PURCHASE AND SALE AGREEMENT
THIS PURCHASE AND SALE AGREEMENT (this "AGREEMENT") is entered into as
of March 23, 1999, by and between PROBE EXPLORATION INC., an Alberta corporation
(the "SELLER"), and Midcoast Canada Operating Corporation, an Alberta
corporation (the "BUYER"). The Seller and the Buyer are referred to collectively
herein as the "PARTIES", and individually as a "PARTY".
W I T N E S S E T H:
WHEREAS, this Agreement contemplates transactions in which (a) the
Buyer will purchase from the Seller, and the Seller will sell to the Buyer, the
Assets, (b) Seller and Buyer will enter into the Gas Gathering and Treating
Agreement, (c) Seller and Buyer will enter into the Area of Interest Agreement,
and (d) Seller and Buyer will enter into the Probe System Gathering Agreement
all for the Consideration to be paid by Buyer to Seller;
NOW, THEREFORE, in consideration of the premises and the mutual
promises herein made, and in consideration of the representations, warranties
and covenants herein contained, the Parties agree as follows:
1) DEFINITIONS.
(1) "ACID GAS DISPOSAL WELL" means the well Mama Xxxxxx #1 Leduc
100/07-23-049-27W4 into which the Seller has been injecting
volumes of H2S and CO2 derived as a consequence of the normal
operation of the Calmar Gas Plant and Gas Gathering System.
(2) "ADVERSE CONSEQUENCES" means: all actions, suits, proceedings,
hearings, investigations, charges, complaints, claims,
demands, injunctions, judgments, orders, decrees, rulings,
damages, dues, penalties, fines, costs, amounts paid in
settlement, liabilities, obligations, taxes, liens, losses,
expenses and fees, including court costs and fees and expenses
on a solicitor-client basis, but excluding consequential
damages.
(3) "AFFILIATES" means, with respect to the relationship between
corporations, that one of them is controlled by the other or
that both of them are controlled by the same Person,
corporation or body politic; and for this purpose a
corporation shall be deemed to be controlled by those Persons,
corporations or bodies politic who own or effectively control,
other than by way of security only, sufficient voting shares
of the corporation (whether directly through the ownership of
shares of the corporation or indirectly through the ownership
of shares of another corporation which owns shares of the
corporation) to elect the majority of its board of directors.
(4) "AREA OF INTEREST AGREEMENT" means the Agreement attached
hereto as Exhibit "B".
(5) "ASSETS" has the meaning set forth in Section 2(a) hereof,
giving due effect to the provisions of Section 2(b) hereof.
(6) "ASSUMED OBLIGATIONS" has the meaning set forth in Section
2(c) hereof.
(7) "BUSINESS DAY" means any day other than a Saturday, Sunday or
statutory holiday in Calgary, Alberta.
(8) "BUYER" has the meaning set forth in the preface hereof.
(9) "CALMAR GAS PLANT AND GAS GATHERING SYSTEM" has the meaning
set forth in Section 2(a)(i) hereof.
(10) "CLOSING" has the meaning set forth in Section 7(e) hereof.
(11) "CLOSING DATE" has the meaning set forth in Section 7(e)
hereof.
(12) "CONFIDENTIALITY AGREEMENT" means the letter confidentiality
agreement dated March 23, 1999 between Probe Exploration Inc.
and Midcoast Energy Resources Inc. respecting the subject
matter of this Agreement.
(13) "CONSIDERATION" has the meaning set forth in Section 7(a)
hereof.
(14) "CUSTOMARY POST-CLOSING CONSENTS" means consents and approvals
from Governmental Authorities that are customarily obtained
after closing in connection with a sale of ownership interests
or assets of the nature of the Assets.
(15) "DEFERRED CONTINGENT CONSIDERATION" means the additional
consideration for the Assets which may, if the Escrow
Conditions are satisfied in favour of the Seller, become
payable to the Seller in whole or in part in accordance with
the terms of Section 7(b).
(16) "DISCLOSURE SCHEDULE" means the schedule attached to this
Agreement referenced in Section 8(a) hereof and elsewhere in
this Agreement.
(17) "EFFECTIVE TIME" has the meaning set forth in Section 7(e)
hereof.
(18) "ENCUMBRANCE" means any mortgage, pledge, lien, encumbrance,
charge, or other security interest, and any restriction on
right of conveyance other than Permitted Encumbrances.
(19) "ENVIRONMENTAL LAW" or "ENVIRONMENTAL LAWS" has the meaning
given to that term in Section 9(i) hereof.
(20) "EQUIPMENT" has the meaning set forth in Section 2(a)(ii)
hereof.
(21) "ESCROW AGENT" means the escrow agent appointed pursuant to
the Escrow Agreement.
(22) "ESCROW AGREEMENT" means the agreement attached hereto as
Exhibit "D".
(23) "ESCROW CONDITIONS" means the conditions upon which the Escrow
Funds shall be paid to the Seller or the Buyer as set forth
in Section 7(c).
(24) "ESCROW FUNDS" means the monies paid to and held by the Escrow
Agent pursuant to the Escrow Agreement, including all accrued
interest thereon.
(25) "EXCLUDED ASSETS" has the meaning set forth in Section 2(b)
hereof.
(26) "EXCLUDED OBLIGATIONS" has the meaning set forth in Section
2(d) hereof.
(27) "GAS CONTRACTS" has the meaning set forth in Section 2(a)(v)
hereof.
(28) "GAS GATHERING AND TREATING AGREEMENT" means the agreement
attached hereto as Exhibit "A".
(29) "GOVERNMENTAL AUTHORITY" or "GOVERNMENTAL AUTHORITIES" means
the Commonwealth of Canada and any province, county, city or
other political subdivision, agency, court or instrumentality
thereof.
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(30) "HAZARDOUS SUBSTANCES" means all materials, substances and
wastes which are regulated under any Environmental Law or
which may form the basis for liability under any Environmental
Law.
(31) "INDEMNIFIED PARTY" has the meaning set forth in Section 13(e)
hereof.
(32) "INDEMNIFYING PARTY" has the meaning set forth in Section
13(e) hereof.
(33) "INTERCREDITOR AGREEMENT" means the agreement attached hereto
as Exhibit "E".
(34) "LAWS" means any constitution, statute, code, regulation,
rule, injunction, judgment, order, decree, ruling, charge or
other restriction of any applicable Governmental Authority.
(35) "MATERIAL ADVERSE EFFECT" means any change or effect that,
individually or in the aggregate with other changes or
effects, is, or is reasonably likely to be, adverse to the
business, operations and properties comprising the Assets, in
the aggregate amount of ten thousand dollars ($10,000.00)
Canadian or more provided that a change in the prices at which
petroleum substances may be sold or in the economic conditions
affecting the oil and gas industry generally shall not in any
event be found to constitute or result in a Material Adverse
Effect.
(36) "ORDINARY COURSE OF BUSINESS" means the ordinary course of
business consistent with the affected Party's past custom and
practice (including with respect to quantity and frequency).
(37) "PARTNERSHIP INTERESTS" means the collective interests in the
Assets owned by Probe 1997 Processing Facility Limited
Partnership and PRX 1997 Processing Facility Limited
Partnership.
(38) "PARTY" and "PARTIES" have the meaning set forth in the
preface hereof.
(39) "PERMITS" shall have the meaning set forth in Section 9(j)
hereof.
(40) "PERMITTED ENCUMBRANCES" means any of the following:
(1) any liens for taxes and assessments not yet delinquent;
(2) any obligations or duties reserved to or vested in any
municipality or other Governmental Authority to regulate
any Asset in any manner including all applicable Laws;
(3) any Customary Post-Closing Consents with respect to the
Assets;
(4) any right reserved to or vested in any governmental or
other public authority by the terms of any lease, licence,
franchise, grant or permit or by a Law to terminate any
such lease, licence, franchise, grant or permit or to
require periodic payments as a condition of the
continuance thereof;
(5) easements, rights of way, servitudes or other similar
rights in land which do not materially impair the use or
exploitation of the Assets or any of them, including,
without in any way limiting the generality of the
foregoing, rights of way and servitudes for highways,
railways, sewers, drains, gas and oil pipelines, gas and
water mains, electric light, power, telephone or cable
television conduits, poles, wires or cables;
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(6) inchoate mechanics' builders' and materialmans' liens in
respect of services rendered or goods supplied for which
payment is not yet due;
(7) the reservations, limitations, provisos and conditions in
any grants or transfers from the Crown of any of the lands
comprising any of the Assets or interests therein and
statutory exceptions to title;
(8) Encumbrances of which discharges or releases in a form
satisfactory to Buyer acting reasonably are delivered to
Buyer at Closing; and
(9) the Renaissance Claim.
(41) "PERSON" means an individual, a partnership, a corporation, an
association, a joint stock company, a trust, a joint venture,
an unincorporated organization or a governmental entity (or
any department, agency, or political subdivision thereof).
(42) "PRE-CLOSING CONSENTS" means consents and approvals from
Governmental Authorities that are required to be obtained or
which are customarily obtained prior to closing in connection
with a sale of ownership interests or assets of the nature of
the Assets.
(43) "PROBE SYSTEM GATHERING AGREEMENT" means the Agreement
attached as Exhibit "C" hereto.
(44) "RENAISSANCE CLAIM" means the claims heretofor or hereafter
advanced by Renaissance Energy Ltd. or any successor thereto
("Renaissance") arising out of the past ownership and
operation of the Leduc/Calmar Original Plant and/or its
gathering lines or a claim of ownership rights to the Calmar
Gas Plant and Gas Gathering System insofar only as such claim
may be made against the Buyer, or the Calmar Gas Plant and Gas
Gathering System, or the operation thereof or the right to use
a certain capacity thereof at a reduced rate both before and
after the Effective Time, or other similar claim, including
but not limited to those of such allegations contained in a
letter dated March 1, 1999 from Renaissance Energy Ltd. to the
Seller and a letter dated March 11, 1999 from Xxxxx & Company
to the Seller;
(45) "RIGHTS-OF-WAY" has the meaning set forth in Section 2(a)(iii)
hereof.
(46) "SELLER" has the meaning set forth in the preface hereof.
(47) "SURFACE ADJUSTMENTS" means those additions to, deletions from
or amendments of certain of the surface rights which formed a
portion of the Assets in order to facilitate the sale of the
Assets apart from the Leduc/Calmar Original Plant of which the
Buyer had knowledge prior to the date hereof.
(48) "TAX(ES)" means any federal, state, local or foreign income,
gross receipts, license, payroll, employment, excise,
severance, stamp, occupation, premium, windfall profits,
environmental, custom duties, capital stock, franchise
profits, withholding, social security (or similar),
unemployment, disability, real property, personal property,
sales, use, transfer, registration, value added, alternative
or add-on minimum, estimated or other tax of any kind
whatsoever, including any interest, penalty or addition
thereto, whether disputed or not.
(49) "TAX RETURN" means any return, declaration, report, claim for
refund, or information return or statement relating to Taxes,
including any schedule or attachment thereto, and including
any amendment thereof.
(50) "THIRD PARTY CLAIM" has the meaning set forth in Section 13(e)
hereof.
(51) "TRANSACTION DOCUMENTS" means the Confidentiality Agreement,
the Gas Gathering and Treating Agreement, the Area of Interest
Agreement, the Probe System Gathering Agreement and the Escrow
Agreement and the instruments of assignment, conveyance and
transfer of the Assets from Seller to Buyer covering the
Assets.
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(52) "TRANSITION PERIOD" has the meaning set forth in Section
11(c).
