Exhibit 2.1
COMBINATION AGREEMENT
CALPINE CORPORATION
AND
ENCAL ENERGY LTD.
DATED EFFECTIVE AS OF FEBRUARY 7, 2001
TABLE OF CONTENTS
Page
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COMBINATION AGREEMENT................................................................ 1
RECITALS ................................................................... 1
ARTICLE 1 GENERAL............................................................ 1
1.1 Plan of Arrangement................................................ 1
1.2 Exchange Ratio..................................................... 2
1.3 Dissenting Shares.................................................. 2
1.4 Other Effects of the Arrangement................................... 2
1.5 Proxy Circular; Registration Statements............................ 2
1.6 Material Adverse Effect............................................ 4
1.7 Currency........................................................... 4
1.8 CCo Sub............................................................ 4
1.9 Exhibits........................................................... 4
ARTICLE 2 REPRESENTATIONS AND WARRANTIES OF ECO.............................. 5
2.1 Organization and Standing.......................................... 5
2.2 Agreement Authorized and its Effect on Other Obligations........... 5
2.3 Governmental and Third Party Consents.............................. 6
2.4 Capitalization..................................................... 7
2.5 Securities Reports and Financial Statements, Books and Records..... 8
2.6 Liabilities........................................................ 9
2.7 Information Supplied............................................... 9
2.8 No Defaults........................................................ 9
2.9 Litigation; Investigations......................................... 9
2.10 Absence of Certain Changes and Events.............................. 10
2.11 Additional ECo Information......................................... 10
2.12 Certain Agreements................................................. 11
2.13 Employee Benefit Plans............................................. 11
2.14 Intellectual Property.............................................. 12
2.15 Title to Properties................................................ 12
2.16 Environmental Matters.............................................. 13
2.17 Compliance With Other Laws......................................... 14
2.18 Taxes.............................................................. 14
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2.19 Vote Required..................................................... 14
2.20 Brokers and Finders............................................... 15
2.21 Disclosure........................................................ 15
2.22 Fairness Opinion.................................................. 15
2.23 Restrictions on Business Activities............................... 15
2.24 Books and Records................................................. 15
2.25 Pooling Matters................................................... 16
2.26 Engineering Report................................................ 16
2.27 United States Operations.......................................... 16
2.28 Insurance......................................................... 16
2.29 Operations........................................................ 17
ARTICLE 3 REPRESENTATIONS AND WARRANTIES OF CCO............................. 17
3.1 Organization and Standing......................................... 17
3.2 Agreement Authorized and its Effect on Other Obligations.......... 17
3.3 Governmental and Third Party Consents............................. 18
3.4 Capitalization.................................................... 19
3.5 Securities Reports and Financial Statements, Books and Records.... 20
3.7 Information Supplied.............................................. 20
3.8 No Defaults....................................................... 21
3.9 Litigation; Investigations........................................ 21
3.10 Absence of Certain Changes and Events............................. 21
3.11 Compliance With Laws.............................................. 21
3.12 Brokers and Finders............................................... 21
3.13 Disclosure........................................................ 22
3.14 CCo Sub........................................................... 22
3.15 Pooling Matters................................................... 22
3.16 Ownership of ECo Shares........................................... 22
3.17 Title to Properties............................................... 22
3.18 Environmental Matters............................................. 23
3.19 Employee Benefit Plans............................................ 23
ARTICLE 4 OBLIGATIONS PENDING EFFECTIVE DATE................................ 24
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4.1 Agreements of CCo and ECo..................................... 24
4.2 Additional Agreements of ECo.................................. 25
4.3 Additional Agreements of CCo.................................. 29
4.4 Public Announcements.......................................... 30
4.5 Comfort Letters............................................... 30
ARTICLE 5 CONDITIONS PRECEDENT TO OBLIGATIONS........................... 31
5.1 Conditions Precedent to Obligations of Each Party............. 31
5.2 Conditions Precedent to Obligations of ECo.................... 32
5.3 Conditions Precedent to Obligations of CCo.................... 33
5.4 Pooling Accounting............................................ 34
ARTICLE 6 TERMINATION................................................... 35
6.1 Termination................................................... 35
6.2 Notice of Termination......................................... 36
6.3 Effect of Termination......................................... 37
6.4 Termination Fee............................................... 37
ARTICLE 7 ADDITIONAL AGREEMENTS......................................... 38
7.1 Meetings...................................................... 38
7.2 The Closing................................................... 38
7.3 Ancillary Documents/Reservation of Shares..................... 38
7.4 Exchange of Options........................................... 39
7.5 Indemnification and Related Matters........................... 39
7.6 Affiliate Agreements.......................................... 41
7.7 Employment Agreements......................................... 41
ARTICLE 8 MISCELLANEOUS................................................. 42
8.1 No Survival of Representations and Warranties................. 42
8.2 Notices....................................................... 42
8.3 Interpretation................................................ 42
8.4 Severability.................................................. 42
8.5 Counterparts.................................................. 43
8.6 Miscellaneous................................................. 43
8.7 Governing Law................................................. 43
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8.8 Amendment and Waivers......................................... 43
8.9 Expenses...................................................... 43
8.10 Further Assurances............................................ 44
8.11 U.S. Taxation of Arrangement.................................. 44
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COMBINATION AGREEMENT
THIS COMBINATION AGREEMENT (this "Agreement") is entered into effective
as of February 7, 2001, between Calpine Corporation, a Delaware corporation
("CCo"), and Encal Energy Ltd., an Alberta corporation ("ECo").
RECITALS
WHEREAS, the respective boards of directors of CCo and ECo each deem it
advisable and in the best interests of their respective stockholders to combine
their respective businesses by CCo, through CCo Sub (as hereinafter defined),
acquiring common shares of ECo pursuant to the Plan of Arrangement (as
hereinafter defined).
WHEREAS, in furtherance of such combination, the respective boards of
directors of CCo and ECo have approved the transactions contemplated by this
Agreement, and the board of directors of ECo has agreed to submit the Plan of
Arrangement and the other transactions contemplated hereby to its shareholders
and optionholders (together, "securityholders") and the Court of Queen's Bench
of Alberta (the "Court") for approval.
WHEREAS, it is intended that the transactions contemplated hereby will
be treated as a "pooling of interests" under United States generally accepted
accounting principles.
NOW, THEREFORE, in consideration of the premises and of the
representations, warranties, covenants and agreements herein contained, the
parties hereto, intending to be legally bound, agree as follows:
ARTICLE 1
GENERAL
1.1 PLAN OF ARRANGEMENT
As promptly as practicable after the Proxy Circular (as hereinafter
defined) is prepared, ECo will apply to the Court pursuant to Section 186 of the
Business Corporations Act (Alberta) (the "ABCA") for an interim order in form
and substance reasonably satisfactory to CCo (the "Interim Order") providing
for, among other things, the calling and holding of the ECo Shareholders Meeting
(as hereinafter defined) for the purpose of considering and, if deemed
advisable, approving the arrangement (the "Arrangement") under Section 186 of
the ABCA and pursuant to this Agreement and the Plan of Arrangement
substantially in the form of Exhibit A (the "Plan of Arrangement"). If the ECo
securityholders approve the Arrangement, ECo 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"). At 12:01 a.m. (the "Effective Time") on the date (the "Effective Date")
shown on the articles of arrangement filed with the Registrar under the ABCA
(which articles of arrangement will not be filed with the Registrar under the
ABCA during any 15 business day cure period referred to in Section 6.1 (b) or
(c) hereof) giving effect to the Arrangement and other transactions set out in
clauses (a) through (d), inclusive, of Section 2.1 of the Plan of Arrangement,
the Arrangement and such other transactions shall occur and shall be deemed to
occur in the order set out therein without any further act or formality.
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1.2 EXCHANGE RATIO
(a) Pursuant, and subject, to the Plan of Arrangement, each of the
outstanding common shares of ECo will be exchanged for a number
of Exchangeable Shares (as defined in the Plan of Arrangement)
equal to Cdn. $12.00 divided by the CCo Average Price (as defined
in the Plan of Arrangement). This number will be determined by
the parties based on the foregoing formula prior to the Effective
Time and will, before the articles of arrangement are filed with
the Registrar under the ABCA, be inserted in the filed copy of
the Plan of Arrangement in place of the "bullet" and the "Note to
Draft" in the definition of "Exchange Ratio" in the Plan of
Arrangement attached hereto as Exhibit A.
(b) The Exchange Ratio (as defined in the Plan of Arrangement) shall
be adjusted to reflect fully the effect of any stock split,
reverse stock split, dividend (including any dividend or
distribution of cash, property, stock or securities convertible
into CCo Common Stock (as defined in the Plan of Arrangement) or
ECo Common Shares (as defined in the Plan of Arrangement)),
merger, reorganization, recapitalization or other like change
with respect to CCo Common Stock or ECo Common Shares occurring
after the date hereof and prior to the Effective Time.
(c) Options to purchase ECo Common Shares will be treated in the
manner described in the Plan of Arrangement.
1.3 DISSENTING SHARES
Holders of ECo Common Shares and options to acquire ECo Common Shares
("ECo Options") 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" when referring
exclusively to ECo Shareholders). ECo shall give CCo (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 ECo and (ii) the
opportunity to participate in all negotiations and proceedings with respect to
such rights. Without the prior written consent of CCo, except as required by
applicable law, ECo shall not make any payment with respect to any such rights
or offer to settle or settle any such rights.
1.4 OTHER EFFECTS OF THE ARRANGEMENT
At the Effective Time: (a) each ECo Common Share and each ECo Option
outstanding immediately prior to the Effective Time will be exchanged as
provided in the Plan of Arrangement; and (b) the Arrangement will, from and
after the Effective Time, have all of the effects provided by applicable law,
including the ABCA.
1.5 PROXY CIRCULAR; REGISTRATION STATEMENTS
(a) As promptly as practicable after execution of this Agreement, CCo
and ECo shall prepare a management information circular (the
"Proxy Circular") of ECo with respect to the meeting of
securityholders of ECo relating to the Arrangement and
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the approval of certain matters in connection therewith (the "ECo
Shareholders Meeting"). As promptly as practicable after the
Proxy Circular is prepared and the Interim Order granted, ECo
shall cause the Proxy Circular to be mailed to each of ECo's
securityholders entitled to vote at the ECo Shareholders Meeting.
As promptly as practicable, CCo shall prepare and file (i) a
registration statement on Form S-3 (the "S-3 Registration
Statement") with the United States Securities and Exchange
Commission (the "SEC") to register the CCo Common Stock to be
issued from time to time after the Effective Time upon exchange
of the exchangeable shares to be issued by CCo Sub (as defined
hereafter) as contemplated in the Plan of Arrangement (the
"Exchangeable Shares") and CCo shall use its reasonable best
efforts to cause the S-3 Registration Statement to become
effective prior to the Closing, and (ii) a registration statement
on Form S-8 (the "S-8 Registration Statement" and together with
the S-3 Registration Statement, the "Registration Statements")
with the SEC to register the CCo Common Stock to be issued from
time to time after the Effective Time upon exercise of New
Options (as defined hereafter). If such Registration Statements
become effective, CCo will use its reasonable best efforts to
maintain the effectiveness of the S-3 Registration Statement for
so long as any Exchangeable Shares remain outstanding and the S-8
Registration Statement for so long as any New Options remain
outstanding or, in each case, until such earlier time as CCo
determines to be sufficient on the written advice of its outside
counsel.
(b) Each party shall promptly furnish to the other party all
information concerning such party and its securityholders as may
be reasonably required in connection with any action contemplated
by this Section 1.5. The Proxy Circular and the Registration
Statements shall comply in all material respects with all
applicable requirements of law. Whenever any event occurs which
should, in the opinion of CCo, be set forth in an amendment or
supplement to a Registration Statement, ECo shall promptly
provide information reasonably requested by CCo to enable CCo to
file with the SEC such amendment or supplement. Whenever any
event occurs which should, in the opinion of ECo, be set forth in
an amendment or supplement to the Proxy Circular, CCo shall
promptly provide information reasonably requested by ECo to
enable ECo to prepare and file such amendment or supplement.
(c) CCo and ECo 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 CCo Common
Stock and the Arrangement; provided, however, that with respect
to any such laws, neither CCo nor ECo 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 CCo Common Stock or the issuance of the
Exchangeable Shares.
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1.6 MATERIAL ADVERSE EFFECT
In this Agreement, the term "Material Adverse Effect" used with respect
to any party means any event, change or effect that is or would reasonably be
expected to be materially adverse to the financial condition, operations,
assets, liabilities, or business of such party and its subsidiaries, taken as a
whole, provided that:
(a) a Material Adverse Effect shall not include any adverse effect
resulting from (i) any decline in crude oil, natural gas, gas
liquids or electrical power prices on a current or forward basis,
(ii) changes in general economic, financial, currency exchange,
securities or commodity market conditions in the United States or
elsewhere, or (iii) the drilling, completion or testing after the
date hereof of any xxxxx, where the drilling of such xxxxx
commenced after January 1, 2001, establishing that any such xxxxx
or the related prospects are not commercially viable or are less
successful than anticipated by ECo; and
(b) a Material Adverse Effect shall, notwithstanding (a) above,
include a change in law or regulation or in the application of
law or regulation that is or would reasonably be expected to be
materially adverse as aforesaid.
1.7 CURRENCY
Unless otherwise specified, all references in this Agreement to
"dollars" or "$" shall mean United States dollars.
1.8 CCO SUB
(a) On or prior to the Effective Date, CCo shall cause a new or,
subject to the consent of ECo, not to be unreasonably withheld,
an existing corporation under the ABCA ("CCo Sub") to include the
following provisions in its articles of incorporation:
(i) a class of exchangeable shares (the "Exchangeable
Shares"), unlimited in number and having the terms and
conditions set forth in Exhibit B; and
(ii) those other provisions set forth in Exhibit B.
(b) CCo shall cause CCo Sub to complete the transactions contemplated
herein.
1.9 EXHIBITS
The following Exhibits attached hereto are incorporated herein by
reference:
(a) Exhibit A - Plan of Arrangement;
(b) Exhibit B - Exchangeable Share Provisions and other provisions to be
included in the Articles of Incorporation of CCo Sub;
(c) Exhibit C - Support Agreement;
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(d) Exhibit D - Voting and Exchange Trust Agreement;
(e) Exhibit E - ECo Affiliates Agreement; and
(f) Exhibit F - CCo Affiliates Agreement.
ARTICLE 2
REPRESENTATIONS AND WARRANTIES OF ECO
Except as set forth in a letter dated the date of this Agreement and
delivered by ECo to CCo concurrently herewith (the "ECo Disclosure Letter"), ECo
hereby represents and warrants to, and agrees with, CCo that:
2.1 ORGANIZATION AND STANDING
ECo and each body corporate, partnership, joint venture, 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 ECo (the "ECo Subsidiaries"), is an
entity duly organized, validly existing and in good standing under the laws of
the jurisdiction of its incorporation or organization, 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 ECo. The ECo Disclosure Letter sets
forth a complete list, as at the date hereof, of the ECo Subsidiaries and the
percentage of each subsidiary's outstanding capital stock or other ownership
interest owned by ECo or another ECo Subsidiary.
2.2 AGREEMENT AUTHORIZED AND ITS EFFECT ON OTHER OBLIGATIONS
(a) ECo has all requisite corporate power and authority to enter into
this Agreement and to perform its obligations hereunder and,
subject to approval of ECo's securityholders and the Court 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 ECo and, subject to approval of
ECo's securityholders and the Court as provided in this
Agreement, the consummation by ECo of the Arrangement and the
other transactions contemplated hereby have been unanimously
approved by the board of directors of ECo and have been duly
authorized by all other necessary corporate action on the part of
ECo. This Agreement has been duly executed and delivered by ECo
and is a valid and binding obligation of ECo, 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, (ii) general equitable principles, and (iii)
the qualifications that the consummation of the Arrangement is
subject to
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approval of ECo's securityholders and the Court as provided in
this Agreement and that Alberta courts will only render monetary
judgements expressed in Canadian dollars.
(b) Neither the execution, delivery or performance of this Agreement
or the Arrangement by ECo, nor the consummation of the
transactions contemplated hereby or thereby by ECo nor compliance
with the provisions hereof or thereof by ECo will: (i) conflict
with, or result in any violations of, the articles of
amalgamation or bylaws of ECo or any equivalent document of any
of the ECo Subsidiaries; or (ii) result in any breach of or cause
a default (with or without notice or lapse of time, or both)
under, give rise to a right of termination, amendment,
cancellation or acceleration of any obligation contained in, or
the loss of any benefit or the incurrence of any cost (including,
but not limited to, rentals, royalties, excess royalty,
overriding royalty interests, production payments, pipeline and
production imbalances and penalties, governmental authority
curtailment of hydrocarbon production and seismic data transfer
fees) under, or result in the creation of any lien, charge,
mortgage, security interest, option, preferential purchase right
or other right or interest of any other person (collectively, an
"Encumbrance") upon any of the properties or assets of ECo or any
of the ECo Subsidiaries under, any term, condition or provision
of any loan or credit agreement, note, bond, mortgage, indenture,
lease or other agreement, judgment, order, decree, statute, law,
ordinance, rule or regulation applicable to ECo or any of the ECo
Subsidiaries or their respective properties or assets, other than
any such breaches, defaults, rights, losses, or Encumbrances
which, individually or in the aggregate, would not have a
Material Adverse Effect on ECo.
2.3 GOVERNMENTAL AND THIRD PARTY CONSENTS
(a) 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 ECo or any of the ECo 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"), the Court and the
mailing to securityholders of ECo of the Proxy Circular relating
to the ECo Shareholders Meeting; (ii) the furnishing to the SEC
of such reports and information under 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 any
other applicable Canadian or United States federal, provincial or
state securities laws and the rules of the NYSE or The Toronto
Stock Exchange
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("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); (vii) such notice, filings, orders and
approvals as may be necessary under the Public Utilities Board
Act (Alberta), Gas Utilities Act (Alberta) or similar legislation
in other applicable provinces; and (viii) where the failure to
obtain such consents, approvals, etc., would not prevent or delay
the consummation of the Arrangement or otherwise prevent ECo from
performing its obligations under this Agreement and would not
reasonably be expected to have a Material Adverse Effect on ECo.
(b) Other than as contemplated by Section 2.3(a), no consents,
assignments, waivers, authorizations or other certificates from
third parties are necessary or required in connection with the
transactions contemplated hereby to provide for the continuation
in full force and effect of all of ECo's material contracts or
leases or for ECo 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 ECo.
2.4 CAPITALIZATION
(a) The authorized capital of ECo consists of an unlimited number of
common shares ("ECo Common Shares"), an unlimited number of Class
A preferred shares issuable in series and an unlimited number of
Class B preferred shares issuable in series (collectively, the
"Preferred Shares"). As of February 6, 2001, 109,857,279 ECo
Common Shares were issued and outstanding and no Preferred Shares
are issued and outstanding. As of February 6, 2001, an aggregate
of 7,294,981 ECo Common Shares were reserved for issuance
pursuant to outstanding ECo Options granted under the Stock
Option Plan of ECo (the "ECo Option Plan") and, as at such date,
no other ECo Shares are reserved for issuance pursuant to any
outstanding rights or options and no Preferred Shares are
reserved for issuance. The board of directors of ECo will not
take any action to amend or to cause the early vesting of any of
the ECo Options other than in accordance with pre-existing rights
of the holders thereof. All of the issued and outstanding ECo
Common Shares have been duly authorized and validly issued, are
fully paid and non-assessable, were not issued in violation of
the terms of any agreement or other understanding binding upon
ECo and were issued in compliance with all applicable charter
documents of ECo and all applicable federal, provincial and
foreign securities laws, rules and regulations. There are, and
have been, no preemptive rights with respect to the issuance of
the ECo Common Shares or any other capital stock of ECo.
(b) Other than as set forth above, there are no outstanding
subscriptions, options, warrants, convertible securities, calls,
commitments, agreements or rights (contingent or otherwise) of
any character to purchase or otherwise acquire from ECo any
shares of, or any securities convertible into, the capital stock
of ECo.
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(c) ECo does not have a shareholders rights protection plan or
similar plan or agreement.
2.5 SECURITIES REPORTS AND FINANCIAL STATEMENTS, BOOKS AND RECORDS
(a) ECo has filed all forms, reports, annual reports and documents
with the Commissions required to be filed by it pursuant to
relevant Canadian securities statutes, regulations, policies and
rules (collectively, the "ECo Canadian 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 ECo Canadian 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
ECo contained in the ECo Canadian 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 in all
material respects (subject, in the case of the unaudited
statements, to normal, year-end audit adjustments) the
consolidated financial position of ECo and its consolidated ECo
Subsidiaries as at the respective dates thereof and the
consolidated results of their operations and cash flows for the
respective periods then ended.
(b) ECo has filed all annual and quarterly reports and (except for
any immaterial matters) all other forms, reports and documents
with the SEC required to be filed by it pursuant to relevant
United States securities statutes, regulations, policies and
rules (collectively, the "ECo United States Securities Reports";
and together with the ECo Canadian Securities Reports, the "ECo
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 ECo United States
Securities Reports, at the time filed or as subsequently amended
or supplemented, 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 ECo contained
in the ECo United States Securities Reports complied in all
material respects with the then applicable accounting
requirements and the published rules and regulations under the
relevant United States 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 in all
material respects (subject, in the case of the unaudited
statements, to normal, year-end audit
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adjustments) the consolidated financial position of ECo and its
consolidated ECo Subsidiaries as at the respective dates thereof
and the consolidated results of their operations and cash flows
for the respective periods then ended.
(c) There has been no change in ECo's accounting policies or the
methods of making accounting estimates or changes in estimates
that are material to such financial statements, except as
described in the notes thereto.
2.6 LIABILITIES
Neither ECo nor any ECo Subsidiary has any material liabilities or
obligations, either accrued, absolute, contingent or otherwise, or has any
knowledge of any potential material liabilities or obligations, other than those
disclosed in the ECo Securities Reports or incurred in the ordinary course of
business since September 30, 2000.
2.7 INFORMATION SUPPLIED
None of the information supplied or to be supplied by ECo for inclusion
or incorporation by reference in the Proxy Circular will, at the time the Proxy
Circular is mailed to the securityholders of ECo or at the time of the ECo
Shareholders Meeting contain any untrue statement which, at the time and in
light of the circumstances under which it is made, is false or misleading with
respect to any material fact, or omit to state any material fact required to be
stated therein or necessary in order to make the statements therein not false or
misleading or necessary to correct any statement in any earlier communication
with respect to the solicitation of a proxy for the same meeting or subject
matter which has become false or misleading. None of the information supplied or
to be supplied by ECo for inclusion or incorporation by reference in a
Registration Statement will at the time such Registration Statement is declared
or becomes effective contain any untrue statement of a material fact or omit 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. ECo will take all reasonable steps within its control
to ensure that the Proxy Circular is prepared as to form in all material
respects in compliance with the provisions of the ABCA and applicable United
States and Canadian securities laws and the rules and regulations promulgated
thereunder.
2.8 NO DEFAULTS
Neither ECo nor any ECo 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: (a) its articles or bylaws; (b) any judgment, decree
or order applicable to it; or (c) any loan or credit agreement, note, bond,
mortgage, indenture, contract, agreement, lease, license or other instrument to
which ECo or any ECo Subsidiary is now a party or by which it or any of its
properties or assets may be bound, except in the case of items (b) and (c) for
defaults and violations which, individually or in the aggregate, would not have
a Material Adverse Effect on ECo.
2.9 LITIGATION; INVESTIGATIONS
There is no claim, action, suit or proceeding pending, or to the
knowledge of ECo threatened against ECo or any of the ECo Subsidiaries, which
would, if adversely determined,
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individually or in the aggregate, have a Material Adverse Effect on ECo, nor is
there any judgment, decree, injunction, rule or order of any Governmental Entity
or arbitrator outstanding against ECo or any of the ECo 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 ECo,
threatened, against ECo or any of the ECo Subsidiaries before any Governmental
Entity which could have such effect.
2.10 ABSENCE OF CERTAIN CHANGES AND EVENTS
Since September 30, 2000, there has not been:
(a) Any Material Adverse Effect on ECo;
(b) Any material damage, destruction, or loss to the business or
properties of ECo and the ECo Subsidiaries, taken as a whole, not
covered by insurance;
(c) Any declaration, setting aside or payment of any dividend or
other distribution in respect of the capital stock of ECo, or any
direct or indirect redemption, purchase or any other acquisition
by ECo of any such stock;
(d) Any change in the capital stock or in the number of shares or
classes of ECo's authorized or outstanding capital stock as
described in Section 2.4 (other than as a result of exercises of
ECo Options described in Section 2.4 (a));
(e) Any material labor dispute or charge of unfair labor practice
(other than routine individual grievances) or, to the knowledge
of ECo, any activity or proceeding by a labor union or by a
representative thereof to organize any employees of ECo or any
ECo Subsidiary or any campaign being conducted to solicit
authorization from employees to be represented by such labor
union; or
(f) Any other event or condition known to ECo particularly pertaining
to and adversely affecting the operations, assets or business of
ECo or any of the ECo 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 ECo.
2.11 ADDITIONAL ECO INFORMATION
The ECo Disclosure Letter contains true, complete and correct lists of
the following items with respect to ECo and each of the ECo Subsidiaries, and
ECo has furnished or made available to CCo true, complete and correct copies of
all documents referred to in such lists:
(a) All contracts which involve, or may involve, aggregate payments
by any party thereto of $5 million or more, which payments or
obligations are to be performed in whole or in part after the
Effective Time and which are not cancellable or terminable by ECo
without payment or penalty in excess of $5 million;
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(b) All option, bonus, incentive compensation, deferred compensation,
indemnification agreements, employment agreements (including
change of control agreements) and profit-sharing, retirement,
pension, welfare, group insurance, death benefit and other fringe
benefit plans, arrangements or trust agreements;
(c) All material patents, trademarks, copyrights and other
intellectual property rights (including, without limitation,
those relating to seismic data) owned, licensed or used and all
applications therefor;
(d) All material trade names and fictitious names used or held,
whether and where such names are registered and where used;
(e) All long-term and short-term promissory notes, installment
contracts, loan agreements, credit agreements, interest rate and
currency derivatives, and operating and finance leases, in each
case, having financial obligations in excess of $1 million, and
any other material agreements relating thereto or with respect to
collateral securing the same;
(f) All indebtedness, liabilities and commitments of third parties
(other than ECo Subsidiaries) 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) or has otherwise provided any form of financial
assistance, and all letters of credit, in each case with a
financial liability exposure in excess of $1 million, whether
stand-by or documentary, issued by any third party; and
(g) all material production transportation, marketing, sales and
hedging contracts, other than production sales contracts
terminable without penalty upon no more than 30 days notice.
2.12 CERTAIN AGREEMENTS
Except for the ECo employment agreements and change of control
agreements disclosed under Section 2.11 (b) or the acceleration of vesting of
ECo Options, neither the execution and delivery of this Agreement nor the
consummation of the transactions contemplated hereby will: (a) result in any
payment (including severance, unemployment compensation, parachute payment,
bonus or otherwise) becoming due to any director, employee or independent
contractor of ECo or any of the ECo Subsidiaries under any ECo Plan (as defined
in Section 2.13) or otherwise; (b) materially increase any benefits otherwise
payable under any ECo Plan or otherwise; or (c) result in the acceleration of
the time of payment or vesting of any such benefits.
2.13 EMPLOYEE BENEFIT PLANS
All employee benefits plans covering active, former or retired employees
of ECo and the ECo Subsidiaries are listed in the ECo Disclosure Letter (the
"ECo Plans"). ECo has made available to CCo true, complete and correct copies of
each ECo Plan, any related trust agreement, annuity or insurance contract or
other funding vehicle, and: (a) each ECo Plan has
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been maintained and administered in material compliance with its terms and is,
to the extent required by applicable law or contract, fully funded without
having any deficit or unfunded actuarial liability or adequate provision has
been made therefor; (b) all required employer contributions under any such plans
have been made and the applicable funds have been funded in accordance with the
terms thereof; (c) each ECo Plan that is required or intended to be qualified
under applicable law or registered or approved by a governmental agency or
authority has been so qualified, registered or approved by the appropriate
governmental agency or authority, and nothing has occurred since the date of the
last qualification, registration or approval to adversely affect, or cause, the
appropriate governmental agency or authority to revoke such qualification,
registration or approval; (d) to the knowledge of ECo after due inquiry, there
are no pending or anticipated material claims against or otherwise involving any
of the ECo Plans and no suit, action or other litigation (excluding claims for
benefits incurred in the ordinary course of ECo Plan activities) has been
brought against or with respect to any ECo Plan; (e) all material contributions,
reserves or premium payments required to be made to the ECo Plans have been made
or provided for; and (f) neither ECo nor any ECo Subsidiary has any material
obligations for retiree health and life benefits under any ECo Plan.
2.14 INTELLECTUAL PROPERTY
ECo or the ECo Subsidiaries own or possess 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 "ECo Intellectual Property") that are either
material to the business of ECo or any ECo Subsidiary or that are necessary for
the use, ownership, evaluation, operation, development, exploration, drilling
and maintenance of their assets, and production, transportation and marketing of
natural gas, crude oil gas liquids and petroleum products related to their
operation. The ECo Intellectual Property is owned or licensed by ECo or the ECo
Subsidiaries free and clear of any Encumbrance other than such Encumbrances that
would not have a Material Adverse Effect on ECo. Except in the ordinary course
of business, neither ECo nor any of the ECo Subsidiaries has granted to any
other person any license to use any ECo Intellectual Property. Neither ECo nor
any of the ECo Subsidiaries has received any notice of infringement,
misappropriation or conflict with, the intellectual property rights of others in
connection with the use by ECo and the ECo Subsidiaries of the ECo Intellectual
Property.
2.15 TITLE TO PROPERTIES
Except for assets and other property sold, used or otherwise disposed of
since September 30, 2000 in the ordinary course of business for fair value, ECo
and the ECo Subsidiaries have good and defensible title to all their properties,
interests in properties and assets, real and personal, reflected in ECo's
September 30, 2000 financial statements, free and clear of any Encumbrance,
except: (a) Encumbrances reflected in the balance sheet of ECo as of September
30, 2000; (b) liens for current taxes not yet due and payable; and (c) such
imperfections of title, easements and Encumbrances as would not have a Material
Adverse Effect on ECo. All leases pursuant to which ECo or any ECo Subsidiary
leases (whether as lessee or lessor) minerals, mineral interests, lands,
surface, gas plants, pipelines, facilities and any other real or personal
property of whatsoever kind and nature are in good standing, valid, and
effective with ECo
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entitled to quiet enjoyment as lessee thereunder; 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 ECo
or any ECo Subsidiary which, individually or in the aggregate, would have a
Material Adverse Effect on ECo and in respect to which ECo or a ECo Subsidiary
has not taken adequate steps to prevent a default from occurring. The buildings,
gas plants, pipeline facilities and premises of ECo and each of the ECo
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 ECo and the ECo 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 do not substantially interfere with the
continued use thereof in the conduct of normal operations.
2.16 ENVIRONMENTAL MATTERS
(a) There are no environmental conditions or circumstances, such as
the presence or release of any hazardous substance, on any
property presently or, to the knowledge of ECo, previously owned
or leased or occupied or controlled by ECo or any of the ECo
Subsidiaries that could reasonably be expected to result in a
Material Adverse Effect on ECo;
(b) ECo and the ECo Subsidiaries have in full force and effect all
material environmental permits, licenses, approvals and other
authorizations required to conduct their operations and are
operating in material compliance thereunder;
(c) ECo's and the ECo Subsidiaries' operations and the use of their
assets do not violate and have not violated any applicable
Canadian or United States federal, provincial, state or local
law, statute, ordinance, rule, regulation, order or notice
requirement pertaining to (i) the condition or protection of air,
groundwater, surface water, soil, or other environmental media;
(ii) the environment, including natural resources or any activity
which affects the environment; or (iii) the regulation of any
pollutants, contaminants, waste or other substances (whether or
not hazardous or toxic) (collectively the "Applicable
Environmental Laws"), except for violations which, either
individually or in the aggregate, would not result in a Material
Adverse Effect on ECo;
(d) To the knowledge of ECo, none of the operations or assets of ECo
or any ECo Subsidiary has ever been conducted or used by ECo or
any ECo Subsidiary in such a manner as to constitute a violation
of any of the Applicable Environmental Laws, except for
violations which, either individually or in the aggregate, would
not result in a Material Adverse Effect on ECo or have been
rectified;
(e) No written notice has been served on ECo or any ECo Subsidiary
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
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foregoing which, either individually or in the aggregate, would
not result in a Material Adverse Effect on ECo; and
(f) ECo does not know of any reason that would preclude it from
renewing or obtaining a reissuance of the material permits,
licenses or other authorizations required pursuant to any
Applicable Environmental Laws to operate and use any of ECo's or
the ECo Subsidiaries' assets for their current purposes and uses.
2.17 COMPLIANCE WITH OTHER LAWS
Neither ECo nor any ECo 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 or regulation, or any writ or decree
of any court or any Governmental Entity or delinquent with respect to any report
required to be filed with any Governmental Entity, except for violations,
defaults and delinquencies which, either individually or in the aggregate, do
not and are not expected to result in a Material Adverse Effect on ECo.
2.18 TAXES
Except with respect to failures which, in the aggregate, would not
result in a Material Adverse Effect on ECo, proper and accurate federal,
provincial, state and local income, capital, withholding, value added, sales,
use, franchise, ad valorem taxes, gross revenue, turnover, excise, payroll,
property, employee withholding, labour taxes, unemployment insurance, social
insurance taxes, customs duties and any and all other tax returns, reports, and
estimates have been filed with appropriate governmental agencies, domestic and
foreign, by ECo and each of the ECo 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 ECo or a ECo Subsidiary; and the tax provision
reflected in ECo's financial statements is adequate, in accordance with Canadian
or United States (if applicable) generally accepted accounting principles, to
cover liabilities of ECo and the ECo Subsidiaries for all taxes, including any
interest, penalties and additions to taxes of any character whatsoever
applicable to ECo and the ECo Subsidiaries or their assets or businesses.
Neither ECo nor any ECo Subsidiary has received any notice of reassessment from
the Internal Revenue Service, Canada Customs and Revenue Agency or Alberta
Corporate Tax Administration or any other revenue or collection agency that
would result in a Material Adverse Effect on ECo. There are no tax liens on any
assets of ECo or the ECo Subsidiaries except for taxes not yet currently due and
those which could not reasonably be expected to result in a Material Adverse
Effect on ECo.
2.19 VOTE REQUIRED
Except as may be provided in the Interim Order, at the ECo Shareholders
Meeting at which a quorum is present, the affirmative vote of the holders of
two-thirds of the securityholders present or represented by proxy, voting as a
single class, is required to approve this Agreement, the Arrangement and the
consummation of the transactions contemplated hereby.
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2.20 BROKERS AND FINDERS
Other xxxx Xxxxxxx Xxxxx in accordance with the terms of its engagement
letter dated January 3, 2001, a copy of which has been provided to CCo, none of
ECo or any of the ECo 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. The ECo Disclosure Letter attaches a copy of the engagement letter
and such letter includes a description of all of the fees and other financial
obligations and commitments of ECo's engagement arrangement with Xxxxxxx Xxxxx.
2.21 DISCLOSURE
No representation or warranty made by ECo in this Agreement or the ECo
Disclosure Letter, nor any document, written information, written statement,
financial statement, certificate or Exhibit prepared and furnished or to be
prepared and furnished by ECo or its representatives pursuant hereto or in
connection with the transactions contemplated hereby, when taken together,
contains or contained (as of the date made) any untrue statement of a material
fact when made, or omits or omitted (as of the date made) to state a material
fact necessary to make the statements or facts contained herein or therein not
misleading, in any material way, in light of the circumstances under which they
were made, except for such untrue statements or omissions (other than any in the
representations or warranties made by ECo in this Agreement or the ECo
Disclosure Letter) which were not intentional, and which, either individually or
in the aggregate, do not constitute a Material Adverse Effect on Eco.
2.22 FAIRNESS OPINION
ECo's board of directors has received an opinion as of February 6, 2001
(and have been advised that they will receive a written opinion) from Xxxxxxx
Xxxxx that the Plan of Arrangement is fair from a financial point of view to ECo
securityholders (the "ECo Fairness Opinion").
2.23 RESTRICTIONS ON BUSINESS ACTIVITIES
There is no material agreement, judgment, injunction, order or court
decree binding upon ECo or any ECo Subsidiary that has or could reasonably be
expected to have the effect of prohibiting or materially impairing any current
business practice of ECo or any ECo Subsidiary, any acquisition of property by
ECo or any ECo Subsidiary, the conduct of any current business by ECo or any ECo
Subsidiary or the transactions contemplated in this Agreement.
