PROVISIONS ATTACHING TO THE EXCHANGEABLE SHARES, SERIES 1
The Exchangeable Shares, Series 1 (the "Exchangeable Shares") shall have the
following rights, privileges, restrictions and conditions:
ARTICLE 1
INTERPRETATION
1.1 For the purposes of these share provisions:
"ACT" means the BUSINESS CORPORATIONS ACT (Alberta), as amended;
"AFFILIATE" has the meaning given to that term in the Securities Act;
"ANNUAL REDEMPTION" has the meaning given to that term in Section 5.1(d) of
these share provisions;
"ANNUAL REDEMPTION DATE" means any date that is within the first 90 days of any
calendar year commencing in 2005;
"AUTOMATIC REDEMPTION" has the meaning given to that term in Section 5.1(a) of
these share provisions;
"AUTOMATIC REDEMPTION DATE" means the date that is the fifth anniversary of the
Effective Date;
"BOARD OF DIRECTORS" means the Board of Directors of the Corporation;
"BUSINESS DAY" means any day on which commercial banks are generally open for
business in Calgary, Alberta, other than a Saturday, a Sunday or a day observed
as a holiday in Calgary, Alberta under the laws of the Province of Alberta or
the federal laws of Canada;
"CALL NOTICE" has the meaning given to that term in Section 4.3 of these share
provisions;
"CALL RIGHTS" means the Liquidation Call Right, the Redemption Call Right and
the Retraction Call Right, collectively;
"COMMON SHARES" means the common shares in the capital of the Corporation;
"CORPORATION" means Harvest Operations Corp., a corporation incorporated under
the Act, and where the context requires, its successors;
"CUMULATIVE DIVIDEND AMOUNT EXCHANGE RATIO", at any time, shall equal the
Exchange Ratio at such time less one;
"CURRENT MARKET PRICE" means, in respect of a Unit on any date, the weighted
average trading price of a Unit on the TSX for the 5 trading days preceding that
date, or, if the Units are not then listed on the TSX, on such other stock
exchange or automated quotation system on which the Units are listed or quoted,
as the case may be, as may be selected by the Board of Directors for such
purpose; provided, however, that if in the opinion of the Board of Directors the
public distribution or trading activity of Units for that period does not result
in a weighted average trading price which reflects the fair market value of a
Unit, then the Current Market Price of a Unit shall be determined by the Board
of Directors, in good faith and in its sole discretion, and provided further
that any such selection, opinion or determination by the Board of Directors
shall be conclusive and binding;
"DE MINIMUS REDEMPTION" has the meaning given to that term in Section 5.1(c) of
these share provisions;
"DE MINIMUS REDEMPTION DATE" has the meaning given to that term in Section
5.1(c) of these share provisions;
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"DISTRIBUTION" means a distribution paid by Harvest in respect of the Units,
expressed as an amount per Unit;
"DISTRIBUTION PAYMENT DATE" means a date on which a Distribution is paid to
Unitholders, generally being the 15th day of the month following any
Distribution Record Date (or if such day is not a Business Day, on the next
Business Day);
"DISTRIBUTION RECORD DATE" means the day on which Unitholders are identified for
purposes of determining entitlement to a Distribution, generally being the last
Business Day of each month;
"DIVIDEND RECORD DATE" has the meaning given to that term in Section 3.3 of
these share provisions;
"EFFECTIVE DATE" means June 30, 2004 or such other date as may be designated by
the Board of Directors;
"EXCHANGE RATIO", at any time and in respect of each Exchangeable Share, shall
be equal to 1.00000, as at the Effective Date, and shall be cumulatively
adjusted between the time at which that Exchangeable Share was issued and the
time as of which the Exchange Ratio is being calculated by:
(a) increasing the Exchange Ratio on each Distribution Payment Date by an
amount, rounded to the nearest five decimal places, equal to a fraction
having as its numerator the Distribution, expressed as an amount per
Unit, paid on that Distribution Payment Date, and having as its
denominator the Current Market Price on the first Business Day
following the Distribution Record Date for such Distribution; and
(b) decreasing the Exchange Ratio on each Dividend Record Date by an
amount, rounded to the nearest five decimal places, equal to a fraction
having as its numerator the amount of the dividend payable to holders
of Exchangeable Shares, expressed as an amount per Exchangeable Share,
and having as its denominator the Current Market Price on the date that
is seven Business Days prior to that Dividend Record Date;
"EXCHANGE RIGHTS" has the meaning given to that term in the Voting and Exchange
Trust Agreement;
"EXCHANGEABLE SHARES" mean the non-voting exchangeable shares in the capital of
the Corporation, having the rights, privileges, restrictions and conditions set
forth herein;
"GOVERNMENTAL ENTITY" means any: (a) multinational, federal, provincial, state,
regional, municipal, local or other government, governmental or public
department, central bank, court, tribunal, arbitral body, commission, board,
bureau or agency, domestic or foreign; (b) any subdivision, agent, commission,
board, or authority of any of the foregoing; or (c) any quasi-governmental or
private body exercising any regulatory, expropriation or taxing authority under
or for the account of any of the foregoing;
"HOLDER" means, when used with reference to the Exchangeable Shares, the holders
of Exchangeable Shares shown from time to time in the register maintained by or
on behalf of the Corporation in respect of the Exchangeable Shares;
"LCR EXERCISING PARTY" has the meaning given to that term in Section 6.5 of
these share provisions;
"LIQUIDATION AMOUNT" has the meaning given to that term in Section 6.1 of these
share provisions;
"LIQUIDATION CALL RIGHT" has the meaning ascribed thereto in Section 6.5 of
these share provisions;
"LIQUIDATION DATE" has the meaning given to that term in Section 6.1 of these
share provisions;
"LIQUIDATION OFFER" has the meaning given to that term in Section 6.5 of these
share provisions;
"HARVEST EXCHANGECO" means Harvest ExchangeCo Inc., a corporation incorporated
under the Act;
"HARVEST" means the Harvest Energy Trust, a trust established under the laws of
Alberta;
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"OPTIONAL REDEMPTION" has the meaning given to that term in Section 5.1(b) of
these share provisions;
"OPTIONAL REDEMPTION DATE" means any date that is after the second anniversary
of the Effective Date;
"PERSON" includes any individual, firm, partnership, joint venture, venture
capital fund, limited liability company, unlimited liability company,
association, trust, trustee, executor, administrator, legal personal
representative, estate, group, body corporate, corporation, unincorporated
association or organization, Governmental Entity, syndicate or other entity,
whether or not having legal status;
"PROMISSORY NOTE" means the promissory note of the Corporation in favour of
Harvest, dated the Effective Date;
"PURCHASE PRICE" has the meaning given to that term in Section 4.3 of these
share provisions;
"RCR EXERCISING PARTY", for the purpose of Article 4 of these share provisions,
has the meaning given to the term in Section 4.3 of these share provisions and,
for the purpose of Article 5 of these share provisions, has the meaning given to
that term in Section 5.5 of these share provisions;
"REDEMPTION CALL RIGHT" has the meaning given to that term in Section 5.5 of
these share provisions;
"REDEMPTION DATE" means any of the Automatic Redemption Date, the Optional
Redemption Date, the De Minimus Redemption Date or the Annual Redemption Date,
as the context requires;
"REDEMPTION OFFER" has the meaning given to that term in Section 5.5 of these
share provisions;
"REDEMPTION PRICE" means a price per Exchangeable Share equal to the amount
determined by multiplying the Exchange Ratio on the last Business Day prior to
the applicable Redemption Date by the Current Market Price of a Unit on the last
Business Day prior to such Redemption Date;
"REGULATION S" means Regulation S under the U.S. Securities Act;
"RETRACTED SHARES" has the meaning given to that term in Section 4.1(a) of these
share provisions;
"RETRACTION CALL RIGHT" has the meaning given to that term in Section 4.1(b) of
these share provisions;
"RETRACTION DATE" means the date that is three Business Days after the date on
which the Corporation or the Transfer Agent receives a Retraction Request in
respect of the Retracted Shares;
"RETRACTION OFFER" has the meaning given to that term in Section 4.1(b) of these
share provisions;
"RETRACTION PRICE" has the meaning given to that term in Section 4.1 of these
share provisions;
"RETRACTION REQUEST" has the meaning given to that term in Section 4.1 of these
share provisions;
"SECURITIES ACT" means the SECURITIES ACT (Alberta) and the rules, regulations
and policies made thereunder, as now in effect and as they may be amended from
time to time prior to the Effective Date;
"SUPPORT AGREEMENT" means the agreement made among Harvest, Harvest ExchangeCo,
the Corporation and the Trustee and dated as of the Effective Date;
"TSX" means the Toronto Stock Exchange;
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"TRANSFER AGENT" means Valiant Trust Company or such other Person as may from
time to time be appointed by the Corporation as the registrar and transfer agent
for the Exchangeable Shares;
"TRUSTEE" means the trustee chosen by Harvest to act as trustee under the Voting
and Exchange Trust Agreement, and any successor trustee appointed under the
Voting and Exchange Trust Agreement;
"UNITS" means the trust units of Harvest as constituted on the Effective Date;
"UNITHOLDERS" means holders of Units;
"U.S. PERSON" means a U.S. Person as defined in Rule 902(k) under Regulation S;
"U.S. SECURITIES ACT" means the UNITED STATES SECURITIES ACT OF 1933, as
amended;
"UNITED STATES" or "U.S." means the United States of America, its territories
and possessions, any State of the United States and the District of Columbia;
and
"VOTING AND EXCHANGE TRUST AGREEMENT" means the agreement made among Harvest,
Harvest ExchangeCo, the Corporation and the Trustee and dated as of the
Effective Date.
