ARRANGEMENT AGREEMENT
THIS ARRANGEMENT AGREEMENT dated as of June 16, 1999 (this
"Agreement"), is made and entered into by and between Greka Energy Corporation,
a Colorado corporation ("Greka"),and Beaver Lake Resources Corporation, an
Alberta corporation ("Beaver Lake").
WHEREAS, in furtherance of the Arrangement, the Board of Directors of
Beaver Lake has agreed to submit the Plan of Arrangement in the form of Exhibit
1 hereto and the other transactions contemplated by this Agreement to its
shareholders for approval;
WHEREAS, in furtherance of the Arrangement, following approval by the
shareholders of Beaver Lake of the transactions contemplated by this Agreement,
Beaver Lake will submit the Plan of Arrangement to the Court for approval; and
WHEREAS, the parties hereto desire to set forth certain
representations, warranties and covenants made by each to the other as an
inducement to the consummation of the Arrangement;
NOW, THEREFORE, in consideration of the premises and of the mutual
representations, warranties and covenants herein contained, the parties hereto
hereby agree as follows:
ARTICLE 1
INTERPRETATION
1.1 Definitions
In this Agreement, unless the context otherwise requires, the following
terms shall have the respective meanings set forth below:
"ABCA" means the Business Corporations Act (Alberta), S.A. 1981, C. B-15, as
amended from time to time, including the regulations promulgated thereunder;
"ASE" means The Alberta Stock Exchange.
"Affiliate" with respect to any Person, means any Person that directly or
indirectly controls, is controlled by or is under common control with such
Person;
"Acquisition Proposal" has the meaning set forth in Section 5.5;
"Arrangement" means the arrangement under section 186 of the ABCA on the terms
and subject to the conditions set forth in the Plan of Arrangement;
"Articles of Arrangement" means the articles of arrangement in respect of the
Arrangement required by the ABCA to be sent to the Registrar after the Final
Order is made;
"Beaver Lake Articles" means Beaver Lake's Articles of Amalgamation, as amended;
"Beaver Lake Assets" means all of the assets and properties of Beaver Lake;
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"Beaver Lake Certificate" means a certificate that immediately prior to the
Effective Date represented outstanding Beaver Lake Common Shares;
"Beaver Lake Commission Filings" means all reports and other filings (including
all notes, exhibits and schedules thereto and documents incorporated by
reference therein) filed by Beaver Lake with the ASE or the Commissions, through
the date of this Agreement, together with any amendments thereto;
"Beaver Lake Affiliates" has the meaning set forth in Section 6.2(h);
"Beaver Lake Common Shareholders" means the holders of the Beaver Lake Common
Shares;
"Beaver Lake Common Shares" means the common shares in the capital of Beaver
Lake;
"Beaver Lake Disclosure Letter" means the disclosure letter delivered by Beaver
Lake to Greka on the date hereof;
"Beaver Lake MAE" means (i) a single event, occurrence or fact that (together
with all other events, occurrences and facts) would have, or might reasonably be
expected to have, a material adverse effect on the assets, business, operations,
prospects or financial condition of Beaver Lake or (ii) an item that prevents or
adversely affects the ability of Beaver Lake to perform and comply with its
obligations under this Agreement or any other agreement to be executed and
delivered in connection with the transactions contemplated hereby or thereby;
"Beaver Lake Non-Voting Shares" means the convertible non-voting shares in the
capital of Beaver Lake;
"Beaver Lake Options" means the outstanding options to purchase an aggregate of
o Beaver Lake Common Shares under the Beaver Lake Option Plan and Beaver Lake
Share Option Agreements;
"Beaver Lake Option Plan" means the Beaver Lake Resources Corporation Stock
Option Plan;
"Beaver Lake Permits" has the meaning set forth in Section 3.2(o);
"Beaver Lake Shareholders Meeting" means the annual and special meeting of the
shareholders of Beaver Lake (including any adjournment thereof) that is to be
convened as provided by the Interim Order to consider, and if deemed advisable,
approve the Arrangement;
"Benefit Program or Agreement" means any stock option plan, collective
bargaining agreement, bonus plan or arrangement, incentive award plan or
arrangement, pension plan, vacation policy, severance pay plan, policy or
agreement, deferred compensation agreement or arrangement, executive
compensation or supplemental income arrangement, consulting agreement,
employment agreement and each other employee benefit plan, agreement,
arrangement, program, practice or understanding to which Beaver Lake is a party
or has any obligation;
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"Business Day" means, with respect to any action to be taken, any day other than
Saturday, Sunday or a statutory holiday in the place where such action is to be
taken;
"Closing" means the closing of the transactions contemplated by this Agreement
on the Effective Date;
"Commissions" means the Securities Commissions in Ontario, Alberta and British
Columbia;
"Court" means the Court of Queen's Bench of Alberta;
"Demands" means any claims, actions, suits, investigations, inquiries or
proceedings;
"Depositary" means Montreal Trust Company of Canada at its offices located at
000, 000 - 0xx Xxxxxx X.X., Xxxxxxx, Xxxxxxx X0X 0X0;
"Effective Date" means the date the Articles of Arrangement are accepted for
filing by the Registrar;
"Environmental Laws" means any and all laws, statutes, ordinances, rules,
regulations, orders or determinations of any Governmental Entity pertaining to
health or the environment currently in effect in any and all jurisdictions in
which the party in question and its subsidiaries own property or conduct
business;
"Final Order" means the final order of the Court approving the Arrangement to be
applied for following the Beaver Lake Shareholders Meeting pursuant to section
186(9) of the ABCA;
"Greka Common Stock" means the common stock of Greka;
"Xxxxx XXX" means (i) a single event, occurrence or fact that (together with all
other events, occurrences and facts) would have, or might reasonably be expected
to have, a material adverse effect on the assets, business, operations,
prospects or financial condition of Greka and its subsidiaries on a consolidated
basis or (ii) an item that prevents or adversely affects the ability of Greka to
perform and comply with its obligations under this Agreement or any other
agreement to be executed and delivered in connection with the transactions
contemplated hereby or thereby;
"Governmental Entity" means any court, administrative agency or commission or
other governmental authority or agency, domestic or foreign, including local
authorities, and any arbitration board or panel;
"GST" means any and all taxes payable under Part IX of the Excise Tax Act
(Canada) as amended from time to time and any regulations promulgated
thereunder;
"Interim Order" means the interim order of the Court made in connection with the
approval of the Arrangement;
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"Lien" means any lien, mortgage, pledge, security interest, restriction on
transfer, option, charge, right of any third Person or any other encumbrance of
any nature;
"NASDAQ" means the NASDAQ stock listing and exchange systems.
"Other Agreements" means, other than this Agreement, the agreements and
instruments contemplated to be executed and delivered in connection with the
Arrangement;
"Permitted Liens" means (A) Liens for taxes not due and payable and (B) inchoate
mechanics', warehousemen's and other statutory Liens incurred in the ordinary
course of business;
"Person" means an individual, corporation, limited liability company,
partnership, Governmental Entity or any other entity;
"Plan of Arrangement" means the plan of arrangement, which is attached as
Exhibit 1 and any amendment or supplement thereto made in accordance with
Section 7.3;
"Policy 9.1" means Policy Statement 9.1 of the Ontario Securities Commission;
"Proprietary Rights" means all patents, inventions, shop rights, know how, trade
secrets, designs, plans, manuals, computer software, specifications,
confidentiality agreements, confidential information and other proprietary
technology and similar information; all registered and unregistered trademarks,
service marks, logos, names, trade names and all other trademark rights; all
registered and unregistered copyrights; and all registrations for, and
applications for registration of, any of the foregoing, in each case that are
used in the conduct of the business of Beaver Lake or any Beaver Lake
Subsidiary;
"Proxy Circular" means the proxy circular, as amended or supplemented from time
to time, relating to the approval by the Beaver Lake Common Shareholders at the
Beaver Lake Shareholders Meeting of the Arrangement;
"Recommendation" has the meaning set forth in Section 5.1(c);
"Registrar" means the Registrar of Corporations appointed pursuant to section
253 of the ABCA;
"SEC" means the United States Securities and Exchange Commission;
"SEC Documents" means Greka's Annual Report or Form 10-KSB dated December 31,
1998, and Form 10-Q dated March 31, 1999, its Current Reports on Form 8-K and
its proxy statement with respect to the Special Meeting of Stockholders of Greka
held on March 24, 1999;
"Securities Act" means the United States Securities Act of 1933, as amended;
"Xxxxxxx" means Xxxxxxx Associates Limited;
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"Xxxxxxx Report" means the report dated December 31, 199 prepared by Xxxxxxx
evaluating Beaver Lake's reserves of oil, natural gas liquids and natural gas as
at December 31, 1998;
1.2 Exhibit
The following Exhibit is annexed to and incorporated into this
Agreement by reference and is deemed to be a part hereof:
Exhibit 1 -- Plan of Arrangement
ARTICLE 2
THE ARRANGEMENT
2.1 Court Approval
As soon as reasonably practicable, Beaver Lake shall apply to the Court
pursuant to section 186 of the ABCA for an order approving the Arrangement and
in connection with such application shall:
(a) forthwith file, proceed with and diligently prosecute an application
for an Interim Order under section 186(4) of the ABCA providing for,
among other things, the calling and holding of the Beaver Lake
Shareholders Meeting as provided for in Section 5.1(a) for the purpose
of considering and, if deemed advisable, approving the Arrangement; and
(b) subject to obtaining such approval of the Beaver Lake Common
Shareholders as may be directed by the Court in the Interim Order, take
the steps necessary to submit the Arrangement to the Court and apply
for the Final Order, and, subject to the fulfilment of the conditions
set forth in Article 6, shall deliver to the Registrar Articles of
Arrangement and such other documents as may be required to give effect
to the Arrangement.
2.2 Closing
The Closing shall take place at the offices of XxXxxxxxx Xxxx Xxxxx,
2200 000 0xx Xxxxxx X.X. Xxxxxxx,Xxxxxxx, Xxxxxx, as soon as practicable after
the satisfaction or waiver of the conditions set forth in Article 6 but not
later than three Business Days after the Final Order is granted or at such other
time and place and on such other date as Greka and Beaver Lake shall agree;
provided that the closing conditions set forth in Article 6 shall have been
satisfied or waived at or prior to such time.
