1
Exhibit 2.2
COMBINATION AGREEMENT
THIS COMBINATION AGREEMENT (this "Agreement") is entered into as of
September 3, 1997, by and between Pioneer Natural Resources Company, a Delaware
corporation ("US Co"), and Chauvco Resources Ltd., an Alberta corporation
("Chauvco").
RECITALS
WHEREAS, the respective boards of directors of US Co and Chauvco have
approved the transactions contemplated by this Agreement, and have agreed to
submit the applicable transactions included in the Plan of Arrangement (as
defined in Section 1.1) and other transactions contemplated hereby to their
respective shareholders for approval.
NOW, THEREFORE, the parties hereto hereby agree as follows:
ARTICLE 1
GENERAL
1.1 PLAN OF ARRANGEMENT
As promptly as practicable after the execution of this Agreement,
Chauvco will apply to the Court of Queen's Bench of Alberta (the "Court")
pursuant to Part 15 of the Business Corporations Act (Alberta) (the "ABCA") for
an interim order (the "Interim Order") providing for, among other things, the
calling and holding of the Chauvco Meeting (as hereinafter defined) for the
purpose of considering and, if deemed advisable, approving the arrangement (the
"Arrangement") under Part 15 of the ABCA and pursuant to this Agreement and the
Plan of Arrangement substantially in the form of Exhibit A hereto (the "Plan of
Arrangement"). If the Chauvco shareholders approve the Arrangement, thereafter
Chauvco will take the necessary steps to submit the Arrangement to the Court
and apply for a final order of the Court approving the Arrangement in such
fashion as the Court may direct (the "Final Order") and file Articles of
Arrangement in respect of the Arrangement. At 12:01 a.m. (the "Effective Time")
on the date (the "Effective Date") shown on the certificate of arrangement
issued by the Registrar under the ABCA giving effect to the Arrangement (which
shall be within 60 days after the date of the Final Order), the following shall
occur and shall be deemed to occur in the following order without any further
act or formality:
(a) Chauvco shall subscribe for that number of common shares in the
capital of Chauvco Resources International Ltd. ("CRI") as is equal to (i) the
number of common shares of Chauvco (the "Chauvco Common Shares") which are
issued and outstanding three trading days prior to the Effective Date (the
"Record Date"), (ii) plus that number of Chauvco Common Shares which all
Optionholders (as hereinafter defined) would otherwise be entitled to acquire
on the exercise of their Chauvco Options (as hereinafter defined) on a fully
vested basis on the Record Date (other than Chauvco Common Shares that could be
acquired by Optionholders who exercise their right of dissent in accordance
with the Interim Order and who are ultimately entitled to be paid the fair
value of their Chauvco Options), (iii) less that number of common shares of CRI
then held by Chauvco, and (iv) less that number of Chauvco Common Shares held
by shareholders who have exercised their rights of dissent in accordance with
the Interim Order and who are ultimately entitled to be paid the
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fair value for such shares. The subscription price for the common shares of CRI
shall be paid for in cash in the aggregate amount equal to US$5,000,000 plus
the fair market value on the Effective Date (as determined and adjusted in
accordance with Section 7.7) of the Gabon Securities (as hereinafter defined);
(b) CRI shall purchase from CR International Limited ("CR"), a
wholly-owned subsidiary of Chauvco, for cash in an aggregate amount equal to
the fair market value thereof on the Effective Date (as determined and adjusted
in accordance with Section 7.7), (i) all of the issued and outstanding
securities of Chauvco Resources (Gabon) S.A., Chauvco Resources (Gabon-Ngalo)
S.A., Chauvco Resources (Gabon-Maga) S.A., Chauvco Resources (Gabon-Avomo) S.A.
and CR Trading Co. Ltd. (collectively, the "Gabon Subsidiaries"), (ii) 75% of
the issued and outstanding securities of Westoil Marine & Transport Co. Ltd.
("Westoil"), and (iii) all of its rights under a loan in the amount of U.S.
$909,421.60 made by CR to Olympic Marine Services International, Inc. (which
owns the remaining 25% of the issued and outstanding securities of Westoil),
any and all advances made by CR to Westoil, and any and all advances made by
Chauvco (all of which shall have first been assigned by Chauvco to CR) to the
Gabon Subsidiaries and Westoil (such securities in Section 1.1(b)(i), (ii) and
(iii) collectively, the "Gabon Securities");
(c) Chauvco shall transfer, assign and convey to CRI, in consideration
for $1.00, all of Chauvco's right, title, benefit and interest in and to any
and all trademarks (including registrations and applications therefor), trade
names and the internet domain name "xxxxxxx.xxx" owned by Chauvco as at the
Effective Time, and the other assets and property which are set out in Exhibit
F;
(d) US Co Sub (as hereinafter defined) shall purchase from Chauvco all
of the issued and outstanding common shares of CRI (the "CRI Shares") in
consideration of the payment by way of promissory note of US Co Sub to Chauvco
in an amount equal to the subscription price paid for such CRI Shares by
Chauvco under Section 1.1(a);
(e) each of the outstanding options to purchase Chauvco Common Shares
other than options held by a holder who has exercised its right of dissent in
accordance with the Interim Order and is ultimately entitled to be paid the
fair value of its options (collectively, the "Chauvco Options") (which includes
all outstanding options granted under Chauvco's stock option plan as amended
and restated on November 10, 1995 (the "Chauvco Option Plan")) will vest, if
not already vested, and be transferred to US Co Sub in consideration for one
(1) CRI Share and, in accordance with the election of each holder thereof (the
"Optionholder") and the remainder of this Section 1.1(e) and Section 1.1(f), a
number of shares of US Co common stock ("US Co Common Stock") determined in
accordance with the Exchange Ratio (as hereinafter defined) in which event, in
addition to transferring the Chauvco Options to US Co Sub, the Optionholder
will be required to make a payment to US Co Sub (the "Option Payment") in an
amount equal to the aggregate exercise price which the Optionholder would
otherwise be required to pay on the exercise of such options. As an alternative
to making the Option Payment, Optionholders will be entitled to elect to reduce
the number of shares of US Co Common Stock to be received by the number
obtained by dividing the Option Payment by the US Co Stock Price, as defined in
Section 1.3 (converted into Canadian dollars using the Currency Exchange Rate
(as hereinafter defined)). Each Optionholder will receive only a whole number
of shares of US Co Common Stock resulting from the transfer of his Chauvco
Options. In lieu of fractional shares of US Co Common Stock, each Optionholder
who would otherwise be entitled to receive such fractional shares shall be paid
by US Co Sub an amount
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determined in accordance with the Plan of Arrangement in full satisfaction of
such fractional entitlement;
(f) an Optionholder electing to make the Option Payment and receive
the applicable number of shares of US Co Common Stock under Section 1.1(e)
above shall give effect to the election by depositing with Montreal Trust
Company of Canada (the "Depositary"), prior to the date which is two (2) days
prior to the date of the Chauvco Meeting (the "Election Deadline"), a duly
completed letter of transmittal and election form (the "Option Letter of
Transmittal and Election Form") in the form provided by Chauvco along with the
proxy materials indicating such holder's election and by agreeing to pay the
Option Payment to the Depositary as agent for US Co Sub. Coincident with the
receipt of the CRI Shares and shares of US Co Common Stock, such Optionholder
shall pay the Option Payment to the Depositary as agent for US Co Sub less any
amounts receivable by such Optionholder in connection with fractional
entitlements under the Plan of Arrangement. In the event that an Optionholder
who has elected to make the Option Payment fails to make the Option Payment on
or before the day that is 60 days after the Effective Date, such Optionholder
shall be deemed to have elected the option to receive the reduced number of
shares of US Co Common Stock by not making the Option Payment. In the event
that an Optionholder has failed to validly make an election in the Option
Letter of Transmittal and Election Form pursuant to this paragraph, such
Optionholder shall be deemed to have elected the option to receive the reduced
number of shares of US Co Common Stock by not making the Option Payment;
(g) each of the outstanding Chauvco Common Shares that are not held by
a shareholder who has exercised its right of dissent in accordance with the
Interim Order and is ultimately entitled to be paid the fair value of its
Chauvco Common Shares will be transferred to US Co Sub in consideration for one
(1) CRI Share and, at the election of the holders of the Chauvco Common Shares:
(i) a number of shares of US Co Common Stock determined
in accordance with the Exchange Ratio. Each such
holder of Chauvco Common Shares will receive only a
whole number of shares of US Co Common Stock
resulting from the transfer of such holder's Chauvco
Common Shares to US Co Sub. In lieu of fractional
shares of US Co Common Stock, each holder of a
Chauvco Common Share who otherwise would be entitled
to receive such fractional share shall be paid by US
Co Sub an amount determined in accordance with the
Plan of Arrangement in full satisfaction of such
fractional entitlement; or
(ii) a number of shares of Exchangeable Shares determined
in accordance with the Exchange Ratio. Each such
holder of Chauvco Common Shares will receive only a
whole number of Exchangeable Shares resulting from
the transfer of such holder's Chauvco Common Shares
to US Co Sub. In lieu of fractional Exchangeable
Shares, each holder of a Chauvco Common Share who
otherwise would be entitled to receive such
fractional share shall be paid by US Co Sub an
amount determined in accordance with the Plan of
Arrangement in full satisfaction of such fractional
entitlement;
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provided that such holders shall be entitled to elect
to receive a combination of shares of US Co Common
Stock and Exchangeable Shares on the transfer of
their Chauvco Common Shares;
(h) a holder of Chauvco Common Shares shall give effect to the
election in Section 1.1(g) above by depositing with the Depositary, prior to
the Election Deadline, a duly completed letter of transmittal and election form
(the "Letter of Transmittal and Election Form") in the form provided by Chauvco
along with the proxy materials indicating such holder's election. In the event
that a holder of Chauvco Common Shares has failed to validly make an election
under Section 1.1(g) in the Letter of Transmittal and Election Form pursuant to
this paragraph, such holder shall be deemed to have elected the option under
Section 1.1(g)(i). Notwithstanding any provision to the contrary, holders of
Chauvco Common Shares who are not residents of Canada for the purposes of the
Income Tax Act (Canada) (the "ITA") will not be entitled to elect to receive
Exchangeable Shares under Section 1.1(g)(ii);
(i) upon the transfer of shares referred to in Section 1.1(g) above:
(i) each holder of a Chauvco Common Share shall cease to be such a holder,
shall have his name removed from the register of holders of Chauvco Common
Shares and shall become a holder of the number of fully paid CRI Shares and
Exchangeable Shares and/or shares of US Co Common Stock to which he is entitled
as a result of the transfer of shares referred to in Section 1.1(g) and such
holder's name shall be added to the register of holders of such securities
accordingly; and (ii) US Co Sub shall become the legal and beneficial owner of
all of the Chauvco Common Shares so transferred;
(j) holders of Chauvco Common Shares who are residents of Canada for
the purposes of the ITA and who have elected to receive Exchangeable Shares
under Section 1.1(g)(ii) above shall be entitled to make an income tax election
pursuant to subsection 85(1) of the ITA with respect to the transfer of their
Chauvco Common Shares to US Co Sub referred to in Section 1.1(g)(ii) by
providing two signed copies of the necessary election forms to US Co Sub within
90 days following the Effective Date, duly completed with the details of the
number of shares transferred and the applicable agreed amounts for the purposes
of such elections. Thereafter, subject to the election forms complying with the
provisions of the ITA, the forms will be signed by US Co Sub and returned to
such holders of Chauvco Common Shares for filing with Revenue Canada, Customs,
Excise and Taxation;
(k) US Co shall issue to and deposit with the Depositary the Voting
Share (as defined in the Voting and Exchange Trust Agreement (as defined
herein)), in consideration of the payment to US Co of US $1, to be hereafter
held of record by the Depositary as trustee for and on behalf of, and for the
use and benefit of, the holders of the Exchangeable Shares, in accordance with
the Voting and Exchange Trust Agreement; and
(l) US Co Sub shall be continued as a corporation under the ABCA and
its Articles of Continuance shall include the items set forth in Exhibit G.
1.2 US CO SUB
(a) On or prior to the Effective Date, US Co shall (directly or
through a wholly-owned subsidiary incorporated in the United States)
incorporate a new corporation under the Company Act
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(British Columbia) ("US Co Sub") to be named Pioneer Natural Resources (Canada)
Ltd. and shall include the following provisions in its memorandum of
association (or as may be amended by mutual agreement on the advice of outside
counsel to comply with the Company Act):
(i) a class of common voting shares (the "US Co Sub
Common Shares") unlimited in number;
(ii) a class of exchangeable shares (the "Exchangeable
Shares") unlimited in number; and
(iii) a restriction on the business of US Co Sub;
all as set out in Exhibit G and, in connection with such incorporation, US Co
shall (directly or through a wholly-owned subsidiary incorporated in the United
States) cause US Co Sub to purchase from US Co that number of newly issued
shares of US Co Common Stock which will enable US Co Sub to satisfy its
obligation to deliver US Co Common Stock to holders of Chauvco Common Shares
and to Optionholders who transfer their Chauvco Common Shares or Chauvco
Options to US Co Sub under Sections 1.1(g)(i) and 1.1(e) above.
(b) US Co shall cause US Co Sub to complete the transactions
contemplated herein.
1.3 EXCHANGE RATIO
As used herein, the term "Exchange Ratio" means in respect of
Exchangeable Shares or US Co Common Stock to be delivered upon the transfer of
Chauvco Common Shares or Chauvco Options to US Co Sub, a ratio of the number of
Exchangeable Shares or shares of US Co Common Stock per Chauvco Common Share or
Chauvco Option equal to:
(a) if the US Co Stock Price is less than US$33.50, (.493827);
(b) if the US Co Stock Price is at least US$33.50 but less than
US$39.01,
.493827 - ((US Co Stock Price - 33.50) X .042360)
5.51
and
(c) if the US Co Stock Price is equal to or greater than $39.01,
(.451467).
The Exchange Ratio as so determined in each case shall be rounded to six
decimal places. The "US Co Stock Price" shall mean the average closing sales
price, regular way, per share of the US Co Common Stock on the NYSE in United
States dollars as reported in the Wall Street Journal over the ten (10)
consecutive trading days ending on the third trading day next preceding the
date of the Chauvco Meeting. Notwithstanding the foregoing, if the Exchange
Ratio is above .465116, US Co may elect to cause US Co Sub to deliver, in lieu
of Exchangeable Shares and shares of US Co Common Stock, a number of
Exchangeable Shares or shares of US Co Common Stock for each Chauvco Common
Share or Chauvco Option based on the Exchange Ratio as set forth above equal
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to (.465116) and an amount in cash (in Canadian dollars) per Chauvco Common
Share or Chauvco Option equal to the product of (x) the US Co Stock Price
multiplied by the noon spot rate of exchange of US dollars to Canadian dollars
announced by the Bank of Canada on the day preceding the date of calculation
for the exchange (the "Currency Exchange Rate") and (y)
Exchange Ratio -- .465116
1.4 ADJUSTMENTS FOR CAPITAL CHANGES
Prior to the Effective Time, Chauvco shall not recapitalize through a
subdivision of its outstanding shares into a greater number of shares, or a
combination of its outstanding shares into a lesser number of shares, or
reorganize, reclassify or otherwise change its outstanding shares into the same
or a different number of shares of other classes, or declare a dividend on its
outstanding shares payable in shares of its capital stock or securities
convertible or exchangeable into shares of its capital stock. Prior to the
Effective Time, US Co may with prior written consent of Chauvco recapitalize
through a subdivision of its outstanding shares into a greater number of
shares, or a combination of its outstanding shares into a lesser number of
shares, or reorganize, reclassify or otherwise change its outstanding shares
into the same or a different number of shares of other classes, or declare a
dividend on its outstanding shares payable in shares of its capital stock or
securities convertible or exchangeable into shares of its capital stock,
provided that, in connection therewith the Exchange Ratio shall be adjusted
appropriately so as to maintain the relative proportionate interests of the
holders of Chauvco Common Shares and the holders of the shares of US Co Common
Stock and provided further that, the consent of Chauvco may not be withheld if
the foregoing proviso is complied with. No such changes shall be made by US Co
other than those made in accordance with this Agreement.
