UNOCAL CANADA LIMITED
UNOCAL CANADA ALBERTA HUB LIMITED
UNOCAL CORPORATION
and
POGO CANADA, ULC
POGO PRODUCING COMPANY
SHARE PURCHASE AGREEMENT
July 8, 2005
SHARE PURCHASE AGREEMENT
TABLE OF CONTENTS
ARTICLE 1
DEFINITIONS AND INTERPRETATION
1.1 Definitions.......................................................2
1.2 Certain Rules of Interpretation..................................15
1.3 Knowledge........................................................17
1.4 Entire Agreement.................................................17
1.5 Applicable Law...................................................17
1.6 Accounting Principles............................................17
1.7 Disclosure.......................................................17
1.8 Schedules........................................................17
1.9 Joint and Several Liability......................................18
1.10 Interpretation If Closing Does Not Occur.........................18
1.11 Conflicts........................................................18
1.12 Guarantees.......................................................18
ARTICLE 2
PURCHASE AND SALE
2.1 Actions by Vendor and Purchaser Regarding Purchase...............19
2.2 Place of Closing.................................................19
2.3 Tender...........................................................19
ARTICLE 3
PURCHASE PRICE
3.1 Purchase Price...................................................19
3.2 Payment of Purchase Price........................................19
3.3 Post Closing Adjustment to the Net Working Capital Amount........20
ARTICLE 4
REPRESENTATIONS AND WARRANTIES OF VENDOR
4.1 Incorporation and Registration...................................22
4.2 Right to Sell....................................................22
4.3 Capitalization...................................................23
4.4 Corporation and Subsidiaries.....................................23
4.5 Due Authorization................................................24
4.6 Residence of Vendor..............................................25
4.7 Enforceability of Obligations....................................25
4.8 No Advisors or Consultants.......................................25
4.9 Government Authorizations........................................25
4.10 Benefit Plans and Labour Matters.................................25
4.11 Financial Statements.............................................26
4.12 Distributions....................................................26
4.13 Business Carried on in the Ordinary Course.......................26
4.14 Environmental Matters............................................26
4.15 Assets...........................................................27
4.16 Material Obligations.............................................28
4.17 Litigation.......................................................29
4.18 Intellectual Property............................................30
4.19 Taxes............................................................30
4.20 Absence of Certain Changes.......................................32
4.21 Certain Contracts, Agreements, Plans and Commitments.............32
4.22 Resource Pools and Undepreciated Capital Cost Balances...........33
4.23 Operation of Assets..............................................33
4.24 Minute Books.....................................................33
4.25 Corporate Registers..............................................33
4.26 Books and Records and Internal Controls..........................33
4.27 SMOG Run.........................................................34
4.28 Xxxx Xxxxx Xxxxxx Information....................................34
ARTICLE 5
REPRESENTATIONS AND WARRANTIES OF PURCHASER
5.1 Incorporation....................................................34
5.2 Due Authorization................................................34
5.3 Enforceability of Obligations....................................35
5.4 Investment Canada................................................35
5.5 Authorizations...................................................35
5.6 Financing........................................................35
5.7 Brokers..........................................................35
5.8 Purchaser as Principal...........................................35
ARTICLE 6
REGARDING REPRESENTATIONS, WARRANTIES
AND COVENANTS
6.1 Materiality......................................................36
6.2 Nature of Survival of Vendor's Representations, Warranties,
Covenants and Indemnities and Limitations on Claims..............36
6.3 Nature of Survival of Purchaser's Representations, Warranties,
Covenants and Indemnities........................................37
6.4 No Consequential Damages.........................................38
6.5 No Other Representations, Warranties or Covenants of Vendor......38
6.6 No Other Representation, Warranties or Covenants of Purchaser....39
6.7 Restrictions on Claims and Actions...............................40
ARTICLE 7
PURCHASER'S CONDITIONS
7.1 Correctness and Accuracy of Representations and Warranties.......41
7.2 Performance of Obligations.......................................41
7.3 Governmental Approvals, Consents, and Authorizations.............41
7.4 Other Consents and Approvals.....................................42
7.5 No Injunctions or Restraints.....................................42
7.6 Vendor's Closing Deliveries......................................42
ARTICLE 8
VENDOR'S CONDITIONS
8.1 Correctness and Accuracy of Representations and Warranties.......43
8.2 Performance of Obligations.......................................43
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8.3 Governmental Approvals, Consents, and Authorizations.............43
8.4 Other Consents and Approvals.....................................44
8.5 No Injunctions or Restraints.....................................44
8.6 Purchaser's Closing Deliveries...................................44
8.7 Deposit..........................................................45
ARTICLE 9
OTHER COVENANTS
9.1 Conduct of Business Prior to Closing.............................45
9.2 Negative Covenants...............................................45
9.3 Dealings or Operations Regarding Assets..........................47
9.4 Intercorporate Obligations.......................................48
9.5 Access to Books and Records and Other Assets.....................48
9.6 Confidentiality..................................................49
9.7 Actions to Satisfy Closing Conditions............................49
9.8 Preservation of Records..........................................50
9.9 Competition Act Filing and Investment Canada Act Filing..........50
9.10 Assignment of Confidentiality Agreements.........................51
9.11 Insurance........................................................51
9.12 Employee Related Matters.........................................51
9.13 Consent to Jurisdiction..........................................52
9.14 US Financial Statements..........................................53
9.15 Reserves Report (US).............................................53
9.16 Purchase Not Conditional on Financing............................54
9.17 Compliance with Privacy Laws.....................................54
9.18 Bank Accounts....................................................55
ARTICLE 10
INDEMNIFICATION
10.1 Mutual Indemnifications for Breaches of Covenants
and Warranties...................................................55
10.2 Procedures Relating to Indemnification Between Vendor
and Purchaser....................................................57
10.3 Indemnification Procedures for Third Party Claims................58
10.4 Holding of Indemnities...........................................59
10.5 Claims Net of Insurance and Taxes................................59
10.6 Mitigation.......................................................60
10.7 Adjustment to Purchase Price.....................................60
10.8 Subrogation......................................................60
ARTICLE 11
TAX MATTERS
11.1 Liabilities for Taxes............................................60
11.2 Tax Returns......................................................62
11.3 Confidentiality of Tax Information...............................63
11.4 Section 338 Election.............................................63
11.5 Tax Claims.......................................................65
11.6 Assistance and Cooperation.......................................66
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ARTICLE 12
TERMINATION AND CLOSING
12.1 Termination......................................................66
12.2 Regarding Termination by Purchaser...............................67
12.3 Regarding Termination by Vendor..................................67
12.4 Deposit..........................................................67
12.5 Notice of Termination............................................67
12.6 Effect of Termination............................................68
ARTICLE 13
GENERAL
13.1 Non-Waiver.......................................................68
13.2 Public Notices...................................................68
13.3 Notices..........................................................70
13.4 Assignment.......................................................71
13.5 Further Assurances...............................................71
13.6 No Recourse......................................................71
13.7 Time of the Essence..............................................72
13.8 Amendment........................................................72
13.9 Invalidity.......................................................72
13.10 Counterparts.....................................................72
13.11 Enforcement......................................................72
13.12 No Third-Party Beneficiaries.....................................72
13.13 Expenses.........................................................72
13.14 Removal of Name..................................................72
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SCHEDULES
Schedule 1.1(a) Escrow Agreement
Schedule 1.1(b) SMOG Run
Schedule 1.1(c) Unaudited Financial Statements
Schedule 1.3 Vendor Knowledge Individuals
Schedule 4.4(c) Subsidiaries
Part 1 Corporate Subsidiaries (Alberta)
Part 2 Corporate Subsidiary (Nova Scotia)
Part 3 Partnership Subsidiaries
Schedule 4.5(c) Defaults Due to this Agreement
Schedule 4.5(e) Change of Control Provisions
Schedule 4.9 Material Government Authorizations - Vendor and Unocal
Schedule 4.10 Benefit Plans
Schedule 4.14 Environmental Matters
Schedule 4.15(a) Permitted Encumbrances
Schedule 4.15(c) Notices of Defaults
Schedule 4.15(d) Government Proceedings
Schedule 4.15(e) Authorizations for Expenditure
Schedule 4.15(g) Marketing and Transportation Agreements
Schedule 4.16 Material Contracts and Liabilities
Schedule 4.17 Open Litigation Claims
Schedule 4.18 Intellectual Property
Schedule 4.19(a) Tax Matters
Schedule 4.19(h) Tax Elections
Schedule 4.19(i) Subpart F Income
Schedule 4.19(j) United States Property
Schedule 4.22 Estimated Resource Pools
Schedule 4.23 Areas of Mutual Interest
Schedule 5.5 Material Government Authorizations - Purchaser and Pogo
Schedule 7.6(e) Vendor's Opinions
Schedule 8.6(e) Purchaser's Opinions
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SHARE PURCHASE AGREEMENT
THIS AGREEMENT is made as of July 8, 2005 among:
UNOCAL CANADA LIMITED
a corporation continued under the laws of Alberta
- and -
UNOCAL CANADA ALBERTA HUB LIMITED
a corporation incorporated under the laws of Alberta
(Unocal Canada Limited and Unocal Canada Alberta Hub Limited
are hereinafter collectively called "Vendor")
- and -
UNOCAL CORPORATION
a corporation incorporated under the laws of Delaware
(hereinafter called "Unocal")
- and -
POGO CANADA, ULC
an Alberta unlimited liability corporation
(hereinafter called "Purchaser")
- and -
POGO PRODUCING COMPANY
a corporation incorporated under the laws of Delaware
(hereinafter called "Pogo")
RECITALS:
A. Vendor is the legal and beneficial owner of all of the Purchased Shares.
B. Vendor has agreed to sell to Purchaser, and Purchaser has agreed to purchase
from Vendor, all of the Purchased Shares, on the terms and conditions of this
Agreement.
IN CONSIDERATION of the covenants, agreements, representations,
warranties and payments herein set forth, the Parties, together with Unocal and
Pogo, covenant and agree as follows:
ARTICLE 1
DEFINITIONS AND INTERPRETATION
1.1 Definitions
Whenever used in this Agreement or the Schedules to this Agreement, the
following words and terms shall have the meanings set out below:
"Abandonment and Reclamation Obligations" means all past, present and
future obligations under Contracts, Applicable Laws, equity or common
law to:
(a) abandon xxxxx;
(b) close, decommission, dismantle and remove tangible equipment and
facilities that were or that are being used in connection with
the Assets;
(c) restore, remediate and reclaim the surface or subsurface of the
lands used in connection with the xxxxx, tangible equipment and
facilities that were or that are being used in connection with
the Assets, including lands in or on which they are or were
located and lands which are or were used to gain access to them;
and
(d) restore, remediate and reclaim the surface or subsurface of lands
affected by seismic or other geological or geophysical
exploration activities conducted by or on behalf of the
Corporation or any of the Subsidiaries;
including such obligations relating to xxxxx, facilities and tangibles
which were abandoned or decommissioned, dismantled or removed prior to
the Closing Date (whether or not included in the Assets).
"ABCA" means the Business Corporations Act (Alberta).
"Accounting Firm" means a mutually agreed on, nationally recognized
accounting firm.
"Affiliate" means, as to a Person, any other Person controlling,
controlled by or under common control with that Person where "control",
"controlling" or "controlled" means the possession, direct or indirect,
of the power to direct or cause the direction of the management and
policies of another Person, whether through the ownership of voting
securities or by contract, partnership agreement, trust arrangement or
other means, either directly or indirectly, that results in control in
fact; provided that direct or indirect ownership of shares of a
corporation carrying more than 50% of the voting rights shall
constitute control of that corporation; and further provided that:
(a) the Corporation and each of the Subsidiaries shall be
conclusively deemed to be Affiliates of Vendor as to any matter
or thing relating to the period before the Closing; and
(b) the Corporation and each of the Subsidiaries shall be
conclusively deemed to be Affiliates of Purchaser as to any
matter or thing relating to the period from and after the
Closing.
"Agreement" means this Share Purchase Agreement, including the recitals
and all Schedules hereto, and includes all written instruments
supplementing, amending or confirming this Share Purchase Agreement
agreed to by the Parties after the date hereof.
"Applicable Laws" means all laws (including Environmental Laws and
Privacy Laws), statutes, rules, regulations, official directives and
orders of Government Authorities (whether administrative, regulatory,
legislative, executive or otherwise) including judgments, orders and
decrees of courts, commissions or bodies exercising similar functions.
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"Asset Acquisition Statement" has the meaning given to that term in
Section 11.4(b).
"Assets" means all of the tangible and intangible property (whether
real, personal or mixed), rights, benefits, privileges and other assets
owned or leased by the Corporation and the Subsidiaries, including all
oil and gas properties and the tangible equipment and miscellaneous
interests owned or held by the Corporation and the Subsidiaries in
connection therewith and any such assets in respect of which the
Corporation or any of the Subsidiaries share ownership with third
parties, or have a right to use.
"Audited Financial Statements" means the audited consolidated financial
statements of the Corporation and the Subsidiaries for the fiscal years
ended December 31, 2004 and 2003, in each case consisting of a
consolidated balance sheet, a consolidated statement of earnings and
retained earnings and a consolidated statement of cash flows, and the
audited consolidated statement of earnings and retained earnings and a
consolidated statement of cash flows for the fiscal year ended December
31, 2002, in each case prepared in accordance with generally accepted
accounting principles.
"Authorizations" means all permits, licenses, exemptions, orders,
variances, approvals, consents, authorizations, registrations,
qualifications and filings with or under any Applicable Laws and having
the force of law.
"Banking Facilities" means, collectively, the credit facilities
available to the Corporation under the Syndicated Credit Agreement and
the Demand Credit Agreement.
"Base Price" has the meaning given to that term in Section 3.1(a).
"Benefit Plans" means all plans and arrangements to which the
Corporation or any of the Subsidiaries is a party or by which the
Corporation or any of the Subsidiaries is bound or under which the
Corporation or any of the Subsidiaries has, or will have, any liability
or contingent liability, relating to:
(a) Pension Plans;
(b) Insurance Plans; or
(c) Compensation Plans;
with respect to any of its Employees or former Employees (or any
dependants or beneficiaries of any such Employees or former Employees),
other than statutory plans with which the Corporation or any of the
Subsidiaries are required to comply, including the Canada Pension Plan
and the Canada Employment Insurance Plan, and plans administered
pursuant to applicable provincial health and workers' compensation
legislation.
"Books and Records" means all books and records of the Corporation and
the Subsidiaries, including financial, corporate, operations and sales
books, inventory and other asset records, books of account, sales and
purchase records, the Title and Operating Documents, customer files,
production data, equipment maintenance data, accounting records, sales
and promotional data, advertising materials, cost and pricing
information, supplier lists, customer lists, business reports, plans
and projections and all other similar documents, surveys, plans, files,
records, correspondence, and other data and information, financial or
otherwise, including all data and information stored on
computer-related or other electronic media but excepting therefrom all
Proprietary Information.
-3-
"Business" means the business of the Corporation and the Subsidiaries.
"Business Day" means a day, other than a Saturday or Sunday, on which
the principal commercial banks located at the cities of Calgary,
Alberta and Houston, Texas are open for business during normal banking
hours.
"Claim" means any action, claim, demand, lawsuit, audit, proceeding,
arbitration or any proceeding or investigation by a Government
Authority including a Tax Claim.
"Closing" means the completion of the Purchase pursuant to the terms
and conditions of this Agreement.
"Closing Date" means:
(a) the fifth Business Day following the day on which all of the
Conditions set forth in Sections 7.3(a), 7.3(b), 7.4, 8.3(a),
8.3(b), and 8.4 have been satisfied or duly waived by the Party
entitled to waive the same and notice of satisfaction or waiver
has been given by the applicable Party to the other Party which
notice each Party agrees to give promptly to the other; provided
that, unless the Parties determine otherwise, the Closing Date
shall not in any event be before the earlier of:
(i) the fifth Business Day after Purchaser receives the Audited
Financial Statements and unaudited financial statements
referred to in Section 9.14 and the Reserves Report (US);
and
(ii) the 90th day after the date of this Agreement; or
(b) such other date as the Parties may agree in writing as the date
on which the Closing shall take place.
"Closing Time" means 9:00 a.m. on the Closing Date, or such other time
on such date as the Parties may agree in writing as the time at which
the Closing shall take place.
"Code" means the United States Internal Revenue Code of 1986.
"Commissioner" means the Commissioner of Competition appointed pursuant
to the Competition Act.
"Compensation Plans" means any and all employment benefits and plans
relating to bonuses, incentive pay or compensation, performance
compensation, deferred compensation, profit sharing or deferred profit
sharing, share purchase, share option, stock appreciation, phantom
stock, vacation or vacation pay, sick pay, severance or termination
pay, employee loans or separation from service benefits, and any other
type of arrangement providing for compensation additional to base pay
or salary.
"Competition Act" means the Competition Act (Canada).
-4-
"Competition Act Approval" means, in respect of the Purchase, that:
(a) an advance ruling certificate (an "ARC") pursuant to Section 102
of the Competition Act shall have been issued by the
Commissioner; or
(b) a "no action letter" has been received from the Commissioner
indicating that the Commissioner has determined that she does not
at that time intend to make an application for an order under
Section 92 of the Competition Act in respect of the Purchase; or
(c) in the event that neither an ARC nor a "no action letter" is
issued or received, the relevant waiting period under Section 123
of the Competition Act shall have expired and there shall be no
threatened or actual application by the Commissioner for an order
under Sections 92 or 100 of the Competition Act.
"Conditions" means, either or both of Vendor's Conditions and
Purchaser's Conditions, as applicable.
"Confidentiality Agreement" means the Confidentiality Agreement dated
June 7, 2005 between Unocal, on behalf of itself and its Affiliates,
and Pogo.
"constating document" means the articles of incorporation, bylaws,
memorandum of association, partnership agreement or similar
constituting documents of a Person.
"Contracts" means, with respect to any Person, any contracts, licences,
leases, arrangements, agreements and commitments of that Person, and
includes all quotations, orders or tenders for contracts which remain
open for acceptance and all manufacturers' or suppliers' warranties,
guarantees or commitments (express or implied), but excludes any oral
contract, arrangement, agreement or commitment relating to goods or
services (including the sale of Petroleum Substances) entered into in
the Ordinary Course of the Business.
"Corporate Subsidiaries" means the Subsidiaries described in Part 1 and
Part 2 of Schedule 4.4(c).
"Corporation" means Northrock Resources Ltd., a corporation
incorporated under the laws of Alberta.
"Corporation Trade-marks" means any and all trade-marks owned by the
Corporation or the Subsidiaries.
"Damage or Destruction Event" means damage, destruction or other
casualty losses with respect to the Assets or any part or parts of the
Assets.
"Demand Credit Agreement" means the agreement dated May 21, 2002 among
Unocal Canada Limited and the Corporation, as borrowers, Unocal, Union
Oil Company of California and the Corporation, as guarantors, and The
Toronto-Dominion Bank, as lender.
"Deposit" has the meaning given to that term in Section 3.2(a).
"Disclosed Environmental Liabilities" means any and all Environmental
Liabilities (whether presently realized or projected) caused by,
arising from, incurred in connection with or otherwise relating in any
way to the matters in the Environmental Documentation and any of the
health, safety and environmental records or reports of the Corporation
and the Subsidiaries made available to Purchaser or its Representatives
for review before the date of this Agreement.
-5-
"Disclosed Personal Information" has the meaning given to that term in
Section 9.17(a).
"Distributions" means the aggregate amount of the dividends, returns of
capital or other distributions, of cash or other property, that may be
made by the Corporation and the Subsidiaries to any of Vendor and
Vendor's Affiliates (other than the Corporation and the Subsidiaries);
but shall not include any payment pursuant to Section 9.4 including any
amounts paid or property distributed to Unocal Canada Limited on the
redemption of the Preferred Shares referred to in Section 9.4(b).
"Employees" means all individuals employed by the Corporation or any of
the Subsidiaries including those employees on long term disability
leave or other absence.
"Encumbrances" means any lien, charge, Security Interest or other
encumbrance of any kind or character whatsoever.
"Environment" means the atmosphere, the surface and sub-surface of the
earth, groundwater and surface waters and plants and animals; and
"Environmental" means relating to or in respect of the Environment.
"Environmental Approvals" means all Government Authorizations issued or
required pursuant to Environmental Laws with respect to the Assets or
the operation of the Business.
"Environmental Documentation" means all environmental site assessments,
environmental audits, environmental reports and other reports relating
to the application of Environmental Laws to the Corporation, the
Subsidiaries, the Assets or the Business.
"Environmental Laws" means all Applicable Laws relating in whole or in
part to the protection of the Environment, and includes those
Applicable Laws relating to the storage, generation, use, handling,
manufacture, processing, transportation, treatment, release and
disposal of Hazardous Substances.
"Environmental Liabilities" means all past, present and future
Liabilities associated with or arising from any of the following and
all costs associated therewith:
(a) the manufacture, construction, processing, distribution, use,
holding, collection, accumulation, generation, treatment,
stabilization, storage, disposal, handling or transportation of
Hazardous Substances, Petroleum Substances, oilfield wastes or
produced water;
(b) compliance with present and future Environmental Laws and
Applicable Laws related to employee and public health and safety
matters including the protection, reclamation, remediation or
restoration of the Environment;
(c) Abandonment and Reclamation Obligations;
(d) Releases of Hazardous Substances, Petroleum Substances, oilfield
wastes, produced water or other substances; and
-6-
(e) the removal, assessment, monitoring, sampling, response,
abatement, clean-up, investigation and reporting of contamination
or pollution of or other adverse effects on the Environment,
including compensation of third parties for Losses suffered by
them in respect thereof;
that relate to the Assets or any previously owned assets or that have
arisen or hereafter arise from or in respect of any past, present or
future operations and activities related to the Assets, or any other
activities (including activities related to the previously owned assets
and any seismic programs) conducted by or on behalf of the Corporation
or any of the Subsidiaries.
"Environmental Matters" means any activity, event or circumstance in
respect of any of the Assets or the conduct of the Business pertaining
to the storage, use, holding, collection, accumulation, assessment,
generation, manufacture, processing, treatment, stabilization,
disposition, handling, transportation or release of Hazardous
Substances or Petroleum Substances on, at or into the Environment;
"Environmental Order" means any environmental protection order,
enforcement order, control order, stop order, remedial order, or other
administrative complaint, direction, order or sanction issued, filed or
imposed by a Government Authority pursuant to Environmental Laws and
having the force of law.
"Escrow Agent" means CIBC Mellon Trust Company, a corporation existing
under the federal laws of Canada.
"Escrow Agreement" means an agreement among Vendor, Purchaser and the
Escrow Agent in the form provided in Schedule 1.1(a).
"Exchange Act" means the United States Securities Exchange Act of 1934.
"Final Working Capital Statement" has the meaning given to that term
in Section 3.3(b).
"Futures Transaction" means any derivatives transaction (including an
agreement with respect thereto) which is commonly referred to as a
hedge transaction, rate swap transaction, basis swap, forward rate
transaction, commodity swap, commodity option, equity or equity index
swap, equity or equity index option, bond option, interest rate option,
foreign exchange transaction, cap transaction, floor transaction,
collar transaction, currency swap transaction, cross-currency rate swap
transaction, currency option or any other similar transactions
(including any option with respect to any of these transaction) or any
combination of these transactions.
"Xxxxxxx Xxxxx Commitment" has the meaning given to that term in
Section 5.6.
"Government Authority" means any government, regulatory or
administrative authority, government department, agency, commission,
board or tribunal or court having jurisdiction on behalf of any nation,
province or state or subdivision thereof or any municipality, district
or subdivision thereof.
"Government Authorization" means all Authorizations, including any
Environmental Approvals, issued to, or required by, the Corporation or
any of the Subsidiaries by or from, any Government Authorities.
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"Hazardous Substance" means any pollutant, contaminant, hazardous
substance, hazardous material, toxic substance, dangerous substance or
dangerous good as defined, judicially interpreted or identified in any
Environmental Law.
"Indemnification Notice" has the meaning given to that term in Section
10.2.
"Indemnified Environmental Liabilities" has the meaning given to that
term in Section 10.1(b)(i).
"Indemnified Environmental Matters" has the meaning given to that term
in Section 10.1(b)(i).
"Indemnified Party" has the meaning given to that term in Section
10.1(a).
"Indemnified Person" means a Vendor Indemnified Person or a Purchaser
Indemnified Person, as applicable.
"Indemnifying Party" has the meaning given to that term in Section
10.1(a).
"Information Memorandum" means the document entitled "Information
Memorandum" issued by CIBC World Markets Inc. and Waterous & Co. dated
June 2005, as amended and supplemented from time to time before the
date of this Agreement.
"Insurance Plans" means any and all employment benefits and plans
relating to disability or wage continuation during periods of absence
from work (including short term disability and long term disability),
hospitalization, health, medical or dental treatments or expenses, life
insurance, death or survivor's benefits and supplementary employment
insurance, in each case regardless of whether or not those benefits are
insured or self-insured.
"Intellectual Property" means all registered patents, copyrights,
trade-marks (including the Corporation Trade-marks), trade-names,
service marks, logos, commercial symbols and industrial designs,
(including applications for all of the foregoing, and renewals,
divisions, extensions and reissues, where applicable, relating thereto)
owned by or licensed to the Corporation or any of the Subsidiaries.
