1
ARRANGEMENT AGREEMENT
Among
NATURAL RESOURCES GEOPHYSICAL CORPORATION
and
EAGLE CANADA, INC.
and
EAGLE GEOPHYSICAL, INC.
October 27, 1998
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TABLE OF CONTENTS
PAGE NO.
Article 1....................................................................................................... 1
Definitions, Interpretation and Exhibits............................................................... 1
1.1 Definitions.......................................................................... 1
1.2 Currency............................................................................. 5
1.3 Interpretation Not Affected by Headings.............................................. 5
1.4 Number and Gender.................................................................... 6
1.5 Date for Any Action.................................................................. 6
1.6 Meaning.............................................................................. 6
1.7 Schedules and Exhibits............................................................... 6
Article 2....................................................................................................... 7
Arrangement............................................................................................ 7
2.1 Arrangement.......................................................................... 7
2.2 Recommendation of the Board of Directors of NRG...................................... 7
2.3 Effective Date of Arrangement........................................................ 7
2.4 Filing of Articles of Arrangement.................................................... 7
Article 3....................................................................................................... 8
Transfer of Assets and Assumption of Debt.............................................................. 8
3.1 Transfer of Assets................................................................... 8
3.2 Excluded Assets...................................................................... 9
3.3 Instruments of Conveyance and Transfer............................................... 10
3.4 Further Assurances................................................................... 11
3.5 Liabilities.......................................................................... 11
3.6 Expenses: Consents and Taxes........................................................ 12
Article 4....................................................................................................... 12
Closing .............................................................................................. 12
4.1 Pre-Closing.......................................................................... 12
4.2 Exchange of Assets for Cash and Eagle Shares......................................... 12
4.3 Purchase Price Allocation............................................................ 13
4.4 GST Election......................................................................... 13
Article 5....................................................................................................... 13
Representations and Warranties......................................................................... 13
5.1 Representations and Warranties of NRG................................................ 13
5.2 Representations and Warranties of Eagle Canada....................................... 23
5.3 Representations and Warranties of Eagle Geophysical.................................. 24
5.4 Survival of Representations and Warranties........................................... 25
Article 6....................................................................................................... 25
Covenants, Actions Prior to Closing.................................................................... 25
6.1 Access to Information................................................................ 25
6.2 Conduct of the Business.............................................................. 26
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6.3 Court Approval....................................................................... 27
6.4 Cooperation; Consents and Approvals.................................................. 27
6.5 Further Actions...................................................................... 28
6.6 Notification......................................................................... 29
6.7 No Inconsistent Action............................................................... 29
6.8 Acquisition Proposals................................................................ 29
6.9 Public Announcements................................................................. 29
Article 7....................................................................................................... 30
Conditions Precedent................................................................................... 30
7.1 Conditions Precedent to Obligations of All Parties................................... 30
7.2 Conditions Precedent to Obligations of Eagle Canada.................................. 31
7.3 Conditions Precedent to the Obligations of NRG....................................... 32
Article 8....................................................................................................... 33
Employees.............................................................................................. 33
8.1 Employment........................................................................... 33
8.2 No Eagle Canada Liability............................................................ 33
Article 9....................................................................................................... 34
Termination............................................................................................ 34
9.1 General.............................................................................. 34
9.2 No Liabilities in Event of Termination............................................... 34
Article 10...................................................................................................... 35
Covenants, Action Subsequent to Closing................................................................ 35
10.1 Access to Books and Records.......................................................... 35
10.2 Mail................................................................................. 35
10.3 Use of Names......................................................................... 35
10.4 Third Party Consents................................................................. 35
10.5 Confidentiality...................................................................... 36
Article 11...................................................................................................... 36
Indemnification........................................................................................ 36
11.1 Indemnification by NRG............................................................... 36
11.2 Indemnification by Eagle Canada...................................................... 36
11.3 Indemnification by Eagle Geophysical................................................. 36
11.4 Indemnification Procedures........................................................... 37
Article 12...................................................................................................... 38
Miscellaneous.......................................................................................... 38
12.1 Payment of Certain Fees and Expenses................................................. 38
12.2 Notices.............................................................................. 38
12.3 Entire Agreement..................................................................... 39
12.4 Binding Effect; Benefit.............................................................. 39
12.5 Assignability........................................................................ 40
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12.6 Amendment; Waiver.................................................................... 40
12.7 Severability......................................................................... 40
12.8 Counterparts......................................................................... 40
12.9 Applicable Law....................................................................... 40
12.10 Execution by Eagle Geophysical....................................................... 41
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ARRANGEMENT AGREEMENT
October 27, 1998
AMONG:
NATURAL RESOURCES GEOPHYSICAL CORPORATION,
an Alberta corporation ("NRG")
AND
EAGLE CANADA, INC., a Delaware corporation ("EAGLE
CANADA")
AND
EAGLE GEOPHYSICAL, INC., a Delaware corporation ("Eagle
Geophysical"), for the limited purposes set forth in Section
5.3 and Article 11 hereof
RECITALS
A. NRG is an oilfield service company specializing in the acquisition of
seismic data on behalf of clients and customers (the "Business");
B. Pursuant to a Plan of Arrangement, Eagle Canada proposes to acquire
substantially all of the assets of NRG as utilized in the Business;
C. NRG proposes to convene meetings of its Securityholders to approve the
Arrangement in accordance with the provisions of the ABCA; and
D. Upon the Arrangement becoming effective, among other things, Eagle
Canada will acquire substantially all of the assets and assume certain
debt of NRG, NRG will receive cash and shares of Eagle Geophysical,
twenty-five percent (25%) of such shares will be distributed to the
security holders of NRG, and NRG will change its name, all in
accordance with the provisions of this Agreement and the Plan of
Arrangement.
THE PARTIES AGREE AS FOLLOWS:
ARTICLE 1
DEFINITIONS, INTERPRETATION AND EXHIBITS
1.1 DEFINITIONS
In this Agreement, the following capitalized words and terms shall
have the following meanings:
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"ABCA" means the Business Corporations Act (Alberta), S.A. 1981, c.
B-15, as amended, including the regulations promulgated thereunder;
"ACQUISITION PROPOSAL" means any bona fide written offer or proposal
for any arrangement, amalgamation, merger, takeover bid, tender offer,
reorganization, recapitalization, purchase of assets out of the
ordinary course of business or assumption of liability transactions,
liquidation or winding up of, or other business combination or similar
transaction involving NRG or the acquisition of a substantial equity
interest in, or the acquisition of all or a material portion of the
assets of NRG other than the Arrangement;
"AFFILIATE" means, with respect to any person, any other person that,
directly or indirectly, through one or more intermediaries, controls,
is controlled by, or is under common control with, such person;
"AGREEMENT" means this arrangement agreement including the schedules
and exhibits attached hereto as the same may be supplemented or
amended from time to time;
"APPLICABLE LAW" means any statute, law, rule or regulation or any
judgment, order, writ, injunction or decree of any Governmental Entity
to which a specified person or property is subject;
"ARRANGEMENT" means the transfer of all of the Assets to Eagle Canada,
the assumption by Eagle Canada of the Assumed Liabilities, the payment
of cash by and delivery of Eagle Shares by Eagle Canada to NRG, the
distribution of 25% of such shares to Securityholders on a pro rata
basis and the change of NRG's name to 582990 Alberta Ltd., all
pursuant to the ABCA as contemplated by the provisions of this
Agreement and the Plan of Arrangement;
"ARTICLES OF ARRANGEMENT" means the articles of arrangement in respect
of the Arrangement required by the ABCA to be sent to the Registrar
after the Final Order is made;
"BUSINESS DAY" means a day which is not a Saturday, Sunday or
statutory holiday in the Province of Alberta;
"CASH AMOUNT" means $1,506,644;
"CONSTATING DOCUMENTS" means articles and by-laws, as the case may be;
"COURT" means the Court of Queen's Bench of Alberta;
"EAGLE CANADA" means Eagle Canada, Inc., a Delaware corporation;
"EAGLE GEOPHYSICAL" means Eagle Geophysical, Inc., a Delaware
corporation;
"EAGLE SHARES" means the common stock issued by Eagle Geophysical,
which Eagle Canada will deliver pursuant to Section 4.2(b)(iii)
hereof;
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"EFFECTIVE DATE" means the date set out in the Certificate of
Amendment issued by the Registrar, or if no certificate is required to
be issued, on the date the Articles of Arrangement are filed with the
Registrar;
"EFFECTIVE TIME" means 12:01 a.m. (Calgary time) on the Effective Date;
"ENCUMBRANCES" means liens, charges, pledges, options, mortgages,
deeds of trust, security interests, claims, restrictions (whether on
voting, sale, transfer, disposition or otherwise), easements and other
encumbrances of every type and description, whether imposed by law,
agreement, understanding or otherwise;
"FINAL ORDER" means the final order of the Court approving the
Arrangement to be applied for following the NRG Meetings pursuant to
the provisions of subsection 186(9) of the ABCA, as such order may be
amended or modified by the highest court to which an appeal may be
made;
"GAAP" means generally accepted accounting principles as in effect in
Canada on the date of this Agreement;
"GOVERNMENTAL ENTITY" means any court or tribunal in any jurisdiction
(domestic or foreign) or any public, governmental or regulatory body,
agency, department, commission, board, bureau or other authority or
instrumentality (domestic or foreign);
"INFORMATION CIRCULAR" means the information circular of NRG to be
sent to the Securityholders in connection with the NRG Meetings,
including the schedules attached thereto;
"INTELLECTUAL PROPERTY" means patents, trademarks, service marks,
trade names, copyrights, trade secrets, know-how, inventions, and
similar rights, and all registrations, applications, licenses and
rights with respect to any of the foregoing;
"INTERIM ORDER" means the order of the Court to be applied for
providing orders and directions in connection with the Arrangement;
"NRG" means Natural Resources Geophysical Corporation, a corporation
incorporated under the provisions of the ABCA;
"NRG MEETINGS" means the special meetings of the Securityholders to be
held to consider and, if deemed advisable, approve the Arrangement and
includes any adjournment thereof;
"NRG SECURITIES" means the outstanding common shares, preferred shares
and special warrants issued by NRG;
"PERMITS" means licenses, permits, franchises, consents, approvals and
other authorizations of or from Governmental Entities;
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"PERSON" means any individual, partnership, association, body
corporate, trustee, executor, administrator, legal representative,
government, regulatory authority or other entity;
"PLAN OF ARRANGEMENT" means the plan of arrangement in the form
annexed to this Agreement as Exhibit A;
"PROCEEDINGS" means all proceedings, actions, claims, suits,
investigations and inquiries by or before any arbitrator or
Governmental Entity;
"REGISTRAR" means the Registrar of Corporations appointed pursuant to
Section 253 of the ABCA; and
"SECURITYHOLDERS" means the holders of the NRG Securities;
"SUBSIDIARY" means, with respect to a specified body corporate, a body
corporate of which more than 50% of the outstanding shares ordinarily
entitled to elect a majority of the directors thereof, whether or not
shares of any other class or classes shall or might be entitled to
vote upon the happening of any event or contingency, are at the time
owned, directly or indirectly, by such specified body corporate, and
includes a body corporate in like relation to a Subsidiary;
"SUPERIOR PROPOSAL" means any written Acquisition Proposal which, in
the opinion of NRG's board of directors after consultation with and on
the basis of written advice from its financial advisors, constitutes a
commercially feasible transaction for which adequate financial
arrangements have been made and which could be carried out within a
time frame that is reasonable in the circumstances and, if
consummated, would be superior to the Arrangement from a financial
point of view to NRG's shareholders;
"TAX RETURN" means any return or report, including any related or
supporting information, with respect to Taxes;
"TAXES" means any income taxes or similar assessments or any sales,
excise, occupation, use, ad valorem, property, production, severance,
transportation, employment, payroll, franchise or other tax imposed by
any federal, provincial or local (or any foreign or state) taxing
authority, including any interest, penalties or additions attributable
thereto; and
"U.S. SECURITIES ACT" means the United States Securities Act of 1933,
as amended, together with all rules and regulations promulgated
thereunder.