2.24 BOOKS AND RECORDS
The books, records and accounts of ECo and the ECo 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 ECo and
the ECo Subsidiaries, and (c) accurately and fairly reflect the basis for the
ECo financial statements. ECo has devised and maintains a system of internal
accounting controls sufficient to provide reasonable assurances that: (x)
transactions are executed in
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accordance with management's general or specific authorization; and (y)
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.
2.25 POOLING MATTERS
Neither ECo nor any of its Affiliates (as defined in Section 7.6) or the
ECo Subsidiaries has taken or agreed to take any action that, without giving
effect to any action taken or agreed to be taken by CCo or any of its affiliates
or subsidiaries, would prevent CCo from accounting for the business combination
to be effected by the Arrangement on a pooling of interests accounting basis
under United States generally accepted accounting principles. ECo's board of
directors has received written advice, a copy of which has been provided to CCo,
from Ernst & Young LLP that they are not presently aware of any matters which,
in the opinion of Ernst & Young LLP, would prevent CCo from accounting for the
business combination to be effected by the Arrangement on such pooling of
interests accounting basis under United States generally accepted accounting
principles. Neither ECo nor any of the ECo Subsidiaries have any reason to
believe that the business combination to be effected by the Arrangement cannot
qualify as a pooling of interests for accounting purposes under United States
generally accepted accounting principles.
2.26 ENGINEERING REPORT
ECo has provided to Xxxxxxx Xxxxxxx Xxxx Associates Ltd. ("Xxxxxxx"),
independent geological and petroleum engineering consultants, all material
information concerning land descriptions and well data which is in ECo's
possession or control respecting the oil and gas assets of ECo evaluated by
Xxxxxxx in the Xxxxxxx Report prepared effective December 31, 2000, a copy of
which has been provided to CCo and, in particular, all material information
respecting ECo's interests in such oil and gas assets and the royalty burdens
and net profits interest burdens thereon and ECo is not aware, after due
enquiry, of any information not provided to Xxxxxxx that would have a material
adverse impact on the Xxxxxxx Report, taken as a whole and none of the oil and
gas assets to which Alberta Royalty Tax Credits were attributed in the Xxxxxxx
Report is a "restricted resource property".
2.27 UNITED STATES OPERATIONS
Direct sales by ECo, if any, into the United States in calendar year
2000 were less than $25 million (U.S.) in the aggregate and the assets of ECo
located in the United States, if any, have an aggregate value less than $15
million (U.S.).
2.28 INSURANCE
Policies of insurance are in force as of the date hereof naming ECo and
the ECo Subsidiaries as insureds which adequately cover all risks as are
customarily covered by oil and gas producers in the industry in which ECo and
the ECo Subsidiaries operate. All such policies shall remain in force and effect
and shall not be canceled or otherwise terminated as a result of the
transactions contemplated by this Agreement.
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2.29 OPERATIONS
To ECo's knowledge, all operations in respect of ECo and the ECo
Subsidiaries, including without limitation the drilling, completion, operations
and abandonment of xxxxx and production marketing and transportation, have been
and will be conducted in accordance with good oilfield practices in all material
respects.
ARTICLE 3
REPRESENTATIONS AND WARRANTIES OF CCO
CCo hereby represents and warrants to, and agrees with, ECo that:
3.1 ORGANIZATION AND STANDING
CCo and each material body corporate, partnership, joint venture,
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 CCo (the "CCo Subsidiaries"),
is an entity duly organized, validly existing and in good standing under the
laws of the jurisdiction of its incorporation or organization, 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 CCo.
3.2 AGREEMENT AUTHORIZED AND ITS EFFECT ON OTHER OBLIGATIONS
(a) CCo has all requisite corporate power and authority to enter into
this Agreement and to perform its obligations hereunder and to
consummate the Arrangement and the other transactions
contemplated by this Agreement. The execution and delivery of
this Agreement by CCo and the consummation by CCo of the
Arrangement and the other transactions contemplated hereby have
been unanimously approved by the board of directors of CCo and
have been duly authorized by all other necessary corporate action
on the part of CCo. This Agreement has been duly executed and
delivered by CCo and is a valid and binding obligation of CCo,
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; (ii) general
equitable principles; and (iii) the qualification that Alberta
courts will only render monetary judgments expressed in Canadian
dollars.
(b) Neither the execution, delivery or performance of this Agreement
or the Arrangement by CCo, nor the consummation of the
transactions contemplated hereby or thereby by CCo nor compliance
with the provisions hereof or thereof by CCo will: (i) conflict
with, or result in any violations of, the Certificate of
Incorporation or bylaws of CCo or any equivalent document of any
of the CCo
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Subsidiaries; or (ii) result in any breach of or cause a default
(with or without notice or lapse of time, or both) under, give
rise to a right of termination, amendment, cancellation or
acceleration of any obligation contained in, or the loss of any
material benefit or incurrence of any material cost under, or
result in the creation of any Encumbrance upon any of the
material properties or assets of CCo or any of the CCo
Subsidiaries under, any term, condition or provision of any loan
or credit agreement, note, bond, mortgage, indenture, lease or
other agreement, judgment, order, decree, statute, law,
ordinance, rule or regulation applicable to CCo or any of the CCo
Subsidiaries or their respective properties or assets, other than
any such breaches, defaults, rights, losses, or Encumbrances
which, individually or in the aggregate, would not have a
Material Adverse Effect on CCo.
3.3 GOVERNMENTAL AND THIRD PARTY CONSENTS
(a) No consent, approval, order or authorization of, or registration,
declaration or filing with, any Governmental Entity, is required
to be obtained by CCo or any of the CCo 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 and
clearance of the S-3 Registration Statement with the SEC and the
filing of the S-8 Registration Statement with the SEC (which
shall become effective immediately upon such filing); (ii)
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; (iii) such filings,
authorizations, orders and approvals as may be required under
applicable federal, provincial or state securities laws and the
rules of the NYSE; (iv) such filings and notifications as may be
necessary under the HSR Act; (v) such notices and filings as may
be necessary under the Investment Canada Act and under the
Competition Act (Canada); (vi) such notice, filings, orders and
approvals as may be necessary under the Public Utilities Board
Act (Alberta), Gas Utilities Act (Alberta) or similar legislation
in other applicable provinces; and (vii) where the failure to
obtain such consents, approvals, etc., would not prevent or delay
the consummation of the Arrangement or otherwise prevent CCo from
performing its obligations under this Agreement and would not
reasonably be expected to have a Material Adverse Effect on CCo.
(b) Other than as contemplated by Section 3.3(a), no consents,
assignments, waivers, authorizations or other certificates from
third parties are necessary or required in connection with the
transactions contemplated hereby to provide for the continuation
in full force and effect of all of CCo's material contracts or
leases or for CCo 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 CCo.
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3.4 CAPITALIZATION
(a) As of the date of this Agreement, the authorized capital stock of
CCo consists of 500,000,000 shares of common stock, $0.001 par
value ("CCo Common Stock", which term shall include for all
purposes of this Agreement the related CCo Common Stock purchase
rights issued or issuable under that certain Rights Agreement
dated as of June 5, 1997 (the "CCo Rights Agreement"), between
CCo and First Chicago Trust Company of New York, as Rights Agent,
and 10,000,000 shares of preferred stock, par value $0.001 per
share, issuable in series ("CCo Preferred Stock") of which
500,000 shares have been designated Series A Participating
Preferred Stock. As of February 1, 2001, no shares of CCo
Preferred Stock were issued or outstanding, 283,739,629 shares of
CCo Common Stock were issued and outstanding and no shares of CCo
Common Stock were held by CCo in its treasury. As of February 1,
2001, (i) 35,138,595 shares of CCo Common Stock were reserved or
allocated for issuance upon the exercise of stock options then
outstanding under CCo's stock option plans and for future
issuance of options under CCo's stock option plans, (ii)
44,881,650 shares of CCo Common Stock were reserved or allocated
for issuance upon exchange or conversion of the securities
described in Section 3.4(b)(x), and (iii) CCo has in its
authorized capital the number of shares of CCo Preferred Stock
required to be issued upon the exercise of the rights provided by
the CCo Rights Agreement in accordance with the terms and
conditions thereof. All of the issued and outstanding shares of
CCo Common Stock have been duly authorized and validly issued,
are fully paid and nonassessable, were not issued in violation of
the terms of any agreement or other understanding binding upon
CCo and were issued in compliance with all applicable charter
documents of CCo and all applicable federal, state and foreign
securities laws, rules and regulations. There are no preemptive
rights with respect to the issuance of the shares of CCo Common
Stock or any other capital stock of CCo.
(b) Other than as set forth above, as of the date of this Agreement,
there are no outstanding subscriptions, options, warrants,
convertible securities, calls, commitments, agreements or rights
(contingent or otherwise) of any character to purchase or
otherwise acquire from CCo any shares of, or any securities
convertible into, the capital stock of CCo ("CCo Securities"),
except (x) the following securities: (i) 5,520,000 5 3/4%
Remarketable Term Income Deferrable Equity Securities (the "HIGH
TIDES"SM) of Calpine Capital Trust, a Delaware business trust,
which are convertible into CCo's 5 3/4% Convertible Subordinated
Debentures due 2029, which Debentures are exchangeable for shares
of CCo Common Stock, (ii) 7,200,000 5 1/2% HIGH TIDES of Calpine
Capital Trust II, a Delaware business trust, which are
convertible into CCo's 5 1/2% Convertible Subordinated Debentures
due 2030, which Debentures are exchangeable for shares of CCo
Common Stock and (iii) 10,350,000 5% HIGH TIDES of Calpine
Capital Trust III, a Delaware business trust, which are
convertible into CCo's 5% Convertible Subordinated Debentures due
2030, which Debentures are exchangeable for shares of CCo Common
Stock and (y) other CCo Securities
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issued or to be issued in connection with acquisition
transactions in which the value of the underlying CCo Common
Stock is less than $60 million.
3.5 SECURITIES REPORTS AND FINANCIAL STATEMENTS, BOOKS AND RECORDS
CCo has filed all forms, reports, annual reports and documents required
to be filed by it with the SEC pursuant to relevant United States securities
statutes, regulations, policies and rules (collectively, the "CCo 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 CCo Securities Reports, at the time filed or as subsequently amended or
supplemented, 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 CCo contained in the CCo
Securities Reports complied in all material respects with the then applicable
accounting requirements and the published rules and regulations under 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 in all
material respects (subject, in the case of the unaudited statements, to normal,
year-end audit adjustments) the consolidated financial position of CCo and its
consolidated CCo 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 CCo's accounting policies or the
methods of making accounting estimates or changes in estimates that are material
to such financial statements, except as described in the notes thereto.
3.6 MATERIAL LIABILITIES
CCo and the CCo Subsidiaries have properly disclosed in the CCo
Securities Reports all material liabilities of CCo and the CCo Subsidiaries
required to be disclosed therein.
3.7 INFORMATION SUPPLIED
None of the information supplied or to be supplied by CCo for inclusion
or incorporation by reference in the Proxy Circular will, at the time the Proxy
Circular is mailed to the shareholders of ECo and at the time of the ECo
Securityholders Meeting, as may be adjourned from time to time, contain any
untrue statement which, at the time and in light of the circumstances under
which it is made, is false or misleading with respect to any material fact or
omit to state any material fact required to be stated therein or necessary in
order to make the statements therein not false or misleading or necessary to
correct any statement in any earlier communication with respect to the
solicitation of a proxy for the same meeting or subject matter which has become
false or misleading. None of the information supplied or to be supplied by CCo
for inclusion or incorporation by reference in a Registration Statement will at
the time such Registration Statement is declared or becomes effective contain
any untrue statement of a material fact or omit 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.
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3.8 NO DEFAULTS
Neither CCo nor any CCo 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: (a) its charter documents or bylaws; (b) any
judgment, decree or order applicable to it; or (c) any loan or credit agreement,
note, bond, mortgage, indenture, contract, agreement, lease, license or other
instrument to which CCo or any CCo Subsidiary is now a party or by which it or
any of its properties or assets may be bound, except in the case of items (b)
and (c) for defaults and violations which, individually or in the aggregate,
would not have a Material Adverse Effect on CCo.
3.9 LITIGATION; INVESTIGATIONS
There is no claim, action, suit or proceeding pending, or to the
knowledge of CCo threatened against CCo or any of the CCo Subsidiaries, which
would, if adversely determined, individually or in the aggregate, have a
Material Adverse Effect on CCo, nor is there any judgment, decree, injunction,
rule or order of any Governmental Entity or arbitrator outstanding against CCo
or any of the CCo 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 CCo, threatened, against CCo or any of the CCo
Subsidiaries before any Governmental Entity which could have such effect.
3.10 ABSENCE OF CERTAIN CHANGES AND EVENTS
Since September 30, 2000, there has not been any Material Adverse Effect
on CCo that has not been publicly disclosed in accordance with applicable laws,
widely reported to the general public in the United States or otherwise
disclosed in the CCo Securities Reports.
3.11 COMPLIANCE WITH LAWS
Neither CCo nor any CCo 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 or 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, defaults and delinquencies
which, either individually or in the aggregate, do not and are not expected to
result in a Material Adverse Effect on CCo.
3.12 BROKERS AND FINDERS
Other than Xxxxxxx, Xxxxx & Co., Scotia Capital Inc. and Ernst & Young
Corporate Finance Inc., none of CCo or any of the CCo 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.
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3.13 DISCLOSURE
No representation or warranty made by CCo in this Agreement, nor any
document, written information, written statement, financial statement,
certificate or Exhibit prepared and furnished or to be prepared and furnished by
CCo or its representatives pursuant hereto or in connection with the
transactions contemplated hereby, when taken together, contains or contained (as
of the date made) any untrue statement of a material fact when made, or omits or
omitted (as of the date made) to state a material fact necessary to make the
statements or facts contained herein or therein not misleading, in any material
way, in light of the circumstances under which they were made, except for such
untrue statements or omissions (other than any in the representations or
warranties made by CCo in this Agreement) which were not intentional and which,
either individually or in the aggregate, do not constitute a Material Adverse
Effect on CCo.
3.14 CCO SUB
CCo Sub will be incorporated or will continue solely for the purpose of
participating in the transactions contemplated herein and, through the Effective
Time, will carry on no other business (except that CCo Sub may own shares in
other indirect Canadian subsidiaries of CCo), and, except as contemplated herein
or in any other document related to the transactions contemplated herein, will
not have any liabilities or obligations, either accrued, absolute, contingent or
otherwise as of the Effective Time.
3.15 POOLING MATTERS
Neither CCo nor any of its Affiliates (as defined in Section 7.6) or the
CCo Subsidiaries has taken or agreed to take any action that, without giving
effect to any action taken or agreed to be taken by ECo or any of its affiliates
or ECo Subsidiaries, would prevent CCo from accounting for the business
combination to be effected by the Arrangement on a pooling of interests
accounting basis under United States generally accepted accounting principles.
CCo's board of directors has received written advice, a copy of which has been
provided to ECo, from Xxxxxx Xxxxxxxx LLP that they are not presently aware of
any matters which, in the opinion of Xxxxxx Xxxxxxxx LLP, would prevent CCo from
accounting for the business combination to be effected by the Arrangement on
such pooling of interests accounting basis under United States generally
accepted accounting principles. Neither CCo nor any of the CCo Subsidiaries have
any reason to believe that the business combination to be effected by the
Arrangement cannot qualify as a pooling of interests for accounting purposes
under United States generally accepted accounting principles.
3.16 OWNERSHIP OF ECO SHARES
Neither CCo nor any of its affiliates own any ECo Common Shares, and
neither CCo nor any of its affiliates will acquire any ECo Common Shares prior
to the Effective Time.
3.17 TITLE TO PROPERTIES
Except as shall be disclosed publicly by CCo in accordance with
applicable law or in the CCo Securities Reports and except for assets and other
property sold, used or otherwise disposed
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of by CCo since September 30, 2000 in the ordinary course of business for fair
value, CCo and the CCo Subsidiaries have good and marketable title to all real
properties and all other properties and assets owned by them, in each case free
from liens, encumbrances and defects that would materially affect the value
thereof or materially interfere with the use made or to be made thereof by them
(other than liens in favor of banks and other financing parties); and except as
shall be disclosed publicly by CCo in accordance with applicable law or in the
CCo Securities Reports, CCo and the CCo Subsidiaries hold any leased real or
personal property under valid and enforceable leases with no exceptions that
would materially interfere with the use made or to be made thereof by them and
except for encumbrances and defects or exemptions which individually or in the
aggregate would not have a Material Adverse Effect on CCo.
3.18 ENVIRONMENTAL MATTERS
Except as shall be disclosed publicly by CCo in accordance with
applicable law or in the CCo Securities Reports, neither CCo nor any of the CCo
Subsidiaries is in violation of any statute, any rule, regulation, decision or
order of any governmental agency or body or any court, domestic or foreign,
relating to the use, disposal or release of hazardous or toxic substances or
relating to the protection or restoration of the environment or human exposure
to hazardous or toxic substances (collectively, "Environmental Laws"), owns or
operates any real property contaminated with any substance that is subject to
any Environmental Laws, is liable for any off-site disposal or contamination
pursuant to any Environmental Laws, or is subject to any claim relating to any
Environmental Laws, which violation, contamination, liability or claim would
individually or in the aggregate have a Material Adverse Effect on CCo; and CCo
has no knowledge of any pending investigation which might lead to such a claim.
3.19 EMPLOYEE BENEFIT PLANS
Except as set forth in the CCo Securities Reports, all material employee
benefits plans ("CCo Plans") covering current or former employees of CCo and the
CCo Subsidiaries have been maintained and administered in material compliance
with their terms and:
(a) all material contributions and reserves or premium payments
required to be made to the CCo Plans have been made or provided
for;
(b) each CCo Plan that is required to be registered or approved by a
governmental agency or authority has been so registered or
approved and to the knowledge of CCo, nothing has occurred since
the date of the last registration or approval to adversely affect
registration or approval; and
(c) to the knowledge of CCo, there are no pending or anticipated
material claims against any of the CCo Plans and no suit, action
or other litigation has been brought against any CCo Plan
(excluding claims for benefits incurred in the ordinary course of
operation of the CCo Plans).
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ARTICLE 4
OBLIGATIONS PENDING EFFECTIVE DATE
4.1 AGREEMENTS OF CCO AND ECO
CCo and ECo agree to take the following actions after the date hereof:
(a) 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 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 reasonable best
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 any required filings under the HSR Act and
shall make such filings as are necessary under the Investment
Canada Act and the Competition Act (Canada);
(b) CCo and ECo shall cooperate in the preparation of the Proxy
Circular and the Registration Statements and of subsequent
amendments, where appropriate, thereto and the prompt filing by
CCo of the Registration Statements and subsequent amendments
thereto with the SEC;
(c) Each of CCo and ECo will promptly notify the other in writing (i)
of any event occurring subsequent to the date of this Agreement
which would render any representation and warranty of such party
contained in this Agreement untrue or inaccurate in any material
respect; (ii) of any event, change or effect having a Material
Adverse Effect on such party; and (iii) of any breach by such
party of any material covenant or agreement contained in this
Agreement;
(d) During the term of this Agreement, each of CCo and ECo will use
its reasonable best efforts to satisfy or cause to be satisfied
as soon as reasonably practicable all the conditions precedent
that are set forth in Article 5 hereof, and each of CCo and ECo
will use its reasonable best efforts to cause the Arrangement and
the other transactions contemplated by this Agreement to be
consummated as soon as reasonably practicable;
(e) Subject to Section 5.4, each of CCo and ECo covenants and agrees
that it will use its reasonable best efforts (including, without
limitation, investigations and consultations with its
professional advisors) such that it and its Affiliates (as
defined in Section 7.6) will not take or agree to take any action
that would prevent CCo from accounting for the business
combination to be effected by the Arrangement as a pooling of
interests in accordance with the United States generally accepted
accounting principles and applicable rules and regulations of the
SEC and each of ECo and CCo agrees to consult with the other and
with their respective independent accountants concerning any
potential transaction or other
-25-
matter or action that might have such effect forthwith upon such
potential transaction, matters or actions having been identified
(after having made all its reasonable best efforts to make such
identification); and
(f) CCo and ECo shall use reasonable best efforts to obtain from
Xxxxxx Xxxxxxxx LLP and Ernst & Young LLP, immediately before the
commencement of the Measurement Period (as defined in the Plan of
Arrangement) and a reconfirmation thereof on or before the
Effective Date, opinions, in form and substance satisfactory to
CCo and ECo, acting reasonably, that the Arrangement will be
treated as a "pooling of interests" for accounting purposes under
United States generally accepted accounting principles.
4.2 ADDITIONAL AGREEMENTS OF ECO
ECo agrees that, except as expressly contemplated by this Agreement or
as otherwise agreed to in writing by CCo or as set forth in the ECo Disclosure
Letter, from the date hereof to the Effective Date it will, and will cause each
of the ECo Subsidiaries to:
(a) 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) 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) 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) Duly comply in all material respects with all laws applicable to
it and to the conduct of its business;
(e) Not: (i) enter into any contracts of employment which cannot be
terminated, or which 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; or (ii)
amend any employee benefit plan or stock option plan, except as
may be required for compliance with this Agreement or applicable
law;
(f) 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; or (iii) trade
payables incurred in the ordinary course of business;
-26-
(g) Not commit to capital expenditures, except for individual (or
project) capital expenditures of up to Cdn. $10 million which are
contained in the 2001 capital budget of ECo, including in the
budget unidentified expenditures contained therein for land and
seismic of $20 million per quarter, a copy of which budget has
been provided to CCo (and ECo shall not amend such budget), and
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; or (ii) as may be
required by law;
(h) Not sell, dispose of, or encumber, any property or assets, except
for sales or dispositions of oil and gas production in the
ordinary course of business consistent with prior practice, and
not enter into any new, or amend any existing, production sales
contracts (other than contracts terminable without penalty within
no more than 30 days) or production, interest or currency xxxxxx
or other derivatives;
(i) 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) 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) Not issue or sell (except upon the exercise of outstanding
options), or issue options or rights to subscribe to, except
pursuant to outstanding commitments, 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) Not declare or pay any dividend on shares of its capital stock or
make any other distribution of assets to the holders thereof;
(m) Deliver to CCo, before February 22, 2001, audited consolidated
financial statements for the year ended December 31, 2000 and,
within 30 days after the end of each fiscal quarter of ECo
beginning on or after January 1, 2001, and through the Effective
Date, unaudited consolidated balance sheets and related unaudited
statements of income and changes in financial position as of the
end of each fiscal quarter of ECo, and as of the corresponding
fiscal quarter of the previous fiscal year. ECo hereby represents
and warrants that such consolidated financial statements shall
(i) be complete in all material respects (except, in the case of
the unaudited financial statements, for the omission of notes and
schedules contained in audited financial statements), (ii)
present fairly in all material respects the financial condition
of ECo as at the dates indicated and the results of operations
for the respective 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
-27-
which ECo considers necessary for a fair presentation of its
results for each respective fiscal period;
(n) ECo shall immediately cease and cause to be terminated any
existing solicitation, initiation, encouragement, activity,
discussion or negotiation with any parties conducted heretofore
by ECo, any ECo Subsidiary or their officers, directors,
employees, financial advisors, representatives and agents
("Representatives") with respect to an Acquisition Proposal (as
defined herein) whether or not initiated by ECo and in connection
therewith, ECo shall exercise all rights to require the return of
information regarding ECo previously provided to such parties and
shall exercise all rights to require the destruction of all
materials including or incorporating any information regarding
ECo. From and after the date hereof, ECo and the ECo Subsidiaries
will not, and will not authorize or permit any of their
Representatives to, directly or indirectly, solicit, initiate or
encourage (including by way of furnishing information) or
participate in or take any other action to facilitate any
inquiries or the making of any proposal which constitutes or may
reasonably be expected to lead to an Acquisition Proposal from
any person, or engage in any discussion, negotiations or
inquiries relating thereto or accept any Acquisition Proposal;
provided, however, that notwithstanding any other provision
hereof, ECo may at any time prior to the time ECo's shareholders
shall have voted to approve the Plan of Arrangement and the other
transactions contemplated thereby (i) engage in discussions or
negotiations with a third party who (without any solicitation,
initiation or encouragement, directly or indirectly, by ECo, any
ECo Subsidiary or the Representatives after the date hereof)
seeks to initiate such discussions or negotiations and may
furnish such third party information concerning ECo and its
business, properties and assets which has previously been
provided to CCo if, and only to the extent that: (A) the third
party has first made a bona fide written Acquisition Proposal
that is demonstrably financially superior to the shareholders of
ECo as compared to the transactions contemplated by this
Agreement (as determined in good faith by ECo's board of
directors after receiving the advice of its outside financial
advisors that is reflected in minutes of the board of directors)
and has demonstrated that the funds or other consideration
necessary for the Acquisition Proposal are available (as
determined by ECo's board of directors in the same manner and
with the same advice) and is not subject to any due diligence
conditions other than confirmatory due diligence (a "Superior
Proposal") and ECo's board of directors has concluded in good
faith (after considering applicable law and the advice of outside
counsel and outside financial advisors that is reflected in
minutes of a meeting of board of directors) that such action is
necessary for the ECo board of directors to act in a manner
consistent with fiduciary duties under applicable law; (B) upon
receipt of such written Acquisition Proposal, ECo provides prompt
notice orally and in writing to CCo specifying the identity of
such person or entity and prior to furnishing such information to
or entering into discussions or negotiations with such person or
entity, notifies CCo in writing that it is furnishing information
to or entering into discussions or negotiations with such person
or entity in respect to a Superior Proposal and receives from
such person or entity an executed confidentiality agreement
having confidentiality and standstill terms substantially
-28-
similar to those contained in the confidentiality agreement
executed by CCo, providing full details forthwith, and in any
event within one business day, of all material terms and
conditions of such Superior Proposal and any amendments thereto
and confirming in writing the determination of ECo's board of
directors that the Acquisition Proposal constitutes a Superior
Proposal; (C) ECo provides notice forthwith and in any event
within one business day to CCo at such time as it is terminating
any such discussions or negotiations with such person or entity;
and (D) ECo promptly provides to CCo any information provided to
any such person or entity whether or not previously made
available to CCo, (ii) comply with Rules 14d-9 and 14e-2
promulgated under the Exchange Act with regard to a tender or
exchange offer, if applicable, and similar rules under applicable
Canadian securities laws relating to the provision of directors'
circulars, and make appropriate disclosure with respect thereto
to ECo's shareholders and (iii) accept, recommend, approve or
implement a Superior Proposal from a third party, but only (in
the case of this clause (iii)) if prior to such acceptance,
recommendation, approval or implementation, ECo's board of
directors shall have concluded in good faith, after considering
provisions of applicable law and after giving effect to all
proposals to adjust the terms and conditions of this Agreement
and the Arrangement which may be offered by CCo during the five
day notice period set forth below and after receiving the advice
of outside counsel and financial advisors that is reflected in
minutes of a meeting of board of directors, that such action is
necessary for ECo's board of directors to act in a manner
consistent with fiduciary duties under applicable law and ECo
terminates this Agreement in accordance with Sections 6.1(j) and
6.4 and concurrently therewith has paid the fees payable
thereunder. ECo shall give CCo orally and in writing at least
five days advance notice of any proposed decision by the board of
directors of ECo to accept, recommend, approve or implement a
Superior Proposal which notice shall identify the party making
the Superior Proposal and shall provide full details of all
material terms and conditions thereof and any amendments thereto.
ECo shall inform CCo of the status (including all terms and
conditions thereof) of any discussions and negotiations with such
party. In addition ECo shall, and shall cause its respective
financial and legal advisors to, negotiate in good faith with CCo
to make such adjustments in the terms and conditions of this
Agreement and of the Plan of Arrangement as would enable ECo to
proceed with the transactions contemplated hereby. Prior to
executing any agreement to implement a Superior Proposal, ECo
shall provide CCo with copies of such agreement and related
documentation executed by the party making the Superior Proposal.
In the event CCo proposes to amend this Agreement and the
Arrangement to provide financially equivalent or superior value
(taking into account the risks associated with the form of
consideration and transaction) as is provided under the Superior
Proposal, then ECo shall not enter into any agreement regarding
the Superior Proposal. As used herein, "Acquisition Proposal"
shall mean a proposal or offer (other than by CCo), whether or
not subject to a due diligence condition, and whether or not in
writing, to acquire in any manner, directly or indirectly,
beneficial ownership (as defined under Part XIII of the
Securities Act (Alberta)) of all or a material portion of the
assets of ECo or any material ECo Subsidiary or
-29-
to acquire in any manner, directly or indirectly, more than 9.9%
(and for the purposes of Section 6.4(c), 20%) of the outstanding
voting shares of ECo whether by an arrangement, amalgamation,
merger, consolidation or other business combination, by means of
a sale of shares of capital stock, sale of assets, tender offer
or exchange offer or similar transaction involving ECo or any
material ECo Subsidiary including without limitation any single
or multi-step transaction or series of related transactions which
is structured to permit such third party to acquire beneficial
ownership of all or a material portion of the assets of ECo or
any material ECo Subsidiary or to acquire in any manner, directly
or indirectly, more than 9.9% (and for the purposes of Section
6.4(c), 20%) of the outstanding voting shares of ECo (other than
the transactions contemplated by this Agreement); and
(o) ECo will allow CCo and its agents reasonable access, during
normal business hours for due diligence purposes and for the
purposes of providing an orderly transition of operations, to the
files, books, records, offices and officers of itself and its
subsidiaries, including any and all information relating to its
tax matters, contracts, leases, licenses and real, personal and
intangible property and financial condition. ECo will cause its
accountants to cooperate with the other in making available to
CCo all financial information reasonably requested, including the
right to examine all working papers pertaining to tax matters and
financial statements prepared or audited by such accountants. CCo
will allow ECo reasonable access to the officers of CCo and to
the books and records of CCO Sub during normal business hours for
due diligence purposes. Notwithstanding the foregoing, except as
expressly provided for herein, neither party shall be obligated
to make available to the other party any of its' board of
directors' materials relating to the assessment or evaluation of
the transactions contemplated hereby or any alternative
transactions nor any information supplied by any of its officers,
directors, employees, financial advisors, legal advisors,
representatives and agents in connection therewith. All
information provided will be subject to the Confidentiality
Agreements dated December 19, 2000 and January 24, 2001.
4.3 ADDITIONAL AGREEMENTS OF CCO
CCo agrees that, except as expressly contemplated by this Agreement or
otherwise agreed to in writing by ECo, from the date hereof to the Effective
Date it will, and will cause each of the CCo Subsidiaries to:
(a) Use its reasonable best efforts to cause: (i) the shares of CCo
Common Stock to be issued from time to time after the Effective
Time upon exchange of the Exchangeable Shares and upon exercise
of the New Options to be listed upon the Closing on the NYSE; and
(ii) with the cooperation and assistance of ECo, the Exchangeable
Shares to be listed on the TSE or, in the event that a listing on
the TSE is not available, on another recognized Canadian stock
exchange;
(b) CCo shall or shall cause CCo Sub to make application to the
applicable securities regulatory authorities in Canada for an
order(s) declaring that: (i) the first trade of
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Exchangeable Shares by a holder thereof; (ii) the issuance of CCo
Common Stock on conversion of the Exchangeable Shares; (iii) the
first trade of CCo Common Stock received on conversion of the
Exchangeable Shares by a holder thereof; (iv) the issuance of CCo
Common Stock on exercise of the ECo Options; and (v) the first
trade of CCo Common Stock received on exercise of the ECo Options
by a holder thereof is not a distribution subject to the
registration and prospectus requirements of applicable securities
legislation in Canada; and
(c) CCo will not, during the Measurement Period, buy back any of its
outstanding Common Stock.
4.4 PUBLIC ANNOUNCEMENTS
Neither CCo nor ECo, nor any of their respective affiliates, shall issue
or cause the publication of any press release or other public announcement with
respect to this Agreement, the Arrangement or the other transactions
contemplated hereby or in respect of ECo's business and operations without the
prior notice to and the consent (not to be unreasonably withheld) of the other
party, except the filing of the Registration Statements and any Current Reports
on Form 8-K with the SEC and except as may be required by law or by any listing
agreement with the NYSE or TSE or any other national securities exchange or
Canadian stock exchange.
4.5 COMFORT LETTERS
(a) Upon request of CCo, ECo shall use its reasonable best efforts to
cause to be delivered to CCo a letter (the "ECo Comfort Letter")
of Ernst & Young LLP, Chartered Accountants, addressed to CCo and
dated as of a date within five days before the earlier of (i) the
date the Proxy Circular is first mailed to ECo's securityholders;
and (ii) the date on which the S-3 Registration Statement shall
become effective, in form and substance reasonably satisfactory
to CCo and customary in scope and substance for "comfort" letters
delivered by independent public accountants in connection with
proxy circulars and registration statements similar to the Proxy
Circular and the S-3 Registration Statement.
(b) Upon request of ECo, CCo shall use its reasonable best efforts to
cause to be delivered to ECo a letter (the "CCo Comfort Letter")
of Xxxxxx Xxxxxxxx LLP, Independent Accountants, addressed to ECo
and dated as of a date within five days before the earlier of (i)
the date the Proxy Circular is first mailed to ECo's
securityholders; and (ii) the date on which the S-3 Registration
Statement shall become effective, in form and substance
reasonably satisfactory to ECo and customary in scope and
substance for "comfort" letters delivered by independent public
accountants in connection with proxy circulars and registration
statements similar to the Proxy Circular and the S-3 Registration
Statement.
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ARTICLE 5
CONDITIONS PRECEDENT TO OBLIGATIONS
5.1 CONDITIONS PRECEDENT TO OBLIGATIONS OF EACH PARTY
The obligations of each party to consummate and effect the transactions
contemplated hereunder shall be subject to the satisfaction or waiver on or
before the Effective Date of the following conditions:
(a) Securityholder Approval. The Arrangement and the other
transactions contemplated hereby shall have been approved and
adopted by the ECo securityholders in accordance with applicable
law and ECo's articles and bylaws;
(b) 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
Governmental Entity 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;
(c) Court Approval. The Court shall have issued its final order
approving the Arrangement in form and substance reasonably
satisfactory to CCo and ECo (such approvals not to be
unreasonably withheld or delayed by CCo or ECo) and reflecting
the terms hereof;
(d) Commissions, etc. All required orders shall have been obtained
from the Commissions and other relevant United States and
Canadian securities regulatory authorities in connection with the
Arrangement. Any 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 a material portion of the
assets or businesses of ECo or CCo. CCo and ECo shall each 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 the parties;
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(e) Securities Matters. The Registration Statements shall have been
declared or become effective under the Securities Act on or
before the Effective Date, and, each Registration Statement, at
its effective date and on the Closing Date shall not be the
subject of any SEC stop-order or SEC proceedings seeking a
stop-order, and the Arrangement shall, on the Closing Date, not
be subject to any similar proceedings commenced or threatened by
the Commissions;
(f) Listings. The CCo Common Stock to be issued from time to time
after the Effective Time upon exchange of the Exchangeable Shares
and exercise of the New Options shall have been approved for
listing on the NYSE, and the Exchangeable Shares shall be listed
on the TSE or, in the absence of a listing on the TSE, on another
recognized Canadian stock exchange;
(g) Consents of Certain Parties in Privity. CCo and ECo shall have
received all written consents, assignments, waivers,
authorizations or other certificates set forth in the ECo
Disclosure Letter necessary to provide for the continuation in
full force and effect of all their material contracts and leases
and for them 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 either
CCo or ECo; and
5.2 CONDITIONS PRECEDENT TO OBLIGATIONS OF ECO
The obligations of ECo to consummate and effect the transactions
contemplated hereunder shall be subject to the satisfaction or waiver on or
before the Effective Date of the following additional conditions:
(a) Representations and Warranties. The representations and
warranties of CCo contained in this Agreement shall be true and
correct on the date hereof and (except to the extent any such
representations and warranties speaks as of an earlier date)
shall also be true and correct on and as of the Effective Date,
with the same force and effect as if made on and as of the
Effective Date, except where the underlying facts giving rise to
the failure of such representations and warranties to be true and
correct would not have a Material Adverse Effect on CCo and
except where, if such failure would have a Material Adverse
Effect on CCo, CCo has publicly disclosed (either by including
the information in a CCo Securities Report filed with the SEC or
in a press release disseminated over a recognized newswire
service in the United States) the matter or matters giving rise
to such failure, or such matter or matters have been otherwise
widely reported to the general public in the United States,
before the commencement of the Measurement Period (as defined in
the Plan of Arrangement) after taking into account any
postponement of the ECo Shareholder Meeting;
(b) Covenants. CCo shall have performed and complied in all material
respects with all covenants required by this Agreement to be
performed or complied with by CCo on or before the Effective
Date;
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(c) Material Adverse Effects. There shall not have been any Material
Adverse Effect on CCo since September 30, 2000 which has not
been, or the facts giving rise to such Material Adverse Effect
have not been, publicly disclosed (either by including the
information in a CCo Securities Report filed with the SEC or in a
press release disseminated over a recognized newswire service in
the United States) or otherwise widely reported to the general
public in the United States, prior to the commencement of the
Measurement Period (as defined in the Plan of Arrangement) after
taking into account any postponement of the ECo Shareholder
Meeting;
(d) Certificate. CCo shall have delivered to ECo a certificate, dated
the Effective Date and signed by its chief executive officer and
its chief financial officer, to the effect set forth in Sections
5.2 (a), (b) and (c);
(e) Securities Commission Orders. CCo shall have received an order or
orders from applicable regulatory authorities in Canada as
provided pursuant to Section 4.3(b) in a form acceptable to ECo
acting reasonably; and
(f) Pooling Letters. Subject to Section 5.4, ECo shall have received
letters, at Closing, from Ernst & Young LLP and Xxxxxx Xxxxxxxx
LLP, regarding such firms' concurrence with the conclusions of
management of CCo and ECo as to the appropriateness of pooling of
interests accounting for the Arrangement under APB 16 if the
transactions contemplated under this Agreement and the Plan of
Arrangement are consummated in accordance herewith and therewith;
provided that ECo has not taken any action after the date hereof
that has resulted in such letters not being received.
