Exhibit 3
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COMBINATION AGREEMENT
between
FORDING INC.
- and -
TECK COMINCO LIMITED
- and -
WESTSHORE TERMINALS INCOME FUND
- and -
ONTARIO TEACHERS' PENSION PLAN BOARD
- and -
SHERRITT INTERNATIONAL CORPORATION
January 12, 2003
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OSLER, XXXXXX & HARCOURT LLP
Table of Contents
ARTICLE 1
DEFINITIONS AND PRINCIPLES OF INTERPRETATION......................3
1.1 Definitions..............................................3
1.2 Certain Rules of Interpretation.........................13
1.3 Entire Agreement........................................15
1.4 Schedules...............................................15
1.5 Accounting Matters......................................16
1.6 Knowledge...............................................16
ARTICLE 2
THE COMBINATION..................................................16
2.1 The Arrangement.........................................16
2.2 Funding of the Cash Option..............................16
2.3 Agreements of the Parties with
respect to the Transaction..............................17
2.4 Related Agreements......................................20
2.5 Public Announcement.....................................20
2.6 Implementation Steps for Fording........................20
2.7 Support of Transaction..................................21
2.8 Effective Date Matters..................................21
2.9 Preparation of Filings, etc.............................21
ARTICLE 3
REPRESENTATIONS AND WARRANTIES...................................22
3.1 Representations and Warranties of
Fording - General......................................22
3.2 Representations and Warranties of
Fording - Prairie Operations............................28
3.3 Representations and Warranties of Teck..................31
3.4 Representations and Warranties of Westshore.............37
3.5 Representations and Warranties of OTPP..................38
3.6 Representations and Warranties of Sherritt..............40
3.7 Representations and Warranties of OTPP and Sherritt
Regarding Luscar Contributed Assets.....................41
3.8 Nature and Survival.....................................46
ARTICLE 4
COVENANTS........................................................47
4.1 Covenants of Fording....................................47
4.2 Covenants of Other Parties..............................48
4.3 Ordinary Course Covenants...............................49
4.4 Fording Covenants Regarding Non-Solicitation............50
4.5 Right of First Refusal..................................51
4.6 Access to Information...................................52
4.7 Completion of Transaction...............................53
ARTICLE 5
CONDITIONS.......................................................53
5.1 Mutual Conditions Precedent.............................53
5.2 Additional Conditions Precedent to the
Obligations of Teck and Westshore.......................55
5.3 Effect of Breach........................................56
5.4 Additional Conditions Precedent to the
Obligations of Fording..................................56
5.5 Effect of Breach........................................57
5.6 Additional Conditions Precedent to the Obligations of
OTPP and Sherritt.......................................57
5.7 Effect of Breach........................................58
5.8 Notice and Cure Provisions..............................58
5.9 Satisfaction of Conditions..............................59
ARTICLE 6
AMENDMENT AND TERMINATION........................................60
6.1 Amendment...............................................60
6.2 Termination.............................................60
6.3 Break Fee...............................................61
6.4 Remedies................................................62
ARTICLE 7
GENERAL..........................................................62
7.1 Notices.................................................62
7.2 Assignment..............................................65
7.3 Co-Operation and Further Assurances.....................65
7.4 Effect on Westshore Trustee.............................65
7.5 Expenses................................................65
7.6 Execution and Delivery..................................66
7.7 Transfer Tax Elections..................................66
7.8 Assignment of Tax Pools.................................66
Schedule Description
-------- -----------
Schedule 2.1 Amended Plan
Schedule 2.3(a) Partnership Agreement Term Sheet
Schedule 2.3(c) Prairie Operations Term Sheet
Schedule 2.3(d) Teck Contribution Term Sheet
Schedule 2.3(e) Fording Contribution Term Sheet
Schedule 2.3(n) Non-Competition Term Sheet
Schedule 2.4 Governance Term Sheet
Schedule 2.4 Trust Indenture Term Sheet
Schedule 2.5 Form of Press Release
Schedule 4.1 Regulatory Approvals
THIS AGREEMENT is made the 12th day of January, 0000
X X X X X X X:
FORDING INC.
a corporation existing under the laws of Canada
("Fording")
- and -
TECK COMINCO LIMITED
a corporation existing under the laws of Canada
("Teck")
- and -
WESTSHORE TERMINALS INCOME FUND
an open-ended mutual fund trust existing under the
laws of British Columbia
("Westshore")
- and -
ONTARIO TEACHERS' PENSION PLAN BOARD
a corporation existing under the laws of Ontario
("OTPP")
- and -
SHERRITT INTERNATIONAL CORPORATION a corporation
existing under the laws of New Brunswick
("Sherritt").
RECITALS:
A. A meeting of Fording securityholders (the "Securityholders") is scheduled
to be held on January 22, 2003 to consider the adoption of a plan of
arrangement (the "Plan of Arrangement") involving Teck and Westshore to
reorganize the way in which equity in the business of Fording is held by
its Securityholders through the conversion of Fording into the Fording
Canadian Coal Trust (the "Fund"), an open-ended mutual fund trust to be
created under the laws of Alberta.
X. Xxxxxxx, Teck, Westshore, OTPP and Sherritt wish to further enhance the
value to Securityholders of the conversion of Fording into an income trust
contemplated by the Plan of Arrangement through offering the combination of
certain metallurgical coal assets and operations of Teck and the
Luscar/CONSOL Joint Ventures (defined below) with the assets of Fording
(other than the Fording Prairie Operations and Fording's Industrial
Minerals Operations) to be held in a general partnership (the
"Partnership") organized under the Fund, together with the contemporaneous
cash investments by Teck, Westshore and Sherritt Coal Partnership II
("SCPII"), a partnership comprised of Sherritt and OTPP, in the Fund and
the Partnership to permit the Cash Option to be increased to $1,050
million, all in the manner described herein (collectively, the
"Transaction").
C. Luscar Ltd. ("Luscar") is a wholly owned subsidiary of Luscar Energy
Partnership, a partnership comprised as to 50/50 of wholly-owned
subsidiaries of each of OTPP and Sherritt.
D. Luscar and CONSOL Energy Inc. ("CONSOL") are joint venture participants as
to 50/50 in the Cardinal River Coal Joint Venture and the Line Creek Joint
Venture (collectively, the "Luscar/CONSOL Joint Ventures").
E. The terms of the Plan of Arrangement previously announced by Fording will
be amended to enable Shareholders to elect to receive one unit (a "Unit")
of the Fund per Common Share (the "Unit Option") up to a maximum of
approximately the number of Common Shares outstanding at Closing less 30
million, being approximately 21,432,477 Units or $35.00 in cash per Common
Share (the "Cash Option"), to a maximum of $1,050 million, or a combination
of cash and Units, subject to proration as described herein.
F. Pursuant to the terms of the Amended Plan:
(i) Certain of Teck's and Teck's Affiliates' North American metallurgical
coal assets (consisting primarily of the Elkview Mine), the
Luscar/CONSOL Joint Ventures' metallurgical coal assets, (consisting
primarily of its Line Creek Mine, Cheviot and the Luscar Mine, and its
interests in the Neptune Terminal) and Fording's assets (other than
its Industrial Minerals Operations, the Prairie Operations and any
liabilities associated with the Mount Washington Mine site) will be
contributed, directly or indirectly, to the Partnership in order to
realize significant synergies.
(ii) Fording will sell and SCPII or an affiliated entity will purchase the
Prairie Operations for $225 million;
(iii) Fording and Westshore will build upon their historical relationship
by having a subsidiary of Westshore enter into a long-term coal
terminal agreement with Fording consistent with their existing
negotiations.
(iv) Teck will contribute $125 million to the Partnership to acquire a
partnership interest therein.
(v) Teck will make an investment in Units of the Fund of $150 million.
(vi) Westshore will make an investment in Units of the Fund of $150
million.
(vii) SCPII will make an investment in Units of the Fund of $375 million.
(viii) The combination of the Teck Contributed Assets, the Luscar
Contributed Assets and the Fording Contributed Assets will enable
Fording to borrow or cause to be borrowed additional funds in the
aggregate of $336 million, which will be used to fund, in part, the
Cash Option and for other purposes.
G. It is anticipated that the Amended Plan will be considered at a meeting of
Securityholders to be held on or about February 19, 2003.
H. In the event that the Amended Plan is approved and implemented, immediately
after the Effective Time:
(i) initial ownership interests in the Partnership will be 65% Fund
(indirectly) and 35% Teck; and
(ii) ownership interests in the Fund will be approximately 45.5%
Shareholders (including approximately 6.7% owned by OTPP); 9.1% Teck;
9.1% Westshore; 6.8% Luscar; 6.8% CONSOL and 22.7% SCPII.
I. The board of directors or trustees, as the case may be, of each of Fording,
Teck, Westshore, Sherritt and OTPP has determined to consummate the
Transaction and has agreed to co-operate in the manner set out herein with
a view to consummating the Transaction.
THEREFORE, the parties agree as follows:
ARTICLE 1
DEFINITIONS AND PRINCIPLES OF interpretation
1.1 Definitions
In this Agreement, unless there is something in the subject matter or context
inconsistent therewith, the following terms shall have the following meanings
respectively:
"Acquisition Proposal" means any proposal or offer with respect to any
merger, amalgamation, arrangement, business combination, liquidation,
dissolution, recapitalization, take-over bid, tender offer, purchase
of any assets representing greater than 20% of the fair market value
of the Transaction, or purchase of more than 20% of the equity (or
rights thereto) of Fording or similar transactions or series of
transactions involving Fording, excluding the arrangement contemplated
by the F/T/W Plan of Arrangement;
"Affiliate" and "Associate" (regardless of case) each has the meaning
ascribed to it under the Securities Act;
"Agreement" means this agreement, including all schedules, and all
amendments or restatements as permitted, and references to "Article" or
"Section" mean the specified Article or Section of this agreement;
"Amended Arrangement" means the arrangement under Section 192 of the
CBCA contemplated by the Amended Plan;
"Amended Plan" means the Plan of Arrangement as amended to give effect
to the Transaction contemplated by this Agreement substantially in the
form attached as Schedule 2.1;
"Arrangement Resolution" means the special resolution of the
Securityholders authorizing the Amended Plan to be considered and voted
upon by the Securityholders at the Fording Meeting;
"Articles of Arrangement" means the articles of arrangement of Fording
contemplated by the Amended Plan that, pursuant to the provisions of
Section 192(6) of the CBCA, must be filed with the Director after the
Final Order has been granted in order for the Amended Arrangement to
become effective;
"Board of Directors" means the board of directors of Fording;
"Break Fee" has the meaning ascribed to it in Section 6.3(b);
"Business Day" means a day, which is not a Saturday, Sunday or
statutory holiday in the Province of Alberta, the Province of British
Columbia or the Province of Ontario, on which the principal commercial
banks in downtown Calgary, Vancouver and Toronto are generally open for
the transaction of commercial banking business;
"Canadian Securities Regulatory Authorities" means the applicable
Canadian, provincial and territorial securities commissions and
regulatory authorities;
"Canadian Tax Act" means the Income Tax Act, R.S.C. 1985,
c. 1 (5th Supp.);
"Cash Option" has the meaning ascribed to it in the Recitals to this
Agreement;
"CBCA" means the Canada Business Corporations Act, R.S.C.
1985, c. C-44;
"CCRA" means the Canada Customs and Revenue Agency;
"Certificate of Arrangement" means the certificate or proof of filing
of the Articles of Arrangement to be issued by the Director pursuant to
Section 192(7) of the CBCA;
"Closing Time" has the meaning ascribed to it in Section 2.8;
"Common Share" means a common share in the capital of Fording;
"Confidentiality Agreements" means the Confidentiality Agreements
between Fording and each of Teck and Westshore dated November 29, 2002
and between Fording and each of OTPP and Sherritt dated January 10,
2003, and the Confidentiality Agreements between each of Teck and
Sherritt and between Westshore and Sherritt dated January 10, 2003;
"CONSOL" means CONSOL Energy Inc.;
"contracts" means a contract, lease, instrument, note, bond, debenture,
mortgage, agreement, arrangement or understanding to which a Party, or
any of its subsidiaries, is a party to or under which a Party or any of
its subsidiaries is bound, has unfulfilled obligations or contingent
liabilities or is owed unfulfilled obligations, whether known or
unknown, whether asserted or not;
"Court" means the Court of Queen's Bench of Alberta;
"CP Arrangement Agreement" means the arrangement agreement entered into
by CPL and certain of its subsidiaries dated as of July 30, 2001
setting forth the terms on which the parties would undertake a plan of
arrangement pursuant to which the operating subsidiaries of CPL would
be spun off into separate public companies;
"CPL" means Canadian Pacific Limited;
"CPR Agreement" means the agreement between FCL and Canadian Pacific
Railway Company dated April 1, 2001;
"Director" means the Director appointed under Section 260 of the CBCA;
"Effective Date" means the date shown on the Certificate of Arrangement
to be issued by the Director giving effect to the Amended Arrangement,
which date shall be determined in accordance with Section 2.8;
"Effective Time" means the first moment in time on the Effective Date;
"Elkview Mine" means the coal mine owned by Teck and located in
southeastern British Columbia, covering a surface area of approximately
23,000 hectares;
"Environmental Law" means any and all applicable Laws relating to the
protection of human health and safety or the environment, or relating
to hazardous or toxic substances or wastes, pollutants or contaminants;
"Exchange Options" means options to purchase Units, and any
accompanying unit appreciation rights, issued under the Exchange Option
Plan;
"Exchange Option Plan" means the Unit option plan of the Fund proposed
to be created as part of the Amended Arrangement pursuant to which
options to acquire Units and any accompanying unit appreciation rights
will be granted to existing Optionholders in exchange ultimately for
existing Options and any existing share appreciation rights in the
manner contemplated by the Amended Plan;
"FCL" means Fording Coal Limited/Les Charbons Fording, Limitee, a
corporation existing under the CBCA;
"FCL Amalco" means the corporation resulting from the amalgamation of
Fording and FCL;
"F/T/W Combination Agreement" means the combination agreement dated
December 4, 2002 among Fording, Teck and Westshore;
"F/T/W Plan of Arrangement" means the plan of arrangement set forth as
Schedule "B" to the supplement dated December 8, 2002 to the
Information Circular;
"FX Acknowledgements" means the acknowledgements proposed to be
obtained by Fording from certain counterparties with whom Fording has
entered into certain foreign exchange forward contracts stating that
the consummation of the Transaction will not result in any early
termination or the occurrence of an event of default under such
contracts;
"Final Order" means the order of the Court approving the Amended
Arrangement;
"Fording Annual Information Form" means the annual information form of
Fording, dated May 16, 2002, for the year ended December 31, 2001;
"Fording Benefit Plans" means all plans, arrangements, agreements,
programs, policies, practices or undertakings, whether oral or written,
formal or informal, funded or unfunded, registered or unregistered to
which Fording or its subsidiaries is a party to or bound by or under
which Fording or its subsidiaries have, or will have, any liability or
contingent liability, relating to: pension plans, insurance plans
(whether insured or self-insured) or compensation plans with respect to
any of its employees or former employees (or any spouses, dependants,
survivors or beneficiaries of any such employees or former employees),
directors or officers, individuals working on contract with Fording or
its subsidiaries or other individuals providing services to it of a
kind normally provided by employees or eligible dependants of such
Person other than the Fording Prairie Benefit Plans;
"Fording Contributed Assets" means the assets of Fording other than (i)
its Industrial Minerals Operations, (ii) Fording's rights and
obligations in connection with its interests in a former mining
operation located at the Mount Washington mine site, and (iii) the
Prairie Operations. The Fording Contributed Assets are described in the
Fording Contribution Term Sheet attached as Schedule 2.3(e);
"Fording Disclosure Letter" means the disclosure letter of Fording
delivered to the other Parties prior to the execution of this
Agreement;
"Fording Disclosure Record" has the meaning ascribed to it in Section
3.1(e);
"Fording Financial Statements" means the audited financial statements
of Fording for the fiscal year ended December 31, 2001, consisting of a
consolidated balance sheet as at December 31, 2001, and the
consolidated statements of income and retained earnings and cash flows
for the fiscal year ended December 31, 2001, and all notes thereto and
the interim unaudited financial statements of Fording for the nine
month period ended September 30, 2002;
"Fording Meeting" means the special meeting of Securityholders to be
held on or before February 19, 2003 and any adjournment(s) or
postponement(s) thereof made in accordance with the notice of meeting
that forms part of the Information Circular, to consider and to vote
on, among other things, the Resolutions;
"Fording Prairie Benefit Plans" means all plans, arrangements,
agreements, programs, policies, practices or undertakings, whether oral
or written, formal or informal, funded or unfunded, registered or
unregistered to which Fording or its subsidiaries is a party to or
bound by or under which Fording or its subsidiaries has, or will have,
any liability or contingent liability, relating to: pension plans,
insurance plans (whether insured or self-insured) or compensation plans
with respect to any employees or former employees (or any spouses,
dependants, survivors or beneficiaries of any such employees or former
employees) employed in connection with the Prairie Operations,
directors or officers, individuals working on contract with Fording or
its subsidiaries or other individuals providing services to it of a
kind normally provided by employees or eligible dependants of such
Person, in each case, in connection with the Prairie Operations;
"Fording Subsidiary" has the meaning ascribed to it in Section 3.1(a);
"Fund" has the meaning ascribed to it in the Recitals to this
Agreement;
"Further Supplement" means the amendment and supplement to the
Information Circular prepared in respect of the Amended Arrangement in
form and content acceptable to the Parties acting reasonably;
"Genesee Agreements" means, collectively, the Genesee Coal Mine
Operating Agreement between the City of Edmonton and FCL made as of
August 7, 1980, the Genesee Coal Mine Joint Venture Agreement between
the City of Edmonton and FCL made as of August 7, 1980, the Genesee
Coal Mine Dedication and Unitization Agreement between the City of
Edmonton, FCL and the City of Edmonton and FCL as joint venturers made
as of August 7, 1980, the Genesee Coal Mine Purchase and Sale Agreement
between the City of Edmonton and FCL as joint venturers and the City of
Edmonton made as of August 7, 1980 and the Construction Agreement
between the City of Edmonton and FCL as joint venturers and FCL dated
August 7, 1980, as the same have been assigned;
"Governance Agreement" means the agreement regarding the governance of
the Fund on the terms attached as Schedule 2.4;
"Governmental Authority" means any (a) multinational, federal,
provincial, state, regional, municipal, local or other government,
governmental or public department, central bank, court, tribunal,
arbitral body, commission, board, bureau or agency, domestic or
foreign, (b) Canadian Securities Regulatory Authority, self-regulatory
organization or stock exchange including without limitation the NYSE
and the TSX, (c) any subdivision, agent, commission, board, or
authority of any of the foregoing, or (d) any quasi-governmental or
private body exercising any regulatory, expropriation or taxing
authority under or for the account of any of the foregoing;
"Holders" means, when used with reference to securities of Fording or
the Fund, the holders thereof shown from time to time on the register
maintained by or on behalf of Fording or the Fund, as the case may be,
in respect of such securities;
"Industrial Minerals Operations" means the NYCO Minerals, Inc.
operations at Willsboro, New York, the Minera NYCO S.A. de C.V.
operations located near Hermosillo in the northwestern state of
Sonora, Mexico and the American Tripoli, Inc. operations located near
Seneca, Missouri;
"Information Circular" means the notice of the Fording Meeting and the
management information circular dated November 20, 2002, including all
accompanying appendices thereto, sent to Securityholders in connection
with the Fording Meeting as amended or supplemented to the date hereof;
"Interim Order" means the order of the Court confirming, among other
things, the calling and holding of the Fording Meeting and voting
thereon, as such order has been and may be amended or varied;
"Laws" means all applicable laws (including common law), statutes,
regulations, statutory rules, orders, ordinances, and the terms and
conditions of any approvals, licences, permits, judgments or other
requirements of any applicable published notes and policies of any
Governmental Authority, and the term "applicable", with respect to such
Laws and in the context that refers to one or more Persons, means such
Laws that apply to such Person or Persons or its or their business,
undertaking, property or securities and that emanate from a
Governmental Authority having jurisdiction over the Person or Persons
or its or their business, undertaking, property or securities;
"Luscar" has the meaning ascribed to it in the Recitals to this
Agreement;
"Luscar/CONSOL Joint Ventures" has the meaning ascribed to it in the
Recitals to this Agreement;
"Luscar Contributed Assets" means the assets of the Luscar/CONSOL Joint
Ventures described in the Luscar Contribution Term Sheet, delivered to
the Parties on the date hereof, which, pursuant to the Amended Plan,
will ultimately be contributed to the Partnership and includes the Line
Creek Mine, Cheviot, the Luscar Mine and a 46.4% interest in the
Neptune Terminal and associated terminal contracts;
"Luscar Disclosure Letter" means the disclosure letter in respect of
the Luscar Contributed Assets delivered by Sherritt and OTPP to the
other Parties prior to the execution of this Agreement;
"Luscar Disclosure Record" has the meaning ascribed to it in Section
3.7(d);
"Luscar Benefit Plans" means all plans, arrangements, agreements,
programs, policies, practices or undertakings, whether oral or written,
formal or informal, funded or unfunded, registered or unregistered to
which Luscar or the Luscar/CONSOL Joint Ventures is a party to or bound
by or under which Luscar or the Luscar/CONSOL Joint Ventures has, or
will have, any liability or contingent liability, relating to: pension
plans, insurance plans (whether insured or self-insured) or
compensation plans with respect to any of its employees or former
employees (or any spouses, dependants, survivors or beneficiaries of
any such employees or former employees), directors or officers,
individuals working on contract with Luscar or the Luscar/CONSOL Joint
Ventures or other individuals providing services to it of a kind
normally provided by employees or eligible dependants of such Person,
in each case, in connection with the Luscar Contributed Assets;
"Luscar Employees" means the persons currently employed by Luscar or
the Luscar/CONSOL Joint Ventures (including for this purpose, dependent
contractors) required to operate the Luscar Contributed Assets, being
the Persons listed in the Luscar Disclosure Letter;
"Luscar Entities" has the meaning ascribed to it in Section 3.7(a);
"Luscar Financial Statements" means the audited financial statements
of Luscar Coal Income Fund and Luscar Coal Ltd. included in Appendix C
to the SCAI Offer, as amended on December 16, 2002;
"Luscar New Financial Statements" means the audited financial
statements for the Luscar/CONSOL Joint Ventures for the fiscal year
ended December 31, 2001 consisting of a balance sheet as of December
31, 2001, and the statements of earnings, owner's equity and cash flows
for the fiscal year ended December 31, 2001, and all notes thereto and
the interim unaudited financial statements for the Luscar/CONSOL Joint
Ventures for the nine month period ended September 30, 2002;
"Material Adverse Change", when used in connection with a Party or the
Fording Contributed Assets, the Prairie Operations, the Teck
Contributed Assets or the Luscar Contributed Assets, as the case may
be, means any change, effect, event or occurrence with respect to the
condition (financial or otherwise), properties, assets, liabilities,
obligations (whether absolute, accrued, contingent, conditional or
otherwise), businesses, operations or results of operations of such
Party or assets or, if applicable, those of its subsidiaries, that is,
or could reasonably be expected to be, material and adverse to such
Party or assets and, if applicable, its subsidiaries on a consolidated
basis, other than any change, effect, event or occurrence: (i) relating
to the economy, political conditions or securities markets in general;
(ii) in the case of Fording, the Fording Contributed Assets, the
Prairie Operations, the Teck Contributed Assets or the Luscar
Contributed Assets, affecting the coal industry in general and which
does not have, or could not reasonably be expected to have, a
materially disproportionate impact on Fording, the Fording Contributed
Assets, the Prairie Operations, the Teck Contributed Assets or the
Luscar Contributed Assets, as the case may be, as compared to the other
industry participants; or (iii) that is merely itself a change in the
market trading price of publicly issued securities of the Party; (iv)
resulting exclusively from the entering into of this Agreement; or (v)
resulting from a change in the market price of metallurgical coal or
thermal coal;
"Material Adverse Effect" when used in connection with a Party, means
any effect resulting from a Material Adverse Change to that Party;
"material fact" has the meaning ascribed to it under the Securities
Act;
"New Fording" means the corporation resulting from the amalgamation of
Fording, FCL Amalco (which results from the amalgamation of FCL and a
subsidiary of Fording) and Subco, which will occur as part of the
Amended Arrangement;
"NYSE" means the New York Stock Exchange;
"Options" means the outstanding options to purchase Common Shares
issued pursuant to Fording's Directors' Stock Option Plan and Key
Employee Stock Option Plan;
"Optionholders" means Holders from time to time of Options;
"Outside Date" means, subject to Section 6.2(e), April 30, 2003 or
such later date as may be mutually agreed by the Parties;
"Partnership" has the meaning ascribed to it in the Recitals to this
Agreement;
"Partnership Agreement" means the agreement between Fording and Teck
on the terms attached as Schedule 2.3(a);
"Party" or "Parties" means a signatory or the signatories to this
Agreement, respectively;
"Person" means any individual, sole proprietorship, partnership, firm,
entity, unincorporated association, unincorporated syndicate,
unincorporated organization, trust, body corporate, agency and where
the context requires, any of the foregoing when they are acting as
trustee, executor, administrator or other legal representative;
"Prairie Operations" means the Fording assets described in the Prairie
Operations Term Sheet attached as Schedule 2.3(c), which, for greater
certainty, excludes thermal coal that is mined in Fording's
metallurgical coal mines;
"Pre-Effective Date Period" means the period commencing on the
execution and delivery of this Agreement and ending at the Closing
Time, subject to the earlier termination of this Agreement in
accordance with its terms;
"Proposed Agreement" has the meaning ascribed to it in Section 4.5(a);
"publicly disclosed" means disclosure by a Party in a public filing
made by it with either the Canadian Securities Regulatory Authorities
on the SEDAR system in Canada or with the Securities and Exchange
Commission on the XXXXX system in the United States from December 31,
2001 to the date hereof;
"PWC Resolution" means the resolution of the Shareholders to be
considered and voted upon by the Shareholders at the Fording Meeting,
appointing PricewaterhouseCoopers LLP as auditor of the Fund;
"RBC" means RBC Dominion Securities Inc., a member company of RBC
Capital Markets;
"RBC Fairness Opinion" has the meaning ascribed to it in Section
2.7(a);
"Registrar and Transfer Agent" means Computershare Trust Company of
Canada, the registrar and transfer agent of the Common Shares and the
Units;
"Regulatory Approvals" means those sanctions, rulings, consents,
orders, exemptions, permits and other approvals (including the lapse,
without objection, of a prescribed time under a statute or regulation
that states that an arrangement may only be implemented if a prescribed
time lapses following the giving of notice without an objection being
made) of any Governmental Authority, as set out in Schedule 4.1;
"Resolutions" means the special resolutions of the Shareholders and the
Optionholders, as the case may be, authorizing the Arrangement
Resolution, the Unitholder Rights Plan Resolution and the PWC
Resolution, to be considered and voted upon by the Shareholders and the
Optionholders, as the case may be, at the Fording Meeting;
"SCAI" means Sherritt Coal Acquisition Inc.;
"SCAI Offer" means the offer made by SCAI dated October 25, 2002 as
amended December 16, 2002 and January 6, 2003, to acquire all of the
issued and outstanding Common Shares;
"SCPII" has the meaning ascribed to it in the Recitals to this
Agreement;
"Securities Act" means the Securities Act (Alberta), R.S.A. 2000, c.
S-4, and the rules and regulations promulgated thereunder;
"Securityholders" means, collectively, the Shareholders and the
Optionholders;
"Shareholders" means the Holders of Common Shares;
"Sherritt Annual Information Form" means the annual information form of
Sherritt, dated March 15, 2002, for the year ended December 31, 2001;
"Special Distribution" has the meaning ascribed to it in
Section 2.3(k);
"Subco" means 4123212 Canada Ltd., an indirect, wholly-owned
subsidiary of Fording with no material assets or liabilities, existing
under the laws of Canada;
"subsidiary" or "Subsidiary" means, with respect to a specified body
corporate, any body corporate of which more than 50% of the outstanding
shares ordinarily entitled to elect a majority of the board of
directors thereof (whether or not shares of any other class or classes
shall or might be entitled to vote upon the happening of any event or
contingency) are at the time owned directly or indirectly by such
specified body corporate, and shall include any body corporate,
partnership, joint venture or other entity over which it exercises
direction or control or which is in a like relation to a subsidiary;
"Superior Proposal" means any bona fide written Acquisition Proposal
that, in the good faith determination of the Board of Directors after
consultation with its financial advisors and with outside counsel,
would, if consummated in accordance with its terms and taking into
account the risk of non-completion, reasonably be expected to result in
a transaction more favourable to the Securityholders from a financial
point of view than the Transaction;
"tax returns" means all returns, declarations, reports, information
returns and statements required to be filed with the CCRA or any taxing
authority relating to taxes;
"Teck Annual Information Form" means the annual information form of
Teck, dated March 1, 2002, for the year ended December 31, 2001;
"Teck Contributed Assets" means the Teck assets described in the Teck
Contribution Term Sheet attached as Schedule 2.3(d), which, pursuant to
the Amended Plan, will be contributed to the Partnership;
"Teck Disclosure Letter" means the disclosure letter of Teck delivered
to the other Parties prior to the execution of this Agreement;
"Teck Disclosure Record" has the meaning ascribed to it in Section
3.3(f);
"Teck Mine Benefit Plans" means all plans, arrangements, agreements,
programs, policies, practices or undertakings, whether oral or written,
formal or informal, funded or unfunded, registered or unregistered to
which Teck or its subsidiaries is a party to or bound by or under which
Teck or its subsidiaries has, or will have, any liability or contingent
liability, relating to: pension plans, insurance plans (whether insured
or self-insured) or compensation plans with respect to any of its
employees or former employees (or any spouses, dependants, survivors or
beneficiaries of any such employees or former employees), directors or
officers, individuals working on contract with Teck or its subsidiaries
or other individuals providing services to it of a kind normally
provided by employees or eligible dependants of such Person in each
case, in connection with the Teck Contributed Assets;
"Teck Mine Employees" means the persons currently employed by Teck
(including for this purpose, dependent contractors) required to operate
the Elkview Mine, being the Persons listed in the Teck Disclosure
Letter;
"Teck Mine Financial Statements" means the audited financial statements
for the Elkview Mine for the fiscal year ended December 31, 2001
consisting of a balance sheet as of December 31, 2001, and the
statements of earnings, owner's equity and cash flows for the fiscal
year ended December 31, 2001, and all notes thereto and the interim
unaudited financial statements for the Elkview Mine for the nine month
period ended September 30, 2002, copies of which have been initialled
for identification and delivered by Teck to Fording;
"Terminal Agreement" means the agreement between New Fording, on behalf
of the Partnership, and Westshore, on the terms which have been
initialed for identification and delivered to Westshore and Fording,
respectively;
"Transaction" has the meaning ascribed to it in the Recitals to this
Agreement;
"Transaction Agreement" means each of the agreements listed in or
contemplated by Section 1.4;
"Trustees" means the trustees of the Fund from time to time;
"TSX" means the Toronto Stock Exchange;
"Unit" means a trust unit of the Fund;
"Unit Option" has the meaning ascribed to it in the Recitals to this
Agreement;
"Unitholder Rights Plan Resolution" means the resolution of the
Shareholders authorizing the implementation of the Unitholder Rights
Plan to be considered and voted upon by the Shareholders at the Fording
Meeting;
"Unitholders" means the Holders from time to time of the Units;
"U.S. Tax Code" means the United States Internal Revenue Code of 1986;
and
"Westshore Disclosure Letter" means the disclosure letter of Westshore
delivered to the other Parties prior to the execution of this
Agreement.
1.2 Certain Rules of Interpretation
In this Agreement:
(a) Consent - Whenever a provision of this Agreement requires an
approval or consent 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) Currency - Unless otherwise specified, all references to money
amounts are to lawful currency of Canada.
(c) Governing Law - This 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. Each Party hereby irrevocably attorns to
the non-exclusive jurisdiction of the courts of the Province of
Alberta in respect of all matters arising under or in relation to
this Agreement.
(d) Headings - Headings of Articles and Sections are inserted for
convenience of reference only and shall not affect the
construction or interpretation of this Agreement.
(e) Including - Where the word "including" or "includes" is used in
this Agreement, it means "including (or includes) without
limitation".
(f) No Strict Construction - The language used in this 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.
(g) 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.
(h) Statutory references - A reference to a statute includes all
rules and regulations made pursuant to such statute and, unless
otherwise specified, the provisions of any statute or regulation
or rule which amends, supplements or supersedes any such statute
or any such regulation or rule.
(i) Subsidiaries - To the extent any representations, warranties,
covenants or agreements contained herein relate, directly or
indirectly, to a Subsidiary of any Party, each such provision
shall be construed as a covenant by such Party to cause (to the
fullest extent to which it is legally capable) such Subsidiary to
perform the required action. To the extent any covenants or
agreements contained herein relate, directly or indirectly, to
SCPII, Luscar, the Luscar/CONSOL Joint Ventures or the Luscar
Energy Partnership, each such provision shall be construed as a
joint and several covenant by OTPP and Sherritt to cause (to the
fullest extent to which it is legally capable) such entity to
perform the required action.
(j) Time - Time is of the essence in the performance of the Parties'
respective obligations.
(k) Time Periods - Unless otherwise specified, time periods within or
following which any payment is to be made or act is to be done
shall be calculated by excluding the day on which the period
commences and including the day on which the period ends and by
extending the period to the next Business Day following if the
last day of the period is not a Business Day.
1.3 Entire Agreement
This Agreement, together with the Confidentiality Agreements and the agreements
and documents required to be delivered pursuant to this Agreement, constitute
the entire agreement between the Parties and set out all 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. For greater certainty, this Agreement supersedes and
replaces the F/T/W Combination Agreement, and the term sheet among the Parties
of January 10, 2003, which are terminated without liability between the parties.
No reliance has been made upon, and 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.
There shall be no liability, either in tort or in contract or otherwise,
assessed in relation to any such warranty, representation, opinion, advice or
assertion of fact, not reduced to writing as part of this Agreement. Each of the
Parties agrees that the other Parties will have no remedy in respect of any
untrue statement made to it and upon which it relied in entering into this
Agreement and that, absent fraud, its only remedy can be for breach of contract
under this Agreement.
1.4 Schedules
The schedules to this Agreement, as listed below, are an integral part of this
Agreement:
Schedule Description
-------- -----------
Schedule 2.1 Amended Plan
Schedule 2.3(a) Partnership Term Sheet
Schedule 2.3(c) Prairie Operations Term Sheet
Schedule 2.3(d) Teck Contribution Term Sheet
Schedule 2.3(e) Fording Contribution Term Sheet
Schedule 2.3(n) Non-Competition Term Sheet
Schedule 2.4 Governance Term Sheet
Schedule 2.4 Trust Indenture Term Sheet
Schedule 2.5 Form of Press Release
Schedule 4.1 Regulatory Approvals
The Luscar Contribution Term Sheet and the Working Capital Agreement have also
been delivered to the Parties on the date hereof.
1.5 Accounting Matters
Unless otherwise stated, all accounting terms used in this Agreement in respect
of any Party shall have the meanings attributable thereto under generally
accepted accounting principles applicable to such Party's published financial
statements and all determinations of an accounting nature in respect of any
Party required to be made shall be made in a manner consistent with Canadian
generally accepted accounting principles applicable to such Party's published
financial statements and past practice.
1.6 Knowledge
Any reference to the knowledge of any Party shall mean, unless otherwise
specified, to the best of the knowledge, information and belief of such Party
after reviewing all relevant records and making reasonable inquiries regarding
the relevant matter of all relevant directors, officers and employees of the
Party.
ARTICLE 2
THE COMBINATION
2.1 The Arrangement
(a) The Amended Plan will be substantially in the form set out in
Schedule 2.1, provided the Parties will cooperate to amend such
plan to achieve the objectives set out herein (provided further
that such amendments are not prejudicial to the Parties).
(b) The Amended Plan will give Shareholders the option to elect the
Cash Option, the Unit Option or a combination of both, subject to
maximum available cash of $1,050 million for the Cash Option and
maximum available Units for the Unit Option equal to the number
of outstanding Common Shares at the Effective Time less
30,000,000.
(c) The Amended Plan will contemplate the completion of the
transactions referenced in Sections 2.2 and 2.3.
(d) The Amended Plan may be amended from the form set out in Schedule
2.1 including without limitation, the reordering of certain steps
or replacing certain amalgamations with windings up provided such
amendment does not create a material disadvantage to any of the
Parties to this Agreement.
2.2 Funding of the Cash Option
(a) The Cash Option will be funded from several sources:
(i) Teck will contribute $125 million to the Partnership in
addition to the Teck Contributed Assets and will receive in
consideration therefor an interest in the Partnership having
the rights described in Schedule 2.3(a), which together with
the Partnership interest to be acquired pursuant to Section
2.3(d), will represent a 35% interest in the Partnership and
those funds will be paid by the Partnership to New Fording
as part of the consideration for the Fording Contributed
Assets;
(ii) Teck and Westshore will each make the following
subscriptions for Units set opposite their name:
Teck $150 million
Westshore $150 million;
(iii) OTPP and Sherritt will cause SCPII or other Affiliates of
OTPP or Sherritt to subscribe for $375 million in Units;
(iv) Subco will draw down approximately $336 million from its new
credit facilities and make a portion of such funds available
to the Fund to refinance Fording's existing debt or pay
Fording's expenses or pay for working capital included in
the Luscar Contributed Assets and, if necessary, fund the
Cash Option; and
(v) Fording will receive $225 million from the sale of the
Prairie Operations to SCPII (or an affiliated entity) and
will make such funds available for the payment of the Cash
Option to the extent not used to fund the other obligations
specified hereunder,
so that an aggregate of $1,050 million will be available to
fund the Cash Option and approximately $311 million will be
available to pay the Special Distribution, to settle the debt
obligations of Fording, and to pay the expenses of the Parties
as contemplated herein.
