure
Securityholders in respect of the Arrangement pursuant to the ABCA, the Interim
Order and Article 3 of the Plan of Arrangement.
"Dissenting Securityholder" means a registered Assure Securityholder who
validly exercises, and does not, prior to the Effective Date, withdraw or
otherwise relinquish, the Dissent Rights.
- 4 -
"Effective Date" means the later of the date of the Meeting, the date of
issuance of the Final Order (unless appealed in which case, the Effective Date
shall be the date such appeal is delivered or withdrawn) and the date upon which
the last Regulatory Approval is obtained.
"Effective Time" means 12:01 a.m. (Calgary time) on the Effective Date.
"Exchange Ratio" means 0.7 of a GEOCAN Share per one Assure Share.
"Fairness Opinion" means the fairness opinion of Haywood Securities that
the Arrangement is fair, from a financial point of view, to the Assure
Shareholders, a copy of which is attached hereto as Appendix H to this
Information Circular.
"Final Order" means the final order of the Court approving the Arrangement
pursuant to subsection 193(9) of the ABCA, as such order may be amended by the
Court at any time prior to the Effective Date or, if appealed, then, unless such
appeal is withdrawn or denied, as affirmed or amended on appeal.
"GEOCAN" means GEOCAN Energy Inc., a body corporate incorporated under the
ABCA.
"GEOCAN Board" means the Board of Directors of GEOCAN.
"GEOCAN Break Fee" means the sum of $1,500,000.
"GEOCAN Engineer's Reports" means the evaluation reports effective
December 31, 2004 prepared by Sproule, in respect of the crude oil, natural gas
and natural gas products reserves of GEOCAN.
"GEOCAN Financial Statements" means the unaudited financial statements of
GEOCAN for the three month period ended March 31, 2005 and the audited financial
statements of GEOCAN for the year ended December 31, 2004, the nine month period
ended December 31, 2003 and the year ended March 31, 2002.
"GEOCAN Securities" means collectively the GEOCAN Shares and GEOCAN
Warrants.
"GEOCAN Shareholders" means the holders of GEOCAN Shares.
"GEOCAN Shares" means the Class "A" common shares in the capital of
GEOCAN.
"GEOCAN Warrants" means, collectively, all warrants of GEOCAN to be issued
upon the conversion of the Assure Warrants in accordance with the terms of such
Assure Warrants.
"Governmental Authority" means any: (a) multinational, federal,
provincial, state, regional, municipal, local or other government, governmental
or public department, central bank, court, tribunal, arbitral body, commission,
board, bureau or agency, domestic or foreign; (b) self-regulatory organization
or applicable stock exchange or stock quotation system; (c) any subdivision,
agent, commission, board, or authority of any of the foregoing including the SEC
or any Canadian securities commission or similar regulatory authority; or (d)
any quasi-governmental or private body exercising any regulatory, expropriation
or taxing authority under or for the account of any of the foregoing.
"Haywood Securities" means Haywood Securities Inc., retained by Assure to
provide the Fairness Opinion.
"Income Tax Act" means the Income Tax Act (Canada), as amended, including
the regulations promulgated thereunder.
"Interim Order" means an interim order of the Court concerning the
Arrangement under subsection 193(4) of the ABCA, as the same may be amended, in
respect of the Arrangement.
- 5 -
"Information Circular" means the Notice of Meeting and management
information circular of Assure to be mailed by Assure to the Assure
Securityholders in connection with the holding of the Meeting and approval of
the Arrangement Resolution.
"Laws" means all applicable laws (including common law), statutes,
regulations, statutory rules, orders, ordinances, and the terms and conditions
of any approvals, licences or judgements of any applicable published notes and
policies of any Governmental Authority, and the term "applicable", with respect
to such Laws and in the context that refers to one or more Persons, means such
Laws that apply to such Person or Persons or its or their business, undertaking,
property or securities and that emanate from a Governmental Authority having
jurisdiction over the Person or Persons or its or their business, undertaking,
property or securities.
"Letter of Transmittal" means the letter of transmittal respecting Assure
Shares and Assure Warrants which will be forwarded to Assure Shareholders and
Assure Warrantholders following approval of the Arrangement.
"Lockup Agreements" mean the lockup agreements of the directors and
officers of Assure in the form attached as Exhibit 2 to Appendix B.
"Material Adverse Change", means any change or effect (or any condition,
event or development involving a prospective change or effect) in or on the
business, operations, results of operations, assets, capitalization, financial
condition, licenses, permits, concessions, rights or liabilities, whether
contractual or otherwise, of a party which is materially adverse to the
business, operations or financial condition of such party, other than a change
or effect (i) which arises out of a matter that has been disclosed in writing to
the other party prior to the other party entering into the Arrangement
Agreement, (ii) resulting from conditions affecting the oil and gas industry in
the jurisdictions in which such party holds its assets, taken as a whole, or
(iii) resulting from general economic, financial, currency exchange, securities
or commodity market conditions (including, without limitation, the prices of
crude oil and natural gas) in Canada, the United States or elsewhere.
"Material Adverse Effect" means any effect that is, or would reasonably be
expected to be, material and adverse to the business, operations or financial
condition of Assure or GEOCAN but "Material Adverse Effect" shall not include an
effect resulting from any of the matters referred to in subparagraphs (i), (ii)
or (iii) of the definition of "Material Adverse Change" above.
"Meeting" means the special meeting of Assure Securityholders to be held
for the purpose of considering and, if deemed advisable, passing the Arrangement
Resolution.
"Notice of Meeting" means the notice of the Meeting.
"Notice of Petition" means the notice of petition by Assure and GEOCAN to
the Court for the Final Order, which accompanies this Information Circular.
"OTCBB" means the over-the-counter bulletin board of the National
Association of Securities Dealers, Inc. in the United States of America.
"Outside Date" means, subject to section 5.1 of the Arrangement Agreement,
October 6, 2005.
"Person" includes any individual, sole proprietorship, partnership, firm,
entity, limited partnership, limited liability company, unlimited liability
company, unincorporated association, unincorporated syndicate, unincorporated
organization, trust, body, corporation, or Governmental Authority.
"Plan of Arrangement" means the plan of arrangement substantially in the
form and content of Exhibit 1 to the Arrangement Agreement and any amendments or
variations made thereto in accordance with the Arrangement Agreement, the Plan
of Arrangement or made at the direction of the Court.
- 6 -
"Pre-Effective Date Period" means the period between the Agreement Date
and the Effective Date, subject to the earlier termination of the Arrangement
Agreement in accordance with its terms.
"Pro-forma Combined Financial Statements" means the unaudited pro-forma
combined financial statements for GEOCAN, after giving effect to the Arrangement
as at and for the three month period ended March 31, 2005 and the financial year
ended December 31, 2004.
"Registrar" means the registrar appointed pursuant to Section 263 of the
ABCA.
"Regulatory Approvals" means those sanctions, rulings, consents, orders,
exemptions, permits and other approvals (including the lapse, without objection,
of a prescribed time under a statute or regulation that states that an
arrangement may only be implemented if a prescribed time lapses following the
giving of notice without an objection being made) of any Governmental Authority
including compliance with the "blue sky" or other applicable securities law of
any U.S. state where holders of Assure Shares, Assure Preferred Shares or Assure
Warrants reside.
"SEC" means the United States Securities and Exchange Commission.
"Sproule" means Sproule Associates Limited, independent petroleum
consultants based in Calgary, Alberta.
"Superior Proposal" means, in respect of Assure or its assets, an Assure
Acquisition Proposal in respect of which the board of directors of Assure has
determined in good faith: (a) that funds or other consideration necessary for
the Assure Acquisition Proposal are or are likely to be available; (b) after
consultation with its financial advisor (if any) that such Assure Acquisition
Proposal would, if consummated in accordance with its terms, result in a
transaction, taken as a whole, more favourable to Assure shareholders than the
Arrangement; and (c) after receiving the advice of outside legal counsel to such
effect, that the taking of such action is recommended for the board of directors
to act in a manner consistent with statutory or fiduciary duties of the
directors under applicable law.
"TSX" means the Toronto Stock Exchange.
"U.S." or "United States" means the United States of America, its
territories and possessions, any state of the United States, and the District of
Columbia.
"U.S. Exchange Act" means the United States Securities Exchange Act of
1934, as amended.
"U.S. Securities Act" means the United States Securities Act of 1933, as
amended.
Words importing the singular number may include the plural and vice
versa and words importing any gender include all genders.
All dollar amounts set forth in this Information Circular and the
Appendices attached hereto are in Canadian dollars, except where otherwise
indicated.
- 7 -
ABBREVIATIONS
In this Information Circular, except in Appendix D which sets out the
abbreviations used therein, the abbreviations set forth below have the following
meanings:
Oil and Natural Gas Liquids Natural Gas
-----------------------------------------------------------------------------------------------------------------------
bbl..................... barrel Mcf................ thousand cubic feet
--------------------------- barrels Mcf/d.............. thousand cubic feet per day
bbls.................... barrels per day MMcf............... million cubic feet
bbls/d.................. barrels of oil equivalent MMcf/d............. million cubic feet per day
boe..................... barrels of oil equivalent per
boe/d................... day
Mbbl.................... thousand barrels
Mboe.................... thousand barrels of oil
NGL..................... equivalent
stb..................... natural gas liquids
standard stock tank barrel
Other
AECO....................... Intra-Alberta Nova Inventory Transfer Price (NIT net price of natural gas)
API........................ American Petroleum Institute
ARTC ...................... Alberta Royalty Tax Credit
m3......................... cubic metres
M$......................... thousands of dollars
Disclosure provided herein in respect of boes may be misleading,
particularly if used in isolation. A boe conversion ratio of six Mcf to one bbl
is based on an energy equivalency conversion method primarily applicable at the
burner tip and does not represent a value equivalency at the wellhead.
- 8 -
CAUTIONARY STATEMENT CONCERNING FORWARD-LOOKING STATEMENTS
This Information Circular, including all Appendices attached hereto and all
documents incorporated by reference herein, contains forward-looking statements.
All statements other than statements of historical fact contained in this
Information Circular are forward-looking statements, including, without
limitation, statements regarding Assure's or GEOCAN's future financial position,
business strategy, proposed acquisitions, budgets, litigation, project costs and
plans and objectives of management for future operations. Many of these
statements can be identified by looking for words such as "believe," "expects,"
"will," "intends," "projects," "anticipates," "estimates," "continues" or
similar words or the negative thereof. Assure, and, where applicable, GEOCAN,
cannot assure you that the plans, intentions or expectations upon which these
forward-looking statements are based will occur. These forward-looking
statements are subject to risks, uncertainties and assumptions, including those
discussed elsewhere in this Information Circular. Although Assure believes that
the expectations represented in such forward-looking statements are reasonable,
there can be no assurance that these expectations will prove to be correct. Some
of the risks which could affect Assure's and GEOCAN's future results and could
cause the results to differ materially from those expressed in these
forward-looking statements include: the impact of general economic conditions in
Canada and the United States; industry conditions, including fluctuations in the
price of oil and natural gas and royalties payable in respect of oil and gas
production; the impact of governmental regulation of the oil and gas industry,
including environmental regulation; fluctuations in foreign exchange or interest
rates; stock market volatility; the need to obtain required approvals from
regulatory authorities; the uncertainty inherent in estimating oil and gas
reserves; the impact of competition; difficulties encountered during the
exploration for and production of oil and gas; variations in production and
problems inherent to the marketability of oil and gas, including the proximity
to and capacity of oil and gas pipelines and processing equipment; reservoir
characteristics; and the uncertainty inherent in attracting capital.
The information set forth under the heading "Part III - Information Relating to
GEOCAN, Post-Arrangement - Risk Factors" in this Information Circular and under
"Risk Factors" in Appendix D and Appendix E attached hereto, identifies
additional factors that could affect Assure's and GEOCAN's respective
operations, results and performance. Assure Securityholders should carefully
consider these factors.
Any forward-looking statements are expressly qualified in their entirety by this
cautionary statement. Moreover, neither Assure nor anyone else assumes
responsibility for the accuracy or completeness of any forward-looking
statements. The forward-looking statements included in this Information Circular
are made as of the date of this Information Circular and Assure undertakes no
obligation to publicly update such forward-looking statements to reflect new
information, subsequent events or otherwise. Assure Securityholders should not
place undue reliance on forward-looking statements.
- 9 -
SUMMARY OF INFORMATION CIRCULAR
The following is a summary of certain information contained elsewhere in
this Information Circular, including the Appendices hereto, and is qualified in
its entirety by reference to the more detailed information contained or referred
to elsewhere in this Information Circular or in the Appendices hereto. Terms
with initial capital letters used in this Summary are defined in the "Glossary
of Terms" and "Abbreviations" or in Appendix D, as applicable. In this summary,
all dollar amounts are in Canadian dollars unless otherwise indicated.
The Corporations
Assure is a publicly traded oil and gas corporation which is engaged in
the acquisition of, exploration for, and the exploitation, development and
production of, oil and natural gas in Western Canada. For the three months ended
March 31, 2005, Assure's average daily production was 488 bbls/d of oil and
liquids and 1.93 MMcf/d of natural gas.
GEOCAN is a publicly traded oil and gas corporation engaged in the
acquisition of, exploration for, and the exploitation, development and
production of, oil and natural gas in four core areas, namely central Alberta,
east central Alberta, the Lloydminster area of eastern Alberta and southeast
Saskatchewan. For the three months ended March 31, 2005, GEOCAN's average daily
production was 1,915 bbls/d of oil and liquids and 1.7 MMcf/d of natural gas.
The Assure Meeting
The Meeting will be held on Wednesday, September 7, 2005 at 10:00 a.m.
(Calgary time), at the offices of Bennett Jones LLP, 4500, 855 - 2nd Street
S.W., Calgary, Alberta, for the purpose of considering and, if deemed advisable,
passing, with or without variation, the Arrangement Resolution approving the
Arrangement.
Description of the Arrangement
On July 9, 2005, GEOCAN and Assure entered into the Arrangement Agreement,
as amended and restated on August 2, 2005, a copy of which is attached as
Appendix B to this Information Circular. The Arrangement Agreement provides for
the implementation of the Plan of Arrangement, a copy of which is attached as
Exhibit 1 to the Arrangement Agreement. The description in this Information
Circular of the Arrangement and the Arrangement Agreement is a summary only and
is qualified in its entirety by reference to the full text of the Arrangement
Agreement and the Plan of Arrangement.
The following summarizes the events which will occur under the Plan of
Arrangement on the Effective Date if all conditions to the implementation of the
Arrangement (including obtaining the requisite Court and Assure Securityholder
approvals) have been satisfied or waived:
(a) all of the issued and outstanding Assure Shares, Assure Preferred
Shares and Assure Warrants held by Dissenting Securityholders as of
the Effective Time shall be deemed to have been transferred to
Assure and cancelled and shall cease to be issued and outstanding
and, as of the Effective Time, such Dissenting Securityholders shall
cease to have any rights as Assure Securityholders, other than the
right to be paid the fair value of their Assure Shares, Assure
Preferred Shares or Assure Warrants, as the case may be, and the
names of such Dissenting Securityholders shall be removed from the
register of holders of Assure Shares, Assure Preferred Shares and
Assure Warrants, as applicable; and
(b) all of the issued and outstanding Assure Shares beneficially owned
by Assure Shareholders at the Effective Time shall be transferred to
GEOCAN, solely in exchange for the issue by GEOCAN, to such Assure
Shareholders in respect of such Assure Shares, of fully paid and
non-assessable common shares of GEOCAN on the basis of 0.7 of a
GEOCAN Share for each Assure Share.
- 10 -
No fractional GEOCAN Shares will be issued pursuant to the Arrangement. In
the event that the conversions contemplated by the Plan of Arrangement would
result in an Assure Shareholder being entitled to a fractional GEOCAN Share, the
number of GEOCAN Shares to be issued to each such former Assure Shareholder will
be rounded up to the next whole number of GEOCAN Shares. In calculating such
fractional interests, all Assure Shares held by an Assure Shareholder prior to
the Effective Time will be aggregated.
The respective obligations of GEOCAN and Assure to complete the
transactions contemplated by the Plan of Arrangement are subject to a number of
conditions which must be satisfied or waived in order for the Arrangement to
become effective. If the Arrangement is approved by the Assure Securityholders,
the Final Order is obtained, and all of the conditions to completion of the
Arrangement are fulfilled or waived, Assure is required to file a copy of the
Final Order and the Articles of Arrangement with the Registrar under the ABCA in
order to give effect to the Arrangement.
Directors and Officers
The GEOCAN Board, following the completion of the Arrangement, will be
composed of Messrs. Christopher J. Bloomer, Raymond P. Cej, Bradley J. Farris,
William C. Guinan, Garry W. Lohuis, Wayne S. Wadley and a nominee of Assure to
be named later. The senior officers of GEOCAN following the Arrangement will be
composed of the current senior officers of GEOCAN. See "Part III - Information
Relating to GEOCAN, Post Arrangement - Directors and Officers of GEOCAN" in this
Information Circular.
Benefits of the Arrangement
The Assure Board and management believes that the Arrangement is in the
best interests of the Assure Securityholders and that the Arrangement provides a
number of benefits including:
(a) the combined company will have a larger production base and greater
financial resources, enabling it to more effectively undertake and
accelerate its oil and natural gas development and exploration
opportunities;
(b) the combined company will have a focused and experienced management
team with a strong record for creating shareholder value;
(c) the combined company will have increased operating efficiencies;
(d) the combined company will have increased market capitalization and a
wider shareholder base allowing greater access to capital and
improved liquidity;
(e) the combined company will have a stronger balance sheet providing
for greater financial flexibility;
(f) the combined company will have a balanced inventory of exploration
and development projects; and
(g) the transaction provides generally for the tax deferred rollover of
Assure Shares into GEOCAN Shares under the Income Tax Act for Assure
Shareholders resident in Canada and a tax free disposition of Assure
Shares into GEOCAN Shares for Assure Shareholders not resident in
Canada. See "Part II - The Arrangement - Certain Canadian Federal
Income Tax Considerations" in this Information Circular.
- 11 -
Effect of the Arrangement
Each Assure Shareholder, other than Dissenting Securityholders, will be
deemed to transfer the Assure Shares held by them to GEOCAN in exchange for the
applicable number of GEOCAN Shares determined by the Exchange Ratio. Each Assure
Preferred Share, other than Assure Preferred Shares held by Dissenting
Securityholders, shall remain an Assure Preferred Share. Each Assure Warrant,
other than Assure Warrants held by Dissenting Securityholders, will become
warrants exercisable into GEOCAN Shares in accordance with the terms of the
Assure Warrants. Assure has agreed, in the Arrangement Agreement, to use
reasonable commercial efforts to cause the holders of Assure A Warrants and
Assure B Warrants to exercise such warrants. Assure and certain Assure
Warrantholders may enter into agreements to exercise such warrants whereby the
Assure Warrantholder, rather than paying the exercise price and receiving an
Assure Share, will receive the in-the-money amount of the Assure Warrant plus a
premium for the remaining time value of the Assure Warrant, payable in Assure
Shares.
Assuming there are no Dissenting Securityholders and prior to the exercise
of any Assure Warrants, there will be approximately 41,063,171 GEOCAN Shares
outstanding after giving effect to the Arrangement, on a non-diluted basis.
Current GEOCAN Shareholders will hold approximately 23,961,973 GEOCAN Shares, on
a non-diluted basis, immediately following completion of the Arrangement,
representing approximately 58% of the issued and outstanding GEOCAN Shares
(non-diluted). Current Assure Securityholders will hold approximately 17,101,198
GEOCAN Shares (on a non-diluted basis) immediately following completion of the
Arrangement, representing approximately 42% of the issued and outstanding GEOCAN
Shares (non-diluted). The foregoing information is approximate due to the
rounding of fractional shares pursuant to the Arrangement and the exercise of
the Assure Warrants.
The following graph illustrates the effect of the Arrangement on Assure
Securityholders.
Prior to Arrangement
----------------- ----------------- ------------------ ----------------
| GEOCAN | |Assure Preferred| | Assure | | Assure |
|Securityholders | |Securityholders | |Securityholders | |Warrantholders |
----------------- ----------------- ------------------ ----------------
| | | | | | | |
------------------------------ ---------------------------
| | | |
| GEOCAN | | Assure |
| | | |
------------------------------ ---------------------------
Subsequent to Arrangement
----------------- ------------------ ----------------
| GEOCAN | | Assure | | Assure |
|Securityholders | |Securityholders | |Warrantholders |
----------------- ------------------ ----------------
| | | | | |
----------------------------------
| |
| GEOCAN |
| |
----------------------------------
| | -----------------
| | |Assure Preferred
| | |Securityholders
| | -----------------
| | | |
----------------------------
| |
| Assure |
| |
----------------------------
See "Part II - The Arrangement - Effect of the Arrangement" in this
Information Circular.
- 12 -
The Arrangement Agreement
GEOCAN and Assure entered into the Arrangement Agreement, which provides
for implementation of the Arrangement pursuant to Section 193 of the ABCA. The
Arrangement Agreement contains representations and warranties of and from each
of GEOCAN and Assure, covenants (including restrictions on interim operations
and other matters), and various conditions precedent, with respect to each of
Assure and GEOCAN, to the implementation of the Arrangement. See "Part II - The
Arrangement - The Arrangement Agreement".
Procedure for the Arrangement to Become Effective
Procedural Steps
The Arrangement is proposed to be carried out pursuant to Section 193 of
the ABCA. The following procedural steps must be taken in order for the
Arrangement to become effective:
(a) the Arrangement must be approved by the Assure Securityholders in
the manner set forth in the Interim Order;
(b) the Court must grant the Final Order approving the Arrangement;
(c) all conditions precedent to the Arrangement, as set forth in the
Arrangement Agreement, must be satisfied or waived by the
appropriate party; and
(d) the Final Order and Articles of Arrangement in the form prescribed
by the ABCA must be filed with the Registrar.
Securityholder Approvals
The Interim Order provides that the Arrangement Resolution is required to
be approved by 66 2/3% of all of the votes cast on such resolutions by Assure
Securityholders, voting together as a class, present in person or by proxy at
the Meeting such that (a) each Assure Shareholder is entitled to one vote for
each Assure Share held, (b) each Assure Preferred Shareholder is entitled to one
vote for each Assure Preferred Share held, and (c) each Assure Warrantholder is
entitled to one vote for each Assure Share such holder would be entitled to
receive upon the exercise of the Assure Warrants.
See "Part II - The Arrangement - Procedure for the Arrangement to Become
Effective" in this Information Circular. See also Appendix A to this Information
Circular for the full text of the Arrangement Resolution.
Court Approval
The ABCA provides that the Arrangement requires Court approval. On August
5, 2005 Assure obtained the Interim Order providing for the calling and holding
of the Meeting and other procedural matters. The Interim Order is attached as
Appendix C to this Information Circular.
Subject to the terms of the Arrangement Agreement and to the Arrangement
Resolution being approved at the Meeting in the manner required by the Interim
Order, Assure will make application to the Court for the Final Order at the
Court, 611 - 4th Street S.W., Calgary, Alberta on September 7, 2005 at 1:15 p.m.
(Calgary time) or as soon thereafter as counsel may be heard. Any Assure
Securityholder or other interested party who wishes to participate in or be
represented at the hearing may do so, subject to filing with the Court and
serving on Assure, a Notice of Intention to Appear on or before 4:00 p.m. on
Thursday, September 1, 2005, together with any evidence or materials which are
to be presented to the Court, setting out the Assure Securityholder's or other
interested party's address for service and indicating whether such Assure
Securityholder or other interested party intends to support or oppose the
petition or make submissions. See "Notice of Petition" in this Information
Circular. See "Part II - The Arrangement - Procedures for the Arrangement to
become Effective - Court Approval".
- 13 -
Regulatory Approvals
The Arrangement requires approval of certain regulatory authorities. The
Arrangement Agreement provides that these approvals are conditions precedent to
the Arrangement becoming effective. GEOCAN will make application to such
authorities prior to the Effective Date in order to obtain all approvals
required in respect of the Arrangement. There can be no assurance that the
requisite approvals will be granted on a timely basis or on conditions
satisfactory to Assure and GEOCAN. See "Part II - The Arrangement - Procedures
for the Arrangement to become Effective - Regulatory Approvals".
Timing
If the Meeting is held as scheduled and is not adjourned and the other
necessary conditions of the Arrangement are satisfied or waived, Assure will
apply to the Court for the Final Order approving the Arrangement. If the Final
Order is obtained on September 7, 2005 in form and substance satisfactory to
GEOCAN and Assure, and all other conditions specified are satisfied or waived,
Assure expects the Effective Date of the Arrangement will be September 8, 2005.
See "Part II - The Arrangement - Timing".
Fairness Opinion
The Assure Board retained Haywood Securities as its financial advisors
pursuant to an agreement effective April 21, 2005. Pursuant to this agreement,
Haywood Securities has considered the fairness, from a financial point of view,
of the Arrangement to the Assure Shareholders.
The Assure Board has received the Fairness Opinion from Haywood
Securities, which states that, on the basis of the assumptions and
considerations summarized therein and based on the Exchange Ratio, Haywood
Securities views the Arrangement as fair, from a financial point of view to the
Assure Shareholders.
See "Part II - The Arrangement - Fairness Opinion" and the Fairness
Opinion attached as Appendix H to this Information Circular. The Fairness
Opinion should be read carefully and in its entirety.
Recommendation of the Assure Board
The Assure Board has determined that the Arrangement is in the best
interests of Assure and the Assure Securityholders and is fair to the Assure
Securityholders and, as such, has authorized the submission of the Arrangement
to the Assure Securityholders for approval and to the Court for the Final Order.
The Assure Board unanimously recommends that Assure Securityholders vote
in favour of the Arrangement Resolution. See "Part II - The Arrangement -
Recommendation of the Assure Board".
Interests and Intentions of Directors, Officers, Insiders and Significant
Securityholders in Matters to be Acted Upon
As of the date hereof, the directors and officers of Assure, as a group,
beneficially own or control, directly or indirectly, or exercise control or
direction over, 445,600 (?%) Assure Shares. The directors and officers of Assure
have indicated their intention to vote the Assure Shares and Assure Warrants
beneficially held or controlled by them in favour of the Arrangement. All of the
directors and officers of Assure have entered into the Lockup Agreements
requiring them to vote their Assure Securities in favour of the Arrangement. See
"Part II - The Arrangement - Interests and Intentions of Directors, Officers,
Insiders and Significant Securityholders in Matters to be Acted Upon".
- 14 -
Expenses of The Arrangement
If completed, all out-of-pocket expenses incurred in connection with the
Arrangement, the transactions contemplated thereby, the Meeting and the
preparation and mailing of the Information Circular, including legal and
accounting fees, printing costs, financial advisor fees and all disbursements by
advisors, shall be borne by the party incurring such expenses. See "Part II -
The Arrangement - Expenses of the Arrangement".
Stock Exchange Listings
The Assure Shares are currently quoted on the OTCBB under the symbol
"ASURF" and on the Frankfurt Stock Exchange under the symbol "ASL" (WKN 357954).
On July 8, 2005, the last trading day prior to the initial date of the
announcement of the proposed Arrangement, the closing price of the Assure Shares
on the OTCBB was US$0.71 per share. On August 4, 2005, the closing price of the
Assure Shares on the OTCBB was $1.07.
The GEOCAN Shares are listed and posted for trading on the TSX under the
symbol "GCA". On July 8, 2005, the last trading day prior to the initial date of
the announcement of the proposed Arrangement, the closing price of the GEOCAN
Shares on the TSX was $1.52 per share. On August 4, 2005, the closing price of
the GEOCAN Shares on the TSX was $1.97.
It is a condition to the completion of the Arrangement that the TSX shall
have approved the listing of the GEOCAN Shares. Application has been made to
list the GEOCAN Shares issued to Assure Shareholders and Assure Warrantholders
on the TSX. See "Part II - The Arrangement - Stock Exchange Listings".
Certain Canadian Federal Income Tax Consequences
Generally, unless an Assure Shareholder chooses to recognize a gain or
loss on the exchange of Assure Shares for GEOCAN Shares under the Arrangement,
no capital gain or capital loss will result. See "Part II - The Arrangement -
Certain Canadian Federal Income Tax Consequences".
Right of Dissent
Pursuant to the Interim Order, registered Assure Securityholders have been
granted the right to dissent in respect of the Arrangement Resolution, and, if
the Arrangement becomes effective, to be paid the fair value of their securities
in accordance with the provisions of Section 191 of the ABCA, as modified by the
Interim Order. To exercise such right, Assure must receive from the Dissenting
Securityholder a written objection to the Arrangement Resolution, delivered to
Assure, c/o Bennett Jones LLP, 4500 Bankers Hall East, 855 - 2nd Street S.W.,
Calgary, Alberta, T2P 4K7, Attention: Mr. Ken Lenz, by 5:00 p.m. (Calgary time)
two Business Days before the Meeting, and the Dissenting Securityholder must
otherwise comply with Section 191 of the ABCA, as modified by the Interim Order.
See Appendices C and G to this Information Circular for a copy of the Interim
Order and the provisions of Section 191 of the ABCA, respectively.
The statutory provisions covering the Dissent Rights are technical and
complex. Failure to strictly comply with any of the requirements set forth in
Section 191 of the ABCA, as modified by the Interim Order, may result in the
loss of the Dissent Rights. Beneficial Holders whose Assure Securities are
registered in the name of a broker, custodian, nominee or other intermediary who
wish to dissent should be aware that only the registered holders of such
securities are entitled to dissent. Accordingly, a Beneficial Holder desiring to
exercise dissent rights must make arrangements for the Assure Securities
beneficially owned by such Beneficial Holder to be registered in his or her name
prior to the time the written objection to the Arrangement Resolution is
required to be received by Assure, or alternatively, make arrangements for the
registered holder of his or her Assure Securities to dissent on his or her
behalf. Pursuant to the Interim Order, an Assure Securityholder that exercises
the Dissent Rights may not exercise the Dissent Rights in respect of only a
portion of such holder's securities. See "Part II - The Arrangement - Right of
Dissent" in this Information Circular.
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It is a condition to the Arrangement that Assure Securityholders of not
more than 10% of the aggregate of the outstanding Assure Shares, Assure
Preferred Shares and Assure Warrants shall have exercised rights of dissent in
respect to the Arrangement.
Selected Financial Information
The following tables set out certain financial information for GEOCAN and
Assure and certain unaudited pro-forma combined financial information for GEOCAN
and Assure as at and for the three months ended March 31, 2005 after giving
effect to the Arrangement from January 1, 2005 and as at and for the financial
year ended December 31, 2004 after giving effect to the Arrangement from January
1, 2004. The following information should be read in conjunction with the GEOCAN
Financial Statements and Assure Financial Statements set forth or incorporated
by reference in Appendix D and Appendix E to this Information Circular,
respectively, and the Pro-forma Combined Financial Statements set forth in
Appendix F to this Information Circular. See "Part III - Information Relating to
GEOCAN, Post-Arrangement - Selected Financial Information".
For the Three Months Ended March 31, 2005
Assure GEOCAN Pro-forma Combined
(M$) (M$) (M$)
--------------------- --------------------- ---------------------
Net petroleum and natural gas revenue(1).... 2,741 5,841 8,582
Net income (loss)(2)........................ (850) (245) (1,639)
Net income (loss) per Common Share ($)
Basic and diluted........................... (0.04) (0.01) (0.04)
Total Assets(3)............................. 43,405 42,963 112,178
Total Debt and Working Capital 15,088 13,903 35,481
Deficiency..................................
Dividends Declared(4)....................... 35 - 35
For the Year Ended December 31, 2004
Assure GEOCAN Pro-forma Combined
(M$) (M$) (M$)
--------------------- --------------------- ---------------------
Net petroleum and natural gas revenue(1).... 15,976 16,789 30,638
Net income (loss)(2)........................ (3,663) (1,155) (8,437)
Net income (loss) per Common Share ($)
Basic and diluted........................... (0.18) (0.07) (0.24)
Total Assets(3)............................. 39,082 38,000 -
Total Debt and Working Capital 17,241 9,450 -
Deficiency..................................
Dividends Declared(4)....................... 227 - 227
Note:
(1) See Note 3(a) of the Pro-Forma income statement for the year ended December
31, 2004 attached hereto as Appendix F. The Pro-forma Combined Net
Petroleum and natural gas revenue amounts exclude operating results from
the Chestermere property.
(2) See Note 3(b-d) of the Pro-Forma income statement for the year ended
December 31, 2004 and Note 4(a-b) of the Pro-Forma income statement for the
three months ended March 31, 2005 attached hereto as Appendix F. The
Pro-forma Combined amounts for the Net loss include adjustments to record
depletion on the fair value of assets acquired, eliminate minority interest
previously recorded and record additional future income tax recoveries.
- 16 -
(3) See Note 2(a) of the Pro-Forma consolidated balance sheet as at March 31,
2005 and December 31, 2004 attached hereto as Appendix F. The Pro-forma
Combined Total Assets amounts include adjustments to record the excess of
the fair value over book value of assets acquired from Assure.
(4) For the three months ended March 31, 2005, Assure paid a dividend on the
Assure Preferred Shares of $35,000. For the year ended December 31, 2004,
Assure paid a dividend on the Assure Preferred Shares of $227,000.
Selected Reserves and Operational Information
It should not be assumed that the estimates of future net revenues
presented in the tables below represent the fair market value of the reserves.
There is no assurance that the constant prices and costs assumptions and
forecast prices and costs assumptions will be attained and variances could be
material. The recovery and reserve estimates of the Corporation's crude oil,
natural gas liquids and natural gas reserves provided herein are estimates only
and there is no guarantee that the estimated reserves will be recovered. Actual
crude oil, natural gas and natural gas liquid reserves may be greater than or
less than the estimates provided herein.
The following table sets forth certain reserves information for GEOCAN and
Assure and pro-forma combined reserves information for GEOCAN and Assure, for
the year ended December 31, 2004 after giving effect to the Arrangement from
January 1, 2004. The following information should be read in conjunction with
the information contained in Appendix D and Appendix E to this Information
Circular. See "Part III - Information Relating to GEOCAN, Post-Arrangement -
Selected Reserves and Operational Information".