ARTICLE 2
AUTHORIZED NUMBER OF EXCHANGEABLE SHARES AND RANKING OF EXCHANGEABLE SHARES
2.1 The Corporation is authorized to issue an unlimited number of
Exchangeable Shares without nominal or par
value.
2.2 The Exchangeable Shares shall, subject to the following, be entitled to
a preference over the Common Shares and any other shares ranking junior to the
Exchangeable Shares with respect to the payment of dividends and the
distribution of assets in the event of the liquidation, dissolution or
winding-up of the Corporation, whether voluntary or involuntary, or any other
distribution of the assets of the Corporation among its shareholders for the
purpose of winding up its affairs; provided that notwithstanding such ranking
the Corporation shall not be restricted in any way from repaying indebtedness of
the Corporation to Harvest, from time to time, including without limitation, the
indebtedness evidenced by the Promissory Note. ARTICLE 3 DIVIDENDS
3.1 The holders of Exchangeable Shares, in priority to the Common Shares
and any class of shares of the Corporation ranking junior to the Exchangeable
Shares with respect to the payment of dividends, shall be entitled to receive,
and the Corporation shall pay on each Exchangeable Share, if, as and when
declared by the Board of Directors in its sole discretion from time to time out
of the money, assets or property of the Corporation properly applicable to the
payment of dividends (which may include Units), cumulative preferential cash
dividends in an amount per Exchangeable Share as set out in this Section 3.1.
The accrued amount of such preferential cumulative dividend with respect to an
Exchangeable Share on any date from time to time shall be the Cumulative
Dividend Amount Exchange Ratio in effect on the last Business Date prior to such
date multiplied by the Current Market Price on the last Business Day prior to
such date. Such dividends, whether or not declared, shall accrue and shall be
cumulative from the Effective Date.
3.2 Cheques of the Corporation payable at par at any branch of the bankers
of the Corporation shall be issued in respect of any cash dividends by the
sending of such a cheque to each holder of an Exchangeable Share, which shall
satisfy the cash dividend represented thereby unless the cheque is not paid on
presentation. Certificates registered in the name of the registered holder of
Exchangeable Shares shall be issued or transferred in respect of any stock
dividends by the sending of such a certificate to each holder of an Exchangeable
Share, which shall satisfy the stock dividend represented thereby. Such other
type and amount of property in respect of any dividends shall be issued,
distributed or transferred by the Corporation in such manner as it shall
determine and the issuance, distribution or transfer thereof by the Corporation
to each holder of an Exchangeable Share shall satisfy the dividend represented
thereby. No holder of an Exchangeable Share shall be entitled to recover by
action or other legal process
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against the Corporation any dividend that is represented by a cheque that has
not been duly presented to the Corporation's bankers for payment or that
otherwise remains unclaimed for a period of six years from the date on which
such dividend was payable.
3.3 The record date (a "Dividend Record Date") for the determination of the
holders of Exchangeable Shares entitled to receive payment of, and the payment
date for, any dividend declared on the Exchangeable Shares under Section 3.1 of
these share provisions and whether any such dividend is in fact declared shall
be determined in the sole discretion of the Board of Directors.
3.4 If on any payment date for any dividends declared on the Exchangeable
Shares under Section 3.1 of these share provisions the dividends are not paid in
full on all of the Exchangeable Shares then outstanding, any such dividends that
remain unpaid shall be paid on a subsequent date or dates determined by the
Board of Directors on which the Corporation shall have sufficient moneys, assets
or property properly applicable to the payment of such dividends.
ARTICLE 4
RETRACTION OF EXCHANGEABLE SHARES BY HOLDER
4.1 Subject to applicable law, and provided neither Harvest nor Harvest
ExchangeCo has exercised the Retraction Call Right, a holder of Exchangeable
Shares shall be entitled at any time, upon compliance with the provisions of
this Article 4, to require the Corporation to redeem any or all of the
Exchangeable Shares registered in the name of such holder for an amount per
share (the "Retraction Price") equal to the amount determined by multiplying the
Exchange Ratio on the last Business Day prior to the Retraction Date by the
Current Market Price of a Unit on the last Business Day prior to the Retraction
Date, which payment of the Retraction Price shall be satisfied in full by the
Corporation delivering or causing to be delivered to such holder that number of
Units equal to the Exchange Ratio as at the last Business Day prior to the
Retraction Date in accordance with Section 4.2 of these share provisions, for
each Exchangeable Share presented and surrendered by the holder. To effect such
retraction, the holder shall present and surrender to the Corporation at the
principal office of the Transfer Agent in Toronto or Calgary or at such other
address as may be specified by the Corporation by notice to the holders of
Exchangeable Shares from time to time the certificate or certificates
representing the Exchangeable Shares which the holder desires to have the
Corporation redeem, together with such other documents and instruments as may be
required to effect a transfer of Exchangeable Shares under the Act and the
by-laws of the Corporation and such additional documents and instruments as the
Transfer Agent and the Corporation may reasonably require, and together with a
duly executed statement (the "Retraction Request") in the form of Schedule A
hereto or in such other form as may be acceptable to the Corporation:
(a) specifying that the holder desires to have all or any number specified
therein of the Exchangeable Shares represented by such certificate or
certificates (the "Retracted Shares") redeemed by the Corporation; and
(b) appointing the Corporation as its agent for the purpose of offering its
Retracted Shares for sale to Harvest and Harvest ExchangeCo (the
"Retraction Offer") on the terms and conditions set out in Section 4.3
below (Harvest's and Harvest ExchangeCo's right to accept the
Retraction Offer and to complete the purchase of the Retracted Shares
pursuant to the Retraction Offer is referred to as the "Retraction Call
Right").
4.2 Subject to the exercise by Harvest or Harvest ExchangeCo of the
Retraction Call Right, upon receipt by the Corporation or the Transfer Agent in
the manner specified in Section 4.1 hereof of documents including, without
limitation, a certificate or certificates representing the number of Retracted
Shares, together with a Retraction Request, and provided that the Retraction
Request is not revoked by the holder in the manner specified in Section 4.7, the
Corporation shall redeem the Retracted Shares effective at the close of business
on the Retraction Date and shall cause to be delivered to such holder the
Retraction Price. If only a part of the Exchangeable Shares represented by any
certificate is redeemed (or purchased by Harvest or Harvest ExchangeCo pursuant
to the Retraction Call Right), a new certificate for the balance of such
Exchangeable Shares shall be issued to the holder at the expense of the
Corporation.
