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AGREEMENT FOR THE SALE AND PURCHASE OF THE ENTIRE ISSUED SHARE CAPITAL OF PIONEER NATURAL RESOURCES ANAGUID LTD. AND PIONEER NATURAL RESOURCES TUNISIA LTD

Purchase and Sale Agreement

AGREEMENT FOR THE SALE AND PURCHASE OF THE ENTIRE ISSUED SHARE CAPITAL OF PIONEER NATURAL RESOURCES ANAGUID LTD. AND PIONEER NATURAL RESOURCES TUNISIA LTD | Document Parties: PIONEER NATURAL RESOURCES CO | PIONEER NATURAL RESOURCES ANAGUID LTD | PIONEER NATURAL RESOURCES TUNISIA LTD | Pioneer Natural Resources USA, Inc You are currently viewing:
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PIONEER NATURAL RESOURCES CO | PIONEER NATURAL RESOURCES ANAGUID LTD | PIONEER NATURAL RESOURCES TUNISIA LTD | Pioneer Natural Resources USA, Inc

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Title: AGREEMENT FOR THE SALE AND PURCHASE OF THE ENTIRE ISSUED SHARE CAPITAL OF PIONEER NATURAL RESOURCES ANAGUID LTD. AND PIONEER NATURAL RESOURCES TUNISIA LTD
Governing Law: United States Of America     Date: 2/25/2011
Industry: Oil and Gas - Integrated     Law Firm: Vinson Elkins     Sector: Energy

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Exhibit 2.2

DATED 6 JANUARY 2011

(1) Pioneer Natural Resources USA, Inc.

(2) OMV (Tunesien) Production GmbH

 

 

AGREEMENT FOR THE SALE AND PURCHASE

OF THE ENTIRE ISSUED SHARE CAPITAL OF

PIONEER NATURAL RESOURCES ANAGUID LTD.

AND

PIONEER NATURAL RESOURCES TUNISIA LTD.

 

CityPoint

33rd Floor

1 Ropemaker Street

London EC2Y 9UE

Tel: 44.20.7065.6000

Fax: 44.20.7065.6001


CONTENTS

 

CLAUSE

  

PAGE

 

1.

    

DEFINITIONS

  

 

3

  

2.

    

SALE OF SHARES AND CONSIDERATION

  

 

12

  

3.

    

CONDITIONS AND CONDUCT TO CLOSING

  

 

13

  

4.

    

DEPOSIT

  

 

17

  

5.

    

PRICE ADJUSTMENT

  

 

18

  

6.

    

2010 ACCOUNTS

  

 

19

  

7.

    

CLOSING

  

 

21

  

8.

    

WARRANTIES AND INDEMNIFICATION

  

 

22

  

9.

    

TAX

  

 

26

  

10.

    

PROTECTIVE COVENANTS

  

 

26

  

11.

    

INSURANCE

  

 

27

  

12.

    

EMPLOYMENT

  

 

28

  

13.

    

LEFT BLANK INTENTIONALLY

  

 

29

  

14.

    

BUYER WARRANTIES

  

 

29

  

15.

    

ANNOUNCEMENTS AND CONFIDENTIALITY

  

 

29

  

16.

    

NOTICES

  

 

30

  

17.

    

GENERAL

  

 

31

  

18.

    

WHOLE AGREEMENT

  

 

33

  

19.

    

CONSTRUCTION

  

 

33

  

20.

    

GOVERNING LAW AND JURISDICTION

  

 

35

  

SCHEDULE 1 INFORMATION ABOUT THE COMPANIES

  

 

36

  

SCHEDULE 2 BUSINESS TO BE TRANSACTED AT CLOSING

  

 

37

  

SCHEDULE 3 PART I SELLER WARRANTIES

  

 

39

  

PART II BUYER WARRANTIES

  

 

52

  

SCHEDULE 4 RELEVANT CLAIMS

  

 

54

  

SCHEDULE 5 INTERIM PERIOD

  

 

63

  

SCHEDULE 6 WORKING CAPITAL CALCULATION AND ADJUSTED BID AMOUNT

  

 

67

  

SCHEDULE 7 TAX COVENANT

  

 

70

  

SCHEDULE 8 INTENTIONALLY BLANK

  

 

74

  

SCHEDULE 9 ACCOUNTS

  

 

75

  

SCHEDULE 10 INTENTIONALLY BLANK

  

 

76

  

SCHEDULE 11 CONTENT OF THE DATA ROOM

  

 

77

  

SCHEDULE 12 FIRST DISCLOSURE LETTER

  

 

78

  

SCHEDULE 13 SERVICES AGREEMENT - KEY TERMS

  

 

82

  

 

i


SCHEDULE 14 LIST OF SELLER’S / SELLER’S GROUP IP RIGHTS

  

 

85

  

SCHEDULE 15 LIST OF INSURANCE POLICIES TO BE MAINTAINED OR TAKEN

  

 

93

  

SCHEDULE 16 INTENTIONALLY BLANK

  

 

95

  

SCHEDULE 17 INTENTIONALLY BLANK

  

 

96

  

SCHEDULE 18 PRICE ALLOCATION

  

 

97

  

SCHEDULE 19 INTENTIONALLY BLANK

  

 

98

  

SCHEDULE 20 OUTSTANDING MINIMUM WORK COMMITMENTS

  

 

99

  

SCHEDULE 21 GUARANTEES

  

 

101

  

 

ii


THIS AGREEMENT is made on 6 January 2011

BETWEEN

 

(1)

Pioneer Natural Resources USA, Inc. , a company incorporated under the laws of Delaware, under registration number 4541779 and having its registered office at c/o The Corporation Trust Company, Corporation Trust Center, 1209 Orange Street, Wilmington, Delaware 19801, United States of America (the “ Seller ”);

 

(2)

OMV (Tunesien) Production GmbH , a company incorporated under the laws of Austria under registration number 250795 t and having its registered office at Trabrennstrasse 6-8, 1020 Vienna, Austria (the “ Buyer ”);

RECITALS:

 

(A)

Pioneer Natural Resources Anaguid Ltd. (“ Pioneer Anaguid ”) and Pioneer Natural Resources Tunisia Ltd. (“ Pioneer Tunisia ” and together with Pioneer Anaguid shall be hereinafter referred to as the “ Companies ” or each as a “ Company ”) are each an exempted company incorporated under the laws of the Cayman Islands. Further particulars of the Companies are set out in Schedule 1.

 

(B)

The Seller is the owner of the entire issued share capital of each Company, which it agrees to sell to the Buyer and which the Buyer agrees to buy from the Seller on the terms and subject to the conditions set forth in this Agreement.

NOW IT IS AGREED as follows:

 

1.

DEFINITIONS

In this Agreement, the following terms shall have the following meaning, unless the context requires otherwise:

“2010 Accounts” means the fully audited balance sheet, profit and loss account and statement of cash flows, including related notes, of each Company, on a stand alone basis, as at and for the period from 1 January 2010 until the Effective Date, which are to be prepared in accordance with paragraph 3.1(b) of Part I of Schedule 3;

Accounts ” means the unaudited balance sheet of each Company as at 30 September 2010, which is attached hereto as Schedule 9;

Accounts Date ” means 30 September 2010;

Actual Knowledge of Buyer ” means the actual knowledge (and with no duty of enquiry) of Andreas Scheed (General Manager, Buyer), Arno Dettlinger (Vice President, NW Europe, North Africa & Latin America Region, E&P International), Bernd Apelt (Commercial Manager, Buyer), Ali Muhammad (Finance Manager, Buyer), Stefan Waldner (Senior Vice President, Corporate Development & M&A), Andreas Aigner (Head of Department M&A Legal, Corporate Development & M&A), Peter Krois (Head of Exploration, North Africa & Offshore), Jan Steckhan (Advisor Petrophysics, Buyer), Christian Astl (Exploration Advisor, North Africa & Offshore), Tony Reilly (Senior Facility Engineer, Production & Projects), Andrea Iro (Head of HR Business, OMV E&P), Kazim Ali (Senior Expert Project Related HSE) and Julian Roberts (Senior Expert Planning, Assessment, Monitoring; Sustainability & HSSE);

