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EXHIBIT 10.2
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ASSET PURCHASE AGREEMENT
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THIS AGREEMENT MADE THE 24TH DAY OF MARCH, 2000,
AMONG:
▇▇▇▇▇▇ DRILLING INTERNATIONAL LTD.
AND
THE SHAREHOLDERS OF
592655 ALBERTA LTD.
AND
▇▇▇▇▇▇ DRILLING LTD.
AND
UTI ENERGY CORP.
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TABLE OF CONTENTS
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ARTICLE 1 INTERPRETATION................................................1
1.1 Defined Terms.................................................1
1.2 Currency......................................................5
1.3 Sections and Headings.........................................5
1.4 Number, Gender and Persons....................................5
1.5 Accounting Principles.........................................5
1.6 Entire Agreement..............................................5
1.7 Time of Essence...............................................5
1.8 Applicable Law................................................6
1.9 Successors and Assigns........................................6
1.10 Severability..................................................6
1.11 Amendments and Waivers........................................6
1.12 Knowledge or Awareness........................................7
1.13 Schedules.....................................................7
ARTICLE 2 PURCHASE AND SALE OF PURCHASED ASSETS.........................7
2.1 Purchased Assets..............................................7
2.2 Excluded Assets...............................................9
2.3 Merchantability..............................................10
ARTICLE 3 PURCHASE PRICE...............................................11
3.1 Purchase Price...............................................11
3.2 Adjustments..................................................11
3.3 Allocation of Purchase Price.................................12
3.4 GST..........................................................13
ARTICLE 4 ASSUMPTION OF OBLIGATIONS....................................13
4.1 Assumption of Obligations....................................13
4.2 Exclusion of Liabilities.....................................14
ARTICLE 5 REPRESENTATIONS AND WARRANTIES OF SELLER.....................14
5.1 Organization.................................................14
5.2 Authorization................................................14
5.3 No Conflict..................................................14
5.4 No Other Agreements to Purchase..............................15
5.5 Sufficiency of Purchased Assets..............................15
5.6 Title to Purchased Assets....................................15
5.7 Leased Real Property.........................................15
5.8 Intellectual Property........................................16
5.9 Insurance....................................................16
5.10 Material Contracts...........................................17
5.11 Compliance with Laws; Governmental Authorization.............18
5.12 Consents and Approvals.......................................18
5.13 Financial Statements.........................................19
5.14 Books and Records............................................19
5.15 Absence of Changes...........................................19
5.16 Non-Arm's Length Transactions................................20
5.17 Litigation...................................................21
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5.18 Residency....................................................21
5.19 Environmental Matters........................................21
5.20 Employee Matters.............................................21
5.21 Customers and Suppliers......................................22
5.22 Y2K Compliance...............................................22
5.23 Full Disclosure..............................................23
5.24 Brokers......................................................23
5.25 ▇▇▇▇▇ ▇▇▇▇▇▇▇ Ltd............................................23
ARTICLE 6 REPRESENTATIONS AND WARRANTIES OF PURCHASER..................23
6.1 Organization.................................................23
6.2 Authorization................................................24
6.3 No Conflict..................................................24
6.4 Consents and Approvals.......................................24
6.5 Investment Canada............................................25
6.6 Brokers......................................................25
ARTICLE 7 SURVIVAL OF REPRESENTATIONS AND WARRANTIES...................25
7.1 Survival of Representations and Warranties..................25
ARTICLE 8 COVENANTS....................................................25
8.1 Access to Purchased Business and Purchased Assets............25
8.2 Delivery of Books and Records................................26
8.3 Change of Name...............................................26
8.4 Conduct of Purchased Business Prior to Closing...............27
8.5 Third Party Consents and Novations...........................28
8.6 Employees....................................................28
8.7 Employee Plans...............................................29
8.8 Financial Statement Cooperation..............................30
8.9 Exclusivity..................................................30
8.10 Non-Competition..............................................30
8.11 Update of Schedules..........................................32
ARTICLE 9 CONDITIONS OF CLOSING........................................32
9.1 Conditions of Closing in Favour of Purchaser.................32
9.2 Conditions of Closing in Favour of Seller....................34
ARTICLE 10 CLOSING AND TRANSFER OF POSSESSION...........................35
10.1 Place of Closing.............................................35
10.2 Closing Deliveries by Seller.................................35
10.3 Closing Deliveries by Purchaser..............................36
10.4 Further Assurances...........................................36
10.5 Transfer of Possession and Title.............................37
10.6 Risk of Loss.................................................37
ARTICLE 11 INDEMNIFICATION..............................................37
11.1 Indemnification by Seller and Shareholders...................37
11.2 Indemnification by Purchaser and UTI.........................37
11.3 Limitations on Indemnification...............................38
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11.4 Notice of Claim..............................................39
11.5 Direct Claims................................................39
11.6 Third Party Claims...........................................39
11.7 Settlement of Third Party Claims.............................40
11.8 Co-operation.................................................40
11.9 Scope........................................................40
ARTICLE 12 TERMINATION; REMEDIES; LIMITATIONS...........................41
12.1 Termination Agreement........................................41
12.2 Effect of Termination........................................41
ARTICLE 13 MISCELLANEOUS................................................41
13.1 Notices......................................................41
13.2 Consultation.................................................43
13.3 Disclosure...................................................43
13.4 Best Efforts.................................................43
13.5 Counterparts.................................................44
Schedule 1 - Financial Statements
Schedule 2 - Drilling Rigs and Equipment
Schedule 3 - Drilling Contracts
Schedule 4 - Leased Real Property
Schedule 5 - Vehicles
Schedule 6 - Other Agreements
Schedule 7 - Licenses and Permits
Schedule 8 - Intellectual Property
Schedule 9 - Allocation of Purchase Price
Schedule 10 - Insurance Policies
Schedule 11 - Consents and Approvals
Schedule 12 - Permitted Encumbrances
Schedule 13 - Subsequent Changes
Schedule 14 - Legal and Regulatory Proceedings
Schedule 15 - Environmental Matters
Schedule 16 - Employee Matters
Schedule 17 - Major Customers
Schedule 18 - Opinion of Seller's Counsel
Schedule 19 - Opinion of Purchaser's and UTI's Counsel
Schedule 20 - Related Transactions
Schedule 21 - ▇▇▇▇ of Sale
Schedule 22 - Employment Terms and Employment Agreement
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ASSET PURCHASE AGREEMENT
THIS AGREEMENT made the 24th day of March, 2000,
AMONG:
▇▇▇▇▇▇ DRILLING INTERNATIONAL LTD., a
corporation existing under the laws of
Alberta (hereinafter referred to as the
"SELLER")
- and -
THE PERSONS LISTED ON THE SIGNATURE PAGES
HEREOF UNDER THE HEADING "SHAREHOLDERS",
each being a shareholder of 592655
Alberta Ltd. (hereinafter referred to
collectively as the "SHAREHOLDERS")
- and -
▇▇▇▇▇▇ DRILLING LTD., a corporation
existing under the laws of Alberta
(hereinafter referred to as the
"Purchaser")
- and -
UTI ENERGY CORP., a corporation existing
under the laws of Delaware (hereinafter
referred to as "UTI")
THIS AGREEMENT WITNESSES THAT in consideration of the respective
covenants, agreements, representations, warranties and indemnities of the
Parties herein contained and for other good and valuable consideration (the
receipt and sufficiency of which are acknowledged by each Party), the Parties
agree as follows:
ARTICLE 1
INTERPRETATION
1.1 DEFINED TERMS
For the purposes of this Agreement, unless the context otherwise requires,
the following terms shall have the respective meanings set out below and
grammatical variations of such terms shall have corresponding meanings:
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"ABCA" means the Business Corporations Act (Alberta) as in effect on the
date hereof;
"AFFILIATE" has the meaning given to that term in the ABCA;
"ANNUAL FINANCIAL STATEMENTS" means the financial statements of the Seller
prepared by Seller's accountants on a review engagement basis as at and
for the financial years ended May 31, 1996, May 31, 1997, May 31, 1998 and
May 31, 1999, including the notes thereto, copies of which are annexed
hereto as Part 1 of Schedule 1;
"ASSOCIATE" has the meaning given to that term in the ABCA;
"ASSUMED OBLIGATIONS" has the meaning set out in Section 4.1;
"▇▇▇▇ OF SALE" means the assignment, ▇▇▇▇ of sale and assumption agreement
in substantially in the form attached as Schedule 21;
"BUSINESS DAY" means any day of the week, except Saturday, Sunday, or any
statutory holiday in Calgary, Alberta or Los Angeles, California;
"CDN. $" or "$" means lawful currency of Canada;
"CLOSING" means the closing of the purchase and sale contemplated
hereby on the Closing Date;
"CLOSING DATE" means April 18, 2000 or such other date as the Seller and
the Purchaser may mutually determine;
"CONTRACT" means any agreement, indenture, contract, lease, deed of trust,
licence, option, instrument or other commitment, whether written or oral;
"EFFECTIVE TIME" means 12:01 a.m. (Calgary time) on the Closing Date;
"EMPLOYEE PLANS" has the meaning set out in Subsection 5.20(b);
"EMPLOYEES" means all employees of the Seller immediately prior to the
Time of Closing;
"ENCUMBRANCE" means any encumbrance, lien, charge, hypothecation, pledge,
mortgage, title retention agreement, security interest of any nature,
adverse claim, exception, reservation, easement, right of occupation, any
matter capable of registration against title, preferential arrangement or
restriction of any kind including, without limitation, any restriction on
the use, voting, transfer, receipt of income or other exercise of any
attributes of ownership;
"ENVIRONMENTAL LAWS" has the meaning set out in Subsection 5.19(a);
"EXCLUDED ASSETS" has the meaning set out in Section 2.2;
"EXCLUDED LIABILITIES" has the meaning set out in Section 4.2;
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"FINAL ACCOUNTING STATEMENT" has the meaning set out in Subsection
3.2(c);
"FINANCIAL STATEMENTS" means the Annual Financial Statements and the
Interim Financial Statements;
"GST" has the meaning set out in Subsection 3.4(a);
"INTELLECTUAL PROPERTY" has the meaning set out in Subsection 2.1(l);
"INTERIM ACCOUNTING STATEMENT" has the meaning set out in Subsection
3.2(b);
"INTERIM FINANCIAL STATEMENTS" means the unaudited financial statements of
the Seller as prepared by the Seller as at and for the nine month period
commencing June 1, 1999 and ending February 29, 2000, copies of which are
annexed hereto as Part 2 of Schedule 1;
"LEASED REAL PROPERTY" means the real property that is used in the
Purchased Business and leased by the Seller and which is described in
Schedule 4;
"LIABILITIES" means any and all indebtedness, liabilities and obligations,
whether accrued or fixed, absolute or contingent, matured or unmatured or
determined or determinable, including, without limitation, those arising
under any Contract or law;
"LOSSES" means, in respect of any matter, all claims, demands,
proceedings, losses, damages, Liabilities, deficiencies, costs and
expenses (including, without limitation, all legal and other professional
fees and disbursements, interest, penalties and amounts paid in
settlement) arising directly or indirectly as a consequence of such
matter;
"MANAGEMENT AGREEMENTS" means (i) the Management Agreement dated September
1, 1996 between the Seller and 700392, as amended, and (ii) the Amended
and Restated Management Agreement dated September 1, 1996 between the
Seller and 584022, as amended;
"PARTY" means a party to this Agreement, and "PARTIES" means all of
such parties;
"PERMITTED ENCUMBRANCES" means any of the following Encumbrances:
(i) servitudes, easements, restrictions, rights-of-way and other
similar rights in real property or any interest therein,
provided the same are not of such nature as to materially
adversely affect the use of the property subject thereto;
(ii) undetermined or inchoate liens, charges and privileges
incidental to current construction or current operations and
statutory liens, charges, adverse claims, security interests
or encumbrances of any nature whatsoever claimed or held by
any governmental authority that relate to obligations not due
or delinquent;
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(iii) assignments of insurance provided to landlords (or their
mortgagees) pursuant to the terms of any lease, and liens or
rights reserved in any lease for rent or for compliance with
the terms of such lease and that relate to obligations not due
or delinquent;
(iv) security given in the ordinary course of the Purchased
Business to any public utility, any municipality or government
or any statutory or public authority and that relate to
obligations not due or delinquent;
(v) the reservations in any original grants from the Crown of any
real property or interest therein and statutory exceptions to
title, which do not materially detract from the value of the
real property concerned or materially impair its use in the
operation of the Purchased Business;
(vi) the Encumbrances described in Part 1 of Schedule 12 which
will continue after Closing; and
(vii) the Encumbrances described in Part 2 of Schedule 12 which
will be discharged by the Seller at the Closing;
"PERSON" means any individual, corporation, partnership, joint venture,
trust, unincorporated association, or any other judicial entity or a
government, state or agency or political subdivision thereof;
"PRIME RATE" means the annual variable rate of interest quoted or
published from time to time by Royal Bank of Canada at its main branch in
Calgary, Alberta as the "prime rate" of interest charged by it for
Canadian dollar loans made in Canada;
"PURCHASE PRICE" has the meaning set out in Section 3.1;
"PURCHASED ASSETS" has the meaning set out in Section 2.1;
"PURCHASED BUSINESS" means the business carried on by the Seller
consisting primarily of an oilfield drilling contract business;
"TAX ACT" means the Income Tax Act (Canada), as amended from time to
time;
"TIME OF CLOSING" means 2:00 p.m. (Calgary time) on the Closing Date, or
such other time on the Closing Date as the Seller and the Purchaser may
mutually determine;
"US EXCHANGE ACT" means the United States Securities Exchange Act of 1934,
as amended from time to time;
"US SECURITIES ACT" means the United States Securities Act of 1933, as
amended from time to time;
"UTI" means UTI Energy Corp., a corporation subsisting under the laws
of the State of Delaware;
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"584022" means ▇▇▇▇▇▇ ▇▇▇▇▇▇▇ Ltd., a corporation subsisting under the
laws of Alberta;
"592655" means 592655 Alberta Ltd., a corporation subsisting under the
laws of Alberta; and
"700392" means ▇▇▇▇▇▇ ▇▇▇▇▇▇▇ Ltd., a corporation subsisting under the
laws of Alberta.
1.2 CURRENCY
Unless otherwise indicated, all dollar amounts in this Agreement are
expressed in Canadian funds.
1.3 SECTIONS AND HEADINGS
The division of this Agreement into Articles, Sections and Subsections and
the insertion of headings are for convenience of reference only and shall not
affect the interpretation of this Agreement. Unless otherwise indicated, any
reference in this Agreement to an Article, Section, Subsection or Schedule
refers to the specified Article, Section or Subsection of or Schedule to this
Agreement.
1.4 NUMBER, GENDER AND PERSONS
In this Agreement, words importing the singular number only shall include
the plural and vice versa, words importing gender shall include all genders and
words importing persons shall include individuals, corporations, partnerships,
associations, trusts, unincorporated organizations, governmental bodies and
other legal or business entities of any kind whatsoever.
1.5 ACCOUNTING PRINCIPLES
Any reference in this Agreement to generally accepted accounting
principles refers to generally accepted accounting principles that have been
established in Canada, including those approved from time to time by the
Canadian Institute of Chartered Accountants or any successor body thereto.
