ACQUISITION AGREEMENT
THIS ACQUISITION AGREEMENT (this "Agreement") is
entered into as of the 9th day of October, 1998, by and among
EUROGAS, INC., a Utah corporation ("EuroGas"), EUROGAS RESOURCES
INC., a British Columbia corporation ("Eurosub"), and BELMONT
RESOURCES, INC., a British Columbia corporation ("Belmont"),
based on the following:
Premises
A. EuroGas is a publicly-held corporation that owns an
interest in mineral deposits in Slovakia through a wholly-owned
subsidiary.
B. Eurosub is a wholly-owned subsidiary of EuroGas.
C. Belmont is a publicly-held corporation traded on the
Vancouver Stock Exchange.
D. Maseva, s.r.o. ("Maseva") is a privately-held entity
organized under the laws of the Slovak Republic. Maseva was
awarded the rights to the exploration territory known as
"Kralovsky Chlmec" pursuant to a decision (the "Initial
Decision") of the Slovak Republic Ministry of Environment located
in Bratislava dated March 10, 1998, File No. 464/359/98-3.3 that
gave Maseva the exclusive right to explore in the area covered by
the Initial Decision.
E. Belmont and Maseva formed a new company in the Slovak
Republic under the name of Maseva Gas, spol, s.r.o. ("Maseva
Gas") and the exploration rights covered by the Initial Decision
were transferred from Maseva to Maseva Gas. Belmont now owns 90%
of Maseva Gas.
F. EuroGas, through Eurosub, wishes to acquire, and
Belmont desires to sell, the right to explore for and exploit
crude oil and natural gas in the territory covered by the Initial
Decision by the transfer of ownership of its 90% interest in
Maseva Gas to Eurosub.
G. Belmont will transfer its 90% interest in Maseva Gas to
Eurosub on a tax-deferred basis pursuant to subsection 85(1) of
the Income Tax Act (Canada).
Agreement
NOW, THEREFORE, based on the foregoing premises, which are
incorporated herein by this reference, and for and in
consideration of the mutual covenants and the agreements
hereinafter set forth and the mutual benefit to the parties to be
derived therefrom, it is hereby agreed as follows:
Article I
Definitions
In this Agreement, the following terms shall have the
meanings specified in this Article I. Such definition shall be
equally applicable to both the singular and the plural forms.
Any agreement referred to below shall mean such agreement as
amended, supplemented, or modified from time to time to the
extent permitted by the applicable provisions thereof and by this
Agreement.
"Assumed Obligations" means the obligations under the
contracts and agreements which are assumed by Eurosub, all as
more particularly described in Section 2.03.
"Closing" has the meaning set forth in Section 2.05.
"Closing Date" has the meaning set forth in Section 2.05.
"Common Stock of EuroGas" means the authorized common stock
of EuroGas, par value $0.001 per share.
"Decision" means the decision of the Ministry of Environment
of the Slovak Republic in Bratislava dated July 30, 1998, File
No. 1944/941/98-3.3 granting Maseva Gas the exclusive right to
explore for oil and flammable natural gas in the territory
described which covers 849.7 square kilometers.
"Due Diligence" means the 30 days after the date of delivery
of the Belmont Schedules during which time EuroGas may inspect
such Belmont Schedules.
"Environmental Laws" means the central government,
provincial, and local laws and regulations governing the
generation, marketing, refining, recycling, treatment, handling,
use, storage, transportation, disposal, and clean up of
hazardous, radio active, reactive, flammable, infectious, toxic,
or dangerous materials, or the protection of public health or the
environment, including, without limitation, all laws and
regulation governing water resources, water management
structures, and other environmental features protected pursuant
to the Slovakian Gazette on the Protection of Nature and the
Countryside and compliance with the regulations governing
forestry land reserves, national nature reserves, and the
Ministry of Environment, including all permits and regulatory
approvals required or issued thereunder.
"EuroGas Shares" means 2,500,000 shares of restricted Common
Stock of EuroGas to be held by Eurosub pursuant to the terms of
this Agreement.
"EuroGas Warrant" means the transferable warrant to be held
by Eurosub pursuant to the terms of this Agreement which warrant
gives the holder the right, at the holder's election, to acquire
up to 2,500,000 shares of restricted Common Stock of EuroGas, at
an exercise price of $2.50 per share, at any time prior to
October 1, 2000, a copy of which is attached hereto as
Exhibit "A" and forms a part of this Agreement.
