UNOCAL CANADA LIMITED
UNOCAL CANADA ALBERTA HUB LIMITED
UNOCAL CORPORATION
and
POGO CANADA, ULC
POGO PRODUCING COMPANY
SHARE PURCHASE AGREEMENT
July 8, 2005
<PAGE>
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
<PAGE>
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 Hart
Scott Rodino 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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<PAGE>
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:
<PAGE>
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 wells;
(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 wells, 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 wells, 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.
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<PAGE>
"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).
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<PAGE>
"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.
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<PAGE>
"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
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<PAGE>
(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.
"Goldman Sachs 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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<PAGE>
"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.
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<PAGE>
"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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<PAGE>
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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<PAGE>
"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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<PAGE>
(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 Ryder
Scott
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 Ryder
Scott.
"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.
"Ryder Scott" means Ryder Scott 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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<PAGE>
(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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<PAGE>
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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<PAGE>
(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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<PAGE>
(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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<PAGE>
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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<PAGE>
(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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<PAGE>
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.
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<PAGE>
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 Bennett
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.
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<PAGE>
(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).
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<PAGE>
(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.
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<PAGE>
(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.
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<PAGE>
(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.
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<PAGE>
(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.
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<PAGE>
(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.
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(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.
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(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 Bennett 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.
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(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) Bennett 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.
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(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 Mate
