EXHIBIT 1
SUPPORT AGREEMENT
THIS SUPPORT AGREEMENT dated May 28, 2001,
A M O N G: CONOCO INC., a corporation subsisting under the laws of Delaware
("Conoco")
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3794407 CANADA INC., a corporation subsisting under the laws of
Canada ("Bidco")
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GULF CANADA RESOURCES LIMITED, a corporation subsisting under
the laws of Canada ("Gulf")
WHEREAS the Parties hereto wish to enter into a business combination
by way of Bidco making a take-over bid for all of the issued and outstanding
Ordinary Shares of Gulf.
NOW THEREFORE IN CONSIDERATION of the foregoing premises, the
covenants and agreements herein contained and other good and valuable
consideration (the receipt and sufficiency of which are hereby acknowledged),
the parties hereto covenant and agree as follows:
ARTICLE I
INTERPRETATION
1.1 Definitions
In this Agreement, unless the context otherwise requires:
"Acquisition Proposal" means any merger, amalgamation, take-over
bid, tender offer, arrangement, share exchange, dissolution,
recapitalization or other business combination involving Gulf or any
Material Subsidiary, any purchase by a single person or combination
of persons of 20% or more of the Gulf Shares on a fully diluted
basis, any sale of assets representing more than 25% of the book
value (on a consolidated basis) or fair market value of the
consolidated assets of Gulf taking into account Petrovera Resources,
Tidal and any Material Joint Venture Interest of Gulf (or any lease,
long term supply agreement or other arrangement having the same
economic effect as a sale of assets), any purchase or sale of more
than 20% of the equity of Gulf or rights thereto or interests
therein or thereto, or any sale or disposition by Gulf of any of its
equity interest in GIRL, or a proposal to do any of the foregoing,
excluding the Offer;
"affiliate" has the meaning ascribed thereto in the CBCA;
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"Appropriate Regulatory Approvals" means those sanctions, rulings,
consents, orders, exemptions, permits and other approvals (including
the lapse, without objection, of a prescribed time under a statute
or regulation that states that a transaction may be implemented if a
prescribed time lapses following the giving of notice, the making of
an application or the taking of any other required steps or
proceeding without an objection being made) of Governmental Entities
or self-regulatory organizations, set out in Schedule B hereto;
"business day" means any day, other than a Saturday, a Sunday and a
statutory holiday in Xxxxxxx, Xxxxx xx Xxxxxxx, Xxxxxxx;
"CBCA" means the Canada Business Corporations Act, R.S.C. 1985, c.
C-44, as amended;
"Canadian GAAP" means Canadian generally accepted accounting
principles applied on a consistent basis;
"Compulsory Acquisition" means an acquisition by Bidco of Gulf
Shares not tendered to the Offer utilizing the provisions of Section
206 of the CBCA;
"Confidentiality Agreement" means the agreement dated May 18, 2001
between Conoco and Gulf providing access by Conoco to confidential
information of Gulf on specified terms;
"Director" means the Director appointed pursuant to Section 260 of
the CBCA;
"Directors' Circular" means the directors' circular to be sent to
the Gulf Shareholders in response to the Offer;
"Disclosure Letter" means, collectively, those materials provided to
Conoco by Gulf prior to the date hereof and listed in Schedule C
hereto and the Supplemental Disclosure Letter;
"Effective Date" means the date on which Bidco first takes up Gulf
Shares deposited to the Offer, except that if Bidco takes up and
pays for more than 50% of the Gulf Shares, "Effective Date" means
the date on which a majority of the directors comprising the Board
of Directors of Gulf are individuals nominated by Bidco;
"Effective Time" means 12:01 a.m. (Calgary Time) on the Effective
Date;
"Exchanges" means the TSE and the NYSE, and "Exchange" means any of
them;
"Expiry Date" means the date on which Bidco first takes up any Gulf
Shares deposited to the Offer, by way of notice thereof given to the
Depository;
"Expiry Time" means the time the Offer, as may be extended from time
to time, expires;
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"Governmental Entity" means (a) any multinational, federal,
provincial, state, regional, municipal, local or other government,
governmental or public department, central bank, court, tribunal,
arbitral body, commission, board, bureau or agency, domestic or
foreign, (b) any subdivision, agent, commission, board, or authority
of any of the foregoing or (c) any quasi-governmental or private
body exercising any regulatory, expropriation or taxing authority
under or for the account of any of the foregoing;
"GIRL" means Gulf Indonesia Resources Limited, a corporation
subsisting under the laws of New Brunswick;
"Grissik" means Gulf Resources (Grissik) Ltd., a corporation
incorporated under the laws of Barbados;
"Gulf Energy" means the partnership of that name subsisting under
the laws of Alberta between International Colin Energy Corporation
and Gulf;
"Gulf Option" means an option to purchase Gulf Shares granted under
any of the Gulf Stock Plans or as an inducement to enter the employ
of Gulf;
"Gulf Shareholders" means the holders of Gulf Shares;
"Gulf Shares" means the ordinary shares in the capital of Gulf;
"Gulf Stock Plans" means the Gulf Incentive Stock Option Plan
(1990), the Gulf Incentive Stock Option Plan (1994) and the
Executive Restricted Share Unit/Deferred Share Unit Plan;
"Gulf Western Canada" means the partnership of that name subsisting
under the laws of Alberta between Gulf Energy, Wabiskaw Exploration
Ltd. and Gulf;
"HSR Act" means the United States Xxxx-Xxxxx-Xxxxxx Antitrust
Improvements Act of 1976, as amended;
"Initial Expiry Time" has the meaning ascribed thereto in Section
2.1(c);
"Law" or "Laws" means all laws, by-laws, statutes, rules,
regulations, principles of law, orders, ordinances, judgements,
decrees or other requirements and the terms and conditions of any
grant of approval, permission, authority or licence of any
Governmental Entity or self-regulatory authority (including any of
the Exchanges), and the term "applicable" with respect to such Laws
and in a context that refers to one or more Parties, means such Laws
as are applicable to such Party or its business, undertaking,
property or securities and emanate from a person having jurisdiction
over the Party or Parties or its or their business, undertaking,
property or securities;
"material" means, where used in relation to Gulf and its
Subsidiaries, a fact, asset, liability, transaction or circumstance
concerning the business, assets, rights, liabilities,
capitalization, operations, prospects or financial condition of Gulf
and its Subsidiaries, taken as a whole, that (i) would be reasonably
likely to have a significant effect on the market price or value of
the Gulf Shares or (ii) that would prevent or materially delay
completion of the Offer, in accordance with this Agreement, or any
Compulsory Acquisition or Subsequent Acquisition Transaction;
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"material adverse change" or "material adverse effect" means, when
used in connection with a person, any change, effect, occurrence or
state of facts (or any effect, development, occurrence or state of
facts involving a prospective change) that is, or could reasonably
be expected to be, material and adverse to the business, assets,
rights, liabilities, capitalization, operations, prospects or
financial condition of that person and its subsidiaries taken as a
whole, other than any change, effect, occurrence or state of facts
(i) resulting from conditions affecting the oil and gas industry as
a whole; (ii) resulting from general economic, financial, currency
exchange or securities market conditions in Canada or elsewhere;
(iii) resulting from civil or political unrest in Indonesia that
does not have a materially disproportionate effect on such person;
and (iv) resulting from changes in the market price of crude oil and
natural gas;
"Material Entities" means the Material Subsidiaries, Petrovera
Resources, Tidal and the Partnerships;
"Material Joint Venture Interest" means any of Syncrude, Mobil
Canada Joint Venture and Totalfina Joint Venture;
"Material Subsidiaries" means, in respect of Gulf, GIRL and Grissik
and "Material Subsidiary" means any of them;
"Minimum Condition" has the meaning ascribed thereto in Schedule A;
"Mobil Canada Joint Venture" means the joint venture between Gulf
and Mobil Canada;
"NYSE" means the New York Stock Exchange, Inc.;
"Offer" means the offer to purchase all of the outstanding Gulf
Shares, together with associated SRP rights, including any Gulf
Shares which may become outstanding pursuant to the exercise of
outstanding Gulf Options, to be made by Bidco to all of the Gulf
Shareholders on the conditions set out in Schedule A hereto and on
such other terms as are consistent with this Agreement;
"Offering Circular" means the take-over bid circular of Bidco
provided to the holders of the Gulf Shares in respect of the Offer;
"Outside Date" means November 30, 2001, or such later date as may be
mutually agreed in writing by the Parties;
"Parties" means Gulf, Conoco and Bidco; and "Party" means any of
them;
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"Partnerships" means Gulf Energy and Gulf Western Canada;
"Permitted Encumbrances" means:
(a) liens for taxes, assessments or governmental charges which are
not due or delinquent or the validity of which is being
diligently contested in good faith by Gulf;
(b) liens incurred or created in the ordinary course of business as
security in favour of any other person who is conducting the
development or operation of the property to which such liens
relate for Gulf's share of the costs and expenses of such
development or operation which are not due or delinquent;
(c) mechanics', builders' or materialmen's liens in respect of
services rendered or goods supplied for which payment is not
due;
(d) easements, rights of way, servitudes or other similar rights in
land (including, without limitation, rights of way and
servitudes for railways; sewers; drains; gas and oil pipelines;
gas and water mains; and electric light, power, telephone,
telegraph and cable television conduits, poles, wires and
cables);
(e) the right reserved to or vested in any municipality or
governmental or other public authority by the terms of any
lease, license, franchise, grant or permit or by any statutory
provision, to terminate any such lease, license, franchise,
grant or permit or to require annual or other periodic payments
as a condition of the continuance thereof;
(f) governmental requirements of general application, including,
without limitation, those respecting production rates or other
operational matters;
(g) the reservations, limitations, provisos and conditions in any
original grants from the Crown of any of the oil and gas
properties of Gulf, its Subsidiaries, the Partnerships,
Petrovera Resources, Tidal and the Material Joint Venture
Interests or interests therein and statutory exceptions to
title; and
(h) the terms and conditions of the leases, licenses, production
sharing contracts, technical assistance contracts, title and
operating documents and any unit agreements or pooling
agreements entered into prior to the date hereof with respect
to the oil and gas properties of Gulf, its Subsidiaries, the
Partnerships, Petrovera Resources, Tidal and the Material Joint
Venture Interests;
"person" includes an individual, partnership, association, body
corporate, trustee, executor, administrator, legal representative,
Governmental Entity or any other business enterprise, whether or not
having legal status;
"Petrovera Resources" means the Petrovera Resources partnership, a
partnership subsisting under the laws of Alberta;
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"Publicly Disclosed by Gulf" means disclosed by Gulf and GIRL in a
public filing made by them with the Alberta or Ontario Securities
Commissions or the SEC from January 1, 1999 to and including the
date hereof;
"Returns" means all reports, forms, elections, estimates,
declarations of estimated tax, information statements and returns
relating to, or required to be filed in connection with, any Taxes;
"SEC" means the United States Securities and Exchange Commission;
"Securities Act" means the Securities Act (Alberta), R.S.A. 1981, c.
S-6.1 and the rules, regulations and policies made thereunder, as
now in effect and as they may be amended from time to time prior to
the Expiry Time;
"Shareholder Rights Plan" means the shareholder rights plan
agreement made between Gulf and Computershare Trust Company of
Canada as amended and restated as of April 2, 2001;
"SRP Rights" means the rights issued pursuant to the Shareholder
Rights Plan;
"Subsequent Acquisition Transaction" means a "going private
transaction" (as that term is defined in Rule 61-501 of the Ontario
Securities Commission) for Gulf which, if successfully completed,
will result in Conoco owning, directly or indirectly, all of the
Gulf Shares;
"subsidiary" means, with respect to a specified body corporate, any
body corporate of which more than 50% of the outstanding shares
ordinarily entitled to elect a majority of the board of directors
thereof (whether or not shares of any other class or classes shall
or might be entitled to vote upon the happening of any event or
contingency) are at the time owned directly or indirectly by such
specified body corporate and shall include any body corporate,
partnership, joint venture or other person (excluding any
Governmental Entity) over which such specified body corporate
exercises direction or control whether through the ownership of
voting securities, by contract or otherwise, or which is in a like
relation to a subsidiary;
"Subsidiary" means a subsidiary of Gulf, whether direct or indirect;
"Superior Proposal" means any bona fide written unsolicited
Acquisition Proposal that (a) in the good faith determination of the
Board of Directors of Gulf after consultation with financial
advisors and outside counsel is reasonably capable of being
completed, taking into account all legal, financial, regulatory and
other aspects of such proposal and the person making such proposal,
and (b) in the good faith determination of the Board of Directors of
Gulf (based on the written opinions, with only customary
qualifications, of each of Xxxxxxx Xxxxx Canada Inc. and Xxxxxxx
Sachs & Co.) would, if consummated in accordance with its terms,
result in a transaction more favourable from a financial point of
view to Gulf Shareholders than the transaction contemplated by this
Agreement;
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"Supplemental Benefits Disclosure Letter" means that certain letter
referred to in Section 3.1(p);
"Supplemental Disclosure Letter" means that certain letter dated as
of even date herewith and delivered by Gulf to Conoco and attached
as Schedule D hereto;
"Syncrude" means the Syncrude joint venture;
"Tax Act" means the Income Tax Act (Canada), R.S.C. 1985, c. 1 , as
amended;
"Taxes" means (i) all taxes and any instalments in respect thereof,
however denominated, including any interest, penalties or other
additions that may become payable in respect thereof, imposed by any
federal, provincial, state, local or foreign government or any
agency or political subdivision of any such government, which taxes
shall include, without limiting the generality of the foregoing, all
income or profits taxes (including, but not limited to, federal,
provincial and state income taxes), capital, payroll, employee
withholding and non-resident withholding taxes, labour taxes,
unemployment insurance, pension contributions, social insurance
taxes, sales and use taxes, ad valorem taxes, value added taxes,
goods and services taxes, capital gains taxes, excise taxes,
franchise taxes, gross receipts taxes, business license taxes,
occupation taxes, real and personal property taxes, stamp taxes,
environmental taxes, transfer taxes, workers' compensation and other
governmental charges, levies and other obligations of the same or of
a similar nature to any of the foregoing, which Gulf or any of its
Subsidiaries is required to pay, withhold or collect, (ii) liability
for the payment of any amounts of the type described in clause (i)
as a result of being a member of an affiliated, consolidated,
combined, unitary or aggregate group, and (iii) liability for the
payment of any amounts as a result of being party to any tax sharing
agreement or as a result of any express or implied obligation to
indemnify any other person with respect to the payment of any
amounts of the type described in clause (i) or (ii);
"Tidal" means Tidal Energy Marketing Inc., a corporation governed by
the laws of Canada;
"Totalfina Joint Venture" means the joint venture entered into
between Gulf and Totalfina S.A.; and
"TSE" means the Toronto Stock Exchange.
