PRE-ACQUISITION AGREEMENT
Between
BURLINGTON RESOURCES INC.
and
CANADIAN HUNTER EXPLORATION LTD.
Dated as of October 8, 2001
TABLE OF CONTENTS
Page
ARTICLE 1 INTERPRETATION.....................................................1
.1 Definitions......................................................1
.2 Singular, Plural, etc............................................4
.3 Deemed Currency..................................................4
.4 Headings, etc....................................................4
.5 Date for any Action..............................................4
.6 Governing Law....................................................4
.7 Attornment.......................................................4
.8 Accounting Matters...............................................5
.9 Knowledge........................................................5
.10 Interpretation Not Affected by Party Drafting...................5
.11 Incorporation of Schedules......................................5
ARTICLE 2 THE OFFER..........................................................5
.1 The Offer........................................................5
.2 Canadian Hunter Directors' Circular..............................7
.3 Offer Documents..................................................8
.4 Outstanding Stock Options and Deferred Share Units...............8
.5 Rights Plan......................................................9
.6 Employee Plans...................................................9
ARTICLE 3 PUBLICITY AND SOLICITATION........................................10
.1 Publicity.......................................................10
.2 Solicitation....................................................10
ARTICLE 4 TRANSACTIONS FOLLOWING COMPLETION OF THE OFFER....................10
.1 Second Stage Transaction........................................10
.2 Information Circular, Etc.......................................11
ARTICLE 5 REPRESENTATIONS AND WARRANTIES OF BURLINGTON......................11
.1 Organization and Qualification..................................11
.2 Authority Relative to this Agreement............................11
.3 No Violations...................................................12
.4 Funds Available.................................................12
ARTICLE 6 REPRESENTATIONS AND WARRANTIES OF CANADIAN HUNTER.................12
.1 Organization and Qualification..................................12
.2 Authority Relative to this Agreement............................13
.3 No Violations...................................................13
.4 Capitalization..................................................14
.5 No Material Adverse Change......................................14
.6 No Undisclosed Material Liabilities.............................14
.7 Impairment......................................................14
.8 Officer Obligations.............................................14
.9 Financial Advisor...............................................14
.10 Conduct of Business............................................15
.11 Reports........................................................15
.12 Subsidiaries...................................................16
.13 Compliance with Law............................................16
.14 Material Agreements............................................16
.15 Disclosure.....................................................16
.16 Employment Agreements..........................................16
.17 U.S. Securities Law Matters....................................16
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.18 Employee Benefit Plans.........................................17
.19 Books and Records..............................................17
.20 Litigation, Etc................................................17
.21 Environmental..................................................17
.22 Tax Matters....................................................17
.23 Reporting Issuer Status........................................18
.24 Debt and Working Capital.......................................19
.25 Confidentiality Agreements.....................................19
.26 Insurance......................................................19
ARTICLE 7 CONDUCT OF BUSINESS...............................................19
.1 Conduct of Business by Canadian Hunter..........................19
.2 Provision of Information; Access................................20
ARTICLE 8 COVENANTS OF CANADIAN HUNTER......................................21
.1 Notice of Material Change.......................................21
.2 Non-Completion Fee..............................................21
.3 No Solicitation.................................................22
.4 Canadian Hunter Board of Directors..............................23
.5 Structure of Transaction........................................23
.6 Financial and Other Information.................................23
ARTICLE 9 COVENANTS OF BURLINGTON...........................................24
.1 Availability of Funds...........................................24
.2 Other Covenants.................................................24
ARTICLE 10 MUTUAL COVENANTS.................................................24
.1 Other Filings...................................................24
.2 Additional Agreements...........................................24
ARTICLE 11 TERMINATION, AMENDMENT AND WAIVER................................25
.1 Termination.....................................................25
.2 Effect of Termination...........................................26
.3 Amendment.......................................................26
.4 Waiver..........................................................26
ARTICLE 12 GENERAL PROVISIONS...............................................26
.1 Notices.........................................................26
.2 Miscellaneous...................................................27
.3 Directors' and Officers' Insurance..............................27
.4 Indemnities.....................................................27
.5 Employment Agreements...........................................28
.6 Third Party Beneficiaries.......................................28
.7 Assignment......................................................28
.8 Expenses........................................................28
.9 Confidentiality Agreement.......................................28
.10 Survival of Representations and Warranties.....................28
.11 Severability...................................................28
.12 Counterpart Execution..........................................29
SCHEDULE A - CONDITIONS TO THE OFFER
SCHEDULE B - FORM OF PRE-TENDER AGREEMENT
SCHEDULE C - FORM OF JOINT PRESS RELEASE
PRE-ACQUISITION AGREEMENT
THIS AGREEMENT made as of the 8th day of October, 2001,
BETWEEN:
BURLINGTON RESOURCES INC., a corporation duly incorporated under and
governed by the laws of the State of Delaware and having an office in the
City of Houston, in the State of Texas (hereafter referred to as
"Burlington")
- and -
CANADIAN HUNTER EXPLORATION LTD., a corporation duly amalgamated under and
governed by the laws of Alberta and having its head and principal office in
the City of Calgary, in the Province of Alberta (hereafter referred to as
"Canadian Hunter")
WHEREAS the Board of Directors of each of Burlington and Canadian Hunter
has determined that it is in the best interests of their respective corporations
and shareholders that Burlington and Canadian Hunter combine their business
interests with the result that there shall be one economic enterprise and that
such combination be effected through an offer by Burlington to purchase all of
the outstanding shares of Canadian Hunter;
AND WHEREAS the Board of Directors of Canadian Hunter has determined to
unanimously recommend acceptance of the Burlington offer to the shareholders of
Canadian Hunter;
AND WHEREAS Burlington is willing to make an offer subject to the terms and
conditions of this Agreement;
NOW THEREFORE IN CONSIDERATION OF the mutual covenants hereinafter
contained and other good and valuable consideration (the receipt and adequacy
whereof is hereby acknowledged), the parties hereto agree as follows:
ARTICLE 1
INTERPRETATION
.1 Definitions
In this Agreement, unless there is something in the subject matter or
context inconsistent therewith:
"Act" means the Business Corporations Act (Alberta) as the same has been and may
hereafter from time to time be amended;
"affiliates" has the meaning set forth in the Act;
"Agreement", "this Agreement", "herein", "hereto", and "hereof" and similar
expressions refer to this Agreement, as the same may be amended or supplemented
from time to time and, where applicable, to the appropriate Schedules hereto;
"Burlington" means Burlington Resources Inc.;
"Business Day" means any day excepting a Saturday, Sunday or statutory holiday
in Calgary, Alberta;
"Canadian Hunter" means Canadian Hunter Exploration Ltd.;
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"Canadian Hunter Governing Documents" means the Articles of Amalgamation and
By-laws of Canadian Hunter;
"Canadian Hunter Options" means the outstanding options to acquire Canadian
Hunter Shares under the Stock Option Plan;
"Canadian Hunter Shares" means common shares in the share capital of Canadian
Hunter;
"Canadian Hunter Subsidiaries" 945266 Alberta Ltd., 000000 Xxxxxxx Ltd., Atalaya
Energy S.A., Canadian Hunter Holdings Ltd., Canadian Hunter Argentina S.A.,
Canadian Hunter Resources (a general partnership), Kintail Energy Inc. and Pogo
Canada Limited;
"Canadian Hunter Year End Bonus Arrangements" has the meaning set forth in
Section 2.6(c) and as set forth in the Disclosure Letter;
"Canadian GAAP" means Canadian generally accepted accounting principles applied
on a consistent basis;
"Deferred Share Unit Plan" means the deferred share unit plan of Canadian Hunter
dated as of January 1, 2001;
"Deferred Share Units" means the bookkeeping entry, equivalent in value to a
Canadian Hunter Share, credited to non-employee directors under the Deferred
Share Unit Plan;
"diluted basis" means, with respect to the number of outstanding Canadian Hunter
Shares at any time, such number of outstanding Canadian Hunter Shares calculated
assuming that all Canadian Hunter Options, Deferred Share Units and other rights
other than the Rights to purchase Canadian Hunter Shares are exercised;
"Disclosure Letter" means the letter dated October 8, 2001 delivered
concurrently with this Agreement;
"Effective Time" means the time that Burlington shall have acquired ownership of
and paid for at least the Minimum Required Shares pursuant to the terms of the
Offer;
"Expiry Time" means the Initial Expiry Time unless the Offer has been or is
required to be extended, in which case it means the expiry time of the Offer as
extended, or required to be extended, from time to time;
"HSR Act" means the United States Xxxx-Xxxxx Xxxxxx Antitrust Improvements Act
of 1976, as amended;
"Initial Expiry Time" means 1:01 a.m. (Calgary time) on the first Business Day
which falls after the 35th day following the day of the mailing of the Offer
Documents to the shareholders of Canadian Hunter (where the first day of this
period is the day immediately following the day of mailing);
"material" means, where used in relation to Canadian Hunter and its
subsidiaries, a fact, asset, liability, transaction or circumstance concerning
the business, assets, rights, liabilities, capitalization, operations, prospects
or financial condition of Canadian Hunter and its subsidiaries, taken as a
whole, that: (i) would be reasonably likely to have a significant effect on the
market price or value of the Canadian Hunter Shares; or (ii) that would prevent
or materially delay completion of the Offer in accordance with this Agreement,
or any compulsory acquisition or Second Stage Transaction;
"Material Adverse Change" means any change (or any condition, event or
development involving a prospective change) in the business, operations, results
of operations, assets, capitalization, financial condition, licenses, permits,
concessions, rights, liabilities, prospects or privileges, whether contractual
or otherwise, of Canadian Hunter or any of its subsidiaries which is, or could
reasonably be expected to
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be, materially adverse to the business of Canadian Hunter and its subsidiaries
considered as a whole other than a change: (i) which has prior to the date
hereof been publicly disclosed or otherwise disclosed in the Disclosure Letter;
(ii) resulting from conditions affecting the oil and gas industry as a whole;
(iii) resulting from general economic, financial, currency exchange, securities
or commodity market conditions in Canada or elsewhere; or (iv) resulting from
changes in the market price of crude oil or natural gas;
"Minimum Condition" means the condition set forth in paragraph (a) of Schedule
A;
"Minimum Required Shares" means at least that number of the outstanding Canadian
Hunter Shares required pursuant to the Minimum Condition unless Burlington shall
have waived the Minimum Condition in which case "Minimum Required Shares" means
that number of the outstanding Canadian Hunter Shares which Burlington takes up
on the Take-up Date, provided that such number of Canadian Hunter Shares shall
not be less than 50% of the issued and outstanding Canadian Hunter Shares on a
diluted basis (exclusive of any Canadian Hunter Shares that Burlington owned
prior to the date the Offer Documents are mailed);
"Offer" has the meaning set forth in Section 2.1(a);
"Offer Documents" has the meaning set forth in Section 2.3(a);
"Officer Obligations" means the obligations of Canadian Hunter to its officers
for severance or termination payments in connection with a termination of
employment or change of control of Canadian Hunter pursuant to any written
agreements, in each case as listed in the Disclosure Letter;
"Pension Plans" means the defined benefit pension plan of Canadian Hunter, the
defined contribution pension plan of Canadian Hunter and the supplementary
retirement plan of Canadian Hunter;
"Rights" means the rights issued to holders of Canadian Hunter Shares pursuant
to the Rights Plan;
"Rights Plan" means the Shareholder Rights Plan Agreement dated as of March 21,
2000 between Canadian Hunter and Montreal Trust Company of Canada (now
Computershare Trust Company of Canada);
"Second Stage Transaction" has the meaning set forth in Section 4.1;
"Securities Authorities" means the appropriate securities commissions or similar
regulatory authorities in Canada and each of the provinces and territories
thereof and in the United States and each of the states thereof;
"Securities Laws" has the meaning set forth in Section 2.3(a);
"Share Purchase Plan" means the Share Purchase Plan of Canadian Hunter as of May
16, 2001;
"Share Savings Plan" means the Employee Share Savings Plan of Canadian Hunter as
of December 31, 1998;
"Stock Option Plan" means the Incentive Share Option Plan of Canadian Hunter as
of May 16, 2001;
"subsidiary" has the meaning set forth in the Securities Act (Alberta);
"Superior Proposal" has the meaning set forth in Section 8.3;
"Take-over Proposal" means a proposal or offer (other than by Burlington),
whether or not subject to a due diligence condition, whether or not in writing,
to acquire in any manner, directly or indirectly,
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beneficial ownership of all or a material portion of the assets of Canadian
Hunter or any material Canadian Hunter Subsidiary or to acquire in any manner,
directly or indirectly, beneficial ownership or control or direction over more
than 20% of the outstanding voting shares of Canadian Hunter whether by an
arrangement, amalgamation, merger, consolidation or other business combination,
by means of a sale of shares of capital stock, sale of assets, tender offer or
exchange offer or similar transaction involving Canadian Hunter or any Canadian
Hunter Subsidiary including without limitation any single or multi-step
transaction or series of related transactions which is structured to permit such
third party to acquire beneficial ownership of all or a material portion of the
assets of Canadian Hunter or any Canadian Hunter Subsidiary or to acquire in any
manner, directly or indirectly, more than 20% of the outstanding voting shares
of Canadian Hunter (other than the transactions contemplated by this Agreement);
and
"Take-up Date" means the date that Burlington first takes up and acquires
Canadian Hunter Shares pursuant to the Offer.
