EXHIBIT 2.1
AMENDED AND RESTATED
ACQUISITION AGREEMENT
BETWEEN:
▇▇▇▇▇▇ INDUSTRIES, INC., a corporation incorporated under
the laws of Delaware,
- and -
ENSERCO ENERGY SERVICE COMPANY INC., a
corporation incorporated under the laws of Canada.
TABLE OF CONTENTS
ARTICLE 1
DEFINITIONS
1.1 Definitions................................................. 4
1.2 Singular, Plural, etc....................................... 8
1.3 Deemed Currency............................................. 8
1.4 Date for Any Action......................................... 9
1.5 Decision by Board of Directors.............................. 9
1.6 Interpretation Not Affected by Party Drafting............... 9
ARTICLE 2
THE ARRANGEMENT
2.1 Implementation Steps by the Corporation..................... 9
2.2 Implementation Steps by Acquiror............................ 9
2.3 Interim Order............................................... 10
2.4 Dissenting Securities....................................... 10
2.5 Articles of Arrangement..................................... 10
2.6 Corporation Approval of the Arrangement..................... 10
2.7 Proxy Circular.............................................. 11
2.8 Securities Compliance....................................... 11
2.9 Preparation of Filings...................................... 11
2.10 Cooperation................................................. 13
2.11 Press Release and Public Disclosure......................... 15
2.12 Outstanding Rights to Acquire Shares........................ 15
ARTICLE 3
COVENANTS OF THE CORPORATION
3.1 Ordinary Course of Business................................. 16
3.2 Non-Solicitation............................................ 18
3.3 Notice of Material Change................................... 21
3.4 Access to Information....................................... 21
ARTICLE 4
FEES AND OTHER ARRANGEMENTS
4.1 Fees........................................................ 22
ARTICLE 5
COVENANTS OF ACQUIROR
5.1 Officers' and Directors' Insurance.......................... 23
5.2 Indemnities................................................. 23
5.3 Employment Agreements....................................... 23
5.4 Third Party Beneficiaries................................... 23
5.5 Availability of Funds....................................... 23
5.6 Availability of Personnel................................... 23
ARTICLE 6
MUTUAL COVENANTS
6.1 Consultation................................................ 24
6.2 Other Filings............................................... 24
6.3 Additional Agreements....................................... 24
2
ARTICLE 7
REPRESENTATIONS AND WARRANTIES OF THE CORPORATION
7.1 Representations............................................. 24
7.2 Investigation............................................... 32
ARTICLE 8
REPRESENTATIONS AND WARRANTIES OF ACQUIROR
8.1 Representations............................................. 33
8.2 Investigation............................................... 35
ARTICLE 9
CONDITIONS
9.1 Conditions Precedent to Obligations of Each Party........... 36
9.2 Acquiror Conditions......................................... 37
9.3 Corporation Conditions...................................... 38
ARTICLE 10
TERMINATION
10.1 Termination................................................. 38
ARTICLE 11
MISCELLANEOUS
11.1 Amendment or Waiver......................................... 39
11.2 Entire Agreement............................................ 39
11.3 Headings.................................................... 39
11.4 Notices..................................................... 39
11.5 Counterparts and Facsimiles................................. 40
11.6 Expenses.................................................... 40
11.7 Assignment.................................................. 41
11.8 Severability................................................ 41
11.9 Choice of Law............................................... 41
11.10 Attornment.................................................. 41
11.11 Remedies.................................................... 41
11.12 Survival of Representations and Warranties.................. 41
11.13 Time of Essence............................................. 42
SCHEDULE A - Arrangement Resolution
SCHEDULE B - Plan of Arrangement
SCHEDULE C - Form of Lock-up Agreement
SCHEDULE D - Enserco Subsidiaries
SCHEDULE E - Support Agreement
SCHEDULE F - Voting and Exchange Trust Agreement
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THIS AMENDED AND RESTATED
ACQUISITION AGREEMENT made as of the 25th day of
February, 2002, as amended and restated on March 18, 2002 with effect as of and
from February 25, 2002.
BETWEEN:
▇▇▇▇▇▇ INDUSTRIES, INC., a corporation incorporated
under the laws of Delaware,
("ACQUIROR")
- and -
ENSERCO ENERGY SERVICE COMPANY INC., a corporation
incorporated under the laws of Canada,
(the "CORPORATION")
RECITALS
WHEREAS:
A. The Acquiror has made a proposal to acquire all of the outstanding Shares
(as defined in Article 1) at a price of $15.50 per Share, plus additional
consideration, (payable, at the election of each Shareholder (as defined in
Article 1) in cash or in exchangeable shares of a Canadian subsidiary of
Acquiror) pursuant to the Plan of Arrangement (as defined in Article 1);
B. The Board of Directors (as defined in Article 1) has determined that it
would be in the best interests of the Corporation and its Shareholders to
recommend acceptance of the Arrangement (as defined in Article 1) to the
Shareholders, to cooperate with Acquiror and to take all reasonable action to
support the Arrangement; and
C. The Board of Directors has determined that it would be in the best interests
of the Corporation and the Shareholders to enter into this Agreement (as defined
in Article 1).
NOW THEREFORE IN CONSIDERATION of the mutual covenants set out below,
Acquiror and the Corporation agree as follows:
ARTICLE 1
DEFINITIONS
1.1 DEFINITIONS
In this Agreement, unless the context otherwise requires, the following
terms have the meanings specified:
"ACQUIROR SHARES" means shares in the common stock of Acquiror;
"ACQUISITION PROPOSAL" means a proposal or offer by any Person (other than
Acquiror or an affiliate of Acquiror), whether or not subject to conditions
and whether or not in writing, to acquire in any manner, directly or
indirectly, beneficial ownership of all or a material portion of the assets
of the Corporation or any Subsidiary of the Corporation or to acquire in
any manner, directly or indirectly, beneficial ownership of or control or
direction over more than 20% of the outstanding voting shares of the
Corporation, whether by means of an arrangement or amalgamation, a merger,
consolidation or other business combination, a sale of shares or assets, a
take-over bid, tender offer or exchange offer, or any other transaction
involving the Corporation or any Subsidiary of the Corporation, including,
without limitation, any single or multi-step transaction or series of
related transactions structured to permit such Person to acquire beneficial
ownership of all or a material portion of the assets of the Corporation or
any Subsidiary of the Corporation or to acquire in any manner, directly or
indirectly, more than 20% of the outstanding voting shares of the
Corporation (other than the transaction contemplated by this Agreement);
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"ACT" means the Canada Business Corporations Act as the same has been and
may hereafter from time to time be amended;
"AFFILIATE" has the meaning set forth in the Securities Act (
Alberta);
"AGREEMENT", and "THIS AGREEMENT", and similar expressions refer to this
Agreement, as the same may be amended, restated or supplemented from time
to time and, where applicable, to the appropriate Schedules to this
Agreement;
"ARRANGEMENT" means the arrangement under Section 192 of the Act on the
terms and conditions set out in the Plan of Arrangement;
"ARRANGEMENT RESOLUTION" means the special resolution of the Shareholders
to be substantially as set forth in Schedule A hereto;
"ARTICLES OF ARRANGEMENT" means the articles of arrangement of the
Corporation in respect of the Arrangement that are required by the Act to
be sent to the Director after the Final Order;
"BOARD OF DIRECTORS" means the board of directors of the Corporation as
constituted from time to time;
"BUSINESS DAY" means any day excepting a Saturday, Sunday or statutory
holiday in Calgary,
Alberta or Houston, Texas;
"CALLCO" means 3064297 Nova Scotia Company, an unlimited liability company
incorporated under the laws of the Province of Nova Scotia which, at the
Effective Time, will be an indirect wholly-owned Subsidiary of Acquiror;
"CANCO" means Nabors Exchangeco (Canada) Inc., an indirect wholly-owned
Subsidiary of Acquiror incorporated under the Act;
"CLOSING" means the closing of the Arrangement and the transactions
contemplated hereby;
"CLOSING DATE" means the date of Closing;
"CONFIDENTIALITY AGREEMENT" means the confidentiality agreement made as of
December 10, 2001 between Acquiror and the Corporation;
"COURT" means the Court of Queen's Bench of
Alberta;
"DATE HEREOF ", "DATE OF THIS AGREEMENT" and other similar terms mean,
unless the context otherwise requires, February 25, 2002;
"DILUTED BASIS" means, with respect to the number of outstanding Shares at
any time, such number of outstanding Shares calculated assuming that all
outstanding in-the-money Options, rights (including Share Purchase Rights
and Warrants) and other securities entitling the holder to acquire Shares
are exercised;
"DIRECTOR" means the Director appointed pursuant to Section 260 of the Act;
"DISCLOSURE LETTER" means the letter delivered by the Corporation to
Acquiror on the date of this Agreement, in each case referencing the
Section or subsection of this Agreement in respect of which disclosure is
being made;
"DISSENT RIGHTS" means the rights of dissent in respect of the Arrangement
Resolution discussed in Section 3.1 of the Plan of Arrangement;
"EFFECTIVE DATE" means the effective date of the Arrangement, being the
date shown on the certificate of arrangement issued by the Director under
the Act giving effect to the Arrangement;
"EFFECTIVE TIME" means 12:01 a.m. (Calgary time) on the Effective Date;
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"EMPLOYEE OBLIGATIONS" means any obligations or liabilities of the
Corporation or any Subsidiary of the Corporation to pay any amount to its
officers, directors, or employees, other than for salary, bonuses under
their existing bonus arrangements and directors' fees in the ordinary
course in each case in amounts consistent with historic practices and,
without limiting the generality of the foregoing, Employee Obligations
shall include the obligations or liabilities of the Corporation or any of
its Subsidiaries to officers or employees (i) for severance or termination
payments on the change of control of the Corporation pursuant to any
executive involuntary severance and termination agreements in the case of
officers and pursuant to the Corporation's severance policy in the case of
employees and (ii) for retention bonus payments pursuant to any retention
bonus program but shall exclude any statutory or common law obligations or
liabilities in respect of termination or severance;
"ENCUMBRANCE" includes, without limitation, any mortgage, pledge,
assignment, charge, lien, security interest or trust, royalty, carried,
working, participation or net profits interest or other third party
interest and any agreement, option, right or privilege (whether by law,
contract or otherwise) capable of becoming any of the foregoing;
"EXCHANGEABLE SHARES" means exchangeable shares of Canco having attributes
substantially as set forth in Appendix 1 to the Plan of Arrangement;
"FEE EVENT" has the meaning set forth in Section 4.1;
"FINAL ORDER" has the meaning set forth in Section 2.1;
"FINANCIAL STATEMENTS" means the audited financial statements of the
Corporation as at and for the period ended December 31, 2001;
"GOVERNMENTAL ENTITY" means any (i) multinational, federal, provincial,
state, municipal, local or other governmental or public department, central
bank, court, commission, board, bureau, agency or instrumentality, domestic
or foreign, (ii) any subdivision or authority of any of the foregoing, or
(iii) any quasi-governmental or private body exercising any regulatory,
expropriation or taxing authority under or for the account of any of the
above;
"INTERIM ORDER" has the meaning set forth in Section 2.1;
"IN-THE-MONEY" means, in respect of Options, Warrants or Share Purchase
Rights, such of them as have an exercise price per Share less than the Per
Share Price;
"MATERIAL" means, where used in relation to the Corporation or Acquiror, a
fact, asset, liability, transaction or circumstance concerning the
business, operations, results of operations, assets, capitalization,
financial condition, rights, liabilities, prospects or privileges, whether
contractual or otherwise, of the Corporation and its Subsidiaries or
Acquiror and its Subsidiaries, as the case may be, in either case
considered as a whole, that: (i) is materially adverse to the business of
the Corporation and its Subsidiaries or Acquiror and its Subsidiaries, in
either case considered as a whole; (ii) would be reasonably likely to have
a significant effect on the market price or value of the Shares or Acquiror
Shares, as the case may be (in either (i) or (ii) other than resulting
from: (A) conditions affecting the oil and gas industry as a whole or the
oil and gas services industry as a whole; (B) general economic, financial,
currency exchange, securities or commodity market conditions in Canada or
elsewhere; or (C) changes in the market price of crude oil or natural gas);
or (iii) would prevent or materially delay completion of the Arrangement in
accordance with this Agreement; provided that, a fact, asset, liability,
transaction or circumstance shall be considered to be Material if its value
or financial effect (net of reasonably anticipated insurance recoveries in
respect thereof) exceeds, in the aggregate, $10,000,000 in respect of the
Corporation and its Subsidiaries or $165,000,000 in respect of Acquiror and
its Subsidiaries;
"MATERIAL ADVERSE CHANGE", in respect of the Corporation or the Acquiror,
means any change (or changes which in the aggregate would be material) (or
any condition, event or development involving a prospective material
change) in the business, operations, results of operations, assets,
capitalization, financial condition, rights, liabilities, prospects or
privileges, whether contractual or otherwise, of the
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Corporation or the Acquiror, as the case may be, or any of its Subsidiaries
which is materially adverse to the business thereof considered as a whole,
other than a change: (i) which has prior to the date hereof been publicly
disclosed or otherwise disclosed herein or in the Disclosure Letter; (ii)
resulting from conditions affecting the oil and gas industry as a whole or
the oil and gas services industry as a whole; (iii) resulting from general
economic, financial, currency exchange, securities or commodity market
conditions in Canada or elsewhere; or (iv) resulting from changes in the
market price of crude oil or natural gas; provided that such change or
changes shall be considered to be material if its or their value or
financial effect (net of reasonably anticipated insurance recoveries in
respect of such change) exceeds, in the aggregate, $10,000,000 in respect
of the Corporation and its Subsidiaries or $165,000,000 in respect of
Acquiror and its Subsidiaries;
"MATERIAL CONTRACT" means an agreement or understanding (whether or not in
writing) to which the Corporation or any of its Subsidiaries is a party or
by which any thereof is bound: pursuant to which the Corporation or any of
its Subsidiaries has or may have an obligation in excess of, or having a
value in excess of, $500,000 annually; which has a term in excess of 90
days without being terminable by the Corporation or its Subsidiary without
penalty and is an aggregate obligation in excess, or having a value in
excess of, $200,000; or which is a footage or turnkey drilling contract or
a day work contract having a term in excess of 60 days;
"MISREPRESENTATION" has the meaning set forth in the Securities Act
(
Alberta);
"OPTIONS" means the outstanding options to acquire common shares in the
capital of the Corporation (i) under the Stock Option Plan, or (ii)
pursuant to the Predecessor Option Agreements;
"PER SHARE PRICE" means that amount calculated to four decimal places equal
to Cdn.$15.50 plus additional consideration calculated at the rate of 6%
per annum thereon from, but not including, February 25, 2002 to and
including the Effective Date;
"PERSON" includes an individual, partnership, trust, firm, body corporate,
government, governmental body, agency or instrumentality, unincorporated
body of persons or association;
"PLAN OF ARRANGEMENT" means the plan of arrangement substantially in the
form attached hereto as Schedule B and any amendments or variation thereto
made in accordance with Article 6 of the Plan of Arrangement or made at the
direction of the Court in the Final Order;
"PREDECESSOR CORPORATIONS" means those corporations which merged with the
Corporation pursuant to various amalgamations including, without
limitation, Trimat Well Servicing Inc., Pink Panther Oilfield Services Ltd.
and Swab-Tech Inc.;
"PREDECESSOR OPTION AGREEMENTS" means the agreements between the
Corporation and certain individuals pursuant to which options to acquire
securities of entities previously acquired by the Corporation were
exchanged for options to acquire Shares;
"PROXY CIRCULAR" means the management information circular of the
Corporation to be sent to the Shareholders and the holders of Options,
Warrants and Share Purchase Rights in connection with the Shareholder
Meeting (including, without limitation, information incorporated by
reference);
"PUBLIC RECORD" means all information and materials filed by, or on behalf
of, the Corporation or any of the Predecessor Corporations with any of the
Securities Authorities available through the SEDAR or ▇▇▇▇▇ websites as of
the date of this Agreement;
"REAL PROPERTY" has the meaning set forth in Section 7.1(v);
"REGULATORY APPROVALS" means all approvals, consents and authorizations of
all Governmental Entities and other regulators (including stock exchanges)
reasonably necessary or desirable in connection with the Arrangement and
the other transactions contemplated hereby;
"SEC" means the Securities and Exchange Commission of the United States;
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"SECURITIES AUTHORITIES" means the appropriate securities commission or
similar regulatory authorities in Canada and each of the provinces and
territories thereof and in the United States and each of the states
thereof;
"SECURITIES LAWS" means, collectively, all applicable Canadian provincial
and territorial corporate and securities laws, United States securities
laws, the "blue sky" or securities laws of the states of the United States
and any other applicable securities laws;
"SHAREHOLDERS" means the holders of Shares from time to time;
"SHAREHOLDER MEETING" means the special meeting of the Shareholders and
holders of Options, Warrants and Share Purchase Rights, including any
adjournments or postponement thereof, to be called and held in accordance
with the Interim Order to consider and, if deemed advisable, approve the
Arrangement Resolution;
"SHARE PURCHASE RIGHTS" means rights to acquire Shares issued pursuant to
the Cooperation Agreement made as of June 18, 2001 between Bonus Well
Servicing Partnership and Polar Energy Services Ltd. and the agreement made
and entered into as of June 1, 2001 between Kuukpik/ H & R Drilling LLC and
H & R Drilling Alaska Inc.;
"SHARES" means common shares in the share capital of the Corporation;
"STOCK OPTION PLAN" means the stock option plan of the Corporation approved
by the Board of Directors on April 12, 2001;
"SUBSIDIARY" has the meaning set forth in the Act in respect of the
Corporation or the Acquiror, as the context requires, and, in respect of
the Corporation, includes (without limitation) each partnership or other
entity controlled, directly or indirectly, by the Corporation including
those Persons listed in Schedule D hereto provided that Subsidiaries shall
not include such Persons as: (i) are inactive and have no assets or
property beyond a nominal amount; (ii) do not own shares or other
securities of any other Subsidiary; and (iii) none of the Corporation or
the Subsidiaries of the Corporation are liable jointly, as a guarantor, a
surety or otherwise for any liabilities or obligations thereof;
"SUPERIOR PROPOSAL" has the meaning set forth in Section 3.2(a);
"SUPPORT AGREEMENT" means the agreement to be substantially as set forth in
Schedule E hereto;
"U.S. SECURITIES ACT" means the United States Securities Act of 1933, as
amended;
"VOTING AND EXCHANGE TRUST AGREEMENT" means the agreement to be
substantially as set forth in Schedule F hereto; and
"WARRANTS" means the warrants to purchase 500,000 Shares represented by and
provided for in Warrant Certificate No. 98-1 dated November 13, 1998 issued
by the Corporation to SCF-IV, L.P., as amended December 12, 2001.
1.2 SINGULAR, PLURAL, ETC.
Words importing the singular number include the plural and vice versa and
words importing gender include the masculine, feminine and neuter genders.
1.3 DEEMED CURRENCY
In the absence of a specific designation of any currency, any undescribed
dollar amount herein shall be deemed to refer to Canadian dollars.
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1.4 DATE FOR ANY ACTION
In the event that any date on which any action is required to be taken
hereunder by any of the parties hereunder 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 DECISION BY BOARD OF DIRECTORS
Any reference herein to a decision or determination, unanimous or
otherwise, of the Board of Directors means a decision or determination by a
quorum of the directors of the Corporation entitled to vote under the Act and
the constating documents of the Corporation.
1.6 INTERPRETATION NOT AFFECTED BY PARTY DRAFTING
The parties hereto acknowledge that their respective legal counsel have
reviewed and participated in settling the terms of this Agreement, and the
parties hereby agree that any rule of construction to the effect that any
ambiguity is to be resolved against the drafting party will not be applicable in
the interpretation of this Agreement.
ARTICLE 2
THE ARRANGEMENT
2.1 IMPLEMENTATION STEPS BY THE CORPORATION
The Corporation agrees that it shall:
(a) as soon as reasonably practicable, and in any event, on or before
March 22, 2002, apply to the Court in a manner acceptable to Acquiror
acting reasonably, under Section 192 of the Act for an order approving
the Arrangement and for an interim order, (the "INTERIM ORDER")
providing for, among other things, the calling and holding of the
Shareholder Meeting, and thereafter proceed with and diligently seek
the Interim Order;
(b) lawfully convene and hold the Shareholder Meeting as soon as
reasonably practicable and, in any event, on or before April 30, 2002;
(c) subject to obtaining the approvals as are required by the Interim
Order, proceed with and diligently pursue the application to the Court
for a final order of the Court approving the Arrangement in form and
substance satisfactory to Acquiror, acting reasonably, (the "FINAL
ORDER"); and
(d) subject to obtaining the Final Order and the satisfaction or waiver of
the other conditions herein contained in favour of each party, send to
the Director, for endorsement and filing by the Director, the Articles
of Arrangement and such other documents as may be required in
connection therewith under the Act to give effect to the Arrangement.
2.2 IMPLEMENTATION STEPS BY ACQUIROR
Acquiror agrees that, on or prior to the Effective Date and subject to the
satisfaction or waiver of the conditions herein contained in favour of Acquiror:
(a) Acquiror, Callco and Canco shall execute and deliver the Support
Agreement;
(b) Acquiror and Canco shall execute and deliver the Voting and Exchange
Trust Agreement; and
(c) Acquiror shall issue to the trustee under the Voting and Exchange
Trust Agreement such share or shares as required by the Voting and
Exchange Trust Agreement.
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2.3 INTERIM ORDER
The notice of motion for the application referred to in Section 2.1 shall
request that the Interim Order provide, among other things:
(a) for the class of persons to whom notice is to be provided in respect
of the Arrangement and the Shareholder Meeting and for the manner in
which such notice is to be provided;
(b) that the requisite approval for the Arrangement Resolution shall be
66 2/3% of the votes cast on the Arrangement Resolution by
Shareholders and holders of Options, Warrants and Share Purchase
Rights, voting together as a single class, present in person or by
proxy at the Shareholder Meeting (such that each holder of Shares is
entitled to one vote for each Share held and each holder of an Option,
Warrant or Share Purchase Right is entitled to one vote for each Share
such holder would have received on a valid exercise of such Option,
Warrant or Share Purchase Right, as the case may be);
(c) that, in all other respects, the terms, restrictions and conditions of
the governing documents of the Corporation, including quorum
requirements and all other matters, shall apply in respect of the
Shareholder Meeting; and
(d) for the grant of the Dissent Rights.
2.4 DISSENTING SECURITIES
Each Shareholder and each holder of an Option, Warrant or Share Purchase
Right may exercise Dissent Rights in connection with the Arrangement pursuant to
and in the manner set forth in Section 190 of the Act and the Interim Order
(such holders referred to as "DISSENTERS" or as "DISSENTING SHAREHOLDERS" when
referring exclusively to Shareholders). The Corporation shall give Acquiror (i)
prompt notice of any written notices of exercise of rights of dissent,
withdrawals of such notices, and any other instruments served pursuant to the
Act and received by the Corporation and (ii) the opportunity to participate in
all negotiations and proceedings with respect to such rights. Without the prior
written consent of Acquiror, except as required by applicable law, the
Corporation shall not make any payment with respect to any such rights or offer
to settle or settle any such rights.
2.5 ARTICLES OF ARRANGEMENT
The Articles of Arrangement shall, together with such other matters as are
necessary to effect the Arrangement, implement the Plan of Arrangement.
2.6 CORPORATION APPROVAL OF THE ARRANGEMENT
(a) The Corporation represents that the Board of Directors, upon
consultation with its advisors, has unanimously determined that:
(i) the Arrangement is fair from a financial point of view to the
Shareholders and is in the best interests of the Corporation and
the Shareholders; and
(ii) the Board of Directors will unanimously recommend that
Shareholders vote in favour of the Arrangement, which
recommendation may not be withdrawn, modified or changed in any
manner except as provided in Section 3.2 or in the event of the
termination of this Agreement pursuant to Section 10.1.
(b) The Corporation represents that the Board of Directors has received an
oral opinion from the Corporation's financial advisor that the
consideration under the Arrangement is fair from a
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financial point of view to the Shareholders and that such financial
advisor will provide a written opinion to such effect on or before the
application referred to in Section 2.1(a).
(c) The Corporation represents that its senior officers and directors have
advised the Corporation that, at the date hereof, they intend to vote
any Shares held by them in favour of the Arrangement Resolution and
will so represent in the Proxy Circular.
2.7 PROXY CIRCULAR
As promptly as reasonably practicable, the Corporation shall prepare the
Proxy Circular (setting forth inter alia the recommendation of the Board of
Directors set forth in Section 2.6(a) and the opinion of the Corporation's
financial advisors referred to in Section 2.6(b) and reflecting the execution of
the lock-up agreements referred to in Section 9.2(e) and the intention of the
senior officers and directors referred to in Section 2.6(c)) together with any
other documents required by Securities Laws or other applicable laws in
connection with the approval of the Arrangement by the Shareholders and the
Corporation shall, on a confidential basis, provide Acquiror timely opportunity
to review and a reasonable period of time in the circumstance to comment on all
such documentation and all such documentation shall be reasonably satisfactory
to Acquiror before it is filed or distributed to the Shareholders. As promptly
as practicable after obtaining the Interim Order and, in any event on or before
March 26, 2002, the Corporation shall cause the Proxy Circular and other
documentation required in connection with the Shareholder Meeting to be sent to
each Shareholder and each holder of an Option, Warrant or Share Purchase Right
and filed as required by the Interim Order and applicable laws.
2.8 SECURITIES COMPLIANCE
(a) Acquiror shall, or shall cause its Subsidiaries (and the Corporation
agrees to cooperate in respect thereof) to use commercially reasonable
efforts to obtain all orders required from the applicable Canadian
Governmental Entities to permit the issuance and first resale of (i)
the Exchangeable Shares issuable pursuant to the Arrangement, and (ii)
Acquiror Shares issuable upon exchange of the Exchangeable Shares from
time to time and upon exercise of the Warrants from time to time, in
each case without qualification with, or approval of, or the filing of
any prospectus or similar document, or undertaking, from any Canadian
Governmental Entity under any Canadian federal, provincial or
territorial securities or other laws or pursuant to the rules and
regulations of any Governmental Entity administering such laws, or the
fulfilment of any other legal requirement in any such jurisdiction
(other than, with respect to such first resale being from the holdings
of a "CONTROL PERSON" for purposes of Canadian Securities Laws).
(b) Acquiror agrees to file a registration statement on Form S-3 (or other
applicable form) (the "S-3 REGISTRATION STATEMENT") with the SEC in
order to register under the U.S. Securities Act the Acquiror Shares
issuable from time to time after the Effective Time upon exchange of
the Exchangeable Shares and from time to time upon exercise of the
Warrants, and shall use all commercially reasonable efforts to cause
the S-3 Registration Statement to become effective and to maintain the
effectiveness of such registration so long as any Exchangeable Shares
remain outstanding (other than those Exchangeable Shares held by
Acquiror or any of its affiliates).
2.9 PREPARATION OF FILINGS
(a) Acquiror and the Corporation shall, acting reasonably and promptly in
the circumstances, cooperate in:
(i) the preparation of any application for the orders and the
preparation of any required registration statements and any other
documents reasonably deemed by Acquiror or the Corporation to be
necessary to discharge their respective obligations under
Securities Laws in connection with the Arrangement and the other
transactions contemplated hereby;
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(ii) the taking of all such action as may be required under any
applicable Securities Laws (including "blue sky laws") in
connection with the issuance of the Exchangeable Shares and
Acquiror Shares in connection with the Arrangement; provided,
however, that with respect to the United States "blue sky" and
Canadian provincial qualifications neither Acquiror nor the
Corporation shall be required to register or qualify as a foreign
corporation or to take any action that would subject it to service
of process in any jurisdiction where such entity is not now so
subject, except as to matters and transactions arising solely from
the offer and sale of the Exchangeable Shares and Acquiror Shares;
and
(iii) the taking of all such action as may be required under the Act in
connection with the transactions contemplated by this Agreement
and the Plan of Arrangement.
(b) Each of Acquiror and the Corporation agree to promptly furnish to the
other all information concerning it, the Shareholders and the holders
of Options, Warrants and Share Purchase Rights as may be required for
the effectuation of the actions described in Sections 2.7 and 2.8 and
the foregoing provisions of this Section 2.9, and each covenants that
no information furnished by it (to its knowledge in the case of
information concerning its shareholders) in connection with such
actions or otherwise in connection with the consummation of the
Arrangement and the other transactions contemplated by this Agreement
will contain any misrepresentation or any untrue statement of a
material fact or omit to state a material fact required to be stated
in any such document or necessary in order to make any information so
furnished for use in any such document not misleading in the light of
the circumstances in which it is furnished.
(c) Each of Acquiror and the Corporation agree to promptly notify the
other if at any time before or after the Effective Time it becomes
aware that the Proxy Circular or an application for an order or a
registration statement described in Section 2.8 contains any
misrepresentation or any 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 Proxy Circular or such application or
registration statement. In any such event, Acquiror and the
Corporation agree to cooperate in the preparation of a supplement or
amendment to the Proxy Circular or such other document, as required
and as the case may be, and, if required, shall cause the same to be
distributed to the Shareholders and holders of Options, Warrants or
Share Purchase Rights or filed with the relevant securities regulatory
authorities.
(d) The Corporation shall ensure that the Proxy Circular complies with all
applicable laws and, without limiting the generality of the foregoing,
that the Proxy Circular does not contain any misrepresentation or 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 there not misleading in light of the circumstances in which
they are made (other than with respect to any information relating to
and provided by Acquiror). Without limiting the generality of the
foregoing, the Corporation shall ensure that the Proxy Circular
complies with OSC Rule 54-501 and the Interim Order and provides
Shareholders and holders of Options, Warrants or Share Purchase Rights
with information in sufficient detail to permit them to form a
reasoned judgement concerning the matters to be place before them at
the Shareholder Meeting. The Corporation shall ensure that none of the
information supplied or to be supplied by the Corporation for
inclusion or incorporation by reference in the S-3 Registration
Statement will at the time such registration statement is declared or
becomes effective contain any untrue statement of material fact or
omit to state a material fact required to be stated therein or
necessary in order to make the statements made therein in light of the
circumstances under which they were made not misleading. The
Corporation will take all reasonable steps within its control to
ensure that the Proxy Circular is prepared as to form in all material
respects in compliance with the provisions of the Act and Canadian
Securities Laws.
12
(e) Acquiror shall ensure that the S-3 Registration Statement complies with
all U.S. Securities Laws and, without limiting the generality of the
foregoing, that such documents do 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 relating to and provided by the
Corporation).
2.10 COOPERATION
(a) The Corporation agrees to use its commercially reasonable efforts to,
and shall use its commercially reasonable efforts to cause its
Subsidiaries to, perform all obligations required to be performed by
the Corporation or any of its Subsidiaries under this Agreement,
cooperate with Acquiror 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 transaction
contemplated in this Agreement and, without limiting the generality of
the foregoing, the Corporation shall:
(i) subject to Section 3.2, at the request of Acquiror, solicit from
the Shareholders and holders of Options, Warrants or Share
Purchase Rights proxies in favour of approval of the Arrangement
Resolution and use commercially reasonable efforts to obtain the
approval by such Shareholders and holders of Options, Warrants or
Share Purchase Rights of the Arrangement Resolution, voting as a
single class;
(ii) not adjourn, postpone or cancel (or propose adjournment,
postponement or cancellation of) the Shareholder Meeting without
Acquiror's prior written consent except as required by applicable
laws, or in the case of adjournment, as may be required by
Shareholders and holders of Options, Warrants or Share Purchase
Rights as expressed by majority resolution, voting as a single
class;
(iii) use commercially reasonable efforts to satisfy or cause to be
satisfied as soon as reasonably practicable all the conditions
precedent that are set forth in Article 9;
(iv) apply for and use commercially reasonable efforts to obtain as
promptly as practicable all Regulatory Approvals relating to the
Corporation or any of its Subsidiaries and, in doing so, to keep
Acquiror reasonably informed as to the status of the proceedings
related to obtaining the Regulatory Approvals, including, but not
limited to, providing Acquiror the opportunity to be present for
or participate in all communications with any Governmental Entity
and providing Acquiror with copies of all related applications
and notifications, in draft form, in order for Acquiror to
provide its reasonable comments;
(v) apply for and use commercially reasonable efforts to obtain the
Interim Order and the Final Order;
(vi) carry out the terms of the Interim Order and the Final Order
applicable to it and use commercially reasonable efforts to
comply promptly with all requirements which applicable laws may
impose on the Corporation or its Subsidiaries with respect to the
transactions contemplated hereby and by the Arrangement;
(vii) use commercially reasonable efforts to defend all lawsuits or
other legal, regulatory or other proceedings to which it is a
party challenging or affecting this Agreement or the consummation
of the transactions contemplated hereby;
(viii)use commercially reasonable efforts to have lifted or rescinded
any injunction or restraining order or other order which may
adversely affect the ability of the parties to consummate the
transactions contemplated hereby;
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(ix) effect all necessary registrations, filings and submissions of
information required by Governmental Entities from the
Corporation or any of its Subsidiaries in connection with the
transactions contemplated hereby;
(x) consult with Acquiror prior to making publicly available its
financial results for any period after the date of this Agreement
provided that the Corporation is not unreasonably impaired in
satisfying all disclosure requirements under Securities Laws in
respect thereof; and
(xi) use commercially reasonable efforts to obtain all waivers,
consents and approvals from other parties to loan agreements,
leases or other contracts required to be obtained by the
Corporation or a Subsidiary of the Corporation to consummate the
transactions contemplated hereby which the failure to obtain
would materially adversely affect the ability of the Corporation
or its Subsidiaries to consummate the transaction contemplated
hereby.
(b) Acquiror agrees that, until the earlier of the Effective Date and the
termination of this Agreement pursuant to its terms, in each case
except (i) with the consent of the Corporation to any deviation
therefrom, or (ii) as expressly contemplated by this Agreement or the
Plan of Arrangement, Acquiror shall and will cause its Subsidiaries to:
(i) subject to Section 2.10(c)(vii), not adopt or propose to adopt
any amendments to its governing documents or the governing
documents of Canco or Acquiror which would have a material
adverse impact on the consummation of the transactions
contemplated hereby or the economic terms of, or the form of,
consideration to be provided pursuant to the Arrangement; and
(ii) not take any action which may jeopardize the exchange of the
Shares by Shareholders who are resident in Canada for the
purposes of the Income Tax Act (Canada) from being treated on a
tax deferred basis under the Income Tax Act (Canada) for holders
who are otherwise eligible for such treatment.
(c) Acquiror agrees to use its commercially reasonable efforts to, and
shall use its commercially reasonable efforts to cause its Subsidiaries
to, perform all obligations required to be performed by it or any of
its Subsidiaries under this Agreement, cooperate with the Corporation
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 transaction contemplated by this
Agreement and, without limiting the generality of the following:
(i) use commercially reasonable efforts to satisfy or cause to be
satisfied as soon as reasonably practicable all conditions
precedent that are set forth in Article 9 hereof;
(ii) apply for and use commercially reasonable efforts to obtain
promptly all Regulatory Approvals relating to Acquiror or any of
its Subsidiaries, and, in doing so, to keep the Corporation
reasonably informed as to the status of the proceedings related
to obtaining the Regulatory Approvals, including, but not limited
to, providing the Corporation with copies of all related
applications and notifications, in draft form, in order for the
Corporation to provide its reasonable comments;
(iii) carry out the terms of the Interim Order and Final Order
applicable to it and use commercially reasonable efforts to
comply promptly with all requirements which applicable laws may
impose on Acquiror with respect to the transactions contemplated
hereby and by the Arrangement;
(iv) in respect of holders of Shares who are resident in Canada for
the purposes of the Income Tax Act (Canada) and are not exempt
from tax under Part 1 of the Income Tax Act (Canada) and who
receive Exchangeable Shares under the Arrangement, to cause Canco
14
to enter into elections with any such holders who make elections
under Section 85 of the Income Tax Act (Canada) and any
equivalents thereof under provincial laws;
(v) use commercially reasonable efforts to defend all lawsuits or
other legal, regulatory or other proceedings to which it is a
party challenging or affecting this Agreement or the consummation
of the transactions contemplated hereby;
(vi) use commercially reasonable efforts to have lifted or rescinded
any injunction or restraining order or other order relating to
Acquiror or any of its Subsidiaries which may adversely affect
the ability of the parties to consummate the transactions
contemplated hereby;
(vii) effect all necessary registrations, filings and submissions of
information required by Governmental Entities from Acquiror or
any of its Subsidiaries in connection with the transactions
contemplated hereby;
(viii)cause the governing documents of Canco to be amended to create
the Exchangeable Shares and otherwise as required to effect the
transactions contemplated hereby;
(ix) reserve or have available a sufficient number of Acquiror Shares
for issuance upon the exchange from time to time of Exchangeable
Shares and the exercise from time to time of the Warrants, and
use commercially reasonable efforts to cause such Acquiror Shares
to be approved for listing on the American Stock Exchange,
subject to official notice of issuance, prior to the Effective
Time;
(x) use commercially reasonable efforts (A) to cause the Exchangeable
Shares to be listed for trading on The Toronto Stock Exchange by
the Effective Date and (B) to ensure that Canco remains a "public
corporation" within the meaning of the Income Tax Act (Canada)
for so long as any Canco Exchangeable Shares are outstanding
(other than those Exchangeable Shares held by Acquiror or any of
its affiliates); and
(xi) not, during the ten trading days preceding the third Business Day
prior to the Shareholder Meeting buy back any of its outstanding
Acquiror Shares.
2.11 PRESS RELEASE AND PUBLIC DISCLOSURE
Each of Acquiror and the Corporation agrees to issue a joint press release
in the form agreed to between them prior to the opening of markets on February
26, 2002 and the Corporation agrees to file a copy of this Agreement, as an
attachment to a material change report with respect to the Arrangement, as soon
as possible with the Securities Authorities having jurisdiction over the
Corporation.
2.12 OUTSTANDING RIGHTS TO ACQUIRE SHARES
The Corporation agrees and represents that the Board of Directors has
unanimously resolved that:
(a) The Corporation shall use all commercially reasonable efforts to
provide that Persons holding Options who may do so under Securities
Laws and in accordance with the Stock Option Plan or the relevant
agreements governing such Options (or pursuant to this Section 2.12)
shall be entitled to exercise all of their Options and vote all Shares
issued in connection therewith at the Shareholder Meeting. It is agreed
by Acquiror that all Options that are duly surrendered for exercise,
conditional on Closing and with appropriate instructions that the
Shares issuable upon such exercise are to be voted in favour of the
Arrangement (the "CONDITIONAL OPTION EXERCISE"), shall be exercised
immediately prior to the Effective Time. Furthermore, Acquiror shall
accept as validly issued all Shares that are to be issued pursuant to
the Conditional Option Exercise. The Corporation may make arrangements
to loan holders of Options who elect to receive cash pursuant to the
Arrangement, the exercise price thereof with repayment of the loan to
be made from the proceeds received under the Arrangement for the Shares
acquired on such exercise.
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(b) Prior to the Effective Time, the Corporation shall use all commercially
reasonable efforts to enter into releases, in a form approved by
Acquiror, acting reasonably, with each holder of Options or Share
Purchase Rights pursuant to which the parties thereto shall agree that,
upon Closing, each holder that has not previously exercised such
Options or Share Purchase Rights, as the case may be, will receive from
the Corporation, in consideration of the termination of all such
holder's unexercised Options or Share Purchase Rights, as the case may
be, the greater of:
(i) the positive difference, if any, between the purchase price under
the Arrangement for each Share and the exercise price of the
holder's Options or Share Purchase Rights, as the case may be, per
Share, regardless of the vesting of any such Options under the
Stock Option Plan and the agreements governing such Options or
Share Purchase Rights, as applicable; and
(ii) $0.10,
for each Share that is subject to such issuance.
The Corporation shall make appropriate withholdings of taxes or other
applicable source deductions from any such payments made to any holders
of Options or Share Purchase Rights as required by applicable law.
(c) The Corporation shall use all commercially reasonable efforts to ensure
that, at the Effective Time, all of the Options have been exercised or
surrendered for termination as contemplated by this Section 2.12, and
without limiting the generality of the forgoing, the Corporation shall:
(i) encourage and facilitate all persons holding Options to exercise
those Options and vote all Shares issued in connection therewith
in favour of the Arrangement at the Shareholder Meeting pursuant
to the Conditional Option Exercise or otherwise or surrender their
Options in the manner provided for in Section 2.12; and
(ii) cause the vesting of option entitlements under the Stock Option
Plan to accelerate prior to or concurrently with the completion of
the Arrangement, such that all outstanding Options shall be
exercisable and fully vested prior to the Effective Time.
