The board of directors (the "Board") of Pine Cliff Energy Ltd. (the "Corporation") hereby establishes a committee to be called the Reserves Committee (the "Committee"). The charter of the Committee is as described below.
The membership of the Committee shall be as follows:
(a) the Committee shall consist of a minimum of three directors of the Corporation;
(b) the majority of the members of the Committee:
(i) shall not be, and shall not have been during the preceding 12 months, (A) an officer or employee of the Corporation or an affiliate of the Corporation, (B) a person who beneficially owns 10% or more of the outstanding voting securities of the Corporation, and (C) a relative of a person referred to in clause (A) or (B) residing in the same home as that person; and
(ii) shall be free from any interest, any business or other relationship which could, or could reasonably be perceived, to materially interfere with the director's ability to act with a view to the best interests of the Corporation, other than interests and relationships arising from shareholdings. In determining whether a director is independent of management for the purposes of the determination in this subsection 2(b), the Board shall make reference to the then current legislation, rules, policies and instruments of applicable regulatory authorities;
(c) all members of the Committee shall have a working familiarity with the estimation of petroleum and natural gas resources and reserves;
(d) members of the Committee shall be appointed annually by the Board, at the first meeting of the Board after the annual general meeting of shareholders of the Corporation, from among directors of the Corporation;
(e) the chair (the "Chair") of the Committee shall be appointed by the Board;
(f) a member of the Committee shall ipso facto cease to be a member of the Committee upon ceasing to be a director of the Corporation; and
(g) any member of the Committee may be removed or replaced at any time by resolution of the directors of the Corporation. If and whenever a vacancy shall exist on the Committee, the remaining members may exercise all its powers so long as a quorum remains.
The Committee's primary purpose is to assist the Board in fulfilling its oversight responsibilities where the Corporation has become a reporting issuer with respect to the compliance with the requirements contained in National Instrument 51-101 Standards of Disclosure for Oil and Gas Activities ("NI 51-101").
Subject to the following requirements, the Committee may determine its own meeting procedures:
(a) The Committee shall convene at such dates, times and places as may be designated or approved by the Chair whenever a meeting is requested by the Board, a member of the Committee, the Chief Executive Officer of the Corporation (the "CEO"), the qualifies reserves evaluator or any senior executive of the Corporation. The Committee shall convene a minimum of once per year, with one meeting scheduled to correspond with the review of the Corporation’s annual reserves report;
(b) Notice of each meeting shall be given to each member of the Committee, the Chairman of the Board, the CEO, the qualified reserves evaluator and all other persons the Committee determines should be provided with notice of the meeting;
(c) Notice of a meeting of the Committee shall:
(i) be in writing;
(ii) state the nature of the business to be transacted at the meeting in reasonable detail;
(iii) provide the location of the meeting and instructions how to participate remotely if required;
(iv) to the extent practicable, be accompanied by copies of documentation to be considered at the meeting; and
(v) be given at least two business days prior to the time stipulated for the meeting or such shorter period as the members of the Committee may permit;
(d) A quorum for the transaction of business at a meeting of the Committee shall consist of a majority of its members. Every motion at the Committee meeting shall be decided by a majority of votes cast; in the event of a tie vote on any matters, such matters shall be presented to the Board for its consideration and determination;
(e) Any member of the Committee may participate in a meeting of the Committee by means of such telephonic, electronic or other communication facilities as permit all persons participating in the meeting to communicate adequately with each other, and a member participating in such a meeting by any such means is deemed to be present at the meeting;
(f) The Chair shall preside at all meeting of the Committee, and in the absence of the Chair, the members of the Committee shall choose one of the members present to be chair of themeeting. In addition, the members of the Committee shall choose one of the persons present to be the secretary of the meeting;
(g) The Chairman of the Board, senior management of the Corporation and other parties may attend meetings of the Committee; however, the Committee (i) shall meet with the qualified reserve evaluator or auditor independent of management, and (ii) may meet separately with management;
(h) The Committee shall meet in a separate, non-management, in camera session at each meeting. The Committee may invite such officers, directors and employees of the Corporation or affiliates as it see fit from time to time to attend meetings of the Committee and to assist thereat in the discussion of matters being considered by the Committee;
(i) Minutes shall be kept of all meetings of the Committee and shall be signed by the chair and the secretary of the meeting; and
(j) Minutes of Committee meetings will be sent to all Board members and relevant executive and management staff. Reports on the conduct of the meetings will be made to the Board by the Chair or in their absence, by the chair of the meeting.