1.5 DISSENTING SHAREHOLDERS
Holders of Chauvco Common Shares may exercise rights of dissent with
respect to such shares in connection with the Arrangement pursuant to and in
the manner set forth in Section 184 of the ABCA and Section 3.1 of the Plan of
Arrangement (such holders referred to as "Dissenters" or as "Dissenting
Shareholders"). Chauvco shall give US Co (i) prompt notice of any written
demands of a right of dissent, withdrawals of such demands, and any other
instruments served pursuant to the ABCA and received by Chauvco and (ii) the
opportunity to participate in all negotiations and proceedings with respect to
such rights. Without the prior written consent of US Co, except as required by
applicable law, Chauvco shall not make any payment with respect to any such
rights or offer to settle or settle any such rights. The obligations in respect
of Dissenting Shareholders shall be apportioned between Chauvco and CRI as set
forth in the Plan of Arrangement.
1.6 OTHER EFFECTS OF THE ARRANGEMENT
The Arrangement will, from and after the Effective Time, have all of
the effects provided by applicable law, including, without limitation, the
ABCA.
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1.7 JOINT PROXY STATEMENT; FORM F-4, FORM S-4 AND FORM S-3 REGISTRATION
STATEMENT
(a) As promptly as practicable after execution of this Agreement, US
Co and Chauvco shall prepare and file with the United States Securities and
Exchange Commission (the "SEC") a preliminary joint management information
circular and proxy statement (the "Joint Proxy Statement"), together with any
other documents required by the Securities Act of 1933, as amended (the
"Securities Act"), or the Securities Exchange Act of 1934, as amended (the
"Exchange Act"), in connection with the Arrangement and the other transactions
contemplated hereby. The Joint Proxy Statement shall constitute (i) the
management information circular of Chauvco with respect to the meeting of
shareholders of Chauvco relating to the Arrangement and the approval of certain
matters in connection therewith (the "Chauvco Meeting") and (ii) the proxy
statement of US Co with respect to the meeting of stockholders of US Co with
respect to the issuance of US Co Common Stock from time to time upon exchange
of Exchangeable Shares and any other matters requiring approval of such
stockholders in connection with the Arrangement (the "US Co Stockholders
Meeting"). As promptly as practicable after the preliminary Joint Proxy
Statement is cleared by the SEC, US Co and Chauvco shall cause the Joint Proxy
Statement to be mailed to each company's respective stockholders. If either
Chauvco or US Co determines on the advice of its outside counsel (with the
concurrence of outside counsel for the other) that the offer and sale of the
Exchangeable Shares or the CRI Shares in connection with the Arrangement is
required to be registered under the Securities Act, then as applicable, US Co
shall cause US Co Sub to file with the SEC a registration statement on Form S-4
(or other applicable form) (such registration statement, the "Form S-4") and if
it is determined that the offer and sale of the CRI Shares is not otherwise
exempt from such registration, Chauvco and US Co shall (a) agree on appropriate
and equitable adjustments to the Plan of Arrangement so that CRI Shares that
would otherwise be issued to holders who are residents of the United States
shall instead be sold by a trustee or agent and the net proceeds of such sales
remitted to such holders and otherwise as may be necessary to avoid offers and
sales of the CRI Shares being deemed to take place within the United States, if
such adjustments will avoid the necessity for such registration or (b) if such
adjustments cannot reasonably be undertaken so as to avoid the necessity for
such registration, Chauvco shall cause CRI to file with the SEC a registration
statement on Form F-4 (or other applicable form) covering such offer and sale
(such registration statement, the "Form F-4") and the Joint Proxy Statement
shall also constitute the prospectuses of US Co Sub and CRI, as applicable,
with respect to such offer and sale and shall be included in the Form S-4 or
Form F-4, as applicable. Notwithstanding anything herein to the contrary,
neither Chauvco nor US Co shall be under any obligation to cause to be filed
the Form S-4 or Forms F-4 if it shall have determined on the advice of its
outside counsel (with the concurrence of outside counsel for the other) that
the offer and sale of the Exchangeable Shares and the CRI Shares pursuant to
the Arrangement is exempt from the registration requirements of Section 5 of
the Securities Act by virtue of Section 3(a)(10) thereof. In connection with
such determination, US Co and Chauvco shall prepare and file with the SEC a
request for no action (the "No Action Request") seeking to confirm the
availability of such exemption. If US Co determines on the advice of its
outside counsel (with the concurrence of outside counsel for Chauvco) that it
is necessary to file a registration statement on Form S-3 (or other applicable
form)(the "Form S-3") in order to register the US Co Common Stock to be issued
from time to time after the Effective Time upon exchange of the Exchangeable
Shares, then US Co shall file the Form S-3 with the SEC and use its best
efforts to maintain the effectiveness of such registration for the period that
such Exchangeable Shares remain outstanding, and US Co and Chauvco shall use
their best efforts to cause the Form S-3 to become effective.
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(b) Each party shall promptly furnish to the other party all
information concerning such party and its stockholders as may be reasonably
required in connection with any action contemplated by this Section 1.5. The
Joint Proxy Statement and, if required, the Form F-4, Form S-4 and Form S-3,
shall comply in all material respects with all applicable requirements of law.
Each of US Co and Chauvco will notify the other promptly of the receipt of any
comments from the SEC and of any request by the SEC for amendments or
supplements to the Joint Proxy Statement or the Form F-4, Form S-4 or Form S-3,
if required, or for additional information, and will supply the other with
copies of all correspondence with the SEC with respect to the Joint Proxy
Statement or the Form S-3, if required. Whenever any event occurs which should
be set forth in an amendment or supplement to the Joint Proxy Statement or the
Form F-4, Form S-4 or Form S-3, if required, US Co or Chauvco, as the case may
be, shall promptly inform the other of such occurrence and cooperate in filing
with the SEC, and/or mailing to stockholders of US Co or Chauvco, as may be
applicable, such amendment or supplement.
(c) US Co and Chauvco shall take any action required to be taken under
any applicable provincial or state securities laws (including "blue sky" laws)
in connection with the issuance of the Exchangeable Shares, CRI Shares or US Co
Common Stock and the Arrangement; provided, however, that with respect to the
blue sky and Canadian provincial qualifications, neither US Co nor Chauvco
shall be required to register or qualify as a foreign corporation or reporting
issuer where any such entity is not now so registered or qualified except as to
matters and transactions arising solely from the offer and sale of the US Co
Common Stock, the CRI Shares or the issuance of the Exchangeable Shares.
1.8 REORGANIZATION
The parties intend to adopt this Agreement and the Plan of Arrangement
as a qualified stock purchase under Section 338(d)(3) of the Internal Revenue
Code of 1986, as amended (the "Code").
1.9 MATERIAL ADVERSE EFFECT
In this Agreement, any reference to any event, change or effect being
"material" with respect to any entity or group of entities means any material
event, change or effect related to the condition (financial or otherwise),
properties or business of such entity or group of entities. In this Agreement,
the term "Material Adverse Effect" used with respect to any party means any
event, change or effect that is materially adverse to the condition (financial
or otherwise), properties or business of such party and its subsidiaries, taken
as a whole; provided, that a Material Adverse Effect shall not include any
adverse effect resulting from changes in general economic conditions or
conditions generally affecting the industries in which US Co or Chauvco
operate.
1.10 CURRENCY
Unless otherwise specified, all references in this Agreement to
"dollars" or "$" shall mean Canadian dollars.
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1.11 EXHIBITS
The following exhibits attached hereto shall form part of this
Agreement:
(a) Exhibit A - Plan of Arrangement;
(b) Exhibit B - Support Agreement;
(c) Exhibit C - Voting and Exchange Trust Agreement;
(d) Exhibit D - Terms and Conditions of US Co Special
Voting Stock;
(e) Exhibit E - List of Lock-up Shareholders;
(f) Exhibit F - List of Other Assets to be Transferred to
CRI; and
(g) Exhibit G - Provisions of Memorandum of Association of
US Co Sub.
ARTICLE 2
REPRESENTATIONS AND WARRANTIES OF CHAUVCO
Except as set forth in a letter dated the date of this Agreement and
delivered by Chauvco to US Co concurrently herewith (the "Chauvco Disclosure
Letter") and subject to Sections 7.7 and 7.8 hereof, Chauvco hereby represents
and warrants to US Co that:
2.1 ORGANIZATION AND STANDING
Chauvco and each partnership, joint venture, corporation, association
or other business entity of which more than 50% of the total voting power of
shares of stock or units of ownership or beneficial interest entitled to vote
in the election of directors (or members of a comparable governing body) is
owned or controlled, directly or indirectly, by Chauvco (the "Chauvco
Subsidiaries"), is duly incorporated or formed, duly organized, validly
existing and in good standing under the laws of the jurisdiction of its
incorporation or formation, has full requisite power and authority to carry on
its business as it is currently conducted, and to own, lease and operate the
properties currently owned, leased and operated by it, and is duly qualified or
licensed to do business and is in good standing as a foreign corporation or
organization authorized to do business in all jurisdictions in which the
character of the properties owned or leased or the nature of the business
conducted by it would make such qualification or licensing necessary, except
where the failure to be so qualified or licensed would not have a Material
Adverse Effect on Chauvco. The Chauvco Disclosure Letter sets forth a complete
list of the Chauvco Subsidiaries (and all other subsidiaries in which Chauvco
has an interest of 50% or less determined as described above), the percentage
of each subsidiary's outstanding capital stock or other ownership interest
owned by Chauvco or another Chauvco Subsidiary and a description of any lien,
charge, mortgage, security interest, option, preferential purchase right or
other right or interest of any other person (collectively, an "Encumbrance") on
such stock, on treasury stock or other ownership interest and a complete list
of each jurisdiction in which each of Chauvco and each Chauvco Subsidiary is
duly qualified, registered and in good standing to do business.
2.2 AGREEMENT AUTHORIZED AND ITS EFFECT ON OTHER OBLIGATIONS
(a) Chauvco has all requisite corporate power and authority to enter
into this Agreement and, subject to approval of this Agreement and the
Arrangement by the shareholders of Chauvco and approval by the Court, to
perform its obligations hereunder and to consummate the Arrangement and
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the other transactions contemplated by this Agreement. The execution and
delivery of this Agreement by Chauvco and, subject to approval of this
Agreement and the Arrangement by the shareholders of Chauvco and approval by
the Court, the consummation by Chauvco of the Arrangement and the other
transactions contemplated hereby have been duly authorized by all necessary
corporate action on the part of Chauvco. This Agreement has been duly executed
and delivered by Chauvco and is the valid and binding obligation of Chauvco,
enforceable in accordance with its terms, except that such enforceability may
be subject to (i) bankruptcy, insolvency, reorganization or other similar laws
affecting or relating to enforcement of creditors' rights generally and (ii)
general equitable principles.
(b) Neither the execution, delivery and performance of this Agreement
or the Arrangement by Chauvco, nor the consummation of the transactions
contemplated hereby or thereby by Chauvco nor compliance with the provisions
hereof or thereof by Chauvco will: (i) conflict with, or result in any
violations of, the articles of amalgamation or bylaws of Chauvco or any
equivalent document of any of the Chauvco Subsidiaries, or (ii) result in any
breach of or cause a default (with or without notice or lapse of time, or both)
under, or give rise to a right of termination, amendment, cancellation or
acceleration of any obligation contained in, or the loss of any material
benefit under, or result in the creation of any Encumbrance upon any of the
material properties or assets of Chauvco or any of the Chauvco Subsidiaries
under, any term, condition or provision of any loan or credit agreement, note,
bond, mortgage, indenture, lease or other material agreement, judgment, order,
decree, statute, law, ordinance, rule or regulation applicable to Chauvco or
any of the Chauvco Subsidiaries or their respective properties or assets, other
than any such breaches, defaults, losses, or encumbrances which, individually
or in the aggregate, would not have a Material Adverse Effect on Chauvco.
2.3 GOVERNMENTAL CONSENTS
No consent, approval, order or authorization of, or registration,
declaration or filing with, any court, administrative agency or commission or
other governmental authority or instrumentality, domestic or foreign (each a
"Governmental Entity"), is required to be obtained by Chauvco or any of the
Chauvco Subsidiaries in connection with the execution and delivery of this
Agreement or the Plan of Arrangement or the consummation of the transactions
contemplated hereby or thereby, except for: (i) the filing with the applicable
Canadian provincial securities commissions or regulatory authorities (the
"Commissions") and the Court and the mailing to shareholders of Chauvco of the
Joint Proxy Statement relating to the Chauvco Meeting to be held with respect
to the approval of this Agreement and the Arrangement, (ii) the furnishing to
the SEC of all required filings under the Securities Exchange Act of 1934, as
amended (the "Exchange Act"), and the rules and regulations promulgated by the
SEC thereunder, as may be required in connection with this Agreement and the
transactions contemplated hereby (the "SEC Filings"); (iii) approval by the
Court of the Arrangement and the filings of the articles of arrangement and
other required arrangement or other documents as required by the ABCA; (iv)
such filings, authorizations, orders and approvals as may be required under
state "control share acquisition," "anti-takeover" or other similar statutes,
any other applicable federal, provincial or state securities laws and the rules
of the NYSE or The Toronto Stock Exchange ("TSE"); (v) such filings and
notifications as may be necessary under the Xxxx-Xxxxx-Xxxxxx Antitrust
Improvements Act of 1976, as amended (the "HSR Act"); (vi) such notices and
filings as may be necessary under the Investment Canada Act and under the
Competition Act (Canada); and (vii) where the failure to obtain such consents,
approvals, etc., would not prevent or delay the consummation of
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the Arrangement or otherwise prevent Chauvco from performing its obligations
under this Agreement and would not reasonably be expected to have a Material
Adverse Effect on Chauvco.
2.4 CAPITALIZATION
The authorized capital stock of Chauvco consists of an unlimited
number of Chauvco Common Shares, no par value. At the close of business on
August 29, 1997, 48,464,312 Chauvco Common Shares were issued and outstanding,
and no Chauvco Common Shares were held by Chauvco in its treasury. As of August
29, 1997, an aggregate of 2,901,995 Chauvco Common Shares were reserved for
issuance pursuant to outstanding Chauvco Options granted under the Chauvco
Option Plan. All issued and outstanding Chauvco Common Shares have been duly
authorized, validly issued and are fully paid and non-assessable. Except in
connection with the Chauvco Option Plan and in connection with Chauvco's
shareholder rights plan adopted pursuant to that agreement dated April 24, 1997
between Chauvco and Montreal Trust Company of Canada (the "Chauvco SRP"), no
person, firm or corporation has any agreement or option or any right or
privilege, whether by law, pre-emptive or contractual, capable of becoming an
agreement, including convertible securities, warrants or convertible
obligations of any nature, for the purchase, subscription, allotment or
issuance of any of the unissued shares in the capital of Chauvco or of any
securities of Chauvco.
2.5 SECURITIES REPORTS AND FINANCIAL STATEMENTS
Chauvco and all predecessor corporations to Chauvco have filed all
forms, reports and documents with the Commissions required to be filed by it or
them pursuant to relevant Canadian securities statutes, regulations, policies
and rules (collectively, the "Chauvco Securities Reports"), all of which have
complied in all material respects with all applicable requirements of such
statutes, regulations, policies and rules. None of the Chauvco Securities
Reports, at the time filed or as subsequently amended, contained any untrue
statement of a material fact or omitted to state a material fact required to be
stated therein or necessary in order to make the statements made therein, in
light of the circumstances under which they were made, not misleading. The
financial statements of Chauvco and such predecessor corporations contained in
the Chauvco Securities Reports complied in all material respects with the then
applicable accounting requirements and the published rules and regulations of
the relevant Canadian securities statutes with respect thereto, were prepared
in accordance with Canadian generally accepted accounting principles applied on
a consistent basis during the periods involved (except as may have been
indicated in the notes thereto or, in the case of unaudited statements, as
permitted by applicable laws, rules or regulations) and fairly present
(subject, in the case of the unaudited statements, to normal, year-end audit
adjustments) the consolidated financial position of Chauvco and such
predecessor corporations and the consolidated Chauvco Subsidiaries as at the
respective dates thereof and the consolidated results of their operations and
cash flows for the respective periods then ended. There has been no change in
the accounting policies or the methods of making accounting estimates of
Chauvco or its predecessor corporations or changes in estimates that are
material to such financial statements, except as described in the notes
thereto.