.2 Singular, Plural, etc.
Words importing the singular number include the plural and vice versa and
words importing gender include the masculine, feminine and neuter genders.
.3 Deemed Currency
In the absence of a specific designation of any currency any undescribed
dollar amount herein shall be deemed to refer to Canadian dollars.
.4 Headings, etc.
The division of this Agreement into Articles and Sections, the provision of
a table of contents hereto and the insertion of the recitals and headings are
for convenience of reference only and shall not affect the construction or
interpretation of this Agreement and, unless otherwise stated, all references in
this Agreement or in the Schedules to Articles, Sections and Schedules refer to
Articles, Sections and Schedules of and to this Agreement or of the Schedules in
which such reference is made.
.5 Date for any Action
In the event that any date on which any action is required to be taken
hereunder by any of the parties hereunder is not a Business Day, such action
shall be required to be taken on the next succeeding day which is a Business
Day.
.6 Governing Law
This Agreement shall be governed by and interpreted in accordance with the
laws of the Province of Alberta and the federal laws of Canada applicable
therein.
.7 Attornment
The parties hereby irrevocably and unconditionally consent to and submit to
the courts of the Province of Alberta for any actions, suits or proceedings
arising out of or relating to this Agreement or the matters contemplated hereby
(and agree not to commence any action, suit or proceeding relating thereto
except in such courts) and further agree that service of any process, summons,
notice or document by single registered mail to the addresses of the parties set
forth in this Agreement shall be effective service of process for any action,
suit or proceeding brought against either party in such court. The parties
hereby irrevocably and unconditionally waive any objection to the laying of
venue of any action, suit or proceeding arising out of this Agreement or the
matters contemplated hereby in the courts of the Province of Alberta and hereby
further irrevocably and unconditionally waive and agree not to plead or claim in
any such court that any such action, suit or proceeding so brought has been
brought in an inconvenient forum.
5
.8 Accounting Matters
Unless otherwise stated, all accounting terms used in this Agreement in
respect of Canadian Hunter shall have the meanings attributable thereto under
Canadian GAAP and all determinations of an accounting nature in respect of
Canadian Hunter required to be made shall be made in a manner consistent with
Canadian GAAP and past practice.
.9 Knowledge
Where in this Agreement a representation or warranty is made on the basis
of the knowledge or awareness of Canadian Hunter, such knowledge or awareness
consists only of the actual knowledge or awareness, as of the date of this
Agreement, of the senior executive officers of Canadian Hunter, but does not
include the knowledge or awareness of any other individual or any constructive,
implied or imputed knowledge.
.10 Interpretation Not Affected by Party Drafting
The parties hereto acknowledge that their respective legal counsel have
reviewed and participated in settling the terms of this Agreement, and the
parties hereby agree that any rule of construction to the effect that any
ambiguity is to be resolved against the drafting party will not be applicable in
the interpretation of this Agreement.
.11 Incorporation of Schedules
Schedules A to C attached hereto and described below shall, for all
purposes hereof, form an integral part of this Agreement.
Schedule A Conditions to the Offer
Schedule B Form of Pre-tender Agreement
Schedule C Form of Joint Press Release
ARTICLE 2
THE OFFER
.1 The Offer
(a) Subject to the terms and conditions of this Agreement, Burlington shall
mail to holders of Canadian Hunter Shares and Canadian Hunter Options as
soon as practicable but in any event not later than 11:59 p.m. (Calgary
time) on October 19, 2001, an offer to purchase all of the outstanding
Canadian Hunter Shares (including the associated Rights) including any
Canadian Hunter Shares which may become outstanding pursuant to the
exercise of outstanding Canadian Hunter Options and pursuant to the
exchange of outstanding Deferred Share Units, for a price of $53.00 in cash
for each Canadian Hunter Share which offer shall be made in accordance with
this Agreement, the Act and Securities Laws and be subject to the
conditions set forth in Schedule A hereto (the "Offer", which term shall
include any amendments to, or extensions of, such Offer, including, without
limitation, increasing the consideration, removing or waiving any condition
or extending the date by which Canadian Hunter Shares may be tendered).
Burlington and Canadian Hunter shall cooperate in making on a timely basis
any filings with respect to the Offer, including amendments thereafter on a
timely basis as required by Securities Laws. The Offer shall be prepared in
both the English and French languages and in accordance with this
Agreement, the Act and Securities Laws. Burlington shall provide Canadian
Hunter with a draft copy of the Offer Documents prior to mailing for its
review and comment.
(b) Burlington may make the Offer itself or through any direct or indirect
subsidiary. In the event that a Burlington subsidiary makes or participates
in the making of the Offer, the term "Burlington" as used herein shall
include such subsidiary, other than in Article 5 where the term
6
"Burlington" shall not include such subsidiary, but Burlington shall
continue to be liable to Canadian Hunter, as principal obligor, for such
subsidiary's obligations hereunder and for any default by such subsidiary
in the performance of its obligations hereunder.
(c) The Offer shall expire at the Initial Expiry Time, except that the Offer
may be extended, at the sole discretion of Burlington, if the conditions
thereto set forth in Schedule A hereto are not satisfied on the date and
time at which the Offer expires and if Burlington determines, acting
reasonably, that there is a reasonable prospect that the conditions of the
Offer may not be satisfied prior to the Expiry Time. In addition, in the
event that any appropriate regulatory approval is not obtained prior to the
time the Offer is scheduled to terminate, unless such approval has been
denied, Burlington agrees that it will extend the Offer for not less than
two additional successive 10 day periods, if upon the expiry of any
extension, the appropriate regulatory approval has not been obtained.
In the event that at the Expiry Time, all conditions of the Offer contained
in Schedule A hereto have been satisfied or waived other than the condition
set forth in paragraph (g) of Schedule A, Burlington hereby agrees to
extend the Offer for a period of time not less than 10 days past the Expiry
Time. If the condition set forth in paragraph (g) of Schedule A is not
satisfied at the end of the extended Offer period, Burlington shall have no
further obligation to extend the Offer.
Subject to the satisfaction or waiver of the conditions set forth in
Schedule A hereto, Burlington shall within three Business Days accept for
payment and pay for all Canadian Hunter Shares validly tendered (and not
properly withdrawn) pursuant to the Offer. Each of Burlington and Canadian
Hunter shall use all commercially reasonable efforts to consummate the
Offer, subject to the terms and conditions thereof.
(d) It is agreed that Burlington may, in its sole discretion, waive any term or
condition of the Offer for its benefit provided that if Burlington takes up
and pays for any Canadian Hunter Shares it shall acquire not less than the
Minimum Required Shares. Burlington agrees that it shall not amend any term
or condition of the Offer (which for greater certainty, does not include
waiving, in whole or part, a condition of the Offer) in a manner that is
materially adverse to the holders of Canadian Hunter Shares without the
prior written consent of Canadian Hunter other than to: (i) comply with
Section 2.1(c); (ii) extend the Offer, if, at the initial or extended date
on which the Offer is scheduled to terminate, any of the conditions to the
Offer shall not be satisfied or waived by Burlington, until such time as
such conditions are satisfied or waived by Burlington; (iii) extend the
Offer for any period required by any rule, regulation, interpretation or
position of the Securities Authorities applicable to the Offer or any
period required by applicable law; or (iv) comply with the legal
obligations of Burlington with respect to any amendment, modification or
change of the Offer.
Notwithstanding and without limiting the foregoing, Burlington may at any
time following the Initial Expiry Time, reduce the Minimum Condition to a
percentage not less than 50% (exclusive of any Canadian Hunter Shares that
Burlington owned prior to the date the Offering Documents are mailed) and
shall, subject to the conditions of the Offer being satisfied or waived,
take up and pay for all Canadian Hunter Shares validly deposited to the
Offer, provided that, after Burlington reduces the Minimum Condition,
Burlington extends the Offer by a 10 day period and agrees to extend the
Offer for not less than two additional successive 10 day periods if, upon
the expiry of any extension, the Minimum Condition has not been satisfied.
Any agreement of Burlington referred to in the foregoing sentence shall
continue after the Effective Time until such agreement shall have been
performed or this Agreement is terminated.
Burlington shall provide a draft of any proposed amendment, modification or
change to the Offer to Canadian Hunter.
(e) Burlington will instruct the depositary under the Offer to advise Canadian
Hunter from time to time, not less frequently than every three Business
Days until the day immediately prior to the Expiry Time and thereafter on
an hourly basis, if requested by Canadian Hunter and in such
7
manner as Canadian Hunter may reasonably request, as to the number of
Canadian Hunter Shares that have been tendered (and not withdrawn) under
the Offer.
(f) Burlington's obligation to make the Offer as set forth in Section 2.1(a) is
conditional upon the execution and delivery to Burlington, concurrently
with the execution of this Agreement, of pre-tender agreements referred to
in Section 2.2(b).
(g) Notwithstanding any of the other terms of this Agreement, Burlington shall
not be required to make the Offer if, on or before the date Burlington
would otherwise be required to make the Offer under the terms of this
Agreement:
(i) any of the representations or warranties of Canadian Hunter contained
herein shall not be true and correct in all material respects or
Canadian Hunter shall not have complied in all material respects with
each of its covenants set out herein; or
(ii) the Board of Directors of Canadian Hunter shall have withdrawn its
positive recommendation of the Offer; or
(iii) a Material Adverse Change shall have occurred, or a person shall have
commenced a bona fide action for injunctive relief against the
performance of this Agreement or the completion of the Offer, or
another event shall have occurred or circumstances shall exist which
would make it impossible or highly unlikely to satisfy one or more of
the conditions of the Offer set forth in Schedule A hereto.
The foregoing conditions are for the sole benefit of Burlington and may be
waived by Burlington at any time.
.2 Canadian Hunter Directors' Circular
(a) Canadian Hunter hereby consents to the Offer as set forth in Section 2.1
and confirms that its Board of Directors has resolved that it will
recommend that holders of Canadian Hunter Shares accept the Offer, has
approved the entering into of this Agreement and has received the opinion
of its financial advisors that the consideration payable pursuant to the
Offer is fair, from a financial point of view, to the holders of Canadian
Hunter Shares and has resolved to unanimously recommend acceptance of the
Offer by the holders of Canadian Hunter Shares, subject to Section 8.3.
Canadian Hunter shall prepare and make available for mailing with the
Offer, in both the English and French languages, sufficient copies of a
directors' circular prepared in accordance with Securities Laws. The
directors' circular will set forth (among other things) the recommendation
of the Board of Directors of Canadian Hunter as described above. Canadian
Hunter shall provide Burlington with a draft copy of the directors'
circular prior to its finalization for Burlington's review and comment.
(b) The Board of Directors of Canadian Hunter has been advised that the
directors and officers of Canadian Hunter intend to tender their Canadian
Hunter Shares under the Offer and have agreed to elect that, in lieu of
exercising their Canadian Hunter Options, Canadian Hunter will pay the
difference between the exercise price of their Canadian Hunter Options and
the purchase price for the Canadian Hunter Shares under the Offer
immediately after the Take-up Date in exchange for the termination of their
Canadian Hunter Options and providing that such director or officer agrees
to surrender any remaining unexercised options to Canadian Hunter for
cancellation for no consideration effective immediately after the Take-up
Date. Canadian Hunter represents that its director's and officer's have
agreed to execute pre-tender agreements (in the form of the agreement
attached hereto as Schedule B) and agrees to use its reasonable best
efforts to deliver such agreements within 72 hours of the execution of this
Agreement duly executed by all of its directors and officers. The
directors' circular shall reflect the execution and delivery of such
pre-tender agreements and the agreement of the directors and officers to
tender their Canadian Hunter Shares pursuant to the Offer.
8
(c) Canadian Hunter represents that it has obtained advice from CIBC World
Markets Inc. and Xxxxxxx Xxxxx & Co. that the consideration to be offered
to Canadian Hunter's shareholders pursuant to the Offer is fair to holders
of Canadian Hunter Shares from a financial point of view and that such
financial advisor will each provide a written opinion to such effect on or
before October 19, 2001. The fairness opinions will be attached to or
referred to in the directors' circular referred to in Section 2.2(a).
.3 Offer Documents
(a) Burlington shall file or cause to be filed with the appropriate Securities
Authorities an Offer to Purchase and Take-over Bid Circular and the related
Letter of Transmittal and Notice of Guaranteed Delivery pursuant to which
the Offer will be made (collectively, the "Offer Documents"). The Offer
Documents, when filed with the Securities Authorities and when mailed to
holders of Canadian Hunter Shares, shall contain (or shall be amended in a
timely manner to contain) all information which is required to be included
therein in accordance with the Act and any applicable Canadian provincial
securities laws, United States securities laws, the "blue sky" or
securities laws of the states of the United States and any other applicable
law (collectively, the "Securities Laws").
