PRE-ACQUISITION AGREEMENT
Between
UNION PACIFIC RESOURCES GROUP INC.
and
UNION PACIFIC RESOURCES INC.
and
NORCEN ENERGY RESOURCES LIMITED
Dated January 25, 1998
TABLE OF CONTENTS
Page
ARTICLE 1
INTERPRETATION
1.1 Definitions...........................................................2
1.2 Singular, Plural, etc.................................................4
1.3 Deemed Currency.......................................................4
1.4 Headings, etc.........................................................4
1.5 Date for any Action...................................................5
1.6 Governing Law.........................................................5
1.7 Attornment............................................................5
1.8 Incorporation of Schedules............................................5
ARTICLE 2
THE OFFER
2.1 The Offer.............................................................6
2.2 Norcen Directors' Circular............................................7
2.3 Offer Documents.......................................................9
2.4 Outstanding Stock Options.............................................9
ARTICLE 3
PUBLICITY AND SOLICITATION
3.1 Publicity............................................................10
3.2 Solicitation.........................................................10
ARTICLE 4
TRANSACTIONS FOLLOWING COMPLETION OF THE OFFER
4.1 Second Stage Transaction.............................................10
4.2 Information Circular, Etc............................................11
ARTICLE 5
REPRESENTATIONS AND WARRANTIES OF UPR AND UPRI
5.1 Organization and Qualification.......................................11
5.2 Authority Relative to this Agreement.................................11
5.3 No Violations........................................................12
5.4 Funds Available......................................................13
5.5 Knowledge............................................................13
ARTICLE 6
REPRESENTATIONS AND WARRANTIES OF NORCEN
- iii -
6.1 Organization and Qualification......................................13
6.2 Authority Relative to this Agreement................................13
6.3 No Violations.......................................................14
6.4 Capitalization......................................................15
6.5 No Material Adverse Change..........................................15
6.6 No Undisclosed Material Liabilities.................................15
6.7 Impairment..........................................................15
6.8 Officer Obligations.................................................15
6.9 Brokerage Fees......................................................16
6.10 Conduct of Business.................................................16
6.11 Reports.............................................................16
6.12 U.S. Registration...................................................17
6.13 Subsidiaries........................................................17
ARTICLE 7
CONDUCT OF BUSINESS
7.1 Conduct of Business by Norcen.......................................17
ARTICLE 8
COVENANTS OF NORCEN
8.1 Notice of Material Change...........................................19
8.2 Non-Completion Fee..................................................20
8.3 No Solicitation.....................................................20
8.4 Norcen Board of Directors...........................................21
8.5 Structure of Transaction............................................21
ARTICLE 9
COVENANTS OF UPRI
9.1 Availability of Funds...............................................22
9.2 Employment Agreements...............................................22
9.3 Officers' and Directors' Insurance..................................22
9.4 Employment Termination..............................................22
9.5 Indemnities.........................................................22
9.6 Holdco Purchase.....................................................23
9.7 Retention Bonus.....................................................23
ARTICLE 10
MUTUAL COVENANTS
10.1 Other Filings.......................................................23
10.2 HSR Filings.........................................................23
10.3 Additional Agreements...............................................24
10.4 Access to Information...............................................24
- iv -
ARTICLE 11
TERMINATION, AMENDMENT AND WAIVER
11.1 Termination..........................................................25
11.2 Effect of Termination................................................26
11.3 Amendment............................................................26
11.4 Waiver...............................................................26
ARTICLE 12
GENERAL PROVISIONS
12.1 Notices..............................................................26
12.2 Miscellaneous........................................................28
12.3 Assignment...........................................................28
12.4 Expenses.............................................................28
12.5 Severability.........................................................28
12.6 Confidentiality Agreement............................................28
12.7 Counterpart Execution................................................29
SCHEDULE A - CONDITIONS TO THE OFFER
SCHEDULE B - FORM OF PRE-TENDER AGREEMENT FOR CONTROLLING
SHAREHOLDER
SCHEDULE C - FORM OF NORCEN PRESS RELEASE
SCHEDULE D - FORM OF UPR PRESS RELEASE
SCHEDULE E - CONDITIONS IN FAVOUR OF NORCEN
SCHEDULE F - LETTER FOR RECIPIENTS OF EVALUATION MATERIALS
SCHEDULE G - HOLDCO SHARE PURCHASE AGREEMENT
PRE-ACQUISITION AGREEMENT
-------------------------
THIS AGREEMENT made as of the 25th day of January, 1998,
BETWEEN:
UNION PACIFIC RESOURCES GROUP INC., a corporation duly
incorporated under and governed by the laws of the State of Utah
and having an office in the City of Fort Worth, in the State of
Texas (hereafter referred to as "UPR")
OF THE FIRST PART,
- and -
UNION PACIFIC RESOURCES INC., a corporation duly incorporated
under and governed by the laws of the Province of Alberta and
having an office in the City of Calgary, in the Province of
Alberta (hereafter referred to as "UPRI")
OF THE SECOND PART,
- and -
NORCEN ENERGY RESOURCES LIMITED, a corporation duly amalgamated
under and governed by the federal laws of Canada and having its
head and principal office in the City of Calgary, in the Province
of Alberta (hereafter referred to as "Norcen")
OF THE THIRD PART.
WHEREAS the Board of Directors of each of UPR and Norcen has determined
that it is in the best interests of their respective corporations and
shareholders that UPR and Norcen combine their business interests with the
result that there shall be one economic enterprise and that such combination be
effected through an offer by UPRI, an indirectly wholly-owned subsidiary of UPR,
to purchase all of the outstanding shares of Norcen;
AND WHEREAS the Board of Directors of Norcen has determined to
unanimously recommend acceptance of the UPRI offer to the shareholders of
Norcen;
AND WHEREAS the Board of Directors of Norcen has determined that it
would be in the best interests of Norcen and its shareholders to enter into this
Agreement;
AND WHEREAS UPR, through UPRI, 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:
- 2 -
ARTICLE 1
INTERPRETATION
1.1 Definitions
-----------
In this Agreement, unless there is something in the subject matter or
context inconsistent therewith:
"Act" means the Canada Business Corporations Act as the same has been and may
hereafter from time to time be amended;
"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;
"Business Day" means any day excepting a Saturday, Sunday or statutory holiday
in Calgary, Alberta;
"diluted basis" means, with respect to the number of outstanding Norcen Shares
at any time, such number of outstanding Norcen Shares calculated assuming that
all outstanding options and other rights to purchase Norcen Shares are
exercised;
"Effective Time" means the time that UPRI 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 extended,
in which case it means the expiry time of the Offer as extended from time to
time;
"in writing" means written information including documents, files, records,
books and other materials made available, delivered or produced to UPR by or on
behalf of Norcen in the course of conducting its due diligence review in respect
of Norcen and its subsidiaries between January 5, 1998, being the date of the
confidentiality agreement between UPR and Norcen, and the date of this
Agreement;
"Initial Expiry Time" means 6:00 p.m. (Calgary time) on the first Business Day
which falls after the 30th day following the day of the mailing of the Offer
Documents to the shareholders of Norcen (where the first day of this period is
the day immediately following the day of mailing);
"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 Norcen or any of its subsidiaries which is materially adverse
to the business of Norcen and its subsidiaries considered as a whole other than
a change (i) which arises out of a matter that has been publicly disclosed or
otherwise disclosed in writing to UPR, (ii) resulting from conditions affecting
the oil and gas industry as a whole, or (iii) resulting from general
- 3 -
economic, financial, currency exchange, securities or commodity market
conditions in Canada or elsewhere;
"Minimum Condition" means the condition set forth in paragraph (a) of Schedule
A;
"Minimum Required Shares" means at least that number of the outstanding Norcen
Shares required pursuant to the Minimum Condition unless UPRI shall have waived
the Minimum Condition in which case "Minimum Required Shares" means that number
of the outstanding Norcen Shares which UPRI takes up on the Take-up Date,
provided that such number of Norcen Shares shall be at least that number of
Norcen Shares tendered pursuant to the pre-tender agreement referred to in
Section 2.2(b);
"Norcen" means Norcen Energy Resources Limited, the party of the third part;
"Norcen Governing Documents" means the Certificate and Articles of Amalgamation
and By-laws of Norcen;
"Norcen Options" means the outstanding options to acquire Norcen Shares under
the Stock Option Plan;
"Norcen Shares" means common shares in the share capital of Norcen;
"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 any obligations or liabilities of Norcen or any
subsidiary of Norcen to pay any amount to its officers, directors, or employees,
other than for salary, bonuses under their existing bonus arrangements and
directors' fees in the ordinary course in each case in amounts consistent with
historic practices and, without limiting the generality of the foregoing,
Officer Obligations shall include the obligations of Norcen or any of its
subsidiaries to officers or employees (i) for severance or termination payments
on the change of control of Norcen pursuant to any executive involuntary
severance and termination agreements in the case of officers and pursuant to
Norcen's severance policy in the case of employees and (ii) for retention bonus
payments pursuant to any retention bonus program;
"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);
"Stock Option Plan" means the stock option plan of Norcen as amended and
restated February 14, 1995 and further amended as at February 4, 1997;
- 4 -
"subsidiary" has the meaning set forth in the Act;
"Superior Take-over Proposal" means any bona fide written Take-over Proposal
which, in the opinion of Norcen's Board of Directors after consultation with its
financial advisors, constitutes a commercially feasible transaction for which
adequate financial arrangements have been made and which could be carried out
within a time frame that is reasonable in the circumstances and, if consummated,
would be superior to the Offer from a financial point of view to Norcen and to
Norcen's shareholders;
"Take-over Proposal" means, in respect of Norcen or its subsidiaries or their
assets, any proposals or offers regarding any take-over bid, merger,
consolidation, amalgamation, arrangement, sale of a material amount of assets,
sale of treasury shares (other than pursuant to options under the Stock Option
Plan) or other business combination or similar transaction;
"Take-up Date" means the date that UPRI first takes up and acquires Norcen
Shares pursuant to the Offer;
"UPR" means Union Pacific Resources Group Inc., being the party of the first
part; and
"UPRI" means Union Pacific Resources Inc., being the party of the second part.
