SUPPORT AGREEMENT (“Agreement”) made as of the 2nd day of March, 2007.
EXHIBIT
10.3
SUPPORT
AGREEMENT (“Agreement”)
made
as of the 2nd
day of
March,
2007.
AMONG:
SURGE
GLOBAL ENERGY, INC.,
a
corporation incorporated under the laws of Delaware
(hereinafter referred to as “Acquiror”)
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and
-
COLD
FLOW ENERGY ULC,
an
unlimited liability company incorporated under the laws of Alberta (hereinafter
referred to as the “Corporation”)
-
and
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1294697
ALBERTA LTD.,
a
corporation incorporated under the laws of Alberta (hereinafter referred to
as
“Callco”)
WHEREAS:
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A.
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in
connection with a stock purchase agreement (the “Acquisition
Agreement”)
made as of November
30,
2006 among Acquiror, Peace Oil Corp., a corporation incorporated
under the
laws of Alberta (“Peace”),
the Corporation and the shareholders of Peace, the Corporation is
to issue
exchangeable shares (the “Exchangeable
Shares”)
to the holders of Class “A” and Class “I” shares in the capital of Peace
in consideration, in part, for the acquisition of their Class “A” and
Class “I” shares in the capital of Peace; and
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B.
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pursuant
to the Acquisition Agreement, Acquiror has agreed to, and to cause
the
Corporation to, execute this Agreement.
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NOW
THEREFORE
in
consideration of the respective covenants and agreements provided in this
Agreement and for other good and valuable consideration (the receipt and
sufficiency of which are hereby acknowledged), the parties hereto covenant
and
agree as follows:
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ARTICLE 1
INTERPRETATION
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1.1
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DEFINED
TERMS
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Each
term
denoted herein by initial capital letters and not otherwise defined herein
shall
have the meaning ascribed thereto in the rights, privileges, restrictions and
conditions (collectively, the “Exchangeable
Share Provisions”)
attaching to the Exchangeable Shares attached as Exhibit 3.1 to the Acquisition
Agreement.
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1.2
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INTERPRETATION
NOT AFFECTED BY HEADINGS
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The
division of this Agreement into articles, sections and other portions and the
insertion of headings are for convenience of reference only and shall not affect
the construction or interpretation hereof. Unless otherwise indicated, all
references to an “Article” or “Section” followed by a number refer to the
specified Article or Section of this Agreement. The terms “this Agreement,”
“hereof,” “herein” and “hereunder” and similar expressions refer to this
Agreement and not to any particular Article, Section or other portion hereof
and
include any agreement or instrument supplementary or ancillary
hereto.
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1.3
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RULES
OF CONSTRUCTION
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Unless
otherwise specifically indicated or the context otherwise requires, (a) all
references to “dollars” or “$” mean United States dollars, (b) words importing
the singular shall include the plural and vice versa and words importing any
gender shall include all genders, and (c) “include,” “includes” and “including”
shall be deemed to be followed by the words “without limitation.”
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1.4
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DATE
FOR ANY ACTION
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If
the
event that any date on which any action is required to be taken hereunder by
any
of the parties hereto is not a Business Day, such action shall be required
to be
taken on the next succeeding day that is a Business Day.
ARTICLE 2
COVENANTS
OF ACQUIROR AND THE CORPORATION
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2.1
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COVENANTS
REGARDING EXCHANGEABLE
SHARES
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So
long
as any Exchangeable Shares not owned by Acquiror or its Affiliates are
outstanding, Acquiror will:
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(a)
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not
declare or pay any dividend on the Acquiror Shares unless (i) the
Corporation shall (w) simultaneously declare or pay, as the case
may be,
an equivalent dividend or other distribution economically equivalent
thereto (as provided for in the Exchangeable Share Provisions) on
the
Exchangeable Shares (an “Equivalent
Dividend”)
and (x) the Corporation shall have sufficient money or other assets
or
authorized but unissued securities available to enable the due declaration
and the due and punctual payment, in accordance with applicable law
and
the terms of the Exchangeable Share Provisions, of any such Equivalent
Dividend, or, if the dividend or other distribution is a stock dividend
or
distribution of stock, in lieu of such dividend (ii) the Corporation
shall (y) effect a corresponding, contemporaneous and economically
equivalent subdivision of the Exchangeable Shares (as provided for
in the
Exchangeable Share Provisions) (an “Equivalent
Stock Subdivision”),
and (z) have sufficient authorized but unissued securities available
to
enable the Equivalent Stock Subdivision;
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(b)
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advise
the Corporation sufficiently in advance of the declaration by Acquiror
of
any dividend on Acquiror Shares and take all such other actions as
are
reasonably necessary, in cooperation with the Corporation, to ensure
that
(i) the respective declaration date, record date and payment date
for an