1.6 ENTIRE AGREEMENT
Except for the provisions of the Confidentiality Agreement dated June 16,
1999 between the Seller and UTI that survive the termination of this Agreement,
this Agreement constitutes the entire agreement between the Parties with respect
to the subject matter hereof and supersedes all prior agreements,
understandings, negotiations and discussions, whether written or oral. There are
no conditions, covenants, agreements, representations, warranties or other
provisions, express or implied, collateral, statutory or otherwise, relating to
the subject matter hereof except as herein provided.
1.7 TIME OF ESSENCE
Time shall be of the essence of this Agreement.
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1.8 APPLICABLE LAW
This Agreement shall be construed, interpreted and enforced in accordance
with, and the respective rights and obligations of the Parties shall be governed
by, the laws of the Province of Alberta and the federal laws of Canada
applicable therein, and each Party irrevocably and unconditionally submits to
the non-exclusive jurisdiction of the courts of such province and all courts
competent to hear appeals therefrom.
1.9 SUCCESSORS AND ASSIGNS
(a) Subject to Subsection 1.9(b), no Party may assign any of its rights
or obligations hereunder without the prior written consent of the
other Parties.
(b) The Purchaser may assign its right under this Agreement in whole or
in part to any Affiliate of UTI; provided, however, that any such
assignment shall not relieve either the Purchaser or UTI from any of
its obligations to the Seller or the Shareholders hereunder.
Notwithstanding any such assignment, if an event of default occurs
under this Agreement, the Seller shall have the option to claim
performance or payment of the obligations from the Purchaser, UTI or
the assignee or transferee and to bring proceedings against any or
all of them, provided that nothing herein shall entitle the Seller
to receive duplicate performance or payment of the same obligation.
(c) This Agreement shall enure to the benefit of and shall be binding on
and enforceable by the Parties and, where the context so permits,
their respective successors and permitted assigns.
1.10 SEVERABILITY
If any provision of this Agreement is determined by a court of competent
jurisdiction to be invalid, illegal or unenforceable in any respect, such
determination shall not impair or affect the validity, legality or
enforceability of the remaining provisions hereof, and each provision is hereby
declared to be separate, severable and distinct; provided that if the economic
or legal substance of the transactions contemplated hereby are affected in an
adverse manner to any Party by the severance of such provision, then the Parties
shall negotiate in good faith to modify this Agreement so as to effect the
original intent of the Parties as closely as possible in an acceptable manner to
the end that the transactions contemplated hereby are fulfilled to the extent
possible.
1.11 AMENDMENTS AND WAIVERS
No amendment or waiver of any provision of this Agreement shall be binding
on any Party unless consented to in writing by such Party. No waiver of any
provision of this Agreement shall constitute a waiver of any other provision nor
shall any waiver constitute a continuing waiver unless otherwise provided.
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1.12 KNOWLEDGE OR AWARENESS
In this Agreement, references to a Party's knowledge or awareness and
similar references mean the actual knowledge of the current officers and
employees of such Party who are primarily responsible for the matters in
question after such Persons have engaged in, or caused to be performed, a
reasonable review of the relevant files and records of such Party relating to
the Purchased Assets, but without any further inquiry and does not include
knowledge or awareness of any other Person.
1.13 SCHEDULES
The following Schedules are attached to and form part of this Agreement:
Schedule 1 - Financial Statements
Schedule 2 - Drilling Rigs and Equipment
Schedule 3 - Drilling Contracts
Schedule 4 - Leased Real Property
Schedule 5 - Vehicles
Schedule 6 - Other Agreements
Schedule 7 - Licenses and Permits
Schedule 8 - Intellectual Property
Schedule 9 - Allocation of Purchase Price
Schedule 10 - Insurance Policies
Schedule 11 - Consents and Approvals
Schedule 12 - Permitted Encumbrances
Schedule 13 - Subsequent Changes
Schedule 14 - Legal and Regulatory Proceedings
Schedule 15 - Environmental Matters
Schedule 16 - Employee Matters
Schedule 17 - Major Customers
Schedule 18 - Opinion of Seller's Counsel
Schedule 19 - Opinion of Purchaser's and UTI's Counsel
Schedule 20 - Related Transactions
Schedule 21 - ▇▇▇▇ of Sale
Schedule 22 - Employment Terms and Employment Agreement
ARTICLE 2
PURCHASE AND SALE OF PURCHASED ASSETS
2.1 PURCHASED ASSETS
Upon the terms and subject to the conditions of this Agreement, the Seller
shall sell, assign and transfer to the Purchaser and the Purchaser shall
purchase from the Seller, on the Closing Date, all of the property and assets of
the Seller (other than the Excluded Assets), whether real or personal, tangible
or intangible, of every kind and description and wherever situate (collectively,
the "PURCHASED ASSETS"), including, without limitation, the following:
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(a) DRILLING EQUIPMENT. All drilling rigs and related assets and
ancillary equipment together with all spare parts and related assets
necessarily incidental to the use of the drilling rigs including,
without limitation, the drilling equipment described in Part 1 of
Schedule 2;
(b) DRILLING CONTRACTS. All rights under drilling contracts under which
Seller has agreed to provide drilling services to a third party
including drilling contracts for which drilling services have been
commenced by Seller prior to but have not been completed by Seller
as of the Effective Time including, without limitation, the
Contracts described in Schedule 3;
(c) LEASED REAL PROPERTY. All rights (whether as lessee or lessor) under
leases of real property, together with all leasehold improvements
relating thereto including, without limitation, the Leased Real
Property described in Schedule 4;
(d) OFFICE EQUIPMENT. All furniture, furnishings and accessories,
computer equipment (hardware and software, including all rights
under licences and other agreements relating thereto), telephones,
cellular phones, office equipment and office supplies together with
all service, operational and other manuals and all replacement parts
and tools with respect to the foregoing including, without
limitation, all office equipment described in Part 2 of Schedule 2;
(e) OTHER MACHINERY AND EQUIPMENT. All machinery and shop equipment,
hand tools and handling equipment including, without limitation, the
machinery and equipment described in Part 3 of Schedule 2;
(f) VEHICLES. All trucks, cars and other vehicles including, without
limitation, the vehicles described in Schedule 5;
(g) LEASES OF PERSONAL PROPERTY. All rights under vehicle and equipment
leases, rental equipment contracts and office equipment leases and
Contracts including, without limitation, the leases described in
Schedules 2 and 5;
(h) INVENTORIES. All inventories including, without limitation, raw
materials and replacement parts;
(i) PREPAID EXPENSES. All prepaid expenses;
(j) OTHER AGREEMENTS. All rights under orders or Contracts for the
provision of goods or services (whether as buyer or seller),
distribution and agency agreements, and other Contracts not
otherwise referred to in this Section 2.1 including, without
limitation, the Contracts described in Schedule 6;
(k) LICENCES AND PERMITS. All licences, permits, approvals, consents,
registrations, certificates and other authorizations required to
carry on the Purchased Business in the ordinary course including,
without limitation, those described in Schedule 7;
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(l) INTELLECTUAL PROPERTY. All trade or brand names, business names,
trade marks, trade ▇▇▇▇ registrations and applications, service
marks, service ▇▇▇▇ registrations and applications, copyrights,
copyright registrations and applications, patents, patent
registrations and applications and other patent rights (including
any patents issued on such applications or rights), trade secrets,
proprietary manufacturing information and know-how, equipment and
parts lists and descriptions, instruction manuals, inventions,
inventors' notes, research data, unpatented blue prints, drawings
and designs, formulae, processes, technology and other intellectual
property, together with all rights under licences, registered user
agreements, technology transfer agreements and other agreements or
instruments relating to any of the foregoing (collectively,
"INTELLECTUAL PROPERTY") including, without limitation, the
trademarks, copyrights, patents, licences and agreements described
in Schedule 8;
(m) BOOKS AND RECORDS. All books and records (other than those required
by law to be retained by the Seller, copies of which will be made
available to the Purchaser), including, without limitation, customer
lists, sales records, price lists and catalogues, sales literature,
advertising material, manufacturing data, production records,
employee manuals, personnel records, supply records, inventory
records and correspondence files (together with, in the case of any
such information that is stored electronically, the media on which
the same is stored);
(n) TELEPHONE NUMBERS. The right to the use of the Seller's telephone
and cellular numbers and facsimile numbers to the extent permitted
by the appropriate telephone authority; and
(o) GOODWILL. All goodwill, together with the exclusive right for the
Purchaser to represent itself as carrying on the Purchased Business
in succession to the Seller and the right to use any words
indicating that the Purchased Business is so carried on, including,
subject to the provisions of Section 8.3, the exclusive right to use
the name "▇▇▇▇▇▇ Drilling International", or any variation thereof,
as part of the name or style under which the Purchased Business or
any part thereof is carried on by the Purchaser.
2.2 EXCLUDED ASSETS
Notwithstanding the provisions of Section 2.1, the Purchased Assets shall
exclude the following property and assets of the Seller as determined at the
Effective Time (collectively, the "EXCLUDED ASSETS"):
(a) CASH. All cash on hand or in banks or other depositories;
(b) ACCOUNTS RECEIVABLE. All accounts receivable, trade accounts, notes
receivable, and book debts due or accruing due in respect of
services provided by the Seller prior to the Effective Time and
which have been invoiced prior to the Effective Time;
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(c) WORK IN PROGRESS. All work in progress consisting of services
provided by the Seller prior to the Effective Time and which have
not been invoiced as of the Effective Time;
(d) INCOME TAXES. All income tax payments and/or installments paid by
the Seller and the right to receive any refund of income taxes paid
by the Seller;
(e) PROVINCIAL SALES TAXES. All British Columbia provincial sales tax
payments and/or installments paid by the Seller and the right to
receive any refund of provincial sales taxes paid by the Seller;
(f) GST. All GST payments and/or installments paid by the Seller and the
right to receive any refund of GST paid by the Seller;
(g) BANK ACCOUNTS. All bank accounts of the Seller;
(h) MANAGEMENT AGREEMENTS. The interest of Seller in the Management
Agreements;
(i) INTERCORPORATE INDEBTEDNESS. All amounts due or accruing due to or
by the Seller from or to 700392 or 584022 including, without
limitation, any amounts due or accruing due from or to 700392 or
584022 under the Management Agreements;
(j) 31323 ALBERTA LTD. The beneficial interest of the Seller in 31323
Alberta Ltd. and any amounts due, accruing due or payable or to
become payable to the Seller by 31323 Alberta Ltd. or in respect of
Seller's beneficial interest in 31323 Alberta Ltd.;
(k) LITIGATION. Any and all payments payable or to become payable to the
Seller in regard to any actions, suits or proceedings;
(l) LIFE INSURANCE. Any and all policies of life insurance maintained by
the Seller on the life of each shareholder; and
(m) WORKERS COMPENSATION. All British Columbia, Saskatchewan and Alberta
workers compensation board prepayments of premiums paid by the
Seller for its own account or on behalf of 584022 or 700392 and the
right of the Seller on its own behalf or on behalf of 584022 or
700392 to receive rebates of British Columbia, Saskatchewan or
Alberta workers compensation board payments.
2.3 MERCHANTABILITY
Notwithstanding anything to the contrary contained in this Agreement, the
Purchaser and UTI acknowledge that the Purchaser will acquire the Purchased
Assets on an "as is" "where is" basis and that the Seller does not make any
representation or warranty as to the fitness for purpose, condition or
merchantability of the Purchased Assets or any of them, except as expressly
provided otherwise in Article 5. Each of the Purchaser and UTI acknowledge and
agree that they have relied and shall solely rely on their own appraisal and
estimate as to the
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quantum of value of the Purchased Assets and the Purchased Business and that
they have relied and shall rely on their own analysis related thereto,
notwithstanding anything to the contrary contained in this Agreement.
ARTICLE 3
PURCHASE PRICE
3.1 PURCHASE PRICE
Subject to the adjustments provided for in Sections 3.2 and 3.3, the
aggregate purchase price (the "PURCHASE PRICE") payable by the Purchaser to the
Seller for the Purchased Assets shall be Cdn. $28,975,527, payable by delivery
of a bank draft or wire transfer at Closing.
3.2 ADJUSTMENTS
(a) APPORTIONMENT OF BENEFITS AND OBLIGATIONS. All benefits and
obligations of any kind and nature accruing, payable or paid in
respect of the Purchased Assets shall be apportioned between the
Seller and the Purchaser as of the Effective Time.
(b) INTERIM ACCOUNTING. An interim accounting and adjustment shall be
carried out by the Seller and a statement (the "INTERIM ACCOUNTING
STATEMENT") shall be prepared and delivered by the Seller to the
Purchaser at least three Business Days prior to the Closing Date
based on the Seller's good faith estimate of all adjustments to be
made to the Purchase Price as of the Effective Time. The Purchase
Price shall be adjusted on the Closing Date to reflect the
adjustments provided for in the Interim Accounting Statement. At its
initiative or upon the reasonable request of the Seller, the
Purchaser agrees to provide subsequent Interim Accounting
Statement(s) after the Closing Date and before the Final Accounting
Statement is provided, and the Seller and the Purchaser agree to
make all reasonable efforts to agree upon these subsequent interim
adjustments and to provide for the prompt payment of same, together
with interest thereon at the Prime Rate from and including the
Closing Date to but excluding the date of payment.
(c) FINAL ACCOUNTING. Following Closing, a final accounting shall be
carried out by the Purchaser and a statement (the "FINAL ACCOUNTING
STATEMENT") shall be prepared and delivered by the Purchaser to the
Seller within nine (9) months after the Closing Date. Neither the
Seller nor the Purchaser shall be obligated to make any further
adjustments to the items provided for in the Final Accounting
Statement after the Final Accounting Statement is approved or is
deemed to have been approved.
(d) APPROVAL OF FINAL ACCOUNTING STATEMENT. The Seller shall have a
period of 30 days from the date it receives the Final Accounting
Statement in which to review the same. For the purpose of such
review, the Purchaser agrees to permit the Seller and its authorized
representatives to examine all working papers, schedules and other
documentation used or prepared by the Purchaser in connection with
the
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preparation of the Final Accounting Statement. If no objection to
the Final Accounting Statement is given to the Purchaser by the
Seller within such 30 day period in accordance with the provisions
of Subsection 3.2(e), the Final Accounting Statement shall be deemed
to have been approved as of the last day of such 30 day period.
(e) OBJECTION TO FINAL ACCOUNTING STATEMENT. If the Seller objects to
the Final Accounting Statement within the 30 day period referenced
in Subsection 3.2(d) by giving written notice to the Purchaser
setting out in reasonable detail the nature of such objection, the
Seller and Purchaser agree to attempt to resolve the matters in
dispute within 15 days from the date of giving such notice. If all
matters in dispute are resolved by the Seller and the Purchaser, the
Final Accounting Statement shall be modified to the extent required
to give effect to such resolution and shall be deemed to have been
approved as of the date of such resolution.
(f) DISPUTE RESOLUTION. If the Seller and Purchaser cannot resolve all
matters in dispute within the 15 day period referenced in Subsection
3.2(e), all unresolved matters shall be submitted for resolution to
a single arbitrator chosen by the Seller and the Purchaser, or
failing agreement, chosen by a judge of the Court of Queen's Bench
of Alberta (the "ARBITRATOR"). The Arbitrator shall be given access
to all materials and information reasonably requested by it for such
purpose. The rules and procedures to be followed in the arbitration
proceedings shall be determined by the Arbitrator in its discretion.
The Arbitrator's determination of all such matters shall be final
and binding and shall not be subject to appeal by any Party. The
fees and expenses of the Arbitrator shall be borne equally by the
Seller and the Purchaser or in such other proportion as may be
determined by the Arbitrator in its sole discretion. The Final
Accounting Statement shall be modified to the extent required to
give effect to the Arbitrator's determination and shall be deemed to
have been approved as of the date of such determination.