2) PURCHASE AND SALE OF THE ASSETS.
(1) ASSETS. Subject to the terms and conditions of this Agreement,
the Seller agrees to sell to the Buyer, and the Buyer agrees
to purchase from the Seller, the following (collectively, the
"ASSETS"):
(1) the Calmar gas plant and gas gathering system, compression
facilities and dehydration facilities depicted on the maps
attached hereto as Schedule 2(a)(i), together with all
valves, taps, interconnections, and flow meters attached
thereto or used in connection therewith (the "CALMAR GAS
PLANT AND GAS GATHERING SYSTEM");
(2) all equipment, whether owned or leased, including, but not
limited to, the compressor units, scrubbers, dehydration
units, tanks, traps, cathodic protection equipment, computer
systems, data files, CAD files and other personal property
which is used or held for use in connection with and is
situate in, on or appurtenant to the Calmar Gas Plant and
Gas Gathering System, (collectively, the "EQUIPMENT");
(3) all real property interests currently used by the Seller in
connection with the Calmar Gas Plant and Gas Gathering
System, including, but not limited to those fee interests,
surface leases, easements, rights-of-way, surface use
agreements and other similar agreements listed on the
attached Schedule 2(a)(iii) (collectively, the
"RIGHTS-OF-WAY");
(4) the vehicles and heavy motorized equipment, trailers and
like equipment listed on the attached Schedule 2(a)(iv);
(5) the gas service contracts, gas gathering agreements and
third party contractor or supplier agreements, together with
all amendments thereto and ratifications thereof, listed on
the attached Schedule 2(a)(v) (collectively, the "GAS
CONTRACTS");
(6) any and all other facilities, equipment, tools, office
furniture and equipment, operating supplies, gasoline or
diesel fuel, spare parts, chemicals and other tangible
assets currently located at or attached or appurtenant to
the Calmar Gas Plant and Gas Gathering System and used or
intended for use in connection therewith, whether in use or
non-use, and whether specifically described or not described
in the schedules attached to this Agreement;
(7) all books, files, maps, records and reports other than those
which are owned or licenced by third parties with
restrictions on their deliverability or disclosure by the
Seller to any assignee which is not an Affiliate of the
Seller and the Seller's tax records pertaining primarily to
the Calmar Gas Plant and Gas Gathering System and the
Equipment, including, but not limited to, all pipeline and
plant construction and testing records, vessel and pipe
certifications and weld x-rays, and reports and filings to
and with the Governmental Authorities; and
(8) all permits, licenses, orders, certificates of occupancy and
other governmental authorizations obtained by the Seller
pertaining or relating to the Calmar Gas Plant and Gas
Gathering Systems set forth on Schedule 2(a)(viii) hereto,
to the extent legally assignable or transferable.
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(2) EXCLUDED ASSETS. Notwithstanding any provision of Section
2(a) hereof, the Assets do not include, and the Seller shall
retain all right, title and interest in and to the following
assets (the "EXCLUDED ASSETS"):
(1) all cash and cash equivalents of the Seller;
(2) all accounts and notes receivable arising out of,
resulting from or relating to the business and
operations of the Assets for periods up to and
including the Effective Time, and all claims, causes of
action and rights relating thereto and proceeds
thereof; and
(3) all rights under insurance policies of the Seller and
its Affiliates relating to the Assets; and
(4) the original natural gas plant constructed by Seller
and located in close proximity to the Calmar Gas Plant
and Gas Gathering System (the "Leduc/Calmar Original
Plant") as depicted within the red line on the plat
attached hereto as Schedule 2(b)(iv), together with all
equipment comprising a part thereof and all real
property interests used or owned by Seller to the
extent comprising a part of the plant site of the
Leduc/Calmar Original Plant and not currently used in
connection with the Calmar Gas Plant and Gas Gathering
System.
(3) ASSUMED OBLIGATIONS. Except for the obligations (and the
liabilities attendant thereto) described in Section 2(d)
below, subject to the terms and conditions of, and the
closing of, this Agreement, effective as of the Effective
Time, the Buyer shall assume and shall thereafter be
responsible for and covenants to pay and discharge when due,
all obligations relating to the ownership and operation of
the Assets or the business pertaining thereto which accrue
at any time after the Effective Time (collectively, the
"ASSUMED OBLIGATIONS"). The assumption of the Assumed
Obligations by Buyer hereunder shall not be deemed to
create, confirm or give rise to any rights of any third
party, as third party beneficiary or otherwise, or to waive
any defenses available to Seller or Buyer with respect to
any such obligations; it being understood that such
assumption is for the purpose of allocated responsibility
between Seller and Buyer. Further, assumption of the Assumed
Obligations by Buyer hereunder shall not be deemed a waiver
of any misrepresentation or breach of any warranty,
covenant, agreement, or undertaking of Seller under this
Agreement even though such misrepresentation or breach gives
rise to Assumed Obligations.
(4) EXCLUDED OBLIGATIONS. Notwithstanding Section 2(c) hereof or
any other provisions of this Agreement, the Buyer is not
assuming, and the Seller shall retain and be responsible for
and covenants to pay and discharge when due, the following
(collectively, the "EXCLUDED OBLIGATIONS"):
(1) all accounts and notes payable arising out of,
resulting from or relating to the Assets for periods up
to and including the Effective Time;
(2) all indebtedness of the Seller;
(3) all Taxes arising out of, resulting from or relating to
the business and operation of Assets for whole or
partial taxable periods on or before the Effective
Time;
(4) subject always to the provisions of Section 13(d), all
obligations (and the liabilities attendant thereto)
relating to the ownership or operation of the Assets or
the business pertaining thereto which accrue at any
time prior to the Effective Time, and those obligations
(and the liabilities attendant thereto) which accrue
after the Effective Time by reason of contractual
breaches, violations of Laws, negligence, fraud,
intentional misconduct or other malfeasance of Seller
or Seller's predecessors-in-interest prior to the
Effective Time;
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(5) all liabilities and obligations arising out of,
resulting from, attributable to or connected with
Seller's ownership and/or operation of the Leduc/Calmar
Original Plant, including without limitation, the cost
of abandoning, decommissioning, disassembling and
removing it or any portion of it and the reclamation of
all real property interests comprising the plant site
and not currently used in connection with the Calmar
Gas Plant and Gas Gathering System.
3) GAS GATHERING AND TREATING AGREEMENT. Subject to the terms and conditions of
this Agreement, at the Closing, Seller and Buyer shall both execute and deliver
to the other duplicate originals of that certain "Gas Gathering and Treating
Agreement" attached hereto as Exhibit "A".
4) AREA OF INTEREST AGREEMENT. Subject to the terms and conditions of this
Agreement, at the Closing, Seller and Buyer shall both execute and deliver to
the other a duplicate original of that certain "Area of Interest Agreement"
attached hereto as Exhibit "B".
5) PROBE SYSTEM GATHERING AGREEMENT. Subject to the terms and conditions of this
Agreement, at the Closing, Seller and Buyer shall both execute and deliver to
the other a duplicate original of that certain "Probe System Gathering
Agreement" attached hereto as Exhibit "C".
6) ESCROW AGREEMENT AND INTERCREDITOR AGREEMENT. Subject to the terms and
conditions of this Agreement, at the Closing, Seller and Buyer shall both
execute and deliver to the other a duplicate original of that certain "Escrow
Agreement" attached hereto as Exhibit "D" as well as a duplicate original of
that certain "Intercreditor Agreement" attached hereto as Exhibit "E", executed
as well by the Bank of Montreal.
7) CONSIDERATION AND CLOSING.
(1) CONSIDERATION. The Buyer agrees to pay to the Seller, at the
Closing, the sum of nineteen million three hundred
thirty-three thousand three hundred and thirty-four and
no/100 dollars ($19,333,334.00) in lawful money of Canada
(the "CONSIDERATION"), payable by certified cheque or bank
draft or delivery of other immediately available funds in
form satisfactory to Seller.
(2) DEFERRED CONTINGENT CONSIDERATION The parties acknowledge
that the Consideration payable by the Buyer to the Seller
for the Assets shall be increased by an amount equal to the
sum of six hundred and sixty-six thousand six hundred and
sixty-six and no/100 dollars ($666,666.00) plus the amount
of any accrued interest thereon to which the Seller becomes
entitled in accordance with the provisions of Section 7(c),
less the amounts, if any, paid by the Escrow Agent to the
Buyer in accordance with Section 7(c) (such net amount being
herein referred to as the Deferred Contingent
Consideration). The Buyer shall remain the sole beneficial
owner of the Deferred Contingent Consideration and accrued
interest thereon until such time as the Seller becomes
entitled to the payment of all or a portion of the Deferred
Contingent Consideration and accrued interest thereon in
accordance with Section 7(c) at which time the Seller shall
become the beneficial owner of such monies to which it is
entitled at that time.
(3) ESCROW CONDITIONS. The Parties acknowledge and agree that
following payment of the Escrow Funds to the Escrow Agent in
accordance with Section 7(f), such monies shall be held by
the Escrow Agent in accordance with the terms of the Escrow
Agreement and shall be governed by the following conditions:
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(1) In the event that Buyer and Seller have no actual knowledge
on March 25, 2001, of the filing of suit against the Buyer
or its Affiliates or against the Assets in rem in connection
with the Renaissance Claims and at any time on or after
March 25, 2001, the Seller has delivered to Buyer record
searches from the Court of Queen's Bench of Alberta in each
judicial district in the Province of Alberta disclosing that
Renaissance Energy Ltd. (or any successor thereof known to
the Seller on the date of such searches) has not commenced
legal proceedings against the Buyer or any of its Affiliates
in connection with the Renaissance Claim and further
provided that no arbitration proceedings shall have been
commenced by Renaissance Energy Ltd. at any time prior to
March 25, 2001 with respect to the Renaissance Claim, the
Seller and the Buyer shall jointly advise the Escrow Agent
that this Escrow Condition 7(c)(i) has been satisfied in
favour of the Seller and shall instruct the Escrow Agent to
pay all of the Escrow Funds in his possession or under his
control at that time to the Seller.
(2) In the event that the Seller, at any time hereafter,
delivers to the Buyer a quit claim and release of any claims
that Renaissance Energy Ltd. (or any successor thereof known
to the Seller as of the date of such quit claim and release)
may have against the Buyer and its Affiliates and the Calmar
Gas Plant and Gas Gathering System, the operation thereof
and the right to utilize a certain capacity thereof at
reduced rates, both before and after the Effective Time
(other than any rights to capacity at such volumes or at
such rates not to exceed $0.55 per MCF which has been made
available by the Seller to Renaissance or any such successor
thereto being part of the capacity allocated to the Seller
in the Gas Gathering and Treating Agreement in settlement of
such claims), together with an assignment and conveyance of
the entire undivided interest Renaissance Energy Ltd. (or
any successor thereof known to the Seller at the time of
such assignment and conveyance) may hold in the Calmar Gas
Plant and Gas Gathering System, if any, each executed by
Renaissance Energy Ltd. or any such successor thereof and in
favour of the Buyer, each in a form which would be
acceptable to a prudent purchaser of the Assets acting
reasonably, the Seller and the Buyer shall, provided that
all other disbursements of the Escrow Funds to which the
Buyer is otherwise entitled pursuant to Section 7(c)(iv)
have been paid, jointly advise the Escrow Agent that this
Escrow Condition 7(c)(ii) has been satisfied in favour of
the Seller and shall instruct the Escrow Agent to pay all of
the Escrow Funds in his possession or under his control at
that time to the Seller.