(b) The entire $1,050 million will be paid to Shareholders pursuant
to the Cash Option.
(c) The expense payments in Section 2.3(p) will be sourced out of the
funds referred to in paragraphs 2.2(a)(i) or (v).
2.3 Agreements of the Parties with respect to the Transaction
(a) Fording and Teck each agree that prior to the Effective Time,
they will enter (and in the case of Teck, also cause
Teck-Bullmoose Coal Inc. and Quintette Coal Partnership to enter)
into the Partnership Agreement and form the Partnership.
(b) Fording agrees that it will purchase or cause to be purchased,
and Sherritt and OTPP agree to cause the Luscar/CONSOL Joint
Ventures to sell the Luscar Contributed Assets on the terms set
out in the Luscar Contribution Term Sheet delivered to the
Parties on the date hereof. Luscar and CONSOL will be issued
shares or debt and shares of Fording or an Affiliate in partial
payment for the Luscar Contributed Assets which will be
immediately indirectly exchanged for 6.4 million freely tradeable
Units (as to 50% of such Units each).
(c) Fording agrees that it will sell or cause the sale of the Prairie
Operations on the terms set out in Schedule 2.3(c) and Sherritt
and OTPP agree that they will cause SCPII or an affiliated entity
of OTPP or Sherritt to purchase the Prairie Operations for $225
million, subject to adjustments in accordance with Schedule
2.3(c). The Parties will cooperate in structuring this
transaction to ensure that no current taxes will be payable by
Fording in respect of such transactions to the extent reasonably
possible.
(d) Teck agrees that, as at the Effective Time, it will contribute or
cause to be contributed the Teck Contributed Assets to the
Partnership in exchange for an interest in the Partnership having
the rights described in Schedule 2.3(a), which together with the
Partnership interest to be acquired pursuant to Section 2.3(f),
will represent a 35% interest in the Partnership, on the terms
set out in Schedule 2.3(d).
(e) Fording agrees that, as at the Effective Time, it will contribute
the Fording Contributed Assets on the terms set out in Schedule
2.3(e), and the Luscar Contributed Assets acquired from the
Luscar/CONSOL Joint Ventures as contemplated in Section 2.3(b)
above, to the Partnership in exchange for an interest in the
Partnership having the rights described in Schedule 2.3(a), which
will represent a 65% interest in the Partnership.
(f) Teck agrees that, as at the Effective Time, it will contribute
$125 million to the Partnership in exchange for an interest in
the Partnership having the rights described in Schedule 2.3(a),
which together with the Partnership interest to be acquired
pursuant to Section 2.3(d), will represent a 35% interest in the
Partnership.
(g) Each of Teck and Westshore severally (and not jointly nor jointly
and severally) agrees that, as of the Effective Time, in
accordance with the Amended Plan, each will subscribe for and
purchase Units in the aggregate amounts specified below at a
purchase price of $35.00 per Unit:
Teck $150 million
Westshore $150 million
(h) Sherritt and OTPP agree that, as of the Effective Time, they will
subscribe for and purchase or will cause SCPII or other
Affiliates of OTPP or Sherritt to subscribe for and purchase $375
million in Units at a purchase price of $35.00 per Unit.
(i) Subco and New Fording will borrow an amount under their new
credit facilities, which together with other funds payable to
Fording hereunder, will enable it to satisfy the Cash Option, and
to pay the Special Distribution, the expenses referred to in
Section 2.3(p), its expenses, to refinance its existing
indebtedness and fulfill its other obligations hereunder.
(j) Fording agrees to cause the Fund to issue, as required under the
Amended Plan, to Shareholders, Units up to an amount equal to the
outstanding Common Shares at the Effective Date less 30 million.
(k) Each of the Parties agrees that the Fund will make a distribution
(the "Special Distribution") of an aggregate of $70 million to
all Unitholders as to $35 million at the end of the quarter in
which the Effective Date occurs and as to $35 million at the end
of the quarter after the quarter in which the Effective Date
occurs.
(l) OTPP agrees that it will elect to receive Units for all of its
Common Shares under the Amended Arrangement and will not exercise
any dissent or appraisal rights under the Amended Arrangement.
(m) OTPP and Sherritt will withdraw and terminate the SCAI Offer and
publicly announce such withdrawal and termination as part of the
press release contemplated by this Agreement and return any
Common Shares that are tendered to the SCAI Offer. They shall
also cease soliciting proxies under their dissident proxy
circular in respect of the Fording Meeting.
(n) The Luscar Entities and New Fording will enter into a
non-competition agreement consistent with Schedule 2.3(n)
providing that Luscar will not compete in respect of
metallurgical coal operations in Canada for five years.
(o) The Partnership and the Fund will enter into a non-competition
agreement consistent with Schedule 2.3(n) providing that the
Partnership, New Fording and the Fund (but not Teck or any of its
other Affiliates) will not compete in respect of thermal coal
operations in Canada for five years.
(p) Fording on its own behalf and on behalf of New Fording (its
successor by amalgamation or liquidation) agrees that it shall
bear its own expenses in respect of the Transaction and that upon
completion of the Amended Arrangement, as at the Closing Time,
directly or indirectly it will pay the following amount as a
reimbursement of and as a contribution to expenses and costs of
the Parties:
Teck and Westshore (or their designees) $25 million
OTPP and Sherritt (or their designees) $50 million
Fording and New Fording shall be obligated to make the payments
in the amounts stated, and no Party is required to itemize or
prove the particular expenses reimbursed or costs contributed to
in order to be entitled to the payment stipulated. Fording and
New Fordng shall not be obligated to pay any more than the amount
stipulated regardless of the expenses and costs actually incurred
by a Party. The manner of payment shall be structured to maximize
tax efficiency for Fording without prejudice for the other
Parties.
The Parties agree that the transactions set forth in items (b) through (h) and
item (j) above will be undertaken in accordance with the Amended Arrangement.
2.4 Related Agreements
At the Closing Time:
(a) Each of the Parties will enter into and deliver or cause its
respective Affiliates or associates, as appropriate, to enter and
deliver, one to the others, the Transaction Agreements to which
it or its Affiliates or associates is a Party;
(b) New Fording, on behalf of the Partnership, and Westshore will
enter into, and deliver, one to the other, the Terminal
Agreement; and
(c) If not previously formed, the Fund will be formed pursuant to a
trust indenture in accordance with the Trust Indenture Term Sheet
attached to this Agreement as Schedule 2.4.
2.5 Public Announcement
Immediately upon signing of this Agreement, the Parties shall jointly issue for
public dissemination the press release attached to this Agreement as Schedule
2.5 and shall file such press release with the TSX and in prescribed form with
the U.S. Securities and Exchange Commission and each Party (other than OTPP)
shall file, as required, on a timely basis, a material change report in
prescribed form with the Canadian Securities Regulatory Authorities.
2.6 Implementation Steps for Fording
Fording shall, except to the extent that the Board of Directors has changed its
recommendation in respect of the Transaction, do the following:
(a) mail the Further Supplement to Securityholders in accordance with
the Interim Order and applicable Laws;
(b) subject to the Interim Order, hold the Fording Meeting in a
timely fashion for the purpose of considering the Resolutions,
and for any other proper purpose as may be set out in the notice
for such meeting and conduct such meeting in accordance with the
Interim Order, applicable Laws and Fording's by-laws;
(c) use commercially reasonable efforts to solicit from the
Securityholders proxies in favour of the approval of the
Resolutions, as applicable, and take all other action that is
necessary or desirable to secure the approval of the Resolutions
by the Securityholders, as applicable;
(d) subject to obtaining the approvals as are required by the Interim
Order, apply to the Court for the Final Order and diligently
pursue its issuance; and
(e) subject to obtaining the Final Order and the satisfaction or
waiver of the other conditions herein contained in favour of each
Party, on the date contemplated in Section 2.8, 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 CBCA to give effect to
the Transaction and diligently pursue such endorsement and
filing.
2.7 Support of Transaction
Fording represents and warrants to Teck, Westshore, Sherritt and OTPP that:
(a) it has received the oral opinion of RBC (the "RBC Fairness
Opinion") that, as of the date hereof, the consideration to
Shareholders under the Amended Arrangement is fair from a
financial point of view to Shareholders;
(b) subject to the provisions of Section 4.4 relating to the
existence of a Superior Proposal and provided that RBC has
delivered and not withdrawn the RBC Fairness Opinion, each
director of Fording has advised that he intends to vote all
Common Shares held by him in favour of the Amended Arrangement
and will so represent in the Further Supplement;
(c) subject to the provisions of Section 4.4 relating to the
existence of a Superior Proposal and provided that RBC has
delivered and not withdrawn the RBC Fairness Opinion, the Board
of Directors (i) has advised that they will unanimously recommend
acceptance of the Amended Arrangement to Securityholders and will
so represent in the Further Supplement; and (ii) will include a
statement in the Further Supplement that the Amended Arrangement
is fair to Securityholders and is in the best interests of
Fording.
2.8 Effective Date Matters
The Effective Date shall be not more than the 5th Business Day following the
later of the date of issuance of the Final Order (unless appealed, in which
case, the Effective Date shall be the date such appeal is dismissed or
withdrawn) and the date upon which the last Regulatory Approval is obtained, or
on such other date as the Parties agree. Closing shall take place at the offices
of Osler, Xxxxxx & Harcourt LLP in Calgary at 7:00 a.m. (Mountain Standard Time)
on the Effective Date or at such other place, date and time as the Parties shall
agree (the "Closing Time"). Each Party shall deliver, at the closing of the
Transaction, such customary certificates, resolutions and other customary
closing documents as may be required by the other Parties, acting reasonably.
2.9 Preparation of Filings, etc.
(a) Each Party shall furnish to the other Parties all information
that may be required (i) under applicable Laws for inclusion in
or filing with the Further Supplement or (ii) subject to any
contractual confidentiality restrictions which the Party has been
unable to obtain a waiver with respect thereto, in order to
implement the other actions described in Article 2. Each Party
covenants with and represents and warrants to the other Parties
that information to be furnished by it (to the best of its
knowledge in the case of information concerning its
securityholders and Affiliates) in connection with such Further
Supplement, actions or otherwise in connection with the
consummation of the Transaction will not contain any untrue
statement of a material fact or omit to state a material fact
required to be stated in any such document or which is 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. In particular, Teck shall provide Fording
with the Teck Mine Financial Statements and, if required, the
consent of its auditor in respect thereof for inclusion in the
Further Supplement, and Sherritt and OTPP shall provide Fording
with the Luscar New Financial Statements and the consents of the
auditors in respect thereof for inclusion in the Further
Supplement if Fording receives advice from its auditor and
counsel that such financial statements and consent are required
to be included in the Further Supplement.
(b) Each Party shall promptly notify the others if, at any time
before the Closing Time, it becomes aware that the Further
Supplement, an application for an order or any other document
described herein contains any untrue statement of a material fact
or omits to state a material fact required to be stated therein
or which is necessary to make the statements contained therein
not misleading in the light of the circumstances in which they
are made, or that otherwise requires an amendment or further
supplement to the Information Circular or such application or
other document. In any such event, each Party shall cooperate in
the preparation of any such supplement or amendment to the
Information Circular or such application or other document, as
required and as the case may be, and, if required, shall cause
the same to be distributed to Securityholders and/or filed with
the relevant Governmental Authorities.
ARTICLE 3
REPRESENTATIONS AND WARRANTIES
3.1 Representations and Warranties of Fording - General
Fording represents and warrants to and in favour of the other Parties as follows
and acknowledges that the other Parties are relying upon same in connection with
the transactions contemplated herein:
(a) Fording is a corporation incorporated and validly existing under
the Laws of Canada and has the corporate power to own or lease
its property, to carry on its business as now being conducted and
enter into this Agreement; each material subsidiary of Fording,
being for purposes hereof, each subsidiary whose total assets
constitute more than 10% of the consolidated assets of Fording or
whose total revenues constitute more than 10% of the consolidated
revenues of Fording, in each case as determined by reference to
the Fording Financial Statements (a "Fording Subsidiary"), is a
corporation incorporated and validly existing under the Laws of
its jurisdiction of incorporation and such subsidiary has the
corporate power to own or lease its property and to carry on its
business as now being conducted by it;
(b) Fording has all necessary corporate power and capacity to enter
into this Agreement and to carry out its obligations hereunder,
subject to Shareholder approval, the execution and delivery of
this Agreement and the consummation of the transactions
contemplated herein have been duly authorized by all necessary
corporate action on the part of Fording;
(c) this Agreement is a legal, valid and binding obligation of
Fording, enforceable against Fording in accordance with its
terms, subject, however, to limitations with respect to
enforcement imposed by Law in connection with bankruptcy or
similar proceedings and to the extent that equitable remedies
such as specific performance and injunction are in the discretion
of the court from which they are sought;
(d) the approval, execution and delivery of this Agreement by
Fording, the performance by it of its obligations under such
agreement and the completion of the Transaction, will not:
(i) result (with or without notice or the passage of time) in a
violation or breach of, require any consent to be obtained
under or give rise to any termination, purchase or sale
rights or payment obligation under any provision of:
(A) its certificate of incorporation, articles, by-laws or
other charter documents;
(B) any Laws (subject to obtaining the Regulatory
Approvals), except to the extent that the violation or
breach of, or failure to obtain any consent under, any
Laws would not, individually or in the aggregate,
reasonably be expected to prevent or delay the
Transaction or have a Material Adverse Effect on
Fording; or
(C) subject to obtaining the consents required by the CP
Arrangement Agreement, the Genesee Agreements, the CPR
Agreement, the FX Acknowledgments and the documents
disclosed as requiring consent in the Fording
Disclosure Letter, any contract, license, permit or
government grant to which Fording or any Fording
Subsidiary is a party or by which it is bound or
subject or is the beneficiary, except as would not,
individually or in the aggregate, reasonably be
expected to prevent or delay the Transaction or have a
Material Adverse Effect on Fording;
(ii) result in the imposition of any encumbrance, charge or lien
upon any of its assets or the assets of any Fording
Subsidiary except as would not, individually or in the
aggregate, reasonably be expected to prevent or delay the
Transaction or have a Material Adverse Effect on Fording; or
(iii) restrict, hinder, impair or limit the ability of Fording or
any Fording Subsidiary to carry on business in the manner in
which it is currently being carried on, except as would not,
individually or in the aggregate, reasonably be expected to
prevent or delay the Transaction or have a Material Adverse
Effect on Fording;
(e) Fording has prepared and filed all documents required to be filed
by it with the Alberta Securities Commission in connection with
its status as a "reporting issuer" under the Securities Act and
other applicable Laws, and with those other jurisdictions where
it is a reporting issuer or the equivalent as required to be
filed by it in connection with such status (collectively the
"Fording Disclosure Record"), and such documents, as of the date
they were filed, complied in all material respects with
applicable Laws and did not fail to state a material fact
required to be stated in order to make the statements contained
therein not misleading in light of the circumstances in which
they were made. No Material Adverse Change has occurred in
relation to Fording that is not disclosed in the Fording
Disclosure Record and Fording has not filed any confidential
material change reports as part of the Fording Disclosure Record
that continue to be confidential;
(f) except as has been disclosed in the Fording Disclosure Record, no
Person has any agreement, option, right or privilege (whether by
Law, pre-emptive or contractual) capable of becoming an
agreement, including convertible securities, options, warrants or
convertible obligations of any nature, for the purchase,
subscription, allotment or issuance of any unissued shares or
other securities of Fording or of any Fording Subsidiary except
for individuals granted Options prior to December 4, 2002 under
Fording's stock option plans and by virtue of this Agreement;
(g) the Fording Financial Statements have been prepared in accordance
with generally accepted accounting principles applied on a basis
consistent with prior periods, present fairly in all material
respects the assets, liabilities (whether accrued, absolute,
contingent or otherwise) and financial condition of Fording, on a
consolidated basis, as at the date thereof and the revenues,
earnings, and results of operations of Fording, on a consolidated
basis, for the periods presented;
(h) since December 31, 2001, and other than as disclosed in the
Fording Disclosure Letter, the Fording Disclosure Record or the
press release dated January 6, 2003 disclosed in the Westshore
Disclosure Letter, there has not been any Material Adverse Change
in the condition (financial or otherwise), assets, liabilities,
operations, earnings or business of Fording, on a consolidated
basis;
(i) except as has been disclosed in the Fording Disclosure Letter,
there is no suit, action or proceeding pending, or to the
knowledge of Fording, threatened against Fording or any Fording
Subsidiary that would materially impede Fording's ability to
complete the Transaction or that, individually or in the
aggregate, could reasonably be expected to have a Material
Adverse Effect on Fording, and there is no judgment, decree,
injunction, rule or order of any Governmental Authority with
jurisdiction over Fording or any Fording Subsidiary outstanding
against Fording or any Fording Subsidiary causing, or which in so
far as can reasonably be foreseen, in the future would materially
impede Fording's ability to complete the Transaction or that
would cause a Material Adverse Effect on Fording;
(j) except as disclosed in the Fording Disclosure Letter, there is no
environmental liability, nor factors likely to give rise to any
environmental liability, affecting any of the properties of
Fording or any Fording Subsidiary that individually or in the
aggregate, could reasonably be expected to have a Material
Adverse Effect on Fording taken as a whole and neither Fording
nor any Fording Subsidiary has violated or infringed any
Environmental Law now in effect except as would not, individually
or in the aggregate, reasonably be expected to have a Material
Adverse Effect on Fording; except as disclosed in the Fording
Disclosure Letter neither Fording nor any Fording Subsidiary has
violated or infringed any then current Environmental Law as
applied at that time, other than such violations or infringements
that, individually or in the aggregate, have not had and could
not reasonably be expected to have, a Material Adverse Effect on
Fording;
(k) except as disclosed in the Fording Disclosure Letter, each of
Fording and each Fording Subsidiary has good and marketable (and
in the case of equipment valid as opposed to marketable) title,
applying customary standards in the mining industry, to its
operating properties, equipment and mineral reserves and
resources (other than property as to which Fording or a Fording
Subsidiary is a lessee, in which case it has a valid leasehold
interest), except for such defects in title that individually or
in the aggregate, could not reasonably be expected to have a
Material Adverse Effect on Fording;
(l) the reserves and resources of Fording as set forth in the Fording
Annual Information Form, were prepared in accordance with
accepted engineering practices and were, at such date, in
compliance in all material respects with the requirements
applicable to the presentation of such reserves and resources in
documents filed with the Alberta Securities Commission, including
without limitation, the provisions of National Instrument 43-101;
(m) each of Fording and each Fording Subsidiary has all permits,
licences, certificates of authority, orders and approvals of, and
has made all filings, applications and registrations with,
applicable Governmental Authorities that are required in order to
permit it to carry on its business as presently conducted, except
for such permits, licences, certificates, orders, filings,
applications and registrations, the failure to have or make,
individually or in the aggregate, have not had and could not
reasonably be expected to have, a Material Adverse Effect on
Fording;
(n) each of Fording and each Fording Subsidiary has its assets
insured against loss or damage as is appropriate to its business
and assets, in such amounts and against such risks as are
customarily carried and insured against by owners of comparable
businesses and assets, and such insurance coverages will be
continued in full force and effect to and including the Effective
Date, other than those insurance coverages in respect of which
the failure to continue in full force and effect could not
reasonably be expected to have a Material Adverse Effect on
Fording;
(o) each of Fording and each Fording Subsidiary has duly filed on a
timely basis all material tax returns required to be filed by it
and has paid all taxes which are due and payable and has paid all
assessments and reassessments, and all other taxes, governmental
charges, penalties, interest and fines due and payable on or
before the date hereof, in each case, of a material nature, and
adequate provision has been made for taxes payable for the
current period for which tax returns are not yet required to be
filed; except as has been disclosed in the Fording Disclosure
Letter, there are no material actions, suits, or claims asserted
or assessed against Fording or any Fording Subsidiary in respect
of taxes, governmental charges or assessments, nor any material
matters under discussion with the CCRA or any Governmental
Authority relating to taxes, governmental charges or assessments
asserted by such Governmental Authority;
(p) except as discussed in the Fording Disclosure Letter, the
business of Fording and the business of each Fording Subsidiary
is being and has been conducted in all material respects in
compliance with all applicable Laws, regulations and ordinances
of all Governmental Authorities having jurisdiction, except where
the failure to comply has not been and would not be reasonably
likely, individually or in the aggregate, to have a Material
Adverse Effect on Fording; neither Fording nor any Fording
Subsidiary has been notified by any Governmental Authority of any
investigation with respect to it that is pending or threatened,
nor has any Governmental Authority notified Fording or any such
subsidiary of such Governmental Authority's intention to commence
or to conduct any investigation that would be reasonably likely
to have a Material Adverse Effect on Fording;
(q) other than as set forth in the Fording Disclosure Letter and
other than as contemplated herein, neither Fording nor any of its
Affiliates is a party to or bound or affected by any commitment,
agreement or document containing any covenant expressly limiting
its freedom to compete in any line of business, other than such
restrictive covenants, which individually or in the aggregate,
directly or indirectly, have not had or could not reasonably be
expected to have a Material Adverse Effect on Fording;
(r) except as disclosed in the Fording Disclosure Letter, the Fording
Contributed Assets are being and have been operated in all
material respects in compliance with all applicable Laws,
regulations and ordinances of all authorities having
jurisdiction, except where the failure to comply has not been and
would not be reasonably likely, individually or in the aggregate,
to have a Material Adverse Effect on Fording or the Fording
Contributed Assets; Fording has not been notified by any
Governmental Authority of any investigation relating to the
Fording Contributed Assets that is pending or threatened, nor has
any Governmental Authority notified Fording of such Governmental
Authority's intention to commence or to conduct any investigation
relating to the Fording Contributed Assets;
(s) except as set out in the Fording Disclosure Letter or for
exceptions that could not, individually or in the aggregate, be
reasonably expected to have a Material Adverse Effect on Fording:
(i) the Fording Benefit Plans comply in all respects with all
applicable Laws and such plans have been administered in
compliance with applicable Laws and their terms;
(ii) none of the Fording Benefit Plans, other than plans which
provide only monetary retirement payments in accordance with
the terms of such plans, provides benefits beyond retirement
or other termination of service to Fording employees or
former Fording employees or to the beneficiaries or
dependants of such employees;
(iii) all benefits accrued under the Fording Benefit Plans have
been properly accrued on the Fording Financial Statements in
accordance with generally accepted accounting principles;
and
(iv) no event has occurred and no condition or circumstance
exists that has resulted in or could reasonably be expected
to result in any Fording Benefit Plan being ordered, or
required to be, terminated or wound up in whole or in part,
having its registration under applicable Laws refused or
revoked, being placed under the administration of any
trustee or receiver or Governmental Authority or being
required to pay any material taxes, penalties, payments or
levies under applicable Laws;
(t) except as disclosed in the Fording Disclosure Letter or for
exceptions that could not, individually or in the aggregate, be
reasonably expected to have a Material Adverse Effect on Fording,
to the knowledge of Fording there are in respect of any of
Fording's employees who will be made available to the Partnership
on an agency basis:
(i) no legal proceedings involving governmental tribunals;
(ii) no collective agreements currently under negotiation; and
(iii) no labour disputes, grievances, strikes or lockouts,
pending or threatened;
(u) the assets set forth under the heading "Assets Conveyed" in
Schedule 2.3(e) are all the assets comprising the Fording
Contributed Assets; and
(v) except as set out in the Fording Disclosure Letter, Fording
is up to date in respect of all of its reclamation bonding
requirements in all material respects.
3.2 Representations and Warranties of Fording - Prairie Operations
Fording represents and warrants to and in favour of OTPP and Sherritt as follows
and acknowledges that OTPP and Sherritt are relying upon same in connection with
the transactions contemplated herein:
(a) except as disclosed in the Fording Disclosure Letter, there is no
environmental liability, nor factors likely to give rise to any
environmental liability, affecting the Prairie Operations of
Fording that individually or in the aggregate, could reasonably
be expected to have a Material Adverse Effect on the Prairie
Operations and neither Fording nor any Fording Subsidiary has
violated or infringed, in respect of the Prairie Operations, any
Environmental Law now in effect except as would not, individually
or in the aggregate, reasonably be expected to have a Material
Adverse Effect on the Prairie Operations; except as disclosed in
the Fording Disclosure Letter neither Fording nor any Fording
Subsidiary has violated or infringed, in respect of the Prairie
Operations, any then current Environmental Law as applied at that
time, other than such violations or infringements that,
individually or in the aggregate, have not had and could not
reasonably be expected to have, a Material Adverse Effect on the
Prairie Operations;
(b) except as disclosed in the Fording Disclosure Letter, each of
Fording and each Fording Subsidiary has good and marketable (and
in the case of equipment valid as opposed to marketable) title,
applying customary standards in the mining industry, to its
operating properties and equipment and mineral reserves and
resources included in the Prairie Operations (other than property
as to which Fording or a Fording Subsidiary is a lessee, in which
case it has a valid leasehold interest), except for such defects
in title that individually or in the aggregate, could not
reasonably be expected to have a Material Adverse Effect on the
Prairie Operations;
(c) the reserves and resources of Fording included in the Prairie
Operations as set forth in the Fording Annual Information Form
were prepared in accordance with accepted engineering practices
and were, at such date, in compliance in all material respects
with the requirements applicable to the presentation of such
reserves and resources in documents filed with the Alberta
Securities Commission, including without limitation, the
provisions of National Instrument 43-101;
(d) each of Fording and each Fording Subsidiary has all permits,
licences, certificates of authority, orders and approvals of, and
has made all filings, applications and registrations with,
applicable Governmental Authorities that are required in order to
permit it to carry on its business as presently conducted with
respect to its Prairie Operations, except for such permits,
licences, certificates, orders, filings, applications and
registrations, the failure to have or make, individually or in
the aggregate, have not had and could not reasonably be expected
to have, a Material Adverse Effect on the Prairie Operations;
(e) each of Fording and each Fording subsidiary has its assets
included in the Prairie Operations insured against loss or damage
as is appropriate to its business and assets, in such amounts and
against such risks as are customarily carried and insured against
by owners of comparable businesses and assets, and such insurance
coverages will be continued in full force and effect to and
including the Effective Date, other than those insurance
coverages in respect of which the failure to continue in full
force and effect could not reasonably be expected to have a
Material Adverse Effect on the Prairie Operations;
(f) except as has been disclosed in the Fording Disclosure Letter,
there is no suit, action or proceeding pending, or to the
knowledge of Fording, threatened against Fording or any
Subsidiary of Fording that would impede Fording's ability to
complete the Transaction or that, individually or in the
aggregate, could reasonably be expected to have a Material
Adverse Effect on the Prairie Operations, and there is no
judgment, decree, injunction, rule or order of any Governmental
Authority with jurisdiction over Fording or any Subsidiary
outstanding against Fording or any subsidiary causing, or which
in so far as can reasonably be foreseen, in the future would
materially impede Fording's ability to complete the Transaction
or that would cause, a Material Adverse Effect on Fording or the
Prairie Operations;
(g) with respect to its Prairie Operations, other than as set forth
in the Fording Disclosure Letter and other than as contemplated
herein, neither Fording nor any of its Affiliates is a party to
or bound or affected by any commitment, agreement or document
containing any covenant expressly limiting its freedom to compete
in any line of business, other than such restrictive covenants,
which individually or in the aggregate, directly or indirectly,
have not had or could not reasonably be expected to have a
Material Adverse Effect on the Prairie Operations;
(h) except as disclosed in the Fording Disclosure Letter, the Prairie
Operations are being and have been operated in all material
respects in compliance with all applicable Laws, regulations and
ordinances of all authorities having jurisdiction, except where
the failure to comply has not been and would not be reasonably
likely, individually or in the aggregate, to have a Material
Adverse Effect on the Prairie Operations; Fording has not been
notified by any Governmental Authority of any investigation
relating to the Prairie Operations that is pending or threatened,
nor has any Governmental Authority notified Fording of such
Governmental Authority's intention to commence or to conduct any
investigation relating to the Prairie Operations;
(i) except as set out in the Fording Disclosure Letter or for
exceptions that could not, individually or in the aggregate, be
reasonably expected to have a Material Adverse Effect on the
Prairie Operations in so far as they apply to the Prairie
Operations:
(i) the Fording Prairie Benefit Plans comply in all respects
with all applicable Laws and such plans have been
administered in compliance with applicable Laws and their
terms;
(ii) none of the Fording Prairie Benefit Plans, other than plans
which provide only monetary retirement payments in
accordance with the terms of such plans, provides benefits
beyond retirement or other termination of service to Fording
employees or former Fording employees or to the
beneficiaries or dependants of such employees;
(iii) all benefits accrued under the Fording Prairie Benefit
Plans have been properly accrued on the Fording Financial
Statements in accordance with generally accepted accounting
principles;
(iv) no event has occurred and no condition or circumstance
exists that has resulted in or could reasonably be expected
to result in any Fording Prairie Benefit Plan being ordered,
or required to be, terminated or wound up in whole or in
part, having its registration under applicable Laws refused
or revoked, being placed under the administration of any
trustee or receiver or Governmental Authority or being
required to pay any material taxes, penalties, payments or
levies under applicable Laws; and
(v) all of the Fording Prairie Benefit Plans are either (A)
fully insured or (B) fully funded in accordance with
applicable Laws on a going concern solvency basis and
winding-up solvency basis;
(j) except as disclosed in the Fording Disclosure Letter or for
exceptions that could not, individually or in the aggregate, be
reasonably expected to have a Material Adverse Effect on the
Prairie Operations, to the knowledge of Fording there are in
respect of any of Fording's employees employed in connection with
the Prairie Operations:
(i) no legal proceedings involving governmental tribunals;
(ii) no collective agreements currently under negotiation; and
(iii) no labour disputes, grievances, strikes or lockouts,
pending or threatened.
(k) the assets set forth under the heading "Purchased Assets" in
Schedule 2.3(c) are all the assets comprising Fording's Prairie
Operations; and
(l) since December 31, 2001, and other than as disclosed in the
Fording Disclosure Letter or the Fording Disclosure Record, there
has not been any Material Adverse Change in the condition
(financial or otherwise), assets, liabilities, operations,
earnings on business of the Prairie Operations, on a consolidated
basis.
3.3 Representations and Warranties of Teck
Teck represents and warrants to and in favour of the other Parties as follows
and acknowledges that the other Parties are relying upon same in connection with
the transactions contemplated herein:
(a) Teck is a corporation incorporated and validly existing under the
Laws of Canada and has the corporate power to own or lease its
property, to carry on its business as now being conducted;
(b) Teck has all necessary corporate power, authority and capacity to
enter into this Agreement and to carry out its obligations
hereunder. The execution and delivery of this Agreement and the
consummation of the transactions contemplated herein have been
duly authorized by all necessary corporate action on the part of
Teck; without limiting the generality of the foregoing, Teck has
the necessary corporate power, authority and capacity to enter
into this Agreement and to carry out its obligations hereunder,
on a basis which does not require Teck to seek the prior approval
of its shareholders;
(c) this Agreement is a legal, valid and binding obligation of Teck,
enforceable against Teck in accordance with its terms, subject,
however, to limitations with respect to enforcement imposed by
Law in connection with bankruptcy or similar proceedings and to
the extent that equitable remedies such as specific performance
and injunction are in the discretion of the court from which they
are sought;
(d) the approval, execution and delivery of this Agreement by Teck,
the performance by it of its obligations under such agreement and
the completion of the Transaction, will not:
(i) result (with or without notice or the passage of time) in a
violation or breach of, require any consent to be obtained
under or give rise to any termination, purchase or sale
rights or payment obligation under any provision of:
(A) its certificate of incorporation, articles, by-laws or
other charter documents;
(B) any Laws (subject to obtaining the Regulatory
Approvals), except to the extent that the violation or
breach of, or failure to obtain any consent under, any
Laws would not, individually or in the aggregate,
reasonably be expected to prevent or delay the
Transaction or have a Material Adverse Effect on the
Teck Contributed Assets; or
(C) any contract, license, permit or government grant to
which Teck is a party or by which it is bound or
subject or is the beneficiary, except as disclosed in
the Teck Disclosure Letter or as would not,
individually or in the aggregate, reasonably be
expected to prevent or delay the Transaction or have a
Material Adverse Effect on the Teck Contributed Assets;
(ii) result in the imposition of any encumbrance, charge or lien
upon any of its assets except as would not, individually or
in the aggregate, reasonably be expected to prevent or delay
the Transaction or have a Material Adverse Effect on the
Teck Contributed Assets; or
(iii) restrict, hinder, impair or limit the ability of any Teck
Contributed Assets to be operated in the manner in which
they are currently being operated, except as would not,
individually or in the aggregate, reasonably be expected to
prevent or delay the Transaction or have a Material Adverse
Effect on the Teck Contributed Assets.
