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AS FILED WITH THE SECURITIES AND EXCHANGE COMMISSION ON NOVEMBER 3, 1997
Registration No. 333-
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SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM S-3
REGISTRATION STATEMENT UNDER THE SECURITIES ACT OF 1933
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PIONEER NATURAL RESOURCES COMPANY
(Exact name of Registrant as specified in its charter)
Delaware 75-2702753
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification No.)
1400 Williams Square West
5205 North O'Connor Blvd.
Irving, Texas 75039
(972) 444-9001
(Address, including zip code, and telephone number, including area code, of
Registrant's principal executive offices)
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Scott D. Sheffield
President and Chief
Executive Officer
Pioneer Natural Resources Company
1400 Williams Square West
5205 North O'Connor Blvd.
Irving, Texas 75039
(972) 444-9001
(Name, address, including zip code, and telephone number, including area code,
of agent for service)
---------------
With copies to:
Mark L. Withrow Michael D. Wortley
Executive Vice President and General Counsel Vinson & Elkins L.L.P.
Pioneer Natural Resources Company 2001 Ross Avenue
1400 Williams Square West Suite 3700
5205 North O'Connor Blvd. Dallas, Texas 75201
Irving, Texas 75039 (214) 220-7700
(972) 444-9001
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APPROXIMATE DATE OF COMMENCEMENT OF PROPOSED SALE TO THE PUBLIC: From time
to time after this Registration Statement becomes effective.
If the only securities being registered on this Form are being offered
pursuant to dividend or interest reinvestment plans, please check the following
box. [ ]
If any of the securities being registered on this Form are to be offered on
a delayed or continuous basis pursuant to Rule 415 under the Securities Act of
1933, other than securities offered only in connection with dividend or
interest reinvestment plans, check the following box. [x]
If the Registrant elects to deliver its latest annual report to security
holders, or a complete and legible facsimile thereof, pursuant to Item 11(a)(i)
of this Form, check the following box. [ ]
If this Form is filed to register additional securities for an offering
pursuant to Rule 462(b) under the Securities Act, please check the following
box and list the Securities Act registration statement number of the earlier
effective registration statement for the same offering. [ ]
If this Form is a post-effective amendment filed pursuant to Rule 462(c)
under the Securities Act, check the following box and list the Securities Act
registration statement number of the earlier effective registration statement
for the same offering. [ ]
If delivery of the prospectus is expected to be made pursuant to Rule 434,
please check the following box. [x]
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CALCULATION OF REGISTRATION FEE
<TABLE>
<CAPTION>
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PROPOSED PROPOSED
MAXIMUM MAXIMUM
AMOUNT OFFERING AGGREGATE AMOUNT OF
TITLE OF EACH CLASS OF TO BE PRICE OFFERING REGISTRATION
SECURITIES TO BE REGISTERED REGISTERED PER SHARE PRICE FEE
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<S> <C> <C> <C> <C>
Common Stock . . . . . . . . . . . . 18,004,289 (1) $40.41(2) $727,553,318 (2) (3)
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</TABLE>
(1) Based upon an estimated 39,879,524 Chauvco Common Shares (as defined
herein) to be transferred for Exchangeable Shares (as defined herein)
pursuant to the Transaction (as defined herein), multiplied by .451467, an
estimated Exchange Ratio (as defined herein).
(2) Pursuant to Rule 457(f), the registration fee was computed on the basis of
the market value of the 18,004,289 shares of Pioneer Common Stock assumed to
be issued by the Registrant in connection with the exchange of the
Exchangeable Shares, computed in accordance with Rule 457(c) on the basis of
the average ($40.41) of the high and low price per share of the shares of
Pioneer Common Stock reported on the New York Stock Exchange on October 31,
1997.
(3) Pursuant to Rule 457(b), the registration fee of $218,266 is offset by the
registration fee of $218,266 paid on September 29, 1997, in connection with
the filing under the Securities Exchange Act of 1934, of preliminary copies
of the Registrant's proxy materials relating to the Transaction.
THE REGISTRANT HEREBY AMENDS THIS REGISTRATION STATEMENT ON SUCH DATE OR
DATES AS MAY BE NECESSARY TO DELAY ITS EFFECTIVE DATE UNTIL THE REGISTRANT
SHALL FILE A FURTHER AMENDMENT WHICH SPECIFICALLY STATES THAT THIS REGISTRATION
STATEMENT SHALL THEREAFTER BECOME EFFECTIVE IN ACCORDANCE WITH SECTION 8(a) OF
THE SECURITIES ACT OF 1933, OR UNTIL THE REGISTRATION STATEMENT SHALL BECOME
EFFECTIVE ON SUCH DATE AS THE COMMISSION, ACTING PURSUANT TO SAID SECTION 8(a),
MAY DETERMINE.
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CROSS REFERENCE SHEET
<TABLE>
<CAPTION>
ITEM
NUMBER FORM S-3 CAPTION PROSPECTUS CAPTION
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<S> <C> <C>
1. Forepart of Registration Statement and Outside Front Cover of Registration Statement; Outside Front
Cover Page of Prospectus Cover Page of Prospectus
2. Inside Front and Outside Back Cover Pages of Available Information; Incorporation by Reference;
Prospectus Table of Contents
3. Summary Information, Risk Factors and Ratio of Cover Page; Pioneer; Risk Factors; Incorporation
Earnings to Fixed Charges by Reference
4. Use of Proceeds Use of Proceeds
5. Determination of Offering Price *
6. Dilution *
7. Selling Security Holders *
8. Plan of Distribution Plan of Distribution
9. Description of Securities to be Registered Description of Capital Stock; Incorporation by
Reference
10. Interests of Named Experts and Counsel Experts; Legal Matters
11. Material Changes Incorporation by Reference
12. Incorporation of Certain Information by Reference Incorporation by Reference
13. Disclosure of Commission Position on Indemnification *
For Securities Act Liabilities
</TABLE>
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* Not applicable
<PAGE> 3
Information contained herein is subject to completion or amendment. A
registration statement relating to these securities has been filed with the
Securities and Exchange Commission. These securities may not be sold nor may
offers to buy be accepted to the time the registration becomes effective. This
prospectus shall not constitute an offer to sell or the solicitation of an
offer to buy nor shall there be any sale of these securities in any State in
which such offer, solicitation or sale would be unlawful prior to registration
or qualification under the securities laws of any such State.
SUBJECT TO COMPLETION DATED NOVEMBER 3, 1997
PRELIMINARY PROSPECTUS
SHARES
PIONEER NATURAL RESOURCES COMPANY
COMMON STOCK
(PAR VALUE $0.01 PER SHARE)
Each of the shares of common stock, par value $0.01 per share
(the "Pioneer Common Stock"), of Pioneer Natural Resources Company, a Delaware
corporation ("Pioneer"), offered hereby is issuable upon the exchange or
redemption of an exchangeable share (an "Exchangeable Share") of Pioneer
Natural Resources (Canada) Ltd., an indirectly owned subsidiary of Pioneer
("Pioneer Canada"). Pursuant to the Plan of Arrangement (as defined below), at
the Effective Time (as defined herein) Pioneer Canada, which is currently a
British Columbia corporation, will be continued as an Alberta corporation. The
Exchangeable Shares will be issued by Pioneer Canada upon the transfer of
common shares ("Chauvco Common Shares") of Chauvco Resources Ltd., an Alberta
corporation ("Chauvco"), pursuant to the terms of a Combination Agreement (the
"Combination Agreement") dated as of September 3, 1997, between Pioneer and
Chauvco and the terms of a plan of arrangement proposed under Section 186 of
the Business Corporations Act (Alberta) (the "Plan of Arrangement") attached as
an exhibit to the Combination Agreement (the transactions contemplated by the
Combination Agreement and the Plan of Arrangement being referred to herein
collectively as the "Transaction"). Shares of Pioneer Common Stock are being
offered on a continuous basis pursuant to Rule 415 under the Securities Act of
1933 (the "Securities Act"), for such period as the Registration Statement to
which this Prospectus relates remains effective.
Pioneer and Pioneer Canada are offering shares of Pioneer Common Stock to
holders of Exchangeable Shares pursuant to the terms of the Exchangeable
Shares, which obligate Pioneer Canada to redeem such shares or permit Pioneer,
at its election, to acquire such shares when, as and if the Exchangeable Shares
are presented by the holders thereof. Hereinafter the term "exchange" means
either the redemption by Pioneer Canada or the acquisition by Pioneer of
Exchangeable Shares, unless otherwise specified. Upon such exchange, holders of
the Exchangeable Shares will be entitled to receive for each Exchangeable Share
one share of Pioneer Common Stock, plus an additional amount equivalent to the
full amount of all declared and unpaid dividends on such Exchangeable Share
(see "Plan of Distribution"). All expenses of registration incurred in
connection with this offering are being paid by Pioneer. The Pioneer Common
Stock currently trades on the New York Stock Exchange (the "NYSE") under the
symbol "PXD", and has been conditionally approved for listing on The Toronto
Stock Exchange (the "TSE"). On December , 1997, the closing price of the
Pioneer Common Stock on the NYSE was $ per share.
---------------
SEE "RISK FACTORS" BEGINNING ON PAGE 3 HEREOF FOR A DISCUSSION OF CERTAIN
FACTORS THAT SHOULD BE CONSIDERED IN CONNECTION WITH ANY INVESTMENT IN THE
PIONEER COMMON STOCK OFFERED HEREBY.
---------------
THESE SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE SECURITIES
AND EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION, NOR HAS THE
SECURITIES AND EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION
PASSED UPON THE ACCURACY OR ADEQUACY OF THIS PROSPECTUS. ANY
REPRESENTATION TO THE CONTRARY IS A CRIMINAL OFFENSE.
The date of this Preliminary Prospectus is December , 1997.
<PAGE> 4
AVAILABLE INFORMATION
Pioneer is subject to the informational requirements of the Securities
Exchange Act of 1934 (the "Exchange Act"). It files reports, proxy statements,
and other information with the Securities and Exchange Commission (the "SEC").
Those reports, proxy statements, and other information can be inspected and
copied at the public reference facilities maintained by the SEC at Room 1024,
450 Fifth Street, N.W., Washington, D.C. 20549, and at the regional offices of
the SEC at 7 World Trade Center, Suite 1300, New York, New York 10048, and 500
West Madison Street, Suite 1400, Chicago, Illinois 60611. Copies of these
materials can be obtained at prescribed rates from the Public Reference Section
of the SEC at 450 Fifth Street, N.W., Washington, D.C. 20549. These reports,
proxy statements and other information may also be obtained without charge from
the web site that the SEC maintains at http://www.sec.gov. These reports, proxy
statements, and other information also may be inspected at the offices of the
NYSE, 20 Broad Street, New York, New York 10005.
Pioneer has filed with the SEC a Registration Statement on Form S-3
(the "Registration Statement") under the Securities Act, with respect to the
shares of Pioneer Common Stock offered hereby. This Prospectus does not contain
all the information set forth in the Registration Statement, certain parts of
which are omitted in accordance with the rules and regulations of the SEC. For
further information with respect to Pioneer and the shares of Pioneer Common
Stock offered hereby, reference is made to the Registration Statement and to
the exhibits thereto. Statements contained herein concerning the provisions of
certain documents are not necessarily complete, and in each instance, reference
is made to the copy of the document filed as an exhibit to the Registration
Statement or otherwise filed with the SEC. Each such statement is qualified in
its entirety by that reference.
INCORPORATION OF CERTAIN DOCUMENTS BY REFERENCE
The following documents have been filed by Pioneer, Parker & Parsley
Petroleum Company ("Parker & Parsley") and MESA Inc. ("Mesa") with the SEC and
are incorporated by reference into this Prospectus, and shall be deemed to be a
part hereof:
1. Mesa's Annual Report on Forms 10-K and 10-K/A for the year ended
December 31, 1996.
2. Mesa's Quarterly Report on Form 10-Q for the period ended March 31,
1997.
3. Mesa's Current Reports on Form 8-K, dated February 7, 1997, and April
6, 1997, and Mesa's Current Report on Form 8-K/A, dated February 7,
1997.
4. Mesa's Quarterly Report on Form 10-Q for the period ended June 30,
1997.
5. Parker & Parsley's Annual Report on Forms 10-K and 10-K/A for the year
ended December 31, 1996.
6. Parker & Parsley's Quarterly Report on Form 10-Q for the period ended
March 31, 1997.
7. Parker & Parsley's Current Reports on Form 8-K, dated April 6, 1997.
8. Parker & Parsley's Quarterly Report on Form 10-Q for the period ended
June 30, 1997.
9. The financial statements under the caption "Unaudited Pro Forma
Combined Financial Statements" and each of the Exhibits specified in
Exhibit Number 3.1, 3.2 and 4.1 of the Exhibit Index beginning on page
II-2 of this Registration Statement, which are contained in Pioneer's
Registration Statement on Form S-4 (No. 333-26951) filed on June 26,
1997, including any amendment or report for the purpose of updating
any such material;
10. Pioneer's Quarterly Report on Form 10-Q for the quarter ended June 30,
1997;
11. Pioneer's Current Report on Form 8-K, dated August 7, 1997;
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12. The description of Pioneer's Common Stock contained in Pioneer's
Registration Statement on Forms 8-A and 8-A/A (File No. 001-13245),
declared effective by the SEC on August 8, 1997;
13. Pioneer's Current Report on Form 8-K, dated August 7, 1997;
14. The Definitive Joint Management Information Circular and Proxy
Statement of Pioneer and Chauvco (File No. 001- 13245) filed with the
SEC on November , 1997, including any amendment or report for the
purpose of updating any such material; and
15. Pioneer's Current Report on Form 8-K, dated September 3, 1997.
All documents filed by Pioneer pursuant to Section 13(a), 14 or 15(d)
of the Exchange Act subsequent to the date of this Prospectus and prior to the
termination of the offering made hereby shall be deemed to be incorporated by
reference into this Prospectus and to be a part hereof from the date of the
filing of such documents. Any statement contained herein or in a document
incorporated or deemed to be incorporated by reference herein shall be deemed
to be modified or superseded for purposes of this Prospectus to the extent that
a statement contained herein or in any subsequently filed document that also is
or is deemed to be incorporated by reference herein modifies or supersedes such
statement. Any statement so modified or superseded shall not be deemed to
constitute a part of this Prospectus, except as so modified or superseded.
Pioneer will provide without charge to each person to whom a copy of
this Prospectus has been delivered, on the written or oral request of any
person, a copy of any or all of the documents referred to above that have been
or may be incorporated by reference into this Prospectus, other than exhibits
to the documents (unless the exhibits are specifically incorporated by
reference into the documents). Written or telephone request for the copies
should be directed to Corporate Secretary, Pioneer Natural Resources Company,
1400 Williams Square West, 5205 North O'Connor Boulevard, Irving, Texas 75039
(Telephone: (972) 444-9001).
RISK FACTORS
Investors should consider carefully the following factors, in addition
to the other information contained in this Prospectus, before exchanging their
Exchangeable Shares for the shares of Pioneer Common Stock offered hereby.
TAXABILITY OF THE EXCHANGE
Based on the tax laws as of the date of this Prospectus, the exchange
of Exchangeable Shares for shares of Pioneer Common Stock is generally a
taxable event in Canada and the United States. A holder's tax consequences can
vary depending on a number of factors, including the residency of the holder,
the method of the exchange and the length of time that the Exchangeable Shares
were held prior to the exchange (see "Income Tax Considerations").
DIFFERENCES IN CANADA AND U.S. TRADING MARKETS
The Pioneer Common Stock is listed on the NYSE and has been
conditionally approved for listing on the TSE. As a condition precedent to the
consummation of the arrangement under the Plan of Arrangement (the
"Arrangement"), the Exchangeable Shares shall be listed for trading on the TSE.
The TSE has conditionally approved the listing of the Exchangeable Shares.
Listing is subject to fulfilling the requirements of the TSE on or before
February 4, 1998, including the distribution of the Exchangeable Shares to a
minimum number of public shareholders. There is no current intention to list
the Exchangeable Shares or Pioneer Common Stock on any other stock exchange in
Canada or the United States. As a result of the foregoing, the price at which
the Exchangeable Shares will trade will be based upon the market for such
shares on the TSE, and the price at which the shares of Pioneer Common Stock
will trade will be based upon the market for such shares on the NYSE and TSE.
Although Pioneer believes that the market price of the Exchangeable Shares on
the TSE and the market price of the Pioneer Common Stock on the NYSE and TSE
will reflect essentially equivalent values, there can be no assurance that the
market price of the Pioneer Common Stock will be identical, or even similar, to
the market price of the Exchangeable Shares.
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FOREIGN PROPERTY
So long as the Exchangeable Shares are listed on a prescribed stock
exchange in Canada (which currently includes the TSE) and Pioneer Canada
maintains a substantial presence in Canada, the Exchangeable Shares will not be
foreign property under the Income Tax Act (Canada) (the "Canadian Tax Act") for
trusts governed by registered pension plans, registered retirement savings
plans, registered retirement income funds and deferred profit sharing plans or
for certain other tax-exempt persons. Pioneer Common Stock will, however, be
foreign property for such plans or persons.
PIONEER
Pioneer is one of the largest public independent oil and gas companies
in the United States, engaged principally in the acquisition, development, and
production of, and exploration for, oil and gas reserves and related
activities.
Pioneer's executive offices and operating headquarters are located at
1400 Williams Square West, 5205 North O'Connor Blvd., Irving, Texas 75039, and
its telephone number at those offices is 972-444-9001.
USE OF PROCEEDS
Because shares of Pioneer Common Stock will be issued on the exchange
of the Exchangeable Shares, Pioneer will receive no net cash proceeds on such
issuance.
DESCRIPTION OF CAPITAL STOCK
The authorized capital stock of Pioneer consists of 500,000,000 shares
of common stock, par value $.01 per share, and 100,000,000 shares of preferred
stock, par value $.01 per share, of which one share has been designated as
Special Preferred Voting Stock.
