The Centre for Mining, Energy and
Natural Resources Law
Oil and Gas Agreements
UPSTREAM SALE AND PURCHASE AGREEMENT CLAUSES
Oil & Gas Agreements Appendiix 4.1
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APPENDIX 1 – UPSTREAM SALE AND PURCHASE AGREEMENT
CLAUSES
1.1 Definitions
In this Agreement:
Affiliate has the same meaning as “related body corporate” under the
Corporations Act.
Agreed Interest Rate means LIBOR plus 3%.
Approval and Registration means approval and registration of
dealings and transfers by the Titles Administrator under the Petroleum
Legislation.
Base Purchase Price means the Base Purchase Price for the Sale
Assets as specified in Schedule 1.
Business Day means a day (other than a Saturday, Sunday or public
holiday) on which banks are open for general banking business in
Western Australia.
Cash Call means a cash call, invoice or other request for payment that
is issued under the JOA in respect of the Sale Assets.
Claim means any claim, action, proceeding, judgment, damage, loss,
cost, expense or liability whatsoever, at law, in equity, under statute or
howsoever arising, whether actual, prospective, contingent or
otherwise and whether or not ascertained.
Completion means completion of the sale and purchase of the Sale
Assets
Completion Adjustment is defined in clause 4.4.
Completion Date means the date that is 5 Business Days after the
satisfaction or waiver of the Conditions, or any other date agreed in
writing by the Seller and the Buyer.
Completion Payment Amount is defined in clause 5.1.
Completion Statement means the Completion Statement to be issued
by Seller to Buyer under clause 5.2.
Condition means each of the conditions specified in clause 3.1.
Consequential Loss means indirect, remote or unforeseeable loss,
deferment of income, loss of profit, loss or denial of opportunity, loss of
access to markets, loss of goodwill, loss of business reputation, future
reputation or publicity, damage to credit rating, punitive or special
damages, whether or not in the reasonable contemplation of the
Parties at the time of execution of this Agreement.
Costs means, in relation to each of the Sale Assets, costs payable or
paid in respect of the Sale Assets for operations and activities carried
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out under the JOA or in connection with the sale of Production,
including:
| (a) (b) (c) |
amounts payable under the JOA; costs payable in relation to the sale or delivery of Production; amounts payable in respect of the Sale Assets pursuant to the Permitted Encumbrances; and premiums payable in respect of insurances maintained by Seller in relation to the Sale Assets. |
| (d) |
Costs do not include those Liabilities referred to in clause 9.2.
Cut-Off Date means, in relation to a Condition, the final date by which
that Condition must be satisfied.
Data Room means the process by which information, whether in
physical or electronic form, has been provided or made available by or
on behalf of Seller to Buyer or any of its advisers or representatives, as
part of Buyer’s due diligence investigations on the Sale Assets.
Disclosure Letter means the letter of disclosure provided by Seller to
Buyer annexed as Annexure A.
Disclosure Materials means:
| (a) (b) (c) |
this Agreement including the Disclosure Letter; all information in the Data Room; all information publicly available (by searches of public registers or otherwise); and all other written information and data in connection with the transactions contemplated by this Agreement or the Sale Assets |
| (d) |
provided or communicated to Buyer, its Affiliates,
representatives, advisers or employees by Seller, its Affiliates,
representatives, advisers or employees, before the date of this
Agreement.
Effective Date means the date so specified in Schedule 1.
Encumbrance means any mortgage, charge, lien, writ, caveat, royalty
(other than royalties to Government Authorities), net profit interest or
other encumbrance or third party interest.
Final Adjustment is defined in clause 5.3.
Final Statement is defined in clause 5.3.
Government Approval means an approval, permit, licence or authority
required from a Government Authority.
Government Authority means any government or any governmental,
semi-governmental or judicial entity, authority, body or agency whether
Commonwealth, State or local.
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Immediately Available Funds means cash or telegraphic or other
electronic means of transfer of cleared funds into a bank account
nominated by Seller by way of real-time gross settlement.
Interim Period means the period from and including the Effective Date,
up to but excluding the date of Completion.
JOA means, in relation to each of the Sale Assets, the joint operating
agreement under which that Sale Asset is held, as described in
Schedule 1.
JOA Assumption Deed means, in relation to each of the Sale Assets,
the deed to be entered into under the JOA by an incoming JOA
Participant, under which it agrees to become a JOA Participant as to
the interest being acquired by it.
JOA Cross Charge means, in relation to each of the Sale Assets, the
cross charge required to be entered into between the JOA Participants
pursuant to the JOA.
JOA Participant means, in relation to each of the Sale Assets, the
holder of an interest in and under the relevant JOA.
Joint Venture means, in relation to each of the Sale Assets, the joint
venture under which that Sale Asset is held, arising under the JOA.
Legal Requirements means present or future obligations arising
under:
| (a) (b) (c) |
legislation, regulations, by-laws; or orders or requirements of Government Authorities; or the terms and conditions of Government Approvals. |
Liabilities includes Claims, demands, costs, losses, obligations and
liabilities, whether present, future or contingent.
LIBOR means the rate per annum equal to the London Interbank Offer
Rate as fixed by the British Bankers’ Association for 3 month deposits
in United States dollars at or about 11:00 a.m. London time on any day.
Material Adverse Effect means a result or consequence that a
reasonable person would consider to materially and adversely affect
the value of the Sale Assets, by an amount of 20% or more of the Base
Purchase Price.
Material Contracts means the Seller Contracts and the Operator
Contracts.
OPGGSA means the Offshore Petroleum and Greenhouse Gas
Storage Act 2006 (Cth).
Operator means, in relation to each of the Sale Assets, the Operator
from time to time under the JOA.