ARTICLE 3
COVENANTS OF THE CORPORATION
3.1 ORDINARY COURSE OF BUSINESS
The Corporation covenants and agrees that, from the date hereof until the
earlier of the Effective Time and the date this Agreement is terminated pursuant
to its terms, unless Acquiror otherwise agrees in writing or as otherwise
expressly contemplated or permitted by this Agreement or the Disclosure Letter:
(a) the Corporation shall, and shall cause each of its Subsidiaries to,
conduct its and their respective business only in, and not take action
except in, the usual, ordinary and regular course of business and
consistent with past practice;
(b) the Corporation shall not directly or indirectly do or permit to occur
any of the following:
(i) (other than transactions solely among the Corporation and its
Subsidiaries) issue, sell, pledge, lease, dispose of, encumber or
agree to issue, sell, pledge, lease, dispose of or encumber (or
permit any of its Subsidiaries to issue, sell, pledge, lease,
dispose of, encumber or agree to issue, sell, pledge, lease,
dispose of or encumber):
(A) any additional shares of, or any options, warrants, calls,
conversion privileges or rights of any kind to acquire any
shares of, any capital stock of the Corporation or any of
its Subsidiaries (other than pursuant to the exercise of
outstanding stock
16
options issued pursuant to the terms of the Options,
Warrants or Share Purchase Rights), or
(B) except in the ordinary and regular course of business,
consistent with past practice and not, in the aggregate,
exceeding $100,000 individually and $500,000 in the
aggregate any assets of the Corporation or any of its
Subsidiaries;
(ii) amend or propose to amend its articles or bylaws or those of any
of its Subsidiaries;
(iii) split, combine or reclassify any outstanding Shares, or declare,
set aside or pay any dividend (other than as disclosed in writing
to Acquiror prior to the date hereof) or other distribution
payable in cash, stock, property or otherwise with respect to the
Shares;
(iv) except as set forth in Section 2.12, redeem, purchase or offer to
purchase (or permit any of its Subsidiaries to redeem, purchase
or offer to purchase) any Shares or other securities of the
Corporation or any of its Subsidiaries;
(v) reorganize, amalgamate or merge the Corporation or any of its
Subsidiaries with any other Person or other business organization
whatsoever;
(vi) except as set forth in the Disclosure Letter, acquire or agree to
acquire (by merger, amalgamation, acquisition of stock or assets
or otherwise) any Person or other business organization or
division or acquire or agree to acquire any assets, except in the
ordinary and regular course of business, consistent with past
practice and not exceeding $100,000 individually and $500,000 in
the aggregate;
(vii) except in the ordinary and regular course of business consistent
with past practice: (A) pay, discharge or satisfy any material
claims, liabilities or obligations; or (B) except such as have
been reserved against in the Financial Statements, relinquish any
material contractual rights;
(viii)enter into any interest rate, currency or commodity swaps, ▇▇▇▇▇▇
or other similar financial instruments;
(ix) waive, release, grant or transfer any rights of material value or
modify or change in any material respect any existing material
licence, lease, contract, production sharing agreement,
government land concession or other document, other than in the
ordinary and regular course of business, consistent with past
practice;
(x) authorize, recommend or propose any release or relinquishment of
any material contract right other than in the ordinary and
regular course of business, consistent with past practice or
(other than with the prior written consent of Acquiror, not to be
unreasonably withheld) enter into, or amend, any footage or
turnkey drilling contract or a day work contract having a term in
excess of 60 days;
(xi) (other than the rollover of presently outstanding bankers'
acceptances or the conversion of prime rate advances to bankers'
acceptances) incur or commit to incur any indebtedness for
borrowed money or any other material liability or obligation or
issue any debt or assume, guarantee, endorse or otherwise as an
accommodation become responsible for, the obligations of any
other person, or make loans (other than as contemplated in
Section 2.12) or advances, except, in either case, in the
ordinary and regular course of business consistent with past
practice under facilities currently outstanding; and
(xii) authorize or propose any of the foregoing, or enter into or
modify any contract, agreement, commitment or arrangement to do
any of the foregoing;
(c) the Corporation shall not, and shall cause each of its Subsidiaries to
not:
(i) take any action with respect to the entering into, assuming or
modifying of any employment, severance, collective bargaining or
similar agreements, policies or
17
arrangements with respect to the grant of any bonuses, salary
increases, stock options, pension benefits, retirement
allowances, deferred compensation, severance or termination pay
or any other form of compensation or profit sharing or with
respect to any increase of benefits payable; or
(ii) without limiting the foregoing, create, enter into, assume or
modify any Employee Obligations;
(d) the Corporation shall use its reasonable efforts to cause its current
insurance (or re-insurance) policies not to be cancelled or terminated
or any of the coverage thereunder to lapse, unless simultaneously with
such termination, cancellation or lapse, replacement policies
underwritten by insurance and re-insurance companies of nationally
recognized standing providing commercially reasonable coverage in
accordance with industry practice for similar entities carrying on
comparable business;
(e) the Corporation shall:
(i) in the context of the transactions contemplated hereby, use its
commercially reasonable efforts, and cause each of its
Subsidiaries to use its commercially reasonable efforts, to
preserve intact their respective business organizations and
goodwill, to keep available the services of its officers and
employees as a group and to maintain satisfactory relationships
with suppliers, agents, distributors, customers and others having
business relationships with it or its Subsidiaries, provided that
the Corporation shall be permitted to modify the number and types
of non-executive employees in the employment of the Corporation,
acting reasonably, to reflect changing industry conditions from
time to time;
(ii) not take any action, or permit any of its Subsidiaries to take
any action, that would render, or that reasonably may be expected
to render, any representation or warranty made by it in this
Agreement untrue in any material respect at any time prior to the
Effective Time if then made; and
(iii) confer on a regular basis with Acquiror with respect to material
operational matters;
(f) the Corporation shall not settle or compromise any claim brought by any
present, former or purported holder of any securities of the
Corporation in connection with the transactions contemplated by this
Agreement or the Arrangement prior to the Effective Time without the
prior written consent of Acquiror;
(g) except as set forth in Section 2.12, the Corporation shall not enter
into or modify any contract, agreement, commitment or arrangement
inconsistent with any of the matters set forth in this Section 3.1
without the prior written consent of Acquiror; and
(h) the Corporation shall use all commercially reasonable efforts to obtain
receipt of the consents of any and all lenders to the Corporation
(including without limitation the Corporation's senior lenders) whose
consent is required to prevent a default or any event that with the
passage of time may constitute an event of default thereunder, to the
transactions contemplated herein.
3.2 NON-SOLICITATION
(a) The Corporation shall not, directly or indirectly, through any officer,
director, employee, representative or agent of the Corporation or any
of its Subsidiaries, (i) solicit, initiate or encourage (including by
way of furnishing information or entering into any form of agreement,
arrangement or understanding) the initiation of any inquiries,
discussions, negotiations, proposals or offers from any Person or other
entity or group (other than Acquiror) in respect of any matter or thing
inconsistent with the successful completion of the Arrangement,
including, without limitation, any Acquisition Proposal or (ii) provide
any non-public information to, participate in any discussions or
negotiations relating to any such matter or thing with, or otherwise
cooperate with or assist or participate in any effort to take such
action by, any Person
18
or other entity or group; provided nothing contained in this Section
3.2 shall prevent the Board of Directors from:
(i) considering, negotiating or providing information in connection
with, or otherwise (except as provided for in (iii) below)
responding to, an unsolicited bona fide written Acquisition
Proposal in respect of which:
(A) the funds or other consideration provided for in the
Acquisition Proposal are demonstrably available and the
Acquisition Proposal is not subject to any due diligence
condition other than confirmatory due diligence;
(B) the Board of Directors has determined in good faith (after
receiving the advice of its financial advisors that is
reflected in the minutes of the Board of Directors) to be a
commercially feasible transaction that could be carried out
within a time frame that is reasonable in the circumstances
and would, if consummated in accordance with its terms,
result in a transaction demonstrably superior to the
Arrangement from a financial point of view to the
Shareholders; and
(C) after consultation with its financial advisors, and after
receiving advice of outside counsel that is reflected in the
minutes of the Board of Directors, the Board of Directors
concludes in good faith such action is necessary for the
Board of Directors to discharge properly its fiduciary
duties under applicable law;
(any such Acquisition Proposal that meets such requirements being
referred to herein as a "SUPERIOR PROPOSAL"), provided that the
Corporation has complied with Sections 3.2(c) and (d) in respect
of the Acquisition Proposal;
(ii) complying with Securities Laws relating to the provision of
directors' circulars and making appropriate disclosure with
respect thereto to Shareholders; and
(iii) accepting, recommending, approving or implementing any Superior
Proposal if the Corporation has complied with Sections 3.2(c) and
(d) in respect of the Superior Proposal and prior to such
acceptance, recommendation, approval or implementation:
(A) after consultation with its financial advisors, and after
receiving advice of outside counsel that is reflected in the
minutes of the Board of Directors, the Board of Directors
concludes in good faith such action is necessary for the
Board of Directors to discharge properly its fiduciary
duties under applicable law; and
(B) in arriving at such conclusion, the Board of Directors gives
consideration to any amendment proposed by Acquiror in
writing in the three Business Day period referred to in
Section 3.2(d); and
the Corporation concurrently pays the fee provided in
Section 4.1 to Acquiror.
(b) The Corporation shall, and shall direct and use reasonable efforts to
cause its officers, directors, employees, representatives and agents
to, immediately cease and cause to be terminated any existing
discussions or negotiations with any parties (other than Acquiror or an
affiliate of Acquiror) with respect to any potential Acquisition
Proposal. To the extent not already done so, the Corporation shall
immediately close any and all data rooms which may have been opened.
The Corporation agrees not to waive, in whole or in part, or release,
in whole or in part, any third party from, or consent to any action
pursuant to, any confidentiality or standstill obligation to which the
Corporation and such third party is a party except in respect of a
Superior Proposal in accordance with Section 3.2(d). The Corporation
shall immediately request the return or destruction of all confidential
non-public information provided to any third parties who have entered
into a confidentiality agreement with the Corporation relating to a
potential Acquisition Proposal, shall use all reasonable efforts to
ensure that such requests are honoured and shall immediately advise
Acquiror orally and in writing of any responses or action (actual or
19
threatened) by any recipient of such request which could hinder,
prevent, delay or otherwise adversely affect the completion of the
Arrangement.
(c) The Corporation shall immediately notify Acquiror of any Acquisition
Proposal (including, without limitation any amended, supplemented,
replaced or renewed Acquisition Proposal previously made) or any
request for non-public information relating to the Corporation or any
of its Subsidiaries or for access to the properties, books or records
of the Corporation or any Subsidiary by any Person or other entity or
group that informs the Corporation or such Subsidiary that it is
considering making, or has made, an Acquisition Proposal. Such notice
to Acquiror shall be made, from time to time, orally and in writing,
and shall indicate such details of the proposal, inquiry or contact
known to such person as Acquiror may reasonably request including,
without limitation, the identity of the Person or other entity or group
making such proposal, inquiry or contact and shall include a copy of
any written form of Acquisition Proposal (all of which information
shall be subject to the provisions of the Confidentiality Agreement as
if it were Confidential Information as referred to in that agreement).
(d) If the Board of Directors determines that an Acquisition Proposal
constitutes a Superior Proposal pursuant to Section 3.2(a), the
Corporation shall give immediate notice of such determination to the
Acquiror (together with a copy of advice of outside counsel that is
reflected in the minutes of the Board of Directors, referred to in
Section 3.2(a)) and shall give Acquiror not less than three Business
Days advance notice of any action to be taken by the Board of Directors
to withdraw, modify or change any recommendation regarding the
Arrangement or to enter into any agreement to implement the Superior
Proposal, and provide to Acquiror the right, during such three Business
Days, to advise the Board of Directors that Acquiror will, within such
period, announce its intention to, and, as soon as practicable in the
circumstances and, in any event, within three Business Days of such
announcement, amend the terms of the Arrangement to provide that the
holders of Shares shall, pursuant to the Arrangement as amended,
receive a value per Share equal to or greater than the value per Share
provided in the Superior Proposal. If Acquiror so advises the Board of
Directors and so amends the Arrangement, the Board of Directors shall
not withdraw, modify or change any recommendation with respect to the
Arrangement, as so amended, and neither the Corporation nor the Board
of Directors shall take any action to accept, recommend, approve or
implement the Superior Proposal, including, without limitation, any
release of the party making the Superior Proposal from any standstill
or confidentiality obligation, any further consideration or negotiation
of the Superior Proposal or entry into of any agreement regarding the
Superior Proposal and the Corporation agrees to amend this Agreement to
provide for the Arrangement as so amended.
(e) If the Board of Directors receives a request for non-public information
from a party who has made or is considering making an unsolicited bona
fide Acquisition Proposal and the Board of Directors determines that
such Acquisition Proposal constitutes a Superior Proposal pursuant to
Section 3.2(a), then, and only in such case, the Corporation may,
subject to the execution of a confidentiality agreement substantially
similar to the Confidentiality Agreement, provide such party with
access to information regarding the Corporation provided that the
Corporation complies with its obligations pursuant to Section 3.2(c),
sends a copy of any such confidentiality agreement to Acquiror
immediately upon its execution and provides copies to Acquiror of any
information provided to such party (that has not been previously
provided to Acquiror) concurrently with its provision to such party.
(f) The Corporation shall ensure that the officers, directors and employees
of the Corporation and its Subsidiaries and any investment bankers or
other advisors or representatives retained by the Corporation are aware
of the provisions of this Section, and the Corporation shall be
responsible for any breach of this Section 3.2 by such investment
bankers, advisors or other representatives.
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3.3 NOTICE OF MATERIAL CHANGE
(a) From the date hereof until the earlier of the Effective Time and the
date this Agreement is terminated pursuant to its terms, the
Corporation shall promptly notify Acquiror in writing of:
(i) any material adverse change (actual, anticipated, contemplated or
threatened) in the business, affairs, operations, assets,
liabilities (contingent or otherwise) or capital of the
Corporation and its Subsidiaries, considered as a whole;
(ii) any change in information relating to any representation or
warranty of the Corporation set forth in this Agreement which is
or may be of such a nature as to render any such representation
or warranty misleading or untrue in a material respect;
(iii) any material fact that arises and which would have been required
to be stated herein or disclosed to Acquiror had such fact arisen
on or prior to the date of this Agreement;
(iv) any claim, action, proceeding or investigation pending or, to the
knowledge of the Corporation, threatened referred to in Section
7.1(n) or any basis for any such claim, action, proceeding or
investigation; and
(v) any claim under policies of insurance referred to in Section
7.1(p).
The Corporation shall in good faith discuss with Acquiror any change in
circumstances (actual, anticipated, contemplated or, to the knowledge
of the Corporation, threatened), financial or otherwise, which is of
such a nature that there may be a reasonable question as to whether
notice is required to be given pursuant to this Section.
(b) From the date hereof until the earlier of the Effective Time and the
date this Agreement is terminated pursuant to its terms, Acquiror shall
promptly notify the Corporation in writing of any change in information
relating to any representation or warranty of Acquiror set forth in
this Agreement which is or may be of such a nature as to render any
such representation or warranty misleading or untrue in a material
respect. Acquiror shall in good faith discuss with the Corporation any
change in circumstances (actual, anticipated, contemplated or, to the
knowledge of Acquiror, threatened), financial or otherwise, which is of
such a nature that there may be a reasonable question as to whether
notice is required to be given pursuant to this Section.
3.4 ACCESS TO INFORMATION.
Subject to the Confidentiality Agreement, upon reasonable notice, the
Corporation shall, and shall cause each of its Subsidiaries to, afford
Acquiror's officers, employees, counsel, accountants and other authorized
representatives and advisors ("REPRESENTATIVES") reasonable access, during
normal business hours from the date hereof and until the earlier of the
Effective Time and the date this Agreement is terminated pursuant to its terms,
to its facilities (including the ability to conduct reasonable environmental
tests in respect of any of the properties of the Corporation or its
Subsidiaries, at Acquiror's cost) properties, books, contracts and records as
well as to its management personnel, and, during such period, the Corporation
shall, and shall cause such of its Subsidiaries to, furnish promptly to Acquiror
all information concerning its business, properties and personnel as Acquiror
may reasonably request upon reasonable notice to the Chief Financial Officer of
the Corporation, provided that the Acquiror shall make reasonable efforts to
minimize the number of Representatives attending at the Corporation's offices
and facilities as to work cooperatively with the Acquiror to minimize
disruptions in the business of the Corporation.
21
ARTICLE 4
FEES AND OTHER ARRANGEMENTS
4.1 FEES.
Provided Acquiror has not breached in any material respect its
representations, warranties or covenants in this Agreement, if at any time after
the execution of this Agreement:
(a) the Board of Directors has withdrawn, modified or changed, prior to the
Effective Date, any of its recommendations or determinations referred
to in Section 2.6 in a manner adverse to Acquiror or shall have
resolved to do so;
(b) the Board of Directors shall have failed to reaffirm its recommendation
of the Arrangement by press statement within three Business Days after
the expiry of the period set forth in Section 3.2(d) for Acquiror to
advise whether it will amend the terms of the Arrangement, in the case
of a Superior Proposal, and three Business Days after the public
announcement or commencement of any other Acquisition Proposal;
(c) the Board of Directors recommends that any of its Shareholders deposit
their Shares under, vote in favour of, or otherwise accept, an
Acquisition Proposal;
(d) the Corporation enters into any agreement, commitment or understanding
with any Person or other entity or group with respect to an Acquisition
Proposal prior to the Closing, excluding a confidentiality agreement
entered into in compliance with Section 3.2(e);
(e) any Acquisition Proposal is publicly announced or made to the
Shareholders or to the Corporation; on the date of the Shareholder
Meeting any such Acquisition Proposal has either been accepted or has
not expired or been withdrawn; the Shareholders do not approve the
Arrangement at the Shareholder Meeting; this Agreement is terminated
pursuant to Section 10.1(b); and either (within 12 months of such
termination) such Acquisition Proposal is consummated or (within 6
months of such termination) an Acquisition Proposal is consummated; or
(f) at any time prior to the Effective Time, the Corporation has breached
any of its representations, warranties, agreements or obligations
herein which breach would result in the failure to satisfy one or more
conditions set forth in Section 9.2(a) or (b) and such breach is: (i)
in relation to Section 3.2; (ii) an intentional breach by the
Corporation; (iii) not curable; or (iv) curable, but is not cured
within 5 days after notice thereof has been received by the
Corporation;
(each of the above being a "FEE EVENT"), then the Corporation shall pay to
Acquiror $17 million in immediately available funds to an account designated by
Acquiror within one Business Day and interest thereon at a rate of 8% per annum,
if payment is not made when due after the first to occur of the events described
above, provided that the Corporation shall only be obligated to make one payment
pursuant to this Section 4.1.
Any payment pursuant to this Section shall be without prejudice to the
rights or remedies available to Acquiror upon the breach of any provision of
this Agreement.
22
ARTICLE 5
COVENANTS OF ACQUIROR
5.1 OFFICERS' AND DIRECTORS' INSURANCE
Acquiror agrees that for the entire period from the Effective Time until
six years after the Effective Time, Acquiror will cause the Corporation or any
successor to the Corporation to maintain the Corporation's current directors'
and officers' insurance policy or an equivalent policy, subject in either case
to terms and conditions no less advantageous to the directors and officers of
the Corporation than those contained in the policy in effect on the date hereof
("EQUIVALENT INSURANCE"), providing coverage on a "trailing" or "run-off" basis
for all present directors and officers of the Corporation, covering claims made
prior to or within six years after the Effective Time.
5.2 INDEMNITIES
Acquiror agrees that, if the Arrangement is completed, it shall cause each
of the Corporation and its Subsidiaries to fulfil their obligations pursuant to
indemnities provided or available to present officers and directors of the
Corporation and its Subsidiaries pursuant to the provisions of the articles,
bylaws or similar constating documents of the Corporation and its Subsidiaries,
applicable corporate legislation and the written indemnity agreements between
the Corporation or its Subsidiaries and its present directors and officers,
copies of which are attached to the Disclosure Letter.
5.3 EMPLOYMENT AGREEMENTS
Acquiror covenants and agrees, and after the Effective Time Acquiror will
cause the Corporation and any successor to the Corporation, to honour and comply
with the terms of those existing employment agreements, termination, severance
and retention plans or policies of the Corporation which the Corporation has
disclosed to Acquiror in the Disclosure Letter including, without limitation,
the Employee Obligations.
5.4 THIRD PARTY BENEFICIARIES
The provisions of Sections 5.1, 5.2 and 5.3 are (i) intended for the
benefit of all present directors and officers of the Corporation and its
Subsidiaries, as and to the extent applicable in accordance with their terms,
and shall be enforceable by each of such persons and each such person's heirs,
executors, administrators and other legal representatives (collectively, the
"THIRD PARTY BENEFICIARIES") and the Corporation shall hold the rights and
benefits of Sections 5.1, 5.2 and 5.3 in trust for and on behalf of the Third
Party Beneficiaries and the Corporation hereby accepts such trust and agrees to
hold the benefit of and enforce performance of such covenants on behalf of the
Third Party Beneficiaries, and (ii) are in addition to, and not in substitution
for, any other rights that the Third Party Beneficiaries may have by contract or
otherwise.
5.5 AVAILABILITY OF FUNDS
At all times from the date of this Agreement to the Effective Time,
Acquiror will not take any action which would or could result in the
representation and warranty set out in Section 8.1(j) being untrue or inaccurate
in any material respect.
5.6 AVAILABILITY OF PERSONNEL
Acquiror agrees to make appropriate personnel available to the Corporation
on a timely basis for consultation, meetings or discussions with the Corporation
as contemplated by the provisions of this Agreement including, without
limitation, Section 3.1(e)(iii). Acquiror agrees to designate in writing to the
Corporation those persons upon whom the Corporation may rely in respect of any
consent, approval or authorization required of Acquiror pursuant to this
Agreement.
23
ARTICLE 6
MUTUAL COVENANTS
6.1 CONSULTATION
Acquiror and the Corporation agree to consult with each other in issuing
any press releases or otherwise making public statements with respect to the
Arrangement and in making any filings with any federal, provincial or state
governmental or regulatory agency or with any securities exchange with respect
thereto. Each party shall use all commercially reasonable efforts to enable the
other party to review and comment on all such press releases prior to release
thereof.
6.2 OTHER FILINGS
Acquiror and the Corporation shall, as promptly as practicable hereafter,
prepare and file any filings required under the Competition Act (Canada), the
Investment Canada Act (Canada), any Securities Laws, the rules of The Toronto
Stock Exchange and the American Stock Exchange, the United States Securities
Exchange Act of 1934, as amended, state securities or "blue sky" laws of the
states of the United States, as amended, or any other applicable law or rule of
applicable stock exchange relating to the transactions contemplated in this
Agreement.
6.3 ADDITIONAL AGREEMENTS
Subject to the terms and conditions herein provided and to fiduciary
obligations under applicable law, each of the parties hereto agrees to use all
commercially reasonable efforts to take, or cause to be taken, all action and to
do, or cause to be done, all things necessary, proper or advisable to consummate
and make effective as promptly as practicable the transactions contemplated by
this Agreement and the Arrangement and to cooperate with each other in
connection with the foregoing, including using commercially reasonable efforts
(i) to obtain all necessary waivers, consents and approvals from other parties
to material agreements, leases and other contracts or agreements (including,
without limitation, the agreement of any Persons as may be required pursuant to
any agreement, arrangement or understanding relating to the Corporation's or any
of its Subsidiaries' operations), (ii) to obtain all necessary consents,
approvals and authorizations as are required to be obtained under any federal,
provincial or foreign law or regulations, (iii) to defend all lawsuits or other
legal proceedings challenging this Agreement or the Arrangement or the
consummation of the transactions contemplated hereby or thereby, (iv) to cause
to be lifted or rescinded any injunction or restraining order or other order
adversely affecting the ability of the parties to consummate the transactions
contemplated hereby or by the Arrangement, (v) to effect all necessary
registrations and other filings and submissions of information requested by
governmental authorities and (vi) to fulfil all conditions and satisfy all
provisions of this Agreement and the Arrangement. For purposes of the foregoing,
the obligation to use "commercially reasonable efforts" to obtain waivers,
consents and approvals to loan agreements, leases and other contracts shall not
include any obligation to agree to a materially adverse modification of the
terms of such documents or to prepay or incur additional material obligations to
such other parties.
ARTICLE 7
REPRESENTATIONS AND WARRANTIES OF THE CORPORATION
7.1 REPRESENTATIONS
The Corporation hereby represents and warrants to Acquiror (and
acknowledges that Acquiror is relying upon such representations and warranties
in connection with entering into this Agreement):
(a) Organization
The Corporation and each of its Subsidiaries has been duly incorporated
or formed under applicable law, is validly existing and has full
corporate or legal power and authority to own its
24
properties and conduct its business as presently owned and conducted.
The Corporation and each of its Subsidiaries is duly registered to do
business and is in good standing in each jurisdiction in which the
character of its properties, owned or leased, 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 the business, affairs, operations, assets, prospects
or financial condition of the Corporation and its Subsidiaries, taken
as a whole, or on the ability of the Corporation to consummate the
transactions contemplated hereby. All of the outstanding shares of
capital stock and other ownership interests of the Subsidiaries are
validly issued, fully paid and non-assessable and all such shares and
other ownership interests owned directly or indirectly by the
Corporation are, except in connection with the Corporation's existing
banking arrangements, owned free and clear of all material liens,
claims or encumbrances, and there are no outstanding options, rights,
entitlements, understandings or commitments (contingent or otherwise)
regarding the right to acquire any shares of capital stock or other
ownership interests in any of its Subsidiaries. The Corporation has no
Subsidiaries except those Persons listed in Schedule D hereto.
(b) Capitalization
As of the date hereof, the authorized capital of the Corporation
consists of an unlimited number of Shares. As of the date hereof, there
are only 26,179,861 Shares issued and outstanding. As of the date
hereof, up to a maximum of 741,630 Shares may be issued pursuant to
outstanding in-the-money Options, up to a maximum of 77,000 Shares may
be issued pursuant to outstanding Options that are not in-the-money,
only 2,500 Shares may be issued pursuant to Share Purchase Rights in
each case at an exercise price less than $15.50 per Share and 500,000
Shares may be issued pursuant to the outstanding Warrants at an
exercise price of $9.50 and the details of such Options, Share Purchase
Rights and Warrants are as set forth in the Disclosure Letter. No
further entitlements to acquire Shares have been earned pursuant to the
agreements referred to in the definition of Share Purchase Rights and
the Corporation will not prior to the Effective Time take any step that
will entitle the other party to either such agreement to acquire
further Shares. Except as described in the immediately preceding
sentence, there are no other issued or outstanding securities of the
Corporation or (other than those owned by the Corporation) its
Subsidiaries and, without limitation, there are no options, warrants,
conversion privileges or other rights, agreements, arrangements or
commitments obligating the Corporation or any of its Subsidiaries to
issue or sell any shares of any capital stock of the Corporation or any
of its Subsidiaries (other than rights pursuant to the agreements
referred to in the definition of Share Purchase Rights to earn further
entitlements to acquire Shares) or securities or obligations of any
kind convertible into or exchangeable for any shares of capital stock
of the Corporation or any of its Subsidiaries, nor, is there
outstanding any stock appreciation rights, phantom equity or similar
rights, agreements, arrangements or commitments based upon the book
value, income or any other attribute of the Corporation or any of its
Subsidiaries.
(c) Authority
The Corporation has the requisite corporate power and authority to
enter into this Agreement and to perform its obligations hereunder and
to complete the transactions contemplated hereby. The execution and
delivery of this Agreement by the Corporation and the consummation by
the Corporation of the transactions contemplated by this Agreement have
been duly authorized by the Board of Directors and no other corporate
proceedings on the part of the Corporation are necessary to authorize
this Agreement or the transactions contemplated hereby other than the
approval of the Shareholders and the holders of Options, Warrants or
Share Purchase Rights and the approval of the Court as provided in this
Agreement. This Agreement has been duly executed and delivered by the
Corporation and constitutes a valid and binding obligation of the
Corporation, enforceable against the Corporation in accordance with its
terms subject to bankruptcy, insolvency, reorganization, fraudulent
transfer, moratorium and other laws relating to
25
or affecting creditors' rights generally, to general principles of
equity and the qualifications that the consummation of the Arrangement
is subject to approval of Shareholders and the Court as provided in
this Agreement. Except as disclosed in the Disclosure Letter, the
execution and delivery by the Corporation of this Agreement and
performance by it of its obligations hereunder and the completion of
the Arrangement and the transactions contemplated thereby, will not:
(i) result in a violation or breach of, require any consent to be
obtained under or give rise to any termination rights under any
provision of:
(A) its or any of its Subsidiaries' certificate of
incorporation, articles, by-laws or other charter documents,
including any unanimous shareholder agreement or any other
agreement or understanding with any party holding an
ownership interest in any Subsidiary;
(B) any law, regulation, order, judgment or decree; or
(C) any Material Contract;
(ii) give rise to any right of termination or acceleration of
indebtedness, or cause any indebtedness to come due before its
stated maturity or cause any available credit to cease to be
available; or
(iii) result in the imposition of any encumbrance, charge or lien upon
any of its assets or the assets of any Subsidiary, or restrict,
hinder, impair or limit the ability of the Corporation or any
Subsidiary to carry on the business of the Corporation or any
Subsidiary as and where it is now being carried on or as and
where it may be carried on in the future;
result (alone or together with other adverse changes) in a Material
Adverse Change.
(d) Impediments
Other than in connection with or in compliance with the provisions of
Securities Laws and the rules of The Toronto Stock Exchange and the
receipt of the applicable approvals under the Competition Act and the
Investment Canada Act, (i) there is no legal restrictions to the
consummation by the Corporation of the transactions contemplated by
this Agreement or the performance by the Corporation of its obligations
hereunder and (ii) no filing or registration by the Corporation with,
or authorization, consent or approval of, any domestic or foreign
public body or authority is necessary in connection with the
consummation of the Arrangement, except for such filings or
registrations which, if not made, or such authorizations, consents or
approvals, which, if not received, would not have a material adverse
effect on the ability of the Corporation to perform its obligations
hereunder.
(e) Public Record
As of their respective dates, the documents and materials comprising
the Public Record (including all exhibits and schedules thereto and
documents incorporated by reference therein) 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 under which they were made, not misleading,
and complied in all material respects with all applicable legal and
stock exchange requirements. The Corporation shall deliver to Acquiror
as soon as they become available true and complete copies of any report
or statement filed by it with Securities Authorities or provided to its
Shareholders subsequent to the date of this Agreement. As of their
respective dates, such reports and statements (excluding any
information therein provided by Acquiror, as to which the Corporation
makes no representation) will 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 under which they are made, not misleading and will comply
in all material respects with the requirements of applicable law and
stock exchange rules. The consolidated financial statements
26
of the Corporation issued by the Corporation or to be included in such
reports and statements (excluding any information therein provided by
Acquiror, as to which the Corporation makes no representation) will be
prepared in accordance with generally accepted accounting principles
applicable in Canada (except as otherwise indicated in such financial
statements and the notes thereto or, in the case of audited statements,
in the related report of the auditor), and will present fairly the
consolidated financial position, results of operations and changes in
financial position of the Corporation 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 audit adjustments).
(f) Books and Records
All financial transactions of the Corporation and its Subsidiaries have
been recorded in the financial books and records of the Corporation and
each Subsidiary, as applicable, in accordance with good business
practice, and such financial books and records accurately reflect the
basis for the financial condition and the revenues, expenses and
results of operations of the Corporation and its Subsidiaries shown in
the Financial Statements. The Corporation and its Subsidiaries have not
entered into and are not parties to any material financial transactions
which are not reflected in the Financial Statements. No information,
records or systems pertaining to the operation or administration of the
business of the Corporation and its Subsidiaries are in the possession
of, recorded, stored, maintained by or otherwise dependent upon any
Person other than the Corporation and its Subsidiaries, other than
information relating to payroll services which are handled by a
contractor and corporate minute books held by outside counsel.
(g) Absence of Changes
As of the date of this Agreement, since December 31, 2001 to the date
of this Agreement and except as has been publicly disclosed in any
document filed with the
Alberta Securities Commission: (i) the
Corporation, the Subsidiaries and the Predecessor Corporations have
conducted their respective businesses only in the ordinary course, (ii)
no extraordinary liability or obligation of any nature (whether
absolute, accrued, contingent or otherwise) material to the Corporation
(on a consolidated basis) has been incurred, and (iii) there has not
been any (alone or together with other adverse changes) Material
Adverse Change.
(h) Employment Agreements and Benefit Plans
Except as set forth in the Disclosure Letter, neither the Corporation
nor any Subsidiary is a party to any written or oral policy, agreement,
obligation or understanding providing for severance or termination
payments to, or any employment agreement or, without limitation, any
Employee Obligation, with, any person. All benefit plans covering
active, former or retired employees, officers or Directors of the
Corporation or any of its Subsidiaries are listed in the Disclosure
Letter; the Corporation has made available to Acquiror true and
complete copies of all of the respective terms thereof and: each such
plan has been maintained and administered in material compliance with
its terms and is, to the extent required by applicable law or contract,
fully funded without any deficit or unfunded actuarial liability or
adequate provision therefor having been made; all required employer
contributions in respect of such plans have been made; all such plans
are in compliance with applicable laws, rules, regulations and policies
(including those as to registration or other qualification); to the
knowledge of the Corporation there are no pending, anticipated or
threatened claims against or involving any of the plans; and all
contributions, reserves or premium payments required or provided for
have been made.
(i) Disclosure
As of the date of this Agreement, there is no information known to the
officers of the Corporation regarding any event, circumstance or action
taken or failed to be taken which may reasonably be expected to result
in (alone or together with other adverse changes) a Material Adverse
Change.
27
(j) Material Contracts
The Corporation shall have provided true and complete copies of all
Material Contracts relating to the Corporation's and the Subsidiaries'
businesses prior to the mailing of the Proxy Circular to the
Shareholders and all Material Contracts are listed in the Disclosure
Letter. Except as disclosed in the Disclosure Letter, such agreements
do not contain any "change of control" provisions which would be
triggered or effected by the Arrangement. Each of the Corporation and
its Subsidiaries has performed in all material respects the obligations
required to be performed by it and is entitled to all benefits under
the Material Contracts. None of the Corporation or its Subsidiaries has
violated or breached, in any material respect, any of the terms or
conditions of the Material Contracts and there exists no default or
event of default or event, occurrence, condition or act which, with the
giving of notice, the lapse of time or the happening of any other event
or condition, would become a default or event of default by the
Corporation or any of its Subsidiaries under any of the Material
Contracts. Except as disclosed in the Disclosure Letter, none of the
Corporation or the Subsidiaries is a party to or bound by any agreement
containing any standstill, restrictive covenant or similar provision
that would restrict or limit its right to acquire or hold any asset,
carry on any business or activity, solicit business from any Person or
in any geographical area, or otherwise to conduct its business as it
may determine.
(k) Financial Statements
The Financial Statements were prepared in accordance with generally
accepted accounting principles in Canada consistently applied, and
fairly present the consolidated financial condition of the Corporation
at the respective dates indicated and the results of operations of the
Corporation (on a consolidated basis) for the periods covered. Except
(a) as disclosed or reflected in the Financial Statements or (b)
liabilities and obligations (i) incurred in the ordinary course of
business and consistent with past practice or (ii) pursuant to the
terms of this Agreement, neither the Corporation nor any of its
Subsidiaries has incurred any liabilities of any nature, whether
accrued, contingent or otherwise (or which would be required by
generally accepted accounting principles applicable in Canada to be
reflected on a consolidated balance sheet of the Corporation) that have
constituted or would be reasonably likely to constitute (alone or
together with other adverse changes) a Material Adverse Change. Without
limiting the generality of the foregoing provisions of this Section and
except as set forth in the Disclosure Letter, the Corporation has not
committed to make any capital expenditures, nor have any capital
expenditures been authorized by the Corporation at any time since
December 31, 2001, except for capital expenditures, made in the
ordinary and regular course of business of the Corporation and not
exceeding $100,000 individually and $500,000 in the aggregate.
(l) Employee Obligations, Etc.
The Employee Obligations (all of which are listed in the Disclosure
Letter) do not exceed an aggregate of $750,000 (excluding obligations
pursuant to the agreement dated January 4, 2000 between the Corporation
and ▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇).
(m) Compliance with Law
Each of the Corporation, its Subsidiaries and the Predecessor
Corporations has complied with and is in compliance with all laws and
regulations applicable to the operation of its business, except where
such non-compliance, considered individually or in the aggregate, would
not constitute (alone or together with other adverse changes) a
Material Adverse Change and would not materially affect the
consummation of the transactions contemplated hereby or the ability of
the Corporation to perform its obligations hereunder.
28
(n) Litigation, etc.
Except as set forth in the Disclosure Letter, at the date of this
Agreement, there is no claim, action, proceeding or investigation
pending or, to the knowledge of the Corporation threatened against or
relating to the Corporation or any of its Subsidiaries or affecting any
of their properties or assets before any court or governmental or
regulatory authority or body, nor is the Corporation at the date of
this Agreement aware of any basis for any such claim, action,
proceeding or investigation. Neither the Corporation nor any of its
Subsidiaries is subject to any outstanding order, writ, injunction or
decree that has had or is reasonably likely to have a material adverse
effect or prevent or materially delay consummation of the transactions
contemplated by this Agreement or the Arrangement.
(o) Environmental
(i) Whenever used in this Agreement, the following words and terms
shall have the indicated meanings.
(A) "ENVIRONMENTAL LAWS" means all applicable statutes,
regulations, ordinances, by-laws, and codes and all
international treaties and agreements, now in existence in
Canada (whether federal, provincial or municipal) relating
to the protection and preservation of the environment,
occupational health and safety, product safety, product
liability or Hazardous Substances, including, without
limitation, the Environmental Protection and Enhancement Act
(
Alberta), as amended to the date hereof (the "AEPEA"), and
the Canadian Environmental Protection Act, as amended to the
date hereof (the "CEPA").
(B) "ENVIRONMENTAL PERMITS" includes all orders, permits,
certificates, approvals, consents, registrations and
licences issued by any competent authority under
Environmental Laws.
(C) "HAZARDOUS SUBSTANCE" means, collectively, any contaminant
(as defined in the AEPEA), toxic substance (as defined in
the CEPA), dangerous goods (as defined in the Transportation
of Dangerous Goods Act (Canada), as amended to the date
hereof) or pollutant or any other substance that when
released to the natural environment is likely to cause, at
some immediate or future time, material harm or degradation
to the natural environment or material risk to human health.
(D) "RELEASE" means any release, spill, leak, emission,
discharge, ▇▇▇▇▇, dumping, escape or other disposal that is
or has been made in contravention of any Environmental Laws.
(ii) The operation of the business of the Corporation and each of its
Subsidiaries, the property and assets owned or used by the
Corporation and each of its Subsidiaries and the use, maintenance
and operation thereof have been and are in compliance with all
Environmental Laws except where non-compliance would not
reasonably be expected to have a material adverse effect on the
Corporation and its Subsidiaries, taken as a whole. The
Corporation and each of its Subsidiaries have complied with all
reporting and monitoring requirements under all Environmental
Laws except where non-compliance would not reasonably be expected
to have a material adverse effect on the Corporation and its
Subsidiaries, taken as a whole. The Corporation has not received
any notice of any non-compliance with any Environmental Laws or
Environmental Permits, and the Corporation has never been
convicted of an offence for non-compliance with any Environmental
Laws or Environmental Permits or been fined or otherwise
sentenced or settled such prosecution short of conviction, except
for any such non-compliance that would not reasonably be expected
to have a material adverse effect on the Corporation and its
Subsidiaries taken as a whole.
29
(iii) The Corporation and each of its Subsidiaries has obtained all
Environmental Permits necessary to conduct its business and to
own, use and operate its properties and assets (except where the
failure to obtain any such permit would not reasonably be
expected to have a material adverse effect on the Corporation and
its Subsidiaries, taken as a whole) and the operation of the
business of the Corporation and each of its Subsidiaries, the
property and assets owned by the Corporation and each of its
Subsidiaries and the use, maintenance and operation thereof have
been and are in compliance with all Environmental Permits (except
where non-compliance would not reasonably be expected to have a
material adverse effect on the Corporation and its Subsidiaries,
taken as a whole).
(iv) The Corporation and each of its Subsidiaries has, at all times,
used, generated, treated, stored, transported, disposed of or
otherwise handled its Hazardous Substances in compliance with all
Environmental Laws and Environmental Permits (except where
non-compliance would not reasonably be expected to have a
material adverse effect on the Corporation and its Subsidiaries,
taken as a whole).
Neither the Corporation nor any of its Subsidiaries is, and, to the
knowledge of the Corporation, there is no reasonable basis upon which
the Corporation or any of its Subsidiaries could become, responsible
for any material clean-up or corrective action under any Environmental
Laws. All audits, assessments and studies with respect to environmental
matters relating to the Corporation or any of its Subsidiaries have
been listed in the Disclosure Letter. Prior to the Effective Time, the
Corporation shall allow the Acquiror to conduct at its expense such
audits, assessments and studies deemed necessary by the Acquiror to
satisfy itself of the status of the environmental matters and accuracy
of the representations and warranties contained in this Agreement.
(p) Insurance
Policies of insurance in force as of the date hereof naming the
Corporation or any of its Subsidiaries as an insured adequately cover
all risks reasonably and prudently foreseeable in the operation and
conduct of the business of the Corporation and its Subsidiaries as
would be customary in respect of the businesses carried on by the
Corporation and all such policies of insurance are as listed in the
Disclosure Letter. As of the date of this Agreement, there are no
outstanding claims under any such policies of insurance, except as set
forth in the Disclosure Letter.
(q) Tax Matters
(i) DEFINITIONS. For purposes of this Agreement, the following
definitions shall apply:
(A) The term "TAXES" shall mean all taxes, however denominated,
including any interest, penalties or other additions that
may become payable in respect thereof, imposed by any
federal, territorial, 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 income taxes and
provincial income taxes), payroll and employee withholding
taxes, unemployment insurance, social insurance taxes, sales
and use taxes, ad valorem 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, and other
obligations of the same or of a similar nature to any of the
foregoing, which the Corporation or any of its Subsidiaries
is required to pay, withhold or collect.
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(B) The term "RETURNS" shall mean all reports, estimates,
declarations of estimated tax, information statements and
returns relating to, or required to be filed in connection
with, any Taxes.
(ii) RETURNS FILED AND TAXES PAID. All Returns required to be filed
prior to the date hereof by or on behalf of the Corporation or
any Subsidiaries have been duly filed on a timely basis and such
Returns are true, complete and correct. All taxes shown to be
payable on the Returns or on subsequent assessments or
reassessments with respect thereto have been paid in full or
objected to on a timely basis, and no other Taxes are payable by
the Corporation or any of its Subsidiaries with respect to items
or periods covered by such Returns.
(iii) TAX RESERVES. The Corporation has paid or provided adequate
accruals in its financial statements for Taxes, including income
taxes and related future taxes, in conformity with generally
accepted accounting principles applicable in Canada.
(iv) RETURNS FURNISHED. For all periods ending on and after January
2, 2000, Acquiror has been furnished by the Corporation true and
complete copies of all federal and provincial income tax returns
for the Corporation or any of its Subsidiaries, including the tax
return for Bonus Well Servicing Partnership for the year ended
January 1, 2001 which will be filed prior to June 30, 2002.
(v) TAX DEFICIENCIES; AUDITS; STATUTES OF LIMITATIONS. Except for
existing objections disclosed in the Disclosure Letter: (i) no
deficiencies exist or have been asserted with respect to Taxes of
the Corporation or any of its Subsidiaries; (ii) neither the
Corporation nor any of its Subsidiaries is a party to any action
or proceeding for assessment or collection of Taxes, nor has such
event been asserted or threatened against the Corporation or any
of its Subsidiaries or any of their respective assets which, if
successful, would constitute (alone or together with other
adverse changes) a Material Adverse Change; and (iii) no waiver
or extension of any statute of limitations is in effect with
respect to Taxes or Returns of the Corporation or any Subsidiary.