Equivalent Dividend on the Exchangeable Shares shall be the same
as the
declaration date, record date and payment date for the corresponding
dividend on the Acquiror Shares, or (ii) the record date and effective
date for an Equivalent Stock Subdivision shall be the same as the
record
date and payment date for the stock dividend on the Acquiror Shares
and
that such dividend on the Exchangeable Shares will correspond with
any
requirement of the principal stock exchange on which the Exchangeable
Shares are listed, if any;
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(c)
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ensure
that the record date for any dividend declared on Acquiror Shares
is not
less than 10 Business Days after the declaration date of such
dividend;
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(d)
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take
all such actions and do all such things as are reasonably necessary
or
desirable to enable and permit the Corporation, in accordance with
applicable law, to pay and otherwise perform its obligations with
respect
to the satisfaction of the Liquidation Amount, the Retraction Price
or the
Redemption Price in respect of each issued and outstanding Exchangeable
Share (other than Exchangeable Shares owned by Acquiror or its Affiliates)
upon the liquidation, dissolution or winding-up of the Corporation
or any
other distribution of the assets of the Corporation among its shareholders
for the purpose of winding-up its affairs, the delivery of a Retraction
Request by a holder of Exchangeable Shares or a redemption of Exchangeable
Shares by the Corporation, as the case may be, including all such
actions
and all such things as are necessary or desirable to enable and permit
the
Corporation to cause to be delivered Acquiror Shares to the holders
of
Exchangeable Shares in accordance with the provisions of Article
5, 6 or
7, as the case may be, of the Exchangeable Share Provisions and cash
in
respect of declared and unpaid dividends;
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(e)
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take
all such actions and do all such things as are reasonably necessary
or
desirable to enable and permit Callco, in accordance with applicable
law,
to perform its obligations arising upon the exercise by it of the
Liquidation Call Right, the Retraction Call Right or the Redemption
Call
Right, including all such actions and all such things as are necessary
or
desirable to enable and permit Callco to cause to be delivered Acquiror
Shares to the holders of Exchangeable Shares in accordance with the
provisions of the Liquidation Call Right, the Retraction Call Right
or the
Redemption Call Right, as the case may be, and cash in respect of
declared
and unpaid dividends; and
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(f)
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not
(and will ensure that Callco or any of its Affiliates does not) exercise
its vote as a shareholder to initiate the voluntary liquidation,
dissolution or winding-up of the Corporation or any other distribution
of
the assets of the Corporation among its shareholders for the purpose
of
winding up its affairs nor take any action or omit to take any action
(and
Acquiror will not permit Callco or any of its Affiliates to take
any
action or omit to take any action) that is designed to result in
the
liquidation, dissolution or winding up of the Corporation or any
other
distribution of the assets of the Corporation among its shareholders
for
the purpose of winding up its affairs.
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2.2
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SEGREGATION
OF FUNDS
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(a)
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Acquiror
will cause the Corporation to deposit a sufficient amount of funds
in a
separate account of the Corporation and segregate a sufficient amount
of
such other assets and property as is necessary to enable the Corporation
to pay dividends when due and to pay or otherwise satisfy its respective
obligations under Article 5, 6 or 7 of the Exchangeable Share
Provisions or, if required, to pay the purchase price for Acquiror
Shares
as contemplated by Section 2.5,
as applicable.
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(b)
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Acquiror
will cause Callco to deposit a sufficient amount of funds in a separate
account of Callco and segregate a sufficient amount of such other
assets
and property as is necessary to enable Callco to pay the purchase
price
for Acquiror Shares as contemplated by Section 2.5.
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2.3
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RESERVATION
OF ACQUIROR SHARES
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Acquiror
hereby represents, warrants and covenants in favour of the Corporation that
Acquiror has reserved for issuance and will, at all times while any Exchangeable
Shares (other than Exchangeable Shares held by Acquiror or its Affiliates)
are
outstanding, keep available, free from preemptive and other rights, out of
its
authorized and unissued capital stock such number of Acquiror Shares (or other
shares or securities into which Acquiror Shares may be reclassified or changed
as contemplated by Section 2.7
hereof)
(a) as is equal to the sum of (i) two times the number of Exchangeable Shares
issued and outstanding from time to time and (ii) two times the number of
Exchangeable Shares issuable upon the exercise of all rights to acquire
Exchangeable Shares outstanding from time to time and (b) as are now and may
hereafter be required to enable and permit Acquiror to meet its obligations
under the Voting and Exchange Trust Agreement, to enable and permit Callco
to
meet its obligations arising upon exercise by it of each of the Liquidation
Call
Right, the Retraction Call Right and the Redemption Call Right and to enable
and
permit the Corporation to meet its obligations hereunder and under the
Exchangeable Share Provisions.
