EXHIBIT 1
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GOVERNANCE AGREEMENT
Among
FORDING CANADIAN COAL TRUST
- and -
4123212 CANADA LTD.
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SHERRITT INTERNATIONAL CORPORATION
February 28, 2003
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PAGE
ARTICLE 1
DEFINITIONS AND PRINCIPLES OF INTERPRETATION............................1
1.1 Definitions....................................................1
1.2 Interpretation and General Provisions..........................4
ARTICLE 2
TRUSTEES AND BOARD OF DIRECTORS.........................................5
2.1 Sherritt/OTPP Trustee Nominee..................................5
2.2 Sherritt/OTPP Director Nominee.................................5
2.3 No Duplication of Nominees.....................................6
ARTICLE 3
PROCEDURAL, VOTING AND DISCLOSURE MATTERS...............................6
3.1 Procedure......................................................6
3.2 Voting.........................................................7
3.3 Voting for Alternate Nominees..................................8
3.4 Voting not Compulsory..........................................8
3.5 Board Age Policies.............................................8
3.6 Disclosure.....................................................8
ARTICLE 4
RESTRICTIONS ON AMENDMENT...............................................9
4.1 Restrictions on Amendment......................................9
ARTICLE 5
MISCELLANEOUS...........................................................9
5.1 Notices........................................................9
5.2 Submission to Jurisdiction....................................11
5.3 Liability of Trustees and Unitholders.........................11
5.4 References to Acts Performed by the Trust or the Trustees.....11
5.5 Ability to Set Aside Vote.....................................11
5.6 Enforcement of Governance Agreements..........................12
5.7 Expenses......................................................12
5.8 Entire Agreement..............................................12
5.9 Consequence of OTPP Ceasing to Hold Units.....................13
5.10 Termination...................................................13
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THIS AGREEMENT is made this 28th day of February, 2003.
AMONG:
FORDING CANADIAN COAL TRUST
an open-ended mutual fund trust existing under the laws of
Alberta ("TRUST") - and -
4123212 CANADA LTD.
a corporation existing under the laws of Canada and a wholly
owned subsidiary of the Trust ("NEW FORDING")
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SHERRITT INTERNATIONAL CORPORATION
a corporation existing under the laws of New Brunswick
("SHERRITT")
RECITALS:
▇. ▇▇▇▇▇▇▇▇ is a Unitholder of the Trust.
▇. ▇▇▇▇▇▇▇▇, the Trust and New Fording wish to enter into this Agreement
to deal with certain matters relating to the governance of the Trust
and New Fording.
C. Subsequent to the entering into of this Agreement, New Fording will
change its name to Fording Inc.
THEREFORE, the parties agree as follows:
ARTICLE 1
DEFINITIONS AND PRINCIPLES OF INTERPRETATION
1.1 DEFINITIONS
For purposes of the Agreement, the following terms shall have the following
meanings:
"AGREEMENT" means this agreement, including all schedules, amendments
or restatements as permitted, and references to "Article", "Section" or
"Schedule" mean the specified Article, Section or Schedule of this
Agreement;
"AFFILIATE" means, with respect to any Person (other than an
individual), any other Person (other than an individual) directly or
indirectly controlling, controlled by, or under direct or indirect
common control with the first Person, and, with respect to any
Principal Unitholder, includes any Person that is jointly controlled by
that Principal Unitholder together with one or more other Principal
Unitholders;
"BOARD OF DIRECTORS" means the board of directors of New Fording from
time to time;
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"BUSINESS DAY" means a day which is not a Saturday, Sunday or a
statutory holiday in the Provinces of Alberta, British Columbia and
Ontario, on which the principal commercial banks in downtown ▇▇▇▇▇▇▇,
▇▇▇▇▇▇▇ and Vancouver are generally open for the transaction of
commercial banking business;
"CBCA" means the Canada Business Corporations Act, R.S.C. 1985, c.
