PURCHASE AND SALE AGREEMENT BETWEEN PETROHUNTER ENERGY CORPORTION, PETROHUNTER OPERATING COMPANY AND SWEETPEA PETROLEUM PTY LTD. AND FALCON OIL & GAS LTD., FALCON OIL & GAS USA, INC. AND FALCON OIL & GAS AUSTRALIA PTY LTD. DATED MAY 26, 2009
EXHIBIT 10.1
PURCHASE AND SALE AGREEMENT BETWEEN PETROHUNTER
ENERGY CORPORTION,
PETROHUNTER OPERATING COMPANY AND SWEETPEA
PETROLEUM PTY LTD. AND
FALCON OIL & GAS LTD., FALCON OIL & GAS
USA, INC. AND FALCON OIL & GAS AUSTRALIA PTY LTD.
DATED MAY 26, 2009
EXECUTION
COPY
SECOND
PURCHASE AND SALE AGREEMENT
BY
AND BETWEEN:
PETROHUNTER
ENERGY CORPORATION
-
and -
PETROHUNTER
OPERATING COMPANY
-
and -
SWEETPEA
PETROLEUM PTY LTD
-
and -
FALCON
OIL & GAS LTD.
-
and -
FALCON
OIL & GAS USA, INC.
-
and -
FALCON
OIL & GAS AUSTRALIA PTY LTD
TABLE
OF CONTENTS
Page
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ARTICLE
1 INTERPRETATION AND GENERAL
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1
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1.1
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Defined
Terms
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1
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1.2
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Meaning
of Subsidiary
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6
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1.3
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Meaning
of Control or Controlled
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7
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1.4
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General
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7
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1.5
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Governing
Law
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7
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ARTICLE
2 PURCHASE AND SALE
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8
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2.1
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PetroHunter
Parties’ Consideration
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8
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2.2
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Falcon
Parties’ Consideration
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8
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ARTICLE
3 REPRESENTATIONS AND WARRANTIES
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9
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3.1
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Representations
and Warranties by PetroHunter Parties
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9
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3.2
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Representations
and Warranties of Falcon Parties
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12
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ARTICLE
4 WARRANTY CLAIMS
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12
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4.1
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Survival
of Warranties
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12
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4.2
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Limitations
on Warranty Claims
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13
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ARTICLE
5 COVENANTS
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13
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5.1
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Mutual
Covenants
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13
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5.2
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Covenants
of PetroHunter Parties
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14
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5.3
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Covenants
of Falcon Parties
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15
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5.4
|
Right
of First Offer
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15
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ARTICLE
6 CLOSING
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16
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6.1
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Closing
or Termination
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16
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6.2
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Conditions
for the Benefit of the Falcon Parties
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17
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6.3
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Conditions
for Benefit of PetroHunter Parties
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17
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6.4
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PetroHunter
Parties’ Deliveries on Closing
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17
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6.5
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Falcon
Parties’ Deliveries on Closing
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19
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ARTICLE
7 RESOLUTION OF DISPUTES
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21
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7.1
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Artibration
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21
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ARTICLE
8 INDEMNITY
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22
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8.1
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Indemnity
by the PetroHunter Parties
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22
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8.2
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Provisions
Relating to Indemnity Claims
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23
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ARTICLE
9 GST
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25
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9.1
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Interpretation
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25
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-i-
TABLE
OF CONTENTS
(continued)
Page
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9.2
|
Going
concern
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25
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9.3
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GST
gross-up
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26
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9.4
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Tax
invoice
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26
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9.5
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Adjustment
event
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26
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9.6
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Reimbursements
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26
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9.7
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Survival
of Article 9
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26
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ARTICLE
10 GENERAL
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26
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10.1
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Taxes
and Fees
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26
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10.2
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Complete
Closings
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27
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10.3
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Status
of the Agreement
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27
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10.4
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Tender
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27
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10.5
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Specific
Performance and other Remedies
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27
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10.6
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Obligations
as Covenants
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27
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10.7
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Amendment
of Agreement
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27
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10.8
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Further
Assurances
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27
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10.9
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Waiver
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28
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10.10
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Time
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28
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10.11
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Entire
Agreement
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28
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10.12
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Severability
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28
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10.13
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Counterparts
and Facsimile
|
28
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10.14
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Notices
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29
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10.15
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Confidentiality
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30
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10.16
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Successors
and Assigns
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30
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10.17
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Enurement
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30
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10.18
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Language
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30
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SCHEDULE
"A" PERMIT TRANSFER INSTRUMENT
|
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SCHEDULE
"B" ASSIGNMENT AND XXXX OF SALE
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SCHEDULE
"C" ASSIGNMENT AND XXXX OF SALE (BEETALOO INVENTORY)
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SCHEDULE
"D" ASSIGNMENT AND XXXX OF SALE (25% INTEREST IN THE
ASSETS)
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SCHEDULE
"E" ASSIGNMENT AND XXXX OF SALE (INITIAL WORKING INTEREST)
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SCHEDULE
"F" BEETALOO PAYABLES
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SCHEDULE
"G" ESCROW AGREEMENT
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| SCHEDULE "H" ASSUMPTION UNDERTAKING | |||
-ii-
TABLE
OF CONTENTS
Page
| SCHEDULE "I" BEETALOO BASIN JOINT OPERATING AGREEMENT | |||
| SCHEDULE "J" MATERIAL AGREEMENTS | |||
-iii-
SECOND
PURCHASE AND SALE AGREEMENT
THIS SECOND PURCHASE AND SALE
AGREEMENT (“Agreement”) is made and
entered into May 26, 2009, by and between PetroHunter Energy Corporation (“PetroHunter Energy”), Sweetpea
Petroleum Pty Ltd (“Sweetpea”), PetroHunter
Operating Company (“PetroHunter
Operating”), Falcon Oil & Gas Ltd. (“Falcon”), Falcon Oil & Gas
USA, Inc. (“Falcon USA”)
and Falcon Oil & Gas Australia Pty Ltd (“Purchaser”). PetroHunter
Energy, PetroHunter Operating, Sweetpea, Falcon, Falcon USA and Purchaser may
sometimes be referred to herein individually as a “Party” and collectively as the
“Parties”.
WHEREAS, PetroHunter Energy and
Sweetpea, and Falcon and Purchaser entered into a purchase and sale agreement
dated August 22, 2008 (the “Beetaloo PSA”) with respect to
the Beetaloo Basin Project (as hereinafter defined) whereby Purchaser bought an
undivided 50% interest in the Beetaloo Basin Project from Sweetpea on September
30, 2008 (the “Initial
Transaction”);
AND WHEREAS, Sweetpea is now
operator of the Beetaloo Basin Project and owner of the other undivided 50%
interest in the Beetaloo Basin Project;
AND WHEREAS, Purchaser wishes
to buy an additional 25% undivided interest in the Beetaloo Basin Project from
Sweetpea and become the operator of the Beetaloo Basin Project;
NOW THEREFORE, in
consideration of the mutual covenants and agreements set out in this Agreement
and for other good and valuable consideration (the receipt and sufficiency of
which are hereby acknowledged), the Parties hereto covenant and agree as
follows:
ARTICLE
1
INTERPRETATION
AND GENERAL
|
1.1
|
Defined
Terms
|
In this
Agreement, the following defined terms shall mean as follows:
“Acceptance Date” means the
last to occur of:
|
(a)
|
the
execution and delivery of this Agreement by all Parties;
and
|
|
(b)
|
written
confirmation received by each Party that each other Party’s Board of
Directors has approved the execution and delivery of this
Agreement.
|
“Agreement” means this purchase
and sale agreement, including all Schedules hereto, as amended from time to time
in accordance with the terms hereof, “hereof”, “hereto” and “hereunder” and
similar expressions refer to this Agreement and not any particular section of
this Agreement; “Article”, “Section” and “Schedule” mean and refer to the
specified article, section or Schedule of or to this Agreement.
-2-
“Amended and Restated Beetaloo
JOA” means the joint operating agreement between the Purchaser and
Sweetpea dated the Closing Date in the form attached hereto as SCHEDULE "I"
hereto.
“Assets” means the undivided
25% interest in the Beetaloo Basin Project that will be subject to the
assignment delivered by Sweetpea to Purchaser at the Closing.
“Xxxxxxx Override” has the
meaning ascribed thereto in the Beetaloo PSA.
“Beetaloo Basin Project” means
(i) the Permits, (ii) the Well, (iii) the Data, (iv) the Material Agreements,
(v) all related licenses, permits, access rights, and other rights and
privileges, and (vi) all rights, titles and interests of the PetroHunter
Parties, whether derived under the Permits, the Material Agreements, or
otherwise, in and to all equipment, fixtures and personal property located on
lands covered by the Permits or used in connection with the exploration and
development of such lands.
“Beetaloo Inventory” means the entire 100%
ownership interest in the inventory identified on SCHEDULE "C" hereto (together
with any other personal property owned, leased or otherwise held for use by or
on behalf of a PetroHunter Party that is related to the Beetaloo Basin Project,
even if such property is omitted or misdescribed in SCHEDULE "C") that will be
subject to the xxxx of sale delivered by Sweetpea to Purchaser at the
Closing.
“Beetaloo JOA” means the joint
operating agreement between Purchaser and Sweetpea dated August 22,
2008.
“Beetaloo Payables” means all
amounts owing by the PetroHunter Parties to contractors, creditors and all other
parties in connection with the Beetaloo Basin Project up to a maximum of
A$1,500,000.