(3) In the event that at any time before the Seller becomes
entitled to the payment of the whole of the Escrow Funds
remaining in the possession or control of the Escrow Agent,
legal or arbitration proceedings are commenced against the
Buyer or its Affiliates, or in the Assets in rem, by
Renaissance Energy Ltd. or any successor thereof in respect
of the Renaissance Claim, then the Escrow Funds shall remain
subject to the Escrow Agreement until the Escrow Funds have
been fully disbursed to the Seller and/or the Buyer in
accordance with Section 7(c)(iv) or otherwise agreed between
the Parties.
(4) In the event that legal or arbitration proceedings are
commenced by Renaissance Energy Ltd. or any successor
thereof against the Buyer or its Affiliates as contemplated
in Section 7(c)(iii):
(1) upon delivery to the Seller, from time to time during
the continuance of any legal or arbitration proceedings
described in Section 7(c)(iii), of evidence of the
reasonable disbursement or the assumption of liability
for the reasonable disbursement of any amounts for
which the Buyer has been indemnified by the Seller in
respect of the Renaissance Claim (including, but not
limited to, reasonable legal fees and other
out-of-pocket costs and expenses incurred by Buyer in
connection with such legal or arbitration proceedings),
the Seller and the Buyer shall jointly advise the
Escrow Agent that this Escrow Condition 7(c)(iv)(A) has
been satisfied in full or in part in favour of the
Buyer and shall instruct the Escrow Agent to pay that
specified amount of the Escrow Funds in his possession
or under his control at that time to the Buyer or as
the Buyer may direct in satisfaction of such amounts;
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(2) upon the delivery to the Seller of evidence of the
reasonable disbursement by or the imposition of
liability upon the Buyer for any amounts for which the
Buyer has been indemnified by the Seller in respect of
the Renaissance Claim required to obtain a final
settlement of such claim or to satisfy any arbitration
award or judgment which cannot be appealed which has
been made against the Buyer or adversely affects the
Calmar Gas Plant and Gas Gathering System or the
operation or capacity thereof after the Effective Time,
the Seller and the Buyer shall jointly advise the
Escrow Agent that this Escrow Condition 7(c)(iv)(B) has
been satisfied and shall jointly instruct the Escrow
Agent to pay that amount of the Escrow Funds in his
possession or under his control at that time to the
Buyer or as the Buyer may direct in satisfaction of
such amount, to pay to the Buyer any additional portion
of the Escrow Funds to which it is otherwise entitled
pursuant to Section 7(c)(iv), and to pay the balance,
if any to the Seller;
(3) In the event that any legal or arbitration proceedings
described in Section 7(c)(iii) are discontinued insofar
as they pertain to the Renaissance Claim, the Seller
and the Buyer shall jointly advise the Escrow Agent
that such proceedings have been discontinued as
aforesaid and shall jointly instruct the Escrow Agent
to pay to the Buyer any portion of the Escrow Funds to
which it is otherwise entitled pursuant to Section
7(c)(iv) and to pay the balance, if any, to the Seller.
(4) ARBITRATION. Should a dispute or disagreement arise between
the parties in respect of any matters made the subject of
Section 7(c), then either Party may refer the settlement of
the dispute to arbitration in accordance with Section 16(u).
(5) CLOSING AND THE EFFECTIVE TIME. Subject always to the
provisions of Section 14 hereof, the closing of the
transactions contemplated by this Agreement (the "CLOSING")
shall take place at the offices of Xxxxx Xxxxxxx & Xxxxxxx,
counsel to the Seller, commencing at 2:00 p.m. local time on
March 23, 1999 or such other date as the Buyer and the
Seller may mutually determine (the "CLOSING DATE"). Upon the
Closing, the transactions shall be deemed effective for all
purposes as of 8:00 a.m. local time on March 1, 1999 (the
"EFFECTIVE TIME").
(6) DELIVERIES AT THE CLOSING. At the Closing, (i) the Seller
will deliver to the Buyer the various certificates,
instruments and documents referred to in Section 12(a)
below, (ii) the Buyer will deliver to the Seller the various
certificates, instruments and documents referred to in
Section 12(b) below, (iii) the Seller will deliver to the
Buyer such instruments of assignment, conveyance and
transfer, in form and content mutually acceptable to Seller
and Buyer acting reasonably, as shall be necessary for
Seller to convey to the Assets to Buyer provided that such
documents shall not require Seller to assume or incur any
obligation or to provide any representation or warranty
beyond those contained in this Agreement, (iv) the Seller
and the Buyer will execute and deliver to the other a
duplicate original of the Gas Gathering and Treating
Agreement, the Area of Interest Agreement, the Probe System
Gathering Agreement, the Intercreditor Agreement and the
Escrow Agreement, (v) the Buyer will deliver to the Seller
the Consideration specified in Section 9(a) above and any
other monies payable by the Buyer to the Seller at Closing
hereunder, and (vi) the Buyer will deliver the Deferred
Contingent Consideration to the Escrow Agent in accordance
with and subject to the terms of the Escrow Agreement. The
Buyer acknowledges that a portion of the Consideration will
be required by the Seller to pay the purchase price due to
be paid to complete the acquisition of the Partnership
Interests by the Seller and agrees that so much of the
Consideration as is required may be used by the Seller for
that purpose provided that escrow arrangements satisfactory
to the Buyer acting reasonably are put into place to assure
the purchase of the Partnership Interests by the Buyer in
accordance with the terms hereof.
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(7) APPORTIONMENTS.
(1) All benefits and obligations of any kind and nature
accruing, payable, paid, received or receivable with respect
to the Assets (including, without limitation, maintenance,
development, capital and operating costs and payments with
respect to the Permitted Encumbrances, proceeds from the
processing of production, accounts receivable and incentives
accruing pursuant to the Law) shall be apportioned, as of
the Effective Time, between the Seller and the Buyer in
accordance with Canadian generally accepted accounting
principles, subject to the provisions of this Agreement. All
costs of whatever nature pertaining to work performed or
goods or services provided with respect to the Assets prior
to the Effective Time shall be borne by the Seller,
notwithstanding that such costs may be payable in whole or
in part after the Effective Time. Subject to the preceding
sentence, the Seller shall be entitled to a credit for all
cash advances, operating funds and similar advances to third
parties in respect of the Assets which stand to the credit
of the Seller at the Closing Date and which are hereby
assigned to the Buyer upon Closing. For further clarity, all
accounts receivable shall be deemed to have accrued when
earned (whether or not billed); any accounts payable shall
be deemed to have accrued when the events giving rise to
such accounts payable occurred (whether or not such accounts
payable were invoiced or paid on the Closing Date).
(2) Notwithstanding the provisions of Section 7 (g) (i), all
rentals and all similar payments required to preserve any of
the surface rights forming part of the Assets and all ad
valorem and property taxes levied with respect to the Assets
shall be apportioned between the Seller and the Buyer on a
per diem basis as of the Effective Time.
(3) An interim accounting and adjustment shall be conducted for
Closing, based on the Seller's and the Buyer's good faith
estimate of all adjustments to be made for the transactions
herein pursuant to this Article. An estimate of all property
taxes which are anticipated to become payable by the Buyer
in the calender year in which Closing occurs shall be
included in the interim accounting and adjusted in
accordance with Section 7 (g) (ii). The Seller shall deliver
a written statement to the Buyer of all proposed interim
adjustments a reasonable time before Closing and shall
provide reasonable assistance to the Buyer as may be
required to verify such written statement prior to Closing.
The Parties shall endeavor to conduct a final accounting and
adjustment in like manner within ninety (90) days following
the Closing Date and subject to subsections (iv) and (v) of
this Section, the Parties shall not be obligated to make any
adjustments after one (1) year following the Closing Date
unless such adjustment has been specifically requested, by
notice, within such period. All adjustments shall be settled
by payment by the Party required to make payment hereunder
within fifteen (15) days of being notified of the
determination of the amount owing.
(4) During the one (1) year period following the Closing Date,
the Buyer may audit the books, records and accounts of the
Seller respecting the Assets, for the purpose of effecting
adjustments pursuant to this Section. Such audit shall be
conducted upon reasonable notice to the Seller at the
Seller's offices during the Seller's normal business hours,
and shall be conducted at the sole expense of the Buyer. Any
claims of discrepancies disclosed by such audit shall be
made in writing to the Seller within two (2) months
following the completion of such audit, and the Seller shall
respond in writing to any claims of discrepancies within six
(6) months of the receipt of such claims. To the extent that
the Parties are unable to resolve any outstanding claims of
discrepancies disclosed by such audit within two (2) months
of the Seller's response thereto, such audit exceptions
shall be resolved pursuant to Section 16(u).
10
(5) Notwithstanding the preceding subsections of this Section
and Section 13(a), any adjustments established by a joint
venture audit or by an audit conducted pursuant to the Laws
shall be made at the time such adjustment is established,
with payment being made by the Party required to make
payment hereunder within fifteen (15) days of being notified
of the determination of the amount owing.
(6) Any adjustments made hereunder, except for revenues and
operating expenses attributable to the operation of the
Plant after the Effective Time, shall constitute an increase
or decrease, as the case may be, to the Purchase Price and
to the amount allocated to tangibles.
(8) ALLOCATION OF CONSIDERATION. Buyer and Seller agree that the
Consideration shall be allocated among the Assets as follows:
Allocation of
ASSET TYPE Consideration
---------- ($CANADIAN)
--------------
Cash (US Class I ) $ -0-
Cash - like (USClass II) $ -0-
Tangibles (US Class III) $ 19,333,333.00
Intangibles (US Class IV) $ 1.00
Goodwill and going concern
(US Class V) $ -0-
----------------
TOTAL $19,333,334.00
In the event that the amount of the Consideration is increased upon the payment
of all or a portion of the Deferred Contingent Consideration to the Seller in
accordance with the provisions of Section 7(b), the amount by which the
Consideration is increased as a result thereof shall be allocated to Tangibles
(US Class III).
8) REPRESENTATIONS AND WARRANTIES CONCERNING THE TRANSACTION.
(1) REPRESENTATIONS AND WARRANTIES OF THE SELLER. The Seller
represents and warrants to the Buyer that the statements
contained in this Section 8(a) are correct and complete as of
the date of this Agreement and will be correct and complete as
of the Closing Date (as though made then and as though the
Closing Date were substituted for the date of this Agreement
throughout this Section 8(a)).
(1) ORGANIZATION OF THE SELLER. The Seller is a corporation duly
organized, validly existing and in good standing under the laws
of the Province of Alberta.
(2) AUTHORIZATION OF TRANSACTIONS. The Seller has full power and
authority (including full corporate power and authority) to
execute and deliver this Agreement and to perform its obligations
hereunder, except that the Seller cannot convey a 100% interest
in the Assets unless the Partnership Interests are acquired by it
prior to Closing. This Agreement constitutes the valid and
legally binding obligation of the Seller, enforceable in
accordance with its terms and conditions, subject, however, to
the effects of bankruptcy, insolvency, reorganization, moratorium
or similar laws affecting creditors' rights generally, and to
general principles of equity (regardless of whether such
enforceability is considered in a proceeding in equity or at
law). The Seller need not give any notice to, make any filing
with or obtain any authorization, consent or approval of, any
Governmental Authority in order to consummate the transactions
contemplated by this Agreement, except for Customary Post-Closing
Consents and those described in Section 8(a)(ii) of the
Disclosure Schedule.