Operator Contracts means, in relation to the Sale Assets, contracts
entered into by the Operator on behalf of the JOA Participants and
which are still in force as at the Effective Date.
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Permitted Encumbrances means, with respect to the Sale Assets:
| (a) (b) (c) (d) |
Taxes imposed by Government Authorities; the terms and conditions of the Petroleum Titles; obligations arising under Legal Requirements; the terms of the Material Contracts and the rights of third parties under the Material Contracts; the royalties and other liabilities and encumbrances (if any) disclosed in Schedule 1; undetermined or inchoate liens incurred or created as security in favour of suppliers and contractors in the ordinary course of business; easements, rights-of-way, restrictions, servitudes, permits, conditions, covenants, exceptions, reservations, and other similar encumbrances reserved or granted; and third party rights and interests disclosed in the Disclosure Materials. |
| (e) | |
| (f) | |
| (g) | |
| (h) |
Petroleum Legislation means the OPGGSA and any other Act of
Parliament which replaces or with which that Act is incorporated or
which is ancillary to that Act and, as well as all regulations,
administrative directions and determinations made under that Act.
Petroleum Titles means, in relation to each of the Sale Assets, the
Petroleum Titles described in Schedule 1.
PRRT means Petroleum Resource Rent Tax payable under the PRRT
Act.
PRRT Act means the Petroleum Resource Rent Tax Assessment Act
1987 (Cth).
Production means production of hydrocarbons attributed to the Sale
Assets.
Project Documents means the documents that are binding on the
Seller either jointly or severally in respect of Joint Venture operations or
discrete activities on the area the subject of the Titles, and any
document entered into for the purpose of varying, novating,
supplementing, extending, replacing or restating those documents.
Purchase Price means the total price payable by the Buyer for the
Sale Assets determined in accordance with clause 3.
Receipts means, in relation to each of the Sale Assets, receipts,
refunds, repayments and receivables in respect of the Sale Assets
arising under the JOA or in connection with the sale of Production.
Sale means the sale and purchase of the Sale Assets under this
Agreement.
Sale Assets means the Permit Interest as described in Schedule 1.
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Seller Contracts means the contracts to which Seller is a party in
relation to the Sale Assets and which are still in force as at the Effective
Date. Seller Contracts do not include Operator Contracts, in respect of
which Seller’s rights and obligations are assumed by Buyer by virtue of
the JOA Assumption Deed.
Seller’s Effective Date Production Entitlement means:
| (a) | Seller’s participating interest share of Production on-hand at the Effective Date; and any additional quantity of Production that Seller is, at the |
| (b) |
Effective Date, entitled to offtake as a result of having previously
offtaken less than its full participating interest share (underlift).
Tax means any tax (including PRRT), royalty, levy, charge, impost, fee,
deductions, compulsory loan or withholding, which is assessed, levied,
imposed or collected by any Government Authority and includes, but is
not limited to any interest, penalty, charge, fee or other amount
imposed on, or in respect of any of the above.
Titles [has the meaning given in the JOA].
Titles Administrator means the Titles Administrator as defined in the
OPGGSA.
Transfer means, in relation to each Petroleum Title, an instrument of
transfer of the Petroleum Title in the form required by the OPGGSA.
Working Capital is defined in clause 4.4(i).
2. SALE AND PURCHASE
2.1 Sale and purchase of Sale Assets
Subject to the terms and conditions set out in this Agreement, Seller
agrees to sell and Buyer agrees to purchase the Sale Assets.
2.2 Encumbrances
The Sale Assets are sold free from all Encumbrances other than
Permitted Encumbrances.
2.3 Risk and benefit passes from Effective Date
Subject to Completion taking place, the sale and purchase of the Sale
Assets will be deemed to have taken effect on and from the Effective
Date, and the risk in and benefit of the Sale Assets will be deemed to
have passed to the Buyer on and from the Effective Date.
2.4 Allocation of Costs and Receipts
Subject to Completion taking place:
(a) Seller will be responsible for Costs in respect of operations and
activities performed prior to the Effective Date. Buyer will be
responsible for Costs in respect of operations and activities
performed on or after the Effective Date.
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(b) Seller will be entitled to all Receipts in respect of Production
derived prior to the Effective Date or which otherwise accrue
from circumstances occurring prior to the Effective Date. Buyer
will be entitled to all Receipts in respect of Production derived on
or after the Effective Date or which otherwise accrue from
circumstances occurring on or after the Effective Date.
| (c) | The allocation of Costs and Receipts under this clause will be recorded in the Completion Adjustment. |
3. CONDITIONS TO COMPLETION
3.1 Conditions
Completion is conditional on each of the following conditions being
satisfied or waived (as appropriate):
(a) Buyer has received notification from the Titles Administrator
under clause 6.1(a) to the effect that the dealings contained in
this Agreement have been approved and registered under Part
4.6 of the OPGGSA; and
| (b) | [Insert other applicable conditions, e.g FIRB, financing,, etc.] | |
| Benefit | ||
| (a) | The Conditions in clause 3.1[ | ] are for the benefit of the Seller |
| and the Buyer and may not be waived. | ||
| (b) | The Conditions in clause 3.1[ | ] are for the benefit of the Seller |
| and only the Seller may, in its sole and absolute discretion, waive the non-satisfaction of that Condition. The non-satisfaction of a Condition may only be waived in |
(c) |
3.2 writing.