5.3 CONDITIONS PRECEDENT TO OBLIGATIONS OF CCO
The obligations of CCo to consummate and effect the transactions
contemplated hereunder shall be subject to the satisfaction or waiver on or
before the Effective Date of the following additional conditions:
(a) Representations and Warranties. The representations and
warranties of ECo contained in this Agreement shall be true and
correct on the date hereof and (except to the extent any such
representations and warranties speaks as of an earlier date and
except to give effect to the issuance of ECo Common Shares on
exercise of outstanding options) shall also be true and correct
on and as of the Effective Date, with the same force and effect
as if made on and as of the Effective Date, except where the
underlying facts giving rise to the failure of such
representations and warranties to be true and correct would not
have a Material Adverse Effect on ECo;
(b) Covenants. ECo shall have performed and complied in all material
respects with all covenants required by this Agreement to be
performed or complied with by ECo on or before the Effective
Date;
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(c) Certificate. ECo shall have delivered to CCo a certificate, dated
the Effective Date and signed by its chief executive officer and
its chief financial officer, to the effect set forth in Sections
5.3 (a) and (b);
(d) Affiliates Agreements. ECo shall have furnished copies to CCo of
the ECo affiliates agreements referred to Section 7.6(a); (e)
Dissent Rights. ECo shall not have received on or prior to the
Effective Time notice from the holders of more than 5% of the
issued and outstanding ECo Common Shares and ECo Options, in
aggregate, of their intention to exercise their rights of
dissent, as granted in the Interim Order, under section 184 of
the ABCA;
(f) Pooling Letters. Subject to Section 5.4, CCo shall have received
letters, at Closing, from Ernst & Young LLP and Xxxxxx Xxxxxxxx
LLP, regarding such firms' concurrence with the conclusions of
management of CCo and ECo as to the appropriateness of pooling of
interests accounting for the Arrangement under APB 16 if the
transactions contemplated under this Agreement and the Plan of
Arrangement are consummated in accordance herewith and therewith;
provided that CCo has not taken any action after the date hereof
that has resulted in such letters not being received; and
(g) Material Adverse Effect. There shall not have been any Material
Adverse Effect since September 30, 2000 in respect of ECo.
5.4 POOLING ACCOUNTING
If at any time prior to the ECo Shareholders Meeting, CCo shall
determine, and shall publicly disclose (either by including the information in a
CCo Securities Report filed with the SEC or in a press release disseminated over
a recognized newswire service in the United States), that the transactions
contemplated by this Agreement and the Plan of Arrangement will not be accounted
for on a pooling of interests accounting basis under United States generally
accepted accounting principles, then:
(a) the agreement of CCo and ECo in Section 4.1(e) shall terminate;
and
(b) so long as such public disclosure by CCo is made prior to the
commencement of the Measurement Period (as defined in the Plan of
Arrangement) after taking into account any postponement to the
date of the ECo Shareholders Meeting, the conditions to
completion of the transactions contemplated hereby set forth in
Sections 5.2(f) and 5.3(f) shall be deemed to be waived as of the
date of such public disclosure;
provided that, if the principal reason for such determination by CCo is the
breach by ECo of its obligations under Section 4.1(e), then the obligations of
ECo under such section shall not be terminated under Section 5.4(a) above and
the condition to completion in favour of CCo under Section 5.3(f) shall not be
deemed to be waived under Section 5.4(b) above (and, for greater
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certainty, the condition under Section 5.2(f) continues to be deemed to be
waived under Section 5.4(b)).
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 securityholders entitled to vote of ECo, as follows:
(a) by mutual agreement of ECo and CCo;
(b) by ECo, if there has been a breach by CCo of any representation
or warranty set forth in this Agreement on the part of CCo, or if
any representation or warranty of CCo shall have become untrue,
in either case which has or is reasonably expected to have a
Material Adverse Effect on CCo, and which CCo fails to cure
within 15 business days after written notice thereof from ECo
(except that no cure period shall be provided for a breach by CCo
which by its nature cannot be cured and in no event shall such
cure period extend beyond the Termination Date); provided that a
breach of such a representation or warranty or any such
representation or warranty that shall have become untrue shall be
deemed not to have and not to be reasonably expected to have a
Material Adverse Effect on CCo for purposes of this Agreement if
CCo has publicly disclosed (either by including the information
in a CCo Securities Report filed with the SEC or in a press
release disseminated over a recognized newswire service in the
United States) the matter or matters giving rise to such breach
or untruth, or such matter or matters have been otherwise widely
reported to the general public in the United States, before the
commencement of the Measurement Period (as defined in the Plan of
Arrangement) after taking into account any postponement of the
ECo Shareholder Meeting;
(c) by ECo, if there has been a breach in any material respect by CCo
of any covenant or agreement set forth in this Agreement on the
part of CCo which CCo fails to cure within 15 business days after
written notice thereof from ECo (except that no cure period shall
be provided for a breach by CCo which by its nature cannot be
cured and in no event shall such cure period extend beyond the
Termination Date);
(d) by CCo, if there has been a breach by ECo of any representation
or warranty set forth in this Agreement on the part of ECo, or if
any representation or warranty of ECo shall have become untrue,
in either case which has or is reasonably expected to have a
Material Adverse Effect on ECo, and which ECo fails to cure
within 15 business days after written notice thereof from CCo
(except that no cure period shall be provided for a breach by ECo
which by its nature cannot be cured and in no event shall such
cure period extend beyond the Termination Date);
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(e) by CCo, if there has been a breach in any material respect by ECo
of any covenant or agreement set forth in this Agreement on the
part of ECo which ECo fails to cure within 15 business days after
written notice thereof from CCo (except that no cure period shall
be provided for a breach by ECo which by its nature cannot be
cured and in no event shall such cure period extend beyond the
Termination Date);
(f) by either party, if all the conditions for Closing the
Arrangement for the benefit of such party shall not have been
satisfied or waived on or before 5:00 p.m., Calgary, Alberta time
on June 29, 2001 (the "Termination Date"), other than as a result
of a breach of this Agreement by the terminating party;
(g) by either party if the securityholders of ECo do not approve the
Arrangement (and the other matters to be approved at such meeting
as provided in Section 7.1 hereof) at the ECo Shareholders
Meeting;
(h) by either party if a final and non-appealable order shall have
been entered in any action or proceeding before any Governmental
Entity that prevents or makes illegal the consummation of the
Arrangement;
(i) by CCo if the ECo board of directors or any committee of the ECo
board of directors shall (i) withdraw or modify in any adverse
manner its approval or recommendation in respect of this
Agreement, the Arrangement and the other transactions
contemplated hereby or (ii) fails to reaffirm its approval or
recommendation upon request, from time to time, by CCo to do so
or upon an Acquisition Proposal in respect of ECo being publicly
announced or proposed, offered or made to the ECo Shareholders or
to ECo (such reaffirmation to be made within 10 days of such
request being made or such Acquisition Proposal being publicly
announced, proposed, offered or made or immediately prior to the
meeting of ECo Shareholders, whichever occurs first);
(j) by ECo, prior to the approval of this Agreement, the Arrangement
and the other transactions contemplated hereby by the
securityholders of ECo if, as a result of a Superior Proposal by
a party other than CCo or any of its affiliates, ECo's board of
directors determines in accordance with Section 4.2(n) to accept,
recommend, approve or implement such Superior Proposal and ECo
has otherwise complied with all of its representations,
warranties, covenants and agreements herein contained including,
without limitation, Sections 4.2(n) and 6.4; or
(k) by either party if the CCo Average Price (as defined in the Plan
of Arrangement) is less than $28 (such dollar amount being
subject to adjustment in the same manner as is set forth in
Section 1.2(b)).
6.2 NOTICE OF TERMINATION
Any termination of this Agreement under Section 6.1 above will be
effected by the delivery of written notice by the terminating party to the other
party hereto.
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6.3 EFFECT OF TERMINATION
Subject to Section 6.4, in the event of termination of this Agreement by
either ECo or CCo pursuant to 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 CCo or ECo or their respective officers or directors, except that: (i)
the provisions of Section 6.4(c) shall survive such termination; (ii) the
provisions of the Confidentiality Agreements dated December 19, 2000 and January
24, 2001 shall survive any such termination; and (iii) no party shall be
released or relieved from any liability arising from the willful breach by such
party of any of its representations, warranties, covenants or agreements as set
forth in this Agreement (and, in the case of wilful breach, the termination fees
payable, if any, under section 6.4 shall not be treated as liquidated damages).
6.4 TERMINATION FEE
(a) If this Agreement is terminated by ECo pursuant to Section
6.1(c), then CCo shall pay to ECo a cash termination fee of $30
million at the time of such termination;
(b) If this Agreement is terminated by CCo pursuant to Section 6.1(d)
or Section 6.1(e), then ECo shall pay to CCo a cash termination
fee of $30 million at the time of such termination;
(c) If: (x) an Acquisition Proposal in respect of ECo is publicly
announced or is proposed, offered or made to the ECo Shareholders
or to ECo prior to the ECo Shareholders Meeting; (y) this
Agreement is terminated by either party pursuant to Section
6.1(g); and (z) either within 12 months following such
termination ECo enters into, directly or indirectly, an
agreement, commitment or understanding with respect to such
Acquisition Proposal or such Acquisition Proposal is consummated
or within six months following such termination ECo enters into
an Acquisition Proposal or an Acquisition Proposal is
consummated, then ECo shall pay to CCo a cash termination fee of
$30 million, payable immediately upon satisfaction of the
requirements contained in (x), (y) and (z).
(d) If this Agreement is terminated by CCo pursuant to Section
6.1(i), then ECo shall pay to CCo upon such termination a cash
termination fee of $30 million at the time of such termination.
(e) If this Agreement is terminated by ECo pursuant to Section
6.1(j), then ECo shall pay to CCo upon such termination a cash
termination fee of $30 million at the time of such termination.
(f) CCo and ECo each agree that the agreements contained in Sections
6.4(a) through 6.4(e) are an integral part of the transactions
contemplated by this Agreement. If either party fails to promptly
pay the other party any fee due under such Sections 6.4(a)
through 6.4(e), it shall pay the other party's costs and expenses
(including legal fees and expenses) in connection with any
action, including the filing of any lawsuit or other legal
action, taken to collect payment, together with interest on the
amount of any unpaid fee at the publicly announced prime rate
from time to time of Chase Manhattan Bank from the date such fee
was first due.
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ARTICLE 7
ADDITIONAL AGREEMENTS
CCo and ECo each agree to take the following actions after the execution
of this Agreement.
7.1 MEETINGS
ECo shall duly call a meeting of its securityholders entitled to vote to
be held within 45 days after the Proxy Circular is prepared for the purpose of
voting upon the Agreement and the Plan of Arrangement and the transactions
contemplated hereby and thereby; and ECo shall, through its board of directors,
recommend to its securityholders in the Proxy Circular approval of such matters
and shall coordinate and cooperate with respect to the timing of such meetings.
ECo may only change such recommendation in the event that the board of directors
of ECo concludes, in good faith, after receiving the advice of outside counsel
and financial advisors that is reflected in the minutes of a meeting of the
board of directors, that such action is necessary for the board of directors to
act in a manner consistent with its fiduciary duty or applicable law and, in the
event that Section 4.2(n) is applicable, if ECo and its board of directors are
in compliance with that Section; however, notwithstanding any change in such
recommendation, ECo will not, subject to compliance with applicable law,
postpone or cancel the holding of the meeting of its security holders, provided
that ECo may postpone the meeting if, after consultation with CCo, there is a
reasonable basis to expect that there are conditions in Section 5.1 or 5.2 to
completion of the transactions contemplated hereunder (other than the conditions
in Section 5.1(a), (b) and (c)) which are unlikely to be satisfied in order for
completion of the transactions to occur within 5 business days after the meeting
of the securityholders. Notwithstanding the foregoing, ECo will, in any event
whatsoever, hold the meeting of its securityholders no later than June 25, 2001.
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 LLP, Suite 3700, 000 - 0xx
Xxxxxx X.X., Xxxxxxx, Xxxxxxx, X0X 0X0 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 first 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 ECo and CCo. Concurrently with the Closing, the Plan of
Arrangement will be filed with the Registrar under the ABCA.
7.3 ANCILLARY DOCUMENTS/RESERVATION OF SHARES
(a) Provided all other conditions of this Agreement have been
satisfied or waived, ECo shall, on the Closing Date, file
Articles of Arrangement pursuant to Section 186 of the ABCA to
give effect to the Plan of Arrangement.
(b) On the Effective Date:
(i) CCo and CCo Sub shall execute and deliver a Support
Agreement containing the terms and conditions set forth in
Exhibit C, together with
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such other terms and conditions as may be agreed to by the
parties hereto acting reasonably; and
(ii) CCo, CCo Sub and a Canadian trust company to be mutually
agreeable to CCo and ECo, acting reasonably, shall execute
and deliver a Voting and Exchange Trust Agreement
containing the terms and conditions set forth in Exhibit
D, 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, CCo will reserve for issuance
such number of shares of CCo Common Stock as shall be necessary
to give effect to the exchanges of options contemplated hereby.
7.4 EXCHANGE OF OPTIONS
Promptly after the Effective Time, CCo will notify in writing each
holder of a ECo Option of the exchange of such ECo Option for an option to
purchase CCo Common Stock in accordance with the Plan of Arrangement, and CCo
will confirm its agreement to honour such options in accordance with their
terms.
7.5 INDEMNIFICATION AND RELATED MATTERS
(a) CCo agrees that all rights to indemnification existing in favor
of the present or former directors and officers of ECo (as such)
or any of the ECo Subsidiaries or present or former directors and
officers (as such) of ECo or any of the ECo Subsidiaries serving
or who served at ECo's or any of the ECo Subsidiaries' request as
a director, officer, employee, agent or representative of another
corporation, partnership, joint venture, trust, employee benefit
plan or other enterprise (each such present or former director or
officer of ECo or any of the ECo Subsidiaries, an "Indemnified
Party"), as provided by contract or in ECo's charter or bylaws or
similar documents of any of the ECo 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, CCo and ECo, jointly and
severally, shall and CCo shall cause ECo to indemnify and hold
harmless to the fullest extent permitted under the ABCA, each
Indemnified Party against any costs and expenses (including
reasonable attorney's fees), judgments, fines, losses, claims and
damages and liabilities, and amounts paid in settlement thereof
with the consent of the indemnifying party, such consent not to
be unreasonably withheld, in connection with any actual or
threatened claim, action, suit, proceeding or investigation that
is based on, or arises out of, the fact that such person is or
was a director or officer of ECo or any ECo Subsidiary (including
without limitation with respect to any of the transactions
contemplated hereby or the Arrangement) or who is serving or who
served at ECo's or any of the ECo Subsidiaries' request as a
director, officer, employee, agent or representative of another
corporation,
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partnership, joint venture, trust, employee benefit plan or other
enterprise. In the event of any such claim, action, suit,
proceeding or investigation, CCo shall cause ECo 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 CCo and, subject to limitations imposed by the
ABCA, ECo shall (or CCo shall cause ECo to) pay all reasonable
fees and expenses of such counsel for the Indemnified Parties
promptly as statements therefor are received; and (ii) CCo will
use all reasonable efforts to assist in the defense of such
matter; provided, however, that neither ECo nor CCo shall be
liable for any settlement effected without its prior written
consent which shall not be unreasonably withheld. Any Indemnified
Party wishing to claim indemnification under this Section 7.5(b),
upon learning of any such claim, action, suit, proceeding or
investigation, shall notify CCo (but the failure to so notify
shall not relieve a party from any liability which it may have
under this Section 7.5(b) unless such failure results in actual
prejudice to such party and then only to the extent of such
prejudice). 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 additional counsel may be
required to be retained by the Indemnified Parties.
(c) Subject to limitations imposed by the ABCA, provided the
Arrangement becomes effective, ECo shall (or CCo shall cause ECo
to) pay all expenses, including reasonable attorney's fees, 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 7.5;
provided, however, that ECo will be entitled to reimbursement for
any advances made under this Section 7.5 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) Provided the Arrangement becomes effective, for a period of six
years after the Effective Date, CCo shall continue in effect
director and officer liability insurance for the benefit of the
Indemnified Parties in such amounts, and with such deductibles,
retained amounts, coverages and exclusions as ECo provides for
its own directors and officers at the date hereof.
(e) This Section 7.5, which shall survive the consummation of this
Agreement and the Arrangement, is intended to benefit each person
or entity indemnified hereunder.
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7.6 AFFILIATE AGREEMENTS
(a) ECo will use its reasonable best efforts to have its Affiliates
sign and deliver to CCo the ECo Affiliate Agreements in the form
of Exhibit E concurrently with the execution hereof. For purposes
of this Agreement, an "Affiliate" shall have the meaning referred
to in SEC Accounting Series Releases 130 and 135 and in Rule 145
under the Securities Act. In the event that ECo does not succeed
in getting its respective Affiliates to sign and deliver the
Affiliate Agreements, such party shall continue to use its
reasonable best efforts to have its Affiliates sign and deliver
the Affiliate Agreements.
(b) CCo agrees that it shall publicly release the combined financial
results (including combined sales and net income) of CCo and ECo
for the period ending at the end of the first full calendar month
of post-combination combined operations of CCo and ECo as soon as
reasonably practicable following Closing, notwithstanding that
such release may not coincide with a financial quarterly report
or be in the form of a report filed with the SEC on Form 10-Q.
7.7 EMPLOYMENT AGREEMENTS
(a) CCo covenants and agrees that, after the Effective Time, it will
and will cause ECo, as the case may be, (and any successor) to
honour and comply with the terms of the existing executive
employee agreements of ECo which ECo has disclosed in writing to
CCo and covenants and agrees that it will not terminate the
employment of any executive officer of ECo, other than for Just
Cause (as that term is defined in the executive employment
agreements) for a period of not less than 45 days.
(b) this Section 7.7 is:
(i) intended for the benefit of employees of ECo and shall be
enforceable by each such person and his or her heirs,
executors, administrators and other legal representatives
(collectively, the "Third Party Beneficiaries") and ECo
and any successors shall hold the rights and benefits of
this Section 7.7 in trust for and on behalf of the Third
Party Beneficiaries and ECo and any successor hereby
accepts such trust and agrees to hold the benefit of and
enforce performance of such covenants on behalf of Third
Party Beneficiaries; and
(ii) are in addition to and not in substitution for, any other
rights that the Third Party Beneficiaries may have by
contract or otherwise.
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ARTICLE 8
MISCELLANEOUS
8.1 NO SURVIVAL OF REPRESENTATIONS AND WARRANTIES
All representations and warranties of the parties contained in this
Agreement will remain operative and in full force and effect, regardless of any
investigation made by or on behalf of the parties to this Agreement, until the
earlier of the valid termination of this Agreement or the Closing Date,
whereupon such representations and warranties will expire and be of no further
force or effect. All agreements and covenants of the parties shall survive the
Closing Date, 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 or by recognized overnight
courier, by facsimile (receipt confirmed) or mailed by 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):
(a) if to CCo to: Calpine Corporation, 00 Xxxx Xxx Xxxxxxxx Xxxxxx,
0xx Xxxxx, Xxx Xxxx, Xxxxxxxxxx, 00000, Attention: General
Counsel, Facsimile No. 000-000-0000, with a copy to Xxxxxxx Xxxxx
LLP, Suite 3700, 000 - 0xx Xxxxxx X.X., Xxxxxxx, Xxxxxxx, X0X
0X0, Attention: A. G. Love, Facsimile No. 000-000-0000 and to
Xxxxxxxxx & Xxxxxxx, 0000 Xxxxxx xx xxx Xxxxxxxx, Xxx Xxxx, XX
00000, Attention: Xxxxxxx X. Xxxxxxx, Facsimile No. 000-000-0000.
(b) if to ECo to: Encal Energy Ltd., 1800, 000 Xxxxxxx Xxxxxx X.X.,
Xxxxxxx, Xxxxxxx, X0X 0X0, Attention: President, Facsimile No.
000-000-0000, with a copy to Xxxxxxx Xxxxx XXX, 0000 Xxxxxxx Xxxx
Xxxx, 000 - 0xx Xxxxxx X.X., Xxxxxxx, Xxxxxxx, X0X 0X0,
Attention: X.X. Xxxxxxxxxx, Facsimile No. 000-000-0000 and to
Xxxx, Weiss, Rifkind, Xxxxxxx & Xxxxxxxx, 0000 Xxxxxx xx xxx
Xxxxxxxx, Xxx Xxxx, XX 00000, Attention: Xxxxx X. Xxxxxxx,
Facsimile No. 000-000-0000.
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."
Any references in this Agreement to "the date hereof" refers to the date of
execution of this Agreement. 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 SEVERABILITY
If any provision of this Agreement or the application thereof to any
person or circumstance is held invalid or unenforceable in any jurisdiction, the
remainder hereof, and the application of such provision to such person or
circumstance in any other jurisdiction or to other
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persons or circumstances in any jurisdiction, shall not be affected thereby, and
to this end the provisions of this Agreement shall be severable.
8.5 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.
8.6 MISCELLANEOUS
This Agreement, which includes the ECo Disclosure Letter and the
Exhibits hereto and the Confidentiality Agreements dated December 19, 2000 and
January 24, 2001 between CCo and ECo, and any other documents referred to herein
or contemplated hereby (a) constitutes the entire agreement between 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; (b) are not intended to confer upon any other person any
rights or remedies hereunder (except that Section 7.5 is for the benefit of
ECo's directors and officers and is intended to confer rights on such persons);
and (c) shall not be assigned by operation of law or otherwise except as
otherwise specifically provided.
8.7 GOVERNING LAW
This Agreement shall be governed by and construed in accordance with the
laws of the Province of Alberta (regardless of the laws that might otherwise
govern under applicable principles of conflicts of law) as to all matters,
including without limitation validity, construction, effect, performance and
remedies.
8.8 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 which writing expressly refers to this
Agreement and the operation of the provisions of this Section 8.8. 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. This Agreement may be amended by the parties hereto at any time before
or after approval of the ECo securityholders, or the CCo stockholders, but,
after such approval, no amendment will be made which by applicable law requires
the further approval of the ECo securityholders or the CCo stockholders without
obtaining such further approval.
8.9 EXPENSES
Except as otherwise provided herein, each party will bear its respective
expenses and legal fees incurred with respect to this Agreement and the
transactions contemplated hereby.
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8.10 FURTHER ASSURANCES
Each of the parties hereto will from time to time execute and deliver
all such further documents and instruments and do all such acts and things as
the other parties may reasonably require to effectively carry out or better
evidence or perfect the terms and provisions of this Agreement. The parties
agree to amend the structure of the transactions contemplated hereby if
necessary to have the transactions treated as "pooling of interests" under
United States generally accepted accounting principles, provided that any such
amendment will not have a Material Adverse Effect on either party.
8.11 U.S. TAXATION OF ARRANGEMENT
It is acknowledged that CCo may or may not, in its sole discretion,
structure the transactions contemplated hereby as a taxable transaction for
United States tax purposes.
IN WITNESS WHEREOF, CCo and ECo have caused this Agreement to be signed
by their respective officers thereunder duly authorized, all as of the date
first written above.
CALPINE CORPORATION
Per: /s/ XXXXX XXXXXXXXXX
--------------------------------------
Xxxxx Xxxxxxxxxx
President and Chief Executive Officer
ENCAL ENERGY LTD.
Per: /s/ XXXXX XXXXXXX
--------------------------------------
Xxxxx Xxxxxxx
President and Chief Executive Officer
Per: /s/ XXXXXX XXXXXXX
--------------------------------------
EXHIBIT A
FORM OF PLAN OF ARRANGEMENT
UNDER SECTION 186
OF THE BUSINESS CORPORATIONS ACT (ALBERTA)
INVOLVING AND AFFECTING ECO AND
THE HOLDERS OF ITS COMMON SHARES AND OPTIONS
ARTICLE 1
INTERPRETATION
1.1 DEFINITIONS
In this Plan of Arrangement unless there is something in the subject
matter or context inconsistent therewith, the following terms shall have the
respective meanings set out below and grammatical variations of such terms shall
have corresponding meanings:
"ABCA" means the Business Corporations Act (Alberta), as amended;
"Arrangement" means the arrangement under Section 186 of the ABCA on the
terms and subject to the conditions set out in this Plan of Arrangement,
subject to any amendments thereto made (i) in accordance with Section
8.8 of the Combination Agreement; (ii) in accordance with Section 5.1
hereof or (iii) at the direction of the Court in the Final Order;
"Arrangement Resolution" means the special resolution passed by the
Shareholders and the Optionholders at the Meeting;
"Automatic Redemption Date" has the meaning provided in the Exchangeable
Share Provisions;
"Business Day" has the meaning provided in the Exchangeable Share
Provisions;
"Canadian Dollar Exchange Rate" means, with respect to determining the
exchange rate from U.S. dollars to Canadian dollars on a particular day,
the noon buying rate (expressed to the fourth decimal place) as reported
by the Bank of Canada for such day or, if the day of the calculation is
a holiday or other day on which the Bank of Canada is not reporting such
rate, then the Federal Reserve Bank of New York Noon Buying Rate
(expressed to the fourth decimal place) shall be used instead on such
day;
"CCo" has the meaning provided in the Exchangeable Share Provisions;
"CCo Average Price" means the weighted average trading price of the
shares of CCo Common Stock on The New York Stock Exchange (as reported
by The New York Stock Exchange and converted, as hereinafter provided,
to Canadian dollars and expressed to the fourth decimal place) for the
Measurement Period. For these purposes, (i) the U.S. dollar/Canadian
dollar exchange rate for determining the CCo Average Price shall be
based upon the average of the Canadian Dollar Exchange Rate (expressed
to the fourth decimal place) for each of the trading days in the
Measurement Period; and (ii) the "weighted average trading price" shall
be determined by dividing the aggregate sale price of all shares of CCo
Common Stock sold on The New York Stock Exchange during the Measurement
Period by the total number of shares of CCo Common Stock sold;
"CCo Common Stock" has the meaning provided in the Exchangeable Share
Provisions;
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"CCo Sub" means, a corporation organized and existing under the laws of
Alberta and any successor corporation;
"Combination Agreement" means the combination agreement by and between
CCo and ECo dated effective as of February 7, 2001, as amended and
restated from time to time, providing for, among other things, this Plan
of Arrangement and the Arrangement;
"Court" means the Court of Queen's Bench of Alberta;
"Depositary" means CIBC Mellon Trust Company at its principal transfer
offices in Xxxxxxx, Xxxxxxx xxx Xxxxxxx, Xxxxxxx;
"Dissent Procedures" has the meaning provided in Section 3.1;
"ECo" means Encal Energy Ltd., a corporation organized and existing
under the ABCA;
"ECo Common Shares" means the common shares in the capital of ECo;
"Effective Date" means the registration date shown on the registration
statement issued upon the filing of the Articles of Arrangement under
the ABCA giving effect to the Arrangement;
"Effective Time" means 12:01 a.m. (Calgary time) on the Effective Date;
"Exchange Ratio" means the ratio of ~ [NOTE TO DRAFT: THIS NUMBER IS
DETERMINED AS SET FORTH IN SECTION 1.2 OF THE COMBINATION AGREEMENT]
Exchangeable Shares for each whole ECo Common Share, subject to
adjustment as provided in accordance with Section 1.2 of the Combination
Agreement;
"Exchangeable Share Provisions" means the rights, privileges,
restrictions and conditions attaching to the Exchangeable Shares;
"Exchangeable Shares" means the Exchangeable Shares in the capital of
CCo Sub;
"Final Order" means the final order of the Court approving the
Arrangement, as such order may be amended by the Court at any time and
from time to time prior to the Effective Time;
"Interim Order" means the interim order of the Court in relation to the
Arrangement, as such order may be amended by the Court at any time and
from time to time;
"ITA" means the Income Tax Act (Canada), as amended;
"Measurement Period" means the period of 10 consecutive trading days
ending on the third trading day prior to the date of the Meeting
(including any adjournment thereof);
"Meeting" means the special meeting of the Shareholders and of the
Optionholders of ECo to be held to consider this Plan of Arrangement;
"Options" means all options to purchase ECo Common Shares outstanding as
at the Effective Date, including all options outstanding under ECo's
stock option plan;
"Optionholders" means holders of Options;
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"Proxy Circular" means the Management Information Circular of ECo
prepared in connection with the Arrangement;
"Shareholders" means holders of ECo Common Shares;
"Support Agreement" means the agreement so entitled between CCo and CCo
Sub to be dated as of the Effective Date and provided for in the
Combination Agreement;
"Transfer Agent" means the duly appointed transfer agent for the time
being of the Exchangeable Shares, and, if there is more than one such
transfer agent, then the principal Canadian transfer agent;
"Voting and Exchange Trust Agreement" means the agreement so entitled
between CCo, CCo Sub and the Trustee named therein to be dated as of the
Effective Date and provided for in the Combination Agreement; and
"Voting Share" has the meaning ascribed to such term in the Voting and
Exchange Trust Agreement.
1.2 SECTIONS AND HEADINGS
The division of this Plan of Arrangement into sections and the insertion
of headings are for reference purposes only and shall not affect the
interpretation of this Plan of Arrangement. Unless otherwise indicated, any
reference in this Plan of Arrangement to a Section refers to the specified
Section of this Plan of Arrangement.
1.3 NUMBER, GENDER AND PERSONS
In this Plan of Arrangement, unless the context otherwise requires,
words importing the singular number include the plural and vice versa, words
importing any gender include all genders and words importing persons include
individuals, bodies corporate, partnerships, associations, trusts,
unincorporated organizations, governmental bodies and other legal or business
entities of any kind.
1.4 DATE FOR ANY ACTION
In the event that any date on or by which any action is required or
permitted to be taken hereunder is not a Business Day, such action shall be
required or permitted to be taken on or by the next succeeding day which is a
Business Day.
1.5 CURRENCY
Unless otherwise expressly stated herein, all references to currency and
payments in cash or money in this Plan of Arrangement are to United States
dollars.
1.6 STATUTORY REFERENCES
Any reference in this Plan of Arrangement to a statute includes such
statute as amended, consolidated or re-enacted from time to time, all
regulations made thereunder, all amendments to such regulations from time to
time, and any statute or regulation which supersedes such statute or
regulations.
A-3
ARTICLE 2
ARRANGEMENT
2.1 ARRANGEMENT
At the Effective Time, the following transactions shall occur and shall
be deemed to occur in the following order without any further act or formality:
(a) each of the outstanding ECo Common Shares (other than ECo Common
Shares held by Shareholders who have exercised their right of
dissent in accordance with Article 3 hereof and are ultimately
entitled to be paid the fair value of their ECo Common Shares)
will, without any further action on behalf of the Shareholders,
be transferred to CCo Sub in consideration for a number of
Exchangeable Shares determined in accordance with the Exchange
Ratio;
(b) each Shareholder will receive only a whole number of Exchangeable
Shares resulting from the transfer of such Shareholder's ECo
Common Shares to CCo Sub. In lieu of fractional Exchangeable
Shares, each Shareholder who otherwise would be entitled to
receive such fractional share shall be paid by CCo Sub an amount
determined in accordance herewith in full satisfaction of such
fractional entitlement;
(c) upon the transfer of shares referred to in Section 2.1(a) above:
(i) each Shareholder shall cease to be such a holder of ECo
Common Shares, shall have his name removed from the register of
holders of ECo Common Shares and shall become a holder of the
number of fully paid Exchangeable Shares to which he is entitled
as a result of the transfer of shares referred to in Section
2.1(a) and such Shareholder's name shall be added to the register
of holders of such securities accordingly; and (ii) CCo Sub shall
become the legal and beneficial owner of all of the ECo Common
Shares so transferred;
(d) each of the outstanding Options (other than Options held by
holders who have exercised their rights of dissent in accordance
with Section 3.1 hereof and who are ultimately entitled to be
paid the fair value for such Options) will, without any further
action on the part of any Optionholder: (i) vest in accordance
with the rights of the holder thereof; and (ii) be converted into
or exchanged for an option to purchase the number of shares of
CCo Common Stock determined by multiplying the number of ECo
Common Shares subject to such Option at the Effective Time by the
Exchange Ratio, at an exercise price per share of CCo Common
Stock equal to the exercise price per share of such Option
immediately prior to the Effective Time divided by the Exchange
Ratio, and expressed in U.S. dollars. For the purposes of
determining the exercise price per share of CCo Common Stock, the
exercise price per share of ECo Common Shares subject to such
Option shall be adjusted using the average of the Canadian Dollar
Exchange Rate (expressed to the fourth decimal point) for each of
the trading days in the Measurement Period. If the foregoing
calculation results in a converted Option being exercisable for a
fraction of a share of CCo Common Stock, then the number of
shares of CCo Common Stock subject to such Option will be rounded
down to the nearest whole number of shares, and the exercise
price per whole share of CCo Common Stock will be as determined
above. The obligations of ECo under the Options as so converted
shall be assumed by CCo and CCo shall be substituted for ECo
under, and as sponsor of, ECo's stock option plan. Except as
provided in this paragraph (d), the term and all other terms and
conditions of the Options in effect immediately prior to giving
effect to the Arrangement shall govern the Options; and
A-4
(e) holders of ECo Common Shares who are residents of Canada for the
purposes of the ITA and who receive Exchangeable Shares under
Section 2.1(a) shall be entitled to make an income tax election
pursuant to subsection 85(1) of the ITA with respect to the
transfer of their ECo Common Shares to CCo Sub by providing two
signed copies of the necessary election forms to CCo 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 CCo Sub and returned to such
holders of ECo Common Shares for filing with Revenue Canada,
Customs, Excise and Taxation.
2.2 ALLOCATION OF CONSIDERATION
A Shareholder who has transferred his ECo Common Shares to CCo Sub as
contemplated under Section 2.1(a) shall be considered to have disposed of a
portion (the "share portion") of such Shareholder's ECo Common Shares solely in
consideration for Exchangeable Shares and to have disposed of the remaining
portion of such ECo Common Shares for all other ancillary rights and benefits
(the "Ancillary Rights") associated with the Exchangeable Shares and the Voting
Share under the Exchangeable Share Provisions, the Voting and Exchange Trust
Agreement and the Support Agreement. The share portion (expressed as a number)
shall be equal to the number of ECo Common Shares obtained when the total number
of ECo Common Shares held by the Shareholder is multiplied by the aggregate fair
market value of the Exchangeable Shares received by the Shareholder divided by
the sum of such aggregate fair market value and the aggregate fair market value
of the Ancillary Rights received by the Shareholder.
ARTICLE 3
RIGHTS OF DISSENT
3.1 RIGHTS OF DISSENT
Registered Shareholders and Optionholders may exercise rights of dissent
with respect to their ECo Common Shares or Options pursuant to and in the manner
set forth in Section 184 of the ABCA (as modified by the Interim Order) and this
Section 3.1 (the "Dissent Procedures") in connection with the Arrangement, and
holders who duly exercise such rights of dissent and who:
(a) are ultimately entitled to be paid fair value for the ECo Common
Shares or Options shall be deemed to have transferred such ECo
Common Shares or Options to ECo for cancellation on the Effective
Date; or
(b) are ultimately not entitled, for any reason, to be paid the fair
value for their ECo Common Shares or Options shall be deemed to
have participated in the Arrangement on the same basis as any
nondissenting Shareholder or Optionholder, as the case may be,
but in no case shall ECo be required to recognize such holders as Shareholders
or Optionholders on and after the Effective Time, and the names of such persons
shall be deleted from the registers of Shareholders or Optionholders on the
Effective Time.