(r) Pension and Termination Benefits
The Corporation has provided adequate accruals in its financial
statements (or such amounts are fully funded) for all pension or other
employee benefit obligations of the Corporation arising under or
relating to each of the pension or retirement income plans or other
employee benefit plans or agreements or policies maintained by or
binding on the Corporation or any of its Subsidiaries as well as for
any other payment required to be made by the Corporation in connection
with the termination of employment or retirement of any employee of the
Corporation or any of its Subsidiaries.
(s) Reports
All forms, reports, schedules, statements and other documents filed by
the Corporation in compliance, or purported compliance, with Securities
Laws, at the time of filing, (i) did not contain any misrepresentation
and (ii) complied in all material respects with the applicable
requirements of the Securities Laws.
(t) United States Relationships
The Corporation's shares are not traded on a United States national
securities exchange or quoted on the NASDAQ Stock Market in the United
States nor are any of its securities registered under the United States
Securities Exchange Act of 1934, as amended, or any state securities
laws. To the Corporation's knowledge and as at the date hereof, the
level of ownership by U.S. Holders of Shares is less than 40% of the
outstanding Shares. The term "U.S. HOLDER" means any securityholder
resident in the United States as of the date hereof.
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(u) Indebtedness
As at the date of this Agreement, the Corporation's consolidated
indebtedness does not exceed $60,000,000 and its working capital as at
December 31, 2001 was $13,600,000 as set out in the Financial
Statements. Except as disclosed in the Disclosure Letter, all of the
Corporation's indebtedness may be paid out and discharged on notice of
30 days or less without incurring any penalties, bonuses or
acceleration payments.
(v) Real Property
Except such property as is described in the Disclosure Letter (the
"REAL PROPERTY"), the Corporation does not own or lease and has not
agreed to acquire or lease any real property or interest in real
property other than the Real Property. The Corporation has the
exclusive right to possess, use and occupy, and as applicable, has good
and marketable title in fee simple to, all the Real Property, free and
clear of all Encumbrances, easements or other restrictions of any kind
other than as set forth in the Disclosure Letter. All buildings,
structures, improvements and appurtenances situated on the Real
Property are in good operating condition and in a state of good
maintenance and repair, except as set out in the Disclosure Letter, are
adequate and suitable for the purposes for which they are currently
being used and the Corporation has adequate rights of ingress and
egress for the operation of its business in the ordinary course with
such exceptions as are not in the aggregate (alone or together with
other adverse changes) a Material Adverse Change. None of the
buildings, structures, improvements or appurtenances located on the
Real Property (or any equipment therein), nor the operation or
maintenance thereof, violates any restrictive covenant or any provision
of any federal, provincial or municipal law, ordinance, rule or
regulation, or encroaches on any property owned by others, other than
violations or encroachments that do not, individually or in the
aggregate, have a material adverse effect on the current use of such
property or on the business or financial condition of the Corporation.
(w) Confidentiality Agreements
All agreements entered into by the Corporation with Persons other than
Acquiror regarding the confidentiality of information provided to such
Persons or reviewed by such Persons with respect to any Acquisition
Proposal are in substantially the form of the Confidentiality
Agreement. The Corporation has not negotiated any Acquisition Proposal
with any Person who has not entered into such a confidentiality
agreement and has not waived any "standstill" provisions in any such
agreement.
(x) Solvency
The Corporation is not insolvent and at the time of the consummation of
the Arrangement will not be insolvent, as defined in Section 192(2) of
the Act.
7.2 INVESTIGATION.
Any investigation by Acquiror and its advisors shall not mitigate, diminish
or affect the representations and warranties of the Corporation provided
pursuant to this Agreement. Where the provisions of Section 7.1 refer to
disclosure in writing, such disclosure shall be made expressly in response to
the applicable provision and shall be signed by a senior officer of the
Corporation.
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ARTICLE 8
REPRESENTATIONS AND WARRANTIES OF ACQUIROR
8.1 REPRESENTATIONS.
Acquiror hereby represents and warrants to the Corporation (and
acknowledges that the Corporation is relying upon such representations and
warranties in connection with entering into this Agreement):
(a) Organization
Acquiror has been duly incorporated and organized, and is validly
existing, as a corporation under the laws of Delaware and has the
requisite corporate power and authority to carry on its business as it
is now being conducted.
(b) Capitalization
As of the date hereof, the authorized capital of Acquiror consists of
418,000,000 shares of stock, par value $0.10 per share, of which
400,000,000 are Acquiror Shares, 10,000,000 are shares of preferred
stock and 8,000,000 are shares of class B stock. As of February 22,
2002, there are 140,958,467 Acquiror Shares issued and outstanding. As
of February 22, 2002, up to a maximum of 45,258,089 Acquiror Shares are
reserved for issuance pursuant to stock option plans or upon exchange
or conversion of outstanding Acquiror debt securities or warrants.
Except as described in the immediately preceding sentence, there are no
other issued or outstanding securities of Acquiror or (other than those
owned by Acquiror) its Subsidiaries and, without limitation, there are
no options, warrants, conversion privileges or other rights,
agreements, arrangements or commitments obligating Acquiror or any of
its Subsidiaries to issue or sell any shares of any capital stock of
Acquiror or any of its Subsidiaries or securities or obligations of any
kind convertible into or exchangeable for any shares of capital stock
of Acquiror or any of its Subsidiaries, nor, is there outstanding any
stock appreciation rights, phantom equity or similar rights,
agreements, arrangements or commitments based upon the book value,
income or any other attribute of Acquiror or any of its Subsidiaries.
(c) Authority
Acquiror has the requisite corporate power and authority to enter into
this Agreement and to perform its obligations hereunder and to complete
the transactions contemplated hereby. The execution and delivery of
this Agreement by the Acquiror and the consummation by the Acquiror of
the transactions contemplated by this Agreement have been duly
authorized and no other corporate proceedings on the part of Acquiror
are necessary to authorize this Agreement or the transactions
contemplated hereby. This Agreement has been duly executed and
delivered by Acquiror and constitutes a valid and binding obligation of
Acquiror, enforceable against Acquiror in accordance with its terms,
subject to bankruptcy, insolvency, reorganization, fraudulent transfer,
moratorium and other laws relating to or affecting creditors' rights
generally and to general principles of equity. The execution and
delivery by Acquiror of this Agreement and performance by it of its
obligations hereunder and the completion of the Arrangement and the
transactions contemplated thereby, will not:
(i) result in a violation or breach of, require any consent to be
obtained under or give rise to any termination rights under any
provision of:
(A) its or any of its Subsidiaries' certificate of
incorporation, articles, by-laws or other charter documents,
including any unanimous shareholder agreement or any other
agreement or understanding with any party holding an
ownership interest in any Subsidiary;
33
(B) any law, regulation, order, judgment or decree; or
(C) any material contract, agreement, license, franchise or
permit to which the Acquiror or any Subsidiary is bound or
is subject or is the beneficiary;
(ii) give rise to any right of termination or acceleration of
indebtedness, or cause any indebtedness to come due before its
stated maturity or cause any available credit to cease to be
available; or
(iii) result in the imposition of any encumbrance, charge or lien upon
any of its assets or the assets of any Subsidiary, or restrict,
hinder, impair or limit the ability of Acquiror or any Subsidiary
to carry on the business of Acquiror or any Subsidiary as and
where it is now being carried on or as and where it is currently
intended to be carried on in the future;
result (alone or together with other adverse changes) in a Material
Adverse Change.
(d) Impediments
Other than in connection with or in compliance with the provisions of
Securities Laws and the rules of the American Stock Exchange and the
receipt of the applicable approvals under the Competition Act and the
Investment Canada Act, (i) there is no legal restrictions to the
consummation by the Acquiror of the transactions contemplated by this
Agreement or the performance by Acquiror of its obligations hereunder
and (ii) no filing or registration by Acquiror with, or authorization,
consent or approval of, any domestic or foreign public body or
authority is necessary in connection with the consummation of the
Arrangement, except for such filings or registrations which, if not
made, or such authorizations, consents or approvals, which, if not
received, would not have a material adverse effect on the ability of
Acquiror to perform its obligations hereunder.
(e) Public Record
As of their respective dates, the documents and materials comprising
the public record of Acquiror (including all exhibits and schedules
thereto and documents incorporated by reference therein) 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 under which they were
made, not misleading, and complied in all material respects with all
applicable legal and stock exchange requirements.
(f) Books and Records
All financial transactions of Acquiror and its Subsidiaries have been
recorded in the financial books and records of Acquiror and each
Subsidiary, as applicable, in accordance with good business practice,
and such financial books and records accurately reflect the basis for
the financial condition and the revenues, expenses and results of
operations of Acquiror and its Subsidiaries shown in the audited
financial statements of Acquiror for the year ended December 31, 2000
and the unaudited interim financial statements of Acquiror for the
periods ended March 31, June 30 and September 31, 2001 and 2000
(collectively, the "ACQUIROR FINANCIAL STATEMENTS"). Acquiror and its
Subsidiaries have not entered into and are not parties to any material
financial transactions which are not reflected in such financial
statements.
(g) Absence of Changes
Since December 31, 2001 and to the date of this Agreement and except as
has been publicly disclosed in any document filed with the SEC: (i)
Acquiror and its Subsidiaries have conducted their respective
businesses only in the ordinary course, (ii) no extraordinary liability
or obligation of any nature (whether absolute, accrued, contingent or
otherwise) material to Acquiror (on a consolidated basis) has been
incurred, and (iii) there has not been any (alone or together with
other adverse changes) Material Adverse Change.
34
(h) Disclosure
As of the date of this Agreement, there is no information known to the
officers of Acquiror regarding any event, circumstance or action taken
or failed to be taken which may reasonably be expected to result in
(alone or together with other adverse changes) a Material Adverse
Change.
(i) Acquiror Financial Statements
The Acquiror Financial Statements were prepared in accordance with
generally accepted accounting principles in the United States
consistently applied, and fairly present the consolidated financial
condition of Acquiror at the respective dates indicated and the results
of operations of Acquiror (on a consolidated basis) for the periods
covered. Except (a) as disclosed or reflected in the Acquiror Financial
Statements and (b) liabilities and obligations (i) incurred in the
ordinary course of business and consistent with past practice or (ii)
pursuant to the terms of this Agreement, neither Acquiror nor any of
its Subsidiaries has incurred any liabilities of any nature, whether
accrued, contingent or otherwise (or which would be required by
generally accepted accounting principles applicable in the United
States to be reflected on a consolidated balance sheet of Acquiror)
that have constituted or would be reasonably likely constitute (alone
or together with other adverse changes) a Material Adverse Change.
(j) Financing
Acquiror has access to cash balances and available credit facilities
sufficient to fund all amounts that may be required in connection with
and pursuant to the Arrangement.
(k) Compliance with Law
Each of Acquiror and its Subsidiaries has complied with and is in
compliance with all laws and regulations applicable to the operation of
its business, except where such non-compliance, considered individually
or in the aggregate, would not constitute (alone or together with other
adverse changes) a Material Adverse Change and would not materially
affect the consummation of the transactions contemplated hereby or the
ability of Acquiror to perform its obligations hereunder.
(l) Information Supplied
None of the information supplied or to be supplied by Acquiror for
inclusion or incorporation by reference in the Proxy Circular will, at
the time the Proxy Circular is mailed to the Shareholders and at the
time of the Shareholder Meeting, as may be adjourned from time to time,
contain any untrue statement which, at the time and in light of the
circumstances under which it is made, if false or misleading with
respect to any material fact or omit to state any material fact
required to be stated therein or necessary in order to make the
statements therein not false or misleading or necessary to correct any
statement in any earlier communication with respect to the solicitation
of a proxy for the same meeting or subject matter which has become
false or misleading. None of the information supplied or to be supplied
by Acquiror for inclusion or incorporation by reference in the S-3
Registration Statement will at the time such registration statement is
declared or becomes effective contain any untrue statement of a
material fact or omit to state a material fact required to be stated
therein or necessary in order to make the statements made therein, in
light of the circumstances under which they were made, not misleading.
8.2 INVESTIGATION
Any investigation by the Corporation and its advisors shall not mitigate,
diminish or affect the representations and warranties of Acquiror provided
pursuant to this Agreement. Where the provisions of Section 8.1 refer to
disclosure in writing, such disclosure shall be made expressly in response to
the applicable provision and shall be signed by a senior officer of Acquiror.
35
ARTICLE 9
CONDITIONS
9.1 CONDITIONS PRECEDENT TO OBLIGATIONS OF EACH PARTY
The obligations of the parties hereto to consummate and effect the
transactions contemplated hereunder shall be subject to the satisfaction or
waiver by both parties on or before the Effective Date of the following
conditions:
(a) the Arrangement and the other transactions contemplated hereby shall
have been approved and adopted by the Shareholders and holders of
Options, Warrants and Share Purchase Rights, voting as a single class,
in accordance with applicable law (including the Interim Order) and the
Corporation's articles and bylaws;
(b) the Court shall have issued each of the Interim Order and Final Order
approving the Arrangement in form and substance reasonably satisfactory
to Acquiror and the Corporation (such approvals not to be unreasonably
withheld or delayed by Acquiror or the Corporation) reflecting the
terms hereof and shall not have been set aside or modified in a manner
unacceptable to either thereof, acting reasonably, on appeal or
otherwise;
(c) in respect of the aspects of the Plan of Arrangement contemplating the
issuance of Exchangeable Shares and the revision of the Warrants only,
the S-3 Registration Statement shall have been declared or become
effective under the U.S. Securities Act on or before the Effective
Date, and, such registration statement, at its effective date and on
the Closing Date shall not be the subject of any SEC stop-order or SEC
proceedings seeking a stop-order, and the Arrangement shall, on the
Closing Date, not be subject to any similar proceedings commenced or
threatened by the Securities Authorities;
(d) in respect of the aspects of the Plan of Arrangement contemplating the
issuance of Exchangeable Shares and the revision of the Warrants only,
the Acquiror Shares to be issued from time to time after the Effective
Time upon exchange of the Exchangeable Shares or exercise of the
Warrants shall have been approved for listing on the American Stock
Exchange;
(e) all approvals or exemptions under the Investment Canada Act (Canada) in
connection with the Arrangement shall have been obtained on terms and
conditions reasonably satisfactory to Acquiror;
(f) all Regulatory Approvals shall have been obtained on reasonably
satisfactory terms and conditions and shall be in full force and effect
and all applicable statutory or regulatory waiting periods shall have
expired or been terminated and no objection or opposition shall have
been filed, initiated or made during any applicable statutory or
regulatory waiting period which would adversely affect Acquiror's
ability to consummate the Arrangement or the transactions contemplated
hereby or which is or would be materially adverse to the business of
the Corporation and its Subsidiaries considered on a consolidated basis
or to the value of the Shares to Acquiror;
(g) without limiting the scope of the preceding subsection, any applicable
waiting periods under the HSR Act shall have expired or been earlier
terminated, and any applicable waiting periods under any other
competition, merger control or similar law, rule, regulation or policy
or any approval or consent of any governmental entity in respect of
competition or merger control matters having jurisdiction, shall have
terminated or expired or been obtained on reasonably satisfactory terms
and conditions;
(h) there shall not exist any prohibition at law against the consummation
of the Arrangement or the transactions contemplated hereby; and
(i) (i) the Commissioner of Competition (the "COMMISSIONER") appointed
under the Competition Act shall have issued an advance ruling
certificate under Section 102 of the Competition Act in
36
respect of the acquisition of the Shares by Acquiror under the
Arrangement (the "TRANSACTION"); or (ii) the applicable waiting period
under Section 123 of the Competition Act shall have expired without the
Commissioner having given notice that he intends to make an application
to the Competition Tribunal for an order under Section 92 of the
Competition Act in respect of the Transaction; and no proceedings shall
have been taken or threatened under the merger provisions of Part VIII
of the Competition Act in respect of the Transaction.
9.2 ACQUIROR CONDITIONS
The obligations of Acquiror to consummate and effect the transactions
contemplated hereunder shall be subject to the following conditions:
(a) the Corporation shall have performed or complied with, in all material
respects, each of its obligations, covenants and agreements hereunder
to be performed and complied with by it on or before the Effective
Time;
(b) each of the representations and warranties of the Corporation in this
Agreement (which for purposes of this clause (b) shall be read as
though none of them contained any material adverse effect or other
materiality qualification), shall be true and correct in all respects
on the date of this Agreement and as of the Effective Date as if made
on and as of such date (except for such representations and warranties
made as of a specified date, which shall be true and correct as of such
specified date) except where the failure of such representations and
warranties in the aggregate to be true and correct in all respects is
not and would not be reasonably expected to be Material;
(c) no act, action, suit or proceeding shall have been taken before or by
any Canadian or United States federal, provincial, state or foreign
court or other tribunal or governmental agency or other regulatory or
administrative agency or commission or by any elected or appointed
public official or other Person in Canada, the United States or
elsewhere, whether or not having the force of law, and no law,
regulation or policy have been proposed, enacted, promulgated or
applied, whether or not having the force of law, which could reasonably
be expected to have the effect of:
(i) making illegal, or otherwise directly or indirectly restraining
or prohibiting the Arrangement, the acceptance for payment of,
payment for, or ownership, directly or indirectly, of some or all
of the Shares by Acquiror, or the consummation of any of the
transactions contemplated by the Arrangement;
(ii) prohibiting or materially limiting the ownership or operation by
the Corporation or any of its Subsidiaries, or by Acquiror,
directly or indirectly, of all or any material portion of the
business or assets of the Corporation, on a consolidated basis,
or Acquiror, directly or indirectly, or compelling Acquiror,
directly or indirectly, to dispose of or hold separate all or any
material portion of the business or assets of the Corporation, on
a consolidated basis, or Acquiror, directly or indirectly, as a
result of the transactions contemplated by the Arrangement;
(iii) imposing or confirming limitations on the ability of Acquiror,
directly or indirectly, effectively to acquire or hold or to
exercise full rights of ownership of the Shares, including
without limitation the right to vote any Shares acquired or owned
by Acquiror, directly or indirectly, on all matters properly
presented to the Shareholders of the Corporation, including
without limitation the right to vote any shares of capital stock
of any Subsidiary (other than immaterial Subsidiaries) directly
or indirectly owned by the Corporation materially adversely
affecting the business, financial condition or results of
operations of the Corporation and its Subsidiaries taken as a
whole or the value of the Shares to Acquiror; or
(iv) requiring divestiture by Acquiror, directly or indirectly, of any
Shares or any Subsidiary;
37
(d) Acquiror shall not have received on or prior to the Effective Time from
the Corporation notices by the holders of more than 5% of the issued
and outstanding securities entitled to vote at the Shareholder Meeting
of their intention to exercise their dissent rights, as granted in the
Interim Order, under section 192 of the Act; and
(e) holders of not less than 3,748,795 Shares and options to purchase not
less than 511,240 Shares shall have entered into, and continue to be
bound by and not to have breached, lock-up agreements in the form
attached as Schedule C hereto and the vendors pursuant to those
agreements entered into concurrently with the execution of this
Agreement relating to the purchase by Acquiror of 5,366,872 Shares
shall: (x) continue to be bound by and not to have breached such
agreements; or (y) have consummated the transactions contemplated by
such agreements,
which conditions are for the exclusive benefit of Acquiror and may be waived by
Acquiror in whole or in part at any time and from time to time, before the
Effective Time.
9.3 CORPORATION CONDITIONS
The obligations of the Corporation to consummate and effect the
transactions contemplated hereunder shall be subject to the following
conditions:
(a) Acquiror shall have performed or complied with, in all material
respects, each of its obligations, covenants and agreements hereunder
to be performed and complied with by it on or before the Effective
Time;
(b) each of the representations and warranties of Acquiror in this
Agreement (which for purposes of this clause (b) shall be read as
though none of them contained any material adverse effect or other
materiality qualification), shall be true and correct in all respects
on the date of this Agreement and as of the Effective Date as if made
on and as of such date (except for such representations and warranties
made as of a specified date, which shall be true and correct as of such
specified date) except where the failure of such representations and
warranties in the aggregate to be true and correct in all respects is
not and would not be reasonably expected to be Material; and
(c) the Exchangeable Shares shall be listed on The Toronto Stock Exchange
or, in the absence of a listing on The Toronto Stock Exchange, on
another recognized Canadian stock exchange,
which conditions are for the exclusive benefit of the Corporation and may be
waived by the Corporation in whole or in part at any time and from time to time,
before the Effective Time.
ARTICLE 10
TERMINATION
10.1 TERMINATION
This Agreement may be terminated at any time prior to the Effective Time
(notwithstanding any approval of the Arrangement Resolution):
(a) by mutual written consent of Acquiror and the Corporation;
(b) by either Acquiror or the Corporation if the Shareholders do not
approve the Arrangement Resolution at the Shareholder Meeting;
(c) by Acquiror or the Corporation, if a fee as provided in Section 4.1
becomes payable, other than pursuant to Section 4.1(f);
38
(d) by either the Corporation or Acquiror, if the Effective Date does not
occur on or before June 24, 2002 provided that the failure is not due
to the party seeking to terminate this Agreement to perform the
obligations required to be performed by it under this Agreement;
(e) by Acquiror, if the Corporation has breached any of its
representations, warranties, agreements or obligations herein which
breach would result in the failure to satisfy one or more conditions
set forth in Section 9.2(a) or (b) and such breach is: (i) in relation
to Section 3.2; (ii) an intentional breach by the Corporation; (iii)
not curable; or (iv) curable, but is not cured within 5 days after
notice thereof has been received by the Corporation; or
(f) by the Corporation, if Acquiror has breached any of its
representations, warranties, agreements or obligations herein which
breach would result in the failure to satisfy one or more conditions
set forth in Section 9.3(a) or (b) and such breach is: (i) an
intentional breach by Acquiror; (ii) not curable; or (iii) curable, but
is not cured within 5 days after notice thereof has been received by
Acquiror,
except that the obligations set forth in Section 4.1 (in respect of any
Fee Event occurring prior to the termination) shall survive the
termination of this Agreement.
ARTICLE 11
MISCELLANEOUS
11.1 AMENDMENT OR WAIVER
This Agreement, may be amended, modified or superseded, and any of the
terms, covenants, representations, warranties or conditions hereof may be
waived, but only by written instrument executed by Acquiror and the Corporation;
provided, however, that either Acquiror or the Corporation may in its discretion
waive a condition herein which is solely for its benefit without the consent of
the other. No waiver of any nature, in any one or more instances, shall be
deemed or construed as a further or continued waiver of any condition or any
breach of any other term, representation or warranty in this Agreement.
11.2 ENTIRE AGREEMENT
This Agreement, the Confidentiality Agreement and the other documents
referred to herein constitute the entire agreement between the parties with
respect to the subject matter hereof and supersede all prior agreements,
arrangement or understandings with respect thereto.
11.3 HEADINGS
The division of the Agreement into Articles, Sections and other partitions
and the insertion of headings are for convenience of reference only and shall
not control or affect the meaning or construction of any provisions of this
Agreement.
11.4 NOTICES
All notices or other communication which are required or permitted
hereunder shall be communicated confidentially and in writing and shall be
sufficient if delivered personally, or sent by confidential telecopier addressed
as follows:
To Acquiror:
▇▇▇▇▇▇ Industries, Inc.
▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇
▇▇▇▇▇▇▇, ▇▇▇▇▇
▇▇▇▇▇
Attention: President and Chief Operating Officer
Fax: (▇▇▇) ▇▇▇-▇▇▇▇
39
With copies to:
▇▇▇▇▇▇ Corporate Services, Inc.
▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇
▇▇▇▇▇ ▇▇▇▇
▇▇▇▇▇▇▇, ▇▇▇▇▇
▇▇▇▇▇
Attention: ▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇
Fax: (▇▇▇) ▇▇▇-▇▇▇▇
And a copy to:
Stikeman Elliott
▇▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇ ▇▇▇▇
▇▇▇ - ▇▇▇ ▇▇▇▇▇▇ ▇.▇.
▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇
▇▇▇ ▇▇▇
Attention: ▇▇▇▇▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇
Fax: (▇▇▇) ▇▇▇-▇▇▇▇
To the Corporation:
Enserco Energy Service Company Inc.
▇▇▇▇, ▇▇▇ - ▇▇▇ ▇▇▇▇▇▇ ▇.▇.
▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇
▇▇▇ ▇▇▇
Attention: ▇▇▇▇ ▇▇▇▇▇▇▇▇
Fax: (▇▇▇) ▇▇▇-▇▇▇▇
With a copy to:
▇▇▇▇▇ ▇▇▇▇▇▇▇ & ▇▇▇▇▇▇▇ LLP
3500, ▇▇▇ ▇▇▇ ▇▇▇▇▇▇ ▇.▇.
▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇
▇▇▇ ▇▇▇
Attention:▇▇▇ ▇▇▇▇▇▇▇▇
Fax:(▇▇▇) ▇▇▇-▇▇▇▇
11.5 COUNTERPARTS AND FACSIMILES
This Agreement may be executed in any number of counterparts and each such
counterpart shall be deemed to be an original instrument but all such
counterparts together shall constitute but one Agreement. The parties hereto
shall be entitled to rely upon delivery of an executed facsimile copy of the
Agreement, and such facsimile copy shall be legally effective to create a valid
and binding agreement between the parties hereto.
11.6 EXPENSES
Each party will pay its own expenses. The Corporation represents and
warrants that, except for fees payable to ▇▇▇▇▇▇ & Co. Limited pursuant to the
engagement letter dated November 26, 2001, a copy of which has been provided to
Acquiror, 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 the Arrangement. Notwithstanding anything provided
in this Agreement, the Corporation may pay to ▇▇▇▇▇▇ & Co. Limited the fees (not
in excess of $2,500,000 plus GST) and expenses pursuant to and in accordance
with such engagement letter. The Corporation has provided to Acquiror a correct
and complete copy of all agreements between the Corporation and its financial
advisor as are in existence at the date hereof. The
40
Corporation covenants not to amend the terms of any such agreements relating to
the payment of fees and expenses without the prior written approval of Acquiror.
11.7 ASSIGNMENT
Acquiror may assign all or any part of its rights or obligations under this
Agreement to a direct or indirect wholly-owned Subsidiary of Acquiror or any
other party related to Acquiror, but, if such assignment takes place, Acquiror
shall continue to be liable to the Corporation for any default in performance by
the assignee. This Agreement shall not otherwise be assignable by either party
without the prior written consent of the other party.
11.8 SEVERABILITY
If any term, provision, covenant or restriction of this Agreement is held
by a court of competent jurisdiction to be invalid, void or unenforceable, the
remainder of the terms, provisions, covenants and restrictions of this Agreement
shall remain in full force and effect and shall in no way be affected, impaired
or invalidated and the parties shall negotiate in good faith to modify this
Agreement to preserve each party's anticipated benefits under this Agreement.
11.9 CHOICE OF LAW
This Agreement shall be governed by, construed and interpreted in
accordance with the laws of the Province of
Alberta.
11.10 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 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.
11.11 REMEDIES
The parties hereto 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 remedy or
prevent non-compliance with or breaches of the terms of this Agreement and to
enforce specifically the terms and provisions hereof in any court of the
Province of
Alberta having jurisdiction; provided that such remedies shall be in
addition to, and not in substitution for, any other remedy to which the parties
may be entitled at law or in equity.
11.12 SURVIVAL OF REPRESENTATIONS AND WARRANTIES
The representations and warranties of the Corporation and Acquiror
contained in this Agreement shall not survive the completion of the Arrangement
and shall expire and be terminated at the earlier of the Effective Time and
(except in respect of a termination pursuant to Section 10.1(e) in which respect
the covenants, representations and warranties of the Corporation shall survive
the termination of this Agreement) the date on which this Agreement is
terminated in accordance with its terms.
41
11.13 TIME OF ESSENCE
Time shall be of the essence in this Agreement.
IN WITNESS WHEREOF the parties hereto have caused this Agreement to be
executed on their behalf by their officers thereunto duly authorized as of the
date first written above.
▇▇▇▇▇▇ INDUSTRIES, INC.
By: (signed) ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇
---------------------------------------
ENSERCO ENERGY SERVICE COMPANY INC.
By: (signed) ▇▇▇▇ ▇▇▇▇▇▇▇▇
---------------------------------------
By: (signed) ▇▇▇▇▇ ▇▇▇▇▇▇
---------------------------------------
42
SCHEDULE A
[INTENTIONALLY OMITTED]
SCHEDULE B
FORM OF PLAN OF ARRANGEMENT
UNDER SECTION 192
OF THE CANADA BUSINESS CORPORATIONS ACT
INVOLVING AND AFFECTING
ENSERCO ENERGY SERVICE COMPANY INC. AND
ITS SECURITYHOLDERS
ARTICLE 1
INTERPRETATION
1.1 DEFINITIONS
In this Plan of Arrangement, unless there is something in the subject
matter or context inconsistent therewith, the following terms shall have the
respective meanings set out below (and grammatical variations of such terms
shall have corresponding meanings):
"ACQUIROR AVERAGE PRICE" means the weighted average trading price of
Acquiror Shares on the American Stock Exchange (as reported by the American
Stock Exchange and converted, as hereinafter provided, to Canadian dollars
and expressed to the fourth decimal place) for the Measurement Period. For
these purposes, (i) the U.S. dollar/Canadian dollar exchange rate for
determining the Acquiror Average Price shall be the average of the Canadian
Dollar Exchange Rate (expressed to the fourth decimal place) for each of
the trading days in the Measurement Period; and (ii) the "weighted average
trading price" shall be determined by dividing the aggregate sale price of
all Acquiror Shares sold on the American Stock Exchange during the
Measurement Period by the total number of Acquiror Shares sold during such
period;
"ACQUIROR CONTROL TRANSACTION" has the meaning provided in the Exchangeable
Share Provisions;
"ACQUIROR SHARES" has the meaning provided in the Exchangeable Share
Provisions and any other securities into which such shares may be changed,
exchanged or converted;
"ACQUIROR" means ▇▇▇▇▇▇ Industries, Inc., a corporation incorporated under
the laws of Delaware;
"
ACQUISITION AGREEMENT" means the
acquisition agreement by and between
Acquiror and the Corporation dated February 25, 2002, as amended and
restated from time to time, providing for, among other things, this Plan of
Arrangement and the Arrangement;
"ACT" means the Canada Business Corporations Act, as the same has been and
may hereafter from time to time be amended;
"ANCILLARY RIGHTS" means the interest of a holder of Holdco Shares or
Shares who elects to receive Exchangeable Shares as a beneficiary of the
trust created under the Voting and Exchange Trust Agreement;
"ARRANGEMENT" means the arrangement under Section 192 of the Act on the
terms and subject to the conditions set out in this Plan of Arrangement,
subject to any amendments thereto made (i) in accordance with Section 3.2
of the
Acquisition Agreement; (ii) in accordance with Section 6.1 hereof,
or (iii) at the direction of the Court in the Final Order;
"ARRANGEMENT RESOLUTION" means the special resolution passed by the
Shareholders at the Shareholder Meeting, such resolution to be
substantially in the form and content of Schedule A to the
Acquisition
Agreement;
"BUSINESS DAY" has the meaning provided in the Exchangeable Share
Provisions;
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"CALLCO" means 3064297 Nova Scotia Company, an unlimited liability company
incorporated under the laws of the Province of Nova Scotia which, at the
Effective Time, will be an indirect wholly-owned Subsidiary of Acquiror;
"CANADIAN DOLLAR EXCHANGE RATE" means, with respect to determining the
exchange rate from U.S. dollars to Canadian dollars on a particular day,
the amount expressed in U.S. dollars as the noon buying rate (expressed to
the fourth decimal place) in New York City for cable transfers in Canadian
dollars as certified for customs purposes by the Federal Reserve Bank of
New York on such day;
"CANCO" means Nabors Exchangeco (Canada) Inc., a corporation incorporated
under the laws of Canada;
"CCRA" means the Canada Customs and Revenue Agency;
"CHANGE OF LAW" means any amendment to the Income Tax Act (Canada) and
other applicable provincial income tax laws that permits holders of
Exchangeable Shares who are resident in Canada, hold the Exchangeable
Shares as capital property and deal at arm's length with Acquiror and the
Corporation (all for the purposes of the Income Tax Act (Canada) and other
applicable provincial income tax laws) to exchange their Exchangeable
Shares for Acquiror Shares on a basis that will not require such holders to
recognize any gain or loss or any actual or deemed dividend in respect of
such exchange for the purposes of the Income Tax Act (Canada) or applicable
provincial income tax laws;
"CHANGE OF LAW CALL DATE" has the meaning provided in Section 5.3(b);
"CHANGE OF LAW CALL PURCHASE PRICE" has the meaning provided in Section
5.3(a);
"CHANGE OF LAW CALL RIGHT" has the meaning provided in Section 5.3(a);
"CODE" means the United States Internal Revenue Code of 1986, as amended;
"CORPORATION" means Enserco Energy Service Company Inc., a corporation
incorporated under the laws of Canada;
"COURT" means the Court of Queen's Bench of Alberta;
"DEPOSITARY" means the duly appointed depositary in respect of the
Arrangement at its principal transfer offices in ▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇ ▇▇▇
▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇;
"EFFECTIVE DATE" means the effective date of the Arrangement, being the
date shown on the certificate of arrangement issued by the Director under
the Act giving effect to the Arrangement;
"EFFECTIVE TIME" means 12:01 a.m. (Calgary time) on the Effective Date;
"ELECTION DEADLINE" means 5:00 p.m. (local time) at the place of deposit on
the date that is two Business Days prior to the Effective Date;
"EXCHANGE RATIO" means, subject to adjustment, if any, as provided in
Section 2.5, the number, calculated to four decimal places, equal to the
Per Share Price divided by the Acquiror Average Price;
"EXCHANGEABLE SHARE CONSIDERATION" has the meaning provided in the
Exchangeable Share Provisions;
"EXCHANGEABLE SHARE PRICE" has the meaning provided in the Exchangeable
Share Provisions;
"EXCHANGEABLE SHARE PROVISIONS" means the rights, privileges, restrictions
and conditions attaching to the Exchangeable Shares, which rights,
privileges, restrictions and conditions shall be substantially as set forth
in Appendix 1 hereto;
"EXCHANGEABLE SHARES" means the exchangeable shares in the capital of
Canco;
"FINAL ORDER" means the final order of the Court approving the Arrangement,
as such order may be amended by the Court at any time and from time to time
prior to the Effective Time;
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"HOLDCO" has the meaning ascribed in Section 2.3;
"HOLDCO LETTER OF TRANSMITTAL AND ELECTION FORM" means the letter of
transmittal and election form for use by holders of Holdco Shares in
connection with the Arrangement;
"HOLDCO SHAREHOLDERS" means the holders at the relevant time of Holdco
Shares;
"HOLDCO SHARES" means all issued and outstanding shares of any particular
Holdco;
"INTERIM ORDER" means the interim order of the Court in relation to the
Arrangement, as such order may be amended by the Court at any time and from
time to time;
"ITA" means the Income Tax Act (Canada), as amended;
"LETTER OF TRANSMITTAL AND ELECTION FORM" means the letter of transmittal
and election form provided for use by holders of Shares (other than
Holdcos) in connection with the Arrangement;
"LIQUIDATION AMOUNT" has the meaning provided in the Exchangeable Share
Provisions;
"LIQUIDATION CALL PURCHASE PRICE" has the meaning provided in Section
5.1(a);
"LIQUIDATION CALL RIGHT" has the meaning provided in Section 5.1(a);
"LIQUIDATION DATE" has the meaning provided in the Exchangeable Share
Provisions;
"MEASUREMENT PERIOD" means the period of 10 consecutive trading days ending
on the third Business Day prior to the date of the Shareholder Meeting
(including any adjournment thereof);
"OPTIONS" means the outstanding options to acquire Shares (i) under the
Stock Option Plan, and (ii) pursuant to the Predecessor Option Agreements;
"PER SHARE PRICE" means that amount calculated to four decimal places equal
to $15.50 plus additional consideration calculated at the rate of 6% per
annum thereon in respect of the period from, but not including, February
25, 2002 to and including the Effective Date;
"PREDECESSOR CORPORATIONS" means those corporations which merged with the
Corporation pursuant to various amalgamations including, without
limitation, Trimat Well Servicing Inc., Pink Panther Oilfield Services Ltd.
and Swab-Tech Inc.;
"PREDECESSOR OPTION AGREEMENTS" means the agreements between the
Corporation and certain individuals pursuant to which options to acquire
securities of entities previously acquired by the Corporation were
exchanged for options to acquire Shares;
"REDEMPTION CALL PURCHASE PRICE" has the meaning provided in Section
5.2(a);
"REDEMPTION CALL RIGHT" has the meaning provided in Section 5.2(a);
"REDEMPTION DATE" has the meaning provided in the Exchangeable Share
Provisions;
"REDEMPTION PRICE" has the meaning provided in the Exchangeable Share
Provisions;
"SHAREHOLDER MEETING" means the special meeting of the Shareholders and
holders of Options, Warrants and Share Purchase Rights to be held to
consider this Plan of Arrangement;
"SHAREHOLDERS" means holders of Shares from time to time;
"SHARE PURCHASE RIGHTS" means rights to acquire Shares issued pursuant to
the Cooperation Agreement made as of June 18, 2001 between Bonus Well
Servicing Partnership and Polar Energy Services Ltd. and the agreement made
and entered into as of June 1, 2002 between Kuukpik/ H & R Drilling LLC and
H & R Drilling Alaska Inc.;
"SHARES" means the common shares in the capital of the Corporation;
"STOCK OPTION PLAN" means the stock option plan of the Corporation approved
by the Board of Directors on April 12, 2001;
B-3
"TRANSFER AGENT" means the duly appointed transfer agent for the time being
of the Exchangeable Shares, and, if there is more than one such transfer
agent, then the principal Canadian transfer agent;
"VOTING AND EXCHANGE TRUST AGREEMENT" means the agreement so entitled among
Acquiror, Canco and the Trustee named therein to be dated as of the
Effective Date and provided for in the
Acquisition Agreement; and
"WARRANTS" means the warrants to purchase 500,000 Shares represented by and
provided for in Warrant Certificate No. 98-1 dated November 13, 1998 issued
by the Corporation to SCF-IV, L.P., as amended December 12, 2001.
1.2 SECTIONS AND HEADINGS
The division of this Plan of Arrangement into sections and the insertion of
headings are for reference purposes only and shall not affect the interpretation
of this Plan of Arrangement. Unless otherwise indicated, any reference in this
Plan of Arrangement to a Section refers to the specified Section of this Plan of
Arrangement.
1.3 NUMBER, GENDER AND PERSONS
In this Plan of Arrangement, unless the context otherwise requires, words
importing the singular number include the plural and vice versa, words importing
any gender include all genders and words importing persons include individuals,
bodies corporate, partnerships, associations, trusts, unincorporated
organizations, governmental bodies and other legal or business entities of any
kind.
1.4 DATE FOR ANY ACTION
In the event that any date on or by which any action is required or
permitted to be taken hereunder is not a Business Day, such action shall be
required or permitted to be taken on or by the next succeeding day which is a
Business Day.
1.5 CURRENCY
Unless otherwise expressly stated herein, all references to currency and
payments in cash or money in this Plan of Arrangement are to Canadian dollars.
1.6 STATUTORY REFERENCES
Any reference in this Plan of Arrangement to a statute includes such
statute as amended, consolidated or re-enacted from time to time, all
regulations made thereunder, all amendments to such regulations from time to
time, and any statute or regulation which supersedes such statute or
regulations.
ARTICLE 2
ARRANGEMENT
2.1 BINDING EFFECT
This Plan of Arrangement will become effective at, and be binding at and
after, the Effective Time on (i) Acquiror, Canco and Callco; (ii) the
Corporation; (iii) all holders and all beneficial owners of Shares; (iv) all
Holdcos and all holders and all beneficial owners of Holdco Shares; (v) all
holders and all beneficial owners of Options, Warrants or Share Purchase Rights;
and (vi) all holders and all beneficial owners of Exchangeable Shares.
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2.2 ARRANGEMENT
At the Effective Time, the following transactions shall occur and shall be
deemed to occur in the following order without any further act or formality:
(a) Each Holdco Share will be transferred to, and acquired by, Canco
without any act or formality on the part of the holder of such Holdco
Share or the entity which acquires such Holdco Share, free and clear of
all liens, claims and encumbrances, in exchange for, at the holder's
election (or deemed election), (w) the Per Share Price in cash without
interest; (x) such number of fully paid and non-assessable Exchangeable
Shares (and the Ancillary Rights) as is equal to the Exchange Ratio; or
(y) such amount of cash, less than the Per Share Price, as is specified
by the holder in the holder's election (whether as a specific dollar
amount or a percentage of the Per Share Price) (the "Cash Portion")
plus such number of fully paid and non-assessable Exchangeable Shares
(and the Ancillary Rights) as is equal to the positive difference
between the Per Share Price and the Cash Portion, divided by the
Acquiror Average Price calculated to four decimal places, in each case
multiplied by a fraction having as its numerator the number of Shares
held by the Holdco and as its denominator the number of issued and
outstanding Holdco Shares of the Holdco; payable, in each case, in
accordance with Article 4 hereof, and the name of each such holder of
Holdco Shares will be removed from the register of holders of Holdco
Shares and added to the register of holders of the Exchangeable Shares
comprising all or part of the consideration to be received by such
holder for such transfer, and Canco will be recorded as the registered
holder of each such Holdco Share so exchanged and will be deemed to be
the legal and beneficial owner thereof.