The Committee shall arrange for the preparation, review by the Board and, where the Corporation has become a reporting issuer, public filing with securities authorities of:
(a) a Statement of Reserves Data and Other Information pursuant to Form 51-101F1 (the "Reserves Report"), as at the last day of the Corporation's most recent financial year and for the financial year then ended;
(b) a signed Report of Independent Qualified Reserves Evaluator or Auditor pursuant to Form 51-101F2 (the "Evaluator's Report");
(c) a signed Report of Management and Directors pursuant to Form 51-101F3 (the "Management Report") confirming the role of the Board in connection with reserves and executed by two senior officers and two directors of the Corporation; and
(d) if the public filing of the Reserves Report, Evaluator's Report and Management Report is satisfied by including the information included therein in an annual information form, a notice of filing in Form 51-101F4, concurrently with the filing of the annual information form.
The Committee shall:
(a) review and recommend to the Board the appointment of a qualified reserves evaluator or auditor, where the Corporation has become a reporting issuer, pursuant to the requirements of NI 51-101;
(b) review the appointment or change in appointment of the reserves evaluator or auditor and in the case of a proposed change in appointment, determine whether there have been any disputes between the qualified reserves evaluator or auditor and management of the Corporation;
(c) review and approve annually the expected fees of the independent qualified reserves evaluator(s);
(d) ensure the independence of the qualified reserves evaluator or auditor; and
(e) provide a means of direct communication for the Board with the independent qualified reserves evaluator or auditor. The independent qualified reserves evaluator (s) shall have a direct line of communication to the Committee through its Chair. The Committee, through its Chair, may contact directly any employee in the Corporation as it deems necessary, and any employees may bring before the Reserves Committee any matter on a confidential basis involving the reserves evaluation process.
The Committee shall:
(a) ensure the qualified reserves evaluator or auditor has all of the information reasonably necessary to provide a Reserves Report that satisfies the requirements of NI 51-101 where the Corporation has become a reporting issuer;
(b) determine whether any restrictions affect the ability of the qualified reserves evaluator or auditor in reporting on the Corporation's reserves data;
(c) review, with reasonable frequency, the Corporation's procedures relating to the disclosure of oil and gas activities and reserves information, including its procedures for complying with the disclosure requirements of NI 51-101 where it has become a reporting issuer;
(d) review the scope of the annual review of reserves;
(e) meet independently of management with the qualified reserves evaluator or auditor;
(f) before approving the filing of the Reserves Report, meet with management and the qualified reserves evaluator or auditor to:
(i) determine whether any restrictions affect the ability of the qualified reserves evaluator or auditor to report on reserves data without reservation;
(ii) review the reserves data and the report of the qualified reserves evaluator or auditor thereon; and
(iii) review and approve the content and filing of the Reserves Report, the Evaluator's Report and the Management Report;
(g) discuss reserves findings and disagreements between management and the qualified reserves evaluator or auditor and resolve disputes; and
(h) annually assess the work of the qualified reserves evaluator or auditor.
At the earliest reasonable opportunity after each meeting, the Committee shall report to the Board the results of its activities and any reviews undertaken and make recommendations to the Board as deemed appropriate.
The Committee shall have the authority to:
(a) inspect any and all of the books and records of the Corporation, its subsidiaries and affiliates;
(b) discuss with the management and employees of the Corporation, its subsidiaries and affiliates, any affected party and the qualified reserves evaluator, such accounts, records and other matters as any member of the Committee considers necessary and appropriate;
(c) engage independent counsel and other advisors as it determines necessary to carry out its duties; and
(d) to set and pay the compensation for any advisors employed by the Committee.
The Committee shall be provided with resources and support to carry out its duties and responsibilities delegated to it by the Board, including administrative support.
The Committee shall:
(a) have the authority to make non-material and technical amendments to this Charter to honour the spirit and intent of applicable law as it evolves, which proposed amendments must be reported to the Board prior to adoption thereof;
(b) be charged by the Board, from time to time, to review any other items relating to reserves, development or acquisitions and divestments;
(c) periodically report to the Board the results of all reviews undertaken and any associated recommendations; and
(d) perform any other activities consistent with this Charter, the Corporation’s By-laws and governing laws as the Committee or the Board deems necessary or appropriate.
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