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2.6 LIABILITIES
Chauvco and the Chauvco Subsidiaries do not have any liabilities or
obligations, either accrued, absolute, contingent, or otherwise, or have any
knowledge of any potential liabilities or obligations, other than those (i)
disclosed in the Chauvco Securities Reports, (ii) set forth in the Chauvco
Disclosure Letter, (iii) incurred in the ordinary course of business since June
30, 1997; or (iv) which individually or in the aggregate would not reasonably
be expected to have a Material Adverse Effect on Chauvco.
2.7 INFORMATION SUPPLIED
None of the information supplied or to be supplied by Chauvco for
inclusion or incorporation by reference in the Joint Proxy Statement (and, if
filed, the Form X-0, X-0 or F-4) will, at the time the Joint Proxy Statement is
mailed to the shareholders of Chauvco and at the time of the Chauvco Meeting
(and, if filed, at the time the Form X-0, X-0 or F-4 is declared effective),
contain any untrue statement of a material fact or omit to state any material
fact required to be stated therein or necessary to make the statements therein,
in light of the circumstances under which they are made, not misleading. The
Joint Proxy Statement will comply as to form in all material respects with the
provisions of the ABCA and applicable Canadian securities laws and the rules
and regulations promulgated thereunder.
2.8 NO DEFAULTS
Neither Chauvco nor any Chauvco Subsidiary is, or has received notice
that it would be with the passage of time, in default or violation of any term,
condition or provision of (i) its charter documents or bylaws; (ii) any
judgment, decree or order applicable to it; or (iii) any loan or credit
agreement, note, bond, mortgage, indenture, material contract, agreement,
lease, license or other instrument to which Chauvco or any Chauvco Subsidiary
is now a party or by which it or any of its properties or assets may be bound,
except in the case of item (iii) for defaults and violations which,
individually or in the aggregate, would not have a Material Adverse Effect on
Chauvco.
2.9 LITIGATION; INVESTIGATIONS
There is no claim, action, suit or proceeding pending or, to the
knowledge of Chauvco, threatened, which would, if adversely determined,
individually or in the aggregate, have a Material Adverse Effect on Chauvco,
nor is there any judgment, decree, injunction, rule or order of any
Governmental Entity or arbitrator outstanding against Chauvco or any of the
Chauvco Subsidiaries having, or which, insofar as reasonably can be foreseen,
in the future could have, any such effect. There is no investigation pending
or, to the knowledge of Chauvco, threatened, against Chauvco or any of the
Chauvco Subsidiaries before any Governmental Entity which could have any such
effect.
2.10 ABSENCE OF CERTAIN CHANGES AND EVENTS
Except as set forth in the Chauvco Disclosure Letter, other than as a
result of the transactions contemplated by this Agreement, since June 30, 1997,
there has not been:
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(a) Financial Change. Any material adverse change in the financial
condition, operations, assets, liabilities or business of Chauvco or the
Chauvco Subsidiaries;
(b) Property Damage. Any material damage, destruction, or loss to the
business or properties of Chauvco or the Chauvco Subsidiaries (whether or not
covered by insurance);
(c) Dividends or Redemptions. Any declaration, setting aside, or
payment of any dividend or other distribution in respect of the capital stock
of Chauvco, or any direct or indirect redemption, purchase or any other
acquisition by Chauvco of any such stock;
(d) Capitalization Change. Any change in the capital stock or in the
number of shares or classes of Chauvco's authorized or outstanding capital
stock as described in Section 2.4 (other than as a result of exercises of
currently outstanding Chauvco Options); or
(e) Other Material Changes. Any other event or condition known to
Chauvco particularly pertaining to and adversely affecting the operations,
assets or business of Chauvco or the Chauvco Subsidiaries (other than events or
conditions which are of a general or industry-wide nature and of general public
knowledge) which would constitute a Material Adverse Effect on Chauvco.
2.11 ADDITIONAL CHAUVCO INFORMATION
The Chauvco Disclosure Letter contains true, complete and correct
lists of the following items with respect to Chauvco and the Chauvco
Subsidiaries, and Chauvco agrees that upon the request of US Co, it will
furnish to US Co true, complete and correct copies of any documents referred to
in such lists:
(a) Material Contracts. All contracts which involve, or may involve,
aggregate payments by any party thereto of $5,000,000 or more, which are to be
performed in whole or in part after the Effective Time;
(b) Employee Compensation Plans. All bonus, retention bonus, company
severance policy, employee stock option plans, incentive compensation, deferred
compensation, profit-sharing, retirement, pension, welfare, group insurance,
death benefit, or other fringe benefit plans, arrangements or trust agreements
together with copies of the most recent reports with respect to such plans,
arrangements, or trust agreements filed with any Governmental Entity and all
tax determination letters that have been received with respect to such plans;
(c) Employee Agreements. Any collective bargaining agreements with any
labor union or other representative of employees, including amendments and
supplements, in each case covering ten (10) or more employees, all employment
agreements involving, individually, remuneration greater than $100,000 per
annum and all executive termination agreements;
(d) Patents. All patents, trademarks, copyrights and other material
intellectual property rights owned, licensed or used;
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(e) Trade Names. All trade names and fictitious names used or held,
whether and where such names are registered and where used;
(f) Promissory Notes. All long-term and short-term promissory notes,
installment contracts, loan agreements, credit agreements, and any other
agreements relating thereto or with respect to collateral securing the same; and
(g) Guarantees. All indebtedness, liabilities and commitments of others
and as to which it is a guarantor, endorser, co-maker, surety, or accommodation
maker, or is contingently liable therefor (excluding liabilities as an endorser
of checks and the like in the ordinary course of business) and all letters of
credit, whether stand-by or documentary, issued by any third party.
2.12 CERTAIN AGREEMENTS
Except in connection with Chauvco's executive termination agreements,
retention bonus plan, company severance policy and Stock Option Plan, neither
the execution and delivery of this Agreement nor the consummation of the
transactions contemplated hereby will (i) result in any payment (including
without limitation, severance, unemployment compensation, parachute payment,
bonus or otherwise) becoming due to any director, employee or independent
contractor of Chauvco or the Chauvco Subsidiaries under any Chauvco Plan (as
hereinafter defined) or otherwise, (ii) materially increase any benefits
otherwise payable under any Chauvco Plan or otherwise or (iii) result in the
acceleration of the time of payment or vesting of any such benefits.
2.13 EMPLOYEE BENEFIT PLANS
Except for health insurance, vacation, severance and similar plans
which are set forth in the Chauvco Disclosure Letter ("Chauvco Plans"), there
are no employee benefits plans covering active, former or retired employees of
Chauvco and the Chauvco Subsidiaries. Each Chauvco Plan has been maintained and
administered in material compliance with its terms and with the requirements
prescribed by any and all applicable statutes, orders, rules and regulations.
2.14 INTELLECTUAL PROPERTY
Chauvco or the Chauvco Subsidiaries owns or possesses licenses to use
all patents, patent applications, trademarks and service marks (including
registrations and applications therefor), trade names, copyrights and written
know-how, trade secrets and all other similar proprietary data and the goodwill
associated therewith (collectively, the "Chauvco Intellectual Property") that
are either material to the business of Chauvco or any Chauvco Subsidiary or
that are necessary for the manufacture, use, license or sale of any services or
products manufactured, used, licensed or sold by Chauvco or the Chauvco
Subsidiaries, including all such intellectual property listed in the Chauvco
Disclosure Letter. The Chauvco Intellectual Property is owned or licensed by
Chauvco or the Chauvco Subsidiaries free and clear of any Encumbrance other
than such Encumbrances as are listed in the Chauvco Disclosure Letter. Except
as otherwise indicated in such letter or in the ordinary course of business,
neither Chauvco nor the Chauvco Subsidiaries has granted to any other person
any license to use any Chauvco Intellectual Property. Neither Chauvco nor the
Chauvco Subsidiaries has received any notice of infringement, misappropriation,
or conflict with, the
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intellectual property rights of others in connection with the use by Chauvco or
the Chauvco Subsidiaries of the Chauvco Intellectual Property.
2.15 TITLE TO PROPERTIES
Except for goods and other property sold, used or otherwise disposed
of in the ordinary course of business for fair value, Chauvco has good and
indefeasible title to all its properties, interests in properties and assets,
real and personal, reflected in its June 30, 1997 financial statements, free
and clear of any Encumbrance, except (i) Encumbrances reflected in the balance
sheet of Chauvco dated June 30, 1997, (ii) liens for current taxes not yet due
and payable, and (iii) such imperfections of title, easements and Encumbrances,
if any, which would not, individually or in the aggregate, have a Material
Adverse Effect on Chauvco. All leases pursuant to which Chauvco or any Chauvco
Subsidiary leases (whether as lessee or lessor) any substantial amount of real
or personal property are in good standing, valid, and effective; and there is
not, under any such leases, any existing or prospective default or event of
default or event which with notice or lapse of time, or both, would constitute
a default by Chauvco or any Chauvco Subsidiary which would, individually or in
the aggregate, have a Material Adverse Effect on Chauvco and in respect to
which Chauvco or a Chauvco Subsidiary has not taken adequate steps to prevent a
default from occurring. The buildings and premises of Chauvco and the Chauvco
Subsidiaries that are used in its business are in good operating condition and
repair, subject only to ordinary wear and tear. All major items of operating
equipment of Chauvco and the Chauvco Subsidiaries are in good operating
condition and in a state of reasonable maintenance and repair, ordinary wear
and tear excepted, and are free from any known defects except as may be
repaired by routine maintenance and such minor defects as to not substantially
interfere with the continued use thereof in the conduct of normal operations.
2.16 ENVIRONMENTAL MATTERS
Except as set forth in the Chauvco Disclosure Letter:
(a) Environmental Conditions. There are no environmental conditions or
circumstances, such as the presence or release of any hazardous substance, on
any property presently or previously owned or leased by Chauvco or the Chauvco
Subsidiaries that could result in a Material Adverse Effect on Chauvco.
(b) Permits, etc. Chauvco and the Chauvco Subsidiaries have in full
force and effect all environmental permits, licenses, approvals and other
authorizations required to conduct their operations and are operating in
material compliance thereunder.
(c) Compliance. Chauvco's and the Chauvco Subsidiaries' operations and
use of their assets do not violate any applicable United States or Canadian or
other federal, provincial, state or local law, statute, ordinance, rule,
regulation, order or notice requirement (collectively the "Applicable
Environmental Laws") pertaining to (a) the condition or protection of air,
groundwater, surface water, soil, or other environmental media, (b) the
environment, including natural resources or any activity which affects the
environment, or (c) the regulation of any pollutants, contaminants, waste or
substances (whether or not hazardous or toxic), including, without limitation,
the Comprehensive Environmental Response Compensation and Liability Act (42 U.
S.C. ss. 9601 et seq.), the Hazardous Materials Transportation Act (49 U.S.C.
ss. 1801 et seq.), the Resource
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Conservation and Recovery Act (42 U.S.C. ss. 6901 et seq.) the Clean Water Act
(33 U.S.C. ss. 1251 et seq.), the Clean Air Act (42 U.S.C. ss. 7401 et seq.),
the Toxic Substances Control Act (15 U. S.C. ss. 2601 et seq.), the Safe
Drinking Water Act (42 U. S.C. ss. 300f et seq.), the Rivers and Harbors Act
(33 U.S.C. ss. 401 et seq.), the Oil Pollution Act (33 U. S.C. ss. 2701 et
seq.) and analogous Canadian, Argentine, foreign, provincial, state and local
provisions, as any of the foregoing may have been amended or supplemented from
time to time, except for violations which, either singly or in the aggregate,
would not result in a Material Adverse Effect on Chauvco.
(d) Past Compliance. None of the operations or assets of Chauvco or
the Chauvco Subsidiaries has ever been conducted or used by Chauvco or the
Chauvco Subsidiaries in such a manner as to constitute a violation of any of
the Applicable Environmental Laws, except for violations which, either singly
or in the aggregate, would not result in a Material Adverse Effect on Chauvco.
(e) Environmental Claims. No notice has been served on Chauvco or any
Chauvco Subsidiaries from any entity, governmental agency or individual
regarding any existing, pending or threatened investigation or inquiry related
to alleged violations under any Applicable Environmental Laws, or regarding any
claims for remedial obligations or contribution under any Applicable
Environmental Laws, other than any of the foregoing which, either singly or in
the aggregate, would not result in a Material Adverse Effect on Chauvco.
(f) Renewals. Chauvco does not know of any reason it or US Co would
not be able to renew any of the permits, licenses, or other authorizations
required pursuant to any Applicable Environmental Laws to operate and use any
of Chauvco's or the Chauvco Subsidiaries' assets for their current purposes and
uses.
2.17 COMPLIANCE WITH OTHER LAWS
Except as set forth in the Chauvco Disclosure Letter, neither Chauvco
nor any Chauvco Subsidiary is in violation of or in default with respect to, or
in alleged violation of or alleged default with respect to any other applicable
law or any applicable rule, regulation, or any writ or decree of any court or
any governmental commission, board, bureau, agency, or instrumentality, or
delinquent with respect to any report required to be filed with any
Governmental Entity, except for violations which, either singly or in the
aggregate, do not and are not expected to result in a Material Adverse Effect
on Chauvco.
2.18 TAXES
Except with respect to failures which, in the aggregate, would not
result in a Material Adverse Effect on Chauvco, proper and accurate federal,
provincial, state and local income, capital, withholding, value added, sales,
use, franchise, gross revenue, turnover, excise, payroll, property, employment,
customs duties and any and all other tax returns, reports, and estimates have
been filed with appropriate governmental agencies, domestic and foreign, by
Chauvco and each of the Chauvco Subsidiaries for each period for which any
returns, reports, or estimates were due (taking into account any extensions of
time to file before the date hereof); all taxes shown by such returns to be
payable and any other taxes due and payable have been paid other than those
being contested in good faith by Chauvco or a Chauvco Subsidiary; and the tax
provision reflected in Chauvco's financial
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statements as of June 30, 1997, is adequate, in accordance with Canadian
generally accepted accounting principles, to cover liabilities of Chauvco and
the Chauvco Subsidiaries at the date thereof for all taxes, including any
interest, penalties and additions to taxes of any character whatsoever
applicable to Chauvco and the Chauvco Subsidiaries or their assets or
businesses. There are no tax liens on any assets of Chauvco or the Chauvco
Subsidiaries except for taxes not yet currently due and those which could not
reasonably be expected to result in a Material Adverse Effect on Chauvco.
2.19 VOTE REQUIRED
Except as may be provided in the Interim Order, at the Chauvco Meeting
at which a quorum is present, the affirmative vote of the holders of two-thirds
of the Chauvco Common Shares present is the only vote required to approve this
Agreement, the Arrangement and the consummation of the transactions
contemplated hereby.
2.20 BROKERS AND FINDERS
Other than Salomon Brothers Inc. and RBC Dominion Securities Inc. in
accordance with the terms of their respective engagement letters in final
forms, copies of which have previously been provided to US Co, none of Chauvco
or any of the Chauvco Subsidiaries nor any of their respective directors,
officers or employees has employed any broker or finder or incurred any
liability for any financial advisory fees, brokerage fees, commissions or
similar payments in connection with the transactions contemplated by this
Agreement.
