EXHIBIT 10.18
PURCHASE AND SALE AGREEMENT
LOOKOUT BUTTE AREA, ALBERTA
MARTIN CREEK AREA, B.C.
THIS AGREEMENT made this 28th day of April, 2005
BETWEEN:
PIONEER NATURAL RESOURCES CANADA
INC., a body corporate having an
office in Calgary, Alberta ("Pioneer
Can" or the "Vendor")
- and -
KETCH RESOURCES LTD., a body corporate
having an office in Calgary, Alberta
(the "Purchaser")
WHEREAS the Vendor has agreed to sell the Assets to the Purchaser and the
Purchaser has agreed to purchase the Assets from the Vendor on the terms and
conditions set forth herein;
NOW THEREFORE in consideration of the premises and the mutual covenants and
warranties herein contained, the parties hereto agree as follows:
1. INTERPRETATION
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1.01 Definitions
In this Agreement, including the recitals and the schedules attached
hereto, the following terms shall have the following meanings:
(a) "Affiliate" or "Affiliates" have the same meaning as ascribed to such
terms in the Business Corporations Act (Alberta);
(b) "Agreement" means this document, together with the Schedules attached
hereto and made a part hereof;
(c) "Assets" means the Petroleum and Natural Gas Rights, the Tangibles
and the Miscellaneous Interests;
(d) "Base Price" has the meaning set forth in Subclause 3.01(a);
(e) "Burden" means a royalty, net profits interest, carried working
interest or similar encumbrance; a right to convert a royalty to a
working interest at payout of a well; a mortgage, lien or charge; an
option to purchase; a farmout agreement under which earning has not
occurred; a penalty or forfeiture arising as a result of an election
prior to the Effective Time not to participate in a drilling or other
operation; and any other similar encumbrance, but does not include a
right of first refusal, preemptive purchase right or similar right;
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(f) "Business Day" means a day other than a Saturday, Sunday or statutory
holiday in Calgary, Alberta;
(g) "Claim" means any claim, demand, lawsuit, legal proceeding,
arbitration or governmental investigation;
(h) "Closing" means the consummation of the purchase and sale of the
Assets by the Purchaser and the Vendor as contemplated in this
Agreement;
(i) "Closing Time" means 10:00 a.m. on May 31, 2005 or such other date or
time as may be agreed to in writing by the Parties;
(j) "Competition Act Approval" means that (i) the Commissioner of
Competition (the "Commissioner") appointed under the Competition Act
has issued an advance ruling certificate pursuant to section 102 of
the Competition Act in respect of the transactions contemplated
herein on terms and conditions satisfactory to the Parties, acting
reasonably; or (ii) notification of the transactions contemplated
herein pursuant to section 114 of the Competition Act has been given
and either (A) the applicable waiting period under section 123 of the
Competition Act has expired without the Commissioner having advised
the Parties that he intends to apply to the Competition Tribunal
established pursuant to subsection 3(1) of the Competition Tribunal
Act (Canada) for an order under section 92 or section 100 of the
Competition Act in respect of the transactions contemplated herein;
or (B) the Commissioner has advised Purchaser that the Commissioner
does not intend to apply to the Competition Tribunal for an order
under section 92 of the Competition Act in respect of the
transactions contemplated herein.
(k) "Competition Act" means the Competition Act R.S.C. 1985, c. C-34;
(l) "Confidentiality Agreement" means the Confidentiality Agreement dated
April 1, 2005 between the Vendor and the Purchaser;
(m) "Conveyance" means the Conveyance Agreement attached as Schedule "G"
hereto;
(n) "Data Room" means the data room established by or on behalf of the
Vendor in connection with the sale process that resulted in this
Agreement;
(o) "Deposit Amount" means the payment set forth in Clause 3.04 plus
interest at the Prime Rate from (and including) the date hereof
until (but excluding) the Closing Date;
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(p) "Effective Time" means 8:00 a.m. on the first day of March, 2005;
(q) "Environment" includes the components of the earth and the atmosphere
and includes all layers of the atmosphere, ambient air, the soil, the
surface and sub-surface strata of land, groundwater and surface
water (including lakes, rivers, streams, oceans and aquifers), all
organic and inorganic matter and living organisms, and the
interacting natural systems that include such components;
(r) "Environmental Law" means any Regulation intended to protect or
preserve the Environment and any Regulation relating to the
production, manufacture, storage, handling, transportation, use,
spill, release or emission of toxic or hazardous substances;
(s) "Environmental and Reclamation Liabilities" means (i) all of the
Environmental Liabilities (whether arising or accruing prior to, on
or after the Effective Date) relating to the Assets or arising in
connection with operations relating to the Assets and (ii) all
obligations to abandon the Wells and restore and reclaim the surface
sites thereof, to decommission and remove the facilities and
equipment comprised in the Tangibles and restore and reclaim the
surface sites thereof and to reclaim and restore the lands to which
the Surface Rights relate, including such obligations relating to
Wells which were abandoned prior to the Effective Time;
(t) "Environmental Liabilities" means any and all Liabilities in respect
of the Environment, including:
(i) Liabilities in respect of contamination, pollution or other
damage to the Environment;
(ii) Liabilities in respect of damage caused by the production,
manufacture, presence, storage, transportation, release, spill
or emission of any toxic or hazardous substance (including any
form of energy), including, without limitation, corrosion or
deterioration of structures or other property and death or
injury to human beings, plants or animals;
(iii) Liabilities for the remediation, restoration or reclamation of
the Environment; and
(iv) Liabilities under Environmental Laws;
(u) "EUB" means the Alberta Energy and Utilities Board;
(v) "EUB License Transfers" means transfers in suitable form for
registration with the EUB of the well licenses for the Wells and
facilities comprised in the Tangibles which are registered in the
name of the Vendor;
(w) "Field Employees" means those individuals which are employed by the
Vendor who normally work in the field at or near the Assets and whose
names are listed in Schedule "H";
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(x) "Files and Records" means well files, agreement files, lease files,
surface rights files, production records and other files, records,
data and information directly pertaining to the Assets and in the
possession or control of Vendor excluding historical information not
relevant to future operations such as accounting source information
and also excluding Seismic Data, income tax and financial
information, evaluations, geological maps and interpretations;
(y) "GST" means the Goods and Services Tax payable under the Excise Tax
Act, 1980 R.S.C., c. E-15, as amended and the schedules and
regulations thereunder;
(z) Indemnity Threshold" means an amount equal to one percent (1%) of the
Base Price;
(aa) "Interim Period Pre-Tax Income" means the revenues and costs of every
kind and nature (whether incurred or accrued, paid or received or
payable or receivable) in respect of the Assets between the Effective
Time and the Closing Date calculated on an accrual basis in
accordance with normal industry practices, excluding income taxes;
(bb) "Investment Canada Act" means the Investment Canada Act, R.S.C. 1985,
c. 28 (1st Suppl.);
(cc) "Joint Seismic Data" means the Seismic Data which is beneficially
owned by the Vendor jointly with one or more third parties and is
associated with the seismic lines listed in Schedule "J";
(dd) "knowledge", "aware of" and similar terms mean, when used in a
representation or warranty by the Vendor, the actual knowledge or
awareness, as the case may be, of the officers of the Vendor and the
seven (7) employees of the Vendor who are currently designated as
"Managers", without specific inquiry or investigation in connection
herewith;
(ee) "Lands" means the lands described in Schedule "A", insofar as rights
pertaining to the Petroleum Substances underlying those lands, are
granted by the Leases;
(ff) "Leases" means the leases, licences, permits and other documents of
title described in Schedule "A" by virtue of which the holder thereof
is entitled to drill for, win, take, own and/or remove the Petroleum
Substances within, upon or under the Lands or by virtue of which the
holder thereof is entitled to a share of Petroleum Substances removed
from the Lands or lands pooled or unitized therewith and includes, if
applicable, all renewals and extensions of such documents and all
documents issued in substitution therefor;
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(gg) "Liabilities" means all liabilities and obligations, whether under
common law, in equity, under the Regulations, under contract or
otherwise, whether torts, contractual, statutory or otherwise,
whether absolute or contingent and whether based on fault, strict
liability or otherwise;
(hh) "Losses" means, for purposes of the indemnification of a person in
respect of a matter, all losses, costs, liabilities, taxes (excluding
GST and other refundable taxes) and damages which such person
suffers, sustains, pays or incurs in connection with such matter and
includes reasonable costs of legal counsel (on a full indemnity
basis) and other consultants and reasonable costs of investigating
and defending Claims arising from such matter, regardless of whether
such Claims are sustained but do not include consequential or
indirect losses or loss of future profits;
(ii) "Miscellaneous Interests" means the Vendor's Interest in all
property, assets, interests and rights (other than the Petroleum and
Natural Gas Rights and the Tangibles) directly related to the
Petroleum and Natural Gas Rights or the Tangibles including, without
limitation, any and all of the following:
(i) the Title and Operating Documents to the extent related to the
Petroleum and Natural Gas Rights or the Tangibles;
(ii) rights to use or occupy the surface of lands which are used
exclusively in connection with the Petroleum and Natural Gas
Rights or the Tangibles, including rights to enter upon and
occupy the surface of lands on which the Tangibles and the
Wells are located and rights to use the surface of lands to
gain access thereto, excluding any such rights that pertain
only to a well or wells other than the Wells;
(iii) all Files and Records; and
(iv) the Wells, including well bores and casing,
but specifically excludes the 3-32 Well and the well bore thereof
and casing therein, the Seismic Data, income tax and financial
information, evaluations, geological maps and interpretations;
(jj) "Other Indemnitees" means, in respect of a Party, its Affiliates and
its and its Affiliates' directors, officers and employees;
(kk) "Party" means the Vendor or the Purchaser;
(ll) "Permitted Encumbrances" means:
(i) easements, rights of way, servitudes or other similar rights
in land including, without limiting the generality of the
foregoing, rights of way and servitudes for railways, sewers,
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drains, gas and oil pipelines, gas and water mains and
electric light, power, telephone, telegraph or cable
television conduits, poles, wires or cables;
(ii) the right reserved to or vested in any government or other
public authority, by the terms of the Leases or by statute, to
terminate any of the Leases or to require annual or other
periodic payments as a condition of the continuance thereof;
(iii) taxes on Petroleum Substances or the income or revenue
therefrom;