1.2 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.
1.3 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.
1.4 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.
1.5 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.
- 5 -
1.6 Governing Law
-------------
This Agreement shall be governed by and interpreted in accordance with
the laws of the Province of Alberta and the laws of Canada applicable therein.
1.7 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.
1.8 Incorporation of Schedules
--------------------------
Schedules A to G 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 for Controlling
Shareholder
Schedule C Form of Norcen Press Release
Schedule D Form of UPR Press Release
Schedule E Conditions in Favour of Norcen
Schedule F Letter for Recipients of Evaluation Materials
Schedule G Holdco Share Purchase Agreement
ARTICLE 2
THE OFFER
2.1 The Offer
---------
(a) UPR shall cause UPRI to mail and UPRI shall mail before 11:59
p.m. (Calgary time) on February 2, 1998, an offer to purchase
all of the outstanding Norcen Shares for a price of $19.80 in
cash for each Norcen Share, which offer shall be made in
accordance with Securities Laws and be subject only 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 Norcen Shares may be tendered). The Offer
shall be prepared in both the English and French
- 6 -
language and in accordance with Securities Laws. UPR shall
provide Norcen with a draft copy of the Offer Documents prior
to mailing for its review and comment.
(b) The Offer shall expire on the Initial Expiry Time, except that
the Offer may be extended, subject to Section 2.1(c), if the
conditions thereto set forth in Schedule A are not satisfied
on the date and time at which the Offer expires and if UPRI
determines, acting reasonably, that there is a reasonable
prospect that the conditions of the Offer may be satisfied
prior to the Expiry Time.
Subject to the satisfaction or waiver of the conditions set
forth in Schedule A hereto, UPRI shall, as soon as is
practicable in the circumstances and in any event within the
time periods required by law, accept for payment and pay for
all Norcen Shares validly tendered (and not properly
withdrawn) pursuant to the Offer. UPR and UPRI shall use all
commercially reasonable efforts to consummate the Offer,
subject to the terms and conditions thereof.
(c) Notwithstanding the foregoing, if any of the conditions set
out in paragraphs (b), (c), (d) and (e) of Schedule A have not
been satisfied or waived on the Initial Expiry Time, UPRI
agrees to extend the Offer for such period of time, not to
exceed 60 days following the Initial Expiry Time, as is
necessary to satisfy or fulfill such conditions, but only if
UPRI has made a bona fide determination, acting reasonably,
that there is a reasonable prospect that such conditions may
be satisfied within such 60 day period.
(d) It is agreed that UPRI may, in its sole discretion:
(i) waive any term or condition of the Offer for its
benefit provided that if UPRI takes up and pays for
any Norcen Shares it shall acquire not less than the
Minimum Required Shares; and
(ii) amend any term or condition of the Offer, provided
that UPRI shall not change the number of Norcen
Shares for which the Offer is made, decrease or
change the form of the consideration to be paid for
each Norcen Share, amend the Offer or modify the
conditions to the Offer in a manner that is, in the
opinion of Norcen, acting reasonably, adverse to the
holders of Norcen Shares.
UPRI agrees to provide Norcen with not less than two days
prior written notice of any waiver or amendment of any term or
condition of the Offer.
(e) UPRI will instruct the depositary under the Offer to advise
Norcen from time to time, not less frequently than every two
Business Days until the day immediately prior to the Expiry
Time and thereafter on an hourly basis, if requested by Norcen
and in such manner as Norcen may reasonably request, as to the
number of Norcen Shares that have been tendered (and not
withdrawn) under the Offer.
- 7 -
(f) The parties hereto agree that UPR may make the Offer through
UPRI but UPR shall be liable to Norcen for the full
performance by UPRI under this Agreement.
(g) UPRI's obligation to make the Offer as set forth in Section
2.1(a) is conditional upon the execution and delivery to UPRI,
concurrently with the execution of this Agreement, of the
pre-tender agreement referred to in Section 2.2(b).
(h) Prior to commencement of the Offer and continuing for 20 days
thereafter, UPR agrees that it will consider in good faith
restructuring the Offer contemplated in this Agreement prior
to its commencement to provide for a right on the part of
Canadian shareholders of Norcen to either receive cash of
$19.80 for each Norcen Share or cash and investment grade
notes of UPRI guaranteed by UPR and if UPR agrees to amend the
Offer, and Norcen consents thereto, the necessary amendments
to this Agreement and the Offer will be made to give effect
thereto.
2.2 Norcen Directors' Circular
--------------------------
(a) Norcen hereby consents to the Offer as set forth in Section
2.1 and confirms that its Board of Directors has unanimously
approved the Offer and this Agreement and has resolved to
unanimously recommend acceptance of the Offer by the holders
of Norcen Shares, subject to Section 2.2(c), provided that the
Offer is not amended except in accordance with the terms of
this Agreement. Norcen shall prepare and mail as soon as
possible after UPRI mails the Offer, in both the English and
French language, 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 Norcen as described above. Norcen shall provide
UPR and UPRI with a draft copy of the directors' circular
prior to mailing for their review and comment.
(b) The Board of Directors of Norcen has been advised that the
directors and senior officers of Norcen and Noranda Inc., the
controlling shareholder of Norcen, intend to tender their
Norcen Shares under the Offer. Norcen hereby delivers
concurrently with the execution of this Agreement, a
pre-tender agreement (in the form or substantially in the form
of the agreement attached hereto as Schedule B) signed by
Noranda Inc. The directors' circular shall reflect the
execution and delivery of such pre-tender agreement and the
intention of the directors and senior officers to tender their
Norcen Shares pursuant to the Offer.
(c) Notwithstanding Section 2.2(a), in the event that, prior to
the expiry of the Offer, a Superior Take-over Proposal is
offered or made to the holders of Norcen Shares or Norcen, the
Board of Directors of Norcen may withdraw, modify or change
any recommendation regarding the Offer if, in the opinion of
the Board of Directors acting in good faith after written
advice from outside counsel (confirmation of which shall be
immediately delivered to UPR), the failure to so withdraw,
modify or change any recommendation regarding the Offer would
be inconsistent with the performance by the directors of
Norcen of their fiduciary duties under applicable law. Norcen
shall as soon as possible but in any event prior to 10:00 a.m.
(Calgary time) on the
- 8 -
day following receipt of any Take-over Proposal, advise UPR
orally and in writing that a Take-over Proposal has been
offered or made to the Board of Directors of Norcen or to
Norcen (which notice in writing must identify the party
proposing such transaction and the terms and conditions
thereof, which must include a copy of the terms and conditions
of any written form of Take-over Proposal and which must
provide an undertaking to provide to UPR any further documents
relating to the terms or conditions thereof delivered to the
Board of Directors of Norcen or to Norcen by the offeror). If
the Board of Directors of Norcen believes that the Take- over
Proposal constitutes a Superior Take-over Proposal, Norcen
shall give UPR and UPRI at least four Business Days advance
notice of any action to be taken by the Board of Directors of
Norcen to withdraw, modify or change any recommendation
regarding the Offer or to enter into an agreement to implement
the Superior Take- over Proposal. Such notice shall provide to
UPRI the right during such four Business Days to advise the
Board of Directors of Norcen that it will immediately announce
and as soon as possible in the circumstances amend its Offer
to provide that the holders of Norcen Shares shall receive a
value per Norcen Share equal to or having a value greater than
the value per Norcen Share provided in the Superior Take-over
Proposal. If UPR so advises the Board of Directors prior to
the expiry of such four Business Days period, the Board of
Directors of Norcen shall not withdraw, modify or change any
recommendation with respect to the Offer, as so amended, or
take any action to approve or implement the Superior Take-over
Proposal.
(d) The Board of Directors of Norcen may withdraw, modify or
change any recommendation with respect to the Offer:
(i) as permitted under Section 2.2(c); or
(ii) in the event that the conditions set forth in
Schedule E hereto are not satisfied or waived at the
applicable time by Norcen in its discretion acting
reasonably.
2.3 Offer Documents
---------------
(a) Within the time periods required by law, UPRI shall file or
cause to be filed with the appropriate Securities Authorities
an Offer to Purchase and Take-over 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
Securities Authorities and when mailed to holders of Norcen
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) Norcen agrees to provide such reasonable assistance as UPRI or
its agents may reasonably request in connection with
communicating the Offer and any amendments and supplements
thereto to the holders of the Norcen Shares and to such other
persons as are entitled to receive the Offer under Securities
Laws, including
- 9 -
providing lists of the shareholders of Norcen and of the
holders of Norcen Options and other securities convertible
into or exchangeable for Norcen Shares (to the extent known by
Norcen) 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 January 30, 1998 and updates or supplements
thereto from time to time as may be requested by UPRI.
(c) UPR and UPRI agree that, to the extent that it is the most
expedient filing process, the Offer shall be made pursuant to
and in compliance with the requirements of the Canada/United
States Multijurisdictional Disclosure System, including Rule
14d-1(b) under the United States Securities Exchange Act of
1934.
2.4 Outstanding Stock Options
-------------------------
Norcen and UPR agrees that to the extent holders of Norcen Options do
not exercise them and tender the Norcen Shares they receive upon such exercise,
Norcen may agree with all remaining holders of Norcen Options that, in lieu of
such persons exercising their Norcen Options, Norcen will pay to such persons
the difference between the exercise price of their Norcen Options and the
purchase price for the Norcen Shares under the Offer immediately after the
Expiry Time of the Offer in exchange for the termination of their Norcen
Options.