“Board of Directors” means the
board of directors of a Party, as the context may require.
“Breaching Party” has the
meaning ascribed thereto in Section 10.5.
“Buckskin JOA” means the joint
operating agreement dated October 31, 2008, between PetroHunter Operating, as
operator, and Falcon USA, as non-operator.
“Buckskin PSA” means the
purchase and sale agreement between PetroHunter Energy and PetroHunter
Operating, and Falcon and Falcon USA dated August 22, 2008, as amended on
October 31, 2008.
“Buckskin Mesa Project” means
PetroHunter’s 20,000-acre Buckskin Mesa project located in the Piceance Basin,
Colorado.
“Business Day” means a day of
the week, other than a Saturday, Sunday or any other day which is a statutory
holiday in the Province of Ontario, the Northern Territory of Australia, or the
State of Colorado.
-3-
“Closing” means the matters
contemplated by ARTICLE 6 of this Agreement at the offices of Xxxxx Xxxxxx &
Xxxxxx LLP in Denver, Colorado on the Closing Date.
“Closing Date” means 11:00 a.m.
(Denver time) five Business Days after:
|
(c)
|
the
first to occur of the following:
|
|
(i)
|
the
Treasurer of the Commonwealth of Australia ceasing to be empowered to make
an order under Part II of the Foreign Acquisitions and Takeovers Xxx 0000
(Cth) in respect of the Transaction;
or
|
|
(ii)
|
the
Treasurer of the Commonwealth of Australia giving the Purchaser advice in
writing of a decision by the Treasurer that the Commonwealth Government
has no objection to the Transaction;
and
|
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(d)
|
the
satisfaction or waiver of the closing conditions by the relevant Parties
contained in Sections 6.2 and 6.3, as the case may
be.
|
“Commissioner of Taxation”
means the commissioner of taxation of the Australian Taxation
Office.
“Common Shares” means common
shares in the capital of Falcon.
“Completion Capital” has the
meaning ascribed thereto in the Buckskin PSA.
“Control” has the meaning
ascribed in Section 1.3;
“Data” means all files,
records, correspondence and information in the possession or under the control
of the PetroHunter Parties that relate to the Beetaloo Basin Project, including
without limitation invoice and payment records; Permit, contract, and
correspondence files; and geological, geophysical, engineering and interpretive
data.
“Escrow Agent” means the escrow
agent appointed by Falcon in its sole discretion under the Escrow
Agreement.
“Escrow Agreement” means the
escrow agreement among, the Escrow Agent, the Falcon Parties and PetroHunter
Parties dated the Closing Date in the form of escrow agreement attached hereto
as SCHEDULE "G" to this Agreement and which will be dated the Closing
Date.
“Falcon Encumbrances” means
liens, charges, security interests, options, claims, mortgages, pledges, or
other restrictions on title or transfer, except for Permitted Falcon
Encumbrances.
“Falcon Parties” means,
together, Falcon, Falcon USA and the Purchaser, or any one of them, as the case
may be.
“Governmental Authority” means
any federal, state or local government, regulatory authority, governmental
department, agency, commission, board, tribunal or court.
“GST” has the meaning given to
that expression in the GST Law.
-4-
“GST Law” has the meaning given
to that expression in the A
New Tax System (Goods and Services Tax) Xxx 0000, as amended, of the
Commonwealth of Australia.
“Indemnity” has the meaning
ascribed thereto in ARTICLE 8.
“Initial Working Interest” has
the meaning ascribed thereto in the Buckskin PSA.
“Loan” means the $5,000,000
loan made by Falcon to PetroHunter Energy in accordance with the Loan
Agreement.
“Loan Agreement” means the loan
agreement dated October 1, 2008, as amended on December 10, 2008, between
PetroHunter Energy and Falcon.
“Material Agreements” means the
contracts identified on Schedule “C” to the Beetaloo PSA and those identified on
SCHEDULE "J" hereto.
“Mortgage” means the mortgage,
assignment, security agreement, fixture filing and security agreement, dated
October 1, 2008 and recorded in the real property records of Rio Xxxxxx County,
Colorado under Document No. 293828, from PetroHunter Energy and PetroHunter
Operating, as mortgagors, to Falcon, as mortgagee.
“New Xxxxx” means the five
xxxxx (Excalibur Nos. 5054 through 5058, inclusive) identified on Schedule 3 to
the Buckskin PSA.
“Northern Land Council Exploration
Agreements” means the Exploration Agreement between Sweetpea, Local
Aboriginal Groups and the Northern Land Council relating to Petroleum
Exploration Permits 76, 98 and 99 and the Exploration Agreement between
Sweetpea, Local Aboriginal Groups and the Northern Land Council relating to
Petroleum Exploration Permit 117.
“Northern Land Council Royalty”
means the royalty interest payable to the Local Aboriginal Groups
(through the Northern Land Council) in accordance with the Northern Land Council
Exploration Agreements.
“Northern Territory Royalty”
means the royalty payable to the Northern Territory in accordance with Part III,
Division 5, Section 84 of the Petroleum Act of the Northern
Territory.
“Notice” has the meaning
attributed to it in Section 10.14.
“Offered Interest” means the
remaining 25% interest in the Beetaloo Basin Project held by the PetroHunter
Parties immediately following the Closing Date.
“Operator Bonds” means,
collectively: (i) the five standby letters of credit issued by Xxxxx Fargo Bank,
National Association, relating to the Beetaloo Basin Project in the aggregate
amount of A$496,000; (ii) all underlying cash security provided to Xxxxx Fargo
Bank, National Association, in connection with such letters of credit; and (iii)
all other bonds and instruments that may now be in place for the benefit of the
Northern Land Council or any Governmental
-5-
Authority,
together with all security given in connection therewith, relating to Sweetpea’s
status as title holder of the Permits or its activities as operator of the
Permits.
“Permits” means Petroleum
Exploration Permits 76, 98, 99 and 117, together with any renewals or extensions
thereof as more fully described on SCHEDULE "A" to the Beetaloo
PSA.
“Permitted Falcon
Encumbrances” means:
|
(a)
|
liens
for taxes or assessments, not yet due or
payable;
|
|
(b)
|
easements,
rights-of-way, servitudes, permits, and surface leases held by third
parties on, over, or in respect of lands covered by the Initial Working
Interest; and
|
|
(c)
|
any
Falcon Encumbrance, title defect or matter that is expressly waived by
PetroHunter Energy.
|
“Permitted PetroHunter
Encumbrances” means:
|
(a)
|
Xxxxxxx
Override, Northern Land Council Royalty, Northern Territory Royalty, and
Xxxxxxxxxxxx Override;
|
|
(b)
|
liens
for taxes or assessments, not yet due or
payable;
|
|
(c)
|
all
rights to consent by, required notices to, filings with, or other actions
by Northern Territory or Australian governmental entities in connection
with the ownership of the Permits, but only if the same are customarily
obtained after such transfer of
ownership;
|
|
(d)
|
easements,
rights-of-way, servitudes, permits, and surface leases held by third
parties on, over, or in respect of lands covered by the
Permits;
|
|
(e)
|
the
terms and conditions of the Material Agreements and all documents of
record;
|
|
(f)
|
the
Beetaloo Payables; and
|
|
(g)
|
any
PetroHunter Encumbrance, title defect or matter that is expressly waived
by Purchaser.
|
“Person” is to be broadly
interpreted and includes an individual, a corporation, a partnership, a trust,
an unincorporated organization, the government of a country or any political
subdivision thereof, or any agency or department of any such government, and the
executors, administrators or other legal representatives of an individual in
such capacity.
“PetroHunter Encumbrances”
means liens, charges, security interests, options, claims, mortgages, pledges,
or other restrictions on title or transfer, except for Permitted PetroHunter
Encumbrances.
“PetroHunter Parties” means,
together, PetroHunter, PetroHunter Operating and Sweetpea, or any one of them,
as the case may be.
-6-
“Pledge Agreement” means the
pledge and security agreement dated October 1, 2008, as modified by letter
agreement dated December 10, 2008, between PetroHunter Energy, as pledgor, and
Falcon, as pledgee.
“Purchaser” means Falcon Oil
& Gas Australia Pty Ltd.
“Remaining Completion Capital”
means the Completion Capital that has not been expended on costs relating to the
Buckskin Mesa Project as of the Closing Date.
“Xxxxxxxxxxxx Override” means
the overriding royalty interest on production from lands covered by the Permits
that was created by MAB Resources LLC under the terms of its Acquisition and
Consulting Agreement with PetroHunter Energy dated effective January 1,
2007.
“Seller” has the meaning
ascribed thereto in the Beetaloo PSA.
“Sellers” has the meaning
ascribed thereto in the Beetaloo PSA.
“Subsidiary” has the meaning
ascribed in Section 1.2.
“Transaction” has the meaning
ascribed thereto in ARTICLE 2.
“Transaction Agreements” means,
collectively, this Agreement, the Amended and Restated Beetaloo JOA and the
Escrow Agreement.
“Transaction Fees” means,
collectively, all fees, costs and expenses of every type and nature arising out
of or relating to the activities of the PetroHunter Parties in Australia that
are not specifically set forth in SCHEDULE "F".
“TSXV” means the TSX Venture
Exchange.
“TSXV Policies” means the TSXV
Corporate Finance Manual as constituted on the date hereof.