PIONEER CAPITAL STOCK
Pioneer Common Stock
All shares of Pioneer Common Stock issued upon the exchange of the
Exchangeable Shares will be fully paid and nonassessable. The holders of
Pioneer Common Stock are entitled to one vote for each share held on all
matters submitted to a vote of common stockholders. The Pioneer Common Stock
does not have cumulative voting rights. Shares of Pioneer Common Stock have no
preemptive rights, conversion rights, redemption rights or sinking fund
provisions. Pioneer Common Stock is not subject to redemption by Pioneer.
Subject to the rights of the holders of any class of capital stock of
Pioneer having any preference or priority over the Pioneer Common Stock, the
holders of Pioneer Common Stock are entitled to dividends in such amounts as
may be declared by the Board of Directors of Pioneer (the "Pioneer Board") from
time to time out of funds legally available for such payments and, in the event
of liquidation, to share ratably in any assets of Pioneer remaining after
payment in full of all creditors and provision for any liquidation preferences
on any outstanding preferred stock ranking prior to the Pioneer Common Stock.
Pioneer Preferred Stock
The Pioneer Board, without further stockholder action, is authorized
to issue up to 100,000,000 shares of preferred stock in one or more series and
to fix and determine as to any series all the relative rights and preferences
of shares in the series, including voting rights, dividend rights, liquidation
preferences, terms of redemption, and conversion rights.
Pioneer Special Preferred Voting Stock
The Pioneer Board has designated one (1) of the 100,000,000 authorized
shares of preferred stock as Special Preferred Voting Stock, par value $.01 per
share (the "Voting Share"). The Montreal Trust Company of Canada, or any
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successor thereto (the "Trustee"), shall hold such Voting Share as trustee for
and on behalf of, and for the use and benefit of, the holders of Exchangeable
Shares and in accordance with the Voting and Exchange Trust Agreement. The
Certificate of Designations for the Voting Share includes the following
principal terms:
Dividends. No dividend shall be paid to the Trustee as the holder of
the Voting Share.
Voting Rights. The Trustee, as the holder of record of the Voting
Share, shall be entitled to all of the voting rights attached to the Voting
Share, including the right to consent to or vote in person or by proxy the
Voting Share, on any matter, question or proposition whatsoever that may
properly come before the Pioneer stockholders at a meeting thereof or with
respect to any written consent sought by Pioneer from its stockholders. For
each Exchangeable Share owned of record on the relevant record date, the holder
thereof shall be entitled to instruct the Trustee to cast and exercise, in the
manner instructed, a number of votes (including for purposes of a quorum) equal
to the number of votes to which a holder of one share of Pioneer Common Stock
is entitled with respect to any matter, proposition or question on which the
holders of Pioneer Common Stock are entitled to vote. Except as otherwise
described herein or required by law, the holder of the Voting Share will vote
together with the Pioneer Common Stock as a single class and not as a separate
class or series apart therefrom, including any vote to approve or adopt: (i)
any plan of merger, consolidation or share exchange for which Delaware law
requires a stockholder vote; (ii) any disposition of assets for which Delaware
law requires a stockholder vote; and (iii) any dissolution of Pioneer for which
Delaware law requires a stockholder vote.
So long as any Exchangeable Shares are outstanding, the number of
shares comprising the Special Preferred Voting Stock will not be increased or
decreased, and no other term of the Special Preferred Voting Stock may be
amended, except upon the approval of the holder of the Voting Share.
Conversion. The Voting Share is not convertible into any other class
or series of the capital stock of Pioneer or into cash, property or other
rights.
Redemption. The Voting Share may not be redeemed, except at such time
as no Exchangeable Shares shall be outstanding, in which case, the Voting Share
shall be automatically redeemed. The redemption price due and payable upon such
automatic redemption will be equal to a $1.00 liquidation preference. The
Voting Share will be deemed retired and will be canceled upon any purchase or
other acquisition thereof by Pioneer. After such cancellation, the Voting Share
may not be reissued or otherwise disposed of by Pioneer.
Liquidation. The Voting Share will rank prior to each share of Pioneer
Common Stock with respect to the distribution of assets upon a liquidation,
dissolution or winding-up of Pioneer. In the event of any such liquidation,
dissolution or winding-up, the holder of the Voting Share will be entitled to
receive, before any distribution to the holders of Pioneer Common Stock, but
only after the liquidation preference of any other shares of preferred stock of
Pioneer has been paid in full, a liquidation preference equal to $1.00.
Certain Covenants of Pioneer. For so long as the Voting Share is
outstanding, Pioneer will: (i) fully comply with all terms of the Exchangeable
Shares and with all contractual obligations of Pioneer associated therewith,
and (ii) not amend, alter or repeal the terms and conditions of the Special
Preferred Voting Stock, except with the approval of the holder of the Voting
Share.
For a more detailed description of Pioneer's Special Preferred Voting
Stock and the Voting Share, see the terms and conditions thereof set forth on
Exhibit 3.3 to the Registration Statement of which this Prospectus is a part.
See also "--Voting and Exchange Trust Agreement."
Certain Provisions of the Certificate of Incorporation and Bylaws
The Pioneer Board is divided into three classes. The directors of each
class are elected for three-year terms, with the terms of the three classes
staggered so that directors from a single class are elected at each annual
meeting of stockholders. Stockholders may remove a director only for cause. In
general, the Pioneer Board, not the stockholders, has the right to appoint
persons to fill vacancies on the Pioneer Board.
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The amended and restated certificate of incorporation of Pioneer (the
"Pioneer Restated Certificate") contains a "fair price" provision that requires
the affirmative vote of the holders of least 80% of Pioneer's voting stock and
the affirmative vote of at least 66 2/3% of Pioneer's voting stock not owned,
directly or indirectly, by a Pioneer Related Person (as defined below) to
approve any merger, consolidation, sale or lease of all or substantially all of
Pioneer's assets, or certain other transactions involving a Pioneer Related
Person. For purposes of this fair price provision, a "Pioneer Related Person"
is any person beneficially owning 10% or more of the voting power of the
outstanding capital stock of Pioneer who is a party to the transaction at
issue. The voting requirement is not applicable to certain transactions,
including those that are approved by Pioneer's Continuing Directors (as defined
in the Pioneer Restated Certificate) or that meet certain "fair price" criteria
contained in the Pioneer Restated Certificate.
The Pioneer Restated Certificate further provides that stockholders
may act only at annual or special meetings of stockholders and not by written
consent, that special meetings of stockholders may be called only by the
Pioneer Board and that only business proposed by the Pioneer Board may be
considered at special meetings of stockholders.
The Pioneer Restated Certificate also provides that the only business
(including election of directors) that may be considered at an annual meeting
of stockholders, in addition to business proposed (or persons nominated to be
directors) by the directors of Pioneer, is business proposed (or persons
nominated to be directors) by stockholders who comply with the notice and
disclosure requirements set forth in the Pioneer Restated Certificate. In
general, the Pioneer Restated Certificate requires that a stockholder give
Pioneer notice of proposed business or nominations no later than 60 days before
the annual meeting of stockholders (meaning the date on which the meeting is
first scheduled and not postponements or adjournments thereof) or (if later) 10
days after the first public notice of the annual meeting is sent to common
stockholders. In general, the notice must also contain information about the
stockholder proposing the business or nomination, his interest in the business,
and (with respect to nominations for director) information about the nominee of
the nature ordinarily required to be disclosed in public proxy solicitations.
The stockholder also must submit a notarized letter from each of his nominees
stating the nominee's acceptance of the nomination and indicating the nominee's
intention to serve as director if elected.
The Pioneer Restated Certificate also restricts the ability of
stockholders to interfere with the powers of the Board of Directors in certain
specified ways, including the constitution and composition of committees and
the election and removal of officers.
The Pioneer Restated Certificate provides that approval by the holders
of at least 66 2/3% of the outstanding Pioneer voting stock is required to
amend the provisions of the Certificate of Incorporation discussed above and
certain other provisions, except that (a) approval by the holders of at least
80% of the outstanding Pioneer voting stock together with approval by the
holders of at least 66 2/3% of the outstanding voting stock not owned, directly
or indirectly, by the Related Person, is required to amend the fair price
provisions and (b) approval of the holders of at least 80% of the outstanding
voting stock is required to amend the provisions prohibiting stockholders from
acting by written consent.
Delaware Anti-Takeover Statute
Pioneer is a Delaware corporation and is subject to Section 203 of the
Delaware General Corporation Law. In general, Section 203 prevents an
"interested stockholder" (defined generally as a person owning 15% or more of
Pioneer's outstanding voting stock) from engaging in a "business combination"
(as defined in Section 203) with Pioneer for three years following the date
that person becomes an interested stockholder unless (a) before that person
became an interested stockholder, the Pioneer Board approved the transaction in
which the interested stockholder became an interested stockholder or approved
the business combination, (b) upon completion of the transaction that resulted
in the interested stockholder's becoming an interested stockholder, the
interested stockholder owns at least 85% of Pioneer voting stock outstanding at
the time the transaction commenced (excluding stock held by directors who are
also officers of Pioneer and by employee stock plans that do not provide
employees with the right to determine confidentially whether shares held
subject to the plan will be tendered in a tender or exchange offer), or (c)
following the transaction in which that person became an interested
stockholder, the business combination is approved by the Pioneer Board and
authorized at a meeting of stockholders by the affirmative vote of the holders
of at least two-thirds of the outstanding Pioneer voting stock not owned by the
interested stockholder.
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Under Section 203, these restrictions also do not apply to certain
business combinations proposed by an interested stockholder following the
announcement or notification of one or certain extraordinary transactions
involving Pioneer and a person who was not an interested stockholder during the
previous three years or who became an interested stockholder with the approval
of a majority of Pioneer's directors, if that extraordinary transaction is
approved or not opposed by a majority of the directors before any person became
an interested stockholder in the previous three years or who were recommended
for election or elected to succeed such directors by a majority of such
directors then in office.
CHAUVCO SHARE CAPITAL
The share capital of Chauvco after the Effective Time (as defined
below) will consist of one class of common shares, unlimited in number, and all
of such shares which are issued and outstanding shall be held by Pioneer
Canada. The "Effective Time" means 12:01 a.m. (Calgary time) on the "Effective
Date", which means the date shown on the certificate of amendment issued by the
Registrar under the Business Corporations Act (Alberta) giving effect to the
Arrangement.
PIONEER CANADA SHARE CAPITAL
The share capital of Pioneer Canada after the Effective Time will have
the rights and preferences summarized below. Such summary is qualified in its
entirety by reference to the Plan of Arrangement and the rights, privileges,
restrictions and conditions attaching to the Exchangeable Shares (the
"Exchangeable Share Provisions") which are Exhibits 2.2 and 3.4, respectively,
to the Registration Statement of which this Prospectus is a part.
Pioneer Canada Common Voting Shares. The holders of common voting
shares of Pioneer Canada ("Pioneer Canada Common Voting Shares") will be
entitled to receive notice of and to attend all meetings of the shareholders of
Pioneer Canada and will be entitled to one vote for each share held of record
on all matters submitted to a vote of holders of Pioneer Canada Common Voting
Shares. The holders of Pioneer Canada Common Voting Shares will be entitled to
receive such dividends as may be declared by the Pioneer Canada board of
directors out of funds legally available therefor. Holders of Pioneer Canada
Common Voting Shares will be entitled upon any liquidation, dissolution or
winding-up of Pioneer Canada, subject to the prior rights of the holders of the
Exchangeable Shares and to any other shares ranking senior to the Pioneer
Canada Common Voting Shares, to receive the remaining property and assets of
Pioneer Canada.
Exchangeable Shares of Pioneer Canada
Ranking. The Exchangeable Shares will rank prior to the Pioneer Canada
Common Voting Shares and any other shares ranking junior to the Exchangeable
Shares with respect to the payment of dividends and the distribution of assets
in the event of the liquidation, dissolution or winding-up of Pioneer Canada.
Dividends. Holders of Exchangeable Shares will be entitled to receive
dividends equivalent to dividends paid from time to time by Pioneer on shares
of Pioneer Common Stock. The declaration date, record date and payment date for
dividends on the Exchangeable Shares will be the same as that for the
corresponding dividends on the Pioneer Common Stock.
Certain Restrictions. Without the approval of the holders of the
Exchangeable Shares, Pioneer Canada will not:
(a) pay any dividend on the Pioneer Canada Common Voting Shares,
or any other shares ranking junior to the Exchangeable Shares, other than stock
dividends payable in such other shares ranking junior to the Exchangeable
Shares;
(b) redeem, purchase or make any capital distribution in respect
of Pioneer Canada Common Voting Shares or any other shares ranking junior to
the Exchangeable Shares;
(c) redeem or purchase any other shares of Pioneer Canada ranking
equally with the Exchangeable Shares with respect to the payment of dividends
or on any liquidation distribution;
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(d) issue any Exchangeable Shares or any other shares of Pioneer
Canada ranking equally with, or superior to, the Exchangeable Shares other than
by stock dividends to the holders of the Exchangeable Shares or as contemplated
in the Support Agreement to be entered into between Pioneer and Pioneer Canada
(the "Support Agreement"); or
(e) amend the articles or bylaws of Pioneer Canada.
The restrictions in (a), (b) and (c) above will not apply at any time
when the dividends on the outstanding Exchangeable Shares corresponding to
dividends declared on the Pioneer Common Stock have been declared and paid in
full.
Liquidation. In the event of the liquidation, dissolution or
winding-up of Pioneer Canada a holder of Exchangeable Shares will be entitled
to receive for each Exchangeable Share one share of Pioneer Common Stock,
together with a cash amount equivalent to the full amount of all unpaid
dividends on the Exchangeable Shares. See "--Voting and Exchange Trust
Agreement."
Retraction of Exchangeable Shares by Holders. A holder of Exchangeable
Shares will be entitled at any time to require Pioneer Canada to retract (i.e.,
require Pioneer Canada to redeem) any or all of the Exchangeable Shares held by
such holder for one share of Pioneer Common Stock for each Exchangeable Share
plus an additional amount equivalent to the full amount of all unpaid dividends
thereon, which shall be delivered to the retracting holder on the retraction
date specified by the holder (which shall not be less than three nor more than
ten business days after the date on which Pioneer Canada receives the
retraction request from the holder).
If, as a result of liquidity or solvency provisions of applicable law,
Pioneer Canada is not permitted to redeem all Exchangeable Shares tendered by a
retracting holder, Pioneer Canada will redeem only those Exchangeable Shares
tendered by the holder (rounded down to a whole number of shares) as would not
be contrary to such provisions of applicable law. The holder of any
Exchangeable Shares not redeemed by Pioneer Canada will be deemed to have
required Pioneer to purchase such unretracted shares in exchange for Pioneer
Common Stock, plus an additional amount equivalent to the full amount of all
unpaid dividends thereon, on the retraction date pursuant to the optional
Exchange Rights (as defined herein). See "--Voting and Exchange Trust
Agreement."
Redemption of Exchangeable Shares. Subject to Pioneer's Redemption
Call Right (as defined below), on the Automatic Redemption Date (as defined
below) Pioneer Canada will redeem all but not less than all of the then
outstanding Exchangeable Shares for one share of Pioneer Common Stock for each
Exchangeable Share plus an additional amount equivalent to the full amount of
all unpaid dividends thereon. Pioneer Canada shall, at least 120 days prior to
the Automatic Redemption Date, provide the registered holders of the
Exchangeable Shares with written notice of the proposed redemption of the
Exchangeable Shares.
"Automatic Redemption Date" means the fifth anniversary of the date of
the first issuance of Exchangeable Shares unless (a) such date shall be
extended at any time or from time to time to a specified later date by the
Board of Directors of Pioneer Canada, but not later than December 31, 2005 or
(b) such date shall be accelerated at any time to a specified earlier date (but
no earlier than the third anniversary of the first issuance of Exchangeable
Shares) by the Board of Directors of Pioneer Canada if at such time there are
issued and outstanding less than 5% of the number of Exchangeable Shares
initially issued and outstanding pursuant to the Plan of Arrangement (other
than Exchangeable Shares held by Pioneer and its subsidiaries) and as such
number of shares may be adjusted as deemed appropriate by the Board of
Directors of Pioneer Canada to give effect to any subdivision or consolidation
of or stock dividend on the Exchangeable Shares, any issuance or distribution
of rights to acquire Exchangeable Shares or securities exchangeable for or
convertible into Exchangeable Shares, any issue or distribution of other
securities or rights or evidences of indebtedness or assets, or any other
capital reorganization or other transaction affecting the Exchangeable Shares,
in which case the Automatic Redemption Date shall be such later or earlier
date; provided, however, that the accidental failure or omission to give any
such notice of extension or acceleration, as the case may be, to less than 10%
of such holders of Exchangeable Shares shall not affect the validity of such
extension or acceleration.
Voting Rights. Except as required by applicable law, the holders of
the Exchangeable Shares shall not be entitled as such to receive notice of or
attend any meeting of the shareholders of Pioneer Canada or to vote at any such
meeting.
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Amendment and Approval. The rights, privileges, restrictions and
conditions attaching to the Exchangeable Shares may be changed only with the
approval of the holders thereof. Any such approval or any other approval or
consent to be given by the holders of the Exchangeable Shares will be
sufficiently given if given in accordance with applicable law and subject to a
minimum requirement that such approval or consent be evidenced by a resolution
passed by not less than two-thirds of the votes cast thereon (other than shares
beneficially owned by Pioneer or entities controlled by Pioneer) at a meeting
of the holders of Exchangeable Shares duly called and held at which holders of
at least 50% of the then outstanding Exchangeable Shares are present or
represented by proxy. In the event that no such quorum is present at such
meeting within one-half hour after the time appointed therefor, then the
meeting will be adjourned to such place and time not less than 10 days later as
may be determined at the original meeting and the holders of Exchangeable
Shares present or represented by proxy at the adjourned meeting may transact
the business for which the meeting was originally called. At the adjourned
meeting, a resolution passed by the affirmative vote of not less than
two-thirds of the votes cast thereon will constitute the approval or consent of
the holders of the Exchangeable Shares.