(iv) all Regulations respecting the operation of the Assets,
including, without limitation, regulations regarding the rate
of production of Petroleum Substances from the Wells;
(v) the terms and conditions of the Title and Operating Documents,
excluding Burdens which are not listed in Schedule "A";
(vi) any liens in favour of a person conducting the operation of
any of the Assets securing the portion of the costs and
expenses of such operation payable by the Vendor;
(vii) mechanics', builders' or materialmen's liens and similar liens
in respect of services rendered or goods supplied for which
payment is not due;
(viii) the reservations, limitations, provisos and conditions in any
original grants from the Crown of any of the Lands or
interests therein and statutory exceptions to title, which do
not materially adversely effect the use of the Assets affected
thereby in the oil and gas business;
(ix) liens granted in the ordinary course of business to a public
utility, municipality or governmental authority in connection
with operations conducted with respect to the Assets;
(x) any security held by any third party encumbering the Vendor's
interest in and to the Assets or any part or portion thereof,
in respect of which the Vendor delivers a discharge to the
Purchaser at or prior to Closing;
(xi) the Burdens set forth in Schedule "A"; and
(xii) the ROFRs listed in Schedule "A";
(mm) "Personal Information" means information about an identifiable
individual which has been disclosed to the Purchaser or to any of its
representatives in connection with the transaction contemplated by
this Agreement, but does not include the name, title, business
address or telephone number of an employee of an organization;
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(nn) "Petroleum and Natural Gas Rights" means the Vendor's Interest as set
forth in Schedule "A" hereto in and to the Lands and, insofar as they
pertain to the Lands, the Leases;
(oo) "Petroleum Substances" means petroleum, natural gas, sulphur and
related hydrocarbons and every other mineral or substance, whether
liquid or solid and whether hydrocarbon or not, or any of them, the
right to explore for which, or an interest in which, is granted
pursuant to the Leases, insofar only as they pertain to the Lands;
(pp) "Place of Closing" shall mean the offices of the Vendor;
(qq) "Prime Rate" means the annual rate of interest announced from time to
time by the Royal Bank of Canada as the reference rate which is used
by such bank for determining interest rates on Canadian dollar
commercial loans made by it in Canada, as varied by such bank from
time to time;
(rr) "Proprietary Seismic Data" means the Seismic Data which is 100%
beneficially owned by the Vendor which is associated with the
seismic lines listed in Schedule "I";
(ss) "Purchase Price" means the amount payable by the Purchaser to the
Vendor pursuant to Clause 3.01;
(tt) "Regulations" means all statutes, laws, rules, orders and regulations
in effect from time to time and made by governments or governmental
boards or agencies having jurisdiction over the Assets;
(uu) "Restricted Joint Seismic Data" means Joint Seismic Data which is not
Unrestricted Joint Seismic Data;
(vv) "ROFR" has the meaning specified in Clause 7.01;
(ww) "Seismic Data" means all records, books, documents, licences,
reports and data associated with seismic lines which the Vendor has
possession or to which the Vendor and its Affiliates have access,
excluding interpretations, but including, without limitation:
(i) all permanent records of basic field data including, but not
limited to, any and all microfilm or paper copies of seismic
driller's reports, monitor records, observer's reports and
survey notes and any and all copies of magnetic field tapes or
conversions thereof;
(ii) all permanent records of the processed field data including, but
not limited to, any and all microfilm or paper copies of shot
point maps, pre-and post-stacked record sections including
amplitude, phase, structural displays or other interpretative
processes, post-stack data manipulations including filters,
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migrations and wavelet enhancements, and any and all copies of
final stacked tapes and any manipulations and conversions
thereof; and
(iii) in the case of 3D seismic, in addition to the foregoing, all
permanent records or bin locations, bin fold, static
corrections, surface elevations and any other relevant
information;
(xx) "Seismic License" means a perpetual, non-exclusive, non-transferable
licence to use the Proprietary Seismic Data and the Joint Seismic
Data which is Unrestricted Joint Seismic Data at the Closing Time
which will be granted by the Vendor to the Purchaser at Closing and
which will contain generally accepted industry terms;
(yy) "Tangibles" means the Vendor's Interest in all tangible, depreciable
property and assets that are:
(i) located in, on or appurtenant to the Lands and used, or intended
for use, by the Vendor exclusively in connection with
production, processing, gathering, storage, treatment or
transportation operations respecting the Petroleum and Natural
Gas Rights, including, without limitation, the well equipment,
if any, relating to the Wells; and
(ii) any additional items, whether located on or off the Lands, that
are indicated in Schedule "B" to be specifically included as
Tangibles;
(zz) "3-32 Well" means the well located at 3-32-1-28W4M;
(aaa) "Title and Operating Documents" means (i) the Leases (ii) all
agreements relating to the ownership or operation of the Assets
entered into in the normal course of the upstream oil and gas
business, including, without limitation, joint operating agreements;
unit agreements and unit operating agreements; agreements for the
construction, ownership and operation of gas plants, pipelines, gas
gathering systems and similar facilities; pooling agreements, royalty
agreements, farmin agreements, farmout agreements and participation
agreements; contracts for the processing, compressing, treatment,
gathering, transportation or sale of Petroleum Substances; common
stream agreements; well operating contracts; and easements, surface
leases, rights of way, road use agreements, pipeline crossing
agreements and other surface rights agreements; and (iii) all
permits, licences and approvals issued or granted by governmental
authorities pertaining to the ownership or operation of the Assets;
(bbb) "Title Defect" means a defect, deficiency or discrepancy in or
affecting the title of the Vendor to any of the Assets which would
not be acceptable to a ready, willing and able buyer of the Assets
affected thereby, excluding Permitted Encumbrances, and matters
specifically disclosed herein or in Schedule "A";
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(ccc) "Trade Seismic Data" means Seismic Data that is not Proprietary
Seismic Data or Joint Seismic Data;
(ddd) "Unrestricted Joint Seismic Data" means Joint Seismic Data which the
Vendor is entitled to license to the Purchaser without the Vendor
being in breach of any agreement or obligation or being obligated to
compensate any third party or share with any third party the
proceeds of such license;
(eee) "Vendor's Interest" means the entire interest of the Vendor at the
Effective Time; and
(fff) "Wells" means the wells located in or on the Lands or lands pooled or
unitized therewith including, producing, shut-in, suspended, capped,
abandoned and injection wells, if any, listed in Schedule "E"",
provided that the "Wells" do not include the 3-32 Well.
1.02 The following Schedules pertaining to the following matters are attached
to and are made part of this Agreement:
Schedule "A" - Lands, Leases, Petroleum and Natural Gas Rights,
Burdens and ROFRs
Schedule "B" - Tangibles
Schedule "C" - Production Sale Contracts
Schedule "D" - Financial Commitments
Schedule "E" - Wells
Schedule "F" - Units
Schedule "G" - Conveyance
Schedule "H" - Field Employees
Schedule "I" - Proprietary Seismic Data Lines
Schedule "J" - Joint Seismic Data Lines
1.03 The headings in this Agreement are inserted for convenience of reference
only and shall not be used in any way in construing or interpreting any
provision hereof.
1.04 Whenever the singular or masculine or neuter is used in this Agreement
or in Schedules attached hereto, it shall be interpreted as meaning the
plural or feminine or body politic or corporate, and vice versa, as the
context requires.
1.05 If there is any conflict or inconsistency between a provision of the
body of this Agreement and that of a Schedule or any document prepared to
convey the Assets to the Purchaser, the provision of the body of this
Agreement shall prevail.
1.06 All monetary references in this Agreement are expressed in Canadian
dollars. Except as otherwise provided in this Agreement, all payments
made pursuant hereto shall be made in Canadian dollars.
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1.07 For purposes of this Agreement, interest for a period will accrue on a
daily basis from and including the first day of the period to but
excluding the last day of the period and will not be compounded.
1.08 Unless otherwise stated, references in this Agreement to a Clause,
Subclause or Schedule is a reference to a clause, subclause or schedule
of this Agreement.
1.09 A term which has a generally accepted meaning in the upstream oil and gas
industry in western Canada has the same meaning in this Agreement, unless
the context otherwise requires or the term is otherwise defined in this
Agreement.
2. PURCHASE AND SALE
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2.01 The Vendor agrees to sell and convey the Assets to the Purchaser and
grant the Seismic License to the Purchaser and the Purchaser agrees to
purchase, receive and pay for the Assets and the Seismic License, all
in accordance with and subject to the terms and conditions of this
Agreement.
3. PURCHASE PRICE AND ALLOCATION
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3.01 The Purchase Price to be paid by the Purchaser to the Vendor for the
Assets and the Seismic License, subject to adjustments, shall be:
(a) $255,700,000.00 (the "Base Price"); plus
(b) an amount equal to interest on the Base Price at the Prime Rate from
the Effective Time to the Closing Time (the "Notional Interest").
3.02 The Base Price shall be allocated among the Assets as follows:
(a) To Petroleum and Natural Gas Rights $ 179,049,990.00
(b) To Tangibles $ 74,650,000.00
(c) To the Seismic License $ 2,000,000.00
(d) To Miscellaneous Interests $ 10.00
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Base Price $ 255,700,000.00
The Notional Interest shall be allocated to the Petroleum and Natural Gas
Rights.
3.03 The Purchase Price does not include GST, sales taxes or similar taxes. At
Closing the Purchaser shall pay to the Vendor an amount equal to 7% of
the portion of the Purchase Price allocated to the Tangibles and the
Seismic License pursuant to Clause 3.02. The Vendor's GST Registration
number is R132693219.
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The Purchaser shall be solely liable for any and all sales and similar
taxes imposed by provincial or federal legislation in respect of the
acquisition of the Assets pursuant hereto (including, if applicable,
British Columbia Social Services Tax). If the Vendor is required by law
to collect such taxes, the Purchaser shall pay such taxes to the Vendor
at Closing. The Vendor shall remit the taxes collected by it pursuant
to this Clause to the appropriate authorities in accordance with the
applicable legislation.
After Closing, the Purchaser will be responsible for, and indemnify and
save the Vendor harmless in respect of, any amounts of GST and sales
and similar taxes (including interest and penalties) which the Purchaser
is liable to pay in respect of the acquisition of the Assets pursuant
hereto which are in excess of the amounts collected by the Vendor from
the Purchaser at Closing on account of such taxes.