 

3


Actual Knowledge of Seller ” means the actual knowledge (and with no duty of enquiry) of Ed Hance, David McManus, Ed Caamano, Tom Hagen, Tom Grau, Dave Simpson, Mark Berg, Chris Cheatwood, Richard Dealy, Timothy Dove and Ralph Watkins;

Adjusted Bid Amount ” means the Base Value, plus Working Capital based on the 2010 Accounts and calculated according to Schedule 6, as finally agreed by the Buyer and the Seller or finalised by the Expert according to Clause 6.8;

Agreement ” means this agreement together with the Schedules;

Anaguid Exploration Permit ” means:

 

 

(a)

Convention for Research and Exploitation of Mineral Substances by and among Coho International Limited, ETAP and the State of Tunisia dated 8 April 1992; and

 

 

(b)

Joint Venture Agreement and Annexes by and between Coho International Limited and ETAP dated 8 April 1992;

Anaguid-Durra Application ” means the application dated April 8, 2010, the CCH approval dated July 7, 2010 and the amended application dated October 25, 2010;

Anaguid Interest ” means:

 

 

(a)

a thirty percent (30%) participating interest conferring all legal and beneficial rights in the Anaguid Exploration Permit and the Anaguid-Durra Application; and

 

 

(b)

a sixty percent (60%) interest under the Anaguid JOA;

Anaguid JOA ” means the joint operating agreement by and among Coho Anaguid, Inc., Bligh Tunisia Inc. and Anadarko Tunisia Anaguid Company with an effective date of 1 July 1997, as amended on 2 July 2001, 10 September 2002 and 12 June 2007;

“Base Value” means US$800,000,000 (eight hundred million US Dollars) provided that where the preferential right under the Anaguid JOA is exercised and Closing hereunder involves only the acquisition by the Buyer of the entire issued share capital of Pioneer Tunisia, the Base Value shall be US$695,700,000 (six hundred and ninety five million seven hundred thousand US Dollars);

BEK Exploration Permit ” means:

 

 

(a)

Convention for Research and Exploitation of Mineral Substances by and among Elf Acquitaine Tunisie, ETAP and the State of Tunisia dated 22 September 1990, as amended on 26 December 1997 and 12 March 2010; and

 

4


 

(b)

Joint Venture Agreement and Annexes by and among Elf Acquitaine Tunisie, ETAP and the State of Tunisia dated 22 September 1990, as amended on 15 August 1991, 13 May 1996 (as modified on 12 December 1997 and 10 February 2004) and 1 January 2005;

BEK-Adam Concession ” means the application dated 8 April 2003, the CCH approval dated 2 May 2003 (with minor amendment dated May 21, 2003), the official gazettal dated July 1, 2003, and the adoption on 10 April 2004 of the benefits allowed by Article 2 of Decree Law No. 99-93 dated 17 August 1999;

BEK Interest ” means:

 

 

(a)

a twenty percent (20%) participating interest conferring all legal and beneficial rights in the BEK Exploration Permit and the BEK-Adam Concession; and

 

 

(b)

a forty percent (40%) interest under the BEK JOA;

BEK JOA ” means the joint operating agreement by and among Phillips Petroleum Company Tunisia, Lasmo Tunisia B.V. and Unions Texas Maghreb, Inc. and dated 1 September 1997, as amended 17 September 2001, 17 June 2002 and 18 June 2002;

Best Knowledge of Seller ” means the actual knowledge of Ed Hance, David McManus, Ed Caamano, Tom Hagen, Tom Grau, Dave Simpson, Mark Berg, Chris Cheatwood, Richard Dealy, Timothy Dove and Ralph Watkins and the knowledge those persons would be deemed to have had after making reasonable enquiry;

Bid Amount ” means US$865,692,063 (eight hundred and sixty five million six hundred and ninety two thousand and sixty three US Dollars) comprised of the Base Value plus the Working Capital reflected in the Accounts;

Business Day ” means a day other than a Saturday or Sunday on which banks are generally open for business in New York, United States of America, Vienna, Austria and Tunis, Tunisia (except that any references to Business Day with respect to any provision in this Agreement relating to the timing of Closing or to an obligation to pay any amounts owed hereunder shall not include Tunis, Tunisia);

Buyer ” means OMV (Tunesien) Production GmbH, a company incorporated under the laws of Austria under registration number 250795 t and having its registered office at Trabrennstrasse 6-8, 1020 Vienna, Austria;

Buyer’s Group ” means the Buyer and any other company which is or becomes a subsidiary or holding company of the Buyer or a subsidiary of such holding company;

Cash in Lieu Agreement ” means an agreement for bonus payment in lieu of a stock award between an employee of Pioneer Tunisia and Pioneer Tunisia that is entered into prior to the Closing;

CCH ” means the Comité Consultatif des Hydrocarbures (Consultative Committee of Hydrocarbons) of the Ministry in charge of Energy of Tunisia or any successor Tunisian Governmental Entity;

Claims Notice ” has the meaning given to it in paragraph 4.1 of Schedule 4;

 

5


Closing ” has the meaning given to it in Clause 7.1;

Closing Date ” means the date on which Closing occurs;

Company ” and “ Companies ” has the meaning given to it in Recital (A);

Company Returns ” has the meaning given to it in paragraph 5 of Schedule 7;

Concessions ” means the:

 

 

(a)

Anaguid-Durra Application;

 

 

(b)

BEK-Adam Concession; and

 

 

(c)

JN-Cherouq Concession;

Conditions ” means the conditions contained in Clause 3.1;

Confidentiality Agreement ” means the confidentiality agreement between OMV Aktiengesellschaft and Pioneer Tunisia and Pioneer Anaguid dated 15 November 2010;

Contributions ” means all equity contributions made in the ordinary course of business to Pioneer Anaguid or to Pioneer Tunisia, by the members of the Seller’s Group during the period from (and inclusive of) the Effective Date to (and inclusive of) the Closing Date provided , however , that the Seller shall not be entitled to make capital contributions (i) in excess of US$5,000,000 to Pioneer Anaguid or (ii) any capital contribution to Pioneer Tunisia, without, in either case, the consent of the Buyer (which consent shall not be unreasonably withheld, conditioned or delayed) provided further , however , that the contributions made by any member of the Seller’s Group to Pioneer Tunisia pursuant to Clause 12 shall not constitute Contributions for the purposes of this definition;

Data Room ” means the documents and information listed in Schedule 11;

de minimis claims ” has the meaning given to it in paragraph 1.1(a) of Schedule 4;

Deposit ” means the sum equal to 10% of the Bid Amount;

Deposit Advance ” means the sum equal to 5% of the Bid Amount which shall be payable by the Buyer to the Seller by way of deposit at the time of signature of this Agreement and for the purposes of this definition, Bid Amount shall be calculated without regard to any exercise of the preferential right set forth in the Anaguid JOA;

Disputed Item ” has the meaning given to it in Clause 6.2;

“Dividend” means any distribution of distributable reserves by Pioneer Tunisia to the Seller on or after the Effective Date and before Closing (but shall not, for the avoidance of doubt, include any payments permitted under Schedule 5);

Effective Date ” means 00:00 local time in Tunisia on 1 January 2011;

 

6


El Hamra Exploration Permit ” means:

 

 

(a)

Convention for Research and Exploitation of Mineral Substances by and among Eurogas International, Inc., Pioneer Tunisia, ETAP and the State of Tunisia dated 5 April 2002, as amended 13 February 2006; and

 

 

(b)

Joint Venture Agreement and Annexes by and among Eurogas International Inc., Pioneer Natural Resources Tunisia Ltd and ETAP dated 5 April 2002;

El Hamra Interest ” means a fifty percent (50%) participating interest conferring all legal and beneficial rights in the El Hamra Exploration Permit;

Employee List ” has the meaning given to it in paragraph 5(a) of Part I of Schedule 3;