For the Year Ended December 31, 2004
Forecast Prices and Costs(1) Assure GEOCAN Pro-forma Combined(2)(3)
--------------------- --------------------- ---------------------
Gross Reserves (Mboe)
Proved................................ 2,372 2,556 4,928
Probable.............................. 1,446 1,476 2,922
Total................................. 3,818 4,032 7,850
Net Reserves (Mboe)
Proved................................ 1,915 2,203 4,118
Probable.............................. 1,149 1,284 2,433
Total................................. 3,064 3,487 6,551
For the Year Ended December 31, 2004
Constant Prices and Costs(1) Assure GEOCAN Pro-forma Combined(2)(3)
--------------------- --------------------- ---------------------
Gross Reserves (Mboe)
Proved................................ 2,323 2,159 4,482
Probable.............................. 1,372 1,268 2,640
Total................................. 3,695 3,427 7,122
Net Reserves (Mboe)
Proved................................ 1,873 1,926 3,799
Probable.............................. 1,088 1,138 2,226
Total................................. 2,961 3,064 6,025
The following table sets forth the net present value of future net
revenue, before deducting income taxes and discounted at 10%, derived from the
reserves of GEOCAN and Assure for GEOCAN and Assure, and pro-forma combined net
present value of future net revenues before deducting income taxes, for the year
ended December 31, 2004, after giving effect to the Arrangement as at January 1,
2004. The following information should be read in conjunction with the
information contained in Appendix D and Appendix E to this Information Circular.
For the Year Ended December 31, 2004
Assure GEOCAN Pro-forma Combined
--------------------- --------------------- ---------------------
Forecast Prices and Costs(1) (M$) (M$) (M$)(2)(3)
Proved................................ 23,616 29,401 53,017
Probable.............................. 12,623 11,494 24,117
Total................................. 36,239 40,895 77,134
- 17 -
For the Year Ended December 31, 2004
Assure GEOCAN Pro-forma Combined
--------------------- --------------------- ---------------------
Constant Prices and Costs(1) (M$) (M$) (M$)(2)(3)
Proved................................ 20,872 16,956 37,828
Probable.............................. 13,881 6,701 20,582
Total................................. 34,753 23,657 58,410
The following table sets forth certain operational information for
GEOCAN and Assure and pro-forma combined operational information for GEOCAN and
Assure for the three months ended March 31, 2005, after giving effect to the
Arrangement, as at January 1, 2005. The following information should be read in
conjunction with the information contained in Appendix D and Appendix E to this
Information Circular.
Assure GEOCAN Pro-forma Combined(2)(4)
--------------------- --------------------- ---------------------
Average daily production
Oil & NGLs - bbls/d..................... 488 1,921 2,409
Natural gas - Mcf....................... 1,926 1,812 3,738
Combined boe/d @ 6:1.................... 809 2,223 3,032
Average prices
Oil & NGLs ($/bbls)..................... 38.22 26.01 30.04
Natural gas ($/Mcf)..................... 6.12 7.27 6.89
Combined ($/boe)........................ 37.63 29.35 32.08
Notes:
(1) All pricing information for constant and forecast prices and costs and
other pricing assumptions relating to GEOCAN and Assure are included in
Appendices D and E to this Information Circular, respectively.
(2) Pro-Forma combined reserves information is calculated solely by combining
the reserves of Assure and GEOCAN. No adjustments have been made to reflect
synergies or efficiencies resulting from the Arrangement or for
Saskatchewan capital tax or abandonment costs, neither of which have been
applied in the case of GEOCAN. Actual reserves information of GEOCAN
subsequent to the Arrangement may be materially different from these
figures and readers are cautioned not to place undue reliance on such
information.
(3) Assure disposed of producing properties in the Chestermere area of Alberta
in early January 2005. Assure's working interest proved and proved plus
probable reserves as estimated by Sproule for this property as of December
31, 2004 was 417 Mboe and 659 Mboe, respectively.
(4) Pro-Forma combined average prices information reflects a weighted average
percentage of approximately one third Assure and two-thirds GEOCAN. Actual
prices of GEOCAN subsequent to the Arrangement may be materially different
from these figures. The Assure Securityholders are advised to avoid placing
undue reliance on these figures.
GEOCAN has provided the information contained in this Information Circular
concerning GEOCAN and its businesses, including its financial information and
financial statements. Assure assumes no responsibility for the accuracy or
completeness of such information, nor for any omission on the part of GEOCAN of
facts or events which may affect the accuracy of such information.
GEOCAN and Assure are, and GEOCAN will be, subject to certain risks that
should be carefully considered. These risks include volatility of commodity
prices, operational risks, and an inability to replace reserves. See "Part III -
Information Relating to GEOCAN, Post-Arrangement - Risk Factors" in the
Information Circular and "Risk Factors" in Appendices D & E attached hereto.
- 18 -
PART I - GENERAL PROXY MATTERS
Purpose of Solicitation
This Information Circular is provided in connection with the solicitation
of proxies by the management of Assure for use at the Meeting to be held at the
offices of Bennett Jones LLP, 4500, 855 - 2nd Street S.W., Calgary, Alberta, on
Wednesday, September 7, 2005 at 10:00 a.m. (Calgary time) and at any
adjournments thereof, for the purposes set forth in the Notice of Meeting
accompanying this Information Circular.
Information contained herein is given as of August 5, 2005 unless
otherwise specifically stated. All sums are expressed in Canadian dollars unless
otherwise indicated.
Solicitation and Revocation of Proxies
It is expected that the solicitation will be primarily by mail, but some
proxies may be solicited personally or by telephone, facsimile transmission or
other electronic means by the directors, officers or employees of Assure. No
remuneration will be paid to any person for soliciting proxies, but Assure may,
upon request, pay to brokerage firms, fiduciaries or other persons holding
Assure Securities in their name for others, the charges incurred for
distributing the form of proxy ("Form of Proxy") to those persons for whom they
hold Assure Securities. The cost of any such solicitation will be borne by
Assure.
The Form of Proxy is solicited by and on behalf of the management of
Assure. Harvey Lalach, President and Chief Executive Officer of Assure and,
alternatively, Colin McNeil, Director of Assure, are named as proxies in the
enclosed Form of Proxy for Assure Securityholders at the Meeting.
An Assure Securityholder submitting a proxy has the right to appoint a
nominee (who need not be an Assure Securityholder) to represent him or her at
the Meeting other than the persons designated by management in the enclosed Form
of Proxy, by inserting the name of the Assure Securityholder's chosen nominee in
the space provided for that purpose on the applicable enclosed Form of Proxy,
and by striking out the names of the management designees printed thereon or by
completing another proper instrument of proxy. Such Assure Securityholder should
notify the nominee of the appointment, obtain the nominee's consent to act as
proxy and instruct the nominee as to how the Assure Securityholder's Assure
Shares, Assure Preferred Shares or Assure Warrants are to be voted.
A Form of Proxy will not be valid for the Meeting or any adjournments
thereof unless it is in writing and signed by the Assure Securityholder or by
his or her attorney authorized in writing or, if the Assure Securityholder is a
corporation, by a duly authorized officer or attorney of such corporation, and
forwarded so it reaches or is deposited with Continental, 17 Battery Place, New
York, NY 10004, not later than twenty-four hours (excluding Saturdays, Sundays
and statutory holidays) prior to the time fixed for the Meeting, or any
adjournments thereof.
An Assure Securityholder who has submitted a proxy may revoke it at any
time prior to the exercise of that proxy. If a person who has given a proxy
attends personally at the Meeting such person may revoke the proxy and vote in
person. In addition to revocation in any other manner permitted by law, a proxy
may be revoked by instrument in writing executed by the Assure Securityholder or
his or her attorney authorized in writing or, if the Assure Securityholder is a
corporation, by a duly authorized officer or attorney of such corporation, and
deposited either at the head office of Assure at any time up to 4:30 p.m.
(Calgary time) on the last Business Day before the day of the Meeting, or with
the Chairman of the Meeting on the day of the Meeting, and upon either of such
deposits, the proxy is revoked. An Assure Securityholder who revokes his or her
proxy and does not replace it with another that is deposited with Continental at
least twenty-four hours (excluding Saturdays, Sundays and holidays) before the
time of the Meeting may not vote his or her Assure Securities in any manner at
the Meeting.
19
Voting Shares and Principal Holders Thereof
The Assure Board has fixed August 2, 2005 as the record date for the
determination of Assure Securityholders entitled to receive notice of the
Meeting. Assure Shareholders and Assure Preferred Shareholders of record on that
date are entitled to receive notice of and attend the Meeting and to vote
thereat on the basis of one vote for each Assure Share and Assure Preferred
Shares held, except to the extent that: (i) a registered Assure Shareholder or
Assure Preferred Shareholder has transferred the ownership of any Assure Shares
or Assure Preferred Shares subsequent to such date; and (ii) the transferee of
those Assure Shares or Assure Preferred Shares produces properly endorsed share
certificates, or otherwise establishes that he or she owns such shares and
demands, not later than ten days before the Meeting, that his or her name be
included on the list of the Assure Securityholders entitled to vote at the
Meeting, in which case the transferee shall be entitled to vote such Assure
Shares or Assure Preferred Shares at the Meeting. Assure Warrantholders of
record on the record date are entitled to receive notice of and attend the
Meeting and to vote thereat, together with the Assure Shareholders, on the basis
of one vote for each Assure Share such holder would be entitled to receive upon
the valid exercise of the Assure Warrants. As at the date hereof, there were
issued and outstanding 24,430,284 Assure Shares, 22,750 Assure Preferred Shares
(consisting of 17,500 Series A Shares and 5,250 Series B Shares) and 8,906,700
Assure Warrants. For the principal holders of Assure Securities, see "Principal
Shareholders" in Appendix E to this Information Circular.
Pursuant to the by-laws of Assure, as modified by the Interim Order,
business may be transacted at the Meeting if there are not less than two persons
present at the Meeting, holding or representing not less than 10% of the Assure
Securities entitled to be voted at the Meeting. The Interim Order provides that
if no quorum is present within thirty minutes of the appointed time for the
Meeting, the Meeting shall stand adjourned to a date, as determined by the
Chairman of the Meeting, which is not less than seven days and not more than
thirty days after the Meeting. The Interim Order also provides that at such
adjourned Meeting, those persons present in person or by proxy and entitled to
vote at such Meeting will constitute a quorum at such adjourned Meeting.
Advice to Beneficial Holders of Assure Shares
The information set forth in this section is of significant importance to
a substantial number of Assure Shareholders who do not hold their Assure Shares
in their own name. Assure Shareholders who do not hold their Assure Shares in
their own name should note that only proxies deposited by Assure Shareholders
whose names appear on the records of Assure as the registered holders of Assure
Shares can be recognized and acted upon at the Meeting. If Assure Shares are
listed in an account statement provided to an Assure Shareholder by a broker,
then in almost all cases those Assure Shares will not be registered in such
Assure Shareholder's name on the records of Assure. Such Assure Shares will more
likely be registered under the name of the Assure Shareholder's broker or an
agent of that broker. In Canada, the vast majority of such Assure Shares are
registered in the name of CDS & Co., the registration name for The Canadian
Depository for Securities Limited, which company acts as a nominee for many
Canadian brokerage firms. Assure Shares held by brokers or their nominees can
only be voted for or against resolutions upon the instructions of the Beneficial
Holder. Without specific instructions, brokers/nominees are prohibited from
voting Assure Shares for their clients. Assure does not know for whose benefit
the Assure Shares registered in the name of CDS & Co. are held.
20
Applicable regulatory policy requires intermediaries/brokers to seek
voting instructions from Beneficial Holders in advance of securityholders'
meetings. Every intermediary/broker has its own mailing procedures and provides
its own return instructions, which should be carefully followed by Beneficial
Holders in order to ensure that their Assure Shares are voted at the Meeting.
The purpose of a form of proxy supplied to a Beneficial Holder by its broker is
limited to instructing the broker how to vote on behalf of the Beneficial
Holder. The majority of brokers now delegate responsibility for obtaining
instructions from clients to ADP. ADP typically mails a scannable Voting
Instruction Form in lieu of the Form of Proxy issued by Assure. Beneficial
Holders are requested to complete and return the Voting Instruction Form to ADP
by mail or facsimile. Alternatively, Beneficial Holders can call a toll-free
telephone number or access ADP's dedicated voting website at
www.proxyvotecanada.com to deliver their voting instructions and vote the Assure
Shares held by them. ADP then tabulates the results of all instructions received
and provides appropriate instructions respecting the voting of Assure Shares to
be represented at the Meeting. A Beneficial Holder receiving a Voting
Instruction Form cannot use that Voting Instruction Form to vote Assure Shares
directly at the Meeting as the Voting Instruction Form must be returned as
directed by ADP well in advance of the Meeting in order to have the Assure
Shares voted. Beneficial Holders who receive forms of proxies or voting
materials from organizations other than ADP should complete and return such
forms of proxies or voting materials in accordance with the instructions on such
materials in order to properly vote their Assure Shares at the Meeting.
Voting of Proxies
The persons named in the enclosed Form of Proxy will, if the instructions
are clear, vote the Assure Shares, Assure Preferred Shares or Assure Warrants
represented by that Form of Proxy and, where the Assure Securityholders specify
a choice with respect to any matter to be acted upon, the Assure Shares, Assure
Preferred Shares or Assure Warrants will be voted on in accordance with the
specification so made.
In the absence of such specification, the Assure Shares, Assure Preferred
Shares or Assure Warrants represented by this Form of Proxy will be voted in
favour of the matters to be acted upon as set out herein. The persons appointed
under the Form of Proxy furnished by Assure are conferred with discretionary
authority with respect to amendments or variations of those matters specified in
the Form of Proxy and Notice of Meeting and with respect to any other matters
which may properly be brought before the Meeting. In the event that amendments
or variations to matters identified in the Notice of Meeting are properly
brought before the Meeting, it is the intention of the persons designated in the
enclosed Form of Proxy to vote in accordance with their best judgement on such
matter or business. At the time of printing this Information Circular, Assure
knows of no such amendment, variation or other matter.
PART II - THE ARRANGEMENT
Background to the Arrangement
On June 17, 2005, Assure and GEOCAN signed a letter of intent, which was
amended by a letter agreement dated June 29, 2005, to negotiate a formal
agreement to effect the business combination of Assure and GEOCAN by means of a
share exchange on the basis of the Exchange Ratio. Pursuant to the letter of
intent it was agreed that the acquisition would be structured in the most
advantageous manner for both parties, giving consideration to tax and regulatory
implications. The letter of intent provided that the formal agreement was
subject to the completion of due diligence, the good faith negotiation of a
definitive arrangement and certain exclusivity and confidentiality arrangements.
The parties announced the Arrangement Agreement on July 11, 2005.
The Assure Board retained Haywood Securities as its financial advisor
pursuant to an agreement effective April 21, 2005. Pursuant to this agreement,
Haywood Securities agreed to consider the fairness, from a financial point of
view, of the Arrangement to the Assure Shareholders. GEOCAN and Assure, with the
assistance of their respective legal and financial advisors, proceeded to
negotiate the terms of the Arrangement Agreement.
Haywood Securities has advised the Assure Board that it would be in a
position to provide the Fairness Opinion. The Assure Board has determined that
the proposed Arrangement is in the best interests of Assure and the Assure
Securityholders, has resolved to recommend that Assure Securityholders vote in
favour of the Arrangement Resolution and has authorized the negotiation,
entering into and execution of the Arrangement Agreement.
On July 9, 2005, the parties executed the Arrangement Agreement and
announced the definitive terms of the proposed transaction. On August 2, 2005,
the parties executed the amended and restated Arrangement Agreement. On August
5, 2005, the Assure Board approved the Information Circular and the application
to the Court for the Interim Order.
21
Description of the Arrangement
On July 9, 2005, GEOCAN and Assure entered into the Arrangement Agreement,
a copy of which is attached as Appendix B to this Information Circular. GEOCAN
and Assure entered into an amended and restated Arrangement Agreement on August
2, 2005, which agreement is effective as of July 8, 2005. The Arrangement
Agreement provides for the implementation of the Plan of Arrangement, a copy of
which is attached as Exhibit 1 to the Arrangement Agreement. The description in
this Information Circular of the Arrangement and the Arrangement Agreement is a
summary only and is qualified in its entirety by reference to the full text of
the Arrangement Agreement and the Plan of Arrangement.
The following summarizes the events which will occur under the Plan of
Arrangement on the Effective Date if all conditions to the implementation of the
Arrangement (including obtaining the requisite Court and Assure Securityholder
approvals) have been satisfied or waived:
(a) all of the issued and outstanding Assure Shares, Assure Preferred
Shares and Assure Warrants held by Dissenting Securityholders as of
the Effective Time shall be deemed to have been transferred to
Assure and cancelled and shall cease to be issued and outstanding
and, as of the Effective Time, such Dissenting Securityholders shall
cease to have any rights as Assure Securityholders, other than the
right to be paid the fair value of their Assure Shares, Assure
Preferred Shares or Assure Warrants, as the case may be, and the
names of such Dissenting Securityholders shall be removed from the
register of holders of Assure Shares, Assure Preferred Shares and
Assure Warrants, as applicable; and
(b) all of the issued and outstanding Assure Shares beneficially owned
by Assure Shareholders at the Effective Time shall be transferred to
GEOCAN, solely in exchange for the issue by GEOCAN, to such Assure
Shareholders in respect of such Assure Shares, of GEOCAN on the
basis of 0.7 of a GEOCAN Share for each Assure Share.
No fractional GEOCAN Shares will be issued pursuant to the Arrangement. In
the event that the conversions contemplated by the Plan of Arrangement would
result in an Assure Shareholder being entitled to a fractional GEOCAN Share, the
number of GEOCAN Shares to be issued to each such former Assure Shareholder will
be rounded up to the next whole number of GEOCAN Shares. In calculating such
fractional interests, all Assure Shares held by Assure Shareholders prior to the
Effective Time will be aggregated.
The respective obligations of GEOCAN and Assure to complete the
transactions contemplated by the Plan of Arrangement are subject to a number of
conditions which must be satisfied or waived in order for the Arrangement to
become effective. If the Arrangement is approved by the Assure Securityholders,
the Final Order is obtained, and all of the conditions to completion of the
Arrangement are fulfilled or waived, Assure is required to file a copy of the
Final Order and the Articles of Arrangement with the Registrar under the ABCA in
order to give effect to the Arrangement.
Directors and Officers
The GEOCAN Board, following the completion of the Arrangement, will be
composed of Christopher J. Bloomer, Raymond P. Cej, Bradley J. Farris, William
C. Guinan, Garry W. Lohuis, Wayne S. Wadley and a nominee of Assure to be named
later. The senior officers of GEOCAN, following the Arrangement, will be
composed of the current senior officers of GEOCAN. See "Part III - Information
Relating to GEOCAN, Post Arrangement - Directors and Officers of GEOCAN" in this
Information Circular.
Benefits of the Arrangement
The Assure Board believes that the Arrangement is in the best interests
of the Assure Securityholders and that the Arrangement provides a number of
benefits including:
22
(a) the combined company will have a larger production base and greater
financial resources, enabling it to more effectively undertake and
accelerate its oil and natural gas development and exploration
opportunities;
(b) the combined company will have a focused and experienced management
team with a strong record for creating shareholder value;
(c) the combined company will have increased operating efficiencies;
(d) the combined company will have increased market capitalization and a
wider shareholder base allowing greater access to capital and
improved liquidity;
(e) the combined company will have a stronger balance sheet providing
for greater financial flexibility;
(f) the combined company will have a well balanced inventory of
exploration and development projects; and
(g) the transaction provides generally for the tax deferred rollover of
Assure Shares into GEOCAN Shares under the Income Tax Act for Assure
Shareholders resident in Canada and a tax free disposition of Assure
Shares into GEOCAN Shares for Assure Shareholders not resident in
Canada. See "Part II - The Arrangement - Certain Canadian Federal
Income Tax Considerations" in this Information Circular.
Effect of the Arrangement
Each Assure Shareholder, other than Dissenting Securityholders, will be
deemed to transfer the Assure Shares held by them to GEOCAN in exchange for the
applicable number of GEOCAN Shares determined by the Exchange Ratio. Each Assure
Preferred Share, other than Assure Preferred Shares held by Dissenting
Securityholders, shall remain an Assure Preferred Share. Each Assure Warrant,
other than Assure Warrants held by Dissenting Securityholders, will become
warrants exercisable into GEOCAN Shares in accordance with the terms of the
Assure Warrants. Assure has agreed, in the Arrangement Agreement, to use
reasonable commercial efforts to cause the holders of Assure A Warrants and
Assure B Warrants to exercise such warrants. Assure and certain Assure
Warrantholders may enter into agreements to exercise such warrants whereby the
Assure Warrantholder, rather than paying the exercise price and receiving an
Assure Share, will receive the in-the-money amount of the Assure Warrant plus a
premium for the remaining time value of the Assure Warrant, payable in Assure
Shares.
Assuming there are no Dissenting Securityholders and prior to the exercise
of any Assure Warrants, there will be approximately 41,063,171 GEOCAN Shares
outstanding after giving effect to the Arrangement, on a non-diluted basis.
Current GEOCAN Shareholders will hold approximately 23,961,973 GEOCAN Shares, on
a non-diluted basis, immediately following completion of the Arrangement,
representing approximately 58% of the issued and outstanding GEOCAN Shares
(non-diluted). Current Assure Securityholders will hold approximately 17,101,198
GEOCAN Shares (on a non-diluted basis) immediately following completion of the
Arrangement, representing approximately 42% of the issued and outstanding GEOCAN
Shares (non-diluted). The foregoing information is approximate due to the
rounding of fractional shares pursuant to the Arrangement and the exercise of
the Assure Warrants.
23
The following graph illustrates the effect of the Arrangement on Assure
Securityholders.
Prior to Arrangement
----------------- ----------------- ------------------ ----------------
| GEOCAN | |Assure Preferred| | Assure | | Assure |
|Securityholders | |Securityholders | |Securityholders | |Warrantholders |
----------------- ----------------- ------------------ ----------------
| | | | | | | |
------------------------------ ---------------------------
| | | |
| GEOCAN | | Assure |
| | | |
------------------------------ ---------------------------
Subsequent to Arrangement
----------------- ------------------ ----------------
| GEOCAN | | Assure | | Assure |
|Securityholders | |Securityholders | |Warrantholders |
----------------- ------------------ ----------------
| | | | | |
----------------------------------
| |
| GEOCAN |
| |
----------------------------------
| | -----------------
| | |Assure Preferred
| | |Securityholders
| | -----------------
| | | |
----------------------------
| |
| Assure |
| |
----------------------------
See "Part II - The Arrangement - Effect of the Arrangement" in this
Information Circular.
The Arrangement Agreement
GEOCAN and Assure entered into the Arrangement Agreement, which provides
for the implementation of the Arrangement pursuant to Section 193 of the ABCA.
The Arrangement Agreement contains representations and warranties of and from
each of GEOCAN and Assure, covenants (including restrictions on interim
operations and other matters), and various conditions precedent, with respect to
each of Assure and GEOCAN, to the implementation of the Arrangement.
Conditions to the Arrangement
The respective obligations of GEOCAN and Assure to complete the
transactions contemplated by the Arrangement Agreement are subject to a number
of conditions, which must be satisfied or waived in order for the Arrangement to
become effective. These conditions are provided in the Arrangement Agreement and
include the following:
24
(a) Mutual Conditions
The obligations of GEOCAN and Assure to complete the Arrangement are subject to
fulfillment of the following conditions precedent on or before the Effective
Date or such other time as is specified below:
(i) the Interim Order shall have been granted in form and
substance satisfactory to GEOCAN and Assure, acting
reasonably, on or before August 18, 2005 and shall not have
been set aside or modified in a manner unacceptable to such
parties acting reasonably, on appeal or otherwise;
(ii) a special resolution or resolutions approving the Arrangement
shall have been passed by the Assure Securityholders as may be
required pursuant to the Interim Order and any applicable
regulatory requirements on or before October 5, 2005, subject
to an extension of up to 20 days pursuant to Section 10.4 of
the Arrangement Agreement, in form and substance satisfactory
to each of GEOCAN and Assure, each acting reasonably;
(iii) on or before October 5, 2005, subject to an extension of up to
20 days pursuant to Section 10.4 of the Arrangement Agreement,
the Final Order shall have been granted in form and substance
satisfactory to GEOCAN and Assure, each acting reasonably;
(iv) the Arrangement shall have become effective on or before
October 6, 2005, subject to an extension of up to 20 days
pursuant to Section 10.4 of the Arrangement Agreement;
(v) the Articles of Arrangement relating to the Arrangement shall
be in form and substance satisfactory to GEOCAN and Assure,
each acting reasonably;
(vi) there shall be no action taken under any existing applicable
law or regulation, nor any statute, rule, regulation or order
which is enacted, enforced, promulgated or issued by any
court, department, commission, board, regulatory body,
government or governmental authority or similar agency,
domestic or foreign, that:
(A) makes illegal or otherwise directly or indirectly
restrains, enjoins or prohibits the Arrangement or any
other material transactions contemplated herein; or
(B) results in a judgment or assessment of material damages
directly or indirectly relating to the transactions
contemplated herein;
(vii) all requisite domestic and foreign regulatory approvals and
consents, necessary in connection with the transactions
contemplated hereby including, without limitation, those under
the Investment Canada Act and of the TSX to the issuance of
the GEOCAN Shares to be issued under the Arrangement and those
of the SEC shall have been obtained on terms and conditions
satisfactory to GEOCAN and Assure, each acting reasonably, and
all applicable domestic and foreign statutory or regulatory
waiting periods to the transactions contemplated under the
Arrangement shall have expired or been terminated, and no
objection or opposition shall have been filed, initiated or
made by any regulatory authority during any applicable
statutory or regulatory period;
(viii) except, in the case of (i) below for those disclosed in
writing to GEOCAN or Assure, as the case may be, no act,
action, suit or proceeding shall have been threatened or taken
before or by any domestic or foreign court or tribunal or
government agency or other regulatory authority or
administrative agency or commission or by any elected or
appointed public official or private person (including,
without limitation, any individual, corporation, firm, group
or other entity) in Canada or elsewhere, whether or not having
the force of law, and no law, regulation or policy shall have
been proposed, enacted, promulgated or applied:
25
(A) which has the effect or may have the effect to cease
trade, enjoin, prohibit or impose material limitations
or conditions on the Arrangement; or
(B) which would have a Material Adverse Effect on GEOCAN or
Assure;
(ix) there shall not have occurred any actual or threatened change
(including any proposal by the Minister of Finance (Canada) to
amend the Income Tax Act (Canada) or any announcement,
governmental or regulatory initiative, condition, event or
development involving a change or a prospective change) that,
in the sole judgment of GEOCAN or Assure, acting reasonably,
directly or indirectly, has or may have material adverse
significance with respect to the business or operations of
either of GEOCAN or Assure, in which either of them has a
material interest or with respect to the regulatory regime
applicable to their respective business and operations;
(x) all third parties consents, including, without limitation,
consent of lenders to GEOCAN or Assure, required in connection
with the matters contemplated by the Arrangement Agreement and
the Arrangement shall have been obtained; and
(xi) if applicable, the relevant waiting period in section 123 of
the Competition Act (Canada) shall have expired and: (i) an
advance ruling certificate ("ARC") pursuant to section 102 of
the Competition Act shall have been issued by the Commissioner
of the Competition Bureau ("Commissioner") appointed under the
Competition Act (Canada); or (ii) a "no action letter"
satisfactory to each of GEOCAN and Assure, acting reasonably,
indicating that the Commissioner has determined not to make an
application for an order under section 92 of the Competition
Act (Canada) shall have been received from the Commissioner,
and any terms and conditions attached to any such letter shall
be acceptable to each of GEOCAN and Assure, acting reasonably;
and in addition, in the event that the ARC or "no action"
letter described in (i) or (ii) in the foregoing is issued,
there shall be no threatened or actual application by the
Commissioner for an order under section 92 or 100 of the
Competition Act (Canada).
The foregoing conditions are for the mutual benefit of GEOCAN and Assure and may
be waived, in whole or in part, by GEOCAN and Assure together, at any time.
Subject to Section 10.4 of the Arrangement Agreement, if any of the conditions
precedent set forth in this Article shall not be complied with or waived as
aforesaid on or before the date required for the performance thereof, GEOCAN or
Assure may, in addition to the other remedies they may have at law or in equity,
rescind and terminate the Arrangement Agreement by written notice to the other
party.
(b) GEOCAN Conditions
The obligations of GEOCAN to complete the Arrangement are subject to fulfillment
of the following conditions precedent on or before the Effective Date:
(i) the representations and warranties made by Assure in Section
6.1 of the Arrangement Agreement shall be true as of the
Effective Date as if made on and as of such date (except to
the extent such representations and warranties speak to a
particular date and except, in the case of Section 6.1(e) of
the Arrangement Agreement, to the extent the number of Assure
Shares, Assure Preferred Shares and Assure Warrants has
changed as a result of the exercise of such warrants prior to
the Effective Date) except where the failure of such
representations and warranties to be true and correct would
not have a Material Adverse Effect on Assure and Assure shall
have provided to GEOCAN a certificate of an officer of Assure
certifying (to the best of his knowledge and not in his
personal capacity) as to such matters on the Effective Date;
26
(ii) Assure shall have furnished GEOCAN with:
(A) certified copies of the resolutions duly passed by the
board of directors of Assure approving the Arrangement
Agreement and the consummation of the transactions
contemplated thereby and directing the submission of the
Arrangement for approval at the Assure Meeting and
recommending that Assure Securityholders vote in favour
of the Arrangement; and
(B) certified copies of the special resolution of Assure
Securityholders, duly passed at the Assure Meeting,
approving the Arrangement in accordance with the Interim
Order;
(iii) Assure shall have complied in all material respects with its
covenants in the Arrangement Agreement and Assure shall have
provided to GEOCAN a certificate of an officer certifying (to
the best of his knowledge and not in his personal capacity) as
to such compliance;
(iv) not more than 500,000 Assure A Warrants and not more than
1,200,000 Assure B Warrants shall remain outstanding;
(v) GEOCAN shall be satisfied that, immediately after the
Effective Date, there will not be outstanding any securities
exercisable or convertible into Assure Shares;
(vi) the aggregate number of Assure Securities held by Assure
Securityholders exercising their right to dissent shall not
exceed an amount equal to 10% of the aggregate of the
outstanding Assure Shares, Assure Preferred Shares and Assure
Warrants;
(vii) resignations, on or prior to the Effective Date, of all of
Assure's directors, officers, employees and consultants shall
have been delivered (in the case of directors, in a manner
which allows for the orderly replacement of directors);
(viii) releases by Assure's directors and officers of Assure and
GEOCAN, which shall include normal course exceptions
respecting any statutory or contractual indemnities by Assure
of such parties, shall have been delivered;
(ix) no lawsuits, claims or regulatory proceedings shall be
pending, threatened or in existence that would prevent or
effect in a materially adverse manner GEOCAN's ownership or
operation of all or a material portion of Assure's business or
assets or impose any limitations on GEOCAN's exercise of full
ownership rights of the Assure Shares;
(x) the board of directors of Assure shall not have withdrawn,
modified or changed any of its recommendations, approvals,
resolutions or determinations referred to in Section 6.1(u) of
the Arrangement Agreement in a manner materially adverse to
GEOCAN or to the completion of the Arrangement;
(xi) there shall not have occurred any Material Adverse Change in
respect of Assure;
(xii) the Assure Preferred Share Waiver shall have been delivered;
and
(xiii) GEOCAN shall have received an opinion of legal counsel dated
as of the Effective Date, in respect of such matters related
to the transactions contemplated by the Arrangement Agreement
and the Arrangement as may be reasonably be requested by
GEOCAN.
27
GEOCAN shall be entitled to terminate the Arrangement Agreement by written
notice at any time after July 18, 2005 if Lockup Agreements have not been
executed and delivered to GEOCAN by each of the current directors and officers
of Assure.
The foregoing conditions precedent are for the benefit of GEOCAN and may be
waived, in whole or in part, by GEOCAN in writing at any time. Subject to
Section 10.4 of the Arrangement Agreement, if any of the conditions precedent
set forth herein shall not be complied with or waived by GEOCAN on or before the
date required for the performance thereof, GEOCAN may, in addition to the other
remedies they may have at law or equity, rescind and terminate the Arrangement
Agreement by written notice to Assure.
(c) Assure Conditions
The obligation of Assure to complete the Arrangement is
subject to the fulfillment of the following conditions
precedent on or before the Effective Date:
(i) the representations and warranties made by GEOCAN in Section
7.1 of the Arrangement Agreement shall be true as of the
Effective Date as if made on and as of such date (except to
the extent such representation and warranty speaks as of a
particular date) except where the failure of such
representations and warranties to be true and correct would
not have a Material Adverse Effect on GEOCAN and GEOCAN shall
have provided to Assure a certificate of an officer of GEOCAN
certifying (to the best of his knowledge and not in his
personal capacity) as to such matters on the Effective Date;
(ii) GEOCAN shall have furnished Assure (all in form acceptable to
Assure, acting reasonably) with certified copies of the
resolutions duly passed by the board of directors of GEOCAN
approving the Arrangement Agreement and the consummation of
the transactions contemplated hereby;
(iii) GEOCAN shall have complied in all material respects with its
covenants in the Arrangement Agreement and GEOCAN shall have
provided to Assure a certificate of an officer of GEOCAN
certifying (to the best of his knowledge and not in his
personal capacity) as to such compliance;
(iv) releases by GEOCAN and Assure of Assure's directors and
officers, and any employees who have provided releases
pursuant to Section 9.1(u) of the Arrangement Agreement, which
shall include normal course exceptions respecting
confidentiality, fraud, negligence, criminal behaviour,
willful misconduct or failure to act honestly, in good faith
and in the best interests of Assure, shall have been
delivered;
(v) GEOCAN shall have entered into written agreement effective as
of the Effective Date satisfactory to Assure, acting
reasonably, pursuant to which GEOCAN shall agree that, for a
period of three years after the Effective Date, GEOCAN shall
cause to be maintained directors' and officers' liability
insurance providing coverage on a "trailing" or "run-off"
basis for all present (to the Effective Date) and former
directors and officers of Assure with respect to claims
arising from facts or events which occurred before the
Effective Date, such insurance to have substantially the same
coverage limits and terms from time to time as GEOCAN provides
for its own directors and officers;
(vi) there shall not have occurred any Material Adverse Change in
respect of GEOCAN;
28
(vii) the Assure Shareholder Loan Mandatory Repayment shall have
occurred;
(viii) the GEOCAN Shares issueable pursuant to the Arrangement shall
be freely tradable by the holders of such GEOCAN Shares
subject to requirements of general application, the TSX and in
respect of trades by control persons; and
(ix) Assure shall have received an opinion of legal counsel dated
as of the Effective Date, in respect of such matters related
to the transactions contemplated by the Arrangement Agreement
and the Arrangement as may reasonably be requested by Assure.