3.04 The Vendor acknowledges that the Purchaser has paid the Vendor a deposit
of five (5%) percent of the Base Price which shall be deemed to accrue
interest at the Prime Rate from (and including) the date hereof to (but
excluding) the Closing Date. The Deposit Amount shall be applied in
accordance with the following terms:
(a) if Closing occurs, the Deposit Amount paid shall be applied to
payment of the Purchase Price;
(b) if Closing does not occur due to a breach of this Agreement by the
Purchaser, the Deposit Amount shall be forfeited to the Vendor on
account of the damages suffered by the Vendor as a consequence of
such breach. The Parties agree that an amount equal to ten percent
(10%) of the Base Price constitutes their genuine pre-estimate of the
damages which will be suffered by the Vendor by virtue of such
breach; and
(c) if Closing does not occur for any reason or circumstance other than
that described in Subclause 3.04(b), the Vendor shall refund the
Deposit Amount to the Purchaser.
3.05 The Purchase Price and the GST and other taxes payable at Closing
pursuant to Clause 3.03 less the Deposit Amount shall be paid by the
Purchaser to the Vendor at the Closing Time, per the written
instructions of Vendor, by wire transfer of immediately available funds
to the Vendor.
4. EFFECTIVE TIME AND ADJUSTMENTS
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4.01 The transfer and assignment of the Assets by the Vendor to the Purchaser
shall occur at the Closing Time and be effective as of the Effective
Time. The Vendor will be responsible to cause the payment of all costs
incurred prior to the Effective Time and the Purchaser will be
responsible to cause the payment of all costs incurred on or after the
Effective Time.
4.02 Except as otherwise provided in this Agreement, all costs relating to the
Assets (including, without limitation, maintenance, development, capital
and operating costs) and all revenues attributable to the Assets shall be
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apportioned between the Parties as of the Effective Time on an accrual
basis, provided that:
(a) except as otherwise provided in this Clause, costs, expenses and
revenues shall be deemed to accrue in accordance with generally
accepted accounting principles;
(b) costs of work done, services provided and goods supplied shall be
deemed to accrue when the work is done or the goods or services are
provided;
(c) Petroleum Substances produced prior to the Effective Time (including
those in tanks at the Effective Time) and the revenues therefrom
shall be credited to the Vendor and Petroleum Substances produced
after the Effective Time and the revenues therefrom shall be
credited to the Purchaser;
(d) fees payable to the Vendor as owner of the Tangibles in respect of
the custom processing, compression, treatment, gathering or
transportation of Petroleum Substances therein shall be revenues
attributable to the Assets which accrue at the time that the
Petroleum Substances are processed, compressed, treated, gathered or
transported therein;
(e) amounts payable by the Parties on account of royalties and similar
Burdens in respect of Petroleum Substances produced from the Lands
or lands pooled or unitized therewith and fees payable by the
Parties in respect of the custom processing, compression, treatment,
gathering or transportation of Petroleum Substances produced from
the Lands or lands pooled or unitized therewith shall be charged to
the Party to whom the revenues from the Sale of the Petroleum
Substances are credited;
(f) other than as provided in Subclauses (j) and (k), rentals and
similar payments in respect of the Leases or surface rights
comprised in the Assets, taxes levied with respect to the Assets or
operations in respect thereof and prepaid expenses will be costs
attributable to the Assets and will be apportioned on a per diem
basis as of the Effective Time;
(g) amounts payable by a Party to an operator under a joint operating
agreement on account of the operator's recoverable overhead
(including, where a Party is the operator, the amount of the
recoverable overhead attributable to such Party's working interest)
shall be costs related to the Assets which accrue in the period to
which the recoverable overhead is attributable under the applicable
joint operating agreement;
(h) except as provided in Subclause (g), no adjustment shall be made in
respect of general administrative and overhead costs;
(i) no adjustments shall be made in respect of overhead recovered by a
Party in its capacity as an operator under a joint operating
agreement;
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(j) Alberta Royalty Tax Credits will not be considered to be revenue
attributable to the Assets and no adjustments shall be made in
respect thereof;
(k) there shall be an adjustment in favor of the Vendor equal to 15% of
the Pre-Tax Interim Period Income on account of the income taxes
payable by the Vendor in respect thereof.; and
(l) except as provided in paragraph(k), no adjustments shall be made in
respect of income taxes or capital taxes.
4.03 An interim accounting of the adjustments required under Clause 4.02 in
respect of the period from the Effective Time to the Closing Date will
be made at Closing, based on the Vendor's good faith estimate of costs
paid by the Vendor prior to Closing and revenues received by the Vendor
prior to Closing. The Vendor shall provide a statement setting forth
such estimates not later than three (3) Business Days prior to Closing
and shall assist the Purchaser in verifying the amounts set forth in
such statement.
4.04 The Parties shall make further adjustments in accordance with Clause
4.02 following the Closing as and when they are ascertained. The
Parties shall meet approximately one hundred and twenty (120) days
after the Closing Date to finalize, to the extent reasonably possible,
the adjustments pursuant to Clause 4.03. In any event, subject to
Clause 4.05, the Parties shall not be obligated to make an adjustment in
accordance with Clause 4.02 more than one (1) year after Closing unless
such adjustment has been specifically requested, by written notice,
within such period.
4.05 During the one (1) year period following the Closing Date, a Party may
audit the books, records and accounts of the other Party respecting the
Assets, for the purpose of effecting adjustments pursuant to this
Article. Such audits shall be conducted upon reasonable notice to the
Party being audited and at the cost of the auditing Party.
4.06 Notwithstanding Clause 4.04, the Parties will be required to make an
adjustment in accordance with Clause 4.02 more than one (1) year after
Closing if:
(a) the adjustment is required by a Crown royalty audit commenced prior
to or within four (4) years after Closing and a written request for
the adjustment is given by one Party to the other Party within 120
days of its receipt of the results of the audit;
(b) the adjustment is required by a joint venture audit commenced
within the term permitted under the governing Title and Operating
Document and a written request for the adjustment is given by one
Party to the other Party within one hundred and twenty (120) days
of its receipt of the final results of the audit; or
(c) the adjustment is required by a 13 month adjustment generated
within the term permitted under the governing Title and Operating
Documents and written request for such adjustment is given by one
Party to the other Party within one hundred and twenty (120) days
of its receipt of the notice of the 13 month adjustment (for
purposes of the foregoing, a "13 month adjustment" is a payment or
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refund which arises when payments or revenues under an agreement
are initially based upon an estimate of annual costs or revenues or
both and an adjustment is made following the annual period to
reflect differences between the estimates and actual amounts).
4.07 An adjustment payable by a Party after Closing pursuant hereto which is
not paid within thirty (30) days of a written request for payment from
the other Party, shall bear interest at the Prime Rate payable by the
paying Party to the other Party from the end of such thirty (30) day
period until the adjustment is paid.
4.08 The Vendor shall continue to invoice joint interest owners for billable
costs attributable to the operations pertaining to the Assets for
periods prior to the Closing Date and for the month in which Closing
occurs and the Vendor shall be entitled to overhead recoveries in its
capacity as an operator for such periods (including the month in which
Closing occurs). Subsequent joint interest billings shall be prepared
and distributed by the Purchaser. For a period of one year after
Closing, the Parties shall provide reasonable assistance to each other
in the collection or recoupment of any overpayment or underpayment of
joint operations accounts receivable and royalties.
4.09 The Assets do not include deposits made by the Vendor which relate to
the Assets or cash call advances, operating fund payments or similar
advances made by the Vendor to an operator under a joint operating
agreement. Such amounts shall either be returned to the Vendor and (if
required) replaced by the Purchaser or be transferred by the Vendor to
the Purchaser, in which event the Purchaser shall reimburse the amount
thereof to the Vendor.
4.10 No item of cost or revenue will be accounted for more than once in the
adjustments made pursuant to this Article.
4.11 After Closing, either Party may, at any time, refer to arbitration a
dispute between the Parties respecting the requirement for or the
amount of an adjustment pursuant to the provisions of this Article 4.
5. CLOSING
-------
5.01 Closing shall take place at the Place of Closing at the Closing Time.
5.02 The Vendor shall prepare, at its cost, and table at Closing, all
conveyances, assignments, transfers, notice of assignments, novations
and other documents and instruments the Vendor determines are
reasonably required or desirable, in accordance with normal oil and gas
industry practices in western Canada, to convey, assign and transfer
the Vendor's title to the Assets to the Purchaser and to novate the
Purchaser into the Title and Operating Documents in the place and stead
of the Vendor with respect to the Assets. The Purchaser shall bear all
costs incurred in registering such conveyances and registering any
further assurances required to convey the Vendor's title to the Assets
to the Purchaser.
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5.03 The Vendor shall provide the Purchaser with originals of the Files and
Records within one (1) day following the Closing Time. The Vendor shall
have the right to retain copies of Files and Records and to have access
to the originals after Closing for purposes arising as a result of its
prior ownership or operation thereof, including joint venture audits,
tax matters, litigation and claims.
5.04 The Purchaser shall retain the Files and Records in good order and good
condition and in a reasonably accessible location for a period of seven
(7) years after the Closing Date, provided that the Purchaser may
destroy or give up possession of any of such information or materials
if it first offers the Vendor the opportunity (by delivery of at least
sixty (60) days' prior written notice to the Vendor containing a
detailed listing of the information and materials proposed to be
destroyed), to obtain a copy of so much of such information or materials
as the Vendor, in its sole discretion, desires at the Vendor's expense,
without any payment to the Purchaser.
6. PURCHASER'S TITLE REVIEW
------------------------
6.01 Between the date this Agreement is fully executed and the Closing Time,
subject to contractual and fiduciary obligations and limits, the Vendor
shall provide the Purchaser and its nominees reasonable access to the
Vendor's records, files and documents directly relating to the Assets,
at the Vendor's office during normal business hours, for the purpose of
the Purchaser's review of the Assets and the Vendor's title thereto,
including, without limitation, the Title and Operating Documents.
6.02 The Purchaser shall conduct its review of the Vendor's title to the
Assets with reasonable diligence. Not later than ten (10) days prior to
the Closing Time (determined without reference to any change in the
Closing Time pursuant to Clause 6.04), the Purchaser shall give the
Vendor written notice (the "Purchaser's Title Defects Notice") of Title
Defects which the Purchaser does not waive. Such notice shall specify
such Title Defects in reasonable detail, the Assets directly affected
thereby, the Purchaser's requirements for the rectification or curing
thereof and the Purchaser's estimate of the reduction in the value of
the Assets resulting therefrom. The Vendor shall thereupon diligently
make reasonable efforts to cure or remove such Title Defects not later
than the Closing Time (determined without reference to any change in
the Closing Time pursuant to Clause 6.04).