"Eurosub Shares" means 2,500,000 Exchangeable Preferred
Shares in the capital of Eurosub to be delivered to Belmont as
part of the purchase price for the shares of Maseva Gas, each
such Eurosub Share retractable by the holder in exchange for one
EuroGas Share. A copy of the special rights and restrictions
attached to the Eurosub Shares is attached hereto as Exhibit "B"
and forms a part of this Agreement.
"Eurosub Warrant" means a warrant to be delivered to Belmont
as part of the purchase price for the shares of Maseva Gas, which
gives Belmont the right, at its election, to acquire the EuroGas
Warrant, in whole or in part, at any time and from time to time
until October 1, 2000, for aggregate consideration of $25.00, a
copy of which is attached as Exhibit "C" and forms a part of this
Agreement.
"Excluded Liabilities" has the meaning set forth in Section
2.04.
"Initial Decision" means the decision of the Slovak Republic
Ministry of Environment in Bratislava dated March 10, 1998, File
No. 464/359/98-3.3 granting Maseva the exclusive right to
prospect for crude oil and natural gas in the exploration
territory identified in the Initial Decision covering 849.7
square kilometers.
"Maseva" means Maseva, s.r.o., an entity organized under the
laws of the Slovak Republic located in Kosice.
"Maseva Concession" means the rights granted under the
Decision and now held by Maseva Gas, including the exclusive
right to prospect for crude oil and flammable natural gas in the
territory identified in the Decision and, on the identification
and location of exploitable minerals, the pre-emptive right to
determine the mining area and exploit the minerals.
"Maseva Gas" means Maseva Gas, Spol, s r.o., an entity
formed under the laws of the Slovak Republic.
"Tax Act" means the Income Tax Act (Canada).
"Voting Trust Agreement" means the voting trust agreement to
be entered into among EuroGas, Eurosub and Pacific Corporate
Trust Company, a form of which is attached to this Agreement as
Exhibit "D".
"Working Interest Agreement" means the working interest
agreement to be entered into between Maseva Gas and Belmont at
the time of Closing, a form of which is attached to this
Agreement as Exhibit "E".
Article II
Purchase of Shares and Assets
Section 2.01 The Purchase. On the terms and conditions
set forth in this Agreement, Eurosub shall purchase from Belmont
90% of the record and equity ownership interest in and to Maseva
Gas in exchange for the delivery to Belmont of the Eurosub Shares
and the Eurosub Warrant. In addition, at the time of Closing,
Belmont shall be assigned a 22.5% working interest in the Maseva
Concession, provided that Maseva Gas will pay the costs
associated with the 22.5% working interest in connection with the
drilling of the initial two new wells on the Maseva Concession in
accordance with the terms of the Working Interest Agreement. At
the Closing, EuroGas shall deliver the EuroGas Shares and the
EuroGas Warrant to Eurosub, c/o Pacific Corporate Trust Company,
Suite 830 - 625 Howe Street, Vancouver, British Columbia,
V6C 3B8, pending retraction of the Eurosub Shares and exercise of
the Eurosub Warrant, to be held by Pacific Corporate Trust
Company in accordance with the Voting Trust Agreement.
Section 2.02 Eurosub and Belmont will jointly elect in the
prescribed manner and within the prescribed time, pursuant to the
provisions of subsection 85(1) of the Tax Act, to effect the
transfer of the shares of Maseva Gas from Belmont to Eurosub at
amounts, determined by Belmont, equal to Belmont's "cost amount",
as defined in the Tax Act of the transferred assets.
Section 2.03 Assumed Obligations. On the Closing Date,
Eurosub and EuroGas shall assume and agree to discharge the
obligations of Belmont under the terms of the agreements
governing Maseva Gas and the Maseva Concession that are set forth
on Schedule 3.07 and that are incurred or related to any time
subsequent to the Closing Date. All costs attributable to any
period of time that encompasses the time both before and after
the Closing Date shall be pro rated between Eurosub and Belmont
as of the Closing Date.
Section 2.04 Excluded Liabilities. EuroGas and Eurosub
shall not assume, be obligated to pay, be obligated to perform,
or otherwise be required to discharge any liability or obligation
of Belmont, Maseva, or Maseva Gas, direct or indirect, known or
unknown, absolute or contingent, not expressly assumed by EuroGas
and Eurosub, including any liability or obligation attributable
to any time prior to the Closing Date.
Section 2.05 Closing; Closing Date. Subject to the terms
and conditions of this Agreement, the consummation of the sale
and purchase of Maseva Gas as contemplated hereby (the "Closing")
shall take place at the offices of Kruse, Landa & Maycock,
L.L.C., or such other place as mutually acceptable to the parties
hereto as soon as practicable, but in any event on or before
September 30, 1998. The date on which the Closing takes place
shall be the "Closing Date."