The foregoing conditions precedent are for the benefit of Assure and may
be waived, in whole or in part, by Assure in writing at any time. Subject to
Section 10.4, if any of the conditions precedent set forth above shall not be
complied with or waived by Assure on or before the date required for the
performance thereof, Assure may, in addition to the other remedies they may have
at law or equity, rescind and terminate the Arrangement Agreement by written
notice from Assure to GEOCAN.
Non-Solicitation and Superior Proposals
The Arrangement Agreement provides that:
(a) Assure shall immediately cease and cause to be terminated all
solicitations, initiations, encouragements, discussions or
negotiations, if any, with any persons conducted before the date of
the Arrangement Agreement with respect to any Assure Acquisition
Proposal and shall immediately request the return or destruction of
all information provided to third parties, if any, who have entered
into a confidentiality agreement with Assure relating to an Assure
Acquisition Proposal and shall use all reasonable commercial efforts
to ensure that such requests are honoured.
(b) Assure shall not, directly or indirectly, authorize or permit any of
the officers, directors or employees of Assure or of any financial
advisor, expert or other person acting on its behalf to:
(i) solicit, initiate or encourage (including, without limitation,
by way of furnishing information or entering into any form of
agreement, arrangement or understanding) an Assure Acquisition
Proposal;
(ii) enter into or participate in any discussions on negotiations
regarding an Assure Acquisition Proposal, or, except in the
ordinary course of business, furnish to any other person any
information with respect to the business, properties,
operations, prospects or conditions (financial or otherwise)
of Assure or an Assure Acquisition Proposal or otherwise
cooperate in any way with, or assist or participate in,
facilitate or encourage, any effort or attempt of any other
person to do or seek to do any of the foregoing; or
(iii) waive, or otherwise forbear (except in respect of non material
matters) in the enforcement of, or enter into or participate
in any discussions, negotiations or agreements to waive or
otherwise forbear in respect of, any rights or other benefits
of Assure under confidential information agreements,
including, without limitation, any "standstill provisions"
thereunder;
provided, however, that notwithstanding any other provisions hereof,
Assure (and its directors, officers, employees and advisors) may:
(iv) engage in discussions or negotiations with a third party who
(without any solicitation, initiation or encouragement,
directly or indirectly, by Assure or any of the officers,
directors or employees of Assure or any financial advisor,
expert or other representative or agent acting on its behalf)
seeks to initiate such discussions or negotiations and,
subject to execution of a confidentiality agreement
substantially similar to the Confidentiality Agreement, may
furnish such third party information concerning Assure and its
business, properties and assets, in each case if, and only to
the extent that:
29
(A) the third party has first made a written bona fide
Assure Acquisition Proposal that is a Superior Proposal;
and
(B) prior to furnishing such information to or entering into
discussions or negotiations with such third party,
Assure provides prompt notice to GEOCAN to the effect
that it is furnishing information to or entering into
discussions or negotiations with such third party
together with a copy of the confidentiality agreement
referenced above and if not previously provided to
GEOCAN, copies of all information provided to such third
party are provided to GEOCAN concurrently with the
provision of such information to such third party.
Assure shall immediately notify GEOCAN orally and in
writing of any inquiries, offers or proposals with
respect to any Assure Acquisition Proposal (including
without limitation, the terms and conditions of any such
proposal (and any amendments or changes thereto), the
identity of the person making it, and if not previously
provided to GEOCAN, copies of all information provided
to such person and all other information reasonably
requested by GEOCAN), shall keep GEOCAN informed of the
status and details of any such inquiry, offer or
proposal and answer GEOCAN's questions with respect
thereto.
(c) Assure shall give GEOCAN 48 hours advance notice of any agreement (and the
terms of such agreement) to be entered into with, or any information to be
supplied to, any person making an inquiry, offer or proposal with respect
to a Superior Proposal and shall confirm the determination of the Assure
Board that the Assure Acquisition Proposal is a Superior Proposal. For a
period of 48 hours from the time that Assure provides notice of such
Superior Proposal to GEOCAN and any amendment thereto, together with the
foregoing confirmation in respect of the determination of the Assure
Board, the Assure Board and Assure agree not to accept, recommend or
approve or enter into any agreement (an "Assure Proposed Agreement") to
implement such a Superior Proposal or release the party from making the
Superior Proposal from any standstill provisions. In addition, in respect
of any Superior Proposal, Assure shall, and shall cause its financial and
legal advisors to, negotiate in good faith with GEOCAN to make such
adjustments in the terms and conditions of the Arrangement Agreement and
the terms of the Arrangement as would enable Assure to proceed with the
transaction contemplated herein, as amended, rather than the Superior
Proposal. In the event that GEOCAN proposes to and does amend the
Arrangement Agreement and the terms of the Arrangement to provide equal or
superior value to that provided under the Superior Proposal within a
period of 48 hours from the time that GEOCAN receives notice of the
Superior Proposal and a copy of the Assure Proposed Agreement (and any
amendments thereto), Assure shall not enter into any Assure Proposed
Agreement regarding the Superior Proposal or any amendment thereof.
(d) Notwithstanding Section 6.1(u) of the Arrangement Agreement in the event
that, prior to the completion of the Arrangement, a Superior Proposal is
offered or made to the Assure Securityholders or Assure, the Assure Board
may fail to make, withdraw, modify or change any recommendation regarding
the Arrangement if, in the opinion of the board of directors acting in
good faith after written advice from outside counsel to such effect, which
is reflected in the minutes of a meeting of the Assure Board (a copy of
the relevant extract of which minutes shall be provided to GEOCAN), the
making or failure to so withdraw, modify or change any recommendation
regarding the Arrangement would be inconsistent with the performance by
the directors of Assure of their fiduciary duties under applicable law,
and provided Assure shall have complied with the provisions of Section 9.3
of the Arrangement Agreement and paid the GEOCAN Break Fee to GEOCAN in
the circumstances where such fee is payable.
30
Payment of Break Fees
Subject to Section 10.4 of the Arrangement Agreement, if at any time after
the date of this Agreement:
(a) the Assure Board fails to recommend that the Assure Securityholders
approve the Arrangement or withdraws or, in any manner adverse to
GEOCAN redefines, modifies or changes any of its recommendations
referred to in Section 6(u) of the Arrangement Agreement, unless it
has the right to do so under Section 9.4 of the Arrangement
Agreement; or
(b) prior to the date of the Meeting:
(i) an Assure Acquisition Proposal that is a Superior Proposal is
publicly announced or made to Assure or the Assure
Securityholders;
(ii) the Superior Proposal has not been withdrawn or expired; and
(A) the Assure Board fails to confirm to the Assure
Securityholders, within five business days after the
making of the Assure Acquisition Proposal its
recommendation that the Assure Securityholders reject
the Superior Proposal; or
(B) Assure enters into an agreement (other than a
confidentiality agreement) with respect to the Superior
Proposal;
and the Arrangement is not approved at the Meeting; or
(c) Assure shall have breached, or failed to comply with, in any
material respect, any of its covenants or other obligations under
the Arrangement Agreement or any of the representations and
warranties of Assure contained in the Arrangement Agreement shall
not be true and correct in all material respects as of the date of
the Arrangement Agreement, except where the failure of such
representations and warranties to be true and correct would not have
a Material Adverse Effect on Assure, or shall have ceased to be true
and correct in any material respect thereafter, except where the
failure of such representations and warranties to be true and
correct would not have a Material Adverse Effect on Assure, (other
than, in either case, as a direct result of and in direct response
to a breach by GEOCAN of its obligations under the Arrangement
Agreement);
then Assure shall, within two business days after the first to occur of
the events described above, pay to GEOCAN the GEOCAN Break Fee. Such
payment shall be made in immediately available funds to an account
designated by GEOCAN. The payment of the GEOCAN Break Fee to GEOCAN shall
represent full and final settlement of all claims of GEOCAN arising in
respect of the matter giving rise to such payment and GEOCAN shall have no
further remedy or recourse in respect of such matter against Assure or its
present or former directors, officers, employers, agents or advisors or
Assure's counsel.
Change of Board Recommendation
The board of directors of Assure reserves the right to not make, withdraw,
redefine, modify or change its recommendations or its determinations referred to
in Section 6.1(u) of the Arrangement Agreement if any of the following occur on
or prior to the Effective Date:
(a) GEOCAN shall have breached, or failed to comply with, in any
material respect, any of its covenants or other obligations under
the Arrangement Agreement;
31
(b) any of the representations and warranties of GEOCAN contained in the
Arrangement Agreement shall not be true and correct in all material
respects as of the date of the Arrangement Agreement or shall have
ceased to be true and correct in any material respect thereafter
(other than as a result of a breach of the Arrangement Agreement by
Assure or of the Lockup Agreements by any of the Assure
Securityholders); or
(c) it becomes certain that any of the conditions contained in Sections
3.1 or 5.1 of the Arrangement Agreement will not be satisfied on or
before the Effective Date (other than as a result of a breach of
this Agreement by Assure or of the Lockup Agreements by any of the
Assure Securityholders who execute and deliver Lockup Agreements)
and all relevant parties do not agree to waive or modify such
conditions.
Termination of the Arrangement Agreement
The Arrangement Agreement may, prior to the filing of the Articles of
Arrangement, be terminated by mutual agreement of GEOCAN and Assure without
further action on the part of the Assure Securityholders. Subject to Section
10.4 of the Arrangement Agreement, notwithstanding any other rights contained
herein, GEOCAN may terminate the Arrangement Agreement upon notice to Assure:
(a) if the Interim Order has been refused, or if granted, is set aside
or modified in a manner unacceptable to GEOCAN, acting reasonably,
on appeal or otherwise;
(b) if the Arrangement is not approved by Assure Securityholders in
accordance with the terms of the Interim Order and all applicable
laws on or before October 5, 2005, subject to an extension of up to
20 days pursuant to Section 10.4 of the Arrangement Agreement;
(c) if the Final Order has not been granted in form and substance
satisfactory to GEOCAN, acting reasonably, on or before October 5,
2005, subject to an extension of up to 20 days pursuant to Section
10.4 of the Arrangement Agreement or, if issued, has been set aside
or modified in a manner unacceptable to GEOCAN, acting reasonably,
on appeal or otherwise;
(d) if the Arrangement has not been completed on or before October 6,
2005, subject to an extension of up to 20 days pursuant to Section
10.4 of the Arrangement Agreement;
(e) if a circumstance giving rise to payment of the GEOCAN Break Fee to
GEOCAN shall have occurred;
(f) if a circumstance giving rise to payment of the Assure Break Fee to
Assure shall have occurred and such payment shall have been made; or
(g) upon any other circumstances hereunder that give rise to a
termination of the Arrangement Agreement by GEOCAN, including those
set forth in Sections 4.1 and 5.1 of the Arrangement Agreement.
Subject to Section 10.4 of the Arrangement Agreement, notwithstanding any other
rights contained herein, Assure may terminate the Arrangement Agreement upon
notice to GEOCAN:
(a) if the Interim Order has been refused, or if granted, is set
aside or modified in a manner unacceptable to Assure, acting
reasonably, on appeal or otherwise;
(b) if the Arrangement is not approved by Assure Securityholders
in accordance with the terms of the Interim Order and all
applicable laws on or before October 5, 2005, subject to an
extension of up to 20 days pursuant to Section 10.4 of the
Arrangement Agreement;
(c) if the Final Order has not been granted in form and substance
satisfactory to GEOCAN, acting reasonably, on or before
October 5, 2005, subject to an extension of up to 20 days
pursuant to Section 10.4 of the Arrangement Agreement, or, if
issued, has been set aside or modified in a manner
unacceptable to Assure, acting reasonably, on appeal or
otherwise;
32
(d) if the Arrangement has not been completed on or before October
6, 2005, subject to an extension of up to 20 days pursuant to
Section 10.4 of the Arrangement Agreement;
(e) if a circumstance giving rise to the payment of the Assure
Break Fee to Assure shall have occurred;
(f) if a circumstance giving rise to payment of the GEOCAN Break
Fee to GEOCAN shall have occurred and such payment shall have
been made; or
(g) upon any other circumstances hereunder that give rise to a
termination of this agreement by Assure, including those set
forth in Sections 3.1 and 5.1 of the Arrangement Agreement.
Each of GEOCAN and Assure will give prompt notice to the other of the
occurrence, or failure to occur, at any time from the date hereof until the
Effective Date, of any event or state of facts which occurrence or failure
would, or would likely to:
(i) cause any of the representations or warranties of either
GEOCAN or Assure contained in the Arrangement Agreement
to be untrue or inaccurate in any material respect on
the date thereof or on the Effective Date; or
(ii) result in the failure to comply with or satisfy any
covenant, condition or agreement to be complied with or
satisfied, in any material respect, by either GEOCAN or
Assure under the Arrangement Agreement on or prior to
the Effective Date.
(a) Subject to Section 10.4(c) of the Arrangement Agreement, neither
GEOCAN nor Assure may elect not to complete the transactions
contemplated hereby pursuant to the non-fulfillment of the
conditions precedent contained in Articles 3, 4 or 5 or pursuant to
Section 10.2 or 10.3 of the Arrangement Agreement or any termination
right arising therefrom and no payments are payable pursuant to
Section 8.2 or 9.3 of the Arrangement Agreement as a result of such
election unless promptly and in any event prior to the filing of the
articles of Arrangement for acceptance by the Registrar, the party
intending to rely thereon has delivered a written notice (a "Default
Notice") to the other party specifying in reasonable detail all
breaches, in any material respect, of covenants, representations and
warranties or other matters which the party delivering such notice
is asserting as the basis for the non-fulfillment of the applicable
condition precedent or termination right, as the case may be.
(b) Nothing in this Section 10.4 of the Arrangement Agreement shall
effect, and no Default Notice shall be required in respect of, (i)
the right of GEOCAN to receive payment of the GEOCAN Break Fee
pursuant to Section 9.3 (a) or (b) of the Arrangement Agreement, or
(ii) the right of either party to terminate the Arrangement
Agreement for matters arising out of the failure to make appropriate
disclosure in writing to the other party.
(c) If any such Default Notice is delivered, provided that the affected
party is proceeding diligently to cure such matter and such matter
is capable of being cured neither party may terminate the
Arrangement Agreement (if they otherwise have the right to do so)
until expiration of a period of twenty (20) days from such Default
Notice and then only if such matter is not cured in all material
respects. If such Default Notice has been delivered prior to the
date of the Meeting, such meeting shall be postponed until the
expiry of such period. If such Default Notice has been delivered
prior to the making of the application for the Final Order or the
filing of the Articles of Arrangement with the Registrar, such
application and such filing shall be postponed until the expiry of
such period.
33
(d) Nothing in this Section 10.4 of the Arrangement Agreement shall give
either GEOCAN or Assure, as the case may be, any right to terminate
the Arrangement Agreement in addition to the rights contained in
Articles 3, 4 or 5 or pursuant to Section 10.2 or 10.3 of the
Arrangement Agreement or any termination right arising therefrom or
any right to receive payment of the Assure Break Fee or GEOCAN Break
Fee except in the circumstances provided in Sections 8.2 and 9.3 of
the Arrangement Agreement.
If the Arrangement Agreement is validly terminated pursuant to any provision of
the Arrangement Agreement, the parties shall return all materials and copies of
all materials delivered to Assure or GEOCAN, as the case may be, or their agents
and, except for the obligations set forth in Sections 8.2, 9.3, and 10.4 and
Article 11 (which shall survive any termination of the Arrangement Agreement and
continue in full force and effect) of the Arrangement Agreement, no party shall
have any further obligations to any other party hereunder with respect to the
Arrangement Agreement except those incurred prior to termination. Except as
expressly provided herein, nothing herein, (including without limitation the
payment of the GEOCAN Break Fee or the Assure Break Fee) shall relieve any party
from liability for any breach of the Arrangement Agreement.
The exercise by any party of any right of termination hereunder shall be without
prejudice to any other remedy available to such party.
Procedure for the Arrangement to Become Effective
Procedural Steps
The Arrangement is proposed to be carried out pursuant to Section 193 of
the ABCA. The following procedural steps must be taken in order for the
Arrangement to become effective:
(a) the Arrangement must be approved by the Assure Securityholders in
the manner set forth in the Interim Order;
(b) the Court must grant the Final Order approving the Arrangement;
(c) all conditions precedent to the Arrangement, as set forth in the
Arrangement Agreement, must be satisfied or waived by the
appropriate party; and
(d) the Final Order and Articles of Arrangement in the form prescribed
by the ABCA must be filed with the Registrar.
Securityholder Approvals
The Interim Order provides that the Arrangement Resolution is required to
be approved by 66 2/3% of all of the votes cast on such resolutions by Assure
Shareholders, Assure Preferred Shareholders and Assure Warrantholders, voting
together as a class, present in person or by proxy at the Meeting such that (a)
each Assure Shareholder and Assure Preferred Shareholder is entitled to one vote
for each Assure Share or Assure Preferred Share held, and (b) each Assure
Warrantholder is entitled to one vote for each Assure Share such holder would be
entitled to receive upon the exercise of the Assure Warrants. See Appendix A to
this Information Circular for the full text of the Arrangement Resolution.
Notwithstanding the foregoing, the Arrangement Resolution authorizes the
Assure Board, without further notice or approval of the Assure Securityholders,
to amend the Arrangement Agreement or the Plan of Arrangement to the extent
permitted by the Arrangement Agreement and, subject to the terms of the
Arrangement Agreement, not to proceed with the Arrangement. See Appendix A to
this Information Circular for the full text of the Arrangement Resolution.
34
Court Approval
Interim Order
On August 5, 2005, Assure obtained the Interim Order providing for the
calling and holding of the Meeting and other procedural matters. The Interim
Order is attached as Appendix C to this Information Circular.
Final Order
Pursuant to the ABCA, the implementation of the Arrangement requires Court
approval. Subject to the terms of the Arrangement Agreement, if the Arrangement
Resolution is approved at the Meeting in the manner required by the Interim
Order, Assure will make application to the Court for the Final Order at the
Court, 611 - 4th Street S.W., Calgary, Alberta on September 7, 2005 at 1:15?p.m.
(Calgary time) or as soon thereafter as counsel may be heard. The Notice of
Petition for the Final Order accompanies this Information Circular. Any Assure
Securityholder or other interested party who wishes to participate or be
represented at the hearing may do so, subject to filing with the Court and
serving on Assure, a Notice of Intention to Appear on or before 4:00 p.m.
(Calgary time) on Thursday, September 1, 2005 together with any evidence or
materials which are to be presented to the Court, setting out Assure
Securityholder's or other interested party's address for service and indicating
whether such Assure Securityholder or other interested party intends to support
or oppose the petition or make submissions. Service of such notice shall be
effected by service by ordinary mail upon the solicitors for Assure: Bennett
Jones LLP, 4500 Bankers Hall East, 855 - 2nd Street S.W., Calgary, Alberta, T2P
4K7, Attention: Mr. Ken Lenz. See "Notice of Petition" in this Information
Circular.
Assure has been advised by legal counsel, Bennett Jones LLP, that the
Court has broad discretion under the ABCA when making orders with respect to an
arrangement and that the Court, in hearing the application for the Final Order,
will consider, among other things, the fairness of the Arrangement to the Assure
Securityholders (and any other interested party as the Court determines
appropriate). The Court may approve the Arrangement either as proposed or as
amended in any manner the Court may direct, subject to compliance with such
terms and conditions, if any, as the Court may determine appropriate. Either
GEOCAN or Assure may determine not to proceed with the Arrangement in the event
that any amendment ordered by the Court is not satisfactory to it, acting
reasonably.
Regulatory Approvals
The Arrangement requires approval of certain regulatory authorities. The
Arrangement Agreement provides that these approvals are conditions precedent to
the Arrangement becoming effective. GEOCAN will make application to such
authorities prior to the Effective Date in order to obtain all approvals
required in respect of the Arrangement. There can be no assurance that the
requisite approvals will be granted on a timely basis or on conditions
satisfactory to Assure and GEOCAN.
Timing
If the Meeting is held as scheduled, is not adjourned, the Arrangement
Resolution is approved and the other conditions are satisfied or waived, Assure
will apply to the Court for the Final Order approving the Arrangement. If the
Final Order is obtained on September 7, 2005 in form and substance satisfactory
to GEOCAN and Assure and all other conditions to the Arrangement are satisfied
or waived, Assure expects the Effective Date of the Arrangement will be
September 8, 2005. GEOCAN and Assure may terminate the Arrangement Agreement in
certain circumstances, in which case the Arrangement will not be completed. See
"Part II - The Arrangement - The Arrangement Agreement - Termination of the
Arrangement Agreement" in this Information Circular.
35
The Arrangement will become effective upon the acceptance by the Registrar
of the filing of a copy of the Final Order and the Articles of Arrangement.
Assure's objective is to have the Effective Date occur as soon as
practicable after the Meeting. The Effective Date could be delayed, however, for
a number of reasons, including an objection before the Court in the hearing of
the application for the Final Order. As soon as the Effective Date has been
determined, GEOCAN and Assure will issue a joint press release announcing
completion of the Arrangement.
Fairness Opinion
The Assure Board retained Haywood Securities as its financial advisor
pursuant to an agreement effective April 21, 2005. Pursuant to this agreement,
Haywood Securities has considered the fairness, from a financial point of view,
of the Arrangement to the Assure Shareholders.
Haywood Securities acts as a trader and dealer, both as principal and
agent, in major Canadian equity markets and as such may execute transactions on
behalf of clients or on behalf of Assure or its related entities for which it
receives compensation. In addition, as an investment dealer, Haywood Securities
conducts research on securities and may, in the ordinary course of business, be
expected to provide research support and investment advice to its clients on
investment matters pertaining to the resulting entity of the Arrangement.
There are no commitments or agreements between Haywood Securities and
Assure, GEOCAN or any of their respective associates or affiliates with respect
to future business dealings. However, Haywood Securities may, from time to time
in the future, perform financial advisory or investment banking services for
GEOCAN or its successor(s) or related entities.
Neither Haywood Securities nor any of its affiliates is an insider,
associate or affiliate (as those terms are defined in the Securities Act
(Alberta)) of GEOCAN or Assure or any of their respective associates or
affiliates. Haywood Securities has not been engaged to provide any financial
advisory services to GEOCAN nor has it participated in any financing involving
GEOCAN or Assure Securityholders or any of their respective associates or
affiliates, within the past two years.
Summary of Fairness Opinion
In connection with its evaluation of the Arrangement, the Assure Board
received the Fairness Opinion to the effect that, as of the Agreement Date,
based on certain assumptions and considerations summarized therein and based
upon the Exchange Ratio, Haywood Securities views the Arrangement as fair, from
a financial point of view, to the Assure Shareholders.
The full text of the Fairness Opinion, which sets forth the assumptions
and considerations made, procedures followed, matters considered and limitations
on review undertaken, is attached as Appendix H to this Information Circular.
Assure Securityholders are urged to read the Fairness Opinion in its entirety.
This summary of the Fairness Opinion is qualified in its entirety by reference
to the full text of such opinion.
Recommendation of the Assure Board
The Assure Board has determined that the Arrangement is in the best
interests of Assure and the Assure Securityholders and is fair to the Assure
Securityholders and, as such, has authorized the submission of the Arrangement
to the Assure Securityholders for approval and to the Court for the Final Order.
36
In coming to its conclusions and recommendations, the Assure Board
considered, among other things, the following factors:
(a) the purpose and benefits of the Arrangement as outlined herein;
(b) information concerning the financial condition, results of
operations, the business plans and prospects of GEOCAN and Assure,
and the resulting potential for the enhancement of the business
efficiency, management effectiveness and financial results of the
combined entity;
(c) the advice of Haywood Securities and the fact that Haywood
Securities is in a position to provide the Fairness Opinion;
(d) that the Assure Securityholders who oppose the Arrangement will be
permitted, subject to compliance with certain conditions, to dissent
from the Arrangement and will be entitled to be paid the fair value
for their Assure Shares, Assure Preferred Shares and Assure Warrants
in accordance with Section 191 of the ABCA, as modified by the
Interim Order; and
(e) that the Arrangement will only become effective if, after hearing
from all interested parties who choose to appear before it, the
Court determines that the Arrangement is fair to the Assure
Securityholders.
The Assure Boards unanimously recommends that the Assure Securityholders
vote in favour of the Arrangement Resolution.
Interests and Intentions of Directors, Officers, Insiders and Significant
Securityholders in Matters to be Acted Upon
As of the date hereof, the directors and officers of Assure, as a group,
beneficially own or control, directly or indirectly, or exercise control or
direction over, 504,600 Assure Securities. The directors and officers of Assure
have indicated their intention to vote the Assure Shares and Assure Warrants
beneficially held or controlled by them in favour of the Arrangement. All of the
directors and officers of Assure have entered into the Lockup Agreements
requiring them to vote their Assure Securities in favour of the Arrangement.
To the knowledge of directors and senior officers of Assure, there are no
material interests of any director or senior officer of Assure or anyone who has
held office as such since the beginning of the last completed financial year or
of any associate or affiliate of any of the foregoing, in any matter to be acted
upon at the Meeting, other than the foregoing and as described elsewhere in this
Information Circular or the Appendices hereto.
Expenses of The Arrangement
If completed, all out-of-pocket expenses incurred in connection with the
Arrangement, the transactions contemplated thereby, the Meeting and the
preparation and mailing of the Information Circular, including legal and
accounting fees, printing costs, financial advisor fees and all disbursements by
advisors, shall be borne by the party incurring such expenses.
Exchange and Issuance of Share Certificates
In order for an Assure Shareholder to receive GEOCAN Shares under the
Arrangement, such Assure Shareholder must deposit a properly completed and duly
executed Letter of Transmittal, together with the certificate(s) representing
such Assure Shareholders' Assure Shares, with the Depositary at the address set
forth in the Letter of Transmittal. A Letter of Transmittal will be forwarded to
all Assure Shareholders once the Arrangement has been approved.
Any use of the mail to transmit the share certificates and Letter of
Transmittal is at the risk of the Assure Shareholders and Assure Warrantholders.
If such documents are mailed, it is recommended that registered mail, with
return receipt requested, properly insured, be used.
37
Assure Shareholders and Assure Warrantholders who dissent and who
ultimately are not entitled to be paid the fair value of their Assure Shares or
Assure Warrants respectively; will be entitled to receive GEOCAN Shares under
the Arrangement.
If the Arrangement proceeds, certificates representing the number of
GEOCAN Securities issued to each Assure Securityholder will be, as soon as
practicable following the Effective Date and the receipt by the Depositary of a
properly completed and duly executed Letter of Transmittal:
(a) forwarded by, or on behalf of GEOCAN to that Assure Security holder,
at the address specified in the Letter of Transmittal, by first
class mail (postage prepaid); or
(b) made available at the Depositary for pick up by the holder, if
requested by the Assure Securityholder in the Letter of Transmittal.
If a certificate representing Assure Securities has been lost, apparently
destroyed or wrongfully taken, the holder of such shares should immediately
contact the registrar and transfer agent of the Assure Securities, Continental,
so that arrangements can be made to issue a replacement certificate to such
holder upon such holder satisfying such reasonable requirements as may be
imposed by Assure and Continental in that regard.
Failure to Forward Letters of Transmittal and to Deposit Certificates
Pursuant to the terms of the Plan of Arrangement, any certificates
formerly representing Assure Securities that are not deposited with the
Depositary together with a duly completed Letter of Transmittal and any other
documents the Depositary reasonably requires, on or before the fifth anniversary
of the Effective Date, shall cease to represent a right or claim of any kind or
nature and the GEOCAN Securities to which the holder of such securities was
entitled shall be cancelled.
Stock Exchange Listings
The Assure Shares are currently quoted on the OTCBB under the symbol
"ASURF" and on the Frankfurt Stock Exchange under the symbol "ASL" (WKN 357954).
On July 8, 2005, the last trading day prior to the initial date of the
announcement of the proposed Arrangement, the closing price of the Assure Shares
on the OTCBB was US$0.71 per share. On August 4, 2005, the closing price of the
Assure Shares on the OTCBB was $1.07.
The GEOCAN Shares are listed and posted for trading on the TSX under the
symbol "GCA". On July 8, 2005, the last trading day prior to the initial date of
the announcement of the proposed Arrangement, the closing price of the GEOCAN
Shares on the TSX was $1.52 per share. On August 4, 2005, the closing price of
the GEOCAN Shares on the TSX was $1.97.
It is a condition to the completion of the Arrangement that the TSX shall
have approved the listing of the GEOCAN Shares. Application has been made to
list the GEOCAN Shares issued to the Assure Securityholders on the TSX.
Certain Canadian Federal Income Tax Considerations
In the opinion of Bennett Jones LLP and Borden Ladner Gervais LLP, the
following is a fair and adequate summary of the principal Canadian federal
income tax considerations under the Income Tax Act in respect of the Arrangement
generally applicable to Assure Shareholders who, for the purposes of the Income
Tax Act and at all relevant times, hold their Assure Shares as capital property,
deal at arm's length with GEOCAN and do not dissent to the Arrangement. Assure
Shares generally will be considered to be capital property to an Assure
Shareholder unless they are held in the course of carrying on a business or are
acquired in a transaction which may be considered to be an adventure in the
nature of trade. Certain Assure Shareholders who are resident in Canada and
whose Assure Shares might not otherwise qualify as capital property may be
entitled to make an irrevocable election in accordance with subsection 39(4) of
the Income Tax Act to have their Assure Shares treated as capital property.
38
This summary is not applicable to Assure Shareholders: (a) that do not
hold their Assure Shares as capital property; (b) that are "financial
institutions" or "specified financial institutions" (as defined in the Income
Tax Act); (c) an interest in whom would be a "tax shelter investment" (as
defined in the Income Tax Act); (d) who are exempt from tax under Part I of the
Income Tax Act; or (e) that are Dissenting Securityholders. Any such Assure
Shareholders should consult their own tax advisors with respect to the
Arrangement.
This summary is based upon the current provisions of the Income Tax Act
and counsels' understanding of the current administrative and assessing
practices of the Canada Revenue Agency to the date hereof. This summary assumes
that all specific publicly announced proposals to amend the Income Tax Act and
regulations thereunder announced by or on behalf of the Minister of Finance
(Canada) prior to the date hereof will be enacted as proposed, although there is
no assurance that such proposed amendments will be enacted as proposed, or at
all. This summary does not take into account or anticipate any other changes in
the law, whether by judicial, governmental or legislative action or decision,
nor does it take into account the tax laws of any province, territory or foreign
jurisdiction, any of which may differ significantly from the Canadian federal
income tax considerations described herein.
This summary is of a general nature only and is not exhaustive of all
Canadian federal income tax considerations. This summary is not intended to be,
and should not be construed to be, legal or tax advice to any Assure
Shareholder. Assure Shareholders should consult their own tax advisors to
determine the particular tax consequences to them of the Arrangement.
Residents of Canada
This part of the summary is applicable to an Assure Shareholder who is
resident, or deemed to be resident, in Canada for the purposes of the Income Tax
Act.
Generally, an Assure Shareholder will realize neither a capital gain nor a
capital loss as a result of the exchange of Assure Shares for GEOCAN Shares
provided that: (i) such Assure Shareholder does not include any portion of the
capital gain or capital loss otherwise determined from such exchange in
computing the Assure Shareholder's income, and (ii) immediately after the
exchange, such Assure Shareholder, persons with whom such holder does not deal
at arm's length or the holder together with such persons, does not control
GEOCAN or beneficially own shares of GEOCAN having a fair market value of more
than 50% of the fair market value of all of the outstanding shares of GEOCAN.
The adjusted cost base of an Assure Shareholder's Assure Shares will become the
cost of the GEOCAN Shares received in these circumstances. The cost of such
GEOCAN Shares generally must be averaged with the adjusted cost base of any
other GEOCAN Shares held by such Assure Shareholder to determine the adjusted
cost base of each GEOCAN Share to the holder.
An Assure Shareholder may choose to file a tax return recognizing a
capital gain or capital loss on the exchange under the Arrangement in such
holder's taxation year which includes the Effective Date. In such event, the
holder will be considered to have disposed of the Assure Shares for GEOCAN
Shares for proceeds of disposition equal to the fair market value of the GEOCAN
Shares received on the exchange. The amount of the capital gain (or capital
loss) will equal the amount that the holder's proceeds of disposition, net of
any reasonable costs of disposition, exceed (or are less than) the adjusted cost
base of that holder's Assure Shares immediately before the exchange. Any Assure
Shareholder that chooses to recognize a capital gain or capital loss will
acquire the GEOCAN Shares at a cost equal to the fair market value of such
GEOCAN Shares received on the exchange. The cost of such GEOCAN Shares must be
averaged with the adjusted cost base of all other GEOCAN Shares held by such
Assure Shareholder to determine the adjusted cost base of each GEOCAN Share to
the holder.
39
Under the Income Tax Act, one-half of a capital gain must be included in
computing a holder's income as a taxable capital gain. One-half of any capital
loss may be deducted as an allowable capital loss only against taxable capital
gains in computing income in accordance with the provisions of the Income Tax
Act. Allowable capital losses for a taxation year in excess of taxable capital
gains for that year generally may be carried back and deducted in any of the
three preceding taxation years or carried forward and deducted in any subsequent
taxation year against net taxable capital gains realized in such years, to the
extent and in the circumstances provided in the Income Tax Act. The amount of
any such capital loss otherwise determined will, if the Assure Shareholder is a
corporation, be reduced by the amount of dividends or deemed dividends received
on the Assure Shares to the extent and in the circumstances provided in the
Income Tax Act. Similar rules apply to a partnership or a trust of which a
corporation, partnership or trust is a member or beneficiary. Taxable capital
gains of a Canadian-controlled private corporation (as defined in the Income Tax
Act) may be subject to an additional refundable tax at a rate of 6-2/3%. Eighty
percent of any capital gains realized by a holder who is an individual will be
included in computing such individual's liability for alternative minimum tax.