2.21 DISCLOSURE
No representation or warranty made by Chauvco in this Agreement, nor
any document, written information statement, financial statement, certificate
or Exhibit prepared and furnished or to be prepared and furnished by Chauvco or
its representatives pursuant hereto or in connection with the transactions
contemplated hereby, when taken together, contained any untrue statement of a
material fact when made, or omitted to state a material fact necessary to make
the statements or facts contained herein or therein not misleading in light of
the circumstances under which they were furnished.
2.22 FAIRNESS OPINION
Chauvco's board of directors has received favourable written opinions
from Salomon Brothers Inc and RBC Dominion Securities Inc. as to the fairness
of the Plan of Arrangement and the other transactions contemplated herein.
2.23 RESTRICTIONS ON BUSINESS ACTIVITIES
There is no material agreement, judgment, injunction, order or decree
binding upon Chauvco or any Chauvco Subsidiary that has or could reasonably be
expected to have the effect of prohibiting or materially impairing any business
practice of Chauvco or any Chauvco Subsidiary, any acquisition of property by
Chauvco or any Chauvco Subsidiary, the conduct of business by Chauvco or any
Chauvco Subsidiary as currently conducted or the consummation of the
Arrangement.
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2.24 BOOKS AND RECORDS
The books, records and accounts of Chauvco and the Chauvco
Subsidiaries (a) have been maintained in accordance with good business
practices on a basis consistent with prior years, (b) are stated in reasonable
detail and accurately and fairly reflect the transactions and dispositions of
the assets of Chauvco and the Chauvco Subsidiaries and (c) accurately and
fairly reflect the basis for the Chauvco financial statements. Chauvco has
devised and maintains a system of internal accounting controls sufficient to
provide reasonable assurances that (a) transactions are executed in accordance
with management's general or specific authorization; and (b) transactions are
recorded as necessary (i) to permit preparation of financial statements in
conformity with Canadian generally accepted accounting principles or any other
criteria applicable to such statements and (ii) to maintain accountability for
assets.
ARTICLE 3
REPRESENTATIONS AND WARRANTIES OF US CO
Except as set forth in a letter dated the date of this Agreement and
delivered by US Co to Chauvco concurrently herewith (the "US Co Disclosure
Letter"), US Co hereby represents and warrants to Chauvco, in each case with
respect to itself and with respect to its predecessor corporations, that:
3.1 ORGANIZATION AND STANDING
US Co and each partnership, joint venture, corporation, association or
other business entity of which more than 50% of the total voting power of
shares of stock or units of ownership or beneficial interest entitled to vote
in the election of directors (or members of a comparable governing body) is
owned or controlled, directly or indirectly, by US Co (the "US Co
Subsidiaries"), is duly incorporated or formed, duly organized, validly
existing and in good standing under the laws of the jurisdiction of its
incorporation or formation, has full requisite power and authority to carry on
its business as it is currently conducted, and to own, lease and operate the
properties currently owned, leased and operated by it, and is duly qualified or
licensed to do business and is in good standing as a foreign corporation or
organization authorized to do business in all jurisdictions in which the
character of the properties owned or leased or the nature of the business
conducted by it would make such qualification or licensing necessary, except
where the failure to be so qualified or licensed would not have a Material
Adverse Effect on US Co. The US Co Disclosure Letter sets forth a complete list
of the US Co Subsidiaries.
3.2 AGREEMENT AUTHORIZED AND ITS EFFECT ON OTHER OBLIGATIONS
(a) US Co has all requisite corporate power and authority to enter
into this Agreement and to perform its obligations hereunder and, subject to
approval of US Co's stockholders as provided in this Agreement, to consummate
the Arrangement and the other transactions contemplated by this Agreement. The
execution and delivery of this Agreement by US Co and, subject to approval of
US Co's stockholders as provided in this Agreement, the consummation by US Co
of the Arrangement and the other transactions contemplated hereby have been
duly authorized by all necessary corporate action on the part of US Co. This
Agreement has been duly executed and delivered by US Co and is the valid and
binding obligation of US Co, enforceable in accordance with
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its terms, except that such enforceability may be subject to (i) bankruptcy,
insolvency, reorganization or other similar laws affecting or relating to
enforcement of creditors' rights generally and (ii) general equitable
principles.
(b) Neither the execution, delivery and performance of this Agreement
or the Arrangement by US Co, nor the consummation of the transactions
contemplated hereby or thereby by US Co nor compliance with the provisions
hereof or thereof by US Co will: (i) conflict with, or result in any violations
of, the certificate of incorporation or bylaws of US Co or any equivalent
document of any of the US Co Subsidiaries, or (ii) result in any breach of or
cause a default (with or without notice or lapse of time, or both) under, or
give rise to a right of termination, amendment, cancellation or acceleration of
any obligation contained in, or the loss of any material benefit under, or
result in the creation of any Encumbrance upon any of the material properties
or assets of US Co or any of the US Co Subsidiaries under, any term, condition
or provision of any loan or credit agreement, note, bond, mortgage, indenture,
lease or other material agreement, judgment, order, decree, statute, law,
ordinance, rule or regulation applicable to US Co or any of the US Co
Subsidiaries or their respective properties or assets, other than any such
breaches, defaults, losses, or encumbrances which, individually or in the
aggregate, would not have a Material Adverse Effect on US Co. Without limiting
the generality of the foregoing, upon the consummation of the Arrangement,
except as contemplated herein, no person or group of persons shall have any
right, contingent or otherwise, to elect, designate or appoint any director of
US Co and no person or group of persons shall have any right, contingent or
otherwise that is inconsistent with the provisions hereof.
3.3 GOVERNMENTAL CONSENTS
No consent, approval, order or authorization of, or registration,
declaration or filing with, any Governmental Entity, is required to be obtained
by US Co or any of the US Co Subsidiaries in connection with the execution and
delivery of this Agreement or the Plan of Arrangement or the consummation of
the transactions contemplated hereby or thereby, except for: (i) the filing
with the Commissions and the mailing to stockholders of US Co of the Joint
Proxy Statement relating to the US Co Stockholders Meeting, (ii) the furnishing
to the SEC of SEC Filings; (iii) approval by the Court of the Arrangement and
the filings of the articles of arrangement and other required arrangement or
other documents as required by the ABCA; (iv) such filings, authorizations,
orders and approvals as may be required under state "control share
acquisition," "anti-takeover" or other similar statutes, any other applicable
federal, provincial or state securities laws and the rules of the NYSE or the
TSE; (v) such filings and notifications as may be necessary under the HSR Act;
(vi) such notices and filings as may be necessary under the Investment Canada
Act and under the Competition Act (Canada); (vii) the filing of a Certificate
of Designation with the Delaware Secretary of State with respect to the
creation of special voting stock; and (viii) where the failure to obtain such
consents, approvals, etc., would not prevent or delay the consummation of the
Arrangement or otherwise prevent US Co from performing its obligations under
this Agreement and would not reasonably be expected to have a Material Adverse
Effect on US Co.
3.4 CAPITALIZATION
The authorized capital stock of US Co consists of 500,000,000 common
shares, U.S.$0.01 par value ("US Co Common Stock") and 100,000,000 preferred
shares, $0.01 par value (the "US Co
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Preferred Stock"). As of August 29, 1997, there were 73,555,501 shares of US Co
Common Stock outstanding, and 3,718,314 shares of US Co Common Stock were
reserved for issuance upon the exercise of stock options outstanding under US
Co's stock option plan; at the same date, no shares of US Co Preferred Stock
were outstanding. Except in connection with US Co's stock option plan, no
person, firm or corporation has any agreement or option or any right or
privilege, whether by law, pre-emptive or contractual, capable of becoming an
agreement, including convertible securities, warrants or convertible
obligations of any nature, for the purchase, subscription, allotment or
issuance of any of the unissued shares in the capital of US Co or of any
securities of US Co. US Co has no shareholder rights plan or similar
arrangement in place in connection with the US Co Common Stock or otherwise
(provided that US Co shall be entitled to institute such a plan or similar
arrangement prior to the Effective Date so long as such plan treats the holders
of Exchangeable Shares in substantially the same manner as the holders of US Co
Common Stock and provided the institution of the shareholder rights plan does
not have a tax impact on the holders of Exchangeable Shares.
3.5 SECURITIES REPORTS AND FINANCIAL STATEMENTS
US Co and all predecessor corporations to US Co have filed all forms,
reports and documents required to be filed by them by the SEC or pursuant to
relevant United States securities statutes, regulations, policies and rules
(collectively, the "US Co Securities Reports"), all of which have complied in
all material respects with all applicable requirements of such statutes,
regulations, policies and rules. None of the US Co Securities Reports, at the
time filed or as subsequently amended, contained any untrue statement of a
material fact or omitted to state a material fact required to be stated therein
or necessary in order to make the statements made therein, in light of the
circumstances under which they were made, not misleading. The financial
statements of US Co and such predecessor corporations contained in the US Co
Securities Reports complied in all material respects with the then applicable
accounting requirements and the published rules and regulations of the relevant
United States securities statutes with respect thereto, were prepared in
accordance with United States generally accepted accounting principles applied
on a consistent basis during the periods involved (except as may have been
indicated in the notes thereto or, in the case of unaudited statements, as
permitted by applicable laws, rules or regulations) and fairly present
(subject, in the case of the unaudited statements, to normal, year-end audit
adjustments) the consolidated financial position of US Co and such predecessor
corporations and the consolidated US Co Subsidiaries as at the respective dates
thereof and the consolidated results of their operations and cash flows for the
respective periods then ended. There has been no change in the accounting
policies or the methods of making accounting estimates or changes in estimates
of US Co or its predecessor corporations that are material to such financial
statements, except as described in the notes thereto.
3.6 LIABILITIES
US Co and the US Co Subsidiaries do not have any liabilities or
obligations, either accrued, absolute, contingent, or otherwise, or have any
knowledge of any potential liabilities or obligations, other than those (i)
disclosed in the US Co Securities Reports or those of its predecessors, (ii)
set forth in the US Co Disclosure Letter, (iii) incurred in the ordinary course
of business since June 30, 1997, or (iv) which individually or in the aggregate
would not reasonably be expected to have a Material Adverse Effect on US Co.
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3.7 INFORMATION SUPPLIED
None of the information supplied or to be supplied by US Co for
inclusion or incorporation by reference in the Joint Proxy Statement (and, if
filed, the Form F-4 or Form S-3) will, at the time the Joint Proxy Statement is
mailed to the shareholders of US Co and at the time of the US Co Stockholders
Meeting (and, if filed, at the time the Form F-4 or Form S-3 is declared
effective), contain any untrue statement of a material fact or omit to state
any material fact required to be stated therein or necessary to make the
statements therein, in light of the circumstances under which they are made,
not misleading. The Joint Proxy Statement will comply as to form in all
material respects with the provisions of applicable United States securities
laws and the rules and regulations of the SEC.
3.8 NO DEFAULTS
Neither US Co nor any US Co Subsidiary is, or has received notice that
it would be with the passage of time, in default or violation of any term,
condition or provision of (i) its charter documents or bylaws; (ii) any
judgment, decree or order applicable to it; or (iii) any loan or credit
agreement, note, bond, mortgage, indenture, material contract, agreement,
lease, license or other instrument to which US Co or any US Co Subsidiary is
now a party or by which it or any of its properties or assets may be bound,
except in the case of item (iii) for defaults and violations which,
individually or in the aggregate, would not have a Material Adverse Effect on
US Co.
3.9 LITIGATION; INVESTIGATIONS
There is no claim, action, suit or proceeding pending or, to the
knowledge of US Co, threatened, which would, if adversely determined,
individually or in the aggregate, have a Material Adverse Effect on US Co, nor
is there any judgment, decree, injunction, rule or order of any Governmental
Entity or arbitrator outstanding against US Co or any of the US Co Subsidiaries
having, or which, insofar as reasonably can be foreseen, in the future could
have, any such effect. There is no investigation pending or, to the knowledge
of US Co, threatened, against US Co or any of the US Co Subsidiaries before any
Governmental Entity which could have any such effect.
3.10 ABSENCE OF CERTAIN CHANGES AND EVENTS
Except as set forth in the US Co Disclosure Letter, other than as a
result of the transactions contemplated by this Agreement, since June 30, 1997,
there has not been:
(a) Financial Change. Any material adverse change in the financial
condition, operations, assets, liabilities or business of US Co or the US Co
Subsidiaries or its predecessors;
(b) Property Damage. Any material damage, destruction, or loss to the
business or properties of US Co or the US Co Subsidiaries (whether or not
covered by insurance);
(c) Dividends or Redemptions. Except as contemplated herein, any
declaration, setting aside, or payment of any dividend or other distribution in
respect of the capital stock of US Co, or any direct or indirect redemption,
purchase or any other acquisition by US Co of any such stock;
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(d) Capitalization Change. Any change in the capital stock or in the
number of shares or classes of US Co's authorized or outstanding capital stock
as described in Section 3.4 (other than as a result of exercises of currently
outstanding options to purchase US Co Common Stock and other than as
contemplated in Section 1.4); or
(e) Other Material Changes. Any other event or condition known to US
Co particularly pertaining to and adversely affecting the operations, assets or
business of US Co or the US Co Subsidiaries (other than events or conditions
which are of a general or industry-wide nature and of general public knowledge)
which would constitute a Material Adverse Effect on US Co.
3.11 ADDITIONAL US CO INFORMATION
The US Co Disclosure Letter contains true, complete and correct lists
of the following items with respect to US Co and the US Co Subsidiaries, and US
Co agrees that upon the request of Chauvco, it will furnish to Chauvco true,
complete and correct copies of any documents referred to in such lists:
(a) Material Contracts. All contracts which involve, or may involve,
aggregate payments by any party thereto of $25,000,000 or more, which are to be
performed in whole or in part after the Effective Time; or
(b) Employee Compensation Plans. All bonus, retention bonus, company
severance policy, employee stock option plans, incentive compensation, deferred
compensation, profit-sharing, retirement, pension, welfare, group insurance,
death benefit, or other fringe benefit plans, arrangements or trust agreements.
3.12 CERTAIN AGREEMENTS
Neither the execution and delivery of this Agreement nor the
consummation of the transactions contemplated hereby will (i) result in any
payment (including without limitation, severance, unemployment compensation,
parachute payment, bonus or otherwise) becoming due to any director, employee
or independent contractor of US Co or the US Co Subsidiaries under any US Co
Plan (as hereinafter defined) or otherwise, (ii) materially increase any
benefits otherwise payable under any US Co Plan or otherwise or (iii) result in
the acceleration of the time of payment or vesting of any such benefits.
3.13 TITLE TO PROPERTIES
Except for goods and other property sold, used or otherwise disposed
of in the ordinary course of business for fair value, US Co has good and
indefeasible title to all its properties, interests in properties and assets,
real and personal, reflected in its June 30, 1997, pro forma financial
statements, free and clear of any Encumbrance, except (i) Encumbrances
reflected in the pro forma balance sheet of US Co dated June 30, 1997, (ii)
liens for current taxes not yet due and payable, and (iii) such imperfections
of title, easements and Encumbrances, if any, which would not individually or
in the aggregate, have a Material Adverse Effect on US Co. All leases pursuant
to which US Co or any US Co Subsidiary leases (whether as lessee or lessor) any
substantial amount of real or personal property are in good standing, valid,
and effective; and there is not, under any such leases,
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any existing or prospective default or event of default or event which with
notice or lapse of time, or both, would constitute a default by US Co or any US
Co Subsidiary which would, individually or in the aggregate, have a Material
Adverse Effect on US Co and in respect to which US Co or a US Co Subsidiary has
not taken adequate steps to prevent a default from occurring. The buildings and
premises of US Co and the US Co Subsidiaries that are used in its business are
in good operating condition and repair, subject only to ordinary wear and tear.
All major items of operating equipment of US Co and the US Co Subsidiaries are
in good operating condition and in a state of reasonable maintenance and
repair, ordinary wear and tear excepted, and are free from any known defects
except as may be repaired by routine maintenance and such minor defects as to
not substantially interfere with the continued use thereof in the conduct of
normal operations.
