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EXHIBIT 2.3
SUPPORT AGREEMENT
MEMORANDUM OF AGREEMENT made as of the 18th day of December, 1997,
BETWEEN:
PIONEER NATURAL RESOURCES COMPANY, a corporation incorporated
under the laws of the State of Delaware and having its head
and principal office at Irving, Texas (hereinafter referred to
as "US Co")
OF THE FIRST PART,
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PIONEER NATURAL RESOURCES (CANADA) LTD., a corporation
continued under the laws of the Province of Alberta and having
its head and principal office at Calgary, Alberta (hereinafter
referred to as "US Co Sub")
OF THE SECOND PART.
WHEREAS pursuant to a combination agreement dated as of September 3,
1997, by and between US Co and Chauvco Resources Ltd. ("Chauvco") (such
agreement as it may be amended or restated is hereinafter referred to as the
"Combination Agreement"), the parties agreed that on the Effective Date (as
defined in the Combination Agreement), US Co and US Co Sub would execute and
deliver a Support Agreement containing the terms and conditions set forth in
Exhibit B to the Combination Agreement together with such other terms and
conditions as may be agreed to by the parties to the Combination Agreement
acting reasonably;
AND WHEREAS pursuant to an arrangement (the "Arrangement") effected by
Articles of Arrangement dated December 18, 1997 filed pursuant to the Business
Corporations Act (Alberta) certain of the issued and outstanding common shares
of Chauvco ("Chauvco Common Shares") were exchanged for, among other things,
issued and outstanding Exchangeable Shares of US Co Sub (the "Exchangeable
Shares");
AND WHEREAS the Articles of US Co Sub set forth the rights,
privileges, restrictions and conditions (collectively, the "Exchangeable Share
Provisions") attaching to the Exchangeable Shares;
AND WHEREAS the parties hereto desire to make appropriate provision
and to establish a procedure whereby US Co will take certain actions and make
certain payments and deliveries necessary to ensure that US Co Sub will be able
to make certain payments and to deliver or cause
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to be delivered shares of US Co Common Stock in satisfaction of the obligations
of US Co Sub under the Exchangeable Share Provisions with respect to the
payment and satisfaction of dividends, Liquidation Amounts, Retraction Prices
and Redemption Prices, all in accordance with the Exchangeable Share
Provisions;
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 agree as follows:
1. DEFINITIONS AND INTERPRETATION
(a) Defined Terms. Each term denoted herein by initial capital
letters and not otherwise defined herein shall have the
meaning attributed thereto in the Exchangeable Share
Provisions, unless the context requires otherwise.
(b) Interpretation Not Affected by Headings, etc. The division of
this Agreement into articles, sections and paragraphs and the
insertion of headings are for convenience of reference only
and shall not affect the construction or interpretation of
this Agreement.
(c) Number, Gender, etc. Words importing the singular number only
shall include the plural and vice versa. Words importing the
use of any gender shall include all genders.
(d) Date for any Action. If any date on which any action is
required to be taken under this Agreement is not a Business
Day, such action shall be required to be taken on the next
succeeding Business Day.
2. COVENANTS OF US CO AND US CO SUB
(a) Covenants of US Co Regarding Exchangeable Shares. So long as
any Exchangeable Shares are outstanding, US Co will:
(i) not declare or pay any dividend on US Co Common Stock
unless (A) US Co Sub will have sufficient assets,
funds and other property available to enable the due
declaration and the due and punctual payment in
accordance with applicable law of an equivalent
dividend on the Exchangeable Shares and (B) US Co Sub
shall simultaneously declare or pay, as the case may
be, an equivalent dividend on the Exchangeable
Shares, in each case in accordance with the
Exchangeable Share Provisions;
(ii) advise US Co Sub sufficiently in advance of the
declaration by US Co of any dividend on US Co Common
Stock and take all such other actions as are
necessary, in cooperation with US Co Sub, to ensure
that the respective declaration date, record date and
payment date for a dividend on the Exchangeable
Shares shall be the same as the record date,
declaration date and payment date for the
corresponding dividend on US Co Common Stock and such
dividend on the Exchangeable Shares shall correspond
with any
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requirement of the principal stock exchange on which
the Exchangeable Shares are listed;
(iii) ensure that the record date for any dividend declared
on US Co Common Stock is not less than 10 calendar
days after the declaration date for such dividend;
(iv) take all such actions and do all such things as are
necessary or desirable to enable and permit US Co
Sub, in accordance with applicable law, to pay and
otherwise perform its obligations with respect to the
satisfaction of the Liquidation Amount in respect of
each issued and outstanding Exchangeable Share upon
the liquidation, dissolution or winding-up of US Co
Sub, including without limitation all such actions
and all such things as are necessary or desirable to
enable and permit US Co Sub to cause to be delivered
shares of US Co Common Stock to the holders of
Exchangeable Shares in accordance with the provisions
of Article 5 of the Exchangeable Share Provisions;
(v) take all such actions and do all such things as are
necessary or desirable to enable and permit US Co
Sub, in accordance with applicable law, to pay and
otherwise perform its obligations with respect to the
satisfaction of the Retraction Price and the
Redemption Price, including without limitation all
such actions and all such things as are necessary or
desirable to enable and permit US Co Sub to cause to
be delivered shares of US Co Common Stock to the
holders of Exchangeable Shares, upon the retraction
or redemption of the Exchangeable Shares in
accordance with the provisions of Article 6 or
Article 7 of the Exchangeable Share Provisions, as
the case may be; and
(vi) not exercise its vote as a direct or indirect
shareholder to initiate the voluntary liquidation,
dissolution or winding-up of US Co Sub nor take any
action or omit to take any action that is designed to
result in the liquidation, dissolution or winding-up
of US Co Sub.