6.03 Insofar as the Title Defects described in the Purchaser's Title Defects
Notice have not been cured by the Closing Time to the Purchaser's
reasonable satisfaction, the Purchaser may elect, subject to Clause
6.04, at or before the Closing Time (determined without reference to
any change in the Closing Time pursuant to Clause 6.04), by notice to
the Vendor, to do one of the following:
(a) waive the uncured Title Defects and proceed with the completion of
the transaction;
(b) if the reduction in the value of the Assets resulting from the
uncured Title Defects which it does not waive is more than 5% of
the Base Price, require that the Base Price be reduced by the
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amount that the reduction in the value of the Assets resulting from
such uncured and unwaived Title Defects is greater than 5% of the
Base Price and, in such event, the Base Price shall be reduced by
such amount, provided that if the reduction in the value of the
Assets resulting from the uncured, unwaived Title Defects exceeds
20% of the Base Price, the Vendor will have the right, at or before
the Closing Time, to terminate this Agreement in its entirety in
accordance with Article 13 and the Deposit Amount shall be returned
to the Purchaser; or
(c) if the reduction in the value of the Assets resulting from the
uncured Title Defects that the Purchaser does not waive is in
excess of 20% of the Base Price, terminate this Agreement in its
entirety in accordance with Article 13 and the Deposit Amount shall
be returned to the Purchaser.
Failure by the Purchaser to make such election at or before the Closing
Time shall be deemed to be an election pursuant to Subclause 6.03(a).
If the reduction in the value of the Assets resulting from the uncured
and unwaived Title Defects is equal to or less than 5% of the Base
Price, the Purchaser shall be deemed to have waived the Title Defects.
6.04 If there is a dispute in relation to Clause 6.03 regarding the existence
of a Title Defect, whether it has been cured or the reduction in the
value of the Assets resulting from a Title Defect, either Party may, at
any time prior to the occurrence of Closing as then scheduled, refer the
determination thereof to arbitration in accordance with Article 14 and
the following:
(a) if the arbitration is with respect to the existence of a Title
Defect, the arbitrator shall be a recognized oil and gas lawyer in
private practice in Calgary, Alberta who does not represent either
Party;
(b) if the arbitration is with respect to the reduction in the value of
the Assets resulting from a Title Defect, the arbitrator shall be a
firm of recognized, independent reservoir engineering consultants
carrying on business in Calgary, Alberta;
(c) each Party shall be required to submit a written statement
respecting the matter to the arbitrator not later than two Business
Days after the arbitrator is appointed, including such Party's
proposed resolution and if a Party fails to do so, the arbitrator
shall be required to accept the proposal of the other Party;
(d) the Purchaser's submissions to the arbitrator shall be consistent
with the elections and notices provided by it pursuant to Clauses
6.02 and 6.03, both as to the existence of Title Defects and the
reductions in the value of the Assets resulting therefrom;
(e) the arbitrator shall be instructed to render its decision not later
than five (5) Business Days after its appointment;
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(f) the Closing Time shall be postponed until 10:00 a.m. on the third
Business Day after the decision of the arbitrator is rendered to
the Parties;
(g) if, after application of the decision of the arbitrator, the
reduction in the value of the Assets resulting from the uncured
Title Defects which the Purchaser does not waive at or before the
Closing Time (determined without reference to any change in the
Closing Time pursuant to Clause 6.04) is greater than 20% of the
Base Price and at or before the Closing Time (determined without
reference to any change in the Closing Time pursuant to Clause
6.04) a Party had elected pursuant to Subclause 6.04(c), to
terminate this Agreement in its entirety, this Agreement shall
terminate in its entirety in accordance with Article 13 and the
Deposit Amount shall be returned to the Purchaser; and
(h) if the arbitrator accepts the proposal of the Vendor, the Notional
Interest shall be computed until the date upon which the Closing
actually occurs and the Purchaser shall pay the fees and expenses
of the arbitrator and if the arbitrator selects the proposal of the
Purchaser, the Notional Interest shall be calculated only until the
date that the Closing would have occurred but for such arbitration
and the Vendor shall pay the fees and expenses of the arbitrator.
7. ROFRS, CONSENTS AND COMPETITION ACT APPROVAL
--------------------------------------------
7.01 If the sale of any of the Assets pursuant hereto is subject to a right
of first refusal, preferential right of purchase or similar restriction
(a "ROFR") or requires the consent of any third party, the Vendor shall
promptly serve all notices as are required in respect of the ROFR or
consent requirement. Unless otherwise agreed by the Purchaser, each such
notice shall include a request for a waiver of the ROFR and a request
for consent to the sale of the Assets in question to the Purchaser.
7.02 The Purchaser, acting reasonably and in good faith, shall allocate the
Base Price to Assets which are subject to a ROFR and shall advise the
Vendor in writing of such allocation within two (2) Business Days after
the execution hereof. Such allocations shall be used for the purposes of
ROFRs. The Purchaser will indemnify the Vendor and save the Vendor
harmless from all Losses that the Vendor suffers as a consequence of
using such allocations for purposes of the ROFRs.
7.03 The Assets which are subject to ROFRs which are validly exercised shall
not be sold to the Purchaser pursuant hereto but shall be deleted from
and cease to be subject to this Agreement and:
(a) the terms "Assets", "Lands", "Leases", "Miscellaneous Interests",
"Petroleum and Natural Gas Rights" and "Tangibles" shall be deemed
to be revised to reflect the deletion of such Assets;
(b) the Base Price shall be reduced by the amount allocated to such
Assets pursuant to Clause 7.02; and
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(c) subject to the other provisions of this Agreement, the Parties
shall complete the sale of the balance of the Assets pursuant
hereto.
7.04 The Purchaser shall promptly file a request for an advance ruling
certificate under the Competition Act in respect of the transactions
herein, and the applicable filing fee and all Taxes thereon shall be
payable by the Parties in equal shares. The Vendor shall co-operate with
and provide reasonable assistance to the Purchaser in the preparation of
such request. The Purchaser shall provide to the Vendor in advance
copies of all applications and filings for approval by the Vendor, not
to be unreasonably withheld. The Purchaser shall provide the Vendor with
a copy of the Competition Act Approval immediately upon receipt of same.
8. REPRESENTATIONS AND WARRANTIES
------------------------------
8.01 Each Party represents and warrants to the other Party that:
(a) Incorporation: It is a corporation duly organized, validly
subsisting and in good standing under the laws of the jurisdiction
of its incorporation, continuance or amalgamation (as the case may
be) and is duly registered and authorized to carry on business in
Alberta;
(b) Authorization: All necessary corporate action has been taken by it
to authorize the execution, delivery and performance of this
Agreement and all other documents, instruments and agreements
contemplated by this Agreement;
(c) Enforceability: This Agreement has been, and each other document,
instrument and agreement executed by it pursuant to this Agreement
will be, duly executed and delivered by it and, if properly
executed and delivered by the other parties thereto, constitutes or
will constitute its valid and binding obligation enforceable in
accordance with its terms;
(d) s. 116 Tax Act: It is not a non-resident of Canada within the
meaning of section 116 of the Income Tax Act R.S.C. 1985, c. 1 (5th
Supplement) as amended;
(e) Finders' Fees: It has not incurred any obligation or liability,
contingent or otherwise, for brokers' or finders' fees in respect
of this transaction for which the other Party shall have any
obligation or liability;
(f) Licensee Liability Rating: It is a registrant with the EUB and its
Licensee Liability Rating:
(i) is greater than or equal to one (1);
(ii) shall, as a result of the consummation of the Transaction,
be greater than or equal to one (1); and
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(iii) shall be greater than or equal to one (1) at the time the
EUB considers approval of any EUB License Transfers pursuant
to this Agreement; and
(g) No Violation of Agreements or Regulations: The execution and
delivery of this Agreement and the completion of the purchase and
sale of the Assets in accordance with the terms of this Agreement
are not and will not be in violation or breach of, or be in
conflict with:
(i) any term or provision of its charter, by-laws or other
governing documents; or
(ii) any agreement, instrument, permit or authority to which it
is a party or by which it is bound; or
(iii) any judicial order, award, judgement or decree applicable to
it;
8.02 The Vendor represents and warrants to the Purchaser that:
(a) Title: Except for the Permitted Encumbrances, the Assets are free
and clear of all Burdens and ROFRs created by, through or under the
Vendor or of which the Vendor otherwise has knowledge and the
Vendor is not aware of there having been committed any act or
omission whereby the interest of the Vendor in and to the Assets or
any part or portion thereof may be cancelled or determined,
provided that except as set forth in this Subclause (a), the Vendor
does not warrant its title to the Assets;
(b) Payment of Rents and Royalties: To the knowledge of the Vendor, all
royalties, rentals and other payments due under each of the Leases
have been properly and timely paid, and all conditions necessary to
keep each of the Leases in force have been fully performed;
(c) No Breaches of the Regulations: The Vendor has no knowledge of any
breach of the Regulations with respect to the Assets which has not
been remedied as of the Effective Time which has had or could
reasonably be expected to have a materially adverse effect on the
Assets or the owner thereof;
(d) Judgements and Claims: There are no judgements against the Vendor
relating to the Assets, the Vendor has not received written notice
of any Claim relating to the Assets and, to the Vendor's knowledge,
there are no other judgements or Claims in existence, contemplated
or threatened against or with respect to the Assets or the
interests of the Vendor therein nor any circumstances which the
Vendor reasonably believes will give rise to a Claim relating to
the Assets which, in the case of any of the foregoing, has had or
could reasonably be expected to have a materially adverse effect on
the Assets or the owner thereof;
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(e) Good Standing Under Agreements: To the Vendor's knowledge, neither
the Vendor nor any other party to the Title and Operating Documents
is in breach of any term or provision thereof which has had or
could reasonably be expected to have a materially adverse effect on
the Assets or the owner thereof, provided that the Vendor shall
have no liability hereunder with respect to title matters or
environmental matters;
(f) Assessments: To the Vendor'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 receipt of proceeds therefrom in
respect of the Assets which have become due and payable prior to
the Effective Time (including all prior years) have been properly
and fully paid and discharged;
(g) Take or Pay, Gas Balancing and Production Sales Contracts: Except
as specifically identified in Schedule "C", the Petroleum and
Natural Gas Rights are not subject to any take or pay obligations,
any gas balancing agreement or any agreement for the sale of
Petroleum Substances that is not terminable on notice of thirty
(30) days or less without an early termination penalty or other
cost;
(h) Financial Commitments: Except as disclosed in Schedule "D", there
are no financial commitments in excess of $50,000.00 in any single
case and which are due as of the date hereof or which may become