11
(3) NONCONTRAVENTION. Except for the approvals and filings specified
in Section 8(a)(ii), neither the execution and delivery of this
Agreement, nor the consummation of the transactions contemplated
hereby, will (A) violate any constitution, statute, regulation,
rule, injunction, judgment, order, decree, ruling, charge or
other restriction of any Governmental Authority to which the
Seller is subject or any provision of its charter or bylaws or
(B) except as set forth in Section 8(a)(iii)(B) of the Disclosure
Schedule conflict with, result in a breach of, constitute a
default under, result in the acceleration of, create in any
Person the right to accelerate, terminate, modify or cancel, or
require any notice under any agreement, contract, lease, license,
instrument or other arrangement to which the Seller is a party or
by which it is bound or to which any of its assets is subject,
except for such violations, defaults, breaches or other
occurrences that do not, individually or in the aggregate, have a
material adverse effect on the ability of the Seller to
consummate the transactions contemplated by this Agreement.
(4) BROKERS' FEES. The Seller has no liability or obligation to pay
any fees or commissions to any broker, finder or agent with
respect to the transactions contemplated by this Agreement for
which the Buyer could become liable or obligated.
(5) GST REGISTRATION: The Seller's GST registration No. is 104309364.
(6) CANADIAN RESIDENCY: The Seller is not a non-resident of Canada
within the meaning of the INCOME TAX ACT (Canada).
(2) REPRESENTATIONS AND WARRANTIES OF THE BUYER. The Buyer
represents and warrants to the Seller that the statements
contained in this Section 8(b) are correct and complete as of
the date of this Agreement and will be correct and complete as
of the Closing Date (as though made then and as though the
Closing Date were substituted for the date of this Agreement
throughout this Section 8(b).
(1) ORGANIZATION OF THE BUYER. The Buyer is a corporation duly
organized, validly existing, and in good standing under the laws
of Alberta.
(2) AUTHORIZATION OF TRANSACTION. The Buyer has full power and
authority (including full corporate power and authority) to
execute and deliver this Agreement and to perform its obligations
hereunder. This Agreement constitutes the valid and legally
binding obligation of the Buyer, enforceable in accordance with
its terms and conditions, subject, however, to the effects of
bankruptcy, insolvency, reorganization, moratorium or similar
laws affecting creditors' rights generally and to general
principles of equity (regardless of whether such enforceability
is considered in a proceeding in equity or at law). The Buyer
need not give any notice to, make any filing with or obtain any
authorization, consent or approval of any Governmental Authority
in order to consummate the transactions contemplated by this
Agreement, except for the approvals and filings specified in
Section 8(a)(ii) and Section 8(b)(v).
12
(3) NONCONTRAVENTION. Except for the approvals and filings specified
in Section 8(a)(ii) and Section 8(b)(v), neither the execution
and delivery of this Agreement, nor the consummation of the
transactions contemplated hereby, will (A) violate any
constitution, statute, regulation, rule, injunction, judgment,
order, decree, ruling, charge or other restriction of any
Governmental Authority to which the Buyer is subject or any
provision of its charter or bylaws or (B) conflict with, result
in a breach of, constitute a default under, result in the
acceleration of, create in any Person the right to accelerate,
terminate, modify or cancel, or require any notice under any
agreement, contract, lease, license, instrument or other
arrangement to which the Buyer is a party or by which it is bound
or to which any of its assets is subject, except for such
violations, defaults, breaches or other occurrences that do not,
individually or in the aggregate, have a material adverse effect
on the ability of the Buyer to consummate the transactions
contemplated by this Agreement.
(4) BROKERS' FEES. Neither the Buyer nor any Affiliate of it has any
liability or obligation to pay any fees or commissions to any
broker, finder or agent with respect to the transactions
contemplated by this Agreement for which the Seller could become
liable or obligated.
(5) INVESTMENT CANADA ACT: The Buyer shall comply with the INVESTMENT
CANADA ACT to the extent, if any, that it is applicable to the
transactions herein.
(6) GST REGISTRATION: The Buyer's GST registration no. is
873220222RT.
9) REPRESENTATIONS AND WARRANTIES CONCERNING THE ASSETS. The Seller represents
and warrants to the Buyer that the statements contained in this Section 9 are
correct and complete as of the date of this Agreement and will be correct and
complete as of the Closing Date (as though made then and as though the Closing
Date were substituted for the date of this Agreement throughout this Section 9).
(1) NONCONTRAVENTION. Except for the approvals and filings specified
in Section 8(a)(ii) or as set forth in Section 9(a) of the
Disclosure Schedule, neither the execution and delivery of this
Agreement, nor the consummation of the transactions contemplated
hereby, will (i) violate any constitution, statute, regulation,
rule, injunction, judgment, order, decree, ruling, charge or
other restriction of any Governmental Authority to which any
Asset is subject or (ii) conflict with, result in a breach of,
constitute a default under, result in the acceleration of, create
in any party the right to accelerate, terminate, modify or
cancel, or require any notice or trigger any rights to payment or
other compensation under any agreement, contract, lease, license,
instrument or other arrangement to which any Asset is subject (or
result in the imposition of any Encumbrance upon any of the
Assets), except where the violation, conflict, breach, default,
acceleration, termination, modification, cancellation, failure to
give notice, right to payment or other compensation, or
Encumbrance would not have a Material Adverse Effect, or
materially adversely affect the ability of the Seller to
consummate the transactions contemplated by this Agreement.
(2) TITLE TO TANGIBLE ASSETS AND CONDITION. The Seller, subject to
its acquisition of the Partnerships Interests, owns good and
marketable title to the tangible assets included in the Assets
free and clear of any and all liens, mortgages, pledges, claims,
options, encumbrances, interests or other burdens other than the
Permitted Encumbrances; The tangible assets included in the
Assets are, to the knowledge and good faith belief of the Seller,
in good operating condition and repair, ordinary wear and tear
excepted and are suitable for the use for which such assets are
currently used.
(3) FINANCIAL STATEMENTS. Section 9(c) of the Disclosure Schedule
sets forth the unaudited earnings before interest, taxes,
depreciation and amortization for the Assets for the 12-month
period ended December 31, 1998 (collectively, the "FINANCIAL
DATA"). The Financial Data is derived from the books and records
of the Seller, has been prepared in accordance with generally
accepted Canadian accounting principles consistently with past
practices of Seller in reporting the financial results of
Seller's operation of the Assets, and is true and correct and
presents fairly the financial results of Seller's operation of
the Assets at the date specified.
13
(4) MATERIAL CHANGE. Except as set forth in Section 9(d) of the
Disclosure Schedule, since January 1, 1998:
(1) to the Seller's knowledge and good faith belief, there has
not been any Material Adverse Effect;
(2) the Assets have been operated and maintained in the Ordinary
Course of Business;
(3) there has not been any physical damage, destruction or loss
to any portion of the Assets, whether or not covered by
insurance, in the aggregate amount of ten thousand dollars
($10,000.00) Canadian or more;
(4) other than with respect to the Partnership Interests in the
Assets, there has been no purchase, sale or lease of assets
included in the Assets, other than in the Ordinary Course of
Business;
(5) there has been no actual, or to the knowledge of the Seller,
pending or threatened change affecting any of the Assets
with any customers, licensors, suppliers, distributors or
sales representatives, except such as has not had a Material
Adverse Effect;
(6) there has been no contract or commitment given or made by
the Seller outside the Ordinary Course of Business;
(7) there has been no contract which grants to a Person a
preferential right to purchase any of the Assets;
(8) there has been no contract or commitment for capital
expenditures or the acquisition or construction of fixed
assets for which Buyer shall or may have responsibility for
after the Closing except as set forth in Section 9(g) of the
Disclosure Schedule;
(9) there has been no commitment of any kind made or given by
the Seller, or to the best of the Seller's knowledge and
good faith belief, the occurrence of any event, giving rise
to any contingent liability for which Buyer shall or may
have responsibility for after the Closing; and
(10) there is no contract, commitment or agreement made, given or
entered into by the Seller to do any of the foregoing,
except as expressly permitted hereby.
(5) LEGAL COMPLIANCE. The Seller (with respect to the Assets) has
complied with all applicable laws (including rules,
regulations, codes, plans, injunctions, judgments, orders,
decrees, rulings, and charges thereunder) of all Governmental
Authorities having jurisdiction (and all agencies thereof),
except where the failure to comply would not have a Material
Adverse Effect.
(6) TAX MATTERS. Except as set forth in Section 9(f) of the Disclosure Schedule:
(1) the Seller (with respect to the Assets) has filed all
material Tax Returns due that it was required to file. All
Taxes owed by the Seller (with respect to the Assets) shown
on any such Tax Return have been paid; and
(2) there is no material dispute or claim concerning any Tax
liability of the Seller (with respect to the Assets) either
(A) claimed or raised by any authority in writing or (B) as
to which the Seller has knowledge.
(7) CONTRACTS AND COMMITMENTS. Section 9(g) of the Disclosure
Schedule includes a list of all material contracts and
commitments (including, without limitation, any contract,
lease, agreement or commitment, written or oral, providing for
receipt or payment, contingent or otherwise, of ten thousand
dollars ($10,000.00) Canadian or more or which may not be
terminated without payment or penalty, or restricting the
ability of the owner of the Assets to engage in any line of
business in any geographic area, or containing any indemnity
obligation, or relating to indebtedness or guarantee
obligations) which are included in the Assets, and each such
contract is in full force and effect, except where the failure
to be in full force and effect would not have a Material
Adverse Effect. The Seller has performed all obligations
required to be performed by it to date under the contracts,
and is not in default under any obligation of any such
contracts, except when such default would not have a Material
Adverse Affect. To the knowledge of the Seller, no other party
to any contract is in default thereunder.
14
(8) LITIGATION. Section 9(h) of the Disclosure Schedule sets forth
each instance in which any of the Assets (i) is subject to any
outstanding injunction, judgment, order, decree or ruling or
(ii) to the knowledge and good faith belief of the Seller, is
the subject of any action, suit, proceeding, hearing or
investigation of, in or before any court or quasi-judicial or
administrative agency of any federal, state, local or foreign
jurisdiction, or is to the knowledge and good faith belief of
the Seller, subject to any pending or threatened claim, demand
or notice of violation or liability from any party, except
where any of the foregoing would not have a Material Adverse
Effect.
(9) ENVIRONMENTAL MATTERS. Except as set forth in Section 9(i) of the Disclosure
Schedule:
(1) to the Seller's knowledge and good faith belief, the Seller
(with respect to the Assets) is and has been in compliance
with all applicable laws (including common law), ordinances,
orders, agreements, decisions, orders, rules and regulations
of Governmental Authority having jurisdiction relating to
protection or enhancement of human health or the environment
(collectively, the "ENVIRONMENTAL LAWS" and individually an
"ENVIRONMENTAL LAW"), except for such instances of
noncompliance that individually or in the aggregate do not
have a Material Adverse Effect;
(2) the Seller (with respect to the Assets) has obtained all
permits, licenses, franchises, authorities, consents and
approvals, and has made all filings and maintained all
material information, documentation, and records, as
necessary under applicable Environmental Laws for operating
the business conducted with the Assets as it is presently
conducted, and to the Seller's knowledge and good faith
belief all such permits, licenses, franchises, authorities,
consents, approvals, and filings remain in full force and
effect, except for such matters that individually or in the
aggregate do not have a Material Adverse Effect;
(3) there are to the Seller's knowledge, no pending or
threatened claims, demands, actions, administrative
proceedings, lawsuits or investigations against the Seller
(with respect to the Assets), and the Seller (with respect
to the Assets) to the Seller's knowledge is not subject to
any injunction, judgment, order, decree or ruling under any
Environmental Laws;
(4) one of the real property included in the Assets and, to the
Seller's knowledge, no off-site location used for the
treatment, storage or disposal of waste from any Asset, is:
(A) to the knowledge of the Seller, listed by any
Governmental Authority as requiring remedial action; (B) to
the knowledge of the Seller, being considered for possible
inclusion on a list by any Governmental Authority for
remedial action; or (C) to the knowledge of the Seller, the
subject of any action or investigation that may lead to
claims under any Environmental Law;
(5) no part of any of the real property included in the Assets
is now being used, or has been used, as a landfill, dump or
other disposal area for Hazardous Substances other than that
portion on which the Acid Gas Disposal Well is located and
the wellbore thereof; and
(6) the Seller has not received any notice or other
communication that it (with respect to the Assets) is or may
be a potentially responsible party or otherwise liable under
any Environmental Law in connection with any site actually
or allegedly containing or used for the treatment, storage
or disposal of Hazardous Substances.
