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GOVERNANCE AGREEMENT
Among
FORDING CANADIAN COAL TRUST
- and -
4123212 CANADA LTD.
- and -
ONTARIO TEACHERS' PENSION PLAN BOARD
February 28, 2003
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Table of Contents
Page
ARTICLE 1
DEFINITIONS AND PRINCIPLES OF INTERPRETATION..............................1
1.1 Definitions........................................................1
1.2 Interpretation and General Provisions..............................4
ARTICLE 2
TRUSTEES AND BOARD OF DIRECTORS...........................................5
2.1 OTPP/Sherritt Trustee Nominee......................................5
2.2 OTPP/Sherritt Director Nominee.....................................5
2.3 No Duplication of Nominees.........................................6
ARTICLE 3
PROCEDURAL, VOTING AND DISCLOSURE MATTERS.................................6
3.1 Procedure..........................................................6
3.2 Voting.............................................................7
3.3 Voting for Alternate Nominees......................................8
3.4 Voting not Compulsory..............................................8
3.5 Board Age Policies.................................................8
3.6 Disclosure.........................................................8
ARTICLE 4
RESTRICTIONS ON AMENDMENT.................................................9
4.1 Restrictions on Amendment..........................................9
ARTICLE 5
MISCELLANEOUS.............................................................9
5.1 Notices............................................................9
5.2 Submission to Jurisdiction........................................11
5.3 Liability of Trustees and Unitholders.............................11
5.4 References to Acts Performed by the Trust or the Trustees.........11
5.5 Ability to Set Aside Vote.........................................11
5.6 Enforcement of Governance Agreements..............................12
5.7 Expenses..........................................................12
5.8 Entire Agreement..................................................12
5.9 Consequence of Sherritt Ceasing to Hold Units.....................13
5.10 Termination.......................................................13
THIS AGREEMENT is made this 28th day of February, 2003.
AMONG:
FORDING CANADIAN COAL TRUST
an open-ended mutual fund trust existing under the laws of Alberta
("Trust")
- and -
4123212 CANADA LTD.
a corporation existing under the laws of Canada and a wholly owned
subsidiary of the Trust
("New Fording")
- and -
ONTARIO TEACHERS' PENSION PLAN BOARD
a non-share capital corporation established under the laws of Ontario
("OTPP")
RECITALS:
A. OTPP and an affiliate of OTPP are Unitholders of the Trust.
B. OTPP, the Trust and New Fording wish to enter into this Agreement to
deal with certain matters relating to the governance of the Trust and
New Fording.
C. Subsequent to the entering into of this Agreement, New Fording will
change its name to Fording Inc.
THEREFORE, the parties agree as follows:
ARTICLE 1
DEFINITIONS AND PRINCIPLES OF INTERPRETATION
1.1 Definitions
For purposes of the Agreement, the following terms shall have the following
meanings:
"Agreement" means this agreement, including all schedules, amendments
or restatements as permitted, and references to "Article", "Section" or
"Schedule" mean the specified Article, Section or Schedule of this
Agreement;
"affiliate" means, with respect to any Person (other than an
individual), any other Person (other than an individual) directly or
indirectly controlling, controlled by, or under direct or indirect
common control with the first Person, and, with respect to any
Principal Unitholder, includes any Person that is jointly controlled by
that Principal Unitholder together with one or more other Principal
Unitholders;
"Board of Directors" means the board of directors of New Fording from
time to time;
"business day" means a day which is not a Saturday, Sunday or a
statutory holiday in the Provinces of Alberta, British Columbia and
Ontario, on which the principal commercial banks in downtown Xxxxxxx,
Xxxxxxx and Vancouver are generally open for the transaction of
commercial banking business;
"CBCA" means the Canada Business Corporations Act, R.S.C. 1985, c.