“U.S.” means the United States
of America and its territories.
“U.S. Securities Act” means the
Securities Act of 1933, as amended, of the
U.S., and the rules and regulations promulgated thereunder.
“Warranty Claim” means a claim
made by a Party based on or with respect to the inaccuracy or non-performance or
non-fulfilment or breach of any representation, warranty or covenant made or
given by another Party contained in the Transaction Agreements or contained in
any document or certificate given in order to carry out the
Transaction.
“Well” means the Shenandoah #1
well, as more fully described on SCHEDULE "B" to the Beetaloo PSA.
|
1.2
|
Meaning
of Subsidiary
|
A Person
shall be deemed to be a subsidiary of another Person if:
-7-
|
(a)
|
it
is controlled by,
|
|
(i)
|
that
other, or
|
|
(ii)
|
that
other and one or more Persons each of which is controlled by that other,
or
|
|
(iii)
|
two
or more Persons each of which is controlled by that other;
or
|
|
(b)
|
it
is a subsidiary of a Person that is that other’s
subsidiary.
|
|
1.3
|
Meaning
of Control or Controlled
|
A Person
shall be deemed to be controlled by another Person or by two or more Persons
if:
|
(a)
|
voting
securities of the first-mentioned Person carrying more than 50 percent of
the votes for the election of directors are held, other than by way of
security only, by or for the benefit of such other Person or by or for the
benefit of such other Person; and
|
|
(b)
|
the
votes carried by such securities are sufficient, if exercised, to elect a
majority of the board of directors of the first-mentioned
Person.
|
|
1.4
|
General
|
The
schedules attached to this Agreement are incorporated herein by reference and
shall be deemed to be a part hereof. In this Agreement, the singular
includes the plural, the plural the singular, and any gender the other
genders. Unless otherwise indicated references to dollars or amounts
stated in dollars are to United States dollars. Headings are included
for convenience or reference only and shall not affect the interpretation
hereof. If anything herein is to be done or held on a day which is
not a Business Day, the same shall be done or held either on the next succeeding
Business Day or as otherwise expressly provided in this Agreement.
|
1.5
|
Governing
Law
|
With
respect to all matters related to the Assets and the Beetaloo Inventory, and
related to the interpretation and enforcement of this Agreement, this Agreement
shall be governed by the laws of the Northern Territory of Australia and the
applicable laws of Australia. With respect to all matters related to the Common
Shares, this Agreement shall be governed by the laws of the Province of Ontario
and the applicable laws of Canada.
-8-
ARTICLE
2
PURCHASE
AND SALE
|
2.1
|
PetroHunter
Parties’ Consideration
|
As
consideration for the actions described in Section 2.2, the PetroHunter Parties,
as the case may be, shall at Closing:
|
(a)
|
subject
to the Permitted PetroHunter Encumbrances, assign the Assets to the
Purchaser;
|
|
(b)
|
assign
the Beetaloo Inventory to the
Purchaser;
|
|
(c)
|
resign
as operator under the Beetaloo JOA with immediate effect, despite any
longer notice period that may otherwise be provided in the Beetaloo
JOA;
|
|
(d)
|
execute
the Amended and Restated Beetaloo JOA;
|
|
(e)
|
assign
or cause to be assigned to the Purchaser or Purchaser’s designee 100% of
the Operator Bonds in accordance with the terms
thereof;
|
|
(f)
|
grant
the Falcon Parties the Indemnity;
|
|
(g)
|
terminate
the Buckskin JOA;
|
|
(h)
|
enter
into the Escrow Agreement, and comply with the terms and conditions
therein; and
|
|
(i)
|
grant
the Falcon Parties the right provided in Section
5.3,
|
and the
PetroHunter Parties agree to such actions on and subject to the terms and
conditions of this Agreement (collectively, the “PetroHunter
Consideration”).
|
2.2
|
Falcon
Parties’ Consideration
|
As
consideration for the actions described in Section 2.1, the Falcon Parties, as
the case may be, shall at Closing:
|
(a)
|
subject
to the Permitted Falcon Encumbrances, reassign the Initial Working
Interest to PetroHunter;
|
|
(b)
|
except
as set forth in this Agreement, accept the PetroHunter Consideration as
full and complete payment of any and all obligations owed by PetroHunter
Energy to Falcon under the Loan and the Loan
Agreement;
|
|
(c)
|
execute
the Amended and Restated Beetaloo
JOA;
|
|
(d)
|
release
any and all interest of the Falcon Parties in the
Mortgage;
|
-9-
|
(e)
|
release
any and all interest of the Falcon Parties in the Pledge Agreement and
instruct the brokerage firm holding the Common Shares subject to the
Pledge Agreement at the Closing Date to transfer such Common Shares to the
Escrow Agent;
|
|
(f)
|
convey
any and all interest of the Falcon Parties in the Remaining Completion
Capital;
|
|
(g)
|
execute
the assumption undertaking to retire the Beetaloo
Payables;
|
|
(h)
|
terminate
the Buckskin JOA;
|
|
(i)
|
assume
all obligations arising after Closing with respect to the Beetaloo
Inventory, including but not limited to storing and insuring the Beetaloo
Inventory for the periods after the Closing Date;
and
|
|
(j)
|
enter
into the Escrow Agreement, and comply with the terms and conditions
therein,
|
and the
Falcon Parties agree to such actions on and subject to the terms and conditions
of this Agreement (collectively, the “Falcon Consideration” and
together with the PetroHunter Consideration, the “Transaction”).
ARTICLE
3
REPRESENTATIONS
AND WARRANTIES
|
3.1
|
Representations
and Warranties by PetroHunter
Parties
|
The
PetroHunter Parties hereby jointly and severally guarantee, represent and
warrant to the Falcon Parties that as at the date hereof:
|
(a)
|
other
than the Permitted PetroHunter Encumbrances, Sweetpea has good and valid
title to the Assets;
|
|
(b)
|
other
than the Permitted PetroHunter Encumbrances, the Assets are free and clear
of all PetroHunter Encumbrances, and the PetroHunter Parties have not
agreed to encumber or alienate any interest in the
Assets;
|
|
(c)
|
other
than the Permitted PetroHunter Encumbrances, Sweetpea has good and valid
title to the Beetaloo Inventory;
|
|
(d)
|
all
storage, insurance and other charges in respect of the Beetaloo Inventory
have been fully paid, the Beetaloo Inventory is free and clear of all
PetroHunter Encumbrances, and the PetroHunter Parties have not agreed to
encumber or alienate any interest in the Beetaloo
Inventory;
|
-10-
|
(e)
|
to
the best knowledge of the PetroHunter Parties, the Operator Bonds will not
be cancelled or terminated or any of the coverage thereunder allowed to
lapse before the Closing;
|
|
(f)
|
the
PetroHunter Parties either have good and valid title to the Operator Bonds
or have obtained the consent of the titleholder to assign the Operator
Bonds to the Falcon Parties;
|
|
(g)
|
none
of the Operator Bonds are encumbered or alienated in any respect, nor have
the PetroHunter Parties agreed to do so, and the Operator Bonds are free
and clear of all PetroHunter
Encumbrances;
|
|
(h)
|
other
than: (i) the Beetaloo Payables; (ii) except as may be set forth in the
most recent joint interest billing sent to Purchaser under the Beetaloo
JOA; (iii) the Transaction Fees; and (iv) and the fees related to the
Permits, none of the PetroHunter Parties has any other accounts payable,
indebtedness or liability to any other person or entity in connection with
ownership of, or operations or activities conducted on or otherwise
relating to, the Beetaloo Basin
Project;
|
|
(i)
|
the
amount of the Remaining Completion Capital is $855,205, and such amount is
more than sufficient to pay 100% of the cost of reclamation and plugging
and abandonment requirements in connection with the Initial Working
Interest;
|
|
(j)
|
there
are no unpaid amounts, whether billed or unbilled, due from PetroHunter
Operating or Falcon USA for materials, services, fees or other reasons in
connection with the Initial Working Interest or the Initial Completion
Program;
|
|
(k)
|
the
Beetaloo Payables represents a true, complete and correct list of all
amounts owing by any PetroHunter Parties to any persons in connection with
the Beetaloo Basin Project, and there is no contingency, agreement or
other legal basis upon which that total amount can increase between the
date hereof and the Closing Date, absent the provision of new services or
materials after the date hereof or any applicable interest
thereon;
|
|
(l)
|
the
PetroHunter Parties directly or indirectly have control or direction over
26,100,000 Common Shares, of which 14,500,000 Common Shares are currently
pledged as security for the Loan in accordance with the terms of the Loan
Agreement;
|
|
(m)
|
the
PetroHunter Parties will continue to bear (i) their income tax liabilities
and their GST liability associated with the Initial Transaction, and (ii)
any obligations with respect to approval by Governmental Authorities,
consent of the Northern Land Council, and registration on the Petroleum
Register of the Xxxxxxx Override, the Xxxxxxxxxxxx Override (including any
predecessor overrides), and the Initial
Transaction;
|
|
(n)
|
each
of the PetroHunter Parties:
|
-11-
|
(i)
|
is
a corporation duly incorporated, organized and validly existing and in
good standing under the laws of its applicable
jurisdiction;
|
|
(ii)
|
has
the corporate power, authority and capacity to enter into the Transaction
Agreements and all other agreements contemplated by the Transaction
Agreements and to carry out and complete its obligations under the
Transaction Agreements and all other agreements contemplated by the
Transaction Agreements; and
|
|
(iii)
|
the
Transaction Agreements and the obligations of the PetroHunter Parties
under the Transaction Agreements and the documents and transaction
contemplated thereby have been duly and validly authorized by all
requisite corporate proceedings;
and
|
|
(o)
|
except
as modified by the guarantees, representations and warranties made in
Sections 3.1(a) to (m), inclusive, the representations and warranties of
PetroHunter and Sweetpea contained in Section 3.1 of the Beetaloo PSA are
true and correct as of the date hereof, and, notwithstanding any express,
implied or other type of limitation contained in or suggested by the
foregoing, the following guarantees, representations and warranties of
PetroHunter and Sweetpea contained in Section 3.1 of the Beetaloo PSA are
true and correct as of the date hereof:
|
|
(i)
|
except
as set forth on Schedule “I” to the Beetaloo PSA, each Seller has
performed all material obligations which are required to be performed by
it under the Material Agreements, including without limitation the
Northern Land Council Exploration Agreements, and it is not in default
under or in breach of or in receipt of any claim of default or breach
under any Material Agreement, including without limitation the Northern
Land Council Exploration Agreements, and no event has occurred which, with
the passage of time or the giving of notice or both, would result in a
default, breach or event of noncompliance by a Seller under any Material
Agreement, including without limitation the Northern Land Council
Exploration Agreements;
|
|
(ii)
|
no
Seller has any present expectation or intention of not fully performing on
a timely basis all material obligations required to be performed by it
under any Material Agreement or other instrument to which it is subject
and to the knowledge of Sellers, there has been no breach or cancellation
by the other parties to any Material Agreement or other instrument to
which the Sellers are a party;
|
|
(iii)
|
all
of the Permits are in full force and effect, in good standing, and
enforceable; and
|
|
(iv)
|
Sweetpea
is not in breach of any term or condition of any
Permit.