4.3 Harvest ExchangeCo shall only be entitled to exercise its Retraction
Call Right with respect to those Exchangeable Shares, if any, in respect of
which Harvest has not exercised its Retraction Call Right. Upon
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receipt by the Corporation of a Retraction Request, the Corporation shall
immediately provide to Harvest and Harvest ExchangeCo a copy of the Retraction
Request and, as agent for the holder who submitted the Retraction Request, shall
be deemed to have made the Retraction Offer to Harvest and Harvest ExchangeCo in
respect of the holder's Retracted Shares by providing to Harvest and Harvest
ExchangeCo a copy of the Retraction Request as aforesaid. In order to exercise
the Retraction Call Right and accept the Retraction Offer, Harvest or Harvest
ExchangeCo must notify the Corporation of its determination to do so (the "Call
Notice") on or before 4:30 p.m. (Calgary time) on the date of notification to
Harvest and Harvest ExchangeCo by the Corporation of the receipt by the
Corporation of the Retraction Request. If Harvest or Harvest ExchangeCo does not
so notify the Corporation on or before 4:30 p.m. (Calgary time) on the date of
notification by the Corporation of the receipt by the Corporation of the
Retraction Request, the Corporation will notify the holder as soon as possible
thereafter that neither Harvest nor Harvest ExchangeCo will exercise the
Retraction Call Right and accept the Retraction Offer. If Harvest or Harvest
ExchangeCo delivers the Call Notice on or before 4:30 p.m. (Calgary time) on the
date of notification by the Corporation of the receipt by the Corporation of the
Retraction Request and provided that the Retraction Offer is not revoked by the
holder in the manner specified in Section 4.7, the Retraction Request shall
thereupon be considered only the Retraction Offer by the holder to sell the
Retracted Shares to Harvest or Harvest ExchangeCo, as applicable (in this
Article 4, the "RCR Exercising Party"), and all other aspects of the Retraction
Request will be null and void. In such event, the Corporation shall not redeem
the Retracted Shares and the RCR Exercising Party shall purchase from such
holder and such holder shall sell to the RCR Exercising Party on the Retraction
Date the Retracted Shares for an amount per share (the "Purchase Price") equal
to the Retraction Price, which payment of the Purchase Price shall be satisfied
in full by the RCR Exercising Party delivering or causing to be delivered to
such holder that number of Units equal to the Exchange Ratio as at the last
Business Day prior to the Retraction Date for each Retracted Share. To the
extent that the RCR Exercising Party pays the Purchase Price in respect of the
Retracted Shares, the Corporation shall no longer be obligated to pay any amount
in respect of the Retraction Price for such Retracted Shares. Provided that the
RCR Exercising Party has complied with Section 4.4, the closing of the purchase
and sale of the Retracted Shares pursuant to the Retraction Call Right shall be
deemed to have occurred as at the close of business on the Retraction Date and,
for greater certainty, no redemption by the Corporation of such Retracted Shares
shall take place on the Retraction Date. In the event that neither Harvest nor
Harvest ExchangeCo delivers a Call Notice within the time required for the
exercise of the Retraction Call Right as set forth above, and provided that the
Retraction Request is not revoked by the holder in the manner specified in
Section 4.7, the Corporation shall redeem the Retracted Shares on the Retraction
Date and in the manner otherwise contemplated in this Article 4.
4.4 The Corporation, Harvest or Harvest ExchangeCo, as the case may be,
shall deliver or cause the Transfer Agent to deliver to the relevant holder, at
the address of the holder recorded in the register of shareholders of the
Corporation for the Exchangeable Shares or at the address specified in the
holder's Retraction Request, or by holding for pick-up by the holder at the
office of the Transfer Agent specified in the holder's Retraction Request,
certificates representing the Units (which securities shall be duly issued as
fully paid and non-assessable and shall be free and clear of any lien, claim or
encumbrance) registered in the name of the holder or in such other name as the
holder may request in payment of the total Retraction Price or the total
Purchase Price, as the case may be, in each case less any amounts withheld on
account of tax required to be deducted and withheld therefrom, and such delivery
of such certificates by or on behalf of the Corporation, Harvest or Harvest
ExchangeCo, as the case may be, or by the Transfer Agent shall be deemed to be
payment of and shall satisfy and discharge all liability for the total
Retraction Price or the total Purchase Price, as the case may be, to the extent
that the same is represented by such certificates (plus any tax deducted and
withheld therefrom and remitted to the proper tax authority).
4.5 On and after the close of business on the Retraction Date, the holder
of the Retracted Shares shall cease to be a holder of such Retracted Shares and
shall not be entitled to exercise any of the rights of a holder in respect
thereof, other than: (i) the right to receive his proportionate part of the
total Retraction Price or the total Purchase Price, as the case may be, unless
upon presentation and surrender of certificates in accordance with the foregoing
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provisions, payment of the total Retraction Price or the total Purchase Price,
as the case may be, shall not be made as provided in Section 4.4, in which case
the rights of such holder shall remain unaffected until the total Retraction
Price or the total Purchase Price, as the case may be, has been paid in the
manner hereinbefore provided; and (ii) the right to receive any declared and
unpaid dividends on the Retracted Shares. On and after the close of business on
the Retraction Date, provided that presentation and surrender of certificates
and payment of the total Retraction Price or the total Purchase Price, as the
case may be, has been made in accordance with the foregoing provisions, the
holder of the Retracted Shares so redeemed by the Corporation or purchased by
Harvest or Harvest ExchangeCo shall thereafter be considered and deemed for all
purposes to be a holder of the Units delivered to it.
4.6 Notwithstanding any other provision of this Article 4, the Corporation
shall not be obligated to redeem Retracted Shares specified by a holder in a
Retraction Request to the extent that such redemption of Retracted Shares would
be contrary to solvency requirements or other provisions of applicable law. If
the Corporation believes that on any Retraction Date it would not be permitted
by any of such provisions to redeem the Retracted Shares tendered for redemption
on such date, and provided that neither Harvest nor Harvest ExchangeCo shall
have exercised the Retraction Call Right with respect to the Retracted Shares,
the Corporation shall only be obligated to redeem Retracted Shares specified by
a holder in a Retraction Request to the extent of the maximum number that may be
so redeemed (rounded down to a whole number of shares) as would not be contrary
to such provisions and shall notify the holder and the Trustee at least two
Business Days prior to the Retraction Date as to the number of Retracted Shares
which will not be redeemed by the Corporation. In any case in which the
redemption by the Corporation of Retracted Shares would be contrary to solvency
requirements or other provisions of applicable law, the Corporation shall redeem
Retracted Shares in accordance with Section 4.2 of these share provisions on a
pro rata basis and shall issue to each holder of Retracted Shares a new
certificate, at the expense of the Corporation, representing the Retracted
Shares not redeemed by the Corporation pursuant to Section 4.2 hereof. Provided
that the Retraction Request is not revoked by the holder in the manner specified
in Section 4.7, the holder of any such Retracted Shares not redeemed by the
Corporation pursuant to Section 4.2 of these share provisions as a result of
solvency requirements or other provisions of applicable law shall be deemed by
giving the Retraction Request to have exercised the Exchange Rights so as to
require Harvest or Harvest ExchangeCo to purchase such Retracted Shares from
such holder on the Retraction Date or as soon as practicable thereafter on
payment by Harvest or Harvest ExchangeCo to such holder of the Purchase Price
for each such Retracted Share, all as more specifically provided in the Voting
and Exchange Trust Agreement.