C-44, as amended;
"Chair" and "Chief Executive Officer" means the Person(s) holding the
respective offices from time to time appointed by the Trustees;
"controlled by" means: A Person is controlled by another Person or by
two or more other Persons if (i) such Person or Persons holds voting
securities of the first Person carrying more than 50% of the votes that
may be cast to elect the board of directors or other governing body of
such first mentioned Person, other than for the purpose of giving
collateral for bona fide debt; and (ii) the votes carried by the
securities in (i) are sufficient, if exercised, to elect a majority of
the board of directors or other governing body of such first mentioned
Person; "control" and "controlling" have a corresponding meaning;
"Declaration of Trust" means the declaration of trust made as of
February 26, 2003, pursuant to which the Trust was established, as
amended, supplemented or restated from time to time;
"Director" means a director of New Fording from time to time;
"Governance Agreements" means the four Governance Agreements to be
entered into among the Trust, New Fording and, separately, each of
OTPP, Sherritt, Teck and Westshore;
"Independent Director" means a Director who:
(a) is not an insider of any of the Principal Unitholders or their
respective affiliates, and, with respect to a Director nominated by
Sherritt and OTPP, is also not an insider of Luscar or its
affiliates, so long as Sherritt and OTPP jointly or severally
control Luscar;
(b) would qualify as an "unrelated director" (as defined in the TSX
Guidelines) of each of the Principal Unitholders, if the Director
was a director or trustee of each of the Principal Unitholders; and
(c) would qualify as an "unrelated director" (as defined in the TSX
Guidelines) of New Fording;
"Independent Trustee" means a Trustee who:
(a) is not an insider of any of the Principal Unitholders or their
respective affiliates, and, with respect to a Trustee nominated by
Sherritt and OTPP, is also not an insider of Luscar or its
affiliates, so long as Sherritt and OTPP jointly or severally
control Luscar;
(b) would qualify as an "unrelated director" (as defined in the TSX
Guidelines) of each of the Principal Unitholders, if the Trustee
was a director or trustee of each of the Principal Unitholders; and
(c) would qualify as an "unrelated director" (as defined in the TSX
Guidelines) of the Trust;
"insider" in relation to a Principal Unitholder means a director,
trustee, officer or employee of that Principal Unitholder or any of its
affiliates, or a director, trustee, officer or employee of any Person
with a greater than 10% voting or economic interest in that Principal
Unitholder, or any affiliates of that Person;
"Luscar" means Luscar Ltd., a corporation existing under the laws of
Alberta;
"OTPP/Sherritt Director Nominee" means the individual nominated by OTPP
acting together with Sherritt to serve as a Director pursuant to
Section 2.2(a) of this Agreement;
"OTPP/Sherritt Trustee Nominee" means the individual nominated by OTPP
acting together with Sherritt to serve as a Trustee pursuant to Section
2.1(a) of this Agreement;
"OTPP's/Sherritt's Ownership Percentage" means with respect to OTPP and
Sherritt, at any time, the ratio, expressed as a percentage, of:
(i) the number of Units beneficially owned by OTPP, Luscar (so
long as OTPP jointly with Sherritt or OTPP severally controls
Luscar), Sherritt and their affiliates, to
(ii) the total number of Units then outstanding;
"Parties" means the parties to the Agreement and "Party" means any one
of them;
"Partnership" means Fording Coal Partnership, a general partnership
formed under the laws of Alberta, the initial partners of which are
Fording Coal Limited, New Fording, Teck, The Quintette Coal Partnership
and Teck - Bullmoose Coal Inc;
"Person" means an individual, sole proprietorship, body corporate,
company, partnership, firm, entity, limited partnership, joint venture,
trust or unincorporated association, unincorporated syndicate,
unincorporated trust, the Crown or any agency or instrumentality
thereof and where the context so requires, any of the foregoing when
they are acting as trustee, executor, administrator or other legal
representative;
"Principal Unitholders" means Teck, Westshore, Sherritt and OTPP (and
their respective affiliates that own Units);
"Proxy" has the meaning given to it in Section 3.2(b) of this
Agreement;
"Proxy Deadline" has the meaning given to it in Section 3.2(b) of this
Agreement;
"Proxy Notice" has the meaning given to it in Section 3.2(c) of this
Agreement;
"Sherritt" means Sherritt International Corporation, a corporation
existing under the laws of New Brunswick;
"Sherritt Governance Agreement" means the governance agreement among
Sherritt, the Trust and New Fording, and for greater certainty is one
of the Governance Agreements;
"Teck" means Teck Cominco Limited, a corporation existing under the
laws of Canada;
"Trustee" means the trustees or trustee of the Trust from time to time;
"TSX Guidelines" means the corporate governance guidelines of the
Toronto Stock Exchange, as amended from time to time;
"Unit" means a unit of the Trust;
"Unitholders" means the registered holders from time to time of the
Units; and
"Westshore" means Westshore Terminals Income Fund, an open-ended mutual
fund existing under the laws of British Columbia.