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ARTICLE 4
CERTIFICATES AND FRACTIONAL SHARES
4.1 ISSUANCE OF CERTIFICATES REPRESENTING EXCHANGEABLE SHARES
At or promptly after the Effective Time, CCo Sub shall deposit with the
Depositary, for the benefit of the Shareholders who exchanged their ECo Common
Shares pursuant to the Arrangement, certificates representing the Exchangeable
Shares issued pursuant to the Arrangement upon the exchange. Upon surrender to
the Depositary of a certificate which immediately prior to the Effective Time
represented outstanding ECo Common Shares, and such additional documents and
instruments as the Depositary may reasonably require, the holder of such
surrendered certificate shall be entitled to receive in exchange therefor, and
the Depositary shall forthwith deliver to such holder, a certificate
representing that number (rounded down to the nearest whole number) of
Exchangeable Shares which such holder has the right to receive pursuant to the
Arrangement (together with any dividends or distributions with respect thereto
pursuant to Section 4.2 and any cash in lieu of fractional Exchangeable Shares
pursuant to Section 4.3), and any certificate so surrendered shall forthwith be
canceled. In the event of a transfer of ownership of ECo Common Shares which is
not registered in the transfer records of ECo, a certificate representing the
proper number of Exchangeable Shares (together with any dividends or
distributions with respect thereto pursuant to Section 4.2 and any cash in lieu
of fractional Exchangeable Shares pursuant to Section 4.3) shall be delivered to
a transferee if the certificate representing such ECo Common Shares is presented
to the Depositary, accompanied by all documents required to evidence and effect
such transfer. Until surrendered as contemplated by this Section 4.1, each
certificate which immediately prior to the Effective Time represented
outstanding ECo Common Shares shall be deemed at any time after the Effective
Time, but subject to Section 4.5, to represent only the right to receive upon
such surrender (a) the certificate representing Exchangeable Shares as
contemplated by this Section 4.1, (b) a cash payment in lieu of any fractional
Exchangeable Shares as contemplated by Section 4.3 and (c) any dividends or
distributions with a record date after the Effective Time theretofore paid or
payable with respect to Exchangeable Shares as contemplated by Section 4.2.
4.2 DIVIDENDS AND OTHER DISTRIBUTIONS
No dividends or other distributions declared or made after the Effective
Time with respect to the Exchangeable Shares with a record date after the
Effective Time shall be paid to the holder of any formerly outstanding ECo
Common Shares which were not exchanged pursuant to Section 2.1, and no cash
payment in lieu of fractional shares shall be paid to any such holder pursuant
to Section 4.3 (and no interest will be earned and payable thereon), unless and
until the certificate representing such ECo Common Shares shall be surrendered
in accordance with Section 4.1. Subject to applicable law and to Section 4.5, at
the time of such surrender of any such certificate (or, in the case of clause
(c) below, at the appropriate payment date), there shall be paid to the holder
of the Exchangeable Shares resulting from such exchange, in all cases without
interest, (a) the amount of any cash payable in lieu of a fractional
Exchangeable Share to which such holder is entitled pursuant to Section 4.3, (b)
the amount of dividends or other distributions with a record date after the
Effective Time theretofore paid with respect to such Exchangeable Shares, and
(c) the amount of dividends or other distributions with a record date after the
Effective Time but prior to surrender or a payment date subsequent to surrender
payable with respect to such Exchangeable Shares.
4.3 NO FRACTIONAL SHARES
No certificates or scrip representing fractional Exchangeable Shares
shall be issued upon the surrender for exchange of certificates pursuant to
Section 4.1, and such fractional interests shall not entitle the owner thereof
to vote or to possess or exercise any rights as a security holder of CCo Sub. In
lieu of
A-6
any such fractional interests, each person entitled thereto will receive an
amount of cash (rounded to the nearest whole cent), without interest, equal to
the product of (a) such fractional interest, multiplied by (b) the CCo Average
Price, such amount to be provided to the Depositary by CCo Sub upon request.
4.4 LOST CERTIFICATES
If any certificate which immediately prior to the Effective Time
represented outstanding ECo Common Shares which were exchanged pursuant to
Section 2.1 has been lost, stolen or destroyed, upon the making of an affidavit
of that fact by the person claiming such certificate to be lost, stolen or
destroyed, the Depositary will issue in exchange for such lost, stolen or
destroyed certificate, certificates representing Exchangeable Shares (together
with any dividends or distributions with respect thereto pursuant to Section 4.2
and any cash in lieu of fractional Exchangeable Shares pursuant to Section 4.3)
deliverable in respect thereof as determined in accordance with Section 2.1.
When seeking such certificate and payment in exchange for any lost, stolen or
destroyed certificate, the person to whom certificates representing Exchangeable
Shares are to be issued shall, as a condition precedent to the issuance thereof,
give a bond satisfactory to CCo Sub, CCo and the Transfer Agent, as the case may
be, in such sum as CCo Sub may direct or otherwise indemnify CCo Sub, CCo and
the Transfer Agent in a manner satisfactory to CCo Sub, CCo and the Transfer
Agent against any claim that may be made against CCo Sub, CCo or the Transfer
Agent with respect to the certificate alleged to have been lost, stolen or
destroyed.
4.5 EXTINGUISHMENT OF RIGHTS
Any certificate which immediately prior to the Effective Time
represented outstanding ECo Common Shares which were exchanged pursuant to
Section 2.1 and has not been deposited, with all other instruments required by
Section 4.1, on or prior to the tenth anniversary of the Effective Date shall
cease to represent a claim or interest of any kind or nature as a Shareholder or
a holder of Exchangeable Shares or shares of CCo Common Stock. On such date, the
Exchangeable Shares (and any dividends or distributions with respect thereto and
any cash pursuant to Section 4.3) to which the former registered holder of the
certificate referred to in the preceding sentence was ultimately entitled (or,
if the Automatic Redemption Date has occurred, the resulting shares of CCo
Common Stock) shall be deemed to have been surrendered to CCo Sub (or, in the
event that the Automatic Redemption Date has occurred, CCo), together with all
entitlements to dividends, distributions, cash and interest thereon held for
such former registered holder, for no consideration and such shares shall
thereupon be canceled and the name of the former registered holder shall be
removed from the register of holders of such shares.
ARTICLE 5
AMENDMENT
5.1 PLAN OF ARRANGEMENT AMENDMENT
ECo reserves the right to amend, modify and/or supplement this Plan of
Arrangement from time to time at any time prior to the Effective Time provided
that any such amendment, modification or supplement must be contained in a
written document that is (a) agreed to by CCo and CCo Sub, (b) filed with the
Court and, if made following the Meeting, approved by the Court and (c)
communicated to Shareholders and Optionholders in the manner required by the
Court (if so required).
Any amendment, modification or supplement to this Plan of Arrangement
may be proposed by ECo at any time prior to or at the Meeting (provided that CCo
and CCo Sub shall have consented thereto) with or without any other prior notice
or communication, and if so proposed and accepted by the persons
A-7
voting at the Meeting (other than as may be required under the Interim Order),
shall become part of this Plan of Arrangement for all purposes.
Any amendment, modification or supplement to this Plan of Arrangement
which is approved by the Court following the Meeting shall be effective only (a)
if it is consented to by ECo, (b) if it is consented to by CCo and CCo Sub and
(c) if required by the Court or applicable law, it is consented to by the
Shareholders, Optionholders or the holders of Exchangeable Shares, as the case
may be.
A-8
EXHIBIT B
EXCHANGEABLE SHARE PROVISIONS AND OTHER PROVISIONS
TO BE INCLUDED IN THE ARTICLES OF INCORPORATION OF CCO SUB
A. SHARE CAPITAL
PROVISIONS ATTACHING TO THE EXCHANGEABLE SHARES
The Exchangeable Shares in the capital of the Corporation shall have the
following rights, privileges, restrictions and conditions:
ARTICLE 1
INTERPRETATION
1.1 FOR THE PURPOSES OF THESE RIGHTS, PRIVILEGES, RESTRICTIONS AND
CONDITIONS:
"Act" means the Business Corporations Act (Alberta), as amended,
consolidated or reenacted from time to time.
"Aggregate Equivalent Vote Amount" means, with respect to any matter,
proposition or question on which holders of CCo Common Stock are
entitled to vote, consent or otherwise act, the product of (i) the
number of Exchangeable Shares then issued and outstanding and held by
holders (other than CCo and its Subsidiaries) multiplied by (ii) the
number of votes to which a holder of one share of CCo Common Stock is
entitled with respect to such matter, proposition or question.
"Automatic Redemption Date" means the date for the automatic redemption
by the Corporation of Exchangeable Shares pursuant to Article 7 of these
share provisions, which date shall be the first to occur of (a) the
date, if any, selected pursuant to this clause (a) by the Board of
Directors of the Corporation in its sole discretion, such date to be no
earlier than 12 months following the Effective Date, (b) the date
selected by the Board of Directors of the Corporation in its sole
discretion at a time when less than five percent (5%) of the number of
Exchangeable Shares issuable on the Effective Date (other than
Exchangeable Shares held by CCo and its Subsidiaries, and as such number
of shares may be adjusted as deemed appropriate by the Board of
Directors to give effect to any subdivision or consolidation of or stock
dividend on the Exchangeable Shares, any issuance or distribution of
rights to acquire Exchangeable Shares or securities exchangeable for or
convertible into or carrying rights to acquire Exchangeable Shares, any
issue or distribution of other securities or rights or evidences of
indebtedness or assets, or any other capital reorganization or other
transaction involving or affecting the Exchangeable Shares), are
outstanding, (c) the Business Day prior to the record date for any
meeting or vote of the shareholders of the Corporation to consider any
matter on which the holders of Exchangeable Shares would be entitled to
vote as shareholders of the Corporation, but, except as provided in
clause (d) below, excluding any meeting or vote held pursuant to Section
10 of these Share Provisions, (d) the Business Day following the day on
which the holders of Exchangeable Shares fail to take the necessary
action at a meeting or other vote of holders of Exchangeable Shares, if
and to the extent such action is required, to approve or disapprove, as
applicable, any change to, or in the rights of the holders of,
Exchangeable Shares, if the approval or disapproval, as applicable, of
such change would be required to maintain the economic and legal
equivalence of the Exchangeable Shares and the CCo Common Stock, or (e)
the date on which the share purchase rights issued pursuant to the
Rights Agreement, dated as of June 5, 1997, between CCo and First
Chicago Trust Company of New York, as Rights Agent (or pursuant to any
similar
B-1
successor or replacement rights agreement) would separate from the
shares of CCo Common Stock and become exercisable.
"Board of Directors" means the board of directors of the Corporation and
any committee thereof acting within its authority.
"Business Day" means any day other than a Saturday, a Sunday or a day
when banks are not open for business in either or both of Xxx Xxxx,
Xxxxxxxxxx xxx Xxxxxxx, Xxxxxxx.
"CCo" means Calpine Corporation, a corporation organized and existing
under the laws of the State of Delaware and includes any successor
corporation or any corporation in which the holders of CCo Common Stock
hold securities resulting from the application of Section 2.7 of the
Support Agreement;
"CCo Call Notice" has the meaning provided in Section 6.3.
"CCo Common Stock" means the shares of common stock of CCo, with a par
value of U.S. $0.001 per share, having voting rights of one vote per
share, and any other securities resulting from the application of
Section 2.7 of the Support Agreement.
"CCo Dividend Declaration Date" means the date on which the board of
directors of CCo declares any dividend on the CCo Common Stock.
"CCo Holdco" has the meaning provided in the Voting and Exchange Trust
Agreement.
"CCo Special Share" means the one share of Special Voting [Preferred]
Stock of CCo, with a par value of U.S. $0.001, and having voting rights
at meetings of holders of CCo Common Stock equal to the Aggregate
Equivalent Voting Amount.
"Common Shares" means the common shares in the capital of the
Corporation.
"Corporation" means ___ Alberta Ltd., a corporation organized and
existing under the Act and includes any successor corporation.
"Current Market Price" means, in respect of a share of CCo Common Stock
on any date, the average of the closing sale prices per share (computed
and rounded to the third decimal point) of shares of CCo Common Stock
during the period of 20 consecutive trading days ending not more than
five trading days before such date on the New York Stock Exchange, or,
if CCo Common Stock is not then traded on the New York Stock Exchange,
on such other principal U.S. stock exchange or automated quotation
system on which the CCo Common Stock is then listed or quoted, as the
case may be, as may be selected by the Board of Directors for such
purpose; provided, however, that if, in the opinion of the Board of
Directors the public distribution or trading activity of CCo Common
Stock during such period does not create a market which reflects the
fair market value of a share of CCo Common Stock, then the Current
Market Price of a share of CCo Common Stock shall be determined by the
Board of Directors based upon the advice of such qualified independent
financial advisors as the Board of Directors may deem to be appropriate,
and provided further than any such selection, opinion or determination
by the Board of Directors shall be conclusive and binding.
"ECo" means Encal Energy Ltd., a corporation organized and existing
under the Act.
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"Effective Date" has the meaning ascribed thereto in the Plan of
Arrangement.
"Exchange Put Date" has the meaning provided in Section 8.2.
"Exchange Put Right" has the meaning provided in Section 8.1.
"Exchangeable Share Consideration" means, with respect to each
Exchangeable Share, for any acquisition of or redemption of or
distribution of assets of the Corporation in respect of or purchase
pursuant to these share provisions, the Plan of Arrangement, the Support
Agreement or the Voting and Exchange Trust Agreement:
(a) the Current Market Price of one share of CCo Common Stock
deliverable in connection with such action;
(b) a cheque or cheques payable at par at any branch of the bankers
of the payor in the amount of all declared, payable and unpaid,
and all undeclared but payable, cash dividends deliverable in
connection with such action; and
(c) such stock or other property constituting any declared and
unpaid, and all undeclared and unpaid but payable, non-cash
dividends deliverable in connection with such action,
provided that (i) that part of the consideration which represents (a)
above, shall be fully paid and satisfied by the delivery of one share of
CCo Common Stock, such share to be duly issued as a fully paid and
non-assessable share, (ii) that part of the consideration which
represents (c), above, shall be fully paid and satisfied by delivery of
such non-cash items, (iii) any such consideration shall be delivered
free and clear of any lien, claim, encumbrance, security interest or
adverse claim or interest and (iv) any such consideration shall be paid
less any tax required to be deducted and withheld therefrom and without
interest.
"Exchangeable Share Price" means, for each Exchangeable Share, an amount
equal to the aggregate of:
(a) the Current Market Price of a share of CCo Common Stock; plus
(b) an additional amount equal to the full amount of all cash
dividends declared, payable and unpaid, on such Exchangeable
Share; plus
(c) an additional amount equal to all dividends declared and payable
on CCo Common Stock which have not been declared or paid on
Exchangeable Shares in accordance herewith; plus
(d) an additional amount representing non-cash dividends declared,
payable and unpaid, on such Exchangeable Share.
"Exchangeable Shares" means the Exchangeable Shares of the Corporation
having the rights, privileges, restrictions and conditions set forth
herein.
"Liquidation Amount" has the meaning provided in Section 5.1.
"Liquidation Call Purchase Price" has the meaning provided in Section
5.5(a).
"Liquidation Call Right" has the meaning provided in Section 5.5(a).
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"Liquidation Date" has the meaning provided in Section 5.1.
"Plan of Arrangement" means the plan of arrangement involving and
affecting ECo, CCo, the Corporation and the holders of common shares and
options of ECo under Section 186 of the Act contemplated in the
Combination Agreement by and among CCo and ECo, dated effective as of
_______, 2001, as further amended and restated from time to time.
"Purchase Price" has the meaning provided in Section 6.3.
"Redemption Call Purchase Price" has the meaning provided in Section
7.5(a).
"Redemption Call Right" has the meaning provided in Section 7.5(a).
"Redemption Price" has the meaning provided in Section 7.1.
"Retracted Shares" has the meaning provided in Section 6.1(a).
"Retraction Call Right" has the meaning provided in Section 6.1(c).
"Retraction Date" has the meaning provided in Section 6.1(b).
"Retraction Price" has the meaning provided in Section 6.1.
"Retraction Request" has the meaning provided in Section 6.1.
"Subsidiary", in relation to any person, means any body corporate,
partnership, joint venture, association or other 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 such person.
"Support Agreement" means the Support Agreement between CCo and the
Corporation, made as of the Effective Date.
"Transfer Agent" means the duly appointed transfer agent for the time
being of the Exchangeable Shares, and, if there is more than one such
transfer agent, then the principal Canadian transfer agent.
"Trustee" means the Trustee appointed under the Voting and Exchange
Trust Agreement, and any successor trustee.
"Unpaid Dividends" means all declared, payable and unpaid, and all
undeclared but payable, cash and non-cash dividends in respect of
Exchangeable Shares on a specified date.
"Voting and Exchange Trust Agreement" means the Voting and Exchange
Trust Agreement among the Corporation, CCo and the Trustee, made as of
the Effective Date.
ARTICLE 2
RANKING OF EXCHANGEABLE SHARES
2.1 The Exchangeable Shares shall be entitled to a preference over the Common
Shares and any other class or series of shares with respect to the payment of
dividends and the distribution of assets in the event
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of the liquidation, dissolution or winding-up of the Corporation, whether
voluntary or involuntary, or any other distribution of the assets of the
Corporation among its shareholders for the purpose of winding-up its affairs.
ARTICLE 3
DIVIDENDS
3.1 A holder of an Exchangeable Share shall be entitled to receive and the Board
of Directors shall, subject to applicable law, on each CCo Dividend Declaration
Date, declare a dividend on each Exchangeable Share (a) in the case of a cash
dividend declared on the CCo Common Stock, in an amount in cash for each
Exchangeable Share equal to the cash dividend declared on each share of CCo
Common Stock, (b) in the case of a stock dividend declared on the CCo Common
Stock to be paid in CCo Common Stock, in such number of Exchangeable Shares for
each Exchangeable Share as is equal to the number of shares of CCo Common Stock
to be paid on each share of CCo Common Stock, (c) in the case of a dividend
declared on the CCo Common Stock in property other than cash or securities of
CCo, in such type and amount of property for each Exchangeable Share as is the
same as or economically equivalent to (to be determined by the Board of
Directors in the manner described in the Support Agreement) the type and amount
of property declared as a dividend on each share of CCo Common Stock or (d) in
the case of a dividend declared on the CCo Common Stock to be paid in securities
of CCo other than CCo Common Stock, in such number of either such securities or
economically equivalent securities of the Corporation (as determined by the
Board of Directors in the manner described in the Support Agreement), for each
Exchangeable Share as is equal to the number of securities of CCo to be paid on
each share of CCo Common Stock. Such dividends (less any tax required to be
deducted and withheld from such dividends) shall be paid out of money, assets or
property of the Corporation properly applicable to the payment of dividends, or
out of authorized but unissued shares of the Corporation.
3.2 Cheques of the Corporation payable at par at any branch of the bankers of
the Corporation shall be issued in respect of any cash dividends contemplated by
Section 3.1(a) hereof and the sending of such a cheque to each holder of an
Exchangeable Share (less any tax required to be deducted and withheld from such
dividends paid or credited by the Corporation) shall satisfy the cash dividends
represented thereby unless the cheque is not paid on presentation. Certificates
registered in the name of the registered holder of Exchangeable Shares shall be
issued or transferred in respect of any stock dividends contemplated by Sections
3.1(b) or (d) hereof and the sending of such a certificate to each holder of an
Exchangeable Share shall satisfy the stock dividend represented thereby or
dividend payable in other securities represented thereby. Such other type and
amount of property in respect of any dividends contemplated by Section 3.1(c)
hereof shall be issued, distributed or transferred by the Corporation in such
manner as it shall determine and the issuance, distribution or transfer thereof
by the Corporation to each holder of an Exchangeable Share shall satisfy the
dividend represented thereby. In all cases, any such dividends shall be subject
to any reduction or adjustment for tax required to be deducted and withheld from
such dividends, and the Corporation shall be entitled to liquidate some of the
property which would otherwise be deliverable in payment of such dividends to a
particular holder of Exchangeable Shares to fund any statutory withholding
obligation. No holder of an Exchangeable Share shall be entitled to recover by
action or other legal process against the Corporation any dividend which is
represented by a cheque that has not been duly presented to the Corporation's
bankers for payment or which otherwise remains unclaimed for a period of six
years from the date on which such dividend was payable.
3.3 The record date for the determination of the holders of Exchangeable Shares
entitled to receive payment of, and the payment date for, any dividend declared
on the Exchangeable Shares under
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Section 3.1 hereof shall be the same dates as the record date and payment date,
respectively, for the corresponding dividend declared on the CCo Common Stock.
3.4 If on any payment date for any dividends declared on the Exchangeable Shares
under Section 3.1 hereof the dividends are not paid in full on all of the
Exchangeable Shares then outstanding, any such dividends which remain unpaid
shall be paid on a subsequent date or dates determined by the Board of Directors
on which the Corporation shall have sufficient moneys, assets or property
properly applicable to the payment of such dividends.
3.5 Except as provided in this Article 3, the holders of Exchangeable Shares
shall not be entitled to receive dividends in respect thereof.
3.6 Payment of the Exchangeable Share Consideration shall satisfy in full all
Unpaid Dividends relating to the Exchangeable Shares in respect of which the
Exchangeable Share Consideration was paid.
ARTICLE 4
CERTAIN RESTRICTIONS
4.1 So long as any of the Exchangeable Shares are outstanding, the Corporation
shall not at any time without, but may at any time with, the approval of the
holders of the Exchangeable Shares given as specified in Article 10 of these
share provisions:
(a) pay any dividends on the Common Shares, or any other shares
ranking junior to the Exchangeable Shares, other than stock
dividends payable in any such other shares ranking junior to the
Exchangeable Shares;
(b) redeem or purchase or make any capital distribution in respect of
Common Shares or any other shares ranking junior to the
Exchangeable Shares with respect to the payment of dividends or
on any liquidation distribution;
(c) redeem or purchase any other shares of the Corporation ranking
equally with the Exchangeable Shares with respect to the payment
of dividends or on any liquidation distribution; or
(d) amend the articles or by-laws of the Corporation, in either case
in any manner that would affect the rights or privileges of the
holders of the Exchangeable Shares.
The restrictions in Sections 4.1(a), 4.1(b) and 4.1(c) above shall not
apply if all dividends on the outstanding Exchangeable Shares corresponding to
dividends declared with a record date on or following the effective date of the
Plan of Arrangement on the CCo Common Stock shall have been declared on the
Exchangeable Shares and paid in full. Nothing herein shall be interpreted to
restrict the Corporation from issuing additional Common Shares or Exchangeable
Shares.
ARTICLE 5
DISTRIBUTION ON LIQUIDATION
5.1 In the event of the liquidation, dissolution or winding-up of the
Corporation or any other distribution of the assets of the Corporation among its
shareholders for the purpose of winding-up its affairs, provided that neither
CCo nor CCo Holdco shall have exercised the Liquidation Call Right, a holder of
Exchangeable Shares shall be entitled, subject to applicable law, to receive
from the assets of
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the Corporation in respect of each Exchangeable Share held by such holder on the
effective date of such liquidation, dissolution or winding-up (the "Liquidation
Date"), before any distribution of any part of the assets of the Corporation to
the holders of the Common Shares or any other shares ranking junior to the
Exchangeable Shares, an amount equal to the Exchangeable Share Price applicable
on the last Business Day prior to the Liquidation Date (the "Liquidation
Amount") in accordance with Section 5.2. In connection with payment of the
Liquidation Amount, the Corporation shall be entitled to liquidate some of the
CCo Common Stock which would otherwise be deliverable as Exchangeable Share
Consideration to any particular holder of Exchangeable Shares in order to fund
any statutory withholding tax obligation.
5.2 On or promptly after the Liquidation Date, and subject to the exercise by
CCo or CCo Holdco of the Liquidation Call Right, the Corporation shall cause to
be delivered to the holders of the Exchangeable Shares the Liquidation Amount
for each such Exchangeable Share upon presentation and surrender of the
certificates representing such Exchangeable Shares, together with such other
documents and instruments as may be required to effect a transfer of
Exchangeable Shares under applicable law and the articles and by-laws of the
Corporation and such additional documents and instruments as the Transfer Agent
may reasonably require, at the registered office of the Corporation or at any
office of the Transfer Agent as may be specified by the Corporation in Schedule
A hereto or by notice to the holders of the Exchangeable Shares. Payment of the
total Liquidation Amount for such Exchangeable Shares shall be made by delivery
to each holder, at the address of the holder recorded in the securities register
of the Corporation for the Exchangeable Shares or by holding for pick up by the
holder at the registered office of the Corporation or at any office of the
Transfer Agent as may be specified by the Corporation in Schedule A hereto or by
notice to the holders of Exchangeable Shares, on behalf of the Corporation of
the Exchangeable Share Consideration representing such holder's pro rata portion
of the total Liquidation Amount. On and after the Liquidation Date, the holders
of the Exchangeable Shares shall cease to be holders of such Exchangeable Shares
and shall not be entitled to exercise any of the rights of holders in respect
thereof, other than the right to receive their proportionate part of the total
Liquidation Amount, unless payment of the total Liquidation Amount for such
Exchangeable Shares shall not be made upon presentation and surrender of share
certificates in accordance with the foregoing provisions, in which case the
rights of the holders shall remain unaffected until the total Liquidation Amount
has been paid in the manner hereinbefore provided. The Corporation shall have
the right at any time on or after the Liquidation Date to deposit or cause to be
deposited the Exchangeable Share Consideration in respect of the Exchangeable
Shares represented by certificates that have not at the Liquidation Date been
surrendered by the holders thereof in a custodial account or for safe keeping,
in the case of non-cash items, with any chartered bank or trust company in
Canada. Upon such deposit being made, the rights of the holders of Exchangeable
Shares after such deposit shall be limited to receiving their proportionate part
of the total Liquidation Amount for such Exchangeable Shares so deposited,
against presentation and surrender of the said certificates held by them,
respectively, in accordance with the foregoing provisions. Upon such payment or
deposit of such Exchangeable Share Consideration, the holders of the
Exchangeable Shares shall thereafter be considered and deemed for all purposes
to be the holders of the CCo Common Stock delivered to them. Notwithstanding the
foregoing, until such payment or deposit of such Exchangeable Share
Consideration, the holder shall be deemed to still be a holder of Exchangeable
Shares for purposes of all voting rights with respect thereto under the Voting
and Exchange Trust Agreement.
5.3 After the Corporation has satisfied its obligations to pay the holders of
the Exchangeable Shares the Liquidation Amount per Exchangeable Share, such
holders shall not be entitled to share in any further distribution of the assets
of the Corporation.
5.4 If CCo or CCo Holdco exercises the Liquidation Call Right, each holder of
Exchangeable Shares shall be obligated to sell the Exchangeable Shares held by
such holder to CCo or CCo Holdco, as the case may be, on the Liquidation Date on
payment to such holder by CCo or CCo Holdco, as the case may be,
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of the Exchangeable Share Consideration representing the Liquidation Call
Purchase Price for each Exchangeable Share.
5.5 (a) Each of CCo and CCo Holdco shall have the overriding right (the
"Liquidation Call Right"), in the event of and notwithstanding
any proposed liquidation, dissolution or winding-up of the
Corporation as referred to in this Article 5, to purchase from
all but not less than all of the holders (other than CCo or any
Subsidiary thereof) of Exchangeable Shares on the Liquidation
Date all but not less than all of the Exchangeable Shares held by
such holders on payment by CCo or CCo Holdco, as the case may be,
to each holder such holder's proportionate share of the
Exchangeable Share Price applicable on the last Business Day
prior to the Liquidation Date (the "Liquidation Call Purchase
Price") in accordance with Section 5.5(c). In the event of the
exercise of the Liquidation Call Right by CCo or CCo Holdco, each
holder shall be obligated to sell all the Exchangeable Shares
held by such holder to CCo or CCo Holdco, as the case may be, on
the Liquidation Date on payment by CCo or CCo Holdco, as the case
may be, to the holder of the Liquidation Call Purchase Price for
each such share.
(b) To exercise the Liquidation Call Right, CCo or CCo Holdco, as the
case may be, must notify the Transfer Agent in writing, as agent
for the holders of Exchangeable Shares, and the Corporation of
its intention to exercise such right at least 55 days before the
Liquidation Date in the case of a voluntary liquidation,
dissolution or winding-up of the Corporation and at least five
Business Days before the Liquidation Date in the case of an
involuntary liquidation, dissolution or winding-up of the
Corporation. The Transfer Agent will notify the holders of
Exchangeable Shares as to whether or not CCo or CCo Holdco has
exercised the Liquidation Call Right forthwith after the expiry
of the date by which the same may be exercised by CCo or CCo
Holdco. If CCo or CCo Holdco exercises the Liquidation Call
Right, on the Liquidation Date, CCo or CCo Holdco, as the case
may be, will purchase and the holders will sell all of the
Exchangeable Shares then outstanding for a price per share equal
to the Liquidation Call Purchase Price.
(c) For the purposes of completing the purchase of the Exchangeable
Shares pursuant to the Liquidation Call Right, CCo or CCo Holdco,
as the case may be, shall deposit with the Transfer Agent, on or
before the Liquidation Date, the Exchangeable Share Consideration
representing the total Liquidation Call Purchase Price. Provided
that such Exchangeable Share Consideration has been so deposited
with the Transfer Agent, on and after the Liquidation Date, the
right of each holder of Exchangeable Shares will be limited to
receiving such holder's proportionate part of the total
Liquidation Call Purchase Price payable by CCo or CCo Holdco, as
the case may be, without interest, upon presentation and
surrender by the holder of certificates representing the
Exchangeable Shares held by such holder and the holder shall, on
and after the Liquidation Date, be considered and deemed for all
purposes to be the holder of the CCo Common Stock delivered to
such holder. Upon surrender to the Transfer Agent of a
certificate or certificates representing Exchangeable Shares,
together with such other documents and instruments as may be
required to effect a transfer of Exchangeable Shares under the
Act and the articles and by-laws of the Corporation and such
additional documents and instruments as the Transfer Agent may
reasonably require, the holder of such surrendered certificate or
certificates shall be entitled to receive in exchange therefor,
and the Transfer Agent on behalf of CCo or CCo Holdco, as the
case may be, shall deliver to such holder, the Exchangeable Share
Consideration to which such holder is entitled. If neither CCo
nor CCo Holdco exercises the Liquidation Call Right in the manner
described above, on the Liquidation Date, the holders of the
Exchangeable Shares will be entitled to receive in
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exchange therefor the liquidation price otherwise payable by the
Corporation in connection with the liquidation, dissolution or
winding-up of the Corporation pursuant to this Article 5.
Notwithstanding the foregoing, until such Exchangeable Share
Consideration is delivered to the holder, the holder shall be
deemed to still be a holder of Exchangeable Shares for purposes
of all voting rights with respect thereto under the Voting and
Exchange Trust Agreement.
ARTICLE 6
RETRACTION OF EXCHANGEABLE SHARES BY HOLDER
6.1 A holder of Exchangeable Shares shall be entitled at any time, subject to
applicable law and the exercise by CCo or CCo Holdco of the Retraction Call
Right (which, if exercised by CCo or CCo Holdco, shall be binding on the holder
of Exchangeable Shares) and otherwise upon compliance with the provisions of
this Article 6, to require the Corporation to redeem any or all of the
Exchangeable Shares registered in the name of such holder for an amount equal to
the Exchangeable Share Price applicable on the last Business Day prior to the
Retraction Date (the "Retraction Price") which, as set forth in Section 6.4,
shall be fully paid and satisfied by the delivery by or on behalf of the
Corporation of the Exchangeable Share Consideration representing such holder's
Retraction Price. In connection with payment of the Retraction Price, the
Corporation shall be entitled to liquidate some of the CCo Common Stock that
would otherwise be deliverable as Exchangeable Share Consideration to the
particular holder of Exchangeable Shares in order to fund any statutory
withholding tax obligation. To effect such redemption, the holder shall present
and surrender at the registered office of the Corporation or at any office of
the Transfer Agent as may be specified by the Corporation in Schedule A hereto
or by notice to the holders of Exchangeable Shares the certificate or
certificates representing the Exchangeable Shares which the holder desires to
have the Corporation redeem, together with such other documents and instruments
as may be required to effect a transfer of Exchangeable Shares under applicable
law and the by-laws of the Corporation and such additional documents and
instruments as the Transfer Agent may reasonably require, and together with a
duly executed statement (the "Retraction Request") in the form of Schedule "A"
hereto or in such other form as may be acceptable to the Corporation:
(a) specifying that the holder desires to have all or any number
specified therein of the Exchangeable Shares represented by such
certificate or certificates (the "Retracted Shares") redeemed by
the Corporation;
(b) stating the Business Day on which the holder desires to have the
Corporation redeem the Retracted Shares (the "Retraction Date"),
provided that the Retraction Date shall be not less than five
Business Days nor more than 10 Business Days after the date on
which the Retraction Request is received by the Corporation and
further provided that, in the event that no such Business Day is
specified by the holder in the Retraction Request, the Retraction
Date shall be deemed to be the tenth Business Day after the date
on which the Retraction Request is received by the Corporation;
and
(c) acknowledging the overriding right (the "Retraction Call Right")
of CCo or CCo Holdco to purchase all but not less than all the
Retracted Shares directly from the holder and that the Retraction
Request shall be deemed to be a revocable offer by the holder to
sell the Retracted Shares in accordance with the Retraction Call
Right on the terms and conditions set out in Section 6.3 below.
6.2 Subject to the exercise by CCo or CCo Holdco of the Retraction Call Right,
upon receipt by the Corporation or the Transfer Agent in the manner specified in
Section 6.1 hereof of a certificate or certificates representing the number of
Exchangeable Shares which the holder desires to have the
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Corporation redeem, together with a Retraction Request, and provided that the
Retraction Request is not revoked by the holder in the manner specified in
Section 6.7, the Corporation shall redeem the Retracted Shares effective at the
close of business on the Retraction Date and shall cause to be delivered to such
holder the total Retraction Price with respect to such shares in accordance with
Section 6.4 hereof. If only a part of the Exchangeable Shares represented by any
certificate are redeemed or purchased by CCo or CCo Holdco pursuant to the
Retraction Call Right, a new certificate for the balance of such Exchangeable
Shares shall be issued to the holder at the expense of the Corporation.
6.3 Upon receipt by the Corporation of a Retraction Request, the Corporation
shall immediately notify CCo and CCo Holdco thereof. In order to exercise the
Retraction Call Right, CCo or CCo Holdco must notify the Corporation in writing
of its determination to do so (the "CCo Call Notice") within two Business Days
of such notification. If CCo or CCo Holdco does not so notify the Corporation
within such two Business Days, the Corporation will notify the holder as soon as
possible thereafter that neither CCo nor CCo Holdco will exercise the Retraction
Call Right. If CCo or CCo Holdco delivers the CCo Call Notice within such two
Business Days, and provided that the Retraction Request is not revoked by the
holder in the manner specified in Section 6.7 hereof, the Retraction Request
shall thereupon be considered only to be an offer by the holder to sell the
Retracted Shares to CCo or CCo Holdco, as the case may be, in accordance with
the Retraction Call Right. In such event, the Corporation shall not redeem the
Retracted Shares and CCo or CCo Holdco, as the case may be, shall purchase from
such holder and such holder shall sell to CCo or CCo Holdco, as the case may be,
on the Retraction Date the Retracted Shares for a purchase price per share (the
"Purchase Price") equal to the Retraction Price, which, as set forth in Section
6.4 hereof, shall be fully paid and satisfied by the delivery by or on behalf of
CCo or CCo Holdco, as the case may be, of the Exchangeable Share Consideration
representing such holder's Purchase Price. For the purposes of completing a
purchase pursuant to the Retraction Call Right, CCo or CCo Holdco, as the case
may be, shall deposit with the Transfer Agent, on or before the Retraction Date,
the Exchangeable Share Consideration representing the total Purchase Price.
Provided that such Exchangeable Share Consideration has been so deposited with
the Transfer Agent, the closing of the purchase and sale of the Retracted Shares
pursuant to the Retraction Call Right shall be deemed to have occurred as at the
close of business on the Retraction Date and, for greater certainty, no
redemption by the Corporation of such Retracted Shares shall take place on the
Retraction Date. In the event that CCo or CCo Holdco, as the case may be, does
not deliver a CCo Call Notice within two Business Days or otherwise comply with
these Exchangeable Share provisions in respect thereto, and provided that the
Retraction Request is not revoked by the holder in the manner specified in
Section 6.7 hereof, the Corporation shall redeem the Retracted Shares on the
Retraction Date and in the manner otherwise contemplated in this Article 6.