In addition to such terms as are defined above, the following terms
are used in this Agreement as defined in the Sections of this Agreement
referenced opposite such terms:
Defined Terms Reference
Accounts Receivable Section 3.2(b)
Assets Section 3.1
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Assumed Debt Section 3.5
Assumed Liabilities Section 3.5
Audited Financial Statements Section 5.1(d)
Business Recital A
Business Locations Section 3.1(a)
Claim Section 11.3(a)
Contracts Section 3.1(c)
Damages Section 11.1
Data Section 3.1(j)
Environmental Laws Section 5.1(n)
Equipment Section 3.1(a)
Excluded Assets Section 3.2
Financial Statements Section 5.1(d)
Hazardous Material Section 5.1(n)
Indemnified Party Section 11.3(a)
Indemnifying Party Section 11.3(a)
Key Employees Section 8.1
Liabilities Section 3.5
NRG Affiliates Section 6.4(g)
Permitted Encumbrances Section 5.1(e)
Purchase Price Section 4.2(a)
Retained Liabilities Section 3.5
Sales Quotations Section 3.1(i)
Surviving Warranties Section 5.3
Unaudited Financial Statements Section 5.1(d)
1.2 CURRENCY
All amounts of money which are referred to in this Agreement are
expressed in lawful money of the United States unless otherwise specified.
1.3 INTERPRETATION NOT AFFECTED BY HEADINGS
The division of this Agreement into articles, sections, subsections,
paragraphs and subparagraphs and the insertion of headings are for convenience
of reference only and shall not affect the construction or interpretation of
the provisions of this Agreement. The terms "this Agreement", "hereof",
"herein", "hereunder" and similar expressions refer to this Agreement and the
schedules and exhibits hereto as a whole and not to any particular article,
section, subsection, paragraph or subparagraph hereof and include any agreement
or instrument supplementary or ancillary hereto.
1.4 NUMBER AND GENDER
In this Agreement, unless the context otherwise requires, words
importing the singular number only shall include the plural and vice versa and
words importing the use of either gender shall include both genders and neuter.
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1.5 DATE FOR ANY ACTION
In the event that any date on which any action is required to be taken
hereunder by any party is not a Business Day such action shall be required to
be taken on the next succeeding day which is a Business Day.
1.6 MEANING
Words and phrases used herein and defined in the ABCA shall have the
same meaning herein as in the ABCA unless the context otherwise requires.
1.7 SCHEDULES AND EXHIBITS
The Schedules and Exhibits attached hereto shall be deemed to be
incorporated into and form part of this Agreement, and are comprised of the
following:
EXHIBITS
Exhibit A - Plan of Arrangement
Exhibit B - Opinion of NRG Counsel
Exhibit C - Opinion of Eagle Counsel
SCHEDULES
Schedule 3.1(a) - Equipment
Schedule 3.1(c) - Contracts
Schedule 5.1(a) - NRG Affiliates
Schedule 5.1(c) - Consents and Approvals
Schedule 5.1(d) - Financial Information
Schedule 5.1(e)(i) - Permitted Encumbrances
Schedule 5.1(e)(ii) - Data
Schedule 5.1(g) - Properties, Contracts, Permits and Other Data
Schedule 5.1(h) - Legal Proceedings
Schedule 5.1(i) - Insurance
Schedule 5.1(n) - Defects in Environmental Compliance
Schedule 5.1(u) - Additional Information
Schedule 5.1(w) - Employee Benefit Plans
Schedule 5.1(y) - Transactions with Affiliates
Schedule 5.1(aa) - Sales Quotations
Schedule 5.1(bb) - Accounts Receivable
Schedule 5.1(cc) - Omitted Material Assets
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ARTICLE 2
ARRANGEMENT
2.1 ARRANGEMENT
Under the Arrangement pursuant to the provisions of the ABCA:
(i) NRG transfers the Assets to Eagle Canada,
(ii) Eagle Canada assumes the Assumed Liabilities,
(iii) Eagle Canada pays to NRG the Cash Amount and delivers to NRG
the Eagle Shares,
(iv) 25% of the Eagle Shares are distributed to the
Securityholders on a pro-rata basis, and
(v) the name of NRG is changed to 582990 Alberta Ltd.,
all on the terms and subject to the conditions contained in this Agreement and
the Plan of Arrangement.
2.2 RECOMMENDATION OF THE BOARD OF DIRECTORS OF NRG
(a) NRG hereby confirms that its board of directors has
unanimously determined that the Arrangement is in the best
interests of NRG and that it has approved the Arrangement and
this Agreement and has resolved to unanimously recommend
approval of the Arrangement by the Securityholders. The
Information Circular will set forth (among other things) the
recommendation of the board of directors of NRG as described
above. NRG shall provide Eagle Canada with a draft copy of
the Information Circular prior to mailing for its review and
comment.
(b) The board of directors of NRG has been advised that the
directors and senior officers of NRG intend to vote their NRG
Securities now held and subsequently acquired, if any, in
favour of the Arrangement. The Information Circular shall
reflect such intentions to vote the NRG Securities now held
and subsequently acquired in favour of the Arrangement.
2.3 EFFECTIVE DATE OF ARRANGEMENT
The Arrangement shall become effective at the Effective Time.
2.4 FILING OF ARTICLES OF ARRANGEMENT
Subject to the rights of termination contained in Article 9 hereof,
upon the holders of each class of NRG Securities approving the Arrangement by
special resolution in accordance with the provisions of the ABCA and NRG
obtaining the Final Order and the satisfaction or waiver of all
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condition precedents, NRG shall file with the Registrar under the ABCA Articles
of Arrangement, together with such other documents as may be required in order
to effect the Arrangement.
ARTICLE 3
TRANSFER OF ASSETS AND ASSUMPTION OF DEBT
3.1 TRANSFER OF ASSETS
On the terms and subject to the conditions set forth in this Agreement
and the Plan of Arrangement, at the Effective Time NRG shall convey, assign,
transfer and deliver to Eagle Canada, and Eagle Canada shall acquire from NRG
(except as provided in Section 3.2 hereof), all of the tangible and intangible
assets, rights and properties of NRG and any Subsidiaries or Affiliates of NRG
used by or associated with the Business other than the Excluded Assets,
including, without limitation, the following:
(a) the equipment, machinery, vehicles, tools, spare parts,
fuels, lubricants, furniture, furnishings, office supplies,
computers, software and other tangible personal property
associated with the Business, including, without limitation,
all leasehold improvements relating to the office space and
any other facility or business locations of NRG (the
"Business Locations") and those major items of personal
property listed on Schedule 3.1(a) hereto (collectively, the
"Equipment"), and all warranties and guarantees, if any,
express or implied, existing for the benefit of NRG in
connection with the Equipment to the extent assignable;
(b) all right, title and interest of NRG in, to and under all
price lists, customer lists, computer programs, disks and
tapes, distribution lists, files and records, sales promotion
and advertising materials, vendor lists, catalogs, research
material, technical information, specifications, operating
manuals, designs, drawings and quality control and other
similar data used in the Business;
(c) the rights of NRG relating to the Business under all
contracts, agreements and arrangements; purchase commitments
for materials and other services; and agreements with
suppliers, personal property lessors, personal property
lessees, licensors, licensees, consignors and consignees,
including, but not limited to, those listed on Schedule
3.1(c) hereto (collectively, the "Contracts");
(d) the rights of NRG under all licenses, permits, consents,
approvals, authorizations, qualifications, orders, or
franchises issued by any federal, state, provincial or local
authority relating to the development, use, maintenance or
occupation of the Business Locations or the conduct of the
Business, to the extent that such licenses, permits or
franchises are transferable;
(e) all Intellectual Property, and any good will associated
therewith, including, without limitation, ownership of the
name "Natural Resources Geophysical Corporation" and any
variations thereof to the extent assignable and the assets
identified on Schedule 3.1(e) hereto;
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(f) all inventories of materials, spare parts and replacement and
component parts of NRG on hand or in transit as of the
Effective Date;
(g) all personnel files and other materials relating to employees
of NRG who may be offered employment by Eagle Canada
including, without limitation, those contemplated by Article
8 hereof;
(h) all records of compliance and non-compliance with Applicable
Laws to which the Business is subject;
(i) all right, title and interest of NRG in, to and under any
oral or written bid, quotation or proposal relating to the
Business ("Sales Quotations");
(j) all right, title and interest of NRG in and to the seismic
data and related data and information of NRG, consisting of
approximately 946 kilometers of 2D data, including, without
limitation, all processed tapes, field tapes, all other tapes
and support data, files, films, microfilms, mylar,
black-lines, sections (stack, migration or other displays in
any format existing), shock point base maps, x-y coordinates
and derivatives related to the speculative seismic data, and
all Intellectual Property existing in or primarily and
directly related to the foregoing (collectively, the "Data");
(k) all requests and studies for capital expenditures made by or
for NRG or the Business;
(l) all deposits, prepayments and prepaid expenses relating to
the operations of NRG to the extent such deposits,
prepayments and prepaid expenses are transferable;
(m) All rights, claims or choses in action of NRG against any
person relating to the Assets;
(n) all goodwill of NRG; and
(o) the originals of all information, files, records, data and
contracts related to the foregoing.
The assets described in this Section 3.1 as being sold, conveyed, assigned,
transferred and delivered to Eagle Canada pursuant to the Arrangement are
referred to collectively as the "Assets".
3.2 EXCLUDED ASSETS
It is expressly understood and agreed that the Assets shall not
include the following (the "Excluded Assets"):
(a) cash and cash equivalents or similar type investments, such
as certificates of deposit, Treasury bills and other
marketable securities;
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(b) accounts receivable of NRG (the "Accounts Receivable")
arising out of the Business as of the Effective Date;
(c) any assets of any employee benefit plan maintained by NRG or
any of its Affiliates and any of the plans or agreements of
the type described in Section 5.1(w) or 5.1(y);
(d) the original corporate minute books, stock books, financial
records, tax returns and corporate policies and procedures
manuals of NRG (provided, however, that Buyer shall be
furnished copies); and
(e) any asset of NRG which Eagle Canada elects to exclude from
the Assets on or before the Effective Date.
3.3 INSTRUMENTS OF CONVEYANCE AND TRANSFER
On the Effective Date, NRG shall deliver or cause to be delivered to
Eagle Canada the following in a form reasonably acceptable to Eagle Canada:
(a) A general conveyance transferring to Eagle Canada good,
marketable and indefeasible title to all of the tangible
personal property included in the Assets, subject only to
Permitted Encumbrances;
(b) An assignment or sublease to Eagle Canada of NRG's right,
title and interest in each of the Contracts referred to in
Section 3.1(c) hereof, together with all consents of third
parties required to make each such assignment or sublease
effective as to such third parties;
(c) All appropriate documents for the assignment as of the
Effective Date of NRG's rights under the licenses, permits
and franchises referred to in Section 3.1(d) hereof and of
all registrations, permits, licenses, equipment or motor
vehicle leasing agreements, motor vehicle and rolling stock
titles, rights under sales and/or purchase orders and rights
under all other contracts constituting a part of the Assets,
together with all consents of third parties required to make
such assignments effective as to such third parties;
(d) All appropriate documents for the assignment as of the
Effective Date of any and all patents, trademarks, trade
names and other Intellectual Property referred to in Section
3.1(e) hereof;
(e) Originals of all of the Contracts, commitments, books,
records, files and other data that (i) are included in the
Assets or (ii) relate to or affect the Assets as of the
Effective Date and are reasonably necessary for the continued
conduct of the Business; and
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(f) Such other instruments of transfer and assignment in respect
of the Assets as Eagle Canada shall reasonably require and as
shall be consistent with the terms and provisions of this
Agreement.
Prior to the Effective Date, NRG will take such reasonable steps as may be
requisite or appropriate so that no later than the close of business on the
Effective Date, Eagle Canada will be placed in actual possession and control of
all of the Assets, including, without limitation, paying or causing the payment
of all costs and expenses necessary to obtain the consents of the third parties
contemplated by paragraphs (b) and (c) above and elsewhere in this Agreement.