"Interim Period" means the period from the Working Capital Date to and
including the Closing Date.
"Investment Canada Act" means the Investment Canada Act (Canada).
"Investment Canada Approval" means the approval (or deemed approval) by
the responsible Minister designated pursuant to the Investment Canada
Act, of the completion of the Purchase under this Agreement.
"Liabilities" means any and all liabilities and obligations, whether
under common law, in equity, under Applicable Law or otherwise, whether
tortious, contractual, vicarious, statutory or otherwise, whether
absolute or contingent, and whether based on fault, strict liability or
otherwise.
"Losses" means, in respect of a Person and in relation to a matter, any
and all losses, damages, costs, expenses, charges (including all
penalties, assessments and fines) which that Person suffers, sustains,
pays or incurs in connection with that matter and includes reasonable
costs of legal counsel (on a solicitor and client basis) and other
professional advisors and consultants and reasonable costs of
investigating and defending Claims arising from the matter, regardless
of whether those Claims are sustained; and also includes Taxes on a
settlement payment or damage award in respect of that matter, but does
not include consequential or indirect losses or loss of profits.
-8-
"Marketing Agreement" means the Marketing Agreement dated effective
September 1, 2000 between the Corporation and Unocal Canada Limited.
"Material" or "Materially" means material in relation to the Assets
taken as a whole.
"Material Adverse Effect" means any adverse effect or change that
results or could reasonably be expected to result in a reduction in the
fair market value of the Purchased Shares in excess of $30,000,000,
whether that reduction arises from:
(a) a diminution in the fair market value of the Assets (including as
a result of the loss of any Assets, the impairment or loss of
interests in any Assets or the forfeiture or non-existence of any
Assets);
(b) an increase in the amount of Liabilities of the Corporation and
the Subsidiaries (on a consolidated basis);
(c) the Corporation and the Subsidiaries (on a consolidated basis)
being unable to operate the Business after the Closing Date on
substantially the same basis as the Corporation and the
Subsidiaries (on a consolidated basis) operated the Business
before the Closing Date; or
(d) (without duplication) a combination of the foregoing;
but does not include any adverse effect or change caused by general
economic conditions or fiscal or monetary policies of Government
Authorities, or resulting from any changes in the price of Petroleum
Substances or any changes in the oil and gas business generally
(including any change or effect resulting from any regulatory action or
intervention of general application, including that resulting from
changes to Applicable Law), or resulting from changes in interest
rates, currency exchange rates and stock markets generally, or
resulting from changes in Applicable Laws.
"Material Claim" has the meaning given to that term in Section 6.1(a).
"Material Contract" means any Contract of any of the following types:
(a) a Contract involving payments in excess of $5,000,000 by or to
the Corporation or any Subsidiary in any consecutive twelve month
period (excluding any payment by way of penalty or liquidated
damages), which cannot be terminated by the Corporation without
penalty on three months' notice or less;
(b) a Contract evidencing indebtedness or guarantees for borrowed
money or the deferred purchase price of property, excepting any
guarantees by the Corporation of any obligations of any of the
Subsidiaries and any guarantees by any of the Subsidiaries of any
obligations of any of the other Subsidiaries or of the
Corporation; or
(c) any of the agreements governing the Partnership Subsidiaries;
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but does not include:
(i) Title and Operating Documents;
(ii) Benefit Plans; or
(iii) Contracts exclusively between Subsidiaries or between the
Corporation and one or more Subsidiaries.
"Net Working Capital Amount" means an amount calculated as of the
Working Capital Date for the Corporation and the Subsidiaries equal to
the aggregate of all of their:
(a) cash on hand or on deposit with banks or other depositories;
(b) accounts receivable and accrued receivables less the allowance
for doubtful accounts;
(c) prepaid expenses including prepaid Taxes; and
(d) other current assets not described above;
minus:
(e) accounts payable and accrued current liabilities;
(f) Taxes payable by them relating to any period on or before the
Working Capital Date, whether or not the same have become due,
and calculated on the assumption that the Corporation and each of
the Subsidiaries had a fiscal year for purposes of the Tax Act
ending on the Working Capital Date; and
(g) other current liabilities not described above, but specifically
excluding long term asset retirement obligations (including as
part of that exclusion provisions for future lease reclamation).
Deferred income taxes shall not be treated as a current asset or a
current liability and will not affect the calculation of the Net
Working Capital Amount.
For the purposes of this definition of Net Working Capital Amount:
(i) all of those amounts included in the definition shall be
calculated on a consolidated basis for the Corporation and
the Subsidiaries in accordance with generally accepted
accounting principles; and
(ii) the note receivable owed by Unocal Canada Limited to the
Corporation that is referred to in Section 9.4(b) shall be
excluded.
"Notice" has the meaning given to that term in Section 13.3.
"Office Lease" means the Lease of Office Space dated as of November 1,
2001 between Scotia Centre Limited, as landlord, and the Corporation,
as tenant.
"Ordinary Course" means, with respect to an action or actions taken by
a Person, that such action or actions is or are consistent with prudent
industry practice and the past practices of the Person and is or are
taken in the ordinary course of normal day-to-day operations of that
Person; and when used with reference to the Corporation and the
Subsidiaries specifically includes any transfers of any of the Assets
between or among the Corporation and the Subsidiaries or any of the
Subsidiaries, and any arrangements or agreements between or among the
Corporation and the Subsidiaries or between or among any of the
Subsidiaries.
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"Outside Date" means December 31, 2005.
"Parties" means Vendor and Purchaser collectively; and "Party" means
the applicable one of them.
"Partnership Subsidiaries" means the Subsidiaries described in Part 3
of Schedule 4.4(c).
"Pension Plans" means arrangements relating to retirement savings or
pensions, including pension plans, pensions or supplemental pensions
whether registered or unregistered, funded or unfunded, "registered
retirement savings plans" (as defined in the Tax Act), "registered
pension plans" (as defined in the Tax Act) and "retirement compensation
arrangements" (as defined in the Tax Act).
"Permitted Contest" means action taken by the Corporation or any
Subsidiary in good faith by appropriate proceedings diligently pursued
to contest any Taxes, Claim or Encumbrance, provided that proceeding
with that action will not create a material risk of the forfeiture or
loss of, or interference with the use of operation of, a Material part
of the Assets.
"Permitted Encumbrance" has the meaning given to that term in Schedule
4.15(a).
"Person" means any individual, sole proprietorship, partnership,
limited partnership, corporation, limited or unlimited liability
company, unincorporated association, unincorporated syndicate,
unincorporated organization, trust, body corporate, Government
Authority, or any other entity, and a natural person in such person's
capacity as trustee, executor, administrator or other legal
representative.
"Personal Information" means information about an Employee, but does
not include an individual's name, position name or title, business
telephone number, business address, business email or business fax
number.
"Petroleum Substances" means petroleum, natural gas and all related
hydrocarbons (including liquid hydrocarbons) and all other mineral
substances, whether solid or gaseous and whether hydrocarbon or not
(including sulphur and hydrogen sulphide) produced in association with
petroleum, natural gas or related hydrocarbons.
"Pogo" means Pogo Producing Company, a corporation incorporated under
the laws of Delaware.
"Preferred Shares" means the unlimited number of Class A preferred
shares that may be issued by the Corporation.
"Preliminary Net Working Capital Amount" has the meaning given to that
term in Section 3.3(a).
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"Prime Rate" means the annual rate of interest announced from time to
time by The Bank of Nova Scotia as its reference rate then in effect
for determining interest rates it will charge on Canadian dollar
commercial loans made by it in Canada.
"Privacy Laws" means any and all Applicable Laws relating to privacy
and the collection, use and disclosure of Personal Information in all
applicable jurisdictions, including the Personal Information Protection
and Electronic Documents Act (Canada) and/or any comparable provincial
law (including the Personal Information Protection Act (Alberta)).
"Prohibited Name and Marks" has the meaning given to that term in
Section 13.14.
"Proprietary Information" means all Books And Records in respect of or
in connection with:
(a) the valuation of the Corporation, the Subsidiaries, the Assets or
the Business;
(b) any advice from Vendor's Counsel, Vendor's Investment Bankers and
any other consultant or advisor of Vendor, the Corporation or the
Subsidiaries with respect to the divestiture of the Corporation,
the Subsidiaries or their respective Assets or parts of the
Business; and
(c) the process and proceedings with respect to any such proposed
divestiture.
"Purchase" means the purchase by Purchaser of the Purchased Shares from
Vendor in accordance with the provisions of this Agreement.
"Purchase Money Obligation" means any secured debt of the Corporation
or any Subsidiary created or assumed to finance any part of the
purchase price of real or tangible personal property, including any
extensions, renewals or refunding of any of that debt.
"Purchase Price" has the meaning given to that term in Section 3.1.
"Purchased Shares" means all of the issued and outstanding shares in
the capital of the Corporation; and for certainty "Purchased Shares"
shall not include any Preferred Shares that are redeemed pursuant to
Section 9.4.
"Purchaser" means Pogo Canada, ULC, an Alberta unlimited liability
corporation.
"Purchaser Indemnified Persons" has the meaning given to that term in
Section 10.1(a)
"Purchaser's Conditions" has the meaning given to that term in Article
7.
"Purchaser's Objection" has the meaning given to that term in Section
3.3(c).
"Purchaser's Process Agent" has the meaning given to that term in
Section 9.13.
"PWC" means PricewaterhouseCoopers LLP, Chartered Accountants.
"Related Party" means, in reference to a Party:
(a) its Affiliates, successors and assigns;
(b) its directors, officers and employees;
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(c) its Affiliates' directors, officers and employees; and
(d) its Representatives.
"Releases" means any release, spill, emission, leaking, pumping,
injection, deposit, disposal, discharge, dispersal, leaching or
migration of a Hazardous Substance, oilfield wastes or produced water
into or through the Environment.
"Representatives" means, in reference to a Party, its and its
Affiliates' representatives, agents, legal counsel, consultants and
advisors; and with regard to Vendor includes Vendor's Counsel and
Vendor's Investment Bankers.
"Required Approvals" means the Competition Act Approval and the
Investment Canada Approval.
"Reserves Report (Can)" means a report (National Instrument 51-101
compliant) containing estimates of the proved reserves of Petroleum
Substances attributable to the Assets to be prepared by Xxxxx Xxxxx
using escalating and constant pricing, including a Form 51-101F2 -
Report on Reserves Data by Independent Qualified Reserves Evaluator or
Auditor and a Form 51-101F3 - Report of Management and Directors on Oil
and Gas Disclosure of the Corporation.
"Reserves Report (US)" means a report containing estimates of the
proved reserves of Petroleum Substances attributable to the Assets to
be prepared by Xxxxx Xxxxx.
"Resource Pools" means
(a) cumulative Canadian exploration expenses;
(b) cumulative Canadian development expenses;
(c) cumulative Canadian oil and gas property expenses;
(d) Undepreciated Capital Cost; and
(e) non-capital loss carry forwards;
as those terms are defined in the Tax Act.
"Xxxxx Xxxxx" means Xxxxx Xxxxx Company Petroleum Engineers.
"SEC" means the United States Securities and Exchange Commission.
"section 338 election" has the meaning given to that term in Section
11.4(a).
"Securities Act of 1933" means the United States Securities Act of
1933.
"Security Interest" has the meaning given to that term under the
Personal Property Security Act (Alberta).
"Senior Officers" means with respect to:
(a) Vendor, president and chairman and the vice-presidents;
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(b) the Corporation or any Subsidiary, the president, the senior
vice-president and chief financial officer and the vice-president
corporate development; and
(c) Purchaser, the chief executive officer, the president and the
vice-president finance.
"SMOG Run" means the Northrock Standard Measure of Oil and Gas Reserves
Year-End Data Input in respect of the Assets prepared by Unocal for its
2004 annual report year, a copy of which document is attached as
Schedule 1.1(b).
"Straddle Period" means, in the case of the Corporation or any
Corporate Subsidiary, any taxation year and, in the case of any
Partnership Subsidiary, any fiscal year, in any case beginning on or
before and ending after the Working Capital Date.
"Subsidiaries" means the entities listed in Part 1, Part 2 and Part 3
of Schedule 4.4(c).
"Syndicated Credit Agreement" means the Amended and Restated Credit and
Guarantee Agreement dated as of November 24, 2004 among Unocal Canada
Limited and the Corporation, as borrowers, Unocal, Union Oil Company of
California, Unocal Canada Limited and the Corporation, as guarantors,
the Lenders party thereto, BNP Paribas (Canada), as Administrative
Agent, and The Bank of Nova Scotia, as Syndication Agent.
"Tax Act" means the Income Tax Act (Canada).
"Tax Benefit" has the meaning given to that term in Section 10.5(b).
"Tax Claim" has the meaning given to that term in Section 11.5(a).
"Tax Rate" has the meaning given to that term in Section 10.5(b).
"Tax Returns" includes all returns, reports, declarations, elections,
notices, filings, forms, information returns and statements filed or
required to be filed in respect of Taxes.
"Taxes" means all taxes, duties, fees, premiums, assessments, imposts,
levies and other charges of any kind whatsoever imposed by any
Government Authority, together with all interest, penalties, fines,
additions to tax or other additional amounts imposed in respect
thereof, including those levied on, or measured by, or referred to as,
income, gross receipts, profits, capital, transfer, land transfer,
sales, goods and services, harmonized sales, use, value-added, excise,
stamp, withholding, business, franchising, property, employer health,
payroll, employment, health, social services, education and social
security taxes, all surtaxes, all customs duties and import and export
taxes, all license and registration fees and all employment insurance,
health insurance and Canada and other Government Authority pension plan
premiums or contributions.
"Title and Operating Documents" means documents of title including:
(a) petroleum and/or natural gas leases, permits and licenses
(whether freehold or Crown) and similar instruments; and
(b) operating procedures; unit agreements; 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 and farmout
agreements; participation and subparticipation agreements; trust
declarations and agreements; agreements providing for the
gathering, measurement, processing, compression or transportation
of Petroleum Substances; well operating contracts and surface
leases, pipeline easements, road use agreements and other
contracts granting surface interests;
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by virtue of which the Assets are held or which pertain to the
ownership, development or operation of the Assets.
"Unaudited Financial Statements" means the unaudited consolidated
financial statements of the Corporation and the Subsidiaries for the
fiscal years ended December 31, 2003 and 2004, and the unaudited
consolidated financial statements of the Corporation and the
Subsidiaries for the three month period ended March 31, 2005, in each
case consisting of a consolidated balance sheet and a consolidated
statement of earnings prepared in accordance with generally accepted
accounting principles, which financial statements are attached as
Schedule 1.1(c).
"Undepreciated Capital Cost" means "undepreciated capital cost", as
defined in and for the purposes of the Tax Act.
"Unocal" means Unocal Corporation, a corporation incorporated under the
laws of Delaware.
"Unused Tax Credits" has the meaning given to that term in Section
11.4(e).
"US$" or "US Dollars" means lawful currency of the United States.
"Vendor" means, collectively, Unocal Canada Limited, a corporation
continued under the laws of Alberta, and Unocal Canada Alberta Hub
Limited, a corporation incorporated under the laws of Alberta.
"Vendor Indemnified Persons" has the meaning given to that term in
Section 10.1(a).
"Vendor's Conditions" has the meaning given to that term in Article 8.
"Vendor's Counsel" means Stikeman Elliott LLP.
"Vendor's Insurance" has the meaning given to that term in Section
9.11(a).
"Vendor's Interest Rate" means the rate per annum for three month
Government of Canada Treasury Bills from time to time, as posted on
Bloomberg screen GGR, plus 0.025% per annum.
"Vendor's Investment Bankers" means, collectively, CIBC World Markets
Inc. and Waterous & Co.
"Vendor's Process Agent" has the meaning given to that term in Section
9.13.
"Vendor's Review Period" has the meaning given to that term in Section
3.3(d).
"Working Capital Date" means June 30, 2005.
1.2 Certain Rules of Interpretation
In this Agreement (including the Schedules):
(a) all references to a time are references to local time in Calgary,
Alberta;
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(b) except for references to money amounts in Article 3, and in
Section 6.2(c)(ii) which references shall be to US Dollars, or as
otherwise expressly specified in this Agreement, all references
to money amounts are to Canadian currency;
(c) references to Article or Section mean and refer to the specified
Article or Section of this Agreement;
(d) descriptive headings or titles of Articles and Sections have been
inserted solely for convenience of reference and are not intended
as complete or accurate descriptions of the content of those
Articles or Sections, and shall not be used in interpreting those
Articles or Sections;
(e) use of words in the singular or plural, or with a particular
gender, shall include the other and shall not limit the scope or
exclude the application of any provision of this Agreement, to
any Person or Persons or circumstances as the context otherwise
permits;
(f) whenever a provision of this Agreement requires an approval or
consent by a Party to this Agreement:
(i) unless otherwise provided herein, that approval or consent
may not be unreasonably withheld or delayed; and
(ii) if notification of that approval or consent (or the refusal
of that approval or consent) is not delivered within the
applicable time limit, then, unless otherwise expressly
specified herein, the Party whose consent or approval is
required shall be conclusively deemed not to have provided
its approval or consent;
(g) unless otherwise expressly specified herein, time periods within
or following which any payment is to be made or act is to be done
shall be calculated by excluding the day on which the period
commences and including the day on which the period ends, and by
extending the period to the next Business Day following, if the
last day of the period is not a Business Day;
(h) whenever any payment is to be made or action to be taken under
this Agreement is required to be made or taken on a day other
than a Business Day, that payment shall be made or action taken
on the next Business Day following that day;
(i) where the words "including" or "includes" appear in this
Agreement, including the Schedules, those words mean "including
(or includes) without limitation";
(j) any references herein to an agreement, instrument or writing
shall be a reference to that agreement, instrument or writing, as
amended from time to time prior to the date hereof;
(k) any reference herein to a law, statute, regulation or other
enactment shall be a reference to that law, statute, regulation
or enactment as amended, replaced or superseded from time to
time;
(l) all references in this Agreement to the words "herein", "hereby",
"hereof", "hereto", and words of similar import refer to this
Agreement as a whole and not to any particular Article, Section
or Schedule unless otherwise expressly stated; and
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(m) where any conversion of Canadian currency or US Dollars from one
to the other is required, the Parties shall use the average of
the Bank of Canada posted noon spot exchange rates on the
Business Day prior to the Business Day on which the conversion
takes place.
1.3 Knowledge
Any reference in this Agreement (including in the Schedules) to "the
knowledge" or "to the best of the knowledge" of Vendor, the Corporation or a
Subsidiary or of which Vendor, the Corporation or any Subsidiary is "aware" will
be deemed to mean a reference to the actual knowledge of the applicable
individuals set forth in Part 1 of Schedule 1.3 without any obligation on those
individuals to make investigation or inquiry.
1.4 Entire Agreement
This Agreement, including the Schedules, constitutes the entire
agreement among the Parties pertaining to the subject matter of this Agreement
and supersedes all prior agreements, understandings, negotiations and
discussions, whether oral or written, of the Parties. The Confidentiality
Agreement shall terminate on Closing.
1.5 Applicable Law
This Agreement shall be governed by and interpreted in accordance with
the laws of Alberta and the laws of Canada applicable therein, and shall be
treated in all respects as an Alberta contract.
1.6 Accounting Principles
Except as otherwise provided herein:
(a) references to generally accepted accounting principles herein
means a reference to principles recommended from time to time;
and
(b) all accounting terms not otherwise defined in this Agreement have
the meanings assigned to them;
in accordance with generally accepted accounting principles in the United
States.
1.7 Disclosure
Reference to any matter on any Schedule shall not be deemed to be an
acknowledgement by Vendor, or to otherwise imply, that the matter meets or
exceeds any applicable threshold of materiality or any other relevant threshold.
1.8 Schedules
The Schedules to this Agreement, as listed below, are attached to and
are an integral part of this Agreement:
Schedule 1.1(a) Escrow Agreement
Schedule 1.1(b) SMOG Run
Schedule 1.1(c) Unaudited Financial Statements
Schedule 1.3 Vendor Knowledge Individuals
Schedule 4.4(c) Subsidiaries
Part 1 Corporate Subsidiaries (Alberta)
Part 2 Corporate Subsidiary (Nova Scotia)
Part 3 Partnership Subsidiaries
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Schedule 4.5(c) Defaults Due to this Agreement
Schedule 4.5(e) Change of Control Provisions
Schedule 4.9 Material Government Authorizations - Vendor and Unocal
Schedule 4.10 Benefit Plans
Schedule 4.14 Environmental Matters
Schedule 4.15(a) Permitted Encumbrances
Schedule 4.15(c) Notices of Defaults
Schedule 4.15(d) Government Proceedings
Schedule 4.15(e) Authorizations for Expenditure
Schedule 4.15(g) Marketing and Transportation Agreements
Schedule 4.16 Material Contracts and Liabilities
Schedule 4.17 Open Litigation Claims
Schedule 4.18 Intellectual Property
Schedule 4.19(a) Tax Matters
Schedule 4.19(h) Tax Elections
Schedule 4.19(i) Subpart F Income
Schedule 4.19(j) United States Property
Schedule 4.22 Estimated Resource Pools
Schedule 4.23 Areas of Mutual Interest
Schedule 5.5 Material Government Authorizations - Purchaser and Pogo
Schedule 7.6(e) Vendor's Opinions
Schedule 8.6(e) Purchaser's Opinions
1.9 Joint and Several Liability
Unocal Canada Limited and Unocal Canada Alberta Hub Limited shall be
jointly and severally liable for all of their covenants, liabilities and
obligations under this Agreement.
1.10 Interpretation If Closing Does Not Occur
If Closing does not occur, each provision of this Agreement which
presumes that Purchaser has acquired the Purchased Shares shall be construed as
having been contingent on Closing having occurred.
1.11 Conflicts
Except as specifically provided herein, if there is any conflict or
inconsistency between a provision of the body of this Agreement and that of a
Schedule or a conveyance document, the provision of the body of this Agreement
shall prevail.
1.12 Guarantees
(a) Unocal hereby guarantees the performance by Unocal Canada Limited
and Unocal Canada Alberta Hub Limited of all of their covenants,
obligations and liabilities under this Agreement and covenants
with Purchaser that Unocal is and that it shall be directly
liable as principal obligor for the performance of any of those
covenants, obligations and liabilities without necessity or
requirement for Purchaser to pursue or exhaust its remedies or
recourse against Unocal Canada Limited or Unocal Canada Alberta
Hub Limited.
(b) Pogo hereby guarantees the performance by Purchaser of all of
Purchaser's covenants, obligations and liabilities under this
Agreement and covenants with Vendor that Pogo is and that it
shall be directly liable as principal obligor for the performance
of any of those covenants, obligations and liabilities without
necessity or requirement for Vendor to pursue or exhaust its
remedies or recourse against Purchaser.
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ARTICLE 2
PURCHASE AND SALE
2.1 Actions by Vendor and Purchaser Regarding Purchase
Subject to the terms and conditions of this Agreement, at the Closing
Time:
(a) Vendor shall sell, transfer and deliver to Purchaser, and
Purchaser shall purchase and receive from Vendor, the Purchased
Shares in consideration for the payment by Purchaser to Vendor of
the Purchase Price, as adjusted and payable as provided for in
this Agreement; and
(b) each Party shall deliver to the other Party all documents
required to be delivered by it at the Closing Time pursuant to
Article 7 and Article 8.
2.2 Place of Closing
The Closing shall take place at the Closing Time at the offices of
Vendor's Counsel located at Suite 4300, Bankers Hall West, 888 - 3rd Street SW,
Calgary, Alberta, or at such other place as may be agreed on in writing by
Vendor and Purchaser.
2.3 Tender
Any tender of documents or money under this Agreement may be made on
the Parties or their respective counsel and, subject to any express provisions
of this Agreement to the contrary, money shall be tendered by wire transfer of
immediately available funds in the applicable currency specified herein to the
account specified by the Party to which payment is being made.
ARTICLE 3
PURCHASE PRICE
3.1 Purchase Price
The amount payable by Purchaser to Vendor for the Purchased Shares (the
"Purchase Price") shall be an aggregate amount equal to:
(a) US$1,800,000,000 (the "Base Price");
(b) plus the Net Working Capital Amount (if positive); or minus the
Net Working Capital Amount (if negative); minus
(c) any Distributions made during the Interim Period.
The Purchase Price shall be subject to adjustment in accordance with Section
3.3.
3.2 Payment of Purchase Price
The Purchase Price shall be paid by Purchaser to Vendor as follows:
(a) on execution and delivery of this Agreement, Purchaser shall pay
to the Escrow Agent to be held by the Escrow Agent pursuant to
the Escrow Agreement an amount equal to US$180,000,000 (the
"Deposit") as a deposit against the payment of the Purchase
Price; and
(b) at the Closing Time, subject to Article 12, Purchaser shall pay
to Vendor, an aggregate amount equal to:
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(i) the sum of the Base Price and the Preliminary Net Working
Capital Amount (if positive); minus
(ii) the sum of the Deposit (including interest thereon, less
applicable withholding Taxes), the Preliminary Net Working
Capital Amount (if negative) and any Distributions made
during the Interim Period.
The Deposit shall be paid by the Escrow Agent to Vendor as part of the
Purchase Price. Subject to this Agreement and the Escrow Agreement, the Parties
shall cause the Escrow Agent to deliver the Deposit to Vendor at the Closing
Time.