|
-12-
|
3.2
|
Representations
and Warranties of Falcon Parties
|
The
Falcon Parties hereby jointly and severally guarantee, represent and warrant to
the PetroHunter Parties that as at the date hereof:
|
(a)
|
none
of the Falcon Parties has encumbered or alienated its interest in the
Initial Working Interest in any respect or agreed to do so, and the
Initial Working Interest is free and clear of all Falcon
Encumbrances;
|
|
(b)
|
Falcon
has, or reasonably believes that it has access to, immediately available
funds necessary to pay the Beetaloo
Payables;
|
|
(c)
|
each
of the Falcon Parties:
|
|
(i)
|
is
a corporation duly incorporated, organized and validly existing and in
good standing under the laws of its applicable
jurisdiction;
|
|
(ii)
|
has
the corporate power, authority and capacity to enter into the Transaction
Agreements and all other agreements contemplated by the Transaction
Agreements and to carry out and complete its obligations under the
Transaction Agreements and all other agreements contemplated by the
Transaction Agreements; and
|
|
(iii)
|
the
Transaction Agreements and the obligations of the Falcon Parties under the
Transaction Agreements and the documents and transaction contemplated
thereby have been duly and validly authorized by all requisite corporate
proceedings; and
|
|
(d)
|
except
as modified by the guarantees, representations and warranties made in
Section 3.2(a) above, the representations and warranties of Falcon and
Purchaser contained in Section 3.2 of the Beetaloo PSA are true and
correct as of the date hereof.
|
ARTICLE
4
WARRANTY
CLAIMS
|
4.1
|
Survival
of Warranties
|
|
(a)
|
The
representations and warranties contained in this Agreement or contained in
any document or certificate given in order to carry out the Transaction
will survive Closing and shall continue in full force and effect, subject
to the following provisions of this
section:
|
|
(i)
|
except
as expressly provided in this section, no Warranty Claim may be made or
brought by any Party after the date which is 18 months after
the Closing Date; and
|
-13-
|
(ii)
|
any
Warranty Claim which is based on intentional misrepresentation or fraud by
a Party may be made or brought at any
time.
|
|
(b)
|
It
is a condition of the liability of each Party under the representations
and warranties contained in this Agreement that the Party making a
Warranty Claim shall have given written notice to the other of such
Warranty Claim, with such particularity as the circumstances reasonably
permit, before the expiry of the 18 month period referred to
above. After the expiration of such 18 month period, each Party
will be released from all obligations and liabilities in respect of the
representations and warranties contained in this Agreement or contained in
any document or certificate given in order to carry out the Transaction,
except as previously set forth in a written
notice.
|
|
4.2
|
Limitations
on Warranty Claims
|
|
(a)
|
No
Party shall be entitled to make a Warranty Claim if that Party has been
advised in a writing addressed to it and signed by an officer of the
advising Party prior to Closing Date of the inaccuracy, non-performance,
non-fulfilment or breach which is the basis for such Warranty Claim and
that Party completes the Transaction hereunder notwithstanding such
inaccuracy, non-performance, non-fulfilment or
breach.
|
|
(b)
|
The
amount of any damages which may be claimed by a Party pursuant to a
Warranty Claim shall be calculated to be the cost or loss to that Party
after giving effect to any insurance proceeds available to that Party in
relation to the matter which is the subject of the Warranty
Claim.
|
|
(c)
|
Subject
to the receipt of all necessary approvals and all applicable laws, the
satisfaction of any amounts owing by PetroHunter Parties to Falcon
Parties, or by Falcon Parties to PetroHunter Parties, may be paid by the
indemnifying party through the delivery of either cash or check, in either
case such method of payment shall be determined by the indemnifying party
in its discretion.
|
ARTICLE
5
COVENANTS
|
5.1
|
Mutual
Covenants
|
The
PetroHunter Parties and the Falcon Parties hereby covenant and agree that,
without the prior written consent of the other Party (such consent not to be
unreasonably withheld or delayed) or except as expressly contemplated in this
Agreement, from the date hereof until the earlier of the Closing Date or the day
upon which this Agreement is terminated, each shall:
|
(a)
|
take
all such actions as are necessary to terminate the Buckskin JOA;
and
|
|
(b)
|
take
all such actions as are necessary to enter into the Amended and Restated
Beetaloo JOA.
|
-14-
|
5.2
|
Covenants
of PetroHunter Parties
|
The
PetroHunter Parties hereby covenant and agree that, except as expressly
contemplated by this Agreement and the other elements of the Transaction, until
the earlier of five days prior to the Closing Date and the day upon which this
Agreement is terminated (unless otherwise indicated in the covenant), the
PetroHunter Parties, in a timely and expeditious manner, shall:
|
(a)
|
allow
the Falcon Parties, any of their respective representatives or agents
access during normal business hours to the premises and the properties of
PetroHunter Parties and their respective subsidiaries and to all of the
files, books, records and offices of PetroHunter Parties and their
subsidiaries related to the Beetaloo Basin
Project;
|
|
(b)
|
resign
as operator under the Beetaloo JOA with immediate effect, despite any
longer notice period that may otherwise be provided in the Beetaloo
JOA;
|
|
(c)
|
use
their best efforts (and cause each of its Subsidiaries to use reasonable
commercial efforts) to cause its current insurance policies, as such item
relates to the Beetaloo Basin Project, and the Operator Bonds not to be
cancelled or terminated or any of the coverage thereunder to
lapse;
|
|
(d)
|
each
of the PetroHunter Parties: (i) will not make an assignment in favour of
its creditors or a proposal in bankruptcy to its creditors or any class
thereof; (ii) have not initiated proceedings with respect to a compromise
or arrangement with its creditors or for its winding up, liquidation or
dissolution; and (iii) will immediately deliver written notice to Falcon
if the PetroHunter Parties’ creditors delivers a notice to the PetroHunter
Parties demanding payment in 21 days or otherwise, which notice shall
contain reasonable detail sufficient to inform Falcon of the nature of any
such notice;
|
|
(e)
|
allow
Falcon the full, exclusive and unfettered authority to: (i) negotiate with
any Governmental Authority related to the Beetaloo Basin Project and agree
to any changes in the timing, extent and nature of the work required to
keep the Permits in effect; and (ii) bind both Falcon and PetroHunter to
any such changes related to the Beetaloo Basin
Project;
|
|
(f)
|
accept,
support and vote in favour of such work plans and budgets as Falcon may
propose under the Beetaloo Basin JOA for the remainder of 2009, but only
to the extent such work programs and budgets are intended by Falcon in
good faith to satisfy the minimum work requirements under the Permits in a
manner that Falcon believes to be commercially and technically reasonable,
and with the understanding that Falcon’s present intention is to limit the
capital expenditures in the work plan and budget for 2010 to the minimum
believed necessary to keep the Permits in full force and
effect;
|
|
(g)
|
not
with respect to the Beetaloo Basin Project: (i) undertake any material
operations; (ii) incur any material obligations; or (iii) enter into any
transaction or
|
-15-
|
refrain
from doing any action which, if effected before the date of this
Agreement, would constitute a breach of any representation, warranty,
covenant or other obligation of one or more of the PetroHunter Parties
contained herein, in connection with the Beetaloo Basin Project, without
the prior written consent of
Falcon;
|
|
(h)
|
pay
all interest owing under the Loan until the Closing Date;
and
|
|
(i)
|
immediately
deliver written notice to Falcon if litigation is commenced against any
PetroHunter Parties, which notice shall contain reasonable detail
sufficient to inform Falcon of the nature of any such litigation, so long
as Falcon maintains the confidentiality of any material non-public
information in accordance with Section 10.15 of this
Agreement.