ARTICLE 3
PUBLICITY AND SOLICITATION
3.1 Publicity
---------
(a) Each of UPR, UPRI and Norcen shall receive the prior consent,
not to be unreasonably withheld, of the other parties 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 or any third party with
respect to this Agreement or the transactions contemplated
hereby. UPR, UPRI and Norcen shall not issue any such press
release or make any such public statement prior to such
consent, except upon the advice of counsel that such action is
required by applicable law or by obligations pursuant to any
listing agreement with a stock exchange and only after using
its 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) Norcen and UPR agree that the press releases attached hereto
as Schedules C and D shall be issued immediately following the
execution of this Agreement.
- 10 -
3.2 Solicitation
------------
The financial advisors to UPR and UPRI will act as dealer managers (the
"Dealer Managers") in connection with the Offer and solicit acceptances of the
Offer. The Dealer Managers will 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
4.1 Second Stage Transaction
------------------------
If UPRI takes up and pays for Norcen Shares pursuant to the terms of
the Offer, and thereby acquires at least the Minimum Required Shares, UPRI
agrees to use all commercially reasonable efforts to acquire, and Norcen agrees
to use all commercially reasonable efforts to assist UPRI in acquiring, the
balance of the Norcen Shares as soon as practicable and in any event within a
period of six months following the Take-up Date 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 a cash consideration per Norcen
Share not less than the consideration paid pursuant to the Offer. Nothing herein
shall be construed to prevent UPRI from acquiring, directly or indirectly,
additional Norcen Shares in the open market or in privately negotiated
transactions, in accordance with Securities Laws (including by way of compulsory
acquisition) following completion of the Offer.
4.2 Information Circular, Etc.
--------------------------
Without limiting Section 4.1, Norcen agrees that if UPRI is required to
effect a Second Stage Transaction which requires approval of Norcen's
shareholders in a meeting of Norcen's shareholders, Norcen shall take all action
necessary in accordance with the Securities Laws, other applicable Canadian
laws, the Norcen Governing Documents and the requirements of The Toronto Stock
Exchange and the Montreal 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 UPRI. In the event of such a meeting or meetings, Norcen shall use
all commercially reasonable efforts to mail to its shareholders an Information
Circular with respect to the meeting of Norcen'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 Norcen's shareholders and all amendments or supplements
thereto, if any. UPRI and Norcen 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 UPRI and
Norcen for use in the Information Circular, on both the date the Information
Circular is first mailed to Norcen'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. UPRI and Norcen each agree to correct promptly any such
- 11 -
information provided by it for use in any Information Circular which shall have
become false or misleading.
ARTICLE 5
REPRESENTATIONS AND WARRANTIES OF UPR AND UPRI
As of the date hereof, UPR and UPRI hereby jointly and severally
represent and warrant to Norcen as follows and acknowledge that Norcen is
relying upon these representations and warranties in connection with the
entering into of this Agreement:
5.1 Organization and Qualification
------------------------------
UPR is a corporation duly incorporated and organized and validly
existing under the laws of the State of Utah and has the requisite corporate
power and authority to carry on its business as it is now being conducted. UPRI
is a corporation duly incorporated and organized and validly subsisting under
the laws of the Province of Alberta and has the requisite corporate power and
authority to carry on its business as it is now being conducted.
5.2 Authority Relative to this Agreement
------------------------------------
UPR and UPRI have the requisite corporate authority to enter into this
Agreement and to carry out their obligations hereunder. The execution and
delivery of this Agreement and the consummation by UPR and UPRI of the
transactions contemplated hereby have been duly authorized by their respective
Boards of Directors and no other corporate proceedings on their part are or will
be necessary to authorize this Agreement and the transactions contemplated
hereby. This Agreement has been duly executed and delivered by each of UPR and
UPRI and constitutes the legal, valid and binding obligation of each of UPR and
UPRI enforceable against each of them 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.
5.3 No Violations
-------------
(a) Neither the execution and delivery of this Agreement by UPR
and UPRI, the consummation by them of the transactions
contemplated hereby nor compliance by them 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
UPR or UPRI or any of their subsidiaries under, any of the
terms, conditions or provisions of (x) the charter or bylaws
of either UPR or UPRI or (y) any material note, bond,
mortgage, indenture, loan agreement, deed of trust, agreement,
lien, contract or other instrument or obligation to which UPR
or UPRI or any of their subsidiaries is a party or to which
any of them, or any of their respective properties or assets,
may be subject or by which either UPR or UPRI or any of their
subsidiaries is bound; or (ii) subject to compliance with the
statutes and regulations
- 12 -
referred to in Section 5.3(b), violate any judgment, ruling,
order, writ, injunction, determination, award, decree,
statute, ordinance, rule or regulation applicable to UPR or
UPRI or any of their 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 UPR and its subsidiaries taken as a
whole or on the ability of UPR to consummate the transactions
contemplated hereby).
(b) Other than in connection with or in compliance with the
provisions of Securities Laws, the Competition Act (Canada),
the Public Utilities Board Act (Alberta), the Gas Utilities
Act (Alberta), the requirements of the National Energy Board
(Canada), the Investment Canada Act (Canada), the rules of The
Toronto Stock Exchange, the Montreal 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, Hart-Scott-Rodino Antitrust Improvements
Act of 1976 (United States), as amended (the "HSR Act"), and
any other pre-merger notification statutes, (i) there is no
legal impediment to UPR and UPRI'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 UPRI 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 UPRI to consummate
the transactions contemplated hereby.
5.4 Funds Available
---------------
The aggregate cash consideration payable pursuant to the Offer is
available to UPRI so that UPRI is in a position to pay for all Norcen Shares
tendered pursuant to the Offer in accordance with the terms of the Offer.
5.5 Knowledge
---------
As of the date hereof, UPR has no actual knowledge of any
misrepresentation, breach or non-performance by Norcen of any representation,
warranty or covenant contained in this Agreement which would have or would be
reasonably likely to have a material adverse effect on UPR should the Offer be
completed.
- 13 -
ARTICLE 6
REPRESENTATIONS AND WARRANTIES OF NORCEN
As of the date hereof, Norcen hereby represents and warrants to UPR and
UPRI as follows and acknowledges that they are relying upon these
representations and warranties in connection with the entering into of this
Agreement:
6.1 Organization and Qualification
------------------------------
Norcen is a corporation duly amalgamated and organized and validly
existing under the federal laws of Canada and has the requisite corporate power
and authority to carry on its business as it is now being conducted. Each of
Norcen's subsidiaries is a corporation duly incorporated and organized and
validly subsisting under the laws of the jurisdiction of its incorporation and
has the requisite corporate power and authority to carry on its business as now
being conducted. Norcen and each of its subsidiaries 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 Norcen and its subsidiaries
taken as a whole.
6.2 Authority Relative to this Agreement
------------------------------------
Norcen 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 Norcen's Board of Directors, and no other corporate
proceedings on the part of Norcen 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 Norcen and constitutes the legal, valid and
binding obligation of Norcen enforceable against Norcen 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.
6.3 No Violations
-------------
(a) Except as previously disclosed in writing to UPR, neither the
execution and delivery of this Agreement by Norcen, the
consummation of the transactions contemplated hereby nor
compliance by Norcen 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 Norcen or
any of its subsidiaries under, any of the terms, conditions or
provisions of (x) the Norcen 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 Norcen 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 Norcen or any
of its subsidiaries is
- 14 -
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 Norcen 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 Norcen and its
subsidiaries taken as a whole or on the ability of Norcen to
consummate the transactions contemplated hereby).
(b) Except as previously disclosed in writing to UPR, other than
in connection with or in compliance with the provisions of
Securities Laws, the Competition Act (Canada), the Public
Utilities Board Act (Alberta), the Gas Utilities Act
(Alberta), the requirements of the National Energy Board
(Canada), the Investment Canada Act (Canada), the rules of The
Toronto Stock Exchange, the Montreal 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, and any other pre-merger
notification statutes, (i) there is no legal impediment to
Norcen'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 Norcen 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
Norcen to consummate the transactions contemplated hereby.
6.4 Capitalization
--------------
As of the date hereof, the authorized share capital of Norcen consists
of an unlimited number of Common Shares, First Preference Shares and Junior
Preference Shares. As of the date hereof, 187,028,147 Norcen Shares are issued
and outstanding. As of the date hereof, 1,615,406 Norcen Shares are issuable
pursuant to the exercise of outstanding Norcen Options granted under the Stock
Option Plan calculated at the Offer Price of $19.80. Except as set forth above,
there are no options, warrants or other rights, agreements or commitments of any
character whatsoever requiring the issuance, sale or transfer by Norcen of any
shares of Norcen (including the Norcen Shares) or any securities convertible
into, or exchangeable or exercisable for, or otherwise evidencing a right to
acquire, any shares of Norcen (including the Norcen 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 attribute of Norcen. All outstanding Norcen 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
Norcen Shares issuable upon exercise of outstanding stock options 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.
- 15 -
6.5 No Material Adverse Change
--------------------------
Since December 31, 1997, there has not been any Material Adverse
Change.
6.6 No Undisclosed Material Liabilities
-----------------------------------
Except (a) as disclosed or reflected in the consolidated internal
interim unaudited financial statements of Norcen as at December 31, 1997
previously delivered to UPR, and (b) for liabilities and obligations (i)
incurred in the ordinary course of business and consistent with past practice,
(ii) pursuant to the terms of this Agreement, or (iii) as disclosed in writing
to UPR, neither Norcen or any of its subsidiaries has incurred any liabilities
of any nature, whether accrued, contingent or otherwise (or which would be
required by generally accepted accounting principles to be reflected on a
consolidated balance sheet of Norcen and its subsidiaries) that have constituted
or would be reasonably likely to constitute a Material Adverse Change.