3.3 Post Closing Adjustment to the Net Working Capital Amount
(a) Vendor shall, not later than three Business Days before the
Closing Date, provide to Purchaser a statement setting forth
Vendor's good faith estimate (the "Preliminary Net Working
Capital Amount") of the Net Working Capital Amount and the actual
amount of the Distributions made or to be made during the Interim
Period. The amount of those Distributions shall be converted from
Canadian currency into US Dollars as of the date of that
statement. The Preliminary Net Working Capital Amount and the
amount of the Distributions made during the Interim Period
provided in that statement shall be included in calculating the
amounts payable by Purchaser to Vendor at the Closing Time
pursuant to Section 3.2(b)(i) or Section 3.2(b)(ii), as
applicable.
(b) Vendor, with the assistance of the Corporation and the
Subsidiaries, shall prepare and deliver to Purchaser, within 30
days after the Closing Date, a statement setting forth Vendor's
determination of the Net Working Capital Amount (the "Final
Working Capital Statement") based on:
(i) the actual information available from accounting systems of
Vendor and the records of the Corporation and the
Subsidiaries; and
(ii) a conversion of the Net Working Capital Amount from Canadian
currency to US Dollars as of the effective date of the Final
Working Capital Statement.
(c) Purchaser shall, within 30 days after Vendor's delivery of the
Final Working Capital Statement, complete its review of the Final
Working Capital Statement. If Purchaser disputes Vendor's
determination of any of the Net Working Capital Amount as set
forth in the Final Working Capital Statement, Purchaser will so
notify Vendor, on or before the last Business Day of that 30 day
period, in writing (the "Purchaser's Objection"). That notice
will set forth a specific description of the basis of Purchaser's
Objection and the adjustments to the Final Working Capital
Statement that Purchaser believes should be made. If Purchaser
does not deliver a Purchaser's Objection within that period, the
Final Working Capital Statement shall be conclusive and binding
on the Parties.
(d) Vendor will have 30 days ("Vendor's Review Period") from its
receipt of Purchaser's Objection to review and respond to it, and
the Parties will thereafter attempt in good faith to reach an
agreement with respect to any matters in dispute. If Vendor and
Purchaser are unable to resolve their disagreement within 15 days
following Vendor's Review Period, they will refer that
disagreement to the Accounting Firm, who will, acting as experts
and not as arbitrators, determine, only with respect to the
remaining differences so submitted, whether and to what extent,
if any, any of the Final Working Capital Statement requires
adjustment.
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Vendor and Purchaser will direct the Accounting Firm to use its
best efforts to render its determination within 20 Business Days.
The Accounting Firm's determination will be conclusive and
binding on Vendor and Purchaser. In resolving any disputed item,
the Accounting Firm must not assign a value to that item greater
than the greatest value for that item claimed by either Vendor or
Purchaser or less than the smallest value for that item claimed
by either Vendor or Purchaser. Vendor and Purchaser will each pay
one half of the fees and disbursements incurred by the Accounting
Firm.
(e) The Net Working Capital Amount as set forth in the Final Working
Capital Statement, shall be revised to reflect any revisions
agreed to by the Parties or determined by the Accounting Firm. If
the Net Working Capital Amount (including any revisions required
to be made to the Final Working Capital Statement) is:
(i) greater than the Preliminary Net Working Capital Amount then
Purchaser shall pay Vendor an amount equal to that
difference; or
(ii) less than the Preliminary Net Working Capital Amount then
Vendor shall pay Purchaser an amount equal to that
difference.
Notwithstanding the foregoing, if there is a disagreement between
Vendor and Purchaser as to any items in the Final Working Capital
Statement which disagreement is required to be resolved by the
Accounting Firm in accordance with the procedures provided in
Section 3.3(d) then no payment pursuant to paragraph (i) or
paragraph (ii) above, as applicable, shall be required to be made
by the applicable Party unless the difference between the
Preliminary Net Working Capital Amount and the Net Working
Capital Amount incorporating the Accounting Firm's determinations
is greater than US $1,500,000.
Any payment required pursuant to this Section 3.3(e) is to be
made within five Business Days following the final determination
of the Net Working Capital Amount rendered by the Accounting Firm
or as agreed to by the Parties. Any payments required pursuant to
the foregoing shall be made together with interest thereon at a
rate per annum equal to the Prime Rate calculated for the period
from the Working Capital Date to but excluding the date of
payment. No further adjustments shall be made to the Purchase
Price with respect to the Net Working Capital Amount. Any such
payment (excluding the part thereof that is interest) shall be
treated by Vendor and Purchaser as an adjustment to the Purchase
Price.
(f) Vendor and Purchaser shall cooperate and Purchaser shall cause
the Corporation and the Subsidiaries to cooperate to facilitate
the preparation and delivery of the Final Working Capital
Statement in accordance with this Section 3.3. During the period
of time from and after the Closing Date through to the time of
delivery of the Final Working Capital Statement, and, if
applicable, the Accounting Firm's determinations, Purchaser shall
afford, and shall cause the Corporation and the Subsidiaries to
afford, to the Accounting Firm, Vendor, counsel or financial
advisors retained by Vendor in connection with any adjustment to
the Preliminary Net Working Capital Amount contemplated by this
Section 3.3, reasonable access during normal business hours to
all the properties, Contracts, personnel and Books and Records of
the Corporation and the Subsidiaries and work papers relevant to
the adjustment contemplated by this Section 3.3.
-21-
ARTICLE 4
REPRESENTATIONS AND WARRANTIES OF VENDOR
Vendor represents and warrants to Purchaser the matters set out below:
4.1 Incorporation and Registration
(a) Unocal Canada Limited is a corporation continued and existing
under the ABCA and Unocal Canada Alberta Hub Limited is a
corporation incorporated and existing under the ABCA. Each of
Unocal Canada Limited and Unocal Canada Alberta Hub Limited is
current in the filing of all necessary corporate returns under
the ABCA.
(b) The Corporation and each of the Corporate Subsidiaries set forth
in Part 1 of Schedule 4.4(c) is a corporation incorporated and
existing under the ABCA, is current in the filing of all
necessary corporate returns under the ABCA and has all necessary
corporate power and capacity to own and lease the Assets owned
and leased by it and to carry on its Business as presently
conducted.
(c) The Corporate Subsidiary set forth in Part 2 of Schedule 4.4(c)
is an unlimited liability company existing under the laws of Nova
Scotia, is current in the filing of all necessary company returns
and has all necessary corporate power and capacity to own and
lease the Assets owned and leased by it and to carry on its
Business as now conducted.
(d) Each of the Partnership Subsidiaries other than Xxxxxxx Energy
and Tethys Energy Partnership (which are formed pursuant to the
laws of Utah and Bermuda, respectively) is a general partnership
formed pursuant to the Partnership Act (Alberta), each of the
Partnership Subsidiaries is validly existing under the laws of
its jurisdiction of formation and each of the Partnership
Subsidiaries is duly organized and has all necessary partnership
power and authority to own and lease the Assets owned and leased
by it and to carry on its Business as presently conducted.
(e) Neither the nature of the Business nor the locations or character
of the Assets owned or leased by the Corporation or any of the
Subsidiaries requires the Corporation or any of the Subsidiaries
to be registered, licensed or otherwise qualified as an
extra-provincial or foreign corporation in any jurisdiction where
they are not so registered, licensed or qualified except for any
registration, licence or qualification in any jurisdiction where
the sole reason for that registration, licence or qualification
is the ownership by the Corporation or a Corporate Subsidiary of
its interest in the Partnership Subsidiary that is carrying on
business in that jurisdiction.
(f) The Corporation and each of the Subsidiaries is a "private
issuer" as defined in Multilateral Instrument 45-103 "Capital
Raising Exemptions" adopted by, among others, the Alberta
Securities Commission.
4.2 Right to Sell
(a) Vendor is the sole registered and beneficial owner of the
Purchased Shares with good legal and beneficial title thereto,
free and clear of all Encumbrances and adverse claims other than
restrictions on transfers and permitted number of beneficial
owners set out in the articles of incorporation of the
Corporation and any Encumbrances arising out of any action taken
by, or in favour of, Purchaser.
-22-
(b) Vendor has the exclusive right to sell, assign and transfer the
Purchased Shares as provided in this Agreement.
(c) At the Closing Time any restrictions on transfers of the
Purchased Shares that are set out in the articles of
incorporation of the Corporation will have been complied with so
as to permit the transfer of the Purchased Shares to Purchaser.
(d) On the completion of the Purchase, Purchaser shall acquire from
Vendor good legal and beneficial title to the Purchased Shares,
free and clear of any Encumbrances and adverse claims, except
restrictions on transfers and permitted number of beneficial
owners set out in the articles of incorporation of the
Corporation and any Encumbrances arising out of any action taken
by, or in favour of, Purchaser.
(e) There is no contract, option or other right binding on Vendor or
which may become binding on Vendor to sell, assign or transfer
the Purchased Shares or the shares, partnership units or other
equity interests of the Subsidiaries, other than pursuant to this
Agreement.
4.3 Capitalization
(a) The authorized capital of the Corporation consists of an
unlimited number of Class A Common Shares, an unlimited number of
Class B Common Shares and an unlimited number of Class A
Preferred Shares of which the following are issued and
outstanding:
Shareholder Class A Class B Class A
Common Common Preferred
------------------------- ------- ---------- ---------------
Unocal Canada Limited 731,659 62,886,476 5,000, less the
number of
Preferred
Shares to be
redeemed
pursuant to
Section 9.4(b)
on or before the
Closing Date
Unocal Canada Alberta 29,588
Hub Limited
(b) The authorized capital of Northrock Energy Ltd. consists of an
unlimited number of common shares and the authorized capital of
832507 Alberta Ltd. consists of an unlimited number of Class "A",
"B", "C", "D", "E", "F", "G", "H" and "I" shares.
4.4 Corporation and Subsidiaries
(a) The only Persons in which the Corporation holds shares, units,
partnership interests or other securities are the Subsidiaries.
(b) The Corporation is the sole registered and beneficial owner of
all of the issued and outstanding shares of the Corporate
Subsidiaries set forth in Part 1 of Schedule 4.4(c) and the
Corporation and/or one or more of the Subsidiaries are the sole
owners of the shares of each of the Corporate Subsidiaries set
forth in Part 2 of Schedule 4.4(c) and the units of or
partnership interests in each of the Partnership Subsidiaries set
forth in Part 3 of Schedule 4.4(c).
-23-
(c) The ownership of the Subsidiaries is set forth in Schedule
4.4(c).
(d) Each of the shares, units and partnership interests referred to
in Section 4.4(b) are free and clear of all Encumbrances other
than restrictions on transfers and permitted number of beneficial
owners set out in the articles of incorporation of the Corporate
Subsidiaries or in the applicable partnership agreement in
respect of a Partnership Subsidiary and any Encumbrances arising
out of any action taken by, or in favour of, Purchaser.
(e) All of the Purchased Shares and all of the issued and outstanding
shares of the Corporate Subsidiaries and the units of or the
partnership interests in the Partnership Subsidiaries, as
applicable, have been duly and validly issued and are outstanding
as fully paid and non-assessable shares, units or partnership
interests, as applicable.
(f) No options, warrants, pre-emptive rights, commitments,
subscriptions or other rights to purchase issued or unissued
shares or other securities of the Corporation or any of the
Corporate Subsidiaries or units of or partnership interests in
any of the Partnership Subsidiaries, or create any additional
class of shares, and no securities or obligations convertible
into or exchangeable for shares or other securities of or units
of or partnership interests in any of the Corporation or any of
the Subsidiaries, have been issued, granted, authorized, allotted
or agreed to be issued or are outstanding other than:
(i) in the case of the Purchased Shares, rights in favour of
Purchaser pursuant to this Agreement; and
(ii) options to purchase the Corporation's Class B Common Shares
pursuant to the Northrock Resources Ltd. Amended and
Restated June 2000 Stock Option Plan, which options will
expire and be of no further force or effect on the Closing.
4.5 Due Authorization
(a) Vendor has all necessary corporate power, authority and capacity
to enter into this Agreement and to perform its obligations under
this Agreement.
(b) The execution and delivery of this Agreement, the completion of
the Purchase and the performance of Vendor's obligations under
this Agreement have been duly authorized by all necessary
corporate action on the part of Vendor.
(c) Except as provided in Schedule 4.5(c), the execution and delivery
of this Agreement, the completion of the Purchase and the
performance of Vendor's obligations under this Agreement will not
conflict with or result in the violation or breach of, or render
Vendor in default of, or result in the termination or in a right
of termination or cancellation of, or accelerate the performance
required by or result in being declared void, voidable or without
further binding effect, any of the terms, conditions or
provisions of:
(i) any provision of Vendor's constating documents;
(ii) any Contract to which Vendor is a party or by which Vendor
is bound that is Material; or
(iii) any Applicable Laws or licences applicable to Vendor.
(d) No Encumbrances, rights of first refusal or preferential rights
to purchase will be created or triggered by, and no material
consent or approval of any third party will be required in
conjunction with the execution, delivery or performance of
obligations under this Agreement by Vendor except in favour of
Purchaser and except for the Required Approvals.
-24-
(e) Except as provided in Schedule 4.5(e), the execution and delivery
of this Agreement, the completion of the Purchase and the
performance of Vendor's obligations under this Agreement will not
result in any "change of control" or similar event or
circumstance under the terms of any Contract to which the
Corporation or any Subsidiary is a party that is Material.
4.6 Residence of Vendor
Vendor is not a non-resident of Canada for the purposes of the Tax Act.
4.7 Enforceability of Obligations
This Agreement constitutes a legal, valid and binding obligation of
Vendor, enforceable against Vendor in accordance with its terms, subject to
bankruptcy, winding-up, insolvency, moratorium, arrangement, reorganization and
other similar laws affecting creditors' rights generally, and to general
principles of equity.
4.8 No Advisors or Consultants
Neither the Corporation nor any Subsidiary has employed, or is subject
to the valid Claim of, any advisor, finder, consultant or other similar
intermediary in connection with the Purchase who will be entitled to a fee,
commission or other similar payment contingent on the completion of the
Purchase. Vendor is solely responsible for any fee, commission or other payment
that may be due to Vendor's Investment Bankers and other advisors in connection
with the Purchase.
4.9 Government Authorizations
No material Government Authorizations are required on the part of
Vendor or Unocal in connection with the Purchase or the performance of its other
obligations under this Agreement except for those set forth in Schedule 4.9.
4.10 Benefit Plans and Labour Matters
(a) Except as disclosed in Schedule 4.10, neither the Corporation nor
any of the Subsidiaries:
(i) is a party to or bound by or subject to any agreement or
arrangement with respect to Benefit Plans;
(ii) is in arrears for any payment, contribution or assessment
required to be made by it pursuant to any Benefit Plans set
out in Schedule 4.10;
(iii) is a party to or bound by or subject to any collective
bargaining agreement or arrangement with any labour union or
employee association; or
(iv) is a party to or bound by or subject to any written
employment agreement, written or oral, consulting or service
agreement with or respecting its Employees.
(b) No collective bargaining agreement is currently being negotiated
by the Corporation or any of its Subsidiaries with respect to any
Employee. There are no certification proceedings outstanding in
respect of the Employees and, to the knowledge of Vendor, there
are no attempts to organize or certify any of the Employees.
There is no current or pending labour strike, dispute, work
slowdown or work stoppage against the Corporation or any of its
Subsidiaries or, to the knowledge of Vendor, threatened against
the Corporation or any of its Subsidiaries. To the knowledge of
Vendor, no trade union or employee association has applied to
have the Corporation or any of its Subsidiaries declared a
related or successor employer pursuant to any Applicable Law.
-25-
(c) To the knowledge of Vendor, neither the Corporation nor any of
its Subsidiaries has committed any unfair labour practices. No
unfair labour practice complaint, grievance or arbitration
proceeding is pending or, to the knowledge of Vendor, threatened
against the Corporation or any of its Subsidiaries.
(d) All Benefit Plans have been administered by the Corporation or
any of its Subsidiaries in material compliance with Applicable
Laws and their respective terms. No promises have been made in
respect of changes to any of the Benefit Plans, other than those
that are set out in the current texts of the Benefit Plans. No
Pension Plan is a multi-employer pension plan as that term is
defined in pension benefits legislation. Neither the Corporation
nor any of its Subsidiaries has ever sponsored or participated in
a Pension Plan that is a registered pension plan.
4.11 Financial Statements
The Unaudited Financial Statements are, and the Audited Financial
Statements delivered pursuant to Section 9.14 will be:
(a) complete and accurate in all material respects;
(b) in accordance with the Books and Records; and
(c) prepared in accordance with generally accepted accounting
principles consistently applied during the periods involved;
and fairly present or, with respect to the Audited Financial Statements, will
fairly present in all material respects the consolidated financial position of
the Corporation and the Subsidiaries as of the dates thereof and the
consolidated results of their operations and their cash flows for the periods
then ended.
4.12 Distributions
No Distributions have been made from or after the Working Capital Date,
except for cash Distributions as may be set forth in the statement to be
provided pursuant to Section 3.3(a).
4.13 Business Carried on in the Ordinary Course
Since December 31, 2004:
(a) the Business has been carried on in the Ordinary Course except
with respect to the sale process commenced by the Corporation as
set out in the Information Memorandum; and
(b) other than as set forth in Schedule 4.17, the Business has been
conducted in material compliance with all Applicable Laws.
4.14 Environmental Matters
(a) On or before the Closing Time, Vendor shall provide or cause to
be provided or made available to Purchaser all Environmental
Documentation in the possession or control of Vendor or the
Corporation or any of the Subsidiaries in respect of the Business
or the Assets produced for or received by Vendor, the Corporation
or the Subsidiaries since June 1, 2000. To Vendor's knowledge,
except as described in Schedule 4.14, there are no Material
Environmental Liabilities that have occurred since June 1, 2000
that have not been remedied.
-26-
(b) Except as set out in Schedule 4.14, neither the Corporation
nor any Subsidiary has received:
(i) any Environmental Order which relates to Environmental
Liabilities and which requires any work, repairs,
construction or capital expenditures which is outstanding,
where that Environmental Order has not been complied with in
all material respects; or
(ii) any demand or notice issued with respect to the breach of
Environmental Laws, which demand or notice remains
outstanding.
(c) Without limitation of any other provisions of this Agreement,
except as specifically set forth in this Section 4.14, Vendor
makes no representations or warranties with respect to the extent
of any existing or future liability relating to any Environmental
Matter, Environmental Liability or the application of any
Environmental Laws, including in respect of or relating to
Hazardous Substances.
4.15 Assets
(a) Vendor does not warrant title to the Assets, but does warrant
that, to Vendor's knowledge, the interests of the Corporation and
the Subsidiaries in and to the Assets are now, and will be at
Closing Date, free and clear of all Encumbrances created by,
through or under Vendor, the Corporation or the Subsidiaries or
of which Vendor is aware other than:
(i) Permitted Encumbrances; and
(ii) other restrictions on transfers and permitted number of
beneficial owners set out in the constating documents of the
Corporation and the Subsidiaries.
(b) Neither the Corporation nor any of the Subsidiaries:
(i) is in default or will be in default on the completion of the
Purchase under any Material Contract or, to Vendor's
knowledge, any Title and Operating Document; or
(ii) has failed to comply with, perform, observe or satisfy, in
any material respect, any term, condition, obligation or
liability which has heretofore arisen under the provisions
of any Material Contract or any Title and Operating
Document;
which defaults or failures could reasonably be expected to
have a Material Adverse Effect.
(c) Except as described in Schedule 4.15(c), neither the Corporation
nor any Subsidiary has received notice of default under, and none
of them is to Vendor's knowledge in default under, any
obligation, agreement or document or under any order, writ,
injunction or decree of any Government Authority, nor is the
Corporation or any Subsidiary to Vendor's knowledge in breach of
any Applicable Laws which could reasonably be expected to have a
Material Adverse Effect.
-27-
(d) Except as described in Schedule 4.15(d) or relating to
Environmental Matters disclosed in accordance with Section 4.14
prior to the date hereof, no action before any Government
Authority has been commenced or, to Vendor's knowledge, is
threatened, against the Corporation or any Subsidiary which could
reasonably be expected to have a Material Adverse Effect.
(e) Except as set forth in Schedule 4.15(e) and except for operating
costs incurred in the Ordinary Course of the Business, there are
no outstanding authorizations for expenditure or other financial
commitments respecting the Assets which are due as at the date
hereof pursuant to which individual expenditures of greater than
$100,000 may be required by the Corporation or any Subsidiary
after the Closing Date.
(f) To Vendor's knowledge, all ad valorem, property, royalties,
production, severance and similar Taxes based on or measured by
the ownership of the Assets, the production of Petroleum
Substances from the Assets or the receipt of proceeds therefrom
have been paid and discharged.
(g) Without limiting the generality of the foregoing provisions of
this Section 4.15, except for agreements that can be terminated
without penalty on notice of 90 days or less or as set out in
Schedule 4.15(g), neither the Corporation nor any of the
Subsidiaries is a party to or bound by any Material:
(i) contracts for the sale of Petroleum Substances;
(ii) gas balancing or similar agreements pertaining to Petroleum
Substances;
(iii) agreements for the transportation, processing or disposal
of Petroleum Substances other than Title and Operating
Documents; or
(iv) take or pay arrangements;
relating to the Assets.
(h) The Corporation and the Subsidiaries are not party to any Futures
Transactions, either as principal or surety.
(i) After Closing there are no support agreements or other services,
personnel, assets or facilities that need to be provided by
Vendor or any of its Affiliates in order for the Corporation and
the Subsidiaries to be able to conduct the Business substantially
in the manner as presently conducted; and no such agreements will
exist, it being acknowledged by Purchaser that Vendor's Insurance
and the Marketing Agreement, will both terminate on Closing.
4.16 Material Obligations
(a) Neither the Corporation nor any Subsidiary is a party to or bound
by any agreement of any nature to acquire any shares or other
securities of any corporation, partnership interests in any
partnerships or any other equity interests or to merge or
consolidate with any other entity, to sell or acquire any assets
having a fair market value in excess of $10,000,000 or to
acquire, capitalize or invest in any business.
-28-
(b) Neither the Corporation nor any Subsidiary has currently
guaranteed, endorsed, assumed or indemnified, contingently or
otherwise, the obligations or indebtedness of any Person except:
(i) in the Ordinary Course of the Business;
(ii) pursuant to the Title and Operating Documents; and
(iii) pursuant to the Banking Facilities to be cancelled or from
which the Corporation and any Subsidiary will be released on
or before Closing.
(c) There exists no shareholder or other agreement which affects the
transferability of the Purchased Shares and none of the
Corporation, any Subsidiary or Vendor is a party to any voting
trust agreement, unanimous shareholder agreement, share pooling
agreement, or other Contract, commitment, plan, or understanding
restricting or otherwise relating to voting or dividend rights
with respect to the Purchased Shares.
(d) Neither the Corporation nor any of the Subsidiaries will have any
indebtedness for borrowed money at the Closing Time.
(e) Neither the Corporation nor any of the Subsidiaries will have any
Liabilities at the Closing Time that are Material, whether those
Liabilities are absolute or contingent, other than:
(i) Environmental Liabilities;
(ii) Liabilities under the Title and Operating Documents and
under the Material Contracts listed in Schedule 4.16;
(iii) Liabilities incurred or arising in the Ordinary Course of
the Business (including Liabilities arising in the Ordinary
Course of the Business for Taxes);
(iv) Liabilities described or referred to in the Unaudited
Financial Statements; and
(v) Liabilities described or referred to in Schedule 4.16 and in
the other Schedules to this Agreement including the
commitments described in Schedule 4.15(e);
and at the Closing Time no Person will hold any power of
attorney from the Corporation or a Subsidiary other than
powers of attorney granted by a Subsidiary to the Corporation
or another Subsidiary or as may have been provided under the
Title and Operating Documents in the Ordinary Course of the
Business.
4.17 Litigation
(a) Schedule 4.17 sets forth a list of open litigation Claims
(including those which are the subject of arbitration and, to
Vendor's knowledge, any threatened Claims) which, as of the date
of this Agreement, have been duly served on the Corporation or
any of the Subsidiaries where the amounts claimed exceeds or
could reasonably be expected to exceed $500,000. Vendor makes no
representations or warranties with respect to validity or effect
of any of those Claims.
-29-
(b) Except as set forth in Schedule 4.17, there are no unsatisfied
judgments against the Corporation or any Subsidiary or any
consent decrees or injunctions to which the Corporation or
Subsidiary is subject.
4.18 Intellectual Property
As of the date of this Agreement, Schedule 4.18 sets forth and
describes all material Intellectual Property used in whole or part in the
Business and specifies, for each item, whether the Intellectual Property is
owned by the Corporation or a Subsidiary, or whether the Intellectual Property
is used by the Corporation or a Subsidiary under a license agreement or other
arrangement with another Person.
4.19 Taxes
(a) Vendor has caused the Corporation and the Subsidiaries to duly
and timely:
(i) file all Tax Returns required to be filed by them prior to
the date hereof and, those Tax Returns are true, complete
and accurate in all material respects;
(ii) pay all Taxes (including instalments) due and payable by
them prior to the date hereof; and
(iii) collect or withhold and remit to the appropriate Government
Authorities all Taxes required to be collected or withheld
by them;
and except as provided in Schedule 4.19(a) there are no Claims
pending or, to Vendor's knowledge, threatened by any
Government Authority against the Corporation or any Subsidiary
in respect of Taxes.