4.7 A holder of Retracted Shares may, by notice in writing given by the
holder to the Corporation before the close of business on the Business Day
immediately preceding the Retraction Date, revoke its Retraction Request or
Retraction Offer, as applicable, in which event such Retraction Request or
Retraction Offer shall be null and void
ARTICLE 5
REDEMPTION OF EXCHANGEABLE SHARES BY THE CORPORATION
5.1 Subject to applicable law, and provided neither Harvest nor Harvest
ExchangeCo has exercised the Redemption Call Right, the Corporation:
(a) shall, on the Automatic Redemption Date, redeem all but not less than
all of the then outstanding Exchangeable Shares for the Redemption
Price (such redemption being an "Automatic Redemption");
(b) may, on any Optional Redemption Date, redeem all but not less than all
of the then outstanding Exchangeable Shares (such redemption being an
"Optional Redemption");
(c) may, on any date when the aggregate number of issued and outstanding
Exchangeable Shares is less than 500,000 (such redemption date being
the "De Minimus Redemption Date"), redeem all but not less than all of
the then outstanding Exchangeable Shares for the Redemption Price (such
redemption being a "De Minimus Redemption"); and
(d) may, on any Annual Redemption Date, redeem up to that number of
Exchangeable Shares equal to 20% of the Exchangeable Shares outstanding
on the Effective Date (such redemption being an "Annual Redemption");
such payment of the Redemption Price per Exchangeable Share to be satisfied in
full in all cases by the Corporation delivering or causing to be delivered, at
the election of the Corporation, either that number of Units equal to the
Exchange Ratio as at the last Business Day prior to the applicable Redemption
Date or an amount in cash equal to the Redemption Price, in accordance with
Section 5.3 of these share provisions. In case only part of the then
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outstanding Exchangeable Shares are at any time to be redeemed pursuant to an
Annual Redemption, the Exchangeable Shares to be redeemed shall be redeemed pro
rata, excluding fractions, from the holdings of all shareholders of Exchangeable
Shares, other than the Harvest and Harvest ExchangeCo, or in such other manner
as the Board of Directors deems reasonable.
5.2 In any case of a redemption of Exchangeable Shares under this Article
5, the Corporation shall, at least 90 days before the applicable Redemption
Date, send or cause to be sent to each holder of Exchangeable Shares a notice in
writing of the redemption by the Corporation or the purchase by Harvest or
Harvest ExchangeCo under the Redemption Call Right, as the case may be, of the
Exchangeable Shares held by such holder. Such notice shall set out the formula
for determining the Redemption Price, the Redemption Date and, if applicable,
particulars of the Redemption Call Right and/or Annual Redemption. The
accidental failure or omission to give any notice of redemption under this
Section 5.2 to less than 10% of the holders of Exchangeable Shares (other than
Harvest and Harvest ExchangeCo) shall not affect the validity of any redemption
of Exchangeable Shares pursuant to such notice.
5.3 On or after the applicable Redemption Date and subject to the exercise
by Harvest or Harvest ExchangeCo of the Redemption Call Right, the Corporation
shall deliver or cause to be delivered to the holders of the Exchangeable Shares
to be redeemed the Redemption Price for each such Exchangeable Share upon
presentation and surrender of the certificates representing such Exchangeable
Shares, together with such other documents and instruments as may be required to
effect a transfer of Exchangeable Shares under the Act and the by-laws of the
Corporation and such additional documents and instruments as the Transfer Agent
and the Corporation may reasonably require, at the registered office of the
Corporation or at any office of the Transfer Agent as may be specified by the
Corporation in such notice. Payment of the total Redemption Price for such
Exchangeable Shares, shall be made by delivery to each holder, at the address of
the holder recorded in the register of holders of the Exchangeable Shares
maintained by or on behalf of the Corporation or by holding for pick-up by the
holder at the registered office of the Corporation or at any office of the
Transfer Agent as may be specified by the Corporation in such notice, on behalf
of the Corporation, of certificates representing Units (which securities shall
be duly issued as fully paid and non-assessable and shall be free and clear of
any lien, claim or encumbrance), or, if applicable, a cheque of the Corporation
payable at par at any branch of the bankers of the Corporation, in each case
less any amounts withheld on account of tax required to be deducted and withheld
therefrom. On and after the applicable Redemption Date, the holders of the
Exchangeable Shares called for redemption shall cease to be holders of such
Exchangeable Shares and shall not be entitled to exercise any of the rights of
holders in respect thereof, other than: (i) the right to receive their
proportionate part of the total Redemption Price, unless payment of the total
Redemption Price for such Exchangeable Shares shall not be made upon
presentation and surrender of certificates in accordance with the foregoing
provisions, in which case the rights of the holders shall remain unaffected
until the total Redemption Price has been paid in the manner hereinbefore
provided; and (ii) the right to receive any declared and unpaid dividends on
such Exchangeable Shares. If only part of the Exchangeable Shares represented by
any certificate are to be redeemed, a new certificate for the balance shall be
issued at the expense of the Corporation.
5.4 The Corporation shall have the right at any time after the sending of
notice of its intention to redeem the Exchangeable Shares as aforesaid to
deposit or cause to be deposited the total Redemption Price for the Exchangeable
Shares so called for redemption, or of such of the said Exchangeable Shares
represented by certificates that have not at the date of such deposit been
surrendered by the holders thereof in connection with such redemption, in a
custodial account with any chartered bank or trust company in Canada named in
such notice, less any amounts withheld on account of tax required to be deducted
and withheld therefrom. Upon the later of such deposit being made and the
applicable Redemption Date, the Exchangeable Shares in respect whereof such
deposit shall have been made shall be redeemed and the rights of the holders
thereof after such deposit or that Redemption Date, as the case may be, shall be
limited to: (i) receiving their proportionate part of the total Redemption Price
(in each case less any amounts withheld on account of tax required to be
deducted or withheld therefrom) for such Exchangeable Shares so deposited,
against presentation and surrender of the said certificates held by them,
respectively, in accordance with the foregoing provisions; and (ii) receiving
any declared and unpaid dividends on such Exchangeable Shares. Upon such payment
or deposit of the total Redemption Price, the holders of the Exchangeable Shares
that have been so redeemed shall thereafter be considered and deemed for all
purposes to be holders of the Units or to have had cash delivered to them or the
custodian on their behalf, as applicable.
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5.5 Subject to the limitations set forth in Section 5.6 of these share
provisions, the Corporation is appointed as agent for the holders of
Exchangeable Shares for the purpose of offering to Harvest and Harvest
ExchangeCo (the "Redemption Offer") the overriding right (Harvest's and Harvest
ExchangeCo's right to accept the Redemption Offer and complete the purchase of
the Exchangeable Shares is referred to as the "Redemption Call Right"), in the
event of any proposed redemption of Exchangeable Shares by the Corporation
pursuant to this Article 5, to purchase from all but not less than all of the
holders of Exchangeable Shares (other than Harvest or Harvest ExchangeCo) on the
applicable Redemption Date all but not less than all of the Exchangeable Shares
held by each such holder, in the case of an Automatic Redemption, an Optional
Redemption or a De Minimus Redemption, or to purchase from all but not less than
all of the holders of Exchangeable Shares (other than Harvest or Harvest
ExchangeCo) on the applicable Redemption Date the designated percentage of the
Exchangeable Shares held by each such holder, in the case of an Annual
Redemption, on payment by whichever of Harvest or Harvest ExchangeCo is
exercising such right (in this Article 5, the "RCR Exercising Party") to each
such holder of an amount per Exchangeable Share equal to the Redemption Price,
which payment of the Redemption Price shall be satisfied in full by the RCR
Exercising Party delivering or causing to be delivered to such holder, at the
election of the RCR Exercising Party, either that number of Units equal to the
Exchange Ratio as at the last Business Day prior to the applicable Redemption
Date or an amount in cash equal to the Redemption Price, in accordance with
Section 5.7 of these share provisions. In the case of a redemption of
Exchangeable Shares under this Article 5, the Corporation, as agent for the
holders of Exchangeable Shares, shall make the Redemption Offer to Harvest and
Harvest ExchangeCo by sending or causing to be sent to Harvest and Harvest
ExchangeCo a notice in writing of the redemption by the Corporation of the
Exchangeable Shares. In the event of the exercise of the Redemption Call Right
and the acceptance of the Redemption Offer, each holder of Exchangeable Shares
shall be obligated to sell all of the Exchangeable Shares held by that holder to
the RCR Exercising Party on the applicable Redemption Date on payment by the RCR
Exercising Party to such holder of the Redemption Price for each such share, and
the Corporation shall have no obligation to redeem, or to pay any amount in
respect of, such shares so purchased by the RCR Exercising Party.