Actions of Pioneer Canada under Support Agreement. Under the
Exchangeable Share Provisions, Pioneer Canada will agree to take all such
actions and do all such things as are necessary or advisable to perform and
comply with its obligations under, and to ensure the performance and compliance
by Pioneer with its obligations under, the Support Agreement.
SUPPORT AGREEMENT
The following is a summary description of the material provisions of
the Support Agreement and is qualified in its entirety by reference to the full
text of the Support Agreement, which is Exhibit 4.2. to the Registration
Statement of which this Prospectus is a part.
Under the Support Agreement, Pioneer will agree that: (i) it will not
declare or pay dividends on the Pioneer Common Stock unless Pioneer Canada is
able to and simultaneously pays an equivalent dividend on the Exchangeable
Shares; (ii) it will cause Pioneer Canada to declare and pay an equivalent
dividend on the Exchangeable Shares simultaneously with Pioneer's declaration
and payment of dividends on the Pioneer Common Stock; (iii) it will advise
Pioneer Canada in advance of the declaration of any dividend on the Pioneer
Common Stock and ensure that the declaration date, record date and payment date
for dividends on the Exchangeable Shares are the same as that for the Pioneer
Common Stock; (iv) it will take all actions and do all things necessary to
ensure that Pioneer Canada is able to provide to the holders of the
Exchangeable Shares the equivalent number of shares of Pioneer Common Stock in
the event of a liquidation, dissolution, or winding-up of Pioneer Canada, a
Retraction Request (as defined herein) by a holder of Exchangeable Shares, or a
redemption of Exchangeable Shares of Pioneer Canada; and (v) it will not vote
or otherwise take any action or omit to take any action causing the
liquidation, dissolution or winding-up of Pioneer Canada.
The Support Agreement also provides that, without the prior approval
of Pioneer Canada and the holders of the Exchangeable Shares, Pioneer will not
distribute additional shares of Pioneer Common Stock or rights to subscribe
therefor or other property or assets to all or substantially all holders of
shares of Pioneer Common Stock, nor change the Pioneer Common Stock nor effect
any tender offer, share exchange offer, issuer bid, take-over bid or similar
transaction affecting the Pioneer Common Stock, unless the same or an
equivalent distribution on or change to the Exchangeable Shares (or in the
rights of the holders thereof) is made simultaneously.
Pioneer has agreed that so long as there remain outstanding any
Exchangeable Shares not owned by Pioneer or any entity controlled by Pioneer,
Pioneer will remain the beneficial owner, directly or indirectly, of all
outstanding shares of Pioneer Canada other than the Exchangeable Shares. In
addition, the Support Agreement obligates Pioneer to nominate Messrs. James
Baroffio and Guy J. Turcotte to the board of directors of Pioneer in accordance
with the same terms as the Combination Agreement.
With the exception of administrative changes for the purpose of adding
covenants for the protection of the holders of the Exchangeable Shares, making
certain necessary amendments or curing ambiguities or clerical errors (in each
case provided that the board of directors of each of Pioneer and Pioneer Canada
is of the opinion that such amendments are not prejudicial to the interests of
the holders of the Exchangeable Shares), the Support Agreement may not be
amended without the approval of the holders of the Exchangeable Shares.
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Under the Support Agreement, Pioneer has agreed not to exercise any
voting rights attached to the Exchangeable Shares owned by it or any entity
controlled by it on any matter considered at meetings of holders of
Exchangeable Shares (including any approval sought from such holders in respect
of matters arising under the Support Agreement).
VOTING AND EXCHANGE TRUST AGREEMENT
The following is a summary description of the material provisions of
the Voting and Exchange Trust Agreement and is qualified in its entirety by
reference to the full text of the Voting and Exchange Trust Agreement which is
Exhibit 4.3 to the Registration Statement of which this Prospectus is a part.
Under the terms of the Voting and Exchange Trust Agreement, Pioneer will issue
and grant to the Trustee the (i) rights of the holders of Exchangeable Shares
to direct the voting of the Voting Share in accordance with the Voting and
Exchange Trust Agreement (the "Voting Rights") and (ii) the Automatic Exchange
Rights (as defined below) and the optional exchange right granted to the
Trustee for the use and benefit of the holders of the Exchangeable Shares
pursuant to the Voting and Exchange Trust Agreement to require Pioneer to
purchase Exchangeable Shares from the holders hereof in exchange for shares of
Pioneer Common Stock upon the occurrence of a Pioneer Canada Insolvency Event
(as defined herein). "Automatic Exchange Rights" means the rights granted to
the Trustee for the benefit of the holders of the Exchangeable Shares pursuant
to the Voting and Exchange Trust Agreement to automatically exchange the
Exchangeable Shares for shares of Pioneer Common Stock upon a Pioneer
Liquidation Event (as defined herein).
Voting Rights. Under the Voting and Exchange Trust Agreement, Pioneer
will issue the Voting Share to the Trustee for the benefit of the holders
(other than Pioneer and its subsidiaries) of the Exchangeable Shares. The
Voting Share will carry a number of votes, exercisable at any meeting at which
Pioneer Stockholders are entitled to vote, equal to the number of outstanding
Exchangeable Shares (other than shares held by Pioneer and its subsidiaries).
With respect to any written consent sought from the Pioneer Stockholders, each
vote attached to the Voting Share will be exercisable in the same manner as set
forth above.
Each holder of an Exchangeable Share on the record date for any
meeting at which Pioneer Stockholders are entitled to vote will be entitled to
instruct the Trustee to exercise one of the votes attached to the Voting Share
for such Exchangeable Share. The Trustee will exercise each vote attached to
the Voting Share only as directed by the relevant holder and, in the absence of
instructions from a holder as to voting, will not exercise such votes. A holder
may, upon instructing the Trustee, obtain a proxy from the Trustee entitling
the holder to vote directly at the relevant meeting the votes attached to the
Voting Share to which the holder is entitled.
The Trustee will send to the holders of the Exchangeable Shares the
notice of each meeting at which the Pioneer Stockholders are entitled to vote,
together with the related meeting materials and a statement as to the manner in
which the holder may instruct the Trustee to exercise the votes attaching to
the Voting Share, at the same time as Pioneer sends such notice and materials
to the Pioneer Stockholders. The Trustee will also send to the holders copies
of all information statements, interim and annual financial statements, reports
and other materials sent by Pioneer to the Pioneer Stockholders at the same
time as such materials are sent to the Pioneer Stockholders. To the extent such
materials are provided to the Trustee by Pioneer, the Trustee will also send to
the holders all materials sent by third parties to Pioneer Stockholders,
including dissident proxy circulars and tender and exchange offer circulars, as
soon as possible after such materials are first sent to Pioneer Stockholders.
All rights of a holder of Exchangeable Shares to exercise votes
attached to the Voting Share will cease upon the exchange of all such holder's
Exchangeable Shares for shares of Pioneer Common Stock.
Exchange Rights. Under the Voting and Exchange Trust Agreement,
Pioneer will grant the Exchange Rights (as defined below) to the Trustee for
the benefit of the holders of the Exchangeable Shares. "Exchange Rights" means
the Automatic Exchange Rights and the optional exchange right granted to the
Trustee for the use and benefit of the holders of the Exchangeable Shares
pursuant to the Voting and Exchange Trust Agreement to require Pioneer to
purchase Exchangeable Shares from the holders thereof in exchange for shares of
Pioneer Common Stock upon the occurrence of a Pioneer Canada Insolvency Event.
Optional Exchange Right. Upon the occurrence and during the
continuance of a Pioneer Canada Insolvency Event, a holder of Exchangeable
Shares will be entitled to instruct the Trustee to exercise the optional
Exchange Right with respect to any or all of the Exchangeable Shares held by
such holder, thereby requiring Pioneer to purchase such Exchangeable Shares
from the holder. Immediately upon the occurrence of a Pioneer Canada Insolvency
Event or any
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event which may with the passage of time or the giving of notice become a
Pioneer Canada Insolvency Event, Pioneer Canada and Pioneer will give written
notice thereof to the Trustee. As soon as practicable thereafter, the Trustee
will notify each holder of Exchangeable Shares of such event or potential event
and will advise the holder of its rights with respect to the optional Exchange
Right. "Pioneer Canada Insolvency Event" means any insolvency or bankruptcy
proceeding instituted by or against Pioneer Canada, including any such
proceeding under the Companies' Creditors Arrangement Act (Canada) and the
Bankruptcy and Insolvency Act (Canada) and the admission in writing by Pioneer
Canada of its inability to pay its debts generally as they become due and the
inability of Pioneer Canada, as a result of solvency requirements of applicable
law, to redeem any Exchangeable Shares tendered for retraction.
The consideration for each Exchangeable Share to be acquired under the
optional Exchange Right will be one share of Pioneer Common Stock plus an
additional amount equivalent to the full amount of all dividends declared and
unpaid on the Exchangeable Share.
If, as a result of liquidity or solvency provisions of applicable law,
Pioneer Canada is unable to redeem all of the Exchangeable Shares tendered for
retraction by a holder in accordance with the Exchangeable Share Provisions,
the holder will be deemed to have exercised the optional Exchange Right with
respect to the unredeemed Exchangeable Shares and Pioneer will be required to
purchase such shares from the holder in the manner set forth above.
Automatic Exchange Right. In the event of a Pioneer Liquidation Event,
Pioneer will be required to acquire each outstanding Exchangeable Share by
exchanging one share of Pioneer Common Stock for each such Exchangeable Share,
plus an additional amount equivalent to the full amount of all declared and
unpaid dividends on the Exchangeable Shares. "Pioneer Liquidation Event" means
(i) any determination by the Pioneer Board to institute voluntary liquidation,
dissolution, or winding-up proceedings with respect to Pioneer or to effect any
other distribution of assets of Pioneer among its stockholders for the purpose
of winding up its affairs; or (ii) immediately upon the earlier of (A) receipt
by Pioneer of notice of, and (B) Pioneer becoming aware of any threatened or
instituted claim, suit, petition or other proceedings with respect to the
involuntary liquidation, dissolution or winding-up of Pioneer or to effect any
other distribution of assets of Pioneer among its stockholders for the purpose
of winding-up its affairs.
DELIVERY OF PIONEER COMMON STOCK
Pioneer will ensure that all shares of Pioneer Common Stock to be
delivered by it under the Support Agreement or on the exercise of the Exchange
Rights under the Voting and Exchange Trust Agreement are duly registered,
qualified or approved under applicable Canadian and United States securities
laws, if required so that such shares may be freely traded by the holder
thereof (other than any restriction on transfer by reason of a holder being a
"control person" of Pioneer for purposes of Canadian law or an "affiliate" of
Pioneer for purposes of United States law). In addition, Pioneer will take all
actions necessary to cause all such shares of Pioneer Common Stock to be listed
or quoted for trading on all stock exchanges or quotation systems on which
outstanding shares of Pioneer Common Stock are then listed or quoted for
trading.
CALL RIGHTS
The following description of (i) the right of Pioneer, in the event of
a proposed liquidation, dissolution or winding-up of Pioneer Canada, to
purchase all of the outstanding Exchangeable Shares from the holders thereof on
the effective date of any such liquidation, dissolution or winding-up in
exchange for shares of Pioneer Common Stock pursuant to the Plan of Arrangement
(the "Liquidation Call Right"), (ii) the right of Pioneer to purchase all of
the outstanding Exchangeable Shares from the holders thereof on the Automatic
Redemption Date in exchange for shares of Pioneer Common Stock pursuant to the
Plan of Arrangement (the "Redemption Call Right") and (iii) the overriding
right of Pioneer, in the event of a proposed retraction of Exchangeable Shares
by a holder thereof, to purchase from such holder on the Retraction Date (as
defined herein) the Exchangeable Shares tendered for retraction in exchange for
shares of Pioneer Common Stock pursuant to the Exchangeable Share Provisions
(the "Retraction Call Right", and, together with the Liquidation Right and the
Redemption Call Right, the "Call Rights"), is qualified in its entirety by
reference to the full text of the Plan of Arrangement and the Exchangeable
Share Provisions, which are attached as Exhibits 2.2. and 3.4, respectively, to
the Registration Statement of which this Prospectus is a part.
In the circumstances described below, Pioneer will have certain
overriding rights to acquire Exchangeable Shares from holders thereof for one
share of Pioneer Common Stock for each Exchangeable Share acquired, plus an
amount equivalent to the full amount of all declared and unpaid dividends on
the Exchangeable Shares. Different
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Canadian federal income tax consequences to a holder of Exchangeable Shares may
arise depending upon whether the Call Rights are exercised by Pioneer or
whether the relevant Exchangeable Shares are redeemed by Pioneer Canada
pursuant to the Exchangeable Share Provisions in the absence of the exercise by
Pioneer of the Call Rights. See "Income Tax Considerations."
Retraction Call Right. Pursuant to the Exchangeable Share Provisions,
a holder requesting Pioneer Canada to redeem the Exchangeable Shares will be
deemed to offer such shares to Pioneer, and Pioneer will have an overriding
Retraction Call Right to acquire all but not less than all of the Exchangeable
Shares that the holder has requested Pioneer Canada to redeem in exchange for
one share of Pioneer Common Stock for each Exchangeable Share, plus an
additional amount equivalent to the full amount of all declared and unpaid
dividends thereon.
At the time of a Retraction Request by a holder of Exchangeable
Shares, Pioneer Canada will immediately notify Pioneer. Pioneer must then
advise Pioneer Canada within two business days as to whether Pioneer will
exercise the Retraction Call Right. If Pioneer does not advise Pioneer Canada
within such two business day period, Pioneer Canada will notify the holder as
soon as possible thereafter that Pioneer will not exercise the Retraction Call
Right. A holder may revoke his or her Retraction Request, at any time prior to
the close of business on the business day preceding the Retraction Date in
which case the holder's Exchangeable Shares will neither be purchased by
Pioneer nor redeemed by Pioneer Canada. If the holder does not revoke his or
her Retraction Request, on the Retraction Date the Exchangeable Shares that the
holder has requested Pioneer Canada to redeem will be acquired by Pioneer
(assuming Pioneer exercises its Retraction Call Right) or redeemed by Pioneer
Canada, as the case may be, in each case for one share of Pioneer Common Stock
for each Exchangeable Share plus an additional amount equivalent to the full
amount of all declared and unpaid dividends on the Exchangeable Shares.
Liquidation Call Right. Pursuant to the Plan of Arrangement, Pioneer
will be granted an overriding Liquidation Call Right, in the event of and
notwithstanding a proposed Pioneer Canada Insolvency Event, to acquire all but
not less than all of the Exchangeable Shares then outstanding in exchange for
Pioneer Common Stock and, upon the exercise by Pioneer of the Liquidation Call
Right, the holders thereof will be obligated to transfer such shares to
Pioneer. The acquisition by Pioneer of all of the outstanding Exchangeable
Shares upon the exercise of the Liquidation Call Right will occur on the
effective date of the voluntary or involuntary liquidation, dissolution or
winding-up of Pioneer Canada.
Redemption Call Right. Pursuant to the Plan of Arrangement, Pioneer
will be granted an overriding Redemption Call Right, notwithstanding the
proposed automatic redemption of the Exchangeable Shares by Pioneer Canada
pursuant to the Exchangeable Share Provisions, to acquire on the Automatic
Redemption Date all but not less than all of the Exchangeable Shares then
outstanding in exchange for Pioneer Common Stock plus an additional amount
equivalent to the full amount of all declared and unpaid dividends on the
Exchangeable Shares and, upon the exercise by Pioneer of the Redemption Call
Right, the holders thereof will be obligated to transfer such shares to
Pioneer.
Effect of Call Right Exercise. If Pioneer exercises one or more of its
Call Rights, it will directly issue shares of Pioneer Common Stock to holders
of Exchangeable Shares and will become the holder of such Exchangeable Shares.
Pioneer will not be entitled to exercise any voting rights attached to the
Exchangeable Shares it so acquires. If Pioneer declines to exercise its Call
Rights when applicable, it will be required, pursuant to the Support Agreement,
to issue shares of Pioneer Common Stock to Pioneer Canada which will, in turn,
transfer such stock to the holders of Exchangeable Shares in consideration for
the return and cancellation of such Exchangeable Shares. The tax consequences
resulting from Pioneer's exercise of one or more of the Call Rights are
discussed in "Income Tax Considerations--Canadian Federal Income Tax
Considerations" which includes a discussion of deemed dividends and Part VI.1
tax.
PLAN OF DISTRIBUTION
EXCHANGEABLE SHARES
Pursuant to the terms of the Combination Agreement, Pioneer Canada
will acquire all the outstanding Chauvco Common Shares, other than Chauvco
Common Shares held by holders who properly exercised their rights of dissent
and are ultimately entitled to be paid fair value for their shares, in an
arrangement subject to the approval by the Court of Queen's Bench of Alberta
pursuant to Part 15 of the Business Corporations Act (Alberta). At the
Effective Time, each existing holder of Chauvco Common Shares will
automatically transfer each Chauvco Common Share such holder holds to Pioneer
Canada in consideration for (i) a number of shares of Pioneer Common Stock or
Exchangeable Shares, or a
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combination of both, determined in accordance with an agreed-upon exchange
ratio (the "Exchange Ratio") and, in certain cases, based upon such holder's
election, and (ii) one common share ("CRI Share") of Chauvco Resources
International Ltd. ("CRI"), a wholly-owned subsidiary of Chauvco which will
have its principal properties, operations and oil reserves located in Gabon,
central west Africa. Only holders resident in Canada may elect to receive
Exchangeable Shares, and such holders may elect to have their Chauvco Common
Shares transferred for a combination of shares of Pioneer Common Stock and
Exchangeable Shares. In addition, each existing holder of options to purchase
Chauvco Common Shares who has not exercised its right of dissent in accordance
with Article 3 of the Plan of Arrangement will automatically transfer to
Pioneer Canada each Chauvco option such holder holds in consideration for (i)
one CRI Share and (ii) a number of shares of Pioneer Common Stock determined in
accordance with the Exchange Ratio and in accordance with the holder's election
of whether or not to pay the exercise price of such Chauvco option in cash. In
certain circumstances, Pioneer has the right to cause Pioneer Canada to deliver
fewer shares of Pioneer Common Stock and Exchangeable Shares and to pay cash to
the Chauvco shareholders and to Chauvco optionholders. As a result of the
Arrangement, Chauvco will become a wholly-owned subsidiary of Pioneer Canada,
and CRI will be transferred to Chauvco's shareholders and optionholders.