2.3 Consummation of the Arrangement
At the Closing, the parties hereto will cause the Arrangement to be
consummated by filing with the Registrar the Articles of Arrangement in such
form as required by, and executed in accordance with, the relevant provisions of
the ABCA and the Final Order.
2.4 Effects of the Arrangement
The Arrangement shall have the effects set forth in the applicable
provisions of the ABCA and the Final Order.
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2.5 Conversion of Securities
Subject to the terms and conditions of this Agreement, at the Effective
Date, by virtue of the Arrangement and without any further action on the part of
any of the parties hereto or their shareholders, each Beaver Lake Common Share
issued and outstanding immediately prior to the Effective Date and held other
than by Greka shall be exchanged for Greka Common Stock on the basis of one
share of Greka Common Stock for every 74.40 Beaver Lake Common Shares. If the
application of the foregoing exchange ratio to the aggregate number of Beaver
Lake Common Shares beneficially owned by a Beaver Lake Common Shareholder would
result in such holder being entitled to receive a fraction of a share of Greka
Common Stock, then in respect of such fraction the holder shall receive a cash
payment from Greka for an amount equal to such fractional interest multiplied by
$9.15(U.S.).
2.6 Taking of Necessary Action; Further Action
The parties hereto shall take all such reasonable and lawful action as
may be necessary or appropriate in order to effectuate the Arrangement as
promptly as possible.
ARTICLE 3
REPRESENTATIONS AND WARRANTIES
3.1 Representations and Warranties of Greka
Greka hereby represents and warrants to Beaver Lake that:
(a) Organization and Compliance with Law Greka is a corporation duly
incorporated, validly existing and in good standing under the laws of
its jurisdiction of incorporation. Greka has all requisite corporate
power and corporate authority and all necessary governmental
authorizations to own, lease and operate all of its properties and
assets and to carry on its business as now being conducted, except
where the failure to have such authorization would not have a Xxxxx
XXX. Xxxxx is duly qualified as a foreign corporation to do business,
and is in good standing, in each jurisdiction in which the property
owned, leased or operated by it or the nature of the business conducted
by it makes such qualification necessary, except in such jurisdictions
where the failure to be duly qualified does not and would not have a
Xxxxx XXX. Greka is in compliance with all applicable laws, judgments,
orders, rules and regulations, domestic and foreign, except where
failure to be in such compliance would not have a Xxxxx XXX.
(b) Capitalization The authorized capital stock of Greka consists of
50,000,000 shares of Greka Common Stock, of which 4,352,589 shares were
issued and outstanding as of the date hereof.
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(c) Authorization and Validity of Agreement The execution and delivery by
Greka of this Agreement and the Other Agreements and the consummation
by them of the transactions contemplated hereby and thereby have been
duly authorized by all necessary corporate action. This Agreement has
been duly executed and delivered by Greka and is a valid and binding
obligation of Greka, enforceable against Greka in accordance with its
terms, except as enforceability may be limited by applicable
bankruptcy, insolvency, reorganization, moratorium or similar laws from
time to time in effect that affect creditors' rights generally and by
legal and equitable limitations on the availability of specific
remedies. The Other Agreements, when executed and delivered by Greka,
as applicable, will constitute valid and binding obligations of Greka ,
enforceable against them in accordance with their respective terms,
except as enforceability may be limited by applicable bankruptcy,
insolvency, reorganization, moratorium or similar laws from time to
time in effect that affect creditors' rights generally and by legal and
equitable limitations on the availability of specific remedies.
(d) No Approvals or Notices Required; No Conflict Neither the execution and
delivery of this Agreement nor the performance by Greka of its
obligations hereunder, nor the consummation of the transactions
contemplated hereby by Greka, will (i) conflict with the articles or
bylaws of Greka; (ii) assuming satisfaction of the requirements set
forth in clause (iii) below, violate any provision of law applicable to
Greka; (iii) except for (A) issuance of the Interim Order and the Final
Order by the Court, (B) requirements of Canadian, United States,
provincial or state securities laws, (C) requirements of notice filings
in such foreign jurisdictions as may be applicable and (D) the filing
of Articles of Arrangement in accordance with the ABCA, require any
consent or approval of, or filing with or notice to, any public body or
authority, domestic or foreign, under any provision of law applicable
to Greka .; or (iv) require any consent, approval or notice under, or
violate, breach, be in conflict with or constitute a default (or an
event that, with notice or lapse of time or both, would constitute a
default) under, or permit the termination of any provision of, or
result in the creation or imposition of any Lien upon any properties,
assets or business of Greka under, any note, bond, indenture, mortgage,
deed of trust, lease, franchise, permit, authorization, license,
contract, instrument or other agreement or commitment or any order,
judgment or decree to which Greka is a party or by which it or any of
its assets or properties is bound or encumbered, except (A) those that
have already been given, obtained or filed and (B) those that, in the
aggregate, would not have a Xxxxx XXX.
(e) Voting Requirements No vote of the holders of shares of the capital
stock of Greka is necessary to approve this Agreement and the
Arrangement.
(f) Information Supplied The information supplied or to be supplied by
Greka for inclusion or incorporation by reference in the Proxy Circular
shall, at the date the Proxy Circular is first mailed to Beaver Lake
Common Shareholders and at the time of the Beaver Lake Shareholders
Meeting, be true and complete in all material respects and shall not
contain any misrepresentation (as defined in the Securities Act
(Alberta)).
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(g) Authorization for Greka Common Stock Greka has taken all necessary
action to permit it to issue the number of shares of Greka Common Stock
required to be issued pursuant to the terms of the Plan of Arrangement
and this Agreement. The shares of Greka Common Stock issued pursuant to
the terms of the Plan of Arrangement and this Agreement will, when
issued, be validly issued, fully paid and nonassessable and not subject
to preemptive rights.
(h) SEC Documents Greka has provided to Beaver Lake the SEC Documents. As
of their respective dates, the SEC Documents complied in all material
respects with the requirements of the United States Securities Exchange
Act of 1934, as amended, and the rules and regulations of the SEC
promulgated thereunder applicable to such SEC Documents, and none of
the SEC Documents 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 therein, in light of the
circumstances under which they were made, not misleading. The
consolidated financial statements of Greka included in the SEC
Documents comply as to form in all material respects with applicable
accounting requirements and the published rules and regulations of the
SEC with respect thereto, have been prepared in accordance with United
States generally accepted accounting principles applied on a consistent
basis during the periods involved (except as may be indicated in the
notes thereto) and fairly present the consolidated financial position
of Greka and its consolidated subsidiaries as of the dates thereof and
the consolidated results of their operations and cash flows for the
periods then ended. Except as set forth in the SEC Documents, no event
has occurred since the date of filing of such documents that would
constitute a Xxxxx XXX.
(i) Conduct of Business in the Ordinary Course; Absence of Certain Changes
and Events Since December 31, 1998, except as contemplated by this
Agreement or as disclosed in the SEC Documents, there has not been: (i)
a Xxxxx XXX or (ii) any other condition, event or development that
reasonably may be expected to result in a Xxxxx XXX.
(j) Litigation Except as disclosed in writing to Beaver Lake, there are no
Demands pending or, to the knowledge of Greka, threatened against or
affecting (i) Greka or any of its properties at law or in equity, or
any of their employee benefit plans or fiduciaries of such plans or
(ii) any Greka Subsidiary or any of their respective properties at law
or in equity, or any of their respective employee benefit plans or
fiduciaries of such plans, before or by any Governmental Entity
wherever located that (x) could prevent or hinder the consummation of
the transactions contemplated by this Agreement or the Plan of
Arrangement; or (y) would otherwise, if adversely determined, have a
Xxxxx XXX.
(k) Environmental Matters To Greka's knowledge, the properties, operations
and activities of Greka comply in all material respects with all
applicable Environmental Laws, except for failures to comply that would
not have a Xxxxx XXX; and (ii) Greka is not subject to any existing,
pending or, to its knowledge, threatened action, suit, investigation,
inquiry or proceeding by or before any Governmental Entity under any
Environmental Law which, if adversely determined, would have a Xxxxx
XXX. Except as may be disclosed in SEC Documents filed by Saba or
otherwise made in writing.
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(l) Compliance with Laws Greka holds all required, necessary or applicable
permits, licenses, variances, exemptions, orders, franchises and
approvals of all Governmental Entities, except where the failure to so
hold could not reasonably be expected to have a Xxxxx XXX (the "Xxxxx
Permits"). To Greka's knowledge, all applications with respect to the
Greka Permits (excluding applications for such Greka Permits where the
failure to so hold could not reasonably be expected to have a Xxxxx
XXX) were complete and correct in all material respects when made and
Greka does not know of any reason why any of the Greka Permits would be
subject to cancellation, excluding such Greka Permits where the
cancellation of the same could not reasonably be expected to have a
Xxxxx XXX. Xxxxx is in compliance with the terms of the Greka Permits
except where the failure to so comply could not reasonably be expected
to have a Xxxxx XXX. Xxxxx has not violated or failed to comply with
any statute, law, ordinance, regulation, rule, permit or order of any
federal, state or local government, domestic or foreign, or any
Governmental Entity, any arbitration award or any judgment, decree or
order of any court or other Governmental Entity, applicable to Greka or
its business, assets or operations, except for violations and failures
to comply that would not have a Xxxxx XXX.
(m) Title to Property To Greka's knowledge, it has complied in all material
respects with the terms of all material leases to which it is a party
and under which it is in occupancy, and all such leases are in full
force and effect, except where such failure to comply or to be in full
force and effect could not reasonably be expected to have a Xxxxx XXX.
3.2 Representations and Warranties of Beaver Lake.
Beaver Lake hereby represents and warrants to Greka that:
(a) Organization Beaver Lake is a corporation duly incorporated, validly
existing and in good standing under the laws of the Province of
Alberta. Beaver Lake has all requisite corporate power and corporate
authority and all necessary governmental authorizations to own, lease
and operate all of its properties and assets and to carry on its
business as now being conducted, except where the failure to have such
governmental authority would not have a Beaver Lake MAE. Beaver Lake is
duly qualified as a foreign corporation to do business, and is in good
standing, in each jurisdiction in which the property owned, leased or
operated by it or the nature of the business conducted by it makes such
qualification necessary, except in such jurisdictions where the failure
to be duly qualified does not and would not have a Beaver Lake MAE.
Beaver Lake is in compliance with all applicable laws, judgments,
orders, rules and regulations, domestic and foreign, except where
failure to be in such compliance would not have a Beaver Lake MAE.