1.2 Interpretation and General Provisions
(a) Consent - Whenever a provision of the Agreement requires an
approval or consent by a Party and such approval or consent is not
delivered within the applicable time limit, then, unless otherwise
specified, the Party whose consent or approval is required shall be
conclusively deemed to have withheld its approval or consent.
(b) Governing Law - The Agreement is a contract made under and shall be
governed by and construed in accordance with the laws of the
Province of Alberta and the federal laws of Canada applicable in
the Province of Alberta.
(c) Headings - Headings of the Articles and Sections are inserted for
convenience of reference only and shall not affect the construction
or interpretation of the Agreement.
(d) Including - Where the words "including" or "includes" are used in
the Agreement, it means "including (or includes) without
limitation".
(e) No Strict Construction - The language used in the Agreement is the
language chosen by the Parties to express their mutual intent, and
no rule of strict construction shall be applied against any Party.
(f) Number and Gender - Unless the context otherwise requires, words
importing the singular include the plural and vice versa and words
importing gender include all genders.
(g) Time - Time is of the essence in the performance of the Parties'
respective obligations.
(h) Assignment - No Party may assign this Agreement or any rights or
obligations under this Agreement without the prior written consent
of each of the other Parties, such consent not to be unreasonably
withheld.
(i) Enurement - This Agreement shall enure to the benefit of and be
binding upon the Parties and their respective successors (including
any successor by reason of amalgamation of any Party) and permitted
assigns.
(j) Further Assurances - The Parties shall with reasonable diligence do
all such things and provide all such reasonable assurances as may
be required to consummate the transactions contemplated by the
Agreement, and each Party shall provide such further documents or
instruments required by any other Party as may be reasonably
necessary or desirable to effect the purpose of the Agreement and
carry out its provisions.
(k) Execution and Delivery - This Agreement may be executed by the
Parties in counterparts and may be executed and delivered by
facsimile and all such counterparts and facsimiles shall together
constitute one and the same agreement.
ARTICLE 2
TRUSTEES AND BOARD OF DIRECTORS
2.1 OTPP/Sherritt Trustee Nominee
(a) Subject to Section 3.2(d), OTPP acting together with Sherritt shall
be entitled to nominate one individual (the "OTPP/Sherritt Trustee
Nominee") for election as a Trustee at each meeting of Unitholders
at which Trustees are elected, provided that (i) no person
nominated by OTPP and/or Sherritt is then serving as a Trustee for
a term extending beyond such meeting; (ii) OTPP's/Sherritt's
Ownership Percentage is at least 4.5%; (iii) the nominee shall be
eligible under the Declaration of Trust to serve as a Trustee; and
(iv) the nominee must be an Independent Trustee.
(b) Subject to Section 3.2(d), the Trust shall cause the OTPP/Sherritt
Trustee Nominee to be included in the slate of nominees proposed by
the Trustees to the Unitholders for election as Trustees at each
meeting of the Unitholders where Trustees are to be elected by
Unitholders, provided that (i) OTPP acting together with Sherritt
continues to be entitled to a nominee; (ii) no nominee of OTPP and
Sherritt is then serving as a Trustee for a term extending beyond
such meeting; and (iii) the nominee is an Independent Trustee.