C-44, as amended;
"CHAIR" and "CHIEF EXECUTIVE OFFICER" means the Person(s) holding the
respective offices from time to time appointed by the Trustees;
"CONTROLLED BY" means: A Person is controlled by another Person or by
two or more other Persons if (i) such Person or Persons holds voting
securities of the first Person carrying more than 50% of the votes that
may be cast to elect the board of directors or other governing body of
such first mentioned Person, other than for the purpose of giving
collateral for bona fide debt; and (ii) the votes carried by the
securities in (i) are sufficient, if exercised, to elect a majority of
the board of directors or other governing body of such first mentioned
Person; "CONTROL" and "CONTROLLING" have a corresponding meaning;
"DECLARATION OF TRUST" means the declaration of trust made as of
February 26, 2003, pursuant to which the Trust was established, as
amended, supplemented or restated from time to time;
"DIRECTOR" means a director of New Fording from time to time;
"GOVERNANCE AGREEMENTS" means the four Governance Agreements to be
entered into among the Trust, New Fording and, separately, each of
OTPP, Sherritt, Teck and Westshore;
"INDEPENDENT DIRECTOR" means a Director who:
(a) is not an insider of any of the Principal Unitholders or their
respective affiliates, and, with respect to a Director
nominated by Sherritt and OTPP, is also not an insider of
Luscar or its affiliates, so long as Sherritt and OTPP jointly
or severally control Luscar;
(b) would qualify as an "unrelated director" (as defined in the
TSX Guidelines) of each of the Principal Unitholders, if the
Director was a director or trustee of each of the Principal
Unitholders; and
(c) would qualify as an "unrelated director" (as defined in the
TSX Guidelines) of New Fording;
"INDEPENDENT TRUSTEE" means a Trustee who:
(a) is not an insider of any of the Principal Unitholders or their
respective affiliates, and, with respect to a Trustee
nominated by Sherritt and OTPP, is also not an insider of
Luscar or its affiliates, so long as Sherritt and OTPP jointly
or severally control Luscar;
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(b) would qualify as an "unrelated director" (as defined in the
TSX Guidelines) of each of the Principal Unitholders, if the
Trustee was a director or trustee of each of the Principal
Unitholders; and
(c) would qualify as an "unrelated director" (as defined in the
TSX Guidelines) of the Trust;
"INSIDER" in relation to a Principal Unitholder means a director,
trustee, officer or employee of that Principal Unitholder or any of its
affiliates, or a director, trustee, officer or employee of any Person
with a greater than 10% voting or economic interest in that Principal
Unitholder, or any affiliates of that Person;
"LUSCAR" means Luscar Ltd., a corporation existing under the laws of
Alberta;
"OTPP" means the Ontario Teachers' Pension Plan Board, a non-share
capital corporation established under the laws of Ontario;
"OTPP GOVERNANCE AGREEMENT" means the governance agreement among OTPP,
the Trust and New Fording, and for greater certainty is one of the
Governance Agreements;
"PARTIES" means the parties to the Agreement and "PARTY" means any one
of them;
"PARTNERSHIP" means Fording Coal Partnership, a general partnership
formed under the laws of Alberta, the initial partners of which are
Fording Coal Limited, New Fording, Teck, The Quintette Coal Partnership
and Teck-Bullmoose Coal Inc.
"PERSON" means an individual, sole proprietorship, body corporate,
company, partnership, firm, entity, limited partnership, joint venture,
trust or unincorporated association, unincorporated syndicate,
unincorporated trust, the Crown or any agency or instrumentality
thereof and where the context so requires, any of the foregoing when
they are acting as trustee, executor, administrator or other legal
representative;
"PRINCIPAL UNITHOLDERS" means Teck, Westshore, Sherritt and OTPP (and
their respective affiliates that own Units);
"PROXY" has the meaning given to it in Section 3.2(b) of this
Agreement;
"PROXY DEADLINE" has the meaning given to it in Section 3.2(b) of this
Agreement;
"PROXY NOTICE" has the meaning given to it in Section 3.2(c) of this
Agreement;
"SHERRITT/OTPP DIRECTOR NOMINEE" means the individual nominated by
Sherritt acting together with OTPP to serve as a Director pursuant to
Section 2.2(a) of this Agreement;
"SHERRITT/OTPP TRUSTEE NOMINEE" means the individual nominated by
Sherritt acting together with OTPP to serve as a Trustee pursuant to
Section 2.1(a) of this Agreement;
"SHERRITT'S/OTPP'S OWNERSHIP PERCENTAGE" means with respect to Sherritt
and OTPP, at any time, the ratio, expressed as a percentage, of:
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(i) the number of Units beneficially owned by Sherritt,
Luscar (so long as Sherritt jointly with OTPP or
Sherritt severally controls Luscar), OTPP and their
affiliates, to
(ii) the total number of Units then outstanding;
"TECK" means Teck Cominco Limited, a corporation existing under the
laws of Canada;
"TRUSTEE" means the trustees or trustee of the Trust from time to time;
"TSX GUIDELINES" means the corporate governance guidelines of the
Toronto Stock Exchange, as amended from time to time;
"UNIT" means a unit of the Trust;
"UNITHOLDERS" means the registered holders from time to time of the
Units; and
"WESTSHORE" means Westshore Terminals Income Fund, an open-ended mutual
fund existing under the laws of British Columbia.