6.7 Impairment
----------
The making of the Offer will not result in Material Adverse Change.
6.8 Officer Obligations
-------------------
The Officer Obligations do not exceed an aggregate of $5.5 million.
6.9 Brokerage Fees
--------------
Norcen 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 that
Goldman, Sachs & Co. and Trilon Securities Limited have been retained as
Norcen's financial advisors in connection with certain matters including the
transactions contemplated hereby. Norcen has delivered to UPRI a true and
complete copy of its agreement with Goldman, Sachs & Co. and Trilon Securities
Limited.
6.10 Conduct of Business
-------------------
Since December 31, 1997, neither Norcen 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
Norcen and its subsidiaries considered as a whole or would materially affect
Norcen's ability to consummate the transactions contemplated hereby.
6.11 Reports
-------
(a) Norcen has heretofore delivered to UPRI true and complete
copies of (i) Norcen's 1997 Annual Information Form,
Information Circular relating to Norcen's 1997 annual and
special meeting of shareholders and 1996 Annual Report to
shareholders and (ii) all prospectuses or other offering
documents used by Norcen in the offering
- 16 -
of its securities or filed with Securities Authorities since
December 31, 1996 and (iii) the consolidated internal interim
unaudited financial statements of Norcen dated December 31,
1997 previously delivered to UPR. As of their respective
dates, such form, 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 Norcen and its consolidated subsidiaries
publicly issued by Norcen, previously delivered to UPR, or
included or incorporated by reference in such form,
statements, prospectuses and other offering documents were
prepared in accordance with generally accepted accounting
principles in Canada (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 Norcen'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
Norcen 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) Norcen will deliver to UPRI 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 UPRI, as to
which Norcen 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 Norcen issued by
Norcen or to be included in such reports and statements
(excluding any information therein provided by UPRI, as to
which Norcen makes no representation) will be prepared in
accordance with generally accepted accounting principles in
Canada (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 Norcen's independent
accounts 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 Norcen 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).
- 17 -
6.12 U.S. Registration
-----------------
The Norcen Shares were not issued by a closed-end investment company
registered under the United States Investment Company Act of 1940.
6.13 Subsidiaries
------------
All of Norcen's subsidiaries are wholly-owned by Norcen and all shares
of Norcen's material subsidiaries owned by Norcen are beneficially owned,
directly or indirectly, 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.
ARTICLE 7
CONDUCT OF BUSINESS
7.1 Conduct of Business by Norcen
-----------------------------
Norcen covenants and agrees that, during the period from the date of
this Agreement until either: (i) the time of the next annual meeting of
shareholders of Norcen at which directors are to be elected; or (ii) this
Agreement is terminated by its terms, unless UPRI 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 Norcen and its subsidiaries shall be conducted
only in, and Norcen and its subsidiaries shall not take any
action except in, the usual and ordinary course of business
and consistent with past practice, and Norcen shall use all
commercially reasonable efforts to maintain and preserve its
business organization, assets, employees and advantageous
business relationships;
(b) Norcen shall not directly or indirectly do or permit to occur
any of the following: (i) amend the Norcen 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 Norcen or its subsidiaries, or securities
convertible into or exchangeable or exercisable for, or
otherwise evidencing a right to acquire, shares of Norcen or
its subsidiaries, other than Norcen Shares issuable pursuant
to the terms of the Norcen 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 Norcen; 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 Norcen nor any of its subsidiaries shall directly or
indirectly do any of the following other than pursuant to
commitments entered into prior to the date of this Agreement:
(i) sell, pledge, dispose of or encumber any assets except in
the ordinary course of business for a consideration not in
excess of $15 million in aggregate; (ii)
- 18 -
acquire (by merger, amalgamation, consolidation or acquisition
of shares or assets) any corporation, partnership or other
business organization or division thereof, or, except for
investments in securities made in the ordinary course of
business, make any investment either by purchase of shares or
securities, contributions of capital (other than to
subsidiaries), property transfer, or, except in the ordinary
course of business, purchase of any property or assets of any
other individual or entity, in each case having a value in
excess of $15 million; (iii) incur any indebtedness for
borrowed money 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, in each case in excess of $15 million,
except in the ordinary course of business; (iv) except for the
Officer Obligations or amounts less than $15 million pay,
discharge or satisfy any material claims, liabilities or
obligations other than the payment, discharge or satisfaction
in the ordinary course of business consistent with past
practice of liabilities reflected or reserved against in its
financial statements or incurred in the ordinary course of
business consistent with past practice; (v) authorize,
recommend or propose any release or relinquishment of any
material contract right other than in the ordinary course of
business consistent with past practice; (vi) waive, release,
grant or transfer any rights of material value or modify or
change in any material respect any existing material license,
lease, contract, production sharing agreement, government land
concession or other document, other than in the ordinary
course of business consistent with past practice; (vii) enter
into any interest rate swaps, currency swaps or any other rate
fixing agreement for a financial transaction or enter into any
call arrangement of any sort or any forward sale agreement for
commodities, other than in the ordinary course of business
consistent with past practice; (viii) authorize or propose any
of the foregoing, or enter into or modify any contract,
agreement, commitment or arrangement to do any of the
foregoing; or (ix) sell, dispose of, cancel or terminate any
of its remaining 10% interest in Superior Propane Inc. and its
management, administration and related contracts respecting
Superior Propane Inc. and Superior Propane Income Fund, nor
enter into any agreement concerning any such sale,
cancellation or termination;
(d) neither Norcen nor any of its subsidiaries shall create any
new Officer Obligations other than as provided for in Section
9.7 and, except for payment of the existing Officer
Obligations, neither Norcen 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 or director, or
take any action with respect to the grant of any severance or
termination pay (other than as contemplated pursuant to
Section 9.2 of this Agreement) arising from the Offer or a
change of control of Norcen or the entering into of any
employment agreement with, any senior officer or director, or
with respect to any increase of benefits payable under its
current severance or termination pay policies; and
- 19 -
(e) neither Norcen 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.
ARTICLE 8
COVENANTS OF NORCEN
8.1 Notice of Material Change
-------------------------
From the date hereof until the termination of this Agreement, Norcen
shall promptly notify UPR in writing of:
(a) any material change (actual, anticipated, contemplated or, to
the knowledge of Norcen, threatened, financial or otherwise)
in the business, affairs, operations, assets, liabilities
(contingent or otherwise) or capital of Norcen and its
subsidiaries considered as a whole; or
(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.
Norcen shall in good faith discuss with UPR any change in circumstances
(actual, anticipated, contemplated or, to the knowledge of Norcen,
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 UPRI pursuant to this section.
8.2 Non-Completion Fee
------------------
Provided that there is no breach or non-performance by UPR or UPRI of a
material provision of this Agreement in any material respect, Norcen shall pay
to UPRI the sum of $125 million if:
(a) the Offer shall have expired and not been consummated by
reason of the Minimum Condition not having been satisfied but
only if a Superior Take-over Proposal, as a result of which
the Board of Directors of Norcen has withdrawn, modified or
changed its recommendation regarding the Offer, has been
publicly announced and not withdrawn prior to the Expiry Time;
or
(b) this Agreement has been terminated by UPR pursuant to Section
11.1(e).
In the circumstances set forth above Norcen shall pay to UPRI an amount
equal to all documented and reasonable out of pocket expenses incurred
by UPR and UPRI in making the Offer, including the fees payable to its
financial advisors and legal counsel and all fees,
- 20 -
costs and expenses incurred in arranging the financing for the Offer
which shall not exceed $30 million.
Such payments shall be made by Norcen to UPRI within two Business Days
of the event giving rise to the payment in immediately available funds
to an account designated by UPRI.
8.3 No Solicitation
---------------
(a) Norcen shall immediately cease and cause to be terminated all
existing discussions and negotiations, if any, with any
parties conducted before the date of this Agreement with
respect to any Take-over Proposal and, without limitation,
shall immediately send a letter in substantially the form of
the letter attached hereto as Schedule F to all parties who
have had such discussions or negotiations or who have entered
into confidentiality agreements with Norcen pertaining to the
sale of Norcen or a substantial portion of its assets. Norcen
shall immediately advise UPRI orally and in writing of any
response or action (actual, anticipated, contemplated or
threatened) by any recipient of such letter which could
hinder, prevent or delay or otherwise adversely affect the
completion of the Offer. Norcen agrees not to release any
third party from any confidentiality or standstill obligation
set forth in any agreement to which Norcen and such third
party are parties except for the standstill obligation in
connection with a Superior Take-over Proposal by such third
party.
(b) Neither Norcen nor any of its subsidiaries, or any of their
respective directors, officers, employees, agents, financial
advisors, counsel or other representatives shall, directly or
indirectly, (i) solicit, initiate or knowingly encourage the
initiation or continuation of any inquiries, discussions,
negotiations, proposals or offers from any corporation, person
or other entity or group (other than UPR and its subsidiaries
and their respective directors, officers, employees, agents,
financial advisors, counsel or other representatives) in
respect of any matter or thing which is inconsistent with the
successful completion of the Offer and the merger of UPRI and
Norcen, including any Take-over Proposal or (ii) provide any
confidential information to, participate in any discussions or
negotiations relating to any Take-over Proposal with, or
otherwise cooperate with or assist or participate in any
effort to consider, review or initiate a Take-over Proposal
by, any corporation, person or other entity or group;
provided, however, that Norcen shall not be bound by the
foregoing restrictions in this Section 8.3(b)(ii) in respect
of any proposal or offer in writing received by Norcen from
another party, which offer was not solicited by Norcen or any
of its subsidiaries or, of any of their respective directors,
officers, employees, agents, financial advisors, counsel or
other representatives after the date hereof, which the Board
of Directors of Norcen believes is reasonably likely to become
a Superior Take-over Proposal and at any such time that Norcen
or its Board of Directors starts to provide any confidential
information in accordance with this proviso, Norcen shall so
notify UPR of any such provision of confidential information
and provided further that the provision of any such
confidential information shall be on terms and conditions no
more favorable to such other party than those contained in the
confidentiality agreement dated January 5, 1998 between UPR
and Norcen.