(b) Each Share (other than Shares owned by Holdcos in respect of which
Section 2.2(a) applies) that is not held by (i) a Shareholder who has
exercised its right to dissent in accordance with Article 3 hereof and
who is ultimately entitled to be paid the fair value of its Shares, or
(ii) Acquiror or any affiliate (within the meaning of the Act) thereof
(which Share shall not be exchanged under the Arrangement and shall
remain outstanding as a Share held by Acquiror or any affiliate
thereof), will be transferred to, and acquired by, Canco without any
act or formality on the part of the holder of such Share or the entity
which acquires such Share, free and clear of all liens, claims and
encumbrances, in exchange for, at the holder's election (or deemed
election), (w) the Per Share Price in cash without interest; (x) such
number of fully paid and non-assessable Exchangeable Shares (and the
Ancillary Rights) as is equal to the Exchange Ratio; or (y) such amount
of cash, less than the Per Share Price, as is specified by the holder
in the holder's election (whether as a specific dollar amount or a
percentage of the Per Share Price) (the "Cash Portion") plus such
number of fully paid and non-assessable Exchangeable Shares (and the
Ancillary Rights) as is equal to the positive difference between the
Per Share Price and the Cash Portion, divided by the Acquiror Average
Price calculated to four decimal places, payable, in each case, in
accordance with Article 4 hereof, and the name of each such holder of
Shares will be removed from the register of holders of Shares and added
to the register of holders of the Exchangeable Shares comprising all or
part of the consideration to be received by such holder for such
transfer, and Canco will be recorded as the registered holder of each
such Share so exchanged and will be deemed to be the legal and
beneficial owner thereof.
(c) Each Share (other than Shares owned by Holdcos in respect of which
Section 2.2(a) applies) in respect of which no election has been made
by the holder thereof, or in respect of which an effective election has
not been made (other than Shares held by (i) a Shareholder who has
exercised its right to dissent in accordance with Article 3 hereof and
who is ultimately entitled to be paid the fair value of its Shares, or
(ii) Acquiror or any affiliate (within the meaning of the Act) thereof
(which Share shall not be exchanged under the Arrangement and shall
remain outstanding as a Share held by Acquiror or any affiliate
thereof)) will be transferred to, and acquired by, Canco, without any
act or formality on the part of the holder of such Share or Canco, free
and clear of all liens, claims and encumbrances, and the holder shall
be deemed to have elected to receive in exchange therefor the Per Share
Price in cash without interest,
B-5
payable in accordance with Article 4 hereof, and the name of each such
holder of Shares will be removed from the register of holders of Shares
and Canco will be recorded as the registered holder of each such Share
so exchanged and will be deemed to be the legal and beneficial owner
thereof.
(d) Each Warrant that has not been duly exercised prior to the Effective
Time shall thereafter represent the right to purchase that number of
Acquiror Shares equal to the number of Shares subject to such Warrant
multiplied by the Exchange Ratio. The exercise price per Acquiror Share
under the Warrant shall equal the exercise price per Share of such
Warrant immediately prior to the Effective Time divided by the Exchange
Ratio and further multiplied by the Canadian Dollar Exchange Rate on
the Effective Date. If the foregoing calculation results in the Warrant
being exercisable for a fraction of an Acquiror Share, then the number
of Acquiror Shares subject to such Warrant shall be rounded down to the
next whole number of Acquiror Shares and the total exercise price for
the Warrant shall be reduced by the exercise price of the fractional
Acquiror Share. The term to expiry, conditions to and manner of
exercising and all other terms and conditions of such Warrant will be
unaffected except to the extent necessary to reflect the changes to the
securities acquirable upon exercise and to the exercise price, and any
document or agreement previously evidencing such Warrant shall
thereafter evidence and be deemed to evidence such Warrant after the
Effective Time; provided, however that the holder of the Warrant may
request and receive a new warrant certificate from the Acquiror
reflecting the foregoing changes in substitution of the Warrant.
(e) Each Option and each Share Purchase Right that has not been duly
exercised or surrendered for termination prior to the Effective Time
(whether in accordance with Section 2.12 of the
Acquisition Agreement
or otherwise) shall be terminated and, in consideration for such
termination, each holder of such Option or Share Purchase Right shall
receive cash, without interest, in an amount equal to the greater of:
(A) the positive difference, if any, between (i) the Per Share Price
and (ii) the exercise price per share of such Option or Share Purchase
Right; and (B) $0.10, for each Share subject to issuance pursuant to
such Option or Share Purchase Right.
2.3 HOLDCO ALTERNATIVE
Each Shareholder shall be entitled to transfer its Shares to a
newly-incorporated corporation (a "Holdco") and transfer the Holdco Shares to
Canco as provided in Section 2.2(a) provided that each of the following
conditions are satisfied on or prior to and as of the Effective Date:
(a) the Shareholder is a resident of Canada for the purposes of the ITA;
(b) Holdco is incorporated no earlier than February 24, 2002, under the
Act;
(c) the Shareholder transfers its Shares to Holdco solely in consideration
for the Holdco Shares;
(d) Holdco has no indebtedness or liabilities and owns no assets other than
the Shares;
(e) the Shareholder indemnifies Acquiror, the Corporation, Canco and Callco
for any and all liabilities of Holdco (other than tax liabilities of
Holdco that arise solely as a result of the tax status of Acquiror,
Canco or Callco as a "financial institution" for purposes of the ITA)
in a form satisfactory to Acquiror in its sole discretion, and such
Shareholder either has net assets as reflected on its audited financial
statements for its most recently ended fiscal year which are
satisfactory to Acquiror or provides Acquiror with security
satisfactory to Acquiror in respect of such shareholder's
indemnification obligations as set out above;
(f) prior to the Effective Date, Holdco (i) declares one or more stock
dividends which (if the Holdco Shares are to be acquired by Canco) may
be in the form of preferred shares of Holdco that are converted into
common shares of Holdco prior to the Effective Date, (ii) increases the
stated capital of the Holdco Shares; or (iii) (if the Holdco Shares are
to be acquired by Canco)
B-6
declares one or more cash dividends, provided that such cash is used to
subscribe, directly or indirectly, for shares of Holdco;
(g) on the Effective Date, Holdco has no issued shares outstanding other
than the Holdco Shares and such shares will be owned by the
Shareholder;
(h) on or prior to the Effective Date, Holdco has never entered into any
transaction (or conducted any business or operations or engaged in any
activity) other than those described herein or such other transactions
as are necessary to facilitate those transactions described herein with
Acquiror's consent, acting reasonably;
(i) other than as provided in (f) above, Holdco will not declare or pay any
dividends or other distributions;
(j) the Shareholder shall prepare and file all income tax returns of its
Holdco in respect of the taxation year-end of such Holdco ending
immediately prior to the acquisition of such Holdco Shares by Canco
subject to Acquiror's right to approve all such returns as to form and
substance;
(k) the Shareholder provides the Corporation and Acquiror with copies of
all documents necessary to effect the transactions contemplated in this
Section 2.3 at least ten days prior to the Effective Date which
documents must be approved by both the Corporation and Acquiror in
their sole discretion; and
(l) the Shareholder and its Holdco execute a share purchase agreement in
the form required by Acquiror, acting reasonably, providing for, among
other things, the sale of the Holdco Shares to Canco and containing the
terms and conditions, among others, set out in this Section 2.3.
2.4 ELECTIONS
(a) Each person who, at or prior to the Election Deadline, is a holder of
Shares or Holdco Shares will be entitled, with respect to all or a
portion of their shares, to make an election at or prior to the
Election Deadline to receive (i) cash, (ii) Exchangeable Shares (and
the Ancillary Rights), or (iii) a combination thereof in exchange for
such holder's Shares or Holdco Shares on the basis set forth herein and
in the Letter of Transmittal and Election Form or the Holdco Letter of
Transmittal and Election Form, as the case may be.
(b) Holders of Shares and holders of Holdco Shares who are resident in
Canada for purposes of the ITA, other than any such holders who are
exempt from tax under Part I of the ITA, and who have elected to
receive Exchangeable Shares (and the Ancillary Rights) or a combination
of cash and Exchangeable Shares (and the Ancillary Rights) shall be
entitled to make an income tax election pursuant to subsection 85(1) of
the ITA or, if the holder is a partnership, subsection 85(2) of the ITA
(and in each case, where applicable, the analogous provisions of
provincial income tax law) with respect to the transfer of their Shares
or Holdco Shares, as the case may be, to Canco by providing two signed
copies of the necessary prescribed election forms to the Depositary
within 90 days following the Effective Date, duly completed with the
details of the number of Shares or Holdco Shares, as the case may be,
transferred and the applicable agreed amounts for the purposes of such
elections. Thereafter, subject to the election forms being correct and
complete and complying with the provisions of the ITA (or any
applicable provincial income tax law), the forms will be signed by
Canco and returned to such holders within 30 days after the receipt
thereof by the Depositary for filing with CCRA (or the applicable
provincial taxing authority). Canco will not be responsible for the
proper completion of any election form and, except for Canco's
obligation to return duly completed election forms which are received
by the Depositary within 90 days following the Effective Date, within
30 days after the receipt thereof by the Depositary, Canco will not be
responsible for any taxes, interest, penalties or any other costs or
damages resulting from the failure by a holder of Shares or Holdco
Shares to properly complete or file the election forms in the form and
manner and
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within the time prescribed by the ITA (or any applicable provincial
income tax law). In its sole discretion, Canco may choose to sign and
return an election form received more than 90 days following the
Effective Date, but Canco will have no obligation to do so.
2.5 ADJUSTMENTS TO EXCHANGE RATIO
The Exchange Ratio shall be proportionately and appropriately adjusted to
reflect fully the effect of (a) any stock split, reverse split, stock dividend
(including any dividend or distribution of securities convertible into Acquiror
Shares or Shares), reorganization, recapitalization or other like change with
respect to Acquiror Shares or Shares, and (b) any extraordinary dividend or
distribution with respect to Acquiror Shares (other than a dividend or
distribution referenced in clause (a)); provided that the foregoing adjustments
shall not be made if the record date for the stock split, reverse split, stock
dividend, reorganization, recapitalization, other like change or extraordinary
dividend or distribution referred to in clauses (a) and (b) above does not occur
after the date of the
Acquisition Agreement and prior to the Effective Time. IN
ANY CASE WHERE THE EXCHANGE RATIO IS ADJUSTED IN ACCORDANCE WITH THE FOREGOING,
A CORRESPONDING ADJUSTMENT SHALL BE MADE TO THE NUMBER OF EXCHANGEABLE SHARES
(AND ANCILLARY RIGHTS) THAT ARE ACQUIRED BY HOLDERS OF SHARES OR HOLDCO SHARES
WHO HAVE ELECTED TO RECEIVE A COMBINATION OF CASH AND EXCHANGEABLE SHARES (AND
ANCILLARY RIGHTS).
ARTICLE 3
RIGHTS OF DISSENT
3.1 RIGHTS OF DISSENT
Holders of Shares, Options, Warrants or Share Purchase Rights may exercise
rights of dissent with respect to such Shares, Options, Warrants or Share
Purchase Rights, as the case may be, pursuant to and in the manner set forth in
Section 190 of the Act as modified by the Interim Order and this Section 3.1 in
connection with the Arrangement; provided that, notwithstanding subsection
190(5) of the Act, the written objection to the Arrangement Resolution referred
to in subsection 190(5) of the Act must be received by the Corporation not later
than 2:00 p.m. (Calgary time) on the Business Day preceding the Shareholder
Meeting. Holders of Shares, Options, Warrants or Share Purchase Rights, as the
case may be, who duly exercise such rights of dissent and who:
(a) are ultimately determined to be entitled to be paid fair value for
their Shares, Options, Warrants or Share Purchase Rights, as the case
may be, shall be deemed to have transferred such Shares, Options,
Warrants or Share Purchase Rights, as the case may be, as of the
Effective Time, without any further act or formality and free and clear
of all liens, claims and encumbrances, to Canco, in consideration for a
payment of cash from Canco equal to such fair value; or
(b) are ultimately determined not to be entitled, for any reason, to be
paid fair value for their Shares, Options, Warrants or Share Purchase
Rights, as the case may be, shall be deemed to have participated in the
Arrangement, as of the Effective Time, on the same basis as a
non-dissenting holder of Shares, Options, Warrants or Share Purchase
Rights, as the case may be, who did not make an election and shall
receive cash on the same basis as holders of Shares, Options, Warrants
or Share Purchase Rights in respect of which no election has been made,
but in no case shall Acquiror, the Corporation, Canco, Callco or any other
person be required to recognize any holder of Shares, Options, Warrants or Share
Purchase Rights who exercises rights of dissent as a holder of Shares, Options,
Warrants or Share Purchase Rights after the Effective Time and the names of each
such holder shall be deleted from the register of holders of Shares, Options,
Warrants or Share Purchase Rights at the Effective Time.
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ARTICLE 4
CERTIFICATES AND FRACTIONAL SHARES
4.1 PAYMENT OF CASH
At or promptly after the Effective Time, Canco shall deposit with the
Depositary, for the benefit of the holders of Holdco Shares, Shares, Options and
Share Purchase Rights who will receive cash in connection with the Arrangement,
cash in an amount sufficient to satisfy all of the cash payment obligations to
Holdco Shareholders and Shareholders in connection with the acquisition of
Holdco Shares and Shares pursuant to the Arrangement (together with any unpaid
dividends or distributions declared on the Shares, if any, prior to the
Effective Time) and to holders of Options or Share Purchase Rights required
pursuant to Section 2.2(e) or otherwise under this Plan of Arrangement. Upon
surrender to the Depositary for transfer to Canco of a certificate which
immediately prior to or upon the Effective Time represented Holdco Shares or
Shares in respect of which the holder is entitled to receive cash under the
Arrangement, together with (i) a duly completed Letter of Transmittal and
Election Form or Holdco Letter of Transmittal and Election Form, (ii) such other
documents and instruments as would have been required to effect the transfer of
the Holdco Shares or Shares formerly represented by such certificate under the
Act and the by-laws of the Corporation, and (iii) such additional documents and
instruments as the Depositary may reasonably require, the holder of such
surrendered certificate shall be entitled to receive in exchange therefor, and
after the Effective Time the Depositary shall deliver to such holder, the amount
of cash such holder is entitled to receive under the Arrangement (together with
any unpaid dividends or distributions declared on the surrendered Shares or
Shares owned by the relevant Holdco, if any, prior to the Effective Time), and
any certificate so surrendered shall forthwith be transferred to Canco. No
interest shall be paid or accrued on unpaid dividends and distributions, if any,
payable to holders of certificates that formerly represented Shares. In the
event of a transfer of ownership of such Shares or Holdco Shares that was not
registered in the securities register of the Corporation or Holdco, as the case
may be, the amount of cash payable for such Shares under the Arrangement may be
delivered to the transferee if the certificate representing such Shares or
Holdco Shares is presented to the Depositary as provided above, accompanied by
all documents required to evidence and effect such transfer and to evidence that
any applicable stock transfer taxes have been paid. Until surrendered as
contemplated by this Section 4.1, each certificate which immediately prior to or
upon the Effective Time represented one or more outstanding Shares or Holdco
Shares that, under the Arrangement, were exchanged or were deemed to be
exchanged for cash pursuant to Section 2.2 shall be deemed at all times after
the Effective Time to represent only the right to receive upon such surrender
the cash payment contemplated by this Section 4.1.
4.2 ISSUANCE OF CERTIFICATES REPRESENTING EXCHANGEABLE SHARES
At or promptly after the Effective Time, Canco shall deposit with the
Depositary, for the benefit of the holders of Holdco Shares and Shares who will
receive Exchangeable Shares (and the Ancillary Rights) in connection with the
Arrangement, certificates representing the number of Exchangeable Shares
sufficient to satisfy all of the Exchangeable Share payment obligations to
Holdco Shareholders and Shareholders in connection with the acquisition of
Holdco Shares and Shares pursuant to the Arrangement (together with cash in an
amount equal to the sum of any unpaid dividends or distributions declared on the
surrendered Shares or Shares owned by the relevant Holdco, if any, prior to the
Effective Time, and any payments for fractional shares required by Section 4.3).
Upon surrender to the Depositary for transfer to Canco of a certificate which
immediately prior to or upon the Effective Time represented Holdco Shares or
Shares in respect of which the holder is entitled to receive Exchangeable Shares
under the Arrangement, together with (i) a duly completed Letter of Transmittal
and Election Form or Holdco Letter of Transmittal and Election Form, (ii) such
other documents and instruments as would have been required to effect the
transfer of the Holdco Shares or Shares formerly represented by such certificate
under the Act and the by-laws of the relevant Holdco or the Corporation, and
(iii) such additional documents and instruments as the Depositary may reasonably
require, the holder of such surrendered certificate shall be entitled to receive
in exchange therefor, and after the Effective Time the Depositary shall deliver
to such holder, a certificate representing that number (rounded down to the
nearest whole
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number) of Exchangeable Shares which such holder has the right to receive
(together with any unpaid dividends or distributions declared on the surrendered
Shares or Shares owned by the relevant Holdco prior to the Effective Time), and
any certificate so surrendered shall forthwith be transferred to Canco. No
interest shall be paid or accrued on the cash in lieu of fractional shares, if
any, or on unpaid dividends and distributions, if any, payable to holders of
certificates that formerly represented Shares. In the event of a transfer of
ownership of Holdco Shares or Shares that was not registered in the securities
register of the relevant Holdco or the Corporation, as the case may be, a
certificate representing the proper number of Exchangeable Shares (together with
any unpaid dividends or distributions declared on the surrendered Shares prior
to the Effective Time) may be issued to the transferee if the certificate
representing such Holdco Shares or Shares is presented to the Depositary as
provided above, accompanied by all documents required to evidence and effect
such transfer and to evidence that any applicable stock transfer taxes have been
paid. Until surrendered as contemplated by this Section 4.2, each certificate
which immediately prior to or upon the Effective Time represented one or more
Holdco Shares or Shares that, under the Arrangement, were exchanged or were
deemed to be exchanged for Exchangeable Shares pursuant to Section 2.2 shall be
deemed at all times after the Effective Time, but subject to Section 4.3, to
represent only the right to receive upon such surrender a certificate
representing that number (rounded down to the nearest whole number) of
Exchangeable Shares (together with any unpaid dividends or distributions
declared on the surrendered Shares, or Shares owned by the relevant Holdco,
prior to the Effective Time) which such holder has the right to receive.
4.3 DISTRIBUTIONS WITH RESPECT TO UNSURRENDERED CERTIFICATES
No dividends or other distributions paid, declared or made with respect to
Exchangeable Shares, in each case with a record date after the Effective Time,
shall be paid to the holder of any unsurrendered certificate which immediately
prior to the Effective Time represented outstanding Holdco Shares or Shares that
were exchanged for Exchangeable Shares pursuant to Section 2.2 unless and until
the holder of such certificate shall comply with the provisions of Section 4.2.
Subject to applicable law, at the time such holder shall have complied with the
provisions of Section 4.2 (or, in the case of clause (ii) below, at the
appropriate payment date), there shall be paid to the holder of the certificates
formerly representing Holdco Shares or Shares, without interest, (i) the amount
of dividends or other distributions with a record date after the Effective Time
paid with respect to the Exchangeable Shares to which such holder is entitled
pursuant hereto, and (ii) on the appropriate payment date, the amount of
dividends or other distributions with a record date after the Effective Time but
prior to the date of compliance by such holder with the provisions of Section
4.2 and a payment date subsequent to the date of such compliance and payable
with respect to such Exchangeable Shares.
4.4 NO FRACTIONAL SHARES
No certificates representing fractional Exchangeable Shares shall be issued
upon compliance with the provisions of Section 4.2 and no dividend, stock split
or other change in the capital structure of Canco shall relate to any such
fractional security and such fractional interests shall not entitle the owner
thereof to exercise any rights as a security holder of Canco. In lieu of any
such fractional securities, each holder otherwise entitled to a fractional
interest in an Exchangeable Share will be entitled to receive a cash payment
from the Depositary equal to the product of such fractional interest and the
Acquiror Average Price, such amount to be provided to the Depositary by Canco,
upon request. Such payment with respect to fractional shares is merely intended
to provide a mechanical rounding off of, and is not separately bargained for,
consideration. If more than one certificate formerly representing Holdco Shares
or Shares is surrendered for the account of the same holder, the number of
Exchangeable Shares for which such certificates have been surrendered shall be
computed on the basis of the aggregate number of Holdco Shares or Shares
represented by the certificates so surrendered. On the date of the notice
referred to in Section 7.2 of the Exchangeable Share Provisions, the aggregate
number of Exchangeable Shares for which no certificates were issued as a result
of the foregoing provisions of this Section 4.4 shall be deemed to have been
surrendered by the Depositary for no consideration to Canco.
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4.5 LOST CERTIFICATES
In the event any certificate which immediately prior to the Effective Time
represented one or more outstanding Holdco Shares or Shares that were exchanged
pursuant to Section 2.2 shall have been lost, stolen or destroyed, upon the
making of an affidavit of that fact by the holder of Holdco Shares or Shares
claiming such certificate to be lost, stolen or destroyed, the Depositary will
issue in exchange for such lost, stolen or destroyed certificate, any cash
pursuant to Section 4.1 and/or one or more certificates representing one or more
Exchangeable Shares pursuant to Section 4.2 (and any dividends or distributions
with respect thereto) in each case deliverable in accordance with Section 2.2.
When authorizing such payment in exchange for any lost, stolen or destroyed
certificate, the holder to whom cash and/or certificates representing
Exchangeable Shares are to be issued shall, as a condition precedent to the
issuance thereof, give a bond satisfactory to the Corporation and Canco and
their respective transfer agents in such sum as any of them may direct or
otherwise indemnify the Corporation and Canco in a manner satisfactory to the
Corporation and Canco against any claim that may be made against any of them
with respect to the certificate alleged to have been lost, stolen or destroyed.
4.6 EXTINGUISHMENT OF RIGHTS
Any certificate which immediately prior to the Effective Time represented
outstanding Shares that are not held by a Shareholder who has exercised its
right to dissent in accordance with Article 3 hereof and who is ultimately
entitled to be paid fair value of the Shares held by such Shareholder but was
exchanged or was deemed to have been exchanged pursuant to Section 2.2, that has
not been deposited with all other instruments required by Section 4.1 or Section
4.2, on or prior to the earlier of the third anniversary of the Effective Date
and the date of the notice referred to in Section 7.2 of the Exchangeable Share
Provisions shall cease to represent a claim or interest of any kind or nature to
such cash payment and/or as a holder of Exchangeable Shares. On such date, the
cash payment and/or the Exchangeable Shares (and any dividends or distributions
with respect thereto) to which the former holder of the certificate referred to
in the preceding sentence was ultimately entitled shall be deemed to have been
surrendered for no consideration to Callco or Canco, as the case may be,
together with all entitlements to dividends, distributions, cash and interest in
respect thereof held for such former holder. None of Acquiror, the Corporation,
Canco, Callco or the Depositary shall be liable to any person in respect of any
cash payment or Exchangeable Shares (or dividends, distributions and/or cash in
lieu of fractional shares) delivered to a public official pursuant to and in
compliance with any applicable abandoned property, escheat or similar law.
4.7 WITHHOLDING RIGHTS
Acquiror, the Corporation, Canco, Callco and the Depositary shall be
entitled to deduct and withhold from any dividend or consideration otherwise
payable to any holder of Shares or Exchangeable Shares such amounts as the
Corporation, Canco, Callco or the Depositary is required to deduct and withhold
with respect to such payment under the ITA, the Code or any provision of
federal, provincial, territorial, state, local or foreign tax law, in each case,
as amended. To the extent that amounts are so withheld, such withheld amounts
shall be treated for all purposes hereof as having been paid to the holder of
the shares in respect of which such deduction and withholding was made, provided
that such withheld amounts are actually remitted to the appropriate taxing
authority. To the extent that the amount so required to be deducted or withheld
from any payment to a holder exceeds the cash portion of the consideration
otherwise payable to the holder, the Corporation, Canco, Callco and the
Depositary are hereby authorized to sell or otherwise dispose of such portion of
the consideration as is necessary to provide sufficient funds to the
Corporation, Canco, Callco or the Depositary, as the case may be, to enable it
to comply with such deduction or withholding requirement and the Corporation,
Canco, Callco or the Depositary shall notify the holder thereof and remit any
unapplied balance of the net proceeds of such sale.
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4.8 TERMINATION OF DEPOSITARY
Any Exchangeable Shares, together with any funds held by the Depositary,
that remain undistributed to former holders of Shares nine months after the
Effective Date shall be delivered to Canco or Callco upon demand therefor, and
holders of certificates previously representing Shares who have not theretofore
complied with Section 4.1 or Section 4.2 shall thereafter look only to Canco or
Callco for payment of any claim to cash, Exchangeable Shares, cash in lieu of
fractional shares thereof or dividends or distributions, if any, in respect
thereof.
ARTICLE 5
CERTAIN RIGHTS OF CALLCO TO ACQUIRE EXCHANGEABLE SHARES
5.1 CALLCO LIQUIDATION CALL RIGHT
(a) Callco shall have the overriding right (the "Liquidation Call Right"),
in the event of and notwithstanding the proposed liquidation,
dissolution or winding-up of Canco or any other distribution of the
assets of Canco among its shareholders for the purpose of winding-up
its affairs, pursuant to Article 5 of the Exchangeable Share
Provisions, to purchase from all but not less than all of the holders
of Exchangeable Shares (other than any holder of Exchangeable Shares
which is an affiliate of Acquiror) on the Liquidation Date all but not
less than all of the Exchangeable Shares held by each such holder upon
payment by Callco to each such holder of the Exchangeable Share Price
applicable on the last Business Day prior to the Liquidation Date (the
"Liquidation Call Purchase Price") in accordance with Section 5.1(c).
In the event of the exercise of the Liquidation Call Right by Callco,
each holder shall be obligated to sell all the Exchangeable Shares
held by such holder to Callco on the Liquidation Date upon payment by
Callco to such holder of the Liquidation Call Purchase Price for each
such Exchangeable Share, whereupon Canco shall have no obligation to
pay any Liquidation Amount to the holders of such shares so purchased
by Callco.
(b) To exercise the Liquidation Call Right, Callco must notify Canco and
the Transfer Agent of Callco's intention to exercise such right at
least 45 days before the Liquidation Date, in the case of a voluntary
liquidation, dissolution or winding-up of Canco or any other voluntary
distribution of the assets of Canco among its shareholders for the
purpose of winding-up its affairs, and at least five Business Days
before the Liquidation Date, in the case of an involuntary
liquidation, dissolution or winding-up of Canco or any other
involuntary distribution of the assets of Canco among its shareholders
for the purpose of winding up its affairs. The Transfer Agent will
notify the holders of Exchangeable Shares as to whether Callco has
exercised the Liquidation Call Right forthwith after the expiry of the
period during which the same may be exercised by Callco. If Callco
exercises the Liquidation Call Right, then on the Liquidation Date,
Callco will purchase and the holders of Exchangeable Shares will sell
all of the Exchangeable Shares then outstanding for a price per share
equal to the Liquidation Call Purchase Price.
(c) For the purposes of completing the purchase of the Exchangeable Shares
pursuant to the Liquidation Call Right, Callco shall deposit or cause
to be deposited with the Transfer Agent, on or before the Liquidation
Date, the Exchangeable Share Consideration representing the total
Liquidation Call Purchase Price. Provided that such Exchangeable Share
Consideration has been so deposited with the Transfer Agent, on and
after the Liquidation Date, the holders of the Exchangeable Shares
shall cease to be holders of the Exchangeable Shares and shall not be
entitled to exercise any of the rights of holders in respect thereof
(including any rights under the Voting and Exchange Trust Agreement ),
other than the right to receive their proportionate part of the total
Liquidation Call Purchase Price payable by Callco, without interest,
upon presentation and surrender by the holder of certificates
representing the Exchangeable Shares held by such holder and the
holder shall on and after the Liquidation Date be considered and
deemed for all purposes to be the holder of Acquiror Shares to which
such holder is entitled. Upon surrender to the Transfer Agent of a
certificate or certificates representing Exchangeable
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Shares, together with such other documents and instruments as may be
required to effect a transfer of Exchangeable Shares under the Act and
the by-laws of Canco and such additional documents and instruments as
the Transfer Agent may reasonably require, the holder of such
surrendered certificate or certificates shall be entitled to receive in
exchange therefor, and the Transfer Agent on behalf of Callco shall
deliver to such holder, the Exchangeable Share Consideration to which
such holder is entitled. If Callco does not exercise the Liquidation
Call Right in the manner described above, on the Liquidation Date the
holders of the Exchangeable Shares will be entitled to receive in
exchange therefor the Liquidation Amount otherwise payable by Canco in
connection with the liquidation, dissolution or winding-up of Canco
pursuant to Article 5 of the Exchangeable Share Provisions.
5.2 CALLCO REDEMPTION CALL RIGHT
In addition to Callco's rights contained in the Exchangeable Share
Provisions, including the Retraction Call Right (as defined in the Exchangeable
Share Provisions), Callco shall have the following rights in respect of the
Exchangeable Shares:
(a) Callco shall have the overriding right (the "Redemption Call Right"),
in the event of and notwithstanding the proposed redemption of the
Exchangeable Shares by Canco pursuant to Article 7 of the Exchangeable
Share Provisions, to purchase from all but not less than all of the
holders of Exchangeable Shares (other than any holder of Exchangeable
Shares which is an affiliate of Acquiror) on the Redemption Date all
but not less than all of the Exchangeable Shares held by each such
holder upon payment by Callco to each such holder of the Exchangeable
Share Price applicable on the last Business Day prior to the
Redemption Date (the "Redemption Call Purchase Price") in accordance
with 5.2(c). In the event of the exercise of the Redemption Call Right
by Callco, each holder of Exchangeable Shares shall be obligated to
sell all the Exchangeable Shares held by such holder to Callco on the
Redemption Date upon payment by Callco to such holder of the
Redemption Call Purchase Price for each such Exchangeable Share,
whereupon Canco shall have no obligation to redeem, or to pay the
Redemption Price in respect of, such shares so purchased by Callco.
(b) To exercise the Redemption Call Right, Callco must notify the Transfer
Agent of Callco's intention to exercise such right at least 60 days
before the Redemption Date, except in the case of a redemption
occurring as a result of an Acquiror Control Transaction, an
Exchangeable Share Voting Event or an Exempt Exchangeable Share Voting
Event (each as defined in the Exchangeable Share Provisions), in which
case Callco shall so notify the Transfer Agent and Canco on or before
the Redemption Date. The Transfer Agent will notify the holders of the
Exchangeable Shares as to whether Callco has exercised the Redemption
Call Right forthwith after the expiry of the period during which the
same may be exercised by Callco. If Callco exercises the Redemption
Call Right, then, on the Redemption Date, Callco will purchase and the
holders of Exchangeable Shares will sell all of the Exchangeable
Shares then outstanding for a price per share equal to the Redemption
Call Purchase Price.
(c) For the purposes of completing the purchase of the Exchangeable Shares
pursuant to the exercise of the Redemption Call Right, Callco shall
deposit or cause to be deposited with the Transfer Agent, on or before
the Redemption Date, the Exchangeable Share Consideration representing
the total Redemption Call Purchase Price. Provided that such
Exchangeable Share Consideration has been so deposited with the
Transfer Agent, on and after the Redemption Date the holders of the
Exchangeable Shares shall cease to be holders of the Exchangeable
Shares and shall not be entitled to exercise any of the rights of
holders in respect thereof (including any rights under the Voting and
Exchange Trust Agreement), other than the right to receive their
proportionate part of the total Redemption Call Purchase Price payable
by Callco, without interest, upon presentation and surrender by the
holder of certificates representing the Exchangeable Shares held by
such holder and the holder shall on and after the Redemption Date be
considered and deemed for all purposes to be the holder of Acquiror
Shares to which
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such holder is entitled. Upon surrender to the Transfer Agent of a
certificate or certificates representing Exchangeable Shares, together
with such other documents and instruments as may be required to effect a
transfer of Exchangeable Shares under the Act and the by-laws of Canco
and such additional documents and instruments as the Transfer Agent may
reasonably require, the holder of such surrendered certificate or
certificates shall be entitled to receive in exchange therefor, and the
Transfer Agent on behalf of Callco shall deliver to such holder, the
Exchangeable Share Consideration to which such holder is entitled. If
Callco does not exercise the Redemption Call Right in the manner
described above, on the Redemption Date the holders of the Exchangeable
Shares will be entitled to receive in exchange therefor the Redemption
Price otherwise payable by Canco in connection with the redemption of
the Exchangeable Shares pursuant to Article 7 of the Exchangeable Share
Provisions.
5.3 CHANGE OF LAW CALL RIGHT
(a) Acquiror shall have the overriding right (the "Change of Law Call
Right"), in the event of a Change of Law, to purchase (or to cause
Callco to purchase) from all but not less than all of the holders of
Exchangeable Shares (other than any holder of Exchangeable Shares
which is an affiliate of Acquiror) all but not less than all of the
Exchangeable Shares held by each such holder upon payment by Acquiror
or Callco, as the case may be, of an amount per share (the "Change of
Law Call Purchase Price") equal to the Exchangeable Share Price
applicable on the last Business Day prior to the Change of Law Call
Date, in accordance with Section 5.3(c). In the event of the exercise
of the Change of Law Call Right by Acquiror or Callco, as the case may
be, each holder of Exchangeable Shares shall be obligated to sell all
the Exchangeable Shares held by such holder to Acquiror or Callco, as
the case may be, on the Change of Law Call Date upon payment by
Acquiror to such holder of the Change of Law Call Purchase Price for
each such Exchangeable Share.
(b) To exercise the Change of Law Call Right, Acquiror or Callco must
notify the Transfer Agent of its intention to exercise such right at
least 45 days before the date on which Acquiror or Callco intends to
acquire the Exchangeable Shares (the "Change of Law Call Date"). If
Acquiror or Callco exercises the Change of Law Call Right, then, on
the Change of Law Call Date, Acquiror or Callco, as the case may be,
will purchase and the holders of Exchangeable Shares will sell all of
the Exchangeable Shares then outstanding for a price per share equal
to the Change of Law Call Purchase Price.
(c) For the purposes of completing the purchase of the Exchangeable Shares
pursuant to the exercise of the Change of Law Call Right, Acquiror or
Callco, as the case may be, shall deposit or cause to be deposited
with the Transfer Agent, on or before the Change of Law Call Date, the
Exchangeable Share Consideration representing the total Change of Law
Call Purchase Price. Provided that such Exchangeable Share
Consideration has been so deposited with the Transfer Agent, on and
after the Change of Law Call Date the holders of the Exchangeable
Shares shall cease to be holders of the Exchangeable Shares and shall
not be entitled to exercise any of the rights of holders in respect
thereof (including any rights under the Voting and Exchange Trust
Agreement), other than the right to receive their proportionate part
of the total Change of Law Purchase Price payable by Acquiror or
Callco, as the case may be, without interest, upon presentation and
surrender by the holder of certificates representing the Exchangeable
Shares held by such holder and the holder shall on and after the
Change of Law Call Date be considered and deemed for all purposes to
be the holder of Acquiror Shares to which such holder is entitled.
Upon surrender to the Transfer Agent of a certificate or certificates
representing Exchangeable Shares, together with such other documents
and instruments as may be required to effect a transfer of
Exchangeable Shares under the Act and the by-laws of Canco and such
additional documents and instruments as the Transfer Agent may
reasonably require, the holder of such surrendered certificate or
certificates shall be entitled to receive in exchange therefor, and
the Transfer Agent on behalf of Acquiror or Callco, as the
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case may be, shall deliver to such holder, the Exchangeable Share
Consideration to which such holder is entitled.
ARTICLE 6
AMENDMENT
6.1 PLAN OF ARRANGEMENT AMENDMENT
The Corporation and Acquiror reserve the right to amend, modify and/or
supplement this Plan of Arrangement from time to time at any time prior to the
Effective Time provided that any such amendment, modification or supplement must
be contained in a written document that is (a) agreed to by Acquiror, (b) filed
with the Court and, if made following the Shareholder Meeting, approved by the
Court, and (c) communicated to Shareholders and holders of Options, Warrants and
Share Purchase Rights in the manner required by the Court (if so required).
Any amendment, modification or supplement to this Plan of Arrangement may
be proposed by the Corporation and Acquiror at any time prior to or at the
Shareholder Meeting (provided that Acquiror shall have consented thereto) with
or without any other prior notice or communication, and if so proposed and
accepted by the persons voting at the Shareholder Meeting (other than as may be
required under the Interim Order), shall become part of this Plan of Arrangement
for all purposes.
Any amendment, modification or supplement to this Plan of Arrangement which
is approved or directed by the Court following the Shareholder Meeting shall be
effective only if it is consented to by each of the Corporation and Acquiror,
and if required by the Court or applicable law, it is consented to by the
Shareholders and holders of Options, Warrants and Share Purchase Rights or the
holders of the Exchangeable Shares, as the case may be.
Subject to applicable law, any amendment, modification or supplement to
this Plan of Arrangement may be made following the Effective Time unilaterally
by Acquiror; provided that it concerns a matter which, in the reasonable opinion
of Acquiror, is of an administrative nature required to better give effect to
the implementation of this Plan of Arrangement and is not adverse to the
financial or economic interests of any Shareholders or holders of Options,
Warrants and Share Purchase Rights.
ARTICLE 7
FURTHER ASSURANCES
7.1 FURTHER ASSURANCES
Notwithstanding that the transactions and events set out herein shall occur
and be deemed to occur in the order set out in this Plan of Arrangement without
any further act or formality, each of the parties to the
Acquisition Agreement
shall make, do and execute, or cause to be made, done and executed, all such
further acts, deeds, agreements, transfers, assurances, instruments or documents
as may reasonably be required by any of them in order further to document or
evidence any of the transactions or events set out herein.
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APPENDIX 1
TO THE PLAN OF ARRANGEMENT
PROVISIONS ATTACHING TO THE
EXCHANGEABLE SHARES OF NABORS EXCHANGECO (CANADA) INC.