(g) PAYMENT OF ADJUSTED AMOUNT. Any adjustments to the Purchase Price
shall be settled by the indebted Party by cash payment to the
recipient Party within 5 Business Days after the Final Accounting
Statement is deemed to have been approved in accordance with this
Section 3.2, together with interest thereon at the Prime Rate from
and including the Closing Date to but excluding the date of payment.
3.3 ALLOCATION OF PURCHASE PRICE
The Seller and the Purchaser agree to allocate the Purchase Price among
the Purchased Assets in accordance with Schedule 9 and to report the sale and
purchase of the Purchased Assets for all federal, provincial and local tax
purposes in a manner consistent with such allocation.
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3.4 GST
(a) The Parties acknowledge that the Purchase Price is exclusive of the
Goods and Services Tax ("GST") as provided for in the Excise Tax Act
(Canada).
(b) Each of the Seller and the Purchaser represent and warrant to the
other that it is a registrant for GST purposes and will continue to
be a registrant at the Closing Date in accordance with the
provisions of the Excise Tax Act (Canada) and that each of their GST
registration numbers is:
Seller - BN 10417 7100 RT0001
Purchaser - o
(c) The Seller represents and warrants to the Purchaser that the sale of
the Purchased Assets is a sale of a business or part of a business
carried on by the Seller at the time of the sale for the purposes of
the Excise Tax Act (Canada), and the Purchaser represents and
warrants to the Seller that the acquisition of the Purchased Assets
represents the acquisition of all or substantially all of the
property that can reasonably be regarded as being necessary for the
Purchaser to be capable of carrying on the Seller's business or such
part of the Seller's business as a business.
(d) The Seller and the Purchaser shall jointly prepare and execute the
election prescribed by subsection 167(1) of the Excise Tax Act
(Canada) and the Purchaser shall file such election in the manner
and within the time prescribed thereto.
(e) Pursuant to paragraph Subsection 3.4(d) above, and subsection
167(1.1) of the Excise Tax Act (Canada), no GST is payable by the
Purchaser to the Seller in respect of the sale and purchase of the
Purchased Assets.
ARTICLE 4
ASSUMPTION OF OBLIGATIONS
4.1 ASSUMPTION OF OBLIGATIONS
Upon the terms and subject to the conditions of this Agreement, the
Purchaser shall assume, pay, satisfy, discharge, perform and fulfill, on the
Closing Date, all prospective obligations of the Seller which are required to be
performed on or after the Effective Time (the "ASSUMED OBLIGATIONS") under:
(a) the Contracts described in Schedules 2 through 6 inclusive and
Schedule 8;
(b) the licenses, permits, approvals, consents, registrations,
certificates and other authorizations described in Schedule 7;
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(c) any other Contracts entered into by the Seller in the ordinary
course consistent with past business practice and generally accepted
industry practice for the provision of goods or services by a third
party to the Seller on normal commercial terms and which will not
require an aggregate expenditure in excess of $100,000; and
(d) any other Contracts entered into by the Seller in the ordinary
course consistent with past business practice and generally accepted
industry practice for the provision of goods or services by the
Seller to a third party on normal commercial terms and which will
not result in the receipt of revenue in excess of an aggregate of
$50,000.
4.2 EXCLUSION OF LIABILITIES
Except as set forth in Section 4.1, the Purchaser shall not be obligated
to pay or perform or otherwise be responsible for any Liabilities of the Seller
including any Liabilities or claims of any kind or nature arising out of or
related to the operation of the Purchased Business, the Seller or the Purchased
Assets accrued or incurred or caused by any act, condition, or event existing or
arising on or prior to the Effective Time or relating to the Excluded Assets
(the "EXCLUDED LIABILITIES").
ARTICLE 5
REPRESENTATIONS AND WARRANTIES OF SELLER
The Seller represents and warrants to the Purchaser as follows:
5.1 ORGANIZATION
The Seller is a corporation validly subsisting under the laws of the
Province of Alberta and has the corporate power to carry on the Purchased
Business as now being conducted by it and to enter into this Agreement and to
perform its obligations hereunder. The Seller is a wholly-owned subsidiary of
592655 and the Shareholders are all of the legal and beneficial shareholders of
592655.
5.2 AUTHORIZATION
This Agreement has been duly authorized, executed and delivered by the
Seller and the Shareholders and is a legal, valid and binding obligation of the
Seller and the Shareholders, enforceable against them by the Purchaser in
accordance with its terms, except as enforcement may be limited by bankruptcy,
insolvency and other laws affecting the rights of creditors generally and except
that equitable remedies may be granted only in the discretion of a court of
competent jurisdiction.
5.3 NO CONFLICT
The execution and delivery of this Agreement by the Seller and the
consummation of the transactions herein provided for will not result in:
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(a) the breach or violation of any of the provisions of, or constitute a
default under, or conflict with:
(i) any provision of the constating documents or by-laws or
resolutions of the board of directors (or any committee
thereof) or shareholders of the Seller;
(ii) any judgment, decree, order or award of any court,
governmental body or arbitration having jurisdiction over the
Seller;
(iii) any licence, permit, approval, consent or authorization held
by the Seller or necessary to the operation of the Purchased
Business except as set forth in Schedule 11; or
(iv) any applicable law, statute, ordinance, regulation or rule;
(b) a default under any Contract to which the Seller is a party or by
which it is or any of the Purchased Assets are bound, except for the
notifications, consents and approvals described in Part 2 of
Schedule 11; or
(c) the creation or imposition of any Encumbrance on any of the
Purchased Assets.
5.4 NO OTHER AGREEMENTS TO PURCHASE
No Person other than the Purchaser has any written or oral agreement or
option or any right or privilege (whether by law, pre-emptive or contractual)
capable of becoming an agreement or option for the purchase or acquisition from
the Seller of any of the Purchased Assets.
5.5 SUFFICIENCY OF PURCHASED ASSETS
The Purchased Assets owned or leased by the Seller are sufficient to carry
on the Purchased Business in a manner consistent with the past business
practices of the Seller. All the tangible Purchased Assets are situate at the
locations set out in Schedules 2 and 5.
5.6 TITLE TO PURCHASED ASSETS
The Seller is the absolute legal and beneficial owner of and has good and
marketable title to, or in the case of leased, subleased, licensed or
sublicensed Purchased Assets, valid and subsisting leasehold interests or
licenses as the case may be in, all of the Purchased Assets, free and clear of
all Encumbrances, except Permitted Encumbrances, and is exclusively entitled to
possess and dispose of the Purchased Assets (subject only to the necessity for
obtaining the consents and approvals described in Schedule 11).
5.7 LEASED REAL PROPERTY
The Seller is not the beneficial or registered owner of and has not agreed
to acquire any real property or any interest in any real property other than the
Leased Real Property described in Schedule 4. The Seller is not a party to any
lease or agreement to lease in respect of any real
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property, whether as lessor or lessee, other than the leases (the "LEASES")
described in Schedule 4. Schedule 4 sets out the parties to each of the Leases,
their dates of execution and expiry dates, any options to renew, the locations
of the leased lands and premises and the rent payable thereunder. Except as
described in Schedule 4, the Seller occupies the Leased Property and has the
exclusive right to occupy and use the Leased Property. Each of the Leases is in
good standing and in full force and effect, and neither the Seller nor any other
party thereto is in breach of any covenants, conditions or obligations contained
therein. The Seller has provided to the Purchaser a true and complete copy of
each Lease and all amendments thereto referred to in Schedule 4.
5.8 INTELLECTUAL PROPERTY
Schedule 8 sets out all registered or pending Intellectual Property
(including particulars of registration or application for registration) and all
licences, registered user agreements and other Contracts that comprise or relate
to Intellectual Property. The Intellectual Property comprises all trade or brand
names, business names, trade marks, service marks, copyrights, patents, trade
secrets, know-how, inventions, designs and other industrial or intellectual
property necessary to conduct the Purchased Business. The Seller is the
beneficial owner of the Intellectual Property, free and clear of all
Encumbrances, and is not a party to or bound by any Contract or any other
obligation whatsoever that limits or impairs its ability to sell, transfer,
assign or convey, or that otherwise affects, the Intellectual Property. No
Person has been granted any interest in or right to use all or any portion of
the Intellectual Property. To the knowledge of the Seller, the conduct of the
Purchased Business does not infringe upon the industrial or intellectual
property rights, domestic or foreign, of any other Person. Neither the Seller
nor the Shareholders are aware of a claim of any infringement or breach of any
industrial or intellectual property rights of any other Person, nor have the
Seller or the Shareholders received any notice that the conduct of the Purchased
Business, including the use of the Intellectual Property, infringes upon or
breaches any industrial or intellectual property rights of any other Person, and
the Seller and the Shareholders have no knowledge of any infringement or
violation of any of the Seller's rights in the Intellectual Property. Neither
the Seller nor the Shareholders are aware of any state of facts that casts doubt
on the validity or enforceability of any of the Intellectual Property. The
Seller has provided to the Purchaser a true and complete copy of all Contracts
and amendments thereto that comprise or relate to the Intellectual Property
referred to in Schedule 8.
5.9 INSURANCE
The Seller has insured the Purchased Assets set forth in Schedules 2, 4
and 5 in accordance with the Seller's normal business practices against loss or
damage by all insurable hazards or risks and such insurance coverage will be
continued in full force and effect up to and including the Time of Closing.
Schedule 10 sets out all insurance policies (specifying the insurer, the amount
of the coverage, the type of insurance, the policy number and any pending claims
thereunder) maintained by the Seller on the Purchased Assets set forth in
Schedules 2, 4 and 5 as of the date hereof and true and complete copies of the
most recent inspection reports, if any, received from insurance underwriters or
others as to the condition of the Purchased Assets. The Seller is not in default
with respect to any of the provisions contained in any such insurance policy and
has not failed to give any notice or present any claim under any such insurance
policy,
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in due and timely fashion. The Seller has provided to the Purchaser a true copy
of each insurance policy referred to in Schedule 10.
5.10 MATERIAL CONTRACTS
The Schedules describe each of the following material subsisting Contracts
relating to the Purchased Business or Purchased Assets to which the Seller is a
party or by which it or any of the Purchased Assets is bound:
(a) any Contract for the purchase or supply of materials, supplies,
equipment or services involving more than $50,000 in respect of any
one such Contract or more than $100,000 in respect of all such
Contracts;
(b) any employment, consulting or management Contract or any other
Contract with any officer, employee or consultant, other than oral
Contracts of indefinite hire terminable by the Seller without cause
or reasonable notice;
(c) any profit sharing, bonus, stock option, pension, retirement,
disability, stock purchase, medical, dental, hospitalization,
insurance or similar plan or agreement providing benefits to any
current or former director, officer, employee or consultant;
(d) any Encumbrance registered against any of the Purchased Assets or a
leasing transaction of the type required to be capitalized in
accordance with generally accepted accounting principles;
(e) any distributor, sales, advertising, agency or manufacturer's
representative Contract;
(f) any collective bargaining agreement or other Contract with any
labour union;
(g) any Contracts for capital expenditures in excess of $50,000 in
respect of any one such Contract or in excess of $100,000 in the
aggregate in respect of all such Contracts;
(h) any Contract for the sale of any assets;
(i) any Contract pursuant to which the Seller is a lessor of any
machinery, equipment, motor vehicles, office furniture, fixtures or
other personal property;
(j) any non-competition or similar Contract;
(k) any licence, franchise or other agreement that relates in whole or
in part to any Intellectual Property;
(l) any agreement of guarantee, support, indemnification, assumption or
endorsement of, or any other similar commitment with respect to, the
obligations, Liabilities (whether accrued, absolute, contingent or
otherwise) or indebtedness of any other
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Person, except for cheques endorsed for collection in the ordinary
course of the Purchased Business, which obligations, Liabilities or
indebtedness the Purchaser shall be obligated to pay, satisfy or
perform or otherwise be responsible;
(m) any Contract that expires, or may expire if the same is renewed or
extended at the option of any Person other than the Seller, more
than one year after the date of this Agreement;
(n) any Contract entered into by the Seller other than in the ordinary
course of the Purchased Business; or
(o) any other Contract which is material to the Seller or the absence of
which would have a material adverse effect on the Purchased Business
or the Purchased Assets.
Except as described in the Schedules, the Seller has performed all of the
obligations required to be performed by it and is entitled to all benefits
under, and is not in default or alleged to be in default in respect of, any
Contract relating to the Purchased Business or Purchased Assets to which it is a
party or by which it is bound; the Seller has not received payment under any
Contract for any goods or services not yet provided by the Seller under such
Contract; all such Contracts are in good standing and in full force and effect,
and no event, condition or occurrence exists that, after notice or lapse of time
or both, would constitute a default under any of the foregoing. The Seller has
provided to the Purchaser a true and complete copy of each Contract listed or
described in the Schedules and all amendments thereto, except for oral
Contracts.
5.11 COMPLIANCE WITH LAWS; GOVERNMENTAL AUTHORIZATION
To the knowledge of the Seller, the Seller has complied in all material
respects with all laws, statutes, ordinances, regulations, rules, judgments,
decrees or orders applicable to the Purchased Business or the Purchased Assets.
Schedule 7 sets out a complete and accurate list of all licences, permits,
approvals, consents, certificates, registrations and authorizations (whether
governmental, regulatory or otherwise) (the "LICENCES") held by or granted to
the Seller, and there are no other licences, permits, approvals, consents,
certificates, registrations or authorizations necessary to carry on the
Purchased Business or to own or lease any of the Purchased Assets. Each Licence
is valid, subsisting, in good standing, and transferable or assignable to the
Purchaser, except as noted otherwise in Schedule 7. The Seller has received no
notice of nor is the Seller in default or breach of any Licence and, to the
knowledge of the Seller, no proceeding is pending or threatened to revoke or
limit any Licence. The Seller has provided to the Purchaser a true and complete
copy of each Licence and all amendments thereto referred to in Schedule 7.
5.12 CONSENTS AND APPROVALS
(a) REGULATORY CONSENTS. There is no requirement to make any filing
with, give any notice to or to obtain any licence, permit,
certificate, registration, authorization, consent or approval of,
any governmental or regulatory authority as a condition to the
lawful consummation of the transactions contemplated by this
Agreement, except for the filings, notifications, licences, permits,
certificates, registrations, consents and approvals described in
Part 1 of Schedule 11 or that relate solely to
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the identity of the Purchaser or the nature of any business carried
on by the Purchaser.
(b) THIRD PARTY CONSENTS. There is no requirement under any Contract
relating to the Purchased Business or Purchased Assets to which the
Seller is a party or by which it is bound to give any notice to, or
to obtain the consent or approval of, any party to such agreement,
instrument or commitment relating to the consummation of the
transactions contemplated by this Agreement, except for the
notifications, consents and approvals described in Part 2 of
Schedule 11.
5.13 FINANCIAL STATEMENTS
The Financial Statements have been prepared in accordance with generally
accepted accounting principles applied on a basis consistent with prior periods,
are correct and complete, and present fairly the assets, Liabilities and
financial condition of the Seller as at the respective dates of the Financial
Statements and the sales, earnings and results of operations of the Seller for
the respective periods covered by the Financial Statements. The Seller has
provided to the Purchaser true and complete copies of the Financial Statements.
5.14 BOOKS AND RECORDS
The books and records of the Seller fairly and correctly set out and
disclose, in accordance with Canadian generally accepted accounting principles,
the financial position of the Seller as at the date hereof, and all financial
transactions of the Seller relating to the Purchased Business have been
accurately recorded in such books and records.