(b) Except as provided in Schedule 4.19(a) and Schedule 4.19(h),
neither the Corporation nor any Subsidiary has entered into any
agreement, waiver or other arrangement with any Government
Authority respecting Taxes payable by them or Tax Returns
required to be filed by them.
(c) The Corporation and each of the Corporate Subsidiaries are
taxable Canadian corporations (as defined in the Tax Act); and
each of the Partnership Subsidiaries is a Canadian partnership
(as defined in the Tax Act) except for Tethys Energy Partnership
and Xxxxxxx Energy.
(d) The Corporation and each of the Subsidiaries are duly registered
under Subdivision (d) of Division V of Part IX of the Excise Tax
Act (Canada) with respect to the goods and services tax.
(e) Except as provided in Schedule 4.19(a), there are no matters
under audit or appeal with any Government Authority relating to
Taxes of the Corporation or any of the Subsidiaries.
(f) None of Section 78, 80, 80.01, 80.02, 80.03 or 80.04 of the Tax
Act or any equivalent provision of the Tax legislation of any of
the provinces or any other jurisdiction, have applied or will
apply to any of the Corporation or the Subsidiaries at any time
up to and including the Closing Date.
(g) None of the Corporations or the Subsidiaries has acquired
property from a non-arm's length Person, within the meaning of
the Tax Act, for consideration, the value of which is less than
the fair market value of the property acquired in circumstances
which would subject it to a liability under section 160 of the
Tax Act.
-30-
(h) For all transactions between any of the Corporation and the
Subsidiaries and any non-resident Person with whom any of them
was not dealing at arm's length during a taxation year ending on
or before the Closing Date, each has made or obtained records or
documents that meet the requirements of paragraphs 247(4)(a) to
(c) of the Tax Act.
(i) The taxation year end of each of the Corporation and the
Corporate Subsidiaries is as follows with respect to:
(i) the Corporation, December 31;
(ii) Northrock Energy Ltd., December 31;
(iii) 832507 Alberta Ltd., December 31; and
(iv) 3094725 Nova Scotia Company, to be selected.
The fiscal period end of each of the Partnership Subsidiaries
is as follows with respect to:
(i) Northrock Resources Partnership, January 1;
(ii) Tethys Energy Partnership, January 31;
(iii) Xxxxxxx Energy Partnership, September 14; and
(iv) each of Northrock Resources (Southern Alberta), Northrock
Resources (Northern Alberta and B.C.), Northrock Resources
(West Central Alberta), Northrock Resources (NWT), Northrock
Resources (SW Sask) and Northrock Resources (SE Sask), to be
selected.
(j) Neither the Corporation nor any of the Subsidiaries has an
obligation to file on or before the Closing Date any Tax Return
required to be made, prepared or filed under the laws of any
jurisdiction other than Canada in respect of any Taxes or will be
obligated to file any such Tax Return after the Closing Date as a
result of Assets owned or activities conducted on or before the
Closing Date.
(k) Except as provided in Schedule 4.19(h), no election pursuant to
U.S. Treasury Regulations Section 301.7701-3 has been made with
respect to the Corporation or any of the Subsidiaries.
(l) Except as provided in Schedule 4.19(i), none of the Corporation
or any of the Subsidiaries at any time during 2005 and on or
before the Closing Date had or will have subpart F income, within
the meaning of section 952 of the Code.
(m) Except as provided in Schedule 4.19(j), none of the Corporation
or any of the Subsidiaries at any time during 2005 and on or
before the Closing Date owned or will own any United States
property, within the meaning of section 956 of the Code.
(n) Neither the Corporation nor any of the Subsidiaries owns any
United States real property interest, within the meaning of
section 897(c)(1)(A) of the Code.
-31-
(o) Neither the Corporation nor any of the Subsidiaries owns any
Asset, gain on the sale of which would be effectively connected
or treated as effectively connected with the conduct of a trade
or business in the United States, within the meaning of section
882(b)(2) of the Code.
4.20 Absence of Certain Changes
Except as disclosed to Purchaser in this Agreement or the Schedules to
this Agreement, since December 31, 2004, there has not been:
(a) any change in the financial condition, Assets, Business,
operations or prospects of the Corporation and the Subsidiaries
taken as a whole that has had a Material Adverse Effect, which
change arose from developments specific to the Corporation or the
Subsidiaries not generally affecting other entities similarly
situated in the petroleum and natural gas industry in Canada;
(b) any uninsured Damage or Destruction Event to any of the Assets
that has had a Material Adverse Effect;
(c) other than as contemplated herein, a reduction in the
Corporation's or any of the Subsidiaries' stated capital, as
applicable; and
(d) any bonus or similar payment not in the Ordinary Course of
Business that has been authorized or paid to any officer or
director of the Corporation or the Subsidiaries in excess of
$100,000 per officer or director or in the aggregate for all
officers and directors, $1,000,000.
4.21 Certain Contracts, Agreements, Plans and Commitments
Other than in respect of the Title and Operating Documents and the
agreements required to be disclosed on a Schedule to this Agreement, Schedule
4.16 is a complete and correct list of all Material Contracts to which the
Corporation or any of the Subsidiaries is a party or by which it is bound, or to
which any of them adhere or in which any of them participates (complete and
correct copies of descriptions of each of which, as in effect on the date
hereof, have been made available to Purchaser), including:
(a) any written agreements that contain any Liability of the
Corporation or any Subsidiary after the Closing Date for
severance pay or any Liabilities in respect of termination or
severance of employment;
(b) any contract or agreement under which the Corporation or any
Subsidiary has outstanding indebtedness for borrowed money or the
deferred purchase price of property in an amount which is in the
aggregate in excess of $1,000,000 or has the obligation to incur
any such indebtedness;
(c) any guarantee or surety entered into by the Corporation or any
Subsidiary that continues after Closing;
(d) any confidentiality or non-competition agreement outside the
Ordinary Course of Business which materially restricts the right
of the Corporation or any Subsidiary to continue the Business as
currently conducted after Closing; and
(e) any lease or sublease entered into by the Corporation or any
Subsidiary for office space.
-32-
4.22 Resource Pools and Undepreciated Capital Cost Balances
The information concerning the estimated Resource Pools and
Undepreciated Capital Cost balances with respect to the Corporation and the
Subsidiaries, as at January 1, 2005, is set forth in Schedule 4.22. The
Corporation and the Subsidiaries will not claim or renounce amounts in respect
of the Resource Pools or Undepreciated Capital Cost balances prior to Closing
except to reduce income for tax purposes of the Corporation and the Corporate
Subsidiaries for their taxation years ending immediately before the Closing Date
or as permitted by Section 11.1(d) or Section 11.2(a).
4.23 Operation of Assets
(a) Except as provided in Schedule 4.23, to Vendor's knowledge,
neither the Corporation nor any of the Subsidiaries are party to
a Contract containing area of mutual interest or area of
exclusion provisions applicable to or binding on the Corporation
or the Subsidiaries that Materially restricts the right of the
Corporation or any Subsidiary to continue the Business as
currently conducted after Closing.
(b) No officer, director or consultant of the Corporation or any of
the Subsidiaries, any associate or Affiliate of any such person
or any party not at arm's length to the Corporation will own or
will have or be entitled to any royalty, net profits interest,
carried interest or other encumbrance of any nature whatsoever
which are based on production from the Assets or any revenue or
rights attributed thereto.
(c) To Vendor's knowledge, since June 2000, all operations in respect
of the Assets have been conducted in accordance with good
oilfield practices in Canada in effect at the time that the
operations were conducted.
(d) The Corporation and the Subsidiaries have obtained all material
permits, licenses and other authorizations which are required
under Applicable Law to own or operate the Assets.
4.24 Minute Books
The minute books of the Corporation and the Subsidiaries are complete
and correct in all material respects with respect to all significant resolutions
of the directors and shareholders.
4.25 Corporate Registers
The register of shareholders, register of partners and register of
transfers of the Corporation and the Subsidiaries contained in their respective
minute books are complete and accurate in all material respects since the later
of June 1, 2000 or the date that the applicable Subsidiary was incorporated or
formed.
4.26 Books and Records and Internal Controls
(a) As of December 31, 2004, the Corporation and the Subsidiaries
existing at that date each have in place:
(i) the "disclosure controls and procedures" (as defined in
Rules 13a-15(e) and 15d-15(e) of the Exchange Act);
(ii) a process of "internal control over financial reporting" (as
defined in Rules 13a-15(f) and 15d-15(f) of the Exchange
Act); and
(iii) a system of internal accounting controls;
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in each case as required in order for Unocal to comply with
the requirements of the Exchange Act and the United States
Xxxxxxxx-Xxxxx Act of 2002, including Section 13(b)(2)(B)
under the Exchange Act and the certification requirements of
Sections 302 and 906 of the United States Xxxxxxxx -Xxxxx Act
of 2002.
(b) The Corporation and the Subsidiaries make and keep books, records
and accounts which, in reasonable detail, accurately and fairly
reflect their transactions and dispositions.
4.27 SMOG Run
The SMOG Run complies in all material respects with the applicable
requirements of federal securities laws of the United States, including
Regulation S-X promulgated by the SEC and Industry Guide 2 under the Securities
Act of 1933.
4.28 Xxxx Xxxxx Xxxxxx Information
Neither the Corporation nor any of the Subsidiaries has assets in the
United States of a value of US $53,000,000 or greater nor have they individually
or collectively made direct sales to any Persons in the United States of a value
of US $53,000,000 or greater in the last two years.
ARTICLE 5
REPRESENTATIONS AND WARRANTIES OF PURCHASER
Purchaser represents and warrants to Vendor the matters set out below:
5.1 Incorporation
Purchaser is a duly incorporated unlimited liability corporation and
validly existing under the laws of Alberta.
5.2 Due Authorization
(a) Purchaser has all necessary corporate power, authority and
capacity to enter into this Agreement and to carry out its
obligations under this Agreement.
(b) The execution and delivery of this Agreement and the completion
of the Purchase and the performance of Purchaser's obligations
under this Agreement have been duly authorized by all necessary
corporate action on the part of Purchaser.
(c) None of the execution and delivery of this Agreement, the
completion of the Purchase and the performance of Purchaser's
obligations under this Agreement will conflict with or result in
the violation or breach of or render Purchaser in default of, or
result in the termination or in a right of termination or
cancellation of, or accelerate the performance required by or
result in being declared void, voidable or without further
binding effect, any of the terms, conditions or provisions of:
(i) any provisions of the constating documents of Purchaser;
(ii) any Contract to which Purchaser is a party or by which
Purchaser is bound that is material to the business of
Purchaser; or
(iii) any Applicable Laws or licences applicable to Purchaser.
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5.3 Enforceability of Obligations
This Agreement constitutes a legal, valid and binding obligation of
Purchaser, enforceable against Purchaser in accordance with its terms, subject
to bankruptcy, winding-up, insolvency, moratorium, arrangement, reorganization
and other similar laws affecting creditors' rights generally, and to general
principles of equity.
5.4 Investment Canada
Purchaser is a "WTO Investor" within the meaning of the Investment
Canada Act and shall comply with that act.
5.5 Authorizations
Assuming the accuracy of Section 4.28, no material Government
Authorizations are required on the part of Purchaser or Pogo in connection with
the Purchase or the performance of its other obligations under this Agreement
except for those set forth in Schedule 5.5.
5.6 Financing
Purchaser has received and delivered to Vendor a true and complete copy
of the commitment letter from Xxxxxxx Xxxxx Credit Partners L.P. to Pogo dated
July 5, 2005 that relates to the provision of all of the financing required by
Purchaser in connection with the Purchase contemplated by this Agreement, and
all agreements, arrangements or undertakings related to that commitment letter
to which Purchaser, Pogo or any of their Affiliates is a party and all
schedules, annexes, exhibits or other attachments to any thereof, other than
those documents relating solely to fee arrangements in connection with that
letter (collectively, the "Xxxxxxx Sachs Commitment"). For greater certainty,
the documents relating solely to fee arrangements do not contain any conditions
precedent relating to the provision of the financing referred to in the Xxxxxxx
Xxxxx Commitment. The Xxxxxxx Sachs Commitment is in effect and neither
Purchaser nor Pogo has agreed to any material amendment or modification thereof
that would adversely affect Purchaser's ability to obtain financing as
contemplated thereby and neither Purchaser nor Pogo is in material breach or
default thereunder. Purchaser or Pogo is in a position to satisfy all conditions
to advances under the Xxxxxxx Xxxxx Commitment to the extent such conditions are
within their control. The aggregate proceeds of the financings to which the
Xxxxxxx Sachs Commitment relates are, together with available funds of Purchaser
(details in respect of which have been delivered by Purchaser to Vendor),
sufficient to pay the Purchase Price, as it may be adjusted pursuant to this
Agreement.
5.7 Brokers
Purchaser has not incurred any liability or obligation for any
brokerage fees, commissions, finders' fees or similar compensation with respect
to this Agreement or the transactions contemplated hereby for which Vendor will
be liable.
5.8 Purchaser as Principal
Purchaser is acquiring the Purchased Shares, in its capacity as
principal, and is not purchasing those Purchased Shares for the purpose of
resale or distribution to a third party.
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ARTICLE 6
REGARDING REPRESENTATIONS, WARRANTIES
AND COVENANTS
6.1 Materiality
Purchaser may not refuse to complete the Purchase on the basis of any
representations or warranties by Vendor in this Agreement being incorrect or
inaccurate, or any covenants of Vendor being breached, unless, as a result
thereof:
(a) there occurs or could reasonably be expected to occur a reduction
in the fair market value of the Purchased Shares or the Assets in
excess of $3,000,000 in the case of any single incorrect or
inaccurate representation or warranty or breach of a covenant (a
"Material Claim") for any reason including:
(i) a diminution in the fair market value of the Assets
(including as a result of the loss of any Assets, title
defects in relation to such Assets, the impairment or loss
of interests in any Assets or the forfeiture or
non-existence of any Assets);
(ii) an increase in the amount of Liabilities of the Corporation
and the Subsidiaries (on a consolidated basis);
(iii) the Corporation and the Subsidiaries (on a consolidated
basis) being unable to operate the Business after the
Closing Date on substantially the same basis as the
Corporation and the Subsidiaries (on a consolidated basis)
operated the Business before the Closing Date; or
(iv) (without duplication) a combination of the foregoing;
and the aggregate amount of all Material Claims of Purchaser
exceeds $300,000,000 and those inaccuracies or breaches have
not been cured before the Closing Time; or
(b) Purchaser would be unable to complete the Purchase substantially
in accordance with the provisions of this Agreement.
For purposes of this Section 6.1, any applicable representation and
warranty or covenant of Vendor shall be deemed not to be qualified by any
reference in the text thereof to Material or to a Material Adverse Effect.
6.2 Nature of Survival of Vendor's Representations, Warranties, Covenants
and Indemnities and Limitations on Claims
(a) The representations and warranties of Vendor set forth in Article
4 shall survive the Closing for the benefit of Purchaser for a
period of eighteen months from the Closing, after which time
Purchaser shall not be entitled to advance, make or bring any
Claims whatsoever against Vendor with respect to those
representations and warranties, or any indemnities relating
thereto; provided that notwithstanding the foregoing:
(i) the representations and warranties in Section 4.2 and
Section 4.4 and the indemnities related thereto shall
survive for an indefinite period from the Closing; and
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(ii) the representations and warranties in Section 4.19 and the
indemnities related thereto (including the indemnities in
Article 11 shall continue in full force and effect for the
benefit of Purchaser until 120 days after the later of:
(A) the last date on which an assessment or reassessment
for Taxes under the Tax Act or under any other
Applicable Laws imposing Taxes can be made against the
Corporation or the Subsidiaries in respect of the dates
or periods covered by those representations and
warranties; and
(B) the date on which the period for an appeal from an
assessment, reassessment or other determination of
those Taxes, or decision of a court or other competent
tribunal in respect thereof may be filed has expired
and that appeal has not been filed.
(b) Purchaser shall not be entitled to make any Claim under this
Agreement unless each such Claim is in excess of $2,000,000 in
the case of any single incorrect or inaccurate representation or
warranty or breach of a covenant and the aggregate amount of all
of those Claims as a result of all incorrect or inaccurate
representations and warranties and the breaches of all covenants
of Vendor contained in this Agreement (including any Claims for
indemnity arising out of those incorrect or inaccurate
representations or warranties and those breaches of covenants) is
equal to or greater than $50,000,000, in which case Purchaser
will be entitled (subject to Section 6.2(c)) to recover all
Losses of Purchaser related to those Claims. For purposes of this
Section 6.2(b), including any applicable Claims pursuant to
Article 10, after Closing any applicable representation and
warranty or covenant of Vendor shall be deemed not to be
qualified by any reference in the text thereof to Material or to
a Material Adverse Effect and Vendor's representation and
warranty in Section 4.15(a) shall not be deemed not to be
qualified by any reference in the text thereof to "to Vendor's
knowledge" or words to that effect.
The foregoing dollar minimums in this Section 6.2(b) shall not
apply to any Claims in respect of inaccurate or incorrect
representations and warranties or breaches of covenants in
Section 4.2, Section 4.4, Section 4.12, Section 4.16(d) or
Section 4.19 nor shall they apply to amounts owing to Purchaser
or the Corporation pursuant to Section 3.3 or Section 9.11.
(c) Notwithstanding any other provisions of this Agreement, the
maximum cumulative Liability of Vendor in the aggregate in
respect of all Material Claims regarding:
(i) incorrect or inaccurate representations and warranties in
Section 4.2 or Section 4.4 (including on indemnities arising
therefrom) will be limited to an amount not greater than the
amount equal to the difference between the Purchase Price
minus the amount of all Liabilities of Vendor referred to in
Section 6.2(c)(ii); and
(ii) incorrect or inaccurate representations and warranties
(other than those contained in Section 4.2 or Section 4.4)
and breaches of covenants in this Agreement (including on
indemnities arising therefrom) will be limited to
US$450,000,000.
6.3 Nature of Survival of Purchaser's Representations, Warranties,
Covenants and Indemnities
The representations and warranties of Purchaser set forth in Article 5
shall survive the Closing for the benefit of Vendor for a period of eighteen
months from the Closing, after which time Vendor shall
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not be entitled to advance, make or bring any Claims whatsoever against
Purchaser with respect to those representations and warranties, or any
other indemnities relating thereto.
6.4 No Consequential Damages
Neither Party will, in any circumstances whatsoever, be liable under
this Agreement to the other Party for indirect, incidental, consequential,
exemplary or punitive damages, suffered, sustained, paid, incurred or claimed by
the other Party or the other Party's Related Parties; provided that the
foregoing does not restrict Purchaser after Closing from recovering damages
(other than the foregoing kinds of damages) from Vendor for Losses suffered by
the Corporation or any one or more of the Subsidiaries. However, nothing in this
Agreement shall in any way limit the right of any Indemnified Person to be
indemnified pursuant to Article 10 for any and all indirect, incidental,
consequential, exemplary or punitive damages of every nature and kind
whatsoever, including loss of profits and revenues, that are part of any Claim
by a Person other than a Party to this Agreement or a Related Party.
6.5 No Other Representations, Warranties or Covenants of Vendor
Purchaser acknowledges to, and agrees with, Vendor as follows:
(a) Vendor makes no other representations, warranties, covenants or
agreements to or with Purchaser except as expressly set forth in
this Agreement, and this Agreement contains all the
representations, warranties, covenants and agreements of Vendor
relating to the Purchase, including with respect to the
Corporation, the Subsidiaries, the Assets and the Business. No
oral statements or representations (whether express or implied)
by any Person (including any information contained in the
Information Memorandum) have induced or influenced Purchaser to
enter into this Agreement or to agree to any of its terms, or
have been relied on in any way by Purchaser as being accurate or
have been taken into account by Purchaser as being important to
Purchaser's decision to enter into this Agreement or agree to any
of its terms;
(b) except as set forth in Article 4 and Article 9 of this Agreement,
neither Vendor, the Corporation nor any Subsidiary nor anyone
acting on any of their behalves (including any of their Related
Parties) have made any representation, warranty, covenant or
agreement whatsoever, either express or implied, with respect to
the Corporation or any of the Subsidiaries, or their respective
Assets, Liabilities or Business activities. Without limiting the
foregoing provisions of this Section 6.5(b), no representation,
warranty, covenant or agreement has been made by Vendor, the
Corporation, any Subsidiary or any other such Person in relation
to:
(i) except for the representations and warranties expressly
provided in Article 4, any data or information provided or
made available to Purchaser by Vendor's Investment Bankers,
on plant or site visits, in management presentations, in
meetings with Vendor's management or employees or otherwise;
(ii) the value of the Assets or the future cash flow therefrom;
(iii) except as expressly provided in Article 4, the
Environmental condition of any Asset or any Environmental
Liability;
(iv) any engineering or geological information or interpretations
thereof or any economic evaluations;
(v) except as expressly provided in Article 4, title to the
Assets;
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(vi) except as expressly provided in Article 4, Liabilities or
Claims related to the Assets or any operations related to
the Assets;
(vii) the past, present or future exercise of any regulatory,
administrative or ministerial discretion under any
Applicable Law;
(viii) the past, present or future performance, action,
operation, ownership or profitability of the oil and gas
industry in western Canada;
(ix) the existence of any present or future business
opportunities of the Corporation or the Subsidiaries of any
type whatsoever, including in respect of the oil and gas
industry in western Canada; or
(x) the state or condition of the Assets (which are acknowledged
by Purchaser to be on an "as-is" basis), including the
physical condition of the Assets or the fitness for a
particular purpose thereof, or the merchantability,
Environmental condition, existence of latent or patent
defects, quality or other aspect or characteristic of the
Assets;
provided that nothing in this Section 6.5(b) shall be deemed
to limit the scope or effect of the express provisions of
Article 4 and Article 9;
(c) Vendor has provided Purchaser with the opportunity to conduct all
such enquiries, investigations and due diligence regarding the
Corporation, the Subsidiaries, and the respective Assets,
Liabilities and Business activities of the Corporation and the
Subsidiaries and all such other matters as Purchaser considered
necessary or desirable in connection with the completion of the
Purchase in accordance with this Agreement, and Purchaser has
entered into this Agreement as a result of its own due diligence,
investigations, enquiries, advice and knowledge, and Purchaser
assumes full business and financial risk in connection with the
Purchase including the Assets and the Business;
(d) Purchaser has knowledge and experience in the oil and gas
industry generally, and is capable of evaluating the merits
associated with entering into and performing its obligations
under this Agreement; and
(e) except for its rights under this Agreement and the Escrow
Agreement, Purchaser hereby waives all rights and remedies
(whether now existing or hereafter arising and including all
common law, tort, contractual, equitable and statutory rights and
remedies) against Vendor, the Corporation or any Subsidiary or
anyone acting on any of their behalves in respect of the
Purchased Shares, the Assets, the Business or any representations
or statements made, or information or data furnished, to
Purchaser or anyone acting on Purchaser's behalf in connection
therewith or otherwise (whether made or furnished by or on behalf
of Vendor and whether made or furnished orally or by electronic,
faxed, written or other means): provided that nothing in this
Section 6.5(e) shall be deemed to limit the scope or effect of
the express provisions of Article 4 and Article 9.
6.6 No Other Representation, Warranties or Covenants of Purchaser
Vendor acknowledges to, and agrees with, Purchaser as follows:
(a) Purchaser makes no other representations, warranties, covenants
or agreements to or with Vendor except as expressly set forth in
this Agreement, and this Agreement contains all the
representations, warranties, covenants and agreements of
Purchaser
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relating to the Purchase. No other statements or representations
(whether express or implied) by any Person have induced or
influenced Vendor to enter into this Agreement or to agree to any
of its terms, or have been relied on in any way by Vendor as
being accurate or have been taken into account by Vendor as being
important to Vendor's decision to enter into this Agreement or
agree to any of its terms; and
(b) except for its rights under this Agreement and the Escrow
Agreement, Vendor hereby waives all rights and remedies (whether
now existing or hereafter arising and including all common law,
tort, contractual, equitable and statutory rights and remedies)
against Purchaser, the Corporation or any Subsidiary or anyone
acting on any of their behalves in respect of the Purchased
Shares, the Assets, the Business or any representations or
statements made, or information or data furnished, to Vendor or
anyone acting on Vendor's behalf in connection therewith or
otherwise (whether made or furnished by or on behalf of Purchaser
and whether made or furnished orally or by electronic, faxed,
written or other means); provided that nothing in this Section
6.6(b) shall be deemed to limit the scope or effect of the
express provisions of Article 5 and Article 9.
