EXHIBIT 99.39
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SHAREHOLDER AGREEMENT
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SEARCH ENERGY CORP.
- AND -
ADVANTAGE INVESTMENT MANAGEMENT LTD.
- AND -
MONTREAL TRUST COMPANY OF CANADA
__________________________________________________
Dated
as of
May 24, 2001
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SHAREHOLDER AGREEMENT
THIS AGREEMENT is dated the 24th day of May, 2001.
AMONG:
SEARCH ENERGY CORP., a body corporate with offices
in Calgary, Alberta (hereinafter referred to as the
"Corporation")
OF THE FIRST PART
AND
ADVANTAGE INVESTMENT MANAGEMENT LTD., a body
corporate with offices in Calgary, Alberta
(hereinafter referred to as the "Manager")
OF THE SECOND PART
AND
MONTREAL TRUST COMPANY OF CANADA, a trust company
incorporated under the laws of Canada with offices
in Calgary, Alberta, as trustee of the Trust
(hereinafter referred to as the "Trustee")
OF THE THIRD PART
WHEREAS:
A. The Corporation is a corporation incorporated under the BUSINESS
CORPORATIONS ACT (Alberta);
B. The authorized and issued capital of the Corporation consists of an
unlimited number of common shares, all of which issued and outstanding common
shares are held by the Trust;
C. The Trust is an open-ended mutual fund trust created pursuant to the
laws of the Province of Alberta pursuant to the Trust Indenture for the purpose
of, among other things, acquiring securities of the Corporation, including the
Notes, as well as purchasing the Royalty from the Corporation holding the
Royalty;
D. The Trustee has been appointed as trustee for the benefit of the
Unitholders pursuant to the Trust Indenture;
E. The Parties wish to establish the rights and obligations of the Trustee
in respect of the Shares now or hereafter owned by it, the rights and
obligations of the Unitholders and holders of the Special Voting Units, if any,
in respect of the Trust Units or Special Voting Units
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now or hereafter owned by them, the management and control of the Corporation
and certain other matters as hereinafter set forth;
F. The Parties have agreed to do all such things as may be necessary in
order to give effect to this Agreement; and
G. The Trustee joins in this Agreement as party of the third part as
Trustee for and on behalf of the Unitholders.
NOW THEREFORE THIS AGREEMENT WITNESSETH THAT, in consideration of the
premises and the mutual covenants and agreements hereinafter contained and other
good and valuable consideration (the receipt and sufficiency of which is hereby
acknowledged) the parties hereto agree as follows:
ARTICLE 1
INTERPRETATION
1.1 The Parties hereto represent that, to the extent that the
subject matter therein is within their knowledge or control, the recitals to
this Agreement are true and correct and the parties hereto agree that such
recitals form an integral part of this Agreement.
1.2 In the Agreement unless there is something in the subject
matter or context inconsistent therewith:
(a) "Act" means the BUSINESS CORPORATIONS ACT, Statutes of Alberta, 1981,
c. B-15, as amended from time to time and every statute that may be
substituted therefor, and in the case of any such amendment and
substitution, any reference in this Agreement to the Act shall be read
as referring to the amended or substituted provisions therefor;
(b) "Affiliate" has the meaning ascribed thereto in the Act;
(c) "Agreement" means this Agreement and any agreements or schedules
supplemental or ancillary hereto and the expression "Article" followed
by a number means and refers to the specified Article of this
Agreement;
(d) "Appoint" includes "elect" and vice versa;
(e) "Articles of Incorporation" means the Articles of Incorporation of the
Corporation, as the same may be amended from time to time;
(f) "By-Laws" means the by-laws of the Corporation from time to time in
force and effect;
(g) "Exchangeable Shares" means the exchangeable shares that may be issued
from time to time by the Corporation, which shares, subject to their
terms and conditions, may be exchanged for Trust Units;
(h) "Management Agreement" means the Management Agreement dated the date
hereof between the Corporation, the Trustee for and on behalf of the
Trust and the Manager, as amended;
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(i) "Note Indenture" means the indenture between the Corporation and
Montreal Trust Company of Canada pursuant to which the Notes are
issued;