5.15 ABSENCE OF CHANGES
Since September 1, 1999, the Purchased Business has been carried on only
in the ordinary and normal course consistent with the Seller's past business
practice and, except as set forth in the Financial Statements or as described in
Schedule 13 there has not been:
(a) any material adverse change in the condition (financial or
otherwise), assets, Liabilities, operations, earnings, business or
prospects of the Purchased Business;
(b) any damage, destruction or loss (whether or not covered by
insurance) affecting Purchased Assets having a value in excess of
$100,000 in each instance or $200,000 in the aggregate;
(c) any Liability or Contract incurred or entered into by the Seller in
connection with the Purchased Business, other than those incurred or
entered into in the ordinary and normal course of the Purchased
Business and consistent with the Seller's past business practice;
(d) any labour trouble adversely affecting the Purchased Business or the
Purchased Assets;
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(e) any sale, assignment, transfer, licenses, disposition, pledge,
mortgage or granting of a security interest or other Encumbrance on
or over any Purchased Assets;
(f) any write-down or write-off of any inventory, accounts or notes
receivable or any portion thereof relating to the Purchased Business
in amounts exceeding $50,000 in each instance or $100,000 in the
aggregate;
(g) any amendment, termination or waiver of any rights of value to the
Purchased Business in amounts exceeding $100,000 in each instance or
$200,000 in the aggregate;
(h) any general increase in the compensation of employees of the Seller
or any increase in any such compensation or bonus payable to any
officer, employee, consultant or agent thereof or the execution of
any employment contract with any officer or employee, or the making
of any loan to, or engagement in any transaction with, any employee,
officer or director of the Seller in relation to the Purchased
Business, other than the general industry-wide wage increase
averaging approximately 5.67% which occurred on October 1, 1999;
(i) any capital expenditures or commitments relating to the Purchased
Business or Purchased Assets in excess of $200,000 in the aggregate;
(j) any change in the maintenance procedures followed by the Seller;
(k) any change in the accounting or tax practices followed by the
Seller; or
(l) any change in the credit terms offered to customers of, or by
suppliers to, the Purchased Business.
5.16 NON-ARM'S LENGTH TRANSACTIONS
(a) Except for Contracts of employment and any Contracts which do not
form part of the Purchased Assets or the Assumed Obligations, the
Seller is not party to any Contract with any officer, director,
employee, shareholder or any other Person not dealing at arm's
length with the Seller (within the meaning of the Tax Act) or any
Affiliate or Associate of any of the foregoing.
(b) No officer, director or shareholder of the Seller and no entity that
is an Affiliate or Associate of one or more of such individuals:
(i) owns, directly or indirectly, any interest in (except for
shares representing less than five per cent of the outstanding
shares of any class or series of any publicly traded company),
or is an officer, director, employee or consultant of, any
Person that is, or is engaged in business as, a competitor of
the Purchased Business or a lessor, lessee, supplier,
distributor, sales agent or customer of the Purchased
Business; or
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(ii) owns, directly or indirectly, in whole or in part, any
property that the Seller uses in the operation of the
Purchased Business.
5.17 LITIGATION
Except as described in Schedule 14, there are no actions, suits or
proceedings (whether or not purportedly on behalf of the Seller) pending or, to
the best knowledge of the Seller, threatened against or affecting the Seller at
law or in equity or before or by any federal, provincial, municipal or other
governmental department, court, commission, board, bureau, agency or
instrumentality, domestic or foreign, or before or by an arbitrator or
arbitration board. The Seller is not aware of any ground on which any such
action, suit or proceeding might be commenced with any reasonable likelihood of
success.
5.18 RESIDENCY
The Seller is a resident of Canada for the purposes of the Tax Act.
5.19 ENVIRONMENTAL MATTERS
(a) Except as described in Schedule 15, the Seller has been and is in
compliance in all material respects with all applicable federal,
provincial, municipal and local laws, statutes, ordinances, by-laws
and regulations, and other directives and decisions rendered by any
ministry, department or administrative or regulatory agency
("ENVIRONMENTAL LAWS") relating to the protection of the
environment, occupational health and safety or the manufacture,
processing, distribution, use, treatment, storage, disposal,
transport or handling of any pollutants, contaminants, chemicals or
industrial toxic or hazardous wastes or substances.
(b) The Seller has never received any notice of nor been prosecuted for
non-compliance with any Environmental Laws with respect to the
Purchased Business or the Purchased Assets.
(c) The Seller has delivered to the Purchaser a true and complete copy
of all environmental audits, evaluations, assessments, studies or
tests relating to the Purchased Business or Purchased Assets of
which it is aware.
5.20 EMPLOYEE MATTERS
(a) Part 1 of Schedule 16 contains a complete and accurate list of the
names of all individuals who are full-time, part-time or casual
Employees as of the date of this Agreement specifying the length of
employment, job title and rate of salary or hourly pay and
commission or bonus entitlements (if any) for each such Employee.
Except as described in Part 1 of Schedule 16, there are no
complaints, claims or charges outstanding, or to the best of the
knowledge of the Seller, anticipated, nor are there any orders,
decisions, directions or convictions currently registered or
outstanding by any tribunal or agency against or in respect of the
Seller under or in respect of any employment legislation. Part 1 of
Schedule 16 also identifies any Employees as of the date of this
Agreement in respect of whom
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the Seller has been advised by the Workers' Compensation Board of
British Columbia, Saskatchewan or Alberta that such Employees are in
receipt of benefits under the applicable Workers' Compensation Act.
To the knowledge of the Seller, the Seller is in compliance in all
material respects with all applicable employment legislation.
(b) Part 2 of Schedule 16 identifies each retirement, pension, bonus,
stock purchase, profit sharing, stock option, deferred compensation,
severance or termination pay, insurance, medical, hospital, dental,
vision care, drug, sick leave, disability, salary continuation,
legal benefits, unemployment benefits, vacation, incentive or other
compensation plan or arrangement or other employee benefit that is
maintained, or otherwise contributed to or required to be
contributed to, by the Seller for the benefit of Employees or former
employees of the Seller (the "EMPLOYEE PLANS") and a true and
complete copy of each Employee Plan has been furnished to the
Purchaser. To the knowledge of the Seller, each Employee Plan has
been maintained in compliance in all material respects with its
terms and with the requirements prescribed by any and all statutes,
orders, rules and regulations that are applicable to such Employee
Plan.
(c) The Seller has not made any Contracts with any labour union or
employee association nor made commitments to or conducted
negotiations with any labour union or employee association with
respect to any future agreements, and the Seller is not aware of any
current attempts to organize or establish any labour union or
employee association with respect to any Employees of the Seller nor
is there any certification of any such union with regard to a
bargaining unit.
5.21 CUSTOMERS AND SUPPLIERS
(a) Schedule 17 sets out the major customers of the Purchased Business,
being those customers of the Purchased Business accounting for more
than 10% of revenue during either the period January 1, 1996 to
February 29, 2000, or the last 12 calendar months. To the knowledge
of the Seller there has been no termination or cancellation of, and
no modification or change in, the Seller's business relationship
with any major customer or group of major customers. The Seller has
no reason to believe that the benefits of any relationship with any
of the major customers or suppliers of the Purchased Business will
not continue after the Closing Date in substantially the same manner
as prior to the date of this Agreement.
(b) Except as set forth in Schedule 17, the Seller has not derived any
of its revenues during its last fiscal year from sales to, or
within, the United States or from services performed in the United
States.
5.22 Y2K COMPLIANCE
To the knowledge of the Seller, all of the Purchased Assets are Year 2000
Compliant to the extent applicable. For the purposes of this Agreement, "Year
2000 Compliant" means that:
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(a) neither the performance nor the functionality of the Purchased
Assets will be affected by dates prior to, during, or after the year
2000, or by any changes to the field configuration which contains
the date information within any part of the Purchased Assets caused
by the advent of the year 2000;
(b) the Purchased Assets are and will be capable of accurate and timely
processing, storage, inputting, outputting, displaying, sorting and
sequencing of any data or input which includes an indication of or
reference to a date; and
(c) the Purchased Assets are and will be capable of accurate and timely
identification, manipulation, and calculation using dates outside
the 1900 - 1999 year range.
5.23 FULL DISCLOSURE
To the knowledge of the Seller, there are no facts pertaining to the
Seller, the Purchased Business or the Purchased Assets which could reasonably be
expected to have a material adverse effect on the Purchased Business or the
Purchased Assets and which have not been disclosed in this Agreement or the
Schedules.
5.24 BROKERS
No broker, finder or investment banker is entitled to any brokerage,
finder's or other fee or commission in connection with the transactions
contemplated by this Agreement based upon arrangements made by or on behalf of
the Seller.
5.25 ▇▇▇▇▇ ▇▇▇▇▇▇▇ LTD.
The assets of ▇▇▇▇▇ ▇▇▇▇▇▇▇ Ltd. consists of agreements, securities and
other investments and none of those agreements, securities or other investments
are or have been used by the Seller in carrying on the Purchased Business.
ARTICLE 6
REPRESENTATIONS AND WARRANTIES OF PURCHASER
The Purchaser and UTI, jointly and severally, represent and warrant to the
Seller as follows:
6.1 ORGANIZATION
The Purchaser is a corporation validly subsisting under the laws of the
Province of Alberta and has the corporate power to enter into this Agreement and
to perform its obligations hereunder. UTI is a corporation validly subsiding
under the laws of the State of Delaware and has the corporate power to enter
into this Agreement and to perform its obligations hereunder.
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6.2 AUTHORIZATION
This Agreement has been duly authorized, executed and delivered by each of
the Purchaser and UTI and are legal, valid and binding obligations of the
Purchaser and UTI enforceable against the Purchaser and UTI, as the case may be,
by the Seller in accordance with the terms of this Agreement, except as such
enforcement may be limited by bankruptcy, insolvency and other laws affecting
the rights of creditors generally and except that equitable remedies may only be
granted in the discretion of a court of competent jurisdiction.
6.3 NO CONFLICT
The execution and delivery of this Agreement by each of the Purchaser and
UTI and the consummation of the transactions herein provided for will not result
in the violation of any provision of, or constitute a default under, or conflict
with or cause the acceleration of any obligation of the Purchaser or UTI under:
(a) any provision of the constating documents or by-laws or resolutions
of the board of directors (or any committee thereof) or shareholders
of the Purchaser or UTI;
(b) any judgment, decree, order or award of any court, governmental body
or arbitrator having jurisdiction over the Purchaser or UTI;
(c) any applicable law, statute, ordinance, regulation or rule; or
(d) any Contract to which the Purchaser or UTI is a party or by which
the Purchaser or UTI are bound.
6.4 CONSENTS AND APPROVALS
(a) REGULATORY CONSENTS. There is no requirement for either the
Purchaser or UTI to make any filing with, give any notice to or
obtain any licence, permit, certificate, registration,
authorization, consent or approval of, any government or regulatory
authority as a condition to the lawful consummation of the
transactions contemplated by this Agreement and that would
materially adversely affect the Purchaser's or UTI's ability to
consummate the transactions contemplated by this Agreement.
(b) THIRD PARTY CONSENTS. Except for notices to UTI's lenders and any
applicable stock exchange, there is no requirement under any
Contract to which either the Purchaser or UTI is a party or by which
either the Purchaser or UTI is bound, to give notice to, obtain the
consent or approval of, any party to such Contract relating to the
transactions contemplated by this Agreement that would materially
adversely affect the Purchaser's or UTI's ability to consummate the
transactions contemplated by this Agreement.
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6.5 INVESTMENT CANADA
The Purchaser will comply with the Investment Canada Act and the
Competition Act to the extent, if any, applicable to the transactions referred
to in this Agreement including, without limitation, the related transactions
contemplated by the agreements listed in Schedule 20.
6.6 BROKERS
No broker, finder or investment banker is entitled to any brokerage,
finder's or other fee or commission in connection with the transactions
contemplated by this Agreement based upon arrangements made by or on behalf of
either the Purchaser or UTI.
ARTICLE 7
SURVIVAL OF REPRESENTATIONS AND WARRANTIES
7.1 SURVIVAL OF REPRESENTATIONS AND WARRANTIES
Notwithstanding the Closing or any investigation made by or on behalf of
the Party entitled to the benefit thereof, the representations and warranties
contained in this Agreement and in all certificates and documents delivered
pursuant to or contemplated by this Agreement shall survive the Closing of the
transactions contemplated hereby and shall not be merged in any conveyances or
other documents provided pursuant to this Agreement, provided that no claim may
be made by one Party against any other Party, pursuant to or based upon any of
these representations and warranties unless written notice thereof with
reasonable particulars shall have been provided by such Parties to the other
Party within 18 months following the Closing.
ARTICLE 8
COVENANTS
8.1 ACCESS TO PURCHASED BUSINESS AND PURCHASED ASSETS
The Seller shall permit the Purchaser to conduct a due diligence review of
the Purchased Assets and the records and documents related thereto and to the
Purchased Business. The Seller shall forthwith make available to the Purchaser
and its authorized representatives and, if requested by the Purchaser, provide a
copy to the Purchaser of, all title documents, Contracts, financial statements,
policies, plans, reports, licences, orders, permits, books of account,
accounting records and all other documents, information and data relating to the
Purchased Business. The Seller shall afford the Purchaser and its authorized
representatives every reasonable opportunity to have free and unrestricted
access to the Purchased Assets during normal business hours and all other
property and assets utilized in the Purchased Business. At the request of the
Purchaser, the Seller shall execute such consents, authorizations and directions
as may be necessary to permit any inspection of the Purchased Business or any of
the Purchased Assets or to enable the Purchaser or its authorized representative
to obtain full access to all files and records relating to any of the Purchased
Assets maintained by governmental or other public authorities. At the
Purchaser's request, the Seller shall co-operate with the Purchaser in arranging
any such meetings as the Purchaser should reasonably request with:
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(a) Employees;
(b) customers, suppliers, distributors or others who have or have had a
business relationship with the Seller in respect of the Purchased
Business; and
(c) the auditors, solicitors or any other persons engaged or previously
engaged to provide services to the Seller who have knowledge of
matters relating to the Purchased Business or Purchased Assets.
In particular, without limitation, the Seller shall permit the Purchaser's
representatives or consultants to conduct all such testing and inspection in
respect of environmental matters at such locations of the Purchased Business as
the Purchaser may determine, in its sole discretion, as may be required to
satisfy the Purchaser in respect of such matters and the Seller shall permit the
representatives or consultants of the Purchaser to conduct a physical review of
the equipment of the Purchased Business as the Purchaser reasonably deems
necessary so as to enable the Purchaser to appraise and/or estimate the quantum
of value of such equipment. The exercise of any rights of inspection by or on
behalf of the Purchaser under this Section 8.1 shall not mitigate or otherwise
affect any of the representations and warranties of the Seller hereunder, which
shall continue in full force and effect as provided in Section 7.1.
Notwithstanding the foregoing or anything to the contrary contained in this
Agreement, each of the Purchaser and UTI acknowledge and agree that it has
relied and shall rely solely on its own appraisal and estimate of the quantum of
value of the Purchased Assets and the Purchased Business and that it has relied
and shall rely on its own analysis related thereto.