1.2 Interpretation Not Affected by Headings
The division of this Agreement into Articles, Sections, subsections
and paragraphs and the insertion of headings are for convenience of reference
only and shall not affect in any way the meaning or interpretation of this
Agreement. Unless the contrary intention appears, references in this Agreement
to an Article, Section, subsection, paragraph or Schedule by number or letter
or both refer to the Article, Section, subsection, paragraph or Schedule,
respectively, bearing that designation in this Agreement.
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1.3 Number and Gender
In this Agreement, unless the contrary intention appears, words
importing the singular include the plural and vice versa, and words importing
gender include all genders.
1.4 Date for Any Action
If the date on which any action is required to be taken hereunder by
a Party is not a business day, such action shall be required to be taken on
the next succeeding day which is a business day.
1.5 Currency
Unless otherwise stated, all references in this Agreement to sums of
money are expressed in lawful money of Canada.
1.6 Accounting Matters
Unless otherwise stated, all accounting terms used in this Agreement
in respect of Gulf shall have the meanings attributable thereto under Canadian
GAAP and all determinations of an accounting nature in respect of Gulf
required to be made shall be made in a manner consistent with Canadian GAAP
and past practice.
1.7 Knowledge
Where in this Agreement a representation or warranty is made on the
basis of the knowledge of Gulf, such knowledge consists only of the actual
knowledge, as of the date of this Agreement, of the senior executives of Gulf
but does not include the knowledge of any other individual or any
constructive, implied or imputed knowledge.
1.8 Schedules
The following Schedules are annexed to this Agreement and are
incorporated by reference into this Agreement and form a part hereof:
Schedule A - Conditions of the Offer
Schedule B - Appropriate Regulatory Approvals
Schedule C - List of Materials Provided
Schedule D - Supplemental Disclosure Letter.
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ARTICLE II
THE OFFER
2.1 Actions by Conoco and Bidco
(a) Conoco agrees to cause Bidco to make and Bidco agrees to make
the Offer at a cash price of $12.40 per Gulf Share, commencing
on or before June 8, 2001 (the "Offer Deadline"), provided that
in the event that Bidco shall not have been provided with such
of the lists referred to in Section 2.2 in order to allow Bidco
to mail the Offer to holders of Gulf Shares and Gulf Options by
the Offer Deadline, the Offer Deadline shall be extended to the
second business day following the obtaining of such lists.
Subject to Section 2.5, Conoco and Gulf shall publicly announce
the Offer following the execution of this Agreement.
(b) Bidco shall prepare the Offer, the Offering Circular and the
related letter of acceptance and transmittal and notice of
guaranteed delivery (collectively, the "Offer Documents") with
respect to the Offer in both English and French in compliance
with the Securities Act, all other applicable provincial and
United States federal and state securities laws, rules and
regulations and published policies thereunder (collectively,
the "Securities Laws"). Gulf and its counsel shall be given a
reasonable opportunity to review the Offer Documents which
shall be delivered in accordance with the notice provisions of
Section 9.1 (and which opportunity, in any event, will be at
least two days), and comment thereon, prior to their being
mailed to Gulf Shareholders and filed with the appropriate
securities commissions and other regulatory authorities in
Canada and the United States (the "Securities Authorities").
Bidco shall file the Offer Documents and the Schedule 14D-1F on
a timely basis with the Securities Authorities using the
multi-jurisdictional disclosure system. The Offer Documents and
the Schedule 14D-1F, when filed with the Securities Authorities
and mailed to the Gulf Shareholders, shall contain all
information which is required to be included therein in
accordance with any applicable Law, including, without limiting
the generality of the foregoing, the CBCA, and shall in all
material respects comply with the requirements of applicable
Law, including the CBCA. The terms of the Offer shall comply
with the terms of this Agreement. In making the Offer, Bidco
shall comply in all material respects with the provisions of
applicable Law.
(c) Conoco and Bidco agree that the initial expiry time (the
"Initial Expiry Time") for the Offer will be 6:00 p.m. (Calgary
time) on the 36th day following the day of the mailing of the
Offer Documents to the Gulf Shareholders or, if such day is not
a business day in Calgary, on the next business day thereafter.
In the event that any Appropriate Regulatory Approval is not
obtained prior to the time the Offer is scheduled to terminate,
unless such approval has been denied, Bidco agrees that it will
extend the Offer for a period of not less than 10 days past the
Initial Expiry Time pending receipt of such approval, provided
that Bidco shall not be required to extend the Offer past the
Outside Date.
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(d) Subject to the satisfaction or waiver of the conditions set
forth in Schedule A hereto and Article VI, Bidco shall, within
three business days after taking up the Gulf Shares under the
Offer, accept for payment and pay for all Gulf Shares validly
tendered (and not properly withdrawn) pursuant to the Offer.
2.2 Actions by Gulf
Gulf covenants in favour of Conoco and Bidco that:
(a) it will provide lists of the holders of all classes and series
of securities of Gulf prepared by Gulf or its transfer agent, a
list of the Gulf Shareholders, a list of the holders of Gulf
Options, and a list of the holders of any other rights,
warrants or convertible securities currently outstanding (with
full particulars as to the purchase, exercise or conversion
price, vesting and expiry date) prepared by Gulf (as well as a
security position listing from each depositary, including The
Canadian Depositary for Securities Limited and Cede & Co.) and
deliver such lists to Bidco as soon as practicable following
the execution of this Agreement, and will obtain and deliver to
Bidco thereafter supplemental lists setting out any changes
thereto from time to time as requested by Conoco following the
execution of this Agreement, all such deliveries to be in both
printed form and, if available, computer-readable format; and
(b) sufficiently in advance of the mailing of the Offer Documents
that the Directors' Circular can be mailed together with the
Offer Documents, Gulf will convene a meeting of the Board of
Directors of Gulf to approve the Directors' Circular, which
Directors' Circular shall include the recommendation of the
Board of Directors of Gulf that Gulf Shareholders accept the
Offer and deposit their Gulf Shares to the Offer, subject to
the other terms of this Agreement.
2.3 DIRECTORS' CIRCULAR
Gulf shall prepare the Directors' Circular and Gulf's Schedule
14D-9F together with any other documents required by the Securities Act or
other applicable Laws in connection with the Offer, and Gulf shall cause the
Directors' Circular and any other documentation required by the Securities Act
to be sent to each holder of Gulf Shares and Gulf Options to be issued and so
sent together with the Offer Documents and to be filed as required by the
Securities Act and all other applicable Laws. Gulf shall file the Directors'
Circular and the Schedule 14D-9F on a timely basis with the Securities
Authorities using the multi-jurisdictional disclosure system. The Directors'
Circular and the Schedule 14D-9F, when filed with the Securities Authorities
and mailed to the Gulf Shareholders, shall contain all information which is
required to be included therein in accordance with any applicable Law,
including, without limiting the generality of the foregoing, the CBCA, and
shall in all material respects comply with the requirements of applicable Law,
including the CBCA. Bidco and its counsel shall be given a reasonable
opportunity to review the Directors' Circular and Gulf's Schedule 14D-9F which
shall be delivered in accordance with the notice provisions of Section 9.1
(and which opportunity, in any event, will be at least two days), and
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comment thereon, prior to their being mailed to Gulf Shareholders and filed
with the Securities Authorities.
2.4 PREPARATION OF FILINGS
(a) Conoco, Bidco and Gulf shall co-operate in the preparation of
any application for orders, registrations, consents, filings, circulars and
approvals and the preparation of any required documents reasonably deemed by
the Parties to be necessary to discharge their respective obligations under
applicable Laws in connection with this Agreement, the Offer, any Compulsory
Acquisition and any Subsequent Acquisition Transaction.
(b) Each of Conoco and Bidco shall ensure that the Offering Circular
and their Schedule 14D-1F complies with all applicable Laws and, without
limiting the generality of the foregoing, that the Offering Circular and their
Schedule 14D-1F does not contain any untrue statement of a material fact or
omit to state a material fact required to be stated therein or necessary to
make the statements contained therein not misleading in light of the
circumstances in which they are made (other than with respect to any
information provided by Gulf in writing for use therein).
(c) Gulf shall ensure that the Directors' Circular and Gulf's
Schedule 14D-9F complies with all applicable Laws and, without limiting the
generality of the foregoing, that the Directors' Circular and Gulf's Schedule
14D-9F does not contain any untrue statement of a material fact or omit to
state a material fact required to be stated therein or necessary to make the
statements contained therein not misleading in light of the circumstances in
which they are made (other than with respect to any information provided by
Conoco in writing for use therein).
(d) Each of Gulf, Conoco and Bidco shall promptly notify the other
Parties if at any time before the Expiry Time any of them becomes aware that
the Offering Circular, the Schedule 14D-1F, the Directors' Circular or the
Schedule 14D-9F, an application for an order, registration, consent, filing,
circular or approval, any registration statement or any other filing under
companies, corporations or securities Laws contains an untrue statement of a
material fact or omits to state a material fact required to be stated therein
or necessary to make the statements contained therein not misleading in light
of the circumstances in which they are made, or that otherwise requires an
amendment or supplement to the Offering Circular, the Schedule 14D-1F, the
Directors' Circular or the Schedule 14D-9F, such application, registration
statement or filing, and the Parties shall co-operate in the preparation of
any amendment or supplement to the Offering Circular, the Schedule 14D-1F, the
Directors' Circular or the Schedule 14D-9F, or any such application,
registration statement or filing, as required.
2.5 Shareholder Communications
Gulf and Conoco agree to co-operate in the preparation of
presentations, if any, to investors regarding the Offer prior to the making of
such presentations and to promptly consult with each other in issuing any
press releases or otherwise making public statements with respect to this
Agreement or the Offer and in making any filing with any Governmental Entity
or with any Exchange with respect thereto. Notwithstanding the foregoing, no
Party shall issue any
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press release regarding the Offer, this Agreement or any transaction relating
to this Agreement without first providing a draft of such press release to the
other Parties and prior notice and reasonable opportunity for comment;
provided, however, that the foregoing shall be subject to each Party's
overriding obligation to make any such disclosure required in accordance with
applicable Laws. If such disclosure is required and the other Parties have not
reviewed or commented on the disclosure, the Party making such disclosure
shall use all commercially reasonable efforts to give prior oral or written
notice to the other Parties, and if such prior notice is not possible, to give
such notice immediately following.
2.6 WITHHOLDING
Conoco and Bidco shall be entitled to deduct and withhold from the
amount otherwise payable pursuant to this Agreement or the Offer to any Gulf
Shareholder such amounts as are required to be deducted and withheld with
respect to the making of such payment under the United States Internal Revenue
Code of 1986, as amended (the "Code"), or any other provision of domestic or
foreign (whether national, federal, state, provincial, local or otherwise) Tax
Law. To the extent that amounts are so deducted and withheld and paid over to
the appropriate taxing authority by Conoco or Bidco, such deducted and
withheld amounts shall be treated for all purposes of this Agreement and the
Offer as having been paid to the Gulf Shareholder in respect of which such
deduction and withholding was made by Conoco or Bidco.
ARTICLE III
REPRESENTATIONS AND WARRANTIES OF GULF
3.1 Representations and Warranties
Gulf hereby represents and warrants to and in favour of Conoco and
Bidco as follows and acknowledges that Conoco and Bidco are relying upon such
representations and warranties in connection with the entering into of this
Agreement and the making of the Offer:
(a) Board Approval and Fairness. The Board of Directors of Gulf has
unanimously approved the Offer and this Agreement and
determined unanimously that the Offer is fair to the Gulf
Shareholders and is in the best interests of Gulf and the Gulf
Shareholders and has resolved unanimously to recommend to the
Gulf Shareholders that they accept the Offer and deposit their
Gulf Shares to the Offer. The Board of Directors of Gulf has
received an opinion from each of Xxxxxxx Xxxxx Canada Inc. and
Xxxxxxx, Sachs & Co. that the Offer is fair from a financial
point of view to the Gulf Shareholders.
(b) Organization and Qualification. Gulf and each of the Material
Entities is a corporation duly incorporated or a person duly
created, validly existing and in good standing under the laws
of its jurisdiction of incorporation, continuance or creation
and has the requisite corporate or other power and authority to
own its properties as now owned and to carry on its business as
it is now being conducted. Gulf and each of the Material
Entities is duly registered or otherwise authorized to do
business and each is in good standing in each jurisdiction in
which the
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character of its properties, owned, leased, licensed or
otherwise held, or the nature of its activities makes such
registration necessary, except where the failure to be so
registered or in good standing would not have a material
adverse effect on Gulf and its Subsidiaries taken as a whole.
Copies of the Certificate and Articles of Amalgamation of Gulf
dated January 1, 2001 together with all amendments to date and
the by-laws of Gulf furnished to Conoco are accurate and
complete as of the date hereof and have not been amended or
superseded.
(c) Authority Relative to this Agreement. Gulf has the requisite
corporate authority to enter into this Agreement and to carry
out its obligations hereunder and thereunder. The execution and
delivery of this Agreement has been duly authorized by the
Board of Directors of Gulf and no other corporate proceedings
on the part of Gulf are necessary to authorize this Agreement.
This Agreement has been duly executed and delivered by Gulf and
constitutes a legal, valid and binding obligation of Gulf
enforceable against Gulf in accordance with its terms, subject
to the qualification that such enforceability may be limited by
bankruptcy, insolvency, reorganization or other laws of general
application relating to or affecting rights of creditors
generally and that equitable remedies, including specific
performance, are discretionary and may not be ordered.
(d) No Violations.