due by virtue of matters occurring or arising prior to the date
hereof;
(i) Hedging Contracts: there are no interest rate swaps, foreign
exchange swaps, commodity price hedging contracts or similar
derivative contracts relating to the Assets for which the Purchaser
will acquire any liability pursuant hereto or which will apply to
the Assets after the Closing Date or which will affect the
adjustments made pursuant to Article 4 hereof;
(j) Environmental Matters: To the knowledge of the Vendor, the Vendor
has not received notice from any governmental agency of:
(i) any non-compliance with any Environmental Law which has not
been remedied in all material respects; or
(ii) any Claim of damage to, or contamination or pollution of, the
environment or the release, emission, or escape of any toxic
or hazardous substance occurring in connection with the
operation or development of the Assets;
(k) Authorizations or Approvals: No authorization or approval or other
action by, and no notice to or filing with, any governmental
authority or regulatory body exercising jurisdiction over the
Assets is required for the due execution, delivery and performance
by the Vendor of this Agreement, other than authorizations,
approvals or exemptions from requirement therefor, previously
obtained and currently in force, approvals of the EUB, and under
the Competition Act;
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(l) ROFR's: Except as may be set out in Schedule "A", none of the
interest of Vendor in and to the Assets is subject to any ROFR
created by, through or under Vendor or of which Vendor is aware,
that become operative by virtue of this Agreement or the
transaction to be effected by it;
(m) Adverse Claims: To the knowledge of the Vendor, the Vendor has not
received notice from any third party claiming an interest in and to
the Assets adverse to the interest of the Vendor;
(n) Compliance by the Vendor: To the knowledge of the Vendor, the
Vendor has not failed to comply with, perform, observe or satisfy
any term, condition, obligation or liability which has heretofore
arisen under the provisions of any of the Title and Operating
Documents or any other agreements and documents to which the Assets
are subject which has had or could reasonably be expected to have a
materially adverse effect on the Assets or the owner thereof,
provided that the Vendor shall have no liability hereunder with
respect to title matters or environmental matters;
(o) Licences and Permits: To the knowledge of the Vendor, in respect of
the Assets that are operated by the Vendor, the Vendor holds all
material licenses, permits and similar rights and privileges that
are required and necessary under applicable law to operate the
Assets as presently operated;
(p) Operations: To the knowledge of the Vendor, in all material
respects, any and all operations in respect of the Assets, have
been conducted in accordance with good oil and gas industry
practices and in material compliance with all applicable laws,
rules, regulations, orders and directions of governmental and other
competent authorities;
(q) Tangibles: To the knowledge of the Vendor, the Tangibles operated
by the Vendor, if any, are in good and operable condition for the
purpose for which they are being used, reasonable wear and tear
excepted, and to the knowledge of the Vendor, the Vendor has not
received any notice that the Tangibles operated by third parties,
if any, are not in good and operable condition for the purpose for
which they are being used, reasonable wear and tear excepted;
(r) Drilling Obligations: To the knowledge of the Vendor, no material
obligations have accrued pursuant to the Title and Operating
Documents that may be satisfied by the drilling of a well, the
payment of compensatory royalty or the surrender of some or all of
the interests granted, reserved or otherwise conferred pursuant to
the Title and Operating Documents, other than obligations that have
been satisfied (by means other than by the payment of compensatory
royalties) or have been permanently waived;
(s) Areas of Mutual Interest: There are no active area of mutual
interest provisions in any of the Title and Operating Documents or
other agreements or documents to which the Assets are subject; and
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(t) Production or Other Penalties: Excepting production limits of
general application in the oil and gas industry, none of the Wells
is subject to production or other penalties imposed by the Title
and Operating Documents or by any other agreements and documents to
which the Assets are subject, or by the Regulations,.
8.03 The Purchaser represents and warrants to the Vendor that:
(a) Investment Canada: the Purchaser is a Canadian for purposes of the
Investment Canada Act.; and
(b) Financial Capacity: the Purchaser has made necessary arrangements
so that at the Closing Time the Purchaser will have available
sufficient funds so that it is able to pay the amounts payable by
it at Closing pursuant to this Agreement.
8.04 The Vendor makes no representations or warranties to the Purchaser
other than those expressly enumerated in Clauses 8.01 and 8.02. The
Vendor does not warrant or make representations or warranties with
respect to:
(a) except as specifically set forth in Subclause (a) of Clause 8.02,
title to the Assets;
(b) the quantity or quality of Petroleum Substances recoverable from
the Lands;
(c) any estimates of the value of the Assets or the revenues applicable
to future production from the Lands;
(d) any engineering, geological or other interpretations or economic
evaluations respecting the Assets;
(e) the rates of production of Petroleum Substances from the Lands;
(f) the quality, condition or serviceability of any of the Assets or
the suitability of their use for any purpose ; or
(g) except as set forth in Subclause 8.02(j), any Environmental
Liabilities.
Further without restricting the generality of the foregoing, the
Purchaser acknowledges that it has made its own independent
investigation, analysis, evaluation and inspection of the Assets and the
state and condition thereof and that it has relied solely on such
investigation, analysis, evaluation and inspection as to its assessment
of the condition, quantum and value of the Assets and is purchasing the
Assets on an "as is, where is" basis.
8.05 Each Party acknowledges that the other may rely on the representations
and warranties made by such Party pursuant to Clauses 8.01, 8.02 and
8.03. The representations and warranties contained in Clauses 8.01, 8.02
and 8.03 shall be true at the Effective Time and at the Closing Time,
and the representations and warranties of both the Vendor and the
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Purchaser shall continue to be in full force and effect and shall
survive the Effective Time for a period of one (1) year, for the benefit
of the Party for which such representations and warranties were made. In
the absence of fraud, however, no claim or action shall be commenced
with respect to a breach of any such representation or warranty, unless,
within such period, written notice specifying such breach in reasonable
detail has been provided to the Party which made such representation or
warranty.
9. LIABILITY AND INDEMNIFICATION
-----------------------------
9.01 Subject to other provisions of this Article 9 and provided Closing has
occurred and the Vendor has received payment from the Purchaser of the
Purchase Price, as adjusted, pursuant to Clause 4., the Vendor shall:
(a) indemnify and save harmless the Purchaser and its Other Indemnitees
from and against all Losses and Liabilities which the Purchaser and
its Other Indemnitees suffer, sustain, pay or incur as a
consequence of a breach of a representation and warranty made by
the Vendor in Clause 8.01 or 8.02 or a breach by the Vendor of any
of the covenants made by it in this Agreement; and
(b) be liable for, and indemnify and save harmless the Purchaser and
its Other Indemnitees from and against, all Claims made against the
Purchaser and its Other Indemnitees as a consequence of a breach of
a representation and warranty made by the Vendor in Clause 8.01 or
8.02 or a breach by the Vendor of any of the covenants made by it
in this Agreement and all Losses and Liabilities which the
Purchaser and its Other Indemnitees suffer, sustain, pay or incur
as a consequence of such Claims;
except to the extent reimbursed (or reimbursable) by insurance
maintained by the Purchaser or caused by the gross negligence or wilful
misconduct of the Purchaser or its Other Indemnitees. The indemnity
granted by the Vendor herein, however, is not a title warranty and shall
not provide any remedy in respect of Losses suffered by the Purchaser or
its Other Indemnitees or its successors or assigns as a result of a
failure of title to the Assets or an encumbrance or Burden on the
Assets.
9.02 The Purchaser shall:
(a) indemnify and save harmless the Vendor and its Other Indemnitees
from and against all Losses and Liabilities which the Vendor and
its Other Indemnitees suffer, sustain, pay or incur as a
consequence of a breach of a representation and warranty made by
the Purchaser in Clause 8.01 or 8.03 or a breach by the Purchaser
of any of the covenants made by it in this Agreement;
(b) be liable for, and indemnify and save harmless the Vendor and its
Other Indemnitees from and against, all Claims made against the
Vendor and its Other Indemnitees as a consequence of a breach of a
representation and warranty made by the Purchaser in Clause 8.01 or
8.03 or a breach by the Purchaser of any of the covenants made by
it in this Agreement and all Losses and Liabilities which the
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Vendor and its Other Indemnitees suffer, sustain, pays or incur as
a consequence of such Claims; and
(c) if Closing occurs, be liable for, and indemnify and save harmless
the Vendor and its Other Indemnitees from and against, all Claims
made against the Vendor and its Other Indemnitees by a person
(other than a Party) in respect of a matter relating to the Assets
which occurs on or after the Closing Date and all Losses and
Liabilities which the Vendor and its Other Indemnitees suffer,
sustain, pay or incur as a consequence of such Claims other than
anything directly related to or connected with the 3-32 Well;
except to the extent reimbursed (or reimbursable) by insurance
maintained by the Vendor or caused by the gross negligence or wilful
misconduct of the Vendor.
9.03 The Purchaser is not relying upon any representation or warranty of the
Vendor as to the condition, environmental or otherwise, of the Assets,
except as is specifically made pursuant to Subclause 8.02(j).
Notwithstanding Clause 9.01, but subject to the Purchaser's right under
this Article 9 in respect of the representation and warranty in
Subclause 8.02(j), the Purchaser further agrees that, if Closing
occurs, the Purchaser shall:
(a) be solely liable and responsible for; and
(b) indemnify and save the Vendor and its Other Indemnitees harmless
from any and all Losses they suffer, sustain, pay or incur in
respect of
all Environmental and Reclamation Liabilities (whether related to acts
or omissions occurring before, on or after the Effective Time),
including, without limitation, damage from or removal of hazardous or
toxic substances, pollution, clean-up, abandonment of the Wells and
reclamation , but excluding anything directly related to or connected
with the 3-32 Well.
9.04 The indemnification obligations of Vendor under Clause 9.01 are subject
to the following restrictions and limitations:
(a) The Purchaser shall not be entitled to seek indemnification from
the Vendor pursuant to Clause 9.01 in respect of any act,
omission, circumstance or other matter actually known to the
Purchaser prior to or at Closing or any matter disclosed in the
Data Room.
(b) No claim by the Purchaser shall be made against the Vendor pursuant
to Clause 9.01 in respect of Vendor's breach of any representation
or warranty in Clause 8.01 or 8.02 or a covenant contained in
Clause 10.01, 10.02 10.03 or unless the aggregate of all of
Purchaser's Losses in respect of all of breaches of the Vendor's
representations or warranties in Clauses 8.01 and 8.02 and the
covenants contained in Clauses 10.01, 10.02 and 10.03 exceeds the
Indemnity Threshold. If the total amount of all such Losses exceeds
the Indemnity Threshold, then the Vendor's obligations for
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Purchaser's Losses under Clause 9.01 shall be limited to the amount
by which the aggregate amount of all of such Losses exceeds the
Indemnity Threshold.