(e) the Teck Mine Financial Statements have been prepared in
accordance with generally accepted accounting principles applied
on a basis consistent with prior periods, present fairly in all
material respects the assets, liabilities (whether accrued,
absolute, contingent or otherwise) and financial condition of the
Teck Contributed Assets as at the date thereof and the revenues,
earnings, and results of operations of the Teck Contributed
Assets for the periods presented;
(f) no Material Adverse Change has occurred in relation to the Teck
Contributed Assets that is not disclosed in documents required to
be filed by Teck with the British Columbia Securities Commission
in connection with its status as a "reporting issuer" under the
British Columbia Securities Act and other applicable Laws, and
with those other jurisdictions where it is a reporting issuer or
the equivalent as required to be filed by it in connection with
such status (collectively the "Teck Disclosure Record"), and Teck
has, in respect of all disclosure relating to the Teck
Contributed Assets complied in all material respects with
applicable Laws and has not failed to state a material fact
required to be stated in order to make the statements contained
therein not misleading in light of the circumstances in which
they were made. Teck has not filed any confidential material
change reports relating in any way to the Teck Contributed Assets
as part of the Teck Disclosure Record that continue to be
confidential;
(g) since December 31, 2001, and other than as disclosed in the Teck
Disclosure Letter or the Teck Disclosure Record, there has not
been any Material Adverse Change in the condition (financial or
otherwise), assets, liabilities, operations, earnings or business
of Teck or the Teck Contributed Assets;
(h) there is no suit, action or proceeding pending, or to the
knowledge of Teck, threatened against Teck or any subsidiary of
Teck that would impede Teck's ability to complete the Transaction
or that, individually or in the aggregate, could reasonably be
expected to have a Material Adverse Effect on the Teck
Contributed Assets, and there is no judgment, decree, injunction,
rule or order of any Governmental Authority with jurisdiction
over Teck or any subsidiary outstanding against Teck or any
subsidiary causing, or which in so far as can reasonably be
foreseen, in the future would materially impede Teck's ability to
complete the Transaction or that would cause, a Material Adverse
Effect on Teck or the Teck Contributed Assets;
(i) except as disclosed in the Teck Disclosure Letter, there is no
environmental liability, nor factors likely to give rise to any
environmental liability, affecting the Teck Contributed Assets
that individually or in the aggregate, could reasonably be
expected to have a Material Adverse Effect on Teck or the Teck
Contributed Assets, and the operation of the Teck Contributed
Assets by Teck has not violated or infringed any Environmental
Law now in effect except as would not, individually or in the
aggregate, reasonably be expected to have a Material Adverse
Effect on Teck or the Teck Contributed Assets; the operation of
the Teck Contributed Assets by Teck has not violated or infringed
any then current Environmental Law as applied at that time, other
than such violations or infringements that, individually or in
the aggregate, have not had and could not reasonably be expected
to have, a Material Adverse Effect on Teck or the Teck
Contributed Assets;
(j) except as disclosed in the Teck Disclosure Letter, Teck has good
and marketable (and in the case of equipment valid as opposed to
marketable) title to the Teck Contributed Assets, applying
customary standards in the mining industry, including its
operating properties, equipment and mineral reserves and
resources (other than leasehold property as to which Elkview is a
lessee, in respect of which Elkview has a valid leasehold
interest), except for such defects in title that individually or
in the aggregate, could not reasonably be expected to have a
Material Adverse Effect on Teck or the Teck Contributed Assets;
other than the Bullmoose assets, which are owned in a joint
venture, Teck is exclusively entitled to possess and dispose of
the Teck Contributed Assets;
(k) the reserves and resources of the Teck Contributed Assets as set
forth in the Teck Annual Information Form were prepared in
accordance with accepted engineering practices and were, at such
date, in compliance in all material respects with the
requirements applicable to the presentation of such reserves and
resources in documents filed with the British Columbia Securities
Commission, including without limitation, the provisions of
National Instrument 43-101;
(l) except as disclosed in the Teck Disclosure Letter, Teck has all
permits, licences, certificates of authority, orders and
approvals of, and has made all filings, applications and
registrations with, applicable Governmental Authorities that are
required in order to permit it to carry on its business in
respect of the Teck Contributed Assets as presently conducted,
except for such permits, licences, certificates, orders, filings,
applications and registrations, the failure to have or make,
individually or in the aggregate, have not had and could not
reasonably be expected to have, a Material Adverse Effect on Teck
or the Teck Contributed Assets;
(m) each of Teck and each subsidiary of Teck has duly filed on a
timely basis all material tax returns required to be filed by it
and has paid all taxes which are due and payable and has paid all
assessments and reassessments, and all other taxes, governmental
charges, penalties, interest and fines due and payable on or
before the date hereof, in each case, of a material nature, and
adequate provision has been made for taxes payable for the
current period for which tax returns are not yet required to be
filed; there are no material actions, suits, or claims asserted
or assessed against Teck or any subsidiary of Teck in respect of
taxes, governmental charges or assessments, nor any material
matters under discussion with the CCRA or any Governmental
Authority relating to taxes, governmental charges or assessments
asserted by such Governmental Authority except as would not,
individually or in the aggregate, reasonably be expected to
impede Teck's ability to consummate the Transaction or to create
a lien or encumbrance on the Teck Contributed Assets;
(n) the Teck Contributed Assets are being and have been operated in
all material respects in compliance with all applicable Laws,
regulations and ordinances of all authorities having
jurisdiction, except where the failure to comply has not been and
would not be reasonably likely, individually or in the aggregate,
to have a Material Adverse Effect on Teck or the Teck Contributed
Assets; Teck has not been notified by any Governmental Authority
of any investigation relating to the Teck Contributed Assets that
is pending or threatened, nor has any Governmental Authority
notified Teck of such Governmental Authority's intention to
commence or to conduct any investigation relating to the Teck
Contributed Assets;
(o) except as set out in the Teck Disclosure Letter or for exceptions
that could not, individually or in the aggregate, be reasonably
expected to have a Material Adverse Effect on Teck or the Teck
Contributed Assets:
(i) the Teck Mine Benefit Plans comply in all respects with all
applicable Laws and such plans have been administered in
compliance with applicable Laws and their terms;
(ii) none of the Teck Mine Benefit Plans, other than plans which
provide only monetary retirement payments in accordance with
the terms of such plans, provides benefits beyond retirement
or other termination of service to Teck Mine Employees or
former Teck Mine Employees or to the beneficiaries or
dependants of such employees;
(iii) all benefits accrued under the Teck Mine Benefit Plans have
been properly accrued on the Teck Mine Financial Statements
in accordance with generally accepted accounting principles;
and
(iv) no event has occurred and no condition or circumstance
exists that has resulted in or could reasonably be expected
to result in any Teck Mine Benefit Plan being ordered, or
required to be, terminated or wound up in whole or in part,
having its registration under applicable Laws refused or
revoked, being placed under the administration of any
trustee or receiver or Governmental Authority or being
required to pay any material taxes, penalties, payments or
levies under applicable Laws;
(p) with respect to Teck Mine Employees:
(i) the Teck Disclosure Letter sets forth as of December 3, 2002
a list of all Teck Mine Employees, together with the titles
and material terms of employment, including service date,
current wages, salaries or hourly rate of pay of, and bonus
(whether monetary or otherwise) paid or payable to each such
Teck Mine Employee and the date upon which such wage,
salary, rate or bonus became effective, and there has been
no material change in respect of such matters;
(ii) the Teck Disclosure Letter sets forth a complete list of all
collective agreements to which any of the Teck Mine
Employees are subject;
(iii) except as set forth at item (ii) above and except for those
written or oral employment contracts with salaried Teck Mine
Employees identified in the Teck Disclosure Letter, there
are no written or oral contracts of employment entered into
with any employees that will be binding upon the Partnership
upon completion of the Transaction and that are not
terminable on the giving of reasonable notice in accordance
with applicable Laws;
(iv) except for the Teck Mine Benefits Plans, there are no
pension or benefit plans covering the Teck Mine Employees
and no employment policies or plans, including policies or
plans regarding incentive compensation, stock options,
severance pay or terms or conditions upon which Teck Mine
Employees may be terminated, which will be binding upon the
Partnership or FCL following completion of the Transaction;
(v) the amount of salaries, bonuses, and other remuneration
including vacation pay and unpaid earned wages of the Teck
Mine Employees as of the Effective Date will have been paid
in full, and there is not currently and will not at the
Effective Time be any outstanding assessment, order,
certificate, lien or judgment under any employment
standards, health and safety or other employment
legislation;
(vi) the records maintained by Teck and which will be delivered
to Fording at the Closing Time relating to the Teck Mine
Employees accurately set out all banked vacation
entitlement, regular and supplementary vacation pay, banked
and deferred overtime compensation, time-off entitlement,
accumulated time-off entitlement, severance and retirement
benefits and any other emoluments or benefits due or
accruing; and
(vii) except for exceptions that could not, individually or in
the aggregate, be reasonably expected to have a Material
Adverse Effect on the Teck Contributed Assets, to the
knowledge of Teck, there are in respect of the Teck Mine
Employees:
(A) no legal proceedings involving governmental tribunals;
(B) no collective agreements currently under negotiation;
and
(C) no labour disputes, grievances, strikes or lockouts,
pending or threatened.
(q) Teck has available to it sufficient cash resources or committed
credit facilities in order to allow it to complete its
obligations hereunder;
(r) except as herein contemplated, Teck has not entered into any
agreement or understanding with any Person regarding the manner
in which it will exercise the rights to any Units of the Fund
which it will hold;
(s) other than as contemplated herein, neither Teck nor any of its
Affiliates is a party to or bound or affected by any commitment,
agreement or document containing any covenant expressly limiting
its freedom to compete in any line of business other than such
restrictive covenants which individually or in the aggregate,
directly or indirectly, have not had or could not reasonably be
expected to have a Material Adverse Effect on the Teck
Contributed Assets;
(t) the Teck Contributed Assets are insured against loss or damage as
is appropriate to such assets, in such amounts and against such
risks as are customarily carried and insured against by owners of
comparable businesses and assets, and such insurance coverages
will be continued in full force and effect to and including the
Effective Date, other than those insurance coverages in respect
of which the failure to continue in full force and effect could
not reasonably be expected to have a Material Adverse Effect on
the Teck Contributed Assets;
(u) the Teck Contributed Assets (other than those owned by Quintette
Coal Partnership and Teck-Bullmoose Coal Inc.) comprise all
assets used by Teck to carry on the business conducted by Teck at
the Elkview Mine; and
(v) except as set out in the Teck Disclosure Letter, Teck is up to
date in all of its reclamation bonding in all material respects.
3.4 Representations and Warranties of Westshore
Westshore represents and warrants to and in favour of the other Parties
as follows and acknowledges that the other Parties are relying upon
same in connection with the transactions contemplated herein:
(a) Westshore is a trust validly existing under the Laws of British
Columbia and has the power to own or lease its property, to carry
on its business as now being conducted;
(b) Westshore has all necessary power, authority and capacity to
enter into this Agreement and to carry out its obligations
hereunder. The execution and delivery of this Agreement and the
consummation of the transactions contemplated herein have been
duly authorized by all necessary action on the part of Westshore;
without limiting the generality of the foregoing, Westshore has
the necessary power, authority and capacity to enter into this
Agreement and to carry out its obligations hereunder, on a basis
which does not require Westshore to seek the prior approval of
its securityholders;
(c) this Agreement is a legal, valid and binding obligation of
Westshore, enforceable against Westshore in accordance with its
terms subject, however, to limitations with respect to
enforcement imposed by Law in connection with bankruptcy or
similar proceedings and to the extent that equitable remedies
such as specific performance and injunction are in the discretion
of the court from which they are sought;
(d) the approval, execution and delivery of this Agreement by
Westshore, the performance by it of its obligations under such
agreement and the completion of the Transaction, will not:
(i) result (with or without notice or the passage of time) in a
violation or breach of, require any consent to be obtained
under or give rise to any termination, purchase or sale
rights or payment obligation under any provision of:
(A) its declaration of trust or other charter documents;
(B) any Laws (subject to obtaining the Regulatory
Approvals), except to the extent that the violation or
breach of, or failure to obtain any consent under, any
Laws would not, individually or in the aggregate,
reasonably be expected to prevent or delay the
Transaction; or
(C) any contract, license, permit or government grant to
which Westshore is party or by which it is bound or
subject or is the beneficiary, except as would not,
individually or in the aggregate, reasonably be
expected to prevent or delay the Transaction;
(ii) result in the imposition of any encumbrance, charge or lien
upon any of its assets except as would not, individually or
in the aggregate, reasonably be expected to prevent or delay
the Transaction; or
(iii) restrict, hinder, impair or limit the ability of Westshore
to carry on business as and where it is now being carried
on, except as would not, individually or in the aggregate,
reasonably be expected to prevent or delay the Transaction;
(e) except as disclosed in the Westshore Disclosure Letter, there is
no suit, action or proceeding pending, or to the knowledge of
Westshore, threatened against Westshore that would materially
impede Westshore's ability to complete the Transaction, and there
is no judgment, decree, injunction, rule or order of any
Governmental Authority with jurisdiction over Westshore
outstanding against Westshore causing, or which in so far as can
reasonably be foreseen, in the future would materially impede
Westshore's ability to complete the Transaction;
(f) Westshore has available to it sufficient cash resources or
committed credit facilities in order to allow it to complete its
obligations hereunder; and
(g) except as contemplated herein, Westshore has not entered into any
agreement or understanding with any Person regarding the manner
in which it will exercise the rights to any Units of the Fund
which it will hold.
3.5 Representations and Warranties of OTPP
OTPP represents and warrants to and in favour of the other Parties as
follows and acknowledges that the other Parties are relying upon same
in connection with the transactions contemplated herein:
(a) OTPP is a non-share capital corporation validly existing under
the Laws of Ontario and has the power to own or lease its
property, and to carry on its business as now being conducted;
(b) OTPP has all necessary corporate power, authority and capacity to
enter into this Agreement and to carry out its obligations
hereunder. The execution and delivery of this Agreement and the
consummation of the transactions contemplated herein have been
duly authorized by all necessary corporate action on the part of
OTPP; without limiting the generality of the foregoing, OTPP has
the necessary power, authority and capacity to enter into this
Agreement and to carry out its obligations hereunder, on a basis
which does not require OTPP to seek the prior approval of its
members;
(c) this Agreement is a legal, valid and binding obligation of OTPP,
enforceable against OTPP in accordance with its terms subject,
however, to limitations with respect to enforcement imposed by
Law in connection with bankruptcy or similar proceedings and to
the extent that equitable remedies such as specific performance
and injunction are in the discretion of the court from which they
are sought;
(d) the approval, execution and delivery of this Agreement by OTPP,
the performance by it of its obligations under such agreement and
the completion of the Transaction, will not:
(i) result (with or without notice or the passage of time) in a
violation or breach of or require any consent to be obtained
under or give rise to any termination, purchase or sale
rights or payment obligation under any provision of:
(A) its certificate of incorporation, articles, by-laws or
other charter documents;
(B) any Laws (subject to obtaining the Regulatory
Approvals), except to the extent that the violation or
breach of, or failure to obtain any consent under, any
Laws would not, individually or in the aggregate,
reasonably be expected to prevent or delay the
Transaction; or
(C) any contract, license, permit or government grant to
which OTPP is party or by which it is bound or subject
or is the beneficiary, except as would not,
individually or in the aggregate, reasonably be
expected to prevent or delay the Transaction;
(ii) result in the imposition of any encumbrance, charge or lien
upon any of its assets except as would not, individually or
in the aggregate, reasonably be expected to prevent or delay
the Transaction; or
(iii) restrict, hinder, impair or limit the ability of OTPP to
carry on business as and where it is now being carried on,
except as would not, individually or in the aggregate,
reasonably be expected to prevent or delay the Transaction;
(e) there is no suit, action or proceeding pending, or to the
knowledge of OTPP, threatened against OTPP that would materially
impede OTPP's ability to complete the Transaction, and there is
no judgment, decree, injunction, rule or order of any
Governmental Authority with jurisdiction over OTPP outstanding
against OTPP causing, or which in so far as can reasonably be
foreseen, in the future would materially impede OTPP's ability to
complete the Transaction;
(f) OTPP has available to it sufficient cash resources or committed
credit facilities in order to allow it to complete its
obligations hereunder; and
(g) except as contemplated herein, OTPP has not entered into any
agreement or understanding with any Person regarding the manner
in which it will exercise the rights to any Units of the Fund
which it will hold.
3.6 Representations and Warranties of Xxxxxxxx
Xxxxxxxx represents and warrants to and in favour of the other Parties
as follows and acknowledges that the other Parties are relying upon
same in connection with the transactions contemplated herein:
(a) Sherritt is a corporation validly existing under the Laws of New
Brunswick and has the power to own or lease its property, to
carry on its business as now being conducted;
(b) Sherritt has all necessary corporate power, authority and
capacity to enter into this Agreement and to carry out its
obligations hereunder; the execution and delivery of this
Agreement and the consummation of the transactions contemplated
herein have been duly authorized by all necessary corporate
action on the part of Sherritt; without limiting the generality
of the foregoing, Sherritt has the necessary power, authority and
capacity to enter into this Agreement and to carry out its
obligations hereunder, on a basis which does not require Sherritt
to seek the prior approval of its securityholders;
(c) this Agreement is a legal, valid and binding obligation of
Sherritt, enforceable against Sherritt in accordance with its
terms subject, however, to limitations with respect to
enforcement imposed by Law in connection with bankruptcy or
similar proceedings and to the extent that equitable remedies
such as specific performance and injunction are in the discretion
of the court from which they are sought;
(d) the approval, execution and delivery of this Agreement by
Sherritt, the performance by it of its obligations under such
agreement and the completion of the Transaction, will not:
(i) result (with or without notice or the passage of time) in a
violation or breach of or require any consent to be obtained
under or give rise to any termination, purchase or sale
rights or payment obligation under any provision of:
(A) its certificate of incorporation, articles, by-laws or
other charter documents;
(B) any Laws (subject to obtaining the Regulatory
Approvals), except to the extent that the violation or
breach of, or failure to obtain any consent under, any
Laws would not, individually or in the aggregate,
reasonably be expected to prevent or delay the
Transaction; or
(C) any contract, license, permit, government grant to
which Sherritt is party or by which it is bound or
subject or is the beneficiary, except as would not,
individually or in the aggregate, reasonably be
expected to prevent or delay the Transaction;
(ii) result in the imposition of any encumbrance, charge or lien
upon any of its assets except as would not, individually or
in the aggregate, reasonably be expected to prevent or delay
the Transaction; or
(iii) restrict, hinder, impair or limit the ability of Sherritt
to carry on business as and where it is now being carried
on, except as would not, individually or in the aggregate,
reasonably be expected to prevent or delay the Transaction;
(e) there is no suit, action or proceeding pending, or to the
knowledge of Sherritt, threatened against Sherritt that would
materially impede Sherritt's ability to complete the Transaction,
and there is no judgment, decree, injunction, rule or order of
any Governmental Authority with jurisdiction over Sherritt
outstanding against Sherritt causing, or which in so far as can
reasonably be foreseen, in the future would materially impede
Sherritt's ability to complete the Transaction;
(f) Sherritt has available to it sufficient cash resources or
committed credit facilities in order to allow it to complete its
obligations hereunder; and
(g) except as contemplated herein, Sherritt has not entered into any
agreement or understanding with any Person regarding the manner
in which it will exercise the rights to any Units of the Fund
which it will hold.
3.7 Representations and Warranties of OTPP and Sherritt Regarding Luscar
Contributed Assets
OTPP and Sherritt, jointly and severally, represent and warrant to and
in favour of the other Parties as follows and acknowledge that the
other Parties are relying upon same in connection with the
transactions contemplated herein:
(a) each entity that is controlled by Sherritt and OTPP which is a
seller of the Luscar Contributed Assets and each entity which
owns or has an interest in any part of the Luscar Contributed
Assets (the "Luscar Entities") is duly incorporated or created,
as applicable, organized and validly existing under the Laws of
the jurisdiction in which it is organized and each such entity
has the power to own or lease its property, to carry on its
business as now being conducted, to effect the terms of this
Agreement and to perform its obligations hereunder;
(b) the approval, execution and delivery of this Agreement by each of
OTPP and Sherritt, the performance by them of their obligations
hereunder and the completion of the Transaction, will not:
(i) result (with or without notice or the passage of time) in a
violation or breach of, require any consent to be obtained
under or give rise to any termination, purchase or sale
rights or payment obligation under any provision of:
(A) the constating documents of the Luscar Entities or the
Luscar/CONSOL Joint Ventures;
(B) any Laws (subject to obtaining the Regulatory
Approvals), except to the extent that the violation or
breach of, or failure to obtain any consent under, any
Laws would not, individually or in the aggregate,
reasonably be expected to prevent or delay the
Transaction or have a Material Adverse Effect on the
Luscar Contributed Assets; or
(C) any contract, license, permit, government grant to
which a Luscar Entity or the Luscar/CONSOL Joint
Ventures is a party or by which it is bound or subject
or is the beneficiary, except as disclosed in the
Luscar Disclosure Letter as would not, individually or
in the aggregate, reasonably be expected to prevent or
delay the Transaction or have a Material Adverse Effect
on the Luscar Contributed Assets;
(ii) result in the imposition of any encumbrance, charge or lien
upon any of the Luscar Contributed Assets except as would
not, individually or in the aggregate, reasonably be
expected to prevent or delay the Transaction or have a
Material Adverse Effect on the Luscar Contributed Assets; or
(iii) restrict, hinder, impair or limit the ability of any Luscar
Contributed Assets to be operated in the manner in which
they are currently being operated, except as would not,
individually or in the aggregate, reasonably be expected to
prevent or delay the Transaction or have a Material Adverse
Effect on the Luscar Contributed Assets.
(c) the Luscar Financial Statements have been prepared in accordance
with generally accepted accounting principles applied on a basis
consistent with prior periods, present fairly in all material
respects the assets, liabilities (whether accrued, absolute,
contingent or otherwise) and financial condition of the business
disclosed therein which includes the Luscar Contributed Assets,
on a consolidated basis, as at the date thereof and the revenues,
earnings, and results of operations of the business disclosed
therein, which includes Luscar's share of the Luscar Contributed
Assets, for the periods presented; the Luscar New Financial
Statements will be prepared in accordance with generally accepted
accounting principles applied on a basis consistent with prior
periods, will present fairly in all material respects the assets,
liabilities (whether accrued, absolute, contingent or otherwise)
and financial condition of the Luscar Contributed Assets, on a
combined basis, as at the date thereof and the revenues, earnings
and results of operations of the Luscar Contributed Assets for
the periods presented;
(d) no Material Adverse Change has occurred in relation to the Luscar
Contributed Assets that is not disclosed in documents filed by
SCAI or required to be filed by any Luscar Entity or Sherritt
with any securities regulatory authorities in connection with its
status as a "reporting issuer" under applicable Laws, including
U.S. securities laws, and with those other jurisdictions where
any Luscar Entity or Sherritt is a reporting issuer or the
equivalent as required to be filed by it in connection with such
status (collectively the "Luscar Disclosure Record"), and OTPP,
Sherritt and Luscar have, in respect of all disclosure relating
to the Luscar Contributed Assets and OTPP and Sherritt in respect
of the SCAI Offer in so far as it refers to the Luscar
Contributed Assets complied in all material respects with
applicable Laws and has not failed to state a material fact
required to be stated in order to make the statements contained
therein not misleading in light of the circumstances in which
they were made. Sherritt and Luscar have not filed any
confidential material change reports relating in any way to the
Luscar Contributed Assets as part of the Luscar Disclosure Record
that continue to be confidential;
(e) since December 31, 2001, and other than as disclosed in the
Luscar Disclosure Letter, there has not been any Material Adverse
Change in the condition (financial or otherwise), assets,
liabilities, operations, earnings or business of the
Luscar/CONSOL Joint Ventures, the Luscar Entities or the Luscar
Contributed Assets as a whole;
(f) except as has been disclosed in the Luscar Disclosure Letter,
there is no suit, action or proceeding pending, or to the
knowledge of OTPP or Sherritt, threatened against OTPP, Sherritt,
the Luscar/CONSOL Joint Ventures and any Luscar Entity that would
impede OTPP, Sherritt and any Luscar Entity's ability to complete
the Transaction or that, individually or in the aggregate, could
reasonably be expected to have a Material Adverse Effect on the
Luscar Contributed Assets, and there is no judgment, decree,
injunction, rule or order of any Governmental Authority with
jurisdiction over any of OTPP, Sherritt, the Luscar/CONSOL Joint
Ventures and any Luscar Entity outstanding against any of OTPP,
Sherritt, the Luscar/CONSOL Joint Ventures and any Luscar Entity
causing, or which in so far as can reasonably be foreseen, in the
future would materially impede the completion of the Transaction
or that would cause, a Material Adverse Effect on the Luscar
Contributed Assets;
(g) except as disclosed in the Luscar Disclosure Letter, there is no
environmental liability, nor factors likely to give rise to any
environmental liability, affecting the Luscar Contributed Assets
that individually or in the aggregate, could reasonably be
expected to have a Material Adverse Effect on the Luscar
Contributed Assets, and the operation of the Luscar Contributed
Assets by the Luscar/CONSOL Joint Ventures has not violated or
infringed any Environmental Law now in effect except as would
not, individually or in the aggregate, reasonably be expected to
have a Material Adverse Effect on the Luscar Contributed Assets;
the operation of the Luscar Contributed Assets by the
Luscar/CONSOL Joint Ventures has not violated or infringed any
then current Environmental Law as applied at that time, other
than such violations or infringements that, individually or in
the aggregate, have not had and could not reasonably be expected
to have, a Material Adverse Effect on the Luscar Contributed
Assets;
(h) except as disclosed in the Luscar Disclosure Letter, the
Luscar/CONSOL Joint Ventures and/or the Luscar Entities, as
applicable, have good and marketable (and in the case of
equipment valid as opposed to marketable) title to the Luscar
Contributed Assets, applying customary standards in the mining
industry, including its operating properties, equipment and
mineral reserves and resources (other than leasehold property as
to which such entity is a lessee, in respect of which Luscar (or
an Affiliate) has a valid leasehold interest), except for such
defects in title that individually or in the aggregate, could not
reasonably be expected to have a Material Adverse Effect on the
Luscar Contributed Assets; OTPP and Sherritt are entitled to
dispose of their share of the Luscar Contributed Assets under the
Agreement, either in their own right or through their Affiliates;
(i) the reserves and resources relating to the Luscar Contributed
Assets as set forth in the Sherritt Annual Information Form were
prepared in accordance with accepted engineering practices and
were, at such date, in compliance in all material respects with
the requirements applicable to the presentation of such reserves
and resources in documents filed with the Ontario Securities
Commission, including without limitation, the provisions of
National Instrument 43-101;
(j) except as disclosed in the Luscar Disclosure Letter, each of the
Luscar/CONSOL Joint Ventures and the Luscar Entities has all
permits, licences, certificates of authority, orders and
approvals of, and has made all filings, applications and
registrations with, applicable Governmental Authorities that are
required in order to permit each to carry on its business in
respect of the Luscar Contributed Assets as presently conducted,
except for such permits, licences, certificates, orders, filings,
applications and registrations, the failure to have or make,
individually or in the aggregate, have not had and could not
reasonably be expected to have, a Material Adverse Effect on the
Luscar Contributed Assets;
(k) each of the Luscar/CONSOL Joint Ventures and the Luscar Entities
has duly filed on a timely basis all material tax returns
required to be filed by each of them and has paid all taxes which
are due and payable and has paid all assessments and
reassessments, and all other taxes, governmental charges,
penalties, interest and fines due and payable on or before the
date hereof, in each case, of a material nature, and adequate
provision has been made for taxes payable for the current period
for which tax returns are not yet required to be filed; there are
no material actions, suits, or claims asserted or assessed
against any Luscar Entity or any of their respective subsidiaries
in respect of taxes, governmental charges or assessments, nor any
material matters under discussion with the CCRA or any
Governmental Authority relating to taxes, governmental charges or
assessments asserted by such Governmental Authority except as
would not, individually or in the aggregate, reasonably be
expected to impede OTPP's and Sherritt's ability to consummate
the Transaction or to create a lien or encumbrance on any Luscar
Entity's (other than a selling entity) interest in the Luscar
Contributed Assets;
(l) unless otherwise agreed by Fording, Luscar and CONSOL the
allocation of purchase price with respect the Luscar Contributed
Assets will result in the creation of $150,754,000 of Canadian
development expenses as defined for purposes of the Income Tax
Act (Canada) (the "Tax Act") and $71,446,000 of undepreciated
capital cost as defined in the Tax Act of assets described in
class 41 of Schedule II to the Regulations to the Tax Act;
(m) the Luscar Contributed Assets are being and have been operated in
all material respects in compliance with all applicable Laws,
regulations and ordinances of all authorities having
jurisdiction, except where the failure to comply has not been and
would not be reasonably likely, individually or in the aggregate,
to have a Material Adverse Effect on any Luscar Entity or the
Luscar Contributed Assets; OTPP, Sherritt or any Luscar Entity
have not been notified by any Governmental Authority of any
investigation relating to the Luscar Contributed Assets that is
pending or threatened, nor has any Governmental Authority
notified OTPP, Sherritt or any Luscar Entity of such Governmental
Authority's intention to commence or to conduct any investigation
relating to the Luscar Contributed Assets;
(n) except as set out in the Luscar Disclosure Letter or for
exceptions that could not, individually or in the aggregate, be
reasonably expected to have a Material Adverse Effect on the
Luscar Contributed Assets:
(i) the Luscar Benefit Plans comply in all respects with all
applicable Laws and such plans have been administered in
compliance with applicable Laws and their terms;
(ii) none of the Luscar Benefit Plans, other than plans which
provide only monetary retirement payments in accordance with
the terms of such plans, provides benefits beyond retirement
or other termination of service to Luscar Employees or
former Luscar Employees or to the beneficiaries or
dependants of such employees;
(iii) all benefits accrued under the Luscar Benefit Plans have
been properly accrued on the Luscar Financial Statements in
accordance with generally accepted accounting principles;
(iv) no event has occurred and no condition or circumstance
exists that has resulted in or could reasonably be expected
to result in any Luscar Benefit Plan being ordered, or
required to be, terminated or wound up in whole or in part,
having its registration under applicable Laws refused or
revoked, being placed under the administration of any
trustee or receiver or Governmental Authority or being
required to pay any material taxes, penalties, payments or
levies under applicable Laws; and
(v) all of the Luscar Benefit Plans are either (A) fully insured
or (B) fully funded in accordance with applicable Laws on a
going concern solvency basis and winding-up solvency basis;
(o) with respect to Luscar Employees except for exceptions that could
not, individually or in the aggregate, be expected to have a
Material Adverse Effect on the Luscar Contributed Assets, to the
knowledge of each of OTPP, Sherritt and Luscar there are in
respect of the Luscar Employees:
(i) no legal proceedings involving governmental tribunals;
(ii) no collective agreements currently under negotiation; and
(iii) no labour disputes, grievances, strikes or lockouts,
pending or threatened.
(p) other than as contemplated herein, no Luscar Entity is a party to
or bound or affected by any commitment, agreement or document
containing any covenant expressly limiting its freedom to compete
in any line of business other than such restrictive covenants
which individually or in the aggregate, directly or indirectly,
have not had or could not reasonably be expected to have a
Material Adverse Effect on the Luscar Contributed Assets;
(q) the Luscar Contributed Assets comprise all assets necessary to
carry on the metallurgical coal business carried on by the
Luscar/CONSOL Joint Ventures;
(r) OTPP and Sherritt have no reason to believe that the conditions
precedent to the completion of the transactions contemplated by
the Luscar Contribution Term Sheet will not be satisfied; and
(s) except as set out in the Luscar Disclosure Letter, the Luscar
Entities are up to date in respect of all of their reclamation
bonding requirements in all material respects.
3.8 Nature and Survival
(a) Subject to Sections 3.8(b), 3.8(c) and 3.8(d), all
representations, warranties and covenants contained in this
Agreement on the part of each of the Parties shall survive the
consummation of the Transaction.
(b) Representations and warranties concerning tax matters contained
in this Agreement shall survive for a period of 90 days after the
relevant authorities shall no longer be entitled to assess
liability for tax against the representing Party for any
particular taxation year ended on or prior to the Effective Date,
having regard without limitation, to any waivers given by the
Party in respect of any taxation year.
(c) The representations and warranties set forth at Sections 3.1(k),
3.2(b), 3.3(j) and 3.7(h) of this Agreement shall survive for a
period of ten years following the Effective Date.
(d) All other representations and warranties shall only survive for a
period of two years following the Effective Date; however any
claim which is based on intentional misrepresentation or fraud
may be brought at any time.
If no claim shall have been made under this Agreement against a Party for any
incorrectness in or breach of any representation or warranty made in this
Agreement prior to the expiry of the survival periods set forth above, such
Party shall have no further liability under this Agreement with respect to such
representations or warranties.
ARTICLE 4
COVENANTS
4.1 Covenants of Fording
Except to the extent that the Board of Directors has withdrawn, modified or
qualified its recommendation to Securityholders with respect to the Transaction,
Fording will and will cause its subsidiaries to perform all obligations
required, necessary or desirable to be performed by Fording or any of its
subsidiaries under this Agreement, co-operate with the other Parties 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 and, without limiting the generality of the
foregoing, Fording shall and where necessary and appropriate shall cause its
subsidiaries to:
(a) use commercially reasonable efforts to obtain the requisite
approvals of the Securityholders to the Amended Arrangement in
accordance with the terms of this Agreement;
(b) apply for and use commercially reasonable efforts to obtain all
Regulatory Approvals relating to Fording or any of its
subsidiaries and, in doing so, to keep the other Parties informed
as to the status of the proceedings related to obtaining the
Regulatory Approvals, including, but not limited to, providing
the other Parties with copies of all related applications and
notifications (in draft form, except that commercially
confidential information of Fording may be expurgated in the
other Parties' copies) in order for such Party to provide its
reasonable comments and providing the other Parties with copies
of all material correspondence;
(c) use commercially reasonable efforts to effect all necessary
registrations, filings and submissions of information required by
Governmental Authorities from Fording or any of its subsidiaries
relating to the Amended Arrangement;
(d) use commercially reasonable efforts to obtain all necessary
waivers, consents and approvals required to be obtained by
Fording or a subsidiary in connection with the Amended
Arrangement from other parties to any loan agreements, material
leases or other material contracts or hold such agreements,
leases or contracts in trust pending receipt of such waiver,
consent or approval;
(e) 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 Fording or its subsidiaries with respect to the
transactions contemplated by this Agreement;
(f) not take any action, refrain from taking any action or permit any
action to be taken or not taken, inconsistent with this Agreement
and which would reasonably be expected to significantly impede
the consummation of the Amended Arrangement;
(g) except as provided for in the Amended Plan, not make any
distribution by way of dividend, distribution of property or
assets, return of capital or otherwise to or for the benefit of
Shareholders, except in each case, in the ordinary and usual
course consistent with past practice;
(h) continue to carry on business in the ordinary course consistent
with past practice and, to use commercially reasonable efforts to
preserve intact its present business organization, and its
relationship with those having business dealings with it, to the
end that its goodwill and business shall not be impaired in a
manner that could, individually or in the aggregate, reasonably
be expected to have a Material Adverse Effect on Fording;
(i) execute and deliver for the benefit of RBC certificates of senior
officers of Fording confirming such matters as RBC may reasonably
request in order to enable it to issue and deliver the RBC
Fairness Opinion; and
(j) allow representatives of the Parties to attend the Fording
Meeting.
4.2 Covenants of Other Parties
Each of the Parties, other than Fording, hereby covenants and agrees to perform
or cause their respective Affiliates to perform all obligations required or
desirable to be performed by it or them under this Agreement, to co-operate with
Fording in connection therewith, and to do all such other acts and things as may
be necessary or desirable in order to consummate and make effective, as soon as
reasonably practicable, the transactions contemplated by this Agreement and,
without limiting the generality of the foregoing, each such Party shall and
where necessary and applicable shall cause its Affiliates to:
(a) apply for and use commercially reasonable efforts to obtain all
Regulatory Approvals relating to it or its Affiliates and, in
doing so, to keep Fording informed as to the status of the
proceedings related to obtaining the Regulatory Approvals,
including, but not limited to, providing Fording with copies of
all related applications and notifications, in draft form (except
that commercially confidential information of such Party may be
expurgated in Fording's copy) in order for Fording to provide its
reasonable comments and providing Fording with copies of all
material correspondence;
(b) effect all necessary registrations, filings and submissions of
information required by Governmental Authorities from such Party
or their respective Affiliates relating to the Transaction;
(c) vote the Common Shares held by them, and cause their Affiliates
and, to the extent possible, all of their respective directors
and officers to vote the Common Shares held by them, in favour of
the Resolutions at the Fording Meeting;
(d) use commercially reasonable efforts to obtain all necessary
waivers, consents and approvals required to be obtained by it or
a subsidiary or associate in connection with the Amended
Arrangement from other parties to any loan agreements, material
leases or other material contracts;
(e) subject to applicable Law, not take any action to alter or amend
any rights to indemnification or exculpation existing in favour
of directors or officers of Fording or Fording Subsidiaries or
otherwise diminish directors or officers liability insurance
currently maintained by Fording in a manner that could be
prejudicial to such Persons for a period of six years from the
Effective Date;
(f) not take any action, refrain from taking any action or permit any
action to be taken or not taken, inconsistent with this Agreement
and which would reasonably be expected to significantly impede
the consummation of the Amended Arrangement;
(g) until the third anniversary of the Effective Date, not take any
action to alter or amend any Fording compensation arrangement
other than as contemplated in the Information Circular, without
substituting therefore compensation arrangements that are, in the
opinion of the continuing directors, no less favourable, in the
aggregate, than those arrangements currently in existence; and
(h) cause Fording to honour all contractual severance arrangements
disclosed in the Fording Disclosure Record or Fording Disclosure
Letter.
4.3 Ordinary Course Covenants
(a) Subject to the effects of the wind storm damage at Westshore's
coal terminal at Xxxxxxx Bank, British Columbia, as described in
Westshore's press release dated January 6, 2003, Teck covenants
and agrees to continue to carry on its metallurgical coal
business in the ordinary course consistent with past practice and
to use commercially reasonable efforts to preserve intact its
present business organization and its relationship with those
having business dealings with it, to the end that its goodwill
and business shall not be impaired in a manner that could,
individually or in the aggregate, reasonably be expected to have
a Material Adverse Effect on the Teck Contributed Assets.
(b) Subject to the effects of the wind storm damage at Westshore's
coal terminal at Xxxxxxx Bank, British Columbia, as described in
Westshore's press release dated January 6, 2003, OTPP and
Sherritt, jointly and severally, covenant and agree to cause the
Luscar/CONSOL Joint Ventures and Luscar Entities to continue to
carry on and cause the Luscar Contributed Assets business to be
carried on in the ordinary course consistent with past practice
and to use commercially reasonable efforts to preserve intact its
present business organization and its relationship with those
having business dealings with it, to the end that its goodwill
and business shall not be impaired in a manner that could,
individually or in the aggregate, reasonably be expected to have
a Material Adverse Effect on the Luscar Contributed Assets.
4.4 Fording Covenants Regarding Non-Solicitation
(a) Fording shall, and shall cause the officers, directors,
employees, representatives and agents of Fording and its
subsidiaries to cease all current discussions and negotiations
regarding any proposal that constitutes, or may reasonably be
expected to lead to, an Acquisition Proposal, and request and
enforce the return or destruction of all confidential information
provided in connection therewith.
(b) Subject to Section 4.4(e), Fording shall not, directly or
indirectly, through any officer or director of Fording, or any of
its subsidiaries, (i) solicit, initiate, knowingly encourage or
otherwise facilitate (including by way of furnishing information
or entering into any form of agreement, arrangement or
understanding) the initiation of any inquiries or proposals
regarding an Acquisition Proposal, (ii) participate in any
discussions or negotiations regarding, or provide any
confidential information with respect to, any Acquisition
Proposal, (iii) approve or recommend, or publicly propose to
approve or recommend, any Acquisition Proposal; or (iv) accept or
enter into, or publicly propose to accept or enter into, any
letter of intent, agreement, arrangement or understanding related
to any Acquisition Proposal.
(c) Notwithstanding Section 4.4(b) and any other provision of this
Agreement, nothing shall prevent the Board of Directors from (i)
complying with Fording's disclosure obligations under applicable
Laws with regard to an Acquisition Proposal, (ii) taking any
other action to the extent ordered or otherwise mandated by any
court of competent jurisdiction, (iii) considering, participating
in any discussions or negotiations, or entering into a
confidentiality agreement and providing information pursuant to
Section 4.4(e), or (iv) withdrawing, modifying or qualifying (or
publicly proposing to withdraw, modify or qualify), in any manner
adverse to the other Parties, the approval or recommendation of
the Amended Arrangement by the Board of Directors if and only to
the extent that, in any such case referred to in clause (iii) or
this clause (iv), (A) the Fording Meeting shall not have
occurred, (B) Fording has complied with this Section 4.4 and (C)
the Board of Directors concludes in good faith in the case of
clauses (iii) and (iv), after consultation with its outside legal
and financial advisors, (x) that any required financing of such
Acquisition Proposal is reasonably likely to be obtained; (y) in
the case of clause (iii) that, after taking the steps
contemplated in clause (iii), it is reasonably likely that the
Board of Directors could determine that such Acquisition Proposal
is a Superior Proposal; and (z) in the case of clause (iv) that
the Acquisition Proposal constitutes a Superior Proposal.
(d) Fording shall forthwith notify the other Parties of any
Acquisition Proposal and any inquiry of which a director or a
senior officer of Fording or Fording's financial advisor is made
aware that could lead to an Acquisition Proposal, or any
amendments to the foregoing, or any request for non-public
information relating to Fording or any Fording Subsidiary in
connection with an Acquisition Proposal or for access to the
properties, books or records of Fording or any Fording Subsidiary
by any Person. Such notice shall include a description of the
material terms and conditions of any proposal, the identity of
the Person making the first mentioned proposal, inquiry or
contact and provide such other details of the proposal, inquiry
or contact as the other Parties may reasonably request. Fording
shall keep the other Parties informed of the status, including
any change to the material terms, of any such Acquisition
Proposal or inquiry in a timely manner, on at least a next day
basis.