6.7 Restrictions on Claims and Actions
Without in any way restricting the provisions of Section 6.5, Purchaser
acknowledges to and agrees with Vendor that Vendor will not be liable for, and
Purchaser will not make or advance, any Claim to the extent that:
(a) there may be any difference between the forecasts, projections or
estimates of the quantities, values and other matters regarding
the oil and gas reserves applicable to the Assets contained in
the Reserves Report (US), the Reserves Report (Can) or other
materials that may be prepared by Xxxxx Xxxxx as compared to the
estimates of those reserves contained in the SMOG Run or in
Unocal's Regulation S-X filings with the SEC;
(b) the Claim is based on any fact, matter or circumstance which,
before the date of this Agreement, had been disclosed in writing
to Purchaser or Purchaser's Representatives by Vendor, the
Corporation, any Subsidiary or any Person acting on behalf of
Vendor, the Corporation or any Subsidiary, including Vendor's
Investment Bankers, Vendor's Counsel, or any officer, employee,
agent, consultants or adviser of any of them;
(c) provision has been made in the Unaudited Financial Statements for
any fact, matter or circumstance on which the Claim is based;
(d) the Claim is based on any risk (actual or potential), fact,
matter or circumstance which was recorded on or referred to in
the Personal Property Registries of British Columbia, Alberta,
Saskatchewan and the Northwest Territories with respect to
Vendor, the Corporation and the Subsidiaries, other than
Northrock Resources (NWT) as at the date of this Agreement;
(e) except as expressly provided in Article 4, the Claim is based on
any forecasts, projections or estimates (including any contained
in the Information Memorandum) as to the future of the Business
(including any revenue or profits which may be derived from the
Business) given by Vendor, the Corporation, any Subsidiary, any
Person representing Vendor, the Corporation or any Subsidiary
(including its directors, officers, employees, consultants,
agents or advisors, including Vendor's Investment Bankers and
Vendor's Counsel) to Purchaser or Purchaser's Representatives;
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(f) the circumstances giving rise to the Claim result in a savings in
Taxes to Purchaser or any Affiliate of Purchaser (but only to the
extent that such Claim would be reduced by the net present value
of a Tax Benefit pursuant to Section 10.5(b) if Purchaser were
entitled to indemnification for that Claim); or
(g) the Claim is as a result of, in respect of or arises from any
act, omission, transaction, fact, matter or circumstance which
would not have occurred but for any Applicable Law not in force
at the date of this Agreement or any change of any law or
administrative practice of any Government Authority, including
any such Applicable Law or change which takes effect
retrospectively.
All disclosures in writing by or on behalf of Vendor on or before the
date of this Agreement, including those in this Agreement (including the
Schedules to this Agreement), are to be taken as relating to each of Vendor's
representations, warranties, covenants and agreements in this Agreement to the
extent that the relationship is reasonably apparent, and to Vendor's indemnities
provided in this Agreement.
ARTICLE 7
PURCHASER'S CONDITIONS
The obligation of Purchaser to complete the Purchase in accordance with
this Agreement shall be subject to the satisfaction of, or compliance with, at
or before the Closing Time, each of the following conditions (collectively, the
"Purchaser's Conditions") each of which is acknowledged to be inserted for the
exclusive benefit of Purchaser and may be waived by Purchaser in whole or in
part:
7.1 Correctness and Accuracy of Representations and Warranties
The representations and warranties of Vendor contained in Article 4
shall be correct and accurate in all material respects as at the Closing Time
with the same effect as if made at and as of the Closing Time (except to the
extent those representations and warranties expressly relate to an earlier date,
in which case such representations and warranties shall be correct and accurate
in all material respects on and as of such earlier date, and except to the
extent those representations and warranties are affected by actions or omissions
consented to or waived by Purchaser), and Purchaser shall have received a
certificate to that effect at or before the Closing Time from a Senior Officer
of Vendor.
7.2 Performance of Obligations
Vendor shall, at or before the Closing Time, have performed or complied
with, in all material respects, all its obligations, covenants and agreements
under this Agreement required to be performed or complied with by it prior to or
on the Closing Time, and Purchaser shall have received a certificate to that
effect at or before the Closing Time from a Senior Officer of Vendor.
7.3 Governmental Approvals, Consents, and Authorizations
(a) The Required Approvals shall have been obtained and shall be in
full force and effect.
(b) All other Authorizations of any Government Authority required in
connection with the completion of the Purchase in accordance with
this Agreement shall have been obtained and be in full force and
effect, other than any such Authorizations, the failure of which
to obtain would not enjoin, materially restrict, prohibit or make
illegal the Purchase.
(c) There shall not be in effect any Applicable Law which enjoins,
materially restricts, prohibits or makes illegal the Purchase,
provided that all Authorizations from Government Authorities have
been obtained.
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7.4 Other Consents and Approvals
All Authorizations (other than Authorizations from a Government
Authority) required in connection with the completion of the Purchase in
accordance with this Agreement shall have been obtained, other than those
consents and approvals, the failure of which to obtain, individually or in the
aggregate, would not enjoin, materially restrict, prohibit or make illegal the
completion of the Purchase in accordance with this Agreement.
7.5 No Injunctions or Restraints
No restraining order, injunction or other order or decree issued by any
Government Authority of competent jurisdiction enjoining, restraining or
otherwise preventing the completion of the Purchase in accordance with this
Agreement shall be in effect; provided, however, that each of the Parties shall
use commercially reasonable efforts to prevent the entry of any such restraining
order, injunction or other order or decree and to cause any such restraining
order, injunction or other order or decree that may be entered to be vacated or
otherwise rendered of no effect.
7.6 Vendor's Closing Deliveries
(a) At least three Business Days before the Closing Time Vendor shall
deliver to Purchaser:
(i) the statement referred to in Section 3.3(a) setting forth
Vendor's estimate of the Preliminary Net Working Capital
Amount and the amount of Distributions made during the
Interim Period; and
(ii) the list of bank accounts and safety deposit boxes referred
to in Section 9.18; and
(b) At or before the Closing Time, Vendor shall have delivered to
Purchaser the following, in form and substance satisfactory to
Purchaser, acting reasonably:
(i) share certificates representing the Purchased Shares, duly
endorsed in blank for transfer, or accompanied by
irrevocable security transfer powers of attorney duly
executed in blank, in either case by the holders of record,
together with evidence satisfactory to Purchaser (acting
reasonably) that Purchaser or its nominee(s) have been
entered on the books of the Corporation as the registered
holder of the Purchased Shares;
(ii) certified copies of:
(A) the articles of incorporation and bylaws of Vendor,
Unocal, the Corporation and each Subsidiary and the
partnership agreements and other constating documents
of the Subsidiary Partnerships and the partners
thereof;
(B) all resolutions of the boards of directors of Vendor
and Unocal and of the Corporation and a resolution of
the shareholders of the Corporation approving the
entering into and completion of the Purchase (in the
case of Vendor) and the transfer of the Purchased
Shares (in the case of the Corporation); and
(C) a list of the officers of Vendor and Unocal authorized
to sign agreements, certificates, transfers and any
other writings in respect of the Purchase, together
with their specimen signatures;
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(iii) certificates of status with respect to Vendor and Unocal,
the Corporation and each of the Corporate Subsidiaries,
issued by the appropriate Government Authority;
(iv) a certificate confirming the matters described in Section
7.1 and Section 7.2;
(v) an opinion of counsel to Vendor and counsel to Unocal as to
the matters set forth in Schedule 7.6(e) which opinion
regarding Unocal may be given by or in reliance on an
opinion from in-house counsel of Unocal and may be subject
to customary assumptions, qualifications and limitations.
With respect to any factual matters relevant to the
opinions, counsel may rely on certificates of a Senior
Officer of Vendor and Unocal, as applicable;
(vi) a duly executed resignation, effective as of the Closing
Time, of each director of the Corporation and of each of the
Subsidiaries;
(vii) a receipt for payment of the amount provided in Section
3.2(b);
(viii) original share books, share ledgers and minute books and
corporate seals and an undertaking from Vendor to deliver to
Purchaser promptly after Closing all Books and Records; and
(ix) any other documents reasonably required to be delivered by
Vendor to Purchaser at Closing Time pursuant to this
Agreement.
ARTICLE 8
VENDOR'S CONDITIONS
The obligation of Vendor to complete the Purchase in accordance with
this Agreement shall be subject to the satisfaction of, or compliance with, at
or before the Closing Time, each of the following conditions (collectively, the
"Vendor's Conditions") each of which is acknowledged to be inserted for the
exclusive benefit of Vendor and may be waived by Vendor in whole or in part:
8.1 Correctness and Accuracy of Representations and Warranties
The representations and warranties of Purchaser contained in Article 5
shall be correct and accurate in all material respects as at the Closing Time
with the same effect as if made at and as of the Closing Time (except to the
extent those representations and warranties expressly relate to an earlier date,
in which case such representations and warranties shall be correct and accurate
in all material respects on and as of such earlier date, and except to the
extent that such representations and warranties are affected by actions and
omissions consented to or waived by Vendor), and Vendor shall have received a
certificate to that effect at or before the Closing Time from a Senior Officer
of Purchaser.
8.2 Performance of Obligations
Purchaser shall, at or before the Closing Time, have performed or
complied with, in all material respects, all its obligations, covenants and
agreements under this Agreement required to be performed or complied with by it
prior to or on the Closing Time, and Vendor shall have received a certificate to
that effect at or before the Closing Time from a Senior Officer of Purchaser.
8.3 Governmental Approvals, Consents, and Authorizations
(a) The Required Approvals shall have been obtained and shall be in
full force and effect.
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(b) All other Authorizations of any Government Authority required in
connection with the completion of the Purchase in accordance with
this Agreement shall have been obtained and be in full force and
effect, other than any such Authorizations, the failure of which
to obtain would not enjoin, materially restrict, prohibit or make
illegal the Purchase.
(c) There shall not be in effect any Applicable Law which enjoins,
materially restricts, prohibits or makes illegal the Purchase,
provided that all Authorizations from Government Authorities have
been obtained.
8.4 Other Consents and Approvals
All Authorizations (other than Authorizations from a Government
Authority) required in connection with the completion of the Purchase in
accordance with this Agreement shall have been obtained, other than those
consents and approvals, the failure of which to obtain, individually or in the
aggregate, would not enjoin, materially restrict, prohibit or make illegal the
completion of the Purchase in accordance with this Agreement.
8.5 No Injunctions or Restraints
No restraining order, injunction or other order or decree issued by any
Government Authority of competent jurisdiction enjoining, restraining or
otherwise preventing the completion of the Purchase in accordance with this
Agreement shall be in effect; provided, however, that each of the Parties shall
use commercially reasonable efforts to prevent the entry of any such restraining
order, injunction or other order or decree and to cause any such restraining
order, injunction or other order or decree that may be entered to be vacated or
otherwise rendered of no effect.
8.6 Purchaser's Closing Deliveries
At or before the Closing Time, Purchaser shall have delivered to Vendor
the following, in form and substance satisfactory to Vendor, acting reasonably:
(a) amount of the Purchase Price provided in Section 3.2(b) by wire
transfer in accordance with Section 2.3;
(b) certified copies of:
(i) the constating documents of Purchaser and Pogo;
(ii) all resolutions of the board of directors of Purchaser and
Pogo approving the entering into and completion of the
Purchase contemplated by this Agreement; and
(iii) a list of the officers and directors of Purchaser and Pogo
authorized to sign agreements and any certificates,
transfers and other writings in respect of the Purchase,
together with their specimen signatures;
(c) a certificate of status with respect to Purchaser and Pogo issued
by an appropriate Government Authority;
(d) a certificate confirming the matters described in Section 8.1 and
Section 8.2;
(e) an opinion of counsel to Purchaser and counsel to Pogo as to the
matters set forth in Schedule 8.6(e) which opinion regarding Pogo
may be given by or in reliance on an opinion from in-house
counsel of Pogo or other United States counsel and may be subject
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to customary assumptions, qualifications and limitations. With
respect to any factual matters relevant to the opinions, counsel
may rely on certificates of a Senior Officer of Purchaser and
Pogo, as applicable;
(f) copies of the Required Approvals and other required
Authorizations;
(g) a notice to the Escrow Agent in the form prescribed by the Escrow
Agreement authorizing the Escrow Agent to release the Deposit
(and any interest earned thereon less any applicable withholding
Taxes) to Vendor; and
(h) any other documents reasonably required to be delivered by
Purchaser to Vendor at Closing Time pursuant to this Agreement.
8.7 Deposit
The Deposit and any interest earned on the Deposit (less any applicable
withholding Taxes) shall have been paid to Vendor by the Escrow Agent.
ARTICLE 9
OTHER COVENANTS
9.1 Conduct of Business Prior to Closing
From the date of this Agreement until the Closing Time, Vendor shall
cause the Corporation and the Subsidiaries to do the following:
(a) conduct the Business in the Ordinary Course except as otherwise
specifically contemplated or permitted by this Agreement;
(b) use commercially reasonable efforts to maintain good relations
with Persons having business relationships with the Corporation
and any of the Subsidiaries and with the Employees; and
(c) comply in all material respects with all Applicable Laws
applicable to the Corporation, any of the Subsidiaries and the
Assets;
provided that where the Corporation or any Subsidiary is not the operator of any
Asset, Vendor shall be obligated to cause to be done only that which a prudent
non-operator would be expected to do in similar circumstances in accordance with
accepted Canadian oilfield industry practices.
9.2 Negative Covenants
From the date of this Agreement until the Closing Time Vendor shall
not, without the consent of Purchaser:
(a) amend the constating documents or bylaws of the Corporation or of
any Subsidiary; or
(b) cause or permit the Corporation or any Subsidiary to:
(i) issue, sell or agree to issue or sell:
(A) any shares of its capital stock or any of its units or
partnership interests, as applicable; or
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(B) any securities convertible into, or options with
respect to, or warrants to purchase or rights to
subscribe for, any shares of its capital stock or any
of its units or partnership interests, as applicable;
(ii) merge into, amalgamate into, or with or consolidate with any
other Person or acquire all or substantially all of the
business or assets of any other Person;
(iii) declare, set aside, make or pay any Distributions or
redemptions, except in cash;
(iv) sell, transfer or otherwise dispose of any of its oil and
gas properties having a fair market value for any such
property of greater than $1,000,000 or if the aggregate fair
market values of any such properties that are sold,
transferred or otherwise disposed of by the Corporation and
the Subsidiaries during this period would exceed $5,000,000;
(v) sell, lease, transfer or otherwise dispose of any Assets
other than the oil and gas properties that are referred to
in Section 9.2(b)(iv), having an individual or aggregate
fair market value in excess of $10,000,000 except:
(A) the sale of Petroleum Substances and any Assets, other
than the oil and gas properties that are referred to in
Section 9.2(b)(iv), in the Ordinary Course of the
Business;
(B) to the Corporation or any Subsidiary; or
(C) pursuant to Permitted Encumbrances;
(vi) create any new Encumbrances on the Assets other than
Permitted Encumbrances except in the Ordinary Course of the
Business and pursuant to the Title and Operating Documents;
(vii) except to the extent required by the terms of written
employment or consulting agreements as in effect on the date
of this Agreement, or as otherwise expressly contemplated by
the terms of this Agreement:
(A) increase the benefits pursuant to Benefit Plans except
in the Ordinary Course of the Business;
(B) enter into any contracts of employment involving annual
base compensation in excess of $200,000 (other than the
contracts terminable by Purchaser without liability
immediately following the Closing); or
(C) increase, except consistent with previous practice of
the Corporation, any salary, wages or other
compensation payable to Employees by more than $50,000
per Employee or $1,000,000 in the aggregate for all
Employees;
(viii) make any single capital expenditure in excess of
$5,000,000 or make any capital expenditures in the aggregate
(including the value of new equipment subject to lease as
specified in Section 9.2(b)(xi)) in excess of $25,000,000,
except in case of:
(A) an emergency; or
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(B) amounts which the Corporation or any Subsidiary may be
committed to expend and has been specifically disclosed
to Purchaser including as provided in Schedule 4.15(e);
(ix) except as provided in Section 9.2(b)(xi), incur any
indebtedness for borrowed money, other than indebtedness for
borrowed money incurred in the Ordinary Course of the
Business that is paid in full before the Closing;
(x) enter into, amend in any material respect or terminate
before the end of the term thereof any Material Contract or
any Title and Operating Document, except in the Ordinary
Course of the Business (including processing of assignments
by third parties in the Ordinary Course of the Business);
(xi) enter into any leases for new equipment if the equipment
which is the subject matter of any such lease has a value in
excess of $5,000,000;
(xii) except in the Ordinary Course of the Business, enter into
any joint venture, partnership or other similar arrangement
or form any other new material arrangement for the conduct
of the Business or acquire, purchase or lease any interest
in petroleum and natural gas, real property or real property
interests;
(xiii) purchase any securities of any Person, excepting any
shares of the Corporation or shares, units or partnership
interests in any of the Subsidiaries; or
(xiv) enter into any commitments to take any of the actions
prohibited by any of the foregoing.
9.3 Dealings or Operations Regarding Assets
Except in an emergency in order to prevent loss of life, injury to
persons or damage to or loss of property and subject to Section 9.2, from the
date of this Agreement until the Closing Time Vendor shall not permit the
Corporation or any Subsidiary, without the prior written consent of Purchaser,
to:
(a) voluntarily assume any obligation or commitment with respect to
the Assets, where the Corporation's or the applicable
Subsidiary's share of the expenditure associated with that
obligation or commitment is estimated by Vendor or the
Corporation, acting reasonably, to exceed $5,000,000;
(b) surrender, abandon or allow to expire any of the Assets except:
(i) Assets which have become worn out or obsolete;
(ii) where the rights of the Corporation or the Subsidiaries to
those Assets have expired or terminated; or
(iii) otherwise in the Ordinary Course of the Business;
(c) propose or initiate the exercise of any right (including bidding
rights at Crown sales, rights under areas of mutual interest
provisions and rights of first refusal) or option relative to, or
arising as a result of the ownership of, any of the Assets, or
propose or initiate any operations on the Assets which have not
commenced or have not been committed to by the Corporation or any
Subsidiary as of the date hereof in excess of
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$5,000,000 or that would have a Material Adverse Effect on the
value of any of the Assets; or
(d) resign, or take any action which would result in its resignation
or replacement, as operator of any of the Assets.
If Vendor, the Corporation or any Subsidiary makes expenditures or
takes actions necessary to prevent loss of life or injury to individuals, damage
to or loss of property, Vendor shall, or shall cause the Corporation or the
applicable Subsidiary to, give notice to Purchaser of those expenditures or
actions and Vendor's, the Corporation's or the applicable Subsidiary's estimate
of the amounts expended or to be expended in connection therewith as soon as
reasonably possible in the circumstances.
9.4 Intercorporate Obligations
On or before the Closing Date and notwithstanding anything to the
contrary provided herein:
(a) Vendor shall cause any indebtedness of the Corporation and the
Subsidiaries to Unocal Canada Limited or Vendor's Affiliates to
be paid or otherwise satisfied, including by set-off;
(b) Vendor shall, and shall cause its Affiliates to, pay or otherwise
satisfy any amounts owed by them to the Corporation and the
Subsidiaries and to facilitate that payment shall cause an amount
in value of the Preferred Shares held by Unocal Canada Limited
equal to the amount of the note receivable outstanding on the
date hereof and owed by Unocal Canada Limited to the Corporation
to be redeemed by the Corporation in exchange for the
distribution to Unocal Canada Limited of cash of that amount;
(c) Vendor shall use reasonable commercial efforts to cause any
guarantees, credit support or other financial assurances provided
by Vendor or its Affiliates to counterparties who have Contracts
with the Corporation or any Subsidiary to be released in a manner
that does not have a Material Adverse Effect subject to Purchaser
complying with its obligations in this Section 9.4; and
(d) Vendor shall cause the Syndicated Credit Agreement to be amended
to remove the Corporation as a borrower thereunder and the Demand
Credit Agreement to be cancelled.
Purchaser will at Vendor's request at any time as part of the Closing
furnish any guarantees, credit support or other financial assurances as may be
required by the counterparties referred to in Section 9.4(c) so that Vendor and
its Affiliates can be released from their obligations in that regard.
9.5 Access to Books and Records and Other Assets
(a) Vendor shall permit Purchaser and its Representatives, between
the date of this Agreement and the Closing Time, on reasonable
notice to the Senior Officers of Vendor, the Corporation and any
Subsidiary, to have access during normal business hours to:
(i) all locations of the Corporation or any Subsidiary where
Books and Records or other material relevant to the Business
is stored;
(ii) all the Books and Records; and
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(iii) the Assets of the Corporation and the Subsidiaries and
other material relevant to the Business and in the
possession or control of the Corporation or any Subsidiary;
provided that such access does not unreasonably interfere with
the operation of the Business in the Ordinary Course.
(b) Vendor shall permit Purchaser and its Representatives, between
the date of this Agreement and the Closing Time, on reasonable
notice to the Senior Officers of Vendor, the Corporation and any
Subsidiary, to have reasonable access to the Employees, auditors
and inside counsel of the Corporation and any Subsidiary during
normal business hours; provided that such access does not
unreasonably interfere with such Employees', auditors' and
counsels' responsibilities or the operation of the Business in
the Ordinary Course.
(c) Notwithstanding Section 9.5(a), Vendor shall not be required to
disclose any information, records, files or other data to
Purchaser:
(i) where Vendor, the Corporation or any Subsidiary is
prohibited by any Applicable Law (including the Competition
Act); or
(ii) where to do so would cause Vendor, the Corporation or any
Subsidiary to be in violation of a confidentiality
obligation to another Person, except if the information
subject to that confidentiality obligation is Material,
Purchaser agrees to keep that Material information
confidential and to indemnify Vendor and Vendor's Related
Parties and hold Vendor and Vendor's Related Parties
harmless from and against any Losses, Liabilities or Claims
that Vendor and Vendor's Related Parties may suffer as a
result of any disclosure.
If any consent of any Person is required to permit the release of
any information to Purchaser, Vendor shall, on the request of
Purchaser, make all commercially reasonable efforts to obtain
that consent. Vendor shall provide Purchaser with notice as to
any disclosure that is not provided for the reasons in this
Section 9.5(c).
9.6 Confidentiality
Prior to the Closing, Purchaser shall keep, and shall cause its Related
Parties to keep, confidential all information disclosed to it by Vendor or
Vendor's Representatives relating to Vendor and Vendor's Related Parties in
accordance with the provisions of the Confidentiality Agreement.
9.7 Actions to Satisfy Closing Conditions
Without derogating from any Party's rights or obligations under this
Agreement, it is agreed that Vendor shall act in good faith and use commercially
reasonable efforts to satisfy, or cause to be satisfied, all of the Conditions
set forth in Article 7, and Purchaser shall act in good faith and use
commercially reasonable efforts to satisfy, or cause to be satisfied, the
Conditions set out in Article 8. Each Party shall cooperate with the other Party
and provide the other Party or its Representatives with information in its
possession, and not otherwise available to the other Party, necessary to seek
the approvals or waivers referred to in Article 7 and Article 8. Each of
Purchaser and Vendor shall act in good faith in determining whether or not a
Condition in its favour has been satisfied.
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9.8 Preservation of Records
Purchaser shall take all reasonable steps to preserve and keep the
Books and Records for a period of ten years from the Closing Date, or for any
longer period as may be required by any Applicable Law or Government Authority
or by Section 11.2(d), and shall make those Books and Records available to
Vendor as may be reasonably required by Vendor in connection with a Claim by
Purchaser or any other Person against Vendor under or relating to this
Agreement. Vendor acknowledges that Purchaser shall not be liable to Vendor in
the event of any accidental destruction of those Books and Records, caused
otherwise than by the negligence or wilful misconduct of Purchaser.
9.9 Competition Act Filing and Investment Canada Act Filing
Without limiting the provisions of Section 9.7:
(a) Purchaser and Vendor shall, and shall use all commercially
reasonable efforts to cause their respective officers, employees,
representatives, advisors and agents to:
(i) within fourteen days after the date of this Agreement, make
the filings required of Purchaser, Vendor, the Corporation
or any of their Affiliates to obtain the Competition Act
Approval and the Investment Canada Approval;
(ii) comply at the earliest practicable date with any request for
additional information or documentary material received by
Purchaser, Vendor, the Corporation or any of their
Affiliates from the Canadian Competition Bureau pursuant to
the Competition Act, the Investment Review Division of
Industry Canada pursuant to the Investment Canada Act or any
other Government Authority, as the case may be; and
(iii) consult and cooperate in connection with any investigation,
review or other inquiry in each case concerning the Purchase
commenced by any Government Authority;
(b) each Party shall:
(i) promptly inform the other Party of any material, applicable,
communication received by that Party from the Canadian
Competition Bureau, the Investment Review Division of
Industry Canada or any other Government Authority regarding
the Purchase;
(ii) not agree to participate in any substantive meeting or
discussion with the Canadian Competition Bureau or any
representative thereof or the Investment Review Division of
Industry Canada in respect of any filings, investigation or
inquiry concerning the Purchase contemplated by this
Agreement, whether oral or in person, unless it consults
with the other Party in advance and, to the extent permitted
by the Canadian Competition Bureau or any representative
thereof or the Investment Review Division of Industry Canada
or any representative thereof, gives the other Party the
opportunity to attend and participate thereat; and if that
participation is either declined or not permitted, to
furnish promptly thereafter a memorandum setting forth the
material terms of that meeting or those discussions; and
(iii) furnish the other Party in advance with copies of all
correspondence, filings and communications between them and
their Affiliates and their respective
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Representatives, on the one hand, and the Canadian
Competition Bureau or any representative thereof or the
Investment Review Division of Industry Canada or members of
its staff, on the other hand, with respect to this
Agreement and the Purchase and provide the other Party a
reasonable opportunity to comment thereon and agrees to
consider those comments in good faith;
(c) Purchaser shall advise Vendor promptly in advance of any
understandings, undertakings or agreements which Purchaser and
the Corporation propose to make or enter into with the Canadian
Competition Bureau or the Investment Review Division of Industry
Canada in connection with the Purchase; and
(d) without limiting the foregoing provisions of this Section 9.9,
Purchaser agrees to use commercially reasonable efforts to obtain
any Authorization of any Government Authority (including the
Investment Canada Approval) necessary to enable the Parties to
consummate the Purchase as soon as practicable, but in any event
no later than the Outside Date, including committing to
undertakings under the Investment Canada Act and/or registration
of a consent agreement under the Competition Act, on terms and
conditions (including such undertakings and consent agreement, if
any) which will not cause a Material Adverse Effect.