Encumbrance ” means any mortgage, charge (fixed or floating), pledge, lien, option, right to acquire, right of first offer, right of pre-emption, assignment by way of security or trust arrangement for the purpose of providing security or other security interest of any kind (including any retention arrangement), over-riding royalty or other restriction or limitation of a similar nature or any agreement to create any of the foregoing;

“ETAP” means the Entreprise Tunisienne d’Activités Pétrolières;

ETAP Receivables ” means costs or expenses incurred or paid by the Companies, the Companies’ predecessors in interest or any other current or former party to the Key Agreements in connection with any of the Interests prior to the Effective Date which are attributed to, or are collectable in connection with, any amounts receivable due from ETAP;

“Expert” has the meaning given to it in Clause 6.6;

Exploration Permits ” means:

 

 

(a)

the Anaguid Exploration Permit;

 

 

(b)

the BEK Exploration Permit;

 

 

(c)

the El Hamra Exploration Permit; and

 

 

(d)

the JN Exploration Permit;

First Disclosure Letter ” means the letter which is attached in Schedule 12;

Governmental Entity ” means any public international, multinational or transnational organisation or any national, state, municipal or local governmental, legislative, administrative or other person, authority, ministry, department, agency, instrumentality, office, organisation or stock exchange having jurisdiction over the Seller, the Buyer or the Companies or their respective properties or assets;

Guarantees ” means the guarantees which are listed in Schedule 21;

 

7


holding company ” shall have the meaning given to that term by the Companies Act 2006 of England;

Hydrocarbon Code ” means, with respect to any Interest, whichever of (a) Decree Law No. 85-9 dated 14 September 1985 or (b) Decree Law No. 99-93 dated 17 August 1999 is applicable thereto;

Interest ” means any of, and “ Interests ” means all of:

 

 

(a)

the Anaguid Interest;

 

 

(b)

the BEK Interest;

 

 

(c)

the El Hamra Interest; and

 

 

(d)

the JN Interest;

Interim Period ” means the period from the date of this Agreement to the Closing Date (both dates inclusive);

JN Exploration Permit ” means:

 

 

(a)

Convention for Research and Exploitation of Mineral Substances by and among AGIP Tunisia B.V., ETAP and the State of Tunisia dated 16 April 1996, as amended 15 February 2007 and 22 February 2010; and

 

 

(b)

Joint Venture Agreement and Annexes by and among AGIP Tunisia B.V. and ETAP dated 16 April 1996, as amended 20 June 2000;

JN-Cherouq Concession ” means the application dated 10 November 2007, the CCH approval dated 17 December 2007 and the official gazettal dated 25 April 2008;

JN Interest ” means a fifty percent (50%) participating interest conferring all legal and beneficial rights in the JN Exploration Permit and the JN-Cherouq Concession;

JOA ” means any of, and “ JOAs ” means all of:

 

 

(a)

the Anaguid JOA; and

 

 

(b)

the BEK JOA;

Key Agreement ” means any of, and “ Key Agreements ” means all of:

 

 

(a)

the Exploration Permits;

 

 

(b)

the Concessions; and

 

 

(c)

the JOAs;

Law(s) ” means any law, statute, regulation, rule, ordinance, decree, principle of civil, administrative or common law, governmental or administrative instruction and any treaty.

 

8


Long Stop Date ” means:

 

 

(a)

28 February 2011; or

 

 

(b)

such other date as may be mutually agreed in writing by the Parties;

Losses ” means losses, costs, damages, liabilities, interests, charges, expenses, fines, penalties and environmental clean up costs but Losses shall not include any internal costs of a Party;

Material Adverse Event ” means one or more events which individually or in the aggregate has an adverse effect on the Interests or on the business, operations, financial condition or assets of the Companies and which results, or is reasonably likely to result, in Losses to the Companies exceeding the Materiality Threshold; provided , however , that for the purposes of this definition, no event arising or resulting from any of the following, either alone or in combination, shall constitute or be taken into account in determining whether there has been or may be, a Material Adverse Event: (i) general changes, developments or conditions in any national, regional or world economy or in the industries in which the Companies operate or in commodity prices, (ii) financial or other market or political conditions (including any changes or instabilities in political conditions), (iii) the announcement of this Agreement and the transactions contemplated hereby, including any termination of, reduction in or similar negative impact on relationships, contractual or otherwise, with any customers, suppliers, distributors, partners or employees of the Companies due to the announcement and performance of this Agreement or the identity of the Parties, (iv) natural disasters, acts of war or terrorism, (v) the fact that the Companies failed to meet any projections, forecasts, or revenue or earnings predictions for any period, (vi) the performance of and compliance with this Agreement and the transactions contemplated hereby and any action taken or omitted to be taken by the Companies at the request or with the prior written consent of the Buyer, (vii) changes after the date hereof in any Laws or regulations or applicable accounting regulations or principles or the interpretations thereof or (viii) any adverse consequences to reserves or resource potential resulting from drilling activities (excluding, for the avoidance of doubt, any blow-out or similar adverse physical event). For the avoidance of doubt, the fact that events are excluded from the definition of Material Adverse Event is not a limitation on the Warranties or Seller’s covenants;

Material Agreement ” means:

 

 

(a)

each Key Agreement;

 

 

(b)

the ENI Oil Marketing Agreement dated 12 September 2003 by and among Pioneer Tunisia and ENI S.p.A. Refining and Marketing Division, as amended on 21 February 2007;

 

 

(c)

the Gaz du Sud Agreement dated 8 March 2007 by and among ETAP, ENI Tunisia B.V., ENI Tunisia BEK B.V., Pioneer Tunisia and Talisman Resources (Tunisia) Limited on one hand, and la Société Tunisienne de l’Electricté et du Gaz on the other hand;

 

9


 

(d)

the Adam Gas Sales Contract dated 22 February 2010 by and among ETAP, ENI Tunisia B.V., ENI Tunisia BEK B.V., Pioneer Tunisia and Talisman Resources (Tunisia) Limited on one hand, and la Société Tunisienne de l’Electricté et du Gaz on the other hand; and

 

 

(e)

the Trapsa Agreement dated 1 January 2007 by and among La Compagnie des Transports par Pipe-Line au Sahara and Pioneer Tunisia;

Materiality Threshold ” means 15% of the Bid Amount;

Notice ” has the meaning given to it in Clause 16.1;

Objection Notice ” has the meaning given to it in Clause 6.4;

Order ” means any permit or licence or any judgment, injunction, order, rulings, decree or other restriction of any Governmental Entity, court or tribunal;

Party ” means any of the Seller, the Buyer and “ Parties ” shall mean all of them;

Person ” means any natural person, company, corporation, partnership, limited partnership, limited liability company, trust, unincorporated organization, joint venture, Governmental Entity, or other entity;

Pioneer Anaguid ” has the meaning given to it in Recital (A);

Pioneer Services Agreement ” means the transitional services agreement to be entered into between Seller and Buyer upon Closing, consistent with the principles set forth in Schedule 13;

Pioneer Tunisia ” has the meaning given to it in Recital (A);

President ” has the meaning given to it in Clause 6.6;

Relevant Claim ” means a claim by the Buyer arising in connection with a breach by the Seller of any Warranty or under or pursuant to any covenant, indemnity or other term of any Transaction Document;

Relief ” means, unless the context otherwise requires, any allowance, credit, deduction, exemption or set-off in respect of any Tax or relevant to the computation of any income, profits or gains for the purposes of any Tax, or any saving or repayment of Tax (including any interest in respect of Tax);

Royalty ” means any royalty payment to be paid to ETAP or any Tunisian Governmental Entity pursuant to the Hydrocarbons Code and/or the Concessions and relating to the Interests;

Royalty Liability ” has the meaning given to it in paragraph 1.1(b) of Schedule 7;

Schedule ” means any of the schedules attached hereto;

Second Disclosure Letter ” means the letter from the Seller to the Buyer to be delivered prior to Closing in accordance with Clause 7.6;

 