(b) Capitalization
(i) The authorized share capital of Beaver Lake consists of an
unlimited number of Beaver Lake Common Shares, there are
19,466,666 Beaver Lake Common Shares issued and outstanding.
No other shares in the capital of Beaver Lake are outstanding.
All issued and outstanding Beaver Lake Common Shares are
validly issued, fully paid and nonassessable and no holder
thereof is entitled to preemptive rights. Beaver Lake is not a
party to, and is not aware of, any voting agreement, voting
trust or similar agreement or arrangement relating to any
class or series of its shares, or any agreement or arrangement
providing for registration rights with respect to any shares
or other securities of Beaver Lake.
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(ii) Other than the Beaver Lake Options (all of which Beaver Lake
Options shall be cancelled prior to the filing of the Articles
of Arrangement), there are not now, and at the Effective Date
there will not be, any (A) shares of capital or other equity
securities of Beaver Lake outstanding, other than the
19,466,666 Beaver Lake Common Shares currently issued and
outstanding and any additional Beaver Lake Common Shares
issued after the date hereof and prior to the Effective Date
pursuant to the exercise of Beaver Lake Options, or (B)
outstanding options, warrants, scrip, rights to subscribe for,
calls or commitments of any character whatsoever relating to,
or securities or rights convertible into or exchangeable for,
shares of any class of share capital of Beaver Lake, or
contracts, understandings or arrangements to which Beaver Lake
is a party, or by which it is or may be bound, to issue
additional shares of its capital or options, warrants, scrip
or rights to subscribe for, or securities or rights
convertible into or exchangeable for, any additional shares of
its capital.
(c) Authorization and Validity of Agreement Beaver Lake has all requisite
corporate power and authority to enter into this Agreement and the
Other Agreements and to perform its obligations hereunder and
thereunder. The execution and delivery by Beaver Lake of this Agreement
and the Other Agreements to which it is a party and the consummation by
it of the transactions contemplated hereby and thereby have been duly
authorized by all necessary corporate action (subject only, with
respect to the Arrangement, to approval of this Agreement by the Beaver
Lake Common Shareholders as provided for in Section 5.1). On or prior
to the date hereof the Board of Directors of Beaver Lake has determined
to recommend approval of the Arrangement to the Beaver Lake Common
Shareholders, and such determination is in effect as of the date
hereof. This Agreement has been duly executed and delivered by Beaver
Lake and is the valid and binding obligation of Beaver Lake enforceable
against it in accordance with its terms, except as enforceability may
be limited by applicable bankruptcy, insolvency, reorganization,
moratorium or similar laws from time to time in effect that affect
creditors' rights generally and by legal and equitable limitations on
the availability of specific remedies. The Other Agreements, when
executed and delivered by Beaver Lake, as applicable, will constitute
valid and binding obligations of Beaver Lake, enforceable against it in
accordance with their respective terms, except as enforceability may be
limited by applicable bankruptcy, insolvency, reorganization,
moratorium or similar laws from time to time in effect that affect
creditors' rights generally and by legal and equitable limitations on
the availability of specific remedies.
(d) No Approvals or Notices Required; No Conflict with Instruments to which
Beaver Lake is a Party The execution and delivery of this Agreement and
the Other Agreements do not, and the consummation of the transactions
contemplated hereby and thereby and compliance with the provisions
hereof and thereof will not, conflict with, or result in any violation
of, or default (with or without notice or lapse of time, or both)
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under, or give rise to a right of termination, cancellation or
acceleration of or "put" right with respect to any obligation or to
loss of a material benefit under, or result in the creation of any Lien
upon any of the properties or assets of Beaver Lake or any of the
Beaver Lake Subsidiaries under, any provision of (i) the Beaver Lake
Articles or bylaws of Beaver Lake, (ii) any loan or credit agreement,
note, bond, mortgage, indenture, lease, guaranty or other financial
assurance agreement or other agreement, instrument, permit, concession,
franchise or license applicable to Beaver Lake or its properties or
assets, (iii) any loan or credit agreement, note, bond, mortgage,
indenture, lease, guaranty or other financial assurance agreement or
other agreement, instrument, permit, concession, franchise or license
applicable to any Beaver Lake Subsidiary, or it's properties or assets
and (iv) subject to governmental filing and other matters referred to
in the following sentence, any judgment, order, decree, statute, law,
ordinance, rule or regulation or arbitration award applicable to Beaver
Lake or its properties or assets, other than, in the case of clauses
(ii) and (iii), any such conflicts, violations, defaults, rights or
Liens that individually or in the aggregate would not have a Beaver
Lake MAE. No consent, approval, order or authorization of, or
registration, declaration or filing with, any Governmental Entity is
required by or with respect to Beaver Lake in connection with the
execution and delivery of this Agreement by Beaver Lake or the
consummation by Beaver Lake of the transactions contemplated hereby,
except for (i) issuance of the Interim Order and the Final Order, (ii)
the filing with the ASE and Commissions of the Proxy Circular, (iii)
the filing of the Articles of Arrangement with the Registrar with
respect to the Arrangement as provided in the ABCA and the Final Order
and appropriate documents with the relevant authorities of other
jurisdictions in which Beaver Lake is qualified to do business and (iv)
such other consents, approvals, orders, authorizations, registrations,
declarations, filings and notices as are set forth in Section 2 of the
Beaver Lake Disclosure Letter.
(e) Commission Filings; Financial Statements Beaver Lake is a reporting
issuer under the securities laws of Ontario, Alberta and British
Columbia and is not in default of any requirement of such securities
laws and it is in compliance with the bylaws, rules and regulations of
the ASE, being the only exchange upon which the Beaver Lake Common
Shares are listed. Beaver Lake has filed all reports and other filings,
together with any amendments required to be made with respect thereto,
that they have been required to file with the ASE and the Commissions.
Beaver Lake has heretofore delivered to Greka copies of the Beaver Lake
Commission Filings. As of the dates of it's filing with the ASE or the
Commissions, the Beaver Lake Commission Filings complied in all
material respects with the applicable securities laws, the rules and
regulations of the Commissions thereunder and the bylaws, rules and
regulations of the ASE, and were true and complete in all material
respects and did not contain any misrepresentation (as defined in the
Securities Act (Alberta)).
Each of the financial statements (including any related notes or
schedules) included in the Beaver Lake Commission Filings was prepared in
accordance with Canadian generally accepted accounting principles applied on a
consistent basis (except as may be noted therein or in the notes or schedules
thereto) and complied with the rules and regulations of the ASE and the
Commissions. Such consolidated financial statements fairly present the
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consolidated financial position of Beaver Lake as of the dates thereof and the
results of operations, cash flows and changes in shareholders' equity for the
periods then ended (subject, in the case of the unaudited interim financial
statements, to normal year-end audit adjustments on a basis comparable with past
periods). As of the date hereof, Beaver Lake has no liabilities, absolute or
contingent, that may reasonably be expected to have a Beaver Lake MAE, that are
not reflected in the Beaver Lake Commission Filings, except those incurred in
the ordinary course of business consistent with past operations and not relating
to the borrowing of money.
(f) Conduct of Business in the Ordinary Course; Absence of Certain Changes
and Events Since December 31, 1998, except as contemplated by this
Agreement or as disclosed in the Beaver Lake Commission Filings, Beaver
Lake has conducted its business only in the ordinary and usual course
in accordance with past practice, and there has not been: (i) a Beaver
Lake MAE or any other material adverse change in the financial
condition, results of operations, prospects, assets or business of
Beaver Lake, taken as a whole, or (ii) any other condition, event or
development that reasonably may be expected to result in any such
material adverse change or a Beaver Lake MAE; (iii) any change by
Beaver Lake in its accounting methods, principles or practices; (iv)
any amendment to the Beaver Lake Articles, bylaws or other governing
documents or any resolutions or proceedings pending for any amendment
thereto, except as may be contemplated therein; (v) except as disclosed
in Section 3 of the Beaver Lake Disclosure Letter, any revaluation by
Beaver Lake of any of its assets, including, without limitation,
writing down the value of or writing off notes or accounts receivable
other than in the ordinary course of business and consistent with past
practice; (vi) any entry by Beaver Lake into any commitment or
transaction that would be material to Beaver Lake and not in the
ordinary course of business; (vii) any declaration, setting aside or
payment of any dividends or distributions in respect of the Beaver Lake
Common Shares or any redemption, purchase or other acquisition of any
of its securities; (viii) any damage, destruction or loss (whether or
not covered by insurance) materially adversely affecting the properties
or business of Beaver Lake; (ix) any increase in indebtedness of
borrowed money other than borrowing under existing credit facilities as
disclosed in Section 3 of the Beaver Lake Disclosure Letter; (x) any
granting of a security interest or Lien on any property or assets of
Beaver Lake, other than Permitted Liens; or (xi) any increase in or
establishment of any bonus, insurance, severance, deferred
compensation, pension, retirement, profit sharing, stock option
(including, without limitation, the granting of stock options, stock
appreciation rights, performance awards or restricted stock awards),
stock purchase or other employee benefit plan or any other increase in
the compensation payable or to become payable to any directors,
officers or key employees of Beaver Lake or for which Beaver Lake would
be responsible.
(g) Litigation Except as disclosed in writing to Greka, there are no
Demands pending or, to the knowledge of Beaver Lake, threatened against
or affecting (i) Beaver Lake or any of its properties at law or in
equity, or any of it's employee benefit plans or fiduciaries of such
plans or (ii) any of its properties at law or in equity, or any of it's
employee benefit plans or fiduciaries of such plans, before or by any
Governmental Entity, wherever located that (x) could prevent or hinder
the consummation of the transactions contemplated by this Agreement or
the Plan of Arrangement; or (y) would otherwise, if adversely
determined, have a Beaver Lake MAE. Except as disclosed in writing to
Greka, Beaver Lake is not subject to any material judicial,
governmental or administrative order, writ, judgment, injunction or
decree.
B-12
(h) Disclosure Beaver Lake has made disclosure of all material facts (as
defined in the Securities Act (Alberta)) relating to its business and
financial affairs to Greka and acknowledges that Greka is relying upon
such disclosure in determining whether to proceed with the Plan of
Arrangement.
(i) Employee Benefit Plans
(i) None of the employees of Beaver Lake are subject to union or
collective bargaining agreements.