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2.4
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NOTIFICATION
OF CERTAIN EVENTS
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In
order
to assist Acquiror in compliance with its obligations hereunder and to permit
Callco to exercise the Liquidation Call Right, the Retraction Call Right and
the
Redemption Call Right, the Corporation will notify Acquiror and Callco of each
of the following events at the times set forth below:
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(a)
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in
the event of any determination by the Board of Directors of the
Corporation to institute voluntary liquidation, dissolution or winding-up
proceedings with respect to the Corporation or to effect any other
distribution of the assets of the Corporation among its shareholders
for
the purpose of winding up its affairs, at least 60 days prior to
the
proposed effective date of such liquidation, dissolution, winding-up
or
other distribution;
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(b)
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promptly,
upon the earlier of receipt by the Corporation of notice of and the
Corporation otherwise becoming aware of any threatened or instituted
claim, suit, petition or other proceeding with respect to the involuntary
liquidation, dissolution or winding-up of the Corporation or to effect
any
other distribution of the assets of the Corporation among its shareholders
for the purpose of winding up its affairs;
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(c)
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promptly,
upon receipt by the Corporation of a Retraction Request;
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(d)
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promptly
following the date on which notice of redemption is given to holders
of
Exchangeable Shares, upon the determination of a Redemption Date
in
accordance with the Exchangeable Share Provisions; and
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(e)
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promptly
upon the issuance by the Corporation of any Exchangeable Shares or
rights
to acquire Exchangeable Shares (other than the issuance of Exchangeable
Shares and rights to acquire Exchangeable Shares in exchange for
outstanding Peace Shares pursuant to the Acquisition
Agreement).
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2.5
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DELIVERY
OF ACQUIROR SHARES TO THE
CORPORATION
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In
furtherance of its obligations under Section 2.1(d)
hereof,
upon notice from the Corporation or Callco of any event that requires the
Corporation or Callco to cause to be delivered Acquiror Shares to any holder
of
Exchangeable Shares, Acquiror shall forthwith issue and deliver the requisite
number of Acquiror Shares to be received by, and issued to or to the order
of,
the former holder of the surrendered Exchangeable Shares, as the Corporation
or
Callco shall direct. All such Acquiror Shares shall be duly authorized, validly
issued and fully paid and non-assessable and shall be free and clear of any
lien, claim or encumbrance. In consideration of the issuance and delivery of
such Acquiror Share, the Corporation or Callco, as the case may be, shall pay
a
purchase price equal to the fair market value of such Acquiror
Share.
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2.6
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QUALIFICATION
OF ACQUIROR SHARES
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Acquiror
covenants that if any Acquiror Shares (or other shares or securities into which
Acquiror Shares may be reclassified or changed as contemplated by
Section 2.7
hereof)
to be issued and delivered hereunder (including for greater certainty, pursuant
to the Exchangeable Share Provisions or pursuant to the Change of Law Call
Right, Exchange Right or the Automatic Exchange Rights (each as defined in
the
Voting and Exchange Trust Agreement)) require registration or qualification
with, or approval of, or the filing of any document, including any prospectus
or
similar document, the taking of any proceeding with, or the obtaining of any
order, ruling or consent from, any governmental or regulatory authority under
any Canadian or United States federal, provincial, territorial or state
securities or other law or regulation or pursuant to the rules and regulations
of any securities or other regulatory authority, or the fulfilment of any other
United States or Canadian legal requirement (collectively, the “Applicable
Laws”)
before
such shares (or other shares or securities into which Acquiror Shares may be
reclassified or changed as contemplated by Section 2.7
hereof)
may be issued and delivered by Acquiror at the direction of the Corporation
or
Callco, if applicable, to the holder of surrendered Exchangeable Shares or
in
order that such shares (or other shares or securities into which Acquiror Shares
may be reclassified or changed as contemplated by Section 2.7
hereof)
may be freely traded thereafter (other than any restrictions of general
application on transfer by reason of a holder being a “control person” of
Acquiror for purposes of Canadian provincial securities law or an “affiliate” of
Acquiror for purposes of United States federal or state securities law),
Acquiror will use its reasonable best efforts and in good faith expeditiously
take all such actions and do all such things as are necessary or desirable
and
within its power to cause such Acquiror Shares (or other shares or securities
into which Acquiror Shares may be reclassified or changed as contemplated by
Section 2.7
hereof)
to be and remain duly registered, qualified or approved under United States
and/or Canadian law, as the case may be, to the extent expressly provided in
the
Acquisition Agreement. Acquiror will use its reasonable best efforts and in
good
faith expeditiously take all such actions and do all such things as are
reasonably necessary or desirable to cause all Acquiror Shares (or other shares
or securities into which Acquiror Shares may be reclassified or changed as
contemplated by Section 2.7
hereof)
to be delivered hereunder to be listed, quoted or posted for trading on all
stock exchanges and quotation systems on which outstanding Acquiror Shares
(or
other shares or securities into which Acquiror Shares may be reclassified or
changed as contemplated by Section 2.7
hereof)
are listed and are quoted or posted for trading at such time.