(j) "Notes" means the subordinated promissory notes issued by the
Corporation pursuant to the terms of the Note Indenture and held by the
Trust;
(k) "Parties" means the parties to this Agreement;
(l) "Person" means an individual, corporation, partnership, trustee,
syndicate, entity, association or unincorporated organization, and
words importing persons have a similar meaning;
(m) "Plan of Arrangement" means the plan of arrangement contemplated by the
Arrangement Agreement dated April 18, 2001 between the Trust, the
Corporation and 925212 Alberta Ltd.;
(n) "Royalty Agreement" means the Royalty Agreement made as of May 24, 2001
between the Corporation and Montreal Trust Company of Canada for and on
behalf of the Trust;
(o) "Shares" means the common shares of the Corporation from time to time
outstanding;
(p) "Special Voting Unit" means the special voting units which are
authorized for issuance under the Trust Indenture;
(q) "Trust" means Advantage Energy Income Fund;
(r) "Trust Indenture" means the Trust Indenture dated as of April 17, 2001
between the Corporation and the Trustee for and on behalf of the
Unitholders providing for the establishment of the Trust and the
creation and issue of the Trust Units and Special Voting Units, as
amended from time to time;
(s) "Royalty" means the Royalty payable by the Corporation to the Trust
pursuant to the Royalty Agreement;
(t) "Trust Units" has the meaning ascribed thereto in the Trust Indenture;
and
(u) "Unitholders" means the holders from time to time of one or more Trust
Units.
1.3 Unless the context otherwise requires, where capitalized terms
defined in the Trust Indenture are used herein without definition, the
definitions set out therein shall apply to this Agreement.
1.4 In this Agreement, words importing the singular number shall
include the plural and vice versa and words importing the masculine gender shall
include the feminine or neuter gender and vice versa where the context so
requires.
1.5 The division of this Agreement into Articles and Sections and
the Article and Section headings are for convenience of reference only and shall
not affect the interpretation or construction of this Agreement.
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ARTICLE 2
EFFECT AND IMPLEMENTATION OF AGREEMENT
2.1 This Agreement does not constitute a unanimous shareholder
agreement within the meaning of the Act.
2.2 The Trustee covenants and agrees that it shall vote or cause
to be voted the Shares of the Corporation owned by it to accomplish and give
effect to the terms and conditions of this Agreement.
2.3 In the event of any conflict between the provisions of this
Agreement on the one hand, and the Articles of Incorporation or By-Laws on the
other, the Trustee agrees to vote or to cause to be voted the Shares owned by it
so as to cause the Articles or By-laws, or both, as the case may be, to be
amended to resolve any such conflict in favour of the provisions of this
Agreement.
2.4 The Corporation by its execution hereof acknowledges that it
has actual notice of the terms of this Agreement, consents hereto and hereby
covenants with the Trustee for the benefit of the Trust and the Unitholders and
the Manager that it will at all times during the term of this Agreement be
governed by the terms and provisions hereof in carrying out its business and
affairs and, accordingly, shall give or cause to be given such notices, execute
or cause to be executed such documents and do or cause to be done all such acts,
matters and things as may from time to time be necessary or required to carry
out the terms and intent hereof.
2.5 The parties hereto acknowledge that the Trustee is entering
into this Agreement solely in its capacity as Trustee on behalf of the Trust and
the obligations of the Trustee hereunder shall not be personally binding upon
the Trustee or any of the holders of Trust Units and that any recourse against
the Trust, the Trustee or any holders of Trust Units in any manner in respect of
any indebtedness, obligation or liability of the Trust arising hereunder or
arising in connection herewith or from the matters to which this Agreement
relates, if any, including without limitation claims based on negligence or
otherwise tortious behaviour, shall be limited to, and satisfied only out of,
the Trust Fund; provided however that the limitation on recourse against the
Trustee shall not be limited as aforesaid in the event of the fraud, wilful
default or gross negligence of the Trustee.