(c) Subject to Section 3.2(d), the Trust shall use reasonable efforts
to cause the election of the OTPP/Sherritt Trustee Nominee,
including soliciting proxies in favour of the election of the
OTPP/Sherritt Trustee Nominee.
2.2 OTPP/Sherritt Director Nominee
(a) Subject to Section 3.2(d), OTPP acting together with Sherritt shall
be entitled to nominate one individual (the "OTPP/Sherritt Director
Nominee") for approval as a Director at each meeting of Unitholders
at which proposed Directors are to be approved, provided that (i)
no person nominated by OTPP and/or Sherritt is then serving as a
Director for a term extending beyond such meeting; (ii)
OTPP's/Sherritt's Ownership Percentage is at least 4.5%; (iii) the
nominee shall be eligible under the articles of incorporation and
by-laws governing New Fording and the CBCA to serve as a Director;
(iv) the nominee must be an Independent Director; and (v) the
nominee is not the same person as the OTPP/Sherritt Trustee
Nominee.
(b) Subject to Section 3.2(d), the Trust shall cause the OTPP/Sherritt
Director Nominee to be included in the slate of nominees proposed
by the Board of Directors to the Unitholders for approval as
Directors at each meeting of the Unitholders where Directors are to
be approved by Unitholders, provided that (i) OTPP acting together
with Sherritt continues to be entitled to a nominee; (ii) no
nominee of OTPP and Sherritt is then serving as a Director for a
term extending beyond such meeting; (iii) the nominee is an
Independent Director; and (iv) the nominee is not the same person
as the OTPP/Sherritt Trustee Nominee.
(c) Subject to Section 3.2(d), the Trust shall use all reasonable
efforts to cause the election of the OTPP/Sherritt Director
Nominee, including soliciting proxies in favour of the election of
the OTPP/Sherritt Director Nominee.
2.3 No Duplication of Nominees
For greater certainty, the right to nominate a Trustee and Director under the
Sherritt Governance Agreement shall not be in addition to the right to nominate
the OTPP/Sherritt Director Nominee and the OTPP/Sherritt Trustee Nominee as
provided for herein, and that in total, provided that the terms of this
Agreement and the Sherritt Governance Agreement are complied with, OTPP acting
together with Sherritt are entitled to nominate one Director and one Trustee.
ARTICLE 3
PROCEDURAL, VOTING AND DISCLOSURE MATTERS
3.1 Procedure
(a) OTPP acting together with Sherritt (until such time it ceases to
hold Units) shall advise the Trust, and the Trust shall forthwith
advise the other Principal Unitholders, of the OTPP/Sherritt
Trustee Nominee and the OTPP/Sherritt Director Nominee at least 50
days prior to any meeting at which Trustees and/or Directors are to
be elected or approved by the Unitholders, or within 10 days of
being notified of the record date for such meeting if such record
date is within 60 days of such meeting.
(b) If OTPP acting together with Sherritt does not advise the Trust of
the OTPP/Sherritt Trustee Nominee and the OTPP/Sherritt Director
Nominee prior to the deadline, then OTPP and Sherritt will be
deemed to have nominated its incumbent nominee.
(c) Upon request by the Trust, OTPP shall promptly provide the Trust
with a statutory declaration stating the number of Units
beneficially owned by OTPP and its affiliates as at the record date
referred to in Section 3.1(a).
3.2 Voting
(a) Subject to Section 3.3 and 3.4, OTPP shall vote its Units in favour
of all of the persons nominated by the Trust or the Board of
Directors for election as Trustees and approval as Directors,
respectively, provided that:
(i) the Trust is in compliance with its obligations under this
Agreement to nominate the OTPP/Sherritt Trustee Nominee and
the OTPP/Sherritt Director Nominee; and
(ii) if elected or approved, the Trustees and the Directors
nominated by the Trust will meet the requirements of the
Declaration of Trust relating to the eligibility and the
composition of the Trustees and the articles of incorporation
and by-laws of New Fording and the CBCA relating to the
eligibility and composition of the Board of Directors.