(b) Canadian Hunter agrees to provide such assistance as Burlington or its
agents may reasonably request in connection with communicating the Offer
and any amendments and supplements thereto to the holders of the Canadian
Hunter Shares and to such other persons as are entitled to receive the
Offer under Securities Laws, including providing lists and updated or
supplemental lists of the holders of Canadian Hunter Shares, holders of
Canadian Hunter Options and holders of Deferred Share Units and other
securities convertible into or exchangeable for Canadian Hunter Shares and
mailing labels with respect to all such holders of securities as soon as
possible after the date of this Agreement but in any event no later than
the close of business in Calgary on October 11, 2001 and updates or
supplements thereto from time to time as may be requested by Burlington.
.4 Outstanding Stock Options and Deferred Share Units
(a) Subject to the receipt of any necessary regulatory approvals, persons
holding options pursuant to the Stock Option Plan who may do so under
Securities Laws and in accordance with the Stock Option Plan shall be
entitled to exercise all of their options and tender all Canadian Hunter
Shares issued in connection therewith under the Offer upon payment by
certified cheque or bank draft of the exercise price in full. The Canadian
Hunter Board of Directors shall not, prior to completion of the Offer,
grant additional options pursuant to the Stock Option Plan. It is agreed by
Burlington that all Canadian Hunter Options which have been tendered to
Canadian Hunter for exercise, conditional on Burlington taking up Canadian
Hunter Shares under the Offer ("Conditional Option Exercise"), shall be
deemed to have been exercised concurrently with the take-up of Canadian
Hunter Shares by Burlington. Furthermore, Burlington shall accept as
validly tendered under the Offer as of the Take-up Date all Canadian Hunter
Shares which are to be issued pursuant to the Conditional Option Exercise,
provided that the holders of such options indicate that such shares are
tendered pursuant to the Offer and provided that such holder agrees to
surrender their remaining unexercised options to Canadian Hunter for
cancellation for no consideration effective immediately after the Take-up
Date.
(b) Canadian Hunter and Burlington agree that to the extent holders of Canadian
Hunter Options do not exercise such Canadian Hunter Options and tender the
Canadian Hunter Shares they receive upon such exercise, Canadian Hunter may
agree with all remaining holders of Canadian Hunter Options that, in lieu
of such persons exercising their Canadian Hunter Options, Canadian Hunter
will pay to such persons the difference between the exercise price of their
Canadian Hunter Options and the purchase price for the Canadian Hunter
Shares under the Offer immediately after the Take-up Date of the Offer in
exchange for the termination of their Canadian Hunter Options and provided
that such holders agree to surrender their remaining unexercised options to
9
Canadian Hunter for cancellation for no consideration effective immediately
after the Take-up Date.
(c) Persons holding Deferred Share Units shall be entitled to exchange all of
their Deferred Share Units for Canadian Hunter Shares and tender all
Canadian Hunter Shares issued in connection therewith to the Offer.
(d) Burlington and Canadian Hunter acknowledge and agree that, pursuant to the
Stock Option Plan and Deferred Share Unit Plan, all outstanding and
unvested Canadian Hunter Options and all outstanding Deferred Share Units,
respectively, shall immediately vest at the Effective Time.
.5 Rights Plan
(a) Canadian Hunter represents to Burlington that its Board of Directors has
irrevocably resolved to waive the application of the Rights Plan to the
Offer immediately prior to the Expiry Time and to any other actions taken
by Burlington in furtherance of acquiring all of the Canadian Hunter Shares
and covenants to Burlington to take all action necessary pursuant to the
Rights Plan to effect such waiver no earlier than the Expiry Time, and to
ensure that the Separation Time (as defined in the Rights Plan) does not
occur.
(b) Canadian Hunter covenants and agrees with Burlington and represents to
Burlington that its Board of Directors has resolved not to waive the
application of the Rights Plan or to redeem any of the outstanding Rights
or take any other action which would limit the application of the Rights
Plan to any transaction other than a Take-over Proposal that expires no
sooner than the Initial Expiry Time.
.6 Employee Plans
(a) Canadian Hunter shall terminate the Employee Share Savings Plan and the
Share Purchase Plan subject to and coincident with the first take-up of
Canadian Hunter Shares by Burlington under the Offer on the Take-up Date
and shall make whatever arrangements may be necessary to permit the
participants in such plans to tender the Canadian Hunter Shares allocated,
or to be allocated, as the case may be, to them on termination of such
plans under the Offer. Burlington and Canadian Hunter acknowledge and agree
that, pursuant to the Share Purchase Plan, all outstanding loans between
Canadian Hunter and a Participant (as defined in such plan) shall be due
and payable on the Take-up Date and that all outstanding amounts shall be
netted against any amounts due from Burlington under the Offer to the
Participants (as defined in such Plan).
(b) Subject to and following the take-up of Canadian Hunter Shares by
Burlington under the Offer on the Take-up Date, Burlington covenants and
agrees that, effective upon the termination of the Employee Share Savings
Plan pursuant to Section 2.6(a) and up to and including the date (the
"Rollover Date") which is the earlier of (i) the date that such participant
is covered under Burlington's stock purchase savings plan and (ii) December
31, 2001, Burlington shall cause Canadian Hunter to make all necessary
arrangements so that all participants in such plan prior to the Take-up
Date shall continue to have the same payroll amounts withheld by Canadian
Hunter. On the Rollover Date, Burlington shall cause Canadian Hunter to pay
all such accumulated contributions to such participants together with an
amount equal to (i) in the case of participants who continue to be employed
by Canadian Hunter on the Rollover Date, the actual contributions made by
such participants up to and including the Rollover Date and (ii) in the
case of participants who are terminated on or prior to the Rollover Date,
the maximum amount such participants could have contributed under the
Employee Share Savings Plan up to and including the Rollover Date had they
not been terminated, provided, however, where a participant has been
terminated for just cause, Canadian Hunter shall only be required to pay an
amount equal to such participant's actual contributions.
10
(c) Subject to and following the take-up of Canadian Hunter Shares by
Burlington under the Offer, Burlington covenants and agrees to cause
Canadian Hunter to allocate and pay out to employees of Canadian Hunter
bonus amounts in respect of the calendar year ending December 31, 2001 in
accordance with Canadian Hunter's customary year end bonus practices
consistently applied in accordance with prior years (the "Canadian Hunter
Year End Bonus Arrangements"). Canadian Hunter and Burlington agree that
bonus amounts for December 31, 2001 to be paid to the eight officers of
Canadian Hunter with employment contracts shall be the same amounts as paid
to such employees for the December 31, 2000 calendar year.
(d) Subject to and following the take-up of Canadian Hunter Shares by
Burlington under the Offer on the Take-up Date, Burlington covenants and
agrees to cause Canadian Hunter to apply Canadian Hunter's current and
historical practices related to severance and termination payments payable
to its employees as described in the Disclosure Letter until at least
December 31, 2002.
(e) Subject to and following the take-up of Canadian Hunter Shares by
Burlington under the Offer on the Take-up Date, Burlington covenants and
agrees to cause Canadian Hunter to pay to employees terminated for any
reason except just cause all amounts accrued and in accordance with the
provisions of the Pension Plans to the date of termination of employment.
ARTICLE 3
PUBLICITY AND SOLICITATION
.1 Publicity
(a) Each of Burlington and Canadian Hunter shall advise, consult and cooperate
with the other party prior to issuing, or permitting any of its
subsidiaries, directors, officers, employees or agents to issue any press
release or other written statement to the press with respect to this
Agreement or the transactions contemplated hereby. Burlington and Canadian
Hunter shall not issue any such press release or make any such public
statement prior to such consultation, except as may be required by
applicable law or by obligations pursuant to any listing agreement with a
stock exchange and only after using its reasonable commercial best efforts
to consult the other party taking into account the time constraints to
which it is subject as a result of such law or obligation.
(b) Canadian Hunter and Burlington agree that a joint press release
substantially in the form of Schedule C shall be issued immediately
following the execution of this Agreement.
(c) Canadian Hunter agrees that it shall include, as part of its material
change report filing it makes pursuant to applicable Canadian securities
laws in respect of this Agreement, the complete text of this Agreement.
.2 Solicitation
Investment firms to be selected by Burlington will act as dealer managers
(the "Dealer Managers") in connection with the Offer and solicit acceptances of
the Offer. The Dealer Managers may form a soliciting dealer group comprised of
members of the Investment Dealers Association of Canada and of the stock
exchanges in Canada and their United States broker dealer affiliates to solicit
acceptances of the Offer.
ARTICLE 4
TRANSACTIONS FOLLOWING COMPLETION OF THE OFFER
.1 Second Stage Transaction
If Burlington takes up and pays for Canadian Hunter Shares pursuant to the
terms of the Offer, and thereby acquires at least the Minimum Required Shares,
Burlington agrees to use all
11
commercially reasonable efforts to acquire, and Canadian Hunter agrees to use
all commercially reasonable efforts to assist Burlington in acquiring, the
balance of the Canadian Hunter Shares by way of a statutory arrangement,
amalgamation, merger, reorganization, consolidation, recapitalization or other
type of acquisition transaction or transactions ("Second Stage Transaction")
carried out for consideration per Canadian Hunter Share not less than the
consideration paid pursuant to the Offer (it being understood that Burlington
shall be under no obligation to pay more than that amount). Nothing herein shall
be construed to prevent Burlington from acquiring, directly or indirectly,
additional Canadian Hunter Shares in the open market or in privately negotiated
transactions, in another take-over bid, tender or exchange offer, or otherwise
in accordance with Securities Laws (including by way of compulsory acquisition)
following completion of the Offer.
.2 Information Circular, Etc.
Without limiting Section 4.1, Canadian Hunter agrees that if Burlington is
required to effect a Second Stage Transaction which requires approval of
Canadian Hunter's shareholders in a meeting of Canadian Hunter's shareholders,
Canadian Hunter shall take all action necessary in accordance with Securities
Laws, other applicable Canadian laws, the Canadian Hunter Governing Documents
and the requirements of The Toronto Stock Exchange or any other regulatory
authority having jurisdiction to duly call, give notice of, convene and hold a
meeting of its shareholders as promptly as practicable to consider and vote upon
the action proposed by Burlington. In the event of such a meeting or meetings,
Canadian Hunter shall use all commercially reasonable efforts to mail to its
shareholders an Information Circular with respect to the meeting of Canadian
Hunter's shareholders. The term "Information Circular" shall mean such proxy or
other required informational statement or circular, as the case may be, and all
related materials at the time required to be mailed to Canadian Hunter's
shareholders and all amendments or supplements thereto, if any. Burlington and
Canadian Hunter each shall use all commercially reasonable efforts to obtain and
furnish the information required to be included in any Information Circular. The
information provided and to be provided by Burlington and Canadian Hunter for
use in the Information Circular, on both the date the Information Circular is
first mailed to Canadian Hunter's shareholders and on the date any such meeting
is held, shall not contain any untrue statement of a material fact or omit to
state a material fact required to be stated therein or necessary to make the
statements therein, in light of the circumstances under which they are made, not
misleading and will comply in all material respects with all applicable
requirements of law. Burlington and Canadian Hunter each agree to correct
promptly any such information provided by it for use in any Information Circular
which shall have become false or misleading.
ARTICLE 5
REPRESENTATIONS AND WARRANTIES OF Burlington
As of the date hereof, Burlington hereby represents and warrants to
Canadian Hunter as follows and acknowledges that Canadian Hunter is relying upon
these representations and warranties in connection with the entering into of
this Agreement:
.1 Organization and Qualification
Burlington is a corporation duly incorporated and organized and validly
existing under the laws of Delaware and has the requisite corporate power and
authority to carry on its business as it is now being conducted.
.2 Authority Relative to this Agreement
Burlington has the requisite corporate authority to enter into this
Agreement and to carry out its obligations hereunder. The execution and delivery
of this Agreement and the consummation by Burlington of the transactions
contemplated hereby have been duly authorized by its Board of Directors and no
other corporate proceedings on its part are or will be necessary to authorize
this Agreement and the transactions contemplated hereby. This Agreement has been
duly executed and delivered by Burlington and constitutes a legal, valid and
binding obligation of Burlington enforceable against it in
12
accordance with its terms, subject to bankruptcy, insolvency, fraudulent
transfer, reorganization, moratorium and other laws relating to or affecting
creditors' rights generally and to general principles of equity.
.3 No Violations
(a) Neither the execution and delivery of this Agreement by Burlington, the
consummation by it of the transactions contemplated hereby nor compliance
by it with any of the provisions hereof will: (i) violate, conflict with,
or result in breach of any provision of, require any consent, approval or
notice under, or constitute a default (or an event which, with notice or
lapse of time or both, would constitute a default) or result in a right of
termination or acceleration under, or result in a creation of any lien,
security interest, charge or encumbrance upon any of the properties or
assets of Burlington or any of its subsidiaries under, any of the terms,
conditions or provisions of (x) the charter or bylaws of Burlington or (y)
any material note, bond, mortgage, indenture, loan agreement, deed of
trust, agreement, lien, contract or other instrument or obligation to which
Burlington or any of its subsidiaries is a party or to which any of them,
or any of their respective properties or assets, may be subject or by which
Burlington or any of its subsidiaries is bound; or (ii) subject to
compliance with the statutes and regulations referred to in Section 5.3(b),
violate any judgment, ruling, order, writ, injunction, determination,
award, decree, statute, ordinance, rule or regulation applicable to
Burlington or any of its subsidiaries (except, in the case of each of
clauses (i) and (ii) above, for such violations, conflicts, breaches,
defaults, terminations which, or any consents, approvals or notices which
if not given or received, would not have any material adverse effect on the
business, operations or financial condition of Burlington and its
subsidiaries taken as a whole or on the ability of Burlington to consummate
the transactions contemplated hereby).