1.2 INTERPRETATION AND GENERAL PROVISIONS
(a) CONSENT -- Whenever a provision of the Agreement requires an
approval or consent by a Party and such approval or consent is
not delivered within the applicable time limit, then, unless
otherwise specified, the Party whose consent or approval is
required shall be conclusively deemed to have withheld its
approval or consent.
(b) GOVERNING LAW -- The Agreement is a contract made under and
shall be governed by and construed in accordance with the laws
of the Province of Alberta and the federal laws of Canada
applicable in the Province of Alberta.
(c) HEADINGS -- Headings of the Articles and Sections are inserted
for convenience of reference only and shall not affect the
construction or interpretation of the Agreement.
(d) INCLUDING -- Where the words "including" or "includes" are
used in the Agreement, it means "including (or includes)
without limitation".
(e) NO STRICT CONSTRUCTION -- The language used in the Agreement
is the language chosen by the Parties to express their mutual
intent, and no rule of strict construction shall be applied
against any Party.
(f) NUMBER AND GENDER -- Unless the context otherwise requires,
words importing the singular include the plural and vice versa
and words importing gender include all genders.
(g) TIME -- Time is of the essence in the performance of the
Parties' respective obligations.
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(h) ASSIGNMENT -- No Party may assign this Agreement or any rights
or obligations under this Agreement without the prior written
consent of each of the other Parties, such consent not to be
unreasonably withheld.
(i) ENUREMENT -- This Agreement shall enure to the benefit of and
be binding upon the Parties and their respective successors
(including any successor by reason of amalgamation of any
Party) and permitted assigns.
(j) FURTHER ASSURANCES -- The Parties shall with reasonable
diligence do all such things and provide all such reasonable
assurances as may be required to consummate the transactions
contemplated by the Agreement, and each Party shall provide
such further documents or instruments required by any other
Party as may be reasonably necessary or desirable to effect
the purpose of the Agreement and carry out its provisions.
(k) EXECUTION AND DELIVERY -- This Agreement may be executed by
the Parties in counterparts and may be executed and delivered
by facsimile and all such counterparts and facsimiles shall
together constitute one and the same agreement.
ARTICLE 2
TRUSTEES AND BOARD OF DIRECTORS
2.1 SHERRITT/OTPP TRUSTEE NOMINEE
(a) Subject to Section 3.2(d), Sherritt acting together with OTPP
shall be entitled to nominate one individual (the
"Sherritt/OTPP Trustee Nominee") for election as a Trustee at
each meeting of Unitholders at which Trustees are elected,
provided that (i) no person nominated by Sherritt and/or OTPP
is then serving as a Trustee for a term extending beyond such
meeting; (ii) Sherritt's/OTPP's Ownership Percentage is at
least 4.5%; (iii) the nominee shall be eligible under the
Declaration of Trust to serve as a Trustee; and (iv) the
nominee must be an Independent Trustee.
(b) Subject to Section 3.2(d), the Trust shall cause the
Sherritt/OTPP Trustee Nominee to be included in the slate of
nominees proposed by the Trustees to the Unitholders for
election as Trustees at each meeting of the Unitholders where
Trustees are to be elected by Unitholders, provided that (i)
Sherritt acting together with OTPP continues to be entitled to
a nominee; (ii) no nominee of Sherritt and OTPP is then
serving as a Trustee for a term extending beyond such meeting;
and (iii) the nominee is an Independent Trustee.