5.6 Harvest ExchangeCo shall only be entitled to exercise its Redemption
Call Right with respect to those Exchangeable Shares, if any, in respect of
which Harvest has not exercised its Redemption Call Right. To exercise the
Redemption Call Right and accept the Redemption Offer, the RCR Exercising Party
must notify the Transfer Agent, as agent for the holders of Exchangeable Shares,
and the Corporation of its intention to exercise such right (and accept such
offer) at least 60 days before the applicable Redemption Date. The Corporation
shall cause the Transfer Agent to notify the holders of the Exchangeable Shares
as to whether or not Harvest or Harvest ExchangeCo has exercised the Redemption
Call Right forthwith after the expiry of the period during which such right may
be exercised. If an RCR Exercising Party exercises its Redemption Call Right,
such RCR Exercising Party shall on the applicable Redemption Date purchase, and
each of the holders of Exchangeable Shares will sell, all of the Exchangeable
Shares then outstanding for a price per Exchangeable Share equal to the
Redemption Price.
5.7 For the purposes of completing the purchase of the Exchangeable Shares
pursuant to the Redemption Call Right, the RCR Exercising Party shall deposit
with the Transfer Agent, on or before the applicable Redemption Date,
certificates representing the aggregate number of Units deliverable by the RCR
Exercising Party (which securities shall be duly issued as fully paid and
non-assessable and shall be free and clear of any lien, claim or encumbrance)
or, if applicable, a cheque of the RCR Exercising Party payable at par at any
branch of the bankers of the RCR Exercising Party in payment of the total
Redemption Price, in each case less any amounts withheld on account of tax
required to be deducted and withheld therefrom. Provided that the total
Redemption Price has been so deposited with the Transfer Agent, on and after the
applicable Redemption Date the rights of each holder of Exchangeable Shares
(other than Harvest and Harvest ExchangeCo) shall be limited to: (i) receiving
such holder's proportionate part of the total Redemption Price payable by the
RCR Exercising Party upon presentation and surrender by the holder of
certificates representing the Exchangeable Shares held by such holder and the
holder shall on and after that Redemption Date be considered and deemed for all
purposes to be the holder of the Units to which it is entitled; and (ii)
receiving any declared and unpaid dividends on such Exchangeable Shares. Upon
surrender to the Transfer Agent of a certificate or certificates representing
Exchangeable Shares, together with such other documents and instruments as may
be required to effect a transfer of Exchangeable Shares under the Act and the
by-laws of the Corporation and such additional documents and instruments as the
Transfer Agent and the Corporation may reasonably require, the holder of such
surrendered certificate or certificates shall be entitled to receive in exchange
therefor, and the Corporation shall cause the Transfer Agent on behalf of the
RCR Exercising Party to deliver to such holder, certificates representing the
Units to which the holder is entitled or a cheque of the RCR
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Exercising Party payable at par at any branch of the bankers of the RCR
Exercising Party, of the total Redemption Price, less any amounts withheld on
account of tax required to be deducted and withheld therefrom. If neither
Harvest nor Harvest ExchangeCo exercises the Redemption Call Right in the manner
described above, on the applicable Redemption Date the holders of the
Exchangeable Shares shall be entitled to receive in exchange therefor the
Redemption Price otherwise payable by the Corporation in connection with the
redemption of the Exchangeable Shares pursuant to Section 5.1 of these share
provisions.
ARTICLE 6
DISTRIBUTION ON LIQUIDATION
6.1 In the event of the liquidation, dissolution or winding-up of the
Corporation or any other distribution of the assets of the Corporation among its
shareholders for the purpose of winding up its affairs, a holder of Exchangeable
Shares shall be entitled, subject to applicable law, to receive from the assets
of the Corporation in respect of each Exchangeable Share held by such holder on
the effective date (the "Liquidation Date") of such liquidation, dissolution or
winding-up, before any distribution of any part of the assets of the Corporation
among the holders of the Common Shares or any other shares ranking junior to the
Exchangeable Shares, an amount per share (the "Liquidation Amount") equal to the
amount determined by multiplying the Exchange Ratio on the last Business Day
prior to the Liquidation Date by the Current Market Price of a Unit on the last
Business Day prior to the Liquidation Date, which payment of the Liquidation
Amount shall be satisfied in full by the Corporation delivering or causing to be
delivered to such holder that number of Units equal to the Exchange Ratio as at
the last Business Day prior to the Liquidation Date, in accordance with Section
6.2 of these share provisions.
6.2 On or promptly after the Liquidation Date, and subject to the exercise
by Harvest or Harvest ExchangeCo of the Liquidation Call Right, the Corporation
shall deliver or cause to be delivered to the holders of the Exchangeable Shares
the Liquidation Amount for each such Exchangeable Share upon presentation and
surrender of the certificates representing such Exchangeable Shares, together
with such other documents and instruments as may be required to effect a
transfer of Exchangeable Shares under the Act and the by-laws of the Corporation
and such additional documents and instruments as the Transfer Agent and the
Corporation may reasonably require, at the registered office of the Corporation
or at any office of the Transfer Agent as may be specified by the Corporation by
notice to the holders of the Exchangeable Shares. Payment of the total
Liquidation Amount for such Exchangeable Shares shall be made by delivery to
each holder, at the address of the holder recorded in the register of holders of
the Exchangeable Shares maintained by or on behalf of the Corporation or by
holding for pick-up by the holder at the registered office of the Corporation or
at any office of the Transfer Agent as may be specified by the Corporation by
notice to the holders of Exchangeable Shares, on behalf of the Corporation, of
certificates representing Units (which securities shall be duly issued as fully
paid and non-assessable and shall be free and clear of any lien, claim or
encumbrance), less any amounts withheld on account of tax required to be
deducted and withheld therefrom. On and after the Liquidation Date, the holders
of the Exchangeable Shares shall cease to be holders of such Exchangeable Shares
and shall not be entitled to exercise any of the rights of holders in respect
thereof, other than: (i) the right to receive their proportionate part of the
total Liquidation Amount, unless payment of the total Liquidation Amount for
such Exchangeable Shares shall not be made upon presentation and surrender of
certificates in accordance with the foregoing provisions, in which case the
rights of the holders shall remain unaffected until the total Liquidation Amount
has been paid in the manner hereinbefore provided; and (ii) the right to receive
any declared and unpaid dividends on such Exchangeable Shares.
6.3 The Corporation shall have the right at any time after the Liquidation
Date to deposit or cause to be deposited the total Liquidation Amount in respect
of the Exchangeable Shares represented by certificates that have not at the
Liquidation Date been surrendered by the holders thereof in a custodial account
with any chartered bank or trust company in Canada, less any amounts withheld on
account of tax required to be deducted or withheld therefrom. Upon such deposit
being made, the rights of the holders of Exchangeable Shares after such deposit
shall be limited to: (i) receiving their proportionate part of the total
Liquidation Amount (less any amounts withheld on account of tax required to be
deducted and withheld therefrom) for such Exchangeable Shares so deposited,
against presentation and surrender of the said certificates held by them,
respectively, in accordance with the foregoing provisions; and (ii) receiving
any declared and unpaid dividends on such Exchangeable Shares. Upon such payment
or deposit of the total Liquidation Amount, the holders of the Exchangeable
Shares shall thereafter be considered and deemed for all purposes to be holders
of the Units delivered to them or the custodian on their behalf.
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6.4 After the Corporation has satisfied its obligations to pay the holders
of the Exchangeable Shares the Liquidation Amount per Exchangeable Share
pursuant to Section 6.1 of these share provisions, such holders shall not be
entitled to share in any further distribution of the assets of the Corporation.
6.5 Subject to the limitations set forth in Section 6.6 of these share
provisions, the Corporation is appointed as agent for the holders of
Exchangeable Shares for the purpose of offering to Harvest and Harvest
ExchangeCo (the "Liquidation Offer") the overriding right (Harvest's and Harvest
ExchangeCo's right to accept the Liquidation Offer and complete the purchase of
the Exchangeable Shares is referred to as the "Liquidation Call Right"), in the
event of and notwithstanding any proposed liquidation, dissolution or winding-up
of the Corporation or any other distribution of the assets of the Corporation
among its shareholders for the purpose of winding up its affairs, to purchase
from all but not less than all of the holders of Exchangeable Shares (other than
Harvest or Harvest ExchangeCo) on the Liquidation Date all but not less than all
of the Exchangeable Shares held by each such holder, on payment by whichever of
Harvest or Harvest ExchangeCo is exercising such right (in this Article 6, the
"LCR Exercising Party") to each such holder of an amount per Exchangeable Share
equal to the Liquidation Amount, which shall be satisfied in full by the LCR
Exercising Party delivering or causing to be delivered to such holder that
number of Units equal to the Exchange Ratio as at the last Business Day prior to
the Liquidation Date, in accordance with Section 6.7 of these share provisions.