(i) Except as disclosed in the Disclosure Letter, neither the
execution and delivery of this Agreement by Gulf nor the
completion of the Offer, a Compulsory Acquisition or a
Subsequent Acquisition Transaction contemplated hereby
will: (1) violate, conflict with, or result in a breach of
any provision of, require any consent, approval or notice
under, or constitute a default (or an event which, with
notice or lapse of time or both, would constitute a
default) or result in a right of termination or
acceleration under, or permit any person to exercise
rights against Gulf, any of its Subsidiaries, the
Partnerships or, to the knowledge of Gulf, Petrovera
Resources, Tidal or any of the Material Joint Venture
Interests or which would have an adverse effect on any of
them, or result in the creation of any lien, charge,
encumbrance, claim or right of others (collectively,
"encumbrance") upon any of the properties or assets of
Gulf, any of its Subsidiaries, the Partnerships or, to the
knowledge of Gulf, Petrovera Resources, Tidal or any of
the Material Joint Venture Interests or cause any
indebtedness to come due before its stated maturity or
cause any credit to cease to be available, under any of
the terms, conditions or provisions of (A) their
respective charters or by-laws or other comparable
organizational documents or (B) any material note, bond,
mortgage, indenture, loan agreement, deed of trust,
agreement, lien, contract or other instrument or
obligation to which Gulf, any of its Subsidiaries, the
Partnerships or, to the knowledge of Gulf, Petrovera
Resources, Tidal or any of the Material Joint Venture
Interests is a party or to which any of
-14-
them, or any of their respective properties or assets, may
be subject or by which Gulf, any of its Subsidiaries, the
Partnerships or, to the knowledge of Gulf, Petrovera
Resources, Tidal or any of the Material Joint Venture
Interests is bound; (2) subject to compliance with the
statutes and regulations referred to in Schedule B, "
Appropriate Regulatory Approvals", the CBCA and applicable
Securities Laws, violate any Law applicable to Gulf, any
of its Subsidiaries, the Partnerships or, to the knowledge
of Gulf, Petrovera Resources, Tidal or any of the Material
Joint Venture Interests or any of their respective
properties or assets (except, in the case of each of
clauses (1) and (2) above, for such violations, conflicts,
breaches, defaults, terminations, accelerations or
creations of encumbrances which, or any consents,
approvals or notices which if not given or received, would
not have any material adverse effect on Gulf and its
Subsidiaries taken as a whole or prevent or materially
delay the making and completion of the Offer by Bidco, a
Compulsory Acquisition or a Subsequent Acquisition
Transaction); (3) cause the suspension or revocation of
any authorization, consent, approval or licence currently
in effect which would have a material adverse effect on
Gulf and its Subsidiaries taken as a whole; or (4) result
in any payment (including severance, unemployment
compensation, golden parachute, bonus or otherwise)
becoming due to any director or employee of Gulf or any
Subsidiary.
(ii) Subject to obtaining the Appropriate Regulatory Approvals
and other than in connection with or in compliance with
the provisions of applicable Securities Laws and the CBCA,
(1) there is no legal impediment to the delivery of the
Directors' Circular, and (2) no filing or registration
with, or authorization, consent or approval of, any
Governmental Entity is required to be obtained or made by
Gulf, any of its Subsidiaries, the Partnerships or, to the
knowledge of Gulf, Petrovera Resources, Tidal or any of
the Material Joint Venture Interests in connection with
the execution and delivery of this Agreement, the making
or completion of the Offer by Bidco or a Compulsory
Acquisition, or the delivery of the Directors' Circular,
except for such filings or registrations which, if not
made, or for such authorizations, consents or approvals
which, if not received, would not have a material adverse
effect on Gulf and its Subsidiaries taken as a whole or
prevent or materially delay the making and completion of
the Offer by Bidco or a Compulsory Acquisition.
(iii) Subject to obtaining the Appropriate Regulatory Approvals
relating to Gulf, neither Gulf nor any of its
Subsidiaries, the Partnerships or, to the knowledge of
Gulf, Petrovera Resources, Tidal and the Material Joint
Venture Interests is in default under, and there exists no
event, condition or occurrence which after notice or the
lapse of time or both would constitute such a default
under any contract, agreement, licence or
-15-
franchise to which it is a party or to which any of them,
or any of their respective properties or assets, may be
subject or by which any of them is bound which would, if
terminated due to such default, cause a material adverse
effect with respect to Gulf and its Subsidiaries taken as
a whole.
(e) Capitalization. As of the date hereof, the authorized share
capital of Gulf consists of an unlimited number of Ordinary
Shares, an unlimited number of preference shares designated as
Senior Preference Shares, issuable in series, and an unlimited
number of preference shares designated as Junior Preference
Shares, issuable in series. As at May 1, 2001, Gulf had
535,373,276 issued and outstanding Ordinary Shares and
85,504,557 Series 1 Senior Preference Shares and 300 Series 2
Senior Preference Shares issued and outstanding. There are no
other shares of any class or series outstanding. As at May 1,
2001, there were no more than 21,301,745 Gulf Shares issuable
upon the exercise of Gulf Options. Except as set forth above,
and other than the Gulf Options, the Gulf Stock Plans, the
Shareholder Rights Plan and the Series 1 Senior Preference
Shares, the terms of which provide for a right of conversion
into shares of a newly created class or series of Preference
Shares, there are no options, warrants or other rights,
shareholder rights plans, agreements or commitments of any
nature whatsoever requiring or which may require the issuance,
sale or transfer by Gulf of any shares of Gulf or any
securities convertible into, or exchangeable or exercisable
for, or otherwise evidencing a right to acquire, any shares of
Gulf. All outstanding Gulf Shares have been duly authorized and
validly issued, are fully paid and non-assessable and are not
subject to, nor were they issued in violation of, any
pre-emptive rights, and all Gulf Shares issuable upon the
exercise of outstanding Gulf Options in accordance with their
respective terms have been duly authorized and, upon issuance,
will be validly issued as fully paid and non-assessable and
will not be subject to any pre-emptive rights. Other than the
Gulf Options, there are no securities of Gulf, any of its
Subsidiaries, the Partnerships or, to the knowledge of Gulf,
Petrovera Resources, Tidal or any of the Material Joint Venture
Interests outstanding which have the right to vote generally
(or are convertible into or exchangeable for securities having
the right to vote generally) with the Gulf Shareholders on any
matter. There are no outstanding contractual or other
obligations of Gulf, any of its Subsidiaries, the Partnerships
or, to the knowledge of Gulf, Petrovera Resources, Tidal or any
of the Material Joint Venture Interests to repurchase, redeem
or otherwise acquire any of its securities or with respect to
the voting or disposition of any outstanding securities of any
of the Subsidiaries Petrovera Resources, Tidal or any of the
Material Joint Venture Interests other than Gulf's normal
course issuer bid, and other than obligations of GIRL to issue
common shares upon the exercise of stock options under the GIRL
Incentive Stock Option Plan (1997).
(f) Ownership of Subsidiaries and Material Joint Venture Interests.
All of the outstanding shares of capital stock and other
ownership interests in Gulf's Subsidiaries, the Partnerships
and, to the knowledge of Gulf, Petrovera Resources,
-16-
Tidal and the Material Joint Venture Interests (to the extent
the Material Joint Venture Interests are constituted such that
there are shares of capital stock or ownership interests
outstanding) are duly authorized, validly issued, fully paid
and non-assessable, and all such shares and other ownership
interests held directly or indirectly by Gulf are, except as
disclosed in the Disclosure Letter or pursuant to restrictions
on transfer contained in constating documents, rights of first
refusal and similar rights restricting transfer contained in
shareholders, partnership or joint venture agreements or
pursuant to existing financing arrangements involving Gulf, its
Subsidiaries, the Partnerships or, to the knowledge of Gulf,
Petrovera Resources, Tidal and the Material Joint Venture
Interests (which documents, agreements and arrangements have
been disclosed to Conoco in the Disclosure Letter), owned by
Gulf or one or more of its Subsidiaries free and clear of all
material encumbrances, and there are no outstanding options,
rights, entitlements, understandings or commitments (contingent
or otherwise) regarding the right to acquire any such shares of
capital stock or other ownership interests in or material
assets or properties of any of Gulf's Subsidiaries, the
Partnerships or, to the knowledge of Gulf, Petrovera Resources,
Tidal or any of the Material Joint Venture Interests except as
disclosed in the Disclosure Letter or pursuant to shareholders,
partnership or joint venture agreements for or pursuant to
existing financing arrangements involving Gulf, its
Subsidiaries, the Partnerships or, to the knowledge of Gulf,
Petrovera Resources, Tidal or any of the Material Joint Venture
Interests (which agreements and arrangements have been
disclosed to Conoco in the Disclosure Letter). Gulf is in
compliance, in all material respects, with the terms and
conditions of the organizational and/or governing documents of
Petrovera Resources, Tidal and each Material Joint Venture
Interest. Except for the Material Entities, Gulf has no
subsidiaries or interests in other entities, the total assets
of which constituted more than ten percent of the consolidated
assets of Gulf or the total revenues of which constituted more
than ten percent of the consolidated revenues of Gulf in each
case as set out in the consolidated audited financial
statements of Gulf for the year ended December 31, 2000. Gulf
holds all of its interests in the Material Joint Venture
Interests directly.
(g) Reports. As of their respective dates: (i) Gulf's and GIRL's
audited financial statements as at and for the fiscal years
ended December 31, 1999 and December 31, 2000 and their
unaudited financial statements as at and for the three months
ended March 31, 2000, the six months ended June 30, 2000, the
nine months ended September 30, 2000 and the three months ended
March 31, 2001 (collectively, the "Financial Statements"); (ii)
Gulf's Annual Information Forms dated April 28, 2000 and April
3, 2001 and GIRL's Annual Information Forms dated March 8, 2000
and March 19, 2001 (including all documents incorporated by
reference therein); (iii) Gulf's Management Information
Circular dated March 13, 2000 in respect of its Annual and
Special Meeting of Shareholders held on May 9, 2000, Gulf's
Management Information Circular dated March 30, 2001 in respect
of its Annual and Special Meeting of Shareholders held on May
8, 2001, GIRL's Management Information Circular dated March 10,
2000 in respect of its
-17-
Annual Meeting of Shareholders held on May 8, 2000 and its
Management Information Circular dated March 19, 2001 in respect
of its Annual Meeting of Shareholders held on May 7, 2001; (iv)
all forms, schedules, statements, reports, material change
reports, press releases or other documents filed by Gulf and
GIRL with the Director under the CBCA or Registrar of Companies
in New Brunswick or Securities Authorities or any Exchange
since December 31, 1999; and (v) all offering documents used by
Gulf or GIRL in the offering of their securities or filed with
Securities Authorities or any Exchange since December 31, 1999:
(1) are all the financial statements, information circulars,
forms, reports, prospectuses or other documents required to be
filed by them by virtue of the applicable securities Laws since
December 31, 1999; (2) at their respective effective dates did
not contain any untrue statement of a material fact or omit to
state a material fact required to be stated therein or
necessary to make the statements therein, in light of the
circumstances in which they were made, not misleading; and (3)
complied in all material respects with all applicable Laws. The
Financial Statements and all financial statements of Gulf, GIRL
and their respective subsidiaries included or incorporated by
reference in such information circulars, forms, reports,
statements, prospectuses and other documents were prepared in
accordance with Canadian GAAP (except (A) as otherwise
indicated in such financial statements and the notes thereto
or, in the case of audited statements, in the related report of
Gulf's or GIRL's independent auditors, or (B) in the case of
unaudited interim statements, to the extent they may not
include footnotes, are subject to normal year end adjustments
or may be condensed or summary statements), and fairly present
the consolidated financial position, results of operations and
changes in financial position of Gulf, GIRL and their
respective subsidiaries as of the dates thereof and for the
periods indicated therein (subject, in the case of any
unaudited interim financial statements, to normal year-end
adjustments) and reflect reserves required by Canadian GAAP in
respect of all material contingent liabilities, if any, of
Gulf, GIRL and their respective subsidiaries on a consolidated
basis. There has been no change in Gulf's or GIRL's accounting
policies since December 31, 1999.
(h) Books and Records. The corporate records and minute books and
the other books, records and accounts of Gulf, its Subsidiaries
and the Partnerships and, to the knowledge of Gulf, Petrovera
Resources, Tidal or any of the Material Joint Venture Interests
have been maintained substantially in accordance with all
applicable Laws and are complete and accurate in all material
respects.
(i) Litigation. Except as disclosed in the Disclosure Letter, there
are no claims, actions, suits or proceedings outstanding,
pending or, to the knowledge of Gulf, threatened affecting
Gulf, any of its Subsidiaries, the Partnerships or, to the
knowledge of Gulf, Petrovera Resources, Tidal or any of the
Material Joint Venture Interests or affecting any of their
respective property or assets at law or in equity before or by
any court or Governmental Entity, including matters arising
under environmental, health and safety laws, which action, suit
or proceeding
-18-
involves a possibility of any judgement against or liability of
Gulf, its Subsidiaries, Petrovera Resources, Tidal or any of
the Material Joint Venture Interests which, if successful,
would have a material adverse effect on Gulf and its
Subsidiaries taken as a whole or would prevent or materially
delay the making and completion of the Offer by Bidco, a
Compulsory Acquisition or any Subsequent Acquisition
Transaction. Neither Gulf nor any of its Subsidiaries, the
Partnerships or, to the knowledge of Gulf, Petrovera Resources,
Tidal or any of the Material Joint Venture Interests or their
respective assets or properties is subject to any outstanding
judgement, order, writ, injunction or decree that has had or is
reasonably likely to have a material adverse effect on Gulf and
its Subsidiaries taken as a whole or that would prevent or
materially delay the consummation by Gulf of the transactions
contemplated by this Agreement or the making and completion of
the Offer, a Compulsory Acquisition or any Subsequent
Acquisition Transaction.
(j) Taxes, etc. All material Returns required to be filed by or on
behalf of Gulf or any Subsidiary have been duly filed on a
timely basis and such material Returns are true, complete and
correct in all material respects. All Taxes shown to be payable
on the Returns or on subsequent assessments with respect
thereto have been paid in full on a timely basis, other than
such failures as in aggregate would not have a material adverse
effect on Gulf and its Subsidiaries, taken as a whole, and no
other material Taxes are payable by Gulf or any Subsidiaries.
Gulf and each Subsidiary has paid or provided adequate accruals
(in addition to any accruals for deferred Taxes) in its
financial statements for the year ended December 31, 2000 for
Taxes, in conformity with generally accepted accounting
principles applicable in Canada, other than such Taxes as in
the aggregate do not have a material adverse effect on Gulf and
its Subsidiaries taken as a whole.
For all periods ending on and after December 31, 1996, true and
complete copies of (i) relevant portions of material income Tax
audit reports, statements of deficiencies, settlement or other
agreements relating to Taxes received by Gulf or any Subsidiary
or on behalf of Gulf or any Subsidiary, and (ii) all material
federal, provincial, state, local or foreign income or
franchise Returns for Gulf or any Subsidiaries have been made
available by Gulf for inspection by Conoco.
No material deficiencies, litigation, proposed adjustments or
matters in controversy exist or have been asserted with respect
to Taxes of Gulf or any Subsidiary. Neither Gulf nor any
Subsidiary is a party to any material action or proceeding for
assessment or collection of Taxes, nor has such event been
asserted or threatened against Gulf or any Subsidiary or any of
their respective assets. No waiver or extension of any statute
of limitations and no other agreement or other document
extending or having the effect of extending the period of
assessment or collection of any material Taxes is in effect
with respect to Taxes or Returns of Gulf or any Subsidiary.
-19-
Except as previously disclosed by Gulf to Conoco, none of Gulf
or the Subsidiaries is aware of any contingent Tax liabilities
or any grounds for an assessment or reassessment of any of them
by any Governmental Entity, other than for which adequate
provision has been made in the Gulf Financial Statements or
which would not in aggregate have a material adverse effect on
Gulf and its Subsidiaries taken as a whole.