(e) If Fording receives a request for material non-public information
from a Person who has made an unsolicited bona fide written
Acquisition Proposal and Fording is permitted, subject to and as
contemplated under Section 4.4(c), to negotiate the terms of such
Acquisition Proposal, then, and only in such case, the Board of
Directors may, subject to the execution by such Person of a
confidentiality agreement containing employee non-solicitation
and standstill provisions substantially similar to those
contained in the Confidentiality Agreements provide such Person
with access to information regarding Fording; provided, however,
that the Person making the Acquisition Proposal shall not be
precluded under such confidentiality agreement from making an
Acquisition Proposal for consideration for each Common Share that
is equal to or superior to that contained in such Acquisition
Proposal at the time of entry into such confidentiality agreement
in accordance with this Agreement, and provided further that
Fording sends a copy of any such confidentiality agreement to the
other Parties promptly upon its execution and the other Parties
are each provided with a list of, and copies of, the information
provided to such Person and is also provided upon request with
access to similar information to which such Person was provided
on a timely basis.
(f) Fording shall ensure that its officers, directors and employees
and its subsidiaries and their officers, directors and employees
and any financial advisors or other advisors or representatives
retained by it or its subsidiaries are aware of the provisions of
this Section 4.4, and Fording shall be responsible for any breach
of this Section 4.4 by its and its subsidiaries' officers,
directors, employees, representatives or agents.
4.5 Right of First Refusal
(a) Fording will not enter into any agreement, arrangement or
understanding regarding a Superior Proposal (a "Proposed
Agreement") without providing the other Parties with an
opportunity to amend this Agreement to provide for consideration
and financial terms which are, in the Board of Directors' sole
discretion, financially equal or superior to those contained in
the Proposed Agreement, with the result that the Superior
Proposal would cease to be a Superior Proposal. Fording will
provide the other Parties with a copy of any Proposed Agreement,
as executed by the Person making the proposal, as soon as
possible and in any event not less than four Business Days prior
to its proposed execution by Fording. In the event the other
Parties or any combination thereof agree to amend the Agreement
so that it would be financially equal or superior to the Proposed
Agreement, Fording covenants to not enter into the Proposed
Agreement and shall agree to work with such other Parties to
amend this Agreement and no fee shall be payable under Section
6.3 in respect of the Proposed Agreement.
(b) Subject to Section 4.1(a), nothing contained in this Section 4.5
shall limit in any way the obligation of Fording to convene and
hold the Fording Meeting.
4.6 Access to Information
(a) Subject to Section 4.6(b) and applicable Laws, upon reasonable
notice Fording shall arrange to afford Sherritt's officers,
employees, counsel, accountants and other authorized
representatives and advisors access, during normal business hours
from the date hereof and until the earlier of the Effective Date
or the termination of this Agreement, to its and its
subsidiaries' properties, books, contracts and records in respect
to the Prairie Operations as well as to its financial management
personnel without materially interfering with their other
responsibilities, and, during such period, Fording shall (and
shall cause each of its subsidiaries to) furnish promptly to
Sherritt information concerning the Prairie Operations as
Sherritt may reasonably request, subject to Fording
confidentiality obligations. Subject to Section 4.6(b) and
applicable Laws, upon reasonable notice, Sherritt shall arrange
to afford Fording's officers, employees, counsel, accountants and
other authorized representatives and advisors access, during
normal business hours from the date hereof and until the earlier
of the Effective Date or the termination of this Agreement, to
its and its subsidiaries' properties, books, contracts and
records in respect to the Luscar Contributed Assets as well as to
its financial management personnel without materially interfering
with their other responsibilities, and, during such period,
Sherritt shall (and shall cause each of its subsidiaries to)
furnish promptly to Fording information concerning the Luscar
Contributed Assets as Fording may reasonably request, subject to
Sherritt confidentiality obligations. Any costs shall be at the
expense of the Party seeking access.
(b) The Parties acknowledge that, notwithstanding Section 4.6(a),
information may be competitively sensitive and that disclosure
thereof shall be limited to that which is reasonably necessary
for the purpose of (i) preparing submissions or applications in
order to obtain the Regulatory Approvals, (ii) fulfilling legal
obligations in connection with public disclosure requirements
under Law, including in connection with the Further Supplement or
a prospectus filing, and (iii) the advancement of the
Transaction; and such information shall be provided only to those
persons who need to know such information for the foregoing
purposes.
(c) Each of Sherritt and Fording acknowledges that information
provided to it under Section 4.6(a) above will be non-public
and/or proprietary in nature and will be subject to the terms of
the Confidentiality Agreements and Section 4.6(a). For greater
certainty, the provisions of the Confidentiality Agreements shall
survive the termination of this Agreement.
4.7 Completion of Transaction
The Parties shall co-operate with each other to encourage Shareholders to vote
for the Arrangement Resolution (for greater certainty, this shall not include
the payment of expenses incurred by the other Parties, except as otherwise
contemplated herein). Each Party shall take all necessary action to complete the
transactions contemplated by this Agreement, including those contemplated by the
attached Term Sheets.
ARTICLE 5
CONDITIONS
5.1 Mutual Conditions Precedent
The respective obligations of each Party to complete the Transaction shall be
subject to the satisfaction, on or before the Closing Time, of the following
conditions precedent, each of which may only be waived by the mutual consent of
the Parties:
(a) the Arrangement Resolution shall have been approved at the
Fording Meeting in accordance with the Interim Order;
(b) the Final Order shall have been granted in form and substance
satisfactory to the Parties, each acting reasonably, and shall
not have been set aside or modified in a manner unacceptable to
the Parties, each acting reasonably, on appeal or otherwise;
(c) Fording and/or the Partnership shall have in place credit
facilities in the aggregate of $540 million;
(d) the Articles of Arrangement and all necessary related documents
filed with the Director in accordance with the Amended
Arrangement shall be in form and substance satisfactory to each
of the Parties, acting reasonably, and shall have been accepted
for filing by the Director together with the Final Order in
accordance with subsection 192(6) of the CBCA;
(e) there shall be no action taken under any existing applicable Law
or regulation, nor any statute, rule, regulation or order, which
is enacted, enforced, promulgated or issued by any court,
department, commission, board, regulatory body, government or
Governmental Authority or similar agency, domestic or foreign,
nor shall there be in force any order or decree of any such
entity that:
(i) makes illegal or otherwise directly or indirectly restrains,
enjoins or prohibits the Transaction or any of the other
transactions contemplated herein;
(ii) results in any judgment or assessment of material damages
directly or indirectly relating to the transactions
contemplated herein; or
(iii) imposes or confirms material limitations on the ability of
the Fund to issue Units or effectively exercise full rights
of ownership of the securities of New Fording, including,
without limitation, the right to vote any such securities;
(f) the Regulatory Approvals and the third party approvals required
under the CP Arrangement Agreement, the Genesee Agreements and
the CPR Agreement as well as the FX Acknowledgements shall have
been obtained or satisfied on terms and conditions satisfactory
to the Parties acting reasonably;
(g) other than the Regulatory Approvals, all consents, waivers,
permits, orders and approvals of any Governmental Authority, and
the expiry of any waiting periods, in connection with, or
required to permit, the consummation of the Amended Arrangement,
the failure of which to obtain or the non-expiry of which would
constitute a criminal offence or would have a Material Adverse
Effect on such Party shall have been obtained or satisfied on
terms that could not reasonably be expected to have a Material
Adverse Effect on such Party;
(h) there shall not have occurred any actual change or amendment to,
or any proposal by the Minister of Finance (Canada) or Internal
Revenue Service to change or amend, the Canadian Tax Act, or U.S.
Tax Code, as applicable or to any applicable provincial tax
legislation or the regulations thereunder or any publicly stated
administrative position or practice in relation thereto which
individually or in the aggregate, directly or indirectly, has or
could reasonably be expected to have any material adverse effect
on the benefits anticipated to be enjoyed by Securityholders upon
consummation of the Transaction;
(i) the approval of the TSX to the conditional substitutional listing
of the Units to be issued pursuant to the Amended Arrangement
shall have been obtained, subject only to the filing of required
documents and such Units shall also have been listed by the NYSE,
subject to official notice of issuance; and
(j) this Agreement shall not have been terminated pursuant to Article
6.
5.2 Additional Conditions Precedent to the Obligations of Teck and
Westshore
The respective obligations of Teck and Westshore to complete the Transaction
shall also be subject to the fulfilment of each of the following conditions
precedent (each of which is for Teck and Westshore's exclusive benefit and may
be waived only by Teck and Westshore acting jointly):
(a) all covenants of Fording, OTPP and Sherritt under this Agreement
to be performed on or before the Effective Time shall have been
duly performed by Fording, OTPP and Sherritt in all material
respects and Teck and Westshore shall have received a certificate
of each of Fording, OTPP and Sherritt, respectively, addressed to
Teck and Westshore respectively and dated the Effective Date,
signed on behalf of Fording, OTPP and Sherritt, respectively, by
two senior executive officers of each such Party (on each such
Party's behalf and without personal liability), confirming the
same as at the Effective Date;
(b) the representations and warranties of each of Fording, OTPP and
Sherritt in this Agreement shall have been true and correct on
the date of this Agreement as follows: (i) the representations
and warranties of Fording, OTPP and Sherritt that are qualified
by references to materiality shall be true and correct; (ii) the
representations and warranties of Fording, OTPP and Sherritt not
so qualified (except Sections 3.1(g) and 3.7(c)) shall be true
and correct (except for the failure of such representation to be
true and correct, individually or in the aggregate, which has not
had and could not reasonably be expected to have a Material
Adverse Effect on Fording, OTPP or Sherritt, respectively, or
prevent or delay the Transaction); and (iii) the representations
in Sections 3.1(g) and 3.7(c) shall be true and correct in all
material respects, in each case as of the Closing Time as if made
on and as of such time (except to the extent such representations
and warranties speak solely as of an earlier date, in which event
such representations and warranties shall be true and correct to
such extent as of such earlier date, or except as affected by
transactions contemplated or permitted by this Agreement), and
Teck and Westshore shall have received a certificate of each of
Fording, OTPP and Sherritt, respectively addressed to Teck and
Westshore and dated the Effective Date, signed on behalf of
Fording, OTPP and Sherritt, respectively, by two senior executive
officers of each such Party (on each such Party's behalf and
without personal liability), confirming the same as at the
Effective Date;
(c) the board of directors of Fording shall have adopted all
necessary resolutions, and all other necessary corporate action
shall have been taken by Fording and the subsidiaries to permit
the consummation of the Amended Arrangement;
(d) during the Pre-Effective Date Period, there shall not have
occurred or have been disclosed to the public if previously
undisclosed to the public and the other Parties, a Material
Adverse Change to Fording as it will be constituted including the
Luscar Contributed Assets; and
(e) the Transaction Agreements and the Terminal Agreement shall have
been executed and delivered to the other Parties, as applicable,
by Fording, the Fund, OTPP and Sherritt.
5.3 Effect of Breach
Teck and Westshore may not rely on the failure of another Party to satisfy any
of the conditions precedent set forth in Section 5.1 or Section 5.2 if the
condition precedent would have been satisfied but for a material default by
either Teck or Westshore in complying with its respective obligations in this
Agreement.
5.4 Additional Conditions Precedent to the Obligations of Fording
The obligations of Fording to complete the Transaction shall also be subject to
the following conditions precedent (each of which is for the exclusive benefit
of Fording and may be waived by Fording):
(a) all covenants of Teck, Westshore, OTPP and Sherritt under this
Agreement to be performed on or before the Closing Time shall
have been duly performed by Teck, Westshore, OTPP and Sherritt,
as the case may be, in all material respects, and Fording shall
have received a certificate of each of Teck, Westshore, OTPP and
Sherritt addressed to Fording and dated the Effective Date,
signed on behalf of Teck, Westshore, OTPP and Sherritt,
respectively, by two senior executive officers of each of Teck,
OTPP and Sherritt, and one trustee in the case of Westshore (on
each such Party's behalf and without personal liability),
confirming the same as at the Effective Date;
(b) all representations and warranties of each of Teck, Westshore,
OTPP and Sherritt in this Agreement shall have been true and
correct on the date hereof as follows: (i) the representations
and warranties of Teck, Westshore, OTPP and Sherritt that are
qualified by references to materiality shall be true and correct;
(ii) the representations and warranties of Teck, Westshore, OTPP
and Sherritt not so qualified (except Section 3.3(e) and 3.7(c))
shall be true and correct (except for the failure of such
representation to be true and correct, individually or in the
aggregate, has not had and could not reasonably be expected to
have a Material Adverse Effect on any of the Teck Contributed
Assets, the Luscar Contributed Assets or Westshore, as the case
may be, and that could not reasonably be expected to prevent or
delay the Transaction); (iii) the representations in Section
3.3(e) and 3.7(c) shall be true and correct in all material
respects, in each case as of the Closing Time as if made on and
as of such time (except to the extent such representations and
warranties speak solely as of an earlier date, in which event
such representations and warranties shall be true and correct to
such extent as of such earlier date, or except as affected by
transactions contemplated or permitted by this Agreement), and
Fording shall have received a certificate of each of Teck,
Westshore, OTPP and Sherritt addressed to Fording, and dated the
Effective Date, signed on behalf of each of Teck, Westshore, OTPP
and Sherritt, respectively, by two senior executive officers of
each such Party (or one trustee in the case of Westshore) (in
each case on each such Party's behalf and without personal
liability), confirming the same as at the Effective Date;
(c) each Party shall have deposited, prior to the prescribed time for
payment under the Amended Plan, the aggregate cash amounts
payable by that Party pursuant to Section 2.2 and 2.3 to a trust
account maintained by the Registrar and Transfer Agent of Fording
to facilitate payment to Securityholders in accordance with the
Amended Plan;
(d) the Unitholder Rights Plan Resolution shall have been approved at
the Fording Meeting by not less than a simple majority of the
votes cast by the Shareholders in accordance with any applicable
Laws;
(e) arrangements satisfactory to Fording shall have been entered into
to ensure that all outstanding Options shall have been exchanged,
ultimately, for Exchange Options issued under the Exchange Option
Plan; and
(f) Fording's credit and foreign exchange facilities shall have been
reformulated to the satisfaction of the Board of Directors,
acting reasonably.
5.5 Effect of Breach
Fording may not rely on the failure of another Party to satisfy any of the
conditions precedent in Section 5.1 or Section 5.4 if the condition precedent
would have been satisfied but for a material default by Fording in complying
with its obligations in this Agreement.
5.6 Additional Conditions Precedent to the Obligations of OTPP and Sherritt
The respective obligations of each of OTPP and Sherritt to complete the
Transaction shall also be subject to the fulfilment of each of the following
conditions precedent (each of which is for OTPP and Sherritt's exclusive benefit
and may be waived by OTPP and Sherritt, acting jointly):
(a) all covenants of Fording, Teck and Westshore under this Agreement
to be performed on or before the Effective Time shall have been
duly performed by Fording, Teck and Westshore in all material
respects and OTPP and Sherritt shall have received a certificate
of each of Fording, Teck and Westshore addressed to them and
dated the Effective Date, signed on behalf of each of Fording and
Teck by two senior executive officers and on behalf of Westshore
by one trustee of Westshore (in each case on each such Party's
behalf and without personal liability), confirming the same as at
the Effective Date;
(b) the representations and warranties of each of Fording, Teck and
Westshore in this Agreement shall have been true and correct on
the date of this Agreement as follows: (i) the representations
and warranties of Fording, Teck and Westshore that are qualified
by references to materiality shall be true and correct; (ii) the
representations and warranties of Fording, Teck and Westshore not
so qualified (except Section 3.1(g) and 3.3(e) shall be true and
correct (except for the failure of such representation to be true
and correct, individually or in the aggregate, which has not had
and could not reasonably be expected to have a Material Adverse
Effect on Fording, Teck or Westshore, as applicable, or prevent
or delay the Transaction); (iii) the representations in Section
3.1(g) and 3.3(e) shall be true and correct in all material
respects, in each case as of the Closing Time as if made on and
as of such time (except to the extent such representations and
warranties speak solely as of an earlier date, in which event
such representations and warranties shall be true and correct to
such extent as of such earlier date, or except as affected by
transactions contemplated or permitted by this Agreement), and
OTPP and Sherritt shall have received a certificate of each of
Fording, Teck and Westshore, respectively, addressed to OTPP and
Sherritt and dated the Effective Date, signed on behalf of
Fording and Teck by two senior executive officers of each such
Party and on behalf of Westshore by one trustee of Westshore (in
each case on each such Party's behalf and without personal
liability), confirming the same as at the Effective Date;
(c) the board of directors of Fording shall have adopted all
necessary resolutions, and all other necessary corporate action
shall have been taken by Fording and the subsidiaries to permit
the consummation of the Amended Arrangement; and
(d) during the Pre-Effective Date Period, there shall not have
occurred or have been disclosed to the public if previously
undisclosed to the public and the other Parties, a Material
Adverse Change to Fording or the Teck Contributed Assets.
5.7 Effect of Breach
OTPP and Sherritt may not rely on the failure of another Party to satisfy any of
these conditions precedent in Section 5.1 or Section 5.6 if the condition
precedent would have been satisfied but for a material default by either OTPP or
Sherritt in complying with their respective obligations in this Agreement.
5.8 Notice and Cure Provisions
(a) The Parties will give prompt notice to each other of the
occurrence, or failure to occur, at any time during the
Pre-Effective Date Period of any event or state of facts which
occurrence or failure would, or would be likely to:
(i) cause any of the representations or warranties of that Party
contained herein to be untrue or inaccurate on the date
hereof or on the Effective Time such that the conditions set
forth in any of Sections 5.1, 5.2, 5.4 or 5.6 would not be
satisfied as of the Effective Time; or
(ii) result in the failure in any material respect to comply with
or satisfy any covenant, condition or agreement to be
complied with or satisfied by the other hereunder prior to
the Effective Time such that the conditions set forth in any
of Sections 5.1, 5.2, 5.4 or 5.6, as applicable, would not
be satisfied as of the Effective Time.
(b) A Party may not seek to rely upon any conditions precedent
contained in Sections 5.1, 5.2, 5.4 or 5.6, nor exercise any
termination right arising therefrom, unless forthwith and in any
event prior to the filing of the Articles of Arrangement for
acceptance by the Director, a Party, as the case may be, has
delivered a written notice to the other Parties specifying in
reasonable detail all breaches of covenants, representations and
warranties or other matters which such Party is asserting as the
basis for the non-fulfilment of the applicable condition
precedent or the exercise of the termination right, as the case
may be. If any such notice is delivered, provided that the
breaching Party receiving such notice is proceeding diligently to
cure such matter, if such matter is susceptible to being cured
(for greater certainty, except by way of disclosure in the case
of representations and warranties), the other Parties may not
terminate this Agreement as a result thereof until four Business
Days from such date on which such notice is delivered. If such
notice has been delivered prior to the date of the Fording
Meeting, such meeting shall, unless the Parties agree otherwise,
be postponed or adjourned until the expiry of such period. If
such notice has been delivered prior to the making of the
application for the Final Order or the filing of the Articles of
Arrangement with the Director, such application or filing, as the
case may be, shall be postponed until the expiry of such period.
For greater certainty, in the event that such matter is cured
within the time period referred to herein without a Material
Adverse Effect on the Party in breach, this Agreement may not be
terminated as a result of the cured breach.
5.9 Satisfaction of Conditions
The conditions precedent set out in Sections 5.1, 5.2, 5.4 and 5.6 shall be
conclusively deemed to have been satisfied, waived or released when a
Certificate of Arrangement in respect of the Amended Arrangement is issued by
the Director, it being understood, that such issuance will not extinguish
liability arising from a breach of any covenant, representation or warranty.
ARTICLE 6
AMENDMENT AND TERMINATION
6.1 Amendment
Subject to applicable Laws, this Agreement may, at any time and from time to
time before or after the holding of the Fording Meeting but not later than the
Effective Date, be amended by mutual written agreement of the Parties.
6.2 Termination
(a) If any condition contained in Sections 5.1 or 5.2 is not
satisfied at or before the Closing Time, then Teck and Westshore,
acting jointly, may, subject to Section 5.3 and to Section 5.8 by
notice to the other Parties terminate this Agreement and the
obligations of the Parties hereunder (except as otherwise herein
provided, including under Section 6.3), but without detracting
from the rights of Teck and Westshore arising from any breach by
another Party but for which the condition would have been
satisfied.
(b) If any condition contained in Sections 5.1 or 5.4 is not
satisfied at or before the Closing Time, then Fording may,
subject to Section 5.5 and to Section 5.8, by notice to the other
Parties terminate this Agreement and the obligations of the
Parties hereunder (except as otherwise herein provided, including
under Section 6.3), but without detracting from the rights of
Fording arising from any breach by another Party but for which
the condition would have been satisfied.
(c) If any condition contained in Section 5.1 or 5.6 is not satisfied
at or before the Closing time, then OTPP and Sherritt, acting
jointly, may, subject to Section 5.7 and Section 5.8, by notice
to the other Parties terminate the Agreement and the obligations
of the Parties hereunder (except as otherwise herein provided,
including under Section 6.3), but without detracting from the
rights of OTPP and Sherritt arising from any breach by another
Party but for which the condition would have been satisfied.
(d) This Agreement may:
(i) be terminated by the mutual agreement of the Parties, (and
for greater certainty, without further action on the part of
the Securityholders if terminated after the holding of the
Fording Meeting);
(ii) be terminated by any Party if there shall be passed any Law
that makes consummation of the Amended Arrangement illegal
or otherwise prohibited;
(iii) be terminated by a Party other than Fording, if
(A) the Board of Directors shall have failed to recommend
or shall have withdrawn, modified or changed its
approval or recommendation of the Arrangement
Resolution, or
(B) the Board of Directors shall have approved or
recommended any Acquisition Proposal other than the
Amended Arrangement;
(iv) be terminated by Fording, provided that Fording is not then
in material breach or default of any of its obligations
hereunder, upon any determination by the Board of Directors
at the conclusion of the process set out in Section 4.4 that
an Acquisition Proposal constitutes a Superior Proposal and
that the Parties' rights under Section 4.5 have expired
unexercised by them; or
(v) be terminated by any Party if the approval of the
Arrangement Resolution by the Securityholders, in the manner
set out in the Interim Order, shall not have been obtained
at the Fording Meeting, or if a court as a matter of final
determination that is not subject to appeal declines to
grant the Final Order in a form consistent with this
Agreement;
in each case, prior to the Effective Time.
(e) If the Effective Date has not occurred on or prior to the Outside
Date, then, unless otherwise agreed in writing by the Parties,
this Agreement shall terminate provided that in the event that
the conditions set forth in Section 5.1(f) above shall not have
been satisfied by that date, a Party may unilaterally extend the
Outside Date until May 31, 2003 upon written notice to the other
Parties, in which case the Outside Date shall be deemed for all
purposes to be May 31, 2003, provided that the right to terminate
this Agreement pursuant to this Section 6.2(e) shall not be
available to the Party seeking to terminate if any action of such
Party or its Affiliates or the failure of such Party or its
Affiliates to perform any of its obligations under this Agreement
required to be performed at or prior to the Effective Time shall
have resulted in the conditions contained in Sections 5.1, 5.2,
5.4 or 5.6 (as applicable) not having been satisfied prior to the
Outside Date.
(f) If this Agreement is terminated in accordance with the foregoing
provisions of this Section 6.2, no Party shall have any further
liability to perform its obligations under this Agreement except
as provided in Section 6.3 and as otherwise expressly
contemplated by this Agreement, and provided that neither the
termination of this Agreement nor anything contained in this
Section 6.2(f) shall relieve any Party from any liability for any
breach by it of this Agreement, including from any inaccuracy in
its representations and warranties and any non-performance by it
of its covenants made herein.
6.3 Break Fee
(a) If:
(i) either Teck or Westshore shall terminate this Agreement
pursuant to Section 6.2(d)(iii) or Fording shall terminate
this Agreement pursuant to Section 6.2(d)(iv) in
circumstances where Teck and Westshore are not in material
breach of their obligations under this Agreement;
(ii) either Fording, Teck or Westshore shall terminate this
Agreement pursuant to Section 6.2(d)(v) and the Board of
Directors, within six months following the date of the
Fording Meeting, approves or recommends an Acquisition
Proposal that was publicly made, publicly announced or
otherwise publicly disclosed by any Person other than Teck
prior to the Fording Meeting but subsequent to the date
hereof or such an Acquisition Proposal is actually
consummated within six months following the date of the
Fording Meeting; or
(iii) after OTPP and Sherritt withdraw the SCAI Offer pursuant to
Section 2.3(m) of this Agreement, OTPP and/or Sherritt or
any of their respective Affiliates makes a new Acquisition
Proposal after the date of this Agreement on terms
substantially similar or superior to those in the SCAI Offer
as it existed on December 16, 2002 and the Board of
Directors, within six months following the date hereof,
approves or recommends such Acquisition Proposal or such
Acquisition Proposal is actually consummated within six
months following the date of the Fording Meeting,
then in any such case Fording shall pay to Teck and Westshore
together the Break Fee in immediately available funds to an
account designated by Teck and Westshore. Such payment shall be
due (A) in the case of a termination specified in clause (i),
within one Business Day after written notice of termination by
Teck or Westshore or (B) in the case of a termination specified
in clause (ii) or (iii) above, one Business Day after the
approval, recommendation or consummation of an Acquisition
Proposal as described in Section 6.3(a)(ii) or (iii).
(b) Break fee means $51 million (the "Break Fee").
(c) Fording's obligations under this Section 6.3 survive termination
or expiry of this Agreement. Fording shall not be obligated to
make more than one payment pursuant to this Section 6.3.
For greater certainty, the Break Fee is payable only in the circumstances set
out in this Section 6.3 and the Break Fee is not payable solely because
Shareholders do not approve the Arrangement Resolution.
6.4 Remedies
The Parties hereto acknowledge and agree that an award of money damages would be
inadequate for any breach of this Agreement by any Party or its representatives
and any such breach would cause the non-breaching Party irreparable harm.
Accordingly, the Parties hereto agree that, in the event of any breach or
threatened breach of this Agreement by one of the Parties, the non-breaching
Party will also be entitled, without the requirement of posting a bond or other
security, to equitable relief, including injunctive relief and specific
performance. Such remedies will not be the exclusive remedies for any breach of
this Agreement but will be in addition to all other remedies available at Law or
equity to each of the Parties.
ARTICLE 7
GENERAL
7.1 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):
(a) If to Fording at:
Xxxxx 0000
000 Xxxxx Xxxxxx X.X.
Xxxxxxx XX X0X 0X0
Attention: Xxx Xxxxx
Telecopier No.: (000) 000-0000
Email: xxx_xxxxx@xxxxxxx.xx
with a copy to:
Xxxxx Xxxxxx & Harcourt LLP
0000, 000 - 0xx Xxxxxx XX
Xxxxxxx XX X0X 0X0
Attention: Xxxxx X. Xxxxxx
Telecopier No.: (000) 000-0000
Email: xxxxxxx@xxxxx.xxx
(b) If to Teck at:
Xxxxx 000
000 Xxxxxxx Xxxxxx
Xxxxxxxxx XX X0X 0X0
Attention: Xxxxx Rozee
Telecopier No.: (000) 000-0000
Email: xxxxx.xxxxx@xxxxxxxxxxx.xxx
with a copy to:
Lang Xxxxxxxx BCE Place, XX Xxx 000 Xxxxx 0000, 000
Xxx Xxxxxx Xxxxxxx XX X0X 0X0
Attention: Xxxxxxx Xxxxx
Telecopier No.: (000) 000-0000
Email: xxxxxx@xxxxxxxxxxxx.xx
(c) If to Westshore at:
Westshore Terminals Income Fund
Suite 1600
0000 Xxxx Xxxxxxxx Xxxxxx
Xxxxxxxxx XX X0X 0X0
Attention: X.X. Xxxxxxxxx / X. Xxxxxxxxx
Telecopier No.: (000) 000-0000
Email: xxxxxxx_xxxxxxxxx@xx-xxxxx.xxx
xxxx_xxxxxxxxx@xx-xxxxx.xxx
(d) If to OTPP at:
0000 Xxxxx Xxxxxx
Xxxxxxx, XX X0X 0X0
Attention: Senior Vice-President,
Global Active Equities
Telecopier No.: (000) 000-0000
Email: Xxxxx_Xxxxxx@xxxx.xxx
With a copy to OTPP:
0000 Xxxxx Xxxxxx
Xxxxxxx, XX X0X 0X0
Attention: General Counsel
(e) If to Sherritt at:
0000 Xxxxx Xxxxxx
Xxxxxxx, XX X0X 0X0
Attention: Xxxxxx X. Xxxxxx
Telecopier No.: (000) 000-0000
Email: xxxxxxx@Xxxxxxxx.xxx
With a copy to Torys LLP:
Xxxxx 0000, Xxxxxxxx Xxxx Xxxxx,
XX Xxxxxx
Xxxxxxx, XX X0X 0X0
Attention: Xxxxx Xxxxxxxxx
Telecopier No.: (000) 000-0000
Email: xxxxxxxxxx@xxxxx.xxx
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. 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.
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.
7.2 Assignment
Except as otherwise permitted hereunder, neither this Agreement nor any rights
or obligations under this Agreement shall be assignable by any Party without the
prior written consent of each of the other Parties. Subject thereto, provided
that no assignment shall relieve a Party of its obligations, 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. No third party shall have any rights hereunder
unless expressly stated to the contrary.
7.3 Co-Operation and 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 this 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 this Agreement and carry out its
provisions. Without limitation and subject to the terms of this Agreement, the
Parties shall co-operate with each other in furtherance of completing the
Transaction contemplated by this Agreement.
7.4 Effect on Westshore Trustee
The trustee of Westshore (on behalf of the trustees of Westshore) has entered
into this Agreement solely in his capacity as trustee on behalf of Westshore and
the obligations of Westshore hereunder shall not be personally binding upon the
trustee or upon any of the unitholders of Westshore or any annuitant under a
plan of which a unitholder is a trustee or carrier ("annuitant"). Any recourse
against Westshore, the trustee or any unitholder or annuitant in any manner in
respect of any indebtedness, obligation or liability of Westshore 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 Westshore's assets, without recourse to the personal assets of any
of the foregoing Persons.
7.5 Expenses
Subject to Section 2.3 and 6.3, the Parties agree that all costs and expenses of
the Parties relating to the Transaction and the transactions contemplated
hereby, including legal fees, accounting fees, financial advisory fees,
regulatory filing fees, stock exchange fees, all disbursements of advisors and
printing and mailing costs, shall be paid by the Party incurring such expenses.
7.6 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.
7.7 Transfer Tax Elections
The Parties shall co-operate in good faith to file any relevant elections in
order to minimize taxes payable under Part IX of the Excise Tax Act (Canada),
the Quebec Sales Tax Act and any other provincial or territorial legislation
imposing taxes on the sale or transfer of the Fording Contributed Assets, Teck
Contributed Assets, Luscar Contributed Assets and Prairie Operations.
7.8 Assignment of Tax Pools
The Luscar Entities shall elect to assign the benefit of their British Columbia
mining tax pools related to the Luscar Contributed Assets to New Fording.
IN WITNESS WHEREOF the Parties hereto have executed this Agreement as of the
date first written above.
FORDING INC.