(b) Segregation of Funds. US Co will cause US Co Sub to deposit a
sufficient amount of funds in a separate account and segregate
a sufficient amount of such assets and other property as is
necessary to enable US Co Sub to pay or otherwise satisfy the
applicable dividends, Liquidation Amount, Retraction Price or
Redemption Price, in each case for the benefit of holders from
time to time of the Exchangeable Shares, and to use such
funds, assets and other property so segregated exclusively for
the payment of dividends and the payment or other satisfaction
of the Liquidation Amount, the Retraction Price or the
Redemption Price, as applicable, net of any corresponding
withholding tax obligations and for the remittance of such
withholding tax obligations.
(c) Reservation of Shares of US Co Common Stock. US Co hereby
represents, warrants and covenants that it has irrevocably
reserved for issuance and will at all times keep available,
free from pre-emptive and other rights, out of its authorized
and unissued capital stock such number of shares of US Co
Common Stock (or other shares or
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securities into which US Co Common Stock may be reclassified
or changed as contemplated by section 2(g) hereof) (i) as is
equal to the sum of (A) the number of Exchangeable Shares
issued and outstanding from time to time and (B) the number of
Exchangeable Shares issuable upon the exercise of all rights
to acquire Exchangeable Shares outstanding from time to time
and (ii) as are now and may hereafter be required to enable
and permit US Co Sub to meet its obligations hereunder, under
the Voting and Exchange Trust Agreement, under the
Exchangeable Share Provisions and under any other security or
commitment pursuant to the Arrangement with respect to which
US Co may now or hereafter be required to issue shares of US
Co Common Stock.
(d) Notification of Certain Events. In order to assist US Co to
comply with its obligations hereunder, US Co Sub will give US
Co 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 US Co Sub to institute voluntary
liquidation, dissolution or winding-up proceedings
with respect to US Co Sub or to effect any other
distribution of the assets of US Co Sub 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;
(ii) immediately, upon the earlier of (A) receipt by US Co
Sub of notice of, and (B) US Co Sub 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 US Co Sub or to effect any other
distribution of the assets of US Co Sub among its
shareholders for the purpose of winding-up its
affairs;
(iii) immediately, upon receipt by US Co Sub of a
Retraction Request (as defined in the Exchangeable
Share Provisions);
(iv) at least 130 days prior to any accelerated Automatic
Redemption Date determined by the Board of Directors
of US Co Sub in accordance with the Exchangeable
Share Provisions; and
(v) as soon as practicable upon the issuance by US Co Sub
of any Exchangeable Shares or rights to acquire
Exchangeable Shares.
(e) Delivery of Shares of US Co Common Stock. In furtherance of
its obligations hereunder, upon notice of any event which
requires US Co Sub to cause to be delivered shares of US Co
Common Stock to any holder of Exchangeable Shares, US Co shall
forthwith issue and deliver the requisite shares of US Co
Common Stock to or to the order of the former holder of the
surrendered Exchangeable Shares, as US Co Sub shall direct.
All such shares of US Co Common Stock shall be duly issued as
fully paid and non- assessable and shall be free and clear of
any lien, claim, encumbrance, security interest or adverse
claim.