8.2 DELIVERY OF BOOKS AND RECORDS
At the Time of Closing, there shall be delivered to the Purchaser by the
Seller all the books and records described in Section 2.1. The Purchaser agrees
that it will preserve the books and records so delivered to it for a period of 4
years from the Closing Date, or for such longer period as is required by any
applicable law, and will permit the Seller or its authorized representatives
reasonable access thereto in connection with the affairs of the Seller relating
to its matters, but the Purchaser shall not be responsible or liable to the
Seller for or as result of any accidental loss or destruction of or damage to
any such books or records. Until March 1, 2001, the Seller will be permitted
reasonable access to the computer system which relates to the Purchased Assets
to handle accounts payable, payrolls and other accounting matters relating to
the Seller.
8.3 CHANGE OF NAME
The Seller agrees that before December 31, 2000 it shall change its name
and the names of any of its Associates or Affiliates that include the words
"▇▇▇▇▇▇ Drilling" or "▇▇▇▇▇▇ Drilling International" to a name that does not
include such words or any part thereof or any similar words. The Seller agrees
that from and after the Closing Date neither the Seller nor any of its
Associates or Affiliates will use the words "▇▇▇▇▇▇ Drilling" or "▇▇▇▇▇▇
Drilling International" or any variation thereof or any similar words in any
active business or other activity which might create any confusion over these
names.
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8.4 CONDUCT OF PURCHASED BUSINESS PRIOR TO CLOSING
Without in any way limiting any other obligations of the Seller hereunder,
during the period from the date hereof to the Time of Closing:
(a) CONDUCT BUSINESS IN THE ORDINARY COURSE. The Seller shall conduct
the Purchased Business and maintain the Purchased Assets in a proper
and prudent manner consistent with past practice and generally
accepted industry practice. In addition, the Seller shall not,
without the prior written consent of the Purchaser (such consent not
to be unreasonably withheld), (i) enter into any transaction or
refrain from doing any action that, if effected before the date of
this Agreement, would constitute a breach of any representation,
warranty, covenant or other obligation of the Seller contained
herein, or (ii) make any material decisions or enter into any
material Contracts with respect to the Purchased Business or the
Purchased Assets other than the entering into or performance of
drilling contracts and maintenance and repair activities that are
entered into or conducted in the ordinary course of business and in
a proper and prudent manner consistent with past business practice
and generally accepted industry practice;
(b) CONTINUE INSURANCE. The Seller shall (i) continue to maintain in
full force and effect all policies of insurance or renewals thereof
now in effect, (ii) take out, at the expense of the Purchaser, such
additional insurance as may be reasonably requested by the Purchaser
and (iii) give all notices and present all claims under all policies
of insurance in a due and timely fashion;
(c) REGULATORY CONSENTS. The Seller shall use its best efforts to
obtain, at or prior to the Time of Closing, from all appropriate
federal, provincial, municipal or other governmental or regulatory
bodies, the licences, permits, consents, approvals, certificates,
registrations and authorizations described in Part 1 of Schedule 11;
(d) PRESERVE GOODWILL. The Seller shall use its best efforts to preserve
intact the Purchased Business and Purchased Assets and to carry on
the Purchased Business as currently conducted, and the Seller shall
use its best efforts to promote and preserve for the Purchaser the
goodwill of suppliers, customers and others having business
relations with the Seller;
(e) DISCHARGE LIABILITIES. The Seller shall pay and discharge the
Liabilities of the Seller relating to the Purchased Business in the
ordinary course in accordance and consistent with the previous
practice of the Seller, except those contested in good faith by the
Seller;
(f) CORPORATE ACTION. The Seller shall use its best efforts to take or
cause to be taken all necessary corporate action, steps and
proceedings to approve or authorize validly and effectively the
transfer of the Purchased Assets to the Purchaser and the execution
and delivery of this Agreement and the other agreements and
documents contemplated hereby and to cause all necessary meetings of
directors and shareholders of the Seller to be held for such
purpose; and
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(g) BEST EFFORTS. The Seller shall use its best efforts to satisfy the
conditions contained in Section 9.1.
8.5 THIRD PARTY CONSENTS AND NOVATIONS
(a) The Seller shall promptly give such notices to third parties and use
its best efforts to obtain such third party consents and novations
as the Purchaser or the Seller may reasonably deem necessary or
desirable in connection with the transactions contemplated by this
Agreement including, without limitation, those consents and
novations described in Schedule 11. The Purchaser shall cooperate
and use its best efforts to assist the Seller in giving such notices
and obtaining such consents and novations.
(b) Each of the Seller and the Purchaser agree that, in the event any
consent or novation necessary or desirable to preserve for the
Purchased Business any right or benefit under any lease, license,
contract, commitment or other agreement or arrangement to which the
Seller is a party is not obtained or in the reasonable opinion of
the Seller should not be obtained prior to the Closing, the Seller
will, subsequent to the Closing, cooperate with the Purchaser in
attempting to obtain such consent or novation as promptly thereafter
as practicable. Until such consent or novation is obtained or if
such consent or novation cannot be obtained, the Seller shall use
its best efforts to provide the Purchaser with the rights and
benefits of the affected lease, license, contract, commitment or
other agreement or arrangement (collectively, the "NON-ASSIGNABLE
RIGHTS") for the term of such lease, license, contract or other
agreement or arrangement, and, if the Seller provides such rights
and benefits, the Purchaser shall assume the obligations and burdens
thereunder and indemnify and save harmless the Seller in respect
thereof. In particular, the Seller shall, at the request of the
Purchaser:
(i) hold any such Non-Assignable Rights in trust for the Purchaser
or act as agent for the Purchaser;
(ii) enforce any rights of the Seller arising from such
Non-Assignable Rights against the issuer thereof or the other
party or parties thereto;
(iii) take all such actions and do, or cause to be done, all such
things at the request of the Purchaser as shall reasonably be
necessary and proper in order that the value of any
Non-Assignable Rights shall be preserved and shall enure to
the benefit of the Purchaser; and
(iv) pay over to the Purchaser, all monies collected by or paid to
the Seller in respect of such Non-Assignable Rights in respect
of amounts due or accruing due subsequent to the Effective
Time.
8.6 EMPLOYEES
(a) Each of the Employees listed in Schedule 16 shall be employed by the
Purchaser, effective as of the Time of Closing, on terms and
conditions of employment no
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less favourable in the aggregate than the terms and conditions of
his or her current employment with the Seller. The Seller shall not
terminate any of the Employees listed in Schedule 16. The Seller and
the Purchaser agree that the employment of the Employees listed in
Schedule 16 shall continue uninterrupted by the Seller and the
Purchaser. The Purchaser shall indemnify and hold harmless the
Seller from and against all Losses suffered or incurred by the
Seller as a result of any claims for termination benefits or other
benefits by any Employees listed in Schedule 16 who are terminated
by the Purchaser. The Seller shall indemnify and hold harmless the
Purchaser from and against all Losses suffered or incurred by the
Purchaser as a result of any claims for termination benefits or
other benefits by any Employees who were terminated by the Seller or
who refuse to continue their employment with the Purchaser. No
Employee shall be entitled to any rights under this Section 8.6 or
under any other provisions of this Agreement. Nothing in this
Section 8.6 shall obligate the Purchaser to employ any Employees who
refuse to continue their employment with the Purchaser.
(b) All of the Shareholders shall be employed by the Purchaser,
effective as at the Time of Closing, on terms and conditions no less
favourable in the aggregate than the terms and conditions of his or
her current employment with the Seller. Except as provided for in
any employment/consulting agreement between the Purchaser and the
Shareholders as provided for in Sections 9.1(f) and 9.2(e), the
Purchaser shall have no Liability to the Shareholders for
termination benefits or any other benefits arising prior to the Time
of Closing upon the expiry or termination of their
employment/consulting agreement with the Purchaser, and the Seller
shall indemnify the Purchaser from and against all Losses resulting
from any claim for such benefits by the Shareholders against the
Purchaser.
(c) The Seller shall continue to employ all the Employees listed in
Schedule 16 until the Time of Closing, except for any employees who
prior to the Time of Closing:
(i) are terminated by the Seller for cause;
(ii) are terminated by the Seller with the Purchaser's consent,
which consent shall not be unreasonably withheld;
(iii) voluntarily resign; or
(iv) retire.
(d) The Seller and its Affiliates shall not attempt in any way to
discourage any of the Employees listed in Schedule 16 from
continuing their employment with the Purchaser following the
Closing.
8.7 EMPLOYEE PLANS
Subject to Section 8.6(b), except for severance and termination benefits
accruing to the Employees listed in Schedule 16, the Purchaser shall not assume
any Liability for accrued benefits under any of the Employee Plans. The
Purchaser agrees that it will establish
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replacement plans in replacement of the Employee Plans (the "REPLACEMENT PLANS")
for all Employees who continue their employment with the Purchaser from and
after the Time of Closing. The terms and conditions of such Replacement Plans
shall be no less favourable in the aggregate than the Employee Plans. For the
purpose of determining the eligibility of an Employee for benefits under the
Replacement Plans, his or her period of employment shall include employment with
both the Seller and the Purchaser and shall be deemed not to have been
interrupted at the Time of Closing provided that no Employee shall be entitled
to benefits under any disability plan sponsored by the Purchaser in respect of
any condition existing at or event occurring prior to the Time of Closing.
Except for severance and termination benefits accruing to the Employees listed
in Schedule 16, for which benefits the Purchaser has agreed to assume Liability
from the respective date each such Employee commenced employment with the Seller
or any predecessor of the Seller, the Employees shall begin to accrue benefits
under the Replacement Plans as of the Time of Closing in respect of their
employment by the Purchaser. The Purchaser agrees to obtain the required
approvals of the applicable federal and provincial regulatory authorities in
connection with the establishment and registration of the Replacement Plans.
8.8 FINANCIAL STATEMENT COOPERATION
The Seller agrees, at the cost and expense of the Purchaser, to cooperate
with the Purchaser and to assist the Purchaser's outside auditors in the
preparation of any financial statements relating to the Purchased Assets and the
Seller that may be reasonably requested by the Purchaser or UTI for filing with
the Securities and Exchange Commission in connection with any filings that may
be made by the Purchaser or UTI under the US Securities Act or the US Exchange
Act. Such financial statements shall consist of (i) such audited balance sheets
and audited statements of operations, cash flows and changes in equity together
with the notes thereon and (ii) such unaudited interim balance sheet and
unaudited interim statements of operations, cash flows and changes in equity, if
any, in each case as the Purchaser or UTI shall reasonably deem to be required
by the Purchaser or UTI.
8.9 EXCLUSIVITY
From the date hereof until the Closing, neither the Seller nor any of the
Shareholders will directly or indirectly initiate discussions with or engage in
negotiations with any Person other than the Purchaser for any sale of the
Purchased Business or any of the Purchased Assets, whether through any sale of
assets, sale of shares, reorganization or otherwise.
8.10 NON-COMPETITION
(a) Each of the Seller and the Shareholders acknowledges that pursuant
to this Agreement the Purchaser will purchase from the Seller the
goodwill of the Seller and the Purchased Business, and that to
induce the Purchaser to pay the Purchase Price, the protection and
maintenance of such goodwill constitutes a legitimate interest to be
protected by the Purchaser and UTI by this covenant not to compete.
Therefore, each of the Seller and the Shareholders agrees, severally
and not jointly, that for the period (the "NONCOMPETITION PERIOD")
commencing upon the Closing Date and ending upon the fifth
anniversary (the "ENDING DATE") of the
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Closing Date, he, she or it shall not, directly or indirectly,
either as an employee, employer, consultant, agent, principal,
partner, shareholder (other than a shareholder of 5% or less of a
publicly traded company), corporate officer or director, or in any
other individual or representative capacity, engage or participate
in the land contract drilling business in North America (such entire
geographic area is hereinafter referred to as the "NONCOMPETITION
AREA") provided that nothing herein shall restrict the Seller or any
Shareholder upon his or her cessation of employment with the
Purchaser from providing well-site drilling consulting services to
operators. Each of the Seller and the Shareholders represents to the
Purchaser that the enforcement of the restriction contained in this
Section 8.10 would not be unduly burdensome to it, having regard to
the provisions set forth in Section 8.6. Each of the Seller and the
Shareholders further represents and acknowledges that it has
willingly entered into this agreement not to compete and is willing
and able to compete in other geographical areas not prohibited by
this Section 8.10.
(b) Each of the Seller and the Shareholders agrees that in addition to
the application of the provisions set forth in Article 11, a breach
or violation of this covenant not to compete shall entitle the
Purchaser and UTI, as a matter of right, to an injunction issued by
any court of competent jurisdiction, restraining any further or
continued breach or violation of this covenant. Such right to an
injunction shall be cumulative and in addition to, and not in lieu
of, any other remedies to which the Purchaser or UTI may show itself
justly entitled. Further, each of the Seller and the Shareholders
agrees that during any period in which it is in breach of this
covenant not to compete, the Noncompetition Period applicable to
such Seller or Shareholder who is in breach of this covenant shall
be extended for the amount of time that it is in breach hereof.
(c) Each of the Seller and the Shareholders agrees, severally and not
jointly, that for the Noncompetition Period it will not, either
directly or indirectly, (i) solicit for employment, or allow any
corporation or business entity controlled directly or indirectly by
or affiliated with the Seller or any such Shareholder to solicit for
employment, any Person that at that time is, or at any time during
the 12 month period immediately preceding the Closing Date was, an
employee, consultant or agent of the Seller, the Purchaser, UTI or
any of their Affiliates (except that this shall not prohibit
reasonable and customary general solicitations of employment through
the media) or (ii) make known to any Person that is engaged in the
contract land drilling business in the Non-Competition Area or
executive recruiting or search firms that have clients engaged in
such business, the names of any Person that at that time is, or at
any time during the 12-month period immediately preceding the
Closing Date was, an employee, consultant or agent of the Purchaser,
the Seller or any of their Affiliates relating to the Purchased
Business.
(d) Notwithstanding anything contained herein to the contrary, the
existence of any claim or cause of action of the Seller against the
Purchaser or UTI, whether predicated on this Agreement or otherwise,
shall not constitute a defence to the
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enforcement by the Purchaser of the covenants of the Seller and the
Shareholders contained in this Section 8.10.
(e) The Parties agree that the limitations contained in this Section
8.10 with respect to geographic area, duration and scope of activity
are reasonable. However, if any court shall determine that the
geographic area, duration or scope of activity of any restriction
contained in this Section 8.10 is unenforceable, it is the intention
of the Parties that such restrictive covenant set forth herein shall
not thereby be terminated but shall be deemed amended to the extent
required to render it valid and enforceable.
8.11 UPDATE OF SCHEDULES
From the date hereof through and including the Closing Date, the Seller
may correct or update any of the Schedules. Any such correction or update shall
be made by actual delivery of an amended Schedule, marked to show changes (the
"Amended Schedule"), which Amended Schedule shall replace the original Schedule
hereto. The Purchaser shall be given a reasonable opportunity to review any
Amended Schedule prior to Closing and shall have the right to postpone the
Closing for up to two Business Days to review any Amended Schedule delivered on
or immediately before the Closing Date. The Purchaser shall have the right to
terminate this Agreement at any time prior to the Closing if it is not
satisfied, acting reasonably, with any information contained in any Amended
Schedule.