|
|
5.3
|
Covenants
of Falcon Parties
|
As of the
Closing Date, the Falcon Parties hereby covenant and agree to assume their
proportionate share of all costs, duties, liabilities and obligations with
respect to their ownership interests in the Beetaloo Basin Project including,
but not limited to, those burdens described in the Permitted PetroHunter
Encumbrances.
|
5.4
|
Right
of First Offer
|
|
(a)
|
Following
the Closing Date and subject to Section 5.3(e), if any of the
PetroHunter Parties desires or is obliged by law or otherwise to sell,
assign, transfer or otherwise dispose of the Offered Interest
to a third party, the Falcon Parties shall have the prior right to
purchase the Offered Interest (the “First Offer”) and the
PetroHunter Parties shall deliver to the Falcon Parties a copy of the
First Offer addressed to the Falcon Parties together with a statement
executed by the PetroHunter Parties (the “First Offer Notice”)
notifying the Falcon Parties that the PetroHunter Parties are exercising
their rights and obligations under this Section 5.3, with full particulars
of any proposed transfer of the Offered
Interest.
|
|
(b)
|
The
First Offer Notice shall:
|
|
(i)
|
set
out the price for which the sale of the Offered Interest is to be
transacted;
|
|
(ii)
|
specify
the date on which the sale is to close and the other closing
arrangements;
|
|
(iii)
|
specify
the date by which a written response to the First Offer must be received
by The PetroHunter Parties (which, in any event, shall be not less than
fifteen (15) days from the date of the First Offer Notice);
and
|
|
(iv)
|
provide
for the method and timing of
payment.
|
-16-
|
(c)
|
The
Falcon Parties shall be entitled to accept and purchase all but not less
than all the Offered Interest upon the terms and conditions specified in
the First Offer Notice by delivering a written notice to purchase (the
“Purchase Notice”)
to the PetroHunter Parties within the time period specified in the First
Offer Notice.
|
|
(d)
|
If
the Falcon Parties offer to purchase all, but not less than all, of the
Offered Interest and the PetroHunter Parties have received the Purchase
Notice within the time period specified in the First Offer Notice, then
closing shall take place at the offices of Falcon on the date which is
fifteen (15) days following receipt of all necessary documents required to
be obtained in order to effect a valid transfer of the Offered Interest
(and the parties hereto covenant and agree to use their best efforts to
obtain such documents) and such closing shall include all documentation
customary for transactions of this
nature.
|
|
(e)
|
If
the Falcon Parties do not offer to purchase all, but not less than all, of
the Offered Interest or the PetroHunter Parties do not receive the
Purchase Notice within the time period specified in the First Offer
Notice, then Section 5.3 shall become null and void in respect of the
particular transaction described in the First Offer
Notice.
|
|
(f)
|
For
greater certainty, until such time as the PetroHunter Parties sell,
assign, transfer or otherwise dispose of the 100% of the Offered Interest,
each offer to sell, assign, transfer or otherwise dispose of the Offered
Interest shall be subject to Section
5.3.
|
ARTICLE
6
CLOSING
|
6.1
|
Closing
or Termination
|
|
(a)
|
This
Agreement may be terminated at any time prior to the Closing
Date:
|
|
(i)
|
at
any time with the written consent of the Parties;
and
|
|
(ii)
|
by
Falcon if Falcon is not satisfied in its sole
discretion:
|
|
(A)
|
with
the performance by PetroHunter of the PetroHunter Covenants contained in
ARTICLE 5; or
|
|
(B)
|
Falcon
otherwise concludes that PetroHunter will not be able to fulfill the
condition contained in Section 6.2(a) on or before the Closing
Date.
|
|
(b)
|
This
Agreement shall automatically terminate if the closing falls on or after
June 10, 2009 or such other date as may be agreed to in writing by the
Parties.
|
-17-
|
6.2
|
Conditions
for the Benefit of the Falcon
Parties
|
The
obligation of the Falcon Parties to complete the Transaction is subject to the
satisfaction by the PetroHunter Parties or waiver by the Falcon Parties on or
before the Closing Date, for the exclusive benefit of the Falcon Parties, of the
following conditions:
|
(a)
|
all
representations and warranties of PetroHunter Parties contained in Section
3.1 must be true in all material respects at and as of the Closing Date;
|
|
(b)
|
all
of the covenants and conditions in favour of the Falcon Parties to be
complied with, performed or waived by the PetroHunter Parties on or before
the Closing Date shall have been complied with, performed or
waived;
|
|
(c)
|
the
timing, extent and nature of the work required under the Permits must have
been changed by the Government in a way satisfactory to Purchaser, or
Purchaser must believe, in its sole discretion, that satisfactory changes
will be made; and
|
|
(d)
|
the
50% interest in the Beetaloo Basin Project previously purchased by the
Purchaser must have been transferred of record in the appropriate
government offices, or Purchaser must believe, in its sole discretion,
that such transfer will occur in due
course.
|
|
6.3
|
Conditions
for Benefit of PetroHunter Parties
|
The
obligation of PetroHunter Parties to complete the Transaction is subject to the
satisfaction by the Falcon Parties or waiver by the PetroHunter Parties on or
before the Closing Date, for the exclusive benefit of PetroHunter Parties, of
each of the following conditions:
|
(a)
|
all
representations and warranties of the applicable Falcon Parties contained
in Section 3.2 must be true in all material respect at and as of the
Closing Date; and
|
|
(b)
|
all
of the covenants and conditions in favour of the PetroHunter Parties to be
complied with, performed or waived by the Falcon Parties on or before the
Closing Date shall have been complied with, performed or
waived.
|
|
6.4
|
PetroHunter
Parties’ Deliveries on Closing
|
On the
Closing Date, PetroHunter Parties will deliver the following documents, all duly
executed and to be dated as of the Closing Date:
|
(a)
|
an
executed copy of the Transaction
Agreements;
|
|
(b)
|
a
legal opinion, satisfactory to the TSXV and Xxxx & Berlis LLP,
relating to the status of each PetroHunter Parties, the Permits, and other
matters as required by the TSXV;
|
|
(c)
|
a
permit transfer instrument conveying an undivided 25% interest in the
Permits, substantially in the form attached as SCHEDULE
"A";
|
-18-
|
(d)
|
an
assignment and xxxx of sale substantially in the form attached as SCHEDULE
"B", assigning and selling an undivided 25% interest in the
Assets;
|
|
(e)
|
a
deed of assignment and assumption substantially in the form attached as
SCHEDULE "D", assigning and selling an undivided 25% interest in the
Assets and by which Purchaser assumes its proportionate share of the
obligations owed to Northern Land
Council;
|
|
(f)
|
a
countersigned Resignation of Beetaloo Operator and Appointment of
Successor executed by Sweetpea, in a form satisfactory to the Purchaser
acting reasonably, whereby Sweetpea
will:
|
|
(i)
|
resign
as operator under the Beetaloo JOA with immediate effect;
and
|
|
(ii)
|
appoint
Falcon Australia as the operator of the Beetaloo Basin Project with
immediate effect;
|
|
(g)
|
an
assignment and xxxx of sale substantially in the form attached as SCHEDULE
"C" hereto, assigning and selling a 100% interest in the Beetaloo
Inventory on an “as is, where is”
basis;
|
|
(h)
|
a
letter executed by Sweetpea, in a form satisfactory to the Purchaser
acting reasonably, instructing Xxxxx Fargo Bank, National Association, to
transfer and, if necessary, reissue all standby letters of credit forming
a part of the Operator Bonds, so that such letters of credit support and
secure the obligations of Purchaser, rather than Sweetpea, to the
Government Authorities;
|
|
(i)
|
assignments,
signature cards, and all other instruments necessary, in a form
satisfactory to the Purchaser acting reasonably, to transfer to
Purchaser’s designee the accounts, cash and certificates of deposit that
secure Xxxxx Fargo Bank, National Association, under the standby letters
of credit forming a part of the Operator Bonds, in each case fully
executed by the owner of the concerned account, cash or certificate of
deposit, so that such accounts, cash and certificates of deposit are then
owned by Purchaser, rather than the current
owners;
|
|
(j)
|
the
escrow agreement substantially in the form attached as SCHEDULE "G"
hereto;
|
|
(k)
|
any
financial information if required by TSXV or other Governmental
Authority;
|
|
(l)
|
all
other documents or information as may be required by the TSXV, corporate
or securities regulatory
authorities;
|
|
(m)
|
the
approval, acceptance, authorization, exemption, waiver or consent of each
of the third parties from whom consents are
required;
|
|
(n)
|
a
certificate of each of PetroHunter Parties’ signed by any two of their
respective officers certifying
that:
|
-19-
|
(i)
|
the
representations and warranties of such PetroHunter Parties herein
contained are true and correct as of the Closing
Date;
|
|
(ii)
|
the
resolutions of the Boards of Directors of such PetroHunter Parties
approving the Transaction Agreements are in full force and
effect;
|
|
(iii)
|
PetroHunter
Parties have performed and complied with all covenants and agreements
contained in the Transaction Agreements to be performed or complied with
by such PetroHunter Parties at or prior to the Closing Date;
and
|
|
(iv)
|
all
necessary corporate action has been taken by such PetroHunter Parties to
authorize the execution and delivery of the Transaction Agreements and to
consummate the Transaction contemplated by the Transaction;
and
|
|
(o)
|
such
other documents and assurances as may be reasonably required by Falcon or
Purchaser,
|
all in
form and substance satisfactory to the Falcon Parties, each acting reasonably
and in good faith.