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(f) Qualification of Shares of US Co Common Stock. US Co
covenants that if any shares of US Co Common Stock (or other
shares or securities into which US Co Common Stock may be
reclassified or changed as contemplated by section 2(g)
hereof) to be issued and delivered hereunder, including for
greater certainty, pursuant to the Exchangeable Share
Provisions, or pursuant to the Exchange Right or the Automatic
Exchange Rights (both 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 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 or state law or regulation
or pursuant to the rules and regulations of any regulatory
authority or the fulfillment of any other legal requirement
(collectively, the "Applicable Laws") before such shares (or
other shares or securities into which US Co Common Stock may
be reclassified or changed as contemplated by section 2(g)
hereof) may be issued and delivered by US Co to the initial
holder thereof (other than US Co Sub) or in order that such
shares may be freely traded thereafter (other than any
restrictions on transfer by reason of a holder being a
"control person" of US Co for purposes of Canadian federal or
provincial securities law or an "affiliate" of US Co or, prior
to the Effective Date, of Chauvco for purposes of United
States federal or state securities law), US Co will in good
faith expeditiously take all such actions and do all such
things as are necessary to cause such shares of US Co Common
Stock (or other shares or securities into which US Co Common
Stock may be reclassified or changed as contemplated by
section 2(g) hereof) to be and remain duly registered,
qualified or approved. US Co represents and warrants that it
has in good faith taken all actions and done all things as are
necessary under Applicable Laws as they exist on the date
hereof to cause the shares of US Co Common Stock (or other
shares or securities into which US Co Common Stock may be
reclassified or changed as contemplated by section 2(g)
hereof) to be issued and delivered hereunder, including for
greater certainty, pursuant to the Exchangeable Share
Provisions, or pursuant to the Exchange Right and the
Automatic Exchange Right to be freely tradeable thereafter
(other than restrictions on transfer by reason of a holder
being a "control person" of US Co for the purposes of Canadian
federal and provincial securities law or an "affiliate" of US
Co or, prior to the Effective Date, of Chauvco for the
purposes of United States federal or state securities law).
US Co will in good faith expeditiously take all such actions
and do all such things as are necessary to cause all shares of
US Co Common Stock (or other shares or other securities into
which US Co Common Stock may be reclassified or changed as
contemplated by section 2(g) hereof) to be delivered
hereunder, including for greater certainty, pursuant to the
Exchangeable Share Provisions, or 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 such shares are listed, quoted or posted for
trading at such time. US Co will in good faith expeditiously
take all such action and do all such things as are necessary
to cause all Exchangeable Shares to be and to continue to be
listed and posted for trading on The Toronto Stock Exchange.
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(g) Equivalence.
(i) US Co will not without the prior approval of US Co
Sub and the prior approval of the holders of the
Exchangeable Shares given in accordance with Section
9.2 of the Exchangeable Share Provisions:
(A) issue or distribute shares of US Co Common
Stock (or securities exchangeable for or
convertible into or carrying rights to
acquire shares of US Co Common Stock) to the
holders of all or substantially all of the
then outstanding US Co Common Stock by way of
stock dividend or other distribution; or
(B) issue or distribute rights, options or
warrants to the holders of all or
substantially all of the then outstanding
shares of US Co Common Stock entitling them
to subscribe for or to purchase shares of US
Co Common Stock (or securities exchangeable
for or convertible into or carrying rights to
acquire shares of US Co Common Stock); or
(C) issue or distribute to the holders of all or
substantially all of the then outstanding
shares of US Co Common Stock (I) shares or
securities of US Co of any class other than
US Co Common Stock (other than shares
convertible into or exchangeable for or
carrying rights to acquire shares of US Co
Common Stock), (II) rights, options or
warrants other than those referred to in
subsection 2(g)(i)(B) above, (III) evidences
of indebtedness of US Co or (IV) assets of US
Co;
unless
(D) US Co Sub is permitted under applicable law
to issue or distribute the economic
equivalent on a per share basis of such
rights, options, securities, shares,
evidences of indebtedness or other assets to
holders of the Exchangeable Shares; and
(E) US Co Sub shall issue or distribute the
economic equivalent on a per share basis of
such rights, options, securities, shares,
evidences of indebtedness or other assets
simultaneously to holders of the Exchangeable
Shares.
(ii) US Co will not without the prior approval of US Co
Sub and the prior approval of the holders of the
Exchangeable Shares given in accordance with Section
9.2 of the Exchangeable Share Provisions:
(A) subdivide, divide or change the then
outstanding shares of US Co Common Stock into
a greater number of shares of US Co Common
Stock; or
(B) reduce, combine or consolidate or change the
then outstanding shares of US Co Common Stock
into a lesser number of shares of US Co
Common Stock; or
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(C) reclassify or otherwise change the shares of
US Co Common Stock or effect an amalgamation,
merger, reorganization or other transaction
affecting the shares of US Co Common Stock;
unless (I) US Co Sub is permitted under applicable
law to simultaneously make the same or an equivalent
change to, or in the rights of holders of, the
Exchangeable Shares and (II) the same or an
equivalent change is made to, or in the rights of the
holders of, the Exchangeable Shares.