- 21 -
8.4 Norcen Board of Directors
-------------------------
The Board of Directors of Norcen immediately following the acquisition
by UPRI of more than 50% of the outstanding Norcen Shares pursuant to the Offer
shall be reconstituted through resignations of all existing Norcen directors and
the appointment of UPR nominees in their stead. Norcen shall, in accordance with
the foregoing and subject to the provisions of the Act, assist UPR to secure the
resignations of all Norcen directors to be effective at such time as may be
required by UPR and to use its best efforts to cause the election of the UPR
nominees to fill the vacancies so created in order to effect the foregoing
without the necessity of a shareholder meeting.
8.5 Structure of Transaction
------------------------
Norcen shall cooperate with UPR in structuring the acquisition by UPRI
of Norcen in a tax efficient manner, including without limitation, by completing
to the satisfaction of UPR, acting reasonably, a possible internal corporate
reorganization of Norcen involving the transfer of certain unincorporated
business divisions to separate wholly-owned Canadian subsidiary corporations
provided that such reorganization shall not be completed until Norcen is
satisfied the Offer will be completed, provided that no such cooperation shall
be required where such structuring shall have a material adverse effect on the
business, operations or financial condition of Norcen or cause any breach of or
default under this Agreement by Norcen.
ARTICLE 9
COVENANTS OF UPRI
9.1 Availability of Funds
---------------------
UPR and UPRI covenant and agree that at all times when the Offer is
outstanding, UPRI shall not take any action, or fail to take any action, which
would or could 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.
9.2 Employment Agreements
---------------------
UPRI covenants and agrees, and after the Effective Time will cause
Norcen and any successor to Norcen to agree, to honour and comply with the terms
of those existing executive termination and severance agreements, plans or
policies of Norcen and its subsidiaries which Norcen has disclosed to UPR in
writing prior to the date hereof.
9.3 Officers' and Directors' Insurance
----------------------------------
UPRI agrees to use reasonable efforts to secure directors and officers
liability insurance coverage for Norcen's current and former directors and
officers on a six year "trailing" or "runoff" basis from and after the Effective
Time. If a "trailing" policy is not available, then UPRI agrees that for the
entire period from the Effective Time until six years after the Effective Time,
UPRI will use reasonable commercial efforts to cause Norcen or any successor to
Norcen to maintain Norcen's current directors' and officers' insurance policy or
an equivalent policy, subject in either case to
- 22 -
terms and conditions no less advantageous to the directors and officers of
Norcen than those contained in the policy in effect on the date hereof, for all
present and former directors and officers of Norcen, covering claims made prior
to or within six years after the Effective Time.
9.4 Employment Termination
----------------------
If UPR, UPRI or Norcen choose to terminate, whether constructively or
actually, the employment of any employees (other than for cause) of Norcen
within one year of the completion of the Offer, notice and severance shall be
provided to such employees in accordance with Norcen's existing severance
practices previously disclosed in writing to UPR.
9.5 Indemnities
-----------
UPR agrees that if it acquires the Norcen Shares under the Offer it
shall cause Norcen to fulfill its obligations pursuant to indemnities provided
or available to past and present officers and directors of Norcen pursuant to
the provisions of the By-laws of Norcen, the Canada Business Corporation Act,
and the written indemnity agreements shown to UPR which will be entered into
between Norcen and its current officers and directors.
9.6 Holdco Purchase
---------------
The Offer will provide that any corporate holder of Norcen Shares which
holds such shares indirectly through a holding corporation (a "Holdco") may
deposit all of the outstanding shares of its Holdco under the Offer in
accordance with a share purchase agreement substantially in the form attached
hereto as Schedule G.
9.7 Retention Bonus
---------------
Norcen shall be entitled to establish and pay up to $4.5 million in
bonuses to officers and employees of Norcen mutually agreed upon by Norcen and
UPR who agree to and do remain in the employment of Norcen for an agreed upon
period of time following the change of control of Norcen.
ARTICLE 10
MUTUAL COVENANTS
10.1 Other Filings
-------------
UPR, UPRI and Norcen shall, as promptly as practicable hereafter,
prepare and file any filings required under the Competition Act (Canada), the
Investment Canada Act (Canada), the Public Utilities Board Act (Alberta), the
Gas Utilities Act (Alberta), the requirements of the National Energy Board
(Canada), any Securities Law, the rules of The Toronto Stock Exchange and the
Montreal 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.
- 23 -
10.2 HSR Filings
-----------
(a) Without limiting the generality of Section 10.1 hereof, UPR,
UPRI and Norcen shall (i) take promptly all actions necessary
to make the filings required of UPR, UPRI, Norcen or any of
their affiliates under the HSR Act, (ii) comply at the
earliest practicable date with any request for additional
information or documentary material received by UPR, UPRI,
Norcen or any of their affiliates from the Federal Trade
Commission or the Antitrust Division of the Department of
Justice pursuant to the HSR Act and (iii) cooperate in
connection with any filing under the HSR Act and in connection
with resolving any investigation or other inquiry concerning
the transactions contemplated by this Agreement commenced by
either the Federal Trade Commission or the Antitrust Division
of the Department of Justice or state attorneys general; and
(b) Each of the parties hereto shall promptly inform the other
parties of any material communication received by such party
from the Federal Trade Commission, the Antitrust Division of
the Department of Justice or any other governmental or
regulatory authority regarding any of the transactions
contemplated hereby. UPR and UPRI shall advise Norcen promptly
of any understandings, undertakings or agreements which UPR
and UPRI proposes to make or enter into with the Federal
Trade Commission, the Antitrust Division of the Department of
Justice or any other governmental or regulatory authority in
connection with the transactions contemplated hereby.
10.3 Additional Agreements
---------------------
Subject to the terms and conditions herein provided and to fiduciary
obligations under applicable law, 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 and approvals from other parties to material
agreements, leases and other contracts or agreements (including, without
limitation, the agreement of any persons as may be required pursuant to any
agreement, arrangement or understanding relating to Norcen'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 the foregoing, the obligation to
use "commercially reasonable efforts" to obtain waivers, consents and approvals
to loan agreements, leases and other contracts 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 to such other parties.
- 24 -
10.4 Access to Information
---------------------
Subject to the existing Confidentiality Agreement between Norcen and
UPR dated January 5, 1998, upon reasonable notice, Norcen shall (and shall cause
each of its subsidiaries to) afford UPR's officers, employees, counsel,
accountants and other authorized representatives and advisers reasonable access,
during normal business hours and at such other time or times as UPR may
reasonably request from the date hereof and until the expiration of this
Agreement, to its properties, books, contracts and records as well as to its
management personnel, and, during such period, Norcen shall (and shall cause
each of its subsidiaries to) furnish promptly to UPR all information concerning
its business, properties and personnel as UPR may reasonably request.
ARTICLE 11
TERMINATION, AMENDMENT AND WAIVER
11.1 Termination
This Agreement may be terminated by written notice given to the other
parties hereto, at any time prior to completion of the transactions contemplated
hereby:
(a) by mutual written consent of Norcen and UPR;
(b) by either UPR or Norcen if UPRI shall not have taken up and
paid for the Minimum Required Shares under the Offer on or
before the times required by this Agreement, unless the
absence of such occurrence shall be due to the failure of the
party seeking to terminate this Agreement to perform the
obligations under this Agreement required to be performed by
it;
(c) by either UPR or Norcen if a court of competent jurisdiction
or a governmental, regulatory or administrative agency or
commission shall have issued an order, decree or ruling or
taken any other action permanently restraining, enjoining or
otherwise prohibiting any of the transactions contemplated by
this Agreement and such order, decree, ruling or other action
shall have become final and non-appealable, provided that the
party seeking to terminate this Agreement pursuant to this
Section 11.1(c) shall have used all commercially reasonable
efforts to remove such order, decree, ruling or injunction;
(d) by either UPR or Norcen, if the Offer terminates or expires at
the Expiry Time, without UPRI taking up and paying for any
Norcen Shares on account of the failure of any condition
specified in Schedule A which has not been waived by UPRI,
unless the absence of such occurrence shall be due to the
failure of the party seeking to terminate this Agreement to
perform the obligations under this Agreement required to be
performed by it;
(e) by either UPR or Norcen, if there has been a
misrepresentation, breach or non-performance by the other
party of any representation, warranty or covenant contained
- 25 -
in this Agreement which would have or would be reasonably
likely to have a material adverse effect on the party seeking
to terminate, provided the breaching party has been given
notice of and three days to cure any such misrepresentation,
breach or non-performance;
(f) by Norcen or UPR if Norcen enters into an agreement providing
for a Superior Takeover Proposal;
(g) by Norcen if the Take-up Date has not occurred within 60 days
of the Initial Expiry Time; or
(h) by UPR if there has been a misrepresentation, breach or
non-performance by Noranda Inc. of any representation,
warranty or covenant contained in the pre-tender agreement
referred to in Section 2.2(b), which would have or would be
reasonably likely to have a material adverse effect on UPR,
provided that Noranda Inc. shall have been given notice of and
three days to cure any such misrepresentation, breach or
non-performance.