3.14 ENVIRONMENTAL MATTERS
Except as set forth in the US Co Disclosure Letter:
(a) Environmental Conditions. There are no environmental conditions or
circumstances, such as the presence or release of any hazardous substance, on
any property presently or previously owned or leased by US Co or the US Co
Subsidiaries that could result in a Material Adverse Effect on US Co.
(b) Permits, etc. US Co and the US Co Subsidiaries have in full force
and effect all environmental permits, licenses, approvals and other
authorizations required to conduct their operations and are operating in
material compliance thereunder.
(c) Compliance. US Co's and the US Co Subsidiaries' operations and use
of their assets do not violate any applicable United States or Canadian or
other federal, provincial, state or local law, statute, ordinance, rule,
regulation, order or notice requirement pertaining to (a) the condition or
protection of air, groundwater, surface water, soil, or other environmental
media, (b) the environment, including natural resources or any activity which
affects the environment, or (c) the regulation of any pollutants, contaminants,
waste, substances (whether or not hazardous or toxic), including, without
limitation, the Applicable Environmental Laws, except for violations which,
either singly or in the aggregate, would not result in a Material Adverse
Effect on US Co.
(d) Past Compliance. None of the operations or assets of US Co or the
US Co Subsidiaries has ever been conducted or used by US Co or the US Co
Subsidiaries in such a manner as to constitute a violation of any of the
Applicable Environmental Laws, except for violations which, either singly or in
the aggregate, would not result in a Material Adverse Effect on US Co.
(e) Environmental Claims. No notice has been served on US Co or any US
Co Subsidiaries from any entity, governmental agency or individual regarding
any existing, pending or threatened investigation or inquiry related to alleged
violations under any Applicable Environmental Laws, or regarding any claims for
remedial obligations or contribution under any Applicable Environmental Laws,
other than any of the foregoing which, either singly or in the aggregate, would
not result in a Material Adverse Effect on US Co.
(f) Renewals. US Co does not know of any reason it would not be able
to renew any of the permits, licenses, or other authorizations required
pursuant to any Applicable Environmental
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Laws to operate and use any of US Co's or the US Co Subsidiaries' assets for
their current purposes and uses.
3.15 COMPLIANCE WITH OTHER LAWS
Except as set forth in the US Co Disclosure Letter, neither US Co nor
any US Co Subsidiary is in violation of or in default with respect to, or in
alleged violation of or alleged default with respect to any other applicable
law or any applicable rule, regulation, or any writ or decree of any court or
any governmental commission, board, bureau, agency, or instrumentality, or
delinquent with respect to any report required to be filed with any
Governmental Entity, except for violations which, either singly or in the
aggregate, do not and are not expected to result in a Material Adverse Effect
on US Co.
3.16 TAXES
(a) Except with respect to failures which, in the aggregate, would not
result in a Material Adverse Effect on US Co, proper and accurate federal,
state and local income, capital, withholding, value added, sales, use,
franchise, gross revenue, turnover, excise, payroll, property, employment,
customs duties and any and all other tax returns, reports, and estimates have
been filed with appropriate governmental agencies, domestic and foreign, by US
Co and all predecessor corporations and each of the US Co Subsidiaries for each
period for which any returns, reports, or estimates were due (taking into
account any extensions of time to file before the date hereof); all taxes shown
by such returns to be payable and any other taxes due and payable have been
paid other than those being contested in good faith by US Co or a US Co
Subsidiary; and the tax provision reflected in US Co's pro forma financial
statements as of June 30, 1997, is adequate, in accordance with United States
generally accepted accounting principles, to cover liabilities of US Co and the
US Co Subsidiaries at the date thereof for all taxes, including any interest,
penalties and additions to taxes of any character whatsoever applicable to US
Co and the US Co Subsidiaries or their assets or businesses. There are no tax
liens on any assets of US Co or the US Co Subsidiaries except for taxes not yet
currently due and those which could not reasonably be expected to result in a
Material Adverse Effect on US Co.
(b) On and after the Effective Date and until such time as no person,
other than US Co or an affiliate of US Co, holds any Exchangeable Shares,
neither US Co nor any of its affiliates will be a "specified financial
institution" as that term is defined in the ITA.
3.17 VOTE REQUIRED
At a stockholders meeting at which a quorum is present, the
affirmative vote of the holders of a majority of the outstanding shares of US
Co Common Stock present at the meeting is required to approve the issuance of
the US Co Common Stock pursuant to this Agreement and upon exchange of the
Exchangeable Shares. Except as aforesaid, no vote or other approval of the
stockholders of US Co is required, under the stockholder approval policy of the
NYSE, corporate law or otherwise, to approve this Agreement, the Arrangement
and the consummation of the transactions contemplated hereby.
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3.18 BROKERS AND FINDERS
Other than Xxxxxxx, Xxxxx & Co. in accordance with the terms of its
engagement letter, none of US Co or any of the US Co Subsidiaries nor any of
their respective directors, officers or employees has employed any broker or
finder or incurred any liability for any financial advisory fees, brokerage
fees, commissions or similar payments in connection with the transactions
contemplated by this Agreement.
3.19 DISCLOSURE
No representation or warranty made by US Co in this Agreement, nor any
document, written information, statement, financial statement, certificate or
Exhibit prepared and furnished or to be prepared and furnished by US Co or its
representatives pursuant hereto or in connection with the transactions
contemplated hereby, when taken together, contained any untrue statement of a
material fact when made, or omitted to state a material fact necessary to make
the statements or facts contained herein or therein not misleading in light of
the circumstances under which they were furnished.
3.20 FAIRNESS OPINION
US Co's board of directors has received a written opinion from
Xxxxxxx, Sachs & Co. that as of the date hereof the consideration to be paid by
US Co in connection with this Agreement is fair to US Co.
3.21 RESTRICTIONS ON BUSINESS ACTIVITIES
There is no material agreement, judgment, injunction, order or decree
binding upon US Co or any US Co Subsidiary that has or could reasonably be
expected to have the effect of prohibiting or materially impairing any business
practice of US Co or any US Co Subsidiary, any acquisition of property by US Co
or any US Co Subsidiary, the conduct of business by US Co or any US Co
Subsidiary as currently conducted or the consummation of the Arrangement.
3.22 BOOKS AND RECORDS
The books, records and accounts of US Co and the US Co Subsidiaries
(a) have been maintained in accordance with good business practices on a basis
consistent with prior years, (b) are stated in reasonable detail and accurately
and fairly reflect the transactions and dispositions of the assets of US Co and
the US Co Subsidiaries and (c) accurately and fairly reflect the basis for the
US Co financial statements. US Co has devised and maintains a system of
internal accounting controls sufficient to provide reasonable assurances that
(a) transactions are executed in accordance with management's general or
specific authorization; and (b) transactions are recorded as necessary (i) to
permit preparation of financial statements in conformity with United States
generally accepted accounting principles or any other criteria applicable to
such statements and (ii) to maintain accountability for assets.
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3.23 US CO SUB
US Co Sub will be incorporated solely for the purpose of participating
in the transactions contemplated herein, will carry on no other business, and,
except as contemplated herein, will not have any liabilities or obligations,
either accrued, absolute, contingent, or otherwise as of the Effective Date.
ARTICLE 4
OBLIGATIONS PENDING EFFECTIVE DATE
4.1 AGREEMENTS OF US CO AND CHAUVCO
US Co and Chauvco agree to take the following actions after the date
hereof:
(a) Regulatory Approvals. Each party will promptly execute and file or
join in the execution and filing of any application or other document that may
be necessary in order to obtain the authorization, approval or consent of any
Governmental Entity, the Commissions or the SEC which may be reasonably
required, or which the other party may reasonably request, in connection with
the consummation of the transactions contemplated by this Agreement. Each party
will use its commercially reasonable efforts to promptly obtain such
authorizations, approvals and consents. Without limiting the generality of the
foregoing, as promptly as practicable after the execution of this Agreement,
each party shall make all required filings with the Federal Trade Commission
(the "FTC") and the Antitrust Division of the Department of Justice (the
"DOJ"), a pre-merger notification report under the HSR Act and shall make such
filings as are necessary under the Investment Canada Act and the Competition
Act (Canada).
(b) Access. Each party will allow the other and its agents reasonable
access to the premises and properties of the other and to the files, books,
records and offices of the other and the other's subsidiaries, including,
without limitation, any and all information relating to such party's tax
matters, contracts, leases, licenses and real, personal and intangible property
and financial condition. Each party will cause its accountants to cooperate
with the other in making available to the other party all financial information
reasonably requested, including, without limitation, the right to examine all
working papers pertaining to tax matters and financial statements prepared or
audited by such accountants.
(c) Joint Proxy Statement. US Co and Chauvco shall cooperate in the
preparation and prompt filing of the Joint Proxy Statement (and, if required,
the Form X-0, X-0 or Form S-3) with the SEC;
(d) Notice of Material Developments. Each of US Co and Chauvco will
promptly notify the other in writing (i) of any event occurring subsequent to
the date of this Agreement which would render, or might reasonably be expected
to render, any representation and warranty of such party contained in this
Agreement untrue or inaccurate in any material respect, (ii) of any Material
Adverse Effect on such party and (iii) of any breach by such party of any
covenant or agreement contained in this Agreement; and
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(e) Satisfaction of Conditions Precedent. During the term of this
Agreement, each of US Co and Chauvco will use its commercially reasonable
efforts to satisfy or cause to be satisfied all the conditions precedent that
are set forth in Article 5 hereof, and each of US Co and Chauvco will use its
commercially reasonable efforts to cause the Arrangement and the other
transactions contemplated by this Agreement to be consummated.
4.2 ADDITIONAL AGREEMENTS OF CHAUVCO
Chauvco agrees that from the date hereof to the Effective Date, it
will, and will cause each of the Chauvco Subsidiaries to:
(a) Operate in Ordinary Course/Consult. Other than as contemplated by
this Agreement, operate its business only in the usual, regular, and ordinary
manner and, to the extent consistent with such operation, use all commercially
reasonable efforts to preserve intact its present business organization, keep
available the services of its present officers and employees, and preserve its
relationships with customers, suppliers, distributors, and others having
business dealings with it; permit US Co representatives to meet with Chauvco
officers and attend such Chauvco business meetings, and provide US Co with such
periodic reports, all as US Co may reasonably request to become and keep
generally informed as to Chauvco's business, assets and operations;
(b) Maintenance of Properties. Maintain all of its property and assets
in customary repair, order, and condition, reasonable wear and use and damage
by fire or unavoidable casualty excepted;
(c) Maintenance of Books and Records. Maintain its books of account
and records in the usual, regular, and ordinary manner, in accordance with
generally accepted accounting principles applied on a consistent basis;
(d) Compliance with Law. Duly comply in all material respects with all
laws applicable to it and to the conduct of its business;
(e) Employment Matters. Allow reasonable access by US Co to employees
in order for US Co to explore continuing employment arrangements; not (i) enter
into any contracts of employment which (1) cannot be terminated on notice of 30
days or less or (2) provide for any severance payments or benefits covering a
period beyond the termination date of such employment contract, except as may
be required by law; (ii) amend any employee benefit plan or stock option plan,
except as may be required for compliance with applicable law or as contemplated
by this Agreement; or (iii) except with the prior written consent of US Co,
such consent not to be unreasonably withheld, increase salaries or declare
bonuses prior to the Effective Date provided that Chauvco shall be permitted to
declare and pay bonuses in an amount not to exceed $750,000 without the consent
of US Co;
(f) Prohibition of Certain Loans. Not incur any borrowings except (i)
the refinancing of indebtedness now outstanding or additional borrowings under
its existing revolving credit facilities, (ii) the prepayment by customers of
amounts due or to become due for goods sold or services rendered or to be
rendered in the future, (iii) trade payables incurred in the ordinary course of
business, (iv) other borrowings incurred in the ordinary course of business to
finance normal
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operations, (v) borrowing to finance expenditures not prohibited under
paragraph (g) (provided however with respect to items (i) to (v) the borrowing
shall not exceed current borrowing limits under current credit facilities), or
(vi) as is otherwise agreed to in writing by US Co;
(g) Prohibition of Certain Commitments. Not enter into commitments of
a capital expenditure nature or incur any contingent liability which would
exceed $1,000,000, in the aggregate, except (i) as may be necessary for the
maintenance of existing facilities, machinery and equipment in good operating
condition and repair in the ordinary course of business, (ii) as may be
required by law, (iii) as contemplated in Chauvco's Estimated Capital
Expenditures for the period July 1, 1997 to December 31, 1997, a copy of which
has been attached to the Chauvco Disclosure Letter or (iv) as is otherwise
agreed to in writing by US Co;
(h) Disposal of Assets. Not sell, dispose of, or encumber, any
property or assets, except (i) in the ordinary course of business and not
exceeding $10,000,000 in value in the aggregate, (ii) Encumbrances as may be
reasonably required in connection with borrowings under Section 4.2(f), or
(iii) as is otherwise agreed to in writing by US Co;
(i) Maintenance of Insurance. Maintain insurance upon all its
properties and with respect to the conduct of its business of such kinds and in
such amounts as is customary in the type of business in which it is engaged,
but not less than that presently carried by it;
(j) No Amendment to Charter Documents, etc. Except as otherwise
provided in this Agreement, not amend its charter documents or bylaws or other
organizational documents or merge or consolidate with or into any other
corporation or change in any manner the rights of its capital stock or the
character of its business;
(k) No Issuance, Sale, or Purchase of Securities. Except as otherwise
provided in this Agreement, not issue or sell (except upon the exercise of
outstanding options), or issue options or rights to subscribe to, or enter into
any contract or commitment to issue or sell, any shares of its capital stock or
subdivide or in any way reclassify any shares of its capital stock, or acquire,
or agree to acquire, any shares of its capital stock;
(l) Prohibition on Dividends. Not declare or pay any dividend on
shares of its capital stock or make any other distribution of assets to the
holders thereof;
(m) Supplemental Financial Statements. Deliver to US Co, within 45
days after the end of the fiscal quarter of Chauvco ending September 30, 1997,
unaudited consolidated balance sheets and related unaudited statements of
income, retained earnings and cash flows as of the end of such fiscal quarter
of Chauvco, and as of the corresponding fiscal quarter of the previous fiscal
year. Chauvco hereby represents and warrants that such unaudited consolidated
financial statements shall (i) be complete in all material respects except for
the omission of notes and schedules contained in audited financial statements,
(ii) present fairly the financial condition of Chauvco as at the dates
indicated and the results of operations for the periods indicated, (iii) shall
have been prepared in accordance with Canadian generally accepted accounting
principles applied on a consistent basis, except as noted therein and (iv)
shall contain all adjustments which Chauvco considers necessary for a fair
presentation of its results for the fiscal period;
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(n) Exclusivity; Acquisition Transactions. Unless and until this
Agreement shall have been terminated by either party pursuant to Article 6
hereof, it shall not (and it shall cause its directors, representatives, agents
or affiliates (collectively "Representatives")) not to take or cause to take
(or cause any of the Chauvco Subsidiaries to take), directly or indirectly, any
of the following actions with any party other than US Co and its designees: (i)
solicit, encourage, initiate or participate in any negotiations, inquiries or