By:
----------------------------------------------
Name: Xxxxx X. Xxxxxxxx
Title: President and Chief Executive Officer
TECK COMINCO LIMITED
By:
----------------------------------------------
Name: Xxxxx Xxxxxxxx
Title: Deputy Chairman and Chief Executive
Officer
WESTSHORE TERMINALS INCOME FUND by its trustees
For and on behalf of the trustees
By:
----------------------------------------------
Name: Xxxxxxx Xxxxxxxxx
Title: Trustee
ONTARIO TEACHERS' PENSION PLAN BOARD
By:
----------------------------------------------
Name: Xxxxx X. Xxxxxx
Title: Senior Vice-President, Global Active
Equities
SHERRITT INTERNATIONAL CORPORATION
By:
----------------------------------------------
Name: Xxx X. Xxxxxxx
Title: Chairman
SCHEDULE 2.1
PLAN OF ARRANGEMENT MADE PURSUANT TO SECTION 192
OF THE CANADA BUSINESS CORPORATIONS ACT
Table of Contents
(continued)
Page
Table of Contents
Page
ARTICLE 1 INTERPRETATION.............................................................................1
1.1 Definitions....................................................................................1
1.2 Certain Rules of Interpretation................................................................7
1.3 Schedules......................................................................................8
ARTICLE 2 PURPOSE AND EFFECT OF THE ARRANGEMENT......................................................8
2.1 Arrangement....................................................................................8
2.2 Effectiveness..................................................................................8
ARTICLE 3 ARRANGEMENT................................................................................9
3.1 Commencing at the Effective Time, each of the events set out below shall occur and shall be
deemed to occur, except as otherwise noted, one minute apart and in the following order
without any further act or formality:..........................................................9
3.2 Adjustments to Cash Option and Unit Option Elections..........................................13
3.3 Manner of Making Elections....................................................................14
ARTICLE 4 STATED CAPITAL ADDITIONS..................................................................14
4.1 Additions to Stated Capital...................................................................14
4.2 Stated Capital Accounts of New Fording........................................................15
ARTICLE 5 NOTE AND PREFERRED SHARE DETERMINATION....................................................15
5.1 Subordinated Notes and Preferred Shares.......................................................15
ARTICLE 6 DISSENTING SHAREHOLDERS...................................................................16
6.1 Rights of Dissent.............................................................................16
6.2 Recognition of Dissenting Shareholders........................................................16
ARTICLE 7 OUTSTANDING CERTIFICATES..................................................................16
7.1 Outstanding Certificates......................................................................16
7.2 Provision of Consideration....................................................................16
7.3 Depository....................................................................................17
7.4 No Entitlement to Interest....................................................................17
7.5 Certificates..................................................................................17
ARTICLE 8 AMENDMENTS................................................................................17
8.1 Amendments....................................................................................17
8.2 Proposed Amendments...........................................................................18
8.3 Effectiveness of Amendments...................................................................18
SCHEDULE "A"
FORDING CANADIAN COAL TRUST
EXCHANGE OPTION PLAN
ARTICLE 1 PURPOSE OF THE PLAN........................................................................2
1.1 Purpose........................................................................................2
ARTICLE 2 DEFINITIONS AND INTERPRETATION.............................................................2
2.1 Definitions....................................................................................2
2.2 Interpretation.................................................................................6
2.3 Effectiveness..................................................................................6
ARTICLE 3 GENERAL PROVISIONS OF THE PLAN.............................................................6
3.1 Administration.................................................................................6
3.2 Units Reserved.................................................................................6
3.3 Limits with respect to Insiders................................................................6
3.4 Non-Exclusivity................................................................................7
3.5 Amendment or Termination of Plan and Exchange Options..........................................7
3.6 Compliance with Laws and Stock Exchange Rules..................................................7
3.7 Participation in the Plan......................................................................8
3.8 CP Optionholders...............................................................................8
ARTICLE 4 EXCHANGE OF OPTIONS........................................................................8
4.1 Exchange of Options............................................................................8
4.2 Option Agreement...............................................................................9
4.3 Early Expiry...................................................................................9
4.4 Limited Assignment............................................................................10
4.5 No Rights as Unitholder or to Remain an Eligible Person; Status of Consultants................11
4.6 Adjustments...................................................................................11
ARTICLE 5 EXERCISE OF OPTIONS.......................................................................12
5.1 Manner of Exercise............................................................................12
5.2 Delivery of Unit Certificate..................................................................12
5.3 Cashless Exercise.............................................................................13
5.4 Withholding...................................................................................13
5.5 Indemnification...............................................................................13
5.6 Effect on Trustees............................................................................14
SCHEDULE "A - NOTICE OF EXERCISE
FORDING CANADIAN COAL TRUST EXCHANGE OPTION PLAN
SCHEDULE "B" - FORM OF OPTION AGREEMENT
CANADIAN COAL TRUST EXCHANGE OPTION PLAN OPTION AGREEMENT
SCHEDULE "C"-- CASHLESS EXERCISE INSTRUCTION FORM
FORDING CANADIAN COAL TRUST EXCHANGE OPTION PLAN
SCHEDULE "B" - FORDING CANADIAN COAL TRUST NOTE
SCHEDULE "C"
SCHEDULE "D" - 4123212 CANADA LTD. COMMON SHARES
SCHEDULE "E" - 4123212 CANADA LTD. NOMINAL NOTE
SCHEDULE "F" - 4123212 CANADA LTD. PREFERRED SHARES
SCHEDULE "G" - 4123212 CANADA LTD. PROMISSORY NOTE
SCHEDULE "H" - FCL AMALCO AMALGAMATION PROVISIONS
SCHEDULE "I" - NEW FORDING AMALGAMATION PROVISIONS
APPENDIX 1 TO SCHEDULE "I"
APPENDIX J - LUSCAR/CONSOL NOTE
ARTICLE 1
INTERPRETATION
1.1 Definitions
In this Plan of Arrangement, the following terms have the following respective
meanings:
(a) "Arrangement" means the arrangement under Section 192 of the CBCA
described in this Plan of Arrangement involving the Corporation,
FCL, Subco, the Fund, Teck, Westshore, TBCI, QCP, Luscar, CONSOL
and SCPII;
(b) "Business Day" means a day, which is not a Saturday, Sunday or
statutory holiday in the Provinces of Alberta, British Columbia
and Ontario, on which the principal commercial banks in downtown
Calgary, Vancouver and Toronto are generally open for the
transaction of commercial banking business;
(c) "Canadian Tax Act" means the Income Tax Act, R.S.C. 1985, c.1 (5th
Supp.), as amended;
(d) "Cash Option" means the election available to Participating
Shareholders pursuant to the Arrangement to ultimately receive
$35.00 in cash for each Common Share in respect of which an
election is made, subject to pro-ration, which election is given
effect under this Plan by such Participating Shareholder receiving
a Fund Note instead of a Unit for the exchanges described herein;
(e) "CBCA" means the Canada Business Corporations Act, R.S.C. 1985,
C.c-44, as amended, including the regulations promulgated
thereunder;
(f) "Combination Agreement" means the combination agreement dated
January 13, 2003 between the Corporation, Teck, Westshore, OTPP
and Sherritt International Corporation, as the same may be amended
in accordance with its terms;
(g) "Common Shares" means the common shares in the capital of the
Corporation;
(h) "Common Share Trading Price" means the weighted average trading
price of the Common Shares on the TSX for the five trading days
immediately preceding the Effective Date;
(i) "CONSOL" means CONSOL Energy Inc., a corporation existing under
the laws of o;
(j) "Corporation" or "Fording" means Fording Inc., a corporation
existing under the laws of Canada;
(k) "CP Transaction" means the transaction completed on October 1,
2001 pursuant to which Fording became a publicly traded
corporation, a predecessor to Fording having previously been
indirectly owned by a single shareholder, Canadian Pacific
Limited;
(l) "CP Optionholders" means the former Canadian Pacific Limited
optionholders who held options and accompanying share appreciation
rights under the key employee stock option plan of Canadian
Pacific Limited which options and stock appreciation rights were
replaced, in part, by options and accompanying share appreciation
rights issued under Fording's key employee stock option plan
pursuant to a plan of arrangement setting forth the steps
comprising the CP Transaction;
(m) "Depository" means Computershare Trust Company of Canada as the
registrar and transfer agent of the Units;
(n) "Director" means the Director appointed under Section 260 of the
CBCA;
(o) "Dissenting Shareholder" means a registered Shareholder who has
duly exercised, and who does not, prior to the time at which the
resolution of Securityholders authorizing the Arrangement is
approved, withdraw or otherwise relinquish the dissent rights
available to it in connection with the Arrangement;
(p) "Effective Date" means the date shown on the Certificate of
Arrangement to be issued by the Director giving effect to the
Arrangement;
(q) "Effective Time" means the first moment in time on the Effective
Date;
(r) "Elected Cash Amount" has the meaning set out in Section
3.2(b)(i);
(s) "Elected Unit Amount" means the aggregate number of Common Shares
in respect of which holders of Common Shares have elected or are
deemed to have elected to receive ultimately Units in respect of
their Common Shares, prior to any pro-ration hereunder;
(t) "Election Form" means the election form for use by Participating
Shareholders in the form provided to them;
(u) "Exchange Option Plan" means the Unit option plan of the Fund
created as part of the Arrangement pursuant to which Options will
ultimately be exchanged for Exchange Options in the form attached
to this Plan as Schedule "A";
(v) "Exchange Options" means options to purchase Units, and any
accompanying unit appreciation rights, issued under the Exchange
Option Plan;
(w) "Excluded Assets" means all of the outstanding shares and debt of
NYCO Minerals Inc. and 627066 Alberta Ltd., the Initial Unit and
Fording's rights and obligations in connection with its interests
in a former mining operation located at Mount Washington;
(x) "Existing Option Plans" means, collectively, the Corporation's
Directors' Stock Option Plan and its Key Employee Stock Option
Plan;
(y) "FCL" means Fording Coal Limited, a corporation existing under the
laws of Canada;
(z) "FCL Amalco" means the corporation resulting from the amalgamation
of the Corporation and FCL which forms part of this Plan of
Arrangement;
(aa) "FCL Amalco Common Shares" means the common shares in the capital
of FCL Amalco;
(bb) "Fund" means the Fording Canadian Coal Trust, a trust to be
established under the laws of Alberta pursuant to a declaration of
trust;
(cc) "Fund Notes" means the demand non-interest bearing notes of the
Fund, each with a principal amount of $35.00, issuable pursuant to
the Plan of Arrangement, substantially in the form attached as
Schedule "B";
(dd) "Initial Unit" means the Unit to be issued to FCL in consideration
of the contribution of all of the issued and outstanding common
shares of Subco upon the formation and settlement of the Fund;
(ee) "Information Circular" means the Notice of Meeting, Notice of
Petition and Information Circular of the Corporation dated
November 20, 2002 and the supplement thereto dated December 8,
2002;
(ff) "Long-Term Holder" means a Shareholder who:
(i) owned, or was deemed by the Canadian Tax Act to own, shares
of Canadian Pacific Limited ("CPL") on January 1, 1972, had
a cost in such shares on January 1, 1972 that was less than
$13.88, continued to hold such shares until October 1,
2001, being the date on which the CP Transaction occurred,
and continues to hold the Common Shares received in
exchange for such shares of CPL through to the Effective
Date; or
(ii) is an individual (other than a trust) resident in Canada
who owned shares of CPL on February 22, 1994, continued to
hold such shares until October 1, 2001, being the date on
which the CP Transaction occurred, and continues to hold
the Common Shares received in exchange for such shares of
CPL through to the Effective Date;
(gg) "Luscar" means Luscar Coal Limited, a corporation existing under
the laws of o;
(hh) "Luscar Assets" means the Line Creek mine, the Cheviot mine, the
Luscar mine and the collective interest of Luscar and CONSOL in
the Neptune terminal including any net working capital related to
these assets;
(ii) "Luscar Asset Obligations" means, in connection with: (a) all of
the Luscar Assets other than the Luscar mine, the ordinary course
of business liabilities and obligations of Luscar and CONSOL
related to the transferred assets; and (b) in the case of the
Luscar mine, all of the ordinary course of business liabilities
and obligations of Luscar and CONSOL in connection with such
assets other than third party debt, pre-existing reclamation
liabilities, any underfunding or accrued pension liabilities and
severance in respect of transferred employees of the Luscar mine;
(jj) "Luscar/CONSOL Note" means the demand non-interest bearing notes
of FCL substantially in the form attached as Schedule J;
(kk) "Maximum Cash Amount" means $1,050 million;
(ll) "Maximum Unit Amount" means the number of Common Shares
outstanding at the Effective Time less 30,000,000 (representing
the total number of Common Shares which will be purchased for cash
under the Arrangement) and less the number of Common Shares held
by Small Non-Board Lot Holders and Dissenting Shareholders;
(mm) "Meeting" means the special meeting of Securityholders to be held
on January 22, 2003, including any adjournment(s) or
postponement(s) thereof, to consider and to vote upon, among other
things, the Arrangement Resolution, the Unitholder Rights Plan
Resolution and the PWC Resolution (as such terms are defined in
the Information Circular as modified by the third supplement
thereto expected to be dated January o, 2003);
(nn) "New Fording" means the corporation resulting from the
amalgamation of FCL Amalco and Subco which forms part of this Plan
of Arrangement;
(oo) "New Non-Voting Shares" means the New Non-Voting Shares in the
capital of FCL Amalco having the rights, privileges, conditions
and restrictions specified in Schedule "C";
(pp) "New Options" means options to purchase New Non-Voting Shares
issued by FCL Amalco, pursuant to the Arrangement in exchange for
Options;
(qq) "New Voting Shares" means the New Voting Preference Shares in the
capital of FCL Amalco having the rights, privileges, conditions
and restrictions specified in Schedule "C";
(rr) "Note Indenture" means the trust indenture providing for issuance
of the Subordinated Notes to be dated the Effective Date and made
between New Fording and Computershare Trust Company of Canada as
Trustee;
(ss) "OTPP" means the Ontario Teachers' Pension Plan Board, a non-share
capital corporation established under the laws of the Province of
Ontario;
(tt) "OTPP Unit Amount" means the number of Common Shares held directly
or indirectly by OTPP;
(uu) "Options" means the outstanding options to purchase Common Shares
issued pursuant to the Existing Option Plans;
(vv) "Participating Shareholders" means at the Effective Time, holders
of Common Shares other than Small Non-Board Lot Holders and
Dissenting Shareholders;
(ww) "Partnership" means the Fording Canadian Coal Partnership, the
general partnership formed under the laws of Alberta the initial
partners of which will be FCL and Teck;
(xx) "Plan of Arrangement" or "Plan" means this plan of arrangement and
any amendment or variation made in accordance with the terms
hereof;
(yy) "Prairie Operations" means Fording's thermal coal operations
including its operations at Genessee, Whitewood and Highvale,
Alberta, its undeveloped resource properties, and the royalties
collected from third parties mining at Fording's mineral
properties at locations in Alberta and Saskatchewan and including
any net working capital related to these assets;
(zz) "Proceeds Date" means the third trading day on the TSX following
the Effective Date or such other date as the Trustees may select;
(aaa) "QCP" means Quintette Coal Partnership, a partnership existing
under the laws of British Columbia, having as its partners, Teck
and TBCI;
(bbb) "QCP Mobile Equipment" means all mobile equipment owned by QCP
other than mobile equipment owned by QCP and leased to Teck as at
January o, 2003;
(ccc) "Royalty" means the participation right granted to [FCL] to
receive a percentage, not to exceed 5%, of the gross revenue
realized from production from lands forming part of the Prairie
Operations beyond current levels, excluding for this purpose the
planned 2005 Genesee expansion;
(ddd) "SCPII" means Sherritt Coal Partnership II a [general] partnership
existing under the laws of Ontario;
(eee) "Securityholders" means, collectively, Shareholders and holders of
Options;
(fff) "Shareholder Rights Plan" means the existing Fording shareholder
rights plan;
(ggg) "Shareholders" means the holders from time to time of Common
Shares;
(hhh) "Small Non-Board Lot Holder" means a registered holder of Common
Shares holding 20 Common Shares or less as of the close of
business in Calgary, Alberta on November 19, 2002 who continues to
hold such Common Shares as a registered holder through to the
Proceeds Date and who does not elect to receive Units pursuant to
the Arrangement;
(iii) "Subco" means 4123212 Canada Ltd., a corporation existing under
the laws of Canada;
(jjj) "Subco Common Shares" means the common shares in the capital of
Subco having substantially the rights, privileges, conditions and
restrictions set forth in Schedule "D";
(kkk) "Subco Nominal Notes" means the demand, non-interest bearing notes
of Subco, each with a principal amount of $0.01, issuable pursuant
to the Arrangement substantially in the form attached as Schedule
"E";
(lll) "Subco Preferred Shares" means the preferred shares in the capital
of Subco having substantially the rights, privileges, conditions
and restrictions set forth in Schedule "F", and each having a
redemption amount determined in accordance with Section 5.1;
(mmm) "Subco Promissory Notes" means the demand non-interest bearing
promissory notes of Subco each with a principal amount equal to
the amount obtained by dividing [$445] million by the number of
Common Shares held by Participating Shareholders immediately prior
to the Effective Time substantially in the form attached as
Schedule "G";
(nnn) "Subordinated Notes" means the unsecured, subordinated notes of
Subco to be issued by Subco pursuant to the Arrangement having
substantially the terms summarized in the Information Circular and
each having a principal amount determined in accordance with
Section 5.1;
(ooo) "TBCI" means Teck Bullmoose Coal Inc., a corporation existing
under the laws of British Columbia;
(ppp) "Teck" means Teck Cominco Limited, a corporation existing under
the laws of Canada;
(qqq) "Teck Contributed Assets" means all assets (other than cash) and
liabilities associated with the Elkview Mine and all other
properties with potential coal reserves or resources owned by Teck
or its affiliates in North America and associated surface rights
other than (a) the Quintette coal leases and licences and
overlying surface tenures (the balance of which will be conveyed
after completion of the reclamation); (b) mobile equipment and
related parts owned by QCP (the balance of the QCP Mobile
Equipment and related parts will be conveyed to the Partnership
after completion of reclamation); (c) any assets related to the
Bullmoose mine (the balance of which will be conveyed, subject to
receipt of joint venture consent, when shutdown by TBCI has been
completed and the mine reclaimed); and (d) for greater certainty,
mobile equipment used at Elkview leased from QCP and Teck's and
TBCI's interest in QCP;
(rrr) "TSX" means the Toronto Stock Exchange;
(sss) "Unit" means a trust unit of the Fund;
(ttt) "Unit Option" means the election available to Participating
Shareholders pursuant to the Arrangement to ultimately receive a
Unit for each Common Share in respect of which an election is made
or deemed to be made under this Plan, subject to pro-ration,
instead of a Fund Note for the exchanges described herein which
election is given effect under this Plan by such Participating
Shareholder receiving a Unit; and
(uuu) "Westshore" means Westshore Terminals Income Fund.
1.2 Certain Rules of Interpretation
In this Plan:
(a) Currency -- Unless otherwise specified, all references to money
amounts are to the lawful currency of Canada.
(b) Headings -- Headings of Articles and Sections are inserted for
convenience of reference only and shall not affect the
construction or interpretation of this Plan.
(c) Including -- Where the word "including" or "includes" is used in
this Plan, it means "including (or includes) without limitation".
(d) 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.
(e) Statutory References -- A reference to a statute includes all
regulations made pursuant to such statute and, unless otherwise
specified, the provisions of any statute or regulation which
amends, supplements or supersedes any such statute or any such
regulation.
(f) Time Periods -- Unless otherwise specified, time periods within or
following which any payment is to be made or act is to be done
shall be calculated by excluding the day on which the period
commences and including the day on which the period ends and by
extending the period to the next Business Day following if the
last day of the period is not a Business Day.
1.3 Schedules
The Schedules to this Plan, as listed below, are an integral part of this Plan:
Schedule Description
Schedule "A" Exchange Option Plan
Schedule "B" Form of Fund Note
Schedule "C" Rights, Privileges, Conditions and Restrictions attaching to the New Voting
Shares and the New Non-Voting Shares
Schedule "D" Rights, Privileges, Conditions and Restrictions attaching to the Subco
Common Shares
Schedule "E" Form of Subco Nominal Note
Schedule "F" Rights, Privileges, Conditions and Restrictions attaching to the Subco
Preferred Shares
Schedule "G" Form of Subco Promissory Note
Schedule "H" FCL Amalco Amalgamation Provisions
Schedule "I" New Fording Amalgamation Provisions
ARTICLE 2
PURPOSE AND EFFECT OF THE ARRANGEMENT
2.1 Arrangement
This Plan of Arrangement is made pursuant to, is subject to the provisions of,
and forms part of, the Combination Agreement.
2.2 Effectiveness
Upon filing the Articles of Arrangement and the issuance of the Certificate of
Arrangement, this Plan of Arrangement will become effective and will be binding
without any further authorization, act or formality on the part of the Parties,
the Court, the Director or the Securityholders, from and after the Effective
Time. Other than as expressly provided in Article 3, no portion of this Plan of
Arrangement shall take effect with respect to any Party or Person until the
Effective Time.
ARTICLE 3
ARRANGEMENT
3.1 Commencing at the Effective Time, each of the events set out below
shall occur and shall be deemed to occur, except as otherwise noted,
one minute apart and in the following order without any further act or
formality:
(a) The Shareholder Rights Plan will be terminated;
(b) Each outstanding Common Share held by a Small Non-Board Lot Holder
will be cancelled by Fording in consideration for the payment of
an amount in cash equal to the Common Share Trading Price;
(c) The stated capital account maintained by FCL for its class of
common shares will be reduced to $1.00 without any payment or
other distribution of property by FCL therefor;
(d) FCL will transfer to SCPII beneficial ownership of the Prairie
Operations, subject to the Royalty which shall be retained by FCL,
in consideration of a cash payment by SCPII of $225 million;
(e) Luscar and CONSOL
(i) will transfer to FCL all of their interests in the Luscar
Assets; and
(ii) will pay to FCL in cash the amount, if any, described in
Schedule 2.4 to the Combination Agreement;
in consideration of
(iii) the assumption by FCL of the Luscar Asset Obligations,
(iv) the payment by FCL to Luscar and CONSOL of the amount, if
any, described in Schedule 2.4 of the Combination
Agreement;
(v) the Luscar/CONSOL Note;
(f) Fording and FCL will amalgamate to form FCL Amalco on the terms
set out in Schedule "H" as if such amalgamation had been approved
and undertaken pursuant to and in accordance with Subsection
184(1) of the CBCA except to the extent modified by the Plan;
(f.1) The Luscar/CONSOL Note held by Luscar and CONSOL will be repaid by
the issuance of 6.4 million FCL Amalco Common Shares to Luscar and
CONSOL;
(g) Teck will contribute to the Partnership $125 million of cash and
will transfer into the Partnership beneficial ownership of the
Teck Contributed Assets (but excluding the Teck Contributed Assets
to be contributed by TBCI and QCP) as a capital contribution to
the Partnership in exchange for the assumption of obligations and
an interest in the Partnership which will be a 34.833% interest
after completion of all capital contributions to the Partnership
made pursuant to this Section 3.1;
(h) Contemporaneously with the transaction set forth in paragraph
3.1(g), QCP will contribute to the Partnership all of its fee
simple lands and related tenures including the fixtures thereon
(excluding its coal lease and licences and overlying surface
tenures) in exchange for the assumption of obligations and an
interest in the Partnership which will be a 0.164% interest after
completion of all capital contributions to the Partnership made
pursuant to this Section 3.1, and for greater certainty, the
consideration for the interest in the Partnership will include
QCP's obligation to convey the balance of the QCP Mobile Equipment
and its coal lease and licences and overlying tenures to the
Partnership after completion of reclamation); [Note to draft:
Assets being contributed to be confirmed.]
(i) TBCI will acquire an interest in the Partnership which will be a
0.003% interest after completion of all capital contributions to
the Partnership made pursuant to this Section 3.1, the
consideration therefor being TBCI's obligation, subject to receipt
of joint venture consent, to transfer to the Partnership all coal
properties comprising the Bullmoose Mine owned by TBCI after
completion of reclamation at the Bullmoose Mine;
(j) FCL Amalco will transfer beneficial ownership of all of its assets
but excluding:
(i) the Excluded Assets; and
(ii) that undivided interest, expressed as a percentage, in all
of the property owned by FCL Amalco that qualifies as
"Canadian resource property" within the meaning of the
Canadian Tax Act and is in respect of the Fording River
Coal Mine and which has a fair market value of $200
million;
into the Partnership as a capital contribution to the Partnership
in exchange for
(iii) a cash payment of $125 million;
(iv) the assumption of all obligations relating to the assets
contributed to the Partnership as a capital contribution
pursuant to this paragraph 3.1(j); and
(v) an interest in the Partnership equal to the product
obtained when 65% is multiplied by the quotient obtained
when
(A) the excess of the fair market value of the assets
contributed to the Partnership as a capital
contribution pursuant to this paragraph 3.1(j) over
the total of $125 million and the aggregate amount
of obligations assumed pursuant to this paragraph
3.1(j);
is divided by
(B) the excess of the total fair market value of the
assets contributed to the Partnership as capital
contributions pursuant to this paragraph 3.1(j) and
paragraph 3.1(bb) over the total of $125 million and
the amount of obligations assumed pursuant to this
paragraph 3.1(j) and paragraph 3.1(bb);
(k) The New Non-Voting Shares and the New Voting Shares will be
created as authorized classes of shares of FCL Amalco;
(l) Each outstanding FCL Amalco Common Share held by (a) a
Participating Shareholder or (b) Luscar or CONSOL, will be
exchanged for one New Voting Share and one New Non-Voting Share,
all such FCL Amalco Common Shares so exchanged will be cancelled,
and thereafter the FCL Amalco Common Shares will cease to be an
authorized class of shares of FCL Amalco;
(m) Contemporaneously with the transaction set forth in paragraph
3.1(l), each outstanding Option will be exchanged for a New Option
and the exercise price under the New Option will be equal to the
excess of (i) the exercise price of the outstanding Option over
(ii) the excess of (A) the fair market value of an FCL Amalco
Common Share immediately prior to the share exchange referred to
in paragraph 3.1(l) over (B) the fair market value of a New
Non-Voting Share immediately after the share exchange referred to
in paragraph 3.1(l), and thereafter the outstanding Option will be
cancelled;
(n) Each New Voting Share held by (a) a Participating Shareholder or
(b) Luscar or CONSOL, will be acquired by Subco in exchange for
the issuance of one Subco Nominal Note;
(o) Subject to section 3.2, each New Non-Voting Share and Subco
Nominal Note held by a Participating Shareholder (other than a
Long-Term Holder) who has elected the Cash Option in respect of
the relevant Common Share will be acquired by the Fund in exchange
for the issuance of one Fund Note;
(p) Subject to section 3.2, and contemporaneously with the transaction
set forth in paragraph 3.1(o), each New Non-Voting Share and Subco
Nominal Note held by a Participating Shareholder (other than a
Long-Term Holder) who has elected the Unit Option in respect of
the relevant Common Share will be acquired by the Fund in exchange
for the issuance of one Unit;
(p.1) Contemporaneously with the transaction set forth in paragraph
3.1(o), each New Non-Voting Share and Subco Nominal Note held by
Luscar or CONSOL will be acquired by the Fund in exchange for the
issuance of one Unit;
(q) Each New Non-Voting Share held by a Long-Term Holder will be
acquired by Subco in exchange for the issuance of one Subco
Promissory Note, one Subordinated Note and one Subco Preferred
Share;
(r) Subject to section 3.2 and contemporaneous with the transaction
set forth in paragraph 3.1(q), the Subco Nominal Notes, Subco
Promissory Notes, Subordinated Notes and Subco Preferred Shares
held by each Long-Term Holder who has elected the Cash Option in
respect of the relevant Common Share will be acquired by the Fund
in exchange for the issuance of one Fund Note for each New
Non-Voting Share held by the Long-Term Holder immediately before
the exchange referred to in paragraph 3.1(q);
(s) Subject to section 3.2, the Subco Nominal Notes, Subco Promissory
Notes, Subordinated Notes and Subco Preferred Shares held by each
Long-Term Holder who has elected the Unit Option in respect of the
relevant Common Share will be acquired by the Fund in exchange for
the issuance of one Unit for each New Non-Voting Share held by the
Long-Term Holder immediately before the exchange referred to in
paragraph 3.1(q);
(t) The Exchange Option Plan will become effective;
(u) Each New Option will be exchanged for one Exchange Option and the
exercise price under the Exchange Option will be:
(i) the exercise price under the original Option for which the
New Option was exchanged, or
(ii) such other amount determined by the Trustees of the Fund as
required to ensure that the "in-the-money" amount of the
Exchange Option, immediately after the exchange, will be
equal to the "in-the-money" amount of the corresponding
original Option immediately before the exchange referred to
in paragraph 3.1(l),
and the New Option will be cancelled;
(v) The Initial Unit will be redeemed by the Fund for an amount equal
to its fair market value;
(w) Each New Non-Voting Share held by the Fund will be acquired by
Subco in exchange for the issuance of one Subordinated Note, one
Subco Preferred Share and one Subco Promissory Note;
(x) The Subco Nominal Notes held by the Fund will be repaid by Subco
by the payment of cash equal to their principal amount;
(y) The Subco Promissory Notes held by the Fund will be repaid by
Subco by the payment of cash equal to their principal amount;
(z) Subco will amalgamate with FCL Amalco to form New Fording on the
terms set out in Schedule "I" as if such amalgamation had been
approved and undertaken pursuant to and in accordance with
Subsection 184(l) of the CBCA except to the extent modified by the
Plan;
(aa) Each of Teck and Westshore will pay $150 million to the Fund to
purchase 4,285,714 Units from the Fund, and SCPII will pay $375
million to the Fund to purchase 10,714,285 Units from the Fund, in
each case at a price of $35.00 per Unit;
(bb) New Fording will transfer beneficial ownership of the property
described in subparagraph 3.1(j)(ii) into the Partnership in
exchange for the assumption of all obligations related to such
property and an interest in the Partnership equal to the excess of
65% over the interest in the Partnership described in subparagraph
3.1(j)(v);
(cc) The Fund Notes will be repaid by the Fund by the payment of cash
equal to their principal amount (and the Fund will hold such
payment on behalf of the recipients until payment thereof in
accordance with this Plan); and
(dd) The Existing Option Plans will be terminated and all rights and
entitlements of participants under such plan will be terminated.
3.2 Adjustments to Cash Option and Unit Option Elections
(a) The Maximum Cash Amount will be paid, and a number of Units equal
to the Maximum Unit Amount will be issued, in their entirety, as
the consideration under the Arrangement. If more than the Maximum
Cash Amount is elected pursuant to the Cash Option it will be
necessary to pro rate the Maximum Cash Amount among those holders
who elected to receive cash and pay the balance of the Elected
Cash Amount in Units. If a number of Units greater than the
Maximum Unit Amount is elected pursuant to the Unit Option at an
issue price of $35.00 per Unit it will be necessary to pro rate
the Maximum Unit Amount among those holders who elect to receive
Units and pay the balance of the Elected Unit Amount in cash in an
amount equal to $35.00 per Common Share, subject to pro-ration as
described below. The manner of pro-ration is set out in this
Section.
(b) Notwithstanding the election of the Cash Option by a Participating
Shareholder, the number of Common Shares in respect of which the
holder will be deemed to have elected the Cash Option will be:
(i) subject to paragraph 3.2(c)(ii), if the product of the
aggregate number of Common Shares in respect of which
Participating Shareholders elect the Cash Option and $35.00
(the "Elected Cash Amount") does not exceed the Maximum
Cash Amount, the number of Common Shares in respect of
which the holder elected the Cash Option;
(ii) if the Elected Cash Amount exceeds the Maximum Cash Amount,
that number of Common Shares determined by multiplying the
total number of Common Shares in respect of which the
holder elected the Cash Option by the quotient obtained by
dividing the Maximum Cash Amount by the Elected Cash
Amount, and such holder shall be deemed to have elected the
Unit Option in respect of the balance of such holder's
Common Shares.
(c) Notwithstanding the election or deemed election of the Unit Option
by a Participating Shareholder (other than OTPP), the number of
Common Shares in respect of which the holder (other than OTPP)
will be deemed to have elected the Unit Option will be:
(i) subject to paragraph 3.2(b)(ii), if the Elected Cash Amount
exceeds the Maximum Cash Amount, the number of Common
Shares in respect of which the holder elected, or is deemed
to have elected pursuant to paragraph 3.3(a) or 3.3(b), the
Unit Option; and
(ii) if the Elected Cash Amount does not exceed the Maximum Cash
Amount, that number of Common Shares determined by
multiplying the total number of Common Shares in respect of
which the holder elected or is deemed to have elected
pursuant to paragraph 3.3(b), the Unit Option by the
quotient
obtained by dividing:
(i) the excess of the Maximum Unit Amount over the OTPP Unit
Amount, by
(ii) the excess of the Elected Unit Amount over the OTPP Unit
Amount;
and such holder shall be deemed to have elected the Cash Option in
respect of the balance of such holder's Common Shares.
3.3 Manner of Making Elections
(a) Each Participating Shareholder (other than OTPP) shall have the
opportunity to elect either the Cash Option, the Unit Option or a
combination thereof by depositing, or by causing its agent or
other representative to deposit, with Computershare Trust Company
of Canada prior to the Effective Date or such other date as is
determined by the board of directors of the Corporation and
publicly announced in advance thereof, a duly completed Election
Form indicating such holder's election together with the
certificates representing such holder's Common Shares. OTPP shall
be deemed to have made an election for the Unit Option in respect
of all of the Common Shares held [directly or indirectly] by OTPP.
(b) Any holder who (i) does not deposit with Computershare Trust
Company of Canada a duly completed Election Form prior to the
Proceeds Date or (ii) otherwise fails to comply fully with the
requirements of paragraph 3.3(a) and the Election Form in respect
of such holder's election of the Cash Option or Unit Option, shall
be deemed to have elected the Unit Option in respect of its Common
Shares.
(c) Any deposit of an Election Form and accompanying certificates may
be made at any of the offices of Computershare Trust Company of
Canada specified in the Election Form.
ARTICLE 4
STATED CAPITAL ADDITIONS
4.1 Additions to Stated Capital
The amounts added to the stated capital accounts maintained by FCL, FCL Amalco
or Subco, as the case may be, in respect of the issuances of shares of the
capital stock of those corporations under the Plan will be as follows:
(a) in connection with the issuance of 6.4 million FCL Amalco Common
Shares pursuant to paragraph 3.1(f.1), the amount of $224 million
shall be added to the stated capital account maintained by FCL
Amalco in respect of the FCL Amalco Common Shares;
(b) in connection with the issuance of New Voting Shares pursuant to
paragraph 3.1(l) of the Plan, the amount of $0.01 per share
multiplied by the number of New Voting Shares so issued, shall be
added to the stated capital account maintained by FCL Amalco in
respect of the New Voting Shares (the "New Voting Capital
Amount");
(c) in connection with the issuance of New Non-Voting Shares pursuant
to paragraph 3.1(l) of the Plan, an amount equal the excess of the
paid-up capital, under the Canadian Tax Act, of the FCL Amalco
Common Shares immediately prior to such share exchange over the
New Voting Capital Amount shall be added to the stated capital
account maintained by FCL Amalco in respect of the New Non-Voting
Shares; and
(d) in connection with the issuance of Subco Preferred Shares pursuant
to the Plan, an amount equal to the aggregate redemption amount of
the Subco Preferred Shares so issued shall be added to the stated
capital account maintained by Subco in respect of the Subco
Preferred Shares.
4.2 Stated Capital Accounts of New Fording
The stated capital accounts of New Fording shall initially be as follows:
(a) the aggregate stated capital of the class of common shares of New
Fording shall initially be equal to the aggregate paid-up capital
of the class of Subco Common Shares as determined for purposes of
the Canadian Tax Act immediately prior to the amalgamation
referred to in paragraph 3.1(z) of the Plan; and
(b) the aggregate stated capital of the preferred shares of New
Fording shall initially be equal to the aggregate paid-up capital
of the class of Subco Preferred Shares as determined for purposes
of the Canadian Tax Act immediately prior to the amalgamation
referred to in paragraph 3.1(z) of the Plan.
ARTICLE 5
NOTE AND PREFERRED SHARE DETERMINATION
5.1 Subordinated Notes and Preferred Shares
The aggregate principal amounts of the Subordinated Notes and the aggregate
redemption amounts of the Subco Preferred Shares issued in connection with the
Arrangement will, in each case, be such amount as is determined by the board of
directors of New Fording except that the aggregate of (i) the aggregate
principal amounts of the Subordinated Notes plus (ii) $445 million, shall not
exceed nine times the aggregate redemption amounts of the Subco Preferred
Shares, and the sum of the aggregate principal amounts of the Subordinated Notes
and the aggregate redemption amounts of the Subco Preferred Shares shall reflect
the fair market value of the consideration received by Subco for the issuance of
the Subordinated Notes and the Subco Preferred Shares.
ARTICLE 6
DISSENTING SHAREHOLDERS
6.1 Rights of Dissent
Pursuant to the Plan of Arrangement, Dissenting Shareholders who duly exercise
their rights of dissent and who:
(a) are ultimately entitled to be paid fair value for their Common
Shares shall have their Common Shares cancelled as of the
Effective Time and prior to commencement of the transactions
referenced to in Section 3.1 hereof in consideration of the fair
value to be paid to them and will not be entitled to any other
payment or consideration including any payment that would be
payable under the Arrangement had such holders not exercised their
rights of dissent; or
(b) are ultimately not entitled, for any reason, to be paid fair value
for their Common Shares will be deemed to have participated in the
Arrangement on the same basis as any non-Dissenting Shareholder
who elected the Unit Option.
6.2 Recognition of Dissenting Shareholders
Neither the Corporation, New Fording, any of the parties to the Combination
Agreement (the "Parties") nor any other person shall be required to recognize a
Dissenting Shareholder as a holder of Common Shares or New Fording Common Shares
after the Effective Time, nor as having any interest in the Fund other than in
the circumstances where New Fording elects to deliver moneys-worth of Units in
satisfaction of its obligation to pay fair value to a Dissenting Shareholder.
After the Effective Time, the names of Dissenting Shareholders shall be deleted
from the register of holders of Common Shares maintained by the Corporation.
ARTICLE 7
OUTSTANDING CERTIFICATES
7.1 Outstanding Certificates
From and after the Effective Time until and including the Proceeds Date, share
certificates representing Common Shares will represent the right to obtain the
consideration issued pursuant to the Plan of Arrangement, consisting of $35.00
or one Unit per Common Share or a combination thereof (other than certificates
in the name of a Dissenting Shareholder or a Small Non-Board Lot Holder) in
accordance with the elections made by the holder, subject to pro-ration
hereunder.
7.2 Provision of Consideration
As soon as practicable after the Proceeds Date:
(a) there shall be delivered to each Participating Shareholder,
certificates representing the Units and a cheque for the cash
amount to which such holder is entitled pursuant to this Plan of
Arrangement; and
(b) there shall be delivered to each Small Non-Board Lot Holder a
cheque for the cash amount to which such holder is entitled
pursuant to this Plan of Arrangement.
For greater certainty, Shareholders will not be required to send to the
Depository the certificates representing their Common Shares in order to receive
the Unit certificates and/or any cheque to which they are entitled to receive
pursuant to this Arrangement.
7.3 Depository
All distributions made with respect to any Units allotted and issued pursuant to
this Arrangement but for which a certificate has not been, or cannot be,
delivered, shall be paid and delivered to the Depository to be held by the
Depository in trust for the registered holder thereof. All monies received by
the Depository in respect of such Units shall be invested by it in
interest-bearing trust accounts upon such terms as the Depository may reasonably
deem appropriate. The Depository shall pay and deliver to any such registered
holder such distributions and any interest thereon to which such holder is
entitled, net of applicable withholding and other taxes, upon delivery of the
certificate representing the Units issued to such holder in connection with the
Arrangement.
7.4 No Entitlement to Interest
The Participating Shareholders and Small Non-Board Lot Holders shall not be
entitled to any interest, dividend, premium or other payment on or with respect
to their former Common Shares other than the certificates representing the Units
and/or the cheque that they are entitled to receive pursuant to this Plan of
Arrangement.
7.5 Certificates
After the Proceeds Date, the certificates formerly representing Common Shares
will not represent any interest in the Fund, New Fording, Fording or otherwise
and shall be deemed to be cancelled, null and void.
ARTICLE 8
AMENDMENTS
8.1 Amendments
The Parties 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) filed with the Court and, if made following the Meeting, approved
by the Court; and
(b) communicated to Securityholders in the manner required by the
Court (if so required).
8.2 Proposed Amendments
Any amendment, modification or supplement to this Plan of Arrangement may be
proposed by the Parties at any time prior to or at the Meeting with or without
any other prior notice or communication, and if so proposed and accepted by the
Securityholders voting at the Meeting, in the manner required by the Interim
Order, shall become part of this Plan of Arrangement for all purposes. In
addition, Fording may amend, modify or supplement this Plan of Arrangement in
accordance with the terms of the Combination Agreement.
8.3 Effectiveness of Amendments
Any amendment, modification or supplement to this Plan of Arrangement which is
approved by the Court following the Meeting shall be effective only:
(a) if it is consented to by the Parties; and
(b) if required by the Court or applicable law, it is consented to by
the Securityholders.
[Remainder of Page Intentionally Left Blank]
SCHEDULE "A"
FORDING CANADIAN COAL TRUST
EXCHANGE OPTION PLAN
Effective December ?, 2002
ARTICLE 1
PURPOSE OF THE PLAN
1.1 Purpose
The purpose of the Fording Canadian Coal Trust Exchange Option Plan (the "Plan")
is to record and implement the exchange ultimately, as part of the Arrangement
(as herein defined), of all outstanding options and any accompanying share
appreciation rights ("Options") to purchase Common Shares (as herein defined)
issued under the Corporation's Key Employee Stock Option Plan (the "KESOP") and
the Directors' Stock Option Plan (the "DSOP") for options to acquire Units in
the Fund and accompanying unit appreciation rights (the "Exchange Options")
issued under this Plan. Exchange Options will have attached to them terms which
are substantially similar for the Options for which they are exchanged, adjusted
in accordance with the terms of the Arrangement.
ARTICLE 2
DEFINITIONS AND INTERPRETATION
2.1 Definitions
For the purposes of this Plan, the following terms will have the following
meanings:
(a) "Arrangement" means the arrangement under Section 192 of the CBCA
involving the Corporation, its securityholders, Fording Coal
Limited, 4123212 Canada Ltd., Teck Cominco Limited, Westshore
Terminals Income Fund, the Fund, Teck Bullmoose Coal Inc.,
Quintette Coal Partnership, Luscar Coal Limited, CONSOL Energy
Inc. and Sherritt Coal Partnership II;
(b) "Board" means the board of directors of the Corporation;
(c) "CBCA" means the Canada Business Corporations Act, R.S.C. 1985, c.