(c) Subject to Section 3.2(d), the Trust shall use reasonable
efforts to cause the election of the Sherritt/OTPP Trustee
Nominee, including soliciting proxies in favour of the
election of the Sherritt/OTPP Trustee Nominee.
2.2 SHERRITT/OTPP DIRECTOR NOMINEE
(a) Subject to Section 3.2(d), Sherritt acting together with OTPP
shall be entitled to nominate one individual (the
"Sherritt/OTPP Director Nominee") for approval as
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a Director at each meeting of Unitholders at which proposed
Directors are to be approved, provided that (i) no person
nominated by Sherritt and/or OTPP is then serving as a
Director for a term extending beyond such meeting; (ii)
Sherritt's/OTPP's Ownership Percentage is at least 4.5%; (iii)
the nominee shall be eligible under the articles of
incorporation and by-laws governing New Fording and the CBCA
to serve as a Director; (iv) the nominee must be an
Independent Director; and (v) the nominee is not the same
person as the Sherritt/OTPP Trustee Nominee.
(b) Subject to Section 3.2(d), the Trust shall cause the
Sherritt/OTPP Director Nominee to be included in the slate of
nominees proposed by the Board of Directors to the Unitholders
for approval as Directors at each meeting of the Unitholders
where Directors are to be approved by Unitholders, provided
that (i) Sherritt acting together with OTPP continues to be
entitled to a nominee; (ii) no nominee of Sherritt and OTPP is
then serving as a Director for a term extending beyond such
meeting; (iii) the nominee is an Independent Director; and
(iv) the nominee is not the same person as the Sherritt/OTPP
Trustee Nominee.
(c) Subject to Section 3.2(d), the Trust shall use all reasonable
efforts to cause the election of the Sherritt/OTPP Director
Nominee, including soliciting proxies in favour of the
election of the Sherritt/OTPP Director Nominee.
2.3 NO DUPLICATION OF NOMINEES
For greater certainty, the right to nominate a Trustee and Director under the
OTPP Governance Agreement shall not be in addition to the right to nominate the
Sherritt/OTPP Director Nominee and the Sherritt/OTPP Trustee Nominee as provided
for herein, and that in total, provided that the terms of this Agreement and the
OTPP Governance Agreement are complied with, Sherritt acting together with OTPP
are entitled to nominate one Director and one Trustee.
ARTICLE 3
PROCEDURAL, VOTING AND DISCLOSURE MATTERS
3.1 PROCEDURE
(a) Sherritt acting together with OTPP (until such time it ceases
to hold Units) shall advise the Trust, and the Trust shall
forthwith advise the other Principal Unitholders, of the
Sherritt/OTPP Trustee Nominee and the Sherritt/OTPP Director
Nominee at least 50 days prior to any meeting at which
Trustees and/or Directors are to be elected or approved by the
Unitholders, or within 10 days of being notified of the record
date for such meeting if such record date is within 60 days of
such meeting.
(b) If Sherritt acting together with OTPP does not advise the
Trust of the Sherritt/OTPP Trustee Nominee and the
Sherritt/OTPP Director Nominee prior to the deadline, then
Sherritt and OTPP will be deemed to have nominated its
incumbent nominee.
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(c) Upon request by the Trust, Sherritt shall promptly provide the
Trust with a statutory declaration stating the number of Units
beneficially owned by Sherritt and its affiliates as at the
record date referred to in Section 3.1(a).
3.2 VOTING
(a) Subject to Section 3.3 and 3.4, Sherritt shall vote its Units
in favour of all of the persons nominated by the Trust or the
Board of Directors for election as Trustees and approval as
Directors, respectively, provided that:
(i) the Trust is in compliance with its obligations under
this Agreement to nominate the Sherritt/OTPP Trustee
Nominee and the Sherritt/OTPP Director Nominee; and
(ii) if elected or approved, the Trustees and the
Directors nominated by the Trust will meet the
requirements of the Declaration of Trust relating to
the eligibility and the composition of the Trustees
and the articles of incorporation and by-laws of New
Fording and the CBCA relating to the eligibility and
composition of the Board of Directors.