Section 2.06 Closing Events. At the Closing, Belmont
shall execute, acknowledge, and deliver (or shall cause to be
executed, acknowledged, and delivered) (i) the bills of sale,
assignments, and other documents and instruments of conveyance
and transfer, all in form and substance reasonably satisfactory
to EuroGas and Eurosub and their counsel, necessary to vest free
and clear title in Eurosub to 90% of the equity and record
ownership of Maseva Gas; (ii) originals or copies of all of
Maseva Gas's agreements, contracts, and commitments; (iii)
originals or copies of all science related to the Maseva
Concession, including surveys, reports, feasibility studies,
testing reports, seismic information, drill logs, etc.; (iv) all
certificates, opinions, schedules, agreements, resolutions, or
other instruments required by this Agreement to be so delivered
prior to the Closing; (v) a representation letter acknowledging
the restricted nature of the securities delivered to Belmont as
part of the purchase price and setting forth Belmont's investment
intent in form and substance as set forth on Exhibit "F" attached
hereto and incorporated herein by this reference; and (vi) such
other items as may be reasonably requested by the parties hereto
and their respective legal counsel in order to effectuate or
evidence the transactions contemplated hereby. Eurosub shall
deliver to Belmont the certificates representing the Eurosub
Shares and the Eurosub Warrant and a form T2057 election signed
by Eurosub as a transferor and a letter to Belmont authorizing it
to complete the form and file it with Revenue Canada.
Section 2.07 Registration of Common Stock. At the
Closing, the parties will execute and deliver a Registration
Rights Agreement in the form and substance as set forth on
Exhibit "G" giving Belmont the right to have any EuroGas Shares
acquired upon retraction of the Eurosub Shares and the restricted
Common Stock of EuroGas issuable on exercise of the EuroGas
Warrants which may be acquired by Belmont on exercise of the
Eurosub Warrant included in any appropriate registration
statement that may be filed by EuroGas within one year of the
date of Closing.
Article III
Representations, Covenants, and Warranties of Belmont
Belmont hereby represents, covenants, and warrants to
EuroGas and to Eurosub, such representations, covenants, and
warranties to be made as of the date hereof and at and as of the
Closing Date and to survive the Closing and continue in
accordance with the terms hereof, as follows:
Section 3.01 Organization of Belmont. Belmont is a
corporation duly organized, validly existing, and in good
standing under the laws of British Columbia and has the corporate
power and is duly authorized, qualified, franchised, and licensed
under all applicable laws, regulations, ordinances, and public
authorities to own its properties and assets and to carry on its
business in all material respects as it is now being conducted.
There is no jurisdiction in which it is not so qualified in which
the character and location of the assets owned by it or the
nature of the business transacted by it requires qualification,
except when the failure to do so would not have a material
adverse affect on the business and properties of Belmont. The
execution and delivery of this Agreement does not, and the
consummation of the transactions contemplated by this Agreement
in accordance with the terms hereof will not, violate any
provision of Belmont's articles of incorporation or bylaws.
Section 3.02 Organization of Maseva Gas. Maseva Gas is an
entity duly organized, validly existing, and in good standing
under the laws of the Slovak Republic, with the power and duly
authorized, qualified, franchised, and licensed under all
applicable laws, regulations, ordinances, and public authorities
to own its properties and assets, including the Maseva
Concession, and to carry on its proposed business of exploring
for natural gas and crude oil on the Maseva Concession. There is
no jurisdiction in which it is not so qualified in which the
character and location of the assets owned by it or the nature of
the business transacted or proposed by it, requires
qualification. The consummation of the transactions contemplated
by this Agreement in accordance with the terms hereof will not
violate any provision of Maseva Gas's governing instruments.
Section 3.03 Approval of this Agreement. The board of
directors of Belmont has authorized the execution and delivery of
this Agreement and has approved the transactions contemplated
hereby. There is no requirement that the shareholders of Belmont
approve this Agreement or the transactions contemplated hereby.
This Agreement is the legal, valid, and binding agreement of
Belmont enforceable in accordance with its terms, except as such
enforcement may be limited by bankruptcy, insolvency, or other
laws effecting the enforcement of creditor's rights generally and
by general principles of equity.
Section 3.04 Capitalization of Maseva Gas. The authorized
capital of Maseva Gas is as set forth in the provided copy of the
Maseva Articles of Organization. All such issued and outstanding
shares have been legally issued, and are fully paid, and
nonassessable, and not issued in violation of the rights of any
other person or entity. No shares of the authorized capital of
Maseva Gas are subject to any right held by any other person or
entity to require the issuance of additional shares or acquire
the issued and outstanding shares on the exercise or conversion
of options, warrants, convertible debentures, contract rights, or
other such instruments.