Each of Gulf and the Subsidiaries has (i) withheld from each
payment made to any of its present or former employees,
officers and directors and to all persons who are non-residents
of Canada for purposes of the Tax Act all amounts required by
law to be withheld and has remitted such withheld amounts
within the prescribed period to the appropriate Governmental
Entity, (ii) remitted all pension plan contributions,
unemployment insurance premiums, employer health taxes and all
other Taxes payable or collectible by it in respect of its
employees to the appropriate Governmental Entity within the
time required under the applicable legislation and (iii)
charged, collected and remitted on a timely basis all Taxes as
required under applicable legislation on any sale, supply or
delivery whatsoever made by any of them unless such failures in
the aggregate do not have a material adverse effect on Gulf and
its Subsidiaries taken as a whole.
Each of Gulf and its Subsidiaries have complied in all material
respects with the contemporaneous documentation and other
requirements of Section 247 of the Tax Act. To the best of the
knowledge of Gulf, other than Citibank, TD Securities and CIBC
World Markets which in the aggregate own more than 10% of the
Series 2 Senior Preference Shares, the holders of indebtedness
owing by Gulf or any Material Subsidiary, holders of Gulf
Options and persons with which such holders do not deal at
arm's length for purposes of the Tax Act do not in aggregate
own 10% or more of the shares of any class or series of Gulf or
the relevant Material Subsidiary as the case may be.
Except as disclosed in the Disclosure Letter, neither Gulf nor
any of its Subsidiaries is party to or is bound by any material
agreement, arrangement or practice with respect to Taxes
(including any Tax sharing agreements with any taxing
authority).
Neither Gulf nor any of its Subsidiaries has made an election
to be treated as a "consenting corporation" under Section 341
of the Code. Gulf has not made an election under Section 897(i)
of the Code to be treated as a domestic corporation for
purposes of Sections 897, 1445 and 6039C of the Code.
Neither Gulf nor any of its Subsidiaries has constituted either
a "distributing corporation" or a "controlled corporation" in a
distribution of stock qualifying for tax-free treatment under
Section 355 of the Code (A) in the two years prior to the date
of this Agreement or (B) in a distribution which could
otherwise constitute
-20-
part of a "plan" or "series of related transactions" (within
the meaning of Section 355(e) of the Code) in conjunction with
the Offer.
(k) Absence of Undisclosed Liabilities. Except as Publicly
Disclosed by Gulf or as disclosed in the Disclosure Letter,
neither Gulf nor any of its Subsidiaries, the Partnerships or,
to its knowledge, Petrovera Resources, Tidal or any of the
Material Joint Venture Interests has any material obligations
or liabilities of any nature (matured or unmatured, fixed or
contingent), other than those (i) Publicly Disclosed by Gulf
and (ii) those incurred in the ordinary course of business
since December 31, 2000.
(l) Absence of Certain Changes or Events. Except as disclosed in
the Disclosure Letter or Publicly Disclosed by Gulf, from
December 31, 2000 through to the date hereof, there has not
occurred:
(i) a material adverse change with respect to Gulf and its
Subsidiaries taken as a whole;
(ii) any damage, destruction or loss, whether covered by
insurance or not, that could reasonably be expected to
have a material adverse effect on Gulf and its
Subsidiaries taken as a whole;
(iii) any redemption, repurchase or other acquisition by Gulf
of Gulf Shares or Preference Shares of Gulf or any
declaration, setting aside or payment of any dividend or
other distribution (whether in cash, stock or property)
with respect to Gulf Shares or Preference Shares of Gulf,
other than dividends and repurchases provided for by the
terms of the Preference Shares of Gulf and other than
Gulf's normal course issuer bid;
(iv) any acquisition or sale of property or assets of Gulf, its
Subsidiaries, Petrovera Resources, Tidal or any of its
Material Joint Venture Interests aggregating 10% or more
of Gulf's total consolidated property and assets as at
December 31, 2000 other than in the ordinary and regular
course of business consistent with past practice;
(v) any entering into, amendment of, relinquishment,
termination or non-renewal by it of any material contract,
agreement, licence, franchise, lease transaction,
commitment or other material right or obligation, other
than in the ordinary and regular course of business
consistent with past practice;
(vi) any resolution to approve a split, combination or
reclassification of any of its outstanding shares;
-21-
(vii) any change in its accounting methods, principles or
practices; or
(viii) any agreement or arrangement to take any action which,
if taken prior to the date hereof, would have made any
representation or warranty set forth in this Agreement
materially untrue or incorrect as of the date such
representation or warranty is made.
(m) Environmental. None of Gulf nor any of its Subsidiaries, the
Partnerships or, to the knowledge of Gulf, Petrovera Resources,
Tidal or any of the Material Joint Venture Interests is aware
of, or has received notice of or is subject to:
(i) any proceeding, order or directive which relates to
environmental or health or safety matters that would have
any material adverse effect on the business, operations or
financial condition of Gulf and its Subsidiaries, taken as
a whole, or which requires any material work, repairs,
construction or capital expenditures; or
(ii) any demand or notice with respect to the breach of any
environmental, health or safety law applicable to Gulf or
any of its Subsidiaries, the Partnerships or Petrovera
Resources, Tidal or any of the Material Joint Venture
Interests or any of their business undertakings,
including, without limitation, any regulations respecting
the use, storage, treatment, transportation or disposal of
environmental contaminants that would have any material
adverse effect on the business, operations or financial
condition of Gulf and its Subsidiaries, taken as a whole.
(n) Property. There are no defects in title to the oil and gas
properties of Gulf, its Subsidiaries, the Partnerships, and to
Gulf's knowledge, Petrovera Resources, Tidal and the Material
Joint Venture Interests or their material assets and facilities
which are used in the production and marketing of oil and gas,
except for (i) such defects in title as would, individually or
in the aggregate, not have a material adverse effect on Gulf
and its Subsidiaries, taken as a whole, and (ii) except for any
Permitted Encumbrances.
(o) Licences. Except as Publicly Disclosed by Gulf, Gulf, each of
its Subsidiaries, the Partnerships and, to the knowledge of
Gulf, Petrovera Resources, Tidal and the Material Joint Venture
Interests has obtained and is in compliance with all licences,
permits, certificates, consents, orders, grants and other
authorizations of or from any Governmental Entity, including
those required under environmental, health or safety laws,
necessary to conduct its current businesses as they are now,
individually or in the aggregate, being or are proposed to be
conducted, other than such licenses, permits, certificates,
consents, orders, grants and authorizations the failure of
which to be obtained or be in compliance with would not have a
material adverse effect on Gulf and its Subsidiaries, taken as
a whole.
-22-
(p) Pension and Employee Benefits.
(i) Except for such plans, arrangements or practices disclosed
in the Disclosure Letter or in the Supplemental Benefits
Disclosure Letter (to be provided by Gulf within seven
days of the date of this Agreement) (the "Gulf Plans"),
there are no employee benefit, health, welfare,
supplemental unemployment benefit, bonus, pension, profit
sharing, incentive compensation, deferred compensation,
stock compensation, stock purchase, retirement,
hospitalization insurance, medical, dental, legal,
disability or similar plans or arrangements or practices
relating to directors or employees or former employees of
Gulf, its Subsidiaries, the Partnerships or Tidal which
are currently maintained or in respect of which Gulf, its
Subsidiaries, the Partnership or Tidal have any material
liabilities.
(ii) Except as disclosed in the Disclosure Letter or in the
Supplemental Benefits Disclosure Letter, all of the Gulf
Plans are and have been established, registered,
qualified, invested and administered, in all material
respects, in accordance with all applicable Laws, and in
accordance with their terms. No fact or circumstance
exists that could adversely affect the exempt tax status
of a Gulf Plan.
(iii) All obligations of Gulf or a Subsidiary regarding the
Gulf Plans have been satisfied in all material respects
and no Taxes, penalties or fees are owing or exigible
under any of the Gulf Plans. All contributions or premiums
required to be made by Gulf or a Subsidiary under the
terms of each Gulf Plan or by applicable Laws have been
made in a timely fashion in accordance with applicable
Laws and the terms of the Gulf Plans and none of Gulf or
its Subsidiaries has, and as of the Expiry Date will not
have any liability (other than liabilities accruing after
the Expiry Date) with respect to any of the Gulf Plans.
Except as disclosed in the Disclosure Letter or in the
Supplemental Benefits Disclosure Letter, each Gulf Plan
which is required pursuant to its terms or applicable Laws
to be funded is fully funded or insured on each of an
ongoing, solvency and wind-up basis pursuant to the
actuarial assumptions and methods contained in the most
recent actuarial valuation report prepared in respect of
each such Gulf Plan and which has been disclosed to Conoco
pursuant to Section 3.1(p)(vii).
(iv) No Gulf Plan, nor any related funding medium thereunder,
is subject to any pending investigation, examination or
other proceeding, action or claim initiated by any
Governmental Entity, or by any other person (other than
routine claims for benefits), and, to the knowledge of
Gulf, there exists no state of facts which after notice or
lapse of time or both could reasonably be expected to give
rise to any such investigation, examination or other
proceeding, action or claim or to affect the registration
of any Gulf Plan required to be registered.
-23-
(v) To the knowledge of Gulf, there have been no improper
withdrawals, applications or transfers of assets from any
Gulf Plan or the funding media relating thereto that
remain outstanding and unremedied, and neither Gulf nor
any Subsidiary nor any of their respective agents, has
been in breach of any fiduciary obligation with respect to
the administration of the Gulf Plans or the funding media
relating thereto.
(vi) No insurance policy or any other contract or agreement
affecting any Gulf Plan requires or permits a retroactive
increase in premiums or payments due thereunder. The level
of insurance reserves under each insured Gulf Plan is
reasonable and sufficient to provide for all incurred but
unreported claims.
(vii) Gulf has furnished to Conoco or will within seven days of
this Agreement furnish to Conoco true, correct and
complete copies of all the Gulf Plans as amended as of the
date hereof together with the most recent plan texts,
funding agreements, actuarial reports, funding and
financial information returns and statements, and the most
recent plan summaries and booklets. No material changes
have occurred to the Gulf Plans or are expected to occur
which would affect the actuarial reports or financial
statements required to be provided to Conoco pursuant to
this Section 3.1(p)(vii). Except as disclosed in the
Disclosure Letter or in the Supplemental Benefits
Disclosure Letter, the consummation of the transactions
provided under this Agreement will not result in the
acceleration of vesting, funding of, or entitlement to
benefits under the Gulf Plans or an increase in funding,
or provision of additional benefits, under the Gulf Plans.
(viii) Gulf and its Subsidiaries do not have any employees
employed in the United States.
(ix) Except as disclosed in the Disclosure Letter, Gulf has
provided adequate accruals in its financial statements for
the year ended December 31, 2000 (or, in either case, such
amounts are fully funded) for all pension or other
employee benefit obligations of Gulf or any Subsidiary
arising under or relating to each of the pension or
retirement income plans or other employee benefit plans or
agreements or arrangements or practices maintained by or
binding on Gulf or any of its Subsidiaries in accordance
with Canadian GAAP.
(x) None of the employees of Petrovera Resources or Syncrude,
in their capacities as employees of Petrovera Resources or
Syncrude, participate in the Gulf Plans, nor have any of
such employees participated in the Gulf Plans within the
past three years.
(xi) The Mobil Canada Joint Venture and the Totalfina Joint
Venture do not have any employees and have not had any
employees and, for greater
-24-
certainty, this representation does not apply to the
employees of any joint venture partner who are part of the
Mobil Canada Joint Venture or the Totalfina Joint Venture.
(q) Employment Agreements and Collective Agreements. Except as
Publicly Disclosed by Gulf or as set forth in the written
policies of Gulf, copies of which have been provided to Conoco,
or as otherwise disclosed in the Disclosure Letter, neither
Gulf nor any Subsidiary or Partnership is a party to or bound
by:
(i) except as implied by applicable Law, any employment
agreement with any employee or any written or oral
agreement, arrangement or understanding providing for
severance or termination payments to any director or
employee of Gulf, a Subsidiary or a Partnership;
(ii) any collective bargaining or union agreement, any
bargaining certificate, or any actual or threatened
application for certification or bargaining rights in
respect of Gulf, a Subsidiary or a Partnership;
(iii) any material labour dispute, strike or lock-out relating
to or involving any employee of Gulf, a Subsidiary or a
Partnership; or
(iv) any actual or threatened claim arising out of or in
connection with employment by Gulf, any of its
Subsidiaries or Partnerships or the termination thereof,
other than such claims as in the aggregate do not have a
material adverse effect on Gulf and its Subsidiaries,
taken as a whole.
(r) Compliance with Laws. Gulf, its Subsidiaries, the Partnerships
and, to the knowledge of Gulf, Petrovera Resources, Tidal and
the Material Joint Venture Interests have complied with and are
not in violation of any applicable Laws, other than
non-compliance or violations which would, individually or in
the aggregate, not have a material adverse effect on Gulf and
its Subsidiaries, taken as a whole. Without limiting the
generality of the foregoing, all securities of Gulf (including
without limitation all options, rights or other convertible or
exchangeable securities) have been issued in compliance, in all
material respects, with all applicable securities Laws and all
securities to be issued upon the exercise of any such options,
rights and other convertible or exchangeable securities, upon
issuance, will be duly and validly issued.
(s) Restrictions on Business Activities. There is no agreement,
judgment, injunction, order or decree binding upon Gulf, any of
its Subsidiaries, the Partnerships or, to the knowledge of
Gulf, Petrovera Resources, Tidal or any of the Material Joint
Venture Interests that has or could reasonably be expected to
have the effect of prohibiting, restricting or materially
impairing any business of Gulf, Petrovera Resources, Tidal or
such Subsidiary, Partnership or Material Joint Venture
Interest, other than such agreements, judgments, injunctions,
orders or decrees
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which would not, individually or in the aggregate, have a
material adverse effect on Gulf and its Subsidiaries taken as a
whole.
(t) Intellectual Property. Except as set forth in the Disclosure
Letter, Gulf, its Subsidiaries, the Partnerships and, to the
knowledge of Gulf, the Material Joint Venture Interests own, or
are validly licensed or otherwise have the right to use, all
patents, patent rights, trade-marks, trade names, service
marks, copyrights, know how and other proprietary intellectual
property rights that are material to the conduct of the
business, as presently conducted, of Gulf and its Subsidiaries
taken as a whole.
(u) Insurance. Gulf, its Subsidiaries, the Partnerships and, to the
knowledge of Gulf, Petrovera Resources, Tidal and the Material
Joint Venture Interests that are constituted such that they may
have an insurable interest have policies of insurance in force
as of the date hereof naming Gulf, its Subsidiaries, Petrovera
Resources, Tidal and/or and the Material Joint Venture
Interests, as the case may be, as an insured which, having
regard to the nature of such risk and the relative cost of
obtaining insurance, Gulf believes are reasonable.