(iii) US Co will ensure that the record date for any event
referred to in section 2(g)(i) or 2(g)(ii) above, or
(if no record date is applicable for such event) the
effective date for any such event, is not less than
10 calendar days after the date on which such event
is declared or announced by US Co (with simultaneous
notice thereof to be given by US Co to US Co Sub).
(h) Tender Offers, etc. In the event that a tender offer, share
exchange offer, issuer bid, take-over bid or similar
transaction with respect to US Co Common Stock (an "Offer") is
proposed by US Co or is proposed to US Co or its shareholders
and is recommended by the Board of Directors of US Co, or is
otherwise effected or to be effected with the consent or
approval of the Board of Directors of US Co, US Co shall take
all such actions and do all such things as are necessary or
desirable to enable and permit holders of Exchangeable Shares
to participate in such Offer to the same extent and on an
equivalent basis as the holders of shares of US Co Common
Stock, without discrimination, including, without limiting the
generality of the foregoing, US Co will use its good faith
efforts expeditiously to (and shall, in the case of a
transaction proposed by US Co or where US Co is a participant
in the negotiation thereof) ensure that holders of
Exchangeable Shares may participate in all such Offers without
being required to retract Exchangeable Shares as against US Co
Sub (or, if so required, to ensure that any such retraction
shall be effective only upon, and shall be conditional upon,
the closing of the Offer and only to the extent necessary to
tender or deposit to the Offer).
(i) Ownership of Outstanding Shares. Without the prior approval
of US Co Sub and the prior approval of the holders of the
Exchangeable Shares given in accordance with Section 9.2 of
the Exchangeable Share Provisions, US Co covenants and agrees
in favour of US Co Sub that, as long as any outstanding
Exchangeable Shares are owned by any person or entity other
than US Co or any of its Subsidiaries, US Co will be and
remain the direct or indirect beneficial owner of all issued
and outstanding shares in the capital of US Co Sub and all
outstanding securities of US Co Sub carrying or otherwise
entitled to voting rights in any circumstances, in each case
other than the Exchangeable Shares.
(j) US Co Not to Vote Exchangeable Shares. US Co covenants and
agrees that it will appoint and cause to be appointed
proxyholders with respect to all Exchangeable Shares held by
US Co and its Subsidiaries for the sole purpose of attending
each meeting of holders of Exchangeable Shares in order to be
counted as part of the quorum for each such meeting. US Co
further covenants and agrees that it will not, and will cause
its Subsidiaries not to, exercise any voting rights which may
be
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exercisable by holders of Exchangeable Shares from time to
time pursuant to the Exchangeable Share Provisions or pursuant
to the provisions of any corporate statute by which US Co Sub
may be governed with respect to any Exchangeable Shares held
by it or by its Subsidiaries in respect of any matter
considered at any meeting of holders of Exchangeable Shares.
(k) Due Performance. On and after the Effective Date, US Co shall
duly and timely perform all of its obligations provided for in
connection with the Plan of Arrangement including any
obligations that may arise upon the exercise of US Co's rights
under the Exchangeable Share Provisions.
(l) Appointment to US Co Board. US Co shall cause ▇▇▇▇▇ ▇.
▇▇▇▇▇▇▇▇ to be appointed as a director of US Co on or prior to
the date hereof as a Class II Director to serve until US Co's
1999 annual stockholders' meeting; ▇▇▇ ▇. ▇▇▇▇▇▇▇▇ to be
nominated as a director of US Co for election at US Co's 1998
annual stockholders' meeting and ▇▇. ▇▇▇▇▇▇▇▇ to be nominated
for re-election at US Co's 1999 annual stockholders' meeting.
US Co shall put forth Messrs. ▇▇▇▇▇▇▇▇ and ▇▇▇▇▇▇▇▇ for
election to its board of directors as aforesaid and will cause
to be solicited proxies for its stockholder's meetings in
favour of the election of such individual.
(m) Notwithstanding the general restriction in section 4.1(d) of
the share provisions of the Exchangeable Shares, US Co Sub
shall be entitled, for a period of 60 days following the
initial issuance of Exchangeable Shares, to issue Exchangeable
Shares, provided that concurrent with any such issuance it
acquires directly or indirectly an equivalent number of
Exchangeable Shares.