ARTICLE 3
DIRECTORS
3.1 The Board of Directors of the Corporation shall consist of a
minimum of five members, a maximum of nine members and shall initially be set at
seven (7) members. As long as the Manager is a party to the Management
Agreement, it shall be entitled to designate two (2) of the members of the Board
of Directors of the Corporation. The balance of the members of the Board of
Directors of the Corporation shall be selected by a vote of the Unitholders and
holders of Special Voting Units, if any, at a meeting of Unitholders held in
accordance with the Trust Indenture and thereafter the Trustee shall elect the
individuals so selected by the Unitholders and holders of Special Voting Units,
if any, and the Manager to the Board of Directors of the Corporation. In any
event, the Unitholders and holders of Special Voting Units, if any, shall at all
times be entitled to select a majority of the Board of Directors in the event
that the number of Directors constituting the Board of Directors of the
Corporation is changed in accordance with the Act and the Articles and the
By-Laws of the Corporation. One of the directors so selected by the Unitholders
and holders of Special Voting Units, if any,
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will be the Chairman of the Board of Directors of the Corporation. In addition,
a majority of the Board of Directors of the Corporation must not be officers,
employees or consultants of the Corporation, the Manager or any of their
respective affiliates. Committees of the Board of Directors shall in all cases
be comprised of a majority of directors selected by the Unitholders and holders
of Special Voting Units, if any.
3.2 The Board of Directors of the Corporation may give special
consideration to the interests of the Unitholders and holders of Special Voting
Units, if any, in determining whether a particular transaction or course of
action is in the best interests of the Corporation.
ARTICLE 4
VOTING
4.1 Except as provided in Sections 2.2, 2.3 and 3.1 hereof and
this Section 4.1, the Trustee shall abstain from voting its Shares at any and
all meetings of the shareholders of the Corporation and shall not exercise any
rights to pass a resolution in writing except in accordance with the result of a
vote of Unitholders and except as follows:
(a) to eliminate or correct any provisions in the Articles of the
Corporation inconsistent with the issuance of Exchangeable Shares of
the Corporation;
(b) to allow the creation and issuance of Exchangeable Shares; and
(c) to do any other matter incidental to the issuance of Exchangeable
Shares;
all as approved from time to time by the Board of Directors of the Corporation.
4.2 Unitholders and holders of Special Voting Units, if any, shall
be entitled to notice of, to attend at and to direct the manner in which the
Trustee will vote its Shares at any meeting of, and in respect of any matter put
before the shareholders of the Corporation including, without limitation, voting
on the election of directors of the Corporation as set forth in Article 3 (other
than the directors of the Corporation to be selected by the Manager as set forth
in Section 3.1), approving its financial statements and appointing its auditors,
who shall be the same as the auditors of the Trust. Prior to the Trustee voting
its Shares in respect of any matter, each Unitholder shall be entitled to vote
in respect of the matter at a meeting of Unitholders called for the purpose of
considering the matter on the basis of one vote per Trust Unit held and any
holder of Special Voting Units, if any, shall be entitled to vote on the basis
set forth in any rights and limitations to such Special Voting Units and the
Trustee shall be required to vote its Shares in accordance with the result of
the vote of Unitholders and the holders of the Special Voting Units, if any, on
the matter.
4.3 Except with the approval of Unitholders and holders of Special
Voting Units, if any, by Special Resolution, the Shares shall not be transferred
to any Person except the Trustee.
ARTICLE 5
ISSUE OF SHARES
5.1 The Corporation may not issue any further Shares except upon
the approval of Unitholders by Special Resolution and upon any such holder of
any such Shares becoming a party to this Agreement in accordance with Section
7.1.
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ARTICLE 6
WAIVER
6.1 To the extent permitted by law, the Trustee waives each and
every provision contained in the Articles of Incorporation or By-laws insofar as
they may conflict with the provisions of this Agreement.
ARTICLE 7
SUBSEQUENT PARTIES TO THIS AGREEMENT
7.1 Any Person who shall hereafter become the registered owner of
one or more Shares shall, prior to becoming such registered holder, and any
replacement of the Trustee shall, prior to becoming the Trustee, execute one or
more counterparts of this Agreement (whether or not the same has previously been
executed by any other Person(s)) and shall thereafter be entitled to all of the
benefits of and be bound by the terms and conditions of this Agreement in the
same manner as if it had been an original party hereto.
ARTICLE 8
TERM OF AGREEMENT AND AMENDMENT
8.1 This Agreement shall be in effect until terminated, cancelled
or amended in writing by the agreement of the Corporation, the Manager and the
Trustee, provided that the Trustee will only act on the direction of the Board
of Directors of the Corporation, except with respect to any amendments that
would affect the ability of Unitholders and holders of Special Voting Units, if
any, to vote for and elect the majority of the members of the Board of Directors
of the Corporation pursuant to Section 3.1 hereof, in which case the Trustee
will only act on the direction of a Special Resolution of the Unitholders.