(ii) To the best knowledge of Beaver Lake, no officer or director
of Beaver Lake or Benefit Plans, or trusts created thereunder,
or trustee or administrator thereof, has engaged in any
prohibited transaction or act or any other breach of fiduciary
responsibility that could subject Beaver Lake to any tax or
penalty or to any liability under any applicable law or
regulation.
(j) Taxes
(i) Beaver Lake has duly and timely filed, in all material
respects, in proper form, returns in respect of taxes under
the Income Tax Act (Canada), the Alberta Corporate Tax Act,
the income tax legislation of any other province of Canada or
any foreign country having jurisdiction over its affairs, and
similar legislation of other provinces having jurisdiction
over its affairs, for all prior periods in respect of which
such filings have heretofore been required. All taxes shown on
such returns and all taxes now owing, including interest and
penalties, have been paid or accrued on Beaver Lake's books.
There are no outstanding agreements or waivers extending the
statutory period of limitations applicable to any federal,
provincial or other income tax return for any period. There is
no material claim against Beaver Lake with respect to any
taxes, and no material assessment, deficiency or adjustment
has been asserted or proposed with respect to any tax return
of or with respect to Beaver Lake that has not been adequately
provided for in reserves established by Beaver Lake. All
income tax returns of or with respect to Beaver Lake up to and
including December 31, 1998, have been assessed by the
applicable Governmental Entity. The time period for
reassessment under the Income Tax Act (Canada) and the Alberta
Corporate Tax Act in the absence of misrepresentation
attributable to negligence, carelessness, wilful default or
fraud has expired for all periods up to and including the tax
year ended 1993. The total amounts set up as liabilities for
current and deferred taxes in the consolidated financial
statements included in the Beaver Lake Commission Filings have
been prepared in accordance with Canadian generally accepted
accounting principles and are sufficient to cover the payment
of all material taxes, including any penalties or interest
thereon and whether or not assessed or disputed, that are, or
are hereafter found to be, or to have been, due with respect
to the operations of Beaver Lake through the periods covered
thereby. Except for statutory Liens for current taxes not yet
due, no Liens for taxes exist upon the assets of Beaver Lake.
B-13
(ii) Beaver Lake and each Beaver Lake Subsidiary has remitted to
the proper tax authority when required by law to do so, all
amounts payable by it on account of GST and is a "taxable
Canadian corporation" for the Income Tax Act (Canada).
(iii) As of the Effective Date, Beaver Lake shall have fully accrued
for all taxes that may be required to be paid as a result of
the transactions contemplated hereby.
(k) Environmental Matters Except as set forth in Section 5 of the Beaver
Lake Disclosure Letter, (i) the properties, operations and activities
of Beaver Lake comply in all material respects with all applicable
Environmental Laws; (ii) none of Beaver Lake is subject to any
existing, pending or, to the knowledge of Beaver Lake, threatened
action, suit, investigation, inquiry or proceeding by or before any
Governmental Entity under any Environmental Law; (iii) except where the
failure would not have a Beaver Lake MAE, all notices,
permits,licenses, or similar authorizations, if any, required to be
obtained or filed by Beaver Lake under any Environmental Law in
connection with any aspect of the business of Beaver Lake or any Beaver
Lake Subsidiary, including without limitation those relating to the
treatment, storage, disposal or release of a hazardous substance or
solid waste, have been duly obtained or filed and will remain valid and
in effect after the Arrangement and Beaver Lake and each Beaver Lake
Subsidiary is in compliance with the terms and conditions of all such
notices, permits, licenses and similar authorizations; (iv) Beaver Lake
and each Beaver Lake Subsidiary has satisfied and is currently in
compliance in all material respects with all financial responsibility
requirements applicable to its operations and imposed by any
Governmental Entity under any Environmental Law, and none of such
parties has received any notice of noncompliance with any such
requirements; (v) to Beaver Lake's knowledge, there are no physical or
environmental conditions existing on any property currently owned or
leased or presently owned or leased by Beaver Lake or any entity in
which it has or had ownership interest that could reasonably be
expected to give rise to any on-site or off-site remedial obligations
under any Environmental Laws; and (vi) to Beaver Lake's knowledge,
since the effective date of the relevant requirements of applicable
Environmental Laws, all hazardous substances or solid wastes generated
by Beaver Lake or used in connection with their properties or
operations have been transported only by carriers authorized under
Environmental Laws to transport such substances and wastes, and
disposed of only at treatment, storage, and disposal facilities
authorized under Environmental Laws to treat, store or dispose of such
substances and wastes, and, to the knowledge of Beaver Lake, such
carriers and facilities have been and are operating in compliance in
all material respects with such authorizations and are not the subject
of any existing, pending, or overtly threatened action, investigation,
or inquiry by any Governmental Entity in connection with any
Environmental Laws.
(l) Severance Payments Except as set forth in Section 6 of the Beaver Lake
Disclosure Letter, Beaver Lake will not have any liability or
obligation to pay a severance payment or similar obligation to any of
its employees, officers, or directors as a result of the Arrangement or
the transactions contemplated by this Agreement, nor will any of such
persons be entitled to an increase in severance payments or other
benefits as a result of the Arrangement or the transactions
contemplated by this Agreement or the Other Agreements in the event of
the subsequent termination of their employment.
B-14
(m) Compliance with Laws Beaver Lake holds all required, necessary or
applicable permits, licenses, variances, exemptions, orders, franchises
and approvals of all Governmental Entities, except where the failure to
so hold could not reasonably be expected to have a Beaver Lake MAE (the
"Beaver Lake Permits"). All applications with respect to the Beaver
Lake Permits were complete and correct in all material respects when
made and Beaver Lake does not know of any reason why any of the Beaver
Lake Permits would be subject to cancellation. Beaver Lake is in
compliance with the terms of the Beaver Lake Permits except where the
failure to so comply could not reasonably be expected to have a Beaver
Lake MAE. Beaver Lake has not violated or failed to comply with any
statute, law, ordinance, regulation, rule, permit or order of any
federal, provincial or local government, domestic or foreign, or any
Governmental Entity, any arbitration award or any judgment, decree or
order of any court or other Governmental Entity, applicable to Beaver
Lake's business, assets or operations, except for violations and
failures to comply that would not have a Beaver Lake MAE.
(n) Contracts Section 7 to the Beaver Lake Disclosure Letter contains a
complete list of the following contracts, agreements, arrangements,
ownership interests and commitments: (i) all employment or consulting
contracts or agreements to which Beaver Lake is contractually
obligated; (ii) current leases, sales contracts and other agreements
with respect to any property, real or personal, of Beaver Lake or to
which Beaver Lake is contractually obligated; (iii) contracts or
commitments for capital expenditures or acquisitions in excess of
$50,000 to which Beaver Lake is obligated; (iv) agreements, contracts,
indentures or other instruments relating to the borrowing of money, or
the guarantee of any obligation for the borrowing of money, to which
Beaver Lake is a party or any of their respective properties is bound;
(v) all corporations, partnerships, limited liability companies and
other entities in which Beaver Lake owns or has owned, directly or
indirectly, a material equity interest, (vi) all material
indemnification and guaranty or other similar obligations to which
Beaver Lake is bound and which the officers of Beaver Lake or any
Beaver Lake Subsidiary, after reasonable investigation, are aware,
(vii) any outstanding bonds, letters of credit posted or guaranteed by
Beaver Lake with respect to any Person, (viii) any covenants not to
compete or other obligations affecting Beaver Lake that would restrict
Greka or its Affiliates from engaging in any business or activity of
which the officers of Beaver Lake are aware, after reasonable
investigation (ix) any agreement, lease, contract or commitment or
series of related agreements, leases, contracts or commitments not
entered into in the ordinary course of business or, except for
agreements to purchase or sell goods and services entered into in the
ordinary course of business, not cancellable by Beaver Lake within 30
calendar days, (x) contracts, agreements, arrangements or commitments,
other than the foregoing, that could reasonably be considered to be
material to Beaver Lake or any Beaver Lake Subsidiary, taken as a
whole.
B-15
(o) Title to Property
(i) Other than as disclosed in the Beaver Lake Disclosure Letter,
the Beaver Lake Assets are free and clear of any liens,
royalties, production payments, charges, adverse claims,
demands or encumbrances created by, through or under Beaver
Lake or of which Beaver Lake has knowledge.
(ii) Beaver Lake and each of the Beaver Lake Subsidiaries has
complied in all material respects with the terms of all leases
to which they are a party and under which they are in
occupancy, and all such leases are in full force and effect.
Beaver Lake and each of the Beaver Lake Subsidiaries enjoy
peaceful and undisturbed possession under all such leases.
(p) Beaver Lake Assets
(i) Beaver Lake has made available to Xxxxxxx prior to the
issuance of the Xxxxxxx Report, all information material to an
adequate determination of the oil and gas reserves of Beaver
Lake, none of such information contained a misrepresentation
and there has been no material adverse change to the oil and
gas reserves of Beaver Lake since the Xxxxxxx Report.
(ii) Beaver Lake has not received any notices of material violation
or alleged material violation of the provisions of any
agreement in respect of the Beaver Lake Assets and to the best
of the knowledge, information and belief of Beaver Lake, the
properties and lands comprising the Beaver Lake Assets have
been drilled, developed and operated in accordance with all
material agreements that relate to them except as disclosed in
the Disclosure Letter.
(iii) Beaver Lake has performed, observed and satisfied all of its
material duties, liabilities, obligations and covenants
required to be satisfied, performed and observed by it under,
and is not in material default under or in material breach of,
the terms of any material leases or agreements pertaining to
the Beaver Lake Assets.
(iv) All ad valorem, property, production, severance and similar
taxes and assessments based on or measured by the ownership of
the Beaver Lake Assets or the production of petroleum and
natural gas or the receipt of proceeds therefrom payable in
respect of or in relation to substantially all of the Beaver
Lake Assets have been properly and fully paid and discharged.
(v) There is no material circumstance, matter or thing known to
Beaver Lake which indicates in any manner that it may not hold
good and marketable title to any material portion of the
Beaver Lake Assets.
B-16
(vi) All material documents and agreements of whatsoever nature and
kind affecting the title to the Beaver Lake Assets which are
in the possession of Beaver Lake or of which Beaver Lake is
otherwise aware have been disclosed to Greka.