3.3 Responsibility
Each party must, in respect of the Conditions it is responsible for
satisfying under clause 3.1:
| (a) | use all reasonable endeavours to ensure that the Condition is satisfied as soon as practicable after the Execution Date; |
|
| (b) | supply the other parties with a copy of all material correspondence with the Titles Administrator and [ case may be); |
] (as the |
| (c) | keep the other parties fully informed as to the progress of | |
| obtaining the satisfaction of the Condition; and | ||
| (d) | promptly notify the other parties in writing when it becomes aware that the Condition has been satisfied or has become |
|
| incapable of being satisfied. |
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3.4 Co-operation
The parties agree to cooperate with each other and do everything
reasonably necessary to procure the satisfaction of the Conditions,
including:
| (a) | supplying all necessary and appropriate information for the purpose of enabling the Conditions to be satisfied; and not taking any action that would or would be likely to hinder satisfaction of the Conditions. |
| (b) |
3.5 Failure to satisfy conditions
If the Conditions have not been satisfied or waived in accordance with
clause 3.2 (as appropriate) before the date that is [three] months after
the Execution Date, then the parties must work together in good faith
with view to resolving the circumstances giving rise to the failure to
satisfy the Conditions, including considering alternative ways in which
the sale and purchase of Sale Interest contemplated in this agreement
could be achieved on substantially the same terms as this agreement.
3.6 Termination
If, by the date that is [ ] months after the Execution Date:
| (a) | any Condition has not been satisfied or waived in accordance with clause 3.2 (as appropriate); and the parties have not reached agreement on any alternative way of transferring the Sale Interest pursuant to clause 3.5, |
| (b) |
then the Buyer or the Seller (provided they have fully complied with
their obligations under clause 3.5) may terminate this agreement by
written notice to the other, in which case clause 14.3 shall apply.
4. PURCHASE PRICE
4.1 Purchase Price
In consideration for the sale of the Sale Assets, Buyer will pay the
Purchase Price to Seller, at the times and in the manner provided in
this Agreement.
4.2 Calculation of Purchase Price
The Purchase Price for the Sale Assets will be the sum of:
| (a) (b) |
the Base Purchase Price; and the Completion Adjustment in accordance with clause 4.4. |
4.3 Base Purchase Price
The Base Purchase Price is the amount in US$ specified in
Schedule 1. The Base Purchase Price is allocated in the manner
shown in Schedule 1.
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4.4 Completion Adjustment
| (a) | The Completion Adjustment will be an amount (in US$) calculated as follows: |
| (i) | by adding the value of Working Capital at the Effective Date, calculated as follows: |
| (A) | by adding Seller’s share of moneys in the Joint Venture account at the Effective Date; by adding Seller’s share of deposits, advances and |
| (B) |
prepayments paid prior to the Effective Date to the
extent they relate to operations or activities to be
performed on or after the Effective Date;
(C) by adding the value of inventory of materials and
supplies purchased prior to the Effective Date and
available for use in operations to be performed on
or after the Effective Date; and
| (D) | by deducting accruals or payables at the Effective Date to the extent they are to be met out of assets referred to in paragraphs (A) or (B); |
| (ii) | by adding any Costs paid by Seller in respect of |
operations and activities performed on or after the
Effective Date (excluding items that have been included
in the calculation of Working Capital);
| (iii) | by adding any Costs incurred in respect of insurance policies, as required to be added by 5.4; by deducting any Costs to be paid by Buyer on or after |
| (iv) |
Completion in respect of operations and activities
performed prior to the Effective Date, provided that if any
Cost item is an operating cost (deductible to Buyer for
income tax purposes) then the amount to be deducted for
that Cost item under this paragraph will be equal to 70%
of the face value of that Cost item;
(v) by adding any Receipts to be received by Buyer after
Completion in respect of Production derived prior to the
Effective Date, or which arise from operations and
activities performed prior to the Effective Date;
(vi) by deducting any Receipts received by Seller in respect
of Production derived after the Effective Date, or which
arise from operations and activities performed on or after
the Effective Date. Receipts attributed to Seller’s
Effective Date Production Entitlement will be excluded
from this calculation.
| (vii) | by adding an amount of AUD$[ ] per month for the Interim Period, pro rated for part of a month, representing |
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Seller’s internal personnel costs in managing the Sale
Assets during the Interim Period; and
(viii) by adding the amount of any PRRT instalment payments
made by Seller in respect of Receipts for Production
derived on or after the Effective Date, or which arise from
operations and activities performed on or after the
Effective Date, but excluding the estimated PRRT liability
attributable to assessable receipts derived by the Seller
for PRRT purposes on or after the Effective Date in
respect of Seller’s Effective Date Production Entitlement
(based on the actual sales proceeds received by Seller
for such Production and less “allowable deductions” for
PRRT purposes incurred by the Seller and undeducted
for PRRT purposes as at the Effective Date).
(b) The calculation of Working Capital and the allocation of Costs
and Receipts under the Completion Adjustment, will be based
on the joint venture accounts prepared by the Operator as at the
Effective Date, adjusted for events and adjustments occurring
after the Effective Date.
(c) For the purpose of calculating the Completion Adjustment in
US$, any Costs or Receipts or any other amount referred to in
paragraph (a), which are denominated in Australian currency will
be converted to US$ at the wholesale spot AUD/US$ rate as
published in the Australian Financial Review on the first
Business day of the month in which the payment is received or
paid by Seller.
| (d) | The Completion Adjustment may result in either a positive amount (being an amount owing by Buyer to Seller) or a negative amount (being an amount owing by Seller to Buyer). In carrying out the Completion Adjustment, there is to be no |
| (e) |
double-counting of any Cost or Receipt items (except to the
extent that any Cost or Receipt may be counted in the
calculation of PRRT or notional income tax adjustment).
(f) Schedule 3 to this Agreement sets out an example calculation of
the adjustment mechanism described in this clause. The
example calculation in Schedule 3 is provided by way of
illustration only, is not intended to be representative of any
actual amounts to be used in the calculation of the Completion
Adjustment, and is not to be relied on by any party as
representing any actual amounts.