The Exchangeable Shares shall have the following rights, privileges,
restrictions and conditions:
ARTICLE 1
INTERPRETATION
1.1 For the purposes of these share provisions:
"Acquiror" means ▇▇▇▇▇▇ Industries Inc., a corporation incorporated under
the laws of Delaware;
"Acquiror Control Transaction" means any merger, amalgamation, tender
offer, material sale of shares or rights or interests therein or thereto or
similar transactions involving Acquiror, or any proposal to carry out the
same;
"Acquiror Dividend Declaration Date" means the date on which the board of
directors of Acquiror declares any dividend on the Acquiror Shares;
"Acquiror Shares" means the shares in the common stock of Acquiror and any
other securities into which such shares may be changed, exchanged or
converted;
"Acquisition Agreement" means the acquisition agreement by and between
Acquiror and Enserco dated February 25, 2002, as amended and restated from
time to time, providing for, among other things, the Arrangement;
"Affiliate" has the meaning ascribed thereto in the Securities Act, unless
otherwise expressly stated herein;
"Arrangement" means an arrangement under section 192 of the CBCA on the
terms and subject to the conditions set out in the Plan of Arrangement to
which plan these share provisions are attached as Appendix 1 and which Plan
of Arrangement (other than Appendix 1 thereto) is attached to the
Acquisition Agreement as Schedule B, subject to any amendments or
variations thereto made in accordance with Article 6 of the Plan of
Arrangement or made at the direction of the Court in the Final Order;
"Board of Directors" means the board of directors of the Company;
"Business Day" means any day on which commercial banks are generally open
for business in ▇▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇ ▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇, other than a Saturday,
a Sunday or a day observed as a holiday in Houston, Texas under the laws of
the State of Texas or the federal laws of the United States of America or
in Calgary, Alberta under the laws of the Province of Alberta or the
federal laws of Canada;
"Callco" means 3064297 Nova Scotia Company, an unlimited liability company
existing under the laws of the Province of Nova Scotia and an indirect
wholly-owned subsidiary of Acquiror;
"Callco Call Notice" has the meaning ascribed thereto in Section 6.3 of
these share provisions;
"Canadian Dollar Equivalent" means in respect of an amount expressed in a
currency other than Canadian dollars (the "Foreign Currency Amount") at any
date the product obtained by multiplying:
(a) the Foreign Currency Amount, by
(b) the noon spot exchange rate on such date for such foreign currency
expressed in Canadian dollars as reported by the Bank of Canada or, in
the event such spot exchange rate is not
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available, such spot exchange rate on such date for such foreign
currency expressed in Canadian dollars as may be deemed by the Board of
Directors to be appropriate for such purpose;
"CBCA" means Canada Business Corporations Act, as amended from time to time
prior to the Effective Date;
"Change of Law Call Right" has the meaning ascribed thereto in the Plan of
Arrangement;
"Common Shares" means the common shares in the capital of the Company;
"Company" or "Canco" means Nabors Exchangeco (Canada) Inc., a corporation
existing under the CBCA;
"Court" has the meaning ascribed thereto in the Plan of Arrangement;
"Current Market Price" means, in respect of an Acquiror Share on any date,
the Canadian Dollar Equivalent of the average of the closing bid and asked
prices of Acquiror Shares during a period of 20 consecutive trading days
ending not more than three trading days before such date on the American
Stock Exchange, or, if the Acquiror Shares are not then listed on the
American Stock Exchange, on such other stock exchange or automated
quotation system on which the Acquiror Shares are listed or quoted, as the
case may be, as may be selected by the Board of Directors for such purpose;
provided, however, that if in the opinion of the Board of Directors the
public distribution or trading activity of Acquiror Shares during such
period does not create a market which reflects the fair market value of an
Acquiror Share, then the Current Market Price of an Acquiror Share shall be
determined by the Board of Directors, in good faith and in its sole
discretion, and provided further that any such selection, opinion or
determination by the Board of Directors shall be conclusive and binding;
"Director" means the Director appointed pursuant to section 260 of the
CBCA;
"Effective Date" means the effective date of the Arrangement, being the
date shown on the certificate of arrangement to be issued by the Director
under the CBCA giving effect to the Arrangement;
"Effective Time" means 12:01 a.m. (Calgary time) on the Effective Date;
"Enserco" means Enserco Energy Service Company Inc., a corporation existing
under the laws of Canada;
"Enserco Shares" means the common shares in the capital of Enserco;
"Exchangeable Shares" mean the non-voting exchangeable shares in the
capital of the Company, having the rights, privileges, restrictions and
conditions set forth herein;
"Exchangeable Share Consideration" means, with respect to each Exchangeable
Share, for any acquisition of, redemption of or distribution of assets of
the Company in respect of, or purchase pursuant to, these share provisions,
the Plan of Arrangement, the Support Agreement or the Voting and Exchange
Trust Agreement:
(a) the Current Market Price of one Acquiror Share deliverable in
connection with such action; plus
(b) a cheque or cheques payable at par at any branch of the bankers of the
payor in the amount of all declared, payable and unpaid, and all
undeclared but payable, cash dividends deliverable in connection with
such action; plus
(c) such stock or other property constituting any declared and unpaid
non-cash dividends deliverable in connection with such action,
provided that (i) the part of the consideration which represents (a) above
shall be fully paid and satisfied by the delivery of one Acquiror Share,
such share to be duly issued, fully paid and non-assessable, (ii) the part
of the consideration which represents (c) above shall be fully paid and
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satisfied by delivery of such non-cash items, (iii) any such consideration
shall be delivered free and clear of any lien, claim, encumbrance, security
interest or adverse claim or interest and (iv) any such consideration shall
be paid less any tax required to be deducted and withheld therefrom and
without interest;
"Exchangeable Share Price" means, for each Exchangeable Share, an amount
equal to the aggregate of:
(a) the Current Market Price of one Acquiror Share; plus
(b) an additional amount equal to the full amount of all cash dividends
declared, payable and unpaid, on such Exchangeable Share; plus
(c) an additional amount equal to the full amount of all dividends
declared and payable or paid on Acquiror Shares which have not been
declared or paid on Exchangeable Shares in accordance herewith; plus
(d) an additional amount representing the full amount of all non-cash
dividends declared, payable and unpaid, on such Exchangeable Share;
"Exchangeable Share Voting Event" means any matter in respect of which
holders of Exchangeable Shares are entitled to vote as shareholders of the
Company, other than an Exempt Exchangeable Share Voting Event, and, for
greater certainty, excluding any matter in respect of which holders of
Exchangeable Shares are entitled to vote (or instruct the Trustee to vote)
in their capacity as Beneficiaries under (and as that term is defined in)
the Voting and Exchange Trust Agreement;
"Exempt Exchangeable Share Voting Event" means any matter in respect of
which holders of Exchangeable Shares are entitled to vote as shareholders
of the Company in order to approve or disapprove, as applicable, any change
to, or in the rights of the holders of, the Exchangeable Shares, where the
approval or disapproval, as applicable, of such change would be required to
maintain the equivalence of the Exchangeable Shares and the Acquiror
Shares;
"Final Order" has the meaning ascribed thereto in the Plan of Arrangement;
"Governmental Entity" means any (a) multinational, federal, provincial,
territorial, 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)
subdivision, agent, commission, board, or authority of any of the
foregoing, or (c) quasi-governmental or private body exercising any
regulatory, expropriation or taxing authority under or for the account of
any of the foregoing;
"Holder" means, when used with reference to the Exchangeable Shares, the
holders of Exchangeable Shares shown from time to time in the register
maintained by or on behalf of the Company in respect of the Exchangeable
Shares;
"Liquidation Amount" has the meaning ascribed thereto in Section 5.1(a) of
these share provisions;
"Liquidation Call Right" has the meaning ascribed thereto in the Plan of
Arrangement;
"Liquidation Date" has the meaning ascribed thereto in Section 5.1(a) of
these share provisions;
"Options" has the meaning ascribed thereto in the Plan of Arrangement;
"Person" includes any individual, firm, partnership, joint venture, venture
capital fund, limited liability company, unlimited liability company,
association, trust, trustee, executor, administrator, legal personal
representative, estate, group, body corporate, corporation, unincorporated
association or organization, Governmental Entity, syndicate or other
entity, whether or not having legal status;
"Plan of Arrangement" means the plan of arrangement involving and affecting
Enserco, Acquiror, Callco, the Company, all holders and all beneficial
owners of Enserco Shares, all holders and all beneficial owners of
Exchangeable Shares and all holders and all beneficial owners of, inter
alia,
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Options under section 192 of the CBCA contemplated in the Acquisition
Agreement, to which these share provisions are attached as Appendix 1;
"Purchase Price" has the meaning ascribed thereto in Section 6.3 of these
share provisions;
"Redemption Call Purchase Price" has the meaning ascribed thereto in the
Plan of Arrangement;
"Redemption Call Right" has the meaning ascribed thereto in the Plan of
Arrangement;
"Redemption Date" means the date, if any, established by the Board of
Directors for the redemption by the Company of all but not less than all of
the outstanding Exchangeable Shares pursuant to Article 7 of these share
provisions, which date shall be no earlier than the fifth anniversary of
the Effective Date, unless:
(a) there are less than 1,500,000 Exchangeable Shares outstanding (other
than Exchangeable Shares held by Acquiror and its Affiliates);
(b) an Acquiror Control Transaction occurs, in which case, provided that
the Board of Directors determines, in good faith and in its sole
discretion, that it is not reasonably practicable to substantially
replicate the terms and conditions of the Exchangeable Shares in
connection with such an Acquiror Control Transaction and that the
redemption of all but not less than all of the outstanding
Exchangeable Shares is necessary to enable the completion of such
Acquiror Control Transaction in accordance with its terms, the Board
of Directors may accelerate such redemption date to such date prior to
the fifth anniversary of the Effective Date as it may determine, upon
such number of days' prior written notice to the registered holders of
the Exchangeable Shares and the Trustee as the Board of Directors may
determine to be reasonably practicable in such circumstances; provided
that, for greater certainty, the proposed reorganization of Acquiror,
as publicly disclosed by Acquiror on January 2, 2002 and as generally
described in the draft registration statement filed by the Acquiror
with the United States Securities and Exchange Commission on or about
such date, as amended or supplemented from time to time, shall not in
any event constitute an Acquiror Control Transaction for purposes
hereof;
(c) an Exchangeable Share Voting Event is proposed, in which case,
provided that the Board of Directors has determined, in good faith and
in its sole discretion, that it is not reasonably practicable to
accomplish the business purpose intended by the Exchangeable Share
Voting Event, which business purpose must be bona fide and not for the
primary purpose of causing the occurrence of a Redemption Date, the
redemption date shall be the Business Day prior to the record date for
any meeting or vote of the holders of the Exchangeable Shares to
consider the Exchangeable Share Voting Event and the Board of
Directors shall give such number of days' prior written notice of such
redemption to the registered holders of the Exchangeable Shares and
the Trustee as the Board of Directors may determine to be reasonably
practicable in such circumstances; or
(d) an Exempt Exchangeable Share Voting Event is proposed and the holders
of the Exchangeable Shares fail to take the necessary action at a
meeting or other vote of holders of Exchangeable Shares, to approve or
disapprove, as applicable, the Exempt Exchangeable Share Voting Event,
in which case the redemption date shall be the Business Day following
the day on which the holders of the Exchangeable Shares failed to take
such action,
provided, however, that the accidental failure or omission to give any
notice of redemption under clauses (a), (b) or (c) above to any of such
holders of Exchangeable Shares shall not affect the validity of any such
redemption;
"Redemption Price" has the meaning ascribed thereto in Section 7.1 of these
share provisions;
"Retracted Shares" has the meaning ascribed thereto in Section 6.1(a) of
these share provisions;
"Retraction Call Right" has the meaning ascribed thereto in Section 6.1(c)
of these share provisions;
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"Retraction Date" has the meaning ascribed thereto in Section 6.1(b) of
these share provisions;
"Retraction Price" has the meaning ascribed thereto in Section 6.1 of these
share provisions;
"Retraction Request" has the meaning ascribed thereto in Section 6.1 of
these share provisions;
"Securities Act" means the Securities Act (Alberta) 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 Effective Date;
"Support Agreement" means the agreement made between Acquiror, Callco and
the Company substantially in the form and content of Schedule E annexed to
the Acquisition Agreement, with such changes thereto as the parties to the
Acquisition Agreement, acting reasonably, may agree;
"Transfer Agent" means Computershare Trust Company of Canada or such other
Person as may from time to time be appointed by the Company as the
registrar and transfer agent for the Exchangeable Shares;
"Trustee" means Computershare Trust Company of Canada or such other trustee
as is chosen by Acquiror and Enserco, acting reasonably, to act as trustee
under the Voting and Exchange Trust Agreement, being a corporation
organized and existing under the laws of Canada, and any successor trustee
appointed under the Voting and Exchange Trust Agreement; and
"Voting and Exchange Trust Agreement" means the agreement made among
Acquiror, the Company and the Trustee in connection with the Plan of
Arrangement substantially in the form and content of Schedule F annexed to
the Acquisition Agreement with such changes thereto as the parties to the
Acquisition Agreement, acting reasonably, may agree.
ARTICLE 2
RANKING OF EXCHANGEABLE SHARES
2.1 The Exchangeable Shares shall be entitled to a preference over the Common
Shares and any other shares ranking junior to the Exchangeable Shares with
respect to the payment of dividends and the distribution of assets in the
event of the liquidation, dissolution or winding-up of the Company, whether
voluntary or involuntary, or any other distribution of the assets of the
Company, among its shareholders for the purpose of winding-up its affairs.
ARTICLE 3
DIVIDENDS
3.1 A holder of an Exchangeable Share shall be entitled to receive and the Board
of Directors shall, subject to applicable law, on each Acquiror Dividend
Declaration Date, declare a dividend on each Exchangeable Share:
(a) in the case of a cash dividend declared on the Acquiror Shares, in an
amount in cash for each Exchangeable Share in U.S. dollars, or the
Canadian Dollar Equivalent thereof on the Acquiror Dividend
Declaration Date, in each case, corresponding to the cash dividend
declared on each Acquiror Share;
(b) in the case of a stock dividend declared on the Acquiror Shares, to be
paid in Acquiror Shares, subject to Section 3.2, by the issue or
transfer by the Company of such number of Exchangeable Shares for each
Exchangeable Share as is equal to the number of Acquiror Shares to be
paid on each Acquiror Share; or
(c) in the case of a dividend declared on the Acquiror Shares in property
other than cash or Acquiror Shares, in such type and amount of
property for each Exchangeable Share as is the same as or economically
equivalent to (to be determined by the Board of Directors as
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contemplated by Section 3.6) the type and amount of property declared as
a dividend on each Acquiror Share.
Such dividends shall be paid out of money, assets or property of the
Company properly applicable to the payment of dividends, or out of
authorized but unissued shares of the Company, as applicable.
3.2 In the case of a stock dividend declared on the Acquiror Shares to be paid
in Acquiror Shares, in lieu of declaring the stock dividend contemplated by
Section 3.1(b) on the Exchangeable Shares, the Board of Directors may, in
good faith and in its discretion and subject to applicable law and to
obtaining all required regulatory approvals, subdivide, redivide or change
(the "Subdivision") each issued and unissued Exchangeable Share on the basis
that each Exchangeable Share before the subdivision becomes a number of
Exchangeable Shares equal to the sum of (i) one Acquiror Share and (ii) the
number of Acquiror Shares to be paid as a share dividend on each Acquiror
Share. In making such Subdivision, the Board of Directors shall consider the
effect thereof upon the then outstanding Exchangeable Shares and the general
taxation consequences of the Subdivision to the holders of the Exchangeable
Shares. In such instance, and notwithstanding any other provision hereof,
such Subdivision shall become effective on the effective date specified in
Section 3.4 without any further act or formality on the part of the Board of
Directors or of the holders of Exchangeable Shares. For greater certainty,
subject to applicable law, no approval of the Holders to an amendment to the
articles of the Company shall be required to give effect to such
Subdivision.
3.3 Cheques of the Company payable at par at any branch of the bankers of the
Company shall be issued in respect of any cash dividends contemplated by
Section 3.1(a) and the sending of such a cheque to each holder of an
Exchangeable Share shall satisfy the cash dividend represented thereby
unless the cheque is not paid on presentation. Subject to applicable law,
certificates registered in the name of the registered holder of Exchangeable
Shares shall be issued or transferred in respect of any stock dividends
contemplated by Section 3.1(b) or any Subdivision contemplated by Section
3.2 and the sending of such a certificate to each holder of an Exchangeable
Share shall satisfy the stock dividend represented thereby. Such other type
and amount of property in respect of any dividends contemplated by Section
3.1(c) shall be issued, distributed or transferred by the Company in such
manner as it shall determine and the issuance, distribution or transfer
thereof by the Company to each holder of an Exchangeable Share shall satisfy
the dividend represented thereby. No holder of an Exchangeable Share shall
be entitled to recover by action or other legal process against the Company
any dividend that is represented by a cheque that has not been duly
presented to the Company's bankers for payment or that otherwise remains
unclaimed for a period of six years from the date on which such dividend was
first payable.
3.4 The record date for the determination of the holders of Exchangeable Shares
entitled to receive payment of, and the payment date for, any dividend
declared on the Exchangeable Shares under Section 3.1 shall be the same
dates as the record date and payment date, respectively, for the
corresponding dividend declared on the Acquiror Shares. The record date for
the determination of the holders of Exchangeable Shares entitled to receive
Exchangeable Shares in connection with any Subdivision of the Exchangeable
Shares under Section 3.2 and the effective date of such Subdivision shall be
the same dates as the record date and payment date, respectively, for the
corresponding dividend declared on the Acquiror Shares.
3.5 If on any payment date for any dividends declared on the Exchangeable Shares
under Section 3.1 the dividends are not paid in full on all of the
Exchangeable Shares then outstanding, any such dividends that remain unpaid
shall be paid on the earliest subsequent date or dates determined by the
Board of Directors on which the Company shall have sufficient moneys, assets
or property properly applicable to the payment of such dividends.
3.6 The Board of Directors shall determine, in good faith and in its sole
discretion, economic equivalence for the purposes of Sections 3.1 and 3.2
and Article 11, and each such determination shall be conclusive and binding
on the Company and its shareholders. In making each such determination, the
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following factors shall, without excluding other factors determined by the
Board of Directors to be relevant, be considered by the Board of Directors:
(a) in the case of any stock dividend or other distribution payable in
Acquiror Shares, the number of such shares issued in proportion to the
number of Acquiror Shares previously outstanding;
(b) in the case of the issuance or distribution of any rights, options or
warrants to subscribe for or purchase Acquiror Shares (or securities
exchangeable for or convertible into or carrying rights to acquire
Acquiror Shares), the relationship between the exercise price of each
such right, option or warrant and the Current Market Price, the
volatility of the Acquiror Shares and the term of any such instrument;
(c) in the case of the issuance or distribution of any other form of
property (including any shares or securities of Acquiror of any class
other than Acquiror Shares, any rights, options or warrants other than
those referred to in Section 3.6(b) above, any evidences of
indebtedness of Acquiror or any assets of Acquiror) the relationship
between the fair market value (as determined by the Board of Directors
in the manner above contemplated) of such property to be issued or
distributed with respect to each outstanding Acquiror Share and the
Current Market Price; and
(d) in all such cases, the general taxation consequences of the relevant
event to holders of Exchangeable Shares to the extent that such
consequences may differ from the taxation consequences to holders of
Acquiror Shares as a result of differences between taxation laws of
Canada and the United States (except for any differing consequences
arising as a result of differing marginal taxation rates and without
regard to the individual circumstances of holders of Exchangeable
Shares).
3.7 Except as provided in this , the holders of Exchangeable Shares shall not be
entitled to receive dividends in respect thereof.
ARTICLE 4
CERTAIN RESTRICTIONS
4.1 So long as any of the Exchangeable Shares are outstanding, the Company shall
not at any time without, but may at any time with, the approval of the
holders of the Exchangeable Shares given as specified in Section 10.2 of
these share provisions:
(a) pay any dividends on the Common Shares or any other shares ranking
junior to the Exchangeable Shares with respect to the payment of
dividends, other than stock dividends payable in Common Shares or any
such other shares ranking junior to the Exchangeable Shares, as the
case may be;
(b) redeem or purchase or make any capital distribution in respect of
Common Shares or any other shares ranking junior to the Exchangeable
Shares with respect to the payment of dividends or on any liquidation,
dissolution or winding-up of the Company or any other distribution of
the assets of the Company;
(c) redeem or purchase or make any capital distribution in respect of any
other shares of the Company ranking equally with the Exchangeable
Shares with respect to the payment of dividends or on any liquidation,
dissolution or winding-up of the Company or any other distribution of
the assets of the Company; or
(d) issue any Exchangeable Shares or any other shares of the Company
ranking equally with, or superior to, the Exchangeable Shares other
than by way of stock dividends to the holders of such Exchangeable
Shares;
provided that the restrictions in Sections 4.1(a), (b), (c) and (d) shall
not apply if all dividends on the outstanding Exchangeable Shares
corresponding to dividends declared and paid to date on the Acquiror Shares
shall have been declared and paid on the Exchangeable Shares.
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ARTICLE 5
DISTRIBUTION ON LIQUIDATION
5.1 In the event of the liquidation, dissolution or winding-up of the Company or
any other distribution of the assets of the Company among its shareholders
for the purpose of winding up its affairs, a holder of Exchangeable Shares
shall be entitled, subject to applicable law and to the exercise by Callco
of the Liquidation Call Right, to receive from the assets of the Company in
respect of each Exchangeable Share held by such holder on the effective date
(the "Liquidation Date") of such liquidation, dissolution, winding-up or
distribution of assets, before any distribution of any part of the assets of
the Company among the holders of the Common Shares or any other shares
ranking junior to the Exchangeable Shares, an amount per share equal to the
Exchangeable Share Price applicable on the last Business Day prior to the
Liquidation Date (the "Liquidation Amount").
5.2 On or promptly after the Liquidation Date, and subject to the exercise by
Callco of the Liquidation Call Right, the Company shall cause to be
delivered to the holders of the Exchangeable Shares the Liquidation Amount
for each such Exchangeable Share upon presentation and surrender of the
certificates representing such Exchangeable Shares, together with such other
documents and instruments as may be required to effect a transfer of
Exchangeable Shares under the CBCA and the articles and by-laws of the
Company and such additional documents and instruments as the Transfer Agent
and the Company may reasonably require, at the registered office of the
Company or at any office of the Transfer Agent as may be specified by the
Company by notice to the holders of the Exchangeable Shares. Payment of the
total Liquidation Amount for such Exchangeable Shares shall be made by
delivery to each holder, at the address of the holder recorded in the
register of the Company for the Exchangeable Shares or by holding for
pick-up by the holder at the registered office of the Company or at any
office of the Transfer Agent as may be specified by the Company by notice to
the holders of Exchangeable Shares, on behalf of the Company of the
Exchangeable Share Consideration representing the total Liquidation Amount.
On and after the Liquidation Date, the holders of the Exchangeable Shares
shall cease to be holders of such Exchangeable Shares and shall not be
entitled to exercise any of the rights of holders in respect thereof
(including any rights under the Voting and Exchange Trust Agreement), other
than the right to receive their proportionate part of the total Liquidation
Amount, unless payment of the total Liquidation Amount for such Exchangeable
Shares shall not be made upon presentation and surrender of share
certificates in accordance with the foregoing provisions, in which case the
rights of the holders shall remain unaffected until the total Liquidation
Amount to which such holders are entitled shall have been paid to such
holders in the manner hereinbefore provided. The Company shall have the
right at any time on or before the Liquidation Date to deposit or cause to
be deposited the Exchangeable Share Consideration in respect of the
Exchangeable Shares represented by certificates that have not at the
Liquidation Date been surrendered by the holders thereof in a custodial
account with any chartered bank or trust company in Canada. Upon such
deposit being made, the rights of the holders of Exchangeable Shares, after
such deposit, shall be limited to receiving their proportionate part of the
total Liquidation Amount for such Exchangeable Shares so deposited, against
presentation and surrender of the said certificates held by them,
respectively, in accordance with the foregoing provisions. Upon such payment
or deposit of such Exchangeable Share Consideration, the holders of the
Exchangeable Shares shall thereafter be considered and deemed for all
purposes to be holders of the Acquiror Shares delivered to them or the
custodian on their behalf.
5.3 After the Company has satisfied its obligations to pay the holders of the
Exchangeable Shares the Liquidation Amount per Exchangeable Share pursuant
to Section 5.1 of these share provisions, such holders shall not be entitled
to share in any further distribution of the assets of the Company.
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ARTICLE 6
RETRACTION OF EXCHANGEABLE SHARES BY HOLDER
6.1 A holder of Exchangeable Shares shall be entitled at any time, subject to
the exercise by Callco of the Retraction Call Right and otherwise upon
compliance with the provisions of this Article 6, to require the Company to
redeem any or all of the Exchangeable Shares registered in the name of such
holder for an amount per share equal to the Exchangeable Share Price
applicable on the last Business Day prior to the Retraction Date (the
"Retraction Price"), which shall be satisfied in full by the Company
causing to be delivered to such holder the Exchangeable Share Consideration
representing the Retraction Price. To effect such redemption, the holder
shall present and surrender at the registered office of the Company or at
any office of the Transfer Agent as may be specified by the Company by
notice to the holders of Exchangeable Shares, the certificate or
certificates representing the Exchangeable Shares which the holder desires
to have the Company redeem, together with such other documents and
instruments as may be required to effect a transfer of Exchangeable Shares
under the CBCA and the articles and bylaws of the Company and such
additional documents and instruments as the Transfer Agent and the Company
may reasonably require, and together with a duly executed statement (the
"Retraction Request") in the form of Schedule A hereto or in such other
form as may be acceptable to the Company:
(a) specifying that the holder desires to have all or any number specified
therein of the Exchangeable Shares represented by such certificate or
certificates (the "Retracted Shares") redeemed by the Company;
(b) stating the Business Day on which the holder desires to have the
Company redeem the Retracted Shares (the "Retraction Date"), provided
that the Retraction Date shall be not less than 10 Business Days nor
more than 15 Business Days after the date on which the Retraction
Request is received by the Company and further provided that, in the
event that no such Business Day is specified by the holder in the
Retraction Request, the Retraction Date shall be deemed to be the 15th
Business Day after the date on which the Retraction Request is received
by the Company; and
(c) acknowledging the overriding right (the "Retraction Call Right") of
Callco to purchase all but not less than all the Retracted Shares
directly from the holder and that the Retraction Request shall be
deemed to be a revocable offer by the holder to sell the Retracted
Shares to Callco in accordance with the Retraction Call Right on the
terms and conditions set out in Section 6.3 below.
6.2 Subject to the exercise by Callco of the Retraction Call Right, upon
receipt by the Company or the Transfer Agent in the manner specified in
Section 6.1 of a certificate or certificates representing the number of
Retracted Shares, together with a Retraction Request and such additional
documents and instruments as the Transfer Agent and the Company may
reasonably require, and provided that the Retraction Request is not revoked
by the holder in the manner specified in Section 6.7, the Company shall
redeem the Retracted Shares effective at the close of business on the
Retraction Date and shall cause to be delivered to such holder the total
Retraction Price with respect to such shares in accordance with Section
6.4. If only a part of the Exchangeable Shares represented by any
certificate is redeemed (or purchased by Callco pursuant to the Retraction
Call Right), a new certificate for the balance of such Exchangeable Shares
shall be issued to the holder at the expense of the Company.
6.3 Upon receipt by the Company of a Retraction Request, the Company shall
immediately notify Callco thereof and shall provide to Callco a copy of the
Retraction Request. In order to exercise the Retraction Call Right, Callco
must notify the Company of its determination to do so (the "Callco Call
Notice") within five Business Days of receipt by the Company of the
Retraction Request. If Callco does not so notify the Company within such
five Business Day period, the Company will notify the holder as soon as
possible thereafter that Callco will not exercise the Retraction Call
Right. If Callco delivers the Callco Call Notice within such five Business
Day period, and provided that the Retraction Request is not revoked by the
holder in the manner specified in Section 6.7, the Retraction
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Request shall thereupon be considered only to be an offer by the holder to
sell all but not less than all the Retracted Shares to Callco in accordance
with the Retraction Call Right. In such event, the Company shall not redeem
the Retracted Shares and Callco shall purchase from such holder and such
holder shall sell to Callco on the Retraction Date all but not less than
all the Retracted Shares for a purchase price (the "Purchase Price") per
share equal to the Retraction Price, which, as set forth in Section 6.4,
shall be fully paid and satisfied by the delivery by or on behalf of
Callco, of the Exchangeable Share Consideration representing the total
Purchase Price. For the purposes of completing a purchase pursuant to the
Retraction Call Right, Callco shall deposit with the Transfer Agent, on or
before the Retraction Date, the Exchangeable Share Consideration
representing the total Purchase Price. Provided that Callco has complied
with Section 6.4, the closing of the purchase and sale of the Retracted
Shares pursuant to the Retraction Call Right shall be deemed to have
occurred as at the close of business on the Retraction Date and, for
greater certainty, no redemption by the Company of such Retracted Shares
shall take place on the Retraction Date. In the event that Callco does not
deliver a Callco Call Notice within such five Business Day period, and
provided that the Retraction Request is not revoked by the holder in the
manner specified in Section 6.7, the Company shall redeem the Retracted
Shares on the Retraction Date and in the manner otherwise contemplated in
this Article 6.
6.4 The Company or Callco, as the case may be, shall deliver or cause the
Transfer Agent to deliver to the relevant holder, at the address of the
holder recorded in the register of the Company for the Exchangeable Shares
or at the address specified in the holder's Retraction Request or, if
specified in such Retraction Request, by holding for pick-up by the holder
at the registered office of the Company or at any office of the Transfer
Agent as may be specified by the Company by notice to such holder of
Exchangeable Shares, the Exchangeable Share Consideration representing the
total Retraction Price or the total Purchase Price, as the case may be, and
such delivery of such Exchangeable Share Consideration to the Transfer
Agent shall be deemed to be payment of and shall satisfy and discharge all
liability for the total Retraction Price or total Purchase Price, as the
case may be, to the extent that the same is represented by such
Exchangeable Share Consideration.
6.5 On and after the close of business on the Retraction Date, the holder of
the Retracted Shares shall cease to be a holder of such Retracted Shares
and shall not be entitled to exercise any of the rights of a holder in
respect thereof, other than the right to receive the total Retraction Price
or total Purchase Price, as the case may be, unless upon presentation and
surrender of certificates in accordance with the foregoing provisions,
payment of the total Retraction Price or the total Purchase Price, as the
case may be, shall not be made as provided in Section 6.4, in which case
the rights of such holder shall remain unaffected until the total
Retraction Price or the total Purchase Price, as the case may be, has been
paid in the manner hereinbefore provided. On and after the close of
business on the Retraction Date, provided that presentation and surrender
of certificates and payment of the total Retraction Price or the total
Purchase Price, as the case may be, has been made in accordance with the
foregoing provisions, the holder of the Retracted Shares so redeemed by the
Company or purchased by Callco shall thereafter be considered and deemed
for all purposes to be the holder of Acquiror Shares delivered to it.
6.6 Notwithstanding any other provision of this Article 6, the Company shall
not be obligated to redeem Retracted Shares specified by a holder in a
Retraction Request to the extent that such redemption of Retracted Shares
would be contrary to solvency requirements or other provisions of
applicable law. If the Company believes, acting reasonably, that on any
Retraction Date it would not be permitted by any of such provisions to
redeem the Retracted Shares tendered for redemption on such date, and
provided that Callco shall not have exercised the Retraction Call Right
with respect to the Retracted Shares, the Company shall only be obligated
to redeem Retracted Shares specified by a holder in a Retraction Request to
the extent of the maximum number that may be so redeemed (rounded down to a
whole number of shares) as would not be contrary to such provisions and
shall notify the holder at least two Business Days prior to the Retraction
Date as to the number of Retracted Shares which will not be redeemed by the
Company. In any case in which the redemption by the Company of
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Retracted Shares would be contrary to solvency requirements or other
provisions of applicable law, the Company shall redeem the maximum number
of Exchangeable Shares which the Board of Directors determines the Company
is permitted to redeem as of the Retraction Date on a pro rata basis and
shall issue to each holder of Retracted Shares a new certificate, at the
expense of the Company, representing the Retracted Shares not redeemed by
the Company pursuant to Section 6.2. Provided that the Retraction Request
is not revoked by the holder in the manner specified in Section 6.7 and
Callco does not exercise the Retraction Call Right, the holder of any such
Retracted Shares not redeemed by the Company pursuant to Section 6.2 as a
result of solvency requirements or other provisions of applicable law shall
be deemed by giving the Retraction Request to have instructed the Trustee
to require Acquiror to purchase such Retracted Shares from such holder on
the Retraction Date or as soon as practicable thereafter on payment by
Acquiror to such holder of the Retraction Price for each such Retracted
Share, all as more specifically provided in the Voting and Exchange Trust
Agreement.
6.7 A holder of Retracted Shares may, by notice in writing given by the holder
to the Company before the close of business on the Business Day immediately
preceding the Retraction Date, withdraw its Retraction Request, in which
event such Retraction Request shall be null and void and, for greater
certainty, the revocable offer constituted by the Retraction Request to
sell the Retracted Shares to Callco shall be deemed to have been revoked.
ARTICLE 7
REDEMPTION OF EXCHANGEABLE SHARES BY THE COMPANY
7.1 Subject to applicable law, and provided Callco has not exercised the
Redemption Call Right, the Company shall on the Redemption Date redeem all
but not less than all of the then outstanding Exchangeable Shares for an
amount per share equal to the Exchangeable Share Price applicable on the
last Business Day prior to the Redemption Date (the "Redemption Price").
7.2 In any case of a redemption of Exchangeable Shares under this Article 7,
the Company shall, at least 45 days before the Redemption Date (other than
a Redemption Date established in connection with an Acquiror Control
Transaction, an Exchangeable Share Voting Event or an Exempt Exchangeable
Share Voting Event), send or cause to be sent to each holder of
Exchangeable Shares a notice in writing of the redemption by the Company or
the purchase by Callco under the Redemption Call Right, as the case may be,
of the Exchangeable Shares held by such holder. In the case of a Redemption
Date established in connection with an Acquiror Control Transaction, an
Exchangeable Share Voting Event or an Exempt Exchangeable Share Voting
Event, the written notice of redemption by the Company or the purchase by
Callco under the Redemption Call Right will be sent on or before the
Redemption Date, on as many days prior written notice as may be determined
by the Board of Directors to be reasonably practicable in the
circumstances. In any such case, such notice shall set out the formula for
determining the Redemption Price or the Redemption Call Purchase Price, as
the case may be, the Redemption Date and, if applicable, particulars of the
Redemption Call Right. In the case of any notice given in connection with a
possible Redemption Date, such notice will be given contingently and will
be withdrawn if the contingency does not occur.
7.3 On or after the Redemption Date and subject to the exercise by Callco of
the Redemption Call Right, the Company shall cause to be delivered to the
holders of the Exchangeable Shares to be redeemed the Redemption Price for
each such Exchangeable Share upon presentation and surrender at the
registered office of the Company or at any office of the Transfer Agent as
may be specified by the Company in the notice described in Section 6.7 of
the certificates representing such Exchangeable Shares, together with such
other documents and instruments as may be required to effect a transfer of
Exchangeable Shares under the CBCA and the articles and by-laws of the
Company and such additional documents and instruments as the Transfer Agent
and the Company may reasonably require. Payment of the total Redemption
Price for such Exchangeable Shares shall be made by delivery to each
holder, at the address of the holder recorded in the securities register of
the Company
1-11
or by holding for pick-up by the holder at the registered office of the
Company or at any office of the Transfer Agent as may be specified by the
Company in such notice, on behalf of the Company of the Exchangeable Share
Consideration representing the total Redemption Price. On and after the
Redemption Date, the holders of the Exchangeable Shares called for
redemption shall cease to be holders of such Exchangeable Shares and shall
not be entitled to exercise any of the rights of holders in respect
thereof, other than the right to receive their proportionate part of the
total Redemption Price, unless payment of the total Redemption Price for
such Exchangeable Shares shall not be made upon presentation and surrender
of certificates in accordance with the foregoing provisions, in which case
the rights of the holders shall remain unaffected until the total
Redemption Price has been paid in the manner hereinbefore provided. The
Company shall have the right at any time after the sending of notice of its
intention to redeem the Exchangeable Shares as aforesaid to deposit or
cause to be deposited the Exchangeable Share Consideration with respect to
the Exchangeable Shares so called for redemption, or of such of the said
Exchangeable Shares represented by certificates that have not at the date
of such deposit been surrendered by the holders thereof in connection with
such redemption, in a custodial account with any chartered bank or trust
company in Canada named in such notice. Upon the later of such deposit
being made and the Redemption Date, the Exchangeable Shares in respect
whereof such deposit shall have been made shall be redeemed and the rights
of the holders thereof after such deposit or Redemption Date, as the case
may be, shall be limited to receiving their proportionate part of the total
Redemption Price for such Exchangeable Shares so deposited, against
presentation and surrender of the said certificates held by them,
respectively, in accordance with the foregoing provisions. Upon such
payment or deposit of such Exchangeable Share Consideration, the holders of
the Exchangeable Shares shall thereafter be considered and deemed for all
purposes to be holders of Acquiror Shares delivered to them or the
custodian on their behalf.
ARTICLE 8
PURCHASE FOR CANCELLATION
8.1 Subject to applicable law and the articles of the Company and
notwithstanding Section 8.2, the Company may at any time and from time to
time purchase for cancellation all or any part of the Exchangeable Shares
by private agreement with any holder of Exchangeable Shares.
8.2 Subject to applicable law and the articles of the Company, the Company may
at any time and from time to time purchase for cancellation all or any part
of the outstanding Exchangeable Shares by tender to all the holders of
record of Exchangeable Shares then outstanding or through the facilities of
any stock exchange on which the Exchangeable Shares are listed or quoted at
any price per share together with an amount equal to all declared and
unpaid dividends thereon for which the record date has occurred prior to
the date of purchase. If in response to an invitation for tenders under the
provisions of this Section 8.2, more Exchangeable Shares are tendered at a
price or prices acceptable to the Company than the Company is prepared to
purchase, the Exchangeable Shares to be purchased by the Company shall be
purchased as nearly as may be pro rata according to the number of shares
tendered by each holder who submits a tender to the Company, provided that
when shares are tendered at different prices, the pro rating shall be
effected (disregarding fractions) only with respect to the shares tendered
at the price at which more shares were tendered than the Company is
prepared to purchase after the Company has purchased all the shares
tendered at lower prices. If only part of the Exchangeable Shares
represented by any certificate shall be purchased, a new certificate for
the balance of such shares shall be issued at the expense of the Company.
ARTICLE 9
VOTING RIGHTS
9.1 Except as required by applicable law and by Article 10, Section 11.1 and
Section 12.2, the holders of the Exchangeable Shares shall not be entitled
as such to receive notice of or to attend any meeting of the shareholders
of the Company or to vote at any such meeting.
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ARTICLE 10
AMENDMENT AND APPROVAL
10.1 The rights, privileges, restrictions and conditions attaching to the
Exchangeable Shares may be added to, changed or removed but only with the
approval of the holders of the Exchangeable Shares given as hereinafter
specified.
10.2 Any approval given by the holders of the Exchangeable Shares to add to,
change or remove any right, privilege, restriction or condition attaching
to the Exchangeable Shares or any other matter requiring the approval or
consent of the holders of the Exchangeable Shares shall be deemed to have
been sufficiently given if it shall have been given in accordance with
applicable law subject to a minimum requirement that such approval be
evidenced by resolution passed by not less than 66 2/3% of the votes cast
on such resolution by holders (other than Acquiror and its Affiliates)
represented in person or by proxy at a meeting of holders of Exchangeable
Shares duly called and held at which the holders of at least 25% of the
outstanding Exchangeable Shares (other than Exchangeable Shares held by
Acquiror and its Affiliates) at that time are present or represented by
proxy; provided that if at any such meeting the holders of at least 25% of
the outstanding Exchangeable Shares at that time are not present or
represented by proxy within one-half hour after the time appointed for such
meeting, then the meeting shall be adjourned to such date not less than
five days thereafter and to such time and place as may be designated by the
Chair of such meeting. At such adjourned meeting, the holders of
Exchangeable Shares (other than Acquiror and its Affiliates) present or
represented by proxy thereat may transact the business for which the
meeting was originally called and a resolution passed thereat by the
affirmative vote of not less than 66 2/3% of the votes cast on such
resolution by holders (other than Acquiror and its Affiliates) represented
in person or by proxy at such meeting shall constitute the approval or
consent of the holders of the Exchangeable Shares. For purposes of this
section, any spoiled votes, illegible votes, defective votes and
abstentions shall be deemed to be votes not cast.
ARTICLE 11
RECIPROCAL CHANGES, ETC. IN RESPECT OF ACQUIROR SHARES
11.1 Each holder of an Exchangeable Share acknowledges that the Support
Agreement provides, in part, that Acquiror will not, without the prior
approval of the Company and the prior approval of the holders of the
Exchangeable Shares given in accordance with Section 10.2 of these share
provisions:
(a) issue or distribute Acquiror Shares (or securities exchangeable for or
convertible into or carrying rights to acquire Acquiror Shares) to the
holders of all or substantially all of the then outstanding Acquiror
Shares by way of stock dividend or other distribution, other than an
issue of Acquiror Shares (or securities exchangeable for or convertible
into or carrying rights to acquire Acquiror Shares) to holders of
Acquiror Shares who (i) exercise an option to receive dividends in
Acquiror Shares (or securities exchangeable for or convertible into or
carrying rights to acquire Acquiror Shares) in lieu of receiving cash
dividends, or (ii) pursuant to any dividend reinvestment plan or scrip
dividend;
(b) issue or distribute rights, options or warrants to the holders of all
or substantially all of the then outstanding Acquiror Shares entitling
them to subscribe for or to purchase Acquiror Shares (or securities
exchangeable for or convertible into or carrying rights to acquire
Acquiror Shares); or
(c) issue or distribute to the holders of all or substantially all of the
then outstanding Acquiror Shares:
(i) shares or securities of Acquiror of any class other than Acquiror
Shares (other than shares convertible into or exchangeable for or
carrying rights to acquire Acquiror Shares);
(ii) rights, options or warrants other than those referred to in
Section 11.1(b) above;
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(iii) evidences of indebtedness of Acquiror; or
(iv) assets of Acquiror,
unless the economic equivalent on a per share basis of such rights,
options, warrants, securities, shares, evidences of indebtedness or other
assets is issued or distributed simultaneously to holders of the
Exchangeable Shares.
11.2 Each holder of an Exchangeable Share acknowledges that the Support
Agreement further provides, in part, that Acquiror will not without the
prior approval of the Company and the prior approval of the holders of the
Exchangeable Shares given in accordance with Section 10.2:
(a) subdivide, redivide or change the then outstanding Acquiror Shares into
a greater number of Acquiror Shares;
(b) reduce, combine, consolidate or change the then outstanding Acquiror
Shares into a lesser number of Acquiror Shares; or
(c) reclassify or otherwise change the Acquiror Shares or effect an
amalgamation, merger, reorganization or other transaction affecting the
Acquiror Shares;
unless the same or an economically equivalent change shall simultaneously
be made to, or in the rights of the holders of, the Exchangeable Shares and
such change is permitted under applicable law. The Support Agreement
further provides, in part, that the provisions of the Support Agreement
described in Section 11.1 and this Section 11.2 shall not be changed
without the approval of the holders of the Exchangeable Shares given in
accordance with Section 10.2.
11.3 Notwithstanding the foregoing provisions of this Article 11, in the event
of an Acquiror Control Transaction:
(a) in which Acquiror merges or amalgamates with, or in which all or
substantially all of the then outstanding Acquiror Shares are acquired
by, one or more other corporations to which Acquiror is, immediately
before such merger, amalgamation or acquisition, "related" within the
meaning of the Income Tax Act (Canada) (otherwise than by virtue of a
right referred to in paragraph 251(5)(b) thereof);
(b) which does not result in an acceleration of the Redemption Date in
accordance with paragraph (b) of that definition; and
(c) in which all or substantially all of the then outstanding Acquiror
Shares are converted into or exchanged for shares or rights to receive
such shares (the "Other Shares") of another corporation (the "Other
Corporation") that, immediately after such Acquiror Control
Transaction, owns or controls, directly or indirectly, Acquiror;
provided that, for greater certainty, the proposed reorganization of
Acquiror, as publicly disclosed by Acquiror on January 2, 2002 and as
generally described in the draft registration statement filed by the
Acquiror with the United States Securities and Exchange Commission on or
about such date, as amended or supplemented from time to time, shall
constitute such an Acquiror Control Transaction for purposes hereof, then
all references herein to "Acquiror" shall thereafter be and be deemed to be
references to "Other Corporation" and all references herein to "Acquiror
Shares" shall thereafter be and be deemed to be references to "Other
Shares" (with appropriate adjustments, if any, as are required to result in
a holder of Exchangeable Shares on the exchange, redemption or retraction
of such shares pursuant to these share provisions or Article 5 of the Plan
of Arrangement or exchange of such shares pursuant to the Voting and
Exchange Trust Agreement immediately subsequent to the Acquiror Control
Transaction being entitled to receive that number of Other Shares equal to
the number of Other Shares such holder of Exchangeable Shares would have
received if the exchange, redemption or retraction of such shares pursuant
to these share provisions or Article 5 of the Plan of Arrangement, or
exchange of such shares pursuant to the Voting and Exchange Trust Agreement
had occurred immediately prior to the Acquiror Control Transaction and the
Acquiror Control Transaction
1-14
was completed) without any need to amend the terms and conditions of the
Exchangeable Shares and without any further action required.
ARTICLE 12
ACTIONS BY THE COMPANY UNDER SUPPORT AGREEMENT
12.1 The Company will take all such actions and do all such things as shall be
necessary or advisable to perform and comply with and to ensure performance
and compliance by Acquiror, Callco and the Company with all provisions of
the Support Agreement and the Voting and Exchange Trust Agreement
applicable to Acquiror, Callco and the Company, respectively, in accordance
with the terms thereof including taking all such actions and doing all such
things as shall be necessary or advisable to enforce to the fullest extent
possible for the direct benefit of the Company all rights and benefits in
favour of the Company under or pursuant thereto.
12.2 The Company shall not propose, agree to or otherwise give effect to any
amendment to, or waiver or forgiveness of its rights or obligations under,
the Support Agreement or the Voting and Exchange Trust Agreement without
the approval of the holders of the Exchangeable Shares given in accordance
with Section 10.2 other than such amendments, waivers and/or forgiveness as
may be necessary or advisable for the purposes of:
(a) adding to the covenants of the other parties to such agreement for the
protection of the Company or the holders of the Exchangeable Shares
thereunder;
(b) making such provisions or modifications not inconsistent with such
agreement as may be necessary or desirable with respect to matters or
questions arising thereunder which, in the good faith opinion of the
Board of Directors, it may be expedient to make, provided that the
Board of Directors shall be of the good faith opinion, after
consultation with counsel, that such provisions and modifications will
not be prejudicial to the interests of the holders of the Exchangeable
Shares; or
(c) making such changes in or corrections to such agreement which, on the
advice of counsel to the Company, are required for the purpose of
curing or correcting any ambiguity or defect or inconsistent provision
or clerical omission or mistake or manifest error contained therein,
provided that the Board of Directors shall be of the good faith
opinion, after consultation with counsel, that such changes or
corrections will not be prejudicial to the interests of the holders of
the Exchangeable Shares.