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2.7
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ECONOMIC
EQUIVALENCE
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So
long
as any Exchangeable Shares not owned by Acquiror or its Affiliates are
outstanding:
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(a)
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Acquiror
will not, without prior approval of the Corporation and the prior
approval
of the holders of the Exchangeable Shares given in accordance with
Section
10.2 of the Exchangeable Share
Provisions:
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(i)
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issue
or distribute Acquiror Shares (or securities exchangeable for or
convertible into or carrying rights to acquire Acquiror Shares) to
the
holders of all or substantially all of the then outstanding Acquiror
Shares by way of stock dividend or other distribution, other than
an issue
of Acquiror Shares (or securities exchangeable for or convertible
into or
carrying rights to acquire Acquiror Shares) to holders of Acquiror
Shares
who (A) exercise an option to receive dividends in Acquiror Shares
(or
securities exchangeable for or convertible into or carrying rights
to
acquire Acquiror Shares) in lieu of receiving cash dividends, or
(B)
pursuant to any dividend reinvestment plan or scrip dividend;
or
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(ii)
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issue
or distribute rights, options or warrants to the holders of all or
substantially all of the then outstanding Acquiror Shares entitling
them
to subscribe for or to purchase Acquiror Shares (or securities
exchangeable for or convertible into or carrying rights to acquire
Acquiror Shares); or
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(iii)
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issue
or distribute to the holders of all or substantially all of the then
outstanding Acquiror Shares (A) shares or securities of Acquiror
of any
class other than Acquiror Shares (other than shares convertible into
or
exchangeable for or carrying rights to acquire Acquiror Shares),
(B)
rights, options or warrants other than those referred to in
Section 2.7(a)(ii)
above, (C) evidences of indebtedness of Acquiror or (D) assets of
Acquiror, unless the economic equivalent on a per share basis of
such
rights, options, warrants, securities, shares, evidences of indebtedness
or other assets is issued or distributed simultaneously to holders
of the
Exchangeable Shares; provided that, for greater certainty, the above
restrictions shall not apply to any securities issued or distributed
by
Acquiror in order to give effect to and to consummate the transactions
contemplated by, and in accordance with, the Acquisition
Agreement.
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(b)
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Acquiror
will not without the prior approval of the Corporation and the prior
approval of the holders of the Exchangeable Shares given in accordance
with Section 10.2 of the Exchangeable Share
Provisions:
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(i)
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subdivide,
redivide or change the then outstanding Acquiror Shares into a greater
number of Acquiror Shares; or
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(ii)
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reduce,
combine, consolidate or change the then outstanding Acquiror Shares
into a
lesser number of Acquiror Shares; or
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(iii)
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reclassify
or otherwise change Acquiror Shares or effect an amalgamation, merger,
reorganization or other transaction affecting the Acquiror
Shares,
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unless
the same or an economically equivalent change shall simultaneously be made
to,
or in the rights of the holders of, the Exchangeable Shares; provided that,
for
greater certainty, the above restrictions shall not apply to any securities
issued or distributed by Acquiror in order to give effect to and to consummate
the transactions contemplated by, and in accordance with, the Acquisition
Agreement.
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(c)
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Acquiror
will ensure that the record date for any event referred to in
Section 2.7(a)
or
2.7(b)
above, or (if no record date is applicable for such event) the effective
date for any such event, is not less than five Business Days after
the
date on which such event is declared or announced by Acquiror (with
contemporaneous notification thereof by Acquiror to the
Corporation).