(vii) There is no fact or circumstance known to Beaver Lake which
materially adversely affects the aggregate production of
petroleum and natural gas from the properties and lands
comprising the Beaver Lake Assets except as disclosed in the
Disclosure Letter.
(viii) To the best of its knowledge, Beaver Lake has done no act or
thing, nor has Beaver Lake suffered or permitted any act or
omission, whereby its title to the Beaver Lake Assets may be
cancelled or terminated.
(ix) All producing xxxxx and facilities operated by Beaver Lake or,
where such xxxxx or facilities are operated by operators
acting on its behalf, to the best of Beaver Lake's knowledge,
are in good and operable condition, and are not subject to any
production or other penalties imposed by applicable leases or
legislation which would materially impair the value of the
Beaver Lake Assets.
(x) All xxxxx operated by Beaver Lake or where such xxxxx are
operated by operators acting on its behalf, to the best of
Beaver Lake's knowledge, have been drilled, completed,
shut-in, abandoned, suspended and operated, as the case may
be, in accordance with applicable laws, rules, regulations,
orders and lawful directions of governmental or other
competent authorities.
(xi) Beaver Lake is receiving substantially all of its revenue from
the production of petroleum and natural gas from the Beaver
Lake Assets on what it considers to be a timely basis and,
except as security for its revolving operating line, it has
not assigned or otherwise encumbered same.
(q) Insurance Policies Beaver Lake will retain insurance policies, in
accordance with industry standards. Each such policy is in full force
and effect, is with responsible insurance carriers and is substantially
equivalent in coverage and amount to policies covering companies of the
size of Beaver Lake and in the business in which Beaver Lake is
engaged, in light of the risk to which such companies and their
employees, businesses, properties and other assets may be exposed. All
retroactive premium adjustments under any worker's compensation policy
of Beaver Lake has been recorded in Beaver Lake's financial statements
in accordance with Canadian generally accepted accounting principles
and are reflected in the financial statements contained in the Beaver
Lake Commission Filings.
(r) Information Supplied The information included or incorporated by
reference in the Proxy Circular (except for any information supplied or
to be supplied by Greka) shall, at the date the Proxy Circular is first
mailed to Beaver Lake Common Shareholders and at the time of the Beaver
Lake Shareholders Meeting, be true and complete in all material
respects and shall not contain any misrepresentation (as defined in the
Securities Act (Alberta)). The Proxy Circular will comply as to form in
all material respects with the requirements of the Securities Act
(Alberta) and the rules and regulations thereunder.
B-17
(s) Sales into the United States Revenues from sales of goods and services
attributable to the business of Beaver Lake into and for use in the
United States have, for each of the three years preceding the date
hereof, been less than an aggregate total of US$25 million. The
aggregate total book value of the assets in the United States of Beaver
Lake is less than US$15 million.
(v) Beaver Lake Options Beaver Lake has terminated the granting of options
under the Beaver Lake Stock Option Plan and has negotiated the
cancellation and termination of all unexercised Beaver Lake Options
effective on or before the Effective Date and prior to the filing of
the Articles of Arrangement at a cost to Beaver Lake per share not
exceeding the difference between 45(cent) and the exercise price of the
options.
ARTICLE 4
COVENANTS OF Beaver Lake
4.1 Conduct of Business by Beaver Lake Pending the Arrangement
Beaver Lake covenants and agrees that, from the date of this Agreement
until the earlier of the Effective Date or the date of termination of this
Agreement, unless Greka shall otherwise agree in writing or as otherwise
expressly contemplated by this Agreement:
(a) The business of Beaver Lake shall be conducted and shall not take any
action except in, the ordinary course of business and consistent with
past practice.
(b) Beaver Lake shall not directly or indirectly do any of the following:
(i) issue, sell, pledge, dispose of or encumber any share capital of
Beaver Lake except for the issuance of Beaver Lake Common Shares upon
the exercise of outstanding Beaver Lake Options; (ii) split, combine,
or reclassify any outstanding share capital, or declare, set aside, or
pay any dividend payable in cash, shares, property, or otherwise with
respect to its share capital whether now or hereafter outstanding;
(iii) redeem, purchase or acquire or offer to acquire any of its share
capital; (iv) grant any options to purchase any shares of Beaver Lake
or any Beaver Lake Subsidiary; (v) acquire, agree to acquire or make
any offer to acquire for cash or other consideration, any equity
interest in or all or substantially all of the assets of any
corporation, partnership, joint venture, or other entity; (vi) enter
into any contract, agreement, commitment, or arrangement with respect
to any of the matters set forth in this Section 4.1(b); (vii) amend its
articles or bylaws; or (viii) reorganize, amalgamate or merge with any
other Person.
(c) Beaver Lake shall allow Greka and its representatives and agents full
access during normal business hours, to all of the assets, properties,
books, records, agreements and commitments of each of Beaver Lake and
its subsidiaries and provide all such information concerning Beaver
Lake and its subsidiaries as Greka may reasonably request.
B-18
(d) Until the Effective Date, Beaver Lake shall:
(i) conduct its operations in the ordinary and normal course of
business and in accordance with applicable laws, generally
accepted industry practice, any operating and other agreements
applicable to the Beaver Lake Assets and within its usual
areas of exploration except as otherwise contemplated by this
Agreement or as otherwise agreed to in writing by Greka;
(ii) in all material respects, conduct itself so as to keep Greka
fully informed as to the decisions required with respect to
the most advantageous methods in Beaver Lake's opinion of
exploring, operating and producing from the Beaver Lake Assets
and promptly disclose in writing to Greka all material adverse
changes, if any, in the Beaver Lake Assets or in its interest
therein;
(iii) except in respect of existing commitments, not make or
authorize, without prior written consent of Greka, any single
capital expenditure in respect of any of its properties or
assets which exceeds $50,000, otherwise than in the event of a
catastrophe or other event endangering life, property or the
environment;
(iv) take no action which would be outside the ordinary course of
business or which may result in a Beaver Lake MAE;
(v) not enter into any employment, consulting or severance
agreement or other similar arrangement with any director or
senior officer of Beaver Lake or any other Person; and
(vi) maintain insurance on and in respect of all of its properties
and assets in like kind to, and in an amount not less than the
amount of, insurance in respect of its properties and assets
in effect on the date hereof.
(e) Beaver Lake shall not sell, lease, mortgage, pledge, xxxxx x Xxxx on or
otherwise encumber or otherwise dispose of any of Beaver Lake's
properties or assets in an amount in excess of $50,000 in the
aggregate.
(f) Beaver Lake shall not, directly or indirectly, incur any indebtedness
for borrowed money or guarantee any such indebtedness of another
Person, issue or sell any debt securities or warrants or other rights
to acquire any debt securities of Beaver Lake or the guarantee of any
debt securities of another Person or enter into any arrangement having
the economic effect of any of the foregoing, except for short-term
borrowings incurred in the ordinary course of business consistent with
past practice, or make or permit to remain outstanding any loans,
advances or capital contributions to, or investments in, any other
Person, other than to Beaver Lake.
(g) Beaver Lake shall not make any election relating to taxes.
B-19
(h) Beaver Lake shall not change any accounting principle used by it.
(i) Beaver Lake shall use its reasonable efforts (i) to preserve intact the
business organization of Beaver Lake, (ii) to maintain in effect any
material authorizations or similar rights of Beaver Lake, (iii) to
preserve the goodwill of those having material business relationships
with it, (iv) to maintain and keep each of Beaver Lake's properties in
the same repair and condition as presently exists, except for
deterioration due to ordinary wear and tear and damage due to casualty
and (v) to maintain in full force and effect insurance comparable in
amount and scope of coverage to that currently maintained by it.
(j) Beaver Lake shall not authorize any of, or commit or agree to take any
of, or permit any Beaver Lake Subsidiary to take any of, the foregoing
actions to the extent prohibited by the foregoing and shall not, take
any action that would, or that reasonably could be expected to, result
in any of the representations and warranties set forth in this
Agreement becoming untrue or any of the conditions to the Arrangement
set forth in Article 6 not being satisfied. Beaver Lake promptly shall
advise Greka orally and in writing of any change or event having, or
which, insofar as reasonably can be foreseen, would have, a material
adverse effect on Beaver Lake taken as a whole, or cause a Beaver Lake
MAE.
ARTICLE 5
ADDITIONAL AGREEMENTS
5.1 Cooperation; Consents and Approvals
(a) Beaver Lake shall use all reasonable efforts to, as soon as
practicable, complete the preparation of the Proxy Circular as agreed
with Greka and, subject to the grant of the Interim Order, to mail to
the Beaver Lake Common Shareholders and file in all jurisdictions where
required the Proxy Circular and other documentation required in
connection with the Beaver Lake Shareholders Meeting, all in accordance
with National Policy No. 41 of the Canadian Securities Administrators,
the Interim Order and applicable law, and Beaver Lake shall use all
reasonable efforts, subject to the grant of the Interim Order, to as
soon as practicable and in any event on the date specified in the
Interim Order, to convene the Beaver Lake Shareholders Meeting for the
purpose of approving the Arrangement and this Agreement in accordance
with the Interim Order.
(b) Beaver Lake shall ensure that the Proxy Circular complies with all
applicable disclosure laws as they relate to the disclosure of
information regarding Beaver Lake and, without limiting the generality
of the foregoing, provides the Beaver Lake Common Shareholders to which
such circular is sent with information in sufficient detail to permit
them to form a reasoned judgment concerning the matters before them.
(c) Subject to the terms and conditions set forth in Section 5.5 and the
fiduciary obligations of the Board of Directors of Beaver Lake with
respect to such matters, the Board of Directors of Beaver Lake (i)
shall recommend at such meeting that the Beaver Lake Common
Shareholders vote to adopt and approve the Arrangement and this
Agreement (the "Recommendation"), (ii) shall use its reasonable efforts
to solicit from the Beaver Lake Common Shareholders proxies in favour
of such adoption and approval and (iii) shall take all other action
reasonably necessary to secure a vote of its shareholders in favour of
the adoption and approval of the Arrangement and this Agreement.