(v) Shareholders' Agreement. The shareholders' agreement dated
January 25, 1995 between Gulf and certain of its shareholders
is no longer in force and Gulf is not a party to any other
shareholders' agreement or any registration rights agreement
(other than the registration rights agreement dated January 25,
1995) with any of its shareholders.
(w) US Securities Laws Matters. Less than 40% (calculated in
accordance with Schedule 14D-1F of the US Securities Exchange
Act of 1934, as amended (the "US Exchange Act")) of outstanding
Gulf Shares are held by US holders (as defined in Schedule
14D-1F of the US Exchange Act). Gulf is eligible to file with
the SEC a solicitation/recommendation statement in compliance
with Rules 14d-1(b) and 14e-2(c) under the US Exchange Act on
Schedule 14D-9F. Gulf is a foreign private issuer, as that term
is defined in Rule 3b-4 of the US Exchange Act. Gulf is not an
investment company registered or required to be registered
under the US Investment Company Act of 1940, as amended.
(x) Disclosure. Except as Publicly Disclosed by Gulf, Gulf has
disclosed to Conoco in the Disclosure Letter any information
regarding any event, circumstance or action taken or failed to
be taken which could reasonably be expected to materially
adversely affect the business, operations, assets,
capitalization, financial condition, prospects, rights or
liabilities of or relating to Gulf and its Subsidiaries, taken
as a whole.
(y) Foreign Corrupt Practices Act. There have been no actions taken
by or on behalf of Gulf, or its Subsidiaries or Partnerships
or, to the knowledge of Gulf, Petrovera Resources, Tidal or any
of the Material Joint Venture Interests, that would cause Gulf
or any of its Subsidiaries, Petrovera Resources, Tidal or any
of the Material
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Joint Venture Interests, to be in violation of the Foreign
Corrupt Practices Act of the United States of America or the
Corruption of Foreign Public Officials Act (Canada).
(z) Shareholder Rights Plan. Gulf has taken all corporate action
required for it to perform its obligations under Sections
5.2(1)(a) and (b).
3.2 Investigation
Any investigation by Conoco, Bidco or their respective advisors
shall not mitigate, diminish or affect the representations and warranties of
Gulf pursuant to this Agreement.
3.3 Survival of Representations and Warranties
The representations and warranties of Gulf contained in this
Agreement shall not survive the completion of the Offer and shall expire and
be terminated on the earlier of the Effective Date and the date on which this
Agreement is terminated in accordance with its terms.
ARTICLE IV
REPRESENTATIONS AND WARRANTIES OF CONOCO AND BIDCO
4.1 Representations and Warranties
Each of Conoco and Bidco hereby represents and warrants to and in
favour of Gulf as follows and acknowledges that Gulf is relying upon such
representations and warranties in connection with the entering into of this
Agreement:
(a) Organization and Qualification. Each of Conoco and Bidco is a
corporation duly incorporated, validly existing and in good
standing under the laws of its jurisdiction of incorporation or
continuance and has the requisite corporate power and authority
to own its properties and to carry on its business as it is now
being conducted. Each of Conoco and Bidco is duly registered to
do business and each is in good standing in each jurisdiction
in which the character of its properties, owned, leased,
licensed or otherwise held, or the nature of its activities
makes such registration necessary, except where the failure to
be so registered or in good standing would not have a material
adverse effect on Conoco and its subsidiaries taken as a whole.
(b) Authority Relative to this Agreement. Each of Conoco and Bidco
has the requisite corporate authority to enter into this
Agreement and to carry out its obligations hereunder. The
execution and delivery of this Agreement and the making by
Bidco of the Offer contemplated hereby have been duly
authorized by the respective Boards of Directors of Conoco and
Bidco and no other corporate proceedings on the part of Conoco
and Bidco are necessary to authorize the making or completion
of the Offer. This Agreement has been duly executed and
delivered by each of Conoco and Bidco, as applicable, and
constitutes a legal,
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valid and binding obligation of each of Conoco and Bidco, as
applicable, enforceable against each of them in accordance with
its terms, subject to the qualification that such
enforceability may be limited by bankruptcy, insolvency,
reorganization or other laws of general application relating to
or affecting rights of creditors and that equitable remedies,
including specific performance, are discretionary and may not
be ordered.
(c) No Violations.
(i) Neither the execution and delivery of this Agreement by
Conoco and Bidco nor the making or completion of the Offer
contemplated hereby nor compliance by Conoco and Bidco, as
applicable, with any of the provisions hereof or thereof
will: (1) violate, conflict with, or result in a breach of
any provision of, require any consent, approval or notice
under, or constitute a default (or an event which, with
notice or lapse of time or both, would constitute a
default) or result in a right of termination or
acceleration or create an encumbrance under, any of the
terms, conditions or provisions of their respective
charters or by-laws or any material contract or other
instrument or obligation to which Conoco or Bidco is a
party or to which it is subject or by which it is bound;
or (2) subject to compliance with the statutes and
regulations referred to in Schedule B, "Appropriate
Regulatory Approvals", violate any Law applicable to
Conoco or Bidco or any of their respective properties or
assets (except, in the case of each of clauses (1) and (2)
above, for such violations, conflicts, breaches, defaults,
terminations, accelerations or creations of encumbrances
which, or any consents, approvals or notices which if not
given or received, would not significantly impede the
ability of Bidco to make or complete the Offer); or (3)
cause the suspension or revocation of any authorization,
consent, approval or licence currently in effect which
would prevent or materially delay the making and
completion of the Offer by Bidco.
(ii) Subject to obtaining Appropriate Regulatory Approvals and
other than in connection with or in compliance with the
provisions of applicable securities Laws, the CBCA and the
Appropriate Regulatory Approvals, (1) there is no legal
impediment to the making or completion of the Offer by
Bidco, and (2) no filing or registration with, or
authorization, consent or approval of, any Governmental
Entity is required to be obtained or made by Conoco or
Bidco, as applicable, in connection with the execution and
delivery of this Agreement or the making or completion of
the Offer, except for such filings or registrations which,
if not made, or for such authorizations, consents or
approvals which, if not received, would not prevent or
materially delay the making and completion of the Offer by
Bidco.
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(d) Sufficient Funds. Bidco will have, at the date the Offer
Documents are mailed, sufficient funds or adequate arrangements
(as such term is understood for purposes of Section 135.1 of
the Securities Act) for financing in place to provide
sufficient funds to purchase all Gulf Shares tendered under the
Offer.
(e) Ownership of Shares. None of Conoco, Bidco or their respective
affiliates beneficially owns or exercises control or direction
over any Gulf Shares, nor do they have any rights to acquire
any Gulf Shares.
4.2 Investigation
Any investigation by Gulf or its advisors shall not mitigate,
diminish or affect the representations and warranties of Conoco and Bidco
pursuant to this Agreement.
4.3 Survival of Representations and Warranties
The representations and warranties of Conoco and Bidco contained in
this Agreement shall not survive the completion of the Offer and shall expire
and be terminated on the earlier of the Effective Date and the date on which
this Agreement is terminated in accordance with its terms.
ARTICLE V
COVENANTS
5.1 Covenants of Gulf Regarding the Conduct of Business
(1) Gulf covenants and agrees that, during the period from the date of this
Agreement until the earlier of the Effective Date and the time that this
Agreement is terminated in accordance with its terms, unless Conoco shall
otherwise agree in writing, or as is otherwise expressly permitted by
this Agreement or the Offer:
(a) the business of Gulf, its wholly-owned Subsidiaries and the
Partnerships shall be conducted only in, and Gulf, its
wholly-owned Subsidiaries and the Partnerships shall not take
any action except in, the usual and ordinary course of business
and consistent with past practice (including Gulf's business
plan and capital expenditure budget disclosed to Conoco prior
to the date hereof), and Gulf shall use all commercially
reasonable efforts to maintain and preserve its and their
business organization, assets, employees, advantageous business
relationships and the attendant goodwill of Gulf, its
Subsidiaries and Partnerships and to contribute to retention of
that goodwill to and after the Effective Date;
(b) Gulf shall not, and shall not permit any of its wholly-owned
Subsidiaries and the Partnerships to, directly or indirectly:
(i) amend its charter or by-laws or other comparable
organizational documents; (ii) declare, set aside or pay any
dividend or other distribution or payment (whether in cash,
shares or property) in respect of the Gulf Shares or the
Preference Shares of Gulf or the securities of any
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Subsidiary owned by a person other than Gulf or a Subsidiary,
except dividends paid in the ordinary course consistent with
past practice; (iii) issue, grant, sell or pledge or agree to
issue, grant, sell or pledge any shares of Gulf or its
Subsidiaries, or securities convertible into or exchangeable or
exercisable for, or otherwise evidencing a right to acquire,
shares of Gulf or its Subsidiaries, or grant, sell or pledge or
agree to grant, sell or pledge any of its shares or other
ownership interests in a Material Joint Venture Interest, other
than (A) the issuance of Gulf Shares issuable pursuant to the
terms of Gulf Options, (B) the granting of Gulf Options in the
ordinary course consistent with past practice, (C) transactions
between two or more Gulf wholly-owned Subsidiaries or between
Gulf and a Gulf wholly-owned Subsidiary, (D) pursuant to pledge
commitments contained in written agreements entered into prior
to the date hereof, and (E) as required under applicable Law or
existing contracts; (iv) redeem, purchase or otherwise acquire
any of its outstanding securities, unless otherwise required by
the terms of such securities and other than in transactions
between two or more Gulf wholly-owned Subsidiaries or between
Gulf and a Gulf wholly-owned Subsidiary; (v) amend the terms of
any of its securities; (vi) adopt a plan of liquidation or
resolution providing for the liquidation, dissolution, merger,
consolidation, spin-off, demerger or a reorganization of Gulf,
any of its Subsidiaries, Partnerships or Material Joint Venture
Interests; (vii) enter into, modify or terminate any contract,
agreement, commitment or arrangement with respect to any of the
foregoing; or (viii) make any material Tax election or settle
or compromise any material Tax liability;
(c) Gulf shall conduct itself so as to keep Conoco informed as to
the material decisions or actions required to be made or taken
by Gulf's Board of Directors with respect to the operation of
its business; provided, in each case, that such disclosure is
not otherwise prohibited by reason of a confidentiality
obligation owed to any person or otherwise prevented by
applicable Law;
(d) Gulf shall not, and shall not permit any of its wholly-owned
Subsidiaries or the Partnerships to, directly or indirectly:
(i) sell, pledge, lease, dispose of or encumber any assets of
Gulf or of any such Subsidiary, Partnership or Material Joint
Venture Interest, except in the ordinary course of business
consistent with past practice and except as required under
existing contracts set forth in the Disclosure Letter; (ii)
acquire (by merger, amalgamation, consolidation or acquisition
of shares or assets or otherwise) any corporation, partnership
or other person or other business organization or division
thereof, or, except for investments in securities made in the
ordinary course of business consistent with past practice, make
any investment either by the purchase of securities,
contributions of capital (other than to wholly-owned
Subsidiaries), property transfer, or, except in the ordinary
course of business consistent with past practice, purchase of
any property or assets of any other person, if any of the
foregoing would be material to the business or financial
condition of Gulf and its Subsidiaries taken as a whole; (iii)
commence or undertake a substantial
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expansion of its business facilities or operations or an
expansion that is out of the ordinary and regular course of
business consistent with past practice in light of current
market and economic conditions;(iv) incur any indebtedness for
borrowed money or any other liability or obligation or issue
any debt securities or assume, guarantee, endorse or otherwise
as an accommodation become responsible for the obligations of
any other person, or make any loans or advances, except (A) in
the ordinary course of business consistent with past practice,
(B) for refinancing of existing debt on substantially the same
or more favourable terms, (C) as disclosed in the Disclosure
Letter, and (D) for daylight employee assistance loans in
connection with the exercise of options; (v) pay, discharge or
satisfy any claims, liabilities or obligations other than the
payment, discharge or satisfaction, in the ordinary course of
business consistent with past practice, of liabilities
reflected or reserved against in the Gulf Financial Statements
or incurred in the ordinary course of business consistent with
past practice; (vi) authorize, recommend or propose any release
or relinquishment of any contractual right, other than in the
ordinary course of business consistent with past practice;
(vii) waive, release, grant or transfer any rights of material
value or modify or change any existing material licence, lease,
contract or other document, other than in the ordinary course
of business consistent with past practice; (viii) except in the
ordinary course of business consistent with past practice or as
required by applicable Laws, enter into or modify in any
material respect any contract, agreement, commitment or
arrangement which new contract or series of related new
contracts or modification to an existing contract or series of
related existing contracts would have a material adverse effect
on Gulf and its Subsidiaries taken as a whole; or (ix)
authorize or propose any of the foregoing, or enter into or
modify any contract, agreement, commitment or arrangement to do
any of the foregoing; provided, however, that the foregoing
shall not apply to any action, transaction or agreement
(including a series of transactions) that is outside the
ordinary course of business exception as referred to herein but
has a value of less than $50 million individually or $100
million in the aggregate (for greater certainty in the case of
any joint venture, partnership or similar arrangement to which
Gulf is a party, value shall be measured only as the value of
Gulf's proportionate interest);
(e) Gulf shall not, and shall not permit any of its wholly-owned
Subsidiaries or the Partnerships to, (i) grant or promise to
grant to any officer or director, other than as disclosed in
the Disclosure Letter, an increase or improvement in
compensation or benefits in any form, (ii) other than in the
ordinary course of business consistent with past practice,
grant or promise to grant to any other employee any increase in
compensation or benefits in any form other than to the extent
required under any existing collective bargaining agreements or
union contracts disclosed to Conoco in the Disclosure Letter,
(iii) make any loan to any officer or director except for
daylight employee assistance loans in connection with the
exercise of options, (iv) take any action with respect to the
grant or increase of any severance or termination pay to, or
the entering into or amendment of any employment or consulting
agreement with, any employee of Gulf or any of its Subsidiaries
or
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Partnerships, or with respect to any increase of benefits
payable under its current severance or termination pay policies
or (v) take any action to accelerate any rights or benefits, or
make any material determinations not in the ordinary course of
business consistent with past practice under any Gulf Plan,
collective bargaining agreements or union contracts;
(f) Gulf shall not, and shall not permit any of its wholly-owned
Subsidiaries or the Partnerships to, settle or compromise any
claim brought by any present, former or purported holder of its
securities in connection with the transactions contemplated by
this Agreement or the Offer prior to the Effective Date without
the prior written consent of Conoco, which consent shall not be
unreasonably withheld;
(g) other than in the ordinary course of business consistent with
past practice or as is necessary to comply with applicable Laws
or as disclosed in the Disclosure Letter, neither Gulf nor any
of its wholly-owned Subsidiaries or the Partnerships shall
adopt or materially amend or make any contribution to or
promise to adopt, materially amend or make any contribution to
any bonus, profit sharing, option, pension, retirement,
deferred compensation, insurance, incentive compensation, other
compensation or benefit or other similar plan, agreement,
trust, fund or arrangement for the benefit of directors,
employees or former employees;
(h) Gulf shall notify Conoco of any material adverse change in
respect of Gulf or its Subsidiaries, the Partnerships or the
Material Joint Venture Interests forthwith upon Gulf becoming
aware of same;
(i) Gulf shall use its reasonable commercial efforts to cause its
current insurance (or re-insurance) policies maintained by Gulf
or any wholly-owned Subsidiary or any Partnership, including
without limitation directors' and officers' insurance, not to
be cancelled or terminated or any of the coverage thereunder
not to lapse, unless simultaneously with such termination,
cancellation or lapse, replacement policies underwritten by
insurance or re-insurance companies of nationally recognized
standing having comparable deductions and providing coverage
equal to or greater than the coverage under the cancelled,
terminated or lapsed policies for substantially similar
premiums are in full force and effect; and
(j) Gulf shall not take, and shall not permit any wholly-owned
Subsidiary, any Partnership or, where reasonably practicable
and Gulf is legally capable, Petrovera Resources, Tidal and any
Material Joint Venture Interest to take any action (including,
without limitation and for greater certainty, any action that
would otherwise be permitted to be taken under the terms of
this Agreement), if such action would be reasonably likely to
prevent, materially impede or make more difficult or burdensome
in any material respect, the obtainment of the Appropriate
Regulatory Approvals.