5. PAYMENT OF PURCHASE PRICE
5.1 Completion Payment Amount
At Completion, Buyer will pay to Seller the Completion Payment
Amount, being the aggregate of:
(a) the Base Purchase Price; and
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| (b) | Seller’s calculation of the Completion Adjustment. |
| Completion Statement | |
| (a) | On the day being 5 Business Days prior to the due date for |
5.2 Completion, Seller will prepare and deliver to Buyer a
Completion Statement showing Seller’s calculation of the
Completion Payment Amount, including Seller’s calculation of
the Completion Adjustment. In preparing the Completion
Statement, Seller will provide drafts of the Completion Statement
to the Buyer as they are prepared, liaise with Buyer and discuss
with Buyer any issues arising.
(b) In support of the Completion Statement, Seller will provide Buyer
with copies of all Operators’ reports, billing statements, Cash
Calls and correspondence and of all other material from which
the Completion Statement has been derived.
| (c) | If Buyer disputes the Completion Statement or any calculation used to arrive at the Completion Statement provided by Seller, then: |
| (i) | Buyer will give notice thereof to Seller as soon as practicable. The dispute will not delay Completion. For the purposes |
| (ii) |
of Completion, the Completion Statement prepared by
Seller will be applied on an interim basis and Buyer will
pay the Completion Payment Amount as shown in the
Completion Statement.
(iii) The dispute will be resolved following Completion in
accordance with the Final Statement procedures set out
in clause 5.3.
5.3 Final Statement
Within 90 days after Completion, Seller will prepare and provide to
Buyer a further statement (Final Statement) setting out:
| (i) | a revised and final statement of the Completion Payment Amount, including a revised and final statement of the Completion Adjustment; the amount of any adjustment (Final Adjustment) |
| (ii) |
between the revised Completion Payment Amount as
shown in the Final Statement, and the Completion
Payment Amount as shown in the Completion Statement.
The Final Adjustment may show an amount owing by
Buyer to Seller or an amount owing by Seller to Buyer.
(b) In preparing the Final Statement, Seller will provide drafts of the
Final Statement to the Buyer as they are prepared, liaise with
Buyer and will discuss with Buyer any significant issues arising.
Seller will provide all documentation reasonably necessary to
support the Final Statement and will provide Buyer access
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during normal business hours (and upon Buyer giving
reasonable prior notice) to the books and records necessary to
verify the calculations used to arrive at the Final Statement.
| (c) | Except to the extent that Buyer notifies Seller of a dispute in accordance with clause 4.3(d): |
| (i) (ii) |
the Final Statement will be binding on the Parties; and within 15 Business Days after the date of the Final Statement, the Parties will make any payments necessary |
to give effect to the Final Adjustment. Any payment will
be made by direct electronic transfer of Immediately
Available Funds.
(d) If Buyer disputes any aspect of the Final Statement, Buyer must
give notice of the dispute within 10 Business Days after the date
of the Final Statement. The notice must specify which aspect of
the Final Statement is disputed by Buyer, and must give details
why the amount is disputed. If Buyer gives such a notice of
dispute, then:
| (i) | Buyer will make payment due in respect of the Final Adjustment to the extent that there is no dispute over the amount payable; the Parties will endeavour to resolve the dispute; if the Parties cannot resolve the dispute within a period of |
| (ii) (iii) |
10 Business Days from the date on which Buyer gave its
notice of dispute, the matter will be referred to an Expert
for determination; and
(iv) within 5 Business Days after the date on which the
dispute is resolved by agreement or determination by the
Expert, the Parties will make any payments between
themselves as necessary to give effect to the resolution
of the dispute. The Party required to make a payment to
the other Party will also pay interest, calculated daily at
the Agreed Interest Rate, on the amount of the payment
between the date of the Final Statement and the date on
which payment is made.
5.4 Manner of payment
(a) Each payment to be made by Buyer to Seller on account of the
Purchase Price or otherwise at Completion will be made in
Immediately Available Funds, in the same currency in which the
payment is stated in the Completion Statement.
(b) Buyer will pay the Purchase Price to Seller in full at Completion
without any reduction for any Taxes or other charges
whatsoever.
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6. CONDUCT PRIOR TO COMPLETION
6.1 Seller’s conduct prior to Completion
Subject to clause 6.2, Seller agrees that, in relation to the Sale Assets,
between the date of this Agreement and the Completion Date, it will:
(a) not dispose of any interest in, grant any option or right of preemption, or create or suffer to be created any Encumbrance
over, the Sale Assets, other than a Permitted Encumbrance, or
offer or agree to do any such things;
(b) not agree to relinquish any blocks from the Titles or surrender
the whole or party of the Titles without obtaining the Buyer’s
written consent;
| (c) | [insert other restrictions on Seller’s conduct during Interim Period]. |
| Permitted acts Nothing in clause 6.1 restricts the Seller from doing anything: |
|
| (a) (b) |
that is expressly contemplated by this Agreement; to reasonably and prudently respond to an emergency or |
6.2 disaster (including a situation giving rise to a risk of personal
injury or damage to property) in respect of the Sale Assets;
| (c) | that is necessary for the Seller to meet its legal or contractual obligations, including its obligations under any provision of any Project Document or any other agreement to which it is a party; that is in the ordinary course of business; or approved by the Buyer, such approval not to be unreasonably withheld or delayed. |
| (d) (e) |
|
| Insurance | |
| (a) | Between the date of this Agreement and Completion, the Seller |
6.3 will maintain in force all of the Seller’s insurance policies relating
to the Sale Assets. The costs of maintaining such insurances
during the Interim Period will be included in the Completion
Adjustment.