(c) In no event shall the Vendor be liable for Purchaser's Losses
pursuant to Clause 9.01 after Closing in respect of all of breaches
of the Vendor's representations and warranties in Clauses 8.01 and
8.02 and the covenants contained in Clauses 10.01, 10.02 and 10.03
on an aggregate basis for more than the Base Price.
(d) The Purchaser shall not be entitled to seek indemnification from
the Vendor pursuant to Clause 9.01 in respect of a breach of the
Vendor's representations or warranties in Clause 8.01 or 8.02 or a
covenant contained in Clause 10.01, 10.02 or 10.03 unless the
Purchaser shall have provided the Vendor with a notice of its
claim in respect thereof within 12 months after the Closing Date.
9.05 The Vendor shall not be entitled to seek indemnification from the
Purchaser pursuant to Clause 9.02 in respect of breaches of the
Purchaser's representations or warranties in Clause 8.01 unless the
Vendor shall have provided the Purchaser with a notice of its claim in
respect thereof within 12 months after the Closing Date.
9.06 Notwithstanding anything to the contrary set forth in this Agreement,
neither Party shall have any liability to the other Party for any
incidental, special, indirect or consequential damages suffered by the
other Party or its successors or assigns.
9.07 A Party's sole remedy for a misrepresentation or breach of a warranty,
covenant or other agreement contained in this Agreement is limited to
the indemnity contained in Clause 9.01 or 9.02 (as applicable) as
limited by the other provisions of this Article 9.
9.08 The following procedures shall be applicable to any claim by a Party or
any of its Additional Indemnitees (the "Indemnitee") for indemnification
pursuant to this Agreement from the other Party (the "Indemnitor") in
respect of a claim by a third party:
(a) upon the third party claim being made against or commenced against
the Indemnitee, the Indemnitee shall within 10 Business Days of its
receipt thereof provide notice thereof to the Indemnitor. The
notice shall describe the third party claim in reasonable detail
and indicate the estimated amount, if practicable, of the
indemnifiable Losses that has been or may be sustained by the
Indemnitee in respect thereof. If the Indemnitee does not provide
notice to the Indemnitor within such 10 Business Day period, then
such failure shall only lessen or limit the Indemnitee's rights to
indemnity hereunder to the extent that the defence of the third
party claim was prejudiced by such lack of timely notice;
(b) if the Indemnitor acknowledges to the Indemnitee in writing that
the Indemnitor is responsible to indemnify the Indemnitee in
respect of the third party claim pursuant hereto, the Indemnitor
shall have the right to do either or both of the following:
(i) assume carriage of the defence of the third party claim
using legal counsel of its choice and at its sole cost;
and/or
-26-
(ii) settle the third party claim provided the Indemnitor pays
the full monetary amount of the settlement and the
settlement does not impose any restrictions or obligations
on the Indemnitee;
(c) the Indemnitee and the Indemnitor shall co-operate with the other
in the defence of the third party claim, including making available
to the other Party, its directors, officers, employees and
consultants whose assistance, testimony or presence is of material
assistance in evaluation and defending the third party claim;
(d) the Indemnitee shall not enter into any settlement, consent order
or other compromise with respect to the third party claim without
the prior written consent of the Indemnitor (which consent shall
not be unreasonably withheld or delayed), unless the Indemnitee
waives its rights to indemnification in respect of the third party
claim;
(e) upon payment of the third party claim, the Indemnitor shall be
subrogated to all claims the Indemnitee may have relating thereto.
The Indemnitee shall give such further assurances and co-operate
with the Indemnitor to permit the Indemnitor to pursue such
subrogated claims as reasonably requested by it; and
(f) if the Indemnitor has paid an amount pursuant to the
indemnification obligations herein and the Indemnitee shall
subsequently be reimbursed from any source in respect of the third
party claim from any other Person, the Indemnitee shall promptly
pay the amount of the reimbursement (including interest actually
received) to the Indemnitor, net of Taxes required to be paid by
the Indemnitee as a result of any such receipt.
10. MAINTENANCE OF BUSINESS
-----------------------
10.01 Between the date hereof and the Closing Time, the Vendor shall, to the
extent that the nature of its interests permit and subject to the
Title and Operating Documents:
(a) maintain the Assets in a proper and prudent manner in accordance
with good oil and gas industry practices and in material compliance
with the Regulations;
(b) pay or cause to be paid all costs relating to the Assets as they
become due;
(c) perform and comply with all covenants and conditions contained in
the Title and Operating Documents and any other agreements and
documents to which the Assets are subject;
(d) not enter into or authorize any material contractual commitment or
transaction or any material variation of existing commitments or
transactions pertaining to the Assets; and
-27-
(e) conduct its business relating to the Assets in the normal course,
consistent with its past practices.
During the period between the Effective Time and the Closing Time the
Vendor shall maintain the property damage insurance respecting of the
Assets currently in effect and all other insurance it is required to
maintain pursuant to the Title and Operating Documents.
10.02 During the period from the date of execution of this Agreement until
Closing Time, the Vendor shall not, without the prior written consent
of the Purchaser, assume any obligations or commitments or propose or
initiate any operations (in either event to the extent exceeding
$50,000 for any one item) with respect to the Assets, unless and to the
extent that the Vendor reasonably determines that such expenditures or
actions are necessary for the protection of life or property, in which
case the Vendor shall promptly notify the Purchaser of such intention
or actions and the Vendor's estimate of the costs and expenses
associated therewith.
10.03 The Vendor shall permit the Purchaser and its legal counsel and
authorized representatives to have access to the Assets to the extent
the Vendor has the right to provide such access and to the Vendor's
books, records and files, in each case, upon reasonable notice and
during normal business hours prior to-Closing for purposes of
performing due diligence with respect to the Assets for purposes
hereof. The provisions of the Confidentiality Agreement shall continue
to be applicable to any information made available by the Vendor
pursuant to the provisions of this Agreement.
10.04 Following Closing:
(a) the Vendor shall hold its title to an Asset in trust for the
Purchaser until all necessary notifications, registrations and
other steps required to transfer such title to the Purchaser have
been completed; and
(b) the Vendor shall represent the Purchaser in all matters arising
under a Title and Operating Document until the Purchaser is
substituted as a party thereto in the place of the Vendor, whether
by novation, notice of assignment or otherwise and, in furtherance
thereof:
(i) all payments relating to the Assets received by the Vendor
pursuant to the Title and Operating Document, other than
those to which the Vendor is entitled under Article 4, shall
be received and held by the Vendor as a trustee for the
Purchaser and the Vendor promptly remitted to the Purchaser;
(ii) the Vendor shall forward all statements, notices and other
information received by it pursuant to such Title and
Operating Documents that pertain to the Assets to the
Purchaser promptly following their receipt by the Vendor;
and
-28-
(iii) the Purchaser shall forward to other parties to the Title
and Operating Documents such notices and elections pursuant
to such Title and Operating Documents pertaining to the
Assets as the Vendor may reasonably request.
10.05 If Closing occurs, the Vendor shall be deemed to have been the agent of
the Purchaser with respect to the maintenance of the Assets pursuant to
this Article and the Purchaser shall be deemed to have ratified all
actions which the Vendor takes or refrains from taking as authorized
hereunder, with the intention that all such actions shall be deemed to
be those of the Purchaser.
10.06 If Closing occurs, the Purchaser be liable for, and indemnify and save
harmless the Vendor and its Other Indemnitees from and against, all
Claims made against the Vendor and its Other Indemnitees resulting from
the maintenance of the Assets by the Vendor pursuant to this Article
and all Losses and Liabilities which the Vendor and its Other
Indemnitees suffer, sustain, pay or incur as a consequence of such
Claims, insofar as such Claims and Losses are not a direct result of
the gross negligence or wilful misconduct of the Vendor or its Other
Indemnitees. An action or omission of the Vendor or its Other
Indemnitees shall not be regarded as gross negligence or wilful
misconduct, however, to the extent it was done or omitted to be done in
accordance with the instructions of or with the concurrence of the
Purchaser.
10.07 If Closing occurs, Vendor will commence the abandonment of the 3-32
Well within six (6) months after the Closing Date and thereafter
diligently abandon the 3-32 Well and reclaim the surface location
thereof in accordance with the Regulations and good oilfield practices
all at Vendor's sole cost and risk.
11. PURCHASER'S CLOSING CONDITIONS
------------------------------
11.01 The Purchaser's obligation to purchase the Assets pursuant hereto is
subject to the satisfaction of the following conditions, which are for
the exclusive benefit of the Purchaser and may be waived by the
Purchaser, in whole or in part:
(a) Representations True and Obligations Performed: Except to the
extent which, in the aggregate, does not have a material adverse
effect on the Purchaser:
(i) the representations and warranties made by the Vendor in
Clauses 8.01 and 8.02 shall be true when made and as of the
Closing Time; and
(ii) the Vendor shall have observed and performed in a timely
manner all of its obligations under this Agreement which it
was required to observe and perform prior to or at Closing;
(b) Regulatory Approvals: All approvals to the sale of the Assets
pursuant hereto required under the Regulations, except those
customarily obtained after closing in accordance with normal oil
and gas industry practices in western Canada, shall have been
obtained on terms satisfactory to the Vendor acting reasonably;
-29-
(c) Closing Certificate: If requested by the Purchaser, the Vendor
shall have furnished to the Purchaser at Closing a certificate of a
senior officer of the Vendor dated the date the Closing occurs
certifying on behalf of the Vendor and without personal liability
that the covenants and representations and warranties made by the
Vendor in Clauses 8.01 and 8.02 hereof are true and correct at the
Effective Time and the Closing Time;
(d) No Material Adverse Change: No material adverse change of any kind
to the Petroleum and Natural Gas Rights or the Tangibles shall have
occurred without the Purchaser having agreed thereto between the
date hereof and the Closing Time except:
(i) depreciation of equipment through ordinary wear and tear;
(ii) depletion of reserves through normal production at allowable
rates;
(iii) changes in prices of Petroleum Substances, changes in tax
laws and other circumstances generally affecting the oil and
gas industry in the province in which the Assets affected
thereby are located;
(iv) changes in the rate or quality of production of Petroleum
Substances from the Wells unless caused by a breach by the
Vendor of its obligations under this Agreement; and
(v) damage to the Assets which is substantially covered by
insurance, in which event the insurance proceeds shall be
paid to the Purchaser at Closing or when received, whichever
is later; and
(e) Title: Neither Party shall have elected to terminate this Agreement
pursuant to Clause 6.03.