3.4 FURTHER ASSURANCES
From time to time after the Effective Date, NRG will execute and
deliver, or cause to be executed and delivered, without further consideration,
such other instruments of conveyance, assignment, transfer and delivery and
will take such other actions as Eagle Canada may reasonably request in order to
more effectively transfer, convey, assign and deliver to Eagle Canada, and to
place Eagle Canada in possession and control of the Assets or to enable Eagle
Canada to exercise and enjoy all rights and benefits of NRG with respect
thereto.
3.5 LIABILITIES
From and after the Effective Date, Eagle Canada will assume and pay,
perform, fulfill and discharge, all obligations of NRG which accrue subsequent
to the Effective Date and are due and payable (or performable) subsequent to
the Effective Date under the Contracts listed on Schedule 3.1(c), including,
without limitation, the debt of NRG to AT&T Capital Inc., RoyNat Inc. and
National Trust totalling approximately Two Million Twenty Two Thousand Eight
Hundred Sixty Seven Dollars ($2,022,867) (the "Assumed Debt"), or otherwise
entered into after the date hereof in accordance with the terms of Section 6.2;
provided that the rights thereunder have been duly and effectively assigned to
Eagle Canada (collectively, the "Assumed Liabilities"). Eagle Canada does not
assume any direct or indirect duties, liabilities or obligations of NRG of any
kind or nature, fixed or unfixed, ▇▇▇▇▇▇ or inchoate, liquidated or
unliquidated, secured or unsecured, known or unknown, accrued, absolute,
contingent or otherwise (collectively, the "Liabilities"), other than the
Assumed Liabilities. It is understood and agreed that all such Liabilities
other than the Assumed Liabilities are retained by NRG (the "Retained
Liabilities"), and NRG shall be responsible for the payment and discharge of
all such Retained Liabilities. Without limiting the generality of the
foregoing, Eagle Canada shall not be liable for any Liabilities (i) with
respect to any federal, provincial or local income, property or other tax
attributable to the Business or the ownership of the Assets with respect to any
period prior to the Effective Date, (ii) with respect to any claim, action,
suit or proceeding, whether disclosed or not, including any arising out of or
relating to the violation by NRG of any agreement, contract or understanding by
which NRG is bound, or the violation of any law, rule, regulation or order that
applies to NRG or the Business, (iii) arising out of or existing due to any
breach or untimely performance by NRG, including NRG's failure to perform or
the negligent, improper or untimely performance of, any Contract in accordance
with its terms prior to the Effective Date, (iv) relating to any asset not
included in the Assets, (v) based upon, arising from or attributable to claims
made before, on or after the Effective Date for personal injuries (including
claims for wrongful death), property damages or consequential damages with
respect thereto in each
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case with third parties, which liability arises from or is attributable to the
operations of NRG prior to the Effective Date, and (vi) arising out of,
resulting from or relating to a breach by NRG of (x) any representation or
warranty contained in this Agreement for which NRG has an indemnification
obligation pursuant to the terms of this Agreement, (y) any covenant or
agreement contained in this Agreement, or (z) any trade payable or other
accounts payable or debt of NRG.
3.6 EXPENSES: CONSENTS AND TAXES
NRG shall pay, or cause to be paid, (i) all costs and expenses of
obtaining all consents of third parties to the assignments and subleases
contemplated by subparagraphs (c) and (d) of Section 3.3 hereof, and (ii) all
transfer, stamp, sales, use or other similar taxes or duties payable in
connection with the sale and transfer of the Assets to Eagle Canada.
ARTICLE 4
CLOSING
4.1 PRE-CLOSING
The pre-closing with respect to the transactions provided for in this
Agreement shall take place at the offices of Fraser ▇▇▇▇▇▇, counsel to NRG,
30th floor, ▇▇▇ - ▇▇▇ ▇▇▇▇▇▇ ▇.▇., ▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇ ▇▇▇ ▇▇▇, at 10:00 a.m.,
local time, on November 20, 1998, or at such other time and place as shall be
agreed upon by NRG and Eagle Canada.
4.2 EXCHANGE OF ASSETS FOR CASH AND EAGLE SHARES
(a) NRG and Eagle Canada agree that the value of the
consideration (the "Purchase Price") to be received by NRG
for the Assets shall be $5,539,011, payable as provided in
Section 4.2(b) below.
(b) At the pre-closing, Eagle Canada shall:
(i) pay to NRG the Cash Amount by certified cheque, bank
draft or wire transfer in immediately available
funds to such bank account as designated by NRG in
writing at least three Business Days prior to the
pre-closing,
(ii) assume the Assumed Debt totalling approximately
$2,022,867, and
(iii) deliver that number of Eagle Shares valued at an
amount equal to the balance of the Purchase Price,
based on the closing price of Eagle Shares on the
NASDAQ National Market System as reported in The
Wall Street Journal on the Business Day immediately
preceding the first day of the NRG Meetings,
provided, however, that such conversion price shall
not be less than $10.00 per share.
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4.3 PURCHASE PRICE ALLOCATION
As soon as practicable after the Effective Date, NRG and Eagle Canada
shall jointly prepare IRS Form 8594 to report the allocation of the Purchase
Price among the Assets, consistent with the manner provided for in Schedule
3.1(a) attached hereto. Each party hereto agrees not to assert, in connection
with any tax return, tax audit or similar proceeding, any allocation that
differs from that set forth in such Form 8594.
4.4 GST ELECTION
As soon as practicable after the Effective Date, NRG and Eagle Canada
shall jointly execute and file Form 44 with Revenue Canada - Customs, Excise
and Taxation, with respect to the waiver of the goods and services tax.
ARTICLE 5
REPRESENTATIONS AND WARRANTIES
5.1 REPRESENTATIONS AND WARRANTIES OF NRG
NRG represents and warrants to Eagle Canada and Eagle Geophysical as
follows:
(a) Due Organization; Good Standing and Power. NRG is a
corporation duly organized, validly existing and in good
standing under the laws of the province of Alberta. NRG has
the corporate power and authority to own, lease and operate
its respective assets and to conduct its respective business
as now conducted. NRG is duly authorized, qualified or
licensed to do business as a foreign corporation and is in
good standing in each jurisdiction in which its right, title
or interest in or to any of its assets, or the conduct of is
business, requires such authorization, qualification or
licensing, except where the failure to so qualify or to be in
good standing in such other jurisdictions would not have a
material adverse effect on any of the assets, the business or
the results of operations of NRG. No actions or proceedings
to dissolve NRG are pending. NRG has no Affiliates or any
equity or partnership interest in any other person other than
as listed in Schedule 5.1(a) hereto.
(b) Corporate Authority. The execution, delivery and performance
of this Agreement by NRG has been duly authorized by all
requisite action on its part, subject to the requisite
approval by the Securityholders. No other corporate action is
necessary for the authorization, execution, delivery, and
performance by NRG of this Agreement and the consummation by
NRG of the transactions contemplated hereby.
(c) Validity of Agreement; Approvals; No Conflict with
Instruments. This Agreement has been duly executed and
delivered by NRG and constitutes a legal, valid and binding
obligation of it, enforceable against it in accordance with
its terms, except as the same may be limited by bankruptcy,
insolvency or other similar laws affecting creditors' rights
generally and by general equity principles. Except as
described in Schedule 5.1(c) hereto, the execution, delivery
and performance of this Agreement
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by NRG and the consummation by it of the transactions
contemplated hereby (i) will not violate (with or without the
giving of notice or the lapse of time or both) or require any
consent, approval, filing or notice under, any provision of
any law, rule or regulation, court order, judgment or decree
applicable to NRG and (ii) will not conflict with, or result
in the breach or termination of any provision of, or
constitute a default under, or result in the acceleration of
the performance of the obligations of NRG under, or result in
the creation of a lien, charge or encumbrance upon any
portion of the assets of NRG pursuant to, the charter or
bylaws of NRG, or any indenture, mortgage, deed of trust,
lease, licensing agreement, contract, instrument or other
agreement to which NRG is a party or by which it or any of
its assets is bound or affected.
(d) Financial Information and Absence of Certain Changes. NRG has
delivered to Eagle Canada accurate and complete copies of (i)
the audited consolidated balance sheets of NRG as of December
31, 1996 and December 31, 1997, and the related audited
consolidated statements of earnings and retained earnings and
consolidated statements of changes in financial position for
each of the years then ended, and the notes thereto, prepared
in conformity with GAAP (the "Audited Financial Statements"),
(ii) NRG's September 30, 1998 unaudited consolidated balance
sheet, and unaudited statements of operations for the nine
(9) month period ended September 30, 1998 (the "Unaudited
Financial Statements") certified by NRG's Chief Financial
Officer, and (iii) NRG's October 31, 1998 fiscal asset
schedule and balance sheet accounts for the ten month period
ended October 31, 1998 attached as Schedule 3.1(a) hereto
(the "Valuation Statements") certified by NRG's Chief
Financial Officer (collectively, the "Financial Statements").
The Financial Statements (i) represent actual bona fide
transactions, (ii) have been prepared from the books and
records of NRG in conformity with GAAP applied on a basis
consistent with preceding years throughout the periods
involved, except that the Unaudited Financial Statements and
Valuation Statements are not accompanied by notes or other
textual disclosure required by GAAP, and (iii) accurately,
completely and fairly present NRG's financial position as of
the respective dates thereof and its consolidated results of
operations and cash flows for the periods then ended, except
that the Unaudited Financial Statements and Valuation
Statements are subject to normal year-end adjustments
consistent with past practice, which will not be material in
the aggregate. NRG does not have any liability or obligation
that would materially and adversely affect the business,
assets, financial condition or results of operations of NRG,
whether accrued, absolute, contingent, or otherwise, except
as set forth on the Unaudited Financial Statements. Except as
disclosed on Schedule 5.1(d), since the date of the Unaudited
Financial Statements as at September 30, 1998, there has not
been nor will there be any change in the assets, liabilities,
financial condition, or operations of NRG from that reflected
in the Financial Statements, other than changes in the
ordinary course of business, none of which individually or in
the aggregate have had or will have a material adverse effect
on such assets, liabilities, financial condition, or
operations. Without limiting any of the foregoing, since the
date of the Unaudited Financial Statements and until the
Effective Date, except as disclosed on Schedule 3.1(a) NRG
has not and will not have:
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(i) incurred or become subject to, or agreed to incur or
become subject to, any obligation or liability,
absolute or contingent, except current liabilities
incurred in the ordinary course of business;
(ii) mortgaged, pledged, or subjected to any Encumbrance
(or agreed to do so with respect to) any of the
Assets, or discharged or satisfied any Encumbrance,
or paid or satisfied any obligation or liability
other than in the ordinary course of business and
consistent with past practice;
(iii) sold or transferred, or agreed to sell or transfer,
any of the Assets;
(iv) engaged in any transactions adversely affecting the
Business or the Assets or suffered any extraordinary
losses or waived any rights of substantial value not
in the ordinary course of business;
(v) entered into any representative, distributorship,
service, installation, support and maintenance,
agency or other similar agreements;
(vi) incurred or suffered any damage, destruction, or
loss, whether or not covered by insurance,
materially affecting the Business or any of the
Assets;
(vii) made or applied to make any change in accounting
methods or practices, including for tax purposes; or
(viii) entered into any agreement, commitment or
understanding, whether or not in writing, with
respect to any of the foregoing.
(e) Title to Properties; Absence of Liens and Encumbrances. NRG
owns good, marketable and indefeasible title to all of the
Assets, free and clear of all claims, liens, security
interests, charges, leases, Encumbrances, licenses or
sublicenses and other restrictions of any kind and nature,
other than the claims, liens, security interests, charges,
leases, Encumbrances, licenses or sublicenses specifically
set forth on Schedule 5.1(e)(i) hereto (the items listed on
Schedule 5.1(e)(i) hereto are herein referred to as the
"Permitted Encumbrances"). NRG has, and will convey to Eagle
Canada on the Effective Date, one hundred percent (100%) of
all right, title and interest in and to, and good and
marketable title to, the Data, including, without limitation,
the exclusive right to manage and operate and otherwise
market and license the Data and the exclusive right to
receive all revenues from the sale, licensing or other use of
the Data, without any obligation to pay any proceeds of any
such sale, licensing or other use to any third parties (other
than the payment of Taxes). Schedule 5.1(e)(ii) hereto
contains a complete and correct list of all Data.