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(2) Gulf shall:
(a) take all actions that may be lawfully taken by it, as a
shareholder or other equity owner, directly or indirectly, of
any non-wholly-owned Subsidiary, Petrovera Resources, Tidal or
the Material Joint Venture Interests (collectively, the
"Non-wholly-owned Entities"), to cause such Non-wholly-owned
Entity to comply with the foregoing covenants in Section 5.1(1)
as if those covenants applied to such Non-wholly-owned
Entities; and
(b) cause its nominees on the boards of directors or management
committees of the Non-wholly-owned Entities, subject to such
nominees' fiduciary obligations, applicable Law and any
existing contractual obligations, to cause such
Non-wholly-owned Entities to comply with the foregoing
covenants in Section 5.1(1) as if those covenants applied to
such Non-wholly-owned Entities.
Gulf shall promptly (i) notify Conoco upon learning of any proposal to act,
any action or any omission by a Non-wholly-owned Entity which, if such entity
were subject to the foregoing covenants in Section 5.1(1), would be
prohibited, and (ii) take all commercially reasonable efforts to oppose such
proposal, unwind such action or rectify such omission, including without
limitation directly or indirectly voting its share holdings or other equity
holdings in any such entity against same.
(3) Prior to the Effective Date, Gulf, upon the reasonable request
of Conoco, shall effect and complete such corporate reorganizations and
restructurings (a "Reorganization Transaction") in respect of Gulf, its
Subsidiaries, the Partnerships, Petrovera Resources and Tidal and the Material
Joint Venture Interests, in accordance with Conoco's reasonably detailed
specifications, in order to complete the Offer and re-order the affairs of
Gulf in the most advantageous manner possible from a Tax, legal and business
perspective as a significant operating group of companies within the Conoco
group of companies, provided that all other conditions to the Offer have been
satisfied or, to the extent permitted hereunder, waived, that such
Reorganization Transaction is not prejudicial to Gulf or the remaining public
shareholders of Gulf and that such Reorganization Transaction does not delay
payment more than three business days past the date Gulf Shares are first
taken up under the Offer.
(4) In the event that Bidco does not take up and pay for Gulf Shares
deposited pursuant to the Offer, Conoco hereby agrees to indemnify and save
Gulf, its Subsidiaries and their directors and officers harmless, from and
against any claims, demands, actions, causes of action, damages, losses,
deficiencies, costs, liabilities and expenses, including without limitation
legal fees on a solicitor-and-client basis (the "Reorganization Costs")
arising by reason of the Reorganization Transaction. In calculating any
Reorganization Costs, the present value of any Tax benefits arising by reason
of the Reorganization Transaction shall be taken into account on a reasonable
basis to reduce such costs. Notwithstanding the foregoing, Conoco shall have
no obligation to indemnify Gulf and save Gulf, its Subsidiaries and their
directors and officers harmless from and against any Reorganization Costs:
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(a) to the extent such costs were the result of the negiligent
failure by Gulf, its Subsidiaries or the Partnerships to
implement the Reorganization Transaction in the manner
specified by Conoco;
(b) to the extent such costs could have been avoided if Gulf had
used commercially reasonable efforts to reduce or avoid such
costs; or
(c) if Bidco does not take up and pay for Gulf Shares deposited
pursuant to the Offer by reason of any breach of any
representation, warranty or covenant given or made by Gulf in
this Agreement or by reason of the occurrence of any
circumstance in which the fee referred to in Section 7.5
becomes payable.
(5) Gulf will provide Conoco and its advisors access to all
information and documentation in its possession or control and will otherwise
fully co-operate with Conoco to allow Conoco to determine the status of the
Series 1 and Series 2 Preference Shares as a specified class of the capital
stock of Gulf within the meaning of proposed paragraph 88(1)(c.8) of the Tax
Act and to otherwise determine the form of the reorganizations and
restructuring, if any, to be completed prior to the Effective Time.
5.2 COVENANTS OF GULF REGARDING THE PERFORMANCE OF OBLIGATIONS
(1) Gulf shall and shall cause its Subsidiaries, Partnerships and,
where reasonably practicable and legally capable, its Material Joint Venture
Interests to perform all obligations required or desirable to be performed by
Gulf or any of its Subsidiaries, Partnerships or Material Joint Venture
Interests under this Agreement, co-operate with Conoco and Bidco in connection
therewith, and do all such other acts and things as may be necessary or
desirable in order to consummate and make effective, as soon as reasonably
practicable, the transactions contemplated in this Agreement and, without
limiting the generality of the foregoing, Gulf shall and where appropriate
shall cause its Subsidiaries, Partnerships and, where appropriate, reasonably
practicable and legally capable cause, its Material Joint Venture Interests
to:
(a) immediately defer the separation time of the SRP Rights and
continue to defer separation unless otherwise requested by
Conoco;
(b) on or immediately prior to the Expiry Date or on such earlier
date as Conoco may request, waive, suspend the operation of or
otherwise render the Shareholder Rights Plan inoperative as
regards the Offer, a Compulsory Acquisition and any Subsequent
Acquisition Transaction but for greater certainty unless
required by the terms of the Shareholder Rights Plan with
respect to a competing take-over bid or a final and
non-appealable order of a court having jurisdiction or an order
of a Securities Authority shall not redeem the rights issued
under the Shareholder Rights Plan or otherwise waive, amend,
suspend the operation of or terminate the Shareholder Rights
Plan without the prior written consent of Conoco;
(c) apply for and use all commercially reasonable efforts to obtain
all Appropriate Regulatory Approvals relating to Gulf or any of
its Subsidiaries, the Partnerships
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or Material Joint Venture Interests and, in doing so, to keep
Conoco reasonably informed as to the status of the proceedings
related to obtaining the Appropriate Regulatory Approvals,
including, but not limited to, providing Conoco with copies of
all related applications and notifications, in draft form, in
order for Conoco to provide its reasonable comments;
(d) defend all lawsuits or other legal, regulatory or other
proceedings challenging or affecting this Agreement or the
consummation of the transactions contemplated hereby subject to
the terms of this Agreement;
(e) use all commercially reasonable efforts to obtain all necessary
waivers, consents and approvals required to be obtained by
Gulf, its Subsidiaries or the Partnerships from other parties
to loan agreements, leases, licences or other contracts,
provided that such waivers, consents and approvals may be
conditional on Conoco taking up Gulf Shares under the Offer and
to the extent such waivers, consents and approvals require an
adverse modification to the terms of such documents or
prepayment of any funds or the incurring of additional
obligations, shall be subject to Conoco's prior written
consent; and
(f) forthwith at the request of Conoco upon confirmation that Bidco
beneficially owns more than 50% of the Gulf Shares, to use best
efforts to assist in effecting the resignations of a majority
of the Gulf directors and causing them to be replaced by
individuals nominated by Bidco.
(2) Gulf shall cooperate, and shall cause GIRL to cooperate, with
Conoco and Bidco in disclosing the Offer to the Governmental Entities in
Indonesia and obtaining any required approvals to completion of the Offer in
Indonesia.
5.3 Covenants of Conoco and Bidco Regarding the Performance of Obligations
(1) Each of Conoco and Bidco shall, and Conoco shall cause its other
subsidiaries to, perform all obligations required or desirable to be performed
by Conoco, Bidco or any of Conoco's subsidiaries under this Agreement,
co-operate with Gulf in connection therewith, and do all such other acts and
things as may be necessary or desirable in order to consummate and make
effective, as soon as reasonably practicable, the transactions contemplated in
this Agreement and, without limiting the generality of the foregoing:
(a) Bidco shall make the Offer, which Offer shall be made by Bidco
in accordance with the provisions of this Agreement and in
compliance with all applicable Laws, including securities Laws
and the CBCA;
(b) Bidco shall, subject to the terms and conditions hereof and of
the Offer, take up the Gulf Shares deposited under the Offer
and pay for such Gulf Shares in accordance with applicable
Securities Laws and the terms of this Agreement;
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(c) Conoco and Bidco shall and where appropriate Conoco shall cause
its other subsidiaries to apply for and use all commercially
reasonable efforts to obtain all Appropriate Regulatory
Approvals relating to Conoco, Bidco or any of Conoco's
subsidiaries and, in doing so, to keep Gulf reasonably informed
as to the status of the proceedings related to obtaining the
Appropriate Regulatory Approvals, including, but not limited
to, providing Gulf with copies of all related applications and
notifications, in draft form, in order for Gulf to provide its
reasonable comments; and
(d) Conoco and Bidco shall and where appropriate Conoco shall cause
its other subsidiaries to defend all lawsuits or other legal,
regulatory or other proceedings challenging or affecting this
Agreement or the making or completion of the Offer.
(2) Each of Conoco and Bidco agrees that Bidco will not amend,
modify or change the terms and conditions of the Offer (which, for greater
certainty, does not include waiving, in whole or in part, a condition of the
Offer) in a manner that is materially adverse to the holders of Gulf Shares in
the aggregate without the prior written consent of Gulf other than to (i)
comply with Section 2.1(c), (ii) extend the Offer, if, at the initial or
extended date on which the Offer is scheduled to terminate, any of the
conditions to the Offer shall not be satisfied or waived by Bidco, until such
time as such conditions are satisfied or waived by Bidco subject to the
Outside Date, (iii) extend the Offer for any period required by any rule,
regulation, interpretation or position of the Securities Authorities
applicable to the Offer or any period required by applicable Law, or (iv)
comply with the legal obligations of Bidco with respect to any amendment,
modification or change of the Offer.
(3) Notwithstanding and without limiting subsection (2), Bidco may:
(a) extend the Offer for a period of not more than 20 days beyond
the initial or any extended date on which the Offer is
scheduled to terminate if (i) on such date there shall not have
been tendered at least 90% of the outstanding Gulf Shares, (ii)
the Minimum Condition shall have been satisfied, (iii) all
other conditions to the Offer have been satisfied or waived,
and (iv) Bidco has taken up and paid for all Gulf Shares
tendered to the Offer; or
(b) at any time following the Initial Expiry Time, reduce the
Minimum Condition to a percentage greater than 50% and shall,
subject to the conditions of the Offer being satisfied or
waived, take up and pay for any Gulf Shares validly deposited
to the Offer, provided that, after Bidco so reduces the Minimum
Condition, Bidco extends the Offer by a 10 day period and
agrees to extend the Offer for not less than two additional
successive 10 day periods if, upon the expiry of any extension,
the Minimum Condition has not been satisfied.
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Conoco shall provide a draft of any proposed amendment, modification or change
to the Offer to Gulf. Any agreement of Bidco referred to in paragraph (b)
above shall continue after the Effective Date until such agreement shall have
been performed or this Agreement is terminated.
(4) Notwithstanding subsection (2), Conoco may not reduce the
Minimum Condition to less than 50.1% without the prior written consent of
Gulf.
(5) Despite the foregoing, the restrictions in subsections (2), (3),
and (4) shall not apply where Bidco amends, modifies or changes the terms or
conditions of the Offer in accordance with any amendment to this Agreement
pursuant to Section 7.4(2).
(6) Conoco hereby unconditionally and irrevocably guarantees the
performance of all covenants and obligations of Bidco in this Agreement or its
permitted assignee. Conoco agrees that Gulf shall not have to proceed first
against Bidco before exercising its right under this guarantee against Conoco.
Conoco agrees that this guarantee will not be discharged except by complete
performance of the covenants and obligations of Bidco under this Agreement.
(7) On and after the Effective Time, Conoco and Bidco will cause
Gulf and any successor to Gulf to perform the obligations of Gulf and its
wholly-owned Subsidiaries and will take no action to discourage its
Subsidiaries that are not wholly-owned from the performance of their
obligations relating to severance, termination of employment and change of
control benefits under all employee termination and severance plans or
practices maintained or provided by Gulf and its Subsidiaries and disclosed to
Conoco pursuant to Section 5.3 of the Supplemental Disclosure Letter for a
period up to 18 calendar months following the month in which the Effective
Date occurs and under each written employment agreement which has been
disclosed to Conoco in Section 5.3 of the Supplemental Disclosure Letter.
Conoco acknowledges that Gulf shall hold the benefits of this section in trust
for the benefit of those employees of Gulf or its Subsidiaries who are party
to and bound by the written employment agreements disclosed to Conoco in
Section 5.3 of the Supplemental Disclosure Letter.