(b) Other than in connection with or in compliance with the provisions of
Securities Laws, Investment Canada Act (Canada), the Competition Act
(Canada), the rules of The Toronto Stock Exchange and the New York Stock
Exchange, the HSR Act, and any pre-merger notification statutes, (i) there
is no legal impediment to Burlington's consummation of the transactions
contemplated by this Agreement and (ii) no filing or registration with, or
authorization, consent or approval of, any domestic or foreign public body
or authority is necessary by Burlington in connection with the making or
the consummation of the Offer, except for such filings or registrations
which, if not made, or for such authorizations, consents or approvals,
which, if not received, would not have a material adverse effect on the
ability of Burlington to consummate the transactions contemplated hereby.
.4 Funds Available
Burlington has made adequate financial arrangement prior to the execution
of this Agreement to ensure that sufficient funds are available to pay for all
Canadian Hunter Shares tendered pursuant to the Offer in accordance with the
terms of the Offer.
ARTICLE 6
REPRESENTATIONS AND WARRANTIES OF CANADIAN HUNTER
As of the date hereof, Canadian Hunter hereby represents and warrants to
Burlington as follows and acknowledges that Burlington is relying upon these
representations and warranties in connection with the entering into of this
Agreement:
.1 Organization and Qualification
Canadian Hunter is a corporation duly amalgamated and validly existing
under the laws of Alberta and has the requisite corporate power and authority to
carry on its business as it is now being conducted. Each of the Canadian Hunter
Subsidiaries is a corporation duly incorporated and organized and validly
subsisting under the laws of the jurisdiction of its incorporation or a
partnership duly
13
constituted, as the case may be, and has the requisite corporate or partnership
power and authority to carry on its business as now being conducted. Canadian
Hunter and each Canadian Hunter Subsidiary is duly registered to do business and
is in good standing in each jurisdiction in which the character of its
properties, owned or leased, or the nature of its activities make such
registration necessary, except where the failure to be so registered or in good
standing would not have a material adverse effect on Canadian Hunter and the
Canadian Hunter Subsidiaries taken as a whole.
.2 Authority Relative to this Agreement
Canadian Hunter has the requisite corporate authority to enter into this
Agreement and to carry out its obligations hereunder. The execution and delivery
of this Agreement and the consummation of the transactions contemplated hereby
have been duly authorized by Canadian Hunter's Board of Directors, and no other
corporate proceedings on the part of Canadian Hunter are necessary to authorize
this Agreement (except for obtaining shareholder approval in respect of any
Second Stage Transaction) and the transactions contemplated hereby. This
Agreement has been duly executed and delivered by Canadian Hunter and
constitutes a legal, valid and binding obligation of Canadian Hunter enforceable
against Canadian Hunter in accordance with its terms, subject to bankruptcy,
insolvency, fraudulent transfer, reorganization, moratorium and other laws
relating to or affecting creditors' rights generally and to general principles
of equity.
.3 No Violations
(a) Except as disclosed in the Disclosure Letter, Neither the execution and
delivery of this Agreement by Canadian Hunter, the consummation of the
transactions contemplated hereby nor compliance by Canadian Hunter with any
of the provisions hereof will: (i) violate, conflict with, or result in
breach of any provision of, require any consent, approval or notice under,
or constitute a default (or an event which, with notice or lapse of time or
both, would constitute a default) or result in a right of termination or
acceleration under, or result in a creation of any lien, security interest,
charge or encumbrance upon any of the properties or assets of Canadian
Hunter or any of the Canadian Hunter Subsidiaries under, any of the terms,
conditions or provisions of (x) the Canadian Hunter Governing Documents or
(y) any material note, bond, mortgage, indenture, loan agreement, deed of
trust, agreement, lien, contract or other instrument or obligation to which
Canadian Hunter or any of the Canadian Hunter Subsidiaries is a party or to
which any of them, or any of their respective properties or assets, may be
subject or by which Canadian Hunter or any of the Canadian Hunter
Subsidiaries is bound; or (ii) subject to compliance with the statutes and
regulations referred to in Section 6.3(b), violate any judgment, ruling,
order, writ, injunction, determination, award, decree, statute, ordinance,
rule or regulation applicable to Canadian Hunter or any of the Canadian
Hunter Subsidiaries (except, in the case of each of clauses (i) and (ii)
above, for such violations, conflicts, breaches, defaults, terminations
which, or any consents, approvals or notices which if not given or
received, would not have any material adverse effect on the business,
operations or financial condition of Canadian Hunter and the Canadian
Hunter Subsidiaries taken as a whole or on the ability of Canadian Hunter
to consummate the transactions contemplated hereby).
(b) Other than in connection with or in compliance with the provisions of
Securities Laws, Investment Canada Act (Canada), the Competition Act
(Canada), the rules of The Toronto Stock Exchange, the HSR Act and any
pre-merger notification statutes, (i) there is no legal impediment to
Canadian Hunter's consummation of the transactions contemplated by this
Agreement and (ii) no filing or registration with, or authorization,
consent or approval of, any domestic or foreign public body or authority is
necessary by Canadian Hunter in connection with the making or the
consummation of the Offer, except for such filings or registrations which,
if not made, or for such authorizations, consents or approvals, which, if
not received, would not have a material adverse effect on the ability of
Canadian Hunter to consummate the transactions contemplated hereby.
14
.4 Capitalization
As of the date hereof, the authorized share capital of Canadian Hunter
consists of an unlimited number of common shares and an unlimited number of
preferred shares, issuable in series. As of September 30, 2001, 59,686,178
Canadian Hunter Shares were issued and outstanding and no preferred shares were
issued or outstanding. As of the date hereof, options to acquire an aggregate of
3,166,149 Canadian Hunter Shares have been granted and are unexercised under the
Stock Option Plan and up to 558 Canadian Hunter Shares will be issued upon the
exchange of the Deferred Share Units pursuant to the Deferred Share Unit Plan.
Except as set forth above, there are no securities of Canadian Hunter
outstanding and no options, warrants or other rights, agreements or commitments
of any character whatsoever requiring the issuance, sale or transfer by Canadian
Hunter of any shares of Canadian Hunter (including the Canadian Hunter Shares)
or any securities convertible into, or exchangeable or exercisable for, or
otherwise evidencing a right to acquire, any shares of Canadian Hunter
(including the Canadian Hunter Shares), nor are there any outstanding stock
appreciation rights, phantom equity or similar rights, agreements, arrangements
or commitments based upon the book value, income or other attributes of Canadian
Hunter. All outstanding Canadian Hunter Shares have been duly authorized and
validly issued, are fully paid and non-assessable and are not subject to, nor
were they issued in violation of, any preemptive rights, and all Canadian Hunter
Shares issuable upon exercise of outstanding stock options and pursuant to the
Deferred Share Unit Plan in accordance with their respective terms will be duly
authorized and validly issued, fully paid and non-assessable and will not be
subject to any preemptive rights.
.5 No Material Adverse Change
Since December 31, 2000, there has not been any Material Adverse Change.
.6 No Undisclosed Material Liabilities
Except: (a) as disclosed or reflected in the audited financial statements
of Canadian Hunter as at December 31, 2000 or in the material agreements set out
in the Disclosure Letter pursuant to Section 6.14 hereof; and (b) for
liabilities and obligations: (i) incurred in the ordinary course of business and
consistent with past practice; or (ii) pursuant to the terms of this Agreement,
neither Canadian Hunter nor any of its subsidiaries has incurred any liabilities
of any nature, whether accrued, contingent or otherwise that have constituted or
could be reasonably expected to constitute a Material Adverse Change.
.7 Impairment
Neither the making of the Offer nor the successful completion of the Offer
will result in a Material Adverse Change pursuant to or as a result of the
provisions of any agreement or arrangement to which Canadian Hunter is a party.
.8 Officer Obligations
Officer Obligations do not exceed an aggregate of $15 million for severance
payable to officers.
.9 Financial Advisor
Canadian Hunter has not retained nor will it retain any financial advisor,
broker, agent or finder or paid, or agreed to pay any financial advisor, broker,
agent or finder on account of this Agreement, any transaction contemplated
hereby or any transaction presently ongoing or contemplated, except CIBC World
Markets Inc. and Xxxxxxx, Xxxxx & Co. have been retained as Canadian Hunter's
financial advisor in connection with certain matters including the transactions
contemplated hereby. The total obligation of Canadian Hunter to such financial
advisors is set forth in the Disclosure Letter. After the payment of the
financial obligations to Xxxxxxx, Xxxxx & Co. and CIBC World Markets Inc. as set
15
forth in the Disclosure Letter, Canadian Hunter will not have any continuing
obligations to either Xxxxxxx, Xxxxx & Co. or CIBC World Markets Inc. other than
those related to indemnification, confidentiality and the payment of expenses.
.10 Conduct of Business
Except as publicly disclosed, since December 31, 2000, neither Canadian
Hunter nor any of its subsidiaries has taken any action that would be in
violation of Section 7.1 if such provision had been in effect since such date,
other than violations which would not have any material adverse effect on the
business, operations or financial condition of Canadian Hunter and its
subsidiaries considered as a whole or would not materially affect Canadian
Hunter's ability to consummate the transactions contemplated hereby.
.11 Reports
(a) Canadian Hunter has heretofore delivered to Burlington true and complete
copies of (i) Canadian Hunter's 2000 Annual Information Form, Canadian
Hunter's Information Circular relating to its 2001 annual meeting of
shareholders, Canadian Hunter's 2000 Annual Report to shareholders and
interim reports for the periods ending March 31, 2001 and June 30, 2001;
(ii) all prospectuses or other offering documents used by Canadian Hunter
in the offering of its securities or filed with Securities Authorities
since December 31, 2000; and (iii) the consolidated audited financial
statements of Canadian Hunter dated December 31, 2000. As of their
respective dates, such forms, statements, prospectuses and other offering
documents (including all exhibits and schedules thereto and documents
incorporated by reference therein) did not contain any untrue statement of
a material fact or omit to state a material fact required to be stated
therein or necessary to make the statements therein, in light of the
circumstances under which they were made, not misleading and complied in
all material respects with all applicable requirements of law. The audited
financial statements and unaudited interim financial statements of Canadian
Hunter and its consolidated subsidiaries publicly issued by Canadian
Hunter, previously delivered to Burlington, or included or incorporated by
reference in such forms, statements, prospectuses and other offering
documents were prepared in accordance with Canadian GAAP (except (i) as
otherwise indicated in such financial statements and the notes thereto or,
in the case of audited statements, in the related report of Canadian
Hunter's independent accountants or (ii) in the case of unaudited interim
financial statements, to the extent they may not include footnotes or may
be condensed or summary statements), and fairly present the consolidated
financial position, results of operations and changes in financial position
of Canadian Hunter and its consolidated subsidiaries as of the dates
thereof and for the periods indicated therein (subject, in the case of any
unaudited interim financial statements, to normal year-end audit
adjustments).
(b) Canadian Hunter will deliver to Burlington as soon as they become available
true and complete copies of any report or statement filed by it with
Securities Authorities subsequent to the date hereof. As of their
respective dates, such reports and statements (excluding any information
therein provided by Burlington, as to which Canadian Hunter makes no
representation) will not contain any untrue statement of a material fact or
omit to state a material fact required to be stated therein or necessary to
make the statements therein, in light of the circumstances under which they
are made, not misleading and will comply in all material respects with all
applicable requirements of law. The consolidated financial statements of
Canadian Hunter issued by Canadian Hunter or to be included in such reports
and statements (excluding any information therein provided by Burlington,
as to which Canadian Hunter makes no representation) will be prepared in
accordance with Canadian GAAP (except (i) as otherwise indicated in such
financial statements and the notes thereto or, in the case of audited
statements, in the related report of Canadian Hunter's independent
accountants or (ii) in the case of unaudited interim financial statements,
to the extent they may not include footnotes or may be condensed or summary
statements) and will present fairly the consolidated financial position,
results of operations and changes in financial position of Canadian Hunter
as of the dates thereof and for the periods indicated therein (subject, in
the case of any unaudited interim financial statements, to normal year-end
audit adjustments).
16
.12 Subsidiaries
All of the shares (or partnership interests) of the Canadian Hunter
Subsidiaries are beneficially wholly-owned, directly or indirectly, by Canadian
Hunter with valid and marketable title thereto, free and clear of any and all
liens, charges, security interests, adverse claims, encumbrances and demands of
any nature or kind whatsoever. The Canadian Hunter Subsidiaries are the only
material subsidiaries of Canadian Hunter.
.13 Compliance with Law
Canadian Hunter and each of its subsidiaries has complied with and is in
compliance with all laws and regulations applicable to the operation of its
business, except where such non-compliance would not, considered individually or
in the aggregate, have a material adverse effect on the business, affairs,
operations, assets, prospects or financial condition of Canadian Hunter and its
subsidiaries, taken as a whole, or on the ability of Canadian Hunter to
consummate the transactions contemplated hereby.