In the event of the exercise of the Liquidation Call Right and the acceptance of
the Liquidation Offer, each holder of Exchangeable Shares shall be obligated to
sell all of the Exchangeable Shares held by that holder to the LCR Exercising
Party on the Liquidation Date on payment by the LCR Exercising Party to such
holder of the Liquidation Amount for each such share, and the Corporation shall
have no obligation to pay any amount on account of the Liquidation Amount in
respect of such shares so purchased by the LCR Exercising Party.
6.6 Harvest ExchangeCo shall only be entitled to exercise its Liquidation
Call Right with respect to those Exchangeable Shares, if any, in respect of
which Harvest has not exercised its Liquidation Call Right. In the event of any
proposed liquidation, dissolution or winding-up of the Corporation or any other
distribution of the assets of the Corporation among its shareholders for the
purpose of winding-up its affairs, the Corporation, as agent for the holders of
Exchangeable Shares, shall make the Liquidation Offer by sending or causing to
be sent to Harvest and Harvest ExchangeCo a notice in writing of the Liquidation
Offer. To exercise the Liquidation Call Right and accept the Liquidation Offer,
the LCR Exercising Party must notify the Transfer Agent, as agent for the
holders of Exchangeable Shares, and the Corporation of its intention to exercise
such right (and accept such offer) at least 30 days before the Liquidation Date,
in the case of a voluntary liquidation, dissolution or winding-up of the
Corporation, and at least five Business Days before the Liquidation Date, in the
case of an involuntary liquidation, dissolution or winding-up of the
Corporation. The Corporation shall cause the Transfer Agent to notify the
holders of the Exchangeable Shares as to whether or not Harvest or Harvest
ExchangeCo has exercised the Liquidation Call Right forthwith after the expiry
of the period during which such right may be exercised. If an LCR Exercising
Party exercises its Liquidation Call Right, such LCR Exercising Party will on
the Liquidation Date purchase, and each of the holders of Exchangeable Shares
will sell, all of the Exchangeable Shares then outstanding for a price per
Exchangeable Share equal to the Liquidation Amount.
6.7 For the purposes of completing the purchase of the Exchangeable Shares
pursuant to the Liquidation Call Right, the LCR Exercising Party shall deposit
with the Transfer Agent, on or before the Liquidation Date, certificates
representing the aggregate number of Units deliverable by the LCR Exercising
Party (which securities shall be duly issued as fully paid and non-assessable
and shall be free and clear of any lien, claim or encumbrance), in payment of
the total Liquidation Amount, less any amounts withheld on account of tax
required to be deducted and withheld therefrom. Provided that the total
Liquidation Amount has been so deposited with the Transfer Agent, on and after
the Liquidation Date the rights of each holder of Exchangeable Shares (other
than Harvest and Harvest ExchangeCo) shall be limited to: (i) receiving such
holder's proportionate share of the total Liquidation Amount payable by the LCR
Exercising Party upon presentation and surrender by the holder of certificates
representing the Exchangeable Shares held by such holder and the holder shall on
and after the Liquidation Date be considered and deemed for all purposes to be
the holder of the Units to which it is entitled; and (ii) receiving any declared
and unpaid dividends on such Exchangeable Shares. Upon surrender to the Transfer
Agent of a certificate or certificates representing Exchangeable Shares,
together with such other documents and instruments as may be required to effect
a transfer of Exchangeable Shares under the Act and the by-laws of the
Corporation and such additional documents and instruments as the Transfer Agent
may reasonably require, the holder of such surrendered certificate or
certificates shall be entitled to receive in exchange therefor, and the
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Corporation shall cause the Transfer Agent on behalf of the LCR Exercising Party
to deliver to such holder, certificates representing the Units to which the
holder is entitled, less any amounts withheld on account of tax required to be
deducted and withheld therefrom. If neither Harvest nor Harvest ExchangeCo
exercises the Liquidation Call Right in the manner described above, on the
Liquidation Date the holders of the Exchangeable Shares shall be entitled to
receive in exchange therefor the Liquidation Amount otherwise payable by the
Corporation in connection with the liquidation, dissolution or winding-up of the
Corporation pursuant to Section 6.1 of these share provisions.
ARTICLE 7
CERTAIN RESTRICTIONS
7.1 So long as any of the Exchangeable Shares are outstanding, the
Corporation shall not at any time without, but may at any time with, the
approval of the holders of the Exchangeable Shares given as specified in Section
10.2 of these share provisions:
(a) pay any dividends on the Common Shares or any other shares ranking
junior to the Exchangeable Shares, other than stock dividends payable
in Common Shares or any such other shares ranking junior to the
Exchangeable Shares, as the case may be;
(b) redeem or purchase or make any capital distribution in respect of the
Common Shares or any other shares ranking junior to the Exchangeable
Shares;
(c) redeem or purchase any other shares of the Corporation ranking equally
with the Exchangeable Shares with respect to the payment of dividends
or on any liquidation distribution; or
(d) issue any shares, other than Exchangeable Shares or Common Shares,
which rank superior to the Exchangeable Shares with respect to the
payment of dividends or on any liquidation distribution.
The restrictions in Sections 7.1(a), (b) and (c) above shall only be applicable
if dividends which have been declared on the outstanding Exchangeable Shares
have not been paid as provided for herein.
ARTICLE 8
PURCHASE FOR CANCELLATION
8.1 Subject to applicable law and notwithstanding Section 8.2 and Section
8.3, the Corporation may at any time and from time to time purchase for
cancellation all or any part of the Exchangeable Shares by private agreement
with any holder of Exchangeable Shares for consideration consisting of cash.
8.2 Subject to applicable law, the Corporation may at any time and from
time to time purchase for cancellation all or any part of the outstanding
Exchangeable Shares at any price by tender to all the holders of record of
Exchangeable Shares then outstanding or through the facilities of any stock
exchange on which the Exchangeable Shares are listed or quoted at any price per
share. If in response to an invitation for tenders under the provisions of this
Section 8.2, more Exchangeable Shares are tendered at a price or prices
acceptable to the Corporation than the Corporation is prepared to purchase, the
Exchangeable Shares to be purchased by the Corporation shall be purchased as
nearly as may be pro rata according to the number of shares tendered by each
holder who submits a tender to the Corporation, provided that when shares are
tendered at different prices, the pro rating shall be effected (disregarding
fractions) only with respect to the shares tendered at the price at which more
shares were tendered than the Corporation is prepared to purchase after the
Corporation has purchased all the shares tendered at lower prices. If part only
of the Exchangeable Shares represented by any certificate shall be purchased, a
new certificate for the balance of such shares shall be issued at the expense of
the Corporation.
8.3 Subject to applicable law, the Corporation by notice from time to time
to Harvest or Harvest ExchangeCo, as applicable, shall be entitled at any time
to redeem all or any part of the Exchangeable Shares held by Harvest or Harvest
ExchangeCo which were acquired by them pursuant to the Call Rights, the Exchange
Rights or the Automatic Exchange Rights (as defined in the Voting and Exchange
Trust Agreement) in exchange for the
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delivery of Units (the "Delivered Units") to or for the account of a holder(s)
of Exchangeable Shares. The Exchangeable Shares to be redeemed as set forth in
this Section 8.3 shall be acquired by the Corporation in exchange for the issue
by the Corporation to Harvest or Harvest ExchangeCo, as applicable, of a
promissory note in the principal amount equal to the fair market value of the
Delivered Units (where the fair market value of the Delivered Units is
determined by multiplying the number of Delivered Units by the weighted average
trading price of a Unit on the TSX for the ten trading days preceding the date
of purchase by Harvest or Harvest ExchangeCo, as applicable, of such Delivered
Units). All Exchangeable Shares which are redeemed as set forth in this Section
8.3 shall be cancelled by the Corporation.