(b) OTPP shall deliver a proxy to the Trust that complies with Section
3.2(a) (the "Proxy") at least ten days prior to any meeting of
Unitholders at which the election of Trustees is to be considered
(the "Proxy Deadline").
(c) If the Trust does not receive the Proxy at least 15 days before
such meeting, the Trust shall provide notice to OTPP and to
Sherritt substantially in the form attached as Schedule "A" (the
"Proxy Notice") that it has not received the Proxy, provided
however that the Trust will not be liable to any Person for any
costs, damages or expenses which may be incurred as a result of its
failure to provide such notice.
(d) If OTPP does not deliver the Proxy by the later of the Proxy
Deadline and two business days after delivery of a Proxy Notice or
if, at or prior to a meeting of Unitholders at which the election
of Trustees or the appointment of Directors is to be considered,
OTPP revokes its Proxy or Sherritt does not comply with this
similar provision in the Sherritt Governance Agreement or otherwise
votes against the Trustees or Directors nominated in accordance
with this Section 3.2, then:
(i) the Trust and the Board of Directors may withdraw the
OTPP/Sherritt Trustee Nominee and the OTPP/Sherritt Director
Nominee, respectively, from the slate of nominees proposed by
the Trustees and the Trust may cease soliciting proxies in
favour of the OTPP/Sherritt Trustee Nominee and OTPP/Sherritt
Director Nominee and instead include an additional
Independent Trustee and an additional Independent Director as
nominees for election as a Trustee or approval as a Director
as the case may be; and
(ii) OTPP and Sherritt shall no longer be entitled to nominate a
Trustee or a Director under this Agreement or under the
Sherritt Governance Agreement;
and for greater certainty, neither the Trust nor New Fording
shall have any remedy against OTPP and the sole consequence
of a breach of this Section 3.2 shall be as set out in
Section 3.2(d)(ii).
3.3 Voting for Alternate Nominees
From and after the time at which Section 3.2(d) first applies, if OTPP chooses
to vote its Units in respect of the election of Trustees or approval of
Directors at any meeting of Unitholders at which Trustees and/or Directors are
to be elected or approved by the Unitholders, then OTPP may vote for the
then current Chairman and Chief Executive Officer of the Trust and/or New
Fording, if such person would otherwise be an Independent Trustee or Independent
Director, as the case may be, but for the holding of such positions, and in any
event OTPP must vote in favour of a slate composed of: (i) the nominees for
Director(s) and Trustee(s) that have been proposed by all of the other Principal
Unitholders then entitled to nominate a Trustee and Director under their
respective Governance Agreement; and (ii) in respect of the remaining vacancies,
such nominees for Directors or Trustees as OTPP determines, provided that all
such nominees must qualify as Independent Directors and Independent Trustees, as
the case may be.
3.4 Voting not Compulsory
Notwithstanding any other provision of this Agreement, but subject to the
consequences set out in Section 3.2(d), OTPP shall not be obligated to vote its
Units in respect of the election of Trustees or the approval of Directors.
However, if OTPP chooses to vote its Units in respect of the election of
Trustees or the approval of Directors, it must do so in accordance with Section
3.2 or Section 3.3, as may then be applicable.
3.5 Board Age Policies
Any nominations of OTPP acting together with Sherritt to serve as a Director or
Trustee, as the case may be, whether as the OTPP/Sherritt Director Nominee, the
OTPP/Sherritt Trustee Nominee or otherwise, shall be made in compliance with the
then current policy of the Board of Directors or of the Trustees, as the case
may be, with respect to the age of a Director or Trustee, as the case may be,
provided that, for greater certainty, the Directors and Trustees appointed as of
the date hereof have been grandfathered under such policy.