ARTICLE 13
LEGEND; CALL RIGHTS; WITHHOLDING RIGHTS
13.1 The certificates evidencing the Exchangeable Shares shall contain or have
affixed thereto a legend in form and on terms approved by the Board of
Directors, with respect to the Support Agreement, the provisions of the
Plan of Arrangement relating to the Liquidation Call Right, the Redemption
Call Right and the Change of Law Call Right, and the Voting and Exchange
Trust Agreement (including the provisions with respect to the voting
rights, exchange right and automatic exchange thereunder) and the
Retraction Call Right.
13.2 Each holder of an Exchangeable Share, whether of record or beneficial, by
virtue of becoming and being such a holder shall be deemed to acknowledge
each of the Liquidation Call Right, the Retraction Call Right and the
Redemption Call Right, in each case, in favour of Callco, and the Change of
Law Call Right in favour of Acquiror and Callco and the overriding nature
thereof in connection with the liquidation, dissolution or winding-up of
the Company or any other distribution of the assets of the Company among
its shareholders for the purpose of winding-up its affairs, or the
retraction or redemption of Exchangeable Shares, or a Change of Law (as
defined for purposes of the
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Change of Law Call Right), as the case may be, and to be bound thereby in
favour of Callco or Acquiror, as the case may be, as therein provided.
13.3 The Company, Callco, Acquiror and the Transfer Agent shall be entitled to
deduct and withhold from any dividend or consideration otherwise payable to
any holder of Exchangeable Shares such amounts as the Company, Callco,
Acquiror or the Transfer Agent is required to deduct and withhold with
respect to such payment under the Income Tax Act (Canada), the United
States Internal Revenue Code of 1986 or any provision of provincial, state,
territorial, local or foreign tax law, in each case, as amended. To the
extent that amounts are so withheld, such withheld amounts shall be treated
for all purposes hereof as having been paid to the holder of the
Exchangeable Shares in respect of which such deduction and withholding was
made, provided that such withheld amounts are actually remitted to the
appropriate taxing authority. To the extent that the amount so required or
permitted to be deducted or withheld from any payment to a holder exceeds
the cash portion of the consideration otherwise payable to the holder, the
Company, Callco, Acquiror and the Transfer Agent are hereby authorized to
sell or otherwise dispose of such portion of the consideration as is
necessary to provide sufficient funds to the Company, Callco, Acquiror or
the Transfer Agent, as the case may be, to enable it to comply with such
deduction or withholding requirement and the Company, Callco, Acquiror or
the Transfer Agent shall notify the holder thereof and remit any unapplied
balance of the net proceeds of such sale.
ARTICLE 14
GENERAL
14.1 Any notice, request or other communication to be given to the Company by a
holder of Exchangeable Shares shall be in writing and shall be valid and
effective if given by mail (postage prepaid) or by telecopy or by delivery
to the registered office of the Company and addressed to the attention of
the Secretary of the Company. Any such notice, request or other
communication, if given by mail, telecopy or delivery, shall only be deemed
to have been given and received upon actual receipt thereof by the Company.
14.2 Any presentation and surrender by a holder of Exchangeable Shares to the
Company or the Transfer Agent of certificates representing Exchangeable
Shares in connection with the liquidation, dissolution or winding-up of the
Company or the retraction or redemption of Exchangeable Shares shall be
made by registered mail (postage prepaid) or by delivery to the registered
office of the Company or to such office of the Transfer Agent as may be
specified by the Company, in each case, addressed to the attention of the
Secretary of the Company. Any such presentation and surrender of
certificates shall only be deemed to have been made and to be effective
upon actual receipt thereof by the Company or the Transfer Agent, as the
case may be. Any such presentation and surrender of certificates made by
registered mail shall be at the sole risk of the holder mailing the same.
14.3 Any notice, request or other communication to be given to a holder of
Exchangeable Shares by or on behalf of the Company shall be in writing and
shall be valid and effective if given by mail (postage prepaid) or by
delivery to the address of the holder recorded in the register of the
Company or, in the event of the address of any such holder not being so
recorded, then at the last address of such holder known to the Company. Any
such notice, request or other communication, if given by mail, shall be
deemed to have been given and received on the third Business Day following
the date of mailing and, if given by delivery, shall be deemed to have been
given and received on the date of delivery. Accidental failure or omission
to give any notice, request or other communication to one or more holders
of Exchangeable Shares shall not invalidate or otherwise alter or affect
any action or proceeding intended to be taken by the Company pursuant
thereto.
14.4 Subject to the requirements of National Policy Statement 41 and any
successor policy statement or rule of the Canadian Securities
Administrators or other applicable law, for greater certainty, the Company
shall not be required for any purpose under these share provisions to
recognize or take
1-16
account of Persons who are not recorded as such in the securities register
for the Exchangeable Shares.
14.5 If the Company determines that mail service is or is threatened to be
interrupted at the time when the Company is required or elects to give any
notice to the holders of Exchangeable Shares hereunder, the Company shall,
notwithstanding the provisions hereof, give such notice by means of
publication in The Globe and Mail, national edition, or any other English
language daily newspaper or newspapers of general circulation in Canada and
in a French language daily newspaper of general circulation in the Province
of Quebec, once in each of two successive weeks, and notice so published
shall be deemed to have been given on the latest date on which the first
publication has taken place. If, by reason of any actual or threatened
interruption of mail service due to strike, lock-out or otherwise, any
notice to be given to the Company would be unlikely to reach its
destination in a timely manner, such notice shall be valid and effective
only if delivered personally to the Company in accordance with Section 14.1
or 14.2, as the case may be.
1-17
SCHEDULE A
RETRACTION REQUEST
[TO BE PRINTED ON EXCHANGEABLE SHARE CERTIFICATES]
To: Nabors Exchangeco (Canada) Inc. ("Canco") and 3064297 Nova Scotia Company
("Callco")
This notice is given pursuant to Article 6 of the rights, privileges,
restrictions and conditions (the "Share Provisions") attaching to the
Exchangeable Shares of Canco represented by this certificate and all capitalized
words and expressions used in this notice that are defined in the Share
Provisions have the meanings ascribed to such words and expressions in such
Share Provisions.
The undersigned hereby notifies Canco that, subject to the Retraction Call
Right referred to below, the undersigned desires to have Canco redeem in
accordance with Article 6 of the Share Provisions:
[ ] all share(s) represented by this certificate; or
[ ] __________________ share(s) only represented by this certificate.
The undersigned hereby notifies Canco that the Retraction Date shall be
________________________________ .
NOTE:
The Retraction Date must be a Business Day and must not be less than 10 Business
Days nor more than 15 Business Days after the date upon which this notice is
received by Canco. If no such Business Day is specified above, the Retraction
Date shall be deemed to be the 15th Business Day after the date on which this
notice is received by Canco.
The undersigned acknowledges the overriding Retraction Call Right of Callco
to purchase all but not less than all the Retracted Shares from the undersigned
and that this notice is and shall be deemed to be a revocable offer by the
undersigned to sell the Retracted Shares to Callco in accordance with the
Retraction Call Right on the Retraction Date for the Purchase Price and on the
other terms and conditions set out in Section 6.3 of the Share Provisions. This
Retraction Request, and this offer to sell the Retracted Shares to Callco, may
be revoked and withdrawn by the undersigned only by notice in writing given to
Canco at any time before the close of business on the Business Day immediately
preceding the Retraction Date.
The undersigned acknowledges that if, as a result of solvency provisions of
applicable law, Canco is unable to redeem all Retracted Shares, the undersigned
will be deemed to have exercised the Exchange Right (as defined in the Voting
and Exchange Trust Agreement) so as to require Acquiror to purchase the
unredeemed Retracted Shares.
The undersigned hereby represents and warrants to Callco and Canco that the
undersigned:
[ ] is
(select one)
[ ] is not
a resident in Canada for purposes of the Income Tax Act (Canada). THE
UNDERSIGNED ACKNOWLEDGES THAT IN THE ABSENCE OF AN INDICATION THAT THE
UNDERSIGNED IS A RESIDENT IN CANADA, WITHHOLDING ON ACCOUNT OF CANADIAN TAX MAY
BE MADE FROM AMOUNTS PAYABLE TO THE UNDERSIGNED ON THE REDEMPTION OR PURCHASE OF
THE RETRACTED SHARES.
1-18
The undersigned hereby represents and warrants to Callco and Canco that the
undersigned has good title to, and owns, the share(s) represented by this
certificate to be acquired by Callco or Canco, as the case may be, free and
clear of all liens, claims and encumbrances.
------------------------ --------------------------------------- ---------------------------------------
(Date) (Signature of Shareholder) (Guarantee of Signature)
[ ] Please check box if the securities and any cheque(s)
resulting from the retraction or purchase of the Retracted
Shares are to be held for pick-up by the shareholder from
the Transfer Agent, failing which the securities and any
cheque(s) will be mailed to the last address of the
shareholder as it appears on the register.
NOTE:
This panel must be completed and this certificate, together with such additional
documents as the Transfer Agent may require, must be deposited with the Transfer
Agent. The securities and any cheque(s) resulting from the retraction or
purchase of the Retracted Shares will be issued and registered in, and made
payable to, respectively, the name of the shareholder as it appears on the
register of Canco and the securities and any cheque(s) resulting from such
retraction or purchase will be delivered to such shareholder as indicated above,
unless the form appearing immediately below is duly completed.
Date:
---------------------------------------------
Name of Person in Whose Name Securities or Cheque(s) Are to be Registered,
Issued or Delivered
(please print):
-----------------------------------------------------------------
Street Address or P.O. Box:
-----------------------------------------------------
Signature of Shareholder:
-------------------------------------------------------
City, Province and Postal Code:
------------------------------------------------
Signature Guaranteed by:
--------------------------------------------------------
NOTE:
If this Retraction Request is for less than all of the shares represented by
this certificate, a certificate representing the remaining share(s) of Canco
represented by this certificate will be issued and registered in the name of the
shareholder as it appears on the register of Canco, unless the Share Transfer
Power on the share certificate is duly completed in respect of such share(s).
1-19
SCHEDULE C
[INTENTIONALLY OMITTED]
SCHEDULE D
[INTENTIONALLY OMITTED]
SCHEDULE E
FORM OF SUPPORT AGREEMENT
SUPPORT AGREEMENT ("AGREEMENT") made as of the ______________ day of
_______________________ , 2002.
BETWEEN:
▇▇▇▇▇▇ INDUSTRIES, INC., a corporation existing
under the laws of the State of Delaware (hereinafter
referred to as "ACQUIROR")
- and -
3064297 NOVA SCOTIA COMPANY, an unlimited liability
company existing under the laws of the Province of
Nova Scotia (hereinafter referred to as "CALLCO")
- and -
NABORS EXCHANGECO (CANADA) INC., a company existing
under the laws of Canada (hereinafter referred to as
"CANCO")
WHEREAS in connection with an acquisition agreement (the "ACQUISITION
AGREEMENT") made as of February 25, 2002, as amended and restated from time to
time, between Acquiror and Enserco Energy Service Company Inc., a corporation
existing under the laws of Canada ("ENSERCO"), Canco is to issue exchangeable
shares (the "EXCHANGEABLE SHARES") to certain holders of common shares in the
capital of Enserco pursuant to the plan of arrangement (the "PLAN OF
ARRANGEMENT") contemplated by the Acquisition Agreement; and
WHEREAS pursuant to the Acquisition Agreement, Acquiror has agreed to, and
to cause Canco to, execute a support agreement substantially in the form of this
Agreement on the Effective Date (as defined in the Acquisition Agreement);
NOW THEREFORE in consideration of the respective covenants and agreements
provided in this Agreement and for other good and valuable consideration (the
receipt and sufficiency of which are hereby acknowledged), the parties hereto
covenant and agree as follows:
ARTICLE 1
INTERPRETATION
1. DEFINED TERMS
Each term denoted herein by initial capital letters and not otherwise
defined herein shall have the meaning ascribed thereto in the rights,
privileges, restrictions and conditions (collectively, the "EXCHANGEABLE SHARE
PROVISIONS") attaching to the Exchangeable Shares attached as Appendix 1 to the
Plan of Arrangement and as set out in the Articles of the Plan of Arrangement of
Enserco, unless the context requires otherwise.
1.2 INTERPRETATION NOT AFFECTED BY HEADINGS
The division of this agreement into articles, sections and other portions
and the insertion of headings are for convenience of reference only and shall
not affect the construction or interpretation hereof. Unless otherwise
indicated, all references to an "Article" or "Section" followed by a number
refer to the specified Article or Section of this Agreement. The terms "this
Agreement," "hereof," "herein" and "hereunder" and similar expressions refer to
this agreement and not to any particular Article, Section or other portion
hereof and include any agreement or instrument supplementary or ancillary
hereto.
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1.3 RULES OF CONSTRUCTION
Unless otherwise specifically indicated or the context otherwise requires,
(a) all references to "dollars" or "$" mean United States dollars, (b) words
importing the singular shall include the plural and vice versa and words
importing any gender shall include all genders, and (c) "include," "includes"
and "including" shall be deemed to be followed by the words "without
limitation."
1.4 DATE FOR ANY ACTION
If the event that any date on which any action is required to be taken
hereunder by any of the parties hereto is not a Business Day, such action shall
be required to be taken on the next succeeding day that is a Business Day.
ARTICLE 2
COVENANTS OF ACQUIROR AND CANCO
2.1 COVENANTS REGARDING EXCHANGEABLE SHARES
So long as any Exchangeable Shares not owned by Acquiror or its affiliates
as defined in the CBCA ("AFFILIATES") are outstanding, Acquiror will:
(a) not declare or pay any dividend on the Acquiror Shares unless (i) Canco
shall (w) simultaneously declare or pay, as the case may be, an
equivalent dividend or other distribution economically equivalent
thereto (as provided for in the Exchangeable Share Provisions) on the
Exchangeable Shares (an "EQUIVALENT DIVIDEND") and (x) Canco shall have
sufficient money or other assets or authorized but unissued securities
available to enable the due declaration and the due and punctual
payment, in accordance with applicable law and the terms of the
Exchangeable Share Provisions, of any such Equivalent Dividend, or, if
the dividend or other distribution is a stock dividend or distribution
of stock, in lieu of such dividend (ii) Canco shall (y) effect a
corresponding, contemporaneous and economically equivalent subdivision
of the Exchangeable Shares (as provided for in the Exchangeable Share
Provisions) (an "EQUIVALENT STOCK SUBDIVISION"), and (z) have
sufficient authorized but unissued securities available to enable the
Equivalent Stock Subdivision;
(b) advise Canco sufficiently in advance of the declaration by Acquiror of
any dividend on Acquiror Shares and take all such other actions as are
reasonably necessary, in cooperation with Canco, to ensure that (i) the
respective declaration date, record date and payment date for an
Equivalent Dividend on the Exchangeable Shares shall be the same as the
declaration date, record date and payment date for the corresponding
dividend on the Acquiror Shares, or (ii) the record date and effective
date for an Equivalent Stock Subdivision shall be the same as the
record date and payment date for the stock dividend on the Acquiror
Shares and that such dividend on the Exchangeable Shares will
correspond with any requirement of the principal stock exchange on
which the Exchangeable Shares are listed;
(c) ensure that the record date for any dividend declared on Acquiror
Shares is not less than 10 Business Days after the declaration date of
such dividend;
(d) take all such actions and do all such things as are reasonably
necessary or desirable to enable and permit Canco, in accordance with
applicable law, to pay and otherwise perform its obligations with
respect to the satisfaction of the Liquidation Amount, the Retraction
Price or the Redemption Price in respect of each issued and outstanding
Exchangeable Share (other than Exchangeable Shares owned by Acquiror or
its Affiliates) upon the liquidation, dissolution or winding-up of
Canco or any other distribution of the assets of Canco among its
shareholders for the purpose of winding-up its affairs, the delivery of
a Retraction Request by a holder of Exchangeable Shares or a redemption
of Exchangeable Shares by Canco, as the case may be, including all such
actions and all such things as are necessary or desirable to enable and
permit
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Canco to cause to be delivered Acquiror Shares to the holders of
Exchangeable Shares in accordance with the provisions of Article 5, 6
or 7, as the case may be, of the Exchangeable Share Provisions and cash
in respect of declared and unpaid dividends;
(e) take all such actions and do all such things as are reasonably
necessary or desirable to enable and permit Callco, in accordance with
applicable law, to perform its obligations arising upon the exercise by
it of the Liquidation Call Right, the Retraction Call Right or the
Redemption Call Right, including all such actions and all such things
as are necessary or desirable to enable and permit Callco to cause to
be delivered Acquiror Shares to the holders of Exchangeable Shares in
accordance with the provisions of the Liquidation Call Right, the
Retraction Call Right or the Redemption Call Right, as the case may be,
and cash in respect of declared and unpaid dividends; and
(f) not (and will ensure that Callco or any of its Affiliates does not)
exercise its vote as a shareholder to initiate the voluntary
liquidation, dissolution or winding-up of Canco or any other
distribution of the assets of Canco among its shareholders for the
purpose of winding up its affairs nor take any action or omit to take
any action (and Acquiror will not permit Callco or any of its
Affiliates to take any action or omit to take any action) that is
designed to result in the liquidation, dissolution or winding up of
Canco or any other distribution of the assets of Canco among its
shareholders for the purpose of winding up its affairs.
2.2 SEGREGATION OF FUNDS
(a) Acquiror will cause Canco to deposit a sufficient amount of funds in a
separate account of Canco and segregate a sufficient amount of such
other assets and property as is necessary to enable Canco to pay
dividends when due and to pay or otherwise satisfy its respective
obligations under Article 5, 6 or 7 of the Exchangeable Share
Provisions or, if required, to pay the purchase price for Acquiror
Shares as contemplated by Section 2.5, as applicable.
(b) Acquiror will cause Callco to deposit a sufficient amount of funds in a
separate account of Callco and segregate a sufficient amount of such
other assets and property as is necessary to enable Callco to pay the
purchase price for Acquiror Shares as contemplated by Section 2.5.
2.3 RESERVATION OF ACQUIROR SHARES
Acquiror hereby represents, warrants and covenants in favour of Canco and
Callco that Acquiror has reserved for issuance and will, at all times while any
Exchangeable Shares (other than Exchangeable Shares held by Acquiror or its
Affiliates) are outstanding, keep available, free from preemptive and other
rights, out of its authorized and unissued capital stock such number of Acquiror
Shares (or other shares or securities into which Acquiror Shares may be
reclassified or changed as contemplated by Section 2.7 hereof) (a) as is equal
to the sum of (i) the number of Exchangeable Shares issued and outstanding from
time to time and (ii) the number of Exchangeable Shares issuable upon the
exercise of all rights to acquire Exchangeable Shares outstanding from time to
time and (b) as are now and may hereafter be required to enable and permit
Acquiror to meet its obligations under the Voting and Exchange Trust Agreement
and under any other security or commitment pursuant to the Plan of Arrangement
with respect to which Acquiror may now or hereafter be required to issue
Acquiror Shares, to enable and permit Callco to meet its obligations arising
upon exercise by it of each of the Liquidation Call Right, the Retraction Call
Right and the Redemption Call Right and to enable and permit Canco to meet its
obligations hereunder and under the Exchangeable Share Provisions.
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2.4 NOTIFICATION OF CERTAIN EVENTS
In order to assist Acquiror in compliance with its obligations hereunder
and to permit Callco to exercise the Liquidation Call Right, the Retraction Call
Right and the Redemption Call Right, Canco will notify Acquiror and Callco of
each of the following events at the times set forth below:
(a) in the event of any determination by the Board of Directors of Canco
to institute voluntary liquidation, dissolution or winding-up
proceedings with respect to Canco or to effect any other distribution
of the assets of Canco among its shareholders for the purpose of
winding up its affairs, at least 60 days prior to the proposed
effective date of such liquidation, dissolution, winding-up or other
distribution;
(b) promptly, upon the earlier of receipt by Canco of notice of and Canco
otherwise becoming aware of any threatened or instituted claim, suit,
petition or other proceeding with respect to the involuntary
liquidation, dissolution or winding-up of Canco or to effect any other
distribution of the assets of Canco among its shareholders for the
purpose of winding up its affairs;
(c) promptly, upon receipt by Canco of a Retraction Request;
(d) promptly following the date on which notice of redemption is given to
holders of Exchangeable Shares, upon the determination of a Redemption
Date in accordance with the Exchangeable Share Provisions; and
(e) promptly upon the issuance by Canco of any Exchangeable Shares or
rights to acquire Exchangeable Shares (other than the issuance of
Exchangeable Shares and rights to acquire Exchangeable Shares in
exchange for outstanding Shares pursuant to the Plan of Arrangement).
2.5 DELIVERY OF ACQUIROR SHARES TO CANCO AND CALLCO
In furtherance of its obligations under Sections 2.1(d) and (e) hereof,
upon notice from Canco or Callco of any event that requires Canco or Callco to
cause to be delivered Acquiror Shares to any holder of Exchangeable Shares,
Acquiror shall forthwith issue and deliver the requisite number of Acquiror
Shares to be received by, and issued to or to the order of, the former holder of
the surrendered Exchangeable Shares, as Canco or Callco shall direct. All such
Acquiror Shares shall be duly authorized, validly issued and fully paid and
non-assessable and shall be free and clear of any lien, claim or encumbrance. In
consideration of the issuance and delivery of such Acquiror Common Share, Callco
or Canco, as the case may be, shall pay a purchase price equal to the fair
market value of such Acquiror Common Share.
2.6 QUALIFICATION OF ACQUIROR SHARES
Acquiror covenants that if any Acquiror Shares (or other shares or
securities into which Acquiror Shares may be reclassified or changed as
contemplated by Section 2.7 hereof) to be issued and delivered hereunder
(including for greater certainty, pursuant to the Exchangeable Share Provisions,
or pursuant to the Change of Law Call Right, Exchange Right or the Automatic
Exchange Rights (all as defined in the Voting and Exchange Trust Agreement))
require registration or qualification with, or approval of, or the filing of any
document, including any prospectus or similar document, the taking of any
proceeding with, or the obtaining of any order, ruling or consent from, any
governmental or regulatory authority under any Canadian or United States
federal, provincial, territorial or state securities or other law or regulation
or pursuant to the rules and regulations of any securities or other regulatory
authority, or the fulfilment of any other United States or Canadian legal
requirement (collectively, the "APPLICABLE LAWS") before such shares (or other
shares or securities into which Acquiror Shares may be reclassified or changed
as contemplated by Section 2.7 hereof) may be issued and delivered by Acquiror
at the direction of Canco or Callco, if applicable, to the holder of surrendered
Exchangeable Shares or in order that such shares (or other shares or securities
into which Acquiror Shares may be reclassified or changed as contemplated by
Section 2.7 hereof) may be freely traded thereafter (other than any restrictions
of general application on transfer by reason of a holder being a "control
person" of Acquiror for purposes of Canadian provincial
E-4
securities law or an "affiliate" of Acquiror for purposes of United States
federal or state securities law), Acquiror will use its reasonable best efforts
and in good faith expeditiously take all such actions and do all such things as
are necessary or desirable and within its power to cause such Acquiror Shares
(or other shares or securities into which Acquiror Shares may be reclassified or
changed as contemplated by Section 2.7 hereof) to be and remain duly registered,
qualified or approved under United States and/or Canadian law, as the case may
be, to the extent expressly provided in the Acquisition Agreement. Acquiror will
use its reasonable best efforts and in good faith expeditiously take all such
actions and do all such things as are reasonably necessary or desirable to cause
all Acquiror Shares (or other shares or securities into which Acquiror Shares
may be reclassified or changed as contemplated by Section 2.7 hereof) to be
delivered hereunder to be listed, quoted or posted for trading on all stock
exchanges and quotation systems on which outstanding Acquiror Shares (or other
shares or securities into which Acquiror Shares may be reclassified or changed
as contemplated by Section 2.7 hereof) are listed and are quoted or posted for
trading at such time.
2.7 ECONOMIC EQUIVALENCE
So long as any Exchangeable Shares not owned by Acquiror or its Affiliates
are outstanding:
(a) Acquiror will not, without prior approval of Canco and the prior
approval of the holders of the Exchangeable Shares given in accordance
with Section 10.2 of the Exchangeable Share Provisions:
(i) issue or distribute Acquiror Shares (or securities exchangeable
for or convertible into or carrying rights to acquire Acquiror
Shares) to the holders of all or substantially all of the then
outstanding Acquiror Shares by way of stock dividend or other
distribution, other than an issue of Acquiror Shares (or
securities exchangeable for or convertible into or carrying
rights to acquire Acquiror Shares) to holders of Acquiror Shares
who (A) exercise an option to receive dividends in Acquiror
Shares (or securities exchangeable for or convertible into or
carrying rights to acquire Acquiror Shares) in lieu of receiving
cash dividends, or (B) pursuant to any dividend reinvestment plan
or scrip dividend; or
(ii) issue or distribute rights, options or warrants to the holders of
all or substantially all of the then outstanding Acquiror Shares
entitling them to subscribe for or to purchase Acquiror Shares
(or securities exchangeable for or convertible into or carrying
rights to acquire Acquiror Shares); or
(iii) issue or distribute to the holders of all or substantially all of
the then outstanding Acquiror Shares (A) shares or securities of
Acquiror of any class other than Acquiror Shares (other than
shares convertible into or exchangeable for or carrying rights to
acquire Acquiror Shares), (B) rights, options or warrants other
than those referred to in Section 2.7(a)(ii) above, (C) evidences
of indebtedness of Acquiror or (D) assets of Acquiror,
unless the economic equivalent on a per share basis of such rights,
options, warrants, securities, shares, evidences of indebtedness or
other assets is issued or distributed simultaneously to holders of the
Exchangeable Shares; provided that, for greater certainty, the above
restrictions shall not apply to any securities issued or distributed by
Acquiror in order to give effect to and to consummate the transactions
contemplated by, and in accordance with, the Acquisition Agreement.
(b) Acquiror will not without the prior approval of Canco and the prior
approval of the holders of the Exchangeable Shares given in accordance
with Section 10.2 of the Exchangeable Share Provisions:
(i) subdivide, redivide or change the then outstanding Acquiror
Shares into a greater number of Acquiror Shares; or
E-5
(ii) reduce, combine, consolidate or change the then outstanding
Acquiror Shares into a lesser number of Acquiror Shares; or
(iii) reclassify or otherwise change Acquiror Shares or effect an
amalgamation, merger, reorganization or other transaction
affecting the Acquiror Shares,
unless the same or an economically equivalent change shall
simultaneously be made to, or in the rights of the holders of, the
Exchangeable Shares; provided that, for greater certainty, the above
restrictions shall not apply to any securities issued or distributed by
Acquiror in order to give effect to and to consummate the transactions
contemplated by, and in accordance with, the Acquisition Agreement.
(c) Acquiror will ensure that the record date for any event referred to in
Section 2.7(a) or 2.7(b) above, or (if no record date is applicable for
such event) the effective date for any such event, is not less than
five Business Days after the date on which such event is declared or
announced by Acquiror (with contemporaneous notification thereof by
Acquiror to Canco).
(d) The Board of Directors of Canco shall determine, in good faith and in
its sole discretion, economic equivalence for the purposes of any event
referred to in Section 2.7(a) or 2.7(b) above and each such
determination shall be conclusive and binding on Acquiror and the
holders of Exchangeable Shares. In making each such determination, the
following factors shall, without excluding other factors determined by
the Board of Directors of Canco to be relevant, be considered by the
Board of Directors of Canco:
(i) in the case of any stock dividend or other distribution payable
in Acquiror Shares, the number of such shares issued as a result
of any stock dividend or other distribution in proportion to the
number of Acquiror Shares previously outstanding;
(ii) in the case of the issuance or distribution of any rights,
options or warrants to subscribe for or purchase Acquiror Shares
(or securities exchangeable for or convertible into or carrying
rights to acquire Acquiror Shares), the relationship between the
exercise price of each such right, option or warrant and the
Current Market Price, the volatility of the Acquiror Shares and
the term of any such instrument;
(iii) in the case of the issuance or distribution of any other form of
property (including any shares or securities of Acquiror of any
class other than Acquiror Shares, any rights, options or warrants
other than those referred to in Section 2.7(d)(ii) above, any
evidences of indebtedness of Acquiror or any assets of Acquiror),
the relationship between the fair market value (as determined by
the Board of Directors of Canco in the manner above contemplated)
of such property to be issued or distributed with respect to each
outstanding Acquiror Common Share and the Current Market Price;
(iv) in the case of any subdivision, redivision or change of the then
outstanding Acquiror Shares into a greater number of Acquiror
Shares or the reduction, combination, consolidation or change of
the then outstanding Acquiror Shares into a lesser number of
Acquiror Shares or any amalgamation, merger, reorganization or
other transaction affecting Acquiror Shares, the effect thereof
upon the then outstanding Acquiror Shares; and
(v) in all such cases, the general taxation consequences of the
relevant event to holders of Exchangeable Shares to the extent
that such consequences may differ from the taxation consequences
to holders of Acquiror Shares as a result of differences between
taxation laws of Canada and the United States (except for any
differing consequences arising as a result of differing marginal
taxation rates and without regard to the individual circumstances
of holders of Exchangeable Shares).
(e) Canco agrees that, to the extent required, upon due notice from
Acquiror, Canco will use its best efforts to take or cause to be taken
such steps as may be necessary for the purposes of
E-6
ensuring that appropriate dividends are paid or other distributions are
made by Canco, or subdivisions, redivisions or changes are made to the
Exchangeable Shares, in order to implement the required economic
equivalent with respect to the Acquiror Shares and Exchangeable Shares
as provided for in this Section 2.7.
2.8 TENDER OFFERS
For so long as Exchangeable Shares remain outstanding (not including
Exchangeable Shares held by Acquiror and its Affiliates), in the event that a
tender offer, share exchange offer, issuer bid, take-over bid or similar
transaction with respect to Acquiror Shares (an "OFFER") is proposed by Acquiror
or is proposed to Acquiror or its shareholders and is recommended by the Board
of Directors of Acquiror, or is otherwise effected or to be effected with the
consent or approval of the Board of Directors of Acquiror, and the Exchangeable
Shares are not redeemed by Canco or purchased by Callco pursuant to the
Redemption Call Right, Acquiror will use its reasonable best efforts
expeditiously and in good faith to take all such actions and do all such things
as are necessary or desirable to enable and permit holders of Exchangeable
Shares (other than Acquiror and its Affiliates) to participate in such Offer to
the same extent and on an economically equivalent basis as the holders of
Acquiror Shares, without discrimination. Without limiting the generality of the
foregoing, Acquiror will use its reasonable best efforts expeditiously and in
good faith to ensure that holders of Exchangeable Shares may participate in each
such Offer without being required to retract Exchangeable Shares as against
Canco (or, if so required, to ensure that any such retraction, shall be
effective only upon, and shall be conditional upon, the closing of such Offer
and only to the extent necessary to tender or deposit to the Offer). Nothing
herein shall affect the rights of Canco to redeem (or Callco to purchase
pursuant to the Redemption Call Right) Exchangeable Shares, as applicable, in
the event of an Acquiror Control Transaction.
2.9 OWNERSHIP OF OUTSTANDING SHARES
Without the prior approval of Canco and the prior approval of the holders
of the Exchangeable Shares given in accordance with Section 10.2 of the
Exchangeable Share Provisions, Acquiror covenants and agrees in favour of Canco
that, as long as any outstanding Exchangeable Shares are owned by any Person
other than Acquiror or any of its Affiliates, Acquiror will be and remain the
direct or indirect beneficial owner of all issued and outstanding voting shares
in the capital of Canco and Callco. Notwithstanding the foregoing, Acquiror
shall not be in violation of this section if any person or group of persons
acting jointly or in concert acquires all or substantially all of the assets of
Acquiror or the Acquiror Shares pursuant to any merger of Acquiror pursuant to
which Acquiror was not the surviving corporation.
2.10 ACQUIROR AND AFFILIATES NOT TO VOTE EXCHANGEABLE SHARES
Acquiror and Callco each covenants and agrees that it will not, and will
cause its Affiliates not to, exercise any voting rights which may be exercisable
by holders of Exchangeable Shares from time to time pursuant to the Exchangeable
Share Provisions or pursuant to the provisions of the CBCA (or any successor or
other corporate statute by which Canco may in the future be governed) with
respect to any Exchangeable Shares held by it or by its Affiliates in respect of
any matter considered at any meeting of holders of Exchangeable Shares.
2.11 RULE 10B-18 PURCHASES
For greater certainty, nothing contained in this Agreement, including the
obligations of Acquiror contained in Section 2.8 hereof, shall limit the ability
of Acquiror or Canco to make a "Rule ▇▇▇-▇▇ ▇▇▇▇▇▇▇▇" of Acquiror Shares
pursuant to Rule 10b-18 of the United States Securities Exchange Act of 1934, as
amended, or any successor rule.
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2.12 STOCK EXCHANGE LISTING
Acquiror covenants and agrees in favour of Canco that, as long as any
outstanding Exchangeable Shares are owned by any Person other than Acquiror or
any of its Affiliates, Acquiror will use its reasonable best efforts to maintain
a listing for such Exchangeable Shares on a Canadian stock exchange which is a
prescribed stock exchange within the meaning of the Income Tax Act(Canada) and
to ensure that Canco remains a "public corporation" within the meaning of the
Income Tax Act (Canada) and maintains a "substantial Canadian presence" within
the meaning of the Income Tax Act (Canada) as in effect on the date of this
Agreement.
ARTICLE 3
ACQUIROR SUCCESSORS
3.1 CERTAIN REQUIREMENTS IN RESPECT OF COMBINATION, ETC.
Neither Acquiror nor Callco shall consummate any transaction (whether by
way of reconstruction, reorganization, consolidation, merger, transfer, sale,
lease or otherwise) whereby all or substantially all of its undertaking,
property and assets would become the property of any other Person or, in the
case of a merger, of the continuing corporation resulting therefrom unless, but
may do so if:
(a) such other Person or continuing corporation (the "ACQUIROR SUCCESSOR")
by operation of law, becomes, without more, bound by the terms and
provisions of this Agreement or, if not so bound, executes, prior to
or contemporaneously with the consummation of such transaction, an
agreement supplemental hereto and such other instruments (if any) as
are reasonably necessary or advisable to evidence the assumption by
the Acquiror Successor of liability for all moneys payable and
property deliverable hereunder and the covenant of such Acquiror
Successor to pay and deliver or cause to be delivered the same and its
agreement to observe and perform all the covenants and obligations of
Acquiror or Callco, as the case may be, under this Agreement;
(b) in the event that the Acquiror Shares are reclassified or otherwise
changed as part of such transaction, the same or an economically
equivalent change is simultaneously made to, or in the rights of the
holders of, the Exchangeable Shares; and
(c) such transaction shall be upon such terms and conditions as
substantially to preserve and not to impair in any material respect
any of the rights, duties, powers and authorities of the other parties
hereunder or the holders of Exchangeable Shares.
3.2 VESTING OF POWERS IN SUCCESSOR
Whenever the conditions of Section 3.1 have been duly observed and
performed, the parties, if required by Section 3.1, shall execute and deliver
the supplemental agreement provided for in Section 3.1(a) and thereupon the
Acquiror Successor shall possess and from time to time may exercise each and
every right and power of Acquiror or Callco, as the case may be, under this
Agreement in the name of Acquiror or otherwise and any act or proceeding by any
provision of this Agreement required to be done or performed by the Board of
Directors of Acquiror or any officers of Acquiror may be done and performed with
like force and effect by the directors or officers of such Acquiror Successor.
3.3 WHOLLY-OWNED SUBSIDIARIES
Nothing herein shall be construed as preventing the amalgamation or merger
of any wholly-owned direct or indirect subsidiary of Acquiror (other than Canco
or Callco) with or into Acquiror or the winding-up, liquidation or dissolution
of any wholly-owned subsidiary of Acquiror provided that all of the assets of
such subsidiary are transferred to Acquiror or another wholly-owned direct or
indirect subsidiary of Acquiror and any such transactions are expressly
permitted by this Article 3.
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3.4 SUCCESSORSHIP TRANSACTION
Notwithstanding the foregoing provisions of Article 3, in the event of an
Acquiror Control Transaction:
(a) in which Acquiror merges or amalgamates with, or in which all or
substantially all of the then outstanding Acquiror Shares are acquired
by, one or more other corporations to which Acquiror is, immediately
before such merger, amalgamation or acquisition, "related" within the
meaning of the Income Tax Act (Canada) (otherwise than by virtue of a
right referred to in paragraph 251(5)(b) thereof);
(b) which does not result in an acceleration of the Redemption Date in
accordance with paragraph (b) of that definition; and
(c) in which all or substantially all of the then outstanding Acquiror
Shares are converted into or exchanged for shares or rights to receive
such shares (the "Other Shares") of another corporation (the "Other
Corporation") that, immediately after such Acquiror Control
Transaction, owns or controls, directly or indirectly, Acquiror;
provided that, for greater certainty, the proposed reorganization of Acquiror,
as publicly disclosed by Acquiror on January 2, 2002 and as generally described
in the draft registration statement filed by the Acquiror with the United States
Securities and Exchange Commission on or about such date, as amended or
supplemented from time to time, shall constitute such an Acquiror Control
Transaction for purposes hereof, then all references herein to "Acquiror" shall
thereafter be and be deemed to be references to "Other Corporation" and all
references herein to "Acquiror Shares" shall thereafter be and be deemed to be
references to "Other Shares" (with appropriate adjustments, if any, as are
required to result in a holder of Exchangeable Shares on the exchange,
redemption or retraction of such shares pursuant to the Exchangeable Shares
Provisions or Article 5 of the Plan of Arrangement or exchange of such shares
pursuant to the Voting and Exchange Trust Agreement immediately subsequent to
the Acquiror Control Transaction being entitled to receive that number of Other
Shares equal to the number of Other Shares such holder of Exchangeable Shares
would have received if the exchange, redemption or retraction of such shares
pursuant to the Exchangeable Share Provisions or Article 5 of the Plan of
Arrangement, or exchange of such shares pursuant to the Voting and Exchange
Trust Agreement had occurred immediately prior to the Acquiror Control
Transaction and the Acquiror Control Transaction was completed) without any need
to amend the terms and conditions of the Exchangeable Shares and without any
further action required.
ARTICLE 4
GENERAL
4.1 TERM
This Agreement shall come into force and be effective as of the date hereof
and shall terminate and be of no further force and effect at such time as no
Exchangeable Shares (or securities or rights convertible into or exchangeable
for or carrying rights to acquire Exchangeable Shares) are held by any Person
other than Acquiror and any of its Affiliates.
4.2 CHANGES IN CAPITAL OF ACQUIROR AND CANCO
At all times after the occurrence of any event contemplated pursuant to
Sections 2.7 and 2.8 hereof or otherwise, as a result of which either Acquiror
Shares or the Exchangeable Shares or both are in any way changed, this Agreement
shall forthwith be deemed amended and modified as necessary in order that it
shall apply with full force and effect, mutatis mutandis, to all new securities
into which Acquiror Shares or the Exchangeable Shares or both are so changed and
the parties hereto shall execute and deliver an agreement in writing giving
effect to and evidencing such necessary amendments and modifications.
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4.3 NOTICES TO PARTIES
All notices and other communications hereunder shall be in writing and
shall be deemed given when delivered personally, telecopied (which is confirmed)
or dispatched (postage prepaid) to a nationally recognized overnight courier
service with overnight delivery instructions, in each case addressed to the
particular party at:
▇▇▇▇▇▇ Industries, Inc.
▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇
▇▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇▇
Attention: President and Chief Operating Officer
Telecopier Number: (▇▇▇) ▇▇▇-▇▇▇▇
With copies to:
▇▇▇▇▇▇ Corporate Services, Inc.
▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇
▇▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇▇
Attention: ▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇
Telecopier Number: (▇▇▇) ▇▇▇-▇▇▇▇
And:
Stikeman Elliott
▇▇▇▇, ▇▇▇ - ▇▇▇ ▇▇▇▇▇▇ ▇.▇.
▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇ ▇▇▇ ▇▇▇
Attention: ▇▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇
Telecopier Number: (▇▇▇) ▇▇▇-▇▇▇▇
or at such other address of which any party may, from time to time, advise the
other parties by notice in writing given in accordance with the foregoing.
4.4 ASSIGNMENT
No party hereto may assign this Agreement or any of its rights, interests
or obligations under this Agreement or the Plan of Arrangement (whether by
operation of law or otherwise) except that Canco may assign in its sole
discretion, any or all of its rights, interests and obligations hereunder to any
wholly-owned subsidiary of Acquiror.
4.5 BINDING EFFECT
Subject to Section 4.4, this Agreement and the Plan of Arrangement shall be
binding upon, enure to the benefit of and be enforceable by the parties hereto
and their respective successors and assigns.
4.6 AMENDMENTS, MODIFICATIONS
Subject to Sections 4.2, 4.7 and 4.11, this Agreement may not be amended or
modified except by an agreement in writing executed by Canco, Callco and
Acquiror and approved by the holders of the Exchangeable Shares in accordance
with Section 10.2 of the Exchangeable Share Provisions.
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4.7 MINISTERIAL AMENDMENTS
Notwithstanding the provisions of Section 4.6, the parties to this
Agreement may in writing at any time and from time to time, without the approval
of the holders of the Exchangeable Shares, amend or modify this Agreement for
the purposes of:
(a) adding to the covenants of any or all parties provided that the board
of directors of each of Canco, Callco and Acquiror shall be of the
good faith opinion that such additions will not be prejudicial to the
rights or interests of the holders of the Exchangeable Shares;
(b) making such amendments or modifications not inconsistent with this
Agreement as may be necessary or desirable with respect to matters or
questions which, in the good faith opinion of the board of directors
of each of Canco, Callco and Acquiror, it may be expedient to make,
provided that each such board of directors shall be of the good faith
opinion that such amendments or modifications will not be prejudicial
to the rights or interests of the holders of the Exchangeable Shares;
or
(c) making such changes or corrections which, on the advice of counsel to
Canco, Callco and Acquiror, are required for the purpose of curing or
correcting any ambiguity or defect or inconsistent provision or
clerical omission or mistake or manifest error, provided that the
board of directors of each of Canco, Callco and Acquiror shall be of
the good faith opinion that such changes or corrections will not be
prejudicial to the rights or interests of the holders of the
Exchangeable Shares.