(b) Sherritt shall deliver a proxy to the Trust that complies with
Section 3.2(a) (the "Proxy") at least ten days prior to any
meeting of Unitholders at which the election of Trustees is to
be considered (the "Proxy Deadline").
(c) If the Trust does not receive the Proxy at least 15 days
before such meeting, the Trust shall provide notice to
Sherritt and to OTPP substantially in the form attached as
Schedule "A" (the "Proxy Notice") that it has not received the
Proxy, provided however that the Trust will not be liable to
any Person for any costs, damages or expenses which may be
incurred as a result of its failure to provide such notice.
(d) If Sherritt does not deliver the Proxy by the later of the
Proxy Deadline and two business days after delivery of a Proxy
Notice or if, at or prior to a meeting of Unitholders at which
the election of Trustees or the appointment of Directors is to
be considered, Sherritt revokes its Proxy or OTPP does not
comply with this similar provision in the OTPP Governance
Agreement or otherwise vote against the Trustees or Directors
nominated in accordance with this Section 3.2, then:
(i) the Trust and the Board of Directors may withdraw the
Sherritt/OTPP Trustee Nominee and the Sherritt/OTPP
Director Nominee, respectively, from the slate of
nominees proposed by the Trustees and the Trust may
cease soliciting proxies in favour of the
Sherritt/OTPP Trustee Nominee and Sherritt/OTPP
Director Nominee and instead include an additional
Independent Trustee and an additional Independent
Director as nominees for election as a Trustee or
approval as a Director as the case may be; and
(ii) Sherritt and OTPP shall no longer be entitled to
nominate a Trustee or a Director under this Agreement
or under the OTPP Governance Agreement;
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and for greater certainty, neither the Trust nor New Fording
shall have any remedy against Sherritt and the sole
consequence of a breach of this Section 3.2 shall be as set
out in Section 3.2(d)(ii).
3.3 VOTING FOR ALTERNATE NOMINEES
From and after the time at which Section 3.2(d) first applies, if Sherritt
chooses to vote its Units in respect of the election of Trustees or approval of
Directors at any meeting of Unitholders at which Trustees and/or Directors are
to be elected or approved by the Unitholders, then Sherritt may vote for the
then current Chairman and Chief Executive Officer of the Trust and/or New
Fording, if such person would otherwise be an Independent Trustee or Independent
Director, as the case may be, but for the holding of such positions, and in any
event Sherritt must vote in favour of a slate composed of: (i) the nominees for
Director(s) and Trustee(s) that have been proposed by all of the other Principal
Unitholders then entitled to nominate a Trustee and Director under their
respective Governance Agreement; and (ii) in respect of the remaining vacancies,
such nominees for Directors or Trustees as Sherritt determines, provided that
all such nominees must qualify as Independent Directors and Independent
Trustees, as the case may be.
3.4 VOTING NOT COMPULSORY
Notwithstanding any other provision of this Agreement, but subject to the
consequences set out in Section 3.2(d), Sherritt shall not be obligated to vote
its Units in respect of the election of Trustees or the approval of Directors.
However, if Sherritt chooses to vote its Units in respect of the election of
Trustees or the approval of Directors, it must do so in accordance with Section
3.2 or Section 3.3, as may then be applicable.
3.5 BOARD AGE POLICIES
Any nominations of Sherritt acting together with OTPP to serve as a Director or
Trustee, as the case may be, whether as the Sherritt/OTPP Director Nominee, the
Sherritt/OTPP Trustee Nominee or otherwise, shall be made in compliance with the
then current policy of the Board of Directors or of the Trustees, as the case
may be, with respect to the age of a Director or Trustee, as the case may be,
provided that, for greater certainty, the Directors and Trustees appointed as of
the date hereof have been grandfathered under such policy.
3.6 DISCLOSURE
Within a reasonable time prior to the filing with the applicable Canadian,
provincial and territorial securities commissions and regulatory authorities of
its proxy statement or information circular with respect to each meeting of
Unitholders at which Trustees are to be elected or Directors are to be approved,
the Trust shall provide Sherritt with a reasonable opportunity to review and
comment on the information contained in such proxy statement or information
circular applicable to the Sherritt/OTPP Trustee Nominee and the Sherritt/OTPP
Director Nominee.