9.10 Assignment of Confidentiality Agreements
Vendor shall assign to Purchaser and, to the extent necessary shall
cause the Corporation to assign to Purchaser, at or prior to, and with effect
from and after, the Closing Time, all of its respective rights under any
confidentiality agreements relating to the Corporation with third parties, but
only to the extent that those agreements permit those assignments without
consent. To the extent those agreements do not permit assignments without
consent, at Purchaser's request and at Purchaser's expense, provided that Vendor
receives an indemnity from Purchaser in form and substance satisfactory to
Vendor in its sole discretion, Vendor shall, to the extent permitted by
Applicable Law and the terms of such confidentiality agreements, appoint
Purchaser as Vendor's representative and agent in respect of the confidential
information relating to the Business, the Assets, and the Corporation or the
Subsidiaries under those confidentiality agreements, and any amounts recovered
or expenses incurred by Purchaser or Vendor in connection therewith shall be for
the account of Purchaser.
9.11 Insurance
(a) Insurance coverage required by the Corporation and the
Subsidiaries is maintained and provided by Vendor or Vendor's
Affiliates ("Vendor's Insurance"). Purchaser acknowledges that,
from and after the Closing, the Corporation and the Subsidiaries
will no longer have the benefit of the Vendor's Insurance. Vendor
will refund to the Corporation an amount equal to the portion of
the insurance premiums paid by the Corporation to Vendor for the
Vendor's Insurance for the period from the Closing Time to the
expiry date of the coverage paid for under each applicable policy
providing Vendor's Insurance, to the extent that those amounts
are recoverable from the applicable insurer providing the
Vendor's Insurance.
(b) Vendor shall cause Vendor's Insurance to be maintained until
Closing.
9.12 Employee Related Matters
(a) From and after the Closing, Purchaser will ensure that the
Corporation and the Subsidiaries will:
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(i) honour their obligations to present and former Employees
relating to their employment with the Corporation or any
Subsidiary, including all obligations and Liabilities
relating to the Benefit Plans, regardless of whether those
obligations arose or relate to any period before, on or
after Closing; and
(ii) recognize each Employee's original hire date with the
Corporation or any Subsidiary, and credit the Employee with
all service so recognized by the Corporation or any
Subsidiary in their Benefit Plans, including all periods of
employment leave, for all purposes including defined
contribution participation service credit (as recognized in
Benefit Plans), eligibility for, vesting of and locking in
of benefits, as applicable, under each of the Benefit Plans,
and in the event of future termination of employment,
entitlement to severance payments.
(b) Vendor acknowledges that certain of the Employees participate in
stock based and other compensation plans sponsored by Unocal or
its Affiliates (other than the Benefit Plans). From and after the
date of execution of this Agreement, Vendor shall permit access
by Purchaser to the Employees for the purpose of communicating
Purchaser's plans for compensation and benefit programs and
practices and Purchaser may enter into agreements with one or
more of those Employees relating to employment, compensation
and/or benefits from and after the Closing Date. Purchaser shall
provide to Vendor a copy of any written (including electronic)
communications that Purchaser proposes be provided to Employees
or any of them before that communication is provided and
Purchaser will not unreasonably refuse to incorporate Vendor's
requested changes in any of those communications.
9.13 Consent to Jurisdiction
Each of the Parties and Unocal and Pogo:
(a) irrevocably attorns and submits to the non-exclusive jurisdiction
of each court of competent jurisdiction sitting in Calgary,
Alberta in any Claim arising out of or related to this Agreement
and irrevocably agrees that all Claims may be heard and
determined in that Alberta court;
(b) irrevocably waives, to the fullest extent it may effectively do
so, the defense of an inconvenient forum to the maintenance of
any such Claim;
(c) agrees that a final judgment in any such Claim shall be
conclusive and may be enforced in other jurisdictions by suit on
the judgment or in any other manner provided by Applicable Law;
and
(d) waives trial by jury to any Claim arising out of or relating to
this Agreement and waives any claim to punitive damages with
respect to any Claim.
Each of Purchaser and Pogo irrevocably appoints Fraser Xxxxxx Casgrain
LLP (the " Purchaser's Process Agent"), with an office on the date
hereof at Calgary, Alberta, for the attention of Xxxx Xxxxxxx, as its
agent to receive on its behalf service of copies of a statement of
claim and any other process which may be served in any such Claim. That
service may be made by delivering a copy of that statement of claim or
other process to Purchaser in care of Purchaser's Process Agent at
Purchaser's Process Agent's address above.
Each of Vendor and Unocal irrevocably appoint Vendor's Counsel (the
"Vendor's Process Agent"), with an office on the date hereof at
Calgary, Alberta, for the attention of Xxxxx
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Cameron, as its agent to receive on its behalf service of copies of a
statement of claim and any other process which may be served in any
such Claim. That service may be made by delivering a copy of that
statement of claim or other process to Vendor or Unocal, as the case
may be, in care of Vendor's Process Agent at Vendor's Process Agent's
address above.
9.14 US Financial Statements
(a) Vendor will request that PWC provide to Purchaser, with copies to
Vendor, as soon as reasonably possible:
(i) the Audited Financial Statements, along with any consents,
opinions and reports of PWC, that:
(A) would be required to be filed by Purchaser with the SEC
to issue and sell securities in one or more offerings
registered under the Securities Act of 1933; and
(B) are otherwise required for Purchaser to comply timely
with applicable federal securities laws of the United
States, including Rule 3-05 of Regulation S-X and Item
9.01 of Form 8-K promulgated by the SEC; and
(ii) unaudited financial statements of the Corporation and the
Subsidiaries (or their predecessors) for:
(A) the six month periods ended June 30, 2005 and 2004; and
(B) unless the Closing has occurred, the nine month periods
ended September 30, 2005 and 2004 by November 10, 2005.
(b) All of the unaudited financial statements referred to in Section
9.14(a)(ii) shall be prepared in accordance with generally
accepted accounting principles, and shall otherwise be in such
form as is required for Purchaser to comply in a timely manner
with the applicable federal securities laws of the United States,
including those applicable to the issuance and sale of securities
in offerings registered under the Securities Act of 1933.
(c) Vendor further agrees to use commercially reasonable efforts to
assist Purchaser in the preparation of:
(i) the pro forma financial information with respect to the
Purchase required by Article 11 of Regulation S-X to be
included by Purchaser in filings with the SEC; and
(ii) information regarding the business and operations of the
Corporation and the Subsidiaries necessary or appropriate,
in the judgment of Purchaser, acting reasonably, to be
included in offering documents, loan syndication materials
or other materials referred to in Section 13.2(d) that may
be used by Purchaser in obtaining financing for the
Purchase.
9.15 Reserves Report (US)
Vendor will request that Xxxxx Xxxxx prepare and provide to Purchaser,
with copy to Vendor, as soon as reasonably possible, the Reserves Report (US).
Vendor will request that in preparing the Reserves Report (US) Ryder Xxxxx'x
estimates of reserves and present values of reserves reflected in the
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Reserves Report (US) comply in all material respects with the applicable
requirements of the federal securities laws of the United States, including,
without limitation, Regulation S-X promulgated by the SEC and Industry Guide 2
under the Securities Act of 1933.
9.16 Purchase Not Conditional on Financing
Nothing in Section 5.6, Section 9.14, Section 9.15, Section 13.2 or any
other provision of this Agreement shall make Purchaser's obligation to complete
the Purchase, including Purchaser's obligation to make the payments referred to
in Section 3.2 on a timely basis, conditional on Purchaser being able to obtain
or complete any financing for the Purchase pursuant to the Xxxxxxx Sachs
Commitment or otherwise.
The breach or failure of Vendor, PWC, Xxxxx Xxxxx or any other relevant
Person to comply with any of the covenants and obligations contained in the
Sections referred to above in this Section 9.16 or in providing the financial
statements or Reserves Reports (US) referred to therein shall not be a default
by Vendor under this Agreement including for purposes of Section 12.1(d) or any
basis for Purchaser to refuse to complete the Purchase or to make any Claim
against Vendor and Vendor shall have no liability to Purchaser, Pogo, any of
their Related Parties or any other Persons for or in respect thereof.
9.17 Compliance with Privacy Laws
(a) Vendor acknowledges and confirms that the Corporation and the
Subsidiaries have complied in all material respects at all times
with Privacy Laws which govern the collection, use and disclosure
of Personal Information disclosed to Purchaser pursuant to or in
connection with this Agreement (the "Disclosed Personal
Information"). Vendor hereby covenants and agrees to advise
Purchaser of all purposes for which Disclosed Personal
Information was initially collected from or in respect of the
Employee to which that Disclosed Personal Information relates and
all additional purposes where Vendor has notified the Employee of
that additional purpose, and disclosure of Personal Information,
if any, unless that use or disclosure is permitted or authorized
by law, without notice to, or consent from, that Employee;
provided, however, that in such case Vendor shall have advised
Purchaser of the legislative provisions on which Vendor is
relying.
(b) Before Closing, none of the Parties shall use the Disclosed
Personal Information for any purposes other than those related to
the performance of this Agreement and the completion of the
Purchase.
(c) Each of the Parties acknowledges and confirms that the disclosure
of Personal Information is necessary for the purposes of
determining if the Parties shall proceed with the Purchase, and
that the disclosure of Personal Information relates solely to the
carrying on of the Business, or the completion of the Purchase.
(d) Purchaser shall at all times keep strictly confidential all
Disclosed Personal Information provided to it, and shall instruct
those employees responsible for processing such Disclosed
Personal Information to protect the confidentiality of that
information in a manner consistent with Purchaser's obligations
hereunder. Purchaser shall ensure that access to the Disclosed
Personal Information shall be restricted to those employees or
service providers of Purchaser who have a bona fide need to
access to that information in order to fulfil their obligations
in the course of their employment or in providing services to
Purchaser.
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(e) The Parties shall fully co-operate with one another, with the
Employees to whom the Personal Information relates, and any
Government Authority charged with enforcement of Privacy Laws, in
responding to inquiries, complaints, requests for access, and
Claims in respect of Disclosed Personal Information.
(f) Purchaser undertakes, after Closing, to utilize the Disclosed
Personal Information only for those purposes for which the
Disclosed Personal Information was initially collected from or in
respect of the applicable Employees.
(g) If Closing does not occur, on the request of Vendor, Purchaser
shall forthwith cease all use of the Disclosed Personal
Information acquired by Purchaser in connection with this
Agreement and will return to Vendor or, at Vendor's request,
destroy in a secure manner, the Disclosed Personal Information
(and any copies thereof) and provide Vendor with a certificate of
a Senior Officer of Purchaser confirming such destruction.
9.18 Bank Accounts
Vendor will provide Purchaser at least five Business Days before the
Closing Date a complete and correct list of all bank accounts and safety deposit
boxes maintained by the Corporation and the Subsidiaries.
ARTICLE 10
INDEMNIFICATION
10.1 Mutual Indemnifications for Breaches of Covenants and Warranties
(a) From and after the Closing, Vendor covenants and agrees with
Purchaser, and Purchaser covenants and agrees with Vendor (the
Party covenanting and agreeing to indemnify the other Party being
called in this Agreement the "Indemnifying Party" and the Party
being indemnified being called in this Agreement the "Indemnified
Party") to indemnify and hold harmless, the Indemnified Party,
its Affiliates and its and their respective successors and
permitted assigns and the directors, officers, employees,
shareholders, agents, members and partners of any of them
(collectively, the "Vendor Indemnified Persons" or the "Purchaser
Indemnified Persons", as applicable) from and against all Claims
and Losses which may be made or brought against any of the
Indemnified Persons, or which they may suffer or incur, directly
or indirectly, as a result of, arising out of, or in connection
with any breach of any covenant on the part of the Indemnifying
Party under this Agreement or any inaccuracy or incorrectness of
any representation or warranty of the Indemnifying Party
contained in this Agreement, or other document or certificate
furnished by the Indemnifying Party pursuant to this Agreement
including with respect to any Tax matters.
(b) In addition to and without limiting its obligations to indemnify
Vendor and the other Vendor Indemnified Persons from and after
the Closing, Purchaser covenants and agrees with Vendor to
indemnify, defend, save and hold harmless Vendor Indemnified
Persons from and against any and all Losses of any kind which may
be brought against or suffered by them or any one or more of them
or which any one or more of them may sustain, pay or incur, in
each case which are caused by, arise from, are incurred in
connection with or relate in any way directly or indirectly to:
(i) any past, present or future Environmental Matters or past,
present or future Environmental Liabilities, including all
Disclosed Environmental Liabilities, but excluding any
Environmental Matters or Environmental Liabilities or Losses
or
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Claims which may be made or brought against any of Vendor
Indemnified Persons, or which they may suffer or incur,
directly or indirectly, as a result of, arising out of or in
connection with any breach of any covenant hereunder on the
part of Vendor Indemnified Persons relating to Environmental
Matters or Environmental Liabilities or any inaccuracy or
incorrectness of any representation or warranty of Vendor
relating to Environmental Matters contained in this
Agreement, or other document or certificate furnished by
Vendor pursuant to this Agreement or the existence of which
Environmental Matters or Environmental Liabilities reflects
an inaccuracy or misrepresentation in any of Vendor's
representations or warranties in Section 4.14 (Environmental
Matters and Environmental Liabilities in respect of which
Vendor and the other Vendor Indemnified Persons are
indemnified pursuant to this Section 10.1(b) are referred to
as the "Indemnified Environmental Matters" and the
"Indemnified Environmental Liabilities", respectively) and
Purchaser hereby assumes all Losses, covenants and
Liabilities in respect of any such Indemnified Environmental
Matters and Indemnified Environmental Liabilities,
regardless of whether such Indemnified Environmental Matters
or Indemnified Environmental Liabilities are attributable
to, occurred, arose or accrued on, before or subsequent to
the Closing Date.
Purchaser shall have no rights to recovery, indemnification
or contribution against Vendor Indemnified Persons for
Indemnified Environmental Liabilities or Indemnified
Environmental Matters under this Agreement, under Applicable
Laws, in equity or otherwise, and all rights and remedies
which Purchaser may have at or under Applicable Law
(including any past, present or future Environmental Law) or
in equity, including any right of contribution or
reimbursement, against Vendor Indemnified Persons with
respect to any such Indemnified Environmental Liabilities or
Indemnified Environmental Matters are expressly waived.
Purchaser does hereby release, acquit and forever discharge
Vendor Indemnified Persons from any and all Losses,
including all claims for contribution and indemnity under
Applicable Laws or in equity, which may be asserted now or
in the future (or both) and that in any way relate to or
arise out of Indemnified Environmental Liabilities or
Indemnified Environmental Matters, regardless of whether
those Indemnified Environmental Matters or Indemnified
Environmental Liabilities are attributable to, occurred,
arose or accrued on, before or subsequent to the Closing
Date; and Purchaser covenants not to make any Claim or other
demand, or institute any action or other proceeding against
Vendor Indemnified Persons for indemnity and contribution
for any of those Indemnified Environmental Liabilities or
Indemnified Environmental Matters or against a Person other
than a Vendor Indemnified Person where a Claim for
contribution or indemnity may be brought against a Vendor
Indemnified Person;
(ii) all Claims by a Person who is not Vendor or a Vendor Related
Party to the extent that those Claims directly or indirectly
relate to the Purchased Shares, the Corporation, any
Subsidiary, the Assets or the Business, except for any
Claims which are the subject of indemnification provided by
Vendor as expressly set forth in this Agreement; and
(iii) any financing referred to in Section 13.2(d) except to the
extent that the Loss, Liability or Claim suffered by a
Vendor Indemnified Person results or arises from
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any misstatement or omission in information furnished by
any Vendor Indemnified Person to Purchaser or Pogo.
(c) Any obligation of indemnification pursuant to this Article 10 or
pursuant to Article 11 shall be subject to:
(i) the limitations set forth in Article 6 respecting the
survival of the representations, warranties and covenants of
the Parties and other matters including the limitations in
Section 6.2(b) and Section 6.2(c), all of which limitations
shall, to the extent applicable, apply to any Claims under
this indemnity;
(ii) the restrictions in Section 6.5 or Section 6.7;
(iii) the requirement that the Indemnifying Party shall, in
respect of any Claim made by any third Person, to the extent
reasonably possible, be afforded an opportunity at its sole
expense to resist, defend and compromise that Claim;
(iv) the limitation that, for Claims made in connection with any
inaccuracy or incorrectness of any representation or
warranty contained herein or breach of any covenant
contained herein, the Indemnifying Party shall not be
required to pay any such amount until the aggregate amount
is finally adjudicated or agreed as being payable by that
Indemnified Party and, if applicable, that final amount
exceeds the thresholds set out in Article 6, and then
subject to the limits set forth in Article 6; and
(v) the limitation that, for any Claim in respect of which
Purchaser is the Indemnified Party, if specific provision or
reserve was made for that Claim in the Final Working Capital
Statement and by virtue thereof the amount of that provision
or reserve was deducted in determining the Purchase Price,
then the amount of that provision or reserve shall also be
deducted from that Claim before determining the amount of
that Claim which may be subject to indemnification under
this Agreement.
10.2 Procedures Relating to Indemnification Between Vendor and Purchaser
Following the discovery of any facts or conditions which could
reasonably be expected to give rise to a Claim for which indemnification is
provided under this Agreement, the Indemnified Party shall, as promptly as
reasonably possible thereafter, provide written notice to the Indemnifying
Party, setting forth the specific facts and circumstances, in reasonable detail,
relating to that Claim and the amount of that Claim (or a reasonable, good-faith
estimate thereof if the actual amount is not known or not capable of reasonable
calculation) ("Indemnification Notice"); provided, however, that failure to give
that Indemnification Notice on a timely basis shall not affect the
indemnification provided hereunder except to the extent the Indemnifying Party
shall have been actually and materially prejudiced as a result of that failure.
Notwithstanding the foregoing:
(a) a Purchaser Indemnified Person shall not be entitled to make a
Claim against Vendor under Section 10.1 unless and until:
(i) Purchaser shall have provided Vendor written notice of
default; and
(ii) Vendor shall have failed to cure that default within 60 days
after Vendor's receipt of Purchaser's notice; and
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(b) a Vendor Indemnified Person shall not be entitled to make a Claim
against Purchaser under Section 10.1 unless and until:
(i) Vendor shall have provided Purchaser written notice of
default; and
(ii) Purchaser shall have failed to cure that default within 60
days after Purchaser's receipt of Vendor's notice.
10.3 Indemnification Procedures for Third Party Claims
(a) In the case of Claims made by a third party with respect to which
indemnification is sought hereunder, the Indemnified Party shall
give prompt written notice, and in any event within 20 days after
it receives notice of that Claim, to the Indemnifying Party of
any such Claim made on it stating the nature and basis for that
Claim. A failure to give that notice within that period shall not
preclude the Indemnified Party from obtaining that
indemnification but its right to indemnification shall be reduced
to the extent that any such delay materially prejudiced the
defense of the Claim or materially increased the amount of
liability or cost of defense.
(b) The Indemnifying Party shall have the right, by notice to the
Indemnified Party given not later than 30 days after its receipt
of the notice described in Section 10.3(a), to assume the control
of the defence, compromise or settlement of that Claim, provided
that such assumption shall, by its terms, be without cost to the
Indemnified Party. If the Indemnifying Party assumes the control
of the defence, compromise or settlement of such Claim, as
against the Indemnified Party, it will be conclusively
established for the purposes of this Agreement that those Claims
are within the scope of the indemnification set out in Article 10
and the Indemnifying Party shall be responsible for reimbursing
the Indemnified Party for all prior reasonable legal fees and
expenses on a solicitor and client basis in connection therewith.
The Indemnifying Party shall thereafter keep each Indemnified
Party reasonably informed with respect to the status of that
Claim.
(c) On the assumption of control of any Claim by the Indemnifying
Party pursuant to Section 10.3(b), the Indemnifying Party shall
diligently proceed with the defence, compromise or settlement of
that Claim at its sole expense, including, if necessary,
employment of counsel satisfactory to the Indemnified Party
(acting reasonably) and, in connection therewith, the Indemnified
Party shall cooperate fully, but at the expense of the
Indemnifying Party with respect to any out-of-pocket expenses
incurred, to make available to the Indemnifying Party all
pertinent information and witnesses under the Indemnified Party's
control and take such other steps as in the opinion of counsel
for the Indemnifying Party are reasonably necessary to enable the
Indemnifying Party to conduct that defence. The Indemnifying
Party shall not settle that Claim unless that settlement
includes, as an unconditional term thereof, the giving by the
claimant or the plaintiff of a full and complete release of the
Indemnified Party from any and all liability with respect to that
Claim. As long as the Indemnifying Party is contesting any such
Claim in good faith and on a timely basis, the Indemnified Party
shall not pay or settle any such Claim without the consent of the
Indemnifying Party, acting reasonably. Notwithstanding the
assumption by the Indemnifying Party of the defence of that Claim
as provided in Section 10.3(b), the Indemnified Party shall also
have the right to participate in the negotiation, settlement or
defence of any Claim at its own expense; provided, however, that
if the defendants in any such Claim shall include both an
Indemnified Party and the Indemnifying Party and such Indemnified
Party shall have reasonably concluded that counsel selected by
the Indemnifying Party has a conflict of interest because of the
availability of different or additional defences to that
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Indemnified Party, that Indemnified Party shall have the right to
select separate counsel to participate in the defence of that
Claim on its behalf, at the expense of the Indemnifying Party;
and provided further that the Indemnifying Party shall not be
obligated to pay the expenses of more than one separate counsel
for all Indemnified Parties.
(d) If the Indemnifying Party shall fail to notify the Indemnified
Party of its desire to assume the defence of any Claim within the
period of time prescribed in Section 10.3(b), or shall notify the
Indemnified Party that it will not assume the defense of any such
Claim, then the Indemnified Party may assume the defense of any
such Claim, in which event it may do so in such manner as it may
deem appropriate, and the Indemnifying Party shall be bound by
any determination made in that Claim or any settlement thereof
effected by the Indemnified Party; provided that any such
determination or settlement shall not affect the right of the
Indemnifying Party to dispute the Indemnified Party's claim for
indemnification. The Indemnifying Party shall be permitted to
join in the defense of that Claim and to employ counsel at its
own expense.
(e) The final determination of any Claim pursuant to this Section
10.3, including all related costs and expenses, will be binding
and conclusive on the Parties as to the validity or invalidity,
as the case may be, of that Claim against the Indemnifying Party.
(f) Amounts payable by the Indemnifying Party to the Indemnified
Party in respect of any Claims for which the Indemnified Party is
entitled to indemnification hereunder shall be payable by the
Indemnifying Party as incurred by the Indemnified Party.
10.4 Holding of Indemnities
Vendor and Purchaser shall hold the indemnities contained in Section
10.1 in trust on behalf of Vendor Indemnified Persons or Purchaser Indemnified
Persons, as applicable, and may enforce those indemnities on its and their
respective behalf. In furtherance of the foregoing the term "Indemnified Party"
as used herein shall mean or include, as applicable, any Vendor Indemnified
Person or Purchaser Indemnified Person that the Indemnified Party may represent
in the circumstances.
10.5 Claims Net of Insurance and Taxes
(a) The amount of any and all Claims under this Article 10 and
elsewhere under this Agreement shall be determined net of any
amounts recovered by the Indemnified Party under insurance
policies, indemnities or other reimbursement arrangements with
respect to those Claims. Each Party hereby waives, or will
procure the waiver of, any subrogation rights that its insurer
may have with respect to any indemnifiable Claims.
(b) In determining the amount of any Claim for which either Party is
entitled to indemnification under this Article 10, the gross
amount thereof shall be reduced by any net present value of the
Tax Benefit realized by that Party in connection with that Claim
to the extent that Tax Benefit results directly from the
incurrence of that Claim. If an indemnification payment hereunder
results in incremental Tax being payable by the Indemnified
Party, the amount of the applicable Claim shall be equal to:
(i) the gross amount of that Claim minus the net present value
of the Tax Benefit realized by that Indemnified Party as
determined above;
divided by:
(ii) one minus the Tax Rate;
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provided, however, that no additional indemnification payment for
any applicable incremental Tax shall be payable until final
settlement of that Tax liability with the relevant Tax authority,
and only on receipt by the Indemnifying Party of a copy of an
official communication issued by the relevant Tax authority which
evidences that final settlement of the Tax liability and, in
those circumstances, the Indemnifying Party will also pay to the
Indemnified Party interest, at Vendor's Interest Rate, on the
indemnification amount payable from the date the obligation to
make that indemnification payment arose until the date on which
that indemnification payment is made. For purposes of this
Section 10.5:
"Tax Benefit" means, as to a Party, the Tax Rate multiplied by
the amount of any income tax deduction or allowance in any year
arising from any Claim that entitles the Indemnified Party to
indemnity under this Agreement. If a change in Applicable Law
replaces or otherwise supplements the federal or provincial
income tax on corporations with another method of taxation, the
Parties agree to negotiate in good faith a new definition of Tax
Benefit; and
"Tax Rate" means the rate of Tax exigible under the Applicable
Laws to a relevant Person for any relevant period of time.