4.8 MEETING TO CONSIDER AMENDMENTS
Canco, at the request of Acquiror, shall call a meeting or meetings of the
holders of the Exchangeable Shares for the purpose of considering any proposed
amendment or modification requiring approval pursuant to Section 4.6 hereof;
provided that any such meeting shall only be called for a bona fide business
purpose and not for the principal purpose of causing a Redemption Date to occur
or transpire. Any such meeting or meetings shall be called and held in
accordance with the bylaws of Canco, the Exchangeable Share Provisions and all
applicable laws.
4.9 AMENDMENTS ONLY IN WRITING
No amendment to or modification or waiver of any of the provisions of this
Agreement otherwise permitted hereunder shall be effective unless made in
writing and signed by all of the parties hereto.
4.10 GOVERNING LAWS; CONSENT TO JURISDICTION
This Agreement shall be governed by and construed in accordance with the
laws of the Province of Alberta and the laws of Canada applicable therein and
shall be treated in all respects as an Alberta contract. Each party hereby
irrevocably attorns to the jurisdiction of the courts of the Province of Alberta
in respect of all matters arising under or in relation to this Agreement.
4.11 SEVERABILITY
If any term or other provision of this Agreement is invalid, illegal or
incapable of being enforced by any rule of 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 hereto 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
transactions contemplated hereby are fulfilled to the extent possible.
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4.12 COUNTERPARTS
This Agreement may be executed in 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 the parties hereto have caused this Agreement to be duly
executed as of the date first above written.
▇▇▇▇▇▇ INDUSTRIES, INC.
By:
---------------------------------------
Name:
Title:
3064297 NOVA SCOTIA COMPANY
By:
---------------------------------------
Name:
Title:
▇▇▇▇▇▇ EXCHANGECO (CANADA) INC.
By:
---------------------------------------
Name:
Title:
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SCHEDULE F
FORM OF VOTING AND EXCHANGE TRUST AGREEMENT
VOTING AND EXCHANGE TRUST AGREEMENT ("AGREEMENT") made as of the o day of
o , 2002.
BETWEEN:
▇▇▇▇▇▇ INDUSTRIES, INC., a corporation existing
under the laws of the State of Delaware (hereinafter
referred to as "ACQUIROR")
- and -
▇▇▇▇▇▇ EXCHANGECO (CANADA) INC., a corporation
existing under the laws of Canada (hereinafter
referred to as "CANCO")
- and -
COMPUTERSHARE TRUST COMPANY OF CANADA, a trust
company incorporated under the laws of Canada
(hereinafter referred to as the "TRUSTEE")
WHEREAS in connection with the Acquisition Agreement, Canco may be required
to issue Exchangeable Shares to certain holders of common shares in the capital
of Enserco pursuant to the Plan of Arrangement contemplated in the Acquisition
Agreement; and
WHEREAS pursuant to the Acquisition Agreement, Acquiror has agreed to, and
to cause Canco to, execute a voting and exchange trust agreement substantially
in the form of this Agreement;
NOW THEREFORE in consideration of the respective covenants and agreements
provided in this Agreement and for other good and valuable consideration (the
receipt and sufficiency of which are hereby acknowledged), the parties hereto
covenant and agree as follows:
ARTICLE 1
INTERPRETATION
SECTION 1.1 DEFINITIONS
In this Agreement, unless the context otherwise requires, the following
terms shall have the following meanings respectively:
"ACQUIROR CONSENT" has the meaning ascribed thereto in Section 4.2;
"ACQUIROR CONTROL TRANSACTION" has the meaning ascribed thereto in the
Exchangeable Share Provisions;
"ACQUIROR MEETING" has the meaning ascribed thereto in Section 4.2;
"ACQUIROR SHARES" has the meaning provided in the Exchangeable Share Provisions;
"ACQUIROR SPECIAL VOTING SHARE" means one share of preferred stock of Acquiror
to which that number of voting rights attach (each such voting right to be equal
to the voting rights attached to one Acquiror Share) equal to the number of
outstanding Exchangeable Shares held by Beneficiaries;
"ACQUIROR SUCCESSOR" has the meaning ascribed thereto in Section 10.1(a);
"ACQUISITION AGREEMENT" means the acquisition agreement made as of February 25,
2002 between Acquiror and Enserco, as amended, supplemented and/or restated in
accordance therewith prior to the date hereof, providing for, among other
things, the Arrangement;
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"ACT" means the Canada Business Corporations Act as the same has been and may
hereafter from time to time be amended;
"AFFILIATE" has the meaning ascribed thereto in the Act;
"ARRANGEMENT" means the arrangement under Section 192 of the Act on the terms
and subject to the conditions set out in the Plan of Arrangement, subject to any
amendments or variations thereto made in accordance with Article 6 of the Plan
of Arrangement or made at the direction of the Court;
"AUTOMATIC EXCHANGE RIGHTS" means the benefit of the obligation of Acquiror to
effect the automatic exchange of Exchangeable Shares for Acquiror Shares
pursuant to Section 5.12;
"BENEFICIARIES" means the registered holders from time to time of Exchangeable
Shares, other than Acquiror and its Affiliates;
"BENEFICIARY VOTES" has the meaning ascribed thereto in Section 4.2;
"BUSINESS DAY" means any day on which commercial banks are generally open for
business in ▇▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇ ▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇, other than a Saturday, a Sunday
or a day observed as a holiday in Houston, Texas under the laws of the State of
Texas or the federal laws of the United States of America or in Calgary, Alberta
under the laws of the Province of Alberta or the federal laws of Canada;
"CALLCO" means 3064297 Nova Scotia Company, an unlimited liability company
existing under the laws of the Province of Nova Scotia;
"CHANGE OF LAW CALL RIGHT" has the meaning ascribed thereto in the Plan of
Arrangement;
"COURT" means the Court of Queen's Bench of Alberta;
"ENSERCO" means Enserco Energy Service Company Inc., a corporation existing
under the laws of Canada;
"EQUIVALENT VOTE AMOUNT" means, with respect to any matter, proposition or
question on which holders of Acquiror Shares are entitled to vote, consent or
otherwise act, the number of votes to which a holder of one Acquiror Share is
entitled with respect to such matter, proposition or question;
"EXCHANGE RIGHT" has the meaning ascribed thereto in Section 5.1;
"EXCHANGEABLE SHARE CONSIDERATION" has the meaning ascribed thereto in the
Exchangeable Share Provisions;
"EXCHANGEABLE SHARE PRICE" has the meaning ascribed thereto in the Exchangeable
Share Provisions;
"EXCHANGEABLE SHARE PROVISIONS" means the rights, privileges, restrictions and
conditions attaching to the Exchangeable Shares;
"EXCHANGEABLE SHARES" means the non-voting Exchangeable Shares in the capital of
Canco, having substantially the rights, privileges, restrictions and conditions
set out in Appendix 1 to the Plan of Arrangement;
"FINAL ORDER" means the final order of the Court approving the Arrangement, as
such order may be amended by the Court at any time prior to the date hereof or,
if appealed, then, unless such appeal is withdrawn or denied, as affirmed;
"INDEMNIFIED PARTIES" has the meaning ascribed thereto in Section 8.1;
"INSOLVENCY EVENT" means (i) the institution by Canco of any proceeding to be
adjudicated a bankrupt or insolvent or to be wound up, or the consent of Canco
to the institution of bankruptcy, insolvency or winding-up proceedings against
it, or (ii) the filing of a petition, answer or consent seeking dissolution or
winding-up under any bankruptcy, insolvency or analogous laws, including the
Companies Creditors' Arrangement Act (Canada) and the Bankruptcy and Insolvency
Act (Canada), and the failure by Canco to contest in good faith any such
proceedings commenced in respect of Canco within 30 days of becoming aware
thereof, or the consent by Canco to the filing of any such petition or to the
appointment of a
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receiver, or (iii) the making by Canco of a general assignment for the benefit
of creditors, or the admission in writing by Canco of its inability to pay its
debts generally as they become due, or (iv) Canco not being permitted, pursuant
to solvency requirements of applicable law, to redeem any Retracted Shares
pursuant to Section 6.6 of the Exchangeable Share Provisions;
"LIQUIDATION CALL RIGHT" has the meaning ascribed thereto in the Plan of
Arrangement;
"LIQUIDATION EVENT" has the meaning ascribed thereto in Section 5.12(b);
"LIQUIDATION EVENT EFFECTIVE TIME" has the meaning ascribed thereto in Section
5.12(c);
"LIST" has the meaning ascribed thereto in Section 4.6;
"OFFICER'S CERTIFICATE" means, with respect to Acquiror or Canco, as the case
may be, a certificate signed by any one of the authorized signatories of
Acquiror or Canco, as the case may be;
"PERSON" includes any individual, firm, partnership, joint venture, venture
capital fund, limited liability company, unlimited liability company,
association, trust, trustee, executor, administrator, legal personal
representative, estate, group, body corporate, corporation, unincorporated
association or organization, government body, syndicate or other entity, whether
or not having legal status;
"PLAN OF ARRANGEMENT" means the plan of arrangement substantially in the form
and content of Schedule B annexed to the Acquisition Agreement and any
amendments or variations thereto made in accordance with Section 3.2 of the
Acquisition Agreement or Article 6 of the Plan of Arrangement or made at the
direction of the Court in the Final Order;
"REDEMPTION CALL RIGHT" has the meaning ascribed thereto in the Plan of
Arrangement;
"REDEMPTION DATE" has the meaning ascribed thereto in the Exchangeable Share
Provisions;
"RETRACTED SHARES" has the meaning ascribed thereto in Section 5.7;
"RETRACTION CALL RIGHT" has the meaning ascribed thereto in the Exchangeable
Share Provisions;
"SUPPORT AGREEMENT" means that certain support agreement made as of even date
herewith between Canco, Callco and Acquiror substantially in the form and
content of Schedule E to the Acquisition Agreement, with such changes thereto as
the parties to the Acquisition Agreement, acting reasonably, may agree;
"TRUST" means the trust created by this Agreement;
"TRUST ESTATE" means the Acquiror Special Voting Share, any other securities,
the Exchange Right, the Automatic Exchange Rights and any money or other
property which may be held by the Trustee from time to time pursuant to this
Agreement; and
"VOTING RIGHTS" means the voting rights of the Acquiror Special Voting Share
held by the Trustee.
SECTION 1.2 INTERPRETATION NOT AFFECTED BY HEADINGS, ETC.
The division of this Agreement into articles, sections and other portions
and the insertion of headings are for convenience of reference only and should
not affect the construction or interpretation hereof. Unless otherwise
indicated, all references to an "Article" or "Section" followed by a number
refer to the specified Article or Section of this Agreement. The terms "this
Agreement," "hereof", "herein" and "hereunder" and similar expressions refer to
this Agreement and not to any particular Article, Section or other portion
hereof.
SECTION 1.3 RULES OF CONSTRUCTION
Unless otherwise specifically indicated or the context otherwise requires,
(a) all references to "dollars" or "$" mean United States dollars, (b) words
importing the singular shall include the plural and
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vice versa and words importing any gender shall include all genders, and (c)
"include," "includes" and "including" shall be deemed to be followed by the
words "without limitation."
SECTION 1.4 DATE FOR ANY ACTION
In the event that any date on which any action is required to be taken
hereunder by any of the parties hereto is not a Business Day, such action shall
be required to be taken on the next succeeding day that is a Business Day.
SECTION 1.5 PAYMENTS
All payments to be made hereunder will be made without interest and less
any tax required by Canadian law to be deducted or withheld.
ARTICLE 2
PURPOSE OF AGREEMENT
SECTION 2.1 ESTABLISHMENT OF TRUST
The purpose of this Agreement is to create the Trust for the benefit of the
Beneficiaries and Acquiror, as herein provided. The Trustee will hold the
Acquiror Special Voting Share in order to enable the Trustee to exercise the
Voting Rights and will hold the Exchange Right and the Automatic Exchange Rights
in order to enable the Trustee to exercise such rights, in each case as trustee
for and on behalf of the Beneficiaries as provided in this Agreement. The
Trustee will hold the Acquiror Special Voting Share for and on behalf of
Acquiror for all other rights associated with such Acquiror Special Voting Share
other than the Voting Rights.
ARTICLE 3
ACQUIROR SPECIAL VOTING SHARE
SECTION 3.1 ISSUE AND OWNERSHIP OF THE ACQUIROR SPECIAL VOTING SHARE
Acquiror hereby agrees to issue to, and deposit with, the Trustee the
Acquiror Special Voting Share to be hereafter held of record by the Trustee as
trustee for and on behalf of, and for the use and benefit of, the Beneficiaries
and in accordance with the provisions of this Agreement. Acquiror hereby
acknowledges receipt from the Trustee as trustee for and on behalf of the
Beneficiaries of good and valuable consideration (and the adequacy thereof) for
the issuance of the Acquiror Special Voting Share by Acquiror to the Trustee.
During the term of the Trust and subject to the terms and conditions of this
Agreement, the Trustee shall possess and be vested with full legal ownership of
such Acquiror Special Voting Share and shall be entitled to exercise all of the
rights and powers of an owner with respect to such Acquiror Special Voting Share
provided that the Trustee shall:
(a) hold such Acquiror Special Voting Share and the legal title thereto as
trustee solely for the use and benefit of the Beneficiaries in
accordance with the provisions of this Agreement; and
(b) except as specifically authorized by this Agreement, have no power or
authority to sell, transfer, vote or otherwise deal in or with such
Acquiror Special Voting Share and such Acquiror Special Voting Share
shall not be used or disposed of by the Trustee for any purpose other
than the purposes for which this Trust is created pursuant to this
Agreement.
SECTION 3.2 LEGENDED SHARE CERTIFICATES
Canco will cause each certificate representing Exchangeable Shares to bear
an appropriate legend notifying the Beneficiaries of their right to instruct the
Trustee with respect to the exercise of the portion of the Voting Rights in
respect of the Exchangeable Shares held by the Beneficiaries.
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SECTION 3.3 SAFE KEEPING OF CERTIFICATE
The physical certificate representing the Acquiror Special Voting Share
shall at all times be held in safe keeping by the Trustee or its duly authorized
agent.
ARTICLE 4
EXERCISE OF VOTING RIGHTS
SECTION 4.1 VOTING RIGHTS
The Trustee, as the holder of record of the Acquiror Special Voting Share
forming part of the Trust Estate, shall be entitled to all of the Voting Rights,
including the right to vote in person or by proxy the Acquiror Special Voting
Share held by the Trustee on any matter, question, proposal or proposition
whatsoever that may properly come before the shareholders of Acquiror at an
Acquiror Meeting or in connection with an Acquiror Consent. The Voting Rights
shall be and remain vested in and exercised by the Trustee. Subject to Section
6.15 hereof:
(a) the Trustee shall exercise the Voting Rights only on the basis of
instructions received pursuant to this Article 4 from Beneficiaries
entitled to instruct the Trustee as to the voting thereof at the time
at which the Acquiror Meeting is held or an Acquiror Consent is
sought; and
(b) to the extent that no instructions are received from a Beneficiary
with respect to the Voting Rights to which such Beneficiary is
entitled, the Trustee shall not exercise or permit the exercise of
such Voting Rights.
SECTION 4.2 NUMBER OF VOTES
With respect to all meetings of shareholders of Acquiror at which holders
of Acquiror Shares are entitled to vote (each, an "ACQUIROR MEETING") and with
respect to all written consents sought from Acquiror's shareholders, including
the holders of Acquiror Shares (each, an "ACQUIROR CONSENT"), each Beneficiary
shall be entitled to instruct the Trustee to cast and exercise, in the manner
instructed, a number of votes equal to the Equivalent Vote Amount for each
Exchangeable Share owned of record by such Beneficiary on the record date
established by Acquiror or by applicable law for such Acquiror Meeting or
Acquiror Consent, as the case may be (collectively, the "BENEFICIARY VOTES"), in
respect of each matter, question, proposal or proposition to be voted on at such
Acquiror Meeting or consented to in connection with such Acquiror Consent.
Any Beneficiary who chooses to attend an Acquiror Meeting in person will be
entitled to one vote on a show of hands.
SECTION 4.3 MAILINGS TO SHAREHOLDERS
With respect to each Acquiror Meeting and Acquiror Consent, the Trustee
will use its reasonable efforts promptly to mail or cause to be mailed (or
otherwise communicate in the same manner as Acquiror utilizes in communications
to holders of Acquiror Shares subject to applicable regulatory requirements and
provided such manner of communications is reasonably available to the Trustee)
to each of the Beneficiaries named in the List, such mailing or communication to
commence on the same day as the mailing or notice (or other communication) with
respect thereto is commenced by Acquiror to its shareholders:
(a) a copy of such notice, together with any related materials, including
any proxy or information statement, to be provided to shareholders of
Acquiror;
(b) a statement that such Beneficiary is entitled to instruct the Trustee
as to the exercise of the Beneficiary Votes with respect to such
Acquiror Meeting or Acquiror Consent or, pursuant to Section 4.7, to
attend such Acquiror Meeting and to exercise personally thereat the
Beneficiary Votes of such Beneficiary;
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(c) a statement as to the manner in which such instructions may be given to
the Trustee, including an express indication that instructions may be
given to the Trustee to give:
(i) a proxy to such Beneficiary or its designee to exercise personally
the Beneficiary Votes; or
(ii) a proxy to a designated agent or other representative of the
management of Acquiror to exercise such Beneficiary Votes;
(d) a statement that if no such instructions are received from the
Beneficiary, the Beneficiary Votes to which such Beneficiary is
entitled will not be exercised;
(e) a form of direction whereby the Beneficiary may so direct and instruct
the Trustee as contemplated herein; and
(f) a statement of the time and date by which such instructions must be
received by the Trustee in order to be binding upon it, which in the
case of a Acquiror Meeting shall not be earlier than the close of
business on the second Business Day prior to such meeting, and of the
method for revoking or amending such instructions.
For the purpose of determining Beneficiary Votes to which a Beneficiary is
entitled in respect of any Acquiror Meeting or Acquiror Consent, the number of
Exchangeable Shares owned of record by the Beneficiary shall be determined at
the close of business on the record date established by Acquiror or by
applicable law for purposes of determining shareholders entitled to vote at such
Acquiror Meeting or to give written consent in connection with such Acquiror
Consent. Acquiror will notify the Trustee of any decision of the Board of
Directors of Acquiror with respect to the calling of any Acquiror Meeting or the
seeking of any Acquiror Consent and shall provide all necessary information and
materials to the Trustee in each case promptly and in any event in sufficient
time to enable the Trustee to perform its obligations contemplated by this
Section 4.3.
The materials referred to in this Section 4.3 are to be provided to the
Trustee by Acquiror and the materials referred to in Section 4.3(c), Section
4.3(e) and Section 4.3(f) shall be subject to reasonable comment by the Trustee
in a timely manner. Acquiror shall ensure that the materials to be provided to
the Trustee are provided in sufficient time to permit the Trustee to comment as
aforesaid and to send all materials to each Beneficiary at the same time as such
materials are first sent to holders of Acquiror Shares. Acquiror agrees not to
communicate with holders of Acquiror Shares with respect to the materials
referred to in this Section 4.3 otherwise than by mail unless such method of
communication is also reasonably available to the Trustee for communication with
the Beneficiaries. Notwithstanding the foregoing, Acquiror may at its option
exercise the duties of the Trustee to deliver copies of all materials to each
Beneficiary as required by this Section 4.3 so long as in each case Acquiror
delivers a certificate to the Trustee stating that Acquiror has undertaken to
perform the obligations set forth in this Section 4.3.
SECTION 4.4 COPIES OF SHAREHOLDER INFORMATION
Acquiror will deliver to the Trustee copies of all proxy materials
(including notices of Acquiror Meetings but excluding proxies to vote Acquiror
Shares), information statements, reports (including all interim and annual
financial statements) and other written communications that, in each case, are
to be distributed from time to time to holders of Acquiror Shares in sufficient
quantities and in sufficient time so as to enable the Trustee to send those
materials to each Beneficiary, to the extent possible, at the same time as such
materials are first sent to holders of Acquiror Shares. The Trustee will mail or
otherwise send to each Beneficiary, at the expense of Acquiror, copies of all
such materials (and all materials specifically directed to the Beneficiaries or
to the Trustee for the benefit of the Beneficiaries by Acquiror) received by the
Trustee from Acquiror, to the extent possible, at the same time as such
materials are sent to holders of Acquiror Shares. The Trustee will make copies
of all such materials available for inspection by any Beneficiary at the
Trustee's principal office in Calgary, Alberta. Notwithstanding the foregoing,
Acquiror at its option may exercise the duties of the Trustee to deliver copies
of all materials to each Beneficiary as required by this Section 4.4 so long as
in each case Acquiror delivers a certificate to the Trustee stating that
Acquiror has undertaken to perform the obligations set forth in this Section
4.4.
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SECTION 4.5 OTHER MATERIALS
As soon as reasonably practicable after receipt by Acquiror or holders of
Acquiror Shares (if such receipt is known by Acquiror) of any material sent or
given by or on behalf of a third party to holders of Acquiror Shares generally,
including dissident proxy and information circulars (and related information and
material) and tender and exchange offer circulars (and related information and
material), Acquiror shall use its reasonable best efforts to obtain and deliver
to the Trustee copies thereof in sufficient quantities so as to enable the
Trustee to forward such material (unless the same has been provided directly to
Beneficiaries by such third party) to each Beneficiary as soon as possible
thereafter. As soon as reasonably practicable after receipt thereof, the Trustee
will mail or otherwise send to each Beneficiary, at the expense of Acquiror,
copies of all such materials received by the Trustee from Acquiror. The Trustee
will also make available for inspection by any Beneficiary at the Trustee's
principal office in Calgary, Alberta, copies of all such materials.
Notwithstanding the foregoing, Acquiror at its option may exercise the duties of
the Trustee to deliver copies of all such materials to each Beneficiary as
required by this Section 4.5 so long as in each case Acquiror delivers a
certificate to the Trustee stating that Acquiror has undertaken to perform the
obligations set forth in this Section 4.5.
SECTION 4.6 LIST OF PERSONS ENTITLED TO VOTE
Canco shall, (a) prior to each annual and special Acquiror Meeting or the
seeking of any Acquiror Consent and (b) forthwith upon each request made at any
time by the Trustee in writing, prepare or cause to be prepared a list (a
"LIST") of the names and addresses of the Beneficiaries arranged in alphabetical
order and showing the number of Exchangeable Shares held of record by each such
Beneficiary, in each case at the close of business on the date specified by the
Trustee in such request or, in the case of a List prepared in connection with an
Acquiror Meeting or an Acquiror Consent, at the close of business on the record
date established by Acquiror or pursuant to applicable law for determining the
holders of Acquiror Shares entitled to receive notice of and/or to vote at such
Acquiror Meeting or to give consent in connection with such Acquiror Consent.
Each such List shall be delivered to the Trustee promptly after receipt by Canco
of such request or the record date for such meeting or seeking of consent, as
the case may be, and in any event within sufficient time as to permit the
Trustee to perform its obligations under this Agreement. Acquiror agrees to give
Canco notice (with a copy to the Trustee) of the calling of any Acquiror Meeting
or the seeking of any Acquiror Consent by Acquiror or its management, together
with the record dates therefor, sufficiently prior to the date of the calling of
such meeting or seeking of such consent so as to enable Canco to perform its
obligations under this Section 4.6.
SECTION 4.7 ENTITLEMENT TO DIRECT VOTES
Any Beneficiary named in a List prepared in connection with any Acquiror
Meeting or Acquiror Consent will be entitled (a) to instruct the Trustee in the
manner described in Section 4.3 with respect to the exercise of the Beneficiary
Votes to which such Beneficiary is entitled or (b) to attend such meeting and
personally exercise thereat (or to personally exercise with respect to any
Acquiror Consent), as the proxy of the Trustee, the Beneficiary Votes to which
such Beneficiary is entitled.
SECTION 4.8 VOTING BY TRUSTEE AND ATTENDANCE OF TRUSTEE REPRESENTATIVE AT
MEETING
(a) In connection with each Acquiror Meeting and Acquiror Consent, the
Trustee shall exercise, either in person or by proxy, in accordance
with the instructions received from a Beneficiary pursuant to Section
4.3, the Beneficiary Votes as to which such Beneficiary is entitled to
direct the vote (or any lesser number thereof as may be set forth in
the instructions); provided, however, that such written instructions
are received by the Trustee from the Beneficiary prior to the time and
date fixed by the Trustee for receipt of such instruction in the
notice given by the Trustee to the Beneficiary pursuant to Section
4.3.
(b) The Trustee shall cause a representative who is empowered by it to
sign and deliver, on behalf of the Trustee, proxies for Voting Rights
to attend each Acquiror Meeting. Upon submission by
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a Beneficiary (or its designee) of identification satisfactory to the
Trustee's representative, and at the Beneficiary's request, such
representative shall sign and deliver to such Beneficiary (or its
designee) a proxy to exercise personally the Beneficiary Votes as to
which such Beneficiary is otherwise entitled hereunder to direct the
vote, if such Beneficiary either (i) has not previously given the
Trustee instructions pursuant to Section 4.3 in respect of such meeting
or (ii) submits to such representative written revocation of any such
previous instructions. At such meeting, upon receipt of a proxy from the
Trustee's representative, the Beneficiary exercising such Beneficiary
Votes shall have the same rights as the Trustee to speak at the meeting
in respect of any matter, question, proposal or proposition, to vote by
way of ballot at the meeting in respect of any matter, question,
proposal or proposition, and to vote at such meeting by way of a show of
hands in respect of any matter, question or proposition.
SECTION 4.9 DISTRIBUTION OF WRITTEN MATERIALS
Any written materials distributed by or on behalf of the Trustee pursuant
to this Agreement shall be sent by mail (or otherwise communicated in the same
manner as Acquiror utilizes in communications to holders of Acquiror Shares,
subject to applicable regulatory requirements and provided such manner of
communications is reasonably available to the Trustee) to each Beneficiary at
its address as shown on the books of Canco. Acquiror agrees not to communicate
with holders of Acquiror Shares with respect to such written material otherwise
than by mail unless such method of communication is also reasonably available to
the Trustee for communication with the Beneficiaries. Canco shall provide or
cause to be provided to the Trustee for purposes of communication, on a timely
basis and without charge or other expense:
(a) a current List; and
(b) upon the request of the Trustee, mailing labels to enable the Trustee
to carry out its duties under this Agreement.
Canco's obligations under this Section 4.9 shall be deemed satisfied to the
extent Acquiror exercises its option to perform the duties of the Trustee to
deliver copies of materials to each Beneficiary and Canco provides the required
information and materials to Acquiror.
SECTION 4.10 TERMINATION OF VOTING RIGHTS
Except as otherwise provided herein or in the Exchangeable Share
Provisions, all of the rights of a Beneficiary with respect to the Beneficiary
Votes exercisable in respect of the Exchangeable Shares held by such
Beneficiary, including the right to instruct the Trustee as to the voting of or
to vote personally such Beneficiary Votes, shall be deemed to be surrendered by
the Beneficiary to Acquiror or Callco, as the case may be, and such Beneficiary
Votes and the Voting Rights represented thereby shall cease and be terminated
immediately, upon the delivery by such Beneficiary to the Trustee of the
certificates representing such Exchangeable Shares in connection with the
exercise by the Beneficiary of the Exchange Right or upon the occurrence of the
automatic exchange of Exchangeable Shares for Acquiror Shares, as specified in
Article 5 (unless, in either case, Acquiror shall not have delivered the
Exchangeable Share Consideration deliverable in exchange therefor to the Trustee
for delivery to the Beneficiaries), or upon the redemption of Exchangeable
Shares pursuant to Article 6 or Article 7 of the Exchangeable Share Provisions,
or upon the effective date of the liquidation, dissolution or winding-up of
Canco pursuant to Article 5 of the Exchangeable Share Provisions, or upon the
purchase of Exchangeable Shares from the holder thereof by Callco pursuant to
the exercise by Callco of the Retraction Call Right, the Redemption Call Right
or the Liquidation Call Right, or upon the purchase of Exchangeable Shares from
the holders thereof by Acquiror or Callco pursuant to the exercise by Acquiror
or Callco of the Change of Law Call Right.
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ARTICLE 5
EXCHANGE RIGHT AND AUTOMATIC EXCHANGE
SECTION 5.1 GRANT AND OWNERSHIP OF THE EXCHANGE RIGHT
Acquiror hereby grants to the Trustee as trustee for and on behalf of, and
for the use and benefit of, the Beneficiaries the right (the "EXCHANGE RIGHT"),
upon the occurrence and during the continuance of an Insolvency Event, to
require Acquiror to purchase from each or any Beneficiary all or any part of the
Exchangeable Shares held by such Beneficiary and the Automatic Exchange Rights,
all in accordance with the provisions of this Agreement. Acquiror hereby
acknowledges receipt from the Trustee as trustee for and on behalf of the
Beneficiaries of good and valuable consideration (and the adequacy thereof) for
the grant of the Exchange Right and the Automatic Exchange Rights by Acquiror to
the Trustee. During the term of the Trust and subject to the terms and
conditions of this Agreement, the Trustee shall possess and be vested with full
legal ownership of the Exchange Right and the Automatic Exchange Rights and
shall be entitled to exercise all of the rights and powers of an owner with
respect to the Exchange Right and the Automatic Exchange Rights, provided that
the Trustee shall:
(a) hold the Exchange Right and the Automatic Exchange Rights and the
legal title thereto as trustee solely for the use and benefit of the
Beneficiaries in accordance with the provisions of this Agreement; and
(b) except as specifically authorized by this Agreement, have no power or
authority to exercise or otherwise deal in or with the Exchange Right
or the Automatic Exchange Rights, and the Trustee shall not exercise
any such rights for any purpose other than the purposes for which the
Trust is created pursuant to this Agreement.
SECTION 5.2 LEGENDED SHARE CERTIFICATES
Canco will cause each certificate representing Exchangeable Shares to bear
an appropriate legend notifying the Beneficiaries of:
(a) their right to instruct the Trustee with respect to the exercise of
the Exchange Right in respect of the Exchangeable Shares held by a
Beneficiary; and
(b) the Automatic Exchange Rights.
SECTION 5.3 GENERAL EXERCISE OF EXCHANGE RIGHT
The Exchange Right shall be and remain vested in and exercisable by the
Trustee. Subject to Section 6.15, the Trustee shall exercise the Exchange Right
only on the basis of instructions received pursuant to this Article 5 from
Beneficiaries entitled to instruct the Trustee as to the exercise thereof. To
the extent that no instructions are received from a Beneficiary with respect to
the Exchange Right, the Trustee shall not exercise or permit the exercise of the
Exchange Right.
SECTION 5.4 PURCHASE PRICE
The purchase price payable by Acquiror for each Exchangeable Share to be
purchased by Acquiror under the Exchange Right shall be an amount per share
equal to the Exchangeable Share Price on the last Business Day prior to the day
of closing of the purchase and sale of such Exchangeable Share under the
Exchange Right. In connection with each exercise of the Exchange Right, Acquiror
shall provide to the Trustee an Officer's Certificate setting forth the
calculation of the Exchangeable Share Price for each Exchangeable Share. The
Exchangeable Share Price for each such Exchangeable Share so purchased may be
satisfied only by Acquiror delivering or causing to be delivered to the Trustee,
on behalf of the relevant Beneficiary, the Exchangeable Share Consideration
representing the total Exchangeable Share Price. Upon payment by Acquiror of
such purchase price to the Trustee for the benefit of the Beneficiary, the
relevant Beneficiary shall cease to have any right to be paid any amount in
respect of declared and unpaid dividends on each such Exchangeable Share by
Canco.
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SECTION 5.5 EXERCISE INSTRUCTIONS
Subject to the terms and conditions herein set forth, a Beneficiary shall
be entitled, upon the occurrence and during the continuance of an Insolvency
Event, to instruct the Trustee to exercise the Exchange Right with respect to
all or any part of the Exchangeable Shares registered in the name of such
Beneficiary on the books of Canco. To cause the exercise of the Exchange Right
by the Trustee, the Beneficiary shall deliver to the Trustee, in person or by
certified or registered mail, at its principal office in Calgary, Alberta or at
such other places in Canada as the Trustee may from time to time designate by
written notice to the Beneficiaries, the certificates representing the
Exchangeable Shares which such Beneficiary desires Acquiror to purchase, duly
endorsed in blank for transfer, and accompanied by such other documents and
instruments as may be required to effect a transfer of Exchangeable Shares under
the Act and the by-laws of Canco and such additional documents and instruments
as the Trustee, Canco and Acquiror may reasonably require together with (a) a
duly completed form of notice of exercise of the Exchange Right, contained on
the reverse of or attached to the Exchangeable Share certificates, stating (i)
that the Beneficiary thereby instructs the Trustee to exercise the Exchange
Right so as to require Acquiror to purchase from the Beneficiary the number of
Exchangeable Shares specified therein, (ii) that such Beneficiary has good title
to and owns all such Exchangeable Shares to be acquired by Acquiror free and
clear of all liens, claims, security interests and encumbrances, (iii) the names
in which the certificates representing Acquiror Shares issuable in connection
with the exercise of the Exchange Right are to be issued and (iv) the names and
addresses of the persons to whom such new certificates should be delivered, and
(b) payment (or evidence satisfactory to the Trustee, Canco and Acquiror of
payment) of the taxes (if any) payable as contemplated by Section 5.8 of this
Agreement. If only a part of the Exchangeable Shares represented by any
certificate or certificates delivered to the Trustee are to be purchased by
Acquiror under the Exchange Right, a new certificate for the balance of such
Exchangeable Shares shall be issued to the holder at the expense of Canco.
SECTION 5.6 DELIVERY OF ACQUIROR SHARES; EFFECT OF EXERCISE
Promptly after the receipt by the Trustee of the certificates representing
the Exchangeable Shares which the Beneficiary desires Acquiror to purchase under
the Exchange Right, together with such documents and instruments of transfer and
a duly completed form of notice of exercise of the Exchange Right (and payment
of taxes, if any payable as contemplated by Section 5.8 or evidence thereof),
duly endorsed for transfer to Acquiror, the Trustee shall notify Acquiror and
Canco of its receipt of the same, which notice to Acquiror and Canco shall
constitute exercise of the Exchange Right by the Trustee on behalf of the
Beneficiary in respect of such Exchangeable Shares, and Acquiror shall promptly
thereafter deliver or cause to be delivered to the Trustee, for delivery to the
Beneficiary in respect of such Exchangeable Shares (or to such other persons, if
any, properly designated by such Beneficiary) the Exchangeable Share
Consideration deliverable in connection with the exercise of the Exchange Right;
provided, however, that no such delivery shall be made unless and until the
Beneficiary requesting the same shall have paid (or provided evidence
satisfactory to the Trustee, Canco and Acquiror of the payment of) the taxes (if
any) payable as contemplated by Section 5.8 of this Agreement. Immediately upon
the giving of notice by the Trustee to Acquiror and Canco of the exercise of the
Exchange Right, as provided in this Section 5.6, the closing of the transaction
of purchase and sale contemplated by the Exchange Right shall be deemed to have
occurred, and the Beneficiary of such Exchangeable Shares shall be deemed to
have transferred to Acquiror all of such Beneficiary's right, title and interest
in and to such Exchangeable Shares and in the related interest in the Trust
Estate and shall cease to be a holder of such Exchangeable Shares and shall not
be entitled to exercise any of the rights of a holder in respect thereof, other
than the right to receive his proportionate part of the total purchase price
therefor, unless such Exchangeable Share Consideration is not delivered by
Acquiror to the Trustee for delivery to such Beneficiary (or to such other
person, if any, properly designated by such Beneficiary) within five Business
Days of the date of the giving of such notice by the Trustee, in which case the
rights of the Beneficiary shall remain unaffected until such Exchangeable Share
Consideration is delivered by Acquiror and any cheque included therein is paid.
Upon delivery of such Exchangeable Share Consideration by Acquiror to the
Trustee, the Trustee shall deliver such Exchangeable Share Consideration to such
Beneficiary (or to
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such other person, if any, properly designated by such Beneficiary).
Concurrently with such Beneficiary ceasing to be a holder of Exchangeable
Shares, the Beneficiary shall be considered and deemed for all purposes to be
the holder of the Acquiror Shares delivered to it pursuant to the Exchange
Right.
SECTION 5.7 EXERCISE OF EXCHANGE RIGHT SUBSEQUENT TO RETRACTION
In the event that a Beneficiary has exercised its right under Article 6 of
the Exchangeable Share Provisions to require Canco to redeem any or all of the
Exchangeable Shares held by the Beneficiary (the "RETRACTED SHARES") and is
notified by Canco pursuant to Section 6.6 of the Exchangeable Share Provisions
that Canco will not be permitted as a result of solvency requirements of
applicable law to redeem all such Retracted Shares, and provided that Callco
shall not have exercised the Retraction Call Right with respect to the Retracted
Shares and that the Beneficiary has not revoked the retraction request delivered
by the Beneficiary to Canco pursuant to Section 6.7 of the Exchangeable Share
Provisions, and provided further that the Trustee has received written notice of
same from Canco or Acquiror, the retraction request will constitute and will be
deemed to constitute notice from the Beneficiary to the Trustee instructing the
Trustee to exercise the Exchange Right with respect to those Retracted Shares
that Canco is unable to redeem. In any such event, Canco hereby agrees with the
Trustee and in favour of the Beneficiary promptly to forward or cause to be
forwarded to the Trustee all relevant materials delivered by the Beneficiary to
Canco or to the transfer agent of the Exchangeable Shares (including a copy of
the retraction request delivered pursuant to Section 6.1 of the Exchangeable
Share Provisions) in connection with such proposed redemption of the Retracted
Shares and the Trustee will thereupon exercise the Exchange Right with respect
to the Retracted Shares that Canco is not permitted to redeem and will require
Acquiror to purchase such shares in accordance with the provisions of this
Article 5.
SECTION 5.8 STAMP OR OTHER TRANSFER TAXES
Upon any sale of Exchangeable Shares to Acquiror pursuant to the Exchange
Right or the Automatic Exchange Rights, the share certificate or certificates
representing Acquiror Shares to be delivered in connection with the payment of
the purchase price therefor shall be issued in the name of the Beneficiary in
respect of the Exchangeable Shares so sold or in such names as such Beneficiary
may otherwise direct in writing without charge to the holder of the Exchangeable
Shares so sold; provided, however, that such Beneficiary (a) shall pay (and none
of Acquiror, Canco or the Trustee shall be required to pay) any documentary,
stamp, transfer or other taxes that may be payable in respect of any transfer
involved in the issuance or delivery of such shares to a person other than such
Beneficiary or evidenced to the satisfaction of the such taxes, if any, have
been paid.
SECTION 5.9 NOTICE OF INSOLVENCY EVENT
As soon as practicable following the occurrence of an Insolvency Event or
any event that with the giving of notice or the passage of time or both would be
an Insolvency Event, Canco and Acquiror shall give written notice thereof to the
Trustee. As soon as practicable following the receipt of notice from Canco and
Acquiror of the occurrence of an Insolvency Event, or upon the Trustee becoming
aware of an Insolvency Event, the Trustee will mail to each Beneficiary, at the
expense of Acquiror (such funds to be received in advance), a notice of such
Insolvency Event in the form provided by Acquiror, which notice shall contain a
brief statement of the rights of the Beneficiaries with respect to the Exchange
Right.
SECTION 5.10 QUALIFICATION OF ACQUIROR SHARES
Acquiror covenants that if any Acquiror Shares issuable pursuant to the
Exchange Right or the Automatic Exchange Rights require registration or
qualification with or approval of or the filing of any document, including any
registration statement, prospectus or similar document, or the taking of any
proceeding with or the obtaining of any order, ruling or consent from any
governmental or regulatory authority under any Canadian or United States
federal, provincial, territorial or state law or regulation or pursuant to the
rules and regulations of any regulatory authority or stock exchange or the
fulfilment of any other Canadian or United States federal, provincial,
territorial or state legal requirement before such shares
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may be issued and delivered by Acquiror to the initial holder thereof or in
order that such shares may be freely traded thereafter (other than any
restrictions of general application on transfer by reason of a holder being a
"control person" of Acquiror for purposes of Canadian provincial securities law
or an "affiliate" of Acquiror for purposes of United States federal or state
securities law), Acquiror will in good faith use its reasonable best efforts to
take all such actions and do all such things as are necessary or desirable to
cause such Acquiror Shares to be and remain duly registered, qualified or
approved under United States and/or Canadian law, as the case may be, to the
extent provided in the Acquisition Agreement. Acquiror will use its reasonable
best efforts and in good faith expeditiously take all such actions and do all
such things as are reasonably necessary or desirable to cause all Acquiror
Shares to be delivered pursuant to the Exchange Right or the Automatic Exchange
Rights to be listed, quoted or posted for trading on all stock exchanges and
quotation systems on which outstanding Acquiror Shares are listed, quoted or
posted for trading at such time.
SECTION 5.11 ACQUIROR SHARES
Acquiror hereby represents, warrants and covenants that the Acquiror Shares
issuable to Beneficiaries as described herein will be duly authorized and
validly issued, fully paid and non-assessable and shall be free and clear of any
lien, claim or encumbrance.
SECTION 5.12 AUTOMATIC EXCHANGE ON LIQUIDATION OF ACQUIROR
(a) Acquiror will give the Trustee written notice of each of the following
events at the time set forth below:
(i) in the event of any determination by the Board of Directors of
Acquiror to institute voluntary liquidation, dissolution or
winding-up proceedings with respect to Acquiror or to effect any
other distribution of assets of Acquiror among its shareholders
for the purpose of winding up its affairs, at least 60 days prior
to the proposed effective date of such liquidation, dissolution,
winding-up or other distribution; and
(ii) promptly following the earlier of (A) receipt by Acquiror of
notice of, and (B) Acquiror otherwise becoming aware of, any
threatened or instituted claim, suit, petition or other
proceedings with respect to the involuntary liquidation,
dissolution or winding-up of Acquiror or to effect any other
distribution of assets of Acquiror among its shareholders for the
purpose of winding up its affairs, in each case where Acquiror has
failed to contest in good faith any such proceeding commenced in
respect of Acquiror within 30 days of becoming aware thereof.