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(d)
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The
Board of Directors of the Corporation shall determine, in good faith
and
in its sole discretion, economic equivalence for the purposes of
any event
referred to in Section 2.7(a)
or
2.7(b)
above and each such determination shall be conclusive and binding
on
Acquiror and the holders of Exchangeable Shares. In making each such
determination, the following factors shall, without excluding other
factors determined by the Board of Directors of the Corporation to
be
relevant, be considered by the Board of Directors of the
Corporation:
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(i)
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in
the case of any stock dividend or other distribution payable in Acquiror
Shares, the number of such shares issued as a result of any stock
dividend
or other distribution in proportion to the number of Acquiror Shares
previously outstanding;
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(ii)
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in
the case of the issuance or distribution of any rights, options or
warrants to subscribe for or purchase Acquiror Shares (or securities
exchangeable for or convertible into or carrying rights to acquire
Acquiror Shares), the relationship between the exercise price of
each such
right, option or warrant and the Current Market Price, the volatility
of
the Acquiror Shares and the term of any such instrument;
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(iii)
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in
the case of the issuance or distribution of any other form of property
(including any shares or securities of Acquiror of any class other
than
Acquiror Shares, any rights, options or warrants other than those
referred
to in Section 2.7(d)(ii)
above, any evidences of indebtedness of Acquiror or any assets of
Acquiror), the relationship between the fair market value (as determined
by the Board of Directors of the Corporation in the manner above
contemplated) of such property to be issued or distributed with respect
to
each outstanding Acquiror Share and the Current Market Price;
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(iv)
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in
the case of any subdivision, redivision or change of the then outstanding
Acquiror Shares into a greater number of Acquiror Shares or the reduction,
combination, consolidation or change of the then outstanding Acquiror
Shares into a lesser number of Acquiror Shares or any amalgamation,
merger, reorganization or other transaction affecting Acquiror Shares,
the
effect thereof upon the then outstanding Acquiror Shares;
and
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(v)
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in
all such cases, the general taxation consequences of the relevant
event to
holders of Exchangeable Shares to the extent that such consequences
may
differ from the taxation consequences to holders of Acquiror Shares
as a
result of differences between taxation laws of Canada and the United
States (except for any differing consequences arising as a result
of
differing marginal taxation rates and without regard to the individual
circumstances of holders of Exchangeable
Shares).
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(e)
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The
Corporation agrees that, to the extent required, upon due notice
from
Acquiror, the Corporation will use its best efforts to take or cause
to be
taken such steps as may be necessary for the purposes of ensuring
that
appropriate dividends are paid or other distributions are made by
the
Corporation, or subdivisions, redivisions or changes are made to
the
Exchangeable Shares, in order to implement the required economic
equivalent with respect to the Acquiror Shares and Exchangeable Shares
as
provided for in this Section 2.7.
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2.8
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TENDER
OFFERS
|
For
so
long as Exchangeable Shares remain outstanding (not including Exchangeable
Shares held by Acquiror and its Affiliates), in the event that a tender offer,
share exchange offer, issuer bid, take-over bid or similar transaction with
respect to Acquiror Shares (an “Offer”)
is
proposed by Acquiror or is proposed to Acquiror or its shareholders and is
recommended by the Board of Directors of Acquiror, or is otherwise effected
or
to be effected with the consent or approval of the Board of Directors of
Acquiror, and the Exchangeable Shares are not redeemed by the Corporation or
purchased by Callco pursuant to the Redemption Call Right, Acquiror will use
its
reasonable best efforts expeditiously and in good faith to take all such actions
and do all such things as are necessary or desirable to enable and permit
holders of Exchangeable Shares (other than Acquiror and its Affiliates) to
participate in such Offer to the same extent and on an economically equivalent
basis as the holders of Acquiror Shares, without discrimination. Without
limiting the generality of the foregoing, Acquiror will use its reasonable
best
efforts expeditiously and in good faith to ensure that holders of Exchangeable
Shares may participate in each such Offer without being required to retract
Exchangeable Shares as against the Corporation (or, if so required, to ensure
that any such retraction, shall be effective only upon, and shall be conditional
upon, the closing of such Offer and only to the extent necessary to tender
or
deposit to the Offer). Nothing herein shall affect the rights of the Corporation
(or Callco to purchase pursuant to the Redemption Call Right) to redeem
Exchangeable Shares in the event of an Acquiror Control
Transaction.
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2.9
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OWNERSHIP
OF OUTSTANDING SHARES
|
Without
the prior approval of the Corporation and the prior approval of the holders
of
the Exchangeable Shares given in accordance with Section 10.2 of the
Exchangeable Share Provisions, Acquiror covenants and agrees in favour of the
Corporation that, as long as any outstanding Exchangeable Shares are owned
by
any Person other than Acquiror or any of its Affiliates, Acquiror will be and
remain the direct or indirect beneficial owner of all issued and outstanding
voting shares in the capital of the Corporation and Callco. Notwithstanding
the
foregoing, Acquiror shall not be in violation of this section if any person
or
group of persons acting jointly or in concert acquires all or substantially
all
of the assets of Acquiror or the Acquiror Shares pursuant to any merger of
Acquiror pursuant to which Acquiror was not the surviving
corporation.