C-44, as amended, including the regulations promulgated
thereunder;
(d) "Cause" means:
(i) the continued failure by the Optionholder to substantially
perform his duties in connection with his employment by, or
service to, the Corporation or any Subsidiary (other than
as a result of physical or mental illness) after the
Corporation or the Subsidiary, as the case may be, has
given the Optionholder reasonable written notice of such
failure and a reasonable opportunity to correct it;
(ii) the engaging by the Optionholder in any act which is
injurious to the Corporation (including any Subsidiary)
financially, reputationally or otherwise;
(iii) the engaging by the Optionholder in any act resulting, or
intended to result, whether directly or indirectly, in
personal gain to the Optionholder at the expense of the
Corporation (including any Subsidiary);
(iv) the conviction of the Optionholder by a court of competent
jurisdiction on any charge involving fraud, theft or moral
turpitude in circumstances where such charge arises in
connection with the business of the Corporation (including
any Subsidiary); or
(v) any other conduct that constitutes cause at common law;
(e) "Combination Agreement" means the agreement dated January o, 2003
among the Corporation, Teck Cominco Limited, Westshore Terminals
Income Fund, Ontario Teachers' Pension Plan Board and Sherritt
International Corporation setting out the terms and conditions
upon which such parties will implement the Arrangement, and any
amendment thereto;
(f) "Common Shares" means common shares in the capital of the
Corporation;
(g) "Consultant" means a person engaged to provide ongoing management
or consulting services to the Fund, the Corporation or any
Subsidiary;
(h) "Corporation" means Fording Inc., and any successor corporation
thereto;
(i) "CP Optionholders" means the former Canadian Pacific Limited
optionholders who held options and accompanying share appreciation
rights under the key employee stock option plan of Canadian
Pacific Limited, which options and share appreciation rights were
replaced by, in part, Options and accompanying share appreciation
rights issued under the KESOP pursuant to a plan of arrangement
under section 192 of the CBCA completed in October 2001 that
resulted in the Corporation becoming a publicly traded
Corporation;
(j) "Date of Termination" means, unless otherwise agreed to in writing
by the Optionholder and the Corporation or, if applicable, a
Subsidiary, the actual date of termination of employment of the
Optionholder or termination of the Optionholder's contract as a
Consultant, excluding any period during which the Optionholder is
in receipt of or is eligible to receive any statutory, contractual
or common law notice or compensation in lieu thereof or severance
or damage payments following the actual date of termination;
(k) "DSOP" has the meaning ascribed to it in Section 1.1;
(l) "Effective Time" has the meaning ascribed to it in the Plan of
Arrangement;
(m) "Eligible Person" means a holder of an Exchange Option who is:
(i) an officer, employee, Non-Employee Director of the
Corporation or Consultant of the Corporation or any
Subsidiary, and also includes a Family Trust, Personal
Holding Corporation, Retirement Trust of any of the
foregoing individuals; or
(ii) a CP Optionholder;
(n) "Exchange Option" has the meaning ascribed to it in Section 1.1
hereof;
(o) "Exercise Price" means the price per Unit at which Optioned Units
may be subscribed for by an Optionholder pursuant to a particular
Option Agreement;
(p) "Expiry Date" means the date on which an Exchange Option expires
pursuant to the Exchange Option Agreement relating to that
Exchange Option;
(q) "Family Trust" means a trust, of which at least one of the
trustees is an Eligible Person and the beneficiaries of which are
one or more of the Eligible Person and the spouse, minor children
and minor grandchildren of the Eligible Person;
(r) "Fund" means the Fording Canadian Coal Trust;
(s) "Insider" means:
(i) an insider, as defined in the Securities Act (Alberta),
other than a person who falls within that definition solely
by virtue of being a director or senior officer of a
Subsidiary; and
(ii) an associate, as defined in the Securities Act (Alberta),
of any person who is an insider by virtue of (i) above;
(t) "KESOP" has the meaning ascribed to it in Section 1.1 hereof;
(u) "Non-Employee Director" means a person who, as of any applicable
date, is a member of the Board and is not an officer or employee
of the Corporation or any of its Subsidiaries;
(v) "Notice of Exercise" means a notice, substantially in the form of
the notice set out in Schedule A to this Plan, from an
Optionholder to the Fund giving notice of the exercise or partial
exercise of an Exchange Option granted to the Optionholder;
(w) "Option Agreement" means an agreement, substantially in the form
of the agreement set out in Schedule B to this Plan, between the
Fund and an Eligible Person setting out the terms of an Exchange
Option granted to the Eligible Person;
(x) "Optioned Units" means the Units that may be subscribed for by an
Optionholder pursuant to a particular Option Agreement;
(y) "Optionholder" means an Eligible Person who acquires an Exchange
Option;
(z) "Original Grant Date" means the date on which an Original Option
was granted being the date that the Board resolved to grant such
option, unless the Board resolved to ratify options to acquire
Common Shares granted on an earlier date or to delay the grant of
options to acquire Common Shares to a later date, in which case
the Original Grant Date will be such earlier or later date;
(aa) "Original Option" means an Option described in Section 1.1
(including for greater certainty, any related Share Appreciation
Right) which, as an intermediate step in the exchange described in
Section 4.1, is exchanged for an option to purchase a New
Non-Voting Share (and, for greater certainty, any related share
appreciation right) of FCL Amalco (as those terms are defined in
the Plan of Arrangement);
(bb) "Person" means any individual, sole proprietorship, partnership,
firm, entity, unincorporated association, unincorporated
syndicate, unincorporated organization, trust, body corporate,
agency, and where the context requires, any of the foregoing when
they are acting as trustee, executor, administrator or other legal
representative;
(cc) "Personal Holding Corporation" means a corporation that is
controlled by an Eligible Person (who is a natural person) and the
shares of which are beneficially owned by the Eligible Person and
the spouse, minor children or minor grandchildren of the Eligible
Person;
(dd) "Plan" has the meaning ascribed to it in Section 1.1;
(ee) "Plan of Arrangement" means the plan of arrangement appearing as
Schedule A to the Combination Agreement which describes the steps
comprising the Arrangement;
(ff) "Retirement Trust" means a trust governed by a registered
retirement savings plan or a registered retirement income fund
established by and for the benefit of an Eligible Person (who is a
natural person);
(gg) "Share Appreciation Rights" are the rights granted to the CP
Optionholders in connection with the options granted under the key
employee stock option plan of Canadian Pacific Limited, which
options and rights were replaced by options and share appreciation
rights under the KESOP;
(hh) "Subsidiary" means any corporation that is a subsidiary of the
Corporation as defined in the Securities Act (Alberta);
(ii) "Trustees" means the trustees of the Fund from time to time;
(jj) "Unit Appreciation Rights" means the Unit appreciation rights
issued under the Plan forming part of the Exchange Options issued
to CP Optionholders pursuant to the Plan of Arrangement;
(kk) "Unit Compensation Arrangement" means any unit option plan,
employee unit purchase plan or any other compensation or incentive
mechanism involving the issuance or potential issuance of Units
from treasury to one or more Eligible Persons; and
(ll) "Units" means trust units of the Fund.
2.2 Interpretation
(a) Time shall be the essence of this Plan.
(b) Words denoting the singular number include the plural and vice
versa and words denoting any gender include all genders.
(c) This Plan and all matters to which reference is made herein will
be governed by and interpreted in accordance with the laws of the
Province of Alberta and the federal laws of Canada applicable
therein.
2.3 Effectiveness
This Plan will become effective at the Effective Time in the manner specified by
the Plan of Arrangement.
ARTICLE 3
GENERAL PROVISIONS OF THE PLAN
3.1 Administration
The Plan will be administered by the Trustees and the Trustees will interpret
the Plan and determine all questions arising out of the Plan and any Exchange
Option issued pursuant to the Plan, which interpretations and determinations
will be conclusive and binding on the Corporation, the Fund, Eligible Persons,
Optionholders and all other affected Persons.
3.2 Units Reserved
(a) The maximum number of Units that may be reserved for issuance
under the Plan is 776,034, which will be equal to the number of
Original Options outstanding immediately prior to the Effective
Time. The maximum number of Units will be reduced as Exchange
Options are exercised and the Units so reserved are issued.
(b) The maximum number of Units that may be reserved for issuance to
any one Eligible Person under the Plan is 5% of the number of
Units outstanding at the time of reservation.
3.3 Limits with respect to Insiders
(a) The maximum number of Units that may be reserved for issuance to
Insiders on the exercise of Exchange Options issued under the Plan
and under or pursuant to any other Unit Compensation Arrangement
of the Fund is 10% of the number of Units outstanding.
(b) The maximum number of Units that may be issued to Insiders under
the Plan and any other Unit Compensation Arrangement of the Fund
within a one-year period is 10% of the number of Units
outstanding.
(c) The maximum number of Units that may be issued to any one Insider
(and such Insider's associates, as defined in the Securities Act
(Alberta)), under the Plan and any other Unit Compensation
Arrangement of the Fund within a one-year period is 5% of the
number of Units outstanding.
(d) For the purposes of (a), (b) and (c) above, any entitlement to
acquire Units issued pursuant to the Plan or any other Unit
Compensation Arrangement of the Fund prior to the grantee becoming
an Insider is to be excluded. For the purposes of (b) and (c)
above, the number of Units outstanding is to be determined on the
basis of the number of Units outstanding at the time of the
reservation or issuance, as the case may be, excluding Units
issued under the Plan or under any other Unit Compensation
Arrangement of the Fund over the preceding one-year period.
3.4 Non-Exclusivity
Nothing in this Plan will prevent the Trustees from adopting other or additional
Unit Compensation Arrangements, subject to obtaining any required regulatory or
shareholder approvals.
3.5 Amendment or Termination of Plan and Exchange Options
(a) The Trustees may amend, suspend or terminate the Plan at any time,
provided that no such amendment, suspension or termination may:
(i) be made without obtaining any required regulatory or
securityholder approvals; or
(ii) prejudice the rights of any Optionholder under any Exchange
Option previously granted hereunder to the Optionholder,
without the consent or deemed consent of the Optionholder.
(b) The Trustees may amend the terms of any outstanding Exchange
Option (including, without limitation, to cancel any Exchange
Option(s) previously issued), provided that:
(i) any required regulatory and securityholder approvals are
obtained;
(ii) the Trustees would have had the authority to initially
grant the Exchange Option under terms as so amended; and
(iii) the consent or deemed consent of the Optionholder is
obtained if the amendment would prejudice the rights of the
Optionholder under the Exchange Option.
3.6 Compliance with Laws and Stock Exchange Rules
The Plan, the issuance of Exchange Options and the exercise of Exchange Options
under the Plan and the Fund's obligation to issue Units on exercise of Exchange
Options will be subject to all applicable federal, provincial and foreign laws,
rules and regulations and the rules of any stock exchange on which the Units are
listed for trading. Unless otherwise agreed to by the Fund in writing, no
Exchange Option will be issued and no Optioned Units will be issued on the
exercise of Exchange Options under the Plan where such issue would require
registration of the Plan or such Optioned Units under the securities laws of any
foreign jurisdiction. Optioned Units issued to Optionholders pursuant to the
exercise of Exchange Options may be subject to limitations on sale or resale
under applicable securities laws.
3.7 Participation in the Plan
The participation of any Eligible Person in the Plan is entirely voluntary and
not obligatory and shall not be interpreted as conferring upon such Participant
any rights or privileges other than those rights and privileges expressly
provided in the Plan. The Plan does not provide any guarantee against any loss
which may result from fluctuations in the market value of the Units. The Fund
does not assume responsibility for the income or other tax consequences for
Eligible Persons and they are advised to consult with their own tax advisors.
3.8 CP Optionholders
Each Exchange Option, including any accompanying Unit Appreciation Right, issued
to a CP Optionholder pursuant to the Plan of Arrangement will be subject to the
provisions of this Plan, with the necessary changes, provided that none of the
provisions of this Plan will operate so as to adversely affect the rights of the
CP Optionholders as set forth in the key employee stock option plan of Canadian
Pacific Limited.
ARTICLE 4
EXCHANGE OF OPTIONS
4.1 Exchange of Options
(a) Pursuant to the Plan of Arrangement, at the Effective Time, each
Original Option will ultimately be exchanged for an Exchange
Option, and thereafter the Original Options will be cancelled.
(b) The Exercise Price of each Exchange Option issued pursuant to the
Plan of Arrangement will be determined pursuant to the Plan of
Arrangement.
(c) The Expiry Date of an Exchange Option will be ten years after the
Original Grant Date of the Original Option, subject to:
(i) any determination by the Trustees at the time of the
Original Grant Date that a particular Original Option would
have a shorter term; and
(ii) the provisions of section 4.3 relating to early expiry.
(d) In the event of any conflict between the Plan and the Combination
Agreement, the terms of the Combination Agreement will prevail.
(e) After the Effective Time, no further grants of Exchange Options
will be made under this Plan.
4.2 Option Agreement
As soon as practicable following the Effective Time, the Fund shall deliver to
the Optionholder an Option Agreement, containing the terms of the Exchange
Option and executed by the Fund. Upon return to the Fund of the Option
Agreement, executed by the Optionholder, the Optionholder will be a participant
in the Plan and have the right to purchase the Units on the terms set out in the
Option Agreement and in the Plan.
4.3 Early Expiry
An Exchange Option will continue in effect until its Expiry Date or expire
before its Expiry Date, as the case may be, in the following events and manner:
(a) if an Optionholder resigns from his employment (other than in the
circumstances described in (c)), or an Optionholder's contract as
a Consultant terminates at its normal termination date, then the
Optionholder must exercise his Exchange Option during the period
ending on the earlier of (i) 60 days after the date of resignation
or termination and (ii) the Expiry Date, after which period the
Exchange Option will expire;
(b) if an Optionholder's employment is terminated by the Corporation
or a Subsidiary without Cause, including a constructive dismissal,
or an Optionholder's contract as a Consultant is terminated by the
Corporation or a Subsidiary before its normal termination date
without Cause, then the Optionholder must exercise his Exchange
Option during the period ending on the earlier of (i) 60 days
after the Date of Termination and (ii) the Expiry Date, after
which period the Exchange Option will expire;
(c) if an Optionholder's employment is terminated by the Corporation
or a Subsidiary for Cause, or an Optionholder's contract as a
Consultant is terminated by the Corporation or a Subsidiary before
its normal termination date for Cause, including where an
Optionholder resigns from his employment or terminates his
contract as a Consultant after being requested to do so by the
Corporation or Subsidiary as an alternative to being terminated
for Cause, then the Exchange Option will expire on the Date of
Termination;
(d) if an Optionholder's contract as a Consultant is frustrated before
its normal termination date due to permanent disability, then the
Optionholder must exercise his Exchange Option during the period
ending on the earlier of (i) six months after the date of
frustration and (ii) the Expiry Date, after which period the
Exchange Option will expire;
(e) if an Optionholder's employment ceases due to permanent
disability, then the Exchange Option may be exercised prior to the
Expiry Date;
(f) if an Optionholder retires upon attaining the mandatory or early
retirement age established by the Corporation or a Subsidiary from
time to time (other than a Non-Employee Director as described in
(g)), then the Exchange Option may be exercised prior to the
Expiry Date;
(g) subject to paragraph (h) below, if an Optionholder who is a
Non-Employee Director ceases to be a member of the Board (whether
as a result of the resignation of the Non-Employee Director from
the Board or the Non-Employee Director not standing for
re-election or not being re-elected as a member of the Board by
the shareholders of the Corporation at a meeting, or for any other
reason other than as a result of death), then the Non-Employee
Director must exercise his Exchange Option during the period
ending on the earlier of (i) 36 months after the date of cessation
and (ii) the Expiry Date, after which the Exchange Option will
expire;
(h) if an Optionholder who is a Non-Employee Director ceases to be a
member of the Board in the circumstances described in (g) above,
but immediately thereafter becomes a Trustee of the Fund, then the
Exchange Option held by such Optionholder must be exercised on the
earlier of (i) 36 months after the date the Optionholder ceases to
be a Trustee of the Fund, and (ii) the Expiry Date, after which
the Exchange Option will expire;
(i) if an Optionholder dies, then any exercise must be effected by a
legal representative of the Optionholder's estate or by a person
who acquires the Optionholder's rights under the Exchange Option
by bequest or inheritance and any such exercise must be effected
during the period ending on the earlier of (i) 12 months after the
death of the Optionholder and (ii) the Expiry Date, after which
period the Exchange Option will expire;
subject to the right of the Trustees to, after the Original Grant Date, set
shorter (with the consent of the Optionholder) or longer periods for exercise
(not later than the Expiry Date) with respect to a particular Optionholder or
group of Optionholders. Notwithstanding the foregoing, the early expiry
provisions set out in this Section 4.3 shall not apply to the CP Optionholders
whose Exchange Options and Unit Appreciation Rights shall continue to be
governed by the terms of the resolution of the board of directors of Canadian
Pacific Limited dated July 30, 2001, providing for the extension of the CP
Optionholders' exercise period until the end of the original grant period,
notwithstanding any earlier termination of employment.
4.4 Limited Assignment
(a) Unit Appreciation Rights may not be assigned separately from the
related right to acquire Units.
(b) Exchange Options, including any accompanying Unit Appreciation
Rights, may not be assigned, except to:
(i) an Optionholder's Family Trust, Personal Holding
Corporation or Retirement Trust (or between such entities
or from either of such entities to the Optionholder); or
(ii) a legal representative of the Optionholder's estate or a
person who acquires the Optionholder's rights under the
Exchange Option by bequest or inheritance on death of the
Optionholder.
(c) If a Personal Holding Corporation to which an Exchange Option,
including any accompanying Unit Appreciation Right, has been
granted or assigned is no longer controlled by the related
Eligible Person, or the shares of the Personal Holding Corporation
are no longer beneficially owned by the Eligible Person and
persons who were the spouse, minor children or minor grandchildren
of the Eligible Person at the time of grant or assignment, then
the Exchange Option, including any accompanying Unit Appreciation
Right, cannot be exercised until it is assigned by the Personal
Holding Corporation to that Eligible Person or another assignee
permitted by section 4.4(a).
4.5 No Rights as Unitholder or to Remain an Eligible Person; Status of
Consultants
(a) An Optionholder will only have rights as a unitholder of the Fund
with respect to those of the Optioned Units that the Optionholder
has acquired through exercise of an Exchange Option in accordance
with its terms.
(b) Nothing in this Plan or in any Option Agreement will confer on any
Optionholder any right to remain as an officer, employee,
Consultant, director or trustee of the Fund, the Corporation or
any Subsidiary.
(c) Nothing in this Plan or in any Option Agreement entered into with
a Consultant will constitute the Consultant as an employee of the
Fund, the Corporation or any Subsidiary.
4.6 Adjustments
Adjustments will be made to (i) the Exercise Price of an Exchange Option, and
(ii) the number of Optioned Units delivered to an Optionholder upon exercise of
an Exchange Option in the following events and manner, subject to any required
regulatory approvals and the right of the Trustees to make such other or
additional adjustments, or to make no adjustments at all, as the Trustees
considers to be appropriate in the circumstances:
(a) upon (i) a subdivision of the Units into a greater number of
Units, (ii) a consolidation of the Units into a lesser number of
Units, or (iii) the distribution of Units to the holders of Units
(excluding a Unit distribution made in lieu of a cash distribution
in the ordinary course and in accordance with the Fund's
distribution policy, and excluding a distribution of Units under
another Unit Compensation Arrangement), the Exercise Price will be
adjusted accordingly and the Trustee will deliver upon exercise of
an Exchange Option, in addition to or in lieu of the number of
Optioned Units in respect of which the right to purchase is being
exercised, such greater or lesser number of Units as result from
the subdivision, consolidation or Unit distribution;
(b) upon (i) a capital reorganization, reclassification or change of
the Units, (ii) a consolidation, amalgamation, arrangement or
other form of business combination of the Fund with another Person
or (iii) a sale, lease or exchange of all or substantially all of
the property of the Fund, the Exercise Price will be adjusted
accordingly and the Fund will deliver upon exercise of an Exchange
Option, in lieu of the Optioned Units in respect of which the
right to purchase is being exercised, the kind and amount of units
or other securities or property as results from such event;
(c) upon the distribution by the Fund to holders of the Units of (i)
units of any class (whether of the Fund or another fund) other
than Units, (ii) rights, options or warrants, (iii) evidences of
indebtedness or (iv) cash (excluding a cash distribution paid in
the ordinary course and in accordance with the Fund's distribution
policy), securities or other property or assets, the Exercise
Price will be adjusted accordingly but no adjustment will be made
to the number of Optioned Units to be delivered upon exercise of
an Exchange Option;
(d) adjustments to the Exercise Price of an Exchange Option will be
rounded up to the nearest one cent and adjustments to the number
of Optioned Units delivered to an Optionholder upon exercise of an
Exchange Option will be rounded down to the nearest whole Unit;
and
(e) an adjustment will take effect at the time of the event giving
rise to the adjustment, and the adjustments provided for in this
section are cumulative.
In the event that any adjustment is made to the Exercise Price of an Exchange
Option or the number of Optioned Units issuable on exercise of an Exchange
Option, similar changes will be made to the exercise price of a Unit
Appreciation Right so as to preserve its value.
ARTICLE 5
EXERCISE OF OPTIONS
5.1 Manner of Exercise
An Optionholder who wishes to exercise an Exchange Option may do so by
delivering, on or before the Expiry Date of the Exchange Option:
(a) a completed Notice of Exercise; and
(b) subject to section 5.3, a certified cheque, money order or bank
draft payable to the Fund for the aggregate Exercise Price of the
Optioned Units being acquired (and any tax payable in accordance
with Section 5.4).
If the Optionholder is deceased or mentally disabled, the Exchange Option may be
exercised by a legal representative of the Optionholder or the Optionholder's
estate or by a person who acquires the Optionholder's rights under the Exchange
Option by bequest or inheritance and who, in addition to delivering the Notice
of
Exercise and (if applicable) certified cheque, money order or bank draft
described above and must also deliver evidence of their status.
5.2 Delivery of Unit Certificate
Not later than five business days after receipt pursuant to section 5.1 of the
Notice of Exercise and payment in full for the Optioned Units being acquired,
the Fund will direct its registrar and transfer agent to issue a certificate in
the name of the Optionholder or an intermediary on behalf of the Optionholder,
(or, if deceased, his legal representative or beneficiary) for the number of
Optioned Units purchased by the Optionholder or the intermediary (or his legal
representative or beneficiary), which will be issued as fully paid and
non-assessable Units.
5.3 Cashless Exercise
To the extent permitted by applicable laws as determined in the sole discretion
of the Trustees, an Optionholder may elect to effect a "cashless" exercise of
its Exchange Options. In such case, the Optionholder will not be required to
deliver to the Fund the certified cheque, money order or bank draft referred to
in section 5.1. Instead, the Optionholder will complete a Cashless Exercise
Instruction Form in the form attached as Schedule C to the Plan, pursuant to
which:
(a) the Optionholder will instruct a broker selected by the
Optionholder to sell through the Toronto Stock Exchange the
Optioned Units issuable on exercise of an Exchange Option, as soon
as possible and at the then applicable bid price for the Units of
the Fund;
(b) on the settlement date for the trade, the Fund will direct its
registrar and transfer agent to issue a certificate in the name of
the broker (or as the broker may otherwise direct) for the number
of Optioned Units issued on exercise of the Exchange Option,
against payment by the broker to the Fund of the Exercise Price
for such Optioned Units; and
(c) the broker will deliver to the Optionholder the remaining proceeds
of sale, net of brokerage commission (and any tax payable in
accordance with Section 5.4).
5.4 Withholding
If the Fund determines that the satisfaction of taxes, including withholding
tax, or other withholding liabilities is necessary or desirable in respect of
the exercise of any Exchange Option, including any accompanying Unit
Appreciation Right, the exercise of the Exchange Option is not effective unless
such taxes have been paid or withholdings made to the satisfaction of the
Trustees. The Fund may require an Optionholder to pay to the Fund, in addition
to the Exercise Price for the Optioned Units, any amount that the Fund or the
Corporation is obliged to remit to the relevant taxing authority in respect of
the exercise of the Exchange Option. Any such additional payment is due no later
than the date on which any amount with respect to the Exchange Option exercised
is required to be remitted by the Fund or the Corporation.
5.5 Indemnification
Every Trustee will at all times be indemnified and saved harmless by the Fund
and from its assets from and against all costs, charges and expenses whatsoever
including any income tax liability arising from any such indemnification, that
such Trustee may sustain or incur by reason of any action, suit or proceeding,
taken or threatened against the Trustee, otherwise than by the Fund, for or in
respect of any act done or omitted by the
Trustee in respect of this Plan, such costs, charges and expenses to include any
amount paid to settle such action suit or proceeding or in satisfaction of any
judgement rendered therein.
5.6 Effect on Trustees
The Trustees have established this Plan solely in their capacity as Trustees on
behalf of the Fund and the obligations of the Fund hereunder shall not be
personally binding upon the Trustees or any of the Unitholders of the Fund or
any annuitant under a plan of which a Unitholder is a trustee or carrier
("annuitant"). Any recourse against the Fund, the Trustees or any Unitholder or
annuitant in any manner in respect of any indebtedness, obligation or liability
of the Fund arising hereunder or arising in connection herewith or from the
matters to which this Plan relates, if any, including, without limitation,
claims based on negligence or otherwise tortious behaviour, shall be limited to,
and satisfied only out of the Fund's assets, without recourse to the personal
assets of any of the foregoing persons.
SCHEDULE A -- NOTICE OF EXERCISE
FORDING CANADIAN COAL TRUST
EXCHANGE OPTION PLAN
TO: Solium Capital Inc. FROM:
Xxxx Xxxxxxx Title:
710, 000 0(xx) Xxxxxx XX Work Address:
Xxxxxxx, X, X0X 0X0
Phone: (000) 000-0000 Phone:
Fax: (000) 000-0000 Fax:
I hereby elect to exercise Exchange Options of Fording Canadian Coal Trust (the
"Fund") granted to me under the provisions of the Exchange Option Plan (the
"Plan") dated . The grant ID was and the Exercise Price of these Exchange
Options was set as $ per Optioned Unit.
I have enclosed a certified cheque, bank draft or money order in the amount of $
(number of options being exercised x Exercise Price) representing the cost to
purchase Units of the Fund and any tax payable in accordance with Section 5.4 of
the Plan.
I request that the certificate be registered and delivered as follows:
Name:
--------------------------------------------------------------
Address:
--------------------------------------------------------------
City/Province:
--------------------------------------------------------------
Postal Code:
--------------------------------------------------------------
.........
I hereby elect to exercise Unit Appreciation Rights (UARs) of the
Fund granted to me under the provisions of the Exchange Option Plan dated .
The grant ID was and the price of these UARs are set at $
per unit.
Current Revenue Canada/Quebec administrative practice provides that 50% of the
appreciation realized by the UAR exercise is exempt from income tax. The
remaining 50% of the appreciation will be taxed at the top marginal rate.
Signed
(Address I would like my cheque mailed to)
Dated:
(City/Province/Postal Code)
To be completed by Solium Capital Inc. and faxed to the Fund:
Solium Capital Inc. confirms that is eligible to exercise the entitlement
indicated herein.
Solium Capital Inc. Date
SCHEDULE B -- FORM OF OPTION AGREEMENT
FORDING CANADIAN COAL TRUST
EXCHANGE OPTION PLAN
OPTION AGREEMENT
This Option Agreement is entered into between Fording Canadian Coal Trust (the
"Fund") and the optionholder named below (the "Optionholder") is a participant
in the Fording Canadian Coal Trust Exchange Option Plan (the "Plan"), a copy of
which is attached hereto. The Optionholder hereby confirms that:
2. on 200_ (the "Grant Date");
3. the Optionholder;
4. was granted an option (the "Exchange Option") to purchase _ Units (the
"Optioned Units") of the Fund to indirectly replace and exchange for
the Optionholder's Original Options (as defined in the Plan);
5. at a price (the "Exercise Price") of $ _ per Optioned Unit; and
6. for a term expiring at 5:00 p.m., _ time, on _ (the "Expiry Date");
on the terms and subject to the conditions set out in the Plan.
By signing this agreement, the Optionholder acknowledges that he has read and
understands the terms of the Plan and accepts the Exchange Option in exchange
for his Original Options in accordance with the terms of the Plan.
IN WITNESS WHEREOF the Fund and the Optionholder have executed this Option
Agreement as of _, 200_.
FORDING CANADIAN COAL TRUST
By: -------------------------------------- [Trustee]
--------------------------------------- Name of Optionholder
--------------------------------------- Signature of Optionholder
SCHEDULE C -- CASHLESS EXERCISE INSTRUCTION FORM
FORDING CANADIAN COAL TRUST
EXCHANGE OPTION PLAN
TO: Brokerage Firm: FROM:
Broker Name: (Title:)
(Work Address)
Phone: (000) 000-0000
Fax: (000) 000-0000
A/C Number:
FAX A COPY TO:
Client Services
Solium Capital Inc.
000, 000-- 0xx Xxxxxx XX
Xxxxxxx, XX
X0X 0X0
Fax: (000) 000-0000
I hereby authorize to sell Units of the Fund at a price of $ .
Concurrent with the sale of Units, I hereby elect to exercise Grant number
made to me under the provisions of the Exchange Option Plan as of
at an Exercise Price of $ per Optioned Unit.
Upon the sale of . Units of the Fund, I direct to deliver
payment to the Fund. The aggregate amount that will be paid to the Fund will be
$ (number of Optioned Units to be exercised (LOGO) Exercise Price ).
Upon receipt by the Fund of $ , I hereby direct that a certificate for
the Optioned Units referred to above be issued in the name of
for the account of and delivered to .
Upon receipt of the units, I direct Units exercised under my Option
Agreement, less brokerage commission fees as follows:
[ ] Mail to my address [ ] Pick up from Broker
[ ] Deposit to my bank -----------------------------------------------------
Account: Bank ID # Transit # A/C #
Bank Address:
Signed: Home Address:
Date: --------------------------------------------------------
To be completed by Solium Capital Inc. and faxed to Broker:
Solium Capital Inc. hereby confirms that is eligible to exercise
the Exchange Option referred to herein:
Solium Capital Inc. Date
To be completed by the Broker and faxed to Fording Canadian Coal Trust within 3
days of transaction:
This hereby confirms that the options referred to above were sold at a price of
$ per Unit.
Broker's Signature Date
SCHEDULE "B"
FORDING CANADIAN COAL TRUST NOTE
$35.00 (Cdn.)
1. FOR VALUE RECEIVED the undersigned unconditionally promises to pay to
the holder of this Note (the "Lender") or to its order, in lawful money
of Canada, the amount of $35.00 (the "Principal Amount"). No interest
shall accrue or be payable on the Principal Amount.
2. The Principal Amount is repayable, at the election of the Lender, on
demand.
3. When not in default under this Note, the undersigned shall be entitled
to prepay all or any portion of the Principal Amount outstanding
without notice, bonus or penalty.
4. The undersigned waives demand, presentment for payment, notice of
non-payment and notice of protest of this Note. No failure or delay by
the Lender in exercising any right under this Note shall operate as a
waiver of such right, nor shall any single or partial exercise of any
right exclude the further exercise thereof or the exercise of any other
right.
5. The undersigned hereby waives the right to assert in any action or
proceeding with regard to this Note any setoffs or counterclaims which
the undersigned may have.
6. This Note 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 enure to the benefit of the Lender, its successors
and assigns and shall be binding on the undersigned and its successors.
DATED
The Trustees of the FORDING CANADIAN COAL TRUST on behalf of such Trust by their
duly authorized signatory
By:
Name:
Title:
SCHEDULE "C"
The terms and conditions of the New Voting Preference Shares and New Non-Voting
Shares of FCL Amalco shall be has follows:
1. NEW NON-VOTING SHARES
The rights, privileges, restrictions and conditions attaching to the New
Non-Voting Shares are as follows:
(a) Payment of Dividends: The holders of the New Non-Voting Shares
will be entitled to receive dividends if, as and when declared by
the board of directors of the Corporation out of the assets of the
Corporation properly applicable to the payment of dividends in
such amounts and payable in such manner as the board of directors
may from time to time determine. Subject to the rights of the
holders of any other class of shares of the Corporation entitled
to receive dividends in priority to or rateably with the holders
of the New Non-Voting Shares, the board of directors may in its
sole discretion declare dividends on the New Non-Voting Shares to
the exclusion of any other class of shares of the Corporation.
(b) Participation upon Liquidation, Dissolution or Winding Up: In the
event of the liquidation, dissolution or winding up of the
Corporation or other distribution of assets of the Corporation
among its shareholders for the purpose of winding up its affairs,
the holders of the New Non-Voting Shares will, subject to the
rights of the holders of any other class of shares of the
Corporation entitled to receive the assets of the Corporation upon
such a distribution in priority to or rateably with the holders of
the New Non-Voting Shares, be entitled to participate rateably in
any distributions of the assets of the Corporation.
(c) Voting Rights: Except as otherwise provided in the Canada Business
Corporations Act, the holders of the New Non-Voting Shares shall
not be entitled to receive notice of, or to attend or to vote at,
any meeting of the shareholders of the Corporation.
2. NEW VOTING PREFERENCE SHARES
The rights, privileges, restrictions and conditions attaching to the New Voting
Preference Shares are as follows:
(a) Definitions: With respect to the New Voting Preference Shares, the
following terms shall have the meanings ascribed to them below:
(i) "Act" means the Canada Business Corporations Act;
(ii) "Redemption Amount" in respect of each New Voting
Preference Share means the amount of $0.01; and
(iii) "Redemption Price" in respect of each New Voting Preference
Share means the Redemption Amount together with all
dividends declared thereon and unpaid up to the date of
liquidation, dissolution or winding up or the date of
redemption, as the case may be.
(b) Payment of Dividends: The holders of the New Voting Preference
Shares will be entitled to receive dividends if, as and when
declared by the board of directors of the Corporation out of the
assets of the Corporation properly applicable to the payment of
dividends in such amounts and payable in such manner as the board
of directors may from time to time determine. Subject to the
rights of the holders of any other class of shares of the
Corporation entitled to receive dividends in priority to or
rateably with the holders of the New Voting Preference Shares, the
board of directors may in its sole discretion declare dividends on
the New Voting Preference Shares to the exclusion of any other
class of shares of the Corporation.
(c) Voting Rights: Each holder of New Voting Preference Shares shall
be entitled to receive notice of and to attend all meetings of
shareholders of the Corporation and to vote thereat, except
meetings at which only holders of a specified class of shares
(other than New Voting Preference Shares) or a specified series of
shares are entitled to vote. At all meetings of which notice must
be given to the holders of the New Voting Preference Shares, each
holder of New Voting Preference Shares shall be entitled to one
vote in respect of each New Voting Preference Share held by such
holder.
(d) Liquidation, Dissolution or Winding-up: In the event of the
liquidation, dissolution or winding-up of the Corporation, whether
voluntary or involuntary, the holders of the New Voting Preference
Shares shall be entitled to receive before any distribution of any
part of the assets of the Corporation among the holders of the New
Non-Voting Shares or any other class of shares of the Corporation
ranking junior to the New Voting Preference Shares, an amount
equal to the Redemption Price of the New Voting Preference Shares.
After payment to the holders of the New Voting Preference Shares
of the amount so payable to such holders as herein provided, the
holders shall not be entitled to share in any further distribution
of the property or assets of the Corporation.
(e) Redemption at the Option of the Corporation:
(i) Subject to the Act, the Corporation shall, at its option,
be entitled to redeem at any time or times all or any part
of the New Voting Preference Shares registered in the name
of any holder of any such New Voting Preference Shares on
the books of the Corporation with or without the consent of
such holder by giving notice in writing to such holder
specifying:
(A) that the Corporation desires to redeem all or any
part of the New Voting Preference Shares registered
in the name of such holder;
(B) if part only of the New Voting Preference Shares
registered in the name of such holder is to be
redeemed, the number thereof to be so redeemed;
(C) the business day (in this paragraph referred to as
the "Redemption Date") on which the Corporation
desires to redeem such New Voting Preference Shares.
Such notice shall specify a Redemption Date which
shall not be less than 30 days after the date on
which the notice is given by the Corporation or such
shorter period of time as the Corporation and the
holder of any such New Voting Preference Shares may
agree; and
(D) the place of redemption.
(ii) The Corporation shall, on the Redemption Date, redeem such
New Voting Preference Shares by paying to such holder an
amount equal to the Redemption Price on presentation and
surrender of the certificate(s) for the New Voting
Preference Shares so called for redemption at such place as
may be specified in such notice. The certificate(s) for
such New Voting Preference Shares shall thereupon be
cancelled and the New Voting Preference Shares represented
thereby shall thereupon be redeemed. Such payment shall be
made by delivery to such holder of a cheque payable in the
amount of the aggregate Redemption Price for the New Voting
Preference Shares to be redeemed. From and after the
Redemption Date, the holder thereof shall not be entitled
to exercise any of the rights of holders of New Voting
Preference Shares in respect thereof unless payment of the
Redemption Price is not made on the Redemption Date, or on
presentation and surrender of the certificate(s) for the
New Voting Preference Shares so called for redemption,
whichever is later in which case the rights of the holder
of the New Voting Preference Shares shall remain unaffected
until payment in full of the Redemption Price.
(f) Redemption at the Option of the Holder:
(i) Subject to the Act, a holder of any New Voting Preference
Shares shall be entitled to require the Corporation to
redeem at any time or times any New Voting Preference
Shares registered in the name of such holder on the books
of the Corporation by tendering to the Corporation at its
registered office a share certificate representing the New
Voting Preference Shares which the holder desires to have
the Corporation redeem together with a request in writing
(in this paragraph referred to as a "Redemption Demand")
specifying:
(A) that the holder desires to have the New Voting
Preference Share represented by such certificate
redeemed by the Corporation;
(B) if part only of the New Voting Preference Shares
registered in the name of such holder is to be
redeemed, the number thereof to be so redeemed; and
(C) the business day (in this paragraph referred to as
the "Redemption Date") on which the holder desires
to have the Corporation redeem such New Voting
Preference Shares. The Redemption Demand shall
specify a Redemption Date which shall not be a date
earlier than the date on which the Redemption Demand
is tendered to the Corporation or such other date as
the holder and the Corporation may agree.