11.2 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 UPR, UPRI or Norcen hereunder except
as set forth in Sections 8.2 and 12.4 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 provided that if
Norcen became obligated to and has paid the fees provided for in Section 8.2,
Norcen shall have no further liability under this Agreement.
11.3 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.
11.4 Waiver
------
Each of UPR and UPRI, on the one hand, and Norcen, 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.
- 26 -
ARTICLE 12
GENERAL PROVISIONS
12.1 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 UPR and UPRI:
Union Pacific Resources Company
P.O. Box 7
Forth Worth, Texas 76101
Attention: Mr. Joe LaSala
Telecopy No.: (817) 877-7522
with a copy to:
Bennett Jones Verchere - and - Morgan, Lewis & Bockius LLP
4500 Bankers Hall East 101 Park Avenue
855 - 2nd Street SW New York, New York
Calgary, Alberta U.S.A. 10178-0060
T2P 4K7
Attention: Mr. John Curran Attention: Mr. Howard Shecter
Telecopy No.: (403) 265-7219 Telecopy No.: (212) 309-7044
(b) if to Norcen:
Norcen Energy Resources Limited
Fifth Avenue Place
425 - 1 Street S.W.
Calgary, Alberta
T2P 4V4
Attention: Mr. Mark Schweitzer
Telecopy No.: (403) 231-0292
- 27 -
with a copy to:
MacKimmie Matthews
700, 401 - 9 Avenue S.W.
Calgary, Alberta
T2P 3C5
Attention: Mr. Robert Engbloom
Telecopy No.: (403) 232-0888
12.2 Miscellaneous
-------------
This Agreement (i) except for the Confidentiality Agreement dated
January 5, 1998 between the parties hereto, 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.
12.3 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. UPRI may assign all or any part of its rights or obligations
under this Agreement to a direct or indirect wholly-owned subsidiary of UPRI,
provided that any such assignment will have no material adverse tax or other
effects to Norcen or the holders of Norcen Shares, and provided further that if
such assignment takes place, UPR and UPRI shall continue to be liable to Norcen
for any default in performance by the assignee.
12.4 Expenses
--------
Except as provided in Section 8.2, 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.
- 28 -
12.5 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.
12.6 Confidentiality Agreement
-------------------------
UPR is hereby released from the provisions of Section 5 of the
Confidentiality Agreement dated January 5, 1998 between UPR and Norcen in
respect of the transaction contemplated by the Offer.
- 29 -
12.7 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, UPR, UPRI and Norcen have caused this Agreement to
be executed as of the date first written above by their respective officers
thereunto duly authorized.
UNION PACIFIC RESOURCES GROUP
INC.
Per:
-----------------------------------
Name:
Title:
Per:
-----------------------------------
Name:
Title:
UNION PACIFIC RESOURCES INC.
Per:
-----------------------------------
Name:
Title:
Per:
-----------------------------------
Name:
Title:
NORCEN ENERGY RESOURCES
LIMITED
Per:
-----------------------------------
Name:
Title:
Per: -----------------------------------
Name:
Title:
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 January 25, 1998 (the
"Agreement") between UPR, UPRI and Norcen, except that the term "Offeror" shall
be deemed to refer to UPRI.
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 Norcen
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 Norcen Shares under the Offer, there shall have been validly
deposited under the Offer and not withdrawn at least 75% of the
outstanding Norcen Shares (calculated on a diluted basis), other than
Norcen Shares held at the date of the Offer by or on behalf of the
Offeror, or its affiliates or associates (as each of such terms is
defined in the Act);
(b) (i) the Director of Investigation and Research (the "Director")
appointed under the Competition Act shall have issued an advance ruling
certificate under Section 102 of the Competition Act in respect of the
transaction (the "Transaction") which will result from the acquisition
of Norcen Shares by the Offeror under the Offer, or (ii) the applicable
waiting period under Section 123 of the Competition Act shall have
expired without the Director having notified the Offeror that he
intends to make an application to the Competition Tribunal for an order
under Section 92 of the Competition Act in respect of the Transaction;
or (iii) the Director shall have advised the Offeror that he does not
intend at the current time to apply to the Competition Tribunal for an
order under Section 92 of the Competition Act in respect of the
Transaction and no proceedings shall have been taken or threatened
under the merger provisions of Part VII or under Section 45 of the
Competition Act in respect of the Transaction;
(c) the Transaction shall have been approved or deemed to be approved
pursuant to the Investment Canada Act;
(d) the waiting period (and any extension thereof) applicable to the
consummation of the Transaction under the Hart-Scott-Rodino Antitrust
Improvements Act of 1976 (United States), as amended, and any other
material waiting period under applicable foreign laws (if any) shall
have expired or been terminated without the imposition of any
governmental request or order requiring the sale or disposition or
holding separate (through a trust or otherwise) of a material portion
of the assets or businesses of UPR or Norcen;
- 2 -
(e) all other requisite regulatory approvals and consents (including,
without limitation, those of any stock exchanges or other securities or
regulatory authorities) shall have been obtained on terms and
conditions satisfactory to the Offeror, acting reasonably, and all
applicable statutory or regulatory waiting periods shall have expired
or been terminated;
(f) (i) 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 Norcen or any of its subsidiaries carries on
business) shall have been proposed, enacted, promulgated, amended or
applied, which in either case, in the 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 Norcen
Shares or the right of the Offeror to own or exercise full
rights of ownership of the Norcen Shares;
(B) has had, or if the Offer was consummated would result in, a
Material Adverse Change or, in the case of (ii) above, would
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 Norcen and/or the holders of
Norcen Shares for the purposes of Norcen becoming, directly or
indirectly, a wholly-owned subsidiary of the Offeror or
affecting an amalgamation or merger of Norcen's business and
assets with or into the Offeror and/or an affiliate of the
Offeror (a "Subsequent Acquisition Transaction");
(g) there shall not exist any prohibition at law against the Offeror making
the Offer or taking up and paying for all of the Norcen Shares under
the Offer or completing any compulsory acquisition or Subsequent
Acquisition Transaction in respect of any Norcen Shares not acquired
under the Offer;
(h) the Offeror shall have determined in its sole judgment acting
reasonably that Norcen has not taken or proposed to take any action
that would be a Material Adverse Change; and
(i) in the sole judgment of the Offeror, acting reasonably, (i) Norcen
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 Norcen 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 any
misrepresentation, breach and non-performance would have, or would be
reasonably likely to have, a material adverse effect on the Offeror and
provided further that
- 3 -
Norcen has been given notice of and 3 days to cure any such
misrepresentation, breach or non-performance.
SCHEDULE B
FORM OF PRE-TENDER AGREEMENT FOR CONTROLLING SHAREHOLDER
--------------------------------------------------------
Union Pacific Resources Group Inc.
Union Pacific Resources Inc.
January 25, 1998
Noranda Inc.
Suite 4100, BCE Place
181 Bay Street
Toronto, Ontario M5J 2T3
Attention: David W. Kerr
President and Chief Executive Officer
Dear Sir:
Re: Offer by Union Pacific Resources Inc. ("UPRI") to Purchase all of
the Norcen Shares
Reference is made to the Pre-Acquisition Agreement dated January 25,
1998 (the "Pre- Acquisition Agreement") between Union Pacific Resources Group
Inc., UPRI and Norcen pursuant to which UPRI has agreed to make an offer to
purchase all of the issued and outstanding Norcen Shares. All capitalized terms
referred to herein shall have the meanings attributed thereto in the Pre-
Acquisition Agreement.
We understand that you (the "Controlling Shareholder") beneficially
own, directly or indirectly, or exercise control or direction over, the number
of Norcen Shares set forth in your acceptance at the end of this letter
agreement. Any references in this letter agreement to Norcen Shares owned by the
Controlling Shareholder shall mean such number of Norcen Shares and, where the
context requires, shall include all of the shares of a holding company whose
only asset is the Norcen Shares and which has no liabilities, which shares may,
pursuant to the Offer, be tendered to UPRI.
1. Covenants of Controlling Shareholder
------------------------------------
By the acceptance of this letter agreement, the Controlling Shareholder
hereby agrees, subject to the terms of paragraph 5 hereof, from the date hereof
until the completion of the Offer:
(a) not to sell, assign, convey or otherwise dispose of any of the
Norcen Shares owned by such Controlling Shareholder and not to
permit any affiliate or subsidiary of such Controlling
Shareholder to sell, assign, convey or otherwise dispose of
any of the Norcen Shares owned by it, other than to a
wholly-owned holding company formed for the purpose of
tendering the shares of such holding company to the Offer;
- 2 -
(b) unconditionally and irrevocably to accept and to cause any
affiliate or subsidiary of such Controlling Shareholder to
unconditionally and irrevocably accept the Offer made by UPRI
by depositing the Norcen Shares presently owned or hereafter
acquired by such Controlling Shareholder or affiliate or
subsidiary immediately following the mailing of the Offer and
in accordance with the terms and conditions of the Offer;
(c) not to exercise any statutory or other rights of withdrawal
with respect to any Norcen Shares owned by such Controlling
Shareholder or any affiliate or subsidiary of such Controlling
Shareholder once deposited pursuant to the Offer unless this
letter agreement is terminated prior to UPRI taking up the
Norcen Shares under the Offer; and
(d) not to exercise any shareholder rights or remedies available
at common law or pursuant to the Canada Business Corporations
Act or applicable securities legislation to delay, hinder,
upset or challenge the Offer.
2. Covenants of UPR and UPRI
-------------------------
(a) UPR shall cause UPRI and UPRI shall make the Offer in accordance with the
terms and conditions of the Pre-Acquisition Agreement and shall comply with the
provisions of Article 2 thereof in respect of the Offer. UPR and UPRI shall not
agree to amend Article 2 of the Pre- Acquisition Agreement without the consent
of the Controlling Shareholder.