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2.10
|
ACQUIROR
AND AFFILIATES NOT TO VOTE EXCHANGEABLE
SHARES
|
Acquiror
and Callco each covenants and agrees that it will not, and will cause its
Affiliates not to, exercise any voting rights which may be exercisable by
holders of Exchangeable Shares from time to time pursuant to the Exchangeable
Share Provisions or pursuant to the provisions of the ABCA (or any successor
or
other corporate statute by which the Corporation may in the future be governed)
with respect to any Exchangeable Shares held by it or by its Affiliates in
respect of any matter considered at any meeting of holders of Exchangeable
Shares.
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2.11
|
RULE
10B-18 PURCHASES
|
For
greater certainty, nothing contained in this Agreement, including the
obligations of Acquiror contained in Section 2.8
hereof,
shall limit the ability of Acquiror or the Corporation to make a “Rule l0b-18
purchase” of Acquiror Shares pursuant to Rule 10b-18 of the United States
Securities
Exchange Act of
1934,
as
amended, or any successor rule.
ARTICLE 3
ACQUIROR
SUCCESSORS
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3.1
|
CERTAIN
REQUIREMENTS IN RESPECT OF COMBINATION,
ETC.
|
Neither
Acquiror nor Callco shall consummate any transaction (whether by way of
reconstruction, reorganization, consolidation, merger, transfer, sale, lease
or
otherwise) whereby all or substantially all of its undertaking, property and
assets would become the property of any other Person or, in the case of a
merger, of the continuing corporation resulting therefrom unless, but may do
so
if:
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(a)
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such
other Person or continuing corporation (the “Acquiror
Successor”)
by operation of law, becomes, without more, bound by the terms and
provisions of this Agreement or, if not so bound, executes, prior
to or
contemporaneously with the consummation of such transaction, an agreement
supplemental hereto and such other instruments (if any) as are reasonably
necessary or advisable to evidence the assumption by the Acquiror
Successor of liability for all moneys payable and property deliverable
hereunder and the covenant of such Acquiror Successor to pay and
deliver
or cause to be delivered the same and its agreement to observe and
perform
all the covenants and obligations of Acquiror or Callco, as the case
may
be, under this Agreement;
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(b)
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in
the event that the Acquiror Shares are reclassified or otherwise
changed
as part of such transaction, the same or an economically equivalent
change
is simultaneously made to, or in the rights of the holders of, the
Exchangeable Shares; and
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(c)
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such
transaction shall be upon such terms and conditions as substantially
to
preserve and not to impair in any material respect any of the rights,
duties, powers and authorities of the other parties hereunder or
the
holders of Exchangeable Shares.
|
|
3.2
|
VESTING
OF POWERS IN SUCCESSOR
|
Whenever
the conditions of Section 3.1
have
been duly observed and performed, the parties, if required by
Section 3.1,
shall
execute and deliver the supplemental agreement provided for in
Section 3.1(a)
and
thereupon the Acquiror Successor shall possess and from time to time may
exercise each and every right and power of Acquiror or Callco, as the case
may
be, under this Agreement in the name of Acquiror or otherwise and any act or
proceeding by any provision of this Agreement required to be done or performed
by the Board of Directors of Acquiror or any officers of Acquiror may be done
and performed with like force and effect by the directors or officers of such
Acquiror Successor.
|
3.3
|
WHOLLY-OWNED
SUBSIDIARIES
|
Nothing
herein shall be construed as preventing the amalgamation or merger of any
wholly-owned direct or indirect subsidiary of Acquiror (other than the
Corporation or Callco) with or into Acquiror or the winding-up, liquidation
or
dissolution of any wholly-owned subsidiary of Acquiror provided that all of
the
assets of such subsidiary are transferred to Acquiror or another wholly-owned
direct or indirect subsidiary of Acquiror and any such transactions are
expressly permitted by this Article 3.
