EXHIBIT 10.16
Cost Recovery Agreement
THIS AGREEMENT made as of April 1, 1997
BETWEEN:
PINNACLE OIL INTERNATIONAL INC.
a Nevada corporation whose principal executive
office is located at 380 - 0000 Xxxx Xxxxxxx Xxxxxx
Xxxxxxxxx, X.X., Xxxxxx, X0X 0X0
("Pinnacle International")
OF THE FIRST PART
AND:
PINNACLE OIL CANADA INC.
a Canadian federal corporation registered in
British Columbia as an extra-provincial
company whose principal executive office
is located at #000 - 0000 Xxxx Xxxxxxx Xxxxxx,
Xxxxxxxxx, X.X. X0X 0X0
("PinCan")
OF THE SECOND PART
AND:
PINNACLE OIL INC.
a Nevada corporation whose principal executive
office is located at 380 - 0000 Xxxx Xxxxxxx Xxxxxx
Xxxxxxxxx, X.X., Xxxxxx, X0X 0X0
("PinUS")
OF THE THIRD PART
WHEREAS:
A. PinCan and PinUS are both wholly owned subsidiaries of Pinnacle
International;
B. Pinnacle International has entered into technology licence
agreements (the "Licence Agreements") with each of PinCan and PinUS
(together called the "Licencees"), pursuant to which the Licencees are
to use their best efforts to
exploit Hydrocarbons (as defined in the Licence Agreements) in Canada
and the United States, using data obtained from Pinnacle
International;
C. In order to fulfil their obligations under the Licence Agreements,
the Licencees will need to use certain equipment now owned by Pinnacle
International, and which Pinnacle International has agreed to make
available to the Licencees;
D. At the same time, the parties have agreed that PinCan will supply
certain management services to both Pinnacle International and PinUS,
using qualified personnel employed by PinCan for this purpose;
E. Both Licence Agreements provide for a licence fee to be paid to
Pinnacle International based on a percentage of gross revenue from the
commercial exploitation of Hydrocarbons, without any provisions for
adjustments to take into account the use of Pinnacle International's
equipment by the Licencees, and the supply of management services to
Pinnacle International and PinUS by PinCan; and
F. The parties desire to enter into this Agreement to set out the
basis for appropriate cost recovery by each party from the others in
respect of the leasing of equipment and the supply of management
services by PinCan.
NOW THIS AGREEMENT WITNESSES that in consideration of the premises the parties
covenant and agree as follows:
1. DEFINITIONS
In this Agreement:
(a) "Data Acquisition Technology", means all technology owned by
Pinnacle International which is required by the Licencees to enable
them to fulfil their obligations under the Licence Agreements and
under all agreements with third parties, including, without
limitation, computer hardware and supporting software and
communications technology;
(b) "Equipment" means all other equipment owned or leased by Pinnacle
International which Pinnacle International has agreed to make
available to the Licencees on a cost recovery basis, including motor
vehicles, airplanes and other modes of transportation, and ancillary
supplies;
(c) "Management Services" means services supplied to Pinnacle
International and PinUS by PinCan personnel relating to
administration, finance, accounting, securities compliance, public
relations and negotiations with third parties on behalf of Pinnacle
International and PinUS.
2. AVAILABILITY OF DATA ACQUISITION TECHNOLOGY
During the currency of the Licence Agreement, Pinnacle International will
make its Data Acquisition Technology available to the Licencees for
sufficient periods to enable them to fulfil their obligations under the
technology agreements and their obligations under all third party
agreements.
3. EQUIPMENT LEASE PAYMENTS TO PINNACLE INTERNATIONAL
During the currency of the Licence Agreements, Pinnacle International will
make its Equipment available to the Licencees for sufficient periods to
assist them to fulfil their obligations under the technology agreements and
their obligations under all third party agreements, for lease payments to
be determined by the parties from time to time, based on the per diem use
of the Equipment by the Licencees, with the intent that Pinnacle
International will recover all of its own actual cost of the Equipment,
plus a reasonable competitive market return on capital.