Pioneer Common Stock may be issued to holders of Exchangeable Shares
as follows: (i) holders of Exchangeable Shares may require at any time that
such shares be exchanged for an equivalent number of shares of Pioneer Common
Stock plus an additional amount equivalent to all declared and unpaid dividends
on such Exchangeable Shares (see "--Procedures for Issuance of Pioneer Common
Stock--Exchange and Call Right"); (ii) subject to applicable law and the
Redemption Call Rights of Pioneer described below, Pioneer Canada must redeem
such Exchangeable Shares on the Automatic Redemption Date by exchanging
therefor an equal number of shares of Pioneer Common Stock plus an additional
amount equivalent to the full amount of all declared and unpaid dividends on
such Exchangeable Shares (see "--Procedures for Issuance of Pioneer Common
Stock--Exchange and Call Right"); (iii) upon the occurrence of a Pioneer Canada
Insolvency Event, holders of Exchangeable Shares may elect to, or, in the case
of Pioneer's exercise of the Liquidation Call Right, will be obligated to,
exchange such Exchangeable Shares for shares of Pioneer Common Stock (see
"--Procedures for Issuance of Pioneer Common Stock--Liquidation Rights of
Holders of Exchangeable Shares"); and (iv) upon the occurrence of a Pioneer
Liquidation Event, Pioneer will be required to acquire each outstanding
Exchangeable Share by exchanging one share of Pioneer Common Stock for each
such Exchangeable Share, plus an additional amount equivalent to the full
amount of all declared and unpaid dividends on the Exchangeable Shares (see
"--Procedures for Issuance of Pioneer Common Stock--Liquidation Rights of
Holders of Exchangeable Shares").
PROCEDURES FOR ISSUANCE OF PIONEER COMMON STOCK
Exchange and Call Right. Holders of the Exchangeable Shares will be
entitled at any time following the Effective Time to retract (i.e., require
Pioneer Canada to redeem) any or all such Exchangeable Shares owned by them and
to receive an equivalent number of shares of Pioneer Common Stock plus an
additional amount equivalent to all declared and unpaid dividends on such
Exchangeable Shares. Holders of the Exchangeable Shares may effect such
retraction by presenting a certificate or certificates to Pioneer Canada or its
transfer agent representing the number of Exchangeable Shares the holder
desires to retract together with a duly executed statement in the form of
Exhibit A to the Exchangeable Share Provisions or in such other form as may be
acceptable to Pioneer Canada (the "Retraction Request") specifying the number
of Exchangeable Shares the holder wishes to retract and the date upon which the
holder desires to receive the Pioneer Common Stock, which must be between three
and 10 business days after the request is received by Pioneer Canada (the
"Retraction Date"), and such other documents as may be required to effect the
retraction of the Exchangeable Shares.
Upon receipt of the Exchangeable Shares, the Retraction Request and
other required documentation from the holder thereof, Pioneer Canada must
immediately notify Pioneer of such Retraction Request. Pioneer will thereafter
have two business days in which to exercise the Retraction Call Right to
purchase all of the Exchangeable Shares submitted by the holder thereof by the
delivery of an equivalent number of shares of Pioneer Common Stock plus an
additional amount equivalent to the full amount of all declared and unpaid
dividends on the Exchangeable Shares to the transfer agent for delivery to such
holder on the Retraction Date. In the event Pioneer determines not to exercise
its Retraction Call Right and provided that the Retraction Request is not
revoked in accordance with the Exchangeable Share Provisions, Pioneer Canada is
obligated to deliver to the holder the number of shares of Pioneer Common Stock
equal to the number of Exchangeable Shares submitted by the holder for
retraction and payment of an additional amount equivalent to the full amount of
all declared and unpaid dividends on such Exchangeable Shares by the Retraction
Date.
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Subject to applicable law and the Redemption Call Rights of Pioneer
described below, on the Automatic Redemption Date, Pioneer Canada must redeem
all but not less than all of the then outstanding Exchangeable Shares in
exchange for an equal number of shares of Pioneer Common Stock, plus an
additional amount equivalent to the full amount of all declared and unpaid
dividends on such Exchangeable Shares. Notwithstanding any proposed redemption
of the Exchangeable Shares of Pioneer Canada, Pioneer will have the overriding
right to purchase on the Automatic Redemption Date all but not less than all of
the then outstanding Exchangeable Shares in exchange for one share of Pioneer
Common Stock for each such Exchangeable Share, plus an additional amount
equivalent to the full amount of all declared and unpaid dividends on such
Exchangeable Share. Pioneer Canada shall, at least 120 days before the
Automatic Redemption Date, provide the registered holders of Exchangeable
Shares with written notice of the proposed redemption or purchase of the
Exchangeable Shares by Pioneer Canada or Pioneer, as the case may be. For a
more detailed description of the Exchange Rights and the Call Rights in
connection with the Exchangeable Shares, see "Description of Capital Stock
- --Pioneer Canada Share Capital--Exchangeable Shares of Pioneer Canada,"
"--Voting and Exchange Trust Agreement--Exchange Rights" and "--Call Rights."
Effect of Call Right Exercise. If Pioneer exercises one or more of its
Call Rights, it will directly issue shares of Pioneer Common Stock to holders
of Exchangeable Shares and will become the holder of such Exchangeable Shares.
Pioneer will not be entitled to exercise any voting rights attached to the
Exchangeable Shares it so acquires. If Pioneer declines to exercise its Call
Rights when applicable, it will be required, pursuant to the Support Agreement,
to issue Pioneer Common Stock to Pioneer Canada which will, in turn, transfer
such stock to the holders of Exchangeable Shares in consideration for the
return and cancellation of such Exchangeable Shares. The tax consequences
resulting from Pioneer's exercise of one or more of the Call Rights are
discussed in "Income Tax Considerations--Canadian Federal Income Tax
Considerations," which includes a discussion of deemed dividends and Part VI.1
tax.
Upon the occurrence of a Pioneer Canada Insolvency Event, holders of
the Exchangeable Shares will have preferential rights to receive from Pioneer
one share of Pioneer Common Stock for each Exchangeable Share they hold, plus
an additional amount equivalent to the full amount of any declared and unpaid
dividends on each such Exchangeable Share. In the event of a proposed Pioneer
Canada Insolvency Event, Pioneer will have the right to purchase all of the
outstanding Exchangeable Shares from the holders thereof at the effective time
of any such liquidation, dissolution, or winding up in exchange for one share
of Pioneer Common Stock for each such Exchangeable Share, plus an additional
amount equivalent to the full amount of all declared and unpaid dividends on
such Exchangeable Share.
Upon the occurrence of a Pioneer Liquidation Event, in order for the
holders of the Exchangeable Shares to participate on a pro rata basis with the
holders of Pioneer Common Stock, each holder of Exchangeable Shares will
automatically receive in exchange therefor an equivalent number of shares of
Pioneer Common Stock, plus an additional amount equivalent to the full amount
of any declared and unpaid dividends on such Exchangeable Shares. For a more
detailed description of the Exchange Rights and the Call Rights in connection
with the Exchangeable Shares, see "Description of Capital Stock--Voting and
Exchange Trust Agreement."
INCOME TAX CONSIDERATIONS
CANADIAN FEDERAL INCOME TAX CONSIDERATIONS
In the opinion of MacKimmie Matthews, Canadian tax counsel for Pioneer
Canada, the following is a summary of the principal Canadian federal income tax
considerations generally applicable to the holders of Exchangeable Shares (the
"Pioneer Canada Shareholders") who, for purposes of the Canadian Tax Act, will
hold their Exchangeable Shares and shares of Pioneer Common Stock as capital
property and deal at arm's length with Pioneer and Pioneer Canada. This summary
does not apply to a holder with respect to whom Pioneer is a foreign affiliate
within the meaning of the Canadian Tax Act.
All Pioneer Canada Shareholders should consult their own tax advisors
as to whether, as a matter of fact, they hold their Exchangeable Shares and
shares of Pioneer Common Stock as capital property for the purposes of the
Canadian Tax Act. In addition, the mark-to-market rules contained in the
Canadian Tax Act relating to financial institutions (including certain
financial institutions, registered securities dealers and corporations
controlled by one or more of the foregoing) will deem such financial
institutions not to hold their Exchangeable Shares and shares of Pioneer Common
Stock as capital property for purposes of the Canadian Tax Act. Pioneer Canada
Shareholders that are financial institutions should consult their own tax
advisors to determine the tax consequences to them of the application of the
mark-to-market rules.
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<PAGE> 17
This summary is based on the current provisions of the Canadian Tax
Act, the regulations thereunder, the current provisions of the Canada-United
States Income Tax Convention, 1980, as amended (the "Tax Treaty"), and Canadian
tax counsel's understanding of the current administrative practices of Revenue
Canada, Customs, Excise and Taxation ("Revenue Canada"). This summary takes
into account the amendments to the Canadian Tax Act and regulations publicly
announced by the Minister of Finance prior to the date hereof (the "Proposed
Amendments") and assumes that all Proposed Amendments will be enacted in their
present form. However, no assurances can be given that the Proposed Amendments
will be enacted in the form proposed, or at all.
Except for the foregoing, this summary does not take into account or
anticipate any changes in law, whether by legislative, administrative or
judicial decision or action, nor does it take into account provincial,
territorial or foreign income tax legislation or considerations, which may
differ from the Canadian federal income tax considerations described herein.
WHILE THIS SUMMARY IS INTENDED TO ADDRESS ALL PRINCIPAL CANADIAN
FEDERAL INCOME TAX CONSIDERATIONS, IT IS OF A GENERAL NATURE ONLY AND IS NOT
INTENDED TO BE, NOR SHOULD IT BE CONSTRUED TO BE, LEGAL OR TAX ADVICE TO ANY
PARTICULAR PIONEER CANADA SHAREHOLDER. THEREFORE, EACH PIONEER CANADA
SHAREHOLDER IS URGED TO CONSULT WITH SUCH SHAREHOLDER'S OWN TAX ADVISORS WITH
RESPECT TO SUCH SHAREHOLDER'S PARTICULAR CIRCUMSTANCES. NO ADVANCE INCOME TAX
RULING HAS BEEN OBTAINED FROM REVENUE CANADA TO CONFIRM THE TAX CONSEQUENCES OF
ANY OF THE TRANSACTIONS DESCRIBED HEREIN.
For purposes of the Canadian Tax Act, all amounts relating to the
acquisition, holding or disposition of shares of Pioneer Common Stock,
including dividends, adjusted cost base and proceeds of disposition must be
converted into Canadian dollars based on the prevailing United States dollar
exchange rate at the time such amounts arise.
Pioneer Canada Shareholders Resident in Canada
The following portion of the summary is applicable to Pioneer Canada
Shareholders who, for purposes of the Canadian Tax Act, are resident or deemed
to be resident in Canada.
Dividends Paid on Exchangeable Shares. A shareholder who is an
individual will include dividends received or deemed to be received on the
Exchangeable Shares in computing the shareholder's income, and will be subject
to the gross-up and dividend tax credit rules normally applicable to taxable
dividends received from taxable Canadian corporations.
Subject to the special rules described below, in the case of a
shareholder that is a corporation, dividends received or deemed to be received
on the Exchangeable Shares will normally be deductible in computing its taxable
income. A shareholder that is a "private corporation" (as defined in the
Canadian Tax Act), or any other corporation resident in Canada and controlled
or deemed to be controlled by or for the benefit of an individual or a related
group of individuals, may be liable under Part IV of the Canadian Tax Act to
pay a refundable tax of 33 1/3% on dividends received or deemed to be received
on the Exchangeable Shares to the extent that such dividends are deductible in
computing the shareholder's taxable income.
Special rules will apply to certain corporations that receive
dividends on the Exchangeable Shares:
(a) In the case of a shareholder that is a "specified financial
institution" under the Canadian Tax Act, a dividend received on its
Exchangeable Shares will be deductible in computing its taxable income only if
either:
(i) the specified financial institution did not acquire
the Exchangeable Shares in the ordinary course of the business carried
on by such institution; or
(ii) at the time of the receipt of the dividend by the
specified financial institution, the Exchangeable Shares are listed on
a prescribed stock exchange in Canada (which currently includes the
TSE) and the specified financial institution, either alone or together
with persons with whom it does not deal at arm's length, does not
receive (or is not deemed to receive) dividends in respect of more
than 10% of the issued and outstanding Exchangeable Shares.
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<PAGE> 18
(b) If Pioneer Canada or any person with whom Pioneer Canada does
not deal at arm's length is a specified financial institution when a dividend
is paid on an Exchangeable Share, then dividends received or deemed to be
received by a shareholder that is a corporation may not be deductible in
computing taxable income but, instead, may be fully included in taxable income
under Part I of the Canadian Tax Act. Pioneer Canada has informed Canadian tax
counsel that it is of the view that neither it nor any person with whom it does
not deal at arm's length is a specified financial institution at the current
time, but there can be no assurances that this status will not change prior to
any dividend which is received or deemed to be received by a corporate
shareholder.
The Exchangeable Shares will be "taxable preferred shares" and
"short-term preferred shares" for purposes of the Canadian Tax Act.
Accordingly, Pioneer Canada will be subject to a 66 2/3% tax under Part VI.1 of
the Canadian Tax Act on dividends, other than excluded dividends, paid or
deemed to be paid on the Exchangeable Shares. Dividends received or deemed to
be received on the Exchangeable Shares will not be subject to the 10% tax under
Part IV.1 of the Canadian Tax Act applicable to certain corporations.
In the event the United States Internal Revenue Service (the "IRS")
imposes U.S. withholding tax with respect to dividends paid on the Exchangeable
Shares as set out in "--United States Federal Income Tax
Considerations--Non-U.S. Holders--Dividends," it is unlikely that a Canadian
resident Pioneer Canada Shareholder will be entitled to a foreign tax credit in
Canada with respect to such U.S. withholding tax.
Redemption or Exchange of Exchangeable Shares. The disposition of an
Exchangeable Share for a share of Pioneer Common Stock will be a taxable
transaction. A disposition can occur as a redemption by Pioneer Canada or as an
acquisition by Pioneer. The Canadian federal income tax consequences of a
redemption differ from those of an acquisition. A holder exercising the right
of retraction in respect of an Exchangeable Share cannot control whether the
share will be acquired by Pioneer under the Retraction Call Right or redeemed
by Pioneer Canada if the Retraction Call Right is not exercised; however, a
holder who exercises the right of retraction will be notified if the Retraction
Call Right will not be exercised by Pioneer and the holder may cancel the
Retraction Request and retain the Exchangeable Share.
The following explains the tax treatment to a holder of an
Exchangeable Share on a redemption by Pioneer Canada or an acquisition by
Pioneer.
(a) Redemption of Exchangeable Shares by Pioneer Canada. On a
redemption (including a retraction) of an Exchangeable Share by Pioneer Canada,
a portion of the redemption proceeds may be deemed to be a dividend received by
the holder. The deemed dividend is calculated as the amount, if any, by which
the redemption proceeds exceeds the paid- up capital at that time of the
Exchangeable Share. The deemed dividend is subject to the tax treatment
accorded to dividends described above. Pioneer Canada is required to calculate
the deemed dividend and report the amount to the holder of the Exchangeable
Share. The holder of the Exchangeable Share may also have a capital gain or
capital loss as a result of the redemption to the extent that the proceeds of
disposition of the Exchangeable Share, less any reasonable cost of disposition,
exceed (or are less than) the adjusted cost base to the holder of the
Exchangeable Share. The holder of the Exchangeable Share is considered to have
disposed of the Exchangeable Share for proceeds of disposition equal to the
redemption proceeds less the amount of the deemed dividend. In the case of a
shareholder that is a corporation, in some circumstances the amount of any
deemed dividend may be treated as proceeds of disposition, and not as a
dividend, for purposes of calculating a capital gain. Three-quarters of any
capital gain (referred to in the Canadian Tax Act as a "taxable capital gain")
must be included in income and three-quarters of any capital loss (referred to
in the Canadian Tax Act as an "allowable capital loss") may generally be used
to offset taxable capital gains in the year the loss arises, in any of the
three prior years or in any subsequent year.
A Pioneer Canada Shareholder that is throughout the relevant taxation
year a "Canadian-controlled private corporation" (as defined in the Canadian
Tax Act) may be liable to pay an additional refundable tax of 6 2/3% on its
"aggregate investment income" for the year, which is defined to include taxable
capital gains (but not dividends or deemed dividends deductible in computing
taxable income).
If a Pioneer Canada Shareholder is a corporation, the amount of any
capital loss arising from a disposition of Exchangeable Shares may be reduced
by the amount of dividends received or deemed to have been received by it on
the Exchangeable Shares previously owned by such holder, to the extent and
under circumstances prescribed by the Canadian Tax Act. Similar rules may apply
where a corporation is a member of a partnership or a beneficiary of a trust
that owns Exchangeable Shares or where a trust or partnership of which a
corporation is a beneficiary or a member is a member of a partnership or a
beneficiary of a trust that owns Exchangeable Shares.