B-20
5.2 Filings; Consents; Reasonable Efforts
Subject to the terms and conditions set forth in Section 5.5 and the
fiduciary obligations of the Board of Directors of Beaver Lake with respect to
such matters, Beaver Lake and Greka shall (i) make all necessary filings with
respect to the Arrangement and this Agreement under applicable securities laws
and shall use all reasonable efforts to obtain required approvals and clearances
with respect thereto; (ii) use reasonable efforts to obtain all consents,
waivers, approvals, authorizations, and orders required in connection with the
authorization, execution, and delivery of this Agreement and the consummation of
the Arrangement; (iii) use reasonable efforts to take, or cause to be taken, all
appropriate action, and do, or cause to be done, all things necessary, proper,
or advisable to consummate and make effective as promptly as practicable the
transactions contemplated by this Agreement; and (iv) will permit the review by
each other of all documents to be filed with the Court or to be sent to the
Beaver Lake Common Shareholders with respect to the Beaver Lake Shareholders
Meeting.
5.3 Notification of Certain Matters
Beaver Lake shall give prompt notice to Greka, and Greka shall give
prompt notice to Beaver Lake, orally and in writing, of (i) the occurrence, or
failure to occur, of any event which occurrence or failure would be likely to
cause any representation or warranty contained in this Agreement to be untrue or
inaccurate at any time from the date hereof to the Effective Date; and (ii) any
material failure of Beaver Lake, or Greka, as the case may be, or any officer,
director, employee or agent thereof, to comply with or satisfy any covenant,
condition or agreement to be compiled with or satisfied by it hereunder.
5.4 Expenses
All costs and expenses incurred in connection with this Agreement and
the transactions contemplated hereby shall be paid by the party incurring such
expenses, whether or not the Arrangement is consummated.
5.5 Better Offers
(a) Nothing herein is intended to restrict Greka or the Board of Directors
of Beaver Lake from soliciting or considering alternative bona fide
proposals or offers from any Person other than Greka relating to the
acquisition, merger, amalgamation, arrangement, or purchase of Beaver
Lake or of material assets or any ownership interest of or in Beaver
Lake or any similar business combination transaction (any of the
foregoing proposals or offers being referred to herein as an
"Acquisition Proposal"). In such event, the party receiving the
Acquisition Proposal shall promptly advise the other parties hereto
orally and in writing of the material terms and conditions of such
Acquisition Proposal and the identity of the Person making such
Acquisition Proposal. Prior to Beaver Lake providing any information
concerning Beaver Lake to such Person, such Person shall sign a
confidentiality agreement substantially similar to the confidentiality
agreement signed by Greka. Beaver Lake shall keep Greka fully informed
of the status and details of any such Acquisition Proposal.
B-21
(b) If a competing bona fide Acquisition Proposal is made which, having
regard to all of the terms and conditions thereof (including any
conditions in respect of financing), is more favourable from a
financial point of view to the Beaver Lake Common Shareholders, then
the board of directors of Beaver Lake may amend or withdraw the
Recommendation provided that, in the opinion of the directors, acting
in good faith and upon the advice of their financial and legal
advisors, the directors' fiduciary duties under applicable law would
require amendment or withdrawal of the Recommendation. In such event,
Beaver Lake shall be relieved of its obligations under Section 5.1(c)
and 5.2(iii); provided however, that nothing herein shall relieve
Beaver Lake of its obligation to convene the Beaver Lake Shareholders
Meeting on August 7, 1998 to allow shareholders to consider the
Arrangement and, if the Arrangement is approved by the requisite vote
of the Beaver Lake Common Shareholders, to perform its obligations
hereunder (including, without limitation, its obligations pursuant to
Section 5.2 and Section 5.6(c) and (d)).
5.6 Mutual Agreements
Each of Greka, Beaver Lake covenants and agrees that, until the
Effective Date or the day upon which this Agreement is terminated, whichever is
earlier, it:
(a) in the case of Beaver Lake, will in a timely and expeditious manner,
but in any event not later than June 30, 1998, file, proceed with and
diligently prosecute an application to the Court under the ABCA for an
Interim Order with respect to the Arrangement;
(b) will, in a timely and expeditious manner, carry out the terms of the
Interim Order, provided that nothing shall require a party to consent
to any modification of this Agreement, the Arrangement or such party's
obligations hereunder;
(c) will, subject to the approval of the Arrangement at the Beaver Lake
Shareholders Meeting in accordance with the provisions on the Interim
Order, forthwith, but in any event not later than September 15, 1998,
file, proceed with and diligently prosecute together with the other
parties hereto an application for the Final Order; and
(d) will forthwith carry out the terms of the Final Order and will,
together with the other parties, file Articles of Arrangement and the
Final Order with the Registrar in order for the Arrangement to become
effective on or before September 15, 1998, provided that nothing shall
require a party to consent to any modification of this Agreement, the
Arrangement or such party's obligations hereunder.
5.7 Deposit of Greka Stock
Greka shall deposit with the Depositary the shares of Greka Common
Stock required for the exchange of Beaver Lake Common Shares held by Beaver Lake
Common Shareholders other than Greka pursuant to this Agreement and the Plan of
Arrangement and Greka shall irrevocably direct the Depositary to exchange the
Beaver Lake Common Shares held by such holders with the shares of Greka Common
Stock deposited.
B-22
ARTICLE 6
CONDITIONS
6.1 Conditions to Obligation of Each Party to Effect the Arrangement
The respective obligations of each party to effect the Arrangement
shall be subject to the fulfilment at or prior to the Effective Date of the
following conditions.
(a) This Agreement and the Arrangement shall have been approved and adopted
by the requisite vote of the Beaver Lake Common Shareholders as may be
required by law, by the Court, by the rules of the ASE, by Policy 9.1
and by any applicable provisions of the Beaver Lake Articles or its
bylaws;
(b) No order shall have been entered and remain in effect in any action or
proceeding before any foreign, federal, provincial or state court or
governmental agency or other foreign, federal or provincial regulatory
or administrative agency or commission that would prevent or make
illegal the consummation of the Arrangement;
(c) There shall have been obtained any and all material permits, approvals
and consents of securities commissions of any jurisdiction, and of any
other governmental body or agency, that reasonably may be deemed
necessary so that the consummation of the Arrangement and the
transactions contemplated thereby will be in compliance with applicable
laws, the failure to comply with which would have a Beaver Lake MAE or
Xxxxx XXX; and
(d) There shall have been obtained all approvals and consents of third
Persons (i) the granting of which is necessary for the consummation of
the Arrangement or the transactions contemplated in connection
therewith and (ii) the non-receipt of which would have a Beaver Lake
MAE or a Xxxxx XXX, including the receipt of the Interim Order and the
Final Order.
6.2 Additional Conditions to Obligation of Greka
The obligation of Greka to effect the Arrangement is, at the option of
Greka , also subject to the fulfilment at or prior to the Effective Date of the
following conditions:
(a) The representations and warranties of Beaver Lake contained in Section
3.2 shall be accurate as of the date of this Agreement and (except to
the extent such representations and warranties speak specifically as of
an earlier date) as of the Effective Date as though such
representations and warranties had been made at and as of that time;
all of the terms, covenants and conditions of this Agreement to be
complied with and performed by Beaver Lake on or before the Effective
Date shall have been duly complied with and performed in all material
respects; and a certificate to the foregoing effect dated the Effective
Date and signed by the president of Beaver Lake shall have been
delivered to Greka and Greka shall have no knowledge to the contrary;
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(b) There shall not have occurred or exist any fact or condition that would
reasonably result in a Beaver Lake MAE or would constitute a material
fixed or contingent liability to Beaver Lake, and Greka shall have
received a certificate signed by the president of Beaver Lake dated the
Effective Date to such effect;
(c) The Recommendation shall have been made and not withdrawn or altered in
any manner detrimental to the Arrangement;
(d) There shall be no more than 5% of the total issued and outstanding
Beaver Lake Common Shares having exercised rights of dissent in
relation to the Arrangement approved at the Beaver Lake Shareholders
Meeting;
(e) Greka shall have received from XxXxxxxxx Xxxx Xxxxx, counsel to Beaver
Lake, an opinion dated the Effective Date covering customary matters
relating to this Agreement and the Arrangement;
(f) Greka shall be reasonably satisfied that immediately prior to the
Effective Date no Person has any agreement or option or any right or
privilege (whether by law, preemptive right, contract or otherwise)
capable of becoming an agreement, option, right or privilege for the
purchase, subscription, allotment or issuance of any unissued
securities of Beaver Lake;
(g) All Beaver Lake options shall have been or terminated and cancelled
effective on or before the Effective Date; and
(h) Greka shall have received from Beaver Lake a list of such Persons, if
any, that Greka, after discussions with counsel for Beaver Lake,
believes may be "affiliates" of Beaver Lake (the "Beaver Lake
Affiliates"), within the meaning of Rule 145 promulgated under the
Securities Act. Beaver Lake shall deliver or cause to be delivered to
Greka an undertaking by each Beaver Lake Affiliate in form satisfactory
to Greka that no Greka Common Stock received or to be received by such
Beaver Lake Affiliate pursuant to the Arrangement will be sold or
disposed of except pursuant to an effective registration statement
under the Securities Act or in accordance with the provisions of Rule
144 or Rule 145(d) promulgated under the Securities Act or another
exemption from registration under the Securities Act.
6.3 Additional Conditions to Obligations of Beaver Lake
The obligation of Beaver Lake to effect the Arrangement is, at the
option of Beaver Lake, also subject to the fulfilment at or prior to the
Effective Date of the following conditions:
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(a) The representations and warranties of Greka contained in Section 3.1
shall be accurate as of the date of this Agreement and (except to the
extent such representations and warranties speak specifically as of an
earlier date) as of the Effective Date as though such representations
and warranties had been made at and as of that time; all the terms,
covenants and conditions of this Agreement to be complied with and
performed by Greka on or before the Effective Date shall have been duly
complied with and performed in all material respects; and a certificate
to the foregoing effect dated the Effective Date and signed by the
chief executive officer of Greka shall have been delivered to Beaver
Lake and Beaver Lake shall have no knowledge to the contrary;
(b) There shall not have occurred or exist any fact or condition that would
reasonably result in a Xxxxx XXX and Xxxxxx Lake shall have received a
certificate signed by the chief executive officer of Greka dated the
Effective Date to such effect;
(c) Beaver Lake shall have received from o, Canadian counsel to Greka , an
opinion dated the Effective Date covering customary matters relating to
this Agreement and the Arrangement and an opinion from o, United States
counsel to Greka dated the Effective Date covering customary matters
relating to the laws of the United States, with respect to this
Agreement and the Arrangement; and
(d) Greka shall have deposited with the Depositary the shares of Greka
Common Stock required for the exchange of the Beaver Lake Common Shares
held by Beaver Lake Common Shareholders other than Greka pursuant to
this Agreement and the Plan of Arrangement and Greka shall have
irrevocably directed the Depositary to exchange the Beaver Lake Common
Shares held by such holders with the shares of Greka Common Stock
deposited.