ARTICLE 9
CONDITIONS OF CLOSING
9.1 CONDITIONS OF CLOSING IN FAVOUR OF PURCHASER
The sale and purchase of the Purchased Assets is subject to the following
terms and conditions for the exclusive benefit of the Purchaser, to be performed
or fulfilled at or prior to the Time of Closing:
(a) CLOSING DELIVERIES. The Seller shall have delivered to the Purchaser
the documents required to be delivered pursuant to Section 10.2;
(b) REPRESENTATIONS AND WARRANTIES. The representation and warranties of
the Seller contained in this Agreement shall be true and correct in
all material respects at the Time of Closing with the same force and
effect as if such representations and warranties were made at and as
of such time, and a certificate of the Seller, dated the Closing
Date to that effect shall have been delivered to the Purchaser, such
certificate to be in form and substance satisfactory to the
Purchaser, acting reasonably;
(c) COVENANTS. All of the terms, covenants and conditions of this
Agreement to be complied with or performed by the Seller at or
before the Time of Closing shall have been complied with or
performed in all material respects, and a certificate of the Seller
dated the Closing Date to that effect shall have been delivered to
the
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Purchaser, such certificate to be in form and substance satisfactory
to the Purchaser, acting reasonably;
(d) REGULATORY CONSENTS. There shall have been obtained from all
appropriate federal, provincial, municipal or other governmental or
administrative bodies such licences, permits, consents, approvals,
certificates, registrations and authorizations as are required to be
obtained by the Seller to permit the change of ownership of the
Purchased Assets contemplated hereby, including, without limitation,
those described in Part 1 of Schedule 11, in each case in form and
substance satisfactory to the Purchaser, acting reasonably;
(e) CONTRACTUAL CONSENTS. The Seller shall have given or obtained the
notices, consents and approvals described in Part 2 of Schedule 11,
in each case in form and substance satisfactory to the Purchaser,
acting reasonably;
(f) EMPLOYMENT/CONSULTING AGREEMENTS. The Purchaser shall have entered
into employment/consulting agreements with the Shareholders which
are consistent with the terms and the form of agreement attached as
Schedule 22;
(g) NO ACTION OR PROCEEDING. No legal or regulatory action or proceeding
shall be pending or threatened by any Person to enjoin, restrict or
prohibit the purchase and sale of the Purchased Assets contemplated
hereby;
(h) NO MATERIAL DAMAGE. No material damage or physical alteration to the
whole or any material part of the Purchased Assets or the Purchased
Business, which would materially affect the value of the Purchased
Assets or the Purchased Business, shall have occurred between the
date hereof and the Time of Closing;
(i) NO MATERIAL ADVERSE CHANGE. There shall have been no material
adverse changes in the condition (financial or otherwise), of the
assets, Liabilities, operations, earnings, business or prospects of
the Purchased Business since the date of the most recent Financial
Statements;
(j) NO ENCUMBRANCES. The Seller shall have provided for the discharge of
the Encumbrances listed in Part 2 of Schedule 12 to the satisfaction
of the Purchaser, acting reasonably;
(k) CONTINUED OPERATION. During the period from the date hereof to the
Time of Closing, the Seller shall have operated the Purchased
Business in a proper and prudent manner in accordance with generally
accepted industry practices;
(l) LEGAL OPINION. The Seller shall have delivered to the Purchaser a
favourable opinion of counsel to the Seller in the form annexed
hereto as Schedule 18;
(m) DUE DILIGENCE. The Purchaser shall have completed, within 14 days
following execution of this Agreement by the Parties, satisfactory
due diligence regarding the Purchased Assets, the results of which
are in all respects satisfactory to the Purchaser in its sole
discretion;
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(n) BOARD APPROVAL. UTI shall have obtained, within 14 days following
execution of this Agreement by the Parties, the approval of its
board of directors for the matters set out herein; and
(o) COMPLETE TRANSACTION. This Agreement constitutes one part of a three
part transaction, and accordingly shall not be binding unless the
related transactions contemplated by the agreements listed in
Schedule 20 are closed concurrent with the Closing of the
transactions contemplated by this Agreement.
If any of the conditions contained in this Section 9.1 shall not be
performed or fulfilled at or prior to the Time of Closing to the sole
satisfaction of the Purchaser, acting reasonably, the Purchaser may, by notice
to the Seller, terminate this Agreement, provided that the Purchaser may also
bring an action pursuant to Article 11 against the Seller and/or the
Shareholders for damages suffered by the Purchaser where the non-performance or
non-fulfillment of the relevant condition is a result of a breach of covenant,
representation or warranty by the Seller. Any such condition may be waived in
whole or in part by the Purchaser without prejudice to any claims it may have
for breach of covenant, representation or warranty.
9.2 CONDITIONS OF CLOSING IN FAVOUR OF SELLER
The sale and purchase of the Purchased Assets is subject to the following
terms and conditions for the exclusive benefit of the Seller, to be performed or
fulfilled at or prior to the Time of Closing:
(a) CLOSING DELIVERIES. The Purchaser shall have delivered to the Seller
the Purchase Price and documents required to be delivered pursuant
to Section 10.3;
(b) REPRESENTATIONS AND WARRANTIES. The representations and warranties
of the Purchaser and UTI contained in this Agreement shall be true
and correct in all material respects at the Time of Closing with the
same force and effect as if such representations and warranties were
made at and as of such time, and a certificate of each of the
Purchaser and UTI, dated the Closing Date, to that effect shall have
been delivered to the Seller each such certificate to be in form and
substance satisfactory to the Seller, acting reasonably;
(c) COVENANTS. All of the terms, covenants and conditions of this
Agreement to be complied with or performed by the Purchaser and UTI
at or before the Time of Closing shall have been complied with or
performed in all material respects, and a certificate of each of the
Purchaser and UTI, dated the Closing Date, to that effect shall have
been delivered to the Seller, each such certificate to be in form
and substance satisfactory to the Seller, acting reasonably;
(d) REGULATORY CONSENTS. There shall have been obtained from all
appropriate federal, provincial, municipal or other governmental or
administrative bodies such licences, permits, consents, approvals,
certificates, registrations and authorizations as are required to be
obtained by the Purchaser to permit the change of ownership of the
Purchased Assets contemplated hereby, including those described in
Part I
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of Schedule 11, in each case in form and substance satisfactory to
the Seller, acting reasonably;
(e) EMPLOYMENT/CONSULTING AGREEMENTS. The Purchaser shall have entered
into employment/consulting agreements with the Shareholders which
are consistent with the terms and the form of agreement attached as
Schedule 22;
(f) NO ACTION OR PROCEEDING. No legal or regulatory action or proceeding
shall be pending or threatened by any person to enjoin, restrict or
prohibit the purchase and sale of the Purchased Assets contemplated
hereby;
(g) LEGAL OPINIONS. The Purchaser and UTI shall have delivered to the
Seller favourable opinions of counsel to the Purchaser and UTI in
the form annexed hereto as Schedule 19;
(h) APPROVALS. The Seller shall have obtained, within five Business Days
following execution of this Agreement, the approval of its board of
directors and of its shareholders for the matters set out herein;
and
(i) COMPLETE TRANSACTION. This Agreement constitutes one part of a three
part transaction, and accordingly shall not be binding unless the
related transactions contemplated by the agreements listed in
Schedule 20 are closed concurrent with the Closing of the
transactions contemplated by this Agreement.
If any of the conditions contained in this Section 9.2 shall not be
performed or fulfilled at or prior to the Time of Closing to the satisfaction of
the Seller acting reasonably, the Seller may, by notice to the Purchaser and
UTI, terminate this Agreement, provided that the Seller may also bring an action
pursuant to Article 11 against the Purchaser and/or UTI for damages suffered by
the Seller where the non-performance or non-fulfillment of the relevant
condition is as a result of a breach of covenant, representation or warranty by
the Purchaser and UTI. Any such condition may be waived in whole or in part by
the Seller without prejudice to any claims it may be have for breach of
covenant, representation or warranty.
ARTICLE 10
CLOSING AND TRANSFER OF POSSESSION
10.1 PLACE OF CLOSING
The Closing shall take place at the Time of Closing at the offices of
▇▇▇▇▇▇▇ ▇▇▇▇▇ in Calgary, Alberta.
10.2 CLOSING DELIVERIES BY SELLER
At the Closing the Seller shall deliver to the Purchaser:
(a) an executed counterpart of the ▇▇▇▇ of Sale plus any other deeds,
conveyances, bills of sale, assurances, transfers, assignments and
any other documentation
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necessary or reasonably required to transfer the Purchased Assets to
the Purchaser with a good and marketable title, free and clear of
all Encumbrances whatsoever except for Permitted Encumbrances.
(b) a certificate of corporate status and an officer's certificate,
certified by a senior officer of the Seller as of the Closing Date,
which certificate shall include copies of its constating documents
and by-laws and of the resolution authorizing the execution,
delivery and performance by the Seller of this Agreement and any
documents to be provided by it pursuant to the provisions hereof;
(c) a receipt for the Purchase Price;
(d) the certificates and other documents required to be delivered
pursuant to Section 9.1; and
(e) all such other documents relevant to the closing of the transactions
contemplated hereby as the Purchaser, acting reasonably, may
request.
10.3 CLOSING DELIVERIES BY PURCHASER
At the Closing the Purchaser shall deliver to the Seller:
(a) the Purchase Price by bank draft or wire transfer;
(b) an executed counterpart of the ▇▇▇▇ of Sale;
(c) certificates of corporate status and officers' certificates,
certified by a senior officer of each of the Purchaser and of UTI as
of the Closing Date, which certificates shall include copies of
constating documents and by-laws and of the resolution authorizing
the execution, delivery and performance by the Purchaser and UTI of
this Agreement and any documents to be provided by them pursuant to
the provisions hereof;
(d) the certificates and other documents required to be delivered
pursuant to Section 9.2; and
(e) all such other documents relevant to the closing of the transactions
contemplated hereby as the Seller, acting reasonably, may request.
10.4 FURTHER ASSURANCES
From and after the Closing Date, each Party to this Agreement covenants
and agrees that it will at all times after the Closing Date, at the expense of
the requesting Party, promptly execute and deliver all such documents,
including, without limitation, all such additional conveyances, transfers,
consents and other assurances and do all such other acts and things as any other
Party, acting reasonably, may from time to time request be executed or done in
order to better evidence or perfect or effectuate any provision of this
Agreement or of any agreement or
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other document executed pursuant to this Agreement or any of the respective
obligations intended to be created hereby or thereby.
10.5 TRANSFER OF POSSESSION AND TITLE
Subject to compliance with the terms and conditions hereof, the transfer
of possession of and title to the Purchased Assets shall be deemed to take
effect as at the Time of Closing.
10.6 RISK OF LOSS
From the date hereof up to the Time of Closing, the Purchased Assets shall
be and remain at the risk of the Seller. If, prior to the Time of Closing, all
or any part of the Purchased Assets that are necessary to carry on the Purchased
Business as currently conducted are destroyed or damaged by fire or any other
casualty or shall be appropriated, expropriated or seized by governmental or
other lawful authority, the Purchaser may elect to complete the purchase without
reduction of the Purchase Price, in which event all proceeds of insurance or
compensation for expropriation or seizure shall be paid to the Purchaser at the
Time of Closing and all right and claim of the Seller to any such amounts not
paid by the Closing Date shall be assigned at the Time of Closing to the
Purchaser.
ARTICLE 11
INDEMNIFICATION
11.1 INDEMNIFICATION BY SELLER AND SHAREHOLDERS
The Seller and the Shareholders jointly and severally agree to
indemnify and save harmless the Purchaser from all Losses suffered or incurred
by the Purchaser as a result of or arising directly or indirectly out of or in
connection with:
(a) any breach by the Seller of or any inaccuracy of any representation
or warranty of the Seller contained in this Agreement or in any
agreement, certificate or other document delivered pursuant hereto;
(b) any breach or non-performance by the Seller of any covenant to be
performed by it that is contained in this Agreement or in any
agreement, certificate or other document delivered pursuant hereto;
(c) the Excluded Liabilities or the Excluded Assets; and
(d) the operation of the Purchased Business, or the ownership of the
Purchased Assets, prior to the Time of Closing.
11.2 INDEMNIFICATION BY PURCHASER AND UTI
The Purchaser and UTI jointly and severally agree to indemnify and save
harmless the Seller from all Losses suffered or incurred by the Seller as a
result of or arising directly or indirectly out of or in connection with:
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(a) any breach by the Purchaser or UTI of or any inaccuracy of any
representation or warranty contained in this Agreement or in any
agreement, instrument, certificate or other document delivered
pursuant hereto;
(b) any breach or non-performance by the Purchaser or UTI of any
covenant to be performed by it that is contained in this Agreement
or in any agreement, certificate or other document delivered
pursuant hereto;
(c) the Assumed Obligations;
(d) any GST which becomes payable by the Seller in respect of the sale
of the Purchased Assets other than as a result of a
misrepresentation or breach by the Seller; and
(e) the operation of the Purchased Business, or the ownership of the
Purchased Assets, on or after the Time of Closing.
11.3 LIMITATIONS ON INDEMNIFICATION
(a) Notwithstanding the foregoing provisions of this Article, but
subject to (c) below, no Party shall be liable under the
indemnifications in Section 11.1 or 11.2 unless and until the
aggregate amount of liability thereunder exceeds Cdn. $25,000.
(b) Notwithstanding the foregoing provisions of this Article, but
subject to (c) below, the aggregate liability of the Seller and the
Shareholders to the Purchaser under the indemnification provisions
of this Agreement, and the aggregate liability of the Purchaser and
UTI to the Seller under the indemnification provisions of this
Agreement, shall be limited in each case to an amount equal to the
Purchase Price.
(c) The limitations on the liability of any Party under this Agreement
shall only apply to the extent that there is not any fraud or wilful
misconduct on the part of such Party, and all such limits on the
liability of any Party shall lapse and be of no force and effect if
and to the extent that there is or has been fraud or wilful
misconduct on the part of such Party in connection with the matter
with respect to which any claim against such Party is made
hereunder.
(d) All indemnification to which an indemnified Party may be entitled
pursuant to the provisions of this Article shall be net of any
insurance coverage paid to the indemnified Party with respect
thereto, and shall exclude any claims arising from the indemnified
Party's gross negligence or willful misconduct after the Closing.
(e) Except for those covenants contained in Article 8 and which are
intended to survive Closing as provided in Article 8, no Party shall
be liable under the indemnifications in Section 11.1 or 11.2 unless
written notice of the claim as provided for in Section 11.4 is given
by the Indemnified Party (as defined in Section 11.4) to the
Indemnifying Party (as defined in Section 11.4), within 18 months
following the Closing.
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11.4 NOTICE OF CLAIM
In the event that a Party (the "INDEMNIFIED PARTY") shall become aware of
any claim, proceeding or other matter (a "CLAIM") in respect of which any other
Party (the "INDEMNIFYING PARTY") agreed to indemnify the Indemnified Party
pursuant to this Agreement, the Indemnified Party shall promptly give written
notice thereof to the Indemnifying Party. Such notice shall specify whether the
Claim arises as a result of a claim by a Person against the Indemnified Party (a
"THIRD PARTY CLAIM") or whether the Claim does not so arise (a "DIRECT CLAIM"),
and shall also specify with reasonable particularity (to the extent that the
information is available):
(a) the factual basis for the Claim; and
(b) the amount of the Claim, if known.
If, through the fault of the Indemnified Party, the Indemnifying Party
does not receive notice of any Claim in time to effectively contest the
determination of any liability susceptible of being contested, the Indemnifying
Party shall be entitled to set off against the amount claimed by the Indemnified
Party the amount of any Losses incurred by the Indemnifying Party resulting from
the Indemnified Party's failure to give such notice on a timely basis.