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<PAGE> 19
Capital gains realized by a Pioneer Canada Shareholder who is an
individual may be subject to an alternative minimum tax. The Canadian Tax Act
provides that the tax payable by individuals (other than certain trusts) is the
greater of the tax otherwise determined and an alternative minimum tax. For
purposes of computing the alternative minimum tax, one-quarter of all capital
gains are added back to the individual's income as otherwise determined.
(b) Acquisition of Exchangeable Shares by Pioneer. On the
acquisition of an Exchangeable Share by Pioneer, the holder will in general
realize a capital gain (or a capital loss) equal to the amount by which the
proceeds of disposition of the Exchangeable Share, less any reasonable cost of
disposition, exceed (or are less than) the adjusted cost base to the holder of
the Exchangeable Share. A holder will be required to include in income any such
capital gain or capital loss in the manner and subject to the rules described
above. The acquisition of an Exchangeable Share by Pioneer will not result in a
deemed dividend to the holder of the Exchangeable Share.
The redemption proceeds in the case of a redemption by Pioneer Canada
and the proceeds of disposition in the case of an acquisition by Pioneer will
be the fair market value of a share of Pioneer Common Stock at the time of the
disposition plus the amount of all declared but unpaid dividends on the
Exchangeable Share.
The cost base of a share of Pioneer Common Stock received on the
retraction, redemption or exchange of an Exchangeable Share will be equal to
the fair market value of the share of Pioneer Common Stock at the time of such
event.
The following example illustrates the different treatment for a
redemption by Pioneer Canada and an acquisition by Pioneer, assuming
hypothetically that the fair market value of the Pioneer Common Stock at the
time of an exchange is $50.00, the Exchangeable Shares have a paid-up capital
at that time of $5.00 per share and the adjusted cost base to the holder of the
Exchangeable Share is $10.00.
<TABLE>
<CAPTION>
Redemption Acquisition
---------- -----------
<S> <C> <C>
Exchange Consideration . . . . . . . . . . . . . . . . . . $ 50.00 $50.00
Deemed Dividend(a) . . . . . . . . . . . . . . . . . . . . 45.00 (b)
Proceeds of Disposition for capital gains purposes . . . . 5.00 50.00
Adjusted Cost Base . . . . . . . . . . . . . . . . . . . . 10.00 10.00
------- ------
Capital Gain (Capital Loss) (a) . . . . . . . . . . . . . . $ (5.00) $40.00
======= ======
</TABLE>
- ---------------
(a) These line items (being the deemed dividend and the capital gain (or
capital loss)) must be reported by the former holder of the
Exchangeable Share.
(b) There is no deemed dividend in the case of an acquisition of the
Exchangeable Shares by a person other than Pioneer Canada.
Dividends on Pioneer Common Stock. Dividends paid on shares of Pioneer
Common Stock will be included in the recipient's income for the purposes of the
Canadian Tax Act. Such dividends received by an individual shareholder will not
be subject to the gross-up and dividend tax credit rules in the Canadian Tax
Act. A corporation which is a shareholder will include such dividends in
computing its taxable income. United States withholding tax on such dividends
will be eligible for foreign tax credit or deduction treatment where applicable
under the Canadian Tax Act. Special considerations may also apply to the
receipt of dividends by a Canadian resident corporate shareholder at a time
when Pioneer is a "foreign affiliate" of the shareholder within the meaning of
the Canadian Tax Act.
Disposition of Pioneer Common Stock. A disposition or deemed
disposition of a share of Pioneer Common Stock by a holder will generally
result in a capital gain (or capital loss) equal to the amount by which the
proceeds of disposition, net of any reasonable costs of disposition, exceed (or
are less than) the adjusted cost base to the holder of the share. Such holders
will be required to include in income any such capital gain or capital loss in
the manner and subject to the rules described above.
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<PAGE> 20
Eligibility for Investment
Qualified Investments. Provided the Exchangeable Shares and the shares
of Pioneer Common Stock are listed on a prescribed stock exchange (which
currently includes the TSE and the NYSE), such securities will be qualified
investments under the Canadian Tax Act for trusts governed by registered
retirement savings plans, registered retirement income funds and deferred
profit sharing plans. The Voting Rights and Exchange Rights will not be
qualified investments under the Canadian Tax Act. However, Pioneer Canada is of
the view that the fair market value of these rights is nominal.
Foreign Property. Provided the Exchangeable Shares are listed on a
prescribed stock exchange in Canada (which currently includes the TSE) and
Pioneer Canada continues to maintain a substantial presence in Canada, the
Exchangeable Shares will not be foreign property under the Canadian Tax Act for
trusts governed by registered pension plans, registered retirement savings
plans, registered retirement income funds and deferred profit sharing plans or
for certain other tax-exempt persons. Pioneer Canada will be considered to have
a substantial presence in Canada if it satisfies certain asset tests or if it
maintains an office in Canada and Pioneer Canada, or a corporation controlled
by it, employs more than five employees in Canada full time in the active
conduct of a business, other than an investment activity or a business carried
on through a partnership of which the corporation is not a majority interest
partner. Pioneer Canada has informed Canadian tax counsel that following the
Arrangement, Pioneer Canada will satisfy this substantial presence test and
expects that it will continue to satisfy the test.
The shares of Pioneer Common Stock will be foreign property under the
Canadian Tax Act as will the Voting Rights and Exchange Rights.
Pioneer Canada Shareholders Not Resident in Canada
The following portion of the summary is applicable to Pioneer Canada
Shareholders who, for purposes of the Canadian Tax Act, have not been and will
not be resident or deemed to be resident in Canada at any time while they have
held Exchangeable Shares or will hold shares of Pioneer Common Stock and to
whom such shares are not "taxable Canadian property" and, in the case of a
non-resident of Canada who carries on an insurance business in Canada and
elsewhere, the shares are not effectively connected with its Canadian insurance
business.
Pioneer Canada Shareholders not resident in Canada are not entitled to
receive Exchangeable Shares pursuant to the Plan of Arrangement, and it is not
expected that a Pioneer Canada Shareholder not resident in Canada would, in
general, wish to acquire Exchangeable Shares on the trading markets after their
original issuance. Accordingly, this portion of the summary is expected to have
limited applicability.
A holder of Exchangeable Shares will not be subject to tax
under the Canadian Tax Act on the exchange of an Exchangeable Share for a share
of Pioneer Common Stock, except to the extent the exchange gives rise to a
deemed dividend (as described above for Canadian residents), or on the sale or
other disposition of an Exchangeable Share or a share of Pioneer Common Stock,
unless the shares constitute "taxable Canadian property" to the holder (within
the meaning of the Canadian Tax Act). Generally, the Exchangeable Shares and
shares of Pioneer Common Stock will not be taxable Canadian property provided
that such shares are listed on a prescribed stock exchange (which currently
includes the TSE and the NYSE), the holder does not use or hold, and is not
deemed to use or hold, the Exchangeable Shares or the shares of Pioneer Common
Stock, as applicable, in connection with carrying on a business in Canada and
the holder, persons with whom such holder does not deal at arm's length, or the
holder and such persons, has not owned (or had under option) 25% or more of the
issued shares of any class or series of the capital stock of Pioneer Canada or
Pioneer at any time within five years preceding the date in question. In the
case of Pioneer, even if the holder exceeds the 25% threshold with respect to
shares of Pioneer Common Stock, any gain on the sale or other disposition of
such shares may not be taxable in Canada, and such holders should consult their
own tax advisors. The Exchangeable Shares have been conditionally approved for
listing on the TSE, and Pioneer has indicated that it intends to use its best
efforts to cause Pioneer Canada to maintain such listing.
Any dividends paid on the Exchangeable Shares will be subject to
non-resident withholding tax under the Canadian Tax Act at the rate of 25%,
although such rate may be reduced under the provisions of an applicable income
tax treaty. For example, under the Tax Treaty, the rate is generally reduced to
15% for dividends paid to a person who is resident in the United States for
purposes of the Tax Treaty.
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<PAGE> 21
UNITED STATES FEDERAL INCOME TAX CONSIDERATIONS
This section summarizes the material United States federal income tax
considerations generally applicable to Pioneer Canada Shareholders of owning
and disposing of Exchangeable Shares (and Pioneer Common Stock received in
exchange therefor), but it does not purport to be a complete analysis of all of
the potential tax effects thereof.
This summary is based on United States federal income tax law
currently in effect. The legal conclusions contained herein represent the
opinion of Vinson & Elkins L.L.P., United States counsel to Pioneer Canada. No
statutory, judicial or administrative authority exists which directly addresses
certain of the United States federal income tax consequences of the ownership
of instruments comparable to the Exchangeable Shares. Consequently, some
aspects of the United States federal income tax treatment of the holding and
exchange of Exchangeable Shares for shares of Pioneer Common Stock are not
certain. No advance income tax ruling has been sought or obtained from the
United States Internal Revenue Service (the "IRS') regarding the tax
consequences of the transactions described herein, and there can be no
assurance that the IRS will not successfully challenge certain of the
conclusions reached in this discussion, particularly those as to which
uncertainty is indicated.
Except as specifically stated otherwise, the discussion does not
address state, local, or foreign taxes or federal tax aspects other than United
States federal income taxation under the Internal Revenue Code of 1986, as
amended (the "U.S. Code"), nor does it address all aspects of such tax that may
be applicable to the specific circumstances of a particular Pioneer Canada
Shareholder. The discussion may not apply to Pioneer Canada Shareholders that
are subject to special provisions of the U.S. Code, such as tax-exempt
organizations, financial institutions, insurance companies, broker-dealers,
persons having a "functional currency" other than the United States dollar, and
Pioneer Canada Shareholders who hold Exchangeable Shares as part of a straddle,
wash sale, hedging or conversion transaction (other than by virtue of their
participation in the Arrangement).
WHILE THIS SUMMARY IS INTENDED TO ADDRESS ALL PRINCIPAL UNITED STATES
FEDERAL INCOME TAX CONSIDERATIONS, IT IS OF A GENERAL NATURE ONLY AND IS NOT
INTENDED TO BE, NOR SHOULD IT BE CONSTRUED AS, LEGAL OR TAX ADVICE TO ANY
PARTICULAR PIONEER CANADA SHAREHOLDER. THEREFORE, EACH PIONEER CANADA
SHAREHOLDER IS URGED TO CONSULT WITH A TAX ADVISOR WITH RESPECT TO ITS
PARTICULAR CIRCUMSTANCES AS SUCH MAY AFFECT THE UNITED STATES FEDERAL, STATE
AND LOCAL TAX CONSEQUENCES AND THE FOREIGN TAX CONSEQUENCES OF THE ACQUISITION,
OWNERSHIP AND DISPOSITION OF EXCHANGEABLE SHARES AND PIONEER COMMON STOCK
RECEIVED IN EXCHANGE THEREFOR. NO ADVANCE INCOME TAX RULING HAS BEEN OBTAINED
FROM THE IRS TO CONFIRM THE TAX CONSEQUENCES OF ANY OF THE TRANSACTIONS
DESCRIBED HEREIN.
Non-U.S. Holders
General. This subsection is addressed to Pioneer Canada Shareholders
that (i) are Non-U.S. Holders (as defined below), and (ii) will hold
Exchangeable Shares (and Pioneer Common Stock received in exchange therefor) as
capital assets. For purposes of the foregoing, the term "Non-U.S. Holder" means
a nonresident alien individual, or a foreign corporation, a foreign partnership
or a foreign estate or trust which is other than a U.S. Holder (as defined
below). An individual may, subject to certain exceptions, be deemed to be a
resident alien (as opposed to a nonresident alien) by virtue of being present
in the United States for at least 31 days in the calendar year and for an
aggregate of at least 183 days during a three-year period ending in the current
calendar year (counting for such purposes all of the days present in the
calendar year, one-third of the days present in the immediately preceding year,
and one-sixth of the days present in the second preceding year). Resident
aliens are subject to tax as if they were U.S. citizens.
It is expected that most Pioneer Canada Shareholders who, for purposes
of the Canadian Tax Act, are resident or deemed to be resident in Canada will
be Non-U.S. Holders. A Non-U.S. Holder seeking benefits under an applicable tax
treaty or an exemption from U.S. withholding tax for "effectively connected
income," as described below, may be required to comply with additional
certification and other requirements in order to establish his entitlement to
such benefits or exemption. This discussion does not consider U.S. tax
consequences that may be relevant to a Non-U.S. Holder who is a United States
expatriate or who has other special facts and circumstances.
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<PAGE> 22
Dividends. Neither Pioneer Canada nor Pioneer intends to withhold any
amount for U.S. withholding tax on dividends paid to Non-U.S. Holders of
Exchangeable Shares. There is some possibility, however, that the IRS may
successfully assert that U.S. withholding tax is payable with respect to such
dividends.
Dividends received by a Non-U.S. Holder with respect to Pioneer Common
Stock that are not effectively connected with the conduct of a trade or
business in the United States will generally be subject to U.S. withholding
tax. The U.S. withholding tax rate is 30% unless reduced by treaty. Under the
Tax Treaty, the rate currently is 15%, generally, on dividends paid to
residents of Canada.
Gain on Dispositions. A Non-U.S. Holder generally will not be subject
to U.S. tax on any gain recognized on the receipt, sale or other disposition of
the Exchangeable Shares, the exchange of the Exchangeable Shares for Pioneer
Common Stock, or the sale or other disposition of such Pioneer Common Stock,
unless (a) such gain is effectively connected with a trade or business in the
United States, or, if a tax treaty applies, is attributable to a permanent
establishment maintained by the Non-U.S. Holder in the United States, or (b)
the Non-U.S. Holder is an individual who is present in the United States for
183 days or more in the taxable year of disposition, and certain other
conditions are satisfied. In this connection, any Non-U.S. Holder who at any
time actually and constructively owns more than 5% of either the Exchangeable
Shares or the Pioneer Common Stock should be aware that Pioneer is probably a
"United States real property holding corporation" within the meaning of section
897 of the U.S. Code, and therefore such Non-U.S. Holder should seek advice
whether his gain or loss would be deemed to be effectively connected with a
U.S. business.
U.S. Estate Tax. Pioneer Common Stock held by an individual Non-U.S.
Holder at the time of death will be deemed to be a U.S. situs asset for
purposes of U.S. estate tax law and therefore will generally be subject to the
U.S. estate tax, except as may otherwise be provided by an applicable tax or
estate tax treaty with the United States. No opinion is expressed as to the
situs of Exchangeable Shares for purposes of U.S. estate tax law.
U.S. Holders
General. This subsection is addressed to Pioneer Canada Shareholders
that (i) are U.S. Holders (as defined below) and (ii) hold Exchangeable Shares
(and Pioneer Common Stock received in exchange therefor) as capital assets. For
purposes of the foregoing, the term "U.S. Holder" means (a) a citizen or
individual resident of the United States, (b) a corporation or partnership
created or organized in or under the laws of the United States or any state
thereof, (c) an estate the income of which is includible in its gross income
for United States federal income tax purposes without regard to its source, or
(d) a trust as to which a court in the United States is able to exercise
primary supervision over the administration of the trust and one or more United
States fiduciaries have the authority to control all substantial decisions of
the trust.
U.S. Holders of Chauvco Stock are not entitled to receive Exchangeable
Shares pursuant to the Plan of Arrangement, and it is not expected that a U.S.
Holder would, in general, wish to acquire Exchangeable Shares on the trading
markets after their original issuance. Accordingly, this subsection is expected
to have limited applicability.
Ownership and Disposition of Exchangeable Shares. Assuming that
Pioneer Canada is not a PFIC (as defined in the following paragraphs of this
subsection), dividends paid to a U.S. Holder with respect to Exchangeable
Shares generally will constitute ordinary dividend income to the extent paid
out of Pioneer Canada's earnings and profits as determined under U.S. tax
principles. The amount of a dividend paid in non-U.S. currency will be
calculated by reference to the exchange rate in effect on the date the dividend
is distributed. Foreign currency gain or loss may be realized on any currency
received that is not converted into United States dollars on such date.
Dividends will generally be treated as foreign source passive income for
foreign tax credit limitation purposes. Any foreign tax imposed on such
dividends will generally be allowable either as a credit against the holder's
United States federal income tax liability (subject to applicable limitations)
or as a deduction in computing U.S. taxable income. Gain or loss recognized on
the disposition of Exchangeable Shares will generally be treated as U.S. source
for foreign tax credit limitation purposes.
Exchange of Exchangeable Shares. A U.S. Holder that exercises such
holder's right to exchange its Exchangeable Shares for shares of Pioneer Common
Stock will generally recognize gain or loss on such exchange, subject to the
discussion below. Such gain or loss will be equal to the difference between the
fair market value of the shares of Pioneer Common Stock received, as determined
at the time of the exchange, and the U.S. Holder's tax basis in the
Exchangeable Shares surrendered. The gain or loss will generally be capital
gain or loss, except that, with respect
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<PAGE> 23
to any declared but unpaid dividends on the Exchangeable Shares, ordinary
income may be recognized. A U.S. Holder will generally, subject to the
discussion below, have a tax basis in the shares of Pioneer Common Stock
received equal to the fair market value of such shares at the time of the
exchange. The holding period for such shares will generally, subject to the
discussion below, begin on the day after the exchange. The IRS could assert,
however, that the Exchangeable Shares and certain of the rights associated
therewith constitute "offsetting positions" for purposes of the straddle rules
set forth in Section 1092 of the U.S. Code. In such case, the holding period of
the Exchangeable Shares would not increase while held by a U.S. Holder.
It is possible, however, that a U.S. Holder who holds Exchangeable
Shares not acquired in the Arrangement would not be permitted to recognize loss
on an exchange of such Exchangeable Shares for Pioneer Common Stock. In that
case, the U. S. Holder will have a tax basis in the shares of Pioneer Common
Stock received equal to the tax basis of the Exchangeable Shares exchanged
therefor, and the U.S. Holder's holding period for the Pioneer Common Stock
received will include the U. S. Holder's holding period in the Exchangeable
Shares exchanged therefor.