5.4 Mutual Covenants
(1) Each of the Parties covenants and agrees that, except as
contemplated in this Agreement, during the period from the date of this
Agreement until the earlier of the Effective Date and the time that this
Agreement is terminated in accordance with its terms:
(a) it shall, and shall cause its subsidiaries to, and, in the case
of Gulf, its Partnerships and where reasonably practicable and
Gulf is legally capable to cause Petrovera Resources, Tidal and
its Material Joint Venture Interests to, use all commercially
reasonable efforts to satisfy (or cause the satisfaction of)
the conditions precedent to its obligations hereunder as set
forth in Article VI to the extent the same is within its
control and to take, or cause to be taken, all other action and
to do, or cause to be done, all other things necessary, proper
or advisable under all applicable Laws to complete the Offer,
including using its commercially reasonable efforts to: (i)
obtain all Appropriate Regulatory Approvals required to be
obtained by it; (ii) effect all necessary registrations,
filings and submissions of
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information requested by Governmental Entities required to be
effected by it in connection with the Offer, a Compulsory
Acquisition or any Subsequent Acquisition Transaction; (iii)
oppose, lift or rescind any injunction or restraining order
against it or other order or action against it seeking to stop,
or otherwise adversely affecting its ability to make and
complete the Offer; and (iv) co-operate with each other Party
in connection with the performance by it and its subsidiaries
of their obligations hereunder all as subject to the other
terms of this Agreement;
(b) it shall not take any action which would reasonably be expected
to impede the making or completion of the Offer, a Compulsory
Acquisition or any Subsequent Acquisition Transaction except as
permitted by this Agreement;
(c) it shall use its reasonable commercial efforts to conduct its
affairs so that all of its representations and warranties
contained herein shall be true and correct in all material
respects on and as of the Effective Date as if made thereon
(other than representations and warranties specific to a
particular date which shall remain true and correct in all
material respects as of that date); and
(d) it shall notify forthwith the other Parties of any breach of a
representation, warranty, covenant or condition by another
Party of which it becomes aware or any event occurring
subsequent to the date of the Agreement that would render any
representation or warranty made by it contained in this
Agreement untrue.
(2) Conoco and Gulf agree that Gulf shall before the Effective Date:
(a) co-operate with Conoco in order to permit holders of Gulf
Options to: (i) elect to exercise their Gulf Options, or (ii)
exchange their Gulf Options for stock options granted by Conoco
("Conoco Options") as provided in Section 5.4(3);
(b) with respect to holders of Gulf Options who do not elect prior
to the expiry of the Offer to exchange their Gulf Options for
Conoco Options as provided in Section 5.4(3), accelerate the
vesting of such unvested Gulf Options and take all actions
required so that all Gulf Options granted to such Gulf Option
holders not exercised prior to the expiry of the Offer shall
cease to be exercisable after the Expiry Date;
(c) accelerate the vesting, release of or expiry date of any hold
period relating to Gulf Shares in any other Gulf Plan so that
any entitlement to a Gulf Share under such other Gulf Plan
becomes exercisable or fully vested prior to the expiry of the
Offer; and
(d) take such actions as are required so that Gulf Options are
exchangeable in accordance with Section 5.4(3).
(3) Gulf shall apply for any consents and authorizations required in
connection with the foregoing, including any exemptions or consents required
from any Governmental Entity in
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connection with any amendment to a Gulf Plan required in connection with the
foregoing and that all proceeds from the exercise of the Gulf Options shall be
retained by Gulf. For greater certainty, to the extent the Gulf Options may be
exercised on a cashless basis, holders of Gulf Options may direct the Gulf
Shares issued pursuant to such Gulf Options after deduction of the exercise
price, brokerage fees or commissions and other transaction costs to be
tendered into the Offer.
(4) Conoco and Gulf agree that Conoco shall, as soon as practicable
following the Effective Date:
(a) grant Conoco Options, as provided in the following sentence, to
those holders of Gulf Options who, prior to the expiry of the
Offer, elected to exchange each of their Gulf Options for
Conoco Options ("Electing Gulf Option Holders"). For each Gulf
Option that an Electing Gulf Option Holder elects to exchange
for an Conoco Option, such Electing Gulf Option Holder shall
receive an Conoco Option to acquire, on the same terms and
conditions as were applicable under the Gulf Option, the number
of shares of common stock of Conoco ("Conoco Common Stock")
determined by multiplying the number of Gulf Shares subject to
such Gulf Option by a fraction (the "Conversion Fraction")
which fraction is subject to adjustment as provided below, the
numerator of which is $12.40 and the denominator of which is
the average of the closing prices of Conoco Common Stock as
reported by the NYSE for three trading days immediately
preceding (but not including) the Effective Date, rounded down
to the nearest whole share, at a price per share of Conoco
Common Stock equal to the exercise price per Gulf Share subject
to such Gulf Option immediately prior to the Effective Date
divided by the Conversion Fraction, rounded up to the nearest
one-hundredth of a cent. The Conversion Fraction shall be
subject to adjustment downwards so as to ensure that the
provisions of paragraph 7(1.4)(c) of the Tax Act shall be met
in respect of the exchange of Gulf Options for Conoco Options.
Conoco shall amend or modify the terms of the Conoco Options,
in its sole discretion, so as to facilitate, to the extent
practicable, the exchange of Gulf Options for Conoco Options as
described above in this Section provided that Conoco shall not
be required to grant Conoco Options to Electing Gulf Option
Holders if it determines, in its sole discretion, that such an
exchange or the offer of such an exchange could have adverse
taxation or other adverse legal consequences to either Bidco or
Conoco; and
(b) Conoco shall apply for any consents and authorizations required
in connection with the foregoing, including any exemptions or
consents required from any Governmental Entity in connection
with the foregoing.
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ARTICLE VI
CONDITIONS
6.1 Mutual Conditions
The obligations of Gulf, Conoco and Bidco hereunder, including the
obligation to make the Offer, are subject to fulfilment of the following
conditions on or before the Expiry Date or such other time prior thereto as is
specified below:
(a) there shall not be in force and non-appealable any injunction,
order or decree issued by a court or other Governmental Entity
of competent jurisdiction in Canada or elsewhere restraining or
enjoining the consummation of the Offer, any Compulsory
Acquisition, any Subsequent Acquisition Transaction or the
other transactions contemplated by this Agreement; and
(b) this Agreement shall not have been terminated pursuant to
Article VIII.
The foregoing conditions are for the mutual benefit of Gulf, Conoco
and Bidco and may be waived, in whole or in part, by Gulf and by Conoco and
Bidco acting jointly, as appropriate, in writing at any time and, unless
otherwise provided in the written waiver, will be limited to the specific
condition waived.
6.2 Additional Conditions Precedent to the Obligations of Gulf
The obligations of Gulf hereunder are subject to the fulfilment of
the following conditions on or before the Expiry Date or such other time prior
thereto as is specified below:
(a) Bidco has made the Offer on or before the time required to be
made under this Agreement;
(b) at the time of mailing the Offer Documents, the conditions of
the Offer conform with the conditions set out in Schedule A and
the other terms of the Offer are consistent with this
Agreement, unless such terms are accepted by Gulf in writing;
(c) at any time that Bidco amends, modifies or changes the terms
and conditions of the Offer, such amendment, modification or
change is not in breach of Sections 5.3(2), 5.3(3) or 5.3(4);
(d) the representations and warranties made by Conoco and Bidco in
this Agreement qualified as to materiality shall be true and
correct and those not so qualified shall be true and correct in
all material respects as of the date hereof and as of the
Expiry Date as if made on and as of such date (except to the
extent that such representations and warranties speak as of an
earlier date or except as affected by transactions expressly
permitted by this Agreement or except as would not have a
material adverse effect on Bidco's ability to complete the
Offer); and
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(e) Conoco and Bidco shall have complied in all material respects
with their covenants herein except as would not have a material
adverse effect on Bidco's ability to complete the Offer.
The foregoing conditions are for the benefit of Gulf and may be
waived, in whole or in part, by Gulf in writing at any time and, unless
otherwise provided in the written waiver, will be limited to the specific
condition waived.
6.3 Additional Conditions Precedent to the Obligations of Conoco and
Bidco
The obligation of Conoco to cause Bidco to make the Offer and the
obligation of Bidco to make the Offer are subject to the fulfilment of the
condition that at the time that Bidco proposes to make the Offer, (i) there
does not exist any prohibition at Law (other than those referred to in any of
paragraphs (c), (d) and (e) in Schedule A hereto) against Bidco making the
Offer or taking up and paying for the Gulf Shares deposited to the Offer and
(ii) the Board of Directors of Gulf shall have issued an affirmative
recommendation to the Gulf Shareholders to accept the Offer and deposit their
Gulf Shares to the Offer.
(2) The obligations of Conoco and Bidco hereunder, including the
obligations of Bidco to complete the Offer, are also subject to the conditions
set out in Schedule A.
(3) The foregoing conditions are for the benefit of Conoco and Bidco
and may be waived, in whole or in part, by Conoco and Bidco, acting jointly,
in writing at any time and, unless otherwise provided in the written waiver,
will be limited to the specific condition waived. If any of such conditions
shall not have been complied with or waived by Conoco and Bidco on or before
the date required for their performance, Conoco and Bidco may terminate this
Agreement by written notice to Gulf and shall have no other right or remedy
against Gulf except as may be provided by Article VII.
6.4 MERGER OF CONDITIONS
The conditions set out in Sections 6.1, 6.2 and 6.3 shall be
conclusively deemed to have been satisfied, waived or released upon the taking
up by Bidco of any Gulf Shares pursuant to the Offer.
ARTICLE VII
ADDITIONAL AGREEMENTS
7.1 Other Filings
As promptly as practicable hereafter, Gulf, Conoco and Bidco shall
each prepare and file, any filings required in connection with the Offer
required under applicable Law or necessary to obtain all required consents,
waivers, permits, orders and approvals.
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7.2 Further Assurances
Subject to the terms and conditions herein provided and to fiduciary
obligations under applicable Law as advised by legal counsel in writing, each
of the Parties agrees to use all commercially reasonable efforts to take, or
cause to be taken, all actions and to do, or cause to be done, all things
necessary, proper or advisable to permit Bidco to make and complete the Offer
as promptly as practicable, and to co-operate with each other in connection
with the foregoing, including using commercially reasonable efforts to obtain
all necessary consents, approvals and authorizations as are required to be
obtained under any applicable Law.
7.3 Non-Solicitation
(a) Gulf shall not, directly or indirectly, through any Subsidiary,
Partnership, Petrovera Resources or Tidal or any Material Joint Venture
Interest or through any officer, director, employee, investment banker,
attorney or other representative or agent of Gulf or any of its Subsidiaries,
the Partnerships, Petrovera Resources or Tidal or Material Joint Venture
Interests, (i) solicit, initiate, facilitate or encourage (including by way of
furnishing information or entering into any form of agreement, arrangement or
understanding) any inquiries or proposals regarding, constituting or that may
be reasonably expected to lead to, an Acquisition Proposal; (ii) participate
in any discussions or negotiations regarding any Acquisition Proposal, (iii)
withdraw or modify, or propose publicly to withdraw or modify, in any manner
adverse to Conoco or Bidco the approval of the Board of Directors of Gulf of
the transactions contemplated hereby, (iv) approve or recommend, or propose
publicly to approve or recommend, any Acquisition Proposal, or (v) accept or
enter into, or propose publicly to accept or enter into, any agreement,
arrangement or understanding related to any Acquisition Proposal.
Notwithstanding clauses (i) and (ii) of the preceding part of this Section
7.3, prior to the Expiry Date the Board of Directors of Gulf shall not be
prohibited from considering, participating in any discussions or negotiating
or entering into a confidentiality agreement and providing information
pursuant to Section 7.3(d) regarding an unsolicited, bona fide, written
Acquisition Proposal that did not result from a breach of this Section 7.3 and
that the Board of Directors of Gulf determines in good faith after
consultation with its financial advisors and outside counsel, is reasonably
likely to result in a Superior Proposal; provided, however, that prior to
taking such action, the Board of Directors of Gulf determines in good faith
after consultation with its outside counsel regarding its fiduciary duties
with respect to such Acquisition Proposal that it is necessary that the Board
of Directors of Gulf take such action in order to avoid breaching its
fiduciary duties. Upon the Board of Directors of Gulf making the determination
that an Acquisition Proposal is reasonably likely to result in a Superior
Proposal, Gulf shall notify Conoco, orally and in writing, of the identity of
the person making such Acquisition Proposal.
(b) Gulf shall, and shall cause the officers, directors, employees,
representatives and agents of Gulf, its Subsidiaries and Partnerships to,
immediately cease any existing discussions or negotiations with any person
(other than Conoco or Bidco) with respect to any proposal that constitutes, or
may reasonably be expected to constitute, an Acquisition Proposal. Gulf agrees
not to release any person from any confidentiality agreement to which such
person is a party. Gulf further agrees not to release any person from any
standstill agreement or provision to which such person is a party. Gulf shall
promptly request the return or destruction of all information
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provided to any person which has entered into, at any time in the six month
period prior to the date of this Agreement, a confidentiality agreement with
Gulf relating to a potential Acquisition Proposal and shall use all reasonable
commercial efforts to ensure that such requests are honoured.
(c) Gulf shall promptly notify Conoco, at first orally and then in
writing, of any Acquisition Proposal made or dated after the date of this
Agreement, of any existing confidentiality agreements in respect of any
Acquisition Proposal and any inquiry or contact that could reasonably be
expected to lead to an Acquisition Proposal, or any amendments to the
foregoing, or any request for non-public information relating to Gulf or any
of its Material Entities, in connection with an Acquisition Proposal or for
access to the properties, books or records of Gulf, any Material Entity or any
Material Joint Venture Interest by any person that informs Gulf or such
Material Entity that it is considering making, or has made, an Acquisition
Proposal. Such notice shall include a description of the material terms and
conditions of any proposal. Gulf shall (i) keep Conoco fully informed of the
status including any change to the terms of any such Acquisition Proposal or
inquiry and (ii) if Gulf has made the determination that any Acquisition
Proposal is reasonably likely to result in a Superior Proposal, provide to
Conoco as soon as possible after receipt or delivery thereof with copies of
all correspondence and other written material sent or provided to Gulf or any
Material Entity in connection with such Acquisition Proposal or sent or,
subject to Gulf's compliance with Section 7.3(d), provided by Gulf or any
Material Entity or any Material Joint Venture Interest to any person in
connection with such Acquisition Proposal.
(d) If, prior to the Expiry Date, Gulf receives a request for
material non-public information from a person who proposes or has made an
unsolicited bona fide Acquisition Proposal and Gulf is permitted, as
contemplated under the second sentence of Section 7.3(a), to negotiate the
terms of such Acquisition Proposal, then, and only in such case, the Board of
Directors of Gulf may, subject to the execution by such person of a customary
confidentiality agreement, provide such person with access to information
regarding Gulf; provided, however, that Gulf sends a copy of any such
confidentiality agreement to Conoco promptly upon its execution and Conoco is
provided with a list of or copies of the information provided to such person
and is immediately provided with access to the same information to which such
person was provided.
(e) Gulf shall ensure that its officers, directors and employees and
those of its Subsidiaries, the Partnerships, Petrovera Resources, Tidal and
the Material Joint Venture Interests and any financial or other advisors or
representatives retained by it are aware of the provisions of this Section,
and it shall be responsible for any breach of this Section by any such
officers, directors, employees, advisors or representatives.