6.4 Subject to receipt by the Corporation of a Retraction Request, the
Corporation, CCo or CCo Holdco, as the case may be, shall deliver or cause the
Transfer Agent to deliver to the relevant holder, at the address of the holder
recorded in the securities register of the Corporation for the Exchangeable
Shares or at the address specified in the holder's Retraction Request or by
holding for pick up by the holder at the registered office of the Corporation or
at any office of the Transfer Agent as may be specified by the Corporation in
Schedule A hereto or by notice to the holders of Exchangeable Shares, the
Exchangeable Share Consideration representing the total Retraction Price or the
total Purchase Price, as the case may be, and such delivery of such Exchangeable
Share Consideration to the Transfer Agent shall be deemed to be payment of and
shall satisfy and discharge all liability for the total Retraction Price or
total Purchase Price, as the case may be, except as to any cheque included
therein which is not paid on due presentation.
6.5 On and after the close of business on the Retraction Date, the holder of the
Retracted Shares shall cease to be a holder of such Retracted Shares and shall
not be entitled to exercise any of the rights of a holder in respect thereof,
other than the right to receive such holder's proportionate part of the total
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Retraction Price or total Purchase Price, as the case may be, unless upon
presentation and surrender of certificates in accordance with the foregoing
provisions, payment of the total applicable Retraction Price or the total
Purchase Price, as the case may be, shall not be made, in which case the rights
of such holder shall remain unaffected until the Exchangeable Share
Consideration representing the total applicable Retraction Price or the total
Purchase Price, as the case may be, has been paid. On and after the close of
business on the Retraction Date, provided that presentation and surrender of
certificates and payment of the Exchangeable Share Consideration representing
the total Retraction Price or the total Purchase Price, as the case may be, has
been made in accordance with the foregoing provisions, the holder of the
Retracted Shares so redeemed by the Corporation or purchased by CCo or CCo
Holdco shall thereafter be considered and deemed for all purposes to be a holder
of the CCo Common Stock delivered to it. Notwithstanding the foregoing, until
such payment of such Exchangeable Share Consideration to the holder, the holder
shall be deemed to still be a holder of Exchangeable Shares for purposes of all
voting rights with respect thereto under the Voting and Exchange Trust
Agreement.
6.6 Notwithstanding any other provision of this Article 6, the Corporation shall
not be obligated to redeem Retracted Shares specified by a holder in a
Retraction Request to the extent that such redemption of Retracted Shares would
be contrary to liquidity or solvency requirements or other provisions of
applicable law. If the Corporation believes that on any Retraction Date it would
not be permitted by any of such provisions to redeem the Retracted Shares
tendered for redemption on such date, and provided that neither CCo nor CCo
Holdco shall have exercised the Retraction Call Right with respect to the
Retracted Shares, the Corporation shall only be obligated to redeem Retracted
Shares specified by a holder in a Retraction Request to the extent of the
maximum number that may be so redeemed (rounded down to a whole number of
shares) as would not be contrary to such provisions and shall notify the holder
at least two Business Days prior to the Retraction Date as to the number of
Retracted Shares which will not be redeemed by the Corporation. In any case in
which the redemption by the Corporation of Retracted Shares would be contrary to
liquidity or solvency requirements or other provisions of applicable law, the
Corporation shall redeem Retracted Shares in accordance with Section 6.2 of
these share provisions on a pro rata basis and shall issue to each holder of
Retracted Shares a new certificate, at the expense of the Corporation,
representing the Retracted Shares not redeemed by the Corporation pursuant to
Sections 6.2 or 6.6 hereof. Provided that the Retraction Request is not revoked
by the holder in the manner specified in Section 6.7 hereof, the holder of any
such Retracted Shares not redeemed by the Corporation pursuant to Section 6.2
hereof as a result of liquidity or solvency requirements or applicable law shall
be deemed by giving the Retraction Request to require CCo or CCo Holdco, as the
case may be, to purchase such Retracted Shares from such holder on the
Retraction Date or as soon as practicable thereafter on payment by CCo or CCo
Holdco, as the case may be, to such holder of the Purchase Price for each such
Retracted Share, all as more specifically provided in the Voting and Exchange
Trust Agreement, and CCo or CCo Holdco, as the case may be, shall make such
purchase.
6.7 A holder of Retracted Shares may, by notice in writing given by the holder
to the Corporation before the close of business on the Business Day immediately
preceding the Retraction Date, withdraw its Retraction Request in which event
such Retraction Request shall be null and void and, for greater certainty, the
revocable offer constituted by the Retraction Request to sell the Retracted
Shares to CCo or CCo Holdco, as the case may be, shall be deemed to have been
revoked.
ARTICLE 7
REDEMPTION OF EXCHANGEABLE SHARES BY THE CORPORATION
7.1 Subject to applicable law, and if neither CCo or CCo Holdco exercises the
Redemption Call Right (which, if exercised, shall be binding on the holders of
Exchangeable Shares), the Corporation shall on the Automatic Redemption Date
redeem all of the then outstanding Exchangeable Shares for an amount
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equal to the Exchangeable Share Price applicable on the last Business Day prior
to the Automatic Redemption Date (the "Redemption Price") which, as set forth in
Section 7.3 hereof, shall be fully paid and satisfied by the delivery by or on
behalf of the Corporation of the Exchangeable Share Consideration representing
the total Redemption Price. In connection with payment of the Exchangeable Share
Consideration representing the Redemption Price, the Corporation shall be
entitled to liquidate some of the CCo Common Stock which would otherwise be
deliverable as Exchangeable Share Consideration to the particular holder of
Exchangeable Shares in order to fund any statutory withholding tax obligation.
7.2 In any case of a redemption of Exchangeable Shares under this Article 7, the
Corporation, or the Transfer Agent on behalf of the Corporation, shall, at least
45 days before an Automatic Redemption Date (or as soon as reasonably
practicable after the Corporation has knowledge of the occurrence of an
Automatic Redemption Date, if not known 45 days before the Automatic Redemption
Date) or before a possible Automatic Redemption Date which may result from a
failure of the holders of Exchangeable Shares to take necessary action as
described in clause (d) of the definition of Automatic Redemption Date, send or
cause to be sent to each holder of Exchangeable Shares a notice in writing of
the redemption or possible redemption by the Corporation or the purchase by CCo
or CCo Holdco under the Redemption Call Right, as the case may be, of the
Exchangeable Shares held by such holder. Such notice shall set out the
Redemption Price or the Redemption Call Purchase Price, as the case may be, the
Automatic Redemption Date and, if applicable, particulars of the Redemption Call
Right. In the case of any notice given in connection with a possible Automatic
Redemption Date, such notice will be given contingently and will be withdrawn if
the contingency does not occur.
7.3 On or after the Automatic Redemption Date, and subject to the exercise by
CCo or CCo Holdco of the Redemption Call Right, the Corporation shall cause to
be delivered to the holders of the Exchangeable Shares to be redeemed the
Exchangeable Share Consideration representing the Redemption Price for each such
Exchangeable Share upon presentation and surrender at the registered office of
the Corporation or at any office of the Transfer Agent as may be specified by
the Corporation in such notice of the certificates representing such
Exchangeable Shares, together with such other documents and instruments as may
be required to effect a transfer of Exchangeable Shares under applicable law and
the articles and by-laws of the Corporation and such additional documents and
instruments as the Transfer Agent may reasonably require. Payment of the total
Redemption Price for such Exchangeable Shares shall be made by delivery to each
holder, at the address of the holder recorded in the securities register or at
any office of the Transfer Agent as may be specified by the Corporation in such
notice, on behalf of the Corporation, of the Exchangeable Share Consideration
representing the total Redemption Price. On and after the Automatic Redemption
Date, the holders of the Exchangeable Shares called for redemption shall cease
to be holders of such Exchangeable Shares and shall not be entitled to exercise
any of the rights of holders in respect thereof, other than the right to receive
their proportionate part of the Exchangeable Share Consideration representing
such holder's proportionate share of the total Redemption Price, unless payment
of the Exchangeable Share Consideration representing such holder's proportionate
share of the total Redemption Price for such Exchangeable Shares shall not be
made upon such holder's presentation and surrender of certificates in accordance
with the foregoing provisions, in which case the rights of such holder shall
remain unaffected until the Exchangeable Share Consideration representing such
holder's proportionate share of the total Redemption Price has been paid to such
holder. The Corporation shall have the right, at any time after the sending of
notice of its intention to redeem the Exchangeable Shares as aforesaid, to
deposit or cause to be deposited the Exchangeable Share Consideration with
respect to the Exchangeable Shares so called for redemption, or of such of the
said Exchangeable Shares represented by certificates that have not at the date
of such deposit been surrendered by the holders thereof in connection with such
redemption, in a custodial account or for safe keeping, in the case of non-cash
items, with any chartered bank or trust company in Canada named in such notice.
Upon the later of such deposit being made and the Automatic Redemption Date, the
Exchangeable Shares in respect whereof such deposit shall have been made shall
be redeemed and the rights of the holders thereof after such deposit or
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Automatic Redemption Date, as the case may be, shall be limited to receiving
their proportionate part of the Exchangeable Share Consideration representing
the total Redemption Price for such Exchangeable Shares so deposited, against
presentation and surrender of the said certificates held by them, respectively,
in accordance with the foregoing provisions. Upon such payment or deposit of
such Exchangeable Share Consideration, the holders of the Exchangeable Shares
shall thereafter be considered and deemed for all purposes to be holders of the
CCo Common Stock delivered to them. Notwithstanding the foregoing, until such
payment or deposit of such Exchangeable Share Consideration is made, the holder
shall be deemed to still be a holder of Exchangeable Shares for purposes of all
voting rights with respect thereto under the Voting and Exchange Trust
Agreement.
7.4 If CCo or CCo Holdco exercises the Redemption Call Right, each holder of
Exchangeable Shares shall be obligated to sell all the Exchangeable Shares held
by such holder to CCo or CCo Holdco, as the case may be, on the Automatic
Redemption Date against payment to such holder by CCo or CCo Holdco, as the case
may be, of the Exchangeable Share Consideration representing the Redemption Call
Purchase Price for each such share.
7.5 (a) Each of CCo and CCo Holdco shall have the overriding right (the
"Redemption Call Right"), notwithstanding any proposed redemption
of the Exchangeable Shares by the Corporation pursuant to this
Article 7, to purchase from all but not less than all of the
holders (other than CCo or any Subsidiary thereof) of
Exchangeable Shares on the Automatic Redemption Date all but not
less than all of the Exchangeable Shares held by each such holder
on payment by CCo or CCo Holdco, as the case may be, to the
holder such holder's proportionate share of the Exchangeable
Share Price applicable on the last Business Day prior to the
Automatic Redemption Date (the "Redemption Call Purchase Price")
in accordance with Section 7.5(c). In the event of the exercise
of the Redemption Call Right by CCo or CCo Holdco, each holder
shall be obligated to sell all the Exchangeable Shares held by
the holder to CCo or CCo Holdco, as the case may be, on the
Automatic Redemption Date on payment by CCo or CCo Holdco, as the
case may be, to the holder of the Redemption Call Purchase Price
for each such share.
(b) To exercise the Redemption Call Right, CCo or CCo Holdco, as the
case may be, must notify the Transfer Agent in writing, as agent
for the holders of Exchangeable Shares, and the Corporation of
its intention to exercise such right not later than the date by
which the Corporation is required to give notice of the Automatic
Redemption Date. The Transfer Agent will notify the holders of
the Exchangeable Shares as to whether or not CCo or CCo Holdco
has exercised the Redemption Call Right forthwith after the date
by which the same may be exercised by CCo or CCo Holdco. If CCo
or CCo Holdco exercises the Redemption Call Right, on the
Automatic Redemption Date, CCo or CCo Holdco, as the case may be,
will purchase and the holders will sell all of the Exchangeable
Shares then outstanding for a price per share equal to the
Redemption Call Purchase Price.
(c) For the purposes of completing the purchase of the Exchangeable
Shares pursuant to the Redemption Call Right, CCo or CCo Holdco,
as the case may be, shall deposit with the Transfer Agent, on or
before the Automatic Redemption Date, the Exchangeable Share
Consideration representing the total Redemption Call Purchase
Price. Provided that such Exchangeable Share Consideration has
been so deposited with the Transfer Agent, on and after the
Automatic Redemption Date, the rights of each holder of
Exchangeable Shares will be limited to receiving such holder's
proportionate part of the total Redemption Call Purchase Price
payable by CCo or CCo Holdco, as the case may be, upon
presentation and surrender by the holder of certificates
representing the Exchangeable Shares held by such holder and the
holder shall on and after the Automatic Redemption Date be
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considered and deemed for all purposes to be the holder of the
CCo Common Stock delivered to such holder. Upon surrender to the
Transfer Agent of a certificate or certificates representing
Exchangeable Shares, together with such other documents and
instruments as may be required to effect a transfer of
Exchangeable Shares under the Act and the articles and by-laws of
the Corporation and such additional documents and instruments as
the Transfer Agent may reasonably require, the holder of such
surrendered certificate or certificates shall be entitled to
receive in exchange therefor, and the Transfer Agent on behalf of
CCo or CCo Holdco, as the case may be, shall deliver to such
holder, the Exchangeable Share Consideration to which such holder
is entitled. If neither CCo nor CCo Holdco exercises the
Redemption Call Right in the manner described above, on the
Automatic Redemption Date, the holders of the Exchangeable Shares
will be entitled to receive in exchange therefor the redemption
price otherwise payable by the Corporation in connection with the
redemption of the Exchangeable Shares pursuant to this Article 7.
Notwithstanding the foregoing, until such Exchangeable Share
Consideration is delivered to the holder, the holder shall be
deemed to still be a holder of Exchangeable Shares for purposes
of all voting rights with respect thereto under the Voting and
Exchange Trust Agreement.
ARTICLE 8
EXCHANGE PUT RIGHT
8.1 Upon and subject to the terms and conditions contained in these share
provisions and the Voting and Exchange Trust Agreement:
(a) a holder of Exchangeable Shares shall have the right (the
"Exchange Put Right") at any time to require CCo to purchase all
or any part of the Exchangeable Shares of the holder, provided
that, upon the exercise of such right, CCo may, at its option,
cause CCo Holdco to purchase such shares; and
(b) upon the exercise by the holder of the Exchange Put Right, the
holder shall be required to sell to CCo or CCo Holdco, as the
case may be, and CCo shall be required to purchase, or cause CCo
Holdco to purchase, from the holder, that number of Exchangeable
Shares in respect of which the Exchange Put Right is exercised,
in consideration of the payment by CCo or CCo Holdco, as the case
may be, of the Exchangeable Share Price applicable thereto (which
shall be the Exchangeable Share Price applicable on the last
Business Day prior to receipt of notice required under Section
8.2 hereof) and delivery by or on behalf of CCo or CCo Holdco, as
the case may be, of the Exchangeable Share Consideration
representing the total applicable Exchangeable Share Price. In
connection with payment of the Exchangeable Share Consideration,
the Corporation shall be entitled to liquidate some of the CCo
Common Stock which would otherwise be deliverable to the
particular holder of Exchangeable Shares in order to fund any
statutory withholding tax obligation.
8.2 The Exchange Put Right provided in Section 8.1 hereof and in Article 5 of
the Voting and Exchange Trust Agreement may be exercised at any time by notice
in writing given by the holder to and received by the Trustee (the date of such
receipt, the "Exchange Put Date") and accompanied by presentation and surrender
of the certificates representing such Exchangeable Shares, together with such
documents and instruments as may be required to effect a transfer of
Exchangeable Shares under the Act and the articles and by-laws of the
Corporation and such additional documents and instruments as the Trustee may
reasonably require, at the principal transfer offices in Calgary, Alberta or
Toronto, Ontario of the Trustee, or at such other office or offices of the
Trustee or of other persons designated by the Trustee for that purpose as may
from time to time be maintained by the Trustee for that purpose. Such notice
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shall be in the form of Schedule B or such other form as may be acceptable to
the Trustee, shall stipulate the number of Exchangeable Shares in respect of
which the right is exercised (which may not exceed the number of shares
represented by certificates surrendered to the Trustee), shall be irrevocable
unless the exchange is not completed in accordance herewith and with the Voting
and Exchange Trust Agreement and shall constitute the holder's authorization to
the Trustee (and such other persons aforesaid) to effect the exchange on behalf
of the holder.
8.3 The completion of the sale and purchase referred to in section 8.1 hereof
shall occur on the terms and conditions described in Section 5.6 of the Voting
and Exchange Trust Agreement.
8.4 If only a part of the Exchangeable Shares represented by any certificate are
to be sold and purchased pursuant to the exercise of the Exchange Put Right, a
new certificate for the balance of such Exchangeable Shares shall be issued to
the holder at the expense of the Corporation.
8.5 On and after the close of business on the Exchange Put Date, the holder of
the Exchangeable Shares in respect of which the Exchange Put Right is exercised
shall not be entitled to exercise any of the rights of a holder in respect
thereof, other than the right to receive the total applicable Exchangeable Share
Price, unless upon presentation and surrender of certificates in accordance with
the foregoing provisions, payment of the Exchangeable Share Consideration shall
not be made, in which case the rights of such holder shall remain unaffected
until such payment has been made. On and after the close of business on the
Exchange Put Date provided that presentation and surrender of certificates and
payment of the Exchangeable Share Consideration has been made in accordance with
the foregoing provisions, the holder of the Exchangeable Shares so purchased by
CCo or CCo Holdco, as the case may be, shall thereafter be considered and deemed
for all purposes to be a holder of the CCo Common Stock delivered to it.
Notwithstanding the foregoing, until payment of the Exchangeable Share
Consideration to the holder, the holder shall be deemed to still be a holder of
Exchangeable Shares for purposes of all voting rights with respect thereto under
the Voting and Exchange Trust Agreement.
ARTICLE 9
VOTING RIGHTS
9.1 Except as required by applicable law and the provisions hereof, the holders
of the Exchangeable Shares shall not be entitled as such to receive notice of or
to attend any meeting of the shareholders of the Corporation or to vote at any
such meeting.
ARTICLE 10
AMENDMENT AND APPROVAL
10.1 The rights, privileges, restrictions and conditions attaching to the
Exchangeable Shares may be added to, changed or removed but, except as
hereinafter provided, only with the approval of the holders of the Exchangeable
Shares given as hereinafter specified.
10.2 Any approval given by the holders of the Exchangeable Shares to add to,
change or remove any right, privilege, restriction or condition attaching to the
Exchangeable Shares or any other matter requiring the approval or consent of the
holders of the Exchangeable Shares shall be deemed to have been sufficiently
given if it shall have been given in accordance with applicable law subject to a
minimum requirement that such approval be evidenced by resolution passed by not
less than 66 2/3% of the votes cast on such resolution by persons represented in
person or by proxy at a meeting of holders of Exchangeable Shares (excluding
Exchangeable Shares beneficially owned by CCo or its Subsidiaries) duly called
and held at which the holders of at least 20% of the outstanding Exchangeable
Shares at that
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time are present or represented by proxy. If at any such meeting the holders of
at least 20% of the outstanding Exchangeable Shares at that time are not present
or represented by proxy within one-half hour after the time appointed for such
meeting, then the meeting shall be adjourned to such date not less than 10 days
thereafter and to such time and place as may be designated by the Chairman of
such meeting. At such adjourned meeting, the holders of Exchangeable Shares
present or represented by proxy thereat may transact the business for which the
meeting was originally called and a resolution passed thereat by the affirmative
vote of not less than 66 2/3% of the votes cast on such resolution by persons
represented in person or by proxy at such meeting (excluding Exchangeable Shares
beneficially owned by CCo or its Subsidiaries) shall constitute the approval or
consent of the holders of the Exchangeable Shares. For the purposes of this
Section, any spoiled votes, illegible votes, defective votes and abstinences
shall be deemed to be votes not cast.
ARTICLE 11
RECIPROCAL CHANGES, ETC. IN RESPECT OF CCO COMMON STOCK
11.1 (a) Each holder of an Exchangeable Share acknowledges that the
Support Agreement provides, in part, that CCo will not:
(i) issue or distribute shares of CCo Common Stock (or
securities exchangeable for or convertible into or
carrying rights to acquire shares of CCo Common Stock) to
the holders of all or substantially all of the then
outstanding shares of CCo Common Stock by way of stock
dividend or other distribution; or
(ii) issue or distribute rights, options or warrants to the
holders of all or substantially all of the then
outstanding shares of CCo Common Stock entitling them to
subscribe for or to purchase shares of CCo Common Stock
(or securities exchangeable for or convertible into or
carrying rights to acquire shares of CCo Common Stock); or
(iii) issue or distribute to the holders of all or substantially
all of the then outstanding shares of CCo Common Stock (A)
shares or securities of CCo of any class other than CCo
Common Stock (other than shares convertible into or
exchangeable for or carrying rights to acquire shares of
CCo Common Stock), (B) rights, options or warrants other
than those referred to in Section 11.1(a)(ii) above, (C)
evidences of indebtedness of CCo or (D) assets of CCo;
unless
(iv) one or both of CCo and the Corporation is permitted under
applicable law to issue or distribute the economic
equivalent on a per share basis of such rights, options,
warrants, securities, shares, evidences of indebtedness or
other assets to the holders of the Exchangeable Shares;
and
(v) one or both of CCo and the Corporation shall issue or
distribute the economic equivalent on a per share basis of
such rights, options, warrants, securities, shares,
evidences of indebtedness or other assets simultaneously
to the holders of the Exchangeable Shares.
(b) Each holder of an Exchangeable Share acknowledges that the
Support Agreement further provides, in part, that CCo will not:
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(i) subdivide, redivide or change the then outstanding shares
of CCo Common Stock into a greater number of shares of CCo
Common Stock; or
(ii) reduce, combine or consolidate or change the then
outstanding shares of CCo Common Stock into a lesser
number of shares of CCo Common Stock; or
(iii) reclassify or otherwise change the shares of CCo Common
Stock or effect an amalgamation, merger, reorganization or
other transaction involving or affecting the shares of CCo
Common Stock;
unless
(iv) the Corporation is permitted under applicable law to
simultaneously make the same or an economically equivalent
change to, or in the rights of the holders of, the
Exchangeable Shares; and
(v) the same or an economically equivalent change is
simultaneously made to, or in the rights of the holders
of, the Exchangeable Shares.
The Support Agreement further provides, in part, that, with the
exception of certain ministerial amendments, the aforesaid provisions of the
Support Agreement shall not be changed without the approval of the holders of
the Exchangeable Shares given in accordance with Article 10 of these share
provisions.
ARTICLE 12
ACTIONS BY THE CORPORATION UNDER SUPPORT AGREEMENT
12.1 The Corporation will take all such actions and do all such things as shall
be necessary or advisable to perform and comply with and to ensure performance
and compliance by CCo with all provisions of the Support Agreement, the Voting
Trust and Exchange Agreement and CCo's Certificate of Incorporation applicable
to the CCo Special Share in accordance with the terms thereof including, without
limitation, taking all such actions and doing all such things as shall be
necessary or advisable to enforce to the fullest extent possible for the direct
benefit of the Corporation all rights and benefits in favour of the Corporation
under or pursuant thereto.
12.2 The Corporation shall not propose, agree to or otherwise give effect to any
amendment to, or waiver or forgiveness of its rights or obligations under, the
Support Agreement, the Voting Trust and Exchange Agreement or CCo's Certificate
of Incorporation applicable to the CCo Special Share without the approval of the
holders of the Exchangeable Shares given in accordance with Section 10.2 hereof
other than such amendments, waivers and/or forgiveness as may be necessary or
advisable for the purpose of:
(a) adding to the covenants of the other party or parties to such
agreement for the protection of the Corporation or the holders of
Exchangeable Shares; or
(b) making such provisions or modifications not inconsistent with
such agreement or certificate as may be necessary or desirable
with respect to matters or questions arising thereunder which, in
the opinion of the Board of Directors, it may be expedient to
make, provided that the Board of Directors shall be of the
opinion, after consultation with counsel, that such provisions
and modifications will not be prejudicial to the interests of the
holders of the Exchangeable Shares; or
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(c) making such changes in or corrections to such agreement or
certificate which, on the advice of counsel to the Corporation,
are required for the purpose of curing or correcting any
ambiguity or defect or inconsistent provision or clerical
omission or mistake or manifest error contained therein, provided
that the Board of Directors shall be of the opinion, after
consultation with counsel, that such changes or corrections will
not be prejudicial to the interests of the holders of the
Exchangeable Shares.
ARTICLE 13
LEGEND
13.1 The certificates evidencing the Exchangeable Shares shall contain or have
affixed thereto a legend, in form and on terms approved by the Board of
Directors, with respect to the Support Agreement, the provisions of the articles
of the Corporation relating to the Liquidation Call Right, the Retraction Call
Right and the Redemption Call Right, and the Voting and Exchange Trust Agreement
(including the provisions with respect to the voting rights and exchange
provisions thereunder).
ARTICLE 14
MISCELLANEOUS
14.1 Any notice, request or other communication to be given to the Corporation
by a holder of Exchangeable Shares shall be in writing and shall be valid and
effective if given by mail (postage prepaid) or by facsimile or by delivery to
the registered office of the Corporation and addressed to the attention of the
President. Any such notice, request or other communication, if given by mail,
facsimile or delivery, shall only be deemed to have been given and received upon
actual receipt thereof by the Corporation.
14.2 Any presentation and surrender by a holder of Exchangeable Shares to the
Corporation or the Transfer Agent of certificates representing Exchangeable
Shares in connection with the liquidation, dissolution or winding-up of the
Corporation or the retraction, redemption or exchange of Exchangeable Shares
shall be made by registered mail (postage prepaid) or by delivery to the
registered office of the Corporation or to such office of the Transfer Agent as
may be specified by the Corporation, in each case addressed to the attention of
the President of the Corporation. Any such presentation and surrender of
certificates shall only be deemed to have been made and to be effective upon
actual receipt thereof by the Corporation or the Transfer Agent, as the case may
be, and the method of any such presentation and surrender of certificates shall
be at the sole risk of the holder.
14.3 Any notice, request or other communication to be given to a holder of
Exchangeable Shares by or on behalf of the Corporation shall be in writing and
shall be valid and effective if given by mail (postage prepaid) or by delivery
to the address of the holder recorded in the securities register of the
Corporation or, in the event of the address of any such holder not being so
recorded, then at the last address of such holder known to the Corporation. Any
such notice, request or other communication, if given by mail, shall be deemed
to have been given and received on the fifth Business Day following the date of
mailing and, if given by delivery, shall be deemed to have been given and
received on the date of delivery. Accidental failure or omission to give any
notice, request or other communication to one or more holders of Exchangeable
Shares shall not invalidate or otherwise alter or affect any action or
proceeding to be or intended to be taken by the Corporation.
14.4 For greater certainty, the Corporation shall not be required for any
purpose under these share provisions to recognize or take account of persons who
are not so recorded in such securities register.
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14.5 All Exchangeable Shares acquired by the Corporation upon the redemption or
retraction thereof shall be cancelled.
14.6 For greater certainty, any payments to the holders of Exchangeable Shares
shall be net of applicable taxes, if any, and the payor shall not be obliged to
gross up or increase the amount of such payment which would otherwise be made to
take into account such taxes. Any such taxes which have been withheld or
deducted by the payor thereof shall be remitted to the applicable tax authority
within the time required for such remittance.
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SCHEDULE "A"
RETRACTION REQUEST
To: _____________, (the "Corporation") and ____________ ("CCo")
and _____________ ("CCo Holdco")
This request is given pursuant to Article 6 of the provisions (the
"Share Provisions") attaching to the Exchangeable Shares of the Corporation and
all capitalized words and expressions used in this request which are defined in
the Share Provisions have the meaning attributed to such words and expressions
in such Share Provisions.
The undersigned hereby notifies the Corporation that, subject to the
Retraction Call Right referred to below, the undersigned requests the
Corporation to redeem in accordance with Article 6 of the Share Provisions:
[ ]: all share(s) represented by the accompanying certificate(s); or
[ ]: ______ share(s) only.
The undersigned hereby notifies the Corporation that the Retraction Date
shall be ____________.
NOTE: The Retraction Date must be a Business Day and must not be less
than five Business Days nor more than 10 Business Days after the
date upon which this notice and the accompanying shares are
received at the registered office of the Corporation or at any
office of the Transfer Agent as may be specified in this
Retraction Request or as may be specified by the Corporation by
notice to the holders of the Exchangeable Shares. In the event
that no such Business Day is correctly specified above, the
Retraction Date shall be deemed to be the tenth Business Day
after the date on which this request is received by the
Corporation.
The undersigned acknowledges the Retraction Call Right of CCo and CCo
Holdco (as defined in the Share Provisions) to purchase all but not less than
all the Retracted Shares from the undersigned and that this request shall be
deemed to be a revocable offer by the undersigned to sell the Retracted Shares
to CCo or CCo Holdco, as the case may be, in accordance with the Retraction Call
Right on the Retraction Date for the Retraction Price and on the other terms and
conditions set out in Section 6.3 of the Share Provisions. If neither CCo or CCo
Holdco, as the case may be, determines to exercise the Retraction Call Right,
the Corporation will notify the undersigned of such fact as soon as possible.
This retraction request, and offer to sell the Retracted Shares to CCo or CCo
Holdco, as the case may be, may be revoked and withdrawn by the undersigned by
notice in writing given to the Corporation at any time before the close of
business on the Business Day immediately preceding the Retraction Date.
The undersigned acknowledges that if, as a result of liquidity or
solvency provisions of applicable law, the Corporation is unable to redeem all
Retracted Shares, the undersigned will be deemed to have exercised the Exchange
Put Right so as to require CCo to purchase, or cause CCo Holdco to purchase, the
unredeemed Retracted Shares.
The undersigned hereby represents and warrants to the Corporation and
CCo that the undersigned has good title to, and owns, the share(s) represented
by the accompanying certificate free and clear of all liens, claims,
encumbrances, security interests and adverse claims or interests.
------------------- ------------------------------- ------------------------
(Date) (Signature of Shareholder) Guarantee of Signature
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[ ] Please check box if the legal or beneficial owner of the Retracted
Shares is a non-resident of Canada.
[ ] Please check box if the securities and any cheque(s) or other non-cash
assets resulting from the retraction of the Retracted Shares are to be
held for pick-up by the shareholder at the principal transfer offices of
____________ (the "Transfer Agent") in Calgary, Alberta or Toronto,
Ontario, failing which the securities and any cheque(s) or other
non-cash assets will be delivered to the shareholder in accordance with
the Share Provisions.
NOTE: This panel must be completed and the accompanying share certificate(s),
together with such additional documents as the Transfer Agent may
require, must be deposited with the Transfer Agent at its principal
transfer offices in Calgary, Alberta or Xxxxxxx, Xxxxxxx. The securities
and any cheque(s) or other non-cash assets resulting from the retraction
or purchase of the Retracted Shares will be issued and registered in,
and made payable to, or transferred into, respectively, the name of the
shareholder as it appears on the register of the Corporation and the
securities, cheque(s) and other non-cash assets resulting from such
retraction or purchase will be delivered to the shareholder in
accordance with the Share Provisions unless the form appearing
immediately below is duly completed.
---------------------------------------------- ---------------------------
Name of Person in Whose Name Securities or Date
Cheque(s) or Other Non-cash Assets Are To Be
Registered, Issued or Delivered (please print)
---------------------------------------------- ---------------------------
Street Address or P.O. Box Signature of Shareholder
---------------------------------------------- ---------------------------
City, Province Signature Guaranteed by
NOTE: If this retraction request is for less than all of the share(s)
represented by the accompanying certificate, a certificate representing
the remaining shares of the Corporation will be issued and registered in
the name of the shareholder as it appears on the register of the
Corporation or its lawful transferee.
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SCHEDULE "B"
NOTICE OF EXERCISE OF EXCHANGE PUT RIGHT
To: _____________, (the "Corporation") and _____________ ("CCo")
and _____________ ("CCo Holdco") and _____________ (the "Trustee")
This Notice is given pursuant to Article 8 of the provisions (the "Share
Provisions") attaching to the Exchangeable Shares of the Corporation and all
capitalized words and expressions used in this request which are defined in the
Share Provisions have the meaning attributed to such words and expressions in
such Share Provisions.
The undersigned hereby irrevocably instructs the Trustee to exercise the
Exchange Put Right so as to require CCo or CCo Holdco to purchase from the
undersigned:
[ ]: all share(s) represented by the accompanying certificate(s); or
[ ]: ______share(s) only.
The undersigned hereby represents and warrants to the Corporation and
CCo that the undersigned has good title to, and owns, the share(s) represented
by the accompanying certificate free and clear of all liens, claims,
encumbrances, security interests and adverse claims or interests.
------------------- ------------------------------- ------------------------
(Date) (Signature of Shareholder) Guarantee of Signature
[ ] Please check box if the legal or beneficial owner of the put shares is a
non-resident of Canada.
[ ] Please check box if the securities and any cheque(s) or other non-cash
assets resulting from the exchange of the put shares are to be held for
pick-up by the shareholder at the principal transfer offices of
______________ (the "Transfer Agent") in Calgary, Alberta or Toronto,
Ontario, failing which the securities and any cheque(s) or other
non-cash assets will be delivered to the shareholder in accordance with
the Share Provisions.
NOTE: This panel must be completed and the accompanying share certificate(s),
together with such additional documents as the Transfer Agent may
require, must be deposited with the Transfer Agent at its principal
transfer offices in Calgary, Alberta or Xxxxxxx, Xxxxxxx. The securities
and any cheque(s) or other non-cash assets resulting from the exercise
of the Exchange Put Right will be issued and registered in, and made
payable to, or transferred into, respectively, the name of the
shareholder as it appears on the register of the Corporation and the
securities, cheque(s) and other non-cash assets resulting from such
retraction or purchase will be delivered to the shareholder in
accordance with the Share Provisions unless the form appearing
immediately below is duly completed.
B-22
---------------------------------------------- ---------------------------
Name of Person in Whose Name Securities or Date
Cheque(s) or Other Non-cash Assets Are To Be
Registered, Issued or Delivered (please print)
---------------------------------------------- ---------------------------
Street Address or P.O. Box Signature of Shareholder
---------------------------------------------- ---------------------------
City, Province Signature Guaranteed by
NOTE: If this election to exchange is for less than all of the share(s)
represented by the accompanying certificate, a certificate representing
the remaining shares of the Corporation will be issued and registered in
the name of the shareholder as it appears on the register of the
Corporation or its lawful transferee.
B-23
B. OTHER PROVISIONS
1.1 MEETINGS
Meetings of shareholders of the Corporation shall be held in the
location determined by the directors of the Corporation, and may be held in San
Jose, California, or at any location within Alberta.
B-24
EXHIBIT C
FORM OF SUPPORT AGREEMENT
THIS SUPPORT AGREEMENT is entered into as of __________, 2001, between
Calpine Corporation, a Delaware corporation ("CCo"), and __________, an Alberta
corporation ("CCo Sub").
RECITALS
WHEREAS, pursuant to a Combination Agreement dated effective as of
_________, 2001, by and between CCo and Encal Energy Ltd. ("ECo") (such
agreement, as it may be amended or restated, is hereinafter referred to as the
"Combination Agreement"), the parties agreed that on the Effective Date (as
defined in the Combination Agreement), CCo and CCo Sub would execute and deliver
a Support Agreement containing the terms and conditions set forth in Exhibit C
to the Combination Agreement together with such other terms and conditions as
may be agreed to by the parties to the Combination Agreement acting reasonably;
AND WHEREAS, pursuant to an arrangement (the "Arrangement") effected by
Articles of Arrangement dated ~, 2001 filed pursuant to the Business
Corporations Act (Alberta) (or any successor or other corporate statute by which
ECo may in the future be governed) (the "Act") each issued and outstanding
common share of ECo (an "ECo Common Share") was exchanged for Exchangeable
Shares of CCo Sub (the "Exchangeable Shares");
AND WHEREAS, the Articles of Incorporation of CCo Sub set forth the
rights, privileges, restrictions and conditions (collectively, the "Exchangeable
Share Provisions") attaching to the Exchangeable Shares;
AND WHEREAS, the parties hereto desire to make appropriate provision and
to establish a procedure whereby CCo will take certain actions and make certain
payments and deliveries necessary to ensure that CCo Sub will be able to make
certain payments and to deliver or cause to be delivered shares of CCo Common
Stock in satisfaction of the obligations of CCo Sub under the Exchangeable Share
Provisions with respect to the payment and satisfaction of dividends,
Liquidation Amounts, Retraction Prices and Redemption Prices, all in accordance
with the Exchangeable Share Provisions;
NOW, THEREFORE, in consideration of the respective covenants and
agreements provided in this agreement and for other good and valuable
consideration (the receipt and sufficiency of which are hereby acknowledged),
the parties agree as follows:
ARTICLE 1
DEFINITIONS AND INTERPRETATION
1.1 DEFINED TERMS
Each term denoted herein by initial capital letters and not otherwise
defined herein shall have the meaning attributed thereto in the Exchangeable
Share Provisions, unless the context requires otherwise.