.14 Material Agreements
There are no agreements material to the conduct of Canadian Hunter's and
its subsidiaries' businesses except land contracts entered into in the ordinary
course of business and construction, ownership and operation agreements entered
into in the ordinary course of business and the agreements as listed in the
Disclosure Letter, and all such agreements are valid and subsisting and Canadian
Hunter or its subsidiary, as applicable, is not in material default under any
such agreements.
.15 Disclosure
Canadian Hunter has disclosed to Burlington in the Disclosure Letter any
information regarding any event, circumstance or action taken or failed to be
taken which could reasonably be expected to materially adversely affect the
business, operations, assets, capitalization, financial condition, prospects,
rights or liabilities of or relating to Canadian Hunter and its subsidiaries
taken as a whole.
To the best of Canadian Hunter's knowledge, none of the information
delivered to Burlington prior to the date hereof and as modified or supplemented
from time to time prior to the date hereof is misleading or incorrect in any
material respect taken as a whole, in light of the circumstances under which it
was made, excluding all financial projections concerning Canadian Hunter and its
subsidiaries.
.16 Employment Agreements
Except as listed in the Disclosure Letter, neither Canadian Hunter nor any
subsidiary is a party to any written employment or consulting agreement or any
verbal employment or consulting agreement with a term of more than one year or
any written agreement which provides for a payment by Canadian Hunter or any
subsidiary on a change of control of Canadian Hunter or severance of employment.
.17 U.S. Securities Law Matters
To Canadian Hunter's knowledge, less than 40% (calculated in accordance
with Schedule 14D-1F or Rule 14d-1 under the United States Securities Exchange
Act of 1934, as amended (the "US Exchange Act")) of the outstanding Canadian
Hunter Shares are held by US holders (as defined in Schedule 14D-1F of the US
Exchange Act). Canadian Hunter is eligible to file with the Securities and
Exchange Commission a solicitation/recommendation statement in compliance with
Rules 14d-1(b) and 14e-2(c) under the US Exchange Act on Schedule 14D-9F.
Canadian Hunter is a foreign private issuer, as that term is defined in Rule
3b-4 of the US Exchange Act. Canadian Hunter is not an investment
17
company registered or required to be registered under the United States
Investment Company Act of 1940, as amended.
.18 Employee Benefit Plans
Neither Canadian Hunter nor any subsidiary has any employee benefit plans
other than: (i) the Stock Option Plan; (ii) the Share Savings Plan; (iii) the
Pension Plans; (iv) the Share Purchase Plan; (v) the Canadian Hunter Year End
Bonus Arrangements; (vi) with respect to those matters contemplated in Section
2.6 hereof; and (vii) existing health, dental, vision and short and long term
disability plans, life insurance and accidental death and dismemberment of
general application and agreements and promises contemplated by the Officer
Obligations and has made no promises with respect to increased benefits under
such plans. All contributions (including premiums) required by law or contract
to and including June 30, 2001 to have been paid or accrued, under or with
respect to such plans, have been paid or accrued as at that date, as the case
may be, except where failure to make any such contribution could not reasonably
be expected to result in a Material Adverse Change.
.19 Books and Records
The corporate records and minute books of Canadian Hunter and each
subsidiary have been maintained in accordance with all applicable statutory
requirements and are complete and accurate in all material respects.
.20 Litigation, Etc.
There are, at the date hereof, no actions, suits or proceedings pending, or
to the knowledge of Canadian Hunter threatened, affecting Canadian Hunter or any
subsidiary before or by any federal, provincial, state, local, foreign,
municipal or other governmental department, commission, board, bureau, agency,
court or instrumentality, which action, suit or proceeding involves a
possibility of any judgment against or liability of Canadian Hunter or any
subsidiary or other person which, if successful, would have a material adverse
effect on the business, affairs, operations, assets, prospects or financial
condition of Canadian Hunter and its subsidiaries, taken as a whole, or on the
ability of Canadian Hunter or Burlington to consummate the transactions
contemplated hereby.
.21 Environmental
Except as set forth in the Disclosure Letter, neither Canadian Hunter nor
any subsidiary is aware of, or has received:
(a) any order or directive which relates to environmental matters and which
requires any material work, repairs, construction, or capital expenditures;
or
(b) any demand or notice with respect to the material breach of any
environmental, health or safety law applicable to Canadian Hunter or any
subsidiary or any of their business undertakings, including, without
limitation, any regulations respecting the use, storage, treatment,
transportation, or disposition of environmental contaminants.
.22 Tax Matters
(a) For purposes of this Agreement, the following definitions shall apply:
(i) The term "Taxes" shall mean all taxes, however denominated, including
any interest, penalties or other additions that may become payable in
respect thereof, imposed by any federal, provincial, state, local or
foreign government or any agency or political subdivision of any such
government, which taxes shall include, without limiting the generality
of the foregoing, all income or profits taxes (including, but not
limited to, federal income taxes and provincial income taxes),
capital, payroll and employee
18
withholding taxes, labour taxes, employment insurance, social
insurance taxes, sales and use taxes, ad valorem taxes, value added
taxes, excise taxes, franchise taxes, gross receipts taxes, business
license taxes, occupation taxes, real and personal property taxes,
stamp taxes, insurance taxes, environmental taxes, transfer taxes,
workers' compensation and other governmental charges, and other
obligations of the same or of a similar nature to any of the
foregoing, which Canadian Hunter or any of its subsidiaries is
required to pay, withhold or collect.
(ii) The term "Returns" shall mean all reports, estimates, declarations of
estimated tax, elections, information statements and returns relating
to, or required to be filed in connection with, any Taxes.
(b) All Returns required to be filed by or on behalf of Canadian Hunter or any
subsidiary have been duly filed on a timely basis and such Returns are
true, complete and correct in all material respects. All Taxes shown to be
payable on the Returns or on subsequent assessments with respect thereto
have been paid in full on a timely basis, and no other Taxes are payable by
Canadian Hunter or any material subsidiaries with respect to items or
periods covered by such Returns.
(c) Canadian Hunter and each subsidiary has paid or provided adequate accruals
in its financial statements for the year ended dated December 31, 2000 for
Taxes, including income taxes, labour taxes and related deferred taxes, in
conformity with Canadian GAAP.
(d) For all periods ending on and after December 31, 1998, Burlington has been
furnished by Canadian Hunter true and complete copies of: (i) material
portions of income tax audit reports, statements of deficiencies, closing
or other agreements received by Canadian Hunter and the Canadian Hunter
Subsidiaries or on behalf of Canadian Hunter and the Canadian Hunter
Subsidiaries relating to Taxes; and (ii) all material federal, provincial,
state, local or foreign income or franchise tax returns for Canadian Hunter
and the Canadian Hunter Subsidiaries.
(e) No material deficiencies exist or have been asserted with respect to Taxes
of Canadian Hunter or any subsidiary. Except as disclosed in the Disclosure
Letter, neither Canadian Hunter nor any subsidiary is a party to any action
or proceeding for assessment or collection of Taxes, nor has such event
been asserted or to Canadian Hunter's knowledge threatened against Canadian
Hunter or any subsidiary or any of their respective assets. Except as
disclosed in the Disclosure Letter, no waiver or extension of any statute
of limitations is in effect with respect to Taxes or Returns of Canadian
Hunter or any subsidiary. There is no audit in process, pending or, to the
knowledge of Canadian Hunter and any subsidiary, threatened by a
governmental or taxing authority relating to the Returns of Canadian Hunter
and/or any subsidiary for the last three years.
(f) Except as set out in the Disclosure Letter, Canadian Hunter has provided
adequate accruals in its financial statements for the year ended December
31, 2000 (or, in either case, such amounts are fully funded) for all
pension or other employee benefit obligations of Canadian Hunter or any
subsidiary arising under or relating to each of the pension or retirement
income plans or other employee benefit plans or agreements or policies
maintained by or binding on Canadian Hunter or any of its subsidiaries.
.23 Reporting Issuer Status
Canadian Hunter is a "reporting issuer" in material compliance with all
applicable securities laws of provinces of Canada and the Canadian Hunter Shares
are only listed on The Toronto Stock Exchange.
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.24 Debt and Working Capital
As at August 31, 2001, Canadian Hunter's consolidated debt (other than
trade debt) did not exceed $50,000 and its working capital deficiency was not
greater than $145 million.
.25 Confidentiality Agreements
All agreements entered into by Canadian Hunter with persons other than
Burlington regarding the confidentiality of information provided to such persons
or reviewed by such persons with respect to the sale of Canadian Hunter or any
merger, arrangement or amalgamation of Canadian Hunter with another party are in
substantially the form of the confidentiality agreement executed by Burlington
(the "Confidentiality Agreement"). Canadian Hunter has not negotiated any
Take-over Proposal with any person who has not entered into such a
confidentiality agreement.
.26 Insurance
Policies of insurance in force as of the date hereof naming Canadian Hunter
as an insured adequately cover all risks reasonably and prudently foreseeable in
the operation and conduct of the business of Canadian Hunter and its
subsidiaries. All such policies of insurance shall remain in force and effect
and shall not be canceled or otherwise terminated as a result of the
transactions contemplated hereby or by the Offer.
ARTICLE 7
CONDUCT OF BUSINESS
.1 Conduct of Business by Canadian Hunter
Canadian Hunter covenants and agrees that, during the period from the date
of this Agreement until the earlier of either: (i) the Effective Time; or (ii)
this Agreement is terminated by its terms, unless Burlington shall otherwise
agree in writing, except as required by law or in connection with a Take-over
Proposal or as otherwise expressly permitted or specifically contemplated by
this Agreement:
(a) the business of Canadian Hunter and its subsidiaries shall be conducted
only in, and Canadian Hunter and its subsidiaries shall not take any action
except in, the usual and ordinary course of business and consistent with
past practice, and Canadian Hunter shall use all commercially reasonable
efforts to maintain and preserve its business organization, assets,
employees and advantageous business relationships;
(b) Canadian Hunter shall not directly or indirectly do or permit to occur any
of the following: (i) amend the Canadian Hunter Governing Documents; (ii)
declare, set aside or pay any dividend or other distribution or payment
(whether in cash, shares or property) in respect of its shares owned by any
person; (iii) issue, grant, sell or pledge or agree to issue, grant, sell
or pledge any shares of Canadian Hunter or its subsidiaries, or securities
convertible into or exchangeable or exercisable for, or otherwise
evidencing a right to acquire, shares of Canadian Hunter or its
subsidiaries, other than Canadian Hunter Shares issuable pursuant to the
terms of the Canadian Hunter Options; (iv) redeem, purchase or otherwise
acquire any of its outstanding shares or other securities; (v) split,
combine or reclassify any of its shares; (vi) adopt a plan of liquidation
or resolutions providing for the liquidation, dissolution, merger,
consolidation or reorganization of Canadian Hunter; or (vii) enter into or
modify any contract, agreement, commitment or arrangement with respect to
any of the foregoing, except as permitted above;
(c) neither Canadian Hunter nor any of its subsidiaries has, other than as
disclosed in the Disclosure Letter, and shall not, without prior
consultation with and the consent of Burlington, such consent not to be
unreasonably withheld, directly or indirectly do any of the following: (i)
sell, pledge, dispose of or encumber any assets having an individual value
in excess of $1 million; (ii) acquire
20
(by merger, amalgamation, consolidation or acquisition of shares or assets)
any corporation, partnership or other business organization or division
thereof, or make any investment either by purchase of shares or securities
(other than for the account of the Pension Plans), contributions of capital
(other than to wholly owned subsidiaries) or property transfer; (iii)
acquire any assets with an acquisition cost which would exceed: (A) $1
million individually; or (B) $5 million in the aggregate, with the
exception of purchases at Crown lease sales and freehold lease
acquisitions; (iv) incur any indebtedness for borrowed money except in the
ordinary course of business or in excess of existing facilities, or any
other material liability or obligation or issue any debt securities or
assume, guarantee, endorse or otherwise as an accommodation become
responsible for, the obligations of any other individual or entity, or make
any loans or advances, other than the Officer Obligations and the
arrangements contemplated in Section 2.6 hereof (including daylight
employee assistance loans or loan guarantees in connection with the
exercise of Stock Options) and fees payable to legal advisors in the
ordinary course and fees payable to legal and financial advisors in respect
of the Offer; (v) authorize, recommend or propose any release or
relinquishment of any material contract right; (vi) waive, release, grant
or transfer any material rights of value or modify or change in any
material respect any existing material license, lease, contract, production
sharing agreement, government land concession or other material document:
(viii) enter into or terminate any xxxxxx, swaps or other financial
instruments or like transactions (other than in accordance with their
terms); (ix) enter into commitments of a capital expenditure nature
including Crown lease purchases and freehold lease acquisitions or incur
any contingent liability in excess of $5 million individually and $115
million in the aggregate and in accordance with the 2001 operating budget,
copies of which have been made available to Burlington (and Canadian Hunter
shall not amend such budgets); (x) enter into any non-arm's length
transactions including with any officers, directors or employees of
Canadian Hunter or any of its subsidiaries or transfer any property or
assets of Canadian Hunter or any of its subsidiaries to any employees,
except: (i) as may be necessary for the maintenance of existing facilities,
machinery and equipment in good operating condition and repair in the
ordinary course of business; or (ii) as may be required by law; or (xi)
authorize or propose any of the foregoing, or enter into or modify any
contract, agreement, commitment or arrangement to do any of the foregoing;
(d) neither Canadian Hunter nor any of its subsidiaries shall create any new
Officer Obligations (except as disclosed in the Disclosure Letter) and,
except for payment of the existing Officer Obligations (from which
Burlington shall make appropriate withholdings as required by applicable
tax laws), neither Canadian Hunter nor any of its subsidiaries shall grant
to any officer or director an increase in compensation in any form, grant
any general salary increase other than in accordance with the requirements
of any existing collective bargaining or union contracts, grant to any
other employee any increase in compensation in any form other than routine
increases in the ordinary course of business consistent with past
practices, make any loan to any officer, director or employee, or take any
action with respect to the grant of any severance or termination pay
arising from the Offer or a change of control of Canadian Hunter or the
entering into of any employment agreement with, any officer or director, or
with respect to any increase of benefits payable under its current
severance or termination pay policies; and
(e) neither Canadian Hunter nor any of its subsidiaries shall adopt or amend or
make any contribution to any bonus, profit sharing, option, pension,
retirement, deferred compensation, insurance, incentive compensation, other
compensation or other similar plan, agreement, trust, fund or arrangements
for the benefit of employees, except as is necessary to comply with the law
or with respect to existing provisions of any such plans, programs,
arrangements or agreements.