3. GENERAL
(a) 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 securities Exchangeable Shares) are
held by any party other than US Co and any of its
Subsidiaries.
(b) Changes in Capital of US Co and US Co Sub. Notwithstanding
the provisions of section 3(d) hereof, at all times after the
occurrence of any event effected pursuant to section 2(g) or
2(h) hereof, as a result of which either US Co Common Stock or
the Exchangeable Shares or both are in any way changed, this
Agreement shall forthwith be amended and modified as necessary
in order that it shall apply with full force and effect,
mutatis mutandis, to all new securities into which US Co
Common Stock 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.
(c) Severability. If any provision of this Agreement is held to
be invalid, illegal or unenforceable, the validity, legality
or enforceability of the remainder of this Agreement shall not
in any way be affected or impaired thereby and this Agreement
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shall be carried out as nearly as possible in accordance with
its original terms and conditions.
(d) Amendments, Modifications, etc. This Agreement may not be
amended or modified except by an agreement in writing executed
by US Co Sub and US Co and approved by the holders of the
Exchangeable Shares in accordance with Section 9.2 of the
Exchangeable Share Provisions.
(e) Ministerial Amendments. Notwithstanding the provisions of
section 3(d), 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:
(i) adding to the covenants of either or both parties for
the protection of the holders of the Exchangeable
Shares;
(ii) 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 opinion of the board of directors of
each of US Co Sub and US Co, it may be expedient to
make, provided that each such boards of directors
shall be of the opinion that such amendments or
modifications will not be prejudicial to the
interests of the holders of the Exchangeable Shares;
or
(iii) making such changes or corrections which, on the
advice of counsel to US Co Sub and US Co, 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 boards of directors of each of US
Co Sub and US Co shall be of the opinion that such
changes or corrections will not be prejudicial to the
interests of the holders of the Exchangeable Shares.
(f) Meeting to Consider Amendments. US Co Sub, at the request of
US Co, 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 of such
shareholders. Any such meeting or meetings shall be called
and held in accordance with the by-laws of US Co Sub, the
Exchangeable Share Provisions and all applicable laws.
(g) 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 both of the parties hereto.
(h) Inurement. This Agreement shall be binding upon and inure to
the benefit of the parties hereto and the holders, from time
to time, of Exchangeable Shares and each of their respective
heirs, successors and assigns.
(i) Notices to Parties. All notices and other communications
between the parties shall be in writing and shall be deemed to
have been given if delivered personally or by
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confirmed telecopy to the parties at the following addresses
(or at such other address for either such party as shall be
specified in like notice):
(i) if to US Co at:
Pioneer Natural Resources Company
▇▇▇▇ ▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇
▇▇▇▇ ▇. ▇'▇▇▇▇▇▇ ▇▇▇▇.
▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇▇-▇▇▇▇
Attention: President
Telecopy: (▇▇▇) ▇▇▇-▇▇▇▇
(ii) if to US Co Sub at:
Pioneer Natural Resources (Canada) Ltd.
▇▇▇▇, ▇▇▇ - ▇▇▇ ▇▇▇▇▇▇ ▇.▇.
▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇
▇▇▇ ▇▇▇
Attention: President
Telecopy: (▇▇▇) ▇▇▇-▇▇▇▇
Any notice or other communication given personally shall be
deemed to have been given and received upon delivery thereof
and if given by telecopy shall be deemed to have been given
and received on the date of confirmed receipt thereof unless
such day is not a Business Day in which case it shall be
deemed to have been given and received upon the immediately
following Business Day.
(j) Counterparts. This Agreement may be executed in counterparts,
each of which shall be deemed an original, and all of which
taken together shall constitute one and the same instrument.
(k) Jurisdiction. This Agreement shall be construed and enforced
in accordance with the laws of the Province of Alberta and the
laws of Canada applicable therein.
(l) Attornment. US Co agrees that any action or proceeding
arising out of or relating to this Agreement may be instituted
in the courts of Alberta, waives any objection which it may
have now or hereafter to the venue of any such action or
proceeding, irrevocably submits to the jurisdiction of the
said courts in any such action or proceeding, agrees to be
bound by any judgment of the said courts and not to seek, and
hereby waives, any review of the merits of any such judgment
by the courts of any other jurisdiction and hereby appoints US
Co Sub at its registered office in the Province of Alberta as
US Co's attorney for service of process.
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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.
PIONEER NATURAL
RESOURCES COMPANY
Per:
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Per:
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PIONEER NATURAL RESOURCES
(CANADA) LTD.
Per:
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Per:
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