10


Seller ” means Pioneer Natural Resources USA, Inc., a company incorporated under the laws of Delaware, under registration number 4541779 and having its registered office at c/o The Corporation Trust Company, Corporation Trust Center, 1209 Orange Street, Wilmington, Delaware 19801, United States of America;

Seller’s Group ” means the Seller and all its subsidiaries, all its holding companies and all the other subsidiaries of each of its holding companies (other than the Companies);

Shares ” means:

 

 

(a)

1,000 ordinary shares with a par value of US$1 each in the capital of Pioneer Anaguid, comprising the entire issued share capital of Pioneer Anaguid; and

 

 

(b)

1,000 ordinary shares with a par value of US$1 each in the capital of Pioneer Tunisia, comprising the entire issued share capital of Pioneer Tunisia;

subsidiary ” shall have the meaning given to that term by the Companies Act 2006 of England;

Tax ” means all forms of taxation including income, withholding, corporation, capital gains, inheritance, value added, employment, property, sales, goods, wealth, customs and other import or export duties, excise duties, stamp duties, transfer taxes, social security or other similar contributions and all charges, duties, imposts and levies of a similar nature, and any interest, penalty, surcharge or fine relating to such taxation;

Tax and Royalty Audit Adjustments ” has the meaning given to it in paragraph 6(a) of Schedule 7;

Tax Authority ” means any authority competent to impose, administer or collect any Tax;

Tax Liability ” means an obligation or liability of either Company to make or suffer an actual payment of Tax;

Tax Warranties ” shall have the meaning given to it in Clause 9.1;

Third Party Claim ” has the meaning given to it in paragraph 4.1 of Schedule 4;

Transaction ” means the sale and purchase of the Shares pursuant to this Agreement provided that where the preferential right under the Anaguid JOA is exercised and Closing hereunder involves only the acquisition by the Buyer of the entire issued share capital of Pioneer Tunisia, the Transaction shall mean the sale and purchase of the Shares in Pioneer Tunisia only;

Transaction Documents ” means this Agreement and the other documents entered into by the Parties in connection with the Transaction including the First Disclosure Letter, the Second Disclosure Letter, the Pioneer Services Agreement and the transfers of the Shares;

 

11


Transfer Tax ” means stamp or similar taxes, fees and levies imposed by a competent authority in Tunisia with respect to the transactions contemplated by this Agreement;

Undisclosed Known Breaches ” has the meaning given to it in Clause 3.3;

US$ ” or “ US dollars ” means US dollars, the lawful currency of the United States of America;

Violation Claim ” means any proceeding, claim, dispute, demand or assertion by a third party or Governmental Entity under the Material Agreements or Tunisian Law arising as a result of the execution or performance of this Agreement including the consummation of the transactions contemplated hereby (including any proceeding, claim, dispute, demand or assertion concerning any right of pre-emption or right of first offer, consent or approval required under the Material Agreements or Tunisian Law);

Warranties ” means the warranties of the Seller contained in Part I of Schedule 3 and “ Warranty ” shall be construed accordingly; and

“Working Capital” has the meaning ascribed to it in Schedule 6.

 

2.

SALE OF SHARES AND CONSIDERATION

 

2.1

The Seller shall sell and the Buyer shall buy the Shares with legal effect from Closing.

 

2.2

The Shares shall be sold to the Buyer hereunder together with all rights attaching to them.

 

2.3

The consideration to be paid by the Buyer to the Seller for the purchase of the Shares shall be the Adjusted Bid Amount. At Closing, the following amount shall be paid by the Buyer to the Seller in US dollars in immediately available funds for same day value by wire transfer to the bank account of the Seller specified in a written notice delivered by the Seller to the Buyer prior to Closing:

 

 

(a)

the Bid Amount or, where the 2010 Accounts have been finalized prior to the Closing in accordance with Clauses 5 and 6 and Schedule 6, the Adjusted Bid Amount; plus

 

 

(b)

the amount of Contributions, in the event any Contributions are made, which amount shall be notified by the Seller to the Buyer no less than five (5) Business Days prior to Closing; minus

 

 

(c)

the amount of the Deposit Advance; minus

 

 

(d)

the amount of the Dividends, if any, declared and paid in accordance with Clause 5.4.

 

2.4

Where the 2010 Accounts have not been finalized prior to the Closing, as a separate and independent obligation in connection with the transactions contemplated herein, the Buyer shall also pay to the Seller the price adjustment, if any, in accordance with Clause 5. Upon payment of the amounts referred in Clause 2.3, all loans and inter-company payables owed by either Company to a member of the Seller’s Group shall be deemed finally settled and paid in full.

 

12


2.5

Contemporaneously with the execution and delivery of this Agreement by the Parties:

 

 

(a)

the Deposit Advance shall be paid by the Buyer to the Seller in accordance with Clause 4.1;

 

 

(b)

the Seller shall provide the Buyer with a certified copy of the resolutions, dated as of or prior to the date of this Agreement, of the board of directors of the Seller which authorises the execution of, and consummation of all transactions contemplated under, each Transaction Document to which the Seller is or is to be a party; and

 

 

(c)

the Buyer shall provide the Seller with a statement in English issued by the compliance officer of the Buyer’s ultimate parent company on or prior to the date of this Agreement confirming that the supervisory board of the Buyer’s ultimate parent company has authorised the execution of, and consummation of all transactions contemplated under, each Transaction Document to which the Buyer is or is to be a party.

 

2.6

Contributions paid or otherwise in respect of any currency other than US dollars shall, for the purposes of this Agreement, be converted into US dollars in accordance with the Seller’s normal accounting procedure applied on a consistent basis.

 

2.7

In the event a party to the Anaguid JOA timely exercises its pre-emption rights thereunder pursuant to the Anaguid JOA, then Closing hereunder shall involve only the acquisition of the entire issued share capital of Pioneer Tunisia by the Buyer and:

 

 

(a)

the amount payable by the Buyer to the Seller contemporaneously with completion of the acquisition of the entire issued share capital of Pioneer Tunisia shall be equal to:

 

 

(i)

the amount calculated and to be paid at Closing pursuant to Clause 2.3; minus

 

 

(ii)

the amount allocated pursuant to paragraph 1 of Schedule 18; minus

 

 

(iii)

the amount of Contributions to Pioneer Anaguid; and

 

 

(b)

any and all obligations, liabilities and Warranties of the Seller and any and all obligations, liabilities and warranties of the Buyer relating to Pioneer Anaguid and the Anaguid Interest shall be null and void and all provisions relating to Closing (including Schedule 2) shall be deemed amended to refer to the transfer of Shares in Pioneer Tunisia only.

 

3.

CONDITIONS AND CONDUCT TO CLOSING

 

3.1

Closing is conditional upon the following conditions being fulfilled (or waived as provided in Clauses 3.2, 3.4 and/or 3.5, as applicable) on or before the Long Stop Date:

 

 

(a)

 

(i)

 

each of the Warranties shall be true and correct in all respects as of the Closing as though made on and as of the Closing (except those Warranties that are made as of a specific date which need only be true as of such specific date); and

 

13


 

(ii)

the Seller shall have performed in all respects all obligations required to be performed by it under this Agreement at or prior to Closing,

provided that the Conditions in this Clause 3.1(a) shall nonetheless be deemed fulfilled for all purposes of this Clause 3.1(a) with respect to any failure of any such Warranty to be so true and correct in all respects and/or the failure of the Seller to have so performed in all respects any of such obligations where all such failures would not, individually or in the aggregate, be reasonably likely to result in Losses to the Buyer or the Companies in excess of the Materiality Threshold (or the equivalent thereof in any other currency);

 

 

(b)

each of the warranties of the Buyer referred to in Clause 14 (except those warranties that are made as of a specific date which need only be true as of such date) shall be true and correct in all material respects as of the Closing as though made on and as of the Closing;

 

 

(c)

the Buyer shall have performed in all material respects all obligations required to be performed by it under this Agreement at or prior to Closing;

 

 

(d)

no Governmental Entity shall have issued an order which remains in effect as of the Closing (which is capable of being enforced) which prohibits the consummation of the transactions contemplated herein;

 

 

(e)

the absence of occurrence of any Material Adverse Event; and

 

 

(f)

no applicable Governmental Entity having jurisdiction over either Party shall have notified either Party in writing that merger control clearance is required, which requirement remains in effect as of the Closing, to consummate the transactions contemplated herein.