10.6 Mitigation
Each Party shall take all reasonable steps and use all commercially
reasonable efforts to mitigate any and all Claims.
10.7 Adjustment to Purchase Price
Any indemnity payment under this Agreement shall be treated as an
adjustment to the Purchase Price.
10.8 Subrogation
Each Party shall assign to the other Party and subrogate the other
Party to all its rights and remedies against any Person (other than, with
respect to rights and remedies of Vendor and Purchaser, those against its
Related Parties) in respect of any payment made by the other Party in respect of
any indemnification or liability assumed by the other Party pursuant to this
Agreement or as a result of this Agreement (including legal fees and other costs
of litigation). Each Party shall provide all reasonable cooperation of
assistance required by the other Party in making and prosecuting any Claim for
recovery against that Person to the extent that payment is made by the other
Party. Neither Party shall knowingly take any action to impair any such right or
remedy of the other Party to recover any such payment.
ARTICLE 11
TAX MATTERS
11.1 Liabilities for Taxes
(a) After Closing and subject to the terms of this Article 11, Vendor
shall be liable for and shall pay and shall indemnify, defend and
save and hold harmless Purchaser, the Corporation and the
Subsidiaries from and against:
(i) all income Taxes of the Corporation and each Corporate
Subsidiary:
(A) for taxation years of the Corporation and each
Corporate Subsidiary ending on or before the Working
Capital Date; or
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(B) attributable to income earned or realized by the
Partnership Subsidiaries for fiscal years of the
Partnership Subsidiaries ending on or before the
Working Capital Date;
(ii) all putative income Taxes of the Corporation and each
Corporate Subsidiary for taxation years of the Corporation
or Corporate Subsidiary, as the case may be, ending after
the Working Capital Date, to the extent such income Taxes
are attributable (x) to income earned or realized by any
Partnership Subsidiary during the period in a Straddle
Period of the Partnership that notionally ended on or before
the Working Capital Date, or (y) to income earned or
realized by the Corporation or Corporate Subsidiary, as the
case may be, otherwise than as a member of any Partnership
Subsidiary, during the period in a Straddle Period of the
Corporation or Corporate Subsidiary, as the case may be,
that notionally ended on or before the Working Capital Date,
all as calculated on the basis and using the assumptions set
forth in Section 11.1(c); and
(iii) all other Taxes attributable to periods ending (or portions
thereof notionally ending) on or before the Working Capital
Date;
in all such cases to the extent that such Taxes are not reflected
in Net Working Capital Amount. After Closing and subject to the
terms of this Article 11, Vendor shall be liable for and shall
pay and shall indemnify and save and hold harmless Purchaser, the
Corporation and the Subsidiaries from and against all Taxes of
the Corporation and each Subsidiary attributable to or which
arise as a result of any Distributions made during the Interim
Period. Vendor shall be entitled to any refund of (or credit for)
Taxes allocable to any period with respect to which Vendor is
liable for Taxes in accordance with the foregoing and, to the
extent applicable, shall also be entitled to any amount not
reflected in the Net Working Capital Amount by which any pre-paid
or estimated Tax payments remitted before the Closing Date with
respect to any such taxation year or any such part of any
Straddle Period exceeds the Tax due and payable therefor.
(b) After Closing and subject to the terms of this Article 11,
Purchaser shall be liable for and shall pay or shall cause the
Corporation and the Subsidiaries to pay and shall indemnify,
defend and save and hold harmless Vendor from and against
(i) all income Taxes of the Corporation and each Corporate
Subsidiary for taxation years ending after the Working
Capital Date to the extent such income Taxes are not income
Taxes for which Vendor is liable under Section 11.1(a);
(ii) all other Taxes attributable to periods beginning (or
portions thereof notionally beginning) after the Working
Capital Date; and
(iii) any Taxes that are reflected in the Net Working Capital
Amount.
(c) For purposes of Section 11.1(a) and Section 11.1(b), whenever it
is necessary to determine the liability for Taxes of the
Corporation or any Subsidiary for a part of any Straddle Period,
the Taxes for the part of the Straddle Period ending on or
before, and the part of the Straddle Period beginning after the
Working Capital Date shall be determined by assuming that:
(i) the Straddle Period consists of two taxation years (or in
the case of the Partnership Subsidiaries, two fiscal years),
one which ended at the close of the
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Working Capital Date and the other of which began at the
beginning of the day immediately after the Working Capital
Date;
(ii) items of income, gain, deduction, loss or credit of the
Corporation or any Subsidiary for the Straddle Period shall
be allocated between those two assumed taxation years based
on a closing of the books; and
(iii) Taxes other than income Taxes will be allocated to each of
the taxation years in proportion to the number days in each
such taxation year relative to the number of days in the
entire Straddle Period.
(d) For purposes of Section 11.1(a), Section 11.1(b) and Section
11.1(c), Vendor shall cause to be prepared notional Tax Returns
for the Corporation and each Subsidiary for, in the case of each
Partnership Subsidiary, the fiscal period of the Partnership
Subsidiary that is deemed under Section 11.1(c) to have ended at
the close of the Working Capital Date and, for the Corporation
and each Corporate Subsidiary, the taxation year of the
Corporation or Corporate Subsidiary, as the case may be, that is
deemed under Section 11.1(c) to have ended at the close of the
Working Capital Date, for the purpose of determining the putative
income Taxes for which Vendor is liable under Section 11.1(a).
Vendor shall be entitled, in preparing such notional Tax Returns,
to claim the maximum allowable amounts (taking into account any
limitations applicable to short periods) in respect of
discretionary deductions, including without limitation Resource
Pools as set out in Schedule 4.22. Purchaser shall have an
opportunity to review and comment on those Tax Returns, acting
reasonably, and Vendor shall reasonably consider and address any
comments of Purchaser in that regard. The Taxes reported on the
notional Tax Returns shall then be included in the Final Working
Capital Statement; provided, however, that any failure of the
Parties to agree on the amount of Taxes that should be reflected
on any notional Tax Return shall be resolved pursuant to Section
3.3(d). If a determination by any Government Authority with
respect to the actual Tax Return to which such notional Tax
Return relates is inconsistent with such notional Tax Return, the
Taxes reported on the notional Tax Return shall be recomputed
consistent with such determination, and the Parties shall
reimburse each other, as appropriate, within 30 days after such
redetermination.
(e) The indemnities provided in this Section 11.1 are in addition to
but subject to the applicable provisions of Article 6 (other than
Section 6.1, Section 6.2(b) and Section 6.2(c)).
11.2 Tax Returns
(a) Vendor shall cause to be prepared and filed on a timely basis all
Tax Returns (if any) for the Corporation and the Subsidiaries for
any taxation year which ends on or before the Closing Date and
for which Tax Returns have not been filed as of that date.
Purchaser shall have an opportunity to review and comment on
those Tax Returns, acting reasonably, before the filing of those
Tax Returns and Vendor shall reasonably consider and address any
comments of Purchaser in that regard. Vendor shall be entitled,
in preparing such Tax Returns, to claim the maximum allowable
amounts in respect of discretionary deductions, including without
limitation Resource Pools.
(b) Purchaser shall cause to be prepared and filed on a timely basis
all Tax Returns for the Corporation and the Subsidiaries for any
taxation year which ends after the Closing Date and for which Tax
Returns have not been filed as of that date. Vendor shall have an
opportunity to review and comment on any of those Tax Returns to
the extent they relate
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to any period before the Closing Date, and to approve them,
acting reasonably, before the filing of those Tax Returns.
(c) Vendor shall pay and remit any Taxes due in respect of Tax
Returns referred to in Section 11.2(a). Purchaser shall or shall
cause the Corporation or any of the Subsidiaries to pay and remit
any Taxes due in respect of the Tax Returns referred to in
Section 11.2(b). Vendor or Purchaser shall reimburse the other
Party for any Taxes for which Vendor or Purchaser is liable
pursuant to Section or Section 11.1(b), as applicable, but which
are payable with Tax Returns to be filed by the other Party
pursuant to Section 11.2(a) and Section 11.2(b), as applicable,
on the written request of the Party entitled to reimbursement,
setting forth in detail the computation of the amount owed by
Vendor or Purchaser, as applicable, but in no event earlier than
ten days before the due date for the filing of any applicable Tax
Returns, except to the extent such amounts have already been paid
as adjustments to the Purchase Price. For greater certainty,
Section 10.7 shall apply to any payment made by one Party to the
other pursuant to this Section 11.2(c).
(d) Before Closing Vendor shall, and after Closing Purchaser shall,
cause the Corporation and the Subsidiaries to cooperate fully
with each other and make available to each other in a timely
fashion such data and other information as may reasonably be
required for the preparation of any of those Tax Returns referred
to in this Section 11.2 and shall preserve that data and other
information until the expiration of any applicable limitation
period under any Applicable Laws with respect to Taxes.
(e) Any Tax Return to be prepared pursuant to the provisions of this
Section 11.2 shall be prepared in a manner consistent with
practices followed in prior years with respect to similar Tax
Returns of the Corporation and the Subsidiaries provided such
historical practices are proper.
(f) Purchaser shall not and shall not allow the Corporation or any
Subsidiary to amend, refile or otherwise modify or grant an
extension of any statute of limitations with respect to any Tax
Return for the Corporation or the Subsidiaries for any taxation
year ending on or before the Working Capital Date or that
includes any Straddle Period and shall not request an audit or
assessment of any such Tax Return, in each case without prior
written consent of Vendor. Vendor shall not file an amended Tax
Return for the Corporation or the Subsidiaries for any taxable
period ending on or before the Closing Date and shall not request
an audit or assessment of any such Tax Return, in each case
without written consent of Purchaser.
11.3 Confidentiality of Tax Information
Unless otherwise required by Applicable Laws, securities regulatory
authority or stock exchange regulations or legal proceedings, each Party shall,
and shall cause its Representatives to, keep confidential and non-public Tax
information, records, and documents disclosed by the other Party, or to which
that Party has received or been granted access, pursuant to this Article 11 and
will not use that Tax information for any purpose other than making the
determinations and taking such other actions contemplated by this Article 11.
11.4 Section 338 Election
(a) Purchaser has the right to make an election under section 338(g)
of the Code ("section 338 election") with respect to the Purchase
and the deemed purchase of the shares of any eligible Subsidiary.
Should Purchaser make a section 338 election,
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Purchaser and Vendor shall cooperate fully with each other in the
making of that election.
(b) Provided that Purchaser makes a section 388 election, the
Purchase Price shall be allocated among the Assets in a manner
required by Section 338 of the Code. Within 60 days after the
Closing Date, Purchaser will provide to Vendor copies of IRS Form
8883 and any required exhibits thereto (the "Asset Acquisition
Statement") with Purchaser's proposed allocation of the Purchase
Price (together with any assumable Liabilities). Within 15 days
after the receipt of that Asset Acquisition Statement, Vendor
will propose to Purchaser any changes in that Asset Acquisition
Statement. If no such changes are proposed in writing to
Purchaser, Vendor shall be deemed to have agreed to, and accepted
the Asset Acquisition Statement). Purchaser and Vendor will
endeavour in good faith to resolve any differences with respect
to the Asset Acquisition Statement within 15 days after
Purchaser's receipt of written notice of objection from Vendor.
Should the Parties fail to reach an agreement as required under
this Section 11.4(b) the Parties further agree to engage, as a
shared expense, the Accounting Firm to resolve the issue.
(c) Provided that Purchaser makes a section 338 election, Vendor
will, at the request of Purchaser, cooperate with Purchaser to
cause elections under section 754 of the Code to be in effect on
the Closing Date with respect to any entity:
(i) in which the Corporation or its Subsidiaries holds an
interest; and
(ii) that is treated as a partnership for United States federal
income tax purposes.
Any increase or decrease in the adjusted basis of the property of
any such partnership resulting from the section 338 election
shall be allocated among the assets of the partnership in a
manner required by section 755 of the Code and agreed on by the
Parties under procedures consistent with those described in
Section 11.4(b).
(d) If Purchaser does not make a section 338 election, Purchaser
shall cause the Corporation not to make any distributions that
would reduce the amount Vendor must include in income as a
dividend under Section 964(e) of the Code with respect to the
Purchase.
(e) Provided that Purchaser makes a section 338 election and, except
as provided below, Purchaser shall pay to Vendor the excess, if
any (the total excess being the "Unused Tax Credits"), of:
(i) the deemed paid credit that would have been allowed by
section 960 of the Code to Vendor's United States
shareholders (as defined in section 951(b) of the Code) as a
result of Vendor's sale of the Purchased Shares to
Purchaser, if the limitations of sections 904 and 907 of the
Code were applied without regard to the section 338
election; less
(ii) the deemed paid credit actually allowed by section 960 of
the Code (subject to the limitations of sections 904 and 907
of the Code) to Vendor's United States shareholders as a
result of Vendor's sale of the Purchased Shares to Seller,
after a final determination by the appropriate Governmental
Authority.
The payment for the Unused Tax Credits shall be made within 30
days after the final determination by the appropriate
Governmental Authority and shall include any
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penalties and interest assessed in that final determination as a
result of a disallowance of the Unused Tax Credits.
Notwithstanding the foregoing provisions of Section 11.4(e),
Purchaser shall have no obligation to make any payment for the
Unused Tax Credits, penalties or interest unless:
(A) Vendor's United States shareholders claim on their
original Tax Returns the deemed paid credits described
in Section 11.4(e)(i);
(B) Vendor's United States shareholders defend the position
taken on their original Tax Returns for the deemed paid
credits described in Section 11.4(e)(i) to the point of
a final determination by an appropriate Governmental
Authority;
(C) Purchaser is entitled to review and comment on Vendor's
United States shareholders' defense; and
(D) Vendor's United States shareholders do not accept a
determination from an appropriate Government Authority
that increases Unused Tax Credits without the written
consent of Purchaser.
11.5 Tax Claims
(a) Each Party shall promptly notify the other Party in writing on
receipt by that Party or any of their respective Affiliates
(including for Purchaser the Corporation and the Subsidiaries) or
Representatives of notice of any pending or threatened federal,
provincial, state, local or foreign Tax audits, examinations,
claims or assessments (a "Tax Claim") for which that Party is
entitled to seek, or is seeking or intends to seek,
indemnification pursuant to the applicable part of Section 11.1.
(b) Purchaser shall represent the interests of the Corporation and
the Subsidiaries in and with respect to any Tax Claim relating to
taxation years ending on or before the Working Capital Date and
employ counsel of its own choice for that purpose. Vendor shall
be entitled to participate in or with respect to that Tax Claim
relating (in whole or in part) to Taxes attributable to taxation
years ending on or before the Working Capital Date and, with the
written consent of Purchaser, and at Vendor's sole expense, may
assume the entire control of that Tax Claim. Purchaser, with the
written consent of Vendor, shall have the right to settle, either
administratively or after the commencement of litigation, any
proceeding relating to Taxes of the Corporation and any of the
Subsidiaries for any taxation year ending on or before the
Working Capital Date. In the case of any Straddle Period, Vendor
shall be entitled to participate at its expense in or with
respect to any Tax Claim relating (in whole or in part) to Taxes
attributable to the part of that Straddle Period ending on or
before the Working Capital Date, and with the written consent of
Purchaser, and at Vendor's sole expense, may assume the entire
control of that Tax Claim. From and after the Closing, neither
Purchaser, the Corporation, any Subsidiary nor any of their
respective Affiliates or Representatives shall settle or
compromise, or agree to settle or compromise, any Tax Claim which
may be the subject of indemnification by Vendor under Section
11.1 without the prior written consent of Vendor.
(c) If the results of any Tax Claim involve an issue that:
(i) recurs in any taxation year (or part thereof) of the
Corporation or any Subsidiary ending on or after the Closing
Date; or
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(ii) otherwise may reasonably be expected to materially and
adversely affect Purchaser, the Corporation or any
Subsidiary for any taxation year (or part thereof) ending on
or after the Closing Date, then there shall be no
settlement, closing or other agreement with respect to that
issue without the consent of such affected Party, which
consent shall not be unreasonably withheld or delayed.
Purchaser shall have the right to control the conduct of any
Tax Claim relating to the Corporation or any Subsidiary with
respect to any Tax matter arising in a period (or part
thereof) ending after the Closing Date.
11.6 Assistance and Cooperation
After the Closing, Vendor and Purchaser shall (and shall cause their
respective Affiliates to):
(a) cooperate in a timely manner in preparing for any audits of, or
disputes with taxing authorities regarding, any Tax Returns of
the Corporation and the Subsidiaries;
(b) make available to the other Party and to any taxing authority in
a timely manner as reasonably requested all information, records,
and documents relating to Taxes and Tax Planning of the
Corporation and the Subsidiaries or their Assets or the Business;
(c) provide timely notice to the other in writing of any pending or
threatened Tax audits or assessment of the Corporation or the
Subsidiaries for taxation year or other periods for which the
other may have a liability under this Article 11;
(d) within 30 days of the receipt of a written request therefor,
furnish the other with copies of all correspondence received from
any taxing authority in connection with any Tax audit or
information request with respect to any such taxation year or
other periods of the Corporation or any of the Subsidiaries;
(e) timely provide to the other Party powers of attorney or similar
authorizations necessary to carry out the purposes of this
Article 11; and
(f) use reasonable efforts to properly retain and maintain accounting
and Tax records and information, in a timely manner consistent
with taxing authority guidelines, to the extent those records and
information relate to the Corporation and the Subsidiaries or any
of the Assets and the Business until 120 days following the
expiration of the applicable statute of limitations period, and
promptly notify the other Party prior to destruction of any of
those Tax records or that information and provide the other Party
a reasonable opportunity to make and retain copies of any of
those Tax records or that information.
ARTICLE 12
TERMINATION AND CLOSING
12.1 Termination
This Agreement may be terminated at any time before Closing:
(a) by mutual written consent of Vendor and Purchaser;
(b) by Purchaser, subject to Section 6.1, if any of Purchaser's
Conditions shall have not been fulfilled by the time required or
shall have become incapable of fulfillment other than as a result
of Purchaser's breach of this Agreement, and shall not have been
waived by Purchaser;
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(c) by Vendor, if any of Vendor's Conditions shall have not been
fulfilled other than as a result of Vendor's breach of this
Agreement by the time required or shall have become incapable of
fulfillment, and shall not have been waived by Vendor; and
(d) by either Vendor or Purchaser, if the Closing does not occur on
or before the Outside Date; provided that the right to terminate
this Agreement under this Section 12.1(d) shall not be available
to a Party whose failure to fulfill any obligation under this
Agreement, except as provided in Section 9.16, has caused or
resulted in the failure of the Closing to occur on or before the
Outside Date.
12.2 Regarding Termination by Purchaser
Any termination of this Agreement by Purchaser pursuant to Section 12.1
shall be without prejudice to any Claims Purchaser may have arising hereunder
out of any incorrect or inaccurate representations or warranties of Vendor in
this Agreement or any breach by Vendor of any of its covenants in this
Agreement, but subject always to the limitations set forth in Article 6.
12.3 Regarding Termination by Vendor
Any termination of this Agreement by Vendor pursuant to Section 12.1
shall be without prejudice to any Claims Vendor may have arising out of any
incorrect or inaccurate representations or warranties of Purchaser in this
Agreement or any breach by Purchaser of any of its covenants, but subject always
to the limitations set forth in Article 6 and, if applicable, Section 12.4(b).
12.4 Deposit
(a) At or before the Closing Time or at such time as this Agreement
is terminated before Closing, as applicable, Vendor and Purchaser
shall provide written notice to the Escrow Agent which notice
shall direct the Escrow Agent as to the payment of the Deposit.
(b) If the Closing does not occur because any representations or
warranties made by Purchaser are incorrect or inaccurate or
because Purchaser failed to perform any of its obligations or
covenants under this Agreement, the full amount of the Deposit
together with all accrued interest (less any applicable
withholding Taxes) shall become the property of, shall be paid by
the Escrow Agent to and may be retained by, Vendor as liquidated
damages (and not as a penalty) to compensate Vendor for the
expenses incurred and opportunities foregone as a result of the
failure of the Purchase to close. To the extent the Deposit is
paid to Vendor in the circumstances described in this Section
12.4(b), Vendor shall retain the Deposit, plus any interest
thereon (less applicable withholding Taxes), as genuine
pre-estimate by Vendor and Purchaser of Vendor's liquidated
damages, not as a penalty and as Vendor's sole remedy hereunder
against Purchaser for all breaches hereof prior to the Closing or
in connection with the termination of the Purchase.
(c) If the Closing does not occur for any reason other than a default
by Purchaser in the performance of its obligations or covenants
under this Agreement or any representations or warranties made by
Purchaser being incorrect or inaccurate, the full amount of the
Deposit together with all accrued interest (less any applicable
withholding Taxes) shall be immediately returned to Purchaser.
12.5 Notice of Termination
In the event of termination by Vendor or Purchaser pursuant to this
Article 12, written notice thereof shall forthwith be given to the other Party
and the transactions contemplated by this Agreement
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(including the Parties' obligation to consummate the Purchase) shall be
terminated without further action by either Party. If the transactions
contemplated by this Agreement are terminated as provided herein:
(a) Purchaser shall return to Vendor all documents and copies and
other materials received from or on behalf of Vendor relating to
the transactions contemplated hereby, whether so obtained before
or after the execution hereof; and
(b) all confidential information received by Purchaser with respect
to the Business, the Assets and the Purchased Shares shall be
treated in accordance with the terms and conditions of the
Confidentiality Agreement, which shall remain in full force and
effect notwithstanding the termination of the transactions
contemplated by this Agreement.
12.6 Effect of Termination
Each Party's right of termination under this Article 12 is in addition
to any other rights it may have under this Agreement or otherwise, and the
exercise of a right of termination will not be an election of remedies. Nothing
in this Article 12 shall limit or affect any other rights or causes of action
either Purchaser or Vendor may have with respect to the representations,
warranties, covenants and indemnities in its favour contained in this Agreement.
Nothing in this Article 12 shall be deemed to release either Party from any
liability for any breach by that Party of the terms and provisions of this
Agreement or to impair the right of either Party to compel specific performance
by the other Party of its obligations under this Agreement.
ARTICLE 13
GENERAL
13.1 Non-Waiver
No waiver of any condition or other provision, in whole or in part,
shall constitute a waiver of any other condition or provision (whether or not
similar) nor shall such waiver constitute a continuing waiver unless otherwise
expressly provided.
13.2 Public Notices
(a) Vendor and Purchaser agree to keep the terms of this Agreement
confidential, except to the extent required by Applicable Laws or
for financial reporting purposes or as otherwise provided herein
and except that the Parties may disclose those terms to their
respective Representatives as necessary in connection with the
ordinary conduct of their respective businesses (so long as those
Persons agree to keep the terms of this Agreement confidential).
(b) Neither Party will make any press release or other public
announcement respecting this Agreement:
(i) without the consent of the other Party, not to be
unreasonably withheld or delayed; or
(ii) unless:
(A) the Party desiring to make the press release or other
public announcement is advised by its counsel that the
release or announcement is required to comply with any
Applicable Law or the rules of any securities
regulatory authority, listing authority or stock
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exchange with which the disclosing Party or any
Affiliate of either Party is bound to comply; and
(B) that press release or other public announcement does
not disclose more information regarding this Agreement
or the subject matter hereof than is required to comply
with any Applicable Law or the rules of any securities
regulatory authority, listing authority or stock
exchange with which disclosing Party or any Affiliate
of either Party is bound to comply.
(c) Notwithstanding the foregoing, nothing contained herein or in the
Confidentiality Agreement shall prevent a Party from furnishing
any information to:
(i) any Government Authority if required by Applicable Law or
the rules of a securities regulatory authority, listing
authority or stock exchange; or
(ii) obtain the Competition Act Approval or the Investment Canada
Approval;
or from making an announcement regarding this Agreement to its
employees (including the Employees).
(d) Purchaser or Pogo shall be entitled to use information respecting
the Assets in drafts or final copies of any prospectus, offering
document or loan syndication materials prepared pursuant to the
Xxxxxxx Xxxxx Commitment in which Purchaser or Pogo proposes to
describe the Purchase to the extent that any such information is
required to comply with any Applicable Law or the rules of any
securities regulatory authority, listing authority or stock
exchange with which Purchaser or Pogo is bound to comply or is
reasonably required with respect to that prospectus, offering
document or loan syndication; provided that Vendor is given draft
copies of the prospectus, offering document or those loan
syndication materials and approves, in advance of the filing or
distribution of any of those documents or materials, acting
reasonably, any references to Vendor, Unocal or the Purchase that
may be provided therein.
(e) A Party which proposes to make any such disclosure as described
in Sections 13.2(b), (c) or (d) shall, to the extent reasonably
possible, provide the other Party (or, in the case of
competitively sensitive information, the other Party's outside
counsel) with a draft of the applicable press release or other
document containing the disclosure at least two Business Days
before its release, filing or delivery or regarding any
prospectus, offering document or any loan syndication materials
to enable the other Party to review that draft and advise of any
comments it may have with respect thereto. The Party proposing to
make the disclosures will not unreasonably refuse to incorporate
the requested changes of the other Party to the applicable press
release or other document except to the extent its counsel
advises that doing so will result in non compliance with
Applicable Law or the rules of the applicable securities
regulatory authority, listing authority or stock exchange.