If any of the foregoing conditions have not been complied with, or
waived by the Purchaser at or before the Closing Time, the Purchaser
may, in addition to any other remedies which it may have available to
it, terminate this Agreement by written notice to the Vendor specifying
what conditions have not been satisfied and, in such event, Clause
13.01 will be applicable.
12. VENDOR'S CLOSING CONDITIONS
---------------------------
12.01 The Vendor's obligation to sell the Assets pursuant hereto is subject to
the satisfaction of the following conditions, which are for the
exclusive benefit of the Vendor and may be waived by the Vendor, in
whole or in part:
(a) Representations True and Obligations Performed: Except to the
extent which, in the aggregate, does not have a material adverse
effect on the Vendor:
-30-
(i) the representations and warranties made by the Purchaser
in Clause 8.01 shall be true when made and as of the Closing
Time; and
(ii) the Purchaser shall have observed and performed in a timely
manner all of its obligations under this Agreement which it
was required to observe and perform prior to or at Closing;
(b) Regulatory Approvals: All approvals to the sale of the Assets
pursuant hereto required under the Regulations, except those
customarily obtained after closing in accordance with normal oil
and gas industry practices in western Canada, shall have been
obtained on terms satisfactory to the Vendor acting reasonably.
(c) Closing Certificate: If requested by the Vendor, the Purchaser
shall have furnished to the Vendor at Closing a certificate of a
senior officer of the Purchaser dated the date the Closing occurs
certifying on behalf of the Purchaser and without personal
liability that the covenants and representations and warranties
made by the Purchaser in Clause 8.01 hereof are true and correct at
the Effective Time and the Closing Time;
(d) Transfers of Well Licenses and Pipeline Permits: The Vendor shall
be reasonably satisfied at the Closing Time that the transfers of
well licences and pipeline permits to the Purchaser pursuant
hereto, if any, will be accepted by the appropriate regulatory
authorities; and
(e) Title: Neither Party shall have elected to terminate this Agreement
pursuant to Clause 6.03.
If any of the foregoing conditions has not been complied with, or waived
by the Vendor at or before the Closing Time, the Vendor may, in addition
to any other remedies which it may have available to it, terminate this
Agreement by written notice to the Purchaser specifying what conditions
have not been satisfied and, in such event, Clause 13.01 will be
applicable.
13. TERMINATION
-----------
13.01 In the event that this Agreement is terminated pursuant to Article 6.00,
11.00 or 12.00, each Party shall be released from all obligations
hereunder except its obligations under Clause 3.04 and Article 9.
14. ARBITRATION
-----------
14.01 If any matter upon which the Parties do not agree is referred to
arbitration pursuant to a right to refer the matter to arbitration
contained in this Agreement or if the Parties agree to refer any matter
arising hereunder to arbitration, the arbitration shall be before a
single arbitrator. Any such arbitration, including the selection of the
arbitrator, shall be governed by the Arbitration Act (Alberta). The
decision of any such arbitrator shall be final and binding on the
-31-
Parties and except as specifically provided for in Subclause 6.04(h),
the costs and fees relating thereto shall be borne and paid in the
manner the arbitrator determines to be fair and equitable.
14.02 If a dispute is referred to arbitration pursuant to Clause 4.11 or
Clause 6.04, each Party shall be required to submit to the arbitrator
such Parties' proposed resolution of the dispute. The arbitrator will
be required to select one of such submissions to be its ruling on the
dispute.
15. OPERATORSHIP AND SIGNS
----------------------
15.01 The Purchaser acknowledges that the Vendor may not be able to transfer
operatorship of some or all of the Assets to the Purchaser at or after
Closing. The Vendor covenants to do such reasonable things as the
Purchaser may request in order to obtain the appropriate consents and
approvals for the assignment and transfer (conditional on Closing
occurring) to the Purchaser of operatorship of those of the Assets which
the Vendor currently operates.
15.02 After Closing, the Vendor may remove any signs which indicate its
ownership or operation of the Assets. The Purchaser will be responsible
to erect or install signs required by governmental agencies to indicate
that the Purchaser is the operator of the Assets and to notify other
working interest owners, gas purchasers, suppliers, contractors,
governmental agencies and other third party of the Purchaser's interest
in the Assets on and after Closing.
16. NOTICE
------
16.01 Notwithstanding anything to the contrary contained herein, all notices
required or permitted hereunder shall be in writing. Any notice to be
given hereunder shall be deemed to be served properly if served in any
of the following modes:
(a) by telecopier directed to the Party on which it is to be served at
that Party's fax number for service. A notice so served shall be
deemed to be received by the addressee when actually received by
it, if received within normal business hours on any Business Day
and otherwise at the commencement of the next ensuing Business Day
following transmission; or
(b) by mailing it first class (air mail if to or from a location
outside of Canada) registered post, postage prepaid, directed to
the Party on which it is to be served at that Party's address for
service. Notices so served shall be deemed to be received by the
addressee at noon, local time, on the earlier of the actual date of
receipt or the fourth (4th) day (excluding Saturdays, Sundays and
statutory holidays in Alberta) following the mailing thereof.
However, if postal service is (or is reasonably anticipated to be)
interrupted or operating with unusual delay, notice shall not be
served by such means during such interruption or period of delay;
or
(c) by delivering the notice to the Party on which it is to be served
at that Party's address for service.
-32-
16.02 The address and fax number for service of notices hereunder of each of
the Parties shall be as follows:
VENDOR:
Pioneer Natural Resources Canada Inc.
2900, 255 - 5th Avenue S.W.
Calgary, Alberta T2P 3G6
Attn: Land Department
Fax: (403) 231-3276
PURCHASER:
Ketch Resources Ltd.
300, 440 - 2nd Avenue S.W.
Calgary, Alberta T2P 5E9
Attn: Land Department
Fax: (403) 781-8585
A Party may change its address or fax number for service by notice to
the other Party, and such changed address for service thereafter shall
be effective for all purposes of this Agreement.
17 EUB LICENSE TRANSFERS
---------------------
17.01 Prior to Closing, the Vendor shall prepare and where applicable,
electronically submit an application to the EUB for the EUB License
Transfers and the Purchaser shall electronically ratify and sign such
application.
17.02 Should the EUB deny a EUB License Transfer because of misdescription or
other minor deficiencies in the application the Vendor shall within
five (5) Business Days correct the application and amend and re-submit
an application for the EUB License Transfer and the Purchaser shall
electronically ratify and sign such application.
17.03 If, for any reason, the EUB requires a Party to make a deposit or
furnish any other form of security in order to approve a EUB License
Transfer, such Party shall and covenants to immediately (i) make such
deposit and (ii) furnish such other form of security as the EUB
requires.
17.04 If a Party (the "Defaulting Party") fails to make a deposit or furnish
security it is required to make or furnish under Clause 17.03 within
ten (10) days of the Defaulting Party's receipt of notification from
the EUB that such deposit or security is required, the other Party (the
"Non-Defaulting Party") shall have the right to make such deposit or
furnish such security. In such event, the Defaulting Party shall (as
applicable) reimburse the amount of such deposit or the costs of such
security to the Non-Defaulting Party plus interest thereon at the Prime
-33-
Rate plus 2% from the date such deposit or security is made or
furnished by the Non-Defaulting Party until such reimbursement is made
and, in the case of security, cause the security to be returned to the
Non-Defaulting Party as soon as possible and indemnify the Non-
Defaulting Party for the amount and costs of any draws on the security
plus interest thereon at the Prime Rate plus 2% from the date such draw
is made until such indemnification is made. In addition to all other
rights to enforce such reimbursement otherwise available to the Non-
Defaulting Party, it shall have the right to set-off the amount of such
reimbursement or indemnification (including interest) against other
monies due to the Defaulting Party pursuant to this Agreement.
17.05 Should the Purchaser fail to perform the obligations requested, ordered
or directed by a governmental authority respecting Environmental
Liabilities within the time specified by the governmental authority and
the EUB declines to approve a EUB License Transfer as a result thereof,
the Vendor shall be entitled to enter upon and access the Assets to
perform such obligations for and on behalf of the Purchaser, without
liability to the Purchaser for trespass or otherwise and the Purchaser
shall reimburse the Vendor for all costs, charges and expenses incurred
by the Vendor in the performance of such obligations, by payment thereof
to the Vendor, within thirty (30) days of the Vendor' delivery to the
Purchaser of an invoice for such costs, charges and expenses together
with interest thereon at the Prime Rate plus 2% from the date such
costs, charges or expenses are paid by the Vendor until such
reimbursement is made.
18 EMPLOYEES
---------
18.01 Prior to Closing, Purchaser shall provide an offer of employment to each
Field Employee, substantially the same in aggregate as the Field
Employee's current employment by the Vendor, which will be conditional
on Closing occurring.
18.02 Purchaser covenants and agrees to use and disclose Personal Information
only for those purposes for which the Personal Information was initially
collected from or in respect of the individual to which such Personal
Information relates, unless:
(a) Vendor or Purchaser has first notified such individual of such
additional purpose, and where required by the Regulations, obtained
the consent of such individual to such additional purpose; or
(b) such use or disclosure is permitted or authorized by the
Regulations, without notice to, or consent from, such individual.
19 SEISMIC DATA
------------
19.01 The Vendor shall use commercially reasonable efforts to obtain the
third party consents and waivers necessary to cause the Joint Seismic
Data which is Restricted Joint Seismic Data on the date hereof to be
Unrestricted Joint Seismic Data at the Closing Time.
19.02 The Purchaser acknowledges that it will acquire the Seismic Data License
without representation and warranty (including, without limitation, any
-34-
representation and warranty as to its accuracy or quality), and without
reliance on any information provided by the Vendor or its Affiliates.
19.03 Under no circumstances shall the Purchaser sell, license, distribute or
otherwise transfer to a third party any of the Seismic Data that is
licensed to the Purchaser pursuant to the Seismic Data License or any
copies thereof, in whole or in part, provided that the Purchaser shall
be permitted to display such Seismic Data to its joint venture partners
holding interests in the Purchaser's joint properties on a view-only
basis. The Purchaser shall take all reasonable actions to prevent the
disclosure to third parties of the Seismic Data that is licensed to the
Purchaser pursuant to the Seismic Data License. The Purchaser shall be
liable to the Vendor and its Affiliates for and shall, in addition,
indemnify the Vendor and its Affiliates from and against all Losses and
third party liability in respect of the Purchaser's disclosure to third
parties of the Seismic Data that is licensed to the Purchaser pursuant
to the Seismic Data License.