Non-Resident Assure Shareholders
This portion of the summary is applicable to an Assure Shareholder who is
neither a resident, nor deemed to be a resident, of Canada for the purposes of
the Income Tax Act ("Non-Resident"). Such a holder whose Assure Shares are not
and are not deemed to be "taxable Canadian property" for the purposes of the
Income Tax Act will not be subject to tax under the Income Tax Act on the
exchange of such holder's Assure Shares for GEOCAN Shares under the Arrangement.
A Non-Resident's Assure Shares generally will not be taxable Canadian property
provided: (a) the Non-Resident does not use or hold, and is not deemed to use or
hold, such shares in connection with carrying on a business in Canada; (b) such
shares are not "designated insurance property" of the Non-Resident within the
meaning of the Income Tax Act; (c) the Non-Resident has not, alone or in
combination with persons with whom the Non-Resident does not deal at arm's
length, owned (or had an interest in or option to acquire) 25% or more of the
issued shares of any class or series of the capital stock of Assure at any time
within the 60 month period preceding the exchange; (d) the Assure Shareholder
has not elected under the Income Tax Act to treat such shares as taxable
Canadian property upon ceasing to be a resident of Canada; or (e) the Assure
Shares are not otherwise deemed to be taxable Canadian property of the
Non-Resident under the Income Tax Act. The Canadian income tax consequences to a
Non-Resident who holds Assure Shares that are taxable Canadian property would
generally be the same as those described above for Assure Shareholders who are
residents of Canada.
Right of Dissent
The following description of the rights of Dissenting Securityholders is
not a comprehensive statement of the procedures to be followed by a Dissenting
Securityholder who seeks payment of the fair value of the securities held by it
and is qualified in its entirety by reference to the full text of the Interim
Order and Section 191 of the ABCA which are attached to this Information
Circular as Appendix C and G, respectively. A Dissenting Securityholder
intending to exercise the Dissent Rights should carefully consider and comply
with the provisions of Section 191 of the ABCA, as modified by the Interim
Order. The statutory provisions covering the Dissent Rights are technical and
complex. Failure to comply with the provisions of Section 191 of the ABCA, as
modified by the Interim Order, and to adhere to the procedures established
therein may result in the loss of all rights thereunder.
The Court hearing the application for the Final Order has the discretion
to alter the rights of dissent described herein based on the evidence presented
at such hearing.
Pursuant to the Dissent Rights, a registered Assure Securityholder is
entitled to dissent and be paid the fair value of the securities held by such
Assure Securityholder, determined as of the close of business on the last
Business Day before the day on which the Arrangement Resolution from which such
holder dissents is adopted. A registered Assure Securityholder may dissent only
with respect to all securities held by such registered Assure Securityholder or
on behalf of any one Beneficial Holder and registered in the Dissenting
Securityholder's name. Only registered Assure Securityholders may dissent.
Persons who are Beneficial Holders of Assure Securities registered in the name
of a broker, custodian, nominee or other intermediary who wish to dissent,
should be aware that they may do so only through the registered owner of such
securities. Accordingly, a Beneficial Holder must make arrangements for the
registered holder of his or her Assure Securities to dissent on his or her
behalf. A registered holder, such as a broker, who holds securities as a nominee
for Beneficial Holders, some of whom wish to dissent, must exercise dissent
rights on behalf of such Beneficial Holders with respect to the securities held
for such Beneficial Holders. In such case, the demand for dissent should set
forth the number of securities covered by it. Alternatively, a Beneficial Holder
of Assure Securities desiring to exercise dissent rights may make arrangements
for the Assure Securities beneficially owned by such Beneficial Holder to be
registered in his or her name prior to the time the written objection to the
Arrangement Resolution is required to be received by Assure.
40
To exercise such right, Assure must receive from the Dissenting
Securityholder a written objection to the Arrangement Resolution, delivered to
Assure, c/o Bennett Jones LLP, 4500 Bankers Hall East, 855 - 2nd Street S.W.,
Calgary, Alberta, T2P 4K7, Attention: Mr. Ken Lenz, by 5:00 p.m. (Calgary time)
two Business Days before the Meeting, and the Dissenting Securityholder must
otherwise comply with Section 191 of the ABCA, as modified by the Interim Order.
An Assure Securityholder wishing to exercise the Dissent Rights with respect to
such holder's securities must abstain from voting the securities held by it in
respect of the Arrangement Resolution.
A vote against the Arrangement Resolution or an abstention does not
constitute a written objection. If the Arrangement Resolution is adopted, Assure
or the Dissenting Securityholder, where the Dissenting Securityholder has sent
the required written objection, may apply to the Court to fix the fair value of
the Dissenting Securityholder's securities. If the application is made, Assure
is required to send to each Dissenting Securityholder a written offer to pay
such Dissenting Securityholder an amount considered by the directors of Assure
to be the fair value of the Dissenting Securityholder's securities. If such
offer is not made or is not accepted, the Court shall fix the fair value of the
Assure Securities, as applicable. There is no obligation on Assure to apply to
the Court. If an application is made by either party, the Dissenting
Securityholder will be entitled to be paid the amount fixed by the Court for the
securities in respect of which the Dissenting Securityholder dissented. A
Dissenting Securityholder may make an agreement with Assure for the purchase of
such holder's securities in the amount of the offer made by Assure at any time
before the Court pronounces an order fixing the fair value of the applicable
securities.
A Dissenting Securityholder is not required to give security for costs in
respect of an application and, except in special circumstances, will not be
required to pay the costs of the application or appraisal. On the application,
the Court will make an order fixing the fair value of the securities of all
Dissenting Securityholders who are parties to the application, giving judgment
in that amount against Assure and in favour of each of those Dissenting
Securityholders, and fixing the time within which Assure must pay that amount
payable to the Dissenting Securityholders. The Court may in its discretion allow
a reasonable rate of interest on the amount payable to each Dissenting
Securityholder calculated from the date on which the Dissenting Securityholder
ceases to have any rights as a Assure Securityholder, until the date of payment.
On the Arrangement becoming effective, or upon the making of an agreement
between Assure and the Dissenting Securityholder as to the payment to be made by
Assure to the Dissenting Securityholder, or upon the pronouncement of a Court
order, whichever first occurs, the Dissenting Securityholder will cease to have
any rights as a Assure Securityholder other than the right to be paid the fair
value of such holder's securities, in the amount agreed to between Assure and
the Dissenting Securityholder or in the amount of the judgment, as the case may
be. Until one of these events occurs, the Dissenting Securityholder may withdraw
their dissent, or Assure may rescind the Arrangement Resolution, and in either
event the dissent and appraisal proceedings in respect of that Dissenting
Securityholder will be discontinued.
Assure shall not make a payment to a Dissenting Securityholder under
Section 191 if there are reasonable grounds for believing that Assure is or
would after the payment be unable to pay its liabilities as they become due, or
that the realizable value of the assets of Assure would thereby be less than the
aggregate of its liabilities. In such event, Assure shall notify each Dissenting
Securityholder that it is unable lawfully to pay Dissenting Securityholders for
their securities, in which case the Dissenting Securityholder may, by written
notice to Assure within 30 days after receipt of such notice, withdraw such
holder's written objection, in which case Assure shall, subject to the terms of
the Arrangement, be deemed to consent to the withdrawal and such Dissenting
Securityholder shall be reinstated with full rights as a Assure Securityholder
failing which such Dissenting Securityholder retains a status as a claimant
against Assure to be paid as soon as Assure is lawfully entitled to do so or, in
a liquidation, to be ranked subordinate to the rights of creditors of Assure but
in priority to its shareholders.
41
Assure Securityholders who exercise the Dissent Rights and who:
(a) are ultimately entitled to be paid fair value for their securities
shall be deemed to have transferred such securities to Assure for
cancellation at the Effective Time; or
(b) are ultimately not entitled, for any reason, to be paid fair value
for their securities shall be deemed to have participated in the
Arrangement on the same basis as non-dissenting Assure
Securityholders in accordance with the Plan of Arrangement.
In no case shall Assure or any other person be required to recognize
Dissenting Securityholders as Assure Securityholders, as applicable, after the
Effective Time.
Any Assure Securityholder who may wish to exercise the Dissent Rights
should carefully consider and comply with the provisions of the Interim Order
and Section 191 of the ABCA, the full texts of which are set out in Appendix C
and G, respectively, to this Information Circular and consult his or her own
legal advisor.
It is a condition to the Arrangement that Assure Securityholders of not
more than 10% of the aggregate of the outstanding Assure Shares, Assure
Preferred Shares and Assure Warrants shall have exercised rights of dissent in
respect of the Arrangement.
Other Matters
Resale of GEOCAN Shares
Canada
The GEOCAN Securities to be issued to Assure Securityholders pursuant to
the Arrangement will be issued in reliance on exemptions from prospectus and
registration requirements of applicable securities laws of the various
applicable provinces in Canada (other than the province of Quebec) and will
generally be "freely tradable" (and not subject to any "restricted period" or
"hold period") if the following conditions are met: (i) the trade is not a
control distribution (as defined in applicable securities legislation); (ii) no
unusual effort is made to prepare the market or to create a demand for the
securities that are the subject of the trade; (iii) no extraordinary commission
or consideration is paid to a person or company in respect of the trade; and
(iv) if the selling shareholder is an insider or an officer of the issuer, the
selling shareholder has no reasonable grounds to believe that the issuer is in
default of securities legislation.
In Quebec, GEOCAN will apply for and expects to receive orders from the
securities regulatory authority providing exemptions from the prospectus and
registration requirements for the issuance of GEOCAN Securities to Assure
Securityholders resident in the province of Quebec and the subsequent resale of
such GEOCAN Securities.
United States
The GEOCAN Securities to be issued to Assure Securityholders pursuant to
the Arrangement will not be registered under the U.S. Securities Act, in
reliance upon the exemption from registration provided by Section 3(a)(l0)
thereof. Following the Arrangement, GEOCAN Securities held by any holder who was
not an "affiliate", for purposes of United States federal securities laws, of
Assure, before the Arrangement, and who will not be an affiliate of GEOCAN after
the Arrangement and at the time of any resale of such GEOCAN Securities, may be
resold without restriction under the U.S. Securities Act. Any resale of GEOCAN
Securities by a holder who was such an affiliate before the Arrangement or is
such an affiliate after the Arrangement may be subject to the registration
requirements of the U.S. Securities Act, absent an exemption therefrom. Any such
affiliate (or former affiliate) should obtain the advice of its legal counsel
with respect to the application of the U.S. Securities Act to the offer or sale
of such GEOCAN Securities by such person. For the purposes of the U.S.
Securities Act, an "affiliate" of GEOCAN or Assure is a person that directly, or
indirectly through one or more intermediaries, controls or is controlled by, or
is under common control with, GEOCAN or Assure, as the case may be.
42
Assure Securityholders residing elsewhere than in Canada are urged to
consult their legal advisers to determine the extent of all applicable resale
provisions.
Legal Developments
Section 193 of the ABCA provides that, where it is impracticable for a
corporation to effect an arrangement under any other provision of the ABCA, a
corporation may apply to the Court for an order approving the arrangement
proposed by such corporation. Pursuant to this section of the ABCA, such an
application will be made by Assure for approval of the Arrangement. There have
been a number of judicial decisions considering this section and its
application; however, there have not been, to the knowledge of Assure, any
recent significant decisions.
Assure Securityholders should consult their legal advisers with respect to
the legal rights available to them in relation to the Arrangement.
Legal Matters
Certain legal matters relating to the Arrangement have been passed upon by
Bennett Jones LLP, on behalf of Assure and by Borden Ladner Gervais LLP, on
behalf of GEOCAN. As at August 2, 2005, the partners and associates of each of
Bennett Jones LLP and Borden Ladner Gervais LLP each beneficially owned,
directly or indirectly, less than 2% of the outstanding GEOCAN Shares. As at
August 2, 2005, the partners and associates of each of Bennett Jones LLP and
Borden Ladner Gervais LLP each beneficially owned, directly or indirectly, less
than 1% of the outstanding Assure Securities.
43
PART III - INFORMATION RELATING TO GEOCAN, POST-ARRANGEMENT
At the Effective Time, all of the Assure Shares will be acquired by
GEOCAN, which will continue as "GEOCAN Energy Inc."
Selected Financial Information
The following tables set out certain financial information for GEOCAN and
Assure and certain unaudited pro-forma combined financial information for GEOCAN
and Assure as at and for the three months ended March 31, 2005 after giving
effect to the Arrangement from January 1, 2005 and as at and for the financial
year ended December 31, 2004 after giving effect to the Arrangement from January
1, 2004. The following information should be read in conjunction with the GEOCAN
Financial Statements and Assure Financial Statements set forth or incorporated
by reference in Appendix D and Appendix E to this Information Circular,
respectively, and the Pro-forma Combined Financial Statements set forth in
Appendix F to this Information Circular.
For the Three Months Ended March 31, 2005
Assure GEOCAN Pro-forma Combined
(M$) (M$) (M$)
--------------------- --------------------- ---------------------
Net petroleum and natural gas revenue(1).... 2,741 5,841 8,582
Net income (loss)(2)........................ (850) (245) (1,639)
Net income (loss) per Common Share ($)
Basic and diluted........................... (0.04) (0.01) (0.04)
Total Assets(3)............................. 43,405 42,963 112,178
Total Debt and Working Capital Deficiency... 15,088 13,903 35,481
Dividends Declared(4)....................... 35 - 35
For the Year Ended December 31, 2004
Assure GEOCAN Pro-forma Combined
(M$) (M$) (M$)
--------------------- --------------------- ---------------------
Net petroleum and natural gas revenue(1).... 15,976 16,789 30,638
Net income (loss)(2)........................ (3,663) (1,155) (8,437)
Net income (loss) per Common Share ($)
Basic and diluted........................... (0.18) (0.07) (0.24)
Total Assets(3)............................. 39,082 38,000 -
Total Debt and Working Capital Deficiency... 17,241 9,450 -
Dividends Declared(4)....................... 227 - 227
Note:
(1) See Note 3(a) of the Pro-Forma income statement for the year ended December
31, 2004 attached hereto as Appendix F. The Pro-forma Combined Net
Petroleum and natural gas revenue amounts exclude operating results from
the Chestermere property.
(2) See Note 3(b-d) of the Pro-Forma income statement for the year ended
December 31, 2004 and Note 4(a-b) of the Pro-Forma income statement for the
three months ended March 31, 2005 attached hereto as Appendix F. The
Pro-forma Combined amounts for the Net loss include adjustments to record
depletion on the fair value of assets acquired, eliminate minority interest
previously recorded and record additional future income tax recoveries.
(3) See Note 2(a) of the Pro-Forma consolidated balance sheets as at March 31,
2005 and December 31, 2004 attached hereto as Appendix F. The Pro-forma
Combined Total Assets amounts include adjustments to record the excess of
the fair value over book value of assets acquired from Assure.
(4) For the three months ended March 31, 2005, assure paid a dividend on the
Assure Preferred Shares of $35,000. For the year ended December 31, 2004,
Assure paid a dividend on the Assure Preferred Shares of $227,000.
44
Selected Reserves and Operational Information
It should not be assumed that the estimates of future net revenues
presented in the tables below represent the fair market value of the reserves.
There is no assurance that the constant prices and costs assumptions and
forecast prices and costs assumptions will be attained and variances could be
material. The recovery and reserve estimates of the Corporation's crude oil,
natural gas liquids and natural gas reserves provided herein are estimates only
and there is no guarantee that the estimated reserves will be recovered. Actual
crude oil, natural gas and natural gas liquid reserves may be greater than or
less than the estimates provided herein.
The following table sets forth certain reserves information for GEOCAN and
Assure and pro-forma combined reserves information for GEOCAN and Assure for the
year ended December 31, 2004, after giving effect to the Arrangement as at
January 1, 2005. The following information should be read in conjunction with
the information contained in Appendix D and Appendix E to this Information
Circular.
For the Year Ended December 31, 2004
Pro-forma
Forecast Prices and Costs(1) Assure GEOCAN Combined(2)(3)
--------------------- --------------------- ---------------------
Gross Reserves (Mboe)
Proved..................................... 2,372 2,556 4,928
Probable................................... 1,446 1,476 2,922
Total...................................... 3,818 4,032 7,850
Net Reserves (Mboe)
Proved..................................... 1,915 2,203 4,118
Probable................................... 1,149 1,284 2,433
Total...................................... 3,064 3,487 6,551
For the Year Ended December 31, 2004
Pro-forma
Constant Prices and Costs(1) Assure GEOCAN Combined(2)(3)
--------------------- --------------------- ---------------------
Gross Reserves (Mboe)
Proved..................................... 2,323 2,159 4,482
Probable................................... 1,372 1,268 2,640
Total...................................... 3,695 3,427 7,122
Net Reserves (Mboe)
Proved..................................... 1,873 1,926 3,799
Probable................................... 1,088 1,138 2,226
Total...................................... 2,961 3,064 6,025
The following table sets forth the net present value of future net
revenue, before deducting income taxes and discounted at 10%, derived from the
reserves of GEOCAN and Assure for GEOCAN and Assure and pro-forma combined net
present value of future net revenues, before deducting income taxes, for the
year ended December 31, 2004 after giving effect to the Arrangement as at
January 1, 2004. The following information should be read in conjunction with
the information contained in Appendix D and Appendix E to this Information
Circular.
For the Year Ended December 31, 2004
Assure GEOCAN Pro-forma Combined
--------------------- --------------------- ---------------------
Forecast Prices and Costs(1) (M$) (M$) (M$)(2)(3)
Proved................................... 23,616 29,401 53,017
Probable................................. 12,623 11,494 24,117
Total.................................... 36,239 40,895 77,134
For the Year Ended December 31, 2004
Assure GEOCAN Pro-forma Combined
--------------------- --------------------- ---------------------
Constant Prices and Costs(1) (M$) (M$) (M$)(2)(3)
Proved................................... 20,872 16,956 37,828
Probable................................. 13,881 6,701 20,582
Total.................................... 34,753 23,657 58,410
The following table sets forth certain operational information for GEOCAN
and Assure and pro-forma combined operational information for GEOCAN and Assure
for the three months ended March 31, 2005 after giving effect to the
Arrangement, as at January 1, 2005. The following information should be read in
conjunction with the information contained in Appendix D and Appendix E to this
Information Circular.
45
Assure GEOCAN Pro-forma Combined(4)
--------------------- --------------------- ---------------------
Average daily production
Oil & NGLs - bbls.......................... 488 1,921 2,409
Natural gas - Mcf.......................... 1,926 1,812 3,738
Combined boe/d @ 6:1....................... 809 2,223 3,032
Average prices
Oil & NGLs ($/bbls)........................ 38.22 26.01 30.04
Natural gas ($/Mcf)........................ 6.12 7.27 6.89
Combined ($/boe)............................ 37.63 29.35 32.08
Note:
(1) All pricing information for constant and forecast prices and costs and
other pricing assumptions relating to GEOCAN and Assure are included in
Appendices D and E to this Information Circular, respectively.
(2) Pro-Forma combined reserves information reflects the combined reserves of
Assure and GEOCAN. No adjustments have been made to reflect synergies and
efficiencies resulting from the Arrangement or for Saskatchewan capital tax
or abandonment costs, neither of which have been applied in the case of
GEOCAN. Actual reserves information of GEOCAN subsequent to the Arrangement
may be materially different from these figures. The Assure Securityholders
are advised to avoid placing undue reliance on these figures.
(3) Assure disposed of producing properties in the Chestermere area of Alberta
in early January 2005. Assure's working interest proved and proved plus
probable reserves as estimated by Sproule for this property as of December
31, 2004 was 417 Mboe and 659 Mboe, respectively.
(4) Pro-Forma combined average prices information reflects a weighted average
percentage of approximately one third Assure and two-thirds GEOCAN. Actual
prices of GEOCAN subsequent to the Arrangement may be materially different
from these figures. The Assure Securityholders are advised to avoid placing
undue reliance on these figures.
GEOCAN has provided the information contained in this Information Circular
concerning GEOCAN and its businesses, including its financial information and
financial statements. Assure assumes no responsibility for the accuracy or
completeness of such information, nor for any omission on the part of GEOCAN of
facts or events which may affect the accuracy of such information.
Risk Factors
GEOCAN and Assure are, and GEOCAN will be, subject to certain risks that
should be carefully considered. The risks facing GEOCAN and Assure are set out
in Appendix D and Appendix E, respectively, attached thereto. The following are
risks related specifically to the Arrangement.
The Arrangement is expected to result in benefits to the combined company, but
the combined company may not realize those benefits due to challenges associated
with integrating the companies.
The success of the Arrangement will be dependent in large part on the success of
the management of the combined company in integrating the operations,
technologies and personnel of the two companies following the close of the
Agreement. The failure of the combined company to meet the challenges involved
in successfully integrating the operations of GEOCAN and Assure or otherwise to
realize any of the anticipated benefits of the Agreement, including anticipated
cost savings described in this Information Circular, could seriously harm the
results of operations of the combined company. In addition, the overall
integration of the two companies may result in unanticipated operations
problems, expenses and liabilities and diversion of management's attention. The
challenges involved in this integration include the following:
o integrating successfully each company's operations, technologies,
products and services;
o coordinating sales and marketing efforts to effectively communicate
the capabilities of the combined company;
o demonstrating to the customers of GEOCAN and Assure that the
Arrangement will not result in adverse changes in business focus;
o coordinating and rationalizing research and development activities
to enhance introduction of new products and technologies with
reduced cost;
o preserving distribution, marketing or other important relationships
of both GEOCAN and Assure and resolving potential conflicts that may
arise;
o assimilating the personnel of both companies and persuading
employees that the business cultures of both companies are
compatible;
46
o maintaining employee morale and motivation, particularly given
recent cost reduction initiatives undertaken by both companies, and
retaining key employees; and
o reducing the costs associated with each company's operations.
GEOCAN and Assure may not be able to successfully integrate their
operations in a timely manner, or at all, and the combined company may not
realize the anticipated benefits or synergies of the Arrangement to the extent
or in the timeframe anticipated. The anticipated benefits and synergies include
cost savings associated with anticipated restructuring efforts and other
operational efficiencies, greater economies of scale and revenue enhancement
opportunities. In addition, GEOCAN anticipates that Assure's cash reserves will
provide the combined company with an increased ability to fund development and
operations. However, these anticipated benefits and synergies are based on
assumptions, not actual experience, and assume a successful integration. Also,
upon completion of the Arrangement, Assure's cash reserves may be significantly
less than anticipated, due to, among other things, the exercise of dissent
rights by Assure Securityholders. The combined company's ability to realize
these benefits and synergies could be adversely impacted to the extent that
GEOCAN's or Assure's relationships with existing or potential customers,
suppliers or strategic partners is adversely affected as a consequence of the
Arrangement, or by practical or legal constraints on its ability to combine
operations or implement workforce reductions.
GEOCAN and Assure expect to incur significant costs associated with the
Arrangement.
GEOCAN and Assure estimate they could collectively incur direct
transaction costs of approximately $3,000,000 in connection with the Arrangement
GEOCAN's direct transaction costs will be included as a part of the total
purchase cost for accounting purposes. Actual direct transaction costs incurred
in connection with the Arrangement may vary. In addition, GEOCAN will incur
additional costs to the extent that any holders of issued and outstanding Assure
Securities exercise their right to dissent and receive fair value of their
shares.
If the Arrangement is not completed, GEOCAN's and Assure's share prices and
future business and operations could be harmed.
If the current market prices of GEOCAN Shares and Assure Shares reflect an
assumption that the Arrangement will be completed, the price of their respective
securities may decline if the Arrangement is not completed. Moreover, GEOCAN's
and Assure's costs related to the Arrangement, including legal, accounting and
some of the fees of their financial advisors, must be paid even if the
Arrangement is not completed.
In addition, if the Arrangement is not completed, GEOCAN and Assure may be
subject to a number of additional material risks, including the following:
o either company may forego other opportunities which would have
otherwise been available had the Arrangement Agreement not been
executed, including, without limitation, opportunities foregone as a
result of affirmative and negative covenants made by each company in
the Arrangement Agreement, such as covenants affecting the conduct
of each company's business outside the ordinary course of business;
and
o either company may be unable to obtain additional sources of
financing or conclude another sale, merger or Arrangement on as
favourable terms, in a timely manner, or a tall.
Fluctuations in the Canadian-U.S. exchange rate will affect the value of GEOCAN
Shares that the Assure Shareholders will receive in the Arrangement.
The value of GEOCAN Shares that Assure Shareholders will receive in the
Arrangement depends on the Canadian-U.S. exchange rate, as the GEOCAN Shares are
valued in Canadian dollars and Assure Shares are valued in U.S. dollars.
The completion of the Arrangement is subject to the satisfaction of conditions.
47
The obligations of GEOCAN and Assure to complete the Arrangement are
subject to the satisfaction or waiver, where permissible, of certain conditions
set forth in the Arrangement Agreement. Some of these conditions cannot be
waived, including obtaining the requisite approval of Assure Securityholders,
GEOCAN Securityholders, the Court, relevant Canadian and U.S. securities
regulators and the Toronto Stock Exchange. If these conditions are not
satisfied, the Arrangement will not be completed.
Some of the conditions to the Arrangement may be waived by GEOCAN or Assure
without resoliciting shareholder approval for the Arrangement.
Some of the conditions set forth in the Arrangement Agreement may be
waived by Assure or GEOCAN, subject to the agreement of the other party in
specific cases. If those conditions are waived, GEOCAN and Assure will evaluate
whether an amendment to the Information Circular and a resolicitation of proxies
is warranted. In the event that the GEOCAN Board or Assure Board determines that
resolicitation of proxies is not warranted, the applicable company will have the
discretion to complete the Arrangement without seeking further shareholder
approval.
Members of the management and board of directors of Assure have interests in the
Arrangement that may present them with actual or potential conflicts of interest
in connection with the Arrangement.
In considering whether to approve the Arrangement, Assure Securityholders
and GEOCAN Securityholders should recognize that some of the members of
management and board of directors of Assure have interests in the Arrangement
that differ from, or are in addition to, their interests as Assure
Securityholders or GEOCAN Securityholders.
Directors and Officers of GEOCAN
The following table sets forth the name, municipality of residence and
positions for each of the proposed directors and officers of GEOCAN upon
completion of the Arrangement, together with their principal occupations for the
past five years, and number of GEOCAN Shares owned, directly or indirectly, or
over which control or direction is exercised after giving effect to the
Arrangement. The directors of GEOCAN shall hold office until the next annual
meeting of GEOCAN Shareholders or until their respective successors have been
duly elected or appointed.
Number of
GEOCAN
Name and Shares
Municipality of Proposed Beneficially
Residence Offices Held Principal Occupation for Past Five Years Owned(1)
----------------------------------------------------------------------------------------------------------------
Christopher J. Director Vice President Heavy Oil since January 2003 126,000
Bloomer(3)(4)(5)(6) and Chief Financial Officer since April
2003 of Petrobank Energy and Resources
Calgary, Alberta, Canada Ltd., an oil and gas exploration and
production company. Prior
thereto Managing Director of
Korn/Ferry International
(Calgary), an executive
search firm from May 1999 to
December 2002.
Raymond P. Cej(3)(5)(6) Director Managing Director BA Energy since May 2003, 20,000
Calgary, Alberta, Canada an oil and gas exploration and production
company. Prior thereto
President and Chief
Operating Officer of Synenco
Energy Inc., an oil and gas
exploration and production
company from December 2001
to April 2003. Prior thereto
President and Chief
Executive Officer of Anadime
Corporation, an oil field
servic3s company, from
January 200 to August 2001.
Bradley J. Farris(5) Vice President Vice President Finance and Chief Financial 619,607
Calgary, Alberta, Canada Finance, Chief Officer of GEOCAN.
Financial Officer
and Director
48
Number of
GEOCAN
Name and Shares
Municipality of Proposed Beneficially
Residence Offices Held Principal Occupation for Past Five Years Owned(1)
----------------------------------------------------------------------------------------------------------------
William C. Guinan(3)(4)(5) Director and Partner, Borden Ladner Gervais LLP, a law 211,458
Calgary, Alberta, Canada Corporate Secretary firm.
Garry W. Lohuis(6) Vice President Vice President Operations of GEOCAN. 351,696
Calgary, Alberta, Canada Operations, Director
Wayne S. Wadley President, Chief President and Chief Executive Officer of 1,385,636(2)
Calgary, Alberta, Canada Executive Officer GEOCAN.
and Directors
Note:
(1) Number of GEOCAN Shares beneficially owned, directly or indirectly, or
over which control or direction is exercised.
(2) Mr. Wadley controls Timberwolf Resources Ltd., which owns 781,625 of these
shares.
(3) Member of the Audit Committee.
(4) Member of the Corporate Governance Committee.
(5) Member of the Compensation Committee. (6) Member of the Reserves
Committee.
After giving effect to the Arrangement, the directors and senior officers
of GEOCAN, as a group, will beneficially own, directly or indirectly, or
exercise control or direction over 2,714,397 GEOCAN Shares, on a diluted basis,
representing, in aggregate, approximately 7% of the issued and outstanding
GEOCAN Shares. See "Information Concerning GEOCAN" in Appendix D to this
Information Circular.
Pro-forma Combined Capitalization
See "Capitalization" in Appendices D and E to this Information Circular
for information on the current capitalization of GEOCAN and Assure,
respectively, and see "Pro-forma Combined Financial Statements" in Appendix F to
this Information Circular for additional information on the pro-forma combined
capitalization of GEOCAN.
Principal Holders of Securities
To the knowledge of the directors and senior officers of GEOCAN, as at the
date hereof, but after giving effect to the Arrangement, no person or company
will beneficially own, directly or indirectly, or exercise control or direction
over, voting securities of GEOCAN carrying more than 10% of the voting rights
attached to any class of voting securities of GEOCAN.
Auditors, Transfer Agent and Registrar
The auditors of GEOCAN are, and will continue to be,
PricewaterhouseCoopers LLP, Chartered Accountants, Calgary, Alberta. The
transfer agent and registrar for the GEOCAN Shares is, and will continue to be,
Computershare Trust Company of Canada at its principal offices in Calgary,
Alberta.
49
PART IV - CONSENTS
Consent of BDO Dunwoody LLP
We have read the Information Circular (the "Circular") dated August 5, 2005
relating to the proposed plan of arrangement between Assure Energy, Inc.
("Assure") and GEOCAN Energy Inc. We have complied with Canadian generally
accepted standards for an auditors' involvement with offering documents.
We consent to the use in the Circular of our Auditors' report dated April 27,
2005 to the shareholders of Assure on the consolidated balance sheets as at
December 31, 2004 and December 31, 2003 and the consolidated statements of
operations, deficits and cash flows for each of the years in the two years ended
December 31, 2004 and December 31, 2003.
(signed) "BDO Dunwoody LLP"
Chartered Accountants
Calgary, Alberta
August 5, 2005
Consent of Rogoff & Company, PC
We have read the information circular dated August 5, 2005 with respect to a
proposed plan of arrangement involving Assure, the successor by amalgamation to
Quarry Oil & Gas Ltd. ("Quarry") and GEOCAN Energy Inc. We have complied with
Canadian generally accepted standards for an auditors' involvement with offering
documents.
We consent to the use in the above-mentioned information circular of our report
to the directors of Assure on the consolidated statements of earnings and
comprehensive loss, stockholders' equity and cash flows for the years ended
December 31, 2002. Our report is dated March 28, 2003 except for notes 2 and
13(a), as to which the date is March 5, 2004; and note 22, as to which the date
is June 29, 2005.
-------------------------------------
(signed) "Rogoff & Company, PC"
Chartered Accountants
August 5, 2005
Consent of PricewaterhouseCoopers LLP
We have read the Information Circular of Assure Energy, Inc. ("Assure") dated
August 5, 2005 relating to the arrangement between Assure and GEOCAN Energy Inc.
("GEOCAN"). We have complied with Canadian generally accepted standards for an
auditor's involvement with offering documents.
We consent to the use in the above-mentioned circular of our report to the
shareholders of GEOCAN on the consolidated balance sheet as at December 31, 2004
and the consolidated statements of operations and retained earnings (deficit)
and cash flows for the year ended December 31, 2004. Our report is dated March
18, 2005.
-------------------------------------
(signed) "PricewaterhouseCoopers LLP"
Chartered Accountants
August 5, 2005
50
Consent of Davis, Daignault Schick & Co.
TO: The Board of Directors of GEOCAN Energy Inc. (the "Company")
The Securities Commission or similar regulatory authority in
each of the provinces of Canada
We refer to the Information Circular (the "Circular") dated August 5, 2005
relating to the arrangement between the Company and Assure Energy, Inc.
We consent to the use in the Circular of our Auditors' report dated March 15,
2004 to the shareholders of the Company on the following:
o Consolidated balance sheet as at December 31, 2003 and March 31,
2002;
o Consolidated statements of income and retained earnings and cash
flows for the nine months ended December 31, 2002 and the year ended
March 31, 2003.
We report that we have read the Circular and have no reason to believe that
there are any misrepresentations in the information therein that are derived
from the consolidated financial statements upon which we have reported or that
are within our knowledge as a result of our audit of such consolidated financial
statements.
This consent is provided solely to the addressees hereto. Any use that a third
part makes of this consent, or any reliance or decisions made based on it, are
the responsibility of such third parties. We accept no responsibility for loss
or damages, if any, suffered by a third party as a result decisions made or
actions taken based on this consent.
(signed) "Davis, Daignault, Schick & Co."
Calgary, Alberta
Chartered Accountants
August 5, 2005
Consent of Bennett Jones LLP
TO: The Board of Directors of Assure Energy, Inc. ("Assure")
The Securities Commission or similar regulatory authority in each of the
provinces of Canada
We hereby consent to the inclusion of and reference to our opinion contained
under "Certain Canadian Federal Income Tax Considerations" in the information
circular of Assure dated August 5, 2005 with respect to the proposed arrangement
involving GEOCAN Energy Inc. and Assure.