.2 Provision of Information; Access
Immediately upon acceptance of this Agreement, Canadian Hunter shall
provide to Burlington information, subject to the existing confidentiality
restrictions pursuant to the Confidentiality Agreement, to enable Burlington to
quickly and efficiently integrate the business and affairs of Canadian Hunter
with Burlington at the Effective Time and Canadian Hunter shall permit:
21
(i) Burlington and its representatives to have reasonable access to
Canadian Hunter's premises, field operations, records, computer
systems, properties, books, contracts, records, employees and
management personnel;
(ii) Burlington and its representatives reasonable access to interview
employees of Canadian Hunter for the purpose of determining which
employees will be retained after the Effective Time; and
(iii) Burlington and its representatives to be informed of the operations
of Canadian Hunter to ensure there is compliance with Section 7.1
hereof.
It is acknowledged that the purpose of this clause is to permit Burlington to be
in a position to expeditiously integrate the business and operations of Canadian
Hunter with that of Burlington immediately upon but not prior to, the Effective
Time without causing any unreasonable disruptions to Canadian Hunter's business
or operations prior to the Effective Time.
ARTICLE 8
COVENANTS OF CANADIAN HUNTER
.1 Notice of Material Change
From the date hereof until the termination of this Agreement, Canadian
Hunter shall promptly notify Burlington in writing of:
(a) any material change (actual, anticipated, contemplated or, to the knowledge
of Canadian Hunter, threatened, financial or otherwise) in the business,
affairs, operations, assets, liabilities (contingent or otherwise) or
capital of Canadian Hunter and its subsidiaries considered as a whole;
(b) any change in any representation or warranty set forth in Article 6 which
change is or may be of such a nature as to render any such representation
or warranty misleading or untrue in a material respect; or
(c) any material fact in respect of Canadian Hunter which arises and which
would have been required to be stated herein had the fact arisen on or
prior to the date of this Agreement.
Canadian Hunter shall in good faith discuss with Burlington any change in
circumstances (actual, anticipated, contemplated or, to the knowledge of
Canadian Hunter, threatened, financial or otherwise) which is of such a nature
that there may be a reasonable question as to whether notice need to be given to
Burlington pursuant to this section.
.2 Non-Completion Fee
If at any time after the execution of this Agreement (and provided there is
no material breach or non-performance by Burlington of a material provision of
this Agreement in any respect):
(a) the Board of Directors of Canadian Hunter has withdrawn or, in any manner
adverse to Burlington, redefined, modified or changed any of its
recommendations referred to in Section 2.2, or shall have resolved to do
so;
(b) any bona fide Take-over Proposal for the Canadian Hunter Shares is publicly
announced or commenced, and the Board of Directors of Canadian Hunter shall
have failed to publicly reaffirm and maintain its recommendation of the
Offer to Canadian Hunter's shareholders within 10 days after the public
announcement or commencement of any such Take-over Proposal;
22
(c) the Board of Directors of Canadian Hunter shall have recommended that
Canadian Hunter's shareholders deposit their Canadian Hunter Shares under,
vote in favour of, or otherwise accept, a Take-over Proposal;
(d) Canadian Hunter shall have entered into any agreement with any person with
respect to a Take-over Proposal prior to the Expiry Time of the Offer,
excluding a confidentiality agreement entered into in compliance with
Section 8.3; or
(e) a Take-over Proposal is publicly announced, proposed, offered or made to
Canadian Hunter's shareholders or to Canadian Hunter prior to the Expiry
Time of the Offer, the Offer shall have expired by reason of the Minimum
Condition not being satisfied, and such Take-over Proposal has been
completed within 180 days of expiry of the Offer,
Canadian Hunter shall upon the occurrence of any such event and in any
event within one Business Day pay to Burlington the amount of $85 million. Such
payment shall be made in immediately available funds to an account designated by
Burlington. On the date of the earliest of any of the events specified in
Sections 8.2(a) to (e), Canadian Hunter shall be deemed to hold such amount in
trust for Burlington. In the event that a Take-over Proposal is publicly
announced, proposed, offered or made to holders of Canadian Hunter Shares as
contemplated by Section 8.2(e), Canadian Hunter agrees to deliver to Burlington,
at least 3 Business Days prior to the scheduled expiry of such Take-over
Proposal, an irrevocable letter of credit, in form satisfactory to Burlington,
acting reasonably, drawable within one Business Day after Burlington shall have
delivered to the issuing party a written certificate confirming the occurrence
of an event specified in Section 8.2(e) or such other form of security as is
satisfactory to Burlington, acting reasonably.
Any payment pursuant to Section 8.2 shall be without prejudice to the
rights or remedies available to Burlington upon the breach of any provision of
this Agreement.
For the purposes of Section 8.2(b), an announcement by the Board of
Directors of Canadian Hunter that it does not have all the information necessary
to properly evaluate the Take-over Proposal and accordingly is reaffirming and
maintaining its recommendation of the Offer pending receipt and analysis of
additional information shall not constitute an event within the ambit of Section
8.2(b) hereof or trigger any obligations to make the payment contemplated by
this Section, provided that the Board of Directors of Canadian Hunter, not less
than five days before the Expiry Time of the Offer, publicly reaffirms and
maintains its recommendation of the Offer as set forth in Section 2.2(a) to
holders of Canadian Hunter Shares without the foregoing qualification in respect
of receipt and analysis of additional information relating to the Take-over
Proposal.
.3 No Solicitation
Canadian Hunter shall immediately cease and cause to be terminated any
existing solicitation, initiation, encouragement, activity, discussion or
negotiation with any parties conducted heretofore by Canadian Hunter, any of its
subsidiaries or their officers, directors, employees, financial advisors,
representatives and agents ("Representatives") with respect to a Take-over
Proposal (as defined herein) whether or not initiated by Canadian Hunter and in
connection therewith, Canadian Hunter shall not release any third party from any
confidentiality or standstill agreement to which Canadian Hunter and such third
party is a party or amend any of the foregoing and shall exercise all rights to
require the return of information regarding Canadian Hunter. From and after the
date hereof, Canadian Hunter and its subsidiaries will not, and will not
authorize or permit any of their Representatives to, directly or indirectly,
solicit, initiate or encourage (including by way of furnishing information) or
participate in or take any other action to facilitate any inquiries or the
making of any proposal which constitutes or may reasonably be expected to lead
to a Take-over Proposal from any person, or engage in any discussion,
negotiations or inquiries relating thereto or accept any Take-over Proposal;
provided, however, that Canadian Hunter may: (i) engage in discussions or
negotiations with a third party who (without any solicitation, initiation or
encouragement, directly or indirectly, by Canadian Hunter, any of its
subsidiaries or the Representatives after the date hereof) seeks to initiate
such discussions or negotiations and may furnish such third party information
concerning Canadian Hunter and its business, properties
23
and assets which has previously been provided to Burlington if, and only to the
extent that: (A) the third party has first made a bona fide written Take-over
Proposal that is financially superior to the Offer (as determined in good faith
in each case by Canadian Hunter's Board of Directors after receiving the advice
of its financial advisors) (a "Superior Proposal") and Canadian Hunter's Board
of Directors has concluded in good faith, after considering applicable law and
receiving the advice of outside counsel that such action is required by the
Canadian Hunter Board of Directors to comply with fiduciary duties under
applicable law; (B) prior to furnishing such information to or entering into
discussions or negotiations with such person or entity, Canadian Hunter receives
from such person or entity an executed confidentiality agreement having
confidentiality and standstill terms substantially similar to those contained in
the Confidentiality Agreement; (C) Canadian Hunter immediately provides to
Burlington any information provided to any such person or entity if not
previously provided to Burlington; (ii) comply with applicable Securities Laws
relating to the provision of directors' circulars, and make appropriate
disclosure with respect thereto to Canadian Hunter's shareholders; and (iii)
accept, recommend, approve or implement a Superior Proposal contemplated in
clause (i)(A), but only (in the case of this clause (iii)) if prior to such
acceptance, recommendation, approval or implementation, Canadian Hunter's Board
of Directors shall have concluded in good faith, after considering provisions of
applicable law and after giving effect to all proposals to adjust the terms and
conditions of this Agreement and the Offer which may be offered by Burlington
during the 24 hour notice period set forth below Canadian Hunter terminates this
Agreement in accordance with Sections 8.2 and 11.1(f) and concurrently therewith
has paid the fees payable thereunder. Canadian Hunter shall give Burlington
orally and in writing at least 24 hours advance notice of any decision by the
Board of Canadian Hunter to accept, recommend, approve or implement a Superior
Proposal. Such notice shall include the principal business terms and conditions
of the Superior Proposal and the general attributes of any non-cash
consideration but shall not include the identity of the party making the
Superior Proposal.
.4 Canadian Hunter Board of Directors
The Board of Directors of Canadian Hunter immediately following the
acquisition by Burlington of more than 50% of the outstanding Canadian Hunter
Shares pursuant to the Offer shall be reconstituted through resignations of all
existing Canadian Hunter directors and the appointment of Burlington nominees in
their stead. Canadian Hunter shall, in accordance with the foregoing and subject
to the provisions of the Act, assist Burlington to secure the resignations of
all Canadian Hunter directors to be effective at such time as may be required by
Burlington and to use its best efforts to cause the election of the Burlington
nominees to fill the vacancies so created in order to effect the foregoing
without the necessity of a shareholder meeting.
.5 Structure of Transaction
Canadian Hunter shall, to the extent reasonable, cooperate with Burlington
in structuring the acquisition by Burlington of Canadian Hunter in a tax
efficient manner, including without limitation, by completing to the
satisfaction of Burlington, acting reasonably, a possible internal corporate
reorganization of Canadian Hunter involving the transfer of certain assets to
one or more partnerships and/or the transfer of certain assets or unincorporated
business divisions to separate wholly-owned Canadian subsidiary corporations.
Burlington shall indemnify Canadian Hunter for all costs and taxes in connection
with the foregoing.
.6 Financial and Other Information
Canadian Hunter shall make available to Burlington, and consents to the use
of, all financial statements and other information of Canadian Hunter which may
be required to be disclosed in the Offer or in other Burlington documents,
including any proxy statement of Burlington and any registration statement filed
by Burlington with the United States Securities and Exchange Commission, and
amendments thereto, as required under applicable law. Such financial statements
shall be prepared in accordance with Canadian GAAP. If required under applicable
law, Canadian Hunter shall make available to Burlington, and shall assist in the
preparation of and consents to the use of, reconciliations of such financial
statements to generally accepted accounting principles in the United States,
prepared in
24
accordance with Item 18 of Form 20-F under the United States Securities Exchange
Act of 1934, as amended. If required by applicable law, such financial
statements shall be audited by Canadian Hunter's auditors. Canadian Hunter shall
use its best efforts to have its auditors, to the extent required under
applicable law, provide their consent to the use of their report and the use of
their name in connection with any disclosure by Burlington of such financial
statements. Burlington agrees to reimburse Canadian Hunter for its reasonable
third party expenses in connection with complying with this Section 8.6.
ARTICLE 9
COVENANTS OF burlington
.1 Availability of Funds
Burlington covenants and agrees that at all times when the Offer is
outstanding, Burlington shall not take any action, or fail to take any action,
which would or could reasonably be expected to result in the representation and
warranty set out in Section 5.4 being untrue in any material respect at any time
while the Offer is outstanding.
.2 Other Covenants
Burlington covenants and agrees that, from and including the date hereof
until the termination of this Agreement, unless Canadian Hunter agrees otherwise
in writing:
(a) Burlington shall use its reasonable commercial efforts to consummate the
Offer, subject only to the terms and conditions hereof and thereof;
(b) Burlington shall use its reasonable commercial efforts to obtain all of the
regulatory approvals, waivers and consents set out in paragraph (b) of
Schedule A; and
(c) Burlington shall honour all employment agreements, severance agreements and
other arrangements disclosed in the Disclosure Letter. Burlington
acknowledges that Canadian Hunter shall hold the benefits of this section
in trust for the benefit of such employees and Burlington shall not take
any action or permit any of its subsidiaries to take any action that would
render, or may reasonably be expected to render, any representation or
warranty made by it in this Agreement untrue in any material respect at any
time prior to expiry of the Offer or termination of this Agreement,
whichever first occurs.