Under the Taxpayer Relief Act of 1997 (the "1997 Act"), the maximum
capital gains rate for individuals has been reduced to 20% for capital assets
held for more than 18 months before disposition, but the rate applicable to
gain realized on the exchange of Exchangeable Shares by a U.S. Holder will
depend upon the holding period of such Exchangeable Shares, the holder's other
taxable income, and other factors.
For U.S. foreign tax credit purposes, any gain realized by a U.S.
Holder will generally be treated as U.S. source, except that, if under the Tax
Treaty any Canadian tax is imposed on the exchange, the gain could be treated
as Canadian source at the election of the U.S. Holder. As a result of such
election, the Canadian tax would generally be available as a credit (subject to
applicable limitations) against the U.S. tax attributable to such gain. A U.S.
Holder that is ineligible for a foreign tax credit with respect to any tax paid
may be entitled to a deduction therefor in computing United States taxable
income.
Under certain limited circumstances, an exchange by a U.S. Holder of
Exchangeable Shares for shares of Pioneer Common Stock may be characterized as
a tax-free exchange. In order to be so characterized, however, certain
requirements must be satisfied as of the date of the exchange. Whether such
requirements can be satisfied will depend on facts and circumstances existing
at that time and which cannot be accurately predicted as of the date of this
Prospectus. Moreover, there is no direct authority as to the proper treatment
for United States federal income tax purposes of the exchange of Exchangeable
Shares for shares of Pioneer Common Stock. For these reasons, there can be no
assurance that an exchange of Exchangeable Shares for Pioneer Common Stock
should properly be treated as tax free under any circumstances. If, however,
such exchange did qualify as a tax-free exchange, a U.S. Holder's tax basis in
the shares of Pioneer Common Stock received would be equal to such holder's tax
basis in the Exchangeable Shares exchanged therefor, and the holding period of
the shares of Pioneer Common Stock received by such U.S. Holder should include
the holding period of the Exchangeable Share exchanged therefor.
Passive Foreign Investment Company Considerations. For United States
federal income tax purposes, Pioneer Canada generally will be treated as a
passive foreign investment company (a "PFIC") for any taxable year ending after
the consummation of the Arrangement during which either (i) 75 percent or more
of its gross income was passive income (as defined for United States federal
income tax purposes) or (ii) on average for such taxable year, 50 percent or
more of its assets (measured as described below) produced or were held for the
production of passive income. For purposes of applying the foregoing tests, the
assets and gross income of Pioneer Canada's significant subsidiaries will be
attributed to Pioneer Canada.
For purposes of applying the 50% assets test, and in the absence of
regulations affording an exception to securities listed for trading on the TSE,
Pioneer Canada's assets must be measured by their adjusted tax bases (as
calculated in order to compute earnings and profits for United States federal
income tax purposes), subject to certain adjustments. As a result, it is
possible that Pioneer Canada could be a PFIC even though less than 50% of
Pioneer Canada's assets (measured by the fair market value of such assets) do
not constitute passive assets.
Pioneer and Pioneer Canada intend to endeavor to cause Pioneer Canada
to avoid PFIC status in the future, although there can be no assurance that
they will be able to do so or that their intent will not change. Moreover, in
connection with the transactions contemplated herein, no opinion will be deemed
given regarding Pioneer Canada's status as a PFIC. After the Arrangement,
Pioneer Canada will endeavor to notify U.S. Holders of Exchangeable Shares if
it believes that Pioneer Canada was a PFIC for that taxable year.
21
<PAGE> 24
If a corporation is a PFIC at any time in which a U.S. Holder owns its
shares and has not elected ("QEF Election") to treat the corporation as a
qualified electing fund, the gain recognized on the disposition of such shares
is taxed as ordinary income at rates that might be higher than those otherwise
applicable, and an interest charge is imposed on such gain. The general effect
of a QEF election is to require the U.S. Holder's pro rata share of the
corporation's income for each taxable year in which the corporation is
classified as a PFIC to be included in his taxable income, even if no dividend
distributions are received. The holder, however, can also elect to defer
payment of the taxes on such income, subject to an interest charge, until the
shares are transferred or a distribution on such shares is received. In
addition, it is possible that under the 1997 Act a U.S. Holder will be
permitted, beginning in 1998, to make a mark-to-market election with respect to
shares of a PFIC in lieu of incurring the special tax and interest charge on
disposition of those shares.
The foregoing summary of the possible application of the PFIC rules to
Pioneer Canada and the U.S. Holders of Exchangeable Shares is only a summary of
certain material aspects of those rules. Because the United States federal
income tax consequences to such U.S. Holders under the PFIC provisions are
significant and complex, such U.S. Holders are urged to discuss these
consequences with their tax advisors.
LEGAL MATTERS
Certain legal matters in connection with the shares of Pioneer Common
Stock offered hereby will be passed upon for Pioneer by Vinson & Elkins L.L.P.,
Dallas, Texas. Certain federal Canadian and U.S. tax matters will be passed
upon for Pioneer by MacKimmie Matthews, Calgary, Canada, and Vinson & Elkins
L.L.P., Dallas, Texas, as set forth under "Income Tax Considerations".
EXPERTS
The Consolidated Financial Statements of Pioneer (successor to Parker
& Parsley and subsidiaries) have been incorporated by reference in this
Registration Statement in reliance upon the report of KPMG Peat Marwick LLP,
independent certified public accountants, and upon the authority of said firm
as experts in accounting and auditing. The report of KPMG Peat Marwick LLP
refers to a change in the method of accounting for the impairment of long-lived
assets and for long-lived assets to be disposed of in 1995.
The Consolidated Financial Statements of Mesa incorporated by
reference in this Registration Statement have been audited by Arthur Andersen
LLP, independent public accountants, as indicated in their report with respect
thereto, and are incorporated by reference herein in reliance upon the
authority of said firm as experts in giving said report.
The Consolidated Financial Statements of Chauvco incorporated by
reference in this Registration Statement have been audited by Price Waterhouse,
chartered accountants, as indicated in their report with respect thereto, and
are incorporated by reference herein in reliance upon the authority of said
firm as experts in giving said report.
The estimates of Pioneer's proved reserves as of December 31, 1996,
incorporated by reference in this Registration Statement are based upon a
reserve report prepared by Pioneer and audited by Netherland, Sewell &
Associates, Inc., independent petroleum consultants, and are incorporated by
reference herein upon the authority of such firm as experts with respect to
such matters covered by such report.
The estimates of Mesa's proved reserves as of December 31, 1996,
incorporated by reference in this Registration Statement with respect to its
Hugoton and West Panhandle field properties are based upon a reserve report
prepared by Williamson Petroleum Consultants, Inc., independent petroleum
consultants, and are incorporated by reference herein upon the authority of
such firm as experts with respect to such matters covered by such report. The
estimates of Greenhill Petroleum Corporation's proved reserves as of December
31, 1996, set forth in this Registration Statement are based upon a reserve
report prepared by Miller and Lents, independent petroleum consultants, and are
incorporated by reference herein upon the authority of such firm as experts
with respect to such matters covered by such report.
The estimates of Chauvco's proved reserves as of December 31, 1996,
incorporated by reference in this Registration Statement are based upon reserve
reports prepared by Gilbert Lausten Jung Associates, Ltd. and Martin Petroleum
and Associates, independent petroleum consultants, and are incorporated by
reference herein upon the authority of such firm as experts with respect to
such matters covered by such report.
22
<PAGE> 25
================================================================================
NO PERSON HAS BEEN AUTHORIZED TO GIVE ANY INFORMATION OR TO MAKE ANY
REPRESENTATIONS OTHER THAN THOSE CONTAINED IN THIS PROSPECTUS OR IN A
PROSPECTUS SUPPLEMENT, AND IF GIVEN OR MADE, SUCH INFORMATION OR
REPRESENTATIONS MUST NOT BE RELIED UPON AS HAVING BEEN AUTHORIZED BY PIONEER OR
ANY OTHER PERSON. NEITHER THIS PROSPECTUS NOR ANY PROSPECTUS SUPPLEMENT
CONSTITUTES AN OFFER TO SELL OR A SOLICITATION OF ANY OFFER TO BUY ANY
SECURITIES OTHER THAN THE SECURITIES TO WHICH IT RELATES, NOR DOES IT
CONSTITUTE AN OFFER TO SELL OR A SOLICITATION OF ANY OFFER TO BUY THE
SECURITIES IN ANY JURISDICTION IN WHICH THE OFFER OR SOLICITATION IS NOT
AUTHORIZED, OR IN WHICH THE PERSON MAKING THE OFFER OR SOLICITATION IS NOT
QUALIFIED TO DO SO, OR TO ANY PERSON TO WHOM IT IS UNLAWFUL TO MAKE THE OFFER
OR SOLICITATION. NEITHER THE DELIVERY OF THIS PROSPECTUS NOR ANY PROSPECTUS
SUPPLEMENT NOR ANY SALE MADE HEREUNDER OR THEREUNDER SHALL, UNDER ANY
CIRCUMSTANCES, CREATE ANY IMPLICATION THAT ANY INFORMATION CONTAINED HEREIN OR
THEREIN IS CORRECT AS OF ANY TIME SUBSEQUENT TO THE DATE HEREOF.
_______________
TABLE OF CONTENTS
<TABLE>
<CAPTION>
PAGE
----
<S> <C>
Available Information . . . . . . . . . . . . . 2
Incorporation of Certain Documents
by Reference . . . . . . . . . . . . . . . . 2
Risk Factors . . . . . . . . . . . . . . . . . 3
The Issuer . . . . . . . . . . . . . . . . . . 4
Use of Proceeds . . . . . . . . . . . . . . . . 4
Description of Capital Stock . . . . . . . . . 4
Plan of Distribution . . . . . . . . . . . . . 12
Income Tax Considerations . . . . . . . . . . . 14
Legal Matters . . . . . . . . . . . . . . . . . 22
Experts . . . . . . . . . . . . . . . . . . . . 22
</TABLE>
---------------
================================================================================
================================================================================
LOGO
SHARES
PIONEER NATURAL
RESOURCES COMPANY
COMMON STOCK
---------------
PROSPECTUS
---------------
December , 1997
================================================================================
<PAGE> 26
PART II
INFORMATION NOT REQUIRED IN PROSPECTUS
ITEM 14. OTHER EXPENSES OF ISSUANCE AND DISTRIBUTION.
The following table sets forth those expenses to be incurred by the
Registrant, Pioneer Natural Resources Company (the "Company"), in connection
with the issuance and distribution of the securities being registered. Except
for the Securities and Exchange Commission registration fee, all amounts shown
are estimates.
<TABLE>
<S> <C>
Securities and Exchange Commission registration fee . . . . . . $ 0
Accounting fees and expenses . . . . . . . . . . . . . . . . . 5,000
Legal fees and expenses . . . . . . . . . . . . . . . . . . . . 15,000
Transfer agent's fees and expenses . . . . . . . . . . . . . . 10,000
Blue Sky fees and expenses, including counsel fees . . . . . . 1,000
Fees of rating agencies . . . . . . . . . . . . . . . . . . . . 0
Listing fees . . . . . . . . . . . . . . . . . . . . . . . . . 140,755
Printing and engraving expenses . . . . . . . . . . . . . . . . 10,000
Miscellaneous . . . . . . . . . . . . . . . . . . . . . . . . . 10,000
--------
Total . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $191,755
========
</TABLE>
ITEM 15. INDEMNIFICATION OF DIRECTORS AND OFFICERS.
Article Twelve of the Restated Certificate of Incorporation of the
Registrant provides that the Registrant must indemnify its officers and
directors to the extent allowed by the Delaware General Corporation Law.
Pursuant to Section 145 of the Delaware General Corporation Law, the Registrant
generally has the power to indemnify its present and former directors and
officers against expenses and liabilities incurred by them in connection with
any suit to which they are, or are threatened to be made, a party by reason of
their serving in those positions so long as they acted in good faith and in a
manner they reasonably believed to be in, or not opposed to, the best interests
of the Registrant, and with respect to any criminal action, they had no
reasonable cause to believe their conduct was unlawful. With respect to suits
by or in the right of the Registrant, however, indemnification is generally
limited to attorneys' fees and other expenses and is not available if the
person is adjudged to be liable to the Registrant unless the court determines
that indemnification is appropriate. The statute expressly provides that the
power to indemnify authorized thereby is not exclusive of any rights granted
under any by-law, agreement, vote of stockholders or disinterested directors,
or otherwise. The Registrant also has the power to purchase and maintain
insurance for its directors and officers. Additionally, Article Twelve of the
Restated Certificate of Incorporation provides that, in the event that an
officer or director files suit against the Registrant seeking indemnification
of liabilities or expenses incurred, the burden will be on the Registrant to
prove that the indemnification would not be permitted under the Delaware
General Corporation Law.
The Registrant has entered into Indemnification Agreements with each of
its directors and officers. These agreements provide that the Registrant must,
within 30 days of a request, indemnify an officer or director for liabilities
incurred to the fullest extent permitted by the Delaware General Corporation
Law. The Registrant must, within two days of a request, indemnify an officer or
director for expenses incurred in the defense of a claim or other proceeding.
The obligation of the Registrant to provide the indemnification does not apply
if, before the date on which the Registrant must provide the indemnification,
the Registrant's Board of Directors, or a representative chosen by the Board of
Directors, concludes that indemnification would be improper under the Delaware
General Corporation Law.
The preceding discussion of the Registrant's Restated Certificate of
Incorporation, Section 145 of the Delaware General Corporation Law, and the
Indemnification Agreements is not intended to be exhaustive and is qualified in
its entirety by the Restated Certificate of Incorporation, Section 145 of the
Delaware General Corporation Law, and the Indemnification Agreements.
II-1
<PAGE> 27
ITEM 16. EXHIBITS AND FINANCIAL STATEMENT SCHEDULES.
There are filed with the Registration Statement the following exhibits:
<TABLE>
<CAPTION>
EXHIBIT
NUMBER DESCRIPTION
------- -----------
<S> <C> <C>
2.1 -- Amended and Restated Agreement and Plan of Merger, dated as of April 6, 1997, by and
among Mesa, Mesa Operating Co. ("MOC"), MXP Reincorporation Corp. and Parker & Parsley
(incorporated by reference to Exhibit 2.1 to Pioneer's Registration Statement on Form S-
4, dated June 27, 1997, Registration No. 333-26951).
2.2 -- Combination Agreement, dated September 3, 1997, between Pioneer and Chauvco
(incorporated by reference to Exhibit 2.1 to Pioneer's Current Report on Form 8-K, File
No. 001-13245, filed with the SEC on October 2, 1997).
2.3** -- Plan of Arrangement under Section 186 of the Business Corporations Act (Alberta).
2.4** -- Form of Support Agreement between Pioneer and Pioneer Canada.
2.5 -- Form of Voting and Exchange Trust Agreement among Pioneer, Pioneer Canada and Montreal
Trust Company of Canada, as Trustee (incorporated by reference to Pioneer's Current
Report on Form 8-K, File No. 001-13245, filed with the SEC on October 2, 1997).
2.6 -- Shareholders Agreement, dated as of September 3, 1997, by and between Pioneer and Guy J.
Turcotte (incorporated by reference to Exhibit 2.2 to Pioneer's Current Report on Form
8-K, File No. 001-13245, filed with the SEC on October 2, 1997).
2.7** -- Amendment, dated , 1997, to Shareholders Agreement, dated as of September 3, 1997, by
and between Pioneer and Guy J. Turcotte.
2.8 -- Shareholders Agreement, dated as of September 3, 1997, by and among Pioneer, Chauvco,
DNR-MESA Holdings, L.P. ("DNR"), Scott D. Sheffield and I. Jon Brumley (incorporated by
reference to Exhibit 2.3 to Pioneer's Current Report on Form 8-K, File No. 001-13245,
filed with the SEC on October 2, 1997).
2.9 -- Shareholders Agreement, dated as of September 3, 1997, by and among Pioneer, Trimac
Corporation and Gendis Inc. (incorporated by reference to Exhibit 2.4 to Pioneer's
Current Report on Form 8-K, File No. 001-13245, filed with the SEC on October 2, 1997).
3.1 -- Restated Certificate of Incorporation of Pioneer (incorporated by reference to Exhibit
3.1 to Pioneer's Registration Statement on Form S-4, Registration No. 333-26951).
3.2 -- Restated Bylaws of Pioneer (incorporated by reference to Exhibit 3.2 to Pioneer's
Registration Statement on Form S-4, Registration No. 333-26951).
3.3** -- Terms and Conditions of Pioneer Special Preferred Voting Stock.
3.4** -- Exchangeable Share Provisions.
4.1 -- Form of Certificate of Common Stock, par value $.01 per share, of Pioneer (incorporated
by reference to Exhibit 4.1 to Pioneer's Registration Statement on Form S-4,
Registration No. 333-26951).
5.1* -- Form of opinion of Vinson & Elkins L.L.P. as to the legality of the securities to be
registered.
</TABLE>
II-2
<PAGE> 28
<TABLE>
<CAPTION>
EXHIBIT
NUMBER DESCRIPTION
-------- -----------
<S> <C> <C>
8.1* -- Form of opinion of MacKimmie Matthews regarding tax matters.
8.2* -- Form of opinion of Vinson & Elkins L.L.P. regarding tax matters.
9.1 -- Shareholder Agreement, dated as of April 6, 1997, between Mesa, Boone Pickens and Parker
& Parsley (incorporated by reference to Exhibit 2.4 of Mesa's Form 8-K filed April 8,
1997).
9.2 -- Shareholders Agreement, dated as of April 6, 1997, between DNR and Mesa (incorporated by
reference to Exhibit 2.2 of Mesa's Form 8-K filed April 8, 1997).