-11-
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3.4
|
SUCCESSORSHIP
TRANSACTION
|
Notwithstanding
the foregoing provisions of Article 3,
in the
event of an Acquiror Control Transaction:
|
(a)
|
in
which Acquiror merges or amalgamates with, or in which all or
substantially all of the then outstanding Acquiror Shares are acquired
by,
one or more other corporations to which Acquiror is, immediately
before
such merger, amalgamation or acquisition, “related” within the meaning of
the Income
Tax Act (Canada)
(otherwise than by virtue of a right referred to in paragraph 251(5)(b)
thereof);
|
|
(b)
|
which
does not result in an acceleration of the Redemption Date in accordance
with paragraph (b) of that definition; and
|
|
(c)
|
in
which all or substantially all of the then outstanding Acquiror Shares
are
converted into or exchanged for shares or rights to receive such
shares
(the “Other
Shares”)
of another corporation (the “Other
Corporation”)
that, immediately after such Acquiror Control Transaction, owns or
controls, directly or indirectly, Acquiror;
|
then
all
references herein to “Acquiror” shall thereafter be and be deemed to be
references to “Other Corporation” and all references herein to “Acquiror Shares”
shall thereafter be and be deemed to be references to “Other Shares” (with
appropriate adjustments, if any, as are required to result in a holder of
Exchangeable Shares on the exchange, redemption or retraction of such shares
pursuant to the Exchangeable Share Provisions or exchange of such shares
pursuant to the Voting and Exchange Trust Agreement immediately subsequent
to
the Acquiror Control Transaction being entitled to receive that number of Other
Shares equal to the number of Other Shares such holder of Exchangeable Shares
would have received if the exchange, redemption or retraction of such shares
pursuant to the Exchangeable Share Provisions or exchange of such shares
pursuant to the Voting and Exchange Trust Agreement had occurred immediately
prior to the Acquiror Control Transaction and the Acquiror Control Transaction
was completed) without any need to amend the terms and conditions of the
Exchangeable Shares and without any further action required.
ARTICLE 4
GENERAL
|
4.1
|
TERM
|
This
Agreement shall come into force and be effective as of the date hereof and
shall
terminate and be of no further force and effect at such time as no Exchangeable
Shares (or securities or rights convertible into or exchangeable for or carrying
rights to acquire Exchangeable Shares) are held by any Person other than
Acquiror and any of its Affiliates.
-12-
|
4.2
|
CHANGES
IN CAPITAL OF ACQUIROR AND THE
CORPORATION
|
At
all
times after the occurrence of any event contemplated pursuant to
Sections 2.7
and
2.8
hereof
or otherwise, as a result of which either Acquiror Shares or the Exchangeable
Shares or both are in any way changed, this Agreement shall forthwith be deemed
amended and modified as necessary in order that it shall apply with full force
and effect, mutatis
mutandis,
to all
new securities into which Acquiror Shares or the Exchangeable Shares or both
are
so changed and the parties hereto shall execute and deliver an agreement in
writing giving effect to and evidencing such necessary amendments and
modifications.
|
4.3
|
NOTICES
TO PARTIES
|
All
notices and other communications hereunder shall be in writing and shall be
deemed given when delivered personally, telecopied (which is confirmed) or
dispatched (postage prepaid) to a nationally recognized overnight courier
service with overnight delivery instructions, in each case addressed to the
particular party at:
If
to
Acquiror:
00000
Xx
Xxxxxx Xxxx, Xxxxx 000
Xxx
Xxxxx, Xxxxxxxxxx 00000
Attention:
CEO
and
Chairman
Telecopier
Number: (000)
000-0000
If
to the
Corporation:
00000
Xx
Xxxxxx Xxxx, Xxxxx 000
Xxx
Xxxxx, Xxxxxxxxxx 00000
Attention:
CEO
and
Chairman
Telecopier
Number: (000)
000-0000
-13-
With
copies to:
Xxxxxxxxx
Xxxxxxx, LLP
000
Xxxx
Xxxxxx Xxxxx, 00xx
Xxxxx
Xxxxx
Xxxx, Xxxxxxxxxx 00000
Attention:
Xxxxxx Xxxxxxxx
Telecopier
Number: (000) 000-0000
And:
Stikeman
Elliott LLP
0000,
000
- 0xx
Xxxxxx
X.X.
Xxxxxxx,
Xxxxxxx X0X 0X0
Attention:
Xxxxx Xxxxxxx
Telecopier
Number: (000) 000-0000
or
at
such other address of which any party may, from time to time, advise the other
parties by notice in writing given in accordance with the
foregoing.
|
4.4
|
ASSIGNMENT
|
No
party
hereto may assign this Agreement or any of its rights, interests or obligations
under this Agreement (whether by operation of law or otherwise) except that
the
Corporation may assign in its sole discretion, any or all of its rights,
interests and obligations hereunder to any wholly-owned subsidiary of
Acquiror.
|
4.5
|
BINDING
EFFECT
|
Subject
to Section 4.4,
this
Agreement shall be binding upon, enure to the benefit of and be enforceable
by
the parties hereto and their respective successors and assigns.