19.04 The Purchaser shall be responsible for payment of all costs of copying
the Seismic Data that is licensed to the Purchaser pursuant to the
Seismic Data License.
20 GENERAL
-------
20.01 Each Party shall from time to time execute and deliver all such further
documents and instruments and do all acts and things as the other Party
may, either before or after the Closing Date, reasonably require to
effectively carry out or better evidence or perfect the full intent and
meaning of this Agreement.
20.02 Unless and until Closing occurs, the Confidentiality Agreement shall be
binding upon the Purchaser. If Closing occurs, thereafter, the
Confidentiality Agreement shall cease to be applicable with respect to
information directly related to the Assets, but will continue to be
binding upon the Purchaser and in full force and effect with respect to
all other information.
20.03 No public announcement or press release concerning the sale and purchase
of the Assets shall be made by a Party without the prior written consent
and approval of the other Party; provided that nothing contained herein
shall prevent a Party at any time furnishing any information to any
governmental authority or to the public if required by the Regulations
or the rules of a stock exchange. A Party which proposes to make such a
public disclosure shall, to the extent reasonably possible, provide the
other Party with a draft of such statement in sufficient time prior to
its release to enable such other Party to review such draft and advise
that Party of any comments it may have with respect thereto, it being
understood that, upon signing this Agreement, the Vendor will be
permitted to immediately issue a press release announcing the
transaction provided such press release has been reviewed by the
Purchaser.
20.04. This Agreement shall be governed by, construed and enforced in
accordance with the laws in effect in the Province of Alberta. Each
Party accepts the jurisdiction of the courts of the Province of Alberta
and all courts of appeal therefrom.
-35-
20.05 No waiver by any Party of any breach (whether actual or anticipated) of
any of the terms, conditions, representations or warranties contained
herein shall take effect or be binding upon that Party unless the
waiver is expressed in writing in accordance with the terms hereof. Any
waiver so given shall extend only to the particular breach so waived
and shall not limit or affect any rights with respect to any other or
future breach.
20.06 Time shall be of the essence in this Agreement.
20.07 The representations, warranties, liabilities and indemnities created in
this Agreement shall be deemed to apply to all assignments,
conveyances, transfers and other documents conveying any of the Assets
from the Vendor to the Purchaser. There shall not be any merger of any
of such representations, warranties, liabilities or indemnities in such
assignments, transfers or other documents.
20.08 This Agreement supersedes all other agreements between the Parties with
respect to the sale of the Assets other than the Confidentiality
Agreement and this Agreement and the Confidentiality Agreement express
the entire agreement of the Parties with respect to the transactions
contained herein.
20.09 No Person other than the Parties and their successors and permitted
assigns and the Other Indemnitees shall be entitled to any rights or
benefits hereunder.
20.10 This Agreement may be amended only by written instrument executed by
the Vendor and the Purchaser.
20.11 This Agreement shall enure to the benefit of and be binding upon the
Parties hereto and their respective successors and permitted assigns.
20.12 This Agreement may be executed in two or more counterparts by the
Parties hereto, each of which counterpart shall be deemed an original
but all of which together shall constitute one and the same agreement.
20.13 (a) Upon the written request of the Purchaser, and only to the extent
necessary to comply with the Securities Requirements, the Vendor
shall:
(i) provide the Purchaser or an independent auditing firm
selected by the Purchaser (who provide a signed
confidentiality undertaking in favour of the Vendor
consistent with that required pursuant to the Confidentiality
Agreement), with the Historical Information as reasonably
requested by the Purchaser; and
(ii) provide reasonable access during normal business hours to its
personnel who are responsible for Historical Information.
(b) Subject to Clause 20.13(d), the Vendor hereby consents to the use
by the Purchaser or its Affiliates of the Historical Information
(including the Audited Net Operating Statements) and any
-35-
information derived therefrom in any public disclosure required by
the Purchaser or its Affiliates to comply with Securities
Requirements.
(c) The obligations of the Vendor to disclose or provide reasonable
access to any Historical Information pursuant to this clause 20.13
shall terminate December 31, 2008.
(d) Except in such form as may be required for Securities
Requirements, the Purchaser shall and shall cause its Affiliates
to keep all Historical Information confidential and shall not
disclose such Historical Information to any of its Affiliates
except any of the foregoing who have a need to know such
Historical Information for the purposes set forth in this Clause.
The Purchaser shall be liable for and in addition, indemnify the
Vendor and its Other Indemnitees for any and all Losses suffered,
sustained, paid or incurred by the Vendor or its Other Indemnitees
directly or indirectly in the event of a breach of this Clause by
the Purchaser or any Claim arising out of any use whatsoever of
the Historical Information including a preliminary prospectus,
final prospectus or other disclosure document that incorporates
such Historical Information.
(e) The Historical Information shall be provided by the Vendor to the
Purchaser or its Affiliates pursuant to this Clause on the
condition that the Vendor assumes no liability whatsoever to the
Purchaser or its Affiliates or their respective successors and
assigns or any other Person in respect of such Historical
Information, or the accuracy or sufficiency thereof or in
connection with any claim arising out of the Historical
Information and Purchaser acknowledges for itself, its Other
Indemnitees, its Affiliates' unitholders and trustees, and on
behalf of its respective successors and assigns that the Vendor
make no representation or warranty with respect to any of the
Historical Information and expressly disclaims any implied or
constructive representation or warranty.
(f) In this Clause:
(i) "Historical Information" means historical financial
information relating to the Assets, including (i) source
records, books, general ledger, invoices, operating
statements in the Vendor's possession or to which it has
reasonable access, and (ii) the Audited Net Operating
Statements;
(ii) "Audited Net Operating Statements" means the historical
audited net operating statements in respect of the Assets
for the 12 month periods ended December 31, 2003 and
December 31, 2004 that were in the Data Room; and
(iii) "Securities Requirements" means the legal requirements in
existence related to alternative disclosure for
acquisitions under Section 5.3 of the Companion Policy
44-101 CP to National Instrument 44-101 and Section 8.10 of
National Instrument 51-102 and any amendments thereto or
any additional requirements under applicable securities
laws that the Purchaser or its Affiliates may be required
-37-
to comply with by a securities commission or similar
securities regulatory authority in connection with the
filing by the Purchaser or its Affiliates of a prospectus
or other public disclosure documents.
IN WITNESS WHEREOF the Parties have duly executed this Agreement as of the
date first above written.
KETCH RESOURCES LTD. PIONEER NATURAL RESOURCES
CANADA INC.
Per: /s/ Russell J. Tripp Per: /s/ Todd A. Dillabough
------------------------------- -----------------------------
Todd A. Dillabough
President & C.E.O.
Per: /s/ Korby D. Zimmerman Per: /s/ Cindy L. Rainsford
------------------------------- -----------------------------
Cindy L. Rainsford
Controller
This is the Execution Page to the Purchase and Sale Agreement dated April 28,
2005 between Pioneer Natural Resources Canada Inc. and Ketch Resources Ltd..
Schedule "A" to a Purchase and Sale Agreement dated April 28, 2005 between
Pioneer Natural Resources Canada Inc., as Vendor, and Ketch Resources Ltd., as
Purchaser.
Schedule "G" to a Purchase and Sale Agreement dated April 28, 2005 between
Pioneer Natural Resources Canada Inc., as Vendor, and Ketch Resources Ltd., as
Purchaser.
CONVEYANCE AGREEMENT
THIS AGREEMENT made this 31st day of May, 2005
BETWEEN:
PIONEER NATURAL RESOURCES CANADA
INC., a body corporate having an office in Calgary,
Alberta (the "Vendor")
- and -
KETCH RESOURCES LTD., a body corporate
having an office in Calgary, Alberta (the
"Purchaser")
WHEREAS the Vendor has agreed to sell and convey the Assets to the
Purchaser and the Purchaser has agreed to purchase and receive the Assets from
the Vendor;
NOW THEREFORE for the consideration provided in the Purchase and Sale
Agreement and in consideration of the premises hereto and the covenants and
agreements hereinafter set forth and contained, the parties hereto agree as
follows:
1.00 DEFINITIONS
-----------
In this Agreement, including the premises hereto:
(a) "Purchase and Sale Agreement" means the Purchase and Sale Agreement
dated April 28, 2005, and made between Pioneer Natural Resources
Canada Inc., as Vendor and o, as Purchaser.
In addition, the definitions provided for in the Purchase and Sale
Agreement are adopted herein by this reference.
2.00 CONVEYANCE
----------
The Vendor, pursuant to and for the consideration provided for in the
Purchase and Sale Agreement, the receipt and sufficiency of such
consideration being hereby acknowledged by the Vendor, hereby sells,
assigns, transfers, conveys and sets over to the Purchaser the entire
right, title, estate and interest of the Vendor in and to the Assets,
to have and to hold the same absolutely, together with all benefit and
advantage to be derived therefrom.
3.00 EFFECTIVE TIME
--------------
This conveyance shall be effective as of the Effective Time.
4.00 SUBORDINATE DOCUMENT
--------------------
This Agreement is executed and delivered by the Parties hereto pursuant
to and for the purposes of the provisions of the Purchase and Sale
Agreement and the provisions of the Purchase and Sale Agreement shall
prevail and govern in the event of a conflict between the provisions of
the Purchase and Sale Agreement and this Agreement.
5.00 ENUREMENT
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This Agreement shall be binding upon and shall enure to the benefit of
each of the Parties hereto and their respective trustees, receivers,
receiver-managers, successors and assigns.
6.00 FURTHER ASSURANCES
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Each Party hereto will, from time to time and at all times hereafter,
at the request of the other Party but without further consideration, do
all such further acts and execute and deliver all such further
documents as shall be reasonably required in order to fully perform and
carry out the terms hereof.
IN WITNESS WHEREOF the Parties hereto have executed this Agreement as of
the date first above written.
KETCH RESOURCES LTD. PIONEER NATURAL RESOURCES
CANADA INC.
Per: Per:
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Per: Per:
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This is an execution page to a Conveyance Agreement dated May 31, 2005 between
Pioneer Natural Resources Canada Inc., as Vendor, and Ketch Resources Ltd., as
Purchaser.