10.1 -- Indenture, dated July 2, 1996, among Pioneer Natural Resources USA, Inc. ("Pioneer USA")
(formerly MOC), as Issuer, Pioneer (Mesa's successor), as Guarantor, and Harris Trust
and Savings Bank, as Trustee, relating to the 11 5/8% Senior Subordinated Discount Notes
Due 2006 (incorporated by reference to Exhibit 4.17 of Mesa's Form 10-Q dated August 13,
1996).
10.2** -- First Supplemental Indenture, dated as of April 15, 1997, among Pioneer USA (formerly MOC),
as Issuer, Mesa, the subsidiary guarantors named therein, Pioneer, and Harris Trust
and Savings Bank, as Trustee, with respect to the indenture identified above as Exhibit 10.1.
10.3** -- Second Supplemental Indenture, dated as of August 7, 1997, among Pioneer USA (formerly MOC),
as Issuer, Mesa, the subsidiary guarantors named therein, Pioneer, and Harris Trust
and Savings Bank, as Trustee, with respect to the indenture identified above as Exhibit 10.1.
10.4 -- Indenture, dated July 2, 1996, among Pioneer USA (formerly MOC), as Issuer, Pioneer
(Mesa's successor), as Guarantor, and Harris Trust and Savings Bank, as Trustee,
relating to 10 5/8% Senior Subordinated Notes Due 2006 (incorporated by reference to
Exhibit 4.18 of Mesa's Form 10-Q, dated August 13, 1996).
10.5** -- First Supplemental Indenture, dated as of April 15, 1997, among Pioneer USA (formerly MOC),
as Issuer, Mesa, the subsidiary guarantors named therein, Pioneer, and Harris Trust and
Savings Bank, as Trustee, with respect to the indenture identified above as Exhibit 10.4.
10.6** -- Second Supplemental Indenture, dated as of August 7, 1997, among Pioneer USA (formerly MOC),
as Issuer, Mesa, the subsidiary guarantors named therein, Pioneer, and Harris Trust and
Savings Bank, as Trustee, with respect to the indenture identified above as Exhibit 10.4.
10.7 -- Indentures relating to $50,000,000 principal amount of 8 1/2% Convertible Subordinated
Debentures due 2005 of Dorchester Master Limited Partnership ($3,762,000 principal
amount of which were outstanding and held by non affiliates at December 31, 1996) and
$100,000,000 principal amount of 9 1/2% Senior Notes due 2000 of Bridge Oil (U.S.A.)
Inc. ($2,063,000 principal amount of which were outstanding at December 31, 1996) have
been omitted pursuant to Item 601(b)(4)(iii)(A) of Regulation S-K. Pioneer hereby agrees
to furnish a copy of the indentures to the Securities and Exchange Commission upon
request (incorporated by reference to Parker & Parsley's Form 10-K, dated December 31,
1996).
10.8 -- Indenture, dated April 12, 1995, between Pioneer USA (successor to Parker & Parsley),
and The Chase Manhattan Bank (National Association), as Trustee (incorporated by
reference to Exhibit 4.1 to Parker & Parsley's Current Report on Form 8-K, dated
April 12, 1995, File No. 1-10695).
10.9** -- First Supplemental Indenture, dated as of August 7, 1997, among Parker & Parsley, The
Chase Manhattan Bank, as Trustee, and Pioneer USA, with respect to the indenture
identified above as Exhibit 10.8.
10.10 -- Form of 8 7/8% Senior Notes Due 2005, dated as of April 12, 1995, in the aggregate
principal amount of $150,000,000, together with Officers' Certificate dated April 12,
1995, establishing the terms of the 8 7/8% Senior Notes Due 2005 pursuant to the
indenture identified above as Exhibit 10.8 (incorporated by reference to Exhibit 4.2 to
Parker & Parsley's Quarterly Report on Form 10-Q for the period ended June 30, 1995,
File No. 1-10695).
10.11 -- Form of 8 1/4% Senior Notes due 2007, dated as of August 22, 1995, in the aggregate
principal amount of $150,000,000, together with Officers' Certificate, dated August 22,
1995, establishing the terms of the 8 1/4% Senior Notes due 2007 pursuant to the
indenture identified above as Exhibit 10.8 (incorporated by reference to Exhibit 1.2 to
Parker & Parsley's Current Report on Form 8-K, dated August 17, 1995, File No. 1-10695).
</TABLE>
II-3
<PAGE> 29
<TABLE>
<CAPTION>
EXHIBIT
NUMBER DESCRIPTION
--------- -----------
<S> <C> <C>
10.12 -- Agreement of Compromise and Settlement, dated May 29, 1987, between Mesa Operating
Limited Partnership and Colorado Interstate Gas Company (Confidential Treatment
Requested) (incorporated by reference to Exhibit 10(s) to Mesa Limited Partnership's
Form 10-K, dated December 31, 1987).
10.13 -- Agreement of Sale between Pioneer Corporation and Cabot Corporation, dated August 29,
1984 (incorporated by reference to Exhibit 10.5 to Pioneer Corporation's Form 10-K,
dated December 31, 1985).
10.14 -- Settlement Agreement, dated March 15, 1989, by and among Mesa Operating Limited
Partnership and Mesa Limited Partnership, et al., Energas Company and the City of
Amarillo (incorporated by reference to Exhibit 10(k) to Mesa Limited Partnership's Form
10-K, dated December 31, 1990).
10.15 -- Gas Purchase Agreement, dated December 1, 1989, between Williams Natural Gas Company and
Mesa Operating Limited Partnership acting on behalf of itself and as agent for Mesa
Midcontinent Limited Partnership (incorporated by reference to Exhibit 10.1 to
Registration Statement of Mesa Limited Partnership on Form S-3, Registration
No. 33-32978).
10.16 -- "B" Contract Production Allocation Agreement, dated July 29, 1991, and effective as of
January 1, 1991, between Colorado Interstate Gas Company and Mesa Operating Limited
Partnership (incorporated by reference to Exhibit 10(r) to Mesa's Form 10-K, dated
December 31, 1991).
10.17 -- Amendment to "B" Contract Production Allocation Agreement effective as of January 1,
1993, between Colorado Interstate Gas Company and Mesa Operating Limited Partnership
(incorporated by reference to Exhibit 10.24 to Mesa's Registration Statement on
Form S-1, Registration No. 033-51909).
10.18 -- Amended Peak Day Gas Purchase Agreement, dated effective June 19, 1991, between Colorado
Interstate Gas Company and Mesa Operating Limited Partnership (incorporated by reference
to Exhibit 10(t) to Mesa's Form 10-K, dated December 31, 1991).
10.19 -- Omnibus Amendment to Collateral Instruments to Supplemental Stipulation and Agreement,
dated June 19, 1991, between Colorado Interstate Gas Company and Mesa Operating Limited
Partnership (incorporated by reference to Exhibit 10(u) to Mesa's Form 10-K, dated
December 31, 1991).
10.20 -- Amarillo Supply Agreement between Mesa Operating Limited Partnership, Seller, and
Energas Company, a division of Atmos Energy Corporation, Buyer, dated effective
January 2, 1993 (incorporated by reference to Exhibit 10.14 to Mesa's Form 10-K, dated
December 31, 1995).
10.21 -- Gas Supply Agreement, dated May 11, 1994, between MOC, as successor to Mesa Operating
Limited Partnership, acting on behalf of itself and as agent for Hugoton Capital Limited
Partnership, and Williams Gas Marketing Company, and Gas Supply Guarantee, dated May 11,
1994 (incorporated by reference to Exhibit 10.16 to Mesa's Form 10-K, dated December 31,
1995).
10.22 -- Gas Transportation Agreement, dated June 14, 1994, between Western Resources, Inc. and
MOC, acting on behalf of itself and as agent for Hugoton Capital Limited Partnership
(incorporated by reference to Exhibit 10.24 to Mesa's Form 10-K, dated December 31,
1994).
</TABLE>
II-4
<PAGE> 30
<TABLE>
<CAPTION>
EXHIBIT
NUMBER DESCRIPTION
--------- -----------
<S> <C> <C>
10.23 -- 1991 Stock Option Plan of Mesa (incorporated by reference to Exhibit 10(v) to Mesa's
Form 10-K, dated December 31, 1991).
10.24 -- Interruptible Gas Transportation and Sales Agreement, dated January 1, 1991, between
Mesa Operating Limited Partnership and Energas Company and Amendment, dated January 1,
1995 (incorporated by reference to Exhibit 10.22 to Mesa's Form 10-K, dated
December 31, 1995).
10.25 -- "B" Contract Operating Agreement, dated January 1, 1988, between Mesa Operating Limited
Partnership and Colorado Interstate Gas Company (incorporated by reference to
Exhibit 10.23 to Mesa's Form 10-K, dated December 31, 1995).
10.26** -- Gathering Agreement, dated May 29, 1987, between Mesa Operating Limited Partnership and
Colorado Interstate Gas Company.
10.27 -- Amendment to Gathering Agreement, dated July 15, 1990, between Colorado Interstate Gas
Company and Mesa Operating Limited Partnership (incorporated by reference to
Exhibit 10.24 to Mesa's Form 10-K, dated December 31, 1995).
10.28** -- Amendment to 1990 Gathering Agreement Amendment, dated September 1, 1997, between
Colorado Interstate Gas Company and Pioneer USA.
10.29 -- Gas Purchase Agreement, dated January 1, 1996, between MOC, as Seller, and KN Marketing
L.P., as Buyer, and Amendment, dated August 1, 1995 (incorporated by reference to
Exhibit 10.25 to Mesa's Form 10-K, dated December 31, 1995).
10.30 -- Employment Agreement, dated as of August 21, 1996, between Mesa and I. Jon Brumley
(incorporated by reference to Exhibit 10.26 of Mesa's Form 10-K, dated December 31,
1996).
10.31 -- Stock Purchase Agreement, dated April 26, 1996, between Mesa and DNR (incorporated by
reference to Exhibit No. 10 to Mesa's Form 8-K filed on April 29, 1996).
10.32 -- 1996 Incentive Plan of Mesa (incorporated by reference to Exhibit 10.28 to Pioneer's
Registration Statement on Form S-4, dated June 27, 1997, Registration No. 333-26951).
10.33 -- Mesa Management Severance Plan, dated April 4, 1997, including a Schedule of
Participants on Schedule A for the purpose of defining the payment of certain benefits
upon the termination of the officer's employment under certain circumstances.
10.34 -- Parker & Parsley Petroleum Company Long-Term Incentive Plan, dated February 19, 1991,
(incorporated by reference to Exhibit 4.1 to Parker & Parsley's Registration Statement
on Form S-8, Registration No. 33-38971).
10.35 -- First Amendment to the Parker & Parsley Petroleum Company Long-Term Incentive Plan,
dated August 23, 1991 (incorporated by reference to Exhibit 10.2 to Parker & Parsley's
Registration Statement on Form S-1, dated February 28, 1992, Registration No. 33-46082).
10.36 -- Agreement of Partnership of P&P Employees 89-B Conv., L.P. (formerly P&P Employees 89-B
GP), dated October 31, 1989, among Parker & Parsley, Ltd. and the Investor Partners (as
defined therein, which includes individuals who are directors and executive officers of
Parker & Parsley), together with a schedule identifying substantially identical
documents and setting forth the material details in which those documents differ from
the foregoing document (incorporated by reference to Exhibit 10.50 to Parker & Parsley's
Registration Statement on Form S-4, dated December 31, 1990, Registration No. 33-38436).
</TABLE>
II-5
<PAGE> 31
<TABLE>
<CAPTION>
EXHIBIT
NUMBER DESCRIPTION
--------- -----------
<S> <C> <C>
10.37 -- Amendment to Agreement of Partnership of P&P Employees 89-B GP, dated May 31, 1990,
among Parker & Parsley, Ltd. and the Investor Partners (as defined therein, which
includes individuals who are directors and executives officers of Parker & Parsley),
together with a schedule identifying substantially identical documents and setting forth
the material details in which those documents differ form the foregoing document
(incorporated by reference to Exhibit 10.51 to Parker & Parsley's Registration Statement
on Form S-4, dated December 31, 1990, Registration No. 33-38436).
10.38 -- Schedule identifying additional documents substantially identical to the Amendment to
Agreement of Partnership of P&P Employees 89-B GP included as Exhibit 10.5 and setting
forth the material details in which those documents differ from that document
(incorporated by reference to Exhibit 10.52 to Parker & Parsley's Registration Statement
on Form S-1, dated February 28, 1992, Registration No. 33-46082).
10.39 -- Agreement of Partnership of P&P Employees 90 Spraberry Private Development GP, dated
October 16, 1990, among Parker & Parsley, Ltd., James D. Moring, and the General
Partners (as defined therein, which includes individuals who are directors and executive
officers of Parker & Parsley), and form of Amendment to Agreement of Partnership of P&P
Employees 90 Spraberry Private Development GP, together with a schedule identifying
substantially identical documents and setting forth the material details in which those
documents differ from the foregoing document (incorporated by reference to Exhibit 10.52
to Parker & Parsley's Registration Statement on Form S-4, dated December 31, 1990,
Registration No. 33-38436).
10.40 -- Amendment to Agreement of Partnership of Parker & Parsley 90-A GP, dated February 19,
1991, among Parker & Parsley Development Company and the Investor Partners (as defined
therein, which includes individuals who are directors and executive officers of Parker &
Parsley), together with a schedule identifying substantially identical documents and
setting forth the material details in which those documents differ from the foregoing
document (incorporated by reference to Exhibit 10.58 to Parker & Parsley's Registration
Statement on Form S-1, dated February 28, 1992, Registration No. 33-46082).
10.41 -- Agreement of Partnership of P&P Employees 91-A, GP, dated September 30, 1991, among
Parker & Parsley Development Company, James D. Moring, and the General Partners (as
defined therein, which includes individuals who are directors and executive officers of
Parker & Parsley), together with a schedule identifying substantially identical
documents and setting forth the material details in which those documents differ from
the foregoing document (incorporated by reference to Exhibit 10.61 to Parker & Parsley's
Registration Statement on Form S-1, dated February 28, 1992, Registration No. 33-46082).
10.42 -- Development Drilling Program Agreement of Parker & Parsley 91-A Development Drilling
Program, dated September 30, 1991, among Parker & Parsley Development Company, the P&P
Employee Participants (as defined therein, which includes individuals who are directors
and executive officers of Parker & Parsley), P&P Employees 91-A, GP, and Parker &
Parsley 91-A, L.P., together with a schedule identifying substantially identical
documents and setting forth the material details in which those documents differ from
the foregoing document (incorporated by reference to Exhibit 10.63 to Parker & Parsley's
Registration Statement on Form S-1, dated February 28, 1992, Registration No. 33-46082).
</TABLE>
II-6
<PAGE> 32
<TABLE>
<CAPTION>
EXHIBIT
NUMBER DESCRIPTION
--------- -----------
<S> <C> <C>
10.43 -- Development Drilling Program Agreement, dated August 1, 1989, among Parker & Parsley,
Ltd., Parker & Parsley Development Partners L.P., certain key employees of Parker &
Parsley, Ltd. (which includes individuals who are directors and executive officers of
Parker & Parsley), and related persons, P&P Employees 89-A GP, and Parker & Parsley 89-
A, GP, and Parker & Parsley 89-A, L.P., together with a schedule identifying
substantially identical documents and setting forth the material details in which those
documents differ from the foregoing document (incorporated by reference to Exhibit 10.56
to Parker & Parsley's Registration Statement on Form S-4, dated December 31, 1990,
Registration No. 33-38436).
10.44 -- Amendment to Development Drilling Program Agreement, dated February 19, 1991, amending
the Development Drilling Program Agreement included in Exhibit 10.11, together with a
schedule identifying substantially identical documents and setting forth the material
details in which those documents differ from the foregoing document (incorporated by
reference to Exhibit 10.66 to Parker & Parsley's Registration Statement on Form S-1,
dated February 28, 1992, Registration No. 33-46082).
10.45 -- Amendment to Agreement of Partnership of P&P Employees 90 Spraberry Private Development
GP, dated April 22, 1991, among the Partners (as defined therein, which includes
individuals who are directors and executive officers of Parker & Parsley) (incorporated
by reference to Exhibit 10.67 to Parker & Parsley's Registration Statement on Form S-1,
dated February 28, 1992, Registration No. 33-46082).
10.46 -- Agreement of Limited Partnership of Parker & Parsley 1992 Direct Investment Program,
Ltd., dated as of July 24, 1992, among Parker & Parsley Development Company, as managing
general partner, and certain key employees of Parker & Parsley (including individuals
who are directors and executive officers of Parker & Parsley), as non-managing general
partners and limited partners (incorporated by reference to Exhibit 10.57 to Parker
Parsley's Annual Report on Form 10-K for the year ended December 31, 1993, Commission
File No. 1-10695).
10.47 -- Agreement of Limited Partnership of Parker & Parsley 1993 Direct Investment Program,
Ltd., dated as of January 1, 1993, among Parker & Parsley Development Company, as
managing general partner, and certain key employees of Parker & Parsley (including
individuals who are directors and executive officers of Parker & Parsley), as non-
managing general partners and limited partners (incorporated by reference to
Exhibit 10.49 to Parker & Parsley's Annual Report on Form 10-K for the year ended
December 31, 1993, Commission File No. 1-10695).
10.48 -- Agreement of Limited Partnership of Parker & Parsley 1994 Direct Investment Program,
Ltd., dated as of January 1, 1994, among Parker & Parsley Development Company, as
managing general partner, and certain key employees of Parker & Parsley (including
individuals who are directors and executive officers of Parker & Parsley), as
non-managing general partners and limited partners (incorporated by reference to Exhibit
10.20 to Parker & Parsley's Annual Report on Form 10-K for the year ended December 31,
1994, Commission File No. 1-10695).