(f) Condition and Sufficiency of Assets. To the best of NRG's
knowledge, the buildings, structures and equipment included
in the Assets are structurally sound, and in good operating
condition and repair, and are adequate for the uses to which
they are being put, and none of such buildings, structures or
equipment is in need of maintenance
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or repairs except for ordinary, routine maintenance and
repairs that are not material in nature or cost. The
building, structures and equipment included in the Assets are
sufficient for the continued conduct of the Business after
the Closing in substantially the same manner as conducted
prior to the Closing.
(g) Properties, Contracts, Permits and Other Data
(i) Schedule 3.1(c) hereto contains a complete and
correct list of all contracts, service agreements,
maintenance agreements, purchase commitments for
materials and other services, leases under which NRG
is a lessor or lessee and other agreements
pertaining to the Business to which NRG, or an
affiliate of NRG is a party, the benefits of which
are enjoyed in the Business or to which any of the
assets of NRG is subject;
(ii) Schedule 5.1(g) hereto contains a complete and
correct list of all Business Locations. Except for
the Business Locations on Schedule 5.1(g), NRG does
not own, lease or otherwise utilize any real
property in the conduct of the Business; and
(iii) There are no Permits relating to the development,
use, maintenance or occupation of the Business
Locations and the conduct of the Business which are
transferable.
True and complete copies of all documents (including all
amendments thereto) referred to in Schedule 5.1(g) hereto
have been delivered to or made available for inspection by
Eagle Canada. All rights, licenses, leases, registrations,
applications, contracts, commitments, Permits and other
arrangements by NRG referred to in Schedules 5.1(g) are in
full force and effect and are valid and enforceable in
accordance with their respective terms (subject to usual
creditors rights), except where the failure to be in full
force and effect and valid and enforceable would not in the
aggregate have an adverse effect on the assets of NRG or on
its results of operations. NRG and its affiliates are not in
breach or default in the performance of any material
obligation thereunder and to the best of NRG's knowledge no
other party is in such breach or default and no event has
occurred or has failed to occur whereby any of the other
parties thereto have been or will be released therefrom or
will be entitled to refuse to perform thereunder. Except as
set forth in Schedule 3.1(c) hereto, there are no contracts,
agreements, licenses, Permits, franchises or rights to which
NRG or any of its affiliates is a party which are material to
the ownership of any of NRG's assets or to the conduct of the
Business as conducted by NRG.
(h) Legal Proceedings. Except as described in Schedule 5.1(h)
hereto, (i) there is no litigation, proceeding, claim or
governmental investigation pending or threatened seeking
relief or damages which, if granted, would adversely affect
the Assets, or the ability of Eagle Canada to use and operate
the Assets or which would prevent the consummation of the
transactions contemplated by this Agreement and (ii) NRG has
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not been charged with any violation of or threatened with a
charge or violation of, nor is NRG aware of any facts or
circumstances that, if discovered by third parties, could
give rise to a charge or a violation of, any provision of
Applicable Law or regulation which charge or violation, if
determined adversely to NRG would adversely affect the
Business or the results of operations of NRG or that might
reasonably be expected to affect the right of Eagle Canada to
own the Assets or operate NRG's Business after the Effective
Date in substantially the manner in which it is currently
operated.
(i) Insurance. Schedule 5.1(i) hereto sets forth a list and brief
description of the insurance policies relating to the
insurable properties of NRG and its Affiliates and the
conduct of the Business of NRG. All premiums due and arising
thereon have been paid and such policies are in full force
and effect.
(j) Intellectual Property. NRG owns and possesses all of the
Intellectual Property needed for the conduct of the Business
as presently conducted. To the knowledge of NRG, there is no
basis for the assertion by any person of any claim against
Eagle Canada or NRG with respect to the use by NRG or Eagle
Canada of any of the Intellectual Property. NRG is not
infringing or violating, and to the knowledge of NRG, NRG has
not infringed or violated, any rights of any person with
respect to any of the Intellectual Property, and the
Intellectual Property is not subject to any order, injunction
or agreement respecting its use.
(k) Government Licenses, Permits and Related Approvals. NRG has
and will have following the Closing, all licenses, Permits,
consents, approvals, authorizations, qualifications and
orders of Governmental Entities required for the conduct of
the Business as presently conducted.
(l) Conduct of Business in Compliance with Regulatory and
Contractual Requirements. NRG has conducted the Business so
as to comply with all Applicable Laws, ordinances,
regulations, rights of concession, licenses, know-how or
other proprietary rights of others, the failure to comply
with which would individually or in the aggregate have a
material adverse effect on the Business or the results of
operations of NRG.
(m) Certain Fees. Neither NRG, nor its officers, directors or
employees on behalf of NRG, have employed any broker or
finder or incurred any other liability for any brokerage
fees, commissions or finders' fees in connection with the
transactions contemplated hereby.
(n) Environmental, Health and Safety Compliance. Except as
described on Schedule 5.1(n) hereto:
(i) NRG is and has continuously been in compliance with
all Environmental Laws;
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(ii) all material notices, Permits, licenses or similar
authorizations, if any, required to be obtained or
filed under any Environmental Law in connection with
the operation of the Business have been obtained or
filed;
(iii) there are no past, pending or threatened
investigations, proceedings or claims against NRG
relating to the presence, release or remediation of
any Hazardous Material or for non-compliance with
any Environmental Law;
(iv) Hazardous Materials have not been treated, stored or
disposed of on, to or from any property relating in
any way to NRG or that is or was owned or leased by
NRG (including, without limitation, the Business
Locations);
(v) none of the properties owned, leased or operated by
NRG (including, without limitation, the Business
Locations) have been used as landfill or waste
disposal sites or contain any underground storage
tanks;
(vi) no conditions or circumstances are known to NRG to
exist or to have existed with respect to NRG or the
Business Locations, including, without limitation,
the off-site disposal of Hazardous Materials, that
could give rise to any remedial action under, or
impose any liability on NRG or Eagle Canada with
respect to any Environmental Law;
(vii) NRG has not received any notice or claim, and is not
aware of any facts suggesting, that NRG is or may be
liable to any person as a result of any Hazardous
Material generated, treated or stored at any real
estate at any time owned or leased by NRG
(including, without limitation, the Business
Locations) or discharged, emitted, released or
transported from any real estate at any time owned
or leased by NRG (including, without limitation, the
Business Locations) or any other source in the
conduct of the Business of NRG;
(viii) no conditions or circumstances are known by NRG to
exist or to have existed, and no activities are
known by NRG to be occurring or to have occurred,
that are resulting or have resulted in the exposure
of any person or property to a Hazardous Material
such that the owner, operator or lessee of the
Business Locations or the owner of the Business may
in the future be liable to such persons or to the
owners of such property for personal or other
injuries or damages resulting from such exposure;
and
(ix) there are no federal or provincial air emission
credits or air or water discharge Permits related to
the Business Locations.
For purposes of this Agreement, the term "Environmental Laws"
shall mean, as to the Business Locations or any given asset
or operation of NRG, all applicable laws, statutes,
ordinances, rules and regulations of any Governmental Entity
pertaining to protection of the environment in effect as of
the Effective Date. For purposes of this
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Agreement, the term "Hazardous Material" shall mean any
substance which is listed or defined as a hazardous
substance, hazardous constituent or solid waste pursuant to
any Environmental Law.
(o) Inventories. The inventories reflected on the Unaudited
Financial Statements and those constructed or acquired by NRG
after the date of the Unaudited Financial Statements, except
to the extent disposed of since such date in the ordinary
conduct of the Business by NRG, are in good, merchantable and
usable condition and have been reflected on the books of NRG
in accordance with GAAP. Except as set forth on Schedule
5.1(e) hereto, all such inventories are owned by NRG free and
clear of any liens or Encumbrances.
(p) Books and Records. All of the books and records of NRG have
been prepared and maintained in accordance with good business
practices and, where applicable, in conformity with GAAP and,
to the best of NRG's knowledge, in compliance with all
Applicable Laws, regulations and other requirements.
(q) Powers of Attorney. There are no outstanding powers of
attorney relating to or affecting NRG.
(r) Taxes. NRG has caused to be timely filed with appropriate
federal, provincial, local and other Governmental Entities
all Tax Returns required to be filed with respect to NRG or
the conduct of the Business and has paid, caused to be paid,
or adequately reserved in the Financial Statements all Taxes
due or claimed to be due from or with respect to such Tax
Returns. No extension of time has been requested or granted
with respect to the filing of any Tax Return or payment of
any Taxes, and no issue has been raised or adjustment
proposed by Revenue Canada or any other taxing authority in
connection with any of NRG's Tax Returns, and there are no
outstanding agreements or waivers that extend any statutory
period of limitations applicable to any federal, provincial
or local Tax Returns that include or reflect the use and
operation of NRG or the conduct of the Business. Except as
set forth on Schedule 5.1(r), NRG has not received or does
not have knowledge of any notice of deficiency, assessment,
audit, investigation, or proposed deficiency, assessment or
audit with respect to NRG or the conduct of the Business from
any taxing authority. NRG has not taken action which is not
in accordance with past practice that could defer any
liability for Taxes from any taxable period ending on or
before the Effective Date to any taxable period ending after
such date.
(s) Rights of Third Parties. Except as specifically set forth on
one or more of the Schedules hereto, the Assets are
transferable and assignable to Eagle Canada as contemplated
by this Agreement without the waiver of any right of first
refusal or the consent of any other party being obtained, and
there exists no preferential right of purchase in favor of
any person with respect to any of the Assets or the Business.
(t) Disclosure. No representation or warranty in this Section 5.1
or in any Schedule or Exhibit to this Agreement, or in any
written statement, certificate or other document
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furnished to Eagle Canada contains or will contain any untrue
statement of a material fact or omits or will omit a material
fact necessary to make the statements therein not misleading.
There is no fact known to NRG that has, or in the future may
have, a material adverse effect on the Business or the
results of operations of NRG, which fact has not been set
forth in this Agreement or in the Schedules hereto.
(u) Additional Information. Schedule 5.1(u) hereto contains
accurate lists and summary descriptions of the following:
(i) the names and titles of and current hourly rates for
all employees of NRG, together with the vacation and
severance benefits to which each such person is
entitled; and
(ii) all names under which NRG has conducted any business
or which it has otherwise used.
(v) Labor Matters. NRG has not suffered any strike, slowdown,
picketing or work stoppage by any union or other group of
employees. NRG is not a party to any collective bargaining
agreement; no such agreement determines the terms and
conditions of employment of any employee of NRG; no
collective bargaining agent has been certified as a
representative of any of the employees of NRG; and no
representation campaign or election is now in progress with
respect to any of the employees of NRG. NRG has not taken or
failed to take any action that would cause Eagle Canada to
incur any liability in the event Eagle Canada chooses not to
employ any of NRG's employees following the Closing. NRG has
complied in all material respects with all laws relating to
the employment of labor in the conduct of the Business,
including provisions thereof relating to wages, hours, equal
opportunity and the payment of pension contributions, social
security and other taxes.
(w) Employee Benefit Plans and Arrangements.