Section 3.05 Ownership of Maseva Gas. Belmont hereby
represents and warrants that, as of the Closing Date, it will be
the sole beneficial and record owner of 90% of the issued and
outstanding record and equity ownership of Maseva Gas. Belmont's
ownership interest in Maseva Gas is held solely by Belmont, free
and clear of any and all liens, encumbrances, claims, or rights
of any other person or entity.
Section 3.06 Ownership of Maseva Concession. As of the
Closing, Maseva Gas will be the sole and exclusive holder of the
Maseva Concession and all of the rights granted under the
Decision. Such ownership and the right to exploit the Maseva
Concession shall not be subject to the approval or consent of any
governmental agency or third party. No other person or entity
will have any lien, encumbrance, claim, or right with respect to
the Maseva Concession.
Section 3.07 No Liabilities or Contingencies. As of the
Closing, Maseva Gas will not have and will not be liable for, any
liabilities or contingencies, whether known or unknown, except
for those obligations listed on Schedule 3.07 which have accrued
but which are not yet due.
Section 3.08 Material Contract Defaults. As of the
Closing, Maseva Gas will not be in default in any respect under
the terms of any outstanding contract, agreement, lease, or other
commitment which is material to the business, operations,
properties, assets, or condition of Maseva Gas, and there will be
no event of default or other event which would with the notice or
lapse of time or both would constitute a default in any material
respect under any such contract, agreement, lease, or other
commitment.
Section 3.09 Taxes. All tax returns, tax reports, and
taxes with respect to the formation or operation of Maseva Gas or
which might be a lien or encumbrance against Maseva Gas or its
assets that is due prior to the Closing Date will be filed on or
before the Closing Date and the underlying tax obligations paid
in full.
Section 3.10 Third-Party Consents. No contract,
agreement, lease, or other commitment, written or oral, to which
Belmont or Maseva Gas is, or as of the Closing Date, will be a
party, or to which any of Maseva Gas's properties or assets are
subject, require the consent of the other party in order to
consummate the transactions herein contemplated.
Section 3.11 No Conflict With Other Instruments. The
execution of this Agreement and the consummation of the
transactions contemplated by this Agreement will not result in
the breach of any term or provision of, or constitute an event of
default under, any material indenture, mortgage, deed of trust,
or other material contract, agreement, or instrument to which
Belmont or Maseva Gas is a party or to which any of their
properties or operations are subject.
Section 3.12 Compliance With Laws and Regulations.
Belmont and Maseva Gas have complied with all applicable statutes
and regulations of any governmental agency with respect to the
Maseva Concession. The Maseva Concession, including all of the
rights under the terms of the Decision, is in good standing and
can be fully exploited by Maseva Gas. Any and all consents
required from any governmental agency to permit Maseva Gas to
exploit the Maseva Concession will have been obtained by the
Closing Date.
Section 3.13 Environmental Concerns. The Maseva
Concession and Maseva Gas are in full compliance with all
Environmental Laws, including the regulations adopted under the
Gazette on Geological Operations, the Slovak Geological Bureau,
the Gazette on the Protection of Nature and Countryside, the
Forestry Land Reserves, the Protection of Agricultural Land
Reserves, the Ministry of Environment, and all local rules and
regulations, and are not subject to any environmental
liabilities.
Section 3.14 Brokers' Fees. Belmont has not engaged or
entered into any agreement with any broker or finder in
connection with any of the transactions contemplated by this
Agreement requiring the payment of any fee or compensation.
Section 3.15 Belmont Schedules. Belmont will deliver to
EuroGas and Eurosub within ten (10) days of the execution of this
Agreement, unless delivered previously, the following disclosure
schedules that are collectively referred to as the "Belmont
Schedules":
(a) A complete copy, including all exhibits, of the
Decision;
(b) A complete copy, including all exhibits, of the
Contract of Mandate between Belmont and Maseva;
(c) A complete copy, including all exhibits, of the
Contract to enter into a Future Contract between Belmont and
Maseva;
(d) A copy of any other agreement, contract, or
commitment to which Maseva Gas is a party or the Maseva
Concession is subject to;
(e) A schedule including all geological information
with respect to the Maseva Concession, including feasibility
studies, geological surveys, reports, development plans, seismic
information, analysis, test results, or similar matters;
(f) A copy of the complete financial records of the
costs associated with obtaining the Maseva Concession, forming
Maseva and Maseva Gas, and the negotiation and execution of the
agreements between Belmont and Maseva.