1.2 INTERPRETATION NOT AFFECTED BY HEADINGS, ETC.
The division of this agreement into articles, sections and paragraphs and the
insertion of headings are for convenience of reference only and shall not affect
the construction or interpretation of this agreement.
C-1
1.3 NUMBER, GENDER, ETC.
Words importing the singular number only shall include the plural and vice
versa. Words importing the use of any gender shall include all genders.
1.4 DATE FOR ANY ACTION
If any date on which any action is required to be taken under this
agreement is not a Business Day, such action shall be required to be taken on
the next succeeding Business Day.
ARTICLE 2
COVENANTS OF CCO AND CCO SUB
2.1 COVENANTS OF CCO REGARDING EXCHANGEABLE SHARES
So long as any Exchangeable Shares are outstanding, CCo will:
(a) not declare or pay any dividend on CCo Common Stock unless (i)
CCo Sub will have sufficient assets, funds and other property
available to enable the due declaration and the due and punctual
payment in accordance with applicable law of an equivalent
dividend on the Exchangeable Shares and (ii) Section 2.1(b) shall
have been complied with in connection with such dividend;
(b) cause CCo Sub to declare simultaneously with the declaration of
any dividend on CCo Common Stock an equivalent dividend on the
Exchangeable Shares and, when such dividend is paid on CCo Common
Stock, cause CCo Sub to pay simultaneously therewith such
equivalent dividend on the Exchangeable Shares, in each case in
accordance with the Exchangeable Share Provisions;
(c) advise CCo Sub sufficiently in advance of the declaration by CCo
of any dividend on CCo Common Stock and take all such other
actions as are necessary, in cooperation with CCo Sub, to ensure
that the respective declaration date, record date and payment
date for a dividend on the Exchangeable Shares shall be the same
as the record date, declaration date and payment date for the
corresponding dividend on CCo Common Stock and that such dividend
on the Exchangeable Shares will correspond with any requirement
of the principal stock exchange on which the Exchangeable Shares
are listed;
(d) ensure that the record date for any dividend declared on CCo
Common Stock is not less than ten Business Days after the
declaration date for such dividend;
(e) take all such actions and do all such things as are necessary or
desirable to enable and permit CCo Sub, in accordance with
applicable law, to pay and otherwise perform its obligations with
respect to the satisfaction of the Liquidation Amount in respect
of each issued and outstanding Exchangeable Share upon the
liquidation, dissolution or winding-up of CCo Sub or any other
distribution of the assets of CCo Sub for the purpose of
winding-up its affairs, including without limitation all such
actions and all such things as are necessary or desirable to
enable and permit CCo Sub to cause to be delivered shares of CCo
Common Stock to the holders of Exchangeable Shares in accordance
with the provisions of Article 5 of the Exchangeable Share
Provisions;
C-2
(f) take all such actions and do all such things as are necessary or
desirable to enable and permit CCo Sub, in accordance with
applicable law, to pay and otherwise perform its obligations with
respect to the satisfaction of the Retraction Price and the
Redemption Price, including without limitation all such actions
and all such things as are necessary or desirable to enable and
permit CCo Sub to cause to be delivered shares of CCo Common
Stock to the holders of Exchangeable Shares, upon the retraction
or redemption of the Exchangeable Shares in accordance with the
provisions of Article 6 or Article 7 of the Exchangeable Share
Provisions, as the case may be;
(g) not exercise its vote as a direct or indirect shareholder to
initiate the voluntary liquidation, dissolution or winding-up of
CCo Sub nor take any action that, or omit to take any action the
omission of which (i) is designed to result in the liquidation,
dissolution or winding-up of CCo Sub or (ii) would result in a
meeting or vote of the shareholders of CCo Sub to consider any
matter on which the holders of Exchangeable Shares would be
entitled to vote as shareholders of CCo Sub, other than a meeting
as described in clause (d) of the definition of "Automatic
Redemption Date" in the Exchangeable Share Provisions; and
(h) use its best efforts to take all such actions and do all such
things as are necessary to ensure that there is no meeting or
vote of the shareholders of CCo Sub to consider any matter on
which the holders of Exchangeable Shares would be entitled to
vote as shareholders of CCo Sub, other than a meeting as
described in clause (d) of the definition of "Automatic
Redemption Date" in the Exchangeable Share Provisions.
2.2 DUE PERFORMANCE
On and after the Effective Date, CCo shall duly and timely perform all
of its obligations provided for in connection with the Plan of Arrangement and
the Articles of Incorporation of CCo Sub, including any obligations that may
arise upon the exercise of CCo's rights under the Exchangeable Share Provisions.
2.3 RESERVATION OF SHARES OF CCO COMMON STOCK
CCo hereby represents, warrants and covenants that it has irrevocably
reserved for issuance and will at all times keep available, free from
pre-emptive and other rights, out of its authorized and unissued capital stock
such number of shares of CCo Common Stock (or other shares or securities into
which CCo Common Stock may be reclassified or changed as contemplated by Section
2.7 hereof) (i) as is equal to the sum of (A) the number of Exchangeable Shares
issued and outstanding from time to time and (B) the number of Exchangeable
Shares issuable upon the exercise of all rights to acquire Exchangeable Shares
outstanding from time to time and (ii) as are now and may hereafter be required
to enable and permit CCo Sub to meet its obligations hereunder, under the Voting
and Exchange Trust Agreement, under the Exchangeable Share Provisions and under
any other security or commitment pursuant to the Arrangement with respect to
which CCo may now or hereafter be required to issue shares of CCo Common Stock.
2.4 NOTIFICATION OF CERTAIN EVENTS
In order to assist CCo to comply with its obligations hereunder, CCo Sub
will give CCo notice of each of the following events at the time set forth
below:
C-3
(a) immediately, in the event of any determination by the Board of
Directors of CCo Sub to take any action which would require a
vote of the holders of Exchangeable Shares for approval;
(b) immediately, upon the earlier of (i) receipt by CCo Sub of notice
of, and (ii) CCo Sub otherwise becoming aware of, any threatened
or instituted claim, suit, petition or other proceedings with
respect to the involuntary liquidation, dissolution or winding-up
of CCo Sub or to effect any other distribution of the assets of
CCo Sub among its shareholders for the purpose of winding-up its
affairs;
(c) immediately, upon receipt by CCo Sub of a Retraction Request (as
defined in the Exchangeable Share Provisions);
(d) at least 45 days prior to any Automatic Redemption Date
determined by the Board of Directors of CCo Sub in accordance
with clause (b) of the definition of Automatic Redemption Date in
the Exchangeable Share Provisions;
(e) as soon as practicable upon the issuance by CCo Sub of any
Exchangeable Shares or rights to acquire Exchangeable Shares; and
(f) in the event of any determination by the Board of Directors of
CCo Sub to institute voluntary liquidation, dissolution or
winding-up proceedings with respect to CCo Sub or to effect any
other distribution of the assets of CCo Sub among its
shareholders for the purpose of winding-up its affairs, at least
30 days prior to the proposed effective date of such liquidation,
dissolution, winding-up or other distribution.
2.5 DELIVERY OF SHARES OF CCO COMMON STOCK
In furtherance of its obligations hereunder, upon notice of any event
which requires CCo Sub to cause to be delivered shares of CCo Common Stock to
any holder of Exchangeable Shares, CCo shall forthwith issue and deliver the
requisite shares of CCo Common Stock to or to the order of the former holder of
the surrendered Exchangeable Shares, as CCo Sub shall direct. All such shares of
CCo Common Stock shall be duly issued as fully paid and non-assessable and shall
be free and clear of any lien, claim, encumbrance, security interest or adverse
claim or interest.
2.6 QUALIFICATION OF SHARES OF CCO COMMON STOCK
CCo covenants that if any shares of CCo Common Stock (or other shares or
securities into which CCo Common Stock may be reclassified or changed as
contemplated by Section 2.7 hereof) to be issued and delivered hereunder
(including for greater certainty, pursuant to the Exchangeable Share Provisions,
or pursuant to the Exchange Put Right, the Exchange Right or the Automatic
Exchange Rights (all as defined in the Voting and Exchange Trust Agreement))
require registration or qualification with or approval of or the filing of any
document including any prospectus or similar document, the taking of any
proceeding with or the obtaining of any order, ruling or consent from any
governmental or regulatory authority under any Canadian or United States
federal, provincial or state law or regulation or pursuant to the rules and
regulations of any regulatory authority, or the fulfillment of any other legal
requirement (collectively, the "Applicable Laws") before such shares (or other
shares or securities into which CCo Common Stock may be reclassified or changed
as contemplated by Section 2.7 hereof) may be issued and delivered by CCo to the
initial holder thereof (other than CCo Sub) or in order that such shares may be
freely traded thereafter (other than any restrictions on transfer by reason of a
holder being a "control person" of CCo for purposes of Canadian federal or
provincial securities law or an "affiliate" of CCo for
C-4
purposes of United States federal or state securities law), CCo will in good
faith take all such actions and do all such things as are necessary and within
its power to cause such shares of CCo Common Stock (or other shares or
securities into which CCo Common Stock may be reclassified or changed as
contemplated by Section 2.7 hereof) to be and remain duly registered, qualified
or approved to the extent expressly provided in the Combination Agreement. CCo
represents and warrants that it has in good faith taken all actions and done all
things as are necessary under Applicable Laws as they exist on the date hereof
to cause the shares of CCo Common Stock (or other shares or securities into
which CCo Common Stock may be reclassified or changed as contemplated by Section
2.7 hereof) to be issued and delivered hereunder (including, for greater
certainty, pursuant to the Exchangeable Share Provisions, or pursuant to the
Exchange Put Right, the Exchange Right and the Automatic Exchange Rights) to be
freely tradeable thereafter (other than restrictions on transfer by reason of a
holder being a "control person" of CCo for the purposes of Canadian federal and
provincial securities law or an "affiliate" of CCo for purposes of United States
federal or state securities law). CCo will in good faith take all such actions
and do all such things as are necessary and within its power to cause all shares
of CCo Common Stock (or other shares or securities into which CCo Common Stock
may be reclassified or changed as contemplated by Section 2.7 hereof) to be
delivered hereunder (including, for greater certainty, pursuant to Exchangeable
Share Provisions, or pursuant to the Exchange Put Right, the Exchange Right or
the Automatic Exchange Rights) to be listed, quoted or posted for trading on all
stock exchanges and quotation systems on which such shares are listed, quoted or
posted for trading at such time. CCo will in good faith take all such action and
do all such things as are necessary and within its power to cause all
Exchangeable Shares to be and to continue to be listed and posted for trading on
The Toronto Stock Exchange or, in the event that a listing on The Toronto Stock
Exchange is not available, on another recognized Canadian stock exchange.
2.7 EQUIVALENCE
(a) CCo will not:
(i) issue or distribute shares of CCo Common Stock (or
securities exchangeable for or convertible into or
carrying rights to acquire shares of CCo Common Stock) to
the holders of all or substantially all of the then
outstanding shares of CCo Common Stock by way of stock
dividend or other distribution; or
(ii) issue or distribute rights, options or warrants to the
holders of all or substantially all of the then
outstanding shares of CCo Common Stock entitling them to
subscribe for or to purchase shares of CCo Common Stock
(or securities exchangeable for or convertible into or
carrying rights to acquire shares of CCo Common Stock); or
(iii) issue or distribute to the holders of all or substantially
all of the then outstanding shares of CCo Common Stock (A)
shares or securities of CCo of any class other than CCo
Common Stock (other than shares convertible into or
exchangeable for or carrying rights to acquire shares of
CCo Common Stock), (B) rights, options or warrants other
than those referred to in Section 2.7(a)(ii) above, (C)
evidences of indebtedness of CCo or (D) assets of CCo;
unless:
(iv) one or both of CCo and CCo Sub is permitted under
applicable law to issue or distribute the economic
equivalent on a per share basis of such rights, options,
warrants, securities, shares, evidences of indebtedness or
other assets to the holders of the Exchangeable Shares;
and
C-5
(v) one or both of CCo and CCo Sub shall issue or distribute
the economic equivalent on a per share basis of such
rights, options, warrants, securities, shares, evidences
of indebtedness or other assets simultaneously to the
holders of the Exchangeable Shares.
(b) CCo will not:
(i) subdivide, redivide or change the then outstanding shares
of CCo Common Stock into a greater number of shares of CCo
Common Stock; or
(ii) reduce, combine or consolidate or change the then
outstanding shares of CCo Common Stock into a lesser
number of shares of CCo Common Stock; or
(iii) reclassify or otherwise change the shares of CCo Common
Stock or effect an amalgamation, merger, reorganization or
other transaction involving or affecting the shares of CCo
Common Stock;
unless:
(iv) CCo Sub is permitted under applicable law to
simultaneously make the same or an economically equivalent
change to, or in the rights of the holders of, the
Exchangeable Shares; and
(v) the same or an economically equivalent change is
simultaneously made to, or in the rights of the holders
of, the Exchangeable Shares.
(c) CCo will ensure that the record date for any event referred to in
Section 2.7(a) or 2.7(b) above, or (if no record date is
applicable for such event) the effective date for any such event,
is not less than 10 Business Days after the date on which such
event is declared or announced by CCo (with simultaneous notice
thereof to be given by CCo to CCo Sub).
2.8 TENDER OFFERS, ETC.
In the event that a tender offer, share exchange offer, issuer bid,
take-over bid or similar transaction with respect to CCo Common Stock (an
"Offer") is proposed by CCo or is proposed to CCo or its shareholders and is
recommended by the board of directors of CCo, or is otherwise effected or to be
effected with the consent or approval of the board of directors of CCo, CCo
shall, in good faith, take all such actions and do all such things as are
necessary and within its power to enable and permit holders of Exchangeable
Shares to participate in such Offer to the same extent and on an equivalent
basis as the holders of shares of CCo Common Stock, without discrimination,
including, without limiting the generality of the foregoing, CCo will use its
good faith efforts to (and shall, in the case of a transaction proposed by CCo
or where CCo is a participant in the negotiation thereof) ensure that holders of
Exchangeable Shares may participate in all such Offers without being required to
retract Exchangeable Shares as against CCo Sub or, if so required, ensure that
any such retraction shall be effective only upon, and shall be conditional upon,
the closing of the Offer and only to the extent necessary to tender or deposit
to the Offer.
2.9 OWNERSHIP OF OUTSTANDING SHARES
Without the prior approval of CCo Sub and the prior approval of the
holders of the Exchangeable Shares given in accordance with Section 10.2 of the
Exchangeable Share Provisions, CCo covenants and
C-6
agrees in favor of CCo Sub that, as long as any outstanding Exchangeable Shares
are owned by any person or entity other than CCo or any of its Subsidiaries,
CCo, alone or together with any direct or indirect wholly-owned subsidiary of
CCo, will be and remain the beneficial owner of all issued and outstanding
voting securities of CCo Sub. Notwithstanding the foregoing, CCo shall not be in
violation of this Section if any person or group of persons acting jointly or in
concert acquires (a) all or substantially all of the assets of CCo, or (b) CCo
Common Stock pursuant to any merger of CCo pursuant to which CCo was not the
surviving corporation.
2.10 CCO NOT TO VOTE EXCHANGEABLE SHARES
CCo covenants and agrees that it will appoint and cause to be appointed
proxy holders with respect to all Exchangeable Shares held by CCo and its
Subsidiaries for the sole purpose of attending each meeting of holders of
Exchangeable Shares in order to be counted as part of the quorum for each such
meeting. CCo further covenants and agrees that it will not, and will cause its
Subsidiaries not to, exercise any voting rights which may be exercisable by
holders of Exchangeable Shares from time to time pursuant to the Exchangeable
Share Provisions or pursuant to the provisions of the Act with respect to any
Exchangeable Shares held by it or by its Subsidiaries in respect of any matter
considered at any meeting of holders of Exchangeable Shares.
ARTICLE 3
GENERAL
3.1 TERM
This agreement shall come into force and be effective as of the date
hereof and shall terminate and be of no further force and effect at such time as
no Exchangeable Shares (or securities or rights convertible into or exchangeable
for or carrying rights to acquire Exchangeable Shares) are held by any party
other than CCo and any of its Subsidiaries.
3.2 CHANGES IN CAPITAL OF CCO AND CCO SUB
Notwithstanding the provisions of Section 3.4 hereof, at all times after
the occurrence of any event effected pursuant to Section 2.7 or 2.8 hereof, as a
result of which either CCo Common Stock or the Exchangeable Shares or both are
in any way changed, this agreement shall forthwith be amended and modified as
necessary in order that it shall apply with full force and effect, mutatis
mutandis, to all new securities into which CCo Common Stock or the Exchangeable
Shares or both are so changed, and the parties hereto shall as soon as possible
execute and deliver an agreement in writing giving effect to and evidencing such
necessary amendments and modifications.
3.3 SEVERABILITY
If any provision of this agreement is held to be invalid, illegal or
unenforceable, the validity, legality or enforceability of the remainder of this
agreement shall not in any way be affected or impaired thereby and this
agreement shall be carried out as nearly as possible in accordance with its
original terms and conditions.
3.4 AMENDMENTS, MODIFICATIONS, ETC.
This agreement may not be amended, modified or waived except by an
agreement in writing executed by CCo Sub and CCo and approved by the holders of
the Exchangeable Shares in accordance with Section 10.2 of the Exchangeable
Share Provisions.
C-7
3.5 MINISTERIAL AMENDMENTS
Notwithstanding the provisions of Section 3.4, the parties to this
agreement may in writing, at any time and from time to time, without the
approval of the holders of the Exchangeable Shares, amend or modify this
agreement for the purposes of:
(a) adding to the covenants of either or both parties for the
protection of the holders of the Exchangeable Shares;
(b) making such amendments or modifications not inconsistent with
this agreement as may be necessary or desirable with respect to
matters or questions which, in the opinion of the board of
directors of each of CCo Sub and CCo, it may be expedient to
make, provided that each such board of directors shall be of the
opinion that such amendments or modifications will not be
prejudicial to the interests of the holders of the Exchangeable
Shares; or
(c) making such changes or corrections which, on the advice of
counsel to CCo Sub and CCo, are required for the purpose of
curing or correcting any ambiguity or defect or inconsistent
provision or clerical omission or mistake or manifest error;
provided that the boards of directors of each of CCo Sub and CCo
shall be of the opinion that such changes or corrections will not
be prejudicial to the interests of the holders of the
Exchangeable Shares.
3.6 MEETING TO CONSIDER AMENDMENTS
CCo Sub, at the request of CCo, shall call a meeting or meetings of the
holders of the Exchangeable Shares for the purpose of considering any proposed
amendment or modification requiring approval of such shareholders. Any such
meeting or meetings shall be called and held in accordance with the by-laws of
CCo Sub, the Exchangeable Share Provisions and all Applicable Laws.
3.7 AMENDMENTS ONLY IN WRITING
No amendment to or modification or waiver of any of the provisions of
this agreement otherwise permitted hereunder shall be effective unless made in
writing and signed by both of the parties hereto.
3.8 INUREMENT
This agreement shall be binding upon and inure to the benefit of the
parties hereto and the holders, from time to time, of Exchangeable Shares and
each of their respective heirs, successors and assigns.
3.9 NOTICES TO PARTIES
All notices and other communications between the parties shall be in
writing and shall be deemed to have been given if delivered personally or by
confirmed facsimile to the parties at the following addresses (or at such other
address for either such party as shall be specified in like notice):
(a) if to CCo:
Calpine Corporation
50 West San Xxxxxxxx Street, 0xx Xxxxx
X-0
Xxx Xxxx, Xxxxxxxxxx, 00000
Attention: General Counsel
Facsimile No. 000-000-0000
with a copy to
Xxxxxxx Xxxxx LLP,
Suite 3700, 000 - 0xx Xxxxxx X.X.
Xxxxxxx, Xxxxxxx, X0X 0X0
Attention: A. G. Love
Facsimile No. 000-000-0000
(b) if to CCo Sub to:
___________________
___________________
___________________
___________________
Any notice or other communication given personally shall be deemed to
have been given and received upon delivery thereof and if given by facsimile
shall be deemed to have been given and received on the date of confirmed receipt
thereof, unless such day is not a Business Day, in which case it shall be deemed
to have been given and received upon the immediately following Business Day.
3.10 COUNTERPARTS
This agreement may be executed in counterparts, each of which shall be
deemed an original, and all of which taken together shall constitute one and the
same instrument.
3.11 JURISDICTION
This agreement shall be construed and enforced in accordance with the
laws of the Province of Alberta and the federal laws of Canada applicable
therein.
3.12 ATTORNMENT
CCo agrees that any action or proceeding arising out of or relating to
this agreement may be instituted in the courts of the Province of Alberta,
waives any objection which it may have now or hereafter to the venue of any such
action or proceeding, irrevocably submits to the jurisdiction of such courts in
any such action or proceeding, agrees to be bound by any judgment of such courts
and not to seek, and hereby waives, any review of the merits of any such
judgment by the courts of any other jurisdiction and hereby appoints CCo Sub at
its registered office in the Province of Alberta as CCo's attorney for service
of process.
IN WITNESS WHEREOF, CCo and CCo Sub have caused this agreement to be
signed by their respective officers thereunder duly authorized, all as of the
date first written above.
CALPINE CORPORATION
C-9
Per:
--------------------------------
[CCO SUB]
Per:
--------------------------------
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EXHIBIT D
FORM OF VOTING AND EXCHANGE TRUST AGREEMENT
THIS VOTING AND EXCHANGE TRUST AGREEMENT is entered into as of
_________, 2001, by and between Calpine Corporation, a Delaware corporation
("CCo"), _________, an [Alberta] corporation ("CCo Sub"), and _________, a
Canadian trust company ("Trustee").
WHEREAS, pursuant to a Combination Agreement dated effective as of
February ___, 2001 by and between CCo and Encal Energy Ltd. ("ECo") (such
agreement as it may be amended or restated is hereinafter referred to as the
"Combination Agreement"), the parties agreed that on the Effective Date (as
defined in the Combination Agreement), CCo and CCo Sub would execute and deliver
a Voting and Exchange Trust Agreement containing the terms and conditions set
forth in Exhibit D to the Combination Agreement together with such other terms
and conditions as may be agreed to by the parties to the Combination Agreement
acting reasonably.
AND WHEREAS, pursuant to an arrangement (the "Arrangement") effected by
Articles of Arrangement dated _________, 2001 filed pursuant to the Business
Corporations Act (Alberta) (or any successor or other corporate statute by which
ECo may in the future be governed) (the "Act"), each issued and outstanding
common share of ECo (an "ECo Common Share") was exchanged for Exchangeable
Shares of CCo Sub (the "Exchangeable Shares");
AND WHEREAS, the Articles of Incorporation of CCo Sub set forth the
rights, privileges, restrictions and conditions attaching to the Exchangeable
Shares (collectively, the "Exchangeable Share Provisions"), and a copy of such
Articles of Incorporation is attached hereto as Exhibit A;
AND WHEREAS, CCo is to grant to and in favor of the holders (other than
CCo and its Subsidiaries) from time to time of Exchangeable Shares the right, in
the circumstances set forth herein, to require CCo to purchase from each such
holder all or any part of the Exchangeable Shares held by the holder;
AND WHEREAS, CCo is to provide voting rights in CCo to each holder
(other than CCo and its Subsidiaries) from time to time of Exchangeable Shares,
such voting rights per Exchangeable Share to be equivalent to the voting rights
per share of CCo Common Stock;
AND WHEREAS, the parties desire to make appropriate provision and to
establish a procedure whereby voting rights in CCo shall be exercisable by
holders (other than CCo and its Subsidiaries) from time to time of Exchangeable
Shares by and through the Trustee, which will hold legal title to and a share
certificate in respect of one share of CCo Special Voting Stock (the "CCo
Special Voting Stock") to which voting rights attach for the benefit of such
holders of Exchangeable Shares and whereby the rights to require CCo or, at the
option of CCo, CCo Holdco, to purchase Exchangeable Shares from the holders
thereof (other than CCo and its Subsidiaries) shall be exercisable by such
holders from time to time of Exchangeable Shares by and through the Trustee,
which will hold legal title to such rights for the benefit of such holders;
AND WHEREAS, these recitals and any statements of fact in this agreement
are made by CCo and CCo Sub and not by the Trustee;
NOW THEREFORE, in consideration of the respective covenants and
agreements provided in this agreement and for other good and valuable
consideration (the receipt and sufficiency of which are hereby acknowledged),
the parties agree as follows:
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ARTICLE 1
DEFINITIONS AND INTERPRETATION
1.1 DEFINITIONS
In this agreement, the following terms shall have the following
meanings:
"Act" has the meaning in the recitals hereto;
"Aggregate Equivalent Vote Amount" means, with respect to any matter,
proposition or question on which holders of CCo Common Stock are
entitled to vote, consent or otherwise act, the product of (i) the
number of shares of Exchangeable Shares issued and outstanding and held
by Holders multiplied by (ii) the Equivalent Vote Amount.
"Arrangement" has the meaning provided in the recitals hereto.
"Automatic Exchange Rights" means the benefit of the obligation of CCo
to effect the automatic exchange of shares of CCo Common Stock for
Exchangeable Shares pursuant to Section 5.11 hereof.
"Board of Directors" means the Board of Directors of CCo Sub.
"Business Day" has the meaning provided in the Exchangeable Share
Provisions.
"CCo" has the meaning in the recitals hereto.
"CCo Common Stock" has the meaning provided in the Exchangeable Share
Provisions.
"CCo Consent" has the meaning provided in Section 4.2 hereof.
"CCo Holdco" means a Subsidiary, if any, of CCo (other than CCo Sub)
established by CCo for the purpose of purchasing Exchangeable Shares and
delivering CCo Common Stock as provided for in this agreement, the
Exchangeable Share Provisions or the Support Agreement.
"CCo Meeting" has the meaning provided in Section 4.2 hereof.
"CCo Special Voting Stock" has the meaning provided in the recitals
hereto.
"CCo Sub" has the meaning in the recitals hereto.
"Combination Agreement" has the meaning in the recitals hereto.
"ECo" has the meaning in the recitals hereto.
"ECo Stock Options" means the outstanding options entitling the holders
to acquire upon exercise thereof up to _________ ECo Common Shares in
the aggregate.
"Equivalent Vote Amount" means, with respect any matter, proposition or
question on which holders of CCo Common Stock are entitled to vote,
consent or otherwise act, the number of votes to which a holder of one
share of CCo Common Stock is entitled with respect to such matter,
proposition or question.
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"Exchange Put Right" has the meaning provided in the Exchangeable Share
Provisions.
"Exchangeable Share Consideration" has the meaning provided in the
Exchangeable Share Provisions.
"Exchangeable Share Price" has the meaning provided in the Exchangeable
Share Provisions.
"Exchangeable Share Provisions" has the meaning provided in the recitals
hereto.
"Exchangeable Shares" has the meaning provided in the recitals hereto.
"Holder Votes" has the meaning provided in Section 4.2 hereof.
"Holders" means the registered holders from time to time of Exchangeable
Shares, other than CCo and its Subsidiaries.
"Liquidation Call Right" has the meaning provided in the Exchangeable
Share Provisions.
"Liquidation Event" has the meaning provided in Section 5.11(b) hereof.
"Liquidation Event Effective Time" has the meaning provided in Section
5.11(c) hereof.
"List" has the meaning provided in Section 4.6 hereof.
"Officer's Certificate" means, with respect to CCo or CCo Sub, as the
case may be, a certificate signed by any one of the Chairman of the
Board, the Vice-Chairman of the Board (if there be one), the President
or any Vice-President or other senior officer of CCo or CCo Sub, as the
case may be.
"Person" includes an individual, body corporate, partnership, company,
unincorporated syndicate or organization, trust, trustee, executor,
administrator and other legal representative.
"Plan of Arrangement" has the meaning provided in the Exchangeable Share
Provisions.
"Redemption Call Right" has the meaning provided in the Exchangeable
Share Provisions.
"Retracted Shares" has the meaning provided in Section 5.7 hereof.
"Retraction Call Right" has the meaning provided in the Exchangeable
Share Provisions.
"Subsidiary" has the meaning provided in the Exchangeable Share
Provisions.
"Successor" has the meaning provided in Section 11. 1(a) hereof.
"Support Agreement" means that certain support agreement made as of even
date hereof by and between CCo and CCo Sub.
"Trust" means the trust created by this agreement.
"Trust Estate" means the Voting Share, any other securities, the
Exchange Put Right, the Automatic Exchange Rights and any money or other
property which may be held by the Trustee from time to time pursuant to
this agreement.
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"Trustee" means [CIBC Mellon Trust Company] and, subject to the
provisions of Article 10 hereof, includes any successor trustee or
permitted assigns.
"Voting Rights" means the voting rights attached to the Voting Share.
"Voting Share" means the one share of CCo Special Voting [Preferred]
Stock, U.S. $0.001 par value, issued by CCo to and deposited with the
Trustee, which entitles the holder of record to a number of votes at
meetings of holders of CCo Common Stock equal to the Aggregate
Equivalent Vote Amount.
1.2 INTERPRETATION NOT AFFECTED BY HEADINGS, ETC.
The division of this agreement into articles, sections and paragraphs
and the insertion of headings are for convenience of reference only and shall
not affect the construction or interpretation of this agreement.
1.3 NUMBER, GENDER, ETC.
Words importing the singular number only shall include the plural and
vice versa. Words importing the use of any gender shall include all genders.
1.4 DATE FOR ANY ACTION
If any date on which any action is required to be taken under this
agreement is not a Business Day, such action shall be required to be taken on
the next succeeding Business Day.
1.5 PAYMENTS
All payments to be made hereunder will be made without interest and less
any tax required by Canadian law to be deducted or withheld.
ARTICLE 2
PURPOSE OF AGREEMENT
The purpose of this agreement is to create the Trust for the benefit of
the Holders, as herein provided. The Trustee will hold the Voting Share in order
to enable the Trustee to exercise the Voting Rights and will hold the Exchange
Put Right and the Automatic Exchange Rights in order to enable the Trustee to
exercise such rights, in each case as trustee for and on behalf of the Holders
as provided in this agreement.
ARTICLE 3
VOTING SHARE
3.1 ISSUANCE AND OWNERSHIP OF THE VOTING SHARE
CCo hereby issues to and deposits with the Trustee the Voting Share to
be hereafter held of record by the Trustee as trustee for and on behalf of, and
for the use and benefit of, the Holders and in accordance with the provisions of
this agreement. CCo hereby acknowledges receipt from the Trustee as trustee for
and on behalf of the Holders of good and valuable consideration (and the
adequacy thereof) for the issuance of the Voting Share by CCo to the Trustee.
During the term of the Trust and subject to the terms and conditions of this
agreement, the Trustee shall possess and be vested with full legal ownership
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of the Voting Share and shall be entitled to exercise all of the rights and
powers of an owner with respect to the Voting Share, provided that the Trustee
shall:
(a) hold the Voting Share and the legal title thereto as trustee
solely for the use and benefit of the Holders in accordance with
the provisions of this agreement; and
(b) except as specifically authorized by this agreement, have no
power or authority to sell, transfer, vote or otherwise deal in
or with the Voting Share, and the Voting Share shall not be used
or disposed of by the Trustee for any purpose other than the
purposes for which this Trust is created pursuant to this
agreement.
3.2 LEGENDED SHARE CERTIFICATES
CCo Sub will cause each certificate representing Exchangeable Shares to
bear an appropriate legend notifying the Holders of their right to instruct the
Trustee with respect to the exercise of the Voting Rights with respect to the
Exchangeable Shares held by a Holder.
3.3 SAFE KEEPING OF CERTIFICATE
The certificate representing the Voting Share shall at all times be held
in safe keeping by the Trustee or its agent.
3.4 HOLDERS' BENEFIT
For greater certainty, the Trustee holds the benefit of the Voting
Rights for the Holders, but all other rights in respect of the Voting Share,
including without limitation any rights to receive dividends on the Voting
Share, are for the benefit of CCo.
ARTICLE 4
EXERCISE OF VOTING RIGHTS
4.1 VOTING RIGHTS
The Trustee, as the holder of record of the Voting Share, shall be
entitled to all of the Voting Rights, including the right to consent to or to
vote in person or by proxy the Voting Share, on any matter, question or
proposition whatsoever that may properly come before the stockholders of CCo at
a CCo Meeting or in connection with a CCo Consent (in each case, as hereinafter
defined). Subject to Section 4.10 hereof, the Voting Rights shall be and remain
vested in and exercised by the Trustee. Subject to Section 7.15 hereof, the
Trustee shall exercise the Voting Rights only on the basis of instructions
received pursuant to this Article 4 from Holders entitled to instruct the
Trustee as to the voting thereof at the time at which a CCo Consent is sought or
a CCo Meeting is held. To the extent that no instructions are received from a
Holder with respect to the Voting Rights to which such Holder is entitled, the
Trustee shall not exercise or permit the exercise of such Holder's Voting
Rights.
4.2 NUMBER OF VOTES
With respect to all meetings of stockholders of CCo at which holders of
shares of CCo Common Stock are entitled to vote (a "CCo Meeting") and with
respect to all written consents sought by CCo from its stockholders including
the holders of shares of CCo Common Stock (a "CCo Consent"), each Holder shall
be entitled to instruct the Trustee to cast and exercise, in the manner
instructed, a number of votes equal to the Equivalent Vote Amount for each
Exchangeable Share owned of record by such Holder on
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the record date established by CCo or by applicable law for such CCo Meeting or
CCo Consent, as the case may be, (the "Holder Votes") in respect of each matter,
question or proposition to be voted on at such CCo Meeting or to be consented to
in connection with such CCo Consent.
4.3 MAILINGS TO SHAREHOLDERS
With respect to each CCo Meeting and CCo Consent, the Trustee will mail
or cause to be mailed (or otherwise communicate in the same manner as CCo
utilizes in communications to holders of CCo Common Stock, subject to the
Trustee's ability to provide this method of communication and upon being advised
in writing of such method) to each of the Holders named in the List on the same
day as the initial mailing or notice (or other communication) with respect
thereto is given by CCo to its stockholders:
(a) a copy of such notice, together with any proxy or information
statement and related materials to be provided to holders of CCo
Common Stock;
(b) a statement of the number of Holder Votes which the Holder is
entitled to exercise;
(c) a statement that such Holder is entitled to instruct the Trustee
as to the exercise of the Holder Votes with respect to such CCo
Meeting or CCo Consent, as the case may be, or, pursuant to
Section 4.7 hereof, to attend such CCo Meeting and to exercise
personally the Holder Votes thereat;
(d) a statement as to the manner in which such instructions may be
given to the Trustee, including an express indication that
instructions may be given to the Trustee to give:
(i) a proxy to such Holder or such Holder's designee to
exercise personally the Holder Votes; or
(ii) a proxy to a designated agent or other representative of
the management of CCo to exercise such Holder Votes;
(e) a statement that if no voting instructions are received from the
Holder, the Holder Votes to which such Holder is entitled will
not be exercised;
(f) a form of direction whereby the Holder may so direct and instruct
the Trustee as contemplated herein; and
(g) a statement of (i) the time and date by which such instructions
must be received by the Trustee in order to be binding upon it,
which in the case of a CCo Meeting shall not be earlier than the
close of business on the Business Day prior to such meeting, and
(ii) the method for revoking or amending such instructions.
The materials referred to above are to be provided by CCo to the
Trustee, but shall be subject to review and comment by the Trustee.
For the purpose of determining Holder Votes to which a Holder is
entitled in respect of any such CCo Meeting or CCo Consent, the number of
Exchangeable Shares owned of record by the Holder shall be determined at the
close of business on the record date established by CCo or by applicable law for
purposes of determining stockholders entitled to vote at such CCo Meeting or to
give written consent in connection with such CCo Consent. CCo will notify the
Trustee in writing of any decision of the board of directors of CCo with respect
to the calling of any such CCo Meeting or the seeking of any such CCo
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Consent and shall provide all necessary information and materials to the Trustee
in each case promptly and in any event in sufficient time to enable the Trustee
to perform its obligations contemplated by this Section 4.3.
4.4 COPIES OF STOCKHOLDER INFORMATION
CCo will deliver to the Trustee copies of all proxy materials,
(including notices of CCo Meetings, but excluding proxies to vote shares of CCo
Common Stock), information statements, reports (including without limitation all
interim and annual financial statements) and other written communications that
are to be distributed from time to time to holders of CCo Common Stock in
sufficient quantities and in sufficient time so as to enable the Trustee to send
those materials to each Holder, to the extent possible, at the same time as such
materials are first sent to holders of CCo Common Stock. The Trustee will mail
or otherwise send to each Holder, at the expense of CCo, copies of all such
materials (and all materials specifically directed to the Holders or to the
Trustee for the benefit of the Holders by CCo) received by the Trustee from CCo,
to the extent possible, at the same time as such materials are first sent to
holders of CCo Common Stock. The Trustee will make copies of all such materials
available for inspection by any Holder at the Trustee's principal transfer
office in the cities of Calgary and Toronto.