(i) Schedule 5.1(w) hereto lists all employee benefit
plans and employment agreements and severance
agreements or other similar arrangements, whether or
not in writing (together with all documents or
instruments establishing or constituting any related
trust, annuity contract or other funding instrument)
to which NRG is (or ever has been) a party or by
which NRG is (or ever has been) bound, including,
without limitation, (1) any profit-sharing, deferred
compensation, bonus, stock option, stock purchase,
pension, retainer, consulting, retirement,
severance, or incentive compensation plan, agreement
or arrangement, (2) any welfare benefit plan,
agreement or arrangement or any plan, agreement or
arrangement providing for "fringe benefits" or
perquisites to employees, officers, directors or
agents, including but not limited to benefits
relating to automobiles, clubs, vacation, child
care, parenting or maternity leave, sabbaticals,
sick leave, medical expenses, dental expenses,
disability, accidental death or dismemberment,
hospitalization, life
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insurance and other types of insurance, (3) any
employment agreement, or (4) any other employee
benefit plan.
(ii) NRG has delivered to Eagle Canada true, correct and
complete copies of all plan documents and/or
contracts (including, where applicable, any
documents and/or instruments establishing or
constituting any related trust, annuity contract or
funding instrument) and summary plan descriptions
with respect to the plans, agreements and
arrangements listed in Schedule 5.1(w) hereto, or
summary descriptions of any such plans, agreements
or arrangements not otherwise in writing. NRG has
provided Eagle Canada with true, correct and
complete copies of any document filed with any
Governmental Entity with respect to each plan
identified in Schedule 5.1(w) hereto. Each of such
documents accurately reflects the financial status
of the plan to which it relates as of the dates
specified therein. In addition, NRG has provided
Eagle Canada with (a) true, correct and complete
copies of any and all written communications notices
or claims that NRG has received from the Revenue
Canada or any other Governmental Entity concerning
any plan, arrangement or agreements identified in
Schedule 5.1(w) hereto that give notice of possible
imposition of a fine, penalty or liability with
respect to such plan, arrangement or agreement and
(b) true, correct and complete copies of any
complaints, petitions, claims or other notices of
liability relating to any such plan, arrangement or
agreement that have been filed by any other party.
(iii) For each of the plans, agreements and arrangements
identified in Schedule 5.1(w) hereto, there are no
negotiations, demands or proposals that are pending
or have been made since the dates of the respective
items furnished pursuant to Section 5.1(w)(ii)
hereto which concern matters now covered, or that
would be covered, by plans, agreements or
arrangements of the type described in this Section.
(iv) NRG and each of the plans, agreements and
arrangements identified in Schedule 5.1(w) hereto
are in full compliance with Applicable Law. NRG has
performed all of its obligations under all such
plans, agreements and arrangements including, but
not limited to, the full payment when due of all
amounts required to be made as contributions thereto
or otherwise. There are no actions, suits or claims
(other than routine claims for benefits) pending or
threatened against such plans or their assets, or
arising out of such plans, agreements or
arrangements, and, to the best knowledge of NRG, no
facts exist which could give rise to any such
actions, suits or claims that might have a material
adverse effect on such plans, agreements or
arrangements or give rise to a fine, penalty, tax or
related charge by any Governmental Entity.
(v) Except as specified in Schedule 5.1(w) hereto, each
of the plans, agreements or arrangements can be
terminated by NRG within a period of 30 days,
without payment of any additional compensation or
amount or the additional vesting or acceleration of
any such benefits.
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(vi) With respect to each plan identified in Schedule
5.1(w), no transaction has occurred which is
prohibited by, or which could give rise to a
material liability under, Applicable Law.
(x) Guarantees. NRG is not a guarantor or otherwise liable for
any liability or obligation (including, without limitation,
indebtedness) of any other person.
(y) Transactions with Affiliates. Except as disclosed on Schedule
5.1(y), no shareholder, director or officer of NRG or any
associate of any such shareholder, director or officer is
currently, directly or indirectly, a party to any transaction
with NRG, including any agreement, arrangement or
understanding, written or oral, providing for the employment
of, furnishing of services by, rental of real or personal
property from, or otherwise requiring payments to any such
shareholder, director, officer or associate. To the best
knowledge of NRG, no shareholder, director or officer of NRG
or any associate of any such shareholder, director or officer
owns, directly or indirectly, any interest in, or serves as a
director, officer, or employee of, any customer, supplier or
competitor of NRG. For purposes of this Section 5.1(y) only,
an "associate" of any shareholder, director or officer means
any member of the immediate family of such shareholder,
director or officer or any corporation, partnership, trust or
other entity in which such shareholder, director, officer or
employee has a substantial ownership or beneficial interest
(other than an interest in a public corporation which does
not exceed three percent of its outstanding securities) or is
a director, officer, partner, or trustee or person holding a
similar position.
(z) Services. Within the past two (2) years there have been no
complaints of customers not cured or which are not reflected
in NRG's customers' complaint records.
(aa) Sales Quotations. Schedule 5.1(aa) hereto sets forth a
complete and correct list of all current Sales Quotations for
which the charge for services is $50,000 CAN or more.
(bb) Accounts Receivable. The Accounts Receivable which are
reflected in the Unaudited Financial Statements and all
Accounts Receivable which have arisen since the Unaudited
Financial Statements, have arisen only from bona fide
transactions in the ordinary course of business. NRG has no
knowledge of any fact or circumstances which would result in
any increase in the uncollectability of the Accounts
Receivable as a class in excess of the reserve provided for
in accordance with GAAP. All of the Accounts Receivable are
valid and enforceable claims, not subject to any valid
defenses or offsets as of the date hereof. Schedule 5.1(bb)
attached hereto sets forth an accurate list of all Accounts
Receivable as included in the Unaudited Financial Statements.
The Cash Amount, NRG's cash on hand and the Accounts
Receivable are or will be sufficient to satisfy all debts,
liabilities and other obligations of NRG at the Effective
Date.
(cc) Material Assets. Except as set forth in Schedule 5.1(cc), the
Assets comprise of all the assets the use of which is
necessary for the continued conduct by Eagle Canada
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of the Business as now being conducted by NRG. Upon
consummation of the transactions provided for herein, NRG
will not have assets relating to the Business, in the
aggregate, of a material value, other than cash on hand, the
Accounts Receivable and the Eagle Shares which are not
immediately distributed to the Securityholders.
(dd) The representations and warranties set forth in this Article
5 shall apply in all applicable respects to any Subsidiary or
Affiliate of NRG, and without limiting the foregoing, shall
specifically apply in respect of any Assets owned by any such
Subsidiary or Affiliate.
5.2 REPRESENTATIONS AND WARRANTIES OF EAGLE CANADA
Eagle Canada represents and warrants to NRG as follows:
(a) Due Organization; Good Standing and Power. Eagle Canada is a
corporation duly organized, validly existing and in good
standing under the laws of the State of Delaware. Eagle
Canada has all corporate power and authority to enter into
this Agreement (and each other agreement expressly provided
for herein) and to perform its respective obligations
hereunder and thereunder.
(b) Authorization and Validity of Agreement. The execution,
delivery and performance of this Agreement by Eagle Canada
and the consummation by Eagle Canada of the transactions
contemplated hereby have been duly authorized by all
requisite corporate action on its part. No other corporate
action is necessary for the authorization, execution,
delivery and performance by Eagle Canada of this Agreement
and the consummation by Eagle Canada of the transactions
contemplated hereby. This Agreement has been duly executed
and delivered by Eagle Canada and constitutes a legal, valid
and binding obligation of Eagle Canada, enforceable against
Eagle Canada in accordance with its terms, except as the same
may be limited by bankruptcy, insolvency or other similar
laws affecting creditors' rights generally and by general
equity principles.
(c) No Approvals or Notices Required; No Conflict with
Instruments. The execution, delivery and performance of this
Agreement by Eagle Canada and the consummation by it of the
transactions contemplated hereby (i) will not violate (with
or without the giving of notice or the lapse of time or
both), or require any consent, approval, filing or notice
under any provision of any law, rule or regulation, court
order, judgment or decree applicable to Eagle Canada, and
(ii) will not conflict with, or result in the breach or
termination of any provision of, or constitute a default
under, or result in the acceleration of the performance of
the obligations of Eagle Canada, under, the charter or bylaws
of Eagle Canada or any indenture, mortgage, deed of trust,
lease, licensing agreement, contract, instrument or other
agreement to which Eagle Canada is a party or by which Eagle
Canada or any of its assets or properties is bound.
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(d) Certain Fees. Neither Eagle Canada nor any of its officers,
directors or employees, on behalf of it, has employed any
broker or finder or incurred any other liability for any
brokerage fees, commissions or finders' fees in connection
with the transactions contemplated hereby.
5.3 REPRESENTATIONS AND WARRANTIES OF EAGLE GEOPHYSICAL
Eagle Geophysical represents and warrants to NRG as follows:
(a) Due Organization; Good Standing and Power. Eagle Geophysical
is a corporation duly organized, validly existing and in good
standing under the laws of the State of Delaware. Eagle
Geophysical has all corporate power and authority to enter
into this Agreement (and each other agreement expressly
provided for herein) and to perform its respective
obligations hereunder and thereunder.
(b) Authorization and Validity of Agreement. The execution,
delivery and performance of this Agreement by Eagle
Geophysical and the consummation by Eagle Geophysical of the
transactions contemplated hereby have been duly authorized by
all requisite corporate action on its part. No other
corporate action is necessary for the authorization,
execution, delivery and performance by Eagle Geophysical of
this Agreement and the consummation by Eagle Geophysical of
the transactions contemplated hereby. This Agreement has been
duly executed and delivered by Eagle Geophysical and
constitutes a legal, valid and binding obligation of Eagle
Geophysical, enforceable against Eagle Geophysical in
accordance with its terms, except as the same may be limited
by bankruptcy, insolvency or other similar laws affecting
creditors' rights generally and by general equity principles.
(c) No Approvals or Notices Required; No Conflict with
Instruments. Other than the filing for approval of the
listing of the Eagle Shares on the NASDAQ National Market
System, the execution, delivery and performance of this
Agreement by Eagle Geophysical and the consummation by it of
the transactions contemplated hereby (i) will not violate
(with or without the giving of notice or the lapse of time or
both), or require any consent, approval, filing or notice
under any provision of any law, rule or regulation, court
order, judgment or decree applicable to Eagle Geophysical,
and (ii) will not conflict with, or result in the breach or
termination of any provision of, or constitute a default
under, or result in the acceleration of the performance of
the obligations of Eagle Geophysical, under, the charter or
bylaws of Eagle Geophysical or any indenture, mortgage, deed
of trust, lease, licensing agreement, contract, instrument or
other agreement to which Eagle Geophysical is a party or by
which Eagle Geophysical or any of its assets or properties is
bound.
(d) Certain Fees. Neither Eagle Geophysical nor any of its
officers, directors or employees, on behalf of it, has
employed any broker or finder or incurred any other liability
for any brokerage fees, commissions or finders' fees in
connection with the transactions contemplated hereby.
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(e) Information Supplied. The information supplied or to be
supplied by Eagle Geophysical for inclusion or incorporation
by reference in the Information Circular shall, at the date
the Information Circular is first mailed to the
Securityholders and at the time of the NRG Meetings, be true
and complete in all material respects and shall not contain
any misrepresentation (as defined in the Securities Act
(Alberta)).
(f) Authorization for Eagle Shares. Eagle Geophysical has taken
all necessary action to permit it to issue the number of
shares of Eagle Shares required to be issued pursuant to the
terms of the Plan of Arrangement and this Agreement. The
Eagle Shares issued pursuant to the terms of the Plan of
Arrangement and this Agreement will, when issued, be validly
issued, fully paid and non-assessable and not subject to
pre-emptive rights.
5.4 SURVIVAL OF REPRESENTATIONS AND WARRANTIES
Notwithstanding the right of Eagle Canada to investigate the Assets
and the affairs of NRG, Eagle Canada shall have the right to rely fully upon
the representations and warranties, covenants and agreements of NRG contained
in this Agreement, and to pursue all rights and remedies in connection
therewith. Notwithstanding the right of NRG to investigate the Eagle Shares and
the affairs of Eagle Canada and Eagle Geophysical, NRG shall have the right to
rely fully upon the representations and warranties, covenants and agreements of
Eagle Canada and Eagle Geophysical contained in this Agreement, and to pursue
all rights and remedies in connection therewith. The respective representations
and warranties of the parties contained herein (other than those set forth in
Sections 3.1(c), (e), (n), (r) and (bb) hereof (the "Surviving Warranties"))
shall expire on the fourth anniversary of the Effective Date; provided that
there shall be no expiration of any such representation or warranty as to which
a bona fide claim has been asserted by written notice of such claim delivered
to the party or parties making such representation or warranty during the
survival period. The Surviving Warranties and all other covenants and
agreements of the parties hereto shall survive the Closing indefinitely.