(g) A schedule setting forth the information required
by Section 3.07.
Article IV
Representations, Covenants, and Warranties of EuroGas and Eurosub
Section 4.01 Organization of EuroGas. EuroGas is a
corporation duly organized, validly existing, and in good
standing under the laws of the state of Utah and has the
corporate power and is duly authorized, qualified, franchised,
and licensed under all applicable laws, regulations, ordinances,
and public authorities to own its properties and assets and to
carry on its business in all material respects as it is now being
conducted. There is no jurisdiction in which it is not so
qualified in which the character and location of the assets owned
by it or the nature of the business transacted by it requires
qualification, except when the failure to do so would not have a
material adverse affect on the business and properties of
EuroGas. The execution and delivery of this Agreement does not,
and the consummation of the transactions contemplated by this
Agreement in accordance with the terms hereof will not, violate
any provision of EuroGas' articles of incorporation or bylaws.
Section 4.02 Organization of Eurosub. Eurosub is a
corporation duly organized, validly existing, and in good
standing under the laws of the Province of British Columbia and
has the corporate power and is duly authorized, qualified,
franchised, and licensed under all applicable laws, regulations,
ordinances, and public authorities to own its properties and
assets and to carry on its business in all material respects as
it is now being conducted. There is no jurisdiction in which it
is not so qualified in which the character and location of the
assets owned by it or the nature of the business transacted by it
requires qualification, except when the failure to do so would
not have a material adverse affect on the business and properties
of Eurosub. The execution and delivery of this Agreement does
not, and the consummation of the transactions contemplated by
this Agreement in accordance with the terms hereof will not,
violate any provision of Eurosub's articles of incorporation or
bylaws.
Section 4.03 Approval of this Agreement. The board of
directors of EuroGas and Eurosub have authorized the execution
and delivery of this Agreement and have approved the transactions
contemplated hereby. There is no requirement that the
shareholders of EuroGas or Eurosub approve this Agreement or the
transactions contemplated hereby. This Agreement is the legal,
valid, and binding agreement of EuroGas and Eurosub enforceable
in accordance with its terms, except as such enforcement may be
limited by bankruptcy, insolvency, or other laws effecting the
enforcement of creditor's rights generally and by general
principles of equity.
Section 4.04 No Conflict With Other Instruments. The
execution of this Agreement and the consummation of the
transactions contemplated by this Agreement will not result in
the breach of any term or provision of, or constitute an event of
default under, any material indenture, mortgage, deed of trust,
or other material contract, agreement, or instrument to which
EuroGas or Eurosub is a party or to which any of their properties
or operations are subject.
Section 4.05 EuroGas Disclosure. The information
concerning EuroGas and its business and operations set forth in
its reports on Form 10-K for the year ended December 31, 1997,
and Form 10-Q for the quarters ended March 31, 1998 and June 30,
1998, does not contain any untrue statement of a material fact or
omit a material fact required to be stated therein or necessary
to make the statements contained therein not misleading. Eurosub
has no material assets except the EuroGas Shares and EuroGas
Warrants and has no material liabilities.
Section 4.06 Brokers' Fees. EuroGas and Eurosub have not
engaged or entered into any agreement with any broker or finder
in connection with any of the transactions contemplated by this
Agreement requiring the payment of any fee or compensation.
Section 4.07 EuroGas Schedules. EuroGas will deliver to
Belmont within ten (10) days of the execution of the Agreement,
unless provided previously, the following disclosure schedules
which are collectively referred to as the "EuroGas Schedules":
(a) Annual report on Form 10-K for the year ended December
31, 1997; and
(b) Quarterly reports on Form 10-Q for the quarters ended
March 31, 1998 and June 30, 1998.
Article V
Conditions Precedent to the Obligations of EuroGas and Eurosub
The obligations of EuroGas to purchase the equity ownership
of Maseva Gas is subject to the satisfaction, at or before the
Closing, of each of the conditions set forth below.
Section 5.01 Performance by Belmont. Belmont shall have
substantially performed all conditions of this Agreement unless
the requirement has been waived in writing by EuroGas and
Eurosub.
Section 5.02 Formation of Maseva Gas. Maseva Gas shall be
duly and lawfully formed and in existence as a legally recognized
entity in the Slovak Republic.
Section 5.03 Transfer of Decision. The Maseva Concession,
including all rights under the Decision, shall have been
transferred to Maseva Gas and Maseva and Maseva Gas shall have
obtained any necessary consent of the Slovak Republic Ministry of
Environment as to such transfer and as to the ownership of Maseva
Gas by EuroGas.