ARTICLE 9
VOTING RIGHTS
9.1 Except as required by applicable law and by Article 10 hereof, the
holders of the Exchangeable Shares shall not be entitled as such to receive
notice of or to attend any meeting of the shareholders of the Corporation or to
vote at any such meeting.
ARTICLE 10
AMENDMENT AND APPROVAL
10.1 The rights, privileges, restrictions and conditions attaching to the
Exchangeable Shares may be added to, changed or removed but only with the
approval of the holders of the Exchangeable Shares given as hereinafter
specified.
10.2 Any approval given by the holders of the Exchangeable Shares to add to,
change or remove any right, privilege, restriction or condition attaching to the
Exchangeable Shares or any other matter requiring the approval or consent of the
holders of the Exchangeable Shares shall be deemed to have been sufficiently
given if it shall have been given in accordance with applicable law subject to a
minimum requirement that such approval be evidenced by resolution passed by not
less than two-thirds of the votes cast on such resolution (other than the
Exchangeable Shares held by Harvest, Harvest ExchangeCo or any of their
respective subsidiaries and other affiliates) at a meeting of holders of
Exchangeable Shares duly called and held at which the holders of at least 10% of
the outstanding Exchangeable Shares (other than the Exchangeable Shares held by
Harvest, Harvest ExchangeCo or any of their respective subsidiaries and other
affiliates) at that time are present or represented by proxy; provided that if
at any such meeting holders of at least 10% of such outstanding Exchangeable
Shares at that time are not present or represented by proxy within one-half hour
after the time appointed for such meeting, then the meeting shall be adjourned
to such place and time (not less than ten days later) as may be designated by
the Chairman of such meeting. At such adjourned meeting the holders of
Exchangeable Shares present or represented by proxy thereat may transact the
business for which the meeting was originally called and a resolution passed
thereat by the affirmative vote of not less than two-thirds of the votes cast on
such resolution at such meeting shall constitute the approval or consent of the
holders of the Exchangeable Shares.
ARTICLE 11
RECIPROCAL CHANGES, ETC. IN RESPECT OF UNITS
11.1 Each holder of an Exchangeable Share acknowledges that the Support
Agreement provides, in part, that the number of Units for which the Exchangeable
Shares are exchangeable shall, in addition to being adjusted from time to time
to conform to the Exchange Ratio, be simultaneously adjusted on an economically
equivalent basis if Harvest:
(a) issues or distributes Units (or securities exchangeable for or
convertible into or carrying rights to acquire Units) to the holders of
all or substantially all of the then outstanding Units by way of stock
distribution or other distribution, other than an issue of Units (or
securities exchangeable for or convertible into or carrying rights to
acquire Units) to holders of Units who exercise an option to receive
distributions in Units (or securities exchangeable for or convertible
into or carrying rights to acquire Units) in lieu of receiving cash
distributions; or
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(b) issues or distributes rights, options or warrants to the holders of all
or substantially all of the then outstanding Units entitling them to
subscribe for or to purchase Units (or securities exchangeable for or
convertible into or carrying rights to acquire Units); or
(c) issues or distributes to the holders of all or substantially all of the
then outstanding Units:
(i) securities of Harvest of any class other than Units (other
than securities convertible into or exchangeable for or
carrying rights to acquire Units);
(ii) rights, options or warrants other than those referred to in
Section 11.1(b) above;
(iii) evidences of indebtedness of Harvest; or
(iv) assets of Harvest other than Distributions which result in an
adjustment to the Exchange Ratio; or
(d) subdivides, redivides or changes the then outstanding Units into a
greater number of Units; or
(e) reduces, combines, consolidates or changes the then outstanding Units
into a lesser number of Units; or
(f) reclassifies or otherwise changes the Units or effects an amalgamation,
merger, reorganization or other transaction affecting the Units.
The Support Agreement further provides, in part, that the aforesaid provisions
of the Support Agreement shall not be changed without the approval of the
holders of the Exchangeable Shares given in accordance with Section 10.2 of
these share provisions.
ARTICLE 12
ACTIONS BY THE CORPORATION UNDER SUPPORT AGREEMENT
12.1 The Corporation shall take all such actions and do all such things as
shall be necessary or advisable to perform and comply with and to ensure
performance and compliance by the Corporation, Harvest and Harvest ExchangeCo
with all provisions of the Support Agreement applicable to the Corporation,
Harvest and Harvest ExchangeCo, respectively, in accordance with the terms
thereof including, without limitation, taking all such actions and doing all
such things as shall be necessary or advisable to enforce to the fullest extent
possible for the direct benefit of the Corporation all rights and benefits in
favour of the Corporation under or pursuant to such agreement.
12.2 The Corporation shall not propose, agree to or otherwise give effect to
any amendment to, or waiver or forgiveness of its rights or obligations under,
the Support Agreement without the approval of the holders of the Exchangeable
Shares given in accordance with Section 10.2 of these share provisions other
than such amendments, waivers and/or forgiveness as may be necessary or
advisable for the purposes of:
(a) adding to the covenants of the other parties to such agreement for the
protection of the Corporation or the holders of the Exchangeable Shares
thereunder;
(b) making such provisions or modifications not inconsistent with such
agreement as may be necessary or desirable with respect to matters or
questions arising thereunder which, in the good faith opinion of the
Board of Directors, it may be expedient to make, provided that the
Board of Directors shall be of the good faith opinion, after
consultation with counsel, that such provisions and modifications shall
not be prejudicial to the interests of the holders of the Exchangeable
Shares; or
(c) making such changes in or corrections to such agreement which, on the
advice of counsel to the Corporation, are required for the purpose of
curing or correcting any ambiguity or defect or inconsistent provision
or clerical omission or mistake or manifest error contained therein,
provided that the Board of
15
Directors shall be of the good faith opinion, after consultation with
counsel, that such changes or corrections shall not be prejudicial to
the interests of the holders of the Exchangeable Shares.
ARTICLE 13
LEGEND; CALL RIGHTS; WITHHOLDING RIGHTS
13.1 The certificates evidencing the Exchangeable Shares shall contain or
have affixed thereto a legend in form and on terms approved by the Board of
Directors, with respect to the Support Agreement, the Call Rights and the Voting
and Exchange Trust Agreement (including the provisions with respect to the
voting rights and exchange rights thereunder).
13.2 Each holder of an Exchangeable Share, whether of record or beneficial,
by virtue of becoming and being such a holder shall be deemed to acknowledge
each of the Liquidation Call Right, the Retraction Call Right and the Redemption
Call Right, in each case, in favour of Harvest and Harvest ExchangeCo, and the
overriding nature thereof in connection with the liquidation, dissolution or
winding-up of the Corporation or the retraction or redemption of Exchangeable
Shares, as the case may be, and to be bound thereby in favour of Harvest and
Harvest ExchangeCo as therein provided.
13.3 The Corporation, Harvest, Harvest ExchangeCo and the Transfer Agent
shall be entitled to deduct and withhold from any dividend or consideration
otherwise payable to any holder of Exchangeable Shares such amounts as the
Corporation, Harvest, Harvest ExchangeCo or the Transfer Agent is required to
deduct and withhold with respect to such payment under the INCOME TAX ACT
(Canada) or any provision of provincial, local or foreign tax law, in each case,
as amended. To the extent that amounts are so withheld, such withheld amounts
shall be treated for all purposes hereof as having been paid to the holder of
the Exchangeable Shares in respect of which such deduction and withholding was
made, provided that such withheld amounts are actually remitted to the
appropriate taxing authority. To the extent that the amount so required or
permitted to be deducted or withheld from any payment to a holder exceeds the
cash consideration otherwise, if any, payable to the holder, the Corporation,
Harvest, Harvest ExchangeCo and the Transfer Agent are hereby authorized to sell
or otherwise dispose of such portion of the consideration as is necessary to
provide sufficient funds to the Corporation, Harvest, Harvest ExchangeCo or the
Transfer Agent, as the case may be, to enable it to comply with such deduction
or withholding requirement and the Corporation, Harvest, Harvest ExchangeCo or
the Transfer Agent shall notify the holder thereof and remit any unapplied
balance of the net proceeds of such sale.