ARTICLE 6
COVENANTS, ACTIONS PRIOR TO CLOSING
6.1 ACCESS TO INFORMATION
During the period beginning on the date hereof and ending on the
Effective Date, NRG will (a) give or cause to be given to Eagle Canada and its
representatives such access, during normal business hours, to the Business
Locations, properties, books and records of NRG as Eagle Canada shall from time
to time reasonably request and (b) furnish or cause to be furnished to Eagle
Canada such financial and operating data and other information with respect to
NRG as Eagle Canada shall from time to time reasonably request. Eagle Canada
and its representatives shall be entitled to such access to the
representatives, officers and employees of NRG as Eagle Canada may reasonably
request. NRG shall permit Eagle Canada and its representatives to confirm, on
reasonable notice and on the basis of agreed methods, with NRG's principal
vendors, customers, and trade affiliates, that the acquisition by Eagle Canada
of NRG will be acceptable to such vendors, customers, and trade affiliates and
that the acquisition will not adversely effect the relationship of such
vendors,
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customers and trade affiliates with the Business. NRG agrees that such access
by Eagle Canada and its representatives shall include the right to conduct such
environmental investigations of the Business Locations as Eagle Canada shall
deem necessary or appropriate to determine on-site conditions and the presence
or absence of any Hazardous Materials. In connection with such environmental
investigations, NRG will provide to or make available for inspection by Eagle
Canada and its representatives all records relating to environmental matters.
6.2 CONDUCT OF THE BUSINESS
Except as specifically required or contemplated by this Agreement or
otherwise consented to or approved in writing by Eagle Canada, during the
period commencing on the date hereof and ending on the Effective Date, NRG
will:
(a) conduct the Business only in the usual, regular and ordinary
manner consistent with current practice and, to the extent
consistent with such operation, use its reasonable best
efforts to keep available the services of the present
employees of NRG and preserve NRG's present relationships
with persons having business dealings with NRG;
(b) maintain NRG's books, accounts and records in the usual,
regular and ordinary manner, on a basis consistent with past
practice, and comply in all material respects with all
Applicable Laws and other obligations of NRG;
(c) not (i) sell, lease or otherwise dispose of any of the Assets
of NRG, (ii) modify or change in any material respect any
contract of NRG, other than in the ordinary course of
business, (iii) enter into any new contract, commitment or
agreement relating to the Business, or (iv) agree, whether in
writing or otherwise, to do any of the foregoing; and
(d) not (i) permit or allow any of the Assets of NRG or the
Business Locations to become subject to any liens or
Encumbrances, (ii) waive any claims or rights relating to the
Business, except in the ordinary course of business and
consistent with past practice, (iii) grant any increase in
the compensation of any employees employed in the conduct of
the Business, except for reasonable increases in the ordinary
course of business and consistent with past practice or as
required by contractual arrangements existing on the date
hereof, and reasonable payments in normal sales compensation
plans, including bonuses, or (iv) agree, whether in writing
or otherwise, to do any of the foregoing.
6.3 COURT APPROVAL
As soon as reasonably practicable, NRG and Eagle Canada shall apply to
the Court pursuant to Section 186 of the ABCA for an order approving the
Arrangement pursuant to the terms hereof and the Plan of Arrangement and in
connection with such application shall:
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(a) forthwith file, proceed with and diligently prosecute an
application for an Interim Order under Section 186(4) of the
ABCA providing for, among other things, the calling and
holding of the NRG Meetings for the purpose of considering
and, if deemed advisable, approving the Arrangement pursuant
to the terms hereof and the Plan of Arrangement; and
(b) subject to obtaining such approvals of the Securityholders at
the NRG Meetings as may be directed by the Court in the
Interim Order, take the steps necessary to submit the Plan of
Arrangement to the Court and apply for the Final Order, and,
subject to the fulfillment of the conditions set forth in
Article 7 hereof, shall deliver to the Registrar, Articles of
Arrangement and such other documents as may be required to
give effect to the Plan of Arrangement.
6.4 COOPERATION; CONSENTS AND APPROVALS
In cooperation with Eagle Canada, NRG shall prepare all necessary
documents and filings and obtain all approvals, including the obtaining of the
Interim Order and the Final Order and the preparation of the Information
Circular.
(a) Without limiting the foregoing, NRG shall use all reasonable
efforts to, as soon as practicable, (i) complete the
preparation of the Information Circular as agreed with Eagle
Canada, and (ii) subject to the grant of the Interim Order,
mail to the Securityholders and file in all jurisdictions
where required the Information Circular, Notices of NRG
Meetings and forms of proxy and other documentation required
in connection with the NRG Meetings, the Interim Order and
Applicable Law. NRG shall use all reasonable efforts, subject
to the grant of the Interim Order, as soon as practicable,
and in any event on the dates specified in the Interim Order,
to convene the NRG Meetings for the purpose of approving the
Plan of Arrangement and this Agreement in accordance with the
Interim Order.
(b) NRG agrees to mail to Eagle Canada the Information Circular,
Notices of NRG Meetings and forms of proxy concurrent with
the mailing to the Securityholders.
(c) NRG shall ensure that the Information Circular complies with
all applicable disclosure laws and all other Applicable Laws
as they relate to the disclosure of information regarding NRG
and, without limiting the generality of the foregoing,
provides the Securityholders to which such Information
Circular is sent with information in sufficient detail to
permit them to form a reasoned judgment concerning the
matters before them.
(d) Eagle Canada shall provide all such information reasonably
required for inclusion in the Information Circular to permit
NRG to comply with Section 6.4(c) hereof.
(e) Subject to the terms and conditions set forth in Article 7
hereof and the fiduciary obligations of the Board of
Directors of NRG with respect to such matters, the Board of
Directors of NRG shall (i) recommend at the NRG Meetings that
the
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Securityholders vote to approve the Plan of Arrangement, (ii)
use its reasonable efforts to solicit from the
Securityholders proxies in favor of such approval, and (iii)
take all other action reasonably necessary to secure a vote
of the Securityholders in favor of the approval of the
Arrangement.
(f) Prior to the Effective Date, Eagle Canada shall have taken
all necessary action to permit it to issue the number of
Eagle Shares issuable as part of the Purchase Price upon the
Closing, and the Eagle Shares to be so issued will, when
issued pursuant to the terms hereof, be validly issued, fully
paid and non-assessable and not subject to any preemptive
rights.
(g) NRG shall deliver to Eagle Canada a list of such persons, if
any, that Eagle Canada, after discussions with counsel for
NRG, believes may be "Affiliates" of NRG (the "NRG
Affiliates") within the meaning of Rule 145 promulgated under
the U.S. Securities Act. NRG shall deliver or cause to be
delivered to Eagle Canada an undertaking by each NRG
Affiliate in form satisfactory to Eagle Canada that no Eagle
Shares received or to be received by such NRG Affiliate
pursuant to the Plan of Arrangement will be sold or disposed
of except pursuant to an effective registration statement
under the U.S. Securities Act or in accordance with the
provisions of Rule 144 or Rule 145(d) promulgated under the
U.S. Securities Act or another exemption from registration
under the U.S. Securities Act.
(h) Counsel to Eagle shall deliver an opinion, substantially in
the form attached as Exhibit "C" that the Eagle Shares issued
to NRG and distributed to its Securityholders are, subject to
certain limitations, freely tradeable.
6.5 FURTHER ACTIONS
Subject to the terms and conditions hereof, NRG and Eagle Canada will
each use their reasonable best efforts to take, or cause to be taken, all
action and to do, or cause to be done, all things necessary, proper or
advisable to consummate and make effective the transactions contemplated by
this Agreement, including using reasonable best efforts: (i) to obtain prior to
the Effective Date all consents, licenses, Permits, approvals, authorizations,
qualifications and orders of Governmental Entities and parties to contracts
with NRG as are necessary for the consummation of the transactions contemplated
hereby; (ii) to effect all necessary registrations and filings; and (iii) to
furnish to each other such information and assistance as reasonably may be
requested in connection with the foregoing. Where the consent of any third
party is required under the terms of any of NRG's leases or contracts to the
transactions contemplated by this Agreement, NRG will use reasonable best
efforts to obtain such consent on terms and conditions not less favorable than
as in effect on the date hereof. NRG and Eagle Canada shall cooperate fully
with each other to the extent reasonably required to obtain such consents.
6.6 NOTIFICATION
NRG shall promptly notify Eagle Canada in writing and keep it advised
as to (i) any litigation or administrative proceeding filed or pending against
NRG or, to its knowledge, threatened
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against it, including any such litigation or administrative proceeding that
challenges the transactions contemplated hereby; (ii) any material damage or
destruction of any of the assets of NRG; (iii) any material adverse change in
the results of operations of NRG; and (iv) any variance from the
representations and warranties contained in Section 5.1 hereof or of any
failure or inability on the part of NRG to comply with any of its covenants
contained in this Article 6.
6.7 NO INCONSISTENT ACTION
Subject to Sections 9.1 and 9.2 hereof, no party hereto shall take any
action inconsistent with its obligations under this Agreement or which could
materially hinder or delay the consummation of the transactions contemplated by
this Agreement.
6.8 ACQUISITION PROPOSALS
Subject to the board of directors' fiduciary duty to its shareholders,
none of NRG or any Affiliate, director, officer, employee or representative of
NRG shall, directly or indirectly (i) solicit, initiate or knowingly encourage
any Acquisition Proposal or (ii) engage in discussions or negotiations with any
person that is considering making or has made an Acquisition Proposal. NRG
shall immediately cease and cause to be terminated any existing activities,
discussions or negotiations with any persons conducted heretofore with respect
to any Acquisition Proposal and shall promptly request each such person who has
heretofore entered into a confidentiality agreement in connection with
Acquisition Proposal to return to NRG all confidential information hereto
furnished to such person by or on behalf of NRG.
6.9 PUBLIC ANNOUNCEMENTS
Except as may be required by Applicable Law or stock exchange or
National Association of Securities Dealers, Inc. regulation, neither Eagle
Canada, on the one hand, nor NRG, on the other, shall issue any press release
or otherwise make any public statements with respect to this Agreement or the
transactions contemplated hereby without the prior written consent of the other
party.
ARTICLE 7
CONDITIONS PRECEDENT
7.1 CONDITIONS PRECEDENT TO OBLIGATIONS OF ALL PARTIES
The respective obligations of the parties to consummate the
transactions contemplated by this Agreement and to file articles of arrangement
to give effect to the Arrangement shall be subject to the satisfaction (or
waiver by each party) on or prior to the Effective Date, of each of the
following conditions:
(a) No Governmental Action. No action of any private party or
Governmental Entity shall have been taken or threatened and
no statute, rule, regulation or executive order shall have
been proposed, promulgated or enacted by any Governmental
Entity which seeks to restrain, enjoin or otherwise prohibit
or to obtain damages or other relief in connection with this
Agreement or the transactions contemplated hereby.
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(b) Court Ordered Plan of Arrangement. A Final Order approving
the Plan of Arrangement shall have been obtained, such that
the Eagle Shares to be delivered by Eagle Canada to NRG shall
not require registration under the U.S. Securities Act.
(c) Securityholders Approval. NRG shall have obtained from the
Securityholders and the holders of all outstanding options
under its share option plan the requisite approval of the
Arrangement.
(d) Articles of Arrangement. The Articles of Arrangement relating
to the Arrangement shall be in form and substance
satisfactory to NRG and Eagle Canada, acting reasonably.
(e) Exercise of Rights of Dissent. Holders of not more than 10%
of the Common Shares, 10% of the Preferred Shares and 10% of
the Special Warrants shall have exercised rights of dissent
in relation to the Arrangement.