ARTICLE 10
MUTUAL COVENANTS
.1 Other Filings
Burlington and Canadian Hunter shall, as promptly as practicable hereafter,
prepare and file any filings required under the Competition Act (Canada),
Investment Canada Act (Canada), any Securities Law, the rules of The Toronto
Stock Exchange and the New York Stock Exchange, the United States Securities
Exchange Act of 1934, as amended, state securities or "blue-sky" laws of the
states of the United States, as amended, the HSR Act or any other applicable law
relating to the transactions contemplated herein.
.2 Additional Agreements
Subject to the terms and conditions herein provided and to fiduciary
obligations under applicable law as advised by counsel in writing, each of the
parties hereto agrees to use all commercially reasonable efforts to take, or
cause to be taken, all action and to 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 to cooperate
with each other in connection with the foregoing, including using commercially
reasonable efforts: (i) to obtain all necessary waivers, consents
25
and approvals from other parties to material agreements, leases and other
contracts (including, without limitation, the agreement of any persons as may be
required pursuant to any agreement, arrangement or understanding relating to
Canadian Hunter's operations); (ii) to obtain all necessary consents, approvals
and authorizations as are required to be obtained under any federal, provincial
or foreign law or regulations; (iii) to defend all lawsuits or other legal
proceedings challenging this Agreement or the consummation of the transactions
contemplated hereby; (iv) to cause to be lifted or rescinded any injunction or
restraining order or other order adversely affecting the ability of the parties
to consummate the transactions contemplated hereby; (v) to effect all necessary
registrations and other filings and submissions of information requested by
governmental authorities; and (vi) to fulfill all conditions and satisfy all
provisions of this Agreement and the Offer. For purposes of this Agreement, the
obligation to use "commercially reasonable efforts" to obtain waivers, consents,
approvals and authorizations to loan agreements, leases and other contracts or
under laws or regulation shall not include any obligation to agree to a
materially adverse modification of the terms of such documents or to prepay or
incur additional material obligations.
ARTICLE 11
TERMINATION, AMENDMENT AND WAIVER
.1 Termination
This Agreement, other than the provisions set forth in Sections 8.2, 11.2
and 12.8, may be terminated by written notice promptly given to the other party
hereto, at any time prior to the time Burlington first takes up and pays for
Canadian Hunter Shares:
(a) by mutual agreement by Burlington and Canadian Hunter; or
(b) by Canadian Hunter, if Burlington has not mailed the Offer Documents to
holders of Canadian Hunter Shares on or before 12:00 midnight (Calgary
time) on October 19, 2001; or
(c) by Burlington, if the conditions to the Offer have not been satisfied or
waived by Burlington on or before the Expiry Time (after having extended
the Offer as required pursuant to this Agreement); or
(d) by either Burlington or Canadian Hunter, if Burlington has not taken up and
paid for the Canadian Hunter Shares deposited under the Offer on or before
the date which is 90 days, or if a Take-over Proposal is publicly
announced, proposed, offered or made to Canadian Hunter's shareholders, 180
days, following the day of mailing of the Offer Documents; or
(e) by either Burlington or Canadian Hunter, if the Offer terminates or expires
at the Expiry Time without Burlington taking up and paying for any of the
Canadian Hunter Shares as a result of the failure of any condition to the
Offer to be satisfied or waived unless the failure of such condition shall
be due to the failure of the party seeking to terminate this Agreement to
perform the obligations required to be performed by it under this
Agreement; or
(f) by either Burlington or Canadian Hunter, if the fee referred to in Section
8.2 becomes payable and payment is made or is immediately available to
Burlington; or
(g) by either Burlington or Canadian Hunter, if there has been a
misrepresentation, breach or nonperformance by the other party of any
representation, warranty (without reference to any qualification as to
materiality in such representation and warranty) or covenant contained in
this Agreement which would have or would reasonably be expected to have a
material adverse effect on the party seeking to terminate, provided the
breaching party has been given notice of and 5 Business Days to cure any
such misrepresentation, breach or non-performance.
26
.2 Effect of Termination
In the event of the termination of this Agreement as provided in Section
11.1, this Agreement shall forthwith have no further force or effect and there
shall be no obligation on the part of Burlington or Canadian Hunter hereunder
except as set forth in Sections 8.2 (provided that the right of payment (in the
case of Section 8.2(e), being the public announcement or commencement of such
Take-over Proposal) arose prior to the termination of this Agreement), Section
8.6 (insofar as it relates to the reimbursement of expenses) and Section 12.8
and this Section 11.2, which provisions shall survive the termination of this
Agreement. Nothing herein shall relieve any party from liability for any breach
of this Agreement.
.3 Amendment
This Agreement may be amended by mutual agreement between the parties
hereto. This Agreement may not be amended except by an instrument in writing
signed by the appropriate officers on behalf of each of the parties hereto.
.4 Waiver
Burlington, on the one hand, and Canadian Hunter, on the other hand, may
(i) extend the time for the performance of any of the obligations or other acts
of the other, (ii) waive compliance with any of the other's agreements or the
fulfillment of any conditions to its own obligations contained herein or (iii)
waive inaccuracies in any of the other's representations or warranties contained
herein or in any document delivered by the other party hereto; provided,
however, that any such extension or waiver shall be valid only if set forth in
an instrument in writing signed on behalf of such party.
ARTICLE 12
GENERAL PROVISIONS
.1 Notices
All notices and other communications given or made pursuant hereto shall be
in writing and shall be deemed to have been duly given or made as of the date
delivered or sent if delivered personally or sent by cable, telegram, telecopier
or telex or sent by prepaid overnight carrier to the parties at the following
addresses (or at such other addresses as shall be specified by the parties by
like notice):
(a) if to Burlington:
0000 Xxxxxxxxxx, Xxxxx 0000
Xxxxxxx, Xxxxx
00000
Attention: Xxxxx X. Xxxxxxxxx, President and Chief
Executive Officer and Xxxx Xxxxxxx,
Vice President and General Counsel
Telecopy No.: (000) 000-0000
with a copy to:
Burnet, Xxxxxxxxx & Xxxxxx LLP
#0000, 000 - 0xx Xxxxxx X.X.
Xxxxxxx, Xxxxxxx
X0X 0X0
Attention: Grant A. Zawalsky
Telecopy No.: (000) 000-0000
(b) if to Canadian Hunter:
27
Suite 2800, 000 - 0xx Xxxxxx X.X.
Xxxxxxx, Xxxxxxx
X0X 0X0
Attention: Xxxxxxx X. Xxxxxx, Vice-President, Finance and
Chief Financial Officer
Telecopy No.: (000) 000-0000
with a copy to:
Xxxxxxx Xxxxx LLP
0000, 000 - 0xx Xxxxxx X.X.
Xxxxxxx, Xxxxxxx
X0X 0X0
Attention: Xxxxxx Xxxxxxx or Xxxx XxxXxxx
Telecopy No.: (000) 000-0000
.2 Miscellaneous
This Agreement: (i) except for the Confidentiality Agreement, constitutes
the entire agreement and supersedes all other prior agreements and
understandings, both written and oral, between the parties, with respect to the
subject matter hereof; and (ii) shall be binding upon and inure to the benefit
of the parties hereto and their respective successors and assigns. The parties
hereto shall be entitled to rely upon delivery of an executed facsimile copy of
the Agreement, and such facsimile copy shall be legally effective to create a
valid and binding agreement among the parties hereto. The parties hereto agree
that irreparable damage would occur in the event that any of the provisions of
this Agreement were not performed in accordance with their specific terms or
were otherwise breached. It is accordingly agreed that the parties shall be
entitled to an injunction or injunctions to prevent breaches of this Agreement
and to enforce specifically the terms and provisions hereof in any court of the
Province of Alberta having jurisdiction, this being in addition to any other
remedy to which they are entitled at law or in equity. .3 Directors' and
Officers' Insurance
If Burlington takes up and pays for Canadian Hunter Shares pursuant to the
Offer, Canadian Hunter shall, provided Canadian Hunter is able to obtain the
same at a cost not exceeding 250% of the annual premium of Canadian Hunter's
current directors' and officers' insurance policy, obtain and pay for directors'
and officers' liability insurance on a "trailing" or "run-off" basis for
Canadian Hunter's current and former directors and officers (whether such
insurance is maintained independently of or included under Burlington's
directors and officers insurance policy), covering claims made prior to or
within six years from the date that the director or officer resigns or is
removed as a director or officer of Canadian Hunter. Coverage of such directors
and officers insurance should be substantially equivalent in scope and coverage
to that provided by Canadian Hunter's current directors and officers insurance
policy.
.4 Indemnities
Burlington agrees that, if it acquires the Minimum Required Shares under
the Offer, it shall cause each of Canadian Hunter and its subsidiaries to
fulfill its obligations pursuant to indemnities provided or available to past
and present officers and directors of Canadian Hunter and its subsidiaries
pursuant to the provisions of the articles, bylaws or similar constating
documents of Canadian Hunter and its subsidiaries, applicable corporate
legislation and any written indemnity agreements between any of Canadian Hunter
or its subsidiaries and its past and present directors and officers in the forms
provided to Burlington.
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.5 Employment Agreements
Burlington covenants and agrees to, and after the Effective Time Burlington
will cause Canadian Hunter and any successor to Canadian Hunter, to honour and
comply with the terms of those existing employment agreements, termination,
severance and retention plans or policies of Canadian Hunter which Canadian
Hunter has disclosed to Burlington in writing prior to the date hereof.
.6 Third Party Beneficiaries
The provisions of Sections 12.3, 12.4 and 12.5 are (i) intended for the
benefit of the employees of Canadian Hunter and its subsidiaries and all present
and former directors and officers of Canadian Hunter and its subsidiaries, as
and to the extent applicable in accordance with their terms, and shall be
enforceable by each of such persons and his or her heirs, executors
administrators and other legal representatives (collectively, the "Third Party
Beneficiaries") and Canadian Hunter shall hold the rights and benefits of
Sections 12.3, 12.4 and 12.5 in trust for and on behalf of the Third Party
Beneficiaries and Canadian Hunter hereby accepts such trust and agrees to hold
the benefit of and enforce performance of such covenants on behalf of the Third
Party Beneficiaries, and (ii) are in addition to, and not in substitution for,
any other rights that the Third Party Beneficiaries may have by contract or
otherwise.
.7 Assignment
Except as expressly permitted by the terms hereof, neither this Agreement
nor any of the rights, interests or obligations hereunder shall be assigned by
any of the parties hereto without the prior written consent of the other
parties. Burlington may assign all or any part of its rights or obligations
under this Agreement to a direct or indirect wholly-owned subsidiary of
Burlington, provided that if such assignment takes place, Burlington shall
continue to be liable to Canadian Hunter for any default in performance by the
assignee.
.8 Expenses
Except as provided in Section 8.2 and 8.6, all fees, costs and expenses
incurred in connection with this Agreement and the transactions contemplated
hereby shall be paid by the party incurring such cost or expense, whether or not
the Offer is consummated.
.9 Confidentiality Agreement
With respect to the Offer, including market purchases permitted under
Applicable Law, Canadian Hunter hereby consents to the Offer and Burlington is
hereby released from any of the restrictions set forth in Section 11 of the
Confidentiality Agreement.
.10 Survival of Representations and Warranties
The representations and warranties of Burlington and Canadian Hunter
contained in this Agreement shall not survive the completion of the Offer and
shall expire and be terminated at the earlier of the Effective Time and the date
on which this Agreement is terminated in accordance with its terms.
.11 Severability
Whenever possible, each provision of this Agreement shall be interpreted in
such manner as to be effective and valid under applicable law. Any provision of
this Agreement that is invalid or unenforceable in any jurisdiction shall be
ineffective to the extent of such invalidity or unenforceability without
invalidating or rendering unenforceable the remaining provisions hereof, and any
such invalidity or unenforceability in any jurisdiction shall not invalidate or
render unenforceable such provision in any other jurisdiction.
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.12 Counterpart Execution
This Agreement may be executed in any number of counterparts and each such
counterpart shall be deemed to be an original instrument but all such
counterparts together shall constitute one agreement.
IN WITNESS WHEREOF, Burlington and Canadian Hunter have caused this
Agreement to be executed as of the date first written above by their respective
officers thereunto duly authorized.
BURLINGTON RESOURCES INC.
Per:
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Per:
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CANADIAN HUNTER EXPLORATION LTD.
Per:
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Per:
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SCHEDULE A
CONDITIONS TO THE OFFER
The capitalized terms used in this Schedule A have the meanings set forth
in the attached Pre-Acquisition Agreement dated October 8, 2001 (the
"Agreement") between Burlington and Canadian Hunter, except that the term
"Offeror" shall be deemed to refer to Burlington.