(b) If between the date of this Agreement and Completion any event
occurs (insured event) which results in loss of or damage to any
property forming party of the Sale Assets, being an event
covered by one of the Seller’s insurance policies relating to the
Sale Assets, then the following provisions will apply:
| (i) (ii) |
The Seller will promptly notify the Buyer of the event. The Seller will use reasonable endeavours to make and |
pursue claims and receive reimbursement under the
Seller’s insurance policies in respect of any loss, damage,
liability and expense arising from the insured event. The
Seller will make the insurance claims promptly. IF the
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insurers dispute or resist any claim, the Seller will
promptly notify the Buyer who may require the Seller to
pursue the claim provided that he Buyer will indemnify the
Seller against any reasonable costs and expenses which
the Seller may thereby incur in pursuing such claim.
(iii) Any insurance payout will be a Receipt accruing after the
Effective Date and will therefore be to the Buyer’s
account for the purposes of the Completion Adjustment,
except to the extent the Receipt is used prior to
Completion in rectifying the loss or damage resulting from
the insured event. Any Cost paid by the Seller in
rectifying the loss or damage resulting from the insured
event, will be a Cost payable for operations carried out
after the Effective Date and will therefore be to the
Buyer’s account.
7. COMPLETION
7.1 Time and place of Completion
Completion will take place at [insert] on the Completion Date at the
| offices of [ | ], or any other time and place agreed between the Seller |
| and the Buyer. The parties shall use all reasonable endeavours to | |
| achieve Completion by [ Seller’s obligations |
]. |
| At Completion, the Seller must: | |
| (a) | deliver to the Buyer: |
| (i) | [ ] |
| (ii) | any other agreement or document required to effect the sale and purchase of the Sale Interest pursuant to this |
| agreement; | |
| (b) | establish to the reasonable satisfaction of the Buyer that the |
| Condition set out in clause [ | ] has been satisfied and deliver to |
| the Buyer any relevant documents of proof; and deliver to the Buyer all Records, except that if the Seller is legally required to retain any of the documents, the Seller may deliver copies of those documents to the Buyer. |
(c) |
7.2 7.3 Buyer’s obligations
At Completion, the Buyer must:
| (a) | deliver to the Seller: | |
| (i) | [ | ] |
| (ii) | any other agreement or document required to effect the sale and purchase of the Sale Interest pursuant to this Agreement; and |
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(b) establish to the reasonable satisfaction of the Seller that the
Condition set out in clause 2.5 has been satisfied and deliver to
the Seller any relevant documents of proof.
7.4 Simultaneous actions at Completion
In respect of Completion:
| (a) | the obligations of the parties under this Agreement are interdependent and must be performed, as nearly as possible, simultaneously; and if all actions required to be performed at Completion are not so |
| (b) |
performed, then Completion is taken not to have occurred and
any document delivered, or payment made, under this clause 6
must be returned to the party that delivered it or paid it.
7.5 Third party consent
Nothing in this Agreement is to be construed as an attempt to assign
the benefit of any Project Document which by its terms or by law is not
assignable without a third party consent unless such consent has been
given.
7.6 Further assurances
The parties shall execute all such other documents and do all such
other acts and things as may be required in order to effect the sale and
transfer of the Sale Assets to the Buyer in accordance with the terms of
this Agreement and otherwise to achieve the intent of this Agreement.
8. OBLIGATIONS AFTER COMPLETION
8.1 Approval and Registration of the Transfers
(a) Promptly after Completion, the Buyer must lodge the Transfers
and the dealings with the Titles Administrator for Approval and
Registration and the Seller must provide all reasonable
assistance.
| (b) | Each of the Buyer and the Seller must cooperate with the other and use its reasonable endeavours to obtain Approval and Registration in accordance with clause 5.1 and this clause 7. Without limiting the generality of clause 7.1(b): |
| (c) | |
| (i) | each of the Buyer and the Seller must make all |
applications and supply all information necessary and
appropriate for the purpose of enabling Approval and
Registration to be obtained;
| (ii) | neither the Buyer nor the Seller may withdraw or procure the withdrawal of any such application, Dealing, Transfer or information; neither the Buyer nor the Seller may take any action that |
| (iii) |
would or would be likely to prevent or hinder Approval
and Registration; and
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(iv) each of the Buyer and the Seller must supply to the other
parties copies of all applications, dealings and Transfers
made and all information supplied for the purpose of
obtaining Approval and Registration.
(d) Following lodgement of the dealings and Transfers with the
Titles Administrator, the Buyer must promptly give to the Seller
notice of such lodgement and provide the Seller with evidence of
Approval and Registration.
8.2 Refusal
(a) Subject to clause 7.2(c), if Approval and Registration of the
Transfers and the dealings is not obtained within 12 months of
the Completion Date, or such later time as the Buyer and the
Seller may agree in writing, the Buyer and the Seller must as
soon as possible thereafter meet and consult in good faith to
consider whether or not the sale and purchase evidenced by this
agreement can proceed on an alternative basis. If, within a
further 60 days, no revised agreement is reached between the
Buyer and the Seller, then either the Buyer or the Seller may, by
notice to the other parties, terminate this agreement without any
party having liability to the other parties, save for antecedent
breaches.
| (b) | On receipt of any notice delivered pursuant to clause 7.2(a): |
| (i) | the Buyer must transfer all parts of the Sale Assets which |
have been transferred to the Buyer back to the Seller and
the Buyer must acknowledge that it has no legal or
beneficial interest in any part of the Sale Assets;
| (ii) | the parties must execute all such documents necessary to transfer the parts of the Sale Assets which have been transferred to the Buyer, back to the Seller; each party must refund to the other party the sums paid |
| (iii) |
by the other party in accordance with clauses 3, 4 and 6
and the Seller must refund the amount of any cash calls
paid by the Buyer under the Project Documents, together
with interest on such sums calculated at LIBOR, on and
from each date of payment up to, but excluding, the date
of such refund, but all other costs associated with the
transaction will be borne by the party which incurred, or is
liable for, them; and
(iv) the parties must take all other steps and execute all such
documents as necessary to terminate, reassign or
otherwise nullify the effect of any document which was
executed between them in connection with the
transaction contemplated in this Agreement between the
date of this Agreement and the Completion Date.