(f) NRG Affiliates. The obligations of NRG pursuant to Section
6.4(g) hereof shall have been fully satisfied.
(g) Regulatory Orders. NRG shall have obtained any orders or
determinations of applicable regulatory authorities required
under Applicable Laws in Canada to permit the resale of Eagle
Shares by NRG Securityholders resident in Canada without the
need to file a prospectus or make any other filing, except in
respect of insiders or control persons.
7.2 CONDITIONS PRECEDENT TO OBLIGATIONS OF EAGLE CANADA
The obligations of Eagle Canada to complete the transactions
contemplated under this Agreement are subject to the satisfaction (or waiver by
Eagle Canada) on or prior to the Effective Date of each of the following
conditions:
(a) Accuracy of Representations and Warranties. All
representations and warranties of NRG contained herein or in
any certificate or document delivered to Eagle Canada
pursuant hereto shall be true and correct in all material
respects on and as of the Effective Date, with the same force
and effect as though such representations and warranties had
been made on and as of the Effective Date, except as
contemplated or permitted by this Agreement.
(b) Performance of Agreements. NRG shall have, in all material
respects, performed all obligations and agreements, and
complied with all covenants and conditions, contained in this
Agreement to be performed or complied with by it prior to or
at the Effective Date.
(c) Actions and Proceedings. All corporate actions, proceedings,
instruments and documents required to carry out the
transactions contemplated by this Agreement or incidental
thereto and all other related legal matters shall be
reasonably satisfactory
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to counsel for Eagle Canada, and such counsel shall have been
furnished with such certified copies of such corporate
actions and proceedings and such other instruments and
documents as it shall have reasonably requested.
(d) Title. On the Effective Date, Eagle Canada shall be satisfied
in its reasonable discretion as to NRG's ownership of the
Assets, free and clear of all liens, easements, claims,
charges and Encumbrances, other than Permitted Encumbrances.
(e) Licenses and Consents. All licenses, Permits, consents,
approvals, authorizations, qualifications and orders of
governmental authorities that are transferable and are
reasonably necessary to enable Eagle Canada to own the Assets
(and lease and operate the Business Locations) and conduct
the Business after the Effective Date in substantially the
same manner as the assets of NRG are owned (and the Business
Locations are operated) and the Business is being conducted
as of the date hereof shall be in full force and effect.
(f) Environmental Matters. Eagle Canada shall not have discovered
any events, occurrences or conditions at or affecting the
Business Locations or the Business, which in the aggregate
could reasonably be expected to cause NRG to incur expenses
in excess of $5,000 for remediation of existing environmental
conditions or for past exposure on-site or off-site of any
person or property to any Hazardous Materials.
(g) Opinion of Counsel to NRG. Fraser ▇▇▇▇▇▇, counsel for NRG,
shall have furnished to Eagle Canada its written opinion,
dated the Effective Date, substantially in the form attached
as Exhibit "B" or as otherwise agreed between counsel to NRG
and counsel to Eagle Canada and Eagle Geophysical.
(h) Operation. The Business shall have been operated and
maintained substantially in the manner in which it has been
operated and maintained previously in the ordinary course of
business and NRG shall not have taken any action which is not
in the ordinary course of business and in compliance with the
terms of this Agreement, without the prior written approval
of Eagle Canada.
(i) Material Adverse Change. There shall have been no material
adverse change in the financial condition, profitability or
the results of operations of the Business from the date of
this Agreement until the Effective Date.
(j) Facts or Omissions. Eagle Canada shall not have discovered
any fact or omission materially adverse to the condition,
results of operations or prospects of NRG.
(k) Audit. Eagle Canada shall have reviewed the equipment of NRG
and, in its sole discretion, found such equipment to be in
good and usable condition and to have been reflected on the
books of NRG in accordance with GAAP.
(l) Payoff Letters. NRG shall have provided Eagle Canada with (i)
payoff letters, with per diem interest amounts, and (ii)
financing statements and other releases executed
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by the secured party, if any, which release any filed or
other liens or security interests that encumber the Assets,
all at NRG's expense, from its lenders (other than the
lenders of the Assumed Debt).
(m) Third Party Consents. All necessary third party consents
relating to the transactions contemplated by this Agreement
shall have been obtained, including any consents required for
the assignment of any Contract by NRG to Eagle Canada
pursuant to the terms hereof.
(n) Lender Consent. The lenders under the Assumed Debt shall have
consented to the consummation of the transactions
contemplated by this Agreement in a form reasonably
satisfactory to Eagle Canada.
(o) Employees. Eagle Canada shall have entered into employment
arrangements with such Key Employees as Eagle Canada deems
necessary for its operation of the Business.
7.3 CONDITIONS PRECEDENT TO THE OBLIGATIONS OF NRG
The obligations of NRG to complete the transactions contemplated under
this Agreement and to file articles of arrangement to give effect to the
Arrangement are subject to the satisfaction (or waiver by NRG) at or prior to
the Effective Date of each of the following conditions:
(a) Accuracy of Representations and Warranties. All
representations and warranties of Eagle Canada contained
herein or in any certificate or document delivered to NRG
pursuant hereto shall be true and correct on and as of the
Effective Date, with the same force and effect as though such
representations and warranties had been made on and as of the
Effective Date, except as contemplated or permitted by this
Agreement.
(b) Performance of Agreements. Eagle Canada shall have performed
all obligations and agreements, and complied with all
covenants and conditions contained in this Agreement to be
performed or complied with by it prior to or at the Effective
Date.
(c) Actions and Proceedings. All corporate actions, proceedings,
instruments and documents required to carry out the
transactions contemplated by this Agreement or incidental
thereto and all other related legal matters shall be
reasonably satisfactory to counsel for NRG, and such counsel
shall have been furnished with such certified copies of such
corporate actions and proceedings and such other instruments
and documents as it shall have reasonably requested.
(d) Opinion of Counsel to Eagle Geophysical and Eagle Canada.
Gardere ▇▇▇▇▇ ▇▇▇▇▇▇ & ▇▇▇▇▇, L.L.P., counsel to Eagle
Geophysical and Eagle Canada, shall have furnished to NRG its
written opinion, dated the Effective Date, substantially in
the form attached as Exhibit "C" or as otherwise agreed
between counsel to Eagle Geophysical and Eagle Canada and
counsel to ▇▇▇.
▇▇
▇▇
(e) Material Adverse Change. There shall have been no material
adverse change in the financial condition, profit ability or
the results of operations of Eagle Geophysical from the date
of this Agreement until the Effective Date.
(f) Facts or Omissions. NRG shall not have discovered any fact or
omission materially adverse to the condition, results of
operations or prospects of Eagle Geophysical.
ARTICLE 8
EMPLOYEES
8.1 EMPLOYMENT
NRG consents to Eagle Canada contacting NRG's officers and employees
regarding potential employment by Eagle Canada, including, without limitation,
▇▇▇▇▇▇ ▇▇▇▇, ▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇ ▇▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇▇, ▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇
▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇, ▇▇▇ ▇▇▇▇▇▇▇, ▇▇▇▇ ▇▇▇▇▇ and ▇▇▇▇▇ ▇▇▇▇▇▇▇ (the
"Key Employees"). Eagle Canada shall have no obligation to offer employment to
any of NRG's employees following the Effective Date, but may offer employment
to any or all of them, as Eagle Canada deems appropriate.
8.2 NO EAGLE CANADA LIABILITY
Eagle Canada shall have no responsibility, liability or obligation,
whether to employees, former employees, their beneficiaries or to any other
person with respect to, and NRG shall indemnify, defend and hold Eagle Canada
harmless with respect to, any employee benefit plan, practice, program or
arrangement (including without limitation the establishment, operation or
termination thereof) maintained for employees of NRG prior to the Effective
Date. NRG shall remain responsible for all expenses, taxes, claims, obligations
or liabilities associated with, arising out of or relating to any employee
benefit plan, practice, program or arrangement maintained by NRG with respect
to NRG prior to the Effective Date, including without limitation medical or
disability claims incurred but unreported prior to the Effective Date and
medical benefits with respect to any employee of NRG whose employment by NRG
was terminated on or before the Effective Date. Eagle Canada shall be under no
obligation to maintain or continue the medical and long-term disability
insurance policies currently maintained by NRG for NRG's employees.
ARTICLE 9
TERMINATION
9.1 GENERAL
Either NRG or Eagle Canada may terminate this Agreement provided such
party is not then in breach of its obligations hereunder at any time prior to
the Effective Date, upon notice to the other party if:
(a) the Interim Order has been granted, set aside or modified in
any manner unacceptable to NRG or Eagle Canada on appeal or
otherwise;
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(b) the Securityholders do not approve the Arrangement in
accordance with the terms of the Interim Order;
(c) in the event the Final Order is refused and no appeal thereof
is applied for before the period to appeal has expired;
(d) the Final Order has not been granted in form and substance
satisfactory to NRG and Eagle Canada on or before January 1,
1999; or
(e) the Arrangement has not become effective on or before January
1, 1999.
9.2 NO LIABILITIES IN EVENT OF TERMINATION
In the event of any termination of this Agreement as provided above,
this Agreement shall forthwith become wholly void and of no further force or
effect and there shall be no liability on the part of Eagle Canada, Eagle
Geophysical, NRG or their respective officers, directors, or agents, except
that the provisions of Section 12.1 hereof shall remain in full force and
effect, and provided that nothing contained herein shall release any party from
liability for any willful failure to comply with any provision, covenant or
agreement contained herein.
ARTICLE 10
COVENANTS, ACTION SUBSEQUENT TO CLOSING
10.1 ACCESS TO BOOKS AND RECORDS
Until the sixth anniversary of the Effective Date, NRG shall afford,
and will cause its affiliates to afford, to Eagle Canada, its counsel,
accountants and other authorized representatives, during normal business hours,
reasonable access to the books, records and other data of NRG and the Business
with respect to periods ending on or prior to the Effective Date to the extent
that such access may be reasonably required by Eagle Canada to facilitate (i)
the investigation, litigation and final disposition of any claims which may
have been or may be made against Eagle Canada in connection with the Business
or (ii) for any other reasonable business purpose.
10.2 MAIL
NRG authorizes and empowers Eagle Canada on and after the Effective
Date to receive and open all mail received by Eagle Canada relating to the
Business or the Assets and to deal with the contents of such communications in
any proper manner. NRG shall promptly deliver to Eagle Canada any mail or other
communication received by it after the Effective Date pertaining to the
Business or the Assets. Eagle Canada shall promptly deliver to NRG any mail or
other communication received by it after the Effective Date pertaining to the
Excluded Assets and any cash, checks or other instruments of payment in respect
of such assets.
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10.3 USE OF NAMES
After the Effective Date, NRG agrees that neither it, nor any of its
Affiliates shall use the names, trademarks, slogans, trade names, logos or
labels to be transferred to Eagle Canada as provided in Section 3.1 hereof.
10.4 THIRD PARTY CONSENTS
To the extent that NRG's rights under any Contract or other Asset
which is to be transferred to Eagle Canada pursuant to the terms hereof may not
be transferred without the consent or approval of another person which has not
been obtained at the Effective Time despite the exercise by NRG of its
reasonable best efforts, this Agreement shall not constitute an agreement to
transfer the same if an attempted transfer would constitute a breach thereof or
be unlawful, and NRG, at its expense, shall use its reasonable best efforts to
obtain any such required consent or approval as promptly as possible, and Eagle
Canada shall reasonably cooperate with such efforts. If any such consent or
approval shall not be obtained or if any attempted transfer would be
ineffective or impair Eagle Canada's rights to the Assets in question so that
Eagle Canada would not in effect acquire the benefit of all such rights, NRG,
to the maximum extent permitted by law, (a) shall act after the Effective Time
as Eagle Canada's agent in order to obtain for Eagle Canada the benefits
thereunder, and (b) shall cooperate to the maximum extent permitted by law,
with Eagle Canada in any other reasonable arrangement designed to provide such
benefits to Eagle Canada, including by agreeing to remain liable under any
Contract to be assigned to Eagle Canada hereunder. Nothing contained in this
Section 10.4 shall relieve NRG of its obligations under any other provisions of
this Agreement or modify the rights of Eagle Canada under Section 7.2 of this
Agreement.