ARTICLE 14
NON-RESIDENT HOLDERS
14.1 Notwithstanding anything contained in these share provisions the
obligation of the Corporation, Harvest or Harvest ExchangeCo to pay the
Retraction Price, Purchase Price, Liquidation Price or Redemption Price, other
than in circumstances where the Corporation, Harvest or Harvest ExchangeCo
elects to pay the Redemption Price in cash, in respect of Exchangeable Shares
held by a person whom the Transfer Agent believes is located in the United
States or a resident of any foreign country, shall be satisfied by delivering
the Units which would have been received by the affected holder to the Transfer
Agent who shall sell such Units on the stock exchange on which the Units are
then listed and, upon such sale, the rights of the affected holder shall be
limited to receiving the net proceeds of sale (net of applicable taxes) upon
surrender of the certificates representing such Exchangeable Shares.
ARTICLE 15
SPECIFIED AMOUNT
15.1 The amount specified in respect of each Exchangeable Share for the
purposes of subsection 191(4) of the INCOME TAX ACT (Canada) shall be an amount
equal to the fair market value of one Unit on the Effective Date.
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ARTICLE 16
NO FRACTIONAL ENTITLEMENTS
16.1 Notwithstanding anything contained in these share provisions including,
without limitation, Articles 4, 5 or 6, no holder of an Exchangeable Share shall
be entitled to and neither the Corporation, Harvest, Harvest ExchangeCo nor the
Trustee shall deliver fractions of Units. Where the application of the
provisions of this Agreement, including, without limitation, Articles 4, 5 and 6
would otherwise result in a holder of Exchangeable Shares receiving a fraction
of a Unit, such holder of Exchangeable Shares shall only be entitled to receive
the nearest whole number of Units.
ARTICLE 17
NOTICES
17.1 Any notice, request or other communication to be given to the
Corporation by a holder of Exchangeable Shares shall be in writing and shall be
valid and effective if given by mail (postage prepaid) or by telecopy or by
delivery to the registered office of the Corporation and addressed to the
attention of the President of the Corporation. Any such notice, request or other
communication, if given by mail, telecopy or delivery, shall only be deemed to
have been given and received upon actual receipt thereof by the Corporation.
17.2 Any presentation and surrender by a holder of Exchangeable Shares to
the Corporation or the Transfer Agent of certificates representing Exchangeable
Shares in connection with the liquidation, dissolution or winding-up of the
Corporation or the retraction or redemption of Exchangeable Shares shall be made
by registered mail (postage prepaid) or by delivery to the registered office of
the Corporation or to such office of the Transfer Agent as may be specified by
the Corporation, in each case, addressed to the attention of the President of
the Corporation. Any such presentation and surrender of certificates shall only
be deemed to have been made and to be effective upon actual receipt thereof by
the Corporation or the Transfer Agent, as the case may be. Any such presentation
and surrender of certificates made by registered mail shall be at the sole risk
of the holder mailing the same.
17.3 ny notice, request or other communication to be given to a holder of
Exchangeable Shares by or on behalf of the Corporation shall be in writing and
shall be valid and effective if given by mail (postage prepaid) or by delivery
to the address of the holder recorded in the register of shareholders of the
Corporation or, in the event of the address of any such holder not being so
recorded, then at the last known address of such holder. Any such notice,
request or other communication, if given by mail, shall be deemed to have been
given and received on the third Business Day following the date of mailing and,
if given by delivery, shall be deemed to have been given and received on the
date of delivery. Accidental failure or omission to give any notice, request or
other communication to one or more holders of Exchangeable Shares shall not
invalidate or otherwise alter or affect any action or proceeding to be taken by
the Corporation pursuant thereto.
17
SCHEDULE A
RETRACTION REQUEST
To The Corporation, Harvest and Harvest ExchangeCo Inc.
This notice is given pursuant to Article 4 of the provisions (the
"Share Provisions") attaching to the Exchangeable Shares of the Corporation
represented by the enclosed certificate and all capitalized words and
expressions used in this notice that are defined in the Share Provisions have
the meanings ascribed to such words and expressions in such Share Provisions.
The undersigned hereby notifies the Corporation that, subject to
the Retraction Call Right referred to below, the undersigned desires to have the
Corporation redeem in accordance with Article 4 of the Share Provisions:
ALL SHARE(S) REPRESENTED BY THE ENCLOSED CERTIFICATE; OR
SHARE(S) OF THE SHARES REPRESENTED BY THE ENCLOSED CERTIFICATE.
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NOTE: The Retraction Date shall be the date that is three Business Days after
the date upon which this notice is received by the Corporation or the
Transfer Agent.
The undersigned acknowledges the overriding Retraction Call Right
of Harvest and Harvest ExchangeCo Inc. to purchase all but not less than all the
Retracted Shares from the undersigned and that this notice is and shall be
deemed to be a revocable Retraction Offer by the undersigned to sell the
Retracted Shares to Harvest and Harvest ExchangeCo Inc. in accordance with the
Retraction Call Right on the Retraction Date for the Purchase Price and on the
other terms and conditions set out in Section 4.3 of the Share Provisions. This
Retraction Request, and this Retraction Offer to sell the Retracted Shares to
Harvest and Harvest ExchangeCo Inc., may be revoked and withdrawn by the
undersigned only by notice in writing given to the Corporation at any time
before the close of business on the Business Day immediately preceding the
Retraction Date.
The undersigned acknowledges that if, as a result of solvency
provisions of applicable law, the Corporation is unable to redeem all Retracted
Shares, the undersigned will be deemed to have exercised the Exchange Rights (as
defined in the Voting and Exchange Trust Agreement) so as to require Harvest or
Harvest ExchangeCo Inc. to purchase the unredeemed Retracted Shares.
The undersigned hereby represents and warrants to the Corporation,
Harvest and Harvest ExchangeCo Inc. that the undersigned:
|_| is
(select one)
|_| is not
a non-resident of Canada for purposes of the INCOME TAX ACT (Canada). The
undersigned acknowledges that in the absence of an indication that the
undersigned is not a non-resident of Canada, withholding on account of Canadian
tax may be made from amounts payable to the undersigned on the redemption or
purchase of the Retracted Shares.
18
The undersigned hereby represents and warrants to the Corporation,
Harvest and Harvest ExchangeCo Inc. that the undersigned has good title to, and
owns, the share(s) represented by this certificate to be acquired by the
Corporation, Harvest or Harvest ExchangeCo Inc., as the case may be, free and
clear of all liens, claims and encumbrances.
- -------------------- -------------------------- ------------------------
(Date) (Signature of Shareholder) (Guarantee of Signature)
|_| Please check box if the securities and any cheque(s) resulting from the
retraction or purchase of the Retracted Shares are to be held for pick-up by the
shareholder from the Transfer Agent, failing which the securities and any
cheque(s) will be mailed to the last address of the shareholder as it appears on
the register.
NOTE: This panel must be completed and the enclosed certificate, together
with such additional documents as the Corporation and the Transfer
Agent may require, must be deposited with the Transfer Agent. The
securities and any cheque(s) resulting from the retraction or purchase
of the Retracted Shares will be issued and registered in, and made
payable to, respectively, the name of the shareholder as it appears on
the register of the Corporation and the securities and any cheque(s)
resulting from such retraction or purchase will be delivered to such
shareholder as indicated above, unless the form appearing immediately
below is duly completed.
Date:
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Name of Person in Whose Name Securities
Are to be Registered or Delivered
(please print):
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Street Address or P.O. Box:
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Social Insurance Number:
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Signature of Shareholder:
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City, Province and Postal Code:
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Signature Guaranteed by:
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NOTE: If this Retraction Request is for less than all of the shares
represented by the enclosed certificate, a certificate representing the
remaining share(s) of the Corporation represented by this certificate
will be issued and registered in the name of the shareholder as it
appears on the register of the Corporation, unless the Share Transfer
Power on the share certificate is duly completed in respect of such
share(s).