Notwithstanding any other provision of the Offer, but subject to the
provisions of the Agreement, the Offeror reserves the right to withdraw or
terminate the Offer and not take up and pay for, or to extend the period of time
during which the Offer is open and postpone taking up and paying for, any
Canadian Hunter Shares deposited under the Offer unless all of the following
conditions are satisfied or waived by the Offeror:
(a) at the Expiry Time, and at the time the Offeror first takes up and pays for
Canadian Hunter Shares under the Offer, there shall have been validly
deposited under the Offer and not withdrawn at least 66 2/3% of the
outstanding Canadian Hunter Shares (calculated on a diluted basis) (the
"Minimum Condition");
(b) all requisite regulatory approvals, consents and expiries of waiting
periods (including, without limitation, under the Competition Act (Canada),
Investment Canada Act (Canada), the HSR Act and those of any stock
exchanges or other securities or regulatory authorities) shall have been
obtained or occurred on terms and conditions satisfactory to the Offeror,
acting reasonably, and all applicable statutory or regulatory waiting
periods shall have expired or been terminated;
(c) no act, action, suit, proceeding, objection or opposition shall have been
threatened or taken before or by any domestic or foreign court or tribunal
or governmental agency or other regulatory authority or administrative
agency or commission by any elected or appointed public official or by any
private person in Canada or elsewhere, whether or not having the force of
law, and (ii) no law, regulation or policy (including applicable tax laws
and regulations in those jurisdictions in which Canadian Hunter or any of
its subsidiaries carries on business) shall have been proposed, enacted,
promulgated, amended or applied, which in either case, in the sole judgment
of the Offeror acting reasonably:
(A) has the effect or may have the effect to cease trade, enjoin, prohibit
or impose material limitations, damages or conditions on the purchase
by, or the sale to, the Offeror of the Canadian Hunter Shares or the
right of the Offeror to own or exercise full rights of ownership of
the Canadian Hunter Shares;
(B) has had, or if the Offer was consummated could reasonably be expected
to result in, a Material Adverse Change or, in the case of (ii) above,
could reasonably be expected to have a material adverse effect on the
Offeror;
(C) has a material adverse effect on the completion of any compulsory
acquisition or any amalgamation, statutory arrangement or other
transaction involving the Offeror and/or an affiliate of the Offeror
and Canadian Hunter and/or the holders of Canadian Hunter Shares for
the purposes of Canadian Hunter becoming, directly or indirectly, a
wholly-owned subsidiary of the Offeror or affecting an amalgamation or
merger of Canadian Hunter's business and assets with or into the
Offeror and/or an affiliate of the Offeror (a "Second Stage
Transaction");
(d) there shall not exist any prohibition at law against the Offeror making the
Offer or taking up and paying for all of the Canadian Hunter Shares under
the Offer or completing any compulsory acquisition or Second Stage
Transaction in respect of any Canadian Hunter Shares not acquired under the
Offer;
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(e) in the sole judgment of the Offeror, acting reasonably: (i) Canadian Hunter
shall not have breached, or failed to comply with, in any material respect,
any of its covenants or other obligations under the Agreement: and (ii) all
representations and warranties of Canadian Hunter contained in the
Agreement shall have been true and correct in all material respects as of
the date of the Agreement and shall not have ceased to be true and correct
in any material respect thereafter provided that Canadian Hunter has been
given notice of and 5 Business Days to cure any misrepresentation, breach
or non-performance and has failed to cure any such misrepresentation,
breach or non-performance;
(f) the Offeror shall have determined that there does not exist and has not
occurred any Material Adverse Change;
(g) the Offeror shall have determined that there has not occurred: (i) any
general suspension of trading in, or general limitation on prices for,
securities on any United States or Canadian national securities exchange;
(ii) a declaration of a general banking moratorium or any general
suspension of payments in respect of banks in the United States or Canada;
(iii) any limitation by any United States or Canadian government or
regulatory authority on the extension of credit by banks or other financial
institutions applicable to financing the Offer; or (iv) in the case of any
of the foregoing existing as of the date of the Offer, material
acceleration or worsening thereof;
(h) the Offeror shall have determined in its sole judgment that, on terms
satisfactory to the Offeror that: (i) the Board of Directors of Canadian
Hunter shall not have waived the application of the Rights Plan to the
purchase of securities by any third party prior to the Expiry Date of the
Offer; (ii) a cease trading order or an injunction shall not have been
issued that has the effect of prohibiting or preventing the exercise of the
Rights or the issue of common shares of Canadian Hunter upon the exercise
of the Rights in relation to any offer that expires prior to the Expiry
Date and such cease trading order or injunction shall be in full force and
effect; (iii) a court of competent jurisdiction shall not have ordered that
the Rights are illegal, of no force or effect or may not be exercised in
relation to any offer which expires prior to the Expiry Date; (iv) the
Rights and the Rights Plan shall not otherwise have been held unexercisable
or unenforceable in relation to any offer which expires prior to the Expiry
Date; or (v) the Rights Plan does not make it inadvisable for the Offeror
to proceed with the Offer and/or with taking up and paying for all of the
Canadian Hunter Shares under the Offer, a compulsory acquisition and any
Second Stage Transaction.
SCHEDULE B
FORM OF PRE-TENDER AGREEMENT
October 8, 2001
Dear Sir:
Re: Offer by Burlington to Purchase all of the Canadian Hunter Shares
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Reference is made to the Pre-Acquisition Agreement dated October 8, 2001
(the "Pre-Acquisition Agreement") between Burlington and Canadian Hunter
pursuant to which Burlington has agreed to make an offer to purchase all of the
issued and outstanding Canadian Hunter Shares. Unless otherwise defined herein,
all capitalized terms referred to herein shall have the meanings attributed
thereto in the Pre-Acquisition Agreement.
We understand that you (the "Selling Shareholder") or your affiliates
beneficially own, directly or indirectly, or exercise control or direction over,
the number of Canadian Hunter Shares set forth in your acceptance at the end of
this letter agreement.
Any references in this letter agreement to Canadian Hunter Shares owned by
the Selling Shareholder shall mean such number of Canadian Hunter Shares and,
where the context requires, shall include all Canadian Hunter Shares issued to
the Selling Shareholder after the date hereof pursuant to the exercise of
Canadian Hunter Options.
This letter agreement sets out the terms and conditions upon which the
Selling Shareholder has agreed, among other things, to support the Offer and to
deposit under the Offer, or cause to be deposited under the Offer, all of the
Canadian Hunter Shares (including Canadian Hunter Shares issuable upon the
exercise of Canadian Hunter Options) held by the Selling Shareholder that are,
or will be, beneficially owned or controlled by the Selling Shareholder.
1. Covenants of Selling Shareholder
By the acceptance of this letter agreement, the Selling Shareholder hereby
agrees, subject to the terms of paragraph 3 of this letter agreement, from the
date hereof until the earlier of the termination of this letter agreement and
the Take-up Date:
(a) not to sell, assign, convey or otherwise dispose of any of the Canadian
Hunter Shares owned by such Selling Shareholder and not to permit any
affiliate of such Selling Shareholder to sell, assign, convey or otherwise
dispose of any of the Canadian Hunter Shares owned by it;
(b) unconditionally and irrevocably to accept and to cause any affiliate of
such Selling Shareholder to unconditionally and irrevocably accept the
Offer made by Burlington by depositing the Canadian Hunter Shares presently
owned or hereafter acquired (including any Canadian Hunter Shares hereafter
acquired pursuant to the exercise of any options to purchase Canadian
Hunter Shares) by such Selling Shareholder or affiliate prior to the Expiry
Time and in accordance with the terms and conditions of the Offer;
(c) that they will not exercise any Canadian Hunter Options and that they agree
to elect that, in lieu of exercising their Canadian Hunter Options,
Canadian Hunter will pay the difference between the exercise price of their
Canadian Hunter Options and the purchase price for the Canadian Hunter
Shares under the Offer immediately after the Take-up Date in exchange for
the termination of their Canadian Hunter Options and provided the Selling
Shareholder agrees to surrender their remaining unexercised options to
Canadian Hunter for cancellation for no consideration effective immediately
after the Take-up Date;
2
(d) that all loans made by Canadian Hunter to the Selling Shareholder shall be
repaid in full on the Take-up Date and that all outstanding amounts shall
be netted against any amounts due from Burlington under the Offer to the
Selling Shareholder;
(e) not to exercise any statutory or other rights of withdrawal with respect to
any Canadian Hunter Shares owned by such Selling Shareholder or any
affiliate of such Selling Shareholder once deposited pursuant to the Offer
unless this letter agreement is terminated prior to Burlington taking up
the Canadian Hunter Shares under the Offer; and
(f) not to exercise any shareholder rights or remedies available at common law
or pursuant to the Business Corporations Act (Alberta) or applicable
securities legislation to delay, hinder, upset or challenge the Offer.
2. Covenants of Burlington
(a) Burlington shall make the Offer in accordance with the terms and conditions
of the Pre-Acquisition Agreement and shall comply with the terms and
conditions of Article 2 and Sections 12.3 and 12.4 thereof in respect of
the Offer.
(b) Burlington shall, subject to the satisfaction or waiver of the conditions
set forth in the Offer, take up and pay for all Canadian Hunter Shares
owned by the Selling Shareholder or any affiliate of the Selling
Shareholder deposited pursuant to the Offer, all in accordance with the
terms and conditions of the Offer and the provisions of the Pre-Acquisition
Agreement.
3. Fiduciary Duties
Nothing herein shall restrict or limit the actions of any director or
officer required to be taken in the discharge of his fiduciary duties as a
director or officer of Canadian Hunter.
4. Expenses
Burlington and the Selling Shareholder agree to pay their own respective
expenses incurred in connection with this letter agreement. Each of the parties
hereto agrees to indemnify the other against any claim for a finder's fee or
other compensation validly made by any broker which has an agreement with such
indemnifying party for the payment of such fee or compensation. This paragraph 4
shall survive the termination of this letter agreement pursuant to paragraph 5.
5. Termination
It is understood and agreed that the respective rights and obligations
hereunder of Burlington and the Selling Shareholder shall cease and this letter
agreement shall terminate:
(a) if, prior to the expiry of the Offer, another bona fide Take-over Proposal
is announced, proposed, offered or made to the holders of Canadian Hunter
Shares or Canadian Hunter which, in the opinion of Canadian Hunter's Board
of Directors after consultation with its financial advisors, would
constitute a Superior Proposal and which permits the Board of Directors of
Canadian Hunter to withdraw, modify or change any recommendation regarding
the Offer in accordance with Section 2.2(a) of the Pre-Acquisition
Agreement; or
(b) if the Canadian Hunter Board of Directors otherwise withdraws, modifies or
changes any recommendation with respect to the Offer; or
(c) if Burlington waives the Minimum Condition, decreases the consideration
offered pursuant to the Offer or otherwise modifies or amends the Offer in
a manner materially adverse to holders of Canadian Hunter Shares, provided
that an extension of the Offer shall not constitute an adverse modification
or amendment to the Offer; or
3
(d) in the event that the Pre-Acquisition Agreement is terminated pursuant to
Section 11.1 thereof.
In the event of termination of this letter agreement, the Selling
Shareholder may withdraw all of the Canadian Hunter Shares deposited in
accordance with the terms and conditions of the Offer, this letter agreement
shall forthwith be of no further force and effect and there shall be no
obligation or liability on the part of either the Selling Shareholder or
Burlington, except as set forth in paragraph 4 and this paragraph 5 which
provisions shall survive the termination of this letter agreement. Nothing
herein shall relieve any party from liability for any breach of this letter
agreement.
6. Amendment
Except as expressly set forth herein, this letter agreement constitutes the
whole of the agreement between the parties and may not be modified, amended,
altered or supplemented except upon the execution and delivery of a written
agreement executed by the parties hereto.
7. Assignment
Except as expressly set forth herein, no party to this letter agreement may
assign any of its rights or obligations under this letter agreement without the
prior written consent of the other party.
8. Disclosure
Prior to first public disclosure of the existence and terms and conditions
of this letter, none of the parties hereto shall disclose the existence of this
letter agreement, or any details hereof, to any person other than Canadian
Hunter, its directors and officers, without the prior written consent of the
other parties hereto, except to the extent required by law. The existence and
terms and conditions of this letter agreement may be disclosed by Burlington and
Canadian Hunter in the press release issued in connection with the execution of
the Pre-Acquisition Agreement and the Offer Documents and the Directors Circular
prepared by Canadian Hunter.
9. Enurement
This letter agreement will be binding upon and enure to the benefit of
Burlington, the Selling Shareholder and their respective executors,
administrators, successors and permitted assigns.
10. Applicable Law
This letter agreement shall be governed and construed in accordance with
the laws of the Province of Alberta and the federal laws of Canada applicable
therein and each of the parties hereto irrevocably attorns to the jurisdictions
of the courts of the Province of Alberta.
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11. Counterparts
This letter agreement may be signed in counterparts which together shall be
deemed to constitute one valid and binding agreement and delivery of such
counterparts may be effected by means of telecopier.
Yours truly,
BURLINGTON RESOURCES INC.
Per:
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Acceptance
The foregoing is hereby accepted as of and with effect from the ____ day of
October, 2001 and the undersigned hereby confirms that the undersigned
beneficially owns ____________________ Canadian Hunter Shares and options to
acquire a further __________________________ Canadian Hunter Shares.
________________________________ ______________________________________
Witness Name:
Title:
SCHEDULE C