15
(10) PERMITS. Except as set forth in Section 9(j) of the
Disclosure Schedule, the Seller owns or holds all
franchises, licenses, permits, consents, approvals and
authorizations of all Governmental Authorities necessary for
the conduct of the business and operations conducted with
the Assets (collectively, the "PERMITS"), except for Permits
whose absence would not have a Material Adverse Effect. Each
Permit is in full force and effect, and to the Seller's
knowledge and good faith belief, the Seller is in compliance
with all of its obligations with respect to each Permit,
except where the failure to be in full force and effect or
to be in compliance would not have a Material Adverse
Effect, and (ii) to the knowledge of the Seller, no event
has occurred that permits, or upon the giving of notice or
the lapse of time or otherwise would permit, revocation or
termination of any Permit except such as in the aggregate
would not have a Material Adverse Effect.
(11) NO "TAKE OR PAY". Except as expressly set forth in Section
9(k) of the Disclosure Schedule, there are currently no
arrangements under any of the Gas Contracts by which Buyer
will be obligated by virtue of a prepayment arrangement, a
"take-or-pay" arrangement, a production payment, or any
other arrangement, to sell, transport or deliver
hydrocarbons at some future time without then or thereafter
receiving full payment therefor, or to make payment at some
future time for hydrocarbons or the transportation or the
delivery of hydrocarbons previously purchased or
transported.
(12) PIPELINE RIGHTS-OF-WAY. Other than the Partnership
Interests, Seller has not sold or assigned any
Rights-of-Way, in whole or in part, or any undivided
interest therein, to any Person whatsoever, except as
expressly disclosed in Section 9(l) of the Disclosure
Schedule. (1)
(13) GAS IMBALANCES. Except as expressly set forth in Section
9(m) of the Disclosure Schedule, there are no gas imbalances
for which the Buyer shall have any liability or other
obligation after the Effective Time.
(14) TARIFFS. Except as expressly set forth in Section 9(n) of
the Disclosure Schedule, to the extent that the operations
with respect to the Assets are subject to a tariff approved
by any Governmental Agency, those operations are in
compliance with each such tariff, except where such
noncompliance would not, individually or in the aggregate,
have a Material Adverse Effect. Seller has no knowledge of
any refund claim of any customers or any refund obligation
imposed by Governmental Authority, by Laws, by contract, or
by any other means, and, except as expressly set forth in
Section 9(n) of the Disclosure Schedule, has no knowledge of
any facts or circumstances which would give rise to any such
refund claim or refund obligation. Except as expressly set
forth, there are no customer complaints to Seller's
knowledge, pending or threatened, which would, either
individually or in the aggregate, have a Material Adverse
Effect.
(15) NO PARTNERSHIP. The Assets are not currently subject to any
partnership or joint venture except as disclosed in Section
9(o) of the Disclosure Schedule.
(16) NO CURTAILMENTS OR OTHER CHANGES. Except as expressly set
forth in Section 9(p) of the Disclosure Schedule, Seller
does not have any knowledge of any threatened or planned
plant closings of customers served by the Assets or reason
to believe that there will likely be curtailment by such
customers of future gas purchases by such customers, or any
knowledge of or reason to believe that there will be any
change in the business pertaining to the Assets or of other
Persons that could have a Material Adverse Effect upon the
presently existing economics of the business pertaining to
the Assets, including without limitation, any change in
tariffs or transportation rates with respect to any
pipelines of Persons that compete or could reasonably
compete with the existing or potential customers served by
the Assets.
(17) REAL PROPERTY. Seller has no knowledge of any threatened
termination or reduction of the current access to or from
the real property comprising a part of the Assets to
existing roads or the sewer or other utility services
presently serving such real property other than the Surface
Adjustments. Seller has not received any notice that its
real property is in violation of any zoning, laws, statutes,
ordinances or building or use restrictions applicable to
such real property or which prohibit the use of such real
property for its current use or uses with respect to the
Assets.
16
(18) PATENTS, COPYRIGHTS, TRADEMARKS, ETC. Except as expressly
set forth in Section 9(r) of the Disclosure Schedule, to the
Seller's knowledge, the present conduct of business with
respect to the Assets does not conflict with, infringe upon
or violate the patents, trademarks, servicemarks, trade
names, copyrights or trade secrets or other intangible
assets of any other person or entity, and Seller has not
received any notice of any infringement thereof, except
where such conflicts, infringements and violations would
not, either individually or in the aggregate, have a
Material Adverse Effect.
(19) NO LEASES. Except as expressly set forth in Section 9(s) of
the Disclosure Schedule, all the equipment and other
tangible property which are material to the operations of
the Assets is owned by the Seller and not leased or rented.
(20) MATERIAL MISSTATEMENTS OR OMISSIONS. No statement,
representation, warranty or covenant made by the Seller in
this Agreement or in any Exhibit or Schedule to this
Agreement contains or will contain any untrue statement of
material fact or to the Seller's knowledge and good faith
belief, omits or will omit to state any material fact
necessary in order to make the statements herein or therein,
in the light of the circumstances under which they were
made, not misleading.
(21) UNDISCLOSED LIABILITIES. Except as expressly set forth on
Section 9(u) of the Disclosure Schedule or otherwise
provided herein, Seller has no knowledge of any facts or
circumstances with respect to the ownership or operation of
the Assets or the businesses conducted with respect thereto
as to which there are, or are likely to be, liabilities
(fixed or contingent) which have NOT been otherwise
disclosed by Seller to Buyer in the Disclosure Schedule.
10) PRE-CLOSING COVENANTS. The Parties agree as follows with respect to
the period between the date of this Agreement and the
Closing:
(1) GENERAL. Each Party will use its reasonable best efforts to
take all action and to do all things necessary, proper or
advisable in order to consummate and make effective the
transactions contemplated by this Agreement (including
satisfaction, but not waiver, of the closing conditions set
forth in Section 12 hereof).
(2) NOTICES AND CONSENTS. The Seller will give any notices to
third parties, and will use its reasonable best efforts to
obtain the third party consents necessary to effect the
assignment of all Gas Contracts, Rights-of-Way and other
Assets to Buyer. If Seller is unable to obtain any necessary
third party consents to the assignment of any Gas Contracts
or Rights-of-Way, then Seller shall hold such Gas Contract
or Right-of-Way for the benefit of Buyer after the Closing
for its term and Seller shall provide Buyer with the
economic benefits thereof until such Gas Contract or
Right-of-Way is terminated. Insofar as the Seller holds any
Gas Contracts or Rights-of -Way for the benefit of the Buyer
after Closing and takes actions with respect thereto on
behalf of the Buyer pursuant to this Section, the Seller
shall be deemed to have been the agent of the Buyer
hereunder. The Buyer ratifies all actions taken by the
Seller or refrained to be taken by the Seller pursuant to
the terms of this Section in such capacity during such
period, with the intention that all such actions shall be
deemed to be those of the Buyer. Insofar as the Seller
exercises rights or takes any actions as the agent of the
Buyer pursuant to this Section, the Seller may require the
Buyer to secure the costs to be incurred by the Seller on
behalf of the Buyer in such manner as may be reasonably
appropriate in the circumstances. The Buyer shall indemnify
the Seller and its directors, officers, servants, agents or
employees against all liabilities, losses, costs (including
legal costs on a solicitor-client basis), claims or damages
which the Seller or its directors, officers, servants,
agents or employees may suffer or incur as a result of
holding any of the Gas Contracts or Rights-of-Way as the
agent of the Buyer pursuant to this Section insofar as such
liabilities, losses, costs, claims or damages are not a
direct result of the gross negligence or wilful misconduct
of the Seller or its directors, officers, servants, agents
or employees. An action or omission of the Seller or its
directors, officers, servants, agents or employees shall not
be regarded as gross negligence or wilful misconduct,
however, to the extent it was done or omitted to be done in
accordance with the instructions of or with the concurrence
of the Buyer. Each of the Parties will give any notices to,
make any filings with, and use its reasonable best efforts
to obtain any authorizations, consents and approvals of
Governmental Authorities which are required prior to
Closing.
17
(3) OPERATION OF BUSINESS. Other than the acquisition of the
Partnership Interests or actions taken or transactions entered
into in order to effect a settlement of the Renaissance Claim
which may be undertaken with the prior consent of the Buyer
which consent shall not be unreasonably withheld, the Seller
will not, without the consent of the Buyer, engage in any
practice, take any action or enter into any transaction with
respect to the Assets outside the Ordinary Course of Business.
Without limiting the generality of the foregoing, the Seller
will not, without the consent of the Buyer, do any of the
following with respect to the Assets:
(1) cause or allow any of the Assets to become subject to an
Encumbrance except for Permitted Encumbrances;
(2) (A) acquire (including, without limitation, by merger,
consolidation or acquisition of stock or assets) any
corporation, partnership or other business organization or
any division thereof or any material amount of assets other
than in the Ordinary Course of Business; (B) sell, lease or
otherwise dispose of any property or assets, other than
sales of goods or services in the Ordinary Course of
Business; or (C) enter into or amend a contract, agreement,
commitment or arrangement with respect to any matter set
forth in this paragraph (ii); or
(3) amend in any respect any contract or agreement relating to
the Assets, or terminate any such contract or agreement
other than in the Ordinary Course of Business.
provided however, the Seller may take any such action or enter
into any such commitments without the prior consent of the
Buyer, if the Seller reasonably determines that such actions
are necessary for the protection of life or property, in which
case the Seller shall promptly notify the Buyer of such
intention or actions and the Seller's estimate of the costs
and expenses associated therewith.
(4) FULL ACCESS. The Seller will, subject to all contractual or
fiduciary obligations and limits, permit representatives of
the Buyer to have full access at all reasonable times, and in
a manner so as not to interfere with the normal business
operations of the Seller, to all premises, properties,
personnel, books, records (including tax records), contracts
and documents of or pertaining to the Assets.
(5) NOTICE OF DEVELOPMENTS. Each Party will give prompt written
notice to the other of any Material Adverse Effect of which it
has knowledge causing a breach of any of its representations
and warranties. No disclosure by any Party pursuant to this
subsection 8(e), however, shall be deemed to amend or
supplement any Schedule hereto or to prevent or cure any
misrepresentation or breach of warranty.