3.6 Disclosure
Within a reasonable time prior to the filing with the applicable Canadian,
provincial and territorial securities commissions and regulatory authorities of
its proxy statement or information circular with respect to each meeting of
Unitholders at which Trustees are to be elected or Directors are to be approved,
the Trust shall provide OTPP with a reasonable opportunity to review and comment
on the information contained in such proxy statement or information circular
applicable to the OTPP/Sherritt Trustee Nominee and the OTPP/Sherritt Director
Nominee.
ARTICLE 4
RESTRICTIONS ON AMENDMENT
4.1 Restrictions on Amendment
None of the Parties to this Agreement (including, for greater certainty, the
Trust and the Trustees) will propose or vote for or cause any amendment,
modification or change to the following provisions of the Declaration of Trust
or the articles of incorporation and by-laws of New Fording:
(a) the definitions of "Independent Director" or "Independent Trustee";
(b) any qualification to act as a Director or Trustee or as Chair or
Chief Executive Officer; and
(c) sections 3.8 (Special Approval Matters), 3.9 (Restrictions on
Trustees' Powers), 8.2 (Audit Committee), 8.3 (Governance
Committee) and 8.4 (Additional Committees) of the Declaration of
Trust and the equivalent sections in the articles of incorporation
and by-laws of New Fording;
without the prior written approval of the Trust, New Fording (in the case of
changes to the articles of incorporation and by-laws of New Fording) and all
other Persons who are parties to a Governance Agreement which is then
outstanding.
ARTICLE 5
MISCELLANEOUS
5.1 Notices
Any notice, consent or approval required or permitted to be given in connection
with this Agreement (in this Section referred to as a "Notice") shall be in
writing and shall be sufficiently given if delivered (whether in person, by
courier service or other personal method of delivery), or if transmitted by
facsimile, with or without copies by e-mail (provided it is understood that
e-mail shall not be a form of delivery or transmission):
(a) in the case of a Notice to the Trust or New Fording at:
Fording Inc.
Xxxxx 0000
000 - Xxxxx Xxxxxx X.X.
Xxxxxxx, Xxxxxxx X0X 0X0
Attention: Xxxxx X. Xxxxx
Fax: (000) 000-0000
E-mail: xxx_xxxxx@xxxxxxx.xx
with a copy to:
Osler, Xxxxxx & Harcourt LLP
0000, 000 - 0xx Xxxxxx X.X.
Xxxxxxx, Xxxxxxx X0X 0X0
Attention: Xxxxx X. Xxxxxx
Fax: (000) 000-0000
E-mail: xxxxxxx@xxxxx.xxx
(b) in the case of a Notice to OTPP at:
0000 Xxxxx Xxxxxx
Xxxxxxx, Xxxxxxx X0X 0X0
Attention: Senior Vice-President, Global Equities and to
General Counsel
Fax: (000) 000-0000
E-mail: Xxxxx_Xxxxxx@xxxx.xxx
with a copy to:
Sherritt International Corporation
0000 Xxxxx Xxxxxx
Xxxxxxx, Xxxxxxx X0X 0X0
Attention: General Counsel and Chief Financial Officer
Fax: (000) 000-0000
E-mail: xxxxxxx@xxxxxxxx.xxx and
xxxxxxx@xxxxxxxx.xxx
and with a copy to:
Torys LLP
Suite 3000
Maritime Life Tower
TD Centre
Toronto, Ontario M5K 1N2
Attention: Xxxxxxxx Xxxxxxxxx
Fax: (000) 000-0000
E-mail: 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 or transmission. However, if
the Notice is delivered or transmitted after 5:00 p.m. local time or if such day
is not a business day then the Notice shall be deemed to have been given and
received on the next business day.
Any party may, from time to time, change its address by giving Notice to the
other Parties in accordance with the provisions of this Section.
5.2 Submission to Jurisdiction
Any and all disputes arising under this Agreement, whether as to interpretation,
performance or otherwise, shall be subject to the exclusive jurisdiction of the
courts of the Province of Alberta and each of the Parties hereby irrevocably
attorns to the exclusive jurisdiction of the courts of such province.