|
4.6
|
AMENDMENTS,
MODIFICATIONS
|
Subject
to Sections 4.2,
4.7
and
4.11,
this
Agreement may not be amended or modified except by an agreement in writing
executed by the Corporation, Callco and Acquiror and approved by the holders
of
the Exchangeable Shares in accordance with Section 10.2 of the Exchangeable
Share Provisions.
|
4.7
|
MINISTERIAL
AMENDMENTS
|
Notwithstanding
the provisions of Section 4.6,
the
parties to this Agreement may in writing at any time and from time to time,
without the approval of the holders of the Exchangeable Shares, amend or modify
this Agreement for the purposes of:
-14-
|
(a)
|
adding
to the covenants of any or all parties provided that the board of
directors of each of the Corporation, Callco and Acquiror shall be
of the
good faith opinion that such additions will not be prejudicial to
the
rights or interests of the holders of the Exchangeable
Shares;
|
|
(b)
|
making
such amendments or modifications not inconsistent with this Agreement
as
may be necessary or desirable with respect to matters or questions
which,
in the good faith opinion of the board of directors of each of the
Corporation, Callco and Acquiror, it may be expedient to make, provided
that each such board of directors shall be of the good faith opinion
that
such amendments or modifications will not be prejudicial to the rights
or
interests of the holders of the Exchangeable Shares; or
|
|
(c)
|
making
such changes or corrections which, on the advice of counsel to the
Corporation, Callco and Acquiror, are required for the purpose of
curing
or correcting any ambiguity or defect or inconsistent provision or
clerical omission or mistake or manifest error, provided that the
board of
directors of each of the Corporation, Callco and Acquiror shall be
of the
good faith opinion that such changes or corrections will not be
prejudicial to the rights or interests of the holders of the Exchangeable
Shares.
|
|
4.8
|
MEETING
TO CONSIDER AMENDMENTS
|
The
Corporation, at the request of Acquiror, shall call a meeting or meetings of
the
holders of the Exchangeable Shares for the purpose of considering any proposed
amendment or modification requiring approval pursuant to
Section 4.6
hereof;
provided that any such meeting shall only be called for a bona fide business
purpose and not for the principal purpose of causing a Redemption Date to occur
or transpire. Any such meeting or meetings shall be called and held in
accordance with the bylaws of the Corporation, the Exchangeable Share Provisions
and all applicable laws.
|
4.9
|
AMENDMENTS
ONLY IN WRITING
|
No
amendment to or modification or waiver of any of the provisions of this
Agreement otherwise permitted hereunder shall be effective unless made in
writing and signed by all of the parties hereto.
|
4.10
|
GOVERNING
LAWS; CONSENT TO
JURISDICTION
|
This
Agreement shall be governed by and construed in accordance with the laws of
the
Province of Alberta and the laws of Canada applicable therein and shall be
treated in all respects as an Alberta contract. Each party hereby irrevocably
attorns to the jurisdiction of the courts of the Province of Alberta in respect
of all matters arising under or in relation to this Agreement.
-15-
|
4.11
|
SEVERABILITY
|
If
any
term or other provision of this Agreement is invalid, illegal or incapable
of
being enforced by any rule of law or public policy, all other conditions and
provisions of this Agreement shall nevertheless remain in full force and effect
so long as the economic or legal substance of the transactions contemplated
hereby is not affected in any manner materially adverse to any party. Upon
such
determination that any term or other provision is invalid, illegal or incapable
of being enforced, the parties hereto shall negotiate in good faith to modify
this Agreement so as to effect the original intent of the parties as closely
as
possible in an acceptable manner to the end that transactions contemplated
hereby are fulfilled to the extent possible.
|
4.12
|
COUNTERPARTS
|
This
Agreement may be executed in counterparts, each of which shall be deemed to
be
an original but all of which together shall constitute one and the same
instrument.
IN
WITNESS WHEREOF the parties hereto have caused this Agreement to be duly
executed as of the date first above written.
|
|
||
|
By:
/s/ Xxxxx Xxxxx
Name:
Xxxxx Xxxxx
|
||
|
Title:
CEO & Chairman
|
||
|
COLD
FLOW ENERGY ULC
|
||
|
By:
/s/ Xxxxx Xxxxx
Name:
Xxxxx Xxxxx
|
||
|
Title:
|
||
|
1294697
ALBERTA LTD.
|
||
|
By:
/s/ Xxxxx Xxxxx
Name:
Xxxxx Xxxxx
|
||
|
Title:
|
-16-