 

3.2

Notwithstanding anything to the contrary in this Agreement, if prior to Closing the Buyer becomes aware that there are one or more breaches of Warranties and/or any of the Seller’s covenants under this Agreement that would result in the failure of any of the Conditions in Clause 3.1(a) being satisfied, then the Buyer shall elect either to:

 

 

(a)

terminate this Agreement prior to Closing by serving a written notice on the Seller prior to Closing of the Buyer’s election to terminate this Agreement in which case the Deposit Advance paid to the Seller pursuant to Clause 4.1 shall be returned to the Buyer pursuant to Clause 3.8; or

 

 

(b)

waive (subject to Clause 3.3) all such breaches for all purposes of this Agreement (and the Buyer’s failure to notify the Seller prior to Closing pursuant to Clause 3.2(a) shall (subject to Clause 3.3) constitute an irrevocable election by the Buyer to waive all such breaches for all purposes) and proceed to Closing and, without in any way limiting the generality of the foregoing, the Buyer shall have no right or entitlement to seek damages or any other remedy in respect of any such breaches pursuant to this Agreement or otherwise,

 

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provided that the Buyer’s right to elect to terminate this Agreement pursuant to Clause 3.2(a) shall be subject to the Buyer having not intentionally or wilfully breached this Agreement in a manner that results in one of the Conditions not being satisfied and where the Buyer is then in such breach under this Agreement, the Buyer shall have no right to make an election pursuant to said Clause 3.2(a); provided further that where the aggregate Losses arising from the breaches in question do not cause any of the Conditions in Clause 3.1(a) not to be satisfied, then the Buyer shall proceed to Closing and, subject to Schedule 4, shall be entitled after Closing to bring claims for all such breaches.

 

3.3

Should the Closing occur pursuant to Clause 3.2(b) above and notwithstanding the waiver contained in Clause 3.2(b), the Buyer’s waiver provided under said Clause shall not apply and the Buyer shall (subject to the other terms and provisions of this Agreement, including, except as otherwise specified below, of Schedule 4) be entitled to make a Relevant Claim:

 

 

(a)

 

(i)

 

in respect of a breach prior to Closing of any of the Warranties or obligations set out in Clause 3.1(a), if, to the Actual Knowledge of Seller as of the execution and delivery of this Agreement, such Warranties or obligations were breached (such breaches referred to herein as “ Undisclosed Known Breaches ”) and provided that, if such Undisclosed Known Breaches had not occurred, the Materiality Threshold referenced in the proviso of Clause 3.1(a) would nevertheless have been exceeded by Losses relating to other breaches. In this case, the Buyer shall only be entitled to recover the Losses relating to the Undisclosed Known Breaches (the other breaches being waived in accordance with Clause 3.2(b)), and the threshold provided for under paragraph 1.1(b) of Schedule 4 shall not be applicable to Relevant Claims relating to such Losses for the Undisclosed Known Breaches;

 

 

(ii)

in respect of all breaches of the Warranties or obligations set out in Clause 3.1(a) prior to Closing, if the Materiality Threshold referenced in the proviso of Clause 3.1(a) would not have been exceeded but for the existence of Undisclosed Known Breaches. In this case, the threshold provided for under paragraph 1.1(b) of Schedule 4 shall not be applicable to the Relevant Claims relating to the portion of the Losses for the Undisclosed Known Breaches.

For the avoidance of doubt, if the Materiality Threshold referenced in the proviso of Clause 3.1(a) is not exceeded by breaches of the Warranties or obligations set out in Clause 3.1(a) (including any Undisclosed Known Breaches), the threshold provided for under paragraph 1.1(b) of Schedule 4 shall be applicable to all Relevant Claims including Relevant Claims relating to the Losses for any Undisclosed Known Breaches.

 

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3.4

If any of the Conditions set forth in Clauses 3.1(a), (d), (e) or (f) have not been fulfilled, or otherwise waived in writing by the Buyer, in its sole discretion, on or before the Long Stop Date then this Agreement shall terminate immediately.

 

3.5

If any of the Conditions set forth in Clauses 3.1(b) or (c) have not been fulfilled (in so far as such non-fulfilment results in the failure by the Buyer to pay any of the amounts set forth in Clause 2) or otherwise waived in writing by the Seller, in its sole discretion, on or before the Long Stop Date then this Agreement shall terminate immediately.

 

3.6

Where this Agreement is terminated prior to Closing pursuant to any applicable provision of this Agreement, each Party shall be released from its obligations under this Agreement (other than Clauses 3.7, 3.8, 3.9, 4.1, 10.2, 15, 16, 17, 18, 19 and 20) without any further action of the Parties and no Party shall have any claim or liability to the other Party, other than in respect of any breach of Clauses 3.7, 3.8, 3.9, 4.1, 10.2, 15, 16, 17, 18, 19 and 20.

 

3.7

Notwithstanding any other provision of this Agreement, where any of the Conditions set out in Clause 3.1(b) and/or 3.1(c) (in so far as such non-fulfilment results in the failure by the Buyer to pay any of the amounts set forth in Clause 2) have not been satisfied and not waived by the Seller, at its sole discretion, prior to the Closing, the sole and exclusive remedy of the Seller shall be to retain the Deposit Advance paid to the Seller pursuant to Clause 4.1 and to be paid an additional amount from the Buyer equal to the Deposit Advance payment, which additional payment shall be made by the Buyer no later than five (5) Business Days following the date of termination of this Agreement provided that nothing in this Clause 3.7 shall constitute a limitation on the Seller’s right to recover damages or claim any other remedy for a breach by the Buyer of Clause 4.1, 10.2, 10.3 and/or 15.

 

3.8

Notwithstanding any other provision of this Agreement, where any of the Conditions set out in Clause 3.1(a) are not satisfied and not waived by the Buyer at its sole discretion prior to the Closing, the sole and exclusive remedy of the Buyer shall be a right to recover from the Seller the Deposit Advance paid to the Seller pursuant to Clause 4.1 and any reasonable and documented out-of-pocket expenses incurred by the Buyer in relation to this Agreement provided that where the Seller has intentionally and wilfully breached its obligation to deliver the Shares at the Closing, the Buyer shall also be entitled to an additional amount from the Seller equal to the Deposit Advance which shall be made by the Seller no later than five (5) Business Days following the date of termination of this Agreement provided further that nothing in this Clause 3.8 shall constitute a limitation on the Buyer’s right to recover damages or claim any other remedy for a breach by the Seller of Clause 15.

 

3.9

Notwithstanding any other provision of this Agreement, where this Agreement is terminated solely because of the failure to satisfy any of the Conditions set out in Clauses 3.1(d), (e) and/or (f), the sole and exclusive remedy of the Buyer shall be a right to recover from the Seller the Deposit Advance paid to the Seller pursuant to Clause 4.1 (which shall be paid by the Seller to the Buyer within five (5) Business Days following the date of termination of this Agreement) provided that nothing in this Clause 3.9 shall constitute a limitation on the Buyer’s right to recover damages or claim any other remedy for a breach by the Seller of Clause 15 and provided further that where this Agreement is terminated solely as a result of any aforesaid failure, the

 

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Seller shall be entitled to retain the Deposit Advance and recover an additional amount from Buyer equal to the Deposit Advance (which additional amount shall be paid within five (5) Business Days after the date of termination)where the Buyer is in material breach of any of its covenants under this Agreement.

 

3.10

The Parties shall use their best endeavours to ensure that the Conditions are fulfilled as soon as reasonably practicable and, in any event, no later than at the Long Stop Date, which shall include an obligation by Buyer and the Seller (to the extent reasonably applicable to the Seller) to use its best efforts to prevent the failure of the Conditions in Clauses 3.1(d) and 3.1(f) and to seek to have overturned or revoked any order or merger clearance notification or requirement which would result in a failure of the Conditions set out in Clauses 3.1(d) and/or 3.1(f). Compliance by a Party with its obligations set forth in this Clause 3.10, shall not deprive the other Party from claiming any remedies available to such Party pursuant to Clauses 3.7, 3.8 or 3.9, as applicable.