4. MANAGEMENT FEES TO PINCAN
During the currency of the Licence Agreements, PinCan will supply
Management Services to Pinnacle International in connection with the world-
wide activities of Pinnacle International and to PinUS in connection with
its activities in the United States, for an annual fee equal to the actual
employment costs of all personnel engaged by PinCan to supply such
Management Services, (including all reasonable expenses incurred by such
personnel in the course of their employment) plus an annual fee of U.S.
$20,000.
5. PAYMENT
Each of the parties will account to the others, on a quarterly basis, for
the amounts due to the others for Equipment lease payments and for fees for
Management Services, and adjustment amounts will be paid from one party to
the others, annually, so as to result in
the full recovery by all three parties of all the payments and fees
contemplated by this Agreement.
6. MISCELLANEOUS
(a) Cooperation
Each party agrees, without further consideration, to cooperate and
diligently perform any further acts, deeds and things, and to execute
and deliver any documents that may be reasonably necessary or
otherwise reasonably required to consummate, evidence, confirm and/or
carry out the intent and provisions of this Agreement, all without
undue delay or expense.
(b) Interpretation
(i) Survival
All representations and warranties made by any party in
connection with any transaction contemplated by this
Agreement shall, irrespective of any investigation made by
or on behalf of any other party hereto, survive the
execution and delivery of this Agreement, and the
performance or consummation of any transaction described in
this Agreement.
(ii) Entire Agreement/No Collateral
Representations
Each party expressly acknowledges and agrees that this
Agreement, and the agreements and documents referenced
herein;
(i) is the final, complete and exclusive statement of the
agreement of the parties with respect to the subject
matter hereof;
(ii) supersedes any prior or contemporaneous agreements,
memorandums, proposals, commitments, guarantees,
assurances, communications, discussions, promises,
representations, understandings, conduct, acts,
courses of dealing, warranties, interpretations or
terms of any kind, whether oral or written, and that
may such prior agreements are of no force or effect
except as expressly set forth herein; and
(iii) may not be varied, supplemented or contradicted by
evidence of prior agreements, or by evidence of
subsequent oral agreements.
No prior drafts of this Agreement, and no words or phrases
from any prior drafts, shall be admissible into evidence in
any action or suit involving this Agreement.
(iii) Amendment; Waiver; Forbearance
Except as expressly provided otherwise herein, neither this
Agreement nor any of the terms, provisions, obligations or
rights contained herein, may be amended, modified,
supplemented, augmented, rescinded, discharged or terminated
(other than by performance), except by a written instrument
or instruments signed by all of the parties to this
Agreement. No waiver of any breach of any term, provision or
agreement contained herein, or of the performance of any act
or obligation under this Agreement, or of any extension of
time for performance of any such act or obligation, or of
any right granted under this Agreement, shall be effective
and binding unless such waiver shall be in a written
instrument or instruments signed by each party claimed to
have given or consented to such waiver and each party
affected by such waiver. Except to the extent that the party
or parties claimed to have given or consented to a waiver
may have otherwise agreed in writing, no such waiver shall
be deemed a waiver or relinquishment of any other term,
provision, agreement, act, obligation or right granted under
this Agreement, or any preceding or subsequent breach
thereof. No forbearance by a party to seek a remedy for any
noncompliance or breach by another party hereto shall be
deemed to be a waiver by such forbearing party of its rights
and remedies with respect to such noncompliance or breach,
unless such waiver shall be in a written instrument or
instruments signed by the forbearing party.
(iv) Remedies Cumulative
The remedies of each party under this Agreement are
cumulative and shall not exclude any other remedies to which
such party may be lawfully entitled.
(v) Severability
If any term or provision of this Agreement or the
application thereof to any person or circumstance shall, to
any extent, be determined to be invalid, illegal or
unenforceable under present or future laws, then, and in
that event:
(i) The performance of the
offending term or provision (but only to the extent
its application is invalid, illegal or unenforceable)
shall be excused as if it had never been incorporated
into this Agreement, and in lieu of such excused
provision, there shall be added a provision as
similar in terms and amount to such excused
provisions as may be possible and be legal, valid and
enforceable; and
(ii) The remaining part of this Agreement (including the
application of the offending term or provision to
persons or circumstances other than those as to which
it is held invalid, illegal or unenforceable) shall
not be affected thereby, and shall continue in full
force and effect to the fullest extent provided by
law.