In the event that a Shareholder shall, within 18 months following the
Closing, become aware of a Claim arising from a breach of any representation and
warranty contained in Section 5.6 (Title to Purchased Assets), Section 5.10
(Material Contracts) or Section 5.19 (Environmental Matters), such Shareholder
severally agrees to give prompt written notice thereof to the Purchaser and UTI.
This obligation is in addition to any disclosure obligations which such
Shareholder may owe to the Purchaser in such Shareholder's capacity as an
employee of the Purchaser or otherwise.
11.5 DIRECT CLAIMS
With respect to any Direct Claim, following receipt of notice from the
Indemnified Party of the Claim, the Indemnifying Party shall have 30 days to
make such investigation of the Claim as is considered necessary or desirable.
For the purpose of such investigation, the Indemnified Party shall make
available to the Indemnifying Party the information relied upon by the
Indemnified Party to substantiate the affected Claim, together with all such
other information as the Indemnifying Party may reasonably request. If both
affected Parties agree at or prior to the expiration of such 30 day period (or
any mutually agreed upon extension thereof) to the validity and amount of such
Claim, the Indemnifying Party shall immediately pay to the Indemnified Party the
full agreed upon amount of the Claim, failing which the matter shall be referred
to binding arbitration in such manner as the Parties may agree or shall be
determined by a court of competent jurisdiction.
11.6 THIRD PARTY CLAIMS
With respect to any Third Party Claim, the Indemnifying Party shall have
the right, at its expense, to participate in or assume control of the
negotiation, settlement or defence of the Claim and, in such event, the
Indemnifying Party shall reimburse the Indemnified Party for all the Indemnified
Party's out-of-pocket expenses as a result of such participation or assumption.
If the
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Indemnifying Party elects to assume such control, the Indemnified Party shall
have the right to participate in the negotiation, settlement or defence of such
Third Party Claim and to retain counsel to act on its behalf, provided that the
fees and disbursements of such counsel shall be paid by the Indemnified Party
unless the Indemnifying Party consents to the retention of such counsel or
unless the named parties to any action or proceeding include both the
Indemnifying Party and the Indemnified Party and a representation of both the
Indemnifying Party and the Indemnified Party by the same counsel would be
inappropriate due to the actual or potential differing interests between them
(such as the availability of different defences). If the Indemnifying Party,
having elected to assume such control, thereafter fails to defend the Third
Party Claim within a reasonable time, the Indemnified Party shall be entitled to
assume such control and the Indemnifying Party shall be bound by the results
obtained by the Indemnified Party with respect to such Third Party Claim. If any
Party Claim is of a nature such that the Indemnified Party is required by
applicable law to make a payment to any Person (a "THIRD PARTY") with respect to
the Third Party Claim before the completion of settlement negotiations or
related legal proceedings, the Indemnified Party may make such payment and the
Indemnifying Party shall, forthwith after demand by the Indemnified Party,
reimburse the Indemnified Party for such payment. If the amount of any liability
of the Indemnified Party under the Third Party Claim in respect of which such a
payment was made, as finally determined, is less than the amount that was paid
by the Indemnifying Party to the Indemnified Party, the Indemnified Party shall,
forthwith after receipt of the difference from the Third Party, pay the amount
of such difference to the Indemnifying Party.
11.7 SETTLEMENT OF THIRD PARTY CLAIMS
If the Indemnifying Party fails to promptly assume control of the defence
of any Third Party Claim, the Indemnified Party shall have the exclusive right
to contest, settle or pay the amount claimed. Whether or not the Indemnifying
Party assumes control of the negotiation, settlement or defence of any Third
Party Claim, the Indemnifying Party shall not settle any Third Party Claim
without the written consent of the Indemnified Party, which consent shall not be
unreasonably withheld or delayed; provided, however, that the liability of the
Indemnifying Party shall be limited to the proposed settlement amount if any
such consent is not obtained for any reason.
11.8 CO-OPERATION
The Indemnified Party and the Indemnifying Party shall co-operate fully
with each other with respect to Third Party Claims, and shall keep each other
fully advised with respect thereto (including supplying copies of all relevant
documentation promptly as it becomes available).
11.9 SCOPE
The provisions of this Article 11 shall apply to any Claim for breach of
any covenant, representation, warranty or other provision of this Agreement or
any agreement, certificate or other document delivered pursuant to this
Agreement (other than a claim for specific performance or injunctive relief)
with the intent that all such Claims shall be subject to the limitations and
other provisions contained in this Article 11.
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ARTICLE 12
TERMINATION; REMEDIES; LIMITATIONS
12.1 TERMINATION AGREEMENT
This Agreement and the transactions contemplated hereby may be terminated
at any time prior to the Closing:
(a) by the mutual consent of the Seller, the Purchaser and UTI; or
(b) if the Closing has not occurred by May 17, 2000, then
(i) by the Purchaser if any condition specified in Section 9.1 has
not been satisfied on or before such date, and shall not have
been waived by the Purchaser, or
(ii) by the Seller if any condition specified in Section 9.2 has
not been satisfied on or before such date, and shall not have
been waived by the Seller;
provided, in each case, that the failure to consummate the
transactions contemplated hereby on or before such date did not
result from the failure by the Party or Parties seeking termination
of this Agreement to fulfill any undertaking or commitment provided
for herein on the part of such Party or Parties that is required to
be fulfilled on or prior to Closing.
12.2 EFFECT OF TERMINATION
Without limiting any Party's respective rights, Liabilities and remedies
hereunder, in the event of termination of this Agreement by the Purchaser or the
Seller pursuant to Subsection 12.1(b), written notice thereof shall forthwith be
given by the terminating Party to the other Party or Parties hereto, and this
Agreement shall thereupon terminate.
ARTICLE 13
MISCELLANEOUS
13.1 NOTICES
(a) Any notice or other communication required or permitted to be given
hereunder shall be in writing and shall be delivered in person,
transmitted by telecopy or similar means of recorded electronic
communication or sent by registered mail, charges prepaid, addressed
as follows:
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(i) if to the Seller or the Shareholders:
▇▇▇▇▇▇ DRILLING INTERNATIONAL LTD.
▇▇▇▇▇▇▇ ▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇
▇▇▇-▇▇▇ ▇▇▇▇▇▇ ▇.▇.
▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇ ▇▇▇ ▇▇▇
Attention: T.V. ▇▇▇▇▇▇
Fax No.: (▇▇▇) ▇▇▇-▇▇▇▇
with a copy to:
FIELD ▇▇▇▇▇▇▇▇ PERRATON
1900 First Canadian Centre
▇▇▇ - ▇▇▇ ▇▇▇▇▇▇ ▇.▇.
▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇ ▇▇▇ ▇▇▇
Attention: ▇▇. ▇▇▇▇▇ ▇▇▇▇▇▇▇▇
Fax No: (▇▇▇) ▇▇▇-▇▇▇▇
(ii) if to the Purchaser or UTI:
▇▇▇▇▇▇ DRILLING LTD. or UTI ENERGY CORP.
c/o UTI Energy Corp.
▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇
▇▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇▇
Attention: Chief Executive Officer
Fax No.: (▇▇▇) ▇▇▇-▇▇▇▇
with a copy to:
▇▇▇▇▇▇▇ ▇▇▇▇▇
▇▇▇▇ ▇▇▇▇▇▇▇▇ ▇▇▇▇▇
▇▇▇ - ▇▇▇ ▇▇▇▇▇▇ ▇.▇.
▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇
▇▇▇ ▇▇▇
Attention: ▇▇. ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇
Fax No. (▇▇▇) ▇▇▇-▇▇▇▇
(b) Any such notice or other communication shall be deemed to have been
given and received on the day on which it was delivered or
transmitted (or, if such day is not a Business Day, on the next
following Business Day) or, if mailed, on the third Business Day
following the date of mailing; provided, however, that if at the
time of mailing or within three Business Days thereafter there is or
occurs a labour dispute or other event that might reasonably be
expected to disrupt the delivery of documents by mail, any notice or
other communication hereunder shall be
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delivered or transmitted by means of recorded electronic
communication as aforesaid.
(c) A Party may at any time change its address for service from time to
time by giving notice to the other Party in accordance with this
Section 13.1
13.2 CONSULTATION
Prior to the Closing and except as required by any applicable law or any
regulatory or stock exchange requirement, no Party shall issue any press release
or make any public announcement without the prior written consent of the other
Parties, which consent shall not be unreasonably withheld or delayed. Upon the
Closing, the Parties shall consult with each other before issuing any press
release or making any other public announcement with respect to this Agreement
or the transactions contemplated hereby.
13.3 DISCLOSURE
Prior to any press release or public announcement of the transaction
contemplated hereby pursuant to Section 13.2, no Party shall disclose this
Agreement or any aspects of the transaction contemplated hereby except to its
board of directors, its senior management, its legal, accounting, financial or
other professional advisors or its lenders, all on a "need to know basis", or as
otherwise may be required by any applicable law or any regulatory authority or
stock exchange having jurisdiction.
13.4 BEST EFFORTS
The Parties acknowledge and agree that, for all purposes of this
Agreement, an obligation on the part of one Party to use its best efforts to
obtain from any Person any waiver, consent, approval, permit, licence or other
document shall not require such Party to make any payment to such Person for the
purpose of procuring the same, other than payments for amounts due and payable
to such Person, payments for incidental expenses incurred by such Person and
payments required by any applicable law or regulation.
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13.5 COUNTERPARTS
This Agreement may be executed in counterparts, each of which shall
constitute an original and all of which taken together shall constitute one and
the same instrument.
IN WITNESS WHEREOF this Agreement has been executed by the Parties as of
the date first above written.
▇▇▇▇▇▇ DRILLING INTERNATIONAL LTD.
By: _____________________________________
By: _____________________________________
SHAREHOLDERS
-------------------------------- ------------------------------------
Witness ▇▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇
-------------------------------- ------------------------------------
Witness ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇▇
-------------------------------- ------------------------------------
Witness ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇
-------------------------------- ------------------------------------
Witness ▇▇▇▇▇▇ ▇. ▇▇▇ ▇▇▇▇▇
-------------------------------- ------------------------------------
Witness ▇▇▇▇ ▇. ▇▇▇▇▇▇
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▇▇▇▇▇▇ DRILLING LTD.
By:
------------------------------------
By:
------------------------------------
UTI ENERGY CORP.
By:
------------------------------------
By:
------------------------------------
50
SCHEDULE 9
ALLOCATION OF PURCHASE PRICE
Class 41 Tangible Depreciable Property ____________
51
SCHEDULE 21
ASSIGNMENT, ▇▇▇▇ OF SALE AND ASSUMPTION AGREEMENT
This Assignment, ▇▇▇▇ of Sale and Assumption Agreement (the
"Agreement") is dated effective the _______ day of April, 2000, and made
between ▇▇▇▇▇▇ Drilling International Ltd. (the "Seller") and ▇▇▇▇▇▇ Drilling
Ltd. (the "Purchaser").
WHEREAS the Seller, the shareholders of the Seller's parent, the Purchaser
and UTI Energy Corp. entered into an Asset Purchase Agreement dated as of the
________ day of March, 2000 (the "Purchase and Sale Agreement") providing, among
other things, for the sale by the Seller to the Purchaser of the Purchased
Assets;
AND WHEREAS pursuant to the Purchase and Sale Agreement, the Seller and
the Purchaser are required to execute and deliver this Agreement in connection
with the consummation of the transactions contemplated by the Purchase and Sale
Agreement;
AND WHEREAS any capitalized term used but not defined in this Agreement
shall have the meaning ascribed to such term in the Purchase and Sale Agreement;
NOW THEREFORE, in consideration of the premises and other good and
valuable consideration, the receipt and sufficiency of which are hereby
acknowledged, the parties hereto agree as follows:
1. ASSIGNMENT OF ASSETS. The Seller hereby assigns, transfers, conveys, sells
and delivers to the Purchaser, and the Purchaser hereby accepts, all
right, title and interest of the Seller in and to the Purchased Assets, TO
HAVE AND TO HOLD the Purchased Assets unto the Purchaser forever, together
with all rights belonging or pertaining thereto.
2. FURTHER ASSURANCES RE PURCHASED ASSETS. The Seller hereby covenants to
execute and deliver to the Purchaser all such other and further
instruments of assignment and transfer, and all such notices, releases
and other documents that would more fully and specifically assign and
transfer to and vest in the Purchaser the title and interest of the
Seller in and to all of the Purchased Assets hereby assigned and
transferred, or intended to be assigned and transferred free and clear
of all Encumbrances whatsoever except for Permitted Encumbrances. To
the extent that, with respect of any of the Purchased Assets, no
assignment document other than this Agreement is executed, the parties
intend that this Agreement constitutes the conveyance, transfer and
assignment of such Purchased Assets.
3. ASSUMPTION OF OBLIGATIONS. The Purchaser hereby assumes, in accordance
with the terms of the Purchase and Sale Agreement, the Assumed
Obligations.
4. FURTHER ASSURANCES RE ASSUMED OBLIGATIONS. The Purchaser hereby covenants
to execute and deliver to the Purchaser all such other and further
instruments of assumption, and all such notices, releases and other
documents that would more fully and specifically assume all of the Assumed
Obligations.
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5. GOVERNING LAW. This Agreement and the rights and obligations of the Seller
and the Purchaser hereunder shall be governed by, interpreted and enforced
in accordance with the laws of the Province of Alberta without giving
effect to principles thereof relating to conflicts of law rules that would
direct application of laws of another jurisdiction, except to the extent
that it is mandatory that the law of another jurisdiction shall apply.
6. CONFLICT AND INCONSISTENCY, NO MERGER. To the extent any conflict or
inconsistency exists between the provisions of this Agreement and the
Purchase and Sale Agreement, the provisions of the Purchase and Sale
Agreement shall govern. The terms and provisions of the Purchase and
Sale Agreement (including, without limitation, the representations,
warranties and covenants therein) shall not merge, be extinguished or
otherwise affected by the delivery and execution of this Agreement or
any other document delivered pursuant to Section 2 of this Agreement or
Section 10.2 or Section 10.3 of the Purchase and Sale Agreement.
7. BINDING EFFECT. This Agreement shall be binding upon and shall enure
to the benefit of the parties hereto and their respective successors
and assigns.
8. COPIES. This Agreement may be executed in counterpart, each of which
shall be deemed an original and which shall constitute one and the same
instrument.
IN WITNESS WHEREOF, the Seller and the Purchaser have executed this
Agreement as of the day and year first above written.
▇▇▇▇▇▇ DRILLING INTERNATIONAL LTD.
BY: ______________________________________
BY: ______________________________________
▇▇▇▇▇▇ DRILLING LTD.
BY: ______________________________________
53
SCHEDULE 22
PART 1: SUMMARY OF KEY TERMS OF
EMPLOYMENT AND NON-COMPETITION
1. COMPENSATION AND BENEFITS
Each Employee's compensation package will include salary and benefits
which are no less favourable in the aggregate than his or her current
salary and benefits. For greater certainty, shareholder bonuses will be
excluded from the new compensation package.
2. SEVERANCE
For the purposes of determining severance obligations, the term of
employment for all Employees will be deemed to include their prior service
with the ▇▇▇▇▇▇ group of companies. These severance obligations will be
subject to the express termination provisions agreed to in any employment
contracts entered into with the Purchaser.