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ARTICLE 4
RESTRICTIONS ON AMENDMENT
4.1 RESTRICTIONS ON AMENDMENT
None of the Parties to this Agreement (including, for greater certainty, the
Trust and the Trustees) will propose or vote for or cause any amendment,
modification or change to the following provisions of the Declaration of Trust
or the articles of incorporation and by-laws of New Fording:
(a) the definitions of "Independent Director" or "Independent
Trustee";
(b) any qualification to act as a Director or Trustee or as Chair
or Chief Executive Officer; and
(c) sections 3.8 (Special Approval Matters), 3.9 (Restrictions on
Trustees' Powers), 8.2 (Audit Committee), 8.3 (Governance
Committee) and 8.4 (Additional Committees) of the Declaration
of Trust and the equivalent sections in the articles of
incorporation and by-laws of New Fording;
without the prior written approval of the Trust, New Fording (in the case of
changes to the articles of incorporation and by-laws of New Fording) and all
other Persons who are parties to a Governance Agreement which is then
outstanding.
ARTICLE 5
MISCELLANEOUS
5.1 NOTICES
Any notice, consent or approval required or permitted to be given in connection
with this Agreement (in this Section referred to as a "Notice") shall be in
writing and shall be sufficiently given if delivered (whether in person, by
courier service or other personal method of delivery), or if transmitted by
facsimile, with or without copies by e-mail (provided it is understood that
e-mail shall not be a form of delivery or transmission):
(a) in the case of a Notice to the Trust or New Fording at:
Fording Inc.
▇▇▇▇▇ ▇▇▇▇
▇▇▇ - ▇▇▇▇▇ ▇▇▇▇▇▇ ▇.▇.
▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇ ▇▇▇ ▇▇▇
Attention: ▇▇▇▇▇ ▇. ▇▇▇▇▇
Fax: (▇▇▇) ▇▇▇-▇▇▇▇
E-mail: ▇▇▇_▇▇▇▇▇@▇▇▇▇▇▇▇.▇▇
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with a copy to:
Osler, ▇▇▇▇▇▇ & Harcourt LLP
1900, ▇▇▇ -- ▇▇▇ ▇▇▇▇▇▇ ▇.▇.
▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇ ▇▇▇ ▇▇▇
Attention: ▇▇▇▇▇ ▇. ▇▇▇▇▇▇
Fax: (▇▇▇) ▇▇▇-▇▇▇▇
E-mail: ▇▇▇▇▇▇▇@▇▇▇▇▇.▇▇▇
(b) in the case of a Notice to Sherritt at:
▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇ ▇▇▇ ▇▇▇
Attention: General Counsel and Chief Financial Officer
Fax: (▇▇▇) ▇▇▇-▇▇▇▇
E-mail: ▇▇▇▇▇▇▇@▇▇▇▇▇▇▇▇.▇▇▇ and
▇▇▇▇▇▇▇@▇▇▇▇▇▇▇▇.▇▇▇
with a copy to:
Ontario Teachers' Pension Plan Board
▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇ ▇▇▇ ▇▇▇
Attention: Senior Vice-President, Global Equities and
to General Counsel
Fax: (▇▇▇) ▇▇▇-▇▇▇▇
E-mail: ▇▇▇▇▇_▇▇▇▇▇▇@▇▇▇▇.▇▇▇
and with a copy to:
Torys LLP
Suite 3000
Maritime Life Tower
TD Centre
Toronto, Ontario M5K 1N2
Attention: ▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇
Fax: (▇▇▇) ▇▇▇-▇▇▇▇
E-mail: ▇▇▇▇▇▇▇▇▇▇@▇▇▇▇▇.▇▇▇
Any Notice delivered or transmitted to a Party as provided above shall be deemed
to have been given and received on the day it is delivered or transmitted,
provided that it is delivered or transmitted on a business day prior to 5:00
p.m. local time in the place of delivery or receipt or transmission. However, if
the Notice is delivered or transmitted after 5:00 p.m. local time or if such day
is not a business day then the Notice shall be deemed to have been given and
received on the next business day.
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Any party may, from time to time, change its address by giving Notice to the
other Parties in accordance with the provisions of this Section.