Section 5.04 Payment of Existing Obligations. Belmont
shall have provided the necessary funding to Maseva or Maseva Gas
to permit the payment of all obligations which are due prior to
the Closing Date, including the obligation of Belmont to
reimburse Maseva for the initial work and organizational costs in
investigating and obtaining the Maseva Concession.
Section 5.05 Due Diligence Review. EuroGas shall have
favorably completed its due diligence of the Maseva Concession
and the ownership of all rights with respect thereto by Maseva
Gas.
Section 5.06 No Material Adverse Change. There shall not
have been any material change to Maseva Gas or the Maseva
Concession prior to the Closing Date.
Section 5.07 Absence of Litigation. No action, suit, or
proceeding before any court or any governmental body or authority
pertaining to the consummation of the transactions contemplated
by this Agreement shall have been instituted or threatened on or
before the Closing Date.
Section 5.08 Closing Date Pro Rations. Eurosub and
Belmont shall pro rate as of the Closing Date, all charges and
items of expense with respect to the Maseva Concession with
Belmont bearing the proportionate expense attributable to the
period prior to the Closing Date in accordance with the terms of
this Agreement and, and Eurosub bearing the proportion expense
attributable to the period subsequent to the Closing Date.
Section 5.09 Third-Party Consents. Belmont shall have
obtained the consents of all third-parties whose consent is
required to consummate the transactions contemplated by this
Agreement, including any consents reasonably requested by EuroGas
and Eurosub.
Section 5.10 Other Agreements. The execution of a
Registration Rights Agreement, Working Interest Agreement,
Warrant, and Voting Trust Agreement in the form substantially
similar to the drafts attached to this Agreement.
Section 5.11 Agreement with Maseva. The obtaining of any
agreements with Maseva (the owner of the other 10% of Maseva Gas)
as Belmont and EuroGas deem mutually advisable.
Article VI
Conditions Precedent to the Obligations of Belmont
The obligation of Belmont to sell its interest in Maseva Gas
is subject to EuroGas' and Eurosub's satisfaction, at the time of
Closing, of the conditions set out below, except for any
condition which has been waived in writing by Belmont at or prior
to the Closing.
Section 6.01 Performance by EuroGas. EuroGas and Eurosub
shall have substantially performed all the conditions of this
Agreement, unless the requirement has been waived in writing by
Belmont.
Section 6.02 Corporate Approval. The board of directors
of EuroGas and Eurosub shall have approved the transactions
described in this Agreement and resolutions setting forth those
approvals shall have been certified to Belmont by an officer of
EuroGas and Eurosub.
Section 6.03 Other Agreements. The execution of a
Registration Rights Agreement, Working Interest Agreement,
Warrant, and Voting Trust Agreement in the form substantially
similar to the drafts attached to this Agreement.
Section 6.04 Agreement with Maseva. The obtaining of any
agreements with Maseva (the owner of the other 10% of Maseva Gas)
as Belmont and EuroGas deem mutually advisable.
Article VII
Survival of Representations and Warranties
All representations and warranties made in Articles IV and V
shall be continuing and shall survive the Closing, but shall
expire 24 months after the Closing Date; provided, however, that
if a claim for indemnification has been asserted pursuant to
Article VII prior to or as of the expiration date of such 24-
month period, such representations and warranties shall remain in
full force and effect until full and complete resolution of such
claim. Notwithstanding the foregoing, however, the time for
making a claim based upon such representation or warranty shall
expire 24 months after the Closing Date.
Article VIII
Indemnification
Section 8.01 By EuroGas, Eurosub, and Belmont. EuroGas
and Eurosub, on the one hand, and Belmont on the other hand, each
hereby agrees to indemnify and hold harmless the other against
all claims, damages, losses, liabilities, costs, and expenses
(including settlement costs and any legal, accounting, or other
expenses for investigating or defending any actions or threatened
actions) reasonably incurred by the indemnified party in
connection with each and all of the following:
(a) any breach by the indemnifying party of any
representation or warranty in this Agreement;
(b) any breach of any covenant, agreement, or
obligation of the indemnifying party contained in this Agreement
or any other agreement, instrument, or document contemplated by
this Agreement; and
(c) any misrepresentation contained in any statement,
exhibit, certificate, or schedule furnished by the indemnifying
party pursuant to this Agreement or in connection with the
transactions contemplated by this Agreement.
Section 8.02 By Belmont. Belmont agrees to indemnify and
hold harmless EuroGas and Eurosub from any and all claims,
damages, liabilities, costs, and expenses (including settlement
costs and any legal, accounting, or other expenses for
investigating or defending any actions or threatened actions)
reasonably incurred by the indemnified party in connection with
each and all of the following:
(a) any claims against, or liabilities or obligations of,
Maseva Gas, the Maseva concession, or the business or assets of
Maseva Gas related to any period of time prior to the Closing
Date.