(ii) The Corporation shall, on such Redemption Date redeem all
New Voting Preference Shares required to be redeemed by
paying to such holder an amount equal to the aggregate
Redemption Price therefor on presentation and surrender of
the certificate(s) for the New Voting Preference Shares to
be so redeemed at the registered office of the Corporation.
The certificate(s) for such New Voting Preference Shares
shall thereupon be cancelled and the New Voting Preference
Shares represented thereby shall thereupon be redeemed.
Such payment shall be made by delivery to such holder of a
cheque in the amount of the aggregate Redemption Price for
the New Voting Preference Shares to be redeemed. From and
after the Redemption Date, such New Voting Preference
Shares shall cease to be entitled to dividends and the
holder thereof shall not be entitled to exercise any of the
rights of holders of New Voting Preference Shares in
respect thereof unless payment of the said Redemption Price
is not made on the Redemption Date, in which case the
rights of the holder of the New Voting Preference Shares
shall remain unaffected until payment in full of the
Redemption Price.
SCHEDULE "D"
4123212 CANADA LTD.
COMMON SHARES
The rights, privileges, restrictions and conditions attaching to the Common
Shares are as follows:
(a) Payment of Dividends: The holders of the Common Shares will be
entitled to receive dividends if, as and when declared by the
board of directors of the Corporation out of the assets of the
Corporation properly applicable to the payment of dividends in
such amounts and payable in such manner as the board of directors
may from time to time determine. Subject to the rights of the
holders of any other class of shares of the Corporation entitled
to receive dividends in priority to the holders of the Common
Shares, the board of directors may in its sole discretion declare
dividends on the Common Shares to the exclusion of any other class
of shares of the Corporation including, for greater certainty, the
Preferred Shares provided that the board of directors may not
declare dividends on the Common Shares if the Corporation is, or
after the payment of the dividend would be, unable to pay the
holders of the Preferred Shares the Redemption Price for each
Preferred Share held by them.
(b) Participation upon Liquidation, Dissolution or Winding-Up: In the
event of the liquidation, dissolution or winding up of the
Corporation or other distribution of assets of the Corporation
among its shareholders for the purpose of winding up its affairs,
the holders of the Common Shares will, subject to the rights of
the holders of any other class of shares of the Corporation
entitled to receive the assets of the Corporation upon such a
distribution in priority to or rateably with the holders of the
Common Shares, be entitled to participate rateably in any
distributions of the assets of the Corporation.
(c) Voting Rights: The holders of the Common Shares will be entitled
to receive notice of and to attend all annual and special meetings
of the shareholders of the Corporation and to one vote in respect
of each Common Share held at all such meetings, except at separate
meetings of or on separate votes by the holders of another class
or series of shares of the Corporation.
SCHEDULE "E"
4123212 CANADA LTD.
NOMINAL NOTE
$0.01 (Cdn.)
1. FOR VALUE RECEIVED the undersigned unconditionally promises to pay to
the holder of this Note (the "Lender") or to its order, in lawful money
of Canada, the amount of $0.01 (the "Principal Amount"). No interest
shall accrue or be payable on the Principal Amount.
2. The Principal Amount is repayable, at the election of the Lender, on
demand.
3. When not in default under this Note, the undersigned shall be entitled
to prepay all or any portion of the Principal Amount outstanding
without notice, bonus or penalty.
4. The undersigned waives demand, presentment for payment, notice of
non-payment and notice of protest of this Note. No failure or delay by
the Lender in exercising any right under this Note shall operate as a
waiver of such right, nor shall any single or partial exercise of any
right exclude the further exercise thereof or the exercise of any other
right.
5. The undersigned hereby waives the right to assert in any action or
proceeding with regard to this Note any setoffs or counterclaims which
the undersigned may have.
6. This Note 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 enure to the benefit of the Lender, its successors
and assigns and shall be binding on the undersigned and its successors.
DATED
4123212 CANADA LTD.
By: ---------------------------------------
Name:
Title:
SCHEDULE "F"
4123212 CANADA LTD.
PREFERRED SHARES
1. Definitions
With respect to the Preferred Shares, the following terms shall have the
meanings ascribed to them below:
(a) "Act" means the Canada Business Corporations Act.
(b) "Plan of Arrangement" means the plan of arrangement describing the
arrangement under Section 192 of the Act involving Fording Inc.,
Fording Coal Limited, 4123212 Canada Ltd., the Fording Canadian
Coal Trust, Teck Cominco Limited, Westshore Terminals Income Fund,
Teck Bullmoose Coal Inc., Quintette Coal Partnership, Luscar Coal
Limited, CONSOL Energy Inc. and Sherritt Coal Partnership II.
(c) "Redemption Amount" in respect of each Preferred Share means the
amount determined in accordance with Section 5.1 of the Plan of
Arrangement.
(d) "Redemption Price" in respect of each Preferred Share means the
Redemption Amount together with all dividends declared thereon and
unpaid up to the date of liquidation, dissolution or winding-up or
the date of redemption, as the case may be.
2. Dividends
The holders of the Preferred Shares shall be entitled to receive and the
Corporation shall pay thereon, as and when declared by the board of directors
out of the moneys of the Corporation properly applicable to the payment of
dividends, non-preferential dividends. Subject to the rights of the holders of
any other class of shares of the Corporation entitled to receive dividends in
priority to or rateably with the holders of the Preferred Shares, the board of
directors may in its sole discretion declare dividends on the Preferred Shares
to the exclusion of any other class of shares of the Corporation.
3. No Voting Rights
Except as otherwise provided in the Act, the holders of the Preferred Shares
shall not be entitled to receive notice of, or to attend or to vote at any
meeting of the shareholders of the Corporation.
4. Liquidation, Dissolution or Winding-up
In the event of the liquidation, dissolution or winding-up of the Corporation,
whether voluntary or involuntary, the holders of the Preferred Shares shall be
entitled to receive in respect of each such share held, before any distribution
of any part of the assets of the Corporation among the holders of the Common
Shares and any other class of shares of the Corporation ranking junior to the
Preferred Shares, an amount equal to the Redemption Price of the Preferred
Shares. After payment to the holders of the Preferred Shares of the amount so
payable to such
holders as herein provided, the holders shall not be entitled to share in any
further distribution of the property or assets of the Corporation.
5. Redemption at the Option of the Corporation
(a) Subject to the Act, the Corporation shall, at its option, be
entitled to redeem at any time or times all or any part of the
Preferred Shares registered in the name of any holder of any such
Preferred Shares on the books of the Corporation with or without
the consent of such holder by giving notice in writing to such
holder specifying:
(i) that the Corporation desires to redeem all or any part of
the Preferred Shares registered in the name of such holder;
(ii) if part only of the Preferred Shares registered in the name
of such holder is to be redeemed, the number thereof to be
so redeemed;
(iii) the business day (in this paragraph referred to as the
"Redemption Date") on which the Corporation desires to
redeem such Preferred Shares. Such notice shall specify a
Redemption Date which shall not be less than 30 days after
the date on which the notice is given by the Corporation or
such shorter period of time as the Corporation and the
holder of any such Preferred Shares may agree; and
(iv) the place of redemption.
(b) The Corporation shall, on the Redemption Date, redeem such
Preferred Shares by paying to such holder an amount equal to the
Redemption Price on presentation and surrender of the
certificate(s) for the Preferred Shares so called for redemption
at such place as may be specified in such notice. The
certificate(s) for such Preferred Shares shall thereupon be
cancelled and the Preferred Shares represented thereby shall
thereupon be redeemed. Such payment shall be made by delivery to
such holder of a cheque payable in the amount of the aggregate
Redemption Price for the Preferred Shares to be redeemed. From and
after the Redemption Date, the holder thereof shall not be
entitled to exercise any of the rights of holders of Preferred
Shares in respect thereof unless payment of the Redemption Price
is not made on the Redemption Date, or on presentation and
surrender of the certificate(s) for the Preferred Shares so called
for redemption, whichever is later in which case the rights of the
holder of the Preferred Shares shall remain unaffected until
payment in full of the Redemption Price.
6. Redemption at the Option of the Holder
(a) Subject to the Act, a holder of any Preferred Shares shall be
entitled to require the Corporation to redeem at any time or times
any Preferred Shares registered in the name of such holder on the
books of the Corporation by tendering to the Corporation at its
registered office a share certificate representing the Preferred
Shares which the holder desires to have the Corporation redeem
together with a request in writing (in this paragraph referred to
as a "Redemption Demand") specifying:
(i) that the holder desires to have the Preferred Share
represented by such certificate redeemed by the
Corporation;
(ii) if part only of the Preferred Shares registered in the name
of such holder is to be redeemed, the number thereof to be
so redeemed; and
(iii) the business day (in this paragraph referred to as the
"Redemption Date") on which the holder desires to have the
Corporation redeem such Preferred Shares. The Redemption
Demand shall specify a Redemption Date which shall not be a
date earlier than the date on which the Redemption Demand
is tendered to the Corporation or such other date as the
holder and the Corporation may agree.
(b) The Corporation shall, on such Redemption Date redeem all
Preferred Shares required to be redeemed by paying to such holder
an amount equal to the aggregate Redemption Price therefor on
presentation and surrender of the certificate(s) for the Preferred
Shares to be so redeemed at the registered office of the
Corporation. The certificate(s) for such Preferred Shares shall
thereupon be cancelled and the Preferred Shares represented
thereby shall thereupon be redeemed. Such payment shall be made by
delivery to such holder of a cheque in the amount of the aggregate
Redemption Price for the Preferred Shares to be redeemed. From and
after the Redemption Date, such Preferred Shares shall cease to be
entitled to dividends and the holder thereof shall not be entitled
to exercise any of the rights of holders of Preferred Shares in
respect thereof unless payment of the said Redemption Price is not
made on the Redemption Date, in which case the rights of the
holder of the Preferred Shares shall remain unaffected until
payment in full of the Redemption Price.
SCHEDULE "G"
4123212 CANADA LTD.
PROMISSORY NOTE
1. FOR VALUE RECEIVED the undersigned unconditionally promises to pay to
the holder of this Note (the "Lender") or to its order, in lawful money
of Canada, the amount obtained by dividing $445,000,000 by the number
of Common Shares held by Participating Shareholders immediately prior
to the Effective Time (the "Principal Amount"). No interest shall
accrue or be payable on the Principal Amount.
2. The Principal Amount is repayable, at the election of the Lender, on
demand.
3. When not in default under this Note, the undersigned shall be entitled
to prepay all or any portion of the Principal Amount outstanding
without notice, bonus or penalty.
4. The undersigned waives demand, presentment for payment, notice of
non-payment and notice of protest of this Note. No failure or delay by
the Lender in exercising any right under this Note shall operate as a
waiver of such right, nor shall any single or partial exercise of any
right exclude the further exercise thereof or the exercise of any other
right.
5. The undersigned hereby waives the right to assert in any action or
proceeding with regard to this Note any setoffs or counterclaims which
the undersigned may have.
6. This Note 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 enure to the benefit of the Lender, its successors
and assigns and shall be binding on the undersigned and its successors.
7. All capitalized terms used herein will have the meaning ascribed to
them in the Plan of Arrangement.
DATED
4123212 CANADA LTD.
By:
Name:
Title:
SCHEDULE "H"
FCL AMALCO AMALGAMATION PROVISIONS
1. Name of amalgamated corporation
FORDING INC.
2. The place in Canada where the registered office is to be situated
Xxxxx 0000, 000, Xxxxx Xxxxxx X.X.
Xxxx of Calgary, in the Province xx Xxxxxxx, X0X 0X0
3. The classes and any maximum number of shares that the corporation is
authorized to issue
The authorized capital of the amalgamated corporation is the same as the
authorized capital of Fording Inc. prior to the amalgamation contemplated
hereby and is comprised of an unlimited number of Common Shares, an
unlimited number of First Preferred Shares and an unlimited number of
Second Preferred Shares.
4. Restrictions, if any, on share transfers
None.
5. Number (or minimum and maximum number of directors)
A minimum of 5 and a maximum of 20.
6. Restrictions, if any, on business the corporation may carry on
There are no restrictions.
7. Other provisions, if any
The actual number of directors within the maximum and minimum set out in
paragraph 5 may be determined from time to time by resolution of the
directors. Any vacancy among the directors resulting from an increase in
the number of directors as so determined may be filled by resolution of
the directors.
8. The amalgamation has been effected as if approved and undertaken pursuant
to and in accordance with Subsection 184(1) of the Act except to the
extent modified by the Plan of Arrangement describing the arrangement
under Section 192 of the Act involving Fording Inc., Fording Coal
Limited, 4123212 Canada Ltd., the Fording Canadian Coal Fund, Teck
Cominco Limited, Westshore Terminals Income Fund, Teck Bullmoose Coal
Inc., Quintette Coal Partnership, Luscar Coal Limited, CONSOL Energy Inc.
and Sherritt Coal Partnership II.
9. Name of the amalgamating corporations
Fording Inc. and Fording Coal Limited
SCHEDULE "I"
NEW FORDING AMALGAMATION PROVISIONS
1. Name of amalgamated corporation
FORDING INC.
2. The place in Canada where the registered office is to be situated
Xxxxx 0000, 000, Xxxxx Xxxxxx X.X.
Xxxx of Calgary, in the Province xx Xxxxxxx, X0X 0X0
3. The classes and any maximum number of shares that the amalgamated
corporation is authorized to issue are the same as the authorized capital
of 4123212 Canada Ltd. prior to the amalgamation contemplated hereby and
is comprised of an unlimited number of Common Shares and an unlimited
number of Preferred Shares, the rights, privileges, conditions and
restrictions of which are described in Appendix 1 to this form.
4. Restrictions, if any, on share transfers
None.
5. Number (or minimum and maximum number of directors)
A minimum of 5 and a maximum of 20.
6. Restrictions, if any, on business the corporation may carry on
There are no restrictions.
7. Other provisions, if any
The actual number of directors within the maximum and minimum set out in
paragraph 5 may be determined from time to time by resolution of the
directors. Any vacancy among the directors resulting from an increase in
the number of directors as so determined may be filled by resolution of
the directors.
8. The amalgamation has been effected as if approved and undertaken pursuant
to and in accordance with Subsection 184(1) of the Act except to the
extent modified by the Plan of Arrangement describing the arrangement
under Section 192 of the Act involving Fording Inc., Fording Coal
Limited, 4123212 Canada Ltd., the Fording Canadian Coal Fund, Teck
Cominco Limited, Westshore Terminals Income Fund, Teck Bullmoose Coal
Inc., Quintette Coal Partnership, Luscar Coal Limited, CONSOL Energy Inc.
and Sherritt Coal Partnership II.
9. Name of the amalgamating corporations
4123212 Canada Ltd. and Fording Inc.
APPENDIX 1 TO SCHEDULE "I"
The Corporation is authorized to issue an unlimited number of Common Shares and
an unlimited number of Preferred Shares.
COMMON SHARES
The rights, privileges, restrictions and conditions attaching to the Common
Shares are as follows:
(a) Payment of Dividends: The holders of the Common Shares will be
entitled to receive dividends if, as and when declared by the
board of directors of the Corporation out of the assets of the
Corporation properly applicable to the payment of dividends in
such amounts and payable in such manner as the board of directors
may from time to time determine. Subject to the rights of the
holders of any other class of shares of the Corporation entitled
to receive dividends in priority to the holders of the Common
Shares, the board of directors may in its sole discretion declare
dividends on the Common Shares to the exclusion of any other class
of shares of the Corporation including, for greater certainty, the
Preferred Shares, provided that the board of directors may not
declare dividends on the Common Shares if the Corporation is, or
after the payment of the dividend would be, unable to pay the
holders of the Preferred Shares the Redemption Price for each
Preferred Share held by them.
(b) Participation upon Liquidation, Dissolution or Winding-Up: In the
event of the liquidation, dissolution or winding-up of the
Corporation or other distribution of assets of the Corporation
among its shareholders for the purpose of winding up its affairs,
the holders of the Common Shares will, subject to the rights of
the holders of any other class of shares of the Corporation
entitled to receive the assets of the Corporation upon such a
distribution in priority to or rateably with the holders of the
Common Shares, be entitled to participate rateably in any
distributions of the assets of the Corporation.
(c) Voting Rights: The holders of the Common Shares will be entitled
to receive notice of and to attend all annual and special meetings
of the shareholders of the Corporation and to one vote in respect
of each Common Share held at all such meetings, except at separate
meetings of or on separate votes by the holders of another class
or series of shares of the Corporation.
PREFERRED SHARES
The rights, privileges, conditions and restrictions attaching to the Preferred
Shares are as follows:
1. Definitions
With respect to the Preferred Shares, the following terms shall have the
meanings ascribed to them below:
(a) "Act" means the Canada Business Corporations Act.
(b) "Plan of Arrangement" means the plan of arrangement describing the
arrangement under Section 192 of the Act involving Fording Inc.,
Fording Coal Limited, 4123212 Canada Ltd., the Fording Canadian
Coal Trust, Teck Cominco Limited, Westshore Terminals Income Fund,
Teck Bullmoose Coal Inc., Quintette Coal Partnership, Luscar Coal
Limited, CONSOL Energy Inc. and Sherritt Coal Partnership II.
(c) "Redemption Amount" in respect of each Preferred Share means the
amount determined in accordance with Section 5.1 of the Plan of
Arrangement.
(d) "Redemption Price" in respect of each Preferred Share means the
Redemption Amount together with all dividends declared thereon and
unpaid up to the date of liquidation, dissolution or winding-up or
the date of redemption, as the case may be.
2. Dividends
The holders of the Preferred Shares shall be entitled to receive and the
Corporation shall pay thereon, as and when declared by the board of directors
out of the moneys of the Corporation properly applicable to the payment of
dividends, non-preferential dividends. Subject to the rights of the holders of
any other class of shares of the Corporation entitled to receive dividends in
priority to or rateably with the holders of the Preferred Shares, the board of
directors may in its sole discretion declare dividends on the Preferred Shares
to the exclusion of any other class of shares of the Corporation.
3. No Voting Rights
Except as otherwise provided in the Act, the holders of the Preferred Shares
shall not be entitled to receive notice of, or to attend or to vote at any
meeting of the shareholders of the Corporation.
4. Liquidation, Dissolution or Winding-up
In the event of the liquidation, dissolution or winding-up of the Corporation,
whether voluntary or involuntary, the holders of the Preferred Shares shall be
entitled to receive in respect of each such share held, before any distribution
of any part of the assets of the Corporation among the holders of the Common
Shares and any other class of shares of the Corporation ranking junior to the
Preferred Shares, an amount equal to the Redemption Price of the Preferred
Shares. After payment to the holders of the Preferred Shares of the amount so
payable to such holders as herein provided, the holders shall not be entitled to
share in any further distribution of the property or assets of the Corporation.
5. Redemption at the Option of the Corporation
(a) Subject to the Act, the Corporation shall, at its option, be
entitled to redeem at any time or times all or any part of the
Preferred Shares registered in the name of any holder of any such
Preferred Shares on the books of the Corporation with or without
the consent of such holder by giving notice in writing to such
holder specifying:
(i) that the Corporation desires to redeem all or any part of
the Preferred Shares registered in the name of such holder;
(ii) if part only of the Preferred Shares registered in the name
of such holder is to be redeemed, the number thereof to be
so redeemed;
(iii) the business day (in this paragraph referred to as the
"Redemption Date") on which the Corporation desires to
redeem such Preferred Shares. Such notice shall specify a
Redemption Date which shall not be less than 30 days after
the date on which the notice is given by the Corporation or
such shorter period of time as the Corporation and the
holder of any such Preferred Shares may agree; and
(iv) the place of redemption.
(b) The Corporation shall, on the Redemption Date, redeem such
Preferred Shares by paying to such holder an amount equal to the
Redemption Price on presentation and surrender of the
certificate(s) for the Preferred Shares so called for redemption
at such place as may be specified in such notice. The
certificate(s) for such Preferred Shares shall thereupon be
cancelled and the Preferred Shares represented thereby shall
thereupon be redeemed. Such payment shall be made by delivery to
such holder of a cheque payable in the amount of the aggregate
Redemption Price for the Preferred Shares to be redeemed. From and
after the Redemption Date, the holder thereof shall not be
entitled to exercise any of the rights of holders of Preferred
Shares in respect thereof unless payment of the Redemption Price
is not made on the Redemption Date, or on presentation and
surrender of the certificate(s) for the Preferred Shares so called
for redemption, whichever is later in which case the rights of the
holder of the Preferred Shares shall remain unaffected until
payment in full of the Redemption Price.
6. Redemption at the Option of the Holder
Subject to the Act, a holder of any Preferred Shares shall be entitled to
require the Corporation to redeem at any time or times any Preferred Shares
registered in the name of such holder on the books of the Corporation by
tendering to the Corporation at its registered office a share certificate
representing the Preferred Shares which the holder desires to have the
Corporation redeem together with a request in writing (in this paragraph
referred to as a "Redemption Demand") specifying:
(a) that the holder desires to have the Preferred Share represented by
such certificate redeemed by the Corporation;
(b) if part only of the Preferred Shares registered in the name of
such holder is to be redeemed, the number thereof to be so
redeemed; and
(c) the business day (in this paragraph referred to as the "Redemption
Date") on which the holder desires to have the Corporation redeem
such Preferred Shares. The Redemption Demand shall specify a
Redemption Date which shall not be a date earlier than the date on
which the Redemption Demand is tendered to the Corporation or such
other date as the holder and the Corporation may agree.
The Corporation shall, on such Redemption Date redeem all Preferred Shares
required to be redeemed by paying to such holder an amount equal to the
aggregate Redemption Price therefor on presentation and surrender of the
certificate(s) for the Preferred Shares to be so redeemed at the registered
office of the Corporation. The certificate(s) for such Preferred Shares shall
thereupon be cancelled and the Preferred Shares represented thereby shall
thereupon be redeemed. Such payment shall be made by delivery to such holder of
a cheque in the amount of the aggregate Redemption Price for the Preferred
Shares to be redeemed. From and after the Redemption Date, such Preferred Shares
shall cease to be entitled to dividends and the holder thereof shall not be
entitled to exercise any of the rights of holders of Preferred Shares in respect
thereof unless payment of the said Redemption Price is not made on the
Redemption Date, in which case the rights of the holder of the Preferred Shares
shall remain unaffected until payment in full of the Redemption Price.
SCHEDULE "J"
LUSCAR/CONSOL NOTE
$224,000,000 (Cdn.)
7. FOR VALUE RECEIVED the undersigned unconditionally promises to pay to
the holder of this Note (the "Lender") or to its order the amount of
$224,000,000 (the "Principal Amount") in cash or through the issuance
of 6,400,000 common shares of FCL Amalco (as such term is defined in
that certain Combination Agreement to which the undersigned is a party
dated January 13, 2003). No interest shall accrue or be payable on the
Principal Amount.
8. The Principal Amount is repayable, at the election of the Lender, on
demand.
9. When not in default under this Note, the undersigned shall be entitled
to prepay all or any portion of the Principal Amount outstanding
without notice, bonus or penalty.
10. The undersigned waives demand, presentment for payment, notice of
non-payment and notice of protest of this Note. No failure or delay by
the Lender in exercising any right under this Note shall operate as a
waiver of such right, nor shall any single or partial exercise of any
right exclude the further exercise thereof or the exercise of any other
right.
11. The undersigned hereby waives the right to assert in any action or
proceeding with regard to this Note any setoffs or counterclaims which
the undersigned may have.
12. This Note 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 enure to the benefit of the Lender, its successors
and assigns and shall be binding on the undersigned and its successors.
DATED
FORDING INC.
By: ---------------------------------------
Name:
Title:
Table of Contents
Page
Final
SCHEDULE 2.3(A)
TERM SHEET - GENERAL PARTNERSHIP AGREEMENT
Parties:
o Fording Holdco, Teck, Quintette Coal
Partnership ("QCP") and Teck Bullmoose
Coal Inc. ("TBCI").
Management and Employees: o In order to facilitate an efficient
transition upon completion of the
Transaction, the management and
employees of Fording to be transferred
to the Partnership will be employed by
the successor by amalgamation to Fording
("Fording Holdco") as agent for the
Partnership on terms no less favourable
than their current terms of employment.
o Until permanent arrangements can be
made, Fording Holdco will make all such
persons exclusively available to the
Partnership and the Partnership shall
reimburse Fording Holdco for all
costs/benefits relating to such
employees and will indemnify Fording
Holdco against claims by such persons
and third party claims in relation to
their activities on behalf of the
Partnership.
o Following completion of the Transaction,
employees, to the extent reasonable from
the perspective of Fording Holdco and
the Partnership, will be moved to a
wholly-owned operating subsidiary of the
Partnership at a tax effective time.
o Elkview employees will continue to be
employed by Elkview Operating
Corporation as agent for the
Partnership.
o All management and employees of the Line
Creek mine and the Luscar mine
ultimately to be transferred to the
partnership pursuant to the Transaction
will continue to be employed by their
respective employers until permanent
arrangements can be made, and such
employers will be reimbursed on the
basis set forth above and Fording will
make such persons available to the
Partnership
o Subject to the following, Teck, in its
capacity as managing partner, shall be
responsible for and shall manage the
business and affairs of the Partnership.
All decisions relating to the business
and affairs of the Partnership will be
made by Teck, other than those described
below under the heading "Special
Majority Matters".
o Teck will exercise the degree of care,
skill and diligence in its management of
the Partnership that an experienced mine
operator would use in the conduct of its
own affairs, and will manage the
Partnership in accordance with prudent
mining practice. Teck will indemnify the
Partnership in respect of its gross
negligence or willful default in the
performance of its management
obligations.
Special Majority Matters: o Notwithstanding the foregoing, the
following matters will require approval
of Partners holding 95% of the
Distribution Entitlement (a "Special
Resolution"):
(a) merger, arrangement, or other
similar transaction involving
substantially all of the business
or assets of the Partnership;
(b) reorganization of the structure of
the Partnership in a manner that
would materially adversely affect
the tax or financial consequences
to a Partner;
(c) any change in the distribution
policy of the Partnership;
(d) a voluntary bankruptcy/insolvency
proceeding or steps for the
appointment of a receiver in
respect of any material part of
the business or assets of the
Partnership;
(e) liquidation of the Partnership's
assets or dissolution of the
Partnership;
(f) admission of new Partners, other
than wholly-owned subsidiaries or
affiliates of a Partner;
(g) change in Distribution
Entitlements, except as
contemplated by the Partnership
Agreement;
(h) suspending any of the operations
of the Partnership's business for
a term in excess of one year;
(i) annual capital requirements not
included in the approved annual
budget in excess of $10 million;
(j) a decision to continue the
Partnership if the Partnership is
terminated by operation of law;
(k) approval of the annual operating
and capital plans or budget,
including any material amendment
thereto, prior to its expiry;
(l) any sale, lease, exchange,
transfer, disposition or
assignment of material assets of
the Partnership other than as
contemplated by the annual
operating and capital plans and
budget;
(m) institution or settlement of
litigation in amounts in excess of
$1,000,000;
(n) hedging transactions;
(o) any delegation by Teck of its
powers to manage the Partnership
(other than to a wholly-owned
subsidiary on terms reasonably
acceptable to the independent
directors of Fording Holdco);
(p) allocations to reserves for
reasonably anticipated working
capital, budget and capital
expenditure requirements not
contemplated by the approved
annual capital plan and budget;
(q) the entering into of any non-arm's
length transactions;
(r) any borrowings in excess of $100
million for working capital
purposes; and
(s) a decision to amend, modify, alter
or repeal any Special Resolution.
Contributions: o At the Closing Time, Fording
contributes, on a tax-deferred basis,
assets, as further described and in the
manner set forth in the Fording
Contribution Term Sheet attached hereto
as Schedule "A" (the "Fording
Contributed Assets").
o At the Closing Time, Teck contributes,
on a tax-deferred basis, assets as
further described and in the manner set
forth in the Teck Contribution Term
Sheet attached hereto as Schedule "B"
(the "Teck Contributed Assets").
o TBCI agrees to contribute the Bullmoose
mine, as described in the Teck
Contribution Term Sheet.
o QCP agrees to contribute the Quintette
Coal leases, the balance of the QCP
Mobile Equipment and the fixed assets at
the Quintette property, as described in
the Teck Contribution Term Sheet.
o Any of the foregoing assets which cannot
be conveyed at the Closing Time will be
held in trust for the Partnership and
the economic interests therein shall be
assigned to the Partnership. In such
case, the party required to convey such
asset will use it best efforts to cause
the asset to be transferred to the
Partnership as soon as possible. In
addition, it is understood that the
Partners will use their best efforts to
ensure that the Fording Contributed
Assets and the Teck Contributed Assets
(collectively, the "Contributed Assets
") are contributed to the Partnership on
a tax efficient basis for the
contributor, having due regard to the
benefits anticipated to accrue to such
party pursuant to the Transaction. If
any of the Contributed Assets can not be
conveyed on such basis, the Partner
shall hold such assets in trust for the
Partnership and shall assign to the
Partnership, the economic interest
therein. Thereafter, the Partner shall
use its best efforts to ensure that such
asset is transferred to the Partnership
as soon as possible.
Distribution Entitlements: o Fording's Partnership Interest entitles
it to Fording Distribution Entitlements,
subject to reduction as described below.
o Teck's Partnership Interest entitles it
to Teck, Distribution Entitlements,
subject to increase as described below.
o Teck's Distribution Entitlements may be
irrevocably increased by up to an
additional 5% (bringing its total
interest to 40%) in the manner
hereinafter described.
o In this term sheet,
"Synergies" means all cost (including
for certainty all capital and operating
costs) savings and increased revenues
attributable to the combination of the
Teck Contributed Assets with the
Fording Contributed Assets (including,
the Luscar/Consol assets) and the
operation thereof and distribution and
marketing of the production thereof by
the Partnership on an integrated basis;
provided that such Synergies shall be
calculated on the basis, without
duplication, that eliminates the effect
of changes in the Canadian dollar,
changes in metallurgical coal prices
generally and any associated impact of
such changes on transportation costs
and port loading charges (but not
eliminating changes in realized prices
for the products of the Partnership
resulting from the combination of
assets therein), changes in cash income
and mineral taxes, changes in
transportation costs as a result of
contracted rate changes existing at the
date hereof or negotiated as part of
the Terminal Agreement. The annual
amount of such Synergies during each
coal year of the Period shall be set
forth in a report of a mutually
acceptable expert in metallurgical coal
mining and marketing.
"Elkview Distributable Cash" will be
determined on a basis adjusted to
eliminate, without duplication, the
effect of changes in the Canadian
dollar, changes in metallurgical coal
prices generally (but not eliminating
changes in realized prices for the
products of the Partnership resulting
from the combination of assets
therein), changes in cash income and
mineral taxes, reductions in Elkview
coal production or sales in comparison
to its optimal capacity on a
stand-alone basis as approved in the
annual budget and changes in
transportation costs as a result of
contracted rate changes existing at the
date hereof. For certainty, Elkview
Distributable Cash in any coal year
will be determined, based on the review
of the mutually acceptable expert, so
as to adjust to eliminate the effect of
items determined to be the result of
Synergies which are counted in the
calculation of Incremental Returns for
that year, and to adjust for unusual
fluctuations in inventories.
"Period" means the next four coal years
of the Partnership (being April 1, 2003
to March 31, 2007).
"Incremental Return" means, in respect
of any coal year during the Period, the
positive amount by which the aggregate
of (a) Elkview Distributable Cash for
such year and (b) the Synergies
achieved during such year, exceeds the
aggregate of (x) Elkview Distributable
Cash for the year ended December 31,
2002, (y) the sum of $25 million and
(z) the cumulative amount of the
Incremental Return for each of the
preceding coal years during the Period.
o At the end of each coal year during the
Period, Teck's Distribution Entitlement
(as defined below) will be permanently
increased by 0.1% in respect of each $1
million of Incremental Return in such
coal year. Any such increase will be
made, effective as at the end of such
coal year, by an increase in Teck's
Distribution Entitlement and in
corresponding decrease in the
Distribution Entitlement of Fording
Holdco.
o Any dispute with respect to the
determination of Incremental Returns
will be resolved through a dispute
resolution mechanism to be established
in the definitive agreement.
Distribution Policy: o The Partnership will distribute to its
Partners in proportion to their
respective Distribution Entitlements
distributable cash on a monthly basis.
Distributable cash will be defined as
all the Partnership's available cash
after reservation for:
(a) payment of its debt obligations,
if any;
(b) operating expenses and Sustaining
Capital Expenditures; and
(c) allocations to a reserve for
reasonably anticipated working
capital and capital expenditure
requirements (provided that
reasonable use will be made of
operating lines for working
capital purposes).
"Sustaining Capital Expenditure" means
expenditures in respect of additions,
replacements or improvements to
property, plant and equipment required
to maintain the Partnership's current
business operations.
Distribution Entitlements: "Distribution Entitlement" means a
Partner's proportional entitlement,
expressed as a percentage, to share in
the profits and losses of the
Partnership and to participate in the
distribution of assets on liquidation
or dissolution of the Partnership.
The initial Distribution Entitlements
will be as follows:
Teck: 34.833%
QCT: 0.164%
TBCI: 0.003%
Fording Holdco: 65%
Income and losses for tax and
accounting purposes will be allocated
to the Partners in proportion to their
Distribution Entitlements. The
Partnership will in each fiscal period,
unless otherwise agreed by the Partners
claim the maximum permissible
discretionary deductions available to
it for tax purposes.
Formation of Partnership: o The name of the Partnership will be
Fording Canadian Coal Partnership and it
will be formed pursuant to the laws of
Alberta.
Representations and Warranties: o The Partners will make standard
representations and warranties regarding
status and capacity.
Other Activities: o Except to the extent otherwise
restricted by the Combination Agreement,
Partners can engage in other activities
unrelated to the production and sale of
coal in North America for which they are
not liable to account to the
Partnership.
Unlimited Liability o Except as provided below in respect of
of Partners: the guarantee referred to under
"Financing Arrangements," Partners have
unlimited liability for all debts,
liabilities and obligations of the
Partnership.
Evidence of Ownership: o On request of a Partner, the Managing
Partner will issue a certificate
evidencing that Partner's status as a
Partner and its Distribution
Entitlement.
Partnership Meetings: o Any Partner can call a meeting at any
time on 10 business days' notice.
o Quorum for Partnership meetings will be
at least two Partners holding not less
than 95% of the outstanding Partnership
Units.
o Partners may attend meetings in person
or by proxy.
Amendments to Partnership
Agreement: o Amendments require the consent of all
Partners.
Financing Arrangements: o The Partnership will provide the
guarantee contemplated by the financing
arrangements being put in place in
connection with the Transaction provided
in such case, as against Teck, QCP and
TBCI the rights of the lender under the
guarantee shall be limited in recourse
to the assets of the Partnership, it is
unsecured and its principal amount is
not greater than $440 million (the
"Initial Principal Amount ") and will
provide a similar guarantee in respect
of the refinancing of any such
facilities provided that the amount
being refinanced is not greater than the
Initial Principal Amount and the terms
and conditions of the replacement
guarantee are no more onerous than those
of the guarantee given in connection
with the initial financing.
o So long as the guarantee is in place,
Fording Holdco will covenant in favour
of Teck (i) not to sell any of its
Partnership interest and (ii) not to
carry on any business other than through
the Partnership or in respect of its
interest therein, and other than its
Industrial Minerals business
substantially as currently conducted,
unless, in the reasonable judgment of
Teck, the carrying on of such business
could not, under any reasonably
foreseeable circumstances, have an
adverse effect on the financial
condition of Fording Holdco.
Pledge of Partnership o A Partner can pledge, mortgage or
Interest: hypothecate a Partnership interest
subject to the credit facilities and
guarantees being put in place in
connection with the Transaction.
Restrictions on Withdrawals: o No Partner will have any right to
withdraw any amount or receive any
distribution except as provided in the
Partnership Agreement and permitted by
law.
Tax Year: o 12 months ended January 31 of each year.
Reporting: o Teck, in its capacity as Managing
Partner will cause the Partnership to
report monthly to the Partners with
respect to the operational results and
financial performance of the
Partnership. In addition, on a quarterly
basis, Teck will report to the board of
Fording Holdco with respect to such
matters and will ensure that Fording
Holdco has access to such other
information regarding the Partnership as
may be required in respect of public
company disclosure.
Partners Meetings: o Where the consent of Partners is
required for any matter, such consent
will be obtained at a meeting of
Partners or by written resolution of
Partners. Consent or Approval by
Partners holding 95% of Distribution
Entitlements will constitute approval of
any such matter. Partners meetings will
be held on reasonable notice, such
notice to be accompanied by sufficient
information to permit a reasoned
decision with respect to the matters
being considered. Each Partner will
arrange for its representation at
Partners' meetings by suitably
experienced persons with expertise in
coal mining and marketing and mine
finance. Partners will be obligated to
vote on any resolution of Partners in
the best interests of the Partnership.
Sale/Assignment of Partnership
Interest: o A Partner may sell, assign, transfer or
dispose of its Partnership interest to a
subsidiary or affiliate (a "permitted
transferee ") however, any intended
sale, assignment, transfer or
disposition to other than a permitted
transferee is subject to a right of
first offer to the other Partner.
o The sale by Teck of its interest will be
subject to the consent of the
independent directors of Fording Holdco,
such consent not to be unreasonably
withheld.
Winding up/Dissolution of
Partnership: o The Partnership continues until wound up
or dissolved which will occur on
authorization by Special Resolution.
o After all the Partnership's liabilities
are satisfied, assets are distributed to
reduce amounts contributed in cash to
capital and to Partners in proportion to
their Distribution Entitlements, subject
to rights of set-off in the event that
the Partnership has rights against a
Partner.