5.3 Liability of Trustees and Unitholders
The Parties hereto acknowledge that the Trustees are entering into this
Agreement solely in their capacity as Trustees on behalf of the Trust and the
obligations of the Trust hereunder shall not be personally binding upon the
Trustees or any of the Unitholders of the Trust and that any recourse against
the Trust, the Trustees or any Unitholder in any manner in respect of any
indebtedness, obligation or liability of the Trust arising hereunder or arising
in connection herewith or from the matters to which this Agreement relates, if
any, including without limitation claims based on negligence or otherwise
tortious behaviour, shall be limited to, and satisfied only out of, the Trust's
assets.
5.4 References to Acts Performed by the Trust or the Trustees
For greater certainty, where any reference is made in this Agreement to:
(a) an act to be performed by the Trust or to rights of the Trust, such
reference shall be construed and applied for all purposes to refer
to an act to be performed by the Trustees on behalf of the Trust or
by some other Person duly authorized to do so by the Trustees or
pursuant to the provisions hereof, or to rights of the Trustees, in
their capacity as Trustees of the Trust, as the case may be;
(b) actions, rights or obligations of the Trustees, such reference
shall be construed and applied for all purposes to refer to
actions, rights or obligations of the Trustees in their capacity as
Trustees of the Trust, and not in any other capacities; and
(c) OTPP, such reference shall include references to any affiliate of
OTPP that holds Units, and OTPP shall ensure that any actions to be
taken or obligations to be fulfilled by it under this Agreement
shall be taken or fulfilled by such affiliate, and such affiliate
shall be entitled to exercise OTPP's rights under this Agreement,
in each case to the extent applicable and necessary to give effect
to OTPP's rights and obligations under this Agreement.
5.5 Ability to Set Aside Vote
The Parties acknowledge and agree that an award of money damages would be
inadequate for any breach by OTPP of Section 3.3, if applicable, if OTPP chooses
to vote its Units in respect of the election of Trustees or the approval of
Directors and any such breach would cause the Trust, New Fording or a party to
another Governance Agreement irreparable harm. Accordingly, the Parties agree
that, as the sole remedy hereunder, in the event that OTPP proposes to vote or
votes its Units in respect of the election of Trustees or approval of Directors
in a manner that would breach or breaches Section 3.3, as the case may be, the
Trust or New Fording, as the case may be, will be entitled to equitable relief,
including injunctive relief or, a declaration as to its right to disregard the
votes cast by OTPP in respect of the election of Trustees or the approval of
Directors in determining which Trustees were elected and which Directors were
approved, or the right to set aside the entire vote if it is reasonable to do so
under the circumstances. For greater certainty, such relief cannot be contrary
to the provisions of Section 3.4 and cannot obligate OTPP to vote in any manner
for Trustees or Directors or remove its right to vote either in accordance with
this Agreement in the future or on any other matters on which it is entitled to
vote.
5.6 Enforcement of Governance Agreements
Upon written request of OTPP, and upon OTPP's full and complete current
indemnification of the Trust and/or New Fording, as the case may be, of all of
the Trust's or New Fording's costs and expenses, including legal fees, costs and
expenses, reasonable charges for the time of Directors, Trustees, officers or
employees and costs incurred for services under the administrative services
agreements between the Trust and the Partnership or New Fording and the
Partnership in relation to the action on a full cost recovery basis, the Trust
or New Fording, as the case may be, shall seek to enforce Sections 3.3 and/or
5.5 of any of the other Governance Agreements if the Principal Unitholder which
is a party to such Governance Agreement chooses to vote its Units in respect of
the election of Trustees or the approval of Directors in breach of Section 3.3
of such Governance Agreement, as may be applicable. Such indemnity payments
shall be reimbursed to OTPP to the extent that costs and expenses are recovered
by the Trust or New Fording from the party against whom such action is taken.