10.49** -- Stock Acquisition Loan Agreements entered into as of June 15, 1995, between Parker &
Parsley and the officers on Schedule I thereto, providing for Parker & Parsley's loans
to such officers of the amounts respectively identified on Schedule I thereto, for the
purpose of acquiring Parker & Parsley's Common Stock, par value $0.01 per share.
10.50 -- Omnibus Amendment to Nonstatutory Stock Option Agreements, included as part of the
Long-Term Incentive Plan, dated as of November 16, 1995, between Parker & Parsley and
Named Executive Officers identified on Schedule 1 setting forth additional details
relating to the Long-Term Incentive Plan (incorporated by reference to Parker &
Parsley's Annual Report on Form 10-K for the year ended December 31, 1995, Commission
File No. 1-10695).
</TABLE>
II-7
<PAGE> 33
<TABLE>
<CAPTION>
EXHIBIT
NUMBER DESCRIPTION
--------- -----------
<S> <C> <C>
10.51** -- Severance Agreement, dated as of August 8, 1997, between Pioneer and Scott D. Sheffield,
together with a schedule identifying substantially identical agreements between Pioneer
and each of the other named executive officers identified on Schedule I for the purpose
of defining the payment of certain benefits upon the termination of the officer's
employment under certain circumstances.
10.52** -- Indemnification Agreement, dated as of August 8, 1997, between Pioneer and Scott D.
Sheffield, together with a schedule identifying substantially identical agreements
between Pioneer and each of Pioneer's other directors and named executive officers
identified on Schedule I.
10.53 -- Pioneer Natural Resources Company Long-Term Incentive Plan (incorporated by reference to
Exhibit 4.1 to Pioneer's Registration Statement on Form S-8, Registration No. 333-
35087).
10.54 -- Pioneer Natural Resources Company Employee Stock Purchase Plan (incorporated by
reference to Exhibit 4.1 to Pioneer's Registration Statement on Form S-8, Registration
No. 333-35165).
10.55 -- Pioneer Natural Resources Company Deferred Compensation Retirement Plan (incorporated by
reference to Exhibit 4.1 to Pioneer's Registration Statement on Form S-8, Registration
No. 333- 39153).
10.56 -- Pioneer Natural Resources USA, Inc. 401(k) Plan (incorporated by reference to Exhibit
4.1 to Pioneer's Registration Statement on Form S-8, Registration No. 333-39249).
10.57 -- Credit Facility Agreement (Primary Facility), dated as of August 7, 1997, between
Pioneer USA, as Borrower, and NationsBank of Texas, N.A., as Administrative Agent, CIBC
Inc., as Documentation Agent, Morgan Guaranty Trust Company of New York, as
Documentation Agent, and The Chase Manhattan Bank, as Syndication Agent; Bank of America
Natural Trust and Savings Association, The Bank of New York, The Bank of Nova Scotia,
Royal Bank of Canada, Union Bank of California, N.A., The Fuji Bank, Limited-Houston
Agency and Wells Fargo Bank, N.A., as Co-Agents; and certain other lenders (incorporated
by reference to Exhibit 10.1 to Pioneer's Form 8-K, dated August 7, 1997, File No. 333-
26951).
10.58 -- Credit Facility Agreement (364 Day Facility), dated as of August 7, 1997, between
Pioneer USA, as Borrower, and NationsBank of Texas, N.A., as Administrative Agent, CIBC
Inc., as Documentation Agent, Morgan Guaranty Trust Company of New York, as
Documentation Agent, and The Chase Manhattan Bank, as Syndication Agent; Bank of America
Natural Trust and Savings Association, The Bank of New York, The Bank of Nova Scotia,
Royal Bank of Canada, Union Bank of California, N.A., The Fuji Bank, Limited-Houston
Agency and Wells Fargo Bank, N.A., as Co-Agents; and certain other lenders (incorporated
by reference to Exhibit 10.2 to Pioneer's Form 8-K, dated August 7, 1997, File No. 333-
26951).
23.1** -- Consent of KPMG Peat Marwick LLP.
23.2** -- Consent of Arthur Andersen LLP.
23.3** -- Consent of Price Waterhouse, chartered accountants.
23.4** -- Consent of Coopers & Lybrand L.L.P.
23.5** -- Consent of Netherland, Sewell & Associates, Inc.
23.6** -- Consent of Williamson Petroleum Consultants, Inc.
</TABLE>
II-8
<PAGE> 34
<TABLE>
<CAPTION>
EXHIBIT
NUMBER DESCRIPTION
--------- -----------
<S> <C> <C>
23.7** -- Consent of Miller and Lents, Ltd.
23.8** -- Consent of Gilbert Lausten Jung Associates, Ltd.
23.9** -- Consent of Martin Petroleum and Associates.
23.10* -- Consent of Vinson & Elkins L.L.P. (included in the opinion filed as Exhibit 5.1 to this
Registration Statement).
23.11* -- Consent of MacKimmie Matthews (included in the opinion filed as Exhibit 8.1 to this
Registration Statement).
23.12* -- Consent of Vinson & Elkins L.L.P. (included in the opinion filed as Exhibit 8.2 to this
Registration Statement).
24.1* -- Powers of Attorney of directors and officers of Pioneer (included on page II-11 to this
Registration Statement).
</TABLE>
* Filed herewith.
** To be filed.
II-9
<PAGE> 35
ITEM 17. UNDERTAKINGS
The undersigned Registrant hereby undertakes:
(a) To file, during any period in which offers or sales are
being made, a post-effective amendment to this Registration Statement.
(1) To include any prospectus required by Section
10(a)(3) of the Securities Act of 1933 (the "Securities Act");
(2) To reflect in the prospectus any facts or events
arising after the effective date of this Registration Statement
(or the most recent post-effective amendment thereof) which,
individually or in the aggregate, represent a fundamental change
in the information set forth in this Registration Statement; and
(3) To include any material information with respect
to the plan of distribution not previously disclosed in this
Registration Statement or any material change to the information
in this Registration Statement;
Provided, however, that clauses (1) and (2) above do not
apply if the information required to be included in a
post-effective amendment by those clauses is contained in
periodic reports filed by the Registrant pursuant to Section 13
or Section 15(d) of the Exchange Act that are incorporated by
reference into this Registration Statement;
(b) That, for the purpose of determining any liability under
the Securities Act, each such post- effective amendment shall be deemed to
be a new registration statement relating to the securities offered
therein, and the offering of the securities at that time shall be deemed
to be the initial bona fide offering thereof; and
(c) To remove from registration by means of a post-effective
amendment any of the securities being registered that remain unsold at the
termination of the offering.
The undersigned Registrant hereby undertakes that, for purposes of
determining any liability under the Securities Act, each filing of the
Registrant's annual report pursuant to Section 13(a) or 15(d) of the Exchange
Act that is incorporated by reference in this Registration Statement shall be
deemed to be a new registration statement relating to the securities offered
therein, and the offering of the securities at that time shall be deemed to be
the initial bona fide offering thereof.
Insofar as indemnification for liabilities arising under the Securities
Act may be permitted to directors, officers, and controlling persons of the
Registrant pursuant to the provisions described in Item 15 above or otherwise,
the Registrant has been advised that in the opinion of the Securities and
Exchange Commission such indemnification is against public policy as expressed
in the Securities Act and is, therefore, unenforceable. In the event that a
claim for indemnification against such liabilities (other than the payment by
the Registrant of expenses incurred or paid by a director, officer, or
controlling person of the Registrant in the successful defense of any action,
suit, or proceeding) is asserted by the director, officer, or controlling
person in connection with the securities being registered, the Registrant will,
unless in the opinion of its counsel the matter has been settled by controlling
precedent, submit to a court of appropriate jurisdiction the question whether
such indemnification by it is against public policy as expressed in the
Securities Act and will be governed by the final adjudication of the issue.
For purposes of determining any liability under the Securities Act of
1933, the information omitted from the form of prospectus filed as part of this
registration statement in reliance upon Rule 430A and contained in a form of
prospectus filed by the registrant pursuant to Rule 424(b)(1) or (4) or 497(h)
under the Securities Act shall be deemed to be part of this Registration
Statement as of the time it was declared effective.
For the purpose of determining any liability under the Securities Act of
1933, each post-effective amendment that contains a form of prospectus shall be
deemed to be a new registration statement relating to the securities offered
therein, and the offering of such securities at that time shall be deemed to be
the initial bona fide offering thereof.
II-10
<PAGE> 36
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933, the Registrant
certifies that it has reasonable grounds to believe that it meets all of the
requirements for filing on Form S-3 and has duly caused this Registration
Statement to be signed on its behalf by the undersigned, thereunto duly
authorized, in Irving, Texas, on October 31, 1997.
PIONEER NATURAL RESOURCES COMPANY
By: /s/ Scott D. Sheffield
--------------------------------------
Scott D. Sheffield,
President and Chief Executive Officer
Pursuant to the requirements of the Securities Act, this Registration
Statement has been signed by the following persons in the capacities and on the
dates indicated. Each person whose signature appears below hereby authorizes
and appoints Scott D. Sheffield, Mark L. Withrow and M. Garrett Smith, or any
of them, as his attorney-in-fact to sign on his behalf individually and in the
capacity stated below all amendments and post-effective amendments to this
Registration Statement (including any additional registration statement filed
pursuant to Rule 462 of the Securities Act with respect to this Registration
Statement) as that attorney-in-fact may deem necessary or appropriate.
<TABLE>
<CAPTION>
Signature Title Date
--------------------------------- -------------------------------------------------- -------------------
<S> <C> <C>
/s/ I. Jon Brumley Chairman of the Board and Director October 31, 1997
- ---------------------------------
I. Jon Brumley
/s/ Scott D. Sheffield Director, President and Chief Executive Officer October 31, 1997
- --------------------------------- (principal executive officer)
Scott D. Sheffield
/s/ M. Garrett Smith Senior Vice President -- Finance October 31, 1997
- --------------------------------- (principal financial and accounting officer)
M. Garrett Smith
/s/ R. Hartwell Gardner Director October 31, 1997
- ---------------------------------
R. Hartwell Gardner
/s/ Kenneth A. Hersh Director October 31, 1997
- ---------------------------------
Kenneth A. Hersh
/s/ James L. Houghton Director October 31, 1997
- ---------------------------------
James L. Houghton
/s/ Charles E. Ramsey, Jr. Director October 31, 1997
- ---------------------------------
Charles E. Ramsey, Jr.
/s/ Arthur L. Smith Director October 31, 1997
- ---------------------------------
Arthur L. Smith
/s/ Robert L. Stillwell Director October 31, 1997
- ---------------------------------
Robert L. Stillwell
/s/ Michael D. Wortley Director October 31, 1997
- ---------------------------------
Michael D. Wortley
</TABLE>
II-11
<PAGE> 37
INDEX TO EXHIBITS
<TABLE>
<CAPTION>
EXHIBIT
NUMBER DESCRIPTION
------- -----------
<S> <C>
5.1 -- Form of opinion of Vinson & Elkins L.L.P. as to the legality
of the securities to be registered.
8.1 -- Form of opinion of MacKimmie Matthews regarding tax matters.
8.2 -- Form of opinion of Vinson & Elkins L.L.P. regarding tax
matters.
</TABLE>
<PAGE> 1
EXHIBIT 5.1
[VINSON & ELKINS L.L.P. LETTERHEAD]
November 3, 1997
Pioneer Natural Resources Company
1400 Williams Square West
5205 North O'Connor Blvd.
Irving, Texas 75039
Ladies and Gentlemen:
We have acted as counsel for Pioneer Natural Resources Company, a
Delaware corporation (the "Company"), in connection with the Company's
registration under the Securities Act of 1933, as amended (the "Act"), of the
offer and issuance of shares of common stock, par value $.01 per share
(the "Pioneer Common Stock") of the Company pursuant to the Company's
Registration Statement on Form S-3 filed with the Securities and Exchange
Commission (the "Commission") on November 3, 1997 (the "Registration
Statement").
In reaching the opinions set forth herein, we have examined and are
familiar with the originals or copies, certified or otherwise, of such
documents and records of the Company and such statutes, regulations, and other
instructions as we have deemed necessary or advisable for purposes of this
opinion, including (i) the Registration Statement, (ii) the Amended and
Restated Certificate of Incorporation of the Company and (iii) the Amended and
Restated By-Laws of the Company.
We have assumed that (i) all information contained in all documents
reviewed by us is true, correct, and complete, (ii) all signatures on all
documents reviewed by us are genuine, (iii) all documents submitted to us as
originals are true and complete, (iv) all documents submitted to us as copies
are true and compete copies of the originals thereof, and (v) all persons
executing and delivering originals or copies of documents examined by us were
competent to execute and deliver such documents. In addition, we have assumed
that: (i) the shares of Pioneer Common Stock that have yet to be issued will be
issued in accordance with the Combination Agreement in the form previously
reviewed by us (the "Combination Agreement"), (ii) the full consideration for
each share of Pioneer Common Stock that has yet to be issued shall be received
by the Company and in no event shall be less than the par value of such share
of Pioneer Common Stock, and (iii) certificates evidencing the shares of
Pioneer Common Stock that have yet to be issued shall be properly executed and
delivered by the Company in accordance with the Delaware General Corporation
Law ("DGCL").
<PAGE> 2
Pioneer Natural Resources Company
November 3, 1997
Page 2
Based on the foregoing and having due regard for the legal
considerations we deem relevant, we are of the opinion that the shares of
Pioneer Common Stock, when issued in accordance with the Combination Agreement,
will be validly issued by the Company, fully paid, and non-assessable.
This opinion is limited in all respects to the DGCL and the federal
laws of the United States of America. You should be aware that we are not
admitted to the practice of law in the State of Delaware, and the opinion
herein as to the DGCL is based upon the latest unofficial compilation thereof
available to us.
This opinion letter may be filed as an exhibit to the Registration
Statement. Consent is also given to the reference to us under the caption
"Legal Matters" in the Registration Statement and in the Prospectus included in
the Registration Statement, as having passed on the validly of the shares of
Pioneer Common Stock. In giving this consent, however, we do not thereby admit
that we fall within the category of persons whose consent is required under
Section 7 of the Act or the rules and regulations of the Commission promulgated
thereunder.
Very truly yours,
/s/ VINSON & ELKINS L.L.P.
<PAGE> 1
EXHIBIT 8.1
[MACKIMMIE MATTHEWS LETTERHEAD]
(214) 220-7700 (214) 220-7716
November 3, 1997
Pioneer Natural Resources Company
1400 Williams Square West
5205 North O'Connor Blvd.
Irving, Texas 75039
Re: Registration Statement on Form S-3
Ladies and Gentlemen:
We have acted as counsel to Pioneer Natural Resources Company, a
Delaware corporation ("Pioneer"), and Pioneer National Resources (Canada) Ltd.,
a British Columbia corporation ("Pioneer Canada"), in connection with the offer
of shares of Pioneer Common Stock issuable upon the redemption by
Pioneer Canada or the acquisition by Pioneer of Exchangeable Shares, pursuant
to a Registration Statement on Form S-3 (the "Registration Statement")
originally filed with the Securities and Exchange Commission under the
Securities Act of 1933 on November 3, 1997. In connection therewith, we have
participated in the preparation of the discussion set forth under the caption
"United States Federal Income Tax Considerations" (the "Discussion") in the
Registration Statement. Capitalized terms used and not otherwise defined herein
are used as defined in the Registration Statement.
The Discussion, subject to the qualifications stated therein, reflects
our opinion as to the material United States federal income tax consequences
for a Pioneer Canada Shareholder in regard to the ownership of Pioneer Canada
Exchangeable Shares and the receipt of shares of Pioneer Common Stock upon the
redemption of a Pioneer Canada Shareholder's Exchangeable Shares by Pioneer
Canada or the acquisition by Pioneer of such Exchangeable Shares.
We hereby consent to the use of our name in the Registration Statement
and to the filing of this opinion as an exhibit to the Registration Statement.
However, this consent does not constitute an admission that we are "experts"
within the meaning of such term as used in the Securities Act of 1933.
Respectfully submitted,
/s/ MacKIMMIE MATTHEWS
<PAGE> 1
EXHIBIT 8.2
[VINSON & ELKINS L.L.P. LETTERHEAD]
(214) 220-7700 (214) 220-7716
November 3, 1997
Pioneer Natural Resources Company
1400 Williams Square West
5205 North O'Connor Blvd.
Irving, Texas 75039
Re: Registration Statement on Form S-3
Ladies and Gentlemen:
We have acted as counsel to Pioneer Natural Resources Company, a
Delaware corporation, in connection with the offer of shares of
Pioneer Common Stock issuable upon the redemption by Pioneer Canada or the
acquisition by Pioneer of Exchangeable Shares, pursuant to a Registration
Statement on Form S-3 (the "Registration Statement") originally filed with the
Securities and Exchange Commission under the Securities Act of 1933 on November
3, 1997. In connection therewith, we have participated in the preparation of
the discussion set forth under the caption "United States Federal Income Tax
Considerations" (the "Discussion") in the Registration Statement. Capitalized
terms used and not otherwise defined herein are used as defined in the
Registration Statement.
The Discussion, subject to the qualifications stated therein, reflects
our opinion as to the material United States federal income tax consequences
for a Pioneer Canada Shareholder in regard to the ownership of Pioneer Canada
Exchangeable Shares and the receipt of shares of Pioneer Common Stock upon the
redemption of a Pioneer Canada Shareholder's Exchangeable Shares by Pioneer
Canada or the acquisition by Pioneer of such Exchangeable Shares.
We hereby consent to the use of our name in the Registration Statement
and to the filing of this opinion as an exhibit to the Registration Statement.
However, this consent does not constitute an admission that we are "experts"
within the meaning of such term as used in the Securities Act of 1933.
Respectfully submitted,
/s/ VINSON & ELKINS L.L.P.