5.2 SUBMISSION TO JURISDICTION
Any and all disputes arising under this Agreement, whether as to interpretation,
performance or otherwise, shall be subject to the exclusive jurisdiction of the
courts of the Province of Alberta and each of the Parties hereby irrevocably
attorns to the exclusive jurisdiction of the courts of such province.
5.3 LIABILITY OF TRUSTEES AND UNITHOLDERS
The Parties hereto acknowledge that the Trustees are entering into this
Agreement solely in their capacity as Trustees on behalf of the Trust and the
obligations of the Trust hereunder shall not be personally binding upon the
Trustees or any of the Unitholders of the Trust and that any recourse against
the Trust, the Trustees or any Unitholder in any manner in respect of any
indebtedness, obligation or liability of the Trust arising hereunder or arising
in connection herewith or from the matters to which this Agreement relates, if
any, including without limitation claims based on negligence or otherwise
tortious behaviour, shall be limited to, and satisfied only out of, the Trust's
assets.
5.4 REFERENCES TO ACTS PERFORMED BY THE TRUST OR THE TRUSTEES
For greater certainty, where any reference is made in this Agreement to:
(a) an act to be performed by the Trust or to rights of the Trust,
such reference shall be construed and applied for all purposes
to refer to an act to be performed by the Trustees on behalf
of the Trust or by some other Person duly authorized to do so
by the Trustees or pursuant to the provisions hereof, or to
rights of the Trustees, in their capacity as Trustees of the
Trust, as the case may be;
(b) actions, rights or obligations of the Trustees, such reference
shall be construed and applied for all purposes to refer to
actions, rights or obligations of the Trustees in their
capacity as Trustees of the Trust, and not in any other
capacities; and
(c) Sherritt, such reference shall include references to any
affiliate of Sherritt that holds Units, and Sherritt shall
ensure that any actions to be taken or obligations to be
fulfilled by it under this Agreement shall be taken or
fulfilled by such affiliate, and such affiliate shall be
entitled to exercise Sherritt's rights under this Agreement,
in each case to the extent applicable and necessary to give
effect to Sherritt's rights and obligations under this
Agreement.
5.5 ABILITY TO SET ASIDE VOTE
The Parties acknowledge and agree that an award of money damages would be
inadequate for any breach by Sherritt of Section 3.3, if applicable, if Sherritt
chooses to vote its Units in respect of the election of Trustees or the approval
of Directors and any such breach would cause the Trust, New Fording or a party
to another Governance Agreement irreparable harm. Accordingly,
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the Parties agree that, as the sole remedy hereunder, in the event that Sherritt
proposes to vote or votes its Units in respect of the election of Trustees or
approval of Directors in a manner that would breach or breaches Section 3.3, as
the case may be, the Trust or New Fording, as the case may be, will be entitled
to equitable relief, including injunctive relief or, a declaration as to its
right to disregard the votes cast by Sherritt in respect of the election of
Trustees or the approval of Directors in determining which Trustees were elected
and which Directors were approved, or the right to set aside the entire vote if
it is reasonable to do so under the circumstances. For greater certainty, such
relief cannot be contrary to the provisions of Section 3.4 and cannot obligate
Sherritt to vote in any manner for Trustees or Directors or remove its right to
vote either in accordance with this Agreement in the future or on any other
matters on which it is entitled to vote.
5.6 ENFORCEMENT OF GOVERNANCE AGREEMENTS
Upon written request of Sherritt, and upon Sherritt's full and complete current
indemnification of the Trust and/or New Fording, as the case may be, of all of
the Trust's or New Fording's costs and expenses, including legal fees, costs and
expenses, reasonable charges for the time of Directors, Trustees, officers or
employees and costs incurred for services under the administrative services
agreements between the Trust and the Partnership or New Fording and the
Partnership in relation to the action on a full cost recovery basis, the Trust
or New Fording, as the case may be, shall seek to enforce Sections 3.3 and/or
5.5 of any of the other Governance Agreements if the Principal Unitholder which
is a party to such Governance Agreement chooses to vote its Units in respect of
the election of Trustees or the approval of Directors in breach of Section 3.3
of such Governance Agreement, as may be applicable. Such indemnity payments
shall be reimbursed to Sherritt to the extent that costs and expenses are
recovered by the Trust or New Fording from the party against whom such action is
taken.