 

3.11

Prior to Closing, the Parties shall agree on a date, time and venue for meetings with any Governmental Entity of Tunisia and shall consult with each other and obtain each other’s consent (not to be unreasonably withheld, conditioned or delayed) and approval prior to commencing any correspondence or discussions with the Government of Tunisia in connection with the transactions contemplated by this Agreement. To the extent that either Party or any of their affiliates receives any correspondence (in whatever form) from the Government of Tunisia relating to the transactions contemplated by this Agreement, such receiving Party shall send a copy of such correspondence, if it is in written form, or otherwise communicate such correspondence (with a written summary to follow), if it is in oral form, to the other Party as soon as reasonably practicable after receipt of such correspondence.

 

3.12

If this Agreement is terminated prior to the Closing for any reason, then the amounts referred to in Clauses 3.7, 3.8, 3.9 and 4.1 are reasonable and necessary and represent a genuine pre-estimate of the Loss that the Seller or the Buyer, as the case may be, would suffer as a result of termination and such amounts are payable as liquidated damages and not as penalties.

 

3.13

Between the date of this Agreement and Closing, the Parties shall reasonably cooperate with each other and use commercially reasonable efforts to effect a smooth transition of the ownership and operation of the Companies and the Seller shall use reasonable efforts to ensure that all material documentation of the Companies in Seller’s possession is transferred to the Buyer within sixty (60) days after Closing provided that the Seller shall be entitled to keep copies of such material documentation for the purposes of its records provided further that no material documentation shall be removed from the office in Tunis of Pioneer Tunisia prior to Closing.

 

4.

DEPOSIT

 

4.1

Upon the date of this Agreement or the next day, the Buyer shall pay to the Seller the Deposit Advance in immediately available funds in US dollars by wire transfer to the bank account of the Seller specified in writing by the Seller for value. If the Deposit Advance is not received in accordance with Clause 4.1, the Seller:

 

 

(a)

shall have an action in debt for the amount of the Deposit Advance; and

 

17


 

(b)

may unilaterally terminate this Agreement by notice in writing to the Buyer in the event that:

 

 

(i)

evidence reasonably satisfactory to the Seller from the paying bank that the Buyer has delivered irrevocable wire transfer instructions to the paying bank to initiate the transfer of the wire to the Seller (to the account nominated by the Seller) for the Deposit Advance is not received by the Seller from the Buyer within three (3) Business Days of the date of this Agreement; or

 

 

(ii)

the Seller does not receive the Deposit Advance within eleven (11) Business Days of the date of this Agreement,

upon which termination the Seller shall have a further action against the Buyer for an additional amount equal to the Deposit Advance (the Parties hereby agree and acknowledge that in the event of such termination the Seller shall be entitled to an amount equal to no less than the Deposit).

 

4.2

Except as provided in Clauses 3.2(a), 3.8 and 3.9, the Deposit Advance paid to the Seller pursuant to Clause 4.1 shall not be refundable and shall be retained by the Seller and (if Closing occurs) applied in part satisfaction of the obligation of the Buyer to pay the Bid Amount as provided in Clause 2.3.

 

5.

PRICE ADJUSTMENT

 

5.1

The Bid Amount has been calculated by the Buyer as the Base Value, plus the Working Capital on the basis of the Accounts and according to Schedule 6.

 

5.2

In the event the 2010 Accounts show a different Working Capital than that resulting from the Accounts, the Bid Amount will be adjusted upwards or downwards, on a US dollar for US dollar basis, in accordance with the procedure set out in Schedule 6; provided that no such adjustment shall be made to the Bid Amount with respect to differences in Working Capital resulting from changes in the amount of the ETAP Receivable attributable to the JN Interest from the Accounts to the 2010 Accounts, it being agreed that for purposes of the calculation of Working Capital in the 2010 Accounts, the amount of the ETAP Receivable attributable to the JN Interest shall be US$16,059,416.

 

5.3

In the event that the 2010 Accounts are finalized after the Closing Date in accordance with Clause 6 below, then any payment due by the Buyer to the Seller or by the Seller to the Buyer shall be paid within five (5) Business Days after such finalization.

 

5.4

The Seller shall be, prior to Closing, entitled to distribute as a Dividend up to thirty seven million US dollars (US$37,000,000), provided that Pioneer Tunisia holds sufficient cash amount to carry out such distribution and that no loan or other credit facility will be required in order to implement such distribution. Should a distribution be made on or following the Effective Date and prior to the Closing Date, the Seller shall inform the Buyer at least five (5) Business Days prior to the anticipated Closing Date of the amount of the Dividend. Such amount will be deducted from the amount to be paid by the Buyer at Closing in accordance with Clause 2.3(d).

 

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6.

2010 ACCOUNTS

 

6.1

Preparation of the 2010 Accounts

 

 

(a)

As soon as reasonably practicable after the Effective Date and in any event within sixty (60) Business Days following the Effective Date, the Seller shall ensure that the Companies prepare the 2010 Accounts on the basis of the principles set out in paragraph 3.1(b) of Part I of Schedule 3, together with the calculation of the Working Capital.

 

 

(b)

The Working Capital calculation (together with the 2010 Accounts and together with an unqualified statement from the Seller’s auditors with respect to the 2010 Accounts) shall be sent as soon as reasonably practicable to the Buyer (with a copy to the Buyer’s auditors where the Buyer has notified the Seller in writing of the identity and address of the Buyer’s auditors).

 

 

(c)

In the event the Closing occurs prior to the sixty (60) Business Day period referred to in Clause 6.1(a) above, the Buyer shall procure that the Companies provide to the Seller all reasonable assistance to perform its obligations hereunder, including reasonable access to all working papers, accounts and documents and access to and reasonable cooperation from relevant personnel.

 

 

(d)

In the event that the Seller fails to submit the 2010 Accounts and the Working Capital calculation to the Buyer within sixty (60) Business Days following the Effective Date, the Buyer shall prepare the 2010 Accounts and the Working Capital calculation, and the remaining provisions of this Clause 6 shall be construed in such a manner whereby it is deemed that the Buyer submits the 2010 Accounts and the Working Capital calculation and the Seller is entitled to review and confirm such calculations.

 

 

(e)

The Buyer’s auditors shall be entitled to review all the documents referred to in this Clause 6.1 and to discuss with the Seller and the Seller’s auditors any matters arising therefrom. The Seller shall, in particular, ensure that the Buyer’s auditors are granted reasonable access to all working papers and other relevant documents of the Seller’s auditors and receive reasonable cooperation from the latter’s relevant personnel.

 

 

(f)

The costs and expenses arising in connection with an audit of the 2010 Accounts required pursuant to this Clause 6 shall be borne by the Companies.

 

6.2

Within twenty (20) Business Days from the date of receipt of the 2010 Accounts and the Working Capital calculation, the Buyer shall review such documents and confirm in writing to the Seller, whether or not it approves the 2010 Accounts and the Working Capital calculation, explaining in writing any disputed item concerning the 2010 Accounts and the Working Capital calculation (“ Disputed Item ”). If after such time limit, the Buyer has not confirmed in writing to the Seller whether or not it approves such 2010 Accounts and Working Capital calculation, they shall be deemed to have been approved by the Buyer and shall become final and binding on the Parties.

 

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6.3

If the Buyer confirms its agreement with the 2010 Accounts and the Working Capital calculation (either as presented to it initially or as modified in such a manner that it has approved them), the 2010 Accounts and the Working Capital calculation shall become final and binding on the Parties.