(6) CASUALTY LOSS. If, prior to the Closing, any portion of the
Assets have been or are damaged or destroyed by fire, flood,
storm or other casualty or shall be taken by condemnation or
under the right of eminent domain (all of which are herein
called "Casualty Loss"), and the Casualty Loss is NOT a
Material Adverse Effect, then Buyer shall bear the --- risk
of loss, provided, however, Seller shall, at the Closing,
pay by means of an adjustment to the Consideration to Buyer,
all sums paid to Seller by persons or governmental bodies by
reason of the damage, destruction or taking of such assets
and shall assign, transfer and set over unto Buyer all of
the right, title and interest of Seller in and to any unpaid
proceeds or other payments from third parties arising out of
such destruction or taking, and all claims and chooses in
action with respect to such destruction or taking; further,
provided, however, if the Casualty Loss is a Material
Adverse Effect and such Assets are not repaired or replaced
and the business operation restored to its original state by
Seller prior to Closing, then Seller shall bear the risk of
loss, and Buyer shall have the right to terminate this
Agreement unless Buyer and Seller mutually shall have agreed
upon an appropriate adjustment to the Consideration which
reflects not only the cost of repair or replacement of the
damaged, destroyed or taken assets, but also includes an
amount for the economic losses incurred or which will be
incurred by Buyer to such business operation. If this
Agreement is terminated in accordance with this Section
10(f) prior to Closing, then except for the confidentiality
provisions contained in the Confidentiality Agreement, the
Parties shall be released from all of their obligations
under this Agreement. If this Agreement is so terminated,
the Buyer shall promptly return to the Seller all materials
delivered to the Buyer by the Seller hereunder, together
with all copies of them that may have been made by or for
the Buyer. Prior to Closing, Seller shall not voluntarily
compromise, settle or adjust any amount payable by reason of
any Casualty Loss which has been assigned to Buyer pursuant
to the foregoing provisions of this Section 10(f).
18
11) POST-CLOSING COVENANTS. The Parties agree as follows:
(1) GENERAL. In case at any time after the Closing any further
action is necessary to carry out the purposes of this
Agreement, each of the Parties will take such further action
(including the execution and delivery of such further
instruments and documents) as the other Party reasonably may
request, all at the sole cost and expense of the requesting
Party (unless the requesting Party is entitled to
indemnification therefor under Section 13 below).
(2) LITIGATION SUPPORT. In the event and for so long as any
Party actively is contesting or defending against any
action, suit, proceeding, hearing, investigation, charge,
complaint, claim or demand in connection with (i) any
transaction contemplated under this Agreement or (ii) any
fact, situation, circumstance, status, condition, activity,
practice, plan, occurrence, event, incident, action, failure
to act or transaction on or before the Closing Date
involving any Asset, the other Party shall cooperate with
the contesting or defending Party and its counsel in the
defense or contest, make available its personnel, and
provide such testimony and access to its books and records
as shall be commercially reasonable in connection with the
defense or contest, all at the sole cost and expense of the
contesting or defending Party (unless the contesting or
defending Party is entitled to indemnification therefor
under Section 13 below).
(3) TRANSITION PERIOD OFFICE SPACE. The Seller shall and does
hereby, for a period of not less than one (1) month and not
more than three (3) months after the Closing Date (the
"TRANSITION PERIOD"), grant to the Buyer a licence to use
and occupy office space being comprised of one office during
normal business hours of the Seller for the purpose of
conducting normal business operations of the Buyer in
connection with the Assets.
(4) DELIVERY AND RETENTION OF RECORDS. On or promptly after the
Closing Date, the Seller will deliver or cause to be
delivered to the Buyer all files, records, information and
data relating to the Assets (other than Tax Returns, Tax
work papers and other Tax records and information) that are
in the possession or control of the Seller and its
Affiliates (together with all of the Seller's and its
Affiliates' contractual rights to request other such files,
records, information and data from any third party) (the
"Records"). The Buyer agrees to (i) hold the Records and not
to destroy or dispose of any thereof for a period of six
years from the Closing Date, provided that, if it desires to
destroy or dispose of such Records during such period, it
will first offer in writing at least 60 days before such
destruction or disposition to surrender them to the Seller
and if the Seller does not accept such offer within 20 days
after receipt of such offer, the Buyer may take such action
and (ii) following the Closing Date to afford the Seller,
its accountants and counsel, during normal business hours,
upon reasonable request, at any time, full access to the
Records and to the Buyer's employees to the extent that such
access may be requested for any legitimate purpose at no
cost to the Seller (other than for reasonable out-of-pocket
expenses); provided, however, that such access will not be
construed to require the disclosure of Records that would
cause the waiver of any attorney-client, work product or
like privilege; provided, further, that in the event of any
litigation nothing herein shall limit either Party's rights
of discovery under applicable law. The Buyer shall have the
same rights, and the Seller shall have the same obligations,
as are set forth in this Section with respect to any copies
of the Records of the Seller pertaining to the Assets that
are retained by the Seller, with the exception of Tax
Returns, Tax work papers and other Tax records and
information retained by the Seller, provided that such
access will not be construed to require the disclosure of
Records that would cause the waiver of any attorney-client,
work product or like privilege.
(5) MAIL; PAYMENTS. Each Party hereby authorizes the other from
and after the Closing to receive and open all mail and other
communications relating to the business conducted with the
Assets, and subject to the terms hereof, to act with respect
to such communications in such manner as that Party may
elect to the extent that such communications relate to the
rights and obligations of such Party with respect to the
Assets. If any communication does not relate exclusively to
the rights and obligations of the recipient with respect to
the Assets, the recipient shall forward the original or a
copy of such communication promptly to the other Party. Each
Party shall promptly deliver to the other any moneys, checks
or other instruments of payment received by that Party to
which the other Party is entitled hereunder.
19
12) CONDITIONS TO OBLIGATION TO CLOSE.
(1) CONDITIONS TO OBLIGATION OF THE BUYER. The obligation of the
Buyer to consummate the transactions to be performed by it
in connection with the Closing is subject to satisfaction of
the following conditions:
(1) the representations and warranties set forth in Section
8(a) and Section 9 above shall be true and correct in
all material respects at and as of the Closing Date;
(2) the Seller shall have performed and complied with all
of its covenants hereunder in all material respects
through the Closing;
(3) there shall not be any injunction, judgment, order,
decree or ruling in effect preventing consummation of
the transactions contemplated by this Agreement;
(4) the Seller shall have delivered to the Buyer a
certificate to the effect that each of the conditions
specified above in subsections 12(a)(i)-(iii) is
satisfied in all respects;
(5) the Parties shall have received all other
authorizations, consents, and approvals of Governmental
Authorities referred to in subsection 8(a)(ii) above
(other than Customary Post-Closing Consents) and in
Section 9(a) of the Disclosure Schedule, if any, and
all material consents, approvals and waivers of third
parties, if any, required for Seller's assignment of
any of the Gas Contracts, Rights-of-Way or other Assets
to Buyer other than those that are customarily obtained
after Closing in connection with a sale of ownership
interests or assets of the nature of the Assets;
(6) all actions to be taken by the Seller in connection
with consummation of the transactions contemplated
hereby and all certificates, instruments and other
documents required to effect the transactions
contemplated hereby will be reasonably satisfactory in
form and substance to the Buyer; and
(7) the Seller shall have completed the acquisition of the
Partnership Interests and the Buyer shall be satisfied
that it will be acquiring title and ownership of a 100%
interest in the Assets, free and clear of all title
defects and Encumbrances other than the Permitted
Encumbrances.
The Buyer may waive any condition specified in this Section
12(a) if it executes a writing so stating at or before the
Closing.
(2) CONDITIONS TO OBLIGATION OF THE SELLER. The obligation of the
Seller to consummate the transactions to be performed by it in
connection with the Closing is subject to satisfaction of the
following conditions:
(1) the representations and warranties set forth in Section
3(b) above shall be true and correct in all material
respects at and as of the Closing Date;
(2) the Buyer shall have performed and complied with all of
its covenants hereunder in all material respects
through the Closing;
(3) there shall not be any injunction, judgment, order,
decree or ruling in effect preventing consummation of
the transactions contemplated by this Agreement;
(4) the Buyer shall have delivered to the Seller a
certificate to the effect that each of the conditions
specified above in subsections 12(b)(i)-(iii) is
satisfied in all respects;
20
(5) the Parties shall have received all other
authorizations, consents, and approvals of Governmental
Authorities referred to in subsection 8(a)(ii) above
(other than Customary Post-Closing Consents) and in
Section 9(a) of the Disclosure Schedule, if any and all
material consents, approvals and waivers of third
parties, if any, required for Seller's assignment of
any of the Gas Contracts, Rights-of-Way or other Assets
to Buyer other than those that are customarily obtained
after closing in connection with a sale of ownership
interests or assets of the nature of the Assets;
(6) all actions to be taken by the Buyer in connection with
consummation of the transactions contemplated hereby
and all certificates, instruments and other documents
required to effect the transactions contemplated hereby
will be reasonably satisfactory in form and substance
to the Seller;
(7) the Seller shall have completed the acquisition of the
Partnership Interests on terms and conditions
satisfactory to the Seller; and
(8) there shall, prior to the Closing, be no sale, transfer
or other disposition of any of the shares of the Seller
which has the effect of altering the effective control
of the Seller nor shall any Person other than the
Seller have made a take-over-bid in respect of shares
of the Seller.
The Seller may waive any condition specified in this Section
12(b) if it executes a writing so stating at or before the
Closing.
(3) In the event any of the conditions in Sections 12(a) or 12(b)
has not been satisfied at or before the Closing Date and such
condition has not been waived by the Party for the benefit of
which such condition has been included, such Party may by
written notice to the other Party, elect without prejudice to
any other rights or remedies it may have available to it, to
terminate this Agreement or to treat this Agreement as being
binding and enforceable. However, a Party may not terminate
this Agreement in such manner after Closing, and its remedies
thereafter, if any, with respect to the failure to satisfy
such condition shall be limited to damages.
13) REMEDIES FOR BREACHES OF THIS AGREEMENT.
(1) SURVIVAL OF REPRESENTATIONS, WARRANTIES AND COVENANTS.
All of the representations and warranties of the
Parties contained in this Agreement shall survive the
Closing and continue in full force and effect for a
period of twenty-four (24) months, for the benefit of
the Party for which such representations and warranties
were made. Other than a claim or action based on the
fraud of a Party, no claim or action shall be commenced
with respect to a breach of any such representation or
warranty, unless, within such period, written notice
specifying such breach in reasonable detail has been
provided to the Party which made such representation or
warranty. The covenants contained in this Agreement to
be performed after the Closing shall survive the
Closing indefinitely.
(2) INDEMNIFICATION PROVISIONS FOR BENEFIT OF THE BUYER.
Subject to Sections 13 (a), (c) and 13 (d) and provided
that Closing has occurred, the Seller shall:
1. be liable to the Buyer for all Adverse
Consequences whatsoever which the Buyer may
suffer, sustain, pay or incur; and
2. indemnify and save the Buyer and its directors,
officers, servants, agents and employees harmless
from and against all Adverse Consequences
whatsoever which may be brought against or
suffered by the Buyer, its directors, officers,
servants, agents or employees or which they may
sustain, pay or incur;
21
(1) as a direct result of any matter or thing
arising out of, resulting from or
attributable to a representation or warranty
contained in Section 8 (a) or Section 9 being
inaccurate or untruthful or Seller's breach
of a covenant to Buyer under this Agreement
or the Transaction Documents;
(2) as a direct result of any matter or thing
arising out of, resulting from or
attributable to or connected with the
ownership and/or operation of the Assets
(whether by Seller or Seller's predecessors
in interest) prior to the Effective Time; or
(i) as a direct result of the Renaissance Claim;
except any Adverse Consequences to the extent that
the same are caused by the gross negligence or wilful
misconduct of the Buyer, its directors, officers,
servants, agents, employees or assigns. The indemnity
granted by the Seller herein, however, is not a title
warranty and does not provide either an extension of
any representation or warranty contained in this
Agreement or an additional remedy with respect to the
Seller's breach of such a representation or warranty.