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(c) If any party institutes legal proceedings challenging any refusal
of Approval and Registration pursuant to the terms of this
agreement, the right to elect to terminate is postponed until
those legal proceedings have been finally determined, settled or
withdrawn.
9. LIABILITY AND INDEMNITY
9.1 Seller’s liabilities arising before the Effective Date
Subject to clauses 3 and 8.3, the Seller will (subject to Completion
occurring):
| (a) | be liable for all costs, charges, expenses, liabilities and obligations in respect of the Sale Interest which accrue in, or relate to, the period before the Effective Date; and reimburse and indemnify the Buyer against any such costs, |
| (b) |
charges, expenses, liabilities and obligations which are paid by
the Buyer in respect of such period.
9.2 Buyer’s liabilities arising on or after the Effective Date
Subject to clauses 3 and 8.3, the Buyer will (subject to Completion
occurring):
| (a) | be liable for all costs, charges, expenses, liabilities and obligations in respect of the Sale Interest which accrue in, or relate to, the period commencing on the Effective Date; and reimburse and indemnify the Seller against any such costs, |
| (b) |
charges, expenses, liabilities and obligations which are paid by
the Seller in respect of such period.
9.3 Environmental and abandonment liability
Notwithstanding clauses 8.1 and 8.2, with effect from the Effective Date
(subject to Completion occurring), the Buyer will be responsible for, and
must reimburse and indemnify the Seller against, all environmental,
rehabilitation and abandonment obligations and liabilities in relation to
the Sale Assets, including obligations and liabilities arising in respect of
activities of the Joint Venture prior to the Effective Date.
9.4 Reduction in amounts payable
The amount of any payment made by the Seller to the Buyer in respect
of any Claim will be a reduction in US$ in the consideration payable in
respect of the Sale Interest the Seller under this Agreement.
9.5 Seller’s indemnity
Subject to the limitations in clause 10, the Seller indemnifies the Buyer
against any and all Claims suffered or incurred by the Buyer as a result
of a breach of any of the Seller’s Warranties and this will be the sole
remedy of the Buyer in respect of any such breach.
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10. WARRANTIES OF SELLER
10.1 Warranties set out in Schedule 2
(a) Seller hereby makes in favour of Buyer the warranties set out in
Schedule 2 to this Agreement, subject to the qualifications,
limitations and disclosures set out in Schedule 2, the Disclosure
Materials and this Agreement.
(b) Except where this Agreement expressly states otherwise in
relation to any specific warranty, Seller’s warranties under this
Agreement are made as at the date of this Agreement and upon
Completion.
10.2 Other warranties negatived
Except as otherwise expressly warranted by Seller in the warranties set
out in Schedule 2:
(a) Seller makes no warranty as to the Sale Assets and disclaims all
liability and responsibility for any representation or warranty
made to Buyer, including but not limited to any representation or
warranty made to Buyer by any officer, director, employee,
agent, consultant, counsel or advisor of Seller. In particular,
Seller makes no warranty relating to:
| (i) (ii) |
the prospectivity of the Sale Assets; or the costs, revenues, profits or losses likely to be incurred by or derived from the Sale Assets; or current or future environmental obligations; or the terms or the effect of any of the Seller Contracts; or the interpretation of any laws or regulations; or the Tax implications of any transaction contemplated under this Agreement; or the condition of any of the Assets; or the scope for any Claims or Liabilities to arise or accrue after Completion. |
| (iii) (iv) (v) (vi) |
|
| (vii) (viii) |
|
| (b) | Buyer acknowledges that it has made its own enquiries and assessments and due diligence with respect to all of those matters affecting its decision to purchase the Sale Assets. Buyer will not be entitled to claim that any fact or matter |
constitutes a breach of or inconsistency with the warranties set
out in Schedule 2 where such fact or matter was within the
actual knowledge of the Buyer or which ought to have been
known by the Buyer exercising that degree of due diligence,
prudence and foresight that would reasonably and ordinarily be
expected from a person investing in assets such as the Sale
Assets.
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(c) Buyer acknowledges that the Seller’s warranties set out in
Schedule 2 represent all of the representations, statements and
warranties made by Seller to Buyer in respect of the Sale
Assets, and there are no implied representations or warranties.
(d) Buyer acknowledges that, in making its decision to enter into this
Agreement, Buyer has not relied on any representation made to
Buyer by or on behalf of Seller other than the warranties given
by Seller under this Agreement. Buyer acknowledges that Seller
is induced to enter into this Agreement in consequence of this
acknowledgment.
10.3 Disclosure Materials
The warranties made by Seller under this Agreement are qualified by
the disclosures set out in the Disclosure Materials. Buyer is deemed to
have notice of all information contained in the Disclosure Materials.
Buyer will not be entitled to claim that any fact or matter constitutes a
breach of or inconsistency with the warranties set out in Schedule 2
where such fact or matter has been disclosed to it by Seller in the
Disclosure Materials.
10.4 Warranties are personal
(a) The rights of Buyer to make a Claim based on a warranty made
by Seller under this Agreement are personal to Buyer and may
not be assigned to any other person other than an Affiliate of
Buyer. This clause does not restrict Buyer from granting
security over its rights under this Agreement in favour of its
financier.