-------------------------------------
(signed) "Bennett Jones LLP"
Calgary, Alberta
August 5, 2005
Consent of Borden Ladner Gervais LLP
TO: The Board of Directors of Assure Energy, Inc. ("Assure")
The Securities Commission or similar regulatory authority in
each of the provinces of Canada
We hereby consent to the inclusion of and reference to our opinion contained
under "Certain Canadian Federal Income Tax Considerations" in the information
circular of Assure dated August 5, 2005 with respect to the proposed arrangement
involving GEOCAN Energy Inc. and Assure.
-------------------------------------
(signed) "Borden Ladner Gervais LLP"
Calgary, Alberta
August 5, 2005
51
Consent of Haywood Securities Inc.
TO: The Board of Directors of Assure Energy, Inc. ("Assure")
The Securities Commission or similar regulatory authority in
each of the provinces of Canada
Re:Information Circular (the "Circular") with respect to a
proposed plan of arrangement involving GEOCAN Energy Inc.
("GEOCAN") and Assure.
We refer to the fairness opinion dated August 3, 2005, which we prepared for
Assure with respect to the proposed arrangement involving GEOCAN and Assure (the
"Fairness Opinion"). We consent to the inclusion of the Fairness Opinion in the
Circular.
-------------------------------------
(signed) "Haywood Securities Inc."
Calgary, Alberta
August 5, 2005
Consent of Sproule Associates Limited
TO: The Board of Directors of GEOCAN Energy Inc. ("GEOCAN")
The Board of Directors of Assure Energy, Inc. ("Assure")
The Securities Commission or similar regulatory authority in
each of the provinces of Canada
Re:Information Circular - Proposed Plan of Arrangement between
GEOCAN and Assure
Sproule Associates Limited is a firm of independent geological and petroleum
engineering consultants of Calgary, Alberta. We prepared the following reports:
o Evaluation of the P&NG Reserves of GEOCAN Energy Inc. (as of
December 31, 2004)", dated March 9, 2005.
o Evaluation of the P&NG Reserves of Assure Energy, Inc. (as of
December 31, 2004)", dated February 28, 2005.
We hereby give our consent to the use of our name and references to, and
excerpts from those reports, which are incorporated in the Information Circular
with respect to a proposed plan of arrangement involving GEOCAN and Assure dated
August 5, 2005.
We have read the information circular and have no reason to believe that there
are any misrepresentations in the information contained therein that is derived
from our reports or that is within our knowledge as a result of the preparation
of our reports.
-------------------------------------
(signed) "Sproule Associates Limited"
Calgary, Alberta
August 5, 2005
52
ITEM 3
------
ASSURE ENERGY, INC.
FORM OF PROXY FOR
HOLDERS OF COMMON SHARES, PREFERRED SHARES AND WARRANTS
FOR THE SPECIAL MEETING OF SECURITYHOLDERS
TO BE HELD ON WEDNESDAY, SEPTEMBER 7, 2005
The undersigned, a holder of common shares, preferred shares, and/or warrants to
acquire common shares (collectively, "Assure Securities") of Assure Energy, Inc.
("Assure"), hereby appoints Harvey Lalach, President and Chief Executive Officer
of Assure, or, failing him, Colin McNeil, a director of Assure or, instead of
either of the foregoing, __________________, as proxyholder of the undersigned,
with full power of substitution, to attend, act and vote for and on behalf of
the undersigned at the special meeting (the "Meeting") of the holders of Assure
Securities (collectively, "Assure Securityholders") to be held on Wednesday,
September 7, 2005 at 10:00 a.m. (Calgary time) in the Bennett Boardroom, 4500,
855 - 2nd Street S.W., Calgary, Alberta, Canada, and at any adjournment thereof,
and on every ballot that may take place in consequence thereof, to the same
extent and with the same powers as if the undersigned were personally present at
the Meeting with authority to vote at the said proxyholder's discretion, except
as otherwise specified below.
Without limiting the general powers hereby conferred, the undersigned hereby
directs the said proxyholder to vote the Assure Securities represented by this
Form of Proxy in the following manner (check the appropriate box):
1. FOR |_| or AGAINST |_| (and, if no specification is made, FOR) a special
resolution, the full text of which is set forth as Appendix A to the
information circular of Assure dated August 2, 2005 (the "Information
Circular"), approving an arrangement under section 193 of the Business
Corporations Act (Alberta), involving Assure, the Assure Securityholders,
and GEOCAN Energy Inc., all as more particularly set forth and described
in the accompanying Information Circular (the "Arrangement"); and
1. on any other matter that may properly come before the Meeting in such
manner as the proxyholder sees fit.
This Form of Proxy is solicited on behalf of the management of Assure. The
Assure Securities represented by this Form of Proxy will be voted and, where the
holder of Assure Securities has specified a choice with respect to the above
matter, will be voted as directed above or, if no direction is given, will be
voted IN FAVOUR of the above matter. The person or persons appointed under this
Form of Proxy are conferred with discretionary authority with respect to
amendments or variations of the matter specified in this Form of Proxy and the
Notice of Meeting in respect thereof and with respect to any other matter which
may be properly brought before the Meeting or any adjournment thereof. This Form
of Proxy should be read in conjunction with the accompanying Information
Circular.
1
THE UNDERSIGNED HEREBY REVOKES ANY PRIOR PROXIES.
Dated:
------------------------------
(if undated, the proxy will be
considered to bear the date on which it
was mailed to the Assure Securityholder)
Name: ----------------------------------------
----------------------------------------
Signature: (please sign, date and mail
promptly in the enclosed envelope - the
signature on this line should
correspond exactly with the name in
which the Securities subject to this
proxy are registered. If the
registered holder of the Securities
subject to this proxy is a corporation,
this proxy must be signed by a director
or officer duly authorized to sign on
behalf of such corporation.)
---------------- -------------- ------------- ---------------
Type of Number of Type of Number of
security security security security
---------------- -------------- ------------- ---------------
Common shares Private
Placement B
warrants
---------------- -------------- ------------- ---------------
Preferred Private
shares Placement C
warrants
---------------- -------------- ------------- ---------------
A warrants Compensation
A warrants
---------------- -------------- ------------- ---------------
B warrants Compensation
B warrants
---------------- -------------- ------------- ---------------
PP A warrants Finance
warrants
---------------- -------------- ------------- ---------------
NOTES:
1. Each Assure Securityholder has the right to appoint a
proxyholder other than the persons designated above, who
need not be a holder of Assure Securities, to attend and
to act for and on the behalf of such holder of Assure
Securities at the Meeting. To exercise such right, the
names of the nominees of management should be crossed out
and the name of the Assure Securityholder's appointee
should be legibly printed in the blank space provided.
2. This Form of Proxy must be dated and executed by the
Assure Securityholder (using exactly the same name in
which the securities are registered) or by his attorney
authorized in writing or, if the Assure Securityholder is
a body corporate, by a duly authorized officer or attorney
thereof. A copy of any such authorization should accompany
this Form of Proxy. Persons signing as executors,
administrators, trustees, etc. should so indicate.
3. This Form of Proxy will not be valid and not be acted upon
or voted unless it is completed as outlined herein and
delivered to Assure Energy Inc. c/o Continental Stock
Transfer & Trust Company, 17 Battery Place, New York, NY
10004, at least 24 hours (excluding Saturdays, Sundays and
statutory holidays) prior to the time set for the Meeting
or any adjournment thereof; provided, however, that the
Chairman of the Meeting may in his discretion accept
proxies received after this time up to and including the
time of the Meeting or any adjournment thereof. A proxy
is valid only at the Meeting in respect of which it is
given or any adjournment of that Meeting.
2
ITEM 4
ASSURE ENERGY, INC.
CERTIFICATE
I, Harvey Lalach, in my capacity as President and Chief Executive Officer of
Assure Energy, Inc. ("Assure"), and not in my personal capacity, hereby certify
that:
1. Assure arranged to have its Notice of Special Meeting of Securityholders,
Management Information Circular dated August 5, 2005 and form of Proxy
relating to the Special Meeting of Securityholders sent in compliance with
National Policy 54-101 - Communications with Beneficial Owners of
Securities of a Reporting Issuer ("NP 54-101") to all beneficial
shareholders of Assure at least 21 days prior to the date of its Special
Meeting, being September 7, 2005.
2. Assure arranged to have carried out all of the requirements of NP 54-101
in addition to those described in paragraph 1 above.
3. Assure is relying upon Section 2.20 of NP 54-101.
DATED at Calgary, Alberta this 8th day of August, 2005.
ASSURE ENERGY, INC.
By: (signed) "Harvey Lalach"
-------------------------------------
Harvey Lalach
President and Chief Executive Officer
ITEM 5
AMENDED AND RESTATED
ARRANGEMENT AGREEMENT
BETWEEN:
GEOCAN ENERGY INC.
- and -
ASSURE ENERGY, INC.
Dated July 8, 2005
TABLE OF CONTENTS
Page
Article 1 DEFINITIONS................................................1
Article 2 INTERPRETATION.............................................5
Article 3 ASSURE'S CLOSING CONDITIONS................................6
Article 4 GEOCAN'S CLOSING CONDITIONS................................7
Article 5 MUTUAL CLOSING CONDITIONS..................................8
Article 6 ASSURE'S REPRESENTATIONS, WARRANTIES, COVENANTS
AND ACKNOWLEDGEMENT......................................10
Article 7 GEOCAN'S REPRESENTATIONS AND WARRANTIES...................16
Article 8 GEOCAN'S COVENANTS........................................23
Article 9 ASSURE'S COVENANTS........................................26
Article 10 TERMINATION...............................................33
Article 11 Privacy Issues............................................35
Article 12 AMENDMENT.................................................36
Article 13 COSTS.....................................................36
Article 14 DISCLOSURE AND TRANSITIONAL...............................36
Article 15 MISCELLANEOUS.............................................37
EXHIBIT 1 - PLAN OF ARRANGEMENT
EXHIBIT 2 - LOCKUP AGREEMENT FORM
AMENDED AND RESTATED
ARRANGEMENT AGREEMENT
THIS ARRANGEMENT AGREEMENT, as amended on the 2nd of August, 2005, is made
and restated as of the 8th day of July, 2005.
BETWEEN:
GEOCAN ENERGY INC., a body corporate incorporated under the laws of
the Province of Alberta, having an office in Calgary, Alberta
(hereinafter called "GEOCAN")
- and -
ASSURE ENERGY, INC., a body corporate incorporated under the laws of
the Province of Alberta, having an office in Calgary, Alberta
(hereinafter called "Assure").
WHEREAS the parties wish to combine the assets and operations of GEOCAN
and Assure;
AND WHEREAS the board of directors of Assure has unanimously determined
that it would be in the best interests of Assure and its securityholders to
recommend to the securityholders of Assure that they vote in favour of the
Arrangement and to cooperate with GEOCAN with respect to the Arrangement and
take all reasonable action to support the Arrangement;
AND WHEREAS the parties hereto intend to carry out certain of the
transactions contemplated herein pursuant to an arrangement under the ABCA;
NOW THEREFORE IN CONSIDERATION of the covenants and agreements herein
contained and other good and valuable consideration (the receipt and sufficiency
of which are hereby acknowledged), the parties hereto covenant and agree as
follows:
ARTICLE 1
DEFINITIONS
1.1 In this Agreement, including in the recitals, unless the context otherwise
requires:
(a) "ABCA" means the Business Corporations Act (Alberta), R.S.A. 2000,
c. B-9, as amended, including the regulations promulgated
thereunder;
(b) "Agreement" means this agreement, including the recitals and all
Exhibits to this agreement, as amended or supplemented from time to
time, and "hereby", "hereof", "herein", "hereunder", "herewith" and
similar terms refer to this Agreement and not to any particular
provision of this Agreement;
(c) "Arrangement" means the arrangement under the provisions of Section
193 of the ABCA as set out in the Plan of Arrangement;
(d) "Articles of Arrangement" means the articles of arrangement in
respect of the Arrangement required under subsection 193(10) of the
ABCA to be filed with the Registrar after the Final Order has been
made;
(e) "Assure" means Assure Energy, Inc., a corporation governed by the
ABCA;
(f) "Assure Acquisition Proposal" means the making of any proposal to
Assure or its shareholders from any person (other than GEOCAN) which
constitutes, or may reasonably be expected to lead to (in either
case whether in one transaction or a series of transactions): (i) an
acquisition of 20% or more of the outstanding voting shares of
Assure; (ii) any acquisition of any material portion of the assets
of Assure or an Assure Subsidiary; (iii) an amalgamation,
arrangement, merger, or consolidation of any of Assure or an Assure
Subsidiary; or (iv) any take-over bid, issuer bid, exchange offer,
recapitalization, liquidation, dissolution, reorganization into a
royalty trust or income fund or similar transaction involving Assure
or any other transaction, the consummation of which would or could
reasonably be expected to impede, interfere with, prevent or delay
the Arrangement or which would or could reasonably be expected to
materially reduce the benefits of the Arrangement to GEOCAN;
(g) "Assure Break Fee" means the sum of $1,000,000;
(h) "Assure Debt and Working Capital Deficiency" means the aggregate of
Assure's indebtedness to any bank or other institutional lender, the
indebtedness under the Assure Notes, the Assure Shareholder Loans
and Assure's working capital deficiency, but excluding the Assure
Preferred Shares and severance and other transaction costs relating
to implementation of the Arrangement;
(i) "Assure's counsel" means Bennett Jones LLP;
(j) "Assure Financial Statements" means the audited consolidated
financial statements of Assure for the periods ended December 31,
2003 and December 31, 2004, together with the notes thereto and the
report of the auditors thereon and the unaudited consolidated
financial statements of Assure for the three months ended March 31,
2005, together with the notes thereto;
(k) "Assure Meeting" means the special meeting of the Assure
Securityholders to be called to, inter alia, consider and, if
thought fit, authorize, approve and adopt the Arrangement in
accordance with the Interim Order, and any adjournments thereof;
(l) "Assure Notes" means notes of Assure held by certain private
investors with dates of repayment ranging from December 28, 2008 to
March 15, 2009;
(m) "Assure Options" means, collectively, all outstanding options as of
the date hereof to purchase Assure Shares pursuant to Assure's
existing stock option plan;
(n) "Assure Preferred Shares" means the currently outstanding Series A
and Series B preferred shares of Assure;
(o) "Assure Preferred Share Waiver" means a waiver, in form and
substance satisfactory to GEOCAN, acting reasonably, provided by all
holders of Assure Preferred Shares, waiving, for the period expiring
December 31, 2005, any right to exercise a conversion right attached
to such shares whereby they may be converted into Assure Shares;
(p) "Assure Public Documents" means all documents or information filed
by or on behalf of Assure in compliance with or intended compliance
with applicable laws and which are accessible by a member of the
general public through the System for Electronic Document Analysis
and Retrieval (SEDAR) website maintained by the Canadian Securities
Administrators or through the EDGAR website maintained by the SEC;
(q) "Assure Securityholders" means, collectively, the holders of Assure
Shares, Assure Preferred Shares and Assure Warrants;
(r) "Assure Shareholder Loan Mandatory Repayment" means the pro rata
repayment of loans made by certain shareholders of Assure to Assure
in the aggregate amount of $1,500,000;
(s) "Assure Shareholder Loans" means currently outstanding loans made by
certain shareholders of Assure to Assure;
(t) "Assure Shareholders" means the holders of Assure Shares;
(u) "Assure Shares" means the common shares of Assure as constituted on
the date hereof;
(v) "Assure Subsidiaries" means Assure Oil & Gas Corp. and Westerra 2000
Inc.;
2
(w) "Assure Superior Proposal" means, in respect of Assure or its
assets, an Assure Acquisition Proposal in respect of which the board
of directors of Assure has determined in good faith: (x) that funds
or other consideration necessary for the Assure Acquisition Proposal
are or are likely to be available; (y) after consultation with its
financial advisor (if any) that such Assure Acquisition Proposal
would, if consummated in accordance with its terms, result in a
transaction, taken as a whole, more favourable to Assure
shareholders than the Arrangement; and (z) after receiving the
advice of outside legal counsel to such effect, that the taking of
such action is recommended for the board of directors to act in a
manner consistent with statutory or fiduciary duties of the
directors under applicable law;
(x) "Assure Warrants" means, collectively, all outstanding warrants of
Assure as of the date hereof entitling the holders to acquire Assure
Shares on the basis set forth in the certificates issued in respect
of such warrants, such Assure Warrants being comprised of 1,593,900
A warrants ("Assure A Warrants") with an exercise price of U.S.$0.33
per Assure Share expiring October 1, 2007, 3,600,000 B warrants
("Assure B Warrants") with an exercise price of U.S.$0.67 per Assure
Share expiring July 1, 2008, 2,100,000 private placement warrants
("Assure PP A Warrants") with an exercise price of U.S.$1.00 per
Assure Share expiring July 1, 2007, 533,500 private placement
warrants ("Assure PP B Warrants") with an exercise price of
U.S.$2.50 per Assure Share expiring February 26, 2008, 50,000
private placement warrants ("Assure PP C Warrants") with an exercise
price of U.S.$2.50 per Assure Share expiring September 1, 2006,
90,000 compensation warrants ("Assure Compensation A Warrants") with
an exercise price of U.S.$3.00 per Assure Share expiring April 7,
2008, 60,000 compensation warrants ("Assure Compensation B
Warrants") with an exercise price of U.S.$4.05 per Assure Share
expiring December 24, 2005, and 350,000 finance warrants ("Assure
Finance Warrants") with an exercise price of U.S.$3.10 per Assure
Share expiring March 15, 2008, (where the Assure PP B Warrants,
Assure PP C Warrants, Assure Compensation A Warrants, Assure
Compensation B Warrants and Assure Finance Warrants collectively
defined as "Assure Other Warrants");
(y) "business day" means a day, other than a Saturday, Sunday or
statutory holiday, when banks are generally open in the city of
Calgary for the transaction of banking business;
(z) "Confidentiality Agreement" means the confidentiality agreement
between GEOCAN and Assure dated May 10, 2005;
(aa) "control" means, with respect to control of a body corporate by a
person, the holding (other than by way of security) by or for the
benefit of that person of securities of that body corporate to which
are attached more than 50% of the votes that may be cast to elect
directors of the body corporate (whether or not securities of any
other class or classes shall or might be entitled to vote upon the
happening of any event or contingency) provided that such votes, if
exercised, are sufficient to elect a majority of the board of
directors of the body corporate;
(bb) "Court" means the Court of Queen's Bench of Alberta;
(cc) "Effective Date" means the date on which the Arrangement becomes
effective under the ABCA;
(dd) "Final Order" means the final order of the Court approving the
Arrangement pursuant to Section 193(9)(a) of the ABCA, as such order
may be affirmed, amended or modified by any court of competent
jurisdiction;
(ee) "GEOCAN" means GEOCAN Energy Inc., a body corporate incorporated
under the ABCA;
(ff) "GEOCAN Break Fee" means the sum of $1,500,000;
3
(gg) "GEOCAN Financial Statements" means the audited consolidated
financial statements of GEOCAN for the periods ended December 31,
2003 and December 31, 2004, together with the notes thereto and the
report of the auditors thereon and the unaudited consolidated
financial statements of GEOCAN for the three months ended March 31,
2005, together with the notes thereto;
(hh) "GEOCAN Public Documents" means all documents or information filed
by or on behalf of GEOCAN in compliance with or intended compliance
with applicable laws and which are accessible by a member of the
general public through the System for Electronic Document Analysis
and Retrieval (SEDAR) website maintained by the Canadian Securities
Administrators;
(ii) "GEOCAN Shares" means Class A common shares of GEOCAN as constituted
on the date hereof;
(jj) "GEOCAN Subsidiaries" means GEOCAN Saskatchewan Inc. and GEOCAN
Energy CL.C. s.r.o.;
(kk) "In Writing" means a written disclosure letter, dated the date
hereof and delivered concurrently with the execution hereof, from
GEOCAN or Assure, as the case may be, to the other party providing
specific disclosure of the matters covered therein;
(ll) "Income Tax Act" means the Income Tax Act (Canada), R.S.C. 1985, c.
1 (5th Supp), as amended, including the regulations promulgated
thereunder;
(mm) "Interim Order" means an interim order of the Court concerning the
Arrangement pursuant to Section 193(4) of the ABCA, containing
declarations and directions with respect to the Arrangement and the
holding of the Assure Meeting, as such order may be affirmed,
amended or modified by any court of competent jurisdiction;
(nn) "Information Circular" means the information circular and proxy
statement of Assure to be mailed to Assure Securityholders in
connection with the holding of the Assure Meeting;
(oo) "Letter Agreement" means the agreement between GEOCAN and Assure
dated June 17, 2005 providing for, among other things, the
Arrangement;
(pp) "Lockup Agreements" mean the lockup agreements of the directors and
officers of Assure in the form attached hereto as Exhibit 2;
(qq) "Material Adverse Change" means any change or effect (or any
condition, event or development involving a prospective change or
effect) in or on the business, operations, results of operations,
assets, capitalization, financial condition, licenses, permits,
concessions, rights or liabilities, whether contractual or
otherwise, of a party which is materially adverse to the business,
operations or financial condition of such party, other than a change
or effect (i) which arises out of a matter that has been disclosed
In Writing to the other party prior to the other party entering into
this Agreement, (ii) resulting from conditions affecting the oil and
gas industry in the jurisdictions in which such party holds its
assets, taken as a whole, or (iii) resulting from general economic,
financial, currency exchange, securities or commodity market
conditions (including, without limitation, the prices of crude oil
and natural gas) in Canada, the United States or elsewhere;
(rr) "Material Adverse Effect" means any effect that is, or would
reasonably be expected to be, material and adverse to the business,
operations or financial condition of Assure or GEOCAN but "Material
Adverse Effect" shall not include an effect resulting from any of
the matters referred to in subparagraphs (i), (ii) or (iii) of the
definition of "Material Adverse Change" above;
(ss) "misrepresentation" includes any untrue statement of a material
fact, any omission to state a material fact that is required to be
stated and any omission to state a material fact that is necessary
to be stated in order for a statement not to be misleading;
(tt) "OTCBB" means the OTC Bulletin Board;
(uu) "person" includes any individual, partnership, firm, trust, body
corporate, government, governmental body, agency or instrumentality,
unincorporated body of persons or association;
4
(vv) "Plan of Arrangement" means the plan of arrangement in the form
substantially as set out in Exhibit 1 hereto as amended or
supplemented from time to time in accordance with Article 12 hereof;
(ww) "Registrar" means the registrar appointed pursuant to Section 253 of
the ABCA;
(xx) "Returns" means all reports, estimates, declarations of estimated
tax, information statements and returns relating to, or required to
be filed in connection with, any Taxes;
(yy) "SEC" means the United States Securities and Exchange Commission;
(zz) "subsidiary" means, when used to indicate a relationship with
another entity:
(i) an entity which is controlled by (A) that other, or (B) that
other and one or more entities, each of which is controlled by
that other, or (C) two or more entities each of which is
controlled by that other, or
(ii) a subsidiary of an entity that is the other's subsidiary,
(aaa) "Tax Pools" means undepreciated capital cost of any particular class
of depreciable property, earned depletion base, cumulative Canadian
exploration expense, cumulative Canadian development expense,
cumulative Canadian oil and gas property expense, foreign
exploration and development expense, capital losses, non-capital
losses, cumulative eligible capital, attributed Canadian royalty
income and investment tax credits, all as defined in the Income Tax
Act and the Alberta Corporate Tax Act, as the case may be;
(bbb) "Taxes" means all taxes, however denominated, including any
interest, penalties or other additions that may become payable in
respect thereof, imposed by any federal, territorial, state, local
or foreign government or any agency or political subdivision of any
such government, which taxes shall include, without limiting the
generality of the foregoing, all income or profits taxes (including,
but not limited to, federal income taxes and provincial income
taxes), payroll and employee withholding taxes, employment
insurance, social insurance taxes, sales and use taxes, ad valorem
taxes, excise taxes, franchise taxes, gross receipts taxes, business
license taxes, occupation taxes, real and personal property taxes,
stamp taxes, environmental taxes, transfer taxes, workers'
compensation and other governmental charges, and other obligations
of the same or of a similar nature to any of the foregoing, which
the applicable party to this Agreement or any subsidiary of such
party, as the case may be, is required to pay, withhold or collect;
and
(ccc) "TSX" means the Toronto Stock Exchange.
1.2 The following Exhibits form part of this Agreement:
Exhibit 1 - Plan of Arrangement
Exhibit 2 - Lock-up Agreement form.
ARTICLE 2
INTERPRETATION
2.1 The division of this Agreement into Articles, Sections, subsections and
paragraphs and the insertion of headings are for convenience of reference
only and shall not affect in any way the meaning or interpretation of this
Agreement.
2.2 Unless the contrary intention appears, references in this Agreement to an
Article, Section, subsection, paragraph, clause, subclause or schedule by
number or letter or both refer to the article, section, subsection,
paragraph, clause, subclause or schedule, respectively, bearing that
designation in this Agreement.
2.3 In this Agreement, unless the contrary intention appears, words importing
the singular include the plural and vice versa; words importing gender
shall include all genders.
5
2.4 In the event that the date on which any action is required to be taken
hereunder by any of the parties is not a business day in the place where
the action is required to be taken, such action shall be required to be
taken on the next succeeding day which is a business day in such place.
2.5 References in this Agreement to any statute or sections thereof shall
include such statute as amended or substituted and any regulations
promulgated thereunder from time to time in effect.
2.6 Unless otherwise stated, all references in this Agreement to sums of money
are expressed in lawful money of Canada.
2.7 All representations, warranties, covenants and opinions in or contemplated
by this Agreement as to the enforceability of any covenant, agreement or
document are subject to enforceability being limited by applicable
bankruptcy, insolvency, reorganization and other laws affecting creditors
rights generally, and the discretionary nature of certain remedies
(including specific performance and injunctive relief).
2.8 This Agreement have been amended and restated on August 2, 2005.
Notwithstanding such amendment and restatement, this Agreement shall be
dated as of July 8, 2005 and all references as to the date hereof or which
speak to the date of execution herein shall be considered to be as at July
8, 2005.
ARTICLE 3
ASSURE'S CLOSING CONDITIONS
3.1 The obligation of Assure to complete the Arrangement is subject to the
fulfillment of the following conditions precedent on or before the
Effective Date:
(a) the representations and warranties made by GEOCAN in Section 7.1
hereof shall be true as of the Effective Date as if made on and as
of such date (except to the extent such representation and warranty
speaks as of a particular date) except where the failure of such
representations and warranties to be true and correct would not have
a Material Adverse Effect on GEOCAN and GEOCAN shall have provided
to Assure a certificate of an officer of GEOCAN certifying (to the
best of his knowledge and not in his personal capacity) as to such
matters on the Effective Date;
(b) GEOCAN shall have furnished Assure (all in form acceptable to
Assure, acting reasonably) with certified copies of the resolutions
duly passed by the board of directors of GEOCAN approving this
Agreement and the consummation of the transactions contemplated
hereby;
(c) GEOCAN shall have complied in all material respects with its
covenants in this Agreement and GEOCAN shall have provided to Assure
a certificate of an officer of GEOCAN certifying (to the best of his
knowledge and not in his personal capacity) as to such compliance;
(d) releases by GEOCAN and Assure of Assure's directors and officers,
and any employees who have provided releases pursuant to Section
9.1(u) hereof, which shall include normal course exceptions
respecting confidentiality, fraud, negligence, criminal behaviour,
wilful misconduct or failure to act honestly, in good faith and in
the best interests of Assure, shall have been delivered;
(e) GEOCAN shall have entered into written agreement effective as of the
Effective Date satisfactory to Assure, acting reasonably, pursuant
to which GEOCAN shall agree that, for a period of three years after
the Effective Date, GEOCAN shall cause to be maintained directors'
and officers' liability insurance providing coverage on a "trailing"
or "run-off" basis for all present (to the Effective Date) and
former directors and officers of Assure with respect to claims
arising from facts or events which occurred before the Effective
Date, such insurance to have substantially the same coverage limits
and terms from time to time as GEOCAN provides for its own directors
and officers;
(f) there shall not have occurred any Material Adverse Change in respect
of GEOCAN;
(g) the Assure Shareholder Loan Mandatory Repayment shall have occurred;
6
(h) the GEOCAN Shares issueable pursuant to the Arrangement shall be
freely tradeable by the holders of such GEOCAN Shares subject to
requirements of general application, the TSX and in respect of
trades by control persons; and
(i) Assure shall have received an opinion of legal counsel dated as of
the Effective Date, in respect of such matters related to the
transactions contemplated by this Agreement and the Arrangement as
may reasonably be requested by Assure.
The foregoing conditions precedent are for the benefit of Assure and may
be waived, in whole or in part, by Assure in writing at any time. Subject
to Section 10.4, if any of the conditions precedent set forth in this
article shall not be complied with or waived by Assure on or before the
date required for the performance thereof, Assure may, in addition to the
other remedies they may have at law or equity, rescind and terminate this
Agreement by written notice from Assure to GEOCAN.
ARTICLE 4
GEOCAN'S CLOSING CONDITIONS
4.1 The obligations of GEOCAN to complete the Arrangement are subject to
fulfillment of the following conditions precedent on or before the
Effective Date:
(a) the representations and warranties made by Assure in Section 6.1
hereof shall be true as of the Effective Date as if made on and as
of such date (except to the extent such representations and
warranties speak to a particular date and except, in the case of
Section 6.1(e) hereof, to the extent the number of Assure Shares and
Assure Warrants has changed as a result of the exercise of such
warrants prior to the Effective Date) except where the failure of
such representations and warranties to be true and correct would not
have a Material Adverse Effect on Assure and Assure shall have
provided to GEOCAN a certificate of an officer of Assure certifying
(to the best of his knowledge and not in his personal capacity) as
to such matters on the Effective Date;
(b) Assure shall have furnished GEOCAN with:
(i) certified copies of the resolutions duly passed by the board
of directors of Assure approving this Agreement and the
consummation of the transactions contemplated hereby and
directing the submission of the Arrangement for approval at
the Assure Meeting and recommending that Assure
Securityholders vote in favour of the Arrangement; and
(ii) certified copies of the special resolution of Assure
Securityholders, duly passed at the Assure Meeting, approving
the Arrangement in accordance with the Interim Order;
(c) Assure shall have complied in all material respects with its
covenants in this Agreement and Assure shall have provided to
GEOCAN, a certificate of an officer certifying (to the best of his
knowledge and not in his personal capacity) as to such compliance;
(d) not more than 500,000 Assure A Warrants and not more than 1,200,000
Assure B Warrants shall remain outstanding;
(e) GEOCAN shall be satisfied that, immediately after the Effective
Date, there will not be outstanding any securities exercisable or
convertible into Assure Shares;
(f) the aggregate number of Assure Securities held by Assure
Securityholders exercising their right to dissent shall not exceed
an amount equal to 10% of the aggregate outstanding Assure Shares
and Assure Warrants;
(g) resignations, on or prior to the Effective Date, of all of Assure's
directors, officers, employees and consultants shall have been
delivered (in the case of directors, in a manner which allows for
the orderly replacement of directors);
7
(h) releases by Assure's directors and officers of Assure and GEOCAN,
which shall include normal course exceptions respecting any
statutory or contractual indemnities by Assure of such parties,
shall have been delivered;
(i) no lawsuits, claims or regulatory proceedings shall be pending,
threatened or in existence that would prevent or effect in a
materially adverse manner GEOCAN's ownership or operation of all or
a material portion of Assure's business or assets or impose any
limitations on GEOCAN's exercise of full ownership rights of the
Assure Shares;
(j) the board of directors of Assure shall not have withdrawn, modified
or changed any of its recommendations, approvals, resolutions or
determinations referred to in Section 6.1(u) in a manner materially
adverse to GEOCAN or to the completion of the Arrangement;
(k) there shall not have occurred any Material Adverse Change in respect
of Assure;
(l) the Assure Preferred Share Waiver shall have been delivered; and
(m) GEOCAN shall have received an opinion of legal counsel dated as of
the Effective Date, in respect of such matters related to the
transactions contemplated by this Agreement and the Arrangement as
may be reasonably be requested by GEOCAN.
4.2 GEOCAN shall be entitled to terminate this Agreement by written notice at
any time after July 18, 2005 if Lockup Agreements have not been executed
and delivered to GEOCAN by each of the current directors and officers of
Assure.
4.3 The foregoing conditions precedent are for the benefit of GEOCAN and may
be waived, in whole or in part, by GEOCAN in writing at any time. Subject
to Section 10.4, if any of the conditions precedent set forth in this
article shall not be complied with or waived by GEOCAN on or before the
date required for the performance thereof, GEOCAN may, in addition to the
other remedies they may have at law or equity, rescind and terminate this
Agreement by written notice to Assure.