5.7 EXPENSES
Sherritt shall pay to the Trust or New Fording as applicable, and indemnify the
Trust and New Fording, as applicable, against all of the reasonable legal fees,
costs and expenses on a full cost recovery basis incurred by either of them in
connection with all actions against Sherritt in connection with the enforcement
by either the Trust or New Fording of any of their respective rights or benefits
conferred pursuant to or derived from this Agreement.
5.8 ENTIRE AGREEMENT
This Agreement, the Declaration of Trust and the articles of incorporation and
by-laws of New Fording constitute the entire agreement between the Parties and
set out all of the covenants, promises, warranties, representations, conditions,
understandings and agreements between the Parties pertaining to the subject
matter of this Agreement and supersede all prior agreements, understandings,
negotiations and discussions, whether oral or written. There are no covenants,
promises, warranties, representations, conditions, understandings or other
agreements, oral or written, express, implied or collateral between the Parties
in connection with the subject matter of this Agreement except as specifically
set forth in this Agreement and any document required to be delivered pursuant
to this Agreement.
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5.9 CONSEQUENCE OF OTPP CEASING TO HOLD UNITS
Notwithstanding any other provision of this Agreement, in the event of the
termination of the OTPP Governance Agreement, Sherritt shall not be required to
act together with OTPP hereunder and all references as to joint action with OTPP
and all references to OTPP Units shall be deemed to be deleted, and Sherritt
acting alone will be entitled to exercise its rights hereunder.
5.10 TERMINATION
This Agreement shall terminate at the earlier of (i) such time that
Sherritt's/OTPP's Ownership Percentage is less than 4.5%; or (ii) Sherritt
ceases to hold any Units, other than through a sale of Units to OTPP in
circumstances in which Sherritt and OTPP would be considered to be acting
jointly and in concert with respect to the Trust.
IN WITNESS WHEREOF the Parties have executed this Agreement as of the date first
written above.
FORDING CANADIAN COAL TRUST,
by its authorized signatories for and on
behalf of its Trustees
By: /s/ ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇
--------------------------------------
Name: ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇
Title: Authorized Signatory
By:
--------------------------------------
Name:
Title: Authorized Signatory
4123212 CANADA LTD.
By: /s/ ▇▇▇▇▇ ▇. ▇▇▇▇▇
--------------------------------------
Name: ▇▇▇▇▇ ▇. ▇▇▇▇▇
Title: Corporate Secretary
SHERRITT INTERNATIONAL
CORPORATION
By: /s/ ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇
--------------------------------
Name: ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇
Title: Senior Vice-President and
General Counsel
SCHEDULE A
NOTICE RESPECTING SUBMITTING OF PROXY
FOR FORDING CANADIAN COAL TRUST
TO: SHERRITT INTERNATIONAL CORPORATION ("Sherritt")
COPY TO: ONTARIO TEACHERS' PENSION PLAN BOARD
AND TO: TORYS LLP
FROM: FORDING CANADIAN COAL TRUST (the "Trust")
FOR IMMEDIATE ACTION. REQUEST FOR PROXY PURSUANT TO THE GOVERNANCE AGREEMENT
AMONG SHERRITT, THE TRUST AND 4123212 CANADA LTD. ("NEW FORDING") DATED FEBRUARY
28, 2003 (THE "GOVERNANCE AGREEMENT").
Notice is hereby given to you by the Trust that your proxy for the upcoming
meeting (the "Meeting") of Unitholders of the Trust to be held on - has not been
received by the Trust. The proxy provides for your vote in favour of the
Trustees of the Trust and approval of the Directors of New Fording, each of
which have been nominated to stand for election or approval by the Unitholders,
as the case may be, at the Meeting.
The failure to comply with this Notice by - shall entitle the Trust to withdraw
your nominee from the slate of nominees recommended by the Trustees and the
Board of Directors to the Unitholders for election as Trustees or approval as
Directors, as the case may be, and shall entitle the Trust and the Board of
Directors, as the case may be, instead to include an additional Independent
Trustee and Independent Director as a nominee.
Defined terms used in this Notice which are not otherwise defined shall have the
meaning given to them in the Governance Agreement.