ARTICLE 9
GENERAL PROVISIONS
9.1 Each party hereto covenants and agrees to execute or cause to
be done or executed all such further and other acts, deed, things, instruments
and assurances whatsoever for the better or more perfect and absolute
performance of the terms and conditions of this Agreement.
9.2 Each communication provided for in this Agreement or arising
in connection therewith (including the service of any documents or notices as
may be required by any court or judge or by any court proceedings) shall be in
writing and shall be delivered to the parties addressed as follows:
the Corporation: Search Energy Corp.
700, 400 - 5th Avenue S.W.
Calgary, Alberta
T2P 0L6
Attention: President
Fax: (403) 262-0723
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the Manager: Advantage Investment Management Ltd.
3700, 400 - 3rd Avenue S.W.
Calgary, Alberta
T2P 4H2
Attention: President
Fax: (403) 264-5973
the Trustee: Montreal Trust Company of Canada
Suite 710, Western Gas Tower
530 - 8th Avenue S.W.
Calgary, Alberta
T2P 3S8
Attention: Manager, Corporate Trust Department
Fax: (403) 267-6598
Each party may change its mailing or delivery address by giving to the
other parties written notice to that effect.
9.3 Each such communication shall be deemed to have been given to
and received by the addressee when delivered.
9.4 The Trustee joins in this Agreement on behalf of the
Unitholders and agrees to be bound hereby and to take all necessary measures to
enforce this Agreement and all benefits and obligations created hereunder in
favour of the Trust and the Unitholders.
9.5 This Agreement may be executed in any number of counterparts
with the same effect as if all the parties hereto signed the same document. All
counterparts shall be construed together and shall constitute one instrument.
9.6 Notwithstanding the place of negotiation or execution of this
Agreement or the province of residence of any of the parties hereto or of any of
the Unitholders, it is agreed that this Agreement shall be interpreted and
construed in accordance with the laws of the Province of Alberta and the
Corporation, the Manager and the Trustee hereby attorn to the exclusive
jurisdiction of the courts of the Province of Alberta.
9.7 Should any portion of this Agreement be judicially held to be
invalid or wholly or partially unenforceable, such holding shall not invalidate
or void the remainder of this Agreement, and the parties hereby agree that the
parts so held to be wholly or partially invalid or enforceable shall be deemed
to have been stricken herefrom with the same force and effect as if such part or
parts had never been included herein or had always been revised and reduced in
scope so as to be valid and enforceable, as the case may be.
9.8 This Agreement shall enure to the benefit of and be binding
upon the parties hereto, their respective heirs, executors, administrators,
successors and permitted assigns and, through the Trustee, this Agreement shall
enure to the benefit of and be binding upon the Unitholders, their respective
heirs, executors, administrators, successors and permitted assigns.
9.9 Any and all certificates representing Shares now or hereafter
beneficially owned by the Shareholder or any other Person during the currency of
this Agreement (whether such certificates are issued initially or with respect
to a transfer or otherwise) shall have endorsed thereon in bold type the
following legend:
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"THE SHARES REPRESENTED BY THIS CERTIFICATE ARE
SUBJECT TO THE PROVISIONS OF A SHAREHOLDER
AGREEMENT, WHICH AGREEMENT CONTAINS RESTRICTIONS
RELATING TO THE VOTING, TRANSFER, HYPOTHECATION OR
OTHER DISPOSITION OF SUCH SHARES AND NOTICE OF THE
TERMS AND CONDITIONS OF SUCH AGREEMENT IS HEREBY
GIVEN."
9.10 Time shall be of the essence of this Agreement.
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IN WITNESS WHEREOF the parties hereto have executed this Agreement as
of the day of the year first above written.
SEARCH ENERGY CORP.
Per:
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Per:
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ADVANTAGE INVESTMENT MANAGEMENT LTD.
Per:
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Per:
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MONTREAL TRUST COMPANY OF CANADA, AS
TRUSTEE FOR ADVANTAGE ENERGY INCOME
FUND
Per:
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Per:
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