ARTICLE 5
MUTUAL CLOSING CONDITIONS
5.1 The obligations of GEOCAN and Assure to complete the Arrangement are
subject to fulfillment of the following conditions precedent on or before
the Effective Date or such other time as is specified below:
(a) the Interim Order shall have been granted in form and substance
satisfactory to GEOCAN and Assure, acting reasonably, on or before
August 18, 2005 and shall not have been set aside or modified in a
manner unacceptable to such parties acting reasonably, on appeal or
otherwise;
(b) a special resolution or resolutions approving the Arrangement shall
have been passed by the Assure Securityholders as may be required
pursuant to the Interim Order and any applicable regulatory
requirements on or before October 5, 2005, subject to an extension
of up to 20 days pursuant to Section 10.4, in form and substance
satisfactory to each of GEOCAN and Assure, each acting reasonably;
(c) on or before October 5, 2005, subject to an extension of up to 20
days pursuant to Section 10.4, the Final Order shall have been
granted in form and substance satisfactory to GEOCAN and Assure,
each acting reasonably;
(d) the Arrangement shall have become effective on or before October 6,
2005, subject to an extension of up to 20 days pursuant to Section
10.4;
(e) the Articles of Arrangement relating to the Arrangement shall be in
form and substance satisfactory to GEOCAN and Assure, each acting
reasonably;
8
(f) there shall be no action taken under any existing applicable law or
regulation, nor any statute, rule, regulation or order which is
enacted, enforced, promulgated or issued by any court, department,
commission, board, regulatory body, government or governmental
authority or similar agency, domestic or foreign, that:
(i) makes illegal or otherwise directly or indirectly restrains,
enjoins or prohibits the Arrangement or any other material
transactions contemplated herein; or
(ii) results in a judgment or assessment of material damages
directly or indirectly relating to the transactions
contemplated herein;
(g) all requisite domestic and foreign regulatory approvals and
consents, necessary in connection with the transactions contemplated
hereby including, without limitation, those under the Investment
Canada Act and of the TSX to the issuance of the GEOCAN Shares to be
issued under the Arrangement and those of the SEC shall have been
obtained on terms and conditions satisfactory to GEOCAN and Assure,
each acting reasonably, and all applicable domestic and foreign
statutory or regulatory waiting periods to the transactions
contemplated under the Arrangement shall have expired or been
terminated, and no objection or opposition shall have been filed,
initiated or made by any regulatory authority during any applicable
statutory or regulatory period;
(h) except, in the case of (i) below for those disclosed In Writing to
GEOCAN or Assure, as the case may be, no act, action, suit or
proceeding shall have been threatened or taken before or by any
domestic or foreign court or tribunal or government agency or other
regulatory authority or administrative agency or commission or by
any elected or appointed public official or private person
(including, without limitation, any individual, corporation, firm,
group or other entity) in Canada or elsewhere, whether or not having
the force of law, and no law, regulation or policy shall have been
proposed, enacted, promulgated or applied:
(i) which has the effect or may have the effect to cease trade,
enjoin, prohibit or impose material limitations or conditions
on the Arrangement; or
(ii) which would have a Material Adverse Effect on GEOCAN or
Assure;
(i) there shall not have occurred any actual or threatened change
(including any proposal by the Minister of Finance (Canada) to amend
the Income Tax Act (Canada) or any announcement, governmental or
regulatory initiative, condition, event or development involving a
change or a prospective change) that, in the sole judgment of GEOCAN
or Assure, acting reasonably, directly or indirectly, has or may
have material adverse significance with respect to the business or
operations of either of GEOCAN or Assure, in which either of them
has a material interest or with respect to the regulatory regime
applicable to their respective business and operations;
(j) all third parties consents, including, without limitation, consent
of lenders to GEOCAN or Assure, required in connection with the
matters contemplated by this Agreement and the Arrangement shall
have been obtained; and
(k) if applicable, the relevant waiting period in section 123 of the
Competition Act (Canada) shall have expired and: (i) an advance
ruling certificate ("ARC") pursuant to section 102 of the
Competition Act shall have been issued by the Commissioner of the
Competition Bureau ("Commissioner") appointed under the Competition
Act (Canada); or (ii) a "no action letter" satisfactory to each of
GEOCAN and Assure, acting reasonably, indicating that the
Commissioner has determined not to make an application for an order
under section 92 of the Competition Act (Canada) shall have been
received from the Commissioner, and any terms and conditions
attached to any such letter shall be acceptable to each of GEOCAN
and Assure, acting reasonably; and in addition, in the event that
the ARC or "no action" letter described in (i) or (ii) in the
foregoing is issued, there shall be no threatened or actual
application by the Commissioner for an order under section 92 or 100
of the Competition Act (Canada).
9
The foregoing conditions are for the mutual benefit of GEOCAN and Assure
and may be waived, in whole or in part, by GEOCAN and Assure together, at
any time. Subject to Section 10.4, if any of the conditions precedent set
forth in this Article shall not be complied with or waived as aforesaid on
or before the date required for the performance thereof, GEOCAN or Assure
may, in addition to the other remedies they may have at law or in equity,
rescind and terminate this Agreement by written notice to the other party.
ARTICLE 6
ASSURE'S REPRESENTATIONS, WARRANTIES, COVENANTS AND ACKNOWLEDGEMENT
6.1 Assure hereby represents and warrants (and, as applicable, covenants) to
GEOCAN as follows and acknowledges that GEOCAN is relying upon these
representations, warranties and covenants in connection with the entering
into of this Agreement:
(a) Assure and each Assure Subsidiary is a corporation validly existing
under the laws of Alberta or, in the case of Assure Oil & Gas Corp.,
Ontario, and has the requisite corporate power and authority to own
its properties and conduct its business as such business is now
conducted of such property is now owned. Assure and each Assure
Subsidiary is duly registered to do business and is in good standing
in each jurisdiction in which the character of its properties, owned
or leased, or the nature of its activities make such registration
necessary, except where the failure to be so registered or in good
standing would not have a Material Adverse Effect on Assure and the
Assure Subsidiaries, taken as a whole.
(b) Assure has the requisite corporate authority to enter into this
Agreement and to carry out its obligations hereunder. The execution
and delivery of this Agreement and the consummation of the
transactions contemplated hereby have been duly authorized by
Assure's board of directors, and (except for approvals contemplated
by this Agreement) no other corporate proceedings on the part of
Assure is necessary to authorize this Agreement and the transactions
contemplated hereby. This Agreement has been duly executed and
delivered by Assure and constitutes the legal, valid and binding
obligation of Assure enforceable against Assure in accordance with
its terms.
(c) Except for the approvals contemplated in this Agreement, the
execution and delivery of this Agreement, by Assure, the
consummation of the transactions contemplated hereby and compliance
by Assure with any of the provisions hereof will not: (i) violate,
conflict with, or result in breach of any provision of, require any
consent, approval or notice under, or constitute a default (or an
event which, with notice or lapse of time or both, would constitute
a default) or result in a right of termination or acceleration
under, or result in a creation of any encumbrance upon any of the
properties or assets of Assure or any Assure Subsidiary under any of
the terms, conditions or provisions of (x) the constating documents
of Assure or any Assure Subsidiary, or (y) any note, bond, mortgage,
indenture, loan agreement, deed of trust, agreement, lien, contract
or other material instrument or obligation to which Assure or any
Assure Subsidiary is a party or to which it, or any of its
properties or assets, may be subject or by which Assure or any
Assure Subsidiary is bound, other than a requirement for consent
from Assure's banker; (ii) violate any judgment, ruling, order,
writ, injunction, determination, award, decree, statute, ordinance,
rule or regulation applicable to Assure or any Assure Subsidiary;
(except, in the case of each of clauses (i) and (ii) above, for such
violations, conflicts, breaches, defaults or terminations which, or
any consents, approvals or notices which if not given or received,
would not have any Material Adverse Effect on Assure and the Assure
Subsidiaries, taken as a whole, or on the ability of Assure to
consummate the transactions contemplated hereby); or (iii) cause the
suspension or revocation of any authorization, consent, approval or
license of Assure or any Assure Subsidiary currently in effect which
would have a Material Adverse Effect on Assure and the Assure
Subsidiaries, taken as a whole.
(d) Except for the approvals contemplated in this Agreement and
approvals that have been obtained and other than in the normal
course in connection with or in compliance with the provisions of
securities laws and any pre merger notification statutes, (i) there
is no legal impediment to Assure's consummation of the transactions
contemplated by this Agreement or any agreement contemplated
hereunder, and (ii) no filing or registration with, or
authorization, consent or approval of, any domestic or foreign
public body or authority is necessary by Assure or any Assure
Subsidiary in connection with the making of this Agreement or the
consummation of the transactions contemplated by this Agreement or
any agreement contemplated hereunder, except for such filings or
registrations which, if not made, or for such authorizations,
consents or approvals which, if not received, would not have a
Material Adverse Effect on Assure or any Assure Subsidiary or the
ability of Assure to consummate the transactions contemplated
hereby.
10
(e) As of the date hereof (i) the authorized share capital of Assure
consists of 4,977,250 Blank Check Preferred Shares, 17,500 Series A
Preferred Shares, 5,250 Series B Preferred Shares and 100,000,000
Assure Shares, and 24,808,042 Assure Shares, 17,500 Series A
Preferred Shares and 5,250 Series B Preferred Shares are issued and
outstanding, (ii) there are no outstanding Assure Options, and (iii)
8,377,400 Assure Shares are issuable pursuant to outstanding Assure
Warrants. Except as set forth in the immediately preceding sentence,
there are no options, warrants or other rights, agreements or
commitments of any character whatsoever requiring the issuance, sale
or transfer by Assure of any shares of Assure (including Assure
Shares) or any securities convertible into, or exchangeable or
exercisable for, or otherwise evidencing a right to acquire, any
shares of Assure (including Assure Shares), nor are there any
outstanding stock appreciation rights, phantom equity or similar
rights, agreements, arrangements or commitments based upon the book
value, income or other attribute of Assure. All outstanding Assure
Shares have been duly authorized and validly issued, are fully paid
and non assessable and are not subject to, nor were they issued in
violation of, any pre emptive rights, and all Assure Shares issuable
upon exercise of the Assure Warrants, in accordance with their terms
will be duly authorized and validly issued, fully paid and non
assessable and will not be subject to any pre emptive rights. (f)
Since December 31, 2004, there has not been any Material Adverse
Change in respect of Assure and the Assure Subsidiaries, taken as a
whole.
(g) To the best of the knowledge of Assure, all material data and
information provided by Assure or its agents to GEOCAN and its
agents and representatives is true and correct in all material
respects and Assure has not withheld from GEOCAN any material
information or documents concerning Assure or any Assure Subsidiary
or its assets or liabilities during the course of GEOCAN's review of
Assure and its assets and operations.
(h) Except (a) as disclosed or reflected in the audited consolidated
financial statements of Assure as at December 31, 2004 previously
delivered to GEOCAN, and (b) for liabilities and obligations (i)
incurred in the ordinary course of business, (ii) pursuant to or in
connection with the terms of this Agreement, or (iii) as disclosed
In Writing to GEOCAN, neither Assure nor any Assure Subsidiary has
incurred any material liabilities of any nature, whether accrued,
contingent or otherwise or which would be required by generally
accepted accounting principles applicable in Canada to be reflected
on a consolidated balance sheet of Assure as of the date hereof.
(i) Since December 31, 2004, except as disclosed in the subsequent event
notes of the Assure Financial Statements, neither Assure nor any
Assure Subsidiary has taken any action that would be in violation of
Section 9.1(a) if such provision had been in effect since such date,
other than violations which would not have any Material Adverse
Effect on the business, operations or financial condition of Assure
and the Assure Subsidiaries, taken as a whole, and would not
materially affect Assure's ability to consummate the transactions
contemplated hereby.
(j) As of their respective dates, the Assure Financial Statements were
prepared in accordance with generally accepted accounting principles
applicable in Canada (except as otherwise indicated in such
financial statements and the notes thereto or, in the related report
of Assure's independent auditors), and fairly present the financial
position, results of operations and changes in financial position of
Assure as of the dates thereof and for the periods indicated
therein.
(k) Assure has no subsidiaries other than the Assure Subsidiaries. Each
Assure Subsidiary is wholly owned by Assure and no person holds any
options, warrants or other securities or otherwise has any right to
acquire any security of an Assure Subsidiary. Assure holds 39% of
the equity securities of Keantha Holdings Inc.
(l) The corporate records and minute books of Assure and each Assure
Subsidiary are complete and accurate in all material respects.
11
(m) To Assure's knowledge, there are no unanimous shareholders
agreements, voting trusts, escrow agreements or similar agreements
(other than the Lockup Agreements) among the Assure Shareholders
relating to Assure or the Assure Shares or other securities of
Assure.
(n) There is no claim, action, proceeding or investigation pending or,
to the knowledge of Assure, threatened against or relating to Assure
or any Assure Subsidiary affecting any of its properties or assets
before any court or governmental or regulatory authority or body
that, if adversely determined, is likely to have a Material Adverse
Effect on Assure and the Assure Subsidiaries, take as a whole, or
prevent or materially delay consummation of the transactions
contemplated by this Agreement, nor is Assure aware of any basis for
any such claim, action, proceeding or investigation. Neither Assure
not any Assure Subsidiary is subject to any outstanding order, writ,
injunction or decree that has had or is reasonably likely to have a
Material Adverse Effect on Assure and the Assure Subsidiaries, taken
as a whole, or prevent or materially delay consummation of the
transactions contemplated by this Agreement or the Plan of
Arrangement.
(o) Except as has been disclosed In Writing to GEOCAN:
(i) Assure and each Assure Subsidiary is not, to the knowledge of
Assure, in material violation of any applicable federal,
provincial, municipal or local laws, regulations, orders,
government decrees or ordinances with respect to
environmental, health or safety matters (collectively,
"Environmental Laws");
(ii) Assure and each Assure Subsidiary has, to the knowledge of
Assure, operated its business at all times and has received,
handled, used, stored, treated, shipped and disposed of all
contaminants without material violation of Environmental Laws
which has not been rectified;
(iii) to the knowledge of Assure, there have been no material
spills, releases, deposits or discharges of hazardous or toxic
substances, contaminants or wastes which have not been
rectified or are in the process of being rectified on any of
the real property owned or leased by Assure or any Assure
Subsidiary during the period of its ownership or tenure or
under its control during the period in which it has had
control;
(iv) to the knowledge of Assure, there have been no material
releases, deposits or discharges, in material violation of
Environmental Laws, of any hazardous or toxic substances,
contaminants or wastes into the earth, air or into any body of
water or any municipal or other sewer or drain water systems
by Assure or any Assure Subsidiary which has not been
rectified;
(v) no material orders, directions or notices have been issued and
remain outstanding pursuant to any Environmental Laws relating
to the business or assets of Assure and each Assure Subsidiary
other than abandonment and similar notices issued in
connection with the normal course of business;
(vi) Assure and each Assure Subsidiary holds all material licences,
permits and approvals required under any Environmental Laws in
connection with the operation of its business and the
ownership and use of its assets, all such licences, permits
and approvals are in full force and effect; and
(vii) Assure has provided GEOCAN with true and complete copies of
all environmental reports, audits and reviews that it or any
Assure Subsidiary has in respect of its assets.
(p) Neither Assure nor any Assure Subsidiary has received notice of any
proposed environmental policies or laws which Assure reasonably
believes would have a Material Adverse Effect on any oil and/or gas
exploration, development or production operations of Assure and the
Assure Subsidiaries, taken as a whole, other than those that apply
to the industry generally.
(q) Policies of insurance in force as of the date hereof naming Assure
or an Assure Subsidiary as an insured adequately cover all risks
reasonably and prudently foreseeable in the operation and conduct of
the business of Assure and the Assure Subsidiaries as would be
customary in respect of the businesses carried on by Assure and the
Assure Subsidiaries.
12
(r) (i) All Returns required to be filed by or on behalf of Assure and
each Assure Subsidiary have been duly filed on a timely basis
and such Returns are true, complete and correct in all
material respects. All Taxes shown to be payable on the
Returns or on subsequent assessments with respect thereto have
been paid in full on a timely basis or have been accrued for
on Assure's consolidated financial statements, and no other
Taxes are payable by Assure or any Assure Subsidiary with
respect to items or periods covered by such Returns.
(ii) Assure and each Assure Subsidiary has paid or provided
adequate accruals in the Assure Financial Statements for
Taxes, including income taxes and related future taxes, in
conformity with generally accepted accounting principles
applicable in Canada.
(iii) No material deficiencies exist or have been asserted with
respect to Taxes of Assure or any Assure Subsidiary. Neither
Assure nor any Assure Subsidiary is a party to any action or
proceeding for assessment, reassessment or collection of
Taxes, nor has such event been asserted or threatened against
Assure or any Assure Subsidiary. No waiver or extension of any
limitation period is in effect with respect to Taxes or
Returns of Assure or any Assure Subsidiary. The Returns of
Assure or any Assure Subsidiary have never been audited by a
government or taxing authority, nor is any such audit in
process, pending or threatened, other than such audits which
are no longer outstanding.
(iv) Assure and each Assure Subsidiary has withheld from each
payment made to any of its officers, directors, and employees
and former officers, directors and employees the amount of all
Taxes (including, without limitation, income tax) and other
deductions required to be withheld therefrom and has paid the
same to the proper tax or other authority within the time
required under any applicable tax legislation.
(s) For all periods since the incorporation of Assure and each Assure
Subsidiary, GEOCAN has been furnished by Assure with true and
complete copies of (i) relevant portions of income tax audit
reports, statements of deficiencies, closing or other agreements
received by Assure or any Assure Subsidiary or on behalf of Assure
or any Assure Subsidiary relating to Taxes; and (ii) all federal and
provincial income or franchise tax returns for Assure and each
Assure Subsidiary.
(t) Assure is a "reporting issuer", or the equivalent thereof, in the
provinces of British Columbia and Alberta, there are more than 50
beneficial holders of Assure Shares and the Assure Shares are listed
only on the OTCBB and the Berlin and Frankfurt stock exchanges and
no other securities of Assure are listed on any stock exchange.
(u) The board of directors of Assure has determined that the Arrangement
is fair to the Assure Shareholders, that the Arrangement is in the
best interests of Assure and the Assure Shareholders, has
unanimously approved the Arrangement and the entering into of this
Agreement and, subject to section 9.3(c) and section 9.4, has
resolved to unanimously recommend that Assure Securityholders vote
in favour of the Arrangement.
(v) Except for contracts disclosed In Writing to GEOCAN:
(i) neither Assure nor any Assure Subsidiary has in effect any
bonus plan, commission plan, profit sharing plan, pension
plan, royalty plan or arrangement or employee benefit plan for
the benefit of any employees, officers, directors or
shareholders of Assure or any Assure Subsidiary and it is not
a party to any written employment or consulting agreement,
existing or proposed, with any person except for medical and
dental plans maintained for the benefit of Assure's officers
and employees;
13
(ii) Assure has provided adequate accruals in Assure's audited
consolidated financial statements for the year ended December
31, 2004 (or such amounts are fully funded) for all pension or
other employee benefit obligations of Assure or any Assure
Subsidiary arising under or relating to each of the pension or
retirement income plans or other employee benefit plans or
agreements or policies maintained by or binding on Assure or
any Assure Subsidiary as well as for any other payment
required to be made by Assure or any Assure Subsidiary in
connection with the termination of employment or retirement of
any employee of Assure or any Assure Subsidiary in respect of
the fiscal period ended December 31, 2004; and
(iii) neither Assure nor any Assure Subsidiary has any stock option
plans.
(w) Except for contracts disclosed In Writing to GEOCAN, neither Assure
nor any Assure Subsidiary is a party to any employment or management
agreement or to any written or oral policy, agreement, obligation or
understanding or any amendment thereto which contains any specific
agreement as to notice of termination or severance pay in lieu
thereof or which cannot be terminated without cause on giving
reasonable notice as may be implied by law.
(x) There is not in effect with respect to Assure or any Assure
Subsidiary, any shareholder rights plan or any other form of plan,
agreement, contract or instrument that will trigger any rights to
acquire Assure Shares or other securities of Assure or any Assure
Subsidiary or rights, entitlements or privileges in favour of any
person upon the entering into of this Agreement or on the
Arrangement becoming effective.
(y) Neither Assure nor any Assure Subsidiary has waived or released the
applicability of any "standstill" or other provisions of any
confidentiality agreements entered into by Assure.
(z) As at June 30, 2005, the Assure Debt and Working Capital Deficiency
does not exceed $18,000,000.
(aa) There is no non-competition, exclusivity or other similar agreement,
commitment or understanding in place, whether written or oral, to
which Assure or any Assure Subsidiary is a party or is otherwise
bound that would now or hereafter, in any way limit the business or
operations of Assure or any Assure Subsidiary (a) in a particular
manner or to a particular locality or geographic region, or (b) for
a limited period of time.
(bb) Except as expressly provided herein, the execution, delivery and
performance of this Agreement does not and will not result in the
restriction of Assure from engaging in its businesses or from
competing with any person or in any geographical area.
(cc) Assure's and each Assure Subsidiary's Canadian and Alberta Tax Pools
as at December 31 2004 were as disclosed to GEOCAN In Writing.
(dd) Since December 31, 2004, Assure and each Assure Subsidiary has
conducted and is conducting its business substantially in accordance
with good oilfield practices and in compliance in all material
respects with all applicable laws, rules and regulations and, in
particular, all applicable licensing legislation, regulations or
by-laws or other requirements of any governmental or regulatory
bodies applicable to Assure and each Assure Subsidiary in each
jurisdiction in which it carries on business and holds all licences,
registrations and qualifications material to its business and assets
in all jurisdictions in which it carries on business as now
conducted, except where the failure to so conduct business or be in
such compliance would not be likely to have a Material Adverse
Effect on Assure and the Assure Subsidiaries, taken as a whole, and
none of such licences, registrations or qualifications contains any
burdensome term, provision, condition or limitation which has or is
likely to have any Material Adverse Effect on Assure and the Assure
Subsidiaries, taken as a whole.
(ee) Although it does not warrant title, Assure does not have reason to
believe that it does not have good and marketable title to or the
irrevocable right to produce and sell its petroleum, natural gas and
related hydrocarbons (for the purposes of this clause, the foregoing
are referred to as the "Interests") and does represent and warrant
that the Interests are free and clear of all liens, charges,
encumbrances, restrictions or adverse claims created by, through or
under Assure other than any liens or encumbrances that may be
outstanding pursuant to credit agreements with Assure's bank, and
those arising in the ordinary course of business, which are not
material in the aggregate, and to the knowledge of Assure after due
inquiry, Assure holds its Interests under valid and subsisting
leases, licenses, permits, concessions, concession agreements,
contracts, subleases, reservations or other agreements.
14
(ff) Except as disclosed In Writing to GEOCAN, there are no material
contracts or agreements which have created, or may create, any
material obligation to Assure or any Assure Subsidiary or from which
it derives or could derive any material benefit which is required by
Assure or any Assure Subsidiary to carry on its business as now
conducted by it or as is now proposed to be carried on by it, except
those contracts which are in the ordinary course of business, or
which are reflected in the Assure Financial Statements. For the
purpose of this representation and warranty, contracts shall be
deemed to give rise to a material obligation that provides for
expenditures by Assure or any Assure Subsidiary which aggregate more
than $250,000 during the next 12 months following the date hereof.
(gg) To the best of Assure's knowledge, all ad valorem, property,
production, severance and similar taxes and assessments based on or
measured by the ownership of property or the production of petroleum
substances or the receipts of proceeds therefrom payable by Assure
or any Assure Subsidiary in respect of any properties or assets up
to the date hereof and to the Effective Date have been or will be
properly and fully paid and discharged.
(hh) No officer, director, employee or any other person not dealing at
arm's length with Assure or any Assure Subsidiary, or, to the
knowledge of Assure, any associate or affiliate of any such person
or any party owns, has or is entitled to any royalty, net profits
interest, carried interest or other encumbrances or claims of any
nature whatsoever which are based on production from Assure's or any
Assure Subsidiary's properties or assets or any revenue or rights
attributed thereto.
(ii) Except as disclosed In Writing to GEOCAN, there are no material
contracts or arrangements to which Assure or any Assure Subsidiary
is a party with any director, officer, employee or any other person
not dealing at arm's length with Assure or any Assure Subsidiary, or
any associate or affiliate of any such director, officer, employee
or any other person not dealing at arm's length with Assure, nor is
there any material indebtedness owing by Assure or any Assure
Subsidiary to any such parties or by any such parties to Assure or
any Assure Subsidiary, other than employment agreements, copies of
which have previously been provided to GEOCAN.
(jj) Except as disclosed In Writing to GEOCAN, or as incurred in the
ordinary course of business provided they do not give rise to a
material obligation on the part of Assure or any Assure Subsidiary,
Assure or any Assure Subsidiary is not a party to or bound by any
agreement, guarantee, indemnification, or endorsement or like
commitment of the obligations, liabilities (contingent or otherwise)
or indebtedness of any person, firm or corporation.
(kk) Except as disclosed In Writing to GEOCAN, Assure or any Assure
Subsidiary has no obligation to incur and renounce in accordance
with the Income Tax Act (Canada) any expenditures required to be
renounced to holders of any flow through shares issued by it.
(ll) Except as disclosed in the consolidated financial statements
(including the notes thereto) of Assure for the first financial
quarters of the 2005 financial year, Assure has not, since December
31, 2004, made any change in its accounting principles and practices
as theretofore applied including, without limitation, the basis upon
which its assets and liabilities are recorded on its books and its
earnings and profits and losses are ascertained.
(mm) The information and statements set forth in the Assure Public
Documents as at the date hereof, as relates to Assure and the Assure
Subsidiaries, are true, correct, and complete and did not contain
any misrepresentation, as of the respective dates of such
information or statements, and no material change has occurred in
relation to Assure and the Assure Subsidiaries which is not
disclosed in the Assure Public Documents, and Assure has not filed
any confidential material change reports which continue to be
confidential.
(nn) Except as disclosed in writing to GEOCAN, no securities commission
or similar regulatory authority or stock exchange in Canada or
elsewhere has issued any order which is currently outstanding
preventing or suspending trading in any securities of Assure, no
such proceeding is, to the knowledge of Assure, pending,
contemplated or threatened and Assure is not in default in any
material respect of any requirement of any securities laws, rules or
policies applicable to Assure or its securities.
15
(oo) Assure has delivered to GEOCAN true and current copies of all
agreements between Assure and its financial advisors in connection
with the transactions contemplated hereby which could give rise to
the payment of any fees to such financial advisor, and all
transaction costs (including legal, financial and other advisors of
Assure and any other costs and expenses of Assure of the transaction
contemplated hereby), shall not exceed $850,000.
(pp) The aggregate of amounts payable by Assure under any obligations or
liabilities of Assure to pay any amount to its officers, directors,
employees or consultants other than for salary and directors' fees
in the ordinary course, in each case in amounts consistent with
historic practices and, without limiting the generality of the
foregoing, including the obligations of Assure to officers,
employees or consultants for severance, retention, termination or
bonus payments on the change of control of Assure or on loss of
position with Assure, will not exceed $610,000, and that $10,000 of
such amount will be paid, by one or more third parties (at no cost
to GEOCAN), on or before the Effective Date.
(qq) Assure's average daily production for the week ended May 28, 2005
was not less than 380 barrels of oil and liquids per day and 3.5
Mmcf of natural gas per day and Assure's average daily production
for the three months ended March 31, 2005 was 488 barrels of oil and
liquids per day and 1.93 Mmcf per day of natural gas and there has
been no material adverse change (other than due to short-term plant
shutdowns) to such production levels since March 31, 2005.
(rr) Assure's oil and gas wells and equipment and facilities are in good
condition and good working order with such exceptions as do not, in
the aggregate, have a material adverse effect on the business,
operations or financial condition of Assure and the Assure
Subsidiaries, taken as a whole.
(ss) No director, officer, insider or other non-arm's length party is
indebted to Assure or any Assure Subsidiary.
(tt) Assure has made available to GEOCAN copies of all management
recommendation letters relating to Assure or any Assure Subsidiary
received from Assure's current auditor or any previous auditor since
its incorporation which are material to Assure.
(uu) None of Assure, any Assure Subsidiary or any party acting on behalf
of Assure or any Assure Subsidiary is obligated to deliver any
hydrocarbon substances allocable to its oil and gas assets to any
party without in due course thereafter receiving and being entitled
to retain full payment at the contract prices therefor.
(vv) There are no production sales contracts, gas balancing agreements,
arrangements, physical or financial hedges under which Assure or any
Assure Subsidiary, or any person acting on behalf of Assure or any
Assure Subsidiary, is obligated to sell or deliver any hydrocarbon
substances allocable to the oil and gas assets of Assure or any
Assure Subsidiary to any person, other than contracts that are
terminable by Assure or any Assure Subsidiary on not more than one
month's notice.
(ww) Except as disclosed In Writing to GEOCAN there are no authorizations
for expenditures (AFEs) approved by Assure or any Assure Subsidiary
with respect to its assets whereby the share of Assure or any Assure
Subsidiary of such AFE which becomes payable after the date hereof
would exceed $25,000 and there are no outstanding cash calls with
respect to the assets of Assure or any Assure Subsidiary, where the
share of such cash calls applicable to Assure or any Assure
Subsidiary exceeds $25,000.
16
(xx) Pursuant to the terms of the Assure Warrants and the terms of the
Assure Preferred Shares, on completion of the Arrangement, as
contemplated herein, such securities shall be exercisable for or
convertible into GEOCAN Shares, not Assure Shares.
ARTICLE 7
GEOCAN'S REPRESENTATIONS AND WARRANTIES
7.1 GEOCAN hereby represents and warrants (and, as applicable, covenants) to
Assure as follows and acknowledges that Assure is relying upon these
representations, warranties and covenants in connection with the entering
into of this Agreement:
(a) GEOCAN is a corporation duly incorporated and organized and validly
existing under the laws of Alberta or, in the case of GEOCAN
Saskatchewan Inc., Saskatchewan, or, in the case of GEOCAN CZ
s.r.o., the Czech Republic, and has the requisite corporate power
and authority to own its properties and conduct its business as such
business is now conducted or such property is now owned. GEOCAN and
each GEOCAN Subsidiary is duly registered to do business and in good
standing in each jurisdiction in which the character of its
properties, owned or leased, or the nature of its activities make
such registration necessary, except where the failure to be so
registered or in good standing would not have a Material Adverse
Effect on GEOCAN and the GEOCAN Subsidiaries, taken as a whole.
(b) GEOCAN has the requisite corporate authority, to enter into this
Agreement and to carry out its obligations hereunder. The execution
and delivery of this Agreement and the consummation by GEOCAN of the
transactions contemplated hereby have been duly authorized by the
board of directors of GEOCAN and no other proceedings on its part
are or will be necessary to authorize this Agreement and the
transactions contemplated hereby. This Agreement has been duly
executed and delivered by GEOCAN and this Agreement constitutes, the
legal, valid and binding obligation of GEOCAN enforceable against it
in accordance with its terms.
(c) Except for the approvals contemplated in this Agreement, the
execution and delivery of this Agreement, by GEOCAN, the
consummation of the transactions contemplated hereby and compliance
by GEOCAN with any of the provisions hereof or thereof will not: (i)
violate, conflict with, or result in a breach of any provision of,
require any consent, approval or notice under, or constitute a
default (or an event which, with notice or lapse of time or both,
would constitute a default) or result in a right of termination or
acceleration under, or result in a creation of an encumbrance upon
any of the properties or assets of GEOCAN or any GEOCAN Subsidiary
under any of the terms, conditions or provisions of (x) the
constating documents of GEOCAN or any GEOCAN Subsidiary, or (y) any
note, bond, mortgage, indenture, loan agreement, deed of trust,
agreement, lien, contract or other material instrument or obligation
to which GEOCAN or any GEOCAN Subsidiary is a party or to which it,
or any of its properties or assets, may be subject or by which
GEOCAN or any GEOCAN Subsidiary is bound, other than a requirement
for consent from GEOCAN's banker; (ii) violate any judgement,
ruling, order, writ, injunction, determination, award, decree,
statute, ordinance, rule or regulation applicable to GEOCAN or any
GEOCAN Subsidiary; (except, in the case of each of clauses (i) or
(ii) above, for such violations, conflicts, breaches, defaults,
terminations, suspensions or revocations which, or any consents,
approvals or notices which if not given or received, would not
materially and adversely affect the ability of GEOCAN to consummate
the transactions contemplated hereby or the benefits to be received
by the Assure Securityholders pursuant to the transactions
contemplated hereby); or (iii) cause the suspension or revocation of
any authorization, consent, approval or license of GEOCAN or (iii)
cause the suspension or revocation of any authorization, consent,
approval or license of GEOCAN currently in effect which would have a
Material Adverse Effect on GEOCAN and the GEOCAN Subsidiaries, taken
as a whole.
(d) Except for the approvals contemplated in this Agreement and
approvals that have been obtained and other than in connection with
or in compliance with the provisions of securities laws, the rules
of the TSX and any pre merger notification statutes, (i) there is no
legal impediment to GEOCAN's consummation of the transactions
contemplated by this Agreement or any agreements contemplated
hereunder and (ii) no filing or registration with, or authorization,
consent or approval of, any domestic or foreign public body or
authority is necessary by GEOCAN or any GEOCAN Subsidiary in
connection with the making of this Agreement or the consummation of
the transactions contemplated by this Agreement or any agreement
contemplated hereunder, except for such filings or registrations
which, if not made, or for such authorizations, consents or
approvals which, if not received, would not have a Material Adverse
Effect on GEOCAN and the GEOCAN Subsidiaries taken as a whole or the
ability to GEOCAN to consummate the transactions contemplated
hereby.
17
(e) As of the date hereof (i) the authorized share capital of GEOCAN
consists of an unlimited number of GEOCAN Shares and 23,948,473
GEOCAN Shares are issued and outstanding, (ii) 1,934,020 GEOCAN
Shares are issuable pursuant to outstanding stock options, and (iii)
2,374,672 GEOCAN Shares are issuable pursuant to outstanding
warrants. Except as set forth in the immediately preceding sentence,
there are no options, warrants or other rights, agreements or
commitments of any character whatsoever requiring the issuance, sale
or transfer by GEOCAN of any shares of GEOCAN (including GEOCAN
Shares) or any securities convertible into, or exchangeable or
exercisable for, or otherwise evidencing a right to acquire, any
shares of GEOCAN (including GEOCAN Shares), nor are there any
outstanding stock appreciation rights, phantom equity or similar
rights, agreements, arrangements or commitments based upon the book
value, income or other attribute of GEOCAN. All outstanding GEOCAN
Shares have been duly authorized and validly issued, are fully paid
and non assessable and are not subject to, nor were they issued in
violation of, any pre emptive rights, and all GEOCAN Shares issuable
upon exercise, in accordance with their respective terms of GEOCAN
Options or GEOCAN Warrants will be duly authorized and validly
issued, fully paid and non assessable and will not be subject to any
pre emptive rights.
(f) Since December 31, 2004, there has not been any Material Adverse
Change in respect of GEOCAN and the GEOCAN Subsidiaries, taken as a
whole.
(g) To the best of the knowledge of GEOCAN, all material data and
information provided by GEOCAN or its agents to Assure and its
agents and representatives is true and correct in all material
respects and GEOCAN has not withheld from Assure any material
information or documents concerning GEOCAN or any GEOCAN Subsidiary
or its assets or liabilities during the course of Assure's review of
GEOCAN and its assets and operations.