(3) INDEMNIFICATION PROVISIONS FOR BENEFIT OF THE SELLER. Provided that Closing
has occurred, the Buyer shall:
1. be liable to the Seller for all Adverse Consequences that the
Seller may suffer, sustain, pay or incur; and
2. indemnify and save the Seller and its directors, officers,
servants, agents and employees harmless from and against all
Adverse Consequences which may be brought against or suffered by
the Seller, its directors, officers, servants, agents or
employees or which they may sustain, pay or incur;
(i) as a direct result of any matter or thing arising out
of, resulting from or attributable to a representation
or warranty contained in Section 8(b) being inaccurate
or untruthful or Buyer's breach of a covenant to Seller
under this Agreement or the Transaction Documents; or
(ii) as a direct result of any matter or thing arising out
of, resulting from or attributable to or connected with
the ownership and/or operation of the Assets whether by
Buyer or Buyer's successors in interest and occurring
or accruing after the Effective Date;
except any Adverse Consequences to the extent that the same
are caused by the gross negligence or wilful misconduct of the
Seller, its directors, officers, servants, agents, employees
or assigns. The responsibility prescribed by this Section
however, does not provide either an extension of any
representation or warranty contained in this Agreement or an
additional remedy for the Buyer's breach of such a
representation or warranty.
(4) ASSETS ACQUIRED ON "AS IS" BASIS
Notwithstanding the foregoing provisions of Section 13(b), the Buyer
acknowledges that it is acquiring the Assets on an "as is" basis, as of
the Effective Time. The Buyer acknowledges that it is familiar with the
present condition of the Assets, that the Seller has provided the Buyer
with a reasonable opportunity to inspect the Assets at the sole cost,
risk and expense of the Buyer (insofar as the Seller could reasonably
provide such access) and that the Buyer is not relying upon any
representation or warranty of the Seller as to the condition,
environmental or otherwise, of the Assets, except as is specifically
made pursuant to Section 8(a) or Section 9.
22
(5) MATTERS INVOLVING THIRD PARTIES.
(1) If any third party shall notify any Party (the "INDEMNIFIED
PARTY") with respect to any matter (a "THIRD PARTY CLAIM")
that may give rise to a claim for indemnification against
any other Party (the "INDEMNIFYING PARTY") under this
Section 13, then the Indemnified Party shall promptly (and
in any event within five (5) Business Days after receiving
notice of the Third Party Claim) notify the Indemnifying
Party thereof in writing.
(2) The Indemnifying Party will have the right to assume and
thereafter conduct the defense of the Third Party Claim with
counsel of its choice reasonably satisfactory to the
Indemnified Party; provided, however, that the Indemnifying
Party will not consent to the entry of any judgment or enter
into any settlement with respect to the Third Party Claim
without the prior written consent of the Indemnified Party
(not to be withheld unreasonably) unless the judgment or
proposed settlement involves only the payment of money
damages and does not impose an injunction or other equitable
relief upon the Indemnified Party.
(3) Unless and until the Indemnifying Party assumes the defense
of the Third Party Claim as provided in subsection 13(e)(ii)
above, however, the Indemnified Party may defend against the
Third Party Claim in any manner it reasonably may deem
appropriate.
(4) In no event will the Indemnified Party consent to the entry
of any judgment or enter into any settlement with respect to
the Third Party Claim without the prior written consent of
the Indemnifying Party which consent shall not be withheld
unreasonably.
14) TERMINATION.
(1) TERMINATION OF AGREEMENT. The Parties may terminate this Agreement as
provided below:
(1) the Buyer and the Seller may terminate this Agreement by
mutual written consent at any time before the Closing;
(2) the Buyer may terminate this Agreement by giving written
notice to the Seller at any time before Closing (A) in the
event the Seller has breached any representation, warranty
or covenant contained in this Agreement in any material
respect, the Buyer has notified the Seller of the breach,
and the breach has continued without cure for a period of
ten (10) days after the notice of breach, or (B) if the
Buyer has elected to terminate this Agreement in accordance
with Section 12 (c), and
(3) the Seller may terminate this Agreement by giving written
notice to the Buyer at any time before the Closing (A) in
the event the Buyer has breached any representation,
warranty or covenant contained in this Agreement in any
material respect, the Seller has notified the Buyer of the
breach, and the breach has continued without cure for a
period of 10 days after the notice of breach, or (B) if the
Seller has elected to terminate this Agreement in accordance
with Section 12(c).
(2) EFFECT OF TERMINATION. If any Party terminates this Agreement
pursuant to Section 16(a) above, all rights and obligations of
the Parties hereunder shall terminate without any liability of
either Party to the other Party (except for any liability of
any Party then in breach); provided, however, that the
confidentiality provisions contained in the Confidentiality
Agreement shall survive termination.
15) PROHIBITED ACTIVITIES OF SELLER. In order to protect the goodwill and
business interests of the Buyer as to its utilization of the Assets for a period
of twenty (20) years following the Closing, Seller covenants and agrees that it
and its Affiliates, now or hereafter existing will not:
23
(1) directly or indirectly, request or advise any party to any Gas
Contract pursuant to which Seller is or Buyer or its Affiliates will
after Closing be, gathering or treating any natural gas owned or
controlled by a Person other than the Seller or its Affiliates at or
through the Calmar Gas Plant and Gas Gathering System, now or
hereafter existing, to withdraw, curtail or cancel any service to or
from the Buyer or its Affiliates under the terms of such contract;
(2) aid, abet or otherwise assist any person, firm or corporation seeking
to interfere with the Buyer's or its Affiliates' relationship with the
parties to, or the term of, any Gas Contract pursuant to which Seller
is or Buyer will after Closing be, gathering or treating any natural
gas owned or controlled by a Person other the Seller or its Affiliates
at or through the Calmar Gas Plant and Gas Gathering System, now or
hereafter; or
(3) acting alone or in conjunction with others, directly or indirectly,
engage in competition with the Buyer or its Affiliates with respect to
any Persons to and in respect of the present Gas Contracts pursuant to
which Seller is or Buyer will after Closing be, gathering or treating
any natural gas owned or controlled by a Person other the Seller or
its Affiliates at or through the Calmar Gas Plant and Gas Gathering
System, or their successors-in-interest, whether for its own account
or for others.
16) MISCELLANEOUS.
(1) PRESS RELEASES AND PUBLIC ANNOUNCEMENTS. The Parties may issue press
releases upon the execution of this Agreement, provided that each
Party shall submit to the other Party a copy of its intended press
release not less than twenty-four (24) hours prior to the time of
release and the other party shall have provided written approval of
such press release which approval shall not be unreasonably withheld.
No Party shall issue any press release or make any public announcement
relating to the subject matter of this Agreement during the period
after the press release hereinbefore mentioned and before the Closing
without the prior written approval of the other Party which approval
shall not be unreasonably withheld; provided, however, that any Party
may make any public disclosure it believes in good faith is required
by applicable law or any listing or trading agreement concerning its
publicly traded securities or in order to enable a Party to fulfill
its obligations in respect of any consents or approvals required
hereunder (in which case the disclosing Party will use its reasonable
best efforts to advise the other Party before making the disclosure).
(2) NO THIRD PARTY BENEFICIARIES. This Agreement shall not confer any
rights or remedies upon any Person other than the Parties and their
respective successors and permitted assigns.
(3) SUCCESSION AND ASSIGNMENT. This Agreement shall be binding upon and
inure to the benefit of the Parties named herein and their respective
successors and permitted assigns. No Party may assign either this
Agreement or any of its rights, interests or obligations hereunder
without the prior written approval of the other Party, except that the
Buyer may assign its rights hereunder to any wholly owned subsidiary
of the Buyer, provided that no such assignment shall relieve the Buyer
of any of its liabilities or obligations hereunder.
(4) COUNTERPARTS. This Agreement may be executed in counterparts, each of
which shall be deemed an original but which together will constitute
one and the same instrument.
(5) HEADINGS. The section headings contained in this Agreement are
inserted for convenience only and shall not affect in any way the
meaning or interpretation of this Agreement.
(6) NOTICES. All notices, requests, demands, claims, and other
communications hereunder will be in writing. Any notice, request,
demand, claim, or other communication hereunder shall be deemed duly
given two business days after it is sent by registered or certified
mail, return receipt requested, postage prepaid, and addressed to the
intended recipient as set forth below:
24
IF TO THE BUYER: Midcoast Canada Operating Corporation
c/o Midcoast Energy Resources, Inc.
0000 Xxxxxxxxx Xxxxxx,
Xxxxx 0000
Xxxxxxx, Xxxxx 00000
Attn: General Counsel
Fax: (000) 000-0000
IF TO THE SELLER:Probe Exploration Inc.
0000, 000-0xx Xxxxxx
Xxxxxxx, Xxxxxxx X0X 0X0
Attn: President
Fax: (000) 000-0000
Any Party may send any notice, request, demand, claim or other
communication hereunder to the intended recipient at the
addresses set forth above using any other means (including
personal delivery, expedited courier, messenger service,
telecopy, ordinary mail, or electronic mail), but no such
notice, request, demand, claim or other communication shall be
deemed to have been duly given unless and until it actually is
received by the intended recipient. Any Party may change the
address to which notices, requests, demands, claims, and other
communications hereunder are to be delivered by giving the
other Party notice in the manner herein set forth.
(7) GOVERNING LAW. This Agreement shall be governed by and
construed in accordance with the domestic laws of the
Commonwealth of Canada without giving effect to any choice or
conflict of law provision or rule (whether of the Commonwealth
of Canada or any other jurisdiction) that would cause the
application of the laws of any jurisdiction other than the
Commonwealth of Canada. Each party accepts the jurisdiction of
the courts of the Province of Alberta and all courts of appeal
in therefrom.
(8) AMENDMENTS AND WAIVERS. No amendment of any provision of this
Agreement shall be valid unless the same shall be in writing
and signed by the Buyer and the Seller. No waiver by any Party
of any default, misrepresentation or breach of warranty or
covenant hereunder, whether intentional or not, shall be
deemed to extend to any prior or subsequent default,
misrepresentation or breach of warranty or covenant hereunder
or affect in any way any rights arising by virtue of any prior
or subsequent such occurrence.
(9) SEVERABILITY. Any term or provision of this Agreement that is
invalid or unenforceable in any situation in any jurisdiction
shall not affect the validity or enforceability of the
remaining terms and provisions hereof or the validity or
enforceability of the offending term or provision in any other
situation or in any other jurisdiction.
(10) TRANSACTION EXPENSES. Each of the Buyer and the Seller will
bear its own costs and expenses (including legal fees and
expenses) incurred in connection with this Agreement and the
transactions contemplated hereby, except as provided in
paragraph (k) below.