3. KEY EMPLOYMENT AGREEMENTS
Employment agreements will be entered into with the following employees
upon the following terms:
NAME TITLE TERM DATE NOTICE PERIOD
---- ----- --------- -------------
▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇▇ VP Operations May 31, 2001 60 days
▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇ VP Finance December 31, 2000 60 days
Art ▇▇▇▇▇▇▇ ▇▇ Contracts May 31, 2003 9 months
▇▇▇▇ ▇▇▇▇▇▇ Drilling Superintendent May 31, 2001 60 days
▇▇▇▇▇▇ ▇▇▇ ▇▇▇▇▇ Drilling Superintendent May 31, 2002 60 days
The term of any of the above employment agreements with terms less than 3
years may be extended prior to Closing for up to 3 years if such employee
wishes.
In the absence of any notice of termination from either party, each of the
above employment agreements will automatically extend on a rolling month
by month basis.
The notice period refers to the amount of advance notice that must be
given to terminate each employment agreement on the expiry date of the
employment agreement. Any termination by the Purchaser prior to the expiry
date will obligate the Purchaser to pay severance for the balance of the
term unless such termination is for just cause.
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4. NON-COMPETITION AGREEMENTS
The five shareholders of 592655 Alberta Ltd. and ▇▇▇▇▇▇ ▇▇▇▇▇▇▇ Ltd.
will be required to enter into 5 year non-competition agreements in
accordance with the Asset Purchase Agreement.
No other shareholders will be required to enter into non-competition
agreements pursuant to the applicable Asset Purchase Agreements.
55
SCHEDULE 22
PART 2: FORM OF EMPLOYMENT AGREEMENT
EMPLOYMENT AGREEMENT
This Employment Agreement (this "Agreement") is made and entered into this
o day of March, 2000, by and between ▇▇▇▇▇▇ Drilling Ltd., an Alberta
corporation (the "Company"), and o, an individual whose primary residence is
located at o, Alberta (the "Employee").
W I T N E S S E T H :
- - - - - - - - - -
WHEREAS, the Company desires to employ Employee on the terms set forth
below to provide management services to the Company, and Employee is willing to
accept such employment and provide such services on such terms.
NOW, THEREFORE, in consideration of the foregoing and for other good and
valuable consideration, the parties hereto do hereby agree:
1. DEFINITIONS. As used in this Agreement, the following terms have the
meanings set forth below:
(a) "Affiliates" means UTI Energy Corp. and its direct and indirect
subsidiaries.
(b) "Disability" shall be deemed to have occurred when Employee shall
have been unable to fully and competently perform the duties
hereunder for a period of at least six consecutive months by reason
of mental or physical illness or other incapacity.
(c) "Notice of Termination" means a notice that sets forth the date of
termination and, in the event of termination for cause, the facts
and circumstances claimed to provide a basis for termination of
Employee's employment.
2. TERM. The term of employment of Employee under this Agreement shall
commence on the date hereof (the "Commencement Date") and shall continue
until o (the "Initial Period") and month-to-month thereafter (the
"Additional Monthly Periods"), unless sooner terminated in accordance with
this Agreement. The Initial Period and the Additional Monthly Periods are
hereinafter referred to together as the "Scheduled Term of Employment".
3. DUTIES. During the Scheduled Term of Employment as provided in Section
2, the Company will employ Employee in a managerial capacity as [insert
job title] with responsibilities for o together with such other
responsibilities as the Company may from time to time determine during
the term of this Agreement, provided that any change in the Employee's
responsibilities will not result in a material change to the Employee's
position, duties or responsibilities. Employee will comply with all
provisions of all applicable laws, with all corporate documents
governing the conduct of the business and affairs of the Company and
its Affiliates and with all applicable policies of the Company
56
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and its Affiliates, including any policies regarding transactions of the
Company or its Affiliates in foreign countries. Employee agrees to devote
substantially all of his business time to the performance of his duties
hereunder.
4. COMPENSATION.
(a) The Company agrees to pay to Employee a minimum base annual salary
of $o ("Annual Base Salary") for all services provided under this
Agreement, payable in accordance with the normal payroll practices
of the Company.
(b) In addition to the payments set forth in Section 4(a) above,
Employee shall be entitled to reimbursement of business expenses in
accordance with the Company's policies and be eligible to
participate in the employee benefit plans (including bonus plans at
the Company's discretion) and maintained by the Company for its
employees in general. Employee also shall be entitled to such fringe
benefits and vacation time as are made available to other employees
of the Company having similar responsibilities to Employee. The
Company shall have the right to deduct from all payments to be made
under this Agreement any federal, provincial or local taxes and
pension or unemployment contributions required by law to be withheld
from such payments. Employee shall participate in the health care
plans available to the Company's employees. Increases in the costs
associated with the Company's health care plans will not increase
Employee's Annual Base Salary.
5. NONDISCLOSURE OF CONFIDENTIAL INFORMATION.
(a) Employee agrees that he will not, except with the consent of the
Company, disclose to others (except for advising agents and
employees of the Company), directly or indirectly, any confidential,
non-public information relating to the business, prospects, or plans
of the Company or its Affiliates and that he will not use such
information except in the performance of his duties hereunder.
Notwithstanding the previous sentence, Employee shall not be in
violation of this section in the event of a disclosure pursuant to a
court action or governmental rule, regulation, or proceeding (an
"Ordered Disclosure") provided Employee has notified the Company or
its Affiliates of such Ordered Disclosure within five business days
of being personally served with such Ordered Disclosure. Employee
agrees to cooperate in good faith with the Company in responding to
such Ordered Disclosure in order to prevent, limit or impose
restrictions on such Ordered Disclosure. In no event, however, shall
this section require Employee to take action or otherwise cause
Employee to be in violation of any law or result in contempt of such
Ordered Disclosure.
(b) Upon termination of his employment with the Company, Employee shall
surrender to the Company any and all work papers, reports, manuals,
documents, and the like (including all originals and copies thereof)
in his possession which contain confidential information relating to
the business, prospects or plans of the Company or its Affiliates.
57
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(c) Employee agrees that during the effectiveness of his covenant not to
compete set forth in Section 6(a), he will endorse strategies of the
Company, and following his termination of employment with the
Company, will not disclose or cause to be disclosed any negative,
adverse or derogatory comments or information of a substantial
nature about the Company or its Affiliates, the management of the
Company or its Affiliates, any product or service provided by the
Company or its Affiliates or the future prospects of the Company or
its Affiliates; provided that following termination of the covenant
not to compete in Section 6 below and in the event Employee is
competing with the Company, Employee may make comments and disclose
information as is reasonable and customary by a competitor in the
land drilling business so long as the disclosure of information does
not violate Sections 5(a) or 5(b) above. The Company may seek the
assistance, cooperation or testimony of Employee following any
termination of his employment with the Company in connection with
any investigation, litigation or proceeding arising out of matters
within the knowledge of Employee and related to his position as an
officer or employee of the Company, and in any such instance,
Employee shall provide such assistance, cooperation or testimony as
is reasonably requested and the Company shall pay Employee's
reasonable costs and expenses in connection therewith. In addition,
if such assistance, cooperation or testimony requires more than a
nominal commitment of Employee's time, the Company will compensate
Employee for such time at a per diem rate derived from Employee's
salary from the Company at the time of Employee's termination. Such
assistance shall not unduly interfere with Employee's activities
following such termination.
6. COVENANT NOT TO COMPETE WITH THE COMPANY.
(a) Employee agrees that, until the later of termination of this
Agreement pursuant to Section 7 or expiration of the Scheduled Term
of Employment, he shall not, directly or indirectly, either as an
employee, employer, consultant, agent, principal, partner,
shareholder (other than a shareholder of 5% or less of a publicly
traded company), corporate officer or director, or in any other
individual or representative capacity, engage or participate in the
land contract drilling business in North America provided that
nothing herein shall restrict the Employee upon his cessation of
employment with the Company from providing well-site drilling
consulting services to operators.
(b) Employee acknowledges that a remedy at law for any breach or
attempted breach of this Section 6 will be inadequate and further
agrees that any breach of this Section 6 will result in irreparable
harm to the Company and its business and the Company shall, in
addition to any other remedy that may be available to it, be
entitled to specific performance and injunctive and other equitable
relief in case of any such breach or attempted breach. Employee
acknowledges that this covenant not to compete is being provided in
connection with the Company's employment of Employee and that this
Section 6 contains reasonable limitations as to time, geographical
area and scope of activity to be restrained that do not impose a
58
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greater restraint than is necessary to protect the goodwill or other
business interest of the Company.
(c) Whenever possible, each provision of this Section 6 shall be
interpreted in such a manner as to be effective and valid under
applicable law but if any provision of this Section 6 shall be
prohibited by or invalid under applicable law, such provision shall
be ineffective to the extent of such prohibition or invalidity,
without invalidating the remaining provisions of this Section 6. If
any provision of this Section 6 shall, for any reason, be judged by
any court of competent jurisdiction to be invalid or unenforceable,
such judgment shall not affect, impair or invalidate the remainder
of this Section 6 but shall be confined in its operation to the
provision of this Section 6 directly involved in the controversy in
which such judgment shall have been rendered. In the event that the
provisions of this Section 6 should ever be deemed to exceed the
time or geographic limitations permitted by applicable laws, then
such provision shall be reformed to the maximum time or geographic
limitations permitted by applicable law.
7. TERMINATION.
(a) The employment of Employee by the Company hereunder shall
automatically terminate upon Employee's death or Disability. In
addition, the employment of Employee by the Company may be
terminated by the Company at any time for any reason whatsoever upon
o months prior notice (subject to Section 7(c)) or upon providing
the payment provided for in Section 7(c) in lieu of notice (except
for termination for "cause" by the Company for which no prior
written notice is required). The employment of the Employee by the
Company may also be terminated by the Employee at any time for any
reason upon o months prior notice. Any termination of Employee's
employment by the Company or by Employee (other than termination
pursuant to the first sentence of this Section 7(a)) shall be
communicated by written Notice of Termination to the other party
hereto in accordance with Section 14. Employee understands and
agrees that the Company may terminate the Employment of Employee at
any time with or without Cause by notice to the Employee as provided
herein.
(b) Upon termination of the employment of Employee for any reason ,
Employee shall be entitled to receive, and the Company shall pay
Employee (or, if such termination is caused by Employee's death, his
estate or as may be directed by the legal representatives of such
estate) within 30 days following the termination date, any unpaid
amounts payable to Employee under Section 4(a) through the date of
termination.
(c) In addition to the amounts to which Employee is entitled under
Section 7(b), (i) if Employee's employment is terminated by the
Company during the Initial Term, whether or not notice is given in
accordance with Section 7(a), for any reason other than for cause,
the Company shall, within 30 days following the termination date,
pay to Employee an amount equal to the Annual Base Salary plus an
allowance for the value of accrued employment benefits, calculated
from the
59
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termination date until the later of the expiration of the Initial
Term or the end of the notice period in Section 7(a), as the case
may be; or (ii) if Employee's employment is terminated by the
Company during the Additional Monthly Periods, for any reason other
than cause, the Company shall, within 30 days following the
termination date, pay to the Employee an amount equal to the Annual
Base Salary plus an allowance for the value of accrued employment
benefits, calculated from the termination date until the end of the
notice period provided in Section 7(a). This amount shall be payable
either in a lump sum or in equal monthly installments, at the option
of the Company.
(d) The compensation set forth in this Section 7 shall be the only
compensation payable as a result of such termination and, except as
may otherwise be expressly provided in any employee benefit plans in
which the Employee is participating at the date of his termination,
Employee shall not be entitled to any other rights he may have under
any other employee benefit plan or arrangement.
(e) In the event that any employment standards legislation provides for
termination compensation in excess of the termination compensation
set out in this Agreement, then such legislation shall prevail to
the extent of such incremental compensation.
8. ADDITIONAL REMEDIES. In the event of a breach or a threatened breach of
the terms of Section 5 and 6 by Employee, the Company shall, in addition
to all other remedies, be entitled to a temporary or permanent injunction
or a decree for specific performance, in accordance with the provisions
hereof, without showing any actual damage or that monetary damages would
not provide an adequate remedy and without any bond or other security
being required.
9. NONASSIGNMENT. This Agreement is personal to Employee and shall not be
assigned by him. Employee shall not hypothecate, delegate, encumber,
alienate, transfer, or otherwise dispose of his rights and duties
hereunder. The Company may assign this Agreement without Employee's
consent to any Affiliate or to any other entity who, in connection with
such assignment, acquires all or substantially all of the Company's
assets, or into or with which the Company is merged or consolidated.
10. INDEMNIFICATION. Employee shall be entitled to indemnification rights
as set forth in the Company's corporate documents, as they may exist
from time to time.
11. WAIVER. The waiver by the Company of a breach by Employee of any
provision of this Agreement shall not be construed as a waiver of any
subsequent breach by Employee.
12. SEVERABILITY. Should any provision of this Agreement be held
unenforceable or invalid, then the parties hereto agree that such
provision shall be deemed modified to the extent necessary to render it
lawful and enforceable, or if such a modification is not possible
without materially altering the intention of the parties hereto, then
such provision shall be severed from this Agreement. In such case the
validity of the remaining provisions shall
60
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not be affected and this Agreement shall be construed as if such provision
were not contained herein.
13. GOVERNING LAW. This Agreement shall be construed by, subject to, and
governed in accordance with the laws of the Province of Alberta.
14. NOTICES. Any notice, request, communication, instruction or other document
to be given hereunder by any party hereto to any other party shall be in
writing and delivered personally, by facsimile (with receipt confirmed) or
by registered or certified mail, postage prepaid:
(a) If to the Company:
▇▇▇▇▇▇ Drilling Ltd.
▇▇▇▇▇ ▇▇▇▇, ▇▇▇ - ▇▇▇ ▇▇▇▇▇▇ ▇.▇.
▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇
▇▇▇ ▇▇▇
Facsimile: (▇▇▇) ▇▇▇-▇▇▇▇
Attention: o
(a) If to Employee:
----------------------
----------------------
----------------------
Facsimile:
------------------
Any notice which is delivered personally in the manner provided herein
shall be deemed to have been duly given to the party to whom it is
directed upon actual receipt by such party (or its agent for notices
hereunder). Any notice which is addressed and mailed in the manner herein
provided shall be conclusively presumed to have been duly given to the
party to which it is addressed at the close of business, local time of the
recipient, on the third day after the day it is so placed in the mail. Any
notice which is sent by facsimile shall be deemed to have been duly given
to the party to which it is addressed upon telephonic confirmation of the
same as provided herein. A copy of any notices delivered by facsimile
shall promptly be mailed in the manner herein provided to the party to
which such notice was given.
15. ENTIRE AGREEMENT. This Agreement sets forth the entire understanding
of the parties and supersedes all prior agreements, arrangements, and
communications, whether oral or written, and this Agreement shall not
be modified or amended except by written agreement of the Company and
Employee. Notwithstanding the foregoing, nothing in this Agreement
shall modify or supercede any non-competition covenant given by the
Employee in any separate agreement to which the Employee and the
Company is a party.
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16. CONSTRUCTION. Words used in the masculine apply equally to the feminine,
and wherever the context dictates, the plural should be read as the
singular and the singular as the plural. References to Sections are to
Sections of this Agreement. The headings at the beginning of each section
are inserted for convenience only and are not intended to describe,
interpret, define, or limit the scope, extent, or intent of this
Agreement.
17. COUNTERPARTS. This Agreement may be executed in separate counterparts,
each of which will be deemed to be an original, but all of which shall
be considered one and the same instrument.
IN WITNESS WHEREOF, the parties hereto have executed this Agreement as of
the date first set forth above.
COMPANY:
▇▇▇▇▇▇ DRILLING LTD.
By: _____________________________________
o
EMPLOYEE:
__________________________________________
o