(vi) Parties in Interest
Notwithstanding anything else to the contrary herein,
nothing in this Agreement shall confer any rights or
remedies under or by reason of this Agreement on any persons
other than the parties hereto and their respective
successors and assigns, if any, as may be permitted
hereunder, nor shall anything in this Agreement relieve or
discharge the obligation or liability of any third party to
any party to this Agreement, nor shall any provision give
any third person any right of subrogation or action over or
against any party to this Agreement. Notwithstanding the
prior sentence, the parties acknowledge that the
subsidiaries of the Grantee and the Grantor and their
respective successors and assigns are a third party
beneficiary of this Agreement.
(c) Enforcement
(i) Applicable Law
This Agreement and the rights and remedies of each party
arising out of or relating to this Agreement (including,
without limitation, equitable remedies) shall (with the
exception of the applicable securities laws) be solely
governed by, interpreted under, and construed and enforced
in accordance with the laws (without regard to the conflicts
of law principles) of the State of Nevada, as if this
Agreement were made, and as if its obligations are to be
performed, wholly with in the State of Nevada.
(ii) Consent to Jurisdiction: Service Process
Any "action or proceeding" (as such term is defined below)
arising out of or relating to this Agreement shall be filed
in and heard and litigated solely before the state courts of
Nevada. Each party generally and unconditionally accepts the
exclusive jurisdiction of such courts and venue therein;
consents to the service of process in any such action or
proceeding by certified or registered mailing of the summons
and complaint in accordance with the notice provisions of
this Agreement; and waives any defense or right to object to
venue in said courts based upon the doctrine of "forum non
conveniens" the Term "action or proceeding" is defined as
any and all claims, suits, actions, hearings, arbitrations
or other similar proceedings, including appeals and
petitions therefrom, whether formal or informal,
governmental or non-governmental, or civil or criminal.
(iii) Waiver of Rights to Jury Trial
Each party hereby waives such party's respective right to a
jury trial of any claim or cause of action based upon or
arising out of this Agreement. Each party acknowledges that
this waiver is a material inducement to each other party
hereto to enter into the transaction contemplated hereby;
that each other party has already relied upon this waiver in
entering into this Agreement; and that each other party will
continue to rely on this waiver in their future dealings.
Each party warrants and represents that such party has
reviewed this waiver with such party's legal counsel, and
that such party has knowingly and voluntarily waived its
jury trial rights following consultation with such legal
counsel.
(d) Assignment
Provided in this Agreement the Grantee may not sell, license, transfer
or assign (whether direct or indirect, merger, consolidations,
conversion, sale of assets, sale or exchange of securities, or by
operation of law, or otherwise) any of its rights or interests or
delegate its duties or obligations under this Agreement, in whole or
in part, including to any Subsidiary or any Affiliate, without the
prior written consent of the Grantee which consent may be withheld in
such other party's sole discretion.
(e) Counterparts; Electronically Transmitted Documents
This Agreement may be executed in counterparts, each of which shall be
deemed an original, and all of which together shall constitute one and
the same instrument, binding on all parties hereto. Any signature page
of its Agreement may be detached from any counterpart of this
Agreement and reattached to any other counterpart of this Agreement
identical in form hereto by having attached to it one or more
additional signature pages. If a copy or counterpart of this
Agreement is originally executed and such copy or counterpart is
thereafter transmitted electronically by facsimile or similar device,
such facsimiled document shall for all purposes be treated as if
manually signed by the party whose facsimile signature appears.
WHEREFORE, the parties hereto have, for purposes of this Agreement,
executed this Agreement in Xxxxxxxxx, Xxxxxxx Xxxxxxxx, Xxxxxx, as of the date
first herinabove set forth.
PINNACLE OIL INTERNATIONAL INC.,
a Nevada corporation
By: /s/ R. Xxxx Xxxxxxx
--------------------------
R. Xxxx Xxxxxxx, President
PINNACLE OIL CANADA INC.
By: /s/ R. Xxxx Xxxxxxx
--------------------------
R. Xxxx Xxxxxxx, President
PINNACLE OIL INC.
By: /s/ R. Xxxx Xxxxxxx
--------------------------
R. Xxxx Xxxxxxx, President