(h) Except (a) as disclosed or reflected in the audited consolidated
financial statements of GEOCAN as at December 31, 2004 previously
delivered to Assure, and (b) for liabilities and obligations (i)
incurred in the ordinary course of business, (ii) pursuant to or in
connection with the terms of this Agreement, or (iii) as disclosed
In Writing to Assure, neither GEOCAN nor any GEOCAN Subsidiary has
incurred any material liabilities of any nature, whether accrued,
contingent or otherwise or which would be required by generally
accepted accounting principles applicable in Canada to be reflected
on a consolidated balance sheet of GEOCAN as of the date hereof.
(i) Since December 31, 2004, except as disclosed in the subsequent event
notes of the GEOCAN Financial Statements, neither GEOCAN nor any
GEOCAN Subsidiary has taken any action that would be in violation of
Section 8.1(a) if such provision had been in effect since such date,
other than violations which would not have any Material Adverse
Effect on the business, operations or financial condition of GEOCAN
and the GEOCAN Subsidiaries, taken as a whole and would not
materially affect GEOCAN's ability to consummate the transactions
contemplated hereby.
(j) As of their respective dates, the GEOCAN Financial Statements were
prepared in accordance with generally accepted accounting principles
applicable in Canada (except as otherwise indicated in such
financial statements and the notes thereto or, in the related report
of GEOCAN's independent auditors), and fairly present the financial
position, results of operations and changes in financial position of
GEOCAN as of the dates thereof and for the periods indicated
therein.
(k) GEOCAN has no subsidiaries other than the GEOCAN Subsidiaries. Each
GEOCAN Subsidiary is wholly owned by GEOCAN and no person holds any
options, warrants or other securities or otherwise has any right to
acquire any security of any GEOCAN Subsidiary.
18
(l) The corporate records and minute books of GEOCAN and each GEOCAN
Subsidiary are complete and accurate in all material respects.
(m) To GEOCAN's knowledge, there are no unanimous shareholders
agreements, voting trusts, escrow agreements or similar agreements
among the GEOCAN Shareholders relating to GEOCAN or the GEOCAN
Shares or other securities of GEOCAN.
(n) There is no claim, action, proceeding or investigation pending or,
to the knowledge of GEOCAN, threatened against or relating to GEOCAN
or any GEOCAN Subsidiary affecting any of its properties or assets
before any court or governmental or regulatory authority or body
that, if adversely determined, is likely to have a Material Adverse
Effect on GEOCAN and the GEOCAN Subsidiaries, taken as a whole, or
prevent or materially delay consummation of the transactions
contemplated by this Agreement, nor is GEOCAN aware of any basis for
any such claim, action, proceeding or investigation. Neither GEOCAN
nor any GEOCAN Subsidiary is subject to any outstanding order, writ,
injunction or decree that has had or is reasonably likely to have a
Material Adverse Effect on GEOCAN and the GEOCAN Subsidiaries, taken
as a whole, or prevent or materially delay consummation of the
transactions contemplated by this Agreement or the Plan of
Arrangement.
(o) Except as has been disclosed In Writing to Assure:
(i) GEOCAN and each GEOCAN Subsidiary is not, to the knowledge of
GEOCAN, in material violation of any applicable federal,
provincial, municipal or local laws, regulations, orders,
government decrees or ordinances with respect to
environmental, health or safety matters (collectively,
"Environmental Laws");
(ii) GEOCAN and each GEOCAN Subsidiary has, to the knowledge of
GEOCAN, operated its business at all times and has received,
handled, used, stored, treated, shipped and disposed of all
contaminants without material violation of Environmental Laws
which has not been rectified;
(iii) to the knowledge of GEOCAN, there have been no material
spills, releases, deposits or discharges of hazardous or toxic
substances, contaminants or wastes which have not been
rectified or are in the process of being rectified on any of
the real property owned or leased by GEOCAN or any GEOCAN
Subsidiary during the period of its ownership or tenure or
under its control during the period in which it has had
control;
(iv) to the knowledge of GEOCAN, there have been no material
releases, deposits or discharges, in material violation of
Environmental Laws, of any hazardous or toxic substances,
contaminants or wastes into the earth, air or into any body of
water or any municipal or other sewer or drain water systems
by GEOCAN or any GEOCAN Subsidiary which has not been
rectified;
(v) no material orders, directions or notices have been issued and
remain outstanding pursuant to any Environmental Laws relating
to the business or assets of GEOCAN and each GEOCAN Subsidiary
other than abandonment and similar notices issued in
connection with the normal course of business;
(vi) GEOCAN and each GEOCAN Subsidiary holds all material licences,
permits and approvals required under any Environmental Laws in
connection with the operation of its business and the
ownership and use of its assets, all such licences, permits
and approvals are in full force and effect; and
(vii) GEOCAN has provided Assure with true and complete copies of
all environmental reports, audits and reviews that it has in
respect of its assets.
(p) Neither GEOCAN nor any GEOCAN Subsidiary has received notice of any
proposed environmental policies or laws which GEOCAN reasonably
believes would have a Material Adverse Effect on any oil and/or gas
exploration, development or production operations of GEOCAN and the
GEOCAN Subsidiaries, taken as a whole, other than those that apply
to the industry generally.
19
(q) Policies of insurance in force as of the date hereof naming GEOCAN
or a GEOCAN Subsidiary as an insured adequately cover all risks
reasonably and prudently foreseeable in the operation and conduct of
the business of GEOCAN and the GEOCAN Subsidiaries as would be
customary in respect of the businesses carried on by GEOCAN and the
GEOCAN Subsidiaries. All such policies of insurance shall remain in
force and effect and shall not be cancelled or otherwise terminated
as a result of the transactions contemplated hereby and in the event
such policies expire pursuant to their terms, GEOCAN will use
reasonable commercial efforts to renew such insurance for at least
such period of time as is necessary to have adequate insurance until
after the Effective Date.
(r) (i) All Returns required to be filed by or on behalf of GEOCAN and
each GEOCAN Subsidiary have been duly filed on a timely basis
and such Returns are true, complete and correct in all
material respects. All Taxes shown to be payable on the
Returns or on subsequent assessments with respect thereto have
been paid in full on a timely basis or have been accrued for
on GEOCAN's consolidated financial statements, and no other
Taxes are payable by GEOCAN or any GEOCAN Subsidiary with
respect to items or periods covered by such Returns.
(ii) GEOCAN and each GEOCAN Subsidiary has paid or provided
adequate accruals in the GEOCAN Financial Statements for
Taxes, including income taxes and related future taxes, in
conformity with generally accepted accounting principles
applicable in Canada.
(iii) No material deficiencies exist or have been asserted with
respect to Taxes of GEOCAN or any GEOCAN Subsidiary. Neither
GEOCAN nor any GEOCAN Subsidiary is a party to any action or
proceeding for assessment, reassessment or collection of
Taxes, nor has such event been asserted or threatened against
GEOCAN or any GEOCAN Subsidiary. No waiver or extension of any
limitation period is in effect with respect to Taxes or
Returns of GEOCAN or any GEOCAN Subsidiary. The Returns of
GEOCAN or any GEOCAN Subsidiary have never been audited by a
government or taxing authority, nor is any such audit in
process, pending or threatened, other than such audits which
are no longer outstanding.
(iv) GEOCAN and each GEOCAN Subsidiary has withheld from each
payment made to any of its officers, directors, and employees
and former officers, directors and employees the amount of all
taxes (including, without limitation, income tax) and other
deductions required to be withheld therefrom and has paid the
same to the proper tax or other authority within the time
required under any applicable tax legislation.
(s) For all periods since the incorporation of GEOCAN and each GEOCAN
Subsidiary, Assure has been furnished by GEOCAN with true and
complete copies of (i) relevant portions of income tax audit
reports, statements of deficiencies, closing or other agreements
received by GEOCAN or any GEOCAN Subsidiary or on behalf of GEOCAN
or any GEOCAN Subsidiary relating to Taxes; and (ii) all federal and
provincial income or franchise tax returns for GEOCAN and each
GEOCAN Subsidiary.
(t) GEOCAN is a "reporting issuer", or the equivalent thereof, in the
provinces of British Columbia, Alberta and Ontario and is in
material compliance with all the securities laws of such provinces
and the GEOCAN Shares are listed on the TSX and no other securities
of GEOCAN are listed on any stock exchange.
(u) Except as expressly provided herein, the execution, delivery and
performance of this Agreement does not and will not result in the
restriction of GEOCAN or any GEOCAN Subsidiary from engaging in its
businesses or from competing with any person or in any geographical
area.
(v) As at December 31 2004, GEOCAN's and each GEOCAN Subsidiary's
Canadian and Alberta Tax Pools were as disclosed to Assure In
Writing.
20
(w) GEOCAN and each GEOCAN Subsidiary has conducted and is conducting
its business substantially in accordance with good oilfield
practices and in compliance in all material respects with all
applicable laws, rules and regulations and, in particular, all
applicable licensing and environmental legislation, regulations or
by-laws or other requirements of any governmental or regulatory
bodies applicable to GEOCAN and each GEOCAN Subsidiary in each
jurisdiction in which it carries on business and holds all licences,
registrations and qualifications material to its business and assets
in all jurisdictions in which it carries on business as now
conducted, except where the failure to so conduct business or be in
such compliance would not be likely to have a Material Adverse
Effect on GEOCAN and the GEOCAN Subsidiaries, taken as a whole and
none of such licences, registrations or qualifications contains any
burdensome term, provision, condition or limitation which has or is
likely to have any Material Adverse Effect on GEOCAN and the GEOCAN
Subsidiaries, taken as a whole.
(x) Although it does not warrant title, GEOCAN does not have reason to
believe that it does not have good and marketable title to or the
irrevocable right to produce and sell its petroleum, natural gas and
related hydrocarbons (for the purposes of this clause, the foregoing
are referred to as the "Interests") and does represent and warrant
that the Interests are free and clear of all liens, charges,
encumbrances, restrictions or adverse claims crated by, through or
under GEOCAN other than any liens or encumbrances that may be
outstanding pursuant to credit agreements with GEOCAN's bank, and
those arising in the ordinary course of business, which are not
material in the aggregate, and to the knowledge of GEOCAN after due
inquiry, GEOCAN holds its Interests under valid and subsisting
leases, licenses, permits, concessions, concession agreements,
contracts, subleases, reservations or other agreements.
(y) To the knowledge of GEOCAN, GEOCAN and each GEOCAN Subsidiary has
all agreements, permits, licences, approvals, certificates and other
rights and authorizations material to the conduct of GEOCAN's and
each GEOCAN Subsidiary's business and, to the knowledge of GEOCAN,
all such agreements, permits, licences, approvals, certificates and
other rights and authorizations possessed by GEOCAN and each GEOCAN
Subsidiary are valid and subsisting and GEOCAN and each GEOCAN
Subsidiary is not in material default under any such agreements,
permits, licences, approvals, certificates and other rights and
authorizations, except where such invalidity or default would not,
in the aggregate, have a Material Adverse Effect on GEOCAN and the
GEOCAN Subsidiaries, taken as a whole.
(z) Except as disclosed in the consolidated financial statements
(including the notes thereto) of GEOCAN for the first financial
quarters of the 2005 financial year, GEOCAN has not, since December
31, 2004, made any change in its accounting principles and practices
as theretofore applied including, without limitation, the basis upon
which its assets and liabilities are recorded on its books and its
earnings and profits and losses are ascertained.
(aa) GEOCAN and each GEOCAN Subsidiary is not:
(i) in breach or violation of any term or provision of, or in
default under any agreement, instrument, licence, permit or
authority to which it is a party or by which it is bound and
which is material to it; or
(ii) in violation or contravention of any provision of any law or
regulation or any judicial or administrative award, judgment
or decree applicable and known to it (after due inquiry);
except to the extent that such breach, violation or contravention
would not have a Material Adverse Effect on GEOCAN and the GEOCAN
Subsidiaries, taken as a whole, or could not reasonably be expected
to prevent or hinder the consummation of the transactions
contemplated by this Agreement or the Arrangement.
(bb) The information and statements set forth in the GEOCAN Public
Documents as at the date hereof, as relates to GEOCAN and the GEOCAN
Subsidiaries, are true, correct, and complete and did not contain
any misrepresentation, as of the respective dates of such
information or statements, and no material change has occurred in
relation to GEOCAN and the GEOCAN Subsidiaries which is not
disclosed in the GEOCAN Public Documents, and GEOCAN has not filed
any confidential material change reports which continue to be
confidential.
21
(cc) No securities commission or similar regulatory authority or stock
exchange in Canada or elsewhere has issued any order which is
currently outstanding preventing or suspending trading in any
securities of GEOCAN, no such proceeding is, to the knowledge of
GEOCAN, pending, contemplated or threatened and GEOCAN is not in
default of any requirement of any securities laws, rules or policies
applicable to GEOCAN or its securities.
(dd) GEOCAN's oil and gas wells and equipment and facilities are in good
condition and good working order with such exceptions as do not, in
the aggregate, have a material adverse effect on the business,
operations or financial condition of GEOCAN and the GEOCAN
Subsidiaries, taken as a whole.
(ee) Computershare Trust Company of Canada at its office in the city of
Calgary is the duly appointed registrar and transfer agent of GEOCAN
with respect to the GEOCAN Shares.
(ff) The form of share certificate for the GEOCAN Shares has been
approved by the board of directors of GEOCAN.
(gg) Except as disclosed In Writing to Assure, there are no material
contracts or agreements which have created, or may create, any
material obligation to GEOCAN or any GEOCAN Subsidiary or from which
it derives or could derive any material benefit which is required by
GEOCAN or any GEOCAN Subsidiary to carry on its business as now
conducted by it or as is now proposed to be carried on by it, except
those contracts which are in the ordinary course of business, or
which are reflected in the GEOCAN Financial Statements. For the
purpose of this representation and warranty, contracts shall be
deemed to give rise to a material obligation that provides for
expenditures by GEOCAN or any GEOCAN Subsidiary which aggregate more
than $250,000 during the next 12 months following the date hereof.
(hh) To the best of GEOCAN's knowledge, all ad valorem, property,
production, severance and similar taxes and assessments based on or
measured by the ownership of property or the production of petroleum
substances or the receipts of proceeds therefrom payable by GEOCAN
or any GEOCAN Subsidiary in respect of any properties or assets up
to the date hereof and to the Effective Date have been or will be
properly and fully paid and discharged.
(ii) No officer, director, employee or any other person not dealing at
arm's length with GEOCAN or any GEOCAN Subsidiary, or, to the
knowledge of GEOCAN, any associate or affiliate of any such person
or any party owns, has or is entitled to any royalty, net profits
interest, carried interest or other encumbrances or claims of any
nature whatsoever which are based on production from GEOCAN's or any
GEOCAN Subsidiary's properties or assets or any revenue or rights
attributed thereto.
(jj) Except as disclosed In Writing to Assure, there are no material
contracts or arrangements to which GEOCAN or any GEOCAN Subsidiary
is a party with any director, officer, employee or any other person
not dealing at arm's length with GEOCAN or any GEOCAN Subsidiary, or
any associate or affiliate of any such director, officer, employee
or any other person not dealing at arm's length with GEOCAN, nor is
there any material indebtedness owing by GEOCAN or any GEOCAN
Subsidiary to any such parties or by any such parties to GEOCAN or
any GEOCAN Subsidiary, other than employment agreements, copies of
which have previously been provided to Assure.
(kk) Except as disclosed In Writing to Assure or as incurred in the
ordinary course of business provided they do not give rise to a
material obligation on the part of GEOCAN or any GEOCAN Subsidiary,
GEOCAN or any GEOCAN Subsidiary is not a party to or bound by any
agreement, guarantee, indemnification, or endorsement or like
commitment of the obligations, liabilities (contingent or otherwise)
or indebtedness of any person, firm or corporation.
(ll) GEOCAN's average daily production for the month of May 2005 was not
less than 1,575 barrels of oil and liquids per day and 1.9 Mmcf of
natural gas per day and GEOCAN's average daily production for the
three months ended March 31, 2005 was 1,915 barrels of oil and
liquids per day and 1.7 Mmcf per day of natural gas and there has
been no material adverse change (other than due to short-term plant
shutdowns) to such production levels since March 31, 2005.
22
(mm) GEOCAN's oil and gas wells and equipment and facilities are in good
condition and good working order with such exceptions as do not, in
the aggregate, have a material adverse effect on the business,
operations or financial condition of GEOCAN and the GEOCAN
Subsidiaries, taken as a whole.
(nn) No director, officer, insider or other non-arm's length party is
indebted to GEOCAN or any GEOCAN Subsidiary.
(oo) GEOCAN has made available to Assure copies of all management
recommendation letters relating to GEOCAN or any GEOCAN Subsidiary
received from GEOCAN's current auditor or any previous auditor since
its incorporation.
(pp) None of GEOCAN, any GEOCAN Subsidiary or any party acting on behalf
of GEOCAN or any GEOCAN Subsidiary is obligated to deliver any
hydrocarbon substances allocable to its oil and gas assets to any
party without in due course thereafter receiving and being entitled
to retain full payment at the contract prices therefor.
(qq) There are no production sales contracts, gas balancing agreements,
arrangements, physical or financial hedges under which GEOCAN or any
GEOCAN Subsidiary, or any person acting on behalf of GEOCAN or any
GEOCAN Subsidiary, is obligated to sell or deliver any hydrocarbon
substances allocable to the oil and gas assets of GEOCAN or any
GEOCAN Subsidiary to any person, other than contracts that are
terminable by GEOCAN or any GEOCAN Subsidiary on not more than one
month's notice.
(rr) There is not in effect with respect to GEOCAN or any GEOCAN
Subsidiary, any shareholder rights plan or any other form of plan,
agreement, contract or instrument that will trigger any rights to
acquire GEOCAN Shares or other securities of GEOCAN or any GEOCAN
Subsidiary or rights, entitlements or privileges in favour of any
person upon the entering into of this Agreement or on the
Arrangement becoming effective.
(ss) Neither GEOCAN nor any GEOCAN Subsidiary has waived or released the
applicability of any "standstill" or other provisions of any
confidentiality agreements entered into by GEOCAN.
(tt) There is no non-competition, exclusivity or other similar agreement,
commitment or understanding in place, whether written or oral, to
which GEOCAN or any GEOCAN Subsidiary is a party or is otherwise
bound that would now or hereafter, in any way limit the business or
operations of GEOCAN or any GEOCAN Subsidiary (a) in a particular
manner or to a particular locality or geographic region, or (b) for
a limited period of time.
(uu) As at June 30, 2005, the aggregate of GEOCAN's debt and working
capital deficiency does not exceed $15,000,000.
(vv) GEOCAN has the ability to appoint a director to its Board of
Directors between meetings of shareholders pursuant to Section
106(4) of the ABCA.
ARTICLE 8
GEOCAN'S COVENANTS
8.1 GEOCAN covenants and agrees that, until the Effective Date or the
termination of this Agreement whichever is earlier, unless Assure shall
otherwise agree in writing or except as required by law or as otherwise
expressly permitted or specifically contemplated by this Agreement:
23
(a) GEOCAN will use its reasonable commercial efforts to fulfill or
cause the fulfillment of the conditions set forth in Sections 3.1
and 5.1 as soon as reasonably possible, to the extent the
fulfillment of the same is within the control of GEOCAN;
(b) GEOCAN will forthwith carry out the terms of the Interim Order and
the Final Order to the extent applicable to it and will use its
reasonable commercial efforts to assist Assure in obtaining such
orders;
(c) GEOCAN will take, or cause to be taken, all action and to do, or
cause to be done, all other things necessary, proper or advisable
under applicable laws and regulations to complete the Arrangement,
including using reasonable commercial efforts:
(i) to obtain all necessary waivers, consents and approvals
required to be obtained by it from other parties to loan
agreements, leases and other contracts;
(ii) to obtain all necessary consents, approvals and authorizations
as are required to be obtained by it under any Canadian or
foreign law or regulation, including from the TSX;
(iii) to effect all necessary registrations and filings with, and
submissions of information requested by, governmental
authorities required to be effected by it in connection with
the Arrangement;
and GEOCAN will use its reasonable commercial efforts to cooperate
with Assure in connection with the performance by it of its
obligations under Sections 9.1(n) including, without limitation,
continuing to provide reasonable access to information and to
maintain ongoing communications as between officers of GEOCAN and
Assure, subject in all cases to the Confidentiality Agreement;
(d) GEOCAN will assist Assure in the preparation of the Information
Circular and provide to Assure, in a timely and expeditious manner,
all information as may be reasonably requested by Assure or is
required by the Interim Order or applicable law, with respect to
GEOCAN for inclusion in the Information Circular and any amendments
or supplements to the Information Circular, in each case shall be
true and complete in all material respects and shall not contain any
misrepresentation;
(e) GEOCAN will conduct its affairs so that all of GEOCAN's
representations and warranties contained herein, insofar as the
accuracy of such representations and warranties constitute a
condition of closing under subsection 3.1(a), shall be true and
correct on and as of the Effective Date as if made thereon;
(f) GEOCAN agrees that all rights to indemnification existing in favour
of the present or former directors and officers of Assure and each
Assure Subsidiary (each such present or former director or officer
of Assure and each Assure Subsidiary, an "Indemnified Party"), as
provided by contract or in Assure's or the Assure Subsidiary's
charter or bylaws in effect as of the date hereof with respect to
matters occurring on or prior to the Effective Date, shall survive
and shall continue in full force and effect and without modification
for a period of not less than the limitation period applicable to
such matters;
(g) GEOCAN will apply 50% of the net proceeds of any equity offering
completed by GEOCAN after the Effective Date and 50% of any
increase, net of lender mandated reductions, on or after January 1,
2006 in credit facilities available to GEOCAN to the retirement of
Assure Shareholder Loans remaining outstanding after the Assure
Shareholder Loan Mandatory Repayment and the Assure Notes, such
amounts to be applied first to the pro rata repayment of the Assure
Shareholder Loans and next to the Canadian dollar denominated Assure
Notes and finally to the U.S. dollar denominated Assure Notes until
all Assure Shareholder Loans and Assure Notes have been repaid in
full; any Assure Shareholder Loans not repaid before December 31,
2005 shall be due and payable on that date;
24
(h) subject to approval of the existing board of directors of GEOCAN and
the TSX, GEOCAN shall cause one representative of Assure to be
elected to the board of directors of GEOCAN on completion of the
Arrangement;
(i) all information relating to GEOCAN supplied by GEOCAN for inclusion
in the Information Circular shall be true and complete in all
material respects and shall not contain any misrepresentation;
(j) the business of GEOCAN and each GEOCAN Subsidiary shall be conducted
only in, and GEOCAN shall not take any action except in, the usual
and ordinary course of business and consistent with past practice,
and GEOCAN and each GEOCAN Subsidiary shall use all commercially
reasonable efforts to maintain and preserve its business
organization, assets, employees and advantageous business
relationships;
(k) GEOCAN shall not directly or indirectly do or permit to occur any of
the following: (i) amend the constating documents of GEOCAN or any
GEOCAN Subsidiary; (ii) declare, set aside or pay any dividend or
other distribution or payment (whether in cash, shares or property)
in respect of its shares or other securities owned by any person;
(iii) issue, grant, sell or pledge or agree to issue, grant, sell or
pledge any shares of GEOCAN or any GEOCAN Subsidiary, or securities
convertible into or exchangeable or exercisable for, or otherwise
evidencing a right to acquire shares of GEOCAN or any GEOCAN
Subsidiary, other than GEOCAN Shares issuable pursuant to the terms
of the GEOCAN Options or GEOCAN Warrants; (iv) redeem, purchase or
otherwise acquire any of its outstanding shares or other securities;
(v) split, combine or reclassify any of its shares; (vi) adopt a
plan of liquidation or resolutions providing for the liquidation,
dissolution, merger, consolidation or reorganization of GEOCAN or
any GEOCAN Subsidiary; (vii) enter into or modify any contract,
agreement, commitment or arrangement with respect to any of the
foregoing, except as permitted above; (viii) reorganize, amalgamate,
merge or otherwise continue GEOCAN or any GEOCAN Subsidiary with any
other person, corporation, partnership or other business
organization whatsoever; or (ix) sell, dispose of, transfer, convey,
farmout, encumber, pledge, surrender or abandon the whole or part of
its assets other than in the ordinary course of business, consistent
with past practice;
(l) GEOCAN shall:
(i) use its reasonable commercial efforts, to preserve intact its
and each GEOCAN Subsidiary's business organization and
goodwill, to keep available the services of its officers and
employees as a group and to maintain satisfactory
relationships with suppliers, agents, distributors, customers
and others having business relationships with it;
(ii) not take any action that would render, or that reasonably may
be expected to render, any representation or warranty made by
it in this Agreement untrue in any material respect; and
(iii) promptly notify Assure in writing of any Material Adverse
Change in respect of GEOCAN and the GEOCAN Subsidiaries, taken
as a whole, or any matter which may potentially amount to such
a Material Adverse Change and of any material governmental or
third party complaints, investigations or hearings (or
communications indicating that the same may be contemplated);
(m) GEOCAN shall promptly notify Assure in writing of any material
change (actual, anticipated, contemplated or, to the knowledge of
GEOCAN, threatened, financial or otherwise) in the business,
operations, affairs, assets, capitalization, financial condition,
prospects, licences, permits, rights, privileges or liabilities,
whether contractual or otherwise, of GEOCAN and the GEOCAN
Subsidiaries, taken as a whole, or of any change in any
representation or warranty provided by GEOCAN in this Agreement
which change is or may be of such a nature to render any
representation or warranty misleading or untrue in any material
respect and GEOCAN shall in good faith discuss with Assure any
change in circumstances (actual, anticipated, contemplated, or to
the knowledge of GEOCAN threatened) which is of such a nature that
there may be a reasonable question as to whether notice needs to be
given to Assure pursuant to this provision;
25
(n) GEOCAN will, within two Business Days of GEOCAN receiving any
written audit inquiry, assessment, reassessment, confirmation or
variation of an assessment, indication that tax assessment is being
considered, request for filing of a waiver or extension of time or
any other notice in writing relating to taxes, interest, penalties,
losses or tax pools (an "Assessment"), deliver to Assure a copy
thereof together with a statement setting out, to the extent then
determinable, an estimate of the obligations, if any, of GEOCAN on
the assumption that such Assessment is valid and binding; and
(o) GEOCAN will use its reasonable commercial efforts to appoint to its
Board of Directors a nominee of Assure, provided such nomination is
made within thirty days of the Effective Date.
8.2 Subject to Section 10.4, if at any time after the date of this Agreement,
GEOCAN shall have breached, or failed to comply with, in any material
respect, any of its covenants or other obligations under this Agreement or
any of the representations and warranties of GEOCAN contained in this
Agreement shall not be true and correct in all material respects as of the
date of this Agreement, except where the failure of such representations
and warranties to be true and correct would not have a Material Adverse
Effect on GEOCAN, or shall have ceased to be true and correct in any
material respect thereafter, except where the failure of such
representations and warranties to be true and correct would not have a
Material Adverse Effect on GEOCAN, (other than, in either case, as a
direct result of and in direct response to a breach by Assure of its
obligations under this Agreement), then GEOCAN shall, within two business
days after the first to occur of the events described above, pay to Assure
the Assure Break Fee. Such payment shall be made in immediately available
funds to an account designated by Assure. The payment of the Assure Break
Fee to Assure shall represent full and final settlement of all claims of
Assure arising in respect of the matter giving rise to such payment and
Assure shall have no further remedy or recourse in respect of such matter
against GEOCAN or its present or former directors, officers, employees,
agents or advisors or GEOCAN's counsel.