4.5 OTHER MATERIALS
Immediately after receipt by CCo or any stockholder of CCo of any
material sent or given generally to the holders of CCo Common Stock by or on
behalf of a third party, including without limitation dissident proxy and
information circulars (and related information and material) and tender and
exchange offer circulars (and related information and material), CCo shall use
its reasonable best efforts to obtain and deliver to the Trustee copies thereof
in sufficient quantities so as to enable the Trustee to forward such material
(unless the same has been provided directly to Holders by such third party) to
each Holder as soon as possible thereafter. As soon as practicable after receipt
thereof, the Trustee will mail or otherwise send to each Holder, at the expense
of CCo, copies of all such materials received by the Trustee from CCo. The
Trustee will also make copies of all such materials available for inspection by
any Holder at the Trustee's principal transfer office in the cities of Calgary
and Toronto.
4.6 LIST OF PERSONS ENTITLED TO VOTE
CCo Sub shall, (i) prior to each annual, general or special CCo Meeting
or the seeking of any CCo Consent and (ii) forthwith upon each request made at
any time by the Trustee in writing, prepare or cause to be prepared a list (a
"List") of the names and addresses of the Holders arranged in alphabetical order
and showing the number of Exchangeable Shares held of record by each such
Holder, in each case at the close of business on the date specified by the
Trustee in such request or, in the case of a List prepared in connection with a
CCo Meeting or a CCo Consent, at the close of business on the record date
established by CCo or pursuant to applicable law for determining the holders of
CCo Common Stock entitled to receive notice of and/or to vote at such CCo
Meeting or to give consent in connection with such CCo Consent. Each such List
shall be delivered to the Trustee promptly after receipt by CCo Sub of such
request or the record date for such meeting or seeking of consent, as the case
may be, and in any event within sufficient time as to enable the Trustee to
perform its obligations under this agreement. CCo agrees to give CCo Sub written
notice (with a copy to the Trustee) of the calling of any CCo Meeting or the
seeking of any CCo Consent, together with the record dates therefor,
sufficiently prior to the date of the calling of such meeting or seeking of such
consent so as to enable CCo Sub to perform its obligations under this Section
4.6.
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4.7 ENTITLEMENT TO DIRECT VOTES
Any Holder named in a List prepared in connection with any CCo Meeting
or any CCo Consent will be entitled (i) to instruct the Trustee in the manner
described in Section 4.3 hereof with respect to the exercise of the Holder Votes
to which such Holder is entitled or (ii) to attend such meeting and personally
to exercise thereat (or to exercise with respect to any written consent), as the
proxy of the Trustee, the Holder Votes to which such Holder is entitled.
4.8 VOTING BY TRUSTEE, AND ATTENDANCE OF TRUSTEE REPRESENTATIVE, AT MEETING
(a) In connection with each CCo Meeting and CCo Consent, the Trustee
shall exercise, either in person or by proxy, in accordance with
the instructions received from a Holder pursuant to Section 4.3
hereof, the Holder Votes as to which such Holder is entitled to
direct the vote (or any lesser number thereof as may be set forth
in the instructions); provided, however, that such written
instructions are received by the Trustee from the Holder prior to
the time and date fixed by it for receipt of such instructions in
the notice given by the Trustee to the Holder pursuant to Section
4.3 hereof.
(b) The Trustee shall cause such representatives as are empowered by
it to sign and deliver, on behalf of the Trustee, proxies for
Voting Rights to attend each CCo Meeting. Upon submission by a
Holder (or its designee) of identification satisfactory to the
Trustee's representatives, and at the Holder's request, such
representatives shall sign and deliver to such Holder (or its
designee) a proxy to exercise personally the Holder Votes as to
which such Holder is otherwise entitled hereunder to direct the
vote, if such Holder either:
(i) has not previously given the Trustee instructions pursuant
to Section 4.3 hereof in respect of such CCo Meeting, or
(ii) submits to the Trustee's representatives written
revocation of any such previous instructions.
At such CCo Meeting, the Holder exercising such Holder Votes shall have
the same rights as the Trustee to speak at the meeting in respect of any matter,
question or proposition, to vote by way of ballot at the meeting in respect of
any matter, question or proposition and to vote at such meeting by way of a show
of hands in respect of any matter, question or proposition.
4.9 DISTRIBUTION OF WRITTEN MATERIALS
Any written materials to be distributed by the Trustee to the Holders
pursuant to this agreement shall be delivered or sent by mail (or otherwise
communicated in the same manner as CCo utilizes in communications to holders of
CCo Common Stock subject to the Trustee's ability to provide this method of
communication and upon being advised in writing of such method) to each Holder
at its address as shown on the books of CCo Sub. CCo Sub shall provide or cause
to be provided to the Trustee for this purpose, on a timely basis and without
charge or other expense:
(a) current lists of the Holders; and
(b) on the request of the Trustee, mailing labels to enable the
Trustee to carry out its duties under this agreement.
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The materials referred to above are to be provided by CCo Sub to the
Trustee, but shall be subject to review and comment by the Trustee.
4.10 TERMINATION OF VOTING RIGHTS
Except as otherwise provided herein or in the Exchangeable Share
Provisions, all of the rights of a Holder with respect to the Holder Votes
exercisable in respect of the Exchangeable Shares held by such Holder, including
the right to instruct the Trustee as to the voting of or to vote personally such
Holder Votes, shall be deemed to be surrendered by the Holder to CCo, and such
Holder Votes and the Voting Rights represented thereby shall cease and be
terminated immediately, upon the delivery by such Holder to the Trustee of the
certificates representing such Exchangeable Shares in connection with the
exercise by the Holder of the Exchange Put Right or the occurrence of the
automatic exchange of Exchangeable Shares for shares of CCo Common Stock, as
specified in Article 5 hereof (unless in any case CCo or CCo Holdco shall not
have delivered the Exchangeable Share Consideration deliverable in exchange
therefor to the Trustee for delivery to the Holders), or upon the redemption of
Exchangeable Shares pursuant to Article 6 or Article 7 of the Exchangeable Share
Provisions, or upon the effective date of the liquidation, dissolution or
winding-up of CCo Sub or any other distribution of the assets of CCo Sub among
its shareholders for the purpose of winding up its affairs pursuant to Article 5
of the Exchangeable Share Provisions, or upon the purchase of Exchangeable
Shares from the holder thereof by CCo pursuant to the exercise by CCo of the
Retraction Call Right, the Redemption Call Right or the Liquidation Call Right.
ARTICLE 5
EXCHANGE PUT RIGHT AND AUTOMATIC EXCHANGE
5.1 GRANT AND OWNERSHIP OF THE EXCHANGE PUT RIGHT AND AUTOMATIC EXCHANGE
RIGHTS
CCo hereby grants to the Trustee as trustee for and on behalf of, and
for the use and benefit of, the Holders:
(a) the Exchange Put Right; and
(b) the Automatic Exchange Rights,
all in accordance with the provisions of this agreement and the Exchangeable
Share Provisions, as the case may be. CCo hereby acknowledges receipt from the
Trustee as trustee for and on behalf of the Holders of good and valuable
consideration (and the adequacy thereof) for the grant of the Exchange Put Right
and the Automatic Exchange Rights by CCo to the Trustee. During the term of the
Trust and subject to the terms and conditions of this agreement, the Trustee
shall possess and be vested with full legal ownership of the Exchange Put Right
and the Automatic Exchange Rights and shall be entitled to exercise and enforce
for the benefit of the Holders all of the rights and powers of an owner with
respect to the Exchange Put Right and the Automatic Exchange Rights, provided
that the Trustee shall:
(c) hold the Exchange Put Right and the Automatic Exchange Rights and
the legal title thereto as trustee solely for the use and benefit
of the Holders in accordance with the provisions of this
agreement; and
(d) except as specifically authorized by this agreement, have no
power or authority to exercise or otherwise deal in or with the
Exchange Put Right or the Automatic Exchange Rights, and the
Trustee shall not exercise any such rights for any purpose other
than the purposes for which this Trust is created pursuant to
this agreement.
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5.2 LEGENDED SHARE CERTIFICATES
CCo Sub will cause each certificate representing Exchangeable Shares to
bear an appropriate legend notifying the Holders of:
(a) their right to instruct the Trustee with respect to the exercise
of the Exchange Put Right in respect of the Exchangeable Shares
held by a Holder; and
(b) the Automatic Exchange Rights.
5.3 GENERAL EXERCISE OF EXCHANGE PUT RIGHT
The Exchange Put Right shall be and remain vested in and exercised by
the Trustee. Subject to Section 7.15 hereof, the Trustee shall exercise the
Exchange Put Right only on the basis of instructions received pursuant to this
Article 5 from Holders entitled to instruct the Trustee as to the exercise
thereof. To the extent that no instructions are received from a Holder with
respect to the Exchange Put Right, the Trustee shall not exercise or permit the
exercise of the Exchange Put Right.
5.4 PURCHASE PRICE
The purchase price payable by CCo (or CCo Holdco, in the case of a
purchase by CCo Holdco) for each Exchangeable Share to be purchased by CCo or
CCo Holdco (as the case may be) under the Exchange Put Right shall be the amount
determined under the Exchangeable Share Provisions. The applicable Exchangeable
Share Price for each such Exchangeable Share so purchased may be satisfied only
by CCo's issuing and delivering or issuing and causing to be delivered by CCo
Holdco to the Trustee, on behalf of the relevant Holder, the applicable
Exchangeable Share Consideration representing the total applicable Exchangeable
Share Price.
5.5 EXERCISE INSTRUCTIONS FOR EXCHANGE PUT RIGHT
Subject to the terms and conditions herein set forth, a Holder shall be
entitled to instruct the Trustee to exercise the Exchange Put Right with respect
to all or any part of the Exchangeable Shares registered in the name of such
Holder on the books of CCo Sub. To cause the exercise of the Exchange Put Right
by the Trustee, the Holder shall comply with the provisions of Article 8 of the
Exchangeable Share Provisions. The surrender by the Holder of Exchangeable
Shares in accordance with Section 8.2 of the Exchangeable Share Provisions shall
constitute the representation, warranty and covenant of the Holder that the
Exchangeable Shares so surrendered are sold to CCo or CCo Holdco, as the case
may be, are free and clear of any lien, encumbrance, security interest or
adverse claim or interest.
5.6 DELIVERY OF EXCHANGEABLE SHARE CONSIDERATION; EFFECT OF EXERCISE
Promptly after receipt of the certificates representing the Exchangeable
Shares which the Holder desires CCo or CCo Holdco to purchase under the Exchange
Put Right (together with such documents and instruments of transfer and a duly
completed form of notice of exercise of the Exchange Put Right), duly endorsed
for transfer to CCo (or CCo Holdco as CCo may direct), the Trustee shall notify
CCo and CCo Sub of its receipt of the same, which notice to CCo and CCo Sub
shall constitute exercise of the Exchange Put Right by the Trustee on behalf of
the Holder of such Exchangeable Shares, and CCo shall immediately thereafter
deliver or cause to be delivered to the Trustee, for delivery to the Holder of
such Exchangeable Shares (or to such other persons, if any, properly designated
by such Holder), the Exchangeable Share Consideration deliverable in connection
with the exercise of the Exchange Put Right; provided, however, that no such
delivery shall be made unless and until the Holder requesting the same
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shall have paid (or provided evidence satisfactory to the Trustee, CCo Sub and
CCo of the payment of) the taxes (if any) payable as contemplated by Section 5.8
of this agreement. Immediately upon the giving of notice by the Trustee to CCo
and CCo Sub of the exercise of the Exchange Put Right, as provided in this
Section 5.6, (i) the closing of the transaction of purchase and sale
contemplated by the Exchange Put Right shall be deemed to have occurred, (ii)
CCo shall be required to take all action necessary to permit it to occur,
including delivery to the Trustee of the relevant Exchangeable Share
Consideration, no later than the close of business on the third Business Day
following the receipt by the Trustee of notice, certificates and other documents
as aforesaid and (iii) the Holder of such Exchangeable Shares shall be deemed to
have transferred to CCo (or CCo Holdco as CCo may direct) all of its right,
title and interest in and to such Exchangeable Shares and the related interest
in the Trust Estate, shall cease to be a holder of such Exchangeable Shares and
shall not be entitled to exercise any of the rights of a holder in respect
thereof, other than the right to receive his proportionate part of the total
purchase price therefor, unless such Exchangeable Share Consideration is not
delivered by CCo to the Trustee by the date specified above, in which case the
rights of the Holder shall remain unaffected with respect to such unpaid portion
until such Exchangeable Share Consideration is delivered by CCo and such holder
is paid his proportionate part of the total purchase price. Concurrently with
such Holder ceasing to be a holder of Exchangeable Shares, the Holder shall be
considered and deemed for all purposes to be the holder of the shares of CCo
Common Stock delivered to it pursuant to the Exchange Put Right. Notwithstanding
the foregoing, until the Exchangeable Share Consideration is delivered to the
Holder, the Holder shall be deemed to still be a holder of the sold Exchangeable
Shares for purposes of the Voting Rights with respect thereto.
5.7 EXERCISE OF EXCHANGE PUT RIGHT SUBSEQUENT TO RETRACTION
In the event that a Holder has exercised its right under Article 6 of
the Exchangeable Share Provisions to require CCo Sub to redeem any or all of the
Exchangeable Shares held by the Holder (the "Retracted Shares") and is notified
by CCo Sub pursuant to Section 6.6 of the Exchangeable Share Provisions that CCo
Sub will not be permitted as a result of liquidity or solvency provisions of
applicable law to redeem all such Retracted Shares, subject to receipt by the
Trustee of written notice to that effect from CCo Sub and provided that CCo or
CCo Holdco, as the case may be, shall not have exercised the Retraction Call
Right with respect to the Retracted Shares and that the Holder has not revoked
the retraction request delivered by the Holder to CCo Sub pursuant to Section
6.1 of the Exchangeable Share Provisions, the retraction request will constitute
and will be deemed to constitute notice from the Holder to the Trustee
instructing the Trustee to exercise the Exchange Put Right with respect to those
Retracted Shares which CCo Sub is unable to redeem. In any such event, CCo Sub
hereby agrees with the Trustee and in favour of the Holder immediately to notify
the Trustee of such prohibition against CCo Sub's redeeming all of the Retracted
Shares and immediately to forward or cause to be forwarded to the Trustee all
relevant materials delivered by the Holder to CCo Sub or to the transfer agent
of the Exchangeable Shares (including without limitation a copy of the
retraction request delivered pursuant to Section 6.1 of the Exchangeable Share
Provisions) in connection with such proposed redemption of the Retracted Shares,
and the Trustee will thereupon exercise the Exchange Put Right with respect to
the Retracted Shares which CCo Sub is not permitted to redeem and will require
CCo or CCo Holdco, as the case may be, to purchase such shares in accordance
with the provisions of this Article 5.
5.8 STAMP OR OTHER TRANSFER TAXES
Upon any sale of Exchangeable Shares to CCo pursuant to the Exchange Put
Right or the Automatic Exchange Rights, the share certificate or certificates
representing CCo Common Stock to be delivered in connection with the payment of
the total purchase price therefor shall be issued in the name of the Holder of
the Exchangeable Shares so sold or in such names as such Holder may otherwise
direct
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in writing without charge to the holder of the Exchangeable Shares so sold,
provided, however, that such Holder:
(a) shall pay (and none of CCo, CCo Sub, CCo Holdco, ECo or the
Trustee shall be required to pay) any documentary, stamp,
transfer or other similar taxes that may be payable, or income
taxes that may be required to be withheld, in respect of any
transfer involved in the issuance or delivery of such shares to a
person other than such Holder; or
(b) shall have established to the satisfaction of the Trustee, CCo
and CCo Sub that such taxes, if any, have been paid.
CCo, CCo Sub, CCo Holdco and the Trustee (as directed in writing by CCo) shall
be entitled to deduct and withhold from any consideration otherwise payable
under this agreement to any Holder such amounts as CCo, CCo Sub, CCo Holdco or
the Trustee is required or permitted to deduct and withhold with respect to such
payment under the Income Tax Act (Canada), the United States Internal Revenue
Code of 1986 or any provision of provincial, state, local or foreign tax law, in
each case as amended or succeeded unless such Holder provides to CCo and the
Trustee certificates or such other assurances as are provided for under the
Income Tax Act (Canada), the United States Internal Revenue Code of 1986 or such
other applicable taxation provisions. To the extent that amounts are so
withheld, such withheld amounts shall be treated for all purposes as having been
paid to the Holder in respect of which such deduction and withholding was made,
provided that such withheld amounts are actually remitted to the appropriate
taxing authority as and when required. To the extent that the amount so required
or permitted to be deducted or withheld from any payment to a Holder exceeds the
cash portion, if any, of the consideration otherwise payable to the Holder, CCo,
CCo Sub, CCo Holdco and the Trustee are hereby authorized to sell or otherwise
dispose of such portion of the consideration as is necessary to provide
sufficient funds to CCo, CCo Sub, CCo Holdco or the Trustee, as the case may be,
to enable it to comply with such deduction or withholding requirement and CCo,
CCo Sub, CCo Holdco or the Trustee, as the case may be, shall notify the Holder
and remit to such Holder any unapplied balance of the net proceeds of such sale.
5.9 QUALIFICATION OF CCO COMMON STOCK
CCo covenants with the Trustee for the benefit of Holders that if any
shares of CCo Common Stock to be issued and delivered pursuant to the Exchange
Put Right or the Automatic Exchange Rights require registration or qualification
with or approval of or the filing of any document including any prospectus or
similar document, the taking of any proceeding with or the obtaining of any
order, ruling or consent from any governmental or regulatory authority under any
Canadian or United States federal, provincial or state law or regulation or
pursuant to the rules and regulations of any regulatory authority, or the
fulfillment of any other legal requirement (collectively, the "Applicable Laws")
before such shares may be issued and delivered by CCo to the initial holder
thereof (other than CCo Sub) or in order that such shares may be freely traded
thereafter (other than any restrictions on transfer by reason of a holder being
a "control person" of CCo for purposes of Canadian provincial securities law or
an "affiliate" of CCo for purposes of United States federal or state securities
law), CCo will in good faith take all such actions and do all such things as are
necessary and within its power to cause such shares of CCo Common Stock to be
and remain duly registered, qualified or approved to the extent expressly
provided in the Combination Agreement. CCo represents and warrants that it has
in good faith taken all actions and done all things as are necessary under
Applicable Laws as they exist on the date hereof to cause the shares of CCo
Common Stock to be issued and delivered pursuant to the Exchange Put Right and
the Automatic Exchange Rights and to be freely tradeable thereafter (other than
restrictions on transfer by reason of a holder being a "control person" of CCo
for the purposes of Canadian provincial securities law or an "affiliate" of CCo
for the purposes of United States federal or state securities law). CCo will in
good faith
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take all such actions and do all such things as are necessary and within its
power to cause all shares of CCo Common Stock to be delivered pursuant to the
Exchange Put Right or the Automatic Exchange Rights to be listed, quoted or
posted for trading on all stock exchanges and quotation systems on which such
shares are listed, quoted or posted for trading at such time.
5.10 RESERVATION OF SHARES OF CCO COMMON STOCK
CCo hereby represents, warrants and covenants with the Trustee for the
benefit of the Holders that it has irrevocably reserved for issuance and will at
all times keep available, free from pre-emptive and other rights, out of its
authorized and unissued capital stock such number of shares of CCo Common Stock:
(a) as is equal to the sum of
(i) the number of Exchangeable Shares issued and outstanding
from time to time, and
(ii) the number of Exchangeable Shares issuable upon the
exercise of all rights to acquire Exchangeable Shares
outstanding from time to time; and
(b) as are now and may hereafter be required to enable and permit CCo
Sub to meet its obligations hereunder, under the Articles of
Incorporation of CCo, under the Support Agreement, under the
Exchangeable Share Provisions and under any other security or
commitment pursuant to the Arrangement with respect to which CCo
may now or hereafter be required to issue shares of CCo Common
Stock.
5.11 AUTOMATIC EXCHANGE ON LIQUIDATION OF CCO
(a) CCo will give the Trustee written notice of each of the following
events at the time set forth below:
(i) in the event of any determination by the board of
directors of CCo to institute voluntary liquidation,
dissolution or winding-up proceedings with respect to CCo
or to effect any other distribution of assets of CCo among
its stockholders for the purpose of winding-up its
affairs, at least 60 days prior to the proposed effective
date of such liquidation, dissolution, winding-up or other
distribution; and
(ii) immediately, upon the earlier of
(A) receipt by CCo of notice of, and
(B) CCo otherwise becoming aware of
any threatened or instituted claim, suit, petition or other
proceedings with respect to the involuntary liquidation,
dissolution or winding-up of CCo or to effect any other
distribution of assets of CCo among its stockholders for the
purpose of winding up its affairs.
(b) Immediately following receipt by the Trustee from CCo of notice
of any event (a "Liquidation Event") contemplated by Section
5.11(a) above, the Trustee will give notice thereof to the
Holders. Such notice will be provided by CCo to the Trustee and
shall
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include a brief description of the automatic exchange of
Exchangeable Shares for shares of CCo Common Stock provided for
in Section 5.11(c) below.
(c) In order that the Holders will be able to participate on a pro
rata basis with the holders of CCo Common Stock in the
distribution of assets of CCo in connection with a Liquidation
Event, immediately prior to the effective time (the "Liquidation
Event Effective Time") of a Liquidation Event, all of the then
outstanding Exchangeable Shares shall be automatically exchanged
for shares of CCo Common Stock. To effect such automatic
exchange, CCo or, at the option of CCo, CCo Holdco, shall be
deemed to have purchased each Exchangeable Share outstanding
immediately prior to the Liquidation Event Effective Time and
held by Holders, and each Holder shall be deemed to have sold the
Exchangeable Shares held by it at such time, for a purchase price
per share equal to the Exchangeable Share Price applicable at
such time. In connection with such automatic exchange, CCo will
provide to the Trustee an Officer's Certificate setting forth the
calculation of the Exchangeable Share Price for each Exchangeable
Share.
(d) The closing of the transaction of purchase and sale contemplated
by Section 5.11(c) above shall be deemed to have occurred
immediately prior to the Liquidation Event Effective Time, and
each Holder of Exchangeable Shares shall be deemed to have
transferred to CCo or CCo Holdco, as the case may be, all of the
Holder's right, title and interest in and to such Exchangeable
Shares and the related interest in the Trust Estate and shall
cease to be a holder of such Exchangeable Shares, and CCo or CCo
Holdco, as the case may be, shall deliver to the Holder the
Exchangeable Share Consideration deliverable upon the automatic
exchange of Exchangeable Shares. Concurrently with such Holder's
ceasing to be a holder of Exchangeable Shares, the Holder shall
be considered and deemed for all purposes to be the holder of the
shares of CCo Common Stock issued to it pursuant to the automatic
exchange of Exchangeable Shares for CCo Common Stock, and the
certificates held by the Holder previously representing the
Exchangeable Shares exchanged by the Holder with CCo or CCo
Holdco, as the case may be, pursuant to such automatic exchange
shall thereafter be deemed to represent the shares of CCo Common
Stock issued to the Holder by CCo or CCo Holdco, as the case may
be, pursuant to such automatic exchange. Upon the request of a
Holder and the surrender by the Holder of Exchangeable Share
certificates deemed to represent shares of CCo Common Stock, duly
endorsed in blank and accompanied by such instruments of transfer
as CCo may reasonably require, CCo or CCo Holdco, as the case may
be, shall deliver or cause to be delivered to the Holder
certificates representing the shares of CCo Common Stock of which
the Holder is the holder. Notwithstanding the foregoing, until
each Holder is actually entered on the register of holders of CCo
Common Stock, such Holder shall be deemed to still be a holder of
the transferred Exchangeable Shares for purposes of all Voting
Rights with respect thereto.
ARTICLE 6
RESTRICTIONS ON ISSUANCE OF CCO SPECIAL VOTING [PREFERRED] STOCK
During the term of this agreement, CCo will not issue any shares of CCo
Special Voting [Preferred] Stock in addition to the Voting Share.
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ARTICLE 7
CONCERNING THE TRUSTEE
7.1 POWERS AND DUTIES OF THE TRUSTEE
The rights, powers and authorities of the Trustee under this agreement, in its
capacity as trustee of the Trust, shall include:
(a) receipt and deposit of the Voting Share from CCo as trustee for
and on behalf of the Holders in accordance with the provisions of
this agreement;
(b) granting proxies and distributing materials to Holders as
provided in this agreement;
(c) voting the Holder Votes in accordance with the provisions of this
agreement;
(d) receiving the grant of the Exchange Put Right and the Automatic
Exchange Rights from CCo as trustee for and on behalf of the
Holders in accordance with the provisions of this agreement;
(e) exercising the Exchange Put Right and enforcing the benefit of
the Automatic Exchange Rights, in each case in accordance with
the provisions of this agreement, and in connection therewith
receiving from Holders Exchangeable Shares and other requisite
documents and distributing to such Holders the shares of CCo
Common Stock and cheques, if any, to which such Holders are
entitled upon the exercise of the Exchange Put Right or pursuant
to the Automatic Exchange Rights, as the case may be;
(f) holding title to the Trust Estate;
(g) investing any moneys forming, from time to time, a part of the
Trust Estate as provided in this agreement;
(h) taking action at the direction of a Holder or Holders to enforce
the obligations of CCo under this agreement; and
(i) taking such other actions and doing such other things as are
specifically provided in this agreement.
In the exercise of such rights, powers and authorities, the Trustee
shall have (and is granted) such incidental and additional rights, powers and
authority not in conflict with any of the provisions of this agreement as the
Trustee, acting in good faith and in the reasonable exercise of its discretion,
may deem necessary, appropriate or desirable to effect the purpose of the Trust.
Any exercise of such discretionary rights, powers and authorities by the Trustee
shall be final, conclusive and binding upon all persons. For greater certainty,
the Trustee shall have only those duties as are set out specifically in this
agreement. The Trustee in exercising its rights, powers, duties and authorities
hereunder shall act honestly and in good faith with a view to the best interests
of the Holders and shall exercise the care, diligence and skill that a
reasonably prudent trustee would exercise in comparable circumstances. The
Trustee shall not be bound to give any notice or do or take any act, action or
proceeding by virtue of the powers conferred on it hereby unless and until it
shall be specifically required to do so under the terms hereof nor shall the
Trustee be required to take any notice of, or to do or to take any act, action
or proceeding as a result of any default or breach of any provision hereunder,
unless and until notified in writing of such default or breach, which notices
shall distinctly specify the default or breach desired to be brought to the
attention of
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the Trustee and in the absence of such notice the Trustee may for all purposes
of this agreement conclusively assume that no default or breach has been made in
the observance or performance of any of the representations, warranties,
covenants, agreements or conditions contained herein.
7.2 NO CONFLICT OF INTEREST
The Trustee represents to CCo Sub and CCo that at the date of execution
and delivery of this agreement there exists no material conflict of interest in
the role of the Trustee as a fiduciary hereunder and the role of the Trustee in
any other capacity. The Trustee shall, within 90 days after it becomes aware
that such a material conflict of interest exists, either eliminate such material
conflict of interest or resign in the manner and with the effect specified in
Article 10 hereof. If, notwithstanding the foregoing provisions of this Section
7.2, the Trustee has such a material conflict of interest, the validity and
enforceability of this agreement shall not be affected in any manner whatsoever
by reason only of the existence of such material conflict of interest. If the
Trustee contravenes the foregoing provisions of this Section 7.2, any interested
party may apply to the superior court of the province in which CCo Sub has its
registered office for an order that the Trustee be replaced as trustee
hereunder.
7.3 DEALINGS WITH TRANSFER AGENTS, REGISTRARS, ETC.
CCo Sub and CCo irrevocably authorize the Trustee, from time to time,
to:
(a) consult, communicate and otherwise deal with the respective
registrars and transfer agents, and with any such subsequent
registrar or transfer agent, of the Exchangeable Shares and CCo
Common Stock; and
(b) requisition, from time to time,
(i) from any such registrar or transfer agent any information
readily available from the records maintained by it which
the Trustee may reasonably require for the discharge of
its duties and responsibilities under this agreement, and
(ii) from the transfer agent of CCo Common Stock, and any
subsequent transfer agent of such shares, to complete the
exercise from time to time of the Exchange Put Right and
the Automatic Exchange Rights in the manner specified in
Article 5 hereof, the share certificates issuable upon
such exercise.
CCo Sub and CCo irrevocably authorize their respective registrars and
transfer agents to comply with all such requests. CCo covenants that it will
supply its transfer agent with duly executed share certificates for the purpose
of completing the exercise from time to time of the Exchange Put Right and the
Automatic Exchange Rights, in each case pursuant to Article 5 hereof.
7.4 BOOKS AND RECORDS
The Trustee shall keep available for inspection by CCo and CCo Sub, at
the Trustee's principal transfer office in Calgary, Alberta, correct and
complete books and records of account relating to the Trustee's actions under
this agreement, including without limitation all information relating to
mailings and instructions to and from Holders and all transactions pursuant to
the Voting Rights, the Exchange Put Right and the Automatic Exchange Rights for
the term of this agreement. On or before March 31, 2002, and on or before March
31 in every year thereafter, so long as the Voting Share is on deposit with the
Trustee, the Trustee shall transmit to CCo and CCo Sub a brief report, dated as
of the preceding December 31, with respect to:
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(a) the property and funds comprising the Trust Estate as of that
date;
(b) the number of exercises of the Exchange Put Right, if any, and
the aggregate number of Exchangeable Shares received by the
Trustee on behalf of Holders in consideration of the issue and
delivery by CCo of shares of CCo Common Stock in connection with
the Exchange Put Right, during the calendar year ended on such
date; and
(c) all other actions taken by the Trustee in the performance of its
duties under this agreement which it had not previously reported.
7.5 INCOME TAX RETURNS AND REPORTS
The Trustee shall, to the extent necessary, prepare and file on behalf
of the Trust appropriate United States and Canadian income tax returns and any
other returns or reports as may be required by applicable law or pursuant to the
rules and regulations of any securities exchange or other trading system through
which the Exchangeable Shares are traded and, in connection therewith, may
obtain the advice and assistance of such experts as the Trustee may consider
necessary or advisable. If requested by the Trustee, CCo shall retain such
experts for purposes of providing such advice and assistance.
7.6 INDEMNIFICATION PRIOR TO CERTAIN ACTIONS BY TRUSTEE
The Trustee shall exercise any or all of the rights, duties, powers or
authorities vested in it by this agreement at the request, order or direction of
any Holder upon such Holder's furnishing to the Trustee reasonable funding,
security and indemnity against the costs, expenses and liabilities which may be
incurred by the Trustee therein or thereby; provided that no Holder shall be
obligated to furnish to the Trustee any such funding, security or indemnity in
connection with the exercise by the Trustee of any of its rights, duties, powers
and authorities with respect to the Voting Share pursuant to Article 4 hereof,
subject to Section 7.15 hereof, and with respect to the Exchange Put Right
pursuant to Article 5 hereof, subject to Section 7.15 hereof, and with respect
to the Automatic Exchange Rights pursuant to Article 5 hereof, subject to
Section 7.15 hereof. None of the provisions contained in this agreement shall
require the Trustee to expend or risk its own funds or otherwise incur financial
liability in the exercise of any of its rights, powers, duties or authorities
unless funded, given funds, security and indemnified as aforesaid.
7.7 ACTIONS BY HOLDERS
No Holder shall have the right to institute any action, suit or
proceeding or to exercise any other remedy authorized by this agreement for the
purpose of enforcing any of its rights or for the execution of any trust or
power hereunder unless the Holder has requested the Trustee to take or institute
such action, suit or proceeding and furnished the Trustee with the funding,
security and indemnity referred to in Section 7.6 hereof and the Trustee shall
have failed to act within a reasonable time thereafter. In such case, but not
otherwise, the Holder shall be entitled to take proceedings in any court of
competent jurisdiction such as the Trustee might have taken; it being understood
and intended that no one or more Holders shall have any right in any manner
whatsoever to affect, disturb or prejudice the rights hereby created by any such
action, or to enforce any right hereunder or under the Voting Rights, the
Exchange Put Right or the Automatic Exchange Rights, except subject to the
conditions and in the manner herein provided, and that all powers and trusts
hereunder shall be exercised and all proceedings at law shall be instituted, had
and maintained by the Trustee, except only as herein provided, and in any event
for the equal benefit of all Holders.
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7.8 RELIANCE UPON DECLARATIONS
The Trustee shall not be considered to be in contravention of any of its
rights, powers, duties and authorities hereunder if, when required, it acts and
relies in good faith upon lists, mailing labels, notices, statutory
declarations, certificates, opinions, reports or other papers or documents
furnished pursuant to the provisions hereof or required by the Trustee to be
furnished to it in the exercise of its rights, powers, duties and authorities
hereunder, and such lists, mailing labels, notices, statutory declarations,
certificates, opinions, reports or other papers or documents comply with the
provisions of Section 7.9 hereof, if applicable, and with any other applicable
provisions of this agreement.
7.9 EVIDENCE AND AUTHORITY TO TRUSTEE
CCo Sub and/or CCo shall furnish to the Trustee evidence of compliance
with the conditions provided for in this agreement relating to any action or
step required or permitted to be taken by CCo Sub and/or CCo or the Trustee
under this agreement or as a result of any obligation imposed under this
agreement, including, without limitation, in respect of the Voting Rights or the
Exchange Put Right or the Automatic Exchange Rights and the taking of any other
action to be taken by the Trustee at the request of or on the application of CCo
Sub and/or CCo forthwith if and when:
(a) such evidence is required by any other Section of this agreement
to be furnished to the Trustee in accordance with the terms of
this Section 7.9; or
(b) the Trustee, in the exercise of its rights, powers, duties and
authorities under this agreement, gives CCo Sub and/or CCo
written notice requiring it to furnish such evidence in relation
to any particular action or obligation specified in such notice.
Such evidence shall consist of an Officer's Certificate of CCo Sub
and/or CCo or a statutory declaration or a certificate made by persons entitled
to sign an Officer's Certificate stating that any such condition has been
complied with in accordance with the terms of this agreement.
Whenever such evidence relates to a matter other than the Voting Rights,
the Exchange Put Right or the Automatic Exchange Rights, and except as otherwise
specifically provided herein, such evidence may consist of a report or opinion
of any solicitor, auditor, accountant, appraiser, valuer, engineer or other
expert or any other person whose qualifications give authority to a statement
made by him, provided that, if such report or opinion is furnished by a
director, officer or employee of CCo Sub and/or CCo, it shall be in the form of
an Officer's Certificate or a statutory declaration.
Each statutory declaration, certificate, opinion or report furnished to
the Trustee as evidence of compliance with a condition provided for in this
agreement shall include a statement by the person giving the evidence:
(i) declaring that such person has read and understands the
provisions of this agreement relating to the condition in
question;
(ii) describing the nature and scope of the examination or
investigation upon which such person based the statutory
declaration, certificate, statement or opinion; and
(iii) declaring that such person has made such examination or
investigation as such person believes is necessary to
enable such person to make the statements or give the
opinions contained or expressed therein.
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7.10 EXPERTS, ADVISERS AND AGENTS
The Trustee may:
(a) in relation to these presents act and rely on the opinion or
advice of or information obtained from or prepared by any
solicitor, auditor, accountant, appraiser, valuer, engineer or
other expert, whether retained by the Trustee or by CCo Sub
and/or CCo or otherwise, and may employ such assistants as may be
necessary to the proper determination and discharge of its powers
and duties and determination of its rights hereunder and may pay
proper and reasonable compensation for all such legal and other
advice or assistance as aforesaid; and
(b) employ such agents and other assistants as it may reasonably
require for the proper determination and discharge of its powers
and duties hereunder, and may pay reasonable remuneration for all
services performed for it (and shall be entitled to receive
reasonable remuneration for all services performed by it) in the
discharge of the trusts hereof and compensation for all
disbursements, costs and expenses made or incurred by it in the
determination and discharge of its duties hereunder and in the
management of the Trust.
7.11 INVESTMENT OF MONEYS HELD BY TRUSTEE
Unless otherwise provided in this agreement, any moneys held by or on
behalf of the Trustee which under the terms of this agreement may or ought to be
invested or which may be on deposit with the Trustee or which may be in the
hands of the Trustee, may be invested and reinvested in the name or under the
control of the Trustee in securities in which, under the laws of the Province of
Alberta, trustees are authorized to invest trust moneys; provided that such
securities are stated to mature within two years after their purchase by the
Trustee, and the Trustee shall so invest such moneys on the written direction of
CCo Sub. Pending the investment of any moneys as hereinbefore provided, such
moneys may be deposited in the name of the Trustee in any chartered bank in
Canada or, with the consent of CCo Sub, in the deposit department of the Trustee
or any other loan or trust company authorized to accept deposits under the laws
of Canada or any province thereof at the rate of interest then current on
similar deposits.