10.5 CONFIDENTIALITY
NRG acknowledges and agrees that irreparable damage would occur in the
event any confidential information regarding the business, assets, results of
operations or financial condition of NRG or Eagle Canada were disclosed to or
utilized on behalf of any person which is in competition in any respect with
the Business (or the business of Eagle Canada conducted following the Closing).
Accordingly, NRG covenants and agrees that it will not, directly or indirectly,
without the prior written consent of Eagle Canada, use or disclose any of such
confidential information. The provisions of this Section 10.5 shall not
prohibit a party from disclosing any confidential information covered by this
Section 10.5 pursuant to a subpoena or other validly issued administrative or
judicial process requesting such information; provided, however, that prompt
notice is provided to Eagle Canada of the requirement of such disclosure.
ARTICLE 11
INDEMNIFICATION
11.1 INDEMNIFICATION BY NRG
Subject to the provisions of this Article 11, NRG shall protect,
indemnify, defend and hold harmless Eagle Canada and Eagle Geophysical, each
officer, director and agent of Eagle Canada and Eagle Geophysical and each
person who controls Eagle Canada and Eagle Geophysical in respect
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of any losses, claims, damages, liabilities, deficiencies, delinquencies,
defaults, assessments, fees, penalties or related costs or expenses, including,
but not limited to, court costs and attorneys', and accountants' fees and
disbursements, and any federal, provincial, state or local income or franchise
taxes payable in respect of the receipt of cash or money in discharge of the
foregoing (collectively referred to herein as "Damages") arising out of or are
based upon (i) the Retained Liabilities, or (ii) the breach of any of the
representations, warranties, covenants or agreements made by NRG in this
Agreement, including the Exhibits and Schedules hereto, or in any certificate
or instrument delivered by or on behalf of NRG pursuant to this Agreement.
11.2 INDEMNIFICATION BY EAGLE CANADA
Subject to the provisions of this Article 11, Eagle Canada shall
protect, defend, indemnify and hold harmless NRG, in respect of any Damages
arising out of or based upon (i) the Assumed Liabilities or (ii) the breach of
any of the representations, warranties, covenants or agreements made by Eagle
Canada in this Agreement, including the Exhibits and Schedules hereto.
11.3 INDEMNIFICATION BY EAGLE GEOPHYSICAL
Subject to the provisions of this Article 11, Eagle Geophysical shall
protect, defend, indemnify and hold harmless NRG, in respect of any Damages
arising out of or based upon the breach of any of the representations,
warranties and covenants or agreements made by Eagle Geophysical made pursuant
to Section 5.3 of this Agreement.
11.4 INDEMNIFICATION PROCEDURES
The obligations and liabilities of each indemnifying party hereunder
with respect to claims resulting from the assertion of liability by the other
party or third parties shall be subject to the following terms and conditions:
(a) If any person shall notify an indemnified party (the
"Indemnified Party") with respect to any matter which may
give rise to a claim for indemnification (a "Claim") against
Eagle Canada on the one hand or NRG on the other (the
"Indemnifying Party") under this Article 11, then the
Indemnified Party shall promptly notify each Indemnifying
Party thereof in writing; provided, however, that no delay on
the part of the Indemnified Party in notifying any
Indemnifying Party shall relieve the Indemnifying Party from
any obligation hereunder unless (and then solely to the
extent) the Indemnifying Party thereby is prejudiced.
(b) Any Indemnifying Party will have the right to defend the
Indemnified Party against the Claim with counsel of its
choice reasonably satisfactory to the Indemnified Party so
long as (i) the Indemnifying Party notifies the Indemnified
Party in writing within 15 days after the Indemnified Party
has given notice of the Claim that the Indemnifying Party
will indemnify the Indemnified Party from and against the
entirety of any Damages the Indemnified Party may suffer
resulting from, arising out of, relating to, in the nature of
or caused by the Claim, (ii) the Indemnifying Party provides
the Indemnified Party with evidence reasonably acceptable to
the
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Indemnified Party that the Indemnifying Party will have the
financial resources to defend against the Claim and fulfill
its indemnification obligations hereunder, (iii) the Claim
involves only money damages and does not seek an injunction
or other equitable relief, (iv) settlement of, or an adverse
judgment with respect to, the Claim is not, in the good faith
judgment of the Indemnifying Party, likely to establish a
precedential custom or practice materially adverse to the
continuing business interests of the Indemnified Party, and
(v) the Indemnifying Party conducts the defense of the Claim
actively and diligently and in good faith.
(c) So long as the Indemnifying Party is conducting the defense
of the Claim in accordance with Section 11.4(b) above, (i)
the Indemnified Party may retain separate co-counsel at its
sole cost and expense and participate in the defense of the
Claim, (ii) the Indemnified Party will not consent to the
entry of any judgment or enter into any settlement with
respect to the Claim without the prior written consent of the
Indemnifying Party (not to be withheld unreasonably), and
(iii) the Indemnifying Party will not consent to the entry of
any judgment or enter into any settlement with respect to the
Claim without the prior written consent of the Indemnified
Party (not to be withheld unreasonably).
(d) In the event any of the conditions in Section 11.4(b) above
is or becomes unsatisfied, however, (i) the Indemnified Party
may defend against, and consent to the entry of any judgment
or enter into any settlement with respect to, the Claim in
any manner it reasonably may deem appropriate (and the
Indemnified Party need not consult with, or obtain any
consent from, any Indemnifying Party in connection
therewith), (ii) the Indemnifying Party will remain
responsible for any damages the Indemnified Party may suffer
resulting from, arising out of, relating to, in the nature
of, or caused by the Claim to the fullest extent provided in
this Article 11.
(e) EACH OF THE AGREEMENTS TO INDEMNIFY, DEFEND OR HOLD
HARMLESS CONTAINED IN THIS ARTICLE 11 SHALL APPLY
IRRESPECTIVE OF WHETHER THE SUBJECT CLAIM IS BASED IN
WHOLE OR IN PART UPON SOLE OR CONTRIBUTORY NEGLIGENCE
(WHETHER ACTIVE, PASSIVE OR GROSS), BREACH OF WARRANTY
OR BREACH OR VIOLATION OF ANY DUTY IMPOSED BY ANY LAW
OR REGULATION, EXCEPT AS OTHERWISE EXPRESSLY PROVIDED
IN THIS AGREEMENT.
ARTICLE 12
MISCELLANEOUS
12.1 PAYMENT OF CERTAIN FEES AND EXPENSES
Each of the parties hereto shall pay the fees and expenses
incurred by it in connection with the negotiation, preparation, execution and
performance of this Agreement, including, without limitation, brokers' fees,
attorneys' fees and accountants' fees.
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12.2 NOTICES
All notices, requests, demands and other communications which are
required or may be given under this Agreement shall be in writing and shall be
deemed to have been duly given if delivered personally or by facsimile or
mailed, first class mail, postage prepaid, return receipt requested, as
follows:
(a) If to NRG:
Natural Resources Geophysical Corporation
▇▇▇▇▇ ▇▇▇, ▇▇▇ - ▇▇▇ ▇▇▇▇▇▇ ▇.▇.
▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇ ▇▇▇ ▇▇▇
Attn: Mr. ▇▇▇▇▇▇ ▇▇▇▇, President
Facsimile number: (▇▇▇) ▇▇▇-▇▇▇▇
with a copy to:
Fraser ▇▇▇▇▇▇
▇▇▇▇ ▇▇▇▇▇, ▇▇▇ - ▇▇▇ ▇▇▇▇▇▇ ▇.▇.
▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇ ▇▇▇ ▇▇▇
Attn: ▇▇. ▇▇▇▇ ▇. ▇▇▇▇▇▇▇
Facsimile number: (▇▇▇) ▇▇▇-▇▇▇▇
(b) If to Eagle Canada:
Eagle Canada, Inc.
▇▇▇▇ ▇▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇
▇▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇▇
Attn: ▇▇. ▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇, President
Facsimile number: (▇▇▇) ▇▇▇-▇▇▇▇
with a copy to:
Gardere ▇▇▇▇▇ ▇▇▇▇▇▇ & ▇▇▇▇▇, L.L.P.
▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇
▇▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇▇
Attn: ▇▇. ▇. ▇. ▇▇▇▇▇▇▇ III
Facsimile number: (▇▇▇) ▇▇▇-▇▇▇▇
and a copy to:
Burstall Ward
▇▇▇▇, ▇▇▇ - ▇▇▇ ▇▇▇▇▇▇ ▇.▇.
▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇ ▇▇▇ ▇▇▇
Attn: ▇▇. ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇
Facsimile number: (▇▇▇) ▇▇▇-▇▇▇▇
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or to such other address as either party shall have specified by notice in
writing to the other party. All such notices, requests, demands and
communications shall be deemed to have been received on the earlier of the date
of delivery or on the fifth business day after the mailing thereof.
12.3 ENTIRE AGREEMENT
This Agreement (including the Exhibits and Schedules hereto)
constitutes the entire agreement between the parties hereto and supersedes all
prior agreements and understandings, oral and written, between the parties
hereto with respect to the subject matter hereof.
12.4 BINDING EFFECT; BENEFIT
This Agreement shall inure to the benefit of and be binding upon the
parties hereto and their respective permitted heirs, personal representatives,
successors and assigns. Nothing in this Agreement, expressed or implied, is
intended to confer on any person other than the parties hereto or their
respective heirs, personal representatives, successors and assigns, any rights,
remedies, obligations or liabilities under or by reason of this Agreement.
12.5 ASSIGNABILITY
This Agreement shall not be assignable by either party without the
prior written consent of the other party; provided, however, that Eagle Canada
shall be entitled to assign this Agreement to an Affiliate without the consent
of NRG.
12.6 AMENDMENT; WAIVER
This Agreement may be amended, supplemented or otherwise modified only
by a written instrument executed by the parties hereto. No waiver by any party
of any of the provisions hereof shall be effective unless explicitly set forth
in writing and executed by the party so waiving. Except as provided in the
preceding sentence, no action taken pursuant to this Agreement, including
without limitation, any investigation by or on behalf of any party, shall be
deemed to constitute a waiver by the party taking such action of compliance
with any representations, warranties, covenants, or agreements contained
herein, and in any documents delivered or to be delivered pursuant to this
Agreement and in connection with the transactions contemplated hereunder. The
waiver by any party hereto of a breach of any provision of this Agreement shall
not operate or be construed as a waiver of any subsequent breach.
12.7 SEVERABILITY
If any provision of this Agreement shall be declared by any court of
competent jurisdiction to be illegal, void or unenforceable, all other
provisions of this Agreement shall not be affected and shall remain in full
force and effect.
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12.8 COUNTERPARTS
This Agreement may be executed in any number of counterparts, each of
which shall be deemed to be an original and all of which together shall be
deemed to be one and the same instrument.
12.9 APPLICABLE LAW
This Agreement shall be governed by, and construed in accordance with,
the laws of the Province of Alberta.
12.10 EXECUTION BY EAGLE GEOPHYSICAL
Eagle Geophysical executes and delivers this Agreement solely for the
purposes of representing and warranting to NRG the representations and
warranties set forth in Section 5.3 hereof and entering into the agreements set
forth in Article 11 hereof.
IN WITNESS WHEREOF, the parties hereto have executed and delivered
this Agreement on the date first above written.
NATURAL RESOURCES EAGLE CANADA, INC.
GEOPHYSICAL CORPORATION
Per: /s/ ▇▇▇▇▇▇ ▇▇▇▇ Per: /s/ ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇
--------------------------- ----------------------------------
Name: ▇▇▇▇▇▇ ▇▇▇▇ Name: ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇
Title: President Title: Vice President
EAGLE GEOPHYSICAL, INC.
Per: /s/ ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇
-------------------------------
Name: ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇
Title: Vice President