(b) UPR shall cause and UPRI shall, subject to the satisfaction or waiver of the
conditions set forth in the Offer, take up and pay for all of the Norcen Shares
owned by the Controlling Shareholder or any affiliate or subsidiary of the
Controlling 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. Representations
---------------
The Controlling Shareholder hereby represents and warrants to UPRI as
follows:
(a) the Norcen Shares are beneficially owned by such Controlling
Shareholder 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;
(b) no person, firm or corporation has any agreement or option, or
any right or privilege (whether by law, pre-emptive or
contractual) capable of becoming an agreement or option, for
the purchase, acquisition or transfer of any of the Norcen
Shares or any interest therein or right thereto, except
pursuant to this letter agreement;
(c) the Controlling Shareholder is a valid and subsisting
corporation with all necessary corporate power and authority
to execute and deliver this letter agreement and to perform
its obligations hereunder; and
- 3 -
(d) this letter agreement has been duly executed and delivered by
the Controlling Shareholder and constitutes a valid and
binding obligation of the Controlling Shareholder, enforceable
in accordance with its terms.
4. Expenses
--------
UPRI and the Controlling 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 Section 4
shall survive the termination of this letter agreement pursuant to Section 5.
5. Termination
-----------
It is understood and agreed that the respective rights and obligations
hereunder of UPRI and the Controlling Shareholder shall cease and this letter
agreement shall terminate in the event that the Pre-Acquisition Agreement is
terminated pursuant to Article 11 thereof other than pursuant to Section 11.1(f)
or 11.1(h) thereof.
In the event of such termination of this letter agreement the
Controlling Shareholder may withdraw all of the Norcen 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
liability on the part of either the Controlling Shareholder or UPRI, except to
the extent that either such party is in default of its obligations herein
contained.
6. No Solicitation
---------------
(a) The Controlling Shareholder and its affiliates and
subsidiaries together with their respective directors,
officers, employees, agents, financial advisors, counsel and
other representatives shall immediately cease and cause to be
terminated all existing discussions and negotiations, if any,
with any parties conducted before the date of this letter
agreement with respect to any Take-over Proposal.
(b) Neither the Controlling Shareholder nor any of its affiliates
and subsidiaries, or any of their respective directors,
officers, employees, agents, financial advisors, counsel or
other representatives shall, directly or indirectly, (a)
solicit, initiate or knowingly encourage the initiation or
continuation of any inquiries, discussions, negotiations,
proposals or offers from any corporation, person or other
entity or group (other than UPR and its subsidiaries and their
respective directors, officers, employees, agents, financial
advisors, counsel or other representatives) in respect of any
matter or thing which is inconsistent with the successful
completion of the Offer and the merger of UPRI and Norcen,
including any Take-over Proposal or (b) provide any
confidential information to, participate in any discussions or
negotiations relating to any Takeover Proposal with, or
otherwise cooperate with or assist or participate in any
effort to consider, review or initiate a Take-over Proposal
by, any corporation, person or other entity or group.
- 4 -
7. 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.
8. Assignment
----------
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.
9. 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 Norcen, 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 UPRI and
Norcen 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 Norcen.
10. Enurement
---------
This letter agreement will be binding upon and enure to the benefit of
UPRI, the Controlling Shareholder and their respective executors,
administrators, successors and permitted assigns.
11. 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
jurisdiction of the courts of the Province of Alberta.
- 5 -
12. 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,
UNION PACIFIC RESOURCES GROUP
INC.
Per:
-------------------------------
Per:
-------------------------------
UNION PACIFIC RESOURCES INC.
Per:
-------------------------------
Per:
-------------------------------
Acceptance
----------
The foregoing is hereby accepted as of and with effect from the ___ day
of January, 1998 and the undersigned hereby represents that the undersigned
beneficially owns, directly or indirectly, or exercises control or direction
over ______________ Norcen Shares.
Noranda Inc.
Per:
--------------------------------------------
Name: David W. Kerr
Title: President and Chief Executive Officer
SCHEDULE C
FORM OF NORCEN PRESS RELEASE
----------------------------
SCHEDULE D
FORM OF UPR PRESS RELEASE
-------------------------
SCHEDULE E
CONDITIONS IN FAVOUR OF NORCEN
------------------------------
The capitalized terms used in this Schedule F have the meanings set
forth in the attached Pre-Acquisition Agreement dated January, 1998 (the
"Agreement") between UPR, UPRI and Norcen, except that the term "Offeror" shall
be deemed to refer to UPRI.
Notwithstanding any other provision of the Agreement, the Board of
Directors of Norcen reserves the right to withdraw, modify or amend its
recommendation with respect to the Offer unless all of the following conditions
are satisfied or waived by Norcen prior to the Expiry Time:
(a) all requisite regulatory approvals and consents (including,
without limitation, those of any stock exchanges or other
securities or regulatory authorities) shall have been obtained
and all applicable statutory or regulatory waiting periods
shall have expired or been terminated and no objection or
opposition shall have been filed, initiated or made during any
applicable statutory or regulatory period; and
(b) (i) no order shall have been issued by any domestic
or foreign court or tribunal or governmental agency
or other regulatory authority or administrative
agency or commissions, and
(ii) no law shall have been enacted;
which has the effect or may have the effect of cease trading,
enjoining or prohibiting the purchase by, or the sale to, the
Offeror of the Norcen Shares.
SCHEDULE F
LETTER FOR RECIPIENTS OF EVALUATION MATERIALS
---------------------------------------------
January o, 1998
o
Dear Sirs:
You are hereby formally requested pursuant to the Confidentiality
Agreement dated o, 1998 (the "Confidentiality Agreement") between you and Norcen
to comply with the terms and conditions of that agreement and to [describe
obligations in Confidentiality Agreement with respect to return and destruction
of confidential information].
NORCEN ENERGY RESOURCES
LIMITED
Per:
------------------------------
Name:
Title:
Per: ------------------------------
Name:
Title:
SCHEDULE G
HOLDCO SHARE PURCHASE AGREEMENT
-------------------------------
BETWEEN o (the "Vendor") and Union Pacific Resources Inc. (the
"Offeror").
WHEREAS the Vendor is the beneficial and registered owner of all of the
issued and outstanding shares (the "Purchased Shares") of o ("Holdco");
AND WHEREAS Holdco is the beneficial and registered owner of o common
shares (the "Norcen Shares") of Norcen Energy Resources Limited ("Norcen");
AND WHEREAS the Vendor has agreed to sell or cause to be sold to the
Offeror and the Offeror has agreed to buy the Purchased Shares upon the terms
and conditions set out below.
NOW THEREFORE the parties agree to the terms set out below.
INTERPRETATION
- --------------
1.1 As used in this agreement, the masculine gender includes the feminine and
neuter genders, and vice versa, and the singular includes the plural, and vice
versa, where the context so requires.
1.2 Defined terms herein have the meaning ascribed to them in the
Pre-Acquisition Agreement dated January 25, 1998 among Union Pacific Resources
Group Inc., Union Pacific Resources Inc. and Norcen (the "Pre-Acquisition
Agreement") unless otherwise defined herein.
PURCHASE OF PURCHASED SHARES
- ----------------------------
2.1 The Vendor agrees to sell to the Offeror and the Offeror agrees to purchase
from the Vendor, the Purchased Shares.
2.2 The Purchase price to be paid by the Offeror for the Purchased Shares shall
be equal in aggregate to the price per share of Norcen offered under the Offer
multiplied the number of the Norcen Shares held by Holdco, such price to be paid
in accordance with the Offer.
2.3 The Vendor and the Offeror agree that at the time the Purchased Shares are
purchased, Holdco shall have no assets (other than the Norcen Shares) and no
liabilities.
REPRESENTATIONS AND COVENANTS
- -----------------------------
3.1 The Vendor represents and warrants to the Offeror that as of execution and
closing:
(a) Incorporation and Registration. Holdco is a corporation duly
incorporated and validly existing under the Alberta Business Corporations Act
and has all necessary corporate power, authority and capacity to own its
property and assets and to carry on its business as presently conducted and to
enter into this Agreement and to perform its obligations hereunder. Holdco was
- 2 -
incorporated on or after January 1, 1998. The Vendor has duly executed and
delivered this Agreement and, upon due execution and delivery of this Agreement
by the Offeror, this Agreement shall be a valid and binding agreement,
enforceable against the Vendor in accordance with its terms, subject to the
usual bankruptcy exception and the availability of equitable remedies. Neither
the nature of its business nor the location or character of the property owned
by Holdco requires Holdco to be registered, licensed or otherwise qualified as
an extra-provincial or foreign corporation or to be in good standing in any
other jurisdiction.
(b) Capitalization. The authorized capital of Holdco consists o of
which o are issued and outstanding (the "Purchased Shares"). The Purchased
Shares are the only outstanding securities of Holdco. All of the Purchased
Shares have been duly and validly issued and are outstanding as fully paid and
non-assessable shares of Holdco. No options, warrants or other rights to
purchase shares or other securities of Holdco and no securities or obligations
convertible into or exchangeable for shares or other securities of Holdco have
been authorized or agreed to be issued or are outstanding.
(c) Right to Sell. The Vendor is the sole registered and beneficial
owner of the Purchased Shares. The Vendor has the exclusive right to dispose of
the Purchased Shares owned by it as provided in this Agreement and the execution
of this Agreement and the disposition of the Purchased Shares will not violate,
contravene, breach or offend against or result in any default under any
indenture, mortgage, lease, agreement, obligation, instrument, charter or by-law
provision, statute, regulation, order, judgment, decree, license, permit or law
to which the Vendor or Holdco is a party or subject or by which the Vendor or
Holdco is bound or affected. The Vendor will deliver to the Offeror on closing
good and valid title to the Purchased Shares to be sold by the Vendor hereunder
free and clear of all liens. The Purchased Shares are not subject to any
shareholders agreement.