7.4 Notice by Gulf of Superior Proposal Determination
(1) Notwithstanding Sections 7.3(a) and (b), at any time prior to
the Expiry Date, Gulf may accept, approve, recommend or enter into any
agreement, understanding or arrangement in respect of a Superior Proposal if,
and only if, (i) it has provided Conoco with a copy of the Superior Proposal
document, (ii) three business days shall have elapsed from the
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later of the date Conoco received written notice advising Conoco that Gulf's
Board of Directors has resolved, subject only to compliance with this Section
7.4 and termination of this Agreement, to accept, approve, recommend or enter
into an agreement in respect of such Superior Proposal, specifying the terms
and conditions of such Superior Proposal and identifying the person making
such Superior Proposal, and the date Conoco received a copy of such Superior
Proposal, (iii) it has previously paid to Conoco the fee payable under Section
7.5, and (iv) it concurrently terminates this Agreement pursuant to Section
8.2(c)(ii).
(2) During any such three business day period referred to in Section
7.4(1), Gulf agrees that Conoco shall have the right, but not the obligation,
to offer to amend the terms of this Agreement. The Board of Directors of Gulf
will review in good faith any offer by Conoco to amend the terms of this
Agreement in order to determine, in the exercise of its fiduciary duties,
whether Conoco's offer upon acceptance by Gulf would result in such Superior
Proposal ceasing to be a Superior Proposal taking into account all relevant
factors, including the risks associated with the form of the consideration and
the structure of the transaction. If the Board of Directors of Gulf so
determines, it will enter into an amended agreement with Conoco reflecting
Conoco's amended proposal. If the Board of Directors of Gulf continues to
believe after consultation with financial advisors and outside counsel, that
such Superior Proposal remains a Superior Proposal and therefore rejects
Conoco's amended proposal, Gulf may terminate this Agreement pursuant to
Section 8.2(c)(ii); provided, however, that Gulf has paid to Conoco the fee
payable to Conoco under Section 7.5 and promptly following termination enters
into a definitive agreement with respect to such Superior Proposal. Gulf
acknowledges and agrees that payment of the fee, if any, payable under Section
7.5 is a condition to valid termination of this Agreement under Section
8.2(c)(ii) and this Section 7.4.
(3) Gulf also acknowledges and agrees that each material successive
modification of any Acquisition Proposal shall constitute a new Acquisition
Proposal for purposes of the requirement under clause (ii) of the first
sentence of Section 7.4(1) to initiate an additional three business day notice
period.
7.5 Break Fee
Notwithstanding any other provision of this Agreement relating to
the payment of fees, including the payment of brokerage fees, Gulf shall pay
to Conoco, within two business days of the first to occur of the following
events, $220 million in immediately available funds to an account designated
by Conoco:
(a) if Conoco shall have terminated this Agreement pursuant to
Section 8.2(c)(iii);
(b) if:
(i) an Acquisition Proposal shall have been made or any person
shall have publicly announced an intention to make an
Acquisition Proposal before the Expiry Time; and
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(ii) thereafter, this Agreement shall have been terminated
(other than by Gulf pursuant to Section 8.2(b) as a result
of the condition in Section 6.2(e) not being satisfied);
and
(iii) prior to the termination of this Agreement or within six
months following termination of this Agreement, any one of
the following occurs:
(A) an Acquisition Proposal is consummated by Gulf,
(B) Gulf's Board of Directors approves or recommends any
Acquisition Proposal, or
(C) Gulf enters into an agreement providing for an
Acquisition Proposal; or
(c) IF GULF SHALL HAVE TERMINATED THIS AGREEMENT PURSUANT TO SECTION
8.2(C)(II).
GULF'S OBLIGATIONS UNDER THIS SECTION 7.5 SURVIVE TERMINATION OR EXPIRY OF
THIS AGREEMENT. FOR GREATER CERTAINTY, IF MORE THAN ONE OF THE FOREGOING
EVENTS TRIGGERING THE PAYMENT UNDER THIS SECTION 7.5 OCCURS, THE FEE SHALL
ONLY BE PAID ONCE.
7.6 FEES AND EXPENSES
Subject to Section 7.5, each Party shall pay all fees, costs and
expenses incurred by such Party in connection with this Agreement and the
Offer.
7.7 Access to Information; Confidentiality
(a) From the date hereof until the earlier of the Effective Date and
the termination of this Agreement, Gulf shall, and shall cause its
Subsidiaries and, where reasonably practicable, its Material Joint Venture
Interests and its respective officers, directors, employees and agents to,
afford to Conoco and to the officers, employees, agents and representatives of
Conoco such access as Conoco may reasonably require at all reasonable times to
their officers, employees, agents, properties, books, records and contracts,
and shall furnish Conoco with all data and information as Conoco may
reasonably request.
(b) All information exchanged pursuant to this Section 7.7 shall be
subject to the confidentiality provisions of the Confidentiality Agreement.
7.8 Insurance and Indemnification
(a) Gulf and Conoco agree that Conoco will, or will cause Gulf to,
maintain in effect without any reduction in scope or coverage for ten years
from the Effective Date customary policies of directors' and officers'
liability insurance providing protection comparable to the protection provided
by the policies maintained by Gulf which are in effect immediately prior to
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the Effective Date and providing protection in respect of claims arising from
facts or events which occurred prior to the Effective Date.
(b) Conoco agrees that all rights to indemnification or exculpation
now existing in favour of present and former officers and directors of Gulf
shall survive the completion of the Offer and shall continue in full force and
effect for a period of not less than ten years from the Effective Date.
7.9 Brokers
Gulf and Conoco represent and warrant to each other that, except for
Xxxxxxx Xxxxx Canada Inc. and Xxxxxxx, Sachs & Co. in the case of Gulf and
JPMorgan in the case of Conoco and Bidco, no broker, finder or investment
banker is entitled to any brokerage, finder's or other fee or commission, or
to the reimbursement of any of its expenses, in connection with this Agreement
or the Offer. Gulf has provided to Conoco a correct and complete copy of all
agreements relating to the arrangements between it and its financial advisors
which are in effect at the date hereof and agrees not to amend the terms of
any such agreements relating to the payment of fees and expenses without the
prior written approval of Conoco.
ARTICLE VIII
TERM, TERMINATION, AMENDMENT AND WAIVER
8.1 Term
This Agreement shall be effective from the date hereof until the
earlier of the Effective Date and the termination of this Agreement in
accordance with its terms.
8.2 Termination
(a) If any condition contained in Sections 6.1 or 6.3 is not
satisfied at or before the date specified in the condition or the date the
Offer is scheduled to terminate, as applicable, then Conoco and Bidco may by
notice to Gulf terminate this Agreement and the obligations of the Parties
hereunder (except as otherwise herein provided, including under Sections 7.5
and 7.6), but without detracting from the rights of Conoco and Bidco arising
from any breach by Gulf but for which the condition would have been satisfied.
(b) If any condition contained in Sections 6.1 or 6.2 is not
satisfied at or before the date specified in the condition or the date the
Offer is scheduled to terminate, as applicable, then Gulf may by notice to
Conoco and Bidco terminate this Agreement and the obligations of the Parties
hereunder (except as otherwise herein provided, including under Sections 7.5
and 7.6), but without detracting from the rights of Gulf arising from any
breach by Conoco or Bidco but for which the condition would have been
satisfied.
(c) This Agreement may also:
(i) be terminated by the mutual agreement of Conoco, Bidco and
Gulf; and
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(ii) be terminated by Gulf in order to enter into a definitive
written agreement with respect to a Superior Proposal,
subject to compliance with Sections 7.3 and 7.4 (without
relieving the obligation to pay the fee required to be
paid pursuant to Section 7.5); and
(iii) be terminated by Conoco and Bidco if the Board of
Directors of Gulf shall have (i) withdrawn or modified, or
proposed publicly to withdraw or modify, the approval or
recommendation of the Board of Directors of Gulf or any
committee thereof of this Agreement or the Offer or (ii)
approved or recommended, or proposed publicly to approve
or recommend, any Acquisition Proposal (without detracting
from Gulf's obligation to pay the fee required to be paid
pursuant to Section 7.5);
in each case, prior to the Effective Date.
(d) This Agreement may be terminated by Gulf if the Offer Documents
are not mailed to Gulf Shareholders on or before the Offer Deadline, provided
that Gulf has complied with its representations, warranties, covenants and
agreements hereunder.
(e) If the Effective Date does not occur on or prior to the Outside
Date, then, unless otherwise agreed in writing by the Parties, this Agreement
shall terminate automatically.
(f) If this Agreement is terminated in accordance with the foregoing
provisions of this Section 8.2, no Party shall have any further liability to
perform its obligations hereunder except as provided in Sections 7.5, 7.6 and
7.7 and as otherwise expressly contemplated hereby. Nothing herein shall
relieve any Party from any liability for any breach by it of this Agreement.
8.3 AMENDMENT
This Agreement may, at any time and from time to time on or before
the Effective Date, be amended by mutual written agreement of the Parties.
8.4 Waiver
Any Party may (i) extend the time for the performance of any of the
obligations or acts of the other Parties, (ii) waive compliance with any of
the other Parties' agreements or the fulfilment of any conditions to its own
obligations contained herein, or (iii) waive inaccuracies in any of the other
Parties' representations or warranties contained herein or in any document
delivered by another Party; provided, however, that any such extension or
waiver shall be valid only if set forth in an instrument in writing signed on
behalf of such Party and, unless otherwise provided in the written waiver,
will be limited to the specific breach or condition waived.
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ARTICLE IX
GENERAL PROVISIONS
9.1 Notices
All notices and other communications given or made pursuant hereto
shall be in writing and shall be deemed to have been duly given or made as of
the date delivered or sent if delivered personally or sent by facsimile
transmission, or as of the following business day if sent by prepaid overnight
courier, to the Parties at the following addresses (or at such other addresses
as shall be specified by a Party by notice to the other Parties given in
accordance with these provisions):
(a) if to Conoco and/or Bidco:
Conoco Inc.
000 Xxxxx Xxxxx Xxxxxxx
Xxxxxxx, Xxxxx 00000
Attention: Senior Vice President, Legal, and General Counsel
Telephone: 000-000-0000
Facsimile: 000-000-0000
with a copy to:
Cravath, Swaine & Xxxxx
Worldwide Plaza
000 Xxxxxx Xxxxxx
Xxx Xxxx, XX 00000
Attention: Xxxxxxx Xxxx
Telephone: 000-000-0000
Facsimile: 212-474-3700
and
Blake, Xxxxxxx & Xxxxxxx LLP
Box 25, Commerce Court West
000 Xxx Xxxxxx, 00xx Xxxxx
Xxxxxxx, Xxxxxxx X0X 0X0
Attention: Xxxx Xxxx
Telephone: 000-000-0000
Facsimile: 000-000-0000
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(b) if to Gulf:
Gulf Canada Resources Limited
000-0xx Xxxxxx X.X.
Xxxxxxx, Xxxxxxx X0X 0X0
Attention: Executive Vice President, Business Development
Telephone: 000-000-0000
Facsimile: 000-000-0000
with a copy to:
Xxxxxxx Xxxxx LLP 0000 Xxxxxxx Xxxx Xxxx 000 - 0xx Xxxxxx
X.X. Xxxxxxx, Xxxxxxx X0X 0X0
Attention: Xxxxxx Xxxxxx
Telephone: 000-000-0000
Facsimile: 000-000-0000
9.2 MISCELLANEOUS
This Agreement: (i) constitutes the entire agreement and supersedes
all other prior agreements and understandings, both written and oral, among
the Parties with respect to the subject matter hereof; and (ii) and, except as
specifically provided in the last sentence of Section 5.3(7) or Section 7.8,
does not confer upon any other person any rights or remedies hereunder. The
Parties shall be entitled to rely upon transmission of an executed facsimile
copy of this Agreement, and such facsimile copy shall be legally effective to
create a valid and binding agreement between the Parties.
9.3 Governing Law
This Agreement shall be governed, including as to validity,
interpretation and effect, by the laws of the Province of Alberta and the laws
of Canada applicable therein, and shall be construed and treated in all
respects as an Alberta contract.
9.4 ATTORNMENT
The parties hereby irrevocably and unconditionally consent to and
submit to the courts of the Province of Alberta for any actions, suits or
proceedings arising out of or relating to this Agreement or the matters
contemplated hereby (and agree not to commence any action, suit or proceeding
relating thereto except in such courts) and further agree that service of any
process, summons, notice or document by single registered mail to the
addresses of the parties set forth in this Agreement shall be effective
service of process for any action, suit or proceeding brought against either
party in such court. The parties hereby irrevocably and unconditionally waive
any objection to the laying of venue of any action, suit or proceeding arising
out of this Agreement or the matters
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contemplated hereby in the courts of the Province of Alberta and hereby
further irrevocably and unconditionally waive and agree not to plead or claim
in any such court that any such action, suit or proceeding so brought has been
brought in an inconvenient forum.
9.5 Injunctive Relief
The Parties agree that irreparable damage would occur in the event
that any of the provisions of this Agreement were not performed in accordance
with their specific terms or were otherwise breached. It is accordingly agreed
that the Parties shall be entitled to an injunction or injunctions to prevent
breaches of this Agreement and to enforce specifically the terms and
provisions hereof in any Court of the Province of Alberta having jurisdiction,
this being in addition to any other remedy to which they are entitled at law
or in equity.
9.6 Time of Essence
Time shall be of the essence in this Agreement.
9.7 Binding Effect and Assignment
This Agreement shall be binding on and shall enure to the benefit of
the Parties and their respective successors and permitted assigns. Except as
expressly permitted by the terms hereof, neither this Agreement nor any of the
rights, interests or obligations hereunder may be assigned by any of the
Parties without the prior written consent of the other Parties, except that
Bidco may assign, in its sole discretion, any or all of its rights, interests
or obligations under this Agreement to Conoco or to any other direct or
indirect wholly-owned subsidiary of Conoco, provided that Conoco shall
continue to be liable to Gulf for any default in performance by the assignee.
9.8 Severability
If any term or other provision of this Agreement is invalid, illegal
or incapable of being enforced by any Law or public policy, all other
conditions and provisions of this Agreement shall nevertheless remain in full
force and effect so long as the economic or legal substance of the
transactions contemplated hereby is not affected in any manner materially
adverse to any Party. Upon such determination that any term or other provision
is invalid, illegal or incapable of being enforced, 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 fullest
extent possible.
9.9 Counterparts
This Agreement may be executed in two or more counterparts, each of
which shall be deemed to be an original but all of which together shall
constitute one and the same instrument.
IN WITNESS WHEREOF Conoco, Bidco and Gulf have caused this Agreement
to be executed as of the date first written above by their respective officers
thereunto duly authorized.
CONOCO INC.
by:
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3794407 CANADA INC.
by:
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GULF CANADA RESOURCES LIMITED
by:
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by:
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