Partner Services: o Partners may provide services to the
Partnership at cost, subject to
arrangements approved by the other
Partners (Teck services to be approved
by directors of Fording Holdco
independent of Teck).
FINAL
SCHEDULE 2.3(C) TO THE COMBINATION AGREEMENT
PRAIRIE OPERATIONS TERM SHEET
All capitalized terms used herein and not otherwise defined shall have
the meanings given to such terms in the Combination Agreement.
Purchaser: o Sherritt Coal Partnership II ("SCPII"),
or such other entity as SCPII may
designate ("AcquireCo").
Vendor: o Fording Inc. and its relevant
subsidiaries or affiliates
(collectively, the "Vendor").
Closing Date: o As defined in the Combination Agreement.
Purchased Assets: o Subject to the Royalties described under
the heading "Royalty" below (to the
extent applicable), all assets, rights
and businesses described as "Prairie
Operations" in Fording Inc.'s 2001
Annual Report and Annual Information
Form dated May 16, 2002, including:
o The Vendor's interest in the Genesee
mining operations and the related
reserves and resources (the "Genesee
Mine") (including, without limitation,
assignment by the Vendor to SCPII or its
designate of the Genesee Coal Mine Joint
Venture Agreement between the Vendor and
EPCOR Utilities Inc., the Genesee Coal
Mine Operating Agreements between the
Vendor and the Joint Venturers and the
Genesee Coal Mine Dedication and
Unitization Agreement between the Vendor
and EPCOR) including all current assets
included in the working capital in
respect of the Genesee Mine; the fixed
assets used in connection with or
associated with the Genesee Mine
including, without limitation, those
fixed assets that will be set out in a
schedule to be provided at Closing and
related reserves and resources; the
Vendor's interest in the property at the
site required to operate the mine and
related infrastructure; coal reserves
and resources; mineral resource
royalties; deferred stripping;
machinery, technology, equipment, leased
rail equipment and other personal
property located at the site to operate
the facilities; transferable licences,
permits and approvals; contracts for
sale of coal and procurement of
services; geological/mining data and
engineering surveys; intellectual
property and information technology;
books, operating records, operating
safety and maintenance manuals, other
documentation related to the facilities
and the Genesee Mine; and the
proportionate benefit of any
arrangements of the Vendor for the
provision of supplies or services for
the operation of the Genesee Mine.
o The Vendor's interest in the Whitewood
mining operations and related reserves
and resources, if any, (the "Whitewood
Mine") including, without limitation,
assignment by Fording to SCPII (or its
designate) of the mining contract
between Fording and TransAlta to operate
the Whitewood Mine and the support and
services equipment and any related
contracts of Fording.
o The Vendor's interest in the Highvale
mining operations and related reserves
and resources (the "Highvale Mine")
including, without limitation,
assignment by Fording to SCPII (or its
designate) of the mining contract
between Fording and TransAlta
Corporation to operate the Highvale
Mine.
o All of the Vendor's mineral rights in
Alberta, Saskatchewan and Manitoba,
including salt leases and oil, gas and
potash rights and the Xxxxxx, Xxxxxxx
and Heatburg, Alberta properties.
o All rights to royalties receivable from
third parties relating to the Purchased
Assets.
Excluded Assets: o Fording's rights and obligations in
connection with its interest in the
former mining operation located at the
Mount Washington, mine site and the
Esquimault and Nanaimo railway lands.
o Thermal coal produced incidentally to
operations primarily involving the
Vendor's metallurgical coal businesses
and operations.
Assumed Liabilities and
Obligations: o AcquireCo will on the Closing Date
assume and be responsible for (and shall
indemnify and hold the Vendor harmless
from and against) all liabilities and
obligations relating to the Purchased
Assets and the operation thereof,
whether accruing prior to or after the
Closing Date, the replacement of letters
of credit (to be set forth in a schedule
to be provided at Closing) which are
posted as security for mining operations
(with the exception of the Excluded
Liabilities and Obligations), including,
without limitation, all liabilities and
obligations for reclamation, demolition,
environmental or other associated
liabilities and obligations in respect
of the Purchased Assets.
Excluded Liabilities and
Obligations: o All liabilities related to employment
income and bonuses, if any, of the
Transferred Employees arising prior to
the Closing Date (apart from any
obligations and liabilities for
severance pay, termination pay, vacation
pay, notice of termination of employment
or pay in lieu of such notice, damages
for wrongful dismissal or other employee
benefits or claims in respect of those
Transferred Employees who do not accept
AcquireCo's offer of employment on the
Closing Date, for which AcquireCo will
be responsible). o Liabilities and
obligations arising directly as a sole
result of the negligence or willful
misconduct of the Vendor in its
operation of the Purchased Assets, prior
to the Closing Date.
o All federal, provincial and municipal
taxes
Purchase Price and Other
Payments: o Subject to the terms and conditions
contained herein, AcquireCo shall
purchase from the Vendor and the Vendor
shall sell to AcquireCo, the Purchased
Assets on the Closing Date and AcquireCo
shall pay as the Purchase Price for the
Purchased Assets $225 million cash.
o The amount of consideration to be
received by the Vendor will be subject
to an adjustment for Working Capital
transferred to AcquireCo.
o "Working Capital" is defined as the
aggregate of accounts receivable,
inventory and prepaid expenses
(excluding deferred stripping costs and
prepaid insurance) less accounts payable
and accrued liabilities (excluding
accrued reclamation liabilities and
income taxes), to the extent such
amounts relate to the Purchased Assets
or the Liabilities assumed by AcquireCo,
all as determined in accordance with
Canadian GAAP as of the Closing Date.
Inventory includes coal, spare parts and
supplies and is valued at the lower of
cost and net realizable value.
o The Vendor will provide to AcquireCo,
prior to the Closing Date, a written
statement setting forth its good faith
estimate of the Working Capital as of
the Closing Date. AcquireCo will pay for
the Working Capital on Closing based on
such estimate.
o Within 30 days following the Closing
Date a statement of Working Capital as
at the Closing Date shall be prepared by
the Vendor for review by AcquireCo, and
an appropriate adjustment made between
the parties.
o The cash payments contemplated in
respect of the payment for the Working
Capital adjustment shall bear interest
at a rate per annum equal to the
prevailing Royal Bank Prime Rate, from
the Closing Date until the payment is
received.
Confirmation of Working
Capital Payments: o In the event of a dispute between the
parties as to the amount of the Working
Capital in respect of the Purchased
Assets, the Vendor shall at AcquireCo's
costs and expense, direct the Auditor to
audit the calculation by the Vendor of
the Working Capital and to provide their
report thereof to the Vendor and
AcquireCo within 60 days after the
Closing Date.
o "Auditor" is defined to mean an
independent firm of Chartered
Accountants acceptable to the Vendor and
AcquireCo, and failing agreement, means
PricewaterhouseCoopers LLP.
Royalty: o The Vendor will be entitled to a Royalty
determined on arm's length terms, but in
any event no greater than 5% of Gross
Revenues (the "Royalty"), payable
monthly based on production after the
Closing Date from the Purchased Assets
beyond levels as at the date of the
Combination Agreement (excluding the
planned 2005 Genesee expansion but
including any other increase in
production, whether as a result of
expansions or property developments or
otherwise). Sales of currently
non-producing properties in the
Purchased Assets will also be subject to
the Royalty.
o "Gross Revenue" is defined as the
selling price of product without any
deductions, or in the case of product
that is deemed to be sold, the fair
market value for such product. Where
AcquireCo uses for its own commercial
purposes or sells to any of its
affiliates any coal mined from any of
the Purchased Assets, such coal shall
for the purposes of this Term Sheet, be
deemed to have been sold by AcquireCo
and the Royalty relating to such coal
shall be calculated on the basis of the
fair market value for such coal.
o When AcquireCo receives any monies on
account of or as the proceeds of sale of
the Vendor's interest in the product
comprising the Royalty, AcquireCo shall
receive those monies as trustee for the
Vendor.
o AcquireCo shall have no right to set-off
any amounts owing by the Vendor against
the Royalty or to otherwise withhold any
amounts owing under the Royalty.
o AcquireCo shall keep accurate and
current books, records and accounts
showing the quantity of coal mined and
produced from the Purchased Assets and
the sales and dispositions made thereof,
which shall be available for inspection
at all reasonable times by the Vendor.
o AcquireCo shall pay Royalties monthly
and shall submit to the Vendor monthly
statements showing the quantity and kind
of coal mined and produced, and deemed
to be produced or sold from the
Purchased Assets in the immediately
preceding month.
o The Vendor, on notice to AcquireCo,
shall have the right to audit
AcquireCo's books, accounts and records
for any month, insofar as they relate to
any matter or item on the Royalty, at
any time during the two (2) full
calendar years following the calendar
year in which the month in question
falls. o The Royalty shall be an
interest in land and shall run with the
Purchased Assets. o Any late payments in
respect of a Royalty shall bear interest
at a rate equal to the prevailing Royal
Bank Prime Rate plus 2 1/2% per annum. o
The Royalty shall be subject to an
adjustment at year end based on actual
revenues payable for the year.
Transferred Employees: o AcquireCo will become bound by the
collective agreements with respect to
the union employees employed in
connection with the Purchased Assets and
be responsible for the employer's
obligations which arise after the
Closing Date.
o AcquireCo will offer employment on the
Closing Date to all non-union employees
employed in connection with the
Purchased Assets at the mine sites
("Transferred Employees"), including,
without limitation, all employees on
leave or receiving benefits on the
Closing Date, on terms and conditions no
less favourable in the aggregate than
those in effect on the Closing Date.
AcquireCo shall recognize in full and be
solely responsible for all past service
of all such employees. AcquireCo will
also be responsible for all employment
obligations with respect to those
employees who accept employment with
AcquireCo following commencement of
their employment with AcquireCo and will
also be responsible for all obligations
and liabilities for severance pay,
termination pay, vacation pay, notice of
termination of employment or pay in lieu
of such notice, damages for wrongful
dismissal or other employee benefits or
claims in respect of those Transferred
Employees who do not accept AcquireCo's
offer of employment on the Closing Date.
o AcquireCo will on the Closing Date,
assume all pension and post retirement
assets and obligations, effective as of
the Closing Date, with respect to the
Transferred Employees.
o The Vendor and AcquireCo shall jointly
retain an independent actuary to
determine the amount of over-funding or
under-funding of the pension obligations
as at the Closing Date in respective of
Transferred Employees. To the extent
that such independent actuary determines
that, as at the Closing Date, there was
an over-funding of pension obligations,
then the Vendor shall be entitled to
receive, and AcquireCo shall pay, as
soon as practical after such
determination by the independent
actuary, such over-funded amount. On the
other hand, if such independent actuary
should determine that there is an
under-funding of pension obligations as
at the Closing Date, then the Vendor
shall remain obligated to pay such
under-funding. In that case, any amount
of under-funding payable by the Vendor
shall be paid to AcquireCo promptly
following completion of the actuarial
determination.
Transferee Agreement: o If AcquireCo transfers the Purchased
Assets to another person, AcquireCo
agrees to cause the transferee to become
party to such agreements as are
necessary to effect the terms of this
Term Sheet, to the extent they remain
executory.
Consents: o AcquireCo and the Vendor shall cooperate
and use commercially reasonable efforts
to obtain all required consents and
approvals for the transaction (including
any subsequent transfer by AcquireCo to
an affiliate at or immediately after
Closing) on terms acceptable to each of
the parties, acting reasonably. In the
event any such consents and approvals
are not obtained by Closing, the parties
shall continue to pursue them and all
the benefits and liabilities shall be
held for the account of AcquireCo.
Transition: o AcquireCo and Vendor shall cooperate to
effect the transfer of the Purchased
Assets (including all books, records,
administrative services and information
technology) in an efficient manner and
in connection therewith the Vendor shall
provide, upon request by AcquireCo and
at a cost to be mutually agreed, access
to and the support of knowledgeable
personnel of the Vendor to effect the
transfer and assist in transition and
training.
Definitive Agreement: o A definitive purchase and sale agreement
based on this Term Sheet is intended to
be settled as soon as practicable
between the Vendor and AcquireCo. The
applicable parties will negotiate in
good faith to complete and sign the
definitive purchase and sale agreement
before the Closing Date.
o Notwithstanding any failure of AcquireCo
and the Vendor to negotiate or enter
into a definitive purchase and sale
agreement, the provisions of this Term
Sheet will nevertheless constitute the
terms of a binding agreement between
them.
FINAL
SCHEDULE 2.3(d)
SCHEDULE 2.3(D) TO THE COMBINATION AGREEMENT
TECK CONTRIBUTION TERM SHEET
All capitalized terms used herein and not otherwise defined shall have the
meanings given to such terms in the Combination Agreement.
Parties: o Teck
o Teck Bullmoose Coal Inc. ("TBCI")
o Quintette Coal Partnership ("QCP")
o Fording Coal Partnership
Closing Date: o As defined in the Combination Agreement
Assets Conveyed: o All of the assets, tangible and
intangible, leased or owned, of Teck or
its Affiliates used in the operation of
the Elkview Mine including, without
limitation, assets shown on the Teck
Mine Financial Statement, and all
surface rights and coal properties in
the Elk River Valley and surrounding
area representing potential coal
reserves or resources owned by Teck or
its Affiliates. For clarity coal
properties includes crown coal leases or
licenses and freehold coal lands
including lands that may be included as
part of titles including all mines and
minerals or other such title and also
includes product and stores inventory,
working capital (other than cash) and
all contracts relating to the operation
of, and the sale and transportation of
coal from, the Elkview Mines and
reclamation bonds and sinking funds
provided for reclamation.
o All of the issued and outstanding shares
of Elkview Coal Corporation ("ECC") and
an assignment of the agency agreement
between Teck and ECC.
o All properties with potential coal
reserves or resources owned by Teck or
its Affiliates in North America and
associated surface rights other than (a)
the Quintette coal leases and licences
and overlying surface tenures (the
balance of which will be conveyed after
completion of the reclamation) and (b)
mobile equipment and related parts owned
by QCP (the balance of the QCP Mobile
Equipment and related parts will be
conveyed to the Partnership after
completion of reclamation) and (c) any
assets related to the Bullmoose mine
(the balance of which will be conveyed,
subject to receipt of joint venture
consent, when shutdown by TBCI has been
completed and the mine reclaimed).
o All the permits, licenses and
reclamation certificates relating to the
existing, abandoned, and/or reclaimed
production areas and operations on any
of the foregoing properties.
o The property and assets being conveyed
are collectively called the "Teck
Contributed Assets".
o "QCP Mobile Equipment" means all mobile
equipment owned by QCP other than mobile
equipment owned by QCP and leased to
Teck at January 13, 2003.
Title: o Title to assets to be registered in name
of nominee company on behalf of
Partnership where practicable, until
time of registration to be held in trust
by respective owner for the Partnership.
Consents: o In the event that an asset requires
consent to be conveyed and such consent
is not available, all economic benefits
of such asset to be held in trust for
Partnership.
Working Capital: o Teck shall use best efforts to manage
the working capital at Elkview in the
ordinary course so that working capital
contributed consistent with the forecast
levels disclosed to Fording.
Non-arms Length Contracts: o Non-arms length contracts for
management, administration and marketing
to be terminated without charge, subject
to necessary transition, if any, at
option of Partnership.
Excluded Assets: o Cash; mobile equipment used at Elkview
leased from QCP, Teck or TBCI; and for
greater certainty, Teck's and TBCI's
interest in QCP.
Liabilities: o Partnership will assume all liabilities
associated with the Teck Contributed
Assets, except for greater certainty, no
reclamation liabilities relating to
Bullmoose or Quintette are assumed.
However, if the Partnership acquires
Quintette's wash plant it shall assume
any demolition or reclamation
obligations with respect thereto.
Employees: o All employees currently employed by ECC
will remain so employed on their current
terms. The Partnership will offer
employment to all non-unionized
employees of Teck located on mine site
who are actively engaged in operations
relating to the Teck Contributed Assets
and to five non-mine site employees
exclusively engaged in respect of such
operations. The Partnership will offer
employment to such employees on terms
and conditions not less favourable taken
as a whole, recognizing their service
with Teck for all purposes.
Pensions: o In respect to non-stand alone pension
plans for employees transferred to the
Partnership, subject to regulatory
approval Teck will transfer plan assets,
including proportional share of any
surplus, to a Partnership plan
established for the purpose of receiving
such assets. If there is a transfer of
assets in respect of a transferred
employee, the Partnership will assume
liabilities (on basis plan is fully
funded) for payments to the transferred
employers. In all cases, employees to be
kept whole.
Tax Provisions: o The parties will file elections under
the Mineral Tax Disposition of a Mine
Regulation (BC Reg. 346/95) in relation
to the contribution of interests in the
Elkview mine to the Partnership
o The Partnership shall bear all transfer
and sales taxes applicable in relation
to the contributions of assets to the
Partnership and the parties shall
cooperate to obtain rulings relating to
valuation issues which arise in relation
to BC property transfer tax and to
minimize the incidence of BC social
services tax (more commonly known as
sales tax) to the contribution of assets
to the Partnership.
o The partners and the Partnership will
file elections under subsection 97(2) of
the federal Income Tax Act in relation
to the transfer of eligible assets to
the Partnership so that the transfers
occur on an income tax deferred basis.
Definitive Agreement: o A definitive
purchase and sale agreement based on
this Term Sheet is intended to be
settled as soon as practicable between
the parties. The applicable parties will
negotiate in good faith to complete and
sign the definitive purchase and sale
agreement before the Closing Date.
o Notwithstanding any failure of the
Partnership and Teck to negotiate or
enter into a definitive purchase and
sale agreement, the provisions of this
Term Sheet will nevertheless constitute
the terms of a binding agreement between
them.
FINAL
SCHEDULE 2.3(E) TO THE COMBINATION AGREEMENT
FORDING CONTRIBUTION TERM SHEET
All capitalized terms used herein and not otherwise defined shall have
the meanings given to such terms in the Combination Agreement.
Parties: o Fording Coal Partnership
o Fording Inc. and its relevant
subsidiaries or affiliates
(collectively, "Fording").
Closing Date: o As defined in the Combination Agreement.
Assets Conveyed: o All of the assets, tangible and
intangible, leased or owned, of Fording
(including the Luscar Contributed Assets
but excluding the Excluded Assets),
including:
o All mines and related infrastructure;
coal reserves and resources; mineral
resource royalties; deferred stripping;
machinery, technology, equipment, leased
rail equipment and other personal
property located at the site to operate
the facilities; transferable licences,
permits and approvals; contracts for
sale of coal and procurement of
services; geological/mining data and
engineering surveys; intellectual
property and information technology;
books, operating records, operating
safety and maintenance manuals, other
documentation related to the facilities.
o All of the Vendor's mineral rights in
jurisdictions other than Alberta,
Saskatchewan and Manitoba.
Excluded Assets: o Fording's rights and obligations in
connection with its interest in the
Esquimault and Nanaimo railway lands,
including the former mining operation
located at the Mount Washington mine
site.
o Fording's Prairie Operations.
Assumed Liabilities and
Obligations: o The Partnership will on the Closing Date
assume and be responsible for (and shall
indemnify and hold Fording harmless from
and against) all liabilities and
obligations relating to the Assets and
the operation thereof, whether accruing
prior to or after the Closing Date, the
replacement of letters of credit (to be
set forth in a schedule to be provided
at Closing) which are posted as security
for mining operations (with the
exception of the Excluded Liabilities
and Obligations), including, without
limitation, all liabilities and
obligations for reclamation, demolition,
environmental or other associated
liabilities and obligations in respect
of the Assets Conveyed.
Excluded Liabilities and
Obligations: o All liabilities related to employment
income and bonuses, if any, of the
Transferred Employees arising prior to
the Closing Date (apart from any
obligations and liabilities for
severance pay, termination pay, vacation
pay, notice of termination of employment
or pay in lieu of such notice, damages
for wrongful dismissal or other employee
benefits or claims in respect of those
Transferred Employees who do not accept
the Partnership's offer of employment on
the Closing Date, for which the
Partnership will be responsible).
o Liabilities and obligations in respect
of the Excluded Assets.
Transferred Employees: o The Partnership will become bound by the
collective agreements with respect to
all of Fording's union employees other
than those employed in connection with
the Excluded Assets and be responsible
for the employer's obligations which
arise after the Closing Date.
o The Partnership will offer employment on
the Closing Date to all non-union
employees ("Transferred Employees")
other than those employed in connection
with the Excluded Assets including,
without limitation, all employees on
leave or receiving benefits on the
Closing Date, on terms and conditions no
less favourable in the aggregate than
those in effect on the Closing Date. The
Partnership shall recognize in full and
be solely responsible for all past
service of all such employees. The
Partnership will also be responsible for
all employment obligations with respect
to those employees who accept employment
with the Partnership following
commencement of their employment with
Partnership and will also be responsible
for all obligations and liabilities for
severance pay, termination pay, vacation
pay, notice of termination of employment
or pay in lieu of such notice, damages
for wrongful dismissal or other employee
benefits or claims in respect of those
Transferred Employees who do not accept
the Partnership's offer of employment on
the Closing Date.
o The Partnership will on the Closing
Date, assume all pension and post
retirement assets and obligations,
effective as of the Closing Date, with
respect to the Transferred Employees.
Title: o Title to assets to be registered in name
of nominee company on behalf of the
Partnership where practicable, until
time of registration to be held in trust
by respective owner for the Partnership.
Consents: o The Partnership and Fording shall
cooperate and use commercially
reasonable efforts to obtain all
required consents and approvals for the
transaction on terms acceptable to each
of the parties, acting reasonably. In
the event any such consents and
approvals are not obtained by Closing,
the parties shall continue to pursue
them and all the benefits and
liabilities shall be held for the
account of Partnership.
Tax Provisions: o The parties will file elections under
the Mineral Tax Disposition of a Mine
Regulation (BC Reg. 346/95) in relation
to the contribution of interests in
Fording River, Coal Mountain and
Greenhills mines to the Partnership.
o The Partnership shall bear all transfer
and sales taxes applicable in relation
to the contributions of assets to the
Partnership and the parties shall
cooperate to obtain rulings relating to
valuation issues which arise in relation
to BC property transfer tax and to
minimize the incidence of BC social
services tax (more commonly known as
sales tax) to the contribution of assets
to the Partnership.
o The partners and the Partnership will
file elections under subsection 97(2) of
the federal Income Tax Act in relation
to the transfer of eligible assets to
the Partnership so that the transfer
occur on an income tax deferred basis.
Definitive Agreement: o A definitive purchase and sale agreement
based on this Term Sheet is intended to
be settled as soon as practicable
between the parties. The applicable
parties will negotiate in good faith to
complete and sign the definitive
purchase and sale agreement before the
Closing Date.
o Notwithstanding any failure of the
Partnership and Fording to negotiate or
enter into a definitive purchase and
sale agreement, the provisions of this
Term Sheet will nevertheless constitute
the terms of a binding agreement between
them.
Schedule 2.3(n)
RECIPROCAL NON-COMPETITION AGREEMENT
TERM SHEET -- JANUARY 12, 2003
------------------------------
Parties: o Luscar Energy Partnership and Luscar Ltd.
(collectively "Luscar"), Fording Inc., the Fording
Canadian Coal Trust (the "Trust") and a general
partnership (the "Partnership") organized under the
Trust (Fording Inc., the Trust and the Partnership,
collectively, "Fording"). For greater certainty,
Teck Cominco Limited shall not be bound by this
agreement.
Fording Non-Compete: o Fording agrees that it will not operate, own, lease
or contract mine any assets or business involving
thermal coal in Canada for a period of 5 years from
the Closing Date (as defined in the Combination
Agreement), except for assets or businesses that
primarily produce metallurgical coal but where
thermal coal is produced incidentally from such
operations or when such coal is blended so as to be
marketed as metallurgical coal ("Byproduct
Thermal"). Fording is permitted to sell Byproduct
Thermal without restriction. Subject to the approval
of the independent trustees of the Trust, the
Partnership and Luscar shall enter into an agreement
to appoint Luscar as the marketing agent of the
Partnership with respect to Byproduct Thermal sales
to customers within Canada other than sales under
any contracts already in place on the Closing Date,
including subsequent extensions. The agency contract
shall be on arms' length commercial terms. The
contract shall have a term of 5 years, terminable at
the election of the Partnership with the approval of
the independent trustees of the Trust at any time
after the expiry of 2 years.
Luscar Non-Compete: o Luscar agrees that it will not operate, own, lease
or contract mine any assets or business involving
metallurgical coal in Canada for a period of 5 years
from the Closing Date, except for assets or
businesses that primarily produce thermal coal but
where metallurgical coal is produced incidentally
from such operations ("Byproduct Metallurgical").
Luscar is only permitted to sell Byproduct
Metallurgical if Fording acts as the marketing agent
with respect to those sales. Fording agrees to act
in a commercially reasonable manner as marketing
agent for such sales.
Severability: o If a court or other tribunal of competent
jurisdiction determines that any one or more of the
provisions contained in the Term Sheet is invalid,
illegal or unenforceable in any respect in any
jurisdiction, the validity, legality and
enforceability of such provision or provisions shall
not in any way be affected or impaired thereby in
any other jurisdiction and the validity, legality
and enforceability of the remaining provisions
contained herein shall not in any way be affected or
impaired thereby, unless in either case as a result
of such determination this Term Sheet would fail in
its essential purpose.
FINAL
SCHEDULE 2.4
FORDING CANADIAN COAL TRUST
GOVERNANCE AGREEMENT
TERM SHEET
Parties: o Fording Canadian Coal Trust (the
"Trust")
o New Fording
o Teck
o Westshore
o OTPP
o SCPII
o CONSOL
Trustees: o The Trust will have 9 Trustees.
Initially, the Trustees will be:
o Xxxxxxx X. Xxxxxxx
o Xxxxxxx Xxxxxxx
o Xxxxx X. Xxxxxxxx
o Xxxxxxx X. Xxxxxxx
o Xxxxxx X. Xxxxxx
o Xxxx Xxxxxxxx
o an independent nominee of SCPII
o a nominee of Teck
o a nominee of CONSOL
o Each of Teck, Westshore, SCPII and
CONSOL shall have the right to nominate
one Trustee, provided that:
o no employee of the Fording Coal
Partnership shall be a Trustee;
o for CONSOL's right to nominate, CONSOL
must hold at least 2 million Units
(representing approximately 4.5% of the
outstanding Units);
o for Teck's right to nominate, Teck must
hold at least 4.5% of the outstanding
Units;
o for Westshore's right to nominate,
Westshore must hold at least 4.5% of the
outstanding Units; and
o for SCPII's right to nominate, SCPII
must hold at least 4.5% of the
outstanding Units and the nominee of
SCPII must be independent of both OTPP
and Sherritt.
o The balance of the Trustees are to be
nominated by the Governance, Nomination
and Compensation Committee of the
Trustees.
o Chairman will not have casting vote.
Board of New Fording:
o The Board of New Fording will have 9
directors. Initially, the directors will
be:
o Xxxxxxx X. Xxxxxxx
o Xxxxxx X. Xxxxxx
o Xxxxxxx Xxxxxxx
o Xxxxx X. Xxxxxxxx
o Xxxxx X. Xxxxxxxx
o Xxxxxxx X. Xxxxxxx
o Xxxxx X. Xxxxxxxx
o an independent nominee of SCPII,
provided that the nominee shall be
different than its nominee for Trustee
o a nominee of CONSOL, provided that the
nominee shall be different than its
nominee for Trustee
o Each of Teck, Westshore, SCPII and
CONSOL shall have the right to nominate
one director of New Fording, provided
that:
o no employee of the Fording Coal
Partnership shall be a director of New
Fording;
o for CONSOL's right to nominate, CONSOL
must hold at least 2 million units
(representing approximately 4.5% of the
outstanding Units);
o for Teck's right to nominate, Teck must
hold at least 4.5% of the outstanding
Units;
o for Westshore's right to nominate,
Westshore must hold at least 4.5% of the
outstanding Units; and
o for SCPII's right to nominate, SCPII
must hold at least 4.5% of the
outstanding Units and the nominee of
SCPII must be independent of both OTPP
and Sherritt.
o Chairman will not have casting vote.
Executive Officers: o The Chairman and CEO of the Trust will
be selected by the Trustees from among
the independent Trustees. If a nominee
for officer of the Trust is a director
or officer of Teck or of the
Partnership, the nominee must be
ratified by the independent Trustees.
The initial Chairman and CEO of the
Trust will be Xxxxxxx Xxxxxxx. The
initial officers of the Trust will be
Xxx Xxxxxxxx (President) and Xxxxx
Xxxxxxxx (CFO).
o The Chairman and CEO of New Fording will
be selected by the directors of New
Fording from among the independent
directors of New Fording. If a nominee
for officer of New Fording is a director
or officer of Teck or of the
Partnership, the nominee must be
ratified by the independent directors of
New Fording. The initial Chairman and
CEO of New Fording will be Xxxxxxx
Xxxxxxx. The initial officers of New
Fording will be Xxx Xxxxxxxx (President)
and Xxxxx Xxxxxxxx (CFO).
o The initial officers of the Partnership
will be Xxx Xxxxxxxx (President and CEO)
and Xxxxx Xxxxxxxx (CFO).
FINAL
SCHEDULE 2.4(c)
FORDING CANADIAN COAL TRUST
DECLARATION OF TRUST
TERM SHEET
Trustees and Officers: o The Trust will have 9 Trustees. The
initial Trustees shall be:
(a) Xxxxxxx X. Xxxxxxx
(b) Xxxxxxx Xxxxxxx
(c) Xxxxx X. Xxxxxxxx
(d) Xxxxxxx X. Xxxxxxx
(e) Xxxxxx X. Xxxxxx
(f) Xxxx Xxxxxxxx
(g) an independent nominee of SCPII
(h) a nominee of Teck
(i) a nominee of CONSOL
o Thereafter, up to four of the Trustees
shall be nominated pursuant to the
Governance Agreement (one each by Teck,
Westshore, SCPII and CONSOL) and the
balance shall be nominated by the
Governance, Nomination and Compensation
Committee of the Trustees.
o All Trustees are to be elected by the
Unitholders.
o A majority of the Trustees shall be
independent Trustees. A nominee (as
Trustee or as director of New Fording)
will be an "independent", if the
nominee:
` (a) is not an associate of or acting
jointly or in concert with any of
Teck, Westshore, SCPII, Sherritt
International Corporation, Luscar
or OTPP (collectively the
"Principals") or their respective
affiliates;
(b) would qualify as an "unrelated
director" (under the TSX
definition) of each of the
Principals, if the nominee was a
director of each of the
Principals; and
(c) would qualify as an "unrelated
director" (under the TSX
definition) of the Trust or of New
Fording, as appropriate.
o A majority of the Trustees must be
Canadian residents.
o No employee of the Fording Coal
Partnership shall be a Trustee. Trustees
Powers and Duties: o Trustees powers are
subject to specific limitations
contained in the Declaration of Trust,
and otherwise Trustee's shall have full
control over the assets and affairs of
the Trust.
o Trustees must disclose all conflicts of
interest and a Trustee's ability to vote
on matters where a conflict exists is
restricted.
o Entering into contracts with a Related
Party (as defined in OSC Rule 61-501) is
subject to the approval of a majority of
the Trustees and not less than a
majority of the Independent Trustees,
except to give effect to any transaction
contemplated in the Combination
Agreement or any agreement referred to
therein.
o Up to four of the nominees as directors
of New Fording are to be selected in
accordance with the Governance Agreement
(one each by Teck, Westshore, SCPII and
CONSOL) and the balance are to be
nominated by the Governance, Nomination
and Compensation Committee of the
Trustees.
o Trustees shall vote the New Fording
Common Shares in favour of these
nominees as directors of New Fording,
provided that:
(a) the nominees shall be approved by
more than 50% of the votes cast at
a Unitholder meeting;
(b) none of the nominees is an
employee of the Fording Coal
Partnership;
(c) a majority of the nominees are
"independent", as defined above;
and
(d) a majority of the nominees shall
not be Trustees Investments of
Trust:
o The operations and investments of the
Trust shall be restricted to:
(a) investing in such securities as
may be approved by the Trustees
from time to time, including the
New Fording Common Shares;
(b) issuing guarantees of the
indebtedness of wholly-owned
subsidiaries;
(c) disposing of assets of the Trust;
(d) holding cash or other short term
investments; and
(e) undertaking such other activities
as may be approved by the Trustees
from time to time Units:
o Beneficial interests in the Trust will
be divided into Units and all
entitlements of the Unitholders shall be
determined on a pro rata basis.
o The Trust may create and issue rights,
warrants or options to subscribe for
fully paid Units.
o A maximum of 49% of the Units may be
held for the benefit of non-residents of
Canada.
o Units may be redeemed at the request of
a holder for the lesser of 90% of the
"market price" or the "closing market
price" on the principal market on which
the Units trade on a "redemption date"
on terms that are typical for income
funds listed and posted for trading on
the TSX, including providing for the
payment of all or part of the
"redemption price" in securities.
o Compulsory acquisition is to be provided
for if a take-over bid is made for the
Units and not less than 90% of the Units
are acquired by an offeror (excluding
Units held by such offeror and its
affiliates or associates as at the date
the take-over bid was made).
o Dissent rights are to be granted to
Unitholders in connection with:
(a) a compulsory acquisition;
(b) the disposition of all or
substantially all of the assets of
the Trust, or any merger,
amalgamation or arrangement of the
Trust; and
(c) any transactions by New Fording,
if such matter is a matter for
which a Unitholder would have been
granted the right to dissent under
section 190 of the CBCA if such
Unitholder was a shareholder of
New Fording and not a Unitholder.
Meetings of Unitholders:
o There shall be an annual meeting of the
Unitholders and additional special
meetings may be called by the Trustees
or upon the request of Unitholders
holding not less than 10% of the Units
then outstanding.
o The approval of at least two-thirds of
the votes cast at a meeting of
Unitholders is required to:
(a) authorize any combination, merger,
amalgamation or arrangement of the
Trust or New Fording (except in
conjunction with an internal
reorganization);
(b) dispose of all or substantially
all of the assets of the Trust or
New Fording;
(c) except in conjunction with an
internal reorganization or to
Unitholders pursuant to the
redemption rights of Unitholders,
dispose of any securities of New
Fording held by the Trust;
(d) authorize the issuance of any
shares in the capital of New
Fording other than to the Trust or
another wholly-owned subsidiary of
the Trust, or except in connection
with the satisfaction of the
redemption rights in respect of
the Units;
(e) amend the articles of New Fording;
(f) liquidate or dissolve New Fording;
or
(g) approve the voluntary termination,
dissolution or winding up of the
Fund.
o So long as Luscar holds any Units of the
Trust and only for a period of 5 years
from the Effective Date, the approval of
75% of the votes cast at a meeting of
Unitholders is required for the Trust to
dispose of more than 90% of the common
shares of New Fording held by the Trust,
except:
(a) in conjunction with an internal
reorganization such that the Trust
remains the sole direct or
indirect common shareholder of New
Fording, or
(b) to Unitholders pursuant to the
redemption rights of Unitholders.
Meetings of Trustees: o Unless
otherwise provided, the actions of
Trustees require majority approval
of the Trustees if considered at a
meeting, and unanimous written
approval if otherwise approved.
o Trustees may delegate powers to
committees and the Declaration of Trust
will contemplate the creation of an
audit committee and a governance,
nomination and compensation committee as
well as provide for the creation of such
other committees as the Trustees may
determine.
o Chairman will not have a casting vote.
Distributions: o The Trust will distribute all of its
Distributable Cash, being all of the
cash received by the Trust from New
Fording less:
(a) expenses and other obligations of
the Trust; and
(b) any amounts paid in cash by the
Trust in connection with the
redemption of Units.
o Distributions will be made quarterly to
Unitholders on the last business day of
each calendar quarter (March, June,
September and December) with actual
payment to be made to such Unitholders
on or about the 15th day of the
following month.
o Where the Trustees determine that the
Trust does not have sufficient available
cash to make the full amount of any
distribution, the payment of such
distribution may be made in Units.
Amendments:
o Trustees may only make minor amendments
to the Declaration of Trust without
obtaining the approval of two-thirds of
the votes cast at a Unitholder meeting.
o Amendments to the distribution policy of
the Trust require the approval of at
least two-thirds of the Unitholders.
Termination:
o The Trust shall continue in force and
effect so long as any property of the
Trust is held by the Trustees.
o The Trust may be terminated by the vote
of at least two-thirds of the votes cast
at meeting of the Unitholders called for
that purpose. Liabilities of the
Trustees: o The liabilities and
indemnification of the Trustees will be
consistent with what is found in other
income trusts that trade on the TSX.
SCHEDULE 4.1
REGULATORY APPROVALS
Canadian Filings
Canadian Securities Regulatory Authorities
Competition Act
Toronto Stock Exchange
International Filings
European Community: Merger Task Force of Directorate-General for Competition of
the European Commission (if required, approvals in Belgium and Germany or other
member states will not be required)
Belgium: Ministere des Affaires econonomiques, and Competition Council (if
European Community approval not required)
Brazil: Conselho Administrativo de Defesa Economica (XXXX)
Germany: Bundeskartellamt (if European Community approval not required)
Japan: Fair Trade Commission
Mexico: Comision Federal de Competencia
United States Filings
United States: Federal Trade Commission and Antitrust Division of the Department
of Justice (if required)
New York Stock Exchange
Any required competition filings determined to be triggered as a result of the
parties sharing information in connection with the proposed transactions.