ARTICLE 7
MISCELLANEOUS
7.1 Termination
This Agreement may be terminated and the Arrangement and the other
transactions contemplated herein may be abandoned at any time prior to the
Effective Date, whether prior to or after approval by the Beaver Lake Common
Shareholders:
(a) by mutual written consent of Greka, and Beaver Lake;
(b) by Greka or Beaver Lake if (i) the Arrangement has not been consummated
on or before August 15, 1999 (provided that the right to terminate this
Agreement under this clause (i) shall not be available to any party
whose breach of any representation or warranty or failure to fulfil any
covenant or agreement under this Agreement has been the cause of or
resulted in the failure of the Arrangement to occur on or before such
date); (ii) any court of competent jurisdiction, or some other
governmental body or regulatory authority shall have issued a permanent
order, decree or ruling or taken any other action restraining,
enjoining or otherwise prohibiting the Arrangement; or (iii) the Beaver
Lake Common Shareholders shall not approve the Arrangement at the
Beaver Lake Shareholders Meeting or at any adjournment thereof; (c) by
Beaver Lake if (i) Greka shall have failed to comply in any material
respect with any of the covenants or agreements contained in this
Agreement to be complied with or performed by it at or prior to such
date of termination (provided such breach has not been cured within 30
days following receipt by Greka of written notice from Beaver Lake of
such breach and is existing at the time of termination of this
Agreement); or (ii) any representation or warranty of Greka contained
in this Agreement shall not be true in all respects when made (provided
such breach has not been cured within 30 days following receipt by
Greka of written notice from Beaver Lake of such breach and is existing
at the time of termination of this Agreement) or on and as of the
Effective Date as if made on and as of the Effective Date (except to
the extent it relates to a particular date), except for such failures
to be so true and correct which would not individually or in the
aggregate, reasonably be expected to have a Xxxxx XXX, assuming the
effectiveness of the Arrangement;
B-25
(d) by Greka if (i) Beaver Lake shall have failed to comply in any material
respect with any of the covenants or agreements contained in this
Agreement to be complied with or performed by Beaver Lake at or prior
to such date of termination (provided such breach has not been cured
within 30 days following receipt by Beaver Lake of written notice from
Greka of such breach and is existing at the time of termination of this
Agreement); (ii) any representation or warranty of Beaver Lake
contained in this Agreement shall not be true in all respects when made
(provided such breach has not been cured within 30 days following
receipt by Beaver Lake of written notice from Greka of such breach and
is existing at the time of termination of this Agreement) or on and as
of the Effective Date as if made on and as of the Effective Date
(except to the extent it relates to a particular date), except for such
failures to be so true and correct which would not individually or in
the aggregate, reasonably be expected to have a Beaver Lake MAE
assuming the effectiveness of the Arrangement; or (iii) the Board of
Directors of Beaver Lake withdraws, modifies or changes the
Recommendation in a manner adverse to Greka or shall have resolved to
do any of the foregoing.
7.2 Effect of Termination
In the event of termination of this Agreement as provided in Section
7.1, this Agreement shall forthwith become void and there shall be no liability
or obligation on the part of Greka, or Beaver Lake, except such termination
shall not relieve any party hereto for any intentional breach prior to such
termination by a party hereto of any of its representations or warranties or of
any of its covenants or agreements set forth in this Agreement.
7.3 Waiver and Amendment
Any provision of this Agreement may be waived at any time by the party
that is, or whose shareholders are, entitled to the benefits thereof. This
Agreement may not be amended or supplemented at any time, except by an
instrument in writing signed on behalf of each party hereto, provided that after
this Agreement has been approved and adopted by the Beaver Lake Common
Shareholders, this Agreement may only be amended without further authorization
if such amendment is not prejudicial to the Beaver Lake Common Shareholders and
is not otherwise prohibited by law. The waiver by any party hereto of any
condition or of a breach of another provision of this Agreement shall not
operate or be construed as a waiver of any other condition or subsequent breach.
The waiver by any party hereto of any of the conditions precedent to its
obligations under this Agreement shall not preclude it from seeking redress for
breach of this Agreement other than with respect to the condition so waived.
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7.4 Nonsurvival of Representations and Warranties
The representations and warranties in this Agreement shall remain in
effect only until the Effective Date, at which time they will expire.
7.5 Public Statements
Beaver Lake and Greka agree to consult with each other prior to issuing
any press release or otherwise making any public statement with respect to the
transactions contemplated hereby.
7.6 Assignment
This Agreement shall enure to the benefit of and will be binding upon
the parties hereto and their respective legal representatives, successors and
permitted assigns.
7.7 Notices
All notices, requests, demands, claims and other communications which
are required to be or may be given under this Agreement shall be in writing and
shall be deemed to have been duly given if (i) delivered in person or by
courier, (ii) sent by facsimile transmission, answer back requested, or (iii)
mailed, certified first class mail, postage prepaid, return receipt requested,
to the parties hereto at the following addresses:
if to Beaver Lake: Beaver Lake Resources Corporation
1204 Dome Tower - Toronto Dominion Square
000 - 0xx Xxxxxx X.X.
Xxxxxxx, Xxxxxxx, Xxxxxx X0X 0X0
Attn: President
Facsimile: 000 000-0000
with a copy to: XxXxxxxxx Xxxx Xxxxx
3200, 000 - 0xx Xxxxxx X.X.
Xxxxxxx, Xxxxxxx, Xxxxxx X0X 0X0
Attn: J. Xxxxxxxx Xxxxxxxxx
Facsimile: 403 260-1418
if to Greka: Ballard, Spahr, Xxxxxx & Xxxxxxxxx
0000 - 00xx Xxxxxx, Xxxxx 0000
Xxxxxx, Xxxxxxxx, X.X.X. 00000
Attn: Mr. Xxxxx Xxxxxxxx
Facsimile: 000-000-0000
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with a copy to: May Xxxxxx Xxxxxx Xxxxx
#0000, 000 - 0xx Xxxxxx X.X.
Xxxxxxx, Xxxxxxx, Xxxxxx X0X 0X0
Attn: Xx. Xxxx Xxxxxxx
Facsimile: 403
or to such other address as any party shall have furnished to the other by
notice given in accordance with this Section 7.7. Such notices shall be
effective, (i) if delivered in person or by courier, upon actual receipt by the
intended recipient, (ii) if sent by facsimile transmission, when the answer back
is received, or (iii) if mailed, upon the earlier of five days after deposit in
the mail and the date of delivery as shown by the return receipt therefor.
7.8 Governing Law
All questions arising out of this Agreement and the rights and
obligations created herein, or its validity, existence, interpretation,
performance or breach shall be governed by the laws of the Province of Alberta
and the laws of Canada applicable therein.
7.9 Severability
If any term, provision, covenant or restriction of this Agreement is
held by a court of competent jurisdiction to be invalid, void or unenforceable,
the remainder of the terms, provisions, covenants and restrictions of this
Agreement shall continue in full force and effect and shall in no way be
affected, impaired or invalidated.
7.10 Counterparts
This Agreement may be executed in counterparts, each of which shall be
an original, but all of which together shall constitute one and the same
agreement.
7.11 Entire Agreement: Third Party Beneficiaries
This Agreement, the Plan of Arrangement and the Other Agreements
constitute the entire agreement and supersede all other prior agreements and
understandings, both oral and written, among the parties or any of them, with
respect to the subject matter hereof and neither this nor any document delivered
in connection with this Agreement confers upon any Person not a party hereto any
rights or remedies hereunder.
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7.12 Beaver Lake Disclosure Letter
The Beaver Lake Disclosure Letter, executed by Beaver Lake as of the
date hereof, and delivered to Greka on the date hereof, contains all disclosure
required to be made by Beaver Lake under the various terms and provisions of
this Agreement. Each item of disclosure set forth in the Beaver Lake Disclosure
Letter specifically refers to the Article and Section of the Agreement to which
such disclosure responds, and shall not be deemed to be disclosed with respect
to any other Article or Section of the Agreement. 7.13 Currency
References to "$" or "dollars" in this Agreement are to the lawful
currency of Canada unless otherwise specified.
7.14 Number and Gender
In this Agreement, words importing the singular number only shall
include the plural and vice versa, and words importing any gender shall include
all genders.
7.15 Divisions, Headings, etc.
Division of this Agreement into articles, sections, subsections and
paragraphs and the insertion of headings are for convenience of reference only
and shall not affect the construction or interpretation hereof. The terms
"herein", "hereof", "hereunder" and similar expressions refer to this Agreement
and not to any particular article, section, subsection, paragraph or other
portion hereof and include any exhibits or appendices hereto and any agreement
or instruments supplementary or ancillary hereto.
7.16 Date of Any Action
In the event that any date on which an 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 that is a Business Day.
IN WITNESS WHEREOF, each of the parties caused this Agreement to be
executed on its behalf by its officers thereunto duly authorized, all as of the
date first above written.