discussions with respect to any offer or proposal (x) to acquire in any manner,
directly or indirectly, all or any significant part of the business or assets
of Chauvco and the Chauvco Subsidiaries taken as a whole or (y) to acquire in
any manner, directly or indirectly, more than 25% of the voting power of the
capital shares of Chauvco, whether by arrangement, amalgamation, merger,
consolidation, other business combination, purchase of assets, tender or
exchange offer or otherwise (each of the foregoing, an "Acquisition
Transaction"), (ii) after the date hereof furnish or provide any information
with respect to, or otherwise take any action that facilitates, any inquiries
or the making of any proposal that constitutes, or may reasonably be expected
to lead to any inquiry, offer or proposal for, an Acquisition Transaction
except in the ordinary course of business (and unrelated to an Acquisition
Transaction) and as required by law or pursuant to a governmental request for
information, (iii) enter into or execute any agreement or arrangement relating
to an Acquisition Transaction, plan of reorganization, or other agreement
calling for the sale of all or any significant part of its business and
properties or the acquisition in any manner of more than 25% of the voting
power of the capital shares of Chauvco; or (iv), except as required by law,
make or authorize any public statement, recommendation or solicitation with
respect to any Acquisition Transaction or any offer or proposal relating to an
Acquisition Transaction other than with respect to the Arrangement (provided
that neither the Board of Directors of Chauvco nor any committee thereof shall
(x) withdraw or modify, or propose to withdraw or modify, in a manner adverse
to US Co, the approval and recommendation by such Board of Directors or such
committee of this Agreement, the Plan of Arrangement or the Arrangement or (y)
approve or recommend, or propose to approve or recommend, any Acquisition
Transaction, except with respect to either clause (x) or (y) in the case of a
Superior Transaction (as hereinafter defined) and then only at or after the
termination of this Agreement pursuant to Section 6.1(g)); and
(o) Alternative Transaction. Notwithstanding the foregoing, prior to
the approval of this Agreement and the Arrangement by the holders of Chauvco
Common Shares at the Chauvco Meeting, nothing contained in this Agreement shall
prevent the Board of Directors of Chauvco (or its Representatives pursuant to
its instructions) from: (i) engaging in discussions or negotiations with (but
not soliciting or initiating such discussions or negotiations or encouraging
inquiries from) a party concerning an unsolicited Acquisition Transaction; or
(ii) providing non-public information in connection with an unsolicited
Acquisition Transaction with respect to Chauvco or the Chauvco Subsidiaries
that has previously been provided to US Co pursuant to a customary
confidentiality agreement (having terms substantially similar to the
Confidentiality Agreement (as hereinafter defined)), in each case if the
Chauvco Board of Directors first determines in good faith, based on the advice
of outside legal counsel, that such action is required by reason of the
fiduciary duties of the members of the Board of Directors of Chauvco to Chauvco
or to Chauvco's shareholders under applicable law and that such unsolicited
Acquisition Transaction involves consideration to the shareholders of Chauvco
with a value that the Board of Directors of Chauvco in good faith believe,
after receiving advice from Chauvco's financial advisors, is superior to the
consideration to the shareholders provided for in the Arrangement; provided
that in each such event, Chauvco first notifies US Co of such determination by
the Chauvco Board of Directors and further notifies US Co of the fact that it
is furnishing information to or entering into discussions or negotiations with
a
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person or entity and Chauvco keeps US Co informed of the status (including all
terms and conditions thereof but not the identity of such person or entity) of
any such discussions or negotiations. Except to the extent expressly referenced
in this Section, nothing in this Section, however, shall relieve Chauvco from
complying with the other terms of this Agreement. If Chauvco or any Chauvco
Subsidiary receives any unsolicited offer or proposal to enter negotiations
relating to an Acquisition Transaction, Chauvco shall immediately notify US Co
thereof. On the date hereof, Chauvco shall immediately cease and cause to be
terminated any existing solicitation, initiation, encouragement, activity,
discussion or negotiation with any parties conducted heretofore by Chauvco or
any Representatives with respect to any Acquisition Transaction and, in
connection therewith, Chauvco shall exercise all rights to require the return
of information regarding Chauvco previously provided to such parties. In no
event may the Board of Directors of Chauvco or any committee thereof (x)
withdraw or modify, or propose to withdraw or modify, in a manner adverse to US
Co, the approval and recommendation by such Board of Directors or such
committee of this Agreement, the Plan of Arrangement or the Arrangement or (y)
approve or recommend, or propose to approve or recommend, any Acquisition
Transaction, except with respect to either clause (x) or (y) in the case of a
Superior Proposal and then only at or after the termination of this Agreement
pursuant to Section 6.1(g). As used in this Agreement, a "Superior Proposal"
means (x) a bona fide written offer for an Acquisition Transaction to acquire,
directly or indirectly, for consideration consisting of cash and/or securities,
more than 50% of the shares and/or voting power of the capital shares of
Chauvco then outstanding or all or substantially all the assets of Chauvco, and
(y) otherwise on terms which the Board of Directors of Chauvco determines in
its good faith judgment to be more favorable to Chauvco than the Arrangement
(based on the written opinion, with only customary qualifications, of Chauvco's
independent financial advisor that the value of the consideration provided for
in such proposal is superior to the value of the consideration provided for in
the Arrangement), for which financing, to the extent required, is then
committed or which, in the good faith judgment of the Board of Directors of
Chauvco, based on advice from Chauvco's independent financial advisor, is
reasonably capable of being financed by such third party and for which the
Board of Directors of Chauvco determines, in its good faith judgment, that such
proposed transaction is reasonably likely to be consummated without undue
delay;
(p) Chauvco Options. Ensure that the consent of the Optionholders as a
class is either obtained or not required;
(q) Chauvco Affiliates. On or prior to the Effective Time, cause its
Affiliates (as such term is defined in the Exchange Act) to execute and deliver
customary letters in connection with Rule 145 of the Securities Act;
(r) Shareholders Rights Plan. Take such action as may be necessary so
that the Chauvco SRP shall be waived immediately prior to the Effective Time
and not apply to the transactions contemplated herein. Chauvco shall utilize
its best efforts to keep the Chauvco SRP in full force and effect unamended
until such waiver; and
(s) International Contracts. Not enter into any binding contracts with
any party in any country upon which the U.S. Government has imposed
international economic sanctions with respect to U.S. persons doing business.
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4.3 ADDITIONAL AGREEMENTS OF US CO
US Co agrees that from the date hereof to the Effective Date, it will,
and will cause each of the US Co Subsidiaries to:
(a) Operate in Ordinary Course. Other than as contemplated by this
Agreement, operate its business only in the usual, regular, and ordinary manner
and, to the extent consistent with such operation, use all commercially
reasonable efforts to preserve intact its present business organization, keep
available the services of its present officers and employees, and preserve its
relationships with customers, suppliers, distributors, and others having
business dealings with it;
(b) Maintenance and Disposition of Properties. Maintain all of its
property and assets in customary repair, order, and condition, reasonable wear
and use and damage by fire or unavoidable casualty excepted and only dispose
thereof (and such disposal shall be permitted) in the ordinary course of
business;
(c) Maintenance of Books and Records. Maintain its books of account
and records in the usual, regular, and ordinary manner, in accordance with
generally accepted accounting principles applied on a consistent basis;
(d) Compliance with Law. Duly comply in all material respects with all
laws applicable to it and to the conduct of its business;
(e) Maintenance of Insurance. Maintain insurance upon all its
properties and with respect to the conduct of its business of such kinds and in
such amounts as is customary in the type of business in which it is engaged,
but not less than that presently carried by it;
(f) No Amendment to Charter Documents, etc. Except as otherwise
contemplated in and subject to Section 1.4, not amend its charter documents or
merge or consolidate with or into any other corporation without the prior
written consent of Chauvco (provided that such consent shall not be necessary
if such transaction will not adversely affect the ability of Chauvco
shareholders to exchange Exchangeable Shares after the Effective Date as
contemplated herein) or change in any manner the rights of its capital stock or
the character of its business provided nothing herein shall prevent the
issuance of preferred stock by US Co and the filing of Certificates of
Designation with the Secretary of State of Delaware in connection therewith;
(g) Prohibition on Dividends. Except for US Co's regular semi-annual
5(cent)/share dividends, or any dividend pursuant to the implementation or
maintenance of a shareholder rights plan or similar arrangement which plan or
arrangement makes adequate provision with respect to the holders of
Exchangeable Shares, not declare or pay any dividend on shares of its capital
stock or make any other distribution of assets to the holders thereof;
(h) Supplemental Financial Statements. Deliver to Chauvco, within 45
days after the end of the fiscal quarter of US Co ending September 30, 1997,
unaudited consolidated balance sheets and related unaudited statements of
income, retained earnings and cash flows for the period ending and as of the
end of such quarter of US Co. US Co hereby represents and warrants that such
unaudited consolidated financial statements shall (i) be complete in all
material respects except for
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the omission of notes and schedules contained in audited financial statements,
(ii) present fairly the financial condition of US Co as at the dates indicated
and the results of operations for the periods indicated, (iii) shall have been
prepared in accordance with United States generally accepted accounting
principles applied on a consistent basis, except as noted therein and (iv)
shall contain all adjustments which US Co considers necessary for a fair
presentation of its results for the fiscal period; and
(i) Listings. Use its commercially reasonable efforts to cause, with
the cooperation and assistance of Chauvco, the Exchangeable Shares to be listed
on the TSE.
ARTICLE 5
CONDITIONS PRECEDENT TO OBLIGATIONS
5.1 CONDITIONS PRECEDENT TO OBLIGATIONS OF CHAUVCO
The obligations of Chauvco to consummate and effect the transactions
contemplated hereunder shall be subject to the satisfaction of the following
conditions, or to the waiver thereof by Chauvco in the manner contemplated by
this Agreement before the Effective Date:
(a) Representations and Warranties of US Co True at Effective Date.
The representations and warranties of US Co herein contained shall be accurate
in all material respects at the Effective Date, with the same effect as though
made at such date, except to the extent such representations and warranties
expressly relate to an earlier date (in which case as of such date), and except
to the extent of the failure of such representations to be true and correct
would not in the aggregate have a Material Adverse Effect on US Co, and except
as affected by transactions permitted or contemplated by this Agreement; US Co
shall have performed and complied with all covenants required by this Agreement
to be performed or complied with, in all material respects, by US Co before the
Effective Date; and US Co shall have delivered to Chauvco a certificate, dated
the Effective Date and signed by its chairman of the board or its president on
behalf of US Co, and by its chief financial or accounting officer, and its
secretary, to both such effects;
(b) Opinion of US Co Counsel. Chauvco shall have received opinions,
dated as of the Effective Date, from Xxxxxx & Xxxxxx, L.L.P., United States
counsel for US Co, and from MacKimmie Xxxxxxxx, Canadian counsel for US Co in
form and substance satisfactory to Chauvco dealing with due authorization,
execution, delivery and enforceability of documents and such other matters as
US Co shall agree to;
(c) Consents of Certain Parties in Privity with US Co. Chauvco shall
have received all written consents, assignments, waivers, authorizations or
other certificates necessary to provide for the continuation in full force and
effect of all material contracts and leases of US Co and for US Co to
consummate the transactions contemplated hereby, except when the failure to
receive such consents or other certificates would not have a Material Adverse
Effect on US Co;
(d) Shareholder Approval. This Agreement, the Arrangement and the
other transactions contemplated hereby shall have been approved and adopted by
the Chauvco shareholders in accordance with applicable law and Chauvco's
articles of amalgamation and bylaws;
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(e) US Co Approvals. The issuance of US Co Common Stock from time to
time upon the exchange of the Exchangeable Shares shall have been approved by
the US Co stockholders in accordance with the rules of the NYSE and applicable
law;
(f) No Legal Action. No temporary restraining order, preliminary
injunction or permanent injunction or other order preventing the consummation
of the Arrangement shall have been issued by any Canadian or United States
federal, provincial or state court and remain in effect, nor shall any
proceeding seeking any of the foregoing be pending. There shall be no order,
decree or ruling by any governmental agency or threat thereof, or any statute,
rule, regulation or order enacted, entered, enforced or deemed applicable to
the Arrangement, which would prohibit or render illegal the transactions
contemplated by this Agreement;
(g) Court Approval. The Court shall have issued its final order
approving the Arrangement in form and substance satisfactory to US Co and
Chauvco (such approvals not to be unreasonably withheld or delayed by US Co or
Chauvco) and reflecting the terms hereof;
(h) Commissions, etc. All necessary orders shall have been obtained
from the Commissions and other relevant United States and Canadian securities
regulatory authorities in connection with the Arrangement. All waiting periods
required by HSR shall have expired with respect to the transactions
contemplated by this Agreement, or early termination with respect thereto shall
have been obtained, without the imposition of any governmental request or order
requiring the sale or disposition or holding separate (through a trust or
otherwise) of particular assets or businesses of Chauvco or US Co. US Co shall
have filed all notices and information (if any) required under Part IX of the
Competition Act (Canada) and the applicable waiting periods and any extensions
thereof shall have expired or the parties shall have received an Advance Ruling
Certificate pursuant to Section 102 of the Competition Act (Canada) setting out
that the Director under such Act is satisfied he would not have sufficient
grounds on which to apply for an order in respect of the Arrangement. The
Arrangement shall have received the allowance or approval or deemed allowance
or approval by the responsible Minister under the Investment Canada Act in
respect of the Arrangement, to the extent such allowance or approval is
required;
(i) SEC Filings. The Forms F-4 and S-4, if filed, and the Form S-3
shall have been declared effective under the Securities Act and shall not be
the subject of any stop-order or proceedings seeking a stop-order, and the
Joint Proxy Statement shall on the Closing Date not be subject to any similar
proceedings commenced or threatened by the SEC or the Commissions;
(j) Appointment to US Co Board. US Co shall cause Xxxxx X. Xxxxxxxx to
be appointed as a director of US Co on or prior to the Effective Date as a
Class II Director to serve until US Co's 1999 annual stockholders' meeting; Xxx
X. Xxxxxxxx to be nominated as a director of US Co for election at US Co's 1998
annual stockholders' meeting and Xx. Xxxxxxxx to be nominated for re-election
at US Co's 1999 annual stockholders' meeting. US Co shall put forth Messrs.
Xxxxxxxx and Xxxxxxxx for election to its board of directors as aforesaid and
will cause to be solicited proxies for its stockholder's meetings in favour of
the election of such individual.
(k) Listings. The Exchangeable Shares shall be listed on the TSE,
subject to notice of issuance, and the US Co Common Stock issuable pursuant to
the Arrangement and upon exchange
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of the Exchangeable Shares shall have been approved for listing on the NYSE,
subject to notice of issuance;
(l) Certificates and Resolutions. Chauvco shall have received such
other certificates and resolutions of US Co as may be reasonably required in
connection with the consummation of this Agreement; and
(m) Material Adverse Effect. There shall have been no event, change or
effect after the date hereof and on or prior to the Effective Date resulting in
a Material Adverse Effect on US Co.
5.2 CONDITIONS PRECEDENT TO OBLIGATIONS OF US CO
The obligations of US Co to consummate and effect the transactions
contemplated hereunder shall be subject to the satisfaction of the following
conditions, or to the waiver thereof by US Co in the manner contemplated by
this Agreement, before the Effective Date:
(a) Representations and Warranties of Chauvco True at Effective Date.