(b) Buyer or an Affiliate of Buyer cannot make a Claim against
Seller if Buyer or an Affiliate of Buyer deriving title from Buyer
has after Completion ceased to own or ceased to control the
Sale Assets.
10.5 Matters within knowledge
Where any Seller’s warranty set out in Schedule 2 is qualified by
reference to Seller’s awareness, knowledge or belief, it is agreed that
Seller’s awareness, knowledge or belief is limited to matters within the
actual knowledge of the persons listed in Schedule 1.
11. LIMITATION ON CLAIMS
11.1 Limitation on Claims
Notwithstanding any other provision of this Agreement, Buyer’s right to
make Claims against Seller for breach of any of Seller’s warranties or
undertakings under this Agreement or for any other breach of this
Agreement by Seller is limited in the manner set out below.
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11.2 Maximum liability
The maximum aggregate liability of Seller under any and all Claims
against Seller will be limited to the amount of [ ]% of the Purchase
Price.
11.3 Thresholds
Seller will not have any liability in respect of any Claim against Seller
unless:
| (a) | the liability of Seller in respect of each such Claim exceeds $[ ]; and the aggregate amount of the liability of Seller to Buyer in respect of all Claims exceeds the amount equal to $[ ]. |
| (b) |
11.4 Time limitation
Seller will have no liability in respect of any Claim against Seller unless
full particulars of the Claim are given to Seller within [ ] months from
the date of Completion, and legal proceedings in respect of the Claim
have been commenced within 24 months from the date of Completion.
11.5 Mitigation
Buyer must ensure that all reasonable steps are taken and all
reasonable assistance is given to avoid or mitigate any loss in respect
of any Claim or possible Claim against Seller.
11.6 Third party Claims leading to Claims
If a third party makes a Claim against Buyer which may result in liability
of Seller to Buyer under this Agreement, then:
| (a) | Buyer will promptly notify Seller and provide it with details of the Claim. Buyer must not make any admission of liability, agreement or compromise with any person in relation to the circumstances without first consulting with and obtaining the approval of Seller. Buyer will, at Seller’s expense, take all action in good faith and |
| (b) | |
| (c) |
with due diligence that Seller directs to avoid, remedy or mitigate
the breach, including legal proceedings and disputing,
defending, appealing or compromising the Claim and any
adjudication of it.
(d) Buyer will make its books and records available to Seller for
inspection and copying during normal business hours and
reasonably co-operate with Seller in the preparation for or
presentation of any defence or appeal from a decision in relation
to such a Claim.
11.7 Further limitations
Buyer is not entitled to make any Claim against Seller to the extent
that:
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(a) Buyer receives or is entitled to receive any benefit or credit
(including but not limited to under any insurance) in respect of
matters to which the Claim relates, including any amount
recovered by Buyer under a policy of insurance (and if Buyer
receives any such payment or benefit after Seller has made a
payment to Buyer pursuant to a Claim, then Buyer must pay
Seller an amount equal to the payment or benefit received);
| (b) | the Claim arises or is increased as a result of anything done or not done after the date of Completion by Buyer or any person on behalf of Buyer; the Claim arises as a result of a change in law or Legal |
| (c) |
Requirements, or in the judicial interpretation of any law, or in
the administrative practice of any Government Authority, after
the date of this Agreement;
| (d) (e) |
the Claim is for Consequential Loss; or the Claim relates to any matter Seller has already disclosed or referred to in the Disclosure Materials. |
11.8 Reduction of Purchase Price
Any monetary compensation received by the Buyer from Seller as a
result of any Claim against Seller will be in reduction and refund of the
Purchase Price.
12. EXCLUSION OF CONSEQUENTIAL LOSS
Notwithstanding any other provision of this Agreement, no Party is
liable to any other Party for Consequential Loss suffered by the other
Party in connection with or arising out of this Agreement, however so
arising, whether under contract, tort (including negligence), strict
liability or otherwise.
13. DEFAULT
[Insert provision that governs default by the parties.]
14. TERMINATION
[Insert provision that governs termination.]
15. CONFIDENTIALITY
[Insert provision that governs what information is confidential and how
the parties will govern use and disclosure of that information.]
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16. COSTS
16.1 Stamp duty and registration fees
16.2 Legal costs
16.3 Interest
17. TAXES
17.1 Income Tax reporting
| (a) | For income tax purposes: |
| (i) | Seller will recognise the income and expenditures attributable to the Sale Assets for income tax purposes for all periods up to and including Completion; and Buyer will recognise the income and expenditures |
| (ii) |
attributable to the Sale Assets after Completion for
income tax purposes.
| (b) | The Seller and the Buyer agree to file all income tax returns on the basis set out in paragraph (a). |
| PRRT (a) |
|
| At Completion, Seller must in relation to each of the Sale Assets provide Buyer with: |
|
| (i) | a statement showing the amount of undeducted PRRT |
17.2 expenditure taken to be incurred by the Buyer under
Section 48 of the Petroleum Resource Rent Tax
Assessment Act 1987 (Cth) in respect of the Sale Assets,
and details of such amount by category and year of
expenditure; and
| (ii) | a transfer notice in the form required under the Petroleum Resource Rent Tax Assessment Act 1987 (Cth). |
| (b) | Any refund of PRRT paid by Seller, including payments of |
quarterly PRRT instalments, in relation to taxable profits arising
before the Effective Date, is to be credited to the account of
Seller. If such a refund is paid to Buyer, Buyer must remit the
refund to Seller within 5 days of receipt. Buyer agrees to use
reasonable endeavours and do all things necessary to facilitate
the payment of the refund to Seller. Buyer agrees to promptly
provide Seller with all information which Seller reasonably
requests in relation to the refund.