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13.3 Notices
Any notice or other writing required or permitted to be given under
this Agreement or for the purposes of this Agreement (in this Section 13.3
referred to as a "Notice") shall be in writing and shall be sufficiently given
if delivered, or if transmitted by facsimile to:
(a) in the case of a Notice to Vendor or to Unocal:
c/o Unocal Corporation
0000 Xxxxxxxxx Xxxxxx
Xxxxx 0000
Xx Xxxxxxx, XX
00000 XXX
Attention: Xxxxxxx X. Xxxxxx
Fax: 000.000.0000
with a copy to:
Stikeman Elliott LLP
4300 Bankers Hall, West Tower
888 - 3rd Street S.W.
Calgary, Alberta
T2P 5C5
Attention: Xxxxx Xxxxxxx
Fax: 000.000.0000;
(b) in the case of a Notice to Purchaser or to Pogo:
c/o Pogo Producing Company
0 Xxxxxxxx Xxxxx, Xxxxx 0000
Xxxxxxx, Xxxxx 00000 0504
Attention: General Counsel
Fax: 000.000.0000;
with a copy to:
Xxxxx Xxxxx L.L.P.
One Shell Plaza
000 Xxxxxxxxx Xxxxxx
Xxxxxxx, Xxxxx 00000-0000
Attention: Xxxxxxx X. Xxxxxx
Fax: 000.000.0000
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and to:
Fraser Xxxxxx Casgrain LLP
00xx Xxxxx
Xxxxx Xxxxxx Xxxxx
000-0xx Xxxxxx X.X.
Xxxxxxx, Xxxxxxx,
X0X 0X0 Xxxxxx
Attention: Xxxx X. Xxxxxxx
Fax: 000.000.0000,
or at such other address or number as the Person to whom that Notice is to be
given shall have last notified the Person giving the same in the manner provided
in this Section 13.3. Any Notice will be deemed to have been validly and
effectively given (i) if personally delivered, on the date of that delivery if
that date is a Business Day and that delivery was made before 4:00 p.m. (Calgary
time), and otherwise on the next Business Day; or (ii) if transmitted by
facsimile or similar means of recorded communication on the Business Day
following the date of transmission if receipt of the transmission has been
confirmed back.
13.4 Assignment
Neither this Agreement nor any benefits, rights or obligations under
this Agreement shall be assignable by either Party, by operation of Applicable
Law or otherwise, without the prior express written consent of the other Party
which consent may be arbitrarily withheld. Notwithstanding the foregoing
prohibition on assignment, Purchaser may assign all of its benefits, rights and
obligations under this Agreement to an Affiliate of Purchaser (but not if that
assignment would extend the time for, or render less certain, the completion of
the Purchase) provided that such assignment shall not release Purchaser from any
of its obligations under this Agreement and provided further that such Affiliate
enters into an agreement with Vendor satisfactory to Vendor, pursuant to which
that Affiliate expressly assumes all of Purchaser's obligations under this
Agreement and, if that assignment occurs before the Closing, that Affiliate
covenants to remain an Affiliate of Purchaser until Closing. Subject to the
foregoing provisions of this Section 13.4, this Agreement shall inure to the
benefit of, be enforceable by and be binding on the Parties, Unocal and Pogo and
their respective successors (including any successor by reason of amalgamation
of any Party or by Unocal or Pogo) and permitted assigns.
13.5 Further Assurances
Each Party, Unocal and Pogo shall use all commercially reasonable
efforts to provide such further documents or instruments required by any other
Party, Unocal and Pogo as are reasonably necessary to carry out the provisions
of this Agreement, whether before or after the Closing.
13.6 No Recourse
Notwithstanding anything that may be expressed or implied in this
Agreement, except as provided in Section 1.12 and Section 13.4, each Party
covenants, agrees and acknowledges that no recourse under this Agreement shall
be had against any current or future shareholders or agents of either Party or
any of its Affiliates, or any current, former or future director, officer,
employee, shareholder or agent of any of the foregoing, whether by any legal or
equitable proceeding, or by virtue of any Applicable Law, it being expressly
agreed and acknowledged that no personal liability whatsoever shall attach to,
be imposed on or otherwise be incurred by any current or future shareholder or
agent of either Party, or any of its Affiliates, or any current or former or
future director, officer, employee, shareholder or agent of any of the
foregoing, for any obligation of the Parties under this Agreement.
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13.7 Time of the Essence
Time shall be of the essence of this Agreement.
13.8 Amendment
This Agreement (including the Schedules hereto) may not be amended,
waived or modified except by an express instrument in writing signed on behalf
of each of the Parties.
13.9 Invalidity
In the event that any one or more provisions contained in this
Agreement or in any other instrument referred to herein shall, for any reason,
be held to be invalid, illegal or unenforceable in any respect, such invalidity,
illegality or unenforceability shall not affect any other provision of this
Agreement or any other such instrument.
13.10 Counterparts
This Agreement may be executed by the Parties in separate counterparts,
each of which when so executed and delivered shall be an original, and all such
counterparts shall together constitute one and the same instrument and a signed
counterpart delivered by facsimile or other electronic means shall be considered
as valid as an original counterpart.
13.11 Enforcement
The Parties agree that irreparable damage would occur in the event that
any of the provisions of this Agreement were not performed in accordance with
their specific terms, or were otherwise breached. It is accordingly agreed that
the Parties shall be entitled to an injunction or injunctions to prevent
breaches of this Agreement and to enforce specifically the terms and provisions
of this Agreement.
13.12 No Third-Party Beneficiaries
This Agreement, other than as provided in Sections 10.1, 13.4 and 13.6
and in the provisions of Article 10 and Article 11 relating to indemnification,
is not intended to confer on any Person other than the Parties any rights or
remedies.
13.13 Expenses
Each of the Parties shall pay their respective legal, accounting, and
other professional advisory and all other fees, costs and expenses incurred in
connection with the Purchase and the negotiation, preparation, execution and
delivery of this Agreement and all documents and instruments executed pursuant
to this Agreement and any other costs and expenses incurred.
13.14 Removal of Name
Following the Closing, Purchaser, and its Affiliates will not be
entitled to use the name "Unocal" or any variation or derivation thereof,
including any logo, trademark or design containing either or both of those names
(the "Prohibited Name and Marks"). Accordingly, promptly following the Closing,
Purchaser shall cause the Corporation and the Subsidiaries to cause the
destruction, disposal or replacement of stationery, business cards and similar
assets containing such Prohibited Name and Marks, and shall cause the
Corporation and the Subsidiaries to avoid the use of the Prohibited Names and
Marks. In addition, as soon as reasonably practicable, but in any event within
the earlier of 60 days following Closing or the date required by Applicable Law,
Purchaser shall:
(a) remove any signage from the Assets that refers to the Prohibited
Name and Marks; and
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(b) make all requisite filings with, and provide requisite notices
to, the appropriate Government Authorities to place title or
other evidence of operation or ownership in a name other than the
Prohibited Name and Marks.
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IN WITNESS WHEREOF the Parties, Unocal and Pogo have duly executed this
Agreement as of the date and year above written.
UNOCAL CANADA LIMITED
By: /s/ Xxxxxxx X. Xxxxxx
-------------------------------
Name: Xxxxxxx X. Xxxxxx
-------------------------------
Title: Vice President
-------------------------------
UNOCAL CANADA ALBERTA HUB LIMITED
By: /s/ Xxxxxxx X. Xxxxxx
-------------------------------
Name: Xxxxxxx X. Xxxxxx
-------------------------------
Title: Vice President, Corp. Dev.
Unocal Corp
-------------------------------
UNOCAL CORPORATION
By: /s/ Xxxxxxx X. Xxxxxx
-------------------------------
Name: Xxxxxxx X. Xxxxxx
-------------------------------
Title: Vice President, Corporate
Development
-------------------------------
POGO CANADA, ULC
By: /s/ Xxxxxxx X. Xxxxxxx
-------------------------------
Name: Xxxxxxx X. Xxxxxxx
-------------------------------
Title: President
-------------------------------
By: /s/ Xxxxxxx X. Xxxxxxxx
-------------------------------
Name: Xxxxxxx X. Xxxxxxxx
-------------------------------
Title: Secretary
-------------------------------
POGO PRODUCING COMPANY
By: /s/ Xxxxxxx X. Xxxxxxx
-------------------------------
Name: Xxxxxxx X. Xxxxxxx
-------------------------------
Title: Executive Vice President
-------------------------------
SCHEDULE 1.1(a)
ESCROW AGREEMENT
ESCROW AGREEMENT
THIS AGREEMENT is made as of July 8, 2005 among:
UNOCAL CANADA LIMITED
a corporation continued under the laws of Alberta
- and -
UNOCAL CANADA ALBERTA HUB LIMITED
a corporation incorporated under the laws of Alberta
(Unocal Canada Limited and Unocal Canada Alberta Hub Limited
are hereinafter collectively called "Vendor")
- and -
POGO CANADA, ULC
an Alberta unlimited liability corporation
(hereinafter called "Purchaser")
- and -
CIBC MELLON TRUST COMPANY
a corporation existing under the laws of Canada
(hereinafter called "Escrow Agent")
RECITALS:
A. Vendor, Unocal Corporation, Purchaser and Pogo Producing Company have entered
into a Share Purchase Agreement dated as of the date hereof (the "Agreement")
providing for the purchase by Purchaser from Vendor of all of the Purchased
Shares.
B. All capitalized terms used herein shall have the meanings ascribed thereto in
the Agreement unless they are otherwise defined in this Escrow Agreement.
C. Escrow Agent is willing to act as escrow agent for the sole purpose of
accepting, holding and releasing the Deposit (as defined hereinafter) in
accordance with the terms and conditions of this Escrow Agreement.
IN CONSIDERATION of the covenants and agreements of the parties herein
set forth, the parties hereto agree as follows:
1. Appointment of Escrow Agent
Vendor and Purchaser hereby appoint Escrow Agent to act as escrow agent
on the terms and conditions set forth herein and Escrow Agent hereby accepts
such appointment on such terms and conditions.
2. Receipt of Deposit
Concurrent with the execution and delivery of the Agreement by the parties
thereto, Purchaser shall deliver to Escrow Agent $180,000,000 (the "Deposit") by
wire transfer in immediately available United States funds. Upon the delivery of
the Deposit by Purchaser to Escrow Agent, Escrow Agent will acknowledge in
writing receipt of the Deposit to Vendor and Purchaser and will deal with the
Deposit in accordance with the terms and conditions of this Escrow Agreement.
3. Investment of Deposit
Escrow Agent shall invest and reinvest the Deposit (and once amounts
are earned thereon, the term "Deposit" herein includes all such amounts in
addition to the initial Deposit) in Qualified Investments and realize on any or
all investments of the Deposit in accordance with the written direction of
Vendor and Purchaser. Each investment direction shall specify the maturity dates
of the Qualified Investments so as to allow Escrow Agent to comply with its
obligations. To be effective, a direction shall be given before 9:00 a.m.
(Toronto time) on a Business Day. If a direction is given on a non-Business Day
or is given after 9:00 a.m. (Toronto time) on a Business Day, it shall be
effective immediately before 9:00 a.m. (Toronto time) on the next succeeding
Business Day. Escrow Agent shall deposit all cash balances constituting the
Deposit for which Escrow Agent has not received an effective investment
direction from Vendor and Purchaser in a U.S. dollar account with the
Toronto-Dominion Bank. Escrow Agent shall be entitled to a fee equal to 0.15%
per annum of the daily amount of the Deposit on deposit with the
Toronto-Dominion Bank. For the purposes of this Section 3, "Qualified
Investments" means U.S. dollar denominated book-based securities, negotiable
instruments or securities represented by instruments in bearer or registered
form which evidence any of:
(a) direct obligations of, or obligations fully guaranteed as to the
timely payment of principal and interest by, the Government of
Canada or direct obligations of the Government of the United
States of America; or
(b) demand deposits, term deposits or certificates of deposits
(having original maturities of no more than 365 days) of banks,
including Affiliates or related parties of Escrow Agent, or trust
companies chartered or licensed under the laws of Canada or any
province thereof; provided that, such bank or trust company is a
member of the Canadian Payments Association or a bank or trust
company that is not resident in Canada and at the time of the
investment or contractual commitment to invest therein, the
short-term debt rating of such bank or trust company shall have a
short-term debt rating of not less than A+ by Standard & Poor's
Rating Services, a division of The XxXxxx-Xxxx Companies, Inc. or
"A1" by Xxxxx'x Investors Service, Inc. For the purpose of this
Section, Canadian Imperial Bank of Commerce and Mellon Bank, N.A.
and each of their Affiliates shall be deemed to be Affiliates of
Escrow Agent;
4. Delivery of Escrow Release Notice
On Closing or upon termination of the Agreement, as applicable,
Purchaser and Vendor shall deliver to Escrow Agent a notice specifying the
treatment of the Deposit in accordance with Section 12.4 of the Agreement (the
"Escrow Release Notice") in the form attached as Exhibit "A" and Escrow Agent
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will deliver the Deposit to Vendor or Purchaser, as applicable, in accordance
with the delivery instructions set out in the Escrow Release Notice no later
than the third Business Day after Escrow Agent's actual receipt of such notice.
If the Escrow Release Notice is not received by Escrow Agent on or before the
third Business Day after December 31, 2005, Escrow Agent may pay into court or
otherwise deposit the Deposit with a court of competent jurisdiction in Calgary,
Alberta.
5. Termination of Escrow Agreement
(a) Other than the provisions of this Escrow Agreement relating to
the protection of Escrow Agent, this Escrow Agreement may be
terminated at any time by and upon the receipt by Escrow Agent of
written notice of termination by both Vendor and Purchaser, which
notice of termination will be accompanied by a written direction
by Vendor and Purchaser to Escrow Agent specifying to whom the
Deposit is to be delivered.
(b) This Escrow Agreement shall terminate and cease to be of any
further force and effect (except for the provisions of this
Escrow Agreement relating to protection of Escrow Agent which
shall survive any termination of this Escrow Agreement) on the
date on which Escrow Agent shall have delivered the Deposit in
accordance with the provisions of Section 4.
6. Determination
The parties hereto agree that Escrow Agent shall not be required to
make any determination or decision with respect to the validity of any claim
made by any party, or of any denial thereof (including, without limitation, the
validity of any Escrow Release Notice given hereunder), but shall be entitled to
act and rely conclusively on the terms hereof and the documents tendered to it
in accordance with the terms hereof.
7. Fees
The reasonable fees and actual out-of-pocket costs, disbursements and
other charges relating to the services of Escrow Agent hereunder shall be paid
solely by Purchaser forthwith upon notice by Escrow Agent of the amount thereof,
which fees shall not include the initial setup fee (including fees of legal
counsel) which have been waived by the Escrow Agent.
8. Escrow Agent
The acceptance by Escrow Agent of its duties under this Escrow
Agreement is subject to the following terms and conditions which shall govern
and control the rights, duties, liabilities and immunities of Escrow Agent.
(a) Escrow Agent may resign at any time as escrow agent upon 60 days'
prior notice to Vendor and Purchaser, or such shorter notice as
Vendor and Purchaser may accept as sufficient. Vendor and
Purchaser shall have the power at any time on 60 days' notice to
remove Escrow Agent and appoint a replacement escrow agent. In
the event of Escrow Agent resigning or being removed as
aforesaid, Vendor and Purchaser shall jointly appoint a new
escrow agent, upon which Escrow Agent shall transfer the Deposit,
together with interest earned on the Deposit, to the replacement
escrow agent, provided that Escrow Agent shall have received
payment in full of all fees and expenses owing to it hereunder.
Any replacement escrow agent shall be subject to removal in the
same manner as aforesaid. On any such appointment, the
replacement escrow agent shall be vested with the same powers,
rights and obligations as if it had been originally named
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herein as escrow agent, without any further assurance,
conveyance, act or deed; but there shall be immediately executed,
at the expense of Vendor and Purchaser, all such conveyances or
other instruments as may, in the reasonable opinion of Escrow
Agent, be necessary or advisable for the purpose of effectively
transferring the Deposit to the replacement escrow agent and
otherwise assuring the replacement escrow agent a full estate in
the premises. Should Vendor and Purchaser fail to appoint a
replacement escrow agent as outlined above, then Escrow Agent
shall cease its function at the expiration of the period of
notice and may retain the Deposit on a merely safekeeping basis
at such reasonable fee as may be determined solely by Escrow
Agent, or may pay into or otherwise deposit with a court of
competent jurisdiction in Calgary, Alberta, the Deposit, pending
the appointment of such a replacement escrow agent.
(b) Escrow Agent is not bound by any agreement, arrangement or
understanding relating to or arising out of the matters provided
for in this Escrow Agreement, other than as expressly set forth
herein. The Escrow Agent shall have no duties or responsibilities
except as expressly provided in this Escrow Agreement and shall
have no liability or responsibility arising under any other
agreements including agreements referred to in this Escrow
Agreement to which the Escrow Agent is not a party.
(c) Escrow Agent shall be entitled to act and rely upon any notice,
declaration, certificate, waiver, consent, receipt or other paper
or document purporting to be delivered pursuant to this Escrow
Agreement and shall not enquire as to the veracity, accuracy or
adequacy thereof or be bound by any notice or direction to the
contrary by any Person other and a Person entitled to give such
notice and, in absence of bad faith or fraud on the part of
Escrow Agent, Vendor and Purchaser shall not hold Escrow Agent
liable for any loss or injury to them with respect to such act or
reliance.
(d) It is understood and agreed that the duties of Escrow Agent
hereunder are purely administrative in nature and that Escrow
Agent shall not be liable for any error of judgment, or for any
act done or step taken or omitted to be taken by it in good
faith, or for any mistake of fact or law, or for anything which
it may do or refrain from doing it connection herewith, except
for its own bad faith or fraud, or its failure to deliver Deposit
pursuant to a valid Escrow Release Notice submitted hereunder as
provided in Section 4.
(e) Escrow Agent shall incur no liability hereunder or in connection
herewith for anything whatsoever other than as a result of its
own bad faith or fraud or its failure to deliver the Deposit
pursuant to a valid Escrow Release Notice submitted hereunder as
provided in Section 4. Purchaser and Vendor jointly and severally
shall indemnify, hold harmless and defend Escrow Agent from and
against any and actions, causes of action, claims, demands,
damages, losses, costs, liabilities and expense, of any nature or
kind (including, without limitation, costs incurred by Escrow
Agent in retaining its own counsel), which may be made or brought
against Escrow Agent or which it may suffer or incur as a result
of or in respect of or arising out of its appointment as escrow
agent hereunder, except such as shall result solely and directly
from Escrow Agent's own bad faith or fraud or its failure to
deliver the Deposit pursuant to a valid Escrow Release Notice
submitted hereunder as provided in Section 4.
(f) In the event of any disagreement between the parties hereto which
in the reasonable opinion of Escrow Agent may result in adverse
claims or demands with respect to the Deposit or if any of the
parties hereto, including, without limitation, Escrow Agent, are
in disagreement about the interpretation of this Escrow Agreement
or about the rights and obligations of Escrow Agent or the
propriety of an action contemplated by Escrow Agent
-4-
under this Escrow Agreement, Escrow Agent may, at its option, if
it then holds the Deposit, pay into court or otherwise deposit
the Deposit with a court of competent jurisdiction in Calgary,
Alberta. Upon Escrow Agent making such deposit, Escrow Agent
shall be discharged and released of its duties and obligations
hereunder. Escrow Agent shall be indemnified by Vendor and
Purchaser jointly and severally in any such action, interpleader
or any other action or proceeding for all costs, expenses and
fees in its capacity as escrow agent in connection with any
deposit or any action brought in connection with this Escrow
Agreement.
(g) Escrow Agent shall not be liable for or by reason of any
statements of fact or recitals in this Escrow Agreement and all
such statements and recitals are and shall be deemed to be made
by the other parties to this agreement.
9. Notice
Any notice, approval, consent, instruction, direction or other
communication to be given under or in connection with this Escrow Agreement
shall be in writing and shall be given by personal delivery or by facsimile
addressed or sent as set out below or to such other address or electronic
communication number as may from time to time by the subject or a notice
hereunder.
to Vendor:
c/o Unocal Corporation
0000 Xxxxxxxxx Xxxxxx
Xxxxx 0000
Xx Xxxxxxx, XX
00000 XXX
Attention: Xxxxxxx X. Xxxxxx
Fax: 000.000.0000
with a copy to:
Stikeman Elliott LLP
4300 Bankers Hall, West Tower
888 - 3rd Street S.W.
Calgary, Alberta
T2P 5C5
Attention: Xxxxx Xxxxxxx
Fax: 000.000.0000
to Purchaser:
Pogo Producing Company
0 Xxxxxxxx Xxxxx, Xxxxx 0000
Xxxxxxx, Xxxxx 00000 0504
Attention: General Counsel
Fax: 000.000.0000;
-5-
with a copy to:
Xxxxx Xxxxx L.L.P.
One Shell Plaza
000 Xxxxxxxxx Xxxxxx
Xxxxxxx, Xxxxx 00000-0000
Attention: Xxxxxxx X. Xxxxxx
Fax: 000.000.0000
and to:
Fraser Xxxxxx Casgrain LLP
00xx Xxxxx
Xxxxx Xxxxxx Xxxxx
237-4th Avenue S.W.
Calgary, Alberta, Canada
Attention: Xxxx X. Xxxxxxx
Fax: 000.000.0000
to Escrow Agent:
CIBC Mellon Trust Company
600 The Dome Tower
000 - 0xx Xxxxxx X.X.
Xxxxxxx, Xxxxxxx X0X 0X0
Attention: Manager, Corporate Trust
Fax: 000.000.0000 (main line).
10. Entire Agreement
Subject to the provisions in the Agreement, this Escrow Agreement
constitutes the entire agreement between the parties with respect to the escrow
delivery of, and subsequent dealing with, the Deposit.
11. Severability
Any provision hereof that is held to be inoperative, unenforceable or
invalid in any jurisdiction shall be severable from the remaining provisions
which shall continue to be valid and enforceable to the fullest extent permitted
by law.
12. Applicable Law
This Escrow Agreement shall be governed by and construed in accordance
with the laws of the Province of Alberta.
13. Further Assurances
Purchaser and Vendor will at any time and from time to time, upon the
request of the other or Escrow Agent, execute and deliver such further documents
and do such further acts and things as may reasonably be requested by Escrow
Agent in order to evidence, carry out and give effect to the terms, conditions,
intent and meaning of this Escrow Agreement.
-6-
14. No Waiver
No failure or delay on the part of Escrow Agent, Purchaser or Vendor in
exercising any right, power or remedy provided herein may be, or may be deemed
to be, a waiver thereof; nor shall any single or partial exercise of any right,
power or remedy preclude any other or further exercise of such right, power or
remedy or other right, power or remedy.
15. Amendments
This Escrow Agreement may not be amended or modified in any respect
except by written instrument signed by all the parties hereto including Escrow
Agent.
16. No Assignment; Successors
No party shall be permitted to assign its rights under this Escrow
Agreement without the express written consent of each of the other parties
hereto. This Escrow Agreement shall be binding upon, and shall ensure to the
benefit of each of the parties hereto and their respective successors and
permitted assigns.
17. Currency
Unless otherwise specified herein, all references to currency herein
are to United States currency.
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18. Counterparts
This Escrow Agreement may be signed in counterparts (including
counterparts by facsimile) and all counterparts taken together shall be deemed
to constitute one and the same instrument.
IN WITNESS WHEREOF the parties hereto have hereunto duly executed this
Escrow Agreement.
UNOCAL CANADA LIMITED
By:
-------------------------------
Name:
-------------------------------
Title:
-------------------------------
UNOCAL CANADA ALBERTA HUB LIMITED
By:
-------------------------------
Name:
-------------------------------
Title:
-------------------------------
POGO CANADA, ULC
By:
-------------------------------
Name:
-------------------------------
Title:
-------------------------------
By:
-------------------------------
Name:
-------------------------------
Title:
-------------------------------
CIBC MELLON TRUST COMPANY
By:
-------------------------------
Name:
-------------------------------
Title:
-------------------------------
By:
-------------------------------
Name:
-------------------------------
Title:
-------------------------------
-8-
EXHIBIT "A"
ESCROW RELEASE NOTICE
TO: CIBC MELLON TRUST COMPANY
Please be advised that you are hereby irrevocably authorized and
directed to deliver the Deposit by wire transfer to:
----------------------------------------------------
----------------------------------------------------
----------------------------------------------------
----------------------------------------------------
and this shall be your good and sufficient authority for doing so.
This is the Escrow Release Notice contemplated in the Escrow Agreement
dated as of July 8, 2005 among Unocal Canada Limited, Unocal Canada Alberta Hub
Limited, Pogo Canada, ULC and CIBC Mellon Trust Company. Capitalized terms in
this Escrow Release Notice shall have the meaning ascribed to such terms in such
agreement.
Dated this _______ day of ______, 2005.
UNOCAL CANADA LIMITED
By:
-------------------------------
Name:
-------------------------------
Title:
-------------------------------
UNOCAL CANADA ALBERTA HUB LIMITED
By:
-------------------------------
Name:
-------------------------------
Title:
-------------------------------
POGO CANADA, ULC
By:
-------------------------------
Name:
-------------------------------
Title:
-------------------------------
By:
-------------------------------
Name:
-------------------------------
Title:
-------------------------------
-9-