GREKA ENERGY CORPORATION
By:
------------------------------
XXXXXXX XXXXXX
BEAVER LAKE RESOURCES CORPORATION
By:
------------------------------
XXXXXXX X. XXXXXX
B-29
Exhibit 1
PLAN OF ARRANGEMENT
MADE PURSUANT TO SECTION 186
OF THE BUSINESS CORPORATIONS ACT (ALBERTA)
ARTICLE 1
INTERPRETATION
1.1 Definitions
In this Plan of Arrangement, the following terms shall have the
following meanings respectively:
"ABCA" means the Business Corporations Act (Alberta), S.A. 1981, C. B-15, as
amended from time to time, including the regulations promulgated thereunder;
"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 in accordance with this Plan of Arrangement or at
the direction of the Court in the Final Order;
"Arrangement Agreement" means the agreement by and between Greka, and Beaver
Lake dated June o, 1999 relating to the Arrangement;
"Articles of Arrangement" means the articles of arrangement in respect of the
Arrangement required by the ABCA to be sent to the Registrar after the Final
Order is made;
"Business Day" means, with respect to any action to be taken, any day other than
Saturday, Sunday or a statutory holiday in the place where such action is to be
taken;
"Court" means the Court of Queen's Bench of Alberta;
"Depositary" means Montreal Trust Company of Canada at its offices located at
000, 000 - 0xx Xxxxxx X.X., Xxxxxxx, Xxxxxxx X0X 0X0;
"Effective Date" means the date the Articles of Arrangement are accepted for
filing by the Registrar;
"Greka" means Greka Energy Corporation, a corporation incorporated under the
laws of the State of Colorado;
"Greka Common Stock" means the common stock of Greka;
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"Final Order" means the final order of the Court made in connection with the
approval of the Arrangement, providing, among other things, for the coming into
effect of the Arrangement;
"Interim Order" means the interim order of the Court made in connection with the
approval of the Arrangement;
"Plan of Arrangement" means this plan of arrangement, as amended or supplemented
from time to time;
"Registrar" means the Registrar of Corporations appointed pursuant to section
253 of the ABCA;
"Beaver Lake" means Beaver Lake Resources Corporation, a corporation
incorporated pursuant to the ABCA;
"Beaver Lake Common Shares" means the common shares in the capital of Beaver
Lake;
"Beaver Lake Common Shareholders" means the holders of the Beaver Lake Common
Shares;
"Beaver Lake Shareholders Meeting" means the special meeting of the shareholders
of Beaver Lake (including any adjournment thereof) that is to be convened as
provided by the Interim Order to consider, and if deemed advisable, approve the
Arrangement;
"Share Exchange Ratio" means 74.40 Beaver Lake Common Shares for each share of
Greka Common Stock.
1.2 Currency
References to "$" or "dollars" in this Plan of Arrangement are to the
lawful currency of Canada unless otherwise specified.
1.3 Number and Gender
In this Plan of Arrangement, words importing the singular number only
shall include the plural and vice versa, and words importing any gender shall
include all genders.
1.4 Divisions, Headings, etc.
Division of this Plan of Arrangement into articles, sections,
subsections and paragraphs and the insertion of headings are for convenience of
reference only and shall not affect the construction or interpretation hereof.
The terms "herein", "hereof", "hereunder" and similar expressions refer to this
Plan of Arrangement and not to any particular article, section, subsection,
paragraph or other portion hereof and include any exhibits or appendices hereto
and any agreement or instruments supplementary or ancillary hereto.
1.5 Date of Any Action
In the event that any date on which an 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 that is a Business Day.
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ARTICLE 2
EFFECT OF PLAN OF ARRANGEMENT
2.1 Arrangement Agreement
This Plan of Arrangement is made pursuant to, is subject to the
provisions of, and forms part of the Arrangement Agreement.
2.2 Effectiveness of the Arrangement
The steps of the Arrangement set forth in Article 3 hereof shall occur
on the Effective Date effective upon the acceptance for filing of the Articles
of Arrangement by the Registrar in the order in which such steps appear in this
Plan of Arrangement and without any further act or formality.
2.3 Binding Effect
This Plan of Arrangement shall be binding on all Beaver Lake Common
Shareholders, Greka and Beaver Lake upon the acceptance for filing of the
Articles of Arrangement by the Registrar.
2.4 Effectiveness of Provisions
The Articles of Arrangement shall be filed with the Registrar with the
purpose and intent that none of the provisions of this Plan of Arrangement shall
become effective unless all of the provisions of this Plan of Arrangement shall
have become effective.
ARTICLE 3
THE ARRANGEMENT
3.1 Steps of the Arrangement
On the Effective Date, each of the events set out below shall occur and
be deemed to occur in the sequence set out therein without further act or
formality:
(a) each issued and outstanding Beaver Lake Common Share held other than by
Greka (other than Beaver Lake Common Shares which are deemed to have
been cancelled pursuant to Section 5.1(a)) shall be, and be deemed to
be, exchanged for Greka Common Stock on the basis of one share of Greka
Common Stock for every 74.40 Beaver Lake Common Shares. If the
application of the foregoing exchange ratio to the aggregate number of
Beaver Lake Common Shares beneficially owned by a Beaver Lake Common
Shareholder would result in such holder being entitled to receive a
fraction of a share of Greka Common Stock, then in respect of such
fraction the holder shall receive a cash payment from Greka for an
amount equal to the fractional interest multiplied by the simple
average closing price of the Greka Common Stock on the NASDAQ on the
last three Business Days immediately preceding the Effective Date;
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3.2 Effect of the Arrangement
(a) No notice to the holders of the Beaver Lake Common Shares shall be
required to effect the exchange of Beaver Lake Common Shares for shares
of Greka Common Stock pursuant to Section 3.1(a) and upon the deposit
of a sufficient number of shares of Greka Common Stock to effect the
exchange being deposited with the Depositary, the Beaver Lake Common
Shares are, and shall for all purposes be deemed to be, exchanged as of
the Effective Date for shares of Greka Common Stock and thereafter a
holder of Beaver Lake Common Shares whose shares are to be exchanged
shall not, as such, have any rights against Beaver Lake.
(b) Upon surrendering the certificate for Beaver Lake Common Shares, each
former holder of Beaver Lake Common Shares (other than Greka) shall be
entitled to receive shares of Greka Common Stock in exchange for the
Beaver Lake Common Shares held by that holder, plus any declared and
unpaid dividends on such shares.
(c) With respect to each Beaver Lake Common Share to which Section 3.1(a)
or Section 3.1(c) applies, the holder thereof shall cease to be a
holder of such shares and such holder's name shall be removed from the
register of Beaver Lake Common Shares with respect to such shares shall
be registered as the holder of such shares.
ARTICLE 4
OUTSTANDING CERTIFICATES AND PAYMENTS
4.1 Beaver Lake Outstanding Certificates
Subject to Section 5.1, after the Effective Date, certificates formerly
representing Beaver Lake Common Shares held by Beaver Lake Common Shareholders
other than Greka shall represent only the right to receive certificates
representing shares of Greka Common Stock that the former holder of such Beaver
Lake Common Shares is entitled to receive pursuant to Article 3, subject to
compliance with the requirements set forth in this Article 4.
4.2 Letter of Transmittal
As soon as practicable after the Effective Date, Beaver Lake shall
forward or cause to be forwarded to each Beaver Lake Common Shareholder (other
than those Beaver Lake Common Shareholders who have exercised their dissent
rights) at the address of such holder as it appears in the share register of
Beaver Lake and to Greka, a letter of transmittal containing, among other
things, instructions for obtaining delivery of the shares of Greka Common Stock
pursuant to this Plan of Arrangement. Such shareholders shall be entitled to
receive certificates representing the shares of Greka Common Stock upon
delivering the certificate formerly representing such holder's Beaver Lake
Common Shares to the Depositary or as the Depositary may otherwise direct and in
accordance with the instructions contained in the letter of transmittal. Such
certificate shall be accompanied by the letter of transmittal, duly completed,
and such other documents as the Depositary may reasonably require.
B-33
4.3 Registration
In respect of Beaver Lake Common Shareholders other than Greka, the
Depositary shall register shares of Greka Common Stock in the name of each such
shareholder or as otherwise instructed in the letter of transmittal, and shall
deliver such shares of Greka Common Stock as each such holder may direct in such
letter of transmittal, as soon as practicable after receipt by the Depositary of
such documents.
4.4 Rights Extinguished
After the Effective Date, the Beaver Lake Common Shareholders (other
than Greka) shall not be entitled to any interest, dividend, premium or other
payment on or with respect to Beaver Lake Common Shares other than the shares of
Greka Common Stock that they are entitled to receive pursuant to this Plan of
Arrangement. After the Effective Date, Greka shall not be entitled to any
interest, dividend, premium or other payment on or with respect to the Beaver
Lake Common Shares that Greka is entitled to receive pursuant to this Plan of
Arrangement.
ARTICLE 5
SHAREHOLDER DISSENT RIGHTS
5.1 Dissent Rights
Beaver Lake Common Shareholders who have given a demand for payment
that remains outstanding on the Effective Date in accordance with the rights of
dissent in respect of the Plan of Arrangement granted by the Interim Order and
who:
(a) are ultimately entitled to be paid for the Beaver Lake Common Shares in
respect of which they dissent in accordance with the provisions of such
Interim Order whether by order of a Court (as defined in the ABCA) or
by acceptance of an offer made pursuant to such Interim Order, shall be
deemed to have transferred such Beaver Lake Common Shares to Beaver
Lake for cancellation immediately prior to the implementation of the
Arrangement on the Effective Date and such shares shall be deemed to no
longer be issued and outstanding as of the Effective Date; or
(b) are ultimately not so entitled to be paid for the Beaver Lake Common
Shares in respect of which they dissent for any reason, shall not be,
or be reinstated as, shareholders of Beaver Lake but for purposes of
receipt of consideration shall be treated as if they had participated
in this Plan of Arrangement on the same basis as a non-dissenting
holder of Beaver Lake Common Shares and such holders shall accordingly
be entitled to receive shares of Greka Common Stock as such
non-dissenting holders are entitled to receive on the basis determined
in accordance with Article 3 and shall be deemed to have transferred
Beaver Lake Common Shares as of the Effective Date.
B-34
ARTICLE 6
AMENDMENTS
6.1 Amendments
(a) This Plan of Arrangement may be amended, modified and/or supplemented
at any time and from time to time provided that any such amendment,
modification, or supplement must be contained in a written document
that is (a) agreed to by each of the parties to the Arrangement
Agreement, (b) filed with the Court, and, if made following the Beaver
Lake Shareholders Meeting, approved by the Court, and (c) communicated
to holders of Beaver Lake Common Shares in the manner required by the
Court (if so required).
(b) Any amendment, modification or supplement to this Plan of Arrangement
may be proposed by Beaver Lake at any time prior to or at the Beaver
Lake Shareholders Meeting (provided that each of the parties to the
Arrangement Agreement shall have consented thereto) with or without any
other prior notice or communication, and if so proposed and accepted by
the persons voting at the Beaver Lake Shareholders Meeting (other than
as may be required under the Court's interim order), shall become part
of this Plan of Arrangement for all purposes.
(c) Any amendment, modification or supplement to this Plan of Arrangement
that is approved by the Court following the Beaver Lake Shareholders
Meeting shall be effective only (i) if it is consented to by each of
the parties to the Arrangement Agreement, and (ii) if required by the
Court or Applicable law, it is consented to by the holders of the
Beaver Lake Common Shares.
B-35