(c) If Buyer incurs any PRRT liability (including any associated
penalties/interest charges) in relation to taxable profits arising
before the Effective Date, including but not limited to any
underpayment of PRRT instalments applicable to a period
ending on or prior to the Effective Date, Seller will reimburse
Buyer for any amounts paid by Buyer in respect of that PRRT
liability.
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17.3 GST
18. NOTICES
[Insert provision to govern how the parties will be able to exchange
notices.]
19. GENERAL
[Insert other general provisions, including in relation to assignment,
waiver, cumulative remedies, entire agreement, rule of construction,
severability, governing law, counterparts, announcements, etc.]
Executed as an agreement / deed.
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Schedule 1
1. SALE ASSETS
The Sale Assets comprise the Permit Interest as described below.
2. PERMIT INTEREST
2.1 Description of interest
The Permit Interest comprises a 40% (forty percent) Percentage
Interest in and under the JOA including an undivided 40% interest in
Production Licence WA-999-L and in other Joint Property under the
JOA.
2.2 JOA
Joint Venture Operating Agreement, between Ajax Ltd, Battler Pty Ltd
and Zulu Pty Ltd dated 2 September, 2000.
2.3 Cross Charge
Deed of Cross Charge dated 2nd September 2000.
2.4 Pre-emptive right
Yes. Pre-emption period is 35 days from the date on which notice is
given.
2.5 Seller Contracts to be assigned
Petroleum Sales and Refining Contract between Ajax Pty Ltd and
Singref Pte Ltd dated 1 July 2015
3. EFFECTIVE DATE
1 July 2017
4. BASE PURCHASE PRICE
[Subject to discussion]
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Schedule 2
Warranties and undertakings of Seller
1. TITLE TO SALE ASSETS
1.1 Title
The Seller is at the date of this Agreement and will at Completion be
the legal and beneficial owner of the Sale Assets.
1.2 Encumbrances
The Sale Assets are at the date of this Agreement and will at
Completion be free of all Encumbrances other than Permitted
Encumbrances.
2. PETROLEUM TITLES
To the best of the Seller’s knowledge and belief, the Petroleum Titles
are in good standing and not subject to forfeiture or cancellation in
whole or in part for any reason.
(a) The Seller has not received any notice or information regarding
nor, to the best of the Seller’s knowledge and belief is it aware
of, any circumstances that would result in a breach of the terms
and conditions of any of the Petroleum Titles.
(b) In the period prior to Completion, Seller will not seek any
variations to the conditions of the Petroleum Titles, nor
surrender or relinquish all or any part of the Sale Assets, except
with Buyer’s consent, such consent not to be unreasonably
withheld.
3. JOA
In relation to each of the JOAs:
| (a) | Seller is at the date of this Agreement and will be at the date of Completion a party to the JOA. To the best of Seller’s knowledge and belief, the JOA is in full force and effect. To the best of Seller’s knowledge and belief, Seller is not in |
| (b) | |
| (c) |
breach of the JOA. Between the date of this Agreement and the
date of Completion, Seller will comply with its material
obligations under the JOA.
(d) In the period prior to Completion, Seller will not agree to amend
any provision of the JOA except with Buyer’s consent, consent
not to be unreasonably withheld.
4. SELLER CONTRACTS
(a) To the best of the Seller’s knowledge, the Seller Contracts
disclosed in Schedule 1 are all of the contracts (other than
Operator Contracts) which are currently binding upon Seller in
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respect of the Sale Assets and which have not been fully
completed, other than minor contracts in the ordinary course of
business which do not impact on the value of or risk associated
with the Sale Assets.
| (b) | In the period prior to Completion, Seller will not enter into any further Seller Contract except as necessarily arise in the course |
of its operations, and will not amend any Seller Contract except
with Buyer’s consent, consent not to be unreasonably withheld.
| (c) | To the best of Seller’s knowledge and belief, each Seller Contract disclosed in Schedule 1 is in full force and effect. |
| COMPLIANCE WITH CONTRACTUAL OBLIGATIONS | |
| (a) | To the best of Seller’s knowledge and belief, Seller is not in |
5. breach of any material obligation under any Seller Contract, nor
is any other party to a Seller Contract in material breach of its
obligations.
| (b) | In the period prior to Completion, Seller will comply with its material contractual obligations under any Seller Contract. |
6. LITIGATION
| (a) | Seller is not a party to any prosecution, litigation, arbitration proceedings or any other form of mediation or dispute resolution in respect of the Sale Assets. Seller is not aware of any prosecution, litigation, proceeding, |
| (b) |
mediation, dispute resolution process or investigation which is
pending or threatened and is not aware of any reason why any
prosecution, litigation, proceeding, mediation, dispute resolution
process or investigation should arise prior to Completion.
7. LEGAL COMPLIANCE
(a) To the best of Seller’s knowledge and belief, all Legal
Requirements in relation to the Sale Assets have been complied
with.
| (b) | During the period prior to Completion, Seller will comply with all Legal Requirements affecting the Sale Assets. |
| INFORMATION | |
| (a) | Seller has not intentionally withheld or concealed from Buyer |
8. any material information in the possession of Seller regarding
the Petroleum Titles or the Sale Assets. Seller has taken all
reasonable endeavours to ensure that the Disclosure Material
contains all information that a prospective purchaser of the Sale
Assets would expect to find in order to make a decision whether
to purchase the Sale Assets and to value them.
(b) To the best of Seller’s knowledge and belief, the information
which has been given by Seller to Buyer regarding the
Petroleum Titles and the Sale Assets is complete and accurate
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in all material respects and is not misleading in any material
respect.
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