 

6.4

Disputed Items shall be notified by the relevant Party in writing (such notification being an “ Objection Notice ”). Any Objection Notice shall set out in reasonable detail the Party’s reasons for such non-acceptance and specify the adjustments which, in such Party’s opinion, should be made to the 2010 Accounts and the Working Capital calculation in order to comply with the provisions of this Agreement and accompanied by such Party’s calculation and its best estimate of each of the items that are in dispute.

 

6.5

If the relevant Party serves an Objection Notice in accordance with Clause 6.4, then the Buyer and the Seller shall attempt, in good faith, to reach agreement upon the adjustments required to be made to the 2010 Accounts and the Working Capital calculation pursuant to the 2010 Accounts within a period of fifteen (15) Business Days after receipt by the relevant Party of the Objection Notice during which period the Party receiving the Objection Notice and its representatives, advisors and auditors shall be permitted to review the working papers of the other Party and its representatives, advisors and auditors (to the extent permitted under applicable Laws) relating to the Objection Notice and the basis therefor.

 

6.6

If the Buyer and the Seller fail to reach agreement as specified in this Clause 6 within the 15-Business Day period provided herein, the Disputed Items may be referred by either the Buyer or the Seller for determination by an independent chartered accountant (the “ Expert ”) who is jointly nominated by the Buyer and the Seller or, in the absence of agreement between the Buyer and the Seller on the Expert within five (5) Business Days of a Party notifying the other that it proposes to refer the dispute to an Expert, by the President of the Institute of Chartered Accountants in England and Wales (the “ President ”) provided that where the President is unwilling or unable to serve as an Expert, the President shall nominate a replacement person to serve as the Expert. The Expert to be nominated shall have no conflict of interest in respect of any of the Parties, the Buyer’s Group or the Seller’s Group. The Buyer and the Seller shall instruct the Expert to render its decision and notify it to the Parties within sixty (60) Business Days of its appointment.

 

6.7

The Expert shall be afforded such access to books, records, accounts and documents in the possession of the Parties as the Expert may reasonably request, and the Expert shall act as an expert and not as an arbitrator. The Parties shall make available (and cause the Companies to make available and shall use their best endeavours to cause their respective auditors to make available) all such information, and provide such access, to the Expert as may be required for the performance of his/its assignment.

 

6.8

The Expert shall review the 2010 Accounts and the Working Capital calculation as well as all necessary supporting documentation so as to settle all Disputed Items thereby finalising the Adjusted Bid Amount. The Expert’s determination shall, in the absence of fraud or manifest error, be final and binding on the Parties. Any challenge

 

20


 

to the determination of the Expert on those grounds shall be brought via the dispute resolution mechanism specified in Clause 20 below, and until such time as a resolution to such challenge is achieved, the Parties will act in accordance with the determination of the Expert. The fees, costs and expenses of the Expert shall be paid entirely by the Party whose assertions regarding the Adjusted Bid Amount differ by the greatest amount from the determination by the Expert with respect to the Adjusted Bid Amount. If the Expert determines that any amount is owed by the Seller to the Buyer or the Buyer to the Seller, as a result of the resolution of the dispute concerning the Disputed Items, the amount owed shall be paid by the Seller to the Buyer or the Buyer to the Seller, as applicable, within seven (7) days after the Seller’s and the Buyer’s receipt of notice of the Expert’s determination and for the avoidance of doubt the Expert shall not make any adjustments to the Base Value.

 

6.9

All of the calculations to be made pursuant to this Clause 6 shall be made on a consistent basis and in accordance with generally accepted accounting principles in the United States in force at the Effective Date unless otherwise stated in this Agreement and such principles shall be consistently applied for the purposes of any and all disputes between the Parties.

 

6.10

For the avoidance of doubt, any approval by the Buyer of the 2010 Accounts in accordance with this Clause 6 shall be without prejudice to any Relevant Claim(s) made pursuant to Clause 8.

 

7.

CLOSING

 

7.1

The closing of the sale and purchase of the Shares under this Agreement (the “ Closing ”) shall take place at 10:00 a.m. at the London office of Vinson & Elkins L.L.P. on the fifth (5 th ) Business Day following:

 

 

(a)

the earliest of the date the:

 

 

(i)

pre-emption period set forth in the Anaguid JOA expires without the counter-party to the Anaguid JOA exercising its pre-emption right under the Anaguid JOA;

 

 

(ii)

counter-party to the Anaguid JOA waives its pre-emption right; or

 

 

(iii)

counter-party to the Anaguid JOA exercises its pre-emption right; and

 

 

(b)

fulfilment (or waiver pursuant to Clause 3.2(b), 3.4 and/or 3.5, as applicable) of all the Conditions in Clause 3.1 (other than those Conditions that by their nature can only be satisfied at the Closing but subject to the fulfilment or waiver pursuant to Clause 3.2(b), 3.4 and/or 3.5, as applicable, of such conditions at Closing).

 

7.2

At Closing each Party shall do all those things respectively required of such Party in Schedule 2.

 

7.3

The Buyer shall not be obliged to complete this Agreement unless the Seller complies with all of its obligations in Schedule 2. The Seller shall not be obliged to complete this Agreement unless the Buyer complies with all of its obligations in Schedule 2.

 

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7.4

Should the Closing not occur by the Long Stop Date as a result of the Seller not complying with its obligations contained in Schedule 2, the provisions of Clause 3.8 shall apply mutatis mutandis.

 

7.5

Should the Closing not occur by the Long Stop Date as a result of the Buyer not complying with its obligations contained in Schedule 2, the provisions of Clause 3.7 shall apply mutatis mutandis.

 

7.6

The Seller shall be entitled to address to the Buyer, at least four (4) Business Days prior to the Closing, a Second Disclosure Letter which shall disclose exceptions to the Warranties which to the Actual Knowledge of Seller did not exist prior to the First Disclosure Letter. Should the exceptions contained in the Second Disclosure Letter result in the Conditions set forth in Clause 3.1(a) being unable to be satisfied and, subject to the Buyer having not intentionally or wilfully breached this Agreement as provided in the first proviso in Clause 3.2, the Buyer shall be entitled to not complete this Agreement (as provided in Clause 3.2(a)), in which case the provisions of Clause 3.2 and/or 3.8 shall apply mutatis mutandis.

 

7.7

From and after Closing, the Buyer shall cause the Companies to take such actions as may be reasonably necessary to satisfy any obligations (if any) arising under the Key Agreements or Tunisian Law as a result of the transactions contemplated by this Agreement.

 

8.

WARRANTIES AND INDEMNIFICATION

 

8.1

The Seller warrants to the Buyer that each of the Warranties is true and accurate as at the date of this Agreement and as at the Closing (except that Warranties that are made as of a specific date need to be so true and accurate only as of such date), subject to any exceptions or disclosures (taken as a whole) disclosed or deemed to be disclosed, fully, fairly and accurately by the Seller in the First Disclosure Letter, the Second Disclosure Letter or the Data Room, to enable an experienced energy company acting reasonably to understand that the Warranty in question is in fact qualified by such exception or disclosure; provided , however , that:

 

 

(a)

except as provided in Clause 8.1(b), no disclosure contained in the Second Disclosure Letter shall be a limitation on the Buyer’s remedies under this Agreement after Closing with respect to:

 

 

(i)

any Warranty that is not true and correct as referred to in Clause 3.1(a)(i) provided that the aggregate Losses resulting from the disclosures contained in the Second Disclosure Letter remain equal to or below the Materiality Threshold ; or

 

 

(ii)

any Warranty that is not true and correct at Closing to the extent that such breach of Warranty occurred prior to the Effective Date; and

 

 

(b)

disclosures contained in the Second Disclosure Letter shall be a limitation on the Buyer’s remedies under this Agreement after Closing with respect to any Warranty that is not true and correct at Closing to the extent that such breach of Warranty occurred after the Effective Date.