The representations and warranties of Chauvco herein contained shall be
accurate in all material respects at the Effective Date, with the same effect
as though made at such date, except to the extent such representations and
warranties expressly relate to an earlier date (in which case as of such date),
and except to the extent of the failure of such representations to be true and
correct would not in the aggregate have a Material Adverse Effect on Chauvco
and except as affected by transactions permitted or contemplated by this
Agreement; Chauvco shall have performed and complied with all covenants
required by this Agreement to be performed or complied with, in all material
respects, by Chauvco before the Effective Date; and Chauvco shall have
delivered to US Co a certificate, dated the Effective Date and signed by its
chairman of the board or its president on behalf of Chauvco and by its chief
financial or accounting officer, and its secretary, to both such effects;
(b) Opinion of Chauvco Counsel. US Co shall have received opinions,
dated as of the Effective Date, from Xxxxx & Xxxxx, L.L.P., United States
counsel for Chauvco, and from Xxxxxxx Xxxxx Verchere, Canadian counsel for
Chauvco in form and substance satisfactory to Chauvco dealing with due
authorization, execution, delivery and enforceability of documents and such
other matters as Chauvco shall agree to;
(c) Consents of Certain Parties in Privity with Chauvco. US Co shall
have received all written consents, assignments, waivers, authorizations or
other certificates necessary to provide for the continuation in full force and
effect of all material contracts and leases of Chauvco and for Chauvco to
consummate the transactions contemplated hereby, except when the failure to
receive such consents or other certificates would not have a Material Adverse
Effect on Chauvco;
(d) Stockholder Approval. The issuance of US Co Common Stock hereunder
and from time to time upon exchange of the Exchangeable Shares shall have been
approved by the US Co stockholders in accordance with the rules of the NYSE and
applicable law;
(e) Chauvco Approvals. This Agreement, the Arrangement and the other
transactions contemplated hereby shall have been approved and adopted by the
Chauvco shareholders in accordance with applicable law and Chauvco's articles
of amalgamation and bylaws, and Chauvco shall not have received on or prior to
the Effective Time notice from the holders of more than 5%
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of the Chauvco Common Shares of their intention to exercise their rights of
dissent under Section 184 of the ABCA;
(f) No Legal Action. No temporary restraining order, preliminary
injunction or permanent injunction or other order preventing the consummation
of the Arrangement shall have been issued by any Canadian or U.S. federal,
provincial or state court and remain in effect, nor shall any proceeding
seeking any of the foregoing be pending. There shall be no order, decree or
ruling by any governmental agency or threat thereof, or any statute, rule,
regulation or order enacted, entered, enforced or deemed applicable to the
Arrangement, which would prohibit or render illegal the transactions
contemplated by this Agreement;
(g) Court Approval. The Court shall have issued its final order
approving the Arrangement in form and substance satisfactory to Chauvco and US
Co (such approvals not to be unreasonably withheld or delayed by Chauvco or US
Co) and reflecting the terms hereof;
(h) Commissions, etc. All necessary orders shall have been obtained
from the Commissions and other relevant United States and Canadian securities
regulatory authorities in connection with the Arrangement. All waiting periods
required by HSR shall have expired with respect to the transactions
contemplated by this Agreement, or early termination with respect thereto shall
have been obtained, without the imposition of any governmental request or order
requiring the sale or disposition or holding separate (through a trust or
otherwise) of particular assets or businesses of US Co or Chauvco. Chauvco
shall have filed all notices and information (if any) required under Part IX of
the Competition Act (Canada) and the applicable waiting periods and any
extensions thereof shall have expired or the parties shall have received an
Advance Ruling Certificate pursuant to Section 102 of the Competition Act
(Canada) setting out that the Director under such Act is satisfied he would not
have sufficient grounds on which to apply for an order in respect of the
Arrangement. The Arrangement shall have received the allowance or approval or
deemed allowance or approval by the responsible Minister under the Investment
Canada Act in respect of the Arrangement, to the extent such allowance or
approval is required, on terms and conditions satisfactory to US Co, acting
reasonably;
(i) SEC Filings. The Forms S-3 and S-4 and the Form F-4, if filed,
shall have been declared effective under the Securities Act and shall not be
the subject of any stop order or proceedings seeking a stop-order and the Joint
Proxy Statement shall on the Closing Date not be subject to any similar
proceedings commenced or threatened by the SEC or the Commissions; and
(j) Certificates and Resolutions. US Co shall have received such other
certificates and resolutions of Chauvco as may be reasonably required in
connection with the consummation of this Agreement.
(k) Material Adverse Effect. There shall have been no event, change or
effect after the date hereof and on or prior to the Effective Date resulting in
a Material Adverse Effect on Chauvco.
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ARTICLE 6
TERMINATION
6.1 TERMINATION
This Agreement may be terminated at any time prior to the Effective
Time, whether before or after approval of the transactions contemplated hereby
by the stockholders of US Co or the shareholders of Chauvco, as follows:
(a) by mutual agreement of Chauvco and US Co;
(b) by Chauvco, in the event of a breach by US Co of any
representation, warranty, covenant or other agreement contained in this
Agreement which (i) would give rise to the failure of a condition set forth in
Section 5.1(a) and (ii) has not been cured within 15 business days after
written notice thereof from Chauvco (except that no cure period shall be
provided for a matter which by its nature cannot be cured and in no event shall
such cure period extend beyond the Termination Date) provided that Chauvco is
not then in material breach (giving effect to any applicable cure periods) of
any representation, warranty, covenant or other agreement contained in this
Agreement;
(c) by US Co., in the event of a breach by Chauvco of any
representation, warranty, covenant or other agreement contained in this
Agreement which (i) would give rise to the failure of a condition set forth in
Section 5.2(a) and (ii) has not been cured within 15 business days after
written notice thereof from US Co (except that no cure period shall be provided
for a matter which by its nature cannot be cured and in no event shall such
cure period extend beyond the Termination Date) provided that US Co is not then
in material breach (giving effect to any applicable cure periods) of any
representation, warranty, covenant or other agreement contained in this
Agreement;
(d) by Chauvco if the stockholders of US Co do not approve the
issuance of US Co Common Stock issuable upon exchange of Exchangeable Shares or
any other matters related to the Plan of Arrangement requiring their approval
at the US Co Stockholders Meeting;
(e) by US Co if the shareholders of Chauvco do not approve the Plan of
Arrangement at the Chauvco Meeting;
(f) by either party, if any of such party's conditions precedent under
Article 5 for Closing (as defined in Section 7.2) the Arrangement shall not
have been satisfied or waived on or before 5:00 p.m., Calgary, Alberta time on
March 31, 1998 (the "Termination Date"), other than as a result of a breach of
this Agreement by the terminating party;
(g) by Chauvco prior to obtaining the approval by the shareholders of
Chauvco of the Plan of Arrangement, if (i) the Board of Directors of Chauvco
shall have determined in good faith, based on the advice of outside counsel,
that it is necessary, in order to comply with its fiduciary duties to Chauvco
or its shareholders under applicable law, to enter into an agreement with
respect to or to consummate a transaction constituting a Superior Proposal,
(ii) Chauvco shall have given notice to US Co advising US Co that Chauvco has
received a Superior Proposal from a third party, specifying the terms and
conditions of such Superior Proposal and that Chauvco intends to terminate this
Agreement in accordance with this Section 6.1(g), and (iii) either (A) US Co
shall not have revised its takeover proposal within five business days after
the date on which such notice is deemed
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to have been given to US Co, or (B) if US Co within such period shall have
revised its takeover proposal, the Board of Directors of Chauvco, after
receiving advice from Chauvco's financial advisors, shall have determined in
its good faith judgment that the third party's Acquisition Transaction is
superior to US Co's revised takeover proposal; provided that Chauvco may not
effect such termination pursuant to this Section 6.1(g) unless Chauvco has
contemporaneously with such termination tendered payment to US Co, or its
designee, of the Termination Fee that is due US Co or its designee pursuant to
Section 6.4(c).
6.2 NOTICE OF TERMINATION
Any termination of this Agreement under Section 6.1 above will be
effective by the delivery of written notice by the terminating party to the
other party hereto.
6.3 EFFECT OF TERMINATION
Subject to Section 6.4, in the event of termination of this Agreement
by either Chauvco or US Co as provided in Section 6.1, this Agreement shall
forthwith become void and have no effect, and there shall be no liability or
obligation on the part of US Co or Chauvco or their respective officers or
directors, except that (i) the provisions of the confidentiality and standstill
agreements dated May 23, 1997 and July 28, 1997, respectively, between Chauvco
and US Co shall survive any such termination and abandonment (the
"Confidentiality Agreement"), and (ii) no party shall be released or relieved
from any liability arising from the breach by such party of any of its
representations, warranties, covenants or agreements as set forth in this
Agreement.
6.4 TERMINATION FEES
Notwithstanding Section 6.3:
(a) if this Agreement is terminated by Chauvco pursuant to Section
6.1(d) as a result of the failure of the stockholders of US Co to approve the
matters contemplated in Section 6.1(d), then US Co shall pay to Chauvco (by
wire transfer or cashier's cheque) a fee of $25 million within two business
days of the delivery of the notice of termination pursuant to Section 6.2.
Chauvco shall not be entitled to receive such payment if, at the time of
delivery of the applicable notice of termination pursuant to Section 6.2,
Chauvco is in material breach of this Agreement;
(b) if this Agreement is terminated by US Co pursuant to Section
6.1(e) as a result of the failure of the shareholders of Chauvco to approve the
matters contemplated in Section 6.l (e), then Chauvco shall pay to US Co (by
wire transfer or cashier's cheque) a fee of $25 million within two business
days of the delivery of the notice of termination pursuant to Section 6.2. US
Co shall not be entitled to receive such payment if, at the time of delivery of
the applicable notice of termination pursuant to Section 6.2, US Co is in
material breach of this Agreement;
(c) if this Agreement is terminated pursuant to Section 6.1(g), then
Chauvco shall pay to US Co (by wire transfer or cashier's cheque) a fee of $40
million concurrently with the delivery of the notice of termination pursuant to
Section 6.2. US Co shall not be entitled to receive such payment if, at the
time of delivery of the applicable notice of termination pursuant to Section
6.2, US Co is in material breach of this Agreement or US Co's stockholders have
disapproved any of the matters contemplated in Section 6.1(d);
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(d) if this Agreement is terminated pursuant to Section 6.1(e) and
within six months of such termination definitive documentation with respect to
an Acquisition Transaction has been entered into or 50% or more of the
outstanding capital shares of Chauvco has been acquired pursuant to a tender
offer made as an Acquisition Transaction, then Chauvco shall pay (by wire
transfer or cashier's cheque), in addition to the termination fee contemplated
in Section 6.4(b), a fee of $15 million contemporaneously with the closing of
such Acquisition Transaction; and
(e) the obligation of the paying party to pay any termination fee set
forth in this Section 6.4 is in lieu of any damages or any other payment which
such party might otherwise be obligated to pay to the receiving party as a
result of any termination for which payment is due under this Section 6.4.
ARTICLE 7
ADDITIONAL AGREEMENTS
US Co and Chauvco each agree to take the following actions after the
execution of this Agreement:
7.1 MEETINGS
Chauvco and US Co shall each duly call a meeting of its stockholders
to be held within 45 days after the SEC has indicated that it has no further
comments on the Joint Proxy Statement for the purpose of (a) in the case of
Chauvco, voting upon the Plan of Arrangement and the transactions contemplated
hereby and thereby, and (b) in the case of US Co, voting upon a proposal to
approve the issuance of such number of shares of US Co Common Stock as are
necessary to consummate the Arrangement and issue upon exchange of Exchangeable
Shares and each shall, subject to Section 4.2(o), through its board of
directors, recommend to their stockholders approval of such matters and shall
coordinate and cooperate with respect to the timing of such meetings.
7.2 THE CLOSING
Subject to the termination of this Agreement as provided in Article 6,
the closing of the transactions contemplated by this Agreement (the "Closing")
will take place at the offices of Xxxxxxx Xxxxx Verchere, Calgary, Alberta,
Canada on a date (the "Closing Date") and at a time to be mutually agreed upon
by the parties, which date shall be no later than the fifth business day after
all conditions to Closing set forth herein shall have been satisfied or waived,
unless another place, time and date is mutually selected by Chauvco and US Co.
7.3 ANCILLARY DOCUMENTS/RESERVATION OF SHARES/SPECIAL VOTING SHARES
(a) Provided all other conditions of this Agreement have been
satisfied or waived, on the Closing Date, the Articles of Arrangement shall be
filed pursuant to Part 15 of the ABCA to give effect to the Plan of
Arrangement.
(b) On the Effective Date:
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(i) US Co shall execute and deliver a Support Agreement
containing the terms and conditions set forth in
Exhibit B hereto, together with such other terms and
conditions as may be agreed to by the parties hereto
acting reasonably; and
(ii) US Co, US Co Sub and the Depositary shall execute
and deliver a Voting and Exchange Trust Agreement
containing the terms and conditions set forth in
Exhibit C hereto, together with such other terms and
conditions as may be agreed to by the parties hereto
acting reasonably.
(c) On or before the Effective Date, US Co will:
(i) reserve for issuance such number of shares of US Co
Common Stock as shall be necessary to give effect to
this agreement plus the exchange of the Exchangeable
Shares; and
(ii) designate a series of its preferred shares as
"Special Voting Stock", such series having the
rights, restrictions, privileges and conditions set
forth in Exhibit E hereto.
7.4 INDEMNIFICATION AND RELATED MATTERS
(a) US Co agrees that all rights to indemnification existing in favor
of the present or former directors and officers of Chauvco (as such) or any of
the Chauvco Subsidiaries or present or former directors and officers (as such)
of Chauvco or any of the Chauvco Subsidiaries serving or who served at
Chauvco's or any of the Chauvco Subsidiaries' request as a director or officer
of another corporation, partnership, joint venture, trust, employee benefit
plan or other enterprise, as provided in Chauvco's charter or bylaws or similar
documents of any of the Chauvco Subsidiaries in effect as of the date hereof
with respect to matters occurring prior to the Effective Time, shall survive
and shall continue in full force and effect and without modification for a
period of not less than the statutes of limitations applicable to such matters.
(b) From and after the Effective Time, US Co shall and shall cause
Chauvco to indemnify and hold harmless to the fullest extent permitted under
the ABCA, each director and officer of US Co Sub, Chauvco or any Chauvco
Subsidiary including, without limitation, officers and directors, serving on or
prior to the date hereof against any costs and expenses (including reasonable
attorney's fees on a solicitor and his own client basis), judgments, fines,
losses, claims and damages and liabilities, and amounts paid in settlement
thereof with the consent of the indemnifying party, in connection with any
claim, action, suit, proceeding or investigation relating to any of the
transactions contemplated hereby or the Arrangement. In the event of any such
claim, action, suit, proceeding or investigation, US Co shall cause Chauvco to
pay the reasonable fees and expenses of counsel in advance of the final
disposition of any such claim, action, suit, proceeding or investigation to the
fullest extent permitted by law subject to the limitations imposed by the ABCA.
Without limiting the foregoing, in the event any such claim, action, suit,
proceeding or investigation is brought against any indemnified parties, (i) the
indemnified parties may retain counsel reasonably satisfactory to US Co and,
subject to limitations imposed by the ABCA, Chauvco shall (or US Co shall cause
Chauvco to) pay all reasonable fees and expenses of such counsel for the
indemnified parties promptly as statements therefor are received; and (ii) US
Co will use all reasonable efforts to assist in the defense
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of such matter; provided, however, that neither Chauvco nor US Co shall be
liable for any settlement effected without its prior written consent. Any
indemnified party wishing to claim indemnification under this section, upon
learning of any such claim, action, suit, proceeding or investigation, shall
notify US Co (but the failure to so notify shall not relieve a party from any
liability which it may have under this section except to the extent such
failure prejudices such party). The indemnified parties as a group may retain
only one law firm in any jurisdiction to represent them with respect to each
such matter unless such counsel determines that there is, under applicable
standards of professional conduct, a conflict on any significant issue between
the positions of any two or more indemnified parties, in which event such
additional counsel may be required to be retained by the indemnified parties.
(c) Subject to limitations imposed by the ABCA, Chauvco shall (or US
Co shall cause Chauvco to) pay all expenses, including attorney's fees on a
solicitor and his own client basis, as the same may be incurred by any
indemnified parties in any action by any indemnified party or parties seeking
to enforce the indemnity or other obligations provided for in this section;
provided, however, that Chauvco will be entitled to reimbursement for any
advances made under this section to any indemnified party who ultimately proves
unsuccessful in enforcing the indemnity as finally determined by a
non-appealable judgment in a court of competent jurisdiction, and payment of
such expenses in advance of the final disposition of the action shall be made
only upon receipt of any undertaking by the indemnified party to reimburse all
amounts advanced if such action ultimately proves unsuccessful.
(d) There shall be maintained in effect for not less than six years
from the Effective Time the current policies of the directors' and officers'
liability insurance maintained by Chauvco in the amounts and with the coverages
in effect on the date of this Agreement. US Co may, however, substitute
therefor policies of at least the same coverage containing terms and conditions
which are no less advantageous, provided that such substitution shall not
result in any gaps or lapses in coverages with respect to matters occurring
prior to the Effective Time.