(b) any and all claims, damages, losses, liabilities,
costs, and expenses including settlement costs and any legal,
accounting, or other expenses for investigating or defending any
actions or threatened actions reasonably incurred by EuroGas or
Eurosub in connection with any claim relating to Maseva Gas's
business or operations prior to the Closing Date.
Section 8.03 Claims for Indemnification. Whenever any
claim shall arise for indemnification hereunder, the party
seeking indemnification (the "Indemnified Party"), shall promptly
notify, in writing, the party from whom indemnification is sought
(the "Indemnifying Party") of the claim and, when known, the
facts constituting the basis for such claim. In the event of any
such claim for indemnification hereunder resulting from or in
connection with any claim or legal proceedings by any party, the
notice to the Indemnifying Party shall specify, if known, the
amount or an estimate of the amount of the liability arising
therefrom. The Indemnified Party shall not settle or compromise
any claim by a third party for which it is entitled to
indemnification hereunder without the prior written consent of
the Indemnifying Party, which shall not be unreasonably withheld,
unless suit shall have been instituted against it and the
Indemnifying Party shall not have taken control of such suit
after notification thereof as provided in section 8.04 hereof.
Section 8.04 Defense by Indemnifying Party. In connection
with any claim giving rise to indemnity hereunder resulting from
or arising out of any claim or legal proceeding by a person who
is not a party to this Agreement, the Indemnifying Party, at its
sole cost and expense may, upon written notice to the Indemnified
Party, assume the defense of any such claim or legal proceeding
if it acknowledges to the Indemnified Party in writing its
obligations to indemnify the Indemnified Party with respect to
all elements of such claim. The Indemnified Party shall be
entitled to participate (but not control) the defense of any such
action, with its counsel and at its own expense. If the
Indemnifying Party does not assume the defense of any such claim
or litigation resulting therefrom within 30 days after the date
such claim is made:
(a) the Indemnified Party may defend against such claim or
litigation in such manner as it may deem appropriate, including,
but not limited to, settling such claim or litigation, after
giving notice of the same to the Indemnifying Party, on such
terms as the Indemnified Party may deem appropriate; and
(b) the Indemnifying Party shall be entitled to
participate in (but not control) the defense of such action, with
its counsel and at its own expense. If the Indemnifying Party
thereafter seeks to question the manner in which the Indemnified
Party defended such third party claim or the amount or nature of
any such settlement, the Indemnifying Party shall have the burden
to prove by a preponderance of the evidence that the Indemnified
Party did not defend or settle such third party claim in a
reasonably prudent manner.
The parties hereto agree the failure of any party to perform
any obligation or duty which each has agreed to perform shall
cause irreparable harm to the parties willing to perform the
obligations and duties herein, which harm cannot be adequately
compensated for by money damages. It is further agreed by the
parties hereto an order of specific performance against a party
in default under the terms of this Agreement would be equitable
and would not work a hardship on the defaulting party.
Accordingly, in the event of default by any party hereto, the non-
defaulting party, in addition to whatever other remedies are
available at law or in equity, shall have the right to compel
specific performance by the defaulting party of any obligation or
duty herein.
Article IX
Specific Performance
The parties hereto agree the failure of any party to perform
any obligation or duty which each has agreed to perform shall
cause irreparable harm to the parties willing to perform the
obligations and duties herein, which harm cannot be adequately
compensated for by money damages. It is further agreed by the
parties hereto an order of specific performance against a party
in default under the terms of this Agreement would be equitable
and would not work a hardship on the defaulting party.
Accordingly, in the event of default by any party hereto, the non-
defaulting party, in addition to whatever other remedies are
available at law or in equity, shall have the right to compel
specific performance by the defaulting party of any obligation or
duty herein.
Article X
Miscellaneous Provisions
Section 10.01 Costs. EuroGas, Eurosub, and Belmont shall
each pay all of their own costs and expenses incurred or to be
incurred by each in negotiating and preparing this Agreement and
in closing and carrying out the transactions contemplated by this
Agreement.
Section 10.02 Notices. Any notice, demand, request, or
other communication under this Agreement shall be in writing and
shall be deemed to have been given on the date of service if
personally served or by facsimile transmission (if receipt is
confirmed by the facsimile operator of the recipient), or
delivered by overnight courier service or on the third day after
mailing if mailed by certified mail, return receipt requested,
addressed as follows:
If to EuroGas or Eurosub, to:
Hank Blankenstein, Vice-President
EuroGas, Inc.