7.12 TRUSTEE NOT REQUIRED TO GIVE SECURITY
The Trustee shall not be required to give any bond or security in
respect of the execution of the trusts, rights, duties, powers and authorities
of this agreement or otherwise in respect of the premises.
7.13 TRUSTEE NOT BOUND TO ACT ON REQUEST
Except as in this agreement otherwise specifically provided, the Trustee
shall not be bound to act in accordance with any direction or request of CCo Sub
and/or CCo or of the directors thereof until a duly authenticated copy of the
instrument or resolution containing such direction or request shall have been
delivered to the Trustee, and the Trustee shall be empowered to act and rely
upon any such copy purporting to be authenticated and believed by the Trustee to
be genuine.
7.14 AUTHORITY TO CARRY ON BUSINESS
The Trustee represents to CCo Sub and CCo that at the date of execution
and delivery by it of this agreement it is authorized to carry on the business
of a trust company in the Province of Alberta but if, notwithstanding the
provisions of this Section 7.14, it ceases to be so authorized to carry on
business, the validity and enforceability of this agreement and the Voting
Rights, the Exchange Put Right and the
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Automatic Exchange Rights shall not be affected in any manner whatsoever by
reason only of such event; provided, however, the Trustee shall, within 90 days
after ceasing to be authorized to carry on the business of a trust company in
the Province of Alberta, either become so authorized or resign in the manner and
with the effect specified in Article 10 hereof.
7.15 CONFLICTING CLAIMS
If conflicting claims or demands are made or asserted with respect to
any interest of any Holder in any Exchangeable Shares, including any
disagreement between the heirs, representatives, successors or assigns
succeeding to all or any part of the interest of any Holder in any Exchangeable
Shares resulting in conflicting claims or demands being made in connection with
such interest, then the Trustee shall be entitled, at its sole discretion, to
refuse to recognize or to comply with any such claim or demand. In so refusing,
the Trustee may elect not to exercise any Voting Rights, Exchange Put Right or
Automatic Exchange Rights subject to such conflicting claims or demands and, in
so doing, the Trustee shall not be or become liable to any person on account of
such election or its failure or refusal to comply with any such conflicting
claims or demands. The Trustee shall be entitled to continue to refrain from
acting and to refuse to act until:
(a) the rights of all adverse claimants with respect to the Voting
Rights, Exchange Put Right or Automatic Exchange Rights subject
to such conflicting claims or demands have been adjudicated by a
final judgment of a court of competent jurisdiction; or
(b) all differences with respect to the Voting Rights, the Exchange
Put Right or Automatic Exchange Rights subject to such
conflicting claims or demands have been conclusively settled by a
valid written agreement binding on all such adverse claimants,
and the Trustee shall have been furnished with an executed copy
of such agreement.
If the Trustee elects to recognize any claim or comply with any demand
made by any such adverse claimant, it may in its discretion require such
claimant to furnish such surety bond or other security satisfactory to the
Trustee as it shall deem appropriate fully to indemnify it as between all
conflicting claims or demands.
7.16 ACCEPTANCE OF TRUST
The Trustee hereby accepts the Trust created and provided for by and in
this agreement and agrees to perform the same upon the terms and conditions
herein set forth and to hold all rights, privileges and benefits conferred
hereby and by law in trust for the various persons who shall from time to time
be Holders, subject to all the terms and conditions herein set forth.
ARTICLE 8
COMPENSATION
CCo and CCo Sub jointly and severally agree to pay to the Trustee
reasonable compensation for all of the services rendered by it under this
agreement and will reimburse the Trustee for all reasonable expenses (including
but not limited to taxes, compensation paid to experts, agents and advisors, and
travel expenses) and disbursements, including the cost and expense of any suit
or litigation of any character and any proceedings before any governmental
agency, reasonably incurred by the Trustee in connection with its rights and
duties under this agreement; provided that CCo and CCo Sub shall have no
obligation to reimburse the Trustee for any expenses or disbursements paid,
incurred or suffered by the Trustee in any suit or litigation in which the
Trustee is determined to have acted in bad faith or with negligence or willful
misconduct.
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ARTICLE 9
INDEMNIFICATION AND LIMITATION OF LIABILITY
9.1 INDEMNIFICATION OF THE TRUSTEE
CCo and CCo Sub jointly and severally agree to indemnify and hold
harmless the Trustee and each of its directors, officers, employees and agents
appointed and acting in accordance with this agreement (collectively, the
"Indemnified Parties") against all claims, losses, damages, costs, penalties,
fines and reasonable expenses (including reasonable expenses of the Trustee's
legal counsel) which, without fraud, negligence, willful misconduct or bad faith
on the part of such Indemnified Party, may be paid, incurred or suffered by the
Indemnified Party by reason of or as a result of the Trustee's acceptance or
administration of the Trust, its compliance with its duties set forth in this
agreement, or any written or oral instructions delivered to the Trustee by CCo
or CCo Sub pursuant hereto. In no case shall CCo or CCo Sub be liable under this
indemnity for any claim against any of the Indemnified Parties unless CCo and
CCo Sub shall be notified by the Trustee of the written assertion of a claim or
of any action commenced against the Indemnified Parties, promptly after any of
the Indemnified Parties shall have received any such written assertion of a
claim or shall have been served with a summons or other first legal process
giving information as to the nature and basis of the claim. Subject to (ii)
below, CCo and CCo Sub shall be entitled to participate at their own expense in
the defense and, if CCo or CCo Sub so elect at any time after receipt of such
notice, either of them may assume the defense of any suit brought to enforce any
such claim. The Trustee shall have the right to employ separate counsel in any
such suit and participate in the defense thereof, but the fees and expenses of
such counsel shall be at the expense of the Trustee unless: (i) the employment
of such counsel has been authorized by CCo or CCo Sub, such authorization not to
be unreasonably withheld; or (ii) the named parties to any such suit include
both the Trustee and CCo or CCo Sub and the Trustee shall have been advised by
counsel acceptable to CCo or CCo Sub that there may be one or more legal
defenses available to the Trustee that are different from or in addition to
those available to CCo or CCo Sub and that an actual or potential conflict of
interest exists (in which case CCo and CCo Sub shall not have the right to
assume the defense of such suit on behalf of the Trustee, but shall be liable to
pay the reasonable fees and expenses of counsel for the Trustee). This indemnity
shall survive the resignation or removal of the Trustee and the termination of
the trust.
9.2 LIMITATION OF LIABILITY
The Trustee shall not be held liable for any loss which may occur by
reason of depreciation of the value of any part of the Trust Estate or any loss
incurred on any investment of funds pursuant to this agreement, except to the
extent that such loss is attributable to the fraud, negligence, willful
misconduct or bad faith on the part of the Trustee.
ARTICLE 10
CHANGE OF TRUSTEE
10.1 RESIGNATION
The Trustee, or any trustee hereafter appointed in accordance with the
terms of this agreement, may at any time resign by giving written notice of such
resignation to CCo and CCo Sub specifying the date on which it desires to
resign, provided that such notice shall never be given less than 60 days before
such desired resignation date unless CCo and CCo Sub otherwise agree and
provided further that such resignation shall not take effect until the date of
the appointment of a successor trustee and the acceptance of such appointment by
the successor trustee in accordance with the terms of this agreement. Upon
receiving such notice of resignation, CCo and CCo Sub shall promptly appoint a
successor trustee by written instrument, in duplicate, one copy of which shall
be delivered to the resigning trustee and one
D-21
copy to the successor trustee. Failing acceptance by a successor trustee, a
successor trustee may be appointed by an order of the superior court of the
province in which CCo Sub has its registered office upon application of one or
more of the parties hereto.
10.2 REMOVAL
The Trustee, or any trustee hereafter appointed, may be removed with or
without cause, at any time on 60 days prior notice by written instrument
executed by CCo and CCo Sub, in duplicate, one copy of which shall be delivered
to the trustee so removed and one copy to the successor trustee; provided that,
in connection with such removal, provision is made for a replacement trustee
similar to that contemplated in Section 10.1.
10.3 SUCCESSOR TRUSTEE
Any successor trustee appointed as provided under this agreement shall
execute, acknowledge and deliver to CCo and CCo Sub and to its predecessor
trustee an instrument accepting such appointment. Thereupon the resignation or
removal of the predecessor trustee shall become effective and such successor
trustee, without any further act, deed or conveyance, shall become vested with
all the rights, powers, duties and obligations of its predecessor under this
agreement, with like effect as if originally named as trustee in this agreement.
However, on the written request of CCo and CCo Sub or of the successor trustee,
the trustee ceasing to act shall, upon payment of any amounts then due it
pursuant to the provisions of this agreement, execute and deliver an instrument
transferring to such successor trustee all the rights and powers of the trustee
so ceasing to act. Upon the request of any such successor trustee, CCo, CCo Sub
and such predecessor trustee shall execute any and all instruments in writing
for more fully and certainly vesting in and confirming to such successor trustee
all such rights and powers.
10.4 NOTICE OF SUCCESSOR TRUSTEE
Upon acceptance of appointment by a successor trustee as provided
herein, CCo and CCo Sub shall cause to be mailed notice of the succession of
such trustee hereunder to each Holder specified in a List. If CCo or CCo Sub
shall fail to cause such notice to be mailed within 10 days after acceptance of
appointment by the successor trustee, the successor trustee shall cause such
notice to be mailed at the expense of CCo and CCo Sub.
ARTICLE 11
SUCCESSORS
11.1 CERTAIN REQUIREMENTS IN RESPECT OF COMBINATION, ETC.
Neither CCo nor CCo Sub shall enter into any transaction (whether by way
of reconstruction, reorganization, consolidation, merger, transfer, sale, lease
or otherwise) whereby all or substantially all of its undertaking, property and
assets would become the property of any other Person or, in the case of a
merger, of the continuing corporation resulting therefrom, but may do so if:
(a) such other Person or continuing corporation (the "Successor"), by
operation of law, becomes, without further action, bound by the
terms and provisions of this agreement or, if not so bound,
executes, prior to or contemporaneously with the consummation of
such transaction an agreement supplemental hereto and such other
instruments (if any) as are reasonably satisfactory to the
Trustee and in the opinion of legal counsel to the Trustee are
necessary or advisable to evidence the assumption by the
Successor of liability for all moneys payable and property
deliverable hereunder, the covenant of such Successor to
D-22
pay and deliver or cause to be delivered the same and its
agreement to observe and perform all the covenants and
obligations of CCo or CCo Sub, as the case may be, under this
agreement; and
(b) such transaction shall, to the satisfaction of the Trustee, be
upon such terms which substantially preserve and do not impair in
any material respect any of the rights, duties, powers and
authorities of the Trustee or of the Holders hereunder.
11.2 VESTING OF POWERS IN SUCCESSOR
Whenever the conditions of Section 11.1 hereof have been duly observed
and performed, the Trustee, if required by Section 11.1 hereof, the Successor
and CCo or CCo Sub, as the case may be, shall execute and deliver the
supplemental agreement provided for in Article 12 hereof, and thereupon the
Successor shall possess and from time to time may exercise each and every right
and power of CCo or CCo Sub, as the case may be, under this agreement in the
name of CCo or CCo Sub, as the case may be, or otherwise and any act or
proceeding by any provision of this agreement required to be done or performed
by the board of directors or any officers of CCo or CCo Sub may be done and
performed with like force and effect by the directors or officers of such
Successor.
11.3 WHOLLY-OWNED SUBSIDIARIES
Nothing herein shall be construed as preventing the amalgamation or
merger of any wholly-owned subsidiary of CCo with or into CCo or the winding-up,
liquidation or dissolution of any wholly-owned subsidiary of CCo provided that
all of the assets of such subsidiary are transferred to CCo or another
wholly-owned subsidiary of CCo, and any such transactions are expressly
permitted by this Article 11.
ARTICLE 12
AMENDMENTS AND SUPPLEMENTAL AGREEMENTS
12.1 AMENDMENTS, MODIFICATIONS, ETC.
Subject to Sections 12.2 and 12.4, this agreement may not be amended,
modified or waived except by an agreement in writing executed by CCo Sub, CCo
and the Trustee and approved by the Holders in accordance with Section 10.2 of
the Exchangeable Share Provisions. No amendment to or modification or waiver of
any of the provisions of this agreement otherwise permitted hereunder shall be
effective unless made in writing and signed by all of the parties hereto.
12.2 MINISTERIAL AMENDMENTS
Notwithstanding the provisions of Section 12.1 hereof, the parties to
this agreement may in writing, at any time and from time to time, without the
approval of the Holders, amend or modify this agreement for the purposes of:
(a) adding to the covenants of any or all of the parties hereto for
the protection of the Holders hereunder subject to the receipt by
the Trustee of an opinion of its counsel that the addition of the
proposed covenant is not prejudicial to the interests of the
holders as a whole or the Trustee;
(b) making such amendments or modifications not inconsistent with
this agreement as may be necessary or desirable with respect to
matters or questions which, in the opinion of the
D-23
board of directors of each of CCo and CCo Sub and in the opinion
of the Trustee and its counsel, having in mind the best interests
of the Holders as a whole, it may be expedient to make, provided
that such boards of directors and the Trustee and its counsel
shall be of the opinion that such amendments and modifications
will not be prejudicial to the interests of the Holders as a
whole;
(c) making such changes or corrections which, on the advice of
counsel to CCo Sub, CCo and the Trustee, are required for the
purpose of curing or correcting any ambiguity or defect or
inconsistent provision or clerical omission or mistake or
manifest error; provided that the Trustee and its counsel and the
board of directors of each of CCo Sub and CCo shall be of the
opinion that such changes or corrections will not be prejudicial
to the interests of the Holders as a whole; or
(d) making such changes as may be necessary or appropriate to
implement or give effect to any assignment or assumption made
pursuant to Section 14.9 hereof.
12.3 MEETING TO CONSIDER AMENDMENTS
CCo Sub, at the request of CCo, shall call a meeting or meetings of the
Holders for the purpose of considering any proposed amendment or modification
requiring approval pursuant hereto. Any such meeting or meetings shall be called
and held in accordance with the by-laws of CCo Sub, the Exchangeable Share
Provisions and all applicable laws.
12.4 CHANGES IN CAPITAL OF CCO AND CCO SUB
At all times after the occurrence of any event effected pursuant to
Section 2.7 or Section 2.8 of the Support Agreement, as a result of which either
CCo Common Stock or the Exchangeable Shares or both are in any way changed, this
agreement shall forthwith be amended and modified as necessary in order that it
shall apply with full force and effect, mutatis mutandis, to all new securities
into which CCo Common Stock or the Exchangeable Shares or both are so changed,
and the parties hereto shall execute and deliver a supplemental agreement giving
effect to and evidencing such necessary amendments and modifications.
12.5 EXECUTION OF SUPPLEMENTAL AGREEMENTS
From time to time, CCo Sub (when authorized by a resolution of its Board
of Directors), CCo and the Trustee may, subject to the provisions of these
presents, and they shall, when so directed by these presents, execute and
deliver by their proper officers, agreements or other instruments supplemental
hereto, which thereafter shall form part hereof, for any one or more of the
following purposes:
(a) evidencing the succession of any Successors to CCo and the
covenants of and obligations assumed by each such Successor in
accordance with the provisions of Article 11 and the successor of
any successor trustee in accordance with the provisions of
Article 10;
(b) making any additions to, deletions from or alterations of the
provisions of this agreement or the Voting Rights, the Exchange
Put Right or the Automatic Exchange Rights which, in the opinion
of the Trustee and its counsel, will not be prejudicial to the
interests of the Holders as a whole or are in the opinion of
counsel to the Trustee necessary or advisable in order to
incorporate, reflect or comply with any legislation the
provisions of which apply to CCo, CCo Sub, the Trustee or this
agreement;
D-24
(c) to implement or give effect to any assignment or assumption made
pursuant to Section 14.9 hereof; and
(d) for any other purposes not inconsistent with the provisions of
this agreement, including without limitation to make or evidence
any amendment or modification to this agreement as contemplated
hereby, provided that, in the opinion of the Trustee and its
counsel, the rights of the Trustee and the Holders as a whole
will not be prejudiced thereby.
ARTICLE 13
TERMINATION
13.1 TERM
The Trust created by this agreement shall continue until the earliest to
occur of the following events:
(a) no outstanding Exchangeable Shares are held by a Holder;
(b) each of CCo Sub and CCo elects in writing to terminate the Trust
and such termination is approved by the Holders of the
Exchangeable Shares in accordance with Section 10.1 of the
Exchangeable Share Provisions; and
(c) 21 years after the death of the last survivor of the descendants
of Her Majesty Queen Xxxxxxxxx XX of the United Kingdom of Great
Britain and Northern Ireland living on the date of the creation
of the Trust.
13.2 SURVIVAL OF AGREEMENT
This agreement shall survive any termination of the Trust and shall
continue until there are no Exchangeable Shares outstanding held by a Holder;
provided, however, that the provisions of Articles 8 and 9 hereof shall survive
any such termination of this agreement.
ARTICLE 14
GENERAL
14.1 SEVERABILITY
If any provision of this agreement is held to be invalid, illegal or
unenforceable, the validity, legality or enforceability of the remainder of this
agreement shall not in any way be affected or impaired thereby, and the
agreement shall be carried out as nearly as possible in accordance with its
original terms and conditions.
14.2 INUREMENT
This agreement shall be binding upon and inure to the benefit of the
parties hereto and their respective successors and permitted assigns and to the
benefit of the Holders.
D-25
14.3 NOTICES TO PARTIES
All notices and other communications between the parties hereunder shall
be in writing and shall be deemed to have been given if delivered personally or
by confirmed facsimile to the parties at the following addresses (or at such
other address for such party as shall be specified in like notice):
(a) if to CCo to:
Calpine Corporation
00 Xxxx Xxx Xxxxxxxx Xxxxxx, 0xx Xxxxx
Xxx Xxxx, Xxxxxxxxxx, 00000
Attention: General Counsel
Facsimile No. 000-000-0000
with a copy to
Xxxxxxx Xxxxx LLP,
Suite 3700, 000 - 0xx Xxxxxx X.X.
Xxxxxxx, Xxxxxxx, X0X 0X0
Attention: A. G. Love
Facsimile No. 000-000-0000
(b) if to CCo Sub to:
-
-
-
-
(c) if to the Trustee to:
-
Any notice or other communication given personally shall be deemed to
have been given and received upon delivery thereof, and if given by facsimile
shall be deemed to have been given and received on the date of receipt thereof
unless such day is not a Business Day in which case it shall be deemed to have
been given and received upon the immediately following Business Day.
14.4 NOTICE TO HOLDERS
Any and all notices to be given and any documents to be sent to any
Holders may be given or sent to the address of such Holder shown on the register
of Holders of Exchangeable Shares in any manner permitted by the Exchangeable
Share Provisions and shall be deemed to be received (if given or sent in such
manner) at the time specified in such Exchangeable Share Provisions, the
provisions of which Exchangeable Share Provisions shall apply mutatis mutandis
to notices or documents as aforesaid sent to such Holders.
D-26
14.5 RISK OF PAYMENTS BY POST
Whenever payments are to be made or documents are to be sent to any
Holder by the Trustee, by CCo Sub or by CCo or by such Holder to the Trustee or
to CCo or CCo Sub, the making of such payment or sending of such document sent
through the mail shall be at the risk of CCo Sub or CCo, in the case of payments
made or documents sent by the Trustee or CCo Sub or CCo, and the Holder, in the
case of payments made or documents sent by the Holder.
14.6 COUNTERPARTS
This agreement may be executed in counterparts, each of which shall be
deemed an original, but all of which taken together shall constitute one and the
same instrument.
14.7 JURISDICTION
This agreement shall be construed and enforced in accordance with the
laws of the Province of Alberta and the federal laws of Canada applicable
therein.
14.8 ATTORNMENT
CCo agrees that any action or proceeding arising out of or relating to this
agreement may be instituted in the courts of Alberta, waives any objection which
it may have now or hereafter to the venue of any such action or proceeding,
irrevocably submits to the jurisdiction of such courts in any such action or
proceeding, agrees to be bound by any judgment of such courts and agrees not to
seek, and hereby waives, any review of the merits of any such judgment by the
courts of any other jurisdiction and hereby appoints CCo Sub at its registered
office in the Province of Alberta as CCo's attorney for service of process.
14.9 PERMITTED ASSIGNMENT
CCo may assign any or all of its rights and obligations under this
agreement to CCo Holdco, provided that each of CCo and CCo Holdco shall
thereafter, jointly and severally, be liable for the performance by CCo Holdco
of the obligations of CCo pursuant to this agreement. Any and all of the
obligations of CCo may be performed and satisfied by CCo Holdco, except that
nothing in this Section 14.9 will permit any change to the rights, privileges,
restrictions and conditions attaching to the Voting Share or Exchangeable Shares
or to the Exchange Put Right or Automatic Exchange Rights.
14.10 NECESSARY ACTION
Whenever CCo elects to have any action undertaken by CCo Holdco as
provided in this agreement, CCo agrees to cause CCo Holdco to duly perform such
action in accordance with the terms of this agreement.
D-27
IN WITNESS WHEREOF, the parties hereby have caused this agreement to be
duly executed as of the date first above written.
CALPINE CORPORATION
Per:
--------------------------------
[CCO SUB]
Per:
--------------------------------
[TRUSTEE]
Per:
--------------------------------
D-28
EXHIBIT E
ENCAL ENERGY LTD.
AFFILIATE'S AGREEMENT
February ____, 2001
Calpine Corporation
00 Xxxx Xxx Xxxxxxxx Xxxxxx,
0xx Xxxxx,
Xxx Xxxx, Xxxxxxxxxx 00000
Encal Energy Ltd.
0000, 000 Xxxxxxx Xxxxxx X.X.
Xxxxxxx, Xxxxxxx
X0X 0X0
Ladies and Gentlemen:
I have been advised that as of the date hereof, I may be deemed to be an
"affiliate" (as that term is defined for purposes of paragraphs (c) and (d) of
Rule 145 of the Rules and Regulations (the "Rules and Regulations") of the
Securities and Exchange Commission (the "SEC") under the Securities Act of 1933,
as amended (the "Securities Act")) of Encal Energy Ltd., a company existing
under the laws of Alberta ("ECo").
I understand that pursuant to an arrangement (the "Arrangement") to be
effected by Articles of Arrangement filed pursuant to the Business Corporations
Act (Alberta), each issued and outstanding common share (a "ECo Common Share")
of ECo will be exchanged for a number of non-voting exchangeable shares of a
subsidiary of CCo (the "Exchangeable Shares"). The Exchangeable Shares will be
exchangeable for shares of common stock ("CCo Common Stock") of Calpine
Corporation, a Delaware corporation ("CCo") pursuant to a Voting and Exchange
Trust Agreement. I further understand that the Arrangement is being entered into
pursuant to a Combination Agreement dated on or about February 7, 2001 (the
"Combination Agreement") by and between ECo and CCo.
I further understand that the Arrangement will be treated for financial
accounting purposes as a "pooling of interests" in accordance with United States
generally accepted accounting principles and that the staff of the SEC has
issued certain guidelines that should be followed to ensure the pooling of the
entities.
In consideration of the agreements contained herein, CCo's and ECo's
reliance on this letter in connection with the consummation of the Arrangement
and for other good and valuable
1
consideration, the receipt and sufficiency of which are hereby acknowledged, I
hereby represent, warrant and agree that, unless the Combination Agreement is
terminated in circumstances where the Arrangement is not completed, during the
period commencing 30 days prior to the Effective Date (as defined in the
Combination Agreement) and ending at such time as financial results that include
at least 30 days of post-combination combined operations of CCo and ECo after
the Arrangement shall have been published, I will not sell, transfer or
otherwise dispose of or, as contemplated by Accounting Series Releases 130 and
135 as amended, of the SEC, reduce my risk relative to any ECo Common Shares
held by me or any Exchangeable Shares or CCo Common Stock received in exchange
therefor except:
a) during the period beginning on the date 30 days prior to the
Effective Date and ending on the Effective Date, I may transfer,
sell, put, pledge or otherwise dispose of, or reduce my risk
relative to, up to a number of shares equal to (x) 10% of my ECo
Common Shares held on the date of any sale, less (y) the number
of such shares sold by me on and after February 7, 2001, provided
that:
i) such disposition is required to prevent expiry of options
granted pursuant to a ECo option plan;
ii) all affiliate dispositions of all equivalent ECo Common
Shares by all affiliates during the prescribed period do
not exceed 1,170,000 equivalent ECo Common Shares as such
equivalent is calculated pursuant to the Arrangement (or
the equivalent number of shares of CCo Common Stock); and
iii) before I dispose of any ECo Common Shares or otherwise
reduce my risk relative to any equivalent ECo Common
Shares during the period prescribed in this paragraph, I
will consult with CCo who, in consultation with its
independent accountants, will, as soon as reasonably
practicable, determine if such disposition or risk
reduction transaction violates the conditions for
pooling-of-interests accounting under U.S. generally
accepted accounting principles. If the ECo Common Share
disposition or risk reduction transaction is determined to
violate the conditions for pooling-of-interests accounting
under U.S. generally accepted accounting principles, I
agree not to make the disposition or enter into the risk
reduction transaction.
I agree not to transfer, sell, put, pledge or otherwise dispose of, or direct or
cause the sale, transfer or other disposition of, or reduce my risk relative to,
any Exchangeable Shares or shares of CCo Common Stock received upon the exchange
of such Exchangeable Shares (together, the "Combination Shares") held by me or
on my behalf or received by me during the period beginning on the Effective Date
and ending on the date (the "Expiration Date") CCo shall have publicly released
a report in the form of a quarterly earnings report, registration statement
filed with the SEC, a report filed with the SEC on Form 10-K, 10-Q or 8-K or any
other public filing, statement or public announcement which includes the
combined financial results (including combined sales and net income) of CCo and
ECo for a period which includes at least 30 days of post-combination combined
operations of CCo and ECo following the Effective Date except:
2
b) during the period beginning on the Effective Date and ending on
the Expiration Date, I may transfer, sell, put, pledge or
otherwise dispose of, or reduce my risk relative to, Combination
Shares equal to (x) 10% of my ECo Common Shares held on the
effective date of the Arrangement, less (y) the number of ECo
Common Shares sold by me on and after February 7, 2001, provided
that:
i) such disposition is required to prevent expiry of options
granted pursuant to a ECo option plan;
ii) the appropriate dispositions of Combination Shares by all
affiliates during the period prescribed in this paragraph
when combined with any dispositions or risk reduction
transactions in paragraph a)(ii) above do not exceed the
equivalent of 1,170,000 ECo Common Shares (or the
equivalent number of shares of CCo Common Stock)
determined by reference to the Exchange Ratio for the
exchange of ECo Common Shares for Exchangeable Shares; and
iii) before I dispose of any Combination Shares or otherwise
reduce my risk relative to any Combination Shares during
the period prescribed in this paragraph, I will consult
with CCo who, in consultation with its independent
accountants, will determine if such disposition or
risk-reduction transaction violates the conditions for
pooling-of-interests accounting under U.S. generally
accepted accounting principles. If the Combination Shares
disposition or risk-reduction transaction is determined to
violate the conditions for pooling-of-interests accounting
under U.S. generally accepted accounting principles, I
agree not to make the disposition or enter into the risk
reduction transaction.
I have been advised that since I may be deemed to be an affiliate of ECo
at the time the Arrangement is submitted for a vote of the holders of ECo Common
Shares, the Exchangeable Shares acquired by me on the Effective Date pursuant to
the Arrangement (and any shares of CCo Common Stock issued in exchange therefor)
can be sold by me only (i) pursuant to an effective registration statement under
the Securities Act, (ii) in conformity with the volume and other limitations of
Rule 145 promulgated by the SEC under the Securities Act, or (iii) in reliance
upon an exemption from registration that is available under the Securities Act.
By its execution hereof, CCo agrees that it will, as long as I own any
Exchangeable Shares acquired by me on the Effective Date pursuant to the
Arrangement (or shares of CCo Common Stock issued in exchange therefor), take
all reasonable efforts to make timely filings with the SEC of all reports
required to be filed by it pursuant to the Securities Exchange Act of 1934, as
amended, and will promptly furnish upon written request of the undersigned a
written statement confirming that such reports have been so timely filed.
CCo agrees that it shall publicly release the combined financial results
(including combined sales and net income) of CCo and ECo for the period ending
at the end of the first full calendar
3
month of post-combination combined operations of CCo and ECo as soon as
reasonably practicable following Closing, notwithstanding that such release may
not coincide with a financial quarterly report or be in the form of a report
filed with the SEC on Form 10-Q.
Execution of this letter should not be considered an admission on my
part that I am an affiliate of ECo as described above, or as a waiver of any
rights I may have to object to any claim that I am such as affiliate on or after
the date of this letter.
If you are in agreement with the foregoing, please so indicate by
signing below and returning a copy of this letter to the undersigned, at which
time this letter shall become a binding agreement between us.
Very truly yours,
By:________________________________
Name:______________________________
Address:___________________________
Date:______________________________
ACCEPTED this____day of February, 2001.
CALPINE CORPORATION ENCAL ENERGY LTD.
By:________________________________ By:__________________________________
Name:______________________________ Name:________________________________
Title:_____________________________ Title:_______________________________
4
SCHEDULE F
CALPINE CORPORATION
AFFILIATE'S AGREEMENT
Calpine Corporation
00 Xxxx Xxx Xxxxxxxx Xxxxxx,
0xx Xxxxx
Xxx Xxxx, Xxxxxxxxxx 00000
Encal Energy Ltd.
0000, 000 Xxxxxxx Xxxxxx X.X.
Xxxxxxx, Xxxxxxx
X0X 0X0
Ladies and Gentlemen:
I have been advised that as of the date hereof, I may be deemed to be an
"affiliate" (as that term is defined for purposes of paragraphs (c) and (d) of
Rule 145 of the Rules and Regulations (the "Rules and Regulations") of the
Securities and Exchange Commission (the "SEC") under the Securities Act of 1933,
as amended (the "Securities Act")) of Calpine Corporation, a Delaware
corporation ("CCo").
I understand that pursuant to an arrangement (the "Arrangement") to be
effected by Articles of Arrangement filed pursuant to the Business Corporations
Act (Alberta), each issued and outstanding common share (a "ECo Common Share")
of Encal Energy Ltd. ("ECo") will be exchanged for a number of non-voting
exchangeable shares of a subsidiary of CCo (the "Exchangeable Shares"). The
Exchangeable Shares will be exchangeable for shares of CCo common stock ("CCo
Common Stock") pursuant to a Voting and Exchange Trust Agreement. I further
understand that the Arrangement is being entered into pursuant to a Combination
Agreement dated on or about February 7, 2001 (the "Combination Agreement") by
and between ECo and CCo.
I further understand that the Arrangement will be treated for financial
accounting purposes as a "pooling of interests" in accordance with United States
generally accepted accounting principles and that the staff of the SEC has
issued certain guidelines that should be followed to ensure the pooling of the
entities.
In consideration of the agreements contained herein, CCo's and ECo's
reliance on this letter in connection with the consummation of the Arrangement
and for other good and valuable consideration, the receipt and sufficiency of
which are hereby acknowledged, I hereby represent, warrant and agree that,
unless the Combination Agreement is terminated in circumstances where the
1
Arrangement is not completed, during the period commencing 30 days prior to the
Effective Date (as defined in the Combination Agreement) and ending at such time
as financial results that include at least 30 days of post-combination combined
operations of CCo and ECo after the Arrangement shall have been published, I
will not sell, transfer or otherwise dispose of or, as contemplated by
Accounting Series Releases 130 and 135, as amended, of the SEC, reduce my risk
relative to any CCo Common Stock held by me, except:
a) during the period beginning on the date 30 days prior to the
Effective Date and ending on the Effective Date, I may transfer,
sell, put, pledge or otherwise dispose of, or reduce my risk
relative to, up to a number of shares equal to (x) 10% of my CCo
Common Shares held on the date of any sale, less (y) the number
of such shares sold by me on and after February 7, 2001 provided
that:
i) such disposition is required to prevent expiry of options
granted pursuant to a CCo option plan;
ii) all affiliate dispositions of all equivalent ECo Common
Shares by all affiliates during the prescribed period do
not exceed 1,170,000 equivalent ECo Common Shares as such
equivalent is calculated pursuant to the Arrangement (or
the equivalent number of shares of CCo Common Stock); and
iii) before I dispose of any shares of CCo Common Stock or
otherwise reduce my risk relative to any equivalent shares
of CCo Common Stock during the period prescribed in this
paragraph, I will consult with CCo who, in consultation
with its independent accountants, will, as soon as
reasonably practicable, determine if such disposition or
risk reduction transaction violates the conditions for
pooling-of-interests accounting under U.S. generally
accepted accounting principles. If the CCo Common Stock
disposition or risk reduction transaction is determined to
violate the conditions for pooling-of-interests accounting
under U.S. generally accepted accounting principles, I
agree not to make the disposition or enter into the risk
reduction transaction.
I agree not to transfer, sell, put, pledge or otherwise dispose of, or direct or
cause the sale, transfer or other disposition of, or reduce my risk relative to,
any Exchangeable Shares or shares of CCo Common Stock received upon the exchange
of such Exchangeable Shares (together, the "Combination Shares") or shares of
CCo Common Stock held by me or on my behalf or received by me during the period
beginning on the Effective Date and ending on the date (the "Expiration Date")
CCo shall have publicly released a report in the form of a quarterly earnings
report, registration statement filed with the SEC, a report filed with the SEC
on Form 10-K, 10-Q or 8-K or any other public filing, statement or public
announcement which includes the combined financial results (including combined
sales and net income) of CCo and ECo for a period which includes at least 30
days of post-combination combined operations of CCo and ECo following the
Effective Date except:
2
b) during the period beginning on the Effective Date and ending on
the Expiration Date, I may transfer, sell, put, pledge or
otherwise dispose of, or reduce my risk relative to, Combination
Shares or shares of CCo Common Stock equal to (x) 10% of my
Combination Shares or shares of CCo Common Stock held on the
effective date of the Arrangement, less (y) the number of Eco
Common Shares sold by me on and after February 7, 2001, provided
that:
i) such disposition is required to prevent expiry of options
granted pursuant to a CCo option plan;
ii) the appropriate dispositions of shares of CCo Common Stock
and Combination Shares by all affiliates during the period
prescribed in this paragraph when combined with any
dispositions or risk reduction transactions in paragraph
a)(ii) above do not exceed the equivalent of 1,170,000 ECo
Common Shares (or the equivalent number of shares of CCo
Common Stock) determined by reference to the Exchange
Ratio for the exchange of ECo Common Shares for
Exchangeable Shares; and
iii) before I dispose of any Combination Shares or shares of
CCo Common Stock or otherwise reduce my risk relative to
any Combination Shares or shares of CCo Common Stock
during the period prescribed in this paragraph, I will
consult with CCo who, in consultation with its independent
accountants, will determine if such disposition or
risk-reduction transaction violates the conditions for
pooling-of-interests accounting under U.S. generally
accepted accounting principles. If the Combination Shares
or CCo Common Stock disposition or risk-reduction
transaction is determined to violate the conditions for
pooling-of-interests accounting under U.S. generally
accepted accounting principles, I agree not to make the
disposition or enter into the risk reduction transaction.
By its execution hereof, CCo agrees that it will, as long as I own any
Combination Shares or shares of CCo Common Stock owned by me on the Effective
Date pursuant to the Arrangement, take all reasonable efforts to make timely
filings with the SEC of all reports required to be filed by it pursuant to the
Securities Exchange Act of 1934, as amended, and will promptly furnish upon
written request to the undersigned a written statement confirming that such
reports have been so timely filed.
CCo agrees that it shall publicly release the combined financial results
(including combined sales and net income) of CCo and ECo for the period ending
at the end of the first full calendar month of post-combination combined
operations of CCo and ECo as soon as reasonably practicable following Closing,
notwithstanding that such release may not coincide with a financial quarterly
report or be in the form of a report filed with the SEC on Form 10-Q.
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c) Execution of this letter should not be considered an admission on
my part that I am an affiliate of ECo as described above, or as a
waiver of any rights I may have to object to any claim that I am
such an affiliate on or after the date of this letter.
If you are in agreement with the foregoing, please so indicate by
signing below and returning a copy of this letter to the undersigned, at which
time this letter shall become a binding agreement between us.
Very truly yours,
Very truly yours,
By:________________________________
Name:______________________________
Address:___________________________
Date:______________________________
ACCEPTED this____day of February, 2001.
CALPINE CORPORATION ENCAL ENERGY LTD.
By:________________________________ By:__________________________________
Name:______________________________ Name:________________________________
Title:_____________________________ Title:_______________________________
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