|
6.5
|
Falcon
Parties’ Deliveries on Closing
|
On the
Closing Date, the applicable Falcon Parties will deliver the following documents
all duly executed and to be dated as of the Closing Date:
|
(a)
|
an
executed copy of the Transaction
Agreements;
|
|
(b)
|
a
permit transfer instrument conveying an undivided 25% interest in the
Permits, substantially in the form attached as SCHEDULE
"A";
|
|
(c)
|
an
assignment and xxxx of sale substantially in the form attached as SCHEDULE
"B", assigning and selling an undivided 25% interest in the
Assets;
|
|
(d)
|
a
countersigned Resignation of Beetaloo Operator and Appointment of
Successor executed by Purchaser, in a form satisfactory to the Purchaser
acting reasonably, whereby Sweetpea
will:
|
|
(i)
|
resign
as operator under the Beetaloo JOA with immediate effect;
and
|
|
(ii)
|
appoint
Falcon Australia as the operator of the Beetaloo Basin Project with
immediate effect;
|
|
(e)
|
an
assignment and xxxx of sale substantially in the form attached as SCHEDULE
"C" hereto, assigning and selling a 100% interest in the Beetaloo
Inventory on an “as is, where is”
basis;
|
-20-
|
(f)
|
an
assignment and xxxx of sale substantially in the form attached as SCHEDULE
"E" hereto assigning and selling the Initial Working Interest to
PetroHunter Operating;
|
|
(g)
|
the
escrow agreement substantially in the form attached as SCHEDULE "G"
hereto;
|
|
(h)
|
a
release of the Mortgage;
|
|
(i)
|
an
assumption undertaking substantially in the form as attached as SCHEDULE
"H" hereto undertaking to retire the Beetaloo
Payables;
|
|
(j)
|
the
approval, acceptance, authorization, exemption, waiver or consent of each
of the TSXV;
|
|
(k)
|
a
certificate of each of Falcon Parties signed by any two of their
respective officers certifying
that:
|
|
(i)
|
the
representations and warranties of the appropriate Falcon Party herein
contained are true and correct as of the Closing
Date;
|
|
(ii)
|
the
resolutions of the Board of Directors of the appropriate Falcon Party
approving the Transaction Agreements and the Transaction are in full force
and effect;
|
|
(iii)
|
the
appropriate Falcon Party has performed and complied with all covenants and
agreements contained in this Agreement to be performed or complied with by
the appropriate Falcon Party at or prior to the Closing Date;
and
|
|
(iv)
|
all
necessary corporate action has been taken by the appropriate Falcon Party
to authorize the execution and delivery of the Transaction Agreements and
to consummate the Transaction contemplated by the
Transaction;
|
|
(l)
|
conditional
approval of the TSXV for the Transaction if required;
and
|
|
(m)
|
such
other documentation and assurances as may be reasonably required by the
PetroHunter Parties,
|
all in
form and substance satisfactory to the PetroHunter Parties, each acting
reasonably and in good faith.
-21-
ARTICLE
7
RESOLUTION
OF DISPUTES
|
7.1
|
Arbitration
|
Except
with respect to matters where irreparable damage would occur and that the
Parties are entitled to seek an injunction or specific performance of the terms
hereof under applicable law, any dispute between the Parties arising during the
period of this Agreement or at any time thereafter which touches upon the
validity, construction, meaning, performance or effect of this Agreement or the
rights and liabilities of the Parties or any matter arising out of or connected
with this Agreement shall be exclusively and definitively resolved through final
and binding arbitration.
|
|
(a)
|
The
arbitration shall be conducted in accordance with and subject to The
Institute of Arbitrators & Mediators Australia Rules for the Conduct
of Commercial Arbitrations.
|
|
|
(b)
|
The
arbitration shall be conducted by three arbitrators, unless all parties to
the dispute agree to a sole arbitrator within 30 days after the filing of
the arbitration.
|
|
|
(c)
|
If
the arbitration is to be conducted by a sole arbitrator, then the
arbitrator will be jointly selected by the parties to the
dispute. If the parties to the dispute fail to agree on the
arbitrator within 30 days after the filing of the arbitration, then the
IAMA shall appoint the arbitrator. If the arbitration is to be conducted
by three arbitrators and there are only two parties to the dispute, then
each party to the dispute shall appoint one arbitrator within 30 days of
the filing of the arbitration, and the two arbitrators so appointed shall
select the presiding arbitrator within 30 days after the latter of the two
arbitrators has been appointed by the parties to the
dispute. If a party to the dispute fails to appoint its
party-appointed arbitrator or if the two party-appointed arbitrators
cannot reach an agreement on the presiding arbitrator within the
applicable time period, then the IAMA shall appoint the remainder of the
three arbitrators not yet
appointed.
|
|
|
(d)
|
Unless
otherwise agreed by all parties to the dispute, the place of arbitration
shall be Sydney, New South Wales.
|
|
|
(e)
|
The
award of the arbitral tribunal shall be final and
binding. Judgment on the award of the arbitral tribunal may be
entered and enforced by any court of competent
jurisdiction.
|
|
|
(f)
|
Any
party to the dispute may apply to a court for interim measures (i) prior
to the constitution of the arbitral tribunal (and thereafter as necessary
to enforce the arbitral tribunal’s rulings); or (ii) in the absence of the
jurisdiction of the arbitral tribunal to rule on interim measures in a
given jurisdiction. The Parties agree that seeking and
obtaining such interim measures shall not waive the right to
arbitration. The arbitrators (or in an emergency the presiding
arbitrator acting alone in the event one or more of the other arbitrators
is unable to be involved in a timely fashion) may grant interim measures
including injunctions, attachments and
|
-22-
|
conservation
orders in appropriate circumstances, which measures may be immediately
enforced by court order. Hearings on requests for interim
measures may be held in person, by telephone, by video conference or by
other means that permit the parties to the dispute to present evidence and
arguments. Without limiting the generality of the foregoing,
any party to the dispute may have recourse to and shall be bound by the
Pre-arbitral Referee Procedure of the International Chamber of Commerce in
accordance with its rules then in
effect.
|
|
|
(g)
|
The
arbitral tribunal is authorized to award costs and attorneys’ fees and to
allocate them between the parties to the dispute. The costs of
the arbitration proceedings, including attorneys’ fees, shall be borne in
the manner determined by the arbitral
tribunal.
|
|
|
(h)
|
The
Parties waive their rights to claim or recover, and the arbitral tribunal
shall not award, any punitive, multiple, or other exemplary damages
(whether statutory or common law) except to the extent such damages have
been awarded to a third party and are subject to allocation between or
among the parties to the dispute.
|
|
|
(i)
|
To
the extent permitted by law, any right to appeal or challenge any arbitral
decision or award, or to oppose enforcement of any such decision or award
before a court or any Governmental Authority, is hereby waived by the
Parties except with respect to the limited grounds for modification or
non-enforcement provided by any applicable arbitration statute.
|
ARTICLE
8
INDEMNITY
|
8.1
|
Indemnity
by the PetroHunter Parties
|
The
PetroHunter Parties hereby jointly and severally agree to indemnify, defend,
hold and save the Falcon Parties and their respective officers, directors,
partners, shareholders, employees, agents, representatives, successors and
assigns harmless from and against any claims, demands, actions, causes of
action, damage, loss, deficiency, cost, liability and expense which may be made
or brought against the Falcon Parties or which the Falcon Parties may suffer or
incur as a result of, in respect of or arising out of:
|
(a)
|
any
obligation, commitment or liability or claim (whether absolute, accrued or
contingent) relating to the Assets, other than the Beetaloo Payables,
arising prior to the Closing Date;
|
|
(b)
|
any
obligation, commitment or liability or claim (whether absolute, accrued or
contingent) relating to the Beetaloo Basin Inventory, other than the
Beetaloo Payables, arising prior to the Closing
Date;
|
|
(c)
|
any
obligation, commitment or liability or claim (whether absolute, accrued or
contingent) relating to the Initial Working Interest, including, without
limitation, all plugging, abandonment and reclamation costs associated
with the New Xxxxx arising at any
time;
|
-23-
|
(d)
|
any
loss, damage or liability or claim (whether absolute, accrued or
contingent) relating to any failure to pay duties or stamp duties in
relation to the Transaction or any Transaction Agreement and any failure
to lodge any document or statement required by a Government Authority
(including a revenue office of an Australian State or Territory) in
connection with the Transaction or any Transaction
Agreement;
|
|
(e)
|
any
non-performance or non-fulfillment of any covenant or agreement on the
part of the PetroHunter Parties contained in this Agreement or in any
document given in order to carry out the transactions contemplated hereby;
and
|
|
(f)
|
all
costs and expenses including, without limitation, legal fees on a
solicitor and client basis, incidental to, arising from or in respect of
the foregoing.