ARTICLE 9
ASSURE'S COVENANTS
9.1 Assure covenants and agrees that until the Effective Date or the
termination of this Agreement whichever is the earlier, unless GEOCAN
shall otherwise agree in writing or except as required by law or as
otherwise expressly permitted or specifically contemplated by this
Agreement:
(a) the business of Assure and each Assure Subsidiary shall be conducted
only in, and Assure shall not take any action except in, the usual
and ordinary course of business and consistent with past practice,
and Assure and each Assure Subsidiary shall use all commercially
reasonable efforts to maintain and preserve its business
organization, assets, employees and advantageous business
relationships, and Assure and each Assure Subsidiary shall deal with
all of its assets, having due regard to the interests of GEOCAN in
such assets through this Agreement and shall not make or approve any
material operation, transaction, acquisition, disposition,
expenditure (capital or otherwise) or make or consent to any
amendment of any material document or agreement respecting its
assets or business (including any employment agreements), except
with the prior written consent of GEOCAN, not to be unreasonably
withheld;
(b) Assure shall not directly or indirectly do or permit to occur any of
the following: (i) amend the constating documents of Assure or any
Assure Subsidiary; (ii) declare, set aside or pay any dividend or
other distribution or payment (whether in cash, shares or property)
in respect of its shares or other securities owned by any person,
other than as required under the terms of the Assure Preferred
Shares and the Assure Notes; (iii) issue, grant, sell or pledge or
agree to issue, grant, sell or pledge any shares of Assure or any
Assure Subsidiary, or securities convertible into or exchangeable or
exercisable for, or otherwise evidencing a right to acquire shares
of Assure or any Assure Subsidiary, other than Assure Shares
issuable pursuant to the terms of the Assure Warrants or in respect
of the Assure Notes; (iv) redeem, purchase or otherwise acquire any
of its outstanding shares or other securities; (v) split, combine or
reclassify any of its shares; (vi) adopt a plan of liquidation or
resolutions providing for the liquidation, dissolution, merger,
consolidation or reorganization of Assure or any Assure Subsidiary;
(vii) enter into or modify any contract, agreement, commitment or
arrangement with respect to any of the foregoing, except as
permitted above; or (viii) reorganize, amalgamate, merge or
otherwise continue Assure or any Assure Subsidiary with any other
person, corporation, partnership or other business organization
whatsoever;
26
(c) Assure shall not, directly or indirectly, do or allow any Assure
Subsidiary to do any of the following (other than as otherwise
contemplated herein or pursuant to commitments entered into prior to
the date of this Agreement as disclosed to GEOCAN In Writing prior
to the date hereof):
(i) sell, dispose of, transfer, convey, farmout, encumber, pledge,
surrender or abandon the whole or any part of its assets,
except for production in the ordinary course of business, for
a consideration in excess of $25,000 individually or $100,000
in the aggregate;
(ii) expend or commit to expend more than $25,000 individually or
$100,000 in the aggregate with respect to any capital or
operating expense or expenses;
(iii) acquire (by merger, amalgamation, consolidation or acquisition
of shares or assets) any corporation, partnership or other
business organization or division thereof, or make any
investment either by purchase of shares or securities,
contributions of capital, property transfer, or purchase of
any property or assets of any other individual or entity, in
each case having a value in excess of $100,000;
(iv) incur any indebtedness for borrowed money or any other
liability or obligation or issue any debt securities or
assume, guarantee, endorse or otherwise as an accommodation
become responsible for, the obligation of any other individual
or entity, or make any loans or advances, except in the
ordinary course of business and in any event not in excess of
$25,000 individually or $100,000 in the aggregate;
(v) pay, discharge or satisfy any claims, liabilities or
obligations other than in the ordinary course of business and
consistent with past practice and other than payment of
amounts reflected or reserved against in the Assure Financial
Statements;
(vi) enter into any agreements for the sale of production having a
term of more than 30 days; or
(vii) authorize or propose any of the foregoing, or enter into or
modify any contract, agreement, commitment or arrangement to
do any of the foregoing;
(d) Assure shall use its reasonable commercial efforts to cause its
current insurance policies not to be cancelled or terminated or any
of the coverage thereunder to lapse, unless simultaneously with such
termination, cancellation or lapse, replacement policies
underwritten by insurance and re-insurance companies of nationally
recognized standing providing coverage equal to or greater than the
coverage under the cancelled, terminated or lapsed policies for
substantially similar premiums are in full force and effect;
(e) Assure shall:
(i) use its reasonable commercial efforts, to preserve intact its
and each Assure Subsidiary's business organization and
goodwill, to keep available the services of its officers and
employees as a group and to maintain satisfactory
relationships with suppliers, agents, distributors, customers
and others having business relationships with it;
(ii) not take any action that would render, or that reasonably may
be expected to render, any representation or warranty made by
it in this Agreement untrue in any material respect;
(iii) promptly notify GEOCAN in writing of any Material Adverse
Change in respect of Assure and the Assure Subsidiaries, taken
as a whole, or any matter which may potentially amount to such
a Material Adverse Change and of any material governmental or
third party complaints, investigations or hearings (or
communications indicating that the same may be contemplated);
27
(iv) confer, prior to taking action (other than in emergency
situations) with GEOCAN with respect to all material
operational matters involved in its business;
(v) work to familiarize GEOCAN personnel, from the date hereof
until the Effective Date, with the nature and workings of all
of its operational, accounting and land systems, such that
GEOCAN personnel shall be able to continue the operation of
all such systems following completion of the transactions
contemplated herein; and
(vi) make such reasonable accruals to its accounts and financial
statements subsequent to the date of this Agreement and prior
to the Effective Date as are materially in accordance with
generally accepted accounting principles, including in respect
of inventory adjustments, allowance for doubtful accounts and
certain other revenue and expense items and balance sheet
reclassification items;
(f) Assure will use its reasonable commercial efforts to fulfil or cause
the fulfillment of the conditions set forth in Sections 4.1 and 5.1
as soon as reasonably possible to the extent the fulfillment of the
same is within the control of Assure;
(g) Assure will make available and cause to be made available to GEOCAN,
its agents and advisors, as GEOCAN may reasonably request, all
documents and agreements (including without limitation, any
correspondence between Assure and its advisors or any governmental
body and all minute books) and shall allow GEOCAN's officers,
employees, accountants and other authorized representatives and
advisors complete access to Assure's properties, premises, field
operations, records, computer systems, management personnel and
employees in any way relating to or affecting the business of
Assure, or the business, operations, prospects, affairs or financial
status of Assure and shall provide GEOCAN with such other documents
or agreements as may reasonably be requested by GEOCAN to permit
GEOCAN to be in a position to expeditiously integrate the business
and operations of Assure with GEOCAN upon the Arrangement becoming
effective, except where Assure is contractually precluded from
making such document or agreement available, and cooperate with
GEOCAN in securing access for GEOCAN to any such documentation not
in the possession or under the control of Assure. Assure shall keep
GEOCAN fully apprised in a timely manner of every circumstance,
action, occurrence or event occurring or arising in the period
between the date hereof and the Effective Date that would be
relevant and material to a purchaser of the Assure Shares or a
prudent operator of the business and operations of Assure, taken as
a whole;
(h) Assure will as soon as reasonably practicable file, proceed with and
diligently prosecute an application to the Court under the ABCA for
an Interim Order of the Court with respect to the matters pertaining
to the Arrangement and acceptable to GEOCAN, acting reasonably;
(i) Assure will seek the Interim Order, which shall provide that for the
purpose of the Assure Meeting:
(i) the securities of Assure for which the holders shall be
entitled to vote on the Arrangement shall be the Assure
Shares;
(ii) the requisite majority for the approval of the Arrangement by
the Assure Securityholders shall be two thirds of the votes
cast by the Assure Securityholders present in person or by
proxy at the Assure Meeting,
provided that in the event that counsel to Assure and counsel to
GEOCAN advise that it is appropriate to establish such other class
or classes of securities to vote on the Arrangement, then Assure and
GEOCAN shall, acting reasonably, agree to amend the Plan of
Arrangement as may be necessary;
(j) Assure will:
(i) forthwith carry out the terms of the Interim Order to the
extent applicable to it;
28
(ii) convene the Assure Meeting and distribute copies of this
Agreement (or a written summary thereof prepared by Assure in
form and substance reasonably satisfactory to GEOCAN), in each
case as ordered by the Interim Order;
(iii) solicit proxies to be voted at the Assure Meeting in favour of
the Arrangement;
(iv) provide notice to GEOCAN of the Assure Meeting and allow
GEOCAN's representatives to attend the Assure Meeting; and
(v) conduct the Assure Meeting in accordance with the Interim
Order, the bylaws of Assure and any instrument governing such
Assure Meeting, as applicable, and as otherwise required by
law;
(k) Assure will, subject to compliance with the terms and conditions
contained in this Agreement and the approval of the Arrangement in
accordance with the provisions of the Interim Order, forthwith file,
proceed with and diligently prosecute an application for the Final
Order, and will carry out the terms of the Final Order to the extent
applicable to Assure and will file Articles of Arrangement and the
Final Order with the Registrar;
(l) Assure will prepare (in consultation with GEOCAN), file and
distribute to the Assure Shareholders in a timely and expeditious
manner the Information Circular and any amendments or supplements to
the Information Circular, a letter of transmittal and all other
related proxy material, all as required by applicable law in all
jurisdictions where the same is required complying in all material
respects with all applicable legal requirements on the date of issue
thereof. Without limiting the generality of the foregoing, Assure
will ensure that the Information Circular provides Assure
Securityholders with information in sufficient detail to permit them
to form a reasoned judgment concerning the matters before them, and
the Information Circular shall include disclosure of the
determinations and recommendations of the board of directors of
Assure set forth in Section 6.1(u);
(m) Assure will take, or cause to be taken, all action and to do, or
cause to be done, all other things necessary, proper or advisable
under applicable laws and regulations to complete the Arrangement,
including using reasonable commercial efforts:
(i) to obtain all necessary waivers, consents and approvals
required to be obtained by it from other parties to loan
agreements, leases and other contracts;
(ii) to obtain all necessary consents, approvals and authorizations
as are required to be obtained by it under any Canadian or
foreign law or regulation;
(iii) to effect all necessary registrations and filings with, and
submissions of information requested by, governmental
authorities required to be effected by it in connection with
the Arrangement;
and Assure will use its reasonable commercial efforts to cooperate
with GEOCAN in connection with the performance by it of its
obligations under Section 8.1(c), including, without limitation,
continuing to provide reasonable access to information and to
maintain ongoing communications as between officers of Assure and
GEOCAN, subject in all respects to the Confidentiality Agreement;
(n) Assure will conduct its affairs so that all of Assure's
representations and warranties contained herein, insofar as the
accuracy of such representations and warranties constitute a
condition of closing under subsection 4.1(a), shall be true and
correct on and as of the Effective Date as if made thereon;
(o) Assure shall promptly notify GEOCAN in writing of any material
change (actual, anticipated, contemplated or, to the knowledge of
Assure, threatened, financial or otherwise) in the business,
operations, affairs, assets, capitalization, financial condition,
prospects, licences, permits, rights, privileges or liabilities,
whether contractual or otherwise, of Assure and the Assure
Subsidiaries, taken as a whole, or of any change in any
representation or warranty provided by Assure in this Agreement
which change is or may be of such a nature to render any
representation or warranty misleading or untrue in any material
respect and Assure shall in good faith discuss with GEOCAN any
change in circumstances (actual, anticipated, contemplated, or to
the knowledge of Assure threatened) which is of such a nature that
there may be a reasonable question as to whether notice needs to be
given to GEOCAN pursuant to this provision;
29
(p) Assure will, within two Business Days of Assure receiving any
written audit inquiry, assessment, reassessment, confirmation or
variation of an assessment, indication that tax assessment is being
considered, request for filing of a waiver or extension of time or
any other notice in writing relating to taxes, interest, penalties,
losses or tax pools (an "Assessment"), deliver to GEOCAN a copy
thereof together with a statement setting out, to the extent then
determinable, an estimate of the obligations, if any, of Assure on
the assumption that such Assessment is valid and binding;
(q) Assure shall promptly advise GEOCAN of the number of Assure Shares
and Assure Warrants for which Assure receives notices of dissent or
written objections to the Arrangement and provide GEOCAN with copies
of such notices and written objections;
(r) Assure shall use all reasonable efforts to obtain releases in favour
of Assure and GEOCAN from Assure's employees who are not directors
and officers similar to those contemplated by Section 4.1(g) hereof;
(s) Assure shall use its reasonable commercial efforts to divest its 39%
holding in Keantha Holdings Inc. before the Effective Date under
commercial terms acceptable to GEOCAN and, pending such disposition,
shall use its reasonable commercial efforts to ensure that there is
no material decrease in or disposition of the assets (including cash
and the airplane) or any material increase in the liabilities of
Keantha Holdings;
(t) Assure shall use its reasonable commercial efforts to (i) cause the
holder of the Assure PP A Warrants to accept a change in its expiry
from July 1, 2007 to May 31, 2006, (ii) cause holders of the Assure
Other Warrants to surrender such warrants to Assure for nominal
consideration, (iii) cause the holders of the Assure Preferred
Shares to execute the Assure Preferred Shares Waiver, and (iv) in
any event cause all holders of Assure Warrants to vote in favour of
the Plan of Arrangement;
(u) all information in the Information Circular (other than information
relating to and supplied by GEOCAN) shall be true and complete in
all material respects and shall not contain any misrepresentation;
(v) prior to the Effective Date Assure and each Assure Subsidiary will
not implement any shareholder rights plan or any other form of plan,
agreement, contract or instrument that will trigger any rights to
acquire Assure Shares or other securities of Assure or any Assure
Subsidiary or rights, entitlements or privileges in favour of any
person upon the entering into of this Agreement or on the
Arrangement becoming effective;
(w) prior to the Effective Date, Assure shall provide GEOCAN with
auditor reviewed financial statements for Assure's first fiscal
quarter of 2005 and prior to the Effective Date, Assure shall use
reasonable commercial efforts to provide GEOCAN with auditor
reviewed financial statements for Assure's second fiscal quarter of
2005;
(x) Assure shall offer and shall use its reasonable commercial efforts
to cause the holders of Assure A Warrants and Assure B Warrants to
accept prior to the Effective Date the exchange of Assure A Warrants
for Assure Shares on the basis of 0.77 Assure Shares for each Assure
A Warrant and the exchange of Assure B Warrants on the basis of 0.44
Assure Shares for each Assure B Warrant and, in any event shall
ensure that, at the Effective Date no more than 500,000 Assure A
Warrants and no more than 1,200,000 Assure B Warrants remain
outstanding;
30
(y) Assure shall use its reasonable efforts to cause holders of Assure
warrants, other than Assure A Warrants and Assure B Warrants, to
surrender such Assure Warrants for cancellation; and
(z) Assure shall provide the constating documents, bylaws, minute books
and securities registers and current and historical financial
statements of Keantha Holdings Inc. to GEOCAN for review as soon as
practicable and in any event prior to the Effective Date.
9.2 (a) Assure shall immediately cease and cause to be terminated all
solicitations, initiations, encouragements, discussions or
negotiations, if any, with any persons conducted before the date of
this Agreement with respect to any Assure Acquisition Proposal and
shall immediately request the return or destruction of all
information provided to third parties, if any, who have entered into
a confidentiality agreement with Assure relating to an Assure
Acquisition Proposal and shall use all reasonable commercial efforts
to ensure that such requests are honoured.
(b) Assure shall not, directly or indirectly, authorize or permit any of
the officers, directors or employees of Assure or of any financial
advisor, expert or other person acting on its behalf to:
(i) solicit, initiate or encourage (including, without limitation,
by way of furnishing information or entering into any form of
agreement, arrangement or understanding) a Assure Acquisition
Proposal;
(ii) enter into or participate in any discussions on negotiations
regarding a Assure Acquisition Proposal, or, except in the
ordinary course of business, furnish to any other person any
information with respect to the business, properties,
operations, prospects or conditions (financial or otherwise)
of Assure or a Assure Acquisition Proposal or otherwise
cooperate in any way with, or assist or participate in,
facilitate or encourage, any effort or attempt of any other
person to do or seek to do any of the foregoing; or
(iii) waive, or otherwise forbear (except in respect of non material
matters) in the enforcement of, or enter into or participate
in any discussions, negotiations or agreements to waive or
otherwise forbear in respect of, any rights or other benefits
of Assure under confidential information agreements,
including, without limitation, any "standstill provisions"
thereunder;
provided, however, that notwithstanding any other provisions hereof,
Assure (and its directors, officers, employees and advisors) may:
(iv) engage in discussions or negotiations with a third party who
(without any solicitation, initiation or encouragement,
directly or indirectly, by Assure or any of the officers,
directors or employees of Assure or any financial advisor,
expert or other representative or agent acting on its behalf)
seeks to initiate such discussions or negotiations and,
subject to execution of a confidentiality agreement
substantially similar to the Confidentiality Agreement, may
furnish such third party information concerning Assure and its
business, properties and assets, in each case if, and only to
the extent that:
(A) the third party has first made a written bona fide
Assure Acquisition Proposal that is a Assure Superior
Proposal; and
(B) prior to furnishing such information to or entering into
discussions or negotiations with such third party,
Assure provides prompt notice to GEOCAN to the effect
that it is furnishing information to or entering into
discussions or negotiations with such third party
together with a copy of the confidentiality agreement
referenced above and if not previously provided to
GEOCAN, copies of all information provided to such third
party are provided to GEOCAN concurrently with the
provision of such information to such third party.
Assure shall immediately notify GEOCAN orally and in
writing of any inquiries, offers or proposals with
respect to any Assure Acquisition Proposal (including
without limitation, the terms and conditions of any such
proposal (and any amendments or changes thereto), the
identity of the person making it, and if not previously
provided to GEOCAN, copies of all information provided
to such person and all other information reasonably
requested by GEOCAN), shall keep GEOCAN informed of the
status and details of any such inquiry, offer or
proposal and answer GEOCAN's questions with respect
thereto.
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(c) Assure shall give GEOCAN 48 hours advance notice of any agreement
(and the terms of such agreement) to be entered into with, or any
information to be supplied to, any person making an inquiry, offer
or proposal with respect to a Assure Superior Proposal and shall
confirm the determination of Assure's board of directors that the
Assure Acquisition Proposal is a Assure Superior Proposal. For a
period of 48 hours from the time that Assure provides notice of such
Assure Superior Proposal to GEOCAN and any amendment thereto,
together with the foregoing confirmation in respect of the board of
directors' determination, the board of directors of Assure and
Assure agree not to accept, recommend or approve or enter into any
agreement (an "Assure Proposed Agreement") to implement such a
Assure Superior Proposal or release the party from making the Assure
Superior Proposal from any standstill provisions. In addition, in
respect of any Assure Superior Proposal, Assure shall and shall
cause its financial and legal advisors to negotiate in good faith
with GEOCAN to make such adjustments in the terms and conditions of
this Agreement and the terms of the Arrangement as would enable
Assure to proceed with the transaction contemplated herein, as
amended, rather than the Assure Superior Proposal. In the event that
GEOCAN proposes to and does amend this Agreement and the terms of
the Arrangement to provide equal or superior value to that provided
under the Assure Superior Proposal within a period of 48 hours from
the time that GEOCAN receives notice of the Assure Superior Proposal
and a copy of the Assure Proposed Agreement (and any amendments
thereto), Assure shall not enter into any Assure Proposed Agreement
regarding the Assure Superior Proposal or any amendment thereof.
(d) Notwithstanding Section 6.1(u) in the event that, prior to the
completion of the Arrangement, a Assure Superior Proposal is offered
or made to the holders of Assure Shares or Assure, the board of
directors of Assure may fail to make, withdraw, modify or change any
recommendation regarding the Arrangement if, in the opinion of the
board of directors acting in good faith after written advice from
outside counsel to such effect, which is reflected in the minutes of
a meeting of the board of directors of Assure (a copy of the
relevant extract of which minutes shall be provided to GEOCAN), the
making or failure to so withdraw, modify or change any
recommendation regarding the Arrangement would be inconsistent with
the performance by the directors of Assure of their fiduciary duties
under applicable law, and provided Assure shall have complied with
the provisions of Section 9.3 and paid the GEOCAN Break Fee to
GEOCAN in the circumstances where such fee is payable.
9.3 Subject to Section 10.4, if at any time after the date of this Agreement:
(a) the board of directors of Assure fails to recommend that the Assure
Securityholders approve the Arrangement or withdraws or, in any
manner adverse to GEOCAN redefines, modifies or changes any of its
recommendations referred to in Section 6(u), unless it has the right
to do so under Section 9.4 hereof; or
(b) prior to the date of the Assure Meeting:
(i) a Assure Acquisition Proposal that is a Assure Superior
Proposal is publicly announced or made to Assure or Assure's
shareholders;
(ii) the Assure Superior Proposal has not been withdrawn or
expired; and
(A) the board of directors of Assure fails to confirm to the
Assure Shareholders, within five business days after the
making of the Assure Proposal its recommendation that
the Assure Shareholders reject the Assure Superior
Proposal; or
32
(B) Assure enters into an agreement (other than a
confidentiality agreement) with respect to the Assure
Superior Proposal;
and the Arrangement is not approved at the Assure Meeting; or
(c) Assure shall have breached, or failed to comply with, in any
material respect, any of its covenants or other obligations under
this Agreement or any of the representations and warranties of
Assure contained in this Agreement shall not be true and correct in
all material respects as of the date of this Agreement, except where
the failure of such representations and warranties to be true and
correct would not have a Material Adverse Effect on Assure, or shall
have ceased to be true and correct in any material respect
thereafter, except where the failure of such representations and
warranties to be true and correct would not have a Material Adverse
Effect on Assure, (other than, in either case, as a direct result of
and in direct response to a breach by GEOCAN of its obligations
under this Agreement);
then Assure shall, within two business days after the first to occur of
the events described above, pay to GEOCAN the GEOCAN Break Fee. Such
payment shall be made in immediately available funds to an account
designated by GEOCAN. The payment of the GEOCAN Break Fee to GEOCAN shall
represent full and final settlement of all claims of GEOCAN arising in
respect of the matter giving rise to such payment and GEOCAN shall have no
further remedy or recourse in respect of such matter against Assure or its
present or former directors, officers, employers, agents or advisors or
Assure's counsel.
9.4 The board of directors of Assure reserves the right to not make, withdraw,
redefine, modify or change its recommendations or its determinations
referred to in Section 6.1(u) if any of the following occur on or prior to
the Effective Date:
(a) GEOCAN shall have breached, or failed to comply with, in any
material respect, any of its covenants or other obligations under
this Agreement;
(b) any of the representations and warranties of GEOCAN contained in
this Agreement shall not be true and correct in all material
respects as of the date of this Agreement or shall have ceased to be
true and correct in any material respect thereafter (other than as a
result of a breach of this Agreement by Assure or of the Lockup
Agreements by any of the holders of the Assure Shares, Assure
Options or Assure Warrants); or
(c) it becomes certain that any of the conditions contained in Sections
3.1 or 5.1 will not be satisfied on or before the Effective Date
(other than as a result of a breach of this Agreement by Assure or
of the Lockup Agreements by any of the holders of the Assure Shares,
Assure Options or Assure Warrants who execute and deliver Lockup
Agreements) and all relevant parties do not agree to waive or modify
such conditions.
9.5 Assure shall use its reasonable efforts to cause all persons holding
Assure Options or Assure Warrants, other than directors and officers of
Assure, to exercise those Assure Options or Assure Warrants prior to the
Assure Meeting and to vote the Assure Shares acquired on exercise in
favour of the Arrangement, all in accordance with the terms of the Lockup
Agreements. Assure shall also use its reasonable efforts to ensure that
all Assure Shares acquired on exercise of the Assure Options or Assure
Warrants at any time prior to the Assure Meeting, be made eligible for
voting at the Assure Meeting, subject to all applicable law.
ARTICLE 10
TERMINATION
10.1 This Agreement may, prior to the filing of the Articles of Arrangement, be
terminated by mutual agreement of GEOCAN and Assure without further action
on the part of the securityholders of Assure.
10.2 Subject to Section 10.4, notwithstanding any other rights contained
herein, GEOCAN may terminate this Agreement upon notice to Assure:
(a) if the Interim Order has been refused, or if granted, is set aside
or modified in a manner unacceptable to GEOCAN, acting reasonably,
on appeal or otherwise;
33
(b) if the Arrangement is not approved by Assure Securityholders in
accordance with the terms of the Interim Order and all applicable
laws on or before October 5, 2005, subject to an extension of up to
20 days pursuant to Section 10.4;
(c) if the Final Order has not been granted in form and substance
satisfactory to GEOCAN, acting reasonably, on or before October 5,
2005, subject to an extension of up to 20 days pursuant to Section
10.4 or, if issued, has been set aside or modified in a manner
unacceptable to GEOCAN, acting reasonably, on appeal or otherwise;
(d) if the Arrangement has not been completed on or before October 6,
2005, subject to an extension of up to 20 days pursuant to Section
10.4;
(e) if a circumstance giving rise to payment of the GEOCAN Break Fee to
GEOCAN shall have occurred;
(f) if a circumstance giving rise to payment of the Assure Break Fee to
Assure shall have occurred and such payment shall have been made; or
(g) upon any other circumstances hereunder that give rise to a
termination of this Agreement by GEOCAN, including those set forth
in Sections 4.1 and 5.1 hereof.
10.3 Subject to Section 10.4, notwithstanding any other rights contained
herein, Assure may terminate this Agreement upon notice to GEOCAN:
(a) if the Interim Order has been refused, or if granted, is set aside
or modified in a manner unacceptable to Assure, acting reasonably,
on appeal or otherwise;
(b) if the Arrangement is not approved by Assure Securityholders in
accordance with the terms of the Interim Order and all applicable
laws on or before October 5, 2005, subject to an extension of up to
20 days pursuant to Section 10.4;
(c) if the Final Order has not been granted in form and substance
satisfactory to GEOCAN, acting reasonably, on or before October 5,
2005, subject to an extension of up to 20 days pursuant to Section
10.4, or, if issued, has been set aside or modified in a manner
unacceptable to Assure, acting reasonably, on appeal or otherwise;
(d) if the Arrangement has not been completed on or before October 6,
2005, subject to an extension of up to 20 days pursuant to Section
10.4;
(e) if a circumstance giving rise to the payment of the Assure Break Fee
to Assure shall have occurred;
(f) if a circumstance giving rise to payment of the GEOCAN Break Fee to
GEOCAN shall have occurred and such payment shall have been made; or
(g) upon any other circumstances hereunder that give rise to a
termination of this agreement by Assure, including those set forth
in Sections 3.1 and 5.1 hereof.
10.4 (a) Each of GEOCAN and Assure will give prompt notice to the other of
the occurrence, or failure to occur, at any time from the date
hereof until the Effective Date, of any event or state of facts
which occurrence or failure would, or would likely to:
(i) cause any of the representations or warranties of either
GEOCAN or Assure contained herein to be untrue or inaccurate
in any material respect on the date hereof or on the Effective
Date; or
34
(ii) result in the failure to comply with or satisfy any covenant,
condition or agreement to be complied with or satisfied, in
any material respect, by either GEOCAN or Assure hereunder on
or prior to the Effective Date.
(b) Subject to Section 10.4(c), neither GEOCAN nor Assure may elect not
to complete the transactions contemplated hereby pursuant to the
non-fulfillment of the conditions precedent contained in Articles 3,
4 or 5 or pursuant to Section 10.2 or 10.3 or any termination right
arising therefrom and no payments are payable pursuant to Section
8.2 or 9.3 as a result of such election unless promptly and in any
event prior to the filing of the articles of Arrangement for
acceptance by the Registrar, the party intending to rely thereon has
delivered a written notice (a "Default Notice") to the other party
specifying in reasonable detail all breaches, in any material
respect, of covenants, representations and warranties or other
matters which the party delivering such notice is asserting as the
basis for the non-fulfillment of the applicable condition precedent
or termination right, as the case may be.
(c) Nothing in this Section 10.4 shall effect, and no Default Notice
shall be required in respect of, (i) the right of GEOCAN to receive
payment of the GEOCAN Break Fee pursuant to Section 9.3 (a) or (b),
or (ii) the right of either party to terminate this Agreement for
matters arising out of the failure to make appropriate disclosure In
Writing to the other party.
(d) If any such Default Notice is delivered, provided that the affected
party is proceeding diligently to cure such matter and such matter
is capable of being cured neither party may terminate this Agreement
(if they otherwise have the right to do so) until expiration of a
period of twenty (20) days from such Default Notice and then only if
such matter is not cured in all material respects. If such Default
Notice has been delivered prior to the date of the Assure Meeting,
such meeting shall be postponed until the expiry of such period. If
such Default Notice has been delivered prior to the making of the
application for the Final Order or the filing of the Articles of
Arrangement with the Registrar, such application and such filing
shall be postponed until the expiry of such period.
(e) Nothing in this Section 10.4 shall give either GEOCAN or Assure, as
the case may be, any right to terminate this Agreement in addition
to the rights contained in Articles 3, 4 or 5 or pursuant to Section
10.2 or 10.3 or any termination right arising therefrom or any right
to receive payment of the Assure Break Fee or GEOCAN Break Fee
except in the circumstances provided in Sections 8.2 and 9.3.
10.5 If this Agreement is validly terminated pursuant to any provision of this
Agreement, the parties shall return all materials and copies of all
materials delivered to Assure or GEOCAN, as the case may be, or their
agents and, except for the obligations set forth in Sections 8.2, 9.3, and
this 10.4 and Article 11 (which shall survive any termination of this
Agreement and continue in full force and effect), no party shall have any
further obligations to any other party hereunder with respect to this
Agreement except those incurred prior to termination. Except as expressly
provided herein, nothing herein, (including without limitation the payment
of the GEOCAN Break Fee or the Assure Break Fee) shall relieve any party
from liability for any breach of this Agreement.
10.6 The exercise by any party of any right of termination hereunder shall be
without prejudice to any other remedy available to such party.
ARTICLE 11
Privacy Issues
11.1 For the purposes of this Article o , the following definitions shall
apply:
(a) "applicable law" means, in relation to any person, transaction or
event, all applicable provisions of laws, statutes, rules,
regulations, official directives and orders of and the terms of all
judgements, orders and decrees issued by any authorized authority by
which such person is bound or having application to the transaction
or event in question, including applicable privacy laws.
(b) "applicable privacy laws" means any and all applicable laws relating
to privacy and the collection, use and disclosure of Personal
Information in all applicable jurisdictions, including but not
limited to the Personal Information Protection and Electronic
Documents Act (Canada) and/or any comparable provincial law
including the Personal Information Protection Act (Alberta).
35
(c) "authorized authority" means, in relation to any person, transaction
or event, any (a) federal, provincial, municipal or local
governmental body (whether administrative, legislative, executive or
otherwise), both domestic and foreign, (b) agency, authority,
commission, instrumentality, regulatory body, court, central bank or
other entity exercising executive, legislative, judicial, taxing,
regulatory or administrative powers or functions of or pertaining to
government, (c) court, arbitrator, commission or body exercising
judicial, quasi-judicial, administrative or similar functions, and
(d) other body or entity created under the authority of or otherwise
subject to the jurisdiction of any of the foregoing, including any
stock or other securities exchange, in each case having jurisdiction
over such person, transaction or event.
(d) "Personal Information" means information about an individual
transferred to GEOCAN by Assure in accordance with this Agreement
and/or as a condition of the Transaction.
11.2 The parties hereto acknowledge that they are responsible for compliance at
all times with applicable privacy laws which govern the collection, use
and disclosure of Personal Information acquired by or disclosed to either
Party pursuant to or in connection with this Agreement (the "Disclosed
Personal Information").
11.3 Neither GEOCAN nor Assure shall use the Disclosed Personal Information for
any purposes other than those related to the performance of this Agreement
and the completion of the Arrangement.
11.4 Both GEOCAN and Assure acknowledge and confirm that the disclosure of
Personal Information is necessary for the purposes of determining if they
shall proceed with the Arrangement, and that the disclosure of Personal
Information relates solely to the carrying on of the business and the
completion of the Arrangement.
11.5 Both GEOCAN and Assure acknowledge and confirm that they have and shall
continue to employ appropriate technology and procedures in accordance
with applicable law to prevent accidental loss or corruption of the
Disclosed Personal Information, unauthorized input or access to the
Disclosed Personal Information, or unauthorized or unlawful collection,
storage, disclosure, recording, copying, alteration, removal, deletion,
use or other processing of such Disclosed Personal Information.
11.6 Both GEOCAN and Assure shall at all times keep strictly confidential all
Disclosed Personal Information provided to it, and shall instruct those
employees or advisors responsible for processing such Disclosed Personal
Information to protect the confidentiality of such information in a manner
consistent with the Parties' obligations hereunder. Each of GEOCAN and
Assure shall ensure that access to the Disclosed Personal Information
shall be restricted to those employees or advisors of the respective party
who have a bona fide need to access to such information in order to
complete the Arrangement.
11.7 GEOCAN and Assure, as the case may be, shall promptly notify the other to
this Agreement of all inquiries, complaints, requests for access, and
claims of which such party is made aware in connection with the Disclosed
Personal Information. GEOCAN and Assure shall fully co-operate with one
another, with the persons to whom the Personal Information relates, and
any authorized authority charged with enforcement of applicable privacy
laws, in responding to such inquiries, complaints, requests for access,
and claims.
11.8 Upon the expiry or termination of this Agreement, or otherwise upon the
reasonable request of either GEOCAN or Assure, the counterparty shall
forthwith cease all use of the Personal Information acquired by the
counterparty in connection with this Agreement and will return to the
party or, at the party's request, destroy in a secure manner, the
Disclosed Personal Information (and any copies).
ARTICLE 12
AMENDMENT
12.1 Any term or provision of this Agreement including the Exhibits may be
amended, and the observance of any term of this Agreement may be waived
(either generally or in a particular instance and either retroactively or
prospectively) only by a document in writing signed by the party to be
bound thereby. The waiver by a party of any breach hereof or default in
the performance hereof will not be deemed to constitute a waiver of any
other default or any succeeding breach or default. This Agreement may be
amended by the parties hereto at any time before or after approval of the
Assure Securityholders but, after such approval, no amendment will be made
which by applicable law requires the further approval of the Assure
Securityholders without obtaining such further approval.
36
ARTICLE 13
COSTS
13.1 All costs and expenses of Assure of or incidental to the Arrangement
(whether it is completed or not) this Agreement and the transactions
contemplated hereby including, without limitation, all legal, financial,
accounting, engineering and other advisor costs and costs of the Assure
Meeting shall be borne by Assure and all of such foregoing costs and
expenses of GEOCAN shall be borne by GEOCAN.
ARTICLE 14
DISCLOSURE AND TRANSITIONAL
14.1 Upon execution of this Agreement, this Agreement supercedes the Letter
Agreement (other than as required to give effect to Sections 5.1(i), 6.2
or 9.1(s) hereof) which shall be terminated and of no further force or
effect and neither party shall have any further liability thereunder
except for any liability arising prior to termination.
14.2 Except as may be required by applicable law or stock exchange policy,
GEOCAN shall not make any public announcement or communication in respect
of the transactions contemplated hereunder (including, without limitation,
the existence of this Agreement or the Arrangement) unless prior approval
of the announcement is obtained from Assure, acting reasonably. Other than
communications with the Assure Shareholders as required pursuant to
applicable law or contemplated hereunder, all of which communications
shall be subject to the prior approval by GEOCAN, acting reasonably, or as
required in connection with seeking the Initial Order or the Final Order,
Assure shall not, prior to Closing, make any public announcement or
communication whatsoever in respect of the within transaction (including,
without limitation, the existence of this Agreement or the Arrangement).
14.3 In connection with the implementation of the Arrangement, Assure and
GEOCAN shall cooperate with each other to provide an orderly transition of
control. Each of Assure and GEOCAN will conduct itself so as to keep the
other fully informed as to its business and affairs and as to the
decisions required with respect to the most advantageous methods of
exploring, operating and producing from Assure's assets and shall
cooperate with each other with respect thereof. Assure and GEOCAN shall
each provide access to its offices to officers and representatives of each
other during normal business hours on reasonable notice following the
acceptance of this Agreement and the officers of Assure and GEOCAN shall
consult with the officers of each other (as they may reasonably request)
in respect of their day-to-day operations. Assure shall provide to GEOCAN
information which will allow GEOCAN, subject to applicable confidentiality
provisions, to quickly and efficiently integrate the business and affairs
of Assure with GEOCAN on completion of the Arrangement and in connection
therewith shall permit GEOCAN and its representatives to have reasonable
access to Assure's premises, field operations, records, computer systems
and employees.
14.4 The covenants and representations and warranties of GEOCAN and of Assure
contained herein, except those in Article 11, shall not survive the
completion of the Arrangement and shall expire and be terminated upon the
Arrangement becoming effective.
ARTICLE 15
MISCELLANEOUS
15.1 Any notice, consent, waiver, direction or other communication required or
permitted to be given under this Agreement by a party to any other party
shall be in writing and may be given by delivering same or sending same by
facsimile transmission or by hand delivery addressed to the party to whom
the notice is to be given at its address for service herein. Any notice,
consent, waiver, direction or other communication aforesaid shall, if
delivered, be deemed to have been given and received on the date on which
it was delivered to the address provided herein (if a business day and, if
not, the next succeeding business day) and if sent by facsimile
transmission be deemed to have been given and received at the time of
receipt unless actually received on a non-business day or after 4:00 p.m.
on a business day at the point of delivery in which case it shall be
deemed to have been given and received on the next business day. The
address for service of each of the parties hereto shall be as follows:
37
if to GEOCAN:
1100, 717 - 7th Avenue S.W.
Calgary, AB T2P 0Z3
Attention: President
Fax: (403) 261-3834
with a copy to:
Borden Ladner Gervais LLP
1000, 400-3rd Avenue S.W.
Calgary, AB T2P 4H2
Attention: Bill Guinan
Fax: (403) 266-1395
if to Assure:
800, 521 - 3rd Avenue S.W.
Calgary, AB T2P 3T3
Attention: President
Fax: (403) 262-9519
with copies to:
Haywood Securities Inc.
301, 808 First Street S.W.
Calgary, AB T2P 1M9
Attention: David McGorman
Fax: (403) 509-1991
- and -
Bennett Jones LLP
4500, 855 - 2nd Street S.W.
Calgary, AB T2P 4K7
Attention: Michael Klym
Fax: (403) 265-7219
15.2 Time shall be of the essence in this Agreement.
15.3 This Agreement, which includes the Exhibits hereto and the Confidentiality
Agreement (a) constitute the entire agreement between the parties with
respect to the subject matter hereof and supersedes all prior agreements
and understandings, both written and oral, among the parties with respect
to the subject matter hereof; (b) is not intended to confer upon any other
person any rights or remedies hereunder; and (c) shall not be assigned by
operation of law or otherwise except as otherwise specifically provided.
15.4 If any one or more of the provisions or parts thereof contained in this
Agreement should be or become invalid, illegal or unenforceable in any
respect in any jurisdiction, the remaining provisions or parts thereof
contained herein shall be and shall be conclusively deemed to be, as to
such jurisdiction, severable therefrom and:
(a) the validity, legality or enforceability of such remaining
provisions or parts thereof shall not in anyway be affected or
impaired by the severance of the provisions or parts thereof
severed; and
38
(b) the invalidity, illegality or unenforceability of any provision or
part thereof contained in this Agreement in any jurisdiction shall
not affect or impair such provision or part thereof or any other
provisions of this Agreement in any other jurisdiction.
15.5 Each party hereto shall, from time to time, and at all times hereafter, at
the request of the other party hereto, but without further consideration,
do all such further acts and execute and deliver all such further
documents and instruments as shall be reasonably required in order to
fully perform and carry out the terms and intent hereof.
15.6 This Agreement shall be governed by, and be construed in accordance with,
the laws of the Province of Alberta and applicable laws of Canada but the
reference to such laws shall not, by conflict of laws rules or otherwise,
require the application of the law of any jurisdiction other than the
Province of Alberta. Each party hereto hereby irrevocably attorns to the
jurisdiction of the Courts of the Province of Alberta in respect of all
matters arising under or in relation to this Agreement.
15.7 This Agreement may be executed in identical counterparts, each of which is
and is hereby conclusively deemed to be an original and counterparts
collectively are to be conclusively deemed one instrument.
15.8 No waiver by any party hereto shall be effective unless in writing and any
waiver shall affect only the matter, and the occurrence thereof,
specifically identified and shall not extend to any other matter or
occurrence.
15.9 This Agreement shall enure to the benefit of and be binding upon the
parties hereto and their respective successors and assigns. This Agreement
may not be assigned by any party hereto without the prior consent of the
other parties hereto.
IN WITNESS WHEREOF the parties hereto have executed this Agreement.
GEOCAN ENERGY INC.
By: (signed) "Wayne Wadley"
------------------------
ASSURE ENERGY, INC.
By: (signed) "Harvey Lalach"
------------------------
39