5.7 Expenses
OTPP shall pay to the Trust or New Fording as applicable, and indemnify the
Trust and New Fording, as applicable, against all of the reasonable legal fees,
costs and expenses on a full cost recovery basis incurred by either of them in
connection with all actions against OTPP in connection with the enforcement by
either the Trust or New Fording of any of their respective rights or benefits
conferred pursuant to or derived from this Agreement.
5.8 Entire Agreement
This Agreement, the Declaration of Trust and the articles of incorporation and
by-laws of New Fording constitute the entire agreement between the Parties and
set out all of the covenants, promises, warranties, representations, conditions,
understandings and agreements between the Parties pertaining to the subject
matter of this Agreement and supersede all prior agreements, understandings,
negotiations and discussions, whether oral or written. There are no covenants,
promises, warranties, representations, conditions, understandings or other
agreements, oral or written, express, implied or collateral between the Parties
in connection with the subject matter of this Agreement except as specifically
set forth in this Agreement and any document required to be delivered pursuant
to this Agreement.
5.9 Consequence of Sherritt Ceasing to Hold Units
Notwithstanding any other provision of this Agreement, in the event of the
termination of the Sherritt Governance Agreement, OTPP shall not be required to
act together with Sherritt hereunder and all references as to joint action with
Sherritt and all references to Sherritt Units shall be deemed to be deleted, and
OTPP acting alone will be entitled to exercise its rights hereunder.
5.10 Termination
This Agreement shall terminate at the earlier of (i) such time that
OTPP's/Sherritt's Ownership Percentage is less than 4.5%; or (ii) OTPP ceases to
hold any Units, other than through a sale of its Units to Sherritt in
circumstances in which OTTP and Sherritt would be considered to be acting
jointly and in concert with respect to the Trust.
IN WITNESS WHEREOF the Parties have executed this Agreement as of the date first
written above.
FORDING CANADIAN COAL TRUST,
by its authorized signatories for and on
behalf of its Trustees
By:
-----------------------------------------
Name:
Title: Authorized Signatory
By:
-----------------------------------------
Name:
Title: Authorized Signatory
4123212 CANADA LTD.
By:
-----------------------------------------
Name:
Title:
ONTARIO TEACHERS' PENSION PLAN BOARD
By:
-----------------------------------------
Name: Xxxxxx X. Xxxxxxxx
Title: Director, Relationship Investments
SCHEDULE A
NOTICE RESPECTING SUBMITTING OF PROXY
FOR FORDING CANADIAN COAL TRUST
TO: ONTARIO TEACHERS' PENSION PLAN BOARD ("OTPP")
COPY TO: SHERRITT INTERNATIONAL CORPORATION
AND TO: TORYS LLP
FROM: FORDING CANADIAN COAL TRUST (the "Trust")
FOR IMMEDIATE ACTION. REQUEST FOR PROXY PURSUANT TO THE GOVERNANCE AGREEMENT
AMONG OTPP, THE TRUST AND 4123212 CANADA LTD. ("NEW FORDING") DATED FEBRUARY 28,
2003 (the "Governance Agreement").
Notice is hereby given to you by the Trust that your proxy for the upcoming
meeting (the "Meeting") of Unitholders of the Trust to be held on o has not been
received by the Trust. The proxy provides for your vote in favour of the
Trustees of the Trust and approval of the Directors of New Fording, each of
which have been nominated to stand for election or approval by the Unitholders,
as the case may be, at the Meeting.
The failure to comply with this Notice by o shall entitle the Trust to withdraw
your nominee from the slate of nominees recommended by the Trustees and the
Board of Directors to the Unitholders for election as Trustees or approval as
Directors, as the case may be, and shall entitle the Trust and the Board of
Directors, as the case may be, instead to include an additional Independent
Trustee and Independent Director as a nominee.
Defined terms used in this Notice which are not otherwise defined shall have the
meaning given to them in the Governance Agreement.