942 East 7145 South, #101A
Midvale, Utah 84047
Fax: (801) 255-2005
Confirmation: (801) 255-0862
With copies to: Howard S. Landa, Esq.
Kruse, Landa & Maycock, L.L.C.
50 West Broadway, Eighth Floor
Salt Lake City, Utah 84101
Fax: (801) 531-7091
Confirmation: (801) 531-7090
If to Belmont, to: Vojtech Agyagos
Belmont Resources, Inc.
Suite 1180 - 666 Burrard St.
Vancouver, British Columbia
Canada V6C 2X8
Fax: (604) 683-1350
Confirmation: (604) 683-6648
With copies to: David Anfield, Esq.
Anfield, Sujir, Kennedy & Durno
16th Floor - Stock Exchange Tower
609 Granville Street
P.O. Box 10068 - Pacific Centre
Vancouver, British Columbia
Canada V7Y 1C3
Fax: (604) 669-3877
Confirmation: (604) 669-1322
or such other addresses and facsimile numbers as shall be
furnished in writing by any party in the manner for giving
notices hereunder, and any such notice, demand, request, or other
communication shall be deemed to have been given as of the date
so delivered or sent by facsimile transmission (if receipt is
confirmed by the facsimile operator of the recipient), three days
after the date so mailed, or one day after the date so sent by
overnight delivery.
Section 10.03 Governing Law. This Agreement shall be
governed by, enforced and construed under and in accordance with
the laws of the United States of America and, with respect to
matters of state law, with the laws of the state of Utah. Venue
for all actions regarding this Agreement shall be in Salt Lake
County, Utah. The parties hereby submit to the personal
jurisdiction of such court for the purpose of resolving any
dispute arising under this Agreement.
Section 10.04 Attorneys' Fees. In the event that any party
institutes any action or suit to enforce this Agreement or to
secure relief from any default hereunder or breach hereof, the
breaching party or parties shall reimburse the nonbreaching party
or parties for all costs, including reasonable attorneys' fees,
incurred in connection therewith and in enforcing or collecting
any judgment rendered therein.
Section 10.05 Schedules and Exhibits; Knowledge. Whenever
in any section of this Agreement reference is made to information
set forth in the exhibits or the Belmont Schedules, such
reference is to information specifically set forth in such
exhibits or schedules and clearly marked* to identify the section
of this Agreement to which the information relates. Whenever any
representation is made to the "knowledge" of any party, it shall
be deemed to be a representation that no officer or director of
such party, after reasonable investigation, has any knowledge of
such matters.
Section 10.06 Entire Agreement. This Agreement, together
with the documents to be delivered pursuant hereto, represent the
entire agreement between the parties relating to the subject
matter hereof. There are no other courses of dealing,
understanding, agreements, representations, or warranties,
written or oral, except as set forth herein.
Section 10.07 Survival; Termination. The representations,
warranties, and covenants of the respective parties shall survive
the Closing.
Section 10.08 Form of Execution; Counterparts. A valid and
binding signature hereto or any notice or demand hereunder may be
in the form of a manual execution or a true copy made by
photographic, xerographic, or other electronic process that
provides similar copy accuracy of a document that has been
executed. This Agreement may be executed in multiple
counterparts, each of which shall be deemed an original and all
of which taken together shall be but a single instrument.
Section 10.09 Amendment or Waiver. Every right and remedy
provided herein shall be cumulative with every other right and
remedy, whether conferred herein, at law, or in equity, and may
be enforced concurrently herewith, and no waiver by any party of
the performance of any obligation by the other shall be construed
as a waiver of the same or any other default then, theretofore,
or thereafter occurring or existing. At any time prior to the
Closing Date, this Agreement may be amended by a writing signed
by all parties hereto, with respect to any of the terms contained
herein, and any term or condition of this Agreement may be waived
or the time for performance thereof may be extended by a writing
signed by the party or parties for whose benefit the provision is
intended.
Section 10.10 Waiver of Jury Trial. Each party hereby (a)
knowingly, voluntarily, intentionally, and irrevocably waives, to
the maximum extent not prohibited by law, any right it may have
to a trial by jury in respect of any litigation based hereon, or
directly or indirectly at any time arising out of, under, or in
connection with this Agreement or any transaction contemplated
hereby or associated herewith; and (b) acknowledges that it has
been induced to enter into this Agreement and the transactions
contemplated hereby by, among other things, the mutual waivers
and certifications contained in this section.
DATED as of the date first above written.
EUROGAS, INC.
By
EUROGAS RESOURCES INC.
By
BELMONT RESOURCES, INC.
By