(11) CERTAIN TAXES. Notwithstanding anything in this Agreement to
the contrary, the Seller and/or the Buyer will prepare and
file all necessary Tax Returns, elections and other
documentation with respect to all transfer, documentary,
sales, use, stamp, registration and other Taxes and fees
required under Canadian Laws in connection with this Agreement
and the consummation of the transactions contemplated hereby,
and, the Buyer and/or the Seller will prepare and file the
same, if any, required under United States Laws. If required
by applicable Laws, each Party will join in the execution of
such Tax Returns or other documentation to be prepared by the
other Party under this Section 16(k). For clarity and
notwithstanding anything to the contrary herein, the Seller
and the Buyer shall jointly elect in the prescribed form,
pursuant to Section 167(1.1) of the EXCISE TAX ACT (Canada) to
have such provisions apply to the transactions contemplated
herein and the Buyer shall file such election with Revenue
Canada in a timely fashion. Provided that Closing has
occurred, the Buyer shall:
25
(1) be liable to the Seller for all Adverse Consequences that
the Seller may suffer, sustain, pay or incur; and
(2) indemnify and save the Seller and its directors, officers,
servants, agents and employees harmless from and against all
Adverse Consequences which may be brought against or
suffered by the Seller, its directors, officers, servants,
agents or employees or which they may sustain, pay or incur
as a direct result of any matter or thing arising out of,
resulting from or attributable to the election prepared,
executed and filed pursuant to Section 167(1.1) of the
EXCISE TAX ACT (Canada) pursuant to this Section.
(3) in the event that the amount of the Consideration is
increased upon the release of all or a portion of the
Deferred Contingent Consideration in accordance with the
provisions of Section 7(b), any tax returns, elections and
other documents filed pursuant to this Section, including
without limitation, any elections pursuant to Section
167(1.1) of the Excise Tax Act (Canada), shall be amended by
the Buyer and/or the Seller accordingly and in a consistent
manner between them.
(12) CONSTRUCTION. The Parties have participated jointly in the
negotiation and drafting of this Agreement. In the event an
ambiguity or question of intent or interpretation arises, this
Agreement shall be construed as if drafted jointly by the
Parties and no presumption or burden of proof shall arise
favoring or disfavoring any Party by virtue of the authorship
of any of the provisions of this Agreement. Any reference to
any federal, state, local or foreign statute or law shall be
deemed also to refer to all rules and regulations promulgated
thereunder, unless the context requires otherwise. The word
"including" shall mean including without limitation.
(13) INCORPORATION OF EXHIBITS AND SCHEDULES. The Exhibits and
Schedules (including the Disclosure Schedule) identified in
this Agreement are incorporated herein by reference and made a
part hereof.
(14) BULK TRANSFERS. The Parties waive compliance with the
requirements of the bulk sales law of any jurisdiction in
connection with the sale of the Assets to the Buyer hereunder.
The Seller shall indemnify and hold harmless the Buyer against
all Adverse Consequences which may be incurred by the Buyer as
a result of noncompliance with any such bulk sales laws.
(15) ENTIRE AGREEMENT. THIS AGREEMENT (INCLUDING THE TRANSACTION
DOCUMENTS REFERRED TO HEREIN) CONSTITUTES THE ENTIRE AGREEMENT
AMONG THE PARTIES AND SUPERSEDES ANY PRIOR UNDERSTANDINGS,
AGREEMENTS OR REPRESENTATIONS BY OR AMONG THE PARTIES, WRITTEN
OR ORAL, TO THE EXTENT THEY HAVE RELATED IN ANY WAY TO THE
SUBJECT MATTER HEREOF.
(16) KNOWLEDGE AND AWARENESS. Where in this Agreement, a
representation and warranty is made on the basis of the
knowledge, belief or awareness of a Party, such knowledge,
belief or awareness consists only of the actual knowledge,
belief or awareness, as the case may be, of the officers and
employees of such Party and does not include the knowledge,
belief or awareness of any other Person.
(17) CONFLICTS. If there is any conflict or inconsistency between a
provision of the body of this Agreement and that of a schedule
attached hereto or another Transaction Document, the provision
of the body of this Agreement shall prevail. If any term or
condition of this Agreement conflicts with a term or condition
of a Law, the term or condition of such Law shall prevail, and
this Agreement shall be deemed to be amended to the extent
required to eliminate any such conflict.
26
(18) NO ADDITIONAL REPRESENTATIONS AND WARRANTIES BY SELLER. The
Seller makes no representations or warranties to the Buyer in
addition to those expressly enumerated in Section 8 (a) and
Section 9. Except and to the extent provided in Section 8(a)
and 9 the Seller does not make representations or warranties
with respect to: (i) the quantity, quality or recoverability
of petroleum substances subject to the Gas Contracts; (ii) any
estimates of the value of the Assets or the revenues
applicable to future operations thereof; (iii) any engineering
or other interpretations or economic evaluations respecting
the Assets; (iv) the rates of production of petroleum
substances subject to the Gas Contracts; (v) the quality,
condition or serviceability of the Assets; (vi) the
suitability of their use for any purpose; or (vii) the degree
to which computer firmware, hardware, software or process
control systems included in the Assets, including without
limitation, micro codes, application programs, electronic data
files and databases, may be impacted or adversely affected by
the transition from the year 1999 to 2000 or the leap year in
the year 2000. Without restricting the generality of the
foregoing, but subject always to Section 8(a) and Section 9,
the Buyer acknowledges that it has made its own independent
investigation, analysis, evaluation and inspection of the
Assets and the state and condition thereof and that it has
relied solely on such investigation, analysis, evaluation and
inspection and the representations and warranties of the
Seller contained in Sections 8(a) and 9 hereof as to its
assessment of the condition, quantum and value of the Assets.
(19) NO LIABILITY FOR COLLATERAL INFORMATION. Except with respect
to the representations and warranties in Section 8(a) and
Section 9, or in the event of fraud or gross negligence of
Seller or its directors, officers, servants, agents or
employees, the Buyer forever releases and discharges the
Seller and its directors, officers, servants, agents and
employees from any claims and all liability to the Buyer or
the Buyer's assigns and successors, as a result of the use or
reliance upon advice, information or materials pertaining to
the Assets which was delivered or made available to the Buyer
by the Seller or its directors, officers, servants, agents or
employees prior to or pursuant to this Agreement, including,
without limitation, any evaluations, projections, reports and
interpretive or non-factual materials prepared by or for the
Seller, or otherwise in the Seller's possession.
(20) TIME OF THE ESSENCE. Time shall be of the essence in this
Agreement.
(21) ARBITRATION. Insofar as the Parties are unable to agree on any
matter which expressly may be referred to arbitration
hereunder, either Party may serve the other Party written
notice that it wishes such matter be referred to arbitration.
The Parties shall meet within seven (7) days of the receipt of
a notice issued pursuant to this Subsection 14 (u) to attempt
to agree on a single arbitrator qualified by experience,
education and training, to determine such matter. If the
Parties are unable to agree on the selection of the
arbitrator, the Party which issued such notice shall forthwith
make application to a judge of the Court of Queen's Bench of
the Province of Alberta pursuant to the ARBITRATION ACT
(Alberta) as amended from time to time, hereinafter referred
to as the "ARBITRATION ACT") for the appointment of a single
arbitrator, and failing such action on the part of the Party
which issued such notice, the other Party may make such
application.
The arbitrator selected pursuant to shall proceed as soon as
is practicable to hear and determine the matter in dispute,
and shall be directed to provide a written decision respecting
such matter within forty-five (45) days of appointment. The
Parties shall provide such assistance and information as may
be reasonably necessary to enable the arbitrator to determine
such matter.
Except to the extent modified in this Subsection, the
arbitrator shall conduct any arbitration hereunder pursuant to
the provisions of the ARBITRATION ACT.
27
IN WITNESS WHEREOF, the Parties hereto have executed this Agreement as
of the date first above written.
SELLER:
PROBE EXPLORATION INC.
Per:______________________________
President
Per:______________________________
BUYER:
MIDCOAST CANADA OPERATING CORPORATION
Per:______________________________
Vice President
Per:______________________________
28
Exhibit "A"
to a Purchase and Sale Agreement
dated as of March 23, 1999 between
Probe Exploration Inc. and Midcoast Canada Operating Corporation
Gas Gathering and Treating Agreement
29
Exhibit "B"
to a Purchase and Sale Agreement
dated as of March 23, 1999 between
Probe Exploration Inc. and Midcoast Canada Operating Corporation
Area of Interest Agreement
30
Exhibit "C"
to a Purchase and Sale Agreement
dated as of March 23, 1999 between
Probe Exploration Inc. and Midcoast Canada Operating Corporation
Probe System Gathering Agreement
31
Exhibit "D"
to a Purchase and Sale Agreement
dated as of March 23, 1999 between
Probe Exploration Inc. and Midcoast Canada Operating Corporation
Escrow Agreement
32
Exhibit "E"
to a Purchase and Sale Agreement
dated as of March 23, 1999 between
Probe Exploration Inc. and Midcoast Canada Operating Corporation
Intercreditor Agreement
33
Schedule "1"
to a Purchase and Sale Agreement
dated as of March 23, 1999 between
Probe Exploration Inc. and Midcoast Canada Operating Corporation
Disclosure Schedule
34
Schedule "2(a)(i)"
to a Purchase and Sale Agreement
dated as of March 23, 1999 between
Probe Exploration Inc. and Midcoast Canada Operating Corporation
Calmar Plant and Gas Gathering System - Maps
35
Schedule "2(a)(iii)"
to a Purchase and Sale Agreement
dated as of March 23, 1999 between
Probe Exploration Inc. and Midcoast Canada Operating Corporation
Listed Surface Rights
36
Schedule "2(a)(iv)"
to a Purchase and Sale Agreement
dated as of March 23, 1999 between
Probe Exploration Inc. and Midcoast Canada Operating Corporation
Listed Motor Vehicles
NIL
37
Schedule "2(a)(v)"
to a Purchase and Sale Agreement
dated as of March 23, 1999 between
Probe Exploration Inc. and Midcoast Canada Operating Corporation
Listed Gas Contracts
NIL
38
Schedule "2(a)(viii)"
to a Purchase and Sale Agreement
dated as of March 23, 1999 between
Probe Exploration Inc. and Midcoast Canada Operating Corporation
Listed Permits and Licences
Alberta Energy and Utilities Board Approval No. 7017
Alberta Energy and Utilities Board Approval No. 0000-000
Xxxxxxx Energy and Utilities Board Approval No.8239
Alberta Energy and Utilities Board Approval No.30800
Alberta Energy and Utilities Board Approval No.30164
Alberta Energy and Utilities Board Approval No.31174
Alberta Environmental Protection Approval No.00000-00-00
Alberta Environmental Protection Approval No.00000-00-00
County of Xxxxx Xx. 00 Xxxxxxxxxxx Xxxxxx No. D98-027
County of Xxxxx Xx. 00 Xxxxxxxxxxx Xxxxxx Xx. X00-000
Xxxxxxx Environmental Protection Permit No. 97-28-PKL
Alberta Boilers Safety Association Vessel Registration Nos:
0437000; 0438883; 0438908; 0442338; 0442333; 0438616; 0438614; 0439613;
0436994; 0439612; 0438882; 0438907; 0442339; 0442334;
0430615; 0438613; 0436993; 0439627;
0428501; 0438881; 0438906; 0442340; 0442335; 0438617; 0438612; 0439612; 0436897;
0428929; 0438880; 0438905; 0442341; 0438817; 0438620; 0438611; 0439601; 2732343;
0403529; 0438879; 0438904; 0442331; 0428501; 0438619; 0438609; 0436999; 0436999;
0428929; 0438878; 0438903; 0442332; 0438618; 0438610; 0437000; 0439602; 0439601
0436994; 0436993; 0439613
39
Schedule "2(b)(iv)"
to a Purchase and Sale Agreement
dated as of March 23, 1999 between
Probe Exploration Inc. and Midcoast Canada Operating Corporation
Leduc/Calmar Original Plant
40