(b) Promptly following receipt by the Trustee from Acquiror of notice of
any event (a "LIQUIDATION EVENT") contemplated by Section 5.12(a)
above, the Trustee will give notice thereof to the Beneficiaries. Such
notice shall be provided to the Trustee by Acquiror and shall include a
brief description of rights of the Beneficiaries with respect to the
Automatic Exchange Rights provided for in Section 5.12(c).
(c) In order that the Beneficiaries will be able to participate on a pro
rata basis with the holders of Acquiror Shares in the distribution of
assets of Acquiror in connection with a Liquidation Event, immediately
prior to the effective time (the "LIQUIDATION EVENT EFFECTIVE TIME") of
a Liquidation Event all of the then outstanding Exchangeable Shares
shall be automatically exchanged for Acquiror Shares. To effect such
automatic exchange, Acquiror shall purchase each Exchangeable Share
outstanding immediately prior to the Liquidation Event Effective Time
and held by Beneficiaries, and each Beneficiary shall sell the
Exchangeable Shares held by such Beneficiary at such time, for a
purchase price per share equal to the Exchangeable Share Price
applicable at that time. Acquiror shall provide the Trustee with an
Officer's Certificate in connection with any automatic exchange setting
forth the calculation of the Exchangeable Share Price for each
Exchangeable Share.
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(d) The closing of the transaction of purchase and sale contemplated by the
automatic exchange of Exchangeable Shares for Acquiror Shares shall be
deemed to have occurred immediately prior to the Liquidation Event
Effective Time, and each Beneficiary shall be deemed to have
transferred to Acquiror all of the Beneficiary's right, title and
interest in and to such Beneficiary's Exchangeable Shares and the
related interest in the Trust Estate. Any right of each such
Beneficiary to receive declared and unpaid dividends from Canco shall
be deemed to be satisfied and discharged and each such Beneficiary
shall cease to be a holder of such Exchangeable Shares and Acquiror
shall deliver to the Beneficiary the Exchangeable Share Consideration
deliverable upon the automatic exchange of Exchangeable Shares.
Concurrently with such Beneficiary ceasing to be a holder of
Exchangeable Shares, the Beneficiary shall be considered and deemed for
all purposes to be the holder of the Acquiror Shares issued pursuant to
the automatic exchange of Exchangeable Shares for Acquiror Shares and
the certificates held by the Beneficiary previously representing the
Exchangeable Shares exchanged by the Beneficiary with Acquiror pursuant
to such automatic exchange shall thereafter be deemed to represent
Acquiror Shares issued to the Beneficiary by Acquiror pursuant to such
automatic exchange. Upon the request of a Beneficiary and the surrender
by the Beneficiary of Exchangeable Share certificates deemed to
represent Acquiror Shares, duly endorsed in blank and accompanied by
such instruments of transfer as Acquiror may reasonably require,
Acquiror shall deliver or cause to be delivered to the Beneficiary
certificates representing Acquiror Shares of which the Beneficiary is
the holder.
SECTION 5.13 WITHHOLDING RIGHTS
Acquiror, Canco and the Trustee shall be entitled to deduct and withhold
from any consideration otherwise payable under this Agreement to any holder of
Exchangeable Shares or Acquiror Shares such amounts as Acquiror, Canco or the
Trustee is required to deduct and withhold with respect to such payment under
the Income Tax Act (Canada), the United States Internal Revenue Code of 1986 or
any provision of federal, provincial, state, local or foreign tax law, in each
case as amended or succeeded. The Trustee may act on the advice of counsel with
respect to such matters. To the extent that amounts are so withheld, such
withheld amounts shall be treated for all purposes as having been paid to the
holder of the shares in respect of which such deduction and withholding was
made, provided that such withheld amounts are actually remitted to the
appropriate taxing authority. To the extent that the amount so required to be
deducted or withheld from any payment to a holder exceeds the cash portion of
the consideration otherwise payable to the holder, Acquiror, Canco and the
Trustee are hereby authorized to sell or otherwise dispose of such portion of
the consideration as is necessary to provide sufficient funds to Acquiror, Canco
or the Trustee, as the case may be, to enable it to comply with such deduction
or withholding requirement and Acquiror, Canco or the Trustee shall notify the
holder thereof and remit to such holder any unapplied balance of the net
proceeds of such sale.
ARTICLE 6
CONCERNING THE TRUSTEE
SECTION 6.1 POWERS AND DUTIES OF THE TRUSTEE
The rights, powers, duties and authorities of the Trustee under this
Agreement, in its capacity as trustee of the Trust, shall include:
(a) receipt and deposit of the Acquiror Special Voting Share from Acquiror
as trustee for and on behalf of the Beneficiaries in accordance with
the provisions of this Agreement;
(b) granting proxies and distributing materials to Beneficiaries as
provided in this Agreement;
(c) casting and exercising the Beneficiary Votes in accordance with the
provisions of this Agreement;
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(d) receiving the grant of the Exchange Right and the Automatic Exchange
Rights from Acquiror as trustee for and on behalf of the Beneficiaries
in accordance with the provisions of this Agreement;
(e) exercising the Exchange Right and enforcing the benefit of the
Automatic Exchange Rights, in each case in accordance with the
provisions of this Agreement, and in connection therewith receiving
from Beneficiaries Exchangeable Shares and other requisite documents
and distributing to such Beneficiaries Acquiror Shares and cheques, if
any, to which such Beneficiaries are entitled upon the exercise of the
Exchange Right or pursuant to the Automatic Exchange Rights, as the
case may be;
(f) holding title to the Trust Estate;
(g) investing any moneys forming, from time to time, a part of the Trust
Estate as provided in this Agreement;
(h) taking action on its own initiative or at the direction of a
Beneficiary or Beneficiaries to enforce the obligations of Acquiror and
Canco under this Agreement; and
(i) taking such other actions and doing such other things as are
specifically provided in this Agreement.
In the exercise of such rights, powers, duties and authorities, the Trustee
shall have (and is granted) such incidental and additional rights, powers,
duties and authority not in conflict with any of the provisions of this
Agreement as the Trustee, acting in good faith and in the reasonable exercise of
its discretion, may deem necessary, appropriate or desirable to effect the
purpose of the Trust. Any exercise of such discretionary rights, powers, duties
and authorities by the Trustee shall be final, conclusive and binding upon all
persons.
The Trustee in exercising its rights, powers, duties and authorities
hereunder shall act honestly and in good faith and with a view to the best
interests of the Beneficiaries and shall exercise the care, diligence and skill
that a reasonably prudent trustee would exercise in comparable circumstances.
The Trustee shall not be bound to give notice or do or take any act, action
or proceeding by virtue of the powers conferred on it hereby unless and until it
shall be specifically required to do so under the terms hereof, nor shall the
Trustee be required to take any notice of, or to do, or to take any act, action
or proceeding as a result of any default or breach of any provision hereunder,
unless and until notified in writing of such default or breach, which notices
shall distinctly specify the default or breach desired to be brought to the
attention of the Trustee, and in the absence of such notice the Trustee may for
all purposes of this Agreement conclusively assume that no default or breach has
been made in the observance or performance of any of the representations,
warranties, covenants, agreements or conditions contained herein.
SECTION 6.2 NO CONFLICT OF INTEREST
The Trustee represents to Acquiror and Canco that at the date of execution
and delivery of this Agreement there exists no material conflict of interest in
the role of the Trustee as a fiduciary hereunder and the role of the Trustee in
any other capacity. The Trustee shall, within 90 days after it becomes aware
that such material conflict of interest exists, either eliminate such material
conflict of interest or resign in the manner and with the effect specified in
Article 10. If, notwithstanding the foregoing provisions of this Section 6.2,
the Trustee has such a material conflict of interest, the validity and
enforceability of this Agreement shall not be affected in any manner whatsoever
by reason only of the existence of such material conflict of interest. If the
Trustee contravenes the foregoing provisions of this Section 6.2, any interested
party may apply to the Court for an order that the Trustee be replaced as
trustee hereunder.
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SECTION 6.3 DEALINGS WITH TRANSFER AGENTS, REGISTRARS, ETC.
Acquiror and Canco irrevocably authorize the Trustee, from time to time,
to:
(a) consult, communicate and otherwise deal with the respective registrars
and transfer agents, and with any such subsequent registrar or
transfer agent, of the Exchangeable Shares and Acquiror Shares; and
(b) requisition, from time to time, (i) from any such registrar or
transfer agent any information readily available from the records
maintained by it which the Trustee may reasonably require for the
discharge of its duties and responsibilities under this Agreement and
(ii) from the transfer agent of Acquiror Shares, and any subsequent
transfer agent of such shares, the share certificates issuable upon
the exercise from time to time of the Exchange Right and pursuant to
the Automatic Exchange Rights.
Acquiror and Canco irrevocably authorize their respective registrars and
transfer agents to comply with all such requests. Acquiror covenants that it
will supply its transfer agent with duly executed share certificates for the
purpose of completing the exercise from time to time of the Exchange Right and
the Automatic Exchange Rights.
SECTION 6.4 BOOKS AND RECORDS
The Trustee shall keep available for inspection by Acquiror and Canco at
the Trustee's principal office in Calgary, Alberta correct and complete books
and records of account relating to the Trust created by this Agreement,
including all relevant data relating to mailings and instructions to and from
Beneficiaries and all transactions pursuant to the Exchange Right and the
Automatic Exchange Rights. On or before January 15 in every year, so long as any
Acquiror Shares are on deposit with the Trustee, the Trustee shall transmit to
Acquiror and Canco a brief report, dated as of the preceding December 31, with
respect to:
(a) the property and funds comprising the Trust Estate as of that date;
(b) the number of exercises of the Exchange Right, if any, and the
aggregate number of Exchangeable Shares received by the Trustee on
behalf of Beneficiaries in consideration of the issuance by Acquiror
of Acquiror Shares in connection with the Exchange Right, during the
calendar year ended on such December 31; and
(c) any action taken by the Trustee in the performance of its duties under
this Agreement which it had not previously reported and which, in the
Trustee's opinion, materially affects the Trust Estate.
SECTION 6.5 INCOME TAX RETURNS AND REPORTS
The Trustee shall, to the extent necessary, prepare and file on behalf of
the Trust appropriate United States and Canadian income tax returns and any
other returns or reports as may be required by applicable law or pursuant to the
rules and regulations of any securities exchange or other trading system through
which the Exchangeable Shares are traded. In connection therewith, the Trustee
may obtain the advice and assistance of such experts or advisors as the Trustee
reasonably considers necessary or advisable (who may be experts or advisors to
Acquiror or Canco). If requested by the Trustee, Acquiror or Canco shall retain
qualified experts or advisors for the purpose of providing such tax advice or
assistance.
SECTION 6.6 INDEMNIFICATION PRIOR TO CERTAIN ACTIONS BY TRUSTEE
The Trustee shall exercise any or all of the rights, duties, powers or
authorities vested in it by this Agreement at the request, order or direction of
any Beneficiary upon such Beneficiary furnishing to the Trustee reasonable
funding, security or indemnity against the costs, expenses and liabilities which
may be incurred by the Trustee therein or thereby, provided that no Beneficiary
shall be obligated to furnish to the Trustee any such security or indemnity in
connection with the exercise by the Trustee of any of its rights, duties, powers
and authorities with respect to the Acquiror Special Voting Share held by the
Trustee
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pursuant to Article 4, subject to Section 6.15, with respect to the Exchange
Right pursuant to Article 5, subject to Section 6.15, and with respect to the
Automatic Exchange Rights pursuant to Article 5, subject to Section 6.15.
None of the provisions contained in this Agreement shall require the
Trustee to expend or risk its own funds or otherwise incur financial liability
in the exercise of any of its rights, powers, duties, or authorities unless
funded, given security or indemnified as aforesaid.
SECTION 6.7 ACTION OF BENEFICIARIES
No Beneficiary shall have the right to institute any action, suit or
proceeding or to exercise any other remedy authorized by this Agreement for the
purpose of enforcing any of its rights or for the execution of any trust or
power hereunder unless the Beneficiary has requested the Trustee to take or
institute such action, suit or proceeding and furnished the Trustee with the
funding, security or indemnity required by Section 6.6 and the Trustee shall
have failed to act within a reasonable time thereafter. In such case, but not
otherwise, the Beneficiary shall be entitled to take proceedings in any court of
competent jurisdiction such as the Trustee might have taken; it being understood
and intended that no one or more Beneficiaries shall have any right in any
manner whatsoever to affect, disturb or prejudice the rights hereby created by
any such action, or to enforce any right hereunder or the Voting Rights, the
Exchange Rights or the Automatic Exchange Rights except subject to the
conditions and in the manner herein provided, and that all powers and trusts
hereunder shall be exercised and all proceedings at law shall be instituted, had
and maintained by the Trustee, except only as herein provided, and in any event
for the equal benefit of all Beneficiaries.
SECTION 6.8 RELIANCE UPON DECLARATIONS
The Trustee shall not be considered to be in contravention of any of its
rights, powers, duties and authorities hereunder if, when required, it acts and
relies in good faith upon statutory declarations, certificates, opinions, Lists,
reports or other papers or documents furnished pursuant to the provisions hereof
or required by the Trustee to be furnished to it in the exercise of its rights,
powers, duties and authorities hereunder if such statutory declarations,
certificates, opinions, Lists, reports or other papers or documents comply with
the provisions of Section 6.9, if applicable, and with any other applicable
provisions of this Agreement.
SECTION 6.9 EVIDENCE AND AUTHORITY TO TRUSTEE
Acquiror and/or Canco shall furnish to the Trustee evidence of compliance
with the conditions provided for in this Agreement relating to any action or
step required or permitted to be taken by Acquiror and/or Canco or the Trustee
under this Agreement or as a result of any obligation imposed under this
Agreement, including in respect of the Voting Rights or the Exchange Right or
the Automatic Exchange Rights and the taking of any other action to be taken by
the Trustee at the request of or on the application of Acquiror and/or Canco
promptly if and when:
(a) such evidence is required by any other section of this Agreement to be
furnished to the Trustee in accordance with the terms of this Section
6.9; or
(b) the Trustee, in the exercise of its rights, powers, duties and
authorities under this Agreement, gives Acquiror and/or Canco written
notice requiring it to furnish such evidence in relation to any
particular action or obligation specified in such notice.
Such evidence shall consist of an officer's Certificate of Acquiror and/or
Canco or a statutory declaration or a certificate made by persons entitled to
sign an Officer's Certificate stating that any such condition has been complied
with in accordance with the terms of this Agreement.
Whenever such evidence relates to a matter other than the Voting Rights or
the Exchange Right or the Automatic Exchange Rights or the taking of any other
action to be taken by the Trustee at the request or on the application of
Acquiror and/or Canco, and except as otherwise specifically provided herein,
such
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evidence may consist of a report or opinion of any solicitor, attorney, auditor,
accountant, appraiser, valuer, engineer or other expert or any other person
whose qualifications give authority to a statement made by him, provided that if
such report or opinion is furnished by a director, officer or employee of
Acquiror and/or Canco it shall be in the form of an Officer's Certificate or a
statutory declaration.
Each statutory declaration, Officer's Certificate, opinion or report
furnished to the Trustee as evidence of compliance with a condition provided for
in this Agreement shall include a statement by the person giving the evidence:
(a) declaring that such person has read and understands the provisions of
this Agreement relating to the condition in question;
(b) describing the nature and scope of the examination or investigation
upon which such person based the statutory declaration, certificate,
statement or opinion; and
(c) declaring that such person has made such examination or investigation
as such person believes is necessary to enable such person to make the
statements or give the opinions contained or expressed therein.
SECTION 6.10 EXPERTS, ADVISERS AND AGENTS
The Trustee may:
(a) in relation to these presents act and rely on the opinion or advice of
or information obtained from any solicitor, attorney, auditor,
accountant, appraiser, valuer, engineer or other expert, whether
retained by the Trustee or by Acquiror and/or Canco or otherwise, and
may retain or employ such assistants as may be necessary to the proper
discharge of its powers and duties and determination of its rights
hereunder and may pay proper and reasonable compensation for all such
legal and other advice or assistance as aforesaid; and
(b) employ such agents and other assistants as it may reasonably require
for the proper determination and discharge of its powers and duties
hereunder, and may pay reasonable remuneration for all services
performed for it (and shall be entitled to receive reasonable
remuneration for all services performed by it) in the discharge of the
trusts hereof and compensation for all disbursements, costs and
expenses made or incurred by it in the discharge of its duties
hereunder and in the management of the Trust.
SECTION 6.11 INVESTMENT OF MONEYS HELD BY TRUSTEE
Unless otherwise provided in this Agreement, any moneys held by or on
behalf of the Trustee which under the terms of this Agreement may or ought to be
invested or which may be on deposit with the Trustee or which may be in the
hands of the Trustee may be invested and reinvested in the name or under the
control of the Trustee, in trust for Canco, in securities in which, under the
laws of the Province of Alberta, trustees are authorized to invest trust moneys,
provided that such securities are stated to mature within two years after their
purchase by the Trustee, and the Trustee shall so invest such moneys on the
written direction of Canco. Pending the investment of any moneys as hereinbefore
provided, such moneys may be deposited in the name of the Trustee in any
chartered bank in Canada or, with the consent of Canco, in the deposit
department of the Trustee or any other loan or trust company authorized to
accept deposits under the laws of Canada or any province thereof at the rate of
interest then current on similar deposits.
SECTION 6.12 TRUSTEE NOT REQUIRED TO GIVE SECURITY
The Trustee shall not be required to give any bond or security in respect
of the execution of the trusts, rights, duties, powers and authorities of this
Agreement or otherwise in respect of the premises.
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SECTION 6.13 TRUSTEE NOT BOUND TO ACT ON REQUEST
Except as in this Agreement otherwise specifically provided, the Trustee
shall not be bound to act in accordance with any direction or request of
Acquiror and/or Canco or of the directors thereof until a duly authenticated
copy of the instrument or resolution containing such direction or request shall
have been delivered to the Trustee, and the Trustee shall be empowered to act
and rely upon any such copy purporting to be authenticated and believed by the
Trustee to be genuine.
SECTION 6.14 AUTHORITY TO CARRY ON BUSINESS
The Trustee represents to Acquiror and Canco that at the date of execution
and delivery by it of this Agreement it is authorized to carry on the business
of a trust company in each of the Provinces of Canada but if, notwithstanding
the provisions of this Section 6.14, it ceases to be so authorized to carry on
business, the validity and enforceability of this Agreement and the Voting
Rights, the Exchange Right and the Automatic Exchange Rights shall not be
affected in any manner whatsoever by reason only of such event but the Trustee
shall, within 90 days after ceasing to be authorized to carry on the business of
a trust company in any province of Canada, either become so authorized or resign
in the manner and with the effect specified in Article 10.
SECTION 6.15 CONFLICTING CLAIMS
If conflicting claims or demands are made or asserted with respect to any
interest of any Beneficiary in any Exchangeable Shares, including any
disagreement between the heirs, representatives, successors or assigns
succeeding to all or any part of the interest of any Beneficiary in any
Exchangeable Shares, resulting in conflicting claims or demands being made in
connection with such interest, then the Trustee shall be entitled, at its sole
discretion, to refuse to recognize or to comply with any such claims or demands.
In so refusing, the Trustee may elect not to exercise any Voting Rights,
Exchange Right or Automatic Exchange Rights subject to such conflicting claims
or demands and, in so doing, the Trustee shall not be or become liable to any
person on account of such election or its failure or refusal to comply with any
such conflicting claims or demands. The Trustee shall be entitled to continue to
refrain from acting and to refuse to act until:
(a) the rights of all adverse claimants with respect to the Voting Rights,
Exchange Right or Automatic Exchange Rights subject to such
conflicting claims or demands have been adjudicated by a final
judgment of a court of competent jurisdiction and all rights of appeal
have expired; or
(b) all differences with respect to the Voting Rights, Exchange Right or
Automatic Exchange Rights subject to such conflicting claims or
demands have been conclusively settled by a valid written agreement
binding on all such adverse claimants, and the Trustee shall have been
furnished with an executed copy of such agreement certified to be in
full force and effect.
If the Trustee elects to recognize any claim or comply with any demand made
by any such adverse claimant, it may in its discretion require such claimant to
furnish such surety bond or other security satisfactory to the Trustee as it
shall deem appropriate to fully indemnify it as between all conflicting claims
or demands.
SECTION 6.16 ACCEPTANCE OF TRUST
The Trustee hereby accepts the Trust created and provided for by and in
this Agreement and agrees to perform the same upon the terms and conditions
herein set forth and to hold all rights, privileges and benefits conferred
hereby and by law in trust for the various persons who shall from time to time
be Beneficiaries, subject to all the terms and conditions herein set forth.
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SECTION 6.17 MAINTENANCE OF OFFICE OR AGENCY
Acquiror will maintain in Calgary, Alberta an office or agency where
certificates representing Exchangeable Shares may be presented or surrendered
for exchange by Beneficiaries and where notices and demands to or upon Acquiror
or Canco in respect of the Exchangeable Shares may be served. Acquiror will give
prompt written notice to the Trustee of the location, and any change in the
location, of such office or agency. If at any time Acquiror shall fail to
maintain any such office or agency or shall fail to furnish the Trustee with the
address thereof, such presentations, surrenders, notices and demands may be
served at the Corporate Trust Office of the Trustee, and Acquiror and Canco
hereby appoint the Trustee as their agent to receive all such presentations,
surrenders, notices and demands. Furthermore, copies of all Acquiror proxy
materials will be made available for inspection by any Beneficiary at such
office or agency.
ARTICLE 7
COMPENSATION
SECTION 7.1 FEES AND EXPENSES OF THE TRUSTEE
Acquiror and Canco jointly and severally agree to pay the Trustee
reasonable compensation for all of the services rendered by it under this
Agreement and will reimburse the Trustee for all reasonable expenses (including
taxes other than taxes based on the net income of the Trustee, fees paid to
legal counsel and other experts and advisors and travel expenses) and
disbursements, including the cost and expense of any suit or litigation of any
character and any proceedings before any governmental agency reasonably incurred
by the Trustee in connection with its duties under this Agreement; provided that
Acquiror and Canco shall have no obligation to reimburse the Trustee for any
expenses or disbursements paid, incurred or suffered by the Trustee in any suit
or litigation in which the Trustee is determined to have acted in bad faith or
with negligence, recklessness or wilful misconduct.
ARTICLE 8
INDEMNIFICATION AND LIMITATION OF LIABILITY
SECTION 8.1 INDEMNIFICATION OF THE TRUSTEE
Acquiror and Canco jointly and severally agree to indemnify and hold
harmless the Trustee and each of its directors, officers, employees and agents
appointed and acting in accordance with this Agreement (collectively, the
"INDEMNIFIED PARTIES") against all claims, losses, damages, reasonable costs,
penalties, fines and reasonable expenses (including reasonable expenses of the
Trustee's legal counsel) which, without fraud, negligence, recklessness, wilful
misconduct or bad faith on the part of such Indemnified Party, may be paid,
incurred or suffered by the Indemnified Party by reason or as a result of the
Trustee's acceptance or administration of the Trust, its compliance with its
duties set forth in this Agreement, or any written or oral instruction delivered
to the Trustee by Acquiror or Canco pursuant hereto.
In no case shall Acquiror or Canco be liable under this indemnity for any
claim against any of the Indemnified Parties unless Acquiror and Canco shall be
notified by the Trustee of the written assertion of a claim or of any action
commenced against the Indemnified Parties, promptly after any of the Indemnified
Parties shall have received any such written assertion of a claim or shall have
been served with a summons or other first legal process giving information as to
the nature and basis of the claim. Subject to (ii) below, Acquiror and Canco
shall be entitled to participate at their own expense in the defense and, if
Acquiror and Canco so elect at any time after receipt of such notice, either of
them may assume the defense of any suit brought to enforce any such claim. The
Trustee shall have the right to employ separate counsel in any such suit and
participate in the defense thereof, but the fees and expenses of such counsel
shall be at the expense of the Trustee unless: (i) the employment of such
counsel has been authorized by Acquiror or Canco; or (ii) the named parties to
any such suit include both the Trustee and Acquiror or Canco and the Trustee
shall have been advised by counsel acceptable to Acquiror or
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Canco that there may be one or more legal defenses available to the Trustee that
are different from or in addition to those available to Acquiror or Canco and
that, in the judgment of such counsel, would present a conflict of interest were
a joint representation to be undertaken (in which case Acquiror and Canco shall
not have the right to assume the defense of such suit on behalf of the Trustee
but shall be liable to pay the reasonable fees and expenses of counsel for the
Trustee). This indemnity shall survive the termination of this Agreement and the
resignation or removal of the Trustee.
SECTION 8.2 LIMITATION OF LIABILITY
The Trustee shall not be held liable for any loss which may occur by reason
of depreciation of the value of any part of the Trust Estate or any loss
incurred on any investment of funds pursuant to this Agreement, except to the
extent that such loss is attributable to the fraud, negligence, recklessness,
wilful misconduct or bad faith on the part of the Trustee.
ARTICLE 9
CHANGE OF TRUSTEE
SECTION 9.1 RESIGNATION
The Trustee, or any trustee hereafter appointed, may at any time resign by
giving written notice of such resignation to Acquiror and Canco specifying the
date on which it desires to resign, provided that such notice shall not be given
less than thirty (30) days before such desired resignation date unless Acquiror
and Canco otherwise agree and provided further that such resignation shall not
take effect until the date of the appointment of a successor trustee and the
acceptance of such appointment by the successor trustee. Upon receiving such
notice of resignation, Acquiror and Canco shall promptly appoint a successor
trustee, which shall be a corporation organized and existing under the laws of
Canada or any Province thereof, by written instrument in duplicate, one copy of
which shall be delivered to the resigning trustee and one copy to the successor
trustee. Failing the appointment and acceptance of a successor trustee, a
successor trustee may be appointed by order of a court of competent jurisdiction
upon application of one or more of the parties to this Agreement. If the
retiring trustee is the party initiating an application for the appointment of a
successor trustee by order of a court of competent jurisdiction, Acquiror and
Canco shall be jointly and severally liable to reimburse the retiring trustee
for its legal costs and expenses in connection with same.
SECTION 9.2 REMOVAL
The Trustee, or any trustee hereafter appointed, may (provided a successor
trustee is appointed) be removed at any time on not less than 30 days' prior
notice by written instrument executed by Acquiror and Canco, in duplicate, one
copy of which shall be delivered to the trustee so removed and one copy to the
successor trustee.
SECTION 9.3 SUCCESSOR TRUSTEE
Any successor trustee appointed as provided under this Agreement shall
execute, acknowledge and deliver to Acquiror and Canco and to its predecessor
trustee an instrument accepting such appointment. Thereupon the resignation or
removal of the predecessor trustee shall become effective and such successor
trustee, without any further act, deed or conveyance, shall become vested with
all the rights, powers, duties and obligations of its predecessor under this
Agreement, with the like effect as if originally named as trustee in this
Agreement. However, on the written request of Acquiror and Canco or of the
successor trustee, the trustee ceasing to act shall, upon payment of any amounts
then due it pursuant to the provisions of this Agreement, execute and deliver an
instrument transferring to such successor trustee all the rights and powers of
the trustee so ceasing to act. Upon the request of any such successor trustee,
Acquiror, Canco and such predecessor trustee shall execute any and all
instruments in writing for more fully and certainly vesting in and confirming to
such successor trustee all such rights and powers.
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SECTION 9.4 NOTICE OF SUCCESSOR TRUSTEE
Upon acceptance of appointment by a successor trustee as provided herein,
Acquiror and Canco shall cause to be mailed notice of the succession of such
trustee hereunder to each Beneficiary specified in a List. If Acquiror or Canco
shall fail to cause such notice to be mailed within 10 days after acceptance of
appointment by the successor trustee, the successor trustee shall cause such
notice to be mailed at the expense of Acquiror and Canco.
ARTICLE 10
ACQUIROR SUCCESSORS
SECTION 10.1 CERTAIN REQUIREMENTS IN RESPECT OF COMBINATION, ETC.
Acquiror shall not consummate any transaction (whether by way of
reconstruction, reorganization, consolidation, merger, transfer, sale, lease or
otherwise) whereby all or substantially all of its undertaking, property and
assets would become the property of any other person or, in the case of a
merger, of the continuing corporation resulting therefrom, but may do so if:
(a) such other person or continuing corporation (herein called the
"ACQUIROR SUCCESSOR"), by operation of law, becomes, without more,
bound by the terms and provisions of this Agreement or, if not so
bound, executes, prior to or contemporaneously with the consummation
of such transaction, a trust agreement supplemental hereto and such
other instruments (if any) as are satisfactory to the Trustee, acting
reasonably, and in the opinion of legal counsel to the Trustee are
reasonably necessary or advisable to evidence the assumption by the
Acquiror Successor of liability for all moneys payable and property
deliverable hereunder (including without limitation one or more voting
securities of such Acquiror Successor to allow Beneficiaries to
exercise voting rights in respect of the Acquiror Successor
substantially similar to those provided for in this Agreement in
respect of Acquiror) and the covenant of such Acquiror Successor to
pay and deliver or cause to be delivered the same and its agreement to
observe and perform all the covenants and obligations of Acquiror
under this Agreement; and
(b) such transaction shall be upon such terms and conditions as
substantially to preserve and not to impair in any material respect
any of the rights, duties, powers and authorities of the Trustee or of
the Beneficiaries hereunder.
SECTION 10.2 VESTING OF POWERS IN SUCCESSOR
Whenever the conditions of Section 10.1 have been duly observed and
performed, the Trustee, Acquiror Successor and Canco shall, if required by
Section 10.1, execute and deliver the supplemental trust agreement provided for
in Article 11 and thereupon Acquiror Successor shall possess and from time to
time may exercise each and every right and power of Acquiror under this
Agreement in the name of Acquiror or otherwise and any act or proceeding by any
provision of this Agreement required to be done or performed by the Board of
Directors of Acquiror or any officers of Acquiror may be done and performed with
like force and effect by the directors or officers of such Acquiror Successor.
SECTION 10.3 WHOLLY-OWNED SUBSIDIARIES
Nothing herein shall be construed as preventing the amalgamation or merger
of any wholly-owned direct or indirect subsidiary of Acquiror with or into
Acquiror or the winding-up, liquidation or dissolution of any wholly-owned
subsidiary of Acquiror provided that all of the assets of such subsidiary are
transferred to Acquiror or another wholly-owned direct or indirect subsidiary of
Acquiror and any such transactions are expressly permitted by this Article 10.
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SECTION 10.4 SUCCESSORSHIP TRANSACTION
Notwithstanding the foregoing provisions of this Article 10, in the event
of an Acquiror Control Transaction:
(a) in which Acquiror merges or amalgamates with, or in which all or
substantially all of the then outstanding Acquiror Shares are acquired
by, one or more other corporations to which Acquiror is, immediately
before such merger, amalgamation or acquisition, "related" within the
meaning of the Income Tax Act (Canada) (otherwise than by virtue of a
right referred to in paragraph 251(5)(b) thereof);
(b) which does not result in an acceleration of the Redemption Date in
accordance with paragraph (b) of that definition; and
(c) in which all or substantially all of the then outstanding Acquiror
Shares are converted into or exchanged for shares or rights to receive
such shares (the "Other Shares") of another corporation (the "Other
Corporation") that, immediately after such Acquiror Control
Transaction, owns or controls, directly or indirectly, Acquiror;
provided that, for greater certainty, the proposed reorganization of
Acquiror, as publicly disclosed by Acquiror on January 2, 2002 and as
generally described in the draft registration statement filed by the
Acquiror with the United States Securities and Exchange Commission on or
about such date, as amended or supplemented from time to time, shall
constitute such an Acquiror Control Transaction for purposes hereof, then
(i) all references herein to "Acquiror" shall thereafter be and be deemed
to be references to "Other Corporation" and all references herein to
"Acquiror Shares" shall thereafter be and be deemed to be references to
"Other Shares" (with appropriate adjustments, if any, as are required to
result in a holder of Exchangeable Shares on the exchange, redemption or
retraction of such shares pursuant to the Exchangeable Share Provisions or
Article 5 of the Plan of Arrangement or exchange of such shares pursuant to
this Agreement immediately subsequent to the Acquiror Control Transaction
being entitled to receive that number of Other Shares equal to the number
of Other Shares such holder of Exchangeable Shares would have received if
the exchange, redemption or retraction of such shares pursuant to the
Exchangeable Share Provisions or Article 5 of the Plan of Arrangement, or
exchange of such shares pursuant to this Agreement had occurred immediately
prior to the Acquiror Control Transaction and the Acquiror Control
Transaction was completed) without any need to amend the terms and
conditions of this Agreement and without any further action required; and
(ii) Acquiror shall cause the Other Corporation to deposit one or more
voting securities of such Other Corporation to allow Beneficiaries to
exercise voting rights in respect of the Other Corporation substantially
similar to those provided for in this Agreement.
ARTICLE 11
AMENDMENTS AND SUPPLEMENTAL TRUST AGREEMENTS
SECTION 11.1 AMENDMENTS, MODIFICATIONS, ETC.
This Agreement may not be amended or modified except by an agreement in
writing executed by Acquiror, Canco and the Trustee and approved by the
Beneficiaries in accordance with Section 10.2 of the Exchangeable Share
Provisions.
SECTION 11.2 MINISTERIAL AMENDMENTS
Notwithstanding the provisions of Section 11.1, the parties to this
Agreement may in writing, at any time and from time to time, without the
approval of the Beneficiaries, amend or modify this Agreement for the purposes
of:
(a) adding to the covenants of any or all parties hereto for the protection
of the Beneficiaries hereunder provided that the Board of Directors of
each of Canco and Acquiror shall be of the
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good faith opinion that such additions will not be prejudicial to the
rights or interests of the Beneficiaries;
(b) making such amendments or modifications not inconsistent with this
Agreement as may be necessary or desirable with respect to matters or
questions which, in the good faith opinion of the Board of Directors of
each of Acquiror and Canco and in the opinion of the Trustee, having in
mind the best interests of the Beneficiaries it may be expedient to
make, provided that such Boards of Directors and the Trustee, acting on
the advice of counsel, shall be of the opinion that such amendments and
modifications will not be prejudicial to the interests of the
Beneficiaries; or
(c) making such changes or corrections which, on the advice of counsel to
Acquiror, Canco and the Trustee, are required for the purpose of curing
or correcting any ambiguity or defect or inconsistent provision or
clerical omission or mistake or manifest error, provided that the
Trustee, acting on the advice of counsel, and the Board of Directors of
each of Acquiror and Canco shall be of the opinion that such changes or
corrections will not be prejudicial to the rights and interests of the
Beneficiaries.
SECTION 11.3 MEETING TO CONSIDER AMENDMENTS
Canco, at the request of Acquiror, shall call a meeting or meetings of the
Beneficiaries for the purpose of considering any proposed amendment or
modification requiring approval pursuant hereto. Any such meeting or meetings
shall be called and held in accordance with the by-laws of Canco, the
Exchangeable Share Provisions and all applicable laws; provided that any such
meeting shall only be called for a bona fide business purpose and not for the
principal purpose of causing a Redemption Date (as defined in the Exchangeable
Share Provisions) to occur or transpire.
SECTION 11.4 CHANGES IN CAPITAL OF ACQUIROR AND CANCO
At all times after the occurrence of any event contemplated pursuant to
Section 2.7 or 2.8 of the Support Agreement or otherwise, as a result of which
either Acquiror Shares or the Exchangeable Shares or both are in any way
changed, this Agreement shall forthwith be deemed amended and modified as
necessary in order that it shall apply with full force and effect, mutatis
mutandis, to all new securities into which Acquiror Shares or the Exchangeable
Shares or both are so changed.
SECTION 11.5 EXECUTION OF SUPPLEMENTAL TRUST AGREEMENTS
No amendment to or modification or waiver of any of the provisions of this
Agreement otherwise permitted hereunder shall be effective unless made in
writing and signed by all of the parties hereto. From time to time Canco,
Acquiror and the Trustee may, subject to the provisions of these presents, and
they shall, when so directed by these presents, execute and deliver by their
proper officers, trust agreements or other instruments supplemental hereto,
which thereafter shall form part hereof, for any one or more of the following
purposes:
(a) evidencing the succession of Acquiror Successors and the covenants of
and obligations assumed by each such Acquiror Successor in accordance
with the provisions of Article 10 and the successors of any successor
trustee in accordance with the provisions of Article 9;
(b) making any additions to, deletions from or alterations of the
provisions of this Agreement or the Voting Rights, the Exchange Right
or the Automatic Exchange Rights which, in the opinion of the Trustee,
will not be prejudicial to the interests of the Beneficiaries or are,
in the opinion of counsel to the Trustee, necessary or advisable in
order to incorporate, reflect or comply with any legislation the
provisions of which apply to Acquiror, Canco, the Trustee or this
Agreement; and
(c) for any other purposes not inconsistent with the provisions of this
Agreement, including to make or evidence any amendment or modification
to this Agreement as contemplated hereby, provided
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that, in the opinion of the Trustee, the rights of the Trustee and
Beneficiaries will not be prejudiced thereby.
ARTICLE 12
TERMINATION
SECTION 12.1 TERM
The Trust created by this Agreement shall continue until the earliest to
occur of the following events:
(a) no outstanding Exchangeable Shares are held by a Beneficiary;
(b) each of Acquiror and Canco elects in writing to terminate the Trust and
such termination is approved by the Beneficiaries in accordance with
Section 10.2 of the Exchangeable Share Provisions; and
(c) 21 years after the death of the last survivor of the descendants of His
Majesty King ▇▇▇▇▇▇ VI of Canada and the United Kingdom of Great
Britain and Northern Ireland living on the date of the creation of the
Trust.
SECTION 12.2 SURVIVAL OF AGREEMENT
This Agreement shall survive any termination of the Trust and shall
continue until there are no Exchangeable Shares outstanding held by a
Beneficiary; provided, however, that the provisions of Article 7 and Article 8
shall survive any such termination of this Agreement.
ARTICLE 13
GENERAL
SECTION 13.1 SEVERABILITY
If any term or other provision of this Agreement is invalid, illegal or
incapable of being enforced by any rule of 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 hereto 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
transactions contemplated hereby are fulfilled to the extent possible.
SECTION 13.2 ASSIGNMENT
No party hereto may assign this Agreement or any of its rights, interests
or obligations under this Agreement (whether by operation of law or otherwise)
except that Canco may assign in its sole discretion, any or all of its rights,
interests and obligations hereunder to any wholly-owned subsidiary of Acquiror.
SECTION 13.3 BINDING EFFECT
Subject to Section 13.2, this Agreement and the Arrangement shall be
binding upon, enure to the benefit of and be enforceable by the parties hereto
and their respective successors and assigns and to the benefit of the
Beneficiaries.
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SECTION 13.4 NOTICES TO PARTIES
All notices and other communications hereunder shall be in writing and
shall be deemed given when delivered personally, telecopied (which is confirmed)
or dispatched (postage prepaid) to a nationally recognized overnight courier
service with overnight delivery instructions, in each case addressed to the
particular party at:
(a) if to Acquiror or Canco, at:
▇▇▇▇▇▇ Industries, Inc.
▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇
▇▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇▇
Attention: President and Chief Operating Officer
Telecopier Number: (▇▇▇) ▇▇▇-▇▇▇▇
With copies to:
▇▇▇▇▇▇ Corporate Services, Inc.
▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇
▇▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇▇
Attention: ▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇
Telecopier Number: (▇▇▇) ▇▇▇-▇▇▇▇
And:
Stikeman Elliott
▇▇▇▇, ▇▇▇ - ▇▇▇ ▇▇▇▇▇▇ ▇.▇.
▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇ ▇▇▇ ▇▇▇
Attention: ▇▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇
Telecopier Number: (▇▇▇) ▇▇▇-▇▇▇▇
(b) if to the Trustee, at:
Computershare Trust Company of Canada
▇▇▇, ▇▇▇ - ▇▇▇ ▇▇▇▇▇▇ ▇.▇.
▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇
▇▇▇ ▇▇▇
Attention: General Manager, Stock Transfer Services
Telecopier Number: (▇▇▇) ▇▇▇-▇▇▇▇
or at such other address of which any party may, from time to time, advise the
other parties by notice in writing given in accordance with the foregoing.
SECTION 13.5 NOTICE TO BENEFICIARIES
Any and all notices to be given and any documents to be sent to any
Beneficiaries may be given or sent to the address of such Beneficiary shown on
the register of holders of Exchangeable Shares in any manner permitted by the
by-laws of Canco from time to time in force in respect of notices to
shareholders and shall be deemed to be received (if given or sent in such
manner) at the time specified in such by-laws, the provisions of which by-laws
shall apply mutatis mutandis to notices or documents as aforesaid sent to such
Beneficiaries.
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SECTION 13.6 COUNTERPARTS
This Agreement may be executed in counterparts, each of which shall be
deemed to be an original but all of which together shall constitute one and the
same instrument.
SECTION 13.7 GOVERNING LAWS; CONSENT TO JURISDICTION
This Agreement shall be governed by and construed in accordance with the
laws of Alberta. Each party hereby irrevocably attorns to the jurisdiction of
the courts of Alberta in respect of all matters arising under or in relation to
this Agreement and Acquiror hereby appoints Stikeman Elliott as its registered
office in Alberta as attorney for service of process.
▇▇▇▇▇▇▇ ▇▇.▇ ▇▇▇▇▇▇ ▇▇▇▇▇▇ TAX CHARACTERIZATION
The parties hereto recognize and intend that, for United States federal,
state and local income, franchise and similar tax purposes, the Trust will be
disregarded as an entity separate from Acquiror pursuant to Treas. Reg.
301.7701-3(b), and no party shall take any position on any tax return or
otherwise that is inconsistent with such treatment.
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IN WITNESS WHEREOF the parties hereto have caused this Agreement to be duly
executed as of the date first above written.
▇▇▇▇▇▇ INDUSTRIES, INC.
By:
---------------------------------------
Name:
Title:
By:
---------------------------------------
Name:
Title:
▇▇▇▇▇▇ EXCHANGECO (CANADA) INC.
By:
---------------------------------------
Name:
Title:
By:
---------------------------------------
Name:
Title:
COMPUTERSHARE TRUST
COMPANY OF CANADA
By:
---------------------------------------
Name:
Title:
By:
---------------------------------------
Name:
Title:
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