 

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8.2

The Buyer acknowledges and agrees that notwithstanding anything to the contrary:

 

 

(a)

the Warranties are the only assurances given by the Seller and the Seller makes no other warranties or assurances in connection with the Transaction or otherwise (and, in particular, the assurances set forth in paragraph 13 of Part I of Schedule 3 are the sole and exclusive warranties given in connection with any environmental matters or issues);

 

 

(b)

it shall have no right or entitlement to bring a breach of Warranty claim in connection with paragraph 13 of Part I of Schedule 3 unless:

 

 

(i)

the breach relates to a period:

 

 

(A)

prior to the Effective Date; and

 

 

(B)

as to any Company, during which such Company held a participating interest in, and acted as operator of, the Interest where the breach occurred;

 

 

(ii)

the breach was caused by either Company carrying out operations pursuant to the Key Agreements in its capacity as operator; and

 

 

(iii)

the breach either:

 

 

(A)

violated any applicable Laws of Tunisia in force prior to the Effective Date; or

 

 

(B)

resulted in liability prior to the Effective Date to a third party;

 

 

(c)

(i)         none of the Warranties will be considered breached, untrue or inaccurate as a result of a Violation Claim;

 

 

(i)

the assertion or enforcement of a Violation Claim or the exercise of any pre-emption rights or right of first offer under any Key Agreement or Tunisian Law will not be considered a Material Adverse Event; and

 

 

(ii)

the Seller shall not be under any obligation to indemnify or otherwise compensate or reimburse the Buyer for any Losses arising in connection with a Violation Claim including arising in connection with any settlement or final determination with respect to any Violation Claim;

 

 

(d)

it has entered into each Transaction Document as a result of its own due diligence, investigations, enquiries, advice and knowledge. The Buyer acknowledges that it 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 each Transaction Document;

 

23


 

(e)

save as expressly provided for herein, the Warranties do not include any assurance (and the Seller does not give any such assurance) as to:

 

 

(i)

the accuracy of any forecasts, estimates, projections, management presentations, statements of intent or statements of opinion howsoever provided to the Buyer or any of its directors, employees, officers, agents, advisers or other Persons on, prior to or after the date of this Agreement including as are included in the Data Room, First Disclosure Letter, the Second Disclosure Letter or any other documents provided to or for the benefit of the Buyer or its advisers in the course of the Buyer’s investigation of the Companies and the Interests;

 

 

(ii)

the value of the Interests or the Shares;

 

 

(iii)

the amounts, quality or deliverability of reserves of crude oil, natural gas or other hydrocarbons attributable to the Interests;

 

 

(iv)

any geological, geographical, engineering, economic or other interpretations, forecasts or evaluations or any estimates or projections of reserves or resources;

 

 

(v)

any forecast of expenditures, budgets or financial projections;

 

 

(vi)

any geological formation, drilling prospect or hydrocarbon reserve;

 

 

(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 Tunisia;

 

 

(ix)

the existence of any present or future business opportunities of either Company of any type whatsoever, including in respect of the oil and gas industry in Tunisia;

 

 

(x)

the state, condition, performance, quality, operability or fitness for a particular purpose of the Interests and/or any of the property or assets relating to the Interests (which are acknowledged by the Buyer to be on an “as-is” basis) including any platforms, pipelines, plant, machinery, wells, facilities and all other installations and structures; or

 

 

(xi)

the accuracy of the English or other translation of any agreement or document referred to in the First Disclosure Letter or the Second Disclosure Letter or as included in the Data Room.

 

 

(f)

Seller shall have no liability under this Agreement attributable to costs or expenses incurred or paid by the Companies, the Companies’ predecessors in interest or any other current or former party to the Key Agreements in connection with the Key Agreements prior to the Effective Date to the extent that such costs or expenses relate to the following (“ past costs or expenses ”):

 

 

(i)

the recoverability or collectability of past costs or expenses reflected as ETAP Receivables in the Accounts or, when finalized, the 2010 Accounts; or

 

24


 

(ii)

issues relating to the deductibility of any past costs or expenses in connection with the computation of the Companies’ Taxes; or

 

 

(iii)

the amount of past costs or expenses properly included in the calculation of any Royalty or other amount calculated pursuant to the applicable R-Factor or ratio (R) (as defined in the Hydrocarbon Code).

 

8.3

After Closing, the Seller shall, subject to Schedule 4 and the other provisions of this Clause 8, undertake to indemnify the Buyer and any payments to Buyer shall be deemed to be a reduction in the Adjusted Bid Amount or, if the Buyer in its absolute discretion so wishes and directs the Seller in writing, by paying the amounts due under this Clause 8.3 to the Companies directly for the amount of:

 

 

(i)

all Losses suffered or incurred by the Buyer or any of the Companies, as a result of any Relevant Claims arising from any breach of any of the Warranties;

 

 

(ii)

subject to any and all of the limitations in Clauses 8.2(e) and 8.2(f) and Schedule 7, any Loss attributable to a Tax Liability or Royalty Liability for a period prior to the Effective Date, (x) if such Loss has not been provided for in the 2010 Accounts of such Company or (y) if and to the extent such Loss represents an increase over the amount so provided in the 2010 Accounts for such Tax or Royalty; and

 

 

(iii)

all reasonable costs and expenses of any proceedings and any legal advice incurred in connection with any Loss referred to in Clauses 8.3(i) and 8.3(ii).

 

8.4

The liability of the Seller in connection with a Relevant Claim shall be subject to the limitations contained in, and to the provisions of, Schedule 4.

 

8.5

After the Closing, Relevant Claims shall be notified in writing by the Buyer to the Seller within the time limits set out in Schedule 4. As soon as reasonably practicable after the Buyer becomes aware that there is a breach of Warranty, the Buyer shall without undue delay notify the Seller in writing. To the extent that the Losses relating to any such breach are increased as a result of a failure by the Buyer to notify the Seller timely of such a breach in accordance with this Clause 8.5, the Buyer shall be deemed to have irrevocably waived its rights and entitlement to claim such increase in Losses. To the extent reasonably practicable, the notification of the Relevant Claim shall contain reasonable information as to the details of such matter or circumstance then known to the Buyer including the Buyer’s best estimate of the amount of the Relevant Claim. To the extent reasonably practicable, the Buyer shall thereafter provide a written update to the Seller of such matters or circumstances whenever any material new information, facts or details become known by the Buyer in connection with such matter or circumstance.

 

8.6

Should the Buyer become aware at any time before or after Closing that there has been a breach of any of the Warranties or any other term of this Agreement, the Buyer shall not be entitled to (and the Buyer hereby waives the right to) rescind or terminate this Agreement after Closing.

 

25


8.7

Each of the Parties acknowledges and agrees that after the Closing, notwithstanding any other provision of any Transaction Document to the contrary, the sole and exclusive remedy of the Buyer with respect to any Relevant Claim shall be a claim for damages under Clause 8.3 and Schedule 4 of this Agreement provided that any such Relevant Claim shall be subject to the limitations set forth herein.

 

9.

TAX

 

9.1

The Seller’s obligation to hold the Buyer harmless in accordance with Clause 8.3, the provisions of Schedule 7 and the provisions of paragraph 8 of Part I of Schedule 3 (the “ Tax Warranties ”), shall represent the Seller’s only obligation with respect to Tax matters.

 

9.2

The Parties agree and acknowledge that no Transfer Tax should be chargeable by any Tax Authority in Tunisia in connection with the transactions contemplated by the Transaction Documents; provided , however , that where any Transfer Tax is payable in Tunisia or Austria in connection with the transactions contemplated by the Transaction Documents, then such Transfer Tax shall be borne solely by the Buyer.

 

10.

PROTECTIVE COVENANTS

 

10.1

The Buyer covenants in favour of the Seller that:

 

 

(a)

no later than thirty (30) days following the Closing Date the Buyer will, and will cause each Company to, change its name and register such change of name with the registrar of companies in the Cayman Islands, and as soon as reasonably practicable but no later than forty five (45) days following the Closing Date the Buyer will, and will cause each Company to, cease using the word “Pioneer” or “PNR” or any variation or derivative thereof (including any logo, trademark or design containing such name or word or derivative or otherwise associated with the Seller or any member of the Seller’s Group and which are listed in Schedule 14) or any other name which could be confused or associated with any such name in connection with the Interests or any assets of either Company or in any way using the word “Pioneer” o


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