|
|
8.2
|
Provisions
Relating to Indemnity Claims
|
The
following provisions will apply to any claim by any Falcon Party or its
respective officers, directors, partners, shareholders, employees, agents,
representatives, successors and assigns (the “Claiming Party”) for
indemnification by one or more of the PetroHunter Parties, as the case may be
(the “Responding
Party”), pursuant to Section 8.1 (an “Indemnity
Claim”):
|
(a)
|
promptly
after becoming aware of any matter that may give rise to an Indemnity
Claim, the Claiming Party will provide to the Responding Party written
notice of the Indemnity Claim specifying (to the extent that information
is available) the factual basis for the Indemnity Claim and the amount of
the Indemnity Claim or, if an amount is not then determinable, an estimate
of the amount of the Indemnity Claim, if an estimate is feasible in the
circumstances;
|
|
(b)
|
if
an Indemnity Claim relates to an alleged liability to any other person (a
“Third Party
Liability”), including without limitation any Governmental
Authority or regulatory body, which is of a nature such that the Claiming
Party is required by applicable law to make a payment to a third party
before the relevant procedure for challenging the existence or quantum of
the alleged liability can be implemented or completed, then the Claiming
Party may, notwithstanding the provisions of subsection (c) of this
section, make such payment and forthwith demand reimbursement for such
payment from the Responding Party in accordance with this Agreement;
provided that, if the alleged Third Party Liability as finally determined
on completion of settlement negotiations or related legal proceedings is
less than the amount which is paid by the Responding Party in respect of
the related Indemnity Claim, then the Claiming Party shall forthwith
following the final determination pay to the Responding Party the amount
by which the amount of the Third Party Liability as finally determined is
less than the amount which is so paid by the Responding
Party;
|
|
(c)
|
the
Claiming Party shall not negotiate, settle, compromise or pay (except in
the case of payment of a judgment) any Third Party Liability as to which
it proposes
|
-24-
|
to
assert an Indemnity Claim, except with the prior written consent of the
Responding Party (which consent shall not be unreasonably withheld or
delayed);
|
|
(d)
|
with
respect to any Third Party Liability, provided the Responding Party first
admits the Claiming Party’s right to indemnification for the amount of
such Third Party Liability which may at any time be determined or settled,
then, in any legal, administrative or other proceedings in connection with
the matters forming the basis of the Third Party Liability, the following
procedures will apply:
|
|
(i)
|
except
as contemplated by paragraph (iii) of this subsection, the Responding
Party will have the right to assume carriage of the compromise or
settlement of the Third Party Liability and the conduct of any related
legal, administrative or other proceedings, but the Claiming Party shall
have the right and shall be given the opportunity to participate in the
defence of the Third Party Liability, to consult with the Responding Party
in the settlement of the Third Party Liability and the conduct of related
legal, administrative and other proceedings (including consultation with
counsel) and to disagree on reasonable grounds with the selection and
retention of counsel, in which case counsel satisfactory to the Responding
Party and the Claiming Party shall be retained by the Responding
Party;
|
|
(ii)
|
the
Responding Party will co-operate with the Claiming Party in relation to
the Third Party Liability, will keep it fully advised with respect
thereto, will provide it with copies of all relevant documentation as it
becomes available, will provide it with access to all records and files
relating to the defence of the Third Party Liability and will meet with
representatives of the Claiming Party at all reasonable times to discuss
the Third Party Liability; and
|
|
(iii)
|
notwithstanding
paragraph (i) of this subsection, the Responding Party will not settle the
Third Party Liability or conduct any legal, administrative or other
proceedings in any manner which could, in the reasonable opinion of the
Claiming Party, have a material adverse affect on the Condition of the
Business or the Claiming Party, except with the prior written consent of
the Claiming Party;
|
|
(e)
|
If,
with respect to any Third Party Liability, the Responding Party does not
admit the Claiming Party’s right to indemnification or declines to assume
carriage of the settlement or of any legal, administrative or other
proceedings relating to the Third Party Liability, then the following
provisions will apply:
|
|
(i)
|
the
Claiming Party, at its discretion, may assume carriage of the settlement
or of any legal, administrative or other proceedings relating to the Third
Party Liability and may defend or settle the Third Party Liability on such
terms as the Claiming Party, acting in good faith, considers advisable;
and
|
-25-
|
(ii)
|
any
cost, loss, damage or expense incurred or suffered by the Claiming Party
in the settlement or defence of such Third Party Liability or the conduct
of any legal, administrative or other proceedings shall be added to the
amount of the Indemnity Claim;
|
|
(f)
|
The
amount of any damage, loss, cost, liability or expense (including
reasonable professional fees and disbursements) in connection with any
claim for which indemnification is provided hereunder shall be net of any
amounts actually received by the Claiming Party under insurance policies
with third parties (i.e.: actual insurance policies and not self insurance
or retention programs) with respect to such claim and shall be net of any
tax benefit received by the Claiming Party in respect of such claim;
and
|
|
(g)
|
Any
liability for indemnification hereunder shall be determined without
duplication of recovery by reason of the state of facts giving rise to
such liability constituting a breach of more than one representation,
warranty, covenant or agreement.
|
ARTICLE
9
GST
|
9.1
|
Interpretation
|
For the
purposes of ARTICLE 9, terms that are not otherwise defined in this Agreement
shall have the meaning ascribed thereto in the GST Law.
|
9.2
|
Going
concern
|
|
(a)
|
The
parties covenant and agree that the supplies described in Section 2.1 are
the supply of a going concern by the Seller to the Purchaser that is
GST-free under the GST Law; and
|
|
(b)
|
The
Seller warrants and represents that it carries on, and will continue to
carry on, the enterprise to which the supply in Section 9.2(a) relates up
to and including the Closing Date.
|
|
(c)
|
Section
9.3 shall not apply to a supply described in Section 2.1 unless the
Commissioner of Taxation issues a private ruling or otherwise determines
in writing that the supply is a taxable supply. If Section 9.3 does apply
to a supply described in Section 2.1, the recipient can withhold payment
of the GST Amount until three business days after the later
of:
|
|
(i)
|
the
day it receives a copy of a private ruling or written determination issued
by the Commissioner of Taxation;
and
|
|
(ii)
|
the
day the supplier (or the representative member for a GST group of which
the supplier is a member) is required to lodge its GST return for the tax
period to which the supply is
attributable.
|
-26-
|
9.3
|
GST
gross-up
|
If GST is
payable by a supplier (or by the representative member for a GST group of which
the supplier is a member) on any supply made under this Agreement, the recipient
will pay to the supplier an amount (the “GST Amount”) equal to the GST
payable on the supply. Subject to Section 9.2, the GST Amount is
payable by the recipient in addition to and at the same time that the
consideration for the supply is to be provided under this
Agreement.
|
9.4
|
Tax
invoice
|
The
supplier must deliver a tax invoice to the recipient before the supplier is
entitled to payment of the GST Amount. The recipient can withhold
payment of the GST Amount until the supplier provides a tax
invoice.
|
9.5
|
Adjustment
event
|
If an
adjustment event arises in respect of a taxable supply made under this
Agreement, the GST Amount will be recalculated to reflect the adjustment event
and a payment will be made by the recipient to the supplier or by the supplier
to the recipient, as the case may be, to reflect the recalculation.
|
9.6
|
Reimbursements
|
If a
Party is required under this Agreement to reimburse or pay to another Party an
amount calculated by reference to a cost, expense, outgoing, or an amount paid
or incurred by that Party, the amount of the reimbursement or payment will be
reduced by the amount of any input tax credits or reduced input tax credits to
which that Party (or the representative member for a GST group of which it is a
member) is entitled in respect of any acquisition relating to that cost,
expense, outgoing or other amount.
|
9.7
|
Survival
of Article 9
|
The
provisions of this ARTICLE 9 shall not merge on Closing.
ARTICLE
10
GENERAL
|
10.1
|
Taxes
and Fees
|
The
PetroHunter Parties and the Falcon Parties agree that:
|
(a)
|
the
PetroHunter Parties shall be responsible for any duties or stamp duties
applicable to the Transaction or in relation to any Transaction
Agreements; and
|
|
(b)
|
each
Party shall pay its own legal and other professional fees in respect of
the Transaction.
|
-27-
|
10.2
|
Complete
Closings
|
All
matters of payment, execution and delivery of documents by each Party to the
other at the Closing shall be deemed to be concurrent requirements and nothing
will be complete at Closing until everything required at Closing has been paid,
executed and delivered. Upon the written request of either Party, all
documents and monies shall be deemed delivered in escrow at Closing until the
Parties’ counsel can agree that all requirements of Closing have been
satisfied.
|
10.3
|
Status
of the Agreement
|
Notwithstanding
anything else contained in this Agreement, this Agreement shall not constitute a
binding agreement between the Parties until the Acceptance Date.
|
10.4
|
Tender
|
Any
tender of documents or money or delivery of Notice pursuant to this Agreement
may be given by or made upon a Party’s legal counsel on behalf of such
Party.
|
10.5
|
Specific
Performance and other Remedies
|
Each of
the Parties hereto hereby recognizes and acknowledges that a breach by any other
Party (the “Breaching
Party”) of any covenants or other commitments contained in this Agreement
will cause the non-Breaching Party to sustain injury for which it would not have
an adequate remedy at law for money damages. Therefore, each of the
Parties hereto hereby agree that, in the event of any such breach, the
non-Breaching Party shall be entitled to the remedy of specific performance of
such covenants or commitments and provisional, interlocutory and permanent
injunctive and other equitable relief in addition to any other remedy to which
it may be entitled, at law or in equity, and each of the Parties hereto further
hereby agrees to waive any requirement for the securing or posting of any bond
in connection with the obtaining of any such injunctive or other equitable
relief.
|
10.6
|
Obligations
as Covenants
|
Each
agreement and obligation of the Parties contained in this Agreement, even though
not expressed as a covenant, shall be considered for all purposes to be a
covenant.
|
10.7
|
Amendment
of Agreement
|
Subject
to Section 10.9, no modification or amendment of this Agreement shall be binding
unless executed in writing by the Parties in the same manner as the execution of
this Agreement.
|
10.8
|
Further
Assurances
|
Each of
the Parties shall from time to time hereafter and upon any reasonable request of
any other Party, make or cause to be made all such further acts, deeds,
assurances and things as may be required or necessary to more effectually
implement and carry out the true intent and meaning of this
Agreement.