(d) Restricted Activity. Holdco was incorporated for the purpose of
acquiring and holding the Norcen Shares and since incorporation its sole
business activity has been the ownership of the Norcen Shares. Holdco has no
liabilities (whether accrued, absolute, potential, contingent or otherwise) and
no assets other than the Norcen Shares.
(e) No Joint Venture Interests, etc. Holdco is not a partner,
co-tenant, joint venturer or otherwise a participant in any partnership, joint
venture, co-tenancy or other similar jointly owned business.
(f) Agreements. Holdco is not a party to nor bound or affected by any
agreements, commitments or understandings of any nature whatsoever, written or
oral except for this Agreement and the Pre-Acquisition Agreement. Holdco is not
a party to nor bound by any agreement of guarantee, indemnification, assumption
or endorsement or any other like commitment of the obligations, liabilities
(contingent or otherwise) or indebtedness of any other person, firm or
corporation.
(g) Tax Matters. (i) Holdco has duly and timely filed its tax returns
with the appropriate taxing or other governmental authority or agency or if not
timely filed has paid any penalties imposed as a result thereof and has duly,
completely and correctly reported all income and all other
- 3 -
amounts and information required to be reported thereon; (ii) Holdco has duly
and timely paid all taxes, including all interest and penalties relating
thereto, that are due and payable by it and there are no taxes that are not yet
due and payable and that relate to periods ending on or prior to the closing;
(iii) Holdco has not requested, nor entered into any agreement or other
arrangement or executed any waiver providing for, any extension of time within
which: (w) to file any tax return covering any taxes for which Holdco is or may
be liable, (x) to file any elections, designations or similar things relating to
taxes for which Holdco is or may be liable, (y) Holdco is required to pay or
remit any taxes or amounts on account of taxes, or (z) any taxing or other
governmental authority or agency may assess or collect taxes for which Holdco is
or may be liable; (iv) there are no actions, suits, proceedings, investigations,
audits or claims now pending or, after due inquiry, threatened, against Holdco
in respect of any taxes and there are no matters under discussion, audit or
appeal with any taxing or other governmental authority or agency relating to
taxes; (v) Holdco has duly and timely withheld from any amount paid or credited
by it to or for the account or benefit of any person, including, without
limitation, any of its employees, officers and directors and any non-resident
person, the amount of all taxes and other deductions, required by any applicable
law, rule or regulation to be withheld from any such amount and has duly and
timely remitted the same to the appropriate taxing or other governmental
authority or agency; (vi) the Norcen Shares are held by Holdco as capital
property for purposes of the Income Tax Act (Canada); (vii) Holdco is not a
non-resident of Canada or a non-resident owned investment corporation for the
purposes of the Income Tax Act (Canada); (viii) the Purchased Shares are
"eligible property" within the meaning of subsection 85(1.1) of the Income Tax
Act (Canada); and (ix) the Vendor is not a non-resident of Canada for the
purposes of the Income Tax Act (Canada.
(h) Litigation. There are no suits, actions, litigation, investigation,
claim, complaint, grievance or proceeding, including appeals and applications
for review, in progress, pending or threatened against or relating to Holdco or
affecting its assets before any court, governmental department, commission,
board, bureau, agency or arbitration panel.
(i) Compliance. Holdco has conducted its business in material
compliance with all applicable law, rules and regulations of any governmental,
administrative or regulatory authority, including any supranational authority,
judgments, orders, rulings or awards of any court arbitrator or any
governmental, administrative or regulatory authority.
(j) Consents. No consent, waiver, approval, authorization, exemption,
registration, license or declaration of or by, or filing with, or notification
to any governmental, administrative or regulatory authority is required to be
made or obtained by Holdco or the Vendor in connection with (i) the execution,
delivery or enforcement of this Agreement or (ii) the consummation of any
transactions provided for herein; except, in either case, those consents or
approvals listed in the Pre- Acquisition Agreement.
(k) Voting. The Vendor has not previously granted or agreed to grant
any proxy in respect of the Purchased Shares or entered into any voting trust,
vote pooling or other agreement with respect to the right to vote, call meetings
of shareholders or give consents or approvals of any kind as to the Purchased
Shares.
- 4 -
(l) Articles and By-laws. The Vendor has made available to the Offeror,
the articles and by-laws of Holdco, including any and all amendments thereto and
such articles and by-laws as so amended are in full force and effect and no
amendments are being made to the same.
(m) Books and Records. The Vendor has made available to the Offeror,
all books and records of Holdco, including the minute books. Such books and
records fairly and correctly set out and disclose in all material respects the
financial position of Holdco and all financial transactions relating to Holdco
have been accurately recorded in such books and records. The minute books
include complete and accurate minutes of all meetings of the directors or
shareholders of Holdco, held to date or resolutions passed by the directors or
shareholders on consent, since the date of its incorporation. The share
certificate book, register of shareholders, register of transfers and register
of directors of Holdco are complete and accurate.
(n) Full Disclosure. None of the foregoing representations and
statements of fact contains any untrue statement of material fact or omits to
state any material fact necessary to make any such statement or representation
not misleading to a prospective purchaser of the Purchased Shares seeking full
information as to Holdco, its respective properties, businesses and affairs.
CLOSING
- -------
4.1 The closing of the purchase of the Purchased Shares shall take place
concurrently with the execution hereof at the offices of o prior to the take-up
and payment by the Offeror of Shares tendered to the Offer (the "Closing Date").
For that purpose, the Offeror agrees to give prior written notice to the Vendor
of its intention to take-up and pay for the Norcen Shares tendered to the
Offeror. Upon closing the Vendor shall deliver to the Offeror the certificates
representing the Purchased Shares, duly endorsed for transfer in blank by the
registered holder thereof, all of the share certificate books, minute books,
corporate seals and other corporate and business books and records of Holdco and
all files and materials respecting the assets and liabilities thereof,
resignations and releases of each director and officer of Holdco, a resolution
approving the transfer of the Purchased Shares to the Offeror and the share
certificates representing the Norcen Shares in the name of Holdco.
4.2 The representations and warranties made by the Vendor herein shall survive
for a period of three years from the date of purchase of the Purchased Shares by
the Offeror; provided however, that any representations and warranties which
prove to be incorrect or untrue with respect to tax matters shall survive as to
the such tax matters until the last applicable limitation period under
applicable tax laws (or, in the event of a reassessment, the settlement or
resolution of all matters relating thereto). No investigations made by or on
behalf of the Offeror or any of its authorized agents at any time shall have the
effect of waiving, diminishing the scope or otherwise affecting any
representation, warranty or covenant made by the Vendor herein or pursuant
hereto.
INDEMNITY
- ---------
5.1 The Vendor agrees to indemnify and save harmless each of the Offeror and its
directors, employees, officers and affiliates, on an after-tax basis, from and
against all liabilities, claims, losses, costs, damages, causes of action and
expenses (including reasonable counsel's fees and expenses) in any way caused
by, or arising directly or indirectly from, or in consequence of:
- 5 -
(a) any representation or warranty in this Agreement being incorrect or
misrepresentative in any respect;
(b) the non-fulfillment of any covenant or agreement by the Vendor of
Holdco under this Agreement;
(c) any liabilities, duties or obligations of Holdco arising, directly
or indirectly, as a result of or in connection with transactions or events which
occurred prior to the closing of the purchase and sale of the Purchased Shares
hereunder, including, without limitation, (i) all debts, obligations,
liabilities, leases, contracts, commitments or engagements whatsoever, and (ii)
all liabilities in respect of income, capital, and other taxes and governmental
charges and assessments; and
(d) any act, action, suit or proceeding which 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 private person
(including, without limitation, any individual, corporation, firm, group or
other entity) in Canada or elsewhere based upon any failure or alleged failure
by the Vendor, Holdco or any of its affiliates to comply with applicable laws,
including but not limited to Canadian securities laws, at any time prior to the
date hereof, all regardless of any prior knowledge of or notice to the Offeror.
TAX RETURNS
- -----------
6.1 On or before the statutory due date, the Vendor shall be responsible for
preparing and filing, and the Offeror shall allow the Vendor to, on behalf of
and in the name of Holdco, prepare and file all tax returns, elections, filings,
forms or reports (the "Returns") of Holdco required by law to be filed for
Holdco's taxation year ending on or before the closing of the purchase and sale
of the Purchased Shares hereunder, and the Offeror shall cause Holdco to execute
the Returns; provided that prior to filing any Returns, the Vendor shall have
first supplied draft copies of the Returns to the Offeror for review and comment
and shall only file the Returns upon obtaining the prior consent of the Offeror
thereto.
MISCELLANEOUS
- -------------
7.1 The provisions hereof shall enure to the benefit of and be binding upon the
parties hereto and their permitted successors and assigns. This Agreement is to
be governed by the laws of Ontario and the laws of Canada applicable therein.
7.2 Each of the parties agrees that in the event of any breach, the aggrieved
party (or parties) shall be entitled to the remedy of specific performance of
such covenants or commitments and preliminary and permanent injunctive and other
equitable relief in addition to any other remedy to which it may be entitled, at
law or in equity, and the parties further agree to waive any requirement for the
securing or posting of any bond in connection with the obtaining of any such
injunctive or other equitable relief.
7.3 This Agreement shall immediately terminate in the event of the termination
of the Agreement.
- 6 -
IN WITNESS WHEREOF the parties have executed this agreement on the o
day of o, 1998.
[OFFEROR]
Per:
-------------------------------
Authorized Signing Officer
[THE VENDOR]
Per:
-------------------------------
Authorized Signing Officer