(e) This section, which shall survive the consummation of this
Agreement and the Arrangement, is intended to benefit each person or entity
indemnified hereunder.
7.5 LOCK-UP AGREEMENTS
Concurrently with the execution of this Agreement, Chauvco shall cause
those shareholders of Chauvco listed in Exhibit E hereto and US Co shall cause
those shareholders of US Co listed in Exhibit E hereto to execute and deliver
to the other lock-up agreements in such forms as may be mutually agreed by the
parties, acting reasonably.
7.6 EMPLOYEE MATTERS
Subject to applicable law, US Co, the US Co Subsidiaries, and the
employee benefit plans and programs ("US Co Benefit Plans") of US Co shall
recognize the number of years of service currently recognized by Chauvco of
each individual employed by Chauvco or a Chauvco Subsidiary immediately prior
to the Effective Date, provided nothing in this provision shall require US Co
to amend any of the US Co Benefit Plans where such amendment would require
regulatory filings or approvals.
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7.7 ANCILLARY TRANSACTIONS - GABON AND OTHER INTERNATIONAL PROPERTIES
It is acknowledged and agreed that:
(a) Chauvco shall cause the entities referred to in Sections 1.1 (a)
through (c) to complete the transactions contemplated therein including,
without limitation, the subscription for the CRI Shares for an aggregate cash
subscription price of US$5,000,000 plus the fair market value of the Gabon
Securities on the Effective Date, and the transfer of the Gabon Securities from
CR to CRI for a cash purchase price equal to the fair market value of the Gabon
Securities on the Effective Date leaving US$5,000,000 as cash in CRI;
(b) Chauvco has determined that the fair market value of the Gabon
Securities on the date hereof is approximately US$60,000,000 relying on (i) the
bidding process in connection with the sale of Chauvco, (ii) the reserve and
evaluation reports prepared by Chauvco's independent engineers, (iii) the
review and recommendation of Chauvco's senior management which established a
range of values at various discount factors and an assessment of the
exploration and development potential of the applicable properties, and (iv) an
independent review conducted to confirm and support the allocation to the CRI
Shares by Chauvco of a portion of the consideration received by the Chauvco
Shareholders. The fair market value of the Gabon Securities on the Effective
Date shall be revalued and determined by Chauvco using consistent principles;
(c) notwithstanding the determination of the fair market value of the
Gabon Securities on the Effective Date under Section 7.7(b), unless the parties
otherwise agree, the amount which will be payable with respect to such value
may not exceed US$100,000,000;
(d) the purchase and sale agreement between CR and CRI with respect to
the transfer of CR's interest in the Gabon Securities to CRI shall be in a form
mutually acceptable to Chauvco and US Co and shall: (i) provide that CRI will
assume and be responsible for and will indemnify, defend and hold CR, Chauvco
and US Co Sub harmless from and against any liabilities CR, Chauvco or US Co
Sub may be or become subject to if any taxing authority challenges the value
placed on the Gabon Securities or the corresponding value of the CRI Shares
transferred to the holders of Chauvco Common Shares and Optionholders; (ii)
provide that CRI will assume all liabilities with respect to the underlying
operations of the Gabon Subsidiaries being purchased; (iii) provide that CRI
will assume and be responsible for and will indemnify, defend and hold CR,
Chauvco and US Co Sub harmless from and against any liabilities CR, Chauvco and
US Co Sub may be or become subject to which relate to the assets, business,
operations, debts or liabilities of CR and Chauvco which are being purchased by
CRI and with respect to the transactions contemplated in this Section 7.7
(provided that with respect to tax matters, the extent of the indemnity shall
be limited to that set out in (i)); (iv) provide that CR and Chauvco will
assume and be responsible for and will indemnify, defend and hold CRI harmless
from and against any liabilities CRI may be or become subject to which relate
to the assets, business, operations, debts or liabilities of CR and Chauvco
which are not being purchased by CRI; (v) provide that Chauvco, subject to
confidentiality provisions, will retain copies of the books and records of such
companies; and (vi) provide that the Chauvco name shall not be used in
connection with, and CRI shall not engage in, any oil and gas operations in the
Western Canadian sedimentary basin for a period of one (1) year from the
Effective Date; and (vii) provide that CRI will use its best efforts to have
Chauvco released from any and all guarantees Chauvco has given to Gabonese
Government;
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(e) Chauvco will provide an additional $13,500,000 of funding into the
Gabon Subsidiaries through CR between the date hereof and the Effective Date
which shall remain in the Gabon Subsidiaries for their operations and shall not
be repaid to CR except to the extent that the same may be reflected in the
determination of the fair market value of the Gabon Securities on the Effective
Date pursuant to Section 7.7(b);
(f) Chauvco shall be responsible for all costs and expenses
(including, without limitation, costs related to establishment and promotion of
CRI and legal fees) incurred on or prior to the Effective Date to implement the
transactions contemplated in this Section 7.7;
(g) CRI shall on or prior to the Effective Date, be provided with
copies of all confidentiality agreements entered into by Chauvco in connection
with the strategic alternatives review process of Chauvco; and
(h) the representations and warranties of Chauvco contained in this
Agreement shall be read as if the transactions in this Section 7.7 shall have
already been completed.
7.8 ANCILLARY TRANSACTIONS - ALLIANCE
It is acknowledged and agreed that:
(a) on or prior to the Effective Date, Chauvco shall enter into a
transaction causing all of its rights and assets (including, without
limitation, copies of all books and records related thereto) relating to the
Alliance pipeline project (the "APP") to be distributed to or through an entity
(the "Alliance Entity") for a cash payment to Chauvco from the Alliance Entity
of $13,500,000 to be made on or prior to the Effective Date;
(b) Chauvco shall be entitled to provide funding and commitments in
respect of the regular capital funding and commitments of the APP between the
date hereof and Closing provided that such funding shall be repaid, and such
commitments shall be assumed, by the Alliance Entity on or before the Effective
Time. Chauvco shall not be entitled to commit to provide any additional funding
to the APP other than in respect of such regularly scheduled capital
commitments (and shall notify US Co as and when such funding or commitments are
provided) and, in particular, Chauvco shall not be entitled to commit to the
approximate $260 million equity financing commitment due in October, 1997;
(c) the Alliance Entity shall be responsible for all costs and
expenses (including, without limitation, costs related to establishment and
promotion of the Alliance Entity) incurred on or prior to the Effective Date to
implement the transactions contemplated in this Section 7.8;
(d) the purchase and sale agreement between the Alliance Entity and
Chauvco with respect to the transfer of Chauvco's interest in the APP to the
Alliance Entity will be in a form mutually acceptable to Chauvco and US Co and
provide that (i) the Alliance Entity will assume and be responsible for and
will indemnify, defend and hold harmless Chauvco from and against any
liabilities Chauvco may be or become subject, including any tax liability, to
which relate in any manner whatever to the transfer of Chauvco's interest in
the APP to the Alliance Entity and with respect to the transactions
contemplated in this Section 7.8, (ii) Chauvco will assume and be responsible
for and will indemnify, defend and hold harmless the Alliance Entity from and
against
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any liabilities the Alliance Entity may be or become subject to which relate to
the assets, business, debts and liabilities of Chauvco unrelated to the APP,
and (iii) Chauvco, subject to confidentiality provisions, will retain copies of
the books and records relating to Chauvco's interest in the APP; and
(e) the representations and warranties of Chauvco contained in this
Agreement shall be read as if the transactions in this Section 7.8 shall have
already been completed.
7.9 CHAUVCO TRADEMARKS AND TRADE NAMES
US Co covenants, whenever so requested by CRI, to execute or cause
Chauvco to execute any and all applications, assignments or other instruments
which CRI shall deem necessary in order to apply for and obtain registered
proprietary rights for the trademarks, trade names and domain name to be
conveyed to CRI pursuant to the Plan of Arrangement and in order to assign and
convey to CRI the sole and exclusive right, title and interest in and to the
said trademarks, trade names and domain name.
7.10 QUALIFICATION OF CRI SHARES
On or before the Effective Date, the CRI Shares shall be qualified for
distribution by prospectus which will be filed with the securities commissions
in each of the provinces of Canada. Chauvco will sign the prospectus as a
promoter pursuant to applicable Canadian securities legislation. Chauvco shall
cause CRI to make an application to the TSE to list the CRI Shares on such
exchange. Alternatively, the CRI Shares shall be issued pursuant to an
exemption from prospectus requirements.
ARTICLE 8
MISCELLANEOUS
8.1 NO SURVIVAL OF REPRESENTATIONS AND WARRANTIES
All representations and warranties of the parties contained in this
Agreement will expire and be of no further force or effect at the Closing. All
agreements and covenants of the parties shall survive the Closing, except as
otherwise set forth in this Agreement.
8.2 NOTICES
All notices and other communications hereunder shall be in writing and
shall be deemed given if delivered personally, by facsimile (receipt confirmed)
or mailed by registered or certified mail (return receipt requested) to the
parties at the following addresses (or at such other address for a party as
shall be specified by like notice):
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(a) if to US Co to:
Pioneer Natural Resources Company
0000 Xxxxxxxx Xxxxxx Xxxx
0000 X. X'Xxxxxx Xxxx.
Xxxxxx, Xxxxx 00000-0000
Attention: General Counsel
Facsimile No. (000) 000-0000
with a copy to Xxxxxx & Xxxxxx L.L.P.
3700 Xxxxxxxx Xxxx Center
0000 Xxxx Xxxxxx
Xxxxxx, Xxxxx 00000-0000
Attention: Xxxxxxx X. Xxxxxxx
Facsimile No. (000) 000-0000
and MacKimmie Xxxxxxxx
000, 000 - 0xx Xxxxxx X.X.
Xxxxxxx, Xxxxxxx
X0X 0X0
Attention: Xxxx XxxXxxxxxxxx
Facsimile No. (000) 000-0000
(b) if to Chauvco to:
Chauvco Resources Ltd.
0000, 000 - 0xx Xxxxxx X.X.
Xxxxxxx, Xxxxxxx
X0X 0X0
Attention: President
Facsimile No. (000) 000-0000
with a copy to Xxxxxxx Xxxxx Verchere
0000 Xxxxxxx Xxxx Xxxx
000 0xx Xxxxxx X.X.
Xxxxxxx, Xxxxxxx
X0X 0X0
Attention: Xxxxxx X. Xxxxxxx
Facsimile No. (000) 000-0000
and Xxxxx & Xxxxx L.L.P.
Xxx Xxxxx Xxxxx
000 Xxxxxxxxx
Xxxxxxx, Xxxxx
00000-0000
Attention: C. Xxxxxxx Xxxxxx
Facsimile No. (000) 000-0000
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8.3 INTERPRETATION
When a reference is made in this Agreement to Sections or Exhibits,
such reference shall be to a Section or Exhibit to this Agreement unless
otherwise indicated. The words "include," "includes" and "including" when used
therein shall be deemed in each case to be followed by the words "without
limitation." The headings contained in this Agreement are for reference
purposes only and shall not affect in any way the meaning or interpretation of
this Agreement.
8.4 COUNTERPARTS
This Agreement may be executed in one or more counterparts, all of
which shall be considered one and the same agreement and shall become effective
when one or more counterparts have been signed by each of the parties and
delivered to each of the other parties, it being understood that all parties
need not sign the same counterpart.
8.5 MISCELLANEOUS
This Agreement, each of the agreements attached as an exhibit hereto
and any other documents referred to herein or contemplated hereby (a)
constitute the entire agreement among the parties with respect to the subject
matter hereof and supersede all prior agreements and understandings, both
written and oral, among the parties with respect to the subject matter hereof
other than the confidentiality and standstill agreements dated May 23, 1997 and
July 28, 1997, respectively, between Chauvco and US Co which shall continue in
full force and effect; (b) is not intended to confer upon any other person any
rights or remedies hereunder (except as otherwise expressly provided herein and
except that Section 7.4 is for the benefit of Chauvco's directors and officers,
Sections 1.1(e) and (f) are for the benefit of holders of Chauvco Options,
Section 7.6 is for the benefit of the Chauvco Employees, Section 7.7 is for the
benefit of CRI and Section 7.8 is for the benefit of the Alliance Entity (and
said sections are intended to confer rights on such persons); and (c) shall not
be assigned by operation of law or otherwise except as otherwise specifically
provided.
8.6 GOVERNING LAW
This Agreement shall be governed in all respects, including validity,
interpretation and effect, by the laws of the Province of Alberta and the
federal laws of Canada applicable therein.
8.7 AMENDMENT AND WAIVERS
Any term or provision of this Agreement may be amended, and the
observance of any term of this Agreement may be waived (either generally or in
a particular instance and either retroactively or prospectively) only by a
writing signed by the party to be bound thereby. The waiver by a party of any
breach hereof or default in the performance hereof will not be deemed to
constitute a waiver of any other default or any succeeding breach or default.
The Agreement may be amended by the parties hereto at any time before or after
approval of the Chauvco shareholders or US Co stockholders, but, after such
approval, no amendment will be made which by applicable law requires the
further approval of the Chauvco shareholders or US Co stockholders without
obtaining such further approval.
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8.8 ASSIGNMENT; BINDING UPON SUCCESSORS AND ASSIGNS
Neither party hereto may assign any of its rights or obligations
hereunder without the prior written consent of the other party hereto. This
Agreement will be binding upon and inure to the benefit of the parties hereto
and their respective successors and permitted assigns.
8.9 SEVERABILITY
If any provision of this Agreement, or the application thereof, will
for any reason and to any extent be invalid or unenforceable, the remainder of
this Agreement and application of such provision to other persons or
circumstances will be interpreted so as reasonably to effect the intent of the
parties hereto. The parties further agree to replace such void or unenforceable
provision of this Agreement with a valid and enforceable provision that will
achieve, to the greatest extend possible, the economic, business and other
purpose of the void and unenforceable provision.
8.10 OTHER REMEDIES
The parties agree that irreparable damage would occur and that they
would not have any adequate remedy at law in the event that any of the
provisions of this Agreement were not performed in accordance with their
specific terms or were otherwise breached. It is accordingly agreed that the
parties shall be entitled to an injunction or injunctions to prevent breaches
of this Agreement (without the requirement of posting a bond) and to enforce
specifically the terms and provisions of this Agreement in any court located in
Alberta, this being in addition to any other remedy to which they are entitled
at law or in equity.
8.11 NO JOINT VENTURE
Nothing contained in this Agreement will be deemed or construed as
creating a joint venture or partnership between any of the parties. No party is
by virtue of this Agreement authorized as an agent, employee or legal
representative of any other party. No party will have the power to control the
activities and operations of any other and the status of each is, and at all
times, will continue to be, that of an independent contractor with respect to
the other. No party will have any power or authority to bind or commit any
other. No party will hold itself out as having any authority or relationship in
contravention of this section.
8.12 FURTHER ASSURANCES
Each party agrees to cooperate fully with the other party, to act
reasonably in respect of, and to execute, such further instruments, documents
and agreements and to give such further written assurances as may be reasonably
requested by any other party to evidence and select the transactions described
herein and contemplated hereby and to carry into effect the intents and
purposes of this Agreement.
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8.13 EXPENSES
Except as otherwise set forth in this Agreement, each party will bear
its respective expenses and legal fees incurred with respect to this Agreement
and the transactions contemplated hereby.
IN WITNESS WHEREOF, US Co and Chauvco have caused this Agreement to be
signed by their respective officers thereunder duly authorized, all as of the
date first written above.
PIONEER NATURAL
RESOURCES COMPANY
Per: /s/ Xxxxx X. Xxxxxxxxx
-------------------------
Per: /s/ Xxxx X. Xxxxxxx
-------------------------
CHAUVCO RESOURCES LTD.
Per: /s/ Xxx X. Xxxxxxxx
-------------------------
Per: /s/ X. X. Xxxxxxx
-------------------------