-28-
|
10.9
|
Waiver
|
Subject
to Section 10.7, no waiver of any default, breach or non-compliance under this
Agreement shall be effective unless in writing and signed by the Party to be
bound by the waiver or by its counsel. Subject to Section 10.7, no
waiver shall be inferred from or implied by any failure to act or delay in
acting by a Party in respect of any default, breach or non-observance or by
anything done or omitted to be done by the other Party. The waiver by
a Party of any default, breach or non-compliance under this Agreement shall not
operate as a waiver of that Party’s rights under this Agreement in respect of
any continuing or subsequent default, breach or non-observance (whether of the
same or any other nature).
|
10.10
|
Time
|
Time
shall in all respects be of the essence hereof provided that the time for doing
or completing any matter may be extended or abridged by an agreement in writing
between Falcon and PetroHunter Energy or their respective
counsel. Except as expressly set out in this Agreement, the
computation of any period of time referred to in this Agreement shall exclude
the first day and include the last day of such period.
|
10.11
|
Entire
Agreement
|
Except
for the defined terms identified in Section 1.1, this Agreement constitutes the
entire agreement between the Parties with respect to the subject matter hereof
and, except as stated in the instruments and documents to be executed and
delivered pursuant hereto, contains all of the representations, conditions,
warranties and agreements of the respective Parties with respect to the subject
matter hereof. There are no verbal representations, undertakings or agreements
of any kind between the Parties. This Agreement supersedes
all prior negotiations or agreements between the Parties, whether written or
verbal, with respect to the subject matter of this Agreement.
|
10.12
|
Severability
|
If any
covenant, obligation or provision of this Agreement, or the application thereof
to any person or circumstance shall, to any extent, be invalid or unenforceable,
the remainder of this Agreement or the application of such covenant, obligation
or provision to persons or circumstances other than those as to which it is held
invalid or unenforceable, shall not be affected thereby. Each
covenant, obligation and provision of this Agreement shall be separately valid
and enforceable to the fullest extent permitted by law.
|
10.13
|
Counterparts
and Facsimile
|
For the
convenience of the Parties, this Agreement may be executed in several
counterparts, and delivered by facsimile transmission, each of which when so
executed and delivered shall be deemed to be an original instrument and such
counterparts together shall constitute one and the same instrument.
-29-
|
10.14
|
Notices
|
Every
notice, consent, request, instruction, approval and other communication provided
for or permitted by this Agreement (each, a “Notice”) and all legal process
in regard hereto shall be validly given, made or served, if in writing and
delivered to, or sent by facsimile, to the Party to whom it is be given
at:
|
(a)
|
to
PetroHunter Parties:
|
c/o
PetroHunter Energy Corporation
0000
Xxxxx Xxxxxx, Xxxxx 0000
Xxxxxx,
Xxxxxxxx 00000
Attention:
Xxxxxx Xxxxx, Chairman
Facsimile
number: (000) 000-0000
with a
copy to (which copy shall not constitute notice hereunder):
Xxxx Xxxx
Xxxx Xxxxxxxxxx & Xxxxxxxxx, P.C.
000
Xxxxxxx Xxxxxx, Xxxxx 000
Xxxxxx,
Xxxxxxxx 00000
Attention:
Xxx X. Xxxxxxxxx, Esq.
Facsimile
number: (000) 000-0000
|
(b)
|
to
Falcon Parties:
|
c/o
Falcon Oil & Gas Ltd.
0000
Xxxxxxxx Xxxxxx, Xxxxx 0000
Xxxxxx,
Xxxxxxxx 00000
Attention:
Chief Financial Officer
Facsimile
number: (000) 000-0000
with a
copy to (which copy shall not constitute notice hereunder):
Xxxx
& Berlis LLP
Brookfield
Place, 000 Xxx Xxxxxx
Xxxxx
0000, Xxx 000
Xxxxxxx,
Xxxxxxx
X0X
0X0
Attention:
Xxxxxx X. Xxxxx
Facsimile
number: (000) 000-0000
or to
such other address as any Party hereto may, from time to time, designate in
writing delivered in a like manner. If delivered or sent by
facsimile, Notice shall be deemed delivered
-30-
on the
date of delivery or facsimile transmission, unless delivered or transmitted
after 4:00 p.m. on a Business Day or on a day which is not a Business Day,
in which event Notice shall be deemed delivered on the next Business
Day.
|
10.15
|
Confidentiality
|
PetroHunter
Parties and Falcon Parties agree that:
|
(a)
|
their
respective officers, directors, partners, shareholders, employees, agents
and representatives shall keep the existence of and the terms of this
Agreement in strictest confidence;
and
|
|
(b)
|
prior
to making any press releases concerning the Transaction, each of them
shall provide a copy of such press release to the other in advance of it
being released.
|
|
10.16
|
Successors
and Assigns
|
This
Agreement shall not be assignable by the Falcon Parties, or otherwise, without
the written consent of PetroHunter Parties, which shall not be unreasonably
withheld.
|
10.17
|
Enurement
|
All of
the covenants and agreements contained in this Agreement shall be binding upon
the Parties and their respective successors and permitted assigns and shall
enure to the benefit of and be enforceable by the Parties and their respective
successors and permitted assigns pursuant to the terms and conditions of this
Agreement.
|
10.18
|
Language
|
The
Parties hereto acknowledge that they have requested and consented that this
Agreement and all documents related hereto be drawn up in
English. Les Parties aux présentes reconnaissent qu’elles ont exigé
cette convention ainsi que tous les documents qui y ont rapport soient rédigés
en anglais, ce a quoi les parties aux présentes consentent.
[REMAINDER
OF PAGE INTENTIONALLY LEFT BLANK]
IN WITNESS WHEREOF, the
Parties hereto have duly executed this agreement under seal as of the day and
year first above written.
| PETROHUNTER ENERGY CORPORATION | ||
| Per: |
/s/
Xxxxxx X. Xxxxx
|
|
|
Name: Xxxxxx
X. Xxxxx
|
||
|
Title: Chairman
and CEO
|
||
| Per: |
/s/
Xxxx X. XxxxxXxxxxxx
|
|
|
Name: Xxxx
X. XxxxxXxxxxxx
|
||
|
Title: Executive
Vice President
|
||
|
I/We
have the authority to bind the corporation.
|
||
| PETROHUNTER OPERATING COMPANY | ||
| Per: |
/s/
Xxxxxx X. Xxxxx
|
|
|
Name: Xxxxxx
X. Xxxxx
|
||
|
Title: Chairman
and CEO
|
||
| Per: |
/s/
Xxxx X. XxxxxXxxxxxx
|
|
|
Name: Xxxx
X. XxxxxXxxxxxx
|
||
|
Title: Executive
Vice President
|
||
|
I/We
have the authority to bind the corporation.
|
||
| SWEETPEA PETROLEUM PTY LTD. | ||
| Per: |
/s/
Xxxxxx X. Xxxxx
|
|
|
Name: Xxxxxx
X. Xxxxx
|
||
|
Title: Director
|
||
| Per: |
/s/
Xxxx X. XxxxxXxxxxxx
|
|
|
Name: Xxxx
X. XxxxxXxxxxxx
|
||
|
Title: Director
and Secretary
|
||
|
I/We
have the authority to bind the corporation.
|
||
|
|
||
-2-
|
FALCON
OIL & GAS LTD.
|
|||
|
Per:
|
/s/
Xxxx X. Xxxxxx
|
||
|
Name: Xxxx
X. Xxxxxx
|
|||
|
Title: CEO
|
|||
|
Per:
|
/s/
Xxxx X. Xxxxxx
|
||
|
Name: Xxxx
X. Xxxxxx
|
|||
|
Title: Chief
Financial Officer
|
|||
|
I/We
have the authority to bind the corporation.
|
|||
|
FALCON
OIL & GAS USA, INC.
|
|||
|
Per:
|
/s/
Xxxx X. Xxxxxx
|
||
|
Name: Xxxx
X. Xxxxxx
|
|||
|
Title: President
|
|||
|
Per:
|
/s/
Xxxx X. Xxxxxx
|
||
|
Name: Xxxx
X. Xxxxxx
|
|||
|
Title: VP/Sec
|
|||
|
I/We
have the authority to bind the corporation.
|
|||
|
FALCON
OIL & GAS AUSTRALIA TY
LTD
|
|||
|
Per:
|
/s/
Xxxxxx X. Xxxxxx
|
||
|
Name: Xxxxxx
X. Xxxxxx
|
|||
|
Title: Director
|
|||
|
Per:
|
/s/
Xxxx X. Xxxxxx
|
||
|
Name: Xxxx
X. Xxxxxx
|
|||
|
Title: Director
|
|||
|
I/We
have the authority to bind the
corporation.
|
|||
